M/s. Imtihan Commercial Pvt. Ltd., Kolkata V. CIT, Central - I, Kolkata

ITA 468/KOL/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54480 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 27-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D R SINDHAL
• Keywords: Search and seizure; Peak credit; Corroborative evidences; Accommodation entries
• Section: 143(3); 142(1); 153A; 147; 131; 148; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE . . , ! '# '# '# '# /AND ' # , ! ) [BEFORE HONBLE SHRI S. V. MEHROTRA, AM & HONBLE S RI MAHAVIR SINGH, JM] #$ #$ #$ #$ / I.T.A NO. 468/KOL/2009 %& ''( %& ''( %& ''( %& ''(/ // / ASSESSMENT YEAR: 2004-05 M/S. IMTIHAN COMMERCIAL PVT. LTD. VS. COMMISSIO NER OF INCOME-TAX, (PAN-AAACI 5655 A) CENTRAL -1, KOLKATA. (*+ /APPELLANT ) (,-*+/ RESPONDENT ) FOR THE APPELLANT: SHRI RAVI TULSIYAN FOR THE RESPONDENT: SHRI D. R. SINDHAL . / ORDER PER MAHAVIR SINGH, JM ( ' # ' # ' # ' #, , , , ! ! ! ! ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF REVISION ORDER OF CIT, CENTRAL-1, KOLKATA VIDE NO CIT (C-1)/263/IMTIHAN/TECH/08-09/KOL/9050-52 DAT ED 13.03.2009 REVISING ASSESSMENT U/S 263 OF THE INCOME TAX ACT, 1961(HEREINAFTER REFERRE D TO AS THE ACT). ASSESSMENT WAS FRAMED BY ITO, WARD-1(2), KOLKATA U/S. 143(3) OF THE ACT F OR ASSESSMENT YEAR 2004-05 VIDE HIS ORDER DATED 03.05.2006. 2. THE SOLE ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST ASSUMPTION OF JURISDICTION U/S. 263 OF THE ACT. FOR THIS, THE ASSESSEE HAS RAISED FOLLOWI NG FOUR GROUNDS: 1) THAT THE LD. CIT ERRED IN INITIATING PROCEEDING U/S. 263 OF THE I. T. ACT, 1961 ON THE BASIS OF SUSPICION, CONJECTURE AND SURMISES. 2) THAT THE LD. CIT ERRED IN PASSING AN ORDER U/S. 263 SETTING ASIDE THE ORIGINAL ASSESSMENT ORDER AND DIRECTING THE A.O. TO FRAME TH E ASSESSMENT DE NOVO WITHOUT ANY COGENT BASIS FOR THE SAME AND MERELY ON SUSPICION, CONJECTURE AND SURMISES. 3) THAT THE LD. CIT ERRED IN HOLDING THAT THE A.O. HAD NOT CONDUCTED PROPER ENQUIRY WITHOUT APPRECIATING THE FACT THAT THE A.O. HAD MAD E ALL REQUISITE ENQUIRIES AND ONLY THEREAFTER HAD PASSED THE ASSESSMENT ORDER. 4) THAT THE LD. CIT ERRED IN SETTING ASIDE THE ORDE R OF THE A.O. WITHOUT APPRECIATING THE DECISIONS OF THE SUPREME COURT AND VARIOUS OTHER HI GH COURTS WHICH WERE CITED BEFORE HER WHEREBY IT WAS CLEAR THAT THE LD. A.O. HAD CARR IED OUT ALL THE ENQUIRIES AS REQUIRED UNDER THE LAW. 2 ITA 468/K/2009 IMTIHAN COMMERCIAL PVT. LTD. A.Y.04-05 3. BRIEF FACTS LEADING TO ABOVE ISSUE ARE THAT ASSE SSEE FILED RETURN OF INCOME FOR RELEVANT ASSESSMENT YEAR 2004-05 ON 25.10.2004 AND ITS RETUR N WAS PROCESSED U/S. 143(1) OF THE ACT. SUBSEQUENTLY, THIS RETURN WAS SELECTED FOR SCRUTINY BY ISSUING STATUTORY NOTICE U/S. 143(2) OF THE ACT DATED 16.12.2004 AND SERVED UPON ASSESSEE ON 17 .12.2004 AND NOTICE U/S. 142(1) OF THE ACT AND LETTER CALLING NECESSARY DOCUMENTS AND EVIDENCE FOR THE YEAR UNDER CONSIDERATION WAS ISSUED. THE ASSESSMENT U/S. 143(3) OF THE ACT WAS FRAMED BY ITO, WARD-1(2), KOLKATA VIDE HIS ORDER DATED 3.5.2006, WHEREBY HE ACCEPTED SHARE CAP ITAL OF RS.3.75 CR. AND RS.29.25 