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TMI Blog2016 (12) TMI 1195X X X X Extracts X X X X X X X X Extracts X X X X ..... decline in the iron ore export market, the turnover of Liberty Marine has gradually decreased over time and accordingly the tax paid by the Liberty Marine has also drastically reduced. The Income Tax Department conducted a survey U/s.133-A of the Income Tax Act at the registered office premises of the Liberty Marine on 11.09.2014 at Paradip and taking the Law in their own hands the survey and search was conducted on 12.09.2014, no undisclosed assets or income have been found in course of search and seizure, but in spite of these aspects of the matter a notice U/s.153-A of the Income Tax Act for the Assessment years 2009-10 to 2014-15 (Annexure-4) has been issued against the petitioner - company which is impugned in this writ petition on the ground that the notice impugned has been issued without following the pre-conditions of Section 132(1)(a), (b) or (c) of the Income Tax Act, no notice has been issued U/s.131(1)(a) of the Income Tax Act, 1961 (herein after referred to as the Act, 1961) before proceeding with search authorization U/s.132 of the Act, 1961, the authorities have conducted the search U/s.132 without any rhyme and reason and as such the search and seizure conducted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) Where the [Principal Director General or] Director General or [Principal Director or] Director or the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner in consequence of information in his possession, has reason to believe that- (a) any person to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub-section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub-section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice, or (b) any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to, any proceeding under the Indian Income-tax Act, 1922 (11 of 1922) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search: Provided that bullion, jewellery or other valuable article or thing, being stock-in-trade of the business, found as a result of such search shall not be seized but the authorised officer shall make a note or inventory of such stock-in-trade of the business; (iv) place marks of identification on any books of account or other documents or make or cause to be made extracts or copies therefrom; (v) make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing : [Provided that where any building, place, vessel, vehicle or aircraft referred to in clause (i) is within the area of jurisdiction of any [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner, but such [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c), then, notwithstanding anything contained in section 120, it shall be competent for him to exercise the powers under this sub-section in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vessel, vehicle or aircraft.] (2) The authorised officer may requisition the services of any police officer or of any officer of the Central Government, or of both, to assist him for all or any of the purposes specified in sub-section (1) or sub-section (1A) and it shall be the duty of every such officer to comply with such requisition. (3) The authorised officer may, where it is not practicable to seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing, for reasons other than those mentioned in the second proviso to sub-section (1), serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it except with the previous permission of such officer and such officer may take such steps as may be necessary for ensuring compliance with this sub-section. Explanation.-For the removal of doubts, it is hereby declared that serving of an order as aforesaid under this sub-section shall not be deemed to be seizure of such books of account, other documents, money, bullion, jewellery or other valuable article or thing under clause (iii) of sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such retention is obtained : Provided that the [Principal Chief Commissioner or] Chief Commissioner, [Principal Commissioner or] Commissioner, [Principal Director General or] Director General or [Principal Director or] Director shall not authorise the retention of the books of account and other documents for a period exceeding thirty days after all the proceedings under the Indian Income-tax Act, 1922 (11 of 1922), or this Act in respect of the years for which the books of account or other documents are relevant are completed. (8A) An order under sub-section (3) shall not be in force for a period exceeding sixty days from the date of the order. (9) The person from whose custody any books of account or other documents are seized under sub-section (1) or sub-section (1A) may make copies thereof, or take extracts therefrom, in the presence of the authorised officer or any other person empowered by him in this behalf, at such place and time as the authorised officer may appoint in this behalf. (9A) Where the authorised officer has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c) of subsection (1), the books of account or other documents, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may have been completed on or before such date and includes also all proceedings under this Act which may be commenced after such date in respect of any year." Section 132 confers power upon the authorities for search and seizure. The provision stipulates power upon the authorities who must have information in his possession and it is he who must have reasons to believe, it is, however, not the commissioner who does the actual search and seizure. This is left to the person whom he authorizes to carry out the search. It follows, therefore, that the seizure of books of account, documents, money, bullion, jewellery or other valuable articles would be dependent on the person so authorized being of the opinion that the same would be useful in any income tax proceeding. Therefore, the inspecting officers cannot seize documents, etc, by themselves but must be guided by the Commissioner. In other words, the things can be seized only after the Commissioner has seen them and had come to be of the opinion that they were relevant and useful, or else he must set out in the warrant of authority particulars of such documents, books of accounts, etc. The difference in between the wordings of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestigation relating thereto, it shall be competent for him to exercise the powers conferred under sub-section (1) on the income-tax authorities referred to in that sub-section, notwithstanding that no proceedings with respect to such person or class of persons are pending before him or any other income-tax authority." This provision confers power upon the competent authority that if there is reason to suspect that any income has been concealed, or is likely to be concealed by any person or class of persons within his jurisdiction, then, for the purposes for making any inquiry or investigation relating thereto, it shall be competent to exercise powers conferred under sub-section (1) on the income tax authorities referred to in that sub-section, notwithstanding that no proceeding with respect to such person or class of persons are pending before him or any other income tax authority. We gathered from the provision of Sec.131(1A) that no precondition for issuance of notice upon the assessee is stipulated in the said provision before invoking the jurisdiction conferred under the provision of Section 132 of the Act. 6. Section 133(A) reads as follows:- "133A. Power of survey. (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er place where business or profession is carried on, within the limits of the area assigned to him, or any place in respect of which he is authorised for the purposes of this section by such income-tax authority who is assigned the area within which such place is situated, where books of account or documents are kept and require the deductor or the collector or any other person who may at that time and place be attending in any manner to such work,- (i) to afford him the necessary facility to inspect such books of account or other documents as he may require and which may be available at such place, and (ii) to furnish such information as he may require in relation to such matter.] (3) An income-tax authority acting under this section may,- (i) if he so deems necessary, place marks of identification on the books of account or other documents inspected by him and make or cause to be made extracts or copies therefrom, (ia) impound and retain in his custody for such period as he thinks fit any books of account or other documents inspected by him: Provided that such income-tax authority shall not- (a) impound any books of account or other documents except after rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Recovery Officer or an Inspector of Income-tax without obtaining the approval of the Joint Director or the Joint Commissioner, as the case may be. Explanation.