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2022 (8) TMI 1065 - AT - Income TaxAssessment u/s 153A - only survey operation under section 133A - Whether valid search is conducted against the assessee u/s 132? - HELD THAT - We find that the search has been initiated in the name of the assessee firm along with names of partners appearing on the warrant of authorization issued u/s 132(1) but no search was conducted at the business premises of the assessee firm. The address mentioned in the partnership deed, notice issued u/s. 133A, the PAN, IT Data base and ITR, copies of which were filed before us, clearly prove that 40, Deshmukh Apartments, Dattatray Nagar, Nagpur where the search was conducted is not the business address of the assessee firm. The search was concluded but no panchnama was drawn in the name of the assessee firm. Therefore, the conditions as stipulated for assuming the jurisdiction u/s. 153A, in our view, have not been satisfied. We do not agree with the contention of the CIT(A) that since, the premises belonged to the partners, search carried out at the residence of partners is a search conducted at the assessee firm. The firm is a separate taxable unit under the income tax act and in view of the Hon ble Bombay HC decision in the case of Tirupati Oil Corporation 2000 (2) TMI 42 - BOMBAY HIGH COURT , Karnataka High Court decision in Nenmal Parmal 1991 (11) TMI 49 - KARNATAKA HIGH COURT and in Govind G. Sarawagi HUF 2015 (11) TMI 993 - ITAT AHMEDABAD it cannot be said that there was any search on the assessee firm. In view of these facts, we are of the opinion that the conditions stipulated u/s. 153A, for the issue of notice, are not satisfied. Until and unless the Assessing Officer assumes the valid jurisdiction u/s. 153A the assessment made in consequence of the notice issued u/s. 153A, in our view is invalid and void ab initio. Accordingly, ground No 1 raised by the appellant for all the assessment years is allowed and we quash the assessment order passed u/s. 153A r.w.s. 143(3).
Issues Involved:
1. Validity of the order passed by the assessing officer under section 153A read with section 143(3) of the Income Tax Act, 1961. 2. Jurisdiction of the assessing officer to initiate proceedings under section 153A based on a survey under section 133A. 3. Applicability of section 153C instead of section 153A when incriminating documents are found at the residential premises of the partners. Detailed Analysis: Issue 1: Validity of the Order Under Section 153A r.w.s. 143(3) The assessee contended that the order passed by the assessing officer under section 153A read with section 143(3) is "bad in law, without jurisdiction and void ab initio." The primary argument was that the notice under section 153A was issued under the erroneous assumption that the appellant firm was subject to search under section 132. The search was conducted at the residential premises of the partners, not at the business premises of the firm. The business premises were only subject to a survey under section 133A, which does not authorize the initiation of proceedings under section 153A. Issue 2: Jurisdiction to Initiate Proceedings Under Section 153A The appellant argued that the survey action under section 133A does not entitle the assessing officer to initiate proceedings under section 153A. The search warrant mentioned the name of the assessee firm but specified the residential premises of the partners as the place of search. No search was conducted at the business premises of the firm, and no incriminating material was found there. The authorized officers prepared an inventory during the survey, and the word "search" was canceled on all pages, indicating that only a survey was conducted. Issue 3: Applicability of Section 153C The appellant contended that even if incriminating documents related to the partnership firm were found during the search at the residential premises of the partners, action against the firm should be initiated under section 153C, not section 153A. The firm is a separate legal entity, and a search at the residential premises of the partners does not constitute a search of the firm. Tribunal's Findings: On Validity of the Order Under Section 153A r.w.s. 143(3) The Tribunal found that the search warrant authorized the search of the residential premises of the partners, not the business premises of the assessee firm. The business premises were only subject to a survey under section 133A. Therefore, the assessing officer did not have the jurisdiction to issue a notice under section 153A. The Tribunal quashed the assessment order passed under section 153A r.w.s. 143(3), declaring it invalid and void ab initio. On Jurisdiction to Initiate Proceedings Under Section 153A The Tribunal analyzed the provisions of sections 132(1) and 153A and concluded that the conditions for assuming jurisdiction under section 153A were not satisfied. The search was conducted at the residential premises of the partners, not at the business premises of the firm. The Tribunal held that the assessing officer could not initiate proceedings under section 153A based on a survey under section 133A. On Applicability of Section 153C The Tribunal agreed with the appellant's contention that any incriminating material found at the residential premises of the partners should lead to proceedings under section 153C, not section 153A. The Tribunal cited various judicial precedents supporting this view, including decisions from the ITAT Raipur bench, ITAT Mumbai bench, and the jurisdictional Bombay High Court. Conclusion: The Tribunal allowed the appeals filed by the assessee for all three years, quashing the assessment orders passed under section 153A r.w.s. 143(3) of the Income Tax Act, 1961. The Tribunal held that the assessing officer did not have the jurisdiction to issue notices under section 153A based on a survey under section 133A and that any action should have been initiated under section 153C if incriminating material was found at the residential premises of the partners.
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