Wa/830/2022 Of The Deputy Commissioner Of Income Tax v. Sunil Kumar Sharma

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 22 DAY OF JANUARY, 2024 PRESENT THE HON’BLE MR.JUSTICE K.SOMASHEKAR AND THE HON'BLE MR JUSTICE RAJESH RAI K -WRIT APPEAL NO.830 OF 2022 (TIT)CONNECTED WITH -WRIT APPEAL NO.831 OF 2022 (TIT)-WRIT APPEAL NO.832 OF 2022 (TIT)-WRIT APPEAL NO.833 OF 2022 (TIT) -WRIT APPEAL NO.834 OF 2022 (TIT) IN W.A.NO.830/2022BETWEEN: 1. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1(4), CENTRAL REVENUE BUILDING QUEENS ROAD BENGALURU – 560 001. CIRCLE-1(4), CENTRAL REVENUE BUILDING QUEENS ROAD BENGALURU – 560 001. 2. THE COMMISSIONER OF INCOME TAX (APPEALS)-11 ROOM NO. 322, 3 FLOOR CENTRAL REVENUE BUILDING QUEEN’S ROAD (APPEALS)-11 ROOM NO. 322, 3 FLOOR CENTRAL REVENUE BUILDING QUEEN’S ROAD BENGALURU – 560 001. ...APPELLANTS (BY SRI. BALBIR SINGH – THE THEN ASG; SRI. Y V RAVIRAJ - ADVOCATE) SRI. Y V RAVIRAJ - ADVOCATE) AND: SUNIL KUMAR SHARMA S/O SRI D P SHARMA AGED ABOUT 45 YEARS NO.328, TIPPU SULTHAN PALACE ROAD KALASIPALYAM BENGALURU – 560 002. ...RESPONDENT (BY SRI KIRAN S JAVALI – SR. COUNSEL FOR SRI. SREEHARI KUTSA – ADVOCATE FOR C/RESPONDENT) THIS WRIT APPEAL FILED UNDER SECTION 4 OF THE HIGH COURT ACT, 1961, PRAYING TO SET ASIDE THE ORDER PASSED BY THE LEARNED SINGLE JUDGE IN W.P.9939/2022 (T-IT) DATED 12.08.2022. IN W.A.NO.831/2022 BETWEEN: 1. THE COMMISSIONER OF INCOME TAX (APPEALS)-11, BENGALURU OFFICE OF THE COMMISSIONER OF INCOME TAX (APPEALS)-11 ROOM NO. 322, 3 FLOOR CENTRAL REVENUE BUILDING QUEEN’S ROAD BENGALURU – 560 001. 2. THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1(4) C R BUILDING, QUEENS ROAD BENGALURU – 560 001. 3. THE JOINT / ADDITIONAL COMMISSIONER OF INCOME TAX, CENTRAL RANGE-1 C R BUILDING, QUEENS ROAD BENGALURU – 560 001. 4. THE PR. COMMISSIONEKR OF INCOME TAX (CENTRAL), C R BUILDING QUEENS ROAD, BENGALURU – 560 001. 5. THE DIRECTOR GENERAL OF INCOME TAX(INV.1) C R BUILDING, QUEENS ROAD BENGALURU – 560 001. ...APPELLANTS (BY SRI. BALBIR SINGH – THE THEN ASG; SRI. Y V RAVIRAJ - ADVOCATE) AND: SUNIL KUMAR SHARMA S/O SRI D P SHARMA AGED ABOUT 45 YEARS NO.328, TIPPU SULTHAN PALACE ROAD KALASIPALYAM BENGALURU – 560 002. ...RESPONDENT (BY SRI KIRAN S JAVALI – SR. COUNSEL FOR SRI. SREEHARI KUTSA – ADVOCATE FOR C/RESPONDENT) THIS WRIT APPEAL FILED UNDER SECTION 4 OF THE HIGH COURT ACT, 1961, PRAYING TO SET ASIDE THE ORDER PASSED BY THE LEARNED SINGLE JUDGE IN W.P.9945/2022 (T-IT) DATED 12.08.2022. IN W.A.NO.832/2022BETWEEN: 1. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1(4), CENTRAL REVENUE BUILDING QUEENS ROAD CIRCLE-1(4), CENTRAL REVENUE BUILDING QUEENS ROAD BENGALURU – 560 001. 2. THE COMMISSIONER OF INCOME TAX (APPEALS)-11 ROOM NO. 322, 3 FLOOR CENTRAL REVENUE BUILDING QUEEN’S ROAD BENGALURU – 560 001. ...APPELLANTS (BY SRI. BALBIR SINGH – THE THEN ASG; SRI. Y V RAVIRAJ - ADVOCATE) AND: SUNIL KUMAR SHARMA S/O SRI D P SHARMA AGED ABOUT 45 YEARS NO.328, TIPPU SULTHAN PALACE ROAD KALASIPALYAM BENGALURU – 560 002. ...RESPONDENT (BY SRI KIRAN S JAVALI – SR. COUNSEL FOR SRI. SREEHARI KUTSA – ADVOCATE FOR C/RESPONDENT) THIS WRIT APPEAL FILED UNDER SECTION 4 OF THE HIGH COURT ACT, 1961, PRAYING TO SET ASIDE THE ORDER PASSED BY THE LEARNED SINGLE JUDGE IN W.P.9938/2022 (T-IT) DATED 12.08.2022. IN W.A.NO.833/2022BETWEEN: 1. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1(4), CENTRAL REVENUE BUILDING QUEENS ROAD BENGALURU – 560 001. CIRCLE-1(4), CENTRAL REVENUE BUILDING QUEENS ROAD BENGALURU – 560 001. 2. THE COMMISSIONER OF INCOME TAX (APPEALS)-11 ROOM NO. 322, 3 FLOOR CENTRAL REVENUE BUILDING QUEEN’S ROAD BENGALURU – 560 001. ...APPELLANTS (BY SRI. BALBIR SINGH – THE THEN ASG; SRI. Y V RAVIRAJ - ADVOCATE) AND: SUNIL KUMAR SHARMA S/O SRI D P SHARMA AGED ABOUT 45 YEARS NO.328, TIPPU SULTHAN PALACE ROAD KALASIPALYAM BENGALURU – 560 002. ...RESPONDENT (BY SRI KIRAN S JAVALI – SR. COUNSEL FOR 12.08.2022. IN W.A.NO.833/2022BETWEEN: 1. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1(4), CENTRAL REVENUE BUILDING QUEENS ROAD BENGALURU – 560 001. CIRCLE-1(4), CENTRAL REVENUE BUILDING QUEENS ROAD BENGALURU – 560 001. 2. THE COMMISSIONER OF INCOME TAX (APPEALS)-11 ROOM NO. 322, 3 FLOOR CENTRAL REVENUE BUILDING QUEEN’S ROAD BENGALURU – 560 001. ...APPELLANTS (BY SRI. BALBIR SINGH – THE THEN ASG; SRI. Y V RAVIRAJ - ADVOCATE) AND: SUNIL KUMAR SHARMA S/O SRI D P SHARMA AGED ABOUT 45 YEARS NO.328, TIPPU SULTHAN PALACE ROAD KALASIPALYAM BENGALURU – 560 002. ...RESPONDENT (BY SRI KIRAN S JAVALI – SR. COUNSEL FOR SRI. SREEHARI KUTSA – ADVOCATE FOR C/R) THIS WRIT APPEAL FILED UNDER SECTION 4 OF THE HIGH COURT ACT, 1961, PRAYING TO SET ASIDE THE ORDER PASSED BY THE LEARNED SINGLE JUDGE IN W.P.9937/2022 (T-IT) DATED 12.08.2022. IN W.A.NO.834/2022 BETWEEN: 1. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1(4), CENTRAL REVENUE BUILDING QUEENS ROAD BENGALURU – 560 001. CIRCLE-1(4), CENTRAL REVENUE BUILDING QUEENS ROAD BENGALURU – 560 001. 2. THE COMMISSIONER OF INCOME TAX (APPEALS)-11 ROOM NO. 322, 3 FLOOR CENTRAL REVENUE BUILDING QUEEN’S ROAD BENGALURU – 560 001. ...APPELLANTS (BY SRI. Y V RAVIRAJ - ADVOCATE) AND: SRI KANDASWAMY RAJENDRA S/O LATE KANDASWAMY AGED ABOUT 76 YEARS R/AT NO.8B, 1 FLOOR DDA MIH FLAT, SARAI JULENA SUKDHEV VIHAR NEW DELHI – 110 025. ...RESPONDENT (BY SRI A MAHESH CHOWDHARY – ADVOCATE) THIS WRIT APPEAL FILED UNDER SECTION 4 OF THE HIGH COURT ACT, 1961, PRAYING TO SET ASIDE THE ORDER PASSED BY THE LEARNED SINGLE JUDGE IN W.P.9946/2022 (T-IT) DATED 12.08.2022. THESE WRIT APPEALS HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 14.12.2023 COMING ON FOR PRONOUNCEMENT THIS DAY, K. SOMASHEKAR J., DELIVERED THE FOLLOWING: J U D G M E N T These appeals have been preferred by the Deputy Commissioner of Income Tax, Circle 1(4) (for short ‘Revenue’), challenging the common order dated 12.08.2022 passed by a learned Single Judge of this Court in W.P.No.9937/2022 and connected matters. All these appeals are directed against one Shri Sunil Kumar Sharma who is the respondent in W.A.Nos.830/2022, 831/2022, 832/2022 and 833/2022 and one Shri Kandaswamy Rajendran who is the respondent in W.A.No.834/2022. The respondents shall hereinafter be referred to as ‘the assessee’ for brevity. 2. Since all these appeals which have been preferred by the Revenue arise out of a common order dated 12.08.2022 rendered by a learned Single Judge in W.P.No.9937/2022 and connected petitions, they are heard together and are disposed of by this common order. 3. Heard the arguments advanced by the then learned Addl. Solicitor General Shri Balbir Singh as well as the present learned counsel Sri Y V Raviraj who is on record for appellants in WA.Nos.830/2022, 831/2022, 832/2022, 833/2022 and 834/2022. We have also heard the arguments advanced by the learned Senior counsel Sri Kiran S Javali for the respondent in W.A.Nos.830/2022, 831/2022, 832/2022 and 833/2022. Further, we have heard the arguments of the learned counsel Sri A. Mahesh Chowdary for the respondent in W.A.No.834/2022 and have perused the materials on record including the impugned order. 4. The factual matrix of the cases as revealed from the pleadings, are as under: It transpires that the Appellants / Revenue, had conducted search action under Section 132(1) of the Income Tax Act, 1961 (for short hereinafter referred to as 'the Act') on 02nd August, 2017 at the premises of the Sri D K Shivakumar and similar search also took place at premises of one Sri K Rajendran/Assessee at New Delhi. It is the case of the 4. The factual matrix of the cases as revealed from the pleadings, are as under: It transpires that the Appellants / Revenue, had conducted search action under Section 132(1) of the Income Tax Act, 1961 (for short hereinafter referred to as 'the Act') on 02nd August, 2017 at the premises of the Sri D K Shivakumar and similar search also took place at premises of one Sri K Rajendran/Assessee at New Delhi. It is the case of the Appellants/Revenue that, during the search at the premises of the Assessee, certain diaries and entries relating to the affairs of the Respondent / Sri Sunil Kumar and Sri D K Shivakumar were recovered and statements of both the Respondent and that of Sri K. Rajendran, came to be recorded. It is further stated in the writ petitions that the Appellant/Revenue claims that the case of the Respondent was centralized to the jurisdiction of Appellant/revenue as per Order dated 07th March, 2018 under Section 127 of the Act. Respondents herein further contended that the Appellant/Revenue has neither issued any notice nor informed regarding centralization of their case to the jurisdiction of Appellant/Revenue and it is further contended in the writ appeals that Appellant/Revenue ought to have provided an opportunity to the Respondents as required under Section 127 of the Act. 5. After the transfer of jurisdiction under Section 127 of the IT Act, the Assessing Officer, after due compliance of the conditions contemplated, issued notice dated 21.08.2019 under Section 153C of the IT Act requesting the assessee to file return of income and in compliance of the said notice, the assessee filed his return of income as on 05.09.2019. On 06.09.2019, the Assessing Officer issued notice to the assessee under Section 143(2) of the IT Act. After granting sufficient opportunity of hearing to the assessee and after considering the incriminating material and other material gathered post search investigation, the Assessing Officer concluded the assessment by its order dated 31.12.2019. The assessee challenged the said order by preferring an appeal as on 30.01.2020 before the Commissioner of Income Tax, Appeals, which appeal is pending consideration. In view of the fact that the said appeal was still pending consideration, the assessee is said to have preferred writ petitions as on 23.05.2022 challenging the notice and the order of assessment. 6. Respondents / Assessee, while urging the aforementioned aspects, questioned the impugned notices calling upon Assessee herein to submit his returns of income for the Assessment Year 2015-2016, as without jurisdiction. The main grievance of the respondents is that impugned notices under Section 153C of the Act is to be issued on "other person" and the respondents being "searched person", the impugned notice under Section 153C of the Act is not maintainable. Hence, the impugned order by the Commissioner of Income Tax in the CIT(A) was challenged through Writ Petition No. 9937/2022 & connected matters before a learned Single Judge of this High Court. Further, aggrieved by the common order of the learned Single Judge of this High Court, the Appellant/Revenue has come before this Division Bench challenging the order of the learned Single Judge as non-est and contrary to law. 7. The learned Single Judge, by its order dated 12.08.2022, has allowed all the writ petitions and has quashed the respective impugned notices issued including the further proceedings and has thereafter remanded the matter to the Revenue to re-consider the issue afresh. It is this order which is under challenge in these petitions by urging various grounds. 8. The then Learned Addl. Solicitor General appearing for the appellants / Revenue has contended that the writ petitions were preferred by the assessee as on 23.05.2022 and the matters were listed before a learned Single Judge of this Court as on 24.05.2022 on which day, the petitioner was permitted to serve 7. The learned Single Judge, by its order dated 12.08.2022, has allowed all the writ petitions and has quashed the respective impugned notices issued including the further proceedings and has thereafter remanded the matter to the Revenue to re-consider the issue afresh. It is this order which is under challenge in these petitions by urging various grounds. 8. The then Learned Addl. Solicitor General appearing for the appellants / Revenue has contended that the writ petitions were preferred by the assessee as on 23.05.2022 and the matters were listed before a learned Single Judge of this Court as on 24.05.2022 on which day, the petitioner was permitted to serve the Standing Counsel for the Revenue. It is contended that the papers were served late in the night as on that day and since the Standing Counsel could not seek instructions, the matter was listed consecutively on 25.05.2022 and on 26.05.2022. The revenue requested for time to file statement of objections. The matter was treated as part heard and was adjourned to 14.06.2022. On the said day, it was adjourned to 15.7.2022 and again to 04.08.2022 and thereafter to 10.08.2022. When the learned ASG appeared for the Revenue, the learned Single Judge had indicated him that the issue raised by the assessee is regarding the applicability of the judgments of the Hon’ble Supreme Court in the case of V.C. SHUKLA and COMMON CAUSE and asked him to answer those issues. Hence, it is contended that the Revenue was constrained to address their arguments only as regards the above issue as indicated by the learned Single Judge. However, it is contended that the judgment dated 12.08.2022 rendered by the learned Single Judge refers to consideration of various issues either not being addressed by the assessee after appearance of the revenue, or in the presence of the revenue or as indicated by the learned Single Judge. It is contended that the learned Single Judge, after considering various aspects, proceeded to set-aside the initiation of proceedings by setting aside the notice issued to the assessee under Section 153C of the IT Act and consequently has set aside the order of assessment as well as the demand notice. The learned Single Judge though has remanded the matter for de novo enquiry, in view of setting aside the notice under Section 153C of the IT Act, the result is that there are no proceedings pending before the Assessing Officer and in view of the same, the order of remand cannot be given effect to and it would only remain a futile exercise. Being aggrieved by the same, it is contended that the Revenue has preferred the appeals on various grounds. 9. The then learned ASG contends that after the appearance of the Revenue, no arguments were addressed on behalf of the Assessee. Since the learned Single Judge had indicated that the Revenue was to argue regarding the order of assessment being passed without considering the law laid down by the Hon’ble Supreme Court in the case of CBI vs. V.C. SHUKLA ((1998 3 SCC 410)) and COMMON CAUSE vs. UNION OF INDIA ((2017) 11 SCC 731)), the arguments were addressed by the Revenue only on the said issue. However, the learned Single Judge has proceeded to address various other issues raised in the writ petitions which were not at all argued, without considering the Statement of objections filed by the Revenue in response to the contentions raised in the writ petitions. Hence, it is contended that the order of the learned Single Judge is in violation of the principles of natural justice and is liable to be set aside. 10. It is contended that neither the revenue nor the assessee had argued before the learned Single Judge regarding the transfer of jurisdiction under Section 127 of the IT Act, maintainability of the writ petition, correctness of initiation of proceedings under Section 153C of the IT Act as to whether the assessee should be treated as a “Searched Person” or “Other Person”. 10. It is contended that neither the revenue nor the assessee had argued before the learned Single Judge regarding the transfer of jurisdiction under Section 127 of the IT Act, maintainability of the writ petition, correctness of initiation of proceedings under Section 153C of the IT Act as to whether the assessee should be treated as a “Searched Person” or “Other Person”. 11. It is the further contention on behalf of the Revenue that as regards the order of assessment passed on 31.12.2019, the assessee has preferred an appeal as provided under Section 246A of the IT Act before the CIT (A) and the same is pending consideration. In view of the assessee having invoked the remedy of an efficacious statutory appeal, during the pendency of the said statutory appeal, the writ petitions preferred before the learned Single Judge were not maintainable, and hence the learned Single Judge had committed an error in entertaining the writ petitions which were not maintainable. It is further to be noticed that the statutory remedy was invoked as on 30.01.2020 by preferring an appeal before the CIT (A) whereas the writ petitions were filed during 2022, after a lapse of 2 ½ years. Hence, it is contended that the writ petitions were not maintainable on the ground of limitation as well. 12. It is further contended that the learned Single Judge has held that the transfer of jurisdiction under Section 127 of the IT Act without granting an opportunity of hearing to the assessee is incorrect. However, the learned Single Judge has failed to take into consideration the statement of objections filed by the Revenue, which contention was answered by specifically referring to Section 127(3) of the IT Act mandating that no opportunity of hearing while transfer of jurisdiction under Section 127 of the IT Act when the transfer is within the same city. In this regard, it is relevant to refer to Section 127(3) of the IT Act, which reads thus: “3) Nothing in sub-section (1) or sub-section (2) shall be deemed to require any such opportunity to be given where the transfer is from any Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) and the offices of all such officers are situated in the same city, locality or place.” Thus, it is contended by the then learned Addl. ASG that since the assessee prior to transfer of jurisdiction under Section 127 of the IT Act was assessed in Bangalore and after transfer of jurisdiction under Section 127 of the IT Act also, the assessee jurisdiction remains in Bangalore only. Hence, the order of the learned Single Judge is without proper appreciation of the facts aspects, which is liable to be set aside. 13. It is further pointed out that the objection filed by the assessee dated 18.11.2019 for issuance of notice under Section 153C of the IT Act was disposed of on 28.11.2019. Subsequently, the assessee participated in the assessment proceedings and the same came to be concluded by order dated 31.12.2019. It is contended that in view of Section 124(3)(c) of the IT Act, the assessee is not entitled to question the jurisdiction of the Assessing Officer, after expiry of one month from the date of notice or assessment order, whichever is earlier. Though specific contention has been raised on this issue, the learned Single Judge has not recorded any finding on this aspect. Hence, it is contended that the order of the learned Single Judge without consideration of the various contentions raised in the Statement of objection, is liable to be set aside. the assessee participated in the assessment proceedings and the same came to be concluded by order dated 31.12.2019. It is contended that in view of Section 124(3)(c) of the IT Act, the assessee is not entitled to question the jurisdiction of the Assessing Officer, after expiry of one month from the date of notice or assessment order, whichever is earlier. Though specific contention has been raised on this issue, the learned Single Judge has not recorded any finding on this aspect. Hence, it is contended that the order of the learned Single Judge without consideration of the various contentions raised in the Statement of objection, is liable to be set aside. 14. The then learned Addl ASJ specifically contended that, satisfaction as required under Section 132 of the IT Act was recorded in respect of Shri D.K. Shivakumar and in view of suspicion that the books of accounts, other documents, money, bullion, jewellery or other valuable articles or things were kept in the premises of the assessee, the said premises of the assessee was searched. The warrant of search was in fact, in the name of Shri D.K. Shivakumar and not in the name of the assessee. Hence, it is contended that Shri D.K. Shivakumar is the searched person and the assessee cannot be considered as searched person. Though no arguments were addressed on this issue, the learned Single Judge has proceeded to conclude that the petitioner in the writ petition is a searched person. It is the vehement contention of the Revenue that the said finding of the learned Single Judge is contrary to the law laid down by the Hon’ble Supreme Court and other Hon’ble High Courts wherein it is held that the search is person specific and not place specific. 15. It is further contended that in the case on hand, satisfaction as required under Section 132(1)(a)(b)(c) was recorded in respect of Shri D.K. Shivakumar and ‘reason to suspect’ as contemplated under Section 132(1)(i) of the IT Act was recorded in respect of the building occupied by the assessee. Section 132(1) (i) reads thus: “132. (1) (i) enter and search any building or place where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept;” 16. It is further contended that the learned Single Judge failed to consider Section 2(12A) of the IT Act which defines “books or books of account”. When a specific definition has been provided for the purposes of the Act, the learned Single Judge was not right in referring to Section 34 of the Evidence Act and then to hold that diaries / loose sheets cannot be considered as an evidence. The learned single judge has failed to appreciate one more aspect that Section 132 of the Act refers to not only books of accounts, and also to other documents. Even if it is to be assumed for the sake of arguments that the loose sheets would not fall within the ambit of books of accounts, undoubtedly the same would fall within the ambit of documents. Hence the finding of the learned single judge that the diary / loose sheets will not fall within the ambit of books of accounts is incorrect. 17. Without prejudice to the above contention it is further submitted that in terms of the law laid down by the Hon’ble Supreme Court which has been relied on by the learned single judge, in the case of VC Shukla and Common Cause, the seized diary would fall within the ambit of books of accounts and holding the diary as not admissible evidence is contrary to the law laid down by the Hon’ble Supreme Court. On all these grounds, learned counsel for the appellant / Revenue prayed to allow the appeals and thereby to set aside the order of the learned Single Judge. 17. Without prejudice to the above contention it is further submitted that in terms of the law laid down by the Hon’ble Supreme Court which has been relied on by the learned single judge, in the case of VC Shukla and Common Cause, the seized diary would fall within the ambit of books of accounts and holding the diary as not admissible evidence is contrary to the law laid down by the Hon’ble Supreme Court. On all these grounds, learned counsel for the appellant / Revenue prayed to allow the appeals and thereby to set aside the order of the learned Single Judge. 18. The Respondents in this Writ Appeal entered appearance and vehemently contended that the Appellant / Revenue Authorities have concluded that the income that has escaped assessment and notice under Section 153C of the Income Tax Act,1961 are solely issued on “loose sheets” and are termed as “Dairies” during the search, which does not come under the ambit of “book of entry” or as evidence under the Indian Evidence Act, 1872. Hence, it is contended that the said evidence is not corroborative to show that such loose sheets found are connected to the petitioner or to the occupation of the petitioners. The Panchanama further vouches for such lack of evidence. In this regard, they have further relied on the Apex court decisions in the case of CBI v. VC Shukla (1998) 3 SCC 410, and Common cause v. Union of India (2017) 11 SCC 731, wherein it is stated that, “Loose sheets” cannot be admissible under Section 34 of the Indian Evidence Act without corroborating with other evidence. 19. The Respondents further rebutted that the Centralization as provided under Section 127 of the Income Tax Act, 1961 empowers transfer of cases, upon providing a reasonable opportunity to object to the notice. For that, it is contended that the respondent herein have not been provided with the Notice. Further the Respondent being a resident of Delhi, the Assessment order and Notice were issued by the Income Tax Authorities in Bengaluru, which is absolutely against the procedure under section 127 of the IT Act. In support of the said argument, the respondent has relied on the case in M/S AJANTHA INDUSTRIES & AMP; ORS V. CENTRAL BOARD OF DIRECT TAXES, NEW DELHI & ORS ((1976) 1 SCC 1001)), and in the case of DARSHAN JITENDRA JHAVERI V. COMMISSIONER OF INCOME-TAX (INTERNATIONAL) ((2022) 134 TAXMAN.COM 43 (BOMBAY)). 20. The counsel for Respondents finally contended as regards non-applicability of Section 153C of the Income Tax Act, 1961. It is contended that quintessential conditions to invoke Section 153-C of the Income Tax Act are that, the search must not be conducted on the person to whom Section 153C notice is issued; a primary person on whom search is to be conducted must exist; there must be discovery of documents found in the custody of the ‘searched person’ relating to the ‘other person’; such documents found must be incriminating material to invoke proceedings against the ‘other person’; no search is sine qua non for issuance of proceedings under Section 153C of the IT Act. The Searched person in the instant case is the Petitioner as the search was conducted on his premises which was established by the Panchanama. In support of these arguments, the learned counsel has relied upon by the following Judgements namely, PCIT V. ASSOCIATE MINING CO. 417 ITR 420 (KAR) which lays down the essential conditions to comply before serving the Notice under Section 153C of Income-tax Act, 1961, and in the judgment of SUPER MALLS (P.) LTD V. PCIT 8, NEW DELHI (2020) 115 TAXMAN.COM 105(SC). 21. Both the Appellant-Revenue and Respondent-Assessee entered appearance and submitted their arguments extensively. On hearing the learned counsel for both the parties, this Court finds it relevant to examine the following questions that arises for consideration in these writ appeals, which are as under: 1) Whether ‘Loose Sheets’ and ‘Diary’ have any evidentiary value? 2) Whether Centralization is in violation of Section 127 of the Income Tax Act, 1961, is valid? 21. Both the Appellant-Revenue and Respondent-Assessee entered appearance and submitted their arguments extensively. On hearing the learned counsel for both the parties, this Court finds it relevant to examine the following questions that arises for consideration in these writ appeals, which are as under: 1) Whether ‘Loose Sheets’ and ‘Diary’ have any evidentiary value? 2) Whether Centralization is in violation of Section 127 of the Income Tax Act, 1961, is valid? 