When information discovered during search capable of generating satisfaction for issuing a notice cannot become irrelevant for further action

ACIT Vs Manorama Devi  (ITAT Allahabad)

Conclusion: Once satisfaction note for initiation of proceedings against the assessee under section 158BD was furnished to assessee, the entire grievance of assessee were disposed off and as per AO, in any case incriminating documents and undisclosed assets belonging to assessee were found and seized during search operations conducted by Revenue on Mr. M and hence proceedings initiated against assessee under section 158BD were valid.

Held: Search and seizure operations conducted by Revenue u/s 132(1) against Shri M at his residential and business premises. Shri M had expired and assessee was wife of Shri M . Since, certain incriminating documents and undisclosed assets belonging to the assessee were found and seized during the course of search operations conducted by Revenue against Shri M, proceedings u/s 158BD were initiated by Revenue against assessee. Consequently, AO issued notice u/s 158BC read with Section 158BD to assessee on 11.01.2002 for the Block Period 01.04.1989 to 08.12.1999, requiring her to file return of income in prescribed form setting forth her total income including undisclosed income for the Block Period. Assessee filed return of income “Under Protest” showing ‘Nil’ undisclosed income for the entire block period.  Assessee claimed before AO that the return of income was filed ‘Under Protest’, and the grievance of assessee needed to be disposed of before proceeding further on the matter. AO was of the view that once satisfaction note for initiation of proceedings against assessee u/s. 158BD was furnished to assessee , the entire grievance of assessee were disposed off and as per AO , in any case incriminating documents and undisclosed assets belonging to assesssee were found and seized during search operations conducted by Revenue on Mr. M and hence proceedings initiated against assessee u/s 158BD were valid.  AO passed Block Period Assessment order u/s 158BC(c ) read with Section 158BD , computing undisclosed income of assessee . In the instant case, it was reiterated that the information discovered in the course of search , if capable of generating the satisfaction for issuing a notice u/s. 158BD , could not altogether become irrelevant for further action u/s. 158BD. Assessee in the instant case, participated and co­operated in proceedings before the lower authorities and never raised this issue of invalidity of search on the grounds that the search warrant was issued in the name of deceased person. AO had claimed that it had unearthed incriminating material and undisclosed assets pertaining to assessee during the course of search operations conducted by it on the husband of assessee. Thus, the proceedings conducted u/s 158BD could not be held to be bad in law in the instant case.

FULL TEXT OF THE ORDER OF ITAT ALLAHABAD

This Miscellaneous application (MA) bearing number 16/Alld./2017 arising out of ITA no. 135/Alld./2006 for Block Period 01.04.1989 to 08.12.1999 is a second Misc. Application filed by Revenue with Income Tax Appellate Tribunal, Allahabad( herein after called “ the tribunal” ) on 25t^h May, 2017, seeking reconsideration of dismissal of first MA filed by Revenue bearing no. M.A. No. 19/Alld/2016 , by tribunal, vide orders dated 28.11.2016 and also reconsideration of decision of the tribunal in quashing of the Block Period Assessment order vide orders dated 01.02.2016, in view of judgment dated 21.03.2017 of Hon’ble Supreme Court in the case of Gunjan Girishbhai Mehta v. Director of Investigation reported in (2017) 393 ITR 310(SC) .

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