TaxTMI 
TaxTMI 
2001 (1) TMI 32
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....ime and its purchasers at times pay cash or at times by their own cheques drawn on their own hank accounts or at times the cheques are obtained from other concerned persons with whom they may have transactions. The petitioner is concerned with the realisation of the sale price whether the payment is made by one mode or the other. The petitioner's accounts are audited under the Income-tax Act as well as under the Companies Act. The search was initiated under section 132 of the Act in the case of Mahendra S. Shah and Hemant C. Shah and their group concerns. These persons are not in any way connected with the petitioner and the petitioner does not have dealings with them by way of sale of goods or even otherwise. The said persons (hereinafter referred to as "the raidees") are engaged in the business of finance in the name of their various concerns, but the petitioner had not received any cheque issued by them at the instance of the purchasers of materials from the petitioner or even otherwise. It is further averred by the petitioner that the raidees might have made deposits with the petitioner but such deposits are by cheque, the repayment is by cheque, the interest payment is ....
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....akers at Alang and thereafter would pay cheques against this cash to such ship breakers and in the bargain earn commission up to 1.5 per cent. For example, cash received from ship breakers was deposited in the account of 'A', 'A' would transfer to the credit of account of 'B'. 'B' again would pay to the credit of account 'C' and 'C' to 'D' and so on. Finally, the cheque would be issued by the last holder of the bank account to the ship breakers. So the above mentioned parties were carrying on the business of converting black money into legally accounted funds for a meagre commission. It may be submitted that the above mentioned parties are not assessed to tax and have never filed a return of income so far. The seized materials in the case of the above mentioned parties indicate that the petitioner was involved in convening its unaccounted funds into legally accounted funds in the garb of sales made/loans received by him which were not found to be genuine. The petitioner, Priya Blue Industries Private Limited, during the financial year has deposited a sum of Rs. 3,93,74,367 in cash and received cheques/demand drafts through the....
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....ding genuineness of the transaction will be inquired during the proceedings under section 158BD. 4. The petitioner has filed a rejoinder affidavit reiterating the ground that there is no evidence to show that the petitioner has undisclosed income. It is stated that in reality it is the case of cash credit and sales which are recorded in the books of account of the petitioner and are, therefore, disclosed income and could only form the subject-matter of regular assessment under section 143(3). It is further submitted in the rejoinder that the Assessing Officer of the raidees has to make the affidavit of his satisfaction and that the respondent is not the Assessing Officer of the raidees. Neither the Assessing Officer of the raidees has made any affidavit nor does the respondent's affidavit state that the Assessing Officer of the raidees was satisfied under section 158BC. It is also contended that the notice is given for the wrong assessment years 1988-89 to 1998-99 when in law and facts it has to be for the assessment years 1990-91 to 2000-2001. 5. At the hearing of the petition, Mr. J. P. Shah, learned counsel for the petitioner, has raised the fallowing contentions : ....
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....led by Rushil Industries Ltd. (hereinafter referred to as "Rushil") another ship breaker against whom notice under section 158BD came to be issued on the ground that Mahendra H. Shah and Hemant C. Shah were subjected to a search operation and undisclosed income prima facie belonging to Rushil came to be detected during the search proceedings. The contention urged there was that since the books of account and documents seized in that search operation did not belong to Rushil, notice could not have been issued against Rushil under section 158BD. Negativing the contention, the court observed that it was true that in a search operation against the two raidees no books of account or other documents or assets belonging to the petitioner-Rushil were seized, but it was not correct on the part of the petitioner to contend that action under section 158B cannot be taken unless in the search operations against a particular person books of account or other documents or assets belonging to another person showing undisclosed income of that other person are found. The court then held in terms: "A bare reading of the provisions of section 158BD would show that for taking action under the s....
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....on and that Assessing Officer shall proceed against such other person and the provisions of this Chapter shall apply accordingly." Since the memo of the petition does not contain any averment about lack of satisfaction of the Assessing Officer of the raidees and since the said officer is also not joined as a party respondent, no fault can be found with the respondent (Assessing Officer for the petitioner) for not making any statement in the reply affidavit about the satisfaction of the Assessing Officer of the raidees. There is no dispute about the fact that the Assessing Officer of the raidees has handed over to the respondent (Assessing Officer of the petitioner), the books of account and other documents seized during the search operations under section 132 of the Act. In the facts of the present case and the material on record there is nothing to dissuade us from invoking the presumption under section 114 of the Indian Evidence Act, 1872, that the official act has been regularly performed in respect of the satisfaction of the Assessing Officer of the raidees. 9. Moreover, as regards the contention of learned counsel for the petitioner that satisfaction of the Assessing Off....
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....n the decision of this court in P. V. Doshi's case [1978] 113 ITR 22 is miscohceived. That was a case under section 147 of the Act wherein the notice for reassessment was challenged. This court held that the conditions precedent for initiating reassessment proceedings are : (i) reasonable belief reached by the Income-tax Officer under clause (a) or clause (b) of section 147 ; (ii) recording of reasons by the Income-tax Officer under section 148(2) ; (iii) sanction before issuing the notice of reassessment by the higher authorities under section 151. These three conditions have been introduced by way of safeguards in public interest so that the finally concluded proceedings, which at the time of the original assessment could be reopened through the initial procedure of appeal, revision or rectification before the assessment became final, could not be lightly reopened with consequent hardship to the assessee and also unnecessary waste of public time and money in such proceedings. These conditions have, therefore, to be treated as being mandatory. There could never be a waiver of a mandatory provision for the simple reason that in such cases jurisdiction could not be conferred on ....
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....operty which has not been or would not have been disclosed for the purposes of this Act." Since it is open to the petitioner to explain all the entries in the books of account seized during the raid before the respondent-Assessing Officer, it is not necessary to discuss the merits of this issue any further. 12. As regards the fifth contention that the proceedings under section 158BD can be initiated only after the proceedings under section 158BC are completed, this contention is also without any substance. As already stated above, in Khandubhai Vasanji Desai's case [1999] 236 ITR 73, this court has examined and explained in detail the scheme of Chapter XIV-B of the Act. It is held therein that when any undisclosed income is detected and the Assessing Officer proceeds under section 158BC to issue notice to the person in whose case search was conducted requiring him to furnish a return in the prescribed form, if at any stage the Assessing Officer is satisfied that any undisclosed income belongs to some other person, similar notice is to be issued to such other person also. It is thus clear that issuance of notice under section 158BD to a person other than then raidee need n....