On 4 November 2000, The It Officials Searched Thebusiness Premises Of One Mr v. Ita

C.R. IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC & THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU FRIDAY, THE 20TH DAY OF OCTOBER 2017/28TH ASWINA, 1939 ITA.No. 419 of 2009 -------------------- AGAINST THE ORDER IN ITA 25/2007 of I.T.A.TRIBUNAL,COCHIN BENCH DATED04-06-2008 APPELLANT/RESPONDENT: --------------------- THE COMMISSIONER OF INCOME TAX(CENTRAL) (CENTRAL), COCHIN. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/APPELLANT:-------------------- MR. P.PREMKUMAR, ADVOCATE, KOCHI R1 BY ADV. SRI.K.I.MAYANKUTTY MATHER R1 BY ADV. SRI.MAHESH V.MENON THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 26.7.2016, THE COURT ON 20-10-2017 DELIVERED THE FOLLOWING: ITA NO.419 OF 2009 APPENDIX APPELLANT'S ANNEXURES: ANNEXURE ATRUE COPY OF THE ORDER SHEET RECORDING OF THE ASSESSINGOFFICER. ANNEXURE A1 A TYPE WRITTEN COPY OF THE ORDER SHEET RECORDING OF THEASSING OFFICER. ANNEXURE BTRUE COPY OF THE ASSESSMENT ORDER U/S 158 BD ANNEXURE CTRUE COPY OF THE ORDER OF THE CIT(A) ANNEXURE DTRUE COPY OF THE ORDER OF ITAT ANNEXURE ETRUE COPY OF THE STATEMENT U/S 132(4). ANNEXURE E1 TYPEWRITTENC OPY OF THE STATEMENT U/S 132(4). ANNEXURE FTRUE COPY OF THE BLOCK PERIOD RETURN ANNEXURE F1 TRUE COPIES OF CASH FLOW STATEMENTS FILED ALONG WITH THEBLOCK RETURN. TRUE COPY CSS/P.S.TO JUDGE C.R. Antony Dominic & Dama Seshadri Naidu, JJ. ------------------------------------------------- I. T. Appeal No.419 of 2009 -------------------------------------------------- Dated this the 20[th] day of October 2017 JUDGMENT Dama Seshadri Naidu, J Introduction: Assessee Premkumar is an advocate practicing, mainly,before the Motor Accident Claim Tribunals. He filed his returnsof income for only the assessment years 1991-92 to 1994-95. 2. On 4 November 2000, the IT officials searched thebusiness premises of one Mr. V. H. Mohammed Rafeeque;relating to it, under section 132 of the Act, they searched PremKumar’s house, too. The search is said to be simultaneous withthat undertaken by the Central Bureau of Investigation (“CBI”).This search led to the Assessing Officer’s passing an order undersection 153 BC. But, on appeal, the Commissioner of Income- ITA No.419 OF 2009 2 Tax (Appeals) (“the Appellate Commissioner”) ruled that the proceedings ought to have been initiated under section 158 BD, theprovision that concerns the undisclosed income belonging to someperson other than the one regarding whom the search was made. 3. Acting on the Appellate Commissioner’s direction, theAssessing Officer, on 28 July 2005, passed orders afresh: Hedetermined the total undisclosed income at `2,02,71,670/-. On appeal, the Appellate Commissioner confirmed the assessment order.Aggrieved, Premkumar approached the Appellate Tribunal, whichreversed the findings and ruled in Premkumar’s favour. Now, theRevenue came in appeal before this Court. 4. The Tribunal had “no hesitation to quash the 158BDassessment in the case.” But it dismissed the surcharge issue covering `20,67,710/- as “not pressed” by assessee-Premkumar. The Adjudicatory Ambit: 5. The Assessing Officer, to his credit, reassessed the case onremand and passed an order solid on facts and sound in reasoning.The Assessing Officer has, overall, done an impeccable job—its ITA No.419 OF 2009 3 correctness not counting here. When the matter finally reached theTribunal, it allowed the second appeal, excluding the issue ‘notpressed’ by Premkumar. 6. Here, we must observe that, more than merits, the 4. The Tribunal had “no hesitation to quash the 158BDassessment in the case.” But it dismissed the surcharge issue covering `20,67,710/- as “not pressed” by assessee-Premkumar. The Adjudicatory Ambit: 5. The Assessing Officer, to his credit, reassessed the case onremand and passed an order solid on facts and sound in reasoning.The Assessing Officer has, overall, done an impeccable job—its ITA No.419 OF 2009 3 correctness not counting here. When the matter finally reached theTribunal, it allowed the second appeal, excluding the issue ‘notpressed’ by Premkumar. 6. Here, we must observe that, more than merits, the jurisdictional, procedural, and technical issues have weighed heavilywith the Tribunal in its deciding the second appeal. And we cannottake exception to the Tribunal’s approach for “the life of the law hasnot been logic; it has been experience.” In expropriatory proceedings,as with the penal ones, technicalities matter as much as the substantialjustice counts. So, we touch on the facts to the extent they arenecessary to dispose of this appeal. The Search: 7. Both the Department and the CBI on 4 November 2000conducted simultaneous, if not joint, search at Premkumar’s residence.