M/s Coffee House, Pune V. ACIT, Pune

ITA 1305/PUN/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2935 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-11-2015
• Assessment Year: misc
• Appeal Filed On: 20-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAVE
• Assessee Lawyers: NILESH KHANDELWAL
• Keywords: Search and seizure; Block assessment
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 1304/PN/2013 %' ( ')( / ASSESSMENT YEAR : 1997-98 TO 2003-04 M/S. GHARANA RESTAURANT, MZSK & ASSOCIATES, CHARTERED ACCOUNTANTS, LEVEL 3, BUSINESS BAY, PLOT NO. 84, WELLESLEY ROAD, NEAR RTO, PUNE 411001 PAN : AABFG0523F ....... / APPELLANT ' / V/S. ACIT, CENTRAL CIRCLE-2(3), PUNE / RESPONDENT / ITA NO. 1305/PN/2013 %' ( ')( / ASSESSMENT YEAR : 1997-98 TO 2003-04 M/S. COFFEE HOUSE, MZSK & ASSOCIATES, CHARTERED ACCOUNTANTS, LEVEL 3, BUSINESS BAY, PLOT NO. 84, WELLESLEY ROAD, NEAR RTO, PUNE 411001 PAN : AADFC1603Q ....... / APPELLANT ' / V/S. ACIT, CENTRAL CIRCLE-2(3), PUNE / RESPONDENT ASSESSEE BY : SHRI NILESH KHANDELWAL REVENUE BY : SHRI HITENDRA NINAVE / DATE OF HEARING : 11-01-2016 / DATE OF PRONOUNCEMENT : 13-01-2016 2 ITA NOS. 1304 & 1305/PN/2013, A.Y. 1997-98 TO 2003-04 * / ORDER PER VIKAS AWASTHY, JM : THESE TWO APPEALS HAVE BEEN FILED BY THE ASSESSEES AGAIN ST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-CENTRAL, PUNE DATED 30-04-2013 PASSED U/S. 158BC(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR THE ASSESSMEN T YEARS 1997-98 TO 2003-04 IN THEIR RESPECTIVE CASES. 2. THE FACTS OF THE CASE AS EMANATING FROM THE RECORDS ARE: M/S. GHARANA RESTAURANT IS A PARTNERSHIP FIRM REGISTERED UNDE R INDIAN PARTNERSHIP ACT WITH THE FOLLOWING TWO PARTNERS: I. SHRI SITHARAM S. SHETTY. II. MISS. POOJA SITHARAM SHETTY. M/S. COFFEE HOUSE IS ALSO A PARTNERSHIP FIRM REGISTERED UND ER INDIAN PARTNERSHIP ACT AND IS HAVING FOLLOWING TWO PARTNERS: I. SHRI SITHARAM S. SHETTY. II. SHRI SHARAN SITHARAM SHETTY. THE PREMISES FROM WHERE M/S. COFFEE HOUSE IS RUNNING ITS BUSINESS IS OWNED BY MRS. PREMA SITHARAM SHETTY. M/S. CO FFEE HOUSE HAS TAKEN THE SAID PREMISES ON LEASE/RENT. M/S. GHARAN A RESTAURANT HAS TAKEN THE PREMISES ON SUB-LEASE/RENT FROM M/S. COFFEE HOUSE. A SEARCH AND SEIZURE ACTION U/S. 132 OF THE ACT WAS CARRIE D OUT ON 27-06- 2002 IN THE CASE OF THE PARTNERS OF THE ASSESSEES. THE ASSESSMENT IN THE CASE OF BOTH THE ASSESSEES WERE ALSO COMPLETED U/S . 