IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD “D” BENCH,itatonline.org/archives/wp-content/files/mansukh_153A_search_warrant.pdf · in the income tax appellate tribunal, ahmedabad

IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD “D” BENCH,

BEFORE SHRI BHAVNESH SAINI, J.M.

AND SHRI N. S. SAINI, A.M.

ITA No.2878, 2879 AND 2880/AHD/2007

A. Y.:2002-03, 2003-04 and 2004-05

Dr. Mansukh Kanjibhai Shah, 16, Uyodog Nagar Society, Panigate, Baroda

Vs The A. C. I. T., Central Circle-2, Aayakar Bhavan, Race Course Circle, Baroda

PAN No. AITPS 7653 L (Appellant) (Respondent)

ITA No.3339/AHD/2007

A. Y.:2005-06

The A. C. I. T., Central Circle-2, Aayakar Bhavan, Race Course Circle, Baroda

Vs Dr. Mansukh Kanjibhai Shah, 16, Uyodog Nagar Society, Panigate, Baroda

PAN No. AITPS 7653 L (Appellant) (Respondent)

For Assessee: Shri Vijay Ranjan, AR

For Department: Shri Anil Kumar, DR

O R D E R

PER SHRI BHAVNESH SAINI, J.M. This order shall dispose of all the

above appeals based upon identical facts.

ITA No.2878, 2879 AND 2880/AHD/2007(Assessee’s appeals)

http://www.itatonline.org

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2. The appeals of the assessee in assessment years 2002-03,

2003-04 and 2004-05 are directed against different orders of learned

Commissioner of Income Tax (Appeals)-IV, Ahmedabad all dated 20th

March -2007on the following common grounds:

“1. In law and in the facts and circumstances of the appellant’s

case, the learned CIT (A) has grossly erred in dismissing Ground of Appeal No.1 of the appellant’s appeal before him challenging the validity of the assessment order impugned before him, inter alia, for t he reasons that it had been passed pursuant to a Notice under Section 153A which was itself issued on the 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 t he

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 the material

available on record.


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4. Briefly, the facts of the case are that in this case initially survey

action u/s 133A of the IT Act was carried out at the premises of K. M.

Shah Charitable Trust (in short “Trust”) in which assessee is the

Managing Trustee, led to detection of unaccounted bank accounts. In

the statement of the assessee recorded during survey on 28th

October, 2004 total amount of Rs.1,93,99,865/- was admitted as

unaccounted money. Subsequently, on 29th October, 2004 search

warrant was issued in the name of the assessee and K. M. Shah

Charitable Trust and the above cash were found and seized. Notice

u/s 153A was issued to the assessee. Return of income was filed for

all the assessment years and revised return was filed at the higher

amount than the income shown in the original return filed. The

returned income was accepted in the assessment year 2002-03 and

2003-04. In assessment year 2004-05, the return of income filed u/s

153A of the IT Act was accepted as it is.

5. The assessee challenged the validity of proceedings u/s 153A

of the IT Act in all the assessment years before learned CIT (A) and it

was submitted that the assessee is the Managing Trustee of K. M.

Shah Charitable Trust which was subjected to survey proceedings u/s

133A on 28-10-2004. At the time of survey, the survey party

extracted an ‘admission’ of the assessee to the effect that cash

amounting to Rs.1,93,99,865/- deposited in those bank accounts of

the Trust belonged to him and that he would include the income

represented thereby in his return for the present assessment years.

Later on, search was conducted in the Bank Premises and search

warrants were issued in the name of the assessee and in the name of


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K. M. Shah Charitable Trust. Those search warrants were served not

on the assessee or on K. M. Shah Charitable Trust in whose case the

proceedings u/s. 132 were to be taken, but on the banks where the

bank accounts of K. M. Shah Charitable Trust were opened before

the date of survey conducted u/s 133A in August, 2004. The said

search proceedings allegedly taken in the case of the assessee and

K. M. Shah Charitable Trust resulted into the search party carrying

out seizure of Rs.1,93,99,865/- after enforcing withdrawal of the

amounts lying deposited in the said bank accounts of K. M. Shah

Charitable Trust. The assessee had retracting from his ‘admission’

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 Rs.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 Rs.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


