TaxTMI 
TaxTMI 
2016 (6) TMI 894
X X X X Extracts X X X X
X X X X Extracts X X X X
....terials found as a result of search conducted on the assessee and thus the proceedings under section 158BD were not valid? 2. Whether in the facts and circumstances of the case, the learned ITAT has erred in law by not appreciating that the name of the assessee was not appearing in the search warrant executed on 8.5.2003 at his residence (which was containing name of Vatika Group of entities namely M/s Vatika Landbase Pvt. Limited, S/Shri Anil Bhalla, Gaurav Bhalla and Gautam Bhalla) and thus the assessee has not been covered under section 132(1) of the IT Act, 1961? 3. Whether in the facts and circumstances of the case, the learned ITAT has erred in law by not appreciating that proceedings under section 158BD have been initiated in the case of assessee on the basis of satisfaction made from seized material found as a result of search conducted in the cases of the entities of Vatika Group?" 2. A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. A search and seizure operation was conducted at the residence of the respondent-assessee - Anupam Nagalia, EG-3118, Garden Estate, Gurgaon on 8.5.2003 alongwith Vat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Act and thus proceedings should have been initiated under section 158BC of the Act. The assessee also questioned the merit of the satisfaction note. The Tribunal vide order dated 11.7.2014, Annexure A.3 dismissed the appeal filed by the department holding that the assessee had objected to the validity of the proceedings before the Assessing Officer. The Tribunal relied upon the observation of the learned CIT(A) that the satisfaction note had been framed on the basis of documents found and seized from the assessee whereas according to the appellant-revenue, to record satisfaction under section 158BD of the Act, these documents could not form the basis. Hence the instant appeal by the revenue. 3. We have heard learned counsel for the parties. 4. Learned counsel for the appellant-revenue submitted that the Apex Court in CIT vs. Calcutta Knitwears Limited, (2014) 362 ITR 673 dealing with the issue regarding recording of satisfaction note for purposes of Section 158BD of the Act had remanded the case to the Tribunal. Further, this Court while examining identical issue in ITA No.591 of 2009 decided on 10.4.2015 (CIT I, Ludhiana vs. Mridula Prop. M/s Dhruv Fabrics, Ludhiana), remand....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng that the seized documents belong to a person other than the searched person is necessary for initiation of action under Section 158BD. The bare reading of the provision indicates that the satisfaction note could be prepared by the assessing officer either at the time of initiating proceedings for completion of assessment of a searched person under Section 158BC of the Act or during the stage of the assessment proceedings. It does not mean that after completion of the assessment, the assessing officer cannot prepare the satisfaction note to the effect that there exists income tax belonging to any person other than the searched person in respect of whom a search was made under Section 132 or requisition of books of accounts were made under Section 132A of the Act. The language of the provision is clear and unambiguous. The legislature has not imposed any embargo on the assessing officer in respect of the stage of proceedings during which the satisfaction is to be reached and recorded in respect of the person other than the searched person. 42. Further, Section 158BE(2)(b) only provides for the period of limitation for completion of block assessment under section 158BD in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... completed under Section 158BC of the Act of the searched person. 45. We are informed by Shri Santosh Krishan, who is appearing in seven of the appeals that the assessing officer had not recorded the satisfaction note as required under Section 158BD of the Act, therefore, the Tribunal and the High Court were justified in setting aside the orders of assessment and the orders passed by the first appellate authority. We do not intend to examine the aforesaid contention canvassed by the learned counsel since we are remanding the matters to the High Court for consideration of the individual cases herein in light of the observations made by us on the scope and possible interpretation of Section 158BD of the Act. 46. With these observations, the appeals are disposed of. The matters are remanded to the respective High Courts for deciding the matters afresh after affording an opportunity of hearing to the parties. Ordered accordingly." 7. This Court in Mridula Prop. M/s Dhgruv Fabrics, Ludhiana's case (supra) following the judgment of the Apex Court in Calcutta Knitwears Limited's case (supra) recorded thus:- "10. Mr. Mittal and Mr. Jain, learned counse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....udged upon its own facts. 13. Our view is supported by the judgment of a Division Bench of this Court dated 14.02.2011 in Income Tax Appeal No. 147 of 2010 Commissioner of Income Tax, Faridabad v. M/s Om Parkash and sons. The Division Bench held as under::- "17. .........................As regards delay in issuing notice to the assessee, we find merit in the contention that it was a case which involved a huge fraud of tax evasion where business of searched person was to give accommodation entries resulting in tax evasion to the extent of Rs. 132 Crores in total, spread over the cases of various assesses in all over India. The coordination by the assessing officer of the searched person was time consuming affair. In these circumstances, delay cannot be held to be unreasonable and cannot be held to vitiate the assessment. No doubt once satisfaction is formed during block assessment of searched person, action must be promptly taken as submitted on behalf of the assessee and as held by the Gujarat High Court in Khandubhai Vasanji Desai and others Vs. DCIT and another (1999) 236 ITR 73. Whether or not action was prompt depends upon circumstances of each case." ....