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TMI Blog2018 (12) TMI 983X X X X Extracts X X X X X X X X Extracts X X X X ..... s OF H. EH THE NIZAM'S SUPPLEMENTAL FAMILY TRUST VERSUS COMMISSIONER OF INCOME-TAX [2000 (2) TMI 4 - SUPREME COURT] The satisfaction recorded by the Assessing Officer as per Revenue is incorporated in the order sheet and not in the notice. Thus, it is not a valid satisfaction, as satisfaction u/s 158BD of the Act has to be recorded by the Assessing Officer of the searched person and not by the Assessing Officer of the other person i.e. assessee. Therefore, this satisfaction which was recorded in the order sheet and also not communicated to the assessee, is not a valid satisfaction, this preposition of the Ld. AR sustains. The contention of the Ld. DR is that the Assessing Officer is same for all the mentioned assessees do not permit/allow the Assessing Officer not to record satisfaction for each of the assessee separately. It is a mandate as per the provisions of the Act and cannot be overlooked. Therefore, the Assessing Officer does not have valid jurisdiction to frame the assessment. Thus, the cross objection of the assessee is allowed. - IT (SS) A NO. 9/DEL/2011 And C.O NO. 93/DEL/2011 - - - Dated:- 13-12-2018 - SHRI N. K. SAINI, VICE PRESIDENT AND MS SUCHITRA KAMBLE, JUDI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in law and facts in deleting the addition of undisclosed income at ₹ 2,44,58,812/- without adversely adjudicating contents of incriminating documents scanned in the assessment order. C.O NO. 93/DEL/2011 1. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that, since no order dropping the proceedings initiated under section 158BD of the Act dated 14.7.2005 had ever been served on the assessee therefore, subsequent notice issued under section 158BD of the Act dated 27/7/2007 was not a valid notice and, hence the impugned order of assessment dated 30.07.2009 was without jurisdiction. Infact, the learned Commissioner of Income Tax (Appeals) has failed to comprehend the alleged dropping of proceeding on the purported date of dropping of proceedings was merely a cloak or a colorable device and was shown only for collateral purposes, to circumvent the non framing the assessment within the period of limitation. 1.2. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that, the finding of the learned Assessing Officer that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Gurgaon was also searched. Shri Anupam Nagalia is chartered accountant and, is a Director in M/s Vatika Land base Pvt. Ltd. Shri Virender Bhatia floated a company M/s Baani Technologies Pvt. Ltd. He purchased a land at village Wazirabad, Gurgaon in the name of M/s Baani Technologies Pvt. Ltd. Vatiak Group has taken over the company M/s Baani Technologies Pvt. Ltd. during Financial Year 2002-03 from Shri Virender Bhatia of Delhi. This Company had only one asset in the form of land measuring around 2.36 acres at Village Wazirabad. The value of land as per balance sheet of the company was at ₹ 2,37,05,540/- as on 31/3/2003. Thus, Vatika Group purchased land at Wazirabad from Shri Virender Bhatia. On the basis of evidence collected during pre-search enquiry and from the seized record, the Assessing Officer held that Vatika Group Company had in-fact made investment of ₹ 4,95,61,000/- in the purchase of land measuring 2.36 acres from Shri Virender Bhatia and his family members. The details of transactions relating to the deal of the said land were said to be recorded in a diary marked as Annexure A-9, particularly on pages 6, back side of Page 10 and Page 18 of the Annexure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee as mentioned on Page 6, backside of Page 10 Page 18 of diary as per Annexure A-9. In response to the said notice, the assessee filed reply dated 14/8/2007 containing therein that fresh notice is without jurisdiction since no assessment order has been passed in respect of previous notice. Thereafter, another notice u/s 142(1) of the Act dated 22/6/2009 was issued. The assessee in response, filed a reply on 17/7/2006, stating that neither notice dated 27/7/2007 nor notice dated 26/2/2009 are valid and both notices are without jurisdiction. The Assessing Officer rejected the objections raised by the assessee Company and determined total undisclosed income of the assessee company at ₹ 2,44,58,812/-. 5. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A) who allowed the appeal of the assessee. Now the department is in appeal and the assessee has filed cross objection. 6. The Ld. DR submitted that there was a search in Vatika Group on 08.05.2003. Assessee had floated a company M/s Baani Technologies Pvt. Ltd. which was taken over by Vatika Group in A.Y.2003-04. The only asset with the company was land of 2.36 Acers valued at S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... took purchase consideration at ₹ 3,07,12,496/- on the basis of statements of brokers/farmers etc. So the addition was for purchase. The Ld. DR submitted that the land remained in the name of said company and the name of company was changed to Vatika Land Marketing (P) Ltd. Thus, the Ld. DR submitted that the issue involved here is the sale of company (and indirectly the land), the consideration for which has gone to the assessee. The Ld. DR submitted that this sale consideration obviously cannot be added in the hands of the company, though the AO discussed this issue to justify the market value of land. So the reliance of CIT(A) is not well placed. In para 7.5 the CIT(A) also held that the notice u/s 158BD to be void. The main reason is that the AO of searched person should have recorded the satisfaction. Apparently, the AO of searched person and assessee were same in this case as all orders in group cases available in Paper Book of the assessee have been passed by him. Therefore, the Ld. DRT relied upon the decision in the case of Ganapati Fincap Services Pvt. Ltd., 99 CCH 27 (Del High Court). 7. The Ld. AR submitted that the proceedings initiated on 27.07.2007 do not re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act dated 14.7.2005 has been served on the appellant after the termination of assessment proceedings in the case of searched person namely Vatika Group. The appellant has submitted that notice under section 158BD of the Act dated 27/7/2007 is without jurisdiction since notice under section 158BD of the Act dated 27.7.2007 has been served on the appellant after termination of the assessment proceedings in the case of searched person namely Vatika Group. It is submitted that, since proceedings in the case of Vatika Group had been terminated on 31.5.2005 as a result of search, action having been taken on them on 8.5.2003, notice issued under section 158BD of the Act on 27.7.2007 is apparently beyond the period of limitation and therefore, unsustainable. In support reliance has been placed on the following decisions: a) 113 ITD 377 (SB)(Del) Manoj Aggarwal vs. DCIT b) 17 SOT 380 (Chd) ACIT vs. Kishore Lai Balwant Rai c) Shri Radhey Shyam Bansal vs. ACIT in IT(SS) No. 12/D/2007 for Block Peirod 1991-92 to 2001-02 (upto 3.08.2002) 7.1. The Assessing officer neither in the comments and, nor in the order of assessment has recorded any adverse findings in reb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 158BD of the Act. In that case, the letter was dated 15.07.2003 and, was after the completion of assessment in the case of Shri Manoj Aggarwal (searched person) on 29.08.2002. It was held following the decision in the case of ACIT vs. Kishore Lai Balwant Rai (Chd.) (reported in 17 SOT 380) as under: 7 That takes us to the question whether the letter dated 15.07.2003 written by the DCIT, Central-3, New Delhi, who is the Assessing officer having jurisdiction over Manoj Aggarwal, to the Assessing Officer, Circle 37(1), New Delhi, who is the Assessing Officer assessing Radhey Shyam Bansal (aasessee before us) can be construed to represent the requisite satisfaction. On this issue, the Chandigarh Bench of the Tribunal has passed an elaborate order on 29th June, 2007 in the case of ACIT, Yamunanagar Vs Kishore lal Balwant Rai and other connected cases. A copy of this order is at pages 75 to 168 of the paper book. Strong reliance was placed on this order by the learned representative for the assessee to contend that the satisfaction has to be recorded during the course of the assessment proceedings of the person put to search under Section 132 or requisition under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further in para 9 and 10, held that the notice dated 22.03.2004 is also belated since such notice was issued about 19 months from the completion of assessment in the case of Shri Manoj Aggarwal. It was held therein as under: 9 The next question to be addressed is whether the notice under Section 158BD requires to be issued within a reasonable time and if it is not to issued, whether the assessment made pursuant to the notice is liable to be set aside on that ground. The contention of the learned representative for the assessee, it may be recalled, was that the notice should have been issued at least within a reasonable tie after the completion of the assessment of the searched person. In the present case, the block assessment of Manoj Aggarwal was completed on 29.08.2002 but the notice under Section 158BD was issued only on 22.03.2004, that is about 19 months later. The further contentions based on the judgment of the Gujarat High Court in Khandubhai Vasanji Desai s case (supra) was that the notice should be issued within 15 days from the completion of the block assessment in the case of the searched person or at any rate within 60 days from that date, the sanctity behind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The period was highlighted by the Gujarat High Court only to emphasis the speed and swiftness within which the proceedings should be taken against such persons. That object does not appear to have been achieved in the present case I view of the unreasonable delay in issuing the notice under Section 158BD not only after the date of completion of the block assessment of Manoj Aggarwal. Even if the period of 60 days is to be reckoned from 15.07.2003, the date on which the Assessing Officer of Radhey Syam Bansal, there is a delay of almost 8 months before issue of the notice under section 158BD . In such circumstances, we hold that the notice having been issued well beyond a reasonable period of time, the assessment made on the assessee is bad in law. 7.4. Further, Special Bench in the case of Bishan Chand Mukesh Kumar reportedas Shri Manoj Aggarwal vs. DCIT reported in 113 ITD 377 also upheld the aforesaid proposition by observing as under: 125. In the instant case, we may now examine whether there is any record of satisfaction that meets the requirement of law as enunciated above. We have already reproduced the copy of the said record dated 19- 12-2002. It is signed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 27.07.2007 i.e. after a gap of approximately 25 months and hence, even the notice issued is highly belated. In otherwords, the notice under section 158BD has been issued to the appellant well beyond a reasonable period of time- reckoned either from the date of search (8.05.2003), or from the date of block assessment on M/s Vatika Group (31.05.2005). Thus, since there was no effective notice to the assessee within a reasonable period, the assessment requires to be vacated and, is thus quashed. Infact, the satisfaction has been recorded on 27/7/2007 i.e. after the completion of assessment of searched person itself shows that this is not a satisfaction recorded by the Assessing Officer of a searched person as is the mandate of section 158BD of the Act, judgment of Apex Court in the case of CIT vs. Manish Maheshwari reported in 289 ITR 341 and. Delhi High Court in the case of Amity Hotels Pvt. Ltd. vs. CIT reported in 272 ITR 75. Accordingly, it is held that, initiation of proceedings without fulfilling the mandatory preconditions is without jurisdiction. Keeping in view my discussion on the legal issue rendered above holding the assessment made by the AO to be invalid, I do not de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hnologies Pvt. Ltd. The Assessing Officer made addition of ₹ 1,49,62,500/- u/s 158BC on account of under statement in purchase price of 2.36 Acres land in Wazirabad, Gurgaon. In that order, the Assessing Officer concluded that actual purchase consideration was ₹ 3,07,12,496/- against the amount is recorded in books of accounts of ₹ 1,57,50,000/-. Accordingly, addition of ₹ 1,49,62,500/- was made. This addition made by DCIT, Central Circle-20, New Delhi was deleted by Ld. CIT(A)-XVIII, New Delhi vide his order dated 26.12.2005 in appeal No.2/05-06. The main reason for deleting the addition by Ld. CIT(A) was that no incriminating document was found during the course of search and seizure action and the addition was made on the basis of statements of the broker and farmers who sold their land to M/s Banni Technologies Pvt. Ltd. Clearly the addition made in this assessment is also in respect of same piece of land of 2.36 acres at Wazirabad, Gurgaon. The addition has been made by the Assessing Officer holding that the appellant company purchased the land for consideration of ₹ 4,95,61,000/- from M?s Baani Technologies Pvt. Ltd. controlled by Shri Virender B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer has merely done some calculations and has arrived at a conclusion that there was undisclosed investments of ₹ 2,58,55,460/-. Other documents being share purchase agreement and letter to Director, Town Country Planning, Chandigarh, Haryana also do not indicate towards any unexplained investments in purchase of land. In view of these facts, I am of the opinion that the Assessing Officer was not justified in making addition of ₹ 2,59,55,460/-. The same is deleted. 8.1. The above order stands confirmed by the Hon ble Tribunal by order dated 25.09.2009 by holding as under: 8 We have heard the rival submissions and have gone through the material available on record. We find that on page no. 10 of the assessment order, it is seen that the Assessing Officer has made addition on the basis that originally, the property in question was purchased by the assessee at a cost of ₹ 3.07 crores at the rate of ₹ 1.30 crores per acre in January, 2001 and thereafter Vatika Group headed by Shri Anil Bhalla purchased this land in November 2002. The Assessing Officer has also observed that the property rates have increased manifold during the period Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that purchase consideration was under accounted for by the assessee considering all these facts, we find no good reason to interfere in the order of learned CIT(A) on this issue. We, therefore, uphold the same. 9 In the result, the appeal filed by the revenue is dismissed. 8.2. Lastly, the Assessing Officer has also referred as to the allegation that land sold was purchased in January, 2001 of ₹ 3.07 crores as against the declared amount of ₹ 1.57 crores and, thus sale at ₹ 2.51 crores is not acceptable. In this regard, it is seen that addition was also deleted by an order dated 26.12.2005 by holding as under: 8.12 Moreover, it is a matter of record that there is no corroborative positive evidence in addition to the statements of the searched parties to draw a conclusion that the appellant had undisclosed income which he had invested in the purchase of the land. On a perusal of the Assessment order, it is noted that the assessment proceedings were taken at the fag end of the limitation period. The addition has been made on the basis of the statements of the sellers of the land and, Shri Satpal. These statements had been put to cross-examinat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he findings of the Assessing Officer that mere fact that the decision to drop the proceedings is not communicated to the assessee cannot be integrated as evidence of the fact that proceedings were barred by limitation that remain pending till the date of limitation as misconceived and erroneous conclusion. In fact, once it is not disputed that no order dropping proceedings had been communicated to the assessee, it ought to have been held that notice issued u/s 158BD of the Act dated 22/7/2007 was without jurisdiction held by Hon ble Apex Court inc case of Trustees HHH, the Nizam Supplemental Family Trust Vs. CIT 242 ITR 381 and the decision of Hon ble Delhi High Court in case of CIT Vs. KLM Royal Touch Airlines Vs. CIT 292 ITR 49. The Ld. AR contended that notice u/s 158BD of the Act was without jurisdiction since, the notice u/s 158BD dated 27/7/2007 did not record any satisfaction as has been held by the Hon ble Delhi High Court in case of New Delhi Auto Finance Pvt. Ltd. Vs. JCIT 300 ITR 83 following the judgment of the Hon ble Apex Court in case of CIT Vs. Mahesh Maheshwari 289 ITR 341. The Ld. AR further contended that satisfaction recorded by the Assessing Officer on the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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