By K. B. Bhujle | Advocate
New Page 1
Reported:
51 Block assessment: S. 158BD of I. T. Act, 1961: Block
period from 01/04/1996 to 28/10/2002: Notice for filing return: Satisfaction
must be of the officer issuing notice and not of another officer: No assessment
pursuant to notice: Assessee cannot be asked to file a return again: Notice
calling for return “as a company” : Status of assessee for earlier year accepted
as individual: Notice invalid.
[Subhas Chandra Bhaniramka Vs. Asst.; 320 ITR 349 (Cal)]
By a notice dated 18/08/2005, the Asst. Commissioner, Central
Circle called upon the petitioner to file a return of undisclosed income in the
status of a company for the block period from 01/04/1996 to 28/10/2002 u/s.
158BD(a) of the Income-tax Act, 1961. As the petitioner was assessed as an
individual, the petitioner filed the return in that status. However, the Asst.
Commissioner of the Central Circle by a letter intimated that since jurisdiction
was with the Asst. Commissioner of Circle 38, proceedings initiated u/s. 158BD
of the Act had been dropped. Thereafter, the petitioner received notice u/s.
158BD of the Act issued by the Asst. Commissioner of Circle 38 calling upon him
to file a return in the status of a company for the block period. The petitioner
requested him to furnish a certified copy of the satisfaction required for
issuing the notice u/s. 158BD. But it was not furnished.
The Calcutta High Court allowed the writ petition filed by
the petitioner and held as under:
“i) Under the Act “an individual” and “a company” are
separate entities. In the assessment for the assessment year 2004-05 the
Department had accepted the status of the petitioner as an individual.
However, by notice dated 31/08/2007 the petitioner was requested to file a
return “as a company”. The notice also described the petitioner “as a
company”. Since the Department had accepted the status of the petitioner as an
“individual”, and as the status of the petitioner had been incorrectly
described in the notice dated 31/08/2007, the notice was ex facie bad and
illegal.
ii) Since proceedings u/s. 158BD may have financial
implications, the satisfaction of the Assessing Officer must reveal the mental
and the dispassionate thought process of the Assessing Officer in arriving at
a conclusion and must contain reasons which should be the basis of initiating
the proceedings u/s. 158BD. Therefore, though section 158BD contains the word
“satisfy” and does not contain the words ” record his reasons” as postulated
in section 148, before proceeding, the Assessing Officer has to record his
reasons for being “satisfied”, which in the instant case was absent. There was
nothing on record to show that there was subjective and independent
satisfaction.
iii) Though the affidavit revealed that the Asst.
Commissioner of the Central Circle had recorded his satisfaction, there was
nothing to show that the Asst. Commissioner of Circle 38 had been satisfied.
He could not use the satisfaction recorded by the other officer. Therefore,
the proceeding was illegal.
iv) Since the earlier notice had not been declared invalid
by any court of law and a return was filed pursuant thereto, on which no
assessment had been made, the Asst. Commissioner of Circle 38 could not call
for another return.
v) The respondents had tried to justify the act by
supplementing reasons in their affidavit. The validity of an order has to be
judged from the order itself. The act which was not within the parameters of
section 158BD could not be validated by additional or supplementary grounds
later brought by way of affidavits.”
