TMI Blog2005 (3) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... eas Ground Nos. 3 to 44 assail various additions made in the block assessment order. Ground No. 45 also challenges the assessment order by alleging that the same is liable to be set aside since it has been framed in great haste and without appreciating the facts and circumstances, without confronting the assessee with the material considered adversely and without allowing proper opportunity of hearing to the assessee. Ground No. 46 contains a prayer to amend and substitute any ground of appeal. 4. On going through the order sheets pertaining to this appeal it is noticed that this matter has a chequred history. The appeal was filed on27-11-1998and the hearing was concluded only on4th February, 2005. In fact much of the delay in concluding the hearing in this case appears to be on account of the non production of record by the Revenue and also on account of lengthy submissions on interim matters including the issue relating to transfer of jurisdiction to the Assessing Officer who has passed the impugned assessment order. This was in relation to one of the legal grounds being ground No. 2 of this appeal. 5. The learned counsel for the assessee submitted detailed arguments with reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to prepare true and correct return of your total income including the undisclosed income in respect of which you as Individual/HUF/Firm/Company/AOP/SCI/Local Authority are assessable for the block period mentioned in section 158B(a) of the I.T. Act, 1961. The return should be in the prescribed Form No. 28 and be delivered in this office within 10 days of service of this notice, duly verified and signed in accordance with the provisions of section 140 of the IT Act. This notice under section 158BD is being issued on the basis of order under section 158BC in the case of S.G. Satish Kumar Aggarwal in which search under section 132(1) was completed on11-10-1996." 8. In compliance to this notice, the assessee filed return of income in Form No. 2B on29-10-1997. Thereafter notices under sections 142(1) and 143(2) were issued. Vide letter dated 21st August, 1998 copy of which is available at pages 16 to 19 of the paper book, the assessee raised certain objections. These objections included the legality of jurisdiction to frame block assessment order against the assessee. It was specifically submitted vide letter dated18th September, 1998that the block assessment should be framed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty bound in law to satisfy himself that the documents seized reveal undisclosed income of the assessee and required further investigation. Regarding the affidavit of Shri Satish Agarwal, the reference to which has been made in the assessment order, it was submitted by him that this affidavit simply owns certain seized papers as belonging to the present assessee and it is nowhere stated that these are of incriminating nature and show undisclosed income. 11. The learned DR, in reply, submitted that the satisfaction of the Assessing Officer can be found from the assessment order itself. He explained that the documents which are listed at various Annexures establish that the income of the assessee has escaped assessment and on the basis of these documents the Assessing Officer proceeded to frame assessment against the present assessee. TheLd. Sr. DRalso placed reliance on the decision of Hon'ble Allahabad High Court in the case of Digvijay Chemicals Ltd. v. Asstt. CIT [2001] 248 ITR 381. 12-13. We have carefully considered the entire material on record and the rival submissions. At the outset, we may point out that in this matter the Department was given sufficient opportunities t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was recorded by the Assessing Officer while making assessment in the case of Shri Satish Agarwal or before issuing notice under section 158BD to the present assessee or before completing the assessment against the present assessee. We have reproduced the notice issued under section 158BC read with section 158BD to the assessee which is dated1-10-1997. In this notice nothing is mentioned about the satisfaction of the Assessing Officer issuing this notice. 16. The contention of the learned DR was that on the basis pf the affidavit of the assessee the Assessing Officer was satisfied that the income of the present assessee has escaped assessment. We have also gone through the affidavit of Shri Satish Kumar Aggarwal a copy of which has been filed on record and which is available at page 50 of the paper book. This affidavit is as under: "I, Satish Kumar Aggarwal s/o Shri Amar Nath Aggarwal R/o C-156, Mahendru Enclave, N. Delhi partner of M/s. Sakun International do hereby state on solemn declaration as under: 1. That during search some loose papers were seized which were bundled as Annexure A-5, A-6, A-7, A-8, A-9 (from Residence) and Annexure A-2, A-3, A-4, A-8, A-9, A-10 (from f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer to be satisfied for initiating proceedings under section 158BD. Thus the proceedings under section 158BD have not been issued by the Assessing Officer on the basis of any material to justify his satisfaction for assuming jurisdiction under section 158BD and as there was no basis for issuing the notice. Thus the notice itself is wrongly issued and making further assessment on the basis of such notice would be wholly outside the purview of the scheme incorporated under section 158. As observed by the Special Bench, ITAT,Bangalorein the case of Y. Subbaraju Co. v. Asstt. CIT [2004] 91 ITD 118 the issuance of notice by itself is not the display or record of satisfaction which is the basic requirement under section 158BD. Thus the contention of learned DR that on the basis of the notice satisfaction can be invoked, is not acceptable. 18. The requirement of satisfaction is a statutory requirement. It cannot be assumed merely on the basis of certain material. It can also not be correlated to any material until and unless it is shown on record that the satisfaction required under section 158BD was based on such record or material. Thus no presumption can be drawn in abs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tnot being satisfied with the affidavit of the ITO held that there was no material before him on which he could have formed the required belief for reopening the assessment proceedings. Notice under section 147(a) was, therefore, held to be void. 20. In the case of Amity Hotels (P.) Ltd. v. CIT [2005] 272 ITR 75 the Hon'ble Delhi High Court has examined the scope of section 158BD and after referring to the provisions of sections 132, 132A, 158BC and 158BD the Hon'ble Delhi High Court has observed as under: "Search and seizure - Block assessment - proceedings under section 158BD - It is necessary for the Assessing Officer to record his satisfaction for taking action under section 158BD against any person other than one covered by section 132 or 132A - The satisfaction is required to be preceded by the investigation and not that the investigation is required to be preceded by the satisfaction - Satisfaction may be on the basis of material which is seized not from the notice but from the other assessee or a person in respect of whom action as taken under section 132 or 132A - In the present case, there is nothing to indicate that the Assessing Officer formed an opinion and arrived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... propositions laid down in these authorities. Hence the ratio of the above decisions are fully applicable to the facts of the instant matter and the same has to be applied and followed. 23. The issue was also considered by the Special Bench in the case of Y. Subbaraju Co. v. Asstt. CIT [2004] 91 ITD 118 (Bang.) on the requirement of satisfaction for framing assessment under section 158BD and the following observations were made: "If the satisfaction of the Assessing Officer that undisclosed income belongs to other person is justifiable the authorities when called in question, cannot escape to demonstrate the material that led to the satisfaction that undisclosed income of other person has been detected by the department as a result of search. If the department, for any reason, has no material whatsoever to come to that view, the proceedings under section 158BD would have to be dropped because the very foundation for the assumption of jurisdiction becomes nonexistent. Although the judicial authorities are not entitled to go into the sufficiency of the reasons, the existence of the reasons for satisfaction can always be gone into by the judicial authorities. In the instant case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... henever the question of satisfaction comes, it must be done before the completion of the assessment in the case of the searched assessee and not thereafter. Admittedly, in the instant case, the period of limitation for framing an assessment in the case of the searched assessee was only31-10-1996. Meaning thereby, the Assessing Officer having jurisdiction over the searched parties must have been satisfied before31-10-1996on the basis of the seized materials that there was some undisclosed income which relate to the assessee in question." In that case the Bench after placing reliance on the decision of ITAT Special Bench in the case of Y. Subbaraju Co. also held as under: "So far as recording of satisfaction is concerned, we have carefully perused the judgments relied upon by the parties and we find that the Tribunal has taken a consistent view that before handing over the seized materials to the concerned Assessing Officer, the Assessing Officer having jurisdiction over the searched parties is required to record the satisfaction in writing." 25. It may be pointed out that in that case also the DR was directed to produce the record but the Revenue could not do so and under th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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