ITO 1(1)(2), MUMBAI V. M/s. CITY WALK SHOES P. LTD, MUMBAI

ITA 4113/MUM/2008

• Counselvise Citation: 411319914 RSA 2008
• Duration Of Justice: 5 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-09-2013
• Assessment Year: 1998-1999
• Appeal Filed On: 09-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C TRIPURA SUNDARI
• Assessee Lawyers: P J PARDIWALA
• Keywords: Search and seizure; Competent authority; Reason to believe; Reassessment proceedings
• Section: 143(3); 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C , BENCH , MUMBAI , BEFORE SHRI R.K.GUPTA , J M & SHRI R AJENDRA SINGH , A M TA NO. 4113 / MUM / 20 08 ( ASSESSMENT YEAR : 1998 - 99 ) ITO 1(1)(2), MUMBAI - 20 VS. CITY WALK SHOES PVT. LTD., 33, CITY WALK HOUSE, COLABA CAUSEWAY, COLABA, MUMBAI - 39. PAN/GIR NO. : A A ACC 1951 F ( APPELLANT ) .. ( RESPONDENT ) /REVENUE BY : MS. C. TRIPURA SUNDARI /ASSESSEE BY : SHRI P.J.PARDIWALA & SHRI HARESH P. SHAH DATE OF HEARING : 5 TH S E PTEMBER , 201 3 DATE OF PRONOUNCEMENT : 4 TH OCTO BER , 2013 O R D E R P ER SHRI R.K.G UPTA, JM : THE DEPARTMENT HAS PREFERRED THIS APPEAL AGAINST THE ORDER OF LEARNED CIT(A) , MUMBAI FOR ASSESSMENT YEAR 1998 - 99 . 2 . INITIALLY, AT THE TIME OF FILING APPEAL BEFORE THE TRIBUNAL, THE DEPARTMENT HAD RAISED VARIOUS GROUNDS OF APPEAL. THEREAFTER THE CONCISE GROUND WAS ASKED TO FILE AND THE DEPARTMENT FILED THE FOLLOWING CONCISE GROUND, WHICH ARE AS UNDER : - I. ON THE FAC TS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE ASSESSEES APPEAL WITHOUT APPRECIATING THE FACT THAT THE IMMUNITY UNDER THE VDIS 1997 WAS NOT AVAILABLE TO ASSESSEE WITHIN THE MEANING OF PROVISIONS OF SECTION 78(B) OF VDIS 1997. II. ON THE FACTS AND IN THE C IRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN QUASHING THE NOTICE ISSUED U/S.148 OF THE I.T.ACT, 1961. I TA N O. 4113 / 08 2 3 . SUCCINCTLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE HAD NOT FILED ANY RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. TH EREAFTER NOTICE UNDER SECTION 148 WAS ISSUED ON 31 - 3 - 2005 AFTER RECORDING REASONS. THE REASONS RECORDED BY THE AO HAS BEEN REPRODUCED IN THE ORDER OF CIT(A) AT PAGE 1 & 2. IN RESPONSE TO NOTICE ISSUED UNDER SECTION 148 , THE ASSESSEE FILED RETURN ON 11 - 5 - 20 05 DECLARING A NET LOSS OF RS. 10,970/ - . COPY OF THE BALANCE SHEET WAS ALSO ENCLOSED ALONG WITH THE RETURN. RESERVES & SURPLUS SHOWN IN THE BALANCE SHEET HAS ALSO BEEN REPRODUCED IN THE ORDER OF CIT(A) IN PARA 5.2. AFTER EXAMINING THE BALANCE SHEET THE AO NOTICED THAT THE ASSESSEE HA D MADE DECLARATION UNDER VDIS AT RS.1,49,12,000/ - AND HA D PAID TAX ALSO. THE AO ASKED THE ASSESSEE TO FURNISH THE DECLARATION UNDER VDIS, PROOF OF PAYMENT OF TAX, SOURCE OF PAYMENT WITH REL EVANT BANK STATEMENT AND EXPLAINING FOR SOURCE IN RESPECT OF THE VDIS DECLARATION. THE CERTIFICATE ISSUED BY THE CIT ACCEPTING THE DECLARATION UNDER VDIS WAS ALSO ASKED FOR. THE AO ASCERTAINED THAT THE ECONOMIC OFFENCES WING, CRIME BRANCH OF MUMBAI POLICE REGISTERED CRIMINAL CASES U/S.420,465 AN D 120B OF INDIAN PENAL CODE AGAINST VARIOUS PERSONS , WHO WERE INVOLVED