Iapl v. Assistant Commissioner Of Income Tax

(AFR) Reserved on 17.11.2017Delivered on 11.01.2018 Case :- INCOME TAX APPEAL No. - 3 of 2000 Appellant :- M/S Verma Roadways Through its Partner R.K.VermaRespondent :- Assistant Commissioner Of Income TaxCounsel for Appellant :- A.P. Singh, S.P. Gupta, Counsel for Respondent :- Ashish Agarwal, Manish Goel And Case :- INCOME TAX APPEAL No. - 4 of 2000 Appellant :- The Commissioner Of Income Tax, Kanpur & AnotherRespondent :- M/S Verma Roadways .133/225 Transport Nagar,Kanpur Counsel for Appellant :- Ashish Agrawal,C.S.C., Manish GoelCounsel for Respondent :- Ravi Kant, Senior Advocate,A.P. Singh, Tanmay Sadh, Rahul Agarwal, Advocates Hon'ble Sudhir Agarwal,J.Hon'ble Dr. Kaushal Jayendra Thaker,J. (Delivered by Hon'ble Sudhir Agarwal, J.) 1. Both these appeals filed under Section 260A of Income Tax Act,1961 (hereinafter referred to as “Act 1961”) have arisen from the samejudgment dated 15.9.1999 passed by Income Tax Appellate Tribunal,Allahabad Bench 'A', Allahabad(hereinafter referred to as 'Tribunal) inITA No. 1551(Alld) of 1997 relating to Block period from 1.4.1994 to28.11.1996. Assessee as well as Commissioner of Income Tax(hereinafter referred to as 'Revenue') both have come in appeal beforethis Court and hence both appeals have been heard together and arebeing decided by this common judgment. 2.Sri Ravi Kant, Senior Advocate assisted by Sri Rahul Agarwal,Advocate have appeared on behalf of Assessee and Sri Manish Goel,Advocate has put in appearance on behalf of Revenue. 3.Revenue's appeal was admitted on the following substantialquestions of law:- (1)Whether on the facts and in the circumstances of the case,Tribunal was right in holding that authorization for searchTribunal was right in holding that authorization for search issued under section 132 and on the basis of which searchwas conducted against Assessee, was invalid, and if so,whether notice issued under section 158 BC of Act, 1961 toAssessee was invalid? (2)Whether notice dated 8.5.1997 issued under section 158BC was invalid because material requisitioned undersection 132-A of Act, 1961 was not available to Income TaxDepartment till that date?BC was invalid because material requisitioned undersection 132-A of Act, 1961 was not available to Income TaxDepartment till that date? (3)Whether Appellate Tribunal was right in holding that noticedated 8.5.1997 was invalid because it did not specify statusof Assessee?dated 8.5.1997 was invalid because it did not specify statusof Assessee? (4)Whether Appellate Tribunal was right in holding that noticedated 8.5.1997 was invalid because it did not indicate,whether it was issued on the basis of search or requisitionor both?dated 8.5.1997 was invalid because it did not indicate,whether it was issued on the basis of search or requisitionor both? (5)Whether Appellate Tribunal was right in holding that noticedated 8.5.1997 was invalid because it mentioned blockperiod as 1.4.1986 to 28.12.1996 while assessment hasbeen made for the period 1.4.1994 to 28.11.1996 ?dated 8.5.1997 was invalid because it mentioned blockperiod as 1.4.1986 to 28.12.1996 while assessment hasbeen made for the period 1.4.1994 to 28.11.1996 ? (6)Whether Appellate Tribunal was right in holding that powerunder section 132 of Act, 1961 was not exercised in thecase of Assessee, M/s. Verma Roadways, and no warrantof authorisation was issued against Assessee, therefore,seizure and issue of notice under Section 158 BC andconsequential block assessment against M/s. VermaRoadways was illegal?under section 132 of Act, 1961 was not exercised in thecase of Assessee, M/s. Verma Roadways, and no warrantof authorisation was issued against Assessee, therefore,seizure and issue of notice under Section 158 BC andconsequential block assessment against M/s. VermaRoadways was illegal? (6)Whether Appellate Tribunal was right in holding that powerunder section 132 of Act, 1961 was not exercised in thecase of Assessee, M/s. Verma Roadways, and no warrantof authorisation was issued against Assessee, therefore,seizure and issue of notice under Section 158 BC andconsequential block assessment against M/s. VermaRoadways was illegal?under section 132 of Act, 1961 was not exercised in thecase of Assessee, M/s. Verma Roadways, and no warrantof authorisation was issued against Assessee, therefore,seizure and issue of notice under Section 158 BC andconsequential block assessment against M/s. VermaRoadways was illegal? (7)Whether Appellate Tribunal was right in holding that thereexisted no requisitioned material before issue of noticeunder section 158 BC and hence notice under section 158BC issued against Assessee was illegal?existed no requisitioned material before issue of noticeunder section 158 BC and hence notice under section 158BC issued against Assessee was illegal? (8)Whether Appellate Tribunal was right in holding thatCommissioner did not properly apply his mind to the matterbefore granting approval for assessment under section 158BC and, therefore, approval was invalid?Commissioner did not properly apply his mind to the matterbefore granting approval for assessment under section 158BC and, therefore, approval was invalid? (9)Whether Appellate Tribunal was right in holding thataddition of Rs.10,50,000/- on account of investment intrucks could not be made under Section 158 BA and 158BB of Act, 1961?addition of Rs.10,50,000/- on account of investment intrucks could not be made under Section 158 BA and 158BB of Act, 1961? (10)Whether Appellate Tribunal had no jurisdiction toexamine validity of proceedings of search carried outagainst Assessee under section 132 of Act, 1961?examine validity of proceedings of search carried outagainst Assessee under section 132 of Act, 1961? 