J & K Engineers Pvt. Ltd.,, Surat v. The ACIT, Circle-1,, Surat

ITSSA 12/AHD/2007 | misc
Pronouncement Date: 30-04-2010 | Result: Allowed

Appeal Details

RSA Number 1220516 RSA 2007
Assessee PAN AAACJ5972F
Bench Ahmedabad
Appeal Number ITSSA 12/AHD/2007
Duration Of Justice 3 year(s) 3 month(s) 20 day(s)
Appellant J & K Engineers Pvt. Ltd.,, Surat
Respondent The ACIT, Circle-1,, Surat
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 30-04-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 30-04-2010
Date Of Final Hearing 12-04-2010
Next Hearing Date 12-04-2010
Assessment Year misc
Appeal Filed On 10-01-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI MAHAVIR SINGH JUDICIAL MEMBER AND SHRI A.N.PHAUJA ACCOUNTANT MEMBER IT(SS)A NO.12/AHD/2007 & BLOCK PERIOD FROM 01/04/1996 TO 27/04/2002 DATE OF HEARING:12.4.10 DRAFTED:12.4.10 J. & K ENGINEERS PVT. LTD. B/15/1 SACHIN UDHYOG NAGAR PALSANA ROAD SACHIN SURAT PAN NO.AAACJ5972F V/S. ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE-1 SURAT (APPELLANT) .. (RESPONDENT) IT(SS)A NO.73/AHD/2008 BLOCK PERIOD FROM 01/04/1996 TO 27/04/2002 J. & K ENGINEERS PVT. LTD. B/15/1 SACHIN UDHYOG NAGAR PALSANA ROAD SACHIN SURAT PAN NO.AAACJ5972F V/S. DY. COMMISSIONER OF INCOME-TAX CIRCLE-1 SURAT (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI HARDIK VORA AR REVENUE BY:- SHRI C.K. MISHRA SR-DR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THESE TWO APPEALS BY THE ASSESSEE ARE ARISING OUT OF DIFFERENT ORDER OF COMMISSIONER OF INCOME-TAX(APPEALS)-I SURAT IN APP EAL NOS.CAS-I/57/06-07 & CAS-I/59/08-09 OF DATED 05-12-2006 AND 10-10-2008. THE BLOCK ASSESSMENT WAS FRAMED BY THE ASSTT. COMMISSIONER OF INCOME-TAX CI RCLE-1 SURAT U/S.158BD R.W.S. 1258BC OF THE INCOME-TAX ACT 1961 (HEREINAFTER REF ERRED TO AS THE ACT) VIDE HIS ORDER DATED 30-05-2006 FOR THE BLOCK PERIOD FROM 01 -04-1996 TO 27-04-2002. IT(SS)A NO.12/AHD/07 & IT(SS)A NO.73/AHD/08 B.P. 1/4/96 TO 27/4/02 J & K ENGINEERS PVT. LTD. V. ACIT CIR-1 SURAT PAGE 2 FIRST WE WILL TAKE UP ASSESSEES APPEAL IT(SS)A NO. 12/AHD/2007. 2. THE FIRST ISSUE IN THIS APPEAL OF THE ASSESSEE I S AS REGARDS TO THE ASSUMPTION OF JURISDICTION U/S.158BD OF THE ACT FOR FRAMING OF BLOCK ASSESSMENT. FOR THIS ASSESSEE HAS RAISED FOLLOWING GROUND NO.1 :- 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HA ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN I SSUING NOTICE U/S.158BD FOR THE PERIOD FROM 01.04.96 TO 30.04.2002 WHEN SEARCH WAS CONDUCTED 27.04.2000. THUS ASSESSMENT FRAMED U/S.158BD R.W.S. 158BC IS REQUIRED TO BE QUASHED. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT A SEARCH ACTION WAS CONDUCTED BY THE INCOME-TAX DEPAR TMENT U/S. 132 OF THE ACT IN THE CASE OF SHRI SHASHIKANT V TAMAKUWALA RESIDENT OF 90 WILSON TOWER ATHWA LINES SURAT ON 27-04-2000. DURING THE COURSE OF S EARCH A DELUXE DIARY NO.BS-2 WAS FOUND AND SEIZED WHICH CONTAINED NOTINGS REGARD ING PURCHASE OF PLOT IN SACHIN UDYOGNAGAR SAHAKARI MANDALI LTD. SACHIN BY VARIOUS PERSONS. SHRI SHASHIKANT TAMAKUWALAIS A BROKER DURING SEARCH IN HIS STATEME NT U/S132(4) OF THE ACT ADMITTED THE TRANSACTION NOTED IN THE SAID DIARY. T HE NOTINGS OF THIS DIARY CONTAINS DETAILS OF PRICE PAID AS ON-MONEY BY THE PURCHASERS . ON PAGE 256 OF THE SAID DIARY A TRANSACTION REGARDING ASSESSEE WAS NOTED IN THE N AME OF J & K AS PER THIS