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TMI Blog2024 (8) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... safeguards assumes greater significance and any violation would have to be tested applying the Doctrine of Proportionality. We say so, for any violation of the statutory safeguards relating to search may well touch on the right to privacy guaranteed under the Constitution thereby rendering the action susceptible to challenge on the ground of not just being illegal but also being unconstitutional which could change the complexion of the consequences that may ensue. This would be clear if we bear in mind that any action that is unconstitutional is rendered void . Though the validity of Section 132 of the Act, has been upheld, however, the individual search can be questioned as being violative of the statutory conditions or the guarantees under the Constitution. As the various aspects discussed on the use of illegally more importantly unconstitutionally obtained evidence has not been examined through the prism of Articles 21 and 265 of the Constitution of India. That apart there is no reference to the recent judgments of 1st and 2nd Puttaswamy 's case [ 2018 (9) TMI 1733 - SUPREME COURT] , [ 2017 (8) TMI 938 - SUPREME COURT] wherein Right to Privacy was held to be a fundamental r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er is rendered a nullity. The above view has exceptions. If an assessee has acquiesced in the jurisdiction of the assessing officer to whom a case has been transferred under Section 127 of the Act, he cannot subsequently object to the jurisdiction of the Officer and seek to get the order of transfer quashed by invoking the jurisdiction of the Court under Article 32 or 226 of the Constitution of India. [Pannalal Binjraj vs. Union of India [ 1956 (12) TMI 1 - SUPREME COURT] Ram Kumar Sitaram vs. Certificate Officer,[ 1962 (12) TMI 72 - CALCUTTA HIGH COURT] ] Thus where the assessee has acquiesced in the jurisdiction of the transferee-authority, all statutory rights which the assessee gets by virtue of Section 127 of the Act vanish and therefore, the assessee cannot assert that without affording opportunity as required under Section 127 of the Act, the case has been transferred. Thus it may be necessary to examine if there has been acquiescence on the part of the assessee in which event the non furnishing of reasons pales into insignificance. The above enquiry was apparently not made by the learned judge inasmuch as the learned judge was of the view that communication of reasons u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o relevant assessment years in question. Instead, the learned Judge has chosen to pass an order rejecting the challenge to Section 153C made by Ramamoorthy Srithar, Srithar Sudha, Nandhini Transports Pvt. Ltd., Kandasamy Thirumoorthy, Thirumoorthy Kala, Manickam Karthikayen, Kaycee Distillers, Chandran Somasundaram, C.Mariappan, Shanmugakani Sivajothi, Somasundaram Rishi Sharaan and Leela Distillers on the basis of the notice issued to Anitha Bottles. It is trite law that assessments for each entity have to be made individually and there cannot be generalization. It is also trite law that each assessment year is a distinct unit even with regard to the very same assessee. Thus, generalization on the basis of a note issued to a different entity on the crucial aspect of existence of jurisdictional fact necessary to assume jurisdiction under Section 153C of the Act, vitiates the proceedings necessitating examination of the above aspects independently for each of the assessees / appellants. Challenge to Provisional Attachments u/s 281B - provisional attachment passed during the pendency of assessments was challenged and the same was rejected by the learned judge - As Ld' Judge has r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, 6961, 6963, 6965, 6967, 6968, 6970, 6971, 6972, 6973, 6974, 6975, 6976, 6977, 6978, 6979, 6980, 6981, 6982, 6983, 6984, 6985, 6986, 6988, 6989, 6990, 6991, 6992, 6993, 6994, 6996, 6997, 7003, 7006, 7014, 7057, 7061, 7062, 7063, 7064, 7065, 7066, 7068, 7070, 7073, 7074,7075, 7076, 7077, 7078, 7079, 7080, 7084, 7086, 7087, 9296, 9298, 9303, 9306, 9309, 9324, 9347, 9982, 9989, 9998, 10001, 10009, 10026, 12543, 25430, 25431, 25438, 25440, 25445, 25448, 25454, 25485, 26047, 26050, 26053, 26056, 26058, 26059, 26062, 26089 of 2023 Hon'ble Mr.R.Mahadevan, Acting Chief Justice And The Hon'ble Mr.Justice Mohammed Shaffiq CASE NUMBERS W.A. Nos. 2713, 2712, 2714, 2715, 2727 ,2728, 2729, 2731, 2733, 2738, 2709, 2710 of 2022 and 476, 481, 485, 488, 511, 512, 3071, 3073, 3074, 3075, 3078, 3079, 3178, 3179, 3181, 3182, 3184, 3185 of 2023 For the Appellant(s) : Mr.R.V.Eswar, Senior Counsel for Mr.N.R.R.Arun Natarajan For the Respondent(s) : Mr.A.P.Srinivas, Senior Standing Counsel and Mr.A.N.R.Jaya Prathap W.A. Nos. 2730, 2732 of 2022, 3077, 3180, 34 and 37 of 2023 For the Appellant(s) : Mr.N.R.R.Arun Natarajan For the Respondent(s) : Mr.A.P.Srinivas, Senior Standing Counsel and Mr.A.N.R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of writ appeals are filed against the common order of the learned Single Judge insofar as it has rejected the following challenges viz., a) Validity of search under Section 132 of the Income Tax Act, 1961 (hereinafter referred to as the Act ). b) Centralization of assessments. c) Notices in terms of Section 153A of the Act. d) Notices in terms of Section 153C of the Act . e) Attachment orders under Section 281B of the Act. f) Notices under Section 143(2) of the Act and Orders of Assessment under Section 143(3) of the Act. Brief Facts: 2. The appellants viz., SNJ Breweries Pvt. Ltd. (hereinafter referred to as SNJB ) and SNJ Distillers Pvt. Ltd., (hereinafter referred to as SNJD ) are engaged in the manufacture of brewing and distilling of liquor. Kaycee Distillers and Leela Distillers are suppliers of raw materials to SNJB and SNJD. SNJ Sugars and Products Ltd., is engaged in the manufacture of white crystal sugar, alcohol and generation of power. The