2014 (11) TMI 1189 - AT - Income Tax

Validity of the assumption of jurisdiction u/s 153A - existence of conditions for issuance of warrant u/s 132A - Held that - Additional grounds raised by the assessee, the AO has clearly not only not rebutted the contentions of the assessee but also has remained silent as to whether the conditions for issuance of warrant of search existed at all. In such circumstances, CIT(A) ought to have at least satisfied herself about the existence of conditions before concluding that that the jurisdiction has been validly exercised by the AO in view of the judgment of the jurisdictional High Court in the case of Ramaiah Reddy (2010 (9) TMI 862 - KARNATAKA HIGH COURT) on which the assessee has placed reliance upon. All the subordinate courts and authorities are bound by the decision of the jurisdictional High Court and has to follow the same in its letter and spirit. We deem it fit and proper and remand the appeals for all the assessment years back to the file of the CIT(A) for proper adjudication of the additional ground of appeal relating to the validity of the jurisdiction u/s 153A as well as the existence of conditions for issuance of warrant u/s 132A of the Act. The other grounds of appeal raised by the assessee with regard to the merits of the disallowance of the addition made by the AO and as confirmed by the CIT(A) are not adjudicated at this stage and the assessee shall be at liberty to agitate the same in case the CIT(A) decides the ground of jurisdiction against the assessee - Appeals of the assessee are treated as allowed for statistical purposes

Summary

Issues:
Validity of search and assumption of jurisdiction under sections 153A and 143(3) of the Income-tax Act, 1961.

Analysis:
The appeals were filed against the CIT(A)'s order for the assessment years 2005-06 to 2011-12, challenging the validity of the search and jurisdiction under sections 153A and 143(3) of the Income-tax Act, 1961. The assessee contended that the conditions for issuing the search warrant did not exist, citing the decision of the jurisdictional High Court in a specific case. The AO, in response to the additional ground raised by the assessee, did not refute the contentions or confirm the existence of the conditions for the search warrant. Despite this, the CIT(A) rejected the assessee's contention, relying on a different High Court decision without considering the jurisdictional High Court's ruling. The Tribunal noted that all authorities are bound by the decision of the jurisdictional High Court and must adhere to it. Therefore, the Tribunal remanded the appeals back to the CIT(A) for proper consideration of the jurisdictional issue and the existence of conditions for the search warrant, emphasizing the importance of following the jurisdictional High Court's decision.

The Tribunal found that the AO did not address the assessee's contentions regarding the validity of the search warrant conditions in the remand report. The CIT(A) failed to independently verify the existence of conditions before upholding the AO's jurisdictional exercise, contrary to the jurisdictional High Court's decision cited by the assessee. The Tribunal emphasized that subordinate courts and authorities must adhere to the jurisdictional High Court's decision. Therefore, the Tribunal remanded the appeals to the CIT(A) for a proper assessment of the jurisdictional issue and search warrant conditions, allowing the assessee to challenge other grounds depending on the CIT(A)'s decision on jurisdiction.

As a result, all the appeals of the assessee were treated as allowed for statistical purposes. The Tribunal pronounced the decision on November 21, 2014.