COMMISSIONER OF INCOME TAX CENTRAL III vs. ANNIE INVESTMENT & FINANCE CO. P.LTD.


IN THE HIGH COURT OF DELHI AT NEW DELHI

ITA Nos. 333, 335, 336, 337, 339, 350, 351 and 367/2009

Judgment Reserved on: 03.11.2009 Judgment Pronounced on: 30.11.2009

Commissioner of Income-Tax Central III

.....Appellant (in all matters) through: Mr. N.P. Sahni

VERSUS

M/s. Uikam Investment & Finance

Pvt. Ltd. and Others

.....Respondent in ITA No.333/2009

M/s. Annie Investment and Finance

Co. P. Ltd.

.....Respondent in ITA No.335/2009

M/s. Kandla Petrochemicals Corporation

Ltd.

.....Respondent in ITA No.336/2009

M/s. Independent Courrier Pvt. Ltd.

.....Respondent in ITA No.337/2009

M/s. Harmony Psychitary Centre Pvt. Ltd.

.....Respondent in ITA No.339/2009

M/s. Professional Leasing & Capital

Services Ltd.

.....Respondent in ITA No.350/2009

M/s. Patliputra Internaitonal Trading Ltd.

.....Respondent in ITA No.351/2009

M/s. Vaidahi Lease and Finance Pvt. Ltd.

.....Respondent in ITA No.367/2009

through: Ms. Bhakti Pasrija

CORAM: THE HON'BLE MR. JUSTICE A.K. SIKRI THE HON'BLE MR. JUSTICE SIDDHARTH MRIDUL

- Whether Reporters of Local newspapers may be allowed to see the Judgment? - 2. To be referred to the Reporter or not? - 3. Whether the Judgment should be reported in the Digest?

A.K. SIKRI, J.

For orders, see file of ITA No.130/2009.

A.K. SIKRI)

(SIDDHARTH MRIDUL)

JUDGE


IN THE HIGH COURT OF DELHI AT NEW DELHI

ITA No.130/2009, 333/2009, 335/2009, 336/2009, 337/2009, 339/2009, 350/2009, 351/2009 and 367/2009

Judgment Reserved on: 03.11.2009

Judgment Pronounced on: 30.11.2009

Commissioner of Income-Tax Central III

.....Appellant (in all matters)

through: Mr. N.P. Sahni

VERSUS

M/s. Shilpi Securities Pvt. Ltd.

.....Respondent in ITA No.130/2009

M/s. Uikam Investment & Finance

Pvt. Ltd. and Others

.....Respondent in ITA No.333/2009

M/s. Annie Investment and Finance

Co. P. Ltd.

.....Respondent in ITA No.335/2009

M/s. Kandla Petrochemicals Corporation

Ltd.

.....Respondent in ITA No.336/2009

M/s. Independent Courrier Pvt. Ltd.

....Respondent in ITA No.337/2009

M/s. Harmony Psychitary Centre Pvt. Ltd. .....Respondent in ITA No.339/2009

M/s. Professional Leasing & Capital

Services Ltd.

.....Respondent in ITA No.350/2009

M/s. Patliputra Internaitonal Trading Ltd. .....Respondent in ITA No.351/2009

M/s. Vaidahi Lease and Finance Pvt. Ltd. .....Respondent in ITA No.367/2009

through: Ms. Bhakti Pasrija

CORAM:-

THE HON'BLE MR. JUSTICE A.K. SIKRI THE HON'BLE MR. JUSTICE SIDDHARTH MRIDUL

Whether Reporters of Local newspapers may be allowed 1. to see the Judgment?



A.K. SIKRI, J.

- 1. These appeals were admitted and heard on the following substantial questions of law:- - 1. Whether the Income Tax Appellate Tribunal was competent and correct in law in entertaining the issue of validity of the search and holding that the Search Warrants under Section 132(1) of the Act were illegal and quashing the block assessment made by the Assessing Officer under Section 158BC of the Income Tax Act? - 2. Whether in view of the facts and circumstances of the case the Tribunal is right in law in holding that the assessment order passed by the Assessing Officer on 30^th September, 1997 had been passed beyond the date of limitation specified in Section 158BE of the Act? - 3. Whether the warrant signed by the Additional Director of Income Tax is without any authority? - 2. Here itself we may point out that not only these questions are common to all these appeals, these appeals preferred by the Revenue are against the judgment dated 30.4.2008 vide which all the cases were decided. Since the issues have arisen in identical circumstances and similar background, our purpose would be served in taking note of the facts in ITA No.130/2009. - 3. With a view to conduct searches on the assessee and its group




c) All the block assessments had been completed beyond use period of limitation prescribed under the Act and therefore, barred by limitation.

