2006 (12) TMI 589

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....(the Act) by the respondent. 2. The brief facts necessary for the present purpose may be stated. On 21st December, 1999 action under Section 132 of the Act was taken against one Shri Narendra Garg and others. From the premises of Shri Garg a diary was found which recorded payment of 'on money' to Shri Jagdish Marfatia. Thereupon an order came to be passed under Section 158BD read with Section 158BC of the Act in case of Shri Jagdish Marfatia. The case of the revenue was that Shri Garg had purchased a parcel of land from a Company named Marfatia Udyog Private Limited and the seized documents indicated payment of a sum of Rs. 2,05,00,000/- to Shri Jagdish Marfatia. Shri Jagdish Marfatia challenged the said order by way of appeal be....

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....he extent of his own shareholding, as a natural consequence, all other shareholders of the Private Limited Company had to be subjected to tax in proportion to their respective shareholdings. Responding to the submission on behalf of the petitioner that provisions of Section 158BD could not be invoked, it was submitted that once the said section had been validly invoked in case of Shri Jagdish Marfatia, the other shareholders would step into the shoes of Shri Jagdish Marfatia when the Commissioner (Appeals) held that the amount was only proportionately taxable in the hands of Shri Jagdish Marfatia. It was also submitted, in the circumstances, the satisfaction recorded by the Assessing Officer having jurisdiction over the searched person viz.....

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....with section 158BC of the Act. From the concluding portion of the satisfaction note, it appears that the Assessing Officer having jurisdiction over Shri Narendra Garg and Shri Jagdishchandra Marfatia is one and the same. 7. On going through the note it is apparent that the Assessing Officer has nowhere recorded that Shri Garg had paid any 'on money' to any of the petitioners. Therefore, the requirement of opening portion of Section 158BD of the Act does not stand satisfied. In the case of Nitin P. Shah (supra) this Court has stated: "On a plain reading, before the section comes into play, the following conditions are required to be satisfied: (i) The Assessing Officer who is assessing the person searched, has to....