TMI Blog2018 (7) TMI 1088X X X X Extracts X X X X X X X X Extracts X X X X ..... ed jurisdiction u/s. 158BD of the Act against the assessee company. Therefore, the AO erred in invoking sec. 158BD proceedings against the assessee company and, therefore, the order of AO passed after invoking section 158BD is ‘Null’ in the eyes of law and so has to be quashed. The jurisdictional fact which is the condition precedent for invoking jurisdiction u/s. 158BD is absent, the very invocation and framing of assessment u/s. 158BD is ab initio void and consequently is null in the eyes of law and is quashed. Since the facts of the other four appeals are identical and orders have been passed without satisfying the jurisdictional fact for invoking jurisdiction u/s. 158BD AO lacks jurisdiction to initiate and pass orders in consequence to sec. 158BD of the Act, therefore, the impugned orders passed by the AO are null in the eyes of law and are, therefore, quashed. - Decided in favour of assessee. - I.T(SS).A. No. 66/Kol/2013, I.T(SS).A. No. 72/Kol/2013, I.T(SS).A. No. 69/Kol/2013, I.T(SS).A. No. 80/Kol/2013 And I.T.A. No. 1718/Kol/2013 - - - Dated:- 13-7-2018 - Shri A. T. Varkey, JM And Shri Waseem Ahmed, AM For The Assessee/Appellant : Shri Ravi Tulsiyan, FCA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed illegally in having upheld such an order which was untenable in law. 4. The brief facts of the case is that the assessee is a private limited company engaged in the business of trading / dealing in shares. A search and seizure operation was conducted in the UIC Group OF Companies on 07.05.2002. Pursuant to the said search, share scrip s of M/s. UIC Group Companies allotted to various companies including that of the assessee company were found and seized. Based on this fact, the Assessing Officer initiated 158BD proceedings against the assessee, satisfaction note for initiating proceedings under section 158BD is reproduced below: A search and seizure operation was conducted in the UIC Group of cases on 07.05.2002. In the course of search in the corporate office of this Group, share scrips worth ₹ 11,63,75,000/- issued by different companies by these Group were found. Out of these scrips it was found that a large number of shares have been allotted in the name of various companies controlled and managed by outsiders viz. Shri Rajesh Kumar Jajodia and Shri Sandip Kumar Singhi. In the course of post search enquiry launched in connection with ascertaining the sourc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is belonging to the assessee [which has been seized], so that they can prepare return accordingly. The AO notes that on the day of the search seizure operation conducted u/s 132 on 07.05.2002 at the office premises of M/s. UIC Wires Ltd. 2 lacs share certificates bearing distinctive numbers 490301 to 690300 acquired on 12.08.2000 with a face value of ₹ 10/- amounting to a total value of ₹ 20 lacs were found and seized from the office premises of M/s. UIC Wires Ltd. According to the AO, M/s. UIC Wires Ltd. could not explain as to how shares issued and sold to the assessee company in the year 2000 were still lying at their office premises. Thus according to the AO this fact reveals that there is a clear cut connivance between the assessee company and the UIC group of channeling unaccounted cash in the form of bogus purchase / sale of shares and assessee company is acting as a facilitator. 6. The AO thereafter notes that on verification of bank accounts of the assessee company maintained the bank account no 5274 with Federal Bank of India, Bura Bazar Branch, Kolkata and the AO noted that the following amounts were transferred to the assessee s accounts from acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ₹ 1,21,65,000/- on a protective basis in the hands of the assessee and on substantive basis in the hands of the UIC Group. Aggrieved the assessee preferred an appeal before the Ld. CIT(A) who was pleased to dismiss the appeal of the assessee and was pleased to change from protective assessment to substantive assessment in the hands of the assessee company. 8. Aggrieved the assessee is before us. 9. We have heard both the parties and perused the records. We note that the assessee is a private limited company engaged in the business of trading/dealing in shares. A search and seizure operation was conducted in the UIC group of companies on 7.5.2002. Pursuant to the said search, share scrips of UIC Companies allotted in the name of the assessee company were found in their premises and they were seized during search operation. Thereafter, the AO notes that during post search enquiry, conducted for ascertaining the source of investment by the assessee company, the A.O. found that the assessee company received the funds from 4 bank accounts viz, A/c nos.4886, 4914, 4933 4934 maintained with Federal Bank of India. Burra Bazar Branch Kolkata which were standing in the name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 1,21,65,000/- was duly received by the appellant company through Account Payee cheques iii. The cheques received as consideration have been duly deposited in the bank account of the assessee iv. The above-mentioned sale transaction was duly recorded in the books of accounts v. Income Tax Returns incorporating the above details have been duly filed in the relevant assessment year. 11. We note that in the block assessment u/s l58BD/144 was completed by the A.O. vide order dated 30.11.2006 making protective addition of ₹ 1,21,65,000/- on account of the afore-mentioned receipt of sale consideration by the assessee company against sale of its shares and on substantive basis an addition of Rs.l2,16,501/- being l% commission on the said amount of Rs.l,21,65,000/- was passed against the assessee company. 12. The legal issue that has been raised by the assessee is as to whether the A.O. is correct in initiating the block assessment proceedings u/s l58BD of the Act. For that let us examine the validity of the impugned block assessment proceedings carried out by the Assessing Officer in respect of the assessee. The provisions of section l58BD clearly read as und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee could be covered under section l58BD and notice under section l58BD can be validly issued. Therefore, existence of material belonging to assessee must be found during the course of search, which is a sine qua non for taking action under section I58BD of the Act. So, the jurisdictional fact to invoke sec. 158BD against the assessee is the seizure of material belonging to assessee found during search conducted on 07.05.2002. Now the question is, can the seized shares found during search on 07.05.2002 at UIC Group can be said to be belonging to assessee company. From the facts emerging as noted by us the assessee company though had purchased the shares of certain UIC Group companies in October, November, 1999 and February, 2000, it had been sold to the four persons named above before the date of search on 07.05.2002 and the assessee company has received the amount of ₹ 1,21,65,000/- through account payee cheque and has deposited it in bank account and have duly recorded in the books of account and incorporated the above details in the Income Tax Return. Therefore, we find that the jurisdictional fact for assumption of jurisdiction is absent and, therefore, the AO could no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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