BALAJI UNIVERSAL TRADELINK P.LTD,MUMBAI vs. DCIT CEN CIR 40, MUMBAI

आदेश / O R D E R Per Joginder Singh (Judicial Member) 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.

ITA Nos.2183 to 2186/Mum/2013 & 3 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. therefore, the outcome of this appeal will be applicable to the impugned appeals.

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

ITA Nos.2183 to 2186/Mum/2013 & 4 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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 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

ITA Nos.2183 to 2186/Mum/2013 & 5 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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

ITA Nos.2183 to 2186/Mum/2013 & 6 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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 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:-

ITA Nos.2183 to 2186/Mum/2013 & 7 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd.

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 .

ITA Nos.2183 to 2186/Mum/2013 & 8 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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

ITA Nos.2183 to 2186/Mum/2013 & 9 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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— (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

ITA Nos.2183 to 2186/Mum/2013 & 10 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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 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

ITA Nos.2183 to 2186/Mum/2013 & 11 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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

ITA Nos.2183 to 2186/Mum/2013 & 12 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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 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

ITA Nos.2183 to 2186/Mum/2013 & 13 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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 Nos.2183 to 2186/Mum/2013 & 14 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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 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

ITA Nos.2183 to 2186/Mum/2013 & 15 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. (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 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

ITA Nos.2183 to 2186/Mum/2013 & 16 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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. [(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

ITA Nos.2183 to 2186/Mum/2013 & 17 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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 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

ITA Nos.2183 to 2186/Mum/2013 & 18 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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 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

ITA Nos.2183 to 2186/Mum/2013 & 19 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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 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,

ITA Nos.2183 to 2186/Mum/2013 & 20 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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. (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)

ITA Nos.2183 to 2186/Mum/2013 & 21 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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 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

ITA Nos.2183 to 2186/Mum/2013 & 22 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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

ITA Nos.2183 to 2186/Mum/2013 & 23 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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 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

ITA Nos.2183 to 2186/Mum/2013 & 24 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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.

ITA Nos.2183 to 2186/Mum/2013 & 25 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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, 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

ITA Nos.2183 to 2186/Mum/2013 & 26 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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-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.

ITA Nos.2183 to 2186/Mum/2013 & 27 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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.

ITA Nos.2183 to 2186/Mum/2013 & 28 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. “…. 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….”

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

ITA Nos.2183 to 2186/Mum/2013 & 29 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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. ***

***

ITA Nos.2183 to 2186/Mum/2013 & 30 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. proviso to section 132(1). Such restraint is deemed to be a seizure as per the said proviso. Hence, in such a case, the preparation of inventory and panchnama would be relevant and any action of the authorized officer lifting the restraint order would, in our opinion, be irrelevant. The reason is that whatever the search partly was required in law to do had been done and nothing more was required. The restraint order is passed not because anything was to be done but because it was not practicable to take physical possession and remove the material to a safe place at the relevant time. As held by the Hon’ble Bombay High Court in the case of CIT v. Mrs. Sandhya P. Naik [2002] 253 ITR 534, the authorized officer cannot keep the search proceedings in operation by passing a restraint order under section 132(3) so as to circumvent the provisions of section 132(3), read with section 132(5). However, the situation would be different where a prohibitory order under section 132(3) is issued because such order, unlike- a restraint order, does not amount to seizure as per sub-section (3) of section 132. Such orders are issued where it is not practicable to seize. So an act of seizure remain to be performed and, therefore, search cannot be said to be concluded. Hence, in such case, search would be concluded when the prohibitory order is lifted and the books of account/valuable articles are actually seized and the panchnama is prepared. In such case, it is this panchnama (if it is the last one) which is relevant for 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

ITA Nos.2183 to 2186/Mum/2013 & 31 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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 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

ITA Nos.2183 to 2186/Mum/2013 & 32 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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 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

ITA Nos.2183 to 2186/Mum/2013 & 33 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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

ITA Nos.2183 to 2186/Mum/2013 & 34 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. 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.

ITA Nos.2183 to 2186/Mum/2013 & 35 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. assessee company by Revenue on 31-10-2009 which was held by us to be vitiated. There was no incriminating material found during the course of search for the impugned assessment year. The assessee company had filed return of income on 20-10-2004 u/s 139(1) of the Act. The time limit for service of notice u/s 143(2) of the Act for the said relevant period was till the expiry of twelve months from the end of the month in which the return is furnished i.e. up-to 31-10- 2005. The search was initiated on 31-10-2009 and hence the period with in which Revenue could have issued notice u/s 143(2) of the Act to frame assessment under Section 143(3) of the Act has already expired and hence the assessment for the impugned assessment year is a concluded assessment as stipulated u/s 153A of the Act on the date of search on 31- 10-2009. Thus, as per mandate of Section 153A of the Act the concluded assessment can be re-opened for framing assessment u/s 153A of the Act provided there is an incriminating material found during the course of search. Since, in the instant case no incriminating material was during the course of search against the assessee company for the impugned assessment year, no additions can be sustained. Our view is fortified by the decision of Hon'ble jurisdiction High Court of Bombay in the case of CIT v. Continental Warehousing Corporation (Nhava Sheva) Limited (2015) 58 taxmann.com 78 (Bom.) and decision of Hon'ble’ Delhi High Court in the case of CIT v. Kabul Chawla (2015) 61 taxmann.com 412(Delhi) whereby the Hon'ble High Court has duly considered the ratio of the decision laid down by

ITA Nos.2183 to 2186/Mum/2013 & 36 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. Hon'ble Bombay High Court in the case of Continental Warehousing Corporation(Nhava Sheva) Limited(supra) whereby summary of legal position was stipulated as under:

“Summary of the legal position

i. Once a search takes place under Section 132 of the Act, notice under 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.

ITA Nos.2183 to 2186/Mum/2013 & 37 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd.

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

3.1 In the light of the foregoing discussion , so far as merits of the additions is concerned , we are of the view that that the addition made on account of sundry creditors cannot be sustained as the assessment for the impugned assessment year is a concluded assessment as on the date of search and no incriminating material has been found during the course of search. So far as interest u/s 234B of the Act is concerned , it is consequential in nature.

Since, we have decided the proceedings as null and void, on the jurisdictional issue itself, as well on merits the assessee deserves to succeed.

ITA Nos.2183 to 2186/Mum/2013 & 38 ITA Nos. 2906 to 2908/Mum/2013 M/s Balaji Universal Tradelinks Pvt. Ltd. Finally, all the appeals are disposed of in terms of foregoing discussion, consequently the appeals of the assessee are allowed and that of the Revenue are dismissed.

This order was pronounced in the open court on 31/10/2016.

Sd/- Sd/- (Sanjay Arora) (Joginder Singh) लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य /JUDICIAL MEMBER मुंबई Mumbai; �दनांक Dated : 31/10/2016

f{x~{tÜ? P.S/.�न.स.

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to :

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

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