TMI Blog2004 (12) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... to dispose of the preliminary issue as it strikes at the root of the assessment itself before considering the case on merits. 4. The facts in brief are as follows. Search and seizure operation was carried out in the case of M/s. Aditya Builders on 5-8-1996 and notice under section 158BC was issued to M/s. Aditya Builders on 7-8-1997. On 18-8-1997, M/s. Aditya Builders filed a nil return in Form No. 2B and had also filed a covering letter stating that there was no material seized relating to M/s. Aditya Builders during the search and seizure proceedings and that material related to either Shri C. Subhan Reddy and 25 others who had completed a venture at Kukatpally in the name of Swagruha Co-operative Housing Society or belong to Shri C. Subhan Reddy and six others who had completed a venture at Hastinapuram North and Hastinapuram South and Jillellaguda venture and that for the two A.O.Ps Block assessments were completed under section 158BD. In the case of Shri C. Subhan Reddy and 15 others block assessment was completed on 8-8-1997 and in the case of C. Subhan Reddy and 6 others block assessment was also completed on 8-8-1997 under section 158BD read with section 143(3) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome belongs to person other than the person in respect of whom search was conducted, ( iii )the books of account or other documents or assets seized shall be handed over to the Assessing Officer having jurisdiction over that other person. ( iv )the Assessing Officer shall proceed against such other person under the provisions of this Chapter." 7. In this case the Assessing Officer had not proceeded on the return filed in Form No. 2B by M/s. Aditya Builders i.e., the person who was searched. The request of the persons searched to close the proceedings under section 158BC was facitly agreed to by the Assessing Officer by not initiating any assessment proceedings on the returns for the block period filed. While so, we do not know-how, the Assessing Officer had formed a prima facie view that the undisclosed income belonging to these persons had escaped assessment. The satisfaction has to be arrived on the basis of cogent and demonstrative evidence though the same might not have been specifically recorded. The Assessing Officer who examined the records of the person searched, thought it fit and proper to issue notices under section 158BD only to the two A.O.Ps on 9-12-1996 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f notice under section 158BD while assessments are done in the case of another person under section 158BD. The powers are restricted to proceedings under section 158BC only. Thus, this argument of the revenue also fails. 10. Even otherwise we find that there is an abnormal delay in issuance of notice under section 158BD. Though no time limit has been prescribed under section 158BD, when proceedings are initiated after considerable delay, it could be said to be barred by limitation. This Bench of the Tribunal in the case of Shri S. Sankara Reddy [IT Appeal Nos. 420 to 423 (Hyd.) of 1999 etc. by order dated 31-12-2003 at paras 27 28 held as under : "27. It may also be noticed that in spite of the order of the Tribunal dated 15-11-1989, the Assessing Officer has taken more than 5 years to issue notices under section 148 of the Act. The notices were issued on 13-3-1995 under section 148 of the Act and assessments were completed on 28-3-1997. Thus there is abnormal delay in reopening the assessments and in completion of the same. Merely because the provisions of sections 150(1) and 153(3) do not provide for any specific time frame, it cannot be said that the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ITAT dated 15-11-1989, and thus the notices and the consequential proceedings can be said to be barred by limitation, having not been taken up within a reasonable time frame. In the case of Foramer of France ( supra ), the observation of the Hon ble High Court, which are affirmed by Hon ble Supreme Court, are relevant to be noticed. The Hon ble Court observed that a direction or finding as contemplated by section 153(3) must be a finding necessary for the disposal of a particular case; to be a necessary finding it must be directly involved in the disposal of the case. This very issue was the subject-matter of consideration by the Hon ble High Court in RC No. 236 of 1990 wherein the question that was referred to Court was "whether the Tribunal was competent to direct the Assessing Officer to examine the case from the angle of leviability of capital gains" and the Court categorically observed that there was no such direction or finding and it was a mere observation." 11. The Hon ble Supreme Court, on principles of natural justice observed in its judgment in the case of Union of India v. J.N. Sinha AIR 1971 SC 40 held as under : "Rules of natural justice are not embodi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uisite satisfaction, is bound to act swiftly to proceed against such other person as soon as may be in reasonable time. The speed and dispatch with which he should act is writ large on the connected provisions of section 132(9A) of the Act under which the authorized officer who has no jurisdiction over the person referred to in clauses ( a ), ( b ) or ( c ) of sub-section (1) of section 132 has to hand over the books of account, documents and assets seized to the Income-tax Officer having jurisdiction over such person within 15 days of such seizure and the Assessing Officer is required to serve a notice to such person under section 158BC requiring him to furnish a return in the prescribed Form 2B and to complete the block assessment in one year from the end of the month in which the last authorization for search or requisition was executed. Thus the apprehension that a notice can be issued under section 158BD read with section 158BC by the Assessing Officer in the case of such "other person" at any time is ill founded." (p. 97) It further observed at page 100 as under : "If in any particular case a notice is unduly delayed, then that is a matter in which the validity of that n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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