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DATE: July 10, 2018 (Date of pronouncement)
DATE: July 19, 2018 (Date of publication)
AY: 1985-86 to 1995-96
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S. 158BC: The fact that the second proviso to s. 158BC(a) prohibits an assessee who is subjected to search from filing a revised return of income does not mean that the assessee is prohibited from raising an additional claim before the appellate authorities

We note that the prohibition in Second Proviso to Section 158BC(a) of the Act of filing a revised return of income before the Assessing Officer would not prohibit a Assessee from raising the additional claim before Appellate Authorities as held by this Court in Pruthvi Brokers and Shareholders P. Ltd. (Supra). This on consideration of the decision of the Supreme Court in National Thermal Power Co. Ltd. v. CIT 229 ITR 384 and Goetze (India) Ltd. v. CIT 284 ITR 323. In fact, in Goetze (India) Ltd., the Apex Court after holding that Assessing Officer has no power to entertain claim for deduction otherwise than by filing revised return of income by Assessee, clarified that the same would not fetter the appellate authority from entertaining a claim not made before the Assessing Officer

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DATE: May 2, 2018 (Date of pronouncement)
DATE: May 3, 2018 (Date of publication)
AY: -
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S. 158BB Block Assessment: While it is a cardinal principle of law that in order to add any income in the block assessment, evidence of such income must be found in the course of the search u/s 132, any material or evidence found/collected in a survey u/s 133A which has been simultaneously made at the premises of a connected person can also be utilized while making the Block Assessment. The same would fall under the words “and such other materials or information as are available with the Assessing Officer and relatable to such evidence” occurring in s. 158 BB

It is a cardinal principle of law that in order to add any income in the block assessment, evidence of such must be found in the course of the search under Section 132 of the IT Act or in any proceedings simultaneously conducted in the premises of the assessee, relatives and/or persons who are connected with the assessee and are having transaction/dealings with such assessee. In the present case, the moot question is whether the fact of cash payment of Rs 95.16 lakhs can be added under the head of the undisclosed income of the assessee in block assessment. The power of survey has been provided under Section 133A of the IT Act. Therefore, any material or evidence found/collected in a Survey which has been simultaneously made at the premises of a connected person can be utilized while making the Block Assessment in respect of an assessee under Section 158BB read with Section 158 BH of the IT Act. The same would fall under the words “and such other materials or information as are available with the Assessing Officer and relatable to such evidence” occurring in Section158 BB of the Act. In the present case, the Assessing Officer was justified in taking the adverse material collected or found during the survey or any other method while making the Block Assessment.

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DATE: April 24, 2018 (Date of pronouncement)
DATE: April 26, 2018 (Date of publication)
AY: 1989-90 to 1999-2000
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S. 158BD Block Assessment: Although s. 158BD does not speak of ‘recording of reasons’ as postulated in s. 148, but since proceedings u/s 158BD may have monetary implications, such satisfaction must reveal mental and dispassionate thought process of the AO in arriving at a conclusion and must contain reasons which should be the basis of initiating the proceedings u/s 158BD. Notice u/s 158BC issued on the same date to the searched person and the other person is not valid as no reasonable or prudent man can come to the satisfaction that any undisclosed income belongs to the other person unless the seized books of accounts etc are verified. The AO is empowered to issue a second notice u/s 158BD to the other person

The very object of the Section 158BD is to give jurisdiction to the Assessing Officer to proceed against any person other than the person against whom a search warrant is issued. Although Section 158BD does not speak of ‘recording of reasons’ as postulated in Section 148, but since proceedings under Section 158BD may have monetary implications, such satisfaction must reveal mental and dispassionate thought process of the Assessing Officer in arriving at a conclusion and must contain reasons which should be the basis of initiating the proceedings under Section 158BD

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DATE: September 13, 2017 (Date of pronouncement)
DATE: September 27, 2017 (Date of publication)
AY: -
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S. 132: The plea that the search proceedings initiated u/s 132 are invalid and that the block assessment proceedings are without jurisdiction cannot be entertained because s. 132A provides that the 'reason to believe' or 'reason to suspect', as the case may be, shall not be disclosed to any person or any authority or the Appellate Tribunal as recorded by Income Tax Authority u/s 132 or 132A

In view of the amendment made in Section 132A of the Income Tax Act, 1961 by Finance Act of 2017, the ‘reason to believe’ or ‘reason to suspect’, as the case may be, shall not be disclosed to any person or any authority or the Appellate Tribunal as recorded by Income Tax Authority under Section 132 or Section 132A. We, therefore, cannot go into that question at all. Even otherwise, we find that the explanation given by the appellant regarding the amount of cash of Rs.30 lacs found by the GRP and seized by the authorities has been disbelieved and has been treated as income not recorded in the Books of Account maintained by it

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DATE: March 21, 2017 (Date of pronouncement)
DATE: April 5, 2017 (Date of publication)
AY: -
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CITATION:
S. 132/ 158BC, 158BD: The fact that the search was invalid because the warrant was in the name of a dead person does not make the s. 158BC/158BD proceedings invalid if the assessee participated in them. Information discovered in the search, if capable of generating the satisfaction for issuing a s. 158BD notice, cannot altogether become irrelevant because the search is invalid

