Just a moment...

Report
FeedbackReport
×

By creating an account you can:

Logo TaxTMI
>
Feedback/Report an Error
Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters0/2000
TMI Blog
Home / RSS

2015 (2) TMI 679

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....a. After recording the statement of V. H. Yahiya under section 132(4), notice was issued under section 158BD calling upon him to file return. He did not file any return of income even after the expiry of the period prescribed therein. Subsequently, notice under section 142(1) was issued to him and assessment was completed under section 158BD read with section 158BC and section 144 of the Act. The total undisclosed income for the block period was Rs. 13,94,320 and the assessee was called upon to pay tax of Rs. 10,77,086, which includes interest as well. The assessee preferred an appeal before the Commissioner of Income-tax (Appeals), which came to be rejected. A further appeal is filed before the Tribunal. The Tribunal allowed the appeal and remanded the matter back to the Commissioner of Income-tax (Appeals). The matter was again considered by the Commissioner of Income-tax (Appeals) and the appeal was allowed. It is, inter alia, found that since the search was in the cases of Sri V. H. M. Rafeeq and Mr. V. H. Yahiya, the assessment ought to have been completed under section 158BC. It is further found that the Assessing Officer committed a serious error of law by invoking section 1....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....red an appeal before the Tribunal, which was heard along with the appeal filed by V. H. Yahiya and by a common order, the Tribunal allowed the Revenue's appeal and remitted back the matter to the Commissioner of Income-tax (Appeals) for considering the matter on the merits. 4. I. T. A. No. 209 of 2013 is filed by M/s. Doriccon, a partnership firm, in which Sri V. H. Yahiya is the managing partner. During the search operation at the business premises of Harbour Syndicate, the appellant in I. T. A. No. 170 of 2013, certain documents showing real estate and construction business relating to the assessee-firm were found and seized. Therefore, notice under section 158BD was served on the assessee, for which there was no response and, therefore, notice under section 142(1) was issued. The assessee informed the Department that he has no undisclosed income. However, the assessment was made ex parte as there was no material produced and the assessee did not co-operate. The Assessing Officer found that the undisclosed income would come to Rs. 21,04,950 and the assessee was called upon to pay tax and interest amounting to Rs. 16,26,054. Though an appeal was filed before the Commissioner ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....at so far no notice was issued under section 158BD. In fact, the issue of notice under section 158BD is the notice under section 158BC itself. Therefore, the appellant is not entitled to take such a ground. The matter has been remanded back by the Tribunal for reconsideration on the ground that the Commissioner of Income-tax (Appeals) did not consider the partnership deed before arriving at conclusions on the merits, which was required to be considered at the time of hearing the appeal. The remand has been made by the Tribunal on purely questions of fact to be decided by the first appellate authority. Hence, we do not think that any question of law arises for consideration in I. T. A. No. 209 of 2013 and, hence, the said appeal is liable to be dismissed. 6. In respect of I. T. A. Nos. 123 and 170 of 2013, the main contention urged by the petitioner is that after conducting a search in the business premises of the M/s. Harbour Syndicate, the Assessing Officer had issued notice under section 158BC. It is the contention of the appellants that the assessee was not the person against whom the search warrant was issued and, therefore, when a search is conducted in order to ascertain the....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....; (ii) the books of account or other documents or assets seized or requisitioned had been handed over to the Assessing Officer having jurisdiction over such other person ; and (iii) the Assessing Officer has proceeded under section 158BC against such other person. In short, based on the above judgment, the argument is that when a search is conducted with reference to the undisclosed income of a person, irrespective of the place where the search is conducted, if proceedings are to be initiated for block assessment, the Assessing Officer can take only proceedings under section 158BC in regard to the person who is being searched and as far as any other person is concerned, including the business premises of any other person which is searched other than the person against whom the search is conducted, proceedings can be taken only under section 158BD and after complying with the requirements thereof. 9. On the other hand, the learned standing counsel relies on the very same judgment in Manish Maheshwari's case (supra) and contends that what is relevant under section 158BC is with reference to taking proceedings for block assessment in respect of the person searched. The argument i....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....r rule 12(1)(c) for assessment under section 158BC of the Act. The learned counsel relies places exception to the above finding by relying upon Manish Maheshwari's case (supra) and contending that if the notice is bad in law, the entire assessment proceedings become illegal. 11. Having regard to the nature of contentions urged by both sides, what is required to be considered is the scope and effect of sections 158BC and 158BD with reference to the factual situation arising in these cases. It is not in dispute that in Harbour Syndicate's case, notice is issued under section 158BC and in V. H. Yahiya's case, notice is issued under section 158BD. According to the learned counsel for the appellants, it ought to have been vice versa whereas, according to the Department, it is the proper method. 12. Sections 158BC and 158BD read as under :              "158BC. 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 acc....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ferent 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 deals with search and seizure, which reads as under :               "132. Search and seizure.-(1) Where the Director General or Director or the Chief Commissioner or Commissioner or Additional Director or Additional Commissioner, or Joint Director or Joint Commissioner in consequence of information in his possession, has rea son to believe that- (a) any person to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub- section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub- section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account, or other documents as required by such summons or notice, or (b) any person to whom a summons or notice as aforesaid has b....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ity 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 ; (iv) place marks of identification on any books of account or other documents or make or cause to be made extracts or copies therefrom ; (v) make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing, (1A) Where any Chief Commissioner or Commissioner, in consequence of information in his possession, has reason to suspect that any books of account, other documents, money, bullion, jewellery or other valuable article or thing in respect of which an officer has been authorised by the Director-General or Director or any other Chief Commissioner or Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner to take action under clauses (i) to (v) of sub-section (1) are or is kept in any building, place, vessel, vehicle or aircraft not mentioned in the authorisation under sub-section (1), such Chief Commissioner or Commissioner may, notwithstanding anything contained in section 120, authorise t....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....f 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 are true ; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document, stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested . . . (8) The books of account or other documents seized under sub- section (1) or sub-section (1A) shall not be retained by the authorised officer for a period exceeding thirty days from the date of the order of assessment under section 153A or clause (c) of section 158BC unless the reasons for retaining the same are recorded by him in writing and the approval of the Chief Commissioner, Commissioner, Director- General or Director for such retention is obtained. (8A) An order under sub-section ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....r, 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 ingress into any building, place, vessel, vehicle or aircraft to be searched where free ingress thereto is not available ; (ii) for ensuring safe custody of any books of account or other documents or assets seized. Explanation 1.-For the purposes of sub-section (9A), 'execution of an authorisation for search' shall have the same meaning as assigned to it in Explanation 2 to section 158BE. Explanation 2.-In this section, the word 'proceeding' means any proceeding in respect of any year, whether under the Indian Income- tax Act, 1922 (11 of 1922), or this Act, which may be pending on the date on which a search is authorised under this section or which may have been completed on or before such date and includes also all proceedings under this Act which may be commenced after such date in respect of any year." The officer authorising the search and seizure is entitled to invoke the said powers to enter and search any building, place, vessel, vehicle or air craft where he has reason to suspect that an....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....arch is conducted in the business premises of Harbour Syndicate, they alone become the "person" mentioned in section 158BC. According to the learned counsel for the appellants, a reading of section 158BD will clarify the fact that the person mentioned in section 158BC is the person to whom notice is issued under section 132(1)(a) of the Act. As per section 158BD, it contemplates satisfaction of the Assessing Officer that any undisclosed income belonging to any person other than the person with reference to whom search was made under section 132. If we are of the opinion that the person searched under section 158BC read with section 132 is Harbour Syndicate, then section 158BD contemplates taking proceedings against the person "other than the person with reference to whom search was made under section 132" or in other words it contemplates a person other than a person referred to in section 158BC. Apparently, the procedure to be followed by the Assessing Officer while invoking section 158BD is his satisfaction that any undisclosed income belonged to any other person other than the person with reference to whom a search was made. Then the books of account and other documents or asset....