1 REPORTABLE IN SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 3958 OF 2014 (SPECIAL LEAVE PETITION(C.)NO.10542 OF 2011) COMMISSIONER OF INCOME TAX - III APPELLANT VERSUS M/S.CALCUTTA KNITWEARS, LUDHIANA RESPONDENT WITH C.A.NO.3959 OF 2014 @ S.L.P.(C)NO.11943 of 2011 WITH C.A.NO.3960 OF 2014 @ S.L.P.(C)NO.17662 of 2011 WITH C.A.NO.3961 OF 2014 @ S.L.P.(C)NO.17656 of 2011 WITH C.A.NO.3962 OF 2014 @ S.L.P.(C)NO.17661 of 2011 WITH C.A.NO.3963 OF 2014 @ S.L.P.(C)NO.2804 of 2012 WITH C.A.NO.3964 OF 2014 @ S.L.P.(C)NO.2805 of 2012 WITH C.A.NO.3965 OF 2014 @ S.L.P.(C)NO.5264 of 2012 WITH C.A.NO.3966 OF 2014 @ S.L.P.(C)NO.5265 of 2012 WITH C.A.NO.3967 OF 2014 @ S.L.P.(C)NO.5266 of 2012 WITH C.A.NO.3968 OF 2014 @ S.L.P.(C)NO.7574 of 2012 WITH C.A.NO.3969 OF 2014 @ S.L.P.(C)NO.7575 of 2012 WITH C.A.NO.3970 OF 2014 @ S.L.P.(C)NO.7576 of 2012 WITH C.A.NO.3971 OF 2014 @ S.L.P.(C)NO.7577 of 2012 WITH C.A.NO.3972 OF 2014 @ S.L.P.(C)NO.9721 of 2012 WITH C.A.NO.3973 OF 2014 @ S.L.P.(C)NO.11460 of 2012 WITH C.A.NO.3974 OF 2014 @ S.L.P.(C)NO.12111 of 2012 WITH C.A.NO.3975 OF 2014 @ S.L.P.(C)NO.12886 of 2012 WITH C.A.NO.3976 OF 2014 @ S.L.P.(C)NO.12887 of 2012 WITH C.A.NO.3977 OF 2014 @ S.L.P.(C)NO.15207 of 2012 WITH C.A.NO.3978 OF 2014 @ S.L.P.(C)NO.15209 of 2012 WITH C.A.NO.3979 OF 2014 @ S.L.P.(C)NO.16266 of 2012 WITH C.A.NO.3980 OF 2014 @ S.L.P.(C)NO.16265 of 2012 WITH C.A.NO.3981 OF 2014 @ S.L.P.(C)NO.16319 of 2012 WITH C.A.NO.3982 OF 2014 @ S.L.P.(C)NO.16782 of 2012 WITH C.A.NO.3983 OF 2014 @ S.L.P.(C)NO.19491 of 2012 WITH C.A.NO.3984 OF 2014 @ S.L.P.(C)NO.19492 of 2012 WITH C.A.NO.3985 OF 2014 @ S.L.P.(C)NO.20626 of 2012 WITH C.A.NO.3986 OF 2014 @ S.L.P.(C)NO.21459 of 2012 WITH C.A.NO.3987 OF 2014 @ S.L.P.(C)NO.21460 of 2012 WITH C.A.NO.3988 OF 2014 @ S.L.P.(C)NO.30192 of 2012 Page 1 2 WITH C.A.NO.3989 OF 2014 @ S.L.P.(C)NO.36559 of 2012 WITH C.A.NO.3990 OF 2014 @ S.L.P.(C)NO.12130 of 2013 WITH C.A.NO.3991 OF 2014 @ S.L.P.(C)NO.15368 of 2013 AND WITH S.L.P.(C)NO.7741 of 2013 O R D E R 1.Delay, if any, in filing and refiling Special Leave Petitions is condoned. 2.Leave granted. 3.The issue that falls for our consideration and decision in all these appeals is: at what stage of proceedings under Chapter XIV-B does assessing authority require to record his satisfaction for issuing notice under Section 158BD of Income Tax Act, 1961 ('the Act' for short). 4.Since issue is common in all these appeals, after hearing learned counsel for parties to lis, we dispose of all these appeals by this common order. 5.For purpose of disposal of these appeals, we take Civil Appeal@ Special Leave Petition (Civil) Page 2 3 No.10542 of 2011 as lead case. Civil Appeal No.3958 of 2014 @S.L.P.(C)No.10542/2011: 6.The respondent in this appeal is firm engaged in manufacturing hosiery goods in name and style of M/s. Calcutta Knitwears. 7.A search operation under Section 132 of Act was carried out in two premises of Bhatia Group, namely, M/s. Swastik Trading Company and M/s. Kavita International Company on 05.02.2003 and certain incriminating documents pertaining to assessee firm were traced in said search. 8.After completion of investigation by investigating agency and handing over of documents to assessing authority, assessing authority had completed block assessments in case of Bhatia Group. Since certain other documents did not pertain to person searched under Section 132 of Act, assessing authority thought it fit to transmit those documents, which according to him, pertain to undisclosed income on account of investment element and profit element of assessee firm and require to be assessed under Section 158BC Page 3 4 read with Section 158BD of Act to another assessing authority in whose jurisdiction assessments could be completed. In doing so, assessing authority had recorded his satisfaction note dated 15.07.2005. 9.The jurisdictional assessing authority for respondent-assessee had issued show cause notice under Section 158BD for block period 01.04.1996 to 05.02.2003, dated 10.02.2006 to assessee inter alia directing assessee to show cause as to why should proceedings under Section 158BC not be completed. After receipt of said notice, assessee firm had filed its return under Section 158BD for said block period declaring its total income as Nil and further filed its reply to said notice challenging validity of said notice under Section 158BD, dated 08.03.2006. assessee had taken stand that notice issued to assessee is (a) in violation of provisions of Section 158BD as conditions precedent have not been complied with by assessing officer and (b) beyond period of limitation as provided for under Section Page 4 5 158BE read with Section 158BD and therefore, no action could be initiated against assessee and accordingly, requested assessing officer to drop proceedings. 10. assessing authority, after due consideration of reply filed to show cause notice, has rejected aforesaid stand of assessee and assessed undisclosed income as Rs. 21,76,916/- (Rs.16,05,744/- (unexplained investment) and Rs.5,71,172/- (profit element)) by order dated 08.02.2008. assessing officer is of view that Section 158BE of Act does not provide for any limitation for issuance of notice and completion of assessment proceedings under Section 158BD of Act and therefore notice could be issued even after completion of proceedings of searched person under Section 158BC of Act. 11. Disturbed by orders passed by assessing officer, assessee firm had carried matter in appeal before Commissioner of Income Tax (Appeal- II) (for short 'the CIT(A) ). CIT(A), while rejecting stand of assessee in respect of Page 5 6 validity of notice issued under Section 158BD, has partly allowed appeal filed by assessee firm and deleted additions made by assessing officer in its assessments, by his order dated 27.08.2008. 12. Revenue had carried matter further by filing appeal before Income Tax Appellate Tribunal (for short 'the Tribunal') and assessee has filed cross objections therein. Tribunal, after hearing parties to lis, has rejected appeal of Revenue and observed that recording of satisfaction by assessing officer as contemplated under Section 158BD was on date subsequent to framing of assessment under Section 158BC in case of searched person, that is, beyond period prescribed under Section 158BE(1)(b) and thereby notice issued under Section 158BD was belated and consequently assumption of jurisdiction by assessing authority in impugned block assessment would be invalid, by order dated 23.04.2009. 13. Aggrieved by order so passed by Tribunal, Revenue had carried matter in appeal under Page 6 7 Section 260A of Act before High Court. High Court, by its impugned judgment and order dated 20.07.2010, has rejected Revenue's appeal and confirmed order passed by Tribunal. 14. That is how Revenue is before us in this appeal. 15. We have heard Shri Rupesh Kumar learned counsel for Revenue and Shri R.P.Bhatt, Shri Ajay Vohra, Shri Santosh Krishan, learned counsel and other learned counsel for respective assessees-respondents. 16. Shri Rupesh Kumar, learned counsel for Revenue would contend that assessing authority, after completion of assessment proceedings against searched person under Section 158BC, being of opinion that other documents which have surfaced at time of search under Section 132 of Act belong to person other than searched person had recorded his satisfaction in said respect and transmitted papers to jurisdictional assessing officer for assessments of such person other than searched person. Further, he would submit that Page 7 8 assessing officer has complied with requirements of Section 158BD of Act in its entirety while preparing satisfaction note and transmitting documents to jurisdictional assessing officer and therefore, Tribunal and High Court were not justified in holding that satisfaction note ought to have been prepared by assessing officer before completion of assessment proceedings of searched person under Section 158BC of Act and that notice issued under Section 158BD was belated. 17. Per contra, Shri Bhatt, learned senior counsel and Shri Ajay Vohra and Shri Santosh Krishan learned counsel for assessees would state that satisfaction note requires to be made by assessing officer before seized documents were transmitted to another assessing officer in whose jurisdiction person other than searched person is assessed and submit that said satisfaction note should be recorded before assessment proceedings of searched person are completed under Section 158BC of Act and not later in time. By saying so, Page 8 9 learned counsel would justify reasoning and conclusion reached by Tribunal as well as High Court. 