Block assessment notices under section 158BD were held invalid where the search warrant named a non-existing concern and section 158BC was bypassed.

Search authorisation under section 132(1) was treated as person-specific, so a warrant issued in the name of a non-existing firm and the related initial notices were held defective. On that basis, the block assessment machinery could not validly proceed against another person unless the statutory route under section 158BC was first followed. A notice issued directly under section 158BD was therefore found invalid, and the special code for block assessment was construed strictly. The assessment proceedings under section 158BD were quashed, and the assessee succeeded.

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Issues: Whether block assessment proceedings initiated against a person other than the searched person were valid when the search warrant and initial proceedings were issued in the name of a non-existing concern and the notice under section 158BD was not issued in the manner required by law.

Analysis: The search authorisation under section 132(1) was treated as the foundation of the entire search action, and such authorisation was held to be person-specific. Since the warrant and the earlier notices under section 158BC were issued in the name of a non-existing firm, the initial search action was found to be flawed and the proceedings under section 158BC had been dropped on technical grounds. The scheme of section 158BD was then examined, and it was held that proceedings against a person other than the searched person must proceed through the mechanism of section 158BC. In that context, the notice issued directly under section 158BD was held to be defective. The court also relied on the view that the amendment inserting the words 'under section 158BC' was clarificatory and that block assessment under this special code must be strictly construed.

Conclusion: The assessment proceedings under section 158BD were invalid and liable to be quashed, and the assessee succeeded.

Ratio Decidendi: Where the search authorisation itself is vitiated by being issued against a non-existent person and the statutory route for proceeding against a person other than the searched person is not followed in accordance with section 158BC, the block assessment under section 158BD cannot be sustained.

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