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1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 16TH DAY OF JANUARY, 2015 PRESENT THE HON' BLE MR. JUSTICE N.KUMAR AND THE HON' BLE MR. JUSTICE B. VEERAPPA ITA No.286/2009 BETWEEN:
SRI SUBHAN JAVEED, NO.148, ‘F’ BLOCK, GOPAL GOWDA EXTENSION, SHIMOGA-577 202
... APPELLANT (BY SRI A. SHANKAR & SRI M. LAVA, ADVOCATES)
AND:
THE ASST. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-2(2), QUEEN’S ROAD, BANGALORE-560 001
... RESPONDENT (BY SRI K.V. ARAVIND, ADVOCATE)
THIS ITA IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961 ARISING OUT OF ORDER DATED 16.01.2009 PASSED IN IT(SS)A NO.
2 59/BNG/2007, FOR THE BLOCK ASSESSMENT PERIOD 01.04.1990 TO 18.01.2001, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND TO ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE ITAT, BANGALORE IN IT(SS)A No.59/BNG/2007 DATED 16.01.2009, IN THE INTEREST OF JUSTICE AND EQUITY.
THIS ITA COMING ON FOR HEARING THIS DAY, N. KUMAR, J., DELIVERED THE FOLLOWING:
JUDGMENT
The assessee has preferred this appeal against the order passed by the Tribunal.
The findings recorded by the Tribunal is that satisfaction can be inferred from the order of the Assessing Officer passed under Section 158BC of the Income-Tax Act, (hereinafter referred to as ‘the Act’) then it would be sufficient compliance to assume jurisdiction under Section 158BD of the Act. Satisfaction need not be in writing. In coming to the said conclusion, the Tribunal noticed that, in the
3 judgment of the Apex Court in Manish Maheshwari’s case, it is held that the Act does not say whether satisfied to be recorded in writing. In Manish Maheshwari’s case the Apex Court has held as under:
“Section 158(BD) however provides for taking recourse to a block assessment in terms of section 158BC in respect of any other person, the conditions precedent wherefor are (i) satisfaction must be recorded by the Assessing Officer that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 of the Act; (ii) the books of account or other documents or assets seized or requisitioned had been handed over to the Assessing Officer having jurisdiction over such other person; and (iii) the Assessing Officer has proceeded under section 158BC against such other person.”
Further it has held as under:
4 “as the Assessing Officer has not recorded his satisfaction, which is mandatory; nor has he transferred the case to the Assessing Officer having jurisdiction over the matter, we are of the opinion that the impugned judgments of the High Court cannot be sustained, which are set-aside accordingly”
This Court had an occasion to consider the said observations of the Apex Court in the case of Smt. Sunkamma v. The Assistant Commissioner of Income Tax, in ITA No.721/2008 decided on 09.09.2014 where it is held as under: “Therefore, it is a case of the Tribunal misreading the judgment of the Hon’ble Apex Court. Even if there are sufficient material to justify the satisfaction on the part of the Assessing Authority so as to take action under section 158BD of the Act, on going through the said material the Assessing Authority has to record his satisfaction in writing, which is a condition precedent for proceeding further in
5 the matter. Admittedly in this case, the satisfaction is not recorded in writing and therefore, the entire proceedings initiated are vitiated and the orders passed by the Authorities are illegal”
Accordingly, the substantial question of law is answered in favour of the assessee and against the revenue. Hence, we pass the following:
ORDER
Impugned order is set aside.
Appeal is allowed.
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JUDGE
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JUDGE Sbs*