Case Law Details
The prerequisite condition for application of section 153A is that assessment under this section can be made against a person in the case of whom a search is initiated under section 132; non-fulfillment of onditions laid down in sections 153A is a jurisdictional defect which cannot be cured.
RELEVANT PARAGRAPHS
44. We have carefully considered the rival submissions in the light of material placed before us. The assessments in the present case have been made u/s 153A of the Act. Section 13A provides that in case a person against whom search is initiated u/s 132A of the Act then notwithstanding anything contained in sections 39, 147,148,149 151 and 153 of the Income Tax Act, the AO shall issue a notice to such person requiring him to furnish returns of income in respect of six assessment years preceding the assessment year relevant to the previous year in which search was conducted or requisition made. Thus, the pre-requisite of sec. 153A is that assessment under this section can be made only in a case of a person where a search is initiated u/s 132 or books of account or other documents or any assets are requisitioned u/s 132A after 31st day of May, 2003. As the present case is not a case of requisition as
described in sec. 132A, therefore, the prerequisite condition for application of section 153A is that assessment under this section can be made against a person in the case of whom a search is initiated u/s 132 of the Act. It is the case of the assessee that no search has been initiated in its case therefore, resort to sec 153A was in violation of law To examine such contention it has to be seen that whether any search has been initiated in the case of the assessee. Copy of two punchnamas on the basis of which search was conducted in the case of Shn Sandeep Bansal at his residential premises as we” as Jodhpur Branch Office of the assessee, where the person searched was an employee, are placed at pages 1-6 and 7-17 of the paper book filed by the assessee. In both of the punchnamas in column A the name of. Shri Sandeep Bansal has been written which clearly shows that search warrant was in the case of Shri Sandeep Bansal and not in the name of assessee. For sake of convenience the inscription in punchnama regarding column A is reproduced below: –
Punchnama prepared at the residential premises of said Shri Sandeep Bansal –
Panchnama (To be prepared in triplicate)
(A) Warrant in the case of : Shri Sandeep Bansal
(B) Warrant to search : A-38. Shastri Nagar
(Details & Ownership : Jodhpur of place of search)
Telephone Numbers : 5107532
Punchnama prepared at the Branch Office of the assessee-
Panchnama (To be prepared in triplicate)
(A) Warrant in the case of : Shri Sandeep Bansal
(B) Warrant to search : M/s Jindal Strips Ltd., Now
(Details & Ownership : M/s Jindal Stainless Ltd.
of place of search) : C-62, MIA. llnd Phase, Baini Jodhpur
Telephone Numbers : 2740228
45. Though the above punchnama clearly shows that warrant was not in the name of the assessee company but were in the name of Shri Sandeep Bansal but Id. DR wanted time to produce such warrant to support his arguments that warrant is in the name of Branch Office of the assessee This case was argued by both the parties on 25.02.2008 and after completing argument Id. DR sought one month time to produce copy of search warrants- Similar time was earlier sought by Id. DR. However, keeping in view the interest of justice further time was given to Id. DR and the appeals were adjourned to 17.03.08 when Id. DR produced the copies of search warrants, the relevant portion of which has already been reproduced in the above part of this order. There also the search warrants are in the name of Shri Sandeep Bansal only and are not in the name of the assessee company. Thus, prerequisite condition of search being initiated in the case of assessee is not fulfilled. However, here it may be the contention of the revenue that the plae where search is conducted is place possessed by the assessee company and whether the assessment is made u/s 153A or u/s 153C it is only a technical issue for which assessment cannot be held invalid. We find no force in such contention as if the assessment is made u/s 153C then also there is a procedure prescribed under that section which is required to be followed by the revenue. In that case the AO of the person on whom the search is conducted has to satisfy himself that the valuable article or books of account or documents seized during the course of search belongs to a person other than the person on whom the search is made then that AO shall hand over such valuable article or books of account to the AO who has jurisdiction over such other person and notice will be issued accordingly u/s 153C of the Act. There is no material on record to suggest that any exercise which has been mentioned in the provisions of sec. 153C has been adopted. There is no force in the argument of Id. DR that such argument of the assessee is only technical, therefore assessment framed on the assessee without following the procedure laid down in Section 153C cannot be held to be invalid. There may be a valid search in the case of said Shri Sandeep Bansal but assessment u/s 153A could be made only in his hands and not in the case of assessee unless procedure laid down in sec. 153C is followed. Such defect in framing the assessment is a jurisdictional defect which cannot be cured and assessment has to be held to be invalid because the AO did not have any jurisdiction to assess the assessee without adopting the procedure laid down in sec 153C as the search was neither initiated nor conducted in the case of assessee. There was no warrant of authorization to conduct search on the assessee and no search was initiated or conducted in the case of the assessee.
46. To further explain that the assessments framed in the hands of assessee company U/S 153A are not valid, it is observed that the provisions of sec. 153C (1) are almost similar to provisions of sec. 158BD which is applicable to the searches conducted up to the day of 31sl May, 2003. Provisions of sec. 158BD and 153C (1) are reproduced below: –
Undisclosed income of any other person.
158BD. Where the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 or whose books of account or other documents or any assets were requisitioned under section I32A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed under section 158BC against such other person and the provisions of this Chapter shall apply accordingly.
153C (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A. then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153 A :
Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person.
49. From the above observations of their lordships of Hon’ble Supreme Court, it is clear that before provisions of s. 158BD/153C are sought to be applied then the conditions laid down in these sections are required to be satisfied It has further been observed that provisions contained in chapter XIVB are drastic in nature and these have draconian consequences and such proceedings can be initiated only if search is conducted because when these provisions are attracted legal presumptions are raised against the assessee and burden also shifts on the assessee. In view of these observations, it will be incorrect to say that non fulfillment of conditions precedent for invoking provisions of s. 153C is merely a technical defect which can be cured. Reference here also can be made to the decision of Hon’ble Calcutta High Court in the case of Sun rolling Mills P. Ltd. Vs. ITO 160 ITR 412 (Cal.) wherein the AO had preceded on the basis of s. 147(b) and AO sought to justify the proceedings at the time of reassessment as if they were taken u/s 147(a). There is a difference between these two sections as u/s 147(b) the requirement is that the information should come to the AO subsequent to the making of original assessment. Whereas section 17(a) requires that escapement of income has occurred by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. It was observed by their lordships as under:-
” In this case, the ITO has sought to justify his action by taking recourse to section 292B. This section is intended to ensure that on technical grounds the return of income, assessment , notice or summons or proceedings is not rendered invalid. This section does not empower the ITO to treat a proceeding taken under section 147(b) as a proceeding under section 147(a). This is not a mere technicality. It is a question of jurisdiction. Unless t he conditions precedent are fulfilled, no proceedings whether under
clause (a) or (b) of section 147 can be initiated”.
54. In the case of Hindustan Transport Co. Vs. IAC (supra) a writ petition was filed by the assessee against the assessment on the ground that the officer lacked jurisdiction to make the assessment. It was contended that CBDT vide its order dated. 31.12.1987 passed u/s 127 of the Act had transferred the assessee’s case to E-Ward, Lucknow Circle, Lucknow and the said order will take effect from 20.01.1988. It was contended that in view of the said transfer order, the AO who has framed the assessment seized to have jurisdiction to deal with the assessment with effect from 20.01.88 and thus, the order of assessment passed on 30.3.1988 is without jurisdiction. Their lordships had examined provisions of s. 124 and found that the assessee’s case was covered by clause cl (a) of sub-sec. 5 of s. 124. It was observed that the Act does not prescribed the respective jurisdiction or functions of various Income Tax Authorities and the various I.T. Authorities are of co-ordinate jurisdiction and it was observed that such a defect arising from allocation of functions is a mere irregularity which does not effect the resultant action. In our considered opinion no support can be drawn by revenue from the said decision to uphold the validity of assessment framed u/s 153A as in the present case non-fulfillment of conditions laid down in s. 153A and 153C is neither a procedural defect nor administrative defect but it relates to jurisdictional defect.
55. In view of above discussion it is held that the assessments framed in the present case u/s 153A are invalid and are quashed.
