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TMI Blog2010 (5) TMI 923X X X X Extracts X X X X X X X X Extracts X X X X ..... erroneous assumption that the appellant had been subject d to search under Section 132. He ought to have appreciated inter alia : (a) that it was not open to him to uphold the validity of the Notice under Section 153A and, in turn, of the assessment order impugned before him, by merely observing as under (emphasis supplied): 3 . I have carefully considered the contentions of Ld. Counsel as well as gone through the records. On perusal of assessment order, it has been noticed that search under Section 132 was conducted in the name of the Appellant in the Bank premises. Hence, notice u/s 153A was validly issued. Keeping in view of above facts and circumstances of the case, there is no infirmity in the assessment order and hence, contentions of Ld. Counsel are hereby rejected. The first ground of appeal is dismissed. (b) that it was not possible to suggest that an assessee has been subjected to proceedings under Section 132 of the Income-tax Act, 1961, even though he had not been shown, far less, served with, any warrant of search. 3. We have heard learned Representatives of both the parties, perused the findings of authorities below and considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on extracted in his second statement which was recorded on 24-12-2004 during the post survey proceedings. It may be noticed that in all these years the income was assessed at the same figure at which the return was filed in response to notice u/s 153A for the respective years. The only question that arises is validity of the proceedings u/s. 153A. The reason for proceedings u/s. 153A is that during the course of survey at the premises of K. M. Shah Charitable Trust it was found that deposits of ₹ 193.99 lacs in the bank accounts were representing unaccounted money. Therefore, it is stated by the Assessing Officer that search proceedings were carried out on 29th October, 2004. The seizure of ₹ 1,93,99,865/- was carried out on 29-10-2004 i.e. on the day immediately following 28-10-2004 when the survey u/s. 133A was conducted, the assessee was informed about it by the Income Tax Department only after more than six months i. .e. on 09-5-2005. The assessee was provided with copies of Panchnamas and their enclosures which must have been prepared by the officials on their visit to the bank s branches. In view of these fact, the notice u/s 153A was issued on 15-07-2005 receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as gone the rough the records. On perusal of assessment order, it has been noticed that search under Section 132 was conducted in the name of the Appellant in the Bank premises. Hence, notice u/s 153A was validly issued. Keeping in view of above facts and circumstances of the case, there is no infirmity in the assessment order and hence, contentions of Ld. Counsel are hereby rejected. The first ground of appeal is dismissed. 7. The learned Counsel for the assessee reiterated the submissions made before the authorities below. He has submitted that no search was conducted in the individual case of the assessee. The order u/s 143(3) was passed in the case of the Trust dated 29-12-2006 for assessment year 2005-06 in which it was granted exemption u/s 11 of the IT Act being registered u/s 12A of the IT Act. However, protective addition was made in a sum of ₹ 1,93,99,865/-. The Assessing Officer passed the order u/s 154 of the IT Act in the case of the Trust and the amount lying in the PD account was adjusted as advance tax in the case of the Trust. The Trust was granted refund against the demand. Copies of 154 order, tax computation form and income tax refund in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book. Thus, Rule 112 (3) of the IT Rules is not satisfied in this case. He has, therefore, submitted that no warrant of authorization u/s 132 was issued in the individual name of the assessee and no warrant of authorization was executed in the individual name of the assessee. No search is conducted in the individual case of the assessee. The A O was therefore, not justified in treating the service of the warrant of authorization on the bank manager of the Trust as service on assessee. He has relied upon decision of the Hon'ble Supreme Court in the case of K. C. C. Software Ltd. and others Vs DIT (Investigation) 298 ITR 1 in which it was held that the cash in bank was conceptually different from cash on hand and it was not permissible for the department to convert assets to cash and thereafter impounded. It was further held when monies are deposited in a bank, relationship between the banker and the customer is one of debtor and creditor and not trustee and beneficiary. It would, therefore, show that no search was conducted in the case of the assessee. He has relied upon decision of Hon'ble Allahabad High Court in the case of CIT Vs Smt. Vandaba Verma in ITA No.21/All/2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion cannot be made on the basis of statement of the assessee only. He has submitted that it is well settled that whenever there is a retraction from the assessee, the department needs to bring enough material on record to prove the existence of undisclosed income. He has filed copies of several decisions of various High Courts and the Tribunal in the paper book in support of this contention. He has also relied upon decision of Madras High Court in the case of CIT Vs S. Khader Khan Son 300 ITR 157 in which it was held section 133A does not empower any ITO to examine any person on oath, so statement recorded u/s 133A has no evidentiary value and any admission made during such statement cannot be made basis of addition. He has also relied upon order of ITAT Calcutta Bench in the case of L.M. J. International Ltd. 22 SOT 315 