Punjab-Haryana High Court
Misty Meadows Pvt Limited vs Union Of India And Others on 13 May, 2024
Author: Sanjeev Prakash Sharma
Bench: Sanjeev Prakash Sharma
Neutral Citation No:=2024:PHHC:066872-DB
CWP No. 5139 of 2024 -1-
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
CWP No. 5139 of 2024 (O&M)
Reserved on : 19.04.2024
Date of Decision: 13.05.2024
Misty Meadows Private Limited ...Petitioner
Versus
Union of India and others ...Respondents
CORAM: HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA
HON'BLE MRS. JUSTICE SUDEEPTI SHARMA
Present: Mr. Akshay Bhan, Senior Advocate assisted by
Mr. Rana Gurtej Singh, Mr. Shantanu Bansal,
Mr. Mayank Goel and Mr. Vijay Aggarwal, Advocates,
for the petitioner (through VC).
Ms. Urvashi Dugga, Senior Standing counsel
for Income Tax Department.
SANJEEV PRAKASH SHARMA, J.
The petitioner by way of this writ petition seeks quashing of the
search proceedings and consequent panchnama dated 24.07.2016 and
19.09.2016 drawn against it by respondent nos. 2 and 3; further prayer to quash
the notice dated 05.01.2018 issued by respondent no.4; and the assessment order
and notice of even dated 07.02.2024 issued by the respondents raising a demand
for the assessment year 2011-2012 of a sum of ` 3,29,49,65,089/- under Section
156 of the Income Tax Act, 1961 (hereinafter to be referred as 'the Act').
2. Brief facts which have been culled out from the pleadings are that
against the petitioner company search and seizure operation was conducted
under Section 132 of the Act on 30.06.2011. Pursuant to the search proceedings,
the assessments for A.Y. 2006-07 to 2012-13 were framed. Notice under Section
1 of 19
Neutral Citation No:=2024:PHHC:066872-DB
153A of the Act was issued on 28.12.2012 and the petitioner company was asked
to furnish the return of total income including the undisclosed income. Final
assessment was framed under Section 153A of the Act vide Assessment Order
dated 28.02.2014. The returned income of ` 70,15,770/- was accepted.
3. It is submitted that thereafter in 2016 a search and seizure operation
was conducted against M3M India Limited company at its office at Paras Twin,
Tower-B, 6th Floor, Golf Course Road, Sector-54, Gurgaon, which was its
registered office and business premises. However, while preparing panchnama
drawn at the Paras Twin Tower-B, Gurgaon, name of the petitioner company was
also added although it is asserted that no authorization for search and seizure
under Section 132 of the Act was issued in the name of the petitioner nor any
search or seizure was conducted at the premises or registered office of the
petitioner company, which was situated at Shop No.4/36, DDA Market, Dakshin
Puri Extension, New Delhi-110062 with effect from 02.05.2011. It is stated that
the office premises were known to the respondent authorities as it was existing
from A.Y. 2011-2012 at the time of search and seizure conducted against the
petitioner.
4. The petitioner has asserted in pleadings that it owned 75 acres of
land at Bhiwadi (Rajasthan). In AY 2011-12, it had entered into separate
development agreement dated 07.09.2010 with five independent companies and
raised a security deposit of ` 2 crores from each company towards the
development of the land, these facts were recorded by the petitioner in its book
of accounts and disclosed in its annual financial statements and were noticed at
the time of search and seizure conducted against the petitioner. At the time of
assessment order dated 28.02.2014, no adverse remarks pertaining to transaction
2 of 19
Neutral Citation No:=2024:PHHC:066872-DB
for development of land at Bhiwadi was mentioned. It is stated further that
search and seizure of residential premises of promoters of M3M India Limited at
different places was also conducted in 2016 but no search of premises of the
Director of the petitioner company was conducted.
5. In the panchnama dated 24.07.2016 and 19.09.2016, which was
prepared for search at Paras Twin Tower (supra), the name of the petitioner
company was mentioned and it was alleged by revenue that there were
incriminating documents found during the search and also in an independent
search of one Gaurav Jain, who had been earlier Ex-Vice President of the
company and had resigned and disassociated from the company on 12.11.2014,
where certain details were found relating to the petitioner on cloning of his
laptop. On the said basis a notice under Section 153A of the Act was issued for
AY 2011-12 on 05.01.2018 and a questionnaire dated 27.08.2018 was also
issued. Another questionnaire was issued on 29.10.2018 for AY 2011-12 wherein
queries were raised with regard to development of land situated at Bhiwadi
(Rajasthan). It is stated that five companies, which have entered into
development agreement with the petitioner company, had subsequently entered
into separate agreements with ten other companies and had received a total
amount of ` 396 crores and therefore, SCN under Section 153A was issued to
show cause as why the amount of ` 10 crores and entry of ` 396 crores should
not be assessed as undisclosed income in the hands of the petitioner.
6. Reply was filed and the petitioner raised objections relating to
issuance of notice to it under Section 153A of the Act. The petitioner thereafter
also moved settlement application before Interim Board for Settlement but it
rejected the application on 29.03.2023 under Section 245D(4) of the Act.
3 of 19
Neutral Citation No:=2024:PHHC:066872-DB
Addendum order was issued on 31.03.2023 whereafter the assessing officer
issued letter to the petitioner on 09.09.2023 and subsequent letters for re-
assessing their income.
7. The petitioner has filed response on 27.11.2023 asking to provide
incriminating material revealing undisclosed income. The respondents informed
stating about the search conducted at the house of Gaurav Jain on 16.07.2016
where incriminating material was found from his laptop and also at the office
where the panchnama was prepared.
8. The petitioner company submitted its response on 24.01.2024,
29.01.2024 and 30.01.2024 raising objections regarding the proceedings initiated
under Section 153A of the Act to be without jurisdiction and without authority in
law. The petitioner has been served with a show cause notice dated 30.01.2024
for addition of income of ` 400/- crores for AY 2011-12 as payment made to
entities from undisclosed sources and an order has been passed on 07.02.2024
concluding assessment proceedings under Section 153A read with Section 153D
of the Act.
Submissions of the Petitioner
9. Learned counsel for the petitioner submits that action of the
respondents in entering the name of the petitioner in the panchnama dated
24.07.2016 and 19.09.2016 was wholly illegal, unjustified and without any
authorization as there was no material to form an opinion to initiate a fresh
search for AY 2011-12 against the petitioner-assessee, after the final assessment
order had been passed under Section 153A of the Act, though sanction and
authorization to conduct search under Section 132 can be said to have been
issued nor any such authorization letter has been placed on record. Merely on the
4 of 19
Neutral Citation No:=2024:PHHC:066872-DB
basis of making entry of name of the petitioner company in the panchnama
prepared at the registered office of another company, power under Section 153A
of the Act could not have been invoked afresh against the petitioner.
10. It is further submitted that the provisions of Section 292CC (1)(ii)
of the Act which allow authorization in the name of more than one person cannot
be said to have been invoked as there is no authorization available on record. If
any incriminating material would have been recovered relating to the petitioner
company, the panchnama should have mentioned the name of petitioner
company only with reference to the material and not as if the search was being
conducted against the petitioner. Hence, the proceedings initiated against the
petitioner company afresh under Section 153A of the Act are wholly vitiated and
deserves to be declared as void ab initio and nonest.
11. Learned counsel for the petitioner further submitted that all the
material had been disclosed and recorded in the books of accounts after the final
return of income submitted in terms of the search and seizure and subsequent
proceedings conducted against the petitioner under Section 153A of the Act in
2012. The returned income of ` 70,15,770/- was accepted after the assessment
order was passed on 28.02.2014. Thus, fresh proceedings under Section 153A of
the Act were not permissible. If any new material was found while conducting
search, the only procedure available with the respondents to conduct fresh
assessment was under Section 153C of the Act. He submits that in fact there was
no new material available and the record relating to the land transactions of
Bhiwadi were already mentioned in the record and it is a case of mere change of
opinion which cannot be allowed to be sustained.
5 of 19
Neutral Citation No:=2024:PHHC:066872-DB
12. It is further submitted that new material alleged to have been
recovered from the cloning of laptop of Gaurav Jain, is without compliance of
Section 65B of the Indian Evidence Act and no conclusions can be drawn on the
basis of such inadmissible documents. Thus, the action of the respondents is
without jurisdiction.
