ACIT-2(1), RAIPUR (CG) V. M/S S.P.Cold Storage, RAIPUR (CG)

ITA 142/BIL/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2254 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2002-2003
• Appeal Filed On: 09-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJIV VERSHNEY
• Assessee Lawyers: N S BEGANI
• Keywords: Search and seizure; Loose papers; Block assessment
• Section: 143(3); 133A; 153A; 32; 263; 132; 144

Judgement Text

1 ITA NOS. 142 TO 147/BLPR/2012 IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. S.NO. I.T.A. NO. ASSTT. YEAR. 1. 142/BLPR/2012 2002 - 03 2. 143/BLPR/2012 2003 - 04 3. 144/BLPR/2012 2004 - 05 4. 145/BLPR/2012 2005 - 06 5. 146/BLPR/2012 2006 - 07 6. 147/BLPR/2012 2007 - 08. ASSTT. COMMISSIONER OF M/S S.P. COLD STORAGE, INCOME TAX - 2(1), RAIPUR. VS. RAIPUR. PAN AAZFS1208F APPELLANT RESPONDENT. APPELLANT BY : SHRI RAJIV VERSHNEY RESPONDENT BY : SHRI N.S. BEGANI. DATE OF HEARING : 15 - 10 - 2015. DATE OF PRONOUNCEMENT : 30 TH OCT., 2015. O R D E R PER SHRI SHAMIN YAHYA, A.M . THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS), RAIPUR DATED 31 - 05 - 2012 AND PERTAIN TO ASSESSMENT YEARS 2002 - 03 TO 2007 - 08. SINCE COMMON ISSUES HAVE BEEN RAISED AND THE ISSUES ARE RELATED, THESE APPEALS ARE DISPOSED OF BY THIS COMMON ORDER. THE CO MMON ISSUE RAISED IS THAT THE LEARNED CIT(APPEALS) ERRED IN CANCELLING THE BLOCK ASSESSMENT ORDERS FRAMED BY THE AO FOR THESE ASSESSMENT YEARS. 2 ITA NOS. 142 TO 147/BLPR/2012 2. THIS IS THE SECOND R OUND OF THESE APPEALS BEFORE THE TRIBUNAL. IN THE EARLIER ROUND THE ASSESSEE HAS TAKEN A LEGAL GROUND BEFORE THE TRIBUNAL THAT THE ASSESSMENT ORDER PASSED U/S 153A READ WI T H SECTION 143(3) IS BAD IN LAW AND HENCE LIABLE TO BE QUASHED. IT WAS CONTENDED BEFORE THE TRIBUNAL THAT ONLY SURVEY U/S 133A WAS CONDUCTED IN THE CASE OF THE ASSESSEE FIR M AND NO SEARCH AS CONTEMPLATED IN THE PROVISIONS OF SECTION 132 WAS EVER CONDUCTED AT THE SOLE BUSINESS PREMISES OF THE FIRM NOR ANY REQUISITION WAS MADE UNDER THE PROVISIONS OF SECTION 132A . T HEREFORE, THE JURISDICTION ASSUMED BY THE AO U/S 153A WAS NULL AND VOID. THE TRIBUNAL VIDE ORDER DATED 08 - 022012 HAD RESTORED THESE APPEALS TO THE FILE OF CIT(APPEALS) TO ADJUDICATE THE LEGAL GROUND FIRST AND IF NECESSARY TO ADJUDICATE THE REMAINING GROUND. 3. PURSUANT TO THE ABOVE DIRECTION OF THE ITAT, LEARNED CIT( APPEALS) ADJUDICATED THE ISSUE AND HELD AS UNDER : 4 . 1 I HAVE GONE THROUGH THE ORIGINAL ASSESSMENT ORDERS , THE APPELLATE ORDERS AND THE SUBMISSIONS OF THE APPELLANT . I HAVE ALSO PERUSED THE RECORDS MADE A V AILABLE BY THE A . O. THE RECORDS SHOW THAT ONLY A SURVEY UNDER SEC . 133A OF THE ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF THE APPELLANT NEAR RAILWAY CROSSING , KHAMATARAI , RAIPUR . THE MATERIAL ON RECORD IN THE SHAPE OF STATEMENTS OF THE PARTNER AND EMPLOYEES RECORDED , INVENTORY OF STOCK KEPT IN THE COLD STORAGE; INVENTORY OF BOOKS OF ACCOUNT, ORDER PASSED U / S.133A ( 3 )( IA) IMPOUNDING BOOKS OF ACCOUNTS , ETC. AND THE DGIT'S APPROVAL U / S.133A(3) ( IA)(B) OF THE ACT SUBSTANTIATES THIS FACT . THE COPY OF WARRANT OF AUTHORIZATION ISSUED UNDER RULE 112 OF THE LT . RULES, 1962 IN FORM NO . 