TMI Blog2019 (3) TMI 1266X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 158 BC of the Act only, the Tribunal found that for the transaction in question for sale of property which was standing in the name of the present assessee, namely, mother- Smt.V.Vijayalakshmi, AO could have initiated proceedings only under Section 158BD of the Act. That being so, we have found, as aforesaid, that the Assessing Officer could proceed on the basis of that satisfaction under Section 158BD of the Act. Hence, the learned Tribunal and also the CIT (A) have rightly dismissed the appeal of the present Assessee, laying a challenge to the proceedings under Section 158BD of the Act against the present Assessee. - Decided against assessee. - T.C.A.No.1505 of 2008 - - - Dated:- 5-3-2019 - Dr. Justice Vineet Kothari And Mr. Justice C.V. Karthikeyan For the Appellant : Mr.A.S.Sriraman For the Respondent : Mr.T.R.Senthil Kumar, Senior Standing Counsel, assisted by Mrs.K.G.Usha Rani, Junior Standing Counsel. JUDGMENT DR.VINEET KOTHARI, J . This Appeal has been filed by the Assessee Smt.V.Vijayalakshmi, under Section 260-A of the Income Tax Act, 1961, in short, 'Act', raising the following Substantial Questions of Law, arising out o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct against the present Assessee, namely, Smt.V.Vijayalakshmi, mother of Mr.S.V.Srinivasan, against whom a Search under Section 132 of the Act was conducted on 13.09.2001 and then proceedings for Assessment under Section 158BC of the Act were initiated. He, therefore, submits that the assessment in the hands of the mother - present Assessee - Smt.V.Vijayalakshmi - is without any basis in the absence of satisfaction being recorded and the Tribunal has erred in holding that the satisfaction recorded by the learned Tribunal while dealing with the earlier appeal of the son - Mr.S.V.Srinivasan - can be taken as sufficient for initiating the proceedings under Section 158 BD of the Act against the mother - present Assessee. Regarding the ' Additions ' made for the sale of property in the hands of the mother-present assessee, he submitted that there were inconsistencies in the statements recorded by the authorities at the time of search of the searched person Mr.S.V.Srinivasan and the seller of the property and, therefore, no such additions could be made in the hands of the present assessee-mother-Smt.V.Vijayalakshmi under Section 158BD of the Act. 3. On the other hand, Mr.T.R.Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer should have been to initiate action under Sec.158BD of the Act and not in assessing the value of the property or on money payment in assessee's hand. Where in the case of third party, whose assets are found in search, cases or whose books of account or other documents evidencing detention of addition are found therein, then, they are liable to be proceeded against under Sec.158BD of the Act. In the present case also, the Assessing Officer should have initiated action under Sec.158BD of the Act on the assessee's mother. In view of this, we are of the view that this addition made by the Assessing Officer is not as per the provisions of the Income Tax Act and accordingly, is deleted. 6. Consequent upon the aforesaid decision of the learned Tribunal in the case of the son-Mr.S.V.Srinivasan- rendered on 03.01.2005, the Assessing Authority, in the present case, initiated the impugned proceedings under Section 158BD of the Act against the present assesseemother- Smt.V.Vijalakshmi. The Preamble of the Assessment Order passed on 22.12.2006 under Section 158BD read with Section 158BC of the Act is quoted below for ready reference : A search under sec.132 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso admitted that the above said property was purchased for ₹ 18,50,000/- from Shri K.N.Natarajan. 4. A letter was issued to the assessee on 08-09-2006 asking her to explain as to why the unaccounted Investment of ₹ 13,90,000/- should not be assessed as her undisclosed Income for the Block Period. In response to this letter, the assessee filed a reply on 23-10-2006 stating as follows :- 7. The subsequent appeals filed against the said Assessment Order of the Assessee-Smt.V.Vijayalakshmi- came to be dismissed by the learned CIT (Appeals) and also the Tribunal. The relevant extracts from the said orders are also quoted below for ready reference : CIT (A) Order, dated 13.03.2007 : 4. I have considered the submissions of the appellant very carefully. As regards questioning the validity of initiation of 158BD proceedings, the observation of Hon'ble ITAT in the case of Sri S.V.Srinivasan is worth reproducing which is as under : ''... Where in the case of third party, whose assets are found in search cases or whose books of account or other documents evidencing detection of addition are found therein, then they are liable to be proceede ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. Regarding the contention of the ld. counsel that no satisfaction was recorded by the Assessing Authority before issuing notice under Section 158BD is not acceptable to us. Initially, the addition was made in the hands of the assessee's son Shri S.V.Srinivasan and when Shri S.V.Srinivasan filed appeal before Tribunal. The Tribunal found that the addition should have been considered in the hands of the assessee as required under Section 158BD. The Tribunal has made a definite finding that the matter has to be examined in the hands of the assessee under Section 158BD. The above direction was being executed by the Assessing Authority in compliance of law while assessment was initiated in the hands of the assessee. Therefore, the satisfaction necessary for initiating block assessment under Section 158BD in the hands of the assessee is very much apparent from the records of the case. The satisfaction straightaway comes out of the order passed by the Tribunal in the case of the assessee's son Shri S.V.Srinivasan. Since the observation of the Tribunal is a judicial observation, it is always public and apparent and on record as well and has to be acted upon. That was done by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isfied 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, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed under section 158BC against such other person and the provisions of this Chapter shall apply accordingly. The Scheme of the aforesaid provisions of Sections 158BC and 158BD of the Act is, thus, very clear. Where search is conducted under Section 132 of the Act and the proceedings for Assessment for Block Period are undertaken under Section 158BC of the Act and where the Assessing Officer is satisfied that any Undisclosed Income belongs to any other person i.e., a third party, then, the record or document seized in the course of search is to be made over to the Assessing Officer having jurisdiction over such other person or third party and such Assessing Officer can proceed against such third party or other person under the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the learned Tribunal in the appeal order passed in the case of son of the present Assessee, against whom Search was conducted, are sufficient to proceed against the mother-present Assessee under Section 158BD of the Act. 10. In our opinion, the Appellate Authorities below have not committed any error in so holding. On the contrary, for not raising any objection in the first instance by the Assessee before the learned Assessing Authority itself when the Notice under Section 158BD of the Act was served upon her, it should be deemed that the mother present Assessee - had acquiesced to the jurisdiction of the authority to proceed under Section 158BD of the Act and given up any objection with regard to the same. Recording of independent and separate reasons other than the one which is already recorded by the learned Tribunal in the appeal order passed in the case of son of the present Assessee, against whom Search was conducted in the present case, is not even envisaged under the Scheme of the Act under Section 158BD of the Act. 11. It is true that the Assessing Authority should record such satisfaction at initial stage itself when the proceedings of Assessment under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant portion of the said judgment is quoted below for ready reference : 11. Law in this regard is clear and explicit. The only question which arises for our consideration is as to whether the notice dated 06.02.1996 satisfies the requirements of Section 158BD of the Act. The said notice does not record any satisfaction on the part of the Assessing Officer. Documents and other assets recovered during search had not been handed over to the Assessing Officer having jurisdiction in the matter. 12. No proceeding under Section 158BC had been initiated. There is, thus, a patent non-application of mind. A prescribed form had been utilized. Even the status of the assessee had not been specified. It had only been mentioned that the search was conducted in the month of November 1995. No other information 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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