ZINZUWADIA AND SONS V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(3), AHMEDABAD

SCA/6135/2019

AI Insights

The case involves Zinzuwadia and Sons, a partnership firm trading in gold and silver bullion, challenging the orders of the Deputy Commissioner of Income Tax and the Principal Commissioner of Income Tax regarding a tax demand based on alleged bogus sales and excess stock. The petitioner argued that the assessments under section 153A of the Income Tax Act were invalid as no search was conducted at their premises, and that the demand was unreasonably high-pitched. The court found merit in the petitioner's arguments regarding the unreasonably high demand but did not grant an unconditional stay on the demand.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 683745 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 30-04-2019
• Assessment Year: misc
• Other Referred Cases: Bansilal B. Raisoni & Sons v. Assistant Commissioner of Income Tax, Central Circle-1, Nashik, Commissioner of Income-tax-IV v. Vishal Exports Overseas Limited, Commissioner of Income-tax-II v. Ramesh D. Patel, MDLR Resorts Pvt. Ltd. and others v. Commissioner of Income Tax and others, Commissioner of Income Tax, Chennai v. S. Ajit Kumar, Commissioner of Income Tax v. Jaora Flour and Foods (P) Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: M R BHATT; MAUNA BHATT
• Assessee Lawyers: B S SOPARKAR
• Keywords: Assessment; Bogus sales; Excess stock; Income Tax; Search and seizure; Stay of demand
• Section: 143(3); 153A; 68; 69B; 220(6); 226(3)

Judgement Text

"C/SCA/6135/2019 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 6135 of 2019 FOR APPROVAL AND SIGNATURE: HONOURABLE MS.JUSTICE HARSHA DEVANI and HONOURABLE MR. JUSTICE BHARGAV D. KARIA ========================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? Yes 2 To be referred to the Reporter or not ? No 3 Whether their Lordships wish to see the fair copy of the judgment ? No 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ? No ========================================================== ZINZUWADIA AND SONS Versus DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(3), AHMEDABAD ========================================================== Appearance: MR B S SOPARKAR(6851) for the Petitioner(s) No. 1 MR MR BHATT, SENIOR ADVOCATE with MRS MAUNA M BHATT(174) for the Respondent(s) No. 1,2 ========================================================== CORAM: HONOURABLE MS.JUSTICE HARSHA DEVANI and HONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 30/04/2019 ORAL JUDGMENT Page 1 of 25 C/SCA/6135/2019 JUDGMENT (PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) 1. By this petition under article 226 of the Constitution of India, the petitioner has challenged the order dated 8.2.2019 passed by the first respondent Deputy Commissioner of Income Tax, Central Circle 2(3), Ahmedabad as well as the order dated 11.3.2019 passed by the second respondent Principal Commissioner of Income Tax, Ahmedabad and has prayed that the first respondent be prohibited from recovering any amount from the petitioner towards the demand raised till the disposal of the appeal preferred by the petitioner before the Commissioner of Income-tax (Appeals). 2. The facts stated briefly are that the petitioner is a partnership firm trading in gold and silver bullion. The petitioner had commenced its business operations in financial year 2012-13. Originally, the petitioner dealt in only wholesale trading and with effect from 6.7.2016, it began retail trading. The petitioner filed return of income for assessment year 2017- 18 on 31.10.2017 declaring income of Rs.26,39,110/-. A search action took place at the residential premises of the partners and a survey action took place at the business premises of the petitioner on 24.1.2017. The first respondent, thereafter, framed assessment under section 143(3) read with section 153A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) at Rs.9,42,82,954/- on alleged bogus sales through backdating entries under section 68 of the Act (Rs.7,88,85,082/-) and on alleged excess stock under section 69B of the Act (Rs.1,27,58,762/-). Page 2 of 25 C/SCA/6135/2019 JUDGMENT 2.1 By a letter dated 30.1.2019, the petitioner requested the first respondent to keep the demand in abeyance till the appeal is decided by the CIT (Appeals). By the impugned order dated 8.2.2019 passed under section 220(6) of the Act, the first respondent rejected the application of the petitioner and asked the petitioner to make payment of 20% of the demand in three days. Thereafter, vide letter dated 18.2.2019, the petitioner requested the second respondent to keep the demand in abeyance till the decision of the CIT (Appeals). By an order dated 11.3.2019, which was furnished to the petitioner on 22.3.2019, the application came to be rejected. It is further the case of the petitioner that on the next day of supplying the order of rejection of the application of stay of demand by the second respondent, a notice under section 226(3) dated 25.3.2019 came to be issued by the first respondent attaching the bank accounts of the petitioner. Being aggrieved, the petitioner has filed the present petition seeking the reliefs noted hereinabove. 