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fact, the notice u/s 153A was issued on 15-07-2005 received a notice

dated 21-08-2006. The assessee submitted that the return in

response to the notice u/s 153A was filed under protest. The search

warrant was issued in case of “K. M. Shah Charitable Trust,

Mansukhbhai K. Shah”, neither the Trust nor Mansukhbhai K. Shah,

whether in individual capacity or in the capacity of the Managing

Trustee of the Trust, was served with or even shown any search

warrant. In this regard, it was submitted that the notice u/s 153A

could be issued only where a search is initiated u/s 132 of the IT Act,

1961. However, in the case of the assessee no such search or

requisition has taken place. Therefore, the notice issued u/s 153A of

the IT Act, 1961 is void ab initio. It was submitted that thus the search

warrant having not been served upon the assessee, there was no

proceedings u/s 132 or u/s 132A in the assessee’s case and hence

there was no question of invoking section 153A of the IT Act.

Accordingly, the notice issued u/s 153A and consequent order of the

assessment is not valid for each of the above years. Further, it is

obvious from the manner in which the Panchnamas described the

person in whose case the warrant for search u/s. 132 was issued that

even the search warrants must have described the person in whose

case the search was to be conducted in the same ambiguous manner

as “K. M. Shah Charitable Trust, Mansukhbhai K. Shah” and which

clearly showed that even at the time of issuing search warrant, the

Department had not made up its mind as to whether it was carrying

out the search in the case of this Trust or in the case of Shri

Mansukhbhai K. Shah in his individual capacity. It is evident from the

fact that separate orders were passed on 27-12-2004 u/s. 210 by the


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Income tax Officer, Ward-5(3), Baroda calling upon not only the Trust

but also Shri Mansukhbhai K. Shah in his individual capacity, to pay

advance tax amounting to Rs.64,89,235/- on the same amount of

estimated income of Rs.1,93,99,865/- that being the amount which

was seized by the Department from this Trust bank accounts in the

Indian Overseas Bank.

6. The learned Commissioner of Income Tax (Appeals) after

considering the materials on record and the submissions of the

assessee dismissed the appeal of the assessee on this issue. His

findings in Para 3 are reproduced as under:

“3. I have carefully considered the contentions of the Ld. Counsel as well 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 Rs.1,93,99,865/-.

The Assessing Officer passed the order u/s 154 of


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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 the Trust

are filed in the paper book. He has further submitted that appeal of

the Trust for the same assessment year before the learned CIT (A)

was not pressed because the tax was appropriated in the case of t he

Trust out of the above amounts lying in various banks in the name of

the Trust which were seized by the Revenue authorities subsequently

and converted into PD account. He has submitted that the amount in

question lying in various bank accounts of Indian Overseas Bank in

the name of the Trust, therefore, does not belong to the assessee

individual and ultimately Revenue Department confirmed the addition

on substantive basis in the case of the Trust of the amounts lying in

the bank accounts of the Trust. The assessee is Managing Trustee

of the Trust. Rs.5.47 Crores were deposited in all the 15 bank

accounts of the Trust between 12-08-2004 to 18-08-2004 but Rs.1.93

Crores was not entered in the books of the Trust in the year under

consideration. Since the amount lying in the bank accounts was in the

name of the Trust, therefore, no search was conducted in the

individual name of the assessee. He has referred to statement of the

assessee recorded on 28-10-2004 in which he has explained the

bank accounts of the Trust out of which some are reflected in the

books of account of the Trust and some not reflected in the books of

the Trust. He has submitted that though he has admitted the amount

to be his personal money but in answer to question No.36 in the

same statement, the assessee has explained that his personal books


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are not written completely, therefore, he will furnish the evidence of

the source by filing the return of income if available. He has submitted

that the assessee in his later statement dated 24-12-2004 further

explained before the AO that the amount lying in the bank belong to

the Trust. Therefore, it would amount to retraction from the earlier

statement. He has submitted that warrant of authorization dated

29-10-2004 were issued in respect of various branches of the Indian

Overseas Bank through which the amount lying in the bank were

converted into PD account of the Debarment which were in the name

of the Trust. He has submitted that the Panchnamas of the bank were

given to the assessee being the Managing Trustee only on

09-05-2005 on which endorsement is made in respect of bank

accounts of the Trust. Copies are filed in the paper 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


