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2016 (5) TMI 321 - AT - Income TaxAssessment u/s 153A - Held that - Revenue had conducted survey operation at the business premises of the assessee firm in which materials are seized. This survey does not entitle the Revenue to initiate proceedings u/s 153A. having searched the residence of partners of the assessee firm Revenue could have initiated action against the assessee firm only u/s 153C had any document pertaining to the firm were seized from the residential premises. Since no material was seized, the revenue could not have initiated proceedings against the assessee firm u/s 153C. in these circumstances in our considered opinion the revenue cannot take shelter of provisions of section 153A for initiating action against the assessee which we have found to be not a valid one qua the assessee firm. DR cannot be a reasoning to hold that by means of an invalid search Revenue can take recourse to provisions of section 153A. Hence we hold that since the warrant of search was not executed at the business premises of the assessee firm and from the place of search no material whatsoever relating to the firm was found nor any submission was recorded from the partners of the firm nor the search notice was served upon the partners of the firm, the search conducted qua the assessee firm was not a valid search. In such circumstances, proceedings initiated u/s 153a in the case of the assessee firm are invalid. Accordingly we do not find any infirmity in the order of the learned CIT (Appeals) accordingly we uphold the same. - Decided in favour of assessee.
Issues Involved:
1. Validity of the block assessment orders framed under Section 153A read with Section 143(3) of the Income Tax Act, 1961. 2. Whether the search conducted at the residence of the partners of the assessee firm can be considered a valid search under Section 132 for initiating proceedings under Section 153A. 3. The impact of the survey conducted under Section 133A at the business premises of the assessee firm on the validity of the assessments. Detailed Analysis: Issue 1: Validity of the Block Assessment Orders The appeals by the revenue challenge the order of the learned CIT (Appeals) which canceled the block assessment orders framed by the AO for the assessment years 2002-03 to 2007-08. The CIT (Appeals) concluded that no search and seizure operation was conducted at the business premises of the assessee firm, which is a sine qua non for framing search assessments. The assessments were based on materials impounded during a survey conducted under Section 133A, not a search under Section 132. Consequently, the CIT (Appeals) declared the assessments null and void. Issue 2: Validity of the Search Conducted The revenue argued that the initiation of search under Section 132 at the residence of the partners of the assessee firm should be considered a valid search for the purposes of Section 153A. The learned D.R. cited several case laws to support this contention, including ACIT vs. Chetan Das Lachman Das, ACIT vs. Chilka Vyankatesh Sidram, Naresh Chand Baid vs. ACIT, and Canara Housing Development Co. vs. DCIT. However, the Tribunal found these cases distinguishable. In the present case, no material related to the assessee firm was found at the searched premises, and no statements were recorded from the partners. The Tribunal concluded that the search conducted at the residence of the partners did not constitute a valid search under Section 132 for initiating proceedings under Section 153A against the assessee firm. Issue 3: Impact of the Survey Conducted The survey conducted under Section 133A at the business premises of the assessee firm led to the impounding of various books, documents, and papers. However, the Tribunal noted that materials gathered during a survey under Section 133A cannot be used for block assessment proceedings under Section 153A. The Tribunal emphasized that a valid search under Section 132 is essential for invoking Section 153A. Since no such search was conducted at the business premises of the assessee firm, the assessments based on the survey materials were invalid. Conclusion The Tribunal upheld the order of the learned CIT (Appeals) and dismissed the appeals filed by the revenue. It was concluded that the search conducted at the residence of the partners did not constitute a valid search under Section 132 for the purposes of Section 153A. Consequently, the assessments framed under Section 153A read with Section 143(3) were declared null and void. The Tribunal emphasized that the mere initiation of a search is insufficient; an actual search must be conducted at the premises of the assessee to invoke Section 153A.
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