18. In order to resolve controversy, certain provisions of Act require to be noticed by us. 19. Chapter XIV-B of Act is special provision carved out by legislature for purpose of assessments in cases pertaining to Sections 132 and 132A of Act. said chapter was introduced by Finance Act, 1995 with effect from 01.07.1995 and comprises Sections 158B to 158BH of Act. provisions under this Chapter were made inapplicable in case of search initiated under Section 132 or Section 132A after 31.05.2003 by introduction of amendment to Chapter as Section 158BI vide Finance Act, 2003 with effect from 01.06.2003. lis before us requires examination of provisions of said Chapter, particularly Section 158BD. 20. Section 158B of Act is dictionary clause. It provides for definition of block period and undisclosed income . For purpose of this case, Page 9 10 reference to definition of undisclosed income as provided for in Section 158B(b) is necessary and, therefore, it is noticed. same reads as under: Undisclosed income" includes any money, bullion, jewellery or other valuable article or thing or any income based on any entry in books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for purposes of this Act [or any expense, deduction or allowance claimed under this Act which is found to be false] . 21. Sections 158BC and 158BD of Act are machinery provisions. Section 158BC of Act provides procedure for block assessment and Section 158BD of Act provides for assessments in case of undisclosed income of any other person. said sections are relevant for purpose of this case and, therefore, they are extracted. They read as under: Page 10 11 Section 158BC. PROCEDURE FOR BLOCK ASSESSMENT. Where any search has been conducted under section 132 or books of account, other documents or assets are requisitioned under section 132A, in case of any person, then, - [(a) Assessing Officer shall, (i) In respect of search initiated or books of account or other documents or any assets requisitioned after 30th day of June, 1995 but before 1st day of January, 1997 serve notice to such person requiring him to furnish within such time not being less than fifteen days; (ii) In respect of search initiated or books of account or other documents or any assets requisitioned on or after 1st day of January, 1997, serve notice to such person requiring him to furnish within such time not being less than fifteen days but not more than forty-five days, as may be specified in notice return in prescribed form and verified in same manner as return under clause (i) of sub-section (1) of section 142, setting forth his total income including undisclosed income for block period: Provided that no notice under section 148 is required to be issued for purpose of proceeding under this Chapter: Provided further that person who has furnished return Page 11 12 under this clause shall not be entitled to file revised return;] (b) Assessing Officer shall proceed to determine undisclosed income of block period in manner laid down in section 158BB and provisions of section 142, sub-sections (2) and (3) of section 143 [section 144 and section 145]shall, so far as may be, apply; (c) Assessing Officer, on determination of undisclosed income of block period in accordance with this Chapter, shall pass order of assessment and determine tax payable by him on basis of such assessment; (d) assets seized under section 132 or requisitioned under section 132A shall be dealt with in accordance with provisions of section 132B.] *** *** *** Section 158BD. UNDISCLOSED INCOME OF ANY OTHER PERSON. Where Assessing Officer is satisfied that any undisclosed income belongs to any person, other than person with respect to whom search was made under section 132 or whose books of account or other documents or any assets were requisitioned under section 132A then, books of account, other documents or assets seized or requisitioned shall be handed over to Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed [under section 158 BC] against such other person and provisions of this Page 12 13 Chapter shall apply accordingly. 22. Section 158BC speaks of procedure for assessment of person searched under Section 132 of Act or books of accounts, other documents or assets are requisitioned under section 132A. limitation for purpose of completion of block assessments for purpose of Section 158BC of Act is as provided under Section 158BE(1)(a) of Act, that is time limit for completion of block assessment. 