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DATE: May 16, 2017 (Date of pronouncement)
DATE: May 27, 2017 (Date of publication)
AY: 2006-07 to 2011-12
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CITATION:
S. 132/153A: Important law explained on the preconditions necessary for the department to initiate valid search and seizure action u/s 132 and whether the assessee is entitled to challenge the same. Consequences of the search being declared void on the s. 153A assessment also explained

The law in relation to searches under Section 132 of the Act has been explained in a large number of decisions of the Supreme Court and the High Courts. The jurisdictional facts that have to be established before a search under Section 132 (1) of the Act can be authorised are that (i) the authority issuing the authorisation is in possession of some credible information, other than surmises and conjectures (ii) that the authority has reason to believe that the conditions stipulated in clauses (a), (b) and (c) of Section 132 (1) qua the person searched exist; and (iii) the said information has nexus to such belief. The Courts have laid emphasis on the mandatory nature of the above requirement to be fulfilled under Section 132 (1) of the Act

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DATE: May 25, 2017 (Date of pronouncement)
DATE: May 26, 2017 (Date of publication)
AY: 2000-01 to 2004-05
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CITATION:
S. 153A: Entire law explained on whether concluded assessments can be reopened u/s 153A even in the absence of incriminating material found during the search in the light of the apparently conflicting verdicts in CIT vs. Kabul Chawla 380 ITR 573 (Del) and Dayawanti Gupta v. CIT 390 ITR 496 (Del)

Section 153A of the Act is titled “Assessment in case of search or requisition”. It is connected to Section 132 which deals with ‘search and seizure’. Both these provisions, therefore, have to be read together. Section 153A is indeed an extremely potent power which enables the Revenue to re-open at least six years of assessments earlier to the year of search. It is not to be exercised lightly. It is only if during the course of search under Section 132 incriminating material justifying the re-opening of the assessments for six previous years is found that the invocation of Section 153A qua each of the AYs would be justified. The question whether unearthing of incriminating material relating to any one of the AYs could justify the re-opening of the assessment for all the earlier AYs was considered both in CIT v. Anil Kumar Bhatia and CIT v. Chetan Das Lachman Das. Incidentally, both these decisions were discussed threadbare in the decision of this Court in Kabul Chawla 380 ITR 573 (Del)

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DATE: March 21, 2017 (Date of pronouncement)
DATE: April 5, 2017 (Date of publication)
AY: 1989-90, 1990-91
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CITATION:
S. 132: It is but natural that concealed income found at the time of search and survey has to be distributed among all the family members who were carrying on business. It is also a reasonable conclusion that the income had been earned over a period of time and should be spread over various years

The Department has failed to bring on record any material to the contrary except the seized documents which, in our considered opinion, could not absolve the Department or give any right to negate the view taken by the first Appellate Authority and the Tribunal. So far as the income divided among the family members of the assessee is concerned, we find that all of them were carrying on same business from the same premises. Therefore, it is but natural that if any concealed income has been found at the time of search and survey, it has to be distributed among all the family members who were carrying on business

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DATE: February 7, 2017 (Date of pronouncement)
DATE: February 15, 2017 (Date of publication)
AY: 2007-08
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CITATION:
S. 153C: The requirement that the documents found during search should “belong” to the assessee is a condition precedent and a jurisdictional issue. The non-satisfaction of the condition renders the entire proceedings null and void. The fact that the searched person and the assessee are alleged to be “hand in glove” is irrelevant

The grievance of the Revenue as submitted by Mr.Kotangale is a submission made on the basis of suspicion and not on the basis of any evidence on record which would indicate that the respondent – assessee and persons searched were all part of the same group. Be that as it may, the requirement of Section 153C of the Act cannot be ignored at the alter of suspicion. The Revenue has to strictly comply with Section 153C of the Act. We are of the view that non satisfaction of the condition precedent viz. the seized document must belong to the respondent – assessee is a jurisdictional issue and non satisfaction thereof would make the entire proceedings taken thereunder null and void. The issue of Section 69C of the Act can only arise for consideration if the proceedings under Section 153C of the Act are upheld

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DATE: September 30, 2016 (Date of pronouncement)
DATE: November 7, 2016 (Date of publication)
AY: 2002-03 to 2007-08
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CITATION:
S. 153C: An order u/s 153C passed without obtaining the approval of the JCIT u/s 153D is without jurisdiction and void in view of Calcutta Knitwears 362 ITR 673 (SC) and CBDT Circular No. 24/15 dated 31.12.2015

The guidelines of the Hon’ble Supreme Court as referred to in para 2 above, with regard to recording of satisfaction note may be brought to the notice of all for strict compliance. It is further clarified that even if the AO of the searched person and the “other person” is one and the same then also he is required to record his satisfaction as has been held by the Courts. In view of the above, filing of appeals on the issue of recording of satisfaction note should also be decided in the light of the above judgment. Accordingly, the Board hereby directs that pending litigation with regard to recording of satisfaction note under section 158BD/153C should be withdrawn/not pressed if it does not meet the guidelines laid down by the Apex Court.

