Law:

Section:

Section 158BD of the Income-tax Act, 1961 - Block assessment in search cases - Undisclosed income of any other person - Block period 1-4-1985 to 20-3-1996 - Whether Assessing Officer must record his satisfaction about existence of undisclosed income before proceeding against a person other than one searched - Held, yes FACTS During the block assessment proceedings pertaining to a company, the Assessing Officer found some incriminating documents relating to the assessee-company but since he did not have jurisdiction in the matter, he sent a letter to the Assessing Officer having jurisdiction over the assessee informing him to issue a notice to the assessee under section 142(1) to file its return and to assume jurisdiction of the case. Subsequently, an order was passed under section 127 transferring the jurisdiction over the assessee to the Assessing Officer of company 'E'. Thereafter, a notice was issued to the assessee under section 158BD requiring it to file its returns for the relevant block period. The assessee filed its returns and during the assessment proceedings, it raised the contention that the Assessing Officer did not record his satisfaction to the effect that proceedings against it should be initiated under section 158BD and that only information was given to the effect that a notice should be issued to the assessee under section 142(1). The Assessing Officer, however, rejected said contention. On appeal, the Tribunal held that the Assessing Officer had rightly issued notice under section 158BD. On appeal : HELD It is quite clear from the of the Supreme Court in the case of Manish Maheshwari v. Asstt. CIT[2007] 289 ITR 341/ 159 Taxman 258 that the Assessing Officer must record his satisfaction about the existence of undisclosed income before proceeding against a person other than the one searched. No such satisfaction had been recorded in the instant case. On the contrary, the only thing recorded by the Assessing Officer was that information was given that a notice should be issued to the assessee under section 142(1). That hardly met with the first condition precedent given in Manish Maheshwari's case (supra). [Para 16] The law laid down by the…

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