TaxTMI 
TaxTMI 
2017 (1) TMI 1627
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....of Income-tax (Appeals). The Commissioner, by his order dated September 28, 2004, disposed of the appeal partly allowing the same. The order of the first appellate authority was challenged before the Tribunal in IT (S&S) A No. 113/Coch/2004 filed by the assessee and the Revenue also filed IT(S&S)A No. 135/Coch/2004. By the impugned order, the appeal filed by the assessee was allowed on the ground that the Assessing Officer did not record his satisfaction as provided under section 158BD and as laid down in the judgment of the apex court in Manish Maheshwari v. Asst. CIT [2007] 289 ITR 341 (SC). Since the appeal of the assessee was thus allowed on the jurisdictional ground, the appeal filed by the Revenue was dismissed. It is in these circumstances, the Revenue has filed these appeals. 3. The questions of law framed in ITA No. 1303 of 2009 are the following : "1. Whether, on the facts and in the circumstances of the case and also for the reasons noted in the grounds raised, the Tribunal is right in law and fact in holding the proceedings under section 158BD is void ab initio ? 2. Whether, on the facts and in the circumstances of the case and also in the light of ....
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....son, the conditions precedent wherefor 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 sec tion 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 said Chapter are applied in relation to any person other than the per son whose premises had been searched or whose documents and other assets had been requisitioned under section 132A of the Act." 6. The legal question as to when the Assessing Officer having jurisdiction against the person other than the person against whom a search under section 132 of the Act has been conducted and the Assessing Officer having jurisdiction over the person searched under section 132 is the same, whether non-recording of satisfaction as provided under se....
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....search of other assessees. Even though section 158BD is an enabling provision authorising the Department to assess any per son other than the searched assessee or assessees against whom documents and records are called for under section 132A, still assess ment in such case has to be completed strictly in accordance with the procedure provided under section 158BC as stated above. In our view, in the first place, there is no mention in section 158BD that the Assessing Officer before transferring the file to another officer having jurisdiction to assess the person other than the assessee proceeded under section 132 or 132A has to record his satisfaction in writing. It is pertinent to note that wherever Assessing Officers are required to record their satisfaction before issuance of notice, the statute pre scribes the same. A situation of that nature is covered by section 148(2) which requires the officer to record reasons for reopening an assessment before issuing notice. Not only is there no such require ment in section 158BD but what we notice is that the satisfaction referred to therein is only about undisclosed income of a person other than the assessee searched under section 132 o....
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....nd the assessee has filed return in form 2B in terms of notice issued. Therefore what remains is only the assessee's contest against the assessment on the merits which the Tribunal has not done. We therefore answer the questions raised in favour of the Revenue and against the assessee and consequently allow the appeals, set aside the order of the Tribunal and restore the appeals to the file of the Tribunal for decision on the merits after hearing both sides." 7. Despite the fact that the Division Bench has categorically found as above, in the judgment in Panchajanyam (supra) the learned senior counsel contended that the said judgment stands impliedly overruled by the judgment of the apex court in CIT v. Calcutta Knitwears [2014] 362 ITR 673 (SC). We have gone through the judgment and find that the question that was considered by the apex court was at what stage of the proceedings under section 158BD should satisfaction note be prepared by the Assessing Officer : whether at the time of initiating the proceedings under section 158BC for the completion of the assessments of the searched person under section 132 or 132A of the Act or during the course of the assessment ....
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....ction 148 of the Act where recording of reasons in writing are a sine qua non. Under section 158BD, the existence of cogent and demonstrative material is germane to the Assessing Officers' satisfaction in concluding 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 pro ceedings for completion of assessment of a searched person under section 158BC of the Act or during the stage of the assessment pro ceedings. 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 account 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 satis faction is to be re....