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TMI Blog2008 (10) TMI 666X X X X Extracts X X X X X X X X Extracts X X X X ..... ore us, the learned counsel for the assessee moved a Notice of Motion under Rule 27 of the ITAT Rules on 1st January 2008, to the effect that the assessee would support the order of the CIT (A) by taking an additional plea that the proceedings under section 158BD of the Income-tax Act, 1961 (in short "the Act"), had not been validly initiated by the A.O. In this connection, it was submitted that the assessee is entitled to raise such a plea in view of Rule 27 as well as judicial pronouncements including the decision of Hon'ble Bombay High Court in the case of B.R. Bamsi vs. CIT 83 ITR 223. In connection with the aforesaid plea, the judgment of the Hon'ble Supreme Court in the case of Manish Maheshwari vs. ACIT 289 ITR 341 was cited, to the effect that the A.O. having jurisdiction over the case of searched person, should record his satisfaction that the undisclosed income or any part thereof was that of the person other than the searched person. It was also mentioned that the assessment was barred by limitation, the reason being that the notice under section 158BD read with section 158BC was issued on 30.05.2001 and, therefore, the assessment ought to have been com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iciaries in cases where names and addresses have not been completely given is being done from the books of Shri S.K. Jain and M/s Aasheesh Securities Ltd. After completion of the same information will be passes on to the Assessing Officer having jurisdiction for taking necessary action as per law." Thereafter, the AO of the assessee issued a notice under section 158 BC of the Act on 15.07.2002, requesting the assessee to file the return of undisclosed income for the block period. The assessment was completed on 30.07.2004, which was framed within the statutorily prescribed time. 3.1 It was further stated by him that the case was earlier assessed by the Assistant Commissioner of Income-tax. Companies Circle 1(7), who had issued a notice under section 158 BC of the Act to the assessee on 31.05.2001. However, this notice was non-est as jurisdiction over the case was transferred from him to the Assistant Commissioner of Income-tax, CC 17, New Delhi, by an order passed under section 127 of the Act on 18.10.2000. Thus after 18.10.2000, the Assistant Commissioner of Income-tax, Companies Circle 1(7) had no jurisdiction over the case. The learned DR was required to file the copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleged by the leaned DR, issued after lapse of about seven months from the passing of order under section 127 of the Act. In such circumstances, it is strange that the earlier A.O. was unaware of this order upto seven months. In any case, the notice dated 15.07.2002 was not served upon the assessee. Thus, it was agitated that, - (i) since no satisfaction was recorded by the ACIT, Company Circle 1(7), the proceeding initiated under section 158 BC read with section 158BD were bad in law; and (ii) the assessment was barred by limitation. 5. Since it was argued by the learned counsel that the notice dated 15.07.2002 was not served upon the assessee, the learned DR was required to produce the record, which was done. He also filed a copy of the notice dated 15.07.2002 served upon the assessee. It is seen that the notice was served on the Director of the Company on 20.07.2002. The stamp of the assessee company is affixed below his signature and his two telephone numbers and address of the assessee company, at Rohini, Delhi, were also mentioned below the signature. These documents were shown to the learned counsel also and their copies were given to him. 6. We have considered the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned DR that the notice issued by him was bad in law as he had no jurisdiction to issue such a notice. Thereafter, no proceeding could have been taken or continued on the basis of such a notice as in such a case the argument of the assessee would have been that such proceedings were bad in law. This leads us to the question whether, the proceedings initiated by the second mentioned A.O. against the assessee were valid in law? The facts in this regard are that a search and seizure operation was undertaken in the case of Shri S.K. Jain on 14.12.1999, in which a diary was seized, which contained the details of the transactions with the assessee. These transactions were stated to be in the nature of accommodation entries and these were conducted through Shri Praveen Mittal. Consequently, the transactions of the assessee and the other transactions undertaken through Shri Praveen Mittal were forwarded to his A.O. for appropriate action. Shri Mittal was also searched on 24.05.2000, possibly to get the details of all the accommodation entry transactions conducted by various entities through him. However, no asset or document was seized from him. Assessment in his case was made under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 132A, he shall proceed against such other person as per the provisions of Chapter XIV-B which would mean that on such satisfaction being reached that any undisclosed income belongs to such other person, he must proceed to serve a notice to such other person as per the provisions of section 158BC of the Act. If the Assessing Officer who is seized of the matter against the raided person reaches such satisfaction that any undisclosed income belongs to such other person over whom he has no jurisdiction, then, in that event, he has to transmit the material to the Assessing Officer having jurisdiction over such other person and in such cases the Assessing Officer who has jurisdiction will proceed against such other person by issuing the requisite notice contemplated by section 158BC of the Act." A similar view has been taken by the Gujarat High Court in Rushil Industries Ltd. vs. Harsh Prakash (2001) 251 ITR 608, Priya Blue Industries P. Ltd. vs. Joint CIT (2001) 251 ITR 615 (Guj), Premjibhai and sons vs. Joint CIT (2001) 251 ITR 625 (Guj), and by the Kerala High Court in CIT vs. Deep Arts (2005) 274 ITR 571, CIT vs. Don Bosco Card Centre (2007) 289 ITR 329 (Ker) and by the Madhya ..... X X X X Extracts X X X X X X X X Extracts X X X X
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