TaxTMI 
TaxTMI 
2012 (6) TMI 382
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....on 158BD of the Income Tax Act (hereinafter called "the Act") on the ground that the Assessing Officer before issuing notice for assessment did not record reasons and that the assessment is also barred by limitation. We have heard Senior counsel Sri.P.K.R.Menon appearing for the Revenue and Senior counsel Sri.T.M.Sreedharan appearing for the respondent. 2. First question to be considered is whether the Tribunal was justified in cancelling the block assessment confirmed in first appeal for the reason that Assessing Officer has not recorded reasons for issuance of notice for assessment under Section 158BD of the Income Tax Act (hereinafter called "the Act"). We notice that the Tribunal held in favour of the assessee following their order i....
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....s of Sri.Abdul Gafoor, the person controlling the group of business concerns, was also searched on the very same date. However, it may be noticed that no search warrant was issued in the name of the respondent-assessee which is a partnership firm wherein 95% of the shares were held by Mrs.Souda Gafoor, wife of Sri.Abdul Gafoor, who is the real owner of the entire business group. One Sri.P.K.Moideen, the only other partner, has only 5% shares in the respondent-firm. No search warrant was issued in the name of the respondent or in the name of both the partners namely, Mrs.Souda Gafoor and Sri.P.K.Moideen. However, since evidence regarding business and earning of unaccounted income by the respondent-firm were found in the course of search in t....
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....ssee under Section 158BC and the other assessee under Section 158BD whose undisclosed income is also found in the course of such search, there is no necessity for the Assessing Officer to record satisfaction as required under Section 158BD because there is no transfer of file from one officer to another. Following our above judgment, we allow the appeal on this issue by setting aside the order of the Tribunal and uphold the assessment under Section 158BD. 4. The next question to be considered is limitation claimed by the assessee and accepted by the Tribunal. Counsel for the assessee relied on decision of the Punjab and Haryana High Court in COMMISSIONER OF INCOME TAX Vs. PARVEEN FABRICS (P) LTD. reported in (2011) 198 TAXMAN 463 wherein....
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....e that the assessments of the searched assessees completed under Section 158BC were barred by limitation. However, limitation is raised only by the respondent-assessee which also forms part of group of concerns in as much as 95% of the shares of the respondent-firm are held by none other than the wife of the person controlling the business of all concerns within the group, on the ground that there is delay in initiation of proceedings under Section 158BD. 5. We notice that the assessment of the searched assessees in the same group were completed on 29.3.2001 which was admittedly within the period of limitation prescribed. However, only after completion of assessment of the said assessees, notice was issued under Section 158BD on t....
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....others will be clear only after determining the income of the searched assessees. So much so, in our view, a prudent officer should first complete assessment under Section 158BC on searched assessees and thereafter based on the materials available, proceed for assessment under Section 158BD against other assessees about whom details were obtained in the course of search. In the absence of any provision in the Act requiring the department to issue notice under Section 158BD within a time frame, we do not think the court can prescribe any time limit. At the maximum we can declare an assessment arbitrary, if assessment is not initiated within a reasonable time which is not the case here because assessment was initiated under Section 158BD with....