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TMI Blog2019 (7) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... as much as. i) AO did not allow cross examination of searched party Jivraj V. Desai (JVD) though specifically directed by Hon. ITAT in its order. ii) JVD had by its letter dated 11.12.2010 to AO categorically denied any transactions with appellant. iii) Hon. ITAT had in case of JVD held that seized dairy A-1 is record of finance transactions. Treating same as land transaction is wrong. iv) The land transaction is between Virabhagat Co-op housing society (seller) and New Virabhagat Co-op Housing Society (buyer). Sale of land is after permission and at rate directed by State Co-op. Registrar. Payment is made by New Virabhagat Society by account payee cheque. There is no evidence of unaccounted money paid by appellant. New Virabhagat Society may be inquired for unaccounted investment. 2) Without prejudice to ground no.1 since Hon. ITAT had hold that diary Annex A-1 page 45 is record of finance transactions, the peak credit may be considered. 3) The Learned CIT(A) has erred in confirming addition made by AO of surcharge of Rs. 9,99,702/- on Tax. 4) The learned CIT(A) has erred in confirming interest charged by AO u/s 158BFA(1) of Rs. 16,03,272/- since delay in filing blo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). The Hon'ble ITAT in appeal, preferred by the department, by way of a reasoned order dated 07.08.2009 in IT(SS)A No.91/Ahd/2007 restored the matter to the file of the Learned Assessing Officer for doing the assessment de novo in accordance with law and after giving an opportunity of being heard to the assessee as required under the law including cross examination of the parties concerned. Ultimately, the said assessment was finalized de novo on 28.12.2010 by the Learned ACIT, Circle -6, Ahmedabad, upon making addition of Rs. 98,01,000/- as unexplained investment of the assessee which was in turn confirmed by the Learned CIT(A) in appeal preferred by the assessee. Hence, the instant appeal before us. 5. At the time of hearing of the instant appeal the Learned Senior Counsel appearing for the assessee submitted before us that the additional ground taken before us was also taken before the Learned CIT(A) challenging the authority of the Learned AO who initially passed the order u/s 158BD without forming/noting, specifying the satisfaction note; the search records were also not forwarded by the Learned ACIT in terms of the statutory provision u/s 158BD. Furthermore, the satisfaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee showed copy of page No. 45 of Annexure A-1 including English transaction of the page written in Gujarati. It showed the name of New Virabhagat as well as the name of Dharamsinbhai of Isanpur i.e. the assessee. It recorded a credit of gs.109.85 lacs being the amount of cheque paid in respect of land purchased by New Virabhagat Society. To our mind, transaction recorded in Diary A-1 and in particular page No.45. cannot be said to be imaginary as no such stand has been taken either by AAS or JVD. Their statements have been recorded and no stage they have denied or averted that transactions recorded in Diary A.1 are imaginary or have not taken place. In addition, we have examined page No.45 of Annexure "A-1" and we also noticed that there is nothing which could indicate that recording on that page would be imaginary of false. Thus, there is no material to hold that what was recorded by AAS in the Diary, atleast on page No.45 would be unreal transactions. A primafacie impression of the page shows that it has been recorded in natural course of events. Had it been the transactions of only New Virabhagat Society, then question of recording the name Shri Dharmasinbhai of Is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing officer which has been accepted by the Ld. CIT(A) without considering the legal position that if for a certain reasons, the Assessing Officer was not able to allow cross-examination, then he is duty bound to allowed the same. In our considered view, not allowing cross-examination of JVD and AAS is only a procedural defect and cannot vitiate the assessment order and cross-examination. Witnesses, JVD and AAS, before filing the return by the assessee could not have served any useful purpose because contents of the return would have been relevant for considering the examination and cross-examination. The assessee chose the file the return of block assessment almost two years, after issuance of notice u/s 158 BD of the I.T. Act, 1961, thus leaving no worthwhile time to the Assessing Officer to follow strictly the rule of evidence by conferring the opportunity of cross-examination. We may note in this Chemicals Ltd. vs. ACIT (2001) 248 ITR 318 (Alia.) that it is not necessary that there must be always a cross-examination of a witness before discarding his evidence. The Hon'ble Madras High Court in the case of T. Devasahay Nadar vs. CIT (1964) 51 ITR 20 ( Mad.) held that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. Objection against Remand Report The additional ground is raised that the Assessing Officer, without forming / noting or specifying the Satisfaction Note, cannot issue notice u/s. 158BD. Sec. 158BD provides that, "158BD. Where the Assessing Officer is satisfied that any undisclosed income 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 132A, 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 - [under section 158BC] against such other person and the provisions of this Chapter shall apply accordingly." Here, in sec. 158BD, for making assessment under that, section, first of all, A.O. of other person is required to prepare Satisfactory Note and thereafter issue notice u/s. 158BC/158BD to make assessment under that section. Sec. 158BD specifically provides that the A. O. of the searched parties shall hand over to the Assessing Officer having jurisdiction of other person and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the case of Hynoop Food & Oil Industries and few other decisions to draw home his point that the block assessment order per se suffers from serious legal infirmities and deserves to be annulled. 5.1 I have carefully considered the facts of the case in the light of submissions made by the appellant, the arguments taken by the assessing officer & material available on records. Before proceeding further, it is pertinent to point out statutory provisions governing the matter. Section 158 BD Undisclosed income of any other person. 158BD. Where the Assessing Officer is satisfied that any undisclosed income 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 132A, 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 95[under section 158BC] against such other person and the provisions of this Chapter shall apply accordingly. Section 2 Definition of different words and phrases us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant by any officer of the level of ADIT. Without prejudice to the same, it is worthwhile to mention that apparently no defect would have come in the assessment order of the AO had satisfaction u/s. 158BD was recorded by any officer of the rank of ADIT. This observation is made in view of the categorical statutory stipulation contained in sub section 7A of section 2 reproduced above which provides that the phrase A O would include officers designated as ADsIT / DDslT. Thus, there would have been no imperfection in the order had any satisfaction u/s. 158BD was recorded by any ADIT. 5.4 Without prejudice to above, the argument of the appellant that the A O who has issued notice u/s. 158BD being DCIT, Circle-6, A'bad and completed subsequent assessment proceedings ought to have recorded his satisfaction and that since no such satisfaction was recorded by him therefore the assessment order becomes invalid, illegal has been analyzed in detail and found to be bereft of any meritorious consideration. Presumably the appellant is trying to read and interpret law prescribed u/s. 158BD in a fashion so as to suit his particular interest. The same is impermissible since it is a se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iving at satisfaction of the first original A O that the incriminating document pertains to a person, that the said person is assessed under a particular A O and that the incriminating document contains details of some undisclosed income. 5.6 The argument of the appellant that the A O issuing notices u/s. 158BD is required to record satisfaction before issuing said notice is totally incorrect. There is no such legal stipulation. Contemporary law of section 158BD, only provides that upon arrival of satisfaction and receipt of incriminating documents forwarded by the first AO, the second AO would proceed to complete assessment u/s. 158BD rws 158BC. There is no mandate for recording of any satisfaction by the second AO which is responsibility of the first A O. As per facts of the case satisfaction for initiation of proceedings u/s. 158BD was recorded by ACIT, Cent Cir.1(1) A'bad through his satisfaction dt 29-10-2002. The same was done by him while conducting block assessment proceedings in the case of JVD. Consequently ACIT, Cent Cir.1(1), A'bad has discharged the onus placed upon his shoulders u/s. 158BD and no fault can be found. Thus, it is clear that there is no legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record at Page 215 to 221 of the paper book before us dated 29.10.2002. The notice u/s 158BC r.w.s. 158BD issued by the ACIT, Circle - 6, Ahmedabad dated 30.10.2002 is also before us. It also appears from the records that the assessee made an application dated 27.09.2018 seeking information under the R.T.I Act, 2005 and also requested for supply of the order u/s 127 of the Income Tax Act, 1961 being the intimation of the change of jurisdiction from ITO, Ward - 6(4), Ahmedabad to DCIT, Circle - 6 as required by the said provision of law. However, the certified copy of the said order was not provided to the appellant by the concerned authority being the CPIO and ITO, Ward - 2(1)(4), Ahmedabad on the ground that such copy of the order u/s 127 of the Act is not available on record as it appears from the reply dated 12.10.2008 by the concerned authority. However, the DCIT, Circle - 6, Ahmedabad has been requested to provide such copy of the order u/s 127 of the Act whereby and whereunder his jurisdiction was changed from the then ITO, Ward - 6(4) to DCIT, Circle - 6, Ahmedabad. The assessee preferred an appeal on 04.12.2018 against the order dated 12.10.2018 passed by the CPIO and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder on 6.7.1999, under Section 127 of the Act transferring the respondent/assessee's case from Rajnangaon to Nagpur. However, the Order dated 6.7.1999 of the Commissioner of Income Tax, Nagpur was quashed and set aside on 17.9.1999 by the Hon'ble M.P. High Court. The notice u/s.158BC of the Act was issued on 22.9.1999 i.e. after the order of transfer dated 6.7.1999, u/s.127 of the Act was quashed and set aside. Thus, it ceased to exist. Consequently, on 22.9.1999, when the Deputy Commissioner of Income Tax, Nagpur ceased to have jurisdiction to assess the Respondent/Assessee as there was no order of transfer of the respondent/assessee's case to Nagpur. In terms of Section 2(7A) of the Act, the Assessing Officer means 'an Officer of the Income Tax vested with jurisdiction either by virtue of Section 120 or any other provision of the Act'. Admittedly, the Deputy Commissioner of Income Tax, Nagpur does not have jurisdiction over the respondent/assessee by virtue of Section 120 of the Act. However, the claim of jurisdiction as a Assessing Officer over respondent/assessee is the Order dated 6.7.1999 which has been passed u/s.127 of the Act, while issuing notice on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the assessee of such transfer of jurisdiction of AO appeared to have been issued. The plea in this respect as taken by the revenue is this that the jurisdiction over the assessee though was changed from Ward - 6(4), Ahmedabad to Circle - 6, Ahmedabad, both the charges are under the then CIT-VI, Ahmedabad. The ACIT/DCIT has concurrent jurisdiction over all the cases of the Range. Therefore, admittedly notice of intimation of change of jurisdiction under the provision of Section 127 has not been issued to the assessee. In this case the assessee is in a better footing than that of the judgment cited above. Notice u/s 127 though required to be issued the same is not in existence at all. Furthermore, the satisfaction note was neither prepared by such ACIT, Circle - 6 who has issued the notice u/s 158BC r.w.s. 158BD on 30.10.2002. The mandatory provision of issuing the said note by the concerned AO having jurisdiction to assess the case of the appellant as thus not been complied with. The satisfaction note was issued by the ACIT, Circle - 1(1), Ahmedabad and not the DCIT, Circle - 6 or the ACIT, Circle - 6. This is the settled principle of law that the notice u/s 158BD r.w.s. 158BC ..... X X X X Extracts X X X X X X X X Extracts X X X X
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