Commissioner Of Income Tax, Faridabad v. M/S Swami Enterprises Pvt. Ltd

ITA No. 538 of 2010 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Commissioner of Income Tax, Faridabad Versus M/s Swami Enterprises Pvt. Ltd. ITA No. 538 of 2010 Date of Decision: 10.11.2010 ....Appellant. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Ms. Urvashi Dhugga, Advocate for the appellant. AJAY KUMAR MITTAL, J. 1.The appellant has approached this Court by way of instantappeal under Section 260A of the Income Tax Act, 1961 (in short “theAct”) against the order dated 13.11.2009 passed by the Income TaxAppellate Tribunal, Delhi Bench 'G', New Delhi passed in IT(SS) A No.14/Del/2008 for the block period 12.4.1993 to 14.8.1996 claimingfollowing substantial questions of law:- “I.Whether, on the facts and in the circumstances of thecase, the Ld. ITAT was right in law in allowing theappeal of the assessee in holding that no satisfactionhas been recorded before initiation of proceedingsunder section 158BD of the Income Tax Act, 1961 inthe case of the assessee, the proceedings initiatedcase, the Ld. ITAT was right in law in allowing theappeal of the assessee in holding that no satisfactionhas been recorded before initiation of proceedingsunder section 158BD of the Income Tax Act, 1961 inthe case of the assessee, the proceedings initiated II. III. IV. V. under section 158BD of the Income Tax Act, 1961invalid and consequential assessment standsquashed even though the entire assessment was setaside with the direction to re-adjudicate upon thesame after affording opportunity to the assessee bythe Ld. ITAT itself? Whether, the order of the Ld. ITAT is within the fourcorners of law as it jeopardizes and overlaps thejurisdiction of the Assessing Officer assigned by theLd. ITAT itself by set aside of the assessment? Whether, on the facts and in the circumstances of thecase, the Ld. ITAT was right in law in adjudicating onissue which was not even the subject matter ofappeal before the Ld. ITAT, who had set aside theassessment already framed only with the direction tore-adjudicate upon the same after affordingopportunity to the assessee? Whether, on the facts and in the circumstances of thecase, the Ld. ITAT was right in law in quashing theassessment made u/s 158BD read with section 254of the Income Tax Act, 1961 and not deciding theissues involved in the case on merits? Whether, on the facts and in the circumstances of thecase, the Ld. ITAT was right in law in quashing theassessment as no satisfaction has been recordedbefore initiation of proceedings under section 158BD of the Income Tax Act, 1961 in the case of theassessee even though the Assessing Officer for boththe search party as well as the assessee was thesame, consequently satisfaction was not required tobe record?” 2.The facts necessary for adjudication as pleaded in theappeal may be noticed. For the block period starting from 12.4.1993 to14.8.1996, the assessment of the assessee's income was completed on23.6.1998 at an income of Rs.3,42,35,628/-. Against the assessmentorder, the assessee filed an appeal before the Tribunal who vide orderdated 8.11.2006 set aside the said assessment and issued a directionto the assessing authority for fresh re-adjudication after affording anopportunity to the assessee. Fresh notices under Sections 143(2) and142(1) dated 17.9.2007 were issued and the assessment wascompleted on 28.12.2007 under Section 158BD read with Section 254of the Act at an income of Rs.8,45,887/-. Against the assessment soframed, the assessee filed an appeal before the Tribunal. The Tribunalvide order dated 13.11.2009 quashed the assessment holding that nosatisfaction had been recorded before initiation of proceedings underSection 158BD of the Act. Hence, the present appeal by the revenue. 3.We have heard learned counsel for the appellant. 3.We have heard learned counsel for the appellant. 4.The assessee was sought to be assessed for the blockperiod 12.4.1993 to 14.8.1996 on the basis of the search which wascarried on at the premises of the searched person leading to discoveryof certain documents which related to undisclosed income of theassessee. However, no satisfaction was recorded by the Assessing ITA No. 538 of 2010 -4- Officer while framing block assessment of the searched person. TheTribunal in view of the Apex Court decision in Manish Maheshwari v.Assistant CIT, 289 ITR 341 (SC) had annulled the proceedings on theground that no satisfaction was recorded by the Assessing Officer to theeffect that any undisclosed income belonged to the assessee which wasmandatory requirement for block assessment in case of a person otherthan the person who was searched. 5.Learned counsel for the revenue could not dispute that nosuch satisfaction was recorded by the Assessing Officer as required inview of the aforesaid pronouncement of the Apex Court. 6.In view of the above, no substantial question of law asclaimed by the revenue arises for consideration of this Court.Accordingly, the appeal is dismissed. November 10, 2010gbs (AJAY KUMAR MITTAL) JUDGE(ADARSH KUMAR GOEL)JUDGE