2022 (8) TMI 784 - AT - Income Tax

Validity of proceedings u/s 153A - Whether no search was conducted on the assessee? - warrant to be issued only at /on the premises of the registered office of the company or corporate office, factory or godown - HELD THAT - A warrant can be issued in the name of any assessee to search any place where the documents pertaining to the assessee have been kept or are to be found as per the satisfaction of the warrant issuing authority. In the instant case, the warrant has been issued in the name of the assessee and the premises namely Plot No. 237238, Uydog Vihar, Phase-1, Gurgaon is the place where the warrant issuing authority had belief and had reasons to suspect that the documents and evidences leading to evasion of tax pertaining to the assessee have been kept or are to be found as per the satisfaction of the warrant issuing authority. The Director of the company has seen the warrant, signed and was present throughout the search procedure which can be observed by going through the warrant of authorization. Hence, the warrant is said to be rightly issued and search on the assessee has been correctly took place. Observations of the ld. CIT(A) that there was no warrant executed at the address mentioned in the ROC record or the other address of the assessee and hence no search was conducted goes against the fundamentals of issue of warrant of authorization u/s 132. It is not necessary that warrant has to be issued only at /on the premises of the registered office of the company or corporate office, factory or godown but a warrant can be authorized to any other place where the issuing authority satisfies and reasons to suspect that the material/evidences pertaining to the assessee have been kept and are to be found. The ld. CIT(A) ignored the provisions of Section 132(1), the proviso under clause (B), provisions of (1A) which clearly deal with the jurisdiction, the premises and the actions that can be taken by the revenue authorities. The decision of the ld. CIT(A) that no search was conducted on the assessee and summarily nullifying the proceedings u/s 153A as ex-facie illegal is devoid of any merit and cannot be sustained.

Summary

Issues:
1. Validity of search & seizure operation under section 132 of the Income Tax Act, 1961.
2. Interpretation of warrant of authorization issued for search.
3. Compliance with procedural requirements under Section 132 of the Income Tax Act, 1961.

Analysis:

Issue 1: Validity of search & seizure operation under section 132 of the Income Tax Act, 1961:
The appeal was filed by the Revenue against the order of the CIT(A) disputing the search operation conducted under section 132 of the Income Tax Act, 1961. The search was part of a larger operation involving the M.M Aggarwal Group of cases, and documents related to the assessee were found and seized during this search. The primary contention of the Revenue was that the CIT(A) erred in adjudicating that no search was conducted at the premises of the assessee. The CIT(A) based this conclusion on discrepancies in the address mentioned in the search warrant and the actual address of the assessee. However, the Tribunal held that the warrant can be issued to search any place where the documents pertaining to the assessee are believed to be kept, irrespective of the registered office address. The Tribunal emphasized that the CIT(A) overlooked the provisions of Section 132(1) and other relevant clauses, and therefore, the decision that "no search was conducted" was deemed incorrect.

Issue 2: Interpretation of warrant of authorization issued for search:
The Tribunal carefully examined the warrant of authorization issued under section 132 of the Income Tax Act, 1961, which was duly signed by the Director of the assessee company and two independent witnesses. The warrant was issued based on the authority's belief that the assessee had undisclosed income or property, and that relevant documents were likely kept at a specific address. The Tribunal noted that the warrant was issued after due satisfaction that summons under section 131 would not yield the required documents and that the assessee was in possession of undisclosed material. The Tribunal concluded that the warrant was correctly issued and the search operation on the assessee was valid.

Issue 3: Compliance with procedural requirements under Section 132 of the Income Tax Act, 1961:
The Tribunal delved into the provisions of Section 132 of the Income Tax Act, 1961, to ascertain the legality of the search operation. It highlighted the key elements behind issuing a warrant under this section, including the authority's belief in non-disclosure of taxable income, suspicion of undisclosed material, and the need to search various premises for relevant evidence. The Tribunal emphasized that a warrant can be issued in the name of the assessee to search any place where documents related to the assessee are suspected to be kept. It further clarified that the warrant does not have to be executed at the registered office address and can be authorized for any relevant location. The Tribunal found the CIT(A)'s decision to nullify the proceedings under section 153A as "ex-facie illegal" to be without merit and directed a reevaluation of the case on its merits.

In conclusion, the Tribunal allowed the appeal of the Revenue for statistical purposes and directed the CIT(A) to adjudicate the grounds on the merits of the case. The judgment emphasized the importance of adhering to the procedural requirements and legal provisions while conducting search operations under the Income Tax Act, 1961.