The legal position with regard to disclosure of the satisfaction note has been considered by this Court in several decisions beginning from Dr. Nand Lal Tahliani Vs. CIT 170 ITR 592 (Alld) to City Montessory School (Regd) Vs. Union of India & Ors. (Writ Petition No.2818 (MB) of 2000
along with two other connected petitions in 2007. The consistent view taken is that the material on the basis of which warrant of authorisation under Section 132 was issued and the search and seizure operations were carried out should be disclosed to the assessee unless privilege is
We find that none of the grounds, taken in the affidavit of Shri Umesh Takyar, Deputy Director of Income Tax (Investigation)-I, Meerut in support of the application under Section 123 of the Evidence Act, is relevant for claiming privilege. The confidentiality of the information by
itself cannot be a ground to claim privilege. The claim of the department, that the authorisation is highly confidential and its revelation to the assessee or to general public may prove detrimental to the potential information given as well as the department, by itself cannot be a
ground to claim privilege of the documents. The satisfaction has to depend upon the material on which it is based, the disclosure of which will bring it within the grounds mentioned in Section 123. We have already discussed the case law in this regard in our order dated
4.5.2011 and do not find that the application is founded on any of the ground on which such privilege can be claimed.The application is accordingly rejected.
So far as question of validity of search and seizure is concerned, since we have rejected the application for claiming the privilege, for disclosing the satisfaction note and warrant of authorisation, for conducting searches, the petitioner along with his counsel will be permitted inspection these documents produced in the Court and kept in the sealed cover in the custody of the Registrar General. The inspection will be carried out in presence of the counsel for the department. Learned counsel for petitioner may make an appropriate application to the Registrar General along with the certified copy of this order for inspection of the documents, and thereafter may make appropriate representation to the Court, for fixing a date for hearing.
Case :- INCOME TAX APPEAL No. - 134 of 2008 Petitioner :- The Commissioner Of Income Tax Respondent :- Dr.Rakesh GuptA All High Court
"Whether on the facts and in the circumstances of the case, the Hon'ble
ITAT was right in coming to the conclusion that there was no proper service
of notice u/s 148 of the I.T.Act in the case, particularly when the other
documents i.e. intimation under section 143(1) and challan has been served
upon the assesses on the same address on which notice u/s 148 was issued...
....The assessee had denied the service of notice as well as despatch of the same at proper address of the assessee. Despite this, the assessing officer made no effort to find the correct address from his own record nor from the bank in which the account opening address given is
different than the address on which the notice was sent. The notice under Section 148 of the Act, on a later date, is shown to have been served on the Chartered Accountant of the assessee, Sri Alok Farsaiya. The Tribunal has held that this cannot be taken as proper service of notice on the assessee....
The point in issue is covered by the Division Benches of this Court in (1) Madan Lal Agarwal v. Commissioner of Income-Tax, Kanpur reported in (1983) 144 ITR 745, (2) Y. Narayana Chetty and another v. Income-Tax Officer, Nellore, and others reported in (1959) 35 ITR 388 and (3) P.N. Sasikumar and others v. Commissioner of Income-Tax reported in (1988) 170 ITR 80. In all these cases it was held that a notice under Section 148 is a condition precedent or a matter of jurisdiction to the validity of any assessment order to be passed under Section 147 of the Act. If no such notice is issued or if the notice issued is invalid or not in accordance with the law or
is not served on the proper person in accordance with law, the assessment would be illegal and without jurisdiction
M/s. Balarampur Chini Mills Ltd Kol ITAT Rule 8D Section 14A
8. Here in the present case, there is no linkage or nexus between the funds borrowed by
assessee and the impugned investments, hence, no interest expenditure can be disallowed by mechanically applying the Provisions of Rule 8D of the Rules. The assessee has explained that the share capital and reserves, that is its own funds, were utilised for the purpose of investment in shares for earning dividend income and this has not been negated by lower authorities i.e. neither CIT(A) nor AO. The assessee has explained each and every investment with sources of funds and its utilization as well as opening application of funds and closing application of funds as noted above. It is an admitted position in law that expenditure can be disallowed U/s.14A of the Act if and only if it is incurred in relation to income which does not
form part of total income. From the facts of the present case, it is clear that there is no link
with expenditure for earning of dividend income incurred by the assessee and once the facts are clear, no disallowance can be made by invoking rule 8D of the Rules. Neither the AO nor CIT(A) has recorded any finding that having regard to the account of the assessee, they are not satisfied with the correctness of the claim of expenditure made by assessee or the claim made by assessee that no expenditure has been incurred in relation to income which do not form part of the total income under the Act for the relevant assessment year. In the absence of any such finding, facts of the present case shows that the investment in shares was made out of own capital employed and not from borrowed funds, no disallowance on account of interest expenditure can be made by invoking rule 8D of the Rules. Accordingly, in the given facts and circumstances, we delete the addition and allow this issue of assessee’s appeal.
Himachal Pardesh High Court in case of Smt.Jasbir Kaur Bhatia ( in both cases)
Date of decision: 12.08.2011
“Whether on the facts and in the circumstances of the case, the ITAT was correct in cancelling the assessment of gift made u/s 15(3) read with Section 16(1) of the Gift-tax Act on the ground that the notice issued u/s 16(1) of the Act had not been issued to all the legal heirs of the assessee and was not in conformity with section 19 of the Act, and was therefore defective, illegal and without jurisdiction?” The only question which arises is whether it is necessary to issue notice to all the legal heirs and in case notice is not issued to the legal heirs, are the entire assessment proceedings vitiated or not.
The legal position is clear that the legal heir to whom notice has been issued cannot challenge the validity of the re-assessment proceedings on the ground that notice has not been issued to all the legal hairs. Therefore, the order of the Tribunal is set-aside and it is held that the assessee is liable to the extent of the estate inherited by her from her mother to pay the amount of tax, interest etc. assessed as being payable by her mother. It is made clear that she will be liable to pay this amount only out of the estate inherited from her mother and not out of the gifted property. As far as the other legal heirs are concerned we may make it clear that this order does not bind them and the revenue can initiate appropriate proceedings in
accordance with law if so permissible at this stage to recover the amount.