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TMI Blog2012 (11) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Kul Bharat, JJ. By Assessee Mrs. Urvashi Shodhan, AR By Revenue Shri S.K. Gupta, CIT-DR O R D E R PER Kul Bharat, Judicial Member:- These are cross-appeals filed by the assessee and Revenue are directed against the common order passed by Commissioner of Income-tax (Appeals)-I, Ahmedabad ( CIT (A) for short) dated 04-03-2003 for the block period from 01-04- 1988 to 08-12-1998. First we take up assessee s appeal in IT(SS)A No.169/Ahd/2003. 2. The assessee has raised following grounds of appeal:- 1. The learned Commissioner of Income Tax (Appeals):I, Ahmedabad (hereinafter referred to as the CIT(A)) has grossly erred in law and on facts in confirming the addition of Rs.2,51,519/- being cash received by M/s. Raj Granites in total disregard of this facts that: (i) the addition of Rs.2,51,519/- has been confirmed by the same CIT(A) in the hands of M/s. Raj Granite, who is the final recipient, vide appellant order dt. 18-9-2002 marked CIT(A)-I/CC.1(4)/07/2002- 2003. (ii) the Appellant firm is the developer of the property for a fixed remuneration at 10% of the cost of project and is neither the owner of the land nor the owner of the super structure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht to have restricted the addition to Rs.9,498/- being 10% supervision charges, of the alleged cash payment of Rs.94,979/- to which the Appellant firm is entitled to by virtue of the agreement between the society and the Appellant firm as developer. 5. The Appellant firm requests the Hon ble Income Tax Appellate Tribunal to delete the following additions aggregating to Rs.3,46,498/- erroneously confirmed by the learned CIT(A): (i) Rs.2,51,519/- amount passed on to M/s. Raj Granite (ii) Rs. 94,979/- amount passed on to M/s. Ambica Timber Mart; Rs.3,46,498 M/s. Ambica Timber Depot and M/s. Decent Sales And alternatively, but without prejudice, to restrict the addition to Rs.34,650/- being 10-% of Rs.3,46,498/-- as undisclosed income of the Appellant firm. The assessee also raised additional ground of appeal which reads as under:- Appellant craves leave to raise this additional ground of appeal before the Hon ble ITAT. This is a legal ground and therefore as per the decision of Ho ble Supreme Court in the case of National Thermal Power (229 ITR 383), it can be raised before the Ho ble ITAT. 1. The notice is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quisite satisfaction to be recorded by AO of the searched party and hence the assessment framed being bad in law In view of the various judicial pronouncements by courts of law deserves to be quashed." The appellant has argued that there is no satisfaction recorded by the A.O. for Issuing notice u/s. 15SGD and that the notice issued u/s. 158BD is stereotype notice and therefore the notice is bad in law and ab-initio void. The decision of Hon'ble ITAT Ahmedabad relied upon by the appellant in the case of M/s. Infotech Solutions IT(SS)A No, 64/Ahd/ dated 09.12.2011 is distinguishable not only on facts but also on law. 2. On facts it is stated that In the decisions relied upon by the appellant no reason was recorded and notice u/s, 15BBD was issued whereas in the case of the assessee reasons have been recorded on I8/10/2000 copy of which Is enclosed and a copy of which was given to the assessee by the DCIT, Circle - 9. Ahmedabad vide letter dated 22.03.2011 on a request made under RTI. Act-In view of this reason It is clear that there is satisfaction recorded by the A.O. of the assesses u/s. 158BD and hence the decisions relied upon by the appellant are not applicable. The additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e he did not have jurisdiction in the matter, the Assessing Officer sent a letter dated 6-3-1998 to the Assessing Officer having jurisdiction over the assesses informing him to issue a notice to she assesses under section 142(1) of the Act to file its return and to assume jurisdiction of the ease. 7. Subsequently, it appears, that an order was passed under section 127 of the Act transferring the jurisdiction over the assessee to the Assessing Officer of M/s. Elora Mechanical Products (P.) Ltd, 8. Thereafter, a notice was issued to the assesses on 29-10-1998 under section 158BD of the Act requiring the assesses to file its returns for the relevant block period The assesses filed its returns and during the assessment proceedings ii raised the contention that the Assessing Officer did not record his satisfaction to the effect that proceedings against the assessee should be initiated under section 158BD of the Act. It was. Submitted that only information was given to the effect that a notice should be issued to the assesses under section 142(1) of the Act. 16. It ii quite clear from the above passage that the Assessing Officer must record his satisfaction about the existence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment proceedings. The notice dated 26-10-1998 issued to the assessee is as vague (if not more) than the notice issued in Manish Maheshwari s case (supra). Such a vague notice, as held by the Supreme Court show a patent non-application of mind. 20. It has been pointed out by the Supreme Court that the consequences arising out of invoking the provisions of Chapter XIV-B of the Act are drastic and draconian. The accounts of the assessee may be re-opened for ten years and not only assessee legal presumption is raised against the assessee but the burden shifts on the assessee to show that it did not have any undisclosed income. Under these circumstances it is quite clear that the revenue should not exercise its powers in a mechanical power but should be circumspect while taking action under the provisions of Chapter XIV-B of the Act. That has no happened insofar as the present case is concerned and, therefore, we have no hesitation in giving a finding in favour of the assessee. 