45 , THOUGH SHOWS THE APPELLANT'S NAME AFTER THE NAMES OF EIGHT INDIVIDUALS OF THE SAME GROUP , THE PLACE OF SEARCH HAS BEEN MENTIONED AS ' THE RESIDENCE OF SH. PRITHPAL SINGH CHANDHOK AND OTHERS LOCATED AT PRITPAL FARM HOUSE , VIP RO AD , RAIPUR'. POINT (A) OF PARA - 2 OF PAGE - 2 OF THE AUTHORIZATION AUTHORIZES THE OFFICERS NAMED IN THE PRECEDING PARAGRAPH , ONLY TO ENTER AND SEARCH THE SPECIFIED BUILDING I.E. , TH E R E S ID E NCE OF SH . PRITPAL SINGH CHANDHOK AND OTHERS LOCATED AT PRITPAL FARM H OUSE , VIP ROAD, RAIPUR AND NOT OTHERS. THUS , THE ONLY PLACE THAT COULD BE SEARCHED ON THE STRENGTH OF THIS AUTHORIZATION IS THE RESIDENCE OF NAMED INDIVIDUALS LOCATED AT ' PRITHPAL FARM HOUSE , VIP ROAD , RAIPUR '. THERE IS NO OFFICE OF THE FIRM AT THE RESIDEN CE OF THE PARTNERS GIVEN IN THE WARRANT OF AUTHORIZATION . SEARCH U / S . 132 CANNOT BE IMAGINED AT THE APPELLANT ' S BUSINESS PREMISES LOCATED ' NEAR RAILWAY CROSSING , KHAMTARAI , RAIPUR ' ON THE STRENGTH OF THIS AUTHORIZATION . N O STATEMENTS UNDER SEC . 132( 4) OF THE ACT WERE RECORDED ; NOR SEIZURE OF ANY BULLION , MONEY , VALUABLES , LOOSE PAPERS, DOCUMENTS , ETC. RELATING TO THE APPELLANT WAS EFFECTED FROM THE APPELLANT ' S PREMISES AT KHAMTARI EVEN TO RENDER AN IMPRESSION THAT ANY ACTION CONTEMPLATED UNDER SEC . 132 OF T HE ACT WAS TAKEN IN THE APPELLANT'S CASE. PERUSAL OF THE PROVISIONS OF SECTIONS 132, , 153A , 153B , 3 ITA NOS. 142 TO 147/BLPR/2012 ETC. OF THE ACT AND RULE 112 OF THE I T . RUL E S S HOWS THAT MERE INITIATION OF S EARCH IN A CASE I S NOT SUFFICIENT TO INVOKE THE PROVISIONS OF SEC. 153 A , BUT CON DUCT OF AN CTUAL SEARCH IS ALL THE MORE ESSENTIAL . PARTNERSH IP FIRM IS A DISTINCT LEGAL E NT ITY FROM ITS PART N ER IN THE EYES OF L AW AND ALLY SEARCH I N THE RESIDENT I A L PREMISES OF THE PARTNERS COULD NOT BE CONSIDERED AS A SEARC H AGA IN ST T H E PARTNERSH I P FIRM PER SE.(CIT VS TIRUPATI OIL CORPORATION 248 I TR 194 (BO R N . HC) & NENMAL SHANKAR L AL PARMAR VS ACIT195 ITR 582 (KAR . HC). THE ASSESSMENT FOR SEVEN ASSESSMENT YEARS WERE MADE ON THE BASIS OF MATERIAL IMPOUNDE D D U RING SURVEY CONDUCTE D AT THE BUSINESS PREMISES OF THE APPE L LANT FIRM AND NO MATERIAL WHATSOEVER FOUN D O R SEIZE D FROM T H E AFORESAID RESIDENTIA L PREMISES OF THE PARTNERS RE L ATES TO THE APPEL L ANT F I RM. I N VIEW OF THE ABOVE FACTUAL AND LEGAL MATRIX, I AM OF TH E CONSIDERED OPINION THAT NO S EARCH AN D S EIZURE OPERATION WA S EVER CONDUCTED AT THE BUSINE SS PREMI S E S OF THE APP E LLANT FIRM, WHICH IS SIN QUA NON ' FOR FRAMING S EA R CH A SS ESSMENT S AND HENCE, THE CONSEQUENTIAL NOTICE S I SS UEDAND AS S ESSMENTS FRAMED UNDER THE PROVISION OF SECTION 153A R.W.S 153B OF THE ACT FOR A.YRS. 2002 - 03 TO 2007 - 08 ARE DECLARED AS NULL AND VOID , AND ACCORDINGL Y , CANCELLED. SINCE, I HAVE ALREADY DECIDED THE APPEALS FOR THE S E YEARS IN FAVOUR OF THE APPELLANT ON LEG AL GROUNDS, IT IS NOT CONSIDERED NECESSAR Y TO GO INTO THE MERITS OF THE CASEAND ADJUDICATE THE OTHERS GROUND S RAI S ED B Y THE APPELLANT A S DIRECTED B Y THEHON ' BLE ITAT, BILASPUR BENCH , BILA S PUR AND ALL OTHER GROUND S ARE ACCORDINGL Y, DI S MIS S ED. 4. AGAINST T HE ABOVE ORDER, REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED D.R. SUBMITTED THAT THE LEARNED CIT(APPEALS) HAS TOTALLY ERRED IN CANCELLING THE ASSESSMENTS. LEARNED D.R. SUBMITTED THAT SECTION 153A SPEAKS OF SITUATION WHERE SUCH SEARCH IS INITIATED U/S 132 AND NOT OF SEARCH CONDUCTED. HENCE LEARNED D.R. SUBMITTED THAT THE REVENUE DEPARTMENT HAD INITIATED SEARCH U/S 132 OF THE I.T. ACT AT THE RESIDENCE OF SHRI PRITPAL SINGH CHANDHOK AND OTHERS LOCATED AT P REITPAL FARM HOUSE, VIP ROAD, RAIPUR. LEARNED D.R. SUBMITTED THAT THIS IS A PLACE OF RESIDENCE OF THE PARTNERS OF THE ASSESSEE FIRM. HENCE WHEN THE REVENUE PARTY CONDUCTED A SEARCH AT THIS PLACE WHICH HAPPENS TO BE THE RESIDENCE OF THE PARTNERS OF THE ASS ESSEE FIRM, IT CANNOT BE SAID THAT NO SEARCH WAS INITIATED IN THE ASSESSEE FIRM. LEARNED D.R. SUBMITTED THAT PARTNERS OF THE FIRM REPRESENT THE FIRM AND INITIATION OF SEARCH AT THEIR RESIDENCE CAN BE CONSTRUED AS THE REQUISITE SEARCH AS ENVISAGED U/S 153A OF THE I.T. ACT. 4 ITA NOS. 142 TO 147/BLPR/2012 6. IN THIS REGARD LEARNED D.R. PLACED RELIANCE UPON THE FOLLOWING CASE LAWS: 1. ACIT VS. CHETAN DAS LACHMAN DAS (ITAT DELHI 36 SOT 417). 