ITO, Ludhiana V. Sh. Ravinder Singh, Ludhiana

ITA 1255/CHANDI/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68493 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-08-2013
• Assessment Year: 2001-2002
• Appeal Filed On: 30-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Keywords: Reopening of assessment; Invalid notice
• Section: 143(3); 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1255 /CHD/2012 (ASSESSMENT YEAR: 2001-02) THE INCOME OFFICER, VS. SH.RAVINDER SINGH WARD II(2), PROP. M/S SIMRAN TRADING CO., LUDHIANA. 462/3, NEW KIDWAL NAGAR, LUDHIANA. PAN: ACOPC7353A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI J.S.NAGAR, DR RESPONDENT BY : SHRI SUDHIR SEHGAL DATE OF HEARING : 22.08.2013 DATE OF PRONOUNCEMENT : 20.09.2013 O R D E R PER SUSHMA CHOWLA, J.M. : THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, CHANDIGARH DATED 06.09.2012 AGAINST THE ORDER PASSED UNDER SECTION 143(3) R.W.S .147 OF INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS UNDER: 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN HOLDING THAT SECTION 150(1) IS NOT APPLICABLE IN THIS CASE AS THE CIT(A) HAS NOT RECORDED ANY FINDINGS OR GIVEN ANY DIRECTIONS, IGNORING INTERALLIA, THE LIMIT OF' . IN CONSEQUENCE OF....' OF SUB SECTION (1) OF SECTION 150 OF THE INCOME TAX ACT 1961 AND HENCE,, THE REOPENING O F CASE BY THE AO WAS VALID. 2. THAT THE LD. CIT(A) HAS ERRED IN LAW IN IGNORIN G THE PARTICULAR FACTS AND CIRCUMSTANCES OF THE CASE, WHICH WERE COVERED IN TH E PROVISIONS OF SECTION 150(1) OF THE INCOME TAX ACT 1961. 2 3. THE LEARNED A.R. FOR THE ASSESSEE AT THE OUT SET POINTED OUT THAT THE ISSUE IN THE PRESENT APPEAL IS COVERED BY THE ORDER OF THE TRIBUNAL IN ITO VS. SHRI KULDEEP SINGH IN ITA NO.363/CHD/2012 RELAT ING TO ASSESSMENT YEAR 2002-03 ORDER DATED 26.7.2012. 4. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFICER. 5. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE ASSESSMENT IN THE CASE WAS COMPLETED UNDER SECTION 144/153C OF THE AC T AT TOTAL INCOME OF RS.21,33,900 VIDE ORDER DATED 8.11.2007. THE SAID ASSESSMENT WAS ANNULLED BY THE CIT (APPEALS) VIDE ORDER DATED 17.3 .2010 HOLDING THAT NO VALUABLE ARTICLES, BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO THE ASSESSEE WERE SEIZED DURING THE SEARCH OPERATION. THE ASSESSING OFFICER THEREAFTER ISSUED NOTICE UNDER SECTION 148 OF THE A CT ON 4.6.2010. THE SAID REOPENING OF ASSESSMENT WAS CHALLENGED BY THE ASSESSEE BEING TIME BARRED. THE ASSESSING OFFICER RELIED UPON THE PROV ISIONS OF SECTION 150(2) OF THE ACT TO EXCLUDE THE PERIOD FROM THE DA TE OF ISSUE OF NOTICE UNDER SECTION 153C OF THE ACT TO THE DATE OF RECEIP T OF APPELLATE ORDER, FOR THE PURPOSE OF COMPUTATION OF TIME LIMITATION A S PROVIDED UNDER SECTION 149 OF THE ACT. 6. BEFORE THE CIT (APPEALS) THE ASSESSEE RAISED THE PRELIMINARY ISSUE AND POINTED OUT THAT THE PROCEEDINGS WERE BAD IN LA W AS THE LAST DATE OF ISSUING NOTICE UNDER SECTION 148 OF THE ACT WAS 31. 