Shri Lalitkumar M. Patel, Baroda V. The DY.CIT., Cent.Circle-1, Baroda

ITSSA 61/AHD/2007

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8129 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 24-08-2011
• Assessment Year: misc
• Appeal Filed On: 23-03-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: M G PATEL
• Keywords: Search and seizure; Opportunity of being heard; Additional evidence; Question of law; Block assessment; Right to appeal; Documents seized
• Section: 148; 263; 132

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH . .. . . .. . , , , , !' !' !' !', , , , #$ #$ #$ #$ %% % & %% % & %% % & %% % &, , , , ' ' ' ' ( ' ( ' ( ' ( ' BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND MUKUL KR. SHRAWAT, JUDICIAL MEMBER) IT(SS)A NO.61/AHD/2007 [BLOCK PERIOD : 01-04-1995 TO 19-12-2001] SHRI LALITKUMAR M. PATEL 4-ATMAJYOTI ASHRAM SOCIETY ELLORA PARK BARODA 390 023. /VS. DCIT, CENT.CIR.I BARODA. ( (( (*+ *+ *+ *+ / APPELLANT) ( (( (,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) .& / 0 (/ ASSESSEE BY : SHRI M.G. PATEL ' / 0 (/ REVENUE BY : SHRI B.L. YADAV %2 / &3/ DATE OF HEARING : 24 TH AUGUST, 2011 456 / &3/ DATE OF PRONOUNCEMENT : 30 TH SEPTEMBER, 2011 (7 / O R D E R PER G.D. AGARWAL, VICE-PRESIDENT : THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, AHMEDABAD ARISING OUT OF THE ORDER OF THE ASSESSING OFFICER UNDER SECTION 158BD R.W.S. 158BC(C) OF THE INCOME TAX ACT , 1961. 2. IN THIS APPEAL BY THE ASSESSEE, AS MANY AS FIVE GROUNDS ARE RAISED. HOWEVER, THE ASSESSEE HAS FURTHER RAISED THE FOLLOW ING ADDITIONAL GROUNDS: 1. THE LD.CIT(A) HAS ERRED IN LAW AS WELL AS ON FA CTS OF THE CASE BY CONFIRMING THE ACTION U/S.158BD OF THE ACT IN FI NALISING THE ASSESSMENT BY THE AO THOUGH THE ACTION U/S.158BD IS INITIATED ON 27/02/2004 WHICH IS TIME BARRED IN VIEW OF THE TIME LIMIT IT(SS)A NO.61/AHD/2007 -2- U/S.158BE OF THE ACT IN CASE OF JAYARAJ GROUP OF CA SES HAVING EXPIRED ON 31/12/2003. 2. THE APPELLANT THEREFORE PRAYS THAT ACTION U/S.15 8BD HAVING BEEN TAKEN AFTER EXPIRY OF THE PERIOD U/S.158BE IN CASE OF JAYRAJ GROUP CASES IS BARRED BY LIMITATION AND THEREFORE I NVOCATION OF SECTION 158BD IN CASE OF APPELLANT IS BAD AT LAW. 3. ASSESSMENT U/S.158BD FOR THE BLOCK PERIOD 01/04/ 1995 TO 19/12/2001 IN THE CASE OF THE APPELLANT IS BAD IN L AW AS ON SATISFACTION WAS RECORDED IN CASES OF JAYRAJ GROUP BEFORE COMPLETION OF BLOCK ASSESSMENT U/S.158BC IN THEIR C ASES. 3. AT THE TIME OF HEARING BEFORE US, IT IS STATED B Y THE LEARNED COUNSEL THAT THE ADDITIONAL GROUNDS ARE LEGAL GROUNDS WHICH GOES TO THE ROOT OF THE MATTER AND THE NECESSARY FACTS FOR ADJUDICATING THE SE GROUNDS ARE ALREADY ON RECORD OF THE REVENUE. HE THEREFORE REQUESTED F OR ADMISSION OF THE ABOVE ADDITIONAL GROUNDS. 