ASST CIT CIR 2, THANE vs. SALASAR DEVELOPERS, THANE

Per Joginder Singh (Judicial Member) This bunch of three appeals is by the Revenue against the impugned orders all dated 21/03/2014 of the Ld. First

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Appellate Authority, Mumbai. The Revenue has challenged annulling the order by the Ld. Commissioner of Income Tax (Appeal) u/s 153A r.w.s 143(3) of the Income Tax Act, 1961 (hereinafter the Act), as illegal by holding that no search and seizure action was initiated in the case of assessee firm as the same is a separate jurisdiction person from its partners on whose residential premises search and seizure action u/s 132 of the Act was carried out in their individual capacity.

2.1. On the other hand, Shri, Virag H. Shah, ld. counsel for the assessee, defended the impugned order. It was contended that no search and seizure action was carried out in the case of the present assessee and rather seizure action was carried out at the residential premises of the partners of the assessee firm. It was also submitted that no incriminating material was found, which relates to the assessee, during search action in the hands of the partners. Reliance was placed upon the cases, which have been

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referred in to the impugned order along with the decision of the Delhi Bench of the Tribunal in the case of M/s CHD Developers Ltd. (ITA No.2902 and 4694/Del./2010) order dated 26/09/2012, which was affirmed by Hon'ble Delhi High Court vide order dated 22/01/2014 (2014) 43 taxman.com 249(Del.); 362 ITR 177 (Del.) ; (2014) 266 CTR 360 (Del.).

2.2. We have considered the rival submissions/written submissions of the Department and perused the material available on record. We find that the case of the assessee is squarely covered by the decision of the Tribunal in the case of DCIT vs M/s Balalji Universal Tradelink Pvt. Ltd. in ITA NO.2183/Mum/2013 (Assessment Year-2004-05), ITA NOs.2184 to 2186/Mum/2013 (Assessment Years 2005-06 to 2007-08) and ITA NOs.2906 to 2908/Mum/2013(Assessment Years- 2005-06 to 2007-08) Order dated 31/10/2016. The relevant portion of the order is reproduced hereunder for ready reference and analysis:- “The assessee as well as Revenue is in cross appeal for the assessment years 2005-06, 2006-07 and 2007-08, whereas, the assessee is in appeal for A.Y. 2004-05, against the impugned orders all dated 17/01/2013 of the ld. First Appellate Authority, Mumbai.

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2.1. During hearing, the ld. counsel for the assessee, Shri Manish Sanghvi, strongly advocated that panchnama does not contain the name of the assessee for which our attention was invited to the panchnama, prepared in the name of ‘Shri Manoj Punamiya & Group’, by asserting that under the Income Tax Act, 1961, there is no concept of group. It was canvassed that the inventory of accounts, books, etc, prepared on 24/12/2009, and prohibitory orders u/s 132(3) of the Act were also only in the name of Shri Manoj Punamiya alone and not the present assessee. It was clarified that the assessee has no nexus with the premises searched/surveyed by the Department. It was empathetically contended that none of the documents, claimed to be seized, belongs to the assessee. It was asserted that no search was ever conducted upon the assessee, hence, the proceedings u/s 153A of the Act are bad in law and void. The ld. counsel for the assessee took us to various pages of the paper book and also the copy of panchnama drawn by the Department. The ld. counsel also invited our attention to the finding contained in the impugned order (as mentioned at page-4), wherein, the assessee in response to letter dated 18/08/2011 asked the authorities to provide the assessee, the copy of the search warrant, if any, issued against the assessee.

2.2. On the other hand, Shri N. P. Singh, ld. CIT-DR, strongly defended the case of the Revenue by contending that search and seizure operation was validly carried out by the Department and the search warrants were also executed. The case was heard at length on 17/02/2016. At this stage, since the jurisdictional issue was raised by the assessee, the ld. CIT-DR sought time to seek comments from the Assessing Officer. At the time of hearing on 03/03/2016, the ld. CIT-DR filed a reply dated 01/03/2016, duly signed by the DCIT, Central Circle-7(1)(Mumbai), wherein, it has been replied as under:-

“In this connection, this is to inform you that, I have verified from my office record and it is seen that the above documents are not available. The only material available is pertaining to the survey action u/s 133A of the I.T. Act on the assessee on 31/10/2009.”

2.3. However, the ld. CIT-DR contended that warrants were issued against the assessee. In reply, the ld. counsel for the assessee reiterated that issue is whether valid search was initiated against the assessee. It was also clarified from page 58 of the paper book that the authorization is with respect to flat no.504 (page-59 of the paper book) which belongs to Shri Manoj Punamiya and not the assessee. Again query was raised by the Bench whether search was conducted at the business premises of the assessee? The ld. CIT-DR stick to the reply of the ld. Assessing Officer dated 01/03/2016, by asserting that

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warrants were issued to the assessee also, therefore, the search is valid. In reply, the ld. counsel for the assessee challenged the assertion of the ld. CIT-DR by explaining that even it is presumed, though not admitted that warrants were issued by the Department against the assessee, that warrant, if any, neither was executed to the assessee nor any search was initiated against the assessee, pursuant to such warrant, and further the panchnama does not contain the name of the assessee.

2.4. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee company, at the relevant time, was engaged in the business of trading/manufacturing recycled plastic grinding, recycled plastic, agglomerates, platinum bars, silver Ignots, Gold bar, Gold jewellery, cut and polish diamonds, recycled plastic granules, etc. The assessee declared income of Rs.4,325/- in its return filed on 20/10/2004, accompanied by audited statement of accounts, which was accepted by intimation u/s 143(1) of the Act dated 01/07/2005.

2.5. An action u/s 132 of the Act was carried out at the residential premises of one Shri Manoj Punamiya (in his individual/personal capacity) on 31/10/2009 and thereafter on 24/12/2009, wherein, seventeen papers, were claimed to be found and seized. The copy of panchanama along with inventory of papers, found and seized, is matter of record. Pursuant to said action, notice u/s 153A was issued on 27/12/2010. The assessee challenged the initiation of proceedings u/s 153A of the Act. It is noteworthy that as abundant caution, the assessee filed return in response to notice u/s 153A on 24/08/2011, declaring total income at Rs.4,325/-, as was originally declared in return of income filed u/s 139(1) of the Act. The assessment was completed purportedly u/s 143(3) r.w.s. 153A on 29/12/2011 making certain additions.

2.6. The validity of initiation of proceedings u/s 153A of the Act were challenged before the ld. Commissioner of Income Tax (Appeals) by contending that 153A notice can be issued only in the cases, where action 132 is initiated and/or where books of accounts etc are requisitioned u/s 132A of the Act. The stand of the assessee was that, neither any search action was initiated against the assessee nor any books of accounts, etc were requisitioned u/s 132A of the Act, therefore, proceedings u/s 153A may be dropped. However, the ld. Commissioner of Income Tax (Appeals) affirmed the stand taken in the assessment order. The assessee is in further appeal before this Tribunal.

2.7. At the beginning of the hearing, the ld. counsel for the assessee took a preliminary objection that warrants were never executed against the present assessee. The ld. CIT-DR sought time to

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reply to the preliminary objection raised by the assessee. We are reproducing hereunder the reply dated 01/03/2016 of the ld. Assessing Officer, pursuant to the query of the Bench, (filed by the ld. CIT-DR) for ready reference and analysis:-

OFFICE OF THE DEPUTY COMMISSIONER OF INCOME- TAX CENTRAL CIRCLE-7(1), ROOM NO.653, 6th FLOOR, AAYAKARBHAVAN,M. K. ROAD, MUMBAI-400020 Tel: 022-22086216

No. DCIT/CC. 7(1 )/Judicial/2015-16 Dated: 01/03/2016 The Commissioner of Income Tax (DR) ITAT - 2, 'B' Bench, Mumbai. Sir, Sub: Appeal in the case of M/s. Balaji Universal Trade Link P. Ltd. A.Y. 2004-05 TO 2006-07 ITA Nos. 2183 to 2186/M/ 13 and 2906 to 2908/M/ 13 PAN: AABCL0236H - Regarding. Ref: No. CIT(DR)/ITAT-2/B-Bench/20 15-16 dated 18.02.2016 No. CIT(DR)/ITAT-2/B-Bench/2015-16 dated 25.02.2016 Kindly refer to the above. In your above referred letter it is mentioned that in connection with the appeal proceedings before ITAT, 'B' Bench Mumbai in the above mentioned case, the following documents are required by you : i) A copy of the duly executed warrant of authorization u/s. 132(1) of the Act read with Rule 112(1) of the I. T. Rules in Form No. 45, mentioning the name and address of the assessee. ii) A copy of the 'panchnama' prepared on the conclusion of the search at the premises of the assessee. In this connection, this is to inform you that, I have verified from my office record and it is seen that the above documents are not available. The only material available is pertaining to the survey action u/s. 133A of the 1. T. Act on the assessee on 31.10.2009. Yours faithfully,

( Sunil S Deshpande ) Deputy Commissioner of Income-tax Central Circle-7( 1), Mumbai. Copy to: The Pr.CIT Central - 4, Mumbai The Addl. CIT Central Range - 7, Mumbai. Deputy Commissioner of Income-tax Central Circle-7( 1), Mumbai .

7 M/s Salasar Developers ITA No.4511 TO 4513/Mum/2014 1. 2.8. If the aforesaid letter is analyzed, it is noted that the ld. CIT-DR asked the concerned DCIT, Central Circle-7(1), Mumbai, to provide the copy of the duly executed warrant of authorization u/s 132(1) of the Act r.w.r. 112(1) of the Income Tax Rules,1962 in form no.45 mentioning the name and address of the assessee and a copy of the panchnama prepared on the conclusion of the search at the premises of the assessee. Vide aforesaid letter, on verification of record, the ld. DCIT informed that above documents are not available on record and the only material available pertains to survey action u/s 133A of the Act on the assessee on 31/10/2009. We have carefully perused the documents produced before us and we have observed that the warrant of authorization u/s 132 of the Act read with Rule 112 (1) of The Income Tax Rules, 1962 (hereinafter the “Rules”) was duly prepared by the DIT(Inv.)-II, Mumbai on 31-10- 2009 which carries the name of the assessee company and is placed at page 58-59 of paper book and was executed on 31-10-2009 . The said search warrant is executed on the premises Flat No. 504, Wing A, Vardhman Heights , Byculla(East), Mumbai which is residential premises of Mr Manoj B Punamia . The said search warrant carries the name of the assessee company. The said search warrant was seen by Mrs Lata Punamia on 31-10-2009 who is wife of Mr. Manoj B. Punamia and was not director of the assessee company on the date of search . The search commences with the execution of search warrant and concludes with the drawing of Panchnama. However, we have observed that Panchnama were not drawn in the name of the assessee company as it carries the name of ‘Manoj B. Punamia & Group’ which are placed at paper book page 9-19. Search is a serious invasion in the life of the tax-payer and cannot be concluded in a casual manner. The Revenue has drawn search warrant in the case of the assessee company as set out above, but conclusion of the search is reflected by the Panchnama, which has not been drawn against the assessee. The Revenue has drawn Panchnama against ‘Manoj Punimia and group’ while there is no concept of ‘group’ under the provisions of the Act . 2.9. From the aforesaid factual matrix, following question arise for our consideration (i) whether a valid search was conducted against the assessee. 2.10. In the light of the aforesaid question, now, we shall deal with the facts available on record by keeping them in juxtaposition with the provisions of section 153A of the Act. Section 153A is reproduced hereunder:- 153A. (1)] 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—

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(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 sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate : Provided also that the Central Government may by rules8 made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made. (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the 9[Principal Commissioner or Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside. 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. The scope and effect of insertion of section 153A and amendment made in various sections has been elaborated by Finance Act 2003 and

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Departmental Circular No.7 of 2003 dated 05/09/2003. The Finance Act, 2003 has provided that the provisions of this chapter shall apply where a search is initiated u/s 132 or books of account, other documents or any asset are requisitioned u/s 132A after 31/05/2003 by inserting a new section 153A in the Act. It is pertinent to mention here that the word used in Section 153A of the Act which confers jurisdiction to issue notice and frame assessment, is ‘initiated’. Of course, it means a valid initiation, with which there can be no quarrel inasmuch as the warrant of authorization stands already executed by the competent authority and bears the name of the assessee-company among the persons to be searched. The new section 153A provides the procedure for completion of assessment, where a valid search is initiated u/s 132. In such cases, the Assessing Officer shall issue notice to such person requiring him to furnish within such period as may be specified in the notice, return of income in respect of six assessment years immediately preceding the Assessment year relevant to the previous year in which search was conducted u/s 132 or requisition was made u/s 132A of the Act. Thus, it can be said that the provision of section 153A of the Act makes it clear that in the case of a person on whom a valid search is initiated u/s 132 or books of accounts or other documents or any asset are requisitioned u/s 132A, the Assessing Officer shall issue a notice upon such person. The expression clearly relates to a person in respect of whom search u/s 132 has been initiated or as section 153A after 31st day of March 2003. The ratio laid down in Ramesh D. Patel (2014) 362 ITR 492(Guj.) supports our view. In that event 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. 2.11. From the aforesaid provision, it is clear that the first requirement is valid initiation of search. The Revenue has executed warrant of authorization in the name of the assessee company on 31-10- 2009 which is placed at paper book page 58-59. The panchnama was prepared in the name of Shri Manoj Punamiya & Group, prohibitory order u/s 132(3) was also in the name of Shri Manoj Punamiya alone, no material was unearthed by the department linking the assessee with the premises so searched by the department and no document was seized from the flat of Shri Manoj Punamiya which belongs to the assessee company. It is also seen that the premises searched did not belong to the assessee company as the same is residential premises of Mr. Manoj B

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Punmia . The assessee company was also subjected to survey action u/s 133A of the Act at its business premises on 31-10-2009 simultaneously. 2.12. Now, we shall discuss certain case laws. The Hon’ble Delhi High Court in the case of CIT vs Kabul Chawla (ITA 707/2014) order dated 28/08/2015 made an elaborate discussion on the issue and after considering various decisions like CIT vs Ankitech Pvt. ltd. (2011) 11 taxman.com 100(Del.), CIT vs Anil Kumar Bhatia (2013) 352 ITR 493 (Del.), Madugula Venu vs DIT (2013) 29 taxman.com 200(Del.), CIT vs Chetan Das Laxman Das, order dated 07/08/2012 (ITA No.2021/2010)(Del.), Ranbaxy Laboratories Ltd. vs CIT (2011) 12 taxman.com 74 (Del.), Jai Steel India Jodhpur vs ACIT (2013) 36 taxman.com 523(Raj.), Hon’ble Bombay High Court in ITA No.36/2009 in the case of CIT vs M/s Murli Agro Products Ltd, M/s Canara Housing Developing Company vs DCIT (ITA No.38/2014) order dated 25/07/2014 from Hon’ble Karnataka High Court, Pr. CIT vs Kurele Paper Mills Pvt. ltd. (ITA No.369 of 20015) order dated 06/07/2015, CIT vs Continental warehousing corporation (Nhava Sheva) Ltd. (2015) 58 taxman.com 78(Bom.), All Cargo Global Logistic Ltd. vs DCIT (2012) 23 taxman.com 103(Bom.)(SB), held that no addition could be made since no incriminating material was unearthed during search. 2.13. In another case, the Hon’ble Bombay High Court in CIT vs Tirupati Oil Corporation (248 ITR 194) (Bom.), wherein, search was carried out at the residence of the partner but block assessment was made u/s 158BC, 158BD of the Act, upon the firm, the Hon’ble High Court held that procedure laid down u/s 158 BD has to be followed, thus, the ratio laid down by Hon’ble jurisdictional High Court supports the case of the assessee. The ratio laid down in J.M. Trading Corporation vs ACIT (2008) 20 SOT 489 (Mum.), which was upheld by the Hon’ble jurisdictional High Court in ITA No. 589 of 2009 holding that provisions of section 153A are only applicable in a case, where valid search is conducted against the assessee u/s 132 of the Act, supports the case of the assessee. 2.14. For fair conclusion, we are also reproduced hereunder the provision of section 132 and 132 A of the Act for ready reference:- “132. (1) Where the [Principal Director General or] Director General or [Principal Director or] Director or the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner 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- section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub- section (1) of section 142 of this Act was issued to produce, or cause

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to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by 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 cause to be produced, any books of account or other documents which will be useful for, or relevant to, any proceeding under the Indian Income- tax Act, 1922 (11 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 (11 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property), then,— (A) the [Principal Director General or] Director General or 61[Principal Director or] Director or the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner, as the case may be, may authorise any Additional Director or Additional Commissioner or Joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer, or (B) such Additional Director or Additional Commissioner or 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— (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

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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 [Principal Chief Commissioner or] Chief Commissioner or[Principal Commissioner or] Commissioner, but such [Principal Chief Commissioner or] Chief Commissioner or [Principal 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 [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner] having jurisdiction over such person may be prejudicial to the interests of the revenue : 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: Provided also that no authorisation shall be issued by the Additional Director or Additional Commissioner or Joint Director or Joint Commissioner on or after the 1st day of October, 2009 unless he has been empowered by the Board to do so.

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[(1A) Where any [Principal Chief Commissioner or] Chief Commissioner or [Principal 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 [Principal Director General or] Director General or [Principal Director or] Director or any other [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner 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 [Principal Chief Commissioner or] Chief Commissioner or [Principal 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 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

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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 [Principal Chief Commissioner or] Chief Commissioner, [Principal Commissioner or] Commissioner, [Principal Director General or Director General or [Principal Director or] Director for such retention is obtained : Provided that the [Principal Chief Commissioner or] Chief Commissioner, [Principal Commissioner or] Commissioner,[Principal Director General or] Director General or [Principal Director 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. (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

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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 [Principal Chief Commissioner or] Chief Commissioner, [Principal Commissioner or] Commissioner, [Principal Director General or] Director General or [Principal Director 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 such date and includes also

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all proceedings under this Act which may be commenced after such date in respect of any year.

132A. (1) Where the [Principal Director General or] Director General or 75[Principal Director or] Director or the [Principal Chief Commissioner or] Chief Commissioner or 7[Principal Commissioner or] Commissioner, 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- section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub- section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents, as required by such summons or notice and the said books of account or other documents have been taken into custody by any officer or authority under any other law for the time being in force, or (b) any books of account or other documents will be useful for, or relevant to, any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act and any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, such books of account or other documents on the return of such books of account or other documents by any officer or authority by whom or which such books of account or other documents have been taken into custody under any other law for the time being in force, or (c) any assets represent either wholly or partly income or property which has not been, or would not have been, disclosed for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act by any person from whose possession or control such assets have been taken into custody by any officer or authority under any other law for the time being in force, then, the [Principal Director General or] Director General or [Principal Director or] Director or the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner may authorise any Additional Director, Additional Commissioner, Joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer (hereafter in this section and in sub-section (2) of section 278D referred to as the requisitioning officer) to require the officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, to deliver such books of account, other documents or assets to the requisitioning officer.

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(2) On a requisition being made under sub-section (1), the officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, of that sub-section shall deliver the books of account, other documents or assets to the requisitioning officer either forthwith or when such officer or authority is of the opinion that it is no longer necessary to retain the same in his or its custody. (3) Where any books of account, other documents or assets have been delivered to the requisitioning officer, the provisions of sub- sections (4A) to (14) (both inclusive) of section 132 and section 132Bshall, so far as may be, apply as if such books of account, other documents or assets had been seized under sub-section (1) of section 132 by the requisitioning officer from the custody of the person referred to in clause (a) or clause (b) or clause (c), as the case may be, of sub-section (1) of this section and as if for the words "the authorised officer" occurring in any of the aforesaid sub-sections (4A) to (14), the words "the requisitioning officer" were substituted.”

2.15. In the present appeal, valid search was not carried out against the assessee. Conduct of search proceedings is an elaborate procedure enumerated u/s 132 of the Act which in clause-I, categorically authorizes the officer to enter and search any building, place, vessel, etc, where he has “reason to belief” that the books of accounts, money, bullion, jewellery or things belonging to the assessee are kept. Before us, the assessee has claimed that nothing pertaining to the assessee was recovered from the premises of Shri Manoj Punamiya, searched by the Revenue. In such a situation, the decision from Hon’ble jurisdictional High Court in the Case of CIT vs M/s J.M. Trading Corporation (ITA No.589 of 2009) order dated 29/06/2009, wherein, there was categorical finding by the Tribunal that initiation of search was non-compliance of the provisions of the Act. As no valid search was conducted at the premises of the assessee as the premises occupied by the assessee was not even entered upon by the search party. In that situation, the Hon’ble High Court held that the search was illegal and invalid. The ratio laid down in ACIT vs M/s S.P. Cold Storage (ITA Nos.142 to 147/BLPR/2012) order dated 30/10/2015, wherein, survey u/s 133A was conducted in the case of assessee firm and no search, as contemplated u/s 132 of the Act, was ever conducted at the business premises of the firm nor any requisition was made u/s 132A, therefore, the jurisdiction assumed by the Assessing Officer u/s 153A of the Act was held to be null and void, supports the case of the assessee. For the sake of repetition, it is worth mentioning that Hon’ble Delhi High Court in CIT vs Kabul Chawla (supra) and Hon’ble jurisdictional High Court after considering the decision of the Special Bench of the Tribunal in All Cargo Global Logistic Ltd. vs DCIT (supra) and CIT vs Murli Agro Products Ltd.(supra) in CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015) 58 taxman.com78 (Bom.) has made elaborate discussion and concluded that in the absence of any incriminating

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material, no assessment/reassessment u/s 153A can be made. In the light of the foregoing discussion, it is evidently clear that an assessment u/s 153A is different from regular assessment. The section can be invoked only when a valid search is initiated u/s 132 or books of accounts, other documents or any assets are requisitioned u/s 132A after 31/05/2003. The provision of section 153A should be read in conjunction with the provision contained in section 132(1), the reason being that the later deals with search and seizure and the former deals with assessment in case of search, thus, the two are inextricably linked with each other, which implies that existence of books of accounts, incriminating documents, or unaccounted assets is or are sine qua non for making the additions in the assessments under this provision. Therefore, if nothing is found during the course of search, the additions in the assessment or reassessment u/s 153A is not only erroneous but also serves no purpose. It can be précised that the assessment or reassessment u/s 153A arises only, when a valid search has been initiated and conducted. The provisions of section 153A of the Act makes it clear that only in the case of a person on whom, a valid search is initiated, u/s 132 or books of accounts or other documents or any assets are requisitioned u/s 132A after 31/05/2003, the Assessing Officer shall after issuing notice assess or reassess the total income of such person for six assessment years immediately preceding the assessment year relevant to previous year, in which such search is conducted or requisition is made. The legislative intent is clear from the use of expression “such person” in section 153A(1)(a) of the Act. The expression clearly relates to a person in respect of whom search u/s 132 has been validly initiated as per section 153A itself provides. Our view find supports from Hon’ble Orissa High Court in Siksha “O” Anusandhan vs CIT (2011) 336 ITR 112 (Orissa). The Hon’ble High Court held as under:- “8. Section 132 prescribes that the competent authorities are empowered to permit the authorized officers to enter, search, break open, seize, place marks of identification and take other steps as contemplated under sub-clauses (i) to (v). However, such powers can be exercised against a person upon fulfilment of certain conditions. Firstly, the competent authority must have information in its possession and, secondly, on the basis of such information it must have reason to believe that the conditions as stipulated in sub-clauses (a), (b) and (c) of section 132(1) of the Income-tax Act, 1961 exist. Sub-clauses (a), (b) and (c) of section 132(1) speak of any person. Search and seizure cannot be sustained unless it is clearly shown that it was done by the authority duly authorized, and all the conditions precedent in relation thereto existed. Thus, before issuance of search warrant in order to take recourse under section 132 of the Income-tax Act, 1961, the authority competent to issue search warrant must be satisfied that search under section 132(1) is needed in respect of a definite person. Satisfaction required under section 132(1) of the

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Act 1961 is qua the person whose name appears in the warrant of authorization. If search as contemplated under section 132 of the Income-tax Act, 1961 is conducted in the premises of a person without any warrant of authorization in the name of the person searched, or on the basis of a warrant of authorization in the name of some other persons, that would be a clear case of non- application of mind of the empowered income-tax authorities and such a search cannot be held to be valid. It is so, because the belief which forms the foundation of search relates to a definite person who is to be subjected to search. If the contrary is the fact situation, the same would amount to serious lapses and would be in clear violation of the provisions contained in section 132(1) of the Income-tax Act, 1961, as it does not stand the test of section 132 of the Income-tax Act, 1961. Therefore, the most serious content of the warrant of authorization is the name and description of the person whose premises, etc., are sought to be searched. 9. The Punjab and Haryana High Court in Jagmohan Mahajan v. CIT [1976] 103 ITR 579 (Punj. & Har.), held that a search authorized in the absence of material necessary to form the requisite belief under section 132(1) on the basis of blank warrant of authorization signed by the Commissioner of Income- tax was illegal and no order under section 132(5) on the basis of such a search could be made. 10. The Delhi High Court in Ajit Jain’s case [2000] 242 ITR 302 (Delhi) held that it is axiomatic that search under section 132 has to be a valid search. An illegal search is no search and as a necessary corollary in such a case Chapter XIV-B would have no application. This judgment of the Delhi High Court has been upheld by the apex court in Union of India v. Ajit Jain [2003] 260 ITR 80 (SC). The Delhi High Court in CIT v. M.S. Rohini S. Walia [2007] 289 ITR328 (Delhi), held that it would be a futile exercise to entertain appeals where admittedly no search warrant was issued in the case of the assessees and the Tribunal held that unless a search warrant was issued, the Assessing Officer could not invoke the provisions of section 158BC of the Income-tax Act, 1961 for initiation of block assessment proceedings against the assessees. 11. Thus, we are of the view that in absence of any search warrant in the name of an assessee, search conducted in its premises is not a valid search as contemplated under section 132 of the Income-tax Act, 1961. 12. To deal with the second question, it is also necessary to examine what is contemplated in section 153A. The relevant provisions of section 153A are quoted below : "153A. Assessment in case of search or requisition.— Notwithstanding anything contained in section 139, section 147,

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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 :" (underlined for emphasis) 13.The provisions of section 153A of the Income Tax Act, 1961, make it clear that only in the case of a person on whom a search is initiated under section 132 or books of account or other documents or any assets are requisitioned under section 132A after 31st March, 2003, the Assessing Officer shall after issuing notice assess or reassess the total income of such person for six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition made. The legislative intent is clear from the use of expression “such person” in clause (a) of section 153A. The expression clearly relates to a person in respect of whom search under section 132 has been initiated as section 153A itself provides. Thus to exercise powers under section 153A in the case of a person the mandatory requirement is that there must be initiation of a search as contemplated under section 132 or requisition under section 132A in respect of such person. The word “person” appearing in section 132 and in section 153A is one and the same person. Thus the person, in respect of whom search under section 132 is initiated, must be the same person against whom notice under section 153A is to be issued for making assessment/reassessment under that section.” The Hon’ble Apex Court in the case of Union of India v. Ajit Jain ((2003) 260 ITR 80(SC), (2003) 129 Taxman 74(SC) ) held that initiation of valid search is a pre-

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requisite for framing search assessment u/s 158BC of the Act , held as under: “As the title of Chapter XIV-B suggests, these are special procedures for assessment of search cases and, therefore, a search under section 132 is a pre-requisite for invoking the provisions of this Chapter. It is axiomatic that search under section 132, as contemplated has to be a valid search. An illegal search is no search and as a necessary corollary, in such a case Chapter XIV-B would have no application. In the instant case, having come to the conclusion that the search conducted was without jurisdiction and was, thus, void ab initio, the imminent consequence would be that the provisions of Chapter XIV-B could not be invoked against the respondent, pursuant to the search of his room at Chennai. Consequently, the block assessment order could not be sustained and was, accordingly, quashed.” Further, ratio laid down in CIT vs Ramesh D. Patel (2014) 362 ITR 492 (Guj.), Abhay Kumar Shroff vs CIT (2007) 290 ITR 114 (Jhar.), Spacewood Furnishers Pvt Ltd. vs DGIT (2012) 340 ITR 393 (Bom.) and CIT vs Smt. Shaila Agarwal (2012) 346 ITR 130 (All.) supports the case of the assessee. The ratio laid down by Hon’ble Apex Court in Union of India vs Ajit Jain 260 ITR 80(SC), CIT vs Ms. Rohini Valia 289 ITR 328 (Del.), Jindal Stainless Ltd. Vs ACIT 120 ITD 301 (Del.), Jayantilal Damjibhai & Ors. Vs DIT (2008) 219 CTR 26, also supports the case of the assessee. We are of the view that search action is in the nature of enforcement which involves invasion in the privacy of the assessee; such action has to be in full conformity with relevant legal provision. Such jurisdiction or action cannot be validated in casual or lax manner. We fully appreciate the mandate of the Superior Courts while considering the validity of assessment in such type of cases. The Mumbai Bench of the Tribunal in J.M. Trading Corporation vs ACIT 20 SOT 489 (Mum.) held that where a search is carried out at the premises owned by the assessee but rented out to other concern, the same does not result into a valid search u/s 132 of the Act upon the assessee. The appeal of the Revenue was dismissed by Hon’ble Bombay High Court vide order dated 29/06/2009 CIT vs J.M. Trading Corporation (ITA No.589 of 2009) and made following observations. “…. The Tribunal has categorically recorded a finding of fact of initiation of the search that non compliance to the provisions of the Act by the Authorized Officer, such searches are invalid and illegal. No search was conducted against the assessee as the premises occupied by the assessee were not entered upon and searched by the Authorized Officer….”

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2.16. The ITAT, Bangalore in D T S Rao v. ACIT (2007) 106 ITD 569(Bang. Trib) which was affirmed by Hon'ble Karnataka High Court in the case of (2012) 23 taxmann.com 352(Kar. HC), held as under:

“28. In view of Explanation 2 to section 158BE, execution of search warrant is to be inferred from the date recorded in respect of conclusion of search in the last panchnama. Panchnama is not defined in the IT Act. However, section 100 of Cr.PC governs the conducting of search. As per section 100(4) of Cr.PC the authorized officer to make search is required to call upon two or more independent and respectable inhabitant of the locality in which the place to be searched is situated. Search is to be made in the presence of these two respectable inhabitants list of things to be seized and placed where these have been found is to be prepared and such list is to be signed by the authorized officer and the two witnesses. Copy of the list prepared is to be delivered to the occupant of the premises. Recording of the names of the officer authorized to search, the building or premises to be searched, the designation of the officer who authorized the search, name and addresses of two respectable persons called to witness the search, time of commencement of search and conclusion or suspension of search, list of valuables, documents etc. found as well as seized recording of statement if any person during search and mention of any restraint order or prohibitory order, are recorded in the prescribed format and such document is known as panchnama. Panchnama is prepared even if search is temporarily suspended. Panchnama is definitely prepared at the conclusion of search. In case an order under section 132(3) is passed, then the same is mentioned in the panchnama. Normally order under section 132(3) is passed in respect of a room, shop, office or an almirah or lockers etc. Such room, locker or almirah etc. is sealed. Prohibitory order under section 132(3) is in respect of a specific portion of an area or space which can be sealed and to which legal access of entry cannot be made except with the knowledge of authorized officer. When such sealed room, almirah etc. is opened again then the same is also done in the presence of two witnesses. Such proceedings are also recorded in the panchnama at the conclusion and if prohibitory order is again to be passed then the same is mentioned in the panchnama. When the prohibitory order under section 132(3) is finally lifted then panchnama is drawn. *** *** 37. Panchnama is not defined under Income-tax Act. However, Board has issued tax payer’s charter. In respect of charter of rights and duties of persons searched, the Board has mentioned that such person has a right to have a copy of panchnama together with all the annexure. Duty of the person searched is to affix his signature on the recorded statement, inventories and the panchnama. Rule 112 of the Income-tax Rules provides the procedure to be followed in

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search. Combined reading of rule 112 and the tax payer’s charter makes it clear that panchnama referred in Explanation 2 to section 158BE is that panchnama copy of which is given to the party searched. In the instant case, there are three panchnamas dated 6- 2-1996, 19-2-1996 and 25-4-1996. As stated earlier order under section 132(3) was not valid on 25-4-1996. When order under section 132(3) was not extended beyond sixty days then lifting of such prohibitory order vide panchnama dated 24-4-1996 has no legal sanction, when violation of order under section 132(3) can result into punishment with rigorous imprisonment then, communication of extension of order under section 132(3) is a must. Hence, panchnama dated 25-4-1996 is not a valid panchnama.

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calculating the period of limitation. Accordingly, we hold that the Tribunal can examine the record of search with a view to find out the factum of last panchnama as discussed above."

Section 153B of the Act as applicable to the relevant year stipulate that time limit for completion of the assessment u/s 153A of the Act shall be computed based on the conclusion of the search as recorded in the last of the panchnama drawn as under: “153BTime-limit for completion of assessment under section 153A ’*** (2) The authorisation referred to in clause (a) and clause (b) of sub- section (1) shall be deemed to have been executed,— (a) in the case of search, on the conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued;”

2.17. Thus, the search will be deemed to be concluded on the basis of last panchnama drawn in relation to the person in whose case the warrant of authorization has been issued and in the instant case , we have observed that no panchnama was drawn against the assessee so it can be concluded that search against the assessee got vitiated as no panchnama was ever prepared against the assessee. The search is a serious invasion into the privacy of the person infringing on fundamental rights as enshrined in Article 21 of the Constitution of India and the same cannot be lightly carried out by the State in an casual or lax manner. The Revenue has prepared the Panchnama in the name of ‘Manoj B Punmia and group’ while there is no concept of word ‘group’ in the Act in context of search proceedings. 2.18. Hon'ble Supreme Court in the case of VLS Finance Limited v. CIT(2016) 68 taxmann.com368(SC) has held that limitation provisions for completing assessments are to be strictly construed as under: The counsel for the appellants are justified in their contention that the provision relating to limitation need to be strictly construed. In the case of K.M. Sharma v. ITO [2002] 254 ITR 772/122 Taxman 426 (SC), this principle is laid down in the following words: "13. Fiscal statute, more particularly a provision such as the present one regulating period of limitation must receive strict construction. The law of limitation is intended to give certainty and finality to legal proceedings and to avoid exposure to risk of litigation to litigant for indefinite period on future unforeseen events. Proceedings, which have

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attained finality under existing law due to bar of limitation cannot be held to be open for revival unless the amended provision is clearly given retrospective operation so as to allow upsetting of proceedings, which had already been concluded and attained finality."

2.19. The Hon’ble Delhi High Court has in the case of MDLR Resorts Private Limited v. CIT (2013) 40 taxmann.com 365(Delhi) has held the defect in the panchanama as curable and not affecting the validity of search but has also held in the said judgment as under:

“The effect of the said lapse on merits or to the value or degree of importance to be given to the material seized is a matter of appraisal and merits and not a question to be examined and answered in these writ petitions. The view, we have taken finds support from the decisions of the Supreme Court in ITO v. Seth Bros. [1969] 74 ITR 836 and Pooran Mal v. Director of Inspection [1974] 93 ITR 505 (SC). Reference can also be made to the decision of this court in CITv. S. K. Katyal [2009] 308 ITR 168/177 Taxman 380 wherein the expression 'panchnama' was elucidated and explained in the following words:—

"15. These provisions demonstrate that a search and seizure under the said Act has to be carried out in the presence of at least two respectable inhabitants of the locality where the search and seizure is conducted. These respectable inhabitants are witnesses to the search and seizure and are known as 'panchas'. The documentation of what they witness is known as the panchnama. The word 'nama', refers to a written document. Its type is usually determined by the word which is combined with it as a suffix. Examples being, nikah-nama (the written muslim marriage contract), hiba-nama (gift deed, the word hiba meaning - gift), wasiyat-nama (written will) and so on. So a panchnama is a written record of what the panch has witnessed. In Mohan Lal v. Emperor AIR 1941 Bom. 149, it was observed that 'the panchnama is merely a record of what a panch sees'. Similarly, the Gujarat High Court in the case of Valibhai Omarji v. State AIR 1963 Guj 145 noted that 'a Panchanama is essentially a document recording certain things which occur in the presence of Panchas and which are seen and heard by them.' Again in The State of Maharashtra v. Kacharadas D. Bhalgar (1978) 80 Bom LR 396, a panchnama was stated to be 'a

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memorandum of what happens in the presence of the panchas as seen by them and of what they hear'. 16. We have examined the meaning of the word panchnama in some detail because it is used in Explanation 2(a) to Section 158BE of the said Act although it has not been defined in the Act. A panchnama, as we have seen is nothing but a document recording what has happened in the presence of the witnesses (panchas). A panchnama may document the search proceedings, with or without any seizure. A panchnama may also document the return of the seized articles or the removal of seals. But, the panchnama that is mentioned in Explanation 2(a) to section 158BE is a panchnama which documents the conclusion of a search. Clearly, if a panchnama does not, from the facts recorded therein, reveal that a search was at all carried out on the day to which it relates, then it would not be a panchnama relating to a search and, consequently, it would not be a panchnama of the type which finds mention in the said Explanation 2(a) to section 158 BE."

Incidentally in the instant appeal , there is no panchnama drawn by the Revenue against the present assessee which is an admitted position. Keeping in view the facts and circumstances of the case, we are of considered view that the search proceedings in the case of present assessee got vitiated due to non-preparation of the panchnama in the name of the assessee which evidences conclusion of the search and which effectively decides against whom the Revenue has conducted search so much so further actions are required to initiate assessment proceedings u/s 153A of the Act for the last six years against the person so searched within the time stipulated u/s 153B of the Act. Even Hon’ble Delhi High Court in the case of MDLR Resorts Private Limited(supra) has quoted relevant extract from decision of the Hon’ble Delhi High Court in the case of CIT v. S. K. Katyal [2009] 308 ITR 168/177 Taxman 380(Delhi) whereby the Hon’ble Court has clearly stated in para 24 that if a panchnama does not, from the facts recorded therein, reveal that a search was at all carried out on the day to which it relates, then it would not be a panchnama relating to a search and, consequently, it would not be a panchnama of the type which finds mention in the said Explanation 2(a) to section 158 BE. Thus, in the absence of panchnama being drawn against the assessee, no incriminating material having been found pertaining to the assessee and also the premises searched did not belonged to the assessee, it could be concluded based on the cumulative effect of all the above-stated relevant facts that no valid search was conducted against the assessee and the assessment u/s 153A of the Act is bad in law hence liable to be quashed. Why, despite a ‘search’, we observe a ‘notice’ u/s 153C as well as a survey being conducted on the assessee in the present case.

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Section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post- search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Conclusion

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“The effect of the said lapse on merits or to the value or degree of importance to be given to the material seized is a matter of appraisal and merits and not a question to be examined and answered in these writ petitions. The view, we have taken finds support from the decisions of the Supreme Court in ITO v. Seth Bros. [1969] 74 ITR 836 and Pooran Mal v. Director of Inspection [1974] 93 ITR 505 (SC). Reference can also be made to the decision of this court in CITv. S. K. Katyal [2009] 308 ITR

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168/177 Taxman 380 wherein the expression 'panchnama' was elucidated and explained in the following words:—

"15. These provisions demonstrate that a search and seizure under the said Act has to be carried out in the presence of at least two respectable inhabitants of the locality where the search and seizure is conducted. These respectable inhabitants are witnesses to the search and seizure and are known as 'panchas'. The documentation of what they witness is known as the panchnama. The word 'nama', refers to a written document. Its type is usually determined by the word which is combined with it as a suffix. Examples being, nikah-nama (the written muslim marriage contract), hiba-nama (gift deed, the word hiba meaning - gift), wasiyat-nama (written will) and so on. So a panchnama is a written record of what the panch has witnessed. In Mohan Lal v. Emperor AIR 1941 Bom. 149, it was observed that 'the panchnama is merely a record of what a panch sees'. Similarly, the Gujarat High Court in the case of Valibhai Omarji v. State AIR 1963 Guj 145 noted that 'a Panchanama is essentially a document recording certain things which occur in the presence of Panchas and which are seen and heard by them.' Again in The State of Maharashtra v. Kacharadas D. Bhalgar (1978) 80 Bom LR 396, a panchnama was stated to be 'a memorandum of what happens in the presence of the panchas as seen by them and of what they hear'. 16. We have examined the meaning of the word panchnama in some detail because it is used in Explanation 2(a) to Section 158BE of the said Act although it has not been defined in the Act. A panchnama, as we have seen is nothing but a document recording what has happened in the presence of the witnesses (panchas). A panchnama may document the search proceedings, with or without any seizure. A panchnama may also document the return of the seized articles or the removal of seals. But, the panchnama that is mentioned in Explanation 2(a) to section 158BE is a panchnama which documents the conclusion of a search. Clearly, if a panchnama does not, from the facts recorded therein, reveal that a search was at all carried out on the day to which it relates, then it would not be a panchnama relating to a search and, consequently, it would not be a panchnama of the type which finds mention in the said Explanation 2(a) to section 158 BE."

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2.4. In the appeal before us, the warrant of authorization, authorizing such search and seizure action was never executed at the business premises of the assessee firm. Disregarding the provisions of law notice u/s 153A of the Act was issued to the assessee firm to which the assessee filed the return of income, under protest, claiming the same deduction u/s 80IB(10) of the Act. So far as, legal issue/jurisdictional issue is concerned, we are of the view that the case of the assessee squarely covered in its favour by the aforesaid decision of the Tribunal, therefore, we find no merit in the appeals of the Revenue.

