Rahul P. Merchand, V. ACIT,

ITA 1275/PUN/2004

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3206 (ITAT-PUNE)
• Duration Of Justice: 6 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 25-08-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY DAMLE
• Keywords: Block assessment
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI I.C.SUDHIR JM AND SHRI D. KARUNAKARA RA O AM I.T.A. NO. 1274//PN/2004 (BLOCK PERIOD: 1-4-1988 TO 28-4-1998) BRIJESH PRADEEP MERCHANT APPELLANT DEEPREKHA VARDHMAN NAGAR MALEGAON 423203(NASIK) PAN : NOT AVAILABLE VS. A.C.I.T, CIR -3, MALEGAON RESPONDENT I.T.A. NO. 1275//PN/2004 (BLOCK PERIOD: 1-4-1988 TO 28-4-1998) RAHUL PRADEEP MERCHANT APPELLANT DEEPREKHA VARDHMAN NAGAR MALEGAON 423203(NASIK) PAN : NOT AVAILABLE VS. A.C.I.T, CIR -3, MALEGAON RESPONDENT APPELLANT BY : SHRI NIKHIL PATHAK RESPONDENT BY : SHRI ABHAY DAMLE ORDER PER I.C. SUDHIR JM IN THESE APPEALS, THE ASSESSES HAVE QUESTIONED FIRS T APPELLATE ORDERS ON SEVERAL GROUNDS INCLUDING THE GROUND QUESTIONING TH E JURISDICTION OF A.O. 2. BESIDES, THE ASSESSES HAVE ALSO MOVED AN APPLICA TION FOR ALLOWING ADDITIONAL GROUNDS RAISED FOR ADJUDICATION OF THE TRIBUNAL. T HESE ADDITIONAL GROUNDS ARE AS UNDER : 1] THE ASST. U/S 158BD R.W.S 143(3) BE HELD NULL AN D VOID SINCE THE SATISFACTION NOTE U/S 158BD WAS RECORDED ON 1ST MA Y, 2000 I.E. AFTER THE COMPLETION OF THE BLOCK ASST. ON 28.04.2000 OF SHRI PRADIP MERCHANT, THE PERSON WHO WAS SEARCHED IN VIEW OF TH E SPL. BENCH DECISION OF ITAT, IN THE CASE OF SHRI MANOJ AGARWA L [113 ITD 377]. ITA NO. 1274 & 1275/PN/2004- BRIJESH P MERCHANT ETC., (SHRI VINOD KANTILAL SHAH) (BLOCK PERIOD 1.4.88 TO 28.4.98) , 2 2] THE ASSESSEE FURTHER SUBMITS THAT THE ASST. U/S 158BD R.W.S 143(3) IS NULL AND VOID SINCE THE NOTICE U/S 158BD IS SERVED AFTER THE COMPLETION OF THE BLOCK ASST. OF SHRI PRADIP MERCHANT, THE PER SON WHO WAS SEARCHED. 3. THE LD. A.R. SUBMITTED THAT THE ISSUES RAISED IN THE ADDITIONAL GROUNDS ARE LEGAL IN NATURE FOR ADJOURNMENT OF WHICH, NO FRESH MATERIAL OUTSIDE THE RECORD IS REQUIRED TO BE CONSIDERED BY THE TRIBUNAL. THE LD. D.R., ON THE OTHER HAND, OPPOSED THE APPLICATION WITH THIS SUBMISSION THAT NO SUCH GROUNDS WERE RAISED BEFORE THE LD CIT(A) AND THESE ADDITIONAL GROUNDS HAVE BEEN RAISED BEFORE THE TRIBUNAL AT VERY BELATED STAGE. 