R.n.jayaprakash v. Deputy Commissioner Of Income Tax Central Circle 2(1) New Income Tax Building

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 17.03.2021 CORAM THE HONOURABLE DR.JUSTICE ANITA SUMANTH W.P.Nos.35076, 13209, 13218, 13368, 35082, 35084, 35086, 35088 & 35090 of 2019and WMP.Nos.13327, 13332, 13477, 35880, 35885, 35883, 35872, 35874, 35876, 35877, 35879, 35866, 35870, 35871, 13333, 13334, 13478, 13481, 35865 of 2019 M/s.Agni Estates and Foundations Private Limited, Rep.by its Director T.G. Balaji, No. 76, Temple Towers, North Mada Street, Mylapore, Chennai – 600004. .. Petitioner inW.P.Nos.35076 of 2019, 13368, 35082,35084, 35086, 35088 & 35090 of 2019 R.N.Jayaprakash. S/o.R.N.Jayachandran, No.1, Ranjith Road, Kottur Puram,Chennai-600 085 ... Petitioner inWP.No.13209 & 19218 of 2019Vs. 1 Deputy Commissioner of Income Tax Central Circle 2(1) New Income Tax BuildingNo. 46 MG Road, Nungambakkam, Chennai - 600034 2 Deputy Director of Income Tax (Investigation) Unit - 3(2) Chennai Income Tax Investigation Wing Building108 M.G. Road, Nungambakkam, Chennai 6000343 Principal Director of Income Tax (Investigation) Income Tax Investigation Wing Building 108 M.G. Road, Nungambakkam, Chennai 600034 .. Respondents in35076 of 2019, 35082, 35084,35086, 35088 & 35090 of 2019 https://hcservices.ecourts.gov.in/hcservices/ 1 Principal Director of Income Tax (Investigation) Income Tax Investigation wing Building 108, M.G.Road, Nungambakkam, Chennai-34 ... 2[nd] Respondent in WP.No.13368 of 2019 2 Deputy Director of Income Tax (Investigation) Unit - 3(2) Chennai, Income Tax Investigation Wing Building, 108, M.G.Road, Nungamabakkam, Chennai-34 ...1[st] Respondent in WP.No.13368 of 2019 3 Deputy Commissioner of Income Tax Corporate Circle1(1), New Building Chennai-34. ... Respondents in WP.No.13209 & 13218 of 2019... 3[rd] Respondent in WP.No.13368 of 2019 Common Prayer: W.P.Nos.35076 of 2019, 35082,35084, 35086, 35088 & 35090 of 2019 :- Writ Petition filed under Article 226 of the Constitution ofIndia praying Writ of Certiorari to call for the records of the1st Respondent in the Impugned Notice dated 01.11.2019 andbearingNumberITBA/AST/S/153A/2019-20/1019689674(1)and1019689675(1), 109689672(1) and 1019689679(1) and 1019689682(1)and 1019689677(1) for the Assessment Year 2013-2014 and 2014-15,2015-16, 2016-17, 2017-18, 2018-19 and quash the same. WP.Nos.13209 of 2019:- Pleased to issue a Writ of declaration, declaring that thesearch and seizure conducted by the respondents purportedlyunder S.132 of the Act in relatin to the case of the petitionerand all consequential proceedings thereto as wholly withoutjurisdiction illegal arbitrary and unconstitutional WP.Nos.13218 of 2019:- Pleaded to issue a Writ of Mandamus or any other order writor direction in the nature of a Writ of Mandamus directing the2nd respondent to return the seized materials to the petitioner. https://hcservices.ecourts.gov.in/hcservices/ WP.Nos.13368 of 2019:- Pleaded to issue a Writ of mandamus or any other appropriatewrit application or order under Article 226 of the Constitutionof India for bearing the 1[st] Respondent from relating the booksand documents and other article and or Calling upon thepetitioner or its directors or employees to appear before himfor the purpose of taking evidence/recording statements withreference to the aforesaid books documents and articles seizedfrom the premises of the petitioner its directors and itsemployees. WP.Nos.13218 of 2019:- Pleaded to issue a Writ of Mandamus or any other order writor direction in the nature of a Writ of Mandamus directing the2nd respondent to return the seized materials to the petitioner. https://hcservices.ecourts.gov.in/hcservices/ WP.Nos.13368 of 2019:- Pleaded to issue a Writ of mandamus or any other appropriatewrit application or order under Article 226 of the Constitutionof India for bearing the 1[st] Respondent from relating the booksand documents and other article and or Calling upon thepetitioner or its directors or employees to appear before himfor the purpose of taking evidence/recording statements withreference to the aforesaid books documents and articles seizedfrom the premises of the petitioner its directors and itsemployees. The petitioners in W.P.Nos.35076, 35082, 35084, 35086,35088 and 35090 of 2019, Agni Estates and Foundations (in short,Company) challenge notices dated 01.11.2019 issued under Section153 A of the Income Tax Act, 1961 (in short ‘Act’) by the firstrespondent, the Deputy Commissioner of Income tax, CentralCircle 2(1), (in short, Assessing officer/AO), in respect ofassessment years (AY) 2013-14 to 2018-19 (‘block period’). Theprayer in W.P.13209 of 2019 filed by R.N.Jayaprakash, a directorin the company, is for a Declaration to the effect that thesearch conducted on the premises in terms of Section 132 of theAct is without jurisdiction as are all consequences thereof.The prayer in W.P.No.13218 of 2019 is for mandamus directing thereturn of documents seized and the prayer in W.P.No.13368 of2019 is for a mandamus forbearing the respondent from retainingthe books and documents and other articles and /or calling uponthe petitioner or its directors or employees to appear beforehim for the purpose of taking evidence/recording statements withreference to the aforesaid books, documents and articles seizedfrom the premises of the petitioner, its directors and itsemployees. 