above appellants form part of the SNJ Group of Companies. While Nandhini Transports, an appellant herein is a transporter, N.Jayamurugan, Geetha Jayamurugan, Ramamoorthy Srithar, Srithar Sudha, Kandaswamy Thirumoorthy, Thirumoorthy K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law, neither the learned Judge nor the counsels before us dealt with the facts in detail, instead focused on jurisdictional errors stated to have been committed by the respondent at different stages of the proceedings. We therefore do not intend to set out / narrate the facts extensively/ in detail, instead shall confine to those necessary to resolve the following legal issues that arise for consideration in this batch of writ appeals: A) Validity of search under Section 132 of the Act. B) Centralization of assessments. C) Notices in terms of Section 153A of the Act. D) Notices in terms of Section 153C of the Act . E) Attachment orders under Section 281B of the Act. F) Notices under Section 143(2) of the Act and Orders of Assessment under Section 143(3) of the Act. 3. We shall proceed to deal with the above issues in seriatim. A. Validity of search under Section 132 of the Act: 4. The challenge to the search can be broadly put under two heads viz., (i) Lack of jurisdiction in authorizing the search in view of nonexistence of the circumstances enumerated in Clauses (a) to (c) to Section 132 of the Act which is a condition precedent / sine qua non to invoke the power of search un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isite for a valid search and seizure. i. Under Section 132 (c) of the Act, the authorities mentioned in Section 132 of the Act, should have reason to believe that the search will yield unaccounted cash, bullion, jewellery or other valuable things. j. The search operations in the premises of the appellant SNJB, residence of the Managing Director of the appellant and his wife, did not yield any unaccounted cash, bullion, jewellery or other valuable things. k. There was thus no reason to believe to order a search under Section 132 of the Act and the entire search operation under Section 132 of the Act ought to be declared as illegal and void ab initio. l. The learned Single Judge called for the files and on a perusal of the files, the learned Single Judge held that reasons to believe have been recorded before initiation of the search. The reasons to believe which are recorded cannot be a pretence or in the nature of suspicion. Hence it is just and necessary that the Division Bench calls for the files for ascertaining if the reasons to believe have been properly recorded in terms with Section 132(1) (a to c) of the Act. In support thereof, the learned Senior counsel would place relianc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account or other documents which will be useful for, or relevant to, any proceeding under the Indian Income-tax Act, 1922 (X1 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 (X1 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property), ..... (4) The authorised officer may, during the course of the search or seizure, examine on 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e., (a) omission or failure of any person [to whom a notice under Section 22(4) of the 1922 Act or Section 142(1) of the 1961 Act or a summons under Section 37(1) of the 1922 Act or Section 131(1) of the 1961 Act was issued to produce, or cause to be produced, any books of account or other documents to produce, or cause to be produced, such books of account or other documents as required by such notice or summons; (b) possibility of non-production by a person [to whom a notice or summons as aforesaid has been or might be issued] of any books of account or other documents which will be useful for, or relevant to, any proceeding under the 1922 Act or the 1961 Act; (c) possession by any person of any money, bullion, jewellery or other valuable article or thing representing either wholly or partly income or property which has not been, or would not be, disclosed (upto 30-9-1975, which has not been disclosed) for the purposes of the 1922 Act or the 1961 Act. 4.6. Clauses (a) to (c) to Section 132 of the Act, spells out the circumstances under which the authorizing authority may issue a warrant of authorization. In other words, such authorization is permissible only if the authorizing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid observations. ]. 4.9. The learned Judge while dealing with the challenge to the assumption of jurisdiction on the premise that there was neither information in possession of the authority authorising the search nor were there reasons to believe that the circumstances existed warranting search under Section 132 of the Act, called for the files relating to recording of information and reason to believe and found as under: 33. The files relating to the recording of -information- and -reasons to believe- were called for and I find that the officer has recorded cogent reasons for the initiation of the search itself. The records reveal that the officer has had information in his possession to lead to the belief that action under Section 132 was warranted. Reasons to believe have been recorded as have the reasons to suspect, based upon which the premises of connected entities/persons have been searched. 34. The files contain the narration of the information leading to the reasons to believe and reasons to suspect that have been recorded by the authorities. I am of the considered view that the procedure to be followed in noting the information received as well as the recording of reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... econd respondent disabled all cameras, evidently to suppress the inappropriate and improper manner in which the search was conducted. d) N.Jayamurugan, his wife and their daughters were confined at their residence in Cenotaph Road, constituting illegal house detention, between 06.08.2019 from 6.30 a.m. and 11.00 a.m. on 11.08.2019. All the telephones of the Directors and family members were confiscated. Around 20 officers of the Income Tax Department stayed in the said premises during the entire search i.e., from 06.08.2019 to 11.08.2019. The appellants and their family members were not permitted to sleep and were made to sit throughout the day and night for all 5 days. This constitutes violation of human rights. e) One of the daughters of the Director suffered seizures on 09.08.2019 on account of lack of sleep. Despite the emergent medical condition, medical measures were delayed and it was only after the lapse of more than an hour, was she permitted to be taken to the hospital. Even then, the search team did not permit either of the parents to accompany her and permitted only her sister to leave the premises. She was admitted to Apollo Hospital for treatment and diagnosed with br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and true, would vitiate the search on the ground of being arbitrary, oppressive, excessive and infringing the appellants' right under Article 21 of the Constitution of India, thereby rendering the search itself unconstitutional, however, the above submissions were hardly examined. (c) That any State action which infringes right to privacy would have to pass the muster of the four fold test laid down in Puttaswamy , which the impugned search miserably fails. (d) That failure to provide timely medical treatment apart from violating Article 21 of the Constitution of India would constitute coercion thereby rendering the evidence/ statement collected / obtained during the search irrelevant, thereby inadmissible. (e) That the decision in Pooran Mal (supra) insofar as it finds that evidence obtained in an illegal search can be used if it satisfies the test of relevance, requires a revisit in view of the decision in Puttaswamy case. (f) That the learned Judge ought to have seen that there was gross violation of the guidelines contained in the search and seizure manual issued by the Board under Section 119 of the Act which is binding on the authorities. Emphasis was placed on Paragraph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act that it is factually incorrect cannot be sustained also for the reason that the manual is meant to serve as a guide to the officers while conducting the search and seizure effectively and does not have any statutory force. Thus, any challenge to a proceeding that the search and seizure manual was not followed is misconceived as it overlooks the position that manual is meant to be a guide but not mandatory nor enforcible. Order of the learned Judge: 4.15. The learned Judge while dealing with the above contentions after referring to the judgment of the Hon'ble Supreme Court in the case of ITO v. Seth Brothers. (1969) 2 SCC 324 and Pooran Mal v. Director of Inspection (Investigation), (1974) 1 SCC 345 observed that search and seizure is a drastic measure and bound to produce inconvenience. The learned Judge proceeds to observe that allegations and rebuttals of highhandedness of the officials as well as oppression was also alleged in the case of Pooran Mal (supra) , however, the Apex Court on an overall view of the matter, found that the search was not established to be mala fide , oppressive or excessive. After observing so, the learned Judge rejected the contention of the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sensori-motor deficits, blurring of vision or bowel bladder disturbances. History of fever, associated with chills since 1 day and cough with expectoration since 2 days. Admitted for further care. .................. 39. Whatever may be the compulsions of the search action, it does not excuse the denial of or delay in, access to medical care. Discharge summary dated 11.08.2019 makes it clear that the person had suffered an epileptic fit and had been admitted to the hospital on 10.08.2019 for treatment. There is a categoric assertion in the writ affidavit regarding the difficulties and resistance encountered by the family in seeking medical help for the person and these allegations have not, in my view, been met or addressed effectively either in counter or in the submissions advanced before me. ...... 43. Suffice it to say that on a wholistic appreciation of this aspect of the matter, I am inclined to give the benefit of doubt to the petitioner. Bearing in mind the factual disputes involved, this is not the appropriate forum to address this issue and I hence reserve the right of the petitioner to approach the Civil Courts/any other appropriate forum to establish (i) availability and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) found that there are adequate safeguards against misuse / abuse of the drastic power of search. The relevant portion is extracted hereunder: (i) Pooran Mal v. Director of Inspection (Investigation), (1974) 1 SCC 345 11. We are, therefore, to see what are the inbuilt safeguards in Section 132 of the Income Tax Act. In the first place, it must be noted that the power to order search and seizure is vested in the highest officers of the department. Secondly, the exercise of this power can only follow a reasonable belief entertained by such officer that any of the three conditions mentioned in Section 132(1)(a),(b) and (c) exists. In this connection it may be further pointed out that under sub-rule (2) of Rule 112, the Director of Inspection or the Commissioner, as the case may be, has to record his reasons before the authorisation is issued to the officers mentioned in sub-section (1). Thirdly, the authorisation for the search cannot be in favour of any officer below the rank of an Income Tax Officer. Fourthly, the authorisation is for specific purposes enumerated in (i) to (v) in sub-section (1) all of which are strictly limited to the object of the search. Fifthly when money, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Constitution, the same has been laid to rest by the Constitution Bench of 9 Judges in the case of K.S.Puttaswamy (2017) 15 SCC 1, wherein it was held that Right to Privacy is a constitutionally protected fundamental right which inheres in Article 21 of the Constitution of India. Importantly, with Puttaswamy's judgment there may be a paradigm shift in the dimension/nature of the enquiry, which Court would make while dealing with the contention of a search being not compliant with statutory safeguards thereby rendering the search unconstitutional and the consequence that follows thereon. 