4. THERE IS NO DISPUTE THAT THE ISSUES RAISED IN TH E ABOVE STATED PROPOSED ADDITIONAL GROUNDS ARE LEGAL IN NATURE FOR ADJUDICA TION OF WHICH, NO FRESH MATERIAL OUTSIDE THE RECORD IS REQUIRED TO BE CONSIDERED BY THE TRIBUNAL. IT IS ALSO AN ESTABLISHED PROPOSITION OF LAW THAT A LEGAL ISSUE CAN BE RAISED EVEN BEFORE THE APPELLATE STAGE. WE, THUS, ALLOW THE APPLICATION FOR ADJUDICATION OF THE ABOVE STATED ADDITIONAL GROUNDS BY THE TRIBUNAL. SINCE I SSUES RAISED IN THE ADDITIONAL GROUNDS ARE LEGAL IN NATURE, WHICH GOES TO THE ROOT OF THE MATTER QUESTIONING THE VALIDITY OF THE ASSESSMENT ORDERS ITSELF, WE PREFER TO HEAR ARGUMENTS OF THE PARTIES ON THESE ADDITIONAL GROUNDS FIRST. 5. THE LD. A.R. CONTENDED THAT IN THE PRESENT CASE, THE ASSESSMENT U/S. 158BC IN THE CASE OF THE PERSONS SEARCHED HAS BEEN COMPL ETED ON 20.4.2010 AND NO SATISFACTION HAS BEEN RECORDED BY THE A.O BEFORE CO NCLUSION OF THE SAID ASSESSMENT U/S. 158BC TO INITIATE PROCEEDINGS U/S. 158BD OF THE ACT AGAINST THE PRESENT APPEALS. HE POINTED OUT THAT IN THE PRESENT CASE, SATISFACTION U/S. 158BD HAS BEEN RECORDED ONLY ON 01.5.2000 I.E. AFTER THE COMPLET ION OF BLOCK ASSESSMENT PROCEEDINGS U/S. 158BC ON 28.4.2000 IN THE CASE O F SHRI PRADIP MERCHANT, THE ASSESSMENT U/S. 158BD READ WITH SEC. 143(3) ASSESSM ENT ARE NULL AND VOID. HE, FURTHER, SUBMITTED THAT THE ASSESSMENTS U/S. 158 BD READ WITH SEC. 143(3) ARE ALSO ITA NO. 1274 & 1275/PN/2004- BRIJESH P MERCHANT ETC., (SHRI VINOD KANTILAL SHAH) (BLOCK PERIOD 1.4.88 TO 28.4.98) , 3 NULL AND VOID SINCE THE NOTICES U/S. 158BD HAVE BEE N SERVED UPON THE ASSESSEE AFTER THE COMPLETION OF THE BLOCK ASSESSMENT U/S. 158BC I N THE CASE OF SHRI PRADIP MERCHANT, THE PERSON WHO WAS SEARCHED. IN SUPPORT, THE LD. A.R. PLACED RELIANCE ON THE FOLLOWING DECISIONS : 1) MANOJ AGGARWAL V. DCIT (2008) 113 ITD 377 (DEL. ) (S.B) 2) HARPAL SINGH K. KOHLI V. ACIT, ITA NO. 1567/PN/ 2006 (BLOCK ASSESSMENT PERIOD 1.4.1989 TO 8.12.1999), ORDER D T. 15 TH APRIL 2009. 3) SHRI RAMCHANDRA MAHADEO PATIL V. ACIT, ITA NO. 583 /PN/2006 (BLOCK ASSESSMENT PERIOD 19.1.1992 TO 2001-02. 4) RAGHUBIR SINGH GARG V. ACIT (2009) 31 DTR (DEL ) (TRIB) 489. 6. THE LD. D.R., ON THE OTHER HAND, TRIED TO JUSTIF Y THE ORDERS OF THE LOWER AUTHORITIES. HE SUBMITTED THAT SUCH SATISFACTION H AS BEEN RECORDED ONLY AFTER 3 DAYS OF ASSESSMENT U/S. 158(BC) OF THE ACT. HE SUBMITTE D FURTHER THAT AS PER THE PROVISIONS OF SUB-SECTION (2A) TO SEC 39 OF THE ACT , THE DELAY BEYOND 60 DAYS ONLY IS TIME BARRED. 7. CONSIDERING THE ABOVE SUBMISSIONS, WE FIND SUBST ANCE IN THE ABOVE CONTENTION OF THE LD. A.R. WHICH IS WELL SUPPORTED WITH THE DECISIONS RELIED UPON BY HIM. IN THE CASE OF MANOJ AGGARWAL V. DCIT (SUPRA) BEFORE THE SPECIAL BENCH OF THE TRIBUNAL, IT HAS BEEN HELD THAT FOR INITIATING ANY ACTION U/S. 158BD, FIRST AND FOREMOST REQUIREMENT IS THAT A.O FRAMING THE BLOCK ASSESSMENT IN CASE OF PERSON SEARCHED, HAS TO BE SATISFIED THAT UNDISCLOSED INCO ME DETECTED BELONGS TO SOME PERSONS, OTHER THAN PERSON SEARCHED AND THUS, SECT ION ITSELF, CONTEMPLATES SATISFACTION ON PART OF A.O MAKING ASSESSMENT IN CA SE OF PERSON SEARCHED; RECORDING OF SATISFACTION IS MANDATORY AND IMPERATIVE BEFORE ASSUMPTION OF JURISDICTION U/S. 158BD. IT HAS BEEN FURTHER HELD THAT NOTE OF SATIS FACTION MUST CONTAIN A POSITIVE FINDING BY A.O MAKING ASSESSMENT U/S. 158BC, INDIC ATING THEREIN UNDISCLOSED INCOME FOUND AS A RESULT OF HIS EXAMINATION OF SEIZ ED MATERIAL AND PERSON TO WHOM SUCH INCOME BELONGS. THE SPECIAL BENCH HAS FURTHER HELD THAT TIME LIMIT SET OUT IN ITA NO. 1274 & 1275/PN/2004- BRIJESH P MERCHANT ETC., (SHRI VINOD KANTILAL SHAH) (BLOCK PERIOD 1.4.88 TO 28.4.98) , 4 SEC. 158BC AUTOMATICALLY APPLIES FOR INVOKING PROVI SIONS OF SEC. 158BD AND IT IS FOR THIS REASON THAT PARLIAMENT DID NOT FIND IT NECESSA RY TO SPECIFY A SEPARATE TIME LIMIT FOR SAME AS ENACTMENT ITSELF SHOWS THAT BOTH SECTI ONS 158BC AND 158BD ARE INTER- LINKED, INTER-LACED AND INTERMINED AND BOTH FORMED PART AND PARCEL OF SAME CHAPTER. IN ITS RECENT DECISIONS, THE DELHI BENCH OF THE TRI BUNAL IN THE CASE OF RAGHUBIR SINGH GARG V. ACIT (SUPRA) HAS HELD THAT UNDISPUTEDLY IN THAT CASE THE ASSESSMENT OF M.A. WAS COMPLETED U/S. 158BC ON 29.8.2002, THERE AFTER, THE A.O THEREIN HIMSELF BECAME FUNCTIOUS OFFICIO AND WAS LEGALLY UNDER A DISPARITY TO RECORD ANY SATISFACTION TO THE EFFECT THAT ANY UNDISCLOSED INC OME BELONGED TO G.K. THEREAFTER, THE LETTER WRITTEN ON 23.01.2003 BY THE DY C.I.T, WHO WAS THE A.O HAVING JURISDICTION OVER M.A. CANNOT BE CONSTRUED TO BE T HE SATISFACTION AS REQUIRED BY SEC. 158 BD SINCE IT WAS MUCH AFTER THE COMPLETION OF BL OCK ASSESSMENT OF M.A. AN IDENTICAL ISSUE HAS BEEN DECIDED BY PUNE BENCH OF T HE TRIBUNAL IN THE CASE OF SHRI RAMCHANDRA MAHADEO PATIL (SUPRA), RELEVANT PARA NO. 7 THEREOF IS BEING REPRODUCED BELOW FOR READY REFERENCE : 7. WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE RIVAL CONTENTIONS AS ALSO THE MATERIAL ON RECORD, FACTUAL MATRIX OF THE CASE AND THE APPLICABLE LEGAL POSITION. WE FIND THAT THE PLEA OF THE ASSESSEE IS INDEED, WELL TAKEN. THE ISSUE IS NO LONGER RES INTEGRA AS THE LD. COUNSEL R IGHTLY POINTS OUT THAT THAT THE FIVE MEMBER BENCH OF THE TRIBUNAL IN THE CASE OF MA NOJ AGGARWAL VS. DCIT CENTRAL CIR, 3 NEW DELHI (2008) 113 ITD 377 (DEL)( SB) HAS HELD THAT THE SATISFACTION FOR THE PURPOSE OF INITIATING PROCEEDI NGS U/S 158BD HAS TO BE RECORDED BEFORE COMPLETION OF THE