“The revenue is aggrieved by the impugned order dated 23rd March 2010 by the order of the ld. CIT(A), New Delhi for A.Y. 2006-07, whereas the assessee has challenged the impugned order dated 11-8- 2010 passed by the ld. first appellate authority, New Delhi for A.Y. 2007-08. Since the facts and the issues are common, both these appeals were heard together.

Therefore, these can be disposed off by a common order, more so when both the appeals pertain to the same assessee.

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2.1. The crux of arguments on behalf of the Revenue is that opportunity was not granted to the Assessing Officer to go through the additional evidence filed before the ld. CIT(A), therefore, it is violation of the Rules. On the other hand, learned counsel for the assessee defended the conclusion drawn in the impugned order, by inviting our attention to pages 37 & 38 of the paper book, evidencing that if common area of staircase is excluded from the total built up area, such area remains to the extent of 1386.03 sq. ft. only.

2.2. We have considered the rival submissions and perused the material available on record. The facts in brief are that the assessee claimed deduction u/s 80-IB(10) amounting to Rs. 1,86,02,270/- on the total sum of Rs. 7,88,82,014/-. The assessee filed profit and loss a/c, balance-sheet and audit report in form no. 10-CCB for claiming such deduction for Krishna Lok project. The assessee was also asked to furnish such information as contained in pages 1 & 2 of the assessment order. The assessee vide reply dated 10-12-2008 furnished the submissions and the documents filed by the assessee were examined. We further find that in the impugned order, there is no mention of the fact that such additional documents were filed by the assessee which were not filed before the Assessing Officer. Therefore, the assertion of the ld. Sr. DR that the is violation of Rule 46A is without any basis. Even otherwise, the ld. CIT(A) has co-terminus power that of the Assessing Officer. As per Sub-section (4), the CIT(A) before disposing off any appeal may make any inquiry as he thinks fit or may direct the Assessing Officer to make further inquiry and report the result of the same to him. It is not the case that the ld. CIT(A) is not empowered to decide the appeal without consulting/ confronting the Assessing Officer . It is not the case that any new evidence was admitted by the ld. CIT(A). The evidence in the form of computation of built up area was furnished during assessment proceedings itself and the ld. DR has not specifically pointed out as to which was the additional evidence filed before the ld. first appellate authority. Therefore, we find no justification to interfere with the conclusion drawn by the ld. CIT(A) and further find no justification in the assertion of the Revenue that there is any violation of Rule 46A. Therefore, this ground of the revenue is based on assumption and presumption, consequently dismissed.

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type “A” flat is more than 1500 sq. ft., therefore, the assessee is not entitled to deduction.

3.1. On the other hand, the learned counsel for the assessee took us to various pages of the paper book, including sanction plan approved by Competent Authority by further submitting that the common area to the tune of 8.172 sq. mts. Which pertains to stair case is not part of the built up area of the flat as the same is used by all the residents, being the common area, and if this area is reduced from the total area it comes below the prescribed limit of 1500 sq. ft.

3.2. We have considered the rival submissions and perused the material available on record. We have also perused the sanction plan and area of each unit like bed rooms, toilet, kitchen, drawing room, balcony, power room and store etc. We find that if the total area as per approved plan is examined, it comes to 1386.03 sq. ft. (as per sanction plan), and the total saleable area/ super area is 1492.43 sq. ft., which in all fairness is below the prescribed limit of 1500 sq. ft. So far as the common area or stair case is concerned, it cannot be included in the built up area of an individual unit as the same is to be used by all the residents/ inhabitants. If the definition of “built up area” as mentioned in sub-clause (a) of sub-section (14) of Section 80-IB, is analyzed, it speaks about the inner measurement of the residential unit at the floor level, including the projections and balconies, as increased by the thickness of the walls but does not include the common area shared with other residential units. The stair case definitely comes under the common pool used by all the inhabitants, therefore, it cannot be included in the built up area. Even otherwise the Assessing Officer noted from the details submitted by the assessee that three types of flats were sold by the assessee and in the type “A” category the area is 1386.03 sq. ft., whereas in type “B” the total area is 1122.48 sq. ft., and in type “C” flat, the total area is 811.84 sq. ft. per flat. These details were submitted by the assessee vide letter dated 12-12-2008 before the ld. CIT(A) and earlier before the Assessing Officer. Such details have been reproduced at page 4 of the impugned order. There is a factual recording that stair case is common area between the two adjacent flats measuring 8.172 sq. mts. and if this area is reduced from the total area of the unit then certainly it comes below the prescribed limit of 1500 sq. ft. This being the first year of claiming deduction u/s 80-IB(10) of the Act, wherein the Assessing Officer himself noted that assessee’s 48 units of Type-A flats; 90 units of Type-B & Type-C units were under construction, the Assessing Officer himself computed the built up area by including the stair case area, therefore, it exceeded the prescribed limit. Such factual finding recorded in the impugned order was not controverted

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by the Revenue by bringing any positive material on record. In view of these facts we are of the considered opinion that the assessee is clearly entitled for such deduction. Therefore, we find no justification to interfere with the conclusion drawn in the impugned order, which is affirmed.

4.1. On the other hand, the learned counsel for the assessee took us to various pages of the paper book by submitting that the expenses were booked separately in the books of account, which are audited one. Our attention was also invited to page 36 wherein break up of the expenses has been given. A query was raised by the Bench whether such break up was submitted before the Assessing Officer. It was uncontrovertedly explained that this break up was very much available before the Assessing Officer .

4.2. We have perused page 36 which is part of the synopsis as per which (Schedule “J”), the administrative and other expenses pertains to head office. Krishna Lok a/c and remaining has been duly explained. Whereas in Schedule “K” the selling expenses, which include advertisement and publicity; sales promotion & booking; and selling expenses have been bifurcated, whereas in Schedule “L”, financial expenses like bank interest and collection charges, interest and others have been mentioned, Therefore, the contention of the Revenue that these expenses were not bifurcated is without any basis. Even from the assessment order (page 6), there is a categorical finding that the assessee company has not taken any loan secured or unsecured for Krishna Lok and the ledger print out of the current account maintained with Oriental Bank of Commerce and Punjab National Bank were furnished during assessment proceedings which clearly indicates that the total receipt from Krishna Lok project sale is utilized for the purpose of meeting expenses of Krishna Lok and none of the loans from Head Office were transferred to Krishna Lok. There is a further finding that there is no question of transfer any financial expenses to Krishna Lok and further the administrative and other expenses which include salary, bonus other perquisites, employees welfare and the rates and taxes, general expenses, news paper and periodicals, legal and professional expenses, postage & telephone charges, power fuel and water charges, printing & stationery, vehicle

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repair & maintenance expenses etc. are incurred separately and debited separately to Krishna Lok restaurant and other projects. Such expenses are business specific and not commonly incurred. On careful scrutiny of allocated expenses, we find that the expenses in the nature of “audit fee” and “director remuneration” are for the assessee as a whole and not specific to the business. Consequently, the expenses of Rs. 33,660/- and Rs. 58,630 respectively are allocated to Krishna Project, therefore, addition to the extent of Rs. 2,92,290/- is sustained. The deletion of addition of balance expenses of Rs. 57,66,129/- is upheld. This ground is, therefore, allowed partly.

5.1. Ld. Sr. DR defended the conclusion drawn in the assessment order, whereas the learned counsel for the assessee defended the impugned order.

5.2. We have considered the rival submissions and found that the assessee claimed Rs. 16,500/- to fixed assets in the block of computers and computer peripherals which as per the assessee are depreciable @ 60%, which was denied by the Assessing Officer . We find that the ld. CIT(A) considered the issue in a justified manner and deleted the addition of Rs. 7425/-. We find no justification to interfere with the same as nothing contrary was brought to our notice.

8.1. The crux of argument on behalf of the assessee is that the vide letter dated 5-11-2008 the assessee had applied for completion certificate but the completion certificate was not issued to the assessee

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which is beyond the control and power of the assessee. Our attention was also invited to page 22 of the paper book containing a certificate signed by the Architect of the assessee i.e. Candid Design Consortium Pvt. Ltd., in which the total area of the Type-A flat has been mentioned at 1492.43 sq. ft. Ld. counsel submitted that for A.Y. 2006- 07 deduction was allowed to the assessee and it is the same sanction plan which could not be denied for the next year. It was empathetically argued that the total built up area is below the prescribed limit of 1500 sq. ft. and there is no violation of the Act. It was also pleaded that the project was approved on 16-3-2005 which is well before 1-4-2005 and the assessee was to complete the project on or before 31-3-2009. The ld. counsel also relied on the decisions of Visakhapatnam & Delhi Benches of the ITAT as also the decision of Hon’ble Gujarat High Court, which we will discuss while coming to a particular conclusion. The crux of the argument is that requirement of completion certificate was merely directory and not mandatory. Reliance was placed upon the decision dated 29-2-2012 of Hon’ble Karnataka High Court (ITA no. 138 of 2010) to the effect that it is prospective in nature.

8.2. On the other hand, ld. Sr. DR took us to various pages of the assessment order by submitting that the case laws relied upon by the assessee are not applicable to the facts of the present appeal and even no such certificate was issued to the assessee till date, therefore, deduction was rightly denied to the assessee.

8.3. In reply, the learned counsel for the assessee contended that for A.Y. 2006-07 on identical facts deduction was granted to the assessee on some of the flats, therefore, for the sake of consistency no “U turn” is permissible for the next year, specially when the facts are same.

8.4. We have considered the rival submissions and perused the material available on record. The facts in brief are that the assessee declared taxable income of Rs. 5,97,15,620/- in its return filed on 31- 10-2007. The case of the assessee was selected for scrutiny. The assessee claimed deduction of Rs. 5,19,92,472/- u/s 80-IB(10). The Assessing Officer asked the assessee to give justification for claiming such deduction. Ld. Assessing Officer denied the claim on two counts- firstly, the built up area of the unit is above prescribed limit of 1500 sq. ft. and secondly for earlier assessment order identical deduction was claimed by the assessee and the assessee violated the conditions stipulated u/s 80-IB(10) in Type –A flats. Ultimately, the ld. Assessing Officer denied such deduction to the assessee. The assessee filed various documents before the Assessing Officer and the same were examined by her. Finally the ld. Assessing Officer concluded that the

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conditions laid down u/s 80-IB(10) were not satisfied, therefore, the claim of deduction could not be allowed to the assessee.

8.5. On appeal before the ld. CIT(A) the claim of the assessee was examined and ultimately the assessment order was upheld. The aggrieved assessee is in appeal before this Tribunal.

8.6. If the totality of facts available on record and the assertion made by the ld. respective counsels are kept in juxtaposition, broadly the ld. CIT(A) is influenced by the sale transactions with Rajasthan Global Securities Ltd., wherein pursuant to summons u/s 131 issued to Rajasthan Global Securities Ltd., it was confirmed that the amount of Rs. 5,36,89,920/- was paid to the assessee as advance for purchase of 37 flats in Krishnalok project. However, what it may the moot issue to be adjudicated by us pertains to sec. 80- IB(10). We further find that as contained in para 1.2 (page 5) of the impugned order, the ld. CIT(A) has examined the submissions of the assessee and the reason of denial of deduction to the assessee by the ld. Assessing Officer. The relevant portion from the impugned order is reproduced hereunder:

“It was further submitted that Addl. CIT wrongly tries to prove that sale with M/s. Rajasthan Global Securities Ltd. (RGSL) are not accounted for properly and undue profit has arisen on account of 80-IB whereas these are normal business transactions undertaken by assessee company with M/s Rajasthan Global Securities Ltd. having no mutual relation whatsoever. The Assessing Officer has objected to the issue of preferential shares and its valuation. The assessee company has issued preferential shares to various persons as per SEBI guidelines and approval of Bombay Stock Exchange. The assessee company is a listed company and does not ah any discretion about the issue price and require to issue shares through preferential allotment only at the rate as per SEBI guidelines and approved by stock exchange. During the year the assessee company has calculated average market price as per general meeting, certification by statutory auditor etc., has submitted to Bombay Stock Exchange and has issued the preferential share after getting approval from Bombay Stock Exchange. These are normal business transactions because these are issued as per SEBI and Stock Exchange guidelines. These shares are issued to a number of companies and individuals and not only to RGSL. Valuation of these shares are done as per SEBI and Stock Exchange guidelines which were as per average market rats and approved by Board of Directors and General Meeting of CHD, statutory auditor and Bombay Stock exchange approval. There is no close

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or remote nexus between CHD and RGSL. There is no common relation among the directors or major share holders. Since CHD is listed company it has no control over market rate or guidelines of SEBI and Stock Exchange. It is immaterial for CHD what its shareholder does with their investments. As regard Assessing Officer ’s observation that the assessee has booked substantial sales with respect to non 80-IB project and has booked substantial sales with respect to 80-IB project, it was submitted that these are normal business transactions which CHD has undertaken during this year for earning profits in 80- IB project as well as non 80-IB projects.”

8.7. If the aforesaid is analyzed, we find that the grievance of the revenue is that the sales made to M/s Rajasthan Global Securities Ltd. are not properly accounted for and undue profit has arisen on account of sec. 80-IB, whereas the claim of the assessee is that it is a normal business transaction and the assessee has no mutual relation what-so-ever with M/s Rajasthan Global Securities Ltd. So far as the built up area is concerned, as has been alleged by the revenue that it is beyond the prescribed limit of 1500 sq. ft., we have perused the sanction plan, submissions before the Assessing Officer as well as before the ld. CIT(A) and the break up dimensions adduced by the assessee. Such break up even has been reproduced at pages 7 & 8 of the impugned order, as per which the total area has been claimed by the assessee at 1492.43 sq. ft.

8.8. Another point mentioned in the assessment order for denying deduction by the Assessing Officer is that the assessee did not file the bifurcation. However, we find that such bifurcation was duly filed by the assessee that too room-wise of all the units. Still the deduction was denied on the presumption that the basis of arriving at such figure was not adduced by the assessee. We are not in agreement with the finding of the Assessing Officer on two counts- firstly, the approval was granted by the Competent Authority; and secondly such bifurcation is as per sanctioned plan which was filed before the Assessing Officer. Uncontrovertedly such bifurcation was filed during assessment stage, first appellate stage and even before us. It is also not in dispute that the approval was granted by the Competent Authority to the assessee on 16-3-2005 meaning thereby the project was approved before the amendment inserted/ substituted by Finance (No.2) Act of 2004, w.e.f. 1-4- 2005. Prior to its substitution, sub-section (10), as amended by

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the Finance Act, 2000, w.e.f. 1-4-2001 and Finance Act 2003 with retrospective effect from 1-4-2002, read as under:

“(10) the amount of profits in case of an undertaking developing and building housing projects approved before the 31st day of March, 2005 by a local authority, shall be hundred per cent of the profits derived in any previous year relevant to any assessment year from such housing project if, -

(a) such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998;

(b) the project is on the size of a plot of land which has a minimum area of one acre; and

(c) the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the cities of Delhi or Mumbai or within twenty-five kilometers from the municipal limits of these cities and one thousand and five hundred square feet at any other place.”

8.9. If the aforesaid position of law existing at the time when the plan was sanctioned/ approval was granted to the assessee is analyzed , there was no condition like production of complete certificate. This is a settled legal proposition of law that the law existing at the particular point of time will be applicable unless and until it is specifically made retrospective by the legislature. The substitution so made, is therefore, applicable prospectively and not retrospectively. There is an uncontroverted fact that approval was granted to the assessee on 16-3-2005, consequently the assessee was expected to complete the project on or before 31-3-2009. Now the question arises whether the project was completed by the assessee within time. As is evident from the letter of the assessee dated 5-11-2008 addressed to the Vice Chairman Mathura Vrindavan Development Authority, on which the seal and signature of the concerned authority is affixed (page 28 of the paper book), it has been specifically requested that the construction has been completed and further request has been made for grant of completion certificate of Phase-I, meaning thereby, if not earlier, the project was presumed to be complete as on 5-11-2008 because the concerned development authority has neither said that the project was not complete nor completion certificate was issued to the assessee.

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In the absence of any variation or allegation if such certificate is not issued to the assessee, whether the assessee can be penalized for the act of an authority on which it has no control, the obvious reply is that for the fault of others anybody should not be penalized, more specifically when the project was approved on 16-3-2005. Therefore, the law applicable as on date will be applicable to the assessee. It is not expected that the assessee will demolish the construction work which is already in progress and again comply with the direction of the law which was inserted on a later date which is prospective in nature. If the intention of the legislature would have been to make it effective from retrospective effect, nothing prevents the legislature to do so.

8.10. If the issue is analyzed in the light of case laws cited before us, we find that the Hon’ble Karnataka High Court vide judgment dated 29th February 2012 in the case of CIT & another Vs. M/s Anriya Project Management Services Pvt. Ltd. (ITA no. 138 of 2010), considered the decision like CIT & ors. Vs. G.R. Developers (ITA no. 355/2009) and held that definition of built up area was inserted by Finance (No.2) Act of 2004, which came into effect from 1-4-2005, is prospective in nature and has no application to the housing projects which were approved by local authority prior to that date, strongly supports the case of the assessee. It was held by the Hon’ble High Court that the assessee was entitled to hundred per cent benefit of sec. 80-IB(10).

