TaxTMI 
TaxTMI 
2001 (1) TMI 202
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.... admitted. 3. The following additional grounds of appeal have been raised: "Because the assessment order, dt. 27th Nov., 1997, is wholly illegal, as being outside the purview and scope of s. 158BD (Chapter XIV-B) of the IT Act, 1961. 2. Because there existed no material/information which could lead the AO to have the requisite satisfaction so as to confer jurisdiction on him to initiate proceedings under s. 158BD in the case of the appellant." 4. After hearing both the sides we admit the additional grounds of appeal as it involved the issue of jurisdiction of the AO under s. 158BD of the Act. 5. The brief facts of the case are that a search and seizure operation was conducted at the business premises of Sri Narayan Das Sarraf....
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....sed by the AO, Ward-3, Varanasi. Notice under s. 158BC was issued by the AO having jurisdiction over Shri Agarwal. Notice under s. 158BC was issued on 8th July, 1997, by the Asstt. CIT, Varanasi. The assessee's counsel filed reply and stated that notice appears to be misconceived since there is no Panchnama in the name of the assessee. Therefore, case of the assessee is not covered under Chapter XIV-B of the Act. Subsequently the Asstt. CIT issued notice under s. 158BD on 7th Oct., 1997. In the meantime the order has been passed by the CIT by transferring jurisdiction from AO Ward-III to Asstt. CIT and that is why Asstt. CIT, CC, issued notice under s. 158BD on 7th Oct., 1997. 7. It is argued by the learned counsel for the assessee that ....
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....ice under s. 158BD of the IT Act. Learned Departmental Representative pointed out that the AO was satisfied about the issue of notice under s. 158BD/BC as there was seizure of assets from the premises of Shri Ajay Kumar Agarwal. At this stage the learned counsel for the assessee pointed out that he had only asked for certified copy of the order sheet. In the case of the assessee copies were submitted to him on 17th March, 1999, after completion of the assessment. Office copy of the note sheets now submitted by the learned Departmental Representative before the Tribunal were not given to the assessee earlier. The learned counsel pointed out that even this office note also does not support the AO's case for issue of notice under s. 158BD r/w ....
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.... in which notice under this chapter was served on such other person in respect of search initiated or books of account or other documents or any asset are requisitioned on or after the 1st January, 1997." 10. It is clear from the provisions of s. 158BD that an AO can issue notices or proceed against any person other than the person with respect to whom search was made under s. 132, where the AO having jurisdiction over the person searched is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under s. 132 of IT Act and give a finding that he is satisfied that any undisclosed income belong to any person other than the person with respect to whom search was made under s. 1....
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....h was conducted in the business of this assessee and residential premises of the partners on 3rd Nov., 1996 to 5th Nov., 1996 under s. 132(1) of IT Act, 1961. On the basis of scrutiny of seized materials, books of account, document and loose papers, under noted undisclosed income has been worked out: Items Found Seized From business premises o....
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.... the case of M/s Radha Krishna Payal Bhandar. Therefore, issue of notice under s. 158BD was without satisfaction about the undisclosed income in the case of the assessee and notice was bad in law and has to be cancelled. Even otherwise if it is considered that the satisfaction note recorded on 8th July, 1997, was for issue of notice under s. 158BD even then also the satisfaction was recorded by the AO on 8th July, 1997, for the purpose of issue of notice under s. 158BD as a result of search carried out on the business premises of firm M/s Radha Krishan Payal Bhandar or partner. No documents or books of account or asset showing undisclosed income relating to the assessee Shri Ajay Kumar Agarwal was found or seized by the AO. The AO has only ....