C I T vs. RAKESH KUMAR

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision: 1.7.2008 The Commissioner of Income Tax, Karnal ......Appellant Versus Sh. Rakesh Kumar, Mukesh Kumar, Panipat L/H of Late Sh. Mohar Singh ......Respondent CORAM:- HON'BLE MR.JUSTICE SATISH KUMAR MITTAL HON'BLE MR.JUSTICE RAKESH KUMAR GARG * * * Present: Mr. Sanjeev Kaushik, Advocate for the appellant-revenue. * * * Rakesh Kumar Garg, J . A search was conducted on 23.7.2002 at the premises of Mohar Singh, father of respondent. However, it is pertinent to mention here that the said Mohar Singh had died on 20.6.2002. Some incriminating documents were found at his residence. On the basis of these facts, a notice under Section 158-BC of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) was issued by the Assessing Officer on 20.5.2004 and the same was served upon Sh. Rakesh Kumar as legal heir of Mohar Singh. He was required to furnish the return of income for the period 1.4.1996 to 23.7.2002. The legal heir did not file any return. The Assessing Officer completed the assessment under Section 158-BC (c)/ 144 of the Act vide his order dated 30.7.2004. However, in appeal of the assessee, the learned Commissioner of Income Tax (Appeals) held the assessment framed under Section 158-BC as null and void while observing as under:- “Keeping in view all the facts and circumstances of the case, it is held that the order passed by the Assessing Officer, under Section 158-BC(c)/144 of the Act on 30.7.2004, was illegal and void ab-initio because the same was passed in consequence to a search warrant, issued under Section 132, in the name of a dead person. Such search warrant was against the laws of natural justice. No valid assessment could have been made, on the strength of such an invalid search warrant. Hence, the impugned order was quashed.”

The appeal filed by the revenue against the order of the Commissioner of Income Tax (Appeals) dated 14.2.2005 was also dismissed by the Tribunal vide order dated 31.1.2007. While dismissing

the appeal of the revenue, the Tribunal relied upon the judgement of the Hon’ble Delhi High Court in the case of R.C. Jain through L.R. v. CIT and others, 190 CTR 34 wherein it has been held that where the Department has commenced proceedings under Section 158-BC of the Act, against a dead person, despite knowledge of his death and that too before expiry of the period allowed to the assessee for filing the return, then there was violation of the principles of natural justice as well as the provisions contained in the Act, and therefore, the assessment is liable to be quashed. Feeling aggrieved against the said order dated 31.1.2007 passed by the Income-Tax Appellate Tribunal, New Delhi Bench 'E' in ITA No.173/Del/2005, the revenue has filed the present appeal raising the following substantial questions of law:- (i) Whether on the facts and in the circumstances of the case, the ld. ITAT was right in law in holding that search was invalid?” (ii) Whether on the facts and in the circumstances of the case, the ld. ITAT was right in law in holding that the authorization issued for conduction the search was invalid and void ab initio?” Sh. Sanjeev Kaushik, learned counsel for the revenue, has vehemently argued that while considering the facts of the present case, the Tribunal has not appreciated the fact that the issues involved in the present case is altogether different from the case of R.C. Jain (supra) i.e. judgement of the Hon’ble Delhi High Court and the same is not applicable to the facts and circumstances of the present case. Learned counsel has further argued that during search on 23.7.2002 it came to the knowledge of the Department that Sh. Mohar Singh had expired on 20.6.2002 and, therefore, by necessary implication, the search warrants were served upon the LRs and the assessee has not challenged the legality of the search warrants before the Competent Authority. It has been further argued that even the illegality of the search, does not vitiate the evidence, collected during such search. The learned counsel has placed strong reliance on the judgments reported as Dr.Partap Singh v. Director of Enforcement (1985) 155 ITR 166 (SC), Pooranmal v. Director of Inspection (Investigation) Income-Tax (1974) 93 ITR 505 (SC) and New Street Oil Mills v. State of Kerala (1978) 111 ITR 463 (Ker.)

We have heard learned counsel for the revenue and have perused the record. We find no force in the contentions raised by him. In the instant case, Mohar Singh died prior to the issuance of search authorisation and thus, the search warrant was issued in the name of a dead person and the Panchnama was also prepared in the name of the dead person. These facts are not disputed by the counsel for the appellant. Thus, from the undisputed facts, it is crystal clear that not only the search was invalid but the authorization for conducting search itself was invalid and void ab intio. Thus, the order passed by the Assessing Officer under Section 158-BC (c )/144 of the Act dated 30.7.2004 was illegal as the same was passed in consequence to a search warrant, issued under Section 132 of the Act, in the name of a dead person. Such search warrant is against the law of natural justice. No valid assessment could have been made on the strength of such an invalid search warrant. The judgements cited by the learned counsel for the appellant are not applicable in the facts and circumstances of the case, being clearly distinguishable. In view of the above, we find no merit in the present appeal. No substantial question of law arises for our determination in the facts of the present case. Hence, the appeal is dismissed.

(RAKESH KUMAR GARG) JUDGE July 1, 2008 (SATISH KUMAR MITTAL) ps JUDGE