TMI Blog2015 (2) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... st assessee. - ITA 287/2009, ITA 1329/2009 - - - Dated:- 30-1-2015 - MR. S. RAVINDRA BHAT AND MR. R.K. GAUBA, JJ. For the Appellant : Mr. Rohit Madan, Sr. Standing Counsel with Ruchir Bhatia, Advocates, Mr. N.P. Sahni, Sr. Standing Counsel with Mr. Nitin Gulati and Mr. Judy James, Jr. Standing Counsel For the Respondent : Mr. Salil Aggarwal with Mr. Ravi Pratap, Advocates, Mr. Vikas Jain, Advocate. JUDGEMENT MR. JUSTICE S.RAVINDRA BHAT 1. These appeals under Section 260A of the Income Tax Act, 1961 (hereafter the Act ) impugn an order dated 04.04.2008 of the Income Tax Appellate Tribunal (hereafter the ITAT ) in case of the respondent/assesses No.1 [in IT(SS)A No. 216/Del/2006 and CO. No.408/Del/2007 for the block period from 01.04.1990 to 20.08.2000] the order dated 17.04.2009 of the ITAT in case of the respondent/assessee No. 2, [in IT(SS)A No. 84/Del/2007 for block period 01.04.1990 to 03.08.2000]. The question of law urged before this Court is whether the ITAT was correct in holding that a notice must be issued by the Assessing Officer ( the A.O in short) within a reasonable period of time in relation to assessment proceedings under sections 158 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CTS: ASSESSEE NO.1 On 10.07.2003 the A.O. of Assessee No. 1 issued a notice under Section 158BC read with Section 158BD of the Act to Assessee No. 1 in the present appeal. On 21.08.2003 the assessee no. 1 filed a return declaring undisclosed income at Nil for the block period. Subsequently, after discussing the case with the Assessee no.1, the A.O. framed the block assessment at an undisclosed income of ₹ 1,16,36,360/- after making additions on the account of unaccounted cash received/paid under the cover of bogus transactions of purchase/sale of shares. Aggrieved, assessee no. 1 preferred appeal before the Commissioner of Income Tax (Appeals) ( the CIT (A) ) who by order dated 07/07/2006 deleted all the amounts brought to tax made by the AO. The revenue appealed this order of the CIT (A s) order before the ITAT. Simultaneously the assessee no. 1 filed a cross objection urging the ground that the order passed by the A.O. was bad and liable to be quashed as the same was barred by limitation. 5. Relevant portions of the orders of the Assessment Order, Order of the CIT(A) and the ITAT in the case of Assessee No. 1 have been reproduced as under: 6. The AO s order dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued by the Assessing Officer of the present assessee after almost five months and hence following the tribunal judgment rendered in the case of Shri Radhey Mohan Bansal (supra), we hold that there was no effective notice to the assessee within a reasonable period and hence the assessment requires to be vacated. We order accordingly. 7. In the result, cross objection of the assessee is allowed. 8. In view of the fact that block assessment is vacated, the appeal of the revenue does not survive and the same is dismissed. 9. RELEVANT FACTS: ASSESSEE NO. 2 In light of the searches conducted of M/s Friends Portfolio Ltd. and the premises of Sh. Manoj Aggarwal and the recording of the satisfaction of the A.O. therein, proceedings u/s 158BD were initiated against Assessee no. 2 and notice for the same was issued on 18.07.2003. Assessee No. 2 aggrieved with the assessment order dated 31.08.2005, filed an appeal before the Ld. CIT (A) which by order dated 04.10.2006 dismissed the appeal. Aggrieved with the order the assessee appealed to the ITAT which by its impugned order dated 17.04.2009 set aside the CIT (A s) order. 10. Relevant portions of the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has been recorded in the file of either Shri Manoj Aggarwal or M/s. Friends Portfolio. In these circumstances, on both the grounds respectfully following decision of the Special Bench in the case of Bishan Chand Mukesh Kumar the assessment as completed u/s 158BD stands quashed. 14. The decision in Commissioner of Income Tax v Sh. Radhey Shyam Bansal 2011 (337) ITR 217 (Del) dealt with the batch of cases decided by the impugned common order of the ITAT and upheld the latter s order. That common judgment of this court was carried in appeal by special leave to the Supreme Court, which decided all the appeals and other cases, on the question of law as to the reasonableness of the time limit within which a notice under Section 158BD was to be issued. The Supreme Court, in its judgment reported as CIT vs. Calcutta Knitwears, Ludhina 362 ITR 673 (SC), inter alia, recorded as follows: 44. In the result, we hold that for the purpose of Section 158BD of the Act a satisfaction note is sine qua non and must be prepared by the assessing officer before he transmits the records to the other assessing officer who has jurisdiction over such other person. The satisfaction note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im to delay the issuance of the notice which ought to be issued soon after the satisfaction is reached and if the AO is different, he ought to immediately transmit the relevant material to the AO having jurisdiction to enable him to proceed against such other person by issuing notice under s. 158BC requiring him to file the return. Since the satisfaction that any undisclosed income belongs to any person other than the one with respect to whom search was made or books of account, documents or assets requisitioned, may, in many cases be reached after the AO starts the proceedings under s. 158BC against the person with respect to whom the search was made, the shift of the commencement point of the limitation to the date of the notice, which could be issued to such other person only after it comes to light leading to the satisfaction of the AO that any undisclosed income belongs to him, was fully justified and it was germane to the object of making block assessment of undisclosed income of such other person who is now known as a person to whom that undisclosed income belongs. The AO once he reaches the requisite satisfaction, it bound to act swiftly to proceed against such other person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of Chapter XIV-B. 16. In Calcutta Knitwears, (supra), the Supreme Court inter alia, recorded as follows (apart from its conclusions in para 44 quoted above): 39. 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 from the end of the month in which the notice under this Chapter was served on such other person in respect of search carried on after 01.01.1997. The said section does neither provides for nor imposes any restrictions or conditions on the period of limitation for preparation the satisfaction note under Section 158BD and consequent issuance of notice to the other 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 from the end of the month in which the notice under this Chapter was served on such other person in respect of search carried on after 01.01.1997. The said section does neither provides for nor imposes an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e requirements of law. So far as the question of delay is concerned, the Court is of the opinion that in the facts and circumstances of the present case, it cannot be held that there was any delay in recording the satisfaction note. The assessment of the searched person was completed on 31.12.2001. The satisfaction note was recorded on 30.05.2002 i.e. just about five months after the date of completion of searched person. Notice was issued on 03.06.2002, immediately after the satisfaction note was recorded to the present assessee. 5. Having placed due regard to the declaration of law made by the Supreme Court which specified three possible points in time when notice under Section 158BD can be issued to third party/assessee, on the basis of material found on the premises of the searched person, the period of five months spent by the AO of the searched person in finalizing the satisfaction note, can be said to have been proximate to the assessment proceedings. We also recollect the decision of this Court in Commissioner of Income Tax v. Raghubir Singh Garg ITA No. 1420/2010 decided on 27.08.2014. In that case, the search took place on 29.08.2002 and the satisfaction no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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