PRITHVI PRAKASHAN P.LTD, MUMBAI V. DCIT CEN CIR 47, MUMBAI

ITSSA 84/MUM/2009

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7598 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 14-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 12-02-2014
• Assessment Year: misc
• Appeal Filed On: 16-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A C TEJPAL
• Assessee Lawyers: R C MAKADIA
• Keywords: Search and seizure; Block assessment; Reason to believe
• Section: 143(3); 147; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER, A ND SHRI R.S. PADVEKAR, JUDICIAL MEMBER IT[SS]A NO. 84/MUM./2009 (BLOCK PERIOD ENDED 18.02.2003 ) M/S. PRITHVI PRAKASHAN (P) LTD. 189, SANE GURUJI MARG CHINCHPOKLI (WEST) MUMBAI 400 011 PAN AAACP5814A .. APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CENTRAL RANGE-47, AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .... RESPONDENT ASSESSEE BY : MR. ARVIND SONDE A/W MR. DHARMESH SHAH & SHRI R.C. MAKADIA REVENUE BY : MR. A.C. TEJPAL DATE OF HEARING 23.02.2012 DATE OF ORDER 14.03.2012 O R D E R PER J. SUDHAKAR REDDY, A.M. THIS APPEAL PREFERRED BY THE ASSESSEE, IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 30 TH SEPTEMBER 2009, PASSED BY THE COMMISSIONER (APPEALS)-XXXVIII, MUMBAI, FOR THE BLOCK PERIOD FRO M 1 ST APRIL 1996 TO 18 TH FEBRUARY 2003. THE GROUNDS RAISED BY THE ASSESSEE, READ AS FOLLOWS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE INITIA TION AND THE ASSESSMENT PROCEEDINGS U/S. 158BD ARE VALID AND THE REBY ERRED IN UPHOLDING THE ACTION OF INITIATING AND COMPLETING A SSESSMENT U/S. 158BD. IT[SS]A NO. 84/MUM./2009 2 2. LOOKING TO THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE APPELLANT SUBMITS THAT LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE INITIATION AND THE ASSESSMENT PROCEEDINGS ARE B AD IN LAW AND VOID AND OUGHT TO HAVE QUASHED THE ASSESSMENT MADE U/S. 158BD. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF RS.1,18,72,390 ON ACCOUNT OF ALLEGED BOGUS ADVERTISEMENT EXPENSES. 4. LOOKING TO THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE APPELLANT SUBMITS THAT LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE ADDITION MADE BY THE A.O. IS INCORRECT AND INVA LID AND OUGHT TO HAVE DELETED THE SAME. 5. WITHOUT PREJUDICE TO ABOVE ON THE FACTS AND IN T HE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C IT(A) ERRED IN CONFIRMING ADDITION OF RS.1,18,72,390 ON ACCOUNT OF ALLEGED BOGUS ADVERTISEMENT EXPENSES. 6. LOOKING TO THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE APPELLANT SUBMITS THAT LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE ADDITION MADE BY THE A.O. IS INCORRECT AND HIGH LY EXCESSIVE OUGHT TO HAVE REDUCED THE SAME SUBSTANTIALLY . FACTS IN BRIEF :- 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND IS EN GAGED IN THE BUSINESS OF PUBLICATION OF NEWSPAPER. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED ON ONE M/S. SUNJEET ADVERTISEMENT PVT. LT D. (SAPL) ON 18 TH FEBRUARY 2003. DURING THE COURSE OF SEARCH IN THE C ASE OF SAPL, SOME DIARIES AND PAPERS WERE SEIZED INDICATING ISSUE OF BOGUS ADVERTISING BILLS AND PAY BACK IN CASH TO VARIOUS PARTIES. MR. AMARLAL CH AWLA, OF SAPL, HAS CONFESSED TO HAVE ISSUED CERTAIN ACCOMMODATION BILL S TO CERTAIN PARTIES ON THE INSTRUCTION OF THE MANAGING DIRECTOR OF M/S. SA PL, MR. DILIP CHHABRIA. MR. CHHABRIA, IN HIS STATEMENT CONFIRMED THE CONFESSION AL STATEMENT OF MR. AMARLAL CHAWLA. THEREFORE, ON THE BASIS OF THE SEIZ ED MATERIAL AND ABOVE INFORMATION, NOTICE UNDER SECTION 158BD OF THE INCO ME TAX ACT, 1961 (FOR SHORT THE ACT ) WAS ISSUED TO THE ASSESSEE COMPANY. 3. THE ASSESSEE, IN RESPONSE TO THE NOTICE FILED RETUR N OF INCOME IN THE PRESCRIBED FORM NO.2B ON 2 ND JUNE 2004, DECLARING UNDISCLOSED INCOME OF ` NIL. THEREAFTER, THE ASSESSING OFFICER PASSED AN OR DER ON 29 TH MARCH 2006, U/S 158BC R/W 158BD R/W 143(3) OF THE ACT, DETERMIN ING THE TOTAL UNDISCLOSED INCOME AT ` 1,18,72,390. IT[SS]A NO. 84/MUM./2009 3 4. ON APPEAL, THE FIRST APPELLATE AUTHORITY CONFIRMED THE FINDINGS OF THE ASSESSING OFFICER. AGGRIEVED, THE ASSESSEE IS IN FU RTHER APPEAL BEFORE THE TRIBUNAL. 5. AT THE OUTSET, THE LEARNED COUNSEL, MR. ARVIND SOND E, REPRESENTING THE ASSESSEE, CHALLENGED THE JURISDICTION EXERCISED BY THE ASSESSING OFFICER TO ISSUE NOTICE UNDER SECTION 158BD. HE SUBMITTED THAT THE ISSUE WAS RAISED BEFORE THE COMMISSIONER (APPEALS) AND AT PARAS-5.2 AND 5.3, THE COMMISSIONER (APPEALS) HAD DECIDED WRONGLY BY NOT A PPLYING THE SETTLED POSITION OF LAW ON THE ISSUE. HE SUBMITTED THAT SAT ISFACTION SHOULD BE RECORDED DURING THE COURSE OF PROCEEDINGS IN THE CA SE OF SAPL BY THE ASSESSING OFFICER AND THE MATERIAL PERTAINING TO TH E ASSESSEE FOUND DURING THE COURSE OF SEARCH IN THE CASE OF SAPL ALONG WITH THE SATISFACTION NOTE, SHOULD BE SENT TO THE ASSESSING OFFICER HAVING JURI SDICTION OVER THE ASSESSEE COMPANY. HE SUBMITTED THAT, IN THIS CASE, IT IS APP ARENT THAT THE SATISFACTION WAS RECORDED BY THE ASSESSING OFFICER IN ASSESSEES CASE, VIDE ORDER SHEET ENTRY DATED 20 TH APRIL 2004. HE RELIED ON THE FOLLOWING CASE LAWS:- MANISH MAHESHWARI V/S ACIT, [2007] 289 ITR 341 (SC) ; CIT V/S JAMUNA P. KANHAIYALAL, ITA NO.130 OF 2008, JUDGMENT DATED 24 TH AUGUST 2011, LUCKNOW BENCH OF ALLAHABAD HIGH COURT . KRISHNA SUGAR CORP. V/S DCIT (LUCK.) (UO), (2010) 1 13 TTJ (LUCK.) 33; AND MANOJ AGGARWAL V/S DCIT, (2008) 113 ITD (DEL.) 377 (SB). 