3) Whether the Notice under Section 153C of the Income Tax Act, 1961 is valid herein? As regards Question No.1: Upon reading the material provided and the order of the learned Single Judge delivered on 12.08.2022, it is evident that the income that has escaped assessment and notices under Section 153C of the Income Tax Act, 1961, were solely issued based on loose sheets and documents which are termed as ‘diaries’ found during the search. The applicability of Section 69A of the Act arises only when the principles laid down under Section 68 of the Act are satisfied. Section 68 states that there must be books of accounts or any books with credit entry. The said Act reads thus: “Section 68: Where any sum is found credited in the books of an assessee maintained for any previous years and the assessee offers no explanations about nature and source thereof or the explanation offered by him is not, in the opinion of the assessing officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year.” The language of the Law is vague and subjective, thus making us rely on an Apex court decision in the case of CBI vs. V.C. Shukla ((1998) 3 SCC 410), wherein the relevant portion reads thus: “Collection of sheet fastened or bound together so as to form material whole. Loose sheets or scraps of paper cannot be termed as books.” In this regard, it is relevant to extract Section 69A of the Act, which reads thus: "69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.". The lack of corroborative evidence to show how the loose sheets found at the house of Sri K Rajandran are connected to the Respondents herein, or their occupation, is evident from the panchanama provided by the Assessing officer. 22. The entire allegation is made out on the basis of loose sheets of documents, which does not come under the ambit and scope of ‘books of entry’ or as ‘evidence’ under the Indian Evidence Act. 23. In view of the aforementioned aspects, we have carefully examined the law declared by the Hon’ble Apex Court with regard to acceptance of diaries/loose sheets by the respondent-Revenue. In the case of CBI Vs. VC SHUKLA (MANU/SC/0168/1998), at paragraphs 16 to 18 of the judgment, it is observed thus: The lack of corroborative evidence to show how the loose sheets found at the house of Sri K Rajandran are connected to the Respondents herein, or their occupation, is evident from the panchanama provided by the Assessing officer. 22. The entire allegation is made out on the basis of loose sheets of documents, which does not come under the ambit and scope of ‘books of entry’ or as ‘evidence’ under the Indian Evidence Act. 23. In view of the aforementioned aspects, we have carefully examined the law declared by the Hon’ble Apex Court with regard to acceptance of diaries/loose sheets by the respondent-Revenue. In the case of CBI Vs. VC SHUKLA (MANU/SC/0168/1998), at paragraphs 16 to 18 of the judgment, it is observed thus: “16. To appreciate the contentions raised before us by the learned counsel for the parties it will be necessary at this stage to refer to the material provisions of the Act. Section 3 declares that a fact a relevant to another when it is connected with the other in any of the ways referred to in the provisions of the Act relating to the relevancy of facts; and those provisions are to be found in Section 6 to 55 appearing in Chapter II. Section 5, with which Chapter II opens, expressly provides that evidence may be given in any suit or proceeding of the existence or non-existence of every fact in issue and the facts declared relevant in the aforesaid section, and of no others. Section 34 of the Act reads as under:- "34. Entries in books of account when relevant - Entries in book of account, regularly kept in the course of business, are relevant whenever they refer to a matter into which the court has to inquire but such statements shall not alone be sufficient evidence to charge any person with liability." 17. From a plain reading of the Section it is manifest that to make an entry relevant thereunder it must be shown that it has been made in a book, that book is a book of account and that book of account has been regularly kept in the course of business. From the above Section it is also manifest that even if the above requirements are fulfilled and the entry becomes admissible as relevant evidence, still, the statement made therein shall not alone be sufficient evidence, still, the statement made therein shall not along be sufficient evidence to charge any person with liability. It is thus seen that while the first part of the section speaks of the relevancy of the entry as evidence, the second part speaks, in a negative way, of its evidentiary value for charging a person with a liability. It will, therefore, be necessary for us to first ascertain whether the entries in the documents, with which we are concerned, fulfil the requirements of the above section so as to be admissible in evidence and if this question is answered in the affirmative then only its probative value need be assessed. 18. “Book” ordinarily means a collection of sheets of paper or other material, blank, written, or 18. “Book” ordinarily means a collection of sheets of paper or other material, blank, written, or printed, fastened or bound together so as to form a material whole. Loose sheets or scraps of paper cannot be termed as 'book' for they can be easily detached and replaced. In dealing with the work 'book' appearing in Section 34 in Mukundram vs. Dayaram [AIR 1914 Nagpur 44], a decision on which both sides have placed reliance, the Court observed:- " In its ordinary sense it signifies a collection of sheets of paper bound together in a manner which cannot be disturbed or altered except by tearing apart. The binding is of a kind which is not intended to the moveable in the sense of being undone and put together again. A collection of papers in a portfolio, or clip, or strung together on a piece of twine which is intended to be untied at will, would not, in ordinary English, be called a book…I think the term "book" in S. 34 aforesaid may properly' be taken to signify, ordinarily, a collection of sheets of paper bound together with the intention that such binding shall be permanent and the papers used collectively in one volume. It is easier however to say what is not a book for the purposes of S. 34, and I have no hesitation in holding that unbound sheets of paper in whatever quantity, though filled up with one continuous account, are not a book of account within the purview of S.34." 24. The aforesaid approach is in accordance with good reasoning and we are in full agreement with it. Applying the above tests, it must be held that the two spiral note books (MR 68/91 and 71/91) and the two spiral pads (MR 69/91 and MR 70/91) are "books" within the meaning of Section 34, but not the loose sheets of papers contained in the two files (MR 72/91 and MR 73/91).” 25. The Hon'ble Supreme Court in the case of COMMON CAUSE AND OTHERS v. UNION OF INDIA, reported in (2017) 11 SCC 731, at paragraphs 278 to 282 of the judgment, has observed thus: “278. With respect to the kind of materials which have been placed on record, this Court in V.C. Shukla case has dealt with the matter though at the stage of discharge when investigation had been completed by same is relevant for the purpose of decision of this case also. This court has considered the entries in Jain Hawala Diaries, note books and file containing loose sheets of papers not in the form of “books of accounts” and has held that such entries in loose papers/sheets are irrelevant and not admissible under Section 34 of the Evidence Act, and that only where the entries are made in the books of accounts regularly kept, depending on the nature of occupation, that those are admissible. 279. It has further been laid down in V.C. Shukla case as to value of entries in the books of account, that such statements shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. It has been held that even then independent evidence is necessary as to trustworthiness of those entries which is a requirement to fasten the liability. 280. This court has further laid down in V.C. Shukla that meaning of account book would be spiral note book/pad but not loose sheets. The following extract being relevant is quoted herein below: (SCC pp.423-27, paras 14 and 20) “14. In setting aside the order of the trial court, the High Court accepted the contention of the respondents that the documents were not admissible in evidence under Section 34 with the following words: "70. ….an account presupposes the existence of two persons such as a seller and a purchaser, creditor and debtor. Admittedly, the alleged diaries in the present case are not records of 280. This court has further laid down in V.C. Shukla that meaning of account book would be spiral note book/pad but not loose sheets. The following extract being relevant is quoted herein below: (SCC pp.423-27, paras 14 and 20) “14. In setting aside the order of the trial court, the High Court accepted the contention of the respondents that the documents were not admissible in evidence under Section 34 with the following words: "70. ….an account presupposes the existence of two persons such as a seller and a purchaser, creditor and debtor. Admittedly, the alleged diaries in the present case are not records of the entries arising out of a contract. They do not contain the debts and credits. They can at the most be described as a memorandum kept by a person for his own benefit which will enable him to look into the same whenever the need arised to do for his future purpose. Admittedly the said diaries were not being maintained on day-to day basis in he course of business. There is no mention of the dates on which the alleged payment were made. In fact the entries there in are on monthly basis. Even the names of the persons whom the alleged payments were made do not find a mention in full. they have been shown in abreviated form. Only certain 'letters' have been written against their names which are within the knowledge of only the scribe of the said diaries as to what they stand for and whom they refer to." 20. Mr. Sibal, the learned counsel for the Jains, did not dispute that the spiral note books and the small pads are 'books' within the meaning of Section 34. He, however, strongly disputed the admissibility of those books in evidence under the aforesaid section on the ground that they were neither books of account nor they were regularly kept in the course of business. he submitted that at best it could be said that those books were memoranda kept by a person for his own benefit. According to Mr. Sibal, in business parlance 'account' means a formal statement of money transactions between parties arising out of contractual or fiduciary relationship. Since the books in question did not reflect any such relationship and, on the contrary, only contained entries of monies received from one set of persons and payment thereof to another set of persons it could not be said, by any stretch of imagination that they were books of account, argued Mr. Sibal. He next contended that even if it was assumed for argument's sake that the above books were books of account relating to a business still they would not be admissible under Section 34 as they were not regularly kept. It was urged by him that the words 'regularly kept' mean that the entries in the books were contemporaneously made at the time the transactions took place but a cursory glance of the books would show that the entries were made therein long after the purported transactions took place. In support of his contentions he also relied upon the dictionary meanings of the words 'account' and 'regularly kept'. 281. With respect to evidentiary value of regular account book, this Court has laid down in V.C. Shukla, thus: (SCC p.433, para 37) “37. In Beni Vs. Bisan 281. With respect to evidentiary value of regular account book, this Court has laid down in V.C. Shukla, thus: (SCC p.433, para 37) “37. In Beni Vs. Bisan Dayal [ A. I. R 1925 Nagpur 445] it was observed tat entries in book s of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate an din absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In Hira Lal Vs. Ram Rakha [ A. I. R. 1953 Pepsu 113] the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been prove, said that the rule as laid down in Section 34 of the Act that entries in the books of account regularly kept in the course of business re relevant whenever they refer to a matter in which the court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability. It is not, therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that the were in accordance with facts. 282. It is apparent from the aforesaid discussion that loose sheets of papers are wholly irrelevant as evidence being not admissible under Section 34 so as to constitute evidence with respect to the transactions mentioned therein being of no evidentiary value. The entire prosecution based upon such entries which led to the investigation was quashed by this Court.” 26. It is established in law by the Hon'ble Apex Court that a sheet of paper containing typed entries and in loose form, not shown to form part of the books of accounts regularly maintained by the assessee or his business entities, do not constitute material evidence. Following the law declared by the Hon'ble Apex Court, we are of the view that the action taken by the respondent / Revenue against the Assessee based on the material contained in the diaries/loose sheets, are contrary to the law declared by the Hon'ble Apex Court. In that view of the matter, impugned notices issued under Section 153C of the Act, based on the loose sheets/diaries are contrary to law, which require to be set aside in these writ appeals, as the same are void and illegal. 27. As regards the further question as to, 2) Whether Centralization is in violation of Section 127 of the Income Tax Act, 1961, is valid: On a perusal of the writ papers, it indicates that the Appellant / Revenue conducted a search at the premises of one Sri Rajendran at New Delhi and recovered certain diaries/loose sheets, which purportedly consisted certain entries relating to the affairs/transactions of the assessee. Based on the statement of the said Sri Rajendran (Petitioner in Writ petition No.9946 of 2022) recorded during the investigation, Appellant/Revenue initiated action against the assessee / Sunil Kumar Sharma. In this regard, the Appellant/Revenue, by exercising power under Section 127 of the Act, transferred the case to the Commissioner of Income Tax by virtue of Section 127 of the Act which provides for power to transfer cases. Relevant provision is Section 127(1) of the Act and same is extracted below: On a perusal of the writ papers, it indicates that the Appellant / Revenue conducted a search at the premises of one Sri Rajendran at New Delhi and recovered certain diaries/loose sheets, which purportedly consisted certain entries relating to the affairs/transactions of the assessee. Based on the statement of the said Sri Rajendran (Petitioner in Writ petition No.9946 of 2022) recorded during the investigation, Appellant/Revenue initiated action against the assessee / Sunil Kumar Sharma. In this regard, the Appellant/Revenue, by exercising power under Section 127 of the Act, transferred the case to the Commissioner of Income Tax by virtue of Section 127 of the Act which provides for power to transfer cases. Relevant provision is Section 127(1) of the Act and same is extracted below: “Section 127(1): The Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him.” 28. On reading the Section 127 of the Act, it connotes providing reasonable opportunity to the assessee and passing Assessment Order based on reasons. Perusal of the material provided and the arguments of learned Counsel appearing for the respondent-Revenue do not satisfy the ingredients of “fair play” as embodied under Section 127(1) of the Act {this is evident from PUNJAB NATIONAL BANK LTD. v. ALL INDIA PUNJAB NATIONAL BANK EMPLOYEES FEDERATION (1960(1) SCR 806)}. Further it’s also noticed that the observation made in impugned Order of A