The Shri Shrikant Rathi, Raisen V. The Dy. Commissioner of Income Tax 1(1), Bhopal

CO 30/IND/2010

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 6865 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 03-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-10-2011
• Assessment Year: misc
• Appeal Filed On: 24-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Keywords: Period of limitation; Procedural lapse; Block assessment; Time period of passing order; Documents seized
• Section: 143(3); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER IT(SS)A NO.84/IND/2010 BLOCK PERIOD 1.4.1996 TO 22.10.2002 DY. COMMISSIONER OF INCOME TAX 1(1), BHOPAL ..APPELLANT V/S. SHRI SHRIKANT RATHI UDAIPURA DISTT. RAISEN PAN AEWPR-4932A ..RESPONDENT CO NO. 30/IND/2010 ARISING OUT OF IT(SS) A NO. 84/IND/2010 SHRI SHRIKANT RATHI UDAIPURA DISTT. RAISEN .OBJECTOR VS DY. COMMISSIONER OF INCOME TAX 1(1), BHOPAL .RESPONDENT REVENUE BY : SHRI ARUN DEWAN, SR. DR ASSESSEE BY : SHRI ASHISH GOYAL, CA DATE OF HEARING : 3.1.2012 DATE OF PRONOUNCEMENT: 3.1.2012 O R D E R PER JOGINDER SINGH THE REVENUE IS AGGRIEVED BY THE ORDER DATED 31.8.2010 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-1, BHOPAL, ON THE GROUND THAT THE LD. FIRST APPELLATE AUTHORITY, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, ERRED IN HOLDING THAT JURISDICTION U/S 158BD OF THE ACT WAS NOT PROPERLY ASSUMED BY THE LEARNED ASSESSING OFFICER ESPECIALLY WHEN THE SAME ASSESSING OFFICER WAS ALSO FOR THE SEARCHED PERSON AND IN THE INSTANT CASE AND THE NOT ICE WAS ISSUED AFTER RECORDING THE NECESSARY SATISFACTI ON AND IN FURTHER HOLDING THE ASSESSMENT SO FRAMED AS NULL AND VOID. 2. DURING HEARING, THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE BY SHRI ARUN DEWAN, LEARNED SR. DR, IS IN SUPPORT TO THE ASSESSMENT ORDER BY FURTHER SUBMITTI NG THAT THE SATISFACTION WAS DULY RECORDED BY THE ASSE SSING OFFICER AND THE SAME ASSESSING OFFICER WAS OF THE SEARCHED PERSON. ALTERNATIVELY, IT WAS CONTENDED TH AT SECTION 292BB OF THE ACT IS VERY CLEAR, THEREFORE, THE NOTICE ISSUED U/S 143(2) OF THE ACT IS VALID. 2.1 ON THE OTHER HAND, THE LEARNED COUNSEL FOR TH E ASSESSEE, SHRI ASHISH GOYAL, CONTENDED THAT THERE WAS A SEARCH ON MALANI AND CHANDAK GROUP ON 13.12.2002 AN D BLOCK ASSESSMENT WAS COMPLETED ON 31.12.2004. THE PROCEEDINGS U/S 158BD OF THE ACT WERE ARGUED TO BE BAD IN LAW AS THE PROCEEDINGS WERE INITIATED BEYOND THE LIMITATION PERIOD AND NO PROPER SATISFACTION WAS RECORDED. THE LEARNED COUNSEL FOR THE ASSESSEE PLA CED RELIANCE UPON THE FOLLOWING DECISIONS :- 1. CIT VS. PRAVIN FABRICS PVT. LTD.; 198 TAXMAN 463 (P&H) 2. ACIT VS. KISHORELAL BALWANTRAO; 17 SOT 380 (CHD. ) 3. MANOJ AGRAWAL; 117 TTJ 145 (DEL) (SB) 4. HARISH MOOLCHANDANI; 12 ITJ 639 (INDORE TRIBUNAL ) ON THE ISSUE OF APPLICABILITY OF SECTION 292BB OF T HE ACT, IT WAS CONTENDED BY THE LEARNED COUNSEL FOR THE ASS ESSEE THAT THE SECTION WAS INTRODUCED BY THE FINANCE ACT, 2008 ONLY, THEREFORE, IT IS APPLICABLE PROSPECTIVELY. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON FILE. BRIEF FACT S OF THE CASE ARE THAT SEARCH ACTION WAS TAKEN IN THE CASE O F MALANI AND CHANDAK GROUP OF UDAIPURA ON 13.12.2002 WHEREIN A DOCUMENT WAS SEIZED FROM THE RESIDENCE OF SHRI SHIVNARAIN MALANI WHICH REVEALED THAT THE ASSE SSEE PURCHASED AGRICULTURAL LAND FROM CERTAIN PERSONS AS SUMMARISED BELOW :- S.NO. NAME OF THE SELLER DATE OF SALE DEED 1 RAM BABU S/O KUNJILAL, VILLAGE KANIWADA 05.10.2001 2. SMT. LALITA BAI W/O LATE BARELAL, KISHANPUR 05.01.2001 3. SHRI CHHOTELAL S/O SHRI GULTHU SINGH, VILLAGE CHORAS 08.06.2001 4. SHRI DEVI SINGH S/O SHRI MITILAL LODHI, VILLAGE GERUWA 08.08.2001 5. SHRI KALYAN SINGH S/O MOTILAL LODHI, VILLAGE GERUWA 26.07.2002 6. SHRISURENDRA SINGH S/O SHRI KANHAIYALAL VILLAGE BORAS 05.07.2002 AS PER THE REVENUE, THE DOCUMENTS SEIZED FROM THE PREMISES OF SHRI SHYAM KUMAR AND SHRI RAM KUMAR CHANDAK REVEALED THAT THE ASSESSEE ENTERED INTO AN AGREEMENT WITH SHRI BABULAL ON 3.7.1997 FOR PURCHAS E OF AGRICULTURAL LAND FOR RS. 1,30,000/- AND ONE SHRI B ABULAL RECEIVED RS. 1,20,000/- AS ADVANCE FROM THE ASSESSE E. IN VIEW OF THESE DOCUMENTS, NOTICE U/S 158BD OF THE ACT WAS ISSUED ON 24.8.2006 AS THE ASSESSING OFFICER WA S OF THE OPINION THAT THE ASSESSEE MADE INVESTMENT TO AC QUIRE PROPERTIES DURING THE PREVIOUS YEARS FALLING WITHIN THE BLOCK PERIOD. THE ASSESSEE FILED THE RETURN FOR THE BLOCK PERIOD ON 12.10.2006 SHOWING THE UNDISCLOSED INCOME AS NIL. SUBSEQUENTLY, NOTICE U/S 143(2) WAS ISSUED ON 24.7.2008. THE ASSESSEE HAS CHALLENGED THE VALIDIT Y OF THIS NOTICE ON THE PLEA THAT IT WAS ISSUED BEYOND T HE STIPULATED TIME LIMIT AND, THEREFORE, THE PROCEEDIN GS INITIATED U/S 158BD ARE NOT SUSTAINABLE IN LAW. ID ENTICAL PLEA WAS RAISED BEFORE THE LD. FIRST APPELLATE AUTH ORITY WHO AFTER CONSIDERING VARIOUS JUDICIAL PRONOUNCEMEN TS LIKE HOTEL BLUEMOON; 321 ITR 362, SMT. HARBANS KAUR BHATIA; 274 ITR 298/302 (MP), CIT V. M.S. AGRAWAL (HUF); 11 ITJ 721 (MP), SPECIAL BENCH DECISION (DEL ) IN THE CASE OF MANOJ AGRAWAL V. DCIT; 117 TTJ 145 ETC. EXAMINED THE ASSERTION OF THE ASSESSEE AFTER OBTAIN ING THE REPORT FROM THE ASSESSING OFFICER (AS DISCUSSED IN PARA 5.5 OF THE IMPUGNED ORDER), HELD THAT THE JURISDICTION ASSUMED U/S 158BD WAS NOT PROPER, CONSEQUENTLY, THE ASSESSMENT WAS HELD TO BE NULL AN D VOID, WHICH IS UNDER CHALLENGE BEFORE THIS TRIBUNAL BY THE REVENUE. 3.1 IN VIEW OF THE ABOVE, FIRST WE ARE SUPPOSED TO ANALYSE THE FACTS. ADMITTEDLY, THE SEARCH WAS CONDU CTED ON MALANI AND CHANDAK GROUP ON 13.12.2002 AND THE BLOCK ASSESSMENT ORDER WAS FRAMED IN THEIR GROUP ON 31.12.2004. NOTICE U/S 158BD OF THE ACT WAS ISSUED/SERVED UPON THE ASSESSEE ON 24.8.2006 (PAPER BOOK PAGE 20) AFTER TWO YEARS 8 MONTHS AND 23 DAYS OF PASSING THE ORDER IN THE CASE OF MALANI & CHANDAK GROUP. NIL UNDISCLOSED INCOME WAS RETURNED BY THE ASSESSEE ON 12.10.2006 (PAPER BOOK PAGES 21 TO 28). NOTICE U/S 143(2) OF THE ACT WAS ISSUED TO THE ASSE SSEE ON 24.7.2008 (PAPER BOOK PAGE 29) AFTER ONE YEAR 9 MONTHS AND 12 DAYS FROM THE DATE OF FILING OF THE B LOCK RETURN AND THE ORDER U/S 158BD OF THE ACT WAS FRAME D ON 29.8.2008. THE ASSESSEE HAS CHALLENGED THESE PROCEEDINGS ON THREE COUNTS. ( A) ASSESSMENT U/S 158BD OF THE ACT WAS INITIATED AFTER COMPLETION OF PROCEEDINGS U/S 158BC OF THE ACT (B) NOTICE U/S 143(2) OF THE ACT IS BEYOND THE PERI OD OF LIMITATION AND NO PROPER SATISFACTION U/S 158BD OF THE ACT WAS EXISTING/RECORDED 3.2 WE FIND THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE ON THE ISSUE OF INITIATION OF PROCEEDINGS U/S 158BD OF THE ACT AND RECORDING OF PROPER SATISFACTI ON BY THE ASSESSING OFFICER BY FOLLOWING VARIOUS DECISION S AS MENTIONED HEREINABOVE INCLUDING THE DECISION FROM HONBLE APEX COURT IN HOTEL BLUEMOON (SUPRA), HONB LE JURISDICTIONAL HIGH COURT IN SMT. HARBANS KAUR BHAT IA AND M.S. AGRAWAL, HUF (SUPRA). BEFORE US, THE ASSE SSEE THROUGH ITS CROSS OBJECTION HAS CHALLENGED THE VALI DITY OF NOTICE ISSUED U/S 143(2) BEYOND THE PERIOD OF LIMIT ATION AND APPLICATION OF SECTION 292BB OF THE ACT. WE FI ND THAT SECTION 292BB WAS INTRODUCED BY THE FINANCE ACT, 20 08, THEREFORE, THE AMENDMENT IS APPLICABLE ONLY WITH EF FECT FROM 1.4.2008 WHICH HAS BEEN FURTHER CLARIFIED BY T HE CBDT CIRCULAR. PRIOR TO FINANCE ACT, 2008 THE PROV ISO TO SECTION 143(2)(II) WAS AS UNDER :- PROVIDED THAT NO NOTICE UNDER CLAUSE (II) SHALL BE SERVED ON THE ASSESSEE AFTER THE EXPIRY OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN IS FURNISHED. AFTER THE SUBSTITUTION MADE BY THE FINANCE ACT, 200 8 WITH EFFECT FROM 1.4.2008, THE AMENDED PROVISO READ S AS UNDER :- PROVIDED THAT NO NOTICE UNDER CLAUSE (II) SHALL BE SERVED ON THE ASSESSEE AFTER THE EXPIRY OF 6 MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED . A CUMULATIVE READING OF AFORESAID SECTIONS/PROVISO BEFORE AND AFTER THE AMENDMENT SUGGESTS THAT PRIOR TO 1.4. 