COMMISSIONER OF INCOME TAX FARIDABAD V. M/S SANWARIA BANQUETS

ITA/492/2010

AI Insights

The case involves the Commissioner of Income-Tax, Faridabad as the appellant and M/s Sanwaria Banquets (P) Ltd. as the respondent. The appeals were filed against the order of the Income Tax Appellate Tribunal, Delhi, which had set aside the additions made during the block assessment proceedings. The tribunal's decision was based on the grounds that the notice under Section 158BD was issued beyond a reasonable time and without properly recording the satisfaction required under the section. The High Court, referencing its previous decisions in similar cases, found that the notice was not beyond reasonable time and that the necessary satisfaction had been recorded, leading to the quashing of the tribunal's order and remanding the case for a fresh assessment.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 679931 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 14-02-2011
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income-Tax, Faridabad Vs. M/s Om Parkash and sons, Commissioner of Income-Tax, Faridabad Vs. Navin Verma
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: URVASHI DHUGGA
• Keywords: Accommodation entries; Block assessment; Satisfaction requirement; Undisclosed income; Limitation ground
• Section: 158BC; 158BD; 260A; 292B

Judgement Text

"Income-tax Appeal No.492 of 2010 -1- **** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Income-tax Appeal No.492 of 2010 Date of decision: 14.2.2011 Commissioner of Income-Tax, Faridabad ...Appellant Versus M/s Sanwaria Banquets (P) Ltd. ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Ms. Urvashi Dhugga, Sr. Standing Counsel for the appellant. **** ADARSH KUMAR GOEL, J ( Oral) . 1. This order will dispose of Income Tax Appeals No.492 and 443 of 2010 as both the appeal involve common questions. 2. ITA No.492 of 2010 has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (for short “the Act”) against the order dated 4.9.2009 of the Income Tax Appellate Tribunal, Delhi Bench 'G', Delhi in I.T.A. No.95/Del/2008 for the block assessment period 1.4.1990 to 3.8.2000 raising following substantial questions of law:- “i) Whether on the facts and in the circumstance of the case, the ld. ITAT was right in law in holding that the notice u/s 158BD issued on 23.9.2004 is beyond Income-tax Appeal No.492 of 2010 -2- **** reasonable time from the date of completion of the block assessment in the case of searched persons, therefore, on the limitation ground, the proceedings initiated u/s 158BD are invalid and are thus, liable to be cancelled even though there is no time limit prescribed for issuing notice u/s158 as per section 158BD read with section 158BC of the Income Tax Act, 1961? ii) Without prejudice to the question No.(I) above, whether, the ld. ITAT was right in law in holding that the proceedings initiated u/s 158BD are invalid and are thus liable to be cancelled on the limitation ground though section 292B of the Income Tax Act, 1961 specifically provides that no proceeding under Income Tax Act, 1961 shall be invalid or shall be deemed to be invalid by reason of any mistake, omission or defect in a notice? iii) Whether on the facts and in the circumstances of the case, the ld. ITAT was right in law in not adjudicating the other grounds i.e. satisfy the requirement of section 158BD in holding that since the notice u/s 158BD has been held to be beyond time rendering it invalid and not confirming the order of the Assessing Officer? iv) Whether on the facts and in the circumstances of Income-tax Appeal No.492 of 2010 -3- **** the case, the ld. ITAT has erred in dismissing the appeal of the revenue and upholding the order of CIT(A) that the proceedings u/s 158BD were initiated without properly recording the satisfaction as required under that section disregarding the fact that the Assessing officer, New Delhi having jurisdiction over the searched person i.e. Shri Manoj Aggarwal and M/s Friends Portfolio (P) Ltd. vide his letter No.181 dated 6.8.2003 has communicated his satisfaction to the Assessing Officer of this case (Annexure-A enclosed) and also in assessment order itself in the case of an M/s Friends Portfolio (P) Ltd. mentioned that unexplained deposits in its bank account relate to various persons who have taken accommodation entries and to protect the interest of revenue, he added the same to the income of the company i.e. and Friends Portfolio (P) Ltd., on protective basis?” 3. Block assessment proceedings were initiated against the assessee on account of material found during the search on the residential and office premises of Manoj Aggarwal and his associates M/s Friends Portfolio P Ltd. on 3.8.2000. During the assessment of the searched person which was completed on 29.8.2002, it was noticed that Manoj Aggarwal was engaged in giving bogus accommodation book entries and the persons to whom such entries Income-tax Appeal No.492 of 2010 -4- **** were given included the assessee. On requisite satisfaction having been formed, the concerned assessing officer was informed who gave notice and initiated block assessment proceedings. The assessing officer found that assessee had undisclosed income which was shown as proceeds of sale of shares through M/s Friends Portfolio P Ltd. The transactions were bogus and infact amount was received by way of accommodation entries which represented undisclosed income of the assessee. On appeal, the CIT(A) set aside the additions without going into merits only on the ground that notice under Section 158BD was beyond reasonable time after formation of satisfaction during assessment of searched person and did not give the requisite period of 15 days as required under Section 158BD. It was further held that the said notice was issued without properly recording the satisfaction. The said view has been affirmed by the Tribunal. 4. Learned counsel for the revenue points out that in the order passed today in ITA No.158 of 2010 (Commissioner of Income-Tax, Faridabad Vs. M/s Om Parkash and sons) it has been held in identical circumstances that the notice under Section 158BD could not be held to be beyond reasonable time and requisite satisfaction had been formed. Similarly in ITA No.558 of 2006 (Commissioner of Income-Tax, Faridabad Vs. Navin Verma) decided on 1.2.2011, it has been held that if period specified in notice under Section 158BD was less than 15 days, the proceedings could not be held to be nullity in absence of prejudice to the Income-tax Appeal No.492 of 2010 -5- **** assessee. Learned counsel for the revenue, thus, submits that the questions raised in both these appeals are fully covered by orders of this Court and the appeals deserve to be allowed. This being the position, we do not consider necessary to issue notice to the assesses since we are remanding the matter to the CIT(A) for fresh decision in accordance with law after hearing the assesses. 5. Accordingly, both the appeals are allowed and impugned orders are quashed. The matters are remanded to the CIT(A) for fresh decision in accordance with law. Since this order is being passed without notice to the assesses in the light of orders of this Court, we make it clear that if the assesses are aggrieved by this order, they will be at liberty to move this Court. (Adarsh Kumar Goel) Judge February 14, 2011 (Ajay Kumar Mittal) Pka Judge "