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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 dated 09-10-2009 (copy

filed in the paper book). In this case, the warrant of authorization was

in joint name of Mr. Mudit Verma and Mrs. Vandana Verma to enter

and search the residence at Lucknow. The A O in this case issued

notice u/s 158BC of the IT Act in the name of Mrs. Vandana Verma

and computed the undisclosed income in her name. The assessee

took preliminary objection before the Tribunal with regard to framing

of the assessment in individual capacity and submitted that as the

search warrant was in joint name therefore, assessment cannot be

framed in individual capacity. The objection was upheld by the

Tribunal and appeal of the assessee was allowed on the preliminary

point itself. Hon'ble High Court considering the issue in detail

dismissed the departmental appeal. The operative findings are

reproduced as under:

“In view of the above, in our opinion, the warrant of authorization must be issued individually by the Director/Commissioner at the time of issuing the same. If the same is not issued individually, then assessment cannot be made in an individual capacity as done by the Assessing Officer in the instant case. The warrant was issued jointly, as stated hereinabove, so the assessment will have to be made collectively in the name of both the persons in the status of AOP/BOI. Thus, the Tribunal has rightly held that assessment could not be framed in an individual capacity but it should be framed either as association of person or as body of individual.


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In the light of the above discussions and by considering the totality of the facts and circumstances of the case, we uphold the impugned order passed by the Tribunal, who has rightly set-aside the assessment orders which were passed in individual capacity of the assessee. However, it will be open to the assessing authority to proceed and pass fresh assessment order in accordance with law, if so desire. The appeal is, therefore, dismissed.”

Learned Counsel for the assessee further submitted that there is no

undisclosed income detected in the individual case of the assessee.

The returned income is accepted in the individual assessments. The

assessee denied money lying in the bank account in the name of

Trust belonging to him. He has submitted that searches are not

conducted on preponderance of probabilities. No material was found

against the assessee at any point of time. Addition 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


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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 individual case of the assessee, therefore,

proceedings u/s 153A in the individual case of the assessee are

invalid and bad in law and shall have to be quashed. No addition can

be made on merit also.

8. On the other hand, learned Departmental Representative relied

upon the orders of authorities below. Learned Departmental

Representative submitted that survey was conducted in the case of

the Trust in which statement of assessee was recorded wherein

assessee admitted that the amount deposited in the bank account of

the Trust is his personal money for which assessee has failed to

explain the source. The Learned Departmental Representative

submitted that there were 15 bank accounts found in the name of the

Trust out of which 6 bank accounts remained unaccounted. He has,

therefore, submitted that since the assessee is Managing Trustee of

the Trust therefore, the principle of preponderance of probability

apply in the case as is held by Hon’ble Supreme Court in the cases

of Sumati Dayal 214 ITR 801 and Durga Prasad More 82 ITR 540.

The Learned Departmental Representative submitted that the amount

belong to the assessee in his individual capacity. He has submitted

that once the warrant of authorisation has been served upon bank,

there is sufficient compliance of service of search warrant upon

assessee. There is no need of service of search warrant upon


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assessee. He has submitted that for proceedings u/s 153A, initiation

of the search proceedings u/s 132 is enough. Assessing Officer was,

therefore, justified in proceeding against the assessee u/s 153A of

the IT Act because warrant of authorization was issued in the name

of the Trust and the assessee u/s 132 of the IT Act in the following

name “K. M. Shah Charitable Trust, Mansukhbhai K. Shah”. He has

submitted that joint search warrant is valid under the law and relied

upon decision of Allahabad High Court in the case of Raghuraj Pratap

Singh and others Vs ACIT 307 ITR 450 in which it was held “common

authorization in respect of more than one person permissible”. He

has submitted that in the case of Smt. Vandana Verma decided by

Hon’ble Allahabad High Court (supra) the warrant was in the joint

names of Mr. Mudit Verma and Mrs. Vandana Verma which was

considered in the name of single person, but in the case of the

assessee and is not used in the warrant of authorization because it is

coma (,) being in the name of Trust 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


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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 survey and relied upon 96

ITD 344 (Ahmedabad). The addition on merit was rightly made by the

A O in the case of assessee.

