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Commissioner of Income Tax III v. Calcutta Knitwears

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 3958 of 2014)Decided 12 Mar 2014
Civil Appeal No. 3958 of 2014
Justice H.L. Dattu · Justice S.A. Bobde

Background

This order sends the case back; it does not decide the dispute. A search of the Bhatia Group produced documents said to show undisclosed income of another firm, Calcutta Knitwears. The tax authorities recorded their satisfaction after completing the searched person's assessment, but the Tribunal and High Court treated that timing as invalid.

Decision Breakdown

This is not a final decision on the dispute. The Court held that a satisfaction note was mandatory before the seized records were transmitted for assessment of another person under Section 158BD. The note could be prepared when proceedings against the searched person began, during those proceedings, or immediately after they concluded. The limitation provision for completing the other person's assessment did not itself impose the narrower deadline adopted below. The Court remanded the individual cases to the High Courts for fresh decisions under this interpretation, leaving case-specific objections, including alleged absence of a note, to be examined there.

Lesson Learnt

Tax action against someone other than the person searched requires the prescribed satisfaction record; however, that record is not automatically invalid merely because the searched person's assessment has just finished.

Official source (sci.gov.in)View Judgment (PDF)

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