Assessment of person not searched can be carried out u/s 158BD only by issue of proper notice

Search operation was carried out in one M/s. G.B. & Company under section 132 of the Income Tax Act, 1961. Though the premises of the assessee were also searched during search operations, the same were in the capacity of an employee of the said company and not in individual capacity. Subsequently, the assessee was visited with notice under section 158BC of the Act. Assessment framed on such basis came to be anulled by the Tribunal by the impugned judgement. The Tribunal noted that the assessee not being searched person, if at all, could have been proceeded under section 158BD of the Act by issuance of proper notice. In the present case, admittedly this was not done so. The Tribunal in that view of the matter relying on decision of the Apex Court in case of Assistant Commissioner of Income-tax and others v. Hotel Blue Moon reported in 321 ITR 362 and Manish Maheshwari v. Asst. Commissioner of Income-tax and another reported in (2007) 289 ITR 341(SC) ruled in favour  of the respondent assessee.

 HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL No. 861 of 2011

COMMISSIONER OF INCOME TAX
Versus
NILESH S RAITHATHA

Date : 15/10/2012

Revenue is in appeal against judgement of the Income Tax Appellate Tribunal (“the Tribunal” for short) dated 31.12.2010 raising following questions for our consideration :

“(A) Whether the Appellate Tribunal is right in law and on facts in holding the assessment finalized u/s.158BC of the Act as invalid?