23. Section 158BD of Act provides for undisclosed income of any other person. Before we proceed to explain said provision, we intend to remind ourselves of first or basic principles of interpretation of fiscal legislation. It is time and again reiterated that courts, while interpreting provisions of fiscal legislation should neither add nor subtract word from provisions of instant meaning of sections. It may be mentioned that foremost principle of interpretation of fiscal statutes in every system of interpretation is rule of strict interpretation which provides that where Page 13 14 words of statute are absolutely clear and unambiguous, recourse cannot be had to principles of interpretation other than literal rule (Swedish Match AB v. Securities and Exchange Board, India, AIR 2004 SC 4219, CIT v. Ajax Products Ltd. [1965] 55 ITR 741 (SC)). 24. We may gainfully refer to Cape Brandy Syndicate v. Inland Revenue Commissioners [1921] 1 KB 64 at 71 which involved Finance (No. 2) Act 1915 which imposed excess profits duty on trade or businesses commenced after outbreak of First World War in 1914. By subjecting legislation to strict literal interpretation, Rowlatt J. held that Finance (No. 2) Act 1915, in isolation, did not apply to businesses that commenced after outbreak of war in 1914 and observed as follows: principle in favour of strict literal approach simply means that in taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at language used. Page 14 15 25. In Commissioner of Stamp Duties (NSW) v. Simpson, (1917) 24 CLR 209 Barton J., citing Viscount Haldane in Lumsden v Inland Revenue Commissioners, [1914] AC 877, stated following: duty of Judges in construing Statutes is to adhere to literal construction unless context renders it plain that such construction cannot be put on words. This rule is especially important in cases of Statutes which impose taxation. Court in Simpson case (supra) sought to determine whether deed poll constituted settlement for purposes of Section 49 of Stamp Duties Act, 1898 (NSW). Section 3 which defined word settlement as meaning any contract or agreement was examined. Court by adopting strict literal approach held that only contract or agreement could constitute settlement and that Section 49 providing for deed poll was not applicable and therefore, taxpayer did not have to pay any stamp duty. 26. Lord Granworth in Grundy v. Pinniger, (1852) 1 LJ Ch 405 has observed that: To adhere as closely as possible to literal meaning of words used, is cardinal rule from which if we de- Page 15 16 part we launch into sea of difficulties which it is not easy to fathom. That is to say, once literal rule is departed, then any number of interpretations can be put to statutory provision, each Judge having free play to put his own interpretation as he likes. This would be destructive of edifice of fiscal legislations which impose economic duties and sanctions. 27. In taxing statutes, even if literal interpretation results in hardship or inconvenience, it has to be followed (G.P. Singh's Principles of Statutory Interpretations, 12th Ed, 2010, Lexis Nexis Butterworths Wadhwa Nagpur; Bennion on Statutory Interpretation, 5th Ed., Lexis Nexis, p. 863; Vepa P. Sarathi, Interpretation of Statutes, 5th Ed., Easter Book Company, Chapter VIII, Taxing Statutes). This Court in CIT v. Keshab Chandra Mandal, AIR 1950 SC 265 has held that hardship or inconvenience cannot alter meaning of language employed by legislature if such meaning is clear and apparent. Hence departure from literal rule should only be done in very rare cases, and ordinarily there should Page 16 17 be judicial restraint to do so.(Pandian Chemicals Ltd. v. C.I.T., 2003(5) SCC 590, Narsiruddin v. Sita Ram Agarwal, AIR 2003 SC 1543, Bhaiji v. Sub-Divisional Officer, Thandla, 2003(1) SCC 692, J.P. Bansal v. State of Rajasthan and Anr., AIR 2003 SC 1405, State of Jharkhand and Anr. v. Govind Singh : JT 2004(10) SC 349, Jinia Keotin v. K.S. Manjhi, 2003 (1) SCC 730, Shiv Shakti Co-operative Housing Society v. Swaraj Developers, AIR 2003 SC 2434, Grasim Industries Limited v. Collector of Customs, 2002 (4) SCC 297 and Union of India v. Hamsoli Devi, 2002 (7) SCC 273) 28. Australian High Court in Federal Commissioner of Taxation v. Westraders Pty Ltd, (1980) 144 CLR 55 considered scope of Section 36A of Income Tax Assessment Act, 1936(Cth), which on literal interpretation allowed taxpayer to make profit and still claim loss for tax purposes. Commissioner argued taxpayer s conduct amounted to tax avoidance scheme and should therefore be disallowed under Section 260 of Income Tax Assessment Act, 1936(Cth). Court held that under literal interpretation Section 36A could apply to Page 17 18 allow taxpayer to claim loss. Barwick CJ, speaking for majority relied on decision in Inland Revenue Commissioners v. Westminster (Duke), [1936] AC 1 which advocated literal approach be applied when interpreting taxation legislation and stated following: It is for Parliament to specify, and to do so, in my opinion, as far as language will permit, with unambiguous clarity, circumstances which will attract obligation on part of citizen to pay tax. function of court is to interpret and apply language in which Parliament has specified those circumstances. court is to do so by determining meaning of words employed by Parliament according to intention of Parliament which is discoverable from language used by Parliament. It is not for court to mould or to attempt to mould language of statute so as to produce some result which it might be thought Parliament may have intended to achieve, though not expressed in actual language employed 29. In Cooper Brookes (Wollongong) Pty Ltd v. Federal Commissioner of Taxation (1981) 147 CLR 297 it is held that in taxing statute if language is unambiguous, departing from literal approach may lead judges to put their own ideas of justice or social policy in place of words of statute . Similar view was espoused in C & J Clark Ltd v. Inland Revenue Commissioners, [1975] 1 WLR 413 and BP Refinery (Westernport) Pty Ltd v. Hastings Shire, (1977) 180 CLR 266. Page 18 19 30. In Hepples v. FCT, (1991) 173 CLR 492, High Court of Australia unequivocally favoured principle that taxation legislation should be subject to strict literal interpretation and opined that such approach was supported by common sense . Therein, taxpayer, on ceasing to be employed, was paid $40,000 by his employer in exchange for taxpayer agreeing that he would not carry on or be interested in certain businesses and would not divulge any trade secrets. issue before Court was whether or not such payment would form part of taxpayer s assessable income for purposes of Income Tax Assessment Act, 1936(Cth). It was held that since Act did not provide for such payments to form part of taxpayer s assessable income, payment would not be assessable. 31. This Court in Tata Consultancy Services v. State of Andhra Pradesh has ascribed plain meaning to terms computer and computer programme in fiscal statute and reiterating proposition laid Page 19 20 down in Inland Revenue Commissioner case (supra), observed that court should not be over zealous in searching ambiguities or obscurities in words which are plain. 32. In Prakash Nath Khanna v. C.I.T., 2004 (9) SCC 686, this Court has explained that language employed in statute is determinative factor of legislative intent. legislature is presumed to have made no mistake. presumption is that it intended to say what it has said. Assuming there is defect or omission in words used by legislature, Court cannot correct or make up deficiency. Where legislative intent is clear from language, Court should give effect to it (Delhi Financial Corporation v. Rajiv Anand, 2004 (11) SCC 625; Government of Andhra Pradesh v. Road Rollers Owners Welfare Association, 2004(6) SCC 210). 33. In B. Premanand and Ors.v. Mohan Koikal and Ors., (2011)4 SCC 266 this Court has observed as follows: 32. literal rule of interpretation really means that there should be no interpretation. In other words, we Page 20 21 should read statute as it is, without distorting or twisting its language. 33. We may mention here that literal rule of inter- pretation is not only followed by Judges and lawyers, but it is also followed by lay man in his ordinary life. To give illustration, if person says "this is pen- cil", then he means that it is pencil; and it is not that when he says that object is pencil, he means that it is horse, donkey or elephant. In other words, literal rule of interpretation simply means that we mean what we say and we say what we mean. If we do not follow literal rule of interpretation, social life will become impossible, and we will not understand each other. If we say that certain object is book, then we mean it is book. If we say it is book, but we mean it is horse, table or elephant, then we will not be able to communicate with each other. Life will become im- possible. Hence, meaning of literal rule of inter- pretation is simply that we mean what we say and we say what we mean. 34. Thus, language of taxing statute should ordinarily be read understood in sense in which it is harmonious with object of statute to effectuate legislative animation. taxing statute should be strictly construed; common