Search and seizure : Block assessment : S. 158BD of Income-tax Act, 1961 : Documents seized considered for assessment of third person : Notice could not be issued on assessee u/s.158BD.

Reported :

53 Search and seizure : Block assessment : S. 158BD of Income-tax Act, 1961 : Documents seized considered for assessment of third person : Notice could not be issued on assessee u/s.158BD.

[Superhouse Overseas Ltd. and Anr. v. Dy. CIT, 325 ITR 448 (All.)]

Search and seizure operation u/s.132 of the Income-tax Act, 1961 was carried out at the residence of one T. A diary was seized and proceedings u/s.158BC were initiated in the case of T. Notices u/s.158BD were issued in the name of the petitioners.

The petitioners filed writ petitions before the Allahabad High Court and challenged the notices. The petitioners pointed out to the Court that the material on the basis of which the notices u/s. 158BD were issued, had been considered by the Settlement Commission in the case of E, an association of persons and the Settlement Commission had passed an order u/s.245D(4) of the Act in which on the basis of the diary, income had been determined and that in pursuance of the order of the Settlement Commission, the association of persons had duly deposited the tax.

The Allahabad High Court allowed the writ petitions and held as under :

“Once the diary which was the basis for the issue of the notices u/s.158BD had been considered in the case of the association of persons and the income arising thereof had been assessed in the case of the association of persons, the notices u/s.158BD did not survive and were liable to be quashed.”