COMMISSIONER OF INCOME TAX FARIDABAD vs. M/S SANWARIA BANQUETS

of 2010

-1- **** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Income-tax Appeal No.492 of 2010 Date of decision: 14.2.2011 Commissioner of Income-Tax, Faridabad ...Appellant Versus M/s Sanwaria Banquets (P) Ltd. ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Ms. Urvashi Dhugga, Sr. Standing Counsel for the appellant.

**** ADARSH KUMAR GOEL, J (

Oral)

.

-2- **** reasonable time from the date of completion of the block assessment in the case of searched persons, therefore, on the limitation ground, the proceedings initiated u/s 158BD are invalid and are thus, liable to be cancelled even though there is no time limit prescribed for issuing notice u/s158 as per section 158BD read with section 158BC of the Income Tax Act, 1961? ii) Without prejudice to the question No.(I) above, whether, the ld. ITAT was right in law in holding that the proceedings initiated u/s 158BD are invalid and are thus liable to be cancelled on the limitation ground though section 292B of the Income Tax Act, 1961 specifically provides that no proceeding under Income Tax Act, 1961 shall be invalid or shall be deemed to be invalid by reason of any mistake, omission or defect in a notice? iii) Whether on the facts and in the circumstances of the case, the ld. ITAT was right in law in not adjudicating the other grounds i.e. satisfy the requirement of section 158BD in holding that since the notice u/s 158BD has been held to be beyond time rendering it invalid and not confirming the order of the Assessing Officer? iv) Whether on the facts and in the circumstances of of 2010

-3- **** the case, the ld. ITAT has erred in dismissing the appeal of the revenue and upholding the order of CIT(A) that the proceedings u/s 158BD were initiated without properly recording the satisfaction as required under that section disregarding the fact that the Assessing officer, New Delhi having juri iction over the searched person i.e. Shri Manoj Aggarwal and M/s Friends Portfolio (P) Ltd. vide his letter No.181 dated 6.8.2003 has communicated his satisfaction to the Assessing Officer of this case (Annexure-A enclosed) and also in assessment order itself in the case of an M/s Friends Portfolio (P) Ltd. mentioned that unexplained deposits in its bank account relate to various persons who have taken accommodation entries and to protect the interest of revenue, he added the same to the income of the company i.e. and Friends Portfolio (P) Ltd., on protective basis?”

-4- **** were given included the assessee. On requisite satisfaction having been formed, the concerned assessing officer was informed who gave notice and initiated block assessment proceedings. The assessing officer found that assessee had undisclosed income which was shown as proceeds of sale of shares through M/s Friends Portfolio P Ltd. The transactions were bogus and infact amount was received by way of accommodation entries which represented undisclosed income of the assessee. On appeal, the CIT(A) set aside the additions without going into merits only on the ground that notice under Section 158BD was beyond reasonable time after formation of satisfaction during assessment of searched person and did not give the requisite period of 15 days as required under Section 158BD. It was further held that the said notice was issued without properly recording the satisfaction. The said view has been affirmed by the Tribunal.

-5- **** assessee. Learned counsel for the revenue, thus, submits that the questions raised in both these appeals are fully covered by orders of this Court and the appeals deserve to be allowed. This being the position, we do not consider necessary to issue notice to the assesses since we are remanding the matter to the CIT(A) for fresh decision in accordance with law after hearing the assesses.

(Adarsh Kumar Goel)

Judge February 14, 2011 (Ajay Kumar Mittal) Pka

Judge