PAGE AND TOTAL PURCHASE CONSIDERATION WAS RS.18.06 LAKH FOR 4 PLOTS B TYPE AND THE AMOUNT OF RS.6 99 508/- WAS DEDUCTED FROM THE TOTAL CONSIDERATION OF RS.18.06 LAKH WHICH WAS DOCUMENT PRICE AND PAID TO THE SOCIETY AN D THE BALANCE RS.11 06 492/- WAS ON-MONEY. THE ASSESSING OFFICER OF SHRI SASHIKA NT V TAMAKUWALA I.E. ACIT CIRCLE-1 SURAT WHO WAS DEALING WITH SEARCH CASE G AVE INFORMATION TO THIS AO ON 31- 07-2003. THE BLOCK ASSESSMENT IN THE CASE OF THE S EARCHED PARTY WAS COMPLETED ON 30-04-2002. SUBSEQUENTLY THE ASSESSING OFFICER INITIATED ACTION U/S.158BD OF THE ACT VIDE NOTICE DATED 18-05-2004 SERVED ON THE ASSESSEE ON 25-04-2004. ACCORDING TO THE AO OF SEARCHED PARTY THE ASSESSEE HAD MADE THE PAYMENT OF RS.18.06 LAKH TOWARDS PURCHASE OF 4 PLOTS B TYPE AND OUT OF WHICH ON-MONEY PAID WAS RS.11 06 492/- WHICH IS UNACCOUNTED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD. BUT BLOCK ASSESSMENT IN THE CASE OF THE AS SESSEE WAS COMPLETED U/S.158BD R.W.S. 158BC OF THE ACT VIDE ORDER DATED 30-05-2006. IT(SS)A NO.12/AHD/07 & IT(SS)A NO.73/AHD/08 B.P. 1/4/96 TO 27/4/02 J & K ENGINEERS PVT. LTD. V. ACIT CIR-1 SURAT PAGE 3 4. ON THESE FACTS LD. COUNSEL FOR THE ASSESSEE SH RI HARDIK VORA STATED THAT THE BLOCK ASSESSMENT IN THE CASE OF SEARCHED PARTY I.E. SHRI SHASHIKANT V TAMAKUWALA WAS COMPLETED ON 30-04-2002 AND THE NOTICES U/S.158 BD OF THE ACT WAS ISSUED ON 18-05-2004 WHICH WAS SERVED ON 20-05-2004. ACCORDI NG TO LD. COUNSEL FOR THE ASSESSEE THIS IS CLEARLY BARRED BY LIMITATION IN V IEW OF THE DECISION OF SPECIAL BENCH DELHI TRIBUNAL IN THE CASE OF MANOJ AGGARWAL V. DCIT (2008) 113 ITD 377 (DEL) WHEREIN THE TRIBUNAL ON THIS ISSUE OF LIMITATION HA S DEALT WITH ISSUE IN PARA-113 TO 116 HAS HELD AS UNDER:- 113. SECTION 158BD COMMENCES WITH THE WORDS WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY UNDISCLOSED INCOME BE LONGS TO ANY PERSON OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MAD E AND THUS IT IS CLEAR THAT THE SATISFACTION OF THE ASSESSING OFFICER ASSE SSING THE PERSON SEARCHED IS THE FIRST AND FOREMOST REQUIREMENT. THE ASSESSING OFFICER CAN ARRIVE AT THIS SATISFACTION ONLY AFTER ASCERTAINING WHETHER THERE IS ANY UNDISCLOSED INCOME AT ALL AND THIS FINDING CAN BE ARRIVED AT BY HIM ONLY IN THE COURSE OF THE SECTION 158BD ASSESSMENT PROCEEDING. THEREAFTER HE HAS TO ARRIVE AT A FINDING AS TO THE PERSON TO WHOM SUCH INCOME BELONGS. THIS FINDIN G ALSO CAN BE ARRIVED AT ONLY IN THE COURSE OF THE SECTION 158BC PROCEEDING IN THE CASE OF THE PERSON SEARCHED. HE MAY FIND THAT PART OF THE SAID UNDISCL OSED INCOME BELONGS TO THE PERSON SEARCHED AND THE REST BELONGS TO OTHER PERSO N OR PERSONS. AT THIS STAGE HE HAS TO GIVE A FINDING IN THIS BEHALF AS T O WHICH OF THE UNDISCLOSED INCOME BELONGS TO THE PERSON TO WHOM THE REST OF TH E INCOME BELONGS. THIS FINDING TOO HAS TO BE ARRIVED AT IN THE COURSE OF T HE SECTION 158BC PROCEEDING. AFTER ARRIVING AT THIS FINDING HE MAKES AN ASSESSM ENT OF THE UNDISCLOSED INCOME RELATING TO THE PERSON SEARCHED IN HIS HANDS AND HANDS OVER THE MATERIAL RELATING TO THE UNDISCLOSED INCOME BELONGI NG TO THE OTHER PERSON OR PERSONS TO THE RESPECTIVE ASSESSING OFFICER. AS SE CTION 158BC PROCEEDING IS SPECIFICALLY INTENDED FOR DETERMINING THE UNDISCLOS ED INCOME THE MATERIAL UNEARTHED HAS TO BE EXAMINED IN THE COURSE OF THE S AID PROCEEDING AND IF SUCH EXAMINATION SHOWS THAT THE UNDISCLOSED INCOME BELONGS TO SOME OTHER PERSONS A FINDING IN THIS BEHALF HAS TO BE RECORDED IN THE COURSE OF THE SECTION 158BC PROCEEDING AS SUCH FINDING HAS TO FORM AN INT EGRAL PART OF THE SAID PROCEEDING AND IN CONFORMITY WITH THE INTENTION BEH IND THE SAID PROVISION. SO IT IS ESSENTIAL THAT SUCH FINDING HAS TO FORM PART OF THE SECTION 158BC PROCEEDING AND SO MUST FIND A PLACE IN THE ORDER UN DER SECTION 158BC. THE ASSESSING OFFICER ASSESSING THE PERSON SEARCHED HAS TO GIVE A FINDING ON EACH AND EVERY MATERIAL AND EVIDENCE UNEARTHED AFTE R A CAREFUL AND JUDICIOUS EVALUATION AND SUCH EXERCISE INVOLVES A FINDING THA T THE UNDISCLOSED INCOME BELONGS TO A SPECIFIED PERSON AS FOUND BY HIM ON TH E SECTION 158BD PROCEEDING REVOLVES. IF THEREFORE IN THE COURSE O F THE SECTION 158BC PROCEEDINGS THE ASSESSING OFFICER ASSESSING THE PER SON SEARCHED DOES NOT GIVE A FINDING THAT ANY PART OF THE UNDISCLOSED INC OME UNEARTHED BELONGS TO A PERSON OTHER THAN THE PERSON SEARCHED SECTION 158B D CAN NEVER BE INVOKED. IT IS THIS FINDING THAT IS AN INTEGRAL PART OF BOTH THE PROCEEDINGS WHETHER UNDER SECTION 15BC OR 158BD. FOR SUCH FINDING DETERMINE S IN WHOSE HANDS THE UNDISCLOSED INCOME UNEARTHED HAS TO BE TAXED. IF TH E UNDISCLOSED INCOME IT(SS)A NO.12/AHD/07 & IT(SS)A NO.73/AHD/08 B.P. 1/4/96 TO 27/4/02 J & K ENGINEERS PVT. LTD. V. ACIT CIR-1 SURAT PAGE 4 BELONGS TO THE PERSON SEARCHED HE IS SUBJECTED TO BLOCK ASSESSMENT ON SUCH INCOME UNDER SECTION 158BC BUT IF SUCH INCOME OR PA RT OF SUCH INCOME BELONGS TO A PERSON NOT SEARCHED SECTION 158BD TAK ES OVER. THIS IS THE ESSENCE OF THE ENTIRE ENACTMENT RELATING TO SEARCH. 114. SECTION 158BE PROVIDES FOR TIME LIMIT FOR COMP LETION OF BLOCK ASSESSMENT. IT STIPULATES THAT THE ORDER UNDER SEC TION 158 BC SHALL BE PASSED WITHIN TWO YEARS FROM THE END OF THE MONTH IN WHICH THE LAST OF THE AUTHORIZATION FOR SEARCH UNDER SECTION132 WAS EXEC UTED OR FOR REQUISITION UNDER SECTION 132A AS THE CASE MAY BE AND SO THE OR DER ENVISAGED UNDER SECTION 158BC HAS NECESSARILY TO BE PASSED WITHIN T HIS TIME FRAME SET IN LAW. IF THERE IS A TIME-LIMIT FOR PASSING OF SUCH ORDER THERE IS AN IMPLIED TIME-LIMIT FOR GIVING A FINDING AS TO THE PERSON TO WHOM THE U NDISCLOSED INCOME BELONGS WHICH UNDER NO CIRCUMSTANCES CAN BE BEYOND THE TIME -LIMIT SET IN SECTION 158BE. IF THERE IS NO SUCH FINDING GIVEN IN THE OR DER UNDER SECTION 158BC THE PROVISIONS OF SECTION 158BD STAND OUSTED AT THE EXP IRY OF THE SAID TIME-LIMIT FOR THE REASON THAT SUCH A FINDING IS THE VERY BASI S FOR INVOKING SECTION 158BD. 115. SECTION 158BD AS SAID EARLIER BEGINS WITH THE EXPRESSION WHERE THE ASSESSING OFFICER IS SATISFIED AND SO VERY SECTION IMPLIES A RECORDING OF SATISFACTION. THE SATISFACTION CONTEMPLATED IS A JUDICIOUS SATISFACTION AND NOT A SUBJECTIVE SATISFACTION AND UNLESS THE SAME IS RE CORDED IT IS NOT POSSIBLE FOR ANY PERSON TO DISCERN WHETHER THE SATISFACTION MEET S THE REQUIREMENTS OF LAW AT ALL. THE SATISFACTION CAN BE FOUND IN THE ORDER PASSED UNDER SECTION 158BC AND IF NO SUCH ORDER IS PASSED THEN IT WILL HAVE TO BE FOUND IN THE NOTE HANDING OVER THE MATERIAL SEIZED TO THE ASSESSING OFFICER A SSESSING THE OTHER PERSON. IN ANY EVENT IT HAS TO BE IN WRITING AND IN VIEW O F SECTION 158BE THE SAID RECORDING HAS TO BE MADE BEFORE THE TIME SET