4.23. To appreciate the nature of Right to Privacy which has been held to be a fundamental right, which inheres in Article 21 of the Constitution of India and its impact on the power of search and seizure of tax authorities, it may be necessary to give a brief background of its evolution. There can be no two views about the fact that search and seizure is a serious invasion on the rights of the subject, for it amounts without doubt intrusion into the privacy of the subject. Thus, any search and seizure ought to be carried in accordance with the procedure established by law. 4.24. In the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC 1295 : (1963) 2 Cri LJ 329 : (1964) 1 SCR 332] to the extent that it holds that the right to privacy is not protected by the Constitution stands overruled; 652.3. The right to privacy is protected as an intrinsic part of the right to life and personal liberty under Article 21 and as a part of the freedoms guaranteed by Part III of the Constitution. (emphasis supplied) 4.28. It is settled that search and seizure powers under tax laws have to be exercised within the bounds of law. We say so, inasmuch as any action contrary to the relevant statutory provision in the present case, Section 132 of the Act, may render the same vulnerable to challenge as infringing right to privacy. 4.29. Importantly, the Constitution Bench in Puttaswamy held that a challenge to a State action on the ground of infringement of the right to privacy may have to be examined applying the following tests viz., (a) The action must be sanctioned by law; (b) The proposed action must be necessary in a democratic society for a legitimate aim; (c) There must be procedural guarantees against abuse; (d) The extent of such interference must be proportionate to the need for such interference. 4.30. We shall now apply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghts draws a fundamental distinction between the scope of the constitutional rights, and the extent of its protection. Insofar, as the scope of constitutional rights is concerned, it marks the outer boundaries of the said rights and defines its contents. The extent of its protection, prescribes the limitations on the exercise of the rights within its scope. In that sense, it defines the justification for limitations that can be imposed on such a right. This phenomenon of both the right and its limitation in the Constitution exemplifies the inherent tension between democracy's two fundamental elements. Such balancing enables each facet to develop alongside the other facets, not in their place. This tension between the two fundamental aspects rights on the one hand and its limitation on the other hand is to be resolved by balancing the two so that they harmoniously co-exist with each other. This balancing is to be done keeping in mind the relative social values of each competitive aspects when considered in proper context. 4.36. Having found that Doctrine of Proportionality is balancing of competing interest in the form of rights vis-a -vis limitations on such right, that leads u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alternative (necessity stage). (d) The measure must not have a disproportionate impact on the right holder (balancing stage). 4.39. The above broad principle on Doctrine of Proportionality was enunciated in the 2nd Puttaswamy case and keeping the same in view, we shall now proceed to examine as to whether the instant case meets the required parameters in respect of the above aspects / components. 4.40. To apply the doctrine of proportionality in the context of a search under a fiscal enactment, it is necessary to bear in mind the significance of the power of taxation under the Constitution of India. Power to tax has been universally acknowledged as an essential attribute of sovereignty. In this regard, it may be relevant to refer to the following portions of the judgment in the case of Jindal Stainless Limited and another v. State of Haryana and Others, reported in (2017) 12 SCC 1 : 17. .....Cooley in his book on Taxation, Vol. 1 (4th Edn.) in Chapter 2 recognises the power of taxation to be inherent in a sovereign State. The power, says the author, is inherent in the people and is meant to recover a contribution of money or other property in accordance with some reasonable rule o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of power to tax which is an attribute of sovereignty and essential for the very existence of the Government, one also need to keep in mind that the power to tax under the Constitution comes with certain express restrictions. One such restriction is the declaration under Article 265 of the Constitution of India, which provides that no tax shall be levied or collected except by authority of law . 4.42. The expression levy has been construed to take within its fold assessment . Assessment is a comprehensive word and can denote the entirety of proceedings which are taken with regard to it. [STO v. Sudarsanam Iyengar and Sons, (1969) 2 SCC 396] . In other words, a ssessment would encompass within itself the entire process of determination of liabilities, commencing with the filing of returns and culminating in the passing of the order of assessment. Assessment would thus include the power to issue summons/ gather documents including by way of search. 