TMI Blog2011 (2) TMI 1418X X X X Extracts X X X X X X X X Extracts X X X X ..... unreasonable delay on the part of the AO for initiating proceedings by issuing notice u/s158BD r.w.s.158BC. Therefore, the issue of notice after expiry of 3 years and 7 months is unreasonable which cannot be a basis for completing the assessment against the assessee. Therefore, in our opinion, the CIT(A) has rightly quashed the proceedings. Regarding the contention of the Department that the assessee has not challenged the notice before the AO, therefore, he cannot challenge the same in view of section 292BB. Admittedly section 292BB was inserted by Finance Act, 2008 with effect from 1.4.2008. The notice u/s 158 r.w.s. 158BC was issued in this case on 7.7.2006. Since the provisions of section 292BB curtail the right of the assessee, it would operate prospectively as held in Kuber Tobacco Products (P) Ltd. vs. DCIT [ 2009 (1) TMI 304 - ITAT DELHI] . Therefore, section 292BB may not be applicable to the notice issued on 7.7.2006. - SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER Appellant by: Smt. K. Kamakshi Respondent by: Shri Chaitanya Kumar ORDER PER NRS GANESAN, JM: This appeal of the Revenue is directed agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee placed his reliance on the decision of the Special Bench of this Tribunal in Manoj Agarwal vs. DCIT (2008) 113 ITR 377. The learned counsel for the assessee submitted that the Special Bench of this Tribunal Delhi Bench in case of Manoj Agarwal (supra) examined the scheme of block assessment and found that the time limit prescribed u/s. 158BE of the Act is to be read along with provisions of section 158BD. Therefore, the notice u/s. 158BC has to be issued within a reasonable period from the date of search. The learned counsel for the assessee has also placed reliance on the decision of this Bench of this Tribunal in P. Mahender Reddy vs. ACIT (2005) 2 SOT 696 (Hyd) and submitted that the notice issued after 4 years of search in respect of person other than the person who was subjected to search was held to be barred by limitation. The learned counsel for the assessee has also placed reliance on the decision of the Delhi Bench of this Tribunal in Tahilram Mulchandani vs. ACIT (2008) 115 TTJ 692 and submitted that when the notice was issued after a period of 22 months and 10 days, the Delhi Bench of this Tribunal found that it was issued with an inordinate delay. Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a). The Special Bench of this Tribunal after examining the scheme of block assessment more particularly section 158BE found that the time limit provided u/s. 158BE applies to the finding recorded in respect of the person who was subjected to search. Therefore, it is logical that the said time limit automatically applies for invoking the provisions of section 158BD of the Act, Because of this reason, according to the Special Bench, the Parliament did not find it necessary to specify a separate time limit since the enactment itself shows both section 158BC and 158BD are interlinked, interlaced and intertwined and both form part and parcel of the same chapter. In fact the Special Bench of this Tribunal has observed as follows at paras 114, 115 and 116 as reported in pages 484 and 485 of the ITD. 114. Section 158BE provides for time limit for completion of block assessment. It stipulates that the order under section 158BC shall be passed within two years from the end of the month in which the last of the authorisation for search under section 132 was executed or for requisition under section 132A as the case may be and so the order envisaged under section 158BC has necessarily to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he person searched gives a finding that the undisclosed income unearthed as a result of search belongs to the said person and once such a finding is given the provisions of section 158BD come into operation. This, therefore, involves assumption of jurisdiction and cannot be construed as a procedural matter. In the absence of a finding in this behalf, there is no jurisdiction to the Assessing Officer at all to proceed further in the matter. As the time limit set in section 158BE applies to such finding, it is only logical tat the said time limit automatically applies for invoking the provisions of section 158BD and it is for this reason that the Parliament did not find it necessary to specify a separate time limit for the same, as the enactment itself shows that both sections 158BC and 158BC are inter-linked, interlaced and intertwined and both form part and parcel of the same chapter. 6. This observation of the Special Bench which consists of 5 Members of this Tribunal shows that the time limit provided u/s. 158BE is also applicable for initiating proceedings u/s. 158BD of the Act. 7. We have also carefully gone through the decision of this Bench of the Tribunal in P. Mahend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one through the judgement of the Gujarat High Court in Khandubhai Vasanji Desai (supra). The assessee before the Gujarat High Court challenged the constitutional validity of section 158BD on the ground that it violates Articles 14, 19 and 21 of Constitution of India. While examining the constitutional validity of section 158BD the Gujarat High Court has observed as follows as reported in pages 96 and 97 of the ITR: Necessarily, therefore, a different starting point of commencement of limitation for making the assessment of the block period in case of such other person was required to be fixed and the obvious starting point was the serving of the notice to such person after the requisite satisfaction was reached by the Assessing Officer that any undisclosed income belonged to such other person. Once the satisfaction under section 158BD is reached by the Assessing Officer, there would be no valid reason for him to delay the issuance of the notice which ought to be issued soon after the satisfaction is reached and if the Assessing Officer is different, he ought to immediately transmit the relevant material to the Assessing Officer, having jurisdiction to enable him to proceed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer having jurisdiction receives the material in respect of the other person, he is in the same position as the Assessing Officer who forwarded it to him and is expected to immediately proceed to issue notice to that other person who falls in his jurisdiction. 12. In view of the above finding of the Gujarat High Court in fact the Assessing Officer has to issue notice within a reasonable time. Therefore, this judgement of the Gujarat High Court supports the case of the assessee and not the Department. In fact the Gujarat High Court specifically observed that the contention of the assessee that notice u/s. 158BD r.w.s. 158BC can be issued any time is ill founded. Therefore, the Assessing Officer has to issue notice within a reasonable period. In this case the notice was, admittedly, issued after expiry of more than 3 years and 7 months without any reasonable cause. Therefore, the issue of notice after expiry of 3 years and 7 months is unreasonable which cannot be a basis for completing the assessment against the assessee. Therefore, in our opinion, the CIT(A) has rightly quashed the proceedings. 13. Now coming to the contention of the Department that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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