THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN ITTA No.455 of 2010 Dated:09.08.2010 Between: Smt.R.Prabhavahi. …Appellant and Asst.Commissioner of Income Tax, Central Circle, Tirupati. …Respondent THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN ITTA No.455 of 2010 JUDGMENT: (per Hon’ble Sri Justice Ramesh Ranganathan) This appeal, under Section 260A of the Income Tax Act, 1961 (the Act), is preferred by the assessee against the order of the Income Tax Appellate Tribunal, Hyderabad Bench, in IT(SS)A No.62/Hyd/07, dated 06.03.2009. Facts in brief are that the assessee, holder of a General Power of Attorney (GPA) given to her by Sri P.Venkatasubbaiah on 17.12.1997 in respect of 17 cents of land in Survey No.471, K.T.Road, Tirupati, entered into a joint venture agreement dated 17.01.1998 with a developer, M/s.Harini Constructions, Tirupati. The said agreement stipulated that the landowner, represented by GPA, would get 33 1/3% of the constructed area, and the rest would go to the developer. The share of the assessee, as per that agreement, worked out to six flats and 2/3rd of the seventh flat. The assessee paid Rs.1,67,000/- for the 1/3rd portion of the flat and got seven flats to her share. The developer also paid Rs.4,99,845/- to the assessee in addition to giving her seven flats. The assessee sold the seven flats for Rs.22,01,000/-. However, she neither accounted for receipt of Rs.4,99,845/- from the developer, nor for the sale proceeds of the seven flats. As the search and seizure operation conducted on the husband of the assessee Sri R.Krishna Murthy, on 07.02.2003, revealed the aforesaid transactions of the assessee, proceedings under Section 158BD of the Act was initiated. In the course of block assessment, the Assessing Officer found that the assessee had paid Rs.6,00,000/-, to the owner Sri P.Venkatasubbaiah, before getting the GPA in respect of the aforesaid land. Taking into consideration the statement of the landowner Sri P.Venkatasubbaiah, who was also cross examined by the assessee, the Assessing Officer completed the block assessment, and treated the consideration received on the sale of seven flats, amounting to Rs.22,01,000/-, as the assessee’s undisclosed income. An assessment order dated 29.03.2006 was passed under Section 158BD of the Act. In appeal, the Commissioner of Income Tax (Appeals) confirmed the order of assessment. Thereafter, a second appeal was preferred to the Tribunal. The Tribunal, in the order under appeal, noted that the question, which clinched the issue, was whether the assessee passed on the sale proceeds to the landowner as claimed by her. The Tribunal noted that the Assessing Officer had brought on record evidence to the contrary in the form of deposition by the landowner who, in the course of his statement during the assessment proceedings, had confirmed having not received from the assessee any amount other than Rs.6,00,000/-, which was received prior to the execution of the GPA in favour of the assessee. The Tribunal also held that, in the absence of any evidence brought on record by the assessee either to substantiate her claim of having passed on the sale proceeds to the landowner, or to contradict the statement of the landowner before the Assessing Officer denying receipt of any amount other than Rs.6,00,000/-, the Assessing Officer was justified in treating the sale proceeds of Rs.22,01,000/- as the undisclosed income of the assessee. The Tribunal further held that there was no stipulation in the GPA with regard to any commission to which the assessee, as an agent, would be entitled to, and on the contrary it was an undisputed fact on record that the assessee had paid only Rs.6,00,000/- to the landowner so as to secure the GPA in her favour. The Tribunal held that it was for the assessee to substantiate that the sale proceeds received by her had been handed over to the landowner, and when there was evidence in the form of statement of the landlord contradicting the stand of the assessee, it was for the assessee to rebut the same by adducing any other evidence and, since the assessee had failed to discharge the onus that lay on her, the order of the lower authority did not necessitate interference. Before us Sri A.V.Krishna Koundinya, learned Counsel for the assessee, would reiterate the very same submissions urged before the Tribunal before us also. He would further submit that since the Officer, who conducted search and seizure operation, had not recorded his satisfaction that the undisclosed income belonged to the assessee, the very initiation of proceedings under Section 158BD of the Act stood vitiated. Learned Counsel would rely on Manish Maheshwari v Assistant Commissioner of Income Tax[1]. It is required to be noted that the contention regarding the failure of the Officer, who conducted the search and seizure operation, to record his satisfaction, has been urged for the first time before us. As the question urged is a mixed question of fact and law, it could not have been urged for the first time before this Court in proceedings under Section 260A of the Act, as an appeal thereunder lies only on a question of law. Even otherwise the Supreme Court, in Manish Maheshwari, observed as under:- “…..The condition precedent for invoking a block assessment is that a search has been conducted under Section 132, or documents or assets have been requisitioned under Section 132A. The said provision would apply in the case of any person in respect of whom search has been carried out under Section 132A or documents or assets have been requisitioned under Section 132A. Section 158BD, however, provides for taking recourse to a block assessment in terms of Section 158BC in respect of any other person, the conditions precedents wherefor are : (i) Satisfaction must be recorded by the Assessing Officer that any undisclosed income belongs to any person, other than the person with respect to whom search was made under Section 132 of the Act; (ii) The books of account or other documents or assets seized or requisitioned had been handed over to the Assessing Officer having jurisdiction over such other person; and (iii) The Assessing Officer has proceeded under Section 158BC against such other person. The conditions precedent for invoking the provisions of Section 158BD, thus, are required to be satisfied before the provisions of the said chapter are applied in relation to any person other than the person whose premises had been searched or whose documents and other assets had been requisitioned under Section 132A of the Act….” The very fact that the records were transferred to the Assessing Officer to enable him to proceed and assess the assessee for the undisclosed income, is by itself proof of the fact that the Officer, who had conducted the search and seizure operation, was satisfied that the undisclosed income belonged to the assessee. As such, the contention that no proceedings could have been initiated under Section 158BD of the Act must fail. The order of the Tribunal is a well considered and reasoned order. We see no reason to take a view contrary thereto. The appeal fails and is, accordingly, dismissed. __________________ (V.V.S.RAO, J) ______________________________ (RAMESH RANGANATHAN, J) 09.08.2010 vs [1] (2007) 289 ITR 341 (SC)