Search and Seizure Invalidated: Lack of Statutory Power for Authorization

The search and seizure operation were deemed invalid due to the authorization being issued by a Jt. Director of IT (Inv.) lacking statutory power. The judgment referenced a prior case where it was held that the Addl. Director does not possess the authority to issue such authorization unless an amendment is made. As the Jt. Director was not specified as an authorized authority, the authorization was deemed invalid, leading to the cancellation of the assessment under s. 158BC of the Act. The assessment was canceled, and the appeal of the assessee was allowed while dismissing the Revenue's appeal due to the violation of the limitation date.

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Issues involved: Validity of search authorization u/s 158BC of the Act and violation of limitation date.

For the issue of validity of search authorization u/s 158BC of the Act, the judgment highlighted that the search and seizure operation conducted were deemed invalid due to the authorization being issued by a Jt. Director of IT (Inv.) who lacked the statutory power to issue such authorization. The decision referenced the case of Dr. Nalini Mahajan v. Director of IT (Inv.) where it was held that unless an amendment is carried out, the Addl. Director does not possess the statutory power to issue authorization for search. The judgment further noted that a notification issued by the CBDT did not specify the Jt. Director of IT (Inv.) as an authorized authority under s. 132(1) of the Act. Consequently, it was concluded that the authorization was not issued by a competent authority, rendering the search invalid and resulting in the cancellation of the assessment made by the AO u/s 158BC of the Act.

Regarding the violation of the limitation date, the judgment mentioned that the assessee raised additional grounds during the hearing regarding the validity of the search and violation of the limitation date while passing the order by the Asstt. CIT, Circle 1(1), New Delhi u/s 158BC of the Act. These additional grounds were admitted as they were deemed purely legal in nature. The judgment ultimately canceled the assessment made by the AO under s. 158BC of the Act due to the invalidity of the search authorization, thereby allowing the appeal of the assessee and dismissing the appeal of the Revenue.

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