2011 (2) TMI 910 - HC - Income Tax

Search and seizure - Block assessment - Tax evasion - Assessing officer was satisfied that proceedings against the assessee were required as a result of material seized during search and the order of assessment itself indicated the said material - the assessment orders in the case of searched persons were not produced before the Tribunal in absence of which the Tribunal assumed that the requisite satisfaction had not been recorded - the matter will require fresh consideration by the Tribunal after taking into account the orders of block assessment

Summary

Issues:
1. Appeal under Section 260-A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal for the block period from 1.4.1986 to 14.8.1996.
2. Whether the findings recorded by the ITAT were contrary to the evidence available on record.
3. Whether the assessment made without recording necessary satisfaction is bad in law.
4. Whether the ITAT was right in allowing the appeal of the assessee and not confirming the order of the Assessing Officer.

Analysis:
1. The appeal was filed by the revenue under Section 260-A of the Income Tax Act against the order of the Income Tax Appellate Tribunal for the block period from 1.4.1986 to 14.8.1996. The substantial questions of law proposed included whether the findings recorded by the ITAT were perverse and contrary to the evidence available on record. The case involved the initiation of proceedings under Section 158BD of the Act based on a search conducted on a group of companies, leading to block assessment. The Tribunal set aside the addition made in the hands of the assessee, citing lack of evidence of satisfaction regarding the addition being based on material found during the search.

2. The revenue argued that the Assessing Officer was satisfied that proceedings against the assessee were necessary due to material seized during the search, as indicated in the assessment order. It was contended that satisfaction had also been recorded in the assessment of the searched persons, namely M/s Goodwill Investment and M/s Glory Securities. However, the assessment orders of the searched persons were not produced before the Tribunal, leading to the Tribunal assuming that the requisite satisfaction had not been recorded. Consequently, the High Court decided that the matter required fresh consideration by the Tribunal after taking into account the assessment orders of the searched persons.

3. The High Court set aside the impugned order of the Tribunal and remanded the matter for fresh decision in accordance with the law. The parties were directed to appear before the Tribunal for further proceedings. The judgment highlighted the importance of producing relevant assessment orders before the Tribunal to establish the recording of necessary satisfaction for the assessment made in the case of the assessee based on material found during the search. The case underscored the procedural requirements and evidentiary standards necessary for block assessments under the Income Tax Act, emphasizing the need for proper documentation and legal compliance in such proceedings.