ACIT Cir.-1, Nashik V. Shri Rajendra Rasiklal Shah, Nashik

ITA 1195/PUN/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7483 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-03-2011
• Assessment Year: misc
• Appeal Filed On: 05-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARESHWAR SHARMA
• Assessee Lawyers: V L JAIN
• Keywords: Document seized; Procedural lapse; Block assessment; Documents seized
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI I C SUDHIR, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER I.T.A. NO. 1195/PN/09 (ASSTT. YEARS: 1997-98 TO 2003-04) ASSTT. COMMISSIONER OF INCOME-TAX CIR. 1, NASHIK .. APPELLANT VS. SHRI RAJENDRA R SHAH, .. RE SPONDENT ARIHANT BUNGALOW, PANDIT COLONY, SHAANPUR ROAD, NASHIK PAN ADBPS 2863H APPELLANT BY: SHRI HARESH WAR SHARMA RESPONDENT BY: SHRI V. L. JAIN ORDER PER G.S. PANNU, AM THIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)II, NASHIK DAT ED 20.7.2009 WHICH, IN TURN, HAS ARISEN FROM AN ORDER OF THE ASSESSING OFF ICER DATED 29.03.2007 PASSED UNDER SECTION 158BD READ WITH SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE BLOCK ASSESSMENT YEARS 1997-98 TO 2003-04. 2. ALTHOUGH, THE REVENUE HAS RAISED MULTIPLE GROUND S OF APPEAL, BUT THE APPEAL IS BEING DISPOSED OFF BY ADVERTING TO A SING LE ISSUE, CONTAINED IN GROUND NO. 5, WHICH READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A)-II, NASHIK HAS ERRED IN CONSIDERING THE BELATED SERVICE OF NOTICE U/S 143(2 ) AS NULLITY RATHER THAN IRREGULARITY AND WHILE DOING SO IN IGNORING THE LEGAL POSITION THAT CHAPTER XIVB IS A SELF CONTAINED CHAPTER IN ITSELF FOR FRAMING BLOCK ASSESSMENTS AND PROVISIONS OF SECTION 143(2) APPLY ONLY PROCEDURALLY AS IS CLEAR FROM THE WORDING SO FAR AS MAY BE. 3. THE FACTS, IN BRIEF, ARE THAT THERE WAS A SEARCH ACTION UNDER SECTION 132(1) OF THE ACT ON 25.3.2003 IN THE CASE OF SHRI BALASAHEB BARKU KOLHE/SHRI SAMARTH DEVELOPERS P. LTD. IN THE COURSE OF WHICH C ERTAIN DOCUMENTS WERE SEIZED. ON THE BASIS OF A STATEMENT RECORDED ON OAT H FROM SHRI B. B. KOLHE ITA NO 1195/PN/09 RAJENDRA R SHAH, NASH IK 2 ABOUT THE SEIZED DOCUMENTS, IT WAS REVEALED THAT VA RIOUS PEOPLE, INCLUDING THE ASSESSEE, SHRI RAJENDRA R SHAH, HAD MADE EXPENDITUR E/INVESTMENT IN LAND TRANSACTIONS. ON THE BASIS OF THIS INFORMATION, THE ASSESSING OFFICER INITIATED PROCEEDINGS UNDER SECTION 158BD OF THE ACT IN RESPO NSE TO WHICH THE ASSESSEE FILED RETURN OF INCOME ON 9.5.2005 DECLARING TOTAL UNDISCLOSED INCOME AT RS NIL. SUBSEQUENTLY, NOTICES UNDER SECTION 142(1) AND 143( 2) WERE ISSUED ON 26.6.2006 AND THE BLOCK ASSESSMENT WAS FINALIZED ON 29.3.2007 BY ADDING AN AMOUNT OF RS 47,07,360/- AS UNDISCLOSED INCOME OF T HE ASSESSEE. 