ITAT jurisdiction to examine validity of search
SC to decide ITAT jurisdiction to examine validity of search and demand satisfaction note, other evidences on the basis of which search was conducted.
In an ongoing litigation in I.A. 2/2016 in Civil Appeal No(s).2734/2013 filed by the Revenue, the latest hearing was conducted on 4th January, 2017. The Revenue was represented by Additional Solicitor General of India (ASG). The matter was heard by the Division Bench of the Hon’ble Supreme Court headed by the Hon’ble Chief Justice of India.
The Bench was apprised of the issues involved in the present matter which are inter alia as under:
- Whether the Tribunal has got powers to look into all aspects of search and a valid search is sine qua non for initiating block assessment?
- Whether the period of limitation starts on the date on which the last of authorisation has been executed and not when the authorised officer states that the the search is finally concluded and that putting a prohibitory order under section 132(3) does not elongate the starting point of limitation?
- Whether the materials seized during an invalid search can not be used in block assessment proceeding but can be used in other assessment proceedings under the Income Tax Act, 1961?
- Whether the power under section 132(3) is subject to recording of the reasons in writing and whether the same are justiciable?
It was also brought to the notice of the Hon’ble Court that Tribunals across the country have started entering into the question of validity of the search and seizure and assessee’s are raising additional issues on the said aspect, beyond the scope of the jurisdiction of Tribunal and that Tribunals have started to direct the Department to produce the records including the satisfaction note and other evidences gathered, on the basis of which search was conducted.
However, on the application of early hearing by the Revenue, the Hon’bte court has desired to know as to the number and the details of matters wherein the aforementioned issues are pending across various fora (High Courts, Tribunals etc.) before any further hearing is conducted.
Accordingly, the Hon’ble Apex Court has granted two weeks, time to the Union of India for compilation of the aforementioned details of the pending matters on the same issues across various and the Revenue was given a liberty to mention the matter after the said two weeks. However the case is likely to be listed on 23/01/2017
Accordingly, on the issue of ITAT jurisdiction to examine validity of search, CBDT has issued the following letter to all PCCITs for reporting pending issues in their jurisdiction for compilation and reporting to the Hon’ble Supreme Court.
Central Board of Direct Taxes
Directorate of Income-Tax (Legal & Research)
4th Floor, Room No. 419, Drum Shape Building
I.P. Estate,New Delhi-110002
Tele No.: 011-23370336
F.No. ADG-II/ Supreme Court Cell/1711/2011/ 5th January, 2017
All the Principal chief commissioners of Income Tax
Subject: Request for providing informationregarding pending litigation on the issue of validity of search and seizure operations, where the court/Tribunal have directed the Department to produce records incruding the “satisfaction Note” and other evidence gathered on the basis of which search was conducted- regarding
The hearing in C.A. No. 2734 of 2013 in the case of CIT Vs C. Ramaiah Reddy, is currently underway at the Hon’ble Supreme Court of India. The Substantial questions of Law before the Apex court are given in the letter attached. The Hon,ble Supreme court has desired that it be informed regarding number & details of such cases pending before High courts and Tribunals wherein the courts/Tribunals have questioned the validity of search and seizure operations, and, where the Court/Tribunal have directed the Department to produce records including the satisfaction note and other evidence gathered on the basis of which search was conducted.
The Hon’ble Apex Court has directed that the information be furnished on or before next date of hearing i.e. 17/01/2017. Therefore, looking at the importance and urgency, the information in this regard be submitted by 11/01/2017 to the Directorate of Legal and Research, New Delhi. The required information may be sent at Fax No. 011-23379215 and Email ID. scc.Ir@incometax.gov.in in the format enclosed.
In case no information is received, it will be assumed that no litigation is pending in your charge on this issue and the Hon’ble Apex Court will be informed accordingly.
Addl. Dir. Gen (L&R)-II Delhi