TMI Blog2007 (2) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee "M/s Indore Construction Company (Pvt.) Ltd.' (for short, 'the Company') is a company registered and incorporated under the Companies Act, 1956 (for short, 'the Act'). One Shri Rameshwar Maheshwari is of one of its Directors. Shri Maheshwari, apart from being a Director of the said Company, is also a tax consultant. A search was conducted, as contemplated under Section 132 of the Act, in the premises of the said Maheshwari and his wife Smt. Lalita Devi on November 21, 1995. Several incriminating documents relating to the business of the Company were seized. A proceeding was initiated against the Company purported to be under Section 158BC of the Act. The order of assessment was passed on November 29, 1996. The Tribunal in an appeal preferred by the assessee thereagainst opined that the Assessing Officer had no jurisdiction to proceed against the assessee for making the block assessments in terms of Chapter XIV-B of the Act, as no search was conducted in terms of Section 132 of the Act, stating : "28. Perusal of the assessment order would go to reveal that the Assessing Officer did not do so. Instead of determining the undisclosed income on the basis of the materials ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , bullion, jewellery or other valuable article or things represents either wholly or partly income or property which has not been, or would not be disclosed for the purposes of the Indian Income Tax Act, 1922 or the Income Tax Act, 1961." 6. We may also notice that purported compliance of Section 158BD was sought to be made by issuing a notice to the Company on February 06, 1996, which is as under : "To Indore Construction Co. Pvt. Ltd. 380, Jawahar Marg, Indore In pursuance of provisions of the section 158BC of the Income Tax Act, 1961, you are requested to prepare a true and correct return of your total income including the undisclosed income in respect of which you as individual / HUF / Firm / Company / AOP / Body of individual/local authority are assessable for the block period mentioned in Section 158B(a) of the Income Tax Act, 1961. The return should be in the prescribed form 2B and be delivered in this office within 16 days of service of this notice duly verified and signed in accordance with the provisions of Section 140 of the Income Tax Act, 1961. (Search was co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and 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." 10. Search and seizure is to be made in terms of Rule 112 of the Income Tax Rules, 1962. For the purpose of invoking the said provision, special procedure for assessment is laid down in Chapter XIV-B, the conditions precedent wherefor as laid down must be satisfied. Sections 158BC and 158BD read as under : "158BC. Procedure for block assessment.- 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iction over such other person and that Assessing Officer shall proceed against such other person and the provisions of this Chapter shall apply accordingly." 11. The condition precedent for invoking a block assessment is that a search has been conducted under Section 132, or documents or assets have been requisitioned under Section 132A. The said 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 wherefor are : (i) Satisfaction must be recorded by the Assessing Officer that any undisclosed income belongs to any person, other than the person with respect to whom search was made under Section 132 of the Act; (ii) The books of account or other documents 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. 12. The conditions prec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion had been furnished. The provisions contained in Chapter XIVB are drastic in nature. It has draconian consequences. Such a proceeding can be initiated, it would bear repetition to state, only if a raid is conducted. When the provisions are attracted, legal presumptions are raised against the assessee. The burden shifts on the assessee. Audited accounts for a period of ten years may have to be reopened. 18. A large number of decisions of various High Courts have been cited at the bar. We would, at the outset, refer to a decision of the Gujarat High Court in Khandubhai Vasanji Desai v . Deputy Commissioner of Income-Tax [1999] 236 ITR 73. Therein, it was clearly held : "This provision indicates that where the Assessing Officer who is seized of the matter and has jurisdiction over the 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, he shall proceed against such other person as per the provisions of Chapter XIV-B which would mean that on such satisfaction being reached that any undisclosed income belongs to such other person, he ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
