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TMI Blog2011 (9) TMI 1001X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer under Section 158BD r.w.s. 158BC(c) of the Income Tax Act, 1961. 2. In this appeal by the assessee, as many as five grounds are raised. However, the assessee has further raised the following additional grounds: "1. The ld.CIT(A) has erred in law as well as on facts of the case by confirming the action u/s.158BD of the Act in finalising the assessment by the AO though the action u/s.158BD is initiated on 27/02/2004 which is time barred in view of the time limit u/s.158BE of the Act in case of Jayaraj Group of cases having expired on 31/12/2003. 2. The appellant therefore prays that action u/s.158BD having been taken after expiry of the period u/s.158BE in case of Jayraj Group cases is barred by limitation and therefore invocation of Section 158BD in case of appellant is bad at law. 3. Assessment u/s.158BD for the block period 01/04/1995 to 19/12/2001 in the case of the appellant is bad in law as on satisfaction was recorded in cases of Jayraj Group before completion of block assessment u/s.158BC in their cases." 3. At the time of hearing before us, it is stated by the learned counsel that the additional grounds are legal grounds which goes to the root of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to produce the satisfaction recorded for the issue of notice under Section 158BD. Admittedly, the search and seizure action was taken under Section 132(1) on 19-12-2001 in the case of Jayarag Group cases. The dates as given by the AO at page no.20 of the paper book with regard to the completion of the assessment in the case of Jayaraj Group cases and also the initiation of action under section 158BD in the case is as under: Sr. No. Particulars Date of order 1. Date of order passed in the case of M/s. Jayraj Group of cases for block period 1.4.95 to 19.12.2011 i. u/s.158BC r.w.s. 158BG 30.1.2004 ii. U/s.263 passed by CIT-III, Baroda. 16.3.2006 iii. u/s.158BC rws 263 29.12.2006 2. Date of recording of reasons for initiating action u/s.158BD 23.2.2004 3. Date of order passed in this case u/s.158BD rws 158BC(C) 31.1.2006 7. Copy of the reasons recorded for issue of notice under Section 158BC is at page no.25 of the Revenue's paper book which reads as under: "REASONS FOR ISSUE OF NOTICE U/S.158BD OF THE ACT. Assessee : Shri Upendra N. Patel, Shri Lalit M. Patel & AShri Champak M. Patel "A search and seizure action in the Jayraj Group was carried out u/s.132 (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontention, he relied upon the decision of the Hon'ble Apex Court in the case of Manish Maheshwari Vs. ACIT, 289 ITR 341 and Special Bench of the ITAT in the case of Manoj Agarwal Vs. DCIT, 113 ITD 377. The learned DR, on the other hand, relied upon the orders of the authorities below and stated that the satisfaction recorded by the AO under Section 158BC is a valid satisfaction because the persons who recorded the satisfaction was the AO for Jayaraj Group of cases as well as the assessee. He also submitted that notice under Section 158BD was duly issued before the completion of the assessment under Section 158BC read with section 263, in the Jayraj Group of cases. 9. We have heard both the parties and perused the material placed before us. The provisions of section 158BD has been considered by the Hon'ble Apex court in the case of Manish Maheshwari (supra). At Page No.348 of the report, Their Lordships held as under: " 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial so as to enable the second Assessing Officer to make a block assessment in a similar manner and that is not possible if the satisfaction is not recorded. And this can be recorded only and only in the course of the section 158BC proceeding and nowhere else. It is the Assessing Officer assessing the person searched who goes, through the seized material and comes to a decision as to whether there is any undisclosed income unearthed as a result of search, if so its nature and to whom it belongs. If the said undisclosed income belongs to the person searched that is the end of the matter. If, on the other hand, the material examined shows that the undisclosed income pertains to some other person he has to give a finding to this effect and thereupon transmit the related seized material to the Assessing Officer having jurisdiction over the other person. All these findings have to be recorded after an honest appreciation of the seized material with an objective mind and there has to be a record reflecting such findings on the basis of which alone the other Assessing Officer can assume jurisdiction to proceed against the other person and it is this record which forms the 'note of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on searched has to be recorded in the course of proceedings under Section 158BC and not thereafter. Meaning thereby, the satisfaction must be recorded before the completion of the assessment of the person searched. Now in the case of the assessee we have reproduced the satisfaction note in para-7 above. 12. From the satisfaction note, it seems that it is recorded by the AO of the assessee and not the AO of Jayraj Group of cases. This inference of ours is on the following basis: i) Heading of the note is "Reasons for issue of Notice u/s.158BD of the Act". Thus, it is the reasons recorded by the AO before the issue of notice under Section 158BD. Obviously, the reason is recorded by the AO who issued the notice under Section 158BD. It seems that the AO considered the provision of section 158BD similar to Section 148 and therefore before the issue of notice, he recorded the reasons for issuing of such notice. ii) The name of the assessee mentioned in the satisfaction note is Shri Upendra N. Patel, Shri Lalit M. Patel & Shri Champak M. Patel. Thus, the reason is recorded in the case of these assessee and not in the case of Jayraj Group of cases. Had the satisfaction recorded by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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