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July 2015

Search and seizure – Block assessment – Sections 158BC and 158BD – B. P. 1/04/1988 to 03/05/1998 – Police recovering cash from possession of three persons – Persons stating cash belonging to assessee who in reply stated that cash belongs to firm – No search warrant or requisition in name of assessee or the firm – No asset requisitioned from assessee – No notice could be issued in the name of assessee – Block assessment against assessee not valid

By K. B. Bhujle Advocate
Reading Time 2 mins
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CIT vs. Anil Kumar Chada; 374 ITR 10 (All):

On 2nd May, 1998, the police recovered a sum of Rs. 17 lakh from the possession of three persons. On interrogation, they stated that the money belonged to the assessee who in reply to the query by the police stated that the cash belonged to the firm, C. When the matter was referred to the Income Tax Department, it issued a notice u/s. 158BC in the name of the assessee for the block period 1 st April, 1988, to 3rd May, 1998, and made an assessment of undisclosed income of Rs. 18,11,700/- in the hands of the assessee. The Tribunal cancelled the assessment holding that since no search warrant was issued u/s. 132 in the name of the assessee, no notice could be issued in the name of the assessee u/s. 158BC.

On appeal by the Revenue, the Allahabad High Court upheld the decision of the Tribunal and held as under:

“i) There was no search warrant in the name of the assessee nor were assets requisitioned from the assessee. Therefore, the provisions of section 158BC were not applicable. Further, no warrant or requisition was issued either in the name of the firm or the assessee.

ii) The order of the Tribunal did not call for interference.”

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