158BC OF THE ACT. 3 ITA NOS. 1304 & 1305/PN/2013, A.Y. 1997-98 TO 2003-04 AGGRIEVED BY THE ASSESSMENT ORDERS, THE ASSESSEES FILED APPEALS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) IN THEIR RE SPECTIVE CASES. ONE OF THE GROUNDS RAISED BY THE ASSESSEES BEFO RE THE FIRST APPELLATE AUTHORITY WAS, THAT THE ASSESSMENT PROCEEDINGS INITIATED UNDER CHAPTER XIV-B OF THE ACT WERE WITHOUT JURISDICTION AS THERE WAS NO WARRANT OF SEARCH IN THE CASE OF THE ASSESSEES. THE COMMISSION ER OF INCOME TAX (APPEALS) REJECTED THE CONTENTIONS OF THE AS SESSEES ON THE GROUND THAT MERELY BECAUSE SECTION 158BC IS MENTIONED IN THE ASSESSMENT ORDERS THE ORDER WILL NOT BECOME VOID AB INIT IO. THE ASSESSMENT ORDER IS VALID IN TERMS OF SECTION 158BD OF THE ACT. THE ASSESSEES FALL WITHIN THE PURVIEW OF TERM OTHER PERSON A S CONTEMPLATED UNDER THE PROVISIONS OF SECTION 158BD OF THE ACT. AGGRIE VED BY THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSE ES ARE IN APPEAL BEFORE THE TRIBUNAL. 3. SHRI NILESH KHANDELWAL APPEARING ON BEHALF OF THE ASSESS EE SUBMITTED THAT THE ASSESSEES HAVE BEEN REQUESTING THE DEPARTMENT TIME AND AGAIN TO PRODUCE THE WARRANTS OF SEARCH ISSUED U/S. 132 OF THE ACT. HOWEVER, TILL DATE THE DEPARTMENT HAS NOT SUP PLIED A COPY OF THE WARRANT TO THE ASSESSEES. THE ASSESSEES HAVE PO INTED OUT BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) THAT WARRANT TO AUTHORIZATION WERE ISSUED IN THE NAME OF : I. SADANAND SHETTY. II. SITHARAM SHETTY. III. GANESH SHETTY. IV. KISHOR SHETTY. V. RAJEEV KULKARNI. VI. BALJEET SETHI. 4 ITA NOS. 1304 & 1305/PN/2013, A.Y. 1997-98 TO 2003-04 THERE WERE NO WARRANT OF AUTHORIZATION IN THE CASE OF M/ S. COFFEE HOUSE AND M/S. GHARANA RESTAURANT. THEREFORE, NO VALID S EARCH COULD HAVE BEEN MADE IN THE CASE OF THE PRESENT ASSESSEES. 3.1 IN SO FAR AS THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) WITH REGARD TO ASSESSMENT U/S. 158BD IS CONCERN ED, MENTIONING OF SECTION IS NOT A MERE FORMALITY. THE ASSESSIN G OFFICER HAS MADE ASSESSMENT IN THE CASE OF ASSESSEES U/S. 158B C AND NOT U/S. 158BD OF THE ACT. THE NOTICE WAS ISSUED TO THE ASS ESSEES U/S. 158BC AND THERE IS NO REFERENCE IN THE ENTIRE ASSESSMEN T ORDER REFERRING THE ASSESSEES AS THE OTHER PERSON AS CONT EMPLATED U/S. 158BD. FURTHER, NO SATISFACTION HAS BEEN RECORDED BY TH E ASSESSING OFFICER FOR INITIATING PROCEEDINGS U/S. 158BD OF THE ACT. THE LD. AR SUBMITTED THAT SEVERAL OPPORTUNITIES WERE GIVEN BY THE T RIBUNAL TO THE DEPARTMENT TO PRODUCE WARRANTS OF SEARCH AGAINST THE ASSESSEES. HOWEVER, TILL DATE THE DEPARTMENT HAS NOT BEEN ABLE TO P LACE ON RECORD WARRANTS OF SEARCH IN THE CASE OF THE ASSESSEES. THE ONLY DOCUMENT ON WHICH THE DEPARTMENT IS HARPING IS PANCHANAMA. THE SEAR CH MADE AT THE PREMISES OF THE ASSESSEES WITHOUT WARRANT IS INVALID A ND THE PROCEEDINGS ARISING THERE FROM ARE VOID AB INITIO. IN SUPP ORT OF HIS SUBMISSIONS, THE LD. AR PLACED ON THE FOLLOWING DECISIONS: I. THE COMMISSIONER OF INCOME TAX VS. M/S. D.K. PALKAR BROTHER S, ITA NO. 4889 OF 2010, DECIDED ON 24-09-2012; II. NARENDRA KUMAR JAIN VS. DY. COMMISSIONER OF INCOME TAX, 74 TTJ (LUCLNOW) 848; III. RAKESH KUMAR JAIN VS. ASSISTANT COMMISSIONER OF INCOME TA X, 89 TTJ (DEL) 203; AND IV. JOINT COMMISSIONER OF INCOME TAX VS. LATIKA V. WAMAN, 1 SO T 535 (MUMBAI). 