2017 (3) TMI 1267 - HC - Income Tax

Valid authorization for search - block assessment validity - Held that - In the instant case, the Deputy Director of Income Tax (Investigation), New Delhi authorized the search in the case of the assessee on 14.10.1998 that is well after the amendment. We are, therefore, of the opinion that the Deputy Director of Income Tax (Investigation), New Delhi was competent to authorize the search on 14.10.1998 in view of the amendment made on 01.10.1998 by Finance No.(2) Act of 2009 with retrospective effect. In view of the above, the finding of the Tribunal is clearly based on misreading of the amendment and it cannot be sustained, it is set aside. Accordingly, the substantial questions of law raised in the memo of appeal are answered in favour of the revenue and against the assessee. Assessee, however, points out that the Tribunal has not adjudicated the issue on merits in the appeal filed by the assessee.The matter is remitted to the Tribunal to adjudicate the assessee s appeal on merits and in accordance with law as expeditiously, as possible.

Summary

Issues involved:
Validity of search authorization; Interpretation of retrospective amendment to Section 132 of the Income Tax Act; Applicability of a previous case decision to the present case.

Validity of search authorization:
The High Court considered an Income Tax Appeal where the Revenue challenged the Tribunal's decision annulling block assessment due to an allegedly invalid search authorization. The initial authorization was for other entities, but a subsequent one was issued for the assessee by a Deputy Director. The Tribunal found the authorization invalid as the Deputy Director was not authorized to issue it. The Revenue argued that a retrospective amendment empowered the Deputy Director to authorize searches, making the authorization valid. The Court agreed, stating that the Deputy Director was competent to authorize the search post-amendment. The Tribunal's finding was deemed a misreading of the amendment, and the appeal was allowed in favor of the Revenue.

Interpretation of retrospective amendment to Section 132:
The Court analyzed the retrospective amendment to the law, which empowered the Deputy Director to authorize searches from a specific date. The assessee's counsel relied on the Tribunal's finding, while the Revenue pointed to the legislative amendment to support their case. The Court held that the Deputy Director was indeed competent to issue the search authorization post-amendment, rejecting the Tribunal's view. The misinterpretation of the amendment led to the Tribunal's decision being set aside in favor of the Revenue.

Applicability of a previous case decision:
The assessee's counsel highlighted that the Tribunal did not address the merits of the assessee's appeal. As a result, the Court remitted the matter back to the Tribunal for a thorough adjudication of the assessee's appeal on its merits and in accordance with the law. The Court allowed the appeal, directing the Tribunal to expedite the process without imposing any costs.