Shri Jugal Kishore Khetawat, Kolkata v. DCIT, Central Circle - XIII, Kolkata, Kolkata

ITSSA 8/KOL/2010 | misc
Pronouncement Date: 07-01-2011

Appeal Details

RSA Number 823516 RSA 2010
Assessee PAN AFCPK5718G
Bench Kolkata
Appeal Number ITSSA 8/KOL/2010
Duration Of Justice 3 month(s) 24 day(s)
Appellant Shri Jugal Kishore Khetawat, Kolkata
Respondent DCIT, Central Circle - XIII, Kolkata, Kolkata
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 07-01-2011
Appeal Filed By Assessee
Bench Allotted A
Tribunal Order Date 07-01-2011
Assessment Year misc
Appeal Filed On 13-09-2010
Judgment Text
1 A IN THE INCOME TAX APPELLATE TRIBUNAL BENCH- A KOL KATA [ . . . . . . . . . . . . . . . . !' ] BEFORE SHRI B.R.MITTAL JUDICIAL MEMBER & SRI C.D. RAO ACCOUNTANT MEMBER # # # # / IT(SS)A NO. 08 (KOL) OF 2010 BLOCK PERIOD : 01/4/1995 TO 08/2/2002 SRI JUGAL KISHORE KHETAWAT KOLKATA. (PAN-AFCPK5718G) DY.COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-XIII KOLKATA. (%& / APPELLANT ) - ) - - VERSUS -. (*+%&/ RESPONDENT ) %& - . !/ FOR THE APPELLANT: / SRI R. SALARPURIA *+%& - . ! / FOR THE RESPONDENT: / SRI P.K. MISHRA !/ / ORDER ( . .. . . .. . ) !' (C.D. RAO) ACCOUNTANT MEMBER : THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 12/8/2010 OF THE LD. C.I.T.(A) CENTRAL-II KOLKATA PERTAINING TO BLOCK PERIOD 01/4/1995 TO 08/2/2002. IN THIS APPEAL BY THE ASSESSEE THE FOLLOWING GROUNDS ARE R AISED :- 1. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE AO WAS WHOLLY UNJUSTIFIED IN TAKING RECOURSE THE PROCEEDING U/S 158BD READ WITH SEC. 158BC AND THE ENTIRE PROCEEDING WAS WHOLLY BAD ILLEGAL UNJUSTIFIED VOI D AB INITIO AND IS LIABLE TO BE QUASHED/CANCELLED. THE LD. CIT(A) WAS ALSO WHOLLY U NJUSTIFIED IN CONFIRMING THE ACTION OF THE AO. 2. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE ENTIRE PROCEEDINGS WERE WHOLLY BAD ILLEGAL AND UNJUSTIFIED. 3. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE AU WAS WHOLLY UNJUSTIFIED IN INCLUDING A SUM OF RS. 36 86 250/- AS UNDISCLOSED I NCOME IN THE HANDS OF YOUR PETITIONER AND THE CIT(A) WAS WHOLLY UNJUSTIFIED IN CONFIRMING THE ACTION OF THE AO TO THE EXTENT OF RS.11 86 250/-. EVEN OTHERWISE THE ADDITION MADE AND CONFIRMED WAS HIGHLY EXCESSIVE AND WHOLLY UNREASONA BLE. 2. THE MAIN DISPUTE IN THIS APPEAL IS WITH REGARD TO THE VALIDITY OF THE INITIATION OF PROCEEDINGS U/S.158-BD OF THE ACT AND CONSEQUENTLY THE VALIDITY OF THE ASSESSMENT ORDER PASSED IN PURSUANCE THERETO U/S. 158BD/158BC