2008 A NOTICE U/S 143(2) COULD HAVE BEEN GIVEN WITHIN 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETUR N IS FURNISHED. HOWEVER, IN THE PRESENT APPEAL, THE NO TICE COULD HAVE BEEN GIVEN ONLY UPTO 31.10.2007 AS ON 1.4.2008 THE LIMITATION PERIOD HAD ALREADY EXPIRED. THE ISSUANCE OF NOTICE U/S 143(2) OF THE ACT IS A MANDA TORY REQUIREMENT, THEREFORE, NON-SERVICE OF NOTICE WOULD BE FATAL. CHAPTER XIV-B PRESCRIBES THE SPECIAL PROCED URE FOR MAKING THE ASSESSMENT OF SEARCH CASES AND SECTION 1 58B DEFINES UNDISCLOSED INCOME AND BLOCK PERIOD WHI CH ARE THE TWO BASIC FACTORS FOR FRAMING THE ASSESSMEN T. SECTION 158BA IS AN ENABLING SECTION, EMPOWERING TH E ASSESSING OFFICER, TO ASSESS UNDISCLOSED INCOME A S A RESULT OF SEARCH INITIATED OR REQUISITIONED MADE AF TER JUNE 30, 1995, IN ACCORDANCE WITH THE PROVISIONS OF THIS CHAPTER. SECTION 158BB PROVIDES THE METHODOLOGY FO R COMPUTATION OF UNDISCLOSED INCOME OF THE BLOCK PERI OD WHEREAS SECTION 158BC PRESCRIBES THE PROCEDURE FOR MAKING THE BLOCK ASSESSMENT OF THE SEARCHED PERSON. SECTION 158BD OF THE ACT ENABLES ASSESSMENT OF ANY PERSON, OTHER THAN THE SEARCHED PERSON AND SECTION 158BE SETS THE TIME LIMIT FOR COMPLETION OF BLOCK ASSESSMENT. THE SCHEME OF THE BLOCK ASSESSMENT HAS BEEN EXPLAINED BY CIRCULAR NO. 717 DATED 14 TH AUGUST, 1995 IN PARAGRAPH 39.9 (1995) 215 ITR (ST.) 70, 98. CLAUSE (E) OF THE CIRCULAR CLARIFIES THE PROCEDURE FOR MAKING BLOCK ASSESSMENT. CLAUSE (E) IS EXTRACTED HEREUNDER :- (E) PROCEDURE FOR MAKING BLOCK ASSESSMENT : (I) THE ASSESSING OFFICER SHALL SERVE A NOTICE ON SUCH PERSON REQUIRING HIM TO FURNISH WITHIN SUCH TIME, NOT BEING LESS THAN 15 DAYS, AS MAY BE SPECIFIED IN THE NOTICE, A RETURN IN THE PRESCRIBED FORM AND VERIFIED IN THE SAME MANNER AS A RETURN UNDER CLAUSE (I) OF SUB- SECTION (1) OF SECTION 142 SETTING FORTH HIS TOTAL INCOME INCLUDING UNDISCLOSED INCOME FOR THE BLOCK PERIOD. THE OFFICER SHALL PROCEED TO DETERMINE THE UNDISCLOSED INCOME OF THE BLOCK PERIOD AND THE PROVISIONS OF SECTION 142, SUB- SECTIONS (2) AND (3) OF SECTION 143 AND SECTION 144 SHALL APPLY ACCORDINGLY. 3.3 SECTION 158BC(B) OF THE ACT PROVIDES FOR INQUI RY AND ASSESSMENT. THE SECTION READS THAT, THE ASSESSING OFFICER SHALL PROCEED TO DETERMINE THE UNDISCLOSED INCOME OF THE BLOCK PERIOD IN THE MANNER LAID DOWN IN SECTION 158BB AND THE PROVISIONS OF SECTION 142, SUB-SECTIONS (2) AND (3) OF SECTION 143, SECTION 144 AND SECTION 145 SHALL, SO FAR AS MAY BE, APPLY AN ANALYSIS OF THIS SUB-SECTION INDICATES THAT, AFT ER THE RETURN IS FILED, THIS CLAUSE ENABLES THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT BY FOLLOWING THE PROCEDU RE LIKE ISSUANCE OF NOTICE U/S 143(2)/142 AND COMPLETE THE ASSESSMENT U/S 143(3) OR AS THE CASE MAY BE. THIS SECTION DOES NOT PROVIDE FOR ACCEPTING THE RETURN A S PROVIDED U/S 143(1)(A) OF THE ACT. IN CASE OF DEFA ULT IN NOT FILING THE RETURN OR NOT COMPLYING WITH THE NOT ICE U/S 143(2)/142, THE ASSESSING OFFICER IS AUTHORISED TO COMPLETE THE ASSESSMENT EX-PARTE U/S 144. CLAUSE ( B) OF SECTION 158BC BY REFERRING TO SECTION 143(2) AND (3 ) WOULD APPEAR TO IMPLY THAT THE PROVISIONS OF SECTIO N 143(1) ARE EXCLUDED, THEREFORE, IF THE ASSESSMENT I S TO BE COMPLETED U/S 143(3) READ WITH SECTION 158BC NOTICE U/S 143(2) IS A MANDATORY REQUIREMENT, THAT TOO, WI THIN THE STIPULATED PERIOD. OMISSION ON THE PART OF THE ASSESSING OFFICER TO ISSUE NOTICE U/S 143(2), THERE FORE, CANNOT BE A PROCEDURAL IRREGULARITY AND THE SAME IS NOT CUARABLE, THEREFORE, THE REQUIREMENT OF NOTICE U/S 143(2) CANNOT BE DISPENSED WITH. WHERE THE LEGISLATURE INT ENDED TO EXCLUDE CERTAIN PROVISIONS FROM THE AMBIT OF SEC TION 158BC(B), IT HAS DONE SO SPECIFICALLY. THUS, WHEN SECTION 158BC(B) SPECIFICALLY REFERS TO APPLICABILITY OF TH E PROVISO HERETO, IT CANNOT BE EXCLUDED, THEREFORE, WE DO NOT AGREE WITH THE ASSERTION OF THE LEARNED SR. DR THAT SECTI ON 292BB COMES TO ITS RESCUE. THE DECISION FROM HON'B LE APEX COURT IN THE CASE OF HOTEL BLUEMOON (2010) 320 ITR 363 CLEARLY SUPPORTS OUR PROPOSITION. WE ALSO FIND SUPPORT FROM THE DECISION IN CIT V. PAVAN GUPTA (20 09); 318 ITR 322 (DEL). EVEN OTHERWISE, SECTION 292BB O F THE ACT WAS INTRODUCED BY THE FINANCE ACT, 2008 WITH EF FECT FROM 1.4.2008 WHEREAS THE RETURN U/S 158BD WAS FILE D BY THE ASSESSEE ON 12.10.2006 AND NOTICE U/S 143(2) WAS GIVEN ON 24.7.2008 I.E. AFTER 1 YEAR 9 MONTHS AND 1 2 DAYS FROM THE DATE OF FILING OF THE BLOCK RETURN, M EANING THEREBY THE NOTICE COULD HAVE BEEN SERVED ONLY WITH IN 12 MONTHS FROM THE END OF THE MONTH IN WHICH RETURN IS FILED. IT CAN BE SAID THAT THE NOTICE U/S 143(2) C OULD HAVE BEEN GIVEN ONLY UPTO 31.10.2007, CONSEQUENTLY, THE LIMITATION PERIOD HAD ALREADY EXPIRED. IN VIEW OF T HESE FACTS AND JUDICIAL PRONOUNCEMENTS, THE CROSS OBJECT ION OF THE ASSESSEE IS ALLOWED. SINCE WE HAVE HELD THAT T HE NOTICE U/S 143(2), WHICH IS A MANDATORY REQUIREMENT , HAS BEEN BEYOND THE PRESCRIBED LIMIT, THEREFORE, T HE APPEAL OF THE REVENUE IS OTHERWISE HAVING NO MERIT AND DISMISSED AS SUCH. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED AN D THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD JANUARY, 2012. SD SD (R.C. SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:.3.1.2012 COPY TO:APPELLANT/RESPONDENT/CIT/CIT(A)/DR/GUARD FI LE D/-