This appeal filed by the assessee is directed against the order of learned CIT(A) (Central). Gurgaon dt. 4th Sept.. 2013 for asst. yr. 2004-05. raising the following grounds:
"I. That the learned CIT(A) has erred inconfinning the action of AO for issue of notice under s. 1 53A of the IT Act and subsequent assessment in spite of the fact that there was no warrant in the name of the company. As no search was initiated in case of company, the notice and subsequent assessment be declared null and void.
2. That the learned CIT(A) has erred in law as well as on facts in confirming the addition of Rs. 4.77.00.000 on account of alleged share application money received under s. 68 of IT Act without appreciating the explanation and confirmations filed which is arbitrary and unjustified.
3. That the appellant craves leave to add, delete or modify any ground of appeal before the same is heard or disposed of."
2. During the course of hearing. an additional ground was also filed, which reads as under :
"That assessment framed under s. 153A(1)(b) r/w s. 143(3) of the IT Act, 1961 is bad in law as no incriminating material was found during the course of search which could warrant such an addition."
3. From the perusal of the assessment order, it is seen that the search operation under s. 132(1) of the IT Act, 1961 (in short 'the Act') was carried out at the residential and business premises of Modern Group of cases as on 17th March, 2010. A notice under s. 153A of the Act was issued to the assessee as on 25th Jan., 2011 for the asst. yr. 2004-05. The preliminary ground raised by the assessee before us was that since no search warrant in the name of the assessee company was issued and since no search was initiated in assessee's case, a notice under s. 153A of the Act and subsequent assessment are null and void. This ground was also raised before the learned CIT(A) who had dismissed the same vide para 4.1 at p. 3 of the appellate order. On an earlier date of hearing while adjudicating this issue the Bench had directed the Departmental Representative to find out from the records whether warrant was issued in the case of the present assessee or not. In pursuance of the same, a letter dt. 25th June, 2015 was received in the office of the CIT (Tribunal) by the Dy. Director of IT (Investigation)-II, Chandigarh. This letter was filed before the Bench in original. On perusal of the same, it is seen that the Director of IT (Investigation) in the last para of the same letter has stated as under:
"In this regard, it is intimated that the perusal of the record of this office reveals that no warrant was issued in the name of M/ s Indo Pacific Finlease Ltd" and the proposal for centralization of the case was sent to Central Circle, Chandigarh vide this office letter No. J 32 dt. 4th May, 2010 on the request of the assessee (copy enclosed}."
4. From the perusal of the above said letter, it is quite clear that in the case of present assessee no search warrant was issued as admitted by the Department itself.
5. The learned counsel for the assessee made detailed submissions to the effect that in the absence of search warrant. notice issued under s. 153A and subsequent proceedings both are invalid. He also relied upon the judgment of Hon'bk jurisdictional High Court in the case of CIT us. Ram Singh &. Ors. (2013) 262 CTR (P&H) 96 ; (2013) 85 DTR (P&.H) 90 and also that of Hon'ble Gujarat High Court in the case of CIT us. Jolly Fantasy World Ltd. (2015) 373 ITR 530 (Guj).
6. The learned Departmental Representative during the course of hearing just relied upon the order of the AO as well as of the learned CIT(A}.
7. We have heard the rival contentions and perused the material available on record. On specific perusal of the letter filed by the Director of IT (Investigation), Chandigarh to the CIT (Tribunal-I), it is clear that the fact that no search warrant was issued in the name of the assessee is correct. Further, on perusal of the assessment order, it is seen that the AO has mentioned the fact that search was carried out at the residential and business premises of Modern Group of cases including the assessee by the Investigation Wing, Chandigarh on 17th March, 20 10. However~ we could not see any evidence to that effect. The learned CIT(A} also has adjudicated the said issue raised by the assessee in a summary manner. Now the issue to be decided by us is whether in the absence of search warrant can there be a valid proceedings initiated by issue of notice under s. 153A of the Act.
8. On the aspect of applicability of condition precedent for making the assessment under s. 153A of the Act, it is pertinent to quote the provisions of this section:
"I53A. (1) Notviithstanding anything contained in s. 139, s. 147, s. 148, s. 149, s. 151 and s. 153, in the case of a person where a search is initiated under s. 132 or books of account, other documents or any assets are requisitioned under s. 132A after the 31 st day of May, 2003, the AO shall-
(a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in c1. (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under s. 139:
(b) assess or reassess the total income of six assessment years immediately preeeding the assessment year relevant to the previous year in which such search is conducted or requisition is made:
Provided that the AO shall assess or reassess the total income in respect of each assessment year falling within such six assessment years:
Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under s. 132 or making of requisition under s. 132A, as the case may be, shall abate:
Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases in which the AO shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made.
(2) If any proceeding initiated or any order of assessment or reassessment made under sl1b-s. (1) has been annulled, in appeal or any other legal proceeding, then, not withstanding anything contained in sub-so (1) or S. 153, the assessment or reassessment relating to any assessment year: which has abated under the second proviso to sub-so (I), shall stand revived w.e.f. the date of receipt of the order of such annulment by the Principal CIT or CIT :
Provided that such revival shall cease to have effect, if sl1ch order of annulment is set aside.
Explanation: For the removal of doubts, it is hereby declared that,-
(i) save as otherwise provided in this section, S. 153B and s. 153C, all other provisions of this Act shall apply to the assessment made under this section:
(ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year."
9. From the perusal of the provisions of sub-so (1) of s. 153A, it is quite evident that the initi81 point for making assessment under s. 153A of the Act. the proceedings under s. 132 or requisition under s. 132A is a must. The provisions of this section would apply in case of any person in respect of whom search has been carried out under s. 132 or assets have been requisitioned under s. 132A of the Act. The law in this regard seems very clear and unambiguous. The existence of a valid search against any assessee is the root of the matter and any AO gets the jurisdiction to issue notice or make assessment under s. 153A of the Act only in the presence of valid search that too in the case of the assessee itself. In case of some incriminating material against the assessee being found in the course of search of another person, separate provisions of S. 153C of the Act have been provided. The reliance placed by the learned counsel for the assessee in this regard on the judgment of Hon'ble jurisdictional High Court in the case of Ram Singh & Ors. (supra) is not out of place. which observes as follows:
"In the absence of any search warrants in respect of these assessees under s. 132(1) of the Act. assessment could not have been under s. 158BC of the Act. Such an assessment without authorization is void ab initio. The Tribunal has referred to the judgment of the Special Bench in the case of Promain Ltd. us. Dy. CIT (2005) 95 TTJ (Del)(SB) 825: (2005) 95 ITD 489 (Del)(SB), Delhi Special Bench in this behalf. No issue remains res integra and law has been settled by various judgments of the High Courts as well."
10. On perusal of the above, it has been declared in no ambiguous term that for assuming the jurisdiction under s. 153A of the Act. the condition of a valid search against the assessee is a must.
11. For this, strength can also be taken from the case of Ajit Jain us. Union of India & Ors. (2000) 159 CTR (Del) 204 : (2000) 242 ITR 302 (Del), whereby the Hon'ble Court held as under :
"Since the search in the present case had taken place on 11 th Jan., I996, in accordance with the said provisions, an ex parte block assessment for the asst. yrs. 1986-87 to 1996-97 was made on 31st. Jan., 1997, creating a total demand of Rs. 50,13,204 on the petitioner in his status as individual. As the title of the said chapter suggests these are special provisions for assessment of search cases and, therefore, a search under s. 132 is a prerequisite for invoking the provisions of the said chapter. It is axiomatic that search under s. 132, as contemplated in the chapter has to be a valid search. An illegal search is no search and as a necessary corollary in such a case, Chapter XlV-B would have no application. Since in the instant case, we have come to the conclusion that the search conducted on 11th Jan., 1996, was without jurisdiction and was thus void ab initio, the imminent consequence would be that the provisions of Chapter XIV-B cannot be invoked against the petitioner, pursuant to the said search of his room at Chennai. Consequently, the block assessment 'order dt. 31st Jan., 1997, cannot be sustained. We accordingly quash the same".
12. In another judgment of the Hon'ble Gujarat High Court in the case of Jolly Fantasy World Ltd, (supra). it has been held that in the absence of warrant of authorization in the name of the assessee, the assessment is ab initio void. We would also like to refer to another order of the Mumbai Bench of the Tribunal in the case of J.M. Trading Corporation us. Asstt. CIT (2008) 20 SOT 489 (Mumbai), which has been upheld by the Hon'bIe Bombay High Court in its judgment dt. 29th June, 2009, in IT Appeal No. 276 of 2009, and further, the Hon'ble Supreme Court has dismissed the SLP filed by the Revenue as on 6th Sept., 2010 while deciding CC No. 13456 of 2010 against the judgment of Hon'ble Bombay High Court. In this case, the Tribunal held that no search being conducted against the assessee, the period of operation to which the provisions of s. 153A of the Act would apply cannot be determined and the invoking of provisions of s. 153A of the Act is baseless. It was also held that the provisions of s. 153A of the Act are only applicable in case valid search is conducted against the assessee under s. 132 of the Act and Tribunal also held that proceedings under s. 143(3) r /w s. 153A of the Act are null and void and the same are cancelled.
13. There are a number of other judgments by the various High Courts including that of Hon'ble jurisdictional High Court and various Benches of the Tribunal to this effect. However, for the sake of brevity, we are not referring to all of those.
14. The undisputed facts in the present case are that there was no search conducted at the assessee's premises, no one from the Department visited it to execute any search and seizure proceedings and no Panch nama in assessee's name was ever drawn. On top of that the Department itself has admitted the fact that no search warrant in the name of the assesset' was issued. In view of the same, the notice issued by the AO under s. 153A of the Act and subsequent proceedings are held to be void ab initio and is hereby quashed.
15. Since we have quashed the assessment order made by the AO under s. 153A of the Act. we do. not find any need to adjudicate the issues raised by the assessee on the merits of the case.
16. In the result. the appeal of the assessee is allowed .