Mere Mentioning of Assessee’s Name in Panchnama of Another Co. Doesn’t Authorize AO to Issue Notice u/s 153A | HC

Case Details: Misty Meadows Private Limited vs. Union of India - [2024] 162 taxmann.com 702 (Punjab & Haryana)

Judiciary and Counsel Details

• Sanjeev Prakash Sharma & Sudeepti Sharma, JJ.
• Akshay Bhan, Sr. Adv., Rana Gurtej Singh, Shantanu Bansal, Mayank Goel & Vijay Aggarwal, Advs. for the Petitioner. 
• Ms. Urvashi Dugga, Sr. Standing counsel for the Respondent.

Facts of the Case

Assessee was a company engaged in real estate development. A search and seizure operation was conducted against another person under section 132 of the Income Tax Act. While preparing the panchnama for the search operation, the assessee’s name was also added, and the Assessing Officer (AO) issued a notice under section 153A. Subsequently, AO concluded the assessment and raised a demand.

Aggrieved by the order, the assessee filed a writ petition before the Punjab & Haryana High Court.

High Court Held

The High Court held that the panchnama would be a document that has to be prepared recording articles, material and objects that may be seized as incriminating documents when searching premises. Mentioning any company’s name in the panchnama would only reflect that documents relating to that company were found during the search at the premises. A panchnama, therefore, cannot be treated to mean authorization issued to the authorities under Section 132 of the Act.

If any incriminating articles/documents/objects or any material relating to the assessee was recovered during the search of premises, which is found to be sufficient for reassessment by the AO, he was required to follow the procedure laid down under Section 153C.

In the instant case, the panchnama prepared at the office of another person only reflects the name of the assessee. Since it cannot be concluded that there was authorization to conduct a search against assessee under Section 132., the proceedings initiated under Section 153A, including the notice issued to the assessee, were held to be unjustified and without jurisdiction.

List of Cases Referred to

• ITO v. Seth Brothers [1969] 74 ITR 836 (SC) (para 14),
• Harmel Singh v. Union of India [1993] 112 CTR 1/204 ITR 334/69 Taxman 347 (Punjab & Haryana) (para 14),
• Pr. CIT (Central) v. Hitesh Ashok Vaswani [2023] 156 taxmann.com 200/459 ITR 610 (Gujarat) (para 14),
• Pr. CIT v. Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399/454 ITR 212/293 Taxman 141 (SC) (para 14),
• respondents relies on Dr. Partap Singh and another v. Director of Enforcement Foreign Exchange Regulation and others 1985 (3) SCC 72 (para 18),
• Banda Development Authority, Banda v. Moti Lal Agarwal and others 2011 (5) SCC 394 (para 18)
• others v. M/s Agarwal Iron Industries 2014 (15) SCC 215 (para 18).