3. Mr. B.S. Soparkar, learned advocate for the petitioner submitted that the impugned orders are patently bad and illegal and deserve to be quashed and set aside. It was submitted that the petitioner is most likely to succeed in the appeal and, therefore, temporary recovery of tax is harsh and illegal. It was submitted that the Central Board of Direct Taxes has issued Circular No.1914 dated 2.2.1993 to streamline the issue relating to stay of demand but the same provides guidelines only and cannot be interpreted to mean that the demand of 20% is automatic. It was submitted that the first respondent was not justified in practically calling upon the petitioner to make payment of 20% of the demand and that Page 3 of 25 C/SCA/6135/2019 JUDGMENT too within a period of three days without giving the petitioner any time to approach the Principal CIT. 3.1 On the merits of the case, it was submitted that the assessment order itself is bad as no assessment could have been made under section 153A of the Act in the absence of a search at the premises of the petitioner. It was submitted that the additions are bad, and hence, the demand would not arise. It was submitted that no addition has been made in the case of the petitioner for the previous years and no addition in the case of the partners has been made for any of the six years. It was submitted that no search was conducted or initiated against the petitioner, and hence, the provisions of section 153A could not have been invoked. 3.2 Reference was made to rule 112 of the Income Tax Rules, 1962 to point out that in sub-rule (3) thereof there is reference to any person in charge of any building, place, vessel etc. to be searched. Sub-rule (4) refers to ingress into building or place etc. Reference was made to the other sub-rules to submit that the search is place specific and that there being no search at the premises of the petitioner, though authorisation was issued against it, the entire proceedings under section 153A of the Act are bad, and hence, the petitioner is entitled to unconditional stay of the demand until the appeal is decided by the Commissioner of Income Tax (Appeals). 3.3 In support of his submissions, the learned advocate placed reliance upon the decision of the Bombay High Court in the case of Bansilal B. Raisoni & Sons v. Assistant Commissioner of Income Tax, Central Circle-1, Nashik, Page 4 of 25 C/SCA/6135/2019 JUDGMENT (2019) 260 Taxman 281 (Bombay), for the proposition that in order to issue notice under sub-section (1) of section 153A of the Act, there must be initiation of search in case of the noticee and a mere search authorisation would not be sufficient. 3.4 Next, it was submitted that though there is a consistent delay on the part of the authorities in deciding the petitioner's application under section 220(6) of the Act, immediately after the passing of the order by the second respondent, the respondents have resorted to coercive measures. On the merits of the additions, it was submitted that the amount of Rs.7,88,85,082/- has been offered for sales and hence, no addition could have been made under section 68 of the Act. In support of such submission, the learned advocate placed reliance upon an unreported decision dated 3.7.2012 of this court in Commissioner of Income-tax-IV v. Vishal Exports Overseas Limited, rendered in Tax Appeal No.2471 of 2009 and allied matters wherein this court agreed with the view adopted by the Income Tax Appellate Tribunal that when the assessee had already offered sales realisation and such income is accepted by the Assessing Officer to be the income of the assessee, addition of the same amount once again under section 68 of the Act would tantamount to double taxation of the same income. 3.5 lnsofar as the second addition is concerned, it was submitted that the Assessing Officer has not considered the stock in the vault and therefore, such addition is not sustainable. It was urged that the petitioner has made out a strong prima facie case, the balance of convenience lies in Page 5 of 25 C/SCA/6135/2019 JUDGMENT favour of the petitioner, and if unconditional stay is not granted, it would result in undue hardship to the petitioner and hence, the garnishee order is required to be set aside and the petitioner is entitled to unconditional stay. 3.6 In support of such submission the learned advocate placed reliance upon the decision of this court in the case of Commissioner of Income-tax-II v. Ramesh D. Patel, (2014) 42 taxmann.com 540 (Gujarat). 4. Vehemently opposing the petition, Mr. M. R. Bhatt, Senior Advocate, learned counsel for the respondent, drew the attention of the court to the assessment order as well as the applications made by the petitioner under section 220(6) of the Act, to submit that no assertion has been made by the petitioner that as no search has been initiated in its case, therefore, the assessment is bad. It was submitted that no ground has been taken in either of the applications that there was no search at the premises of the petitioner. 