Appellate Tribunal: Power to examine validity of search: Sections 132(1), 253(1)(b) and 254(1) of Income-tax Act, 1961: B. P. 1985-86 to 5-12-1995: The Tribunal has power to examine the validity of the search in an appeal against the assessment order passed pursuant to search.

On the scope of the power of the Appellate Tribunal to examine the validity of search u/s.132 of the Income-tax Act, 1961, the Karnataka High Court held as under:

“(i) A search u/s.132 as contemplated by Chapter XIV-B has to be a valid search. An illegal search is no search and in such a case Chapter XIV-B would have no application.

(ii) If the conditions for the exercise of power are not satisfied, the proceeding is liable to be quashed and consequently the block assessment cannot be sustained. Thus, when the assessee challenges the order of assessment and contends that the search is illegal and void, the said question goes to the root of the matter. If the said search and seizure results in determination of liability and levy of tax, then the assessee can be said to be an aggrieved person. Though he cannot prefer an appeal against the authorisation of search and seizure, once such unauthorised or illegal search and seizure culminates in an assessment order, he gets a right to challenge the assessment on several grounds including the validity of authorisation and initiation of search and seizure.

(iii) If he has not challenged the validity of initiation of the proceedings by way of a writ petition under Article 226 of the Constitution, he would not lose his right to challenge the same in the appeal. Specific words used in clause (b) of s.s (1) of section 253 i.e., “an order passed by the AO under clause (c) of section 158BC in respect of search initiated u/s.132” tend to show that this appeal provision specifically applies to an assessment order consequent to search initiated u/s.132. Thus, the subjectmatter of the appeal under the provision is not only the assessment order made by the AO, but also ‘a search initiated’ u/s.132.

(iv) Therefore, if the assessee contends that the search initiated u/s.132 is not in accordance with law, the said contention has to be considered and adjudicated upon by the Tribunal in the appeal filed by the assessee against the assessment order. It is obligatory on the part of the Tribunal first to go into the jurisdictional aspect and satisfy itself that the search was valid and legal. It is only then it can go into the correctness of the order of block assessment.

(v) Therefore, in the absence of a specific provision under the Act for appeal against illegal search, the Tribunal is not estopped from going into such question in the appeal filed against the assessment order.”