Smt. Cicy P. Thomas, Kottayam V. ACIT, Kottayam

CO 37/COCH/2007

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 6739 (ITAT-COCHIN)
• Duration Of Justice: 4 year(s) 5 month(s) 5 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 22-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-08-2011
• Assessment Year: misc
• Appeal Filed On: 17-07-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHA
• Assessee Lawyers: Z T ZACHARIAH
• Keywords: Block assessment
• Section: 132; 15

Judgement Text

1 ITSS NO.32/COCH/2007 & CO NO.37/COCH/2007 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHI BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI SANJAY ARO RA (AM) I.T(SS)A. NO. 32/COCH/2007 (BLOCK PERIOD 01-04-98 TO 03-03-99) THE AC,CIR.1 VS SMT. CICY P THOMAS KOTTAYAM CICY KURIAN, ANICKAL HOUSE MUTTAMBALAM, KOTTAYAM PAN : ABIPT9753A (APPELLANT) (RESPONDENT) C.O. NO.37/COCH/2007 (ARISING OUT OF I.T(SS)A. NO. 32/COCH/2007) (BLOCK PERIOD 01-04-98 TO 03-03-99) SMT. CICY P THOMAS VS THE AC, CIR.1 KOTTAYAM KOTTAYAM (APPELLANT) (RESPONDENT) REVENUE BY : MS. VIJAYAPRABHA ASSESSEE BY : SHRI Z.T. ZACHARIAH DATE OF HEARING : 14-12-2011 DATE OF PRONOUNCEMENT: 22 -12-2011 O R D E R PER N.R.S. GANESAN (JM) THE REVENUE HAS FILED THE APPEAL AGAINST THE ORDER OF CIT(A)-IV, KOCHI DATED 07-03-2007 FOR THE BLOCK PERIOD 1989-90 TO 19 98-99 AND THE ASSESSEE HAS FILED CROSS OBJECTION AGAINST THE VERY SAME ORDER. THEREFORE, WE HEARD THE APPEAL AND THE CROSS OBJECTION TOGETHER AND DISPOSE OF THE SAME BY THIS COMMON ORDER. 2. IN THE CROSS OBJECTION, THE ASSESSEE HAS RAISED THE ISSUE OF LIMITATION IN PASSING THE ORDER U/S 158BD OF THE ACT. SINCE THE ISSUE OF LIMITATION GOES TO THE VERY ROOT OF THE MATTER, WE TAKE UP THE CROSS OBJEC TION FIRST. 2 ITSS NO.32/COCH/2007 & CO NO.37/COCH/2007 3. SHRI Z.T. ZACHARIA, THE LD.REPRESENTATIVE FOR TH E ASSESSEE SUBMITTED THAT THERE WAS A SEARCH ON 03-03-1999 AT THE PREMISES OF SHRI PK KURIEN. ON THE BASIS OF THE MATERIAL FOUND IN THE COURSE OF SEARCH PROCE EDINGS IN THE CASE OF SHRI P.K KURIEN, THE PROCEEDINGS U/S 158BD WAS INITIATED IN THE CASE OF THE ASSESSEE. ACCORDING TO THE LD.REPRESENTATIVE, THE BLOCK ASSES SMENT PROCEEDINGS U/S 158BC WAS COMPLETED ON 30-03-2001 IN THE CASE OF SHRI P.K KURIEN. THE NOTICE U/S 158BD DATED 22-04-2003 WAS SERVED ON THE ASSEESSEE ON 22-04-2003 AFTER EXPIRY OF MORE THAN TWO YEARS FROM THE DATE OF ASSESSMENT IN THE CASE OF SHRI PK KURIEN. ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSING O FFICER HAS TO ISSUE NOTICE U/S 158BD WITHIN A REASONABLE PERIOD FROM THE DATE OF S EARCH. REFERRING TO SECTION 158BE(2), THE LD.REPRESENTATIVE SUBMITTED THAT THE ASSESSMENT PROCEEDINGS U/S 158BD SHALL BE COMPLETED WITHIN TWO YEARS FROM THE END OF THE MONTH IN WHICH NOTICE U/S 158BD WAS SERVED ON THE ASSESSEE. ACCOR DING TO THE LD.REPRESENTATIVE, THOUGH THE ASSESSMENT ORDER IN THE CASE OF ASSESSEE U/S 158BD WAS DATED 29-04- 2005, IN FACT, IT WAS SERVED ON THE ASSESSEE ON 30- 04-2005. THEREFORE, IT WAS BEYOND THE PERIOD OF TWO YEARS. THUS, ACCORDING TO THE LD REPRESENTATIVE, THE BLOCK ASSESSMENT PROCEEDINGS IS INVALID AND CONSEQU ENTLY, THE BLOCK ASSESSMENT HAS TO BE QUASHED. 4. MS. VIJAYAPRABHA, THE LD.DR SUBMITTED THAT NO LI MIT IS PRESCRIBED FOR ISSUING NOTICE U/S 158BD OF THE ACT IN RESPECT OF THE OTHER THAN SEARCHED PERSON. THEREFORE, SO LONG AS THE DELAY IN ISSUING THE NOTI CE CANNOT BE ATTRIBUTED TO THE ASSESSING OFFICER, THE ASSESSMENT ORDER PASSED U/S 158BD IS VALID. THEREFORE, ACCORDING TO THE LD.DR, THE ASSESSING OFFICER HAS V ALIDLY PASSED THE ASSESSMENT ORDER AFTER ISSUING NOTICE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE BLOCK ASSESSMENT PROCEEDINGS IN THE CASE OF SHRI PK KURIEN WERE COMPLETED U/S 158BC ON 30-03-2001. NO DOUBT, THERE IS NO PROVISION IN THE INCOME-TAX ACT FIXING THE TIME LIMIT FOR ISSUING NOTICE 3 ITSS NO.32/COCH/2007 & CO NO.37/COCH/2007 U/S 158 OF THE ACT IN RESPECT OF THE PERSON OTHER T HAN SEARCHED, BUT, IT DOES NOT MEAN THAT THE ASSESSING OFFICER CAN ISSUE THE NOTIC E AT HIS SWEET WILL AT ANY TIME. FINALITY OF THE PROCEEDINGS CANNOT BE SEEN SO LIGHT LY. SECTION 132(9A) ENABLES THE AUTHORIZED OFFICER TO EXAMINE THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE S AND IF IT IS NOT RELATABLE TO ANY PERSON AGAINST WHOM SEARCH WAS CONDUCTED, HE HAS TO HAND OVER THE SAME TO THE CONCERNED ASSESSING OFFICER HAVING JURISDICTION OVE R SUCH PERSON WITHIN THE PERIOD OF 60 DAYS FROM THE DATE ON WHICH THE LAST AUTHORIZ ATION FOR THE SEARCH WAS EXECUTED. THEREFORE, U/S 132(9A) OF THE ACT, THE O FFICER, WHO HAS CONDUCTED THE SEARCH HAS TO EXAMINE THE DOCUMENTS WITHIN 60 DAYS AND IF IT DOES NOT RELATE TO THE PERSON AGAINST WHOM SEARCH WAS CONDUCTED, HE HAS TO HANDOVER THE SAME TO THE CONCERNED OFFICER, WHO IS HAVING JURISDICTION OVER THE PERSON AGAINST WHOM THE MATERIAL WAS FOUND. THIS IS THE FIRST AVAILABLE OP PORTUNITY TO EXAMINE THE SEIZED MATERIAL. MOREOVER, IN THE COURSE OF BLOCK ASSESSM ENT PROCEEDINGS, THE ASSESSING OFFICER HAS THOROUGHLY EXAMINED ALL THE DOCUMENTS. THEREFORE, IT IS FOR THE ASSESSING OFFICER TO ISSUE THE NOTICE WITHIN THE RE ASONABLE TIME. THEREFORE, EVEN THOUGH NO TIME LIMIT FOR ISSUING NOTICE U/S 158BD W AS PRESCRIBED UNDER THE SCHEME OF THE ACT, THE ASSESSING OFFICER HAS TO ISS UE THE NOTICE WITHIN A REASONABLE PERIOD OF TIME AFTER EXPIRY OF 60 DAYS FROM THE DAT E OF LAST AUTHORIZATION FOR SEARCH WAS EXECUTED. IN THIS CASE, ADMITTEDLY, THE SEARCH WAS CONDUCTED ON 30- 03-1999 AND THE ASSESSMENT PROCEEDINGS IN THE CASE OF THE PERSON WHO WAS SEARCHED WAS COMPLETED ON 30-03-2001. THEREFORE, W E ARE OF THE OPINION THAT THE ISSUE OF NOTICE U/S 158 BD ON 22-04-2003 AFTER EXPI RY OF TWO YEARS AND A MONTH IS BEYOND THE REASONABLE PERIOD. WE FIND THAT THIS IS SUE WAS EXAMINED BY A FIVE MEMBER BENCH OF THIS TRIBUNAL AT DELHI IN MANOJ AGA RWAL VS DCIT (2008) 113 ITD 377 (DEL)(SB). THE SPECIAL BENCH OF THE TRIBUN AL EXAMINED THE SCHEME OF THE ACT AND OBSERVED ON PAGE 481, PARAGRAPH 110 & 1 11, AS UNDER 110. IT IS CLEAR FROM THE ABOVE THAT THE PROVISIONS