Delhi High Court
Commissioner Of Income Tax vs Alka Bhandari on 8 January, 2015
Author: S.Ravindra Bhat
$~51 & 54
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Decided on: 8th January, 2015
+ ITA 996/2009
COMMISSIONER OF INCOME TAX ..... Appellant
Through: Mr.Rohit Madan, Mr.Ruchir Bhatia
and Mr.Akash Vajpai, Advs.
versus
ALKA BHANDARI ..... Respondent
Through: Mr.Pradeep Aggarwal and Mr.Anurag
Jain, Advs.
+ ITA 1163/2009
COMMISSIONER OF INCOME TAX ..... Appellant
Through: Mr.Rohit Madan, Mr.Ruchir Bhatia
and Mr.Akash Vajpai, Advs.
versus
ASHOK KUMAR & SONS HUF ..... Respondent
Through: Mr.Pradeep Aggarwal and Mr.Anurag
Jain, Advs.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE R.K.GAUBA
MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT)
%
1. The present appeals have to be decided pursuant to a remittal and
directions of the Supreme Court in its judgment reported as CIT vs. Calcutta
ITA 996 & 1163/2009 Page 1
Knitwears, Ludhina 362 ITR 673 (SC). The Court in its judgment had
directed as follows:
"44. In the result, we hold that for the purpose of Section 158BD
of the Act a satisfaction note is sine qua non and must be
prepared by the assessing officer before he transmits the records
to the other assessing officer who has jurisdiction over such
other person. The satisfaction note could be prepared at either of
the following stages: (a) at the time of or along with the initiation
of proceedings against the searched person under Section 158BC
of the Act; (b) along with the assessment proceedings under
Section 158BC of the Act; and (c) immediately after the
assessment proceedings are completed under Section 158BC of
the Act of the searched person
45. We are informed by Shri Santosh Krishan, who is appearing
in seven of the appeals that the assessing officer had not
recorded the satisfaction note as required under Section 158BD
of the Act, therefore, the Tribunal and the High Court were
justified in setting aside the orders of assessment and the orders
passed by the first appellate authority. We do not intend to
examine the aforesaid contention canvassed by the learned
counsel since we are remanding the matters to the High Court
for consideration of the individual cases herein in light of the
observations made by us on the scope and possible interpretation
of Section 158BD of the Act."
2. In the present case, the ITAT originally had accepted the contentions
of the assessee that the satisfaction note recorded, in their case was delayed
and also had, inter alia, recorded that the satisfaction note did not accord
with the requirements of Section 158 BD as per the judgment of Supreme
Court reported as CIT vs. Manish Maheshwari (2007) 289 ITR 341 (SC). In
both the cases the facts are common and are discussed hereinafter.
ITA 996 & 1163/2009 Page 2
3. The search of one Sh. Manoj Aggarwal was conducted on 03.08.2000,
thereafter notice was issued to him. His Assessing Officer considering the
block returns submitted by the searched person and the material supplied
and forthcoming during the search proceedings completed the assessment by
an order dated 29.08.2000. Based upon the materials obtained, the
Assessing Officer of the searched person recorded a satisfaction note on
06.03.2003 in the case of both assessees in the present appeals, taking the
view that additional income had escaped assessment on the basis of this
satisfaction note, which was forwarded to the Assessing Officer of the
present assesses. The latter issued notice on 18.06.2003 to the
respondent/assessee. After considering their submissions the A.O.
completed assessment on 27.06.2005 in both the cases. In the case of
assessee in ITA No. 996/2009 an addition of ₹ 36,38,119/- and a further
addition of ₹72762/- was made and in the case of assessee in ITA
No.1163/2009 an addition of ₹34,73,000/- and further sum of ₹73727/- and
further addition of ₹69535/- was ordered. Both these were subject matter of
appeals to the CIT which held in favour of the assessee. The revenue
appeals before ITAT were dismissed. The present appeals were originally
disposed of in the common judgment and order of this Court, reported as
CIT vs. Radhey Shyam Bansal 2011 337 ITR 217 (DLI). That judgment was
apparently set aside to the extent that the Supreme Court wants examination
of the limited question as to whether the notices were issued within the
period mentioned in para 44 of Calcutta Knitwears (supra). It is evident
from the narration of the facts discussed above that the satisfaction note was
recorded more than six months after the assessment of searched person; the
assessment was completed on 29.08.2002 and the satisfaction note was
ITA 996 & 1163/2009 Page 3
recorded 06.03.2003. This Court recollects that the extended period within
which the Revenue has been permitted to issue notice under Section 158BD
in such cases is subject to condition of it being "immediate" or
contemporaneous to the time when assessment of the searched persons is
completed.
4. Since the limitation period for completion of block assessment, or in
the case of searched persons as well as the third party who is issued notice is
two years, it is reasonable to assume that the revenue can be given latitude
of six months which can be considered as "immediate" or immediately
proximate in point of time. In the present case, the six month period expired
on 28.02.2003; the satisfaction note was recorded on 06.03.2003 and the
notice was issued more than 3 ½ months after lapse of the date i.e.
18.06.2003.
5. In these circumstances this Court holds that the notices did not accord
with the Supreme Court's declaration of law and was unduly delayed. They
cannot be considered as having been recorded immediately after the
completion of assessment proceedings under Section 158BC Income Tax
Act. The appeals are accordingly dismissed.
S. RAVINDRA BHAT
(JUDGE)
R.K.GAUBA
(JUDGE)
JANUARY 08, 2015/mr
ITA 996 & 1163/2009 Page 4
