C.Narendran, CHENNAI V. ACIT, CHENNAI

CO 105/CHNY/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7935 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-10-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-10-2012
• Assessment Year: misc
• Appeal Filed On: 18-06-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA
• Assessee Lawyers: G BASKAR
• Keywords: Search and seizure; Block assessment
• Section: 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER] I.T.(SS)A.NO. 09/MDS/2012 BLOCK PERIOD FROM 1.4.1990 TO 28.11.2000 THE ACIT CENTRAL CIRCLE I(1) CHENNAI VS SHRI C. NARENDRAN NO.735, THIRUVATRIYUR HIGH ROAD CHENNAI 600 081 [PAN ACGPN 3164 N] (APPELLANT) (RESPONDENT) C.O.NO. 105/MDS/2012 BLOCK PERIOD FROM 1.4.1990 TO 28.11.2000 SHRI C. NARENDRAN NO.735, THIRUVATRIYUR HIGH ROAD CHENNAI 600 081 VS THE ACIT CENTRAL CIRCLE I(1) CHENNAI (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY : DR.S.MOHARANA, CIT/DR ASSESSEE BY : SHRI G. BASKAR, ADVOCATE DATE OF HEARING : 04-10-2012 DATE OF PRONOUNCEMENT : 05-10-2012 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AND THE CRO SS OBJECTION FILED THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-I, CHENNAI, DATED 29.02.2012. I.T.(SS)A.NO. 09/12 CO NO.105/12 :- 2 -: 2. IN ITS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1.A ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED CIT(A) HAS ERRED IN HOLDING THE BLOCK ASSES SMENT ORDER AS VOID AB INITIO. 1L.B THE LEARNED CIT(A) HAS FAILED TO NOTE THAT THE RATIO OF THE CASE OF MANOJ AGGARWAL VS DCIT (113 ITD 377) ITAT SPECIAL BENCH DELHI IS NOT APPLICABLE IN THIS CASE AS THE FACTS ARE DISTINGUISHABLE. IN THIS CASE, THE A.O. IS COMMON F OR BOTH THE SEARCHED PERSON AND THE OTHER PERSON AND THE A.O. HAS RECORDED CLEAR SATISFACTION NOTE FOR ISSUING NOTICE U/S L58BD WHEREAS IN THE REPORTED CASE FACTS ARE DIFFERENT. 1.C THE LEARNED CIT(A) HAS FAILED TO NOTE THAT THER E IS NO TIME LIMIT PRESCRIBED IN THE I.T.ACT 1961 EITHER FOR REC ORDING THE SATISFACTION NOTE FOR ISSUING NOTICE U/S 158BD OR FOR ISSUING NOTICE U/S 158BD : OMISSION TO PRESCRIBE TIME LIMIT BY THE LEGISLATURE IS 'CASUS AMISUS' AND THAT THE A.O. HAS INITIATED THE PROCEEDINGS WITHIN REASONABLE TIME. 1.D THE LEARNED CIT(A) HAS FAILED TO NOTE THAT SUFF ICIENT OPPORTUNITY WAS AFFORDED BY THE A.O. BY REMINDERS I SSUED ON 08-05-2006 AND 07-05-2007 AND ONLY AFTER THIRD REMI NDER THE ASSESSEE FILED COPIES OF ACKNOWLEDGEMENT FOR RETURN S OF INCOME FILED BY HIM FOR ASSESSMENT YEARS 1994-95 T O 1996-97 AND FOR ASSESSMENT YEARS 1998-99 TO 2001-02. NO DET AILS WERE FILED FOR ASSESSMENT YEAR 1997-1998. 1.E THE LEARNED CIT(A) HAS FAILED TO NOTE THAT THE ASSESSEE HAD FILED ONLY COPIES OF ACKNOWLEDGEMENTS FOR FILING TH E RETURNS OF INCOME AND OTHER DETAILS REQUIRED BY THE A.O. WERE NOT AT ALL FILED BY THE ASSESSEE. 2. THE APPELLANT CRAVES LEAVE TO, ADD TO AMEND OR ALTER THE ABOVE GROUNDS OF APPEAL AS MAY BE DEEMED NECESSARY. 3. THE CIT/DR, AT THE TIME OF HEARING, SUBMITTED THAT THE ONLY ISSUE INVOLVED IN THIS APPEAL OF THE REVENUE IS THA T THE CIT(A) FAILED TO NOTE THAT THERE IS NO TIME LIMIT PRESCRIBED IN THE INCOME-TAX ACT, 1961 EITHER FOR RECORDING THE SATISFACTION NOTE FOR ISSU ING NOTICE U/S 158BD I.T.