13. Learned counsel for the petitioner further submits that the procedure
laid down under Section 153C of the Act was sacrosanct and submits that if a
particular procedure has been laid down under the statute, the respondents were
obliged to conduct themselves accordingly and a different procedure cannot be
adopted. Further submits that the order of imposing ` 400/- crores by issuing a
fresh assessment order under Section 153A of the Act is based on complete non
application of mind. He submits that there is no flow of proceeds of such money
traceable to the books of accounts of the petitioner and the addition stands
already made on protective basis in the books of accounts of other company. The
amount received was only ` 10 crores and the remaining amount of ` 396 crores
was received and assessed separately for the other companies. However, the
respondents have put the entire additions on the petitioner company as
undisclosed income.
14. Learned counsel for the petitioner relies on judgments of Hon'ble
the Supreme Court in Income Tax Officer vs Seth Brothers (1969) 74 ITR 836
(SC); a Coordinate Bench of this Court in Harmel Singh vs Union of India
(1993) 204 ITR 334 (P&H), Hon'ble the Supreme Court in Chandra Kishor Jha
vs Mahavir Prasad and others 1999 (8) SCC 266, Bombay High Court in ITA
No. 581 of 2009 - Commissioner of Income Tax vs M/s. J. M. Trading
Corporation, against which Special Leave Petition (Civil) No. 31208 of 2010
6 of 19
Neutral Citation No:=2024:PHHC:066872-DB
was dismissed on 29.10.2010, judgment of Delhi High Court in ITA No. 943 of
2015 - Commissioner of Income Tax III vs Sarvmangalam Builders &
Developers Private Limited; and ITA No. 60 of 2017 Principal Commissioner
of Income Tax, Central-2, New Delhi vs Subhash Khattar; judgment of
Hon'ble the Supreme Court in OPTO Circuit India Limited vs Axis Bank and
others 2021 (6) SCC 707, judgment of Gujarat High Court in Principal
Commissioner of Income Tax vs Hitesh Ashok Vaswani (2023) 459 ITR 610
(Gujarat); and Hon'ble the Supreme Court in Principal Commissioner of
Income Tax vs Abhisar Buildwell Private Limited (2023) 454 ITR 212 (SC).
Submissions of the Respondents
15. Learned counsel for the respondents has supported the action of the
revenue and submits that apart there being an alternative remedy available and
the petitioner having already preferred an appeal during the pendency of the
present appeal, the petitioner should be relegated to the appellate forum. She
asserts that as the name of the petitioner company was mentioned in the
panchnama prepared on 24.07.2016 and 19.09.2016, it would be presumed that
there was authorization for search under Section 132 of the Act as against the
petitioner. She submits that the respondents have reasons to believe that there
had been non-disclosure on the part of the petitioner and, therefore, they only
chose to search the premise of registered office of M3M India company even for
locating the incriminating material against the petitioner company. She submits
that conditions enumerated of clause (a) (b) and (3) of Section 132 of the Act
were satisfied. The search operation ought not to be interfered with by this Court
as the same denies opportunity to the revenue to derail the layering money as the
same ought not to be entertained after passing of the assessment order.
7 of 19
Neutral Citation No:=2024:PHHC:066872-DB
16. It is further submitted that the petitioner cannot be allowed to
question the search after participation in pursuance to the search under Section
132 of the Act and submits that the petitioner had moved an application under
Section 245C (1) of the Act before the Income Tax Settlement Commission,
which was rejected on 29.03.2023 on the ground that the disclosure is not full
and true and there is a deficiency in explaining the facts gathered by the
department. The order of assessment is, thus, also appealable and on that count
the respondents have objected to.
17. Learned counsel for the respondents further submitted that as the
panchnama mentioned the name of the petitioner upon search if any documents
are received, the proceedings were required to be conducted under Section
153A(1) of the Act alone and there was no occasion to resort to provisions of
Section 153C of the Act. It is further submitted that the petitioner has filed return
on 29.01.2018 and notices along with questionnaire under Section 143 (2) and
143 (1) of the Act were initiated whereafter the petitioner approached the Income
Tax Settlement Commission. Another notice was issued on 04.01.2024 along
with documents. The petitioner did not submit its reply on merits of the case.
The Assessing Officer held that the accommodation entries were provided by the
companies, which were accepted by the operators as well as the Directors, whose
statements were recorded, which too provided to the petitioner. The
incriminating documents reflected that the companies were clearly linked and
the transactions were cleared through the paper companies after affording
opportunity to the petitioner, the assessment order was passed, which does not
warrant any interference.
