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TMI Blog2021 (10) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... ave admitted in their respective writ petitions that they in fact did not file ITRs for certain AYs. Even this information, if available with the Department would have been sufficient for them to form a reason to believe for the purpose of Section 132(1)(c). In other words, it is not mandatory that in the present case there should have been summons under Section 131 of the Act for the Department to proceed to initiate action under Section 132 of the Act. If here was such information available for the purposes of search, why did the Department have to undertake a survey of the factories of both Shiva and Shivom under Section 133A of the Act? - There is nothing in either in Section 132 or 133A of the Act that prohibits the Department from undertaking a survey of an entity exclusive to one location of its operations, whereas it may have credible information for search as regards the operations in another location. As rightly pointed out by the Department, search is qua a place and not necessarily qua the Assessee . Survey by its very nature could be of the entity and any place from where such entity may operate. It is perfectly possible that while conducting survey and searc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irector. Petitioner No.5 Shri Vikash Gupta is described as neither the Director nor the employee of Petitioner No.1 but a separate entity . 3. The prayer in this petition is to quash the notices dated 19th February, 2016 issued by the Deputy Commissioner of Income Tax (DCIT), Central Circle, Sambalpur under Section 153A of the Income Tax Act ( Act ) calling upon Shiva and the Petitioners 2 to 5 to file a true and correct copy of their returns of income for the Assessment Years (AYs) 2009-10 up to 2014-15. The other prayer is for a declaration that the search warrants issued are invalid. 4. Writ Petition (Civil) No.16502 of 2016 is by four Petitioners. Petitioner No.1 is Shivom Minerals Ltd. (hereafter Shivom ), a company located at Rourkela engaged in beneficiation of iron ore and having its plant at village Kusumdihi, Koira in Sundargarh District. Petitioner No.2 is its MD and Petitioner No.3 is its Director. Petitioner No.4 is stated to be an Independent Director of Shivom. Here again the prayers are for quashing of the notices dated 19th February, 2016 issued to each of the Petitioners under Section 153A of the Act for the AYs 2009-10 up to 2014-2015 and the further pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department coerced Shiva s MD to declare ₹ 10 crores as undisclosed income and pay tax thereon. It is further alleged that the Petitioners refused to accept the above illegal demand or to make any statement under Section 132 (4) of the Act. 9. Similar averments have been made in the companion petition, Writ Petition (Civil) No.16502 of 2016 by Shivom and its MD and Directors. A search was also conducted in the business and residential premises of Shivom and its Directors on 24th September, 2014. 10. It is stated in both the writ petitions that on 25th September, 2014 the Accounts Officers of both the company appeared before the DDIT (Inv), Rourkela and furnish information as required. In both the petitions an identical statement is made that the Petitioners were pressurized by the Department to disclose the undisclosed income of a sizeable amount and pay the tax and that there was no reason for admitting such fault which the Petitioners are not competent . 11. As regards Shiva there are averments in its writ petition admitting to not filing ITRs for AYs 2012-13 and 2014-15 due to acute fund crisis and inability to pay the admitted tax. It is added that the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the registered Office of both Shiva and Shivom are same. Shri Akash Gupta is the common Director in both the companies. Reference is also made to Section 292 CC of the Act as enabling a common panchanama and warrant of authorization for both the companies. 16. It is contended that requirements of Section 132 (1) of the Act were duly complied in both cases. Reference is also made to the admission of both the companies regarding non-filing of ITRs for certain AYs. In the case of Shiva, it is pointed out that the estimated undisclosed income as per appraisal report was ₹ 37.14 crores due to negative cash balance in the imprest account, unsecured loans, suppression of sale of cement and disallowance under Section 40A (3) of the Act. As far as Shivom is concerned, the estimated undisclosed income is stated to be ₹ 59.63 crores, again for the same reasons. Further pleadings of the parties 17. In the rejoinder affidavit filed by the Petitioners, the above averments regarding the impermissibility in law of a common search warrant and common panchanama is raised. It is contended that the material seized during the search should be capable of identification; oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the search conducted under Section 2014 was any undisclosed money or asset found by the Department as far as Shiva is concerned. Therefore, the pre-condition for the search in terms of Section 132(1)(c) of the Act was non-existent. Reliance was placed reliance on the decision of the Allahabad High Court in Ganga Prasad Maheshwari v. Commissioner of Income Tax (1983) 139 ITR 1043; of the Gujarat High Court in Laljibhai Kanjibhai Mandalia v. Principal Director of Income-Tax (Investigation) (2019) 416 ITR 365 (Guj); of the Delhi High Court in Madhu Gupta v. Director of Income Tax (Investigation) ILR (2013) IV Delhi 2919 and the decision dated 15th February, 2021 in ITA No.37 of 2021 (Principal Commissioner of Income Tax, Delhi v. Param Dairy Limited). (iv) A common search warrant was issued for search of the business premises of both Shiva and Shivom although they were two separate juristic persons, different income tax assessees, filing separate income tax returns (ITRs). There could not have been a common panchnama for the seizures made during the search. In any event, in neither search was any incriminating material found warranting the invocation of Section 153-A of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en validly arrived at since there was no information available qua each of the Petitioners to justify the search. 26. In order to appreciate the submission, the relevant portion of Section 132 (1) of the Act may be referred to, which reads as under: 132. Search and seizure.- (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 subsection (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 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessarily qua the Assessee . Survey by its very nature could be of the entity and any place from where such entity may operate. It is perfectly possible that while conducting survey and search of the premises of an entity, for which an authorisation has been issued, the Department can come across material pertaining to some other person or entity. The provisions like Section 153C of the Act deal with such contingencies. However, that is not to say that a survey or a search cannot happen in two different premises simultaneously. Further, if search is qua the place, the Court sees no reason why if there are two entities in one premises, there cannot be a common search operation. 29. In this context reference may be made to Section 292 CC of the Act which reads as under: 292-CC. Authorization and assessment in case of search or requisition.- (1) Notwithstanding anything contained in this Act,- (i) it shall not be necessary to issue an authorisation under section 132 or make a requisition under section 132A separately in the name of each person; (ii) where an authorisation under section 132 has been issued or requisition under section 132A has been made mentioni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was an Assessee under the Act or the Wealth Tax Act, he answered in the negative. As regards the property returned to him under the order of the criminal court he is made to the discloses belonging to his wife and about some portion of it having been received in the family partition and so on. This was then treated as information to enable the Commissioner to take action under Section 132 A of the Act. 31.3 In the above background, the Allahabad High Court concluded that apart from the statement of GPM and the complaints lodged by Mr. Sahu there was no other evidence or material on record . Holding the said material to be wholly insufficient, the Allahabad High Court concluded that the Commissioner had issued the authorization without there being any reason to believe that the jewellery which was in possession of the Petitioner represented wholly or partly the undisclosed income . Therefore, the action was held to be without jurisdiction. It was further held that mere fact that an authorization has been issued does not amount to having reason to believe that the person against whom it was being issued was in the possession of jewellery or bullion which represented as undisclo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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