CIT, FARIDABAD V. K.N.AGGARWAL FARIDABAD

ITA/162/2010

AI Insights

The case involves an appeal by the Commissioner of Income Tax against the order of the Income Tax Appellate Tribunal, which had set aside the addition of approximately \'2 crores as undisclosed income of the respondent, K.N. Aggarwal. The addition was initially made following a search operation that uncovered incriminating documents. The Tribunal's decision was based on the absence of recorded satisfaction in the file of the person searched, as required by the Supreme Court's ruling in Manish Maheshwari v. Asstt. Commissioner of Income Tax. The High Court found that the necessary assessment orders of other related entities, which could have demonstrated the required satisfaction, were not presented to the Tribunal, leading to the decision to remand the case for a fresh assessment.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 720588 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 24-02-2011
• Assessment Year: misc
• Other Referred Cases: Manish Maheshwari v. Asstt. Commissioner of Income Tax (2007) 289 ITR 341
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: S K MUKHI; JYOTI
• Assessee Lawyers: URVASHI DHUGGA
• Keywords: Block assessment; Income Tax; Satisfaction of Assessing Officer; Search and seizure; Undisclosed income
• Section: 158 BD; 260-A

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.162 of 2010 Date of decision: 24.2.2011 Commissioner of Income Tax -----Appellant. Vs. K.N. Aggarwal. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Ms. Urvashi Dhugga, Sr.Standing Counsel for the appellant. Mr. S.K. Mukhi, Advocate and Ms. Jyoti, Advocate for therespondent. --- ADARSH KUMAR GOEL, J. 1. This appeal has been preferred by the revenue under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against order of the Income Tax Appellate Tribunal, New Delhi in I.T.A. No.101/Del/1998 for the block period from 1.4.1986 to 14.8.1996 proposing following substantial questions of law:- “I. Whether, on the facts and in the circumstances of the case, the findings recorded by the Ld. ITAT is perverse and contrary to the evidence available on record as the Assessing Officer had initiated the proceedings u/s 158 BD of the Income Tax Act, 1961 after recording requisite satisfaction for the purpose of I.T.A. No.162 of 2010 initiating proceedings u/s 158BD of the Income Tax Act, 1961 in the case of the assessee?” II. Whether, on the facts and in the circumstances of the case, the Ld. ITAT was right in law in holding that in the absence of recording of satisfaction in the file of the person searched, the assessment made in the hands of this assessee on the basis of notice issued u/s 158BD without recording necessary satisfaction is bad in law and is liable to be annulled even though the findings recorded by the Ld. ITAT are perverse in so far the detailed proceedings and reasoning given in the assessment order itself evidences implied satisfaction which is also borne out from the additions in the assessment order and even the same Assessing Officer in whose case search was conducted on 14.08.1996 and also having jurisdiction over the case of the Directors of M/s Glory Securities Ltd. Shri A.N. Pahuja, Addl. Commissioner of Income Tax i.e. Special Range, Faridabad had issued notices as per the provisions of law and having jurisdiction over the case of M/s Manu Fin Lease Ltd., M/s Glory Securities Ltd. (See Annexure A & B & C)? III. Whether, on the facts and in the circumstances of the case, the Ld. ITAT was right in law in allowing appeal of the assessee and not confirming the order of the Assessing Officer?” 2. On receiving information about tax evasion, a search was conducted on 14.8.1996 by the Income Tax Department on a Group of companies which included on M/s Manu Finlease Ltd., M/s Goodwill Investment and M/s Glory Securities. The assessee 2 I.T.A. No.162 of 2010 is director of M/s Glory Securities. M/s Goodwill Investment and M/s Glory Securities has common office at Faridabad. Various incriminatory documents were found and seized, which led to proceedings under Section 158BD of the Act for block assessment. Notice was issued to the assessee but no return having been filed, assessment was made adding about a sum of `2 crores in his hands as undisclosed income. The addition was set aside by the Tribunal on the ground that there was no evidence of satisfaction having been reached that addition at the hands of the assessee was on account of material found during the search as required in terms of law laid down by the Hon’ble Supreme Court in Manish Maheshwari v. Asstt. Commissioner of Income Tax (2007) 289 ITR 341. 3. We have heard learned counsel for the parties. 4. Learned counsel for the revenue submits that the Assessing officer was satisfied that proceedings against the assessee were required as a result of material seized during search and the order of assessment itself indicated the said material. It is further submitted that even in proceedings for assessment of the searched persons namely M/s Goodwil Investment and M/s Glory Securities, satisfaction has been recorded. Copies of the assessment orders in the said cases have been shown to us. 3 I.T.A. No.162 of 2010 5. Learned counsel for the assessee submits that the said assessment orders of the searched persons were not produced before the Tribunal. 6. In view of the fact that the assessment orders in the case of searched persons were not produced before the Tribunal, in absence of which the Tribunal assumed that the requisite satisfaction had not been recorded, we are of the view that the matter will require fresh consideration by the Tribunal after taking into account the orders of block assessment referred to above. 7. We answer the questions accordingly, set aside the impugned order of the Tribunal and remand the matter for fresh decision in accordance with law. The parties may appear before the Tribunal for further proceedings on 23.5.2011. (ADARSH KUMAR GOEL) JUDGE February 24, 2011 ( AJAY KUMAR MITTAL ) ashwani JUDGE 4 "