Case Law Details
PER SHRI BHAVNESH SAINI, J.M.
This order shall dispose of all the above appeals based upon identical facts.
2. The appeals of the assessee in assessment years 2002-03, 2003-04 and 2004-05 are directed against different orders of learned Commissioner of Income Tax (Appeals)-IV, Ahmedabad all dated 20th March -2007on the following common grounds:
“1. In law and in the facts and circumstances of the appellant’s case, the learned CIT (A) has grossly erred in dismissing Ground of Appeal No.1 of the appellant’s appeal before him challenging the validity of the assessment order impugned before him, inter alia, for t he reasons that it had been passed pursuant to a Notice under Section 153A which was itself issued on the erroneous assumption that the appellant had been subject d to search under Section 132. He ought to have appreciated inter alia:
(a) that it was not open to him to uphold the validity of t he Notice under Section 153A and, in turn, of the assessment order impugned before him, by merely observing as under (emphasis supplied):
“3. I have carefully considered the contentions of Ld. Counsel as well as gone through the records. On perusal of assessment order, it has been noticed that search under Section 132 was conducted in the name of the Appellant in the Bank premises. Hence, notice u/s 153A was validly issued. Keeping in view of above facts and circumstances of the case, there is no infirmity in the assessment order and hence, contentions of Ld. Counsel are hereby rejected. The first ground of appeal is dismissed.”
(b) that it was not possible to suggest that an assessee has been subjected to proceedings under Section 132 of the Income-tax Act, 1961, even though he had not been shown, far less, served with, any warrant of search.”
3. We have heard learned Representatives of both the parties, perused the findings of authorities below and considered the material available on record.
4. Briefly, the facts of the case are that in this case initially survey action u/s 133A of the IT Act was carried out at the premises of K. M. Shah Charitable Trust (in short “Trust”) in which assessee is the Managing Trustee, led to detection of unaccounted bank accounts. In the statement of the assessee recorded during survey on 28th October, 2004 total amount of Rs.1,93,99,865/- was admitted as unaccounted money. Subsequently, on 29th October, 2004 search warrant was issued in the name of the assessee and K. M. Shah Charitable Trust and the above cash were found and seized. Notice u/s 153A was issued to the assessee. Return of income was filed for all the assessment years and revised return was filed at the higher amount than the income shown in the original return filed. The returned income was accepted in the assessment year 2002-03 and 2003-04. In assessment year 2004-05, the return of income filed u/s 153A of the IT Act was accepted as it is.
5. The assessee challenged the validity of proceedings u/s 153A of the IT Act in all the assessment years before learned CIT (A) and it was submitted that the assessee is the Managing Trustee of K. M. Shah Charitable Trust which was subjected to survey proceedings u/s 133A on 28-10-2004. At the time of survey, the survey party extracted an `admission’ of the assessee to the effect that cash amounting to Rs.1,93,99,865/- deposited in those bank accounts of the Trust belonged to him and that he would include the income represented thereby in his return for the present assessment years. Later on, search was conducted in the Bank Premises and search warrants were issued in the name of the assessee and in the name of K. M. Shah Charitable Trust. Those search warrants were served not on the assessee or on K. M. Shah Charitable Trust in whose case the proceedings u/s. 132 were to be taken, but on the banks where the bank accounts of K. M. Shah Charitable Trust were opened before the date of survey conducted u/s 133A in August, 2004. The said search proceedings allegedly taken in the case of the assessee and K. M. Shah Charitable Trust resulted into the search party carrying out seizure of Rs.1,93,99,865/- after enforcing withdrawal of the amounts lying deposited in the said bank accounts of K. M. Shah Charitable Trust. The assessee had retracting from his `admission’ extracted in his second statement which was recorded on 24-12-2004 during the post survey proceedings. It may be noticed that in all these years the income was assessed at the same figure at which the return was filed in response to notice u/s 153A for the respective years. The only question that arises is validity of the proceedings u/s. 153A. The reason for proceedings u/s. 153A is that during the course of survey at the premises of K. M. Shah Charitable Trust it was found that deposits of Rs.193.99 lacs in the bank accounts were representing unaccounted money. Therefore, it is stated by the Assessing Officer that search proceedings were carried out on 29th October, 2004. The seizure of Rs.1,93,99,865/- was carried out on 29-10-2004 i.e. on the day immediately following 28-10-2004 when the survey u/s. 133A was conducted, the assessee was informed about it by the Income Tax Department only after more than six months i. .e. on 09-5-2005. The assessee was provided with copies of Panchnamas and their enclosures which must have been prepared by the officials on their visit to the bank’s branches. In view of these fact, the notice u/s 153A was issued on 15-07-2005 