4. THE LEARNED DR, ON THE OTHER HAND OBJECTED TO TH E ADMISSION OF THE ADDITIONAL EVIDENCE. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. IN THE CASE OF NATIONAL THERMAL POWER C O. LTD. VS. CIT, 229 ITR 383 (SC), THEIR LORDSHIPS HELD AS UNDER: UNDER SECTION 254 OF THE INCOME-TAX ACT, 1961, THE APPELLATE TRIBUNAL MAY, AFTER GIVING BOTH THE PARTIES TO THE APPEAL AN OPPORTUNITY OF BEING HEARD, PASS SUCH ORDERS THEREO N AS IT THINKS FIT. THE POWER OF THE TRIBUNAL IN DEALING WITH APPE ALS IS THUS EXPRESSED IN THE WIDEST POSSIBLE TERMS. THE PURPOSE OF THE ASSESSMENT PROCEEDINGS BEFORE THE TAXING AUTHORITIE S IS TO ASSESS CORRECTLY THE TAX LIABILITY OF AN ASSESSEE IN ACCOR DANCE WITH LAW. IF, FOR EXAMPLE, AS A RESULT OF A JUDICIAL DECISION GIV EN WHILE THE APPEAL IS PENDING BEFORE THE TRIBUNAL, IT IS FOUND THAT A NON- TAXABLE ITEM IS TAXED OR A PERMISSIBLE DEDUCTION IS DENIED, THERE IS NO REASON WHY THE ASSESSEE SHOULD BE PREVENTED FROM RAISING THAT IT(SS)A NO.61/AHD/2007 -3- QUESTION BEFORE THE TRIBUNAL FOR THE FIRST TIME, SO LONG AS THE RELEVANT FACTS ARE ON RECORD IN RESPECT OF THE ITEM . THERE IS NO REASON TO RESTRICT THE POWER OF THE TRIBUNAL UNDER SECTION 254 ONLY TO DECIDE THE GROUNDS WHICH ARISE FROM THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS). BOTH THE ASSE SSEE AS WELL AS THE DEPARTMENT HAVE A RIGHT TO FILE AN APPEAL/CR OSS-OBJECTIONS BEFORE THE TRIBUNAL. THE TRIBUNAL SHOULD NOT BE PRE VENTED FROM CONSIDERING QUESTIONS OF LAW ARISING IN ASSESSMENT PROCEEDINGS, ALTHOUGH NOT RAISED EARLIER. THE VIEW THAT THE TRIB UNAL IS CONFINED ONLY TO ISSUES ARISING OUT OF THE APPEAL BEFORE THE COMMISSIONER (APPEALS) IS TOO NARROW A VIEW TO TAKE OF THE POWER S OF THE TRIBUNAL. FROM THE ABOVE, IT IS EVIDENT THAT THE HONBLE APEX COURT HAS HELD THAT THE TRIBUNAL SHOULD NOT BE PREVENTED FROM CONSIDERI NG THE QUESTION OF LAW NOT RAISED EARLIER. THE RATIO OF THE ABOVE DEC ISION OF THE HONBLE APEX COURT WOULD BE SQUARELY APPLICABLE IN RESPECT OF THE ADDITIONAL GROUNDS BEING RAISED BY THE ASSESSEE. WE THEREFORE RESPECTFULLY FOLLOWING THE SAME, ADMIT THE ADDITIONAL GROUNDS RA ISED BY THE ASSESSEE. 