RELEVANT ASSESSME NT OF THE SEARCHED PERSON. THERE IS NO DISPUTE THAT IN THE PRESENT CA SE, THE ASSESSMENT OF THE SEARCHED PERSON WAS COMPLETED ON 26-11-2002 WHEREAS THE SATISFACTION HAS BEEN RECORDED ON 10-1-2003. IN THESE CIRCUMSTANCES AND IN THE LIGHT OF THE DECISION OF THE SPECIAL BENCH IN THE CASE OF MANOJ AGGARWAL (SUPRA), THE IMPUGNED BLOCK ASSESSMENT IS INDEED LEGALLY INVALID . WE, THEREFORE, VACATE THE IMPUGNED BLOCK ASSESSMENT. AS WE ARE VACATING THE IMPUGNED ASSESSMENT ORDER ON THE GROUND OF JURISDICTION, WE SEE NO NEED TO ADDRESS OURSELVES TO THE MERITS OF THE CASE. ITA NO. 1274 & 1275/PN/2004- BRIJESH P MERCHANT ETC., (SHRI VINOD KANTILAL SHAH) (BLOCK PERIOD 1.4.88 TO 28.4.98) , 5 9. IN THE PRESENT CASE BEFORE US, UNDISPUTEDLY, THE SATISFACTION NOTE FOR INITIATING THE ACTION U/S. 158BD OF THE ACT IN THE CASE OF APP ELLANTS HAS BEEN ISSUED BY DY CIT, CENTRAL CIRCLE 13, MUMBAI ON 01.5.2000, AND AC CORDINGLY NOTICES U/S. 158BD TO THE APPELLANTS HAVE BEEN ISSUED BY DY C.I.T., CIR. 3, MALEGAON ON 12.5.2000. IT IS ALSO UNDISPUTED FACT THAT ASSESSMENT U/S. 158BC IN THE CASE OF THE PERSON SEARCHED HAS BEEN COMPLETED ON 28.4.2000. THUS, ADMITTEDLY, SATISFACTION NOTE TO INITIATE PROCEEDINGS U/S. 158BD AGAINST THE APPELLANTS HAS B EEN RECORDED BY THE A.O AFTER COMPLETION OF ASSESSMENT U/S. 158BC IN THE CASE OF THE PERSONS SEARCHED. WE, THUS, RESPECTFULLY FOLLOWING ABOVE CITED DECISIONS BY THE LD. A.R., HOLD THAT THE ASSESSMENTS FRAMED U/S 158 BD READ WITH SECTION 143 (3) OF THE ACT IN THE CASE OF THE APPELLANTS ARE NULL AND VOID . THE ISSUE RAISE D IN ADDITIONAL GROUND NO. 1 IS THUS DECIDED IN FAVOUR OF THE ASSESSES. THIS GROUND IS ACCORDINGLY ALLOWED. IN VIEW OF THE DECISION TAKEN IN THIS ADDITIONAL GROUND, REMAI NING ADDITIONAL GROUND AND GROUNDS DO NOT REQUIRE SEPARATE ADJUDICATION AS THE SAME HAVE BECOME ACADEMIC ONLY. THESE GROUNDS ARE ACCORDINGLY DISMISSED AS H AVING BECOME INFRUCTUOUS. THE APPEALS ARE ACCORDINGLY ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON OCT OBER, 2010 SD/- SD/- (D. KARUNAKARA RAO) (I.C.SUDHIR) ACCOUNTANT MEMBER JUDICI AL MEMBER PUNE DATED THE 28TH OCTOBER , 2010 THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 28-10- 2010 SD/- SD/- (G.S. PANNU) (I.C. SUDHIR) A.M J.M US COPY OF THE ORDER IS FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A)- II, NASHIK, 4. CIT RANGE-3, NASHIK ITA NO. 1274 & 1275/PN/2004- BRIJESH P MERCHANT ETC., (SHRI VINOD KANTILAL SHAH) (BLOCK PERIOD 1.4.88 TO 28.4.98) , 6 5. D.R. ITAT A BENCH 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, PUNE BENCHES, PUNE