Brief Facts of the case-
♣ It is a case of appeals involving common questions of law, accordingly a common order had been made in these cases.
♣ In all these cases, assessee/respondents were third parties, who were issued notice under Section 158BD pursuant to search proceedings in respect of other persons. In all these cases, the search proceedings were conducted on 03.08.2000. The assessment proceedings were completed on 29.08.2002. Thereafter, the present assesses-third parties were issued notices under Section 158BD.
♣ These appeals were originally disposed of by common judgment of this Court reported as CIT vs. Radhey Shyam Bansal 2011 337 ITR 217 (DLI). In that judgment it was held that the satisfaction note in all the cases was recorded and notices were issued beyond the period of limitation. It was held, inter alia, that the satisfaction note recorded in these cases did not accord with the requirements of Section 158BD, applying the decision in CIT vs. Manish Maheshwari (2007) 289 ITR 341 (SC).
♣ In this batch of judgments, appeal was preferred before the Supreme Court, which explained the scope and possible interpretation of Section 158BD of the Act in its judgment reported as CIT vs. Calcutta Knitwears, Ludhina 362 ITR 673 (SC) as under:
“44. In the result, we hold that for the purpose of Section 158BD of the Act a satisfaction note is sine qua non and must be prepared by the assessing officer before he transmits the records to the other assessing officer who has jurisdiction over such other person. The satisfaction note could be prepared at either of the following stages: (a) at the time of or along with the initiation of proceedings against the searched person under Section 158BC of the Act; (b) along with the assessment proceedings under Section 158BC of the Act; and (c) immediately after the assessment proceedings are completed under Section 158BC of the Act of the searched person”
Further, the SC remanded the matter back to HC for consideration of the individual cases in light of explained scope.
Question of fact and law
Whether the period in which the satisfaction note was recorded by the AO was contemporaneous with the period in which assessment proceedings of the searched person were carried out?
Contention of Assessee
♣ In each of the cases it is evident that the satisfaction note was recorded almost or just short of or more than a year after the completion of assessment of the searched person, which is not contemporaneous with the period in which assessment proceedings of the searched person were carried out.
♣ The main judgment of this Court in Radhey Shyam Bansal (supra) itself recorded that letter/communication note of 12.07.2003 did not accord with Section 158BD as no material or evidence were produced so as to satisfy the concept of requirement as engrafted under Section 158BD.
Contention of the revenue
The period of delay is contemporaneous with the period in which assessment proceedings of the searched person were carried out.
Held by Respective Court
Having regard to the intent of the Supreme Court in Para 44 of the Calcutta Knitwears (supra), where it was indicated that the Revenue has to be vigilant in issuing notice to the third party under Section 158 BD, immediately after the completion of assessment of the searched person, this Court is of the opinion that a delay ranging between 10 months of 1 ½ years cannot be considered contemporaneous to assessment proceedings. We are of the opinion that notices were not issued in conformity with the requirements of Section 158BD, and were unduly delayed. The appeals of the Revenue accordingly fail and are dismissed.