received a notice dated 21-08-2006. The assessee submitted that the return in response to the notice u/s 153A was filed under protest. The search warrant was issued in case of “K. M. Shah Charitable Trust, Mansukhbhai K. Shah”, neither the Trust nor Mansukhbhai K. Shah, whether in individual capacity or in the capacity of the Managing Trustee of the Trust, was served with or even shown any search warrant. In this regard, it was submitted that the notice u/s 153A could be issued only where a search is initiated u/s 132 of the IT Act, 1961. However, in the case of the assessee no such search or requisition has taken place. Therefore, the notice issued u/s 153A of the IT Act, 1961 is void ab initio. It was submitted that thus the search warrant having not been served upon the assessee, there was no proceedings u/s 132 or u/s 132A in the assessee’s case and hence there was no question of invoking section 153A of the IT Act. Accordingly, the notice issued u/s 153A and consequent order of the assessment is not valid for each of the above years. Further, it is obvious from the manner in which the Panchnamas described the person in whose case the warrant for search u/s. 132 was issued that even the search warrants must have described the person in whose case the search was to be conducted in the same ambiguous manner as “K. M. Shah Charitable Trust, Mansukhbhai K. Shah” and which clearly showed that even at the time of issuing search warrant, the Department had not made up its mind as to whether it was carrying out the search in the case of this Trust or in the case of Shri Mansukhbhai K. Shah in his individual capacity. It is evident from the fact that separate orders were passed on 27-12-2004 u/s. 210 by the Income tax Officer, Ward-5(3), Baroda calling upon not only the Trust but also Shri Mansukhbhai K. Shah in his individual capacity, to pay advance tax amounting to Rs.64,89,235/- on the same amount of estimated income of Rs.1,93,99,865/- that being the amount which was seized by the Department from this Trust bank accounts in the Indian Overseas Bank.
4. The learned Commissioner of Income Tax (Appeals) after considering the materials on record and the submissions of the assessee dismissed the appeal of the assessee on this issue. His findings in Para 3 are reproduced as under:
“3. I have carefully considered the contentions of the Ld. Counsel as well as gone the rough the records. On perusal of assessment order, it has been noticed that search under Section 132 was conducted in the name of the Appellant in the Bank premises. Hence, notice u/s 153A was validly issued. Keeping in view of above facts and circumstances of the case, there is no infirmity in the assessment order and hence, contentions of Ld. Counsel are hereby rejected. The first ground of appeal is dismissed.”
7. The learned Counsel for the assessee reiterated the submissions made before the authorities below. He has submitted that no search was conducted in the individual case of the assessee. The order u/s 143(3) was passed in the case of the Trust dated 29-12-2006 for assessment year 2005-06 in which it was granted exemption u/s 11 of the IT Act being registered u/s 12A of the IT Act. However, protective addition was made in a sum of Rs.1,93,99,865/-. The Assessing Officer passed the order u/s 154 of the IT Act in the case of the Trust and the amount lying in the PD account was adjusted as advance tax in the case of the Trust. The Trust was granted refund against the demand. Copies of 154 order, tax computation form and income tax refund in the case of the Trust are filed in the paper book. He has further submitted that appeal of the Trust for the same assessment year before the learned CIT (A) was not pressed because the tax was appropriated in the case of the Trust out of the above amounts lying in various banks in the name of the Trust which were seized by the Revenue authorities subsequently and converted into PD account. He has submitted that the amount in question lying in various bank accounts of Indian Overseas Bank in the name of the Trust, therefore, does not belong to the assessee individual and ultimately Revenue Department confirmed the addition on substantive basis in the case of the Trust of the amounts lying in the bank accounts of the Trust. The assessee is Managing Trusteen of the Trust. Rs.5.47 Crores were deposited in all the 15 bank accounts of the Trust between 12-08-2004 to 18-08-2004 but Rs.1.93 Crores was not entered in the books of the Trust in the year under consideration. Since the amount lying in the bank accounts was in the name of the Trust, therefore, no search was conducted in the individual name of the assessee. He has referred to statement of the assessee recorded on 28-10-2004 in which he has explained the bank accounts of the Trust out of which some are reflected in the books of account of the Trust and some not reflected in the books of the Trust. He has submitted that though he has admitted the amount to be his personal money but in answer to question No.36 in the same statement, the assessee has explained that his personal books are not written completely, therefore, he will furnish the evidence of the source by filing the return of income if available. He has submitted that the assessee in his later statement dated 24-12-2004 further explained before the AO that the amount lying in the bank belong to the Trust. Therefore, it would amount to retraction from the