2. ACIT VS. CHILKA VYANKATESH SIDRAM 122 ITD 293 (ITAT, PUNE). 3. NARESH CHAND BAID VS. ACIT 23 TAXMANN.COM 378 (HONBLE HIGH COURT OF CHHATTISGARH). 4. CANARA HOUSING DEVELOPMENT CO. VS. DCIT, BANGALORE, 49 TAXMANN.COM 98 (HONBLE HIGH COURT OF KARNATAKA). DRAWING STRENGTH FROM THESE CASE LAWS LEARNED D.R. SUBMITTED THAT THE SEARCH INITIATED U/S 1 32 AT THE RESIDENCE OF THE PARTNERS OF THE ASSESSEE FIRM VERY MUCH FALLS WITHIN THE AMBIT OF SEARCH ENVISAGED U/S 153A AND HENCE THE SEARCH DULY AND PROPERLY GAVE JURISDICTION TO THE AO TO ISSUE NOTICE AND MAKE ASSESSMENT U/S 153 OF I.T. ACT. 7. PER CONT RA LEARNED COUNSEL OF THE ASSESSEE MADE THE FOLLOWING SUBMISSIONS : I) THE RESPONDENT IS A PARTNERSHIP FIRM RUNNING A COLD STORAGE AT PLOT NO.51621. NEAR RAILWAY CROSSING. KBAMTARAI. RAJPUR (CBBATTISGARB) WHICH IS ALSO ITS BUSINESS PREMISES AND FROM WHICH THE RESPONDENT HAS BEEN REGULARLY FILING ITS RETURN OF INCOME SINCE LONG WHICH IS WELL WITHIN THE KNOWLEDGE OF THE DEPARTMENT, COPY OF RETURN FILED FOR THE ASST YEAR 2002 - 03 AND INTIMATION UJS.143(L)(A) OF THE L T.ACT ARE ENCLOSED (REFER PAGE NO.77 & 78 OF THE PAPER BOOK). THE RESPONDENT FIRM HAS TWO PARTNERS VIZ. SHRI GURPREET SINGH CHANDHOK & SMT . GURVINDER KAUR CHANDHOK. II) ON 16 TH JULY, 2007, A SURVEY OPERATION UNDER THE PROVISIONS OF SECTION 133A OF THE LT.ACT WAS CONDUCTED AT THE AFORESAID BUSINESS PREMISES OF THE RESPONDENT FIRM AND IN PURSUANCE OF SUCH SURVEY OPERATION, STATEMENTS OF SHRI GURPREET SINGH CHANDHOK, PARTNER AND SH RI TRILOCHAN NAYAK, MANAGER WAS RECORDED ON 16 TH JULY, 2007 AND A~IN THE CONCLUDING STATEMENT OF SHRI GURPREET SINGH CHANDHOK, PARTNER WAS RECORDED ON 19 JULY, 2007 UNDER THE PROVISIONS OF SECTION 133A ITSELF, COPY OF STATEMENTS (EXTRACTS) ARE ENCLOSED (REFER PAGE NO.52 TO 60 OF THE PAPER BOOK). THE SURVEY OPERATION CONTINUED FROM IS' JULY, 2007 TO 19 TH JULY, 2007 AND WAS CONCLUDED ON 19 TH JULY, 2007, WHEREIN VARIOUS BOOKS OF ACCOUNTS, LOOSE PAPERS & DOCUMENTS WERE IMPOUNDED AND AN INVENTORY MEMO MARK ED AS ANNEXURE A - L WAS PREPARED AND INVENTORISED WITH SI . NO.L TO 144 AND VARIOUS BOOKS OF ACCOUNTS, LOOSE PAPER & DOCUMENTS WERE FOUND BUT NOT IMPOUNDED AND AN INVENTORY MEMO MARKED AS ANNEXURE WAS PREPARED INVENTORISED WITH SI . NO.L TO 156 AND FURTHER, INVENTORY OF STOCK OF GOODS KEPT IN COLD STORAGE WAS ALSO PREPARED, COPY OF EXTRACTS OF INVENTORY MEMO ARE ENCLOSED (REFER PAGE NO.28 TO 51 OF THE PAPER BOOK). III) IN PURSUANCE OF BOOKS OF ACCOUNTS, LOOSE PAPERS, DOCUMENTS ETC. FOUND DURING THE COURSE OF SURVEY OPERATION (INVENTORISED AS ANNEXURE A - L, SI . NO.L TO 144), THE AUTHORISED OFFICER ACTING UNDER SECTION 133A OF THE LT.ACT PASSED AN ORDER UNDER THE PROVISIONS OF SECTION 133A(3)(IA) FOR IMPOUNDING AND RETAINING SUCH BOOKS OF ACCOUNTS, DOCUMENTS ETC. IN HIS CUSTODY FOR 5 ITA NOS. 142 TO 147/BLPR/2012 FURTHER INVESTIGATION, COPY OF SUCH IMPOUNDING ORDER IS ENCLOSED (REFER PAGE NO.27 OF THE PAPER BOOK). SINCE, THE BOOKS OF ACCOUNTS, DOCUMENTS ETC. IMPOUNDED DURING THE SURVEY OPERATION COULD NOT BE RETAINED BEYOND A PERIOD OF 10 DAYS WITHOUT THE APPROVAL OF THE DIRECTOR GENERAL OF INCOME TAX, AN APPROVAL WAS GRANTED BY THE DIRECTOR GENERAL OF INCOME TAX (INVESTIGATION), BHOPAL VIDE ORDER F.NO. DGITIBPUTECH . !MISC - 18IRETN . L07 - 08 DATED 31 . 