ORDER
Dipak Misra, J.
1. The present appeal preferred under Section 260A of the IT Act, 1961 (for brevity 'the Act') was admitted on the following substantial question of law:
Whether the validity of a requisition under Section 132A in pursuance of an authorization issued under that section can be decided by the Tribunal in an appeal before it under Section 254 of the IT Act?
2. The facts which are necessitous to be stated are that on 21st Nov., 1995 a search was undertaken at the residential premises of the appellant-assessee (hereinafter referred to as 'the assessee') by the Lokayukt under Section 13(1)(e) of the Prevention of Corruption Act, 1988 (in short '1988 Act'). Subsequently, the books of account, documents and assets found and seized by the Lokayukt authorities were requisitioned by the CIT, Jabalpur, as per authorization issued by him under Section 132A of the Act. In pursuance of the aforesaid seizure, a notice under Section 158BC of the Act was issued to the assessee on 18th March, 1996. In response to the notice under Section 158BC, return was filed on 21st Sept., 1996. The assessment was completed by the Asstt. CIT, CIR-1(I), Jabalpur (for short 'the AO') under Section 143(3)/158BC on 29th Nov., 1996 and the undisclosed income was computed at Rs. 82,83,854.
3. Being aggrieved by the aforesaid order of assessment, an appeal was preferred before the Tribunal by the assessee. Before the Tribunal it was contended by the assessee that the notice under Section 158BC was invalid as the status of the assessee was not mentioned in the notice and consequently the authorization issued by the CIT under Section 132A was invalid which vitiates the entire assessment under Section 158BC making it void ab initio. There was a difference of opinion between the two Members of the Tribunal. The learned JM answered the issue in favour of the assessee and quashed the assessment. The learned AM repelled the contention of the assessee and upheld the order of the assessment. As there was difference of opinion between the two Members of the Tribunal, the matter was referred to the Third Member as per the provisions of Section 255(4) of the Act who came to hold that the assessment order passed by the AO under Section 158BC was valid and the Tribunal has no jurisdiction to look into the legality and validity of the authorization issued under Section 132A of the Act.
4. I have heard Mr. Sumit Nema, learned Counsel with Mr. Mukesh Agrawal for the appellant-assessee, and Mr. Rohit Arya, learned senior Counsel with Mr. Sanjay Lai for the Revenue.
5. In support of the appeal it is submitted by Mr. Sumit Nema, learned Counsel for the appellant, that if the anatomy of Section 132A of the Act is scanned in proper perspective there can be no shadow of doubt that the said provision does not authorize the authority under the IT Act to take delivery of the properties from the police before seizure is reported to the Court and the Court passes an order as regards the custody and since the same has not been done in the instant case the entire proceeding under Section 132A is sensitively susceptible which makes the whole assessment proceeding totally illegal and untenable. To bolster the aforesaid submission he has commended us to the decisions rendered in of Orient Paper Mills Ltd. v. Union of India : 1973ECR1(SC) , Sadruddin Javeri v. Government of AP (2000) 162 CTR (AP) 496 : (1999) 104 Taxman 335, Rajesh Kumar and Ors. v. Dy. CIT and Ors. (2006) 206 CTR (SC) 175 : (2007) 8 ITJ 1 (SC) and Amandeep Singh v. Director of IT (Inv.) and Ors. . It is further proponed by Mr. Nema that the order passed by the CIT under Section 132A is a quasi-judicial act and, therefore, principles of natural justice and the procedure engrafted under the Act are to be followed in religious manner and any violation thereof makes the order of assessment indefensible.
6. Mr. Rohit Arya, learned senior Counsel appearing for the Revenue, resisting the aforesaid submissions put forth that any action under Section 132A if suffers from any illegality or infirmity can be questioned in a petition preferred under Article 226 of the Constitution of India but cannot be assailed in course of assessment inasmuch as the AO and thereafter the appellate authority under the statute have no jurisdiction to dwell upon and delve into the same. It is urged by Mr. Arya that what cannot be the subject-matter of assessment cannot be scrutinized in an appeal as that would destroy the fabric and concept of jurisdictional facet. To buttress the aforesaid submissions, he has placed reliance on the decisions rendered in the cases of CIT v. Garware Nylons Ltd. : [1995]212ITR242(Bom) and Princess Usha Trust v. CIT : [1989]176ITR227(MP) .
7. To appreciate the rival submissions raised at the Bar it is apposite to refer to Section 132A of the Act. It reads as under:
132k. Power to requisition books of account, etc. - (1) Where the Director General or Director or the Chief CIT or CIT, in consequence of information in his possessions, has reason to believe that-
(a) any person to whom a summons under Sub-section (1) of Section 37 of the Indian IT Act, 1922 (11 of 1922), or under Sub-section (1) of Section 131 of this Act or a notice under Sub-section (4) of Section 22 of the Indian IT Act, 1922, or under Sub-section (1) of Section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents, as required by such summons or notice and the said books of account or other documents have been taken into custody by any officer or authority under any other law for the time being in force, or
(b) any books of account or other documents will be useful for, or relevant to any proceeding under the Indian IT Act, 1922 (11 of 1922), or under this Act and any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, such books or account or other documents on the return of such books of account or other documents by any officer or authority by whom or which such books of account or other documents have been taken into custody under any other law for the time being in force, or
(c) any assets represent either wholly or partly income or property which has not been, or would not have been, disclosed for the purposes of the Indian IT Act, 1922 (11 of 1922), or this Act by any person from whose possession or control such assets have been taken into custody by any officer or authority under any other law for the time being in force.
then, the Director General or Director or the Chief CIT or CIT may authorize Jt. Director, Jt. CIT, Asstt. Director or Dy. Director, Asstt. CIT or Dy. CIT or ITO hereinafter in this section and in Sub-section (2) of Section 278D referred to as the requisitioning officer to require the officer or authority referred to in Clause (a) or Clause (b) or Clause (c), as the case may be, to deliver such books of account, other documents or assets to the requisitioning officer.
(2) On a requisition being made under Sub-section (1), the officer or authority referred to in Clause (a) or Clause (b) or Clause (c), as the case may be, of that sub-section shall deliver the books of account, other documents or assets to the requisitioning officer either forthwith or when such officer or authority is of the opinion that it is no longer necessary to retain the same in his or its custody.
(3) Where any books of account, other documents or assets have been delivered to the requisitioning officer, the provisions of Sub-sections (4A) to (14)(both inclusive) of Section 132 and Section 132B shall, so far as may be, apply as if such books of account, other documents or assets had been seized under Sub-section (1) of Section 132 by the requisitioning officer from the custody of the person referred to in Clause (a) or Clause (b) or Clause (c), as the case may be, of Sub-section (1) of this section and as if for the words 'the authorized officer' occurring in any of the aforesaid Sub-sections (4A) to (14), the words 'the requisitioning officer' were substituted.
8. Section 158BC of the Act which deals with procedure for block assessment is as follows:
158BC. Procedure for block assessment - Where any search has been conducted under Section 132 or books of account, other documents or assets are requisitioned under Section 132A, in the case of any person, then-
(a) the AO shall-
(1) in respect of search initiated or books of account or other documents or any assets requisitioned after the 30th day of June, 1995, but before the 1st day of January, 1997, serve a notice to such person requiring him to furnish within such time not being less than fifteen days;
(ii) in respect of search initiated or books of account or other documents or any assets requisitioned on or after the 1st day of January, 1997, serve a notice to such person requiring him to furnish within such time not being less than fifteen days but not more than forty-five days as may be specified in the notice a return in the prescribed form and verified in the same manner as a return under Clause (i) of Sub-section (1) of Section 142 setting forth his total income including the undisclosed income for the block period:
Provided that no notice under Section 148 is required to be issued for the purpose of proceeding under this chapter:
Provided further that a person who has furnished a return under this clause shall not be entitled to file a revised return.
(b) the AO shall proceed to determine the undisclosed income of the block period in the manner laid down in Section 158BB and the provisions of Section 142, Sub-sections (2) and (3) of Section 143, Section 144 and Section 145 shall, so far as may be, apply;
(c) the AO, on determination of the undisclosed income of the block period in accordance with this Chapter, shall pass an order of assessment and determine the tax payable by him on the basis of such assessment.
(d) the assets seized under Section 132 or requisitioned under Section 132A shall be dealt with in accordance with the provisions of Section 132B.
9. Section 246A deals with appealable orders before CIT(A). Section 253 deals with appeals to the Tribunal. Sub-section 1(a) and (b) which are relevant for our purpose are reproduced below:
246A. (1) Any assessee aggrieved by any of the following orders (whether made before or after the appointed day) may appeal to the CIT(A) against-
(a) an order passed by a Jt. CIT under Clause (ii) of Sub-section (3) of Section 115VP or an order against the assessee where the assessee denies his liability to be assessed under this Act or an intimation under Sub-section (1) or Sub-section (1B) of Section 143, where the assessee objects to the making of adjustments, or any order of assessment under Sub-section (3) of Section 143 or Section 144, to the income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed.
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(b) an order of assessment or reassessment under Section 115WG.
10. Submission of Mr. Nema is that when the Tribunal is established under the Act by virtue of the provisions contained under Article 323 of the Constitution of India and it has the power to scrutinize whether the requisite conditions precedent provided under Section 132A have been followed or not would come within the concept of material incidental as referred to as engrafted under Sub-clause (i) of Clause (2) of Article 323 of the Constitution. In essence, the stand of Mr. Nema is that the Tribunal cannot be regarded to be bereft of jurisdiction to verify the existence of fact situated with regard to search having taken place in accordance with law specified under Clause (a) or (b) or (c) of sub-section of Section 132A of the Act which is a prerequisite condition for authorizing search in accordance with law. In this context, we think it appropriate to reproduce the view expressed by the Third Member of the Tribunal to whom the matter was referred to. The learned Third Member in paras 16.3 and 17.1 has expressed the view as under:
16.3 There are valid reasons why the AO cannot have powers to examine the sufficiency of reasons for issue of warrant of authorisation under Section 132. Authorisation under Section 132 of the IT Act is issued on the basis of information collected from various sources including informations from an informer against a person in whose case warrant under Section 132 is issued. The informer supplies secret information on the promise of keeping his name totally secret from the other persons including the officers of the Department besides the Asstt. Director of IT (Inv.) or other authorities above him in the Directorate of IT (Inv.). If the AO is allowed to examine files containing reasons for issue of authorisation under Section 132 of the IT Act, the name of informer will not be secret and the informer will be exposed to risk of his life. Therefore, such informations supplied by the informers are totally kept secret and cannot be divulged to any person including the AO. The AO, therefore, cannot be allowed access to the secret file of the Directorate of IT (Inv.) which pertains to search and seizure matters.
17.1 The Income-tax Appellate Tribunal (hereinafter referred to as 'the Tribunal') is a creature of the IT Act and not the creature of the Constitution of India. The Tribunal is to discharge its functions in accordance with the provisions of the IT Act. The Tribunal has jurisdiction only over such matters which have been mentioned in Section 253 of the IT Act. The right of appeal is a statutory right and if the appeal is not provided against a particular order of an authority under a particular section then the Tribunal is not competent to hear the appeal or arguments against the order of such authority passed under such section. For instance, it has been held by the Hon'ble Madhya Pradesh High Court that the assessee has no right of appeal against the order under Section 220(2) of the IT Act, 1961 Princess Usha Trust v. CIT : [1989]176ITR227(MP) . Similar ratio has been laid down in the case of ANZ Grindlays Bank Pic. v. CIT : [2000]241ITR269(Cal) and Bharat Commerce & Industries Ltd. v. Union of India and Ors. : [1991]188ITR277(Delhi) .
In the case of State Bank of Indore v. CIT (1988) 70 CTR (MP) 143 : (1988) 172 ITR 39 it was held by the Hon'ble Madhya Pradesh High Court that there is no appeal against,, the provisional assessment under Section 141 of the IT Act. Similarly, in the case of CIT v. Garware Nylons Ltd. : [1995]212ITR242(Bom) , it was held that no appeal lies against the order under Section 197(3) of the IT Act. Prior to amendment by Finance Act, 1994, w.e.f. 1st June, 1994 there was no provision for appeal against the intimation under Section 143(1)(a) of the IT Act.
Therefore, in view of the abovementioned decisions, an assessee can file appeal before the Tribunal only when it is provided in Section 253 of the IT Act. There is no appeal against administrative orders like, authorisation under Section 132 or Section 132A of the IT Act and in the absence of appeal against the order under Section 132 or Section 132A of the IT Act, the Tribunal has no jurisdiction to consider whether there was any information in the possession of the CIT to issue authorisation under Section 132/132A of the IT Act.
11. In the case of Orient Paper Mills Co. Ltd. (supra), the apex Court has expressed the view as under:.This Court as well as the High Courts have repeatedly tried to impress upon them that their two functions are separate; while functioning as quasi-judicial officers they should not allow their judgments to be influenced by administrative considerations or by the instructions or directions given by their superiors. In this case both the Collector as well as the Central Government have ignored the line that demarcates their administrative duties and their judicial functions.
12. In Amandeep Singh (supra), a Division Bench of Punjab & Haryana High Court has opined as follows:.According to the above provisions, it is apparent that the first step is making of a requisition by the IT authorities to an officer or authority who is in possession or control of the assets representing alleged undisclosed income for delivery of such assets. The second step is the compliance by such officer or authority who then delivers the assets to the requisitioning authority in accordance with Section 132A(2) of the Act. In the present case, as already observed, the possession on 23rd March, 1998 was with the Station House Officer, Police Station, City Phagwara, and as such, respondent No. 1 was well within his competence to issue a requisition under Section 132A(1) of the Act. However, respondent No. 3 who had seized the cash and was in its possession in accordance with the provisions of Section 102(1) of the Cr.P.C. was duty-bound to transport the same to the Court of competent criminal jurisdiction or to give its custody to any person on his executing a bond and undertaking to produce the property as and when required to give effect to further order as to its disposal. It was his bounden duty to obtain an order under Section 457 of the Cr.P.C. before parting with the possession of the property. Therefore, his action under Sub-section (2) of Section 132A of the Act in delivering the possession of the seized amount to respondent No. 1 is clearly contrary to the provisions of the Cr.P.C. as held by the Andhra Pradesh High Court in Sadruddin Javeri's case : [2000]243ITR579(AP) .
13. In Sadruddin Javeri (supra), a Division Bench of the Andhra Pradesh High Court ruled thus:
In sum, it had to be concluded unhesitatingly that (1) petitioner's rights under Article 21 of the Constitution had been violated by the search and seizure of the properties as per the seizure list. (2) CIT and Inspector of Police had acted contrary to law and in fact contravened laws in course of search and seizure, and by changing the records of investigation had committed serious violation of the system of the discipline of law under which alone they were required to act. (3) There was no occasion for taxing officers to intervene and in any case they had bypassed the Court which alone was competent to decide about the custody of the properties allegedly seized in course of investigation of a case registered with the police under Section 102 of the Cr.P.C.
14. In the case of Rajesh Kumar (supra), the apex Court while interpreting the concept of special audit under Section 142(2A) of the Act opined that the direction for special audit is not an administrative action as it leads to civil consequences and, therefore, the principles of natural justice are to be followed before directions for special audit are issued.
15. It is worth noting that the aforesaid decisions are distinguishable if the obtaining factual matrix is properly appreciated. What the apex Court laid down in Orient Paper Mills Ltd. (supra) pertains to the distinction between administrative and quasi-judicial function. Though Mr. Nema with vehemence would contend that action taken by the CIT under Section 132A is a quasi-judicial act, in our considered opinion, the same does not have to be dealt with in the case at hand, for what we are going to state at a later stage.
16. In Rajesh Kumar (supra), the question that cropped up related to an action under Section 132A of the Act and how the same was quasi-judicial in nature. It is worth noting that a writ petition was filed by the assessee before the Delhi High Court questioning the action of the Revenue and when the High Court refused to interfere, the matter travelled to the apex Court and at that juncture their Lordships expressed the opinion as has already been indicated hereinabove.
17. In Amandeep Singh (supra), a Division Bench of Punjab and Haryana High Court was dealing with the factual matrix in a writ petition preferred under Article 226 of the Constitution of India. Similarly, the Division Bench of the Andhra Pradesh High Court in the case of Sadmddin Javeri (supra) was dealing with the fact situation that emerged under Article 226 of the Constitution of India.
18. At this stage, we think it appropriate to refer to a decision rendered in the case of Princess Usha Trust (supra), wherein the Division Bench of this Court distinguishing the decision rendered in the case of Central Provinces Manganese Ors Co. Ltd. v. CIT : [1986]160ITR961(SC) expressed the opinion that levy of interest was not the part of process of assessment and, therefore, the Tribunal was not justified in holding in the facts and circumstance of the case that the assessee had no right to prefer an appeal from the order levying interest under the provisions of Section 220(2) of the Act.
19. In Garware Nylons Ltd. (supra), the Bombay High Court while interpreting Section 248 of the Act which deals with appeal by person denying the liability to deduct tax opined thus:
Section 248 thus confers the right of appeal on persons denying their liability to deduct tax in accordance with the provisions of Section 195 and Section 200 of the Act. It does not confer any right of appeal on a company or its principal officer against an order passed by the ITO under Section 197(3) of the Act. Section 197(3) of the Act merely confers on the principal officer of the company in certain cases a right to make an application to the ITO to determine the appropriate promotion (portion) of the dividend to be deducted under the provisions of the Section 80K and a duty on the ITO to make the determination. No appeal is provided under Section 248 or any other provision of the Act against the determination made by the ITO under Section 197(3) of the Act. No appeal shall, therefore, lie against such order.
20. In view of the aforesaid enunciation of law, we are of the considered opinion that the decisions cited by Mr. Nema are distinguishable as the law was laid down while dealing with the matters preferred under Article 226 of the Constitution of India or the matters arose out of writ petition in appeals before the apex Court, but in the case at hand, the controversy pertains to an order passed by the AO in respect of assessment and the appellate order arising therefrom. In our considered opinion, the jurisdiction exercised by the statutory authority while hearing the appeal cannot enter into the justifiability of an action under Section 132A of the Act. To elaborate : whether the order passed by the CIT is without jurisdiction or not cannot be the subject-matter of assessment as the same does not arise in course of assessment. Therefore, neither the AO nor the appellate authority can dwell upon the said facet. We may note with profit, it would not be a jurisdictional fact within the parameters of assessment proceeding or an appeal arising therefrom. It can only partake the nature and character of adjudicatory fact to the limited extent whether such search and seizure had taken place and what has been found during the search and seizure. The validity of search and seizure, in our considered opinion, is neither jurisdictional fact nor adjudicatory fact and, therefore, the same cannot be dwelled upon or delved into in an appeal. Submission of Mr. Nema that the Tribunal having been constituted under Article 323 of the Constitution can delve into, we are disposed to think, is an unacceptable proposition in law, especially in the teeth of the provision contained under Section 253 of the Act.
21. Consequently, we conclude and hold that the appeal is sans merit and accordingly stands dismissed without any order as to costs.