TaxTMI 
TaxTMI 
TaxTMI 
2007 (11) TMI 296
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....led an appeal before the Tribunal challenging the validity of the assessment order being violative of the principles of natural justice. The assessee contended that the assessment order is bad in law for the reason that the same was passed on the belief of the assessing authority without disclosing any material as is required under section 132 of the Income-tax Act. According to the assessee, there was no material with the Director to form the belief as is required under the provisions of section 132(1) and in the absence of any material to this effect the assessment order passed is not maintainable and, therefore, the assessment order deserves to be set aside. 4. The Tribunal in appeal decided the said issue, after referring to the various judgments on the issue, as to whether the Tribunal is having jurisdiction to examine the validity of the authorisation based on reasons duly recorded in writing for search when the same is challenged before the court/Tribunal. According to the Tribunal, the Revenue was given various opportunities to produce the material to show that authorisation was based on the existence of reasons about there being one or more of the circumstances enumerated....
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....or to be invalid. 6. Per contra, counsel appearing for the assessee submitted that when the basic foundation, as called by the Tribunal, to show even existence of the authorisation to be based on existence of one or more of the reasons required under section 132(1) of the Income-tax Act is not in existence, then the Tribunal had held the assessment of the block period to be illegal, while holding the search to be without valid authorisation. It was submitted that in section 158B, the definition of block period is given, which reads as under: "158B. In this Chapter, unless the context otherwise requires- (a) 'block period' means the period comprising previous years relevant to six assessment years preceding the previous year in which the search was conducted under section 132 or any requisition was made under section 132A and also includes the period up to the date of the commencement of such search or date of such requisition in the previous year in which the said search was conducted or requisition was made: Provided that where the search is initiated or the requisition is made before the 1st day of June, 2001, the provisions of this clause shall have effect as if for the word....
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....(A) and (B) can authorise the authorities mentioned in these two clauses to conduct the search. Consequent upon such authorisation, the authority authorised may undertake the actions mentioned in further clauses of section 132. We may at this stage, therefore, gainfully quote the provisions of section 132(1) and clauses (A) and (B) thereof, which read as under: "132. (1) Where the Director General or Director or the Chief Commissioner of Income-tax or the Commissioner of Income-tax or any such Joint Director or Joint Commissioner of Income-tax as may be empowered in this behalf by the Board, in consequence of information in his possession, has reason to believe that- (a) any person to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub-section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub-section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents, has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summon....
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....s of section 158B of the Act. 11. The above being the legal position, since the assessment in the present case is made under Chapter XIV-B, and when it was specifically challenged by the assessee, that the circumstances contemplated by section 132(1) did not exist, this is a matter which goes to the root of the matter about jurisdiction of the assessing authority to proceed under Chapter XIV-B, the Tribunal was very much justified, and had jurisdiction to go into the question as to whether the search was conducted consequent upon the authorisation having been issued in the background of the existence of eventualities and material mentioned in section 132(1). We are conscious of the fact that it is not open to us or the court to go into the question of sufficiency of the reasons on the basis of which the competent authority may have had entertained the reason to believe the existence of one or more of the eventualities under clauses (a) to (c), but then the question as to whether there at all existed any material to have the reason to believe, even purportedly, consequent upon information in his possession, with the competent authority is the matter which can definitely be looked i....