A common search warrant & panchnama issued on two separate Cos operating from a single premise is valid : HC

Case Details: Shiva Cement Ltd. v. DIT (Inv.) - [2021] 132 taxmann.com 286 (Orissa)

Judiciary and Counsel Details

• • Dr. S. Muralidhar, CJ. and B.P. Routray, J.
  • Firoze Andhyarujina, Sr. Adv and L. Mishra, Adv. for the Petitioner. 
  • R.S. Chimanka Sr. Standing Counsel for the Respondent.

Facts of the Case

The assessees were two group entities engaged in different businesses but operating in same premises. During the year, a common search warrant was issued under section 132(1)(c) at their business and residential premises. Notices were issued under section 153A calling the assessees to file their return of income. Thereafter, a block assessment was made for the assessment years 1991-92 to 2000-01 wherein the Assessing Officer (AO) had determined undisclosed income of the assessees and levied tax on ground of suppression of income and non-filing of ITRs. Both the assessees filed writ petition contended that since they were two separate entities engaged in different businesses and filing separate returns, therefore, issuance of common search warrant and common panchnama upon them was impermissible in law.

High Court Held

The High Court held that there is nothing in either in section 132 or 133A that prohibits the department from surveying an entity exclusive to one location of its operations, whereas it may have credible information for search as regards the operations in another location.

As rightly pointed out by the department, search is qua a ‘place’ and not necessarily qua the ‘assessee’. The survey by its very nature could be of the entity and any place from where such entity may operate. It is perfectly possible that while conducting survey and seach of the premises of an entity, for which an authorisation has been issued, the department can come across material pertaining to some other person or entity. The provisions like section 153C deal with such contingencies.

However, that is not to say that a survey or a search cannot happen in two different premises simultaneously. Further, if the search is qua the place, the court sees no reason why if there are two entities in one premise, there cannot be a common search operation. Consequently, the plea of the petitioners that the search and survey operations were entirely without jurisdiction could not be accepted.

Thus, since warrant of authorization was qua ‘premises’ and not qua ‘assessee’, a common warrant of authorisation for search and common panchnama issued on assessees-group companies, operating from one premise, was justified.

Case Review

• • Laljibhai Kanjibhai Mandalia v. Pr. DIT (Investigation ) [2019] 105 taxmann.com 260/263 Taxman 604/416 ITR 365 (Guj.) and,
  • Madhu Gupta v. DIT (Inv.) [2013] 30 taxmann.com 92/214 Taxman 246/350 ITR 598 (Delhi) (para 33) followed.
  • Ganga Prasad Maheshwari v. CIT [1981] 6 Taxman 363/[1983] 139 ITR 1043 (All.) (para 31.4) and
  • Pr. CIT v. Param Dairy Ltd. [IT Appeal No. 37 of 2021, dated 15-2-2021] (Delhi) (para 32) distinguished.

List of Cases Referred to

• • Laljibhai Kanjibhai Mandalia v. Pr. DIT (Investigation ) [2019] 105 taxmann.com 260/263 Taxman 604/416 ITR 365 (Guj.) and,
  • Madhu Gupta v. DIT (Inv.) [2013] 30 taxmann.com 92/214 Taxman 246/350 ITR 598 (Delhi) (para 33) followed.
  • Ganga Prasad Maheshwari v. CIT [1981] 6 Taxman 363/[1983] 139 ITR 1043 (All.) (para 31.4) and
  • Pr. CIT v. Param Dairy Ltd. [IT Appeal No. 37 of 2021, dated 15-2-2021] (Delhi) (para 32) distinguished.