6. COMING TO THE MERIT OF THE ADJUDICATION OF THE A BOVE ADDITIONAL GROUNDS, WE FIND THAT THE REVENUE WAS ASKED TO PROD UCE THE SATISFACTION RECORDED FOR THE ISSUE OF NOTICE UNDER SECTION 158B D. ADMITTEDLY, THE SEARCH AND SEIZURE ACTION WAS TAKEN UNDER SECTION 1 32(1) ON 19-12-2001 IN THE CASE OF JAYARAG GROUP CASES. THE DATES AS G IVEN BY THE AO AT PAGE NO.20 OF THE PAPER BOOK WITH REGARD TO THE COMPLETI ON OF THE ASSESSMENT IN THE CASE OF JAYARAJ GROUP CASES AND ALSO THE INI TIATION OF ACTION UNDER SECTION 158BD IN THE CASE IS AS UNDER: SR.NO. PARTICULARS DATE OF ORDER 1. DATE OF ORDER PASSED IN THE CASE OF M/S. JAYRAJ GROUP OF CASES FOR BLOCK PERIOD 1.4.95 TO 19.12.2011 I. U/S.158BC R.W.S. 158BG 30.1.2004 II. U/S.263 PASSED BY CIT-III, BARODA. 16.3.2006 IT(SS)A NO.61/AHD/2007 -4- III. U/S.158BC RWS 263 29.12.2006 2. DATE OF RECORDING OF REASONS FOR INITIATING ACTION U/S.158BD 23.2.2004 3. DATE OF ORDER PASSED IN THIS CASE U/S.158BD RWS 158BC(C) 31.1.2006 7. COPY OF THE REASONS RECORDED FOR ISSUE OF NOTICE UNDER SECTION 158BC IS AT PAGE NO.25 OF THE REVENUES PAPER BOOK WHICH READS AS UNDER: REASONS FOR ISSUE OF NOTICE U/S.158BD OF THE ACT. ASSESSEE : SHRI UPENDRA N. PATEL, SHRI LALIT M. PAT EL & ASHRI CHAMPAK M. PATEL A SEARCH AND SEIZURE ACTION IN THE JAYRAJ GROUP WA S CARRIED OUT U/S.132 (1) ON 19 12.2001. CERTAIN INCRIMINATING DO CUMENTS PERTAINING TO SHRI UPENDRA N.PATEL, SHRI LALIT M.PA TEL & SHRI CHAMPAK M.PATEL HAS BEEN SEIZED, WHICH HAVE NOT BEE N ACCOUNTED FOR IN HIS REGULAR BOOKS OF ACCOUNTS. THE SEIZED DO CUMENTS SHOW THAT SHRI LALIT M.PATEL AND SHRI CHAMPAK M.PATEL HA VE ACQUIRED RIGHTS IN THE LANDED PROPERTY OF M/S.HINDUSTAN EART H MOVERS PVT. LTD, WHICH WAS FINALLY ACQUIRED BY SHRI JAYESH DAVE AND SHRI UPENDRA N.PATEL, ON THE BASIS OF FINAL COMPROMISE A GREEMENT ENTERED INTO BY THE RESPECTIVE PARTIES DATED 30.09. 2000, WHICH WAS DULY APPROVED BY THE JURISDICTIONAL CIVIL COURT, BA RODA VIDE COMPROMISE DECREE DATED 03.10.2000. AS PER THE MOU DATED 01.11.1996, SHRI LALIT M.PATEL AND SHRI CHAMPAK M.P ATEL ACQUIRED THE RIGHT IN THE LAND OF M/S.HEMPL AND THE Y HAVE MADE TOTAL CASH PAYMENT OF RS.37 LACS AND UNACCOUNTED DE MAND DRAFT OF RS.1 CRORE TO THE COURT RECEIVER APPOINTED BY THE H ON'BLE HIGH COURT OF MUMBAI. SHRI JAYESH DAVE ENTERED INTO A CO URT SETTLEMENT DECREE ON 30.09.2000 WITH SHRI UPENDRA N .PATEL, SHRI LALIT M.PATEL & SHRI CHAMPAK M.PATEL FOR CEDING THE IR RIGHTS IN THE LAND OF M/S.HEMPL AND THEY RECEIVED 1,20,000 SQ .FT OF LAND OF M/S.HEMPL. THE SALE DEED WAS EXECUTED IN THE NAME O F SHRI UPENDRA N.PATEL ONLY FOR RS.5.60 LACS ONLY, WHICH W AS MUCH BELOW THE MARKET RATE. HENCE, LONG TERM CAPITAL GAIN HAD ACCRUED TO SHRI UPENDRA N.PATEL, WHICH HAS NOT BEEN OFFERED FOR TAX ATION. SINCE, THESE FACTS COULD BE DISCOVERED FROM THE VARIOUS MO US SEIZED DURING THE COURSE OF SEARCH IN THE JAYRAJ GROUP, TH E NOTICES U/S.158BD ARE ISSUED TO THE ASSESSEES. THE INCRIMIN ATING PAPERS IT(SS)A NO.61/AHD/2007 -5- REFERRED TO ARE A-15, PAGES 99-95, A-41 PAGES 36-39 , A-3/5 PAGES 138 TO 146, A-57 PAGES 122 TO 158, A-35 PAGES 66-87 J A-2 PAGES- 1, A-15 PAGES 75&76 AND OTHERS OF THE APPRAISAL REP ORT. SD/- (A.K. SINHA) DY.COMMISSIONER OF INCOME TAX DATE : 23.02.2004 CENTRAL CIR.1, BARODA. 