sense approach, equity, logic, ethics and morality have no role to Page 21 22 play. Nothing is to be read in, nothing is to be implied; one can only look fairly at language used and nothing more and nothing less. (J. Srinivasa Rao v. Govt. of A.P. and Anr. 2006(13) SCALE 27, Raja Jagadambika Pratap Narain Singh v. C.B.D.T., [1975] 100 ITR 698(SC)) 35. It is also trite that while interpreting machinery provision, courts would interpret provision in such way that it would give meaning to charging provisions and that machinery provisions are liberally construed by courts. In Mahim Patram Private Ltd. v. Union of India (UOI) and Ors., (2007) 3 SCC 668 this Court has observed that: 20. taxing statute indisputably is to be strictly con- strued. [See J. Srinivasa Rao v. Govt. of Andhra Pradesh and Anr., 2006(13)SCALE 27 ]. It is, however, also well- settled that machinery provisions for calculating tax or procedure for its calculation are to be con- strued by ordinary rule of construction. Whereas liabil- ity has been imposed on dealer by charging section, it is well-settled that court would construe stat- ute in such manner so as to make machinery workable. Page 22 23 21. In J. Srinivasa Rao (supra), this Court noticed de- cisions of this Court in Gursahai Saigal v.Commissioner of Income-tax, Punjab, [1963] 1 ITR 48(SC) and Ispat Indus- tries Ltd. v. Commissioner of Customs, Mumbai, 2006(202)ELT561(SC).In Gursahai Saigal (supra), ques- tion which fell for consideration before this Court was construction of machinery provisions vis- -vis charging provisions. Schedule appended to Motor Vehicles Act is not machinery provision. It is part of charging provision. By giving plain meaning to Schedule appended to Act, machinery provision does not become unworkable. It did not prevent clear inten- tion of legislature from being defeated. It can be given appropriate meaning. 36. reference to observations of this Court in J.K. Synthetics Limited and Birla Cement Works and another v. Commercial Taxes Officer and another,(1994) 4 SCC 276 would be apposite: 13. It is well-known that when statute levies tax it does so by inserting charging section by which liabil- ity is created or fixed and then proceeds to provide machinery to make liability effective. It, there- fore, provides machinery for assessment of li- ability already fixed by charging section, and then provides mode for recovery and collection of tax, including penal provisions meant to deal with defaulters. Ordinarily charging section which fixes liabil- Page 23 24 ity is strictly construed but that rule of strict con- struction is not extended to machinery provisions which are construed like any other statute. ma- chinery provisions must, no doubt, be so construed as would effectuate object and purpose of statute and not defeat same. (Whitney v. Commissioners of Inland Revenue 1926 C 37, CIT v. Mahaliram Ramjidas (1940) 8 ITR 442 , Indian United Mills Ltd. v. Commissioner of Ex- cess Profits Tax, Bombay, [1955] 27 ITR 20(SC) and Gursa- hai Saigal v. CIT, Punjab, [1963] 1 ITR 48(SC). 37. It is duty of court while interpreting machinery provisions of taxing statute to give effect to its manifest purpose. Wherever intention to impose liability is clear, Courts ought not be hesitant in espousing commonsense interpretation to machinery provisions so that charge does not fail. machinery provisions must, no doubt, be so construed as would effectuate object and purpose of statute and not defeat same (Whitney v. Commissioners of Inland Revenue 1926 C 37 , CIT v. Mahaliram Ramjidas (1940) 8 ITR 442, Indian United Mills Ltd. v. Commissioner of Excess Profits Tax, Bombay [1955] 27 ITR 20(SC), and Gursahai Saigal v. CIT, Punjab [1963] 1 ITR 48(SC); Commissioner of Page 24 25 Wealth Tax, Meerut v. Sharvan Kumar Swarup & Sons, (1994) 6 SCC 623; CIT v. National Taj Traders, (1980) 1 SCC 370; Associated Cement Company Ltd. v. Commercial Tax Officer, Kota and Ors., (48) STC 466). Francis Bennion in Bennion on Statutory Interpretation, 5th Ed., Lexis Nexis in support of aforesaid proposition put forth as illustration that since charge made by legislator in procedural provisions is excepted to be for general benefit of litigants and others, it is presumed that it applies to pending as well as future proceedings. 38. Having said that, let us revert to discussion of Section 158BD of Act. said provision is machinery provision and inserted in statute book for purpose of carrying out assessments of person other than searched person under Sections 132 or 132A of Act. Under Section 158BD of Act, if officer is satisfied that there exists any undisclosed income which may belong to other person other than searched person under Sections 132 or 132A of Act, after recording such satisfaction, Page 25 26 may transmit records/documents/chits/papers etc to assessing officer having jurisdiction over such other person. After receipt of aforesaid satisfaction and upon examination of said other documents relating to such other person, jurisdictional assessing officer may proceed to issue notice for purpose of completion of assessments under Section 158BD of Act, other provisions of XIV-B shall apply. 39. opening words of Section 158BD of Act are that assessing officer must be satisfied that undisclosed income belongs to any other person other than person with respect to whom search was made under Section 132 of Act or requisition of books were made under Section 132A of Act and thereafter, transmit records for assessment of such other person. Therefore, short question that falls for our consideration and decision is at what stage of proceedings should satisfaction note be prepared by assessing officer: whether at time of initiating proceedings under Section 158BC for completion of assessments of searched Page 26 27 person under Section 132 and 132A of Act or during course of assessment proceedings under Section 158BC of Act or after completion of proceedings under Section 158BC of Act. 40. Tribunal and High Court are of opinion that it could only be prepared by assessing officer during course of assessment proceedings under Section 158BC of Act and not after completion of said proceedings. Courts below have relied upon limitation period provided in Section 158BE(2)(b) of Act in respect of assessment proceedings initiated under Section 158BD, i.e., two years from end of month in which notice under Chapter XIV-B was served on such other person in respect of search initiated or books of account or other documents or any assets are requisitioned on or after 01.01.1997. We would examine whether Tribunal or High Court are justified in coming to aforesaid conclusion. 41. We would certainly say that before initiating proceedings under Section 158BD of Act, Page 27 28 assessing officer who has initiated proceedings for completion of assessments under Section 158BC of Act should be satisfied that there is undisclosed income which has been traced out when person was searched under Section 132 or books of accounts were requisitioned under Section 132A of Act. This is in contrast to provisions of Section 148 of Act where recording of reasons in writing are sine qua non. Under Section 158BD existence of cogent and demonstrative material is germane to assessing officers satisfaction in concluding that seized documents belong to person other than searched person is necessary for initiation of action under Section 158BD. bare reading of provision indicates that satisfaction note could be prepared by assessing officer either at time of initiating proceedings for completion of assessment of searched person under Section 158BC of Act or during stage of assessment proceedings. It does not mean that after completion of assessment, assessing officer cannot prepare satisfaction note to effect that there exists income tax belonging to any person other than searched person Page 28 29 in respect of whom search was made under Section 132 or requisition of books of accounts were made under Section 132A of Act. language of provision is clear and unambiguous. legislature has not imposed any embargo on assessing officer in respect of stage of proceedings during which satisfaction is to be reached and recorded in respect of person other than searched person. 42. Further, Section 158BE(2)(b) only provides for period of limitation for completion of block assessment under section 158BD in case of person other than searched person as two years from end of month in which notice under this Chapter was served on such other person in respect of search carried on after 01.01.1997. said section does neither provides for nor imposes any restrictions or conditions on period of limitation for preparation satisfaction note under Section 158BD and consequent issuance of notice to other person. 43. In lead case, assessing officer had prepared satisfaction note on 15.07.2005 though assessment proceedings in case of searched Page 29 30 person, namely, S.K. Bhatia were completed on 30.03.2005. As we have already noticed, Tribunal and High Court are of opinion that since satisfaction note was prepared after proceedings were completed by assessing officer under Section 158BC of Act which is contrary to provisions of Section 158BD read with Section 158BE(2)(b) and therefore, have dismissed case of Revenue. In our considered opinion, reasoning of learned Judges of High Court is contrary to plain and simple language employed by legislature under Section 158BD of Act which clearly provides adequate flexibility to assessing officer for recording satisfaction note after completion of proceedings in respect of searched person under Section 158BC. Further, interpretation placed by Courts below by reading into plain language of Section 158BE(2)(b) such as to extend period of limitation to recording of satisfaction note would run counter to avowed object of introduction of Chapter to provide for cost-effective, efficient and expeditious completion of search assessments and avoiding or reducing long drawn proceedings. Page 30 31 44. In result, we hold that for purpose of Section 158BD of Act satisfaction note is sine qua non and must be prepared by assessing officer before he transmits records to other assessing officer who has jurisdiction over such other person. satisfaction note could be prepared at either of following stages: (a) at time of or along with initiation of proceedings against searched person under Section 158BC of Act; (b) along with assessment proceedings under Section 158BC of Act; and (c) immediately after assessment proceedings are completed under Section 158BC of Act of searched person. 45. We are informed by Shri Santosh Krishan, who is appearing in seven of appeals that assessing officer had not recorded satisfaction note as required under Section 158BD of Act, therefore, Tribunal and High Court were justified in setting aside orders of assessment and orders passed by first appellate authority. We do not intend to examine aforesaid contention canvassed Page 31 32 by learned counsel since we are remanding matters to High Court for consideration of individual cases herein in light of observations made by us on scope and possible interpretation of Section 158BD of Act. 46. With these observations, appeals are disposed of. matters are remanded to respective High Courts for deciding matters afresh after affording opportunity of hearing to parties. Ordered accordingly. In C.A.NO.3959 OF 2014 @ S.L.P.(C)NO.11943 of 2011 C.A.NO.3960 OF 2014 @ S.L.P.(C)NO.17662 of 2011 C.A.NO.3961 OF 2014 @ S.L.P.(C)NO.17656 of 2011 C.A.NO.3962 OF 2014 @ S.L.P.(C)NO.17661 of 2011 C.A.NO.3963 OF 2014 @ S.L.P.(C)NO.2804 of 2012 C.A.NO.3964 OF 2014 @ S.L.P.(C)NO.2805 of 2012 C.A.NO.3965 OF 2014 @ S.L.P.(C)NO.5264 of 2012 C.A.NO.3966 OF 2014 @ S.L.P.(C)NO.5265 of 2012 C.A.NO.3967 OF 2014 @ S.L.P.(C)NO.5266 of 2012 C.A.NO.3968 OF 2014 @ S.L.P.(C)NO.7574 of 2012 C.A.NO.3969 OF 2014 @ S.L.P.(C)NO.7575 of 2012 C.A.NO.3970 OF 2014 @ S.L.P.(C)NO.7576 of 2012 C.A.NO.3971 OF 2014 @ S.L.P.(C)NO.7577 of 2012 C.A.NO.3972 OF 2014 @ S.L.P.(C)NO.9721 of 2012 C.A.NO.3973 OF 2014 @ S.L.P.(C)NO.11460 of 2012 C.A.NO.3974 OF 2014 @ S.L.P.(C)NO.12111 of 2012 C.A.NO.3975 OF 2014 @ S.L.P.(C)NO.12886 of 2012 C.A.NO.3976 OF 2014 @ S.L.P.(C)NO.12887 of 2012 C.A.NO.3977 OF 2014 @ S.L.P.(C)NO.15207 of 2012 C.A.NO.3978 OF 2014 @ S.L.P.(C)NO.15209 of 2012 Page 32 33 C.A.NO.3979 OF 2014 @ S.L.P.(C)NO.16266 of 2012 C.A.NO.3980 OF 2014 @ S.L.P.(C)NO.16265 of 2012 C.A.NO.3981 OF 2014 @ S.L.P.(C)NO.16319 of 2012 C.A.NO.3982 OF 2014 @ S.L.P.(C)NO.16782 of 2012 C.A.NO.3983 OF 2014 @ S.L.P.(C)NO.19491 of 2012 C.A.NO.3984 OF 2014 @ S.L.P.(C)NO.19492 of 2012 C.A.NO.3985 OF 2014 @ S.L.P.(C)NO.20626 of 2012 C.A.NO.3986 OF 2014 @ S.L.P.(C)NO.21459 of 2012 C.A.NO.3987 OF 2014 @ S.L.P.(C)NO.21460 of 2012 C.A.NO.3988 OF 2014 @ S.L.P.(C)NO.30192 of 2012 C.A.NO.3989 OF 2014 @ S.L.P.(C)NO.36559 of 2012 C.A.NO.3990 OF 2014 @ S.L.P.(C)NO.12130 of 2013 AND WITH C.A.NO.3991 OF 2014 @ S.L.P.(C)NO.15368 of 2013: In view of order passed in Civil Appeal @ S.L.P. (C)No.10542 of 2011, these appeals are also disposed of in same terms, conditions, observations and directions contained therein. Ordered accordingly. Page 33 34 S.L.P.(C)No.7741/2013: De-tag and list separately. Ordered accordingly. .......................J. (H.L. DATTU) .......................J. (S.A. BOBDE) NEW DELHI; MARCH 12, 2014 Page 34 Commissioner of Income-tax-III v. Calcutta Knitwear