4.43. We thus have two competing rights/ interest, one is the need to curb evasion and other is to ensure that the levy/ assessment, be made strictly in accordance with law for any violation of the law relating to levy which includes a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement. Second, the requirement of a need, in terms of a legitimate State aim, ensures that the nature and content of the law which imposes the restriction falls within the zone of reasonableness mandated by Article 14, which is a guarantee against arbitrary State action. The pursuit of a legitimate State aim ensures that the law does not suffer from manifest arbitrariness. Legitimacy, as a postulate, involves a value judgment. Judicial review does not reappreciate or second guess the value judgment of the legislature but is for deciding whether the aim which is sought to be pursued suffers from palpable or manifest arbitrariness. The third requirement ensures that the means which are adopted by the legislature are proportional to the object and needs sought to be fulfilled by the law. Proportionality is an essential facet of the guarantee against arbitrary State action because it ensures that the nature and quality of the encroachment on the right is not disproportionate to the purpose of the law. Hence, the threefold requirement for a valid law arises out of the mutual interdependence between the fundamental guarantees against arbitrariness on the one hand and the protection of li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his would seem to be elementary and no authority is necessary in support of it, but if any were needed, it may be found in the decision of this Court in N arendra Kumar v . U nion of India [ (1960) 2 SCR 375 : AIR 1960 SC 430 : 1960 SCJ 214] . ...... It would thus be clear that though the impugned Order may be within the terms of Section 10(3)(c), it must nevertheless not contravene any fundamental rights and if it does, it would be void. Now, even if an order impounding a passport is made in the interests of public order, decency or morality, the restriction imposed by it may be so wide, excessive or disproportionate to the mischief or evil sought to be averted that it may be considered unreasonable and in that event, if the direct and inevitable consequence of the Order is to abridge or take away freedom of speech and expression, it would be violative of Article 19(1)(a) and would not be protected by Article 19(2) and the same would be the position where the order is in the interests of the general public but it impinges directly and inevitably on the freedom to carry on a profession, in which case it would contravene Article 19(1)(g) without being saved by the provision enacted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions under the Constitution of India. In the light of the above discussion, we are of the view that the nature of the issues raised require greater attention and closer examination and in the absence of an enquiry and finding on the above issues, we are inclined to remand the matter to the learned Judge for considering the above issues. Value of Evidence obtained in illegal search: 4.51. The learned Senior Advocate Mr.P.S.Raman would submit that the learned Judge erred in giving a short shrift to the value to be attached or relevance of the evidence obtained in a search wherein the procedural safeguards provided under the statute were not complied with, thereby rendering the action unconstitutional for infringing the right to privacy of the entity searched by merely relying on the decision in Pooran Mal wherein it was held that evidence obtained during the course of an illegal search can be used in framing assessment, without considering the impact of the decision in K.S. Puttaswamy wherein right to privacy has been held to be a fundamental right under Article 21 of the Constitution of India. 4.51.1. On the other hand it was submitted by the learned Senior Standing Counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this illegality - the Court excluded the results of the blood test, holding that, it is clear that the legislative intent was that the prescribed due procedure must be followed for collection of blood samples, and there can be no other way of collecting evidence other than what is specifically laid down. The Court ruled that the evidence cannot be held admissible when the due procedure has not been followed. To come to this conclusion, the Court drew strength from the landmark case of Nazir Ahmad v. The King- Emperor, reported in 1926 SCC Online Cal 270 wherein it was held, 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 . 4.51.6. The above position viz., exclusion of illegally obtained evidence was short-lived. The Courts shifted to an approach whereby even if the tree is poisonous the fruit is fine. In other words, the courts took the position that the end justifies the means. In the case of R.M. Malkani v. State of Maharashtra, reported in (1973) 1 SCC 471 , the Court admitted illegally obtained evidence. In this case, the police had fixed a tape-recording instr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at No tax shall be levied or collected except by authority of law . Thus, when there is search in violation of Section 132 of the Act or Rule 112 of the Income Tax Rules, it requires to be seen if Article 265 of the Constitution of India gets offended, if so, whether evidence gathered in a search which is unconstitutional or illegal can still be used only on the basis of its relevance. 4.53. Apart therefrom, it is necessary to note that the above judgment in Pooran Mal was rendered relying upon the judgment of the Supreme Court in M.P.Sharma's case, wherein it was held that right to privacy was not a fundamental right protected under the Constitution of India. The same has now been overruled by 9 judge Constitution Bench in Puttaswamy's case wherein it was held that right to privacy is a fundamental right and inheres in Article 21 of the Constitution of India. Importantly, the 9 judge Bench has held that search is an intrusion into right to privacy. The sequitur is any search ought to be made strictly in compliance with law/safeguards under the enabling provision, in the present case Section 132 of the Act. 4.54. It is important to examine the impact, if any, of the law lai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated and, therefore, could be taken note of. It is a settled legal position that even if a document is procured by improper or illegal means, there is no bar to its admissibility if it is relevant and its genuineness is proved. If the evidence is admissible, it does not matter how it has been obtained. 