IN THE FRAUDULENT OPERATIONS OF LEATHER COOPERATIVE SOCIETIES WHICH IS WELL KNOWN AS COBBLER SCAM OR SHOE SCAM. THE ASSESSEE WAS ALSO REQUIRED TO EXPLAIN AS TO HOW HE WAS ENTITLED FOR T HE BENEFIT UNDER VDIS UNDER SECTION 78(B) OF THE SCHEME. THE CONTENTS OF THE SHOW CAUSE NOTICE ISSUED BY THE AO HAS ALSO BEEN REPRODUCED IN THE ORDER OF CIT(A) AT PAGE 3. IN REPLY, THE ASSESSEE PRODUCED COPY I TA N O. 4113 / 08 3 OF VDIS CERTIFICATE ON 19 - 3 - 1998 ISSUED BY THE C IT. IT WAS FURTHER EXPLAINED THAT SECTION 78(B) DOES NOT DISENTITLE ANY PERSON FROM DECLARATION UNDER VDIS SCHEME. THERE IS A BAR FOR PERSONS COVERED UNDER CLAUSE (A) AND (C) BUT NOT ON THE PERSONS COVERED UNDER CLAUSE (B) OF VDIS SCHEME. THE CERTIFICATE I SSUED UNDER SECTION 68(2) CANNOT BE INVALIDATED AND INCOME OF RS. 1,49,12,000/ - CANNOT BE BROUGHT UNDER THE TAX UNDER THE GUISE OF REASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 1998 - 99 AS THE AMOUNT IS QUANTIFIED AND OFFERED UNDER VDIS PERTAINING TO ASSESSME NT YEAR 1990 - 91 TO 1996 - 97. HOWEVER, THE AO DID NOT AGREE WITH THE INTERPRETATION OF SEC.78 MADE BY THE ASSESSEE . HE INFORMED THE ASSESSEE THAT THE BENEFIT OF VDIS - 97 IS NOT AVAILABLE IN CERTAIN CIRCUMSTANCES AS GIVEN IN SECTION 78 TO THOSE PERSONS , WHO AR E COVERED UNDER THIS SECTION. HE FURTHER MENTIONED THAT THE LETTER AND SPIRIT OF VDIS - 97 CATEGORICALLY WANTS TO DENY THE BENEFITS OF THE SCHEME TO CERTAIN TYPE OF PERSONS COVERED IN RELATION TO PROSECUTION FOR ANY OFFENCE PUNISHABLE UNDER CHAPTER IX OR CHA PTER VII OF INDIAN PENAL CODE. THE AO ALSO MADE ENQUIRY FROM ECONOMIC OFFENCES WING AS TO WHETHER ANY FIR HAS BEEN REGISTERED AGAINST THE ASSESSEE I.E. CITY WALK SHOES PVT. LTD.. IT WAS INFORMED THAT THE CHARGE SHEET HAS BEEN FILED AGAINST ABU SHAHID AZMI, NASIR JAMAL SHAIKH & ABU ASIM AZMI UNDER VARIOUS SECTIONS OF THE INDIAN PENAL CODE. THEREAFTER THE AO ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE ASKING AS TO WHY THE BENEFIT UNDER SECTION VDIS SHOULD NOT BE CONSIDERED AS VOID AB INITIO IN VIEW OF THE SECT ION 78(B) OF VDIS - 97. THE ASSESSEE RAISED ITS I TA N O. 4113 / 08 4 OBJECTION TO THE AFORESAID PROPOSAL. IT WAS ARGUED THAT CLAUSE (A) & (C) ARE PROHIBITORY CLAUSES BUT THE SAME IS NOT THE CASE FOR CLAUSE (B) OF SECTION 78 OF VDIS. THE ASSESSEE FILED AN AFFIDAVIT SIGNED BY THE DIRECTOR MR. NASIR JAMAL SHAIKH STATING THAT ON THE DATE OF DECLARATION I.E. 31.12.1997, THERE WAS NO PROSECUTION FILED OR PENDING AGAINST THE ASSESSEE COMPANY. IT WAS FURTHER STATED THAT THE DATE OF CHARGE SHEET FILED IS 9 - 6 - 1998 AND HENCE, IT WAS AFTER THE DECLARATION OF 31 - 12 - 1997 & THE VDIS CERTIFICATE ISSUED BY THE CIT, DATED.19 - 3 - 1998. HOWEVER, THE AO WAS NOT SATISFIED WITH THE REPLY. ACCORDINGLY HE HELD THAT THE PROSECUTION HAS COMMENCED ON THE DATE OF REGISTRATION OF CR CASE NO. 95/96 ON 10 - 9 - 1996, AND, THEREFORE, THE ASSESSEE WAS INVOLVED IN A RELATION OF OFFENCE PUNISHABLE UNDER CHAPTER XVII OF IPC ON THE DATE OF DECLARATION. HENCE, SECTION 78(B) OF VDIS 97 IS CLEARLY ATTRACTED. SINCE THE DECLARATION WAS VOID, THE AMOUNT OF INCOME UNDER THE VDIS AM OUNTING TO RS. 1,49,12,000/ - IS TO BE BROUGHT TO TAX UNDER THE NORMAL PROVISIONS OF THE INCOME TAX ACT.. THE ASSESSEE HAS ALSO SUBMITTED A DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF M/S UMA CORPORATION, DECIDED IN WRIT PETITION NO. 531 OF 2006, VIDE DATED 14 - 3 - 2006 . THE AO HELD THAT THE DECISION IS NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE AS IN THAT CASE THE DECLARATION WAS NOT FOUND TO BE VOID AB INITIO . ACCORDINGLY, HE DID NOT ACCEPT THE DECISION. FINALLY , HE BROUGHT THE AMOUNT OF R S. 1,49,12,000/ - TO TAX FOR THE YEAR UNDER CONSIDERATION. I TA N O. 4113 / 08 5 4 . THE ASSESSEE CHALLENGED THE ADDITION AS WELL AS REOPENING OF THE ASSESSMENT BEFORE THE CIT(A) . DETAILED SUBMISSIONS WERE FILED. THE CONTENTIONS RAISED BEFORE THE AO WERE REITERATED BEFORE THE CI T(A) . RELIANCE WERE PLACED ON THE DECISION OF HON BLE BOMBAY HIGH COURT IN THE CASE OF M/S UMA CORPORATION (SUPRA) AND THE DECISION IN THE CASE OF RAFIQUE A. MALLIK VS. DCIT, DECIDED IN WRIT PETITION NO. 869 OF 2006 . ACCORDINGLY, IT WAS STATED THAT IN BOT H THESE CASES, THE HON BLE BOMBAY HIGH COURT HAS HELD THAT ISSUANCE OF NOTICE UNDER SECTION 148 WAS BAD IN LAW AND, HENCE, THE ASSESSMENT COMPLETED WERE CANCELLED. AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, LEARNED CIT(A) FOUND T HAT THE AO WAS NOT JUSTIFIED IN REOPENING OF THE ASSESSMENT AS WELL AS MAKING ADDITION IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, THE GROUND OF THE ASSESSEE WAS ALLOWED. AGGRIEVED THEREBY , THE DEPARTMENT IS IN APPEAL HERE BEFORE THE TRIBUNAL. 5 . LEARNE D DR, FIRSTLY, PLACED RELIANCE ON THE ORDER OF AO. IT WAS FURTHER SUBMITTED THAT IT WAS THE DUTY OF THE ASSESSEE TO INFORM THE AO THAT HE HAS FILED DECLARATION, HOWEVER, IT WAS NOT INFORMED TO THE AO AS NO RETURN WAS FILED FOR THE YEAR UNDER CONSIDERATION. AFTER EXAMINING THE BALANCE SHEET FILED IN RESPONSE TO THE NOTICE UNDER SECTION 148, THE AO FOUND THAT THE DECLARATION IS VOID AB INITIO AND, THEREFORE, THE AO WAS CORRECT IN BRINGING THE AMOUNT OF DECLARATION TO TAX WHILE COMPLETING THE ASSESSMENT. PART OF THE ORDER OF THE AO WAS READ BY THE LEARNED DR ALSO. I TA N O. 4113 / 08 6 6 . PER CONTRA , LEARNED COUNSEL OF THE ASSESSEE STATED THAT LEARNED CIT(A) HAS PASSED A VERY REASONABLE ORDER. IT WAS SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HON BLE HIGH COURT. PART OF THE ORDER OF THE HON BLE JURISDICTIONAL HIGH COURT WAS READ ALSO, COPY OF WHICH IS PLACED AT PAGE 54 OF THE PAPER BOOK. IT WAS ALSO SUBMITTED THAT NEITHER ANY PROSECUTION WAS PENDING NOR ANY CHARGE SHEET FILED AGAINST THE ASSESSEE BEFORE FI LING THE DECLARATION UNDER VDIS - 97. ATTENTION OF THE BENCH WAS DRAWN ON VARIOUS EVIDENCES PLACED ON RECORD. THE PROVISION OF SECTION 78(B) WAS ALSO EXPLAINED. ATTENTION OF THE BENCH WAS ALSO DRAWN ON PAGE 48 OF THE PAPER BOOK,, WHERE COPY OF FIR IS PLACED AND IT WAS STATED THAT IN THIS FIR NAME OF THE ASSESSEE IS NOT MENTIONED. SIMILARLY, VARIOUS OTHER EVIDENCES WERE ALSO BROUGHT TO THE KNOWLEDGE OF THE BENCH , COPIES OF WHICH ARE PLACED ON RECORD. A COPY OF CHARGE SHEET DATED 