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The ACIT, Mumbai Versus M/s Depth Entertainment

2015 (12) TMI 1236 - ITAT MUMBAI

Validity of assessment order u/s. 158BD r.w.s. 158BC r.w.s. 143(3) - as per CIT(A) satisfaction note is belated which would not confer jurisdiction of the assessing officer to initiate the proceedings u/s. 158BD - Held that:- The Hon'ble Supreme Court in the case of CIT Vs Calcutta Knitwears [2014 (4) TMI 33 - SUPREME COURT] has made a strong observation that the Revenue has to be vigilant in issuing notice to the third party u/s. 158BD immediately after the completion of assessment of the searc .....

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ears after the date of the completion of the assessment of the searched parties.

In our considered opinion, this service of notice cannot be considered to be immediately after the completion of the assessment of the searched person and is contrary to the observations of the Hon'ble Supreme Court (supra). Also see BHARAT BHUSHAN JAIN AND OTHERS case [2015 (1) TMI 705 - DELHI HIGH COURT] wherein a delay ranging between 10 months to 1 years was not accepted. Thus we decline to interfere .....

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the correctness of the order of the Ld. CIT(A)-35, Mumbai dated 11.07.2011 pertaining to the Block assessment period of 1.4.1989 to 31.3.1999 and broken period of 1.4.1999 to 27.7.1999. 2. The substantive grievances of the revenue read as under: "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in annulling the assessment order u/s. 158BD r.w.s. 158BC r.w.s. 143(3) of the I.T. Act after holding that the satisfaction note dated 15.5.2002 is belated which .....

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stated the facts of the case are that a search u/s. 132 of the Act was conducted on 27.7.1999. During the course of the search operations, certain loose papers were found which contained alleged transactions between the assessee and M/s. Tips Industries Ltd. Such incriminating documents were found from the residence of Shri Ramesh Taurani. On the basis of the entries found on the seized materials in the case of M/s. Tips Industries Ltd (searched party) a satisfaction was recorded about the alleg .....

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osed income at ₹ 13,77,571/- and after adding the returned income of ₹ 4,00,000/-. The total income was assessed at ₹ 17,77,571/-. 4. The assessee, aggrieved by this order, carried the matter before the Ld. CIT(A) and vehemently argued that the notice issue u/s. 158BD of the Act was after an inordinate delay and therefore was bad in law. It was strongly contended that the assumption of jurisdiction by the AO by resorting to a notice which cannot be considered to be issued withi .....

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e was issued on 15.5.2002. Thus, there was a time gap of 7½ months between the completion of block assessment and the issue of Satisfaction Note to the AO of the assessee. Drawing support from the decision of the Special Bench of the Tribunal, Delhi (supra), the Ld. CIT(A) was convinced that in the case of the assessee the delay was more than the delay in the case of Manoj Aggarwal (supra) and concluded by holding that the Satisfaction Note is belated and based on such Satisfaction Note, .....

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d. DR strongly relied upon the findings of the AO. 7. Per contra, the Ld. Counsel for the assessee reiterated what has been stated before the First Appellate authority. It is the say of the Ld. Counsel that the issuance of notice goes to the root of the matter as the AO assumes the jurisdiction and without proper assumption. The entire assessment proceedings become invalid therefore there is no error in the findings of the Ld. CIT(A). Reliance was placed on the decision of the Hon'ble High C .....

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n (M/s. Tips Industries Ltd) to the AO of the assessee on 15.5.2002 i.e. after a gap of 7 ½ months. iv) The AO of the assessee issued and served the notice u/s. 158BD r.w. Sec. 158BC of the Act on 5.9.2005. Thus the notice u/s. 158BD was issued and served after a gap of more than 3 years from the date of receiving of the Satisfaction Note from the Officer of the searched party. 9. With this undisputed factual matrix all that we have to consider is whether the issuance of this note can be .....

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ed hereinabove defy the observations of the Hon'ble Supreme Court mentioned hereinabove. 9.2. As mentioned elsewhere, the block assessment in the case of searched person i.e. M/s. Tips Industries Ltd., was completed on 28.9.2001. The Hon'ble Supreme Court says that the notice u/s. 158BD should be immediately issued after the completion of the assessment of the searched person, but in this case the notice was issued and served on 5.9.2005, almost 4 years after the date of the completion o .....

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