OF THE ACT FOR THE BLOCK PERIOD UNDER CONSIDERATION. THE FACTS IN BRIEF RELATING T O THIS ISSUE ARE THAT A SEARCH & SEIZURE 2 OPERATION U/S. 132 OF THE ACT WAS CONDUCTED ON 08/2 /2002 IN THE PREMISES OF SRI ARUN KUMAR BAJORIA. DURING THE SAID SEARCH OPERATION AC CORDING TO THE A.O. SOME INCRIMINATING DOCUMENTS MARKED HM/6 PAGES 11 TO 13 IN RESPECT OF THE ASSESSEE SRI JUGAL KISHORE KHETAWAT WERE SEIZED AND DULY INVENT ORISED IN THE PANCHANAMA DRAWN IN THE NAME OF THE SEARCHED PERSON SRI ARUN KUMAR BAJO RIA. THE SAID DOCUMENTS WERE PART OF A KACHCHA CASH BOOK MAINTAINED BY SRI BAJORIA C ONTAINING TRANSACTIONS IN CASH AND ENTRIES WRITTEN IN DOUBLE ZERO SUPPRESSION. THE ASS ESSING OFFICER OF SRI ARUN KUMAR BAJORIA (SEARCHED PERSON) FORWARDED ALL THESE EVIDE NCES TO THE A.O. OF THE ASSESSEE HEREIN WHICH CONTAINED THE FOLLOWING ENTRIES :- D A T E AMOUNT NATURE OF PAYMENT 20.09.2001 RS.10 00 000 REPAYMENT OF PRINCIPA L 28.09.2001 RS.15 00 000 REPAYMENT OF PRINCIPA L 20.10.2001 RS.11 86 250 PAYMENT OF INTEREST THE A.O. OBSERVED THAT THE ABOVE TRANSACTIONS WERE NOT RECORDED IN THE REGULAR BOOKS OF THE ASSESSEE PERTAINING TO F.Y. 2001-02. ACCORDING TO HIM FURTHER THE ASSESSEE HIMSELF IN HIS STATEMENT U/S. 131 GIVEN BEFORE THE D.D.I.T. UNIT-1(4) KOLKATA ON 19/4/2002 CONFIRMED HAVING TAKEN CASH LOAN OF RS.25 LAKHS AND PAID INTEREST THEREON. HE THEREFORE INITIATED PROCEEDINGS U/S. 158-BD R.W.S. 158BC OF THE ACT AGAINST THE ASSESSEE AND ISSUED NOTICE ACCORDINGLY. THE REASON S FOR SUCH INITIATION OF PROCEEDING U/S. 158BD WERE RECORDED BY THE A.O. IN THE ORDER S HEET ENTERED ON 02/2/2008 WHICH IS REPRODUCED BELOW :- JUGAL KISHORE KHETAWAT B.P. 1.4.95 TO 28.2.2002 ) 2/2/06 IT IS SEEN THAT IN THE CASE OF SEARCH COND UCTED IN CASE OF ARUN KR. BAJORIA 76 GARDEN REACH ROAD KOLKATA-43 AS PER 11 TO 13 OF SEIZED BOOK OF A/C HM/6 (KACHA CASH BOOK) CASH TRANSACTIONS W ITH DOUBLE ZERO SUPPRESSION WERE RECORDED. THE DETAILS OF CASH PAY MENTS MADE BY SRI KHETAWAT TO SHRI BAJORIA ARE RECORDED THEREIN. A T OTAL LOAN OF RS.25 LAKHS WAS ADVANCED BY SHRI BAJORIA TO SHRI KHETAWAT AND MR. K HETAWAT RETURNED RS.11 86 250 AS INTEREST ON THE SAID LOAN BESIDES T HE PRINCIPAL. THE SAID INFORMATION WAS PASSED BY DCIT-CC-VII KOL TO DCIT- CC-XIII/KOL ON DIFFERENT DATES AS PER RECORDS. IT IS ALSO INFORME D THAT DDIT (INV) UNIT-1(4) KOLKATA RECORDED STATEMENT OF BOTH MR. BAJORIA & MR . J.K.KHETAWAT U/S 131. MR. KHETAWAT IN HIS STATEMENT U/S. 131 ACCEPTED THE SAID LOAN