GURU ASHISH SHIP BREAKERS V. ASSISTANT COMMISSIONER OF INCOME TAX

TAXAP/732/2005

AI Insights

The case involves Guru Ashish Ship Breakers, the appellant, who challenged the judgment and order passed by the Income Tax Appellate Tribunal, Rajkot Bench, concerning a block assessment period from April 1, 1984, to June 30, 1999. The primary legal issue was whether the Tribunal was justified in directing the Assessing Officer to issue a notice under Section 148 of the Income Tax Act, 1961, for an Assessment Year not originally before the Tribunal. The High Court examined the Tribunal's directions and found them inconsistent with established legal precedents, leading to the partial allowance of the appeal.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 695708 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 05-11-2014
• Assessment Year: misc
• Other Referred Cases: Adani Exports v. Deputy Commissioner of Income-tax (Assessments)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: MAUNA BHATT
• Assessee Lawyers: R K PATEL
• Keywords: Block assessment; Income tax appellate tribunal; Notice under section 148; Search and seizure; Undisclosed income
• Section: 148; 132; 158BD

Judgement Text

"O/TAXAP/732/2005 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 732 of 2005 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ GURU ASHISH SHIP BREAKERS....Appellant(s) Versus ASSISTANT COMMISSIONER OF INCOME TAX....Opponent(s) ================================================================ Appearance: MR RK PATEL, ADVOCATE for the Appellant(s) No. 1 MRS MAUNA M BHATT, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER Page 1 of 6 O/TAXAP/732/2005 JUDGMENT Date : 05/11/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. By way of this appeal, the Appellant has challenged the judgment and order passed by the Income Tax Appellate Tribunal, Rajkot Bench, Rajkot in ITA No. (SS) 14 (RJT) of 2002 for the block period from 1.4.1984 to 30.6.1999. 2. While admitting the appeal, this Court has framed the following substantial question of law: “Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in law in directing the Assessing Officer to issue notice under Section 148 of the Income Tax Act, 1961 in relation to the Assessment Year which was not before the Tribunal by way of appeal from regular assessment proceedings ?” 3. The brief facts of the present case are Page 2 of 6 O/TAXAP/732/2005 JUDGMENT that the appellant is a firm regularly being assessed to tax by the Income Tax Office at Bhavnagar. On 30.6.1999, a search and seizure proceedings under section 132 of the Income Tax Act, 1961 was undertaken by the Department. As a consequence of these proceedings, several hearings took place and explanation and evidence were considered at the assessment level after which ultimately the assessment order was confirmed by the Assessing Officer under section 158BD of the Act vide order dated 27.6.2001. Total undisclosed income in respect of the period from 1.4.1989 to 30.6.1999 was determined at Rs. 1,41,14,952/-. The appellant preferred First Appeal before the learned CIT (Appeals) on various grounds on merits as well as legality of the search proceedings under the Block Assessment Scheme in consonance with the provisions of Income Tax Act 1961. Thereafter, the Revenue has preferred second appeal before the Tribunal which partly allowed the appeal, against which, the present appeal is preferred by the appellant. 4. Heard the learned advocates appearing for the parties and considered the submissions made by them. Mr. Bhatt learned advocate appearing for respondent has pointed out that in view of the observations made in para-13 by the Tribunal, the notice under sec. 148 is Page 3 of 6 O/TAXAP/732/2005 JUDGMENT already issued. This Court in the case of Adani Exports v. Deputy Commissioner of Income-tax (Assessments), reported in [1999] 240 ITR 224 (Gujarat), has observed that “thus from the record it is apparent that right from the date the respondent Assessing Officer was appraised of the audit objection, at no point of time up to March 18, 1997, he has betrayed any suggestion of holding any doubt about correctness of his earlier decision in the assessment proceedings about computation of benefit under section 80HHC in the case of the assessee. In spite of holding the view, he has been suggesting to the superior officers that if his view is not acceptable, recourse may be had to section 147 or section 263 that is to say depending upon the view taken by the superior authority.” The directions given by the Appellate Tribunal in Para-13, reads as under: “13. However, on verification of the material placed on the record, we find that similar action made in the block assessment in case of two associate concerns. M/s. L.G. Industries and M/s. Aggrawal Industries, notices u/s. 148 had been issued to consider the discrepancy in material found during the course of search. However, in the case of instant assessee, we do not find any such notice u/s. 148 having been issued by the Assessing Officer for Page 4 of 6 O/TAXAP/732/2005 JUDGMENT examining the discrepancy found during the course of search. We, therefore, direct the Assessing Officer to examine the discrepancy in the quantity of search amounting to Rs. 23,50,700/- and also discrepancy found in respect of non-ferrous metals outside the books of account amounting to Rs. 14,56,140/- by issuing notice u/s. 148 with respect to the year to which such discrepancy pertains. As the CIT(A) has not decided the issue on merits and has just deleted the addition by stating that such discrepancy pertains. As the CIT(A) has not decided the issue on merits and has just deleted the addition by stating that such discrepancy in the quantity of oil shown in the bills of entry and the quantity of oil shown in the books of account as sold and the sale of non-ferrous metals outside the books have to be dealt with in the course of regular assessment. We thus find that proper direction has not been given by the CIT(A) for reopening the assessment for respective year to which discrepancy pertains and to examine the discrepancy on merits after giving due opportunity to the assessee. Therefore, in the fitness of things,we direct the Assessing Officer to examine the impugned discrepancy on account of oil and non-ferrous metal, by reopening the assessments of respective years to which the discrepancy pertains. We direct accordingly.” 5. Therefore, in our view, the directions Page 5 of 6 O/TAXAP/732/2005 JUDGMENT given in para-13 to issue notice under sec.148 of the Act is contrary to the decision of this Court, and therefore, the direction issued is quashed and set aside because such direction cannot be issued against the department. The directions given in pare – 11 and 12 of the order of learned Tribunal are not disturbed. This appeal is partly allowed. (K.S.JHAVERI, J.) (K.J.THAKER, J) mandora Page 6 of 6 "