TMI Blog2008 (10) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... stion of assumption of jurisdiction under Section 158BD of the said Act. 2. The facts are that search and seizure operations were carried out under Section 132 of the said Act in the case of M/s Yadav and Co. In the course of the search, statements of Sh O P Yadav and Mahinder Singh Yadav were recorded wherein they stated that they had not opened or operated the bank accounts in question. By a letter dated 9.9.2002 the Additional Director of Income Tax (Investigation) informed the Commissioner of Income Tax, Delhi-IV who apparently had jurisdiction over the present assessee that there were bogus entries in the bank accounts pertaining to the present assessee (Dawn View Farms Pvt Ltd). Through the said letter the ADIT (Investigation) also informed the said commissioner that on the basis of material gathered and investigation carried out in the case of Yadav and Co it was apparent that the said bank account was bogus and no real transactions of dealing in shares ever took place. The Additional Director of Income Tax (Investigation) also sent copies of the statement of Sh Om Prakash Yadav and Sh Mahinder Singh Yadav as recorded on 7.3.2002. 3. On the basis of the above mentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 158BD. Thereupon, the Assessing Officer issued notice on the basis of the said report. 7. It is recorded in the order passed by the Commissioner of Income Tax (Appeals) that, admittedly, there is no satisfaction recorded by the Assessing Officer of Yadav and Co during the course of block assessment proceedings in the case of Yadav and Co. The Commissioner also noted that the Assessing Officer of the assessee company merely acted on the advice of the Additional Director of Investigation who had conducted the search in the case of Yadav and Co. From this, the Commissioner of Income Tax (Appeals) concluded that, manifestly, there was no satisfaction note as was required to be recorded by the Assessing Officer of Yadav and Co. Referring to the decisions of this Court in the case of Amity Hotels Pvt Ltd vs CIT: 272 ITR 75, the Commissioner of Income Tax (Appeals) held that the block assessment proceedings in respect of the assessee were not in conformity with the mandatory requirements of Section 158 BD. 8. The Commissioner of Income Tax (Appeals) concluded as under:- "I have carefully considered the facts of the case recorded in assessment order and the wri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al relating to the assessee was found during the course of search of Yadav and Co nor had any material been handed over to the Assessing Officer of the assessee company. 11. The Tribunal followed the decisions of the Gujarat High Court in the case of Khandubhai Vasanji Desai vs. Deputy CIT: 236 ITR 73 which had been approved by the Supreme Court in the case of Manish Maheshwari vs. Asst. CIT: 289 ITR 341(SC). Following the said decisions, the Tribunal concluded that for want of recording of satisfaction, the assessment proceedings under Section 158BD were invalid. Consequently, the same were quashed on this count alone. Because of this, the Tribunal did not find it necessary to adjudicate upon the other grounds of appeal. 12. We have heard the counsel for the parties and we feel that the Tribunal has arrived at the correct conclusion. We may note that in Amity Hotels Pvt Ltd (supra) we had in similar circumstances observed as under:- "Before us, the appreciation report prepared by the search party under section 132 of the Act was also produced with various annexures for perusal. It is in view of this report, it appears that the Assessing Officer initiated pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and other assets had been requisitioned under section 132A of the Act." 14. From the above, we find that satisfaction of the Assessing Officer must be recorded to the effect that there is undisclosed income belonging to any person, other than the person in respect of whom the search was made under Section 132 of the said Act. The second condition is that the books of accounts or other documents or assets seized or requisitioned have to be handed over to the Assessing Officer having jurisdiction over such person (i.e, the person other than the person in respect of whom the search was made). It is only thereafter that the Assessing Officer can proceed under Section 158BC against such other person. In the present case, we find that both the Commissioner of Income Tax (Appeals) and the Tribunal have held that no satisfaction was recorded by the Assessing Officer of Yadav and Co. They have also recorded that no material whatsoever was handed over by the Assessing Officer of Yadav and Co. to the Assessing Officer of the assessee company. It is obvious that the essential pre-conditions which needed to be satisfied for the purposes of invoking the provisions of Section 158BD have n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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