CIT-I, LUDHIANA vs. M/S PARVEEN FABRICS PVT. LTD.

ITA/379/2010HC Punjab & HaryanaPHHC01093306201025 August 2010Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY KUMAR MITTAL4 pages
AI SummaryDismissed

What were the facts?

The Revenue appealed against an order of the Income Tax Appellate Tribunal (ITAT) concerning the block period 01.04.1996 to 05.02.2003. A search was conducted on 05.02.2003 at the residence of S.K. Bhatia. Block assessment against the searched person was finalized on 28.02.2005. Subsequently, proceedings were initiated against the respondent, M/s Parveen Fabrics Pvt. Ltd., after a satisfaction note was recorded on 31.03.2006. A notice under Section 158BD was issued to the respondent on 02.12.2006. The respondent contended that the satisfaction note was recorded after the conclusion of the assessment proceedings, which was upheld by the CIT(A) and affirmed by the ITAT.

What did the High Court hold?

The High Court held that while the Act does not specifically prescribe a time limit for initiating proceedings under Section 158BD or for recording satisfaction, a plain and reasonable construction of the provision implies that the recording of satisfaction for taking action against another person under Section 158BD must occur between the initiation of proceedings under Section 158BC and before the completion of the block assessment under Section 158BC in the case of the searched person. The Court reasoned that action under Section 158BD against a third party is necessarily during the course of block assessment proceedings under Section 158BC of the searched person and cannot be after their conclusion, as there would be no occasion for the Assessing Officer to examine seized material. The Court found that the view taken by the Tribunal was in accordance with its own prior judgment in ITA No. 591 of 2009, Commissioner of Income-tax-I, Ludhiana v. Mridula, Prop. M/s Dhruv Fabrics, Ludhiana. Therefore, no substantial question of law arose.

What were the issues?

1. Whether, on the facts and in law, the ITAT was justified in holding that the recording of satisfaction under Section 158BD by the Assessing Officer of the person searched, and the consequent issuance and service of notice under Section 158BD on 02.12.2006, were belated and beyond the period prescribed by law, when Section 158BD read with Section 158BE does not specify that satisfaction must be recorded before the completion of assessment under Section 158BC? Assessee's Contention: The satisfaction note was recorded after the conclusion of the assessment proceedings, rendering the subsequent notice invalid. Revenue's Contention: The revenue argued that Section 158BD read with Section 158BE does not prescribe a specific time limit for recording satisfaction before the completion of assessment under Section 158BC.

Which sections of the Income-tax Act were involved?

Section 260A,Section 158BD,Section 158BE,Section 158BC,Section 132,Section 132A

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: 25.8.2010 Commissioner of Income Tax-I, Ludhiana ....Appellant. Versus M/s Parveen Fabrics Pvt. Ltd. ...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 under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the 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 period 01.04.1996 to 05.02.2003, proposing to raise the following substantial question of law:- “Whether on the facts and in law, the Hon'ble Income Tax Appellate Tribunal was justified in holding the recording of satisfaction u/s 158BD by the Assessing Officer of the person searched and consequence issuance and service of notice u/s 158BD on -2- 2.12.2006 was belated and beyond the period prescribed by law when the section 158BD read with section 158BE d

The order continues below.

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