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TMI Blog2013 (7) TMI 778X X X X Extracts X X X X X X X X Extracts X X X X ..... g the findings on the basis of the seized documents by the Assessing Officer that certain undisclosed income belongs to the assessee?" 2. Brief facts are as follows : 3. Search and seizure action in case of Jayraj Group was carried out under section 132 on 19.12.2001. On the department finding certain incriminating materials in relation to Shri Upendra N. Patel, Shri Champak M. Patel and the present assessee respondent which were not accounted for in regular books of account, the Assessing Officer noted that the assessee and Shri Champak M. Patel acquired the rights in the property of M/s. Hindusthan Earth Movers Pvt. Ltd. Such rights were eventually acquired by Shri Jayesh Dave and Shri Upendra N. Patel on the strength of compromise agreement arrived at by and between the parties dated 30.9.2000. Civil Court also put a seal of approval on the same and compromise decree to that effect came to be passed. It was further noted that when the Memorandum of Understanding was arrived at on 1.11.1996, the rights in the land of M/s. Hindusthan Earth Movers Pvt. Ltd. had been acquired. The total cash payment was to the tune of Rs. 37 lakhs and the bank draft of Rs. 1 crore was also given w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in question has appropriately scanned the entire materials and has rightly arrived at a correct decision which calls for no intervention. 8. On thus hearing both the sides and on examination of the order impugned and the materials produced before us, for the reasons to follow herein-inafter, we are of the opinion that this appeal merits no consideration and deserves dismissal. 9. At the outset the law on the subject requires discussion : Firstly taking up the relevant provision of the Income Tax Act, Section 158BD which reads thus : "158BD. Undisclosed income of any other person.- Where the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 or whose books of account or other documents or any assets were requisitioned under section 132A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed under section 158BC against such other person and the provisions of this Chapter shall apply accordingly." Section 158BC provides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income Tax Act where the premises of a director of a company and his wife were searched under section 132 of the Income Tax Act and the question came of carrying out block assessment in relation to the company. The Court held that the Assessing Officer had to satisfy essentially two requirements (i) record his satisfaction that any undisclosed income belonged to the company, and (ii) hand over the books of accounts and other documents and assets seized to the Assessing Officer having jurisdiction against the company. Relevant findings of the Apex court on the subject need to be noted as under : "11. The Condition precedent for invoking a block assessment is that a search has been conducted under Section 132, or documents or assets have been requisitioned under Section 132A. The said provision would apply in the case of any person in respect of whom search has been carried out under Section 132A or documents or assets have been requisitioned under Section 132A. Section 158BD, however, provides for taking recourse to a block assessment in terms of Section 158BC in respect of any other person, the conditions precedents wherefor are : (i) Satisfaction must be recorded by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such other person by issuing the requisite notice contemplated by sec. 158BC of the Act." The Apex Court in case of Assistant Commissioner of Income-tax v. A.R. Enterprises reported in (2013) 350 ITR 489 (SC) has held thus : "13. A bare reading of the afore-extracted provision makes it clear that the condition precedent for invoking a block assessment is a search conducted under section 132, or documents or assets requisitioned under section 132A. Moreover, section 158BD permits the application of the provisions of this Chapter only on the satisfaction of the Assessing Officer that the seized documents show undisclosed income of a person other than the person with respect to whom search was conducted or a requisition was made. It is trite law that such satisfaction must be recorded for the benefit of the assessee. In Manish Maheshwari v. Asst.CIT(2007) 3 SCC 794, this Court summarized the perquisites of section 158BD of the Act as follows : 11. ...(i) Satisfaction must be recorded by the Assessing Officer that any undisclosed income belongs to any person, other than the person with respect to whom search was made under Section 132 of the Act; (ii) the books of account or other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e. Jayraj Group), Revenue is unable to point out any such satisfaction of Assessing Officer in case of Jayraj Group. It had been emphatically argued before us that the Assessing Officer being the same person i.e. Shri A.K. Sinha, such satisfaction when recorded in case of the present assessee should be considered and construed as a due compliance under the provisions and there would not be any occasion to handover the materials to himself being the very officer. 13. As far as second requirement of endowing the papers to the Assessing Officer having the jurisdiction to initiate the proceedings under section 158BC is concerned, learned counsel Mr.Parikh is right and is also not being disputed by the respondent that such formal order of transfer to oneself would neither be warranted nor in any manner affect the validity of the proceedings. 14. However, the vital and mandatory requirement of recording the satisfaction under section 158BD is concerned, as has been rightly noted by the Tribunal, such satisfaction is absent as far as Jayraj Group is concerned in whose case search under section 132 of the Income Tax Act has been carried out by the department. As such an essential requi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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