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TMI Blog2017 (6) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Hitendra Ninawe ORDER PER VIKAS AWASTHY, JM : These cross appeals by the Department and the assessee are directed against the order of Commissioner of Income Tax (Appeals)- Central, Pune dated 31-01-2013 for the block assessment period 1996-97 to 2002-03. 2. The Department in its appeal has assailed the findings of Commissioner of Income Tax (Appeals) in deleting the addition of ₹ 21,00,000/- made on account of bogus loan entries shown from M/s. Rajashree Enterprises and M/s. Maheshwari Financiers. 3. The assessee on the other hand in appeal has challenged the assessment proceedings carried out u/s. 158BC(c) r.w.s. 158BD and 189 of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). The assessee has also challenged the validity of assessment order on the ground of limitation. Apart from challenging the assessment order on technical ground, the assessee in alternate submission has assailed the additions confirmed by the Commissioner of Income Tax (Appeals) on merits. 4. Shri Neelesh Khandelwal appearing on behalf of the assessee submitted that a search and seizure action u/s. 132 of the Act was carried out at the business and residential premises of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. M/s. Kalpak Ply in ITA No. 1782/PN/2013 for Block Period 1996-97 to 2002-03 decided on 26-08-2015. 4.3 The ld. AR further assailed the assessment order on the ground of limitation. The ld. AR submitted that the notice u/s. 158BD was issued to the assessee on 16-10-2003 i.e. after more than 2 years from the date of search. The assessment order is passed on 28-10-2005. Thus, the assessment order has been passed beyond the period of limitation. 5. On the other hand Shri Hitendra Ninawe representing the Department vehemently supported the findings of Commissioner of Income Tax (Appeals) in upholding the validity of assessment u/s. 158BD of the Act. The ld. DR submitted that the name of the assessee was not included in the search warrant, therefore, notice u/s. 158BD was issued to the assessee. The ld. DR pointed that the assessee had raised the issue of validity of assessment proceedings and issuance of notice u/s. 158BD before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) has categorically pointed that proceedings u/s. 158BD were initiated against the assessee as a consequence of documents seized during the search. The ld. DR vehemently supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings initiated u/s. 158BC on account of technical defect. 8. Search and seizure proceedings are carried out in accordance with the provisions of section 132 of the Act. The warrant of authorization is the foundation of entire search proceedings. A bare perusal of provisions of section 132(1) shows that the warrant of authorization is issued against „any person‟ subject to the conditions laid down u/s. 132(1) of the Act. Thus, the warrant of authorization is person specific and not premises or place specific. The place or premise may or may not be specified in the warrant. In the present case the warrants were issued in the name of "Onkarmal Ratanlal & Co.", a non-existing firm, therefore, the first step towards the search taken by the Department is flawed. Realizing this mistake the Department dropped the proceedings u/s. 158BC of the Act. Once, the proceedings u/s. 158BC are dropped on account of technical defect the subsequent proceedings are vitiated. The provisions relating to Block assessment in search cases are contained in Chapter XIV-B of the Act. The chapter is an independent Code. The power to search and seize are conferred on tax authority u/s. 132 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 58BC of the Act. Thus, in the instant case the launching pad of initiating assessment proceedings u/s. 158BD itself suffers from defect. A perusal of section 158BD reveal that the words „under section 158BC‟ were inserted by the Finance Act, 2002 w.e.f. 01-06-2002. The provisions of section 158BD prior to this amendment provided for initiating action against the person other than searched person under the provisions of Chapter XIB-B. Thus, the only procedure for block assessment under this code is given u/s. 158BC of the Act. The amendment is thus clarificatory in nature. 11. The Hon‟ble Karnataka High Court in the case of Commissioner of Income Tax Vs. Smt. Annapoornamma Chandrashekar (supra) has clarified this aspect. In the said case, assessment proceedings were initiated u/s. 158BD and the notice was issued to the person other than searched u/s. 158BC. The notice was challenged on the ground that since, the block assessment proceedings are initiated against the assessee u/s. 158BD the notice issued u/s. 158BC is void ab initio. The Hon‟ble High Court rejecting the plea of assessee upheld the validity of notice u/s. 158BC. The Hon‟ble High Court he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such assessment; (d) the assets seized under s. 132 or requisitioned under s. 132A shall be dealt with in accordance with the provisions of s. 132B." The said provision mandates the service of notice to such person requiring him to furnish within such time not being less than 15 days a return in the prescribed form and verify in the same manner as the return given under sub-cl. (i) of sub-s. (1) of s. 142 setting out his total income including the undisclosed income for the block period. Therefore where the assessment is to be done under s. 158BC or s. 158BD issue of a notice is mandatory and the said notice is also prescribed under the Act. In order to clarify the position by Finance Act, 2002, the words "under s. 158BC" is expressly provided. The said amendment is clarificatory in nature. Even though it is stated that the provisions of this Chapter shall apply and in that chapter, s. 158BC which is the provision which prescribes the procedure for block assessment the assessment under s. 158BD has to be in terms of s. 158BC. When proceedings are initiated in terms of s. 158BC against a person who is covered under s. 158BD and the notice to be issued is prescribed und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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