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TMI Blog2019 (9) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... material found during the course of search, but insofar as assessment is concerned, all available material can be taken into consideration, whether it is found during the course of search, requisition or survey or is otherwise available with the AO. In case of assessment, the additions cannot be restricted to the material found during the course of search alone. Application made u/s 220(6) - PCIT has nowhere applied his mind to the contention of the assessee that the assessment is unreasonably high-pitched and that enforcement of recovery of the demand would cause genuine hardship to the assessee since the demand is unusually high looking to the financial standing of the assessee. In the opinion of this court, when the statute vests power in an authority, such power is required to be exercised in a reasonable manner, and not in the perfunctory manner in which both the AO and the PCIT have dealt with the applications made by the petitioner under section 220(6) of the Act. There is some merit in the submissions insofar as the additions are concerned. Moreover, considering the amount assessed during the course of regular assessment in the preceding years, the assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts stated briefly are that the petitioner is a partnership firm trading in gold and silver bullion. The petitioner had commenced its business operations in financial year 2012-13. Originally, the petitioner dealt in only wholesale trading and with effect from 6.7.2016, it began retail trading. The petitioner filed return of income for assessment year 2017-18 on 31.10.2017 declaring income of ₹ 26,39,110/-. A search action took place at the residential premises of the partners and a survey action took place at the business premises of the petitioner on 24.1.2017. The first respondent, thereafter, framed assessment under section 143(3) read with section 153A of the Income Tax Act, 1961 (hereinafter referred to as the Act ) at ₹ 9,42,82,954/- on alleged bogus sales through backdating entries under section 68 of the Act (₹ 7,88,85,082/-) and on alleged excess stock under section 69B of the Act (₹ 1,27,58,762/-). 2.1 By a letter dated 30.1.2019, the petitioner requested the first respondent to keep the demand in abeyance till the appeal is decided by the CIT (Appeals). By the impugned order dated 8.2.2019 passed under section 220(6) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in sub-rule (3) thereof there is reference to any person in charge of any building, place, vessel etc. to be searched. Sub-rule (4) refers to ingress into building or place etc. Reference was made to the other sub-rules to submit that the search is place specific and that there being no search at the premises of the petitioner, though authorisation was issued against it, the entire proceedings under section 153A of the Act are bad, and hence, the petitioner is entitled to unconditional stay of the demand until the appeal is decided by the Commissioner of Income Tax (Appeals). 3.3 In support of his submissions, the learned advocate placed reliance upon the decision of the Bombay High Court in the case of Bansilal B. Raisoni Sons v. Asstt. CIT 2018 (12) TMI 223 - BOMBAY HIGH COURT, for the proposition that in order to issue notice under sub-section (1) of section 153A of the Act, there must be initiation of search in case of the noticee and a mere search authorisation would not be sufficient. 3.4 Next, it was submitted that though there is a consistent delay on the part of the authorities in deciding the petitioner's application under section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remises. The attention of the court was invited to the panchnama which forms part of the paper-book, to point out that the same has been drawn in the case of the petitioner as well as the partners. The learned counsel further invited the attention of the court to a copy of warrant of authorisation in respect of the petitioner to submit that the name of the petitioner is duly reflected in the said warrant and therefore, it is factually incorrect to contend that no search was conducted at the premises of the petitioner. It was submitted that the search was authorised, commenced and initiated and, therefore, as a necessary corollary, assessment was required to be made under section 153A of the Act. 4.2 It was submitted that under section 220(6) of the Act, the Assessing Officer will see if the case falls within any of parameters laid down under the circular issued by the CBDT. In this case, the Assessing Officer, after considering the facts of the case, was satisfied that 20% of the demand should be deposited. It was submitted that the having regard to the facts of the present case, this is a case for upward revision of the amount to be deposited, however, the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Referring to the panchnama drawn during the course of search proceedings, it was submitted that the panchnama had been drawn at the residential premises. It was submitted that the expression search as envisaged under section 132 of the Act is a search at the place where such search is actually conducted and that no search having been carried out at the business premises of the petitioner, the petitioner could not have been subjected to proceedings under section 153A of the Act. 5.2 Next, it was submitted that the material used to frame assessment under section 153A of the Act is not material found during the course of search but is based upon the documents found during the course of survey and no order could have been passed under section 153A on the basis of such material. Reliance was placed upon the decision of the Delhi High Court in the case of MDLR Resorts (P.) Ltd. v. CIT [2013] 361 ITR 407, wherein the court has held thus:- 13. The contention with regard to their addresses being different, is misconceived and mere ipse dixit. Address of a company will normally mean its registered office, head office etc. A person can operate from or keep do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onduct of the search. In subsection (1) of Section 153A of the Act, therefore, the legislature has advisably used expression where a search is initiated under Section 132 . 7. We are also in agreement with the contention of the Counsel for the petitioner that the petitioner's objection to the jurisdiction of the Assessing Officer on the ground that if no search was initiated, notice under Section 153A of the Act could not have been issued, cannot be curtailed on the ground that such objection was raised beyond the period referred to in subsection (3) of Section 124 of the Act. Section 124 of the Act pertains to jurisdiction of Assessing Officers. Subsection (1) of Section 124 lays down territorial jurisdiction of the Assessing Officer. Subsection (2) of Section 124 provides that where the question arises under said section, as to whether an Assessing Officer has jurisdiction to assess any person, such question shall be determined by the authority prescribed under the said subsection. Subsection (3) of section 124 provides time limits for a person to call in question jurisdiction of an Assessing Officer. Clause (c) of subsection (3) of section 124 provides that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een made of such amount under section 68 of the Act; and secondly, while holding that there was excess stock, the Assessing Officer has not considered the stock in the vault; and that had the stock in the vault been taken into consideration, there would have been no excess at all. According to the learned counsel for the petitioner, the petitioner has made out a prima facie case, the balance of convenience lies in favour of the petitioner and the petitioner would have to suffer undue hardship if the demand is not stayed more particularly, considering the fact that the demand is unreasonably high-pitched. 8. On behalf of the revenue, it has been pointed out that the warrant of authorisation has been issued in respect of the petitioner whereas the places mentioned therein are places other than the business premises of the petitioner. It has been contended that the search is qua a person and not location specific as is sought to be contended on behalf of the petitioner and that it is factually incorrect to say that no search had been conducted in respect of the petitioner. On the merits of the assessment order, it has been contended that what is shown as sales by the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or relevant to, any proceeding under the Indian Income Tax Act, 1922 (11 of 1922), or under this Act, or (c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been, or would not be, disclosed for the purposes of the Indian Income Tax Act, 1922 (11 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property), then,- (A) the Principal Director General or Director General or Director or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be may authorise any Additional Director or Additional Commissioner or Joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income Tax Officer, or (B) such Additional Director or Additional Commissioner or Joint Director or Joint Commissioner, as the case may be, may authorise any Assistant Director or Deputy Director, Assistant Commissioner or Deput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is required to be conducted qua such person. Such search may be at the office premises, residential premises or even at the premises of a third person, depending on where the competent authority has reason to suspect that books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept. The contention based on rule 112 of the rules that search is location specific, therefore, does not merit acceptance. Rule 112 of the rules provides that the powers of search and seizure under section 132 shall be exercised in accordance with sub-rules (2) to (14) thereof. Thus, rule 112 provides for the manner in which search is to be conducted. Sub-rule (2) provides for the forms in which authorisations are to be issued. On a bare reading of rule 112 as a whole, there is nothing therein to indicate that search is location specific as is sought to be contended on behalf of the petitioner. 12. In this regard, reference may be made to the decision of the Bombay High Court in Bansilal B. Raisoni Sons (supra), on which reliance has been placed by the learned advocate for the petitioner, wherein the court has prima facie found that there is no p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein expression 'initiate any proceedings for contempt' in Section 20 of the Contempt of Courts Act 1971, was interpreted. It was held that the word 'initiate' means introductory steps or action or first move. Black's Law Dictionary was referred to and it was observed that 'initiation of contempt proceedings' takes place when the court applies its mind to allegation and decides to direct the alleged contemnor under Section 17 to show-cause as to why he should not be punished. Thereafter, reference was made to different factual situations. In Wipro Finance's case (supra), it was accordingly observed:- 24. It is the settled principle that while assigning meaning to any expression in any provision of a statute, the context under which the particular expression is used has to be borne in mind. Therefore, bearing in mind the context in which the expression 'search initiated' has been used under various sections of IT Act including ss. 158BA(1), 158BC, 158BD, 158BE(1)(a) and (b) and 253A(1)(a) and (b) and also in the light of examining the dictionary meaning of the word 'initiate' as extracted by the High Court of Rajasthan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 153A of the Act could have been initiated against the petitioner does not merit acceptance. 17. Insofar as the contention that the additions have been made on the basis of the material found during the course of survey and not during the course of search is concerned, the learned counsel for the respondent has placed reliance upon the decision of the Supreme Court in CIT v. S. Ajit Kumar [2018] 404 ITR 526, wherein it has been held thus:- 15. The power of survey has been provided under Section 133-A of the IT Act. Therefore, any material or evidence found/collected in a survey which has been simultaneously made at the premises of a connected person can be utilised while making the block assessment in respect of an assessee under Section 158-BB read with Section 158-BH of the IT Act. The same would fall under the words and such other materials or information as are available with the Assessing Officer and relatable to such evidence occurring in Section 158-BB of the Act. In the present case, the Assessing Officer was justified in taking the adverse material collected or found during the survey or any other method while making the block assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n detail. In the loose paper found during the survey, the sale of old bardana of ₹ 6.50 lakhs on December 22, 2001, and ₹ 3.50 lakhs on December 24, 2001, totalling ₹ 10 lakhs was mentioned. The Tribunal has found that this sale of bardana was entered in the books of account on December 27, 2001, and, thereafter, the profit and loss accounts were drawn up and the computation of income was based on the profit as per the profit and loss accounts, therefore, the computation of income included the alleged unaccounted sale of bardana also. The Assessing Officer ignoring the aforesaid aspects of the matter had made an addition in respect of the alleged sale of bardana. In the aforesaid background, the Tribunal had affirmed the deletion of ₹ 10 lakhs (rupees ten lakhs) by the Commissioner of Income-tax (Appeals), which the Assessing Officer had added on the basis of the loose paper found during the course of survey. The facts recorded by the Tribunal are not in dispute and the conclusion, which has been drawn by the Tribunal on the basis of the factual analysis also does not suffer from any error. 6. So far as the issue of the deletion of ₹ 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y high-pitched and that enforcement of recovery of the demand would cause genuine hardship to the assessee since the demand is unusually high looking to the financial standing of the assessee. In the opinion of this court, when the statute vests power in an authority, such power is required to be exercised in a reasonable manner, and not in the perfunctory manner in which both the Assessing Officer and the PCIT have dealt with the applications made by the petitioner under section 220(6) of the Act. 21. Considering the submissions advanced by the learned counsel for the petitioner, it appears that there is some merit in the submissions insofar as the additions are concerned. Moreover, considering the amount assessed during the course of regular assessment in the preceding years, the assessment order for the year under consideration appears to be unreasonably high-pitched. However, for the reasons recorded hereinabove, no case has been made out for unconditional stay of the demand. Besides, a perusal of the assessment order reveals that on behalf of the petitioner it has been admitted that an amount of ₹ 91,50,156/- is to be treated as out of books sales which is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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