The main legal point established in the judgment is that the provisions of Section 158BC were not applicable in the absence of a search warrant or requisition in the name of the assessee, and the conditions precedent for invoking Section 158BD against a person must be satisfied.

Dr. Satish Chandra, J.

1. The present appeal is filed by the Department against the impugned order dated 5.10.2010 passed by the Income Tax Appellate Tribunal, Allahabad in ITA No. 05/Alld/09 for the Block Period 1.4.1988 to 3.5.1998. The assessee has also filed the writ petition praying for refund of the seized cash.

2. The brief facts of the case are that on 2nd May, 1998, three persons namely Shri Mahesh Kumar Khandelwal, Shri Vijay Kumar Soni and Shri Phool Raj Singh were going on a Rickshaw to board the Prayagraj Express Train for going to Delhi. They were detained by the police and a total sum of Rs. 17,00,000/- was recovered from their possession. On interrogation, all the three persons stated that the money belongs to the assessee i.e. Anil Kumar Chaddha alias Guddu, who in reply to the query by the police stated that the cash belongs to the Firm M/s. Chaddha & Others. Finally, the matter was referred to the Income Tax Department, who has issued a notice under Section 158BC of the Act in the name of the assessee and made the addition being undisclosed income alongwith the income of Rs. 1,11,700/- disclosed by the assessee in his return. Finally, the undisclosed income of Rs. 18,11,700/- was taxed in the hands of the assessee.

3. The CIT(A) has confirmed the same, but the Tribunal has deleted the addition by observing that no search warrant was issued under Section 132 of the Act in the name of the assessee. So, no notice can be issued in the name of the assessee under Section158BC of the Act. Being aggrieved, the Department has filed the present appeal.

4. With this background Shri Bharat Ji Agrawal, learned Senior Counsel for the Department submits that all the three persons were carrying the cash, specifically told that the money belongs to the assessee. The Tribunal has wrongly held that if the undisclosed income was to be assessed in the hands of the assessee, it could have been done under Section 158BD and not under Section158BC before framing the assessment. It is mandatory to issue the notice under Section 158BD and also to record a satisfaction by the Assessing Officer having jurisdiction over the persons search and nothing has been brought on record that any notice under Section 158BD was issued to the assessee. Learned Senior Counsel also submits that this finding is wrong for the reason that no notice under Section 158BD is provided under the Act, assuming that Section 158BD is applicable, still notice has to be issued under Section 158BC . The provisions of Section 158BC and Section 158BD are machinery provisions which provides the procedure for block assessment. Hence, the assessment of undisclosed income cannot be set aside only on the ground that notice under Section158BD should have been issued, even though Section 158BD contemplates the issuance of the notice only under Section 158BC .

5. Learned Senior Counsel further submits that no objection was raised either before the Assessing Officer or the CIT(A), hence this objection cannot be taken for the first time before the Tribunal. It is also a submission of the learned Senior Counsel that Section158BC provides for the procedure for block assessment of undisclosed income. On perusal of the said Section it is clear that 'any' search having been conducted under Section 132 or books of accounts, assets etc. having been requisitioned under Section 132 A of the Act, the Assessing Officer after having issued notices to the persons, may proceed to assess the undisclosed income of such persons. Therefore, an order of requisition under Section 132 A and issuance of the notice under Section 158BC to relevant person are essential for proceeding to assess the undisclosed income. He elaborated his submission by mentioning that Section 132 A falling under Chapter XIII of the Income Tax Act which enunciates the powers of the Income Tax Authorities, nowhere provides that the search or requisition be done by a particular officer who has jurisdiction over a particular