Manoj Silk Mills Pvt. Ltd., Surat V. The Dy.CIT.,Circle-1, Surat

ITSSA 155/AHD/2007

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 8853 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-11-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 15-10-2010
• Assessment Year: misc
• Appeal Filed On: 07-12-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Keywords: Block assessment
• Section: 132

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE S/SHRI BHAVNESH SAINI, JM AND D.C.AGRAWAL, A M M/S MANOJ SILK MILLS (P) LTD., 3A-1, D.K. PARK SOCIETY, BHATAR ROAD, SURAT -395007. VS. THE DY. CIT, CIRCLE-1, SURAT. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI M. K. PATEL, AR RESPONDENT BY:- SHRI SHAILENDRA SHARMA, DR O R D E R PER D.C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING FO LLOWING GROUNDS :- 1. THE LEARNED LOWER AUTHORITY HAS ERRED ON FAC TS AS WELL AS IN LAW IN MAKING THE ADDITION AS UNDISCLOSED INCOME OF RS. 3,59,699/- IN THE TOTAL INCOME RETURNED RS. NIL. 2. THE LEARNED LOWER AUTHORITY HAS ALSO ERRED IN L AW IN HOLDING THAT NOTICE TO FILE RETURN FOR THE BLOCK PERIOD DAT ED 21-11- 2005 IS GOOD IN LAW AND THE ASSESSMENT MADE THEREUN DER IS ALSO GOOD IN LAW. 3. THE LEARNED LOWER AUTHORITY HAS ALSO ERRED IN G IVING FINDINGS THAT THE AMOUNT OF ON-MONEY WAS PAID IN CASH ALONGW ITH CHEQUE AMOUNT. 4. THE LEARNED LOWER AUTHORITY HAS ALSO ERRED IN I NITIATING DE- NOVO ASSESSMENT PROCEEDINGS BY ISSUING NOTICE DATED 21-11- IT(SS)A NO.155/AHD/2007 BLOCK PERIOD 1990-91 TO 1999-2000 & UPTO 27.4.2000 IT(SS)A NO.155/AHD/2007 BLOCK PERIOD 1990-91 TO 1999-2000 & UPTO 27.4.2000 2 2005 AND MADE ASSESSMENT THEREUNDER BY ASSESSMENT O RDER DATED 13-11-2006. 5. THE LEARNED LOWER AUTHORITY HAS ALSO ERRED IN GI VING FINDINGS THAT THE ON-MONEY WAS PAID BY THE COMPANY PRIOR TO INCORPORATION AS HELD IN ASSESSMENT ORDER. 6. THE LEARNED LOWER AUTHORITY HAS ALSO ERRED IN GI VING VARIOUS FINDINGS IN ORDER WITHOUT ANY COGENT AND CONCRETE E VIDENCE SHOWN TO THE APPELLANT-ASSESSEE. 7. THE LEARNED LOWER AUTHORITY HAS ALSO ERRED IN NO T GIVING CROSS-EXAMINATION OF VENDOR OF PLOT AND PRINCIPAL O FFICER OF SACHIN UDYOGNAGAR SAHAKARI MANDLI LTD. AS URGED DUR ING THE ASSESSMENT PROCEEDINGS. 8. THE LEARNED LOWER AUTHORITY HAS ALSO ERRED IN GI VING FINDINGS THAT THE HALF ON-MONEY WAS PAID BY THE SHAKUNTALADE VI V. DUDEJA WITHOUT SHOWING ANY EVIDENCE ON RECORD AND MENTIONING IN THE NOTICE SERVED ON THE APPELLANT. 9. THE LD. LOWER AUTHORITY HAS ALSO ERRED IN NOT PROPE RLY APPRECIATING FACTS OF THE CASE AND VARIOUS WRITTEN SUBMISSIONS FILED BEFORE HIM IN COURSE OF PROCEEDIN GS. 10. THE LD. LOWER AUTHORITY HAS SERIOUSLY ERRED IN NOT DECIDING THE GROUNDS NO.6 OF APPEAL IN HIS APPELLATE ORDER A S TO WHETHER PROPER AND REASONABLE OPPORTUNITY OF PUTTIN G HIS CASE WAS GRANTED OR NOT BEFORE THE ASSESSING AUTHOR ITY. 2. DURING THE COURSE OF HEARING LD. AR SUBMITTED TH AT GROUND NO.2 GOES TO THE ROOT OF THE MATTER, IF IT IS ALLOWED IN FAVOUR OF THE ASSESSEE THEN ENTIRE ASSESSMENT HAS TO BE QUASHED. 3. THE FACTS OF THE CASE ARE THAT A SEARCH AND SEIZ URE OPERATION UNDER SECTION 132 WAS CARRIED OUT IN THE CASE OF SHRI SHA SHIKANT V. TAMAKUWALA AT 90, WILSON TOWER, ATHWALINES, SURAT O N 27.4.00. DURING THE COURSE OF SEARCH ONE DELUXE DIARY NO.BS-2 WAS F OUND AND SEIZED WHICH CONTAINED NOTINGS REGARDING PURCHASE OF PLOTS IN SACHIN UDYOG IT(SS)A NO.155/AHD/2007 BLOCK PERIOD 1990-91 TO 1999-2000 & UPTO 27.4.2000 3 NAGAR SAHAKARI MANDLI LTD. BY VARIOUS PERSONS. THIS DIARY CONTAINED BOTH PAYMENTS BY CHEQUES AND PAYMENTS THROUGH CASH. THIS ALSO REFLECTED TRANSACTION OF ON MONEY. ON PAGE 21A OF THE SAID DI ARY TRANSACTIONS IN THE NAME OF MANOJ WAS RECORDED. THIS WAS INTERPRE TED BY HIM AS M/S MANOJ SILK MILLS (P) LTD. I.E. ASSESSEE. IT CONTAIN ED TRANSACTIONS FOR CONSIDERATION OF RS.10,69,152/- FOR B TYPE, 2 PLOTS . TOTAL SUM INCLUDED RS.7,19,398/- BEING ON MONEY PAYMENT. THE LD. CIT(A ) IN HIS ORDER MENTIONED FOLLOWING FACTS REGARDING INITIATION OF 1 58 BD PROCEEDINGS AND DROPPING THEREUNDER AS FOLLOWS :- 2. ON THE BASIS OF THE INFORMATION, THE NOTICE U/S 158BD R.W.S. 158BC WAS ISSUED BY THIS OFFICE ON 10.10.2003 FOR THE BLO CK PERIOD 1.4.96 TO 30.4.2002 & UPTO 27.4.2002. IN RESPONSE THE RETURN OF INCOME FOR THE BLOCK PERIOD WAS FILED BY THE ASSESSEE ON 19.5.2004 , SHOWING UNDISCLOSED INCOME AT RS.NIL. 3. THE NOTICE U/S 158BD R.W.S 158BC DTD.10.10.2003 WAS ISSUED FOR THE BLOCK PERIOD 1.4.1996 TO 30.4.2002 AND UPTO 27. 4.2002 AS MENTIONED IN THE SAID NOTICE. SINCE THE SEARCH WAS CARRIED OU T ON 27.4.2000 THE CORRECT BLOCK PERIOD IS ASST. YEAR 19990-91 TO ASST . YEAR 1999-2000 AND UPTO 27.4.2000. AS THE DATE OF PAYMENT WAS NOT PERT AINING TO THE BLOCK PERIOD MENTIONED IN THE NOTICE U/S 158BD ISSUED ON 10.10.2003 AND THE BLOCK PERIOD WAS NOT CORRECTLY MENTIONED, THE ASSES SMENT PROCEEDINGS INITIATED U/S 158BD OF THE IT ACT, 1961 WERE DROPPE D VIDE ORDER DATED 26.10.2005. SUBSEQUENTLY ANOTHER NOTICE UNDER SECTION 158BD WAS ISSUED ON 21.11.2005 MENTIONING CORRECT BLOCK PERIOD ON 21.11 .2005. THEREAFTER THE BLOCK ASSESSMENT PROCEEDINGS STARTED WHICH RESU LTED IN BLOCK ASSESSMENT ORDER AT UNDISCLOSED INCOME OF RS.3,59,6 99/- BEING ON MONEY FINALLY COMPUTED. THE LD. CIT(A) DISMISSED T HE APPEAL HOLDING BLOCK ASSESSMENT AS VALID. 4. BEFORE US, THE AR SUBMITTED THAT ASSESSMENT ORDE R UNDER SECTION 158BC IN THE CASE OF SHRI TAMAKUWALA SHOULD HAVE BE EN COMPLETED BY IT(SS)A NO.155/AHD/2007 BLOCK PERIOD 1990-91 TO 1999-2000 & UPTO 27.4.2000 4 30 TH APRIL, 2002. THE FIRST NOTICE U/S 158BD R.W.S. 158 BC WAS ISSUED ON 10.10.2003 AND THE PROCEEDINGS RELATING THERETO WAS DROPPED VIDE ORDER DATED 26.10.2005. SUBSEQUENTLY ANOTHER NOTICE WAS I SSUED ON 21.11.2005. THE SATISFACTION WAS RECORDED BY THE AO OF THE ASSE SSEE AND NOT OF THE PERSON SEARCH. THE SATISFACTION NOTE SO RECORDED AS PROVIDED BY THE LD. DR IS AS UNDER :- REASONS RECORDED FOR ISSUE OF NOTICE U/S 158BD OF THE INCOME-TAX ACT, 1961. NAME OF THE ASSESSEE : MANOJ SILK MILLS (P) L TD., SURAT. PERIOD : BLOCK PERIOD 1990-91 TO 1999-2000 & UPTO 27.4.2000. THE ADDL. CIT, CENTRAL RANGE, SURAT, IN HIS LETTER NO.ADD/CIT/CR/SRT/INT./MSMPL/2003-04 DATED 7 TH AUGUST, 2003, ADDRESSED TO THE JOINT COMMISSIONER OF INCOME-TAX, RANGE-1, SURAT. INTIMATED THAT THE SEARCH U/S 132 OF THE ACT WAS CA RRIED OUT IN THE CASE OF SHRI SHASHIKANT V. TAMAKUWALA OF 90, WILSON TOWER, ATHWALINES, SURAT ON 27.04.2000. DURING THE COURSE OF SEARCH, ONE DEL UXE DIARY NO.BS-2 WAS FOUND AND SEIZED WHICH CONTAINS NOTING REGARDIN G PURCHASE OF PLOT IN SACHIN YDHYOGNAGAR SAHAKARI MANDLI LTD., SACHIN, BY VARIOUS PERSONS. SHRI SHASHIKANT V. TAMAKUWALA IS A BROKER AND DURIN G THE COURSE OF SEARCH HIS STATEMENT WAS RECORDED U/S 132(4) IN WHI CH HE HAS ADMITTED THAT TRANSACTIONS WERE MADE THROUGH HIM. THE NOTING OF THIS DIARY CONTAINS DETAILS OF TOTAL PURCHASE PRICE WHICH INCL UDES PAYMENT OF ON MONEY BY THE PURCHASERS. ON PAGE NO.21A OF THE SAID DIARY THE TRANSACTION REGARDING ABOVE REFERRED PARTY IN THE N AME OF MANOJ IS NOTED. AS PER THIS PAGE TOTAL PURCHASE CONSIDERATIO N IS OF RS.10,69,152/- FOR TWO PLOTS OF B TYPE. THE AMOUNT OF RS.3,49,754/ - IS DOCUMENT PRICE WHICH IS TO BE PAID TO THE SOCIETY AND BALANCE RS.7 ,19,398/- IS ON MONEY PAYMENT. IT ALSO INTIMATED THAT AS PER FURTHER INQUIRY MADE BY THEIR OFFICE IT WAS FOUND THAT OUT OF TWO PLOTS ONE IS PURCHASED IN THE NAME OF MANOJ SILK MILLS (P) LTD. AND THE OTHER IS IN THE NAME OF SMT. SHAKUNTALADEVI PROP. OF SHIVAM SILK INDUSTRIES. THEREFORE SHARE OF ON MONEY OF RS.7,19,398/- I.E. RS.3,59,699/- AND ALSO TO INQUIR E ABOUT SOURCE OF IT(SS)A NO.155/AHD/2007 BLOCK PERIOD 1990-91 TO 1999-2000 & UPTO 27.4.2000 5 PAYMENT OF RS.1,74,877/- IN THE CASE OF THE ASSESSE E COMPANY. THEREFORE, INVESTMENT MADE BY THE ASSESSEE COMPANY IN ONE PLOT IS TO BE ASSESSED U/S 158BD OF THE ACT. THEREFORE, NOTICE U/S 158BD IS RE QUIRES TO BE ISSUED IN THIS CASE FOR THE BLOCK PERIOD ASST. YEAR 1990-91 T O 1999-2000 & UPTO 27.04.2000. SD/- B.B.PATEL ASSTT.COMMISSIONER OF INCOME-TAX CIRCLE-1, SURAT. HE SUBMITTED THAT INITIATION OF BLOCK PROCEEDINGS A FTER COMPLETION OF BLOCK ASSESSMENT IN THE CASE OF PRESENT ASSESSEE IS BELATED. IN VIEW OF THE DECISION OF SPECIAL BENCH ITAT DELHI IN THE CASE O F MANOJ AGGARWAL VS. DCIT (2008) 113 ITD 377 (DEL)(SB) THE ISSUE IS SQUA RELY COVERED BY THE FINDING IN PARA 113 TO 118 WHICH READS AS UNDER :- '113. SECTION : 158BD COMMENCES WITH THE WORDS 'WHE RE THE ASSESSING OFFICER IS SATISFIED THAT ANY UNDISCLOSED INCOME BE LONGS TO ANY PERSON, OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH W AS MADE' AND THUS IT IS CLEAR THAT THE SATISFACTION OF THE ASSESSING OFF ICER ASSESSING THE PERSON SEARCHED IS THE FIRST AND FOREMOST REQUIREMENT. THE ASSESSING OFFICER CAN ARRIVE AT THIS SATISFACTION ONLY AFTER ASCERTAINING WHETHER THERE IS ANY UNDISCLOSED INCOME AT ALL AND THIS FINDING CAN BE A RRIVED AT BY HIM ONLY IN THE COURSE OF THE SECTION 158BD ASSESSMENT PROCE EDING. THEREAFTER, HE HAS TO ARRIVE AT A FINDING AS TO THE PERSON TO WHOM SUCH INCOME BELONGS. THIS FINDING ALSO CAN BE ARRIVED AT ONLY IN THE COU RSE OF THE SECTION 158BC PROCEEDING IN THE CASE OF THE PERSON SEARCHED . HE MAY FIND THAT PART OF THE SAID UNDISCLOSED INCOME BELONGS TO THE PERSON SEARCHED AND THE REST BELONGS TO OTHER PERSON OR PERSONS. AT THI S STAGE, HE HAS TO GIVE A FINDING IN THIS BEHALF AS TO WHICH OF THE UNDISCLOS ED INCOME BELONGS TO THE PERSON TO WHOM THE REST OF THE INCOME BELONGS. THIS FINDING TOO HAS TO BE ARRIVED AT IN THE COURSE OF THE SECTION 158BC PROCE EDING. AFTER ARRIVING AT THIS FINDING, HE MAKES AN ASSESSMENT OF THE UNDI SCLOSED INCOME RELATING TO THE PERSON SEARCHED IN HIS HANDS AND HA NDS OVER THE MATERIAL RELATING TO THE UNDISCLOSED INCOME BELONGING TO THE OTHER PERSON OR PERSONS TO THE RESPECTIVE ASSESSING OFFICER. AS SEC TION 158BC PROCEEDING IS SPECIFICALLY INTENDED FOR DETERMINING THE UNDISC LOSED INCOME, THE MATERIAL UNEARTHED HAS TO BE EXAMINED IN THE COURSE OF THE SAID PROCEEDING AND IF SUCH EXAMINATION SHOWS THAT THE UNDISCLOSED INCOME IT(SS)A NO.155/AHD/2007 BLOCK PERIOD 1990-91 TO 1999-2000 & UPTO 27.4.2000 6 BELONGS TO SOME OTHER PERSONS A FINDING IN THIS BEH ALF HAS TO BE RECORDED IN THE COURSE OF THE SECTION 158BC PROCEEDING AS SU CH FINDING HAS TO FORM AN INTEGRAL PART OF THE SAID PROCEEDING AND IN CONF ORMITY WITH THE INTENTION BEHIND THE SAID PROVISION. SO IT IS ESSEN TIAL THAT SUCH FINDING HAS TO FORM PART OF THE SECTION 158BC PROCEEDING AND SO MUST FIND A PLACE IN THE ORDER UNDER SECTION 158BC . THE ASSESSING OFFICER ASSESSING THE PERSON SEARCHED HAS TO GIVE A FINDING ON EACH AND E VERY MATERIAL AND EVIDENCE UNEARTHED AFTER A CAREFUL AND JUDICIOUS EV ALUATION AND SUCH EXERCISE INVOLVES FINDING THAT THE UNDISCLOSED INCO ME BELONGS TO A SPECIFIED PERSON AS FOUND BY HIM ON THE SECTION 158 BD PROCEEDING REVOLVES. IF THEREFORE, IN THE COURSE OF THE SECTIO N 158BC PROCEEDINGS THE ASSESSING OFFICER ASSESSING THE PERSON SEARCHED DOE S NOT GIVE A FINDING THAT ANY PART OF THE UNDISCLOSED INCOME UNEARTHED B ELONGS TO A. PERSON OTHER THAN THE PERSON SEARCHED, SECTION 158BD CAN NEVER BE INVOKED. IT IS THIS FINING THAT IS AN INTEGRAL PART OF BOTH THE PROCEEDINGS WHETHER UNDER SECTION 15BC OR 158BD, FOR, SUCH FINDING DE TERMINES IN WHOSE HANDS THE UNDISCLOSED INCOME UNEARTHED HAS TO BE TA XED. IF THE UNDISCLOSED INCOME BELONGS TO THE PERSON SEARCHED, HE IS SUBJECTED TO BLOCK ASSESSMENT ON SUCH INCOME UNDER SECTION 158BC BUT IF SUCH INCOME OR PART OF SUCH INCOME BELONGS TO A PERSON NOT SEAR CHED, SECTION 15S8D TAKES OVER. THIS IS THE ESSENCE OF THE ENTIRE ENACT MENT RELATING TO SEARCH.' 114. SECTION 158BE PROVIDES FOR TIME LIMIT FOR COMP LETION OF BLOCK ASSESSMENT, IT STIPULATES THAT THE ORDER UNDER SE CTION 158 BC SHAFT BE PASSED WITHIN TWO YEARS FROM THE END OF THE MONTH I N WHICH THE LAST OF THE AUTHORIZATION FOR SEARCH UNDER SECTION 132 WAS EX ECUTED OR FOR REQUISITION UNDER SECTION 132A AS THE CASE MAY BE A ND SO THE ORDER ENVISAGED UNDER SECTION 158BC HAS NECESSARILY TO BE PASSED WITHIN THIS TIME FRAME SET IN LAW. IF THERE IS A TIME-LIMIT FOR PASSING OF SUCH ORDER, THERE IS AN IMPLIED TIME-LIMIT FOR GIVING A FINDING AS TO THE PERSON TO WHOM THE UNDISCLOSED INCOME BELONGS WHICH UNDER NO CIRCUMSTANCES CAN BE BEYOND THE TIME-LIMIT SET IN SECTION 158BE IF THERE IS NO SUCH FINDING GIVEN IN THE ORDER UNDER SECTION 158BC, THE PROVISI ONS OF SECTION 158BD STAND OUSTED AT THE EXPIRY OF THE SAID TIME-LIMIT F OR THE REASON THAT SUCH A FINDING IS THE VERY BASIS FOR INVOKING SECTION 158B D. 115. SECTION 158BD AS SAID EARLIER BEGINS WITH THE EXPRESSION 'WHERE THE ASSESSING OFFICER IS SATISFIED' AND SO VERY SECTION IMPLIES A RECORDING OF SATISFACTION. THE\ SATISFACTION CONTEMPLATED IS A J UDICIOUS SATISFACTION AND NOT A' SUBJECTIVE SATISFACTION AND UNLESS THE SAME IS RECORDED IT IS NOT POSSIBLE FOR ANY PERSON TO DISCERN WHETHER THE SATI SFACTION MEETS THE REQUIREMENTS OF LAW AT AFT. THE SATISFACTION CAN BE FOUND IN THE ORDER PASSED UNDER SECTION 158BC AND IF NO SUCH ORDER IS PASSED THEN IT WILL IT(SS)A NO.155/AHD/2007 BLOCK PERIOD 1990-91 TO 1999-2000 & UPTO 27.4.2000 7 HAVE TO BE FOUND IN THE NOTE HANDING OVER THE MATER IAL SEIZED TO THE ASSESSING OFFICER ASSESSING THE OTHER PERSON IN ANY EVENT, IT HAS TO BE IN WRITING AND IN VIEW OF SECTION 158B&, THE SAID RECO RDING HAS TO BE MADE BEFORE THE TIME SET IN SECTION 158BE EXPIRES. AFTER THE SAID DATE, IT IS NOT POSSIBLE TO INVOKE SECTION 158BD AT ALL. 116. A VIEW IS EXPRESSED THAT WHEREVER & TIME- LIMIT IS INTENDED, THE PARLIAMENT HAS PROVIDED FOR THE SAME AND IN THE ABS ENCE OF A SPECIFIC PROVISION MADE IN THIS RESPECT IT HAS TO BE ASSUMED THAT THERE IS NO TIME- LIMIT INTENDED IN LAW. IT HAS TO BE REMEMBERED THAT THE MATER RELATES TO FIXING HUGE FINANCIAL AND OTHER CIVIL LIABILITY ON THE PERSON AFFECTED AND IT HAS BEEN REPEATEDLY HELD THAT THERE MUST BE A FINAL ITY TO ANY PROCEEDING UNDER THE ACT AND THAT A CONCLUDED PROCEEDING CANNO T BE REOPENED AT THE WHIM AND FANCY OF THE ASSESSING OFFICER WITHOUT THE DUE PROCESS OF TAW. STRICT INTERPRETATION OF FISCAL STATUTES IS THE ORD ER OF THE DAY AND AS THE PROVISIONS FOR SEARCH ATE DRACONIAN IN NATURE SUCH PROVISIONS HAVE .NECESSARILY TO BE STRICTLY CONSTRUED. IT WILL HA VE TO BE REMEMBERED THAT SECTION 158BD PROVIDES FOR INVOKING JURISDICTI ON UNDER THE SAID SECTION ENABLING THE ASSESSING OFFICER ASSESSING TH E OTHER PERSON IN RESPECT OF WHOM THE ASSESSING OFFICER ASSESSING THE PERSON SEARCHED GIVES A FINDING THAT THE UNDISCLOSED INCOME UNEARTH ED AS A RESULT OF SEARCH BELONGS TO THE SAID PERSON AND ONCE SUCH A F INDING IS GIVEN THE PROVISIONS OF SECTION 158BD COME INTO OPERATION. TH IS, THEREFORE, INVOLVES ASSUMPTION OF JURISDICTION AND CANNO T BE CONSTRUCTED AS A PROCEDURAL MATTER. IN THE ABSENCE OF A FINDING IN T HIS BEHALF, THERE IS NO JURISDICTION TO THE OTHER ASSESSING OFFICER AT ALL TO PROCEED FURTHER IN THE MATTER. AS THE TIME-LIMIT SET IN SECTION 158BE APPL IES TO SUCH FINDING, IT IS ONLY LOGICAL THAT THE SAID TIME-LIMIT AUTOMATI CALLY APPLIES FOR INVOKING THE PROVISIONS OF SECTION 158BD AND IT IS FOR THIS REASON THAT THE PARLIAMENT DID NOT FIND IT NECESSARY TO SPECIFY A S EPARATE TIME-LIMIT FOR THE SAME, AS THE ENACTMENT ITSELF SHOWS THAT BOTH S ECTIONS 158BC AND 158BD ARE INTER-LINKED, INTERLACED AND INTER-WINDED AND BOTH FORM PART AND PARCEL OF THE SAME CHAPTER.' 5. THE LD. DR ON THE OTHER HAND RELIED ON THE ORDER S OF AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. WE ARE OF THE VIEW THAT SINCE THE FACTS ARE UNDISPUTED THAT NOTICE UNDER SECTION 158BD WAS ISSUED ON 21.11.2005 AND EARLIER NOTICE IT(SS)A NO.155/AHD/2007 BLOCK PERIOD 1990-91 TO 1999-2000 & UPTO 27.4.2000 8 WAS ISSUED UNDER SECTION 158BD ON 10.10.2003. THE A SSESSMENT U/S 158BC IN THE CASE OF THE PERSON SEARCHED ON 27.4.20 00, SHOULD HAVE BEEN COMPLETED BY 30 TH APRIL, 2002. ACCORDINGLY THE NOTICE UNDER SECTION 158BD SHOULD HAVE BEEN ISSUED BEFORE COMPLETION OF SEARCH PROCEEDINGS IN THE CASE OF PERSON SEARCHED. THE TRIBUNAL, CHAND IGARH BENCH IN ACIT VS. KISANLAL BALWANTRAI (2007) 17 SOT 380 (CHD) HAS HELD AS UNDER :- FURTHER, THE SATISFACTION CONTEMPLATED UNDER SECTIO N 158BD, IS REQUIRED TO BE RECORDED BY THE ASSESSING OFFICER OF THE PERSON SEARCHED AT ANY TIM E BUT NOT LATER THAN THE FINALIZATION OF ASSESSMENT OF UNDISCLOSED INCOME FOR THE BLOCK PERI OD UNDER CHAPTER XIV-B IN THE CASE OF THE PERSON PUT TO SEARCH OR REQUISITION, AS THE CASE MA Y BE. SECONDLY, INSOFAR AS THE ISSUANCE OF NOTICE UNDER SECTION 158BD IS CONCERNED, THE SAME I S TO BE ISSUED BY THE ASSESSING OFFICER OF THE PERSON OTHER THAN THE PERSON PUT TO SEARCH UNDER SE CTION 132 OR REQUISITION UNDER SECTION 132A. THAT TOO, AFTER TRANSMISSION OF THE RELEVANT MATERI AL FROM THE FIRST MENTIONED ASSESSING OFFICER, I.E., THE ASSESSING OFFICER OF THE PERSON PUT TO SEARCH U NDER SECTION 132 OR REQUISITION UNDER SECTION 132A. THEREFORE, A REASONABLE TIME LAG BETWEEN THE DATE OF RECORDING OF SATISFACTION AND ISSUANCE OF NOTICE UNDER SECTION 158BD IS ENVISAGED IN THE A CT ITSELF. [PARA 27] 7. IT IS ALSO HELD THEREIN THAT SUCH SATISFACTION H AS TO BE RECORDED BY THE AO OF PERSON SEARCHED UNDER SECTION 132. ANOTHER PREMISE WHICH CAN BE SAFELY DEDUCED FROM TH E DECISION OF THE SUPREME COURT IS THAT THE REQUIREMENT OF RECORDING OF SUCH SATISFACTION IS A MANDATORY CONDITION. THEREFORE, THE PLEA ADVANCED ON BEHALF OF THE REVENUE THAT THE SATISFAC TION IN SUCH CASES COULD ONLY BE DISCERNIBLE ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND SUCH SATISFACTION NEED NOT BE SPECIFICALLY RECORDED, COULD NOT BE ACCEPTED. IN THIS VIEW OF THE MATTER, IT COULD BE SAID THAT THE SATISFACTION CONTEMPLATED UNDER SECTION 158BD TO THE EFFECT THAT ANY UNDISCLO SED INCOME BELONGS TO ANY PERSON OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UN DER SECTION 132 OR REQUISITION MADE UNDER SECTION 132A, IS TO BE RECORDED IN WRITING BY THE A SSESSING OFFICER OF THE PERSON WITH RESPECT TO WHOM SEARCH UNDER SECTION 132 OR A REQUISITION UNDE R SECTION 132A IS MADE. [PARA 23] 8. IN THE CASE OF MANOJ AGGARWAL VS. DCIT (2008) 11 3 ITD 377 (DEL)(SB) ALSO HELD THAT AO OF PERSON SEARCHED SHOU LD RECORD SATISFACTION, AS UNDER :- THE PARAMETER FOR INITIATING ACTION UNDER SECTION 158 BD AND THE FIRST AND FOREMOST REQUIREMENT IS THAT THE ASSESSING OFFICER MAKING THE B LOCK ASSESSMENT IN THE CASE OF THE PERSON SEARCHED HAS TO BE SATISFIED THAT THE UNDISCLOSED INCOME DETECTED BELONGS TO SOME PERSON OTHER THAN THE PERSON SEARCHED AND SO THE SECTIO N ITSELF CONTEMPLATES SATISFACTION ON THE PART OF THE ASSESSING OFFICER MAKING THE ASSESSMEN T IN THE CASE OF THE PERSON SEARCHED. RECORDING OF SATISFACTION IS MANDATORY. [PARA 109] IT(SS)A NO.155/AHD/2007 BLOCK PERIOD 1990-91 TO 1999-2000 & UPTO 27.4.2000 9 THERE OBSERVATIONS ARE AS UNDER :- THESE HAVE TO BE POSITIVE FINDINGS FOR THE REASON THAT THE SECTION DOES NOT GIVE ANY ELBOW ROOM FOR THE ASSESSING OFFICER TO SAY THAT IT MAY BEL ONG TO A OR TO B OR TO C. HE HAS TO INFER ON THE BASIS OF THE MATERIAL AND EVIDENCE FOUND THAT SUCH INCOME BELONGS TO A SPECIFIED PERSON IDENTIFIED BY HIM. AFTER ARRIVING AT THIS FIN DING, HE HAS TO HAND OVER SUCH MATERIAL, DOCUMENTS, ETC., TO THE ASSESSING OFFICER HAVING JURISDICTI ON OVER THE SAID OTHER PERSON AT THAT MATERIAL POINT OF TIME AND IT IS AT THAT STAGE THAT T HE SECOND ASSESSING OFFICER ASSUMES JURISDICTION AND STEPS IN AND THEREAFTER HE SHALL PROCE ED UNDER SECTION 158BC AGAINST SUCH OTHER PERSON. IN SHORT, THE ASSESSING OFFICER ASSESSING THE OTHER PERSON ASSUMES JURISDICTION AT THAT POINT OF TIME. IF THE ASSESSING OFFICER ASSESSI NG THE PERSON SEARCHED DOES NOT FIND ANY UNDISCLOSED INCOME AT ALL, OR DOES NOT ARRIVE AT AN Y FINDING IN RESPECT OF THE SAME OR HAVING ARRIVED AT SUCH FINDING DOES NOT HAND OVER THE MATERIA L TO THE SECOND ASSESSING OFFICER, THE PROVISIONS OF SECTION 158BD DO NOT COME INTO OPERATI ON AT ALL. [PARA 111] 9. REGARDING TIME LIMIT FOR INITIATION OF BLOCK ASS ESSMENT PROCEEDINGS UNDER SECTION 158BD IN THE CASE OF OTHER PERSON, TH E SPECIAL BENCH OBSERVED AS UNDER :- IT IS IN THIS CONTEXT THAT QUESTIONS CROP UP-AS TO WHETH ER THERE IS ANY TIME LIMIT AT ALL FOR ASSUMPTION OF JURISDICTION UNDER SECTION 158BD; WHETHER THERE IS ANY REQUIREMENT FOR SATISFACTION BEING RECORDED BY THE ASSESSING OFFICER; WHETH ER SUCH SATISFACTION, IF REQUIRED, CAN BE RECORDED AT ANY POINT OF TIME; AND, WHETHER TH ERE IS ANY TIME LIMIT FOR ISSUE OF A NOTICE UNDER SECTION 158BD AT ALL. [PARA 112] SECTION 158BD COMMENCES WITH THE WORDS WHERE THE ASSESS ING OFFICER IS SATISFIED THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE AND, THUS, IT IS CLEAR THAT THE SATISFACT ION OF THE ASSESSING OFFICER ASSESSING THE PERSON SEARCHED IS THE FIRST AND FOREMOST REQUIRE MENT. THE ASSESSING OFFICER CAN ARRIVE AT THIS SATISFACTION ONLY AFTER ASCERTAINING WHETHER THERE IS ANY UNDISCLOSED INCOME AT ALL AND THIS FINDING CAN BE ARRIVED AT BY HIM ONLY IN THE COURSE OF SECTION 158BC ASSESSMENT PROCEEDING. THEREAFTER, HE HAS TO ARRIVE AT A FINDING AS TO THE PERSON TO WHOM SUCH INCOME BELONGS. THIS FINDING ALSO CAN BE ARRIVED AT ONLY IN THE COU RSE OF SECTION 158BC PROCEEDING IN THE CASE OF THE PERSON SEARCHED. HE MAY FIND THAT PART OF THE SAID UNDISCLOSED INCOME BELONGS TO THE PERSON SEARCHED AND THE REST BELONGS TO OTHER PERSON OR PERSONS. AT THIS STAGE, HE HAS TO GIVE A FINDING IN THIS BEHALF AS T O WHICH OF THE UNDISCLOSED INCOME BELONGS TO THE PERSON SEARCHED AND THE OTHER PERSON TO WHOM THE REST OF THE INCOME BELONGS. THIS FINDING TOO HAS TO BE ARRIVED AT IN T HE COURSE OF SECTION 