2015 (2) TMI 723 - HC - Income Tax

Department's appeal dismissed, Section 158BC assessment invalid. Authority to review refund application in four months.

Anil Kumar Chadha Versus The Commissioner Of Income Tax, Allahabad And Another

The Court dismissed the Department's appeal, upholding the Tribunal's decision that the assessment under Section 158BC was invalid due to the absence of a ... Unaccounted money - addition being undisclosed income - Tribunal deleted the addition as no search warrant was issued u/s 132 in the name of the assessee, so no notice can be issued u/s 158BC - assessee prayed refund of the seized cash - Held that:- In the instant case ₹ 17,00,000/- were requisitioned from the S.H.O. Kotwali, Allahabad under Section 132A of the Act, which was seized from three persons. Therefore, the provision of Section 158BD is applicable in the instant case, but the same was not applied by the Department. The assessment was framed after issuing notice under Section 158BC which is not applicable in the instant case, since the assessee was neither searched nor assets were requisitioned from him under Section 132A of the Act. Further, there were no warrant of authorization in the name of the assessee. No reason to interfere with the impugned order passed by the Tribunal - Petitioner's application for refund directed to be decided within a period of four months from today . - Decided against revenue. Issues:1. Validity of assessment under Section 158BC of the Income Tax Act.2. Applicability of Section 158BD in the case.3. Seizure and requisition of assets in the name of the assessee.4. Refund of seized cash in a writ petition.Issue 1: Validity of assessment under Section 158BC:The Department appealed against the Tribunal's order assessing undisclosed income of the assessee under Section 158BC, contending that the notice under Section 158BD was mandatory before framing the assessment. The Department argued that the provisions of Section 158BC and Section 158BD are procedural and essential for block assessment. The Senior Counsel emphasized the necessity of a proper search or requisition under Chapter XIII of the Income Tax Act, irrespective of the person searched or assets requisitioned. The Department sought to set aside the Tribunal's order and restore the CIT(A)'s decision.Issue 2: Applicability of Section 158BD:The Counsel for the assessee supported the Tribunal's decision, asserting that the provisions of Section 158BC were not applicable as there was no search or requisition in the name of the assessee. The Counsel highlighted that the Tribunal's factual finding stated that the assessee was not searched, and no requisition was made in the assessee's case. It was argued that the proceedings under Section 158BC were illegal and invalid, and the Tribunal's order was legally sound. The Counsel relied on precedents to support the argument that the appeal by the Department should be dismissed.Issue 3: Seizure and requisition of assets:The Court noted that the seized amount was not in the name of the assessee, and no warrant or requisition was issued for the assessee or the Firm. The Court highlighted the difference between Sections 158BC and 158BD, emphasizing the need for specific conditions before invoking Section 158BD against a person not searched or requisitioned. It was observed that the Department failed to apply Section 158BD despite the requisition of funds from other individuals, making it applicable in this case.Issue 4: Refund of seized cash in a writ petition:In the writ petition, the assessee requested a refund of the seized cash, which was deleted by the Tribunal and the Court. The Court directed the concerned authority to decide on the refund application within four months from the date of the order, disposing of the writ petition accordingly.In conclusion, the Court dismissed the Department's appeal, upholding the Tribunal's decision regarding the invalidity of the assessment under Section 158BC due to the lack of search or requisition in the name of the assessee. The Court also directed the authority to consider the assessee's refund application within a specified timeframe.