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TMI Blog2024 (5) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... has been entered and submits that it has already suffered search and seizure earlier resulting in an order passed under Section 153A of the Act and, therefore, proceedings again initiated under Section 153A were wholly unwarranted. The exercise of power under Section 153A based on panchnama was not available. In the present case, we find that there is no authorisation issued to conduct search and seizure relating to the petitioner. The panchnama prepared at Gurgaon office of M3M India Limited only reflects the name of the petitioner company. The term panchnama is not defined in the Income Tax Act. A panchnama is a document prepared in the ordinary course at a site of incident - panchnama would be a document which has to be prepared recording articles, material and objects which may be seized as incriminating documents at the time of conducting search of premises. Mentioning of the name of any company in the panchnama would only reflect that documents relating to that company were found during the search at the premises. A panchnama, therefore, cannot be treated to mean authorization issued to the authorities u/s 132. Thus we find that the respondents were obliged to compulsorily fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3A of the Act vide Assessment Order dated 28.02.2014. The returned income of Rs. 70,15,770/- was accepted. 3. It is submitted that thereafter in 2016 a search and seizure operation was conducted against M3M India Limited company at its office at Paras Twin, Tower-B, 6th Floor, Golf Course Road, Sector-54, Gurgaon, which was its registered office and business premises. However, while preparing panchnama drawn at the Paras Twin Tower-B, Gurgaon, name of the petitioner company was also added although it is asserted that no authorization for search and seizure under Section 132 of the Act was issued in the name of the petitioner nor any search or seizure was conducted at the premises or registered office of the petitioner company, which was situated at Shop No. 4/36, DDA Market, Dakshin Puri Extension, New Delhi-110062 with effect from 02.05.2011. It is stated that the office premises were known to the respondent authorities as it was existing from A.Y. 2011-2012 at the time of search and seizure conducted against the petitioner. 4. The petitioner has asserted in pleadings that it owned 75 acres of land at Bhiwadi (Rajasthan). In AY 2011-12, it had entered into separate development a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner on 09.09.2023 and subsequent letters for reassessing their income. 7. The petitioner has filed response on 27.11.2023 asking to provide incriminating material revealing undisclosed income. The respondents informed stating about the search conducted at the house of Gaurav Jain on 16.07.2016 where incriminating material was found from his laptop and also at the office where the panchnama was prepared. 8. The petitioner company submitted its response on 24.01.2024, 29.01.2024 and 30.01.2024 raising objections regarding the proceedings initiated under Section 153A of the Act to be without jurisdiction and without authority in law. The petitioner has been served with a show cause notice dated 30.01.2024 for addition of income of Rs. 400/- crores for AY 2011-12 as payment made to entities from undisclosed sources and an order has been passed on 07.02.2024 concluding assessment proceedings under Section 153A read with Section 153D of the Act. Submissions of the Petitioner 9. Learned counsel for the petitioner submits that action of the respondents in entering the name of the petitioner in the panchnama dated 24.07.2016 and 19.09.2016 was wholly illegal, unjustified and witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons can be drawn on the basis of such inadmissible documents. Thus, the action of the respondents is without jurisdiction. 13. Learned counsel for the petitioner further submits that the procedure laid down under Section 153C of the Act was sacrosanct and submits that if a particular procedure has been laid down under the statute, the respondents were obliged to conduct themselves accordingly and a different procedure cannot be adopted. Further submits that the order of imposing Rs. 400/- crores by issuing a fresh assessment order under Section 153A of the Act is based on complete non application of mind. He submits that there is no flow of proceeds of such money traceable to the books of accounts of the petitioner and the addition stands already made on protective basis in the books of accounts of other company. The amount received was only Rs. 10 crores and the remaining amount of Rs. 396 crores was received and assessed separately for the other companies. However, the respondents have put the entire additions on the petitioner company as undisclosed income. 14. Learned counsel for the petitioner relies on judgments of Hon'ble the Supreme Court in Income Tax Officer vs Seth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submits that the petitioner had moved an application under Section 245C (1) of the Act before the Income Tax Settlement Commission, which was rejected on 29.03.2023 on the ground that the disclosure is not full and true and there is a deficiency in explaining the facts gathered by the department. The order of assessment is, thus, also appealable and on that count the respondents have objected to. 17. Learned counsel for the respondents further submitted that as the panchnama mentioned the name of the petitioner upon search if any documents are received, the proceedings were required to be conducted under Section 153A(1) of the Act alone and there was no occasion to resort to provisions of Section 153C of the Act. It is further submitted that the petitioner has filed return on 29.01.2018 and notices along with questionnaire under Section 143 (2) and 143 (1) of the Act were initiated whereafter the petitioner approached the Income Tax Settlement Commission. Another notice was issued on 04.01.2024 along with documents. The petitioner did not submit its reply on merits of the case. The Assessing Officer held that the accommodation entries were provided by the companies, which were ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the requisite grounds exist, certiorari will lie although a right of appeal has been conferred by statute, (Halsbury's Laws of England, 3rd Edn., Vol. 11, p. 130 and the cases cited there). The fact that the aggrieved party has another and adequate remedy may be taken into consideration by the superior court in arriving at a conclusion as to whether it should, in exercise of its discretion, issue a writ of certiorari to quash the proceedings and decisions of inferior courts subordinate to it and ordinarily the superior court will decline to interfere until the aggrieved party has exhausted his other statutory remedies, if any. But this rule requiring the exhaustion of statutory remedies before the writ will be granted is a rule of policy, convenience and discretion rather than a rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies. ***" 6. At the end of the last century, this Court in paragraph 15 of the its decision reported in (1998) 8 SCC 1 (Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai and Others) carved out the exceptions on the existence whereof a Writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion of law, we are of the considered view that the plea raised in the writ petition did deserve a consideration on merits and the appellant's writ petition ought not to have been thrown out at the threshold." Thus, in view of the above, this Court under Article 226 of the Constitution of India would be well within its jurisdiction to entertain the petitions where it has to examine whether the power exercised for conducting search and seizure is by duly competent authority. This Court would also entertain petitions where the challenge is to the jurisdiction exercised by the authority also in cases where there is interpretation of the provisions of the Income Tax Act. In the appeal, even if a final order has been passed and provisions of appeal is available, since the appellate authority would not be able to examine the aforesaid aspect, writ petitions would still lie and the concerned assessee cannot be ousted merely because final order has been passed. 21. Keeping in view the exceptions carved out in Whirlpool Corporation vs Registrar of Trade Marks, Mumbai and others (1998) 8 SCC 1, we reject the submissions of the respondents and proceed to examine the contentions of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... designated officer is challenged the officer concerned must satisfy the Court about the regularity of his action. If the action is maliciously taken or power under the section is exercised for a collateral purpose, it is liable to be struck down by the court. If the conditions for exercise of the power are not satisfied the proceeding is liable to be quashed. But where power is exercised bona fide, and in furtherance of the statutory duties of the tax officers any error of judgment on the part of the officers will not vitiate the exercise of the power. Where the Commissioner entertains the requisite belief and for reasons recorded by him authorises a designated officer to enter and search premises for books of account and documents relevant to or useful for any proceeding under the Act, the Court in a petition by an aggrieved person cannot be asked to substitute its own opinion whether an order authorising search should have been issued. Again, any irregularity in the course of entry, search and seizure committed by the officer acting in pursuance of the authorisation will not be sufficient to vitiate the action taken, provided the officer has in executing the authorisation act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng their registered office. If during search in their premises any incriminating articles/ documents/ objects or any material relating to the petitioner was recovered, which is found to be sufficient for the purpose of reassessment by the assessing officer, he was required to follow the procedure laid down under Section 153C of the Act. 28. In Nazir Ahmad vs King Emperor 63 Indian Appeals 372, wherein the Privy Council held as under:- "The rule which applies is a different and not less well recognized rule-namely, that where a power is given to do a certain thing in a certain way the thing must be done in that way or not at all. Other methods of performance are necessarily forbidden. This doctrine has often been applied to Courts-Taylor v. Taylor (1875) 1 Ch.D 426." In Rao Shiv Bahadur Singh and another vs State of Vndhya Pradesh AIR 1954 SC 322 and State of U.P. vs Singhara Singh and others AIR 1964 SC 358, the aforesaid principle was again reiterated by Hon'ble the Supreme Court. 29. Section 153C of the Act provides as under:- Section 153C (1) in The Income Tax Act, 1961 - Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Singh's cases (supra), we find that the respondents were obliged to compulsorily follow the procedure for reassessment of the petitioner company in the manner as prescribed under Section 153C (1) alone and in no other manner. However, we find that the respondents have invoked and initiated proceedings under Section 153A of the Act, although neither there is any search initiated under Section 132 of the Act as against the petitioner nor it can be said that the search was conducted at its premises. Similar view has been taken by Gujarat High Court in Hitesh Ashok Vaswani and Subhash Khattar's cases (supra). Thus, the proceedings initiated under Section 153A are found to be vitiated. 31. In Abhisar Buildwell's case (supra), Hon'ble the Supreme Court has held as under:- "12. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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