TaxTMI 
TaxTMI 
TaxTMI 
2004 (3) TMI 339
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct took place at the premises of M/s DD Industries Ltd. and its associated concerns on29th Aug., 1996. Certain documents relating to the assessee-company were also found during the course of search and seizure operation. Consequently, a survey operation under s. 133A of the Act was also done at the plant and registered office of the assessee-company at B-145, Mayapuri,New Delhi. The proceedings under s. 158BD of the Act were initiated by issue of notice on18th Dec., 1997. In response to such notice, return was filed disclosing nil income. Assessment under Chapter XIV-B was completed and certain additions were made which are challenged before us. 4. While challenging the AO's assumption of jurisdiction under s. 158BD of the Act, the learned....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that in the office note of the assessment order, the satisfaction of the AO was recorded in the following words: "M/s Kiran Engineers (P) Ltd. is a group concern of DD group (Surinder Gambhir) and was covered by search operation at various places belonging to the group companies including B-30,G.T. Karnal Roadand F-1/9, Okhla Indl. Area, from where papers pertaining to the assessee-company were seized. During the search, stock inventory was prepared at the factory of the assessee through a separate survey under s. 133-A by the search party and certain discrepancy was found and reported in the appraisal report. Accordingly, proceedings under s. 158BD were initiated by my predecessor." 6. The learned Departmental Representative accordingly ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion Branch of the IT Department has prepared appraisal report for the guidance of the AO, the same cannot form the basis of issue of notice under s. 158BD of the IT Act. There is no dispute that for assuming jurisdiction under s. 158BD, the AO has to satisfy himself that the undisclosed income on the basis of seized documents belong to somebody else. Merely if, at some places, a document relating to third person was found, it was not enough for assuming jurisdiction under s. 158BD of the Act. The AO has to form his opinion that the undisclosed income mentioned in the seized documents, in fact, belongs to the third person. In this connection, we had asked the learned counsel for the assessee as to whether any enquiry/investigation was made ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....quisites specified in s. 158BD. We feel that the object underlying the provisions of s. 158BD is not to give unbridled power to the AO to proceed against any person without reaching satisfaction in an objective manner based on the cogent material/documents seized at the time of search. The satisfaction of the AO is not a mere formality but it should be positive satisfaction that the seized material pertains to the other person and reveals undisclosed income of that other person. We feel that the provisions of s. 158BD, incorporated in Chapter XIV-B dealing with special procedure for assessment of search cases, have to be construed strictly, as the same provide a launching pad for the AO to assume jurisdiction and proceed against a person, o....