9 - 5 - 98 FILED IS PLACED AT PAGE 50, WHEREAS THE DECLARATION WAS FILED ON 31 - 12 - 1997. AFFIDAVIT OF ABU ASIM AZMI, ONE OF THE DIRECTOR OF THE ASSESSEE COMPANY , IS PLACED AT PAGE 51, WHEREBY IT WAS STATED THAT NO PROSECUTION WAS LAUNCHED AGAINST THE ASSESSEE REGARDING COBBLER SCAM OR ANY OT HER MATTER. COPY OF THE DECISION IN THE CASE OF M/S UMA CORPORATION (SUPRA) IS PLACED AT PAGE S 52 TO 55. COPY OF THE DECISION IN THE CASE OF RAFIQUE A. MALLIK (SUPRA) IS PLACED AT PAGES 55 TO 57. C OPIES OF RELEVANT PROVISION OF VDIS SCHEME ARE PLACED AT PA GES 82 TO 87. LEARNED COUNSEL OF THE ASSESSEE EXPLAINED THESE PAPERS AND IT WAS SUBMITTED THAT AFTER GOING THROUGH ALL THESE PAPERS, IT IS AMPLY PROVED THAT NO I TA N O. 4113 / 08 7 PROSECUTION PROCEEDING WAS STARTED AGAINST THE ASSESSEE COMPANY BEFORE THE DECLARATION UNDER VDI S - 97 , WHICH WAS FILED ON 31 - 12 - 1997 AND LEARNED CIT HAS ISSUED CERTIFICATE UNDER SECTION 68(2) ON 9 - 3 - 1998. ACCORDINGLY, IT WAS SUBMITTED THAT THE AO HAS NO POWER TO HOLD THAT THE CERTIFICATE ISSUED BY THE CIT WAS NOT FOLLOWED OR DECLARATION FILED UNDER VD IS SCHEME - 97 WAS VOID AB INITIO . THEREFORE, IT WAS SUBMITTED THAT THE CIT(A) WAS CORRECT IN HOLDING THAT REOPENING AS WELL AS ADDITION MADE, WERE NOT CORRECT. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED THEM CAREFULLY. AFTER CONSIDERING THE SUBMIS SIONS AND PERUSING THE MATERIAL ON RECORD, WE FIND NO INFIRMITY IN THE FINDINGS OF THE LEARNED CIT(A). LEARNED CIT(A) HAS DECIDED THE ISSUE AFTER TAKING INTO CONSIDERATION ALL THE ASPECTS OF THE CASE AND FOLLOWING THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF UMA CORPORATION (SUPRA) AND IN THE CASE OF RAFIQUE A. MALLIK (SUPRA) . THE FINDINGS O F THE LEARNED CIT(A) HAVE BEEN RECORDED IN PARA 5.13 TO 5.20 AT PAGES 8 TO 12, WHICH ARE AS UNDER : - 5.13 I HAVE CAREFULLY CONSIDERED THE SUBMIS SIONS OF THE LD.AR AND GONE THROUGH THE ASSESSMENT ORDER AND OTHER DOCUMENTS AND COURT DECISIONS BROUGHT ON RECORD. THE APPELLANT HAD NOT FILED THE RETURN OF INCOME. AT THE TIME OF INITIATING PROCEEDINGS U/S. 148 THE ASSESSING OFFICER DID NOT HAVE THE INFO RMATION FROM THE POLICE REGARDING THE STEPS TAKEN IN RESPECT OF THE COBBLERS SCAM. THE REASONS RECORDED FOR ISSUE OF NOTICE U/S. 148 WAS THAT THE APPELLANT HAS NOT FILED A RETURN OF INCOME FOR THE AY:1998 - 98. THE AO FURTHER REFERRED TO THE INCOME RETURNED FOR AY:1991 - 92 TO 1997 - 98 AND FURTHER TO THE INCOME RETURNED FOR THE AY:2002 - 03 . ON THE BASIS O F THIS RETURNED INCOME FOR EARLIER YEARS THE AO BELIEVED TH A T THE COMPANY IS HAVING INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND HE PRESUMED THAT TH IS MAY AMOUNT TO RS. 1 LAC OR MORE FOR AY - 199899 WITHIN THE MEANING OF EXPLANATION 2 TO SECTION 147. THE AO HAD NO SPECIFIC ITEM OF I TA N O. 4113 / 08 8 ESCAPED INCOME IN HIS MIND. ONLY BECAUSE THERE WAS INCOME RANGING RS.30,880/ - TO RS.81,360/ - IN 1990 - 91 & 1995 - 96 AND ALSO T HAT THE DECLARED INCOME FOR 2002 - 03 WAS RS.9,69,280/ - , THE AO PRESUMED THAT THERE MAY BE TAXABLE INCOME WHICH MAY BE ABOVE RS. 1 LAC DURING THIS YEAR. THIS WAS