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TMI Blog2013 (4) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... Deputy Commissioner of Income Tax (2012 (5) TMI 107 - DELHI HIGH COURT), Deputy Commissioner of Income Tax as well as the decisions of Punjab & Haryana High Court, Madhya Pradesh High Court, Rajasthan High Court, and Delhi High Court which have on more than one occasion held that in hearing an appeal against the order of the assessment, the Tribunal cannot go into the question of validity or otherwise of any decisions for conducting search and seizure. This decision can be challenged in an independent proceedings where the question of validity of order may be gone into. - Decided in favor of revenue. - Income Tax Appeal No.174 of 2000, Civil misc. Writ petition (Tax) No. 223 of 2000 - - - Dated:- 5-4-2013 - Sunil Ambwani And Bharat Bhushan, JJ. JUDGMENT 1. We have heard Shri Bharat Ji Agarwal, Senior Counsel assisted by Shri Shambhu Chopra for Commissioner of Income Tax, Allahabad and the Director of Income Tax (Investigation), Income Tax Office, Kanpur. Shri S.K. Garg assisted by Shri Ashish Bansal appears for the respondent. 2. The Income Tax Appeal No. 174 of 2000 under Section 260-A of Income Tax Act, 1961 arises out of an order dated 8.12.1999 passed by the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Allahabad requiring the assessee to prepare a true and correct return of his total income including the undisclosed income in respect of which he is the individual/HUF/firm/company/AOP/body of individuals/local authority for the block period mentioned in Section 158 B(a) of the Act. 5. A grievance petition was submitted by the assessee to the Chief Commissioner of Income Tax, Lucknow on 24.4.1997 representing that the notice in question apart from being vague could not be complied because of non-availability of the seized material. Another petition was sent to Grievances Cell on 1.8.1997 as well as petition before the Assessing Officer stating that the assessee could not be subjected to search operations and thus the provisions of Chapter XIV-B were not applicable. 6. A block assessment order under Section 158BC read with Section 143 (3) of the Act was passed on 30.9.1997 for the block period from 1.4.1986 to 14.9.1996 on a total income of Rs.4,50,59,000/- on which the tax payable @ 60% was Rs.2,70,35,400/-. The order was passed after approval of the Commission of Income Tax under Section 158BG of the Act. 7. The assessee filed an Appeal (ITA No. 1390 (Alld) of 1997) before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her reasons, then the extraordinary jurisdiction under Article 226 of the Constitution can be requested for only if (a) there is no other remedy available under the relevant statute or (b) if the procedure/other remedial procedure is followed, the subject would suffer an irreparable loss to life or properties or reputation or anything else. 12. Non-guaranteeing the subject's right to approach the High Court under Article 226 supports the view that subject's right to approach the High Court requesting for the invoking of the special jurisdiction is neither guaranteed nor is absolute-which makes it, further clear that wherever the subject has efficacious alternative remedy under the relevant statutes for getting the objective redress, it should first exhaust that remedy. 12.1. If this is the law, then to say that a subject, instead of going to the Tribunal, should go to the High Court by way of a petition under Article 226 is to confer a right on the subject which otherwise is not conferred on it- even by the Constitution itself. 13. In view of the above discussion, I am of the opinion that Article 226 does not debar the subject from taking recourse to efficacious remedies avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is found that there are other concerns/persons, namely, 'B', 'C' and 'D' having independent business at the same premises. The search party completes the search by seizing the documents, books and other assets as the case may be, by preparing Panchnamas either in the name of 'A' alone or in the names of 'A', 'B', 'C' and 'D' separately. The authorised officer informs the AO, having jurisdiction over the cases about the factum of search. The AO, without going into the facturm of search-what to say in accordance with law or against law, makes assessments of 'A', 'B', 'C' and 'D' under s.158 BC. 'B', 'C' and 'C' challenge their assessments under s.158BC before the appellate authority on the ground that there being no search warrant in their names, assessments under s.158 BC were bad in law. The appellate authority has no option but to verify the factum of search, i.e., the existence of search warrant in the names of 'B', 'C' and 'D' and on satisfaction that there was no authorisation in their names has to declare the assessment of block period in case of 'B', 'C' and 'C' as avoid ab initio." 10. The third Member held that the empowerment of an Assessing Officer to make an assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cerned, the first limb, i.e., initiation of search, which includes all the actions culminating into issue of warrant of authorization assumes significance and relevance and the same, in our opinion, are not justiciable in an appeal before the Tribunal. The only remedy in this matter lies in the form of seeking issue of a writ from the Hon'ble High Court. We, therefore, answer the question referred to this Special Bench in negative, i.e., in favour of the Revenue and against the assessee. 