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TMI Blog2006 (2) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... passed an order under section 158BC( c ) read with section 158BD and section 144 of the Act dated 30-6-2003 for the block period from 1-4-1987 to 20-11-1997. Search under section 132(1) of the Act was conducted at the premises of the assessee s son on 20-11-1997. Notice under section 158BC( a ) was issued on 30-7-1998 to the assessee asking for filing the return for the block period. As per the assessee provisions of section 158BC are applicable where the person has been searched under section 132(1) and since there was no search on the assessee under section 132(1), the same is illegal. Notice under section 158BC read with section 158BD dated 26th June, 2000 was served upon one Sh. Shiv Lal on 28-6-2000. The said notice is available at page 1 of the paper book of the revenue. As per the Panchnama warrants were issued in the name of Sh. K.K. Jerath. 3. The ACIT vide his letter dated 30-7-1998 which was served upon the assessee on 5-8-1998 asked the assessee to furnish the returns in the prescribed form under sub-clause ( i ) of sub-section (1) of section 142 within 15 days from the receipt of this notice. Another letter was also served upon the assessee on 20-9-1998 in respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merely procedural in nature and the defect if any was a negligible defect and once there is a material available with the Assessing Officer, no other satisfaction is required. On the other hand the major plea of the ld. counsel for the assessee is in support of the order of the first appellate authority by contending that Sh. K.K. Jerath was not staying in the house as he was residing in a Government accommodation and in the notice there is no reference to section 158BD. It was also contended that on 30-11-1999, the proceedings are barred by time as the search was conducted at the premises of the son of the assessee on 20-11-1997. It was also argued that the proceedings were under section 158BC and not under section 158BD and even if it is assumed that assumption of section 158BD was from 24-8-2000, still it is barred by limitation as the mandatory requirement of 15 days time was not given to the assessee. So the proceedings were rightly quashed by the ld. CIT(A). It was also pointed out that merely two days time was given to the assessee. It was strongly contended that the notice was itself wrong as the same was not issued within the provisions of law. Mr. Sehgal further contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer to serve notice on person in whose case search has been conducted to furnish return of income setting forth his total income including the undisclosed income for the block period. Admittedly, Chapter XIV-B is a special procedure for assessment of search cases but as a rule of interpretation of statute, one cannot be merely guided by the heading. The true purpose of each provision has to be seen to ascertain its true nature. Undoubtedly, broadly speaking the entire process of assessment is nothing but a machinery to effectuate the levy and collection of taxes, thereby making the statute workable and that is why Chapter XIV which provides for the machinery and normal assessment is the title as procedure for assessment. Since Chapter XIV-B makes a significant departure from the normal process of assessment as provided in Chapter XIV, the words "special procedure" have been used in the heading of Chapter XIV-B. Broadly speaking these are machinery provisions and certain provisions within these machinery provisions give rise to certain rights and responsibilities. The first three provisions viz. section 158B, Chapter XIV-B provides for a special procedure for assessment of ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed to take these technicalities and the whole proceedings cannot be said to be null and void. Non-mentioning of section 158BC, in our view cannot render the block proceedings as null and void under the present facts and is rectifiable under section 292B. For this proposition we get support from the decision of the Special Bench of the Tribunal pronounced in the case of Smt. Mahesh Kumari Batra v. Joint CIT [2005] 95 ITD 152 (Asr.) support may also be drawn from the decision pronounced by the Special Bench in the case of Y. Subbaraju Co. v. Asstt. CIT [2004] 91 ITD 118 (Bang.). During search at the residential premises of Sh. K.K. Jerath cash memo for purchase of Philips Stereo from M/s. Deepak Radios for Rs. 6,425 was found this amount was treated as undisclosed income of Sh. K.K. Jerath and was further treated as income of the assessee on protective basis. One microwave oven worth Rs. 9,950 was also found lying at the residence. This amount was also treated as income of the assessee on protective basis. Sh. Amolak Ram gave loan of Rs. 20,000 vide Demand Draft dated 27-5-1995 and another loan of Rs. 19,000 to Sh. K.K. Jerath on 24-5-1995 and a gift of Rs. 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Parkash Sanjay Kumar v. Asstt. CIT [2001] 76 ITD 107 (Chd.) wherein the question before the Bench was whether satisfaction must be reached by the Assessing Officer under section 158BD on the basis of material disclosing undisclosed income of the assessee (other person) and has to be suitably recorded since such action is justifiable by the courts. Reliance was also placed on the decision of the Mumbai Bench of the Tribunal pronounced in the case of Joint CIT v. Latika V. Waman [2005] 1 SOT 535 (Mum.). Reliance was placed on the decision pronounced in the case of Madhavi Finvest (P.) Ltd. v. Asstt. CIT [2006] 99 TTJ (Visakha) 933, wherein on the issue of computation of undisclosed income and scope and ambit of block assessment, it was held that the same is limited to material unearthed during search. The Hon ble High Court of Gujarat in the case of Nitin P. Shah v. Dy. CIT [2005] 276 ITR 411 in that case, LTS group was engaged in the business of financing and acting as a private bank. In 1996, a search operation was conducted at the premises of the group and certain loose papers were recovered wherein the name of the assessee with a credit balance of Rs. 67.75 lak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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