2008 (8) TMI 445 - AT - Income Tax

Summary

Issues Involved:

1. Jurisdiction to complete block assessment under section 158BC.
2. Interpretation of "requisition" under section 132A.
3. Validity of block assessment based on photocopies and statements.
4. Compliance with procedural requirements under section 132A.

Detailed Analysis:

1. Jurisdiction to Complete Block Assessment under Section 158BC:

The primary issue was whether the jurisdiction to complete block assessment under section 158BC is conferred on the Assessing Officer by the mere service of a warrant of authorization under section 132A or by the physical handing over of the requisitioned books of account, documents, or assets.

The Tribunal referred to the decisions in Amandeep Singh v. Director of Income-tax (Investigation) and Chandra Prakash Agrawal v. Asstt. CIT, which held that the requisition under section 132A is complete only when the seized assets are physically delivered to the requisitioning authority. The Tribunal concluded that jurisdiction to complete block assessment under section 158BC is conferred on the Assessing Officer only upon the physical handing over of requisitioned assets.

2. Interpretation of "Requisition" under Section 132A:

The Tribunal examined the interpretation of the terms "authorization," "requisition," and "execution" under section 132A, noting that these terms are not defined in the Income-tax Act. The Tribunal referred to dictionary meanings and judicial precedents, emphasizing that "requisition" implies a formal request or demand, and "execution" implies the actual carrying out of such a request.

In Amandeep Singh's case, the High Court held that the process under section 132A involves two steps: the issuance of a requisition and the compliance by the officer in possession of the assets through physical delivery. Similarly, in Chandra Prakash Agrawal's case, it was held that requisition is complete only when the requisitioned assets are physically delivered to the requisitioning authority.

3. Validity of Block Assessment Based on Photocopies and Statements:

The Tribunal considered whether block assessment could be validly based on photocopies of documents and statements when the original documents were not physically handed over to the Assessing Officer. The Tribunal noted that in the present case, the requisitioned documents were not handed over to the Income-tax Department, and only photocopies were available.

The Tribunal relied on Chandra Prakash Agrawal's case, which held that the provisions of Chapter XIV-B of the Act would come into play only when the requisitioned material is actually received by the Assessing Officer. Therefore, the block assessment based on photocopies and statements without physical delivery of the original documents was deemed invalid.

4. Compliance with Procedural Requirements under Section 132A:

The Tribunal emphasized the importance of compliance with procedural requirements under section 132A. It noted that the requisition and warrant of authorization remained unconsummated as the requisitioned assets were never physically handed over to the Department. The Tribunal referred to the letter from the Additional Director of Income-tax (Investigation), which admitted that the requisitioned documents were not received.

The Tribunal concluded that the mandatory requirements of section 132A(3) were not met, and therefore, the provisions of section 158BC could not be invoked. The Tribunal held that the jurisdiction to complete block assessment under section 158BC is conferred only upon the physical handing over of requisitioned assets to the Income-tax authorities.

Conclusion:

The Tribunal, following the decisions in Amandeep Singh's case and Chandra Prakash Agrawal's case, held that the jurisdiction to complete block assessment under section 158BC is conferred on the Assessing Officer only upon the physical handing over of all requisitioned books of account, documents, and assets under section 132A. The question referred to the Special Bench was answered in favor of the assessee and against the Department. The matter was remitted back to the Division Bench for disposal of the appeal.