4.1 Reference was made to section 132 of the Act to submit that search is in respect of a person at any place and that it is not necessary in law that the search should take place only at the business premises. The attention of the court was invited to the panchnama which forms part of the paper-book, to point out that the same has been drawn in the case of the petitioner as well as the partners. The learned counsel further invited the attention of the court to a copy of warrant of authorisation in respect of the petitioner to submit that the name of the petitioner is duly reflected in the said warrant and therefore, it is factually incorrect to contend that no search was conducted Page 6 of 25 C/SCA/6135/2019 JUDGMENT at the premises of the petitioner. It was submitted that the search was authorised, commenced and initiated and, therefore, as a necessary corollary, assessment was required to be made under section 153A of the Act. 4.2 It was submitted that under section 220(6) of the Act, the Assessing Officer will see if the case falls within any of parameters laid down under the circular issued by the CBDT. In this case, the Assessing Officer, after considering the facts of the case, was satisfied that 20% of the demand should be deposited. It was submitted that the having regard to the facts of the present case, this is a case for upward revision of the amount to be deposited, however, the Assessing Officer has duly exercised discretion and restraint in not going for an upward revision considering the facts and circumstances of the case. 4.3 Referring to the application made by the petitioner before the first respondent, it was submitted that there is not even a whisper regarding no search having been conducted in its case and that therefore, the proceedings under section 153A of the Act are bad in law. It was submitted that though before the PCIT, the petitioner has raised the issue about section 153A of the Act, there is no assertion to the effect that there is no search in its case. It was submitted that all these assertions are made to misguide the court and the authorities and that the contention that the department has acted in hot haste is incorrect in the facts of the case. It was submitted that the Assessing Officer has not acted without jurisdiction; there is no breach of the principles of natural justice; and that if assessment has been framed and only 20% of the demand is Page 7 of 25 C/SCA/6135/2019 JUDGMENT sought to be recovered, it cannot be said to be arbitrary. Reference was made to the contents of the assessment order, to submit that it is the case of the revenue that though the petitioner has shown sales in fact there are no sales. It was further submitted that the fact that excess stock had been found reveals that there was no corresponding sale. 4.4 Next, it was submitted that in exercise of powers under article 226 of the Constitution of India, this court would examine the validity of the decision making process and not the decision itself and that in the facts of the present case, there being no illegality in the decision making process, there is no warrant for interference by this court. 5. In rejoinder, Mr. B.S. Soparkar, learned advocate for the petitioner submitted that insofar as the contention with regard to section 153A of the Act is concerned, the same is a jurisdictional issue and can be raised by the petitioner at any point of time. Referring to the grounds of appeal raised before the CIT (Appeals), it was submitted that the petitioner was very much conscious of the issue. 5.1 On the question as to whether search was conducted in the case of the petitioner, it was submitted that the authorisation bears the address of the house of the partners and not of the shop/business premises of the petitioner. Referring to the panchnama drawn during the course of search proceedings, it was submitted that the panchnama had been drawn at the residential premises. It was submitted that the expression search as envisaged under section 132 of the Act is a search at the place where such search is actually conducted Page 8 of 25 C/SCA/6135/2019 JUDGMENT and that no search having been carried out at the business premises of the petitioner, the petitioner could not have been subjected to proceedings under section 153A of the Act. 5.2 Next, it was submitted that the material used to frame assessment under section 153A of the Act is not material found during the course of search but is based upon the documents found during the course of survey and no order could have been passed under section 153A on the basis of such material. Reliance was placed upon the decision of the Delhi High Court in the case of MDLR Resorts Pvt. Ltd. and others v. Commissioner of Income Tax and others, (2014) 361 ITR 407, wherein the court has held thus:- “13. The contention with regard to their addresses being different, is misconceived and mere ipse dixit. Address of a company will normally mean its registered office, head office etc. A person can operate from or keep documents, money etc. at different places and not necessarily from the registered office etc. or from where business is conducted. The address mentioned in the warrant and the panchnama need not be the registered office or the head office but it has to be the place where the search was to be conducted and was conducted. The address at which search could be conducted would be the place or location, where books of accounts, documents, jewellery, unaccounted assets etc. could be located/found.” 