M/S ROOP ALANKAR ,ASANSOL vs. D.C.I.T, CENTRAL CIRCLE-4(3), KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA [Before Shri Rajesh Kumar, AM& Shri Sonjoy Sarma, JM] I.T(SS)A. Nos. 68 & 69/Kol/2019 Assessment Years: 2010-11 & 2011-12 & I.T(SS)A. No. 70/Kol/2019 Assessment Year: 2013-14 M/s. Roop Alankar Vs. DCIT, Central Circle-4(3), Kolkata 81, G. T. Road, P.O. Asansol, West Bengal-713301. (PAN: AAJFR4328P) Appellant Respondent & I.T(SS)A. Nos. 73 & 74/Kol/2019 Assessment Years: 2012-13 & 2013-14 M/s. Jayanti Jewels Vs. DCIT, Central Circle-4(3), Kolkata C/o Senco Gold, Shop No. LG: 18 & 19, Junction Mall, City Centre, Durgapur-713216. (PAN: AAHFJ0821F) Appellant Respondent

Date of conclusion of Hearing 29.05.2024 Date of Pronouncement 29.07.2024 For the Assessee Shri Somnath Ghosh, Advocate For the Respondent Shri Subhendu Datta, CIT, DR

ORDER Per Shri Rajesh Kumar, AM All the above captioned appeals filed by different assessees are against the common order of Ld. CIT(A)-21, Kolkata (for AYs. 2010-11, 2011-12 & 2013-14) dated 01.08.2019 and (for AYs. 2012-13 and 2013-14 dated 09.08.2019. Since facts are substantially similar l and grounds of appeal are common except variance in amounts, we dispose of all the above appeals by this consolidated order for the sake of brevity and convenience. 2. We take up IT(SS)A No. 68/Kol/2019 for the purpose of taking note of the facts of the case observations and findings arrived at in the case shall apply mutatis mutandis to all other appeals involved in this order.

IT(SS)A Nos. 68,69,70,73 & 74/Kol/2019 AYs. 2010-11, 2011-12, 2013-14,2012-13 & 2013-14

“For that the Ld. CIT(A) has erred in law and on facts by not quashing the assessment framed u/s. 153A of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) dated 30.12.2017 on the ground that though there was initiation of search u/s. 132(1) of the Act but in fact no search operation has been conducted on the premises of the assessee.”

“4.3. I have perused the submission of the assessee and the case laws relied upon by the assessee. There is no denying of fact that Panchnama was drawn on 01.12.2015 i.e. on the date of search itself at 21, Hemanta Basu Sarani where the name of the assessee concerned was mentioned in the Panchnama. Therefore, it cannot be denied that legally search has been initiated against the assessee. It is not a case that after one month of the search, assessee’s name has cropped up in a Panchnama as a design to implicate the assessee. Normally search is conducted on the basis of information received by department that certain papers evidencing unaccounted transaction related to certain assessees are kept at certain premises. As a result of search the papers may not be found at the very same premises but at some other premises as has been the case here. In the instant case papers have been found at the premises of Lalit Kayal which relates to Roop Alankar. At the main premises of Roop Alankar only a survey authorization was issued but since on some

IT(SS)A Nos. 68,69,70,73 & 74/Kol/2019 AYs. 2010-11, 2011-12, 2013-14,2012-13 & 2013-14

other premises department had issued a warrant and Panchanama was prepared at that other premises including assessee's name and the assessee is also part of the same group. Therefore, action u/s. 153A is justified. The case laws cited by Ld. A/R does not cover any such complex example given above and therefore, cannot be relied upon.” 6. The Ld. AR vehemently submitted before the bench that the provisions of section 132 of the Act provides for initiation and conduct of search on the assessee. The Ld. AR submitted that the search was initiated against the assessee but premises of the assessee was never searched during the search operation. The Ld. AR further submitted that the premises which was searched was 206, Central Point, Second Floor, 21, Hemant Basu Sarani, Kolkata. During the search operation ,search party did not find any incriminating material qua the assessee though some documents were impounded by the survey team from the business premises of the assessee from Asansol. The Ld. AR vehemently submitted that the assessment framed by the AO in the above case u/s. 143(3) read with sec. 153A is invalid and void ab initio as no such assessment could have been framed for the want of search operation on the assessee’s business premises and at the most if any search operation had taken place at the third party premises i.e. a premises belonging to the partner of the assessee at Kolkata and some incriminating materials were found and seized , then the assessment should have been framed u/s. 153C of the Act after complying with the necessary procedure of recording of satisfaction by the AO of the searched person as well as by the AO of the other person. The Ld. AR submitted that since in the assessee’s case no search action has been conducted on the assessee, therefore, the assessment framed by the AO u/s 143(3) r.w.s.153A of the Act may kindly be quashed. In defense of his arguments, ld. AR relied on the decision of the Coordinate Bench in the case of J.M. Trading Corpn. Vs. ACIT, Central Circle-2, Mumbai [2008] 20 SOT489 (Mum), wherein a similar question has been decided in favour of the assessee. The Ld. Counsel for the assessee submitted that the said decision of the Coordinate Bench has been affirmed by the Hon’ble Bombay High Court in ITA No. 589 of 2009 vide order dated 29.06.2009. The Ld. AR prayed that following the said decision of the Hon’ble High Court the assessment framed may kindly be quashed.

