Smt. Parvathiben N Patel, Bangalore V. ACIT, Bangalore

ITSSA 20/BANG/2010

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 8757 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-03-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-01-2013
• Assessment Year: misc
• Appeal Filed On: 14-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BIJOY KUMAR
• Assessee Lawyers: V SRINIVASAN
• Keywords: Unexplained cash credit; Invalid notice; Gift; Income from undisclosed sources; Period of limitation; Block assessment
• Section: 142(1); 68; 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N. BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI N.V. VASUDEVAN, JUDICIAL MEMBER IT(SS)A NOS. 20 & 21/BANG/2010 ASSESSMENT YEAR : BLOCK PERIOD 1997-98 TO 2002-03 SMT. PARVATHIBEN N. PATEL, PAN : ADAPP 6870G AND SMT. SHARDABEN L. PATEL, PAN: ADAPP 6877B # 14, IST CROSS, VIJAYALAKSHMI NILAYA, BTM LAYOUT II STAGE, BANGALORE. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(2), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI V. SRINIVASAN, C.A. RESPONDENT BY : SHRI BIJOY KUMAR PANDA, ADDL. CIT(DR) DATE OF HEARING : 27.02.2013 DATE OF PRONOUNCEMENT : 08.03.2013 O R D E R PER BENCH THESE ARE APPEALS BY THE TWO ASSESSEES VIZ., SMT. PARVATHIBEN N. PATEL AND SMT. SHARDABEN L. PATEL AGAINST THE TWO O RDERS BOTH DATED IT(SS)A NOS.20 & 21/BANG/2010 PAGE 2 OF 13 17.03.2010 OF THE CIT(APPEALS)-VI, BANGALORE RELATI NG TO THE BLOCK PERIOD 1997-98 TO 2002-03 (UPTO 03.04.2002). 2. THE FACTS AND CIRCUMSTANCES GIVING RISE TO THE AFORESAID APPEALS ARE IDENTICAL. THESE APPEALS WERE HEARD TOGETHER, WE DEEM IT CONVENIENT TO PASS A CONSOLIDATED ORDER. 3. THE ASSESSEE IN IT(SS)A 20/BANG/2010 IS AN INDIV IDUAL. HER SOURCE OF INCOME IS SHARE INCOME FROM PARTNERSHIP FIRM, IN TEREST ON CAPITAL AND INCOME FROM OTHER SOURCES. THE ASSESSEE IN IT(SS)A 21/BANG/2010 IS ALSO AN INDIVIDUAL. HER SOURCE OF INCOME IS ALSO IS SHA RE INCOME FROM PARTNERSHIP FIRM, INTEREST ON CAPITAL AND INCOME FR OM OTHER SOURCES. 4. THERE WAS A SEARCH ACTION U/S. 132 OF THE INCOME -TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT IN SHORT] CO NDUCTED IN PATEL GROUP OF CASES. THE SEARCH WAS CONDUCTED ON 03.04.2002. ON E MR. LALJI L. PATEL, WHO BELONGED TO THE PATEL GROUP OF COMPANIES, WHO I S HUSBAND OF MS.SHARADABEN PATEL WAS ALSO SEARCHED ON 03.04.2002 . IN THE COURSE OF HIS SEARCH, DOCUMENTS INDICATING THAT THE MR.LALJI L.PATEL HAD RECEIVED GIFTS DURING THE BLOCK PERIOD FROM ONE SHRI TANIKESH ARAV INDAN, A PERMANENT RESIDENT OF SINGAPORE THROUGH A DD DATED 10.02.200 1 FOR RS.ONE LAKH WAS FOUND. IN THE BLOCK ASSESSMENT PROCEEDINGS OF SHRI LALJI L. PATEL, HE HAD REITERATED THAT THE GIFTS WERE GENUINE AND IN SUPPO RT THEREOF, FILED THE REQUIRED DOCUMENTS LIKE AFFIDAVITS, ACKNOWLEDGEMENT OF GIFT ETC. THE ASSESSING OFFICER, HOWEVER, REFERRED TO A STATEMENT OF ONE SHRI JAGAN MOHAN RAO, RECORDED IN THE COURSE OF INCOME-TAX