TMI Blog2019 (7) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... er of jurisdiction of the Learned AO and further by not applying the provision of Section 158BC r.w.s. 158 BD by not recording the satisfaction by the jurisdictional AO. In that view of the matter, we find when the very foundation of the block assessment is not stable in the absence of compliance of the statutory provisions as discussed above, the entire proceeding initiated against the assessee is vitiated. Upon considering all the aspect of the matter, we find no merit in the order passed by the authorities below. Further that on the basis of the above discussion and observation we find the entire proceeding is void ab initio i.e. invalid from the very outset and therefore is liable to be quashed and hence the entire proceeding under section 158BD of the Act as initiated by the revenue against the assessee is hereby quashed. - Decided in favour of assessee. - I.T.(SS)A. No.199/Ahd/2014 - - - Dated:- 24-6-2019 - Shri Pramod Kumar, Vice President And Ms. Madhumita Roy, Judicial Member For the Appellant : Shri S. N. Soparkar S. V. Agarwal, A.R. For the Respondent : Shri M. S. A. Khan, CIT-D.R. ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was also taken by the assessee in the said appeal before us: (1) The Ld CIT(A) had erred in confirming action of AO who erred in passing order u/s 158BD without forming/noting or specifying the satisfaction note, and search records were not forwarded as well by ADIC. The satisfaction of ADIT is not sufficient for block assessment u/s 158BD. Therefore, the block assessment is invalid without law requires to be quashed. 3. The additional ground since touches the very root of the matter challenging the foundation of the proceeding under section 158BD, as argued by the Learned Senior Counsel appearing for the assessee, we propose to consider the same first. 4. This case has a chequered history. Initially a search and seizure action u/s 132 of the Act was conducted upon one Master Group on 20.10.2000 where one Shri Jivrajbhai V Desai (JVD) was reportedly the main person of the said Master Group. Connected search was also conducted at the residence of one Shri Arvind A Shah (AAS) being the accountant of the JVD group, wherein documents inter alia a dairy described as Annexure-A-1 was seized. The assessee s name appeared at Page 45 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e matter and thus vitiates the entire proceedings the assessment is therefore liable to be quashed as the case made out by the assessee before the First appellate authority as also before us by way of an additional ground. Apart from that it was also contended by the Learned Senior Counsel that the notice intimating change of jurisdiction of the assessing officer though ought to have been issued and served by the authority under section 127 of the Act has not been complied with rendering the entire proceeding bad in law and thus liable to be set aside. In support of his argument he relied upon a judgment passed by the Hon ble Bombay High Court in the matter of CIT, Nagpur-vs-Lalitkumar Bardia. On the other hand, the Learned Departmental Representative relied upon the order passed by the authorities below. 6. Heard the respective parties, perused the relevant materials available on records. It appears from the records that while restoring the matter to the file of the Learned AO for de novo proceeding on 07.08.2009 the Hon ble ITAT observed as follows: We have perused the material on record and heard the rival parties. In our cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... name of New Virabhagat would not have arisen. Further, the relationship of the assessee with M/s Mahadev Construction Pvt. Ltd, of whom he is one of the two directors along with his son and the relationship of M/s Mahadev Construction Pvt. Ltd. With New Virabhagat society is not so remote to be ignored or to be not worth of proper examination. It seems that for the reasons unknown, the Assessing Officer chose the sleep over the matter and did not follow the procedure for framing a proper assessment by not providing photocopies of documents in time and then by initiating proper assessment proceedings only after filing of the return by the assessee and not immediately after the expiry time allowed to the assessee to file the return. The assessee also thought to avoid to remain present before the Assessing Officer to avail the opportunity of cross - examination. He chose the remain absent for attending a social function between 22/12/2004 to 27/10/2004 (and, assessment getting barred by limitation on 30/10/2004). In our considered view, on worthwhile cross - examination of JVD/AAS could be feasible in absence of the assessee, even if the Assessing Officer thought it to give such an op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a general proposition of law that IT. Department cannot rely upon any evidence which has not been subjected to cross-examination. Therefore, not allowing the cross-examination of JVD and AAS will not be fatal to the assessment proceedings, but will only create curable irregularities for which, in our considered view, the assessee is equally responsible and which deficiencies can be cured by restoring, the matter the matter to the Assessing Officer. In our considered view, we have to strike a balance between individual interest and public interest and where public interest is disallowed to suffer by the two parties either by delaying tactics as by the assessee or by showing indifference as in the present case by the assessing authorities, then courts are not supposed to support the stand of either of the parties. As the Id. CIT(A) has also not considered the genuineness of transactions recorded in the diary, his order cannot be upheld. We, therefore, restore the matter to the file of the Assessing Officer for doing the assessment de novo according to law and after giving an opportunity of being heard to the assessee, as required under the law including cross - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment under that section. Sec. 158BD specifically provides that the A. O. of the searched parties shall hand over to the Assessing Officer having jurisdiction of other person and Assessing Officer of the other person shall proceed against such other person to make assessment u/s. 158BD, after recording his Satisfaction Note. Sec.158BD do not provide that the A.O. of the searched party shall also send the Satisfactory Note to the A.O. of the other person. Sec. 158BD provides that books of accounts, other documents or assets seized or requisitioned shall be handed over to the A. O. having jurisdiction over other person and he shall proceed to make assessment against such other person. Sec. 158BD relates to assessment of other person and not the searched party. Therefore, the satisfaction of A.O. referred to in beginning of sec. 158BD is, satisfaction of A.O. of other party and not satisfaction of A.O. of searched party. In the present case, A. O. of assessee (Other person) has not prepared Satisfaction Note before issue of notice u/s. 158BD and therefore, assessment made u/s. 158BD in case of assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 95[under section 158BC] against such other person and the provisions of this Chapter shall apply accordingly. Section 2 Definition of different words and phrases used in the Act 2. In this Act, unless the context otherwise requires, [(7A) Assessing Officer means the Assistant Commissioner 27[or Deputy Commissioner] 28[or Assistant Director] 27[or Deputy Director] or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or subsection (2) of section 120 or any other provision of this Act, and the 29[Additional Commissioner or] 30[Additional Director or] 31 [Joint Commissioner or Joint Director] who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act;] 5.2 Upon receipt of additional ground from the appellant the same was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;bad and completed subsequent assessment proceedings ought to have recorded his satisfaction and that since no such satisfaction was recorded by him therefore the assessment order becomes invalid, illegal has been analyzed in detail and found to be bereft of any meritorious consideration. Presumably the appellant is trying to read and interpret law prescribed u/s. 158BD in a fashion so as to suit his particular interest. The same is impermissible since it is a settled principle of law as laid down by honourable Apex Court and reiterated by several high Courts that if the provisions of law are un ambiguous and clear then no interpretation is to be applied. Hon'ble Apex Court in the case of Smt Tarulata Shyamv vs CIT (1977) 108 ITR 345 observed that 'to us there appears no justification to depart from the normal rule of construction according to which the intention of legislature is primarily to be gathered from the words used in the statute'. In the said case, the court observed views of rowlatt J in case of 'Cape Brandy Syndicate' that ' in a taxing act one has to look merely at what is clearly said. There is no room for any intendment, there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There is no mandate for recording of any satisfaction by the second AO which is responsibility of the first A O. As per facts of the case satisfaction for initiation of proceedings u/s. 158BD was recorded by ACIT, Cent Cir.1(1) A'bad through his satisfaction dt 29-10-2002. The same was done by him while conducting block assessment proceedings in the case of JVD. Consequently ACIT, Cent Cir.1(1), A'bad has discharged the onus placed upon his shoulders u/s. 158BD and no fault can be found. Thus, it is clear that there is no legal infirmity in the assessment u/s. 158BD done by the ACIT, Circle-6, A'bad. The arguments of the appellant are therefore rejected and the additional ground of appeal raised is dismissed. Upon a plain reading of the observation made by the Learned CIT(A) we found that the case of the revenue in order to defend the contention made by the assessee is this that the satisfaction as mentioned in Section 158BD refers to the act of arriving at satisfaction by the first original Assessment Officer that the incriminating document pertains to the person, the said person is assessed under a particular AO and the incr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law. However, the certified copy of the said order was not provided to the appellant by the concerned authority being the CPIO and ITO, Ward 2(1)(4), Ahmedabad on the ground that such copy of the order u/s 127 of the Act is not available on record as it appears from the reply dated 12.10.2008 by the concerned authority. However, the DCIT, Circle 6, Ahmedabad has been requested to provide such copy of the order u/s 127 of the Act whereby and whereunder his jurisdiction was changed from the then ITO, Ward 6(4) to DCIT, Circle 6, Ahmedabad. The assessee preferred an appeal on 04.12.2018 against the order dated 12.10.2018 passed by the CPIO and the said appeal was disposed of by and under an order dated 04.12.2018 issued by the ACIT, Range 2(1), Ahmedabad and First Appellate Authority under RTI whereby and whereunder the very necessity of issuing the order u/s 127 of the Act upon the assessee intimating change of Assessing Officer has been negated with the following observation: 4.3 The CPIO/AO was asked to verify the case records and report in this matter. To which the AO vide his letter dtd. 04.11.2018 has submitted his comments as On pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansfer dated 6.7.1999, u/s.127 of the Act was quashed and set aside. Thus, it ceased to exist. Consequently, on 22.9.1999, when the Deputy Commissioner of Income Tax, Nagpur ceased to have jurisdiction to assess the Respondent/Assessee as there was no order of transfer of the respondent/assessee's case to Nagpur. In terms of Section 2(7A) of the Act, the Assessing Officer means 'an Officer of the Income Tax vested with jurisdiction either by virtue of Section 120 or any other provision of the Act'. Admittedly, the Deputy Commissioner of Income Tax, Nagpur does not have jurisdiction over the respondent/assessee by virtue of Section 120 of the Act. However, the claim of jurisdiction as a Assessing Officer over respondent/assessee is the Order dated 6.7.1999 which has been passed u/s.127 of the Act, while issuing notice on 22.9.1999, under Section 158 BC of the Act. But, as the Order dt.6.7.1999 under Section 127 of the Act by the Commissioner of Income Tax, Raipur was set aside before issuing of notice, the Deputy Commissioner of Income Tax, Nagpur ceased to be the Respondent/Assessee's Assessing Officer. In the result, the notice dated 22.9.1999 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dabad. The ACIT/DCIT has concurrent jurisdiction over all the cases of the Range. Therefore, admittedly notice of intimation of change of jurisdiction under the provision of Section 127 has not been issued to the assessee. In this case the assessee is in a better footing than that of the judgment cited above. Notice u/s 127 though required to be issued the same is not in existence at all. Furthermore, the satisfaction note was neither prepared by such ACIT, Circle 6 who has issued the notice u/s 158BC r.w.s. 158BD on 30.10.2002. The mandatory provision of issuing the said note by the concerned AO having jurisdiction to assess the case of the appellant as thus not been complied with. The satisfaction note was issued by the ACIT, Circle 1(1), Ahmedabad and not the DCIT, Circle 6 or the ACIT, Circle 6. This is the settled principle of law that the notice u/s 158BD r.w.s. 158BC is required to be issued only upon being specified that the undisclosed income belongs to the appellant only by the concerned AO and not by any other authority having the same rank. The judgment as discussed above in the matter of ACIT-vs-Hotel Blue Moon reiterates the same principle. Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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