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TMI Blog2017 (2) TMI 645X X X X Extracts X X X X X X X X Extracts X X X X ..... 61 has been issued and in terms thereof, the petitioner has given his detailed reply as would be evident from Annexure-6 annexed to the writ petition and after scrutiny of the reply, the authorities came to the conclusion that the books of account pertaining to M/s.Vasumati Builders Pvt. Ltd. has not been produced in spite of the direction having been given to him by the Income Tax authorities, as a result, the authorities have no other alternative than to conduct search and seizure in the premises of the petitioner. The competent authority can resort to the provisions of the Act, 1961, if it is opinion that the assessee is flouting the provisions of the Act and if in that situation, it comes to the conclusion that it is necessary to resort to the provisions under Section 132, then it cannot be said that there was no reason behind resorting to the provisions of the Act, 132 of the Act, 1961. Moreover, initiation of the proceeding under Section 132 has never been questioned by the petitioner immediately thereafter before any Court of law save and except challenging the same after lapse of two years by way of writ petition. There is no dispute about the contention raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Opposite party no.2 after search and seizure, issued a notice under Section 153 of the Act, 1961 on 06.08.2015 calling upon the petitioner to prepare a true and correct return for the assessment year 2009-10 and furnish the same within a period of 30 days. In compliance to the notice, the petitioner had filed compliance stating therein that the return filed under Section 139 of the Act, 1961 prior to the search operation may be treated as compliance to the notice issued under Section 153-A of the Act. 4. Opposite party no.2 has issued notice under Section 143(2) of the Act, 1961 on 11.07.2016 asking the petitioner to attend his office and explain the discrepancy in connection with the return income for the assessment year 2009-10 to 2014-15. Opposite party no.2 has also called for the records for the last six assessment years in exercise of the powers vested under Section 142(1) of the Act, 1961 from the assessment year 2009-10 and fixed the date to 7.11.2016 for compliance of the notice dated 1.11.2016. The petitioner on receipt of the notice under Section 142(1) of the Act, 1961 filed his objection through his counsel challenging the correctness of the initiation of search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ought to have approached the alternative remedy of appeal under the Statute, but instead of doing so, he has approached this Court invoking the extraordinary jurisdiction of this Court under Articles 226 and 227 of the Constitution of India, and hence, this writ petition is not maintainable even on the ground of alternative remedy. He further submits that the petitioner has challenged the search and seizure, but the search was conducted on 2.12.2014 in pursuance to the search warrant issued on 1.12.2014, but fairly for about more than two years the search warrant has not been questioned by the petitioner and only when notice under Section 153 of the Act, 1961 has been issued on 6.8.2014 and even from that date, this writ petition has been filed after lapse of more than one year and four months approximately from the date of issuance of notice. Hence, it cannot be said that the petitioner is at all aggrieved with the search warrant. 7. We have heard the learned counsels for the parties and gone through the materials available on record. 8. Before appreciating the argument advanced on behalf of the parties, we thought it proper to have a discussion regarding the statutory pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer, (the officer so authorised in all cases being hereinafter referred to as the authorised officer) to-] (i) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept; (ii) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (i) where the keys thereof are not available; (iia) search any person who has got out of, or is about to get into, or is in, the building, place, vessel, vehicle or aircraft, if the authorised officer has reason to suspect that such person has secreted about his person any such books of account, other documents, money, bullion, jewellery or other valuable article or thing; (iib) require any person who is found to be in possession or control of any books of account or other documents maintained in the form of electronic record as defined in clause (t) of sub-section (1) of section 2 of the Information Technolo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticle or thing, being stock-in-trade of the business: Provided also that no authorisation shall be issued by the Additional Director or Additional Commissioner or Joint Director or Joint Commissioner on or after the 1st day of October, 2009 unless he has been empowered by the Board to do so. [(1A) Where any [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner, in consequence of information in his possession, has reason to suspect that any books of account, other documents, money, bullion, jewellery or other valuable article or thing in respect of which an officer has been authorised by the [Principal Director General or] Director General or [Principal Director or] Director or any other [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner to take action under clauses (i) to (v) of sub- section (1) are or is kept in any building, place, vessel, vehicle or aircraft not mentioned in the authorisation under sub-section (1), such [Principal Chief Commissioner or] Chief Commissioner or [Principal Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und in the possession or control of any person in the course of a search, it may be presumed- (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true ; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested. (5) [***] (6) [***] (7) [***] (8) The books of account or other documents seized under subsection (1) or sub-section (1A) shall not be retained by the authorised officer for a period exceeding thirty days from the date of the order of assessment under section 153A or clause (c) of section 158BC unless the reasons for retaining the same are recorded by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Board stating therein the reasons for such objection and requesting for the return of the books of account or other documents and the Board may, after giving the applicant an opportunity of being heard, pass such orders as it thinks fit. (11) [***] (11A) [***] (12) [***] [(13) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to searches and seizure shall apply, so far as may be, to searches and seizure under sub-section (1) or sub-section (1A).] (14) The Board may make rules in relation to any search or seizure under this section ; in particular, and without prejudice to the generality of the foregoing power, such rules may provide for the procedure to be followed by the authorised officer- (i) for obtaining ingress into any building, place, vessel, vehicle or aircraft to be searched where free ingress thereto is not available ; (ii) for ensuring safe custody of any books of account or other documents or assets seized. Explanation 1.-For the purposes of sub-section (9A), execution of an authorisation for search shall have the same meaning as assigned to it in Explanation 2 to section 158BE. Explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks of account and documents are, and are afraid that they will be concealed or suppressed. The power of seizure under section 132 shall be exercised in accordance with sub-rules (2) to (14). Sub-rule (2) provides that the commissioner must first of all record his reason for issuing a warrant of authority. It then provides as to what should be the form of such warrant and the commissioner after going through the relevant records will reduce the reasons in writing for the future exercise and as such under the law, it is the Commissioner or the competent authority who must have reason to believe that the assessee would not produce certain books of account or document is called upon to do so, and it is he who must be of the opinion that they are relevant for the purpose of any income tax proceeding, under these underlying principles the power conferred U/s.132 is to be exercised by the competent authority. 9. Section 131(1A) reads as follows:- 131. (1A) If the [Principal Director General or] Director General or [Principal Director or] Director or Joint Director or Assistant Director or Deputy Director, or the authorised officer referred to in sub-section (1) of section 132 bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents as he may require and which may be available at such place, (ii) to afford him the necessary facility to check or verify the cash, stock or other valuable article or thing which may be found therein, and (iv) to furnish such information as he may require as to any matter which may be useful for, or relevant to, any proceeding under this Act. Explanation.-For the purposes of this sub-section, a place where a business or profession is carried on shall also include any other place, whether any business or profession is carried on therein or not, in which the person carrying on the business or profession states that any of his books of account or other documents or any part of his cash or stock or other valuable article or thing relating to his business or profession are or is kept. (2) An income-tax authority may enter any place of business or profession referred to in sub-section (1) only during the hours at which such place is open for the conduct of business or profession and, in the case of any other place, only after sunrise and before sunset. [(2A) Without prejudice to the provisions of sub-section (1), an income-tax authority acting under this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r cause to be removed from the place wherein he has entered, any cash, stock or other valuable article or thing. (5) Where, having regard to the nature and scale of expenditure incurred by an assessee, in connection with any function, ceremony or event, the income-tax authority is of the opinion that it is necessary or expedient so 13 to do, he may, at any time after such function, ceremony or event, require the assessee by whom such expenditure has been incurred or any person who, in the opinion of the income-tax authority, is likely to possess information as respects the expenditure incurred, to furnish such information as he may require as to any matter which may be useful for, or relevant to, any proceeding under this Act and may have the statements of the assessee or any other person recorded and any statement so recorded may thereafter be used in evidence in any proceeding under this Act. (6) If a person under this section is required to afford facility to the income-tax authority to inspect books of account or other documents or to check or verify any cash, stock or other valuable article or thing or to furnish any information or to have his statement recorded eith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate: Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ec.133-A in order to reassess the income due to suppression or concealment of the documents of the undisclosed income. These statutory provisions have been taken note by the Hon‟ble Supreme Court as well as by various High Courts dealing with the power of search and seizure. The Hon‟ble Apex Court while discussing the issue in the case of Pooran Mal Vrs. Director of Inspector, reported in 1974 93 ITR 505 SC has been pleased to hold the constitutional validity of Sec.132 and it has been laid down that the necessity of recording of reasons in support of the reasonable belief contemplated by Sec.132, however, the principle has been 16 laid down that the reason which led the authorities to conduct search and seizure need not to be disclosed or communicated to the person against whom the warrant of authorization has been issued. The same view has been reiterated in the case of Dr. Pratap Singh Vrs. Director of Enforcement, reported in 1985(155) ITR 166 (SC). We, after going through the statutory provisions as well as the authoritative pronouncements as referred herein above, have found that before taking decision for search and seizure as contemplated under the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at hand, as we have gathered from the materials available on record, the search and seize operation under Section 132 of the Act, 1961 had been conducted on 2.12.2014 on the basis of the search warrant issued on 1.12.2014 and after its conclusion inventory of cash was found but not seized to the tune of ₹ 40,050/-, inventory of account book found and seized, inventory of jewellery making a valuation of the same to the tune of ₹ 22,00,714/- and thereafter a notice under Section 153-A of the Act, 1961 was issued on 6.8.2015 asking the petitioner-assessee to prepare true and correct return of both the income including undisclosed income in support of individual/ AOP/ Firm/Company assessable for the assessment year 2009-10 in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed as per the provisions of the Act, 1961 and to prepare the return in prescribed form and deliver the same within 30 days of service of notice, duly verified and signed in accordance with the provisions of Section 140 of the Act, 1961. The petitioner has not stated in the writ petition anything as to whether he has responded to the noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner. 13. In the light of these factual aspects we have appreciated the argument advanced on behalf of learned counsel for the petitioner by taking into consideration the statutory provisions as contemplated U/s.132, 133-A, 142(1) and 143(2) of the Act, 1961. 14. There is no dispute about the fact that the provision of Section 132 of the Act, 1961 confers a power upon the authorities to conduct search and seizure, but subject to the fact that if the authorities has got information on the basis of which he has reason to believe that any person to whom summons under sub-section (1) of section 37 of the Act, 1922, or under sub-section (1) of sub-section 131 of the Act, 1961, or a notice under sub-section (4) of Section 22 of the Indian Income Tax Act, 1922, or under subsection (1) of Section 142 of the Act, 1961 was issued to produce or cause to be produced, any books of accounts 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 any person to whom a summon or notice as aforesaid has been or might be issued will not, or would not, produce 20 or cause to be produced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - from Shri Siba Behera, Nuagaon as advance for land and payment of ₹ 2.00 lakhs to Shri Ravi Bisoi, Sisupalgarh for purchase of land. This is stated by you as a transaction of your company i.e. M/s.Vasumati Builders Pvt. Ltd. The books of M/s. Vasumati Builders Pvt. Ltd. should show such transactions failing which it shall be added to the income of yours because you are the Director. 4. Please refer to page 30 of ASPI regarding payment of advance of ₹ 2.75 Lakhs to Bhasia Bhai. It was stated by you that it is the transaction by the company i.e. failing which it shall be added to the income of yours because you are the Director. The books of M/s. Vasumati Builders Pvt. Ltd. should show such transactions failing which it shall be added to the total income of yours because you are the Director. 5. Please refer to page-34 of ASPI-10 regarding refund of ₹ 1.00 Lakh taken as advance by padia of Lingipur for sale of land to M/s. Vasumati Builders Pvt. Ltd.. Again, ₹ 1.00 Lakh has been paid as advance to Sanatan Bhoi for sale of land. You have replied that these transactions relate to the company. The books of M/s. Vasumati Builders Pvt. Ltd. should show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to page-21,27 32 of ASPI-10 regarding cash receipts from Hi-Tech Estate and Promoters Pvt. Ltd. Please show the relevant books of account to prove the receipts otherwise it shall be treated as unexplained receipt in your hand. 17. We after going through the explanation given by the Assistant Commissioner of Income Tax, Central Circle-2, Bhubaneswar that although at the initial stage, no bullion or jewellery has been recovered, since it was in permissible limit, documents have been seized and in course of their examination, the authorities have come to a definite conclusion that certain income has not been disclosed and as such, for being satisfied, a notice under Section 153-A of the Act, 1961 has been issued and in terms thereof, the petitioner has given his detailed reply as would be evident from Annexure-6 annexed to the writ petition and after scrutiny of the reply, the authorities came to the conclusion that the books of account pertaining to M/s.Vasumati Builders Pvt. Ltd. has not been produced in spite of the direction having been given to him by the Income Tax authorities, as a result, the authorities have no other alternative than to conduct search and seizure in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o far as the judgment relied upon by the learned counsel for the petitioner in the case of Commissioner of Income-tax, Gujarat v. Vijaybhai N.Chandrani, AIR 2013 SC 3518, is concerned, the fact of the said case is that the assessee has invoked the jurisdiction of the Gujarat High Court against the notice issued under Section 153C of the Act, 1961 and the said writ petition was entertained by the Gujarat High Court, which was assailed before the Hon‟ble Supreme Court and while dealing with the case, the Hon‟ble Apex Court has been pleased to observe at paragraphs 16 and 17 that the High Court should not have entertained the writ petition at the first instance without first exhausting the alternative remedy provided under the Act, 1961 and taking into consideration that aspect of the matter, the Hon‟ble Apex Court further observed at paragraph 17 that granting time to the assessee if it so desires to file reply/ objections, if any, as contemplated in the said notice and the authorities have been directed to first consider the said reply/ objection and thereafter direct the assessee to file return for the assessment year in question and if for any reason the assessme ..... 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