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2015 Supreme(Del) 36
High Court of Delhi
S. RAVINDRA BHAT, R.K. GAUBA, JJ.
The Commissioner of Income-Tax - Appellant
Versus
Bharat Bhushan Jain & Others - Respondents
ITA. Nos. 648, 669, 670, 711, 1075, 1318 of 2009 & ITA. Nos. 196, 198, 279, 777, 1145, 1313, 1326 of 2010
Decided on: 08-01-2015
Rohit Madan, Ruchir Bhatia, Akash Vajpai, Pranjal Srivastava , V.M. Chaurasia, Salil Kapoor, Vikas Jain, Piyush Kaushik, Dr. Rakesh Gupta, Poonam Ahuja, Mukul Mathur, Advocates.
The necessity of a satisfaction note under Section 158-BD and its timing in relation to the assessment proceedings of the searched person is crucial for issuing notices to third parties.
Headnote:
Satisfaction Note - Third Party Notices - Section 158-BD - 158-BC, 158-BD, 158-BD - The judgment discusses the requirement of a satisfaction note under Section 158-BD and its timing in relation to the assessment proceedings of the searched person. It highlights the Supreme Court's interpretation of the necessity of a satisfaction note and emphasizes the need for contemporaneousness with the assessment proceedings of the searched person. The court found that the notices issued to the third parties were unduly delayed and not in conformity with the requirements of Section 158-BD.
Fact of the Case:
The appeals involved third parties issued notices under Section 158-BD following search proceedings for other persons. The satisfaction note and notices were issued beyond the period of limitation.
Finding of the Court:
The court found that the satisfaction note and notices were not in conformity with the requirements of Section 158-BD and were unduly delayed.
Issues: The main issue was whether the satisfaction note and notices issued to the third parties were in conformity with the requirements of Section 158-BD.
Ratio Decidendi: The court held that the satisfaction note must be contemporaneous with the assessment proceedings of the searched person, as interpreted by the Supreme Court. It found that the notices were unduly delayed and not in conformity with the requirements of Section 158-BD.
Final Decision: The appeals of the Revenue were dismissed.
S. Ravindra Bhat, J.
1. These appeals are directed against the impugned order of ITAT. Since they involved common questions of law, a common order is being made in the present cases.
2. In all these cases, assessee/respondents were third parties, who were issued notice under Section 158-BD pursuant to search proceedings in respect of other persons. In all these cases, the search proceedings were conducted on 03.08.2000. Thereafter notice was issued to them for block assessment for filing of relevant returns for previous years. The assessment proceedings were completed on 29.08.2002. Thereafter, the present assesses-third parties were issued notices under Section 158-BD. The relevant dates of recording of the satisfaction note by the A.O., issue of notices to the present assesses and completion of assessments are recorded in tabular statement in the following manner:-
ITA No. Date of Search on Manoj Aggarwal group Date of assessment of searched person under Section 158- BC Date ofSatisfaction
Note for
other person Date ofnotice
u/S 158BD Date of completion of assessment u/s 158-BD
648/2009 03.08.2000 29.08.2002 15.07.2003 31.03.2004 31.03.2006
669/2009 03.08.2000 29.08.2002 15.07.2003 31.03.2004 31.03.2006
670/2009 03.08.2000 29.08.2002 15.07.2003 31.03.2004 31.03.2006
771/2009 03.08.2000 29.08.2002 21.07.2003 31.03.2004 31.08.2006
1075/2009 03.08.2000 29.08.2002 15.07.2003 17.08.2004 31.03.2006
1318/2009 03.08.2000 29.08.2002 15.07.2003 31.03.2004 31.03.2006
196/2010 03.08.2000 29.08.2002 13.01.2004 09.02.2004 30.12.2005
198/2010 03.08.2000 29.08.2002 14.01.2004 05.02.2004 17.02.2006
279/2010 03.08.2000 29.08.2002 26.08.2003 27.08.2003 30.08.2005
777/2010 03.08.2000 29.08.2002 13.01.2004 09.02.2004 15.02.2006
1145/2010 03.08.2000 29.08.2002 14.01.2004 06.05.2005 29.05.2007
1313/2010 03.08.2000 29.08.2002 04.06.2003 18.06.2003 27.06.2005
1326/2010 03.08.2000 29.08.2002 04.06.2003 18.06.2003 27.06.2005
3. These appeals were originally disposed of by common judgment of this Court reported as CIT vs. Radhey Shyam Bansal 2011 337 ITR 217 (DLI). In that judgment it was held that the satisfaction note in all the cases was recorded and notices were issued beyond the period of limitation. It was held, inter alia, that the satisfaction note recorded in these cases did not accord with the requirements of Section 158-BD, applying the decision in CIT vs. Manish Maheshwari (2007) 289 ITR 341 (SC). In this batch of judgments, along with another batch of cases, appeal was preferred before the Supreme Court, which decided in its judgment reported as CIT vs. Calcutta Knitwears, Ludhina 362 ITR 673 (SC), inter alia, that:
“44. In the result, we hold that for the purpose of Section 158-BD 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 158-BC of the Act; (b) along with the assessment proceedings under Section 158-BC of the Act; and (c) immediately after the assessment proceedings are completed under Section 158-BC 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 158-BD 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 158-BD of the Act.”
4. So far as the determination whether the