IN SEC TION 158BE EXPIRES. AFTER THE SAID DATE IT IS NOT POSSIBLE TO INVOKE SECTION 158BD AT ALL. 116. A VIEW IS EXPRESSED THAT WHEREVER A TIME-LIMI T IS INTENDED THE PARLIAMENT HAS PROVIDED FOR THE SAME AND IN THE ABS ENCE OF A SPECIFIC PROVISION MADE IN THIS RESPECT IT HAS TO BE ASSUMED THAT THERE IS NO TIME-LIMIT INTENDED IN LAW. IT HAS TO BE REMEMBERED THAT THE M ATER RELATES TO FIXING HUGE FINANCIAL AND OTHER CIVIL LIABILITY ON THE PERSON A FFECTED AND IT HAS BEEN REPEATEDLY HELD THAT THERE MUST BE A FINALITY TO AN Y PROCEEDING UNDER THE ACT AND THAT A CONCLUDED PROCEEDING CANNOT BE REOPENED AT THE WHIM AND FANCY OF THE ASSESSING OFFICER WITHOUT THE DUE PROCESS OF LAW. STRICT INTERPRETATION OF FISCAL STATUTES IS THE ORDER OF THE DAY AND AS T HE PROVISIONS FOR SEARCH ARE DRACONIAN IN NATURE SUCH PROVISIONS HAVE NECESSARIL Y TO BE STRICTLY CONSTRUED. IT WILL HAVE TO BE REMEMBERED THAT SECTION 158BD PR OVIDES FOR INVOKING JURISDICTION UNDER THE SAID SECTION ENABLING THE AS SESSING OFFICER ASSESSING THE OTHER PERSON IN RESPECT OF WHOM THE ASSESSING O FFICER ASSESSING THE PERSON SEARCHED GIVES A FINDING THAT THE UNDISCLOSE D INCOME UNEARTHED AS A RESULT OF SEARCH BELONGS TO THE SAID PERSON AND ONC E SUCH A FINDING IS GIVEN THE PROVISIONS OF SECTION 158BD COME INTO OPERATION . THIS THEREFORE INVOLVES ASSUMPTION OF JURISDICTION AND CANNOT BE CONSTRUCTE D AS A PROCEDURAL MATTER. IN THE ABSENCE OF A FINDING IN THIS BEHALF THERE I S NO JURISDICTION TO THE OTHER ASSESSING OFFICER AT ALL TO PROCEED FURTHER IN THE MATTER. AS THE TIME-LIMIT SET IN SECTION 158BE APPLIES TO SUCH FINDING IT IS ONL Y LOGICAL THAT THE SAID TIME- IT(SS)A NO.12/AHD/07 & IT(SS)A NO.73/AHD/08 B.P. 1/4/96 TO 27/4/02 J & K ENGINEERS PVT. LTD. V. ACIT CIR-1 SURAT PAGE 5 LIMIT AUTOMATICALLY APPLIES FOR INVOKING THE PROVIS IONS OF SECTION 158BD AND IT IS FOR THIS REASON THAT THE PARLIAMENT DID NOT FIND IT NECESSARY TO SPECIFY A SEPARATE TIME-LIMIT FOR THE SAME AS THE ENACTMENT ITSELF SHOWS THAT BOTH SECTIONS 158BC AND 158BD ARE INTER-LINKED INTERLAC ED AND INTER-WINDED AND BOTH FORM PART AND PARCEL OF THE SAME CHAPTER. FINALLY THE HONBLE SPECIAL BENCH HAS DEALT WI TH THE ISSUE OF SATISFACTION IN PARA- 123 TO 127 AS UNDER:- 123 . HAVING HELD THAT RECORDING OF SATISFACTION IS IMPE RATIVE BEFORE ASSUMPTION OF JURISDICTION UNDER SECTION 158BD WE MAY NOW TURN TO EXAMINE THE MEANING OF THE EXPRESSION WHERE THE ASSESSING OFFICER IS SATISFIED APPEARING AT THE BEGINNING OF SECTION 158BD FOR THE MEANING SO ASCERTAINED GIVES US A CLUE AS TO THE NATURE OF THE NOTE OF SAT ISFACTION THAT IS ENVISAGED IN THE SAID SECTION. IT IS THE SUBMISSION OF THE LEARN ED REPRESENTATIVE FOR THE APPELLANT THAT SUCH SATISFACTION MUST CLEARLY SHOW DETECTION OF UNDISCLOSED INCOME ON EXAMINATION OF THE SEIZED MATERIAL AS BEL ONGING TO THE PERSON NOT SEARCHED AND THAT IT CANNOT BE BASED ON ASSUMPTIONS AND SURMISES OR GUESSWORK. THE LEARNED DEPARTMENTAL REPRESENTATIVE ARGUED THAT THE TERM SATISFACTION APPEARS IN VARIOUS PARTS OF THE ACT ITSELF AND THAT EVEN IN SECTION 147/148 DEALING WITH CASES OF REASSESSMENT FOR ASSE SSING INCOME WHICH HAD ESCAPED ASSESSMENT THE ONLY REQUIREMENT IS THAT TH E ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT THERE IS A PRIMA FACIE CASE OF EXISTENCE OF ESCAPED INCOME AND THAT THERE IS NO REQUIREMENT THA T