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2013 (4) TMI 366 - HC - Income TaxSearch U/s 132 of Income Tax Act - Section 253 (1B) of the Act - A block assessment order U/s 158BC - Held that - We agree with the reasons given by the Five-Members Bench of the Tribunal in Promain Ltd. v. Deputy Commissioner of Income Tax (2012 (5) TMI 107 - DELHI HIGH COURT) that the satisfaction to be reached by the Authority issuing warrant of authorisation is an administrative function - The fact, that the plea has to be entertained by the Authority issuing the warrant only after satisfying itself about the existence of the conditions on which the satisfaction has to be arrived at on the basis of the opinion in their possession and that such satisfaction has to be objective and not subjective, may prompt one to conclude that the power to initiate a search is only a quasi-judicial function - The Assessing Authority cannot go into such questions and consequently the Appellate Authority which has to look into the validity of the assessment order cannot question the validity of the search. We entirely agree with the reasoning given in Promain Ltd. v. Deputy Commissioner of Income Tax (2012 (5) TMI 107 - DELHI HIGH COURT), Deputy Commissioner of Income Tax as well as the decisions of Punjab & Haryana High Court, Madhya Pradesh High Court, Rajasthan High Court, and Delhi High Court which have on more than one occasion held that in hearing an appeal against the order of the assessment, the Tribunal cannot go into the question of validity or otherwise of any decisions for conducting search and seizure. This decision can be challenged in an independent proceedings where the question of validity of order may be gone into. - Decided in favor of revenue.
Issues Involved:
1. Jurisdiction of the Income Tax Appellate Tribunal (ITAT) to decide the validity of the search under Section 132 of the Income Tax Act, 1961. 2. Authority of the ITAT to direct the department to produce the 'satisfaction note' for examining the validity of the search authorization. Issue-wise Detailed Analysis: 1. Jurisdiction of ITAT to Decide Validity of the Search: The primary issue was whether the ITAT has the jurisdiction to decide the validity of a search conducted under Section 132 of the Income Tax Act, 1961, during an appeal against a block assessment order. The court referenced multiple judgments, including a Five-Member Bench decision in *Promain Ltd. v. Deputy Commissioner of Income Tax (2006)*, which held that the ITAT does not have the power to adjudicate on the validity of the search. The court agreed with this reasoning, stating that the initiation of a search is an administrative function, and any aggrieved person should seek remedy through a writ petition in the High Court rather than in an appeal before the ITAT. The court emphasized that the ITAT's role is to assess the correctness of the assessment order, not to question the validity of the search itself. 2. Authority to Direct Production of 'Satisfaction Note': The second issue concerned whether the ITAT could direct the department to produce the 'satisfaction note' to examine the satisfaction of the Competent Authority authorizing the search. The court held that the ITAT does not have the authority to call for and scrutinize the 'satisfaction note' as part of its appellate jurisdiction. The court referenced the decision of the Punjab & Haryana High Court in *Commissioner of Income-Tax v. Paras Rice Mills (2009)*, which held that the ITAT could not go into the validity of the search and seizure operations. The court concluded that the satisfaction note and the reasons for authorizing the search are administrative matters and should be challenged through a writ petition, not in an appeal before the ITAT. Conclusion: The court concluded that the ITAT does not have the jurisdiction to decide the validity of the search conducted under Section 132 of the Income Tax Act, 1961, nor does it have the authority to direct the department to produce the 'satisfaction note'. The court allowed the Income Tax Appeal and the Writ Petition, deciding the questions of law in favor of the revenue and against the assessee. The ITAT was directed to decide the pending appeal expeditiously, without delving into the validity of the search operations.
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