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TMI Blog2018 (6) TMI 1223X X X X Extracts X X X X X X X X Extracts X X X X ..... ere no incriminating material found during the course of search against the assessee in the case of Vatika Group of Companies and satisfaction note is anti dated. No satisfaction note has been recorded on the date of issue of notice under section 158BD of the Act dated 31.05.2005. The satisfaction note supplied to the assessee on 27.01.2006 is thus, anti-dated and had not been recorded on the date purported i.e., 31.05.2005. Our findings are based mainly on reasons that in the case of person searched, no incriminating material was found against the assessee, therefore, there were no reason to record satisfaction under section 158BD of the Act in the case of the person searched. - Decided in favour of assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... ction note had been served upon the assessee on 27.01.2006 whereas the satisfaction note was recorded on 31.05.2005 and no reason have been explained for the delay of over 7 months for providing such satisfaction note to the assessee. The satisfaction note served upon the assessee clearly shows that it was recorded in the case of Shri. Anupam Nagalia (assessee). It was, therefore, submitted that no satisfaction note was recorded in the case of the person searched i.e., M/s. Vatika Group of Companies. The assessee relied upon the decisions of Hon'ble Supreme Court in the case of Manish Maheshwari vs. ACIT 289 ITR 341 and others. On the basis of these decisions, the assessee has objected to the initiation of the proceedings under section 158BD, since no satisfaction note whatsoever was recorded by the A.O. having jurisdiction over the person searched. 2.2. It was further contended that, the additions have been made in the hands of the assessee on the basis of the documents seized from assessee's premises allegedly pertaining to the assessee and not on the basis of even a single paper seized from the premises of Vatika group of companies. Even in the note of satisfaction there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 132 A. 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 against such other person and the provisions of this Chapter shall apply accordingly." 4.1. On plain reading of the aforesaid statutory provisions contained in section 158BD of the Act, it will be seen that, it has been provided that, where the Assessing Officer of the searched person is satisfied 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, 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, thereafter the Assessing Officer of such other person shall proceed against such other person. The, Apex Court in the case of Manish Maheshwari 289 ITR 341 has held that, un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n over the 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, 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 not 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." 4.2. Also, Hon'ble Delhi High Court in the case of Janki Exports International v UOI reported in 278 ITR 296 has further held as under : "We find that section 158BD is somewhat analogous to section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed income' and ' belongs to' which clearly indicate that at that point of time when satisfaction i s recorded by the Assessing Officer the undisclosed income is to be identified. Further , the said expression does not stop there. It further uses the expression "belongs to any person, other than the person with respect to whom search was made" which indicates that the undisclosed income identified by the Assessing Officer is found to be belonging to the other person. It would thus mean that at the stage of recording, the Assessing Officer has reached a finding that undisclosed income has been detected as a result of search and also further that such income belongs to the person not searched. All these constitute findings and not a more belief held by the Assessing Officer on the examination of the seized material and hence the satisfaction contemplated in section 158BD is totally different than contemplated in section 147. It is fundamental that the Assessing Officer finds out whether there is undisclosed income. If he finds that there exists undisclosed income, then he has to give a finding as to whom the said income belongs. In the absence of such a finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -l. page 65 reveals unaccounted investment in l and at Rajpur Road . Dehradun amounting to ₹ 5 5 lacs, at Village Bhondsi (Manan a) amounting to ₹ 18 lacs and immovable properties comprising loans and advances, investment in shares and deposits, jewellery etc. amounting to ₹ 48 lacs. IV Unaccounted loan - Annexure A-2, page 1,2,3, 5, 6,8,10,13, 15 and 21 reveals transactions on account of loan s not disclosed for the purpose of income tax. In view of the facts stated above and material available in the form of seized documents, I am satisfied that Sh. Anupam Nagalia had undisclosed income for the block period 01.04.1997 to 08.05.2003 which was not disclosed in the regular return of income. Therefore, notice u/s 158BC read with Section 158BD is issued. Sd/- (P.K.Singh) Asstt. Commissioner of Income Tax, Central Circle-20, New Delhi. 4.6. The aforesaid satisfaction note would show that the learned Assistant Commissioner of Income Tax, Central Circle 20, New Delhi has referred to the following material for concluding that there is undisclosed income of the appellant: (a) Pages 33. 34. 37 and38 of Annexure A-11 (b) Annexure A-11 (c) Page 65 of Annexu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing was found in the case of Shri Praveen Mittal whose A.O. recorded the satisfaction note on the basis of submissions made in his case before him. As nothing was seized from him. nothing was transmitted by the A.O. of Shri Praveen Mittal to the second mentioned A.O., who happens to be the same officer. Thus, in view of the decision in the case of Manish Maheshwar (supra), it is held that pre-conditions required to be satisfied before assuming jurisdiction under section 158BD in the case of the assessee were not satisfied. Learned DR has not been able to show or refer to any material which was seized in the case of Shri Praveen Mittal so as to authorize his A.O. to record satisfaction in the case of the assessee. Thus, we are in the agreement with the learned counsel, albeit for somewhat different reasons, on the issue that the second mentioned A.O. did not have the jurisdiction to issue notice under section 158BC read with section 158 BD on 15.07.2002. Therefore, the order passed on the basis of this notice is invalid in the eye of law ." 4.8. The Assessing Officer in the remand report, has contended that since this objection was not raised in the course of assessment proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initiated under section 158BD of the Act were not legal, valid and are therefore quashed." 2.5. It may be noted that the impugned order of the Ld. CIT(A) was challenged by the Department before ITAT, A-Bench in IT(SS)A.No.36/Del./2010 along with C.O.No.380/Del./2010 of the assessee. The Tribunal vide Order dated 11.07.2014 dismissed the Departmental Appeal as well as Cross Objection filed by the assessee. The Revenue preferred appeal before the Hon'ble Punjab & Haryana High Court against the order of the Tribunal in Income Tax Appeal No.55 of 2015 which is decided vide Judgment dated 06.01.2016 and the matter is remanded to the Tribunal to examine it afresh and record reason based findings. The directions of the Hon'ble High Court in para- 8 are reproduced as under : "8. In the present case, the Tribunal being a final fact finding authority had not recorded any finding with regard to the recording of satisfaction note on 31.5.2005. Further, nothing was observed whether the satisfaction note dated 31.5.2005, if any, produced by the revenue was ante-dated or not. In such circumstances, the matter requires to be remanded to the Tribunal to examine it afresh and record a reason- bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be produced for inspection of the Court because same are not available. 5. On the other hand, Learned Counsel for the Assessee reiterated the submissions made before the Ld. CIT(A). Learned Counsel for the Assessee referred to PB-14 which is notice under section 158BD dated 31.05.2005 issued by Shri P.K. Singh, ACIT, Circle-20, New Delhi who is the same Officer recorded satisfaction on 31.05.2005. The said notice was issued without satisfaction note supplied to the assessee. PB-15 is letter of the assessee dated 11.06.2005 in which the assessee requested the A.O. to furnish note of satisfaction which is required to be recorded in writing as has been held by the Hon'ble Delhi High Court in the case of Amity Hotels reported in 272 ITR 75. The assessee apart from asking copy of the satisfaction note also requested for supply of the documents on the basis of which A.O. was satisfied that there was an undisclosed income belongs to the assessee. PB-16 is another letter of the assessee dated 29.06.2005 in which the assessee similarly asked for copy of the satisfaction note and the documents from the A.O. for compliance. PB-31 is notice issued by A.O. under section 142(1) dated 18. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is called for in the matter. PB-365 is submission of the assessee in detail which have not been rebutted by the department in which the assessee has similarly explained that there were no incriminating material found during the course of search against the assessee in the case of Vatika Group of Companies and satisfaction note is anti dated. He has relied upon decision of Hon'ble Supreme Court in the case of Tapan Kumar Dutta vs. CIT, West Bengal (2018) 92 taxmann.com 367 (SC) in which, in para-11, it was held as under : 11. "A perusal of Section 158BD of the IT Act makes it clear that the Assessing Officer needs to satisfy himself that the undisclosed income belongs to any person other than the person with respect to whom the search was made under Section 132 or whose books of accounts or other documents or assets were requisitioned under Section 132A. The very object of the Section 158BD is to give jurisdiction to the Assessing Officer to proceed against any person other than the person against whom a search warrant is issued. Although Section 158BD does not speak of 'recording of reasons' as postulated in Section 148, but since proceedings under Section 158BD may have mone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the satisfaction has been recorded in the case of the person searched i.e., M/s. Vatika Landbased Private Limited who was the person searched in terms of Section 132(1) Or it has been recorded in the case of assessee, directed the Ld. D.R. to produce the original record of the said Company in whose case order under section 158BC has been passed and also produce records of the assessee. It was also directed that on the date of hearing, A.O. would present himself with the records so that proper facts can be ascertained and parties are heard at length. The adjournment was given to the department to comply with the order and appeal was adjourned to 19.02.2018 as the date convenient to the department. Again on 28.02.2018, the Ld. D.R. requested for adjournment for production of the records as was directed earlier by the Tribunal. The appeal was adjourned to 07.03.2018 with the observation that "case cannot be kept pending just at the mercy of the department to produce the record." The Ld. D.R. has ensured that the records shall be produced in the Court on the next date of hearing, failing which, she will address the arguments without record. The appeal was taken-up for hearing finally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uce the block assessment records in the case of the person searched and the assessee to clarify the position as to in which case satisfaction note have been recorded on 31.05.2005 or on a later date. However, the Revenue Department has failed to produce the assessment records in both the cases. Therefore, an adverse inference shall have to be drawn against the Revenue Department in this regard. These facts clearly show that no satisfaction under section 158BD have been recorded in the case of the person searched i.e., Vatika Group of Companies, which is mandatory for initiating proceedings under section 158BD of the I.T. Act. We also hold that recording of such satisfaction note is also anti-dated and was recorded later on when assessee made a request in writing for supply of copy of the satisfaction note along with seized documents for making proper compliance before the A.O. The Judgments of Hon'ble Supreme Court in the cases of Manish Maheshwari and CIT vs. Calcutta Knitwears (supra), are squarely applicable to the facts of the case in favour of the assessee. It is an admitted position that the papers referred to in the satisfaction note above have been found as a result of sear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the other person is one and the same, then also he is required to record his satisfaction as has been held by the Courts. 9. Considering the material on record, it is clear that no satisfaction note has been recorded on the date of issue of notice under section 158BD of the Act dated 31.05.2005. The satisfaction note supplied to the assessee on 27.01.2006 is thus, anti-dated and had not been recorded on the date purported i.e., 31.05.2005. Our findings are based mainly on reasons that in the case of person searched, no incriminating material was found against the assessee, therefore, there were no reason to record satisfaction under section 158BD of the Act in the case of the person searched. Further, whatever material was found and referred to in the satisfaction note was found during the course of search on the person of the assessee. The assessee made a request for supply of the copy of the satisfaction note immediately, but it was not supplied to the assessee, therefore, it was recorded subsequently in the case of assessee, which fact is strengthened by observation in the impugned assessment order by mentioning that copy of the satisfaction note was provided to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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