DCIT, Hyderabad v. Sri P Venkata Ramana, Anantapur

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B' HYDERABAD BEFORE SHRI N.R.S. GANESAN JUDICIAL MEMBER AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER I.T.(SS)A. NO. 8/HYD/2010 (BLOCK PERIOD 1996-97 TO 2001-02 AND BROKEN PERIOD 1.4.2001 TO 2.11.2001) DY. CIT CIRCLE 1 HYDERABAD VS. SRI P. VENKATA RAMANA GOOTY PAN: AEPPP5807F APPELLANT RESPONDENT APPELLANT BY: SMT. K. KAMAKSHI RESPONDENT BY: SHRI CHAITANYA KUMAR O R D E R PER NRS GANESAN JM: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) TIRUPATI DATED 30.11.2009 AND PERTAI NS TO BLOCK PERIOD 1996-97 TO 2001-02 AND BROKEN PERIOD 1.4.200 1 TO 2.11.2001. 2. SMT. K. KAMAKSHI THE LEARNED DR SUBMITTED THAT THE ASSESSING OFFICER COMPLETED THE BLOCK ASSESSMENT U/ S. 158BD OF THE INCOME-TAX ACT 1961 ON THE BASIS OF MATERIA L FOUND DURING THE COURSE OF SEARCH OPERATION ON 19.6.2008. HOWEVER ON APPEAL OF THE ASSESSEE THE CIT(A) QUASHED THE A SSESSMENT PROCEEDINGS ON THE GROUND THAT THE NOTICE U/S.158BC FOR INITIATING PROCEEDINGS U/S. 158BD WAS ISSUED BEYOND TWO YEARS. ACCORDING TO THE LEARNED DR THERE IS NO PROVISION I N THE INCOME- TAX ACT 1961 THAT PRESCRIBES LIMITATION FOR ISSUE OF NOTICE U/S. 158BC WHEN THE MATERIAL FOUND DURING THE COURSE OF SEARCH I.T.(SS)A. NO. 8/HYD/2010 SRI P. VENKATA RAMANA ===================== 2 OPERATION RELATES TO A PERSON OTHER THAN THE PERSON SEARCHED. REFERRING TO SECTION 292BB OF THE ACT THE LEARNED DR POINTED OUT THAT EVEN IF THERE IS A DELAY IN ISSUE OF NOTIC E THE ASSESSEE HAS NOT OBJECTED TO THE ISSUE OF NOTICE BEFORE THE ASSESSING OFFICER AND THEREFORE THE ASSESSEE IS PRECLUDED F ROM TAKING ANY OBJECTION WITH REGARD TO ISSUE OF NOTICE U/S. 1 58BC OF THE ACT. THE LEARNED DR PLACED HER RELIANCE ON THE DEC ISION OF THE AMRITSAR BENCH OF THIS TRIBUNAL IN VIJAY SEHGAL (HU F) VS. ACIT (2006) 100 ITD 560 AND ALSO THE JUDGEMENT OF THE GU JARAT HIGH COURT IN KHANDUBHAI VASANJI DESAI & ORS. VS. DCIT ( 1999) 236 ITR 73. 3. ON THE CONTRARY SHRI CHAITANYA KUMAR THE LEARN ED COUNSEL FOR THE ASSESSEE SUBMITTED THAT A SEARCH WA S CONDUCTED IN THE RESIDENTIAL PREMISES OF SRI A. NAR AYANASWAMY ON 2.11.2001. THEREFORE IN VIEW OF LIMITATION PRO VIDED U/S. 158BC THE ASSESSING OFFICER HAS TO COMPLETE THE BLO CK ASSESSMENT IN THE CASE OF SRI A. NARAYANASWAMY ON 2 .11.2003. THE NOTICE U/S. 158 R.W.S. 158BC WAS ISSUED TO THE PRESENT ASSESSEE WHO IS NOT SUBJECTED TO SEARCH ON 7.7.2006 AFTER A PERIOD OF ABOUT 3 YEARS AND 7 MONTHS FROM THE DUE D ATE FOR COMPLETION OF ASSESSMENT IN THE CASE OF SRI A. NAR AYANASWAMY WHO WAS SUBJECTED TO TAX. THEREFORE ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE THERE WAS AN UNREASONABLE DELAY IN ISSUING NOTICE U/S. 158BD R.W.S. 158BC FROM THE DAT E OF SEARCH I.T.