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TMI Blog2008 (8) TMI 445X X X X Extracts X X X X X X X X Extracts X X X X ..... documents (page 103 of the assessee's paper book, 'APB'), on the conclusion of the proceedings by the said S.H.O. The warrant of authorization contained the names of the persons to whom the assets requisitioned were sought to be delivered by the S.H.O. The warrant of authorization and the requisitioning letter were served on the S.H.O. on 30-11-1998. However, the assets requisitioned were not handed over by the S.H.O. to the Requisitioning Officer, i.e., the Asstt. Director of Income-tax (Investigation), Bathinda. The jewellery and cash were, later, released to the assessee, but the documents and the Note Pad requisitioned were not handed over to the Department. The position remains the same till date. The Requisitioning Officer had taken photocopies of the loose papers and the Note Pad from the Office of the S.H.O. The statement of the assessee was recorded on 25-11-1998 while he was still in the custody o the Abohar police. Subsequently, his statement was also recorded on 14-1-1999 by the Requisitioning Officer. It was on the basis of these photocopies and statements that the block assessment was made at an undisclosed income of Rs. 23,15,990 vide order dated 27-11-2000. 3. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act; that as such, the dictionary meanings of these words have to be taken into consideration, as held in Abdulgafar A. Nadiawala v. Asstt. CIT [2004] 267 ITR 488 (Bom.); that as per Black's Law Dictionary, "requisition" means a demand in writing, or formal request or requirement; that as per CIT v. Aboo Mohmed [2001] 250 ITR 313 (Kar.), section 132A of the Act has considered the action of requisitioning as that of seizure under section 132(1) and as such, the provisions of section 132(4A) to (14) would apply mutatis mutandis; that therein, it was held that where books of account, other documents or assets have been delivered to the Requisitioning Officer, the provisions of section 132(4A) to section 132(14) shall apply mutatis mutandis; that in Amandeep Singh v. Director of Income-tax (Investigation) [2001] 252 ITR 139 (Punj. Har.), the Hon'ble jurisdictional High Court has held that there are two steps under section 132A; that the first step is of requisitioning and the second step is of compliance of such requisitioning by the actual physical delivery of the assets requisitioned to the Income tax Authorities; that in Chandra Prakash Agrawal v. Asstt. CIT [2006] 287 ITR 172 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's case, is a decision of the jurisdictional High Court, which is binding on the Tribunal. 10. We have heard the parties and have perused the material on record. 11. At the outset, the provisions of the relevant section 132A of the Act involved in the present controversy are being reproduced as follows:- "132A. Power to requisition books of account, etc.-(1) Where the [Director General or Director] or the [Chief Commissioner or Commissioner], in consequence of information in his possession, has reason to believe that- (a) (b) ** (c) any assets represent either wholly or partly income or property which has not been, or would not have been, disclosed for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act by any person from whose possession or control such assets have been taken into custody by any officer or authority under any other law for the time being in force, then, the [Director General or Director] or the [Chief Commissioner or Commissioner] may authorize any {[Joint] Director}, [Joint] Commissioner, {Assistant Director} [or Deputy Director], [Assistant Commissioner (or Deputy Commissioner) or Income-tax Officer] [hereinafter in this section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FIR was lodged. On 22-3-1998, the police authorities applied to the Chief Judicial Magistrate for police remand of the assessee for a week. On receipt of the information about this seizure, the Income-tax authorities recorded the statement of the assessee on 23-3-1998 to enquire into the source of the currency notes. Not satisfied with the explanation of the assessee, the Director of Income-tax (Investigation) issued a requisition under section 132A of the Income-tax Act on 23-3-1998, requiring the police authorities to deliver the currency notes to him, as according to him, the currency notes represented income or property which had not been or would not have disclosed for the purposes of the Income-tax Act. In pursuance of the said requisition, the police authorities delivered the currency notes to the Director of Income-tax (Investigation), on 24-3-1998. Thereafter, on 20-7-1999, a notice under section 158BC of the Income-tax Act was issued, requiring the assessee to prepare and file the return for the block period concerned. The assessee complied and filed a return on 6-9-1999. During the assessment proceedings, the assessee filed a letter questioning the validity of the requis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell competent to issue the requisition under section 132A; that since the notice under section 132A was valid, the consequential notice under section 158BC was also valid; that however, the police officer was not legally competent to deliver the possession of the seized amount without obtaining order of the Court of competent authority under section 457 of the Criminal Procedure Code; and that the amount delivered to the Director of Income-tax (Investigation) had to be returned to the police authority who had to obtain necessary orders from the court of competent authority in accordance with the provisions contained in sections 102 and 457 of the Criminal Procedure Code. 15. In Chandra Prakash Agrawal's case, the relevant facts are that in a search conducted by the Officers of the Directorate General, Central Excise, New Delhi at the business premises of the assessee, certain documents were seized, on 7-6-2001. On the basis of such search, the DDIT (Invt.) initiated proceedings under section 132A against the assessee by issuance of a notice dated 27-3-2002. The assessee was required to give statement on the documents/papers seized by the Central Excise Department The assessee sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken into consideration for the reassessment proceedings. 