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2004 Supreme(Del) 719
High Court Of Delhi
AMITY HOTELS PRIVATE LIMITED - Appellant
Versus
COMMISSIONER OF INCOME-TAX, DELHI - Respondent
W.P.(C.) 5759 of 2002
Decided On : 09/05/2004
PAVAN CHAUDHARY, R.D.Jolly, Rashmi Chopra, S.C.Sharma
The necessity of the Assessing Officer being satisfied and recording reasons to believe before initiating proceedings under Section 158 BD of the Income-Tax Act.
Headnote:
Income-Tax Act - Notices - Section 158 BD
Fact of the Case:
The petitions challenge the issuance of notices by the Assessing Officer under Section 158 BD of the Income-Tax Act, 1961, following a search and seizure operation. The Assessing Officer initiated proceedings under Section 158 BD based on an Appreciation Report prepared by the search party under Section 132 of the Act.
Finding of the Court:
The Court found that the proceedings were not in accordance with the law and therefore required to be quashed. It was noted that there was no satisfaction recorded by the Assessing Officer before issuing the notice under Section 158 BD.
Issues: The issues revolved around the requirement of satisfaction by the Assessing Officer before initiating proceedings under Section 158 BD, the necessity of recording reasons to believe, and the disclosure of the property in the return of income.
Ratio Decidendi: The Court emphasized the necessity of the Assessing Officer being satisfied and recording reasons to believe before initiating proceedings under Section 158 BD. It highlighted that the proceedings must be in accordance with the law.
Final Decision: The writ petitions were disposed of, quashing the proceedings, with the caveat that the department could take action if there was any material in accordance with the law.
( 1 ) THESE petitions are preferred by different assessees questioning the issuance of notices by the Assessing Officer under Section 158 bd of the Income-Tax Act, 1961 (hereinafter referred to as the Act ). It transpires that in accordance with the provisions contained in the Act, namely, under Section 131, the search and seizure operation was carried out in respect of M/s Bharat Lottery Agency and its proprietor Shri Praveen Kumar Jolly on 23. 06. 1999. It is also indicated in the petition that the residential premises of the said Shri praveen Kumar Jolly was searched. It is in view of this search and seizure of the books of accounts, that a report was submitted by the raiding party. It transpires that on the basis of this Appreciation Report, action has been initiated against all these petitioners. Section 158 BD being relevant is quoted hereunder:-
"undisclosed income of any other person 158 BO. Where the Assessing officer is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 or whose books of account or other documents or any assets were requisitioned under section 132a, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed under section 158bc against such other person and the provisions of this Chapter shall apply accordingly. "
( 2 ) THE Assessing Officer, if he is satisfied that any undisclosed income belongs to any person other than the person in respect Qf whom the search was made under Section 132 or documents were requisitioned under section 132a, then, such documents are to be handed over to the Assessing Officer having jurisdiction for initiating proceedings under Section 158 BC of the Act. In the instant case, it is submitted that there was the same Assessing Officer who assessed all the petitioners.
( 3 ) SO far as the procedure for block assessment is concerned, one will have to refer to Section 158 BC of the Act. The relevant portion of Section 158bc is reproduced hereunder: "158bc. Where any search has been conducted under section 132 or books of account, other documents or assets are requisitioned under section 132a, in the case of any person, then, (a) the Assessing Officer shall
(I) in respect of search initiated or books of account or other documents or any assets requisitioned after, the 30th day of June, 1995, but before the 1st day of January, 1977, serve a notice to such person requiring him to furnish within such time not being less than fifteen days;
(II) in respect of search initiated or books of account or other documents or any assets requisitioned on or after the 1st day of January, 1977, serve a notice to such person requiring him to furnish within such time not being less than fifteen days but not more than forty-five days, as may be specified in the notice a return in the prescribed form 83 and verified in the same manner as a return under clause (i) of sub-section (1) of section 142, setting forth his total income including the undisclosed income for the block period:
( 4 ) READING the aforesaid provision, it is clear that in view of Section 132, a search must have been carried out or books of accounts or other documents or assets must have been requisitioned under Section 132a of the act. Section 132 requires that the officer mentioned therein must have "reason to believe" that the person concerned despite issuance of notice has failed to produce or cause to be produced books of accounts or other documents as required by such summons or notice. We are not discussing the entire scheme of this Section because, in our view, it is not necessary and the relevant part is that there must be "reason to believe" for initiating action under Section 132 of the Act.
( 5 ) SIMILARLY, Section 132a of the Act requires that the officer mentioned therein, i