3.2008 AS PER THE TIME LIMITATION PRESCRIBED UNDER SECTION 149 OF THE ACT. THE CLAIM OF THE ASSESSEE BEFORE THE CIT (APPEALS) WAS THAT THE PROVISIONS OF SECTION 150(2) OF THE ACT WERE NOT APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE. THE CIT (APPEALS) VIDE PARA 5 AT PAGES 5 TO 7 HELD AS UNDER: 3 5. I HAVE CONSIDERED THE FACTS OF THE CASE AND IT IS SEE N THAT THE ASSESSING OFFICER HAS RELIED UPON THE ORDER OF THE CIT(A) TO HOLD THAT THE TIME AVAILABLE FOR REOPENING WAS EXTENDED. HERE IT IS IMPORTANT TO REF ER TO THE ORDER OF THE CIT(A) TO FIND OUT IF ANY FINDING OR DIRECTION HAD BEEN RECOR DED SO AS TO ENABLE THE AO TO BASE HIS REOPENING AS PROVIDED FOR IN SECTION 150(1 ). THE CIT(A)S FINDING ON PAGE 5 PARA 3.2 OF THE APPELLATE ORDER ARE AS UNDER :- 'A PLAIN READING OF THE PROVISIONS OF SECTION 153C SHOWS THAT ONLY WHEN MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE S OR THINGS OR BOOKS OF ACCOUNT ETC. ARE SEIZED DURING THE COURSE OF SEARCH AND BELONG TO A PERSON OTHER THAN THE PERSON ORIGINALLY SEARCHED THEN ONLY THE PROCEEDINGS UNDER SECTION 153C CAN BE VALIDLY INITIATED IN THE CASE OF THE PERSON TO WHOM THE MONEY, BULLION, JEWELLERY OR BOOKS OF ACCOUNTS AND DOCUMENTS ETC. BELONGED. IN THIS CASE NOTHING BELONGING TO THE APPELLANT HAS BEEN SEARCHED DURING THE COURSE OF SH. PALWINDER SINGH. IT WAS ONLY DURING THE ASSESSMENT PROCEEDINGS THAT BANK STATEMENTS WERE CALLED FOR BY THE ASSESSI NG OFFICER DURING THE ASSESSMENT PROCEEDINGS OF SH. PALWINDER SINGH, THER EFORE, NOTHING BELONGING TO THE ASSESSEE WAS FOUND AND SEIZED AT THE TIME OF SE ARCH CONDUCTED BY THE DEPARTMENT UNDER SECTION 132(1) OF THE ACT IN CASE OF SH. PALWINDER SINGH. THEREFORE, I AM OF THE OPINION THAT THE PROVISIONS OF SECTION 153C COULD NOT HAVE BEEN INVOKED BY THE ASSESSING OFFICER. THE REFORE, THE ISSUANCE OF NOTICE U/S 153C IS VOID ABINITIO, ACCORDINGLY, I HOLD THAT THE ASSESSMENT FRAMED IN CONSEQUENCE OF THEREOF IS VITIATED AND LE GALLY NOT SUSTAINABLE, AND THE SAME IS ANNULLED. RELIANCE IN THIS REGARD IS ALSO PLACED ON THE ORDER DATED 16/9/2008 IN THE CASE OF ITO-IV(L), LUDHIANA VS. BA CHAN LAI (ITAT, CHANDIGARH BENCH 'A'' THE PERUSAL OF CIT(A)'S ORDER SHOWS THAT HE HAS NOT RECORDED A NY FINDING OR GIVEN ANY DIRECTION SO AS TO SUGGEST THAT THE AO MAY 'PROCEED TO REOPEN THE ASSESSMENT AND THE ASSESSMENT FRAMED U/S 144 HAS BEEN ANNULLED O N THE GROUND THAT THERE WAS NO SEIZURE OF VALUATION, BOOKS OF ACCOUNTS OR DOC UMENTS BELONGING TO THE ASSESSEE. IN THE CIRCUMSTANCES IT IS NOT OPEN TO THE AO TO PRESUME T HAT THE PROVISIONS OF SECTION 150 WOULD BE APPLICABLE TO THE FACTS OF THE CASE. THE AR'S RELIANCE ON THE JUDGEMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MRS. RATANBAI IM.K DUBASH 230 ITR 495 IS PERFECTLY N ORDER AS IT HAS BEEN OBSERVED THAT IT WOULD BE OPEN TO TH E ITO TO T AKE UP THE MATTER FROM THE POINT AT WHICH THE ILLEGALITY S UPERVENED AND TO PASS A FRESH ORDER EVEN IN CASE OF ANNULMENT OF THE ASSE SSMENT IF IT CAN BE MADE ACCORDING TO THE PROVISIONS OF LAW AND IF THE TIME LIMIT FOR TAK ING FURTHER PROCEEDINGS IN THE MATTER AND MAKING THE ASSESSMENT, IF ANY WAS STILL AVAILAB LE. IT IS FURTHER TO BE APPRECIATED THAT THE AO HAS RELIED UPON SECTION 150(2) WHICH LIMITS THE APPLICABILITY OF SECTION 150(1) AND SINCE THERE IS NO DIRECTION BY THE CIT(A) WHILE ANNULLING THE ASSESSMENT MEANING THEREBY THAT SECTION L50(L) WAS NOT APPLICABLE AND THEREFORE THE PROVISIONS OF SECTION 150(2) DON'T COME TO PLAY AT ALL. IF THE CASE OF THE ASSESSEE COULD BE REOPENED U/S 150(1), THE S AME COULD