07.2007, COPY OF WHICH IS ENCLOSED (REFER PAGE NO.25 OF THE PAPER BOOK). IV) I N VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, IT IS SUBMITTED THAT ONLY A SURVEY OPERATION UNDER THE PROVISIONS OF SECTION 133A OF THE LT.ACT WAS CONDUCTED IN THE CASE OF RESPONDENT AND NO SEARCH CONTEMPLATED IN THE PROVISIONS OF SECTION 132 OF THE LT.ACT WAS EVER CONDUCTED I N THE SOLE BUSINESS PREMISES OF THE RESPONDENT FIRM NOR ANY REQUISITION WAS MADE UNDER THE PROVISIONS OF SECTION 132A OF THE LT.ACT. IT IS FURTHER SUBMITTED THA T THE PROVISIONS OF SECTION 153A(1) WHICH STARTS WITH A NON OBSTANTE CLAUSE CONTEMPLATE INITIATION AND CONDUCT OF SEARCH UNDER SECTION 132 OF THE LT.ACT ON ANY PERSON (SECTION 153A(1)(B) READS AS 'ASSESS OR REASSESS THE TOTAL INCOME ..... IN WHICH SUCH SEARCH IS CONDUCTED OR .... '') AND THE ASSESSING OFFICER GETS JURISDICTION TO ISSUE NOTICE AND FRAME ASSESSMENT UNDER THE PROVISIONS OF SECTION 153A R.W.S. 1536 OF THE LT.ACT ONLY AFTER ACTUAL CONDUCT OF SEARCH IN THE PREMISES OF THE ASSESSEE IN ACCORDA NCE WITH THE PROVISIONS OF SECTION 132(1) OF THE LT.ACT AND AFTER PERFORMING ALL THE ACTS, DEEDS AND THINGS ENUMERATED UNDER THE PROVISIONS OF SECTION 132 OF THE LT.ACT R.W. RULE 112 OF THE LT. RULES I.E. TO SAY SEARCH HAS TO BE NECESSARILY CONDUCTED ON THE ASSESSEE. HENCE, THE EXECUTION OF WARRANT OF AUTHORISATION ISSUED UNDER SECTION 132(1) OF THE LT.ACT IS A CONDITION PRECEDENT TO ASSUMPTION OF JURISDICTION UNDER SECTION 153A AND SEARCH IS TO BE ACTUALLY CONDUCTED IN THE CASE OF THE ASSESSEE TO ENAB LE EXERCISE OF VALID JURISDICTION BY THE ASSESSING OFFICER AND IN THE PRESENT CASE, NO WARRANT OF AUTHORISATION UNDER SECTION 132(1) TO ENTER & SEARCH THE PREMISES OWNED OR BELONGING TO THE RESPONDENT FIRM [AT NEAR RAILWAY CROSSING. KHAMTARAI. RAIPUR (C HHATTISGARHL] HAS BEEN ISSUED OR EXECUTED BY THE AUTHORISED OFFICERS. V) IT IS FURTHER SUBMITTED THAT IN THE PRESENT CASE, THE MATERIAL /LOOSE PAPER/DOCUMENTS ETC. ON THE BASIS OF WHICH ASSESSMENTS FOR SEVEN ASSESSMENT YEARS I.E. FROM ASSESSMENT YEAR 2002 - 03 TO 2008 - 09 HAVE BEEN FRAMED UNDER THE PROVISIONS OF SECTION 153A R.W.S.143(3) OF THE LT.ACT HAVE BEEN IMPOUNDED ONLY DURING THE COURSE OF SURVEY UNDER SECTION 133A OF THE LT.ACT (REFER SI.NO.137 AT PAGE NO.37 & SI.NO.142 & 143 AT PAGE NO.38 OF THE PAPER BOOK) AND ADMITTEDLY, NO SEARCH WAS EVER CONDUCTED UNDER SECTION 132(1) ON THE PREMISES OF THE RESPONDENT FIRM. IT IS FURTHER SUBMITTED THAT NO PRELIMINARY OR CONCLUDING STATEMENTS UNDER THE PROVISIONS OF 132(4) HAVE BEEN RECORDED FROM THE PARTNERS OF THE RESPONDENT ETC. WITH REFERENCE TO ANY SEARCH AND NO WARRANT OF AUTHORIZATION WAS ISSUED TO CONDUCT SEARCH OPERATION IN THE PREMISES OF THE RESPONDENT FIRM AND NO PANCHANAMA WAS EVER DRAWN IN RESPECT OF THE RESPONDENT FIRM TO EFFECT ANY SEIZURE A S A RESULT OF ANY SUCH SEARCH OPERATION AND EVEN THE SURVEY WAS NOT CONVERTED/TRANSLATED INTO SEARCH WHICH ITSELF IS INDICATIVE OF THE FACT THAT THE DEPARTMENT NEVER INTENDED TO CONDUCT ANY SEARCH OPERATION AGAINST THE RESPONDENT . VI) IT IS FURTHER SUBMITTED THAT A SEARCH & SEIZURE OPERATION UNDER SECTION 132 OF THE LT.ACT WAS CONDUCTED AT THE RESIDENTIAL PREMISES BELONGING TO SHRI PRITPAL SINGH CHANDHOK AT PRITPA/ FARM HOUSE, VIP ROAD RAIDUR (CHHATTISGARH) ON THE STRENGTH OF WARRANT OF AUTHORIZATION DATED 06.07.2007 WHICH THOUGH BEARS THE NAME OF THE RESPONDENT FIRM ALONG WITH 9 OTHERS INCLUDING SAINI FAMILY BUT THE SAID PREMISES SEARCHED IS NOT THE PREMISES BELONGING TO OR OWNED BY THE RESPONDENT FIRM AND FURTHER, NO INCRIMINATING M ATERIAL/DOCUMENTS, LOOSE PAPERS. BOOKS OF ACCOUNTS, ANY