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TMI Blog2016 (6) TMI 894X X X X Extracts X X X X X X X X Extracts X X X X ..... ocates Ajay Kumar Mittal,J. 1. This appeal has been filed by the appellant-revenue under Section 260A of the Income Tax Act, 1961 (in short, the Act ) against the order dated 11.7.2014, Annexure A.3 passed by the Income Tax Appellate Tribunal, Bench 'A', New Delhi (in short, the Tribunal ) in IT(SS) No.36/Del/2010 for the block period 1.4.1997 to 8.5.2003, claiming following substantial questions of law:- 1. Whether in the facts and circumstances of the case, the learned ITAT has erred in law in dismissing the appeal of the revenue on the ground that proceedings under section 158BD in the case of assessee have been initiated on the basis of satisfaction made from the seized materials found as a result of search conducted on the assessee and thus the proceedings under section 158BD were not valid? 2. Whether in the facts and circumstances of the case, the learned ITAT has erred in law by not appreciating that the name of the assessee was not appearing in the search warrant executed on 8.5.2003 at his residence (which was containing name of Vatika Group of entities namely M/s Vatika Landbase Pvt. Limited, S/Shri Anil Bhalla, Gaurav Bhalla and Gautam Bhalla) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 010, Annexure A.2 held that proceedings initiated under section 158BD of the Act were not legal as the assessee was covered under section 132(1) of the Act and should have been assessed under section 158BC and not under Section 158BD of the Act. Aggrieved by the order, the department filed appeal before the Tribunal. It was pleaded by the department that the name of the assessee was not appearing in the search warrant under section 132(1) of the Act. The search warrant was issued in the name of M/s Vatika Landbase Pvt. Limited, S/Shri Anil Bhalla, Gaurav Bhalla and Gautam Bhalla. The assessee submitted that once the search team entered his premises, he was covered under section 132(1) of the Act and thus proceedings should have been initiated under section 158BC of the Act. The assessee also questioned the merit of the satisfaction note. The Tribunal vide order dated 11.7.2014, Annexure A.3 dismissed the appeal filed by the department holding that the assessee had objected to the validity of the proceedings before the Assessing Officer. The Tribunal relied upon the observation of the learned CIT(A) that the satisfaction note had been framed on the basis of documents found and seize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was observed thus:- 41. We would certainly say that before initiating proceedings under Section 158BD of the Act, the assessing officer who has initiated proceedings for completion of the assessments under Section 158BC of the Act should be satisfied that there is an undisclosed income which has been traced out when a person was searched under Section 132 or the books of accounts were requisitioned under Section 132A of the Act. This is in contrast to the provisions of Section 148 of the Act where recording of reasons in writing are a sine qua non. Under Section 158BD the existence of cogent and demonstrative material is germane to the assessing officers satisfaction in concluding that the seized documents belong to a person other than the searched person is necessary for initiation of action under Section 158BD. The bare reading of the provision indicates that the satisfaction note could be prepared by the assessing officer either at the time of initiating proceedings for completion of assessment of a searched person under Section 158BC of the Act or during the stage of the assessment proceedings. It does not mean that after completion of the assessment, the assessing offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of search assessments and avoiding or reducing long drawn proceedings. 44. In the result, we hold that for the purpose of Section 158BD of the Act a satisfaction note is sine qua non and must be prepared by the assessing officer before he transmits the records to the other assessing officer who has jurisdiction over such other person. The satisfaction note could be prepared at either of the following stages: (a) at the time of or along with the initiation of proceedings against the searched person under Section 158BC of the Act; (b) along with the assessment proceedings under Section 158BC of the Act; and (c) immediately after the assessment proceedings are completed under Section 158BC of the Act of the searched person. 45. We are informed by Shri Santosh Krishan, who is appearing in seven of the appeals that the assessing officer had not recorded the satisfaction note as required under Section 158BD of the Act, therefore, the Tribunal and the High Court were justified in setting aside the orders of assessment and the orders passed by the first appellate authority. We do not intend to examine the aforesaid contention canvassed by the learned counsel since we are remanding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e nor necessary to have any strict formula in this regard. For instance, there may be cases where after the assessment proceedings are completed under section 158-BC of the Act of the searched person, the Assessing Officer is indisposed for some reason such as on the ground of health. It would not be unreasonable if the satisfaction is recorded soon after he recovers. The Assessing Officer may have enormous burden of work upon completing the assessment proceedings under Section 158-BC of the Act. It would be permissible if he took some time after completing such pending work to prepare the satisfaction note. Each case must be judged upon its own facts. 13. Our view is supported by the judgment of a Division Bench of this Court dated 14.02.2011 in Income Tax Appeal No. 147 of 2010 Commissioner of Income Tax, Faridabad v. M/s Om Parkash and sons. The Division Bench held as under::- 17. .........................As regards delay in issuing notice to the assessee, we find merit in the contention that it was a case which involved a huge fraud of tax evasion where business of searched person was to give accommodation entries resulting in tax evasion to the extent of ₹ 132 Cro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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