AI Drafter 
TaxTMI 
TaxTMI 
2014 (7) TMI 1203
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....ing the course of the hearing of the appeal." The facts available on record as per the assessment order show that search & seizure operation was conducted on the residence of the assessee on 08.05.2003 in connection with the search in Vatika Group of companies. For ready-reference we extract the opening para of the assessment order hereunder:- "Search & Seizure operations were conducted at the residence of the assessee on 8/5/2003 in connection with the search in Vatika Group of Companies. A satisfaction note was recorded by the Assessing Officer having jurisdiction over the Vatika Group of Cases. Accordingly a notice u/s 158BD was issued on 31/05/2005 and the assessee filed its return of income u/s 158BD on 20/10/2005 declaring NIL undisclosed income. Notice u/s 143(2) was issued and the assessee requested for the reasons for the issuance of notice u/s 158BD. A copy of satisfaction note was duly provided to the assessee and the assessee filed its letter dated 10/5/2006" (Emphasis provided) The AO considering the reply of the assessee that the documents were mere proposals and were never acted upon as they were claimed to be rough calculations etc. apart from various....
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.... appreciate that under the provisions of section 158BD of the Income Tax Act, 1961 a note of satisfaction was required to be recorded in the case of the person who had been searched on the basis of which the AO having jurisdiction over the assessee was required to be satisfied that books of accounts, other documents or assets seized represented undisclosed income of then person against whom the proceedings have been initiated by him. In the absence of any such satisfaction having been recorded in the case of person searched no valid proceedings could have been initiated against the assessee. That the ld. Deputy Commissioner of Income Tax has failed to appreciate that no such documents or evidence were either found or seized from the person searched and as such no assessment could be made by invoking the provisions of Section 158BD of the Income Tax Act, 1961. That the ld. DCIT has failed to comprehend that the provisions of section 158BC and 158BD of the Act operate in different fields and it depends upon the satisfaction of the AO having jurisdiction in the case of person searched to initiate or not to initiate proceedings against the assessee and as such he was ob....
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....tika group of companies. The assessee has stated that, the AO has in the first para of the order of assessment framed u/s 158BD has noted that, "a satisfaction note was recorded by the AO having jurisdiction over the Vatika Group of Cases". Again in second para of the order, it is stated that a copy of satisfaction note was duly provided to the assessee and the assessee filed its letter dated 10.05.2006. The appellant has disputed the observation made by the AO in the first para of the order of assessment that a satisfaction note was recorded by the AO having jurisdiction over the Vatika Group of cases. It is contended that during the course of hearing, the assessee filed a reply dated 14th May, 2007 wherein assessee specifically raised this issue before the completion of assessment proceedings. The AO however, did not deal the aforesaid objections of the assessee. Further, it was submitted that, copy of the said satisfaction note had been served upon the assessee on 27.01.2006 when the satisfaction note was recorded on 31.05.2005 and, no reason for delay of over 7 months has been given. It was further submitted as under: "A perusal of the satisfaction note served on the assesse....
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....he assessee is aggrieved on the assessment made by the AO under the provisions of section 158BD since according to the assessee, the AO has no jurisdiction for assessment u/s 158BD which jurisdiction was wrongly assumed by the AO instead of application of provisions of section 158BC in order to circumvent non issue of notice u/s 158BC. In this connection without prejudice and in the alternative the assessee submitted that the assessment has been framed u/s 158BD whereas it should have been completed under the provisions of section 158BC and thus, the assessment made is barred by limitation and the provisions of section 158BD are not attracted in the case of the assessee. The appellant has submitted as under: "The facts in this connection are that: Assessee is an Individual. He is a director in some of the Vatika Group of Companies. There was search proceeding u/s 132 of the I.T. Act, 1961 on 08.05.2003. The assessee being the director was searched at his residence. On the aforesaid facts and circumstances it could not be denied that assessee was a person who had been searched on 08.05.2003. As such assessment on assessee should have been made under the provisions of ....
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....om the end of the month in which search took place at assessee's premises. It is further submitted that the legislature has provided a period of two years to an AO to complete assessment u/s 158BC where search has taken place. It is however, submitted that when an action is taken, then it should not be because of any remissness on the part of the AO to initiate the proceedings. In the instant case, the ld. AO on the same facts had taken up the proceedings in the case of the assessee and, had completed the same after period of 2 years as prescribed and, as such, if, he did not choose to initiate proceedings under the correct provisions of the Act where he was within his jurisdiction, it is clear case of remissness on the part of the AO. It cannot be validly said that the ld. AO on the same facts takes up the assessment of all assesses where search was taken up issue a notice u/s 158BC of the Act on the assessee, there is no remissness on his part. It is submitted that, a person cannot be allowed to take advantage of his own lapse or remissness. The short submission of the assessee is that having searched the premises of the assessee, the AO cannot make the same a basis to initiate p....
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....ithout jurisdiction and improperly, yet inspite of, the assessee had furnished his reply on 10.05.2006. However, the AO again proceeded when assessment was going to be barred by limitation as had stated when according to assessee it had already become barred by limitation by long lapse of time, which according to assessee should have been completed on 31.05.2005 as there was a seizure made form the assessee on 08.05.2003. It is contended by the assessee that the entire purpose for making the assessment is to burden the assessee, with the tax liability and without affording to the assessee a fair and proper opportunity, when assessment had already become barred by limitation. The assessee is unable to comprehend any reason as to why proceedings which had been initiated on 31st May, 2005 and in respect of which the assessee had filed his reply on 10.05.2006 were not completed, when the assessee had already filed his reply as early as on 10.05.2006. It is thus contended that the AO was sitting with predetermined mind to frame the assessment arbitrarily". It is seen that the assessee's objections were confronted by the CIT(A) to the AO and Remand Report was sought from him. The rele....
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....23.03.2009 forwarded the following submissions (these are extracted from pages 12 & 13 of the impugned order):- "The assessee in comments on the remand report on 23.12.2009 submitted as under: "It is submitted that the assessment as had been framed on 21.05.2007 is barred by limitation, whereas it had to be framed by 31.05.2005, since the search u/s 132(1) of the Income Tax Act, 1961 had been completed on 08.05.2003, when the documents on the basis of which an undisclosed income has been computed were found and seized from the residential premises of the assessee. It is an admitted fact that, the search had been conducted on the assessee u/s 132(1) of the Income Tax Act, 1961 on 08.05.2003, and as such as is provided u/s 158BE of the Income Tax Act, 1961 the assessment had to be framed within the period of two years from the end of the month, in which the last of the warrant of authorization was finally executed. In the instant case, it is also an undisputed fact that, the search had finally been concluded on 08.05.2003 and as such it is emphasized here that, no assessment in law could be made by the ld. AO. It is further submitted that, there is no further search conducte....
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....ticipated in the assessment proceedings he is not entitled to contend that assessment made was barred by limitation and the purported notice u/s 158BD of the Act was no notice in the eyes of law. In such circumstances it is submitted the objection raised by the ld. AO by his letter dated 26.08.2009 is misdirected, misconceived and thus, deserves to be rejected as is entirely untenable. It is thus prayed that, it be held that an assessment made is barred by limitation. In respect of the other issues and grounds of appeal detailed submissions have already been made and in respect of which there have been no counter submissions made by the ld. AO". Considering the same the CIT(A) allowed the appeal of the assessee holding that the proceedings initiated u/s 158BD were not legal. He further went on to examine and hold that the same were time barred u/s 158BC. These detailed findings are found discussed in para 4 to para 4.9 at pages 14-21 of the impugned order. Aggrieved by this the Revenue is in appeal before the Tribunal. The hearing in the present proceedings took place on two separate and distinct dates as after hearing both the sides, it was considered appropriate for t....
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....ntained in section 158BD of the Act is the satisfaction recorded by the AO of the searched person and that such satisfaction should be recorded in writing on the basis of material found as a result of search on the searched person. Applying these to the facts of the instant case it should be seen that basis adopted for initiation of proceeding u/s 158BD of the Act in the case of appellant is that there has been a search conducted on the premises of Vatika Group of Companies and as a result of the material found during the search satisfaction was recorded by the AO having jurisdiction over the Vatika Group of Companies. iii. ..... It is admitted that each of the aforesaid papers have been found as a result of search on the appellant and not from the premises of Vatika Group of Companies i.e. searched person. This observation made by the CIT(A) is factually incorrect because the seized papers relied upon the AO for initiating proceedings u/s 158BD of the Act have been found from the premises of the Vatika Group of Company. No search was conducted on the appellant. iv) The CIT(A) has also given an observation that undisputedly search has been conducted on the premises on 8....
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....ant Sh. Anupam Naglia. It is settled Law that section u/s 132(1) is person specific and not premises specific.{Smt. Nasreen Yusuf Dhanani Vs ACIT-(2009) 118 ITD 133(MUM)} The books of accounts/documents were seized from the searched persons. M/s Vatika Land Base Pvt. Ltd., Anil Bhalla, Gaurav Bhalla and Gautam Bhalla. AO has having jurisdiction with Vatika group of companies recorded satisfaction as required u/s 158BD of the Act and on the basis of this satisfaction, notice was issued u/s 158BD to the appellant. Reliance is placed on the following case: Vinod Goel (Page 30) 107 TTJ 1853. Sanjay Kumar Modi (Page 3) 150 Taxman 175 Ved PRakash, Sanjay Kumar 76 LTD 107 (Page 28(2) ACIT vs 17 SOT 380 (12) Jaxan Bai 94 Taxman 24 (page 28) In view of the fact of the case and the legal position, it is clear that the CIT(A)'s order is based on incorrect facts and it should therefore be set aside." On behalf of the assessee in support of the impugned order attention was invited to the specific ground raised by the Revenue. Carrying us through the sole issue agitated by the Revenue it was his submission that the Revenue is only aggrieved as per the ground raised ....
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....notice u/s 158BD of the Act was however issued to the assessee-respondent and thereafter, the assessee sought for the copy of satisfaction note and copy of seized documents vide replies dated 13.06.2005 and 29.06.2005 (kindly see pages 15 and 16 to 18 of the paper book). Thereafter, the purported satisfaction note was provided to the after a delay of almost seven months on 27.01.2006 (kindly see page 38 of the paper book). 21.05.2007: The AO framed an assessment at an undisclosed income of Rs. 1,89,53,900/-. The assessee-respondent being aggrieved against the aforesaid order of assessment; preferred an appeal before ld. CIT(A) on various grounds including (kindly see pages 306 to 318 of the paper book). Alleged satisfaction note so recorded is not by the AO of the searched person; hence assessment framed is illegal and void-ab-initio. Satisfaction note was not recorded prior to the culmination of proceedings in the case of searched person. The assessment has been framed u/s 158BD of the Act, whereas, it should have been completed under the provisions of section 158BC of the Act and, thus, the assessment made is barred by limitation and provisions of Section 158BD of ....
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....age 60 to 72 of the Paper Book filed (Specific para 16 at page 72). In this background it was his submission that the contention of the AO in his Remand Report dated 20.08.2009 copy of which is placed at pages 348-349 of the Paper Book regarding applicability of provisions of section 292BB of the Act is factually incorrect and contrary to material available on record. It was contended that where admittedly the only grievance posed by the Revenue is that no such ground was raised before the AO which factually is incorrect on facts then accordingly on the basis of this finding itself the sole ground raised by the Revenue deserves to be dismissed and the departmental appeal be accordingly dismissed. Since arguments de hors the grounds were advanced it was contended by the Ld. AR that he would also address the issues raised in the arguments advanced by the Ld. CIT DR. It was contended that according to the Ld. DR no search was conducted on the assessee and proceedings were validly initiated u/s 158BD it was again reiterated that this grievance is not arising out of the ground raised. It was again requested that the argument de hors the ground need not to be adjudicated upon as the d....
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.... if any the assessment should have been completed u/s 158BC till 31.05.2005 as per the provision of section 158BE(1)(b) of the Act and accordingly since notice u/s 158BC had not been issued recourse to the provisions of Section 158BD was taken for the collateral purposes i.e. to circumvent the non-issuance of notice u/s 158BC. It would be appropriate to extract from the submissions dated 15.05.2014 filed so as to emphasize in assessee's own words the arguments advanced addressing the "mistake" of the AO:- "6.3.3.................................................................... The short-submission here of the assessee-respondent is that having searched the premises of the assessee, the AO could not take recourse to the provisions of section 158BD of the Act. It is a case of an inaction on the part of AO to have not adhered to statutory provisions as envisaged u/s 158BC of the Act and, any inaction on the part of the AO has to be at the cost of national exchequer and for this proposition reliance is placed on the judgment of Hon'ble Supreme Court in the case of Parshuram Pottery Works Ltd. vs. ITO reported in 106 ITR 1 at page 10, wherein the lordships have held as under: ....
