TMI Blog2015 (2) TMI 679X X X X Extracts X X X X X X X X Extracts X X X X ..... ve cases and, therefore, the matter requires to be considered on the merits by the Commissioner of Income- tax (Appeals). Having formed such an opinion, these appeals are liable to be dismissed and, accordingly, we dismiss the appeals. - I.T.A. Nos. 123, 170 & 209 of 2013 - - - Dated:- 12-3-2014 - DR. MANJULA CHELLUR MR. A.M.SHAFFIQUE, JJ. FOR THE APPELLANT : ADVS.SRI.K.V.SIVASANKARAN, SRI.SUNIL SHANKAR FOR THE RESPONDENT : SRI.JOSE JOSEPH, SC, FOR INCOME TAX JUDGEMENT A. M. Shaffique J.- I. T. Appeals Nos. 123 and 170 of 2013 are filed against the common order in IT(SS) A No. 52/Coch/2008 and I. T. A. No. 209 of 2013 is filed against the order passed in IT (SS) A No. 51/Coch/ 2008 by the Income-tax Appellate Tribunal, Cochin Bench. Separate assessees are the appellants in these cases. The assessment relates to the block period for which the assessment is made from April 1, 1990, to September 6, 2000. 2. The facts involved in I. T. A. No. 123 of 2013 would disclose that a search was conducted under section 132 of the Income-tax Act, 1961 (for short the Act ), in the business premises of M/s. Harbour Syndicate. It resulted in seizure of documents s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. Proceedings were initiated against the assessee under section 158BC by issuing a notice on June 8, 2001. The assessee, though requested for time to produce the books of account and documents, there was no further response and, accordingly, notice under section 142(1) of the Act was served on him for making the block assessment. The assessee did not comply with the terms of the notice issued and the proposal made and, therefore, a block assessment was made and the total undisclosed income was arrived at ₹ 10,05,280 and the assessee was called upon to pay tax with interest and surcharge at ₹ 8,29,205. The assessee preferred an appeal before the Commissioner of Income-tax (Appeals) which came to be dismissed. On a further appeal by the assessee, the Tribunal had remanded the matter back to the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) found that the Assessing Officer had completed assessment under section 158BC, which, according to the appellate authority, was erroneous as the panchnama shows that the search was in the cases of V. H. M. Rafeeq and V. H. Yahiya and not in the case of the appellant firm and, hence, it was fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserved that the Commissioner of Income-tax (Appeals) has taken a decision in favour of the assessee without examining the partnership deed, which is necessary before taking any decision on the issue. Hence, it was opined that the matter requires to be reconsidered on the merits and the matter was remanded back to the Commissioner of Income-tax (Appeals). 5. As far as I. T. A. No. 209 of 2013 is concerned, we do not think that any of the substantial questions of law raised in the memorandum of appeal arises for consideration. The Tribunal had only directed the Commissioner of Income-tax (Appeals) to consider the matter on the merits. It is not in dispute that materials were collected by the Assessing Officer while conducting search operations in the premises of M/s. Harbour Syndicate. The assessee herein is another partnership firm and their records were also seized. The Assessing Officer clearly indicates that notice under section 158BD was issued to the assessee. The procedure to be adopted while issuing such notice is clearly indicated in the said provision itself. In so far as there is no illegality in issuing a notice under section 158BD and the procedure followed is sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in these appeals is while conducting a search in the premises of M/s. Harbour Syndicate, if documents leading to the undisclosed income of V. H. Yahiya is obtained, what is the procedure to be followed in making a block assessment. Is it that the Assessing Officer ought to have proceeded under section 158BC or section 158BD in respect of Yahiya and M/s. Harbour Syndicate ? 8. The learned counsel for the appellants, while relying upon the statutory provisions also, placed reliance on the judgment of the Supreme Court in Manish Maheshwari v. Asst. CIT [2007] 289 ITR 341 (SC) ; 341 CDJ 2007 SC 205. That was a case in which the Supreme Court was considering the question as to whether the Assessing Officer has jurisdiction to proceed against the assessee for block assessment in terms of Chapter XIV-B of the Act under section 158BC, when no search is conducted in the premises of the assessee under section 132 of the Act. It is held that section 158BD provides for taking recourse to a block assessment in terms of section 158BC in respect of any other person, the conditions precedents are : (i) satisfaction must be recorded by the Assessing Officer that any undisclosed income belongs t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed will be the premises of the person searched and if such a view is taken, the Assessing Officer was justified in issuing notices of the block assessment in respect of the aforesaid two assessees and the finding of the Commissioner of Income-tax (Appeals) was erroneous. 10. Learned counsel for the appellants would further submit that the Tribunal had considered this issue on a different footing and the Tribunal proceeded on the basis that even though proceedings ought to have been issued against M/s. Harbour Syndicate under section 158BD in so far as the procedure to be followed is issuing notice under section 158BC, there is no illegality in issuing such a notice. It is contended that in the panchnama, it is clearly indicated that notices were issued in the case of V. H. M. Rafeeq and V. H. Yahiya and the Tribunal also proceeded on the basis that the notices were not proper but relying upon the judgment in Lekshmi Traders' case (supra) it is found that when the procedure for assessment of a person other than the person searched under section 158BD, is the same procedure under section 158BC and when there is no prescribed notice under section 158BD, the officer can only ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of assessment and determine the tax payable by him on the basis of such assessment ; (d) the assets seized under section 132 or requisitioned under section 132A shall be dealt with in accordance with the provisions of section 132B. 158BD. 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 or 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 Assessing Officer shall proceed under section 158BC against such other person and the provisions of this Chapter shall apply accordingly. The learned standing counsel also brought to our notice the file regarding the search conducted. According to the learned counsel, several raids were conducted in different premises when information was received that the aforesaid persons were having substantial undisclosed income and was not paying Income-tax. Section 132 of the Act dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept ; (ii) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (i) where the keys thereof are not available ; (iia) search any person who has got out of, or is about to get into, or is in, the building, place, vessel, vehicle or aircraft, if the authorised officer has reason to suspect that such person has secreted about his person any such books of account, other documents, money, bullion, jewellery or other valuable article or thing ; (iib) require any person who is found to be in possession or control of any books of account or other documents maintained in the form of electronic record as defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000), to afford the authorised officer the necessary facility to inspect such books of account or other documents ; (iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search ; (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act. Explanation. -For the removal of doubts, it is hereby declared that the examination of any person under this sub-section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters rele vant for the purposes of any investigation connected with any pro ceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act. (4A) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed- (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person ; (ii) that the contents of such books of account and other documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search was executed and thereupon the powers exercisable by the authorised officer under sub-section (8) or sub-section (9) shall be exercisable by such Assessing Officer. (10) If a person legally entitled to the books of account or other documents seized under sub-section (1) or sub-section (1A) objects for any reason to the approval given by the Chief Commissioner, Commissioner, Director-General or Director under sub-section (8), he may make an application to the Board stating therein the reasons for such objection and requesting for the return of the books of account or other documents and the Board may, after giving the applicant an opportunity of being heard, pass such orders as it thinks fit . . . (13) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to searches and seizure shall apply, so far as may be, to searches and seizure under sub-section (1) or sub-section (1A). (14) The Board may make rules in relation to any search or seizure under this section ; in particular, and without prejudice to the generality of the foregoing power, such rules may provide for the procedure to be followed by the authorised officer- (i) for obtaining ing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e officer is entitled to search any building, place, vessel, vehicle or aircraft. Here, the business premises of Harbour Syndicate is admittedly searched. In other words, the person searched is Harbour Syndicate and not V. H. M. Rafeeq or V. H. Yahiya. Section 2(31) defines a person as including an association of persons or a body of individuals whether incorporated or not and every artificial juridical person, not falling within any of the sub-clauses mentioned in the section. Therefore, Harbour Syndicate, which is apparently the name of a concern, which belongs to certain persons, is also a person under the Income-tax Act. Section 158BC specifically refers to a search conducted under section 132 in the case of any person. The person searched apparently is Harbour Syndicate and not V. H. Yahiya. It may be true that the reason for searching Harbour Syndicate is non-compliance with the summons or notice issued to V. H. M. Rafeeq and V. H. Yahiya in terms of section 132(1)(a) of the Act. But the fact remains that when the search is conducted in the business premises of Harbour Syndicate, they alone become the person mentioned in section 158BC. According to the learned counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her than the searched person. The Supreme Court clearly specifies in the above judgment that section 158BC prescribes the procedure for making block assessment of the searched person and section 158BD enables assessment of any person, other than the searched person. In this case, we have no hesitation to hold that searched person is M/s. Harbour Syndicate and, therefore, as far as M/s. Harbour Syndicate is concerned, the Assessing Officer was justified in issuing notice under section 158BC and in respect of V. H. Yahiya, the Assessing Officer was justified in issuing notice under section 158BD. The question of law raised in this regard is answered in favour of the Revenue. In the light of the above discussion, we are of the view that the order of remittance by the Tribunal is justified though not for the reasons stated in the Tribunal's order. The Assessing Officer was justified in invoking sections 158BC and 158BD in the respective cases and, therefore, the matter requires to be considered on the merits by the Commissioner of Income- tax (Appeals). Having formed such an opinion, these appeals are liable to be dismissed and, accordingly, we dismiss the appeals. - - T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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