9. We have considered the rival submissions and the material

available on record. Section 153A of the Act provides –

“153A. Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall—

(a)issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139;

(b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made :

Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years:

Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this section pending on the date of initiation of the search under


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section 132 or making of requisition under section 132A, as the case may be, shall abate.

Explanation.—For the removal of doubts, it is hereby declared that,—

(i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section;

(ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year.”

Section 132 of the Act provides -

“132. (1) Where the Director General or Director] or the [Chief Commissioner or Commissioner] [or any such [Joint Director] or [Joint Commissioner] 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 sub

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 this Act was issued tobe produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such bookby 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 causother documents which will be useful for, or relevant to, any proceeding under the Indian Incometax Act, 1922 (11 of 1922), or unsection

(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 Aundisclosed income or property),

[then,— (A) the [Director General or Director] or the [Chief Commissioner or

Commissioner], as the case may be, may authorise any [Joint Director], Joint Commissioner], [Assistant Director [or Deputy Director]], Assistant Commissioner [or Deputy Commissioner] or Income-tax Officer], or

(B) such [Joint Director], or [Joint Commissioner], as the case may be,

may authorise any [Assistant Director [or Deputy Director]], [Assistant Commissioner [or Deputy Commissioner] or Income-tax Officer],

(the officer so authorised in all cases being hereinafter referred to as the authorised officer) to—]


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(i) enter and search any [building, place, vessel, vehicle or aircraft] where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept;

(ii) break open the lock of any door, box, locker, safe, almirah or other

receptacle for exercising the powers conferred by clause (i) where the keys thereof are not available;

[(iia) search any person who has got out of, or is about to get into, or is in,

the building, place, vessel, vehicle or aircraft, if the authorised officer has reason to suspect that such person has secreted about his person any such books of account, other documents, money, bullion, jewellery or other valuable article or thing;]

[(iib) require any person who is found to be in possession or control of any

books of account or other documents maintained in the form of electronic record as defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000), to afford the authorised officer the necessary facility to inspect such books of account or other documents;]

(iii) seize any such books of account, other documents, money, bullion,

jewellery or other valuable article or thing found as a result of such search:

[Provided that bullion, jewellery or other valuable article or thing, being

stock-in-trade of the business, found as a result of such search shall not be seized but the authorised officer shall make a note or inventory of such stock-in-trade of the business;]

(iv) place marks of identification on any books of account or other

documents or make or cause to be made extracts or copies therefrom; (v) make a note or an inventory of any such money, bullion, jewellery or

other valuable article or thing :

[Provided that where any building, place, vessel, vehicle or 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 :]


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[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 of such valuable article or thing under clause (iii):]

[Provided also that nothing contained in the second proviso shall apply in case of any valuable article or thing, being stock-in-trade of the business.] [(1A) Where any (Chief Commissioner or Commissioner], in consequence of information in his possession, has reason to suspect that any books of account, other documents, money, bullion, jewellery or other valuable article or thing in respect of which an officer has been authorised by the [Director General or Director] or any other [Chief Commissioner or Commissioner] or any such [Joint Director] or [Joint Commissioner] as may be empowered in this behalf by the Board to take action under clauses (i) to (v) of sub-section (1) are or is kept in any building, place, vessel, vehicle or aircraft not mentioned in the authorisation under sub-section (1), such [Chief Commissioner or Commissioner] may, notwithstanding anything contained in section [120], authorise the said officer to take action under any of the clauses aforesaid in respect of such building, place, vessel, vehicle or aircraft.]

(2) The authorised officer may requisition the services of any police officer or of any officer of the Central Government, or of both, to assist him for all or any of the purposes specified in sub-section (1) [or sub-section (1A)] and it shall be the duty of every such officer to comply with such requisition.

(3) The authorised officer may, where it is not practicable to seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing, [for reasons other than those mentioned in the second proviso to sub-section (1),] 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 officer and such officer may take such steps as may be necessary for ensuring compliance with this sub-section.

[Explanation.—For the removal of doubts, it is hereby declared that serving of an order as aforesaid under this sub-section shall not be deemed to be seizure of such books of account, other documents, money, bullion, jewellery or other valuable article or thing under clause (iii) of sub-section (1).]

