TaxTMI 
TaxTMI 
2012 (6) TMI 630
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....course of assessment proceedings of aforementioned assessees it was found that documents/loose papers seized during the search also reveal that Shri Gopal Agrawal, an M.L.A. of Maharashtra Legislative Assembly received commission to the tune of Rs. 2.75 crores approximately in the financial years 2001-02 and 2002-03. Consequently, notice u/s 158BD of the Act was issued by the DCIT, Circle-7, Nagpur on 3.9.2007. In response, the assessee filed block return declaring undisclosed income at Rs. Nil. Notice u/s 143(2) of the Act was issued on 4.3.2008 and served on the assessee on 5.3.2008. Later on notice u/s 142(1) of the Act was also issued on 7.10.2008 and served on the assessee on 10.10.2008. In the absence of any compliance a final opportunity was offered to the assessee to present his case. Accordingly, a show cause notice was served on the assessee on 10.9.2009, wherein the assessee was informed that on the basis of documents seized in the course of search a total addition to the tune of Rs. 2,78,40,000/- is proposed to be made for the block period. In response, the assessee objected to the addition proposed by interalia stating that he has already denied the receipt of Rs. 2,78....
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....iction to issue a valid notice u/s 158BD as per the Income Tax Act". On merits, the ld. CIT(A) while observing that the Assessing Officer after taking into consideration various documents has properly made the addition, upheld the addition of Rs. 2,78,40,000/-made by the AO. 5. Being aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us. 6. Ground No. 1 reads as under : "1. The ld. CIT(A) failed to appreciate that the block assessment proceedings initiated against the Appellant u/s. 158BD are invalid, contrary to the provisions of law and without reaching at satisfaction in an objective manner nor based on cogent materials/documents seized at the time of search." 7. At the time of hearing the ld. Counsel for the assessee submits that under the provisions of section 158BD, the Assessing Officer making the block assessment in case of person searched has to be satisfied that undisclosed income detected belongs to some persons other than person searched. On being so satisfied, AO will handover the seized materials to the Assessing Officer having jurisdiction over such other person so that he can make a block assessment on him. Such satisfaction must be....
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....(SS)A No. 52/Mum/2008 and IT(SS)A No. 53/Mum/2008 (block period 1.4.1996 to 31.12.2002) dated 31.3.2011, to show that in the case of Pravin M. Shah (supra), the Tribunal has held that the assessment order passed in this case is beyond the period of limitation specified u/s 158BE and the said assessment order is bad in law and has to be cancelled. He further submits that the similar view was taken in the case of Nirmal A. Banwani. He further submits that against the order passed by the Tribunal, in the case of Pravin M. Shah (supra), the Revenue has filed appeal before the Hon'ble Jurisdictional High Court. The Hon'ble Jurisdictional High Court in CIT v. P.M. Shah in Income Tax Appeal (Lod) No. 1243 of 2011, dated 29.11.2011 held that no fault can be found with the decision of the ITAT in holding that the block assessment order passed by the AO was time barred and accordingly dismissed the Revenue's appeal. In the light of the above, he submits that since no satisfaction has been recorded in the case of Pravin M. Shah (supra) and Nirmal A Banwani, therefore, the block assessment order passed by the AO in the case of the assessee be quashed. He further submits that even otherwise, as....
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....businesses of these assessee, viz. supply of various items to the different Govt./semi Govt. organizations, which were not disclosed to the Income-tax Department at all. 2. Considering these seized material/documents/computerized books of accounts and the statements recorded of Shri Nirmal A. Banwani and Late Shri Pravin M. Shah during the course of search as well as post investigation work and block assessment proceedings, the block assessment u/s 158BC in above mentioned cases have been completed on 6.7.2007. 3. Shri Gopal Agrawal, MLC/MLA, through his contacts in political/bureaucratic circle used to procure contacts for the assessee(s). For this he used to pay commission in cash to politicians and bureaucrats. The assessee(s) have paid Rs. 2.75 crores to Shri Gopal Agrawal for procuring the contracts. These payments were disallowed u/s 37(1) of the IT Act and have to be added in the income of Shri Gopal Agrawal. As per pages 110 to 113 of Annexure A-33 to Panchnama dated 31.12.2002 (copy enclosed) these assesses have shown payment of Rs. 2,75,00,000/- to Shri Gopal Agrawal between the period from 1.4.2001 to 31.03.2002 and 01.04.2002 to 3012.2002. The payment of commission to....
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....te Pravin M. Shah has also upheld the view of the Tribunal in holding that the block assessment order passed by the AO was time barred. 12. In Manoj Aggarwal (supra) the Special Bench of the Tribunal as held vide para 126 at page 495 of the report as under: "..... In order to ascertain whether in the course of the assessment proceeding in the case of Manoj Aggarwal u/s. 158BC there is any finding of any undisclosed income in the case of the appellant; even there, we did not come across any finding that any part of the undisclosed income belongs to the appellant or any reference to any material therein indicating the same. In the circumstances, we have to hold that the satisfaction note dated 19.12.2002 is not the one contemplated in section 158BD and further that even if its assumed to be in terms of the said section it does not even remotely show that there is undisclosed income belonging to the appellant firm calling for the assumption of jurisdiction u/s.158BD. In the circumstance, we hold that the said note of satisfaction 158BD. In the circumstance, we hold that the said note of satisfaction is non-established in law and further that the section 158BD proceedings pursuant th....
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....58BD was recorded on 22.3.2004. The Special Bench of the Tribunal in the case of Manoj Aggarwal has held that section 158BE provides the time limit for completion of block assessment which implies that the order u/s 158BC shall be passed within two years from the end of the month in which the last of the authorizations for search u/s 132 was executed. It has further been held in this case that if there is a time limit for passing such order, then there is an implied time limit for giving a finding as to the person to whom the undisclosed income belongs which under no circumstances can be beyond the time limit set in section 158BE. Going by the mandate of the Special Bench order it is clear that the order u/s 158BC in respect of the persons searched u/s 132(1) could have been passed up to 31.5.2003 being two years from the end of the month in which the last of the authorization was executed, which date in these cases in 10.5.2001. The passing of the block assessment orders in the case of Shri Ashok P. Shah etc. on 14.5.2003 is within the prescribed time limit u/s 158BC, Now as per the Special Bench order the same time limit has to be considered for recording satisfaction in respect ....
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....concluded and no other proceedings were pending before him." 16. In CIT v. Calcutta Knitwears [2011] 338 ITR 239 (Punj. & Har.) it has been held (head note): "Held, dismissing the appeal, that since the block assessment in the case of the S group u/s. 158BC of the Act was framed on March 30, 2005, whereas the satisfaction as contemplated u/s. 158BD in the case of the assessee was recorded on July 15, 2005, the proceedings were bad in law." 17. Judged on the anvil of the aforesaid decisions to the facts of the present case we find that since the block assessment in the cases of Shri Nirmal A Banwani and Pravin M. Shah (supra) were framed on 6.7.2007, whereas the satisfaction note/letter was written on 13.7.2007 and the fact that despite more than one opportunity provided to the Revenue, the Revenue has placed no material on record to show including the office note, if any, in the relevant block assessment orders passed u/s. 158BC, as held in the case of CIT v. Mukta Metal Works [2011] 336 ITR 555 (Punj. & Har.) that the office note by itself met the requirement for proceeding u/s 158BD, as to whether any such satisfaction has been recorded by the respective AOs' in the cases of M....