9911796707
TMI Blog2012 (10) TMI 399X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax (Appeals) erred in confirming addition of Rs.54,84,006/- on account of unexplained payment for acquisition of development rights. 4. The Learned Tax (Appeals) erred in confirming addition of Rs.18,50,000/- u/s 68 as unexplained cash credit. The appellant prays that: a) The block assessment order u/s 158 BD may be annulled, b) The income from the project may held to be assessable in A.Y. 1998-99 and not as undisclosed income in block assessment proceedings. c) The addition of Rs.54,84,006/- u/s 69C on the alleged ground of unexplained expenditure may be deleted. d) The addition of Rs.18,50,000/- on the alleged ground of unexplained cash credit may be deleted." ADDITIONAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE: "On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in issuing notice under section 158BD on 8.3.2001, without there being any "satisfaction" recorded as to the existence of any undisclosed income belonging to the appellant prior to issue of such notice. The prerequisite condition for issue of notice as provided under section 158BD as laid down by the Hon'ble Supreme Court in the case of Manish Maheshwari v/s ACIT, 289 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 158BD r/w section 143(3) of the Income Tax Act, 1961 (for short "the Act") is dated 14th February 2002. A search was conducted at the premises of Valji Kanji Thakkar Group, Thane, on 28th July 1999. In pursuance to such search, notice was issued to the assessee under section 158BD on 8th March 2001. The notice issued under section 158BD dated 8th March 2001, is received on 9th March 2011, a copy of which is placed on record. It is the main case of the assessee that assessment in the present case is liable to be quashed on the ground that there is no "satisfaction" recorded by the AO of the search person(s) against the assessee, which is a condition precedent for the validity of notice to be issued under section 158BD of the Act. In other words, it is the case of the assessee that no satisfaction whatsoever has been recorded by the A.O of the searched persons(s) against the assessee which could validate the assessment proceedings against the assessee. 3.1 As the assessee was taking this plea, the department vide ordersheet noting dated 5/8/2010 was directed to furnish "satisfaction note" recorded by the AO of the searched persons(s). Thereafter the matter was adjourned several ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ggest that any satisfaction was recorded by the Assessing Officer of the searched person(s) according to which it can be said that the Assessing Officer of the searched person(s) was satisfied that undisclosed income belongs to the assessee. It is also the case of the learned Counsel that not only the satisfaction should be recorded but according to the requirements of section 158BD, the Assessing Officer of the searched person(s) should have handed over the material to the Assessing Officer of the other person to whom the material belongs on the basis of which the satisfaction has been recorded by the Assessing Officer of the searched person(s). It is on this short ground, both the parties had argued and the other aspects of the appeal were not gone into, as, if it is held that there was no "satisfaction" recorded by the Assessing Officer of the searched person(s) with regard to the undisclosed income of the assessee, then it will vitiate the assessment framed on the assessee. 5. In the letter dated 6/7/2012 filed before us by the Ld. CIT DR it has been clarified that the "satisfaction" is in the shape of aforementioned letter dated 8/3/2001 and the contents of the said letter ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Assessing Officer of the third person which, in the present case, is the assessee. He submitted that in that case also, satisfaction was alleged to be recorded only in the shape of letter written by the Assessing Officer of the searched person(s) to the A.O of the assessee which has been discussed in detail in the aforementioned decision and, therefore, he submitted that the facts of the assessee's case are similar to the facts of the said case. (iii) CIT v/s Sunil Bhala, [2011] 336 ITR 550 (Del.), wherein also, on similar type of letter, similar propositions have been laid by the Hon'ble Delhi High Court and reference in this regard can be made to Paras-4 and 16 of the judgment. 7. For similar propositions Ld. A.R relied on the following decisions:- i) CIT v/s Late Raj Pal Bhatia, [2011] 333 ITR 315 (Del.); ii) New Delhi Auto Finance P. Ltd. v/s JCIT, [2008] 300 ITR 83 (Del.); iii) CIT v/s Dawn View Farms P. Ltd., (2008) 224 CTR 504 (Del.); iv) Manoj Agarwal v/s DCIT, [2008] 113 ITD 377 (SB) (Del.); v) ACIT v/s Amit Pande, 14 Taxman.com 93 (Indore). 8. On the other hand, it was submitted by the learned Departmental Representative that the letter dated 8th March 2001, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1998-99 in the case of the assessee. Regular assessment will be made u/s 158BD of the Act. An early reply in the matter is highly appreciated. Sd/ (A. H. Syed) Asst. Commissioner of Income Tax Circle.30(1), Mumbai. Copy to: 1. The Addl.CIT Range-I, Thane. 2. The Addl.CIT.Range-30, Mumbai. For information. ACIT(Inv).Cir.30(1), Mumbai." From the above letter it can be seen that AO of the assessee had required the AO of the searched persons(s) to issue him a letter so that the proceedings can be started against the assessee under the provisions of section 158 BD and it is also mentioned that notice under section 158BD of the Act cannot be issued by him unless a letter to that effect is received. Thus the aforementioned letter dated 8/3/2001 written by the AO of the searched person(s) was not his self action. The said letter is written only in response to the letter dated 5/3/2001 of the AO of the assessee dated 5/3/2001. It will be relevant to reproduce the language of section 158BD which read as under: "Undisclosed income of any other person. 158BD. Where the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd it is also mentioned that after going through appraisal report it is noticed that the assessee is a sister concern of NKT Group and two brothers i.e. Shri Kanji Khimji Thakkar and Prabhulal Khimji Thakkar were partners of the above firm alongwith two outsiders. It is also mentioned that it is learnt that the said firm is assessed by the AO of the assessee. In para 4 a reference to appraisal report dated 29/11/1999 is made according to which the assessee firm had constructed a project named as "Anand Mangal" having 18 flats in the said building and DDI(Inv), Thane have quantified the undisclosed income to the extent of Rs. 89,19,206/- and considering that fact the AO of the searched person(s) has written to the AO of the assessee to take necessary action as per the provisions of section 158BD of the Act to assess above mentioned undisclosed income in the hands of the assessee. Thus it can been seen that in para 1, 2 &3 there is no recording of "satisfaction" as only facts have been stated. In para-4 the reference is made only to appraisal report and para-4 does not convey any "satisfaction" of the AO of the searched person(s). Thus there is complete lack of any "satisfaction" rec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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