$ 2 * IN HIGH COURT OF DELHI AT NEW DELHI Decided on 18th February, 2015 + ITA 857/2009 COMMISSIONER OF INCOME TAX-VIII ..... Appellant Through: Mr.Rohit Madan and Mr.Ruchir Bhatia, Advs. versus H.P. GOEL ..... Respondent Through: Mr.Saubhagya Agarwal, Adv. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE R.K.GAUBA MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT) % 1. Revenue is aggrieved by order of Income Tax Appellate Tribunal (ITAT) dated 27.06.2008 in ITA No. 248/D/05. It is held that Satisfaction Note which preceded notice under Section 158BD dated 03.06.2002 served upon respondent/assessee, in circumstances, was invalid. 2. brief facts are that one search and seizure operation was carried out in respect of Batra group on 17.12.1999. During course of search, Revenue came across certain documents which formed basis of Satisfaction Note recorded under Section 158BD on 30.05.2002. Soon thereafter, notice was issued on 03.06.2002 and served on assessee. ITA No.857/2009 Page 1 document forming basis of Satisfaction Note was receipt executed sometime in 1999. receipt itself bore signatures of assessee and pertained to transfer of terrace/roof and ground floor of A-201, Shivalik, New Delhi. receipt stated as follows: That total deal has been settled/fixed between me and purchaser at 33,00,000/- (Rupees Thirty Three Lakhs only) and balance payment of 16,50,000/- (Rupees Sixteen Lakhs Fifty Thousand only) shall be paid by above said purchaser to me, as per terms and conditions of agreement to sell dated 8.6.99 3. searched parties, i.e. two Batra brothers, partner of M/s Om and S. Constructions had secured roof rights and disclosed consideration of 4 lacs as to amounts indicated in receipt. Mr.B.L.Goel, assessee s father was Power of Attorney holder of original owner Mr. B.B. Bhagat, on basis of document executed in 1991. assessee contended that amounts received by him were on behalf of his father and consequently another proceeding were followed as against him and Satisfaction Note was, therefore, invalid. Assessing Officer (AO) rejected assessee s contention and brought said amount of 29 lakhs determined by him to be undisclosed income to tax. assessee appealed; CIT (Appeals) by her elaborate order of 21.02.2005 rejected contentions. CIT (Appeals) also outlined and dealt with Satisfaction Note recorded by AO. assessee had contended that in that instance Satisfaction Note clearly indicated that Revenue was aware about ownership of property being that of his father and ITA No.857/2009 Page 2 consequently, Satisfaction Note and notice under Section 158 BD were illegal. CIT(Appeals) however, was unimpressed with this submission and rejected appeal. ITAT by impugned order, accepted assessee s contention and concluded as follows: 6. We have considered rival contentions. perusal of satisfaction note as found at pages 17 & 18 of paper book show that assessing authority was satisfied that issue had required further investigation. assessing authority has not recorded any satisfaction that moneys specified in receipt as found in course of search was undisclosed income of Shri H.P.Goel, assessee herein. In satisfaction note also, assessing authority has recognized assessee s father Shri B.L.Goel as owner of property as also seller of property. Once Assessing Officer has recognized existence of Shri B.L.Goel to be owner as well as transferor of property and fact that assessee herein has transacted on behalf of Shri B.L. Goel, then obviously liability if any could rest only in hands of owner being Shri B.L.Goel. Thus, it is found that satisfaction as recorded by assessing authority did not specify that any undisclosed income belonged to assessee herein but only specified that issue needed further investigation. It is further noticed that search in Batra s case in course of which alleged receipt has been found was conducted on 17.12.1999 and consequently as per provisions of section 158BE time limit for completion of block assessment, assuming that last of panchnama was drawn in December, 1999 would expire by 31st December, 2001. It is noticed that satisfaction has been recorded only on ITA No.857/2009 Page 3 30.05.2002 and consequently this satisfaction note has been recorded much after time limit for completion of assessment under Chapter XIV-B in respect of persons searched. In circumstances on both these counts assessment as made by assessing authority in case of assessee u/s 158BD on 30.06.2004 would have to be held as bad in law in view of fact that satisfaction has been recorded much after time limit for completion of assessment in case of persons searched as provided under Chapter XIV-B as also on ground that satisfaction recorded does not indicate that assessing authority was satisfied that any undisclosed income belonged to assessee herein. In circumstances respectfully following law as laid down by Hon ble Supreme Court in case of Manish Maheshwari referred to (supra) as also view expressed by Chandigarh bench of this Tribunal in case of Kishore Lal Balwant Rai referred to (supra) block assessment order for block period 01.04.1989 to 17.12.1999 passed u/s 158BD on 30.06.2004 in case of assessee is quashed. As we have decided this appeal on preliminary ground itself and have held that assessment is bad in law, we are not expressing any views on other grounds as raised in appeal. 4. Learned counsel for Revenue urged that given nature of receipt which nowhere mentioned that amount was received by assessee on behalf of his father, contentions made in proceedings were unwarranted. It was urged that, in answer to queries put, at one stage, assessee denied having executed receipt, nonetheless he ITA No.857/2009 Page 4 admitted to signatures and further voluntarily informed that he had received amount on behalf of his father. Highlighting that Revenue is not expected to make detailed enquiry and investigation before issuing Satisfaction Note forming basis for notice to third party, learned counsel urged that there was material to indicate that amount was actually received by assessee even though Satisfaction Note noticed that his father (the beneficiary) was owner of property. 5. assessee s counsel, on other hand, urged that once AO became aware that property was not owned by assessee and that he had received amount on someone else s behalf, notice could not have been issued under Section 158BD. He urged that this Court should not interfere with ITAT s order on this ground alone. It is evident that it is precisely this dispute which this Court is called upon to decide. It was further submitted that satisfaction note also indicated that amount received by assessee was on behalf of his father. 6. question which this Court is to adjudicate upon is whether Satisfaction Note and consequent notice under Section 158BD, issued to assessee was valid. There is no dispute about fact that receipt was signed by assessee which indicated that total consideration was 33 lakhs. Even though it alluded to agreement to sell dated 08.06.1999, fact remains that no written agreement apparently was executed; what is matter of fact, however, is that possession of property was with searched party, i.e. Batra brothers and their firm. Furthermore, searched party had disclosed consideration received at 4 lakh only. It is also not in dispute that amount was in fact received by assessee. Given these circumstances, that Satisfaction Note, prima facie, recorded that ITA No.857/2009 Page 5 owner of property was B.L.Goel (assessee s father) and that amount was received by assessee on father s behalf cannot be determinative in facts of this case. Since amount was received, as matter of fact, and books of purchaser showed that fraction of that sum was disclosed as sale consideration, Revenue was entitled to issue notice to respondent, ascertaining whether such amount was actually received by him and, if so, on whose behalf, and proceed further. 7. In circumstance, this Court is of opinion that ITAT s order narrowly confirming invalidity of notice of assessment, that entire amount was received by assessee on behalf of his father cannot be upheld. property did not belong to Mr.B.L.Goel and impugned order is not sustainable, it is accordingly set aside. matter is remitted back to ITAT to decide assessee s appeal in accordance with law. 8. appeal stands disposed of in above terms. S. RAVINDRA BHAT, J R.K.GAUBA, J FEBRUARY 18, 2015 mr ITA No.857/2009 Page 6 Commissioner of Income-tax- VIII v. H.P. Goel