IT(SS)A Nos. 68,69,70,73 & 74/Kol/2019 AYs. 2010-11, 2011-12, 2013-14,2012-13 & 2013-14

premises belonging to the partners were searched and he duly admitted during interrogation that he was executing business on behalf of the group companies. The Ld. DR admitted that no search was conducted at the premises of the assessee at Asansol. However a survey was conducted and some records were impounded. The Ld. DR submitted that the survey was also part of the larger search operation in order to dig out the information/details/documents/ incriminating material from the assessee and, therefore, the arguments forwarded by the Ld. AR is devoid of any merit and should be dismissed out rightly.

IT(SS)A Nos. 68,69,70,73 & 74/Kol/2019 AYs. 2010-11, 2011-12, 2013-14,2012-13 & 2013-14

therefore, the assessment framed u/s. 153A read with sec. 143(3) is invalid and void ab initio. The case of the assessee finds support from the decision of the Coordinate Bench in the case of J.M. Trading Corpn. (supra). The relevant part of the order of the Coordinate Bench is extracted as under:

“20. The perusal of the section reveals that in case a person against whom search is initiated under section 132 of the Act or books of account or other document are requisitioned under section 132A of the Act, then notwithstanding anything contained in sections 139, 147, 148, 149, 151 & 153 of the Income-tax Act, the Assessing Officer shall issue a notice to such a person requiring him to furnish Returns of Income in respect of six assessment years preceding the assessment year relevant to the previous year in which such search was conducted or requisition made. Section 153A of the Act thus talks of two steps i.e., (i) initiation of search and (ii) conduct of search. The question of validity of search i.e., the satisfaction recorded before issue of search warrant cannot be looked into by the Tribunal as held by the Hon’ble Delhi High Court in M.B. Lal v. CIT [2005] 279 ITR 2981. Thus, in the facts of the present case, where the Panchnama was issued in the name of SSKI Group and the name of the assessee is also mentioned at the bottom of the list, the search is initiated against the assessee. 21. The question for our determination is whether search was though initiated against the assessee was conducted on the assessee. The initiation of search and conduct of the search are two different aspects of search and seizure proceedings. In the present case, the search was initiated by issue of warrant of authorization. The conduct of search proceedings is an elaborated procedure enumerated under section 132 of the Income-tax Act, which in clause 1 categorically authorizes the officer to enter and search any building, place, vessel etc. where he has a reason to believe that the books of account, money, bullion, jewellery or things belonging to the assessee are kept. The perusal of the panchnama reveals that the search was conducted in respect of SSKI Group wherein the search warrant was served on Mr. Hitesh M. Desai, who is the Manager of SSKI Group, his statement was recorded during the course of search. The books of account as per the Annexure A-1 and other valuables, locker, FD as per Annexure O-1 belonging to SSKI Group were found and seized. Other valuable articles including money as per note in 1, 2, 3, 4 were found but not seized. The assessee claims that none of his books of account were found or seized and in respect of the valuables also the assessee clarifies that none of his valuables were available at the above said address as the said premises were rented out to SSKI group by the assessee and its sister concerns. In the body of order under section 143(3) read with section 153A of the Income-tax Act, the Assessing Officer also observes that ‘there was search and seizure action under section 132 of the Income-tax Act on SSKI Group and by warrant dated 1-8-2003, the assessee was also covered under the search. The premises whereas the assessee was found was not searched. 22. The fact that search under section 132 of the Act have been conducted on the assessee, is a condition precedent to be satisfied before start of any proceedings against the assessee. Section 158BC of the Income-tax Act, provides the procedure for block assessment in all such cases where search has been conducted under section 132 or books of account or other documents requisitioned under section 132A of the Income-tax Act for searches conducted upto 31-5-2003. Thus, the jurisdictional fact of a search being conducted prior to issue of notice under section 158BC of the Act need to be satisfied. The Special Bench of Bangalore Tribunal in C. Ramaiah Reddy v. Asstt. CIT (Inv.) [2004] 268 ITR (AT) 491 held as under: ". . . . . . . .The Income-tax Appellate Tribunal need be satisfied only about the validity of the search under section 132 based on valid authorization. The jurisdictional fact that needs to be satisfied before the Assessing Officer can issue notice under section 158BC is that a search under section 132 should have been conducted on the assessee. The Income-tax Appellate Tribunal, therefore, needs to satisfy itself that a search was indeed conducted with reference to the assessee in question. The search should not merely have been initiated, but

IT(SS)A Nos. 68,69,70,73 & 74/Kol/2019 AYs. 2010-11, 2011-12, 2013-14,2012-13 & 2013-14

conducted. Hence, the income-tax appellate Tribunal is required to verify whether the jurisdictional facts exist before notice can be issued under section 158BC." 23. The Tribunal though cannot determine the Propriety of search but the Tribunal has the inherent power to verify that there was a search on the assessee and Panchnama prepared was legal. The said principle has also been held by the Special Bench of Bangalore Tribunal in C. Ramaiah Reddy’s case (supra). Applying the ratio of the decision of Special Bench in C. Ramaiah Reddy’s case (supra) to the facts of the present case, we find that though warrant of authorization was issued in the name of the assessee proving the fact of initiation of search against the assessee. But, in the facts of the present case, where the assessee is not to be found on the said premises though owned by the assessee but rented out to a separate concern, income from which is assessed under the head Property Income, established that no search was conducted at the premises at which the assessee is found and available. The word ‘conduct’ is defined in the Law Lexicon as Management; Conducting of affair (as conduct of business); Conduct of a campaign; conduct of sale. It further states conducting requires most wisdom and knowledge. 24. section 132 of the Income-tax Act thus provides the acts and deeds to be carried out by the search team at the premises of the assessee. The conduct of search includes acts, deeds and things enumerated under section 132 of the Income-tax Act which an authorized officer is bound to carry out in order to complete the process of search. Search is an invasion of Privacy of the assessee and all proceedings connected with search need to be carried out within the framework of the provisions of the Act. In case of non-compliance to the provisions of the Act by the Authorised Officer, such searches are invalid and illegal. In the present case before us, no search was conducted against the assessee as the premises occupied by the assessee were not entered upon and searched by the Authorised Officer. Mere search of the premises owned by the assessee but rented to another concern does not by any implication prove the conduct of search against the assessee in view of the fact that the assessee was not available at the address searched upon. Mere mentioning of name in the panchnama does not lead to the conclusion that a valid search was conducted against the assessee. In the totality of circumstances, where no search has been conducted against the assessee there is no merit in the issue of notice under section 153A of the Income-tax Act under which the jurisdictional area of operation is six assessment years immediately preceding the assessment year relevant to the previous year, in which search was conducted. In case, no search is conducted against a person, the period of operation to which the provisions of section 153A would apply, cannot be determined and the invoking of provisions of section 153A of the Act is baseless. Though the provisions of section 158BC of the Act are not applicable to searches conducted after 31-5-2003, but the provisions of section 132 of the Income-tax Act are continuing on the statute implying thereby that the provisions of section 153A of the Act are only applicable in case valid search is conducted against the assessee under section 132 of the Act. Accordingly, we declare the assessments made against the assessee under the provisions of section 143(3) read with section 153A of the Income-tax Act are null and void and direct the Assessing Officer to cancel the same. Thus, the issue related to the validity of search raised by the assessee is allowed.”

IT(SS)A Nos. 68,69,70,73 & 74/Kol/2019 AYs. 2010-11, 2011-12, 2013-14,2012-13 & 2013-14

Order is pronounced in the open court on 29th July, 2024 Sd/- Sd/- (Sonjoy Sarma) (Rajesh Kumar) Judicial Member Accountant Member Dated: 29th July, 2024 JD, Sr. PS

Copy of the order forwarded to: 1. Appellant– 2. Respondent . 3. CIT(A)-21, Kolkata. 4. CIT, 5. DR, ITAT, True Copy By Order Assistant Registrar ITAT, Kolkata Bench, Kolkata