AI Insights
The case involves appeals by the revenue against the annulment of assessment orders by the CIT(A) concerning Focus Buildwell Pvt. Ltd. The primary legal issue was whether the search warrant issued under section 132 of the Income Tax Act, 1961, was validly executed at the correct premises of the assessee. The CIT(A) found that the search was conducted at the premises of M/s Heritage Beverages Pvt. Ltd., not at the registered address of the assessee, which led to the annulment of the assessment orders. The revenue contended that the search was valid as the director of the assessee company was present and acknowledged the search at the incorrect address. The Tribunal agreed with the CIT(A) and dismissed the revenue's appeals, emphasizing that the search must be conducted at the correct premises of the assessee for the proceedings under section 153A to be valid.
Appeal Details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 710294 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
31-07-2025
Appeal Filed By
Department
Order Result
Dismissed
Assessment Year
2010-2011
Judgement Text
" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: F : NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER ITA Nos.2271, 2272 & 2273/Del/2018 AYs 2009-10, 2011-12 & 2010-11 ACIT, Central Circle-15, New Delhi. Vs. Focus Buildwell Pvt. Ltd., 201-H, Gautam Nagar, New Delhi – 110 049. PAN: AABCF2227J CO Nos.67, 68 & 69/Del/2022 (in ITA Nos.2271, 2272 & 2273/Del/2018) AYs 2009-10, 2011-12 & 2010-11 Focus Buildwell Pvt. Ltd., 201-H, Gautam Nagar, New Delhi – 110 049. PAN: AABCF2227J Vs. ACIT, Central Circle-15, New Delhi. (Appellant/Cross Objector) (Respondent) Assessee by : Shri V.K. Agarwal, AR & Shri Hritik Lamba, Advocate Department by : Ms Monika Singh, CIT-DR Date of Hearing : 24.07.2025 Date of Pronouncement : 31.07.2025 ORDER PER ANUBHAV SHARMA, JM: These are appeals preferred by the revenue against the orders dated 03.01.2018 of the Commissioner of Income-tax (Appeals)-XXVI, New Delhi Printed from counselvise.com ITA Nos.2271, 2272 & 2273/Del/2018 CO Nos.67, 68 & 69/Del/2022 2 (hereinafter referred to as the Ld. First Appellate Authority or ‘the ld. FAA’, for short) in appeal Nos. 10510/16-17, 10534/16-17 & 10511/16-17, respectively, arising out of the appeals before it against the orders dated 29.12.2016 passed u/s 153A/143(3) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) by the ACIT, Central Circle-15, New Delhi (hereinafter referred to as the Ld. AO). The assessee has filed Cross Objections for respective assessment years as above. 2. Revenue has raised identical grounds of appeal for all the assessment years read as under:- “1. On the facts & circumstances of the case the CIT(A) has erred in holding the assessment invalid on the basis of address in search warrant without considering that warrant was duly served upon Shri Pradeep Kumar, who is director of assessee company as acknowledged by him while signing search warrant, and also the Vice President (Corporate Affairs) of Heritage Beverages Pvt. Ltd. situated on address which was mentioned in search warrant. 2. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal.” 3. Heard and perused the records. Additions were made u/s 68 of the Act on account of unexplained funds received in form of share capital and share premium. Being aggrieved with the order of AO, the assessee filed appeal before the CIT(A) and where by impugned order ld. CIT(A) observed that the search warrant was issued in the name of the assessee company and was served at the address “Plot No.237-238, Udyog Vihar, Phase-1, Gurgaon which is the address of M/s Heritage Beverages (P) Limited”. The Actual address of the assessee Printed from counselvise.com ITA Nos.2271, 2272 & 2273/Del/2018 CO Nos.67, 68 & 69/Del/2022 3 company is “201-H, Gautam Nagar, New Delhi”. The CIT (A) further observed that the AO has not brought any connection of the assessee with the Udyog Vihar address. With these observations, the CIT (A) held that no search was conducted at the premises of the assessee company and as such the proceedings u/s 153A are ex-facie illegal, arbitrary and without jurisdiction and accordingly annulled the assessment order. 4. Ld. DR has contended that a bare reading of the section 132 of the Act and Rule 112(1) of the Income Tax Act highlights that if the warrant issuing authority has reason to suspect that any books of account, documents, money, bullion or other valuable article or things are kept, the authorized officer can enter any building, place, vessel, vehicle or air craft. Means it is not necessary that the premises where the search operation is carried out is the registered address of the assessee company or premises belongs to the assessee company. It is very clear that a warrant can be issued in the name of the any assessee to search any place where the documents pertaining to the assessee have been kept or are to be found as per the satisfaction of the warrant issuing authority. 5. It was submitted by ld. DR that in the instant case, the warrant has been issued in the name of the assessee company and the premises and plot no. 237 - 238 Udyog Vihar, Phase -1, Gurgaon is the place where the warrant issuing authority had believe and had reason to suspect that documents and evidences leading to evasion of tax pertaining to the assessee company have been kept or Printed from counselvise.com ITA Nos.2271, 2272 & 2273/Del/2018 CO Nos.67, 68 & 69/Del/2022 4 are to be found as per the satisfaction of the warrant issuing authority. The director of the company Sh. Pradeep Kumar has seen the warrant, signed the warrant and was present throughout the search procedure. He has also signed the panchnama where name of the assessee company M/s Focus Buildwell Pvt. Ltd. was duly mentioned, it is not required that incriminating documents related to the company must be found on the premises where search was conducted to prove that search was correctly took place. It is submitted that assessee never disputed that Sh. Pradeep Kumar was Director of the company at the time of search. Reliance is further placed on the following judgments of Hon’ble High Courts and Tribunal to contend that the issue is considered in favor of Revenue on similar issues as in this appeal:- i) Decision of Hon’ble High Court of Delhi in the case of MDLR Resorts (P.) Ltd., v. CIT 40 taxmann.com 365 [2013] ii) Decision of Hon’ble High Court of Karnataka in the case of PCIT v. Associated Mining Co. 108 taxmann.com 564 [2019] iii) Decision of Hon’ble High Court of Gujarat in the case of Zinzuwadia and Sons v. DCIT, Circle -2(3), Ahmedabad 108 taxmann.com 42 [2019] iv) ITAT E-Bench decision in the case of M/s MSG Finance India Pvt. Ltd. having ITA No. 2270/Del2018 for A.Y. 2011-12, company of the same group and having identical facts. 6. It was thus submitted that observation of the Ld. CIT(A) that “no search was conducted at the premises of the appellant” is factually incorrect and not Printed from counselvise.com ITA Nos.2271, 2272 & 2273/Del/2018 CO Nos.67, 68 & 69/Del/2022 5 acceptable. It goes against the fundamentals of issue of warrant of authorization u/s 132 of the Act. It is not necessary that warrant has to be issued only at the premises of registered office of the company or corporate office, factory or godown. A search warrant can be authorize to any other place where the issuing authority satisfies and reasons to suspect that the material / evidences pertaining to the assessee have been kept and are to be found. 7. Ld. DR relied the decision of the coordinate Bench of the Tribunal vide order dated 26.07.2022 in ITA No.2270/Del/2018 in the case ACIT vs. MSG Finance India Pvt. Ltd. to contend these assertions of another assessee have been dismissed by the co-ordinate bench and reliance is placed on paras 12 and 13, which are reproduced below:- “12. In the instant case, the warrant has been issued in the name of the assessee and the premises namely \"Plot No. 237- 238, Uydog Vihar, Phase- 1, Gurgaon\" is the place where the warrant issuing authority had belief and had reasons to suspect that the documents and evidences leading to evasion of tax pertaining to the assessee have been kept or are to be found as per the satisfaction of the warrant issuing authority. The Director of the company has seen the warrant, signed and was present throughout the search procedure which can be observed by going through the warrant of authorization. Hence, the warrant is said to be rightly issued and search on the assessee has been correctly took place. 