in which it was held that the items of regular assessment cannot be added in the proceedings u/s 153C of the IT Act. Learned Counsel for the assessee accordingly submitted that since no search warrant was issued in the individual name of the assessee and no search was conducted in the individual case of the assessee and no undisclosed income was found in the indivi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the assessee. Therefore, decision in the case of Vandana Verma (supra) would not apply. Learned Departmental Representative submitted that assessee did not file return of income on time. Assessee has not made out a case of coercive method used while recording his statement during survey. At least one of the statements of the assessee dated 28-10-2004 or 24-12-2004 is wrong and not true. He has submitted that the statement recorded during the survey shall be deemed to be statement given before the Civil Court and thus, cannot be retracted. He has relied upon decision of Calcutta High Court in the case of Jhabarmall Agarwal Vs Kashiram Agarwal and others 71 ITR 269 in which it was held that u/s 131 of the IT Act read with order XIII Rule 10 of C.P.C., ITO has power to call for records in the custody of the Court. Learned Departmental Representative therefore, submitted that Assessing Officer was justified in initiating the proceedings u/s 153A of the IT Act against the assessee in three years. He has further submitted that the retraction in the case of the assessee is after thought as observed by Assessing Officer. PD account is in the name of the CIT. Trial balance was in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as may be empowered in this behalf by the Board], 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 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 be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such book 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 caus other documents which will be useful for, or relevant to, any proceeding under the Indian Incometax Act, 1922 (11 of 1922), section ( c ) any person is in possession of any money, bullion, jewellery or other valuable article or thing s represents either and such money, bu represents either [which has not been, or would not be, disclosed69] for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this undisclosed income or property), [then,- ( A ) the [Director General or Director] or the [Chief Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aircraft referred to in clause ( i ) is within the area of jurisdiction of any 87[Chief Commissioner or Commissioner], but such [Chief 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 all cases where he has reason to believe that any delay in getting the authorisation from the [Chief Commissioner or Commissioner] having jurisdiction over such person may be prejudicial to the interests of the revenue :] [ Provided further that where it is not possible or practicable to take physical possession of any valuable article or thing and remove it to a safe place due to its volume, weight or other physical characteristics or due to its being of a dangerous nature, the authorised officer may 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 authorised officer and such action of the authorised officer shall be deemed to be seizure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act. [ Explanation. -For the removal of doubts, it is hereby declared that the examination of any person under this sub-section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act.] [(4A) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of sixty days from the date on which the last of the authorisations for search was executed and thereupon the powers exercisable by the authorised officer under sub-section (8) or sub-section (9) shall be exercisable by such Assessing Officer.] (10) If a person legally entitled to the books of account or other documents seized under sub-section (1) [or sub-section (1A)] objects for any reason to the approval given by the [Chief Commissioner, Commissioner, Director General or Director] under sub-section (8), he may make an application 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 fore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions u/s 153A, there is no such provision provided in the Act. Once warrant of authorization is issued and the search is conducted and panchnama is drawn, the assessments for all the seven years including the current year have to be completed u/s 153A, 153B and 153C. Even the assessments which are completed before the date of search shall get reopened and those assessments where the proceedings are pending at the time of search shall abate. The AO, therefore, shall assess or reassess such income for all these years. 9.2 The above provision , therefore, provides for reopening of the completed assessment or abatement or the pending assessments takes place irrespective of whether any incriminating material is found during the course of search or not. It can be illustrated by taking an example that if during the course of search and seizure proceedings, certain unaccounted valuables or money is found at the time of search without there being incriminating material or document for any other year or years, even then all the six assessments preceding the assessment year in which search took place shall get reopened. Similarly, if requisition is made then irrespective of whether th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entioned in the warrant of authorization would be meaningless and would not serve the purpose of section 132 of the Act. It may be illustrated by taking an example that if warrant of authorization under section 132 is issued in the name of A after 31.5.2003 but his premises is not searched for the purpose of executing the warrant of authorization and