TaxTMI 
TaxTMI 
2004 (11) TMI 296
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....or of IT (Inv.), New Delhi, issued a warrant of authorisation under s. 132 r/w r. 112(2)(a) of the IT Rules, 1962, in Form No. 45 against one Shri I.S. Tosaria, who is the husband of the assessee. A xerox copy of the warrant has been placed before us by the learned Departmental Representative. The name of the assessee is not seen mentioned in this warrant. The warrant authorised the authorised officers to carry out the search of the premises at D-15, MCD Flats (MCD Colony), Defence Colony, New Delhi, where it was suspected that books of account, documents, money, bullion, jewellery or other valuable article or thing has been kept and may be found. The Panchnama prepared on conclusion of the search on 30th Sept., 1997 is at pp. 1 to 9 of the paper book filed by the assessee. The said Panchnama is also in the name of Shri I.S. Tosaria. Item 5(a)(vi) of the Panchnama stated that in the course of the search, inter alia, one locker key No. 285 in respect of Allahabad Bank, NDSC-1, New Delhi, was found and seized. The last page of the Panchnama noted that an order under s. 132(3) in respect of the locker No. 343, the key of which was found during the search, in the case of the assessee's....
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....., 2003. 7. Before us, the main ground of attack, predictably, was that the block assessment was null and void for want of jurisdiction, because there was no warrant of authorisation under s. 132(1) in the assessee's case. The warrant was issued only in the case of the assessee's husband, I.S. Tosaria, on 29th Sept., 1997. The so-called warrant referred to by the CIT(A) as having been issued in the name of the assessee, is only an order under s. 132(3) of the Act, which is only a consequential order, consequent to the warrant issued in the husband's case, so that the IT authorities could search the locker which stood in the joint names of the assessee and her mother. Strong reliance was placed on the judgment of the Hon'ble Delhi High Court in CIT vs. Ms. Pushpa Rani (2004) 136 Taxman 627 (Del), in which it was held that there should be a search warrant in the case of the very assessee against whom a block assessment order is passed and if a limited warrant is issued, to facilitate the search of the locker which is in the name of the assessee, the AO ought to have made additions on the basis of the materials seized from the locker. It was submitted that in the present case none ....
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....on issued in the assessee's case, which condition is satisfied, as demonstrated earlier. 9. With reference to the judgment of the Hon'ble Delhi High Court cited on behalf of the assessee, the learned CIT-Departmental Representative submitted that the order of the Tribunal dt. 9th April, 2003, which was the subject of appeal before the Hon'ble High Court, shows that it was conceded on behalf of the Department before the Tribunal that no warrant had been issued in the case of the assessee. It was further submitted that the finding of the Tribunal that absence of a search warrant in the assessee's case invalidates the assessment was reversed by the Hon'ble Delhi High Court. It was further submitted that the Hon'ble Delhi High Court did not pronounce upon the question as to what are the materials that can be utilised for the purpose of framing a block assessment. It was strenuously contended that the provisions of Chapter XIV-B of the IT Act, which are special provisions made to cover search cases, should be so interpreted as to avoid multiplicity of proceedings or absurd results. With reference to the present case, the learned CIT-Departmental Representative further pointed out tha....
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....der s. 132 and it is not sufficient compliance with the law to say that the satisfaction in the case of a locker is subservient to the main satisfaction under s. 132, arrived at in the case of the assessee's husband. To a query from us, the learned counsel for the assessee submitted that a block assessment had been made in the case of the assessee's husband under s. 158BC in which no addition has been made. 12. As regards the cash flow statement and the balance-sheet filed by the assessee in the course of the block proceedings, the learned counsel for the assessee submitted that these cannot be construed as books of account, as held by the Bombay Bench of the Tribunal in the case of S.P. Goel vs. Dy. CIT (2002) 77 TTJ (Bom)(TM) 1 : (2002) 82 ITD 85 (Bom)(TM). 13. We have carefully considered the rival contentions with regard to the first issue which arises in the appeal, namely, the legality of the block assessment, which is challenged on the ground that no search warrant under s. 132 was issued in the assessee's case. The facts brought on record show that a search warrant under s. 132(1) was issued in Form No. 45 on 29th Sept., 1997, by the Director of IT (Inv.) in the case ....
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....is not a valid warrant under s. 132(1). If that is so, the factual position is that there is no valid warrant issued under s. 132(1) in the assessee's name. In Nenmal Shankarlal Parmar vs. Asstt. CIT (1992) 102 CTR (Kar) 64 : (1992) 195 ITR 582 (Kar), the Karnataka High Court held that the mere mention of residential premises in the warrant does not enable the Department to effect seizure of any material and hence, it must beheld that a warrant under s. 132 which has not been issued in the name of the assessee, but issued in the name of a firm in which the assessee was a partner, does not authorise the IT authorities to search the assessee's premises and effect seizure therefrom. In other words, the High Court held that a warrant under s. 132(1), in order to be valid, must be issued in the name of the assessee. It is thus assessee-specific and not premises-specific. If the principle is applied to the present case, it will be seen that no valid warrant under s. 132(1) was issued in the name of the assessee. The warrant issued in the name of the assessee's husband cannot authorise the search of the locker, which stood in the joint names of the assessee and her mother. The warrant iss....
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....because no addition has been made therein on the basis of the materials seized from the locker. 15. For the above reasons, the block assessment framed upon the assessee is held to be invalid and without jurisdiction. 16. The above decision of ours is sufficient to dispose of the appeal. However, we heard arguments of both sides on the merits of the various additions also and, therefore, in deference of the same and for the sake of completeness, we would also examine the correctness of the additions. 17. The learned counsel for the assessee has submitted a chart which shows the various additions made, the explanation and evidence adduced by the assessee, the reasons given by the IT authorities and the contentions pressed before the Tribunal. In addition to the chart, the learned counsel for the assessee raised the following five broad propositions which are applicable to all the additions made in the block assessment: 1. The AO did not collect any evidence in the course of the search in order to make the additions and, therefore, the additions have to be deleted on this score alone. 2. The balance-sheet and the cash flow statements which were filed by the ....
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....ce on the date of search would be a negative figure of around Rs. 1 lakh, which the assessee could not explain. So far as the contention of the assessee that the salary can never be considered as the undisclosed income of the assessee is concerned, the learned CIT-Departmental Representative submitted that the facts before the Rajasthan High Court cited by the assessee are not similar to the facts of the present case. He further submitted that mere deduction of tax does not amount to disclosure by the assessee, because tax is deducted by the employer and not the assessee. Further, from p. 128 of the paper book, it was clear that the assessee has not been filing any return of income, though she was liable to tax on the salary and other income. 19. We have carefully considered the rival submissions. In CIT vs. Ravikant Jain (2001) 167 CTR (Del) 566 : (2001) 250 ITR 141 (Del), the Hon'ble Delhi High Court has held that a block assessment under Chapter XIV-B of the Act is not intended to be a substitute for a regular assessment, that its scope and ambit is limited in that sense to materials unearthed during the search, that it is in addition to the regular assessment already done or....
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....sclosed income should be assessed on the basis of the evidence found as a result of search and such other materials or information which are available with the AO and are relatable to the evidence so found. Therefore, on this ground also, the addition of the cash credits cannot be upheld. 20. The contention that the balance sheet and cash flow statements were filed in the course of the block assessment proceedings and, therefore, do not satisfy the condition prescribed in s. 158BB(1) has to be accepted. These documents could have been treated as material or information available with the AO and relatable to the evidence found in the search only if some evidence with regard to them or connected with them, such as cash or any other assets or valuable article, were found and seized in the course of the search in the assessee's case. That is not the position. These were filed only to explain the opening cash balance so that the investments made by the assessee during the block period can be treated as covered by the opening cash balance. The investments themselves have not been seized in the course of the search. Therefore, the balance sheet and the cash flow statements cannot be co....