Search material in block assessment under section 158BD can still support proceedings despite challenge to the original warrant.

A later Supreme Court declaration that information found in a search can still support proceedings under section 158BD, even if the original search warrant is challenged, was treated as a binding legal position applicable to pending matters. On that basis, the Tribunal's earlier order quashing the block assessment was inconsistent with the law later declared and was therefore regarded as a mistake apparent from the record, justifying recall. The same reasoning applied to the assessment made in the context of a search conducted in the name of a deceased person, because the search material remained capable of supporting the statutory satisfaction for further proceedings. The matter was restored for fresh hearing.

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Issues: (i) Whether the earlier order quashing the block assessment and the subsequent miscellaneous application order suffered from a mistake apparent from the record in view of the Supreme Court ruling on the effect of information discovered in a search for proceedings under section 158BD. (ii) Whether the block assessment under section 158BD read with section 158BC(c) could be sustained or recalled despite the search having been conducted in the name of a deceased person.

Issue (i): Whether the earlier order quashing the block assessment and the subsequent miscellaneous application order suffered from a mistake apparent from the record in view of the Supreme Court ruling on the effect of information discovered in a search for proceedings under section 158BD.

Analysis: The earlier appellate order proceeded on the basis that the assessment had to fall once the search was treated as invalid, while the later miscellaneous order stated that no issue of validity of search had been adjudicated and only the consequential assessment had been quashed. The Supreme Court subsequently held that where information is discovered in the course of search and is capable of generating satisfaction for issuance of notice under section 158BD, such information does not become irrelevant for further proceedings merely because the original search warrant is alleged to be invalid. Since the Tribunal's earlier order was inconsistent with that binding declaration of law, the inconsistency constituted a rectifiable mistake apparent from the record.

Conclusion: The earlier Tribunal order was liable to be recalled as it conflicted with the law declared by the Supreme Court.

Issue (ii): Whether the block assessment under section 158BD read with section 158BC(c) could be sustained or recalled despite the search having been conducted in the name of a deceased person.

Analysis: The assessee had participated in the assessment proceedings and the material found during the search was relied upon for initiating proceedings under section 158BD. The governing legal position, as clarified by the Supreme Court, is that the validity challenge to the original search does not by itself nullify further action under section 158BD when the search yielded information capable of supporting the statutory satisfaction. The earlier quashing of the assessment on the premise that the search was on a deceased person was therefore not sustainable in light of the later binding precedent.

Conclusion: The block assessment and the prior miscellaneous order were recalled and the Revenue's miscellaneous application was allowed.

Final Conclusion: The Tribunal restored the matter by recalling its earlier orders, leaving the appeal to be heard afresh in accordance with the Supreme Court's declaration of law.

Ratio Decidendi: A later declaration of law by the Supreme Court applies to pending matters and may render an earlier order inconsistent with that law a mistake apparent from the record, warranting recall where the earlier decision is contrary to the binding legal position governing the effect of search-related information under section 158BD.

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