2. The petitioners were subject to search and seizureoperation under Section 132 of the Act in their premisesincluding the residential premises of promoter/Directors between05.07.2018 and 09.07.2018. 2. The petitioners were subject to search and seizureoperation under Section 132 of the Act in their premisesincluding the residential premises of promoter/Directors between05.07.2018 and 09.07.2018. 3. W.P.13209 of 2019 seeks a declaration on the grounds of(i) illegal detention, violation of human rights andirregularity in procedure, both in the conduct of search underSection 132 as well as under Rule 112(13) of the Income TaxRules, 1962 and Section 65B of the Evidence Act, 1872 (ii)Retention of documents beyond the period of 60 days ascontemplated under Section 132(9A) of the Act and (iii)Recording of statements under duress and coercion. Several andserious allegations have been made in regard to the procedureadopted by the authorities in the manner of conduct of search.Statements were recorded in the course of search and severaldocuments seized. R2, the Deputy Commissioner of Income tax(Investigation), Circle 3(2), Chennai, (in short, IO) has fileda counter objecting to the allegations made and denying theaccusations levelled in regard to violation of human rights andill-treatment meted out to the petitioner as well as itsemployees by the investigating team. The allegations are, nodoubt, serious, and have been refuted by the respondent, thusleading to a situation where I would have to contend with factsdisputed by both sides. However, the aforesaid allegations werenot seriously pursued or emphasized upon in the course of thehearing by learned Senior counsel. Thus, I choose not tointerfere or render findings on such disputed matters, butconfine the scope of this order solely to the legal issuesraised. An issue common to both the writs of Declaration as wellas the writs of Certiorari, and one that is stressed upon asforming the substratum of the petitioner’s case, is the bar setout in Section 132(9A) of the Act and to this issue, I willadvert shortly. W.P.No.13209 of 2019 is closed, as are theconnected miscellaneous petitions. 4. Proceedings have been initiated by R2 in terms of theprovisions of the Black Money (Undisclosed Foreign Income andAssets) and Imposition of Tax Act, 2015 (in short ‘BM Act’) byissue of notices and summons. The petitioner, in order to complywith the notices, had sought return of various documents fromout of the seized documents. Since there was no response to therequest, the petitioner approached this Court in W.P.No.13218 of2019 seeking a direction to the second respondent to returnseized materials to the petitioner. This Court, by order dated29.04.2019, stated as follows: Mr.A.P.Srinivas, learned Senior Standing Counselaccepts notice for all respondents and seeks some timeto take instructions and to file counter to the writpetitions as well as the Miscellaneous Petitions. accepts notice for all respondents and seeks some timeto take instructions and to file counter to the writpetitions as well as the Miscellaneous Petitions. 2.The petitioners have requested the respondents tofurnish them with copies of various documents seized aswell as statements recorded in the course of theenquiry. This request has been rejected by the Deputyfurnish them with copies of various documents seized aswell as statements recorded in the course of theenquiry. This request has been rejected by the Deputy Director of Income Tax on 04.04.2019 stating thatcopies of relevant statements and seized documents thatare proposed to be used against the assessee for theassessment proceedings will be furnished as and whennotices under Section 153A/153C are issued. 3.It is thus clear that assessments in terms of theprovision of the Income Tax Act, 1961 are yet to beinitiated by the department. 2.The petitioners have requested the respondents tofurnish them with copies of various documents seized aswell as statements recorded in the course of theenquiry. This request has been rejected by the Deputyfurnish them with copies of various documents seized aswell as statements recorded in the course of theenquiry. This request has been rejected by the Deputy Director of Income Tax on 04.04.2019 stating thatcopies of relevant statements and seized documents thatare proposed to be used against the assessee for theassessment proceedings will be furnished as and whennotices under Section 153A/153C are issued. 3.It is thus clear that assessments in terms of theprovision of the Income Tax Act, 1961 are yet to beinitiated by the department. 4.Mr.A.P.Srinivas, learned Senior Standing Counselclarifies that it is only assessment of black money interms of the provisions of Black Money (UndisclosedForeign Income and Assets) and Imposition of Tax Act,2015 ('Black Money Act') that are ongoing. The normalpractice adopted is for furnishing of copies ofstatement as well as seized materials and records to besupplied to an assessee upon a request made in thisregard and payment of copying charges unless thestatute places any condition or bar thereupon. 5. The provisions of the Black Money Act, do not primafacie reveal any bar/impose any condition of thisnature. Thus, the assessee requests for furnishing ofcopies of the statements and seized materials will haveto be accepted. 6. Let the request be complied with within a period ofone (1) week from date of receipt of a copy of thisorder and upon receipt of necessary copying chargesfrom the petitioners. 