TaxTMI 
TaxTMI 
2018 (12) TMI 983
X X X X Extracts X X X X
X X X X Extracts X X X X
....ances of the case, the Ld. CIT(A) has erred in law and facts in relying on the arguments reproduced in the appellate order that block assessment proceedings were initiated under section 158BD on 27.7.2007 during pendency of original provisions initiated under section 15BD on 14/7/2005 whereas this issue has been adequately addressed in the assessment order by scanning the D & CR to substantiate that original proceedings had been dropped prior in initiation of proceedings on 27.7.2007. 4. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and facts in relying on the judicial pronouncements in Manoj Maheshwari 289 ITR 341 in assessment order and Hon'ble Delhi High Court in Amity Hotels Pvt. Limited in 272 ITR 75, which are vastly on different fact and have been amply discussed in assessment order and remand report. 5. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and facts in holding that similar addition has been made in the case of M/s Baani Technologies Pvt. Ltd. and deleted in appeal whereas the Departmental appeal is pending before Hon'ble Delhi High Court and the addition in that case was made on dif....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... notice under section 158BD of the Act dated 27.7.2007 did not record any satisfaction as has been held by the Hon'ble Delhi High Court in the case of New Delhi Auto Finance Private Limited vs. JCIT reported in 300 ITR 83 following the judgment of the Hon'ble Apex Court in the case of CIT vs. Manish Maheshwari reported in 289 ITR 341. 3. That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that satisfaction recorded by the learned Deputy Commissioner of Income Tax, Central Circle-20 on the order sheet and, not in the notice is not a valid satisfaction since satisfaction under section 158BD of the Act has to be recorded by the Assessing Officer of the searched person and, not the Assessing Officer of the appellant and therefore, such purported satisfaction as has been recorded in the order sheet and, not communicated to the assessee, is not a valid satisfaction and therefore, does not confer valid jurisdiction to frame the impugned assessment." 3. A search and seizure operation was conducted u/s 132 of the Income tax Act, 1961 on 8/5/2003 in Vatika Group of cases headed by Shri Anil Bhalla who is a leading developer of premium corporate complexes reso....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sale of land at Wazirabad which was not disclosed in the regular return of income. In view of the facts stated above and material available in the form of seized documents, I am satisfied that Sh. Virender Kumar Bhatia had undisclosed income for the block period 1.04.1997 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." 4. Subsequently, the assessee filed return of undisclosed income on 1/8/2005 showing undisclosed income at NIL. The Assessing Officer issued notice u/s 143(2) of the Act on 17/9/2006. C A of the assessee attended the proceedings u/s 158BD. On 18/7/2007. The assessee raised an objection that name of the assessee and his associated concern did not appear in the seized annexure supplied to him. The Assessing Officer examined the objection of Ld. AR and found it to be correct. Therefore, the assessment proceedings u/s 158BD read with Section 158BC of the Act initiated vide notice issued on 14/7/2005, were dropped on 27/7/2007 after obtaining approval of the Additional Commissioner of Income Tax, Central Range-iii, New Delhi. After disposal of the earlier block assessment procee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t of different annexure and new proceedings were in respect of another annexure. The earlier proceedings were dropped as the same were initiated on the basis of incorrect facts/wrong annexure. Against a disclosed consideration of Rs. 2.51 crores, actual consideration was Rs. 5.49 crore as mentioned on page 7 of assessment order. The Ld. DR submitted that seized documents appeared on page 12 and 13 of assessment order, mentions the name of the assessee as well. The Ld. DR further submitted that Page 18 of assessment order clearly mentions that original deal was of Rs. 5,48,50,000/- out of the same, an amount of Rs. 52,89,000/- has been reduced, being loss shared by seller and remaining amount is mentioned as new amount of purchase. The AO discussed the reasons for addition in para 8.1 onwards. All entries in the seized material have been deciphered upto para 9.4 of the order of AO and the addition was made. The Ld. DR submitted that CIT(A) deleted the addition by relying upon the order in the case of M/s Baani Technologies Pvt. Ltd which is confirmed by ITAT vide order dated 25.09.2009 for deleting the addition. The Ld. DR submitted that the said order of ITAT is on different ground....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h Maheshwari vs. ACIT reported in 289 ITR 341 and in the case of CIT vs. Calcutta Knitwears, reported in 362 ITR 673. The Ld. AR also relied upon the judgment of Hon'ble Apex Court in the case of Tapan Kumar Dutta vs. CIT (2018) 92 taxmann.com 367 (SC) wherein it is held that proceeding initiated are entirely without jurisdiction, without any material and hence no proceedings u/s I58BD can be initiated. Further if the proceedings were initiated on 27.07.2009 than there ought to have been a note of satisfaction, whereas there is only one note of satisfaction prepared and is dated 14/7/2005 and the search was conducted on 08.05.2003 and the present assessment has been framed on 30.07.2009. The sequence of event shows that the proceedings are without any jurisdiction. 8. We have heard both the parties and perused the material available on record. The CIT(A) vide allowing the appeal of the assessee held as under:- "7. I have carefully considered the facts of the case, submissions made by Assessing Officer as well as by the appellant and, documentary evidence placed on record. The appellant has raised as many as Ground 1 to 8 of the Grounds of Appeal. Ground No. 4 of Grounds of Appea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tia had undisclosed income for the block period 1.4.1997 to 8.5.2003 which was not disclosed in the regular return of income..." While completing the assessment in the above case, it has been noticed that the name of the assessee viz., Shri Virender Bhatia does not appear on any of the pages mentioned in the Annexures as described in the satisfaction note. These annexures have also been examined by your goodself. However, page 6, back of page 10 and page 18 of Annexure A-9, seized by Party No. 5, show that an unaccounted amount of Rs. 2,44,58,812/- was paid by Vatika Group to the assessee in the land deal at Wazirabad, Delhi. It is therefore proposed that the present proceedings u/s 158BD may be dropped and a fresh notice u/s 158 BD may be issued on the basis Annexure A-9, seized by Party No. 5. This proposal has also been disallowance caused with the Ld. C.l.T. (C)0I, New Delhi in your presence. 7.2. An identical issue came up before Delhi Bench of the Tribunal in the case of Shri Radhey Shyam Bansal in 1T(SS) No. 12/D/2007 for Block Period 1991-92 to 2001-02 (upto 3.08.2002) wherein the Hon'ble Tribunal held that, any satisfaction recorded after completion of assessment ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch the satisfaction should be recorded by the Assessing Officer having jurisdiction over the assessment of the person searched. In the case on hand, the block assessment of Manoj Aggarwal was completed under Section 158BC on 29.8.2002. Thereafter, The Assessing officer assessing him became functus officio and was legally under a disability to record any satisfaction to the effect that any undisclosed income belongs to Radhey Shaym bansal. Therefore, the letter written on 15.7.2003 by the DCIT. Central-3, New Delhi who was the Assessing Officer having jurisdiction over Manoj Aggarwal, can not be construed to be the satisfaction as required by Section 158BD since it was written after the completion of the block assessment of Manoj Aggarwal. 8. We thus hold that no satisfaction has been recorded under Section 158BD by The Assessing Officer having jurisdiction over the assessment of Manoj Aggarwal and that the letter written by him on 15.7.2003 to the Assessing Officer having jurisdiction over Radhey Sham Bansal cannot be legally taken to be the requisite satisfaction. The result is that the assessment of Radhey Shyam Bansal has been made without satisfying the mandatory precedent u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rat High Court held that the notice under Section 158BD has to be issued within a reasonable period from the date of the search itself and it was pointed out, taking cue from Section 132(9A), that it should be done within 15 days of the seizure. The obvious implication is that the satisfaction that the income reflected in the seized material belongs to some person other than the person searched should also be reached within the aforesaid period of 15 days so that the same can be transmitted alongwith the books of account, documents etc. seized during the search. The period of 15 days has been amended to 60 days by the Finance act, 2002, w.e.f. 1st June, 2002. It is noteworthy that the amendment had come into force even during the tendency of the block assessment proceedings in the case of Manoj Aggarwal. However, even after the completion of the block assessment of Manoj Aggarwal on 29.08.2002, the Assessing Officer of the assessee took about 19 months to issue the notice under Section 15BD. The period of 60 days mentioned in section 132(9A) is actually for handling over the books of account etc, to the Assessing Officer having jurisdiction over the person who is a person other tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd seizure operations in the case of Shri Manoj Aggarwal and his associate concerns; thus, proceedings under section 158BD are applicable in this case. Admittedly, this note is after the date of block assessment in the case of Manoj Kumar Aggarwal which was finalized on 29-8-2002. Further, the note of satisfaction is not recorded by the Dv. CIT, Central Circle-3, New Delhi acting as the Assessing Officer making the assessment under section 158BC of Manoj Kumar Aggarwal since the said assessment has been finalized earlier. Clearly the note of satisfaction dated 19-12- 2002 is beyond the date of block assessment in the section 158BC proceedings dated 29-8-2002 in the case of Shri Manoj Aggarwal. Therefore, the satisfaction recorded is belated." 7.5. I find that the facts of the appellant are identical to the aforesaid judicial decisions in as much as hereto the satisfaction was recorded on 27.07.2007 i.e. subsequent to the completion of assessment in the case of M/s Vatika Group on 31.05.2005 which does not meet the requirements of section 158BD of the Act and as such, respectfully following the above decisions, notice issued on 27.07.2007 is held to be without jurisdiction. In fa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onsidered on sale of land was Rs. 4,95,61,000/- and declared consideration was Rs. 2,51,02,188/-, sum of Rs. 2,44,58,812/- represented undisclosed income of the appellant. I find that the document as relied upon have already been subject matter of consideration in the case of M/s Baani Technologies Pvt. Ltd. wherein too addition was made of Rs. 2,59,55,460/- on identical basis i.e. by holding that net consideration received was Rs. 4.95,61,000/- on the basis of documents found from Sh. Anupam Nagalia. It was held by the learned Commissioner of Income Tax (Appeals) in the said order as under: "9.30 I have considered the reasoning given by the Assessing Officer and submissions made by the Ld. Counsel. I have also carefully seen the copies of the seized documents filed by the appellant in the paper book. Before the issue is decided it is pertinent to mention that appellant company earlier had name of M/s Banni Technologies Pvt. Ltd. At that time this company was controlled by Shri Virender Bhatia and his family members. A search in Virender Bhatia group u/s 132(1) of the IT Act conducted on 20.3.2002. In the said search, the appellant company was also covered. In the assessment u/s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rchase consideration paid by the appellant company for purchased of 2.36 acres of land at Wazirabad, Gurgaon. This is so because at the time of purchase of the said land the appellant was not in control of Vatika Group. A perusal of the documents found from the residence of Shri Anupam Nagalia and seized as per annexure A-9 clearly indicates that they are some calculations. No definite conclusion can be drawn from these documents. Any conclusion from these documents could have been drawn only if such conclusion is supported by the author of the document i.e. Shri Anupam Nagalia. The Assessing Officer has failed to record any statement of Shri Anupam Nagalia page No.5 of the assessment order refers to an statement of Shri Anupam Nagalia and in this statement Shri Anupam Nagalia has clearly stated that page No.6 of annexure A-9 is a rough working done to arrive at a decision whether at all there is viability in the project. It was further stated that figures stated are rough and hypothetical. In view of this statement and the nature of documents I am an agreement with the submissions of the appellant that these documents are dumb documents and are incapable of ay interpretation. The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....case is the same land of 2.36 acres land in Wazirabad, Gurgaon. In view of this fact, no addition can be made on the basis of its value in November, 2002. This is not the case of the Assessing Officer that the property in question was sold by the assessee company in the present year for a sale consideration of Rs. 495.61 lakhs and the assessee has accounted for lesser amount of sale consideration. The Assessing Officer is making addition on the basis that the assessee has purchased land for a consideration of Rs. 495.61 lakhs but has declared lesser amount of purchase value. This value of Rs. 495.61 lakhs is being justified by the Assessing Officer on the basis that the value of this land was Rs. 3.07 crores in January, 2001 to November 2002, its value of Rs. 495.61 lakhs in November, 2002 is very much reasonable and justified. This addition made by the Assessing Officer shows that as per him Rs. 495.61 lakhs, is the value of land in question in November, 2002 but the same was purchased by the assessee in January, 2001 and hence we are of the considered opinion that no addition can be made in the present case on the basis that purchase consideration was under accounted for by the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....de of Rs. 2,48,58.812/- is not in accordance and is thus deleted." Thus, the CIT(A) has given the categorical finding that the addition is not sustainable due to the detailed reasons given by the CIT(A). Further, the initiation of proceedings without recording any note of satisfaction in the case of person searched, the proceedings initiated itself is bad in law as held by the Apex Court in the case of Manish Maheshwari vs. ACIT 289 ITR 341 and in the case of CIT vs. Calcutta Knitwears, 362 ITR 673. Therefore, there is no need to interfere with the findings of the CIT(A). Thus, appeal filed by the Revenue is dismissed. 9. Regarding the Cross-Objection filed by the assessee, the Ld. AR contended that the CIT(A) failed to appreciate the fact that since no order dropping the proceedings initiated u/s 158BD of the Act dated 14/7/2005 was ever been served on the assessee. Therefore, subsequent notice issued u/s 158BD of the Act dated 27/7/2007 was not a valid notice and hence the impugned order of assessment dated 30/07/2009 was without jurisdiction. The Ld. AR further contended that the findings of the Assessing Officer that mere fact that the decision to drop the proceedings is not....