158BC PROCEEDING. AFTER ARRIVING AT THIS FINDING, HE MAKES AN ASSESSM ENT OF THE UNDISCLOSED INCOME RELATING TO THE PERSON SEARCHED IN HIS HANDS AND HANDS OVER THE MATERIAL RELATING TO THE UNDISCLOSED INCOME BELONGING TO THE OTHER PERSON OR PERSONS TO THE RESPECTIVE ASSESSING OFFICERS. AS SECTION 158BC PROCEEDING IS SPECIFICAL LY INTENDED FOR DETERMINING THE UNDISCLOSED INCOME, THE MATERIAL UNEARTHED HAS TO B E EXAMINED IN THE COURSE OF THE SAID PROCEEDING AND IF SUCH EXAMINATION SHOWS THAT THE UNDI SCLOSED INCOME BELONGS TO SOME OTHER PERSONS, A FINDING IN THISBEHALF HAS TO BE RECORDED I N THE COURSE OF SECTION 158BC PROCEEDING AS SUCH FINDING HAS TO FORM AN INTEGRAL PART OF THE SAID PROCEEDING AND HAS TO BE IN CONFORMITY WITH THE INTENTION BEHIND THE SAID PROVISION. SO, IT IS ESSENTIAL THAT SUCH FINDING HAS TO FORM PART OF SECTION 158BC PROCEEDING AND SO MUST FIND A PL ACE IN THE ORDER UNDER SECTION 158BC. THE ASSESSING OFFICER ASSESSING THE PERSON SEARCHED HAS TO GIVE A FINDING ON EACH AND IT(SS)A NO.155/AHD/2007 BLOCK PERIOD 1990-91 TO 1999-2000 & UPTO 27.4.2000 10 EVERY MATERIAL AND EVIDENCE UNEARTHED AFTER A CAREFU L AND JUDICIOUS EVALUATION AND SUCH EXERCISE INVOLVES A FINDING THAT THE UNDISCLOSED INCOME BELONGS TO A SPECIFIED PERSON AS FOUND BY HIM ON SUCH EVALUATION. IT IS THIS FINDING T HAT IS THE PIVOT AROUND WHICH SECTION 158BD PROCEEDING REVOLVES. IF, THEREFORE, IN THE COURSE OF SEC TION 158BC PROCEEDINGS THE ASSESSING OFFICER ASSESSING THE PERSON SEARCHED DOES NOT GIVE A FIND ING THAT ANY PART OF THE UNDISCLOSED INCOME UNEARTHED BELONGS TO A PERSON OTHER THAN THE P ERSON SEARCHED, SECTION 158BD CAN NEVER BE INVOKED. IT IS THIS FINDING THAT IS AN INTEG RAL PART OF BOTH THE PROCEEDINGS WHETHER UNDER SECTION 158BC OR 158BD, FOR, SUCH FINDING DETERM INES IN WHOSE HANDS THE UNDISCLOSED INCOME UNEARTHED HAS TO BE TAXED. IF THE UNDISCLOSED INCOME BELONGS TO THE PERSON SEARCHED, HE IS SUBJECTED TO BLOCK ASSESSMENT ON SUCH INCOME UN DER SECTION 158BC BUT IF SUCH INCOME OR PART OF SUCH INCOME BELONGS TO A PERSON NOT SEARCHED , SECTION 158BD TAKES OVER. THIS IS THE ESSENCE OF THE ENTIRE ENACTMENT RELATING TO SEARCH. [PARA 113] 10. WHEN WE APPLY THE ABOVE PRINCIPLES TO THE FACTS OF THE PRESENT CASE, WE FIND THAT SATISFACTION WAS NOT RECORDED BY THE AO OF THE PERSON SEARCHED BUT BY THE AO OF THE ASSESSEE AND NOTICE U NDER SECTION 158BD WAS ISSUED MUCH AFTER THE CLOSURE OF THE BLOCK ASSE SSMENT PROCEEDINGS IN THE CASE OF THE PERSON SEARCHED. ACCORDINGLY THE BL OCK ASSESSMENT PROCEEDINGS SO INITIATED ARE NOT VALID. THE APPEAL OF THE ASSESSEE IS ALLOWED. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER WAS PRONOUNCED IN OPEN COURT ON 12.11.10. SD/- SD/- (BHAVNESH SAINI) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT ME MBER AHMEDABAD, DATED : 12.11.10 MAHATA/- IT(SS)A NO.155/AHD/2007 BLOCK PERIOD 1990-91 TO 1999-2000 & UPTO 27.4.2000 11 COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 27/10/2010. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 11/11/2010 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..