6. LEARNED DEPARTMENTAL REPRESENTATIVE FILED A COPY OF THE ORDER SHEET ENTRY IN THE CASE OF PRITHVI PRAKASHAN LTD., THE AS SESSEE COMPANY AND SUBMITTED THAT THE SATISFACTION NOTE IS BASED ON MA TERIAL FOUND DURING THE COURSE OF SEARCH IN THE CASE OF SAPL. HE RELIED ON PARA-5.3, OF THE ORDER PASSED BY THE COMMISSIONER (APPEALS) AND ARGUED THA T THE ASSESSING OFFICER HAS NOTED DETAILED REASONS VIDE ORDER SHEET ENTRY D ATED 20 TH APRIL 2004. HE SUBMITTED THAT THE ASSESSING OFFICER HAS CONSIDERED THE SEIZED MATERIAL AND DIARIES AND OTHER INCRIMINATING MATERIALS AND WAS S ATISFIED THAT IT IS A FIT CASE OF INITIATION OF PROCEEDINGS UNDER SECTION 158BD OF THE ACT. IT[SS]A NO. 84/MUM./2009 4 7. IN REPLY, THE LEARNED COUNSEL RELIED ON PARA-5.2, O F THE ORDER PASSED BY THE COMMISSIONER (APPEALS) AND SUBMITTED THAT TH E ASSESSING OFFICER HAS REFERRED TO CERTAIN PAPERS IN ANNEXURE A-2, AS INCR IMINATING MATERIAL BUT NOWHERE IN THE SAID DOCUMENTS, THE NAME OF THE ASSE SSEE APPEARED, EXCEPT ON PAGE-41. EVEN THE NOTINGS ON PAGE-41, DOES NOT I NDICATE EVEN A DOUBT THAT THE BILL WAS BOGUS AND, HENCE, WAS NOT INCRIMI NATING MATERIAL. HE REITERATED HIS STAND THAT SATISFACTION WAS NOT RECO RDED DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS OF SAPL. 8. WE HAVE HEARD THIS CASE ON THIS PRELIMINARY POINT O F JURISDICTION AND HOLD AS FOLLOWS:- 9. THE UNDISPUTED FACT IS THAT THE ASSESSING OFFICER, WHILE COMPLETING THE BLOCK ASSESSMENT PROCEEDINGS IN THE CASE OF SAPL, H AS NOT RECORDED THE SATISFACTION AS CONTEMPLATED UNDER SECTION 158BD. T HE SATISFACTION WAS RECORDED IN THE ORDER SHEET ENTRY OF THE ASSESSEE C OMPANY ON 20 TH APRIL 2004. ON THESE FACTS, WE NOW EXAMINE THE LEGAL POSI TION. THE HON'BLE SUPREME COURT IN MANISH MAHESHWARI (SUPRA), AT PAGE -349, IT IS HELD AS FOLLOWS:- 11. THE CONDITION PRECEDENT FOR INVOKING A BLOCK A SSESSMENT IS THAT A SEARCH HAS BEEN CONDUCTED UNDER SECTION 132, OR D OCUMENTS OR ASSETS HAVE BEEN REQUISITIONED UNDER SECTION 132A. THE SAID PROVISION WOULD APPLY IN THE CASE OF ANY PERSON IN RESPECT OF WHOM SEARCH HAS BEEN CARRIED OUT UNDER SECTION 132A OR DOCUMENTS OR ASSETS HAVE BEEN REQUISITIONED UNDER SECTION 132A. SECTION 158B D, HOWEVER, PROVIDES FOR TAKING RECOURSE TO A BLOCK ASSESSMENT IN TERMS OF SECTION 158BC IN RESPECT OF ANY OTHER PERSON, THE CONDITION S PRECEDENT WHEREFOR ARE : (I) SATISFACTION MUST BE RECORDED BY THE ASSESSING OFFICER THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UND ER SECTION 132 OF THE ACT ; (II) THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR A SSETS SEIZED OR REQUISITIONED HAD BEEN HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON; AND (II I) THE ASSESSING OFFICER HAS PROCEEDED UNDER SECTION 158BC AGAINST S UCH OTHER PERSON. 12. THE CONDITIONS PRECEDENT FOR INVOKING THE PROVI SIONS OF SECTION 158BD, THUS, ARE REQUIRED TO BE SATISFIED BEFORE TH E PROVISIONS OF THE SAID CHAPTER ARE APPLIED IN RELATION TO ANY PERSON OTHER THAN THE PERSON WHOSE PREMISES HAD BEEN SEARCHED OR WHOSE DO CUMENTS AND OTHER ASSETS HAD BEEN REQUISITIONED UNDER SECTION 1 32A OF THE ACT . [EMPHASIS OWN] 10. THE HON'BLE SUPREME COURT, AGAIN AT PAGE-349, HELD AS FOLLOWS:- IT[SS]A NO. 84/MUM./2009 5 LAW IN THIS REGARD IS CLEAR AND EXPLICIT. THE ONLY QUESTION WHICH ARISES FOR OUR CONSIDERATION IS AS TO WHETHER THE NOTICE D ATED FEBRUARY 6, 1996, SATISFIES THE REQUIREMENTS OF SECTION 158BD O F THE ACT. THE SAID NOTICE DOES NOT RECORD ANY SATISFACTION ON THE PART OF THE ASSESSING OFFICER. DOCUMENTS AND OTHER ASSETS RECOVERED DURIN G SEARCH HAD NOT BEEN HANDED OVER TO THE ASSESSING OFFICER HAVING JU RISDICTION IN THE MATTER. 11. THE SPECIAL BENCH OF THE TRIBUNAL IN MANOJ AGGARWAL (SUPRA), AT PAGE- 389, HELD AS FOLLOWS:- RECORDING OF SATISFACTION BEFORE COMMENCEMENT OF PROCEEDINGS UNDER SECTION 158BD SECTION 158BD PROVIDES FOR ASSUMPTION OF JURISDICTI ON TO MAKE A BLOCK ASSESSMENT IN THE CASE OF A PERSON NOT SEARCHED AND AGAINST WHOM NO PROCEEDINGS HAVE BEEN INITIATED. IT CANNOT BE RECOR DING SATISFACTION IT HAS TO BE NOTED THAT THE PROCEEDINGS UNDER SECTION 158BC ARE AGAINST THE PERSON SEARCHED AND IF IN THE COURSE OF SUCH PR OCEEDING THE ASSESSING OFFICER ASSESSING THE PERSON SEARCHED COM ES ACROSS MATERIAL INDICATING THE PRESENCE OF UNDISCLOSED INCOME IN TH E HANDS OF THE PERSON NOT SEARCHED, THERE HAS TO BE A PROVISION FO R MAKING A SIMILAR ASSESSMENT IN THE CASE OF THE OTHER PERSON. AS SECTION 158BC RELATES TO A PER SON SEARCHED, THERE HAS TO BE DIFFERENT PROVISION FOR MAKING A SIMILAR ASSESSMENT IN THE CASE OF THE OTHER PERSON AND HENCE SECTION 158BD HA S BEEN ENACTED. SO, THE SAID SECTION STATES THAT IF THE ASSESSING O FFICER 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. AND T HIS CAN BE RECORDED ONLY AND ONLY IN THE COURSE OF THE SECTION 158BC PR OCEEDING AND NOWHERE ELSE. IT IS THE ASSESSING OFFICER ASSESSING THE PERSON SEARCHED WHO GOES THROUGH THE SEIZED MATERIAL AND COMES TO A DECISION AS TO WHETHER THERE IS ANY UNDISCLOSED INCOME UNEARTHED A S A RESULT OF SEARCH, IF SO ITS NATURE AND TO WHOM IT BELONGS. IF THE SAID UNDISCLOSED INCOME BELONGS TO THE PERSON SEARCHED THAT IS THE E ND 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 R ELATED SEIZED MATERIAL TO THE ASSESSING OFFICER HAVING JURISDICTI ON OVER THE OTHER PERSON. ALL THESE FINDINGS HAVE TO BE RECORDED AFTE R AN HONEST APPRECIATION OF THE SEIZED MATERIAL WITH AN OBJECTI VE MIND AND THERE HAS TO BE A RECORD REFLECTING SUCH FINDINGS ON THE BASIS OF WHICH ALONE THE OTHER ASSESSING OFFICER CAN ASSUME JURISDICTION TO PROCEED 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 D ONE IN THE COURSE OF THE SECTION 158BC PROCEEDING AS THE SATISFACTION HA S TO BE RECORDED ONLY BY THE ASSESSING OFFICER MAKING THE BLOCK ASSE SSMENT IN THE CASE OF THE PERSON SEARCHED WHICH IN TURN MEANS THE SECT ION 158BC PROCEEDINGS SUCH SATISFACTION CANNOT BE RECORDED BE YOND THE DATE OF THE BLOCK