AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2014 (10) TMI 573
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....case on behalf of the petitioners that on 27.09.2001 the respondent No.1 - Director of Investigation, Ahmedabad issued search warrant in the name of deceased person and pursuant thereto searched residential premises of the petitioners and seized cash of Rs. 25,000/as also various documents. It is the case on behalf of the petitioners that respondent No.1 might have recorded reasons to believe as contemplated under Section 132 of the Act, that the deceased person is required to be searched and therefore, search and seizure actions were initiated on 27.09.2001 against the deceased person. That thereafter a warrant of panchnama came to be drawn in the name of deceased person. It is the case on behalf of the petitioners that immediately on seeing the authorization it was pointed out by the petitioner No.1 to the search party that the person in whose name the search warrant is issued has passed away long back and therefore, no search can be effected. It is the case on behalf of the petitioners that despite the same the search and seizure proceedings continued though the search party took note of the said fact inasmuch as list of investments and seized papers prepared subsequently carrie....
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.... for issuing authorization under section 132 of the Act were fulfilled. In support of his above submissions, Shri Soparkar, learned Counsel appearing on behalf of the petitioners has relied upon the decision of the Punjab & Haryana High Court in the case of CIT v. Rakesh Kumar, Mukesh Kumar reported in 313 ITR 305 (P&H) and Commissioner of Income Tax, Karnal v. Moti Ram reported in 316 ITR 321. [3.1] It is further submitted that the authorization under Section 132 of the Act can be issued only if an authorizing person has, in consequence of the information in his possession, has reason to believe that the search is required. It is submitted that the word "information" has to be construed as concrete, cogent, accurate and tangible piece of information. It is submitted that here in the present case there was no such information in possession of the respondent to form a belief that search is required. It is submitted that therefore even otherwise the search operation undertaken against the deceased person fails. [3.2] Now, so far as challenge to the assessment order under Section 158BC and the notices issued upon the petitioners under section 158BD are concerned, it is submitted th....
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....Nirma Group and was also Director in the investment company of the group. It is submitted that the search warrant was issued for the premises i.e. 9, "Gayatri", Motinagar Society. It is submitted that the said deceased person was also brother in law of one Shri R.D. Shah, one of the key persons and Tax Advisor of the group. It is submitted that in light of the aforesaid proximity such search warrant was issued for the aforesaid premises and as required it bears the name of the head of the family, however, all the occupants of the premises were subjected to provisions of section 132 of the Act. It is submitted that as such in the said proceedings no objection was taken by the petitioners and on the contrary panchnama was signed by the petitioner No.1 claiming to be the heir of deceased person. It is submitted that therefore warrants have been issued for the premises, the contention on behalf of the petitioners that it was issued for the deceased person is incorrect. It is submitted that petitioners have therefore acquiesced to the issuance of the authorization under section 132 of the Act. It is submitted by Shri Bhatt, learned Counsel appearing on behalf of the Department that thou....
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....t as such pursuant to the notice under Section 158BD of the Act, petitioners in fact filed return of income and accepted the jurisdiction of the AO. It is submitted that therefore it is not open for the petitioners to challenge the notice under Section 158BD of the Act. [4.5] It is submitted that Chapter XIVB deals with special procedure for assessment of search cases. It is submitted that clause (b) of section 158B defines undisclosed income. The computation of undisclosed income of the block period is to be done as per section 158BB of the Act. It is submitted that assessment for the block period in respect of the searched person is to be carried out under Section 158BC. It is submitted that section 158BC requires a valid search to be conducted. As against that section 158BD is an independent provision dealing with undisclosed income of "any other person". It is submitted that AO under Section 158BC of the Act in respect of searched person is with regard to undisclosed income of the searched person and the same is not at all connected with the undisclosed income of 'other person' as per section 158BD of the Act. The only mandatory requirement of section 158BD of the Act is that ....
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....that the decision in the case of Ajit Jain (Supra) reported in 242 ITR 302 (Delhi) was with regard to challenge to authorization under section 132 and consequential assessment under section 158BC. It is submitted that in the aforesaid decision the Hon'ble Court on facts had held that upon quashing of the authorization under section 132, the consequential assessment under section 158BC was also required to be quashed. It is submitted that there cannot be any dispute to the said proposition inasmuch as, section 158BC assessment is directly relatable to and dependent upon a valid authorization under section 132 of the Act. It is submitted that similar is the issue in the decision reported in 339 ITR 210 (Karnataka). [4.8] It is further submitted by Shri Bhatt, learned Counsel appearing on behalf of the Department that the decision of the Hon'ble Supreme Court in the case of Assistant Commissioner of Incometax, Chennai v. A.R. Enterprises reported in [2013]350 ITR 489 is distinguishable on facts. It is submitted that in the said decision the issue posed for consideration by the Hon'ble Supreme Court was that when advance tax had been paid, whether the relatable income could be deemed ....
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....Section 158BC of the Act is concerned, the same is mainly on the ground that the said warrant of authorization issued under Section 132 of the Act was in the name of a dead person i.e. Late Shri Girishbhai K. Mehta and therefore, the warrant of authorization issued under section 132 of the Act and subsequent assessment order dated 11.09.2003 framed under Section 158BC of the Act are illegal. Now, so far as challenge to the impugned notices dated 04.11.2003 issued under Section 158BD of the Act is on the ground that as the warrant of authorization issued under section 132 of the Act is per se illegal as it was against a dead person, the search can no longer be valid and therefore, chapter XIVB of the Act will not become inapplicable. To appreciate the above object, purpose and interest of enacting section 158 of the Act are required to be considered. The object, purpose and the intention of the legislature for enacting section 158BD of the Act came to be considered by the Hon'ble Supreme Court in the recent decision in the case of Calcutta Knitwears (Supra). [5.2] In order to resolve the controversy, certain provisions of the Act are required to be noticed which also came to be c....
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.... day of January, 1997 serve a notice to such person requiring him to furnish within such time not being less than fifteen days; (ii) In respect of search initiated or books of account or other documents or any assets requisitioned on or after the 1st day of January, 1997, serve a notice to such person requiring him to furnish within such time not being less than fifteen days but not more than fortyfive days, as may be specified in the notice a return in the prescribed form and verified in the same manner as a return under clause (i) of subsection (1) of section 142, setting forth his total income including the undisclosed income for the block period: Provided that no notice under section 148 is required to be issued for the purpose of proceeding under this Chapter: Provided further that a person who has furnished a return under this clause shall not be entitled to file a revised return;] (b) The Assessing Officer shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158BB and the provisions of section 142, subsections (2) and (3) of section 143 [section 144 and section 145]shall, so far as may be, apply; (c) The Assessing Offic....
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....r documents relating to such other person, the jurisdictional AO may proceed to issue a notice for the purpose of completion of the assessments under Section 158BD of the Act, the other provisions of XIVB shall apply. It is further observed by the Hon'ble Supreme Court that the opening words of Section 158BD of the Act are that the AO must be satisfied that "undisclosed income" belong to any other person, other than the person with respect to whom a search was made under Section 132 of the Act or a requisition of books were made under Section 132A of the Act and thereafter, transmit the records for assessment of such other person. It is further observed by the Hon'ble Supreme Court in the said decision that before initiating proceedings under Section 158BC of the Act, the AO who has initiated proceedings for the completion of the assessment under Section 158BC of the Act should be satisfied that there is an undisclosed income which has been traced out when a person was searched under section 132 or the books of accounts were requisitioned under section 132A of the Act. It is further observed by the Hon'ble Supreme Court in the said decision that the aforesaid is in contrast to the ....
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....arch warrant was null and void as sought to be contended on behalf of the petitioners. Therefore, the decisions relied upon by Shri Soparkar, learned Counsel appearing on behalf of the petitioners referred to hereinabove of the Punjab & Haryana High Court in the case of Rakesh Kumar, Mukesh Kumar (Supra) and in the case of Motiram (Supra), would not be applicable to the facts of the case on hand. [5.4] Now, assuming without prejudice to the above that the authorization for search under section 132 of the Act is found to be bad and illegal as the same was against the dead person, the next question which is posed for consideration of this Court is whether during the search under section 132 of the Act, the AO finds that any undisclosed income belongs to any person other than the person with respect to whom the search was made under section 132 of the Act or whose books of account or other documents or any assets were requisitioned under section 132A of the Act is traced out, the proceedings under section 158BD of the Act against any other person, other than the person with respect to whom the search was made would be permissible and/or maintainable or not? It is the contention on be....
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....ct is held to be a machinery provision and inserted in the statute book for the purpose of carrying out assessments of a person other than the searched person under section 132 or 132A of the Act. The special provisions under Chapter XIVB more particularly section 158BD of the Act are devised to operate in the distinct field of undisclosed income and are clearly in addition to the regular assessments covering the previous orders falling in the block period, intended to provide a mode of assessment of undisclosed income, which has been detected as a result of search. A bare reading of the section 158BD of the Act makes it clear that for invoking a block assessment, there must be a search conducted under section 132 of the Act, or documents or assessed requisitioned under section 132A and the AO is satisfied that there exists any undisclosed income which may belong to other person other than the person with respect to whom the search was conducted or requisition was made. Therefore, when during the course of a search conducted under section 132 of the Act or from the documents or assessed requisitioned under section 132A the AO finds that there exists any undisclosed income of a pers....