“On the basis of the material found during search, such as duplicatecopies of documents relating to the land transactions, variouspassbooks, diaries, list of documents and bank locker keys seized by the CBI and evidence gathered subsequently,” the Department ITA No.419 OF 2009 4 initiated proceedings under section 158 BC of the Act. Put on notice,Premkumar declared an undisclosed income of `10,69,094/- 8. The matter remanded, having been put on notice, Premkumar once again filed his objections on 14 January 2005. He requested Assessing Officer to reconsider the findings in the previousassessment order, dated 26 November 2002, passed under section158BC. Premkumar cross-examined two witnesses, too. The Assessing Officer’s Findings: 9. The Assessing Officer based his findings on two factors:Premkumar’s professional income as a lawyer, and the notings in thediary found in his house. 10. As to the professional income, the Assessing Officer, afterexamining various awards in compensation claims handled by Premkumar, took the total award amount during the relevant period as `15,56,99,881/. And he fixed Premkumar’s professional income at 12% of the aggregate award amount. 11. As to the properties, both movable and immovable,presumably owned by Premkumar, the Assessing Officer concluded ITA No.419 OF 2009 5 that all assets had been acquired by Premkumar but conveniently keptin the family members’ names. By marshalling the facts, collating thedata, examining the witnesses, and by drawing conclusions from allthe above sources, the Assessing Officer issued the primary order. Yet,as the Appellate Tribunal’s adjudication turned on technicalities andjurisdictional aspects, we refrain from the dwelling deeper into thefacts. 12. As seen, Assessing Officer arrived at the undisclosed incomefor the block period: ITA No.419 OF 2009 6 13. Finally, Assessing Officer directed Premkumar to pay, on theabove undisclosed income, tax as follows: 14. Income Tax:`1,21,63,002/-; surcharge (at 17%): `20,67,710/-; Addl. Interest (u/s.158BFA for 18 months):`26,32,679/-. Total tax and interest payable was rounded to `1,68,63,390/- The Tribunal’s Findings: (A) About the Properties: (i) Immovable: 15.Only two properties, out of nine, were in the assessee’s name. The residential property was purchased in 1990-91 and wasshown in the regular return filed for the relevant assessment year.About the 1/3rd share in the land at Mundaveli, the assessee explained that he used his ‘chit’ amount to buy it. (ii) Movable: 16. The movable properties belong to the family members, all of whom are individual assessees 13. Finally, Assessing Officer directed Premkumar to pay, on theabove undisclosed income, tax as follows: 14. Income Tax:`1,21,63,002/-; surcharge (at 17%): `20,67,710/-; Addl. Interest (u/s.158BFA for 18 months):`26,32,679/-. Total tax and interest payable was rounded to `1,68,63,390/- The Tribunal’s Findings: (A) About the Properties: (i) Immovable: 15.Only two properties, out of nine, were in the assessee’s name. The residential property was purchased in 1990-91 and wasshown in the regular return filed for the relevant assessment year.About the 1/3rd share in the land at Mundaveli, the assessee explained that he used his ‘chit’ amount to buy it. (ii) Movable: 16. The movable properties belong to the family members, all of whom are individual assessees ITA No.419 OF 2009 7 (B) About the Income: 17. All the records were seized only by the CBI, not theDepartment. The ''Binani Zinc Diary'' received from the CBI shouldnot have been taken as evidence for the ‘block assessment.’ 