Shri Popatlal Malaji Sanghvi -HUF, Pune V. Asstt. CIT, Cen. Cir.1(2), Pune, Pune

ITA 463/PUN/2007

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7498 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 03-04-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K TIWARI
• Assessee Lawyers: NILESH KHANDELWAL
• Keywords: Search and seizure; Period of limitation; Block assessment
• Section: 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER SL. NO. ITA NO. BLOCK AY APPELLANT RESPONDENT 1. 463/PN/2007 1996-97 TO 2002- 03(PART) SHRI POATLAL MALAJI SANGHVI HUF, PROP. SANGHVI MALCHAND DHIRAJI & SONS, PUNE ASSTT. COMMISSIONER OF INCOME-TAX, CEN.CIR.1(2), PUNE 2. 464/PN/2007 1996-97 TO 2002- 03(PART) SHRI MANROOPLAL MALAJI SANGHVI HUF, PROP. SANGHVI DHIRAJI BHUTAJI & SONS, PUNE ASSTT. COMMISSIONER OF INCOME-TAX, CEN.CIR.1(2), PUNE 3. 541PN/2007 1996-97 TO 2002- 03(PART) LATE SHJRI RATANLAL SHANKARLAL SANGHVI, THROUGH L/H SMT PYARIBAI RATANLAL SANGHVI, PUNE ASSTT. COMMISSIONER OF INCOME-TAX, CEN.CIR.1(2), PUNE 4. 530/PN/2007 1996-97 TO 2002- 03(PART) M/S SANGHVI DHIRAJ BHUTAJI & SONS PUNE ASSTT. COMMISSIONER OF INCOME-TAX, CEN.CIR.1(2), PUNE APPELLANTS BY : SHRI NILESH KHANDELWAL RESPONDENT BY : SHRI K K TIWAR I (CIT) ORDER PER G. S. PANNU, A.M : THE CAPTIONED FOUR APPEALS ARE PREFERRED BY FOUR DI FFERENT ASSESSEES BELONGING TO ONE GROUP AND CERTAIN COMMON ISSUES HA VE BEEN RAISED. THEREFORE, WE FIND IT EXPEDIENT TO PASS A COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. THE CAPTIONED APPEALS ARE PREFERRED BY FOUR DIFF ERENT ASSESSEES BELONGING TO ONE GROUP AGAINST SEPARATE BUT SIMILAR ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, PUNE WHICH, IN TURN, HAV E ARISEN FROM THE ORDERS OF THE ASSESSING OFFICER PASSED UNDER SECTION 158BC(C) REA D WITH SECTION 158BD OF THE ITA NO 463/PN/07 ETC. SHRI POPATLAL M S ANGHVI, HUF & ORS 2 INCOME-TAX ACT, 1961 (IN SHORT THE ACT) PERTAININ G TO THE BLOCK ASSESSMENT YEARS 1996-97 TO 2002-03 (PART). 3. THE FACTS, GROUNDS OF APPEAL AND THE ARGUMENTS O F RIVAL SIDES BEING COMMON IN ALL THESE APPEALS, WE SHALL FIRST TAKE UP ITA NO 464/PN/07 IN THE CASE OF SHRI MANROOPLAL M SANGHVI, HUF, PROPRIETOR SANGH VI DHIRAJI BHUTAJI & SONS. IN THE GROUNDS OF APPEAL NO 1, THE ASSESSEE HAS CHALLE NGED THE LEGALITY OF THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IN TERMS OF PROVISIONS OF SECTION 158BC(C) READ WITH SECTION 158BD OF THE ACT . IN GROUNDS NO 3 TO 5, CHALLENGE HAS BEEN MADE TO VARIOUS ADDITIONS MADE I N THE ASSESSMENT AS UNDISCLOSED INCOME. 4. GROUND NO 1 RAISED BY THE ASSESSEE READS AS FOLL OWS: 1. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CA SE AND AS PER PROVISIONS OF LAW, IT BE HELD THAT THE ORDER PASSED BY THE ASSESSING OFFI CER IN TERMS OF PROVISIONS OF SECTION 158BC(C) READ WITH SECTION 158BD OF THE INC OME-TAX ACT, 1961 BE HELD AS INVALID, ILLEGAL AND NOT TENABLE IN LAW AND WITH OUT ASSUMING JURISDICTION IN TERMS OF RELEVANT PROVISIONS OF THE ACT. THE ORDER PASSED BE CANCELLED. 5. THE FACTS, IN BRIEF, ARE THAT SEARCH AND SEIZURE PROCEEDINGS UNDER SECTION 132(1) OF THE ACT WERE CONDUCTED AT THE BUSINESS AN D RESIDENTIAL PREMISES OF SANGHVI GROUP OF ASSESSEES ON 11.10.2001 AT VARIOUS PLACES. THE GROUP IS MAINLY ENGAGED IN THE BUSINESS OF TRADING IN TIMBER , SCRAP, INDUSTRIAL GASES AND CEMENT, ETC. DURING THE COURSE OF SEARCH, STOCK OF TIMBER VALUED AT RS 75,34,179/- WAS PUT UNDER DEEMED SEIZURE IN THE CAS E OF M/S SANGHVI DHIRAJI BHUTAJI & SONS AND M/S SANGHAVI MALCHAND DHIRAJI & SONS. A NOTICE UNDER SECTION 158BC OF THE ACT WAS ISSUED IN THE NAME OF SHRI MANROOPLAL M. SANGHVI (HUF), AND M/S ARIHANT GASES ON 6.5.2002. THE ASSES SEE OBJECTED TO THE SAID NOTICE ON THE GROUND THAT SHRI MANROOPLAL M SANGHVI (HUF) DOES NOT OWN ANY SUCH PROPRIETARY CONCERN IN THE NAME AND STYLE OF A RIHANT GASES, DHIRAJI BHUTAJI & SONS. AND THAT IN FACT THE NAME OF THE PROPRIETAR Y CONCERN OWNED BY SHRI MANROOPLAL M SANGHVI (HUF) IS SANGHVI DHIRAJI BHUTA JI & SONS WHICH ALSO HAD A SISTER CONCERN UNDER THE NAME AND STYLE OF SIDHI PL Y. ACCORDINGLY, A FRESH NOTICE UNDER SECTION 158BC WAS ISSUED TO THE ASSESSEE ON 3 0.10.2002 IN RESPONSE TO WHICH A RETURN FOR THE BLOCK PERIOD 1.4.94 TO 11.10 .2001 WAS FILED ON 2.12.2002 ITA NO 463/PN/07 ETC. SHRI POPATLAL M S ANGHVI, HUF & ORS 3 DECLARING NIL INCOME. THE ASSESSEE SUBMITTED THAT AS THE FIRST NOTICE ISSUED ON 6.5.2002 WAS CANCELLED BEING ERRONEOUS, IT WAS APPR EHENSIVE THAT THE SEARCH WARRANT ISSUED ALSO MAY BE ERRONEOUS AND PROCEEDING S CONDUCTED UNDER SUCH SEARCH WARRANT MAY NOT BE VALID. THE ASSESSEE, THER EFORE, REQUESTED THE ASSESSING OFFICER THAT COPY OF THE SEARCH WARRANT O BTAINED IN THE CASE OF SHRI MANROOPLAL M.SANGHVI (HUF) IN TERMS OF PROVISIONS O F SECTION 132(1) OF THE ACT FOR CARRYING OUT SEARCH ON THE CONCERNED ASSESSEE M AY BE ISSUED TO THE ASSESSEE. AFTER VERIFYING THE CONTENTION OF THE ASS ESSEE, THE ASSESSING OFFICER DROPPED THE PROCEEDINGS INITIATED UNDER SECTION 158 BC OF THE ACT. HOWEVER, SINCE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS PERTAIN ING TO THE ASSESSEE FIRM WERE FOUND AND SEIZED, PROCEEDINGS UNDER SECTION 15 8BD OF THE ACT WERE INITIATED AND NOTICE UNDER SECTION 158BD DATED 16.1 0.2003 WAS ISSUED AND SERVED ON 18.10.2003. HOWEVER, NO RETURN OF INCOME WAS FILED BY THE ASSESSEE. THE ASSESSING OFFICER DID NOT AGREE WITH THE CONTEN TION OF THE ASSESSEE THAT THE PROCEEDINGS INITIATED UNDER SECTION 158BD WERE AB I NITIO VOID AND FINALIZED THE ASSESSMENT UNDER 158BC(C) READ WITH SECTION 158BD A CT VIDE ORDER DATED 28.10.2005. AGAINST THE SAID ORDER, THE ASSESSEE FI LED APPEAL TO THE COMMISSIONER OF INCOME-TAX (APPEALS). 3. IN APPEAL, THE COMMISSIONER OF INCOME-TAX (APPEA LS) OBSERVED THAT IT IS A FACT THAT THERE WAS NO SEARCH IN CASE OF THE ASSESS EE AND THAT NOTICE UNDER SECTION 158BD WAS ISSUED ON 16.10.2003 AND SERVED O N 18.10.2003. AS PER THE COMMISSIONER OF INCOME-TAX (APPEALS), SINCE THERE W AS NO SEARCH UNDER SECTION 132(1) IN THE CASE OF ASSESSEE, THE NOTICE ISSUED U NDER SECTION 158BC HAD NO SANCTITY IN LAW AND WERE NON-EST. THE COMMISSIONER OF INCOME-TAX (APPEALS) FURTHER