By TIOL News Service

NEW DELHI, APR 09, 2019: THE issue is - Whether if the search warrant is against the partners of the assessee firm and the searches are conducted at the business & residential premises of the partners, the assessee can question the jurisdiction if Sec 153B order is passed. NO is the answer.

Facts of the case

The assessee firm filed return for relevant AY. The assessee firm was having 7,99,000 shares of R.S. Infrastructure Pvt. Ltd. A search u/s 132(1)(A) of the Act, was carried out at the residential as well as office premises of M/s. M3M India Limited. The assessee firm earned income from long term capital gain. In accordance with the provisions of Section 153A, a notice was issued and served upon the assessee, requiring the assessee to file return of income for the assessment year under appeal. In response, assessee filed its return of income. The assessee attended the assessment proceedings. On examination of the seized documents, it was found that the assessee, had entered into an agreement with M/s. Lowe Realty Pvt. Ltd., to sell 8,00,000 shares of M/s. R.S. Infrastructure Pvt. Ltd., a concern of M3M Group, for a total consideration of Rs.526 crores. It was also noted that assessee had understated the sale consideration in return filed. Therefore, during assessment, the AO made the addition of Rs. 6 crores on account of sale of shares to M/s. Lowe Reality Pvt. Ltd. On appeal, CIT(A) upheld the order of AO.

On appeal, Tribunal held that,

++ counsel for the Assessee submitted that no search under section 132 of the Income Tax Act was conducted in the case of the assessee and no panchanama have been drawn. Therefore no assessment order could be passed under section 153B(1)(b) of the Income Tax Act. The assessing officer has no jurisdiction to pass the order. The Departmental Representative was, therefore, directed to produce if there is any warrant of authorisation or panchanama executed in the case of the assessee vide order dated 13th September 2018. The D.R. in pursuance of directions filed a written reply and produced the warrant of authorisation under section 132(1) and panchanama in the name of the assessee firm to search the premises of the assessee at C13 Sushant Lok, Phase-1, Gurgaon. Copy of the reply of the D.R. along with a warrant of authorisation and panchanama have been provided to the Counsel for the Assessee. D.R, therefore, contended that search action under section 132 of the Income-Tax Act was carried-out in the business premises of the assessee and residential premises of the partners of the assessee firm. Counsel for the Assessee, in view of these evidences on record, could not contribute anything. These materials on record clearly establish that assessee was subjected to search action under section 132 of the Income-Tax Act, 1961 in pursuance of valid warrant of authorisation under section 132 of the Income Tax Act and during the course of search panchanama was also drawn in respect of the premises searched of the assessee firm. The assessing officer, therefore, rightly proceeded to pass the assessment order under section 153B(1) of the Income Tax Act, having jurisdiction over the case of the assessee. Therefore, this ground of appeal of assessee has no merit. The same is accordingly dismissed;

(See 2019-TIOL-746-ITAT-DEL)