2015 (9) TMI 901

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.... was illegal, invalid and unsustainable. 2.1 That the learned Commissioner of income Tax (Appeals) has failed to appreciate that the purported satisfaction note was not recorded by the learned Assessing Officer of the searched person and hence, the same could not provide any basis to assume jurisdiction u/s 158BD of the Act. 2.2 That furthermore such purported satisfaction note had been recorded after expiry of statutory period for framing of assessment on the searched person and hence, could not be regarded a basis to confer jurisdiction, as has been held by Special Bench of Hon'ble Tribunal in the case of M/s Bishan Chand Mukesh Kumar reported in 113 ITD 377 (Del) (SB). 2.3 That even otherwise the learned Commissioner of Income Tax (Appeals) has failed to appreciate that, there was no evidence found as a result of search on the searched person and, none has been specified in the purported satisfaction note and thus, notice U/S 158BD is erroneous, contrary to law and, unsustainable. 2.4 That adverse findings recorded by the learned Commissioner of Income Tax (Appeals) to support the illegal action are factually incorrect, legally misconceived and, otherwise irrelev....

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....eturn of income on 28th May, 2004, declaring nil undisclosed income. The whole foundation for issuance of notice under Section 150BD was the statement of Sh. Manoj Aggarwal who is the Directors of M/s Friends Portfolio Pvt. Ltd. that the assessee was provided accommodation entries of sale of shares through M/s Friends Portfolio Pvt. Ltd. The modus oprandi of Manoj Aggarwal was that to issue cheques against cash received from the persons who are the beneficiaries of accommodation entries. It was stated that the assessee had carried out the transaction of purchase of 1600 shares of M/s Viraj Credit Capital through M/s Friends Portfolio Pvt. Ltd. on 15.12.1999 for a total consideration of Rs. 1,51,492/- and sold the same through M/s Friends Portfolio Pvt. Ltd. on 14th March, 2000 for a sum of Rs. 5423/-. Thus, the asessee made a payment of Rs. 1,46,699/- to M/s Friends Portfolio Pvt. Ltd. vide cheque no. 630138, dated 03.04.2000 drawn on Tamil Nadu Mercantile Bank Ltd., Chandni Chowk, Delhi-6. Therefore, the Assessing Officer had opined that a sum of Rs. 1,46,069/- paid to M/s Friends Portfolio Pvt. Ltd. towards accommodation entries is treated as undisclosed investments and brought t....

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....other hand, ld. DR relied on the orders of the lower authorities. 5. We heard the rival submission and perused the material on record. When the block assessment proceedings are to be initiated against the persons whose premises are searched, procedure for that is provided under section 158BC of the Act. However, if during the search carried out at the premises of one person, some documents/material is found or asset seized etc. on the basis of which the Assessing Officer is satisfied that any undisclosed income belongs to a third person i.e., a person other than one whose premises were searched under section 132 of the Act, the procedure for carrying out block assessment in that eventuality is provided under section 158BD of the Act. It was for this reason that in the case of these assessees provisions of section 158BD of the Act were invoked. Section 158BD of the Act reads as under :- "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, ot....

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....r section 132, or documents or assets have been requisitioned under section 132A. The said provision would apply in the case of any person in respect of whom search has been carried out under section 132A or documents or assets have been requisitioned under section 132A. Section 158BD, however, provides for taking recourse to a block assessment in terms of section 158BC in respect of any other person, the conditions precedents where for are : (i) Satisfaction must be recorded by the Assessing Officer that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 of the Act; (ii) The books of account or other documents or assets seized or requisitioned had been handed over to the Assessing Officer having jurisdiction over such other person; and (iii) The Assessing Officer has proceeded under section 158BC against such other person. The conditions precedent for invoking the provisions of section 158BD, thus, are required to be satisfied before the provisions of the Chapter XIV-B are applied in relation to any person other than the person whose premises had been searched or whose documents and other assets ha....