NOTICED THAT THE ASSESSING OFFICER HAD INIT IATED PROCEEDINGS UNDER SECTION 158BD FOR REASONS RECORDED IN WRITING. IN CASE OF T HE ASSESSEE, THE ASSESSMENT HAS BEEN COMPLETED WITHIN TWO YEARS FROM THE DATE O F NOTICE UNDER SECTION 158BD AND, THEREFORE, THE COMMISSIONER OF INCOME-TA X (APPEALS) HELD THAT THE ASSESSEES OBJECTION AGAINST ASSESSMENT BEING BARRE D BY LIMITATION HAD NO BASIS IN LAW AND FACTS. THE COMMISSIONER OF INCOME-TAX (A PPEALS) ALSO HELD THAT THE ITA NO 463/PN/07 ETC. SHRI POPATLAL M S ANGHVI, HUF & ORS 4 SUBMISSION F THE ASSESSEE THAT THERE COULD NOTE TWO PROCEEDINGS, ONE UNDER SECTION 158BC AND THE OTHER UNDER SECTION 158BD OF THE ACT AT THE SAME, HAD NO MERIT, FIRSTLY BECAUSE THE PROCEEDINGS UNDER SECTIO N 158BC WERE NON-EST AS THERE WAS NO SEARCH IN CASE OF ASSESSEE, AND SECOND LY, BECAUSE ACTION UNDER SECTION 158BC WAS DROPPED BEFORE PROCEEDINGS UNDER SECTION 158BD WERE TAKEN UP. THE COMMISSIONER OF INCOME-TAX (APPEALS) FURTHER OBSERVED THAT THE ASSESSING OFFICER HAD RECORDED REASONS FOR INITIATI NG PROCEEDINGS UNDER SECTION 158BD OF THE ACT AND THESE REASONS SHOWED APPLICATI ON OF MIND BY THE ASSESSING OFFICER AND THE FACT THAT CONDITIONS PRE- REQUISITE FOR ASSUMPTION OF JURISDICTION UNDER SECTION 158BD EXISTED IN THE CAS E. THE COMMISSIONER OF INCOME-TAX (APPEALS) ACCORDINGLY HELD THAT THE LEGA L OBJECTIONS RAISED BY THE ASSESSEE IN THIS REGARD WERE UNTENABLE AS THEY HAD NO BASIS IN LAW OR FACTS. HE ACCORDINGLY REJECTED THE LEGAL PLEAS OF THE ASSESSE E. AGAINST THE AFORESAID ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), ASSESS EE IS IN APPEAL BEFORE US. 4. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE GROUND NO. 1 RAISED RELATING TO VALIDITY OF ASS ESSMENT MADE UNDER CHAPTER XIVB GOES TO THE ROOT OF THE MATTER AND THE SAME IS REQUIRED TO BE ADJUDICATED AT THE THRESHOLD. IT IS POINTED OUT THAT IN THIS CASE THE ASSESSING OFFICER HAD INITIALLY ISSUED A NOTICE UNDER SECTION 158BC OF THE ACT FOR MAKING BLOCK ASSESSMENT UNDER CHAPTER XIVB CONSIDERING THAT A SEARCH ACTION UNDER SECTION 132(1) OF THE ACT TOOK PLACE ON THE ASSESSEE. ON POINTING OUT THE INFIRMITIES IN SUCH APPROACH INASMUCH AS THERE WAS NO SEARCH WARRANT IN THE NAME OF THE ASSESSEE, MEANING THEREBY THAT NO SEARCH WAS CONDUCTED IN THE CASE OF THE ASSESSEE, THE SAID NOTICE WAS DROPPED. SUBSEQUENTLY, THE SATISFACTION FOR INITIATION OF PROCEEDINGS UNDER SECTION 158BD WAS RECORDED BY THE VERY SAME A SSESSING OFFICER ON 16.10.2003 WHICH AGAIN IS WITHOUT A VALID JURISDICT ION. IN THIS CONTEXT, IT IS POINTED OUT THAT THERE ARE NO PROCEEDINGS UNDER SECTION 158 BC OF THE ACT IN TERMS OF WHICH IT CAN BE SAID THAT ANY SATISFACTION REFERRED TO IN SECTION 158BD OF THE ACT HAS BEEN RECORDED. ACCORDING TO THE LEARNED COUNSEL , EXISTENCE OF VALID PROCEEDINGS UNDER SECTION 158BC OF THE ACT IS OF ES SENCE BEFORE ANY ITA NO 463/PN/07 ETC. SHRI POPATLAL M S ANGHVI, HUF & ORS 5 PROCEEDINGS UNDER SECTION 158BD OF THE ACT CAN BE I NITIATED. IN OTHER WORDS, ACCORDING TO THE LEARNED COUNSEL, THERE IS NO NUCLE US ON THE BASIS OF WHICH THE IMPUGNED PROCEEDINGS UNDER SECTION 158BD HAD BEEN I NITIATED. THEREFORE, THE IMPUGNED PROCEEDINGS SUFFER FROM A JURISDICTIONAL D EFECT. 6. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE, HAS RELIED UPON THE ORDERS OF THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER OF INCOME- TAX (APPEALS) TO POINT OUT THAT JURISDICTION HAD BE EN RIGHTLY INVOKED BY THE ASSESSING OFFICER. IN THIS CONNECTION, REFERENCE WA S INVITED TO THE DISCUSSION IN PARAGRAPH 2.3 OF THE ORDER OF THE COMMISSIONER OF I NCOME-TAX (APPEALS) WHEREIN IT IS STATED THAT IN THE ABSENCE OF ANY SEARCH ACTI ON UNDER SECTION 132(1) OF THE ACT AGAINST THE ASSESSEE NOTICE ISSUED UNDER SECTIO N 158BC INITIALLY WERE INCORRECT AND SUBSEQUENTLY, THE ASSESSING OFFICER I NITIATED PROCEEDINGS UNDER SECTION 158BD OF THE ACT FOR THE REASONS RECORDED I N WRITING AS PER LAW. ACCORDING TO THE LEARNED DEPARTMENTAL REPRESENTATIV E, THE ASSESSING OFFICER HAS DULY RECORDED THE REASONS FOR INITIATING THE PROCEE DINGS UNDER SECTION 158BD AS PER THE REQUIREMENTS LAID DOWN BY THE HONBLE SUPRE ME COURT IN THE CASE OF MANISH MAHESHWARI V ACIT 289 ITR 341(SC). 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS. IN THIS CASE, AN ASSESSMENT UNDER SECTION 158BC(C) READ WITH SECTION 158BD OF THE ACT HAS BEEN FINALIZED BY THE ASSESSING OFFICER. IT IS NOTE D BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT A SEARCH AND SEIZURE ACTION U NDER SECTION 132(1) OF THE ACT WAS CONDUCTED ON THE BUSINESS AND RESIDENTIAL P REMISES OF SANGHVI GROUP ON 11.10.2001. SUBSEQUENTLY, NOTICE UNDER SECTION 1 58BC OF THE ACT WAS ISSUED IN THE CASE OF THE ASSESSEE ON 6.5.2002, WHICH WAS FOUND TO BE DEFECTIVE AND, ACCORDINGLY, A FRESH NOTICE UNDER SECTION 158BC WAS ISSUED ON 30.10.2002. DURING THE PROCEEDINGS BEFORE THE ASSESSING OFFICER , ASSESSEE SUBMITTED THAT SEARCH WARRANT UNDER SECTION 132(1) MAY NOT BE PROP ER RESULTING IN INVALIDITY OF THE PROCEEDINGS INITIATED UNDER SECTION 158BC OF TH E ACT. THE ASSESSING OFFICER HAS NOTED THAT UPON VERIFICATION OF THE ASSESSEES CONTENTION THE PROCEEDINGS ITA NO 463/PN/07 ETC. SHRI POPATLAL M S ANGHVI, HUF & ORS 6 INITIATED UNDER SECTION 158BC WERE DROPPED. HOWEVER , SINCE THE SEARCH HAD REVEALED CERTAIN DOCUMENTS PERTAINING TO THE ASSESS EE AND ITS PROPRIETARY CONCERNS, WHICH ACCORDING TO THE ASSESSING OFFICER REVEALED CERTAIN UNDISCLOSED INCOME, HE ISSUED NOTICE UNDER SECTION 158BD OF THE ACT ON 16.10.2003 PROPOSING TO MAKE AN ASSESSMENT UNDER CHAPTER XIVB OF THE ACT FOR THE BLOCK PERIOD 1.4.1995 TO 11.10.2001. 8. SUCH PROCEEDINGS WERE SOUGHT TO BE ATTACKED AS L ACKING IN JURISDICTION BY THE ASSESSEE BY CONTENDING THAT THE PROCEEDINGS HAV E NOT BEEN PROPERLY INITIATED; THAT THE NOTICE UNDER SECTION 158BD WAS NOT PROPERLY SERVED; AND, THAT THE SATISFACTION CONTEMPLATED UNDER SECTION 158BD W AS NOT VALIDLY RECORDED; ETC. NEVERTHELESS, THE ASSESSING OFFICER DIS-REGARDED TH E OBJECTIONS OF THE ASSESSEE, WHICH WERE THEN CARRIED IN APPEAL BY THE ASSESSEE B EFORE THE COMMISSIONER OF INCOME-TAX (APPEALS). BEFORE THE COMMISSIONER OF IN