THE REASON TO BELIEVE OF THE AO TO ISSUE NOTICE U/S. 148. HOWEVER THE RETURNED INCOME IN THE IMM EDIATELY PRECEDING YEAR 1997 - 98 WAS RS.18,400 WHICH WAS ASSESSED U/S. 143(3) AS NIL. ONLY AFTER REOPENING THE ASSESSMENT AND DURING THE COURSE OF THE REASSESSMENT PROCEEDINGS, THE AO GOT THE LETTER FROM THE SR. INSPECTOR OF POLICE, EOW. IN THE RETURN FILED BY THE APPELLANT IN RESPONSE TO THE NOTICE U/S. 148 THE APPELLANT HAD DISCLOSED AN AMOUNT OF RS. 1,49,12,000/ - UNDER RESERVES AND SURPLUS BEING THE AMOUNT DECLARED UNDER VDIS - 1997. THE AO HAS ADDED THIS AMOUNT TO COMPUTE THE ASSESSED INCOME FOR THIS YEAR. FOR DOING SO HE HAS NULLIFIED THE VDIS DECLARATION MADE BY THE APPELLANT. SO W HET H ER THE SUM OF RS.1,49, 12,000/ - , C ONSTITUTED INCOME FOR THE AY - 1998 - 99 OR NOT CAN BE DECIDED ONLY WITH REFERENCE T O THE VDIS DECLARATION. THE APPELLANT HAD MADE A DECLARATION UNDER VDIS SCHEME FOR WHICH A CERTIFICATE WAS ISSUED BY THE COMMISSIONER OF INCOME - TAX U/S. 68(2) OF THE VDIS SCHEME. SINCE THE APPELLANT HAS FULFILLED THE CONDITIONS MENTIONED U/S. 68(1) OF THE SCHEME, AS PER LAW THIS VOLUNTARY DISCLOSED INCOME SHALL NOT BE INCLUDED IN IS TOTAL INCOME FOR ANY AY UNDER THE INCOME - TAX ACT. THE CERTIFICATE ISSUED BY THE CIT U/S. 68(2) IS STILL IN OPERATION AND HAS NOT BEEN WITHDRAWN OR DECLARED VOID OTHERWISE BY ANY AUTHORITY. THE AO HAS REFERRED TO SEC.78(B) OF THIS SCHEME TO DENY THE APPELLANT THE IMMUNITY OF THE VDIS SCHEME. A CORRECT READING OF THE RELEVANT PROVISION WILL BE AS UNDER: 78. TH E PROVISIONS OF THIS SCHEME SHALL NOT APPLY - (B) IN RELATION TO PROSECUTION FOR ANY OFFENCE PUNISHABLE UNDER CHAPTER IX OR CHAPTER XVII OF THE INDIAN PENAL CODE OF 1860) THE NARCOTIC DRUGS & PSYCHOTROPIC SUBSTANCES ACT, 1985 (61 OF 1985), THE TERRORISTS AND DISRUPTIVE ACTIVITIES (PREVENTION) ACT 1987 (28 OF 1987), THE PREVENTION OF CORRUPTION ACT, 1988 (49 OF 1988) OR FOR THE PURPOSE OF ENFORCEMENT OF ANY CIVIL LIABILITY; 5.14 AS I UNDERSTAND , THE MEANING OF THE PROVISION IS ONLY THAT THE IMMUNITY GRANTED BY THE VDIS SCHEME CANNOT BE EXTENDED TO PROSECUTION FOR CERTAIN OFFENCES PUNISHABLE UNDER THE INDIAN PENAL CODE; NDPS ACT, 1985; T ADA; PREVENTION OF CORRUPTION ACT, 1988 OR FOR THE PURPOSE OF ENFORCEMENT OF ANY CIVIL LIABILITY. SO THE IMMUNITY DENIED TO THE DECLARANT UNDER VDIS IS IN RESPECT OF PROSECUTION UNDER THESE ACTS. TO MY MIND THIS WILL NOT BE APPLICABLE TO THE IMMUNITY AGAIN ST RE ASSESSMENT OF THE INCOME DECLARED IN ONE YEAR, AGAIN IN ANOTHER ASSESSMENT YEAR, WHICH IS GRANTED BY SEC. 68(1) OF THE VDIS SCHEME. 5.15 EVEN IF IT IS ACCEPTED THAT PROSECUTION UNDER IPC AND THE OTHER ACTS MENTIONED U/S. 78(B) WILL DENY THE DECLARAN T THE BENEFITS OF THIS SCHEME, THE ISSUE FOR CONSIDERATION IS WHETHER THIS IS A PROHIBITION FROM FILING A DECLARATION OR A CONDITION FOR DISQUALIFICATION OF THE I TA N O. 4113 / 08 9 DECLARATION ALREADY MADE. IF IT IS A PROHIBITION FROM ACCEPTING A DECLARATION THEN THE COMMISSI ONER WOULD HAVE ASCERTAINED THE ISSUE BEFORE ACCEPTING THE DECLARATION. SINCE HE HAS ACCEPTED THE DECLARATION , IT IS TO BE PRESUMED THAT THE APPELLANT WAS NOT PROHIBITED FROM MAKI N G A DECLARATION AND THAT THE COMMISSIONER WAS FULLY SATISFIED REGARDING THE DECLARATION SO MADE. ON THE OTHER HAND IF IT IS INTERPRETED, AS THE AO HAS DONE, THAT ANY PROSECUTION UNDER IPC AND THE OTHER ACTS NULLIFIES THE DECLARATION MADE UNDER VDIS, THEN THE FACTS HAVE TO BE VERIFIED TO FIND OUT WHETHER AT THE TIME OF MAKING THE DECLARATION THE APPELLANT WAS FACING ANY SUCH PROSECUTION . 5.16 NOW COMING TO THE FACTS RELATING TO THE PROSECUTION UNDER IPC, THE ONLY SOURCE OF THE AOS INFORMATION IS THE LETTER DTD 01.03.2006 RECEIVED FROM THE SENIOR INSPECTOR, EOW. AS PER THIS LETTER A CASE WAS REGISTERED UNDER CR NO.95/96 ON 10.9.1996. IT IS NOT MENTIONED AGAINST WHOM THE CASE WAS REGISTERED. HOWEVER THE COPY OF THE FIR IN CR NO.95/96 DTD. 10.9.96 SUBMITTED BY THE APPELLANT HAS CLEARLY MENTIONED THE NAMES OF THE ACCUSED AND SUSPECTS, AT COLUMN NO. 4 AND 5, WHICH IS AS FOLLOWS: 1. SADRUDDIN DAYA OF DAWOOD SHOES PVT LTD 2 RAFIQUE MALIK OF METRO SHOES PVT LTD 3 RATIQUE TEJANI M.D.METRO SHOES PVT LTD 4 KISHOR SIGNAPURKAR OF MILANO SHOES PVT LTD AND OTHERS. IT IS VERY CLEAR THAT THE FIR REGISTERED ON 10.9.1996 WAS NOT AGAINST THE APPELLANT OR ITS DIRECTORS. SO IT CANNOT BE HELD THAT THEY FACED PROSECUTION FROM THIS DATE. 5.17 A CHARGESHEET WAS FILED ONLY ON 9.6.1998 AGAINST A NUMBER OF PERSONS INCLUDING TWO DIRECTORS OF THE APPELLANT COM PANY. SO THE LIABILITY FOR PROSECUTION OF THE ASSESSEE CAN ONLY BE CONSIDERED WITH EFFECT FROM THIS DATE. IT IS ECESSARY TO REMEMBER HER THAT THE CASE WAS REGISTERED IN RESPECT OF THE COBBLERS SCAM WHICH WAS NOT SPECIFICALLY AGAINST THE APPELLANT COMPANY BUT DUBIOUS PRACTICE DONE BY SAME SHOE MANUFACTURERS. THE NATIONALISED BANKS AND COOPERATIVE BANKS PROVIDED LOAN AT CHEAPER RATES TO COBBLERS. SOME BIG MANUFACTURERS HAD OBTAINED SUCH CHEAP LOANS BY FLOATING BOGUS COOPERATIVES OF COBBLERS. AFTER INVESTIGAT ING THE COMPLAINT THE CHARGESHEET HAS BEEN FILED AGAINST CERTAIN PERSONS INCLUDING THE DIRECTORS OF THE APPELLANT COMPANY. SO THE LIABILITY FOR PROSECUTION OF THE APPELLANT ARISES ONLY WHEN CHARGESHEET HAS BEEN FILED ON 9.6.1998. AS AGAINST THIS THE APPELL ANT FILED ITS VDIS DECLARATION ON 31.12.1997 AND THE DECLARATION HAS BEEN ACCEPTED AND THE COMMISSIONER HAS ISSUED HIS CERTIFICA TE ON 19TH MARCH, 1998. SO WHEN THE APPELLANT FILED ITS VDIS DECLARATION AND WHEN IT WAS ACCEPTED THE CIT THE APPELLANT WAS NOT FACING ANY PROSECUTION UNDER THE IPC OR OTHER ACTS SPECIFIED U/S. 78(B). 5.18, AS HAS BEEN BROUGHT TO MY NOTICE BY THE LD.AR OF THE APPELLANT, SIMILAR ISSUE HAS BEEN ALREADY DECIDED BY THE HONBLE MUMBAI HIGH COURT IN WRIT PETITIONS FILED AGAINST THE ISSU E OF NOTICES U/S. 148 IN CASES WHERE VDIS DECLARATION WAS MADE. IN THE CASE OF I TA N O. 4113 / 08 10 MIS. UMA CORP. VS ACIT, CENTRAL CIRCLE - IL, MUMBAL. IN WRIT PETITION NO. 531 OF 2006, THE HONBLE BOMBAY HIGH COURT HAVE DECIDED THE VALIDITY OF ISSUE OF NOTICE U/S. 148. THE FOL LOWING EXTRACT OF THE OPERATING PORTION OF THE HIGH COURTS ORDER MAKES THE ISSUE CLEAR. 