TaxTMI 
TaxTMI 
2011 (2) TMI 250
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....ugh the assessee broker who is the searched person for the purpose of order U/s 158 BC of the Income Tax Act, 1961? 2. Whether the Ld. Tribunal is right in holding that the ACIT Circle, Yamuna Nagar ought to have handed over the seized material and satisfaction note to ITO, Ward-1, Yamuna Nagar without appreciating the fact that the ITO, Ward-1, Yamuna Nagar was not having jurisdiction over the case, as an officer not below the rank of Assistant Commissioner of Income Tax only is competent to pass an order u/s 158 BC/158BD of the Income Tax Act, 1961 and since the ACIT Yamuna Nagar himself was granted jurisdiction as per order dated 31.12.2001, there was no necessity to transfer the seized material/satisfaction note to ITO Ward-1? 3. Whether the Ld. Tribunal is right in holding that there has been delay in recording of satisfaction prior to issue of notice u/s 158 BD of the Act whereas the Tribunal has itself observed that the satisfaction note dated 21.05.2001 referred to in Qus.No.1 above is within the period of limitation. And, when the statute has not prescribed any time limitation for issue of notice u/s 158BD of the Act? 4. Whether the Ld. Tribunal ....
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....ies of other persons are concerned, no adverse inference is taken in the case of the assessee as these persons are identifiable. Moreover, in view of the fact that Shri Anil Kumar Goyal was a broker in the money lending business and document marked as 'A-1' has been maintained by him in the regular and normal course of business. Therefore, due cognizance is being taken separately, in the case of lenders by initiating proceedings under Chapter XIV-B of the I.T.Act, 1961." 3. Accordingly, proceedings under Section 158BD read with Section 158BC of the Act were initiated against the assessee who was identified as having lent money from undisclosed sources. The assessee filed return of its income dated 30.12.2002 declaring undisclosed income at nil. However, the Assessing Officer assessed the undisclosed income at Rs. 3 lacs relying upon the statement of Anil Dalal and the entries in the document found during the search, apart from Rs. 17,500/- as income from interest thereon. 4. On appeal, the addition was set aside by the CIT(A) on the ground that except the diary and the statement of the broker, there was no other corroborative evidence and the lenders/borrowers mentioned in th....
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....i.e. 21.5.2001 is not relevant to decide the validity of the satisfaction recorded on an anterior date. After examining the aforesaid note dated 21.5.2001 and the submissions of the learned DR, we do not find any satisfaction emerging "that any undisclosed income belongs" to a person other than the person in respect of whom search was made. Neither is there any identification of any undisclosed income or transaction and nor is there any identification of the 'other person' contemplated u/s 158BD. Not withstanding the aforesaid, we are also satisfied that on the basis of material available with the Assessing Officer of 'dalal' as on the date of said note, it could not be deduced that the transaction in Annexure A-1 reflected undisclosed income of the assessee so as to justify the invoking of Section 158BD of the Act. The quality of evidence available with the A.O. does not justify any satisfaction regarding existence of the undisputed income or even the identification of such other person contemplated u/s 158BD. The only basis was the statement of 'dalal' and no further. On an overall consideration of the material on record, we are satisfied that the office note dated 21.5.2001, alt....
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....aforesaid discussion, we are of the opinion that the assumption of jurisdiction by the Assessing Officer by issuance of notice u/s 158BD dated 15.3.2002 is vitiated in law. As we have noted earlier the invoking of Section 158BD is a jurisdictional aspect and its validity is critical to justify the subsequent proceedings....." On merits:- "48. From the aforesaid it emerges that the said evidence does not justify an inference that any transactions in cash have indeed taken place. Firstly, the parties (i.e. the lender and borrower) named by dalal have denied having undertaken any such transactions. Secondly Dalal himself also does not admit of having either witnessed the cash transaction or of having transacted it himself. In the face of this, it cannot be established that the transactions as narrated by 'Dalal' ever took place. In the absence of any such evidence, the correctness of entries in Annexure A-1 cannot be established. After all the entries in the Annexure A-1 can be considered as corroborated only once the direct evidence of the person who is said to have witnessed the exchange of payment is available on record. As the position stands before us there is n....
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....the case of the prosecution against various persons under section 7 and 12 of the Prevention of Corruption Act, 1998 and Section 56 read with section 8 of the Foreign Exchange Regulation Act, 1973. The allegation of the prosecution was that Jains entered into a criminal conspiracy amongst themselves, the object of which was to receive unaccounted money and to disburse the same to various persons, including, V.C. Shukla and others. In pursuance of the said conspiracy Jain lobbied with various public servants to persuade them to award contracts to different foreign bidders with the motive of getting illegal kickbacks from them. An account of such receipts and payments was maintained by Jain in the diaries and files which were recovered during the course of a search by CBI. The issue was as to whether the entries in the diaries and files was an admissible evidence under section 34, 16 & 17 of the Evidence Act, 1872. The decision of the Hon'ble Supreme Court hinges on the provisions of section 34 of the Evidence Act, 1872. Section 34 of the Evidence Act deals with the relevance of the entries in the books of account. It provides the entries in books of account, "regularly kept in the c....
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....s 1999-2k and 2000-2001 respectively. The assessee was confronted with figures of dalali is estimated by the DDIT(Inv.) Ambala from D.No. The assessee has given the complete detail of dalali received by him as per this document. No adverse cognizance is drawn in view of the fact that most of the persons have denied having paid any dalali to the assessee. Moreover, brokerage was being received from the borrowers only. None of the lenders whose statement were recorded had admittedly having paid any brokerage. The brokerage is charged only once that is at the time of advancing of loan by the lender to the borrower, Dalali income is shown on the receipt basis. In view of the above facts dalali income as shown by the assessee has not been interfered with." Evidently in the case of dalal, no adverse view has been taken in the face of denials by the borrowers regarding the commission income in the hands of 'Dalal' Curiously, similarly denials of the parties have not found credence with the Revenue and adverse inference against such parties i.e. the assessee before us, has been drawn. Evidently such a contradictory approach from the side of the Revenue is untenable." On the issue ....
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.... Officer. Such a course of action will thus enable the department to consider the material collected in the case of third parties assessment, after completion of block assessment in the case of the assessee, which could normally have been done by the department by re-opening assessment under the normal provisions of the IT Act, after issue of proper legal notice u/s 148. As already mentioned, recourse to the provisions of section 148 is not contemplated under Chapter XIV-B relating to block assessments. Thus, it will be an attempt to bypass the existing provisions of Chapter XIV-B and achieve something indirectly which cannot be done directly under the existing provisions relating to block assessments. Such an attempt will be a colorable device to defeat the provisions enacted by the Legislature and the Tribunal obviously cannot subscribe or accede to the plea urged by learned DR to admit the said evidence. We do appreciate the constraint placed on the department by the existing provisions of Chapter XIV-B to complete assessment hurriedly within the specific period on the basis of whatever evidence is available within that period with the Assessing Officer and at the same time not ....
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....8BD of the Act. Finding of the Tribunal in setting aside the deletion on merits was vitiated by perversity by placing onus on the revenue and by not drawing presumption under Section 292C of the Act of correctness of the material found during search. The Tribunal also erred in not taking into account additional evidence comprising of report of the Forensic Science Laboratory stating that there was no interpolation in the entries in the diary and the affidavit of Anil Dalal dated 27.10.2004, reiterating the version that the entries in the diary related to the assessee. Reliance has been placed on judgment of Gujarat High Court in Rishul Industires Ltd. v. Harsh Prakash [2001] 251 ITR 608 to the effect that satisfaction referred to under Section 158 BD of the Act is required to be prima facie satisfaction to show that there was undisclosed income of a person other than the searched person. Reliability of the material found was not required to be gone into at that stage. The said judgment was followed in Priya Blue Industries Pv.t Ltd. v. Joint Commissioner of Income Tax [2001] 251 ITR 615 (Guj). 7. Learned counsel for the assessee supported the impugned findings and submitted that....
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....r Goswami v. Gauhati Bank Ltd. AIR 1967 SC 1058. to submit that the word 'information' under Section 132(1) means information which could be believed and not mere suspicion. Investigation was necessary before effecting seizure and forming of opinion that there was reason to believe that there was undisclosed income. 4. CBI v. V.C. Shukla [1998] 3 SCC 410 to submit that even if entries in the books of account are admissible under Section 34 of the Evidence Act, the same are only corroborative and could not be acted upon without independent evidence as to trustworthiness of the said entries. 5. Ram Prasad Sharma v. CIT [1979] 119 ITR 867/2 Taxman 469 (All.) and Sumati Dayal v. CIT [1995] 214 ITR 801/ 80 Taxman 89 (SC) to submit that additional evidence should not be mechanically allowed unless the Tribunal finds it necessary for its decision. 1. Manish Maheshwari v. ACIT & anr. (2007) 289 ITR 341 (SC). to submit that satisfaction under Section 158 BD is a condition precedent for proceeding against a person other than the searched persons. 2. CIT v. Dawn View Farms (P) Ltd. (2009) 224 CTR (Del), Subhas Chandra B....
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.... the language of Section 158BD of the Act that if while considering the case of the searched persons, the material indicates undisclosed income at the hands of any other person, further action could be taken as stipulated therein. In the present case, the Assessing Officer considering the case of the searched persons, found prima facie material to proceed against persons other than the searched persons and initiated proceedings. There is no compulsion to read any further requirement than what is mentioned as necessary for action under Section 158BD. It is not possible to hold that any further investigation is required to be conducted at that stage. Questions 1 and 3, thus, have to be answered in favour of the revenue. 10. It is not disputed that the ACIT, Yamunagar had been conferred jurisdiction to make assessment in the case of the assessee on 31.12.2001 prior to passing of the order of assessment and before recording the note dated 15.3.2002. The said note obviously was in continuation of earlier note dated 21.5.2001. Notice issued by the said authority could not be treated as invalid. Question 2 stands answered accordingly in favour of the revenue. 11. As regards question....