7. List on 12.06.2019. 5. Pursuant thereto, the petitioner appears to havereiterated its request for documents and there was exchange ofcommunication in this regard. Suffice it to state that thepetitioner continues to allege that the documents sought for byit have not been supplied whereas the respondent, in typed setdated 17.07.2020, has placed on record material to the effectthat the documents sought had been sent to the petitioner undercover of letters dated 30.05.2019 and 12.06.2019, but had beenreturned unclaimed. Be that as it may, neither party veryseriously pursues the allegations levelled against each other inregard to the supply of documents, but prefer to be amiable,agreeing that what remains to be supplied would be furnished bythe revenue and duly collected by the petitioner. This isrecorded and this issue is laid to rest permitting thepetitioner to approach the respondent with the list of documentsrequired and directing the respondent to positively furnish thesame to the petitioner within four (4) from date of receipt of the petitioner’s request. W.P.No.13218 of 2019 is closed in theaforesaid terms. At this juncture, I expressly record theassurance of the petitioners to the effect that the present writpetitions, in no way, touch upon the conduct of the proceedingsunder the BM Act and the same may proceed in accordance with lawwith the petitioners extending their utmost co-operation in thatregard. Thus, the proceedings in terms of the BM Act willproceed as scheduled and in accordance with law. 6. The legal issue raised for resolution is the validity orotherwise of the Section 153A notices dated 01.11.2019 for theAYs 2013-14 to 2018-19, on the ground that the time frame setout in Section 132(9A), is mandatory and non-compliancetherewith will render the notices issued initiating the processof assessment, invalid. 6. The legal issue raised for resolution is the validity orotherwise of the Section 153A notices dated 01.11.2019 for theAYs 2013-14 to 2018-19, on the ground that the time frame setout in Section 132(9A), is mandatory and non-compliancetherewith will render the notices issued initiating the processof assessment, invalid. 7. In a common counter affidavit filed in W.P.Nos.35076,35082, 35084, 35086, 35088 & 35090 of 2019, all of which arefiled by the company and challenge notices issued in terms ofSection 153A of the Act, the Deputy Director of Income Tax(Investigation)/R2 gives the background to the entireproceeding. A joint search and survey was conducted by theIncome Tax Department and Enforcement Directorate (ED) in thepremises of Advantage Strategic Consulting Private Limited andothers on 01.12.2015. Upon analysis of the electronic devicesseized by the ED in that search and handed over to theDepartment, transactions of purchase of immovable property interse the petitioner company and Karthi P. Chidambaram and hisfamily were found. The seized details revealed that unaccountedcash had been paid to the sellers and subsequent enquiriesshowed that the properties in question had been sold to acompany by the name of Handhold Ventures Private limited. 8. On the basis of the above intel, action under Section132 was conducted in the case of the petitioner company, itsaffiliates and connected personnel from 05.07.2018 to09.07.2018, covering in all, 21 premises. As per the counter,substantial material including 175 small note books indicatingunaccounted cash payments and investments in foreign entitiesand banks in Mauritius, Seychelles, Hong Kong, the BritishVirgin Islands and Singapore were found. Serious allegation aremade in regard to the alleged escapement of income and assets totax. 9. The counter is quite detailed in regard to the allegedevasion on the basis of the investments and other financialtransactions engaged in by the petitioner and I desist fromreferring to the details thereof as being unnecessary to theadjudication of the legal issue arising in the matters. Sufficeit to say that, according to the revenue, substantial assetshave been found, hitherto undisclosed in the income tax returns https://hcservices.ecourts.gov.in/hcservices/ of the petitioner. Statements appear to have been recorded andinvestigations carried out by the Income Tax Authorities inother countries to further the investigation process. 10. The Department officials deny that the search wasconducted unfairly or that statements were recorded under threatand reiterate that the conduct of the proceedings was proper andin line with the prescription of statute and connected rules andregulations. The counter also gives details of summons issuedboth under the Income Tax as well as BM Acts on several dates tovarious persons in connection with the proceedings, stating thatthere had either been requests for adjournments or non-appearance by the persons summoned. R2 confirms that somematerial, in regard to the transactions with T.S.Kuamaraswamy ofChristy Friedgram Industry, who had ultimately purchasedimmovable properties from the petitioner, have been supplied.Both proceedings, under the IT and BM Acts are pending,notices/summons have been issued and the interim orders grantedby this Court should be vacated, the respondents pray, to enableR2 to proceed with the assessments. No rejoinder has been filedby the petitioners. 