COME-TAX (APPEALS), THE ASSESSEE MADE DETAILED SUBMISSIONS, INTER ALIA, ASS AILING ASSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER FOR ISSUE OF NOTICE UNDER SECTION 158BD OF THE ACT. THE POINTS RAISED BY THE ASSESSEE HAVE BEE N REPRODUCED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) IN PARAGRAPH 2 .2 OF THE ORDER, WHICH READ AS UNDER: THE FIRST ILLEGALITY IS THAT ACTION UNDER SECTION 1 58BD HAD BEEN INITIATED IN A CASE IN WHICH THE SEARCH WARRANT HAS BEEN FOUND TO BE INVAL ID. FOR A VALID ACTION TO BE INITIATED U/S 158BD, THERE HAS TO BE A VALID PROCEEDING U/S 1 58BC. THERE CANNOT BE AN ACTION U/S 158BD INDEPENDENT OF PROCEEDING U/S 158BC. IN FACT, 158BD FLOWS DIRECTLY FROM A VALIDLY CARRIED OUT SEARCH, GIVING RISE TO A VALID PROCEEDI NG U/S 158BC. THE LD. DCIT HAS TOTALLY OVERLOOKED THIS ASPECT OF THE MATTER AND HAS MADE C OMMENTS WHICH ARE WIDE OFF THE MARK. THE SECOND ILLEGALITY IS THAT SUPPOSING, FOR THE SA KE OF ARGUMENT, THERE WAS A VALID PROCEEDING U/S 158BC, AN ACTION U/S 158BD COULD LIE ONLY AGAINST SOME PERSON OTHER THAN THE PERSON SUBJECTIVE TO SEARCH. IT IS UNTHINK ABLE THAT A PROCEEDING U/S 158BC AND 158BD WOULD LIE IN THE SAME CASE. IN OUR CASE, THE NOTICE U/S 158BC WAS ISSUED TO POPATLAL MANURUPLAL SANGHVI HUF AND THE NOTICE U/ S 158BD HAS ALSO BEEN ISSUED TO THE SAME ASS4ESSEE. IN OTHER WORDS, THE LD. DY. CIT HAS ONLY TRIED TO CONVERT AN INVALID PROCEEDING U/S 158BC INTO A PROCEEDING U/S 158BD. A PPARENTLY, HE CANNOT DO IT, AND TO THAT EXTENT, THE NOTICE U/S 158BD SHOULD BE HELD TO BE ILLEGAL AND LIABLE TO BE QUASHED. APART THEREFROM, AN ALTERNATIVE PLEA WAS RAISED, WH ICH READS AS UNDER: WITHOUT PREJUDICE TO THE SUBMISSIONS MADE ABOVE, I T IS ALSO RESPECTFULLY SUBMITTED THAT THE FATE OF THE 2 ND NOTICE ISSUED U/S 158BC ON 28.7.2003 IS ALSO NOT K NOWN TO THE APPELLANT. THE APPELLANT OBJECTED TO THE VALIDITY O F THE SAID NOTICE, AS ALREADY STATED ABOVE, AND FILED A RETURN UNDER PROTEST IN RESPONSE TO THAT NOTICE. THE ASSESSMENT PROCEEDINGS IN RESPECT OF THE SAID RETURN HAVE NEIT HER BEEN DROPPED AS WOULD HAVE BEEN DONE, IF THE AO HAD ACCEPTED THE APPELLANTS CONTEN TION REGARDING THE INVALIDITY OF THE ITA NO 463/PN/07 ETC. SHRI POPATLAL M S ANGHVI, HUF & ORS 7 SAID NOTICE, NOR COMPLETED IN CASE THE AO HELD THE SAID NOTICE TO BE VALID AND REJECTED THE APPELLANTS CONTENTION IN THIS REGARD IT MAY BE POINTED OUT THAT WHEREAS THE SAID PROCEEDINGS U/S 158BC HAVE BECOME BARRED BY LIMITAT ION ON 30.10.2003, THE AO SERVED NOTICE U/S 158BD ON THE APPELLANT ON 18.10,2003. FR OM THESE FACTS, IT IS MORE THAN OBVIOUS THAT THE AO IS TRYING TO GET MORE TIME PERM ISSIBLE FOR COMPLETION OF ASSESSMENT PROCEEDINGS INITIATED U/S 158BD BECAUSE THE PROCEED INGS U/S 158BC HAVE BECOME TIME BARRED. 9. THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS DEA LT WITH THE AFORESAID CONTENTIONS IN THE FOLLOWING MANNER: 2.