Section 153A Does Not Follow Mere Premises Search

The Karnataka High Court at Bengaluru, in a judgment by S.G. Pandit and K.V. Aravind JJ., examined the distinction between a “searched person” under Section 153A of the Income Tax Act, 1961, and an “other person” under Section 153C.

The dispute arose from a search under Section 132 conducted on 14 September 2017 in the case of Sri K. Narayan Raju. The Revenue’s case was that the warrant of authorization was issued in his name, while the respondent’s residential premises were searched because the authorities suspected that books, documents and other valuable articles belonging to Sri K. Narayan Raju were kept there. On that basis, the Assessing Officer of Sri K. Narayan Raju recorded satisfaction, handed over the seized material to the respondent’s Assessing Officer, and notices under Section 153C were issued for assessment years 2011-12 to 2018-19.

The respondent challenged those notices on the footing that since his premises were searched, he should have been treated as the “searched person” and proceeded against under Section 153A, not Section 153C. The learned Single Judge accepted that argument, relying on the panchanama and the decision in Sunil Kumar Sharma v. ACIT, and quashed the notices.

The Division Bench reversed that view.

The Court held that a search under Section 132 is person-specific, not premise-specific. The warrant of authorization identifies the person against whom the search is initiated, while the premises searched may be any place where the authorities have reason to suspect that the specified material is kept. The fact that the respondent’s residential premises were searched did not, by itself, make him the person searched within the meaning of Section 132.

The Bench also held that proceedings against an occupant of searched premises can be initiated under Section 153C if that occupant is an “other person” and the statutory conditions are satisfied. On the facts, the respondent fell within that category. The Court further accepted the Revenue’s submission that Section 153C does not require a separate satisfaction note for each assessment year, and that a consolidated satisfaction note can suffice if it records that the seized material belongs to or pertains to the other person.

The appeal was allowed, the Single Judge’s order was set aside, the writ petition was dismissed, and the Section 153C notices were restored.

Practical takeaway: In search cases, the name on the warrant matters more than the ownership of the premises, and an occupant can still be proceeded against under Section 153C as an “other person.”