18. The Department found no material to hold that the assessee had any professional income by way of MACT cases. And, in fact, allthese materials were gathered after the search; it was throughindependent ‘survey action’ u/s. 133A of the Act. 19. The Assessing Officer has established no undisclosed income,and that undisclosed income is not related to the person searched;instead, it belonged to the person other than the person searched. Eventhe Panchnama, dated 26-3-2000, relates to the lands purchased; and ithas nothing to do with the assessee’s professional fees. The AssessingOfficer did not on his own initiated section158BD assessment; ratherhe acted on the the Appellate Commissioner’s directive. Submissions: 20. Sri P. K. Ravindranatha Menon, the learned Senior Counselfor the Revenue, has submitted that the Assessing Officer has taken an ITA No.419 OF 2009 8 informed decision to assess Premkumar under section 158 BD; a meredirection from the Appellate Commissioner does not vitiate theproceedings. As for the direction in the appeal, Sri Menon asserts thatthe provisions that concern the powers of an appellate authority mustbe read harmoniously. Thus read, the provisions, according to him,justify that an appellate order may contain directions other than thoserequired to be made to confirm, reduce, enhance or annual theassessment. He also contended that the assessee, if aggrieved, shouldhave appealed against that order. 21. To support his contentions, Sri Menon has relied on Thakurv. Hari Prasad v. CIT[1], Estate of Late Rangala Jojodia vs. CIT[2], andSea Pearl Industries & Others v. CIT [3]. 22. The ''Binani Zinc Diary'' was found in a simultaneous action, though seized by the CBI. And it is, asserts the learned Senior 1 167 ITR 603 2 (1971) 79 ITR 505 (SC) 3 247 ITR 578 (SC) ITA No.419 OF 2009 9 Counsel, 'evidence found as result of search' within the meaning ofsection 158BB of the Act. 23. The records seized by the CBI apart, the Assessing Officerhas based his findings, according to the learned Senior Counsel, onthe statements recorded under section 132 (4) during search. SriMenon has also reminded us that the assessee himself declared anundisclosed income of `10,69,094 in the return filed on 14.01.2005for the Block Period. 24. The ''Binani Zinc Diary'' found because of such simultaneousaction, though seized by the CBI, is 'evidence found a s result ofsearch' within the meaning of section 158BB and can be used forcomputation of undisclosed income under section 158BC or 158BD,as the case may be, asserts the learned Senior Counsel. Assessee’s: 25.Sri K. I. Mayankutty Mathar, the learned counsel forassessee-Premkumar, has supported the Tribunal’s findings in theirentirety. According to him, both the Assessing Officer and theAppellate Commissioner have misdirected themselves. And the 24. The ''Binani Zinc Diary'' found because of such simultaneousaction, though seized by the CBI, is 'evidence found a s result ofsearch' within the meaning of section 158BB and can be used forcomputation of undisclosed income under section 158BC or 158BD,as the case may be, asserts the learned Senior Counsel. Assessee’s: 25.Sri K. I. Mayankutty Mathar, the learned counsel forassessee-Premkumar, has supported the Tribunal’s findings in theirentirety. According to him, both the Assessing Officer and theAppellate Commissioner have misdirected themselves. And the ITA No.419 OF 2009 10 Tribunal has corrected what he terms the glaring adjudicatory lapsesand, so, quashed the proceedings, justly. 26. According to Sri Mather, the Appellate Commissioner’s direction to the Assessing Officer to reassess Premkumar undersection 158 BD amounts usurpation of his legitimate adjudicatorypowers as a primary authority. So he asserts that the resultantreassessment has been vitiated. To repel the Revenue’s contention thatPremkumar ought to have challenged the Appellate Commissioner’sfindings—remand and direction to reassess under a particularprovision—Sri Mather submits that once an authority lacks power, theorder renders itself a nullity, and it needs no challenge. 27. Sri Mather has diligently cited numerous decisions, but wewill refer to those that are necessary for our purpose. Substantial Questions of Law: 28. The Department framed these substantial questions of law: 1. Is the Tribunal right in holding that AO’s statement thatcertain materials unearthed in the search has pointed to theundisclosed income? ITA No.419 OF 2009 11 2. Has the AO undertook section158BD assessment on theappellate authority’s direction, rather than of his own volition? 3. Has not the AO acted on certain “admitted facts”? 4. Ought not the assessee to have challenged the appellateauthority’s remanding the matter? 5. Has not the AO computed the undisclosed income based onthe statements under Section 132(4) of the Act and on furtherenquiries through survey under Section 133A? Findings: The Scope of Appeal & The Powers of Appellate Authority: 29.Section 251 of the Act spells out the powers of the Commissioner (Appeals). Before the amendment by Finance (No. 2) Act, 2014, the provision read: 251. Powers of the [* * *] Commissioner (Appeals).— (1) Indisposing of an appeal, the [* * *] Commissioner (Appeals) shallhave the following powers— a() in an appeal against an order of assessment he may confirm,reduce, enhance or annul the assessment; [* * *]reduce, enhance or annul the assessment; [* * *]aa[() . . . (b) in an appeal against an order imposing a penalty, he may confirmor cancel such order or vary it so as either to enhance or to reducethe penalty;or cancel such order or vary it so as either to enhance or to reducethe penalty; c() in any other case, he may pass such orders in the appeal as hethinks fit.thinks fit. (2) The [* * *] Commissioner (Appeals) shall not enhance anassessment or a penalty or reduce the amount of refund unless the ITA No.419 OF 2009 12 appellant has had a reasonable opportunity of showing cause againstsuch enhancement or reduction. Explanation.—In disposing of an appeal, the [* * *]Commissioner (Appeals) may consider and decide any matter arisingout of proceedings in which the order appealed against was passed,notwithstanding that such matter was not raised before the [* * *]Commissioner (Appeals) by the appellant. 30. As seen from the above extract, the provision empowers the c() in any other case, he may pass such orders in the appeal as hethinks fit.thinks fit. (2) The [* * *] Commissioner (Appeals) shall not enhance anassessment or a penalty or reduce the amount of refund unless the ITA No.419 OF 2009 12 appellant has had a reasonable opportunity of showing cause againstsuch enhancement or reduction. Explanation.—In disposing of an appeal, the [* * *]Commissioner (Appeals) may consider and decide any matter arisingout of proceedings in which the order appealed against was passed,notwithstanding that such matter was not raised before the [* * *]Commissioner (Appeals) by the appellant. 30. As seen from the above extract, the provision empowers the appellate authority, in an appeal against an order of assessment, toconfirm, reduce, enhance, or annul the assessment. True, as rightlycontended by Sri Mather, the assessee’s counsel, before 01.06.2001,section 251 (1) (a) has an appendage: “or he may set aside theassessment and refer the case back to the Assessing Officer formaking a fresh assessment in accordance with the directions given bythe Commissioner (Appeals) and after making such further inquiry asmay be necessary, the Assessing Officer shall thereupon proceed tomake such fresh assessment and determine, where necessary, theamount of tax payable on the basis of such fresh assessment;”. 31. Sri Mather relies on a CBDT’s circular to drive home how the amendment has affected the Appellate Commissioner’s powers. Hehas cited the circular in his written submissions. Para 78 of the ITA No.419 OF 2009 13 clarificatory circular notes that the power of the AppellateCommissioner does not include the power to set aside the assessment.It was to finalize the assessment early and to avoiding prolongedlitigation. The Appellate Commissioner will not set aside theassessment and refer the case back to the Assessing Officer formaking fresh assessment. But the Appellate Commissioner continuesto have the powers under Section 250 to inquire further, or to directthe Assessing Officer to inquire and report the result to him. Afterreceiving the Assessing Officers’ enquiry report, the authority can relyon it or gather additional facts or evidence. 32. Sri Mather argues that the Appellate Commissioner has beenstripped of the power to remand and remit not to protect an assessee’sinterests but to avoid prolonged assessment proceedings, which, infact, serves a public purpose. 33. The assessee contends that the remand is beyond theAppellate Commissioner’s powers, and his direction to the primaryauthority to consider a matter under a particular provision is muchworse—indefensible. On the contrary, the Revenue asserts that ITA No.419 OF 2009 14 Premkumar first raised an objection that section 158BC had noapplication. This defence merited the Appellate Commissioner’sacceptance; it led to the remand. Absent any challenge to the order ofremand, the order’s impact cannot be wished away: Premkumarcannot hunt with the hound and run with the hare; he should chooseeither. 34. A waiver is an intentional relinquishment of a known right,but obviously an objection to jurisdiction, lays down the SupremeCourt[4], cannot be waived, for consent cannot give a court jurisdictionwhere there is none. Even if there is inherent jurisdiction, certainprovisions cannot be waived. Maxwell in his book "On theInterpretation of Statutes", 11th Edn., at p. 375, describes the rule:“Another maxim which sanctions the non-observance of a statutory.provision is that cuilibet licet renuntiare juri pro se introductoEveryone has a right to waive and to agree to waive the advantage ofa law or rule made solely for the benefit and protection of the 4 Dhirendra Nath Gorai v. Sudhir Chandra Ghosh, AIR 1964 SC 1300 ITA No.419 OF 2009 15 individual in his private capacity, which may be dispensed with 4 Dhirendra Nath Gorai v. Sudhir Chandra Ghosh, AIR 1964 SC 1300 ITA No.419 OF 2009 15 individual in his private capacity, which may be dispensed with without infringing any public right or public policy."[5] 35. The same rule is restated in Craies on Statute Law, 6th Edn., at p. 269, thus: "As a general rule, the conditions imposed by statutes whichauthorise legal proceedings are treated as being indispensable togiving the court jurisdiction. But if it appears that the statutoryconditions were inserted by the legislature simply for the security orbenefit of the parties to the action themselves, and that no publicinterests are involved, such conditions will not be considered asindispensable, and either party may waive them without affecting thejurisdiction of the court."[6] 36. The three-Judge Bench finally holds in Dhirendra Nath thatwhere the court acts without inherent jurisdiction, a party affectedcannot by waiver confer jurisdiction on it, which it has not. Wheresuch jurisdiction is not wanting, a directory provision can obviouslybe waived. But a mandatory provision can only be waived if it is notconceived in the public interests, but in the interests of the party thatwaives it. 5 As quoted in Nath Gorai (supra) ITA No.419 OF 2009 16 37. A distinction exists between the provisions that conferjurisdiction and those that regulate procedure. Jurisdiction can neitherbe waived nor created by consent, holds a Constitution Bench of the.Supreme Court in Supdt. of Taxes, Dhubri v. Onkarmal Nathmal Trust[7]A procedural provision may be waived by conduct or agreement.Quoting with approval Kammins Ballrooms Co. Ltd. v. ZenithInvestments (Torquay) Ltd.,[8]Onkarmal, per C. N. Ray, C.J.,furtherobserves that waiver arises where a person is entitled to alternativerights inconsistent with one another. A person is sometimes said tohave "waived"' the alternative right, as for instance a right to forfeit alease or to rescind a contract of sale for wrongful repudiation orbreach of condition. This is also sometimes described as "election"rather than "waiver". 38. Onkarmal goes on to observe that there can be no waiver ofa statutory requirement or provision which goes to the jurisdiction, ofassessment. The origin of the assessment is either an assessee filing a 7AIR 1975 SC 2065 ITA No.419 OF 2009 17 return as contemplated in the Act or an assessee being called upon tofile a return as contemplated in the Act. Onkarmal postulates thatrevenue statutes are based on public policy; revenue statutes protectthe public on the one hand and confer power on the State on the other.39. Onkarmal¸ per M. Hameedullah Beg, J. (as his Lordshipthen was), holds that the waiver, even where both sides have agreed towaive the operation of a statutory provision, cannot extend to a casein which the effect may be either to oust the jurisdiction conferred bystatute or to confer a jurisdiction which, according to the statute, is notthere. 40. In Commissioner of Income Tax v. Jolly Fantasy World Ltd.[9],a Division Bench of the Gujarat High Court, relying on the above twojudgments, held, somewhat under similar circumstances as we facenow, that as for the estoppel or waiver, it is immaterial that theassessee participated in the earlier round of litigation either before theAssessing Officer or before the Tribunal, or consequently before the ITA No.419 OF 2009 18 Assessing Officer. It cannot bar the assessee from challenging thejurisdictional authority of an adjudicator. 40. In Commissioner of Income Tax v. Jolly Fantasy World Ltd.[9],a Division Bench of the Gujarat High Court, relying on the above twojudgments, held, somewhat under similar circumstances as we facenow, that as for the estoppel or waiver, it is immaterial that theassessee participated in the earlier round of litigation either before theAssessing Officer or before the Tribunal, or consequently before the ITA No.419 OF 2009 18 Assessing Officer. It cannot bar the assessee from challenging thejurisdictional authority of an adjudicator. 