PRO CEEDINGS (NOT THE BLOCK ASSESSMENT PROCEEDINGS OF LALJI L. PATEL) THA T THE GIFT WAS NOTHING BUT IT(SS)A NOS.20 & 21/BANG/2010 PAGE 3 OF 13 A BUSINESS ADJUSTMENT. THE AO HAS REFERRED TO THE FOLLOWING STATEMENT OF JAGAN MOHAN RAO (DATE ON WHICH THE STATEMENT WAS GI VEN AND THE PROCEEDINGS IN WHICH STATEMENT WAS RECORDED IS NOT GIVEN) IN THE ORDER OF ASSESSMENT FOR THE BLOCK PERIOD OF LALJI L. PATEL): - Q.NO. 6. AS PER THIS OFFICE RECORD YOU HAVE DONATE D RS. 2,00,000/- EACH TO SMT.SHARADABEN PATEL AND SMT. PA RVATHIBEN PATEL ON 20/10/2001. PLEASE EXPLAIN? ANS: SRI LAIJI L. PATEL IS MY CLOSE FRIEND. HE APPR OACHED ME FOR SOME FINANCIAL ADJUSTMENT WITH A REQUEST TO OFFER D EMAND DRAFTS OF RS. 2,00,000/- IN THE NAMES OF SMT. SARADABEN PA TEL & SMT. PARVATHIBEN PATEL, WHICH I WAS FORCED TO DO OUT OF MY LONG STANDING FRIENDSHIP WITH THE FAMILY SRI. LAIJI L. P ATEL. I ALSO DECLARE THAT THE RS. 4,00,000/- DOES NOT BELONG TO ME. THE TWO DDS OF RS. 2,00,000/- EACH WERE MADE BY ME BY WITHD RAWING THE CASH OF RS. 4,00,000/- FROM MY SB. A/C. NO. 41262 A ND THE DDS WERE HANDED OVER TO SRI. LALJI L. PATEL. HOWEVER, I N LEAVE OF DDS, I GOT MY CASH OF RS. 4,00,000/- FROM SRI. LAIJ I L. PATEL. THE ENTIRE TRANSACTION MAY KINDLY BE VIEWED AS THE BUSI NESS ADJUSTMENT OF SRI. LAIJI L. PATEL. 5. THE AO WANTED SHRI TANIKESH ARAVINDAN TO BE PROD UCED FOR EXAMINATION IN THE BLOCK ASSESSMENT PROCEEDINGS OF LALJI L. PATEL. SINCE HE WAS NOT PRODUCED, THE AO HELD THAT THE SUM OF RS .ONE LAKH WAS LIABLE TO BE TREATED AS UNEXPLAINED CREDIT U/S. 68 OF THE ACT AND TREATED IT AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD. THE ORDER OF ASSESSMENT IN THE CASE OF LALJI L. PATEL WAS PASSED ON 29.04.2007. 6. THE AO ASSESSING THE TWO ASSESSEES IN THESE APPE ALS AND THE AO WHO ASSESSED LALJI L. PATEL ARE ONE AND THE SAME. IN THE RECORDS OF BOTH THE ASSESSEES, THE AO HAS RECORDED THE FOLLOWING REASONS FOR PROCEEDING AGAINST THE ASSESSEES U/S. 158BD OF THE ACT:- IT(SS)A NOS.20 & 21/BANG/2010 PAGE 4 OF 13 1. A SEARCH ACTION U/S 132 OF THE I.T. ACT. 1961 WAS CONDUCTED IN 12 BUSINESS/RESIDENTIAL PREMISES OF PA TEL GROUP OF CASES ON 03.04.2002. 2. DURING THE COURSE OF SEARCH ACTION, IT HAS COME TO THE NOTICE OF THE DEPARTMENT THAT THE ASSESSEE GROUP HA VE INTRODUCED MONEY IN THE FORM OF GIFTS. AT THE TIME OF SEARCH S UCH ALLEGED GIFTS HAVE BEEN CROSS VERIFIED IN CERTAIN CASES WHE RE IN THE ALLEGED DONORS HAVE CONFIRMED THAT IT WAS ONLY A FINANCIAL ARRANGEMENT MADE BY THEM. IT IS FURTHER STATED BY THE ALLEGED D ONORS THAT EQUIVALENT TO THE VALUE OF THE ALLEGED GIFTS, THEY HAVE RECEIVED THE MONEY IN THE FORM OF CASH. IN THE LIGHT OF THESE FA CTS, THE ASSESSEES IN THIS GROUP HAVE INTRODUCED BOGUS GIFTS . 3. FURTHER, WHILE CONCLUDING THE BLOCK ASSESSMENT U/S.158BC PERTAINING TO THE MAIN ASSESSEES IN THE GROUP, OPPORTUNITY WAS AFFORDED TO PRODUCE THE ALLEGED DON ORS FOR CROSS VERIFICATION WHICH THE ASSESSEES HAVE FAILED TO DO SO. AS SUCH, SUCH BOGUS GIFTS INTRODUCED HAVE BEEN BROUGHT TO TA X AS CASH CREDITS AND THE BLOCK ASSESSMENTS WAS CONCLUDED. 4. WHILE EXAMINING THE SEIZED MATERIAL, IT IS FOUN D THAT, IN THIS CASE ALSO, THERE ARE BOGUS GIFTS SHOWN TO HAVE RECEIVED BY THE ASSESSEE TO THE TUNE OF RS.1,20,000/- INTRODUCED IN TO THE CAPITAL ACCOUNT. THIS TRANSACTION OF THE ASSESSEE IS NOTHIN G BUT THE FINANCIAL ARRANGEMENT MADE BETWEEN THE ASSESSEE AND THE ALLEGED DONOR WHICH REQUIRES DETAILED VERIFICATION/ INVESTI GATION. 5. FURTHER, THIS FINANCIAL TRANSACTION GIVES AN IN DICATION THAT THE ASSESSEE HAS REIMBURSED THE CASH TO THE ALLEGED DONORS OUT OF THE UNACCOUNTED INCOME EARNED. SINCE THIS TRANSACTI ON HAS NOT GONE THROUGH THE BOOKS OF ACCOUNTS REGULARLY MAINTA INED WHICH WAS DISCLOSED TO THE DEPARTMENT, IT IS NECESSARY TO EXAMINE THE SOURCE FOR SUCH UNACCOUNTED CASH AND REQUIRES TO BE BROUGHT TO TAX U/S.68 OF THE I.T. ACT, AS UNDISCLOSED INCOME O F THE ASSESSEE. 6. THEREFORE, I AM SATISFIED THAT THERE IS UNDISCL OSED INCOME BELONGING TO THE ASSESSEE WHICH REQUIRES TO BE BROU GHT TO TAX UNDER PROVISIONS OF SECTION 158BC. ACCORDINGLY, ISS UE NOTICE U/S.158BC R.W.S. 158BD. SD/- SD/- IT(SS)A NOS.20 & 21/BANG/2010 PAGE 5 OF 13 7.06 QUESTIONNAIRE & NOTICE U/S 142(1) & THE CASE IS POSTED FOR HEARING. PUT UP. SD/- 5.9.06 PL ISS SUUMONS U/S 131 PUT UP. SD/- 7. NOTICE DATED 21.09.05 WAS ISSUED TO BOTH THE ASS ESSEES BY THE AO. THE REASONS RECORDED BY THE AO FOR ISSUING THE NOTI CE U/S. 158BD DOES NOT CONTAIN ANY DATE. NEITHER IN THE PROCEEDINGS BEFOR E THE CIT(A) NOR IN THE PROCEEDINGS BEFORE US, THE REVENUE HAS TAKEN ANY ST AND REGARDING THE DATE ON WHICH REASONS WERE RECORDED FOR ISSUE OF NOTICE U/S. 158BD OF THE ACT. IT CAN THEREFORE BE SAFELY PRESUMED THAT THE SATISF ACTION HAS BEEN RECORDED AND THE NOTICE U/S. 158BD OF THE ACT HAS BEEN ISSUE D SIMULTANEOUSLY, BECAUSE THE SATISFACTION REFERS TO ISSUE OF NOTICE U/S. 158BD. IT IS ON THE AFORESAID FACTS THAT WE NEED TO ADJUDICATE THE VALI DITY OF THE ORDER PASSED U/S. 158BD OF THE ACT, AS RAISED BY THE ASSESSEE IN GROUND NO.3 (AMENDED GROUND NO.3), WHICH READS AS FOLLOWS:- [3] THE ORDER OF BLOCK ASSESSMENT PASSED BY THE LE ARNED A.O. IS BAD IN LAW IN AS MUCH AS THE NOTICE ISSUED BY TH E LEARNED A.O. ASSUMING JURISDICTION U/S. 158BD OF THE ACT AFTER 1 YEAR AND 5 MONTHS FROM THE COMPLETION OF THE PROCEEDINGS U/S. 158BC OF THE ACT IN THE CASE OF THE PERSON SEARCHED IS BARRED BY TIME AND HENCE INVALID AND CONSEQUENTLY, THE ASSESSMENT FOUNDED ON THE INVALID NOTICE IS ALSO BAD IN LAW AND LIABLE TO BE ANNULLED . 