78.As regards the remaining two limbs, i.e., conduct of search and conclusion of search, anomalies and infirmities therein, if any, do not go to vitiate the search action and the Tribunal can look into these aspects to the extent relevant for disposing of the appeal against the block assessment as discussed above. In our opinion, the Tribunal also has the power to call for the production of warrant of authorization and other documentary evidence to ascertain that the search, in fact, was initiated and conducted in a given case to verify this jurisdictional fact, if so challenged by the assessee and if so thought fit by the Tribunal in the facts and circumstances of the case." 13. Shri Bharat Ji ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held as follows:- "...In our considered opinion, the jurisdiction exercised by the statutory authority while hearing the appeal cannot enter into the justifiability of an action under section 132A of the Act. To elaborate: whether the order passed by the Commissioner is without jurisdiction or not cannot be the subject-matter of assessment as the same does not arise in the course of assessment. Therefore, neither the Assessing Officer nor the appellate authority can dwell upon the said facet. We may note with profit, it would not be a jurisdictional fact within the parameters of assessment proceeding or an appeal arising therefrom. It can only partake of the nature and character of adjudicatory fact to the limited extent whether such search and seizure had taken place and what has been found during the search and seizure. The validity of search and seizure in and, therefore, the same cannot be dwelled upon or delved into in an appeal. The submission of Mr. Nema that the Tribunal having been constituted under article 323 of the Constitution can delve into, we are disposed to think, is an unacceptable proposition of law especially in the teeth of the provision contained under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , on the other hand, submits that the issue involved in the appeal and the writ petition was considered by the Karnataka High Court in the case of C Ramaiah Reddy vs. ACIT (2011) 339 ITR 210 in which it was held at pages 253 to 255 as follows:- "A mere search or seizure, by itself would not result in foisting the liability on the assessee thought it would invade his right to privacy and the fundamental right to carry on business. But, if the said search and seizure results in determination of liability and levy of tax then the assessee is said to be an aggrieved person. The said determination of liability and levy of tax would be by way of an assessment order. Then only he can avail of the remedy of appeal provided under the statute. In other words, he cannot prefer an appeal against authorization of search and seizure as illegal. But, once such unauthorized or illegal search and seizure culminates in an assessment order, then he gets a right to challenge the assessment on several grounds including the authorization and initiation of search and seizure without which no order of assessment could have been passed. Though the authorization of search and seizure may not be by the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order. Since this action of the Assessing Officer is inextricably linked with the initiation of assessment proceedings the same can be assailed before the appellate authority. If the initiation of these block assessment proceedings is vitiated, in the eye of law, there is no search and the entire proceedings based on such search has no legs to stand. Therefore, in an appeal filed challenging the block assessment order, it is open to the assessee to contend that this foundation for block assessment is an illegal search. Therefore, it is obligatory on the part of the Tribunal first to go into the jurisdictional aspect and satisfy itself that the said search was valid and legal. It is only then it can go into the correctness of the order of block assessment. Therefore, it cannot be said merely because the assesses did not choose to challenge the search conducted in his premises on the aforesaid grounds by way of a writ petition under Article 226 of the Constitution before the High Court, he cannot challenge the said order in appeal. In the absence of a specific provision provided under the Act for appeal against such orders, in the appeal filed against the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the appellate powers. He submits that the principle of natural justice is attracted in such case. The assessee is entitled to know the reason that had led to initiation of search and seizure action against him so that he may get an opportunity to contend that such action was not valid. Shri Garg has relied upon Rajesh Kumar v. Dy.CIT (2006) 287 ITR 91 (SC); Kanwar Natwar Singh v. Director of Enforcement (2011) 330 ITR 374. He has also cited a number of cases in support of his submission namely Jan Mohammed v. CIT (1953) 23 ITR 15; Sub Divisional Officer, Sadar v. Shambhu Narain Singh AIR 1970 (SC) 140; Asstt. Collector, Central Excise v. National Tobacco Co. AIR 1972 (SC) 2563; Goel Co. v. Union of India (1994) 209 ITR 332 (Alld); City Montessory School v. Union of India, Writ Petition No.2818 (MB) of 2000; ACIT v. Hotel Blue Moon (2010) 321 ITR 362; M.D. Overseas Ltd v. DGIT (2011) 333 ITR 407 (All.); and CIT v. Ashoka Engineering Co. (1992) 194 ITR 645 (SC) in support of his submission. 22. We have carefully considered the arguments and find that the order of Income Tax Appellate Tribunal holding that the Tribunal, while deciding the appeal, can look into the validity of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of the person on whom the notice was served. If the Assessing Officer does not satisfy himself in this regard, then the assessee has the right to object to the validity of the assessment in appeal on the ground that no search was initiated/conducted in the case of the appellant. The Assessing Officer can look into these aspects under Section 148BA unless the case is covered under Section 158BD of the Act. 25. The Five-Members Bench further held that the Tribunal can also look into the findings recorded by the Assessing Officer on the examination of the seized material, and validity of the order under Section 158BB which requires the Assessing Officer to determine the total undisclosed income with reference to the evidence found as a result of search and such other material/information relatable to the search and this evidence will include the statements recorded in the course of search. The Tribunal can also look into the consequence of the search namely the completion of assessment for the purpose of computing the period of limitation under Section 158BE. It may also examine as to when the last of the authorizations was executed for the purpose of calculating the limitation. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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