(PER : HONOURABLE
MR.JUSTICE AKIL KURESHI)
1. Petitioner
has challenged a notice dated 29.10.2001 annexed at Annexure-A2 to
the petition issued by the Deputy Commissioner of Income-tax,
Ahmedabad under Section 158BD of the Income-tax Act, 1961
(Hereinafter referred to as the Act). Petitioner has also
challenged further notice dated 18.01.2002 issued by the same officer
reminding her that pursuant to earlier notice dated 29.10.2001, the
petitioner had to file return of income for the block period in
question.
2. The
brief facts leading to the petition are as under:
2.1 The
petitioner is an individual and is liable to pay tax. The husband of
the petitioner was subjected to search operation on 21.10.1999.
During the course of block assessment proceedings, pursuant to such
search in case of husband of the petitioner, the Assessing Officer
appears to have collected certain materials prima facie, suggesting
that the certain income/investments made belongs to the petitioner
and not the person searched i.e. her husband. A notice under Section
158BD came to be issued to the petitioner on 29.10.2001 calling upon
the petitioner to file a return in the prescribed form. Since the
petitioner did not respond to such a notice, a further communication
came to be issued on 18.01.2002 in which as noted above, the
petitioner was reminded of the requirement of filing the return
pursuant to the notice under Section 158BD of the Act. These notices,
the petitioner has challenged in the present petition on various
grounds.
3. Mr.
K.R. Dixit, counsel for the petitioner raised following contentions:
3.1 That
no satisfaction was recorded by the Assessing Officer of searched
person that any undisclosed income belongs to the petitioner i.e.
person other than the person with respect to whom search was made. He
submitted that in absence of any such satisfaction being recorded, no
notice under Section 158BD could have been issued. In support of his
contention, counsel relied on the decision of the Hon'ble Supreme
Court reported in [2007] 289 ITR 341 (SC) in the case of Manish
Maheshwari Vs. Asst. Commissioner of Income-tax and another.
3.2 Counsel
contended that the impugned notice was issued after gross delay. He
submitted that the search was carried out with respect to husband of
the petitioner on 21.10.1999. The impugned notice was issued after
two years. Relying on the decision of this Court reported in [1999]
236 ITR 73 (Guj) in the case of Khandubhai Vasanji Desai Vs. Deputy
CIT, he submitted that only on this ground, notice should be
quashed.
3.3 Counsel
further submitted that there was total non application of mind on the
part of the officer issuing notice. He submitted that the description
of the petitioner was inaccurate. The notice was issued in a printed
format.
4. On
the other hand, learned counsel Mr. M.M.Bhatt for the respondents
sought to place reliance on undated note recorded by the Assessing
Officer of the searched person in which, a reference was made to
various aspects indicating that undisclosed income belonging to the
petitioner was unearthed during the search operation concerning the
husband of the petitioner. He submitted that such note should be
treated as satisfaction of the Assessing Officer as required under
Section 158BD of the Act.
4.1 Counsel
further contended that notice issued cannot be labelled as belated.
He relied on certain observations made in the case of Khandubhai
Vasanji Desai(Supra), to contend that merely on the ground of
delay, notice cannot be quashed in the present case.
4.2 Counsel
further submitted that notice was issued after due deliberation and
there was no lack of application of mind.
5. Having
thus heard learned counsel for the parties, in our opinion, the
entire petition can be decided on the basis of first contention of
the petitioner. In this aspect, we may peruse the facts more closely.
A search was carried out with respect to husband of the petitioner on
21.10.1999. The impugned notice against the petitioner under Section
158BD of the Act was issued on 29.10.2001. The assessment was framed
in case of the husband of the petitioner pursuant to the search
operation on 31.10.2001. The affidavit-in-reply dated 11.10.2002 of
one Shri S.K. Mehta, Assessing Officer of Income-tax records that the
block assessment relating to the searched person was completed on
31.10.2001. It is further stated that additions on several points
were made, however, a detailed office note made by the Assessing
Officer below assessment order mentions every point which required
action in case of the petitioner. Few things thus emerge. The office
note on which learned counsel for the respondents placed reliance,
which is produced along with the affidavit-in-reply annexed at
Annexure-I, formed part of the assessment order. The assessment order
in case of husband of the petitioner having been passed on
31.10.2001, such note, though undated, came in existence only on
31.10.2001. On 29.10.2001, when notice under Section 158BD was issued
against the petitioner, above mentioned note was not in existence.
6. To
support the notice under Section 158BD, revenue, therefore, cannot
place any reliance on the above referred note. Apart from our prima
facie view that such note also cannot be seen as any recording of the
satisfaction as envisaged under Section 158BD of the Act, such note
not being in existence when the notice was issued, cannot form the
basis for sustaining the notice under Section 158BD of the Act.
7. Previously
when the petition was heard, we inquired with the counsel for the
revenue, if in addition to material already produced before us
including the said note, there was any other material on the file of
the department suggesting recording of the satisfaction of the
Assessing Officer as required under Section 158BD of the Act. Today,
counsel produced on record a communication received by him dated
21.12.2012 from the Income-tax Officer, Ahmedabad. Such communication
is taken on record. In the said letter, it is stated that upon
perusal of file, no such satisfaction note was available on record
in case of husband of the petitioner.
8. The
situation, therefore, emerges is that on the date of issuing notice
under Section 158BD of the Act, there was no satisfaction recorded by
the Assessing officer of the searched person. In this context, we
will refer to the decision of the Supreme Court in the
case of Manish Maheshwari(Supra). In
the context of requirement to be satisfied for an action under
Section 158BD of the Act, the Supreme Court observed as under:
The
condition precedent for revoking a block assessment is that a search
has been conducted under section 132, or documents or assets have
been requisitioned under section 132A. The said provision would apply
in the case of any person in respect of whom search has been carried
out under section 132A or documents or assets have been requisitioned
under section 132A. Section 158BD, however, provides for taking
recourse to a block assessment in terms of section 158BC in respect
of any other person, the conditions precedent wherefor are: (i)
satisfaction mast be recorded by the Assessing Officer that any
undisclosed income belongs to any person, other than the person with
respect to whom search was made under section 132 of the Act, (ii)
the books of account or other documents or assets seized or
requisitioned had been handed over to the Assessing Officer having
jurisdiction over such other person; and (ii) the Assessing Officer
has proceeded under section 158BC against
such other person.
The
conditions precedent for invoking the provisions of section 158BD,
thus are required to be satisfied before the provisions of the 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 requisitioned under section 132A of the Act.
9. Under
the circumstances, we have no hesitation in striking down the
impugned notices annexed at Annexure-A1 & A2 to the petition. In
view of the above conclusion, we are not required to go into the
validity of other contentions of the counsel for the petitioner.
Rule
is made absolute. No cost.
(AKIL KURESHI, J.)
(MS SONIA GOKANI, J.)
Chandrashehar*
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