8.11. Another case cited was from Visakhapatname Bench of the ITAT in the case of M/s Vishnu Builders Vs. ACIT (ITA nos. 178, 179 & 180/Vizag/2011), order dated 27th July 2011. In that case also, completion certificate was not filed before the Assessing Officer and the proof of municipal tax assessment of various flat owners establishing that the housing project was completed before September 2008 was filed. Since there was no practice of issuing the project completion certificate, therefore, it was held that it was not a condition precedent of filing the completion certificate for allowing deduction u/s 80-IB(10) of the Act.

8.12. In the case of CIT Vs. Tarnetar Corporation (Tax appeal no. 1241 of 2011), the Hon’ble Gujarat High Court vide judgment dated 12-9-2012, observed that the confirmation issued by municipal authorities was filed on 15-2-2006 and was rejected on 1-7-2006. The assessee also paid penalty for regularization of the units. Since construction was completed

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well before 31st March 2008, the outer limit for such construction and the permission was not granted by they municipal authority, it was held that fulfilling of every condition is not mandatory and if there is a substantial compliance, the minor deviation thereof would not vitiate the very purpose of deduction.

8.13. The ITAT Delhi Bench ‘G’ in the case of ACIT Vs. Surendra Developers etc. (ITA nos. 2743 to 2745 & ITA nos. 3056 to 3058/Del/2010) vide order dated 1-8-2012, held that wherein the assessee applied for completion certificate before the lower authorities in time and such certificate was not issued by the local authority, such non-issuance was beyond the control of the assessee. While coming to this conclusion the Bench also considered another case of M/s Girija Colonizers (ITA nos. 2417 to 2422/Del/11 – order dated 9-12-2011).

8.14. The ld. Sr. D.R. also placed reliance upon the decision of the Tribunal of Chennai Bench in ACIT Vs. Viswas Promoters P. Ltd. (2010) 005 ITR (Trib) 0449 on the issue of built up area not exceeding 1500 sq. ft. It was held that if this condition is not fulfilled, the assessee is not eligible for deduction. However, we find that in the present appeal, the built up area is below the prescribed limit of 1500 sq. ft. Therefore, this decision may not help the revenue being distinguishable on facts.

8.15. If this issue is analyzed with the view point of rule of consistency, we are of the considered opinion that though the principle of res-judicata is not applicable to the income-tax proceedings, yet for the sake of consistency and for the purposes of finality in all litigations, including litigation arising out of fiscal statutes, earlier decisions on the same question should not be reopened unless some fresh facts are brought on record in subsequent assessment year. For A.Y. 2006-07, even the ld. CIT(A) decided the issue in favour of the assessee, which was confirmed by the Tribunal (supra), therefore, unless and until any new material facts are brought on record, the revenue is not permitted to take a “U turn”, while denying the claimed deduction to the assessee, that too on same facts and circumstances. Our view is fortified by the decision of Hon’ble Jurisdictional High Court in the case of CIT v. A.R.J. Security Printers 264 ITR 276 (Del.); and the ratio laid down in CIT Vs. Neo Poly Pack (P) Ltd. 245 ITR 492 (Del.); Berger Paints India Ltd. Vs. CIT 266 ITR 99 (SC); CIT Vs. Lagan Kala Upvan 259 ITR 489 (Del.); and Union of India & others Vs. Kaumudini

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Narayan Dalal & another 249 ITR 219 (SC). From this angle also, the assessee is having a strong case in its favour.

8.16. Leave apart, we are of the considered opinion that the assessee is expected to complete the project as per the approved plan at a particular point of time and the assessee is not expected to do or to fulfill the conditions which are not in existence at the relevant point of time or made compulsory after making some amendment in the Act from the future date. Since the assessee was to complete the project on or before 31-3-2009 and request was duly made with the Competent Authority on 5- 11-2008 mentioning that the project has been completed and completion certificate may be issued and if the same is not issued by the Competent Authority the assessee should not be penalized for the same unless and until some contrary facts are brought on record evidencing that the assessee contravened the conditions contained in the approval granted by such Competent Authority. As per sub-section (10) of Sec. 80-IB, the housing project which were approved before 31st day of March, 2008, the benefit will be hundred per cent subject to fulfillment of certain conditions. However, this condition was substituted by the Finance (No.2) Act of 2009 with effect from 1-4-2009, which has been further explained by sub-clause (ii) to the Explanation regarding completion certificate. However, since the approval was granted to the assessee on 1-4-2005, therefore, the assessee is not expected to fulfill the conditions which were not on the statute when such approval was granted to the assessee. Therefore, the appeal of the assessee deserves to be allowed.

In the aforesaid order, the Tribunal made an elaborate discussion, considering the legal position as well as various case laws and then reached to a particular conclusion. This decision of the Tribunal was challenged by the Revenue before Hon'ble Delhi High Court, wherein, vide order dated 22/01/2014, the same was affirmed (2014) 43 taxman.com 2049 (Del.) ; (2014) 362 ITR 177 (Del.). If the aforesaid order is kept in juxtaposition with the facts of the present appeal,

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we find that the assessee obtained approval from the local authority, being Mira Bhayander Municipal Corporation (MBMC) on 28/05/2003. The assessee accordingly claimed deduction u/s 80IB(10) of the Act in its return. The assessment was completed u/s 143(3) of the Act rejecting the claimed deduction. The assessee got substantial relief from the Ld. Commissioner of Income Tax (Appeal) and the order was challenged by the Revenue before the Tribunal. In the meantime, search and seizure action took place at the residential premises of the partners of the assessee firms, without taking similar action at the business premises of the assessee firm. There is no dispute to the fact that the project of the assessee was approved on 28/05/2003 by the competent authority and the amendment of the built up area of the unit was brought on the statute book at a later stage, meaning thereby, the project was approved before the amendment inserted/substituted by the Finance (No.2) Act of 2004, w.e.f. 01/04/2005. Prior to substitution, sub- section (10) as amended by the Finance Act, 2000, w.e.f. 01/04/2001 and Finance Act, 2003 with retrospective effect from 01/04/2002 reads as under:-

“(10) the amount of profits in case of an undertaking developing and building housing projects approved before the 31st day of March, 2005 by a local authority, shall be hundred per cent of the profits derived in any previous year relevant to any assessment year from such housing project if, - (a) such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998;

44 M/s Salasar Developers ITA No.4511 TO 4513/Mum/2014

(b) the project is on the size of a plot of land which has a minimum area of one acre; and (c) the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the cities of Delhi or Mumbai or within twenty-five kilometers from the municipal limits of these cities and one thousand and five hundred square feet at any other place.” 3.1. Even otherwise, we are of the considered opinion that the assessee is expected to complete the project as per the approved plan at a particular point of time and the assessee is not expected to do or to fulfill the conditions which were not in existence at the relevant point of time or made compulsory after making some amendment in the Act on a later date. Since the project of the assessee was approved by the competent authority on 28/05/2003, accordingly completed within the specified time and made claim of deduction u/s 80IB(10) of the Act, therefore, the assessee is not expected to fulfill the conditions, which were inserted in the Act on a later date. The assessee was expected to construct/develop the project according to the approved plan. The assessee cannot dream that at a later stage, amendment will be brought into the Act and accordingly the assessee shall fulfill the conditions, which were even not in existence, when the plan was approved, therefore, on merits also, the assessee is having a good case in its favour. The assessee has already produced the documentary evidences in support of its claim before the Assessing Officer. The assessee had fulfill all the conditions as specified u/s 80IB(10) of the Act, thus, on merit also, we

45 M/s Salasar Developers ITA No.4511 TO 4513/Mum/2014

find no infirmity in the order of the Ld. Commissioner of Income Tax (Appeal).

Finally, all the appeals of the Revenue are dismissed.

This Order was pronounced in the open court 04/04/2017.

Sd/- Sd/- (N.K. Pradhan) (Joginder Singh) लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य / JUDICIAL MEMBER

मुंबई Mumbai; �दनांक Dated : 04/04/2017

f{x~{tÜ? P.S /�नजी स�चव

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. आयकर आयु�त(अपील) / The CIT, Mumbai. 4. आयकर आयु�त / CIT(A)- , Mumbai 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाईल / Guard file.

आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy//

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील�य अ�धकरण, मुंबई / ITAT, Mumbai,