(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


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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 documents are true ; and

(iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person’s handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.]

(5) [***]

(6) [***] (7) [***] (8) The books of account or other documents seized under sub-section (1) [or sub-section (1A)] shall not be retained by the authorised officer for a period exceeding [thirty days from the date of the order of assessment under [section 153A or] clause (c) of section 158BC] unless the reasons for retaining the same are recorded by him in writing and the approval of the [Chief Commissioner, Commissioner, Director General or Director] for such retention is obtained : Provided that the [Chief Commissioner, Commissioner, Director General or Director] shall not authorise the retention of the books of account and other documents for a period exceeding thirty days after all the proceedings under the Indian Income-tax Act, 1922 (11 of 1922), or this Act in respect of the years for which the books of account or other documents are relevant are completed. [(8A) An order under sub-section (3) shall not be in force for a period exceeding sixty days from the date of the order.]


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(9) The person from whose custody any books of account or other documents are seized under sub-section (1) [or sub-section (1A)] may make copies thereof, or take extracts therefrom, in the presence of the authorised officer or any other person empowered by him in this behalf, at such place and time as the authorised officer may appoint in this behalf. [(9A) Where the authorised officer has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c) of sub-section (1), the books of account or other documents, or any money, bullion, jewellery or other valuable article or thing (hereafter in this section and in sections 132A and 132B referred to as the assets) seized under that sub-section shall be handed over by the authorised officer to the Assessing Officer having jurisdiction over such person within a period 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 foregoing power, such rules may provide for the procedure to be followed by the authorised officer—

(i) for obtaining ingress into [any building, place, vessel, vehicle or aircraft] to be searched where free ingress thereto is not available ;

(ii) for ensuring safe custody of any books of account or other documents or assets seized.

[Explanation 1.—For the purposes of sub-section (9A), “execution of an authorisation for search” shall have the same meaning as assigned to it in Explanation 2 to section 158BE.]

Explanation 2.—In this section, the word “proceeding” means any proceeding in respect of any year, whether under the Indian Income-tax Act, 1922 (11 of 1922), or this Act, which may be pending on the date on which a search is authorised under this section or which may have been completed on or before


19

such date and includes also all proceedings under this Act which may be commenced after such date in respect of any year.]”

9.1 Section 153A of the IT Act starts with the word

“notwithstanding anything contained”, it is non-obstante clause. For

applicability of above provision, the initiation of search is necessary.

Once a warrant of authorization or requisition is issued and search is

conducted and panchnama is drawn, the completed assessments for

the all the relevant years would get reopened irrespective of whether

any incriminating material is found or not in relation to a particular AY.

In other words, even if the material found shows the concealment in

only one year, all the completed assessments falling in the period of

six AYs preceding the year of search will get reopen. There was an

identical provision contained in Chapter XIV-B of the Act, which

provides that where after 30th June, 1995, a search is initiated u/s 132

or books accounts etc. are requisitioned u/s 132A, the AO shall

proceed to assess undisclosed income in accordance with provisions

of Chapter XIV-B for making assessment for block period but in the

block assessments, the question of assessing an undisclosed income

in relation to any AY was restricted to the incriminating material on

undisclosed assets discovered during the course of search and


20

seizure or in the post search inquiry the material was relatable to

such evidence discovered in search. The income assessed in the

regular assessments was not to be considered in the block

assessments. However, in the present provisions 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


21

assessment year in which search took place shall get reopened.

Similarly, if requisition is made then irrespective of whether there is

anything incriminating found against him in relation to other year or

years or not, the assessee has to undergo the rigor of the

assessment proceedings for all the six years as well as the year

under search.