the warrant of authorization is kept unexecuted, the question arises whether the Assessing Officer still should proceed under section 153A of the Act for the purpose of framing the assessment or reassessment of the six assessment years immediately preceding the assessment years relevant to the previous year in which such search is initiated or requisition is made without executing the search warrant. The answer would be No because it would be a futile exercise. It may be added here that jurisdiction can be assumed by the Assessing Officer to initiate assessment proceedings to issue notices once search is initiated under section 132/requisition made under section 132A. He gets actual jurisdiction only on issue of notice, which could be issued under section 153A (unlike section 158BC(a) in block assessment) with no necessity for infe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng dated April 18, 2002 showed that the requisition was not fully executed as all the books of account and other documents had not been delivered to the requisitioning authority. The proceedings initiated under section 148 were valid. However in the proceedings for reassessment under section 148 of the Act, material or evidence relatable to the documents for which the requisition had been sent under section 132A could not be taken into consideration. The learned Departmental Representative filed copies of warrant of authorization under section 132 of the Act dated 29-10-2004 which are issued in the name of K. M. Shah Charitable Trust, Mansukhbhai K. Shah, with the direction to find valuable articles or things in Indian Overseas Bank at different branches. In the said warrant of authorization also, the authorized Officer was directed to enter and search the building, etc. persons and to seize books of accounts, documents, money, bullion, jewellery, etc. as are provided under section 132 of the Act noted above. According to Section 132(14), execution of an authorization shall have same meaning assigned in Explanation 2 to Section 158BE, which provides authorization is deemed to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 88 ITR 293 held It is an established principle of law that a party is entitled to show and prove that an admission made by him was in fact not correct and true. Hon'ble Supreme Court of India in the case of Pullangode Rubber Product Co. Ltd. 91 ITR 18 held that assessee should be given opportunity to show that admission is incorrect or does not show correct state of facts . Hon'ble Madras High Court in the case of S. Khaderkhan Son (supra) held section 133A does not empower any ITO to examine any person on oath, so statement recorded u/s 133A has no evidentiary value and any admission made during such statement cannot be made basis of addition . Considering the above discussion it is clear that there is no incriminating evidence available on record to show that the amount deposited in the bank account of the Trust belong to the assessee in his individual capacity. The assessee has been able to explain that his admission was in fact incorrect or not true. The statement of the assessee recorded being Managing Trustee of the Trust on oath on dated 28-10-2004 thus cannot be relied upon to proceed against the assessee u/s 153A in his individual capacity. We may also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er decision in the case of Smt. Vandana Verma (supra) is directly on the point in issue because when the warrant is issued in joint names in the case of the Trust and the assessee, then as per the above decision the assessments could not have been framed in the individual capacity/status of the assessee which is done in the present case. The proceedings u/s 153A of the IT Act against the assessee in his individual capacity/status are, therefore, clearly invalid and bad in law on the basis of joint search warrant so issued. The above findings are also supported by the observation of the Assessing Officer that in these three years Assessing Officer accepted the returned income meaning thereby that there was no undisclosed income belongs to the assessee in the assessment years under appeal. In view of the above, there is no need to discuss other decisions relied upon by the learned Counsel for the assessee. 9.5 Considering the above provisions as noted above in the light of the provisions of section 153A of the Act, it would be clear that once the warrant of authorization or requisition is issued and search is actually conducted, Panchnama is drawn, the completed assessments for al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in law and on facts in deleting the addition of ₹ 1,93,99,865/- made on account of undisclosed income found and seized during the course of survey/search by way of cash deposits in the bank accounts. 2. The learned CIT (A) failed to take note of the statement recorded on oath, on 28-10-2004 admitting that the amount was personal money of the assessee and does not belong to the trust. 3. The CIT (A) failed to take note of the fact that no source of income was disclosed during the statement on oath recorded on 28.10.2004. 4. The CIT (A) failed to appreciate the fact that attributing the receipts to M/s. K. M. Shah Charitable Trust was on afterthought on the part of the assessee to pre-empt the Department from other proceedings. 12. The learned Commissioner of Income Tax (Appeals) considering the submissions on merit as noted above held in Para 5 while deleting the addition of ₹ 1,93,99,865/- as under 5. I have carefully considered the contentions of Ld. Counsel as well as gone through the record. On perusal of assessment order, it has been noticed that statement of the Appellant was recorded under section 133A (1)/131 as per para-2 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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