ASSESSMENT IN THE SECTION 158BC PROCEEDIN GS AND THE DATE IT[SS]A NO. 84/MUM./2009 6 OF THE BLOCK ASSESSMENT IS THE OUTER LIMIT FOR RECO RDING SUCH SATISFACTION . THIS IS FOR THE REASON THAT THE SATISFACTION HAS TO BE RECORDED BY THE ASSESSING OFFICER EXAMINING THE MAT ERIAL IN THE CASE OF THE PERSON SEARCHED AND HE WILL HAVE TO FIND OUT WHETHER THERE IS ANY UNDISCLOSED INCOME AT ALL PROCEEDING. AFTER FIN DING THAT THERE IS UNDISCLOSED INCOME, HE INCOME HE WILL HAVE TO GIVE A FINDING AS TO WHETHER SUCH INCOME BELONGS TO THE PERSON SEARCHED AND THIS TOO HAS TO BE IN THE COURSE OF THE SAID PROCEEDING 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 THIS BEHALF AND TAKES FOLLOW -UP ACTION AS ENVISAGED IN SECTION 158BD WHICH AGAIN HAS TO BE ON LY IN THE COURSE 0/SECTION 158BC PROCEEDING AND, HENCE, IF NO SUCH S ATISFACTION IS RECORDED IN COURSE OF SECTION 158BC PROCEEDING, THE N ASSUMPTION OF JURISDICTION UNDER SECTION 158BD IS NOT POSSIBLE. I N THE CIRCUMSTANCES, THE ABSENCE OF THE WORDS IN THE COURSE OF THE PROC EEDING IN THE SECTION IS NOT MATERIAL TO THE ISSUE IN THE CONTEXT OF THE SAID SECTION ITSELF. RECORDING OF SATISFACTION IS IMPERATIVE BEFORE ASSU MPTION OF JURISDICTION UNDER SECTION 158BD. THE TERM REASON TO BELIEVE IMPLIES THAT THE ASSESSING OFFICER SUBJECTIVELY BELIEVES TH AT HE HAS REASON TO BELIEVE ON THE BASIS OF THE MATERIAL BEFORE HIM THA T THERE IS ESCAPEMENT OF INCOME IN THE CASE OF AN ASSESSEE AND SO THE ESCAPED INCOME HAS TO BE BROUGHT TO TAX BY RE-OPENING HE AS SESSMENT AS PER THE PROVISIONS OF SECTION 147/148. ON THE OTHER HAN D, THE TERM SATISFACTION IN SECTION 158BD CONNOTES THAT THERE EXISTS UNDISCLOSED INCOME AND THAT SUCH UNDISCLOSED INCOME IS THAT OF THE PERSON NOT SEARCHED. THE USE OF THE EXPRESSION SATISFIED IN SECTION 158BD CANNOT BE READ IN ISOLATION AND IT HAS TO HE UNDERSTOOD IN THE CONTEXT IN WHICH THE SAID TERM APPEARS IN THE SAID SECTION. IT WILL BE SEEN THAT SECTION 158BD STARTS WITH THE EXPRESSION WHERE THE ASSESSI NG OFFICER IS SATISFIED THAT ANY UNDISCLOSED INCOME BELONGS TO AN Y PERSON OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE. IT IS SIGNIFICANT THAT THE TERM SATISFIED IS NOT USED I N VACUUM BUT ALONG WITH THE WORDS THAT ANY UNDISCLOSED INCOME BELONGS TO .. OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MAD E .. AND THE WORDS IN THE CONTEXT ARE UNDISCLOSED INCOME AND BELONGS TO WHICH CLEARLY INDICATE THAT AT THAT POINT OF TIME WHEN SA TISFACTION IS RECORDED BY THE ASSESSING OFFICER THE UNDISCLOSED INCOME IS TO BE IDENTIFIED. FURTHER, THE SAID EXPRESSION DOES NOT STOP THERE. I T FURTHER USES THE EXPRESSION BELONGS TO ANY PERSON, OTHER THAN THE P ERSON WITH RESPECT TO WHOM SEARCH WAS MADE WHICH INDICATES THAT THE U NDISCLOSED INCOME IDENTIFIED BY THE ASSESSING OFFICER IS FOUND TO BE BELONGING TO THE OTHER