4. IT APPEARS THAT DURING THE COURSE OF APPELLATE P ROCEEDINGS BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS), THE ASSESSEE VIDE LETTER DATED 23.11.2007 RAISED A LEGAL GROUND THAT AS THE ASSESS ING OFFICER HAD NOT SERVED NOTICE UNDER SECTION 143(2) ON THE ASSESSEE WITHIN THE PRESCRIBED PERIOD OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETUR N OF INCOME WAS FILED, THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER WAS INVA LID. IT WAS CONTENDED BY THE ASSESSEE THAT IN HIS CASE IN RESPONSE TO NOTICE UNDER SECTION 158BD DATED 23.3.2005, RETURN OF INCOME WAS FURNISHED ON 9.5.20 05, WHEREAS NOTICES UNDER SECTION 142(1) AND 143(2) OF THE ACT WERE ISSUED ON 26.6.2006. SINCE, THE NOTICE UNDER SECTION 143(2) OF THE ACT WAS SERVED B EYOND TWELVE MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN WAS FURNIS HED, THE SAID NOTICE ISSUED BY THE ASSESSING OFFICER WAS TIME BARRED AND INVALI D. THE COMMISSIONER OF INCOME-TAX (APPEALS) CALLED FOR A REMAND REPORT FRO M THE ASSESSING OFFICER, WHO IN HIS REPORT SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE NEVER RAISED ANY OBJECTION REGARDING T HE EXPIRY OF LIMITATION OF NOTICE UNDER SECTION 143(2) OF THE ACT; ON THE CONT RARY, HE COMPLIED WITH THE SAID NOTICE. ACCORDING TO THE ASSESSING OFFICER, L IMITATION DATE FOR ISSUANCE OF NOTICE UNDER SECTION 143(2) APPLIED ONLY IN CASES W HERE RETURN HAS BEEN FURNISHED UNDER SECTION 139, OR IN RESPONSE TO A NO TICE UNDER SUB-SECTION (1) OF SECTION 142 AND NOT IN BLOCK ASSESSMENT CASES, WHER E RETURN IS CALLED FOR UNDER SECTION 158BD/BC AS PER THE PROCEDURE LAID DOWN UND ER SECTION 158BC OF THE ACT. ITA NO 1195/PN/09 RAJENDRA R SHAH, NASH IK 3 5. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE SI DES, THE COMMISSIONER OF INCOME-TAX (APPEALS) AGREED WITH THE CONTENTIONS OF THE ASSESSEE AND QUASHED THE IMPUGNED ASSESSMENT BY CONCLUDING AS UNDER: IT HAS BEEN LAID DOWN BY HONBLE GAUHATI HIGH COUR T IN THE CASE OF SMT BANDANA GOGOI V CIT & ANR (2007) 289 ITR 281 THAT IN A CASE WHERE THE AO DECIDES TO UNDERTAKE SCRUTINY OF THE RETURN FILED IN PURSUANCE OF A NOTICE ISSUED U/S 158BC(A), HE HAS TO FOLLOW THE RIGORS OF SUB-SECTION (2) AND (3) OF SECTION 143 OF THE ACT. ASSESSMENT WITHOUT NOTICE U/S 143(3) SUFFERS FROM PROCEDURAL A ND JURISDICTIONAL ERROR. THE OPTION LEFT WITH THE AO IS TO COMPUTE THE INCOME AND LEVY TAXES ON THE BASIS OF THE RETURN FILED BY THE ASSESSEE. THE APPELLANTS CONTENTION IS ALSO SU PPORTED BY THE DECISIONS RELIED ON BY HIM OF HONBLE JURISDICTIONAL HIGH COURT AND TRIBUN AL. AS REGARDS THE CONTENTION OF THE AO THAT THE APPELLANT HAS NOT OBJECTED REGARDING TH E EXPIRY OF LIMITATION OF NOTICE DURING ASSESSMENT PROCEEDINGS, THE APPELLANT SUBMITTED THA T THE OBJECTION WAS RAISED DURING SCRUTINY ASSESSMENT AND ACCORDINGLY GROUND OF APPEA L TO THE EFFECT WAS ALSO RAISED. THE APPELLANT FURTHER SUBMITTED THAT IN FACT IT IS NOT NECESSARY TO RAISE SUCH OBJECTION DURING ASSESSMENT PROCEEDINGS AS THE POWER OF CIT(A ) ARE CO-EXTENSIVE WITH THAT OF THE AO AND LEGAL ISSUE CAN BE RAISED AT ANY STAGE. THE ABOVE CONTENTION IS SUPPORTED Y THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF DCIYT V MAHI VALLY HOTELS RESORTS 201 ITR 308 (2006). IN VIEW OF THE ABOVE DI SCUSSION AND IN VIEW OF THE BINDING DECISIONS RELIED ON BY THE APPELLANT, I HOLD THAT T HE AO ASSUMED JURISDICTION IN THE PRESENT CASE WITHOUT VALID ISSUE OF NOTICE AS PROVI DED IN SECTION 158BC R.W.S 143(2) OF THE ACT. THEREFORE THE ASSESSMENT IS LIABLE TO BE Q UASHED. THE GROUND OF THE APPELLANT ON THIS LEGAL ISSUE STANDS ALLOWED. AGGRIEVED WITH THE ABOVE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), REVENUE IS IN APPEAL BEFORE US. 6. BEFORE US, THE LEARNED REPRESENTATIVE FOR THE RE SPONDENT-ASSESSEE SUBMITTED THAT THE ACTION OF THE COMMISSIONER OF IN COME-TAX (APPEALS) IN QUASHING THE ASSESSMENT IN THE FACE OF BELATED ISSU ANCE/SERVICE OF NOTICE UNDER SECTION 143(2) OF THE ACT, IS NOW FORTIFIED B Y THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF ACIT V HOTEL BLUE MOON 321 ITR 362 (SC). 7. ON THIS ASPECT, THE LEARNED CIT-DEPARTMENTAL REP RESENTATIVE HAS RELIED UPON THE REASONING TAKEN BY THE ASSESSING OFFICER I N THE REMAND PROCEEDINGS BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) IN SUPPORT OF THE CASE OF THE REVENUE. THE SAID ARGUMENTS HAVE BEEN NOTED BY US I N PARA 4 ABOVE, AND ARE NOT BEING REPEATED FOR THE SAKE OF BREVITY. 8. WE HAVE HEARD BOTH THE PARTIES AND CONSIDERED TH EIR SUBMISSIONS CAREFULLY. WE FIND THAT THE ISSUE INVOLVED IN THE A FORESAID GROUND STANDS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAI NST THE REVENUE BY THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE O F ACIT V HOTEL BLUE MOON (SUPRA). AS PER THE HONBLE SUPREME COURT, SERVICE OF NOTICE ON THE ASSESSEE UNDER SECTION 143(2) OF THE ACT WITHIN PRESCRIBED P ERIOD OF TIME IS A PRE- ITA NO 1195/PN/09 RAJENDRA R SHAH, NASH IK 4 REQUISITE FOR FRAMING BLOCK ASSESSMENT UNDER CHAPTE R XIV-B OF THE ACT. IT HAS BEEN SPECIFICALLY OBSERVED BY THE HONBLE COURT THA T OMISSION TO ISSUE THE NOTICES WITHIN THE TIME PRESCRIBED IN THE PROVISO T O SECTION 143(2) IS NOT A PROCEDURAL IRREGULARITY AND IS NOT CURABLE. IN THE PRESENT CASE, IT IS UNDISPUTED THAT THE RETURN OF INCOME WAS FURNISHED ON 9.05.200 5, WHEREAS NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 26.06.2006, WHICH IS BEYOND THE PERIOD OF TWELVE MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN WAS FURNISHED. THUS, IN THIS FACTUAL MATRIX, THE JUDGMENT OF THE H ONBLE SUPREME COURT FULLY APPLIES AND ACCORDINGLY, WE FULLY CONCUR WITH THE F INDINGS OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AND FIND NO MERIT IN THE GR OUND RAISED BY THE REVENUE. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE FAILS . 9. SINCE THE ASSESSMENT STANDS QUASHED IN TERMS OF THE ABOVE-STATED GROUND OF APPEAL, THE OTHER GROUNDS RELATING TO THE MERITS OF THE ADDITIONS MADE, ARE RENDERED ACADEMIC AND ARE NOT BEING ADJUD ICATED FOR THE PRESENT. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. DECISION PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF MARCH 2011. SD/- SD/- (I.C. SUDHIR) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER PUNE: DATED: 16 TH MARCH, 2011 B COPY OF THE ORDER IS FORWARDED TO : 1. RAJENDRA R SHAH, NASHIK 2. THE ACIT CIR. 1, NASHIK 3. THE CIT(A)-II,NASHIK 4. THE CIT (CENTRAL) NAGPUR 5. THE D.R, A BENCH, PUNE TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE