TaxTMI 
TaxTMI 
2010 (11) TMI 366
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the searched assessee, namely, managing partner of the firm, is the very same officer who has jurisdiction to assess the respondent firm also. Based on evidence and materials gathered about the undisclosed income of the respondent-firm during search conducted in the premises of the managing partner of the said firm, the Assessing Officer issued notice under section 158BD read with section 158BC to the respondent-firm calling upon the firm to file return of undisclosed income in Form 2B. Though the respondent-firm filed nil return, the Assessing Officer based on materials gathered during search in the premises of the managing partner completed the assessment on the respondent-firm on a total income of Rs.83,51,600. In the appeal filed by the assessee-firm before the Commissioner of Income-tax (Appeals), though the validity of the assessment was questioned for the reason that no satisfaction was recorded by the officer before proceeding with the assessment, the same was rejected holding that since the assessment is made by the very same officer, who has jurisdiction to assess the searched assessee, namely the managing partner of the firm, and the respondent-firm, against which mater....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssued under section 158BD noticed that satisfaction of the officer who transferred the file was not recorded or communicated to the assessee. The further finding of the Supreme Court in paragraphs 16 and 17 of the judgment is as follows (page 349) : "The said notice does not record any satisfaction on the part of the Assessing Officer. Documents and other assets recovered during search had not been handed over to the Assessing Officer having jurisdiction in the matter. No proceeding under section 158BC had been initiated. There is, thus, a patent non-application of mind." 4. The Supreme Court declared section 158BD assessment made as invalid based on the facts narrated above. However, in this case, the facts are entirely different, inasmuch as the very same Assessing Officer who has jurisdiction to assess the searched assessee, namely, managing partner of the respondent-firm, has jurisdiction to assess the respondent-firm. Therefore there was no question of transfer of materials seized during search to another officer for assessment as contemplated under section 158BD. The Assessing Officer who has jurisdiction to assess the searched assessee, namely, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sub-sections (2) and (3) of section 143, section 144 and section 145 shall, so far as may be, apply ; (c) the Assessing Officer, on determination of the undisclosed income of the block period in accordance with this Chapter, shall pass an order of assessment and determine the tax payable by him on the basis of such assessment ; (d) the assets seized under section 132 or requisitioned under section 132A shall be dealt with in accordance with the provisions of section 132B. 158BD. Undisclosed income of any other person.-Where the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 or whose books of account or other documents or any assets were requisitioned under section 132A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed under section 158BC against such other person and the provisions of this Chapter shall apply accordingly." 6. Section 158BC provides for procedure for completion ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of search of an assessee which may pertain to another assessee or other assessees. In the normal course, an assessment in such cases could be initiated against such other assessee about whose income materials are gathered by the Department by making income escaping assessment under section 147 of the Act, which in many cases may be time barred. In order to safeguard the interest of the Revenue, the Legislature gave enabling power to the departmental officers to make assessment on persons about whose income, details are collected in the course of search of other assessees. Even though section 158BD is an enabling provision authorising the Department to assess any person other than the searched assessee or assessees against whom documents and records are called for under section 132A, still assessment in such case has to be completed strictly in accordance with the procedure provided under section 158BC as stated above. In our view, in the first place, there is no mention in section 158BD that the Assessing Officer before transferring the file to another officer having jurisdiction to assess the person other than the assessee proceeded under section 132 or 132A has to record his sat....