Case Law Details

Case Name : MDLR Resorts (P.) Ltd. Vs Commissioner of Income-tax (Delhi High Court)
Appeal Number : WP(C) Nos. 693 OF 2013 & Others
Date of Judgement/Order : 20/12/2013
Related Assessment Year :
Courts : All High Courts (4474) Delhi High Court (1327)

MDLR Resorts (P.) Ltd. v. CIT (Delhi High Court)

Contention Raised by the Assessee – Assessment proceedings under section 153A of the Act are invalid as no panchnamas were drawn in the names of 22 petitioners. Another aspect of the said contention relating to validity of proceedings under Section 153A of the Act has been also raised.

Held by High Court

The expression ‘panchnama‘ has not been defined in the Act. Section 132(13) makes provisions of Code of Criminal Procedure 1971 relating to search and seizure applicable to searches under the said section. Sub-section (5) to Section 100 of the said code states that search shall be made in presence of witnesses and list of things seized during the search shall be prepared by the officers or other persons and signed by such present witnesses. A copy of the said list prepared and duly signed by the witnesses shall be delivered to every occupant or person at the place searched, is mandated and required under sub-section (6) to Section 100 of the code. As per the manual prepared by the Revenue relating to search and seizure operations, at the end of search or when it is temporarily concluded, a panchnama is required to be prepared or drawn. It is evidently clear that this document has considerable evidentiary value and should be prepared with care and caution. The panchnama should be exhaustive, record of all events in the same sequence in which they have occurred and should specify details like name of person against whom warrant was issued, time of temporary conclusion of search etc. Panchnama should be prepared even in cases where nothing is found or seized in the search.

There is certainly lapse and failure to comply with the requirements of search and seizure manual as the panchnama did not contain names of the 22 petitioners and does not record any suspension of search. Even the obstruction and presence of third persons were not mentioned in the panchnamas. But this would not affect the validity of the search. We only record that panchnamas in the present case to this extent are defective, but the search or initiation of search cannot be disputed. However, the respondents should take remedial steps and ensure that such lapses do not occur in future, otherwise similar allegations will get repeated, entailing litigation.
Panchnama is an important document because it informs the person from whose premises the articles are seized or the person searched as to the name of the person or the building etc. where the search was carried out and the officers who were authorized and had carried out the search and the articles, if any, seized. We are informed that copy of the warrant of search is only shown to the occupant or persons against whom it is issued and their signatures obtained but no copy is furnished to them. Any search and seizure operation invades constitutionally protected and cherished right of privacy. Administrative lapse even of minor nature when there is invasion of the said right does lead to criticism and allegations. It will be salutary and proper that a copy of the search warrant be furnished to the occupant or the person searched. This would curtail any allegation of interpolation, addition of names etc. However, in the facts of the present case, we do not think that the lapse or failure in the panchnamas affects the validity of the search or nullifies notice under section 153A of the Act. It certainly would not affect initiation of search which is the starting point and precondition for invoking Section 153A of the Act. Panchama is drawn when the search stands concluded finally or temporarily. The effect of the said lapse on merits or to the value or degree of importance to be given to the material seized is a matter of appraisal and merits and not a question to be examined and answered in these writ petitions. The view, we have taken finds support from the decisions of the Supreme Court in I. T. O. vs. Seth Brothers & Ors. (1969) 74 ITR 836(SC) and Puran Mal vs. Director of Inspection (1973) 93 ITR 505 (SC). Reference can also be made to the decision of this court in Commissioner of Income Tax vs. S. K. Katyal (2009) 308 ITR 168 (Del.), wherein the expression panchnama‘ was elucidated and explained in the following words:-

15. These provisions demonstrate that a search and seizure under the said Act has to be carried out in the presence of at least two respectable inhabitants of the locality where the search and seizure is conducted. These respectable inhabitants are witnesses to the search and seizure and are known as panchas‘. The documentation of what they witness is known as the panchnama. The word nama‘, refers to a written document. Its type is usually determined by the word which is combined with it as a suffix. Examples being, nikah-nama (the written muslim marriage contract), hiba-nama (gift deed, the word hiba meaning – gift), wasiyat-nama (written will) and so on. So a panchnama is a written record of what the panch has witnessed. In Mohan Lal v. Emperor: AIR 1941 Bombay 149, it was observed that the panchnama is merely a record of what a panch sees‘. Similarly, the Gujarat High Court in the case of Valibhai Omarji v. The State: AIR 1963 Guj 145 noted that a Panchanama is essentially a document recording certain things which occur in the presence of Panchas and which are seen and heard by them.‘ Again in The State of Maharashtra v. Kacharadas D. Bhalgar: (1978) 80 BomLR 396, a panchnama was stated to be a memorandum of what happens in the presence of the panchas as seen by them and of what they hear‘.

16. We have examined the meaning of the word panchnama in some detail because it is used in Explanation 2(a) to Section 158BE of the said Act although it has not been defined in the Act. A panchnama, as we have seen is nothing but a document recording what has happened in the presence of the witnesses (panchas). A panchnama may document the search proceedings, with or without any seizure. A panchnama may also document the return of the seized articles or the removal of seals. But, the panchnama that is mentioned in Explanation 2(a) to section 158BE is a panchnama which documents the conclusion of a search. Clearly, if a panchnama does not, from the facts recorded therein, reveal that a search was at all carried out on the day to which it relates, then it would not be a panchnama relating to a search and, consequently, it would not be a panchnama of the type which finds mention in the said Explanation 2(a) to section 158 BE.

Read in this manner, we do not think that the first contention of the petitioners has any merit and the same is rejected.

Download Judgment/Order

More Under Income Tax

Posted Under

Category : Income Tax (28576)
Type : Judiciary (12873)

Leave a Reply

Your email address will not be published. Required fields are marked *