THERE MUST BE A CLEAR FINDING OF UNDISCLOSED INCOME AS SUGGESTED. IN THIS CONTEXT REFERENCE HAS BEEN MADE TO THE APEX COURT DECISION IN THE CASE OF RAJESH JHAVERI STOCK BROKERS (P.) LTD. 291 ITR 500 WHEREIN THE TERM REA SON TO BELIEVE HAS BEEN INTERPRETED AND THE APEX COURT HELD THEREIN THAT W HAT IS REQUIRED IS REASON TO BELIEVE BUT NOT THE ESTABLISHED FACT OF ESCAPEMENT OF INCOME. AT THE STAGE OF ISSUE OF NOTICE THE ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED THE REQ UISITE BELIEF. WHETHER MATERIAL WOULD CONCLUSIVELY PROVE ESCAPEMENT OF INC OME IS NOT THE CONCERN AT THAT STATE. THIS IS SO BECAUSE THE FORMATION OF THE BELIEF IS WITHIN THE REALM OF THE SUBJECTIVE SATISFACTION OF THE ASSESSING OFFICE R. IT IS THEREFORE SUBMITTED THAT IN THE RECORDING OF SATISFACTION IT IS ENOUGH IF A PRIMA FACIE CASE IS MADE OUT. 124. IT IS TRUE THAT THE TERM REASON TO BELIEVE H AS CAME TO BE JUDICIALLY INTERPRETED EVEN SINCE THE PROVISION FOR REASSESSME NT WAS INTRODUCED IN THE ACT AND SO THE VIEW EXPRESSED BY THE APEX COURT IN THE DECISION CITED SUPRA IS IN TUNE WITH ITS OWN EARLIER DECISIONS. BUT THE POINT THAT HAS TO BE CONSIDERED IS WHETHER THE USE OF THE TERM REASON T O BELIEVE AND SATISFACTION HAVE THE SAME MEANING WHEREVER THE SAID TERMS ARE U SED DE HORS THE CONTEXT IN WHICH THE SAID TERM APPEARS? THE TERM REASON TO BELIEVE AS THE APEX COURT HELD IMPLIES THAT THE ASSESSING OFFICER SUBJ ECTIVELY BELIEVES THAT HE HAS REASON TO BELIEVE ON THE BASIS OF THE MATERIAL BEFO RE HIM THAT THERE IS ESCAPEMENT OF INCOME IN THE CASE OF AN ASSESSEE AND SO THAT ESCAPED INCOME HAS TO BE BROUGHT TO TAX BY RE-OPENING HIS A SSESSMENT AS PER THE PROVISIONS OF SECTION 147/148 OF THE ACT. ON THE OT HER HAND THE TERM SATISFACTION IN SECTION 158BD CONNOTES THAT THERE EXISTS UNDISCLOSED INCOME AND THAT SUCH UNDISCLOSED INCOME IS THAT OF THE PER SON NOT SEARCHED. THE USE IT(SS)A NO.12/AHD/07 & IT(SS)A NO.73/AHD/08 B.P. 1/4/96 TO 27/4/02 J & K ENGINEERS PVT. LTD. V. ACIT CIR-1 SURAT PAGE 6 OF THE EXPRESSION SATISFIED IN SECTION 158BD CANN OT BE READ IN ISOLATION AND IT HAS TO BE UNDERSTOOD IN THE CONTEXT IN WHICH THE SA ID TERM APPEARS IN THE SAID SECTION. IT WILL BE SEEN THAT SECTION 158BD STARTS WITH THE EXPRESSION WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY UNDISCL OSED INCOME BELONGS TO ANY PERSON OTHER THAN THE PERSON WITH RESPECT TO WHOM S EARCH WAS MADE. . .. IT IS SIGNIFICANT THAT THE TERM SATISFIED IS NOT USED I N A VACUUM BUT ALONG WITH THE WORDS THAT ANY UNDISCLOSED INCOME BELONGS TO. . . OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE.. AND THE WORDS IN THE CONTEXT ARE UNDISCLOSED INCOME AND BELONGS TO WHICH CLEARLY INDICATE THAT AT THAT POINT OF TIME WHEN SATISFACTION IS RECORDED BY THE ASSESS ING OFFICER THE UNDISCLOSED INCOME IS TO BE IDENTIFIED. FURTHER THE SAID EXPRE SSION DOES NOT STOP THERE. IT FURTHER USES THE EXPRESSION BELONGS TO ANY PERSON OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE WHICH INDICAT ES THAT THE UNDISCLOSED INCOME IDENTIFIED BY THE ASSESSING OFFICER IS FOUND TO BE BELONGING TO THE OTHER PERSON. IT WOULD THUS MEAN THAT AT THE STAGE OF RECORDING THE ASSESSING OFFICER HAS REACHED A FINDING THAT UNDISCLOSED INCO ME HAS BEEN DETECTED AS A RESULT OF SEARCH AND ALSO FURTHER THAT SUCH INCOME BELONGS TO THE PERSON NOT SEARCHED. ALL THESE CONSTITUTE FINDINGS AND NOT A M ORE BELIEF HELD BY THE ASSESSING OFFICER ON THE EXAMINATION OF THE SEIZED MATERIAL AND HENCE THE SATISFACTION CONTEMPLATED IN SECTION 158BD IS TOTAL LY DIFFERENT THAN CONTEMPLATED IN SECTION 147. IT IS FUNDAMENTAL THAT THE ASSESSING OFFICER FINDS OUT WHETHER THERE IS UNDISCLOSED INCOME. IF HE FIND S THAT THERE EXISTS UNDISCLOSED INCOME THEN HE HAS TO GIVE A FINDING A S TO WHOM THE SAID INCOME BELONGS. IN THE ABSENCE OF SUCH A FINDING IT IS NO T POSSIBLE TO CONCLUDE A BLOCK ASSESSMENT UNDER SECTION 158BC. ONLY THEREUPO N THE SECTION 158BD PROCEEDING IN RESPECT OF THE OTHER PERSON FOR MAKIN G A SIMILAR BLOCK ASSESSMENT OF SUCH UNDISCLOSED INCOME WOULD COMMENC E. HENCE IN OUR CONSIDERED VIEW THE NOTE OF SATISFACTION MUST CONT AIN A POSITIVE FINDING BY THE ASSESSING OFFICER MAKING THE ASSESSMENT UNDER SECTI ON 158BC INDICATING THEREIN THE UNDISCLOSED INCOME FOUND AS A RESULT OF HIS EXAMINATION OF THE SEIZED MATERIAL THE PERSON TO WHOM SUCH INCOME BEL ONGS AND PROCEED ACCORDINGLY AS PROVIDED FOR IN THE SAID SECTION. TH E CIRCUMSTANCES ENVISAGED AND THE CONTEXT IN SECTIONS 147 AND 158BD ARE ENTIR ELY DIFFERENT IN NATURE AND SO IT IS NOT POSSIBLE TO IMPORT THE APEX COURT DECI SION IN THE CASE CITED (SUPRA) INTO THE SECTION 158BD PROCEEDING FOR THE REASONS D ETAILED HEREIN. 125. IN THE INSTANT CASE WE MAY NOW EXAMINE WHETHE R THERE IS ANY RECORD OF SATISFACTION THAT MEETS THE REQUIREMENT OF LAW AS E NUNCIATED ABOVE. WE HAVE ALREADY REPRODUCED THE COPY OF THE SAID RECORD DATE D 19-12-2002. IT IS SIGNED BY THE DY. COMMISSIONER OF INCOME-TAX CENTRAL CIRC LE - 3 NEW DELHI. IT IS THEREFORE ADMITTEDLY RECORDED BY THE ASSESSING OFFI CER MAKING THE SECTION 158BD ASSESSMENT AS THE NOTICE UNDER THE SAID SECTI ON HAS ALSO BEEN ISSUED BY HIM. THIS NOTE RECORDS THAT SEARCH IN THE CASE O F SHRI MANOJ AGGARWAL AND ASSOCIATE CONCERNS AND THE BLOCK ASSESSMENT MADE ON HIM CONCLUSIVELY ESTABLISHES THE FACT THAT HE WAS INVOLVED IN PROVID ING BOGUS ACCOMMODATION BOOK ENTRIES TO VARIOUS PERSONS ON COMMISSION BASIS AND FOR THIS PURPOSE HE HAD USED THE NAMES AND BANK ACCOUNTS OF VARIOUS COM PANIES BENAMI PROPRIETORSHIP CONCERNS IN THE NAMES OF HIS EMPLOYE ES IN THE NAMES OF RELATIVES VARIOUS HUF ENTITIES AND FIRMS AND ONE S UCH CONCERN IS M/S. BISHANCHAND MUKESH KUMAR THE BANK ACCOUNTS OF WHICH WERE OPERATED BY S/SHRI MUKESH KUMAR AND BISHANCHAND AGGARWAL; THAT THE SOURCES OF CASH IT(SS)A NO.12/AHD/07 & IT(SS)A NO.73/AHD/08 B.P. 1/4/96 TO 27/4/02 J & K ENGINEERS PVT. LTD. V. ACIT CIR-1 SURAT PAGE 7 AND CLEARING DEPOSITS AND THE WITHDRAWALS FROM THES E BANK ACCOUNTS NEED TO BE EXAMINED; THESE ACCOUNTS HAVE BEEN USED FOR ACCO MMODATION BOOK ENTRIES AND HENCE UNDISCLOSED INCOME HAS ARISEN IN THE HANDS OF THIS CONCERN WHICH HAS BEEN FOUND DURING THE COURSE OF S EARCH AND SEIZURE OPERATIONS IN THE CASE OF SHRI MANOJ AGGARWAL AND H IS ASSOCIATE CONCERNS; THUS PROCEEDINGS UNDER SECTION 158BD ARE APPLICABL E IN THIS CASE. ADMITTEDLY THIS NOTE IS AFTER THE DATE OF BLOCK AS SESSMENT IN THE CASE OF MANOJ KUMAR AGGARWAL WHICH WAS FINALIZED ON 29-8-20 02. FURTHER THE NOTE OF SATISFACTION IS NOT RECORDED BY THE DY. CIT CENTRA L CIRCLE-3 NEW DELHI ACTING AS THE ASSESSING OFFICER MAKING THE ASSESSMENT UNDE R SECTION 158BC OF MANOJ KUMAR AGGARWAL SINCE THE SAID ASSESSMENT HAS BEEN FINALIZED EARLIER. CLEARLY THE NOTE OF SATISFACTION DATED 19-12-2002 I S BEYOND THE DATE OF BLOCK ASSESSMENT IN THE SECTION 158BC PROCEEDINGS DATED 2 9-8-2002 IN THE CASE OF SHRI MANOJ AGGARWAL. THEREFORE THE SATISFACTION RE CORDED IS BELATED. 