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TMI Blog2015 (4) TMI 974X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 158BD. It is found that the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch 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 of Income-tax (Appeals), the same came ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 undisclosed income of V. H. M. Rafeeq and V. H. Yahiya, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 is that when the person searched is M/s. Harbour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (supra), 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 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quence of information in his possession, has reason 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 been or might be issued will not, or would not, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to, any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act, or (c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been, or would not be, disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quence 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 the said officer to take action under any of the clauses aforesaid in respect of such building, place, vessel, vehicle or aircraft. (2) The authorised officer may requisition the services of any police officer or of any officer of the Central Government, or of both, to assist him for all or any of the purposes specified in sub-section (1) or sub-section (1A) and it shall be the duty of every such officer to comply with such requisition. (3) The authorised officer may, where it is not practicable to seize any s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 (3) shall not be in force for a period exceeding sixty days from the date of the order :] Provided that the Director or, as the case may be, the Commissioner shall not approve the extension of the period for any period beyond the expiry of thirty days after the completion of all the proceedings under this Act in respect of the years for which the books of account, other documents, money, bullion, jewellery or other valuable articles or things are relevant. (9) The person from whose custody any books of account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 any books of account or other documents, money, bullion, etc., are kept, if he has reason to believe that any person referred to under sub-clauses (a) to (c) of section 132(1) has failed to provide the information sought for therein. According to the learned counsel for the appellants, section 132(1) can be invoked only when there is failure on the part of persons mentioned under clauses (a) to (c) in complying with the summons or notice issued or if any person is in possession of any of the items specified in clause ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 assets seized shall be handed over to the Assessing Officer having jurisdiction over "such other person" and that the Assessing Officer shall proceed under section 158BC against such other person. We are fortified in the view taken by us based on the observation made by the Supreme Court in Manish Maheshwari's case (supra), taking into account the statement of law referred to in paragraph 12 of the said judgment. Further, while considering the scope and effect of block assessment under Chapter XIV-B, the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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