21. Learned counsel for the revenue was unable to show any judgment of the Supreme Court which has taken a different view from that taken in Manish Maheshwari s case (supra) and in fact could not press he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be assessed based on such materials. It is specifically provided that such other assessing officer to whom file is transferred shall proceed for assessment under Section 158BC and the provisions of Chapter XIVB are applicable far such assessment. In our view, this is only an enabling provision to assess, a. person other than the assessee searched or other than the assessee whose books of accounts and documents were called for and verified under Section 132A of the Act. What the statute visualises is possibility of recovery of cash, valuables or records in the course of search of an assessee which may pertain to another assessee or other assessees. In the normal course, an assessed about whose income materials are gathered by the department by making income escaping assessment under Section 147 of the Act, which in many cases may be time barred. In order to safeguard the interest of the revenue. Legislature gave enabling power to the departmental officers to make assessment on persons about whose income, details are collected in the course of search of other assessees. Even though Section 158BD is an enabling provision authorising the department to assess any person other than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pportunity to file objections. In other words, validity of assessment is not affected by reason of assessing officer s failure to record his satisfaction under Section 158BD which is only the purpose of transferring the file and once the file is transferred, the transferring officer becomes functus officio and the jurisdiction for all purposes is transferred to the officer to whom file is transferred and who has jurisdiction to assess the assessee about whom, details are obtained in the course of search of another assessee. The peculiar features of this case are such that there was no necessity for transferring the file from one officer to another, because the person searched is the managing partner and based on the materials gathered during search assessment is made on the partnership firm, wherein searched assessee is the managing partner. So much so, issuance of notice under Section 15BD read with Section 158BC is sufficient for initiation of assessment which in this case is admittedly done and the assessee has filed return in Form 2B in terms of notice issued. Therefore what remains is only assessee s contest against assessment on merits which the Tribunal has not done. We th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble ITAT, Ahmedabad In the case of Infotech Solutions (supra) has been given without considering this judgment of Kerala High Court. 3.7 It Is further stated that the Hon'ble ITAT Bengalore 'B' Bench has in the case of Subhan Javeed 122 ITD 307 in its judgment dated 16.01.2009 has considered the decision of Hon'ble Supreme Court in the case of Manlsh Maheshwar! (supra) and has given the decision In favour of the department wherein the Hon'ble HAT, Banglore has stated as under:- 2.3 During the course of proceedings before us. the learned AR relied on the decision of the Hon'ble Apex Court fn the case of Manlsh Maheshwar v. Asst CIT [2QQ7] 289 ITR 341. It was submitted that recording of satisfaction is mandatory and no recorded satisfaction has been shown to the assessee. Since the mandatory requirement has not been fulfilled, therefore, the Assessing Officer was having no jurisdiction to pass an order by issuing notice under section 158BD of the Income-tax Act. The learned AR also relied on the decision of the Special Bench in the case of Manoj Aggrawal v. Dy. CIT [2008] 113 ITD 377 (Delhi). The learned AR submitted that the Special Bench has held that recording of satisfactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stant case, the Assessing Officer is the same, who is having the jurisdiction over the raided person as well as over the assessee. Thus, there was no necessity of handing over the case to another Assessing Officer. 2.18 The learned Special Bench in the case of Mannoj Aggarwal (supra) has made the following observation in respect of satisfaction:- 115. Section 158BD as said earlier begins with the expression where the Assessing Officer is satisfied and so the very section implies a recording of satisfaction. The satisfaction contemplated is a judicious satisfaction and not a subjective satisfaction and unless the same is recorded it is not possible for any person to discern whether the satisfaction meets the requirements of law at all. The satisfaction can be found in the order passed under section 158BC and if no such order is passed then it will have to be found in the note handing over the material seized to the Assessing Officer assessing the other person. In any event, it has to be in writing and in view of section 158BE, the said recoding has to be made before Therefore, time set in section 158BE expires. After the said date, it is not possible to invoke section 158B at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 saying since the transaction pertains to J. B. Construction the same should be considered in the assessment order of M/s. J.B. Construction but considering the fact that Shri Janak K Kansara was involved in the deal and the transaction and assessee is not explain these transactions satisfactorily an addition of Rs.15,59,882/- is made to the income of the assessee for the block period as unexplained investment on protective basis. Similar statement has been made in para 14 14.3 of the same order. Not only that, the same AO had issued the notice u/s. 158BD in the present case and hence the facts are fully covered by the decision of Kerala High Court cited above. Therefore, the reliance of the decision of Delhi High Court and consequently the decision of ITAT, Ahmedabad in the case of Shri Kaushik R Shah and Infotech Solutions are not applicable of the facts of the assessee s case. In view of the above, it is clear that on the legal ground also the additional ground raised by the assessee has to be dismissed. 5. In view of the above, it is requested that for the reasons given. In para 2 above and for the reasons given in jaras.3-1 to 4 above the additional ground raised by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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