Smt. Nasreen Yusuf Dhanani v.
ACIT
IT(SS)A No. 203 (Mum.) of 2002
Block Period : 1-4-1986 to 18-12-1996
Dated : 5-10-2007
The Assessing Officer passed the block assessment order in
the assessee’s case making huge additions of unclosed income. The assessee’s
plea that since there was no search warrant in the name of the assessee, the
Assessing Officer should drop the block assessment proceedings initiated in
her name was not considered.
The Tribunal, relying on the decisions in the following
cases, held in favour of the assessee :
(a) Jt. CIT v. Latika V. Waman, (2005) 1 SOT 535
(Mum.)
(b) Dhiraj Suri v. Addl. CIT, (2006) 99 TTJ 525
(Del.)/(2006) 98 ITD 187 (Del.)
The Tribunal noted as under :
(1) Chapter XIV-B is a special procedure for making
assessment of search cases. These provisions of block assessment come into
picture only as a result of search action carried out u/s.132. On reading
the provisions of S. 132(1), it is clear that the section is person-specific
and not premises-specific as argued by the Departmental Representative. The
primary target for conducting a search action is the person who is in
possession of any unclosed income and the search party can enter and search
any building, place, vessel, vehicle or aircraft where the undisclosed
assets or incriminating documents are likely to be found in relation to such
person.
(2) It is an undisputed fact that there is no search
warrant issued in the name of the assessee. In respect of the Panchnama
issued in respect of the bank lockers, it is seen that the Panchnama is in
the names of husband and the assessee for the simple reason that the bank
lockers were in joint names of husband and wife, the name of husband being
first in all the lockers.
(3) As per S. 158BB(1) r.w. S. 132(1), the position is
clear that in order to assess undisclosed income of any person in accordance
with Chapter XIV-B, a search is a prerequisite for the initiation of block
assessment proceedings. Since there is no search warrant issued in the name
of the assessee, the block assessment proceedings u/s. 158BC cannot be
sustained.
(4) If in the course of search of husband, any material
incriminating his wife had been found then the proper course for the
Assessing Officer would have been to issue a notice u/s.158BD. When specific
procedures are prescribed for persons who are searched and for persons in
respect of whom incriminating material is found, the AO cannot bypass the
prescribed procedures and issue notice u/s.158BC on a person who was not
subjected to search.
(5) In the case of the assessee, it was intimated to the
Assessing Officer (AO) vide letter dated 15th December 1997 that there is no
search warrant in her name and, hence, the block assessment pro-ceedings
initiated u/s.158BC need to be drop-ped and, even then, the AO has proceeded
to make assessment u/s.158BC. The entire proceedings undertaken by the AO were
bad in law and hence, the assessment is quashed.