-In this section,- (a) "income-tax authority" means a [Principal Commissioner or] Commissioner, a Joint Commissioner, a [Principal Director or] Director, a Joint Director, an Assistant Director or a Deputy Director or an Assessing Officer, or a Tax Recovery Officer, and for the purposes of clause (i) of sub-section (1), clause (i) of sub-section (3) and sub-section (5), includes an Inspector of Income-tax; (b) "proceeding" means any proceeding under this Act in respect of any year which may be pending on the date on which the powers under this section are exercised or which may have been completed on or before such date and includes also all proceedings under this Act which may be commenced after such date in respect of any year." This section confers power upon the authority to conduct survey which authorizes the income tax authority to enter in any place within the limits of the area assigned to him, or any place occupied by any person in respect of whom he exercises jurisdiction or any place in respect of which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to subsection (1), shall stand revived with effect from the date of receipt of the order of such annulment by the [Principal Commissioner or] Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside. Explanation.-For the removal of doubts, it is hereby declared that,- (i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year." Section 153-A confers power upon the authorities for making an assessment in case of search or requisition which provides that notwithstanding anything contained in Sec.139, 147, 148, 149, 151 and 153, in the case of a person where a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity in complete mis-utilization of the official position. The grounds or reasons which lead to the formation of the belief must have a material bearing on the question of concealment of income by the assessee from assessment because of his failure or omission to disclose fully and truly all material facts. Once there exist reasonable grounds for the Income Tax Officer to form the above belief, that would be sufficient to clothe him to invoke the jurisdiction of section 132 of the Act. Whether the grounds are adequate or not is not a matter for the court to investigate. The sufficiency of the grounds which induce the Income Tax Officer to act is therefore not a justiciable issue, though he cannot make a search or authorize any officer to make a search unless he has reason to believe the existence of the facts mentioned in the section, the section does not compel him to give reasons and non-mention of reasons in itself does not vitiate the order and the Court will never go into the adequacy of such reason as has been held by Hon'ble Apex Court in the case of S. Narayanappa Vrs. Commissioner of Income Tax, reported in 1976 63 I.T.R. 219 (S.C. We further gathered from the statutory p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act, 1961 and accordingly search and seizure was conducted on 11.09.2014 and on subsequent dates in the residential as well as business premises of the petitioner - company, survey operation U/s.133-A of the Income Tax Act, 1961 were also carried out at various places of Kolkata and Paradip, in view of the decision taken by the authorities U/s.127 of the Income Tax Act, 1961. The main thrust of argument of learned counsel for the petitioner that there should not be any exercise in routine manner by the authorities by exercising jurisdiction U/s.132 since it is extreme condition leading to stigma to the assessee, but very surprisingly, the search and seizure conducted in the month of September, 2014 but this has not been challenged fairly for a period of more than two years and it is now been questioned by the petitioner when a notice U/s.153-A of the Act, 1961 has been issued. It is evident from the materials available on the notice dtd.30.09.2016 that the assessee has been given ample opportunity to satisfy the authority before resorting to the provision of Section 132 of the Act, 1961 and when the assessee has not responded to the same, the authorities has resorted to the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision as well as the authoritative pronouncements in this regard by the Hon'ble Apex Court as referred to above and have found that the competent authority can resort to, if he is of the opinion that the assessee is flouting the provision of the Income Tax Act and if in that situation he comes to conclusion that it is necessary to resort to the provision of Section 132, then it cannot be said that there was no reason behind resorting to the provision of Section 132 of the Act, 1961, moreover, the initiation of proceeding U/s.132 has never been questioned by the petitioner before any Court of Law save and except this writ petition wherein also the proceeding U/s.132 is not under challenge, rather the notice U/s.153-A has been challenged which is in consequence of the action of the authorities initiated after invoking the jurisdiction conferred U/s. 132 of the Act, 1961. It is not in dispute that the reason to believe cannot be shown to the assessee during pendency of the assessment. 9. The learned counsel for the petitioner has given much emphasis, when the argument has been advanced on behalf of learned counsel for Income Tax that there are alternative remedies of appeal before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egard reference may be made to the judgment rendered by Hon'ble Apex Court in the case of H.C. Narayanappa Vrs. State of Mysore, reported in AIR 1960 SC 1073 wherein the Hon'ble Apex Court has been pleased to observe as follows:- "It is also true that the Government on whom the duty to decide the dispute rests, is substantially a party to the dispute but if the Government or the authority to whom the power is delegated acts judicially in approving or modifying the scheme, the approval or modification is not open to challenge on a presumption of bias. The Minister or the officer of the Government who is invested with the power to hear objections to the scheme is acting in his official capacity and unless there is reliable evidence to show that he is biased, his decision will not be liable to be called in question, merely because he is a limb of the Government." In view of the fact that the assessee - petitioner's premises has been subjected to search and seizure under the provision of Section 132 on being failure on the part of the assessee to comply with the notice issued U/s.143(2) and 142(1) of the Income Tax Act, 1961, a notice U/s.153-A of the Income Tax Act for the financi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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