4.58. However, importantly the Court also went on to observe: However, as a matter of caution, the court in exercise of its discretion may disallow certain evidence in a criminal case if the strict rules of admissibility would operate unfairly against the accused. More so, the Court must conclude that it is genuine and free from tampering or mutilation 4.59. What exactly would operate unfairly against the accused is a fact-intensive exercise. This exception seems to have been inspired by the Unfair Operation Principle applied by Courts in UK which prohibits admission of evidence, if in a given case, its reception runs contrary to the principles of basic fairness. The principle gives Courts the discretion to decide, on a case to case basis, as to what would operate fairly or unfairly against the accused, and in appropriate cases, exclude such evidence. 4.60. The Supreme Court in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons is to ensure that the testimony considered during trial is reliable. The premise is that involuntary statements are more likely to mislead the Judge and the prosecutor, thereby resulting in a miscarriage of justice. Even during the investigative stage, false statements are likely to cause delays and obstructions in the investigation efforts. 103. The concerns about the voluntariness of statements allow a more comprehensive account of this right. If involuntary statements were readily given weightage during trial, the investigators would have a strong incentive to compel such statements often through methods involving coercion, threats, inducement or deception. Even if such involuntary statements are proved to be true, the law should not incentivise the use of interrogation tactics that violate the dignity and bodily integrity of the person being examined. In this sense, the right against self-incrimination is a vital safeguard against torture and other third-degree methods that could be used to elicit information. It serves as a check on police behaviour during the course of investigation. The exclusion of compelled testimony is important otherwise the investigators will be mor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons 24, 25 and 26 of the Evidence Act, 1872 which read as follows: 24. Confession caused by inducement, threat or promise, when irrelevant in criminal proceeding. A confession made by an accused person is irrelevant in a criminal proceeding, if the making of the confession appears to the court to have been caused by any inducement, threat or promise, having reference to the charge against the accused person, proceeding from a person in authority and sufficient, in the opinion of the court, to give the accused person grounds, which would appear to him reasonable, for supposing that by making it he would gain any advantage or avoid any evil of a temporal nature in reference to the proceedings against him. 25. Confession to police officer not proved. No confession made to a police officer, shall be proved as against a person accused of any offence. 26. Confession by accused while in custody of police not to be proved against him. No confession made by any person whilst he is in the custody of a police officer, unless it be made in the immediate presence of a Magistrate, shall be proved as against such person. (emphasis supplied) 4.61. Taking this step of recognition of the right to pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to see if the rationale of the decision in Selvi's case which frowned upon the use of self incriminating statements on the premise that it would offend Article 20 (3) of the Constitution of India, would apply to a search under Section 132 of the Act. We are conscious of the position that Article 20(3) of the Constitution of India would not apply to statements obtained during the course of an enquiry by an Income Tax Officer, for such statements at the stage of being recorded is not one made by a person accused of an offence. [Ramesh Chandra Mehta v. State of W.B., 1968 SCC OnLine SC 62; Harbansingh Sardar Lenasingh v. State of Maharashtra, (1972) 3 SCC 775] . While in Selvi's case it was dealing with right against self incrimination in terms of Article 20(3) of the Constitution of India, in the present case the submission is that right to privacy which has been recognized as a fundamental right stands offended in view of the fact that the search was not carried out in accordance with law. Search being an intrusion into right to privacy unless the search is in accordance with law, it may offend Article 21 of the Constitution of India, depending on the extent and nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in Section 50 are intended to serve a dual purpose to protect a person against false accusation and frivolous charges as also to lend creditability to the search and seizure conducted by the empowered officer. The argument that keeping in view the growing drug menace, an insistence on compliance with all the safeguards contained in Section 50 may result in more acquittals does not appeal to us. If the empowered officer fails to comply with the requirements of Section 50 and an order or acquittal is recorded on that ground, the prosecution must thank itself for its lapses. Indeed in every case the end result is important but the means to achieve it must remain above board. The remedy cannot be worse than the disease itself. The legitimacy of the judicial process may come under a cloud if the court is seen to condone acts of lawlessness conducted by the investigating agency during search operations and may also undermine respect for the law and may have the effect of unconscionably compromising the administration of justice. That cannot be permitted. The judgment in Pooran Mal case [(1974) 1 SCC 345 : 1974 SCC (Tax) 