5.3 It was submitted that in the case of the petitioner the authorisation has been sent but no search had been initiated and that the address stated in the authorisation is not that of the petitioner and that there was no search at the premises of the petitioner, whereas addition has been made taking cognizance of the material seized during the course of the search. Reference was made to the decision of the Bombay Page 9 of 25 C/SCA/6135/2019 JUDGMENT High Court in the case of Bansilal B. Raisoni & Sons v. Assistant Commissioner of Income Tax, Central Circle-1, Nashik, (supra), wherein the court has held thus:- “6. As noted above, the broad facts before us are that the search authorization was issued against the petitioner partnership firm, one of its partners and another person. Actual search was carried, as pointed out by the petitioner, at three different locations namely at the residential premises of one of the partners and two other residential premises, one of them belonging to the brother of the partner of the partnership firm. In the context of such broad facts, if we refer to Section 153A of the Act, we notice that in subsection (1) thereof, notwithstanding anything contained in Sections 139, 147, 148, 149, 151 and 153 of the Act, in case of a person where search is initiated under Section 132 or books of accounts, other documents are requisitioned under Section 132A, the Assessing Officer would have the authority to issue notice to such person, requiring him to furnish the return of income in respect of each assessment year falling within six assessment years and thereafter carry out the assessments accordingly. In the present case, we have no hesitation in accepting the petitioner's contention that in order to issue notice under subsection (1) of section 153A, there must be initiation of search in case of the noticee. Mere search authorization would not be sufficient. There is clear distinction between search authorization and conduct of the search. In subsection (1) of Section 153A of the Act, therefore, the legislature has advisably used expression \"where a search is initiated under Section 132\". 7. We are also in agreement with the contention of the Counsel for the petitioner that the petitioner's objection to the jurisdiction of the Assessing Officer on the ground that if no search was initiated, notice under Section 153A of the Act could not have been issued, cannot be curtailed on the ground that such objection was raised beyond the period referred to in subsection (3) of Section 124 of the Act. Section 124 of the Act pertains to jurisdiction of Assessing Officers. Subsection (1) of Section 124 lays down territorial jurisdiction of the Assessing Officer. Subsection (2) of Section 124 provides Page 10 of 25 C/SCA/6135/2019 JUDGMENT that where the question arises under said section, as to whether an Assessing Officer has jurisdiction to assess any person, such question shall be determined by the authority prescribed under the said subsection. Subsection (3) of section 124 provides time limits for a person to call in question jurisdiction of an Assessing Officer. Clause (c) of subsection (3) of section 124 provides that no person shall be entitled to call in question jurisdiction of an Assessing Officer where an action has been taken under Section 132 or section 132A, after the expiry of one months from the date on which he was served with a notice under subsection (1) of Section 153A or subsection (2) of Section 153C of the Act or after the completion of the assessment, whichever is earlier. In clear terms, the time limit for raising objection to the jurisdiction of the Assessing Officer prescribed under subsection (3) of section 124 has a relation to the Assessing Officer's territorial jurisdiction. The time limit prescribed would not apply to a case where the assessee contends that the action of the Assessing Officer is without authority of law and, therefore, wholly without jurisdiction.” 5.4 Dealing with the contention of the learned counsel for the respondent that the Assessing Officer had exercised restraint in not going for an upward revision, it was submitted that every search case does not require a higher than the threshold limit to be invoked. 5.5 Various other submissions have been made on the merits of the assessment order; however, since this court is only examining the validity of the orders passed by the Assessing Officer and the PCIT under section 220(6) of the Act, it would not be proper for the court to examine such contentions on merits. 