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT. IT IS A FACT THAT THERE WAS NO SEARCH IN CASE OF APPELLANT IN HIS CAPACITY AS KARTA OF HUF. IT IS AGAIN A FACT THAT NOTICE UNDER SECTION 158BD WAS ISSUED ON 16.10.2003 AND SERVED ON 18.10.2003. SINCE THERE WAS NO SEARCH U/S 132(1) IN CASE OF THE APPEL LANT, THE TWO NOTICES ISSUED U/S 158BC HAD NO SANCTITY IN LAW AND WERE NON-EST. A PE RUSAL OF RECORD SHOWS THAT THE ASSESSING OFFICER HAD INITIATED PROCEEDINGS U/S 158 BD FOR REASONS RECORDED IN WRITING. IN CASE OF THE APPELLANT, THE ASSESSMENT HAS BEEN COMP LETED WITHIN TWO YEARS FROM THE DATE OF NOTICE U/S 158BD AND, THEREFORE, THE APPELL ANTS OBJECTION AGAINST ASSESSMENT BEING BARRED BY LIMITATION HAS NO BASIS IN LAW AND FACTS. THE SUBMISSION OF THE APPELLANT THAT THERE COLD NOT BE TWO PROCEEDINGS, ONE UNDER S ECTION 158BC AND THE OTHER UNDER SECTION 158BD OF THE INCOME-TAX ACT, 1961 AT THE SA ME, HAS NO MERIT, FIRSTLY, BECAUSE THE PROCEEDINGS U/S 158BC ARE NON-EST BECAUSE THERE WAS NO SEARCH IN CASE OF APPELLANT, AND SECONDLY BECAUSE ACTION U/S 158BC WAS DROPPED B EFORE PROCEEDINGS U/S 158BD WERE TAKEN UP. THE LEGAL OBJECTIONS RAISED BY THE A PPELLANT IN THIS REGARD ARE UNTENABLE BECAUSE THEY HAVE NO BASIS IN LAW OR FACTS. 2.3.1 IN VIEW OF THE FOREGOING DISCUSSION AND FOR T REASONS GIVEN BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND REMAND REPORT, GROUNDS OF APPEAL NO. 1 AND 2 ARE HELD TO HAVE NO MERIT AND THEY FAIL. IT IS EVIDENT THAT THE ISSUE RAISED BY THE ASSESSEE INVOLVES A POINT OF LAW AND THE SAME REVOLVES AROUND THE VALIDITY OF THE JURISDICTI ON ASSUMED BY WAY OF NOTICE ISSUED UNDER SECTION 158BD ON 16.10.2003. THE JURIS DICTION TO ASSESS UNDISCLOSED INCOME FOR THE BLOCK PERIOD HAS BEEN VE STED IN THE ASSESSING OFFICER BY VIRTUE OF PROVISIONS CONTAINED IN CHAPTER XIVB O F THE ACT. QUITE CLEARLY, SUCH POWER/JURISDICTION HAS ALSO TO BE EXERCISED IN ACCO RDANCE WITH THE MANNER PROVIDED IN CHAPTER XIVB OF THE ACT. THE PROCEDURE TO MAKE AN ASSESSMENT HAS BEEN PROVIDED UNDER SECTION 158BC ACCORDING TO WHIC H THE ASSESSING OFFICER IS REQUIRED TO COMMENCE THE PROCEEDINGS BY SERVING A N OTICE UNDER THAT SECTION WHERE ANY SEARCH HAS BEEN INITIATED IN THE CASE OF THE ASSESSEE AFTER 30.6.1995 BUT BEFORE 1.1.1997. IT IS ALSO PROVIDED THAT SUCH ASSESSMENT HAS TO BE COMPLETED WITHIN THE PERIOD PRESCRIBED UNDER SECTIO N 158BE OF THE ACT. SHORN OFF OTHER DETAILS INSOFAR AS IT IS RELEVANT FOR OUR PUR POSE, IT IS TO BE NOTED THAT SECTION 158BD OF THE ACT VESTS A JURISDICTION WITH THE ASSE SSING OFFICER TO ASSESS UNDISCLOSED INCOME FOR THE BLOCK PERIOD EVEN IN CAS E OF AN ASSESSEE WITH ITA NO 463/PN/07 ETC. SHRI POPATLAL M S ANGHVI, HUF & ORS 8 RESPECT TO WHOM NO SEARCH ACTION UNDER SECTION 132 HAS BEEN CARRIED OUT. EVEN TO COMPLETE THE BLOCK ASSESSMENT IN THE CASE OF A P ERSON REFERRED TO IN SECTION 158BD, THE PERIOD OF LIMITATION HAS BEEN PROVIDED U NDER SECTION 158BE OF THE ACT. IT IS WELL UNDERSTOOD THAT SECTIONS 158BC AND SECTION 158BD ARE JURISDICTIONAL PROVISIONS, WHICH ARE MANDATORILY RE QUIRED TO BE SATISFIED BEFORE THE PROVISIONS OF CHAPTER XIVB ARE APPLIED TO ANY PERSO N. THE AFORESAID PROPOSITION IS IN LINE WITH THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI (SUPRA). ACCORDING TO THE HONBLE SUPREM E COURT, THE CONDITIONS PRESCRIBED IN THE AFORESAID JURISDICTIONAL SECTIONS ARE PRE-REQUISITES WHICH NEED TO BE COMPLIED WITH BEFORE A VALID BLOCK ASSESSMENT UNDER CHAPTER XIVB CAN BE MADE. 10. AT THIS STAGE, WE MAY ALSO REFER TO FOLLOWING O BSERVATIONS OF THE HONBLE SUPREME COURT IN THE CASE OF ARUN KUMAR & OTHERS V UNION OF INDIA & OTHERS 286 ITR 89 (SC), WHICH DEAL WITH THE IMPORTANCE OF A JURISDICTIONAL FACT: A JURISDICTIONAL FACT IS A FACT WHICH MUST EXIST BEFORE A COURT, TRIBUNAL OR AN AUTHORITY ASSUMES JURISDICTION OVER A PARTICULAR MATTER. A JU RISDICTIONAL FACT IS ONE ON THE EXISTENCE OR NON-EXISTENCE OF WHICH DEPENDS THE JURISDICTION OF A COURT, A TRIBUNAL OR AN AUTHORITY. IT IS THE FACT UPON WHICH AN ADMINISTRATIVE AGENCYS P OWER TO ACT DEPENDS. IF THE JURISDICTIONAL FACT DOES NOT EXIST, THE COURT, AUTH ORITY OR OFFICER CANNOT ACT. IF A COURT OR AUTHORITY WRONGLY ASSUMES THE EXISTENCE OF SUCH FAC T, THE ORDER CAN BE QUESTIONED BY A WRIT OF CERTIORARI. THE UNDERLYING PRINCIPLE IS THA T BY ERRONEOUSLY ASSUMING THE EXISTENCE OF SUCH JURISDICTIONAL FACT, NO AUTHORITY CAN CONFE R UPON ITSELF JURISDICTION WHICH IT OTHERWISE DOES NOT POSSESS. THE EXISTENCE OF THE JU RISDICTIONAL FACT IS THUS THE SINE QUA NON OR CONDITION PRECEDENT FOR THE EXERCISE OF POWE R BY A COURT OF LIMITED JURISDICTION. IF THE JURISDICTIONAL FACT EXISTS, THE AUTHORITY CA N PROCEED WITH THE CASE AND TAKE AN APPROPRIATE DECISION IN ACCORDANCE WITH LAW. ONCE T HE AUTHORITY HAS JURISDICTION IN THE MATTER ON EXISTENCE OF THE JURISDICTIONAL FACT, I T CAN DECIDE THE FACT IN ISSUE OR ADJUDICATORY FACT. A WRONG DECISION ON A FACT IN ISSUE OR ON AN ADJUDICATORY FACT WOULD NOT MAKE THE DECISION OF THE AUTHORITY WITHOUT JURI SDICTION OR VULNERABLE PROVIDED THE ESSENTIAL OR FUNDAMENTAL FACT AS TO EXISTENCE OF JU RISDICTION IS PRESENT. 11. IT IS QUITE EVIDENT FROM THE AFORESAID OBSERVAT ION OF THE HONBLE SUPREME COURT THAT ADHERENCE TO A JURISDICTIONAL FACT IS TH E SINE QUA NON OR A CONDITION PRECEDENT TO ENABLE AN AUTHORITY TO EXERCISE POWER VALIDLY. IT IS IN THIS BACKGROUND ONE HAS TO APPRECIATE THE POINT OF LAW R ELATING TO THE VALIDITY OF JURISDICTION, WHICH HAS BEEN RAISED BY THE APPELLAN T CONSISTENTLY BEFORE THE AUTHORITIES BELOW, AS ALSO BEFORE US. THE COMMISSIO NER OF INCOME-TAX (APPEALS) HAS CONCLUDED THAT THE EARLIER TWO NOTICES ISSUED U NDER SECTION 158BC WERE NON- EST, INASMUCH AS THERE WAS NO SEARCH ACTION UNDER S ECTION 132 IN THE CASE OF THE ITA NO 463/PN/07 ETC. SHRI POPATLAL M S ANGHVI, HUF & ORS 9 ASSESSEE; SO, HOWEVER, THE POINT OF LAW RAISED BY T HE ASSESSEE BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) AND, WHICH HAV E BEEN REPRODUCED BY US IN EARLIER PART OF THIS ORDER, SEEKS TO MAKE OUT TH AT THE SUBSEQUENT INITIATION OF 158BD PROCEEDING IS ALSO RENDERED INVALID IN THE AB SENCE OF A VALID PROCEEDINGS UNDER SECTION 158BC AND THIS POINT HAS NOT BEEN ADD RESSED AT ALL BY THE COMMISSIONER OF INCOME-TAX (APPEALS). OTHER ISSUES HAVE ALSO BEEN RAISED BY THE ASSESSEE, WHICH IS EVIDENT FROM THE EXTRACT OF PARA 2.2 OF THE IMPUGNED ORDER, WHICH HAS BEEN REPRODUCED IN THE EARLIER PAR T OF THIS ORDER. ALL THESE POINTS HAVE NOT BEEN ADDRESSED BY THE COMMISSIONER OF INCO ME-TAX (APPEALS). IN OUR VIEW, THE COMMISSIONER OF INCOME-TAX (APPEALS) MADE AN ERROR IN NOT APPROPRIATELY ADDRESSING THE CONTROVERSY, WHICH REN DERS THE ORDER AS A NON- SPEAKING ORDER. IT IS A TRITE LAW THAT A QUASI-JUDI CIAL ORDER MUST STATE THE POINTS FOR DETERMINATION, THE DECISION THEREON AND THE REASONS FOR DECISION. THIS WOULD NOT ONLY MEET THE REQUIREMENTS OF THE PRINCIPLE OF NATU RAL JUSTICE BUT ALSO ENABLE THE PARTIES AND ALSO THE HIGHER APPELLATE AUTHORITIES T O APPRECIATE THE PRECISE REASONS ON THE BASIS OF WHICH THE CASE HAS BEEN DEC IDED. QUITE CLEARLY, IN PARAGRAPHS 2.3 AND 2.3.5 OF THE IMPUGNED ORDER THE POINTS OF LAW URGED BY THE ASSESSEE HAVE BEEN NOTED AND DISMISSED, BUT NO REAS ONS HAVE BEEN ASSIGNED. SINCE THE ISSUES GO TO ROOT OF THE MATTER, IN OUR C ONSIDERED OPINION, THE SAME ARE REQUIRED TO BE DECIDED AT THE THRESHOLD. FOR THIS P URPOSE, WE ARE INCLINED TO SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME-TAX ( APPEALS) AND RESTORE THE APPEAL IN ITS ENTIRETY BACK TO HIS FILE TO BE ADJUD ICATED AFRESH IN ACCORDANCE WITH LAW AFTER ALLOWING THE ASSESSEE A REASONABLE OPPORT UNITY OF BEING HEARD. NEEDLESS TO SAY, OUR ACTION OF RESTORING THE APPEAL BACK TO THE FILE OF THE COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT NOT TO B E CONSTRUED AS ANY REFLECTION ON THE MERITS OF THE POINTS RAISED BY TH E ASSESSEE. THE COMMISSIONER OF INCOME-TAX (APPEALS) SHALL BE AT LIBERTY TO EXAM INE THE POINTS THAT ARE SOUGHT TO BE RAISED BY THE ASSESSEE IN ACCORDANCE WITH LAW UNINFLUENCED BY ANY OTHER OBSERVATIONS IN OUR ORDER. IN THIS VIEW OF THE MATT ER, EVEN THE ISSUES RAISED IN GROUNDS NO. 2 TO 5 RELATING TO THE MERITS OF THE VA RIOUS ADDITIONS ARE ALSO BEING ITA NO 463/PN/07 ETC. SHRI POPATLAL M S ANGHVI, HUF & ORS 10 SENT BACK TO THE FILE OF THE COMMISSIONER OF INCOME -TAX (APPEALS) FOR RE- ADJUDICATION AFRESH IN ACCORDANCE WITH LAW. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO 464/PN/07 IN THE CASE OF SHRI MANROOPLAL MALAJI SANGHVI, HUF, IS ALLOWED FOR STATISTICAL PURPOSES. 13. IN RESPECT OF OTHER THREE APPEALS OF THIS GROUP , AS STATED IN THE EARLIER PART OF THIS ORDER, THE FACTS AND CIRCUMSTANCES OF THE C ASES AS WELL AS ARGUMENTS OF RIVAL SIDES ARE SIMILAR AND, THEREFORE, ON THE PARI TY OF REASONING, WE RESTORE THE ISSUES RAISED IN THOSE APPEALS ALSO BACK TO THE FIL E OF THE COMMISSIONER OF INCOME-TAX (APPEALS) WITH SAME DIRECTIONS. 14. RESULTANTLY, ALL THE APPEALS OF THE FOUR CAPTIO NED ASSESSEES ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 28TH DAY OF FE BRUARY, 2011. SD/- SD/- (I.C. SUDHIR) (G.S. PAN NU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 28 THS FEBRUARY, 2011 COPY TO:- 1) THE ASSESSEES 2) ACIT CEN. CIR.1(2) PUNE 3) THE CIT-(A)-I, PUNE 4) THE CIT-1, PUNE 5) THE DEPARTMENTAL REPRESENTATIVE, B BENCH, ITAT, PUNE BY ORDER TRUE COPY ASST. REGISTRAR, I.T.A.T., PUNE B