5 ITA NOS. 1304 & 1305/PN/2013, A.Y. 1997-98 TO 2003-04 4. ON THE OTHER HAND SHRI HITENDRA NINAVE REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF THE ASS ESSING OFFICER. HOWEVER, WHEN ASKED TO PRODUCE COPY OF SEARCH WARRAN TS AGAINST THE ASSESSEES, THE LD. DR SUBMITTED THAT SEVERAL LETTERS WERE WRITTEN TO THE CONCERNED OFFICER FOR FURNISHING COPY OF THE SEARCH WARRAN TS. THE OFFICER CONCERNED HAS INFORMED THAT THE FOLDER CONTAINING WA RRANTS IN THE CASE OF ASSESSEES IS NOT TRACEABLE. THE LD. DR PLACED ON RECORD A COPY OF THE LETTER RECEIVED FROM THE ADDL. DIRECTOR OF INCO ME TAX (INV.), UNIT-I, PUNE. THE LD. DR SUBMITTED THAT A PERUSAL OF THE P ANCHANAMA SHOWS THAT THE WARRANTS WERE ISSUED IN THE CASE OF SHR I SITHARAM SHETTY. THE PLACE TO BE SEARCHED IN THE WARRANTS IS ME NTIONED AS BUSINESS PREMISES OF M/S. COFFEE HOUSE. HOWEVER, THERE ARE NO SPEC IFIC WARRANTS OF SEARCH IN THE NAME OF THE ASSESSEES. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO PERUSED THE DOCUMENTS PLACED ON RECORD BY T HE DEPARTMENT AND THE DECISIONS ON WHICH THE LD. AR HAS PLACED RELIANCE . THE ISSUANCE OF SEARCH WARRANT U/S. 132 IS THE STARTING POINT FOR INITIATING SEARCH. IN THE ABSENCE OF VALID SEARCH WARRANTS ANY SE ARCH CONDUCTED AND THE PROCEEDINGS ARISING THERE FROM ARE VOID AB INITIO. IT IS ALSO A SETTLED PRINCIPLE OF LAW THAT THE SEARCH WARRANTS HAVE TO BE NAME SPECIFIC AND NOT PREMISES SPECIFIC. THE TRIBUNAL HAS GIVEN S EVERAL OPPORTUNITIES TO THE DEPARTMENT FOR PLACING ON RECORD TH E WARRANTS OF SEARCH IN THE CASE OF THE ASSESSEES. THE LD. DR HAS PLAC ED ON RECORD A COPY OF THE LETTER DATED 23-09-2015 FROM THE OFFICE OF DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(3), PUNE AND LETTER DATED 04 -12-2015 FROM THE OFFICE OF ADDL. DIRECTOR OF INCOME TAX (INV.), UNIT-I, P UNE. THE 6 ITA NOS. 1304 & 1305/PN/2013, A.Y. 1997-98 TO 2003-04 RELEVANT CONTENTS OF BOTH THE LETTERS ARE REPRODUCED HERE-IN-UNDER FOR READY REFERENCE: TO, DATE : 23/09/2015 THE JT. COMMISSIONER OF INCOME TAX, ITAT-IV, PUNE. (THROUGH PROPER CHANNEL) SIR, SUB.: ITA NO.L309/PN/13 IN THE CASE OF M/S COFFEE HOUSE AND ITAT NO. 1304/PN/13 IN THE CASE OF M/S GHARANA REST AURANT - FOR A.Y. 1997-98 TO 2003-04 - REG. REF.: YOUR OFFICE LETTER NO.PN/CIT/ITAT/CH/2015- 16/349 DATED 11/09/2015 ******************** KINDLY REFER TO THE ABOVE. 02. IN THIS REGARD, THE RECORDS OF THIS OFFICE HAVE BEEN THOROUGHLY SEARCHED AND THE FOLLOWING ARE THE FINDI NGS: A) THE WARRANTS OR ANY OF THE COPIES IN RESPECT OF M/S COFFEE HOUSE AND M/S GHARANA RESTAURANT WERE NOT FOUND. TH E ORIGINAL WARRANTS ARE CUSTOMARILY RETAINED AT THE OFFICE OF CONDUCTING DDIT(INV.) B) THE PANCHANAMA FOLDERS HANDED OVER TO THIS OFFIC E INDICATE SEARCH ACTION AT THE BUSINESS PREMISES OF COFFEE HO USE, 2 MOLEDINA ROAD, CAMP, PUNE ON THE BASIS OF THE WARRA NT IN THE CASE OF SHRI. SITARAM SHETTY. THE PARTY WHICH CONDU CTED SEARCH ACTION AT THE PREMISES WAS DESIGNATED AS PARTY NO. A-53. THE SEARCH ACTIONS WERE CONDUCTED AT THE SAME PREMISES ON 28.06.2002, 29.06.2002, 03.07.2002, 25.08.2002. C) THERE IS ANOTHER 'PARTY A-25' THE NAME OF WHICH IS ALSO MARKED ALONGWITH PARTY NO. A-53 ON THE COMMON FOLDER. THIS MAY BE OF GHARANA RESTAURANT, THOUGH NO SPECIFIC MENTION IS F OUND ANYWHERE LINKING THE PARTY NO. A-25 TO GHARANA REST AURANT. THE BOOKS OF ACCOUNTS FOUND AT 2 MOLEDINA ROAD, CAMP, P UNE COMPRISE THE BOOKS OF A/C OF BOTH COFFEE HOUSE AND GHARANA RESTAURANT BESIDES, OTHER BOOK OF ACCOUNTS. 03. A COPY OF THE PANCHANAMA DATED 28/06/20 02 IS ENCLOSED AS A SPECIMEN FOR YOUR PERUSAL AND ACTION. ENCL.: AS ABOVE YOURS FAITHFULLY, SD/- (A.K. MAHALA) DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2(3), PUNE. 7 ITA NOS. 1304 & 1305/PN/2013, A.Y. 1997-98 TO 2003-04 TO DATE : 24/09/2015 THE JOINT CIT, ITAT-IV, PUNE. SUB : ITA NO.1309/PN/13 IN THE CASE OF M/S. COFFEE HOUSE AND ITA NO.1304/PN/13 IN THE CASE OF M/S. GHARANA RESTA URANT FOR A.Y.1997-98 TO 2003-04 - REG. FEF : YOUR OFFICE LETTER NO.PN/CIT/ITAT/CH/2015-16/ 495 DATED 27.11.2015. PLEASE REFER TO THE ABOVE. THIS OFFICE HAS MADE ALL OUT EFFORTS TO TRACE THE R ELEVANT DOCUMENTS AS REQUIRED BY THE ITAT BENCH. THOUGH THE FOLDER CO NTAINING WARRANTS COULD NOT BE TRACED, THE SEARCH FOLDER CONTAINING T HE PANCHNAMA, STATEMENT OF THE ASSESSEE, ANNEXURES RELATED TO DOC UMENTS FOUND/SEIZED AND CASH/JEWELLERY FOUND/SEIZED ETC. HAS BEEN TRACE D. IT WOULD BE IMPORTANT TO MENTION HERE THAT DOCUMENTS SUPPORTING ACTION U/S.132 IN THE ABOVE MENTIONED CASES ARE AVAILABLE IN THE FORM OF PANCHNAMA AND APPRAISAL REPORT IN WHICH THERE IS A CLEAR CUT MENT ION THAT THE CASES OF M/S. GHARANA RESTAURANT AND M/S. COFFEE HOUSE WERE COVERED U/S.132 OF THE I.T. ACT. FOR THE SAKE OF CONVENIENCE, A COP Y OF DOCUMENTS PROVING THAT THERE WAS A SEARCH ACTION CONDUCTED IN BOTH TH E CASES IS ENCLOSED HEREWITH. ORIGINAL COPIES MAY BE PROVIDED AS AND WH EN REQUIRED. SD/- (EKTA VISHNOI) ADDL. DIRECTOR OF INCOME TAX (INV) UNIT-1,PUNE 6. A PERUSAL OF THE ABOVE LETTERS WOULD SHOW THAT WARRA NTS OF SEARCH ARE NOT AVAILABLE WITH THE DEPARTMENT IN CASE OF BOTH T HE ASSESSEES. THE DEPARTMENT IS REFERRING TO THE COPY OF PANCHANAMA IN DICATING SEARCH ACTION IN THE BUSINESS PREMISES OF M/S. COFFEE HOUSE AND M/S. GHARANA RESTAURANT. SEARCH PROCEEDINGS CANNOT BE INIT IATED IN THE BUSINESS PREMISES OF THE PARTNERSHIP FIRM IN THE GUISE OF SE ARCH 8 ITA NOS. 1304 & 1305/PN/2013, A.Y. 1997-98 TO 2003-04 WARRANTS ISSUED IN THE NAME OF THE PARTNERS. IF AT ALL AN Y INCRIMINATING DOCUMENT IS FOUND AT THE PREMISES OF THE PARTNERS AND T HE DEPARTMENT INTENDS TO SEARCH THE PREMISES OF THE PARTNERSHIP FIRM, A SEPARATE WARRANT OF SEARCH U/S. 132 IS REQUIRED TO BE ISSUED OR T HE ASSESSING OFFICER HAS TO RECORD SATISFACTION IF ASSESSMENT IS TO BE MA DE U/S. 158BD OF THE ACT. IN THE PRESENT CASE NONE OF THE CON DITIONS HAVE BEEN COMPLIED WITH BY THE DEPARTMENT. A PERUSAL OF THE PANCHA NAMA IN THE CASE OF SHRI SITHARAM SHETTY SHOWS THAT PLACE TO BE SEA RCHED IS THE BUSINESS PREMISES AT M/S. COFFEE HOUSE HOWEVER THERE IS N O WARRANT OF SEARCH IN THE CASE OF M/S. COFFEE HOUSE AND/OR M/S. GHARA NA RESTAURANT. 7. IN OUR CONSIDERED VIEW THE SEARCH CARRIED OUT AT TH E PREMISES OF THE ASSESSEES IN THE ABSENCE OF VALID WARRANTS OF SEARCH IS WITHOUT JURISDICTION AND THE PROCEEDINGS ARISING FROM SUCH UNAUTHO RIZED SEARCH ARE VITIATED. THE DECISION OF HYDERABAD BENCH OF THE TRIBU NAL IN THE CASE OF M/S. MARUTI CONSTRUCTIONS VS. THE ASST. CIT, I.T. (SS) A. NO. 72/HYD/2004 FOR BLOCK PERIOD 1991-92 TO 2000-01 DECIDED ON 22-06- 2011 ALSO SUPPORTS THE VIEW TAKEN BY US. THE TRIBUNAL QUASHED THE ASSESSMENT ORDER IN THE ABSENCE OF WARRANTS OF SEARCH IN THE NAME OF ASSESSEE. THE TRIBUNAL WHILE HOLD SO, DRAWS STRENGTH FROM THE DECISION RENDERED IN THE CASE OF M/S. LAXMISAI ENTERPRISES IN IT (SS) A. NO. 67/HYD/2004 DECIDED ON 31-03-2011. THE RELEVANT EXTRACT OF T HE ORDER OF HYDERABAD BENCH OF TRIBUNAL READS AS UNDER: 7. WE HAVE HEARD BOTH THE PARTIES AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. SIMILAR ISSUE WAS CONSIDERED B Y THIS TRIBUNAL IN THE CASE OF LAKSHMISRI ENTERPRISES & OTHERS IN IT(SS)A NO. 67/HYD/2004 & OTHERS, ORDER DATED 31ST MARCH, 2011 WHEREIN THE TR IBUNAL HELD AS FOLLOWS: 9 ITA NOS. 1304 & 1305/PN/2013, A.Y. 1997-98 TO 2003-04 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE HAVE CAREFULLY GONE THROUGH THE SEARC H WARRANT (FORM NO. 45) DATED 6.9.2000 ISSUED U/S 132 READ WITH RULE 11 2 OF THE IT RULES, 1962. IN THE CASE OF M/S LAXMI SREE ENTERPRISES, TH E SEARCH WAS TAKEN PLACE CONSEQUENT TO SEARCH WARRANT DATED 6.9.2000 I SSUED IN THE NAME OF SHRI K. MADHAVA REDDY AND SHRI M.K. SANJEEVA RED DY AND THE PLACE TO BE SEARCHED IS M/S LAXMI SAI ENTERPRISES. WE HAV E ALSO GONE THROUGH THE PANCHANAMA DATED 8.9.2000 DRAWN IN THIS CASE. I N THE PANCHANAMA, THE COLUMN REGARDING WARRANT IN THE CAS E OF WAS FILLED AS FOLLOWS: A) WARRANT IN THE CASE OF : LAXMI SREE ENTERPRISES S/SH.K. MAHADAVA REDDY & SANJEEVA REDDY B) WARRANT TO SEARCH : LAXMI SREE ENTERPRISES, (DETAILS OF OWNERSHIP OF KUKATPALLY, HYD. PLACE OF SEARCH) 14. AS SEEN FROM THE COPY OF SEARCH WARRANT, THERE IS NO VALID WARRANT IN THE CASE OF M/S LAXMI SREE ENTERPRISES. NOW THE QUE STION BEFORE US IS WHETHER THE TRIBUNAL HAS THE POWER TO EXAMINE THE V ALIDITY OF THE SEARCH WARRANT ISSUED IN THIS CASE OR NOT. IN OUR OPINION, NO APPEAL IS PROVIDED FOR AGAINST AN ORDER EITHER U/S 132(1) OR U/S 132(3 ) AND THE ASSESSEE CANNOT CHALLENGE SUCH ADMINISTRATIVE ACTION OF THE REVENUE DEPARTMENT. HOWEVER, THE TRIBUNAL HAS THE POWER AS WELL AS THE DUTY TO DECIDE WHETHER THE ASSESSMENT ORDER IS PASSED IS LEGALLY V ALID OR NOT. FOR THIS PURPOSE, THE TRIBUNAL HAS THE POWER TO SEE WHETHER THERE WAS ANY SEARCH WARRANT IN THE NAME OF THE ASSESSEE OR NOT. IT IS THE PREREQUISITE U/S 158BC, THAT A PERSON IN THE CASE OF WHOM ACTION U/S 132 OR U/S 132A HAS BEEN TAKEN, CAN BE CALLED UPON TO FILE A R ETURN OF INCOME IN RESPECT OF BLOCK PERIOD AND AGAINST SUCH PERSON ONL Y ORDER U/S 158BC CAN BE PASSED. THE TRIBUNAL HAS THE POWER TO EXAMIN E WHETHER THERE IS AN ACTION U/S 132 OF THE IT ACT AGAINST THE ASSESSE E AND WHETHER THERE WAS VALID PANCHANAMA DRAWN IN THIS CASE OR NOT. TH E ASSESSING OFFICER BEFORE ISSUING THE NOTICE U/S 158BC SHOULD SEE THAT THERE IS A SEARCH ACTION CONDUCTED ON THE ASSESSEE U/S 132 OF THE ACT . IN VIEW OF THIS, WE REQUIRED TO VERIFY WHETHER THE JURISDICTIONAL FACTS EXISTS BEFORE ISSUE OF NOTICE U/S 158BC OF THE ACT AND THEREAFTER WE HAVE TO SEE WHETHER AN ASSESSMENT PASSED U/S 158BC IS IN RESPECT OF AN ASS ESSEE AGAINST WHOM SEARCH WAS CONDUCTED U/S 132 OF THE ACT. THE S EARCH ACTION U/S 132 SHOULD BE A VALID ACTION AND IT SHALL BE CULMIN ATED INTO VALID ORDER U/S 158BC OF THE ACT. AT THIS POINT WE MAKE IT CLEA R THAT WE ARE NOT ADJUDICATING THE PROPRIETY OF ACTION TAKEN U/S 132 OF THE ACT AND WE ARE ADJUDICATING ONLY AN ORDER PASSED U/S 158BC BASED O N ACTION U/S 132 OF THE IT ACT. TO BE A VALID SEARCH ACTION, THERE S HOULD BE A WARRANT U/S 132 OF THE IT ACT AND THE SAID WARRANT SHALL IN THE NAME OF THE ASSESSEE ONLY. WE HAVE CAREFULLY GONE THROUGH THE SEARCH WAR RANT. WE ARE UNABLE 10 ITA NOS. 1304 & 1305/PN/2013, A.Y. 1997-98 TO 2003-04 TO FIND OUT THE NAME OF THE ASSESSEE M/S LAXMISAI E NTERPRISES IN THE SEARCH WARRANT DATED 6.9.2000 ISSUED U/S 132 OF THE IT ACT. THE SEARCH WARRANT WAS ISSUED IN THE NAMES OF S/SHRI K. MADHAV A REDDY & K. SANJEEVA REDDY AND THE PLACE TO BE SEARCHED IS BELO NGS M/S LAXMI SAI ENTERPRISES. SECTION 158BB PRESCRIBES THAT WHERE A SEARCH IS INITIATION, U/S 132 OR BOOKS OF ACCOUNT, ETC. ARE REQUISITIONED U/S 132A IN THE CASE OF ANY PERSON, THEN THE UNDISCLOSED INCOME OF THAT PERSON SHALL BE ASSESSED IN ACCORDANCE WITH THE CHAPTER XIV B OF TH E IT ACT. SEARCH U/S 132 IS PERSON SPECIFIC AND NOT PREMISES SPECIFIC. I T FOLLOWS THAT IF THE NAME OF THE ASSESSEE, AGAINST WHOM THE BLOCK ASSESS MENT HAS BEEN MADE, DOES NOT FIGURE IN THE WARRANT OF AUTHORIZATI ON ISSUED U/S 132, THE BLOCK ASSESSMENT WOULD BE UNAUTHORIZED AND VOID AB INITIO. IT IS THE CORRECT LEGAL POSITION, IT WOULD FOLLOW THAT THE AD DITIONAL GROUND IS WELL FOUNDED. THE CONTENTION OF THE REVENUE IS THAT AS T HE PREMISES SEARCHED BELONG TO THE ASSESSEE AS SUCH, PROCEEDINGS AGAINST IT U/S 158BC IS VALID WHICH CANNOT BE ACCEPTED. AS PER SECTION 158B B (1) R.W.S. 132(1), THE POSITION IS CLEAR THAT IN ORDER TO ASSESS THE U NDISCLOSED INCOME OF ANY PERSON IN ACCORDANCE WITH CHAPTER XIV B, A SEARCH I S A PREREQUISITE FOR THE INITIATION OF THE BLOCK ASSESSMENT PROCEEDINGS. IN THE PRESENT CASE, THERE IS NO VALID SEARCH IN THE CASE OF THE ASSESSE E U/S 132 OF THE ACT. INITIATION OF PROCEEDINGS U/S 158BC IS NOT POSSIBLE . IN THIS CASE, ANY ACTION TO BE TAKEN AGAINST THE ASSESSEE IS ONLY U/S 158BD, IF THERE IS ANY EVIDENCE FOUND DURING THE COURSE OF SEARCH ACTI ON IN RESPECT OF OTHER PERSON SHOWING UNDISCLOSED INCOME OF THE ASSESSEE. THERE IS SPECIFIC PROVISION U/S 158BD IN RESPECT OF WHOM INCRIMINATIN G MATERIAL IS FOUND IN CASE OTHER THAN THE PERSON WITH RESPECT TO WHOM THE SEARCH WAS MADE U/S 132 OF THE ACT AND THE ASSESSING OFFICER C ANNOT ARROGATE HIMSELF TO BYPASS THE PRESCRIBED PROCEDURES AND ISS UE NOTICE U/S 158BC ON A PERSON WHO WAS NOT SUBJECT TO SEARCH. IN THE P RESENT CASE, SINCE THERE IS NO SEARCH WARRANT IN THE NAME OF M/S LAXMI SREE ENTERPRISES, THE BLOCK ASSESSMENT PROCEEDINGS INITIATED U/S 158B C IS BAD IN LAW AND THE ASSESSMENT ORDER IS IN VALID. THE JUDGEMENT REL IED BY THE ASSESSEE COUNSEL IN THE CASE OF SMT. NASREEN YUUSUF DHANANI VS. ACIT (24 SOT 31) (MUM), SHRI C RAMAIAH REDDY VS. ACIT (87 ITD 43 9) (BLORE) IS ALSO SUPPORTS OUR VIEW. THE SAME IS THE POSITION IN THE CASE OF M/S AMMA ENTERPRISES (IT(SS)A. 68/H/2004), SHRI JASWANT RAO (IT(SS)A.70/H/2004) AND SHRI M. BHIMA RAO (IT(SS)A. 128/H/2004). IN THE CASE OF M/S AMMA ENTERPRISES (IT(SS)A.68/H/2004 ), WARRANT HAS BEEN ISSUED IN THE NAME OF S/SHRI K. MADHAVA REDDY & K. SANJEEVA REDDY AND THE PLACE TO BE SEARCH IS THE PREMISES OF M/S AMMA FINANCE & M/S SIRI FINANCE, SHOP NO.22 & 127, ALLURI COMMER CIAL COMPLEX, KUKATPALLY, HYDERABAD. IN THE CASE OF SHRI JESWANT RAO (IT(SS)A. 70/H/2004), NO SEARCH WARRANT HAS BEEN PRODUCED BEF ORE US FOR OUR CONSIDERATION. THE PANCHANAMA SHOWS THE WARRANTS BE ING ISSUED IN THE NAME OF S/SHRI K. MADHAVA REDDY & K. SANJEEVA REDDY AND NOT IN THE NAME OF THE ASSESSEE. IN THE CASE OF SHRI M. BHIMA RAO (IT(SS)A. 11 ITA NOS. 1304 & 1305/PN/2013, A.Y. 1997-98 TO 2003-04 128/H/2004, NO SEARCH WARRANT WAS PRODUCED BEFORE U S. THE PANCHANAMA SHOWS THE WARRANTS BEING ISSUED IN THE N AME OF S/SHRI K. MADHAVA REDDY & K. SANJEEVA REDDY AND NOT IN THE NA ME OF THE ASSESSEE. SO, WE TAKE ADVERSE INFERENCE IN THESE CA SES THAT THERE IS NO SEARCHON THESE ASSESSEES. HENCE THE ASSESSMENT ORDE R PASSED IN ALL THESE CASES IS WITHOUT JURISDICTION AND BAD IN LAW. ACCORDINGLY, WE QUASH ALL THE ASSESSMENT ORDERS IN THE CASE OF M/S LAXMI SREE ENTERPRISES (IT(SS)A.67/H/2004), M/S AMMA ENTERPRIS ES (IT(SS)A.68/H/2004), SHRI JESWANT RAO (IT(SS)A.70/H /2004) AND IN THE CASE OF SHRI M. BHIMA RAO (IT(SS)A.128/H/2004). 15. THE ASSESSMENT ORDER PASSED IN THE CASE OF M/S SREE ENTERPRISES (IT(SS)A.69/H/2004) IS U/S 158BD OF THE IT ACT. TH IS ASSESSMENT IS FRAMED CONSEQUENT TO SEARCH ACTION CONDUCTED AT THE PREMISES OF SHRI M. HANUMANTHA RAO, PARTNER OF THE ASSESSEE FIRM. FURTH ER, THE MATERIALS GATHERED DURING THE COURSE OF SEARCH ACTION CONDUCT ED IN THE CASE OF S/SHRI K. MADHAVA REDDY & K. SANJEEVA REDDY AT THE PREMISES M/S LAXMI SRI ENTERPRISES IS ALSO USED. IN OUR OPINION, THE ASSESSING OFFICER IS CORRECT IN FRAMING THE ASSESSMENT U/S 158BD OF T HE ACT BY USING THE MATERIALS GATHERED FROM THE SEARCH ACTION CONDUCTED IN THE CASE OF SHRI M. HANUMANTHA RAO AND ALSO IN THE CASE OF M/S SRI.K . MADHAVA REDDY & SANJEEVA REDDY. IN THE CASE OF SHRI K. MADHAVA RE DDY & SRI SANJEEVA REDDY, THE PREMISES SEARCHED WERE BELONGIN G TO M/S LAXMI ENTERPRISES. AS SUCH, WE CANNOT SAY THAT THE ASSESS ING OFFICER USED ANY SEARCH MATERIAL UNEARTHED BY WAY OF ILLEGAL SEARCH ACTION. IN OUR OPINION, THERE IS A VALID SEARCH ACTION IN THE CASE OF SHRI M. HANUMANTHA RAO AND IN THE CASE OF S/SHRI K MADHAVA REDDY & K SANJE EVA REDDY AND CONSEQUENT TO THESE SEARCH ACTIONS U/S 158BD NOTICE WAS ISSUED TO THESE ASSESSEES AND ASSESSMENT ORDERS FRAMED ACCORD INGLY. WE DO NOT FIND ANY MERIT IN THE ADDITIONAL GROUND RAISED BY T HE ASSESSEE WITH REGARD THE VALIDITY OF THE ASSESSMENT ORDER U/S 158 BD OF THE IT ACT. THE ADDITIONAL GROUND IN THE CASE OF M/S SREE ENTERPRIS ES STANDS DISMISSED. 8. IN VIEW OF THE ABOVE DISCUSSION, BEING THE FACTS AND CIRCUMSTANCES SIMILAR, WE INCLINED TO QUASH THE ASSESSMENT ORDER. ACCORDINGLY THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ALLOWED . WE REFRAIN OURSELVES FROM GOING INTO THE OTHER GROUNDS RAISED BY THE ASSESSEE WHICH BECOME INFRUCTUOUS. [EMPHASIS APPLIED BY US] 8. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF THE COMM ISSIONER OF INCOME TAX VS. M/S. D.K. PALKAR BROTHERS (SUPRA) HAS UPH ELD THE 12 ITA NOS. 1304 & 1305/PN/2013, A.Y. 1997-98 TO 2003-04 FINDINGS OF TRIBUNAL IN QUASHING THE ASSESSMENT PROCEEDINGS IN THE ABSENCE OF VALID WARRANT OF AUTHORIZATION. 9. IN VIEW OF THE FACTS OF THE CASE AND DOCUMENTS ON REC ORD, WE ARE OF THE CONSIDERED VIEW THAT IN THE PRESENT CASE THE AS SESSMENT HAS BEEN MADE U/S. 158BC ON THE ASSESSEES WITHOUT JURISDICT ION. WE HOLD THAT THE BLOCK ASSESSMENT FOR THE ASSESSMENT YEAR 199 7-98 TO 2003-04 MADE ON THE ASSESSEES AS INVALID AND SET ASIDE THE SAME. 10. IN THE RESULT, THE IMPUGNED ORDERS ARE SET ASIDE AND THE APPEALS OF THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 13 TH DAY OF JANUARY, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 13 TH JANUARY, 2016 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-CENTRAL, PUNE 4. ' / THE CIT, CENTRAL, PUNE 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE