COMMISSIONER OF INCOME TAX, FARIDABAD vs. M/S SWAMI ENTERPRISES PVT. LTD.

The appellant has approached this Court by way of instant appeal under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 13.11.2009 passed by the Income Tax Appellate 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 claiming following substantial questions of law:- “I. Whether, on the facts and in the circumstances of the case, the Ld. ITAT was right in law in allowing the appeal of the assessee in holding that no satisfaction has been recorded before initiation of proceedings under section 158BD of the Income Tax Act, 1961 in the case of the assessee, the proceedings initiated -2- under section 158BD of the Income Tax Act, 1961 invalid and consequential assessment stands quashed even though the entire assessment was set aside with the direction to re-adjudicate upon the same after affording opportunity to the assessee by the Ld. ITAT itself? II. Whether, the order of the Ld. ITAT is within the four corners of law as it jeopardizes and overlaps the juri iction of the Assessing Officer assigned by the Ld. ITAT itself by set aside of the assessment? III. Whether, on the facts and in the circumstances of the case, the Ld. ITAT was right in law in adjudicating on issue which was not even the subject matter of appeal before the Ld. ITAT, who had set aside the assessment already framed only with the direction to re-adjudicate upon the same after affording opportunity to the assessee? IV. Whether, on the facts and in the circumstances of the case, the Ld. ITAT was right in law in quashing the assessment made u/s 158BD read with section 254 of the Income Tax Act, 1961 and not deciding the issues involved in the case on merits? V. Whether, on the facts and in the circumstances of the case, the Ld. ITAT was right in law in quashing the assessment as no satisfaction has been recorded before initiation of proceedings under section 158BD -3- of the Income Tax Act, 1961 in the case of the assessee even though the Assessing Officer for both the search party as well as the assessee was the same, consequently satisfaction was not required to be record?”

The facts necessary for adjudication as pleaded in the appeal may be noticed. For the block period starting from 12.4.1993 to 14.8.1996, the assessment of the assessee's income was completed on 23.6.1998 at an income of Rs.3,42,35,628/-. Against the assessment order, the assessee filed an appeal before the Tribunal who vide order dated 8.11.2006 set aside the said assessment and issued a direction to the assessing authority for fresh re-adjudication after affording an opportunity to the assessee. Fresh notices under Sections 143(2) and 142(1) dated 17.9.2007 were issued and the assessment was completed on 28.12.2007 under Section 158BD read with Section 254 of the Act at an income of Rs.8,45,887/-. Against the assessment so framed, the assessee filed an appeal before the Tribunal. The Tribunal vide order dated 13.11.2009 quashed the assessment holding that no satisfaction had been recorded before initiation of proceedings under Section 158BD of the Act. Hence, the present appeal by the revenue.

We have heard learned counsel for the appellant.

The assessee was sought to be assessed for the block period 12.4.1993 to 14.8.1996 on the basis of the search which was carried on at the premises of the searched person leading to discovery of certain documents which related to undisclosed income of the assessee. However, no satisfaction was recorded by the Assessing -4- Officer while framing block assessment of the searched person. The Tribunal in view of the Apex Court decision in Manish Maheshwari v. Assistant CIT, 289 ITR 341 (SC) had annulled the proceedings on the ground that no satisfaction was recorded by the Assessing Officer to the effect that any undisclosed income belonged to the assessee which was mandatory requirement for block assessment in case of a person other than the person who was searched.

Learned counsel for the revenue could not dispute that no such satisfaction was recorded by the Assessing Officer as required in view of the aforesaid pronouncement of the Apex Court.

In view of the above, no substantial question of law as claimed by the revenue arises for consideration of this Court. Accordingly, the appeal is dismissed. (AJAY KUMAR MITTAL) JUDGE November 10, 2010 (ADARSH KUMAR GOEL) gbs JUDGE