If you need to hide something then hide it wisely! The court is in your favor

The Assessing Officer can only search the residential and office premises, of the individual under scrutiny. The High Court of Allahabad ruled in favor of the assessee, where a search warrant in the name an individual was issued by the IT Department however the AO went over and searched the premises of an associate of the individual.  

The explanation by the AO was that due to insufficient information in the search warrant, the scope of search had increased and fell under another section of the Act. This was clarified by  the High Court of Allahabad by ruling in favor of the assessee.

Does this give a green signal to defaulters? If you need to hide something then hide it wisely! The court is in your favor

Whether where authorization under section 132 was issued in name of person other than assessee and business premises of assessee-firm was searched, Assessing Officer was justified to proceed under section 158BD – Held, no. [In favour of assessee]

Facts of the Case:

Authorisation was issued under section 132 in the name of ‘A’ only with directions to search the residential premises of ‘A’ and business premises of the assessee-firm. The Tribunal held that since there was no valid authorisation in the name of the assessee-firm, the provisions of section 158BC would not be applicable to the case of the assessee.

Held in the Case:

  1. In case a wrong finding of fact has been recorded by the Tribunal that the search was not issued in the name of the assessee-firm, the revenue could have filed a review application, to correct the finding of fact. [Para 6]
  2. The Tribunal considered the argument that the Assessing Officer has power to proceed under section 158BD and held that the revenue has tried to make out an altogether new case for the department at the appellate stage for application under section 158BD. The arguments of revenue were not substantiated from records as the Assessing Officer did not comply with the statutory provisions of section 158BD. The Tribunal further held that in order to proceed against the firm, the Assessing Officer should have recorded reasons, for issuing notice under section 158BD and having not recorded such reason, he could not be permitted to proceed with the assessment for the block period. [Para 7]
  3. There is no error of fact or law in the findings recorded by the Tribunal that the authorization was not in the name of the assessee-firm, and thus the Assessing Officer could not have proceeded under section 158BD. [Para 8]


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