The point urged before us, shortly put, is that if the original search warrant is invalid the consequential action under Section 158BD would also be invalid. We do not agree. The issue of invalidity of the search warrant was not raised at any point of time prior to the notice under Section 158BD. In fact, the petitioner had participated in the proceedings of assessment initiated under Section 158BC of the Act. The information discovered in the course of the search, if capable of generating the satisfaction for issuing a notice under Section 158BD, cannot altogether become irrelevant for further action under Section 158BD of the Act

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DATE: March 21, 2017 (Date of pronouncement)
DATE: April 5, 2017 (Date of publication)
AY: 1989-90, 1990-91
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CITATION:
S. 132: It is but natural that concealed income found at the time of search and survey has to be distributed among all the family members who were carrying on business. It is also a reasonable conclusion that the income had been earned over a period of time and should be spread over various years

The Department has failed to bring on record any material to the contrary except the seized documents which, in our considered opinion, could not absolve the Department or give any right to negate the view taken by the first Appellate Authority and the Tribunal. So far as the income divided among the family members of the assessee is concerned, we find that all of them were carrying on same business from the same premises. Therefore, it is but natural that if any concealed income has been found at the time of search and survey, it has to be distributed among all the family members who were carrying on business

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DATE: September 14, 2016 (Date of pronouncement)
DATE: October 15, 2016 (Date of publication)
AY: -
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CITATION:
S. 158BC: Action of the Revenue in issuing s. 158BC notice despite the appraisal report clearly stating that no incriminating material was found is highly deplorable as it amounts to harassment of the taxpayer. The Officers cannot act on their whim and fancy. The Dept should adopt a SOP to provide adequate safeguards before issuing notices under Ch. XVIB. Chief CIT directed to pay costs to the assessee

We note that this action on the part of the revenue to issue the impugned notice ignoring the appraisal report is highly deplorable. We live in a Country governed by laws. The Officers of the Income Tax Department are obliged to proceed in accordance with the statutory provisions and not on their whim and fancy. The Officers hold power in trust and must ensure that no citizen is harassed by sending him notices, when on the basis on its own record, such notices are not sustainable. We trust that the Income Tax Department would adopt a standard operating procedure which would provide for appropriate safeguards before issuing notices under Chapter XIVB of the Act. This alone would ensure that Officers of the Revenue act in terms of the mandate provided in the Act. In fact, at the very outset, after a preliminary hearing, we had asked the learned Counsel for the Revenue whether the Revenue would still want to persist with the impugned notice under Section 158BC of the Act. On instructions, Mr. Suresh Kumar, learned Counsel for the revenue informed us that the revenue seeks to press the impugned notice and seek dismissal of the present Petition. In the above view, this is the fit case where costs should be awarded to the Petitioner

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DATE: April 28, 2016 (Date of pronouncement)
DATE: May 25, 2016 (Date of publication)
AY: -
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CITATION:
S. 158BC: A stay on the conduct of a "special audit" u/s 142(2A) amounts to a "stay of the assessment proceedings" and extends limitation u/s 158BE. One warrant of authorisation can be used for multiple visits and searches and limitation commences only after the panchnama records the conclusion of the search

As a general rule, therefore, when there is no stay of the assessment proceedings passed by the Court, Explanation 1 to Section 158BE of the Act may not be attracted. However, this general statement of legal principle has to be read subject to an exception in order to interpret it rationally and practically. In those cases where stay of some other nature is granted than the stay of the assessment proceedings but the effect of such stay is to prevent the assessing officer from effectively passing assessment order, even that kind of stay order may be treated as stay of the assessment proceedings because of the reason that such stay order becomes an obstacle for the assessing officer to pass an assessment order thereby preventing the assessing officer to proceed with the assessment proceedings and carry out appropriate assessment

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DATE: July 10, 2015 (Date of pronouncement)
DATE: July 15, 2015 (Date of publication)
AY: 2000-01 to 2006-07
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CITATION:
S. 153C: Even if the AO of the searched person and of the "other person" (i.e. the assessee) is the same, the proper satisfaction has to be recorded before assuming jurisdiction over the assessee. Failure to record satisfaction renders the assessment order null and void

The fact that incidentally the Assessing Officer is common at both the stages would not extricate him from recording satisfaction at the respective stages. In that, the Assessing Officer is satisfied that the items referred to in Section 153C belongs or belong to a person (other than the person referred to in Section 153A), being sine qua non. He cannot assume jurisdiction to transmit those items to another file which incidentally is pending before him concerning other person (person other than the person referred to in Section 153A). The question as to whether that may influence the opinion of the Assessing Officer having jurisdiction over such other person, also cannot be the basis to take any other view.

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DATE: November 11, 2014 (Date of pronouncement)
DATE: November 27, 2014 (Date of publication)
AY: 2000-01
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CITATION:
S. 158BD: Issue of notice u/s 158BD to the non-searched party has to be within the two years period given to the AO for completion of block assessment u/s 158BE(1)

The AO passed an order u/s 158BC in the case of Sree Gokulam Chits and Finance Company Limited. After the expiry of two years, he initiated proceedings u/s 158BD against the assessee. The Tribunal struck down the s. 158BD proceedings …

CIT vs. V. D. Muralidharan (Madras High Court) Read More »