(SS)A.NO. 09/12 CO NO.105/12 :- 3 -: OR FOR ISSUING NOTICE U/S 158BD AND OMISSION TO PR ESCRIBE TIME LIMIT BY THE LEGISLATURE IS CASUS OMISUS AND THAT THE ASSE SSING OFFICER HAS INITIATED THE PROCEEDINGS WITHIN REASONABLE TIME AN D THEREFORE, THE CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT SINCE THE NOTICE U/S 158BD HAS BEEN ISSUED ON 16.5.2005 WHICH WAS TWO YEARS AFTER THE COMPLETION OF ASSESSMENT U/S 158BC ON 31.7.2003 WHICH WAS WELL A FTER THE TIME LIMIT PRESCRIBED U/S 158BE AND THEREFORE, THE ASSE SSMENT PROCEEDINGS ARE AB INITIO VOID . THE CIT/DR RELIED ON THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF KHANDUBHAI VASANJ I DESAI & OTHERS VS DCIT, 236 ITR 73 (GUJ). 4. ON THE OTHER HAND, THE A.R OF THE ASSESSEE SUPPORT ING THE ORDER OF THE CIT(A), SUBMITTED THAT THE CIT(A) HAS RIGHTLY HELD THE ASSESSMENT ORDER TO BE AB INITIO VOID IN THE LIGHT OF THE DECISION OF THE DELHI SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MANOJ AGGARWAL VS THE DY. CIT, 113 ITD 377. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE UNDISPUTED FACTS OF THE CASE ARE THAT IN THE INSTAN T CASE, A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT ON 28.11.2000 IN THE CASE OF SREE GOKULAM CHITS & FINANCE COMPANY PVT. LTD OF WHOM TH E ASSESSEE WAS A COMMISSION AGENT. THE ASSESSMENT U/S 158B C IN THE CASE OF I.T.(SS)A.NO. 09/12 CO NO.105/12 :- 4 -: THE SAID COMPANY WAS COMPLETED ON 31.7.2003. THERE AFTER A NOTICE U/S 158BD WAS ISSUED ON THE ASSESSEE ON 16.5.2005 AND ASSESSMENT U/S 144 R.W.S 158BD WAS COMPLETED ON 30.5.2007 ARRI VING AT AN UNDISCLOSED INCOME OF ` 11,31,902/-. 6. ON APPEAL, THE CIT(A), RELYING ON THE DECISION OF D ELHI SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MANOJ AGGARWAL (SUPRA) HELD THAT AS THE NOTICE U/S 158BD ISSUED ON THE A SSESSEE ON 16.5.2005 AFTER THE COMPLETION OF ASSESSMENT U/S 1 58BC IN THE CASE OF SREE GOKULAM CHITS & FINANCE COMPANY PVT. LTD ON 31.7.2003 WHICH WAS TWO YEARS AFTER THE COMPLETION OF ASSESSM ENT U/S 158BC WAS AFTER THE TIME LIMIT PRESCRIBED U/S 158BE OF T HE ACT AND HENCE, THE ASSESSMENT PROCEEDINGS ARE AB INITIO VOID . 7. THE REVENUE HAS CHALLENGED THIS ORDER OF THE CIT(A) BEFORE US. 8. THE CIT/DR HAS RELIED ON THE DECISION OF THE HON'BL E GUJARAT HIGH COURT IN THE CASE OF KHANDUBHAI VASANJI DESAI & OTHERS VS DCIT, (SUPRA) AND SUBMITTED THAT THE TIME LIMIT PRESCRIBE D U/S 158BE APPLIES ONLY IN THE CASE OF THE SEARCHED PERSON FOR COMPLE TION OF ASSESSMENT U/S 158BC OF THE ACT AND DID NOT APPLY FOR ISSUANC E OF NOTICE U/S 158BD OF THE ACT ON THE PERSONS OTHER THAN THE SEAR CHED PERSON WHO WAS ASSESSABLE TO INCOME TAX ON INCOME FOUND TO BE ASSESSABLE IN HIS I.T.(SS)A.NO. 09/12 CO NO.105/12 :- 5 -: HANDS ON THE BASIS OF MATERIAL FOUND IN THE CASE OF THE SEARCHED PERSON. IN OTHER WORDS, THE CONTENTION OF THE CIT /DR IS TO THE EFFECT THAT THERE IS NO TIME LIMIT FOR ISSUANCE OF NOTICE U/S 158BD OF THE ACT AND THE SAME CAN BE ISSUED AT ANY TIME. FOR THIS, HE ALSO RELIED UPON THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN T HE CASE OF KHANDUBHAI VASANJI DESAI & OTHERS VS DCIT, (SUPRA). 