MANISH MAHESHWARI versus ASS TT. COMMISSIONER OF INCOME TAX AND ANR.

Citation: [2007] 3 S.C.R. 61 · Decided: 23-02-2007 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Appeal(s) allowed

Judgment (excerpt)

MANISH MAHESHWARI 
A 
-" 
v. 
ASS TT. COMMISSIONER OF INCOME TAX AND ANR. 
FEBRUARY 23, 2007 
[S.B. SINHA AND MARKANDEY KA TJU, JJ.] 
B 
-( 
Income Tax Act, 1961-ss. 158BD & 158BC: 
'I( 
Search conducted in premises belonging to Director of assessee- c 
Company-Severa/ incriminating documents relating to business of assessee-
Company seized-Proceeding initiated against assessee-Company under 
s. l 58BC-Jurisdiction of Assessing Officer to make block assessments-High 
Court held that the Assessing Officer had the requisite jurisdiction in terms 
~ 
of s. l 58BD rlw s.2(31)-Correctness of-Held, not correct-Notice issued to 
assessee-company did not satisfy the requirements of s. l 58BD-It did not D 
record any satisfaction on the part of Assessing Officer, which was mandatory-
Documents and other assets recovered during search had not been handed 
i 
over to the Assessing Officer having jurisdiction in the matter. 
Interpretation of Statute-Strict construction-Taxing statute-Held: 
Has to be construed strictly. 
E 
Search was conducted in the premises of one of the Directors of 
assessee-company. Several incriminating documents relating to business of 
the company were seized. Proceedings were initiated against the company 
purportedly under s.158BC of the Income Tax Act, 1961. On appeal by 
F 
assessee, Tribunal held that the Assessing Officer has no jurisdiction to 
proceed against the assessee for making the block assessment in terms of 
Chapter XIV-B of the Act, as no search was conducted in terms of s.132 of 
the Act. The block assessment period is 1987-88 to 1995-96. High Court 
however held that the Assessing Officer had the requisite jurisdiction in terms 
ofs.158BD of the Act r/w. s.2(31) thereof. Hence the present appeals. 
G 
.., 
Allowing the appeals, the Court 
j 
HELD: 1.1. Condition precedent for invoking a block assessment is that 
a search has been conducted under Section 132, or documents or assets have 
61 
H 
i;:::::-
62 
SUPREME COURT REPORTS 
[2007] 3 S.C.R. 
A 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 15880, however, provides for taking recourse to a bl.ock 
assessment in terms of Section 158BC in respect of any other person, the 
B 
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 
c proceeded under Section 158BC against such other person. (Para 11) 
(69-B-DJ 
1.2. The conditions precedent for invoking the provisions of Section 
l58BD, thus, are required to be satisfied before the provisions of the said 
illl
chapter are applied in relation to any person other than the person whose 
D premises had been searched or whose documents and other assets had been 
requisitioned under Section 132A of the Act. A taxing statute, as is well-
known, must be construed strictly. (Paras 12 and 13) (69-E-F) 
" 
Sneh Enterprises v. Commissioner of Customs, New Delhi (2006) 7 SCC 
E 
714; Srinivasa Rao v. Govt. of A.P. & Anr., (2006) 13 SCALE 27 and Mis. 
/spat Industries Ltd v. Commissioner of Customs, Mumbai, JT (2006) 12 SC 
• 
379 : (2006) 9 SCALE 652, referred to. 
2.1. In the present case the notice dated 06.02.1996 issued to the 
assessee-company does not record any satisfaction on the part of the 
F Assessing Officer. Documents and other assets recovered during search had 
not been handed over to the Assessing Officer having jurisdiction in the 
matter. No proceeding under Section 158BC had been initiated. There is, thus, · 
11. 
a patent non-application of 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 
G 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 

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