2015 (3) TMI 851 - HC - Income Tax

Proceedings initiated u/s 158BC - Tribunal accepting the additional grounds of the assessee which were raised after a lapse of 5 years of filing of second round of appeal and 14 years after the search to hold proceedings initiated u/s 158BC against assessee are void initio as the name of these assessees are not appearing in the authorization/requisition - Held that - If a strict view is taken, one may say that the revenue could not agitate such question on the aspects of availability of the additional ground before the Tribunal, which was so permitted vide order dated 17.8.2010. But, as this Court vide order dated 13.6.2013 did make the abovereferred observations and even if lenient view is taken, at the most, it would mean that opportunity would be available to the revenue to meet with the additional ground, but such opportunity has already been availed by the revenue. The Tribunal has considered the Panchnama prepared by the revenue. It was for the revenue to controvert the said material by any contemporaneous record or otherwise. But, it appears that even as per the revenue, the contents of the Panchnama including that of non-appearance of the name in the authorization/requisition of the assessee, remained undisputed. Therefore, it cannot be said that the Tribunal did not give any opportunity to the revenue to meet with the additional ground. We do not find that a participation by the assessee in the earlier round of litigation either before the AO or before the Tribunal or consequently before the AO can operate as a bar to the assessee to challenge the jurisdictional authority of the AO under Section 158BC of the Act. If the condition precedent for block assessment under Section 158BC is not satisfied, such would go to the root of the matter and the jurisdiction, which has not been expressly conferred by the statute, cannot be invested with the AO for the block assessment. On facts, as recorded herein above, admittedly, there was no warrant authorization on the name of the assessee and hence, the Tribunal has found the assessment as ab initio void, which, in our view, calls for no interference, on facts and on law. No substantial questions of law would arise for consideration - Decided in favour of assessee.

Issues Involved:
1. Validity of proceedings initiated under Section 158BC of the Income Tax Act.
2. Acceptance of additional grounds by the Tribunal after a significant delay.
3. Jurisdictional challenge to block assessment.

Detailed Analysis:

1. Validity of Proceedings Initiated Under Section 158BC:
The primary issue was whether the proceedings initiated under Section 158BC of the Income Tax Act were valid when the names of the assessees did not appear in the authorization/requisition. The Tribunal found that the search warrant did not include the names of the assessees, which rendered the proceedings under Section 158BC void ab initio. This decision was supported by the legal precedent set in CIT v. Ms. Pushpa Rani, which held that proceedings initiated without a search warrant in the name of the assessee are void and without jurisdiction. The Tribunal also referred to Section 292CC of the Income Tax Act, which states that while authorization can be issued in the name of more than one person, the assessment must be made separately in the name of each person mentioned in the authorization. Since the names of the assessees were not mentioned, the Tribunal concluded that the proceedings were invalid.

2. Acceptance of Additional Grounds by the Tribunal:
The Tribunal allowed the assessees to raise additional grounds challenging the validity of the warrant and the jurisdiction of the block assessment, despite the significant delay. The revenue objected to this, arguing that the additional grounds should not have been admitted after such a long period. However, the Tribunal noted that these objections should have been raised at the time of admission of the additional ground. The High Court had previously observed that ample opportunity would be given to the revenue to meet with the additional ground, and the Tribunal found that the revenue had already availed this opportunity. The Tribunal's decision to admit the additional grounds was upheld, as it was crucial to the root of the matter.

3. Jurisdictional Challenge to Block Assessment:
The Tribunal and the High Court examined whether the jurisdictional challenge to the block assessment could be raised at a later stage. The High Court referred to the Supreme Court's decision in Manish Maheshwari v. Assistant Commissioner of Income Tax, which emphasized that the conditions precedent for block assessment under Section 158BC must be strictly followed. The High Court also cited its own decision in P.V. Doshi v. Commissioner of Income Tax, which held that there could be no waiver or estoppel against a statutory requirement. The High Court concluded that the assessees' participation in earlier proceedings did not bar them from challenging the jurisdiction of the AO under Section 158BC. The Tribunal's finding that the block assessment was void due to the absence of the assessees' names in the warrant was therefore upheld.

Conclusion:
The High Court dismissed all the appeals, finding no substantial questions of law for consideration. The Tribunal's decision that the block assessment proceedings were void ab initio due to the absence of the assessees' names in the search warrant was upheld. The acceptance of additional grounds by the Tribunal, despite the delay, was also upheld, as it was crucial to the root of the matter. The jurisdictional challenge to the block assessment was found valid, as statutory requirements must be strictly followed, and there can be no waiver or estoppel against statutory provisions.

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