K.Radhakrishna Naik, Puttur V. DCIT, Mangalore

ITA 62/BANG/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57512 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-03-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 21-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S VENKATESH
• Keywords: Block assessment; Reason to believe
• Section: 153A; 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K., JUDICIAL MEMBER ITA NOS.61 & 62/BANG/2011 ASSESSMENT YEAR : 1999-2000 & 2000-01 SHRI K. RADHAKRISHNA NAIK, PWD CONTRACTOR, UPPINANGADY, PUTTUR TALUK. PAN : ABRPN 0749B VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, MANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI S. VENKATESH, C.A. RESPONDENT BY : SHRI FARAHAT HUSSAIN QURESHI, CIT-II(DR) DATE OF HEARING : 06.03.2012 DATE OF PRONOUNCEMENT : 06.03.2012 O R D E R PER N.K. SAINI, ACCOUNTANT MEMBER THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AG AINST THE SEPARATE ORDERS EACH DATED 19.11.2010 OF THE CIT(AP PEALS)-VI, BANGALORE. COMMON ISSUES ARE INVOLVED IN THESE APPEALS WHICH W ERE HEARD TOGETHER, SO THESE ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS.61 & 62/BANG/11 PAGE 2 OF 9 2. FIRST WE WILL DEAL WITH ITA NO.61/BANG/2011 FOR THE A.Y. 1999-2000. IN THIS APPEAL, THE FOLLOWING GROUNDS ARE RAISED: 1. THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR AS THEY ARE AGAINST THE APPELLANT ARE OPPOSED TO LAW, EQUITY, W EIGHT OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT[A] IS NOT JUSTIFIED IN SUSTAINI NG THE ASSESSMENT MADE U/S.153A RWS 143[3] OF THE ACT, ON THE GROUND THAT HE WAS IN-COMPETENT TO ADJUDICATE THIS GROUND HAVING REGARD TO THE RATIO OF THE DECISION OF THE HON'BLE ITAT IN C.RAMAIAH REDDY' CASE REPORTED IN 87 ITD 439 AND DELHI HIGH C OURT IN THE CASE OF M.B. LAL REPORTED IN 279 ITR 298, WHICH ARE INAPPLICABLE TO THE FACTS OF THE CASE. 3. THE LEARNED CIT[A] FAILED TO APPRECIATE THAT TH E RATIO OF THE AFORESAID TWO DECISIONS IN CORRECT PERCEPTIVE A ND THE DECISION OF THE JURISDICTIONAL ITAT IN THE CASE OF C. RAMAIA H REDDY IN 87 ITD 439 RELIED UPON BY HIM CATEGORICALLY HELD THAT THE HON'BLE ITAT IS COMPETENT TO LOOK INTO THE VALIDITY OF THE SEARCH PROCEEDINGS AFTER ITS COMMENCEMENT AND THE FACT OF GETTING THE WARRANT SIGNED AFTER INGRESS AND COMMENCEMENT BEING ILLEGAL, WHICH IS NOT DISPUTED, HE OUGHT TO HAVE HELD THAT T HE SEARCH WAS ILLEGAL AND THE CONSEQUENTIAL ASSESSMENT REQUIRES T O BE ANNULLED. 4. THE LEARNED CIT[A] FAILED TO APPRECIATE THAT TH E WARRANT WAS ISSUED ULTRA-VIRES THE PROVISIONS OF SECTION 13 2[1][A], [B] & [C] OF THE ACT AND FURTHER AFTER SUCH ILLEGAL INITI ATION, THE SAME CAME TO BE EXECUTED WITHOUT THE SHOW OF WARRANT BEF ORE INGRESS AND WARRANT CAME TO BE SIGNED ONLY DURING THE COURS E OF THE ILLEGAL SEARCH AFTER START LATER, WHICH FACTS A RE UNDISPUTED AND NOT AT ALL DENIED, WHICH RENDERS THE SEARCH ILLEGAL AND THE CONDUCT BEING CONTRARY TO THE MANDATORY PROVISIONS OF SECTI ON 132[1] OF THE ACT, WHICH ARE NOT DENIED AND DISPUTED AND CONS EQUENTLY, HAVING REGARD TO THE DECISION OF THE HON'BLE SUPREM E COURT IN THE CASE OF AJITH JAIN REPORTED IN 260 ITR 80, THE INVO CATION OF THE PROVISIONS OF SECTION 153A OF THE ACT IS ILLEGA L AND THE CONSEQUENTIAL ASSESSMENT REQUIRES TO BE ANNULLED. 5. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT [A] IS NOT JUSTIFIED IN ESTIMATING THE INCOME OF THE APPELLANT AT 8% OF THE CONTRACT RECEIPTS ON THE BASIS OF SO-CALLED ADMISSI ON MADE, WHICH WERE NOT VOLUNTARY AND WAS DUE TO TENSION AND PRESS URE BUILT-UP ON THE APPELLANT EVEN THOUGH, THE A.O. HAS NOT MADE ANY SUCH ADDITION IN VIEW OF THE FACT REGULAR BOOKS OF ACCOU NTS HAVE BEEN MAINTAINED AND THE BOOKS OF ACCOUNTS WERE ALSO AUDI TED U/S.44AB ITA NOS.61 & 62/BANG/11 PAGE 3 OF 9 OF THE ACT AND THE REPORT WAS ALSO UNQUALIFIED TO W ARRANT ANY REJECTION AND TO MAKE AN ESTIMATE ON THAT BASIS INS TEAD OF DELETING THE ADDITIONS/DISALLOWANCES MADE BY THE LEARNED A.O . ON SLENDER GROUNDS AND THUS HIS FINDING IS VITIATED AND THE AD DITION MADE AND SUSTAINED BY HIM AMOUNTS TO ENHANCEMENT CONTRARY TO THE PROVISIONS OF SECTION 251[2] OF THE ACT AND REQUIRE S TO BE DELETED. 5.1 WITHOUT PREJUDICE TO THE ABOVE, THE INCOME ESTI MATED IS EXCESSIVE AND DIVORCED OF THE REALITIES LIABLE TO B E REDUCED SUBSTANTIALLY. 6. THE LEARNED CIT[A] IS NOT JUSTIFIED IN SUSTAINI NG A SUM OF RS.10,41,047/- INDIRECTLY BY ESTIMATING THE INCOME AT 8% OF THE CONTRACT RECEIPTS FROM OUT OF THE EXPENSES CLAIMED UNDER THE HEAD MATERIALS AND WAGES ON THE GROUND APPELLANT HAS INF LATED THE EXPENSES AND THE VOUCHERS ARE AS IN VOGUE IN THE LI NE OF TRADE ARE INCAPABLE OF VERIFICATION. HE FAILED TO APPRECIATE THAT THE APPELLANT HAS MAINTAINED VOUCHERS AS ARE IN VOGUE I N THE LINE OF TRADE AND THE ACCOUNTS ARE AUDITED AND THE AUDIT RE PORT U/S.44AB OF THE ACT WAS RENDERED. THE ADDITION IS PURELY ON SUSPICION AND SURMISE, ASSUMPTIONS AND PRESUMPTIONS AND LIABLE TO BE DELETED. 7. THE LEARNED CIT[A] IS NOT JUSTIFIED IN SUSTAINI NG A SUM OF RS.1, 91,000/- BEING THE INVESTMENT MADE BY THE JOINT FAMILY OF THE APPELLANT, WHICH IS NOT DURING THE PREVIOUS YEA R RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. HE OUGHT TO HAVE EXCLUDED SUCH INVESTMENTS IN AS MUCH AS, APPELLANT PRAYED FO R SUCH EXCLUSION AFTER REALIZING THE MISTAKE UNDER THE FAC TS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. THE LEARNED CIT[A] HAS ERRED IN HOLDING THAT THE EXPLANATION IS NOT ACCEPT ABLE. 8. THE LEARNED CIT[A] IS NOT JUSTIFIED IN SUSTAINI NG A SUM OF RS. 3,95,000/- AS CREDITORS NOT PROVED, WHICH ARE NOT CASH CREDITS AT ALL UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. HE FAILED TO APPRECIATE THAT THESE CREDITS AR OSE CONSEQUENT TO LIABILITIES INCURRED FOR EXPENSES FOR THE PURPOSE O F BUSINESS AND THESE LIABILITIES HAVE BEEN PAID AND DISCHARGED IN THE SUBSEQUENT YEARS AND THE APPELLANT COULD NOT OBTAIN CONFIRMATI ON LETTERS AFTER LONG LAPSE OF TIME IN AS MUCH AS, TWO CREDITORS WHE REABOUTS WERE NOT KNOWN AND TWO CREDITORS WANTED TO VERIFY THEIR OLD RECORDS AND GIVE THE CONFIRMATION, WHICH COULD NOT BE OBTAI NED IN TIME. THE ADDITION IS PURELY ON SUSPICION AND SURMISE, AS SUMPTIONS AND PRESUMPTIONS AND LIABLE TO BE DELETED. THE LEARNED CIT[A] HAS ERRED IN HOLDING THAT THE EXPLANATION IS NOT ACCEPT ABLE. 9. THE LEARNED CIT[A] IS NOT JUSTIFIED IN SUSTAINI NG A SUM OF RS.17,452/- SEPARATELY UNDER THE HEAD 'OTHER SOURCE S' IN ITA NOS.61 & 62/BANG/11 PAGE 4 OF 9 ADDITION TO ASSESSING A SUM OF RS.1, 72,200/ -, WHICH IS INCLUSIVE OF THE SAID SUM. THE ADDITION THUS MADE TO THE EXTE NT OF RS.17,452/- , HE OUGHT TO HAVE REDUCED INCOME FROM BUSINESS TO THE LIKE EXTENT WHILE COMPUTING THE INCOME. 10. WITHOUT PREJUDICE TO THE RIGHT TO SEEK WAIVER BEFORE THE HON'BLE DG/CCIT, THE APPELLANTS DENIES HIMSELF LIABLE TO BE CHARGED TO INTEREST U/S.234A, 234B AND 234C OF THE ACT, WHICH UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APP ELLANT'S CASE DESERVES TO BE DELETED. 11. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED A. O. OUGHT TO HAVE TAKEN THE TCS/TDS OF RS. 4,34,694/- AGAINST THE TAX DETERMINED BY HIM ON THE TOTAL INCOME ASSESSED BY H IM AND ON THE BALANCE ONLY HE OUGHT TO HAVE CHARGED INTEREST U/S.234A AND 234B OF THE ACT. THUS THE QUANTUM OF INTEREST LEVIE D U/S.234A AND 234B OF THE ACT, REQUIRES TO BE REDUCED. 12. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE UR GED AT THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT HUMBL Y PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED AND THE APPELLANT MAY BE AWARDED COSTS IN PROSECUTING THE APPEAL AND ALSO ORDER FOR THE REFUND OF THE INSTITUTION FEES AS PART OF THE C OSTS. 3. IN GROUND NOS. 2 TO 4, THE ASSESSEE HAD CHALLENG ED THE ACTION OF THE LD. CIT(A) IN NOT ADJUDICATING THE ISSUE RELATING T O VALIDITY OF THE SEARCH. AT THE FIRST INSTANCE, BOTH THE PARTIES ARGUED THE ISS UE RAISED IN THESE GROUNDS. 4. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THA T THE ASSESSEE FILED THE RETURN OF INCOME ON 30.12.1999 DECLARING NET TAXABL E INCOME OF RS.1,97,285 AND AGRICULTURAL INCOME OF RS.2,50,000. THE RETURN WAS PROCESSED U/S. 143(1) OF THE INCOME-TAX ACT, 1961 [ HEREINAFTER REFERRED TO AS THE ACT IN SHORT]. LATER ON A SEARCH U/S. 13 2 OF THE ACT WAS CARRIED OUT IN THE CASE OF ASSESSEE ON 16.02.2005 AND INCRIMINA TING EVIDENCES FOUND WERE SEIZED. SUBSEQUENTLY NOTICE U/S. 153A(A) OF T HE ACT WAS ISSUED TO THE ASSESSEE CALLING FOR THE RETURN OF INCOME. IN RES PONSE TO THAT, THE ASSESSEE FILED THE RETURN OF INCOME ON 22.07.2005 D ECLARING NET TAXABLE OF ITA NOS.61 & 62/BANG/11 PAGE 5 OF 9 RS.3,88,285 AND AGRICULTURAL INCOME OF RS.2,50,000. THE ASSESSING OFFICER HOWEVER MADE ASSESSMENT AT AN INCOME OF RS.18,41,78 0 AND AGRICULTURAL INCOME OF RS.2,50,000. 5. THE ASSESSEE CHALLENGED THE VALIDITY OF SEARCH B EFORE THE LD. CIT(A) AND RAISED SPECIFIC GROUNDS NO.2 & 3 WHICH READ AS UNDER: GROUND NO.2 THE ORDER OF ASSESSMENT PASSED U/S.153A RWS 143[3] OF THE ACT, BY THE LEARNED A.O. IS BAD IN LAW, IN AS MUCH AS , AS THE SEARCH ITSELF IS ILLEGAL, AS THE COND I TIONS SPECIFIED U/S.132[1][A] AND [B] DID NOT EXIST AND IN SO FAR AS THE CONDIT I ON U/S . 132[1][C] IS C ONCERNED , TH ER E WAS NO MATERIAL INDUCING THE REASON TO BELIEVE THAT, TH E APPELLANT W AS I N POSSESSION OF ANY MONEY OR OTHE R ASSET WHICH THE APPELLAN T HAS NOT O R W OULD NOT DISCLOSE FOR THE PURPOSES OF IN C OME - TAX ACT TO ENABLE THE AUTHOR I ZING OFFICER TO ISSUE THE WARRANT AND CONSEQUENTLY, THE BLOCK ASSESSMENT REQU I RES TO BE ANNULLED . THE RATIO OF THE DECIS I ON OF THE HON'BLE SUPREME COURT I N AJITH JAIN REPORTED IN 260 ITR 80 IS RELIED UPON . GROUND NO.3 THE ORDER OF ASSESSMENT PASSED U/S.153A RWS 143[3] IS BAD IN LAW I N AS MUCH AS , THE SEARCH WAS COMMENCED BY INGRESS WITHOUT SHOWING THE WARRANT, WHICH IS I LLEGAL AND THE WAR R ANT CAME TO BE SHOWN AND SIGNED DURING THE PROGRESS OF SEARCH AND SINCE, SUCH ACTION I S ILLEGAL AND CON T RARY TO LAW, THE SEARCH IS ILLEGAL AND CONSEQUENT ASSESSMENT FOU NDED U/S.153A IS ALSO BAD IN LAW AND REQUIRES TO BE ANNULLED. 6. THE SUBMISSIONS OF THE ASSESSEE ARE INCORPORATED BY THE LD. CIT(A) IN PARA 2.2.1 OF THE IMPUGNED ORDER WHICH ARE REPRO DUCED VERBATIM AS UNDER: 2.2.1 THE AUTHORISED REPRESENTATIVE OF THE APPELL ANT DURING THE APPELLATE PROCEEDINGS REITERATED THE ARGUMENTS TAKE N IN THE STATEMENT OF FACTS IN WHICH IT IS SUBMITTED THAT 'T HE APPELLANT IS A PWD CONTRACTOR AND WAS ASSESSED TO TAX EARLIER. THE RE WAS A SEARCH IN THE CASE OF THE APPELLANT ON 16/02/2005. IT WAS CONTENDED BEFORE THE A.O. THAT THE CONDITIONS LAID DOWN U/S.132[1][A],[B] & [C] OF THE ACT DID NOT EXIST TO ISSUE THE WARRANT OF AUTHORIZATION TO SEARCH AND CONSEQUENTLY , THE SEARCH CONDUCTED WAS BAD IN LAW. IT WAS ALSO CONTENDED THA T AT THE TIME OF COMMENCEMENT OF THE SEARCH, THE APPELLANT WAS NO T PRESENT ITA NOS.61 & 62/BANG/11 PAGE 6 OF 9 AND THE SEARCH STARTED WAS WITHOUT SHOWING THE WARR ANT TO ANY PERSON AND AFTER STARTING OF THE SEARCH WITHOUT SHO WING THE WARRANT INITIALLY TO ANY PERSON, THE APPELLANT'S SI GNATURE WAS TAKEN AFTER HIS ARRIVAL SUBSEQUENTLY WHEN THE SEARCH HAD STARTED ALREADY. THUS THE SEARCH WAS STARTED ILLEGALLY AND SUCH ILLE GAL SEARCH COULD NOT BE CURED BY SUBSEQUENTLY TAKING THE SIGNATURE O F THE APPELLANT ON THE WARRANT. IT WAS ALSO SUBMITTED THAT THE SEAR CH WAS THUS ILLEGAL AND CONSEQUENTLY, ON ACCOUNT OF ILLEGA L SEARCH THERE COULD BE A VALID ASSESSMENT U/S.153A OF THE ACT, ON THE BASIS OF THE PARITY OF THE RATIO OF THE DECISION OF THE HON' BLE SUPREME COURT IN THE CASE OF AJITH JAIN REPORTED IN 260 ITR 80 [SC]. HOWEVER, THE LEARNED A.O. NEGATIVED THE CONTENTION ON THE GROUND SUCH CONTENTION COULD NOT BE TAKEN BEFORE HI M. WHILE ON THIS POINT IT IS SUBMITTED THE HON'BLE ITAT, DELHI SPECIAL BENCH, IN THE CASE OF PROMAIN LIMITED REPORTED IN 95 ITD 4 89 HAS HELD THAT THE VALIDITY OF SEARCH CANNOT BE ADJUDICA TED BY THE HON'BLE ITAT IN AN APPEAL BEFORE THE HON'BLE ITAT A ND THAT THE FORUM FOR SUCH AGITATING THE ISSUE WOULD BE THE HON 'BLE HIGH COURT AND NOT THE HON'BLE ITAT OR CIT[A]. THE APPEL LANT HAS BEEN ADVISED AND HAS BEEN UNDER THE FIRM VIEW AND B ELIEF THAT ASSESSING AUTHORITY HAS TO NECESSARILY FIND OUT WHE THER THE SEARCH IS VALID OR NOT BEFORE HE ISSUES A NOTICE TO MAKE A VALID ASSESSMENT AND THAT THE MATTER CAN BE AGITATED BEFO RE THE LEARNED A.O., THE HON'BLE C.I.T.[A] AND THE HON'BLE ITAT. A S A MATTER OF ABUNDANT CAUTION APPELLANT IS ALSO CONTEMPLATING TO FILE A WRIT PETITION BEFORE THE HON'BLE HIGH COURT IN THIS MATT ER IN DUE COURSE OF TIME AND UNDERTAKES TO INFORM THE HON'BLE C.I.T.[A] OF THE OUTCOME OF THE REMEDY SOUGHT TO BE PURSUED NOW. ANYWAY THIS GROUND IS ALSO BEING URGED BEFORE THE HON'BLE COMMISSIONER WITH LIBERTY TO URGE THIS GROUND BEFORE THE HON'BLE HIGH COURT UNDER ARTICLES 226/227 OF THE CONSTITUTION OF INDIA . 7. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT VALIDITY OF SEARCH COULD NOT BE CHALL ENGED BEFORE THE APPELLATE AUTHORITY I.E., CIT(APPEALS) AND THE ITAT . RELIANCE WAS PLACED ON THE DECISION OF THE ITAT SPECIAL BENCH, BANGALOR E IN THE CASE OF C. RAMAIAH REDDY V. ACIT (2003) 87 ITD 439. THE RELEVANT FINDING HAS BEEN GIVEN BY THE LD. CIT(A) IN PARA 2.2.2 OF THE I MPUGNED ORDER, WHICH READS AS UNDER: ITA NOS.61 & 62/BANG/11 PAGE 7 OF 9 2.2.2 THE ABOVE ARGUMENTS OF THE APPELLANT ARE NOT FOUND ACCEPTABLE IN VIEW OF THE FACT THAT THE VALIDITY OF SEARCH INCONSEQUENCE TO WHICH THE NOTICE UNDER SECTION 153 A OF I T ACT HAS BEEN ISSUED, CANNOT BE CHALLENGED BEFORE THE AP PELLATE AUTHORITIES I.E THE COMMISSIONER OF INCOME TAX (APP EALS) AND THE ITAT. THIS VIEW HAS BEEN UPHELD BY THE HON'BLE ITAT SPECIAL BENCH, BANGALORE IN THE CASE OF C RAMAIAH V S ACIT (2003) 87 ITD 439 AND ALSO BY THE HON'BLE DEL HI HIGH COURT IN THE CASE OF M B LAL VS CIT (279 ITR 298) W HERE THE HON'BLE HIGH COURT HELD THAT 'IT WAS NO LONGER OPEN TO THE ASSESSEE TO RE-AGITATE THE QUESTION OF VALIDITY OF THE AUTHORITSATION AND THE LEGALITY OF THE SEARCH PROCEEDINGS BEFORE THE COMMISSIONER OR BEFORE THE TRIBUNAL FOR THAT MA TTER.' NOW THE ASSESSEE IS IN APPEAL. 8. THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUT SET STATED THAT THIS ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COU RT IN THE CASE OF C. RAMAIAH REDDY V. ACIT (2011) 339 ITR 210 (KARN) , WHEREIN THE DECISION OF THE SPECIAL BENCH OF THE ITAT RELIED BY THE CIT( APPEALS) HAS BEEN REVERSED. 9. IN HIS RIVAL SUBMISSIONS, THE LD. CIT(DR) STRONG LY SUPPORTED THE ORDER OF THE LD. CIT(A). 10. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE P ARTIES AND THE MATERIAL ON RECORD, IT IS NOTICED THAT THE DECISION OF THE ITAT SPECIAL BENCH BANGALORE RELIED BY THE LD. CIT(A) HAS BEEN REVERSE D BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF C. RAMAIAH REDDY V. ACIT (SUPRA) , WHEREIN IT HAS BEEN HELD AS UNDER: A BLOCK ASSESSMENT IS BASED ON SEARCH AND SEIZU RE. THIS ORDER IS MADE APPEALABLE UNDER SECTION 253(1)(B). T HE SPECIFIC WORDS USED IN SUB-SECTION (1)(C) OF SECTION 253, I. E., AN ORDER PASSED BY THE ASSESSING OFFICER UNDER CLAUSE (C) OF SECTION ITA NOS.61 & 62/BANG/11 PAGE 8 OF 9 158BC IN RESPECT OF SEARCH INITIATED UNDER SECTION 132. THIS PROVISION SPECIFICALLY APPLIES TO AN ASSESSMENT ORD ER CONSEQUENT TO SEARCH INITIATED UNDER SECTION 132. THEREFORE, T HE NECESSARY COROLLARY IS THAT IF THE ASSESSEE CONTENDS THAT THE SEARCH INITIATED UNDER SECTION 132 IS NOT IN ACCORDANCE WITH LAW AND THAT IT WOULD NOT SATISFY THE LEGAL REQUIREMENTS CONTEMPLATED UND ER SECTION 132(1)(A), (B), (C), THE CONTENTION HAS TO BE CONSI DERED AND ADJUDICATED UPON BY THE TRIBUNAL IN AN APPEAL FILED AGAINST THE ASSESSMENT ORDER. SINCE THIS ACTION OF THE ASSESSIN G OFFICER IS INEXTRICABLY LINKED WITH THE INITIATION OF ASSESSME NT PROCEEDINGS THE ACTION CAN BE ASSAILED BEFORE THE APPELLATE AUT HORITY. IF THE INITIATION OF BLOCK ASSESSMENT PROCEEDINGS IS VITIA TED IN THE EYE OF LAW, THERE IS NO SEARCH AND THE ENTIRE PROCEEDINGS BASED ON SUCH SEARCH HAS NO LEG TO STAND ON. THEREFORE, IN AN APP EAL FILED CHALLENGING THE BLOCK ASSESSMENT ORDER IT IS OPEN T O THE ASSESSEE TO CONTEND THAT THE FOUNDATION FOR BLOCK ASSESSMENT WAS AN ILLEGAL SEARCH. THE TRIBUNAL HAS POWERS TO LOOK INTO ALL AS PECTS OF SEARCH AND A VALID SEARCH IS A SINE QUA NON FOR INITIATING BLOCK ASSESSMENT. 11. FROM THE ABOVE, IT IS NOTICED THAT THE HONBLE JURISDICTIONAL HIGH COURT HAS LAID DOWN THE RATIO THAT SINCE THE ACTIO N U/S. 132 OF THE ACT IS INEXTRICABLY LINKED WITH THE INITIATION OF THE ASSE SSMENT PROCEEDINGS, THE ACTION CAN BE ASSAILED BEFORE THE APPELLATE AUTHORI TY AND THAT IF THE INITIATION OF BLOCK ASSESSMENT PROCEEDINGS IS VITIATED IN THE EYES OF LAW, THERE IS NO SEARCH AND THE ENTIRE PROCEEDINGS BASED ON SUCH SEA RCH HAS NO LEG TO STAND ON. THEREFORE IN THE APPEAL FILED CHALLENGIN G THE BLOCK ASSESSMENT ORDER IT IS OPEN TO THE ASSESSEE TO CONTEND THAT TH E FOUNDATION FOR BLOCK ASSESSMENT WAS AN ILLEGAL SEARCH. BY CONSIDERING T HE ABOVE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN TH E AFORESAID REFERRED TO CASE, WE ARE OF THE OPINION THAT THE LD. CIT(A) SHA LL ADJUDICATE THE ISSUES RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY OF THE SEARCH BEFORE HIM. WE THEREFORE REMAND THIS ISSUE BACK TO THE FILE OF THE LD. CIT(A), TO BE ADJUDICATED AFRESH IN ACCORDANCE WITH THE LAW AFTER KEEPING IN VIEW THE ITA NOS.61 & 62/BANG/11 PAGE 9 OF 9 RECENT JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF C. RAMAIAH REDDY V. ACIT (SUPRA). 12. SINCE WE HAVE RESTORED THE LEGAL ISSUE TO THE F ILE OF THE LD. CIT(A) AND THE SAID ISSUE GOES TO THE ROOT OF THE MATTER, THEREFORE NO SEPARATE FINDINGS ARE GIVEN ON THE OTHER ISSUES RAISED ON TH E MERIT OF THE CASE AND EVEN NEITHER OF THE PARTIES ARGUED THE GROUNDS RAIS ED ON THE MERIT OF THE CASE. 13. IN ITA NO.62/BANG/11, SIMILAR ISSUE IS INVOLVED , THEREFORE OUR FINDING GIVEN IN THE FORMER PART OF THIS ORDER IN RESPECT O F ITA NO.61/BANG/2011 SHALL APPLY MUTATIS MUTANDIS FOR THE ASSESSMENT YEAR 2000-01 ALSO. 14. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 6 TH DAY OF MARCH, 2012. SD/- SD/- ( GEORGE GEORGE K. ) ( N.K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 6 TH MARCH , 2012. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.