Case Law Details

Case Name : ACIT Vs Chilka Vyankatesh Sidram (ITAT Pune 'A' Bench)
Appeal Number : ITA No. 1367/PN/05
Date of Judgement/Order : 19/11/2008
Related Assessment Year :


11. The powers of the Tribunal emanates from the provision of section 254 of the Act and not from any other provisions. The provisions of section 132 of the Act considered by the Hon’ble Rajasthan High Court only specifies the circumstances under which search warrant can be issued by the competent authority. Such provisions have nothing to do with the powers of the Tribunal. The decision of the Rajasthan High Court appears to have been j rendered without reference to the provisions of section 254 of the Act, perhaps because the attention of the court was not drawn to such provisions. Since interpretation of section 254 was not involved, the decision of the apex court in the case of Vegetable Products Ltd. (supra) cannot be applied for resolving the conflict between the decisions of non-jurisdictional High Courts.

12. There is no decision on this issue either of the jurisdictional High Court or of the apex court. We are also not faced with the situation where lone decision of a non-jurisdictional High Court is available which requires due respect while adjudicating an issue. However, we are concerned with the situation where conflicting views have been expressed by different non-jurisdictional High Courts. In such a situation, it is not possible to give effect to both the decisions. It is a settled legal position that only the decision of the jurisdictional High Court is binding on the Tribunal or the Courts sub-ordinate to the High Court. The decision of the non-jurisdiction High Court has persuasive value particularly when conflicting views are available. Therefore, in our opinion, the decision rendered by the Hon’ble Rajasthan High court has persuasive value only. The only binding decision is that of Special Bench of the Tribunal in the case of Promain Ltd. (supra) wherein it has been held that the Tribunal cannot examine the validity of the search proceedings initiated u/s. 132 of the Act. As already stated, this view is fortified by the majority decision rendered by the two High Courts.

13. The Tribunal exercises its jurisdiction u/s. 254 of the Act in respect of the appeal arising from the block assessment proceedings. Hence, its jurisdiction is limited to the issues which arise from the block assessment proceedings. Therefore, what is not decided/cannot be/ decided by the A.O. cannot be the subject matter of the appeal before the Tribunal. The jurisdiction of A.O. under Chapter XIV B arises from the provisions of section 158 BA of the Act. As per this provision, the Assessing Officer can proceed to assess the undisclosed income if a search is initiated and completed under section 132 after 30-06-1995. Once it is found that search u/s. 132 was conducted at the premises of the assessee, he is bound to proceed, to assess the undisclosed income as per the provision of Chapter XIV-B of the Act. His jurisdiction does not extend to action taken by the tax authorities prior to initiation of search proceedings. Hence, he cannot look into the existence of the circumstances mentioned u/s. 132(1) of the Act. It is the settled legal position that powers of the Tribunal are limited to the subject matter arising from the assessment proceedings. Consequently, the Tribunal also cannot look into the validity of the search initiated u/s. 132(1) of the Act. This issue can be examined from another angle. Right of appeal is a statutory right and therefore the same can be exercised only to the extent it is conferred on the assessee. No such right is provided under the Act vis-a-vis the action u/s. 132. Therefore, such action can only be challenged in the writ proceedings under Articles 32/226 of the Constitution of India. These aspects have been discussed at length by the Special Bench in the case of Promain Ltd. (supra) as well as by the Hon’ble Madhya Pradesh High Court in the case of Gaya Prasad Pathak vs. ACIT (supra). Such aspects, perhaps, escaped the attention of their Lordships of the Hon’ble Rajasthan High Court since not argued before them on behalf of the revenue. Therefore, for the reasons given above, we prefer to follow the decision of the Special Bench as well as the majority decision rendered by the High Courts mentioned above. Accordingly, we hold that the Tribunal cannot examine the validity of the action of search u/s. 132(1) of the Act. The contention of the assessee’s counsel in this behalf is, therefore, rejected.

14. The next, question for our consideration is whether any search was initiated and conducted in accordance with law in case of present assessees. The stand of the assessee’s counsel is that no such search was carried out in the case of present assessees. The search was carried out only in the case of Sidram N. Chilka and names of the assessees were inserted in the search warrant subsequent to the date of search. We have gone thoroughly the original search warrants produced by the learned D.R. and the learned DDI which shows that two search warrants were issued in respect of the premises bearing No. 1339, New Pachha Peth, Solapur. One search warrant was issued in respect of residential portion of this property and this warrant was in the names of S/Shri Sidram Narsayya Chilka, Shrinivas, Devalki, Gopal, Vyankatesh. The other warrant was issued in respect of the other portion of the property where the business was carried out. This warrant was in the names of M/s. N.R. Chilka dying, Shri S.N. Chilka, Shrinivas, Smt. Devaki, M/s. Chandrashekhar Saraswat Traders. A bare look at these warrants shows that there was no manipulations/ interpolation in the search warrants. The search warrant executed at the residential portions shows that the words “S/Shri” is written before the names of various persons. This could be written only where search warrant is intended to be executed in respect to more than one person. If the stand of the assessee’s counsel is to be believed then the words “S/sh’ could not have been there prior to the name of Sidram Narsayya Chilka. The existence of the words “s/Sh” proves that search warrant was issued in various names. Further, the ink and the handwriting appears to be the same. Therefore, there is no reason to suspect any malafide on the part of the revenue.

15. The submissions of the assessee’s counsel that full names of the assesees were not written on the search warrant and therefore search warrant is illegal cannot be accepted. No doubt, the search warrant suggests that names of the persons should be stated but in our opinion, search warrant cannot be treated as illegal merely because full name of assessees are not written. The search warrant, in our opinion, should be read in holistic manner. It is not in dispute that Shri S.N. Chilka is the head of family whose full name is clearly written. It is also not in dispute that ail other persons’ namely, Shrinivas, Devaki, Gopal and Vyankatesh are the family members of S.N. Chilka and living jointly in the premises mentioned in the search warrant. Therefore, all the persons are well identified. Hence, it cannot be contended by assessee’s counsel that search warrant was illegal. The facts that no, statement was recorded or nothing was found in the course of search against these assessees would not, in our opinion, make the search warrant illegal. The validity of search warrant does not depend upon the outcome of the search. The fact that assessee wrote in the return of income that “search party has not issued the search warrant’ has no relevance.

17. In view of the above discussions, it is held that search was carried out in accordance with law. The validity of the search action u/s. 132(1) cannot he challenged before the Tribunal. The allegation of assessee’s counsel that names of these assessee were inserted subsequent to the search is not found to be true. Therefore, all the objections raised by the assessee’s counsel are rejected.


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