2023 (1) TMI 1229 - HC - Income Tax

Jurisdiction to conduct search u/s 132 - Construction of Section 132 relating to search and seizure and Section 120 relating to jurisdiction of officers - powers to perform functions relating to search and seizure and corresponding penal and prosecution proceedings in respect of the territorial area of the whole of India and the preamble of the Notification - HELD THAT - Section 132 contains specific situations where it applies, notwithstanding the requirement of territoriality under Section 120. These instances have been specifically noted and elaborated upon in the preceding paragraphs, per Section 132(1A) and the proviso to Section 132, both in the context of location only. Thus, the Notification relied upon by the revenue deals with extension of jurisdiction qua territory alone, and not with regard to an assessee . The Notification is in furtherance of the statutory sanction under the proviso to Section 132 and Section 132(1A), to enable officers in the Department to enter and search places located in areas other than those coming under the jurisdiction of the assessing officer holding jurisdiction over the assessee searched. Thus it is our considered view, based upon the scheme of the Act and the specific statutory provisions, that it is statutorily enjoined for a search to be conducted by the jurisdictional officers of that assessee only. The sole exceptions to this rule are in regard to locations that fall within the jurisdiction of a different officer, subject to satisfaction of, and compliance with, the requisite conditions, under the proviso to Section 132 and Section 132(1A). As called for the records of the search and verified that the warrant of authorisation dated 29.08.2017 in regard to the search conducted on 30.08.2017 has been issued in Form 45, in the name of the Petitioner, by R4 Deputy Director of Income Tax (Inv), Bengaluru. In line with the discussion and conclusions in the foregoing paragraphs of this order, Declaration, as sought, is issued and this writ petition is allowed.

Issues Involved:
1. Legality of the search conducted on the petitioner's premises.
2. Jurisdiction of Income Tax authorities under Sections 132 and 120 of the Income Tax Act, 1961.
3. Validity of the Notification No.S.O.2914(E)(69/2014) dated 13.11.2014.

Detailed Analysis:

1. Legality of the Search Conducted on the Petitioner's Premises:
The petitioner challenged the search conducted at his residence and office on 30.08.2017, claiming it was illegal and contrary to the provisions of law. The petitioner argued that the search was initiated and conducted by the Income Tax authorities from Bangalore, whereas he fell under the jurisdiction of officers in Chennai.

2. Jurisdiction of Income Tax Authorities under Sections 132 and 120 of the Income Tax Act, 1961:
The petitioner contended that the operation of Section 132, which deals with search and seizure, is subject to Section 120, which deals with the jurisdiction of Income-tax authorities. According to the petitioner, the search by Bangalore authorities was illegal as they did not have jurisdiction over him.

The court noted that Section 132 allows for search and seizure operations if the authorities have "reason to believe" that certain conditions are met, such as failure to produce required documents or possession of undisclosed income. The court also referenced the proviso to Section 132, which allows officers to conduct searches in locations outside their jurisdiction if delays in obtaining authorization from the jurisdictional officer would be prejudicial to the interests of the revenue. This proviso was inserted to address the need for immediate and swift action in multiple locations.

Section 132(1A) permits the authorization of searches in additional locations not initially covered under the main warrant if new information is received during the search. This authorization can be issued even to non-jurisdictional officers, as indicated by the phrase "notwithstanding anything contained in Section 120."

3. Validity of the Notification No.S.O.2914(E)(69/2014) dated 13.11.2014:
The Department relied on Notification No.S.O.2914(E)(69/2014), which extended the territorial jurisdiction of specified Director Generals of Income Tax to include areas outside their control. The Notification was intended to enable officers to perform functions related to search and seizure across India. However, the court clarified that this Notification deals with the extension of jurisdiction concerning territory alone and not with regard to the assessee.

The court emphasized that the statutory scheme mandates that searches should be conducted by the jurisdictional officers of the assessee, with exceptions only for locations falling under different jurisdictions, subject to compliance with the conditions under the proviso to Section 132 and Section 132(1A).

Conclusion:
The court concluded that the search conducted on the petitioner by the Bangalore authorities was illegal as it did not comply with the statutory requirements. The warrant of authorization was issued by an officer who did not have jurisdiction over the petitioner. Therefore, the court declared the search and all subsequent proceedings as illegal and allowed the writ petition. No costs were awarded, and the connected miscellaneous petition was closed.

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