TaxTMI 
TaxTMI 
2008 (10) TMI 10
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....nal Director of Income Tax (Investigation) informed the Commissioner of Income Tax, Delhi-IV who apparently had jurisdiction over the present assessee that there were bogus entries in the bank accounts pertaining to the present assessee (Dawn View Farms Pvt Ltd). Through the said letter the ADIT (Investigation) also informed the said commissioner that on the basis of material gathered and investigation carried out in the case of Yadav and Co it was apparent that the said bank account was bogus and no real transactions of dealing in shares ever took place. The Additional Director of Income Tax (Investigation) also sent copies of the statement of Sh Om Prakash Yadav and Sh Mahinder Singh Yadav as recorded on 7.3.2002. 3. On the basis of the above mentioned communication dated 9.9.2002 which was addressed to the Commissioner, the Assessing Officer of the present assessee took up proceedings under Section 158BD and issued notices under Section 158BC on 31.3.2003. In the course of the block assessment proceedings, the assessee issued a letter dated 25.2.2005 requesting for a copy of the reasons/satisfaction recorded for issuance of the notice under Section 158BD. In reply, ....
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....pany merely acted on the advice of the Additional Director of Investigation who had conducted the search in the case of Yadav and Co. From this, the Commissioner of Income Tax (Appeals) concluded that, manifestly, there was no satisfaction note as was required to be recorded by the Assessing Officer of Yadav and Co. Referring to the decisions of this Court in the case of Amity Hotels Pvt Ltd vs CIT: 272 ITR 75, the Commissioner of Income Tax (Appeals) held that the block assessment proceedings in respect of the assessee were not in conformity with the mandatory requirements of Section 158 BD. 8. The Commissioner of Income Tax (Appeals) concluded as under:- "I have carefully considered the facts of the case recorded in assessment order and the written submissions and material filed by the AR of the appellant company. It is observed that none of the ingredients of section 158BD stand satisfied in this case in as much as there is no material, books of accounts or other documents or assets which have been found during the course of search at the premises of Yadav and Co. on the basis of which it could be said that any undisclosed income found therein belonged to the appellant. No sat....
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....ibunal concluded that for want of recording of satisfaction, the assessment proceedings under Section 158BD were invalid. Consequently, the same were quashed on this count alone. Because of this, the Tribunal did not find it necessary to adjudicate upon the other grounds of appeal. 12. We have heard the counsel for the parties and we feel that the Tribunal has arrived at the correct conclusion. We may note that in Amity Hotels Pvt Ltd (supra) we had in similar circumstances observed as under:- "Before us, the appreciation report prepared by the search party under section 132 of the Act was also produced with various annexures for perusal. It is in view of this report, it appears that the Assessing Officer initiated proceedings under section 158BD of the Act. From the record, it appears from the appreciation report that in almost all the cases, what issues need to be investigated are indicated. Over and above, it is also indicated "some of it is verifiable from our record, but for the rest an indepth scrutiny is required to detect concealment". It is further said "keeping in view the above observations and preliminary examination of the seized record, proceedings under secti....
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....to the Assessing Officer having jurisdiction over such person (i.e, the person other than the person in respect of whom the search was made). It is only thereafter that the Assessing Officer can proceed under Section 158BC against such other person. In the present case, we find that both the Commissioner of Income Tax (Appeals) and the Tribunal have held that no satisfaction was recorded by the Assessing Officer of Yadav and Co. They have also recorded that no material whatsoever was handed over by the Assessing Officer of Yadav and Co. to the Assessing Officer of the assessee company. It is obvious that the essential pre-conditions which needed to be satisfied for the purposes of invoking the provisions of Section 158BD have not been fulfilled. 15. An argument was sought to be raised on behalf of the learned counsel for the appellant that Section 158BD nowhere specifies that the satisfaction is to be of the Assessing Officer of the searched party and not of the Assessing Officer of the assessee. We fail to appreciate this argument because the plain reading of the provision makes it clear that unless and until the Assessing Officer of the person who is searched is satisfied ....