P. Satish Shetty, Puttur V. ACIT, Mangalore

ITSSA 10/BANG/2010

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 1212 (ITAT-BANGALORE)
• Duration Of Justice: 5 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-12-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 16-06-2016
• Assessment Year: misc
• Appeal Filed On: 16-02-2010
• Court: TRIBUNAL
• Assessee Lawyers: R CHANDRASHEKAR
• Keywords: Unexplained investment; Search and seizure; Validity of assessment; Block assessment; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER A ND SHRI VIJAY PAL RAO, JUDICIAL MEMBER IT (SS) A NO. 10/ BANG/20 10 ( BLOCK ASSESSMENT YEARS: 1990 - 91 TO 1999 - 2000 ) SHRI P.SATISH SHETTY, SEE THALAXMI COMPOUND, KOMBETTU, PUTTURU. VS. APPELLANT ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 1(1), MANGALORE. RESPONDENT APPELLANT BY: SHRI R.CHANDRASHEKAR, ADVOCATE. RESPONDENT BY: MS. NEERA MALHOTRA, CIT(DR). DAT E OF HEARING : 23/11/2015. DATE OF PRONOUNCEMENT: 29 / 12 /2015. O R D E R PER VIJAY PAL RAO , JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 18/12/2009 OF CIT(A) ARISING FROM THE BLOCK ASSESSMENT U/S 158 - BD R.W.S.254 OF T HE IT ACT, 1961 [ ACT FOR SHORT] FOR THE BLOCK ASSESSMENT YEARS 1990 - 91 TO 1999 - 2000. IT (SS) A NO . 10 /BANG/201 0 SHRI P.SATISH SHETTY PAGE 2 OF 13 2 . THE ASSESSEE IS A MONEY - LENDER. A SEARCH AND SEIZURE U/S 132 OF THE ACT WAS CONDUCTED ON 29/10/1999 IN CASE OF HIS FATHER LATE P.SEETHARAMA SHETTY. FOLLO WING THE SEARCH, NOTICE U/S 158 - BD WAS ISSUED TO THE ASSESSEE ON 1/2/2000. IN RESPONSE TO THE NOTICE, ASSESSEE FILED RETURN OF INCOME ON 14/8/2001. THE BLOCK ASSESSMENT ORDER WAS PASSED ON 25/2/2002 U/S 158 - BD WHEREBY THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED AT RS.59,46,086/ - INCLUSIVE OF UNDISCLOSED INCOME OF RS.54,86,590/ - . 3 . THE MATTER WAS CARRIED TO THIS TRIBUNAL BY THE ASSESSEE IN IT(SS)A NO.41/BANG/2005. THE TRIBUNAL, VIDE ITS ORDER DATED 29/2/2008, SET ASIDE THE ASSESSMENT AND REMAND ED THE CASE BACK TO THE AO WITH CERTAIN DIRECTIONS. IN PURSUANCE TO THE ORDER OF THIS TRIBUNAL, THE AO CONCLUDED A FRESH ASSESSMENT U/S 158 - BD READ WITH SEC.254 ON 30/12/2008 DETERMINING THE TOTAL UNDISCLOSED INCOME FOR THE BLOCK PERIOD AT RS.26,91,800/ - . 4 . THE ASSESSEE CHALLENGED THE ACTION OF THE AO IN THE SECOND ROUND OF LITIGATION BEFORE THE CIT(A). THE CIT(A) GRANTED PARTIAL RELIEF IN RESPECT OF ADDITION MADE BY THE AO ON ACCOUNT OF UNDISCLOSED INCOME. SINCE ASSESSEE WAS NOT SATISFIED WITH RE LIEF GRANTED BY THE CIT(A), THEREFORE, THE PRESENT APPEAL IS PREFERRED AGAINST THE IMPUGNED ORDER OF THE CIT(A). 5. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT, BY VIRTUE OF DIRE CTION IT (SS) A NO . 10 /BANG/201 0 SHRI P.SATISH SHETTY PAGE 3 OF 13 OF THIS HONBLE TRIBUNAL IN ITA NO.IT(SS)A 98/BANG/2004, THE GROUND OF QUESTIONING VALIDITY OF THE ORIGINAL ASSESSMENT IS LOST. 2. THE ORDER OF ASSESSMENT ON 25 - 02 - 2008 BY ASSUMING POWERS U/S.158 BD OF THE ACT AND BY ISSUE OF A NOTICE ULS.158 BD OF THE ACT WAS NULLITY, AS SUCH THE ORDER NOW MADE ON 30 - 12 - 2008 IS ALSO NULLITY, HENCE LIABLE TO BE CANCELLED. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT, IN VIEW OF THE DIRECTIONS OF THIS HON'BLE TRIBUNAL IN ITA NO. IT(SS)A 98/BANG/ 2004, THE APPELLANTS GROUND THAT THERE WAS NO OBLIGATION TO FILE RETURN OF INCOME U/S.139(1) AND SUCH INCOME RELATING TO THOSE ASSESSMENT YEARS CANNOT BE ASSESSED AS UN - DISCLOSED INCOME IN BLOCK ASSESSMENT CANNOT BE QUESTIONED. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN INCLUDING TO BLOCK ASSESSMENT, THE INCOME RELATING TO THE ASSESSMENTS FOR WHICH THERE WAS NO OBLIGATION TO FILE THE RETURN OF INCOME U/S.139(1) OF THE ACT AND ERRED IN CONSIDERING THE SAME AS 'UNDISCLOSED INCOMES' 5. THE LEARNE D COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING ADDITION OF RS.1 24,000/ - MADE BY LEARNED ASSESSING OFFICER ON ACCOUNT OF SETTLEMENT OF AMOUNT RECEIVED FROM M/S UNIVERSAL ENTERPRISES. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAVING CONSI DERING THAT CAPITAL HAS FLOWN FROM APPELLANT'S FATHER FOR PURPOSE OF INVESTMENT, OUGHT NOT TO HAVE CONSIDERED THE RETURN OF SUCH CAPITAL AS INCOME FROM UNDISCLOSED SOURCE. 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE COMPUTATION OF CAPITAL GAIN BY ADOPTING SALE CONSIDERATION AT RS.320,000/ - AS AGAINST RS,1,13,000/ - WHICH IS AS PER SALE DEED. THE LEARNED ASSESSING AUTHORITY ERRED IN CONSIDERING THE SALE OF LAND AT RS.3,20,000/ - AS AGAINST RS.1,13,000/ - WHICH IS AS PER REGISTERED S ALE DEED. IT (SS) A NO . 10 /BANG/201 0 SHRI P.SATISH SHETTY PAGE 4 OF 13 8. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING REFUSAL OF DEDUCTIONS OF LOSS FROM CHIT FUND, WHICH WAS CLAIMED AT RS.68,200/ - . 9. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING ADDITIONS OF RS.1,65,550/ - AS UNEXPLAINED LOANS AND ADVANCES. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT ADDITIONS ARE ON THE BASIS OF SEIZED MATERIALS. APPELLANT SUBMITS IT IS CONTRARY TO FACTS. 10. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING INVESTMENT IN SHARES & UNITS AS UNEXPLAINED INVESTMENT NOTWITHSTANDING THAT SAME FINDS PLACE IN STATEMENT OF AFFAIRS. 11. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING ADDITION OF RS.50,000/ - LOAN TRANSACTION RELATING TO VENKAT ESH NAYAK. 12. THE LEARNED ASSESSING AUTHORITY ERRED IN CHARGING INTEREST U/S.158 BFA(1) OF THE ACT AND NO INTEREST IS LEVIABLE. 13. THE APPELLANT PRAYS LEAVE OF THIS HON'BLE TRIBUNAL TO ADD, DELETE, MODIFY ANY GROUNDS OF APPEAL AT THE TIME OF HEARING. GROUND N O.1 AND 2 REGARDING VALIDITY OF THE INITIATION OF PROCEEDINGS U/S 158 - BD : 6. LEARNED AR OF THE ASSESSEE HAS SUBMITTED THAT THE NOTICE DATED 1/2/2002 ISSUED U/S 158 - BD IS WITHOUT JURISDICTION BECAUSE THE AO HAS NOT RECORDED THE SATISFACTION THAT TH E DOCUMENTS SEIZED DURING THE SEARCH AND SEIZURE ACTION BELONGS TO THE ASSESSEE AND INDICATING UNDISCLOSED INCOME OF THE ASSESSEE. HE HAS FURTHER SUBMITTED THAT RECORDING OF SATISFACTION IS A MANDATORY CONDITION BEFORE INVOKING PROVISIONS OF SEC. 158 - BD. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF 289 ITR 341 AS IT (SS) A NO . 10 /BANG/201 0 SHRI P.SATISH SHETTY PAGE 5 OF 13 WELL AS THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. DAWN VIEW FARM PVT. LTD. AND SUBMITTED THAT IT IS SETTLED PROPOSITION OF LAW THAT SATISFACTION OF THE AO MUST BE RECORDED TO THE EFFECT THAT THERE IS UNDISCLOSED INCOME BELONGING TO ANY PERSON OTHER THAN PERSON IN RESPECT OF WHOM SEARCH WAS MADE U/S 132 OF THE ACT. HE HAS ALSO RELIED UPON THE JUDGMEN T OF THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. CALCUTTA KNITWEAR (362 ITR 673). 7. ON THE OTHER HAND, LEARNED DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT THIS ISSUE HAS ALREADY BEEN DEALT WITH BY THE CIT(A) BY NOTING THE FACT THAT THE TRIB UNAL, WHILE REMANDING THE MATTER TO THE AO, HAS NOT LEFT THIS ISSUE OPEN AND THEREFORE, THE ISSUE CANNOT BE RAISED IN THE SUBSEQUENT PROCEEDINGS ARISING FROM THE ASSESSMENT ORDER PASSED BY THE AO IN PURSUANCE TO THE DIRECTIONS OF THE TRIBUNAL. ONCE THE IS SUE RAISED BY THE ASSESSEE BEFORE THE TRIBUNAL HAS ALREADY BEEN ADJUDICATED BY REMANDING THE ISSUE WITHOUT ANNULLING OR CANCELING THE BLOCK ASSESSMENT, THIS ISSUE DOES NOT ARISE FROM THE PROCEEDINGS IN PURSUANT TO THE DIRECTIONS OF THE TRIBUNAL. SHE HAS R ELIED UPON THE FINDINGS OF THE CIT(A). 8. IN REJOINDER, LEARNED AR OF THE ASSESSEE HAS SUBMITTED THAT AFTER THE ORDER OF THE TRIBUNAL DATED 29/2/2008, ASSESSEE FILED A MISC. PETN. VIZ MP NO.67/BANG/2010 AND SOUGHT RECTIFICATION OF THE MISTAKE APPAREN T ON RECORD ON ACCOUNT OF NON - IT (SS) A NO . 10 /BANG/201 0 SHRI P.SATISH SHETTY PAGE 6 OF 13 ADJUDICATION OF GROUND NO.1 REGARDING VALIDITY OF INITIATION OF PROCEEDINGS U/S 158 - BD. LEARNED AR OF THE ASSESSEE HAS SUBMITTED THAT VIDE ORDER DATED 28/7/2010, THIS TRIBUNAL HAS DISPOSED OF THE MP OF THE ASSESSEE BY GIVIN G OPPORTUNITY TO THE ASSESSEE TO CONTEST THIS ISSUE IN THE APPEAL FILED AGAINST THE IMPUGNED ORDER OF THE CIT(A). THUS, LEARNED AR OF THE ASSESSEE HAS SUBMITTED THAT THIS ISSUE GOING INTO THE ROOT OF THE MATTER HAS TO BE DECIDED FIRST. 9. WE HAVE CON SIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. IN THE EARLIER ROUND OF LITIGATION, THE TRIBUNAL, VIDE ITS ORDER DATED 29/2 /2008 REMANDED THE MATTER TO RECORD OF THE AO VIDE PARA.9 AS UNDER: 9. IN THE CASE OF OTHER ASSESSEES VIZ S/SHRI P.RAJESH SHETTY AND SATISH SHETTY, BOTH ASSESSEES AND THE REVENUE ARE IN APPEAL. THE LEARNED COUNSEL FOR THE ASSESSEE HAD SUBMITTED WRITTEN SUBMISSIONS RAISING AS MANY AS 14 CONTENTIONS WHICH RELATE TO VARIOUS ADDITIONS MADE BY THE AO. ONE OF THE CONTENTIONS IS THAT THEY WERE NOT GIVEN SUFFICIENT OPPORTUNITY. THE REVENUE HAS CHALLENGED CERTAIN DELETIONS MADE BY THE LEARNED CIT(A). SINCE WE ARE REMANDING THE ISSUE IN THE CASE OF SHRI SEETHARAMA SHETTY, IT WILL BE FAIR AND JUSTIFIED IF THESE ASSESS MENTS ALSO RE - CONSIDERED BY THE AO AFTER GIVING SUFFICIENT OPPORTUNITY TO THE ASSESSEES. FOR THE SAME REASONING, ASSESSMENT RELATING TO SMT.LAKSHMI AMMA IS ALSO SET ASIDE FOR THE SAME PURPOSE OF REDOING THE ASSESSMENT AFTER GIVING IT (SS) A NO . 10 /BANG/201 0 SHRI P.SATISH SHETTY PAGE 7 OF 13 SUFFICIENT OPPORTUNITY T O THE ASSESSEES. IT IS ORDERED ACCORDINGLY. THUS IT IS CLEAR THAT ISSUE OF VARIOUS ADDITIONS MADE BY THE AO IN BLOCK ASSESSMENT WAS DEALT WITH BY THE TRIBUNAL AND THE SAME WAS SET ASIDE TO THE RECORD OF THE AO. AS REGARDS, GROUND NO.1 OF THE ASSESSEE S APPEAL IN THE EARLIER ROUND OF LITIGATION, ASSESSEE FILED MP NO.67/BANG/2010 AND SOUGHT RECTIFICATION OF THE MISTAKE IN THE ORDER DATED 29/02/2008 BY RECALLING OF THE ORDER FOR DECIDING GROUND NO.1. THE TRIBUNAL, WHILE DISPOSING OF M P OF THE ASSESSEE, HA S OBSERVED AND REJECTED THE SAME IN PARAS.3 TO 5 AS UNDER: 3. AFTER HEARING BOTH THE PARTIES AND AFTER PERUSAL OF THE MATERIAL ON RECORD, WE FIND FROM THE GROUNDS OF APPEAL RAISED BEFORE THE TRI BUNAL THAT THE ASSESSEE HAS NOT RAISED A SPECIFIC GROUND OF (APPEAL RATING TO THE VALIDITY OF THE PROCEEDINGS U/S 158B OF THE ACT IN THE APPELLANTS CASE. ON A QUERY FROM THE BENCH, THE LEA RNED COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO GROUND OF APPEAL NO.1 AND A CCORDING TO HIM THIS GROUND RELATES TO TH E VALIDITY OF THE PROCEEDINGS UNDER SEC TION 158BD OF THE ACT. GROUND NO.1 READS AS UNDER : 1 . THE LEARNED ASSESSING AUTHORITY ERRED IN INITIATING PROCEEDINGS UNDER SECTION 158 BD OF THE ACT IN THE APPELLANTS CASE' THE GROUND OF APPEAL N O.1, IN OUR OPINION IS VERY GENERAL IN NATURE AND AS BOTH THE MEMBERS HEARING THIS IT (SS) A NO . 10 /BANG/201 0 SHRI P.SATISH SHETTY PAGE 8 OF 13 MISC. PETITION ARE NOT THE PARTIES TO THE ORIGINAL ORDER OF THE TRIBUNAL IN THE APPEAL , IT CANNOT BE ASCERTAINED AS TO WHETHER THE ASSESSEE ARGUED ABOUT THE SATISFACTION NOT BEING RECORDED BEFO RE THE ISSUE OF NOTICE U/S 158 BD OF THE ACT. 4 . ON A QUERY FROM THE BENCH , THE ASSESSEE HAD PRODUCED COPIES O F THE ORDERS OF T HE A.O. AS WELL AS THE C I T(A)IN THE REMAND PROCEEDINGS AND WE FIND THAT THE CIT( A) HAS CONSIDERED THIS ISSUE AND HAS HELD TH AT ISSUE R ELATING TO THE JURISDICTION OF BLOCK ASSESSMENT HAD ALREADY BEEN RAISED BY THE ASSESSEE BEFORE THE ITAT WHICH HAS ADJUDICATED THE MATTER AND SET ASIDE THE ORDER PASSED EARLIER U/S 158 BD WITH OUT ANNULLING OR CANCELLING IT AND THEREFORE THE CIT(A) DISMISSED THE SAID GROUND OF APP EAL. 5. THE LEARNED C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD ALREADY PREFERRED APPEALS AGAINST THESE ORDERS BEFORE THE TRIBUNAL. AS THE ASSESSEE HAS NOT RAISED ANY SPECIFIC G ROUND OF APPEAL BEFORE THE TRIBUN AL IN IT( SS )A NO.41/BNG/05 AND AS THE TRIBUNAL HAS SET ASIDE ALL THE GROUNDS TO THE FILE OF A.O., WE ARE OF THE OPINION THAT THERE IS NO MISTAKE APPARENT FROM THE RECORD IN THE ORDER OF THE TRIBUNAL AND THE ASSESSEE IS AT LIBERTY TO CONTEST THE ISSUE IN TH E APPEALS FILED AGAINST THE OR DER OF THE CIT(A) PASSED U/S.158BD R.W.S. 254 OF THE INCOME TAX ACT, 1961. IN VIEW OF THE FOREGOING, THIS MISC. PETITION IS REJECTED . 10. I T IS CLEAR THAT THE EARLIER ORDER OF THE TRIBUNAL HAS ATTAINED FINALITY AS IN T HE M P, THE TRIBUNAL DID NOT INCLINE TO DISTURB THE EARLIER ORDER AND REJECTED THE PLEA OF THE ASSESSEE IT (SS) A NO . 10 /BANG/201 0 SHRI P.SATISH SHETTY PAGE 9 OF 13 THAT THERE IS A MISTAKE APPARENT ON RECORD. IT WAS OBSERVED BY THE TRIBUNAL THAT GROUND NO.1 IS VERY GENERAL IN NATURE AND THERE IS NO MISTAKE APPARENT F ROM RECORD IN THE ORDER OF THE TRIBUNAL. THE LIBERTY AS TO CONTEST THIS ISSUE IN PRESENT APPEAL WAS ONLY A PASSING OBSERVATION OF THE TRIBUNAL. ONCE THE ORDER DATED 29/2/2008 ATTAINS FINALITY, THEN AO IN THE REMAND PROCEEDINGS AS WELL AS THE CIT(A) IN PR OCEEDING ARISING FROM REMAND ORDER HAS LIMITED JURISDICTION TO DEAL WITH MATTER ONLY IN TERMS OF DIRECTIONS OF THE TRIBUNAL. THE CIT(A) HAS DEALT WITH THIS ISSUE IN PARA.4 OF THE IMPUGNED ORDER AS UNDER: 4. IN THE GROUNDS OF APPEAL, THE APPELLANT HAS, I N ADDITION TO CHALLENGING THE VARIOUS ADDITIONS MENTIONED IN PARAGRAPH 5 BELOW, RAISED TWO GENERAL GROUNDS, VIZ., THAT THE ASSESSMENT ORDER MADE ON 30.12.2008 WAS A NULLITY AND REQUIRED TO BE CANCELLED AND THAT THE ASSESSING AUTHORITY HAD ERRED IN INCLUDIN G INCOMES THAT RELATED TO ASSESSMENT YEARS FOR WHICH THERE WAS NO OBJECTION TO FILE RETURNS OF INCOME UNDER SECTION 139(1) IN THE BLOCK PERIOD AND WERE NOT UNDISCLOSED INCOMES. I FIND THAT THE ISSUE RELATING TO THE JURISDICTION OF BLOCK ASSESSMENT HAD ALRE ADY BEEN RAISED BY THE APPELLANT BEFORE THE HON'BLE ITAT, WHICH HAS ADJUDICATED UPON THE MATTER AND SET ASIDE THE ORDER PASSED EARLIER UNDER SECTION 158131D, WITHOUT ANNULLING OR CANCELLING IT. I THEREFORE DISMISS THESE TWO GROUNDS OF APPEAL. THE LAST GROU ND OF APPEAL IS THAT NO INTEREST WAS LEVIABLE UNDER SECTION 158BFA(1). HOWEVER, INTEREST UNDER SECTION 158BFA(1) IS A MANDATORY LEVY WHICH FOLLOWS FROM THE IT (SS) A NO . 