TMI Blog2014 (4) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... the language employed in a statute is the determinative factor of the legislative intent - The legislature is presumed to have made no mistake - The presumption is that it intended to say what it has said - Assuming there is a defect or an omission in the words used by the legislature, the Court cannot correct or make up the deficiency - Where the legislative intent is clear from the language, the Court should give effect to it. Before initiating proceedings u/s 158BD of the Act, the AO who has initiated proceedings for completion of the assessments u/s 158BC of the Act should be satisfied that there is an undisclosed income which has been traced out when a person was searched under Section 132 or the books of accounts were requisitioned under Section 132A of the Act - This is in contrast to the provisions of Section 148 of the Act where recording of reasons in writing are a sine qua non – u/s 158BD the existence of cogent and demonstrative material is germane to the assessing officers’ satisfaction in concluding that the seized documents belong to a person other than the searched person is necessary for initiation of action under Section 158BD. For the purpose of Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing authority thought it fit to transmit those documents, which according to him, pertain to the undisclosed income on account of investment element and profit element of the assessee firm and require to be assessed under Section 158BC read with Section 158BD of the Act to another assessing authority in whose jurisdiction the assessments could be completed. In doing so, the assessing authority had recorded his satisfaction note dated 15.07.2005. 9.The jurisdictional assessing authority for the respondent-assessee had issued the show cause notice under Section 158BD for the block period 01.04.1996 to 05.02.2003, dated 10.02.2006 to the assessee inter alia directing the assessee to show cause as to why should the proceedings under Section 158BC not be completed. After receipt of the said notice, the assessee firm had filed its return under Section 158BD for the said block period declaring its total income as Nil and further filed its reply to the said notice challenging the validity of the said notice under Section 158BD, dated 08.03.2006. The assessee had taken the stand that the notice issued to the assessee is (a) in violation of the provisions of Section 158BD as the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned judgment and order dated 20.07.2010, has rejected the Revenue's appeal and confirmed the order passed by the Tribunal. 14. That is how the Revenue is before us in this appeal. 15. We have heard Shri Rupesh Kumar learned counsel for the Revenue and Shri R.P.Bhatt, Shri Ajay Vohra, Shri Santosh Krishan, learned counsel and other learned counsel for the respective assessees-respondents. 16. Shri Rupesh Kumar, learned counsel for the Revenue would contend that the assessing authority, after completion of the assessment proceedings against the searched person under Section 158BC, being of the opinion that the other documents which have surfaced at the time of the search under Section 132 of the Act belong to a person other than the searched person had recorded his satisfaction in the said respect and transmitted the papers to the jurisdictional assessing officer for the assessments of such person other than the searched person. Further, he would submit that the assessing officer has complied with the requirements of Section 158BD of the Act in its entirety while preparing the satisfaction note and transmitting the documents to the jurisdictional assessing officer and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of this Act [or any expense, deduction or allowance claimed under this Act which is found to be false] . 21. Sections 158BC and 158BD of the Act are machinery provisions. Section 158BC of the Act provides the procedure for block assessment and Section 158BD of the Act provides for assessments in the case of an undisclosed income of any other person. The said sections are relevant for the purpose of this case and, therefore, they are extracted. They read as under: Section 158BC. PROCEDURE FOR BLOCK ASSESSMENT. Where any search has been conducted under section 132 or books of account, other documents or assets are requisitioned under section 132A, in the case of any person, then, - [(a) The Assessing Officer shall, (i) In respect of search initiated or books of account or other documents or any assets requisitioned after the 30th day of June, 1995 but before the 1st day of January, 1997 serve a notice to such person requiring him to furnish within such time not being less than fifteen days; (ii) In respect of search initiated or boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) of the Act, that is the time limit for completion of block assessment. 23. Section 158BD of the Act provides for undisclosed income of any other person. Before we proceed to explain the said provision, we intend to remind ourselves of the first or the basic principles of interpretation of a fiscal legislation. It is time and again reiterated that the courts, while interpreting the provisions of a fiscal legislation should neither add nor subtract a word from the provisions of instant meaning of the sections. It may be mentioned that the foremost principle of interpretation of fiscal statutes in every system of interpretation is the rule of strict interpretation which provides that where the words of the statute are absolutely clear and unambiguous, recourse cannot be had to the principles of interpretation other than the literal rule (Swedish Match AB v. Securities and Exchange Board, India, AIR 2004 SC 4219, CIT v. Ajax Products Ltd. [1965] 55 ITR 741 (SC)). 24. We may gainfully refer to The Cape Brandy Syndicate v. Inland Revenue Commissioners [1921] 1 KB 64 at 71 which involved the Finance (No. 2) Act 1915 which imposed excess profits duty on trade or businesses comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Wadhwa Nagpur; Bennion on Statutory Interpretation, 5th Ed., Lexis Nexis, p. 863; Vepa P. Sarathi, Interpretation of Statutes, 5th Ed., Easter Book Company, Chapter VIII, Taxing Statutes). This Court in CIT v. Keshab Chandra Mandal, AIR 1950 SC 265 has held that hardship or inconvenience cannot alter the meaning of the language employed by the legislature if such meaning is clear and apparent. Hence departure from the literal rule should only be done in very rare cases, and ordinarily there should be judicial restraint to do so.(Pandian Chemicals Ltd. v. C.I.T., 2003(5) SCC 590, Narsiruddin v. Sita Ram Agarwal, AIR 2003 SC 1543, Bhaiji v. Sub-Divisional Officer, Thandla, 2003(1) SCC 692, J.P. Bansal v. State of Rajasthan and Anr., AIR 2003 SC 1405, State of Jharkhand and Anr. v. Govind Singh : JT 2004(10) SC 349, Jinia Keotin v. K.S. Manjhi, 2003 (1) SCC 730, Shiv Shakti Co-operative Housing Society v. Swaraj Developers, AIR 2003 SC 2434, Grasim Industries Limited v. Collector of Customs, 2002 (4) SCC 297 and Union of India v. Hamsoli Devi, 2002 (7) SCC 273) 28.The Australian High Court in Federal Commissioner of Taxation v. Westraders Pty Ltd, (1980) 144 CLR 55 considered the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain businesses and would not divulge any trade secrets. The issue before the Court was whether or not such payment would form part of the taxpayer s assessable income for the purposes of the Income Tax Assessment Act, 1936(Cth). It was held that since the Act did not provide for such payments to form part of a taxpayer s assessable income, the payment would not be assessable. 31. This Court in Tata Consultancy Services v. State of Andhra Pradesh has ascribed plain meaning to the terms computer and computer programme in a fiscal statute and reiterating the proposition laid down in Inland Revenue Commissioner case (supra), observed that a court should not be over zealous in searching ambiguities or obscurities in words which are plain. 32. In Prakash Nath Khanna v. C.I.T., 2004 (9) SCC 686, this Court has explained that the language employed in a statute is the determinative factor of the legislative intent. The legislature is presumed to have made no mistake. The presumption is that it intended to say what it has said. Assuming there is a defect or an omission in the words used by the legislature, the Court cannot correct or make up the deficiency. Where the legislative i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ors., (2007) 3 SCC 668 this Court has observed that: 20. A taxing statute indisputably is to be strictly construed. [See J. Srinivasa Rao v. Govt. of Andhra Pradesh and Anr., 2006(13)SCALE 27 ]. It is, however, also wellsettled that the machinery provisions for calculating the tax or the procedure for its calculation are to be construed by ordinary rule of construction. Whereas a liability has been imposed on a dealer by the charging section, it is well-settled that the court would construe the statute in such a manner so as to make the machinery workable. 21. In J. Srinivasa Rao (supra), this Court noticed the decisions of this Court in Gursahai Saigal v.Commissioner of Income-tax, Punjab, [1963] 1 ITR 48(SC) and Ispat Industries Ltd. v. Commissioner of Customs, Mumbai, 2006(202)ELT561(SC).In Gursahai Saigal (supra), the question which fell for consideration before this Court was construction of the machinery provisions vis- -vis the charging provisions. Schedule appended to the Motor Vehicles Act is not machinery provision. It is a part of the charging provision. By giving a plain meaning to the Schedule appended to the Act, the machinery provision does not become unworkab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid proposition put forth as an illustration that since charge made by the legislator in procedural provisions is excepted to be for the general benefit of litigants and others, it is presumed that it applies to pending as well as future proceedings. 38. Having said that, let us revert to discussion of Section 158BD of the Act. The said provision is a machinery provision and inserted in the statute book for the purpose of carrying out assessments of a person other than the searched person under Sections 132 or 132A of the Act. Under Section 158BD of the Act, if an officer is satisfied that there exists any undisclosed income which may belong to a other person other than the searched person under Sections 132 or 132A of the Act, after recording such satisfaction, may transmit the records/documents/chits/papers etc to the assessing officer having jurisdiction over such other person. After receipt of the aforesaid satisfaction and upon examination of the said other documents relating to such other person, the jurisdictional assessing officer may proceed to issue a notice for the purpose of completion of the assessments under Section 158BD of the Act, the other provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the searched person is necessary for initiation of action under Section 158BD. The bare reading of the provision indicates that the satisfaction note could be prepared by the assessing officer either at the time of initiating proceedings for completion of assessment of a searched person under Section 158BC of the Act or during the stage of the assessment proceedings. It does not mean that after completion of the assessment, the assessing officer cannot prepare the satisfaction note to the effect that there exists income tax belonging to any person other than the searched person in respect of whom a search was made under Section 132 or requisition of books of accounts were made under Section 132A of the Act. The language of the provision is clear and unambiguous. The legislature has not imposed any embargo on the assessing officer in respect of the stage of proceedings during which the satisfaction is to be reached and recorded in respect of the person other than the searched person. 42. Further, Section 158BE(2)(b) only provides for the period of limitation for completion of block assessment under section 158BD in case of the person other than the searched person as two years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med by Shri Santosh Krishan, who is appearing in seven of the appeals that the assessing officer had not recorded the satisfaction note as required under Section 158BD of the Act, therefore, the Tribunal and the High Court were justified in setting aside the orders of assessment and the orders passed by the first appellate authority. We do not intend to examine the aforesaid contention canvassed by the learned counsel since we are remanding the matters to the High Court for consideration of the individual cases herein in light of the observations made by us on the scope and possible interpretation of Section 158BD of the Act. 46. With these observations, the appeals are disposed of. The matters are remanded to the respective High Courts for deciding the matters afresh after affording an opportunity of hearing to the parties. Ordered accordingly. In C.A.NO.3959 OF 2014 @ S.L.P.(C)NO.11943 of 2011 C.A.NO.3960 OF 2014 @ S.L.P.(C)NO.17662 of 2011 C.A.NO.3961 OF 2014 @ S.L.P.(C)NO.17656 of 2011 C.A.NO.3962 OF 2014 @ S.L.P.(C)NO.17661 of 2011 C.A.NO.3963 OF 2014 @ S.L.P.(C)NO.2804 of 2012 C.A.NO.3964 OF 2014 @ S.L.P.(C)NO.2805 of 2012 C.A.NO.3965 OF 2014 @ S.L.P.(C)NO.5264 of 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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