2017 (3) TMI 1529 - SC - Income Tax

Validity of notice under Section 158BD - Authorization of issue u/s 132 Notice under Section 132 issued in the name of a dead person andwas duly received by the present petitioner as the legal heir of the dead person - if the original search warrant is invalid the consequential action under Section 158BD would also be invalid? - Held that - The issue of invalidity of the search warrant was not raised at any point of time prior to the notice under Section 158BD. In fact, the petitioner had participated in the proceedings of assessment initiated under Section 158BC of the Act. The information discovered in the course of the search, if capable of generating the satisfaction for issuing a notice under Section 158BD, cannot altogether become irrelevant for further action under Section 158BD of the Act. HC Ref case 2014 (10) TMI 573 - GUJARAT HIGH COURT

Summary

Issues:
1. Validity of notice under Section 132 of the Income Tax Act, 1961 issued in the name of a deceased person.
2. Validity of notice under Section 158BD of the Act based on information from a search.
3. Impact of invalidity of original search warrant on consequential action under Section 158BD.

Analysis:
1. The Supreme Court considered a case where a notice under Section 132 of the Income Tax Act was issued in the name of a deceased person but received by the legal heir. Subsequently, a notice under Section 158BC of the Act was issued, and the income was declared as 'nil' with the participation of the legal heir. Another notice under Section 158BD was issued based on information from a search, leading to the petitioner's grievance and the filing of a Special Leave Petition after a writ petition was dismissed by the High Court.

2. The main contention was whether the invalidity of the original search warrant would render the consequential action under Section 158BD invalid. The Court held that the issue of the search warrant's invalidity was not raised before the notice under Section 158BD. The petitioner's participation in the assessment proceedings under Section 158BC without raising this issue was noted. The Court emphasized that information discovered during a search, if sufficient for issuing a notice under Section 158BD, cannot be disregarded for further action under the same section.

3. The Court distinguished previous decisions cited by the parties, highlighting that the cases referred to were based on different facts. The judgment clarified that the issue of the validity of proceedings under Section 158BD was distinct from cases involving challenges to assessment proceedings under Section 158BC due to a search warrant issued in the name of a deceased person. Ultimately, the Court found no merit in the Special Leave Petition and dismissed it accordingly.