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2021 (11) TMI 920 - AT - Income TaxValidity of search action initiated - receipt of search warrant - HELD THAT - Section 132(1) of the Act clearly stipulates issuance of search warrant against whom the search was conducted in accordance with law. In the present case, the search was conducted in the premises of the assessee company which is duly admitted by the Managing Director of the company at the time of recording of her statement. Further from the paper book, we also found that the Managing Director of the company during the appellate proceedings filed an affidavit and in the affidavit he had stated that she is the Managing Director of the Company and the diary was found belonging to the assessee company. the search warrant was clearly issued against the assessee company and, therefore, the action on the part of the revenue to initiate the search proceedings against the assessee company was in accordance with law. In our view, the ld. CIT(A) has rightly relied upon the decision of Hon ble Delhi High Court in the matter of MDLR Resorts Pvt. Ltd 2013 (12) TMI 1116 - DELHI HIGH COURT and therefore, we do not find any error in the order of CIT(A). Search warrant was required to be received by Smt.Radha S. Timblo in her individual capacity as well as in the capacity of Managing Director and only one signature appears on the search warrant - We are of the opinion that in the Companies Act and also in the Income Tax Act, the Managing Director of the company is an authorised officer to file the proceeding for and on behalf of the company and is also entitled to receive the document on behalf of the company. Admittedly, in her statement, Smt. Radha S. Timblo has categorically mentioned that she is making statement in her individual capacity and being the Managing Director of M/s Timblo Pvt. Ltd.. Once the Managing Director of the company says that the search was carried out in the premises of the company, therefore, it is not option for the assessee to take diametrically opposite stand stating that no search was carried out in the premises of the assessee company. With the above observations, we found that the legal ground raised by the assessee in all the appeals is not maintainable. Accordingly, we dismiss all the appeals of the assessee.
Issues Involved:
1. Legality of the search initiated under section 132(1) of the Income Tax Act. 2. Validity of the assessment under section 153A of the Income Tax Act. 3. Execution of the search warrant and its implications. 4. Department's appeal regarding deletion of additions under section 69C of the Income Tax Act. Detailed Analysis: 1. Legality of the Search Initiated Under Section 132(1) of the Income Tax Act: The assessee challenged the initiation of the search under section 132 of the Act, arguing it was illegal and ultra vires as it was based on suspicion rather than concrete information or material, rendering the consequent assessment under section 153A null and void. The assessee relied on precedents such as the Supreme Court decision in Ajit Jain (260 ITR 80) and the Karnataka High Court decision in C. Ramaiah Reddy Vs. ACIT (61 DTR 82), emphasizing that a valid search is a sine qua non for a valid assessment under section 153A. 2. Validity of the Assessment Under Section 153A of the Income Tax Act: The assessee contended that the warrant of authorization was not properly executed, as the name of the assessee company was not mentioned in the panchanama, and thus no search was conducted against the assessee company. The assessee argued that the assessment should have been made under section 153C instead of 153A, as the search was not directly on the assessee but on another individual, Smt. Radha S. Timblo, who was the Managing Director of the assessee company. 3. Execution of the Search Warrant and Its Implications: The assessee highlighted discrepancies in the search warrant and panchanamas, noting that the warrant was issued in the names of Smt. Radha S. Timblo and M/s Timblo Pvt. Ltd., but only executed on Smt. Radha S. Timblo. The assessee argued that the search was conducted on the premises of M/s Timblo Pvt. Ltd. but not on the company itself, rendering the notice under section 153A invalid. The affidavit by Smt. Radha S. Timblo confirmed her role as Managing Director and the ownership of the premises searched, but the assessee maintained that the search was not on the company. 4. Department's Appeal Regarding Deletion of Additions Under Section 69C of the Income Tax Act: The department appealed against the deletion of additions made under section 69C, amounting to ?2,00,00,000 and ?2,28,54,314, arguing that the seized diary indicated unexplained expenditures. The assessee explained that the entries in the diary were estimates and not actual payments, and some amounts were already disclosed in earlier assessments. The CIT(A) deleted the additions, finding the assessee's explanations satisfactory and noting that the entries in the diary did not conclusively prove actual expenditures. Judgment: The Tribunal found that the search warrant was indeed issued against the assessee company and was executed in accordance with law. The Managing Director's acknowledgment during the search and the affidavit confirmed the search's validity. The Tribunal upheld the CIT(A)'s reliance on the Delhi High Court decision in MDLR Resorts Pvt. Ltd Vs. CIT (361 ITR 407) and dismissed the legal grounds raised by the assessee. Regarding the department's appeal, the Tribunal agreed with the CIT(A)'s deletion of additions under section 69C, emphasizing the lack of concrete evidence of actual expenditures and the satisfactory explanations provided by the assessee. Conclusion: The Tribunal dismissed all the appeals of the assessee and upheld the CIT(A)'s orders, confirming the legality of the search and the validity of the assessments under section 153A, as well as the deletion of additions under section 69C.
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