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January 14, 2023

153A proceedings are illegal without a valid search warrant.

by CA Shivam Jaiswal in Income Tax

153A proceedings are illegal without a valid search warrant.

fact and issue of the case

1. These appeals by the Revenue Department-Appellant are directed against a common order dated 23rd June, 2011 passed by the Income Tax Appellate Tribunal, Cuttack Bench, Cuttack (ITAT) in IT (SS)A Nos.39 to 45/CTK/2008 for the Assessment Years (AYs) 2000-01 to 2006-07. 2. The question sought to be urged by the Revenue in these appeals for consideration of this Court is whether ITAT was justified in holding that the proceedings initiated against the Respondent-Assessee under Section 153A of the Income Tax Act, 1961 (Act) was without jurisdiction inasmuch as there was no search warrant at all issued preceding the search conducted in the residential and office premises of the Respondent?

3. This is not the first round of litigation concerning the Respondent-Assessee for the aforementioned years. In fact, this is the second round of litigation.

4. The background facts are that the Respondent is a Society registered under the Societies Registration Act, 1860 and was created for charitable purpose for imparting technical education. It has established several education institutions in Bhubaneswar and has been conferred upon the status of ‘Deemed University’ by the University Grants Commission.

5. Admittedly, on 9th and 10th August 2005, a search was undertaken by the Department in the residential premises of the President of the Society. It is stated that books of accounts, documents, etc. were seized during the course of the search.

6. Pursuant to such search and seizure operation, proceedings under Section 153A of the Act were initiated against the Respondent-Assessee. A tax demand of Rs.15,35,75,989/- was raised for the aforementioned seven AYs i.e. 2000-01 to 2006-07.

7. Challenging the assessment orders, the Respondent-Assessee filed appeals before the Commissioner of Income Tax (Appeals) [CIT(A)]. After the appeals were dismissed by the CIT(A), the Assessee went in appeals before the ITAT where for the first time it raised an additional ground that since no search warrant had been issued, much less served on the Assessee, the proceedings initiated under Section 153A of the Act were without legal basis.

8. The ITAT, in the first round, remitted the matters to the CIT(A) to first decide the additional ground viz., whether in fact any search warrant was issued authorizing the search conducted in the premises of the Respondent-Assessee.

9. Aggrieved by the aforesaid order of the ITAT, the Assessee came before this Court

observation of the court

1. Before this Court, Mr. Radheshyam Chimanka, learned Senior Standing Counsel for the Revenue Department-Appellant placed reliance on the judgments of the Punjab and Haryana High Court in Jai Bhagwan Om Parkash v. Director of Inspection (1994) 208 ITR 424 (P & H) and on the Madras High Court in I. Deverajan v. Tamilnadu Farmers Service Co-Operative Federation, 131 ITR 506 (Mad.). Having examining the said two decisions, the Court finds that they arose in different fact situations and, therefore, are distinguishable. As far as the present cases are concerned, this Court in the first round of litigation accepted the legal position that without there being a valid search warrant authorizing the search in the premises of the Assessee under Section 132 of the Act, the question of initiating proceedings under Section 153A of the Act did not arise. The matter had been remanded to the ITAT only for determining the factual aspect of the existence of a valid search warrant.

2. Before this Court also the Revenue has not been able to demonstrate that there exists in the records of the Revenue a valid search warrant authorizing the searches that were conducted in the premises of the Respondent-Assessee on 9th and 10th August, 2005. De hors such search warrant, validly issued to authorize the search, the question of initiating proceedings under Section 153A of the Act simply did not arise. Since the issue has turned purely on facts, the Court is unable to find any error having been committed by the ITAT in concluding that the entire assessment proceedings under Section 153A of the Act against the Respondent-Assessee were invalid.

3. As a result, the Court is unable to be persuaded to frame the question as urged by the Revenue in these appeals. No substantial question of law arises for consideration by this Court.

4. The appeals are accordingly dismissed.

Conclusion

The tribunal has ruled in favour of the assessee and dismiss the appeal

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