Commissioner of Income Tax vs Parveen Fabrics (P.) Ltd.

Adarsh Kumar Goel, J.—This appeal has been preferred by the revenue u/s 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 IT (SS) A. No. 19/Chd./2009, dated 27-8-2009 for the block period 1-4-1996 to 5-2-2003, 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 2-12-2006 was belated and beyond the period prescribed by law when the Section 158BD read with Section 158BE does not specify that satisfaction has to be recorded by the Assessing Officer before completion of assessment u/s 158BC of the income tax Act, 1961?

A search was conducted on 5-2-2003 at the residence of one S.K. Bhatia, and from the seized documents and after finalizing block assessment against the searched person on 28-2-2005, proceedings were also taken against the Respondent after recording satisfaction on 31-3-2006. Notice u/s 158BD was issued on 2-12-2006 which was contested by the Respondent on the ground that the satisfaction note itself was after conclusion of the proceedings and not during the course of assessment proceedings. This plea was upheld by the CIT(A) following earlier judgment of the Tribunal in Manoj Aggarwal v. Dy. CIT (2008) 113 ITD 377 (Del)(SB). The Tribunal affirmed the said view.

We have heard learned Counsel for the revenue.

An identical matter was considered by this Court in order in CIT v. Mridula, Prop. Dhruv Fabrics(IT Appeal No. 591 of 2009, dated 20-7-2010) and it was observed:

The Act no where specifically prescribes any time limit or limitation for initiation of proceedings u/s 158BD of the Act or for recording of satisfaction before taking action under that provision. The plain and reasonable construction that can be placed on the aforesaid provision would be that the recording of satisfaction for taking action against any other person u/s 158BD of the Act has to be between initiation of proceedings u/s 158BC and before completion of block assessment u/s 158BC of the Act in the case of the person searched. It would, thus, mean that the action contemplated u/s 158BD of the Act against a third party to a search, is necessarily to be during the course of block assessment proceedings u/s 158BC of the searched person. It cannot be after the conclusion of the same as there is no occasion for an Assessing Officer to examine the seized material or documents of the searched person when the block assessment proceedings have concluded and no other proceedings are pending before him. If any other time limit is read in the provisions/statute, it shall lead to anomaly and would be arbitrary and unreasonable. It could not be read in the provision that where block assessment u/s 158BC of the Act in the case of an Assessee against whom action u/s 132 or 132A of the Act had been carried out is finalized, Revenue can take action at any time in the absence of any specific limitation prescribed in the statute. A construction which leads to such an anomaly should be avoided.

The view taken by the Tribunal is, thus, in accordance with the view taken by this Court. No substantial question of law arises.

The appeal is dismissed.