The court held that in cases of search under Section 132, the provisions of Section 153A apply mandatorily, overriding Section 147 and 148, unless incriminating material is found.

JUDGMENT :

1. These petitions under Article 226 of the Constitution of India raise common issues of law and fact, hence they are being disposed of by this common judgment.

2. The question which falls for consideration is whether in the facts and circumstances of the case, respondent no. 3 was correct in law in issuing a notice to the petitioner under Section 148 of the Income-tax Act, 1961 (for short “I.T. Act”) on the basis of a search action under section 132 of the I.T. Act, which is relevant to the entire group of these petitioners. The assessment years in question in all these cases are A.Y. 2012-13.

3. The learned counsel for the parties have argued Writ Petition No. 3057 of 2019 (Sejal Jewellery & Anr. vs. Union of India & Ors.) as the lead petition, hence we refer to the facts of this case.

4. Petitioner no. 1 is a partnership firm (for convenience referred as ‘petitioner’) inter alia engaged in the business of manufacturing and trading in gold and diamond jewellery. For the assessment year in question, petitioner filed its return of income on 28 September, 2012 declaring a total income of Rs.25,52,692/-. After about six years, on 4 October, 2018, a search action was taken against the petitioner under Section 132 of the I.T. Act at the premises of the petitioner. The case of the petitioner is that no incriminating material was found in relation to any bogus loan/accommodation entry in such search.However, for the Revenue, it was otherwise, as discussed hereafter.

5. Consequent to the search action, respondent no. 3 has issued the impugned notice to the petitioner dated 29 March, 2019 under section 148 of the I.T. Act inter alia stating that there are reasons to believe, that income chargeable to tax for the assessment year 2012-13 had escaped assessment, within the meaning of Section 147 of the I.T. Act. Hence, it was proposed to assess/reassess the income of the petitioner for the assessment year. The petitioner was called upon to file a return in the prescribed form within 30 days.

6. The petitioner responded to the impugned notice by its letter dated 16 April, 2019 when it requested the Assessing Officer to furnish to the petitioner the reasons which have led to the Assessing Officer to reopen the assessment under section 147 of the I.T. Act. By communication dated 11 September, 2019, the petitioner was furnished reasons for reopening the assessment. Paragraph 2.1 and 2.2 of the said reasons clearly indicate that they are based on the search and seizure action, as taken under Section 132 of the I.T. Act. The relevant extracts of paragraphs 2.1 and 2.2 of the reasons read thus:

“2.1: It is reported that a Search & Survey action u/s.132 of the Income tax-act, 1961 was carried out on 04.10.2018 on the business premises of M/s Shilpi Jewellers Pvt. Ltd. as well as at the residential premises of the key persons of the Group/concerns. During the course of search action, certain incriminating evidences in the form of various loose papers and data back up of various electronic devices, have been found and seized.

During the course of search action, it is noticed that M/s Shilpi Jewellers Pvt Ltd and its associate concerns as well as the key individuals of the Group, have accepted huge unsecured loans from various shell/paper companies/entities during the year ended on 31.03.2012. Discrete enquiries made and the profiling of the Loan creditor companies in ITD application reveal that the Loan creditor companies/entities, who have advanced huge loans to M/s Shilpi Jewellers Pvt. Ltd and its associate concerns as well as the key individuals of application his group, do not have any creditworthiness to extend such huge loans. The issue of loss receipts by this assessee, from shell/paper companies/entities has been taken up for investigation during the course of search proceedings at the premises of the group and relevant questions have been posed to the concerned persons at various premises in the statements recorded u/s.132(4) of the A