2013 (10) TMI 10 - HC - Income Tax

Who was authorized and competent to issue warrant of authorization for search u/s 158 BD of the Income Tax Act - the warrant of authorization was issued by the Addl. DIT (Inv.). - ITAT observed that nothing to show that the Addl OIT (Inv.) was authorized to issue warrant of authorization Held that - Reliance has been placed upon the decision of the Hon ble Delhi High Court in the case of Dr. Nalini Mahajan Vs. Director of Income Tax (Investigation), 2002 (5) TMI 29 - DELHI High Court - Authorization under Section 158 BD issued in the case of respondent herein is invalid Decided against the Revenue.

Summary

Issues:
1. Validity of the Assessment order under Section 158 BD read with Section 254 of the Income Tax Act, 1961.
2. Lack of jurisdiction in quashing the Assessment order.
3. Recording of satisfaction by the assessee while initiating proceedings under Section 158 BD of the Income Tax Act, 1961.
4. Validity of the warrant of authorization issued for search.
5. Misunderstanding of the order dated 5th April, 2007 by the appellant.

Analysis:

1. The appeal by the Revenue challenges the order dated 16th October, 2009, concerning the block assessment period from 1st April, 1986 to 6th November, 1996. The Assessing Officer's order dated 31st December, 2008 under Section 158 BD read with Section 254 of the Income Tax Act, 1961 was questioned in light of the tribunal's earlier order dated 5th April, 2007, which raised concerns about the lack of jurisdiction.

2. Substantial questions of law were framed on 10th October, 2011, regarding the ITAT's decision to quash the Assessment order due to alleged lack of jurisdiction and failure to record satisfaction by the assessee during the initiation of proceedings under Section 158 BD of the Income Tax Act, 1961.

3. The appellant argued that the order dated 5th April, 2007 did not prohibit the Assessing Officer from reopening the assessment and issuing a fresh assessment order. The tribunal's decision was based on the premise that the Assessing Officer should have provided an opportunity before recording reasons or satisfaction under Section 158 BD of the Act.

4. The tribunal's order dated 5th April, 2007 set aside the assessment orders due to the lack of a valid opportunity granted to the assessee before making the impugned assessment order and the absence of recorded satisfaction by the Assessing Officer. The appellant's misunderstanding of this order led to the incorrect assumption that fresh block assessment proceedings could be initiated.

5. The tribunal's reliance on a previous decision by the Delhi High Court regarding the validity of the warrant of authorization for search further supported the conclusion that the appellant's understanding of the order dated 5th April, 2007 was flawed. The judgment clarified that the block assessment order was not set aside for procedural reasons but for other substantive grounds.

In conclusion, the High Court dismissed the appeal, ruling against the Revenue and in favor of the respondent assessee based on the findings related to the issues raised in the appeal.