41. The High Court has undoubtedly jurisdiction to decidewhether the taxing authority, observed the Supreme Court in BhopalSugar Industries Ltd. v. D. P. Dube, Sales Tax Officer[10], has arrogatedto himself power which he does not possess, or has committed aserious error of procedure which has affected the validity of hisconclusion or even where the taxing authority threatens to recover taxon interpreting the statute which is erroneous. 42. Indeed, the assessee argues that the amendment took theappellate authority’s power to remand the matter. According to him,this denudation aims to serve a public interest: curtailing theadjudicatory delays and completing the assessments quickly. 43. The Revenue maintains that the authority who passed theorder has the power to entertain an appeal, in the first place. If he haspassed an order which does not strictly conform with the statutorymandate, he has, at best, exercised his power irregularly—or even 10AIR 1967 SC 549, as quoted in Okayti Tea Co. Ltd. vs. Income Tax Officer [160 ITR 487(Cal)](Cal)] ITA No.419 OF 2009 19 illegally. But, by no stretch, he acted without authority; nor has hisorder become nullity. 44. When an order under section 271 (1) (C) is passed inviolation of section 274 (1), it is statutory violation, observes the HighCourt of Andhra Pradesh in Thakur V. Hari Prasad. The order mayhave violated a statute, and it may amount to an illegal order. But itcan be corrected under section 254 of the Act. The order does not,thereby, become void. Uncorrected in appropriate proceedings,theorder continues to hold good and remains in currency. 45. In Sea Pearl Industries the Supreme Court examined Section 80-HHC of the Act. The Court observed that the object of Section 80-HHC is to grant an incentive to earners of foreign exchange. Thematter will, therefore, must be considered by referring to this object.In other words, Sea Pearl advocates the well-entrenched rule ofpurposive interpretation. 46. In Okayti Tea,relied on by the Revenue, the Calcutta HighCourt has held that it is not open to a party to make a grievance aboutapplying a rule unless he comes up with appropriate proceedings to ITA No.419 OF 2009 20 have the rule’s applicability property tested. Once the person acts athis own peril by not contesting a particular directive, he cannot urgein the proceedings under Article 226 of the Constitution all thequestions which he could have raised in a reference, for thejurisdiction exercised by the court under Article 226 is limited. 47. All the above precedents examined, we reckon that theholding of Dhirendra Nath, Onkarmal, and Bhopal Sugar Industriesis unmistakable. Under the amended section 251 of the Act, theAppellate Commissioner may confirm, reduce, enhance, or annul theassessment. But he cannot refer the case back to the Assessing Officerfor making a fresh assessment; nor can he direct the Officer to decidein accordance with his directions. Records and Satisfaction under Section 158 BD of the Act: 48. Section 158 BD mandates that the Assessing Officer must be“satisfied that any undisclosed income belongs to any person, otherthan the person with respect to whom search was made under Section132.” Here, meticulous and exhaustive as the primary order has been,the Assessing Officer has recorded no satisfaction that the disclosed Records and Satisfaction under Section 158 BD of the Act: 48. Section 158 BD mandates that the Assessing Officer must be“satisfied that any undisclosed income belongs to any person, otherthan the person with respect to whom search was made under Section132.” Here, meticulous and exhaustive as the primary order has been,the Assessing Officer has recorded no satisfaction that the disclosed ITA No.419 OF 2009 21 income at the hands of Muhammed Rafeeque actually belongs toPremkumar. As rightly contended by Sri Mathar, neither the notice northe assessment order whispers about anything obtained in the searchat the Muhammed Rafeeque’s premises. On the contrary, what wasrecorded is about the search of Premkumar’s house by the CBI and theRevenue Department—and the undisclosed of the very Premkumar.So, it may have been a search under section 158 BC of the Act. 49. In Commissioner of Income Tax vs. PanchajanyamManagement Agencies and Services[11], a Division Bench of this Courthas held that even though section 158BD is an enabling provisionauthorising the Department to assess any person other than thesearched Assessee or Assessees against whom documents and recordsare called for under Section 132A, still the assessment in such casemust be completed strictly in accordance with the procedure providedunder Section 158BC as stated above. But Panchajanyam goes on toobserve that there is no mention in Section 158BD that the AO beforetransferring the file to another officer having jurisdiction to assess the ITA No.419 OF 2009 22 person other than the Assessee proceeded under Section 132 or 132Ahas to record his satisfaction in writing. It finally holds that thevalidity of assessment is not affected from the Assessment Officer’sfailure to record his satisfaction under Section 158BD; it is only totransfer the file. Once the file is transferred, the transferring officerbecomes functus officio and the jurisdiction for all purposes istransferred to the officer to whom file is transferred and who hasjurisdiction to assess the Assessee about whom details are obtainedwhile searching another assessee. 50. Contrary to Panchajanyam are the Supreme Court’sprecedents. While dealing with a taxing provision, the principle of‘strict interpretation’ should be applied. The court shall not, observedthe Supreme Court in Sneh Enterprises v. Commr. of Customs[12],interpret the statutory provision in such a manner as would create anadditional fiscal burden on a person. It is also trite that while twointerpretations are possible, the court ordinarily would interpret theprovisions in favour of a taxpayer and against the Revenue. ITA No.419 OF 2009 23 51. Quoting Sneh Enterprises with approval, another Division Bench of the Supreme Court in Manish Maheshwari v. CIT[13]has heldthat section 158-BD provides for taking recourse to a blockassessment in terms of Section 158-BC regarding any other person,the conditions precedent for that are: (i) satisfaction must be recordedby the assessing officer that any undisclosed income belongs to anyperson, other than the person regarding whom search was made underSection 132 of the Act; (ii) the books of accounts or other documentsor assets seized or requisitioned had been handed over to the assessingofficer having jurisdiction over such other person; and (iii) theassessing officer has proceeded under Section 158-BC against suchother person. 52. Because of the authoritative assertion of the legal principlesin Manish Maheshwari about section 158 BD, we may obviate anyreference to Panchajanyam, whose holding turns on its own facts. 53. The upshot of the discussion is that the assessment order,dt.28.07.2005, is vitiated. ITA No.419 OF 2009 24 Limitation: 52. Because of the authoritative assertion of the legal principlesin Manish Maheshwari about section 158 BD, we may obviate anyreference to Panchajanyam, whose holding turns on its own facts. 53. The upshot of the discussion is that the assessment order,dt.28.07.2005, is vitiated. ITA No.419 OF 2009 24 Limitation: 54.The statutory requirement for completing the blockassessment under section 158BE(2)(b) is “two years from the end ofthe month in which the notice under this Chapter was served on suchother person in respect of search initiated or books of account or otherdocuments or any assets are requisitioned on or after the 1st day ofJanuary 1997.” Determining the limitation under section 158BE (2)(b)of the Act, the Madras High Court in Commissioner of Income Tax vs.K.M. Ganesan[14] has held that if the notice is given first under section158BC and then correctly given under section 158BD, the limitationruns from the date of first notice. 55. Here, the search under section 132 of the Act was conductedon 04.11.2000; the notice under section 158BC was issued ono8.06.2001. The proceedings were concluded on 28.07.2005, whenthe Assessing Officer passed the order. The notice under section158BC of the Act, as is seen, was given way beyond two years ago. ITA No.419 OF 2009 25 Even going by that reckoning, the whole proceedings have beenbarred by limitation. So, we hold that the impugned order, dt.04.06.2008, of theAppellate Tribunal is unexceptionable and unassailable. The questionsof law, therefore, are answered against the Revenue and in favour ofthe assessee. The appeal is dismissed. No order on costs. Sd/- Antony Dominic, Judge sd/- Dama Seshadri Naidu, Judge css/ true copy P.S.TO JUDGE