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2012 (6) TMI 701 - AT - Income TaxSearch - Block assessment - Undisclosed income of any other person - warrant was in the name of Shri. C.P. David and the warrant was to search the premises of Kothamangalam Aggregates Nelkrishi The Revenue maintains that search on Shri C.P. David was only in his capacity as a partner of the assessee-firm-being its principal partner. - Held that - warrant was issued in the case of Shri. C.P. David and it does not mention therein that the same was issued on his name in his capacity as partner of Kothamangalam Aggregates Nelkrishi - In the case of other person , the assessment has to be made u/s. 158BD and not u/s. 158BC - assessment in the case of a person other than the one subject to search can only be u/s.158BD and not u/s. 158BC alone as in the instant case Decided in favor of assessee.
Issues Involved:
1. Legality of assessment under section 158BC of the Income Tax Act, 1961. 2. Applicability of section 158BD for assessments of persons other than those searched. 3. Validity of the assessment based on the remand reports. 4. Binding nature of the Third Member's decision on the Tribunal. Issue-wise Detailed Analysis: 1. Legality of assessment under section 158BC: The assessee challenged the assessment under section 158BC on the grounds that it was not the person subjected to the search under section 132. The Tribunal noted that the assessment of a person not directly searched should be under section 158BD and not 158BC. The Revenue argued that the search on Shri C.P. David was in his capacity as a partner of the assessee-firm, implying the assessment was correctly framed under section 158BC read with section 158BD. The Tribunal held that a mere wrong mention of the section does not invalidate the assessment if the power to take action is justified. However, the Tribunal found merit in the argument that the warrant of authorization was issued in the name of Shri C.P. David, not specifically in his capacity as a partner, and thus, the assessment should have been under section 158BD. 2. Applicability of section 158BD: The Tribunal discussed that the assessment in the case of a person other than the one searched should be under section 158BD. The Tribunal referred to the decision in P.C. Mathew v. Asstt. CIT, where it was held that assessments of persons other than those searched should be under section 158BD. The Tribunal found that the warrant was issued in the name of Shri C.P. David, and not specifically in his capacity as a partner, making the assessee-firm an "other person" under section 158BD. The Tribunal concluded that the assessment should have been framed under section 158BD. 3. Validity of the assessment based on the remand reports: The Tribunal noted that the Commissioner of Income-tax (Appeals) had called for remand reports to address the errors and discrepancies in the original assessment order. The Assessing Officer conceded several modifications in the remand reports, which were considered by the Commissioner in granting relief to the assessee. The Tribunal found that the assessee's detailed objections to the remand reports were considered and accepted, leading to further relief. The Tribunal upheld the findings of the lower authorities, noting no infirmity in the concurrent findings. 4. Binding nature of the Third Member's decision on the Tribunal: The Tribunal discussed the binding nature of the Third Member's decision in the case of P.C. Mathew, which was on identical facts. The Judicial Member followed the Third Member's decision, while the Accountant Member differed. The Third Member, upon reference, concluded that the assessment should be under section 158BD, following the decision in P.C. Mathew. The Tribunal acknowledged that the decision of the Third Member is binding on the coordinate bench in identical cases, and thus, the assessment in the present case should be under section 158BD. Conclusion: The Tribunal set aside the assessment framed under section 158BC, holding it as bad in law. The Tribunal concluded that the assessment should have been under section 158BD, following the binding decision of the Third Member in the case of P.C. Mathew. The appeal by the assessee was allowed.
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