1. INTER ALIA CONTENTION OF MR. PERCY PARDIWALE, THE LEARNED COUNCIL FOR THE PETITION IS THAT ON THE APPLICATION MADE BY THE ASSESSEE , THE COMMISSIONER GRANTED CERTIF ICATE TO THE ASSESSEE SETTING FORTH THE VOLUNTARY DISCLOSURE OF INCOME AND THE INCOME TAX PAID FOR THE SAME. HE STATES THAT THE SAID CERTIFICATE HOLD THE FIELD AND HAS NOT BEEN CANCELLED AS YET. HIS SUBMISSION IS THAT AS PER SECTION 68 OF THE VOLUNTARY DIS CLOSURE OF INCOME SCHEME, 1997 (FINANCE ACT, 1997) THE AMOUNT OF THE VOLUNTARILY DISCLOSED INCOME SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE DECLARANT FOR ANY AY UNDER THE INCOME - TAX ACT AND, THEREFORE, THE NOTICE UNDER SEC.148 OF THE INCOME TAX ACT, 1961 IMPUGNED IN THE PRESENT WRIT PETITION IS WITHOUT JURISDICTION. 2. MR CHATTERJEE, THE ID. COUNSEL FOR THE REVENUE DOES NOT DISPUTE THAT THE CERTIFICATE GRANTED BY THE COMMISSIONER UNDER SEC. 68(2) OF THE VOLUNTARY DISCLOSURE OF INCOME SCHEME, 1997 ST ILL HOLDS THE FIELD AND THAT THE SAID CERTIFICATE HAS NOT BEEN CANCELLED. IF THAT, BE SO, WE WANTED TO KNOW FROM THE LEARNED COU N SEL FOR THE REVENUE HOW COULD THE AMOUNT OF VOLUNTARY DISCLOSED INCOME BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE AND HOW COULD THE NOTICE UNDER SEC. 148 OF THE INCOME TAX ACT, 1961 BE ISSUED TO THE ASSESSEE. 5.19 AFTER CAREFUL CONSIDERING THE EXPLANATION OF THE COUNSEL FOR THE REVENUE THE HONBLE HIGH COURT FURTHER OBSERVED AS UNDER: WE ARE AFRAID, THE CONTENTION OF THE LD . COUNSEL FOR THE REVENUE CANNOT BE ACCEPTED. IT IS A FACT THAT THE PETITIONER APPLIED U NDER VOLUNTARY DISCLOSURE OF IN COME SCHEME, 1997 AND THAT THE CONCERNED AUTHORITY AFTER HOLDING THAT THE PETITIONER WAS ELIGIBLE UNDER THE SAID SCHEME AND THAT SECTION 78 OF THE SAID SCHEME WAS NOT ATTRACTED, GRANTED THE BENEFIT OF THE SAID SCHEME PETITIONER AND A CERTIFICATE WAS ISSUED BY THE COMMISS IONER UNDER SEC 68(2) TO THE PETITION. THAT THE CERTIFICATE GRANTED BY THE COMMISSIONER UNDER SECTION 68(2) OF THE VOLUN TA RY DISCLOSURE OF INCOME SCHEME, 1997 IS STILL HOLDING THE FIELD, IS ALSO NOT DISPUTED BY THE LD. COUNSEL FOR THE FOR THE REVENUE. AS A MATTER OF FACT, MR. CHATTERJEE SUBMITTED BEFORE US CERTIFICATE ISSUED BY THE COMMISSIONER UNDER SEC. 6892) OF THE S AID SC HEME CANNOT BE CANCELLED OR REVOKED. SO LONG AS THE CERTIFICATE U/S. 68(2) OF THE SCHEME HOLDS THE FIELD, THE LEARNED COU N SEL FOR THE REVENUE ALSO ADMITS THAT THE AMOUNT OF .VOLUNTARY DISCLOSED INCOME CANNOT BE INCLUD ED IN THE TOTAL INCOME OF THE DECLARANT FOR ANY ASSESSMENT YEAR UNDER THE INCOME TAX A C T. IN WHAT, MR. B.M. CHATTERJEE, THE LEARNED COU N SEL FOR THE REVENUE SUBMITTED BEFORE US WE FAIL TO UNDERSTAND THE JURISDICTION OF THE NOTICE U/S. 148 OF THE INCOME TAX ACT, 1961. RATHER, WE FIND THAT I TA N O. 4113 / 08 11 ISSUANC E OF NOTICE U/S. 148 OF THE INCOME TAX ACT IS AN ABUSE OF THE POWER BY THE RESPONDENT NO.2. 5.20 THE ORDER IN WRIT PETITION NO. 869 OF 2006 IN CASE OF RAFIQUE K. MALIK VS DCIT, CENTRAL CIRCLE - ILL IS SIMILAR. IT IS PERTINENT TO MENTION HERE THAT MR. RAFIQUE MALIKS NAME APPEARED AS AN ACCUSED IN THE FIR DTD. 10.9.1996 IN CR. NO. 95/96. HE WAS LATER CHARGESHEETED BY THE POLICE. BUT IN HIS CASE ALSO THE HONBLE BOMBAY HIGH COURT HAVE NOT FOUND ANY REASON TO APPLY SEC.78(B) OF THE VDIS SCHEME AND THE NOTICE U/S . 148 HAS BEEN SQUASHED. THE APPELLANT OR ITS DIRECTORS WERE NOT ACCUSED IN THE FIR. EVEN IF IT IS HELD THAT THEY WERE PROSECUTED WITH EFFECT FROM 10.9.1996, STILL THERE WILL BE NO SUPPORT TO THE NOTICE U/S. 148 IN THE LIGHT OF THIS ORDER OF THE HIGH COURT . IN VIEW OF THIS ORDER OF THE JURISDICTIONAL HIGH COURT WHICH IS DIRECTLY ON THIS ISSUE AND IN A SIMILAR CASE, THE NOTICE ISSUED BY THE A.O U/S. 148 OF THE I.T.ACT CANNOT BE SUPPORTED. SIMILARLY AS THERE IS NO DISQUALIFICATION U/S. 78(B) OF THE VDIS SCHEM E AND THE CERTIFICATE ISSUED UNDER SEC. 68(2) IS IN OPERATION THE SUM OF RS.1,49,12,000/ - REMAINS THE INCOME FOR AY: 1990 - 91 TO 1996 - 97 AS DECLARED. SO THERE IS NO QUESTION OF ASSESSING THE SAME INCOME AS THE INCOME OF AY - 1998 - 99 PRESENTLY UNDER CONSIDERAT ION. ACCORDINGLY THE ASSESSMENT OF THIS AMOUNT AS THE INCOME OF THE APPELLANT FOR THIS YEAR ALSO CANNOT BE SUPPORTED. IN VIEW OF THIS, BOTH THE GROUNDS OF THE APPELLANT ARE ALLOWED. THE ABOVE FINDINGS OF THE LEARNED CIT(A) , IN OUR VIEW, ARE FINDINGS OF FACT, WHICH ARE SUPPORTED BY THE DECISION OF THE HON BLE JURIS DICTIONAL HIGH COURT . 8 . SIMILAR ISSUE WAS INVOLVED BEFORE THE HON BLE BOMBAY HIGH COURT IN THE CASES OF M/S UMA CORPORATION (SUPRA) AND RAFIQUE A. MALLIK (SUPRA) . IN THESE CASES ALSO, ASSESSEE S AVAILED BENEFIT OF VDIS SCHEME, HOWEVER, THE AO REOPENED THE ASSESSMENT AND MADE ADDITION OF THE AMOUNT DECLARED UNDER VDIS SCHEME. THESE ASSESSEES PREFERRED WRIT PETITIONS BEFORE THE HONBLE JURISDICTI O NA L HIGH COURT AND THE HONBLE HIGH COURT HELD THAT ONCE CERTIFICATE UNDER SECTION 68(2) HAS BEEN ISSUED BY THE APPROPRIATE AUTHORITY, THEN THE AO HAS NO POWER TO CANCEL THE SAME. IN THE CASE IN HAND, FACTS ARE SIMILAR AS THE CERTIFICATE UNDER SECTION 68(2) WAS ISSUED BY THE CIT AND THE SAME WAS NOT CANCEL LED OR WITHDRAWN BY THE COMPETENT AUTHORITY, I TA N O. 4113 / 08 12 WHO ISSUED THE CERTIFICATE. THERE IS NO PROVISION OF LAW THAT ONCE THE CERTIFICATE UNDER SECTION 68(2) IS ISSUED THEN THE AO CAN WITHDRAW OR CANCEL THE SAME. BY DRAWING ADVERSE INFERENCE AGAINST THE ASSESSEE, TH E AO HAS BROUGHT THE AMOUNT TO TAX UNDER NORMAL PROVISION OF LAW, WHICH WAS DECLARED UNDER VDIS SCHEME. THE AO HAS NO POWER TO HOLD THAT THE DECLARATION MADE BY THE ASSESSEE IS VOID AB INITIO OR LIABLE TO BE CANCELLED. IN VIEW OF THESE FACTS AND CIRCUMSTAN CES AND IN VIEW OF THE DETAILED FINDINGS GIVEN BY THE LEARNED CIT(A), WHICH ARE SUPPORTED BY THE DECISION OF THE HONB LE HIGH COURT, WE CONFIRM THE ORDER OF THE LEARNED CIT(A). 9 . RESULTANTLY , APPEAL OF THE DEPARTMENT IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 4 TH DAY OF OC T . 201 3 . SD/ - ( ) ( R AJENDRA SINGH ) SD/ - ( ) ( R .K.GUPTA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 04 / 10 / 2013 /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE C I T(A) , MUMBAI . 4. / C I T 5. / DR, ITAT, MUMBAI . 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( /ASSTT. REGISTRAR) / ITAT, MUMBAI