TMI Blog2001 (1) TMI 202X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been raised: "Because the assessment order, dt. 27th Nov., 1997, is wholly illegal, as being outside the purview and scope of s. 158BD (Chapter XIV-B) of the IT Act, 1961. 2. Because there existed no material/information which could lead the AO to have the requisite satisfaction so as to confer jurisdiction on him to initiate proceedings under s. 158BD in the case of the appellant." 4. After hearing both the sides we admit the additional grounds of appeal as it involved the issue of jurisdiction of the AO under s. 158BD of the Act. 5. The brief facts of the case are that a search and seizure operation was conducted at the business premises of Sri Narayan Das Sarraf Sons, M/s Radha Krishna Payal Bhandar, M/s Radha Krishna Payal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the AO having jurisdiction over Shri Agarwal. Notice under s. 158BC was issued on 8th July, 1997, by the Asstt. CIT, Varanasi. The assessee's counsel filed reply and stated that notice appears to be misconceived since there is no Panchnama in the name of the assessee. Therefore, case of the assessee is not covered under Chapter XIV-B of the Act. Subsequently the Asstt. CIT issued notice under s. 158BD on 7th Oct., 1997. In the meantime the order has been passed by the CIT by transferring jurisdiction from AO Ward-III to Asstt. CIT and that is why Asstt. CIT, CC, issued notice under s. 158BD on 7th Oct., 1997. 7. It is argued by the learned counsel for the assessee that before issuing notice under s. 158BD the AO should be satisfied that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointed out that the AO was satisfied about the issue of notice under s. 158BD/BC as there was seizure of assets from the premises of Shri Ajay Kumar Agarwal. At this stage the learned counsel for the assessee pointed out that he had only asked for certified copy of the order sheet. In the case of the assessee copies were submitted to him on 17th March, 1999, after completion of the assessment. Office copy of the note sheets now submitted by the learned Departmental Representative before the Tribunal were not given to the assessee earlier. The learned counsel pointed out that even this office note also does not support the AO's case for issue of notice under s. 158BD r/w s. 158BC because no search was conducted at the premises of Shri Ajay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of search initiated or books of account or other documents or any asset are requisitioned on or after the 1st January, 1997." 10. It is clear from the provisions of s. 158BD that an AO can issue notices or proceed against any person other than the person with respect to whom search was made under s. 132, where the AO having jurisdiction over the person searched is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under s. 132 of IT Act and give a finding that he is satisfied that any undisclosed income belong to any person other than the person with respect to whom search was made under s. 132. This finding regarding the satisfaction of undisclosed income is necessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of above concern 1. Cash 67,050 37,380 - 2. Silver ornaments 7,22,550 9,116 - -------- -------- Ornaments 62,900 62,900 3. Other assets such 2,37,300 2,37,300 - as units of UTI, etc. Thus, I have reason to believe that the above undisclosed income is assessable under Chapter XIV-B for the above block period under the provisions of s. 158BD of the IT Act, 1961, for which notice under s. 158BC(a) is issued." It is clear from the entries on the order sheet that the satisfaction note recorded by the AO for issue of notice under s. 158BC was withdrawn by the AO after the assessee objected to the issue of notice under s. 158BC on 8th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hna Bhandar. Such books of account revealing undisclosed income pertaining to him was not found from the business premises of M/s Radha Krishna Bhandar or its partners. Therefore, provisions of s. 158BD is not applicable in the case of Ajay Agarwal. The AO mechanically without application of mind has issued notice under s. 158BD to the assessee Shri Ajay Kumar Agarwal. Notice issued by the AO under s. 158BD in these circumstances is also invalid and bad in law. Since the notice issued under s. 158BD is bad in law the assessment completed by the AO under s. 158BD in consequence of invalid notice under s. 158BD has to be cancelled. 12. As the assessment under s. 158BD has been cancelled it is not necessary to consider other grounds of appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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