Challenging that order, present appeals are preferred.

- 5. In so far as first ground accepted by the Tribunal is concerned, according to the Tribunal, following infirmities were found in various warrants of authorisation: - i) In the case of M/s. Independent Courier Pvt. Ltd., name is incorrectly mentioned in the warrants as "M/s. Independent Courier". Further, in the search warrant no details have been given as to the premises to be searched and the column prescribed for the said purpose has been left blank. - ii) In respect of the assessee M/s. Harmony Psychitary Centre Pvt.

Ltd., though the name is correctly mentioned, but the premises to be searched is stated as "Citi Bank, New Delhi" without mentioning the particular branch of the bank or the address. - (iii) & (iv) So far as M/s. Shilpi Securities Pvt. Ltd. and M/s. Vaidahi Lease and Finance Pvt. Ltd. are concerned, names of these assessees are correctly mentioned but the premises to be searched are vaguely stated as "Citi Bank, Delhi". - 6. The Tribunal was of the opinion that even if mis-description of the


Independent Courier") in the search warrants could be condoned as procedural irregularity not affecting the validity of such proceedings by invoking Section 292B of the Act, non mentioning or incorrect mentioning of the premises to be searched in the search warrants was material illegality which could not be glossed over. The Tribunal relied upon the judgment of the Supreme Court in I.T.O. v. Seth Brothers (1969) 74 ITR 836 wherein the Apex Court held that Section 132 does not confer any arbitrary power upon the Revenue authority. Search is always premises specific and assessee specific. premises to be searched are left blank or are mentioned vaguely without being specific, it would give an unguided power to the authorised officer which cannot be countenanced. The Tribunal also referred to Search and Seizure Manual issued in 1989 by the Directorate of Income Tax (Research, Statistics, Publications and Public Relations), Mayur Bhawan, New Delhi for departmental use, inter alia, providing following guideline under the head:-

"Preparation of warrant of authorisation" as follows:-

IT (SS) A.No.229/Del./1997 IT (SS) A.No.241 to 247/Del./1997 IT (SS) A.No.35/Del./1998

"(c) An authorization without the name of the party whose premises are to be searched is invalid. The premises to be searched should be clearly mentioned. The issue of blank authorization is





2009:DHC:9596-DB





AO has clearly brought out that the assessees had failed to establish the source of cash deposits. Having regard to the facts and circumstances, the specific provisions of Section 158BE(1) Explanation 2A, Section 132(3) Explanation, Section 132(8) and the case law cited above, it is submitted that this ground is also baseless and invalid.

"once an order of restraint had been passed under Section 132 (3), the period of limitation commenced and such an order could not be continued unless and until the provisions of Section 132 (8A) were satisfied."

XXX XXX XXX

"The power under Section 132(3) cannot be exercised as to circumvent the provisions of Section 132(1) read with Section 132 (5). When a search is conducted and valuable movable articles are found which are liable to be seized, then should be seized."

Sandhya P. Naik, [2002] 253 ITR 534 (Bom.):




restraint orders were held to be invalid for want of approval of use Commissioner which was required to be obtained under Section 132(8)(a) for extension of the restraint beyond 60 days. Accordingly, we decide the question of limitation in favour of the Revenue and as a consequence set aside the judgment of the Tribunal on this ground.

Re: Question No. 3

22.

As regards the second ground, Section 132 has been amended by the Finance (No.2) Act, 2009 with retrospective effect from 1.6.1994 enabling the Additional Director of Income-Tax to issue authorizations under Section 132(1) of the Act. This ground is, thus, no longer valid which position was conceded by the learned counsel for the respondent. In view of this legislative amendment retrospectively with effect from 1.6.1994, this question is answered in favour of the Revenue and against the assessee holding that the warrants signed by the Additional Director of Income-Tax would not be invalid as he had the necessary authority in view of the amended provisions of Section 132 of the Act.

Consequential Order:-


and the matter in those cases is referred back to the Tribunal ror decision on merits.

(A.K. SIKRI) JUDGE

(SIDDHARTH MRIDUL) JUDGE

November 30, 2009. HP.