Invalid Notice under Section 158BD Upheld

The Tribunal upheld the decision that the notice issued under section 158BD after the completion of the block assessment of the searched person was invalid. The satisfaction for initiating proceedings was recorded after the statutory time period, rendering the proceedings void. The Tribunal emphasized the importance of recording satisfaction before initiating proceedings under section 158BD. The Revenue's appeal was dismissed, affirming the invalidity of the notice and assessment order, with the assessee's cross-objection also dismissed as infructuous.

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Issues Involved:
1. Validity of notice issued u/s 158BD after the block assessment of the searched person.
2. Jurisdiction of the Assessing Officer to pass a block assessment.
3. Recording of satisfaction for initiating proceedings u/s 158BD.

Summary:

1. Validity of Notice Issued u/s 158BD:
The assessee challenged the validity of the notice issued u/s 158BD, arguing it was issued after the block assessment of the searched person, Shri M.V. Narayana Gupta, was completed. The CIT(Appeals) agreed with the assessee, citing the Special Bench decision in Manoj Aggarwal v. DCIT (117 ITD 377), which held that such proceedings initiated after the last date were invalid. The Tribunal upheld this view, noting that the satisfaction for issuing the notice was recorded almost a year after the last date for completing the block assessment of the searched person.

2. Jurisdiction of the Assessing Officer:
The Revenue argued that the Assessing Officer of both the searched person and the assessee were the same, and thus the decision in Manoj Aggarwal would not apply. However, the Tribunal found that the satisfaction was recorded after the statutory time period allowed for making an assessment in the case of the searched person, rendering the proceedings invalid.

3. Recording of Satisfaction:
The Tribunal emphasized that recording satisfaction is a prerequisite for initiating proceedings u/s 158BD, regardless of whether the Assessing Officer is the same or different. The satisfaction in this case was recorded after the block assessment period had concluded, which was deemed invalid as per the Punjab and Haryana High Court's decision in CIT v. Mridula, Prop. M/s Dhruv Fabrics (335 ITR 266).

Conclusion:
The Tribunal dismissed the Revenue's appeal, affirming the CIT(Appeals)'s decision that the notice and subsequent assessment order were invalid and void ab initio. Consequently, the cross-objection filed by the assessee was also dismissed as infructuous. The order was pronounced on 2nd March, 2012.

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