This appeal dismissed the assessee's challenge against a block assessment order. The High Court held that the notice, though cited as Section 158 BC, was substantially valid under Section 158 BD and covered by Section 292 B as a technical error.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY NAGPUR BENCH : NAGPUR
INCOME-TAX APPEAL NO. 58 OF 2003
Office Notes, Office Memoranda of Coram, appearances, Court's orders or directions and Registrar's orders.
Court's or Judge's orders
CORAM : J.P. DEVADHAR AND B.P. DHARMADHIKARI, JJ. APRIL 03, 2007.
Heard Shri Bhattad, learned counsel for the appellant and Shri Jaiswal, learned counsel for the respondent.
This appeal is filed by the assessee against the judgment of the Tribunal dated 21.02.2003 passed in ITA No. (SS) A/21/NAG/98 (Block Assessment 1986-87 to 1996-97) stating that the following questions of law arise out of the order of the Tribunal :
(i)“When search was conducted against Gopaldas Shankarlal Agrawal and not against Appellant whether notice issued under Section 158 BC and assessment order passed under Section 158-BC is legal and proper ?
(ii)Whether notice in absence of any indication appearing therein as if issued under Section
2
158 BD can be construed as issued under Section 158 BD, particularly when the Assessment order itself is passed under 158 BC ?
(iii) Whether the provisions of Section 158 BC or 158 BD can be invoked against the Appellant merely on the basis of the Documents (B1 – 17 & 18) seized from Gopaldas Agarwal and when Gopaldas Agrawal did not say that the document belonged to the Appellant and when the presumption under Section 132 (4A) was drawn against him as a matter of fact ?
3
Assessment by Assessing Officer which is clearly illegal and based on illegal assumption of power vested under law ?”
At the outset, it may be noted that while setting aside the Block Assessment Order and restoring the matter to the Assessing Officer for fresh assessment, the Tribunal has held that the notice issued under Section 158 BC is in fact notice under Section 158 BD and the same is valid. The grievance of the assessee is that the notice issued under Section 158 BC on 6.6.1997 is invalid on two grounds. Firstly, it is contended that search was carried out in the premises of Gopaldas Agrawal and not in the premises of the assessee and therefore notice under Section 158 BC could not be issued to the assessee. Secondly, it is contended that there is no satisfaction recorded in the present case for initiating block assessment proceedings against the assessee.
The facts relevant for the present appeal are that search action was under Section 132 of the Income-tax Act was initiated at the residential and business premises of one
4
Shri Gopaldas Agrawal on 19.11.1996 and the same continued up to 22.11.1996. In the course of search, the profit and loss account and balance sheet were found in the bed room of Gopaldas Agrawal. On the basis of the said documents as well as certain other enquiries conducted in that behalf, the departmental authorities came to the conclusion that the documents pertained to the business activities with which the assessee was concerned. Accordingly, notice under Section 158 BC of the Act was issued to the assessee on 6.6.1997. The assessee has not filed any return in pursuance of the said notice. Thereafter, the Assessing Officer proceeded with the assessment proceedings and completed the same by determining the total undisclosed income for the block period at Rs. 8,31,88,077/-.
The assessee being aggrieved by the aforesaid order, filed an appeal before the Tribunal. The Tribunal held that the notice was invalid, however, in respect of the merits of the case, the Tribunal held that adequate opportunity has not been given to the assessee and accordingly the Tribunal has
5
remanded the matter for fresh consideration on merits.
As regards the first contention of the appellant that the notice issued under Section 158 BC is invalid, the Tribunal has recorded a finding that the Assessing Officer before issuing notice had recorded reasons wherein it has been specifically stated that on the basis of the material seized from the premises of Gopaldas Agrawal which pertains to the assessee, notice under Section 158 BD has to be issued to the assessee. In this view of the matter, even though in the notice it is stated that the same is issued under Section 158 BC, it is apparent that there was only a technical error and the same is covered under Section 292 B of the Act. Therefore, the finding recorded by the Tribunal that the notice issued against the assessee is valid, cannot be faulted.
As regards the second argument of assessee that there was no satisfaction recorded before issuing the notice, it may be seen that before issuing the notice, the Assessing Officer had recorded the reasons as follows :
6
“M/s. O.J. Agrawal
Block Assessment
6/6/1997
Search was conducted at residence of Shri Shankarlal Agrawal & Others. During the course of search, certain documents were seized from residence of Shri Agrawal. There are certain notings on D.O.C. Inventorised on B1-/17 & 18. The said documents are balance sheet and profit and loss account as regards same jowar business carried out by OJA & GSA. Enquiries were conducted as regards same. Enquiries were also conducted by Invt. Wing, report of same is part of appraisal report. There was some tax evasion petition. This interalia suggested GSA means Gopal Das Agrawal and OJA as Omprakash Agrawal.
Hence in view of above document B1/17 & 18 and on basis of enquiries conducted and also on basis of appraisal report, I am of view that notice u/s.158 BC is required to be issued to O.J. Agrawal, Nagpur under provisions of Section 158 BD.
Hence, notice is issued to O.J. Agrawal u/s. 158 BC.”
The Tribunal has recorded a finding that in the balance sheet, in the liability side, the capital shown at Rs.94,41,607.85 and the same was shown divided between three persons and one of them is OJA which according to the revenue pertains to the assessee and therefore the notice has been
7
issued to the assessee under Section 158 BD of the Act (wrongly shown as 158 BC). The fact that the Tribunal has remanded the matter for de novo consideration cannot be a ground to hold that there was no satisfaction recorded by the Assessing Officer before the notice under Section 158 BC (under section 158 BD) of the Act.
In this view of the matter, we do not find any merit in the appeal filed by the assessee. No question of law arises. Appeal is dismissed. No order as to costs.
JUDGE
JUDGE
*GS.
3 issues framed by the court
Whether notice under Section 158 BC issued to appellant after search at another person's premises is valid and proper.
Whether absence of recorded satisfaction can invalidate notice issued under Section 158 BC.
Whether technical error in citing Section 158 BC instead of 158 BD can be corrected under Section 292 B.
5 provisions across 1 enactments
Gopaldas Shankarlal Agrawal
J.J.
J.P. Devadhar
B.P. Dharmadhikari
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