8. THE LEARNED COUNSEL FOR THE ASSESSEE HAS CHALLEN GED THE VALIDITY OF THE INITIATION OF THE PROCEEDINGS UNDER SECTION 158 BD MAINLY ON TWO COUNTS (I) THAT THE PROCEEDINGS WERE INITIATED AF TER COMPLETION OF THE ASSESSMENT IN THE CASE OF JAYARAJ GROUP OF CASES AN D (II) DURING THE ASSESSMENT PROCEEDINGS OF JAYRAJ GROUP NO SATISFACT ION WAS RECORDED BY THE AO OF JAYARAJ GROUP BUT REASONS WAS RECORDED BY THE AO OF THE ASSESSEE FOR ISSUING OF NOTICE UNDER SECTION 158BD. IN SUPPORT OF HIS CONTENTION, HE RELIED UPON THE DECISION OF THE HON BLE APEX COURT IN THE CASE OF MANISH MAHESHWARI VS. ACIT, 289 ITR 341 AND SPECIAL BENCH OF THE ITAT IN THE CASE OF MANOJ AGARWAL VS. DCIT, 113 ITD 377. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON THE ORDE RS OF THE AUTHORITIES BELOW AND STATED THAT THE SATISFACTION RECORDED BY THE AO UNDER SECTION 158BC IS A VALID SATISFACTION BECAUSE THE PERSONS W HO RECORDED THE SATISFACTION WAS THE AO FOR JAYARAJ GROUP OF CASES AS WELL AS THE ASSESSEE. HE ALSO SUBMITTED THAT NOTICE UNDER SECT ION 158BD WAS DULY ISSUED BEFORE THE COMPLETION OF THE ASSESSMENT UNDE R SECTION 158BC READ WITH SECTION 263, IN THE JAYRAJ GROUP OF CASES. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. THE PROVISIONS OF SECTION 158BD HAS BEE N CONSIDERED BY THE HONBLE APEX COURT IN THE CASE OF MANISH MAHESHWARI (SUPRA). AT PAGE NO.348 OF THE REPORT, THEIR LORDSHIPS HELD AS UNDER : IT(SS)A NO.61/AHD/2007 -6- THE CONDITION PRECEDENT FOR INVOKING A BLOCK ASSE SSMENT IS THAT A SEARCH HAS BEEN CONDUCTED UNDER SECTION 132, OR DOCUMENTS OR ASSETS HAVE BEEN REQUISITIONED UNDER SECTION 132 A. THE SAID PROVISION WOULD APPLY IN THE CASE OF ANY PERSON IN RESPECT OF WHOM SEARCH HAS BEEN CARRIED OUT UNDER SECTION 132A OR D OCUMENTS OR ASSETS HAVE BEEN REQUISITIONED UNDER SECTION 132A. SECTION 158BD, HOWEVER, PROVIDES FOR TAKING RECOURSE TO A BLOCK AS SESSMENT IN TERMS OF SECTION 158BC IN RESPECT OF ANY OTHER PERS ON, THE CONDITIONS PRECEDENT WHEREFOR ARE : (I) SATISFACTIO N MUST BE RECORDED BY THE ASSESSING OFFICER THAT ANY UNDISCLO SED INCOME BELONGS TO ANY PERSON, OTHER THAN THE PERSON WITH R ESPECT TO WHOM SEARCH WAS MADE UNDER SECTION 132 OF THE ACT ; (II) THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASSETS SEIZED OR REQU ISITIONED HAD BEEN HANDED