1997 (10) TMI 109 - AT - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the AO to issue notice u/s 158BC.
2. Validity of block period assessments without search warrants.
3. Reappreciation of evidence and disallowance of claims in block assessments.
4. Consent and acquiescence conferring jurisdiction.

Summary:

1. Jurisdiction of the AO to issue notice u/s 158BC:
The appellants challenged the orders passed by the AO for the block period 1986-87 to 1995-96 u/s 158BC r/w s. 143(3) of the IT Act, 1961. The appellants argued that no search operations were conducted on them, and hence, the provisions of s. 158BC were not applicable. The Tribunal agreed, stating that the AO had no jurisdiction to issue notices u/s 158BC as there were no search warrants issued in the names of the appellants.

2. Validity of block period assessments without search warrants:
The Tribunal noted that search operations were conducted on the father and uncle of the first appellant, but not on the appellants themselves. The AO's reliance on seized materials from the relatives to issue notices u/s 158BC was deemed illegal. The Tribunal emphasized that the provisions of Chapter XIV-B are applicable only when undisclosed income is detected as a result of search operations. Since no search warrants were issued against the appellants, the AO lacked the authority to make block period assessments.

3. Reappreciation of evidence and disallowance of claims in block assessments:
The Tribunal observed that the AO had reappreciated evidence related to interest and dividend income, and gains/losses from share transactions, which were already assessed in regular assessments. The Tribunal held that the AO cannot use the provisions of s. 158BC to reassess claims and disallowances that were previously allowed in regular assessments. The purpose of Chapter XIV-B is to assess undisclosed income detected during search operations, not to reexamine already assessed income.

4. Consent and acquiescence conferring jurisdiction:
The Department argued that the appellants, by filing returns and complying with notices, had submitted to the jurisdiction of the AO. The Tribunal rejected this argument, citing established legal principles that consent does not confer jurisdiction. The Tribunal referred to various judicial precedents, including decisions from the Hon'ble Supreme Court and High Courts, to support the view that jurisdiction cannot be conferred by consent or acquiescence.

Conclusion:
The Tribunal quashed the impugned block period assessments, ruling that the AO had no jurisdiction to issue notices u/s 158BC and that the assessments were void for want of jurisdiction. The appeals were allowed, and the assessments were annulled.