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2017 (11) TMI 1203 - AT - Income TaxBlock assessment - Validity of proceeding under section 158BD - no satisfaction recorded in the case of the searched person by AO before issue of notice - stages of satisfaction recording - Held that:- In the case of Calcutta Knitwears (2014 (4) TMI 33 - SUPREME COURT ) the hon'ble Supreme Court has held that recording of a satisfaction note is a pre-requisite and such satisfaction note must be prepared by the Assessing Officer of the searched person before he transmits the record to the other Assessing Officer who has jurisdiction over the other person under section 158BD of the Act. However, as held by the hon'ble Supreme Court, the satisfaction note in the case of the searched person can be prepared at three stages ; firstly, at the time of initiation of proceedings against the searched person under section 158BC of the Act ; secondly, in the course of assessment proceedings under section 158BC of the Act, and thirdly, immediately after the assessment proceedings are completed under section 158BC of the Act in the case of the searched person. In the facts of the present case, undisputedly, the Assessing Officer in the course of assessment proceedings of the searched person viz Ms. Hoor C. Jhurani, has recorded a satisfaction for initiation of proceedings under section 158BD of the Act in case of the assessee. It is also evident from the facts on record, before issuance of notice under section 158BD of the Act to the assessee, the Assessing Officer has recorded satisfaction under the said provision. Notably, assessment proceedings of both persons were continuing simultaneously before the Assessing Officer. Therefore the conditions of section 158BD stands satisfied. Therefore, the additional ground No. 1, raised by the assessee must fail Addition made on the basis of the credit entries in the bank account - Held that:- When the Assessing Officer is making addition only on the basis of a bank account then both credit and debit entries have to be considered and the assessee deserves an opportunity to explain debit and credit entries. It appears from the order of the learned Commissioner (Appeals) that the assessee has contended that the debit entries appearing in the bank account represent expenditures incurred by the assessee. In our considered opinion, the assessee deserves an opportunity to explain both credit and debit entries in the bank account with supporting evidence. In this context, we must observe, if the Assessing Officer relies on any seized/ adverse material he must confront them to the assessee and provide copies of the same if already not provided to the assessee. The Assessing Officer must also afford a reasonable opportunity of being heard to the assessee in the matter. Additional ground No. 2, is allowed for statistical purposes.
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