11.The officer, in counter, also quantifies the purportedincome that has escaped assessment, exactly and minutely, atground (c) thereof. I refrain from referring to such details inthe light of the order that I have finally passed directing thatthe proceedings for assessments continue and be finalized inaccordance with law, conscious that quantification at this stageis premature, seeing as proceedings for assessment are at apreliminary stage. Thus, I have dealt solely with the legalissue raised and argued, the facts of the matter beingirrelevant in this regard. However, the averments of thepetitioner and respondent as borne out in the pleadings arerecorded in the preceding paragraphs only for proper completionof the narrative and serves no other purpose save this. 12.The provisions of Section 153A have been inserted in theAct w.e.f 01.06.2003 and provide for the framing of assessmentsfor a block period of six years in the case of a person subjectto search and seizure action under Section 132 of the Act.Section 153A, to the extent it is relevant, is extracted below: Assessment in case of search or requisition.153A. (1)Notwithstandinganythingcontainedin section 139, section 147, section 148, section149, section 151 and section 153, in the case of aperson where a search is initiated under section132 or books of account, other documents or any assetsare requisitioned under section 132A after the 31stday of May, 2003, the Assessing Officer shall— (a) issue notice to such person requiring him tofurnish within such period, as may be specified inthe notice, the return of income in respect of eachassessment year falling within six assessment yearsand for the relevant assessment year or yearsreferred to in clause (b), in the prescribed formand verified in the prescribed manner and settingforth such other particulars as may be prescribedand the provisions of this Act shall, so far as maybe, apply accordingly as if such return were areturn required to be furnished under section 139; (b) assess or reassess the total income of sixassessment years immediately preceding theassessment year relevant to the previous year inwhich such search is conducted or requisition ismade and for the relevant assessment year oryears : Provided that the Assessing Officer shall assess orreassess the total income in respect of eachassessment year falling within such six assessmentyears and for the relevant assessment year or years: . . . . 13.The above provision should be read in conjunction withthe provisions of Section 132 to understand the scheme of searchand seizure operation under the Act in the context of a Blockassessment. The provisions of Section 132, in so far as they arerelevant to this matter, are extracted below: Section 132: Search and seizure. 132. (1) Where the Principal Director Generalor Director General or Principal Director orDirector or the Principal Chief Commissioner orChief Commissioner or Principal Commissioner orCommissioner or Additional Director orAdditional Commissioner or Joint Director orJointCommissionerinconsequenceofinformation in his possession, has reason tobelieve 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 sub-section (1) of section 131 of this Act, or anotice under sub-section (4) of section 22 ofthe Indian Income-tax Act, 1922, or under sub-section (1) of section 142 of this Act wasissued to produce, or cause to be produced, any books of account or other documents has omittedor failed to produce, or cause to be produced,such books of account or other documents asrequired by such summons or notice, oror failed to produce, or cause to be produced,such books of account or other documents asrequired by such summons or notice, or (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 sub-section (1) of section 131 of this Act, or anotice under sub-section (4) of section 22 ofthe Indian Income-tax Act, 1922, or under sub-section (1) of section 142 of this Act wasissued to produce, or cause to be produced, any books of account or other documents has omittedor failed to produce, or cause to be produced,such books of account or other documents asrequired by such summons or notice, oror failed to produce, or cause to be produced,such books of account or other documents asrequired by such summons or notice, or (b) any person to whom a summons or notice asaforesaid has been or might be issued will not,or would not, produce or cause to be produced,any books of account or other documents whichwill be useful for, or relevant to, anyproceeding under the Indian Income-tax Act,1922 (11 of 1922), or under this Act, oraforesaid has been or might be issued will not,or would not, produce or cause to be produced,any books of account or other documents whichwill be useful for, or relevant to, anyproceeding 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 orthing and such money, bullion, jewellery orother valuable article or thing representseither wholly or partly income or propertywhich has not been, or would not be, disclosedfor the purposes of the Indian Income-tax Act,1922 (11 of 1922), or this Act (hereinafter inthis section referred to as the undisclosedincome or property),then,—bullion, jewellery or other valuable article orthing and such money, bullion, jewellery orother valuable article or thing representseither wholly or partly income or propertywhich has not been, or would not be, disclosedfor the purposes of the Indian Income-tax Act,1922 (11 of 1922), or this Act (hereinafter inthis section referred to as the undisclosedincome