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TMI Blog2012 (10) TMI 399X X X X Extracts X X X X X X X X Extracts X X X X ..... on” against the assessee which can only be said to be the “satisfaction” of AO of the searched person(s). Therefore, assessment proceedings carried out against the assessee are not valid for the reason that notice u/s 158BD was issued without fulfilling the condition precedent necessary for issue of notice u/s 158BD. Appeal decides in favour of assessee - IT(SS)A NO. 172/MUM/03 - - - Dated:- 27-7-2012 - SHRI G.E.VEERABHADRAPPA SHRI I.P.BANSAL, JJ. Assesseee by : Shri Subodh L. Ratnaparakhi Revenue by : Shri Pravin Varma ORDER PER I.P.BANSAL, J.M These are cross appeals. They are directed against order dated 29th Nov.2002, passed by Ld. CIT(A)-XXIII, Mumbai for the block period 1989-90 to 1999-2000. The grounds of appeal raised by the assessee as well as revenue read as under: ASSESSEE S GROUNDS OF APPEAL: The following grounds of appeal are without prejudice to one another. 1. The Learned Commissioner of income Tax (Appeals) erred in upholding the order u/s 158BD and failed to appreciate that the order u/s 158BD is without jurisdiction and bad in law. 2. The Learned Commissioner of Income Tax (Appeals) failed to appreciate that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als) has erred in estimating the cost of unsold flat No. 18 at the Cost Price i.e. Rs.1,200/- per sq.ft. instead of Market Price of Rs.1,476/- per sq. ft. adopted by the A.O iv) On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in directing the A.O. to delete the addition made u/s. 40A(3) amounting to Rs.26,49,371/- as the assessee failed to prove the same. (v) On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in reducing the addition made by the A.O. amounting to Rs.89, 19,206/- on account of unexplained expenditure in land by Rs.34,35,200/-. vi) On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in treating the date of receipt on money of Rs.6,40,400/- in respect of Flat No. 15 on January, 1995 on assumption since flat No. 15 and 16 have the same area and are serially next to each other. vii) The appellant prays that the order of the CIT(A) on the above grounds be reversed and that of the Assessing Officer be restored. 2. We had heard both the parties on the issue of admission of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in receipt of Appraisal Report from Jt. DI(Inv.), Kalyan vide her confidential letter no.KYN/JDIT/Inv/Appraisal/99 2000/197 dt. 29.11.99. 3. The cases of Nanji Khimji Thakkar group have been assigned to this Circle. After going through the Appraisal Report it is noticed that M/s Shree Siddhi Builders and Developers is a sister concern of NKT group and two brothers i.e. Shri Kanji Khimj Thakkar and Prabhulal Khimji Thakkar were the partners of the above firm alongwith two outsiders. It is learnt that the said firm is assessed by you. 4. As per the Appraisal Report dt. 29.11.99 the said firm has constructed the project named Anand Mangal having 18 flats in the said building. The DDI(lnv.), Thane has quantified the undisclosed income of Rs. 51,59,063 and the undisclosed investment in land to the extent of Rs 89,19,206. Considering the above facts, you are requested to take necessary action as per the provisions of s. 158BD to assess the above mentioned undisclosed income in the hands of your assessee. Sd/ (U.B. TRIMAL) Dy. Commissioner of Income tax Circle 1(1), Thane 4. It may be mentioned here that according to the arguments of the learned Counsel, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for invoking block assessment is that the search has been conducted under section 132 of the Act or documents / assets have been requisitioned under section 132A and there must be a satisfaction recorded by the Assessing Officer that any undisclosed income belong to any other person and also the material has to be handed over to the Assessing Officer having jurisdiction over such other person, then only the assessment under section 158BD can be resorted to. Reference in this regard can be made to Para 7 of the judgment. (ii) Judgment of Hon'ble Delhi High Court in CIT v/s Radhe Shyam Bansal Ors, [2011] 337 ITR 271 (Del.), wherein it has been held that recording of satisfaction by the Assessing Officer of the searched person(s) is a condition precedent. Satisfaction must be recorded by the said Assessing Officer that any undisclosed income belongs to any person other than the person(s) searched. Thereafter, the Assessing Officer of the third person can proceed against his assessee under section 158BC. The documents / books of account or assets seized or requisitioned have to be handed over to the Assessing Officer of the third person. Referring to this decision, it is a case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be relevant to reproduce the said letter. No.AC(Inv)Cir.30( 1)/ S S/2000-200 1 Office of the Astt.Commissioner of Income Tax (Inv) Cir.30(1), P.K. Bhavan, C-12, 1st Floor, Bandra Kurla Complex, Bandra (East), Mumbai - 51. Date : 5th March, 2001. The Dy.Comm. of Income Tax Cir.1(1), Thane. Sub : Search Action in the case of Shri.Vaiji Kanji Thakkar Action u/s 158BD of the I.T. Act, 1961 There was a search action in the case of Shri.Valji Kanji Thakkar, son of Late Shri.Kanji Khimji Thakkar, partner of the firm of M/s.Shree Siddhi Builders Developers on 22.07.1999. Certain papers pertaining to my assessee M/s.Shree Siddhi Builders Developers were found and seized in the case of Shri.Valji Kanji Thakkar. The appraisal report was of the Dy.Director of Income Tax (Inv), Thane. Assessment in the case of M/s.Shree Siddhi Builders Developers for A.Y. 1998-99 is getting barred by limitation by 31.03.2001. All those transctions reported in the appraisal report and reflected in the seized documents are to be considered while finalising the assessment in the case of my assessee. Proper assessment can only be made u/s 158BD of the Act. Notice u/s 158BD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under section 132A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the AO having jurisdiction over such other person and the AO shall proceed under section 158BC against such other persons. Interpreting these provisions in the cases relied upon by Ld. AR it has been held that condition precedent for invoking block assessment is that there must be a satisfaction recorded by the AO that any undisclosed income belonged to any other person and also the material has to be handed over to the AO having jurisdiction over such person, then only the assessment under section 158BD can be resorted to. This position of law has become settled by the aforementioned decisions. 9.2 Now the contention of revenue is that letter dated 8/3/2001 should be considered as satisfaction . Such contention of revenue cannot be accepted firstly; on the ground that letter dated 8/3/2001 is not a spontaneous act of the AO of the searched persons(s). Secondly; even the said letter does not record any satisfaction of the AO of the searched persons(s). In para -1 of the said letter reference is made to the letter of the AO of the assessee dated 5/3/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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