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Judgment
Akil Kureshi, J.—Petitioner has challenged a notice dated 29.10.2001 annexed at Annexure-A2 to the petition issued by the Deputy
Commissioner of income tax, Ahmedabad u/s 158BD of the income tax Act, 1961 (Hereinafter referred to as ""the Act). Petitioner has also
challenged further notice dated 18.01.2002 issued by the same officer reminding her that pursuant to earlier notice dated 29.10.2001, the
petitioner had to file return of income for the block period in question. The brief facts leading to the petition are as under:
2.1 The petitioner is an individual and is liable to pay tax. The husband of the petitioner was subjected to search operation on 21.10.1999. During
the course of block assessment proceedings, pursuant to such search in case of husband of the petitioner, the Assessing Officer appears to have
collected certain materials prima facie, suggesting that the certain income/investments made belongs to the petitioner and not the person searched
i.e. her husband. A notice u/s 158BD came to be issued to the petitioner on 29.10.2001 calling upon the petitioner to file a return in the prescribed
form. Since the petitioner did not respond to such a notice, a further communication came to be issued on 18.01.2002 in which as noted above,
the petitioner was reminded of the requirement of filing the return pursuant to the notice u/s 158BD of the Act. These notices, the petitioner has
challenged in the present petition on various grounds.
Mr. K.R. Dixit, counsel for the petitioner raised following contentions:
2.1 That no satisfaction was recorded by the Assessing Officer of searched person that any undisclosed income belongs to the J petitioner i.e.
person other than the person with respect to whom search was made. He submitted that in absence of any such satisfaction being recorded, no
notice u/s 185BD could have been issued. In support of his contention, counsel relied on the decision of the Hon''ble Supreme Court reported in
Manish Maheshwari Vs. Asstt. Commissioner of Income Tax and Another,
2.2 Counsel contended that the impugned notice was issued after gross delay. He submitted that the search was carried out with respect to
husband of the petitioner on 21.10.1999. The impugned notice was issued after two years. Relying on the decision of this Court reported in
Khandubhai Vasanji Desai and Others Vs. Deputy Commissioner of Income Tax, , he submitted that only on this ground, notice should be
quashed.
2.3 Counsel further submitted that there was total non application of mind on the part of the officer issuing notice. He submitted that the description
of the petitioner was inaccurate. The notice was issued in a printed format.
On the other hand, learned counsel Mr. M.M. Bhatt for the respondents sought to place reliance on undated note recorded by the Assessing
Officer of the searched person in which, a reference was made to various aspects indicating that undisclosed income belonging to the petitioner
was unearthed during the search operation concerning the husband of the petitioner. He submitted that such note should be treated as satisfaction
of the Assessing Officer as required u/s 158BD of the Act.
3.1 Counsel further contended that notice issued cannot be labelled as belated. He relied on certain observations made in the case of Khandubhai
Vasanji Desai (Supra), to contend that merely on the ground of delay, notice cannot be quashed in the present case.
3.2 Counsel further submitted that notice was issued after due deliberation and there was no lack of application of mind.
Having thus heard learned counsel for the parties, in our opinion, the entire petition can be decided on the basis of first contention of the
petitioner. In this aspect, we may peruse the facts more closely. A search was carried out with respect to husband of the petitioner on 21.10.1999.
The impugned notice against the petitioner u/s 158BD of the Act was issued on 29.10.2001. The assessment was framed in case of the husband of
the petitioner pursuant to the search operation on 31.10.2001. The affidavit-in-reply dated 11.10.2002 of one Shri S.K. Mehta, Assessing Officer
of income tax records that the block assessment relating to the searched person was completed on 31.10.2001. It is further stated that additions
on several points were made, however, a detailed office note made by the Assessing Officer below assessment order mentions every point which
required action in case of the petitioner. Few things thus emerge. The office note on which learned counsel for the respondents placed reliance,
which is produced along with the affidavit-in-reply annexed at Annexure-I, formed part of the assessment order. The assessment order in case of
husband of the petitioner having been passed on 31.10.2001, such note, though undated, came in existence only on 31.10.2001. On 29.10.2001,
when notice u/s 158BD was issued against the petitioner, above mentioned note was not in existence.
To support the notice u/s 158BD, revenue, therefore, cannot place any reliance on the above referred note. Apart from our prima facie view
that such note also cannot be seen as any recording of the satisfaction as envisaged u/s 158BD of the Act, such note not being in existence when
the notice was issued, cannot form the basis for sustaining the notice u/s 158BD of the Act.
Previously when the petition was heard, we inquired with the counsel for the revenue, if in addition to material already produced before us
including the said note, there was any other material on the file of the department suggesting recording of the satisfaction of the Assessing Officer as
required u/s 158BD of the Act. Today, counsel produced on record a communication received by him dated 21.12.2012 from the income tax
Officer, Ahmedabad. Such communication is taken on record. In the said letter, it is stated that upon perusal of file, no such satisfaction note was
available on record in case of husband of the petitioner.
The situation, therefore, emerges is that on the date of issuing notice u/s 158BD of the Act, there was no satisfaction recorded by the Assessing
officer of the searched person. In this context, we will refer to the decision of the Supreme Court in the case of Manish Maheshwari (Supra). In the
context of requirement to be satisfied for an action u/s 158BD of the Act, the Supreme Court observed as under:
The condition precedent for revoking a block assessment is that a search has been conducted u/s 132, or documents or assets have been
requisitioned u/s 132A. The said provision would apply in the case of any person in respect of whom search has been carried out u/s 132A or
documents or assets have been requisitioned u/s 132A. Section 158BD, however, provides for taking recourse to a block assessment in terms of
section 158BC in respect of any other person, the conditions precedent wherefore are: (i) satisfaction mast 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 u/s 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 (ii) the Assessing Officer has proceeded u/s 158BC against such other person.
The conditions precedent for invoking the provisions of section 158BD, thus are required to be satisfied before the provisions of the said Chapter
are applied in relation to any person other than the person whose premises had been searched or whose documents and other assets had been
requisitioned u/s 132A of the Act.
Under the circumstances, we have no hesitation in striking down the impugned notices annexed at Annexure-A1 & A2 to the petition. In view of
the above conclusion, we are not required to go into the validity of other contentions of the counsel for the petitioner.
Rule is made absolute. No cost.