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Rikabchand R. Oswal, M/s Manoj Himmatlal Shah, Kokila Rikabchand Oswal Versus Dy. Commissioner of Income Tax

2015 (4) TMI 44 - ITAT PUNE

Block assessment - Assessment u/s 158BD r.w.s. 158BC - addition on Unexplained loan and unexplained expenditure u/s 69C - absence of satisfaction note - Held that:- After examining the record, CIT(A) came to conclude that though the satisfaction note was recorded by the Assessing Officer yet a copy of the same has not been provided to the assessee. Therefore, in the aforesaid factual background, following the parity of reasoning laid down in the case of Janki Exports International (2004 (3) TMI .....

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only thereafter he shall proceed to pass a fresh assessment order in accordance with law.

Since we have set-aside the matter back to the file of the Assessing Officer on the preliminarily ground, the merits of the impugned addition of ₹ 39,55,062/- have not been examined by us, which would be re-visited by the Assessing Officer in accordance with law in the ensuing proceedings. - Decided in favour of assessee for statistical purposes. - ITA No.1705/PN/2013, ITA No.1949/PN/2013, .....

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endra Shah at Adoni, Andhra Pradesh. It was submitted by the Ld. Representative that appeals involve common issues and therefore they have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. 2. ITA No.1705/PN/2013 in the case of M/s Manoj Himmatlal Shah is taken as the lead case. This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-III, Pune dated 22.07.2013 which, in turn, has arisen f .....

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al which goes to the root of the matter as it is claimed that the principles of natural justice have been contravened in this case while completing the block assessment. The said Additional Ground of Appeal raised before us, which was not raised hitherto before the lower authorities, reads as under :- (1) On the facts and circumstances of the case and in law the perusal of the order of the Ld. CIT(A) it reveals that in this Block assessment completed 3 under S. 158BD r.w.s. 158BC of the Act the .....

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under appeal be quashed. 4. According to the Ld. Representative for the assessee, in the present case the assessment has been finalized for the Block period comprising of 01.04.1995 to 11.10.2001 by invoking section 158BD of the Act. The provisions of section 158BD of the Act have been invoked as a consequence of a search action u/s 132(1) of the Act carried out on 12.10.2001 in the case of M/s Rajashree Enterprises (Prop. Shri Ramanlal Shah) and M/s Maheshwari Financiers (Prop. Shri Mahendra S .....

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the Assessing Officer suffers from a legal defect. Justifying the admission of the said Additional Ground of Appeal, the Ld. Representative submitted that the same is a legal issue and the necessary facts are emerging from record and therefore it should be admitted for adjudication. The Ld. Representative also pointed out that under identical circumstances in the case of M/s Bhagyashree Steel Center vs. DCIT, vide ITA No.1706/PN/2013 dated 21.01.2015 the Pune Bench of the Tribunal has admitted s .....

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he lower authorities. 6. Having considered the rival submissions and also the precedent relied upon by the assessee, we find that the aforesaid Additional Ground of Appeal deserves to be admitted for adjudication. The Ground of Appeal raised involves a point of law which relates to a jurisdictional aspect and quite clearly the facts available on records justify its admission, as our subsequent discussion would show. At the time of hearing, it was put across to the parties that the aforesaid Grou .....

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he Hon ble Delhi High Court in the case of Janki Exports International vs. Union of India, 278 ITR 296 (Del) to submit that any person who is to be proceeded with u/s 158BD of the Act must be informed about the satisfaction of the Assessing Officer which has been recorded and that such person must be given a reasonable opportunity to put-forth his objection to the same. The Ld. Representative pointed out that in the present case, the satisfaction Note has not been put across to the assessee whic .....

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shows that the loan transactions amounting to ₹ 3,96,830/- were shown in the books of accounts of Rajashree Enterprises and Maheshwari Financiers against whom search and seizure was conducted on 12.10.2001. The covering letter is accompanied by a satisfaction note running into 10 pages which details the books of accounts, documents, bank pass books etc. that was seized and verified during the course of search and the enquiries that were conducted post-search. It details the modus operandi .....

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e loan amounts and interest thereon have been duly reproduced in the satisfaction note and therefore, the requirement of sec. 158BD that the books of accounts, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person, is seen to have been met. Therefore, although the appellant has not been provided a copy of satisfaction note, a perusal of the same shows that it contains the detailed working of the loan entries and .....

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hi High Court in the case of Janki Exports International (supra) was considering the plea of the assessee regarding issuance of notice u/s 158BD of the Act. Though the challenge to the notice issued u/s 158BD of the Act before the Hon ble High Court was by way of a Writ Petition but the following discussion in the order of the Hon ble High Court is relevant :- 6. We find that section 158BD is somewhat analogous to section 147 in so far as the procedure that is required to be followed. Section 14 .....

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been discovered. Once this is done, we feel that the person who is to be proceeded against under section 158BD and then section 158BC, must be informed about the satisfaction of the Assessing Officer which has been recorded and he must be given a reasonable opportunity to object to the same. Satisfaction can be arrived on some material. That material would provide the reasonable satisfaction. In the case of GKN Driveshafts (India) Ltd v. ITO & Ors. (2003) 179 CTR (SC) 11 : (2003) 259 ITR 19 .....

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ficer is bound to dispose of the same by passing a speaking order." 7. Using the same parity of reasoning, we direct the Assessing Officer to supply the reason recorded for arriving at a satisfaction to the petitioner within a reasonable time upon the petitioner filing a return as required by the impugned notice. On receipt of the same, the petitioner would be entitled to file objections to the issuance of the notice and the Assessing Officer shall dispose of the same by passing a speaking .....

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t that the person who is to be proceeded with u/s 158BD of the Act and then section 158BC of the Act, such person must be informed about the satisfaction of the Assessing Officer which has been recorded and that such person must be given a reasonable opportunity to object to the same. In this background, the Hon ble High Court directed the Assessing Officer to supply the reasons recorded for arriving at the satisfaction contemplated u/s 158BD of the Act and only after disposing of the objections .....

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for arriving at the satisfaction for invoking section 158D of the Act to the assessee. On receipt of such reasons, assessee shall be entitled to file objections which shall be disposedoff by the Assessing Officer by way of a speaking order and only thereafter he shall proceed to pass a fresh assessment in accordance with law. 10. The Ld. Departmental Representative raised a plea that the CIT(A) has already examined the record and is satisfied with the satisfaction recorded, thus, there was no j .....

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8377; 5,17,956/- which has been made by the Assessing Officer by invoking section 69C of the Act. 11. In the result, the appeal of the assessee is allowed for statistical purposes, as above. 8. The Hon ble Delhi High Court in the case of Janki Exports International (supra) held that any person who is to be proceeded with u/s 158BD of the Act must be informed about the satisfaction of the Assessing Officer which has been recorded and that such person must be given a reasonable opportunity to put- .....

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g letter clearly shows that the loan transactions amounting to ₹ 32,00,000/- were shown in the books of accounts of Rajashree Enterprises and Maheshwari Financiers against whom search and seizure was conducted on 12.10.2001. The covering letter is accompanied by a satisfaction note running into 10 pages which details the books of accounts, documents, bank pass books etc. that was seized and verified during the course of search and the enquiries that were conducted post-search. It details t .....

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ounts including the loan amounts and interest thereon have been duly reproduced in the satisfaction note and therefore, the requirement of sec. 158BD that the books of accounts, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person, is seen to have been met. Therefore, although the appellant has not been provided a copy of satisfaction note, a perusal of the same shows that it contains the detailed working of th .....

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ded by the Assessing Officer yet a copy of the same has not been provided to the assessee. Therefore, in the aforesaid factual background, following the parity of reasoning laid down by the Hon ble Delhi 8 High Court in the case of Janki Exports International (supra) as well as our earlier decision in the case of M/s Bhagyashree Steel Center (supra), we setaside the impugned orders of the lower authorities and restore the matter back to the file of the Assessing Officer who shall supply the reas .....

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