or property),then,— (A) the Principal Director General or DirectorGeneral or Principal Director or Director orthe Principal Chief Commissioner or ChiefCommissioner or Principal Commissioner orCommissioner, as the case may be, may authoriseany Additional Director or AdditionalCommissioner or Joint Director, JointCommissioner, Assistant Director or DeputyDirector, Assistant Commissioner or DeputyCommissioner or Income-tax Officer, orGeneral or Principal Director or Director orthe Principal Chief Commissioner or ChiefCommissioner or Principal Commissioner orCommissioner, as the case may be, may authoriseany Additional Director or AdditionalCommissioner or Joint Director, JointCommissioner, Assistant Director or DeputyDirector, Assistant Commissioner or DeputyCommissioner or Income-tax Officer, or (B) such Additional Director or AdditionalCommissioner or Joint Director, or JointCommissioner, as the case may be, may authoriseany Assistant Director or Deputy Director,Assistant Commissioner or Deputy Commissioneror Income-tax Officer,Commissioner or Joint Director, or JointCommissioner, as the case may be, may authoriseany Assistant Director or Deputy Director,Assistant Commissioner or Deputy Commissioneror Income-tax Officer, (the officer so authorised in all cases beinghereinafter referred to as the authorisedofficer) to—hereinafter referred to as the authorisedofficer) to— (i)enter and search any building, place,vessel, vehicle or aircraft where he hasreason to suspect that such books ofaccount, other documents, money, bullion,jewellery or other valuable article or thingare kept; . . . . (the officer so authorised in all cases beinghereinafter referred to as the authorisedofficer) to—hereinafter referred to as the authorisedofficer) to— (i)enter and search any building, place,vessel, vehicle or aircraft where he hasreason to suspect that such books ofaccount, other documents, money, bullion,jewellery or other valuable article or thingare kept; . . . . (8) The books of account or other documentsseized under sub-section (1) or sub-section(1A) shall not be retained by the authorisedofficer for a period exceeding thirty days fromthe date of the order of assessmentunder section 153A or clause (c) of section158BC unless the reasons for retaining the sameare recorded by him in writing and the approvalof the Principal Chief Commissioner or ChiefCommissioner,PrincipalCommissionerorCommissioner, Principal Director General orDirector General or Principal Director orDirector for such retention is obtained :Provided that the Principal Chief Commissioneror Chief Commissioner, Principal Commissioneror Commissioner, Principal Director General orDirector General or Principal Director orDirector shall not authorise the retention ofthe books of account and other documents for aperiod exceeding thirty days after all theproceedings under the Indian Income-tax Act,1922 (11 of 1922), or this Act in respect ofthe years for which the books of account orother documents are relevant are completed.(8A) An order under sub-section (3) shall notbe in force for a period exceeding sixty daysfrom the date of the order (9) The person fromwhose custody any books of account or otherdocuments are seized under sub-section (1) orsub-section (1A) may make copies thereof, ortake extracts therefrom, in the presence of theauthorised officer or any other personempowered by him in this behalf, at such placeand time as the authorised officer may appointin this behalf. (9) The person from whose custody any books ofaccount or other documents are seized undersub-section (1) [or sub-section (1A)] may makecopies thereof, or take extracts therefrom, inthe presence of the authorised officer or anyother person empowered by him in this behalf,at such place and time as the authorisedofficer may appoint in this behalf. (9A) Where the authorised officer has nojurisdiction over the person referred to inclause (a) or clause (b) or clause (c) of sub-section (1), the books of account or otherdocuments, or any money, bullion, jewellery or other valuable article or thing (hereafter inthissectionandin sections132A and 132B referred to as the assets) seizedunder that sub-section shall be handed over bythe authorised officer to the Assessing Officerhaving jurisdiction over such person within aperiod of sixty days from the date on which thelast of the authorisations for search wasexecuted and thereupon the powers exercisableby the authorised officer under sub-section (8)or sub-section (9) shall be exercisable by suchAssessing Officer. . . . . 14. According to the petitioner, the IO has delayed thehanding over of the seized documents to the AO and this vitiatesthe process of assessment. They refer to the provisions ofSection 132(9A) as per which, in cases where the InvestigatingOfficer, if he is not the assessing officer of the assesseeconcerned, is to hand over the seized material to the AO of theconcerned assessee within a period of 60 days. Such delay issought to be arrived by a series of inferences. However, as theIO, vide common counter dated 24.02.2020, admits the date ofhanding over of the seized documents as 20.08.2019, beyond theperiod prescribed under 132(9A), the petitioner is saved theexercise of having to establish the delay otherwise. Ground (h)states as follows: . . . . 14. According to the petitioner, the IO has delayed thehanding over of the seized documents to the AO and this vitiatesthe process of assessment. They refer to the provisions ofSection 132(9A) as per which, in cases where the InvestigatingOfficer, if he is not the assessing officer of the assesseeconcerned, is to hand over the seized material to the AO of theconcerned assessee within a period of 60 days. Such delay issought to be arrived by a series of inferences. However, as theIO, vide common counter dated 24.02.2020, admits the date ofhanding over of the seized documents as 20.08.2019, beyond theperiod prescribed under 132(9A), the petitioner is saved theexercise of having to establish the delay otherwise. Ground (h)states as follows: h. The seized materials were handed overto the 1[st] respondent vide proceedings DDIT/U-3(2)/Agni/2019-20 dated 20.08.2019 and on thedate of issuing of notices U/s 153A, thefirst respondent was in the possession of theseized materials on the date of issuance ofnotices u/s.153A. 15.As per the provisions of Section 132(9A), the books ofaccount or other documents, money, bullion, jewellery or othervaluable article or thing or assets seized shall be handed overby the IO to the AO having jurisdiction over the assessee withina period of sixty days from the date on which the last of theauthorisations for search was executed and thereupon the powersexercisable by the authorised officer under sub-section (8) orsub-section (9) shall be exercisable by such AO. The last of thesearch authorisations is dated 04.09.2018 and the period ofsixty days expires on 03.11.2018 as against which, as per thecounter, 28.02.2019 is, admittedly when the seized materialswere handed over to R1. Since the handover of assets by IO to AOis admittedly beyond the time permitted under Section 132(9A),the process of assessment is itself vitiated and the noticesissued in terms of Section 153A commencing the process of assessment, liable to be quashed. The petitioner relies on adecision of this Court in the case of K. V. Krishnaswamy Naiduand Co Vs. CIT and Others [166 ITR 244], confirmed by theSupreme Court in CIT Vs. K. V. Krishnaswamy Naidu and Co. [249ITR 749] arguing that timeline set out in Section 132 (9A) ismandatory. 16. Learned Senior Standing Counsel for the revenue arguesthat the scheme of Section 132, as the provision read when K. V.Krishnaswamy Naidu (supra) was decided by the Courts, has beenconsiderably amended over the years. Firstly, sub-section (5) ofSection 132, stands omitted by Finance Act, 2002 with effectfrom 01.06.2002 and secondly, sub-Section (9A) was substitutedby Finance Act, 2002 within effect from 01.06.2002. Moreover,the mandate in sub-section (9A) to the effect that books ofaccounts/documents or any asset seized shall be handed over bythe authorised officer to the assessing officer havingjurisdiction over the searched person/entity within a period of60 days from the last of the search authorisations, is specificto the exercise of powers by the authorised officer under sub-section (8) and (9) of Section 132 only and cannot be extendedany further. 17.The Division Bench of this Court in K. V. KrishnaswamyNaidu (supra) considered a challenge to an order of theCommissioner of Income Tax under Section 132(8) of the Act. Thepetitioner in that case, sought the return of documents seizedat the time of search under Section 132 on the grounds thatfirstly, the AO in that case had already passed an order underSection 132(5) which could have been done only if he had been inpossession of the seized documents and in any event, the IOcould not hold the documents after an order under section 132(5)had been passed, whether such possession be termed ‘legal’ or‘physical’ custody. The provisions of Section 132(5) are alsoextracted below, merely for the sake of completion: 17.The Division Bench of this Court in K. V. KrishnaswamyNaidu (supra) considered a challenge to an order of theCommissioner of Income Tax under Section 132(8) of the Act. Thepetitioner in that case, sought the return of documents seizedat the time of search under Section 132 on the grounds thatfirstly, the AO in that case had already passed an order underSection 132(5) which could have been done only if he had been inpossession of the seized documents and in any event, the IOcould not hold the documents after an order under section 132(5)had been passed, whether such possession be termed ‘legal’ or‘physical’ custody. The provisions of Section 132(5) are alsoextracted below, merely for the sake of completion: (5)Where any money, bullion, jewellery or othervaluable article or thing (hereafter in this sectionand in sections 132A and 132B referred to as theassets) is seized under sub- section (1) or sub-section (1A),[ 4]as a result of a search initiated orrequisition" made before the 1st day of July, 1995 ]the[ 7]Assessing] Officer, after affording a reasonableopportunity to the person concerned of being heard andmaking such enquiry as may be prescribed, 6 shallwithin 7 Lone hundred and twenty] days of the seizure,make an order, with the previous approval ofthe[ 8]Deputy] Commissioner, estimating the undisclosedincome (including the income from the undisclosedproperty) in a summary manner to the best of his judgment on the basis of such materials as areavailable with him; 18.In the interim, the IO had made an application to hissuperior seeking approval to retain the seized documents beyondthe period stipulated under Section 132(9A) that came to begranted under Section 132(8). The order granting extension cameto be challenged by the petitioner on the grounds that the IOwas not his assessing officer and hence the IO ought to havehanded over the seized records to his AO who, was the officercompetent to have sought an extension in terms of Section 132(8). 19.It was in the context of the above facts that the Benchconsidered the interplay between the provisions of Section 132(5), (8) and (9A). Section 132(5) provides for the ITO to, afterhearing the assessee and making such enquiry as may beprescribed, pass an order within 120 days of the seizure withthe previous approval of the Inspecting Assistant Commissionertaking note of the seized material and appraisal reports.Section 132(8) stipulates that the documents seized in thecourse of the search shall not be retained by the authorisedofficer for a period exceeding 180 days from the date of seizureexcept for reasons to be recorded in writing shown to andapproved by the CIT. The proviso lays down a further period of30 days for which the CIT may authorise retention of thedocuments. Section 132(9A) states that where the authorisedofficer conducting the search had no jurisdiction over theperson/entity searched, books of accounts/documents/assetsseized shall be handed over by the authorised officer to the ITOhaving jurisdiction over the persons seized within a period of15 days of the seizure and thereupon all powers exercisable bythe authorised officer under sub-Section (8) or (9) shall beexercisable by the ITO. Sub-section (9A) is couched in identicallanguage now except that the period has been increased to 60days from 15 days. 20.In that case, as in the case before me now, there was noidentity between the IO and the AO having jurisdiction over theassessee. Thus, the AO could pass an order under section 132(5)only if he were in possession of the seized documents and it isto enable this, that the IO was directed to hand over possessionof all seized documents/assets to the AO within 15 days from thedate of seizure. The AO received the seized material in earlyDecember 1984, issued a notice on 10.12.1984 and passed an orderunder Section 132(5) thereafter. The request for extension fortime was made by the IO on 22.05.1985 after passing of theSection 1132(5) order by the AO, and granted on 24.05.1985, andthe Bench, being of the view that no valid extension could havebeen made in the aforesaid circumstances, quashes the extensiongranted, holding as follows: In the circumstances, therefore, there could beno doubt that when sub-s. (9A) refers to anauthorised officer having no jurisdiction over theperson, it is a reference to an officer other thanan Income-tax Officer having jurisdiction to make anorder under sub-section (5). Any other constructionwill make sub-section (5) unworkable. For the samereason, the authorised officer referred to in sub-section (8) is the same authorised officer referredto in sub-section (9A) as having no jurisdictionover the person. The net result, therefore, would bethat if the authorised officer is an Income-taxOfficer having jurisdiction over the person, he canretain the records himself for 180 days under sub-section (8). But, however, he will have to make anorder under sub-section (5) within 120 days. If therecords are required by him for any other purpose,for example under section 288(5), that Income-taxOfficer also can ask for approval of theCommissioner for such retention. If the authorisedofficer happens to be an officer other than anIncome-tax Officer having jurisdiction over theperson to make an order under sub-section (5), thatauthorised officer shall hand over the documents andassets to the Income-tax Officer having jurisdictionover the person and once that is done, the Income-tax Officer gets jurisdiction not only to make anorder under sub-section (5) but also to exercise thepowers of an authorised officer under sub-section(8) or sub-section (9) of that section. Thus, thoughunder section 132(1), the Director of Inspection mayauthorise a Deputy Director of Inspection or anInspecting Assistant Commissioner or AssistantDirector of Inspection or Income-tax Officer and theofficer so authorised is referred to as theauthorised officer, the provisions of sub-section(8) could not be invoked by such officer unless thehappens to be an Income-tax Officer havingjurisdiction over the person and who can make anorder under sub-section (5). The authorisation givento such officer by the Director of Inspection inturn also only enables such officer to search andseize the documents, records, money, bullion,jewellery or other valuable article or thing and theother powers specifically referred to in theauthorisation does not and could not enable thatofficer to make an order under section 132(5) unlesssuch authorised officer happens to be an Income-taxOfficer himself having jurisdiction over suchperson. 21.The order of the Division Bench was carried in appeal tothe Supreme Court at the instance of the revenue and in the caseof CIT Vs. K.V.Krishnaswamy Naidu and Co. [249 ITR 749] and wasaffirmed in the following terms: 21.The order of the Division Bench was carried in appeal tothe Supreme Court at the instance of the revenue and in the caseof CIT Vs. K.V.Krishnaswamy Naidu and Co. [249 ITR 749] and wasaffirmed in the following terms: Having heard counsel for the parties and in viewof the provisions of Sub-section (i)A) of Section 132of the Income-tax Act, 1961, we are in agreement withthe judgment of the High Court (reported as [1987]166 ITR 244) that the Assistant Director ofInspection, who was the authorised officer for thepurposes of carrying' out search and seizure but wasnot the Income-tax Officer who could pass an orderunder Sub-section (5) of Section 132 could not retainthe seized documents etc., beyond 15 days and,therefore, he could not moot a proposal under Sub-section (8) for further retention of the documentsbeyond 180 days. This appeal is accordingly dismissedwith costs. 