10 /BANG/201 0 SHRI P.SATISH SHETTY PAGE 10 OF 13 DETERMINATION OF UNDISCLOSED INCOME. I THEREFORE DISMISS THIS GROUND OF APPEAL AS WELL. W HEN THER E WAS NO FINDING OF TRIBUNAL TO KEEP THIS ISSUE OPEN IN EARLIER ROUND OF LITIGATION, THEN , RAISIN G THIS ISSUE IN SECOND ROUND AND CONSEQUENTLY DECIDING THE ISSUE IN PRESENT APPELLATE PROCEEDINGS WILL AMOUNT TO GO BEHIND EARLIER ORDER OF THE TRIBUNAL WHICH, IN OUR VIEW, IS NOT PERMISSIBLE IN THESE PROCEEDINGS . T HE ASSESSEE HAS ALREADY EXHAUSTED ITS REMEDY BY FILING MP THEN IN THE PRESENT PROCEEDINGS ISSUE OF VALIDITY OF ASSESSMENT PASSED U/S 158 - BD WILL LEAD TO ANNULLING THE EARLIER ORDER OF THIS TRIBUNAL. IN OTHER WORDS, IF THE ISSUE OF VALIDITY OF ASSESSMENT ORDER PASSED U/S 158 - BD IS DECIDED IN FAVOUR OF ASSESSEE, IT WOULD AMOUNT TO GO BEHIND EARLIER ORDER OF TRIBUNAL FOR WHICH WE HAVE NO JURISDICTION UNDER PROCEEDINGS ARISING FROM REMAND PROCEEDINGS. TH E ORDER OF TRIBUNAL ALREADY ATTAINED FINALITY CANNOT BE DISTURBED IN SECOND ROUND OF APPEAL ARISING FROM REMAND ORDER PASSED BY THE TRIBUNAL. 1 1 . EVEN OTHERWISE, WE FIND THAT AO HAS RECORDED SATISFACTION VIDE ORDER SHEET DATED 01/02/2000 AS UNDER: 01/ 02/2000: THERE WAS A SEARCH U/S 132 OF IT ACT IN THE CASE OF K.SEETHARAMA SHETTY ON 29/10/99. DURING THE COURSE OF SEARCH, INCRIMINATING DOCUMENTS WERE FOUND PERTAINING TO THE ASSESSEE. THIS CAE IS COVERED U/S 158 - BD OF IT ACT IT (SS) A NO . 10 /BANG/201 0 SHRI P.SATISH SHETTY PAGE 11 OF 13 WE FURTHER NOTE THAT IN THE ASSESSMENT ORDER PASSED U/S 158 - BD, AO HAS FURTHER RECORDED HIS SATISFACTION IN PARA.1 AS UNDER: A SEARCH ACTION U/S 132(1) OF THE IT ACT WAS CONDUCTED BY THE INVESTIGATION WING OF THE DEPARTMENT AT THE RESIDENCE AND OFFICE PREMISES OF SHRI P.SEETHARAMA SHETTY OF SEETHALALAXMI COMPOUND, KOMBETTU, PUTTUR ON 29 - 10 - 1999. CONSEQUENTIAL SEARCHES AND SURVEY ACTION WAS ALSO DONE IN OTHER PLACES ON 29 - 10 - 1999 AND 17 - 11 - 1999. SHRI SATISH SHETTY, THE ASSESSEE, IS THE SON OF SHRI SEETHARAMA SHETTY. DURING THE COURS E OF SEARCH AT THE RESIDENCE OF SHRI SEETHARAMA SHETTY, SEVERAL INCRIMINATING DOCUMENTS, DIARIES, PAPERS, ETC. BELONGING TO THE ASSESSEE WERE FOUND AND SEIZED. ASSESSEE S SWORN IN STATEMENTS WERE ALSO RECORDED, DURING THE SEARCH OPERATIONS. THUS IT IS C LEAR THAT BEFORE ISSUING NOTICE U/S 158 - BD , AO HAS RECORDED SATISFACTION THAT SEVERAL INCRIMINATING DOCUMENTS WERE FOUND PERTAINING TO ASSESSEE. IN THE ASSESSMENT ORDER, AO HAS GONE TO RECORD THAT SEVERAL INCRIMINATING DOCUMENTS, VARIOUS PAPERS , DIARIES E TC., BELONGING TO ASSESSEE WERE FOUND AND SEIZED. STATEMENT OF THE ASSESSEE WAS ALSO RECORDED DURING SEARCH OPERATIONS. THEREFORE, WHEN ASSESSEE S STATEMENT WAS RECORDED DURING SEARCH OPERATION AND ALONG WITH INCRIMINATING DOCUMENTS AS REFERRED BY AO, FO UND DURING THE COURSE OF SEARCH OPERATION, THEN PRE - REQUISITE CONDITION OF SATISFACTION OF AO BEFORE INITIATING PROCEEDINGS U/S 158 - BD IS SATISFIED. THEREFORE, IN VIEW OF IT (SS) A NO . 10 /BANG/201 0 SHRI P.SATISH SHETTY PAGE 12 OF 13 SATISFACTION RECORDED BY AO BEFORE INITIATING PROCEEDINGS U/S 158 - BD , WE DO NOT FIN D ANY SUBSTANCE IN THE CONTENTION RAISED BY THE ASSESSEE AGAINST THE VALIDITY OF ASSESSMENT FRAMED U/S 158 - BD. THE DECISIONS RELIED UPON BY THE ASSESSEE ARE ONLY ON THE POINT THAT RECORDING OF SATISFACTION BY AO IS A PRE - CONDITION BEFORE INITIATING PROCEE DINGS U/S 158 - BD. THE HON BLE SUPREME COURT IN THE CASE OF CALCUTTA KNITWEAR (SUPRA) , HAS ALSO REITERATED THE VIEW BY HOLDING THAT FOR PURPOSES OF SEC. 158 - BD OF THE IT ACT, SATISFACTION NOTE IS SINE QUA NON AND MUST BE PREPARED BY AO. SATISFACTION NOTE CAN BE PREPARED AT EITHER OF THE FOLLOWING STAGES AS OBSERVED BY HON BLE SUPREME COURT : (A) AT THE TIME OF OR ALONG WITH INITIATION OF PROCEEDINGS AGAINST SEARCH PERSON U/S 158 - BC. (B) ALONG WITH AS SESSMENT PROCEEDINGS U/S 158 - BC (C) IMMEDIATELY AFTER A SSESSMENT PROCEEDINGS ARE CONCLUDED U/S 158 - BC OF THE SEARCH PERSON. IN CASE IN HAND SATISFACTION IS RECORDED BY AO EVEN PRIOR TO COMPLETION OF ASSESSMENT U/S 158 - BC , T HEREFORE, IT SATISFIES REQUIREMENT OF RECORDING SATISFACTION BY THE AO AS OBSERVED BY THE HON BLE SUPREME COURT. FURTHER, AO, IN THE CASE OF THE ASSESSEE IS SAME AS IN THE CASE OF THE ASSESSEE S FATHER. THEREFORE, THERE WAS NO REQUIREMENT OF TRANSMISSION OR TRANSFER OF RECORD PERTAINING TO THE ASSESSEE AND THE ONLY REQUIREMENT WAS TO RECORD SATISFACTION THAT CERTAIN MATERIAL/DOCUMENTS FOUND DURING SEARCH PERTAIN TO PERSON OTHER THAN SEARCH PERSON. ONCE, AO HAS RECORDED SATISFACTION THAT INCRIMINATING DOCUMENTS WERE IT (SS) A NO . 10 /BANG/201 0 SHRI P.SATISH SHETTY PAGE 13 OF 13 FOUND AND SEIZED DURING THE SEARCH PROCEEDINGS PERTAIN TO ASSESSEE BEFORE US , THEN THIS LEAVES NO DOUBT ABOUT DISCOVERY OF THE MATERIAL DURING SEARCH AND SEIZURE ACTION BELONGING TO ASSESSEE AND, THEREFORE, INITIATION OF PROCEEDINGS U/S 158 - BD IS PROPER AND VALID. 12 . SINCE OTHER GROUNDS RAISED BY THE ASSESSEE WERE NOT ARGUED, A S THE ASSESSEE REQUESTED TO DECIDED THE LEGAL ISSUE FIRST, THEREFORE, IN VIEW OF OUR FINDING ON THE LEGAL ISSUE RAISED BY THE ASSESSEE REGARDING VALIDITY OF THE ASSESSMENT PROCEEDINGS U/S 158 - BD, THE APPEAL OF THE ASSESSEE BE LISTED FOR HEARING AND ADJUDIC ATION OF THE REMAINING GROUNDS ON MERITS IN ORDINARY COURSE. 1 3 . GROUND NOS.1 AND 2 OF THE APPEAL IS DISMISSED AND THE APPEAL BE LISTED FOR HEARING AND ADJUDICATION OF OTHER GROUNDS . PRON OUNCED IN THE OPEN COURT ON 29 TH DECEMBER , 201 5 . S D/ - S D/ - ( ABRAHAM P GEORGE ) ( VIJAY PAL RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER EKSRINIVASULU COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER AS SISTANT REGISTRAR INCOME - TAX APPELLATE T RIBUNAL BANGALORE