The Income Tax Appellate Tribunal (ITAT), Allahabad Bench held that the information discovered in the course of the search, if capable of generating the satisfaction for issuing a notice under section 158BD, cannot altogether become irrelevant for further action under section 158BD of the Act.
There was a search and seizure operation conducted by Revenue under section 132(1) of the Income-tax Act, 1961 against Shri Munna Lal Verma at his residential and business at Nautanwa and Gorakhpur. Shri Munna Lal Verma had expired. The assessee is the wife of Shri Munna Lal.
According to the Revenue, certain incriminating documents and undisclosed assets belonging to the assessee were found and seized during the course of search operations conducted by Revenue against Munna Lal Verma, proceedings under section 158BD were initiated by Revenue against the assessee.
Consequently, the Assessing Officer issued a notice under section 158BC read with Section 158BD to the assessee for the Block Period requiring her to file a return of income in the prescribed form setting forth her total income including undisclosed income for the Block Period, within 45 days of service of notice which was served on the assessee.
In response thereof, the assessee filed return of income “Under Protest” showing ‘Nil’ undisclosed income for the entire block period. Thereafter, notices under section 143(2) and 142(1)were issued by AO to the assessee from time to time. The assessee participated in the assessment proceedings before the AO.
The assessee then claimed before the AO that the return of income is filed ‘Under Protest’, and the grievances of the assessee needed to be disposed of before proceeding further on the matter. The AO was of the view that once satisfaction note for initiation of proceedings against the assessee under section 158BD of the 1961 Act is furnished to the assessee, the entire grievance of the assessee are disposed off and as per AO, in any case incriminating documents and undisclosed assets belonging to the assessee were found and seized during search operations conducted by Revenue on Mr. Munna Lal Verma and hence proceedings initiated against the assessee under section 158BD are valid.
The main legal objections raised by the assessee before CIT(A) was that no incriminating material and undisclosed assets belonging to the assessee was found during the course of search proceedings against the husband of the assessee, namely Mr. Munna Lal Verma and proceedings initiated under section 158BD of the 1961 Act against assessee are bad in law.
The assessee had contended before(A) that all investments in properties were disclosed in wealth tax returns filed by the assessee, and hence proceedings u/s 158BD is bad in law. The CIT(A) dismissed these legal objections raised by the assessee and partly allowed the appeal filed by the assessee.
The coram of Vijay Pal Rao and Ramit Kochar reiterated that in the course of the search, if capable of generating the satisfaction for issuing a notice u/s. 158BD , cannot altogether become irrelevant for further action under section 158BD of the Act. The assessee in the instant case before us, participated and co-operated in proceedings before the lower authorities as detailed above (same is not repeated for sake of brevity) and never raised this issue of invalidity of search on the grounds that the search warrant was issued in the name of the deceased person.
Therefore, the proceedings conducted under section 158BD cannot be held to be bad in law in the instant case, which is in consonance with a ratio of the decision of Apex Court in the case of Gunjan Girishbhai Mehta.
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