Cit v. Uddhan Properties Ltd

v * IN TITE HIGH COURT OF DELHI AT NEW DELHI Judgment reserved on: 23'd Muy, 2011 Judgment pronounced on: 30th May, 20Ll % + ITA No.2I2l20Ll THE COMMISSIONER OF INCOME TAX ..... Appellant Through: Ms. Prem Lata Bansal, Sr. Adv. with Mr. Ruchir Bhatia. Adv. UDDHAN PROPERTIES LTD. ..... Respondent Through: None. CORAM: HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE SANJIV KIIANNA

¶1Whether reporters of the local papers be allowed to see the Yes judgmdnt?

¶2To be referred to the Reporter or not? Yes

¶3Whether the judgment should be reported in the Digest? Yes DIPAK MISRA. CJ For orders see ITA No.582/2008. .,y' cHrEF #Jti" a'l(c-. SANJIV KHANNA. J. MAY 3O,2OII dk Certify that the digital file and physical file have been compared and the digital data is as per the physical file and no page is missing. ,t. IN TI{E H]IGI{ COURT' OF' DET.H]I AT NEW ]DEI-,]HI]I \ .nudgment reserryecl on: 23''d M*yr 201L % 'nudgment prorloutrceel on: 30tl'N[ay' 201n + 1. ITANo'58212008 gF' THE CoMMISSIoNER oF INCoME TAx XIII ..... Appellant Through: Mr'.Sanjeev Sabharwal, Adv' versus RADI{EY SHYAM BANSAL ""' Resiiondent Through: I\{r'. Salil l(apoor, Mr' Sanat I(apoor and Mr'Anikit Grqrta, Advs'

¶2ITANo.398/2008 I TI-IE COMMISSIONER OF INCOME TAX ..... Appellant Tlu'ough: M'.Sanjeev Sabharwal, Aclv' versus oNE-uPSHAREt.ffi I3r:"t#:ls,itrl};Respondent

¶3ITA No.5 7512008 THE COMNIISSIONER OF INCOME TAX XIII ..... Appellant Through: Mr'.Sanjeev Sabharwal, Adv' versus ITA 582/2008lvilh connected ntalters Page I of47 I MANOJ BANSAL ""' RbsPondeut Through: Ml. Salil I(apoor, Mr' Sanat I(apoor and Nlr-Anil<it GuPta, Advs'

¶4ITA No.5 83/2008 TIIE COMMISSIONER OF INCOME TAX XIII ..... Appellant Tlu'ough: lW.Sanjeev Sabhanval, Adv' . versus SUKESH I(UMAR GUPTA Through: ..... Respoudeut I\{r'. Salil Kapoor, iW'. Sanat l(apoor and Mr.Anikit GuPta, Advs.

¶5ITA No.28712009 rIrECoMMIStt"ffi-L*"fl ^t1Hffi ,,'"";;i,tf :;lT]'*i,r, N{r. Ruchir Bhatia, Adv. versus SUDHIRDHINGRA ITA 582/2Q08'tvith connected matters ..... Responclent Ml. Salil l(apoor, Mr. Sanat I(apoor and iMr'.Ai.pikit Gupta, Advs. ITA No.35 512009 TI-IE COMMISSIONER OF INCOME, TAX ..... Appellant Tluough: Ms. Suluchi Aggarwal, Adv. versus Page 2 of47 Through:

¶6A GULSI-IAN KUMAR LUTHRA ""' Respondent Through: 1W'. Salil I(apoor', i\[r" Sanat I(apoor I and Mr.Anikit GuPta, Advs' ' 7. ITANo.40212009 THE COMMISSIONER OF INCOME TAX ..... Appellant Through: M'. Chandrarnani Bhardwaj' Adv' SUKESH KUMAR GUPTA "' I{espondent Through: Mr'. Salil l(apoor, Mr" Sanat Kapoor ancl Mr.Anikit GuPta, Advs. B. ITA No.67012009 r THE COMMISSIONER OF INCOME TAX ..... Appellant Tluough: Ivfr'- Chandrainani Bhardrvaj, Adv' versus ANIL KUMAR BANSAL ""' Respondent Thlough: None.

¶9ITA No.77112009 THE COMMISSIONER OF INCOME TAX )ilIL'... Appellant ' Thlough: Ml-Chandratnani Bharclwaj, Adv' versus SADHU RAM AGGARWAL ""' Respondent Through: Mr. Salil I(apoor, Mr' Sanat I(apoor and Mr.Anikit GuPta; {dvs. ITA 582/2008 tuith connecled ntatters Page 3 of47 1 0 . ITA No. 8 s7 /2009 rHE c oMMr s "offiL?fl ^ffi H,lffi,l* "r;fl11;j"]'fr," versus . H.P. GOEL ""' ResPondeut Through: None. 1 1 . ITA No,107 512009 . THE COMMISSIONER OF INCOME TAX XIII ..... Appellant Ttl'ough: iW'. Chandramani Bhardrvaj, Adv' versus BHARAT BHUSHAN JAIN "" Responclent Tlu'ough: None.

¶12ITA No.127912009 THE COMMISSIONER OF INCOME TAX ..... Appellant ' Through: Mr'.Sanjeev Sabharwal, r\dv' S'P' BHAGAT AND SONS HUF ""' Rcsponclcnt Through: iW'- Salil I(apoor, Mr' Sanat I(apoor and Mr.Anikit Gt4lta, Advs.

¶13itaNo.t+g/20t0 THECOMMISSIONERoFINCOMETAX'....Appellant Through: Mr.Sanjeev Sabhan'r'al, Adv' ve[sus ITA 582/2008 tvilh comected nntters Page 4 of47 B SMT. BADAI4I DEVI BAFNA ..... RESPOITCICITT Through: Dr. Rakesh Gupta, Mr' Ashwani Tanjeja, Ms. Poouarn Ahuja & Mt" . Johnson Bora' ADvs' 14, ITANo.i5412010 rHE c .MMIS sIoNER or ^ffi.Trffi,ru|*;3ff ]t*' versus CI]AMUNDA SECURITIES PVT. LTD. RCSPOTidETTT Through: None. 1 5 . ITA No.7 4Bl20I0 TI-IE COMMISSIONER OF INCOME TAX XIII ""' Appellant \ Through: Mr. Abhishek Maratha, Adv' versus VEENA GUPTA ""' ResPondeut Throulh: None.

¶16ITA No.27912010 i rIrECoMMlsttoffi'Lro,l^i^"'H'ffi f H*;;i,tllof, Tl'*'u' Mr. Ruchir Bhatia, Aclv. vei'sus SANJAY RAJ CI-IOWDHARY ""' Respondent . Tluough: Dr. Rakesh Gupta, Mr" Ashwani Tanjeja, Ms. Poonam Ahuja & Mr. Johnson Bora, ADvs. ITA 582/2008 witlt gonnected matters Page 5 of47 q l7 . ITA No.1 l4s/2010 . THE COIVIN4ISSIONER OF INCOME TAX ..... APPEIIANT Ttl'ough: Ms. Prern Lata Bansal, Sr' Adv' with \&. Ruchir Bhatia, Adv. versus RASI{MI MONGA ""' ResPondent Through: Ml. Salil l(apoor, Mr' Sanat I(apoor Mr.Anikit GuPta, Advs' ,

¶18ITANo.196/2010 TFIE COMMISSIONER OF INCOME TAX ""' Appellant Through: Iv{r'.Sanjeev Sabhai-wal, Adv' versus MS. ANU AGGARWAL "" ResPondent Through: None. 1 9 . ITA No.6 s5l20\0 TI-IE COMMISSIONER OF'INCOME, TAX ..... Appellant Through: Mr.Sanjeev Sabharwal, Adv' versus GOLDEDGE ESTATES AND INVESTIMENTS LTD. ""' Respondent Through: Dr. Rakesh Gupta, IMr'. Ashwani Tanjeja, Ms. Poonam Ahuja & Mr' Johnson Bora, ADvs' ITA 582/2008 with connected nnllers Page 6 of47 /*

¶20ITA No.1420120t0 c 'MMI s t t "ffL*ofl '*too,Kflff o**'*;i ffff ]''. versus RAGFIUBIR SINGH GARGH ""' RespondenL Thlough: Dr' Rakesh Gupta, Mr" Ashwani 'i Tanjeja, Ms' Poonarn Ahuja & Mr' Johnson Bora' ADvs.

¶21ITA No.142Il20I0 THE COMMISSIONER OF INCOME TAX ..... Appellant Through:. i\4r'.AbhishekMaratha, Adv' versus SECURITIES BROKERS OF INDIA LTD. Respondent ' Through: None.

¶22ITA No.5 s0l20t0 THE COMMISSIONER OF INCOME TAX ..... Appellant Tllough: Ms. Prem Lata Bansal, Sr. Adv' r'r'ith Mr'. Ruchil Bhatia, Adv. vel'sus vYoM FINANCIAL SERVICES PVT. LTD. ..... Responcleut Through: Mr. Salil I(apoor, Ml. Sanat l(apoor and Mr.Alikit Gupta, Advs. ITA 582/2008 tuitlt connected nTatters ! Page 7 of47 t{

¶23ITA No.5 54120t0 THE COMMISSIONER OF INCOME TAX ..... Appellant Thlough: Ms' Prem Lata Bansal, Sr' Adv' r'vith Mr. Ruchir Bhatia, Adv' versus vYoM FINANCIAL SERVICE PVT. LTD. ..... Responclent Through: M'. Salil I(apoor, Mr. Sanat I(alroor . and Mr.Anikit GuPta, Advs'

¶24ITANo.13I3l20L0 TI-IE COMMISSIONER OF INCOME TAX ..... Appellant Th'ough: Ms' Prern Lata Bansal, Sr' Adv' with M'. Ruchir Bhatia, Adv. versus MONIKA SAXENA ""' ResPondcnt Through: None. 2s. ITANo.132612010 TI-IE COMMISSIONER OF INCOME TAX ..... Apirellant rrrrough: M,: ffintlfft1,ff:xli' Adv ivitrr versus MONIKA SAXENA ""' ResPonclcnt Through: None. ITA 58.2/2008 with corurccted natters Page I of47 l>

¶26ITA No.77712010 THECOMMISSIONERoFINCOMETAX.'...Appellant Through: Ms. Prem Lata Bansal, Sr' Ailv' rvith lMr'. Ruchir Bhatia, Adv' \- versus GALLRI DEVI ITA 582/2008'ruith connected nratters ..... Respondent Through: None. 27 . ITA No.7512010 TFIE COMMISSIONER OF INCOME TAX ....' APPEIIANT ' Through: Mr' Abhishek Maratha, Adv' versus MADI{U GUPTA ""' Respondent Through: Mr"Manu I(. Gili and Mr'Rajesh Mahna, Advs.

¶28ITA No.198/2010 TFIE COMMISSIONER OF INCOME TAX ..... Appellant Tll'ough: Ivft'.Sanjeev Sabhanval, Adv' ve[sus GAURI SI-IANI(AR AGGARWAL Tlu'ough: None.

¶29ITA No.237 /2010 THECOMMISSIONERoFINCOMETAx.....Appellant Through:'I\{r'.Abhishek Maratira, Adv' Page 9 of47 /> vefsus PRASAD AND CO. PVT' LTD' "" Respondeut Through: None.

¶30ITA No.37412010 THECOMMISSIONERoFINCOMETAX.....Appellant Through: Mr.AbhishekMaratha,Adv' lWS SHRI CFIAMUNDA SECURITIES PVT. LTD...... Respondent Through: , None.

¶31ITANo.2I2l20I1 THECOMMISSIONERoFINCOMETAX.'...Appellant Thlough: Ms. Pretn Lata Bansal, Sr. Adv' with Mr. Ruchir Bhatia, Adv. VEISUS UDDHAN PROPERTIES LTD. ""' Respoudeut Through: None.

¶32ITA No.53 /2009 THE COMMISSIONER OF INCOME TAX ..... Appellant Thlough: Ms. Suruchi Agganval, Adv. velsus SMT' KULDEEP KAUR "" Respondcnt Thlough: None. ITA 582/2008 tuitlt connecled nntterc Page 10 of47 ' 33. ITA No'10212009 TI{E COMMISSIONER OF INCOME, TAX ..... APPEIIANT .iftt""eft: Ms' Suruchi Aggarwal' Adv' vetsus LAI{-IBIR SINGH GLJF) ""' Respoudent Through: Mr' Salil I(apoor' Mr' Sanat$apoor and iW'.Anikit GuPta, Advs'

¶34ITA No.47712009 TI-IE COMMISSIONER OF INCOME TAX ..... APPEIIANI: ' Through: Mr' Chandramani Bhaldwaj' Adv' LAJ BI{AGAT ""' RESPONdENT Through: Mr"Manu I( Giri and Mr"Rapsh Mahna, Advs'

¶35ITA No'48312009 TFIE COMMISSIONER OF INCOME TAX ..... APPEIIANT "*""^-ir,,.o"er,, Mi li";il,8'f,^?,f}iljr Aclv r,vitrr VEISUS NARENDER UPPAL "' RCSPONdENT Thlough: , l\ft' Salil Ifupoor' Mr' Sanat I(apoor and iW'.Anikit GuPta, Advs' Page I I of47 ITA 582/2008 with cbnnected ntalters t{

¶36ITA No.6 ltl2009 rHEcoMMrsrt"ffi.L?fl ^ftr,y+ffi ,"u"*"i,tf oilx'l'*,,,, iW'. Ruchir Bhatia, Adv' versus RAJAT BHANDARI ""' ResPondent Ilu'ough: Mr'.Manu I(' Giri and Mr'Rajesli Mahna, Advs'

¶37ITA No.82212009 TFIE COMMISSIONER OF INCOME TAX .''.' APPEIIANT Through: Ms. Prern Lata Bansal, Sr' Adv' with tM'. Ruchir Bhatia, Adv. VEISUS PARAMJIT SINGH "" ResPondeut Through: Ml. Salil Kapoor, Mr' Sanat I(apoor and Mr'.Anikit GuPta, Advs.

¶38ITANo.99612009 TFIE COMMISSIONER OF INCOME TAX ..-.. Appellant Through: Ms. Prem Lata Bansal, Sr' Adv' with iW. Ruchir Bhatia, Adv. VETSUS AII(A BHANDARI ""' ResPondent Through: Mr. Salil I(apoor, Mr' Sanat I(apoor and Mr.Anikit GuPta, Advs. ITA sL2/2TkTtvitltconnectednmtters Page 12 df 47

¶39ItANo.to64/2009 TFIE COMMISSIONER OF INCOME TAX ..... Appellant Through: Ms. Prem Lata Bansal, Sr' Adv' with 1\{r. Ruchir Bhatia, Adv. velsus V.I( NARANG HUF ""' ResPondeut Through:' Mr" Salil I(apoor, Mr' Sanat I(apoor and Mr.Anikit GuPta, Advs.

