PCIT Vs Jitendra H Modi Huf (Gujarat High Court)
Summary: The Revenue filed an appeal before the High Court challenging the order of the Income Tax Appellate Tribunal dated 16 March 2017. The primary issue concerned the validity of proceedings initiated under Section 158BD of the Income-tax Act and whether the Tribunal was justified in quashing the assessment on account of delay in recording satisfaction. A second issue related to deletion of addition of ₹36.67 lakh treated as undisclosed income for the block period from Assessment Year 1992–93 to 2001–02.
The case arose from a search and seizure operation conducted on 17 April 2001 against an individual. An assessment order under Section 158BC was passed on 30 April 2003. However, no satisfaction was recorded by the Assessing Officer at that stage indicating that proceedings under Section 158BD should be initiated against the present assessee. Such satisfaction was recorded only on 20 January 2004, nearly nine months after completion of the assessment under Section 158BC. Based on this, the Assessing Officer initiated proceedings under Section 158BD and made an addition of ₹36.67 lakh as undisclosed income.
The assessee challenged the assessment before the Commissioner (Appeals), who rejected the plea regarding delay and upheld the proceedings. The Commissioner held that once satisfaction is reached, issuance of notice within a reasonable time would be valid and found no merit in the assessee’s argument, particularly noting non-filing of return by the assessee.