FURTHER BE RESTRICTED IN TERMS OF TIME AS PROVIDED FOR SECTION 150(2). SI NCE THE ASSESSEE'S CASE WAS OUT OF THE PURVIEW OF EXTENDED TIME AVAILABLE U/S 1 50(1), THE SAME COULD NOT BE REOPENED U/S 150(2) WHICH ONLY LIMITS THE EXTENDED TIME AVAILABLE U/S 150(1). THE HON'BLE ITAT CHANDIGARH *B' BENCH VIDE THEIR ORDER DATED 9/7/2012 HAS CONFIRMED THE ORDER OF THE UNDERSIGNED IN THE CASE OF ITO, WA RD-II(4) VS. SH. KULDEEP SINGH WHEREIN ON IDENTICAL FACTS THE ASSESSMENT FRA MED BY THE ASSESSING OFFICER WAS ANNULLED. IN THE CIRCUMSTANCES IT IS VERY CLEAR THAT THE CASE OF THE ASSESSEE COULD NOT BE REOPENED ON THE DATE OF ISSUE OF NOTIC E BY THE ASSESSING OFFICER IN VIEW OF PROVISIONS OF SECTION 149 OF THE I.T.ACT, 1961, THEREFORE THE ASSESSMENT FRAMED IN PURSUANCE OF TIME BARRED NOTICE IS INVALID AND V OID ABINITO. 4 7. THE REVENUE IS IN APPEAL AGAINST THE SAID FINDIN G OF THE CIT (APPEALS). 8. WE FIND THAT IDENTICAL ISSUE AROSE BEFORE THE TR IBUNAL IN ITO VS. SHRI KULDEEP SINGH (SUPRA) AND IT WAS HELD THAT THE CASE OF THE ASSESSEE COULD NOT HAVE REOPENED ON THE DATE OF ISSUE OF NOT ICE BY THE ASSESSING OFFICER IN THE LIGHT OF EXPRESSION PROVISIONS OF SE CTION 148 OF THE ACT. IT WAS FURTHER HELD THAT THE ASSESSING OFFICER COUL D NOT TAKE SHELTER UNDER THE PROVISIONS OF SECTION 150(2) OF THE ACT, AS THERE WAS NO FINDING OR DIRECTION ISSUED BY THE CIT (APPEALS), W HILE ANNULLING THE PROCEEDINGS UNDER SECTION 153C OF THE ACT. IN THE FACTS OF THE CASE AND REFERRED TO BY US IN THE PARAS HEREINABOVE, THE CIT (APPEALS) IN THE FIRST ROUND OF PROCEEDINGS HAD HELD THAT IN THE ABSENCE O F ANY DOCUMENT FOUND AND ASSESSED AT THE TIME OF SEARCH CONDUCTED UNDER SECTION 132(1) OF THE ACT, THE PROVISIONS OF SECTION 153C COULD NOT HAVE BEEN INVOKED BY THE ASSESSING OFFICER. CONSEQUENTLY, THE ASSESSMENT FR AMED UNDER SECTION 144/153C OF THE ACT WAS ANNULLED BY THE CIT (APPEAL S). THE ABOVE SAID ORDER OF THE CIT (APPEALS) REFLECTS THAT NO DIRECTI ON BEING GIVEN TO THE ASSESSING OFFICER WHICH WOULD SUGGEST THAT HE MAY P ROCEED TO REOPEN THE ASSESSMENT UNDER SECTION 148 OF THE ACT. IN TH E CIRCUMSTANCES THE PRESUMPTION OF THE ASSESSING OFFICER THAT THE PROVI SIONS OF SECTION 150(1) OF THE ACT WERE APPLICABLE TO THE FACTS OF T HE CASE, WAS MISPLACED. WE ARE IN CONFORMITY WITH THE ORDER OF THE CIT (APPEALS) AGAINST THE ORDER PASSED UNDER SECTION 143(3) R.W.S .148 OF THE ACT IN HOLDING THAT IN THE ABSENCE OF ANY DIRECTIONS GIVEN BY THE CIT (APPEALS) WHILE ANNULLING THE ASSESSMENT UNDER SECTION 144/15 3C OF THE ACT, THE PROVISIONS OF SECTION 150(1) OF THE ACT WERE NOT AP PLICABLE AND CONSEQUENTLY THE PROVISIONS OF SECTION 150(2) OF TH E ACT DID NOT COME INTO PLAY. IN VIEW THEREOF, THE CASE OF THE ASSESS EE COULD NOT BE 5 REOPENED BY THE ASSESSING OFFICER UNDER THE PROVISI ONS OF SECTION 149 OF THE ACT AND THE ASSESSMENT FRAMED WAS INVALID AND V OID ABINITO. IN VIEW THEREOF, UPHOLDING THE ORDER OF THE CIT (APPEALS) W E DISMISS THE GROUNDS OF APPEAL RAISED BY THE REVENUE. THE GROUN DS OF APPEAL RAISED BY THE REVENUE ARE THUS DISMISSED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF SEPTEMBER, 2013. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20 TH SEPTEMBER, 2013 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH