TaxTMI 
TaxTMI 
2013 (11) TMI 1284
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....disclosed income of Rs.4,99,09,785/-. The block return for the period from 1.4.1990 to 31.3.2000 and 1.4.2000 to 4.5.2000 was filed by the assessee on 15.6.2001 disclosing income of Rs.4,31,53,640/-. The Assessing Officer vide assessment order dated 30.8.2002 made additions under various heads and held the undisclosed income of the assessee as Rs. 70,07,30,642/-. Aggrieved against the assessment order, the assessee preferred an appeal before the CIT(A). 3. The assessee, inter-alia, assailed the assessment order on the legal/technical grounds: The abridged gist of legal grounds raised by assessee before the CIT(A) are as follows:- (i) Notice under section 158BC is void, ab-initio; (ii) Search conducted on 4.5.2000 which continued upto 20.8.2000 is invalid as during the search no seizure was made and no incriminating material or document was found against the assessee. (iii) Consequent to the first search dated 25.12.1999 whatever material was seized therein and the undisclosed income thereof becomes disclosed income in second search initiated on 4.5.2000. (iv) A search on search is not permissible under the provision....
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.... search, the CIT(A) gave detailed list of immovable properties acquired by the assessee and his family members during the period from June, 1993 to August, 1998. The said details of immovable properties were allegedly obtained during the search. The CIT(A) held that the contention of the assessee that assessment order is based only on sworn statement dated 23.12.1999 is unfounded. 6. On the issue of assessment order under section 158BC, the CIT(A) observed as under:- "18. Now, the question is whether the assessment has been done on the basis of evidence collected during the course of first search or the second search. I have already mentioned that sworn statements were recorded on 19.7.'00, 21.7.'00, 24.7.'00, 18.8.'00, 24.8.'00 and 28.8.'0, when the appellant has offered a sum of Rs.4,70,09,785/- plus Rs.29,00,000/- = Rs.4,99,09,785/-. On going through the various additions made in the assessment order, it is found that the assessment was made mostly on the basis of the sworn statements recorded on the above dates. Since the first search was over by 4.5.'00, the sworn statements recorded from 19.7.'00 to 28.8.'00 cannot be considered as sworn statements recorded....
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....ab-initio. 8. The counsel placed on record paper book containing certain statements of the assessee, panchanama, prohibitory orders etc. The counsel for the assessee referred to panchanamas at page 49 and 53 to show that the search was conducted at the premises of the assessee on different dates. The counsel for the assessee also referred to prohibitory orders at page 7 and 8 dated 25.11.1999, page 48 dated 19.4.2000 and page 52 dated 19.4.2000. The counsel for the assessee pointed out that in all the prohibitory orders almost similar comments have been mentioned i.e. "contents of locker inside the grey colour godrej steel almirah kept in the office of M/s. Mani & Money Ltd. in the ground floor at No.9, Prakasam Street, T.Nagar, Chennai-17. Locker has been locked and seven seals placed on it. Key of the locker was handed over to Mr. Shanmugaraj, Director M/s. Mani & Money Ltd.." The counsel for the assessee submitted that during the entire period starting from 25.11.99 to 4.5.2000 which include the period of both the search no incriminating document or evidence was seized from the assessee and only statements were recorded. Thereafter, during the pendency o....
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....is of evidence found as a result of search or requisition of books of account or other documents and such other materials or information as are available with the Assessing Officer and relatable to such evidence], as reduced by the aggregate of the total income, or as the case may be, as increased by the aggregate of the losses of such previous years, determined,- (a) where assessments under section 143 or section 144 or section 147 have been concluded [prior to the date of commencement of the search or the date of requisition], on the basis of such assessments; (b) where returns of income have been filed under section 139 [or in response to a notice issued under sub-section (1) of section 142 or section 148] but assessments have not been made till the date of search or requisition, on the basis of the income disclosed in such returns; [(c) where the due date for filing a return of income has expired, but no return of income has been filed,- (A) on the basis of entries as recorded in the books of acco....
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....within the block period shall be the income determined before allowing deduction of salary, interest, commission, bonus or remuneration by whatever name called [to any partner not being a working partner] : Provided that undisclosed income of the firm so determined shall not be chargeable to tax in the hands of the partners, whether on allocation or on account of enhancement;] (c) assessment under section 143 includes determination of income under subsection (1) or sub-section (1B) of section 143." "158BC. Procedure for Block Assessment: Where any search has been conducted under section 132 or books of account, other documents or assets are requisitioned under section 132A, in the case of any person, then,- [(a) the Assessing Officer shall- (i) in respect of search initiated or books of account or other documents or any assets requisitioned after the 30th day of June, 1995, but before the 1st day of January, 1997, serve a notice to such person requiring him to furnish within such time not bein....
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....ce. The first search was conducted consequent to the search in the case of Shri V.R. Venkatachalam on 25.11.1999 which concluded on 4.5.2000 and the second search was conducted in the premises of the assessee which started on 4.5.2000 and concluded on 28.8.2000. The assessee has placed on record prohibitory orders dated 25.12.1999 which is at page 7 of the paper book. The endorsement made therein is recorded in para 8 herein above. Another prohibitory order dated 25.2.2000 placed on record at page 8 of the paper book wherein the following endorsement has been made:- "Contents of locker inside the godrej steel almirah kept in the ground floor of the premises of M/s. Mani & Money Ltd. at No.9, Prakasam Street, T.Nagar, Chennai-17. Seals placed on 25.12.99 are retained." These prohibitory orders relate to first search. Thereafter, the second search commenced in the premises of the assessee on 4.5.2000. Panchanama and prohibitory orders relating thereto are at page 45 to 48 of the paper book. A perusal of the panchanama shows the date of authorization as 19.4.2000 and the endorsement made in the prohibitory orders is as follows:- "Contents of grey col....
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.... the order. In the instant case, the aforementioned authorization for search was sought on 19.4.2000. On the basis of the said authorization search was conducted on 4.5.2000, prohibitory orders under section 132(3) were passed on the same date. As per the records, no document, books of accounts etc. were seized or taken into possession. Only one safe in the Godrej almirah was sealed. The period of sixty days ended on 18.6.2000. The competent authority has neither issued fresh authorization nor has re-validated the aforesaid authorization. Even in subsequent panchanamas dated 30.06.2000 and 20.08.2000, there is no mention about fresh authorization. They only mentioned that search is in continuation of the previous proceedings. It would not be out of place to mention here that the search lasted for more than four months. But no incriminating documents were seized during the search. Even in the prohibitory orders, similar endorsements were made. As per the remark in prohibitory orders the keys of the safe were taken by the Department. No plausible reason has been given as to why the safe could not be opened for such a long time and why search could not be completed within the aforesai....
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....d proviso to section 132(1) deals with the "deemed seizure". When in the course of search, it is not possible to seize for the reasons set out in the aforesaid provisions. It is possible under four circumstances: (a) where it is not possible or practicable to take physical possession of any valuable article or thing ; (b) remove it to a safe place due to its volume, weight ; (c) other physical characteristics ; and (d) due to being its dangers nature. Therefore, the law recognizes such a situation and has provided a remedy to tackle such problems. The authorised officer has been given a discretion for the reasons to be recorded in writing to pass a restraint order in respect of the articles, books and other material which he could not take physical possession of, i.e., by making an inventory and leaving it to the custody of the assessee and directing him not to part with the same with-out his permission. Similarly, in circumstances not covered under those provisions, it is open for him to pass a prohibitory order under sub-section (3) not amounting to seizure which order will be in force....
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....sely affect the business and, therefore, adequate safeguards are sought to be provided in the Act by the insertion of the provisions of sub-section (8A) in section 132. In order that the restraint order must not be continued indefinitely, sub-section (8A) of section 132 provides that the restraint order can be continued only if, before the expiry of 60 days, and for reasons to be recorded, the Commissioner grants an extension. The provisions of sub-section (8A) cannot be bypassed or rendered nugatory by revoking an order under section 132(3) and, thereafter, pass another order on the same date. In the nature of things, the search is to be done expeditiously and the undisclosed income is to be unearthed and proceeding has to be initiated against such person and the tax legitimately due to the Government is to be recovered. There cannot be any laxity on the part of the authorised officer in this regard. Any other interpretation would run counter to the scheme of search provision under the Act. Therefore, by passing a restraint order, the time limit available for framing of the order cannot be extended. Once an order under section 132(3) has been passed, then the limitation period com....
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.... the duration of search as 55 minutes i.e. from 11.15 am to 12.10 pm. Thus, it can be safely concluded the last two panchanamas were mere formalities to keep the search proceedings alive. In the instant case, even if we enlarge the period as per the provisions of section 132(8A) authorization ended on 18.06.2000. Therefore, the period of limitation for passing assessment order ended on 30.06.2002, whereas the assessment order has been passed on 30.08.2002 i.e. beyond the period of limitation provided in the Act. Therefore, in our considered opinion, the assessment order is bad in law and is set aside being barred by limitation. 19. A further perusal of sub-section (1) of 158BB clearly shows that the assessment in the case of search can be made in accordance with the provisions of this Act on the basis of evidence found as a result of search or requisition of books of account or other documents during the search. In the present case, the documents on record show that no incriminating documents were seized during search proceedings. In the paper book filed by the assessee Panchanamas are placed at page 9, 45, 49 and 53 vide which search was conducted in the various premises of the....
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....ourt of India in the case of Manish Maheshwari Vs. ACIT reported as 289 ITR 341(SC), wherein the Hon'ble Supreme Court of India had held that (i) the Assessing Officer had to record his satisfaction that undisclosed income belonged to the company, and (ii) hand over the books of account and other documents and assets seized to the Assessing Officer having jurisdiction against the company. The learned counsel further submitted that the assessment proceedings in the case of company are barred by limitation in view of the order of the Special Bench of the Tribunal in the case of Manoj Aggarwal Vs. DCIT reported as 113 ITD 377. 22. On the other hand, the DR submitted that satisfaction note was recorded by the Assessing Officer while initiating proceedings under section 158BD of the Act against the company. The D.R contended that no limitation period is specified under the Act for initiating proceedings under section 158BD of the Act. 23. We have heard the submissions made by both the parties and have perused the orders of the authorities below. A perusal of the order dated 5.1.2007 passed by the CIT(A) shows that in para 7, the CIT(A) has reproduced the satisfaction note recorded....
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....- "Section 158BD as said earlier begins with the expression "where the Assessing Officer is satisfied" and so the very section implies a recording of satisfaction. The satisfaction contemplated is a judicious satisfaction and not a subjective satisfaction and unless the same is recorded it is not possible for any person to discern whether the satisfaction meets the requirements of law at all. The satisfaction can be found in the order passed under section 158BC and if no such order is passed then it will have to be found in the note handing over the material seized to the Assessing Officer assessing the other person. In any event, it has to be in writing and in view of section 158BE, the said recording has to be made before the time set in section 158BE expires. After the said date, it is not possible to invoke section 158BD at all. A view is expressed that wherever a time-limit is intended, Parliament has provided for the same and in the absence of a specific provision made in this respect it has to be assumed that there is no time-limit intended in law. It has to be remembered that the matter relates to fixing huge financial and other civil liabili....
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...., is essential for assuming jurisdiction under section 158BD of the Act. The satisfaction required to be recorded is prima facie satisfaction and is not firm or conclusive satisfaction at that stage. Section 158BE of the Act prescribes the time limit for framing of assessments under sections 158BC and 158BD of the Act. The Assessing Officer of the person against whom action under section 132 or 132A of the Act has been taken, is the Assessing Officer who initiates the proceedings under section 158BD of the Act by recording satisfaction that any undisclosed income belongs to such other person so as to take action under section 158BD of the Act against that person. The Act nowhere specifically prescribes any time limit or limitation for initiation of proceedings under section 158BD of the Act or for recording of satisfaction before taking action under that provision. The plain and reasonable construction that can be placed on the aforesaid provision would be that the recording of satisfaction for taking action against any other person under section 158BD of the Act has to be between initiation of proceedings under section 158BC and before completion of block assessment under section ....