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2013 (2) TMI 454 - HC - Income TaxAuthorization issued under section 132(1) Whether search action on the basis of the authorization of the Additional Director of Income-tax is permissible or not Search and seizure operation under section 132A was conducted The Additional Director required to produce certain documents under section 132A of the Act Held that - By the amendment of the Finance (No. 2) Act, 2009, the words Additional Director has been inserted in section 132(1) of the Act, with effect from June 1, 1994, and the same is applicable in the present appeals. Unless the amendment incorporated by the Finance (No. 2) Act,2009, is challenged and it is declared ultra vires by the court for all practical purposes, it shall be operative being existing in the statute book. Therefore search action can be conducted on the basis of authorization of Additional Director In favour of revenue.
Issues:
Validity of search action based on authorization of Additional Director under section 132A of the Income-tax Act, 1961. Analysis: The judgment involved a common question of law regarding the validity of search action conducted under section 132A of the Income-tax Act, 1961, based on the authorization of the Additional Director. The Tribunal, relying on a previous decision, held that the Additional Director did not have the authority to take action in cases of search and seizure operations. This decision led to the quashing of assessment orders by the Commissioner of Income-tax (Appeals), which was challenged by the Department through appeals. The substantial question of law before the court was whether the Tribunal was justified in quashing the order of the Assessing Officer challenging the validity of the authorization issued under section 132(1) of the Income-tax Act, 1961. The appellant argued that the amendment to section 132(1) of the Act, introduced by the Finance (No. 2) Act, 2009, conferred power on the Additional Director to authorize search actions. On the other hand, the respondent disputed the lawfulness of the amendment, citing judgments from non-income-tax matters. The court emphasized that unless the amendment was declared ultra vires, it remained operative and enforceable. A previous Division Bench judgment had already allowed an appeal in favor of the Department on a similar issue, supporting the appellant's position. The court, in alignment with the Division Bench judgment, concluded that the Income-tax Appellate Tribunal had erred in annulling the assessment orders based on the authorization issue. It held that the Additional Director indeed had the authority under section 132(1) of the Act to issue search and seizure warrants. Consequently, the appeals were allowed, the Tribunal's order was set aside, and the matter was remitted back for reconsideration in accordance with the law. The court ruled in favor of the Revenue and against the assessee, restoring the assessing authority's order and directing the Tribunal to decide the appeal afresh while considering the observations made in the judgment. In summary, the judgment clarified the authority of the Additional Director under section 132(1) of the Income-tax Act, 1961, in authorizing search and seizure operations. It underscored the validity of the amendment introduced by the Finance (No. 2) Act, 2009, and upheld the Department's position regarding the authorization issue. The decision provided clarity on the legal framework governing search actions and assessment orders under the Income-tax Act, ensuring consistent application of the law in such matters.
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