OF SECTION 158BD ARE THUS INEXTRICABLY INTERLINKED AND INTERTW INED WITH SECTION 158BC AND THEY ARE LIKE SIAMESE TWINS. IN THE 4 ITSS NO.32/COCH/2007 & CO NO.37/COCH/2007 CIRCUMSTANCE, IT IS NOT POSSIBLE TO VIEW SECTION 15 8BD IN ISOLATION AND DE HORS SECTION 158BC AS THAT WOULD MILITATE AG AINST THE INTENTION BEHIND THE ENACTMENT OF CHAPTER XIV-B TO PROVIDE FOR A COMPLETE CODE FOR ASSESSMENT OF UNDISCLOSED INCOME AS DIFFERENT FROM THE ASSESSMENT OF NORMAL INCOME IN REGULAR ASS ESSMENT. THE CONCEPT OF UNDISCLOSED INCOME AS DIFFERENT FROM WHA T WE MAY CALL AS NORMAL OR REGULAR INCOME IS AT THE VERY CORE OF THIS CHAPTER. 111. IT IS IN THIS CONTEXT THAT WE HAVE TO VIEW THE PROVISIONS OF SECTION 158BD OF THE ACT. IT IS NOT AS IF THE SAID PROVISION CAN BE INVOKED AT THE WHIMS OF THE ASSESSING OFFICER. ON THE OTHER HAND, THE SECTION HAS CERTAIN BUILT IN REQUIREMENTS WHICH HAVE TO BE SCRUPULOUSLY FOLLOWED AS HELD IN THE CASE OF MANISH MAHESHWARI (SUPRA) IF AN ATTACK AGAINST AN ORDER UNDER THIS SE CTION HAS TO BE REPELLED. THE FIRST PRE-CONDITION IS THAT THE ASSE SSING OFFICER EXAMINING THE MATERIAL FOUND AS A RESULT OF SEARCH OR OTHER RELATED PROCEEDINGS AS IN SECTION 132A SHOULD DETERMINE WHE THER THE MATERIAL THROWS UP ANY INCOME WHICH CAN BE TERMED A S UNDISCLOSED. IF SO, HE HAS TO IDENTIFY SUCH UNDISC LOSED INCOME. THE NEXT STEP IS TO DETERMINE TO WHOM SUCH UNDISCLO SED INCOME BELONGS. IT MAY HAPPEN THAT SUCH INCOME MAY NOT BE LONG TO THE PERSON SEARCHED IN RESPECT OF WHOM HE HAS JURISDICT ION, IN WHICH EVEN HE HAS NO OTHER OPTION BUT TO GIVE A FINDING T HAT THE UNDISCLOSED INCOME DOES NOT BELONG TO HIS ASSESSEE BUT THAT IT BELONGS TO ANOTHER PERSON WHOM HE HAS TO IDENTIFY A ND DETERMINE. THESE HAVE TO BE POSITIVE FINDINGS FOR THE REASON T HAT THE SECTION DOES NOT GIVE ANY ELBOW ROOM FOR THE ASSESSING OFFI CER TO SAY IT MAY BELONG TO A OR TO B OR TO C. HE HAS TO INFER O N THE BASIS OF THE MATERIAL AND EVIDENCE FOUND THAT SUCH INCOME BELONG S TO A SPECIFIED PERSON AND IDENTIFIED BY HIM. AFTER ARRI VING AT THIS FINDING, HE HAS TO HAND OVER SUCH MATERIAL, DOCUMEN TS ETC., TO THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SAID OTHER PERSON AT THAT MATERIAL POINT OF TIME AND IT IS AT THAT STAGE THE SECOND ASSESSING OFFICER ASSUMES JURISDICTION AT THAT POIN T OF TIME. IF THE ASSESSING OFFICER ASSESSING THE PERSON SEARCHED DOE S NOT FIND ANY UNDISCLOSED INCOME AT ALL, OR DOES NOT ARRIVE AT AN Y FINDING IN RESPECT OF THE SAME OR HAVING ARRIVED AT SUCH FINDI NG DOES NOT HAND OVER THE MATERIAL TO THE SECOND ASSESSING OFFICER, THE PROVISIONS OF SECTION 158BD DO NOT COME INTO OPERATION AT ALL. THE SPECIAL BENCH AGAIN OBSERVED AS FOLLOWS ON PAGE 484 AT PARAGRAPH 114 & 115: 5 ITSS NO.32/COCH/2007 & CO NO.37/COCH/2007 114. SECTION 158BE PROVIDES FOR TIME LIMIT FOR COMP LETION OF BLOCK ASSESSMENT. IT STIPULATES THAT THE ORDER UND ER SECTION 158BC SHALL BE PASSED WITHIN TWO YEARS FROM THE END OF TH E MONTH IN WHICH THE LAST OF THE AUTHORIZATION FOR SEARCH UNDE R SECTION 132 WAS EXECUTED OR FOR REQUISITION UNDER SECTION 132A A THE CASE MAY BE AND SO THE ORDER ENVISAGED UNDER SECTION 158BC H AS NECESSARILY TO BE PASSED WITHIN THIS TIME FRAME SET IN LAW. IF THERE IS A TIME- LIMIT FOR PASSING SUCH ORDER, THERE IS AN IMPLIED T IME LIMIT FOR GIVING A FINDING AS TO THE PERSON TO WHOM THE UNDIS CLOSED INCOME BELONGS WHICH UNDER NO CIRCUMSTANCE CAN BE BEYOND T HE TIME-LIMIT SET IN SECTION 158BE. IF THERE IS NO SUCH FINDING GIVEN IN THE ORDER UNDER SECTION 158BC, THE PROVISIONS OF SECTION 158B D STAND OUSTED AT THE EXPIRY OF THE SAID TIME LIMIT FOR THE REASON THAT SUCH A FINDING IS THE VERY BASIS FOR INVOKING SECTION 158B D. 115. SECTION 158BD AS SAID EARLIER BEGINS WITH THE EXPRESSION WHERE THE ASSESSING OFFICER IS SATISFIED AND SO T HE VERY SECTION IMPLIES A RECORDING OF SATISFACTION. THE SATISFACT ION CONTEMPLATED IS A JUDICIOUS SATISFACTION AND NOT A SUBJECTIVE SA TISFACTION AND UNLESS THE SAME IS RECORDED IT IS NOT POSSIBLE FOR ANY PERSON TO DISCERN WHETHER THE SATISFACTION MEETS THE REQUIRES OF LAW AT ALL. THE SATISFACTION CAN BE FOUND IN THE ORDER PASSED U NDER SECTION 158BC AND IF NO SUCH ORDER IS PASSED THEN IT WILL H AVE TO BE FOUND IN THE NOTE HANDING OVER THE MATERIAL SEIZED TO THE ASSESSING OFFICER ASSESSING THE OTHER PERSON. IN ANY EVENT, IT HAS TO BE IN WRITING AND IN VIEW OF SECTION 158BE, THE SAID RECO RDING HAS TO BE MADE BEFORE THE TIME SET IN SECTION 158BE EXPIRES. AFTER THE SAID DATE, IT IS NOT POSSIBLE TO INVOKE SECTION 158BD AT ALL. IN VIEW OF THE ABOVE, ISSUE OF NOTICE U/S 158BD AFT ER TWO YEARS FROM THE DATE OF COMPLETION OF THE ASSESSMENT IN RESPECT OF THE PERS ON AGAINST WHOM SEARCH WAS CARRIED OUT IS BARRED BY LIMITATION. A SIMILAR VIEW WAS TAKEN BY HYDERABAD BENCH OF THIS TRIBUNAL IN THE CASE OF DY.CIT, CIR. VS SHR I P VENKATA RAMANA IN ITSSA NO.08/HYD/2010 ORDER DATED 11-02-2011. A SIMILAR V IEW WAS ALSO TAKEN BY THE GUJARAT HIGH COURT ALSO IN THE CASE OF KHANDUBHAI V ASANJI DESAI & ORS VS DCIT (1999) 236 ITR 73 (GUJ) 7. IN VIEW OF THE ABOVE, IN OUR OPINION, THE BLOCK ASSESSMENT ORDER PASSED AGAINST THE ASSESSEE U/S 158BD IS BARRED BY LIMITAT ION. ACCORDINGLY, THE SAME IS QUASHED. 6 ITSS NO.32/COCH/2007 & CO NO.37/COCH/2007 8. IN VIEW O THE ABOVE, IT IS NOT NECESSARY TO GO I NTO THE MERIT OF THE CONTENTIONS RAISED BY THE REVENUE IN THE REVENUES APPEAL. 9. ACCORDINGLY, THE REVENUES APPEAL IN ITSS A NO.3 2/COCH/2007 IS DISMISSED AND ASSESSEES CO NO.37/COCH/2007 IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND DECEMBER, 2012 SD/- SD/- (SANJAY ARORA) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER ERNAKULAM, DT : 22 ND DECEMBER, 2012 PK/ COPY FORWARDED TO: 1. ASSIST.COMMISSIONER OF INCOME-TAX, CIR.1, KOTTAYAM 2. SMT. CICY P THOMAS ALIAS CICY KURIAN, ANICKAL HOUSE , MUTTAMBALAM, KOTTAYAM 3. THE COMMISSIONER OF INCOME-TAX, CENT.CIR.IV, ERNAKU LAM 4. THE COMMISSIONER OF INCOME-TAX(A)-I, KOCHI 5. THE COMMISSIONER OF INCOME-TAX, KOTTAYAM 6. THE DR (TRUE COPY) BY ORDER ASSTT.REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN