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TMI Blog2007 (11) TMI 296X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal, the following substantial questions of law were framed: "1. Whether for having recourse to assessment for the block period under Chapter XIV-B, a valid search under section 132 is a condition precedent and mere fact of search is not enough to give jurisdiction to the Assessing Officer to have recourse to the provisions under Chapter XIV-B 2. If so, whether, in the facts and circumstances of the present case, the Tribunal was right to hold that the search conducted in the present case was invalid?" 3. The facts giving rise to the present appeal are that the assessee, Chitra Devi, filed an appeal before the Tribunal challenging the validity of the assessment order being violative of the principles of natural justice. The assessee contended that the assessment order is bad in law for the reason that the same was passed on the belief of the assessing authority without disclosing any material as is required under section 132 of the Income-tax Act. According to the assessee, there was no material with the Director to form the belief as is required under the provisions of section 132(1) and in the absence of any material to this effect the assessment order passed is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 132(1), and consequentially, the block assessment was held to be illegal. 5. It has been argued by counsel appearing for the Revenue that the Tribunal cannot look into the validity of the search, as conducted under the provisions of section 132 of the Income-tax Act. It was urged that the Tribunal is having no jurisdiction or competence to look into this aspect, and therefore, the judgment rendered by the Tribunal is without jurisdiction, and goes beyond their competence, and the only question, which has been pressed finally is, regarding the competence of the Tribunal to declare a search to be illegal or to be invalid. 6. Per contra, counsel appearing for the assessee submitted that when the basic foundation, as called by the Tribunal, to show even existence of the authorisation to be based on existence of one or more of the reasons required under section 132(1) of the Income-tax Act is not in existence, then the Tribunal had held the assessment of the block period to be illegal, while holding the search to be without valid authorisation. It was submitted that in section 158B, the definition of block period is given, which reads as under: "158B. In this Chapter, unless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 132A. Since, in the present case, we are not concerned with the eventuality under section 132A, the obvious conclusion is that there should be a search conducted under section 132. In that view of the matter, the provisions of section 132 are required to be looked into and a look thereat shows that the opening language of sub-section (1) thereof contemplates the existence of certain eventualities in the event of existence whereof the competent authority should have reason to believe the existence of the circumstances mentioned in clauses (a) to (c) and in that event the competent authority mentioned in clauses (A) and (B) can authorise the authorities mentioned in these two clauses to conduct the search. Consequent upon such authorisation, the authority authorised may undertake the actions mentioned in further clauses of section 132. We may at this stage, therefore, gainfully quote the provisions of section 132(1) and clauses (A) and (B) thereof, which read as under: "132. (1) Where the Director General or Director or the Chief Commissioner of Income-tax or the Commissioner of Income-tax or any such Joint Director or Joint Commissioner of Income-tax as may be empowere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) to (c) is the sine qua non to entitle the authority to make authorisation, as required by clauses (A) and (B). The obvious consequence is that if the requirement of sub-section (1) about the existence of the reason to believe, consequent upon the information in possession of the concerned authority is not satisfied there could possibly be no authorisation, irrespective of the fact that it may have been made and in turn if any search is conducted in pursuance of the authorisation issued in the absence of requisite sine qua non, the search cannot be said to be a "search" under section 132 of the Act, as contemplated by the provisions of section 158B of the Act. 11. The above being the legal position, since the assessment in the present case is made under Chapter XIV-B, and when it was specifically challenged by the assessee, that the circumstances contemplated by section 132(1) did not exist, this is a matter which goes to the root of the matter about jurisdiction of the assessing authority to proceed under Chapter XIV-B, the Tribunal was very much justified, and had jurisdiction to go into the question as to whether the search was conducted consequent upon the authorisation ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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