4.Assessee's appeal was admitted on following two substantial questions of law:- (1)Whether Tribunal having held that the assessment was badin law and void-ab-initio, was justified in not quashingassessment but remanding to Assessing Officer on variousin law and void-ab-initio, was justified in not quashingassessment but remanding to Assessing Officer on various issues? (2)Whether Tribunal's finding that Assessee failed to establishthat amount of Rs.65,59,302/- belong to Late RameshwarDayal Shiksha Samiti is based on no evidence, therefore,perverse? that amount of Rs.65,59,302/- belong to Late RameshwarDayal Shiksha Samiti is based on no evidence, therefore,perverse? 5.The fact in brief giving rise to these appeals are that AssistantDirector (Anti Evasion), Central Excise, Kanpur conducted a search on27.11.1996 on the premises no.133/225 & 133/283, Transport Nagar,Kanpur. Assessee had its Head Office at 133/225, Transport Nagar,Kanpur and Branch office at 133/283 Transport Nagar, Kanpur. Exciseauthorities seized a number of documents and materials i.e. Biltybooks, ledgers, Gunny bags of Supari etc. Search commenced at 11:30hours on 27.11.1996 and completed at 17:30 hours on the same day. 6.A punchnama was prepared by Central Excise authorities aftermaking search at premise No. 133/283. This search had taken place at11 hours on 27.11.1996 and concluded at 20 hours on the same day.Cash of Rs.1,70,20,000/- was also found by Central Excise authorities. 7.Third premises i.e. 133/174, A.T.P. Nagar, Kanpur Nagar was alsosearched by the said authorities. Then another premises No. 133/111M Block, Kidwai Nagar, Kanpur was also searched on 27.11.1996 andPanchnama was prepared. 8.Assessee is a partnership firm engaged in the business oftransportation of goods. Its Head Office is situated at 133/225Transport Nagar, Kanpur and Branch at 133/283 Transport Nagar,Kanpur. Besides, Assessee has Branches spread over across thecountry. 6.A punchnama was prepared by Central Excise authorities aftermaking search at premise No. 133/283. This search had taken place at11 hours on 27.11.1996 and concluded at 20 hours on the same day.Cash of Rs.1,70,20,000/- was also found by Central Excise authorities. 7.Third premises i.e. 133/174, A.T.P. Nagar, Kanpur Nagar was alsosearched by the said authorities. Then another premises No. 133/111M Block, Kidwai Nagar, Kanpur was also searched on 27.11.1996 andPanchnama was prepared. 8.Assessee is a partnership firm engaged in the business oftransportation of goods. Its Head Office is situated at 133/225Transport Nagar, Kanpur and Branch at 133/283 Transport Nagar,Kanpur. Besides, Assessee has Branches spread over across thecountry. 9.A warrant of authorisation was issued on 28.11.1996 forconducting search under Section 132 of Act, 1961 at the premises ofM/s. Verma Transport Company and Lucknow Banda TransportCompany. 10.Income Tax Authorities searched at the premises of Assessee at133/283 Transport Nagar, Kanpur, Godown between Sugam Parivahanand Bombay General Freight Carriers, T.P. Nagar, Kanpur andprepared panchnama. Search began at 3:30 P.M. and concluded at 7:45 P.M. on 28.11.1996. In respect of search conducted at premises ofAssessee at 133/225 Transport Nagar, Panchnama was preparedshowing commencement of search at 6 A.M. and concluded at 4:45A.M. on 29.11.1996. In the Godown 914 bags of 'Supari' were found. 11.In the light of documents seized by Income Tax Authorities, anotice under 158 BC was issued on 8.5.1997 in the name of“M/s.Verma Roadways” at 133/283, Transport Nagar, Kanpur whichwas served on 15.5.1997. M/s. Verma Roadways (Assessee) wasrequired to file return for block period 1.4.1986 to 28.12.1996 in theprescribed form 2B. Assessee through its counsel vide letter dated16.5.1997 requested Assessing Officer to issue Form 2B which wasissued on 16.5.1997 itself. 12.Vide letter dated 16.5.1997 Assessee also requested to furnishphotostat copy of seized record. Permission was granted on the samedate and communicated to Assessee through counsel. Another letterdated 29.5.1997 was sent by Assessee stating that since photocopy ofrecord is taking time, it may be allowed two months' time to file return.The request was accepted and time to file return was extended upto13.6.1997. Assessee again sought further time vide letter received byAssessing Officer on 13.6.1997 whereupon 15 days further time wasgranted. However, no return was filed. 13.Reminder notice dated 29.7.1997 under Section 142(1) wasserved upon Assessee requiring it to file return by 8.8.1997. In responsethereto, Assessee filed statement that most record of Assessee arelying with Central Excise Department, hence it is not in a position to filereturn of Income Tax. Thereafter, Income Tax Authorities contactedExcise Authorities and made efforts to obtain record seized by themfrom Assessee's premises. Photocopies of seized record was obtainedand made available to Assessee with acknowledgment for filing return.Still Assessee failed to submit return. Hence, Assistant Commissioner,Income Tax, Circle -1, Kanpur i.e. “Assessing Authority” (hereinafterreferred to ACIT/AA') proceeded to make assessment on the basis ofseized material and information received from Excise Department, onbest judgment basis, and passed Assessment order dated 28.11.1997. 