8 of 19
Neutral Citation No:=2024:PHHC:066872-DB
18. Learned counsel for the respondents relies on Dr. Partap Singh and
another vs Director of Enforcement Foreign Exchange Regulation and others
1985 (3) SCC 72; Banda Development Authority, Banda vs Moti Lal Agarwal
and others 2011 (5) SCC 394; Union of India and others vs M/s Agarwal Iron
Industries 2014 (15) SCC 215; Principal Director of Income Tax
(Investigation) and others vs Laljibhai Kanjibhai Mandalia 2022 (10) SCALE
100; judgment of Orissa High Court in M/s Shiva Cement Limited and others
vs Director of Income Tax (Inv.), Bhubaneswar and others 2021 (439) ITR 92
and Civil Appeal arising out of SLP (C) No. 8867 of 2022 - PHR Invent
Educational Society vs UCO Bank and others decided on 10.04.2024.
19. We have heard learned counsel for the parties and have carefully
gone through the judgments cited by learned counsel for the petitioner as well as
learned counsel for the respondents.
20. The jurisdiction of this Court under Article 226 of the Constitution
of India has wide aptitude. However, time and again Hon'ble the Supreme Court
and various High Courts have refused to entertain the petitions where we find
that there is an efficacious remedy or considering that the questions complicate
examination of facts, we are relegating the petitioner to appeal. However, this
would not mean that the remedy under Article 226 is ousted. In a recent
judgment Godrej Sara Lee Limited vs Excise and Taxation Officer-cum-
Assessing Authority 2023 AIR (SC) 781, while considering the case travelling
from this Court, Hon'ble the Supreme Court has held as under:-
"5. A little after the dawn of the Constitution, a Constitution
Bench of this Court in its decision reported in 1958 SCR 595 (State
of Uttar Pradesh vs. Mohd. Nooh) had the occasion to observe as
follows:
9 of 19
Neutral Citation No:=2024:PHHC:066872-DB
"10. In the next place it must be borne in mind that there is
no rule, with regard to certiorari as there is with mandamus,
that it will lie only where there is no other equally effective
remedy. It is well established that, provided the requisite
grounds exist, certiorari will lie although a right of appeal
has been conferred by statute, (Halsbury's Laws of England,
3rd Edn., Vol. 11, p. 130 and the cases cited there). The fact
that the aggrieved party has another and adequate remedy
may be taken into consideration by the superior court in
arriving at a conclusion as to whether it should, in exercise of
its discretion, issue a writ of certiorari to quash the
proceedings and decisions of inferior courts subordinate to it
and ordinarily the superior court will decline to interfere
until the aggrieved party has exhausted his other statutory
remedies, if any. But this rule requiring the exhaustion of
statutory remedies before the writ will be granted is a rule of
policy, convenience and discretion rather than a rule of law
and instances are numerous where a writ of certiorari has
been issued in spite of the fact that the aggrieved party had
other adequate legal remedies. ***"
6. At the end of the last century, this Court in paragraph 15 of
the its decision reported in (1998) 8 SCC 1 (Whirlpool Corporation
vs. Registrar of Trade Marks, Mumbai and Others) carved out the
exceptions on the existence whereof a Writ Court would be justified
in entertaining a writ petition despite the party approaching it not
having availed the alternative remedy provided by the statute. The
same read as under:
(i) where the writ petition seeks enforcement of any of
the fundamental rights;
(ii) where there is violation of principles of natural
justice;
(iii) where the order or the proceedings are wholly
without jurisdiction; or
(iv) where the vires of an Act is challenged.
10 of 19
Neutral Citation No:=2024:PHHC:066872-DB
xxx xxx xx
8. That apart, we may also usefully refer to the decisions of this
Court reported in (1977) 2 SCC 724 (State of Uttar Pradesh & ors.
vs. Indian Hume Pipe Co. Ltd.) and (2000) 10 SCC 482 (Union of
India vs. State of Haryana). What appears on a plain reading of the
former decision is that whether a certain item falls within an entry
in a sales tax statute, raises a pure question of law and if
investigation into facts is unnecessary, the high court could
entertain a writ petition in its discretion even though the alternative
remedy was not availed of; and, unless exercise of discretion is
shown to be unreasonable or perverse, this Court would not
interfere. In the latter decision, this Court found the issue raised by
the appellant to be pristinely legal requiring determination by the
high court without putting the appellant through the mill of
statutory appeals in the hierarchy. What follows from the said
decisions is that where the controversy is a purely legal one and it
does not involve disputed questions of fact but only questions of
law, then it should be decided by the high court instead of
dismissing the writ petition on the ground of an alternative remedy
being available.