9.3. Section 153A would be applicable where a search is initiated

under section 132 or books of accounts or other documents or any

assets are requisitioned under section 132A of the Act after 31st May,

2003. Therefore, before invoking the provisions of section 153A of

the Act it would be necessary to comply with the provisions contained

under section 132(1) of the Act. Salient feature of section 132(1) is

that where the Director General or Director or the Chief

Commissioner or Commissioner, in consequence of information in

his possession has reason to believe that any person failed to

produce books of accounts or other documents in response to

summons or that any person to whom summons have been issued

has not or might not or would not produce any books of accounts or

documents or that any person is in possession of any money, bullion,


22

jewellery or other valuable article in his possession, which has not

been or would not be disclosed for the purpose of this Act (hereinafter

referred to as ‘undisclosed income’ or ‘property’) then the Director

General, Director or Chief Commissioner or Commissioner, as the

case may be, may authorize any Joint Director, Assistant Director,

Assistant Commissioner of Dy. Commissioner of Incometax, called

the authorized Officer, to enter and search any building, place,

vessel, vehicle or air-craft, etc. where he has reason to suspect that

such books of accounts, other documents, money, bullion, jewellery

or other valuable article or thing are kept, break open the lock of any

door, etc., search any person who is about to go from the above

premises, require any person to account for the books of accounts or

documents, seize any such books of accounts or documents, money,

bullion, jewellery, etc. or things found as a result of such search and

may place mark of identification on any books of accounts or other

documents or take copy thereof and to prepare inventory of the

same. The purpose of section 132 for issue of warrant of

authorization is to unearth, detect and to take possession of the

unaccounted/undisclosed income or property. The mere issue of

warrant of authorization without there being search of the premises


23

mentioned 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

inference of escapement of income or under-assessment as under

section 147. Should it mean that a mere search will enable


24

reassessment proceedings by-passing or ignoring the requirements

of section 147. The only part of procedure dispensed with under

section 153A of IT Act on comparison with section 147 is that there is

no reason for recording reasons and for approval by higher

authorities before issue of notice of reassessment. Further, there

cannot be automatic jurisdiction for 6 back years even for those

entities which may not be in existence for all the six years indicating

that the provision is expected to be reasonably exercised. It should

therefore follow that there should be prima facie inference of liability

for invoking jurisdiction under section 153A of the IT Act. We may

add that in section 153A(b) it is specifically provided that the

Assessing Officer shall assess or reassess the total income of six

years immediately preceding the assessment years relevant to the

previous year in which such search is conducted or requisition is

made. It would, therefore, clarify that not only the warrant of

authorization is to be issued in the name of the assessee but search

shall have to be necessarily conducted or in case of requisition under

section 132A, the requisition is to be made actually. Hon’ble

Allahabad High court in the case of Chandra Prakash Agrawal v. CIT;

287 ITR 172 considering the definition of requisition under section


25

132A of the Act as is referred to in section 158BA of the Act observed

that the word “requisition” means taking of actual possession. The

requisition is complete only when the seized books of accounts and

other documents which have been requisitioned have been delivered

to the requisitioning authority. The provisions of section XIV-B of the

Act would come into play only when the books of accounts or other

documents or assets are actually received by the Assessing Officer

pursuant to the requisition made under section 132A. It was held -

“ Held, that no search under section 132 had been conducted by the Incometax Department. The search, if any, was conducted on June 7/8 of 2001 by the Central Excise Department. The Incometax Department had sent a requisition on March 27, 2002 under section 132A of the Act requisitioning the books of accounts and other documents seized by the Central Excise Department. The record of the proceeding 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


26

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 have been executed on conclusion of search as recorded

in Panchnama. Therefore, actual search shall have to be carried out

necessarily before proceeding u/s 153A. Rule 112 of IT Rules is also

not satisfied in case of assessee. Service of warrant on Bank

Manager of Trust is not service on assessee in individual case of

assessee.

9.4 It is undisputed fact that assessee is Managing Trustee of the

Trust. The survey was conducted in the case of the Trust on

28-10-2004. The statement of the assessee was recorded on oath

under survey in the premises of the Trust. The details of the Trust

were called for in the statement of the assessee. Certain bank

accounts in the name of the Trust were found during the course of


27

survey which was not reflected in the books of account of the Trust.

The assessee admitted the amount deposited in the accounts as his

personal money, but in the later portion of the statement he has

explained that since his personal books of account for the current

year are not written, therefore, it cannot be explained and assessee

further stated that he will furnish the same details if available.

Admittedly, it is a fact that all the bank accounts whether disclosed or

not reflected in the books of the Trust are belonging to the Trust only.

