2010 (10) TMI 699 - HC - Income Tax

Question of validity of assessment in pursuance of search u/s 132 - Block Assessment - The assessees have not chosen to challenge the validity of assessments on the allegation of the defect or irregularity in the warrant issued either before the Assessing Officer or in the first round of appeals and they have chosen to raise such a contention after remand before the Commissioner of Income-tax (Appeals) for the first time. We are in complete agreement with the finding of the Tri-bunal in their order challenged in I. T. A. No. 76 of 2010 that the Com-missioner of Income-tax (Appeals) has no jurisdiction to entertain such a contention. - Decided against the assessee.

Summary

Issues:
1. Validity of assessments based on irregularity in search warrant.
2. Jurisdiction of Commissioner of Income-tax (Appeals) to consider validity of assessments.
3. Merits of the assessments challenged by the assessees.

Analysis:
1. The judgment involves connected appeals related to assessments of relatives and related concerns following a search under section 132 and a survey under section 133A of the Income-tax Act, 1961. The controversy arose regarding the alleged suppression and concealment of income by partners and business concerns known as the Carbo group. The search warrants were issued specifically mentioning the places to be searched and the individuals involved. The assessments were challenged before the Commissioner of Income-tax (Appeals) on grounds of lack of opportunity to raise objections. The Commissioner set aside the assessments citing insufficient opportunity and remanded the cases for fresh adjudication. The Tribunal, however, held that the delay in assessments was attributable to the assessees and remitted the matter back to the Commissioner for consideration based on the income determined during the search and survey operations.

2. After remand, the assessees contended for the first time that the search warrant issued in the name of "Carbo group of concerns" was invalid, affecting the validity of assessments. The Tribunal's remand order did not authorize the Commissioner to consider the validity of assessments based on alleged defects in the warrant. The Tribunal upheld that the Commissioner had no jurisdiction to assess the validity of assessments and was only authorized to consider the assessment on the merits, i.e., the income determined during assessment. The assessees' challenge against the validity of assessments was not considered valid as they did not raise this issue in the initial appeals before the Commissioner.

3. On the merits, the Court found no substance in the assessees' claim that the search warrants were defective. The warrants contained precise details about the assessees and the places to be searched, including the head office of the Carbo group and the residences of the partners/directors. The Court concluded that the warrants were free from the alleged defects and upheld the validity of the assessments. Consequently, the Revenue's appeals were allowed, and the assessees' appeal was dismissed. Other appeals were remanded to the Commissioner of Income-tax (Appeals) for a decision on the merits concerning the income assessed based on the Tribunal's remand orders from the first round of appeals.