(SS)A. NO. 8/HYD/2010 SRI P. VENKATA RAMANA ===================== 3 IN THE CASE OF SRI A. NARAYANASWAMY. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE THE PROCEEDINGS INITIATED AGAINST THE ASSESSEE AFTER EXPIRY OF 3 YEARS AND 7 MONTHS IS NO T JUSTIFIED. THEREFORE IT HAS TO BE QUASHED. THE LEARNED COUNS EL FOR THE ASSESSEE PLACED HIS RELIANCE ON THE DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN MANOJ AGARWAL VS. DCIT (2 008) 113 ITR 377. THE LEARNED COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE SPECIAL BENCH OF THIS TRIBUNAL DELHI BENCH IN C ASE OF MANOJ AGARWAL (SUPRA) EXAMINED THE SCHEME OF BLOCK ASSESS MENT AND FOUND THAT THE TIME LIMIT PRESCRIBED U/S. 158BE OF THE ACT IS TO BE READ ALONG WITH PROVISIONS OF SECTION 158BD. THERE FORE THE NOTICE U/S. 158BC HAS TO BE ISSUED WITHIN A REASONA BLE PERIOD FROM THE DATE OF SEARCH. THE LEARNED COUNSEL FOR T HE ASSESSEE HAS ALSO PLACED RELIANCE ON THE DECISION OF THIS BE NCH OF THIS TRIBUNAL IN P. MAHENDER REDDY VS. ACIT (2005) 2 SOT 696 (HYD) AND SUBMITTED THAT THE NOTICE ISSUED AFTER 4 YEARS OF SEARCH IN RESPECT OF PERSON OTHER THAN THE PERSON W HO WAS SUBJECTED TO SEARCH WAS HELD TO BE BARRED BY LIMITA TION. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO PLACED RE LIANCE ON THE DECISION OF THE DELHI BENCH OF THIS TRIBUNAL IN TAHILRAM MULCHANDANI VS. ACIT (2008) 115 TTJ 692 AND SUBMITT ED THAT WHEN THE NOTICE WAS ISSUED AFTER A PERIOD OF 22 MON THS AND 10 DAYS THE DELHI BENCH OF THIS TRIBUNAL FOUND THAT I T WAS ISSUED WITH AN INORDINATE DELAY. THEREFORE THE PROCEEDIN GS WERE ANNULLED. A SIMILAR VIEW WAS ALSO TAKEN BY THE DEL HI BENCH OF I.T.(SS)A. NO. 8/HYD/2010 SRI P. VENKATA RAMANA ===================== 4 THIS TRIBUNAL IN DCIT VS. CSL SECURITIES PVT. LTD. (2008) 15 DTR 318 (DEL). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL ON RECORD. THE QUESTI ON ARISES FOR CONSIDERATION IS WHETHER THE ISSUE OF NOTICE U/S. 1 58BD R.W.S. 158BC AFTER EXPIRY OF MORE THAN 3 YEARS FROM THE DA TE OF COMPLETION OF THE BLOCK ASSESSMENT IN THE CASE OF P ERSON SEARCHED WAS VALID OR NOT? WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 158BD AND 158BE. SECTION 158 BD PROVIDES FOR ASSESSMENT OF A PERSON OTHER THAN THE PERSON WHO WAS SUBJECTED TO SEARCH IN CASE THE ASSESSING OFFIC ER SATISFIED THAT THE UNDISCLOSED INCOME FOUND DURING THE COURSE OF SEARCH OPERATION RELATES TO THE PERSON OTHER THAN THE PERS ON IN RESPECT OF WHOM SEARCH WAS MADE U/S. 132 OF THE ACT. SECTI ON 158BE PROVIDES FOR LIMITATION FOR COMPLETING THE ASSESSME NT U/S. 158BC AND 158BD. SUB-CLAUSE (2B) OF SECTION 158BE PROVID ES A PERIOD OF TWO YEARS FROM THE END OF THE MONTH IN WH ICH THE NOTICE WAS SERVED ON THE OTHER PERSON IN RESPECT OF WHOM THE UNDISCLOSED INCOME RELATES TO. THEREFORE IT IS OB VIOUS THAT INCOME-TAX ACT PROVIDES FOR A PERIOD OF 2 YEARS FRO M THE DATE OF ISSUE OF NOTICE FOR COMPLETION OF ASSESSMENT IN RES PECT OF THE PERSON WHO IS NOT SUBJECTED TO SEARCH. INCOME-TAX ACT DOES NOT PRESCRIBE SPECIFICALLY ANY PERIOD FOR ISSUANCE OF N OTICE U/S. 158BC OF THE ACT. HOWEVER IN RESPECT OF THE PERSO N SEARCHED I.T.(SS)A. NO. 8/HYD/2010 SRI P. VENKATA RAMANA ===================== 5 U/S. 132 THE PERIOD OF LIMITATION FOR COMPLETING TH E ASSESSMENT STARTS FROM THE END OF THE MONTH IN WHICH THE LAST OF THE AUTHORISATION FOR SEARCH U/S. 132 WAS EXECUTED. TH EREFORE THE LEGISLATURE MADE A DISTINCTION IN RESPECT OF COMMEN CEMENT OF THE LIMITATION WITH REGARD TO PERSON SEARCHED AND O THER PERSON WHO IS NOT SUBJECTED TO SEARCH. HOWEVER NO TIME L IMIT IS PRESCRIBED SPECIFICALLY FOR ISSUE OF NOTICE U/S. 15 8BC IN RESPECT OF A PERSON WHO IS NOT SUBJECTED TO SEARCH BUT THE MATERIAL FOUND DURING THE COURSE OF SEARCH RELATES TO SUCH P ERSON. TAKING ADVANTAGE OF THIS POSITION THE LEARNED DR C ONTENDS THAT THE INCOME-TAX ACT DOES NOT PROVIDE ANY PERIOD OF L IMITATION FOR ISSUING NOTICE U/S. 158BC IN RESPECT OF THE PERSON WHO IS NOT SUBJECTED FOR SEARCH. 5. WE HAVE CAREFULLY GONE THROUGH THE DECISION OF S PECIAL BENCH OF THE TRIBUNAL CONSISTING OF 5 MEMBERS IN MA NOJ AGARWAL (SUPRA). THE SPECIAL BENCH OF THIS TRIBUNAL AFTER EXAMINING THE SCHEME OF BLOCK ASSESSMENT MORE PARTICULARLY SECTIO N 158BE FOUND THAT THE TIME LIMIT PROVIDED U/S. 158BE APPLI ES TO THE FINDING RECORDED IN RESPECT OF THE PERSON WHO WAS S UBJECTED TO SEARCH. THEREFORE IT IS LOGICAL THAT THE SAID TIM E LIMIT AUTOMATICALLY APPLIES FOR INVOKING THE PROVISIONS O F SECTION 158BD OF THE ACT BECAUSE OF THIS REASON ACCORDIN G TO THE SPECIAL BENCH THE PARLIAMENT DID NOT FIND IT NECES SARY TO SPECIFY A SEPARATE TIME LIMIT SINCE THE ENACTMENT I TSELF SHOWS I.T.(SS)A. NO. 8/HYD/2010 SRI P. VENKATA RAMANA ===================== 6 BOTH SECTION 158BC AND 158BD ARE INTERLINKED INTER LACED AND INTERTWINED AND BOTH FORM PART AND PARCEL OF THE SA ME CHAPTER. IN FACT THE SPECIAL BENCH OF THIS TRIBUNAL HAS OBSE RVED AS FOLLOWS AT PARAS 114 115 AND 116 AS REPORTED IN PA GES 484 AND 485 OF THE ITD. '114. SECTION 158BE PROVIDES FOR TIME LIMIT FOR COMPLETION OF BLOCK ASSESSMENT. IT STIPULATES THAT THE ORDER UNDER SECTION 158BC SHALL BE PASSED WITHIN TWO YEARS FROM THE END OF THE MONTH IN WHICH THE LAST OF THE AUTHORISATION FOR SEARCH UNDE R SECTION 132 WAS EXECUTED OR FOR REQUISITION UNDER SECTION 132A AS THE CASE MAY BE AND SO THE ORDER ENVISAGED UNDER SECTION 158BC HAS NECESSARILY TO BE PASSED WITHIN THIS TIME FRAME SET IN LAW. IF THERE IS A TIME-LIMIT FOR PASSING SUCH ORDER THERE IS AN IMPLIED TIME LIMIT FOR GIVING A FINDING AS TO TH E PERSON TO WHOM THE UNDISCLOSED INCOME BELONGS WHICH UNDER NO CIRCUMSTANCE CAN BE BEYOND THE TIME LIMIT SET IN SECTION 158BE. IF THERE IS NO SU CH FINDING GIVEN IN THE ORDER UNDER SECTION 158BC THE PROVISIONS OF SECTION 158BD STAND OUSTED AT THE EXPIRY OF THE SAID TIME LIMIT FOR THE REASON THAT S UCH A FINDING IS THE VERY BASIS FOR INVOKING SECTION 158BD. 115. SECTION 158BD AS SAID EARLIER BEGINS WITH THE EXPRESSION 'WHERE THE ASSESSING OFFICER IS SATISFIED' AND SO THE VERY SECTION IMPLIES A RECORDING OF SATISFACTION. THE SATISFACTION CONTEMPLATED IS A JUDICIOUS SATISFACTION AND NOT A SUBJECTIVE SATISFACTION AND UNLESS THE SAME IS RECODED IT IS NOT POSSIBLE FOR ANY PERSON TO DISCER N WHETHER THE SATISFACTION MEETS 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 TH E NOTE HANDING OVER THE MATERIAL SEIZED TO THE ASSESSING OFFICER ASSESSING THE OTHER PERSON. IN ANY EVENT IT HAS TO BE IN WRITING AND IN VIEW OF SECTION 158BE THE SAID RECODING HAS TO BE MADE BEFORE THE TIME SET IN SECTION 158BE EXPIRES. AFTE R THE SAID DATE IT IS NOT POSSIBLE TO INVOKE SECTION 158BD AT ALL. I.T.(SS)A. NO. 8/HYD/2010 SRI P. VENKATA RAMANA ===================== 7 116. A VIEW IS EXPRESSED THAT WHEREVER A TIME LIMIT IS INTENDED THE PARLIAMENT HAS PROVIDED FOR THE SAME AND IN THE ABSENCE 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 MATTER RELATES TO FIXING HUGE FINANCIAL AND OTHER CIVIL LIABILITY ON THE PERSON AFFECTED AD IT HAS BEEN REPEATEDLY HELD THAT THERE MUST BE A FINALITY TO ANY PROCEEDING UNDER THE CT 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 T HE DAY AND AS THE PROVISIONS FOR SEARCH ARE DRACONIAN IN NATURE SUCH PROVISIONS HAVE NECESSARILY TO BE STRICTLY CONSTRUED. IN WILL HAVE TO BE REMEMBERED THAT SECTION 158BD PROVIDED FOR INVOKING JURISDICTION UNDER THE SAID SECTION 158BD PROVIDES FOR INVOKING JURISDICTION UNDER THE SAID SECTION ENABLING THE ASSESSING OFFICER ASSESSING THE OTHER PERSON IN RESPECT OF WHOM ASSESSING OFFICER ASSESSING THE PERSON SEARCHED GIVES A FINDING THAT THE UNDISCLOSED INCOME UNEARTHED AS A RESULT OF SEARCH BELONGS TO THE SAID PERSON AND ONCE SUCH A FINDING IS GIVEN THE PROVISIONS OF SECTION 158BD COME INTO OPERATION. THIS THEREFORE INVOLVES ASSUMPTION OF JURISDICTION AND CANNOT BE CONSTRUED AS A PROCEDURAL MATTER. IN THE ABSENCE OF A FINDIN G IN THIS BEHALF THERE IS NO JURISDICTION TO THE ASSESSING OFFICER AT ALL TO PROCEED FURTHER IN THE MATTER. AS THE TIME LIMIT SET IN SECTION 158BE APPLIES TO SUCH FINDING IT IS ONLY LOGICAL TAT THE SAID TIME LIMIT AUTOMATICALLY APPLIES FOR INVOKING THE PROVISIONS OF SECTION 158BD AND IT IS FOR THIS REASON THAT THE PARLIAMENT DID NOT FIND IT NECESSAR Y TO SPECIFY A SEPARATE TIME LIMIT FOR THE SAME AS T HE ENACTMENT ITSELF SHOWS THAT BOTH SECTIONS 158BC AND 158BC ARE INTER-LINKED INTERLACED AND INTERTWINED AND BOTH FORM PART AND PARCEL OF THE SAME CHAPTER.' 6. THIS OBSERVATION OF THE SPECIAL BENCH WHICH CONS ISTS OF 5 MEMBERS OF THIS TRIBUNAL SHOWS THAT THE TIME LIMIT PROVIDED U/S. 158BE IS ALSO APPLICABLE FOR INITIATING PROCEEDINGS U/S. 158BD OF THE ACT. I.T.(SS)A. NO. 8/HYD/2010 SRI P. VENKATA RAMANA ===================== 8 7. WE HAVE ALSO CAREFULLY GONE THROUGH THE DECISION OF THIS BENCH OF THE TRIBUNAL IN P. MAHENDER REDDY (SUPRA). IN THIS CASE THERE WAS A DELAY OF MORE THAN 3 YEARS FOR ISS UING NOTICE U/S. 158BD R.W.S. 158BC. THE TRIBUNAL AFTER FOLLOW ING THE JUDGEMENT OF THE GUJARAT HIGH COURT IN THE CASE OF KHANDUBHAI VASANJI DESAI (SUPRA) FOUND THAT NOTICE ISSUED U/S. 158BD AFTER EXPIRY OF MORE THAN 3 YEARS FROM THE DATE OF COMPLE TION OF THE BLOCK ASSESSMENT IN RESPECT OF PERSON SEARCHED IS B AD IN LAW. 8. WE HAVE ALSO CAREFULLY GONE THROUGH THE DECISION OF THE DELHI BENCH OF THIS TRIBUNAL IN THE CASE OF TAHILRA M MULCHANDANI (SUPRA) AND IN CSL SECURITIES PVT. LTD. (SUPRA). T HE NOTICE U/S. 158BD WAS ISSUED AFTER A PERIOD OF 19 MONTHS. THE DELHI BENCH OF THIS TRIBUNAL BY FOLLOWING THE JUDGEMENT O F GUJARAT HIGH COURT IN THE CASE OF KHANDUBHAI VASANJI DESAI (SUPRA) HELD THAT THE NOTICE ISSUED U/S. 158BD R.W.S. 158BC IS BAD IN LAW. 9. IN THE CASE BEFORE US ALSO ADMITTEDLY THE SEARCH PROCEEDINGS WAS INITIATED IN CASE OF A. NARAYANASWA MY ON 2.11.2001. IT IS NOT IN DISPUTE THAT THE ASSESSEE WAS NOT SUBJECTED TO SEARCH AT ALL. HOWEVER THE REVENUE A UTHORITIES FOUND MATERIAL AGAINST THE ASSESSEE WITH REGARD TO UNDISCLOSED INCOME. THE ASSESSING OFFICER OUGHT TO HAVE COMPLE TED THE ASSESSMENT IN RESPECT OF A. NARAYANASWAMY ON OR BEF ORE I.T.(SS)A. NO. 8/HYD/2010 SRI P. VENKATA RAMANA ===================== 9 2.11.2003. THIS DATE ALSO WAS NOT DISPUTED BY THE REVENUE. THEREFORE THE ASSESSING OFFICER OUGHT TO HAVE ISSU ED THE NOTICE U/S. 158BC R.W.S. 158BD AGAINST THE ASSESSEE WITHIN A REASONABLE TIME AFTER COMPLETION OF BLOCK ASSESSMEN T IN THE CASE OF A. NARAYANASWAMY WHO WAS SUBJECTED TO TAX. UNFORTUNATELY THE ASSESSING OFFICER HAS NOT TAKEN ANY STEPS FOR MORE THAN THREE YEARS AND 7 MONTHS. THEREFORE THE RE WAS A UNREASONABLE DELAY ON THE PART OF THE ASSESSING OFF ICER FOR INITIATING PROCEEDINGS BY ISSUING NOTICE U/S. 158BD R.W.S. 158BC OF THE ACT. 10. WE HAVE ALSO CAREFULLY GONE THROUGH THE DECISIO N OF THE AMRITSAR BENCH OF THIS TRIBUNAL IN THE CASE OF VIJA Y SEHGAL (HUF) (SUPRA) REFERRED TO BY THE LEARNED DR. NO DO UBT THE AMRITSAR BENCH OF THIS TRIBUNAL IN THE CASE OF VIJA Y SEHGAL (HUF) (SUPRA) FOUND THAT THERE IS NO TIME LIMIT PRE SCRIBED FOR ISSUING NOTICE U/S. 158BD. HOWEVER THE AMRITSAR B ENCH HAS NO OCCASION TO CONSIDER THE JUDGEMENT OF THE GUJARAT H IGH COURT IN KHANDUBHAI VAAANJI DESAI & ORS. (SUPRA). THEREFORE THE DECISION OF THE AMRITSAR BENCH OF THIS TRIBUNAL MAY NOT BE OF ANY ASSISTANCE TO THE REVENUE. 11. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGEME NT OF THE GUJARAT HIGH COURT IN KHANDUBHAI VASANJI DESAI (SUPRA). THE ASSESSEE BEFORE THE GUJARAT HIGH COURT CHALLENG ED THE CONSTITUTIONAL VALIDITY OF SECTION 158BD ON THE GRO UND THAT IT I.T.(SS)A. NO. 8/HYD/2010 SRI P. VENKATA RAMANA ===================== 10 VIOLATES ARTICLES 14 19 AND 21 OF CONSTITUTION OF INDIA. WHILE EXAMINING THE CONSTITUTIONAL VALIDITY OF SECTION 15 8BD THE GUJARAT HIGH COURT HAS OBSERVED AS FOLLOWS AS REPOR TED IN PAGES 96 AND 97 OF THE ITR: ' NECESSARILY THEREFORE A DIFFERENT STARTING POINT OF COMMENCEMENT OF LIMITATION FOR MAKING THE ASSESSMENT OF THE BLOCK PERIOD IN CASE OF SUCH OTHER PERSON WAS REQUIRED TO BE FIXED AND THE OBVIOUS STARTING POINT WAS THE SERVING OF THE NOTIC E TO SUCH PERSON AFTER THE REQUISITE SATISFACTION WAS REACHED BY THE ASSESSING OFFICER THAT ANY UNDISCLOSED INCOME BELONGED TO SUCH OTHER PERSON. ONCE THE SATISFACTION UNDER SECTION 158BD IS REACHED BY THE ASSESSING OFFICER THERE WOULD BE NO VALID REASON FOR HIM TO DELAY THE ISSUANCE OF THE NOTICE WHICH OUGHT TO BE ISSUED SOON AFTER THE SATISFACTION IS REACHED AND IF THE ASSESSING OFFICE R IS DIFFERENT HE OUGHT TO IMMEDIATELY TRANSMIT THE RELEVANT MATERIAL TO THE ASSESSING OFFICER HAVING JURISDICTION TO ENABLE HIM TO PROCEED AGAINST SUCH OTHER PERSON BY ISSUING NOTICE UNDER SECTION 158BC REQUIRING HIM TO FILE THE RETURN. SINCE THE SATISFACTION THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON OTHER THAN THE ONE WITH RESPECT TO WHOM SEARCH WAS MADE OR BOOKS OF ACCOUNT DOCUMENTS OR ASSETS REQUISITIONED MAY IN MANY CASES BE REACHED AFTER THE ASSESSING OFFICER STARTS THE PROCEEDINGS UNDER SECTION 158BC AGAINST THE PERSON WITH RESPECT TO WHOM THE SEARCH WAS MADE THE SHIFT OF THE COMMENCEMENT POINT OF THE LIMITATION TO THE DATE OF THE NOTICE WHICH COULD BE ISSUED TO SUCH OTHER PERSON ONLY AFTER IT COMES TO LIGHT LEADING TO THE SATISFACTION OF THE ASSESSING OFFICER THAT ANY UNDISCLOSED INCOME BELONGS TO HIM WAS FULLY JUSTIFIED AND IT WAS GERMANE TO THE OBJECT OF MAKING BLOCK ASSESSMENT OF THE UNDISCLOSED INCOME OF SUCH OTHER PERSON WHO IS NOW KNOWN AS A PERSON TO WHOM THAT UNDISCLOSED INCOME BELONGS. THE ASSESSING OFFICER ONCE HE REACHES THE REQUISITE SATISFACTION IS BOUND TO ACT SWIFTLY TO PROCEED AGAINST SUCH OTHER PERSON AS SOON AS MAY BE IN REASONABLE TIME. THE SPEED AND DESPATCH WITH WHICH HE SHOULD ACT IS WRIT LARGE ON THE CONNECTED PROVISIONS OF SECTION 132(9A) OF THE ACT UNDER I.T.(SS)A. NO. 8/HYD/2010 SRI P. VENKATA RAMANA ===================== 11 WHICH THE AUTHORISED OFFICER WHO HAS NO JURISDICTIO N OVER THE PERSON REFERRED TO IN CLAUSE (A) (B) OR ( C) OF SUB-SECTION (1) OF SECTION 132 HAS TO HAND OVER THE BOOKS OF ACCOUNT DOCUMENTS AND ASSETS SEIZED TO THE INCOME-TAX OFFICER HAVING JURISDICTIO N OVER SUCH PERSON WITHIN 15 DAYS OF SUCH SEIZURE AND THE ASSESSING OFFICER IS REQUIRED TO SERVE A NOTICE TO SUCH PERSON UNDER SECTION 158BC REQUIRING HIM TO FURNISH A RETURN IN THE PRESCRIBED FORM NO. 2B AND TO COMPLETE THE BLOCK ASSESSMENT IN ONE YEAR FROM THE END OF THE MONTH IN WHICH THE LAST AUTHORISATION FOR SEARCH OR REQUISITION WAS EXECUTED. THUS THE APPREHENSION THAT A NOTICE CAN BE ISSUED UNDER SECTION 158BD READ WITH SECTION 158BC BY THE ASSESSING OFFICER IN THE CASE OF SUCH 'OTHER PERSON' AT ANY TIME IS I LL- FOUNDED. THERE IS NO LIFTING OF THE LIMITATION PERI OD FOR MAKING THE ASSESSMENT ORDER WHICH IS ONE YEAR AND THE STARTING POINT OF LIMITATION IN CASES FALLI NG UNDER SECTION 158BD BY THE VERY NATURE OF THINGS CAN BE FIXED ONLY AFTER THE ASSESSING OFFICER IS SATISFIED THAT ANY UNDISCLOSED INCOME BELONGS TO SUCH OTHER PERSON AND IN CASES WHERE THE ASSESSING OFFICER IS DIFFERENT AFTER THE RELEVANT MATERIAL IS TRANSMITTED TO HIM. AS SOON AS THE ASSESSING OFFICER HAVING JURISDICTION RECEIVES THE MATERIAL IN RESPECT OF THE OTHER PERSON HE IS IN T HE SAME POSITION AS THE ASSESSING OFFICER WHO FORWARDED IT TO HIM AND IS EXPECTED TO IMMEDIATELY PROCEED TO ISSUE NOTICE TO THAT OTHER PERSON WHO FALLS IN HIS JURISDICTION. ' 12. IN VIEW OF THE ABOVE FINDING OF THE GUJARAT HIG H COURT IN FACT THE ASSESSING OFFICER HAS TO ISSUE NOTICE WITH IN A REASONABLE TIME. THEREFORE THIS JUDGEMENT OF THE GUJARAT HIGH COURT SUPPORTS THE CASE OF THE ASSESSEE AND NOT THE DEPARTMENT. IN FACT THE GUJARAT HIGH COURT SPECIFI CALLY OBSERVED THAT THE CONTENTION OF THE ASSESSEE THAT NOTICE U/S . 158BD R.W.S. 158BC CAN BE ISSUED ANY TIME IS ILL FOUNDED. THERE FORE THE ASSESSING OFFICER HAS TO ISSUE NOTICE WITHIN A REAS ONABLE PERIOD. IN THIS CASE THE NOTICE WAS ADMITTEDLY ISSUED AFT ER EXPIRY OF I.T.(SS)A. NO. 8/HYD/2010 SRI P. VENKATA RAMANA ===================== 12 MORE THAN 3 YEARS AND 7 MONTHS WITHOUT ANY REASONAB LE CAUSE. THEREFORE THE ISSUE OF NOTICE AFTER EXPIRY OF 3 YE ARS AND 7 MONTHS IS UNREASONABLE WHICH CANNOT BE A BASIS FOR COMPLETING THE ASSESSMENT AGAINST THE ASSESSEE. THEREFORE IN OUR OPINION THE CIT(A) HAS RIGHTLY QUASHED THE PROCEED INGS. 13. NOW COMING TO THE CONTENTION OF THE DEPARTMENT THAT THE ASSESSEE HAS NOT CHALLENGED THE NOTICE BEFORE THE A SSESSING OFFICER THEREFORE HE CANNOT CHALLENGE THE SAME IN VIEW OF SECTION 292BB. ADMITTEDLY SECTION 292BB WAS INSERT ED BY FINANCE ACT 2008 WITH EFFECT FROM 1.4.2008. THE N OTICE U/S. 158 R.W.S. 158BC WAS ISSUED IN THIS CASE ON 7.7.200 6. SINCE THE PROVISIONS OF SECTION 292BB CURTAIL THE RIGHT O F THE ASSESSEE IT WOULD OPERATE PROSPECTIVELY AS HELD BY THE SPECI AL BENCH OF THIS TRIBUNAL IN KUBER TOBACCO PRODUCTS (P) LTD. VS . DCIT (2009) 117 ITD 273 (SB). THEREFORE SECTION 292BB MAY NOT BE APPLICABLE TO THE NOTICE ISSUED ON 7.7.2006. IN VI EW OF THE ABOVE DISCUSSION WE DO NOT FIND ANY INFIRMITY IN T HE ORDER OF THE CIT(A). ACCORDINGLY THE SAME IS CONFIRMED. 14. IN THE RESULT THE APPEAL OF THE REVENUE STAND S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11TH FEBRUARY 2011. SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER SD/- (N.R.S. GANESAN) JUDICIAL MEMBER HYDERABAD DATED 11TH FEBRUARY 2011 TPRAO I.T.(SS)A. NO. 8/HYD/2010 SRI P. VENKATA RAMANA ===================== 13 COPY FORWARDED TO: 1. DY. COMMISSIONER OF INCOME-TAX CIRCLE 1 AAYAKA R BHAVAN ANANTAPUR. 2. SRI P. VENKATA RAMANA 5-231 MAIN ROAD GOOTY R S GOOTY ANANTAPUR DISTRICT AP. 3. THE CIT(A) TIRUPATI. 4. THE CIT TIRUPATI CHARGE TIRUPATI. 5. THE DR ITAT HYDERABAD.