17. In Smt. Mahesh Kumari Batra's case, it has been held by the Special Bench of the Tribunal, inter alia, that the Assessing Officer acquires the power to assess the undisclosed income at the time of initiation of search, but the actual exercise of that power commences only after the search is over by serving notice under section 158BC; that therefore, the existence of search is the jurisdictional fact which is necessary to the validity of the proceedings and without which, the act of the Assessing Officer will be a mere nullity; that it is the existence of this jurisdictional fact, which will give jurisdiction to the Assessing Officer to assess the undisclosed income of the person searched; that when the jurisdictional fact of search exists to proceed under Chapter XIV-B of the Act, there is no need to bring in "the formation of belief" by the Assessing Officer to proceed under the Chapter; that the term "jurisdiction" means authority or power to act in a matter, and not authority or power to do an act in a particular manner; that the rights, duties and responsibilities of the parties having been created by sections 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he seized assets/amount was delivered, it was ordered by the Hon'ble High Court to be returned to the police authority, and it was held that the police authority had to obtain necessary orders from the Court of the competent jurisdiction in accordance with the provisions contained in sections 102 and 457 of the Cr. Procedure Code. 23. In Chandra Prakash Agrawal's case, the Hon'ble Allahabad High Court has held that "requisition" means taking of actual possession and that the requisition is complete only when the seized asset, which had been requisitioned, has been delivered to the requisitioning authority. 24. The High Courts in Amandeep Singh's case and Chandra Prakash Agrawal's case, have categorically held that under section 132A, requisitioning of the assets seized is the first step and compliance thereof by delivery of the requisitioned assets is the second step ('Amandeep Singh'); and that the requisition is complete only when the seized assets, which have been requisitioned, stand delivered to the requisitioning authority ('Chandra Prakash Agrawal'). The decision of the Hon'ble Punjab and Haryana High Court in Amandeep Singh's case has been given by specifically noting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0] 243 ITR 602. While doing so, it was held as follows:- "However, the facts of the present case are similar to the facts of the case of Sadruddin Javeri [2000] 243 ITR 579 (AP). In that case, the Andhra Pradesh High Court was considering the question whether the Income-tax authorities can justify and legally invoke section 132A of the Act to take delivery of the seized assets from the police when the seizure was in connection with an alleged offence and the seized assets are held under section 102 of the Criminal Procedure Code before the police authorities could report the seizure to the court and obtain an order under section 457 of the Criminal Procedure Code. It was held that such a course was not open to the income-tax authorities and the possession taken by them by invoking section 132A was illegal. The following observations of the court as appearing at page 595 of the report can be usefully referred to: Seen in this background the powers to requisition of books of account, etc., and any assets as contemplated under section 132A of the Income-tax Act, 1961, one has necessarily to consider, whether the expression 'any officer or authority under any other law for the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticles, the petitioner identified only 17 items and the remaining 27 items could not be identified by him. Now the court directed release of all the articles seized by the police from the premises. It is the grievance of the petitioner that the Department is entitled to appropriate these articles of the petitioner, against the petitioner's arrears or income-tax. Hence, the direction to return the articles is not warranted. Though it was prayed by the petitioner to set aside the notices issued under sections 132 and 132A of the Income-tax Act and the enquiry that may be held in consequence thereof, the court has not chosen to grant any such relief or to interfere with those proceedings. Hence, the Department is entitled to proceed with the enquiry. But, meanwhile as per the direction, the Income-tax Department is liable to return the articles to the petitioner. But it is made clear that the articles returned are subject to consequential orders that may be passed by the Department after enquiry is completed. Accordingly, this review petition is dismissed, subject to the above observations." From the above discussion, it clearly emerges that when a seizure is made by a police of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in satisfaction of the warrant of authorization, as admitted by the Additional Director of Income- tax (Investigation), Jalandhar in his letter dated 24-1-2000 to the Commissioner of Income-tax, Patiala (copy at APB 104 to 107). Thus, the requirements of section 132A(3) have not been complied with. Therefore, the provisions of section 158BC cannot be invoked. The provisions of section 158BC come into play on a valid requisition. 28. Apropos M.B. Lal's case, that decision does not touch upon the controversy at hand. The question therein was not as to whether jurisdiction to block assessment arises from the service of warrant of authorization or the physical handing over the requisitioned assets. In the present case, the validity of any search is not being questioned. 29. In view of the above, respectfully following Amandeep Singh's case and Chandra Prakash Agrawal's case, we hold that jurisdiction to complete block assessment under section 158BC is conferred on the Assessing Officer only on the physical handing over of all the books of account/documents/assets requisitioned under section 132A, to the income-tax authorities concerned. 30. The question referred to this Special B ..... X X X X Extracts X X X X X X X X Extracts X X X X
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