14.Assessee filed regular return on 11.11.1997 for the period1.4.1996 to 26.11.1996 for Assessment Year(hereinafter referred to as'A.Y.') 1997-98. 15. ACIT/AA made assessment order dated 28.11.1997 under Section158 BC/144 of Act, 1961 at total income of Rs.3,12,97,430/-. Theundisclosed income assessed by ACIT/AA is as under: 14.Assessee filed regular return on 11.11.1997 for the period1.4.1996 to 26.11.1996 for Assessment Year(hereinafter referred to as'A.Y.') 1997-98. 15. ACIT/AA made assessment order dated 28.11.1997 under Section158 BC/144 of Act, 1961 at total income of Rs.3,12,97,430/-. Theundisclosed income assessed by ACIT/AA is as under: (a) Cash found by Central Excise Department in the raid conducted on 27.11.1996 from premises No. 133/283. Rs.1,70,20,000/ in the raid conducted on 27.11.1996 from premises No. 133/283. Rs.1,70,20,000/ Cash Found during search by the Income- tax Department on 28.11.1996 from the same premises, i.e. 133/283. Rs.13,05,180/- Total Rs.1,83,25,180/- (b) Excess of cash to the extent of Rs.1,08,195/- seized by the Central Excise Department.Rs. 1,08,195/- (c)Unreconciled stock of SupariRs. 70,99,839/-(d)Unexplained investment in clothRs. 5,04,000/-(e)Unexplained investment in trucksRs. 10,50,000/-(d)Unexplained investment in clothRs. 5,04,000/-(e)Unexplained investment in trucksRs. 10,50,000/- (f)Income of the assessee from 1.4.96 to 28.11.1996Rs. 38,70,219/-1.4.96 to 28.11.1996Rs. 38,70,219/- (g)Unexplained investment in houseproperty No. 133/225Rs. 3,40,000/-property No. 133/225Rs. 3,40,000/- 16.Assessee preferred appeal against aforesaid order of assessmentwhich has been partly allowed by Tribunal vide impugned judgment.Both parties have filed respective appeals to the extent order of Tribunalis against them. 17.Tribunal has considered various issues of Assessee and returnedfindings, in brief, as under:- (a)Warrant of authorisation was issued in Form 45(as per Rule112 of Income Tax Rules, 1952(hereinafter referred to 'Rules,1952') in the name of “M/s. Verma Transport Company, LucknowBanda Transport Company”. Panchnama dated 29.11.1996 wasalso prepared in the name of “M/s. Verma Transport Company133/225, Transport Nagar, Kanpur”. Assessee formed title as “M/s.Verma Roadways” which is an independent and separate entity, a partnership firm. Hence there was no valid warrant ofauthorisation in the name of Assessee. Therefore, there was novalid search under Section 132(1) of Act, 1961 at the premises ofAssessee. (b)All consequential actions such as, seizure, issue of noticeunder Section 158 BC and consequential Block Assessment inthe hands of Assessee i.e. “M/s. Verma Roadways” are illegal.Mere fact that actual search was conducted at the premises ofAssessee would not validate warrant of authorisation which wasnot issued in the name of Assessee. (c)Notice dated 8.5.1997 issued under Section 158 BC wasalso not valid, firstly, for the reason that no valid authorisation orsearch under Section 132(1) was made in the name of Assesseeand secondly, no information was available with Income TaxAuthorities, necessary for forming opinion by competent authorityto issue authorisation for search for the reason that seizeddocuments etc. from Central Excise were requisitioned by IncomeTax Authorities on 11.12.1996; thirdly, notice is not mereprocedural but jurisdictional since it was necessary for initiatingBlock Assessment proceedings; fourthly, status of Assessee wasnot mentioned in the notice; fifthly, notice did not indicate materialparticulars and information, whether it was issued for search orrequisition or both though it was necessary; and lastly, noticementioned wrong Block period i.e. 1.4.1986 to 28.12.1996. (d) A valid notice under Section 158 BC is mandatory andillegality therein would vitiate entire proceedings. (e)Approval by Commissioner shows non-application of mindinasmuch as alleged documents seized by Central ExciseAuthorities related to M/s. Verma Roadways i.e. Assessee,while authorisation and other documents prepared by Income Taxauthorities were in the name of “M/s. Verma Transport Company”. (d) A valid notice under Section 158 BC is mandatory andillegality therein would vitiate entire proceedings. (e)Approval by Commissioner shows non-application of mindinasmuch as alleged documents seized by Central ExciseAuthorities related to M/s. Verma Roadways i.e. Assessee,while authorisation and other documents prepared by Income Taxauthorities were in the name of “M/s. Verma Transport Company”. (f)Computation by ACIT/AA ought to be year wise but it hasmade computation for the entire Block period which is illegal. (g)ACIT/AA made additions without permitting Assessee toparticipate in investigation/enquiry and without supplyingdocuments relied for making such additions. (h)Assessee failed to explain Rs.65,59,302/- to prove thatsame related to Rameshwar Dayal Shiksha Samiti and therefore,ACIT/AA rightly made addition of said amount. (i)No proper and thorough enquiry was made by ACIT/AA,may be on account of paucity of time or carelessness or non-cooperation by Assessee. (j)In case of Block Assessment, Section 145 is not applicableand hence there was no scope of best judgment assessment. 18.Sri Manish Goel, learned counsel for Revenue assailed order ofTribunal contending that it has erred in law in observing that there wasno valid warrant of authorisation for making search at the premises ofAssessee and findings in this regard are perverse. He submitted thatthere may be error in mentioning/title of Assessee or its firm but detailsof premises mentioned in warrant of authorisation was correct. Searchwas also made at the premises which admittedly belong to Assessee. Atno point of time, any such objection was raised by Assessee that searchconducted by Income Tax Authorities was not at the premises ofAssessee. Documents and other material seized by Income TaxAuthorities were also from premises belong to Assessee. Hence, therewas no such illegality in warrant of authorisation for search so as tohold entire assessment bad merely for the reason of wrong mention ofname or title of Assessee. 19.He further argued that premises was common. Assessee has notdisclosed anywhere that its office was at a place differently identifiablefrom that whose name was mentioned in warrant of authorisation.Premises was common. Even this was not shown that there was anyfirm in the name and title of M/s. Verma Transport Company andLucknow-Banda Transport Company having distinguished identifiablepremises or place. Hence it cannot be said that authorisation of searchwas bad or search was not validly conducted at the premises of Assessee. Sri Goel in support of submissions placed reliance on aDivision Bench judgments of this Court in Civil Misc. Writ Petition(Tax) No. 451 of 2012 Harbhajan Singh Chadha And Others vs.Director of Income Tax And Others decided on27.3.2015;Commissioner of Income-Tax vs. Dr. A.K. Bansal (2013)355 ITR 513 (All); Punjab and Haryana High Court judgment inCommissioner of Income-Tax vs. Paras Rice Mills (2009) 313 ITR182 (P&H); Delhi High Court's Judgment in M.B. Lal vs.Commissioner of Income-Tax (2005) 279 ITR 298 (Del) andChhattisgarh High Court's judgment in Trilok Singh Dhillon vs.Commissioner of Income-Tax (2011) 332 ITR 185 (Chhattisgarh). Assessee. Sri Goel in support of submissions placed reliance on aDivision Bench judgments of this Court in Civil Misc. Writ Petition(Tax) No. 451 of 2012 Harbhajan Singh Chadha And Others vs.Director of Income Tax And Others decided on27.3.2015;Commissioner of Income-Tax vs. Dr. A.K. Bansal (2013)355 ITR 513 (All); Punjab and Haryana High Court judgment inCommissioner of Income-Tax vs. Paras Rice Mills (2009) 313 ITR182 (P&H); Delhi High Court's Judgment in M.B. Lal vs.Commissioner of Income-Tax (2005) 279 ITR 298 (Del) andChhattisgarh High Court's judgment in Trilok Singh Dhillon vs.Commissioner of Income-Tax (2011) 332 ITR 185 (Chhattisgarh). 20.Sri Manish Goel further submitted that no material was placedbefore Tribunal that “M/s. Verma Transport Company, Lucknow-BandaTransport Company” are two different entities. Tribunal has proceededon certain assumptions without having any material in support thereof.Assessee never raised any objection before ACIT/AA when noticeunder Section 158 BC of Act, 1961 was issued and instead participated.In the circumstances, material collected in such search and seizure canvalidly be used against Assessee. It has valid evidentiary value. Thewarrant was not supposed to be served upon Assessee. It is for theguidance and information of search team so that they may conductsearch at the requisite place. In the present case, search wasauthorised to be conducted at the premises of Assessee which wasactually conducted and material seized therein belong to Assessee.Therefore, Tribunal erred in holding that warrant of authorisation underSection 132 of Act, 1961 was not validly issued. He also contendedthat warrant of authorisation of search and seizure is an administrativefunction and not open for judicial review before Tribunal, hence,Tribunal had no jurisdiction to examine proceedings of search carriedout by Income Tax Authorities at the premises of Assessee underSection 132 of Act, 1961. 21.It was lastly contended that on the basis of information receivedfrom Central Excise Authorities when they found incriminating materialand also huge cash at the premises of Assessee, in search conducted on 27.11.1996, Commissioner of Income Tax validly issued warrant ofauthorisation for search under Section 132(1) and it can not be saidthat there was non-application of mind on the part of Commissioner. Heargued that Tribunal in recording otherwise has erred in law. 22.Sri Ravi Kant, learned Senior Counsel supported judgment ofTribunal in so far as findings have been recorded against Revenueand repelled arguments advanced by Sri Manish Goel. In support ofAssessee-appellant, learned Senior Counsel argued that once searchand seizure itself was held illegal, material collected therein could notbe used against Assessee and entire assessment was illegal. Thatbeing so, there was no occasion for Tribunal to remand matter toACIT/AA and hence to this extent, order of Tribunal is illegal andliable to be set aside. 23. He further contended that in any case, observation of Tribunal thatthere was no evidence to establish that Rs.65,59,302/- belong toRameshwar Dayal Shiksha Samiti, is patently illegal and perverse. 24.We have heard respective submissions, perused record andvarious authorities cited at the Bar. 25.Search was conducted pursuant to warrant of authorization underSection 132(1) of Act, 1961 and Block Assessment has been madeunder Chapter XIV B; in particular, Section 158 BC of Act, 1961.Itwould be appropriate to have a glance over Section 132(1) and 158BC of Act, 1961:- 132. Search and seizure.- (1) Where the Director General orDirector or the Chief Commissioner or Commissioner or any suchDeputy Director or Deputy Commissioner as may be empoweredin this behalf by the Board, in consequence of information inhis possession, has reason to believe that— 24.We have heard respective submissions, perused record andvarious authorities cited at the Bar. 25.Search was conducted pursuant to warrant of authorization underSection 132(1) of Act, 1961 and Block Assessment has been madeunder Chapter XIV B; in particular, Section 158 BC of Act, 1961.Itwould be appropriate to have a glance over Section 132(1) and 158BC of Act, 1961:- 132. Search and seizure.- (1) Where the Director General orDirector or the Chief Commissioner or Commissioner or any suchDeputy Director or Deputy Commissioner as may be empoweredin this behalf by the Board, in consequence of information inhis possession, has reason to believe that— (a) any person to whom a summons under sub-section (1) ofsection 37 of the Indian Income-tax Act, 1922 (11 of 1922), orunder sub-section (1) of section 131 of this Act, or a notice undersub-section (4) of section 22 of the Indian Income-tax Act, 1922,or under sub-section (1) of section 142 of this Act was issued toproduce, or cause to be produced, any books of account or otherdocuments has omitted or failed to produce, or cause to beproduced, such books of account or other documents as requiredby such summons or notice, or (b) any person to whom a summons or notice as aforesaid hasbeen or might be issued will not, or would not, produce orcause to be produced, any books of account or otherdocuments which will be useful for, or relevant to, anyproceeding under the Indian Income-tax Act, 1922 (11 of 1922), orunder 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 representseither wholly or partly income or property which has notbeen, or would not be, disclosed for the purposes of theIndian Income-tax Act, 1922 (11 of 1922), or this Act (hereinafterin this section referred to as the undisclosed income or—property),then, (A) the Director General or Director or the Chief Commissioner orCommissioner, as the case may be, may authorise any DeputyDirector, Deputy Commissioner, Assistant Director, AssistantCommissioner or Income-tax Officer, or (B) such Deputy Director, or Deputy Commissioner, as the casemay be, may authorise any Assistant Director, AssistantCommissioner or Income-tax Officer, (the officer so authorised in all cases being hereinafter referred toas the authorised officer) to— (i) enter and search any building, place, vessel, vehicle oraircraft where he has reason to suspect that such books ofaccount, other documents, money, bullion, jewellery or othervaluable article or thing are kept; (ii) break open the lock of any door, box, locker, safe, almirah orother receptacle for exercising the powers conferred by clause (i)where the keys thereof are not available; (iia) search any person who has got out of, or is about to getinto, or is in, the building, place, vessel, vehicle or aircraft, if theauthorised officer has reason to suspect that such personhas secreted about his person any such books of account,other documents, money, bullion, jewellery or other valuablearticle or thing; (iii) seize any such books of account, other documents,money, bullion, jewellery or other valuable article or thing found asa result of such search: (iv) place marks of identification on any books of account or otherdocuments or make or cause to be made extracts or copiestherefrom; (v) make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing : (iia) search any person who has got out of, or is about to getinto, or is in, the building, place, vessel, vehicle or aircraft, if theauthorised officer has reason to suspect that such personhas secreted about his person any such books of account,other documents, money, bullion, jewellery or other valuablearticle or thing; (iii) seize any such books of account, other documents,money, bullion, jewellery or other valuable article or thing found asa result of such search: (iv) place marks of identification on any books of account or otherdocuments or make or cause to be made extracts or copiestherefrom; (v) make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing : Provided that where any building, place, vessel, vehicle or aircraftreferred to in clause (i) is within the area of jurisdiction of anyChief Commissioner or Commissioner, but such ChiefCommissioner or Commissioner has no jurisdiction over theperson referred to in clause (a) or clause (b) or clause (c), then,notwithstanding anything contained in section 120, it shall becompetent for him to exercise the powers under this sub-sectionin all cases where he has reason to believe that any delay ingetting the authorisation from the Chief Commissioner orCommissioner having jurisdiction over such person may beprejudicial to the interests of the revenue : Provided further that where it is not possible or practicable to takephysical possession of any valuable article or thing and remove itto a safe place due to its volume, weight or other physicalcharacteristics or due to its being of a dangerous nature, theauthorised officer may serve an order on the owner or the personwho is in immediate possession or control thereof that he shall notremove, part with or otherwise deal with it, except with theprevious permission of such authorised officer and such action ofthe authorised officer shall be deemed to be seizure of suchvaluable article or thing under clause (iii): (1A) Where any Chief Commissioner or Commissioner, inconsequence of information in his possession, has reason tosuspect that any books of account, other documents, money,bullion, jewellery or other valuable article or thing in respect ofwhich an officer has been authorised by the Director General orDirector or any other Chief Commissioner or Commissioner orany such Deputy Director or Deputy Commissioner as may beempowered in this behalf by the Board to take action underclauses (i) to (v) of sub-section (1) are or is kept in any building,place, vessel, vehicle or aircraft not mentioned in theauthorisation under sub-section (1), such Chief Commissioner orCommissioner may, notwithstanding anything contained in section120, authorise the said officer to take action under any of theclauses aforesaid in respect of such building, place, vessel,vehicle or aircraft.” (emphasis added) Procedure for block assessment. 158BC. Where any search has been conducted under section132 or books of account, other documents or assets arerequisitioned under section 132A, in the case of any person,then, (a) the Assessing Officer shall serve a notice to such personrequiring him to furnish, within such time, not being less thanfifteen day, as may be specified in the notice, a return in theprescribed form and verified in the same manner as a return under clause (i) of sub-section (1) of section 142, setting forthhis total income including the undisclosed income for the blockperiod: Provided that no notice under section 148 is required to be issuedfor the purpose of proceeding under this Chapter ; (b) the Assessing Officer shall proceed to determine theundisclosed income of the block period in the manner laiddown in section 158BB and the provisions of section 142,sub-sections (2) and (3) of section 143 , 144 shall, so far asmay be, apply; (a) the Assessing Officer shall serve a notice to such personrequiring him to furnish, within such time, not being less thanfifteen day, as may be specified in the notice, a return in theprescribed form and verified in the same manner as a return under clause (i) of sub-section (1) of section 142, setting forthhis total income including the undisclosed income for the blockperiod: Provided that no notice under section 148 is required to be issuedfor the purpose of proceeding under this Chapter ; (b) the Assessing Officer shall proceed to determine theundisclosed income of the block period in the manner laiddown in section 158BB and the provisions of section 142,sub-sections (2) and (3) of section 143 , 144 shall, so far asmay be, apply; (c) the Assessing Officer, on determination of the undisclosedincome of the block period in accordance with this Chapter,shall pass an order of assessment and determine the taxpayable by him on the basis of such assessment; (d) the assets seized under section 132 or requisitioned undersection 132A shall be retained to the extent necessary and theprovisions of section 132B shall apply subject to suchmodifications as may be necessary and the references to “regularassessment” or “reassessment” in Section 132B shall beconstrued as references to “block assessment” . (emphasis applied) 26.Photocopy of warrant of authorisation issued in Form 45 underSection 112(I) of Income Tax Rules, pursuant whereto search wasconducted at Assessee's premises on 28.11.1996 was produced beforeTribunal, which are quoted in para 11.2 of Tribunal's order and relevantextract thereof reads as under:- “FORM NO.45” Warrant of authorisation under section 132 of the Income-tax Act, 1961, and rule 112(1) of the Income-tax Rules, 1952. .... Whereas information has been laid before me on theconsideration thereof I have reason to believe that .... If a summon under sub-section(1) of section 37 of the IndianIncome-tax Act, 1922, or under sub-section(1) of Section 131 ofthe Income-tax Act, 1961, or a notice under sub-section (4) ofsection 22 of the Indian Income-tax Act, 1922 or under sub-section (1) of section 142 of the Income-tax Act, 1961, is issued toVerma Transport Co., Lucknow Banda Transport Co.(name ofperson) to produce or cause to be produced, such books accountor other documents as required by such summons or notice-SARVSHRI/SHRI/SHRIMATI M/S. VERMA TRANSPORTCO.,LUCKNOW BANDA TRANSPORT CO.are/is in possessionof any money, bullion, or other valuable article or thing and such money, bullion, jewellery or other valuable article or thingrepresents either wholly or partly income or property which hasnot been or would not be disclosed for the purposes of theIndian Income-tax Act, 1922, or the Income-tax Act, 1961And whereas I have reason to suspect that such books ofaccount, other documents, money, bullion, jewellery or othervaluable article or thing have been kept and are to be found ingodown 133/225 Transport Nagar, Kanpur (specify particulars ofthe building/place/vessel/vehicle/aircraft); This is to authorise andrequire you as per reverse.......” 27. The contents of warrant of authorisation except the underlinedportion which is hand written, are in Printed form. 28.Copies of Panchnama dated 29.11.1996, order under Section132(3) and order under Second proviso to section 132(1) of Act,1961(Provision of Act, 1961) were also placed before Tribunal,wherein address mentioned reads as under:- “M/s. Verma Transport Company(Roadways) 133/225 Transport Nagar(Kanpur)” 27. The contents of warrant of authorisation except the underlinedportion which is hand written, are in Printed form. 28.Copies of Panchnama dated 29.11.1996, order under Section132(3) and order under Second proviso to section 132(1) of Act,1961(Provision of Act, 1961) were also placed before Tribunal,wherein address mentioned reads as under:- “M/s. Verma Transport Company(Roadways) 133/225 Transport Nagar(Kanpur)” 29.Tribunal has observed that since warrant of authorisation was inthe name of M/s. Verma Transport Company, M/s. Lucknow-BandaTransport Company, hence, documents, books of Accounts, money orother assets in possession of such person i.e. M/s. Verma TransportCompany, Lucknow-Banda Transport Company could have beensearched in the premises specified in the warrant. If in the saidpremises any material or documents were found in respect to anotherperson, namely M/s Verma Roadways and on that basis AssessingOfficer, being satisfied that M/s. Verma Roadways has undisclosedmoney, he could have proceeded under Section 158 BD of Act, 1961and not Section 158BC. Panchnama and seizure memo were preparedin the name of “M/s.Verma Transport Company” and “Lucknow-BandaTransport Company” and not in the name of “M/s. Verma Roadways”i.e. Assessee. The word “Roadways” was mentioned to make anattempt that everything was related to Assessee but it is this additionwhich is subsequent when notice was issued by department. Details ofdocuments in which title/reference was mentioned, have been dealtin 14.1 of order of Tribunal and these observations are reproduced as under:- “(I) Panchnama dated 29.11.96 (page 124 of the paper book of the department) which mentions as follows: A.Warrant in the case M/s Verma Transport Co./ Lucknow Banda Co.(Verma Roadways):Lucknow Banda Co.(Verma Roadways): B.Warrant to Search Godown at 133/235, Transport Nagar, Kanpur.Nagar, Kanpur. (ii) Order under proviso 2[nd] to section 132 (1) (pages 7-8) which isaddressed as follows: To-M/s Verma Transport Co.(Roadways, 173/225, Transport Nagar, Kanpur) (iii)Inventory of stock seized/restrained at the premises in the case of M/s. Verma Transport Co. 133/225, TransportNagar,Kanpur (page-14 of the Paper Book of the Deptt.)Nagar,Kanpur (page-14 of the Paper Book of the Deptt.) (iv)Panchnama dated 28.11.96(Paper Nos. 54-57 of the PaperBook of the deptt.) in which the following entries made:Book of the deptt.) in which the following entries made: (A)Warrant in the case ofM/s Verma Transport Co. and Lucknow Banda Transport Co., 133/283, Transport Nagar, Kanpur. Lucknow Banda Transport Co., 133/283, Transport Nagar, Kanpur. (B)Warrant to Search M/s Verma Transport Co. and M/sLucknow Banda Transport Co.'s godown.Lucknow Banda Transport Co.'s godown. (v)Panchnama dated 28-11-96 (Papers 59-62 of paper book) which contains following entries:which contains following entries: (A)Warrant in the case ofM/s Verma Transport Co. and Lucknow Banda Transport Co., 133/283, Transport Nagar, Kanpur. Lucknow Banda Transport Co., 133/283, Transport Nagar, Kanpur. (B)Warrant to Search M/s Verma Transport Co. and M/s Lucknow Banda Transport Co.'s godown. (vi)Panchnama dated 28.11.96 (paper 67-70 of the Paper Book of the deptt.), which contains following entries: (A)Warrant in the case of M/s Verma Transport Co. and Lucknow Banda Transport Co., 133/283, Transport Nagar, Kanpur. Lucknow Banda Transport Co., 133/283, Transport Nagar, Kanpur. (B)Warrant to Search M/s Verma Transport Co. and Lucknow Banda Transport Co. 133/283, Transport Nagar, Kanpur.”Lucknow Banda Transport Co. 133/283, Transport Nagar, Kanpur.” (A)Warrant in the case ofM/s Verma Transport Co. and Lucknow Banda Transport Co., 133/283, Transport Nagar, Kanpur. Lucknow Banda Transport Co., 133/283, Transport Nagar, Kanpur. (B)Warrant to Search M/s Verma Transport Co. and M/s Lucknow Banda Transport Co.'s godown. (vi)Panchnama dated 28.11.96 (paper 67-70 of the Paper Book of the deptt.), which contains following entries: (A)Warrant in the case of M/s Verma Transport Co. and Lucknow Banda Transport Co., 133/283, Transport Nagar, Kanpur. Lucknow Banda Transport Co., 133/283, Transport Nagar, Kanpur. (B)Warrant to Search M/s Verma Transport Co. and Lucknow Banda Transport Co. 133/283, Transport Nagar, Kanpur.”Lucknow Banda Transport Co. 133/283, Transport Nagar, Kanpur.” 30.It is in this background that Tribunal held that no search wasconducted at “M/s. Verma Roadways” on the basis of warrant ofauthorization issued in the name of “M/s. Verma Transport Company,Lucknow-Banda Transport Company” and there was no warrant ofsearch under Section 132(1) against Assessee. It has also noticed thatso far as Department of Excise was concerned, admittedly searchwas conducted at the premises of “M/s. Verma Roadways” and entirematerial, cash collected, related to “M/s. Verma Roadways” i.e.“Assessee”. Tribunal accordingly held that no warrant of authorization for conducting search under Section 132(1) of Act, 1961, was issued inthe name of Assessee i.e. “M/s. Verma Roadways” and hence allconsequential action such as seizure, notice under Section 158BC ofAct, 1961 and Block Assessment in the hands of “M/s. VermaRoadways” are illegal. Tribunal has recorded its conclusion as under:- “In view of the above, we hold that power u/s 132 was notexercised in the case of the appellant-assessee, i.e. M/s VermaRoadways, as no warrant of authorization was issued againstthe assessee. The consequence will be that the assessment hasto be declared bad in law and void ab initio on these grounds andthe same are liable to be quashed. The submissions raised onbehalf of the assessee-appellant, relating to ground Nos. 1 & 5,therefore, are accepted and those of the revenue are notaccepted. Ground No.1 & 5 are, therefore, allowed in favour ofthe assessee.” 31.Search and seizure are not something unknown earlier or cameto be resorted for the first time in 1961. It is well recognized process inall civilized countries in various fields even in Criminal Procedure Code.There are provisions for search and seizure authorizing policeauthorities. 32.The power of search and seizure and procedure under Section132(1) read with Rule 112 is against a person who is believed, on goodground, to have illegally evaded or likely to evade payment of tax onits income and property. 33.The scheme of Block Assessment was introduced and insertedunder Chapter XIV-B of Act, 1961 with effect from 1.7.1995. ThisChapter deals with special procedure for assessment of search cases.The main provision of Chapter XIV B was to curb tax evasion andsimplify assessment in search cases. Undisclosed income have to berelated in different years in which income was earned in BlockAssessment. The essence of new procedure prescribed under ChapterXIV B therefore, is separate. Single assessment of undisclosed incomedetected as a result of search and this separate assessment is to beadded to the normal assessment covering same period. With thisintention separate return covering years of Block period is pre-requisitefor making Block Assessment. 34. On the question of power of search and seizure, time and again, various issues have been raised and Courts have repeatedly examinedthe matter and laid down certain principles which would be necessary tounderstand the backdrop in which provisions pertaining to search andseizure and material collected thereunder have been made. 34. On the question of power of search and seizure, time and again, various issues have been raised and Courts have repeatedly examinedthe matter and laid down certain principles which would be necessary tounderstand the backdrop in which provisions pertaining to search andseizure and material collected thereunder have been made. 35.In M.P. Sharma vs. Satish Chandra,AIR 1954 SC 300 validity ofpower and seizure under Section 96(1) of Code of Criminal Procedure1898 was upheld observing that a power of search and seizure is inany system of jurisprudence an overriding power of State for theprotection of social security and that power is necessarily regulated bylaw. A search by itself is not a restriction on the right to hold and enjoyproperty though a seizure is a restriction on the right of possession andenjoyment of property seized. Rather, that is only temporary and forthe limited purpose of investigation. A Bench of 8 Judges of SupremeCourt in the judgment delivered by Hon'ble B. Jagannadhadasobserved that power of search and seizure is in any system ofjurisprudence an overriding power of the State for protection of socialsecurity and that power is necessarily regulated by law. 36.Similar power of search and seizure under Section 41 of MadrasGeneral Sales Tax of 1969 was upheld in Commissioner ofCommercial Taxes vs. Ramkishan Shrikishan Jhaver, (1967) 66 ITR664. Court held that an officer empowered by Government was entitledto effect search and seize goods and articles as provided in thatsection. It also held that in the taxing statute, Legislature isempowered to make provisions which would check evasion of tax.The provision for search and seizure is one of such provision. Whileupholding legislative power, Court said that implementation of suchpower must accompany by safeguards so as to protect a genuineperson against its undue and improper exercise. Some suchsafeguards are (i) empowered officer must have reasonable grounds forbelieving that anything necessary for the purpose of recovery of taxmay be found in any place within his jurisdiction, (ii) he must be of theopinion that such thing is not got without any undue delay, (iii) he mustrecord in writing the ground of his belief, and (iv) he must specify insuch writing so far as possible the thing for which search is to bemade. 37.Scope of Section 132 of Act, 1961 was considered in ITR vs.Seth Brothers 1969 (74) ITR 836 SC Court said that this provisiondoes not confer any arbitrary authority upon Revenue Officers.Commissioner or Director (Investigation) must have, as a consequenceof information, reason to believe that statutory conditions for exerciseof power to order search exists. He must record reason for such beliefand issue an authorisation in favour of designated officer to searchpremises and exercise power set out therein. The condition for entry intoand making search of any building or place is the reason to believe thatany books of account or other documents which will be useful for, orrelevant to, any proceeding under the Act may be found. If the Officerhas reason to believe that any books of account or other documentswould be useful for, or relevant to, any proceedings under the Act, he isauthorised by law to seize those books of account or other documents,and to place marks of identification therein, to make extracts or copiestherefrom and also to make a note or an inventory of any articles orother things found in the course of the search. Since by exercise ofpower, a serious invasion is made upon rights, privacy and freedom oftax-payer, power must be exercised strictly in accordance with law andonly for the purposes for which law authorizes it to be exercised. Ifaction of the officer issuing authorization, or of the designated officer isch