126. FURTHER THE SAID NOTE OF SATISFACTION SPEAKS OF MANOJ KUMAR AGGARWAL DOING ACCOMMODATION BUSINESS THROUGH VARIOUS BENAMI CONCERNS AND IN THE NAMES OF VARIOUS PERSONS AND EARNING COMMISSION THR OUGH SUCH ACCOMMODATION AND THAT ONE SUCH CONCERN USED BY HIM IS THE APPELLANT-FIRM. IT FURTHER STATES THAT THE BANK ACCOUNTS OF THE FIR M HAVE TO BE EXAMINED AND THE SOURCE OF THE CASH AND CLEARING DEPOSITS AND TH E WITHDRAWALS FROM THE BANKS HAVE TO BE EXAMINED. THERE IS THUS NO FINDING IN THE SAID NOTE THAT ON EXAMINATION OF THE SEIZED MATERIAL BY HIM IN THE CA SE OF MANOJ KUMAR AGGARWAL HE HAS FOUND THAT THERE IS UNDISCLOSED INC OME AND THAT SUCH UNDISCLOSED INCOME BELONGS TO THE ASSESSEE-FIRM. ON THE OTHER HAND IT SAYS THAT THE BANK ACCOUNTS OF THE FIRM HAVE TO BE EXAMI NED. THERE IS NOT EVEN A WHISPER OF DETECTION OF UNDISCLOSED INCOME IN THE H ANDS OF THE FIRM. THE VERY RECORD LEAVES A TELL TALE EVIDENCE TO THE EFFECT TH AT NO FINDING HAS BEEN ARRIVED AT TO SHOW THAT THERE EXISTS UNDISCLOSED INCOME OF THE ASSESSEE-FIRM. HAD IT BEEN SO THERE WOULD HAVE BEEN A REFERENCE TO THE S AME AND THERE WAS NO NEED TO STATE THAT FURTHER EXAMINATION OF VARIOUS A CCOUNTS WAS REQUIRED. HENCE THE NOTE ITSELF ADMITS THAT NO UNDISCLOSED I NCOME IN THE HANDS OF THE APPELLANT HAS BEEN FOUND EVEN ON THE DATE OF SUCH N OTING WHICH MILITATES AGAINST THE REQUIREMENT OF A NOTE OF SATISFACTION I N TERMS OF SECTION 158BD. IN ORDER TO ASCERTAIN WHETHER IN THE COURSE OF THE ASS ESSMENT PROCEEDING IN THE CASE OF MANOJ AGGARWAL UNDER SECTION 158BC THERE IS ANY FINDING OF ANY UNDISCLOSED INCOME IN THE CASE OF THE APPELLANT; EV EN THERE WE DID NOT COME ACROSS ANY FINDING THAT ANY PART OF THE UNDISCLOSED INCOME BELONGS TO THE APPELLANT OR ANY REFERENCE TO ANY MATERIAL THEREIN INDICATING THE SAME. IN THE CIRCUMSTANCE WE HAVE TO HOLD THAT THE SATISFACTION NOTE DATED 19-12-2002 IS NOT THE ONE CONTEMPLATED IN SECTION 158BD AND FURTH ER THAT EVEN IF IT IS ASSUMED TO BE IN TERMS OF THE SAID SECTION IT DOES NOT EVEN REMOTELY SHOW THAT THERE IS UNDISCLOSED INCOME BELONGING TO THE A PPELLANT-FIRM CALLING FOR THE ASSUMPTION OF JURISDICTION UNDER SECTION 158BD. IN THE CIRCUMSTANCE WE HOLD THAT THE SAID NOTE OF SATISFACTION IS NON-ESTABLISH ED IN LAW AND FURTHER THAT THE SECTION 158BD PROCEEDINGS PURSUANT THERETO IS INVAL ID AND VOID AB INITIO ON THIS GROUND ALSO. 127. WE ARE OF THE FIRM VIEW THAT THE PROCEEDINGS U NDER SECTION 158BD ARE INVALID FOR THE REASONS ABOVE STATED AND SO THE ASS ESSMENT MADE PURSUANT TO IT(SS)A NO.12/AHD/07 & IT(SS)A NO.73/AHD/08 B.P. 1/4/96 TO 27/4/02 J & K ENGINEERS PVT. LTD. V. ACIT CIR-1 SURAT PAGE 8 THESE PROCEEDINGS IS BAD IN LAW. THE SAME IS ACCORD INGLY LIABLE TO BE CANCELLED. 5. IN VIEW OF THE ABOVE FACTS WE FIND THAT SEARCH WAS CONDUCTED BY THE DEPARTMENT U/S. 132 OF THE ACT IN THE CASE OF SHRI SHASHIKANT V TAMAKUWALA RESIDENT OF 90 WILSON TOWER ATHWA LINES SURAT ON 27-04-2000. DURING THE COURSE OF SEARCH A DELUXE DIARY NO.BS-2 WAS FOUND AND SEI ZED WHICH CONTAINED NOTINGS REGARDING PURCHASE OF PLOT IN SACHIN UDYOGNAGAR SAH AKARI MANDALI LTD. SACHIN BY VARIOUS PERSONS. SHRI SHASHIKANT TAMAKUWALAIS A BRO KER DURING SEARCH IN HIS STATEMENT U/S132(4) OF THE ACT ADMITTED THE TRANSA CTION NOTED IN THE SAID DIARY. THE NOTINGS OF THIS DIARY CONTAINS DETAILS OF PRICE PAI D AS ON-MONEY BY THE PURCHASERS. ON PAGE 256 OF THE SAID DIARY A TRANSACTION REGARD ING ASSESSEE WAS NOTED IN THE NAME OF J & K AS PER THIS PAGE AND TOTAL PURCHASE CONSIDERATION WAS RS.18.06 LAKH FOR 4 PLOTS B TYPE AND THE AMOUNT OF RS.6 99 508 /- WAS DEDUCTED FROM THE TOTAL CONSIDERATION OF RS.18.06 LAKH WHICH WAS DOCUMENT PRICE AND PAID TO THE SOCIETY AND THE BALANCE RS.11 06 492/- WAS ON-MONEY. THE AS SESSING OFFICER OF SHRI SASHIKANT V TAMAKUWALA I.E. ACIT CIRCLE-1 SURAT WHO WAS DEALING WITH SEARCH CASE GAVE INFORMATION TO THIS AO ON 31-07-2003 AND BLOCK ASSESSMENT IN THE CASE OF THE SEARCHED PARTY WAS COMPLETED ON 30-04-2002. SUBSEQUENTLY THE ASSESSING OFFICER OF THE ASSESSEE INITIATED ACTION U/S.158BD OF THE ACT VIDE NOTICE DATED 18-04- 2004 SERVED ON THE ASSESSEE ON 25-04-2004. BUT BLOC K ASSESSMENT IN THE CASE OF THE ASSESSEE WAS COMPLETED U/S.158BD R.W.S. 158BC O F THE ACT VIDE ORDER DATED 30- 05-2006. THE CRUCIAL FACT THAT WHETHER THE SATISFAC TION IS RECORDED DURING THE COURSE OF BLOCK ASSESSMENT FRAMED U/S.158BC OF THE ACT IN THE CASE OF SEARCHED PARTY QUA THE ASSESSEE OR NOT IS NOT AVAILABLE ON RECORD. AN OTHER ISSUE REGARDING REASONABLENESS OF TIME IN ISSUING NOTICE U/S.158BD OF THE ACT CANNOT BE DECIDED IN VIEW OF THE FACT THAT THE SATISFACTION RECORDED IN THE CASE OF ASSESSEE DURING THE COURSE OF FRAMING OF BLOCK ASSESSMENT IN SEARCHED P ARTY SHRI SHASHI KANT V TAMAKUWALA IS NOT AVAILABLE ON RECORD. IN THE ABSE NCE OF THESE FACTS THE LEGAL ISSUE IS SET ASIDE TO THE FILE OF THE ASSESSING OFF ICER AND ASSESSING OFFICER IS DIRECTED TO FIND OUT THE ACTUAL POSITION AND DECIDE THE ISSUE IN VIEW OF RATIO LAID DOWN BY THE DECISION OF SPECIAL BENCH IN THE CASE OF MANOJ AGARWAL (SUPRA). ACCORDINGLY THIS ISSUE OF THE ASSESSEES APPEAL IS SET ASIDE TO THE FILE OF ASSESSING OFFICER AS INDICATED ABOVE. ASSESSEES APPEAL IS ALLOWED FOR S TATISTICAL PURPOSES. IT(SS)A NO.12/AHD/07 & IT(SS)A NO.73/AHD/08 B.P. 1/4/96 TO 27/4/02 J & K ENGINEERS PVT. LTD. V. ACIT CIR-1 SURAT PAGE 9 NOW COMING TO ASSESSEES APPEAL IT(SS)A NO.73/AHD/2 008. 6. THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN LEVYING THE PENA LTY U/S.158BFA(2) OF THE ACT. 7. AT THE OUTSET IT IS TO BE STATED THAT THE QUANT UM APPEAL OF THE ASSESSEE IN IT(SS)A NO.12/AHD/2007 ABOVE HAS ALREADY BEEN SET ASIDE TO THE FILE OF AS SESSING OFFICER THIS PENALTY LEVIED BY THE AO U/S.158BFA(2 ) OF THE ACT WILL NOT SURVIVE AND ACCORDINGLY WE DELETE THE SAME. HOWEVER THE AO DUR ING THE COURSE OF RE-FRAMING OF SET ASIDE BLOCK ASSESSMENT IS OF THE PRIMA FACIE VI EW THAT THIS IS A FIT CASE FOR INITIATION OF PENALTY U/S.158BFA(2) HE MAY INITIAT E THE SAME. THIS APPEAL OF THE ASSESSEE IS ALLOWED AS INDICATED ABOVE. 8. IN THE RESULT ASSESSEES APPEAL IN IT(SS)A NO.12/A HD/2007 IS ALLOWED FOR STATISTICAL PURPOSES AND IT(SS)A NO.73/AHD/2008 IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 30/04/2010 SD/- SD/- (A.N.PHAUJA) (MAHAVIR SINGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD DATED : 30/04/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-I SURAT 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD