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2015 (9) TMI 901 - ITAT DELHI

2015 (9) TMI 901 - ITAT DELHI - TMI - Validity of assessment under Section 158BD - Determination of total undisclosed income - Held that:- The satisfaction note was recorded by the Assessing Officer of the appellant instead of Assessing Officer of searched person. Therefore, it has to be inferred that no satisfaction note was recorded, as per the law laid down by in the case of Manish Maheshwari Vs. CIT, [2007 (2) TMI 148 - SUPREME COURT OF INDIA].

Furthermore, the assessment in the c .....

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erson under Section 158BC of the Act, (b) along with the assessment proceeding under Section 158BC of the Act, and (c) immediately after assessment proceedings are completed under Section 158BC of the Act of the searched person.

The period of limitation prescribed under Section 158BC cannot be extended by issuing the belated notice under Section 158BD. The Hon’ble Jurisdictional High Court in the case of CIT Vs. Bharat Bhushan, [2015 (1) TMI 705 - DELHI HIGH COURT] held that having re .....

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d in the eyes of law on this score alone - Decided in favour of assessee. - IT (SS) A No. 35/Del/2012 - Dated:- 9-9-2015 - Smt. Diva Singh And Shri Inturi Rama Rao, JJ. For the Appellant : Sh Gautam Jain, FCA & Piyush Kumar Kamal, Adv For the Respondent : Sh. A.K. Saroha, CIT-DR ORDER Per Inturi Rama Rao, A. M. This appeal by the assessee is directed against the order of CIT(A)-XXV, New Delhi, dated 30th April, 2012 passed for the block period 01.04.1990 to 03.08.2000. The assessee raised th .....

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preconditions for initiating action u/s 158BD of the Act were not satisfied and as such, initiation of proceedings was illegal, invalid and unsustainable. 2.1 That the learned Commissioner of income Tax (Appeals) has failed to appreciate that the purported satisfaction note was not recorded by the learned Assessing Officer of the searched person and hence, the same could not provide any basis to assume jurisdiction u/s 158BD of the Act. 2.2 That furthermore such purported satisfaction note had .....

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ified in the purported satisfaction note and thus, notice U/S 158BD is erroneous, contrary to law and, unsustainable. 2.4 That adverse findings recorded by the learned Commissioner of Income Tax (Appeals) to support the illegal action are factually incorrect, legally misconceived and, otherwise irrelevant and therefore, unsustainable. 3 That the learned Commissioner of Income Tax (Appeals) otherwise failed to appreciate that, assessment framed by the learned Assistant Commissioner of Income Tax, .....

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issioner oflncome Tax (Appeals) has failed to appreciate the evidence tendered by the appellant to support the claim of loss on sale of shares and hence, findings recorded in disregard of evidence and based on irrelevant and extraneous considerations are misconceived and, misplaced. 4.2 That the learned Commissioner of Income Tax (Appeals) has proceeded to sustain the addition on surmises, conjectures and suspicion and therefore, the made and sustained is not warranted. 4.3 That addition confirm .....

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ppeals) has also erred both in law and on facts in upholding levy of interest u/s 158BF A of the Act. It is thus prayed that, assumption of jurisdiction may kindly be quashed and, addition made and sustained together with interest levied may kindly be deleted and, appeal of the appellant be allowed. 2. Brief facts of the case are that consequent upon search and seizure operations under Section 132 of the Income-tax Act, 1961 (for short the Act ) in the case of Sh. Manoj Aggarwal, Director of M/s .....

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nds Portfolio Pvt. Ltd. The modus oprandi of Manoj Aggarwal was that to issue cheques against cash received from the persons who are the beneficiaries of accommodation entries. It was stated that the assessee had carried out the transaction of purchase of 1600 shares of M/s Viraj Credit Capital through M/s Friends Portfolio Pvt. Ltd. on 15.12.1999 for a total consideration of ₹ 1,51,492/- and sold the same through M/s Friends Portfolio Pvt. Ltd. on 14th March, 2000 for a sum of ₹ 542 .....

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Ltd. was brought to tax as undisclosed income vide assessment order dated 25th April, 2006. Being aggrieved by this order, an appeal was filed before the CIT(A) who vide order dated 30.04.2012 dismissed the same vide para 6.5 of his order, which read as under: 6.5 I have considered the order of the AO, remand report of the AO and the submission of the assessee and I do not find any merit in the submission of the assessee in the additional ground of appeal against the proceedings u/s 158BD/158BC .....

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8BD/158BC and a copy of the letter is enclosed and market as Annexure-B. The AO has also submitted remand reports dated 30.04.2007 and 06.12.2007 (vide Annexure -C& D) in which it has been emphasized that the AO has made satisfaction note for initiating proceedings u/s 158BD and the AO has validly assumed the jurisdiction u/s 158BD/158BC. The case laws relied on by the assessee is on various issues and the facts and circumstances of the case of those cases are distinguishable from the facts .....

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earched person i.e. Manoj Kumar Aggarwal, Director of M/s Friends Portfolio Pvt. Ltd. It was further contended that the proceedings initiated under Section 158BD are barred by limitation, inasmuch as, the assessment was completed in the case of searched person on 29th August, 2002 itself. 4. On the other hand, ld. DR relied on the orders of the lower authorities. 5. We heard the rival submission and perused the material on record. When the block assessment proceedings are to be initiated against .....

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is provided under section 158BD of the Act. It was for this reason that in the case of these assessees provisions of section 158BD of the Act were invoked. Section 158BD of the Act reads as under :- "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, .....

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sed income belongs to a person other than the persons with respect to whom search was made under section 132(1) of the Act. Such satisfaction must be based on the material found in the course of search. In the absence of any such satisfaction (which is to be recorded in writing) the concerned Assessing Officer does not get any jurisdiction to assess that other person by invoking the section 158BD of the Act. Further, the satisfaction of the Assessing Officer has to be in respect of the following .....

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ucted in the premises of one Mr. Manoj Kumar Aggarwal and the company i.e. M/s Friends Portfolio Pvt. Ltd. Admittedly, no books of account or other assets pertaining to the appellant was found or seized. The entire foundation of the block assessment made under Section 158BD in the present case was the statement of M/s Manoj Kumar Aggarwal, recorded during the course of search. The assessments in the case of Manoj Kumar Aggarwal was completed on 29th August, 2002, after completion of the assessme .....

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id provision would apply in the case of any person in respect of whom search has been carried out under section 132A or documents or assets have been requisitioned under section 132A. Section 158BD, however, provides for taking recourse to a block assessment in terms of section 158BC in respect of any other person, the conditions precedents where for are : (i) Satisfaction must be recorded by the Assessing Officer that any undisclosed income belongs to any person, other than the person with resp .....

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person other than the person whose premises had been searched or whose documents and other assets had been requisitioned under section 132A of the Act." 6. In the present case, we find from page no. 2 as well as 1 of the paper book, the satisfaction note was recorded by the Assessing Officer of the appellant instead of Assessing Officer of searched person. Therefore, it has to be inferred that no satisfaction note was recorded, as per the law laid down by Hon ble Apex Court in the case cite .....

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