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TMI Blog2009 (3) TMI 506X X X X Extracts X X X X X X X X Extracts X X X X ..... n filed, which he attended. In continuation thereof, a notice dated July 31, 2007 was issued calling upon the petitioner to appear on August 6, 2007, which he complied with. However, respondent No. 2 by letter dated August 3, 2007 intimated that since jurisdiction was with respondent No. 1, proceedings initiated under section 158BD of the Act on August 18, 2005, had been dropped. Thereafter, the petitioner received the impugned notice dated August 31, 2007, under section 158BD of the Act issued by respondent No. 1 requesting him to file a return of the total income including the undisclosed income in the status of a company for the same block period as mentioned in the notice dated August 18, 2005. By letter dated December 10, 2007, the petitioner requested respondent No. 1 to furnish a certified copy of the satisfaction required for issuing the impugned notice under section 158BD which was allegedly not furnished. Aggrieved, this writ petition was filed. At the time of moving the writ petition directions were issued for filing of affidavits. Affidavits have since been exchanged and are on record. 2. The learned advocate appearing for the petitioner reiterating the statements in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Marwah v. CIT reported in [1964] 52 ITR 829 (AP); (2) Khandubhai Vasanji Desai v. Deputy CIT reported in [1999] 236 ITR 73 (Guj); (3) Sanjay Kumar Modi v. Director of I. T. (Inv.) reported in [2005] 278 ITR 374 (Cal); and (4) Digvijay Chemicals Ltd. v. Assistant CIT reported in [2001] 248 ITR 381 (All). 4. The issues to be decided are: (i) in view of the provisions contained in section 2(31) of the Act, whether the status of the petitioner was correctly mentioned in the impugned notice dated August 31, 2007; (ii) whether the satisfaction recorded under section 158BD of the Act, as seen from the affidavit-in-opposition, is proper; (iii) whether respondent No. 1 can use and proceed on the basis of satisfaction of respondent No. 2; (iv) whether respondent No. 1 was justified in directing the assessee to file a fresh return; (v) whether respondent No. 2 as evident from the intimation dated August 3, 2007, was justified in observing that the jurisdiction of the case was with respondent No. 1 and finally, whether assumption of jurisdiction by respondent No. 1 as evident from the letter dated August 31, 2007, without taking recourse to the provisions stipulated under section 127 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed proceedings under section 158BD of the Income-tax Act, 1961 and recorded the following reasons: 'During the course of proceedings under section 158BC in the case of Gangaram Bhaniramka that the following seized documents, jewellery, shares, bank account and cash found during the course of search on October 28, 2002 belongs to Shri Subhas Chandra Bhaniramka. Shri Subhash Chandra Bhaniramka filed affidavit during the course of proceeding under section 158BC of Shri Gangaram Bhaniramka owning up the following documents, cash, etc.: 1. Seized documents bearing identification marked GB/2. 2. Inventorised cash Rs. 13,200. 3. I.V.P. Rs. 4,000. 4. Shares Rs. . . . (Annexure 4 serial Nos. 22 to 44). 5. Bank accounts 4 to 12. 6. Jewelleries GB/12 to GB/38. In view of the above, I am satisfied that the case is fit for proceedings under section 158BD of the Income-tax Act, 1961. Issue notice under section 158BD of the Income-tax Act, 1961." (emphasis supplied) 9. During argument relying on paragraph 5(b) of the affidavit it was submitted by the learned advocate for the respondents since section 158BD postulates the Assessing Officer to record his satisfaction and is not required t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh the affidavit reveals that Assistant Commissioner of Income-tax Circle-XXIII, respondent No. 2, had recorded his satisfaction, there is nothing to show that respondent No. 1 had arrived at a satisfaction. Since section 158BD postulates that the "Assessing Officer" has to be "satisfied", assuming respondent No. 1 is the Assessing Officer he cannot use the satisfaction recorded by the other officer or respondent No. 2. Therefore, as respondent No. 1 failed to record his satisfaction while taking action under section 158BD, the proceeding is illegal. In Hynoup Food and Oil Industries Ltd. [2008] 307 ITR 115 (Guj) the court while dealing with section 148 had observed that successor cannot issue notice under section 148 on the basis of satisfaction of the predecessor officer because reason to believe must be of the officer issuing notice under section 148. In view of the language in section 158BD the same analogy is applicable to the facts of this case. 12. Turning to the next issue it is an admitted fact that the petitioner pursuant to the notice dated August 18, 2005 issued by respondent No. 2 on November 7, 2005, had filed his return. However, by notice dated August 3, 2007 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Kolkata after satisfaction for issuance of such notice but suddenly Assistant Commissioner of Income-tax, Central Circle-XXIII, Kolkata found that he is not competent authority to issue such notice and make assessment. So he dropped the proceedings and transferred the case to Assistant Commissioner of Income-tax, Circle-38, Kolkata stating to initiate the proceedings under section 158BD by jurisdiction authority. So notice issued by Assistant Commissioner of Income-tax, Central Circle-XXIII, Kolkata is meaningless and invalid. That's why he himself dropped the proceeding and informed to the concerned authority to initiate proceedings under section 158BD. The PIN code jurisdiction lies with Income-tax Officer, Ward 38(4), Kolkata and since notice under section 158BD can only be issued by Assistant Commissioner of Income-tax, Circle-38, Kolkata, the jurisdiction can automatically transfer to Assistant Commissioner of Income-tax, Circle-38, Kolkata. Respondent No. 1 found that he is competent authority to initiate the proceedings under section 158BD afresh. Respondent No. 1 is bound to initiate the proceedings under section 158 by law. . . 15. . . . I say that the PIN code jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, also illegal. 17. Now from the totality of facts a question crops up whether the respondents had followed the conditions precedent for invoking the provisions of section 158BD. In order to answer the question it is appropriate to refer to the law laid down in Manish Maheshwari [2007] 289 ITR 341 (SC) where it has been held (page 348): "The condition precedent for invoking a block assessment is that a search has been conducted under section 132, or documents or assets have been requisitioned under section 132A. The said provision would apply in the case of any person in respect of whom search has been carried out under section 132A or documents or assets have been requisitioned under section 132A. Section 158BD, however, provides for taking recourse to a block assessment in terms of section 158BC in respect of any other person, the conditions precedent wherefor are: (i) satisfaction must be recorded by the Assessing Officer that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 of the Act; (ii) the books of account or other documents or assets seized or requisitioned had been handed over to the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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