9. Now, reverting to the facts of this appeal, we find that the
appellant had claimed before the High Court that the suo motu
revisional power could not have been exercised by the Revisional
Authority in view of the existing facts and circumstances leading to
the only conclusion that the assessment orders were legally correct
and that the final orders impugned in the writ petition were passed
upon assuming a jurisdiction which the Revisional Authority did not
possess. We find, the orders impugned were passed wholly without
jurisdiction. Since a jurisdictional issue was raised by the appellant
in the writ petition questioning the very competence of the
Revisional Authority to exercise suo motu power, being a pure
question of law, we are of the considered view that the plea raised
in the writ petition did deserve a consideration on merits and the
11 of 19
Neutral Citation No:=2024:PHHC:066872-DB
appellant's writ petition ought not to have been thrown out at the
threshold."
Thus, in view of the above, this Court under Article 226 of the Constitution of
India would be well within its jurisdiction to entertain the petitions where it has
to examine whether the power exercised for conducting search and seizure is by
duly competent authority. This Court would also entertain petitions where the
challenge is to the jurisdiction exercised by the authority also in cases where
there is interpretation of the provisions of the Income Tax Act. In the appeal,
even if a final order has been passed and provisions of appeal is available, since
the appellate authority would not be able to examine the aforesaid aspect, writ
petitions would still lie and the concerned assessees cannot be ousted merely
because final order has been passed.
21. Keeping in view the exceptions carved out in Whirlpool
Corporation vs Registrar of Trade Marks, Mumbai and others (1998) 8 SCC 1,
we reject the submissions of the respondents and proceed to examine the
contentions of the petitioner on merits.
22. In the present case, we find that challenge is to the very initiation of
proceedings at the initial stage; search under Section 132 of the Act and
jurisdiction of the assessing officer by initiating proceedings under Section 153A
of the Act which needs to be examined. The validity of initiating search
proceedings cannot be examined by the Appellate Authority as is already held in
Chandra Kishor Jha; OPTO Circuit India Limited; M/s. J. M. Trading
Corporation, and Sarvmangalam Builders' cases (supra).
23. The petitioner has challenged the panchnama where its name has
been entered and submits that it has already suffered search and seizure earlier
12 of 19
Neutral Citation No:=2024:PHHC:066872-DB
resulting in an order passed under Section 153A of the Act and, therefore,
proceedings again initiated under Section 153A were wholly unwarranted. The
exercise of power under Section 153A based on panchnama was not available.
24. In M/s Seth Brothers'case (supra), Hon'ble the Supreme Court has
held as under:-
"The section does not confer any arbitrary authority upon the
revenue officer. The Commissioner or the Director of Inspection
must have, in consequence of information, reason to believe that the
statutory conditions for the exercise of the power to order search
exist. He must record reasons for the belief and he must issue an
authorization in favour of a designated officer to search the
premises and exercise the powers set out therein. The condition for
entry into and making search of any building or place is the reason
to believe that any books of account or other documents which will
be useful for, or relevant to, any proceeding under the Act may be
found. If the Officer has reason to believe that any books of account
or other documents would be useful for, or relevant to, any
proceedings under the Act, he is authorised by law to seize those
books of account or other documents, and to place marks of
identification therein, to make extracts or copies therefrom and also
to make a note or an inventory of any articles or other things found
in the course of the search. Since by the exercise of the power a
serious invasion is made upon the rights, privacy and freedom of
the tax-payer, the power must be exercised strictly in accordance
with the law and only for the purposes for which the law authorizes
it to be exercised. If the action of the officer issuing the
authorization, or of the designated officer is challenged the officer
concerned must satisfy the Court about the regularity of his action.
If the action is maliciously taken or power under the section is
exercised for a collateral purpose, it is liable to be struck down by
the court. If the conditions for exercise of the power are not
satisfied the proceeding is liable to be quashed. But where power is
13 of 19
Neutral Citation No:=2024:PHHC:066872-DB
exercised bona fide, and in furtherance of the statutory duties of the
tax officers any error of judgment on the part of the officers will not
vitiate the exercise of the power. Where the Commissioner
entertains the requisite belief and for reasons recorded by him
authorises a designated officer to enter and search premises for
books of account and documents relevant to or useful for any
proceeding under the Act, the Court in a petition by an aggrieved
person cannot be asked to substitute its own opinion whether an
order authorising search should have been issued. Again, any
irregularity in the course of entry, search and seizure committed by
the officer acting in pursuance of the authorisation will not be
sufficient to vitiate the action taken, provided the officer has in
executing the authorisation acted bona fide."
25. In the present case, we find that there is no authorisation issued to
conduct search and seizure relating to the petitioner. The panchnama prepared at
Gurgaon office of M3M India Limited only reflects the name of the petitioner
company.
26. The term panchnama is not defined in the Income Tax Act. A
panchnama is a document prepared in the ordinary course at a site of incident. In
Mohanlal Bababhai vs Emperor 1941 AIR (Bombay) 149, it was observed that
"The panchnama is merely a record of what a panch sees,". The search and
seizure under the Income Tax Act has to be carried out in the presence of at least
two respectable inhabitants of the locality where the search and seizure is
conducted. These respectable inhabitants or witnesses to the search and seizure
are known as the panches. The documentation of what they witness is known the
panchnama. The word "nama" refers to a written document and is usually
determined by the word which is combined with as a suffix. Example
"nikahnama" (marriage certificate), "hibanama" (gift deed), "vasiatnama"
14 of 19
Neutral Citation No:=2024:PHHC:066872-DB
(will), "ikrarnama" (agreement/ contract), "kaboolnama" (confession),
"vakalatnama" (power of attorney). Similarly in Vallibhai Ummarjit vs State
AIR 1963 Gujarat 145, noted that "panchnama is essentially a document
recording certain things which occur in presence of panches and which are seen
and heard by them". In State of Maharashtra vs Kachra Dass D. Balgar 1978
(80) Bombay Law Reporter 396 observed that a panchnama was stated to be
'the memorandum of what happens in the presence of panches as seen by them
and of what they hear'.
Thus, we find that the panchnama would be a document which has
to be prepared recording articles, material and objects which may be seized as
incriminating documents at the time of conducting search of premises.
Mentioning of the name of any company in the panchnama would only reflect
that documents relating to that company were found during the search at the
premises. A panchnama, therefore, cannot be treated to mean authorization
issued to the authorities under Section 132 of the Act.
27. Thus, we conclude that based on the name being mentioned in the
panchnama alone cannot be a conclusion that there was authorisation to conduct
search against the petitioner under Section 132 of the Act and the authorisation
to conduct search was only against M3M India Limited having their registered
office.
If during search in their premises any incriminating articles/
documents/ objects or any material relating to the petitioner was recovered,
which is found to be sufficient for the purpose of reassessment by the assessing
officer, he was required to follow the procedure laid down under Section 153C
of the Act.
15 of 19
Neutral Citation No:=2024:PHHC:066872-DB
28. In Nazir Ahmad vs King Emperor 63 Indian Appeals 372, wherein
the Privy Council held as under:-
"The rule which applies is a different and not less well recognized
rule- namely, that where a power is given to do a certain thing in a
certain way the thing must be done in that way or not at all. Other
methods of performance are necessarily forbidden. This doctrine
has often been applied to Courts- Taylor v. Taylor (1875) 1 Ch.D
426."
In Rao Shiv Bahadur Singh and another vs State of Vndhya Pradesh AIR 1954
SC 322 and State of U.P. vs Singhara Singh and others AIR 1964 SC 358, the
aforesaid principle was again reiterated by Hon'ble the Supreme Court.
29. Section 153C of the Act provides as under:-
Section 153C(1) in The Income Tax Act, 1961 - Notwithstanding
anything contained in section 139, section 147, section 148, section
149, section 151 and section 153, where the Assessing Officer is
satisfied that,--
(a) any money, bullion, jewellery or other valuable article or thing,
seized or requisitioned, belongs to; or
(b) any books of account or documents, seized or requisitioned,
pertains or pertain to, or any information contained therein, relates
to,
a person other than the person referred to in section 153A, then, the
books of account or documents or assets, seized or requisitioned
shall be handed over to the Assessing Officer having jurisdiction
over such other person and that Assessing Officer shall proceed
against each such other person and issue notice and assess or
reassess the income of the other person in accordance with the
provisions of section 153A, if, that Assessing Officer is satisfied that
the books of account or documents or assets seized or requisitioned
have a bearing on the determination of the total income of such
other person for six assessment years immediately preceding the
assessment year relevant to the previous year in which search is
16 of 19
Neutral Citation No:=2024:PHHC:066872-DB
conducted or requisition is made and for the relevant assessment
year or years referred to in sub-section (1) of section 153A :
Provided that in case of such other person, the reference to the date
of initiation of the search under section 132 or making of
requisition under section 132A in the second proviso to sub-section
(1) of section 153A shall be construed as reference to the date of
receiving the books of account or documents or assets seized or
requisitioned by the Assessing Officer having jurisdiction over such
other person:
Provided further that the Central Government may by rules30 made
by it and published in the Official Gazette, specify the class or
classes of cases in respect of such other person, in which the
Assessing Officer shall not be required to issue notice for assessing
or reassessing the total income for six assessment years
immediately preceding the assessment year relevant to the previous
year in which search is conducted or requisition is made and for
the relevant assessment year or years as referred to in sub-section
(1) of section 153A except in cases where any assessment or
reassessment has abated."
30. Thus, we find that a particular procedure has been prescribed, as
above. Following the salutary principles of law as laid down in Nazir Ahmad
and followed in Rao Shiv Bahadur Singh and Singhara Singh's cases (supra),
we find that the respondents were obliged to compulsorily follow the procedure
for reassessment of the petitioner company in the manner as prescribed under
Section 153C(1) alone and in no other manner. However, we find that the
respondents have invoked and initiated proceedings under Section 153A of the
Act, although neither there is any search initiated under Section 132 of the Act as
against the petitioner nor it can be said that the search was conducted at its
premises. Similar view has been taken by Gujarat High Court in Hitesh Ashok
Vaswani and Subhash Khattar's cases (supra). Thus, the proceedings initiated
under Section 153A are found to be vitiated.
17 of 19
Neutral Citation No:=2024:PHHC:066872-DB
31. In Abhisar Buildwell's case (supra), Hon'ble the Supreme Court has
held as under:-
"12. If the submission on behalf of the Revenue that in case of
search even where no incriminating material is found during the
course of search, even in case of unabated/completed assessment,
the AO can assess or reassess the income/total income taking into
consideration the other material is accepted, in that case, there will
be two assessment orders, which shall not be permissible under the
law. At the cost of repetition, it is observed that the assessment
under Section 153 A of the Act is linked with the search and
requisition under Sections 132 and 132A of the Act. The object of
Section 153A is to bring under tax the undisclosed income which is
found during the course of search or pursuant to search or
requisition. Therefore, only in a case where the undisclosed income
is found on the basis of incriminating material, the AO would
assume the jurisdiction to assess or reassess the total income for the
entire six years block assessment period even in case of
completed/unabated assessment. As per the second proviso to
Section 153A, only pending assessment/reassessment shall stand
abated and the AO would assume the jurisdiction with respect to
such abated assessments. It does not provide that all completed/
unabated assessments shall abate."
32. In J. M. Trading Corporation's case (supra), the Bombay High
Court held as under:-
"The Tribunal has categorically recorded a finding of fact on
initiation of the search that non-compliance of the provisions of the
Act by the Authorized Officer, such searches are invalid and illegal.
No search was conducted against the assessee as the premises
occupied by the assessee were not entered upon and searched by the
Authorised Officer."
18 of 19
Neutral Citation No:=2024:PHHC:066872-DB
33. Thus, when there was no search conducted under Section 132 and
132A of the Act as against the petitioner and only a panchnama reflects the name
of the petitioner prepared at the registered office of M3M India Limited, the
action of the respondents in passing second assessment order on 07.02.2024 on
the basis of notice under Section 153A dated 05.01.2018 is held to be unjustified
and without jurisdiction. Once the search and seizure was conducted and
assessment order dated 28.02.2014 was passed by invoking Section 153A of the
Act for the AY 2006-07 to 2012-13, fresh order without conducting search and
seizure operation would not be sustainable in law. In view of the aforesaid
findings and conclusions, we are satisfied that the entire proceedings initiated
under Section 153A of the Act including notice issued on 05.01.2018 are liable
to be quashed.
35. Accordingly, the writ petition is allowed and the notice dated
05.01.2018; assessment order and demand notice dated 07.02.2024 are quashed
and set aside, and the proceedings are held to be nonest.
36. All pending applications shall stand disposed of.
38. No costs.
(SANJEEV PRAKASH SHARMA)
JUDGE
13.05.2024 (SUDEEPTI SHARMA)
vs JUDGE
Whether speaking/reasoned Yes/No
Whether reportable Yes/No
19 of 19