earlier statement. He has submitted that warrant of authorization dated 29-10-2004 were issued in respect of various branches of the Indian Overseas Bank through which the amount lying in the bank were converted into PD account of the Debarment which were in the name of the Trust. He has submitted that the Panchnamas of the bank were given to the assessee being the Managing Trustee only on 09-05-2005 on which endorsement is made in respect of bank accounts of the Trust. Copies are filed in the paper book. Thus, Rule 112 (3) of the IT Rules is not satisfied in this case. He has, therefore, submitted that no warrant of authorization u/s 132 was issued in the individual name of the assessee and no warrant of authorization was executed in the individual name of the assessee. No search is conducted in the individual case of the assessee. The A O was therefore, not justified in treating the service of the warrant of authorization on the bank manager of the Trust as service on assessee. He has relied upon decision of the Hon’ble Supreme Court in the case of K. C. C. Software Ltd. and others Vs DIT (Investigation) 298 ITR 1 in which it was held that the cash in bank was conceptually different from cash on hand and it was not permissible for the department to convert assets to cash and thereafter impounded. It was further held when monies are deposited in a bank, relationship between the banker and the customer is one of debtor and creditor and not trustee and beneficiary. It would, therefore, show that no search was conducted in the case of the assessee. He has relied upon decision of Hon’ble Allahabad High Court in the case of CIT Vs Smt. Vandaba Verma in ITA No.21/All/2009 dated 09-10-2009 (copy filed in the paper book). In this case, the warrant of authorization was in joint name of Mr. Mudit Verma and Mrs. Vandana Verma to enter and search the residence at Lucknow. The A O in this case issued notice u/s 158BC of the IT Act in the name of Mrs. Vandana Verma and computed the undisclosed income in her name. The assessee took preliminary objection before the Tribunal with regard to framing of the assessment in individual capacity and submitted that as the search warrant was in joint name therefore, assessment cannot be framed in individual capacity. The objection was upheld by the Tribunal and appeal of the assessee was allowed on the preliminary point itself. Hon’ble High Court considering the issue in detail dismissed the departmental appeal. The operative findings are reproduced as under:
“In view of the above, in our opinion, the warrant of authorization must be issued individually by the Director/Commissioner at the time of issuing the same. If the same is not issued individually, then assessment cannot be made in an individual capacity as done by the Assessing Officer in the instant case. The warrant was issued jointly, as stated hereinabove, so the assessment will have to be made collectively in the name of both the persons in the status of AOP/BOI. Thus, the Tribunal has rightly held that assessment could not be framed in an individual capacity but it should be framed either as association of person or as body of individual. In the light of the above discussions and by considering the totality of the facts and circumstances of the case, we uphold the impugned order passed by the Tribunal, who has rightly set-aside the assessment orders which were passed in individual capacity of the assessee. However, it will be open to the assessing authority to proceed and pass fresh assessment order in accordance with law, if so desire. The appeal is, therefore, dismissed.”
Learned Counsel for the assessee further submitted that there is no undisclosed income detected in the individual case of the assessee. The returned income is accepted in the individual assessments. The assessee denied money lying in the bank account in the name of Trust belonging to him. He has submitted that searches are not conducted on preponderance of probabilities. No material was found against the assessee at any point of time. Addition cannot be made on the basis of statement of the assessee only. He has submitted that it is well settled that whenever there is a retraction from the assessee, the department needs to bring enough material on record to prove the existence of undisclosed income. He has filed copies of several decisions of various High Courts and the Tribunal in the paper book in support of this contention. He has also relied upon decision of Madras High Court in the case of CIT Vs S. Khader Khan Son 300 ITR 157 in which it was held section 133A does not empower any ITO to examine any person on oath, so statement recorded u/s 133A has no evidentiary value and any admission made during such statement cannot be made basis of addition. He has also relied upon order of ITAT Calcutta Bench in the case of L.M. J. International Ltd. 22 SOT 315 in which it was held that the items of regular assessment cannot be added in the proceedings u/s 153C of the IT Act. Learned Counsel for the assessee accordingly submitted that since no search warrant was issued in the individual name of the assessee and no search was conducted in the individual case of the assessee and no undisclosed income was found in the individual case of the assessee, therefore, proceedings u/s 153A in the individual case of the assessee are invalid and bad in law and shall have to be quashed. No addition can be made on merit also.
8. On the other hand, learned Departmental Representative relied upon the orders of authorities below. Learned Departmental Representative submitted that survey was conducted in the case of the Trust in which statement of assessee was recorded wherein assessee admitted that the amount deposited in the bank account of the Trust is his personal money for which assessee has failed to explain the source. The Learned Departmental Representative submitted that there were 15 bank accounts found in the name of the Trust out of which 6 bank accounts remained unaccounted. He has, therefore, submitted that since the assessee is Managing Trustee of the Trust therefore, the principle of preponderance of probability apply in the case as is held by Hon’ble Supreme Court in the cases of Sumati Dayal 214 ITR 801 and Durga Prasad More 82 ITR 540. The Learned Departmental Representative submitted that the amount belong to the assessee in his individual capacity. He has submitted that once the warrant of authorisation has been served upon bank, there is sufficient compliance of service of search warrant upon assessee. There is no need of service of search warrant upon assessee. He has submitted that for proceedings u/s 153A, initiation of the search proceedings u/s 132 is enough. Assessing Officer was, therefore, justified in proceeding against the assessee u/s 153A of the IT Act because warrant of authorization was issued in the name of the Trust and the assessee u/s 132 of the IT Act in the following name “K. M. Shah Charitable Trust, Mansukhbhai K. Shah”. He has submitted that joint search warrant is valid under the law and relied upon decision of Allahabad High Court in the case of Raghuraj Pratap Singh and others Vs ACIT 307 ITR 450 in which it was held “common authorization in respect of more than one person permissible”. He has submitted that in the case of Smt. Vandana Verma decided by Hon’ble Allahabad High Court (supra) the warrant was in the joint names of Mr. Mudit Verma and Mrs. Vandana Verma which was considered in the name of single person, but in the case of the assessee and is not used in the warrant of authorization because it is coma (,) being in the name of Trust and the assessee. Therefore, decision in the case of Vandana Verma (supra) would not apply. Learned Departmental Representative submitted that assessee did not file return of income on time. Assessee has not made out a case of coercive method used while recording his statement during survey. At least one of the statements of the assessee dated 28-10-2004 or 24-12-2004 is wrong and not true. He has submitted that the statement recorded during the survey shall be deemed to be statement given before the Civil Court and thus, cannot be retracted. He has relied upon decision of Calcutta High Court in the case of Jhabarmall Agarwal Vs Kashiram Agarwal and others 71 ITR 269 in which it was held that u/s 131 of the IT Act read with order XIII Rule10 of C.P.C., ITO has power to call for records in the custody of the Court. Learned Departmental Representative therefore, submitted that Assessing Officer was justified in initiating the proceedings u/s 153A of the IT Act against the assessee in three years. He has further submitted that the retraction in the case of the assessee is after thought as observed by Assessing Officer. PD account is in the name of the CIT. Trial balance was in the survey and relied upon 96 ITD 344 (Ahmedabad). The addition on merit was rightly made by the A O in the case of assessee.
9. We have considered the rival submissions and the material available on record. Section 153A of the Act provides –
“153A. 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 section pending on the date of initiation of the search under 14 section 132 or making of requisition under section 132A, as the case may be, shall abate. 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 132 of the Act provides –
“132. (1) Where the Director General or Director] or the [Chief Commissioner or Commissioner] [or any such [Joint Director] or [Joint Commissioner] as may be empowered in this behalf by the Board], 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 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 be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such book
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 caus
other documents which will be useful for, or relevant to, any proceeding under the Indian Incometax Act, 1922 (11 of 1922), section
(c) any person is in possession of any money, bullion, jewellery or other valuable article or thing s represents either and such money, bu
represents either [which has not been, or would not be, disclosed69] for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this undisclosed income or property),
[then,—
(A) the [Director General or Director] or the [Chief Commissioner or Commissioner], as the case may be, may authorise any [Joint Director], Joint Commissioner], [Assistant Director [or Deputy Director]], Assistant Commissioner [or Deputy Commissioner] or Income-tax Officer], or (B) such [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 87[Chief Commissioner or Commissioner], but such [Chief 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 [Chief 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 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.] [(1A) Where any (Chief 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 [Director General or Director] or any other [Chief Commissioner or Commissioner] or any such [Joint Director] or [Joint Commissioner] as may be empowered in this behalf by the Board 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 [Chief 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 sub-section (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 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 sub-section (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 [Chief Commissioner, Commissioner, Director General or Director] for such retention is obtained : Provided that the [Chief Commissioner, Commissioner, Director General 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, 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 sub-section (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 authorized 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 authorized 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 [Chief Commissioner, Commissioner, Director General 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.]”
9.1 Section 153A of the IT Act starts with the word “notwithstanding anything contained”, it is non-obstante clause. For applicability of above provision, the initiation of search is necessary. Once a warrant of authorization or requisition is issued and search is conducted and panchnama is drawn, the completed assessments for the all the relevant years would get reopened irrespective of whether any incriminating material is found or not in relation to a particular AY. In other words, even if the material found shows the concealment in only one year, all the completed assessments falling in the period of six AYs preceding the year of search will get reopen. There was an identical provision contained in Chapter XIV-B of the Act, which provides that where after 30th June, 1995, a search is initiated u/s 132 or books accounts etc. are requisitioned u/s 132A, the AO shall proceed to assess undisclosed income in accordance with provisions of Chapter XIV-B for making assessment for block period but in the block assessments, the question of assessing an undisclosed income in relation to any AY was restricted to the incriminating material on undisclosed assets discovered during the course of search and seizure or in the post search inquiry the material was relatable to such evidence discovered in search. The income assessed in the regular assessments was not to be considered in the block assessments. However, in the present provisions u/s 153A, there is no such provision provided in the Act. Once warrant of authorization is issued and the search is conducted and panchnama is drawn, the assessments for all the seven years including the current year have to be completed u/s 153A, 153B and 153C. Even the assessments which are completed before the date of search shall get reopened and those assessments where the proceedings are pending at the time of search shall abate. The AO, therefore, shall assess or reassess such income for all these years.
9.2 The above provision , therefore, provides for reopening of the completed assessment or abatement or the pending assessments takes place irrespective of whether any incriminating material is found during the course of search or not. It can be illustrated by taking an example that if during the course of search and seizure proceedings, certain unaccounted valuables or money is found at the time of search without there being incriminating material or document for any other year or years, even then all the six assessments preceding the assessment year in which search took place shall get reopened. Similarly, if requisition is made then irrespective of whether there is anything incriminating found against him in relation to other year or years or not, the assessee has to undergo the rigor of the assessment proceedings for all the six years as well as the year under search.
9.3. Section 153A would be applicable where a search is initiated under section 132 or books of accounts or other documents or any assets are requisitioned under section 132A of the Act after 31st May, 2003. Therefore, before invoking the provisions of section 153A of the Act it would be necessary to comply with the provisions contained under section 132(1) of the Act. Salient feature of section 132(1) is that where the Director General or Director or the Chief Commissioner or Commissioner, in consequence of information in his possession has reason to believe that any person failed to produce books of accounts or other documents in response to summons or that any person to whom summons have been issued has not or might not or would not produce any books of accounts or documents or that any person is in possession of any money, bullion, jewellery or other valuable article in his possession, which has not been or would not be disclosed for the purpose of this Act (hereinafter referred to as `undisclosed income’ or `property’) then the Director General, Director or Chief Commissioner or Commissioner, as the case may be, may authorize any Joint Director, Assistant Director, Assistant Commissioner of Dy. Commissioner of Income tax, called the authorized Officer, to enter and search any building, place, vessel, vehicle or air-craft, etc. where he has reason to suspect that such books of accounts, other documents, money, bullion, jewellery or other valuable article or thing are kept, break open the lock of any door, etc., search any person who is about to go from the above premises, require any person to account for the books of accounts or documents, seize any such books of accounts or documents, money, bullion, jewellery, etc. or things found as a result of such search and may place mark of identification on any books of accounts or other documents or take copy thereof and to prepare inventory of the same. The purpose of section 132 for issue of warrant of authorization is to unearth, detect and to take possession of the unaccounted/undisclosed income or property. The mere issue of warrant of authorization without there being search of the premises mentioned in the warrant of authorization would be meaningless and would not serve the purpose of section 132 of the Act. It may be illustrated by taking an example that if warrant of authorization under section 132 is issued in the name of “A” after 31.5.2003 but his premises is not searched for the purpose of executing the warrant of authorization and the warrant of authorization is kept unexecuted, the question arises whether the Assessing Officer still should proceed under section 153A of the Act for the purpose of framing the assessment or reassessment of the six assessment years immediately preceding the assessment years relevant to the previous year in which such search is initiated or requisition is made without executing the search warrant. The answer would be `No’ because it would be a futile exercise. It may be added here that jurisdiction can be assumed by the Assessing Officer to initiate assessment proceedings to issue notices once search is initiated under section 32/requisition made under section 132A. He gets actual jurisdiction only on issue of notice, which could be issued under section 153A (unlike section 158BC(a) in block assessment) with no necessity for inference of escapement of income or under-assessment as under section 147. Should it mean that a mere search will enable reassessment proceedings by-passing or ignoring the requirements of section 147. The only part of procedure dispensed with under section 153A of IT Act on comparison with section 147 is that there is no reason for recording reasons and for approval by higher authorities before issue of notice of reassessment. Further, there cannot be automatic jurisdiction for 6 back years even for those entities which may not be in existence for all the six years indicating that the provision is expected to be reasonably exercised. It should therefore follow that there should be prima facie inference of liability for invoking jurisdiction under section 153A of the IT Act. We may add that in section 153A(b) it is specifically provided that the Assessing Officer shall assess or reassess the total income of six years immediately preceding the assessment years relevant to the previous year in which such search is conducted or requisition is made. It would, therefore, clarify that not only the warrant of authorization is to be issued in the name of the assessee but search shall have to be necessarily conducted or in case of requisition under section 132A, the requisition is to be made actually. Hon’ble Allahabad High court in the case of Chandra Prakash Agrawal v. CIT; 287 ITR 172 considering the definition of requisition under section 132A of the Act as is referred to in section 158BA of the Act observed that the word “requisition” means taking of actual possession. The requisition is complete only when the seized books of accounts and other documents which have been requisitioned have been delivered to the requisitioning authority. The provisions of section XIV-B of the Act would come into play only when the books of accounts or other documents or assets are actually received by the Assessing Officer pursuant to the requisition made under section 132A. It was held –
” Held, that no search under section 132 had been conducted by the Income tax Department. The search, if any, was conducted on June 7/8 of 2001 by the Central Excise Department. The Income-tax Department had sent a requisition on March 27, 2002 under section 132A of the Act requisitioning the books of accounts and other documents seized by the Central Excise Department. The record of the proceeding dated April 18, 2002 showed that the requisition was not fully executed as all the books of account and other documents had not been delivered to the requisitioning authority. The proceedings initiated under section 148 were valid. However in the proceedings for reassessment under section 148 of the Act, material or evidence relatable to the documents for which the requisition had been sent under section 132A could not be taken into consideration.” The learned Departmental Representative filed copies of warrant of authorization under section 132 of the Act dated 29-10-2004 which are issued in the name of K. M. Shah Charitable Trust, Mansukhbhai K. Shah, with the direction to find valuable articles or things in Indian Overseas Bank at different branches. In the said warrant of authorization also, the authorized Officer was directed to enter and search the building, etc. persons and to seize books of accounts, documents, money, bullion, jewellery, etc. as are provided under section 132 of the Act noted above. According to Section 132(14), execution of an authorization shall have same meaning assigned in Explanation 2 to Section 158BE, which provides authorization is deemed to have been executed on conclusion of search as recorded in Panchnama. Therefore, actual search shall have to be carried out necessarily before proceeding u/s 153A. Rule 112 of IT Rules is also not satisfied in case of assessee. Service of warrant on Bank Manager of Trust is not service on assessee in individual case of assessee.
9.4 It is undisputed fact that assessee is Managing Trustee of the Trust. The survey was conducted in the case of the Trust on 28-10-2004. The statement of the assessee was recorded on oath under survey in the premises of the Trust. The details of the Trust were called for in the statement of the assessee. Certain bank accounts in the name of the Trust were found during the course of survey which was not reflected in the books of account of the Trust. The assessee admitted the amount deposited in the accounts as his personal money, but in the later portion of the statement he has explained that since his personal books of account for the current year are not written, therefore, it cannot be explained and assessee further stated that he will furnish the same details if available. Admittedly, it is a fact that all the bank accounts whether disclosed or not reflected in the books of the Trust are belonging to the Trust only. No undisclosed income in the name of the assessee was found either during the course of survey or the search. No independent or corroborative evidence was found against the assessee that the money deposited in the bank account of the Trust belongs to assessee in his individual capacity. The assessee in his later statement recorded before Assessing Officer on 24-12-2004 retracted from his earlier statement and explained that the amount seized from the bank accounts of t he Trust did not belong to him because the same belong to the Trust only. Except the statement recorded on oath during the course of survey, there is no other material or evidence available on record to prove that the money deposited in the bank account of the Trust belong to the assessee in his individual capacity. It is well settled that admissions are not conclusive proof of matter. They may be shown to be untrue or have been made under mistake of facts or law. Circumstances have to be seen under which same are made. It can be withdrawn unless it is estoppels and conclusive. Hon’ble Punjab & Haryana High Court in the case of Kishanlal Shivchand 88 ITR 293 held “It is an established principle of law that a party is entitled to show and prove that an admission made by him was in fact not correct and true.” Hon’ble Supreme Court of India in the case of Pullangode Rubber Product Co. Ltd. 91 ITR 18 held that “assessee should be given opportunity to show that admission is incorrect or does not show correct state of facts”. Hon’ble Madras High Court in the case of S. Khaderkhan Son (supra) held “section 133A does not empower any ITO to examine any person on oath, so statement recorded u/s 133A has no evidentiary value and any admission made during such statement cannot be made basis of addition”. Considering the above discussion it is clear that there is no incriminating evidence available on record to show that the amount deposited in the bank account of the Trust belong to the assessee in his individual capacity. The assessee has been able to explain that his admission was in fact incorrect or not true. The statement of the assessee recorded being Managing Trustee of the Trust on oath on dated 28-10-2004 thus cannot be relied upon to proceed against the assessee u/s 153A in his individual capacity. We may also note here that the amount lying in the bank accounts of the Trust were converted into PD account of the Department and admittedly in the case of the Trust addition of Rs.1,93,99,865/- was made on protective basis in assessment year 2005-06 and Trust was given benefit of exemption u/s 11 read with section 12A of the IT Act. The amount lying in PD account out of the bank account of the Trust was appropriated by the Assessing Officer against the demand raised in the case of the Trust u/s 154 of the IT Act. Later on, refund was also granted out of the same amount in the case of the Trust. These facts thus would show that ultimately the Revenue Department accepted substantive assessment in case of Trust and that the amount deposited in the bank accounts of the Trust which were not reflected in the accounts of the Trust belongs to the Trust only. Considering the facts of the case and the warrant of authorization and the Panchnama produced before us, it is clear that the warrant of authorization was issued in the name of the Trust and the assessee being the Managing Trustee of the Trust. The warrant of authorization was also executed upon the bank manager of Indian Overseas Bank in respect of several bank accounts of the Trust. Thus, no warrant of authorization issued in the name of assessee in his individual capacity and no warrant of authorization is executed in the individual case of the assessee. No material is produced before us if any search is conducted against the assessee in his individual capacity. It is admitted fact that warrant of authorization is issued in the name of the Trust and the assessee. Even if it is issued in joint (two) names but it appears from the facts and circumstances of the case that name of the assessee was added in the warrant of authorization and in the Panchnama being the assessee Managing Trustee of the Trust. Thus, assessee has no individual liability in the aforesaid case. We may also note here that learned Departmental Representative relied upon decision of Allahabad High Court in the case of Raghuraj Pratap Singh and others (supra) which was delivered on 14-07-2006. However, learned Counsel for the assessee relied upon another decision of Hon’ble Allahabad High Court in the case of CIT vs Smt. Vandana Verma (supra) which was delivered on 09-10-2009. The latter decision is binding for consideration. Moreover, the latter decision in the case of Smt. Vandana Verma (supra) is directly on the point in issue because when the warrant is issued in joint names in the case of the Trust and the assessee, then as per the above decision the assessments could not have been framed in the individual capacity/status of the assessee which is done in the present case. The proceedings u/s 153A of the IT Act against the assessee in his individual capacity/status are, therefore, clearly invalid and bad in law on the basis of joint search warrant so issued. The above findings are also supported by the observation of the Assessing Officer that in these three years Assessing Officer accepted the returned income meaning thereby that there was no undisclosed income belongs to the assessee in the assessment years under appeal. In view of the above, there is no need to discuss other decisions relied upon by the learned Counsel for the assessee.
9.5 Considering the above provisions as noted above in the light of the provisions of section 153A of the Act, it would be clear that once the warrant of authorization or requisition is issued and search is actually conducted, Panchnama is drawn, the completed assessments for all the relevant years would get reopened irrespective of whether any incriminating material is found or not in relation to a particular assessment year. However the warrant of authorization shall have to be executed by the authorized Officer in order to justify invoking of the jurisdiction by the Assessing Officer under section 153A of the Act. Considering section 153A particularly read with sub-clause (b), it is clear that not only initiation of search is mandatory but conduct of the search is also material. The decision of the Allahabad High Court noted above also supports the above findings. As is noted above, it is undisputed fact that though warrant of authorization is issued in the name of the assessee being Managing Trustee of the Trust, but it is admitted fact that no search operation was conducted in the premises of the assessee. Even in the warrant of authorization, the address of the place to be searched is not the address of the assessee individual. Admittedly, no Panchnama is also drawn in pursuance with the warrant of authorization in the case of the assessee. No documents were seized or impounded as such during the course of search from the assessee. The warrant of authorization dated 29.10.2004 in the name of the Trust and the assessee stands unexecuted in the case of assessee individual. Since in this case only survey operation under section 133A is conducted in the premises of the assessee’s Trust, it would not satisfy the requirements of section 153A of the Act. As such, the Assessing Officer was not justified in initiating proceedings or assuming valid jurisdiction under section 153A of the Act against the assessee. In view of the above discussions, we do not find these to be the fit cases for initiating the proceedings u/s 153A of the IT Act against the assessee in his individual status. We accordingly hold that the proceedings u/s153A of the IT Act are invalid and bad in law, resultantly, the orders of the authorities below are set aside and quashed.
10. As a result, all the appeals of the assessee in ITA No.2878, 2879 and 2880/Ahd/2007 are allowed.
11. This appeal by Revenue is directed against the order of the learned Commissioner of Income Tax (Appeals) –IV, Ahmedabad dated 20-03-2007 for Assessment Year 2005-06 on the following grounds:
“1. The learned CIT (A) erred in law and on facts in deleting the addition of Rs.1,93,99,865/- made on account of undisclosed income found and seized during the course of survey/search by way of cash deposits in the bank accounts.
2. The learned CIT (A) failed to take note of the statement recorded on oath, on 28-10-2004 admitting that the amount was personal money of the assessee and does not belong to the trust.
3. The CIT (A) failed to take note of the fact that no source of income was disclosed during the statement on oath recorded on 28.10.2004.
4. The CIT (A) failed to appreciate the fact that attributing the receipts to M/s. K. M. Shah Charitable Trust was on afterthought on the part of the assessee to pre-empt the Department from other proceedings.
12. The learned Commissioner of Income Tax (Appeals) considering the submissions on merit as noted above held in Para 5 while deleting the addition of Rs.1,93,99,865/- as under”
“5. I have carefully considered the contentions of Ld. Counsel as well as gone through the record. On perusal of assessment order, it has been noticed that statement of the Appellant was recorded under section 133A (1)/131 as per para-2 of the Assessment Order. However, as mentioned in the assessment order, a survey u/s 133A was carried out at the premises of the M/s. K. M. Shah Charitable Trust in which Shri M. K. Shah was the Managing Trustee whose statement was recorded on 28.10.2004 i.e. on the day of survey which led to detection of unaccounted bank accounts. On the basis of survey proceedings, the Department had carried out search u/s 132 on the next following day i.e. o n 29.10.2004 at the Bank premises and amount of Rs.1,93,99,865/- lying in the Bank Accounts was seized on 29.10.2004 which was kept in the P. D. Account of the Trust managed by the Appellant Dr. Mansukh Kanjibhai Shah. Further, the amount seized from the Bank Account was adjusted towards Advance Tax Liability of the Trust only and not of the individual liability of the Appellant. It may also be mentioned here that proceedings for cancellation of registration were initiated under section 12AA(3) of Income Tax Act, 9161 on 12.05.2005 but no order for cancellation was received by the Trust. Further, the exemption was granted u/s 11 by the Assessing Officer even after proceedings for cancellation of registration were initiated which strengthened the fact of continuation of the registration of the Trust and its bonafide activities. Since amount seized was adjusted towards advance tax liability of the Trust, therefore, it can be inferred that the amount seized from the Bank Account of the Trust does not belong to the Appellant in his individual capacity. Keeping in view of above facts and circumstances of the case, it is evident that the amounts seized belong to the Trust and the Appellant was managing the affairs of Trust as Managing Trustee. Hence, the amount seized does not belong to the Appellant in his individual capacity. Hence, the second ground of appeal is allowed.”
13. Learned representatives of both the parties submitted that facts are same as considered above in appeals of the assessee. They have submitted that their submissions are same as argued above and findings may be followed accordingly.
14. On consideration of the above facts in the light of findings of learned CIT (A), we are of the view that the issue is same on merit as is considered while considering the appeals of the assessee. The A O made addition of Rs.1,93,99,865/- in the assessment years in question in respect of the same bank accounts in the name of the Trust. We have held above that the bank accounts belong to the Trust and the amount lying in the bank accounts of the Trust is already considered in the case of the Trust by the Department and even refund has been granted to the Trust. We have also held that there is no evidence on record to prove that the amount lying in the bank account of the trust belong to the assessee. By following the reasons for decision in the appeals of the assessee, we do not find any infirmity in the order of the learned CIT (A) in deleting the addition on merit in the individual case of the assessee. We accordingly, do not find any merit in the departmental appeal. The same is accordingly dismissed.
15 As a result, departmental appeal in ITA No. 3339/Ahd/2007 is dismissed.
16. In view of the above finding, the appeals of the assessee are allowed and the departmental appeal is dismissed.
