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TMI Blog2024 (2) TMI 752X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion of the appellant and he was bound to either accept or reject the same in its entirety and any proceedings under section 158BD could be initiated against the appellant or any addition could be made in his hands on the basis of such statement/admission ? iii) Whether the Tribunal was justified in law in holding that the appellant was required to be presumed to be the owner of the seized cash and the burden to prove the nature and source thereof was upon the appellant and proceedings had been rightly taken against the appellant in respect thereof ? iv) Whether and in any event the Tribunal was justified in law in rejecting the explanation of the appellant that the seized cash of Rs. 12,57,150/- belonged to M/s. S. K. Investment (Rs. 6,30,000/-), M/s. ARC Finance Limited (Rs. 6,07,150/) and M/s. Zenith Finvest Pvt. Limited (Rs. 20000/-) and its purported findings upholding the addition of the said sum of Rs. 12,57,150/- in the hands of the appellants are arbitrary, unreasonable and perverse ? 3. Briefly stated facts of the present case are that the appellant/assessee is director in two companies namely, Zenith Finvest Pvt. Ltd. and ARC Finance Ltd. He is partner in M/s. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s father's office since he (the appellant herein) does not have any safe facility in his office premises. Similar letter was written on the same day by the aforesaid Sri J. M. Kothari. The statement of the appellant/assessee and Sri J.M. Kothari were recorded by the income tax authorities on the next day i.e., 13.10.1999 under Section 131 of the Act, 1961. In his statement under Section 131 of the Act, 1961, the appellant/assessee has answered question nos. 1 and 3 as under: "Q. 1) . . . A. Sir, I confirm my position that this cash was given by me to my father on different dates to keep in these safes available at his office at Ruby House since it was felt risky to keep the cash at "Trust House" 32, C.R. Avenue, Kolkata. This cash belongs to my concerns Zenith Finvest Pvt. Ltd., ARC Finance Ltd. and S.K. Investment (Partnership firm). Q. 3) . . . A. Sir, although the books of accounts for our companies other than Zenith Finvest Pvt. Ltd. were maintained up to date I could have explained the cash found from the father's office linking it to my company's accounts in terms of our vouchers etc. but inadvertently I could not do so. Since your seizure includes only the books o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of which you are an employee Director/Executive ? A. Irrespective of whether you believe or not I have told you the fact which is true to the best of my knowledge." 7. In the assessment order under Section 158BC(c) of the Act 1961 dated 31.08.2001, the assessing officer himself noted that the closing cash balance as on 05.08.1999 in the cash book of M/s. S.K. Investments was Rs. 6,33,215.75 and in the cash book of M/s. ARC Finance Limited the closing cash balance as on 05.08.1999 was Rs. 6,98,679.30. He further noted that on 18.08.1999, a sum of Rs. 6,33,000/- has been shown in the cash book of M/s. S.K. Investments as cash seized and Rs. 6,07,150/- has been shown in the cash of M/s. ARC Finance Limited as cash seized by the Income Tax Department. 8. The assessing officer found from the books of account entries reflecting receipt of cash from various persons, out of which some were outstation parties and some were local parties. He issued notices to all such persons under Section 131 of the Act 1961. Notices under Section 131 to outstation parties were returned unserved with the remarks "not known", which was clarified by the appellant assessee that non-service was because o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the evidences on record, rendering the finding recorded by it to be perverse. The CIT(A) has examined the entire facts and lawfully allowed the appeal of the appellant assessee. 11. So far as the question of entire assessment proceedings to be without jurisdiction is concerned, we do not find from the assessment orders or the order of the Income Tax Appellate Tribunal that satisfaction as required under Section 158BD was recorded by the Assessing Officer either before or along with the assessment proceedings. We asked learned counsel for the respondent to show from the records as to whether any satisfaction under Section 158BD was recorded by the assessing officer before proceeding to determine undisclosed income of the appellant assessee? Learned counsel for the respondent stated before us that no satisfaction under Section 158BD was recorded by the assessing officer. 12. Section 158BD of the Act 1961 provides as under:- "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 u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or after completion of the proceedings under section 158BC of the Act." "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 account 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equisitioned under Section 132A. 15. Under Section 158BD, the existence of cogent and demonstrative material is germane to the Assessing Officer's satisfaction for initiation of action under Section 158BD in concluding that the seized documents belong to a person other than the searched person is necessary for initiating action under Section 158BD. The satisfaction note could be prepared by the Assessing Officer either at the time of initiation of proceedings for completion of assessment of a searched person under Section 158BC or during the stage of assessment proceeding. Even after completion of assessment proceeding of the searched person, the Assessing Officer may prepare satisfaction note that there is undisclosed income of a person other than the searched person which has been traced out when such other person was searched under Section 132 or books were requisitioned under Section 132A of the Act, 1961. Thus, for the purpose of Section 158BD of the Act, a satisfaction note is sine qua non and must be prepared by the Assessing Officer who has jurisdiction over such other person. 16. Since as per admitted case of the respondent, the Assessing Officer has not prepared a satis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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