Commissioner Of Income Tax-I, Ludhiana v. M/S Parveen Fabrics Pvt. Ltd

ITA No. 379 of 2010 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Commissioner of Income Tax-I, Ludhiana Versus M/s Parveen Fabrics Pvt. Ltd. ITA No. 379 of 2010 Date of Decision: 25.8.2010 ....Appellant. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Rajesh Katoch, Advocate for the appellant. ADARSH KUMAR GOEL, J. 1.This appeal has been preferred by the revenue underSection 260A of the Income Tax Act, 1961 (in short “the Act”) againstthe order of the Income Tax Appellate Tribunal, Chandigarh Bench (B),Chandigarh (hereinafter referred to as “the Tribunal”) passed in I.T.(SS) A. No. 19/CHANDI/2009 dated 27.8.2009 for the block period01.04.1996 to 05.02.2003, proposing to raise the following substantialquestion of law:- “Whether on the facts and in law, the Hon'ble IncomeTax Appellate Tribunal was justified in holding therecording of satisfaction u/s 158BD by the AssessingOfficer of the person searched and consequenceissuance and service of notice u/s 158BD on 2.12.2006 was belated and beyond the periodprescribed by law when the section 158BD read withsection 158BE does not specify that satisfaction hasto be recorded by the Assessing Officer beforecompletion of assessment u/s 158BC of the IncomeTax Act, 1961?” 2.A search was conducted on 5.2.2003 at the residence ofone S.K. Bhatia, and from the seized documents and after finalizingblock assessment against the searched person on 28.2.2005,proceedings were also taken against the respondent after recordingsatisfaction on 31.3.2006. Notice under Section 158BD was issued on2.12.2006 which was contested by the respondent on the ground thatthe satisfaction note itself was after conclusion of the proceedings andnot during the course of assessment proceedings. This plea wasupheld by the CIT (A) following earlier judgment of the Tribunal inManoj Aggarwal v. DCIT (2008) 113 KTD 377 (Del) (SB). TheTribunal affirmed the said view. 3.We have heard learned counsel for the revenue. 4.An identical matter was considered by this Court in orderdated 20.7.2010 in ITA No. 591 of 2009, Commissioner of Income- tax-I, Ludhiana v. Mridula, Prop. M/s Dhruv Fabrics, Ludhiana and itwas observed: “The Act no where specifically prescribes any timelimit or limitation for initiation of proceedings underSection 158BD of the Act or for recording ofsatisfaction before taking action under that provision. The plain and reasonable construction that can beplaced on the aforesaid provision would be that therecording of satisfaction for taking action against anyother person under Section 158BD of the Act has tobe between initiation of proceedings under section158BC and before completion of block assessmentunder Section 158BC of the Act in the case of theperson searched. It would, thus, mean that theaction contemplated under Section 158BD of the Actagainst a third party to a search, is necessarily to beduring the course of block assessment proceedingsunder Section 158BC of the searched person. Itcannot be after the conclusion of the same as thereis no occasion for an assessing officer to examinethe seized material or documents of the searchedperson when the block assessment proceedingshave concluded and no other proceedings arepending before him. If any other time limit is read inthe provisions/statute, it shall lead to anomaly andwould be arbitrary and unreasonable. It could not beread in the provision that where block assessmentunder Section 158BC of the Act in the case of anassessee against whom action under Section 132 or132A of the Act had been carried out is finalized,Revenue can take action at any time in the absenceof any specific limitation prescribed in the statute. A ITA No. 379 of 2010 construction which leads to such an anomaly should be avoided.” 5.The view taken by the Tribunal is, thus, in accordance with ITA No. 379 of 2010 construction which leads to such an anomaly should be avoided.” 5.The view taken by the Tribunal is, thus, in accordance with the view taken by this Court. No substantial question of law arises. 6.The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE August 25, 2010gbs (AJAY KUMAR MITTAL)JUDGE