TMI Blog2009 (3) TMI 506X X X X Extracts X X X X X X X X Extracts X X X X ..... of Circle 38 could not be sustained and also was illegal. - 1358/07 - - - Dated:- 31-3-2009 - SOUMITRA PAL J. Judgment: 1. Soumitra Pal J .-Subhash Chandra Bhaniramka, the writ petitioner, has challenged the notice dated August 31, 2007 under section 158BD of the Income-tax Act, 1961 (in short "the Act") issued by the Assistant Commissioner of Income-tax, Circle-38 Kolkata, respondent No. 1. The facts, as stated in the petition, in brief are that the Assistant Commissioner of Income-tax, Central Circle XXIII, Kolkata, respondent No. 2, by a notice dated August 18, 2005, requested the petitioner to prepare a true and correct return of total income including the undisclosed income in the status of a company for the block period from April 1, 1996 to October 28, 2002 under section 158BD(a) of the Act. Accordingly, on November 7, 2005, as he is assessed as an individual, the petitioner filed the return in the said status. By notice dated July 5, 2006, respondent No. 2 requested the petitioner to attend before respondent No. 2 regarding the return filed, which he attended. In continuation thereof, a notice dated July 31, 2007 was issued calling upon the petitioner to app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ohinder Singh Gill v. Chief Election Commissioner, AIR 1978 SC 851; (2) Manish Maheshwari v. Assistant CIT [2007] 289 ITR 341 (SC); (3) CIT v. Ved and Co. [2008] 302 ITR 328 (Delhi); (4) Hynoup Food and Oil Industries Ltd. v. Assistant CIT [2008] 307 ITR 115 (Guj); (5) Indian Tube Co. Ltd. v. ITO [2005] 272 ITR 439 (Cal); and (6) K. P. Mohammed Salim v. CIT [2008] 300 ITR 302 (SC). 3. Learned advocate appearing for the respondent submitted since mere satisfaction is enough and as the reasons are sufficient, the action is just and proper. Since section 158BD postulates satisfaction should be of the first officer, and as jurisdiction of the Assessing Officer's are determined on basis of the names of the assessees and the PIN codes, when he found he had no jurisdiction, respondent No. 2 transferred the file to respondent No. 1 who was having the jurisdiction. Moreover, in view of section 158BD, the provisions contained in section 127 of the Act are not applicable. Reliance was placed on the following judgments in support of his submission: (1) Devi Dayal Marwah v. CIT reported in [1964] 52 ITR 829 (AP); (2) Khandubhai Vasanji Desai v. Deputy CIT reported in [1999] 236 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding the remaining issues it is necessary to refer to section 158BD of the Act which is as under: "158BD. Undisclosed income of any other person.-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 of 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 the Assessing Officer shall proceed under section 158BC against such other person and the provisions of this Chapter shall apply accordingly." (emphasis supplied) 8. In order to decide the second issue it is appropriate to refer to the satisfaction recorded, as evident from paragraph 5(b) of the affidavit-in-opposition (in short "the affidavit"), which is as under: "5(b) On August 18, 2005, the Assistant Commissioner of Income-tax/Deputy Commissioner of Income-tax, Central Circle-XXIII, Kolkata initiated proceedings under section 158BD of the Income-tax Act, 1961 and recorded the following reasons: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record his reasons" as postulated in section 148, however, before proceeding, the Assessing Officer has to record his reasons for being "satisfied", which in the instant case is absent. In this case as there is nothing on record to show that there was subjective and independent satisfaction, the answer to the second issue has to be in the negative. 10. In order to answer the third issue it is necessary to refer to the relevant portion of the affidavit filed by the Revenue which is as under: "I say that the satisfaction was duly arrived on August 18, 2005 by Assistant Commissioner of Income-tax, Central-XXIII, Kolkata and also by Assistant Commissioner of Income-tax Circle-38, Kolkata on examination of available information/records. (paragraph 12)" In paragraph 13 of the affidavit it has been submitted as under: "I say that respondent No. 1 is fully empowered to conduct the proceeding under section 158BD, and the notice was issued only after Assistant Commissioner of Income-tax Circle-38 satisfied himself that proceeding under section 158BD is required to be initiated in this case." 11. Though the affidavit reveals that Assistant Commissioner of Income-tax Circle-XXIII, re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could be passed." 13. Therefore, in view of the proposition of law as laid down in Indian Tube Co. Ltd. [2005] 272 ITR 439 (Cal), respondent No. 1 was not justified in issuing the impugned notice dated August 31, 2007, requesting him to prepare a return. 14. In order to decide the issue whether respondent No. 2 was competent to pass an order and transfer the file to respondent No. 1, it is necessary to refer to the order dated August 3, 2007 issued by respondent No. 2, which is as under: "Sub.: Proceedings initiated under section 158BD of the Income-tax Act, 1961 on August 18, 2005 in your case. The proceedings initiated under section 158BD of the Income-tax Act, 1961 in your case on August 18, 2005 has been dropped since the jurisdiction over the case lies with Assistant Commissioner of Income-tax, Circle-38, Kolkata. This is for your information." 15. In their affidavit the respondents have tried to justify the transfer in the manner as under: "14. . . . The proceeding under section 158 was initiated by Assistant Commissioner of Income-tax/Deputy Commissioner of Income-tax Central Circle-XXIII, Kolkata after satisfaction for issuance of such notice but suddenly Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment." Thus, the judgment in Khandubhai Vasanji Desai [1999] 236 ITR 73 (Guj) relied on behalf of the respondents is not applicable. Since the respondents are silent about the designation of the officer conducting the raid, the judgment in Digvijay Chemicals [2001] 248 ITR 381 (All) is not applicable. The principles of law in Sanjay Kumar Modi [2005] 278 ITR 374 (Cal) are not applicable to the facts of this case. There the proceedings under section 158BD were held valid since it was initiated after the proceedings under section 158BC were dropped unlike the case in hand where respondent No. 2 had dropped the proceedings under section 158BD for the purported lack of jurisdiction and had transferred the matter to respondent No. 1 who had initiated proceedings under section 158BD. Therefore, in view of statutory provision and the law as laid down, suo motu transfer of the file of the petitioner to respondent No. 1 is arbitrary, without jurisdiction and ex facie illegal. Consequently, the assumption of jurisdiction by respondent No. 1, as evident from the notice dated August 31, 2007, cannot be sustained and is, thus, also illegal. 17. Now from the totality of facts a question crops ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought out." (paragraph 8) 20. It is evident from the affidavit in opposition particularly from paragraphs 14 and 15 thereof that the respondents have tried to justify the impugned act by supplementing reasons in their affidavit. Law is that the validity of an order has to be judged from the order itself. If the affidavit filed by the respondents justifying the reasons is accepted, then the impugned act which is not within the parameters of section 158BD may get validated by the additional or supplementary grounds later brought by way of affidavits which in my view, cannot be done. 21. Therefore, as the status of the petitioner was incorrectly mentioned in the impugned notice, as there was no subjective and independent satisfaction of respondent No. 1 and as without the same the said respondent proceed and as the transfer of jurisdiction by the respondent No. 2 to respondent No. 1 and consequent assumption of jurisdiction was de hors t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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