COMMISSIONER OF INCOME TAX LUDHIANA vs. G.L.BASSI

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ITA/130/2005HC Punjab & HaryanaPHHC01068290200504 August 2010Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY KUMAR MITTAL3 pages
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What did the High Court hold?

The High Court held that the ITAT erred in cancelling the order. It was not disputed by the assessee that satisfaction in terms of Section 158BD was duly recorded before the completion of the assessment, specifically on 14.9.1995. This crucial fact was omitted from the ITAT's consideration. Therefore, the Assessing Officer was justified in proceeding under Section 158BD, even though this section was not explicitly mentioned in the assessment order. The judgments relied upon by the assessee were distinguished because they lacked the recording of satisfaction as required by Section 158BD. The Court followed the principle laid down in Manish Maheshwari, which states that if satisfaction is duly recorded, persons other than the searched person can be proceeded against under Section 158BD. Consequently, the question was answered in favour of the Revenue and against the assessee. The appeal was allowed, and the order of the Tribunal was set aside.

What were the facts?

The Commissioner of Income Tax (Central) Ludhiana (Revenue) appealed against an order of the Income Tax Appellate Tribunal (ITAT) concerning the block period 1.4.1985 to 11.8.1995. A search and seizure operation was conducted at the assessee's premises on 11.8.1995. During the search, a deposit of Rs. 10 lacs made on 20.3.1995 in the assessee's bank account was discovered. The assessee, Karta of an HUF, filed a return for the block period declaring nil income. Following confrontation with the undisclosed bank deposit, the assessee surrendered the amount for taxation, and the Assessing Officer (AO) assessed it as undisclosed income. However, on appeal, the addition was deleted by the ITAT, primarily on the ground that Section 158BC of the Income Tax Act, 1961 (the Act) was not attracted due to the absence of a search warrant in the assessee's name.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT was correct in law in cancelling the order passed under section 158BC by holding that there was no warrant under section 132(1) of the IT Act, ignoring the fact that the order was passed by invoking the provisions of section 158BD for which execution of a warrant was not a prerequisite? Revenue's contention: The Revenue argued that the order under Section 158BC was justified even without a search warrant in the assessee's name, as the materials found during the search clearly established the assessee's liability. The Revenue relied on the Supreme Court judgment in Manish Maheshwari v. Assistant Commissioner of Income Tax and another (2007) 289 ITR 341. Assessee's contention: The assessee relied on the Bombay High Court judgment in CIT v. Tirupati Oil Corporation (2001) 248 ITR 194 and the Delhi High Court judgment in CIT v. Pushpa Rani (2007) 289 ITR 328.

Which sections of the Income-tax Act were involved?

Section 260A,Section 158BC,Section 132(1),Section 158BD

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. ITA No. 130 of 2005 Date of decision: 4.8.2010 Commissioner of Income Tax (Central) Ludhiana -----Appellant Vs. Sh.Girdhari Lal Bassi ----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Krishan Kumar Mehta, Advocate for the revenue. Mr. Pankaj Jain, Advocate for the respondent-assessee. Adarsh Kumar Goel,J.

1.

This order will dispose of ITA Nos.130 and 133 of 2005 as common question of law is involved. Facts have been taken from ITA No.130 of 2005. 2. This appeal has been preferred by the revenue under section 260A of the Income Tax Act, 1961 (for short, ‘the Act’) against order dated 5.10.2004 passed by the Income Tax Appellate Tribunal, Chandigarh Bench ‘B’, Chandigarh in ITA No.1065/Chandi/96 for the block period 1.4.1985 to 11.8.1995, proposing to raise following substantial questions of law:- “Whether on facts and in the circumstances of the case, the ITAT was correct in law in cancelling the order passed under section 158BC holding that there was no warrant under section 132(1) of the IT Act ignoring the fact that the order was passed by invoking the provisions of section 158BD for which execution of warrant was not a per- requisite?”

The assessee is Karta of HUF. Search and seizure operation was conducted at the premises of the assessee on 11.8.1995. From the materials seized, it was found that the assessee had made a deposit of Rs.10 lacs on 20.3.1995 in his bank account. The assessee filed return for the block period from 1.4.1985 to 11.8.1995 declaring nil income. On being confronted with the undisclosed deposit in the bank account, the assessee in his statement dated 14.8.1996 surrendered the amount for being taxed. Accordingly, the Assessing Officer assessed the amount as undisclosed income. On appeal, addition was deleted, inter-alia, on the ground that there being no search warrant in the name of the assessee, provisions of section 158BC of the Act were not attracted.

3.

We have heard learned counsel for the parties and perused the record.

4.

Learned counsel for the revenue challenges the finding recorded by the Tribunal as erroneous in law by submitting that order under section 158BC was justified even in absence of search warrants being in the name of the assessee. From the material found during the search, liability of the assessee was clearly established. Learned counsel relies upon judgment of the Hon’ble Supreme Court in Manish Maheshwari v. Assistant Commissioner of Income Tax and another, (2007) 289 ITR 341. 5. Learned counsel for the assessee relies upon judgment of Bombay High Court in CIT v. Tirupati Oil Corporation, (2001) 248 ITR 194 and judgment of Delhi High Court in CIT v. Pushpa Rani, (2007) 289 ITR 328. 6. It is not disputed by learned counsel for the assessee that satisfaction in terms of Section 158BD was duly recorded before completion of assessment i.e. on 14.9.1995 which fact has been omitted by the Tribunal from consideration as stated in para 3 of the memo of appeal. The Assessing Officer, was thus, justified in proceeding under section 158BD, even though the said section has not been mentioned in the order of assessment. The judgments relied upon by learned counsel for the assessee are distinguishable as therein satisfaction was not recorded in terms of section 158BD of the Act. In Manish Maheshwari, it has been held that if satisfaction is duly recorded, the person other than searched person can also be proceeded against under Section 158BD of the Act. Accordingly, the question has to be answered in favour of the revenue and against the assessee. Ordered accordingly.

7.

The appeal is allowed and order of the Tribunal is set aside. (Adarsh Kumar Goel) Judge August 4, 2010 (Ajay Kumar Mittal) ‘gs’ Judge 3

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