Commissioner of Income Tax vs Trilochan Pratap Singh

In these bunch of appeals, common question of law and facts are involved. Hence, decided by the present common judgment. A search and seizure operation u/s 132A of the income tax Act, 1961, was conducted and certain incriminating materials were seized. The Additional Director (Inv.) required to produce certain documents u/s 132A of the Act. A common question of law arose as to whether search action on the basis of the authorization of the Additional Director of income tax was permissible or not. The Tribunal relying on a decision of this court dated July 14, 2006, in the case of Raghuraj Pratap Singh and Others Vs. Assistant Commissioner of Income Tax, , held that the Additional Director had no authority to take action in cases of search and seizure operation and the Commissioner of income tax (Appeals) was justified in quashing the assessment orders. Aggrieved by the same, the Department-appellant has preferred these appeals in this court and the Division Bench was admitted all the appeals on the following substantial question of law:

Whether, on the facts and in the circumstances of the case, the income tax Appellate Tribunal was justified in quashing the order of the Assessing Officer challenging the validity of authorization issued u/s 132(1) of the income tax Act, 1961 ?

Sri D.D. Chopra, appearing on behalf of the appellant, submits that u/s 132(1) of the Act, prior to its amendment by the Finance (No. 2) Act, 2009, did not confer power on the Additional Director but by the amendment of the Finance (No. 2) Act, 2009, the words "Additional Director" has been inserted in section 132(1) of the Act, with effect from June 1, 1994, and the same is applicable in the present appeals.

Sri Rohit Nandan Shukla, appearing on behalf of the assessee-respondents, disputing the aforesaid amendment and said that the amendment is not lawful and does not cover the case. For this purpose, he relied upon the judgments reported in Tata Motors Ltd. Vs. State of Maharashtra and Others, and State of Gujarat and Another Vs. Raman Lal Keshav Lal Soni and Others, .

The cases relied upon by the learned counsel for the assessee do not seem applicable under the facts and circumstances of the case for two reasons; firstly, they do not relate to the income tax matter and, secondly, unless the amendment incorporated by the Finance (No. 2) Act, 2009, is challenged and it is declared ultra vires by the court for all practical purposes, it shall be operative being existing in the statute book. The provision inserted by the Finance (No. 2) Act, 2009, is the part of statute books and this court while considering the related issues is bound to enforce the law as exists in the statute book.

A Division Bench of this court, of which one of us was a member (the hon''ble Dr. Satish Chandra J.) in regard to the identical question of law, has allowed the appeal in favour of the Department-appellant by the judgment and order dated November 16, 2009, in Income Tax Appeal No. 182 of 2008 and other connected appeals.

We do not find any reason to take a different view than what has been taken by the co-ordinate Bench of this court. The operative portion of the judgment is reproduced is as under:

We are afraid, the present is not an appropriate proceeding to go into that. Here, the only question, which false for our determination is as to whether the Additional Director had the authority u/s 132(1) of the Act to issue warrant of search and seizure. In view of the amendment brought by the Finance (No. 2) Act, 2009, this point need not detain us much. The Finance (No. 2) Act, 2009, has specifically inserted the words ''Additional Director'' in section 132(1) of the Act with effect from June 1, 1994, besides other authorities.

In view of aforesaid, we are of the opinion that the income tax Appellate Tribunal erred in holding that the annulment of the assessment orders by the Commissioner of income tax (Appeals) was justified.

We are of the opinion that in view of the amendment brought by the Finance (No. 2) Act, 2009, the Additional Director has the power u/s 132(1) of the Act to issue search and seizure warrant.

In the result, these appeals are allowed. The impugned order dated June 27, 2008, passed by the income tax Appellate Tribunal, Lucknow, is set aside and the matter is remitted back to it for reconsideration in accordance with law.

In the facts and circumstances of the case, there shall be no order as to costs.

In view of the above, being respectful in agreement with the Division Bench judgment (supra), we allow the appeal and set aside the Tribunal''s order and answered the question framed in favour of the Revenue and against the assessee. The order of the assessing authority is restored and the matter is remitted back to the Tribunal to decide the appeal afresh on the merits keeping in view the observation made in the body of the present judgment. The appeals are allowed accordingly.