High Court Of Orissa
Aditya Narayan Mahasupakar vs. CCIT
Section 132, 153A
Assessment Year 2009-10
Kumari S. Panda And S.N Prasad, JJ.
W.P. (C) No. 21407 Of 2016
January 20, 2017
JUDGMENT
S.N. Prasad, J. – This writ petition has been filed, inter alia, for the following reliefs:
“(i) Issue a writ of mandamus or any other writ or writs hold that the search and seizure as held under Section 132 of the Income Tax Act as illegal same being not in consonance with the set procedures under the Income Tax Act.
(ii) Issue a writ of certiorari or any other appropriate writ or writs by quashing the notices as issued U/s.153-A of the Income Tax Act, 1961 dated 06.08.2015 vide Annexure-2 and notice as issued 143(2) of the I.T. Act dated 11.07.2016 vide Annexure-4 and notice as issued U/s. 142(1) of the Income Tax Act, 1961 dated 01.11.2016 vide Annexure-5.
(iii) And further issue a writ of mandamus or any other appropriate writ or writs by directing the opp.parties to release the seized documents as per the Panchanama dated 02.12.2014 vide Annexure-1.”
2. The brief fact leading to the institution of this writ petition is that search warrant was issued by opposite party no.1 on 01.12.2014 by the Income Tax Department in exercise of the powers conferred under Section 132 of the Income Tax Act, 1961, hereinafter to be referred to as “the Act, 1961”, in short. The authorities of the Income Tax Department conducted search, but no incriminating material has been recovered, rather they found cash amounting to Rs.40,050/- and gold jewellery of 906 grams belonging to two married ladies of the family, which are within the permissible limits as prescribed by the Income Tax Department and accordingly, Panchanama was prepared showing inventory of cash worth of Rs.40,050/-, golden jewellery valued at Rs.22,00,714/-, but not seized.
3. Opposite party no.2 after search and seizure, issued a notice under Section 153 of the Act, 1961 on 06.08.2015 calling upon the petitioner to prepare a true and correct return for the assessment year 2009-10 and furnish the same within a period of 30 days. In compliance to the notice, the petitioner had filed compliance stating therein that the return filed under Section 139 of the Act, 1961 prior to the search operation may be treated as compliance to the notice issued under Section 153-A of the Act.
4. Opposite party no.2 has issued notice under Section 143(2) of the Act, 1961 on 11.07.2016 asking the petitioner to attend his office and explain the discrepancy in connection with the return income for the assessment year 2009-10 to 2014-15. Opposite party no.2 has also called for the records for the last six assessment years in exercise of the powers vested under Section 142(1) of the Act, 1961 from the assessment year 2009-10 and fixed the date to 7.11.2016 for compliance of the notice dated 1.11.2016. The petitioner on receipt of the notice under Section 142(1) of the Act, 1961 filed his objection through his counsel challenging the correctness of the initiation of search and seizure proceeding. Opposite party no.2 on receiving the objection from the petitioner has passed order holding the search and seizure conducted on 2.12.2014 as legal and valid.
5. The petitioner has taken a ground to challenge the action of the Income Tax authorities including the jurisdiction conferred to them under Section 132 of the Act, 1961 by submitting that the said power can only be exercised by the competent authority if they have definite reasons to belief, there being material information in his possession otherwise not and in case any such search is conducted without any specific information or material information in possession, then the search action will be deemed illegal and arbitrary. The petitioner has further taken a ground that on mere assumption by the competent authorities of the Income Tax Department, the search and seizure order/ warrant cannot be issued as the same will be totally against the provisions of Section 132 of the Act, 1961 and in the given case, it is seen that as per the Panchanama no materials have been seized from the petitioner, which would establish that the same was unaccounted for.
6. Learned counsel representing the Revenue has vehemently opposed the submission of the learned counsel representing the petitioner by submitting that it is not correct that the authorities have exercised the powers conferred upon them under Section 132 of the Act, 1961 merely on surmises and conjectures, rather in course of scrutiny of the documents in the premises of the petitioner, it was found that there was some undisclosed income, which has not been disclosed by the petitioner while submitting the return under Section 139 of the Act, 1961 and as such, it cannot be said that there was no reason for making search and seizure. He further submits that the competent authorities of the Income Tax Department had issued notice under Section 153-A of the Act, 1961 in which he has made objection, which has been answered by the petitioner and in the meanwhile the assessment order has also been passed by the competent assessing authority and as such, at this moment, the writ petition itself is not maintainable because there is an assessment order and if the petitioner is at all aggrieved, he may challenge the same before the appropriate forum. He further submits that since the order of assessment has been passed by the authority, he ought to have approached the alternative remedy of appeal under the Statute, but instead of doing so, he has approached this Court invoking the extraordinary jurisdiction of this Court under Articles 226 and 227 of the Constitution of India, and hence, this writ petition is not maintainable even on the ground of alternative remedy. He further submits that the petitioner has challenged the search and seizure, but the search was conducted on 2.12.2014 in pursuance to the search warrant issued on 1.12.2014, but fairly for about more than two years the search warrant has not been questioned by the petitioner and only when notice under Section 153 of the Act, 1961 has been issued on 6.8.2014 and even from that date, this writ petition has been filed after lapse of more than one year and four months approximately from the date of issuance of notice. Hence, it cannot be said that the petitioner is at all aggrieved with the search warrant.
