Case: Manish Maheshwari Vs. Asstt.Commnr.Of Income Tax

3. Before embarking on legal issues, we may notice the fact of matter from Civil Appeal arising out of Special Leave Petition (Civil) No.9751 of 2005.4. The assessee M/s Indore Construction Company (Pvt.) Ltd. (for short, the Company) is a company registered and incorporated under the Companies Act, 1956 (for short, the Act). One Shri Rameshwar Maheshwari is of one of its Directors. Shri Maheshwari, apart from being a Director of the said Company, is also a tax consultant. A search was conducted, as contemplated under Section 132 of the Act, in the premises of the said Maheshwari and his wife Smt. Lalita Devi on 21.11.1995. Several incriminating documents relating to the business of the Company were seized. A proceeding was initiated against the Company purported to be under Section 158BC of the Act. The order of assessment was passed on 29.11.1996. The Tribunal in an appeal preferred by the assessee thereagainst opined that the Assessing Officer had no jurisdiction to proceed against the assessee for making the block assessments in terms of Chapterof the Act, as no search was conducted in terms of Section 132 of the Act,Perusal of the assessment order would go to reveal that the A.O. did not do so. Instead of determining the undisclosed income on the basis of the materials seized from the residence of the Cos Director, he embarked upon a roving enquiry in respect of completed assessments by referring three apartments to the Valuation Cell to ascertain the correct investment made by the assessee and on receipt of the reports of the Valuation Cell proceeded to compute the income u/s 69 as unexplained investment, adding thereto further undisclosed profit earned on sale of flats. To our mind, what the A.O. did is beyond the scope of sec. 158BD. No addition can be made in any of the assessment year of the block period regarding which no material or information is available with the A.O. In a case, where any material or information is found during search, the A.O. has tosuch material/information with regard to the regular assessment which have already been completed. At the cost of repetition we may state that Chapterdoes not authorize the A.O. to review the assessment competed unless and until there is any direct or indirect or clinching evidence to indicate that the assessee has withheld or had not disclosed any income. No additions can be made merely on the basis of presumption or hypothesis. This is what the A.O. had actual done.An appeal preferred by the respondent herein before the High Court, as noticed hereinbefore, thereagainst under Sectionof the Act, has been allowed, holding that the Assessing Officer had the requisite jurisdiction in terms of Section 158BD of the Act read with Section 2(31) thereof. The Block Assessment Period is6. The search was conducted on 21.11.1995, wherefor a warrant of authorization was issued on 15.10.1995 in the followinga summons under(1) of section 131 of the Income Tax Act, 1961 or under sub section (1) of section 142 of the Income Tax Act, 1961 is issued to Shri Rameshwar R. Maheshwari, Smt. Lalita Devi.To produce, or cause to be produced, books of accounts or other documents of the institution or relevant proceedings under the Income Tax Act, 1961 he would not produce or cause to be produced, such books of accounts or other documents as required.Shri Rameshwar H. Maheswari, Smt. Lalita Devi.Any person is in possession of any money, bullion, jewellery or other valuable article or things and such money, bullion, jewellery or other valuable article or things represents either wholly or partly income or property which has not been, or would not be disclosed for the purposes of the Indian Income Tax Act, 1922 or the Income Tax Act, 1961."

Reasoning:
12. 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.Law in this regard is clear and explicit. The only question which arises for our consideration is as to whether the notice dated 06.02.1996 satisfies the requirements of Section 158BD of the Act. The said notice does not record any satisfaction on the part of the Assessing Officer. Documents and other assets recovered during search had not been handed over to the Assessing Officer having jurisdiction in the matter.17. No proceeding under Section 158BC had been initiated. There is, thus, a patentof mind. A prescribed form had been utilized. Even the status of the assessee had not been specified. It had only been mentioned that the search was conducted in the month of November 1995. No other information had been furnished. The provisions contained in Chapter XIVB are drastic in nature. It has draconian consequences. Such a proceeding can be initiated, it would bear repetition to state, only if a raid is conducted. When the provisions are attracted, legal presumptions are raised against the assessee. The burden shifts on the assessee. Audited accounts for a period of ten years may have to be reopened.