6. In this case, the petitioner has challenged the order Page 11 of 25 C/SCA/6135/2019 JUDGMENT dated 8.2.2019 passed by the Assessing Officer and the order dated 11.3.2019 passed by the Principal Commissioner of Income Tax on the applications made by the petitioner under section 220(6) of the Act. 7. The challenge to the said orders is based principally on the ground that on merits the petitioner has a very good case and is, therefore, entitled to the grant of unconditional stay against any recovery pursuant to the assessment order. The first ground that is advanced before this court is that no search was carried out at the premises of the petitioner and, therefore, proceedings under section 153A of Act could not have been taken against the petitioner. The second ground is that even on merits the petitioner has a very good case, inasmuch as, firstly, the amount of Rs.7,88,85,082/- added to the income of the petitioner has already been offered as sales, and hence, no addition could have been made of such amount under section 68 of the Act; and secondly, while holding that there was excess stock, the Assessing Officer has not considered the stock in the vault; and that had the stock in the vault been taken into consideration, there would have been no excess at all. According to the learned counsel for the petitioner, the petitioner has made out a prima facie case, the balance of convenience lies in favour of the petitioner and the petitioner would have to suffer undue hardship if the demand is not stayed more particularly, considering the fact that the demand is unreasonably high-pitched. 8. On behalf of the revenue, it has been pointed out that the warrant of authorisation has been issued in respect of the petitioner whereas the places mentioned therein are places Page 12 of 25 C/SCA/6135/2019 JUDGMENT other than the business premises of the petitioner. It has been contended that the search is qua a person and not location specific as is sought to be contended on behalf of the petitioner and that it is factually incorrect to say that no search had been conducted in respect of the petitioner. On the merits of the assessment order, it has been contended that what is shown as sales by the petitioner are in fact not sales, but the petitioner’s own cash in old higher denomination notes which have been sought to be legalised by showing cash receipt in respect of sales; that such fact is supported by the fact that excess stock was found at the premises of the petitioner which indicates that in fact there were no sales. 9. Insofar as the first contention namely that in the absence of search at the premises of the petitioner, no proceedings could have been taken against the petitioner under section 153A of the Act is concerned, the learned counsel for the respondent had produced for the perusal of the court, a copy of the warrant of authorisation, which clearly shows that the same has also been issued in respect of the petitioner. However, the addresses for carrying out search are the residences of the partners and not the business premises of the petitioner. 10. It is an admitted position that insofar as the business premises of the petitioner are concerned, the same were subject to survey under section 133A of the Act. At this juncture, reference may be made to sub-section (1) of section 132 of the Act, which provides for search and seizure and reads as under:- Page 13 of 25 C/SCA/6135/2019 JUDGMENT “132. Search and seizure.-(1) Where the Principal Director General or Director General 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 subsection (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income Tax Act, 1922 (11 of 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 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 Page 14 of 25 C/SCA/6135/2019 JUDGMENT (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; (ii-a) 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; (ii-b) 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 (i) of sub- section (1) of Section 2 of the Information Technology Act, 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:” 11. Thus, under sub-section (1) of section 132 of the Act, the Principal Director General or Director General or Director or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or Additional Director Page 15 of 25 C/SCA/6135/2019 JUDGMENT or Additional Commissioner, or Joint Director or Joint Commissioner, as the case may be (hereinafter referred to as the higher authority), is required to form an opinion that any person satisfies the ingredients of clauses (a) or (b) or (c) thereof, in which case he may authorise any of the officers of the rank specified under sub-clauses (A) and (B) thereof, to 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. Thus, the warrant of authorisation is person specific and states the places where search is required to be conducted qua such person. Such search may be at the office premises, residential premises or even at the premises of a third person, depending on where the competent authority has reason to suspect that books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept. The contention based on rule 112 of the rules that search is location specific, therefore, does not merit acceptance. Rule 112 of the rules provides that the powers of search and seizure under section 132 shall be exercised in accordance with sub- rules (2) to (14) thereof. Thus, rule 112 provides for the manner in which search is to be conducted. Sub-rule (2) provides for the forms in which authorisations are to be issued. On a bare reading of rule 112 as a whole, there is nothing therein to indicate that search is location specific as is sought to be contended on behalf of the petitioner. 12. In this regard, reference may be made to the decision of the Bombay High Court in Bansilal B. Raisoni & Sons v. Assistant Commissioner of Income Tax (supra), on which reliance has been placed by the learned advocate for the Page 16 of 25 C/SCA/6135/2019 JUDGMENT petitioner, wherein the court has prima facie found that there is no provision which would restrict the department’s search action only to the registered office of a partnership firm. The court held that the conduct of search at these places in relation to the partnership firm and its business need to be examined in proper perspective keeping in mind the objections of the partnership firm and such exercise should be allowed to be done at the level of the Assessing Officer. 13. Reference may also be made to the decision of the Delhi High Court in MDLR Resorts Pvt. Ltd. v. Commissioner of income Tax, (supra), on which reliance has been placed by the learned advocate for the petitioner, wherein the court has held thus:- “13. The contention with regard to their addresses being different, is misconceived and mere ipse dixit. Address of a company will normally mean its registered office, head office etc. A person can operate from or keep documents, money etc. at different places and not necessarily from the registered office etc. or from where business is conducted. The address mentioned in the warrant and the panchnama need not be the registered office or the head office but it has be the place where the search was to be conducted and was conducted. The address at which search could be conducted would be the place or location, where books of accounts, documents, jewellery, unaccounted assets etc. could be located/found.” “17. What is noticeable that the mandate and language Section 153A(1) does not make any reference to panchnama or the date of panchnama. It does not state that the panchnama is a pre-condition for invoking the said Section. The words used by the Legislature are “search is initiated under Section 132”. The word ‘initiate' means to commence or start. The section is invoked and applicable when the search is‘initiated'. In other words, the section ticks of and comes into play Page 17 of 25 C/SCA/6135/2019 JUDGMENT when the search commences or is undertaken against a person. The expression ‘initiate' had come up for interpretation before the Karnataka High Court in Commissioner of Income Tax vs. WIPRO Finance Ltd. (2010) 323 ITR 467 in relation to Sections 158BC, 158BD etc., and it was observed that as per the dictionary meaning, the said word refers to beginning, commencement or start of proceedings. Reference was made to the decision of the Supreme Court in Om Prakash Jaiswal vs. G.K. Mittal AIR 2000 SC 1136, wherein expression‘initiate any proceedings for contempt' in Section 20 of the Contempt of Courts Act 1971, was interpreted. It was held that the word‘initiate' means introductory steps or action or first move. Black's Law Dictionary was referred to and it was observed that ‘initiation of contempt proceedings' takes place when the court applies its mind to allegation and decides to direct the alleged contemnor under Section 17 to show-cause as to why he should not be punished. Thereafter, reference was made to different factual situations. In Wipro Finance's case (supra), it was accordingly observed:- “24. It is the settled principle that while assigning meaning to any expression in any provision of a statute, the context under which the particular expression is used has to be borne in mind. Therefore, bearing in mind the context in which the expression‘search initiated' has been used under various sections of IT Act including ss. 158BA(1), 158BC, 158BD, 158BE(1)(a) and (b) and 253A(1)(a) and (b) and also in the light of examining the dictionary meaning of the word ‘initiate' as extracted by the High Court of Rajasthan at para No. 34 of its judgment in the case of Rajasthan Udyog referred to supra and also in the light of the above observations of the Hon'ble Supreme Court in the case of Omprakash Jaiswal (supra) we may safely assign to the expression ‘search initiated'; the meaning ‘search taken' or ‘search commenced' or ‘making beginning of the search'. If this is meant by expression‘search initiated' it cannot be held that the only signing of the authorizations by the Director of IT, Bangalore, on 30th Dec., 1996 to make a search in the premises of the respective assessees would amount to ‘initiation of search'. Page 18 of 25 C/SCA/6135/2019 JUDGMENT The signing of the authorizations' would at best amount to ‘taking of the decision by the said authority to initiate search' in the premises of respective assessees but not initiation of search itself.” 14. Thus, the court has held that the address mentioned in the warrant and the panchnama need not be the registered office or the head office but it has be the place where the search was to be conducted and was conducted. The address at which search could be conducted would be the place or location, where books of accounts, documents, jewellery, unaccounted assets etc. could be located/found. 15. A perusal of the record as produced by the petitioner shows that the panchnama drawn at the time of the search shows that the search was carried out at the house, but the name of the petitioner also finds place in the panchnama. The list of inventory of books of account etc. found/seized; list of inventory of jewellery etc. found/seized; inventory of cash found/seized; all bear the name of the petitioner along with the other persons in respect of whom warrant of authorisation was issued. 16. Evidently therefore, the search had been conducted in the case of the petitioner at the locations stated in the authorisation. This court is in complete agreement with the view taken the Delhi High Court in MDLR Resorts Pvt. Ltd. v. Commissioner of income Tax (supra), to the effect that the address at which search could be conducted would be the place or location, where books of accounts, documents, jewellery, unaccounted assets etc. could be located/found and Page 19 of 25 C/SCA/6135/2019 JUDGMENT it need not be the registered office/head office of the person concerned. Under the circumstances, the contention that no proceedings under section 153A of the Act could have been initiated against the petitioner does not merit acceptance. 17. Insofar as the contention that the additions have been made on the basis of the material found during the course of survey and not during the course of search is concerned, the learned counsel for the respondent has placed reliance upon the decision of the Supreme Court in Commissioner of Income Tax, Chennai v. S. Ajit Kumar, (2018) 404 lTR 526, wherein it has been held thus: “15. The power of survey has been provided under Section 133-A of the IT Act. Therefore, any material or evidence found/collected in a survey which has been simultaneously made at the premises of a connected person can be utilised while making the block assessment in respect of an assessee under Section 158-BB read with Section 158-BH of the IT Act. The same would fall under the words “and such other materials or information as are available with the Assessing Officer and relatable to such evidence” occurring in Section 158- BB of the Act. In the present case, the Assessing Officer was justified in taking the adverse material collected or found during the survey or any other method while making the block assessment.” 18. In the opinion of this court, prima facie the above cited decision would not be applicable to proceedings under section 153A of the Act inasmuch as section 158BB of the Act relates to undisclosed income of the assessee for the block period which has to be computed on the basis of the evidence found as a result of the search or requisition of books of account or other documents or such other materials or information as may Page 20 of 25 C/SCA/6135/2019 JUDGMENT be available with the Assessing Officer; whereas section 153A of the Act is much wider and does not specify the basis on which the income is to be computed. In case of section 153A of the Act, the search or requisition are the trigger points, and once the trigger operates the Assessing Officer is required to assess or reassess the total income of the assessee for six assessment years preceding the assessment year relevant to the previous year in which the search is carried out. Thus, while under section 158BB of the Act, it is the undisclosed income which is to be computed, under section 153A of the Act there is assessment or reassessment of the total income of six assessment years. While in those cases, where an assessment order has already been framed under section 143(3) of the Act prior to initiation of proceedings under section 153A or 153C of the Act, it has been held that any addition made in those proceedings should be on the basis of the material found during the course of search. In other words, in case of reassessment, the addition has to be based upon material found during the course of search, but insofar as assessment is concerned, all available material can be taken into consideration, whether it is found during the course of search, requisition or survey or is otherwise available with the Assessing Officer. In case of assessment, the additions cannot be restricted to the material found during the course of search alone. 19. So far as the merits of the additions are concerned, the learned advocate for the petitioner has placed reliance upon the decision of the Madhya Pradesh High Court in Commissioner of Income Tax v. Jaora Flour and Foods (P) Ltd., [2012] 344 ITR 294 (Madhya Pradesh), wherein it was Page 21 of 25 C/SCA/6135/2019 JUDGMENT held thus:- “5. After hearing learned counsel for the appellant and on a perusal of the record, we find that the plea raised by the appellant-Department has already been dealt with by the Tribunal in detail. In the loose paper found during the survey, the sale of old bardana of Rs.6.50 lakhs on December 22, 2001, and Rs.3.50 lakhs on December 24, 2001, totalling Rs.10 lakhs was mentioned. The Tribunal has found that this sale of bardana was entered in the books of account on December 27, 2001, and, thereafter, the profit and loss accounts were drawn up and the computation of income was based on the profit as per the profit and loss accounts, therefore, the computation of income included the alleged unaccounted sale of bardana also. The Assessing Officer ignoring the aforesaid aspects of the matter had made an addition in respect of the alleged sale of bardana. In the aforesaid background, the Tribunal had affirmed the deletion of Rs.10 lakhs (rupees ten lakhs) by the Commissioner of Income-tax (Appeals), which the Assessing Officer had added on the basis of the loose paper found during the course of survey. The facts recorded by the Tribunal are not in dispute and the conclusion, which has been drawn by the Tribunal on the basis of the factual analysis also does not suffer from any error. 6. So far as the issue of the deletion of Rs.10 lakhs (rupees ten lakhs), which were added on account of cash found during the course of survey is concerned, during the survey an amount of Rs.10 lakhs (rupees ten lakhs) was surrendered on account of unrecorded sale of bardana and further Rs.10 lakhs (rupees ten lakhs) were found as cash. The Tribunal has found that after completion of survey, the alleged unaccounted sale of bardana of Rs.10 lakhs (rupees ten lakhs) was entered in the books of account by the assessee on December 27, 2001. The assessee's explanation has been accepted that cash of Rs.10 lakhs (rupees ten lakhs) found during the course of survey were on account of realisation from above sale of bardana of Rs.10 lakhs (rupees ten lakhs). Thus the amount of Rs.10 lakhs cash found during the course of survey was duly entered in the books of account and the same did not remain unrecorded and it Page 22 of 25 C/SCA/6135/2019 JUDGMENT was not unaccounted. The Tribunal noted that the addition of the same amount again during the assessment proceedings amounted to double addition, since it was already shown in the books of account. The facts recorded by the Tribunal are not in dispute and the reasoning given by the Tribunal for deleting the addition of Rs.10 lakhs (rupees ten lakhs) on the undisputed facts does not suffer from any error.” 20. A perusal of the impugned order passed by the Assessing Officer reveals that while considering the application made by the petitioner under section 220(6) of the Act, he has merely referred to the contents of the CBDT circular and without application of mind to the merits of the application has directed the petitioner to pay 20% of the demand of Rs.8,57,91,420/-. The PCIT, in the impugned order dated 11.3.2019, has observed that none of the pleas are covered by the guidelines given by the CBDT in its revised Instruction No.1914 relating to stay of recovery of demand and has refused to interfere with the Assessing Officer's decision mainly on the ground that the assessee has the ability to raise funds whereas the other submissions made by the assessee have been brushed aside by observing that the merits of the additions are being challenged and the grounds raised have been considered by the Assessing Officer in the assessment order. The PCIT has nowhere applied his mind to the contention of the assessee that the assessment is unreasonably high-pitched and that enforcement of recovery of the demand would cause genuine hardship to the assessee since the demand is unusually high looking to the financial standing of the assessee. In the opinion of this court, when the statute vests power in an authority, such power is required to be exercised in a reasonable manner, and not in the Page 23 of 25 C/SCA/6135/2019 JUDGMENT perfunctory manner in which both the Assessing Officer and the PCIT have dealt with the applications made by the petitioner under section 220(6) of the Act. 21. Considering the submissions advanced by the learned counsel for the petitioner, it appears that there is some merit in the submissions insofar as the additions are concerned. Moreover, considering the amount assessed during the course of regular assessment in the preceding years, the assessment order for the year under consideration appears to be unreasonably high-pitched. However, for the reasons recorded hereinabove, no case has been made out for unconditional stay of the demand. Besides, a perusal of the assessment order reveals that on behalf of the petitioner it has been admitted that an amount of Rs.91,50,156/- is to be treated as out of books sales which is unrecorded in the books of accounts. 22. For the reasons recorded hereinabove, and more particularly considering the fact that the assessment is unreasonably high-pitched, the court is of the view that the ends of justice would be met, if instead of 20% of the demand, further recovery of the demand is stayed subject to the petitioner making payment of 10% of the demand of Rs.8,57,91,42O/-. 23. In the light of the above discussion, the petition partly succeeds and is, accordingly, allowed to the following extent. The impugned orders dated 8.2.2019 and 11.3.2019 passed by the first and the second respondents, respectively, as well as the impugned notice dated 25.3.2019 issued under section Page 24 of 25 C/SCA/6135/2019 JUDGMENT 226(3) of the Act, are hereby quashed and set aside. Further recovery of the demand is stayed subject to the petitioner making payment of 10% of the demand of Rs.8,57,91,420/-. Rule is made absolute accordingly to the aforesaid extent. 24. It is clarified that the view expressed in this order is a prima facie view for the purpose of deciding the application under section 220(6) of the Act and the CIT (Appeals) shall decide the appeal without in any manner being influenced by any observations made in this judgment. (HARSHA DEVANI, J) (BHARGAV D. KARIA, J) Z.G. SHAIKH Page 25 of 25 "