No undisclosed income in the name of the assessee was found either

during the course of survey or the search. No independent or

corroborative evidence was found against the assessee that the

money deposited in the bank account of the Trust belongs to

assessee in his individual capacity. The assessee in his later

statement recorded before Assessing Officer on 24-12-2004 retracted

from his earlier statement and explained that the amount seized from

the bank accounts of t he Trust did not belong to him because the

same belong to the Trust only. Except the statement recorded on

oath during the course of survey, there is no other material or

evidence available on record to prove that the money deposited in the

bank account of the Trust belong to the assessee in his individual


28

capacity. It is well settled that admissions are not conclusive proof of

matter. They may be shown to be untrue or have been made under

mistake of facts or law. Circumstances have to be seen under which

same are made. It can be withdrawn unless it is estoppels and

conclusive. Hon'ble Punjab & Haryana High Court in the case of

Kishanlal Shivchand 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


29

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 note here that the amount lying in the bank accounts of the

Trust were converted into PD account of the Department and

admittedly in the case of the Trust addition of Rs.1,93,99,865/- was

made on protective basis in assessment year 2005-06 and Trust was

given benefit of exemption u/s 11 read with section 12A of the IT Act.

The amount lying in PD account out of the bank account of the Trust

was appropriated by the Assessing Officer against the demand raised

in the case of the Trust u/s 154 of the IT Act. Later on, refund was

also granted out of the same amount in the case of the Trust. These

facts thus would show that ultimately the Revenue Department

accepted substantive assessment in case of Trust and that the

amount deposited in the bank accounts of the Trust which were not

reflected in the accounts of the Trust belongs to the Trust only.

Considering the facts of the case and the warrant of authorization and

the Panchnama produced before us, it is clear that the warrant of

authorization was issued in the name of the Trust and the assessee

being the Managing Trustee of the Trust. The warrant of


30

authorization was also executed upon the bank manager of Indian

Overseas Bank in respect of several bank accounts of the Trust.

Thus, no warrant of authorization issued in the name of assessee in

his individual capacity and no warrant of authorization is executed in

the individual case of the assessee. No material is produced before

us if any search is conducted against the assessee in his individual

capacity. It is admitted fact that warrant of authorization is issued in

the name of the Trust and the assessee. Even if it is issued in joint

(two) names but it appears from the facts and circumstances of the

case that name of the assessee was added in the warrant of

authorization and in the Panchnama being the assessee Managing

Trustee of the Trust. Thus, assessee has no individual liability in the

aforesaid case. We may also note here that learned Departmental

Representative relied upon decision of Allahabad High Court in the

case of Raghuraj Pratap Singh and others (supra) which was

delivered on 14-07-2006. However, learned Counsel for the assessee

relied upon another decision of Hon'ble Allahabad High Court in the

case of CIT vs Smt. Vandana Verma (supra) which was delivered on

09-10-2009. The latter decision is binding for consideration.

Moreover, the latter decision in the case of Smt. Vandana Verma


31

(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 all the relevant years would get reopened

irrespective of whether any incriminating material is found or not in


32

relation to a particular assessment year. However the warrant of

authorization shall have to be executed by the authorized Officer in

order to justify invoking of the jurisdiction by the Assessing Officer

under section 153A of the Act. Considering section 153A particularly

read with sub-clause (b), it is clear that not only initiation of search is

mandatory but conduct of the search is also material. The decision of

the Allahabad High Court noted above also supports the above

findings. As is noted above, it is undisputed fact that though warrant

of authorization is issued in the name of the assessee being

Managing Trustee of the Trust, but it is admitted fact that no search

operation was conducted in the premises of the assessee. Even in

the warrant of authorization, the address of the place to be searched

is not the address of the assessee individual. Admittedly, no

Panchnama is also drawn in pursuance with the warrant of

authorization in the case of the assessee. No documents were seized

or impounded as such during the course of search from the

assessee. The warrant of authorization dated 29.10.2004 in the

name of the Trust and the assessee stands unexecuted in the case of

assessee individual. Since in this case only survey operation under

section 133A is conducted in the premises of the assessee’s Trust, it


33

would not satisfy the requirements of section 153A of the Act. As

such, the Assessing Officer was not justified in initiating proceedings

or assuming valid jurisdiction under section 153A of the Act against

the assessee. In view of the above discussions, we do not find these

to be the fit cases for initiating the proceedings u/s 153A of the IT Act

against the assessee in his individual status. We accordingly hold

that the proceedings u/s153A of the IT Act are invalid and bad in law,

resultantly, the orders of the authorities below are set aside and

quashed.

