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2019 (12) TMI 1114 - HC - Income TaxOrder of assessment u/s 158BC(c) - Procedure for block assessment - validity of search - undisclosed income determined - Authorisation and assessment in case of search or requisition - HELD THAT:- From perusal of Section 158BC it is evident that the computation of undisclosed income should be based on such evidence which is seized during the search which is not accounted in the regular books of account. In the present case the warrant of authorization has not been produced before this Court despite order dated 13.10.2019. Therefore, it is open for this Court to draw an adverse inference. However, in the peculiar fact situation of the case, we deem it appropriate to grant liberty to the revenue to proceed afresh in accordance with law. However, on account of non-production of the warrant of authorization, the adverse inference has to be drawn. Therefore, the first substantial question of law is answered in favour of the appellant and against the revenue, however, with the liberty to the revenue to proceed against the appellant in accordance with law. Validity of search - Admittedly, the authorities were under an obligation to examine the validity of the search and thereafter only to proceed to initiate the block assessment proceeding, which has not been done in the instant case. Therefore, the second substantial question of law framed is also answered in favour of the assessee and against the revenue. Challenge the action of the AO to assess u/s 158BC when the condition precedent are not existing as much as for computation of income u/s 158BC - From perusal of the material on record, it is evident that there was no seizure with regard to the assessment year 1988-89 and 1989-90 during the course of the search and seizure operations. However, the Assessing Officer while computing the undisclosed income has taken into account the income in respect of the aforesaid case also and thus the order passed by the Assessing Officer is in violation of Section 158BC(c) of the Act and therefore, the Tribunal was not justified in holding that there is no merit to challenge the action of Assessing Officer to assess under Section 158BC(c) of the Act. Accordingly, the third substantial question of law is also answered in favour of the assessee and against the revenue. In view of preceding analysis, the impugned order dated 09.09.2011 insofar as it contains the findings against the appellant passed by the Income Tax Appellate Tribunal is hereby quashed and set aside. The order of assessment dated 28.11.2000 as well as the order of Commissioner of Income Tax (Appeals) dated 23.08.2002 are also hereby quashed and set aside. However, liberty is granted to the revenue to proceed against the appellant, if so advised in accordance with Section 158BC of the Act.
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