The judgment establishes the importance of compliance with Section 158BB and the necessity of a valid satisfaction note under Section 158BD for block assessment proceedings.

S. Ravindra Bhat (Open Court):

1. The present appeal has been received on limited remit by the Hon’ble Supreme Court which had by its judgment and order reported as CIT V. Calcutta Knitwear (2014) 362 ITR 673 (SC) directed examination of the limited question as to whether opinion formation – in terms of Section 158BB of the Income Tax Act, and the time within which it had to be recorded was complied with.

2. The facts of the case are that a search was conducted on 3.8.2000 in the premises of Sh. Manoj Aggarwal. This led to the seizure of various documents and other materials; even the statement was recorded under Section 132 of the Income Tax Act. The present assessees were issued with a notice on 22.03.2004 by his assessing officer. It was alleged by the revenue that the notice was on account of opinion formation in terms of Section 158BB of Sh. Manoj Aggarwal’s assessing officer. During the course of proceeding the matter ultimately reached the ITAT which after considering the submissions of the parties as far as the records of assessment, in the assessee’s case, held that the requirement of Section 158BB were not complied with in terms of the judgment of the Supreme Court cited as Manish Maheswari V. ACIT 2007 289 ITR 341 (SC). The order of the ITAT became the subject matter of challenge in ITA 582/2008. By judgment and order dated 30.5.2011, this Court affirmed the findings of the ITAT. While doing so, the judgment in Manish Maheswari (supra) was considered, and so too were the other decisions of the Surpeme Court. Thereafter the Court in para 17 discussed the letter/communication dated 15.7.2003, by the assessing officer of Manoj Aggarwal, who wrote to the assessing officer of the present assessee. The relevant extract of the said letter is as follows :

“1) Various diaries have been seized from the possession of Sh. Manoj Aggarwal which establish that Radhey Shyam Bansal is a mediator for providing accommodation book entries by Sh. Manoj Aggarwal. The quantum of transaction done by him as per these documents is given in Annexure-A. Photocopies of these paper are enclosed in Annexure-B.

2) There are evidences of cash having been received by Mr. Manoj Aggarwal from Radhey Shyam Bansal.The summary of the amounts so received as per various seized documents is given in Annexure-C. The photocopies of these documents are provided as per Annexure-D.”

3. The revenue’s contention on that occasion was that the actual satisfaction had been recorded on the file by the assessing officer of Manoj Aggarwal on 29.8.2002. This Court in para 24 of its judgment (reported as 2011 337 ITR 217) recorded in this regard as follows :

“The last plank of submission of learned counsel appearing for the revenue was a note that was recorded by the assessing officer of the Manoj Aggarwal on the date of assessment. It is contended by Ms. Prem Lata Bansal, learned senior counsel, Mr.Sanjeev Sabharwal, Ms. Suruchi Aggarwal, Mr. Chandramani Bhardwaj, learned counsel for the revenue that though the said note was not filed before the tribunal but the same should be treated as a part of evidence on record and dealt with it. Whether that could have been taken as an additional evidence under Order 41 Rule 27 of the Code of Civil Procedure though such an application has not been filed. The same is not necessary in view of the finding recorded by the tribunal in SMC Share Brokers Ltd.(supra) in. In the said case, i.e., ITA No.250/Del/2005, the tribunal expressed the view that a satisfaction note by the assessing officer of the searched person recording undisclosed income of any person within the meaning of Section 158BD could be validly recorded after completion of assessment of the searched person. In that context, the tribunal held the only requirement is that the satisfaction must be in writing. In the said case, the tribunal was dealing with the search carri