2014 (5) TMI 15 - HC - Income Tax

Invalidity of Section 158BC Orders Without Search; Warrant Required for Adverse Inferences

The Commissioner of Income Tax-19 Versus Smt. Pamela Ashish Mohile

The High Court found that in a case where no search was conducted on the assessee, orders under Section 158BC were deemed invalid. The Court emphasized ... Search u/s 132 of the Act – Validity of block assessment – Jurisdiction of the AO to pass order u/s 143(3) r.w section 158BC of the Act – Held that:- The Tribunal was of the view that the assessee was not searched - No warrant evidencing search was produced - mere presence of her name in the panchnama would not enable the revenue to undertake further exercise and as disclosed in the record - the search u/s 132 of the Act is a person specific and not a premises specific - if the name of the assessee against whom the block assessment has been made, does not figure in the warrant of the authorization issued u/s 132 of the Act, the block assessment would be unauthorized – the findings does not raise any substantial question of law arises for consideration – Decided against Revenue. Issues:- Jurisdiction of Assessing Officer under Section 143(3) read with Section 158BC of the Income Tax Act- Validity of block assessment from 1986-87 and 1996-97- Search warrant requirement for passing order under Section 158BC- Non-production of warrant of authorization in the name of the assessee- Consequences of failure to produce relevant search warrant- Person-specific search under Section 132 of the Income Tax ActJurisdiction of Assessing Officer under Section 143(3) read with Section 158BC of the Income Tax Act:The High Court dealt with an appeal challenging an order passed by the Commissioner of Income Tax Appellate Tribunal concerning a block assessment from 1986-87 and 1996-97. The Tribunal found that a search under Section 132 is a condition precedent for passing an order under Section 158BC. As there was no search in the case of the assessee, the orders under Section 158BC were considered nonest in law. The Tribunal emphasized the importance of a valid search in such cases.Validity of block assessment from 1986-87 and 1996-97:The High Court discussed the case of an individual whose husband's premises were searched, leading to the seizure of certain documents, including locker keys in joint names. The argument raised was that the Assessing Officer lacked jurisdiction to pass an assessment order under Section 143(3) read with Section 158BC as no search warrant was served on the respondent assessee. The Court highlighted the significance of proper authorization and search procedures in block assessments.Search warrant requirement for passing order under Section 158BC:The Court noted that the Tribunal directed the departmental representative to produce the warrant of authorization in the name of the assessee. Despite multiple adjournments granted for this purpose, the representative failed to produce the required document. The absence of the search warrant in the name of the assessee raised concerns regarding the validity of the block assessment under Section 158BC.Non-production of warrant of authorization in the name of the assessee:The failure to produce the warrant of authorization in the name of the assessee led to adverse inferences being drawn against the department. The restructuring of the department was cited as a reason for the non-production of the relevant document. However, the Court emphasized the importance of providing necessary documentation to support the validity of the assessment process.Consequences of failure to produce relevant search warrant:The Court highlighted that the search under Section 132 of the Income Tax Act is person-specific and not premises-specific. If the name of the assessee against whom the block assessment is made does not appear in the authorization warrant, the assessment would be considered unauthorized. The Tribunal's conclusion was based on the lack of evidence supporting the search of the assessee, leading to the dismissal of the appeal due to lack of merits.Person-specific search under Section 132 of the Income Tax Act:The Court emphasized that the search under Section 132 is specific to the individual and not the premises. In this case, the absence of the assessee's name in the warrant of authorization raised concerns about the validity of the block assessment. The Court upheld the Tribunal's decision that the search must be person-specific to ensure the legality of the assessment process.