13. The observations of the ld. CIT(A) that there was no warrant executed at the address mentioned in the ROC record or the other address of the assessee and hence \"no search was conducted\" goes against the fundamentals of issue of warrant of authorization u/s 132. It is not necessary that warrant has to be issued only at /on the premises of the registered office of the company or corporate office, factory or godown but a warrant can be authorized to any other place where the issuing authority satisfies and reasons to suspect that the material/evidences pertaining to the assessee have been kept and are to be found. The ld. CIT(A) ignored the provisions of Section 132(1), the proviso under clause (B), provisions of Printed from counselvise.com ITA Nos.2271, 2272 & 2273/Del/2018 CO Nos.67, 68 & 69/Del/2022 6 (1A) which clearly deal with the jurisdiction, the premises and the actions that can be taken by the revenue authorities.” 8. On the other hand, the ld. AR has heavily relied the order of the ld.CIT(A) and took the bench across the paper book of department to show as to how the factual findings of ld. CIT(A) need no interference. 9. Now, as we go through the relevant material in the paper book filed by the department, in the form of copy of warrant of authorization available at page 114 of the paper book, we find that this authorization u/s 132 of the Act r.w. Rule 112(1) of the 1962 Rules has been granted for search upon certain persons named including the assessee. We find that names of Mr. Virender Pal Kandhari, Virender Pal Kandhari, HUF, Neena Khandhari, M/s Enrich Agro Food products Pvt. Ltd., Versatile Polytech Pvt. Ltd. Juicy Beverages Pvt. Ltd., Heritage Beverages Pvt. Ltd., Focus Buildwell Pvt. Ltd., Universal Electronics & Communication Pvt. Ltd., MSG Finance India Pvt. Ltd., Indo Gulf Infrastructure Investment Pvt. Ltd. Sentinel Systems Pvt. Ltd. have been mentioned as the persons to be searched. The place of search is mentioned as Plot No.237-238, Udyog Vihar, Phase I, Gurugram. 9.1 Then what we find is that at page No.113 as part of this authorization, there is an endorsement signature dated 29.03.2015 of Shri Pradeep Kumar, who has signed as Director of Indo Gulf Infrastructure Pvt. Ltd. and MSG Finance India Pvt. Ltd., only. He was not required to sign on behalf of assessee. We also Printed from counselvise.com ITA Nos.2271, 2272 & 2273/Del/2018 CO Nos.67, 68 & 69/Del/2022 7 could not find any justification from ld. DR why only authorized officer asked or accepted the signatures of Shri Pradeep Kumar for two companies and not for assessee. 9.2 Then, at page No.112 of the paper book, there is a panchnama wherein the names of these parties are mentioned. This Panchnama mentions that Mr. Virender Pal Kandhari/Pradeep Kumar were present at the time of search and who after reading the authorization, had signed it. 9.3 Further, at pages 104-195, there is a statement of Shri Pramod Kumar recorded u/s 133(A) of the Act wherein he has made a statement as Vice President, Corporate Affairs of M/s Versatile Polytech Pvt. Ltd. Then, at pages 82 to 94, there is another statement of Shri Pradeep Kumar wherein he mentions that the statement is being recorded in the case of M/s Indo Gulf Infrastructure Investment Pvt. Ltd. and M/s MSG Finance India Pvt. Ltd., M/s Versatile Polytech Pvt. Ltd., M/s Heritage Beverages Pvt. Ltd. Then there is a statement of Virender Pal Kandhari available at pages 82 to 85 and of Pradeep Kumar Shastri from pages 86 to 89 in which their statements have been recorded as director of M/s Versatile Polytech Pvt. Ltd., Heritage Beverages Pvt. Ltd. and M/s Universal Electronics and Communications Pvt. Ltd. 9.4 The business premises to be searched belongs to M/s Heritage Beverages Pvt. Ltd. The assessee’s address happened to be 201-H, Gautam Nagar, New Delhi. Printed from counselvise.com ITA Nos.2271, 2272 & 2273/Del/2018 CO Nos.67, 68 & 69/Del/2022 8 9.5 Thus, what is sufficiently established is that Shri Pradeep Kumar has not at all acknowledged to be in any way connected with the assessee company and has not signed any proceedings of search on behalf of the assessee company. He has not been questioned at time of search or thereafter as representative of assessee company. There is no question or answer to him for connecting the search with assessee also. No material is shown to have been found in search and mentioned in panchnama connecting the assessee with this premises or the search. The Revenue is merely harping on Ministry of Corporate Affairs details wherein Pramod Kumar is also shown to be the director of the assessee company. However, to our mind merely by being director of a company a person cannot hold the company liable to any proceedings unless the company has resolved to allow representation by such director or otherwise in due course of any legal proceedings the such director is deemed to be a representative of the company. Here we have a case where not a word of any connection or association or representation of such director qua the assessee in search is made out. 10. Thus, the question now to be examined is if, for the purpose of section 132 of the Act, there has been initiation of proceedings and execution of search warrants vesting jurisdiction for search assessment u/s 153A of the Act, qua the assessee. Mumbai Tribunal in J.M. Trading Corporation in ITA Nos.1435 to 1438/Mum/2009 has held that “ The question for our determination is whether Printed from counselvise.com ITA Nos.2271, 2272 & 2273/Del/2018 CO Nos.67, 68 & 69/Del/2022 9 search was though initiated against the assessee was conducted on the assessee. The initiation of search and conduct of the search are two different aspects of search and seizure proceedings.” Thus what is significant for the issue of notice u/s 153A of the Act is the initiation of search and secondly, there is a marked distinction between `initiation' and `commencement' of search. In common parlance, 'Initiation' means the beginning of a process or, in other words, a first step in the entire process. Search commences with the issue of authorization by the competent authority. Thus, the 'initiation' of search commences with the issue of authorization by the DIT. 'Execution' of search warrant, which is a step after the initiation of search, takes place later on, which leads to the actual conduct of the search at the premises of the person searched. 10.1 In Promain Ltd. V. DCIT [2005] 95 ITD 489 (Del. Trib.)(SB) the law is settled as follows; \"...the Legislature has used two words 'initiated' and 'conducted' with reference to the search under section 132. The word 'initiated' is understood in legal sense as 'commenced' while the word 'conduct' is understood as 'carry on'. If these words are read together, it would mean commencement of search, the actual carrying on/execution of search and completion of search.” 10.2 The Mumbai Tribunal in J.M. Trading Corporation (supra) also concluded mere mentioning of name in the panchnama does not lead to the conclusion that a valid search was conducted against the assessee and held as follows:- “24. Section 132 of the Income-tax Act thus provides the acts and deed sto be carried out by the search team at the premises of the assessee. The Printed from counselvise.com ITA Nos.2271, 2272 & 2273/Del/2018 CO Nos.67, 68 & 69/Del/2022 10 conduct of search includes acts, deeds and things enumerated under section 132 of the Income-tax Act which an authorized officer is bound to carry out in order to complete the process of search. Search is an invasion of Privacy of the assessee and all proceedings connected with search need to be carried out within the framework of the provisions of the Act. In case of non-compliance to the provisions of the Act by the Authorised Officer, such searches are invalid and illegal. In the present case before us, no search was conducted against the assessee as the premises occupied by the assessee were not entered upon and searched by the Authorised Officer. Mere search of the premises owned by the assessee but rented to another concern does not by any implication prove the conduct of search against the assessee in view of the fact that the assessee was not available at the address searched upon. Mere mentioning of name in the panchnama does not lead to the conclusion that a valid search was conducted against the assessee. In the totality of circumstances, where no search has been conducted against the assessee there is no merit in the issue of notice under section 153A of the Income-tax Act under which the jurisdictional area of operation is six assessment years immediately preceding the assessment year relevant to the previous year, in which search was conducted. In case, no search is conducted against a person, the period of operation to which the provisions of section 153A would apply, cannot be determined and the invoking of provisions of section 153A of the Act is baseless. Though the provisions of section 158BC of the Act are not applicable to searches conducted after 31-5-2003, but the provisions of section 132 of the Income-tax Act are continuing on the statute implying thereby that the provisions of section 153A of the Act are only applicable in case valid search is conducted against the assessee under section 132 of the Act. Accordingly, we declare the assessments made against the assessee under the provisions of section 143(3) read with section 153A of the Income-tax Act are null and void and direct the Assessing Officer to cancel the same. Thus, the issue related to the validity of search raised by the assessee is allowed.” 10.3 This was confirmed by the Hon'ble High Court of Bombay in Tax Case Appeal No.589 of 2009 dated 29.06.2009 observing as under:- \"Heard learned Counsel for the parties. The question sought to be raised in this appeal is relating to the conduct of the search. The assessment made against the assessee under the provisions of section 143(3) read with section 153A of the Income Tax Act. The Tribunal has categorically recorded a finding of fact of initiation of the search Printed from counselvise.com ITA Nos.2271, 2272 & 2273/Del/2018 CO Nos.67, 68 & 69/Del/2022 11 that non compliance to the provisions of the Act by the Authorised 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 Authorised Officer. Considering the factual aspect which is based on the appreciation of evidence and no substantial question of law is involved in the present appeal. In this view of the matter, appeal stands dismissed in limini for want of substantial question of law with no order as to costs.\" The SLP in CIT v J.M. Trading Corporation [2010] CC No. 19194/2010 (SC) stands dismissed. 10.4 Mumbai Tribunal in J.M. Trading Corporation (supra), has been extensively relied by Bangalore bench in ITA Nos.182, 183/Bang/2023 DCIT, Central Circle-1, Mangaluru Verusus M/s. Blueline Foods (India) Pvt. Ltd., decision dated 07.08.2024, where for failure to establish the due initiation and conduct of search the assumption of jurisdiction u/s 153A of the Act was annulled. 11. We find that in the case before us the ld.CIT(A) has carefully taken into consideration these aspects and the relevant findings in para 5.3 are reproduced below:- “5.3 Grounds no. 2, 3 & 4 pertain to the issue that no search u/s 132 was undertaken in this case, I have perused the search warrant sent by the AO vide letter dt. 01/12/2017 which though contained the name of the assessee yet it was served at the address “Plot No, 237-238, Udyog Vihar, Phase-I, Gurgoan”. This is the address of factory premises of M/s Heritage Beverages Pvt Ltd. It is a fact that the address of the assessee was “201H, Gautam Nagar, New Delhi”. The same is verifiable form the assessment order itself wherein the address of the appellant is mentioned at “201H, Gautam Nagar, New Delhi. Further, the Ld. AR has filed a copy of income tax return and annual return filed before ROC just prior to the date of search, i.e., AY 2014-15 and just after the date of search, i.e., AY 2015-16 whmich clearly evidences that at the time of search the address of the Printed from counselvise.com ITA Nos.2271, 2272 & 2273/Del/2018 CO Nos.67, 68 & 69/Del/2022 12 appellant was “201H, Gautam Nagar, New Delhi” and not “Plot No, 237- 238, Udyog Vihar, Phase-I, Gurgoan”. Even the AO though fully in the knowledge of correct address being of Gautam Nagar yet did not bring out any connection of the assessee with the Udhyog Vihar address. In view of these facts, it is conclusively proved that no search was conducted at the premises of the appellant. Therefore, the proceedings u/s 153A are ex-facie illegal, arbitrary and without jurisdiction and hence the assessment order is hereby annulled.” 12. The reliance of ld. DR in the case of MSG Finance Pvt. Ltd.(supra) is distinguishable as in that case, in para 12, the coordinate Bench has specifically made a factual conclusion that Shri Pradeep Kumar as director of that assessee M/s MSG Finance India Pvt. Ltd., had seen the warrant, signed and was present throughout the search procedure. Certainly, warrant may not be issued only at the address of a company, but, when it comes to the question of examining whether a search has been initiated and concluded in consequence to warrant of authorization, then, in case of a company, which has a distinct legal identity, than its shareholders or directors, it should be established that initiation of search and execution of warrant of authorization was upon the company at its registered office or at any other place where the assessee company was represented by authorized person or a director. That is not the case here as was in the case of MSG Finance India Pvt. Ltd. 13. Coming to decisions relied by revenue of PCIT v. Associated Mining Co. (supra), search warrant was in the name of firm and documents were seized and subsequent change of address of firm was made basis of challenge of search, which is not the case here. The MDLR Case (supra), involved a challenge to an Printed from counselvise.com ITA Nos.2271, 2272 & 2273/Del/2018 CO Nos.67, 68 & 69/Del/2022 13 assessment order passed under section 153A of the Income Tax Act following a search and seizure operation. The Hon’ble Delhi High Court addressed the issue of whether procedural defects in the content of panchanama, specifically the omission of the assessee's name, invalidated the assessment. However here we are confronted with question of initiation and conduct of search, as per law. The Zinzuwadia and Sons case (supra) has held that address at which search could be conducted would be place or location, where books of accounts, documents, jewellery, unaccounted assets could be located and it need not be registered office of person concerned. Firstly that was a case of partnership and however, still conduct of the search on the company should be reflected by some overt act of authorized officer. Mere mention of name on warrants is not sufficient. 14. Thus we are inclined to conclude that though the warrant of authorisation was prepared in the name of the assessee, yet there was no commencement or initiation of search in pursuance of the said warrant. When there is no commencement of search at all, the question of invoking the provisions of sec. 153A shall not arise. 15. Coming to ld. DR’s attempt to defend the case relying section 292B of the Act, we are of considered view that same protects only procedural errors of omission or commission, but does not contemplate extrapolation of section 153A of the Act, so as to bring within its ambit non-search cases. It was further held that the said section cannot be used as a tool to bypass the conditions precedent Printed from counselvise.com ITA Nos.2271, 2272 & 2273/Del/2018 CO Nos.67, 68 & 69/Del/2022 14 to the operation of section 153 of the Act; viz., the execution of a warrant of authorization issued under section 132 of the Act, by initiation of a search and drawing up a panchnama in the case of the person in whose name warrant might have been issued. Reliance in this regard is placed on the judgments in the case of PCIT Vs. Maruti Suzuki India Ltd (2019) 107 taxmann.com 375 (SC); Mrs. Vanitha Gopal Shetty Vs. ACIT (2021) 129 taxmann.com 163 (Karnataka); and PCIT Vs. Cherian Abraham (2022) 444 ITR 420 (Karnataka). In the context of section 292BB of the Act, it was held that the said section only deals with the limited aspect of service of a notice. It was thus held that the section 292BB of the Act, does not confer the AO with any kind of jurisdiction where it legally does not exist. 16. Thus, the findings of the ld.CIT(A) require no interference. The grounds raised have no substance. The appeals of the Revenue are dismissed. As a consequence, the Cross Objections of the assessee challenging the impugned order of the ld.CIT(A) for not deciding certain grounds become infructuous and the same are accordingly dismissed. Order pronounced in the open court on 31.07.2025. Sd/- Sd/- (AMITABH SHUKLA) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 31st July, 2025. dk Printed from counselvise.com ITA Nos.2271, 2272 & 2273/Del/2018 CO Nos.67, 68 & 69/Del/2022 15 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi Printed from counselvise.com "
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