10. As a result, all the appeals of the assessee in ITA No.2878,

2879 and 2880/Ahd/2007 are allowed.

ITA No.3339/Ahd/2007 (Departmental appeal)

A Y�(2005-06)

11. This appeal by Revenue is directed against the order of the

learned Commissioner of Income Tax (Appeals) –IV, Ahmedabad

dated 20-03-2007 for Assessment Year 2005-06 on the following

grounds:

“1. The learned CIT (A) erred in law and on facts in

deleting the addition of Rs.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.


34

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 Rs.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 the Assessment Order. However, as mentioned in the assessment order, a survey u/s 133A was carried out at the premises of the M/s. K. M. Shah Charitable Trust in which Shri M. K. Shah was the Managing Trustee whose statement was recorded on 28.10.2004 i.e. on the day of survey which led to detection of unaccounted bank accounts. On the basis of survey proceedings, the Department had carried out search u/s 132 on the next following day i.e. o n 29.10.2004 at the Bank premises and amount of Rs.1,93,99,865/- lying in the Bank Accounts was seized on 29.10.2004 which was kept in the P. D. Account of the Trust managed by the Appellant Dr. Mansukh Kanjibhai


35

Shah. Further, the amount seized from the Bank Account was adjusted towards Advance Tax Liability of the Trust only and not of the individual liability of the Appellant. It may also be mentioned here that proceedings for cancellation of registration were initiated under section 12AA(3) of Income Tax Act, 9161 on 12.05.2005 but no order for cancellation was received by the Trust. Further, the exemption was granted u/s 11 by the Assessing Officer even after proceedings for cancellation of registration were initiated which strengthened the fact of continuation of the registration of the Trust and its bonafide activities. Since amount seized was adjusted towards advance tax liability of the Trust, therefore, it can be inferred that the amount seized from the Bank Account of the Trust does not belong to the Appellant in his individual capacity. Keeping in view of above facts and circumstances of the case, it is evident that the amounts seized belong to the Trust and the Appellant was managing the affairs of Trust as Managing Trustee. Hence, the amount seized does not belong to the Appellant in his individual capacity. Hence, the second ground of appeal is allowed.”

13. Learned representatives of both the parties submitted that facts

are same as considered above in appeals of the assessee. They

have submitted that their submissions are same as argued above and

findings may be followed accordingly.

14. On consideration of the above facts in the light of findings of

learned CIT (A), we are of the view that the issue is same on merit as

is considered while considering the appeals of the assessee. The A O

made addition of Rs.1,93,99,865/- in the assessment years in

question in respect of the same bank accounts in the name of the

Trust. We have held above that the bank accounts belong to the

Trust and the amount lying in the bank accounts of the Trust is


36

already considered in the case of the Trust by the Department and

even refund has been granted to the Trust. We have also held that

there is no evidence on record to prove that the amount lying in the

bank account of the trust belong to the assessee. By following the

reasons for decision in the appeals of the assessee, we do not find

any infirmity in the order of the learned CIT (A) in deleting the addition

on merit in the individual case of the assessee. We accordingly, do

not find any merit in the departmental appeal. The same is

accordingly dismissed.

15 As a result, departmental appeal in ITA No.3339/Ahd/2007 is

dismissed.

16. In view of the above finding, the appeals of the assessee are

allowed and the departmental appeal is dismissed.

Order pronounced in the open court on 21 -05- 2010.

SSSd/- Sd/-

(N. S. Saini) ACCOUNTANT MEMBER

(Bhavnesh Saini) JUDICIAL MEMBER

Date : 21 /05/2010 Lakshmikant/-


37

Copy of the order forwarded to:

1. The Appellant

2. The Respondent 3. The CIT concerned 4. The CIT(A) concerned 5. The DR, ITAT, 6. Guard File

BY ORDER

ूित //True Copy//

DY.R/AR, ITAT, AHMEDABAD


Documents

IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD “D” BENCH,itatonline.org/archives/wp-content/files/mansukh_153A_search_warrant.pdf · in the income tax appellate tribunal, ahmedabad