AND ABOVE MENTIONED TRANSACTIONS. ACCORDINGLY AS PER THE PRO VISIONS OF SECTION 158BD 3 PROCEEDINGS U/S. 158BD/158BC ARE INITIATED IN THE C ASE OF A. ISSUE NOTICE U/S. 158BD. SD/- 2/2/06. FOR THE REASONS DISCUSSED IN THE ASSESSMENT ORDER THE A.O. HELD THAT THE ASSESSEE MADE PAYMENT IN CASH AGGREGATING TO RS.36 86 250/- TO SR I ARUN KUMAR BAJORIA WHICH COMPRISED OF REPAYMENT OF LOANS ON TWO DIFFERENT DA TES AGGREGATING TO RS.25 LAKHS AND PAYMENT OF INTEREST THEREON AMOUNTING TO RS.11 86 2 50/- AND SUCH TRANSACTIONS WERE NOT FOUND RECORDED IN HIS REGULAR BOOKS OF ACCOUNT. HE THEREFORE HELD THAT THAT THE PAYMENT OF RS.36 86 250/- WAS MADE BY THE ASSESSEE OUT OF H IS INCOME FROM UNDISCLOSED SOURCES AND ASSESSED THE SAME IN THE IMPUGNED ASSESSMENT FR AMED U/S. 158-BD R.W.S. SEC. 158BC OF THE ACT. 3. THE ASSESSEE CAME IN APPEAL BEFORE THE LD. C.I. T.(A) AND MADE A DETAILED SUBMISSION WHICH HAS BEEN INCORPORATED IN HIS APPE LLATE ORDER. THE ASSESSEE INTER ALIA SUBMITTED THAT THE COPIES OF STATEMENT ALLEGEDLY RE CORDED FROM HIM U/S. 131 ON 19/4/2002 AND OTHER DOCUMENTS SEIZED FROM THE PREMI SES OF SHRI ARUN KUMAR BAJORIA WERE NOT PROVIDED TO HIM. IN SUPPORT OF HIS CONTENT ION THE ASSESSEE RELIED ON SEVERAL JUDICIAL PRONOUNCEMENTS. HE ALSO FILED AN AFFIDAVIT DATED 22/2/2002 THE RELEVANT PORTION OF WHICH IS REPRODUCED BELOW :- 4. THAT IN THE COURSE OF THE SAID SURVEY SAID SU RVEY TEAM COLLECTED A BUNCH OF LOOSE PAPERS FROM THE VARIOUS TABLES OF THE OFFICE STAFF/ EMPLOYEES AND MADE AN INVENTORY THEREOF NONE OF WHICH WAS INCRIMINATORY I N ANY WAY. 5. THAT THE OFFICERS OF THE SURVEY TE AM THEN CLAIMED THAT ONE SHRI ARUN BAJORIA HAS ADVANCED THE LOAN OF SUBSTANTIAL AMOUNT IN CASH AND I MUST ADMIT THE SUCH LOAN TRANSACTION WITH SAID SHRI ARUN BAJORIA. 6. THAT THE SAID OFFICERS THREATENED ME THAT UNLESS I MAKE THE CONFESSIONAL STATEMENT IN THE WAY THEY WANT IT THE DEPARTMENT WOULD CONVE RT THE SAID SURVEY PROCEEDING INTO A FULL FLEDGED SEARCH AND SEIZURE OPERATION UN DER THE INCOME TAX ACT CAUSING FURTHER HARASSMENT FOR ME. 7. THAT TO GET RID OF THE SAID SURVEY TEAM FURTHER HARASSMENT AND MENTAL AGONY I HAVE FINALLY SUCCUMBED TO THEIR PRESSURE AND ULTIMA TELY SIGNED THE PIECE OF PAPER CONTAINING THE STATEMENT PREPARED BY THE SAID OFFIC ERS OF THE SURVEY TEAM. 8. THAT THE SAID STATEMENT PREPARED B Y THE SURVEY TEAM AND ON WHICH MY SIGNATURE WAS OBTAINED BY THE SURVEY TEAM ON 14 TH FEBRUARY 2002 WAS NOT MY VOLUNTARY STATEMENT NOT CORRECT AND SIGNED BY ME JUST TO SAV E MYSELF FROM THE UNDUE PRESSURE AND HEREBY DENY THE SAME. 4 9. THAT I FURTHER DECLARE AND CONFIRM THAT I HAVE NEITHER RECEIVED ANY MONEY FROM SHRI ARUN BAJORIA NOR I PAID ANY AMOUNT TO SAID SHR I ARUN BAJORIA AS REPAYMENT OF ALLEGED LOAN OR INTEREST THEREON. THE LD. C.I.T.(A) VIDE HIS LETTER DATED 25/3/2010 WHICH IS PLACED ON PAGES 65-66 OF THE PAPER BOOK FORWARDED THE SUBMISSIONS ALONG WITH AF FIDAVIT OF THE ASSESSEE TO THE A.O. FOR ENABLING HIM TO GIVE HIS COMMENT ON THE SAME. T HE A.O. IN HIS REMAND REPORT DATED 19/4/2010 PLACED ON PAGES 67 TO 69 OF THE PAPER BO OK GAVE PARA-WISE COMMENTS THE RELEVANT PORTION OF WHICH IS REPRODUCED BELOW: PARA-2 - THE CONTENTION OF THE ASSESSEE IS NOT A CCEPTABLE FOR THE REASON THAT THE ORDER SHEET ENTRY DATED 02.02.2006 CLEARLY SUGGESTS THAT THE AO OF THE ASSESSEE HAD RECORDED HIS SATISFACTION BEFORE ISSUING NOTICE U/S. 158BD O F THE ACT. IT MAY BE MENTIONED HERE THAT FOR THE ISSUE OF NOTI CE U/S. 158BD OF THE ACT THERE IS NO REQUIREMENT OF THE SATISFACTION OF THE AO OF THE AS SESSEE ON WHOM THE SEARCH WAS CONDUCTED. THE ONLY REQUIREMENT FOR THE PROCEEDING U/S. 158BD OF THE ACT IS THAT THE SEIZED DOCUMENT ARE REQUIRED TO BE RECEIVED FROM TH E ASSESSING OFFICER HOLDING JURISDICTION OVER THE ASSESSEE ON WHOM THE SEARCH W AS CONDUCTED . IN THIS CASE THE INTIMATION FOR TAKING SUITABLE AC TION AGAINST SHRI JUGAL KISHORE KHETAWAT THE ASSESSEE WAS FORWARDED BY THE DCIT CENTRAL CIRCLE-VII KOLKATA THE ASSESSING OFFICER OF SHRI ARUN KUMAR BAJORIA TO THE DCIT CENTRAL CIRCLE-XIII KOLKATA THE ASSESSING OFFICER OF SHRI JUGAL KISHORE KHETAWA T ON 14.1.2005 ALONG WITH THE COPY OF THE STATEMENT RECORDED U/S. 131 OF THE ACT DATED 19.4.2002 AND COPY OF PANCHANAMA DATED 9.2.2002. .. THE DCIT CENTRAL CIRCLE-XIII KOLKATA ISSUED NOTIC E U/S. 158BD OF THE ACT ON 2.2.2006 AFTER RECORDING HIS SATISFACTION. THEREFO RE THE CONTENTION OF THE ASSESSEE HAS GOT NO FORCE AND MAY BE REJECTED. PARA 3 - FROM THE PERUSAL OF THE RECORDS AVAILABLE IT CANNOT BE ASCERTAINED AS TO WHETHER THE STATEMENT RECORDED U/S. 131 DATED 19.4. 2002 WAS PROVIDED TO THE ASSESSEE OR NOT. THE ASSESSEE ALSO IN TURN GAVE HIS REPLY ON THE REM AND REPORT OF THE A.O. WHICH IS PLACED ON PAGES 79 TO 83 OF THE PAPER BOOK. AFTER CONSIDERING ALL THESE FACTS AND EVIDENCE ON RECORD THE LD. C.I.T.