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DATE: September 15, 2016 (Date of pronouncement)
DATE: October 18, 2016 (Date of publication)
AY: -
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CITATION:
S. 158BE(1)(b): A panchnama for purposes of opening a locker and vacating s. 132(3) prohibitory orders does not amount to conclusion of the search for purposes of extending limitation for passing the block assessment order

Now the legal issue qua the search is whether the block assessment as made by the AO was barred by limitation u/s 158BE(1)(b) of the Act. According to the provisions of section 158BE (1)(b) of the Act order in the block assessment has to be passed by the AO within two years from the end of the month in which the search was conducted and concluded. Now the issue to be adjudicated is whether the search concluded in 17.12.1999/23.12.1999 or 14.02.2000

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DATE: September 14, 2016 (Date of pronouncement)
DATE: October 15, 2016 (Date of publication)
AY: -
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CITATION:
S. 158BC: Action of the Revenue in issuing s. 158BC notice despite the appraisal report clearly stating that no incriminating material was found is highly deplorable as it amounts to harassment of the taxpayer. The Officers cannot act on their whim and fancy. The Dept should adopt a SOP to provide adequate safeguards before issuing notices under Ch. XVIB. Chief CIT directed to pay costs to the assessee

We note that this action on the part of the revenue to issue the impugned notice ignoring the appraisal report is highly deplorable. We live in a Country governed by laws. The Officers of the Income Tax Department are obliged to proceed in accordance with the statutory provisions and not on their whim and fancy. The Officers hold power in trust and must ensure that no citizen is harassed by sending him notices, when on the basis on its own record, such notices are not sustainable. We trust that the Income Tax Department would adopt a standard operating procedure which would provide for appropriate safeguards before issuing notices under Chapter XIVB of the Act. This alone would ensure that Officers of the Revenue act in terms of the mandate provided in the Act. In fact, at the very outset, after a preliminary hearing, we had asked the learned Counsel for the Revenue whether the Revenue would still want to persist with the impugned notice under Section 158BC of the Act. On instructions, Mr. Suresh Kumar, learned Counsel for the revenue informed us that the revenue seeks to press the impugned notice and seek dismissal of the present Petition. In the above view, this is the fit case where costs should be awarded to the Petitioner

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DATE: June 27, 2016 (Date of pronouncement)
DATE: July 14, 2016 (Date of publication)
AY: 2006-07, 2007-08
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CITATION:
An assessment made u/s 153A only on the basis of pre-search enquiries and because the parties did not appear in response to s. 133(6) summons is not valid if no incriminating material was found in search. A s. 143(1) Intimation is deemed to be a completed assessment if no notice u/s 143 (2) has been issued prior to the date of search. The ratio of CIT vs. Kabul Chawla 380 ITR 173 (Del) has to be understood by perusing the judgment in entirety and not by picking up the favourable sentences and by ignoring the unfavourable ones

The AO has not made assessment on the basis of incriminating material unearthed during search and seizure operation conducted u/s 132 rather proceeded u/s 153A of the Act on the basis of some pre-search enquiries to make an addition as has specifically been recorded in para 6 of the assessment order that, “Pre search enquiries revealed that M/s Jaipuria Infrastructure Developers Pvt. Ltd., the flagship company involved in the real estate business of the S.K. Jaipuria group is indulged in inflating the cost of the project by debiting bogus expenses by raising bills from the non-existing parties or the entry providers.

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DATE: May 20, 2016 (Date of pronouncement)
DATE: May 26, 2016 (Date of publication)
AY: 2007-08
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CITATION:
S. 147/ 148/ 153C: A case where the AO detects incriminating material in search has to be processed only u/s 153C and not u/s 147. A notice u/s 148 to assess such undisclosed income is void ab initio

Reassessment was initiated on the basis of incriminating material found in search of third party and the validity of the same was challenged by the assessee before the Learned CIT(Appeals) and the Learned CIT(Appeals) vitiated the proceedings. The same was questioned by the Revenue before the ITAT and the ITAT after discussing the cases of the parties and the relevant provisions in details has come to the conclusion that in the above situation, provisions of sec. 153C were applicable which excludes the application of sections 147 and 148 of the Act. The ITAT held the notice issued under sec. 148 and proceedings under sec. 147 as illegal and void ab initio. It was held that Assessing Officer having not followed procedure under sec. 153C, reassessment order was rightly quashed by the CIT(Appeals)

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DATE: October 30, 2015 (Date of pronouncement)
DATE: November 17, 2015 (Date of publication)
AY: -
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CITATION:
S. 292C: The presumption that documents found during search correctly reflect the facts is a ‘discretionary presumption’ & not a ‘compulsory presumption’. The presumption does not apply if the documents are inchoate

Section 292 of the Act provides that where any documents are found in possession or control of any person in the course of search under Section 132 of the Act, then it may be presumed in any proceedings under this Act that the contents of such documents are true and correct. It will be noted that the section uses the word ‘may presume’ and not ‘shall presume’ or ‘conclusively presume’. The words ‘may presume’ are in the nature of discretionary presumption different from a compulsory presumption. Therefore this presumption has to be invoked by the authorities passing an order under the Act particularly when the invocation of such presumption is discretionary on the authorities

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