PERSON. IT WOULD, THUS, MEAN THAT AT THE STAGE OF RECORDING, THE ASSESSING OFFICER HAS REACHED A FINDING THAT UN DISCLOSED INCOME HAS BEEN DETECTED AS A RESULT OF SEARCH AND ALSO FU RTHER THAT SUCH INCOME BELONGS TO THE PERSON NOT SEARCH. ALL THESE CONSTITUTE FINDINGS AND NOT A MERE BELIEF HELD BY THE ASSESSING OFFICER ON THE EXAMINATION OF THE SEIZED MATERIAL AND, HENCE, THE SATISFACTION CONTEMPLATED IN SECTION 158BD IS TOTALLY DIFFERENT FROM THAT CONTEM PLATED IN SECTION 147. IT IS FUNDAMENTAL TAT THE ASSESSING OFFICER FI NDS OUT WHETHER THERE IS UNDISCLOSED INCOME. IF HE FINDS THAT THERE EXIST UNDISCLOSED INCOME, THEN HE HAS TO GIVE A FINDING AS TO WHOM TH E SAID INCOME BELONGS. IN THE ABSENCE OF SUCH A FINDING, IT IS NO T POSSIBLE TO CONCLUDE A BLOCK ASSESSMENT UNDER SECTION 158BC. ONLY THEREU PON, SECTION 158BD PROCEEDING IN RESPECT OF THE OTHER PERSON FOR MAKING A SIMILAR IT[SS]A NO. 84/MUM./2009 7 BLOCK ASSESSMENT OF SUCH UNDISCLOSED INCOME WOULD C OMMENCE. HENCE, THE NOTE OF SATISFACTION MUST CONTAIN A POSI TIVE FINDING BY THE ASSESSING OFFICER MAKING THE ASSESSMENT UNDER SECTI ON 158BC INDICATING THEREIN THE UNDISCLOSED INCOME FOUND AS A RESULT OF HIS EXAMINATION OF THE SEIZED MATERIAL, THE PERSON TO W HOM SUCH INCOME BELONGS AND PROCEED ACCORDINGLY AS PROVIDED FOR IN THE SAID SECTION. THE CIRCUMSTANCES ENVISAGED AND THE CONTEXT IN SECT IONS 147 AND 158BD ARE ENTIRELY DIFFERENT IN NATURE. NEXT QUESTION WAS WHETHER THERE WAS ANY RECORDING O F SATISFACTION THAT MEETS THE REQUIREMENT OF LAW. THIS NOTE RECORDED TH AT SEARCH IN THE CASE OF M AND ASSOCIATE CONCERNS AND THE BLOCK AS SESSMENT MADE ON HIM CONCLUSIVELY ESTABLISHED THE FACT THAT HE WAS I NVOLVED IN PROVIDING BOGUS ACCOMMODATION BOOK ENTRIES TO VARIOUS PERSONS ON COMMISSION BASIS AND/OR THIS PURPOSE HE HAD USED THE NAMES AND BANK ACCOUNTS OF VARIOUS COMPANIES, BENAMI PROPRIETORSHIP CONCERN S IN THE NAMES OF HIS EMPLOYEES, IN THE NAMES OF RELATIVES, VARIOUS H UF ENTITIES AND FIRMS AND ONE SUCH CONCERN WAS THE ASSESSEE, THE BA NK ACCOUNTS OF WHICH WERE OPERATED BY M AND HIS FATHER B AND T HAT THE SOURCES OF CASH AND CLEARING DEPOSITS AND THE WITHDRAWALS FROM THESE BANK ACCOUNTS NEEDED TO BE EXAMINED, THESE ACCOUNTS HAD BEEN USED FOR ACCOMMODATION BOOK ENTRIES AND, HENCE, UNDISCLOSED INCOME HAD ARISEN IN THE HANDS OF THIS CONCERN WHICH HAD BEEN FOUND DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS IN THE CASE OF M AND HIS ASSOCIATE CONCERNS; THUS, PROCEEDINGS UNDER SECTION 158BD WERE APPLICABLE IN THIS CASE. ADMITTEDLY, THIS NOTE WAS AFTER THE DATE OF BLOCK ASSESSMENT IN THE CASE OF M WHICH WAS FINAL IZED ON 29.8.2002. FURTHER, THE NOTE OF SATISFACTION WAS NOT RECORDED BY THE DY. CIT, CENTRAL CIRCLE-3, NEW DELHI, ACTING AS THE ASSESSIN G OFFICER MAKING THE ASSESSMENT UNDER SECTION 158BC OF M SINCE THE SAI D ASSESSMENT HAD BEEN FINALIZED EARLIER. CLEARLY THE NOTE OF SATISFA CTION DATED 19.12.2002 WAS BEYOND THE DATE OF BLOCK ASSESSMENT IN SECTION 158BC PROCEEDINGS DATED 29.8.2002 IN THE CASE OF M. THE REFORE, THE SATISFACTION RECORDED WAS BELATED. FURTHER THE SAID NOTE OF SATISFACTION SPOKE OF M DOING ACCOMMODATION BUSINESS THROUGH VARIOUS BENAMI CONCERNS AND IN THE NAMES OF VARIOUS PERSONS AND EARNING COMMISSION THROUGH SUCH ACCOMMO DATION AND THAT ONE SUCH CONCERN USED BY HIM WAS THE ASSESSEE. IT FURTHER STATED THAT THE BANK ACCOUNT OF THE FIRM HAD TO BE EXAMINED AND THE SOURCE OF THE CASH AND CLEARING DEPOSITS AND THE WITHDRAWALS FROM THE BANKS HAD TO BE EXAMINED. THERE WAS, THUS, NO FINDING IN THE SAID NOTE THAT O N EXAMINATION OF THE SEIZED MATERIAL BY HIM IN THE CASE OF M HE HAD FOU ND THAT THERE WAS UNDISCLOSED INCOME AND THAT SUCH UNDISCLOSED INCOME BELONGED TO THE ASSESSEE-FIRM. ON THE OTHER HAND, IT SAID THAT THE BANK ACCOUNTS OF THE FIRM HAD TO BE EXAMINED. THERE WAS NOT EVEN A WHISP ER OF DETECTION OF UNDISCLOSED INCOME IN THE HANDS OF THE FIRM. THE VE RY RECORD LEFT A TELLTALE EVIDENCE TO THE EFFECT THAT NO FINDING HAD BEEN ARRIVED AT TO SHOW THAT THERE EXISTED UNDISCLOSED INCOME OF THE A SSESSEE-FIRM. HAD IT BEEN SO, THERE WOULD HAVE BEEN A REFERENCE TO TH E SAME AND THERE WAS NO NEED TO STATE THAT FURTHER EXAMINATION OF VA RIOUS ACCOUNTS WAS REQUIRED HENCE, THE NOTE ITSELF ADMITTED THAT NO UN DISCLOSED INCOME IN THE HANDS OF THE ASSESSEE HAD BEEN FOUND EVEN ON TH E DATE OF SUCH NOTING WHICH MILITATED AGAINST THE REQUIREMENT OF A NOTE OF SATISFACTION IT[SS]A NO. 84/MUM./2009 8 IN TERMS OF SECTION 158BD. IN ORDER TO ASCERTAIN WH ETHER IN THE COURSE OF THE ASSESSMENT PROCEEDING IN THE CASE OF M UND ER SECTION 158BC, THERE WAS ANY FINDING OF ANY UNDISCLOSED INCOME IN THE CASE OF THE ASSESSEE; EVEN THEN, THERE WAS NO FINDING THAT ANY PART OF THE UNDISCLOSED INCOME BELONGED TO THE ASSESSEE OR ANY REFERENCE TO ANY MATERIAL THEREIN INDICATING THE SAME. IN THE CIRCUM STANCE, THE SATISFACTION NOTE DATED 19-12-2002 WAS NOT THE ONE CONTEMPLATED IN SECTION 158BD AND FURTHER THAT EVEN IF IT WAS ASSUM ED TO BE IN TERMS OF THE SAID SECTION, IT DID NOT EVEN REMOTELY SHOW THAT THERE WAS UNDISCLOSED INCOME BELONGING TO THE ASSESSEE CALLIN G FOR TILE ASSUMPTION OF JURISDICTION UNDER SECTION 158BD. IN THE CIRCUMSTANCE, THE SAID NOTE OF SATISFACTION WAS NON-ESTABLISHED I N LAW AND FURTHER SECTION 158BD PROCEEDINGS PURSUANT THERETO WERE INV ALID AND VOID AB- INITIO ON THIS GROUND ALSO. HENCE, THE PROCEEDINGS UNDER SECTION 158BD WERE INV ALID FOR THE REASONS STATED ABOVE AND SO THE ASSESSMENT MADE PUR SUANT TO THESE PROCEEDINGS WAS BAD IN LAW. THE SAME WAS, ACCORDING LY, LIABLE TO BE CANCELLED . 12. THE LUCKNOW BENCH OF THE TRIBUNAL IN KRISHNA SUGAR CORP. (SUPRA), HELD AS FOLLOWS:- HELD: THE PERSON SEARCHED BELONGS TO J GROUP OF CAS ES AND THE A.O. WHO WAS HAVING THE JURISDICTION OVER THOSE CASES, HAS N OT RECORED ANY SATISFACTION WHILE TAKING THE ACTION UNDER SECTION 158BC. EVEN T HE A.O. IN HIS REPORT DT. 4 TH JUNE 2010, WHICH WAS SUBMITTED BY THE CIT-DR CATEG ORICALLY STATE THAT THERE WAS NO OCCASION TO RECORD THE SATISFACTION IN THE CASE OF PERSON SEARCHED WHICH IS V.K. LTD., AND THAT THE SAID PERS ON FILED APPLICATION FOR SETTLEMENT BEFORE THE ITSC ON 21 ST JULY 2003, AND CONSEQUENTLY THE JURISDICTION OF THE A.O. CEASED TO EXIST OVER THE G ROUP. HENCE, NO SATISFACTION COULD HAVE BEEN RECORDED ON THE FILE OF THE PERSON SUBJECTED TO SEARCH. THERE IS SUBSTANCE IN THE SUBMISSION OF THE COUNSEL FOR T HE ASSESSEE THAT THE RIGHT COURSE AVAILABLE WITH THE DEPARTMENT WAS TO INVOKE THE PROVISIONS OF SECTION 245D(3) AND SEEK FOR NECESSARY DIRECTION FROM THE I TSC BUT NO SUCH ACTION HAS BEEN TAKEN. EVEN WHEN THE A.O. IN THE CASE OF PERSON SEARCHED AND OTHER PERSON, IS SAME, THE SATISFACTION IS TO BE RECORDED IN THE CASE OF THE PERSON SEARCHED BEFORE TAKING ANY ACTION UNDER SE C. 158BD IN THE CASE OF THE OTHER PERSON. THEREFORE, THE PROCEEDINGS INITIA TED UNDER SECTION 158BD IN THE HAND OF THE ASSESSEE WERE INVALID KAMAL RAHEJ A V/S ACIT (ITA NO.1302/LUCK./2006, ORDER DATED 12 TH SEPT. 2008) FOLLOWED . CONCLUSION:- EVEN WHEN THE A.O. IN THE CASE OF PER SON SEARCHED AND OTHER PERSON IS SAME, SATISFACTION IS TO BE RECORDED IN THE CASE OF PERSON SEARCHED BEFORE TAKING ANY ACTION UNDER S. 158BD I N THE CASE OF OTHER PERSON . 13. APPLYING THE PROPOSITIONS LAID DOWN IN THESE CASE L AWS TO THE FACTS OF THE PRESENT CASE, WE HAVE TO NECESSARILY HOLD THAT THE NOTICE ISSUED UNDER SECTION 158BD, WAS BAD IN LAW. THE SATISFACTION IN QUESTION HAS NOT BEEN RECORDED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) R/W 158BD IN THE C ASE OF SAPL. THE SATISFACTION NOTE IS RECORDED IN THE ORDER SHEET, I N THE CASE OF ASSESSEE AND IT[SS]A NO. 84/MUM./2009 9 NOTICE UNDER SECTION 158BD ISSUED. THE LUCKNOW BENC H OF THE TRIBUNAL IN KRISHNA SUGAR CORP. (SUPRA) HELD THAT EVEN WHEN THE ASSESSING OFFICER IN THE CASE OF PERSON SEARCHED AND OTHER PERSON , IS THE SAME SATISFACTION IS TO BE RECORDED ONLY IN THE CASE OF PERSON SEARCHED BEF ORE TAKING ANY ACTION UNDER SECTION 158BD, IN THE CASE OF ANY OTHER PERSO N. ON THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE HAVE NO OTHER ALTERNA TIVE BUT TO QUASH THE NOTICE UNDER SECTION 158BD, ISSUED TO THE ASSESSEE ON 20 TH APRIL 2004, AND TREAT THE ASSESSMENT AS NULL AND VOID . 14. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.3.2012 SD/- R.S. PADVEKAR JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 14 TH MARCH 2012 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, C BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI