TaxTMI 
TaxTMI 
2010 (5) TMI 464
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....lated to several private limited companies whose director was found to be Smt. Mukta Goenka wife of Shri Anand Goenka. During the search and seizure operations, certain incriminating documents were found. The investigation revealed that the company M/s. S. Goenka Lime & Chemicals Ltd. had received large amount in the form of share capital from the sister concerns, source of which was alleged to be introduced from bogus shareholders and agricultural income. In the cases of the present assessees, gifts were received from outsiders to create its corpus. The assessees have also made investment in M/s. S. Goenka Lime & Chemicals Ltd. The AO in the instant cases framed the block assessment under section 158BD read with section 158BC/143(3) of the Act on 31.10.2005. The assessees preferred appeals against the block assessment orders before the ld. CIT(A). The ld. CIT(A) vide separate orders annulled the block assessment orders on identical grounds. The decision rendered by the ld. CIT(A) in the case of Smt. Mukta Goenka reads as under: "3.5 Decision: I hold that the AO has recorded reasons for initiation of proceedings u/s 158BD in the case of the present appellant in a very casual and....
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....ion of books of account and other documents for which no satisfactory evidence could be put forward in the case of M/s. S. Goenka Lime & Chemicals Ltd. and in the case of Anant Kumar Goenka during the course of assessment proceedings, when admittedly the assessment proceedings have not started on 4.9.2003. (v) That despite giving opportunity to the department no material was produced before us to prove the satisfaction as required by section 158BD of the Act to be recorded by the AO to initiate section 158BD proceeding in the case of the assessee. (vi) That as no satisfaction was recorded in the case of the person searched to initiate the block assessment proceedings in the case of the assessee hence the Hon'ble Supreme Court's decision in the case of Manish Maheshwari v. ACIT, 289 ITR 341 is squarely applicable to the case of the assessee and the CIT(A) was fully justified in annulling the block assessment order passed on 31.10.2005. 4. The ld. A.M. has, however, concluded that the block assessment orders passed on 31.10.2005 under section 158BD of the Act in the cases of the present assessees are valid mainly for the following reasons: ....
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....t proceedings in the case of present assessees. However, it is observed that the Ld. A.M. is of the opinion that as the assessee has not raised this issue before the lower authorities and the Cross Objections filed by the assessees have been dismissed, hence the Tribunal cannot go beyond the grounds of appeal of the Revenue and decide this issue. The relevant observations of the Ld. A.M. are as under: "With due respect, the ITAT cannot therefore, go beyond the grounds of appeal of the revenue and sustain the decision of the Ld. CIT(A) by holding that the reasons were not recorded by the AO of the persons searched before initiating proceedings u/s.158BD of the I.T. Act." In my opinion, the above observations of the Ld. A.M. are not tenable in view of the decision of the Hon'ble M.P. High Court in the case of Dy. CIT v. Turquoise Investment and Finance Ltd. [2008] 299 ITR 143. The Hon'ble High Court has decided a similar issue. In that case also the Tribunal after dismissing the cross objection of the assessee, decided the issue raised by the assessee first time before the Tribunal in the appeal of the Department. The question Nos.3 and 4 referred to the Hon'ble M.P. High Court....
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....sed income belongs to any person other than the person with respect to whom search was made under section 132 of the Act, (ii) the books of account or other documents or assets seized or requisitioned had been handed over to the assessing officer having jurisdiction over such other person; and (iii) the Assessing Officer has proceeded under section 158BC against such other person." The Hon'ble Supreme Court has concluded as follows : "As the Assessing Officer has not recorded his satisfaction, which is mandatory; nor has he transferred the case to the Assessing Officer having jurisdiction over the matter, we are of the opinion that the impugned judgments of the High Court cannot be sustained, which are set aside accordingly. The appeals are allowed." 9. In the case of Manoj Agrawal v. Dy. CIT [2008] 113 ITD 377, the five Members Special Bench of the Tribunal has held in para 113 of the report that the satisfaction to initiate block assessment proceedings in the case of other person is to be recorded in writing and has to be objective/judicious satisfaction and has to be recorded by the AO of the person searched during the course of section 158BC proceedings. The relevant p....
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.... searched as per the provisions of section 158BD of the Act, as ruled by the Hon'ble Supreme Court in the case of Manish Maheshwari (supra). It is well settled law that satisfaction recorded has to be objective/judicious satisfaction and the order sheet dated 4.9.2003, which is in the opinion of the Ld. A.M. is satisfaction recorded for the initiation of block assessment proceedings in the cases of the present assessees does not fulfil this condition because the block assessment proceedings of the persons searched were started by issuing notice under section 158BC on 5.9.2003 and hearing of the case of the persons searched was started on 13.10.2003. Hence, in no case, the AO of the persons searched can examine the seized record on 4.9.2003 and ask the assessees' explanation in respect of seized record of the persons searched. The so called satisfaction recorded on 4.9.2003 by the AO is based on assumption and presumption and is not based on seized record and is not a judicious satisfaction and hence the order sheet dated 4.9.2003 does not fulfil the requirement of section 158BD of the Act. 12. It is also relevant to point out that it is not the case of the AO that he has found a....