(A) OBSERVED THAT THE CONFESSIONAL STATEMENT OF THE ASSESSEE MADE ON 14/2/2002 AND THE SEIZED PAPER FOU ND FROM THE PREMISE OF SRI ARUN KUMAR BAJORIA ON 08/2/2002 WERE PROPER EVIDENCES TO CONFIRM THE TRANSACTIONS OF THE ASSESSEE WITH SRI BAJORIA AGGREGATING TO RS.36 86 2 50/- WHICH COMPRISED OF REPAYMENT 5 OF PRINCIPAL OF RS.25 LAKHS AND INTEREST THEREON FO R 3 YEARS OF RS.11 86 250/-. ACCORDING TO HIM FURTHER IT WOULD BE REASONABLE TO ASSUME IN ABSENCE OF ANY OTHER FACT OR EVIDENCE THAT THE SOURCE OF RETURN OF LOAN OF RS.25 LAKHS BY THE ASSESSEE WAS THE LOAN OF THE SAME AMOUNT TAKEN FROM SRI BAJORIA EARLIER. IN REGARD TO INTEREST OF RS.11 86 250/- HE HELD THAT THE A.O. HAS RIGHTLY ASSESSED THE UNDI SCLOSED EXPENDITURE TO THE ABOVE EXTENT U/S. 69C OF THE ACT. THE RELEVANT PORTION O F HIS FINDING IS REPRODUCED BELOW :- 4.2. THE TRANSACTIONS AS EVIDENCED BY THE SEIZ ED DOCUMENTS FROM THE PREMISES OF SHRI ARUN KUMAR BAJORIA ON 08.02.2002 AND STATEMENT OF APPELLANT DATED 14.02.2002 SHOW THAT APPELLANT HAD TAKEN A CASH LOAN IN 1998 F ROM SHRI ARUN KUMAR BAJORIA WHICH HE RETURNED IN THE MANNER AS MENTIONED ABOVE. DCIT CENTRAL CIRCLE-VII VIDE LETTER DATED 29.07.2005 HAD INFORMED THE ASSESSING OFFICER THAT THE LOAN OF RS.25 LAKH WAS EARLIER PAID BY SHRI ARUN KUMAR BAJORIA TO APPE LLANT ON 12.8.1998 WHICH IS EVIDENCED FROM THE PAGE NO. 20 OF THE SEIZED DOCUME NT MARKED HM/6. IT WOULD BE REASONABLE TO ASSUME IN ABSENCE OF ANY OTHER FACT F ROM THE ASSESSMENT ORDER THAT THE SOURCE OF RETURN OF LOAN OF RS.25 LAKH BY APPELLANT TO SHRI ARUN KUMAR BAJORIA WAS THE LOAN OF RS.25 LAKH OBTAINED BY HIM FROM SHRI ARUN K UMAR BAJORIA EARLIER. THE INTEREST OF ABOUT RS.11-12 LAKH ON A LOAN OF RS.25 LAKH IS A REASONABLE AMOUNT OF INTEREST FOR 3 YEARS AS APPEARING IN THE SEIZED PAPERS. THE SOURC E OF REPAYMENT OF INTEREST OF RS.11 86 250 ON 20.10.2001 IN CASH BY APPELLANT TO SHRI ARUN KUMAR BAJORIA IS DEFINITELY NOT EXPLAINED BY THE APPELLANT IN ANY MA NNER AND THEREFORE ASSESSING OFFICER HAS RIGHTLY ASSESSED THE UNDISCLOSED INCOME OF APPELLANT TO THE EXTENT OF RS.11 86 250/- AS UNEXPLAINED EXPENDITURE U/S. 69C OF THE I.T. ACT. BEING AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE U S. 4. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL PLACED ON RECORD. IT IS A SETTLED LAW THAT SATISFACTION FOR INITIATION OF PRO CEEDING U/S. 158-BD OF THE ACT MUST OF THE ASSESSING OFFICER OF THE PERSON SEARCHED. THAT IS TO SAY FOR INITIATION OF PROCEEDING U/S. 158BD IN THE CASE OF THE ASSESSEE SATISFACTIO N NOTE OF THE ASSESSING OFFICER OF THE SEARCHED PERSON SHRI ARUN KUMAR BAJORIA IS AN ESS ENTIAL REQUIREMENT UNDER LAW. ON PERUSAL OF THE ORDER SHEET ENTRY REFERRED TO ABOVE IT IS EVIDENT THAT THE CONTENTS IN THE SAID NOTE ARE THE SATISFACTION OF THE ASSESSING OFF ICER OF THE ASSESSEE HIMSELF AND NOT OF THE ASSESSING OFFICER OF SHRI ARUN KUMAR BAJORIA S EARCHED PERSON. FURTHER THE A.O. IN HIS REMAND REPORT REPRODUCED ABOVE HAS HIMSELF A SSERTED THAT FOR THE ISSUE OF NOTICE U/S. 158BD OF THE ACT THERE IS NO REQUIREMENT OF T HE SATISFACTION OF THE AO OF THE ASSESSEE ON WHOM THE SEARCH WAS CONDUCTED. THE ONL Y REQUIREMENT FOR THE PROCEEDING U/S. 158BD OF THE ACT IS THAT THE SEIZED DOCUMENT A RE REQUIRED TO BE RECEIVED FROM THE ASSESSING OFFICER HOLDING JURISDICTION OVER THE ASS ESSEE ON WHOM THE SEARCH WAS 6 CONDUCTED. THIS ASSUMPTION OF OPINION IN OUR OPIN ION IS BAD IN THE EYE OF LAW. VARIOUS COURTS AND THE TRIBUNAL HAVE EXAMINED THE PROVISION S OF SEC.158-BD AND LAID DOWN THE CONDITIONS WHERE THE PROCEEDINGS U/S. 158-BD CAN BE INITIATED BY THE REVENUE AUTHORITIES. 4.1. IN THE CASE OF MANOJ AGGARWAL VS. DCIT [113 I TD 377/310 ITR 99 (DELHI TRIBUNAL SB)] THE SPECIAL BENCH OF I.T.A.T. DELHI HELD AS UNDER :- 113. SEC. 158BD COMMENCES WITH THE WORDS WHERE THE AO IS SATISFIED THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON OTHER THA N THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE AND THUS IT IS CLEAR THAT THE SATISFACTION OF THE AO ASSESSING THE PERSON SEARCHED IS THE FIRST AND FORE MOST REQUIREMENT . THE AO CAN ARRIVE AT THIS SATISFACTION ONLY AFTER ASCERTAINING WHETHER THERE IS AN UNDISCLOSED INCOME AT ALL AND THIS FINDING CAN BE ARRIVED AT BY HIM ONLY IN THE COURSE OF THE S. 158BC ASSESSMENT PROCEEDING. THEREAFTER HE HAS TO ARRIVE AT A FINDING AS TO THE PERSON TO WHOM SUCH INCOME BELONGS. THIS FINDING AL SO CAN BE ARRIVED AT ONLY IN THE COURSE OF THE S. 158BC PROCEEDING IN THE CASE OF TH E PERSON SEARCHED . HE MAY FIND THAT PART OF THE SAID UNDISCLOSED INCOME BELONGS TO THE PERSON SEARCHED AND THE REST BELONGS TO OTHER PERSON OR PERSONS. AT THIS STAGE H E HAS TO GIVE A FINDING IN THIS BEHALF AS TO WHICH OF THE UNDISCLOSED INCOME BELONG S TO THE PERSON SEARCHED AND THE OTHER PERSON TO WHOM THE REST OF THE INCOME BELONGS . THIS FINDING TOO HAS TO BE ARRIVED AT IN THE COURSE OF THE S. 158BC PROCEEDING . AFTER ARRIVING AT THIS FINDING HE MAKES AN ASSESSMENT OF THE UNDISCLOSED INCOME RELAT ING TO THE PERSON SEARCHED IN HIS HANDS AND HANDS OVER THE MATERIAL RELATING TO T HE UNDISCLOSED INCOME BELONGING TO THE OTHER PERSON OR PERSONS TO THE RESPECTIVE AO S. AS S. 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 BELON GS TO SOME OTHER PERSONS A FINDING IN THIS BEHALF HAS TO BE RECORDED IN THE CO URSE OF THE S. 15SBC PROCEEDING AS SUCH FINDING HAS TO FORM AN INTEGRAL PART OF THE SA ID PROCEEDING AND IN CONFORMITY WITH THE INTENTION BEHIND THE SAID PROVISION. SO I T IS ESSENTIAL THAT SUCH FINDING HAS TO FORM PART OF THE S. 158BC PROCEEDING AND SO MUST FIND A PLACE IN THE ORDER UNDER S. 158BC. THE AO ASSESSING THE PERSON SEARCHED HAS TO GIVE A FINDING ON EACH AND EVERY MATERIAL AND EVIDENCE UNEARTHED AFTER A CAREF UL AND JUDICIOUS EVALUATION AND SUCH EXERCISE INVOLVES A FINDING THAT THE UNDISCLOS ED INCOME BELONGS TO A SPECIFIED PERSON AS FOUND BY HIM ON SUCH EVALUATION. IT IS TH IS FINDING THAT IS THE PIVOT AROUND WHICH THE S. 158BD PROCEEDING REVOLVES. IF THEREFO RE IN THE COURSE OF THE S. 158BC PROCEEDINGS THE AO ASSESSING THE PERSON SEARCHED DO ES NOT GIVE A FINDING THAT ANY PART OF THE UNDISCLOSED INCOME UNEARTHED BELONGS TO A PERSON OTHER THAN THE PERSON SEARCHED S. 158BD CAN NEVER BE INVOKED. IT IS THIS FINDING THAT IS AN INTEGRAL PART OF BOTH THE PROCEEDINGS WHETHER UNDER S. 158BC OR S. 1 58BD. FOR SUCH FINDING DETERMINES IN WHOSE HANDS THE UNDISCLOSED INCOME UN EARTHED HAS TO BE TAXED. IF THE UNDISCLOSED INCOME BELONGS TO THE PERSON SEARCHED HE IS SUBJECTED TO BLOCK ASSESSMENT ON SUCH INCOME UNDER S. 15SBC BUT IF SUC H INCOME OR PART OF SUCH 7 INCOME BELONGS TO A PERSON NOT SEARCHED S. 158BD T AKES OVER. THIS IS THE ESSENCE OF THE ENTIRE ENACTMENT RELATING TO SEARCH. [EMPHASIS SUPPLIED] 4.2. FURTHER IN THE CASE OF MANISH MAHESHWARI VS. ACIT [289 ITR 341 (SC)] THEIR LORDSHIS OF HONBLE SUPREME COURT HELD AS UNDER :- 11. THE CONDITION PRECEDENT FOR INVOKING A BLOCK ASSESSMENT IS THAT A SEARCH HAS BEEN CONDUCTED U/S 132 OR DOCUMENTS OR ASSETS HAVE BEEN REQUISITIONED U/S 132A.. THE SAID PROVISION WOULD APPLY IN THE CASE OF ANY P ERSON IN RESPECT OF WHOM SEARCH HAS BEEN CARRIED OUT U/S 132A OR DOCUMENTS OR ASSET S HAVE BEEN REQUISITIONED U/S 132A. SECTION 158BD HOWEVER PROVIDES FOR TAKING R ECOURSE TO A BLOCK ASSESSMENT IN TERMS OF SEC.158BC IN RESPECT OF ANY OTHER PERSO N THE CONDITION PRECEDENT WHEREFORE ARE : (I) SATISFACTION MUST BE RECORDED B Y THE ASSESSING OFFICER THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON OTHER THA N THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE U/S 132 OF THE ACT ; (II) THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED HAD BEE N HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH AND (III) THE ASSESSING OFFICER HAS PROCEEDED U/S 158BC AGAINST SUCH OTHER PERSON. 12. THE CONDITION PRECEDENT FOR INVOKING THE PROVIS IONS OF SEC. 158BD THUS ARE REQUIRED TO BE SATISFIED BEFORE THE PROVISIONS OF T HE SAID CHAPTER ARE APPLIED IN RELATION TO ANY PERSON OTHER THAN THE PERSON WHOSE PREMISES HAD BEEN SEARCHED OR WHOSE DOCUMENTS AND OTHER ASSETS HAD BEEN REQUISITI ONED U/S 132A OF THE ACT. [EMPHASIS SUPPLIED] FROM THE ABOVE JUDICIAL PRONOUNCEMENTS IT IS EVIDE NT THAT BEFORE SEC.158-BD COMES INTO PLAY IT IS NECESSARY THAT THE A.O. WHO IS AS SESSING THE PERSON SEARCHED IS SATISFIED THAT THERE IS ANY UNDISCLOSED INCOME WHICH BELONGS TO A PERSON OTHER THAN THE PERSONS SEARCHED. THEREAFTER THE BOOKS OF ACCOUNTS OTHER DOCUMENTS OR ASSETS SEIZED ARE TO BE HANDED OVER TO THE A.O. HAVING JURISDICTION OVER SU CH OTHER PERSONS. IN THE CASE OF THE ASSESSEE AS THE A.O. HIMSELF ADMITTED NO SUCH SAT ISFACTION HAS BEEN RECORDED BY THE A.O. OF THE SEARCHED PERSON. THE PROCEEDING U/S. 1 58BD OF THE ACT WAS INITIATED IN THE CASE OF THE ASSESSEE SOLELY ON THE BASIS OF SATISFA CTION RECORDED BY HIS A.O. THEREFORE THE FIRST AND FOREMOST REQUIREMENT FOR ATTRACTING P ROVISIONS OF SEC. 158BD IS MISSING IN THIS CASE. THEREFORE IN VIEW OF OUR DISCUSSIONS A BOVE AND NON-COMPLIANCE OF LEGAL AND STATUTORY REQUIREMENTS BY THE A.O. BEFORE INITIATIN G PROCEEDING U/S. 158-BD OF THE ACT WE ARE OF THE CONSIDERED OPINION THAT THE INITIATIO N OF PROCEEDING U/S. 158BD AND PASSING OF CONSEQUENTIAL BLOCK ASSESSMENT ORDER U/S . 158BD/158BC DATED 29/2/2008 IN 8 THE CASE OF THE ASSESSEE WAS VOID INITIO AND THE SA ME CANNOT BE SUSTAINED AS PER LAW. WE HOLD ACCORDINGLY. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED. 0 !/ '1! 2 1) 3 04 THIS ORDER IS PRONOUNCED IN OPEN COURT ON 07.01.2011. SD/- SD/- ( . . . . . .. . 5 5 5 5 ) ( . .. . . .. . ) !' (B.R.MITTAL) JUDICIAL MEMBER (C.D.RAO) ACCOUNTANT MEMBER ( (( ( ' ' ' ') )) ) DATE: 07-01-2011 !/ - *556 7!689- COPY OF THE ORDER FORWARDED TO : 1. %& / THE APPELLANT : JUGAL KISHORE KHETWAT C/O SALARPURIA JAJODIA & CO. 7 C.R. AVENU E KOLKATA-700 072. 2 *+%& / THE RESPONDENT : DCIT CC-XIII KOLKATA. 3. 5/) () : THE CIT(A) CENTRAL-II KOLKATA. 4. 5/)/ THE CIT KOL- 5 . =53 *5) / DR ITAT KOLKATA BENCHES KOLKATA 6 . GUARD FILE . +6 *5/ TRUE COPY !/)1/ BY ORDER (DKP) > ? / DEPUTY REGISTRAR .