¶40ITA No. 109812009 THE COMMISSIONER OF INCOME TAX ..... Appellant Through: Ms. Suruchi Aggarwal, Adv' vel'sus S.S. DI{ANJAL "" ResPondent Through: lW'.Manu I( Giri and Mr.Rajesh Mahna, Advs.

¶41ITA No.1 ll9/2009 TI{E COMMISSIONER OF INCOME TAX .'... Appellant' Tluough: Mr.Sanjeev Sabharwal, Adv. ANITA AGGARWAL '.'.' ResPondent Through: Mr. Salil I(apoor, Mr. San4t Kapoor and Mr.Anikit GuPta, Advs' ITA 582/2008 v'ith connected nvtters Page I3 of47 l7 ' 42. ITA No.116312009 TI-IE COMMISSIONER OF INCOME TAX '.... Appellant Through: Ms. Plem Lata Bansal, Sr' Adv' with Ml. Ruchir Bhatia, Adv. ASHOK KUMAR AND SONS IIUF ""' Respondent Through: None. ' 43. ITA No. 1 3 1812009 THE COMMISSIONER OF INCOME TAX Airpellant Through: I\{r' Chandramaui Bharclwaj, Adv' versus STINIL JAIN ""' ResPondent Through: None'

¶44ITANo.132912009 . TI{E COMMISSIONER OF INCOME TAX ..... Appellant Through: None' VEISUS RENU VERMA ""' ResPoucleut Through: None.

¶45ITANo.13 73l2}0g TFIE COMMISSIONER OF INCOME TAX ..... Appellant Through: IzIr. Chandramani Bhardwaj, Adv' ITA 582/2008'w ilh connected matters Page 14 of47 Y versus STINIL JAIN ..... Itcspoudeut

1.

2.

¶3Through: None. COITAM: FltoI{'En E THm, CX{ltEXi,l-usTncE IXON'ts]LE MR. JUST'NCE SAN.IXV XCMA.NI\A Whetirer reporters of the local papers be ailowed to see the judgnrent? To be refened to the Reporter or not? Whether the judgment should be leported in the Digest? Yes Yes Yes D]IPAK I\{][SR,A, CJ In this batch of appeals under Section 260A of tlie Iucotle Tax Act, 1961 (for brevity 'the Act') prefened by the levellue. ITA No.5B2/2008, Cornnissioner of Incorne Tax v. Radhey Shyarn Bansal has been treated as the lead case. It is stated that the relevant facts in all appeals atl'e identical/similar, though details and particulars may be different. Irour questions have been set out as substantial questions of lar,v, but in the coul'sc of hearing, learned counsel appearing for the.revenue have statecl that the leal questions that emerge fol consideration al'e as follows: Iful 582/2008 tvillt corutected matters Page 15 tl'47 t1 "A. Whether the Assessing within the meaning of process of Assessment i5BBC of the Act? Officer is bound to record satisfaction Section 15BBD'of the Act, cltuing the of the person searched uncler Section B. Whether satisfaction as conternplated in Section 15BBD of the Act has been duly recgrded regald being had to be letter clated I5.7 .2003 or in the assessment ordet, rvhereiu unclisclosecl income of the respondent-assessee has beeu refiectecl ancl negation of such satisfaction by the Income Tax Appellate Tribunbl is en'oneous and pelerse for not accepting strch satisfaction?" Z. At the very outset, we lnay set out the facts frotn ITA No.5 BZ1200B for the sake of clar-ity and convenience. As is evincible fi'om thc uat'ratiotl, tlrere was a search under Section 732 of the Act in the prctlises of oue Manoj Aggar-wal of Baldev Park, Delhi'on 30.8.2000. In the coulse of tlie search, several materials wele seized on the basis of which a block assessnent was colnpleted in the case of Manoj Aggarwal uucler.Section ITA 582/2008 vitlt connected nnlters Page I6 oJ'47 lao 1588C of flre Act on 29.8.2002. on 15.7.2003,.a letter \',vas serlt by tlie assessillg officer of Manoj Aggar-wal to the 'assessing officer of the respondent - assessee, namely, Radheiy Shyam Bansal to th'e effcct that the said assessee was acting aS a mediator in transactiols ilvolving Sllbstantial tax evasion by giving bogus accommodation entries to variotts persons'

¶3After receipt of the cotnmunication fi'om the assessing officcr of Maloj Aggarwal, the assessing officer of the respoldent sent a uotice on

22.3.2004purportedly under sectibn i58B of ihe Act. The responclent rvas called upotl to file a block return within 30 clays of the receipt of the notice' The r-espondent, as is evident, filed the requisite return for the periocl from tlre assessment year 1991 -92'to the assessntetlt year 2001-02 (upto the

30.8.2000, the date of search) in the prescribed fonl declaring the incotne at Rs. Nil as undisclosed income. The assessing officer fiamed an order of assessrnent and detenlined that there was undisclosed income edrlecl by way of cominission of Rs.50,85,315/-. I1 addition, he also inclr'rded Rs.9,81,29 ,575/- as unexplained investment under section 69 of the Act on protective basis on the footing that the assessee liad paid cash to Manoj Aggarwai. ITA 582/2008 tpillt connected matters Page l7 oJ'47 2\

¶4. Being dissatisfied.with the older of assessmen! the respouclent preferted an appeal before CIT (Appeals) putting forth uumber of cogtentions including the submission that the notice under Section 1588 was barred by lirnitation; that the assessing offtcer assessing the sear.ched person (Manoj Aggarwal) had not recorded any satisfaction under Section 15BBD; that no opportunity to cross-examine the person on th.e basis of whose statement allegations were made against hirn; that no olrportuuity i,vas afforded to hirn to rebut the matelial collected and utilizecl against him; ancl that the rate of cornmission adopted by the assessing o'fficer r,vas totally exaggerated and not based on any material evidence on record'

¶5The CIT (A) did not accept the contentions of the responcleut - assessee that no satisfaction was lecorded by the assessing oflicer in the case of the searched person. The first appellate authority took uote of the fact that the assessing officel assessing Manoj Aggarwal had cotntnunicated vide letter dated L5.7.2003 to the assessing officel having jurisdiction over the assessee, in which he had mentioned that the diaries seized fion the possessioll of Manoj Aggai'wal which established flrat the assessee Raclliey Shyam Bansal was a mediatol who had provided book entries to various ITA 582/200B.tuit lt connected nntterc Page l8 ctJ'47 T? beleficiaries; and that there was evidence of cash amouuts lvere received by Manoj Aggawal from Radhey shyarn Bansal. on the afbresaicl basis, the CIT(A) catne to the conclusion that the communication dated 15.7.2003 amoirnted to the satisfaction of the assessing officer assessing the'searched persor as required by Section 158BD. Be it noted, the other contetrtions raised by the respondent were also negatived.

¶6Grieved by lhe aforesaid order of the CIT(A), the respoirclent - assessee approached the tribunal in IT(ss) .A.No.12lDeu2007 and in the appeai it was.urged that the notice gnder Section 15BBD was not issttecl withil a reasolable period of time inasmuch as a period of nearly "19 months had elapsed from the date of completion of block assesslllent of IVIanoj agg**ol before the notice under Section 15BBD issuecl; that no satisfaction was recorded by the assessing officer assessiug Manoj Aggarwal as requirecl uirder Section 15BBD of the Act; that the letter dated I5.7.2003 written b1' the said assessing officer to the assessing officer having jririscliction orrer lhc r.espondent -assessee was writlen nruch after the block asscsslllent lt'as completed in the case of Manoj Aggarwal, which was agaitlst the statutory provision and in alry case, no satisfaction was discernible fi'om thc saicl ITA 582/2008 tvitlt corutected nntters Page I9 of47 2> letter; that the order of assessment was vitiated being violative of principle of latural justice since the assessing officer had collected rnaterial behincl the back of the assessee without confi'onting the assessee lvith the satle for rebuttal; ald that the order of assessment had travelled beyoncl the'seized materials.

¶7The aforesaid contentions of the assessee-1'espouclent' before tlie tribulal was resisted by the revenue contending, intet' alia, the rccording of satisfaction tvas in accord with the stipulations euslrined in Section 15BBD of the Act; that the initiation of the proceeding was done withiu a reasonable period of time; that tire principles of natural justice hacl been religioLrsly followed; and that the ordel of assessment did not suffbr fi'om any infirmity.

¶8The tribunal, considering thc contentions of thc learnecl couusel for the parties and upon scrutiny of the documents brought on record, posecl the question whethel recolding of satisfaction by the assessing officer assessiug tlre person searched under Section I32 of the Act that any r-rndisclosecl income belongs to any person other than the searched persolt is mandatory or not. The tribunal relying on flre decision iu Manislt Nfahesh.tvari v. ITA 582/2008 tvitlt connected malters Page 20 of47 2i Assistant conmdssioner of rnconxe Tox & anr., (2A8T 289 nTR. 34X' (SC), caule to hold that no'satisfaction had been recordecl by the asscssing oflicer assessing Manoj Aggar-wal, as there is no reflection of satisfaction iri thc order of assessment, and further the notice datecl 22.3.2004 issr-red ulcler Sdction 15gBC read with section i5BBD did not lefer to any satisfaction of the assessing officer of Manoj Aggarwal. It is noteworthy that the tribr-ural refeued to the satisfaction note dated 22.3.2004 which is a uote rccorded by the assessing officer of the assessee - respondent but not that of the assessing officer of Manoj Aggarwal who is the searchecl person. The tr-ibunal also refened to the letlel dated 15.7.2003 written by DCIT Central, New Delhi the assessing officer having julisdictiou on Manoj Aggarwal to the assessing officer of the respondent-assessee and came to hold that the assessing officer of Manoj Aggarwai could not have tlade such a comrnunication after the assessment of the person sealched was colnpleted' Be it noted, to arrive at the said conclusion the tribunal placed reliancc on the decision rendered by the Co-ordinate Bench at Chandigarh in the case of ACIT, Yamunanagar vs. trfislrcre Lal Balwant llai, "Iagdhari. decided on

29.6.2007. In the view of the tribiriral, the assessing officer of Manoj ITA 582/2008 tuith connected nnlters Page 2l o.[47 ,Lf Aggar-wal had become functus officio on passing th.e assessment order atld fuence, could not have lecorcled any satisfaction. After so holcling, the tr-ibunai proceeded to enquire whether the notice uncler Section 15BB required to be issued,within a reasonable tirne and there lvas delay renclering the whole proceeding vulnerable in law. The tribunal took note of the fact tlrat tlre block assessment of Manoj Aggarwal was completecl on '29.8.2002 but the notice to the respondent-assessee under Section 15BBD was issuecl only on 22.3.2004, i.€., after.19 rnonths later. The tribural placing reliance on tlre decision in l{hanclubhai Vasanji Desai an.cl others t'. DCIT, (1999) 236 XTlt 73 (Gujarat) carne to hold that notice was issued rvell be1,s116l 2s reasonable period.

¶9Being of the aforesaid view, the tribunal set aside the oldel of assessrnent, which had been concurred with by the first appellate authority, ' and allowed the appeal prefen'ed by the assessee.

¶10Regard being had to the questions franled, we are only reqtrirecl to address whether flre recording of satisfaction of the assessing officer of Manoj Aggarwal is rnandatory and further whether in the facts ancl ITtl 582/200B tvitlt connecled ntatters Page 22 oJ'47 -(z-circumstances of the case the satisfaction has been recorded.

¶11In the case of Manish Maltesltwari (supla), a trryo-Judge Bench of the Apex Court dealt with invocation of provision of block assesslnellt against a person other than the pelson whose premises wel'e searched uuder Section I3Z of the Act. Their Lordships referred to Section I32 ancl sub-sectiou

(1A) of section 132, Rule 1L2 ofthe IT Rules, 1962 and callle to hold as follolvs: "6. Search and seizure is to be n'ade iu tet'rns o'f t'I72 of the IT Rules, 1962. For the pulpose of invoking the said provision, special procedule for assessmeut is laicl down in chapter XIV-B, the conditions precedent where for as laid down rnust be satisfied. Secs.158BC and 15BBD read as under: "1588C. Procedure for block assessntellt' - Where arry seal'ch has been conducted uncler s.I32 ol' ' books of accounl, other documents or assets are recluisitioned under s. I32A, in the case of auy person, theu:

(a) the AO shall -

(i) in respect of search initiatecl or books of accounts or other documents or any assets requisitioned after the 30th day of June, 1995 but beiore the ist day of January, L99l , seffe a notice to such person requiring h,irn to flii:nish within such time not being less than fifteen days; ITA 582/20\Btvithconnectednntters Page 2j o'[47 ITA 582/2008 lv itlt connected nntlers (iD in respect of search initiated or books of accounts oI other documents ol' ally assets requisitioned on -or after the lst day of January, 1997 serve a notice to such person lequiring him to fuilish within such tirne not being less thau fifteen days but not more than forty-five days; as may be specified in the notice a retrirn in the prescribed form and verified in the sal1le lllallllel' as a retum under cl. (1) of sub-s. (1) of s.!42, setting forth his totai incone including the undisclosed income fol the block Period: Provided that no irotice under s. 148 is requirecl to be issued for' flre pu{pose of proceeding uncler this Chapter: Provided further that a person who has ftirnishecl a retum under this clause shall not bc entitlecl to file a revised return;

(b) the AO shall ploceed to determine the undisclosed income of the block period in the maru1er laid down in s.i5BBB and the provisions of s.142, sub-ss. (2) and (3) of s.143 ancl s.144 shall, so fal as may bq, apply; (.) the AO, on detennination. of the rurclisclosed income of the block period in accordauce with this Chapter, shall pass an order of assessment aud deternine the tax payable by him on the basis of' such assessnlent;

(d) the assets seized under s.732 or requisitioned under s. 732A sliall be retained to tlie extent necessaly and the provisions of s.1328 shall apply subject to such modifications as rnay be Page 24 of47 9-7 ,1. necessary and the leferences to 'regular assesstnent' or 'reassessment' in s.132B shall be . constnred as refelences to'block-assessnlent''" "1588D. Undisciosed income of any otirer persoll - Where the AO is satisfied that any urdisclosecl income belongs to any person, othel than the . person with respect to.whom search tryas tlacle under s.132 or whose books of account or other documents or any assets were requisitioned uncler s.132A, then, the books of accouttt, other . documents or assets seized or recluisitioned shall be handed over to the AO having julisdiction over such other person and that AO shall proceed against such othel person and the provisions of this Chapter shail apply accordingly."

¶7Condition precedent for invoking a block assessrnent is that a sealch has been condr,rcted ulder s.732, or documents or assets have been requisitioned under s.l32A. The said provision would apply in the case of aly person in respect of whoin search has been carried out under s.I32A or docrunents or assets have beeu recluisitioned under 's.132A. Sec. i5BBD, holvever, provides for taking recourse to a block assessmeut in i"trns of s.158BC in respect of any other person, the conditions pr-ecedent where for are : (i) Satisfactiou tlust be recorded by the AO'that any undisclosed income belongs to any person, other than the persoll with respect to whom search was made under s.132 of the Act; (ii) The books of account or othel docuinents or assets seized or requisitioned had been handed over to the AO having jurisdiction over such other person; and (iii) The AO has proceeded under s.158BC against such other person' The conditions precedent fol invoking the provisions of ITA 582/2008 witlz connected matters Page 25 of47 ?-\ o s.15BBD, thus, are required to be satisfied before the pr-ovisions .of the said chapter ale applied iu telation to any person other than the person lvhose prernises hacl been searched or whose documbnts and other assets had been requisitioned under s.132A of the Act. B. A ta,ring statute, as is well-known, must be construed'strictly. In Sneh Enterprises v. Cotntlissioner of Customs, (2006) 7 SCC 7I4,itwas held: "While dealing with 'a taxing lrrovision, the principle of 'strict interpletation' should be applied. The Court shall not interplet the statutory provision in such a rlanner wirich r,voulcl creatte an additional fiscal bulden on a persoil. It would never be done by invoking the provisions o1' another Act, which are not attracted. It is also trite that while two ^interpretations are possiblc, the Court ordinarily would interpret the provisions in favour of a tax-payer and against the Revenue."

¶9Yet again in J. Slinivasa Rao v. Govt. of A.P. and Aru'. 2006 (13) SCALE 27 , it was held: "In a case of doubt ol dispute, it is well-settled, construction has to be made in'favour of the taxpayer and against the Revenue."

¶10In Ispat Industries Ltd. v. Commr. of Customs JT 2006 (12) SC 379 : 2006 (9) SCALE 652, this Court opined: "In our opinion if there are trvo possible interpletations of a rule, one which subseres thc object of a provision in the parent statute aucl the other which does not, we have to adopt the fonler; because adopting the lattel wili make the rr-rle ultra Page 26 tl'47 ITA 582/2008 willt connecled nnllers )n vit'es the Act-"

¶11Law in this regard is clear and explicit. The only question which arises for our consideratiol is as to whetlrer the notice dated 06.02.1996 satisfies the requir-ements of s.15BBD of the Act. The said notice cloes ,roi l:".ord any satisfaction on the part of the AO' Documents and other asset's recovered during search had not been handed over to the AO having jurisdictiou iu the matter'. i6. As the Ao has.not Iecorded its satisfaction, r,vhich is .mandatory; nor has it transfened the case to the Ao having jurisdiction over the matter, we are of the opiliol that the impugned judgments of the High Cor-rrt canuot be sustained, which are set aside accordingly. The appeals are allowed. However, in the facts and circutnstances of tJre case, thete shall be no older as to costs'"

¶12O1 a perusal of the aforesaid decisiou, it is graphically clcar that thc recorclilg of satisfaction by the assessing officer of the searchecl persou is zt conditiol pr-ecedent. Satisfaction must be recorded by the said assessitrg officer that a1y undisclosed income belongs to aly person, other than the person searched. Thereafter the assessing officer of the third persoll call proceed against his assessee under Section'15811C.' The documents, books of accounts or assets seized or recluisitioned have to be hancled over to the assessing officer of the third person. ITtl 582/2008 u,iih c onnected ntatters Page 27 c{47 X X X X 1n (

¶13Once, it is held that the recording of.satisfaction as per the ratio laicl down in Manbh Maheshwari (supra) is a condition precedeut, it is to be seen whether any such satisfaction of the assessing officer of Manoj Aggalwal is perceivable fi'om the record. Learned couusel for the revellue has invited our attention to the ordel of assessment order of Marnoj Aggarwal, the letter.issued by the asse'ssing officer dated 15.7 .2003 ancl the .note appended to the assessment order to build the edifice that the isatisfaction was recorded and the tribunal has erroneously cotlle to holcl that thele was no satisfaction. Learned counsel for the l'everlue has criticized tlie finding of the tribunal that the assessing officer had becotle functus officio after a particular Stage. Mr. Salil Kapoor, leamed couusel for tlie respondent fairly stated that this Courl may not address the issue whcther tire assessing officer of Manoj Aggarwal had become functus qfficio or uot and rnay only dwell upon the issue whether there is lecording of satislactiou on the basis of the material brought on record. It is contenclecl by him that note dated 29.8.2002 lvhich is purported to have been rvritten by the assessing officer of Manoj Aggarwalwas not lelied before the tribunal or by the CIT(A). AdditionaVnew evidence cannot be produced before the Fligh ITA 582/2008 with contected nntters Page 28 o/'47 o * o Court for the first tirne without any. appiication under Order 41 Rule 27 of the Code of Civil Procedure, 1908. Further this note is ari antedated oue and such a furding has been recorded by the tribunal in SMC Slmre Erolcers l-tcl' v. Deptttlt Commissioner of Inconxe Tax tn ITA No.250lDell2005, (2007) 109 TTJ (Del) 700. Learned counsel wollld conlend that the said orcler passed by the tribunal was challenged before this Court, wherein thc Divisiol Belch had disrnissed the appeal and flre l'evenlle had chosen not to chailenge the finding recorded by the tribunal and, therefore, the saicl uote can:rot be placed reliance upotl. This decision of the Division Bench is reporled in comnrissioner of Inconre Tctx v. sMC Share Erolcers Lttl' Q007) 288 XT'R.3as (Del). ' t4. To appreciate the controvelsr, urr, we shall refer to the order of assessrirent fiamed agailst the Magoj Aggar-wal, the persou rvho iras sear.ched. Leamect counsel for the revenue has clralvll ollf atteutiou to paragraph 2.T to 2.10 fiom the order of block assessment orcler in case of Manoj Aggarwal which was frarned on 29.8'.2008. The said paragraphs reacl as under: ITA 582/2008 tvitl't connected matlers Page 29 c.tJ'47 o ,>' o ' "2.7 Apart fi'om the admission of Sh. Manoj Aggarwal, flre various documents seized duing the course of seaich details of which are given below fuither established that . he is a nalne lender involved in the business of giving accomrnodation entries. Sh.Manoj Aggarwal has accepted all these papers to be related to his busiuess of accornrnodation book entries.

2.8 Annexures ,4.-16, A-18 & A-36 seized fi'on the premises at 5NI2, Ansari Road, Daryaganj, Delhi are cashbooks of the business of accommodation eutries. These give details of the cash received on the receipts ' side and the utilization thereof on the payments sicle. . 2.9 Annexure A-19, A-20 &, A-2I seized fi'om the plemises at 5N12, Ansari Road, Daryaganj, Dclhi are ledger accounts of the mediators thlough u'hom the transactions of accommodation entries has been atraugecl. These ledgels giv'b the details of the naltle of tlie mediator, the date on which the cheque is issr-recl, the name of the beneficiary, the cheque uo., the antourt thereof and the bank and branch fi'om which it is issuecl. . 2.I0 Various pages of A.nnexures A-1, A-8, A-10, A- ' 1I, A-I2, A-15 & A-36 seized fi'om the premises at 5NI2, Ansari Road, Daryaganj, Delhi, various pages of Annexure A-1 seized fi'oin"the lesidencc of Sh. Manoj Aggar-wal at C-25/2, East Baldev Park, Delhi, Annexure A-2 seized fioil the office of Sh.Manoj Agganval 'at 7/22, Ansari Road, Daryaganj, Delhi are recollciliation accounts of the various mediators. These accounts give the details of the cash received fi'om the mediators ancl the details of the cheques issued to the various beneficiaries."

¶15On a perusal of the afolesaicl, we do not perceive any satisfaction by . ITA 582/2008 tvillt connected natlers Page 30 o.[47 1\ o the assessing officer of Manoj Ag-garwal that any unclisclosecl itrcoue belongs to the respondent assessee. The said satisfaction is not reflectccl or stated in the said palagraphs.

¶16Presently, we'shall proceed to deal with the cotnmunicatiotr'sent by the assessing officer of Manoj Aggarwal to the asscssiug oflltcer of the respondent - assessee. ih" said letter is datecl I5.7.2003. Tlie saicl leLtcr ildicates that a communication was made by the assessiug officer of Manoj Aggarwal to the assessing officer assessing the lesponclent-assessee to the effect that the assessee was acting as a mediator in the trausactions involving substantial tax evasion by giving bogus accotlllltoclation entries to various persotls. It is subinitted by Mr'.I(apoor, learned counsel for tlie assessee that the said letter does not lemotely suggest any satisfaction. In fact the revenue has also not treated this lettel as recording of satisfactiou, but the letter is a mdre communication. 17 . The letter/cornrnunication dated 15.1 .2003 by the assessing of Marioj Aggarwal to the assessing officer of the respondent assessee reads as follows: ITA. 5 82/2008 ri' it 11 c on necte d ntalte rs Pagc 3l tl'47 3f "1) Valious diaries have been seized fi'om the possession of sh. Manoj Aggarwal which establish that Radhey Shyarn Bansal is a rnediator for provicling accommodation book entries by Sh. Manoj Aggarvval' The cluantum of tlansaction done by hirn as per these documents is given in Annexure-A. Photocopies of thesc paper are enclosed in Amexule-B. 2) There are evidences of casir h.aving been received by IVh'. Manoj Aggarwal fiom Radhey Shyam Bansal. The summary of the atnounts so received as per various seized documents is given in Anp'exure-C. The photocopies of these documents are provided as pei' Annexure-D."

¶18Before advert to and analyse whether the letter dated I5.7.2003 really conveys satisfaction as is understood in the anatomical base of the provision and also under the backdrop of terms satisfaction t1leall in lewv we tliink it appropriate to refel to Section 1588D of the Act. Tlie said provision 'has already been reproduced in the decision inManislt Maheslttttrlrr (supra).

¶19, On a plain reading of the aforesaid provision, it is vivicl that for the pulpose of initiation of block assessment irroceeding against a third pcl'soll in respect of whom search has not been conclucted certain conclitions precedents are to be followed and they are tlandatory. They have to be ITA 582/2008 witlt cotznecled nzatters l'age 32 <l'47 we ), o construed and cornplied absolutely.strictly. The first pre-couclition as the pr-ovision envisages is that the asse$sing officer of the persoll searchecl has to be satisfied that some. undisclosed income belongs to a third pel'soll. . Thus, the relevant expressions pertaining to conclition precedent are "undisclosed incoine" and "which belongs to a person other than the persoll searched". As in the case at hand, we are actually concemecl rvith the satisfaction we think it appropriate to refer to the said ternts, uzunely, "undisclosed income" which have been defined in Section 158-B(b) lvhich reads as follows: "L58-8. Definitions.-In this Chapter, uttless the context otherwise lequfues,-

(b) "undisclosed inconle" inclucies ally llloney: bullion, jewellery or other valuable article or thing or ally income based on any entry in the books of accouut or other documents or transactions, whele such money, bullion, jewellery, valuable article, thing, etltry in the books of account or other documettt or transactiou represents wholly or partly income or property r,vhich has not been or would not have been disclosed for tirc purposes of this Act [, or any expense, deduction or allowance claimed undel this Act which is fourd to be falsel." ITA 582/2008 wilh cotlnected nmtlers I'age 33 of 47 s7

¶20The aforesaid definition is on a broad canvass. It not only inclucles income which has not been disclosed but income which rryould not have been di,lclosed by a third pel'Son. It must be income aud can be nlone)/, buliion, jeweliery or valuable articies or thing which has not been disclosecl by the third person and would not have been disciosecl by the third pcrson under the Act. It can include entry in the books of accouut or docuucut or transaction which represents wholly or partly incotle or 1rrofit r,vhich has uot been disclosed or wbUld not have been disclosecl under the Act by the thircl person. After arnendment of Section 1588(b) by Finance Act 2002 u'ith retrospective effect fi'om l't July, 1995, it can also include an expense' deduction or allor,vance which is found to be false. 1' 2L The word 'satisfaction'' has not beeu defin'ed in the Act. Tlie 'satisfaction' by its very nalure must precede before the papers/docutneuts are sent by the Assessing Offrcer of the persoll searchecl to tire Assessing Offrcer of the third person. Mele use or mention of the r,vorcl 'satisfarction' in the older/note will not meet the requilement of concept of satisfactiou as used.in Sectiol 15BBD. The satisfaction has to be in writing aucl can'be gathered from the assessment order, if it is so mentionecl/recorded, oi l}om ITA 582/2008 vtith connected nntters Page 34 of47 1-6 any o,ther order, note or record rnaintainecl by the Assessing Officer of the person sear-ched. The wold "satisfaction" refers to the state of mincl of the Assessing Officer of thb person searched, which gets reflected in a tangible shape/for-m when it is reduced into writing. It is the couclusiou clrawtl or the finding recorile{ on the foundation of the matedal available. The worcl 'satisfied' occurs in many a statute.and has its connotatiou. 'fhe tetm "is satisfied" means simply makes up its mind [per Lorcl Pearsou in Blyth v. Bivth (1966) I ALL E.R. 524 (541)1. Dixon J. has definecl it ars 'ztctual persuasion'. It fundamentally rneans a rnind not troubled by doubt or to adopt the language of Smith J. 'a mincl which has reachecl a clear conclusion' (see Angland v. Payne (1944) N.Z.L.R. 610 (626). The Assessing Officer is satisfied when he malces his mind or'reaches a clear conclusion when he takes a prirna facie view that the material available establishbs 'undisclosed income' of a thild paffy. Assessing Officer must reach a clear conclusion that good ground exists for the Assessing Officer of the third person to initiate proceedings as material before hitn sholt's or would establish 'undisclosed income' of a third person. At this stage, as thc proceedings are at the very initial state, the 'satisfactiou' neither is requircci ITA 582/2008 witlt connected matlers l'age 35 of 47 )1 to be firrn or conclusive. The.'satisfaction'recluired is to decide whether or not bldck . assessment proceedings are lecprired to be initiatecl. But 'satisfaction' has to be founded on r€asonableuess. It cannot.be capricior-rs satisfaction. Though, it is a subjective satisfactiou, it must be capable of beilg tested on objective, parameters. The opinion though tentative, however, cannot be a product of imaginatioll or speclllation. It caunot be spacious or melcurial. It should not be a mere pretence and shoulcl be tlacle i1 good faith rather than suspicion. Reliability, credibility or fot-that matter what weight has to be attached to the material, depends Lrpoll the subjective satisfaction of the Assessing Officer but definitely it is subject'to scrr"rtiny whether the satisfaction has a lational nexus or a relevant beariug to thc for-mation of satisfaction anil is .not extraueous ol' irrelevant. 'flie satisfaction must reflect rational connection with or relevant bcaring between the material available and undisclosecl income of the third person. The ratiolal corurection postulates and requires'satisfaction of the Asscssing Officer ilrat a ttrird person has 'undisciosed incotne' on the basis of eviclcncc or rnaterial before him. The material itself should not be vague, inclefinite, distinct or remote. If there is no rational or intangible nexus between the ITA 582/2008 tv i! h corutected nzalters Page 36 of47 \n material and the satisfactiop that a thild person has 'utldisclosed incotre', the conclusion would not deserve acceptation. Then the satisfaction is vitiated. It is to this lirnited extent that the satisfaction can be gone into ancl examiled. Thd satisfaction though subjective, must tneet the aforesaid criteria.

¶22While defuring the scope and ambit of Section 15BBD of the Act, rve have followed. the rationale and judgments. of the Supreme CourL ttucler Section 747 of the Act. Section 1588D uses the lvord 'satisfaction', rvhile Section 1.47 uses the wolds 'reason to believe'. Bttt the rurderline role of tlie Assessing Officer and the principle, r'equirement or pre-conclitious are the same.

¶23In view of the aforesaid legal position we can no\,v exatniue the letter clated 15tl' July, 2003 which was cotllnunicatecl by the Assessing Officer of the searched assessee to the assessing officer of flre rcsponcleut. The question is whether the aforesaid letter can be regarded as "satisfaction" as recluired undel Section 15BBD, i.e. satisfaction of the Assessing Officer of Manoj Aggarwal that there is material that the respouclent assesscc hacl ITA 582/2008 u,ith connecled ntatters Page 37 oJ'47 q\ undisclosed income. The first p*ogruph of the aforesaid lettcr states that the diary.seized fiom the possession of Manoj Aggarwal establishes that the respondent assessee had acted as a mediator for providing accolllltloclation book entlies by Manoj Aggarwal. The second seutence in thc first paragtaph states that the cluanturn of transactions as shor,vn in tlie clocuureuts wele enclosed as Annexure-A and the photocopies .of the ilapers \,vere enclosed as Annexure-B. The second paragraph states that there was evidence that cash was received by Manoj Aggarwal fi'orn the responcleut' and the sui1lmary of the amounts received as per the seized documcuts was given in Annexure C and the photocopies of the documents \,vere anncxed as Annexure-D. It is. accepted that Annexures A, B, C & D, leferred to in this letter were not filed before the tribunal and have not been procluceil before us. It is conceded by the leamed counsel fol the revenlle that they are also not available on the file of the Assessing Officer of the responclent. There is no explanation forthcorning with regard to the aforesaid allnexures. lt is well nigh irnpossible to know their content. The first paragraph of thc letter dated 15tl' July, 2003 states that the respondent-assessee had actcci as a mediator i.e. they had intloduced Manoj Aggarwal with other pelsons to ITA 582i2008 lu ith connected ntatlers Page 3E of47 \r-whom accornmodation book entlies wel'e plovicled by Manoj Aggarwal. There is no allegation in the first paragraph that the le'spondeut assessee was provided with accornmodation book enlr'ies or the atnounts belong to the respoldent assesseb. Boqk entries were plovided to third parties. It is not stated in this 'satisfaction note' that Manoj Aggarwal or third parties had paid any amount towards commission for acting as a rnediator. l"here is no . such allegatiol or statement in the 'satisfaction note'. The seconct paragraph does create some doubt but what is relevant and important is the fact that in the first paragrapir, it is accepted by the Assessing Officer of Manoj Aggar-wal that the respondent assessee was tnet'ely acting as a mecliator aud nothing more. The second paragraph of the letter states that there r,vas evidence that cash was received by Manoj Aggarwal fi'om the respoudent assessees. What was the lvidence and ilaterial was not brought on recorcl before the tribunal or even befole us. The said tlaterial is not mentionecl in the assessment order. It cannot be 'ipse dixit' without material or evicleucc to satisfy the concept of lequirement as engrafted under Section 15BBD. What was the material was neithel highiighted before the tribunal uor before . us. Thus, the appellarit-revenue has not.dischalged the onus that there was ITA 582/2008 with connected nntters Page 39 ctf 47 \e valid satisfaction. as required under Section 158 BD. Therefore, the irresistible conclusion is the pre-re.quisite of "satisfaction" as engraftecl under Section 1588 fol the pulpose of initiation of block asscsstttent proceeding is non-existent or absent.

¶24The last plank of subrnission of learnecl counsel appearing for the revenue was a note that was re.corded by the assessing o'fficer of the Manoj Aggarwal on flre date of assessrnent. It is contended by Ms. Pretu Lata Bansai, learned senior counsel, Mr'.Sanjeev Sabharwal, Ms. Sr-rrr-rchi Aggarwal, Mr. Cltandramani Bhardwaj, learned couusel lor tlie revettue that .though the said note was not filed before the tribunal but the satle sitor-rlcl be treated as. a paft of evidence on record and dealt with it. Whether that cor-rlcl lrave been taken as an additional evidence under Order 41 Rule 27 of the Code of Civil Procedure though such an application has not been filecl. Tlie same is not llecessaryin view of the finding recorded by the tribunal in SMC Share Erolcers Ltd.(stpra) in. In the saicl case, i.e., I'fA No.2501DeU2005, the tribunal expressed the view thal a satisfactiou note by the assessing officer of the searchecl person recolding unclisclosed incotne of aity person rvithin the meaning of Section 158BD coulcl be validly recorclecl ITA 5B2/2008 witlt conttecled ntatters Page 40 of47 Lt\ after completion of assessment of the searched person. In that coutext, the tribunal held the only requirement is that the satisfaction must be in lvriting. In the said case, the tribunal was dealing with the search carriecl out on the premises of Manoj Aggarwal on 3.8.2000. The present case also relates to the said search. It is noteworthy the departmental representative in the case of SMC Sltare Brolcers Lttl. (srtpra) had pressecl into service the note cla[ecl Zg.S.Z1;Zwhich has been sought to be pressed into sdrvice by the lcarnecl counsel for the revenue herein. The tribunal while dealing with the saicl note dated 29.8.2002 expressed their views as follows: "14.3 As per the Departrnental Representative, 'the satisfaction for initiating proceedings under Section 1588D was recorded by the AO making assessmeut iti the case-of Slili Manoj Aggarwal and M/s Friencls Portfolio (P) Ltd. on29thAug., 2002 also i.e. on the date of passing assessment order dt. 29th Aug., 2002 itself' However, the leamed Counsel fol the assessee has seriously challenged the genuinelless a11d the authenticity of this note. According to him, this uote is antedatecl. ife tried to substantiate his argument by demonstrating tliat if tlre satisfaction note was recorded on 29th Aug','2002 then ther-e wouid have been no necessity to further record ' the satisfaction again on 26th Nov., 2002. I-Ie also pointed out that fiom the contents and language of thc . alteged satisfaction note dt.zgthAug., 2002, it is evident that this note is subsequently pfepared. I-Ie submitted that if tlre satisfaction was recorded on 29th Aug., 2002, the ITA 582/2008 r'vith connected ntatters Page 4l o/'47 \1{ rO notice should also have been issued on that date itsclf or just thereafter. . L4.4 The learned Deparlrnental Representative, otl the other hand, rnaintained that the AO had made this note on 29th Aug.,2002.

¶15We have carefully cousidered the entire material on record and the rival submissions. With this note, a list of beneficiaries has been appended. The natne of assessee appears at item No. 69, which is as under: 69 SMC 17, Netaji Friends 30000000 The asscssec ltas takctr Shareblokels Subhash Portfolio bogus accontntodatiotr Ltd. ivlarg,

(P) Ltd. ently tlrlough lvl/s Fricnds Dalyaganj, Poltlblio (P) Ltd. atrd New hcnce satislaction notc in . Delhi-O2 this regald has becn lccordcd in tlrc casc ol'this conlpan), and proposal lbr' ccntlalization ol' tltis casc ' in ' this cit'clc has lrecn approved lbr talting up proceedings u/s I 58llD. The last sentence in the above note indicates that the ploposal for centralization of this case ill this circle has been approved fol taking up pl'oceedings under Sectiorr 1588D. The learned Counsel pointed out before us that no such approval was taken before 29th Aug., 2002. According to him, the pioposal is dt. 19th Sept., 2002, i.e. after the date of the office note. The office note canno! therefole, mention any event, lvhich has occurred later on, i.e., after 29th Aug., 2002. The fact that the proposal itself is dt. 19th Muy, 2002 could not be controverted by the learned Departrnental Representativ e. '16. On goirig through the alleged office note available on pp. 202 to 226, rt is found that the office note has bcen allegedly signed on 29th Arg., 2002 that is the date on ITA 582/2008 tvitlt connected nlatters Page 42 oJ'47 YL ITA 5B2/2008 tvith connected nntters which the assessment order in the case of IWs Friends Portfolio (P) Ltd. lvas col1lpleted. on closer scrutiny of the facts and circumstances mentioned above including the fact regarding the mention of satisfaction note in the case of "this company" and proposal for centralization of the case in the circle in which the cases of searched persons fell, as referred to above, and also in view of the : iircurnstances relating to this issue, we fi1d force i1 the submissions of the learned Counsel for the assessee tnacle before us and conclude that no satisfaction note was prepared on 29th A*g., 2002 and this note has been prepared even after 26th Nov ',- 2002. Our reasous fbr holding so are as under:

(i) Had the satisfaction been recorded on 29th Aug., 2002, there would have been no necessity to record another satisfactiol o1 26th Nov., 2002. The note lefers to the "satisfaction recorded in the case of this company" which refeience is to the satisfaction dt. 26th Nov., 2002 and hence this note has been prepared subsequeut to satisfaction note dt. 26thNov., 2002.

(ii) Had.the satisfaction note been recordecl on 29th Aug., 2002 then the record peilaining to the other persou uot searched should have been trausfeil'ed to the AO of the present assessee who was a different officer at that time than the officer of the searched person.

(iii) The alleged satisfaction makes meution of the ploposal and approval regarding centralization of the case. This proposal is dt. 19th Nov., 2002 aucl is subsequent to the alieged note which fact proves the contention of the leamed Counsel for the assessee that the notice (sic-note) is antedated. Page 43 of47 \a-

(iv) Thele is a detaiied note by the AO, a copy of i'vhich has been filed atp.33 of the paper book. The conclucling observations of the AO in this note are as uirder: "In view of the facts mentioned above ancl the block assessment ordels of Sh. Manoj Agganval and iWs Friends Portfolio (P) Ltcl., undisclosed income has arisen in the hands of iWs SMC Share Brokers Ltd. whiph has been founcl during the course of search and seizure operatiotls in thc case of Slui' Manoj Aggarwal and liis associate concelns. Thus, proceedings utlder Section 15BBD are applicable in this case." The date below the signatures of the Ao is not legible in this copy. Therefole, the learned Deirartmental ' Representative was aske.d durilg the course of hearilg of the case to verify the date of this note. On velificatiou fi-om the record, she informed that the uote is dt. 26tlt Nov., 2002. This fact has been lecorded by the Bctlch otl p.33 itself. I7. In view of the above, it is clear that on or bcfore 29th Aug., 2002, the AO of M/s Fliends Portfolio (P) Linited a1d that of Shri Manoj Aggarwal did pot record ally satisfaction. The note dt. 29th Aug., 2002 is, tirerefore, not to be taken for recolding satisfactiou required undel Section 1 5 8BCil 5 BBD."

¶25We will be failing in our duty, if we do not take note of sone rrore facts. In the said case, there was another satisfaction note dated 26.1L2002 SMC'Sltare Eroleers ['td. and referting to the said.note the tribunal in (supra) has held as follows: ITA 582/2008 t,ilh cottnected nntters Page 44 of47 \? *20.1 The next plea of the assessee is lfiat the satisfactiou note rnakes no reference to the seized material ancl thus the proceedings under Section i5BBD judged fi'om the satisfabtion note cannot be justified. We do not find force in this submission also. The satisfaction note dt. 26th Nov., 2002, refemed to above, is a detailecl oue. We have also leproduced the concluding observations of the AO, which indicate that he applied his mind before recording the satisfaction. It may be pointed out that the satisfaction note is not required.to contain each aud every minr"rte detail and to refer to each and every rnaterial relevant for rnaking assesstnent under Section 15BBD. Thus, the argurnent that since, iu the satisfaction note, thele is no lefelence to seized tnaterial, the assessntettt tnade on the basis of such satisfaction note caruot be legally sustained, is not acceptable."

¶26Eventually, in the said case, aS no closs-examination of Manoj Aggarwal was perinitted, the appeal preferred by the assessec, apart fi'om other grounds, was allowed.

¶27Tlre said order was assailed befole this Court in ITA No.I221/2006 wherein this Court opined as follows: "4.' The Tlibunal held that the Assessing Officer rvas functioning as a quasi judicial authority and was utlder eur obligation to adhere to the principles of natulal justice. Severai requests were made by the assessed, but Manoj Aggarwal was not made available for cross-exatliuation. ITA 582/2008 tvitlt connected nnlters Page 45 oJ'47 rl 1\ On this basis, the Tribunai set aside the block assessmeut and that is why the Revenue is befole us in au appeal under Section 260A of the Act.

¶5Leatned Counsel for the Revenue relied upoll Oue-up Shares and Stock Brokers P. Ltd. vs. R. R. Sittgli, CIT

(2003) 183 CTR (Borir) 254 : (2003) 262ITR 275 (Bom) to contend flrat the statenent of Manoj Agganval had evidentiary value, as . observed by the Bombay Fligh Court. There is no doubt that the statement of Manoj Aggarwal had evidentiary value but weight could not be given to it in proceedings against the assessed r,vithout it being tested under cross-exarlination. In the absettce of the statement being tested, it carurot be said that it shor"rld be believed completely to the prejudice of the assessed. Undel the circumstances, \,ve do not think that the judgment relied upon by learned Corursel catries hitl auy fuither.

¶6We are of the opinion that the Tribr"rnal r,vas right in its view that in the absence of Manoj Aggarwal being made available fol cross-.exainination, despite repeated recluests by the assessed, his stateinent cottlcl not be reliecl upon to his detriment." . It is riglrtly submitted by learned counsel for the responclent-assessee that the said furding of the tribunal has been given the stamp of approval by the High Court. Learned counsel for the revenue would contend that the appeal was preferred on a limited scope. . We need not dclve into that inasmuch as the said furding of the tribunal has gone urchallengecl ancl ITA 582/2008 tvitlt connected nntters Page 46 of47

¶28+ hence, we cannot rely on the said note datecl 29tl'August,2002 totoure to a conclusion that there was recording of satisfaction. The said note stands discredited in the case of SMC Sltare Brolcers Lttl. (supra). The said finding is a finding of fact. We camot, therefore, fbr the first tirire take thc said note into consideration.

¶29In view of the aforesaid analysis, while we'do not find there is any substantial question of law involved in the present batch of appeals, however, conclusion of the tribunal that the forming of an opinion has to be along with the fi'aming of assessment inasmuch as the assessing officer arfter said date becomes functus officio is lcept open to be addressed in an appeal where the said issue is requiled to be deait with.

¶30Resultantly, the appeals, being devoid of merit, stancl clismissecl without anv order as to costs. ,i t ,. CX{NEF'JUST'ICE MAY 3O,ZOLT dk ITA 582/2008 tuith connected matters ttr -l - ' Ll \-'-' sAl{Jnv xffIANi\IA, J. Page 47 oJ'47