114] therefore, cannot be understood to have laid down that an ill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of our democratic society. A conviction resulting from an unfair trial is contrary to our concept of justice. Conducting a fair trial is both for the benefit of the society as well as for an accused and cannot be abandoned. While considering the aspect of fair trial, the nature of the evidence obtained and the nature of the safeguard violated are both relevant factors. Courts cannot allow admission of evidence against an accused, where the court is satisfied that the evidence had been obtained by a conduct of which the prosecution ought not to take advantage particularly when that conduct had caused prejudice to the accused. If after careful consideration of the material on record it is found by the court that the admission of evidence collected in search conducted in violation of Section 50 would render the trial unfair then that evidence must be excluded. In R. v. Collins [(1987) 1 SCR 265 (Canada)] the Supreme Court of Canada speaking through Lamer, J. (as his Lordship, Chief Justice of the Supreme Court of Canada then was) opined that the use of evidence collected in violation of the Charter rights of an accused would render a trial unfair and the evidence inadmissible. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooran Mal 's case was that the seized material can be used in other legal proceedings against the assessees by the Income Tax authorities. The decision in Baldev Singh would suggest that one cannot assume jurisdiction on the basis of the material seized during an illegal search under Section 132 of the Act even in terms of Pooran Mal . 4.66. We find that the learned Judge has relied upon Pooran Mal and observed that the Supreme Court held ......... even if a search had been illegal, the evidence seized can be validly used in the assessments to follow . 4.66.1. The observation of the learned judge would suggest that the various aspects discussed above on the use of illegally more importantly unconstitutionally obtained evidence has not been examined through the prism of Articles 21 and 265 of the Constitution of India. That apart there is no reference to the recent judgments of 1st and 2nd Puttaswamy 's case wherein Right to Privacy was held to be a fundamental right which inheres in Article 21, which may possibly necessitate a paradigm shift as to the nature of enquiry, which Courts may have to undertake while examining cases of search allegedly involving violation of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t availed the opportunity granted nor were objections filed and thus the noncommunication of the order would not have any bearing on the validity of the proceedings under Section 127 of the Act. 5.4. The learned Judge found that non-communication of the order constitutes procedural irregularity that can be cured by supply of the copy before the learned Judge and proceeded to find that no prejudice is caused by non-service of the centralisation order. In any view, the reason for centralisation is for administrative efficiency and convenience. 5.5. We find that the above issue has been considered by the Supreme Court in the case of Ajantha Industries v. Central Board of Direct Taxes , reported in (1976) 1 SCC 1001, wherein it was found that recording of reasons under Section 127 of the Act is mandatory and non-communication of the reasons necessitating the transfer would not be saved by showing that the reasons exist in the file although not communicated to the assessee. It was found that recording of reasons and disclosure thereof is not a mere formality and non-communication of the reasons in the order would invalidate the proceedings. The relevant portions of the judgment referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even satisfy the Income Tax Officer that there were no reasons for reopening the assessment. Such an opportunity is not available to an assessee under Section 127 (1) of the Act. The above decision is, therefore, clearly distinguishable. 17. We are, therefore, clearly of opinion that non-communication of the reasons in the order passed under Section 127 (1) is a serious infirmity in the order for which the same is invalid. The judgment of the High Court is set aside. The appeal is allowed and the orders of transfer are quashed. No costs. (emphasis supplied) 5.6. We are thus unable to concur with the order of the learned Judge, insofar as it finds that non-communication of order/ reasons under Section 127 of the Act is only a procedural irregularity inasmuch as it runs contrary to the judgment of the Supreme Court in the case of Ajantha Industries . Though there is no doubt that law is well settled that in respect of the transfer of income-tax cases from one Officer to another Officer, the procedure as laid down under the provisions of Section 127 of the Act is to be followed and opportunities as contemplated thereunder must be afforded to the assessee, failing which, the order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine Pat 815: 19. This being so, the party having once acquiesced in the jurisdiction of the transferee court, all statutory rights which the assessee gets by virtue of section 127 of the, Act vanish and, therefore, the assessee cannot assert that without affording opportunity as required under section 127 of the Act, the case has been transferred. In this regard see Halsbury's Laws of England, volume II, third edition, page 140, pr. 265, and also the case reported in O.A.O.K. Lakshmanan Chettiar v. Commissioner, Corporation of Madras, [1927] AIR 1927 Mad 130, which are referred to in the decision in the case of Pannalal Binjraj v. Union of India, [1957] 31 ITR 565 (SC). In the case of Pannalal Binjraj, [1957] 31 ITR 565, which is a Constitution Bench decision, the Supreme Court lays down the law to the effect that (head-note), If an assessee has acquiesced in the jurisdiction of the Income-tax Officer to whom a case has been transferred, he cannot subsequently object to the jurisdiction of the officer and seek to get the order of transfer quashed by invoking the jurisdiction of the court under article 226 of the Constitution. 