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2012 (4) TMI 594 - AT - Income TaxJurisdiction to frame assessment u/s 158BC - Held that - The Director of Income-tax (Inv.) Chandigarh, issued Warrant of Authorization, dated 22.05.2002, u/s 132(1) of the Act in the name of Smt.Mohinder Kaur of M/s Lada Liquors Ltd., H.No. 694, Sector 8, Chandigarh. The said authorization was executed on 23.05.2002. The AO framed Block Assessment order u/s 158BC of the Act, on 22.08.2005, in the status of individual determining undisclosed income at ₹ 9,02,13,220/- for the block period commencing from 1.4.1996 to 23.5.2005. Another block assessment order was framed by the AO u/s 158BC on 22.8.2005 of the Act in the status of Individual , determining the undisclosed income of the same block period at ₹ 8,57,15,730/-. As no Warrant of Authorization u/s 132(1) of the Act was issued, in the name of Smt.Mohinder Kaur, L/H of Late Shri Taranjit Singh W/o Shri Taranjit Singh, block assessment cannot be framed u/s 158BC of the Act in such status. Hence, the impugned block assessment order is bad in law and without jurisdiction. Revenue has also failed to adduce any evidence demonstrating the factum of recording of satisfaction within the meaning of Section 158BD r.w. Section 158BC of the Act. In view of the above discussions, the impugned Block Assessment order, which is under challenge, in the C.O. in question, has been passed without jurisdiction.
Issues Involved:
1. Validity of jurisdiction in framing the block assessment order. 2. Deletion of various additions made by the Assessing Officer (AO) on account of undisclosed income and unexplained investments. Issue-Wise Detailed Analysis: 1. Validity of Jurisdiction in Framing the Block Assessment Order: The primary issue raised by the assessee was the validity of the jurisdiction of the AO in framing the block assessment order dated 22.08.2005, determining undisclosed income at Rs. 8,57,15,730/-. The assessee contended that no search warrant was issued under Section 132(1) of the Income-tax Act, 1961, in the name of the assessee, and thus, the AO lacked jurisdiction to frame the assessment under Section 158BC of the Act. The Tribunal examined the statutory provisions and found that the search warrant was issued in the name of Smt. Mohinder Kaur, not in the name of her deceased husband, Shri Taranjit Singh. The Tribunal noted that for a valid block assessment, there must be a search warrant in the name of the person. The Tribunal cited various judicial precedents, including the Supreme Court's decision in Manish Maheshwari v. ACIT, which emphasized the necessity of a search warrant for initiating block assessment proceedings. The Tribunal concluded that the AO was not competent to frame the block assessment order under Section 158BC of the Act as no search warrant was issued in the name of the assessee. Furthermore, the Tribunal highlighted that the AO failed to record satisfaction under Section 158BD of the Act, which is a prerequisite for assuming jurisdiction over undisclosed income belonging to a person other than the one searched. 2. Deletion of Various Additions Made by the AO: The revenue raised multiple grounds of appeal challenging the CIT(A)'s deletion of various additions made by the AO on account of undisclosed income and unexplained investments. These included: (i) Deletion of Rs. 85,45,680/- on account of undisclosed income from running of Ahata. (ii) Deletion of Rs. 1,86,54,215/- and Rs. 12,93,000/- on account of unexplained investment in the purchase/construction of SCO 16-17 Sector 8, Chandigarh. (iii) Deletion of Rs. 10,31,520/- on account of unexplained investment in the purchase of SCF No 210, Sector 24, Chandigarh. (iv) Deletion of Rs. 2,00,000/- on account of undisclosed interest income. (v) Deletion of Rs. 8,40,000/- on account of unexplained household expenses. (vi) Deletion of Rs. 2,50,00,000/- on account of unexplained deposit from M/S Shubh International Ltd. (vii) Deletion of Rs. 1,54,056/- on account of unexplained interest income. (viii) Deletion of Rs. 45,42,000/- on account of unexplained investment in construction of House No. 694, Sector 8, Chandigarh. (ix) Deletion of Rs. 1,24,66,000/- by treating the unexplained investment of Ms. Rajinder Kumar Manoj Kumar as the undisclosed income of Sh. Taranjit Singh. (x) Deletion of Rs. 45,63,930/- on account of undisclosed income of M/s Taranjit Singh & Co and Rs. 1,24,65,000/- on account of credits in the bank account of V Taranjit Singh & Co. (xi) Deletion of Rs. 5 lacs on account of unexplained credit in the account of M/s Lada Liquor (P) Ltd. (xii) Deletion of Rs. 10 lacs made by estimating the capital gain on settlement of properties among family members. However, given the Tribunal's finding on the preliminary issue of jurisdiction, it did not adjudicate these grounds on merit. The Tribunal dismissed the revenue's appeal on these grounds as it found the block assessment order to be without jurisdiction. Conclusion: The Tribunal allowed the assessee's cross-objection, setting aside the block assessment order as it was found to be without jurisdiction due to the absence of a valid search warrant in the name of the assessee. Consequently, the Tribunal dismissed the revenue's appeal challenging the deletions made by the CIT(A), as the block assessment order itself was invalid. The order was pronounced in the open court on 26th April 2012.
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