MONEY, BULLION. JEWELLERY OR OTHER VALUABLE ARTICLE OR THING WAS SEIZED OR FOUND RELATING TO THE RESPONDENT FIRM FROM THE AFORESAID RESIDENTIAL PREMISES HENCE. THE SEARCH CONDUCTED IS INVALID GUA T HE RESPONDENT FIRM . VII) IT HAS BEEN HELD THAT MERE MENTIONING OF NAME OF THE ASSESSEE IN THE SEARCH WARRANT OR PANCHANAMA IN THE ABSENCE OF CONDUCT OF ACTUAL SEARCH, AT THE PREMISES OF THE ASSESSEE I.E. WHERE THAT PARTICULAR ASSESSEE IS RESIDING OR IS AVAILABLE OR IS GENERALLY OR NECESSARILY FOUND OR BELONGING TO THAT ASSESSE, RESULTING INTO IMPOUNDING OR SEIZURE OR FINDING OF ANY BOOKS OF ACCOUNTS, DOCUMENTS, MONEY, BULLION, VALUABLE ARTICLE OR THING ETC. RELATING TO THE ASSESSEE 6 ITA NOS. 142 TO 147/BLPR/2012 FROM THE SEARCHED PREMISES CANNOT LEAD TO AN INEVITABLE CONCLUSION THAT A VALID SEARCH WAS CONDUCTED IN HIS CASE AND THAT WARRANT OF AUTHORISATION SHALL HAVE TO BE EXECUTED BY THE AUTHORISED OFFICER AGAINST THE ASSESSEE AND CONSIDERING SECTION 153A(1)(B), NOT ONLY INITIAT ION OF SEARCH IS MANDATORY BUT CONDUCT OF ACTUAL SEARCH IS ALSO MATERIAL AND SUCH CONDUCT OF A PERSON SPECIFIC AND PREMISES SPECIFIC SEARCH IS A SINE QUA NON FOR ASSUMPTION OF JURISDICTION UNDER THE PROVISIONS OF SECTION 153A OF THE LT.ACT. RELIANCE IN SUPPORT OF THE AFORESAID PROPOSITIONS IS PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS : A) B) A) J. M. TRADING CORPORATION VS. ACIT (2008) 20 SOT 489 (ITAT MUMBAI)(PARA 24) AFFIRMED BY THE HON'BLE BOMBAY HIGH COURT VIDE JUDGMENT RENDERED ON 29.06.2009 IN INCOME TAX APPEAL NO.589 OF 2009 AND SLP FILED BY THE DEPARTMENT IN CC 16238/2010 DISMISSED BY THE HON'BLE SUPREME COURT VIDE ORDER DATED 29.10.2010; B) ACIT VS. MAB FINLEASE LTD. (2014) 43 TAXMANN.COM 107 (ITAT DELHI); C) CIT VS. RAMESH D.PATE L (2014) 362 ITR 492 (GUJ . HC); D) DR. MANSUKH KANJIBHAI SHAH VS. ACIT (2010) 41 DTR 353 (ITAT AHMEDABAD) (PARA 9.5); VIII) I T HAS BEEN HELD THAT PARTNERSHIP FIRM IS A SEPARATE LEGAL ENTITY DISTINCT FROM ITS PARTNERS IN V IEW OF SECTION 2(7) R.W . S. 2(31) AND A SEARCH IN THE RESIDENTIAL PREMISES OF THE PARTNERS OF THE PARTNERSHIP FIRM CANNOT BE CONSIDERED AS A SEARCH IN THE CASE OF PARTNERSHIP FIRM. RELIANCE IN SUPPORT I S PLACED UPON THE FOLLOWING JUDICIAL PRONOUNCEMENTS : C) CIT VS. TIRUPATI OIL CORPORATION (2001) 248 ITR 194 (BOM.HC) D) NENMAL SHANKARLAL PARMER VS. ACIT (1992) 195 ITR 582 (KAR.HC) IX) IT IS FURTHER SUBMITTED THAT INCRIMINATING MATERIAL/LOOSE PAPERS/DOCUMENTS ETC. ON THE BASIS OF WHICH THE ASSESSMENTS HAVE BE EN FRAMED UNDER THE PROVISIONS OF SECTION 153A R.W . S. 143(3) OF THE I . T.ACT FOR THE ASSESSMENT YEAR 2002 - 03 TO 2008 - 09 HAS BEEN IMPOUNDED/GATHERED DURING THE COURSE OF SURVEY UNDER SECTION 133A OF THE LT.ACT AT THE BUSINESS PREMISES OF THE RESPONDENT F I RM ONLY AND IT IS A SETTLED LAW THAT THE MATERIAL GATHERED DURING THE COURSE OF SURVEY UNDER SECTION 133A CANNOT BE REGARDED AS RELEVANT MATER I AL FOR THE COMPUTATION OF UNDISCLOSED I NCOME IN BLOCK ASSESSMENT PROCEEDINGS. RELIANCE IN SUPPORT IS PLACED UPO N THE FOLLOWING JUDICIAL PRONOUNCEMENTS : A) CIT VS. G.K.SENNIAPPAN (2006) 284 ITR 220 (MAD.HC) B) CIT VS. S. AJIT KUMAR (2008) 300 ITR 152 (MAD.HC) X) IN VIEW OF THE ABOVE, SINCE NO SEARCH CONTEMPLATED UNDER TH E PROVISIONS OF SECTION 132 IS CONDUCTED IN THE CA SE OF THE RESPONDENT FIRM, THE CONSEQUENTIAL ASSESSMENTS FRAMED UNDER SECTION 153A OF THE LT.ACT FOR ALL THE ASSESSMENT YEARS IN APPEAL I .E. ASSESSMENT YEAR 2002 - 03 TO 2007 - 08 IS VOID AB INITIO, NULLITY AND UNSUSTAINABLE IN THE EYES OF LAW AND I T I S REQ UESTED THAT ORDER OF THE LD.CIT(A) IN ANNULLING THE ASSESSMENT ORDERS PASSED UNDER SECT I ON 153A R.W.S.143(3) MAY PLEASE BE CONFIRMED . 