17. Thus, there is no doubt that law is well settled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search. The above submission was made on the basis that while search concluded on 11.08.2019, notices were issued under Section 153A on 03.02.2020. However, the seized records were handed over by the search team to the Jurisdictional Assessing Officer only on 10.09.2020. It was submitted that the very fact that notices under Section 153A were issued by the authority even prior to being in possession of the seized material, which by itself would show that the assumption of jurisdiction under Section 153 A of the Act was without basis. 6.1. It was then contended by the learned Senior Advocate for the appellants that the records ought to be handed over within 60 days from the last of the authorisation executed for search in terms of Section 132 (9-A) of the Act. The learned Senior Advocate would place reliance on the following judgments: i. CIT v. Kabul Chawla reported in (2015) SCC OnLine Del 115555 ii. Principal Commissioner of Income Tax Central -2 New Delhi v. Meeta Gutgutia Prop. M/s.Ferns 'N' Petals reported in (2017) SCC OnLine Del 8521 iii. Smrutisudha Nayak v. Union of India and others reported in (2021) SCC OnLine Ori 1784 iv.CIT v. Chetan Das reported in (2012) 254 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 79 (Madras) 6.4. The learned Judge found that it was incumbent on the assessing officer to issue a notice under Section 153A of the Act to any person / entity searched irrespective of whether the seized materials were received or otherwise. The learned Judge thereafter proceeds to rely on the decision of Kabul Chawla while concluding that transfer of the seized material is not a condition precedent for the issuance of notice under Section 153A of the Act . The relevant portion of the judgment reads as under: 105. The above conclusion supports the position that notice under Section 153A is to be mandatorily to be issued in the case of an assessee that has been searched (see sub-para (i) of paragraph 38 above). Neither Section 153A nor Section 153C provide for a time limit for the issuance of the notices and only limitation, for the completion of assessment under those sections, is set out under Section 153B. ..... 111. ..... I am thus unable to accept the argument of the petitioners to the effect that the transfer of the seized material is a pre-condition to the issuance of the notice under Section 153A as such a conclusion would tantamount to re-writing of the provision to rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132-A of the 1961 Act. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under Sections 147/148 of the Act and those powers are saved. 37. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs. ..... 40. In view of the discussion hereinabove, once during search undisclosed income is found on unearthing the incriminating material during the search, the AO would assume jurisdiction to assess or reassess the total income even in case of completed/unabated assessments. Therefore, the impugned judgment(s) and order(s) passed by the High Court taking the view that the AO has the power to reassess the return of the assessee not only for the undisclosed income, which was found during the search operation but als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 53A of the Act . 7.1. Secondly, seized material must relate to each of the assessment years for which notices under Section 153C of the Act ought to be issued and reliance was placed in this regard on the judgment of the Supreme Court in the case of Sinhgad Technical Education Society, reported in 2018 11 SCC 490 . 7.2. Mr.Velmurugan learned counsel appearing for the appellants in W.A. Nos. 325 of 2023 and other cases, while adopting the arguments of Mr.Srinath Sridevan, would submit that separate satisfaction note must be prepared for each of the six assessment years. 7.3. Mr.Karthik Lakshmanan, learned counsel for the appellants in W.A. Nos. 318 of 2023 and other cases relying upon a recent judgment of the Delhi High Court in the case of Saksham Commodities Ltd., in W.P (c) 1459 of 2024 dated 09.04.2024 would reiterate that completed assessment could be interfered only if incriminating materials were unearthed and that it would be impermissible to reopen or reassess in relation to assessment years with respect to which the incriminating documents gathered did not relate while following the judgments in Sinhgad Technical Educational Society and Abhisar Buildwell . 7.4. To the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e periods that such extensions covered. Thus, and in light of the aforesaid ambiguity, I would merely reiterate the provisions of Section 281B. As no material has been placed before the Court to the effect that the extensions are contrary to statute, the submissions of the petitioners are rejected . 8.1. The above observations would show that the learned Judge has rejected the challenge to the provisional attachments for want of clarity and absence of relevant materials being placed. In the light of the fact that we have already expressed our mind to remand the issue on several crucial aspects and this being incidental and the learned judge having rejected the challenge on the ground of lack of clarity and ambiguity, we think it appropriate to permit both the parties to raise contentions, if any, available on the aspect of provisional attachment before the learned Judge. F. Challenge to notices under Section 143 (2) and orders under Section 143 (3) of the Act: 9. The learned Judge disposed of the above challenge by recording that No arguments have been advanced by either party in regard to these writ petitions and in view of my decision above dismissing the challenge to notices und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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