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....e assessee-respondent on 27.01.2006 i.e. nearly after 7 months of the request made by the assessee and thus, it is submitted that no valid proceedings were initiated against the assessee and since, there had been a failure on the part of AO to frame assessment u/s 158BC of the Act, a notice u/s 158BD of the Act was issued as an afterthought and that too by predating a satisfaction note recorded by dating the same as 31.05.2005. Thus, the proceedings so initiated u/s 158BD of the Act (without recording of proper satisfaction note) is without satisfying the statutory preconditions as envisaged under the Act and had been rightly quashed by ld. CIT(A) and in support of the aforesaid submission, the assessee-respondent would seek to place its reliance on the judgment of Hon'ble Supreme Court in the case of Manish Maheshwari vs. ACIT reported in 289 ITR 341. In fact, the burden is very heavy on the revenue to establish that, such a note of satisfaction was recorded by showing independent evidence that a satisfaction note was recorded by the AO having jurisdiction over the person searched and that too prior to culmination of assessment made on M/s Vatika Ltd. on whose case an....
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....espondent, as no search warrant was prepared in the name of assessee is fallacious and contrary to material available on record, as it is an admitted fact that the search party, searched and entered the residence of assessee-respondent as the assessee was a director in M/s Vatika Landbase P. Ltd. and it is also an admitted fact that documents on the basis of which proceedings u/s 158BD of the Act had been initiated were also seized from the said premises of assessee. Thus, the submission of the assessee-respondent is that once the search party entered the premises of the assessee and seized documents therefrom, than proceedings should have been initiated u/s 158BC of the Act on the assessee-respondent instead of section 158BD of the Act. That in order to support the above said submission the assessee-respondent seeks to place its reliance on the order of Hon'ble ITAT Mumbai in the case of J.M. Trading Corporation vs. ACIT reported in 20 SOT 489 which is duly approved by Hon'ble Bombay High Court. (Copy enclosed as Annexure "A" and "B"). That, without prejudice to the above, it is submitted that in order to invoke the provisions of section 158BD of the Act, the basic premise/foun....
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.... 3 A-11 34 2,15,000/- 5 Pg 335 to 337 of the paper book. 4 A-1 17 2,25,000/- 6 Pg 337 to 339 of the paper book 5 A-2 1 1,05,000/- 8 Pg 339 to 334 of the paper book 6 A-2 2/5 (upper portion) 6,91,150/- 9 Pg 339 to 344 of the paper book 7 A-2 3/7 20,57,000/ - 9 Pg 339 to 344 of the paper book 8 A-2 5/11 21,55,342/- 9 Pg 339 to 344 of the paper book 9 A-2 6/13 7,28,375/- 10 Pg 339 to 344 of the paper book 10 A-2 8/17 5,15,000/- 11 Pg 339 to 344 of the paper book 11 A-2 10/25 21,44,657/ - 11 Pg 339 to 344 of the paper book 12 A-2 11/27 1,16,000/- 11-12 Pg 339 to 344 of the paper book 13 A-2 30/33 4,34,350/- 12 Pg 339 to 344 of the paper book 14 A-2 21/93 63,60,000/ 12 Pg 339 to 344 of the paper book That on appraisal of the aforesaid submissions, it would become clear that the documents seized does not depict undisclosed income of the assessee and thus, the satisfaction so recorded is merely a purported and subjective satisfaction. It is also important to ....
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....oceedings against the assessee-respondent u/s 147 of the Act. It is further, submitted that, there is a conceptual difference between two classes of case, one where as a result of search conducted, the books of accounts and other documents have been found from the person searched but are found belonging to person other than the person searched, and secondly, a case where as a result of search conducted on the person searched, the books of accounts and other documents have though been found but not from the person searched (but are found from the person against whom the proceedings are being initiated u/s 158BD of the Act). It is submitted that in the latter class of cases, provisions of section 158BD of the Act are inapplicable. Thus, all what the assessee has submitted is that, even assuming there was no search on the assessee then too, since the documents have been seized from the assessee-respondent and not from the person who had been searched, action u/s 158BD of the Act was wrongly initiated and hence the assessment made is without jurisdiction and has rightly been quashed by ld. CIT(A)." We have heard the rival submissions and perused the material available on record a....
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....e granted by resorting to Ground No-3 raised before us by the Revenue. In the above background where the submissions advanced are available on record in writing considering Ground No-1 raised as being a general non-specific ground and Ground No-3 not having been invoked as such prima facie requires no adjudication, we proceed to address Ground No-2 raised before us. On consideration of the facts available on record and the submissions of the parties qua Ground No-2, we find that the grievance posed by the Revenue is factually not correct. A perusal of paper book page 15 which is a letter dated 11.06.2005 addressed by the assessee to the ACIT, Circle-20 (received as per the stamp of the said office on 13.06.2005) shows that the assessee let alone during the assessment proceedings even at the notice stage has not kept the department in dark about its intentions, grievance and awareness of the legal position. A perusal of the said letter shows that the assessee specifically requests the said authority for the documents taken into consideration for the issuance of notice and the "satisfaction note" required as per law to have been recorded by the AO of the searched person. For ready....
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.... of satisfaction which is required to be recorded in writing by you as has been held by the Hon'ble Delhi High Court in the case of Amity Hotels reported as 272 ITR 75 as also Copies of all such documents on the basis of which you are satisfied that there is an undisclosed income which belongs to me (Emphasis supplied). After having waited for about 15 days of the above referred letter dated 11.06.2005, I personally contacted you in your office on 27.06.2005 when you verbally expressed your reluctance to serve the satisfaction note at this stage, and directed me to take the photocopies of such documents as I wish out of the seized records (Emphasis Supplied). With great respect, it is most respectfully submitted that the proceedings have been initiated on the basis of satisfaction of the assessing officer having jurisdiction over the person who has been searched. Further, such satisfaction has been reached on the basis of evidence found as a result of seized evidence on such third person. It is thus evident that I have to examine such evidence and prepare my reply accordingly. It is thus respectfully submitted that in the instant case, provisions of section 158BD have ....
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....ection 132(1) of the Income-Tax Act had been made on Vatika Group of Companies on 08.5.2003 and orders of assessment have also been made on them by 31.05.2005 and in such circumstances it is not understood, how can a valid notice be issued after culmination of proceedings in the case of above named assessee. The assessee seeks to bring to your kind notice the judgement of the Delhi High Court in the case of Bishan Chand Mukesh Kumar - vs- U.O.l. reported as 135 Taxman 154(Delhi) wherein on a Writ Petition filed, the department had conceded before the High Court that it would furnish the copy of satisfaction note and hence the Writ Petition was dismissed as withdrawn. Sir, it is because of non furnishing of evidence assessee is not able to furnish the return and as such delay in filing the return is not attributable to assessee. It is submitted that in case you propose to pass an adverse order, no interest be charged on such undisclosed income assessed." (Emphasis provided by the Bench) The above read alongwith letter dated 14.05.2007 taken into consideration by the CIT(A) and confronted to the AO shows that not only before the filing of the return but even after filing ....
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.... read with section 158D in the case of Anupam Nagalia which is recorded by the ACIT, Central Circle-20, New Delhi'. It is the submission of the assessee that, this note of reasons has been recorded by the ACIT, Central Circle-20, New Delhi is not in the case of "Vatika group of companies" but in the case of the assessee & that too, probably after culminating the proceedings in these cases; whereas, it is most respectfully submitted, that a note of satisfaction, is required to be recorded by the assessing officer who held jurisdiction over that assessee, and in the case of the instant assessee i.e. me. From the perusal of the "reasons" which have been furnished by you, it is apparent that such a note of reasons as has been recorded by the ACIT, Central Circle- 20, New Delhi, is in my case and as such it is submitted that there has been no valid assumption of jurisdiction at the time of initiation of proceedings by you as there has been no note of satisfaction recorded by the assessing officer as is contemplated in law. Copy of reasons which has been supplied to me reads as under:- Reasons u/s 158 BC read with section 158 BD in the case of Shri Anupam Nagalia "Warrant wa....
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.... challenge is posed to the impugned order on the ground that the assessee "has not sought any remedy at any other level", on consideration of the said ground we are constrained to observe that for the AO to submit by way of raising of such a ground unfortunately demonstrates the strange belief that an assessee challenging the validity of the proceedings must necessarily invoke the extra-ordinary Writ jurisdiction of the Hon'ble High Court compulsorily and such a stand is mandated in all cases. The grievance exhibits a shocking lack of legal understanding as the AO cannot absolve himself from dealing with the objections of the assessee on the validity of the proceedings and cannot be aggrieved by an assessee who on facts has availed of the Statutory right of appeal vested in him by the Statute, namely the Income Tax Act, 1961. Further the AO is no one to suggest that the assessee ought to have invoked the extra ordinary Writ jurisdiction. Infact it would not be out of place to point out that there are umpteen instances to show that the Hon'ble High Court may refuse to entertain the Writ Petition and consequently refuse to exercise the extra-ordinary jurisdiction vested in the Court ....
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.... Income Tax Act, 1961. During the course of block assessment proceedings, the assessee did not raise the issue of block assessment u/s 158BC but objected to the initiation of proceedings u/s 158BD on merits of satisfaction note. Therefore, in view of provisions of section 292BB of Income Tax Act, 1961, the assessee is precluded from taking any objection in the block assessment proceedings." (Emphasis provided in the present proceedings) In the light of these above consistent facts qua the findings arrived at in the impugned order available on record, we find that the conclusion arrived at by the CIT(A) in para 4.8 reproduced hereunder cannot be faulted with:- "4.8. The Assessing Officer in the remand report, has contended that since this objection was not raised in the course of assessment proceedings, therefore, this objections may not be entertained in view of section 292BB of the Act. Firstly, the contention is factually incorrect as the contention regarding validity of proceedings was raised by the appellant in the course of assessment proceedings vide his reply dated 14.5.2007 and moreover, section 292BB of the Act has no application to the facts of the case. Se....
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....nt or other documents or any assets were requisitioned under section 132A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against such other person and the provisions of this Chapter shall apply accordingly. " On plain reading of the aforesaid statutory provisions contained in section 158BD of the Act, it will be seen that, it has been provided that, where the Assessing Officer of the searched person is satisfied 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, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and, thereafter the Assessing Officer of such other person shall proceed against such other person. The, Apex Court in the case of Manish Maheshwari 289 ITR 341 has held that, unless there is a valid satisfaction note recorded by the Assessing Officer of the searched person, after going through the seized docu....
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....ther documents or any assets were requisitioned under section 132A, he shall proceed against such other person as per the provisions of Chapter XIV - B which would mean that on such satisfaction being reached that any undisclosed income belongs to such other person, he must proceed to serve a notice to such other person as per the provisions of section 158BC of the Act. If the Assessing Officer who is seized of the matter against the raided person reaches such satisfaction that any undisclosed income belongs to such other person over whom he has not jurisdiction, then, in that event, he has to transmit the material to the Assessing Officer having jurisdiction over such other person and in such cases the Assessing Officer who has jurisdiction will proceed against such other person by issuing the requisite notice contemplated by section 158BC of the Act." Also, Hon'ble Delhi High Court in the case of Janki Exports International v UOI reported in 278 ITR 296 has further held as under :- "We find that section 158BD is somewhat analogous to section 147 in so far as the procedure that is required to be followed. Section 147 contemplates that if the Assessing Officer has reasons....
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....d by the Assessing Officer the undisclosed income is to be identified. Further, the said expression does not stop there. It further uses the expression "belongs to any person, other than the person with respect to whom search was made" which indicates that the undisclosed income identified by the Assessing Officer is found to be belonging to the other person. It would thus mean that at the stage of recording, the Assessing Officer has reached a finding that undisclosed income has been detected as a result of search and also further that such income belongs to the person not searched. All these constitute findings and not a more belief held by the Assessing Officer on the examination of the seized material and hence the satisfaction contemplated in section 158BD is totally different than contemplated in section 147. It is fundamental that the Assessing Officer finds out whether there is undisclosed income. If he finds that there exists undisclosed income, then he has to give a finding as to whom the said income belongs. In the absence of such a finding, it is not possible to conclude a block assessment under section 158BC. Only thereupon the section 158BD proceedings in respect of t....
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....e properties comprising loans and advances, investment in shares and deposits, jewellery etc. amounting to Rs. 48 lacs. Unaccounted loan-Annexure A-2 page 1, 2, 3, 5, 6, 8, 10, 13, 15 and 21 reveals transactions on account of loans not disclosed for the purpose of income tax. In view of the facts stated above and material available in the form of seized documents, I am satisfied that Sh. Anupam Nagalia had undisclosed income for the block period 01.04.1997 to 08.05.2003 which was not disclosed in the regular return of income. Therefore, notice u/s 158BC read with section 158BD is issued. (P.K.Singh) Asstt. Commissioner of Income Tax, Central Circle-20, New Delhi. The aforesaid satisfaction note would show that the learned Assistant Commissioner of Income Tax, Central Circle-20, New Delhi has referred to the following material for concluding that there is undisclosed income of the appellant:- Pages 33, 34, 37 and 38 of Annexure A-11 Annexure A-11 Page 65 of Annexure A-1 (d) Pages 1, 2, 3, 5, 6, 8, 10, 13, 15 and 21 of Annexure A-2. It is admitted position that, each of the aforesaid papers have been found as a result of search on the appellant and, not ....
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....i Praveen Mittal to the second mentioned A.O. who happens to be the same officer. Thus, in view of the decision in the case of Manish Maheshwari(supra), it is held that pre-conditions required to be satisfied before assuming jurisdiction under section 158BD in the case of the assessee were not satisfied. Learned DR has not been able to show or refer to any material which was seized in the case of Shri Praveen Mittal so as to authorize his A.O. to record satisfaction in the case of the assessee. Thus, we are in the agreement with the learned counsel, albeit for somewhat different reasons, on the issue that the second mentioned A.O. did not have the jurisdiction to issue notice under section 158BC read with section 158BD on 15.07.2002. Therefore, the order passed on the basis of this notice is invalid in the eye of law. "4.8. The Assessing Officer in the remand report, has contended that since this objection was not raised in the course of assessment proceedings, therefore, this objections may not be entertained in view of section 292BB of the Act. Firstly, the contention is factually incorrect as the contention regarding validity of proceedings was raised by the appellant in the ....
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....e to a contrary finding and are of the view that the reliance placed by the assessee on the judgement of the Apex Court in the case of Parshuram Pottery Works Ltd. vs. ITO reported in 106 ITR 1 (SC) is not out of place. Inaction on the part of the AO for not adhering to the statutory provisions as envisaged u/s 158BC of the Act cannot be overlooked and solely to buy time the provisions and procedures under the statute cannot be allowed to be circumvented and a fresh life be given by resorting to the provisions u/s 158BD. The relevant observations of the Apex Court in the aforementioned case of Parshuram Pottery Works Ltd. vs. ITO (cited supra), is reproduced hereunder:- "It has been said that the taxes are the price that we pay for civilization. If so, it is essential that those who are entrusted with the task of calculating and realizing that price should familiarize themselves with the relevant provisions and become well-versed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue. At the same time, we have to bear in mind that the policy of law is that there must be a point of....
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....rly brings out the consistent thread which binds them that is the recording of the satisfaction is the sine qua non for assuming jurisdiction u/s 158BD. The satisfaction so recorded must necessarily be by the AO of the searched person and although the Statute does not prescribe any specific time limit to do so and there were decisions in the public domain of the Hon'ble High Courts and Tribunals that the satisfaction note could only be prepared by the AO during the assessment proceedings u/s 158BC of the Act and not after the completion of the said proceedings however the issue is no longer res integra as the Hon'ble Apex Court eschewing the said view in the case of CIT vs M/s Calcutta Knitwears, Ludhiana rendered on 12.03.2014 in C.A.No.3958 of 2104 and others has laid the controversy at rest and held in para 44 thereof that for the purposes of Section 158BD of the Act a satisfaction note is sine qua non and must be prepared by the assessing officer before he transmits the records to the other assessing officer who has jurisdiction over such other person. Their Lordships have held that the satisfaction note could be prepared at either of the following stages: (a) at the time of....