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. WE FIND THAT THE AO CAN INIT IATE ACTION U/S 153A WHERE A SEARCH IS INITIATED U/S 132 OR BOOKS OF ACCOUNTS, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED U/S 132A. IN THIS CASE NO SEARCH WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE FIRM. SEARCH WAS CONDUCTED AT A PREMISES WHICH HAPPEN S TO BE THE 7 ITA NOS. 142 TO 147/BLPR/2012 RESIDENCE OF THE PARTNERS OF THE ASSESSEE FIRM. NO BOOKS OF ACCOUNTS, DOCUMENTS ETC. RELATING TO THE FIRM WAS FOUND DURING THAT SEARCH. NO STATEMENT OF THE PARTNERS OF THE FIRM WAS RECORDED. NO REQUISITION WAS MADE U/S 132 A OF THE I.T. ACT. THERE IS NO EVIDENCE THAT NOTICE OF SEARCH WAS EVER ISSUED ON THE PARTNERS. ON THE SAME DATE I.E. 16 TH JULY, 2007 A SURVEY OPERATION WAS CONDUCTED U/S 133A AT THE BUSINESS PREMISES OF THE ASSESSEE FIRM. IN PURSUANT OF SURVEY OPERATION, STATEMENT OF PARTNERS WAS RECORDED. THE SURVEY OPERATION CONTINUED F R OM 16 TH JULY, 2007 TO 19 TH JULY, 2007 AND VARIOUS BOOKS, DOCUMENTS, PAPERS ETC. WERE FOUND AND IMPOUNDED. IN THIS BACKGROUND WE HAVE TO EXAMINE AS TO WHETHER THE SEARCH U/S 132 OF THE I .T. ACT IN THIS CASE GIVES JURISDICTION TO THE AO U/S 153A OF THE I.T. ACT. NOW THE ASSESSEES PLEA AND THE LEARNED CIT(APPEALS) VIEW IS THAT IN THESE FACTS NO SEARCH AND SEIZURE OPERATION WAS EVER CONDUCTED AT THE BUSINESS PREMISES OF THE ASSE SSEE FIRM W HICH IS A SINE QUA NON FOR ASSUMING ASSESSMENTS U/S 153A OF I.T. ACT. ON THE OTHER HAND, LEARNED D.RS PLEA IS THAT SECTION 153A POSTULATES INITIATION OF SEARCH U/S 132 AND SUCH A SEARCH AT THE RESIDENTIAL PREMISES OF THE PARTNERS OF THE FIRM AMOUNTS TO A SEARCH AS ENVISAGED U/S 153A OF THE I.T. ACT. 9. WE SHALL FIRST DEAL WITH THE CASE LAWS REFERRED BY THE LEARNED D.R. AS TO WHETHER THE SAME SUPPORT HIS CASE. I) ACIT VS. CHETAN DAS LACHMAN DAS (SUPRA) IN THIS CASE THE TRIBUNAL HAD HELD THAT REQUISITE CONDITION FOR HAVING CONDUCTED SEARCH IN THE NAME OF THE ASSESSEE U/S 132 WAS COMPLIED WITH FOR WHICH WARRANT OF AUTHORIZATION WAS ISSUED AS SPECIFICALLY AUTHORIZING TO SEARCH AT RESIDENTIAL PREMISES OF PARTNERS OF ASSESSEE FIRM WHEREIN MATERIAL RELATIN G TO ASSESSEE FIRM WERE FOUND. IT WAS TO BE CONCLUDED THAT AO WAS JUSTIFIED IN ASSUMING JURISDICTION FOR FRAMING ASSESSMENT U/S 153A. 8 ITA NOS. 142 TO 147/BLPR/2012 WE FIND THAT IN THE ABOVE SAID CASE LAW, WARRANT OF AUTHORIZATION WAS SPECIFICALLY AUTHORIZING TO SEARCH RESIDENTIAL PREM ISES OF ASSESSEE FIRM WHEREIN MATERIALS RELATING TO ASSESSEE FIRM WERE FOUND. THE ABOVE CASE LAW IS TOTALLY DISTINGUISHABLE FROM THE PRESENT CASE AS NO MATERIAL WHATSOEVER WAS FOUND AT THE PREMISES WHERE SEARCH WAS CONDUCTED. II ) ACIT VS. CHILKA VYANKATESH SIDRAM (SUPRA). THIS CASE LAW FROM TRIBUNAL RELATED TO BLOCK ASSESSMENT UNDER CHAPTER XIVB OF THE I.T. ACT. THE ISSUE WAS WHETHER SEARCH WARRANT CANNOT BE TREATED AS ILLE G AL MERELY BECAUSE FULL NAMES OF ASSESSES ARE NOT WRITTEN ON IT AND WHETHE R NON RECORDING OF THE STATEMENT IN A SEARCH CONDUCTED U/S 132 DOES NOT RENDER SEARCH ILLEGAL. THE ABOVE CASE LAW IS ALSO NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. T HE ISSUE RELATED TO SEARCH CONDUCTED UNDER BLOCK ASSESSMENT UNDER CHAPTER XIVB OF T HE I.T. ACT. HENCE THIS CASE LAW DOES NOT SUPPORT THE CASE OF THE LEARNED D.R. III) NARESH CHAND BAID VS. ACIT (SUPRA). IN THIS CASE THE ISSUE WAS WHETHER REVENUE AUTHORITIES ARE COMPETENT TO CONDUCT SEARCH IN PREMISES OF PARTNERS OF THE FIRM, THE NAMES OF ALL PARTNE R S AS SPECIFICALLY MENTIONED IN WARRANT OF AUTHORIZATION ISSUED IN THE NAME OF PARTNERSHIP FIRM. THIS CASE LAW IS NOT AT ALL APPLICABLE AS THE ISSUE OF COMPETENCE OF SEARCH IS NOT HERE. FURTHER IN THE SAID CASE THE FACTS WERE THAT THE ASSES SEE PARTICIPATED AND ARTICLES WERE FOUND IN SEARCH. THIS IS NOT AT ALL THE CASE IN THE PRESENT CASE AS NO ARTICLE WAS FOUND NOR THERE WAS ANY PARTICIPATION OF THE PARTNERS OF THE ASSESSEE FIRM. 9 ITA NOS. 142 TO 147/BLPR/2012 IV) CANARA HOUSING DEVELOPMENT CO. VS. DCIT, (SUPRA) IN THIS CASE LAW IT WAS HELD THAT CONDITION PRECEDENT FOR APPLICATION OF SECTION 153A IS THAT T HERE SHOULD BE A SEARCH U/S 132 T HAT INITIATION OF PROCEEDINGS U/S 153A IS NOT DEPENDANT ON ANY UNDISCLOSED INCOME BE UNEARTHED DURING SEARCH. THE FACTS OF THIS C ASE WERE THAT A SEARCH HAD TAKEN PLACE IN THE PREMISES OF THE ASSESSEE. IN THE CASE OF SEARCH, INCRIMINATING MATERIALS LEADING TO UNDISCLOSED INCOME WAS SEIZED AND THE ISSUE RELATED TO WHEN ONCE PROCEEDING U/S 153A OF THE ACT IS INITIATED, WHETHER CIT CAN INVOKE THE POWER U/S 263 OF THE ACT. HENCE THIS CASE LAW IS TOTALLY INAPPLICABLE. 10. NOW WE DEAL WITH THE CASE LAWS REFERRED BY THE LEARNED COUNSEL OF THE ASSESSEE. I) CIT VS.TIRUPATI OIL CORPORATION 248 ITR 194 (BOM.). IN THIS CASE IT WAS HELD THAT A R EGISTERED FIRM IS A TAXABLE UNIT AND IF THE AO WANTED TO PROCEED UNDER CHAPTER XIV - B OF INCOME - TAX ACT WITH REGARD TO THE UNDISCLOSED INCOME OF THE PARTNER FOR THE PURPOSES OF MAKING BLOCK ASSESSMENT ON THE ASSESSEE FIRM THEN THE AO WAS REQUIRED TO INVOKE SECTION 158BD WHICH HAS NOT BEEN DONE IN THE PRESENT CASE AND, THEREFORE, THE BLOCK ASSESSMENT MADE ON THE FIRM WITHOUT FOLLOWING THE PROCEDURE U/S 158BD WAS BAD IN LAW. II) NENMAL SHANKARLAL PARMAR VS. ACIT 195 ITR 582 (KAR.) IN THIS CASE IT WAS EXPOUNDED THAT FOR THE PURPOSE OF INCOME - TAX ACT THE FIRMS AND ITS PARTNERS ARE DIFFERENT ENTITIES. THE FIRM ITSELF IS A PERSON FOR THE PURPOSE OF THE ACT. WHEN THE LEGAL TITLE MIGHT HAVE BEEN WITH THE PERSON WHOSE INCOME OR PROPERTY IS SOUGHT TO BE TAX ED AND PHYSICAL POSSESSION WAS WITH 10 ITA NOS. 142 TO 147/BLPR/2012 ANOTHER PERSON, IT IS IN RESPECT OF SUCH PERSON S PREMISES THAT WARRANT SHOULD HAVE BEEN ISSUED. III) CIT VS. J.M. TRADING CORPORATION (BOMBAY HIGH COURT ) ITA NO. 589 OF 2009, ORDER DATED 29 - 06 - 2009. IN THIS CASE HONBLE HIGH COURT HAS AFFIRMED THE TRIBUNALS ORDER WHEREIN IT WAS HELD THAT PROVISIONS OF 153A ARE ONLY APPLICABLE IN CASE VALID SEARCH IS CONDUCTED AGAINST THE ASSESSEE U/S 132. SEARCH OF ASSESSEES TENANTED PREMISES WHERE ASSESSEE WAS NOT PRESENT COUL D NOT BE SAID TO BE A VALID SEARCH AGAINST THE ASSESSEE EVEN THOUGH HIS NAME WAS MENTIONED IN THE PANCHANAMA. HENCE ASSESSMENT OF THE ASSESSEE U/S 143(3) READ WITH SECTION 153A IN PURSUANCE OF SUCH INVALID SEARCH HAD TO BE DECLARED AS NULL AND VOID. A SPE CIAL LEAVE PETITION AGAINST THE ABOVE ORDER OF HONBLE BOMBAY HIGH COURT HAS BEEN DISMISSED BY THE HONBLE APEX COURT IN SLP CC 16238/2010 DATED 29 - 10 - 2010. 11. NOW IN THE LIGHT OF THE AFORESAID DISCUSSION AND CASE LAW, WE ANALYSIS THE FACTS OF THE PRESENT CASE. IN THIS CASE THERE WAS A SEARCH. IN THE WARRANT OF AUTHORISATION THE ASSESSEES FIRMS NAME WAS THERE AFTER THE NAMES OF 8 INDIVIDUALS OF THE SAME GROUP. THE PLACE OF SEARCH WAS MENTIONED AS RESIDENCE OF SHRI PRITPAL SINGH CHANDHOK AND OTHERS LOCAT ED AT PRITPAL FARM HOUSE, VIP ROAD, RAIPUR. THE SAID PREMISES IS NOT THE BUSINESS PREMISES OF THE ASSESSEE FIRM THOUGH THE ASSESSEES PARTNERS RESIDE AT THE SAID PLACE. IN THIS VIEW OF THE MATTER ON THE ANVIL OF HONBLE BOMBAY HIGH COURT DECISION IN THE CA SE OF TIRUPATI OIL CORPORATION (SUPRA) AND HONBLE KARNATAKA HIGH COURT DECISION IN THE CASE OF NENMAL SHANKARLAL PARMAR (SUPRA) IT CANNOT BE SAID THAT THERE WAS ANY SEARCH ON THE ASSESSEE FIRM. FURTHER MORE IT IS NOTED THAT IN THE SAID SEARCH NO MATERIAL WHATSOEVER RELATING TO THE ASSESSEE FIRM WAS FOUND NOR EVEN ANY STATEMENT OF THE PARTNERS OF THE ASSESSEE FIRM WAS TAKEN. FURTHER MORE THERE IS 11 ITA NOS. 142 TO 147/BLPR/2012 NO EVIDENCE ON RECORD TO SHOW THAT EVEN THE NOTICE OF SEARCH WAS SERVED UPON THE PARTNERS OF T HE FIRM. IN THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINION, IT CANNOT BE SAID THAT THERE WAS ANY VALID SEARCH UPON THE ASSESSEE FIRM. DRAWING STRENGTH FROM THE HONBLE BOMBAY HIGH COURT DECISION IN THE CASE OF M/S J.M. TRADING CORPORATION (SUPRA) WE HOLD THAT SINCE THE AS SESSMENT U/S 143(3) READ WITH SECTION 153A IN THIS CASE HAS BEEN DONE IN PURSUANCE OF AN INVALID SEARCH, THE SAME DESERVES TO BE DECLARED AS NULL AND VOID. 12 WE ALSO NOTE THAT ON THE SAME DATE OF SEARCH THE REVENUE HAS CONDUCTED SURVEY OPERATION AT THE B USINESS PREMISES OF THE ASSESSEE FIRM IN WHICH MATERIALS WERE SEIZED. THIS SURVEY DOES NOT ENTITLE THE REVENUE TO INITIATE PROCEEDINGS U/S 153A. HAVING SEARCHED THE RESIDENCE OF PARTNERS OF THE ASSESSEE FIRM REVENUE COULD HAVE INITIATED ACTION AGAINST THE ASSESSEE FIRM ONLY U/S 153C HAD ANY DOCUMENT PERTAINING TO THE FIRM WERE SEIZED FROM THE RESIDENTIAL PREMISES. SINCE NO MATERIAL WAS SEIZED, THE REVENUE COULD NOT HAVE INITIATED PROCEEDINGS AGAINST THE ASSESSEE FIRM U/S 153C. IN TH E SE CIRCUMSTANCES, IN OU R CONSIDERED OPINION, THE REVENUE CANNOT TAKE SHELTER OF PROVISIONS OF SECTION 153A FOR INITIATING ACTION AGAINST THE ASSESSEE WHICH WE HAVE FOUND TO BE NOT A VALID ONE QUA THE ASSESSEE FIRM . 13. ON A QUERY FROM THE BENCH AS TO WHY A SEARCH WAS NOT CONDUC TED AT THE BUSINESS PREMISES OF THE ASSESSEE FIRM WHEN SEARCH WAS CONDUCTED AT THE RESIDENCE OF THE PARTNERS AND ONLY SURVEY OPERATION WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE FIRM ON THE SAME DAY , LEARNED D.R. SUBMITTED THAT THIS IS PRIMARIL Y DONE IN VIEW OF THE INFORMATION AVAILABLE FOR INITIATING OF THE SEARCH. HE FURTHER SUBMITTED THAT THE REVENUE WANTS TO CONDUCT MINIMUM AMOUNT OF SEARCH TO KEEP THE STATISTICS OF SEARCH IN PROPER ORDER. IN OUR CONSIDERED OPINION THIS SUBMISSION OF THE L EARNED D.R. CANNOT BE A REASONING TO HOLD THAT BY MEANS OF AN INVALID SEARCH REVENUE CAN TAKE RECOURSE TO PROVISIONS OF SECTION 153A. HENCE ON THE ANVIL OF AFORESAID CASE LAWS FROM 12 ITA NOS. 142 TO 147/BLPR/2012 HONBLE HIGH COURTS, WE HOLD THAT SINCE THE WARRANT OF SEARCH WAS NOT EXEC UTED AT THE BUSINESS PREMISES OF THE ASSESSEE FIRM AND FROM THE PLACE OF SEARCH NO MATERIAL WHATSOEVER RELATING TO THE FIRM WAS FOUND NOR ANY SUBMISSION WAS RECORDED FROM THE PARTNERS OF THE FIRM NOR THE SEARCH NOTICE WAS SERVED UPON THE PARTNERS OF THE F IRM, THE SEARCH CONDUCTED QUA THE ASSESSEE FIRM WAS NOT A VALID SEARCH. IN SUCH CIRCUMSTANCES, PROCEEDINGS INITIATED U/S 153A IN THE CASE OF THE ASSESSEE FIRM ARE INVALID. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(APPEALS). AC CORDINGLY WE UPHOLD THE SAME. 12. IN THE RESULT, THESE APPEALS FILED BY THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF OCT., 2015. SD/ - SD/ - (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER. NAGPUR, DATED: 30 TH OCT., 2015. COPY FORWARDED TO : 1. M/S S.P. COLD STORAGE, NEAR RAILWAY CROSSSING, KHAMTARAI, RAIPUR. 2. A.C.I.T. - 1(2), RAIPUR. 3. C.I.T., RAIPUR. 4. CIT(APPEALS) , RAIPUR. 5. D.R., ITAT, RAIPUR. 6. GUARD FILE TRUE COPY. BY ORDER WAKODE ASSISTANT REGISTRAR, ITAT, NAGPUR