8. THE ISSUE WITH REGARD TO VALIDITY OF THE ORDER P ASSED U/S. 158BD OF THE ACT ON THE AFORESAID GROUND WAS RAISED BY THE A SSESSEE BEFORE THE CIT(APPEALS) BY WAY OF AN ADDITIONAL GROUND. THE C IT(A) HELD THAT IT(SS)A NOS.20 & 21/BANG/2010 PAGE 6 OF 13 ADDITIONAL GROUND CAN BE ADMITTED U/S. 250(5) OF TH E ACT, ONLY IF THE CIT(A) IS SATISFIED THAT THE OMISSION OF THE GROUND FROM T HE FORM OF APPEAL WAS NOT WILLFUL OR UNREASONABLE. THE CIT(A) THEREAFTER HEL D THAT NOTICE U/S. 158BD WAS ISSUED TO THE ASSESSEE ON 21.09.05 AND THE ORDE R U/S. 158BD READ WITH SEC.158BC OF THE ACT WAS PASSED ON 24.09.2007. THE ADDITIONAL GROUND WAS RAISED BY THE ASSESSEE ON 30.03.09. HE WAS OF THE VIEW THAT THE ASSESSEE RAISED THE ADDITIONAL GROUND AFTER 3 YEARS. HE THEREFORE HELD THAT THE OMISSION TO RAISE THIS GROUND IN THE FORM OF APPEAL WAS WILFUL. HE THEREFORE REFUSED TO ADMIT THE ADDITIONAL GROUND FOR ADJUDICATION. NOTWITHSTANDING SUCH REJECTION TO ADMIT ADDITIONAL GROUND, THE CIT(A) ALSO WENT INTO MERITS OF THE ADDITIONAL GROUND AND HELD THAT THE PERIOD OF LIMITATION FOR COMPLETING THE BLOCK ASSESSMENT U/S. 158BD IS TWO YEARS FROM THE END OF THE MONTH IN WHICH THE NOTICE UNDER CHAPTER XIV-B IS SERVED ON SUCH OTHER PERSON. HE ALSO HELD THAT THE DECISION OF THE SPECIAL BENCH OF THE ITAT IN THE CASE OF MANOJ AGGARWAL (113 ITD 377) (DEL)(SB) , ON WHICH RELIANCE WAS PLACED BY THE LD. COUNSEL F OR THE ASSESSEE REFERRED TO ONLY SATISFACTION THAT HAS TO BE ARRIVED AT BEFORE ISSUING NOTICE U/S. 158BD OF THE ACT. HE HELD THAT IN THE BLOCK ASSESSMENT ORDER PASSED IN THE CASE OF LALJI L. PATEL, IT HAS BEEN CLEARLY BROUGHT OUT THAT GIFTS RECEIVED BY THE TWO ASSESSEES WERE BOGUS AND SUCH FINDING ITSELF WAS A SATISFACTION ARRIVED AT BY THE AO FOR ASSUMIN G JURISDICTION U/S. 158BD OF THE ACT. 9. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT NOTICE U/S. 158BD OF THE ACT CANNOT BE ISSUED AT ANY POINT OF T IME. HE DREW OUR ATTENTION TO THE DECISION OF THE ITAT CHANDIGARH BE NCH IN THE CASE OF IT(SS)A NOS.20 & 21/BANG/2010 PAGE 7 OF 13 ACIT V. KISHORE LAL BALWANT RAI (2007) 17 SOT 380 ( CHD.) , WHEREIN THE CHANDIGARH BENCH OF ITAT HELD THAT THE NOTICE U/S.158BD HAS TO BE ISSUED AFTER ARRIVING AT A SATISFACTION IN TH E COURSE OF ASSESSMENT MADE U/S.158BC OF THE ACT IN THE CASE OF PERSON WHO HAS BEEN SUBJECTED TO SEARCH AND THEREFORE NOTICE U/S.158 BD OF THE AC T HAS ALSO TO BE ISSUED WITHIN A REASONABLE TIME BY THE AO WHO IS IN CHARGE OF MAKING ASSESSMENT OF THE PERSON WHO IS PROCEEDED AGAINST U/S.158BD OF THE ACT. THE FOLLOWING RELEVANT OBSERVATIONS WERE BROUGHT TO OUR NOTICE:- OSTENSIBLY THERE IS NO TIME-LIMIT PROVIDED FOR ISS UANCE OF NOTICE UNDER S. 158BD. LOGICALLY SPEAKING, THE POINT OF TI ME WHEREBY THE AO, AFTER HAVING EXAMINED THE ENTIRE MATERIAL AND E VIDENCE FOR THE PURPOSE OF MAKING AN ASSESSMENT IN THE CASE OF PERS ON SEARCHED, SHALL BE IN A POSITION TO SATISFY HIMSELF AS TO WHE THER ANY UNDISCLOSED INCOME BELONGS TO A PERSON OTHER THAN T HE PERSON BEING ASSESSED. THUS, THE DATE OF FINALIZATION OF A SSESSMENT UNDER S. 158BC OF THE PERSON PUT TO SEARCH IS A RELEVANT POINT OF TIME TO DEDUCE THE PERIOD OF LIMITATION AVAILABLE WITH THE AO TO ARRIVE AT THE SATISFACTION CONTEMPLATED UNDER S. 158BD. THE A RGUMENT OF THE DEPARTMENT THAT SATISFACTION CAN BE RECORDED AT ANY TIME AND A NOTICE UNDER S. 158BD CAN BE ISSUED AT ANY TIME FOR THE REASON THAT THERE IS NO TIME-LIMIT PRESCRIBED IS FALLACIOU S HAVING REGARD TO THE SCHEME OF THE BLOCK ASSESSMENT UNDER CHAPTER XI V-B AS ALSO THE OBJECTIVES FOR WHICH THE SPECIAL PROCEDURE FOR ASSESSMENT IN SEARCH CASES HAS BEEN BROUGHT ON STATUTE BY THE FIN ANCE ACT, 1995. THE LEGISLATURE INTENDED THE IT AUTHORITIES T O PROCEED TO FINALIZE THE PROCEEDINGS OF ASSESSMENT OF SEARCH CA SES IN AN EFFICIENT AND SPEEDY MANNER. THIS OBJECTIVE CANNOT BE ENSURED IF ONE WERE TO INFER THAT THE SATISFACTION CONTEMPLATE D UNDER S. 158BD CAN BE ARRIVED AT BY THE AO ANY TIME, EVEN AF TER THE COMPLETION OF ASSESSMENT OF UNDISCLOSED INCOME IN T HE CASE OF THE SEARCHED PERSON. THERE CANNOT BE A SITUATION WHEREB Y A NOTICE UNDER S. 158BD CAN BE ISSUED AT ANY TIME. IN VIEW O F THE AFORESAID DISCUSSION IT CAN BE INFERRED FROM THE SCHEME OF CH APTER XIV-B THAT A LIMITATION CAN BE READ INTO THE STATUTE IN THIS R EGARD. THEREFORE, IT WOULD BE IN THE FITNESS OF THINGS TO CONCLUDE THAT THE SATISFACTION CONTEMPLATED UNDER S. 158BC IS REQUIRED TO BE RECOR DED BY THE AO OF THE PERSON SEARCHED AT ANY TIME BUT NOT LATER TH AN THE FINALIZATION OF ASSESSMENT OF UNDISCLOSED INCOME FO R THE BLOCK PERIOD UNDER CHAPTER XIV-B IN THE CASE OF THE PERSO N PUT TO SEARCH OR REQUISITION, AS THE CASE MAY BE. SECONDLY, INSOF AR AS THE ISSUANCE OF NOTICE UNDER S. 158BD IS CONCERNED THE SAME IS TO BE ISSUED BY THE SECOND MENTIONED AO I.E., THE AO OF T HE PERSON OTHER THAN THE PERSON PUT TO SEARCH UNDER S. 132 OR REQUI SITION UNDER S. 132A. THAT TOO, AFTER TRANSMISSION OF THE RELEVANT MATERIAL FROM THE FIRST MENTIONED AO I.E., THE AO OF THE PERSON PUT T O SEARCH UNDER S. IT(SS)A NOS.20 & 21/BANG/2010 PAGE 8 OF 13 132 OR UNDER S. 132A. THEREFORE, A REASONABLE TIME LAG BETWEEN THE DATE OF RECORDING OF SATISFACTION AND ISSUANCE OF NOTICE UNDER S. 158BD IS ENVISAGED IN THE ACT ITSELF. IT WAS SUBMITTED THAT IN THE PRESENT CASE, THE AO HAS ISSUED NOTICE U/S.158BD AFTER A LAPSE OF 1 YEAR AND 5 MONTHS AFTE R COMPLETION OF THE ASSESSMENT IN THE CASE OF THE PERSONS SEARCHED VIZ. , MR.LALJI L.PATEL, WHICH ACCORDING TO HIM CANNOT BE SAID TO BE ISSUE O F NOTICE U/S.158BD OF THE ACT, WITHIN A REASONABLE TIME. 10. HE FURTHER DREW OUR ATTENTION TO THE DECISION O F THE SPECIAL BENCH OF THE ITAT IN THE CASE OF MANOJ AGGARWAL (SUPRA) , WHEREIN THE SPECIAL BENCH HELD THAT THE TIME LIMIT FOR ISSUING NOTICE U/S. 15 8BD WOULD BE THE LAST DAY OF THE TIME LIMIT SPECIFIED IN SECTION 158BE IN THE CASE OF THE PERSON, IN WHOSE CASE SEARCH WAS CONDUCTED AND BLOCK ASSESSMEN T MADE U/S. 158BC OF THE ACT. THE FOLLOWING ARE THE RELEVANT O BSERVATIONS OF THE TRIBUNAL IN THIS REGARD. 114. SEC. 158BE PROVIDES FOR TIME-LIMIT FOR COMPLETION O F BLOCK ASSESSMENT. IT STIPULATES THAT THE ORDER UNDER S. 1 58BC SHALL BE PASSED WITHIN TWO YEARS FROM THE END OF THE MONTH IN WHICH THE LAST OF THE AUTHORIZATIONS FOR SEARCH UNDER S. 132 WAS EXECUTED OR FOR REQUISITION UNDER S. 132A AS THE CASE MAY BE AND SO THE ORDER E NVISAGED UNDER S. 158BC HAS NECESSARILY TO BE PASSED WITHIN THIS TIME FRAME SET IN LAW. IF THERE IS A TIME-LIMIT FOR PASSING 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 CIRCUMSTANCE CAN BE B EYOND THE TIME- LIMIT SET IN S. 158BE. IF THERE IS NO SUCH FINDING GIVEN IN THE ORDER UNDER S. 158BC, THE PROVISIONS OF S. 158BD STAND OUSTED A T THE EXPIRY OF THE SAID TIME-LIMIT FOR THE REASON THAT SUCH A FINDING IS THE VERY BASIS FOR INVOKING S. 158BD. 11. OUR ATTENTION WAS ALSO DRAWN TO THE FOLLOWING O BSERVATIONS OF THE SPECIAL BENCH WHICH WAS AS FOLLOWS:- IT(SS)A NOS.20 & 21/BANG/2010 PAGE 9 OF 13 115. SEC. 158BD AS SAID EARLIER BEGINS WITH THE EXPRESS ION 'WHERE THE AO IS SATISFIED' AND SO THE VERY SECTION IMPLIES A RECORDING OF SATISFACTION. THE SATISFACTION CONTEMPLATED IS A JU DICIOUS SATISFACTION AND NOT A SUBJECTIVE SATISFACTION AND UNLESS THE SA ME IS RECORDED IT IS NOT POSSIBLE FOR ANY PERSON TO DISCERN WHETHER THE SATISFACTION MEETS THE REQUIREMENTS OF LAW AT ALL. THE SATISFACTION CA N BE FOUND IN THE ORDER PASSED UNDER S. 158BC AND IF NO SUCH ORDER IS PASSED THEN IT WILL HAVE TO BE FOUND IN THE NOTE HANDING OVER THE MATER IAL SEIZED TO THE AO ASSESSING THE OTHER PERSON. IN ANY EVENT, IT HAS TO BE IN WRITING AND IN VIEW OF S. 158BE, THE SAID RECORDING HAS TO BE MADE BEFORE THE TIME SET IN S. 158BE EXPIRES. AFTER THE SAID DATE, IT IS NOT POSSIBLE TO INVOKE S. 158BD AT ALL. 116. A VIEW IS EXPRESSED THAT WHEREVER A 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 MATTER RELATES TO FIXING HUGE FINANCIAL AND OTHER CIVIL LI ABILITY ON THE PERSON AFFECTED AND IT HAS BEEN REPEATEDLY HELD THAT THERE MUST BE A FINALITY TO ANY PROCEEDING UNDER THE ACT AND THAT A CONCLUDED P ROCEEDING CANNOT BE REOPENED AT THE WHIM AND FANCY OF THE AO WITHOUT THE DUE PROCESS OF LAW. STRICT INTERPRETATION OF FISCAL STATUTES IS THE ORDER OF THE DAY AND AS THE PROVISIONS FOR SEARCH ARE DRACONIAN IN NATUR E SUCH PROVISIONS HAVE NECESSARILY TO BE STRICTLY CONSTRUED. IT WILL HAVE TO BE REMEMBERED THAT S. 158BD PROVIDES FOR INVOKING JURISDICTION UN DER THE SAID SECTION ENABLING THE AO ASSESSING THE OTHER PERSON IN RESPE CT OF WHOM THE AO ASSESSING THE PERSON SEARCHED GIVES A FINDING THAT THE UNDISCLOSED INCOME UNEARTHED AS A RESULT OF SEARCH BELONGS TO T HE SAID PERSON AND ONCE SUCH A FINDING IS GIVEN THE PROVISIONS OF S. 1 58BD COME INTO OPERATION. THIS, THEREFORE, INVOLVES ASSUMPTION OF JURISDICTION AND CANNOT BE CONSTRUED AS A PROCEDURAL MATTER. IN THE ABSENCE OF A FINDING IN THIS BEHALF, THERE IS NO JURISDICTION TO THE OTH ER AO AT ALL TO PROCEED FURTHER IN THE MATTER. AS THE TIME-LIMIT SET IN S. 158BE APPLIES TO SUCH FINDING, IT IS ONLY LOGICAL THAT THE SAID TIME-LIMI T AUTOMATICALLY APPLIES FOR INVOKING THE PROVISIONS OF S. 158BD AND IT IS F OR 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 S. 158BC AND 158BD ARE INTERLINKED, INTERLACED AND INTERTWINED A ND BOTH FORM PART AND PARCEL OF THE SAME CHAPTER. (UNDERLIN ING BY US FOR EMPHASIS) 12. THE LD. COUNSEL FOR THE ASSESSEE THUS SUBMITTED THAT APPLYING THE AFORESAID DECISION RENDERED BY THE SPECIAL BENCH, T HE ORDER OF ASSESSMENT U/S. 158BD READ WITH SEC.158BC HAS TO BE HELD TO BE INVALID AND ANNULLED. 13. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE DECISION OF THE AMRITSAR BENCH OF THE ITAT IN THE CASE OF VIJAY SEHGAL V. ACIT (100 IT(SS)A NOS.20 & 21/BANG/2010 PAGE 10 OF 13 ITD 560)(ASR) , WHEREIN IT WAS HELD THAT THERE IS NO TIME LIMIT F OR ISSUE OF NOTICE U/S. 158BD OF THE ACT. THIS DECISION, IN OU R VIEW, CANNOT APPLY IN VIEW OF THE LATER DECISION OF THE SPECIAL BENCH OF THE ITAT IN THE CASE OF MANOJ AGGARWAL (SUPRA) . 14. RELIANCE WAS ALSO PLACED BY THE LD. DR ON THE D ECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. MUKTA METAL WORKS (336 ITR 555)(P&H) . IN THE AFORESAID DECISION, THE HONBLE PUNJAB & HARYANA HIGH COURT HELD THAT THE OFFICE NO TE OF THE AO REGARDING UNDISCLOSED INCOME OF THIRD PERSON WAS SUFFICIENT S ATISFACTION FOR INITIATING PROCEEDINGS FOR BLOCK ASSESSMENT U/S. 158BD AGAINST THE THIRD PERSON. THIS DECISION, IN OUR VIEW, DOES NOT SUPPORT THE PL EA OF THE REVENUE, BECAUSE THE ISSUE WITH WHICH WE ARE CONCERNED IN TH E PRESENT CASE IS WITH REGARD TO THE PERIOD OF LIMITATION WITHIN WHICH NOT ICE U/S. 158BD HAS TO BE ISSUED. 15. IT WAS SUBMITTED BY THE LD. DR THAT THE ASSESSI NG OFFICER OF THE PERSON WHO WAS SEARCHED I.E., 158BC ASSESSEE AND TH E ASSESSING OFFICER OF THE PRESENT ASSESSEES WHO WERE PROCEEDED AGAINST U/S. 158BD OF THE ACT IS ONE AND THE SAME PERSON. IN OUR VIEW, EVEN THIS ASPECT WILL NOT MAKE ANY DIFFERENCE, WHEN IT COMES TO DECIDING THE QUESTION AS TO, WHETHER THE ASSUMPTION OF JURISDICTION U/S. 158BD OF THE AC T WAS WITHIN THE TIME CONTEMPLATED BY LAW? 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN T HE PRESENT CASE, IT IS SEEN THAT THE BASIS ON WHICH THE REVENUE PROCEEDED AGAINST THE TWO IT(SS)A NOS.20 & 21/BANG/2010 PAGE 11 OF 13 ASSESSEES IN THESE APPEALS IS THE SEARCH IN THE CAS E OF LALJI L. PATEL. THE SEARCH IN THE CASE OF LALJI L. PATEL WAS CONDUCTED ON 03.04.2002. THE LAST DATE ON WHICH THE ORDER OF ASSESSMENT HAS TO BE PAS SED IN THE CASE OF LALJI L. PATEL IN TERMS OF SECTION 158BE IS 30.04.2004. THE ORDER OF ASSESSMENT IN THE CASE OF THE AFORESAID PERSON WAS PASSED ON 2 9.04.2004. IN THE SAID ORDER, THERE IS A REFERENCE TO THE STATEMENT OF JAG AN MOHAN RAO, WHO CLAIMED THAT HE HAD GIVEN GIFTS TO SMT. PARVATIBEN PATEL AND SMT. SHARDABEN PATEL (THE TWO ASSESSEES IN THESE APPEAL S), ON THE REQUEST OF LALJI L. PATEL AND THAT THE CASH GIVEN BY LALJI L. PATEL WAS DEPOSITED IN HIS BANK ACCOUNT AND DDS GIVEN AS DEMANDED BY SHRI LALJ I L. PATEL. THIS IS THE BASIS ON WHICH THE AO RECORDED THE SATISFACTION FOR PROCEEDING AGAINST THE TWO ASSESSEES IN THESE APPEALS. 17. WE HAVE ALREADY MADE A REFERENCE TO THE SATISFA CTION RECORDED BY THE AO. THE SATISFACTION SO RECORDED DOES NOT CONT AIN A DATE. IT IS NOT THE CASE OF THE REVENUE THAT THIS SATISFACTION WAS RECO DED ON OR BEFORE 30.04.2004, WHICH IS THE LAST DATE OF THE PERIOD OF LIMITATION IN TERMS OF SECTION 158BE OF THE ACT, FOR PASSING AN ORDER OF A SSESSMENT IN THE CASE OF LALJI L. PATEL. 18. ON THE OTHER HAND, NOTICE U/S. 158BD HAD BEEN I SSUED IN THE CASE OF BOTH THE ASSESSEES BY THE AO ON 21.09.2005. A READ ING OF THE SATISFACTION RECORDED BY THE AO SHOWS THAT IT IS FOLLOWED BY NOT ICE U/S. 158BD OF THE ACT. IT THEREFORE FOLLOWS THAT A SATISFACTION HAD BEEN RECORDED ON 21.09.05. IN SUCH CIRCUMSTANCES, WHETHER PROCEEDINGS U/S. 158 BD HAVE TO BE HELD AS INVALID IS THE QUESTION, WHICH ARISES FOR CONSIDERA TION BY US. IT(SS)A NOS.20 & 21/BANG/2010 PAGE 12 OF 13 19. THE ANSWER TO THE AFORESAID QUESTION IS EVIDENT FROM THE DECISION OF THE SPECIAL BENCH OF THE TIAT IN THE CASE OF MANOJ AGGARWAL (SUPRA) AS WELL AS THE DECISION OF THE CHANDIGARH BENCH OF THE ITAT IN THE CASE OF KISHORE LAL BALWANT RAI (SUPRA). THE TRIBUNAL HAS TAKEN A VIEW THAT SATISFACTION HAS TO BE RECORDED BY THE AO ON OR BEF ORE THE TIME SET OUT IN SECTION 158BE OF THE ACT IN THE CASE OF A PERSON, W HO WAS SEARCHED AND PROCEEDED AGAINST U/S. 158BC OF THE ACT. IT HAS FU RTHER BEEN HELD THAT NOTICE U/S. 158BD HAS TO BE ISSUED ON OR BEFORE THE PERIOD OF LIMITATION REFERRED TO ABOVE. FAILURE TO RECORD SATISFACTION AND ISSUE SUCH NOTICE WITHIN THE AFORESAID PERIOD RENDERS PROCEEDINGS AS WELL AS THE NOTICE U/S. 158BD INVALID. CONSEQUENTLY, THE ASSESSMENT FOUNDE D ON SUCH INVALID NOTICE WAS ALSO HELD TO BE BAD IN LAW AND LIABLE TO BE ANNULLED. 20. IN VIEW OF THE AFORESAID DECISION OF THE SPECIA L BENCH OF THE TRIBUNAL REFERRED TO ABOVE, WE ARE OF THE VIEW THAT IN THE P RESENT CASE THE PROCEEDINGS WHICH HAVE COMMENCED PURSUANT TO SATISF ACTION RECORDED MUCH BEYOND THE PERIOD OF LIMITATION U/S. 158BE OF THE ACT IN THE CASE OF THE PERSON SEARCHED AND IN WHOSE CASE ASSESSMENT WA S MADE U/S. 158BC OF THE ACT, IS HELD TO BE INVALID. CONSEQUENTLY, T HE ORDER OF ASSESSMENT FRAMED PURSUANT TO INVALID ASSUMPTION OF JURISDICTI ON U/S.158BD OF THE ACT AND ISSUE OF INVALID NOTICE U/S.158BD OF THE ACT IS ALSO HELD TO BE BAD IN LAW AND THE ORDER OF ASSESSMENT IS ANNULLED. 21. IN VIEW OF THE AFORESAID DECISION ON THE PRELIM INARY ISSUE, THE OTHER ISSUES RAISED BY THE ASSESSEES ON RECORDING OF SATI SFACTION AS WELL AS IT(SS)A NOS.20 & 21/BANG/2010 PAGE 13 OF 13 MERITS OF THE ADDITION MADE BY THE REVENUE ARE NOT TAKEN UP FOR CONSIDERATION. 22. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 08 TH DAY OF MARCH, 2013. SD/- SD/- ( N. BARATHVAJA SANKAR ) ( N.V. VASU DEVAN ) VICE PRESIDENT JUDIC IAL MEMBER BANGALORE, DATED, THE 08 TH MARCH, 2013. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.