OVER TO THE ASSESSING OFFICER HAVING JU RISDICTION OVER SUCH OTHER PERSON ; AND (III) THE ASSESSING OFFICER HAS PROCEEDED UNDER SECTION 158BC AGAINST SUCH OTHER PERSON. THE CONDITIONS PRECEDENT FOR INVOKING THE PROVISIO NS OF SECTION 158BD, THUS, ARE REQUIRED TO BE SATISFIED BEFORE TH E PROVISIONS OF THE SAID CHAPTER ARE APPLIED IN RELATION TO ANY PER SON OTHER THAN THE PERSON WHOSE PREMISES HAD BEEN SEARCHED OR WHOS E DOCUMENTS AND OTHER ASSETS HAD BEEN REQUISITIONED UNDER SECTI ON 132A OF THE ACT. 10. THAT THE SPECIAL BENCH OF THE ITAT IN THE CASE OF MANOJ AGGARWAL (SUPRA) HAS CONSIDERED THE ABOVE DECISION OF THE HO NBLE APEX COURT AND ALSO OTHER DECISIONS OF VARIOUS COURTS AND EXAMINED IN DETAIL THE CONDITIONS WHICH ARE TO BE SATISFIED BEFORE THE ISS UE OF NOTICE UNDER SECTION 158BD. THE SPECIAL BENCH HELD AS UNDER: SECTION 158BD PROVIDES FOR ASSUMPTION OF JURISDICT ION TO MAKE A BLOCK ASSESSMENT IN THE CASE OF A PERSON NOT SEARCH ED AND AGAINST WHOM NO PROCEEDINGS HAVE BEEN INITIATED. IT CANNOT BE SAID THAT SUCH JURISDICTION CAN BE ASSUMED WITHOUT RECORDING SATISFACTION. IT HAS TOTE NOTED THAT THE PROCEEDINGS UNDER SECTION 1 58BC ARE AGAINST THE PERSON SEARCHED AND IF IN THE COURSE OF SUCH PROCEEDING THE ASSESSING OFFICER ASSESSING THE PERSON SEARCHED COMES ACROSS MATERIAL INDICATING THE PRESENCE OF UNDISCLOSED INC OME IN THE HANDS OF THE PERSON NOT SEARCHED, THERE HAS TO BE A PROVISION FOR MAKING A SIMILAR ASSESSMENT IN THE CASE OF THE OTHE R PERSON. AS SECTION 158BC RELATES TO A PERSON SEARCHED THERE HA S TO BE IT(SS)A NO.61/AHD/2007 -7- DIFFERENT PROVISION FOR MAKING A SIMILAR ASSESSMENT IN THE CASE OF THE OTHER PERSON AND HENCE SECTION 158BD HAS BEEN E NACTED. SO, THE SAID SECTION STATES THAT IF THE ASSESSING OFFIC ER IS SATISFIED THAT THE UNDISCLOSED INCOME BELONGS TO THE OTHER PERSON, THEN HE SHALL HAND OVER THE SEIZED MATERIAL SO AS TO ENABLE THE S ECOND ASSESSING OFFICER TO MAKE A BLOCK ASSESSMENT IN A SIMILAR MAN NER AND THAT IS NOT POSSIBLE IF THE SATISFACTION IS NOT RECORDED. A ND THIS CAN BE RECORDED ONLY AND ONLY IN THE COURSE OF THE SECTION 158BC PROCEEDING AND NOWHERE ELSE. IT IS THE ASSESSING OF FICER ASSESSING THE PERSON SEARCHED WHO GOES, THROUGH THE SEIZED MA TERIAL AND COMES TO A DECISION AS TO WHETHER THERE IS ANY UNDI SCLOSED INCOME UNEARTHED AS A RESULT OF SEARCH, IF SO ITS NATURE A ND TO WHOM IT BELONGS. IF THE SAID UNDISCLOSED INCOME BELONGS TO THE PERSON SEARCHED THAT IS THE END OF THE MATTER. IF, ON THE OTHER HAND, THE MATERIAL EXAMINED SHOWS THAT THE UNDISCLOSED INCOME PERTAINS TO SOME OTHER PERSON HE HAS TO GIVE A FINDING TO THIS EFFECT AND THEREUPON TRANSMIT THE RELATED SEIZED MATERIAL TO T HE ASSESSING OFFICER HAVING JURISDICTION OVER THE OTHER PERSON. ALL THESE FINDINGS HAVE TO BE RECORDED AFTER AN HONEST APPRECIATION OF THE SEIZED MATERIAL WITH AN OBJECTIVE MIND AND THERE HAS TO BE A RECORD REFLECTING SUCH FINDINGS ON THE BASIS OF WHICH ALON E THE OTHER ASSESSING OFFICER CAN ASSUME JURISDICTION TO PROCEE D AGAINST THE OTHER PERSON AND IT IS THIS RECORD WHICH FORMS THE 'NOTE OF SATISFACTION' OR THE 'RECORD OF SATISFACTION. IN S UCH CIRCUMSTANCE, THE RECORDING OF SUCH SATISFACTION IS IMPLIEDLY TO BE DONE IN THE COURSE OF THE SECTION 158BC PROCEEDING AS THE SATIS FACTION HAS TO BE RECORDED ONLY BY THE ASSESSING OFFICER MAKING TH E BLOCK ASSESSMENT IN THE CASE OF THE PERSON SEARCHED WHICH IN TURN MEANS THE SECTION 158BC PROCEEDINGS SUCH SATISFACTION CAN NOT BE RECORDED BEYOND THE DATE OF THE BLOCK ASSESSMENT IN THE SECTION 158BC PROCEEDING AND THE DATE OF THE BLOCK ASSESSME NT IS THE OUTER LIMIT FOR RECORDING SUCH SATISFACTION. THIS IS FOR THE REASON THAT THE SATISFACTION HAS TO BE RECORDED BY THE ASSESSING OF FICER EXAMINING THE MATERIAL IN THE CASE OF THE PERSON SEARCHED AND HE WILL HAVE TO FIND OUT WHETHER THERE IS ANY UNDISCLOSED INCOME AT ALL UNEARTHED WHICH AGAIN CAN ONLY BE IN THE COURSE OF SUCH PROCE EDING. AFTER FINDING THAT THERE IS UNDISCLOSED INCOME, HE WILL H AVE TO GIVE A FINDING AS TO WHETHER SUCH INCOME BELONGS TO THE PE RSON SEARCHED AND THIS TOO HAS TO BE IN THE COURSE OF THE SAID PR OCEEDING ONLY. IF HE FINDS THAT ANY OR ALL OF SUCH INCOME BELONGS TO A PERSON NOT SEARCHED, THEN HE HAS TO RECORD SUCH FINDING IN THI S BEHALF AND TAKES FOLLOW-UP ACTION AS ENVISAGED IN SECTION 158B D WHICH AGAIN IT(SS)A NO.61/AHD/2007 -8- HAS TO BE ONLY IN THE COURSE OF SECTION 158BC PROCE EDING AND, HENCE, IF NO SUCH SATISFACTION IS RECORDED IN COURS E OF SECTION 158BC PROCEEDING, THEN ASSUMPTION OF JURISDICTION U NDER SECTION 158BD IS NOT POSSIBLE. IN THE CIRCUMSTANCES, THE AB SENCE OF THE WORDS 'IN THE COURSE OF THE PROCEEDING IN THE SECT ION IS NO MATERIAL TO THE ISSUE IN THE CONTEXT OF THE SAID SECTION ITS ELF. 11. LET US EXAMINE THE FACTS OF THE ASSESSEES CASE IN THE LIGHT OF THE ABOVE DECISION OF THE HONBLE APEX COURT AND THE SP ECIAL BENCH OF THE ITAT. AS PER THE DECISION OF THE HONBLE APEX COUR T, BEFORE THE ISSUE OF NOTICE UNDER SECTION 158BD, SATISFACTION MUST BE RE CORDED BY THE AO OF THE PERSON SEARCHED, THAT THE UNDISCLOSED INCOME BE LONGS TO THE PERSON OTHER THAN THE PERSON SEARCHED AND THEN BOOKS OF AC COUNTS OR OTHER DOCUMENTS SEIZED HAS TO BE HANDED OVER TO THE AO OF THE PERSON TO WHOM THE UNDISCLOSED INCOME BELONGS. THEREAFTER ON THE BASIS OF SUCH SATISFACTION, THE AO OF THE PERSONS TO WHOM THE UND ISCLOSED INCOME BELONGS WILL TAKE PROCEEDINGS UNDER SECTION 158BD. SPECIAL BENCH OF THE ITAT HAS FURTHER HELD THAT SUCH SATISFACTION BY THE AO OF THE PERSON SEARCHED HAS TO BE RECORDED IN THE COURSE OF PROCEE DINGS UNDER SECTION 158BC AND NOT THEREAFTER. MEANING THEREBY, THE SAT ISFACTION MUST BE RECORDED BEFORE THE COMPLETION OF THE ASSESSMENT OF THE PERSON SEARCHED. NOW IN THE CASE OF THE ASSESSEE WE HAVE REPRODUCED THE SATISFACTION NOTE IN PARA-7 ABOVE. 12. FROM THE SATISFACTION NOTE, IT SEEMS THAT IT IS RECORDED BY THE AO OF THE ASSESSEE AND NOT THE AO OF JAYRAJ GROUP OF CASE S. THIS INFERENCE OF OURS IS ON THE FOLLOWING BASIS: I) HEADING OF THE NOTE IS REASONS FOR ISSUE OF NOTICE U/S.158BD OF THE ACT. THUS, IT IS THE REASONS REC ORDED BY THE AO BEFORE THE ISSUE OF NOTICE UNDER SECTION 158 BD. IT(SS)A NO.61/AHD/2007 -9- OBVIOUSLY, THE REASON IS RECORDED BY THE AO WHO ISS UED THE NOTICE UNDER SECTION 158BD. IT SEEMS THAT THE AO CONSIDERED THE PROVISION OF SECTION 158BD SIMILAR T O SECTION 148 AND THEREFORE BEFORE THE ISSUE OF NOTICE, HE RE CORDED THE REASONS FOR ISSUING OF SUCH NOTICE. II) THE NAME OF THE ASSESSEE MENTIONED IN THE SATISFACT ION NOTE IS SHRI UPENDRA N. PATEL, SHRI LALIT M. PATEL & SHR I CHAMPAK M. PATEL. THUS, THE REASON IS RECORDED IN THE CASE OF THESE ASSESSEE AND NOT IN THE CASE OF JAYRAJ GRO UP OF CASES. HAD THE SATISFACTION RECORDED BY THE AO OF JAYRAJ GROUP OF CASES, THEN THE NAME OF THE ASSESSEE WOULD HAVE BEEN JAYRAJ GROUP OF CASES AND NOT AS SHRI UPENDR A N. PATEL, SHRI LALIT M. PATEL & SHRI CHAMPAK M. PATEL. III) IN THE FIRST LINE OF THE SATISFACTION NOTE, THE AO HAS MENIONED THE SEARCH AND SEIZURE ACTION IN THE JAYRAJ GROUP OF CASES WAS CARRIED OUT UNDER SECTION 132(1) ON 19-12-2001 . IF THE SATISFACTION NOTE WAS RECORDED BY THE AO OF JAYRAJ GROUP OF CASES, HE WOULD HAVE MENTIONED A SEARCH AND SEIZUR E ACTION HAS TAKEN PLACE IN THE CASE OF THE ASSESSEE. IV) AT THE END OF THE NOTICE, THE AO HAS MENTIONED SIN CE THIS FACT COULD BE DISCOVERED FROM THE VARIOUS MOUS SEIZ ED DURING THE COURSE OF SEARCH IN JAYRAJ GROUP, THE NO TICES U/S.158BD ARE ISSUED TO THE ASSESSEES. THIS NOT ING CLEARLY PROVES THAT THE REASON WAS RECORDED BY THE AO OF SH RI LALIT M. PATEL AND NOT OF THE AO OF JAYRAJ GROUP. IF THE SATISFACTION HAS BEEN RECORDED BY THE AO OF JAYRAJ GROUP CASES, HE WOULD HAVE MENTIONED THAT DURING THE COU RSE OF SEARCH IN THE CASE OF THE ASSESSEE, VARIOUS MOUS BE LONGED TO IT(SS)A NO.61/AHD/2007 -10- SHRI UPENDRA N. PATEL, SHRI LALIT M. PATEL & SHRI C HAMPAK M. PATEL WERE FOUND. THE SAME ARE BEING FORWARDED TO THEIR AO FOR TAKING ACTION UNDER SECTION 158BD IN THEIR C ASES. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THAT TH E SATISFACTION WAS RECORDED BY THE AO OF THE ASSESSEE AND NOT BY THE A O OF THE PERSON SEARCHED. AS PER THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF MANISH MAHESHWARI (SUPRA) AS WELL AS SPECIAL BENCH DECISION IN THE CASE OF MAJOJ AGGARWAL (SUIPRA), THE SATISFACTION IS TO BE RECORDED BY THE AO OF THE PERSONS SEARCHED THAT TOO DURING THE COURSE OF ASSESSMENT PROCEEDINGS UNDER SECTION 158BC OF THE PERSON SEARC HED. 13. THAT THE REASONS RECORDED FOR ISSUE OF NOTICE U NDER SECTION 158BC WAS DATED 23-2-2004,WHILE THE ASSESSMENT OF JAYRAJ GROUP WAS ORIGINALLY COMPLETED UNDER SECTION 158BC ON 30-1-2004. THAT T HEREAFTER UNDER SECTION 263 SUCH ORDER WAS SET ASIDE AND FRESH ASSE SSMENT ORDER WAS PASSED ON 29-12-2006. HOWEVER, IT IS NOT THE CASE OF THE REVENUE THAT THE ORDER UNDER SECTION 263 WAS PASSED WITH REGARD TO SOME FINDING PERTAINING TO UNDISCLOSED INCOME OF THE ASSESSEE VI Z. SHRI LALIT M. PATEL. IN THE FRESH ASSESSMENT ORDER PASSED IN PURSUANCE O F SECTION 263 ALSO THERE IS NO MENTION WITH REGARD TO UNDISCLOSED INCO ME, IF ANY BELONGED TO SHRI LALIT M. PATEL. 14. IN VIEW OF THE TOTALITY OF THE ABOVE FACTS, WE ARE OF THE OPINION THAT THE REASONS RECORDED FOR ISSUE OF NOTICE UNDER SECT ION 158BD BY THE AO OF THE ASSESSEE CANNOT BE SAID TO BE VALID SATISFAC TION FOR ISSUE OF NOTICE UNDER SECTION 158BD, WE THEREFORE RESPECTFULLY FOLL OWING THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF MANISH MAHESH WARI (SUPRA) AND THE DECISION OF THE SPECIAL BENCH OF THE ITAT IN TH E CASE OF MANOJ IT(SS)A NO.61/AHD/2007 -11- AGGARWAL (SUPRA), HOLD THAT THE ISSUE OF NOTICE UND ER SECTION 158BD IN THE CASE OF THE ASSESSEE WAS NOT VALID. WE QUASH T HE SAME. ONCE THE NOTICE UNDER SECTION 158BD ITSELF IS QUASHED, THE A SSESSMENT ORDER PASSED UNDER SECTION 158BC IN PURSUANCE TO THE NOTI CE ISSUED UNDER SECTION 158BD IS ALSO QUASHED. 15. SINCE THE ASSESSMENT ORDER HAS BEEN QUASHED, VA RIOUS OTHER GROUNDS RAISED IN THE APPEAL BY THE ASSESSEE AGAINS T THE DETERMINATION OF THE UNDISCLOSED INCOME IN THE ORDER UNDER SECTION 1 58BC REQUIRE NO ADJUDICATION. 16. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 30 TH SEPTEMBER, 2011 SD/- SD/- ( %% % & %% % & %% % & %% % & / MUKUL KR. SHRAWAT) ' ' ' ' /JUDICIAL MEMBER ( . .. . . .. . G.D. AGARWAL) !' !' !' !' /VICE-PRESIDENT PLACE : AHMEDABAD DATE : 30-09-2011 C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD