2019 (3) TMI 1266 - HC - Income Tax

Proceedings u/s 158BD - Firstly addition was made in case of son of assessee u/s 158BC - ITAT held in case of assessee son that this income is taxable in hand of assessee u/s 158BD - then notice u/s 158BD was issued to assessee - first instance, no objection was raised by the Assessee before the Assessing Authority regarding the necessity to record separate reasons for initiating proceedings u/s 158BD - HELD THAT - In our opinion, the Appellate Authorities below have not committed any error in so holding. On the contrary, for not raising any objection in the first instance by the Assessee before the learned Assessing Authority itself when the Notice under Section 158BD of the Act was served upon her, it should be deemed that the mother present Assessee - had acquiesced to the jurisdiction of the authority to proceed under Section 158BD of the Act and given up any objection with regard to the same. Appeal of the son of the present Assessee has been dealt with by the Tribunal and in those appellate proceedings under Section 158 BC of the Act only, the Tribunal found that for the transaction in question for sale of property which was standing in the name of the present assessee, namely, mother- Smt.V.Vijayalakshmi, AO could have initiated proceedings only under Section 158BD of the Act. That being so, we have found, as aforesaid, that the Assessing Officer could proceed on the basis of that satisfaction under Section 158BD of the Act. Hence, the learned Tribunal and also the CIT (A) have rightly dismissed the appeal of the present Assessee, laying a challenge to the proceedings under Section 158BD of the Act against the present Assessee. - Decided against assessee.

Summary

Issues Involved:
1. Validity of the assessment framed under Section 158BD without recorded satisfaction by the Assessment Officer.
2. Sustaining the block assessment despite Supreme Court and High Court decisions.
3. Jurisdictional issue concerning the directions of the Appellate Tribunal.
4. Addition of ?15,39,739/- based on sworn statements.

Detailed Analysis:

1. Validity of the Assessment under Section 158BD:
The primary issue was whether the assessment framed under Section 158BD of the Income Tax Act, 1961 was valid without the satisfaction recorded by the Assessment Officer of the searched person. The court held that the satisfaction recorded by the Tribunal in the case of the son, Mr. S.V. Srinivasan, was sufficient for initiating proceedings under Section 158BD against the mother, Smt. V. Vijayalakshmi. The Tribunal's findings in the son’s case justified the initiation of proceedings against the mother, as the property was held in her name, and the assessment could only be made against her under Section 158BD.

2. Sustaining the Block Assessment:
The court addressed whether the block assessment was valid despite citations of decisions from the Supreme Court and the High Court. The Tribunal had concluded that the assessment under Section 158BD was valid based on the Tribunal's findings in the son’s case. The Tribunal’s order in the son’s appeal provided a sufficient basis for the proceedings against the mother, and thus, the block assessment was sustained.

3. Jurisdictional Issue:
The issue was whether the directions of the Appellate Tribunal could override the mandatory provisions for recording satisfaction under Section 158BD. The court found that the Tribunal’s directions were sufficient to initiate proceedings against the mother. The Tribunal’s decision in the son’s case indicated that the property transaction should be assessed in the hands of the mother under Section 158BD. Therefore, the Tribunal's directions did not override the mandatory provisions but were in accordance with them.

4. Addition Based on Sworn Statements:
The court examined whether the addition of ?15,39,739/- based on sworn statements was valid. The Tribunal had confirmed the addition based on the sworn statements of the searched person and the seller of the property. The court found no illegality or perversity in these findings, as they were based on the facts and evidence presented, including the sworn statements. The Tribunal and CIT (A) had rightly dismissed the appeal, upholding the addition as undisclosed income under Section 158BD read with Section 158BC.

Conclusion:
The court dismissed the appeal, finding that the proceedings under Section 158BD were validly initiated based on the Tribunal’s findings in the son’s case. The objections regarding non-recording of satisfaction were not raised initially and were deemed acquiesced. The addition of undisclosed income was upheld based on the evidence, including sworn statements. The appeal was devoid of merit and dismissed with no costs.