9. WE FIND THAT THE DECISION OF HON'BLE GUJARAT HIGH C OURT IN THE ABOVE CASE DOES NOT SUPPORT THE CONTENTION OF T HE CIT/DR, RATHER, THE OBSERVATIONS OF THE HON'BLE GUJARAT HIGH COURT ARE TO THE CONTRARY OF THE ARGUMENT OF THE CIT/DR. THE HON'BLE GUJARAT HIGH COURT HAS OBSERVED AS UNDER: THE ASSESSING OFFICER, ONCE HE REACHES THE REQUISI TE SATISFACTION, IS BOUND TO ACT SWIFTLY TO PROCEED AG AINST SUCH OTHER PERSON AS SOON AS MAY BE IN REASONABLE TIME. THE SPEED AND DESPATCH WITH WHICH HE SHOULD ACT IS WRIT LARGE ON THE CONNECTED PROVISIONS OF SECTION 132(9A) OF THE ACT UNDER WHICH THE AUTHORISED OFFICER WHO HAS NO JURISDICTIO N OVER THE PERSON REFERRED TO IN CLAUSE (A), (B) OR (C) OF SUB-SECTION (1) OF SECTION 132 HAS TO HAND OVER THE BOOKS OF AC COUNT, DOCUMENTS AND ASSETS SEIZED TO THE INCOME-TAX OFFIC ER HAVING JURISDICTION OVER SUCH PERSON WITHIN 15 DAYS OF SUC H SEIZURE AND THE ASSESSING OFFICER IS REQUIRED TO SERVE A NO TICE TO SUCH PERSON UNDER SECTION 158BC REQUIRING HIM TO FURNISH A RETURN IN THE PRESCRIBED FORM NO. 2B AND TO COMPLET E THE BLOCK ASSESSMENT IN ONE YEAR FROM THE END OF THE MO NTH IN WHICH THE LAST AUTHORISATION FOR SEARCH OR REQUISIT ION WAS EXECUTED. THUS, THE APPREHENSION THAT A NOTICE CAN BE ISSUED UNDER SECTION 158BD READ WITH SECTION 158BC BY THE ASSESSING OFFICER IN THE CASE OF SUCH 'OTHER PERSON ' AT ANY TIME IS ILL-FOUNDED. I.T.(SS)A.NO. 09/12 CO NO.105/12 :- 6 -: 10. WE FIND THAT THE DELHI BENCH OF THE TRIBUNAL IN TH E CASE OF MANOJ AGGARWAL (SUPRA) HAS HELD THAT SECTION 158BD PROVIDES FOR INVOKING JURISDICTION UNDER THE SAID SECTION ENABLI NG THE ASSESSING OFFICER ASSESSING THE OTHER PERSON IN RESPECT OF WH OM THE ASSESSING OFFICER ASSESSING THE PERSON SEARCHED GIVES A FINDI NG THAT THE UNDISCLOSED INCOME UNEARTHED AS A RESULT OF SEARCH BELONGS TO THE SAID PERSON AND ONCE SUCH A FINDING IS GIVEN THE PROVISI ONS OF SECTION 158BD COME INTO OPERATION. THIS, THEREFORE, INVOLV ES ASSUMPTION OF JURISDICTION AND CANNOT BE CONSTRUED AS A PROCEDURA L MATTER. IN THE ABSENCE OF A FINDING IN THIS BEHALF, THERE IS NO JU RISDICTION TO THE OTHER ASSESSING OFFICER AT ALL TO PROCEED FURTHER IN THE MATTER. AS THE TIME LIMIT SOUGHT IN SECTION 158BC APPLIES TO SUCH FINDI NG IT IS ONLY LOGICAL THAT THE SAID TIME LIMIT AUTOMATICALLY APPLIES FOR INVOKING THE PROVISIONS OF SECTION 158BD AND IT IS FOR THIS REASON THAT THE PARLIAMENT DID NOT FIND IT NECESSARY TO SPECIFY A SEPARATE TIME LIMIT FOR THE SAME AND AS THE ENACTMENT ITSELF SHOWS THAT BOTH SECTION 158BC AND 158BD ARE INTERLINKED, INTERLACED AND INTERTWINED AND BOTH FO RM PART AND PARCEL OF THE SAME CHAPTER. 11. ON THE BACKDROP OF ABOVE SETTLED LEGAL POSITION, WE FIND THAT IN THE INSTANT CASE, PROCEEDINGS U/S 158BD WERE INI TIATED ON 16.5.2005 IN PURSUANCE TO A SEARCH WHICH WAS CARRIED OUT ON 2 8.11.2000. I.T.(SS)A.NO. 09/12 CO NO.105/12 :- 7 -: FURTHER, IT IS NOT IN DISPUTE THAT THE ASSESSMENT U/S 158BC IN THE CASE OF THE RELEVANT SEARCHED PERSON WAS COMPLETED ON 31 .7.2003. NO EXPLANATION COULD BE OFFERED BY THE REVENUE TO EXPL AIN THE REASON FOR THE DELAY OF ABOUT 22 MONTHS FOR ISSUANCE OF NOTICE U/S 158BD. IN VIEW OF THE ABOVE UNEXPLAINED DELAY IN ISSUANCE OF NOTICE U/S 158BD, IN OUR CONSIDERED OPINION, NO INTERFERENCE WITH THE ORDER OF THE CIT(A) TO TREAT SUCH NOTICE AS INVALID, IS WARRANTED. HEN CE, WE DISMISS THE GROUNDS OF APPEAL OF THE REVENUE. 12. IN VIEW OF OUR FINDING IN THE APPEAL OF THE REVENUE , THE CROSS OBJECTION FILED BY THE ASSESSEE HAS BECOME I NFRUCTUOUS AND MERELY ACADEMIC IN NATURE AND HENCE, THE SAME IS DI SMISSED. 13. IN THE RESULT, BOTH, THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 05 TH OF OCTOBER, 2012, AT CHENNAI. SD/- SD/- (SATBEER SINGH GODARA) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 05 TH OCTOBER, 2012 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR