THE COMMISSIONER OF INCOME TAX V. M/S RESHA WIRES PVT LTD

ITA/1032/2008

AI Insights

The case involves an appeal by the Commissioner of Income-tax and the Deputy Commissioner of Income-Tax against M/s.Resha Wires Pvt., Ltd., challenging the order of the Income Tax Appellate Tribunal, Bangalore. The Tribunal had set aside the assessment order passed under Section 158BD of the Income Tax Act, 1961, due to the absence of a valid satisfaction report before the issuance of the notice. The Revenue's appeal sought to overturn this decision and reinstate the original assessment order. The High Court of Karnataka, after reviewing the submissions and the relevant legal provisions, dismissed the appeal, affirming the Tribunal's decision.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 700941 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 25-07-2014
• Assessment Year: misc
• Other Referred Cases: MANISH MAHESHWARI v/s ASSISTANT COMMISSIONER OF INCOME TAX AND ANOTHER (2007) 289 ITR 341(SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: A SHANKAR
• Assessee Lawyers: K V ARVIND
• Keywords: Block assessment; Jurisdiction; Undisclosed income; Satisfaction report
• Section: 132; 158BC; 158BD; 132A; 260-A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 25TH DAY OF JULY, 2014 PRESENT: HON' BLE MR. JUSTICE N.KUMAR AND HON' BLE MR. JUSTICE B.MANOHAR ITA NO.1032/2008 BETWEEN: 1. The Commissioner of Income-tax C.R Building, Queens Road, Bangalore 2. The Deputy Commissioner of Income-Tax, Company Circle – 4(1), (Inv), C.R. Building, Queens Road, Bangalore. …Appellants (By Sri.K.V.Arvind, Advocate) AND: M/s.Resha Wires Pvt., Ltd., No.60/51, Kumbargundi, Kalasipalyam, Bangalore. …. Respondent (By Sri.A.Shankar, Advocate) 2 ITA filed u/S.260-A of I.T.Act, 1961 arising out of order dated 06-06-2008 passed in IT(SS)A.No.42/BNG/2005, for the Assessment Period 1989-90 to 1999-2000, praying that this Hon’ble Court may be pleased to i. formulate the substantial questions of law stated therein, ii. allow the appeal and set aside the order passed by the ITAT Bangalore in IT(SS)A.No.42/BNG/2005, dated 6-6-2008 confirm the orders of the Appellate Commissioner and confirm the order passed by the Deputy Commissioner of Income Tax, Company Circle-4(1), (Inv), Bangalore in the interest of justice and equity. This appeal coming on for Hearing this day, N.Kumar J., delivered the following: J U D G M E N T The Revenue has preferred this appeal challenging the order dated 06-06-2008 passed by the Income Tax 3 Appellate Tribunal, Bangalore Bench ‘B’ (hereinafter referred to as ‘the Tribunal’ for short), wherein the Tribunal held that no valid satisfaction was recorded before issuance of notice under Section 158BD and therefore, the assessment order passed under the said provision is one without jurisdiction. 2. The undisputed facts are that the notice under Section 158BC was issued in the name of Iqbal Ahmed and notice under Section 158BD was issued in the name of M/s.Resha Wires Private Limited, both on the same date. The Assessing Officer who issued the notices is one and the same. 3. The Apex Court in the case of MANISH MAHESHWARI v/s ASSISTANT COMMISSIONER OF INCOME TAX AND ANOTHER reported in (2007) 289 ITR 341(SC) has held as under: 4 11. The Condition precedent for invoking a block assessment is that a search has been conducted under section 132, or documents 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 section132A. Section 158BD, however, provides for taking recourse to a block assessment in terms of section 158BC in respect of any other person, the conditions 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 of whom search was made under section 132 of the Act; (ii) the books of account or other documents or assets seized or requisitioned had been handed over to the Assessing Officer having jurisdiction over such other person; and (iii) the Assessing Officer 5 has proceeded under section 158BC against such other person. 4. It is not in dispute, in that instant case also the Assessing Authority has not recorded satisfaction report. Therefore, the Tribunal was justified in setting aside the order passed without applying the said mandatory requirement. In that view of the matter, the substantial question of law framed in this case is answered in favour of the assessee and against the Revenue. Accordingly, the appeal is dismissed. Sd/- JUDGE Sd/- JUDGE mpk/-* "