- (1.) In this group of petitions, the petitioner has prayed for the quashing of the notice dated March 23, 2005, issued under section 158BC read with section 158BD of the Income-tax Act, 1961 (hereinafter referred to as "the Act") directing the petitioner to file the correct return of the total income including the undisclosed income. The petitioner has also prayed for quashing of the reasons to believe dated December 12, 2005, on the basis of which action under section 158BC read with section 158BD of the Act has been initiated. Since all the writ petitions involve the same issue, for facility, the facts of Writ Petition (Tax) No. 80 of 2006, Gyanendra Kumar Jain v. Asst. CIT, are being taken into consideration. The petitioner contends that he and his minor children filed declaration under the Voluntary Disclosure of Income Scheme (hereinafter referred to as "the VDIS") with regard to silver coins, silver utensils, gold sovereign and cash in his individual capacity and paid various sums of money as tax. The petitioner as well as his minor children also sold silver utensils and gold coins through one Bishan Chand Mukesh Kumar Saraf, Chandni Chowk, New Delhi. The sale proceeds were received through account payee cheques from Bishan Chand Mukesh Kumar. The said firm also issued a confirmation statement of such sale for the financial year 1997-98. For the assessment year 1998-99, the petitioner filed a return of income-tax in his individual capacity showing his income at Rs. 5,19,420 plus Rs. 70,000 as an agriculture income. It is contended that the return was filed along with the copy of the profit and loss account, balance-sheet, TDS certificate and certificate of the VDIS issued by the Commissioner of Income-tax, Bareilly. The said return was accepted by the Assistant Commissioner of Income-tax, Nazibabad, Bijnore, under section 143(1)(a) of the Act by issuance of an intimation slip dated November 9, 1998. Subsequently, the petitioner received the impugned notice dated March 23, 2005, under section 158BC read with section 158BD of the Act for the assessment year 1998-99. In response to the said notice, the petitioner filed an application seeking information, namely, as to whom the search warrant under section 132 of the Act was issued and details of the documents seized during the search. The petitioner also asked for the reasons to believe. The petitioner contends that various replies were, given by the authority but the relevant information was not given and ultimately the reasons were supplied on December 12, 2005, which indicates that during the search conducted in the case of Sri Manoj Kumar Agarwal and his associate concern, M/s. Bishan Chand Mukesh Kumar, Pelhi, it was found from the seized material and the inquiries done from the bank accounts of M/s. Bishan Chand Mukesh Kumar that the said concern had not done any real business and had only provided bogus accommodation entries for purchase of jewellery on commission basis and that one such entry relating to the transaction by the petitioner for a sum of Rs. 21,07,861 was found when in fact no jewellery was sold by the petitioner and consequently, the amount of Rs. 21,07,861 constitute the undisclosed income of the petitioner for the assessment year 1998-99 for which action under section 158BC read with section 158BD of the Act has been initiated.
(2.) On this basis, the present writ petition was filed contending that no search or seizure operation had taken place either at the residential or business premises of the petitioner nor any document was requisitioned under section 132A of the Act and, consequently, the notice issued under section 158BC read with section 158BD was wholly illegal and liable to be quashed. It was also contended that the search or seizure conducted at the premises of the firm, M/s. Bishan Chand Mukesh Kumar, did not yield any useful material showing existence of undisclosed income and, consequently, the reasons to believe for issuing notice to the petitioner was not based on any tangible material. It was also contended that the notice issued to the petitioner was barred by limitation.
(3.) A supplementary rejoinder-affidavit dated March 23, 2014, was filed alleging that a search was conducted at the residential and office premises of Manoj Agarwal and Bishan Chand Agarwal and Bamco Jewellers P. Ltd. and block assessment orders under section 158BC was completed against Manoj Agarwal, Bishan Chand Agarwal and Bamco Jewellers on August 29, 2000. It was further contended that satisfaction of the Assessing Officer of Manoj Agarwal was recorded on December 19, 2002, to initiate proceedings under section 158BD against M/s. Bishan Chand Mukesh Kumar and that the assessment of M/s. Bishan Chand Mukesh Kumar was completed on December 31, 2004, and, thereafter, the impugned notice dated March 23, 2005, was issued to the petitioner. It was contended that no satisfaction was recorded by the Assessing Officer to initiate proceedings against the petitioner.;