22.On a harmonious construction of Sections 132 (5), (8)and (9), the Bench holds that unless the authorised officer alsohappens to be the ITO having jurisdiction over the assessee, theseized records must be handed over to the ITO havingjurisdiction within 15 days from date of seizure to enable theITO to pass an order in terms of Section 132(5). This case isthus, not an authority for the proposition whether the timelimit under Section 132(9A) is mandatory or not, but decides thevalidity of an order extending the time for retention ofdocuments by the IO, when the possession of the documents by theIO is itself contrary to the scheme of Section 132. The Benchconcludes that a strict compliance within the proceduralformalities is sine qua non for ensuring validity of the ordersmeaning that the passing of an order under Section 132(5)implies that the documents have been handed over the concernedAO by the IO and the question of the IO seeking extension oftime thereafter does not arise. I am of the view that thedecision of the Supreme Court in K.V.Krishnasamy would notadvance the case of the petitioner since the challenge thereinwas altogether different. 23.Substantial changes have been made to the scheme ofSection 132 in 2002, vide Finance Act 2002. The scheme of searchand seizure under the Income Tax Act as set out in Section 132is that sub-section (1) authorises the search of a premises,sub-sections (2) to (7) provide for the modalities of the searchitself, the manner of conduct of the search, the requirement forpanchas and other formalities to be observed in the course of asearch in order to ensure that the same is valid. 24.Section 132(8) provides for the retention by theauthorised officer of seized records and assets for a period of30 days from the date of order of assessment under Section 153Aor Section 158BC(c) or within such extended period as may beauthorised and granted by the officers stipulated. Section 132(8A) says that an order under sub-section (3) shall not be inforce for a period exceeding 60 days from the date of the orderand relates to an order served on the owner or the searchedperson who is in possession or control of assets or otherrecords to the effect that such owner or person in possessionshall not remove part with or dealt with such record/assetexcept with the previous permission of the officer. 25. Section 132(9) states that the person from whosecustody books/records/documents are seized may make copiesthereof or take extracts therefrom in the presence of theauthorised officer at a stipulated place and time. Section 132(9A) specifically refers to the powers exercisable under sub-section (8) and (9) and therefore, according to the revenue,cannot be extended any further. 25. Section 132(9) states that the person from whosecustody books/records/documents are seized may make copiesthereof or take extracts therefrom in the presence of theauthorised officer at a stipulated place and time. Section 132(9A) specifically refers to the powers exercisable under sub-section (8) and (9) and therefore, according to the revenue,cannot be extended any further. 26.As regards the main contention of the petitioner inregard to delay in handing over the seized materials to R1, R2confirms that the seized materials were handed over by him to R1on 22.08.2019 and R1 was thus in possession of the same when heissued the notices under Section 153A. This, according to therevenue, satisfies the statutory prescription in this regard. 27.No doubt, there is a time limit for handing over of theseized document by the investigating officer to the assessingofficer and this is to ensure that sufficient time is availableto the receiving officer to complete the assessment within theoverall limitation provided. 28. In the present case, the revenue in counter hasadmitted that the documents were handed over beyond the periodof 60 days from the date of search but, this lapse in procedurewill not vitiate the notices under section 153A as, in myconsidered view, the period of sixty days is not critical to thelegality of the notices impugned before me. 29.The Division Bench of the Delhi High Court in Dr.NaliniMahajan Vs. Director of Income Tax (252 ITR 123) consideredvarious issues that arose in the context of search proceedingsinitiated on that petitioner and connected persons and entities.One of the issues framed for consideration was whether theprovisions of Section 132(9A) are mandatory or directory and thedecision of the Bench on this issue (placitum H at page 155 ofthe report in ITR) is extracted below: ‘The question, which now falls for consideration,is as to whether the books of accounts and thedocuments belonging to the petitioner could be retainedby the authorised officer/assessing officer. Sub-section (9A) of Section 132 mandates that where theauthorised officer has no jurisdiction over the personreferred to in Clause (a) or Clause (b) or Clause (c)of Sub-sectio