Deputy Commissioner Of Income Tax ... vs Shree Krupa Builders

[Cites 6, Cited by 4]

Gujarat High Court

Deputy Commissioner Of Income Tax ... vs Shree Krupa Builders - Opponent(S) on 26 July, 2011

Bench: Akil Kureshi

TAXAP/363/2010                            1/3                                      ORDER


             IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                        TAX APPEAL No. 363 of 2010


=========================================================
 DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 3 BARODA
                      - Appellant(s)
                           Versus
            SHREE KRUPA BUILDERS - Opponent(s)
=========================================================
Appearance :
MR KM PARIKH for Appellant(s) : 1,
None for Opponent(s) : 1,
=========================================================
                 CORAM : HONOURABLE MR.JUSTICE AKIL KURESHI

                           and

                           HONOURABLE MS JUSTICE SONIA GOKANI



                              Date : 26/07/2011


ORAL ORDER

(Per : HONOURABLE MR.JUSTICE AKIL KURESHI) This Tax Appeal arises out of judgement of the tribunal dated 16.10.2009. Counsel for the Revenue submitted that following question may be considered for the purpose of this appeal :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that satisfaction is required to be recorded by the A.O. before assuming jurisdiction u/s.158BD of the Act?"

Under similar factual background, we had disposed of Tax Appeal No.404/2010 today making following observations :

"Having heard the learned counsel for the Revenue and having TAXAP/363/2010 2/3 ORDER perused the documents on record, we find that the issue pertains to validity of block assessment proceedings. The Tribunal was of the opinion that the entire proceedings were vitiated on the ground that no satisfaction as required by the Assessing Officer was recorded by him before assuming jurisdiction under section 158BD of the Income Tax Act, 1961. To come to such a conclusion, the Tribunal relied on Special Bench judgment of the Tribunal in case of Manoj Agarwal, 113 ITD 337, in which it was held that "the note of satisfaction must contain a positive finding by the Assessing Officer making assessment under section 158BC indicating therein the undisclosed income found as a result of examination of seized material, the person to whom such income belongs and proceed accordingly as provided for in the said section. The circumstances envisaged and the context in section 147 an 158BD are entirely different in nature".

On the basis of the above observations of the Special Bench of the Tribunal, in the present case the ITAT was of the opinion that the entire proceedings initiated against the person other than the searched person would stand vitiated for nonrecording of the satisfaction by the Assessing Officer as mandatorily required. The Tribunal in the impugned judgment also referred to and relied on a decision of the Apex Court in the case of Manish Maheshwari v. Asstt. CIT, 289 ITR 341 (SC). We find that in the case of Manish Maheshwari, the Apex Court had come to the conclusion that where the premises of a Director of a Company and his wife were searched under section 132 of the Act and a block assessment had to be done in relation to the Company, the Assessing officer had to (1) record his satisfaction that any undisclosed income belonged to the Company and (2) hand over the books of account and other documments and assessed seized to the Assessing Officer having jurisdiction over the Company. The Apex Court noted with approval the ratio of the decision of this Court in the case of Khandubhai Vasanji Desai v. Dy.CIT, 236 ITR 73 (Guj). We may also record that in the case of Rushil Industries Ltd. v. harsh Prakash, 251 ITR 608, similar observations wee made.

In the present case, the facts are similar. The Tribunal also recorded that learned DR has not produced any evidence or the material which may prove that the AO of the person searched has recoded the satisfaction of unearthing of the undisclosed income on the basis of material seized belonging to the person not searched, that is, assessee. The Tribunal further observed that the TAXAP/363/2010 3/3 ORDER note appended to the notice cannot be regarded as satisfaction in accordance with the provisions contained in section 158BD of the Act.

In view of the above factual finding, we do not find that the Tribunal committed any error. Tax Appeal is therefore dismissed."

This tax appeal is also dismissed accordingly.

(Akil Kureshi,J.) (Ms. Sonia Gokani,J.) (raghu)

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