The judgment of the court was delivered by
Ms. Sonia Gokani J.-In the following factual background, this tax appeal arises :
A search and seizure action was carried out under section 132 of the Income-tax Act, 1961 ("the Act" for short), on December 19, 2001. Certain incriminating documents were seized concerning the respondent-assessee during the course of the search. Notice was issued under section 158BD of the Act and the assessee filed his return of income on May 27, 2004, show ing nil undisclosed income for the block period. The Assessing Officer, completed the assessment under section 158BD read with section 158BC(c) on 31st January determining the taxable income of the assessee for the entire block period.
The aggrieved assessee preferred an appeal before the Commissioner of Income-tax (Appeals) who dismissed the appeal of the assessee on December 20, 2006.
Further, an appeal was preferred by the assessee challenging the order of the Commissioner of Income-tax (Appeals) before the Income-tax Appellate Tribunal ("the ITAT" for short). Initially, such appeal was dismissed for want of prosecution, however, later on, such order was recalled and following the decision rendered by this court in the case of co-owner Lalit kumar M. Patel in Tax Appeal No. 192 of 2012, dated May 6, 2013, the Tribunal held that the notice issued by the Assessing Officer under section 158BD of the Act and the assessment order passed thereupon deserve to be quashed. Challenging such order of the Tribunal, the present appeal is preferred by the Revenue raising the following substantial questions of law for our consideration :
"A. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal has erred in law in quashing and set ting aside the notice under section 158BD of the Act and the assess ment order passed under section 158BD read with section 158BC(c) of the Act in the case of the assessee by holding that the reasons recorded for issuance of the notice under section 158BD of the Act by the Assessing Officer cannot be said to be valid satisfaction for issu ance of notice under section 158BD of the Act and thereby, ignoring the fact that the satisfaction of the Assessing Officer was evident from the reasons so recorded ?
B. Whether the Income-tax Appellate Tribunal has substantially erred in law in not appreciating that the mandate given in section 158BD is the satisfaction of the Assessing Officer and nothing more should be read into it, as this would amount to legislation and not interpretation ?"
We have heard learned counsel, Shri K. M. Parikh, for the Revenue. He has agreed to the fact that an identical question has been decided by this court in the case of Lalitkumar Patel (supra), and the Department has chosen to carry the said matter to the apex court. However, the matter has so far not been listed for hearing before the apex court.
On having heard the learned counsel and on examination of the material on record, we could notice that the assessee had raised essentially the issue of assessment under section 158BD read with section 158BC for the block period from April 1, 1995, to December 19 2001, as bad in law since no satisfaction was recorded by the Assessing Officer having jurisdiction over the non-searched person. It is to be noted that in the case of Lalitkumar Patel (supra), as also in the case of the present assessee-respondent, common reasons were recorded by the Assessing Officer for issuance of notice under section 158BD of the Act. In the case of Lalitkumar Patel, when the matter had reached this court challenging the order of the Tribunal, the same was sustained by this court, extensively dealing with the various provisions as also taking into consideration the case laws on the subject particularly relying on case of Manish Maheshwari v. Asst. CIT [2007] 289 ITR 341 (SC). It was held that for taking recourse to the block assessment under section 158BC in relation to the person not searched, whenever search has been conducted under section 132 or the documents have been requisitioned under section 132A, the Assessing Officer of the searched person needs to record his satisfaction that undisclosed income belongs to the person other than the person with respect to whom search was carried out under section 132 of the Act. He is also required to hand over the books of account or other documents or assets seized to the Assessing Officer having jurisdiction over such non-searched person and, thereafter, the Assessing Officer who has jurisdiction would proceed under section 158BC, against the person who has not been searched. In the case of this very group, what has been further held by this court in its judgment is as follows :
"12. In the instant case, as could be noted from the record, search had been carried out in case of Jayraj Group. On examination of the files produced before us by the learned counsel Shri Parikh, it can be seen that the satisfaction recorded by the Assessing Officer is in the case of this very assessee. On pertinently questioned about the satisfaction of the Assessing Officer in case of the searched person (i.e., Jayraj Group), the Revenue is unable to point out any such satisfaction of Assessing Officer in case of Jayraj Group. It had been emphatically argued before us that the Assessing Officer being the same person i.e. Shri A. K. Sinha, such satisfaction when recorded in case of the present assessee should be considered and construed as a due com pliance under the provisions and there would not be any occasion to handover the materials to himself being the very officer.
13. As far as second requirement of endowing the papers to the Assessing Officer having the jurisdiction to initiate the proceedings under section 158BC is concerned, learned counsel Mr. Parikh is right and is also not being disputed by the respondent that such formal order of transfer to oneself would neither be warranted nor in any manner affect the validity of the proceedings.
14. However, the vital and mandatory requirement of recording the satisfaction under section 158BD is concerned, as has been rightly noted by the Tribunal, such satisfaction is absent as far as Jayraj Group is concerned in whose case search under section 132 of the Income-tax Act has been carried out by the department. As such an essential requirement prior to initiating the proceedings under section 158BC, has not been fulfilled, the Tribunal is justified in quashing the notice issued against the assessee respondent and the assessment order passed pursuant thereto. As the order of the Tribunal is in consonance with the law laid down on the subject in case of Manish Maheshwari (supra), we find no reason to interfere with the same."
In the instant case also, facts being identical, they are squarely covered by the judgment rendered by this court in the case of Lalitkumar Patel (supra), the Tribunal committed no error in upholding the version of the assessee-respondent. Recording of satisfaction under section 158BD being absent, without assigning separate reasons in this case, order impugned is upheld.
The substantial questions of law raised in this appeal since duly are answered by this court, no further questions of law deserve any consideration. The tax appeal is dismissed.