7. We have heard the learned counsels for the parties and gone through the materials available on record.
8. Before appreciating the argument advanced on behalf of the parties, we thought it proper to have a discussion regarding the statutory provision which has got bearing for deciding the issue involved in this case which are being quoted hereunder as:—
‘132 Search and seizure.. (1) Where the [Principal Director General or] Director General or [Principal Director or] Director or the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner in consequence of information in his possession, has reason to believe that—
(a) any person to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub- section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub- section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice, or
(b) any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to, any proceeding under the Indian Income- tax Act, 1922 (11 of 1922), or under this Act, or
(c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been, or would not be, disclosed for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property),
[then,—
(A) the [Principal Director General or] Director General or [Principal Director or] Director or the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner, as the case may be, may authorise any Additional Director or Additional Commissioner or Joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer, or
(B) such Additional Director or Additional Commissioner or Joint Director, or Joint Commissioner, as the case may be, may authorise any Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer,
(the officer so authorised in all cases being hereinafter referred to as the authorised officer) to—]
(i) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept;
(ii) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (i) where the keys thereof are not available;
(iia) search any person who has got out of, or is about to get into, or is in, the building, place, vessel, vehicle or aircraft, if the authorised officer has reason to suspect that such person has secreted about his person any such books of account, other documents, money, bullion, jewellery or other valuable article or thing;
(iib) require any person who is found to be in possession or control of any books of account or other documents maintained in the form of electronic record as defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000), to afford the authorised officer the necessary facility to inspect such books of account or other documents;
(iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search:
Provided that bullion, jewellery or other valuable article or thing, being stock-in-trade of the business, found as a result of such search shall not be seized but the authorised officer shall make a note or inventory of such stock-in-trade of the business;
(iv) place marks of identification on any books of account or other documents or make or cause to be made extracts or copies therefrom;
(v) make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing :
[Provided that where any building, place, vessel, vehicle or aircraft referred to in clause (i) is within the area of jurisdiction of any [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner, but such [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c), then, notwithstanding anything contained in section 120, it shall be competent for him to exercise the powers under this sub-section in all cases where he has reason to believe that any delay in getting the authorisation from the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner] having jurisdiction over such person may be prejudicial to the interests of the revenue :
Provided further that where it is not possible or practicable to take physical possession of any valuable article or thing and remove it to a safe place due to its volume, weight or other physical characteristics or due to its being of a dangerous nature, the authorised officer may serve an order on the owner or the person who is in immediate possession or 6 control thereof that he shall not remove, part with or otherwise deal with it, except with the previous permission of such authorised officer and such action of the authorised officer shall be deemed to be seizure of such valuable article or thing under clause (iii):
Provided also that nothing contained in the second proviso shall apply in case of any valuable article or thing, being stock-in-trade of the business:
Provided also that no authorisation shall be issued by the Additional Director or Additional Commissioner or Joint Director or Joint Commissioner on or after the 1st day of October, 2009 unless he has been empowered by the Board to do so.
[(1A) Where any [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner, in consequence of information in his possession, has reason to suspect that any books of account, other documents, money, bullion, jewellery or other valuable article or thing in respect of which an officer has been authorised by the [Principal Director General or] Director General or [Principal Director or] Director or any other [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner to take action under clauses (i) to (v) of sub- section (1) are or is kept in any building, place, vessel, vehicle or aircraft not mentioned in the authorisation under sub-section (1), such [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner may, notwithstanding anything contained in section 120, authorise the said officer to take action under any of the clauses aforesaid in respect of such building, place, vessel, vehicle or aircraft.]
(2) The authorised officer may requisition the services of any police officer or of any officer of the Central Government, or of both, to assist him for all or any of the purposes specified in sub-section (1) or sub-section (1A) and it shall be the duty of every such officer to comply with such requisition.
(3) The authorised officer may, where it is not practicable to seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing, for reasons other than those mentioned in the second proviso to sub- section (1), serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it except with the previous permission of such officer and such officer may take such steps as may be necessary for ensuring compliance with this sub-section.
Explanation.—For the removal of doubts, it is hereby declared that serving of an order as aforesaid under this sub- section shall not be deemed to be seizure of such books of account, other documents, money, bullion, jewellery or other valuable article or thing under clause (iii) of subsection (1).
(4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any 7 proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act.
Explanation.—For the removal of doubts, it is hereby declared that the examination of any person under this sub- section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act.
(4A) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed—
(i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person;
(ii) that the contents of such books of account and other documents are true ; and
(iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person’s handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.
(5) **
(6) **
(7) **
(8) The books of account or other documents seized under subsection (1) or sub-section (1A) shall not be retained by the authorised officer for a period exceeding thirty days from the date of the order of assessment under section 153A or clause (c) of section 158BC unless the reasons for retaining the same are recorded by him in writing and the approval of the [Principal Chief Commissioner or] Chief Commissioner, [Principal Commissioner or] Commissioner, [Principal Director General or Director General or [Principal Director or] Director for such retention is obtained :
Provided that the [Principal Chief Commissioner or] Chief Commissioner, [Principal Commissioner or] Commissioner, [Principal Director General or] Director General or [Principal Director or] Director shall not authorise the retention of the books of account and other documents for a period exceeding thirty days after all the proceedings under the Indian Income-tax Act, 1922 (11 of 1922), or this Act in respect of the years for which the books of account or other documents are relevant are completed.
(8A) An order under sub-section (3) shall not be in force for a period exceeding sixty days from the date of the order.
(9) The person from whose custody any books of account or other documents are seized under sub-section (1) or sub-section (1A) may make copies thereof, or take extracts therefrom, in the presence of the authorised officer or any other person empowered by him in this behalf, 8 at such place and time as the authorised officer may appoint in this behalf.
(9A) Where the authorised officer has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c) of subsection (1), the books of account or other documents, or any money, bullion, jewellery or other valuable article or thing (hereafter in this section and in sections 132A and 132B referred to as the assets) seized under that sub-section shall be handed over by the authorised officer to the Assessing Officer having jurisdiction over such person within a period of sixty days from the date on which the last of the authorisations for search was executed and thereupon the powers exercisable by the authorised officer under sub-section (8) or sub-section (9) shall be exercisable by such Assessing Officer.
(10) If a person legally entitled to the books of account or other documents seized under sub-section (1) or sub-section (1A) objects for any reason to the approval given by the [Principal Chief Commissioner or] Chief Commissioner, [Principal Commissioner or] Commissioner, [Principal Director General or] Director General or [Principal Director or] Director under sub- section (8), he may make an application to the Board stating therein the reasons for such objection and requesting for the return of the books of account or other documents and the Board may, after giving the applicant an opportunity of being heard, pass such orders as it thinks fit.
(11) **
(11A) **
(12) **
[(13) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to searches and seizure shall apply, so far as may be, to searches and seizure under sub-section (1) or sub-section (1A).]
(14) The Board may make rules in relation to any search or seizure under this section ; in particular, and without prejudice to the generality of the foregoing power, such rules may provide for the procedure to be followed by the authorised officer—
(i) for obtaining ingress into any building, place, vessel, vehicle or aircraft to be searched where free ingress thereto is not available ;
(ii) for ensuring safe custody of any books of account or other documents or assets seized.
Explanation 1.—For the purposes of sub-section (9A), “execution of an authorisation for search” shall have the same meaning as assigned to it in Explanation 2 to section 158BE.
Explanation 2.—In this section, the word “proceeding” means any proceeding in respect of any year, whether under the Indian Income-tax Act, 1922 (11 of 1922), or this Act, which may be pending on the date on which a search is authorised under this section or which may have been completed on or before such date and includes also all proceedings under this Act which may be commenced after such date in respect of any year.”
Section 132 confers power upon the authorities for search and seizure. The provision stipulates power upon the authorities who must have information in his possession and it is he who must have reasons to believe, it is, however, not the commissioner who does the actual search and seizure. This is left to the person whom he authorizes to carry out the search. It follows, therefore, that the seizure of books of account, documents, money, bullion, jewellery or other valuable articles would be dependent on the person so authorized being of the opinion that the same would be useful in any income tax proceeding. Therefore, the inspecting officers cannot seize documents, etc, by themselves but must be guided by the Commissioner. In other words, the things can be seized only after the Commissioner has seen them and had come to be of the opinion that they were relevant and useful, or else he must set out in the warrant of authority particulars of such documents, books of accounts, etc. The difference in between the wordings of clauses (a) and (b) of sub-section (1) of Section 132 of the Act, 1961 is that under clause (a) action may be taken if a person is searched with a summons to produce or cause to be produced, specified books of account or other documents and fails to do so. But in clause (b) the basis is somewhat different. In the latter case, the Commissioner must have reason to believe that the person to whom a summons has been issued under clause (a) or might be issued, will not produce or cause to be produced any books of account or documents which will be useful and relevant to an income tax proceeding.
Under clause (b), unless summons under clause(a) has been issued, no specification is possible. In such a case the basis is that the 10 assessee will suppress books of account and documents which will be required. The income tax authorities require the power furnished by clause (b) for the very reason that they do not know what the relevant books of account and documents are, and are afraid that they will be concealed or suppressed. The power of seizure under section 132 shall be exercised in accordance with sub-rules (2) to (14). Sub-rule (2) provides that the commissioner must first of all record his reason for issuing a warrant of authority. It then provides as to what should be the form of such warrant and the commissioner after going through the relevant records will reduce the reasons in writing for the future exercise and as such under the law, it is the Commissioner or the competent authority who must have reason to believe that the assessee would not produce certain books of account or document is called upon to do so, and it is he who must be of the opinion that they are relevant for the purpose of any income tax proceeding, under these underlying principles the power conferred U/s.132 is to be exercised by the competent authority.
9. Section 131(1A) reads as follows:—
“131. (1A) If the [Principal Director General or] Director General or [Principal Director or] Director or Joint Director or Assistant Director or Deputy Director, or the authorised officer referred to in sub-section (1) of section 132 before he takes action under clauses (i) to (v) of that subsection,] has reason to suspect that any income has been concealed, or is likely to be concealed, by any person or class of persons, within his jurisdiction, then, for the purposes of making any enquiry or investigation relating thereto, it shall be competent for him to exercise the powers conferred under sub-section (1) on the income-tax authorities referred to in that sub-section, notwithstanding that no proceedings with respect to such person or class of persons are pending before him or any other income-tax authority.”
This provision confers power upon the competent authority that if there is reason to suspect that any income has been concealed, or is likely to be concealed by any person or class of persons within his jurisdiction, then, for 11 the purposes for making any inquiry or investigation relating thereto, it shall be competent to exercise powers conferred under sub-section (1) on the income tax authorities referred to in that sub-section, notwithstanding that no proceeding with respect to such person or class of persons are pending before him or any other income tax authority.
We gathered from the provision of Sec.131(1A) that no precondition for issuance of notice upon the assessee is stipulated in the said provision before invoking the jurisdiction conferred under the provision of Section 132 of the Act.
10. Section 133(A) reads as follows:—
‘133A. Power of survey. (1) Notwithstanding anything contained in any other provision of this Act, an income-tax authority may enter—
(a) any place within the limits of the area assigned to him, or
(b) any place occupied by any person in respect of whom he exercises jurisdiction, or
(c) any place in respect of which he is authorised for the purposes of this section by such income-tax authority, who is assigned the area within which such place is situated or who exercises jurisdiction in respect of any person occupying such place, at which a business or profession is carried on, whether such place be the principal place or not of such business or profession, and require any proprietor, employee or any other person who may at that time and place be attending in any manner to, or helping in, the carrying on of such business or profession—
(i) to afford him the necessary facility to inspect such books of account or other documents as he may require and which may be available at such place,
(ii) to afford him the necessary facility to check or verify the cash, stock or other valuable article or thing which may be found therein, and
(iv) to furnish such information as he may require as to any matter which may be useful for, or relevant to, any proceeding under this Act.
Explanation.—For the purposes of this sub-section, a place where a business or profession is carried on shall also include any other place, whether any business or profession is carried on therein or not, in which the person carrying on the business or profession states that any of his books of account or other documents or any part of his cash or stock or other valuable article or thing relating to his business or profession are or is kept.
(2) An income-tax authority may enter any place of business or profession referred to in sub-section (1) only during the hours at which such place is open for the conduct of business or profession and, in the case of any other place, only after sunrise and before sunset.
[(2A) Without prejudice to the provisions of sub-section (1), an income-tax authority acting under this sub-section may for the purpose of verifying that tax has been deducted or collected at source in accordance with the provisions under sub-heading B of Chapter XVII or under sub-heading BB of Chapter XVII, as the case may be, enter, after sunrise and before sunset, any office, or any other place where business or profession is carried on, within the limits of the area assigned to him, or any place in respect of which he is authorised for the purposes of this section by such income-tax authority who is assigned the area within which such place is situated, where books of account or documents are kept and require the deductor or the collector or any other person who may at that time and place be attending in any manner to such work,—
(i) to afford him the necessary facility to inspect such books of account or other documents as he may require and which may be available at such place, and
(ii) to furnish such information as he may require in relation to such matter.] (3) An income-tax authority acting under this section may,—
(i) if he so deems necessary, place marks of identification on the books of account or other documents inspected by him and make or cause to be made extracts or copies therefrom,
(ia) impound and retain in his custody for such period as he thinks fit any books of account or other documents inspected by him:
Provided that such income-tax authority shall not—
(a) impound any books of account or other documents except after recording his reasons for so doing; or
[(b) retain in his custody any such books of account or other documents for a period exceeding fifteen days (exclusive of holidays) without obtaining the approval of the Principal Chief Commissioner or the Chief Commissioner or the Principal Director General or the Director General or the Principal Commissioner or the Commissioner or the Principal Director or the Director therefor, as the case may be,]
(ii) make an inventory of any cash, stock or other valuable article or thing checked or verified by him,
(iii) record the statement of any person which may be useful for, or relevant to, any proceeding under this Act :
[Provided that no action under clause (ia) or clause (ii) shall be taken by an income-tax authority acting under sub-section (2A).]
(4) An income-tax authority acting under this section shall, on no account, remove or cause to be removed from the place wherein he has entered, any cash, stock or other valuable article or thing.
(5) Where, having regard to the nature and scale of expenditure incurred by an assessee, in connection with any function, ceremony or event, the income-tax authority is of the opinion that it is necessary or expedient so 13 to do, he may, at any time after such function, ceremony or event, require the assessee by whom such expenditure has been incurred or any person who, in the opinion of the income-tax authority, is likely to possess information as respects the expenditure incurred, to furnish such information as he may require as to any matter which may be useful for, or relevant to, any proceeding under this Act and may have the statements of the assessee or any other person recorded and any statement so recorded may thereafter be used in evidence in any proceeding under this Act.
(6) If a person under this section is required to afford facility to the income-tax authority to inspect books of account or other documents or to check or verify any cash, stock or other valuable article or thing or to furnish any information or to have his statement recorded either refuses or evades to do so, the income-tax authority shall have all the powers under sub-section (1) of section 131 for enforcing compliance with the requirement made :
Provided that no action under sub-section (1) shall be taken by an Assistant Director or a Deputy Director or an Assessing Officer or a Tax Recovery Officer or an Inspector of Income-tax without obtaining the approval of the Joint Director or the Joint Commissioner, as the case may be.
Explanation.—In this section,—
(a) “income-tax authority” means a [Principal Commissioner or] Commissioner, a Joint Commissioner, a [Principal Director or] Director, a Joint Director, an Assistant Director or a Deputy Director or an Assessing Officer, or a Tax Recovery Officer, and for the purposes of clause (i) of sub-section (1), clause (i) of sub-section (3) and sub- section (5), includes an Inspector of Income-tax;
(b) “proceeding” means any proceeding under this Act in respect of any year which may be pending on the date on which the powers under this section are exercised or which may have been completed on or before such date and includes also all proceedings under this Act which may be commenced after such date in respect of any year.’
This section confers power upon the authority to conduct survey which authorizes the income tax authority to enter in any place within the limits of the area assigned to him, or any place occupied by any person in respect of whom he exercises jurisdiction or any place in respect of which he is authorized for the purposes of this section by such income tax authority, who is assigned area within which such place is situated or who exercises jurisdiction in respect of any person occupying such place.
11. Section 153-A reads as follows:—
“153A. Assessment in case of search or requisition (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall—
(a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139;
(b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made:
Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years:
Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate:
Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made.
(2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to subsection (1), shall stand revived with effect from the date of receipt of the order of such annulment by the [Principal Commissioner or] Commissioner:
Provided that such revival shall cease to have effect, if such order of annulment is set aside.
Explanation. – For the removal of doubts, it is hereby declared that,-
(i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section;
(ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year.”
Section 153-A confers power upon the authorities for making an assessment in case of search or requisition which provides that notwithstanding anything contained in Sec.139, 147, 148, 149, 151 and 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned U/s.132-A after the 31st day of May, 2003, the Assessing Officer shall issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause-(b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and to assess or re-assess the total six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made.
This provision confers power for making assessment after the search and seizure as contemplated under the provision of sec.132 and sec.133-A in order to reassess the income due to suppression or concealment of the documents of the undisclosed income.
These statutory provisions have been taken note by the Hon’ble Supreme Court as well as by various High Courts dealing with the power of search and seizure. The Hon’ble Apex Court while discussing the issue in the case of Pooran Mal v. Director of Inspector, [1974] 93 ITR 505 SC has been pleased to hold the constitutional validity of Sec.132 and it has been laid down that the necessity of recording of reasons in support of the reasonable belief contemplated by Sec.132, however, the principle has been 16 laid down that the reason which led the authorities to conduct search and seizure need not to be disclosed or communicated to the person against whom the warrant of authorization has been issued. The same view has been reiterated in the case of Dr. Pratap Singh v. Director of Enforcement [1985] 155 ITR 166/22 Taxman 30 (SC).
We, after going through the statutory provisions as well as the authoritative pronouncements as referred herein above, have found that before taking decision for search and seizure as contemplated under the provision of Sec.132 or 133-A of the I.T. Act, 1961 it is the bounden duty of the competent authority to be satisfied before invoking the said jurisdiction and its is also the cardinal principle of Law that no action be taken without any justified reason and if the action is without any reason, the said action will be said to be unjustified and an arbitrary exercise of authority in complete mis-utilization of the official position.
The grounds or reasons which lead to the formation of the belief must have a material bearing on the question of concealment of income by the assessee from assessment because of his failure or omission to disclose fully and truly all material facts. Once there exist reasonable grounds for the Income Tax Officer to form the above belief, that would be sufficient to clothe him to invoke the jurisdiction of section 132 of the Act. Whether the grounds are adequate or not is not a matter for the court to investigate. The sufficiency of the grounds which induce the Income Tax Officer to act is therefore not a justifiable issue, though he cannot make a search or authorize any officer to make a search unless he has reason to believe the existence of the facts mentioned in the section, the section does not compel him to give reasons and 17 non-mention of reasons in itself does not vitiate the order and the Court will never go into the adequacy of such reason as has been held by Hon’ble Apex Court in the case of S. Narayanappa v. CIT [1967] 63 I.T.R 219 (S.C).
We further gathered from the statutory provision as contained in Sec. 132 of the IT. Act that before invoking the jurisdiction conferred under the said provision the ‘reason to believe’ must be there for making search and seizure of the premises of the assessee in order to know the real fact as to whether the income disclosed by way of income tax return for a particular year is in consonance with the income being possessed by the said assessee. If authorities have found from any sources that the income disclosed by the income tax return, yearly basis, is less than the entire assets and property, then certainly the statute confers power upon the authorities U/s.132 to conduct a search and seizure although there is provision of Sec.147 of I.T. Act which deals with the provision for making assessment of escaped assessment.
12. In the case at hand, as we have gathered from the materials available on record, the search and seize operation under Section 132 of the Act, 1961 had been conducted on 2.12.2014 on the basis of the search warrant issued on 1.12.2014 and after its conclusion inventory of cash was found but not seized to the tune of Rs.40,050/-, inventory of account book found and seized, inventory of jewellery making a valuation of the same to the tune of Rs.22,00,714/- and thereafter a notice under Section 153-A of the Act, 1961 was issued on 6.8.2015 asking the petitioner-assessee to prepare true and correct return of both the income including undisclosed income in support of individual/ AOP/ Firm/Company assessable for the assessment year 2009-10 in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed as per the provisions of the Act, 1961 and to prepare the return in prescribed form and deliver the same within 30 days of service of notice, duly verified and signed in accordance with the provisions of Section 140 of the Act, 1961. The petitioner has not stated in the writ petition anything as to whether he has responded to the notice dated 6.8.2015 or not. The authorities of the Income Tax Department has issued a letter on 11.7.2016 asking him to clarify certain information in connection with the return of income submitted by him on 30.9.2009 for the assessment year 2009-10. Hence, he was directed to attend the office on 19.7.2016 at 11.30 A.M. either in person or by representative duly authorized in writing to produce the relevant documents on which he may want to rely in support of the return filed. It is not so stated in the writ petition by the petitioner nor any document has been annexed as to whether he has responded to the letter dated 11.7.2016. When another letter was issued under the signature of the Asst. Commissioner of Income Tax, Central Circle-2, Bhubaneswar on 31.8.2016 having the subject “calling for details u/s.142(1) for the A.Y.2009- 10 to 2015-16” stating specifically therein that in spite of several opportunity being given, i.e. five times, since he has not rendered any cooperation to the authorities, hence, by this letter, he has once again been requested to give reply without any further delay. However, the petitioner has submitted his response in compliance to the notice under Section 142(1) of the Act, 1961 and the letter dated 24.8.2016 stating in detail that he is not at all fault and whatever return he has submitted that is without any undisclosed income. The authorities in response to his compliance has answered the same vide letter communicated to the petitioner on 1st November, 2016 under the seal and signature of the Assistant Commissioner of Income Tax, Central Circle-2, Bhubaneswar, giving reply point wise and specifically stating therein that the record pertaining to the books of account of M/s.Vasumati Builders Pvt. Ltd. be produced failing which it shall be added to his total income being the Director, but he has not submitted the details about M/s.Vasumati Builders Pvt. Ltd. The petitioner thereafter has approached this Court questioning the search warrant conducted in exercise of the powers under Section 132 of the Act, 1961 on the ground that the search cannot be conducted merely on surmises and conjectures and there must be reason to believe and further on the ground that no incriminating things have come out after conclusion of search and as such, it cannot be said that there was reason to believe for conducting search in the premises of the petitioner.
13. In the light of these factual aspects we have appreciated the argument advanced on behalf of learned counsel for the petitioner by taking into consideration the statutory provisions as contemplated U/s.132, 133-A, 142(1) and 143(2) of the Act, 1961.
14. There is no dispute about the fact that the provision of Section 132 of the Act, 1961 confers a power upon the authorities to conduct search and seizure, but subject to the fact that if the authorities has got information on the basis of which he has reason to believe that any person to whom summons under sub-section (1) of section 37 of the Act, 1922, or under sub-section (1) of sub-section 131 of the Act, 1961, or a notice under sub-section (4) of Section 22 of the Indian Income Tax Act, 1922, or under subsection (1) of Section 142 of the Act, 1961 was issued to produce or cause to be produced, any books of accounts or other documents has omitted or failed to produce, or cause to be produced, such books of account, or other documents as required by such summons or notice or any person to whom a summon or notice as aforesaid has been or might be issued will not, or would not, produce 20 or cause to be produced, any books of account or other documents which will be useful for, or relevant to, any proceeding under the Indian Income Tax Act, 1922 or Income Tax Act, 1961, or any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property for the purpose of the Indian Income Tax Act, 1922, or the Act, 1961, the authorities can initiate proceeding U/s.132 of the Act, 1961.
15. In the instant case, the search was conducted on 2.12.2014 pursuant to the search order dated 1.12.2014, the petitioner kept mum against the search conducted in his premises. The authorities have issued notice under Section 153-A of the Act, 1961 on 6.8.2015, the petitioner has not assailed the notice even before any forum, rather the petitioner has submitted to the jurisdiction of the authorities and again has responded denying his liability.
16. There is no dispute about the contention raised by the petitioner that at the time of search and seizure no bullion or jewellery has been recovered, but there is also no dispute about the fact that certain documents have been seized as would be evident from the inventory list and when the authorities have gone through the seized documents, they have found that the income having been undisclosed by the petitioner reason being in spite of specific direction given to the petitioner to produce his documents, the documents have not been produced. For ready reference, the finding of the authorities in response to the application filed by the petitioner is being quoted hereinbelow to show as to whether there was reason to believe for conducting search and seizure or not.
” 2. Please refer to page 12 of ASPI-10 regarding receipt of Rs.5.00 Lakhs by M/s. Vasumati Builders Pvt. Ltd. from Shri Dhoi Sahu of Patia. You are the Director of Vasumati Builders Pvt. Ltd. You are requested to show the books of M/s. Vasumati Builders Pvt. Ltd. to proof this transactions. It may be stated that the above page shows payment of Rs.5.00 lakhs to Dillip Motwani. The books of M/s. Vasumati Builders Pvt. Ltd. should show such transactions failing which it shall be added to the total income of yours because you are the Director.
3. Please refer to page-13 of ASPI-10 regarding receipt of Rs.2,15,000/- from Shri Siba Behera, Nuagaon as advance for land and payment of Rs.2.00 lakhs to Shri Ravi Bisoi, Sisupalgarh for purchase of land. This is stated by you as a transaction of your company i.e. M/s.Vasumati Builders Pvt. Ltd. The books of M/s. Vasumati Builders Pvt. Ltd. should show such transactions failing which it shall be added to the income of yours because you are the Director.
4. Please refer to page 30 of ASPI regarding payment of advance of Rs.2.75 Lakhs to Bhasia Bhai. It was stated by you that it is the transaction by the company i.e. failing which it shall be added to the income of yours because you are the Director. The books of M/s. Vasumati Builders Pvt. Ltd. should show such transactions failing which it shall be added to the total income of yours because you are the Director.
5. Please refer to page-34 of ASPI-10 regarding refund of Rs.1.00 Lakh taken as advance by padia of Lingipur for sale of land to M/s. Vasumati Builders Pvt. Ltd.. Again, Rs.1.00 Lakh has been paid as advance to Sanatan Bhoi for sale of land. You have replied that these transactions relate to the company. The books of M/s. Vasumati Builders Pvt. Ltd. should show such transaction failing which it shall be added to the income of yours because you are the Director.
6. Please refer to page-26 of ASPI-03 regarding various expenses. The total expenses come to Rs.22,96,926/- which includes Vasumati land agreement- Rs.16.00 Lakhs, Ravi Gudia- Rs.1.00 Lakh and Bhasia Bhoi-Rs.2.75 Lakhs. So, your reply that total expenditures come to Rs.5,96,371/- as per this page is not correct. Your claim that many expenditures relate M/s. Vasumati Builders Pvt. Ltd. should be proved with reference to the cash book & ledger of that Company. The books of M/s. Vasumati Builders Pvt. Ltd. should show such transactions failing which it shall be added to the income of yours because you are the Director & the information is available from the documents seized from your premises.
7. Please refer to page-26 of ASPI-03 regarding various expenses relating to making of gift (Rs.1200, Rs.1550/- etc). Such expenses being personal in nature have to be explained through the relevant source.
8. Please refer to page-23 of ASPI-03 regarding various expenses of Rs.60,88,690/-. It is replied by you that all the expenses relate to M/s. Vasumati Builders Pvt. Ltd. You are requested to explain all such expenses through the cash book and ledger of the Company failing which it shall be added to the total income of yours because you are the Director & the information is available from the documents seized from your premises.
9. Please refer to page-27 and 28 of ASPI-03 regarding various expenses appearing in these two pages. It is replied by you that all the expenses relate to M/s. Vasumati Builders Pvt. Ltd. You are requested to explain all such expenses through the cash book and ledger of the Company failing which it shall be added to the total income of yours because you are the Director & the information is available from the documents seized from your premises.
10. Please refer to page-36 of ASPI-03 regarding various expenses of Rs.3,34,500/-. It is stated by you that these expenses relate to M/s. Vasumati Builders Pvt. Ltd.. You are requested to explain all such expenses through the cash book and ledger of the Company failing which it shall be added to the total income of yours because you are the Director & the information is available from the documents seized from your premises.
11. Please refer to page-21,27 & 32 of ASPI-10 regarding cash receipts from Hi-Tech Estate and Promoters Pvt. Ltd. Please show the relevant books of account to prove the receipts otherwise it shall be treated as unexplained receipt in your hand.”
17. We after going through the explanation given by the Assistant Commissioner of Income Tax, Central Circle-2, Bhubaneswar that although at the initial stage, no bullion or jewellery has been recovered, since it was in permissible limit, documents have been seized and in course of their examination, the authorities have come to a definite conclusion that certain income has not been disclosed and as such, for being satisfied, a notice under Section 153-A of the Act, 1961 has been issued and in terms thereof, the petitioner has given his detailed reply as would be evident from Annexure-6 annexed to the writ petition and after scrutiny of the reply, the authorities came to the conclusion that the books of account pertaining to M/s.Vasumati Builders Pvt. Ltd. has not been produced in spite of the direction having been given to him by the Income Tax authorities, as a result, the authorities have no other alternative than to conduct search and seizure in the premises of the petitioner.
18. We have examined the argument in the light of the statutory provisions as well as the authoritative pronouncements in this regard by the Hon’ble Apex Court referred to above and have found that the competent authority can resort to the provisions of the Act, 1961, if it is opinion that the assessee is flouting the provisions of the Act and if in that situation, it comes to the conclusion that it is necessary to resort to the provisions under Section 132, then it cannot be said that there was no reason behind resorting to the provisions of the Act, 132 of the Act, 1961. Moreover, initiation of the proceeding under Section 132 has never been questioned by the petitioner immediately thereafter before any Court of law save and except challenging the same after lapse of two years by way of writ petition.
19. It is not in dispute that the reason to believe cannot be shown to the assessee during pendency of the assessment.
20. Learned counsel for the Revenue in course of argument has submitted that since there is alternative remedy of appeal available under the Statute, the present writ petition is to be dismissed.
21. In response, learned counsel appearing for the petitioner has submitted that since the petitioner has challenged the warrant and search and if warrant and search will be said to be illegal, its conclusion will be said to be a nullity in the eye of law.
22. There is no dispute about the contention raised by the petitioner that if the root will go, nothing remains. But as we have discussed hereinabove, we found that the submission made by the learned counsel for the petitioner has got no substance. We are of the further considered view that since the assessment order has been passed by the competent authority, it will not be proper for this Court to enter into the merit of the assessment order since this is not questioned in this writ petition.
23. We have also thought it proper to deal with two judgments relied upon by the learned counsel for the petitioner in the cases of CIT v. Vol.101 (19075) (sic) ITR and we after going through the said judgment have found that the said judgment has been passed taking into consideration the judgment rendered by the Hon’ble Apex Court in the case of Pooran Mal (supra), which we have already discussed hereinabove. So far as the judgment relied upon by the learned counsel for the petitioner in the case of CIT v. Vijaybhai N.Chandrani [2013] 357 ITR 713/217 Taxman 138/35 taxmann.com 580, is concerned, the fact of the said case is that the assessee has invoked the jurisdiction of the Gujarat High Court against the notice issued under Section 153C of the Act, 1961 and the said writ petition was entertained by the Gujarat High Court, which was assailed before the Hon’ble Supreme Court and while dealing with the case, the Hon’ble Apex Court has been pleased to observe at paragraphs 16 and 17 that the High Court should not have entertained the writ petition at the first instance without first exhausting the alternative remedy provided under the Act, 1961 and taking into consideration that aspect of the matter, the Hon’ble Apex Court further observed at paragraph 17 that granting time to the assessee if it so desires to file reply/ objections, if any, as contemplated in the said notice and the authorities have been directed to first consider the said reply/ objection and thereafter direct the assessee to file return for the assessment year in question and if for any reason the assessment order goes against the assessee, he/it shall avail and exhaust the remedies available to him/ it under the Act.
24. Learned counsel for the petitioner has given much reliance by rebutting the argument advanced on behalf of the learned counsel for the Revenue while raising the point of alternative remedy, but this judgment in any way help the petitioner reason being that here in the case in hand, notice under Section 153-A has been issued and as such, the assessee has got alternative remedy under the Act, 1961. Hence, we find some force in the argument advanced on behalf of the learned counsel for the Revenue.
25. We after taking into consideration the facts in its entirety and as per the discussion made hereinabove, have found that there is no merit in this writ petition. Accordingly, the writ petition fails and the same is dismissed.
[Citation : 392 ITR 131]