CR. BY DISCUSSING FACTS AS UNDER: SHRI N. K. AGARWAL, A/R OF THE ASSESSEE APPEARED F ROM TIME TO TIME TO REPRESENT THE CASE. DURING THE YEAR UNDER CONSIDERATION THE ASSE SSEE HAS SHOWN OTHER INCOME FOR RS.37,250/-. THERE HAS BEEN PURCHASE OF SHARES ALT HOUGH THE SAME IS HELD AS STOCK IN TRADE. THE ASSESSEE COMPANY WAS REGISTERED WITH RO C VIDE REGISTRATION NO.21-67776 OF 1995 WITH AUTHORISED CAPITAL OF RS.1,00,000/- ON LY. DURING THE YEAR UNDER CONSIDERATION THE AUTHORISED CAPITAL OF ASSESSEE CO MPANY HAS INCREASED TO 3,75,00,000/- DIVIDED INTO 37,50,000 EQUITY SHARES OF RS.10/- EACH. AS REGARDS TO ISSUED CAPITAL IT HAS INCREASED TO RS.3,74,57,500/- FROM RS.49,57,500/-. APART FROM THAT THE ASSESSEE COMPANY CLAIMED TO HAVE RECEIVED RS.90/- PER SHARE AS AGAINST RS.10/- SHARE CAPITAL PER SHARE TOTAL AMOUNT OF RS. 29,25,00,000/-. THE A/R FILED THE VARIOUS DETAILS NAMELY IN RESPECT OF DETAILS OF SHARE CAPITAL ALONG WITH NAME AND ADDRESSES AND PAN OF THE SHARE HOLDER S, DETAILS REGARDING OPENING STOCK, CLOSING STOCK AND PURCHASE OF SHARES. RELEV ANT DOCUMENTS I.E. BANK STATEMENT, ALLOTMENT LETTER, APPLICATION FORM ETC., HAVE ALSO BEEN PRODUCED IN ADDITION TO CASH BOOK AND LEDGER AND THESE HAVE BEEN EXAMINED. AS REGARDS TO OTHER SOURCE OF INCOME IT EXPLAINED B Y THE A/R THAT THIS INCOME RELATES TO SHARE DIFFERENCE INCOME, SUPPORTING EVIDENCE FOR TH E SAME HAS ALSO BEEN FILED. THE CIT, CENTRAL-1, KOLKATA, AFTER EXAMINATION OF A SSESSMENT RECORD, ISSUED NOTICE U/S. 263 OF THE ACT FOR REVISING ASSESSMENT FRAMED VIDE ORDER D ATED 3.5.2006 AND FOR THIS SHOW CAUSE NOTICE U/S. 263 OF THE ACT WAS ISSUED ON 5.12.2008 FIXING THE CASE FOR HEARING ON 18.12.2008. SUBSEQUENTLY, THE CASE WAS ALSO FIXED FOR HEARING O N 8.1.2009 AND 13.3.2009. THE CIT, CENTRAL-1, KOLKATA VIDE ORDER DATED 13.3.2009 U/S. 263 OF THE ACT SET ASIDE ASSESSMENT FRAMED BY AO DATED 3.5.2006 AND DIRECTED THE ASSESSING OFF ICER TO REFRAME ASSESSMENT DE NOVO IN THE LIGHT OF DISCUSSION CARRIED OUT BY HIM IN HIS REVIS ION ORDER. AGGRIEVED, NOW ASSESSEE IS IN APPEAL BEFORE US CHALLENGING VERY JURISDICTION ASSU MED BY CIT, CENTRAL-1, KOLKATA INITIATING PROCEEDINGS U/S. 263 OF THE ACT FOR REVISING ASSESS MENT AND THEREAFTER PASSING REVISION ORDER. 4. LD. COUNSEL FOR THE ASSESSEE SHRI RAVI TULSIYAN, FIRST OF ALL STATED FACTS THAT ASSESSEE HAD FILED AN APPLICATION BEFORE SETTLEMENT COMMISSION ( IN SHORT ITSC) ON 31.5.2009 FOR VARIOUS YEARS INCLUDING ASSESSMENT YEAR 2004-05 I.E. RELEVA NT ASSESSMENT YEAR ALSO. LD. COUNSEL STATED 3 ITA 468/K/2009 IMTIHAN COMMERCIAL PVT. LTD. A.Y.04-05 THAT APPLICATION BEFORE SETTLEMENT COMMISSION WAS D EEMED TO HAVE BEEN ALLOWED TO PROCEED WITH IN TERMS OF SECTION 245(2A) OF THE ACT ON 1.7. 2008 AND COPY OF THE ORDER PASSED BY SETTLEMENT COMMISSION U/S. 245D(3)OF THE ACT DATED 29.3.2010, WHEREIN IT IS EVIDENT THAT APPLICATION OF ASSESSEE WAS PENDING WITH ITSC TILL 29.3.2010 AND, THEREFORE, ITSC WAS HAVING EXCLUSIVE JURISDICTION OVER THIS CASE, BEING PENDIN G BEFORE IT, IN TERMS OF SECTION 245F(2) OF THE ACT. ACCORDINGLY, LD. COUNSEL STATED THAT ONCE PRO CEEDINGS ARE PENDING BEFORE ITSC, IT IS HAVING EXCLUSIVE JURISDICTION OVER PENDING CASE BEF ORE IT AND NO ACTION BY ANY AUTHORITY CAN BE TAKEN UNDER THE ACT IN THAT CASE. LD. COUNSEL FILE D DETAILS OF APPLICATIONS FILED BEFORE ITSC, ACTION U/S. 245D(2A) OF THE ACT AND ORDER PASSED U/ S. 245D(3) OF THE ACT. 5. ON THE OTHER HAND, LD. CIT-DR SHRI D. R. SINDHAL STATED THAT CIT, CENTRAL-1, KOLKATA WAS NOT AWARE OF ANY SETTLEMENT APPLICATION HAVING FILED BEFORE ITSC BY APPLICANT AND, THEREFORE, CIT WAS RIGHT IN EXERCISING JURISDICTION U/S. 263 OF THE ACT. APART FROM THAT, LD. CIT-DR DRAWN OUR ATTENTION TO THE DEFINITION FALLIN G UNDER CHAPTER XIXA U/S. 245(A) OF THE ACT, WHEREIN DEFINITION OF CASE U/S. 245A(B) HAS BEEN AMENDED BY THE FINANCE ACT, 2007 W.E.F. 1.6.2007. LD. CIT-DR STATED THAT IN VIEW OF THIS AMENDMENT, WHICH IS PROCEDURAL IN NATURE, ASSESSEES CASE SQUARELY FALLS UNDER THE DE FINITION OF CASE AS AMENDED BY FINANCE ACT, 2007 W.E.F. 1.6.2007. HENCE, CIT, CENTRAL-1, KOLKA TA HAS RIGHTLY ASSUMED JURISDICTION AND HE ALSO REFERRED TO PLEA TAKEN BY CIT, CENTRAL-II, KOL KATA IN HIS OBJECTION BEFORE ITSC VIDE REFERENCE NO. CIT(C)-II/245D(2B)/RAMSARUP GROUP/07- 08/KOL/7473 DATED 30.08.2007. 6. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE HAS MOVED APPLICATION BEF ORE ITSC ON 31.5.2007 U/S. 245C OF THE ACT FOR VARIOUS YEARS INCLUDING PRESENT ASSESSMENT YEAR 2004-05 UNDER DISPUTE. THE APPLICATION FILED U/S. 245C OF THE ACT IS DEEMED TO HAVE BEEN A LLOWED TO BE PROCEEDED WITH IN TERMS OF SECTION 245D(2A) OF THE ACT IN CASE ADDITIONAL TAX ON INCOME DISCLOSED IN SUCH APPLICATION AND INTEREST THEREON IS PAID ON OR BEFORE 31 ST DAY OF JULY, 2007. THE PROVISION OF SECTION 245D( 1) AND (2A) READS AS UNDER: PROCEDURE ON RECEIPT OF AN APPLICATION UNDER SECTI ON 245C. 245D. (1) ON RECEIPT OF AN APPLICATION UNDER SECTIO N 245C, THE SETTLEMENT COMMISSION SHALL CALL FOR A REPORT FROM THE COMMISSIONER SUBST ITUTED BY THE FINANCE ACT, 2007, W.E.F. 1-6-2007. PRIOR TO ITS SUBSTITUTION, SUB-SECTION (1 ), AS AMENDED BY THE FINANCE ACT, 1995, W.E.F. 1-7-1995, FINANCE ACT, 1979, W.E.F. 1.4.1979 , FINANCE (NO. 2) ACT, 1991, W.E.F. 27- 9-1991 AND FINANCE ACT, 2002, W.E.F. 1-6-2002, READ S AS UNDER: (1) ON RECEIPT OF AN APPLICATION UNDER SECTION 245 C, THE SETTLEMENT COMMISSION SHALL CALL FOR A REPORT FROM THE COMMISSIONER AND ON THE BASIS OF THE MATERIALS CONTAINED IN 4 ITA 468/K/2009 IMTIHAN COMMERCIAL PVT. LTD. A.Y.04-05 SUCH REPORT AND HAVING REGARD TO THE NATURE AND CIR CUMSTANCES OF THE CASE OR THE COMPLEXITY OF THE INVESTIGATION INVOLVED THEREIN, T HE SETTLEMENT COMMISSION, SHALL, WHERE IT IS POSSIBLE, BY ORDER, REJECT THE APPLICATION OR ALLOW THE APPLICATION TO BE PROCEEDED WITH WITHIN A PERIOD OF ONE YEAR FROM THE END OF TH E MONTH IN WHICH SUCH APPLICATION WAS MADE UNDER SECTION 245C: PROVIDED THAT AN APPLICATION SHALL NOT BE REJECTED UNDER THIS SUB-SECTION UNLESS AN OPPORTUNITY HAS BEEN GIVEN TO THE APPLICANT OF BEIN G HEARD: PROVIDED FURTHER THAT THE COMMISSIONER SHALL FURNIS H THE REPORT WITHIN A PERIOD OF FORTY- FIVE DAYS OF THE RECEIPT OF COMMUNICATION FROM THE SETTLEMENT COMMISSION IN CASE OF ALL APPLICATIONS MADE UNDER SECTION 245C ON OR AFTER TH E 1ST DAY OF JULY, 1995 AND IF THE COMMISSIONER FAILS TO FURNISH THE REPORT WITHIN THE SAID PERIOD, THE SETTLEMENT COMMISSIONER MAY MAKE THE ORDER WITHOUT SUCH REPORT . (2A) SUBJECT TO THE PROVISIONS OF SUB-SECTION (2B) , THE ASSESSEE SHALL, WITHIN THIRTY-FIVE DAYS OF THE RECEIPT OF A COPY OF THE ORDER UNDER SU B-SECTION (1) ALLOWING THE APPLICATION TO BE PROCEEDED WITH, PAY THE ADDITIONAL AMOUNT OF INCOME-TAX PAYABLE ON THE INCOME DISCLOSED IN THE APPLICATION AND SHALL FURNISH PROO F OF SUCH PAYMENT TO THE SETTLEMENT COMMISSION. THE ASSESSEE IN THE PRESENT CASE BEFORE US FILED CO PY OF AN ORDER PASSED BY ITSC U/S. 245D(3) DATED 29.3.2010 VIDE SETTLEMENT APPLICATION NO. WB/ KC-II/2007-08/41/IT, WHEREIN ITSC HAS ADMITTED THE APPLICATION AS UNDER: AT THE TIME OF HEARING, THE CIT(DR) READ A LETTER WHICH WAS STATED TO HAVE BEEN JUST RECEIVED FROM SRI P. MUKHERJEE, ACIT, CC-VII, KOLKA TA, AS PER WHICH NO SEARCH WAS CONDUCTED AND NO PROCEEDINGS U/S 153C WAS INITIATED IN THE CASE OF M/S. LMTIHAAN COMMERCIAL (P) LTD. FURTHER, INVESTIGATIONS CONDUCT ED BY DIT(LNV.) KOLKATA AGAINST CERTAIN ACCOMMODATION ENTRY OPERATORS INVOLVED IN PROVIDING ACCOMMODATION ENTRIES TO VARIOUS COMPANIES BASED AT MUMBAI WHO IN TURN USED THE SAID FUNDS FOR PAYMENTS TO MADHEPURA MERCANTILE CO-OPERATIVE BANK AT MUMBAI WHICH IS STA TED TO BE CONTROLLED BY SRI KETAN PAREKH. SUBSEQUENTLY SHRI PRAMOD SHARMA, DIRECTOR O F THE COMPANY STATED ON OATH IN STATEMENT RECORDED U/S 131 OF THE I. T. ACT ON 18-0 2-2006, THAT HE HAD GIVEN ENTRIES OUT OF THOSE COMPANIES, RECEIVING CASH EQUIVALENT AMOUNT A S FOLLOWS: NAME OF THE COMPANY CHEQUE NO. & DATE BANK AMOUNT OMNI SUPPLIERS PVT. LTD. CHAT COMPUTERS PVT. LTD. 3008637 DT. 8.10.2004 340235 DT. 28.03.2005 ABN AMRO BANK IDBI BANK 16,00,000 80,00,000 IT IS MENTIONED FURTHER THAT SRI PRAMOD KUMAR SHARM A FILED HIS RETURN IN THE CAPACITY OF INDIVIDUAL. HE HAD SUBMITTED THAT HE IS PROPRIETOR OF 8 CONCERNS MAINTAINING 8 BANK ACCOUNTS. HE ALSO SUBMITTED THAT IN THE ASST YEAR 2004-05, HE HAS DEPOSITED RS.169 CRORES IN CASH TO THE ABOVE 8 BANK ACCOUNTS DISCLOSING COMMISSION INCOME OF RS.25 LAKHS WHICH IS 0.015% OF THE CASH DEPOSITED, AS SRI SHARMA FAILED TO SUBSTANTIAT E THE SOURCE OF CASH DEPOSITED THE ENTIRE AMOUNT OF RS.169 CRORES WAS ADDED IN HIS HANDS: THE A.O. CONTEND THAT IN VIEW OF THE ABOVE, THE ASSESSEE IS AN ENTRY OPERATOR AND AS SUCH THE W AY THE ASSESSEE DISCLOSED THE INCOME BEFORE THE SETTLEMENT COMMISSION IS NOT CORRECT. THE ASSES SE SHOULD HAVE FILED THE PEAK CREDIT FOR HIS BANK TRANSACTIONS. HENCE A PROPER ENQUIRY NEED BE CONDUCTED IN RESPECT OF THE FUND FLOW OF THE COMPANY. 8. IN THIS REGARD, IT IS NOTED THAT THERE WERE REPO RTS IN NEWS PAPERS ALLEGING INVOLVEMENT OF KETAN PAREKH MANIPULATION OF PRICE OF SELECTED SHAR ES LISTED WITH STOCK EXCHANGE, AND ALSO 5 ITA 468/K/2009 IMTIHAN COMMERCIAL PVT. LTD. A.Y.04-05 ABOUT CONNECTIONS OF MADEHEPURA MERCANTILE COOPERAT IVE BANK AND ALSO OF PERSONS LIKE PRAMOD KUMAR SHARMA, WITH HIM. HOWEVER, THE CONNECT ION BETWEEN THEM AND M/S IMTIHAN COMMERCIAL (P) LTD. IS NOT EXPLAINED BY THE ASSESSI NG OFFICER. FURTHER, IT IS NOT CLEAR IN WHICH WAY THE CHEQUES OR ACCOMMODATION ENTRIES ALLEGED TO HAVE BEEN MADE BY SRI SHARMA IN THE FINANCIAL YEAR 2004-05 IS RELEVANT TO THE CASE HERE . IT IS NOT CLEAR WHETHER ANY ACTION HAS BEEN INITIATED U/S 147 OR 153C IN THIS CASE. 8.2. AT THE SAME TIME, WE RECKON THE POSSIBILITY TH AT THE ADMISSION OF THE SETTLEMENT APPLICATION PREVENTED THE A.O. FROM CONDUCTING NECESSARY ENQUIR IES AND INVESTIGATION. THE AMOUNTS ALLEGED TO BE INVOLVED IN THIS CASE IS HUGE. IN THI S CICUMSTANCE, WE CONSIDER THAT FURTHER ENQUIRIES AND INVESTIGATION ARE NECESSARY TO DETERM INE THE CORRECTNESS OR OTHERWISE OF THE DISCLOSURE BY THE APPLICANT. THE CIT IS DIRECTED TO CAUSE ENQUIRY AND INVESTIGATION INTO THE TRANSACTIONS OF THE APPLICANT IN SHARES AND COMMODI TIES DURING THE PREVIOUS YEARS RELEVANT TO THE ASST. YEARS UNDER CONSIDERATION AND SUBMIT A RE PORT WITHIN 90 DAYS OF THE RECEIPT OF THIS ORDER. 7. FURTHER, THE PROVISIONS OF SECTION 245D(3) AS AM ENDED BY FINANCE ACT, 2002 W.E.F. 1.6.2002 READS AS UNDER: (3) WHERE AN APPLICATION IS ALLOWED TO BE PROCEED ED WITH UNDER SUB-SECTION (1), THE SETTLEMENT COMMISSION MAY CALL FOR THE RELEVANT REC ORDS FROM THE COMMISSIONER AND AFTER EXAMINATION OF SUCH RECORDS, IF THE SETTLEMEN T COMMISSION IS OF THE OPINION THAT ANY FURTHER ENQUIRY OR INVESTIGATION IN THE MATTER IS NECESSARY, IT MAY DIRECT THE COMMISSIONER TO MAKE OR CAUSE TO BE MADE SUCH FURTH ER ENQUIRY OR INVESTIGATION AND FURNISH A REPORT ON THE MATTERS COVERED BY THE APPL ICATION AND ANY OTHER MATTER RELATING TO THE CASE. (4) AFTER EXAMINATION OF THE RECORDS AND THE REPORT OF THE COMMISSIONER, RECEIVED UNDER SUBSECTION (1), AND THE REPORT, IF ANY, OF TH E COMMISSIONER RECEIVED UNDER SUB- SECTION (3), AND AFTER GIVING AN OPPORTUNITY TO THE APPLICANT AND TO THE COMMISSIONER TO BE HEARD, EITHER IN PERSON OR THROUGH A REPRESENTAT IVE DULY AUTHORISED IN THIS BEHALF AND AFTER EXAMINING SUCH FURTHER EVIDENCE AS MAY BE PLACED BEFORE IT OR OBTAINED BY IT, THE SETTLEMENT COMMISSION MAY, IN ACCORDANCE WITH T HE PROVISIONS OF THIS ACT, PASS SUCH ORDER AS IT THINKS FIT ON THE MATTERS COVERED BY THE APPLICATION AND ANY OTHER MATTER RELATING TO THE CASE NOT COVERED BY THE APPL ICATION, BUT REFERRED TO IN THE REPORT OF THE COMMISSIONER UNDER SUB-SECTION (1) OR SUB-SE CTION (3). (4A) IN EVERY, APPLICATION ALLOWED TO BE PROCEEDED WITH UNDER SUB-SECTION (1), THE SETTLEMENT COMMISSION SHALL, WHERE IT IS POSSIBLE, PASS AN ORDER UNDER SUB-SECTION (4) WITHIN A PERIOD OF FOUR YEARS FROM THE END OF THE F INANCIAL YEAR IN WHICH SUCH APPLICATION WAS ALLOWED TO BE PROCEEDED WITH. IN THE PRESENT CASE BEFORE US, ADMITTEDLY, THE ASSE SSEE FILED APPLICATION BEFORE ITSC ON 31.5.2007 AND THE SAME WAS ADMITTED U/S. 245D(3) BY ITSC ON 29.3.2010. THE CIT STARTED REVISIONAL PROCEEDINGS U/S. 263 OF THE ACT BY GIVIN G NOTICE DATED 5.12.2008, I.E. MUCH AFTER THE APPLICATION MADE BY ASSESSEE BEFORE ITSC ON THE SAM E ISSUE, WHICH ARE AGITATED BY ASSESSEE BEFORE ITSC. THE LD. COUNSEL SPECIFICALLY REFERRED TO SECTION 245F(2) OF THE ACT WHEREBY AN APPLICATION HAS BEEN ALLOWED TO BE PROCEEDED WITH U /S. 245D, THE ITSC SHALL, UNTIL AN ORDER IS PASSED UNDER SECTION 245D(4) OF THE ACT, HAVE, SUBJ ECT TO THE PROVISIONS OF SECTION 245D(3), 6 ITA 468/K/2009 IMTIHAN COMMERCIAL PVT. LTD. A.Y.04-05 EXCLUSIVE JURISDICTION, TO EXERCISE THE POWERS AND PERFORM THE FUNCTIONS OF INCOME-TAX AUTHORITY UNDER THE ACT, IN RELATION TO THE CASE. THE RELEVANT SECTION 245F(II) OF THE ACT READS AS UNDER: (2) WHERE AN APPLICATION MADE UNDER SECTION 245C, HAS BEEN ALLOWED TO BE PROCEEDED WITH UNDER SECTION 245D, THE SETTLEMENT COMMISSION SHALL, UNTIL AN ORDER IS PASSED UNDER SUB-SECTION (4) OF SECTION 245D, HAVE, SUBJECT TO T HE PROVISIONS OF SUB-SECTION (3) OF THAT SECTION, EXCLUSIVE JURISDICTION TO EXERCISE THE POW ERS AND PERFORM THE FUNCTIONS OF AN INCOME-TAX AUTHORITY UNDER THIS ACT IN RELATION TO THE CASE. IT MEANS THAT AS ON THE DATE OF ORDER OF REVISION U /S. 263 OF THE ACT BY CIT ON 13.3.2009, JURISDICTION IN TERMS OF SECTION 245F(2) WAS WITH I TSC, HAVING EXCLUSIVE JURISDICTION OVER THIS CASE. THE ARGUMENT OF LD. CIT-DR THAT CIT WAS NOT AWARE OF APPLICATION PENDING WITH ITSC HAVING BEEN FILED BY ASSESSEE, WE ARE OF THE VIEW, IN VIEW OF THE FACTS OF THE CASE THAT IN RESPECT OF THE ASSESSEE REPORT UNDER RULE 9 OF INCOME-TAX S ETTLEMENT COMMISSION (PROCEDURE) RULES, 1997, WAS SENT VIDE F. NO. CIT(C)-1/ITSC/R-9/RAMSAR UP GROUP/07-08/KOL/11973 DATED 20.02.2008. IT MEANS THAT CIT, CENTRAL-1, KOLKATA, WHO PASSED REVISION ORDER U/S. 263 WAS VERY MUCH AWARE ABOUT THE PROCEEDINGS PENDING WITH ITSC. ANOTHER ARGUMENT OF LD. CIT-DR THAT THE AMENDED DEFINITION OF CASE U/S. 245A(B) SPECIFICALLY EXCLUDED ANY MATTER WHERE SEARCH AND SEIZURE U/S. 132 HAD TAKEN PLACE, ALTHOU GH APPLICATION FILED BEFORE AMENDMENT I.E. ON 31.05.2007 AND AMENDMENT IS WITH EFFECT FROM 1.6 .2007 BY FINANCE ACT, 2007. THE RELEVANT DEFINITION OF THE CASE AS AMENDED BY FINANCE ACT, 2007 W.E.F. 1.6.2007 OF SEC. 245A(B) OF THE ACT READS AS UNDER: (B) CASE MEANS ANY PROCEEDING FOR ASSESSMENT UND ER THIS ACT, OF ANY PERSON IN RESPECT OF ANY ASSESSMENT YEAR OR ASSESSMENT YEARS WHICH MAY BE PENDING BEFORE AN ASSESSING OFFICER ON THE DATE ON WHICH AN APPLICATI ON UNDER SUB-SECTION (1) OF SECTION 245C IS MADE: PROVIDED THAT (I) A PROCEEDING FOR ASSESSMENT OR REASSESSMENT OR RECOMPUTATION UNDER SECTION 147; (II) 27[***] (III) 27[***] (IV) A PROCEEDING FOR MAKING FRESH ASSESSMENT IN PU RSUANCE OF AN ORDER UNDER SECTION 254 OR SECTION 263 OR SECTION 264, SETTING ASIDE OR CANCELLING AN ASSESSMENT, SHALL NOT BE A PROCEEDING FOR ASSESSMENT FOR THE PU RPOSES OF THIS CLAUSE. EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE (I) A PROCEEDING FOR ASSESSMENT OR REASSESSMENT OR RECOMPUTATION REFERRED TO IN CLAUSE (I) OF THE PROVISO SHALL BE DEEMED TO HAVE C OMMENCED FROM THE DATE ON WHICH A NOTICE UNDER SECTION 148 IS ISSUED; (II) 28[***] (III) A PROCEEDING FOR MAKING FRESH ASSESSMENT REFE RRED TO IN CLAUSE (IV) OF THE PROVISO SHALL BE DEEMED TO HAVE COMMENCED FROM THE DATE ON WHICH THE ORDER UNDER SECTION 254 OR SECTION 263 OR SECTION 264, SETTING ASIDE OR CANCELLING AN ASSESSMENT WAS PASSED; 7 ITA 468/K/2009 IMTIHAN COMMERCIAL PVT. LTD. A.Y.04-05 [(IIIA) A PROCEEDING FOR ASSESSMENT OR REASSESSMENT FOR ANY OF THE ASSESSMENT YEARS, REFERRED TO IN CLAUSE (B) OF SUB-SECTION (1) OF SEC TION 153A IN CASE OF A PERSON REFERRED TO IN SECTION 153A OR SECTION 153C, SHALL BE DEEMED TO HAVE COMMENCED ON THE DATE OF ISSUE OF NOTICE INITIATING SUCH PROCEED ING AND CONCLUDED ON THE DATE ON WHICH THE ASSESSMENT IS MADE;] (IV) A PROCEEDING FOR ASSESSMENT FOR ANY ASSESSMENT YEAR, OTHER THAN THE PROCEEDINGS OF ASSESSMENT OR REASSESSMENT REFERRED TO IN CLAUSE (I) OR [CLAUSE (IV) OF THE PROVISO OR CLAUSE (IIIA) OF THE EXPLANATION], SHALL BE DEEM ED TO HAVE COMMENCED FROM THE 1ST, DAY OF THE ASSESSMENT YEAR AND CONCLUDED ON THE DAT E ON WHICH THE ASSESSMENT IS MADE;] WE FIND THAT THIS DEFINITION OF CASE BECOMES OPER ATIVE W.E.F. 1.6.2007 AND EVEN THIS PLEAS WAS TAKEN BEFORE ITSC AT THE TIME OF ADMISSION OF APPLI CATION U/S. 245D(3) OF THE ACT AND ITSC VIDE ORDER DATED 29.03.2010 HAS ADMITTED THE PETITI ON AS UNDER: 3. THE APPLICATIONS WERE HEARD ON 14.09.2007, AS P ER THE REQUIREMENTS OF SEC. 245D(2C) AS AMENDED W.E.F. 01.06.2007 BY THE FINANC E ACT, 2007. IT MAY BE MENTIONED IN THIS RELEVANT THAT THERE WAS A SEARCH IN THE REG ISTERED OFFICES OF ALL THE APPLICANT COMPANIES AT NO. 7C, KIRAN SHANKAR ROY ROAD, HASTIN GS CHAMBER, KOLKATA-1 ON 14.9.2006, AND ALSO THE INDIVIDUAL APPLICANTS MENTI ONED ABOVE. FURTHER SEARCH WARRANTS WERE EXECUTED ON THE INDIVIDUAL APPLICANTS SEVERAL COMPANIES. THE CIT CONTENDED THAT, IN THESE CIRCUMSTANCES, PROCEEDINGS FOR THE ASST. YEARS 2001-02 TO 2006-07 DO NOT FALL WITHIN THE DEFINITION OF CASE AS PER DEFINITION I N SECTION 245A(1) AND EXPLANATION (3) AND (4) THEREUNDER THE PROCEEDINGS FOR THESE ASST. YEARS COULD NOT BE PENDING PROCEEDINGS. IT IS HIS CASE THAT ONLY IN CASES WHER E PROCEEDINGS ARE PENDING APPLICATION U/S 245C IS ADMISSIBLE, AFTER THE AMENDMENTS. HE AL SO CONTENDED THAT SINCE ADMISSION OF APPLICATION FILED U/S 245C IS PROCEDURAL, IT IS THE PROVISIONS DEFINING CASE APPLICABLE AFTER THE AMENDMENT W. E. F. 01-06-2007 THAT IS TO BE APPLIED TO DECIDE WHETHER IT IS IN RESPECT OF A CASE WHILE DECIDING ADMISSIBILITY OF T HE APPLICATION, AFTER THE AMENDMENT. 4. HOWEVER, THE SETTLEMENT COMMISSION U/S 245D(2C) DECIDED TO HOLD THAT THE APPLICATIONS ARE NOT INVALID. HOWEVER, NO EXPRESS F INDING WAS GIVEN ON THIS CONTENTION OF THE CIT. THEREFORE, WE WOULD MAKE THE FOLLOWING OBSERVATIONS BY WAY OF CLARIFICATION. THE LAW GOVERNING ADMISSION OF APPLICATION WAS AMEN DED W.E.F. 01-06-2007. SECTION 245D(2A) APPLICABLE FROM 01-06-2007, READS AS FOLLO WS: - WHERE AN APPLICATION WAS MADE UNDER SECTION 245C B EFORE THE 1ST DAY OF JUNE, 2007, BUT AN ORDER UNDER THE PROVISIONS OF SUB-SECTION (1 ) OF THIS SECTION, AS THEY STOOD IMMEDIATELY BEFORE THEIR AMENDMENT BY THE FINANCE A CT, 2007, HAS NOT BEEN MADE BEFORE THE 1ST DAY OF JUNE, 2007, SUCH APPLICATION SHALL BE DEEMED TO HAVE BEEN ALLOWED TO BE PROCEEDED WITH IF THE ADDITIONAL TAX ON THE I NCOME DISCLOSED IN SUCH APPLICATION AND THE INTEREST THEREON IS PAID ON OR BEFORE THE 3 1ST DAY OF JULY, 2007. (EMPHASIS SUPPLIED) IT IS TO BE NOTED THAT DEEMING IS AN EXPRESSION IN LAW. AT PAGE 587 VOL.1 OF CHATURVEDI & PITHISARIAS INCOME TAX LAW FIFTH EDITION, WE FIND THE FOLLOWING: THE WORD DEEMED IS USED A GREAT DEAL IN MODERN L EGISLATION. SOMETIMES IT IS USED FOR THE PURPOSE OF A STATUE AN ARTIFICIA L CONSTRUCTION OF A WORD OR PHRASE THAT WOULD NOT OTHERWISE PREVAIL. SOMETIMES IT IS USED TO PUT BEYOND DOUBT A PARTICULAR CONSTRUCTION THAT MIGHT OTHERWIS E BE UNCERTAIN. SOMETIMES IT IS USED TO GIVE A COMPREHENSIVE DESCRI PTION THAT INCLUDES WHAT IS OBVIOUS, WHAT IS UNCERTAIN AND WHAT IS IN THE OR DINARY SENSE IMPOSSIBLE. 8 ITA 468/K/2009 IMTIHAN COMMERCIAL PVT. LTD. A.Y.04-05 [ST. AUBYN VS ATTORNEY GENERAL (1951) 2 ALL ER 473 QUOTED IN CIT VS BAL VINA (1965) 58 ITR 100 GUJ.] THE CONDITIONS LAID DOWN IN SUB-SECTION (2A) OF SEC TION 245D FOR DEEMING AN APPLICATION TO BE ADMITTED AT THE RELEVANT TIME, WE RE SATISFIED IN ALL THESE CASES AND THEREFORE THE APPLICATIONS ARE DEEMED TO HAVE BEEN ADMITTED, BY FORCE OF LAW. AS MENTIONED EARLIER, A DECISION WAS TAKEN BY THE ITSC U/S 245D(2C) NOT TO HOLD THE APPLICATIONS AS INVALID. 5. NO ORDER WAS PASSED U/S 245D(4) IN THESE CASES. SECTION 245H PROVIDES THAT IF NO. ORDER IS PASSED BY 31-03-2008, THE APPLICATION ABAT ES ON THAT DATE. IN THIS CIRCUMSTANCE, THE APPLICANTS IN THIS GROUP FILED WRIT PETITIONS B EFORE THE HONOURABLE KOLKATA HIGH COURT, IMPLEADING THE SETTLEMENT COMMISSION AS COUN TER PETITIONER AND CHALLENGING THE ABATEMENT. IT IS NOTED THAT IN WRIT PETITIONS NOS. 453 TO 456, 458, 459, 463, 466, AND 468 TO 470 FILED BY THE APPLICANT COMPANIES IN THIS LIS T, WHICH WERE GROUPED WITH SEVERAL OTHER WRIT PETITIONS, THE HONBLE HIGH COURT GRANTE D STAY FOR THE ABATEMENT IN RESPECT OF THE SETTLEMENT APPLICATIONS. THE STAY HAS BEEN EXTE NDED UPTO 7TH JUNE 2010. WE ARE GOING AHEAD WITH THE PROCEEDINGS U/S 245D(4) IN THE CIRCUMSTANCE TO AVOID FURTHER DELAY, THIS ORDER WOULD, HOWEVER BE SUBJECT TO THE FINAL DECISION OF THE HONOURABLE HIGH COURT IN THE WRIT PETITIONS ON THE ISSUE OF ABATEME NT OF THE SETTLEMENT APPLICATIONS. FURTHER, IT IS ALSO A FACT THAT REVENUE HAS CHALLEN GED THE ACTION OF ITSC BEFORE HONBLE CALCUTTA HIGH COURT AND PRESENT ASSESSEE ALSO BECAME PARTY I N WRIT PETITION NO.462 OF 2008 IN THE CASE OF IMTIHAN COMMERCIAL PVT. LTD. VS. INCOME TAX SETT LEMENT COMMISSION. HONBLE HIGH COURT STAYED THE PROCEEDINGS OF ITSC VIDE ORDER DAT ED 28.3.2008 AND FURTHER EXTENDED THIS STAY BY ORDER DATED 16.12.2008 AND FINALLY VIDE ORDER DA TED 6.5.2009, THE INTERIM ORDER WAS EXTENDED TILL FURTHER ORDERS. BUT AMENDED THE ORDER OF STAY VIDE ORDER DATED 18.9.2008 THAT IN VIEW OF THE ORDER PASSED BY THE HONBLE SUPREME COU RT OF INDIA IN W.P. (CIVIL) NO.113 OF 2008 (PRABHU DAYAL VS. UNION OF INDIA & ORS.), THE PENDE NCY OF THE WRIT PETITION WILL NOT COME IN THE WAY OF INCOME-TAX SETTLEMENT COMMISSION IN DISP OSING OF THE MATTER BEFORE IT IN ACCORDANCE WITH LAW. 8. WE ARE OF THE VIEW, IN VIEW OF THE ABOVE FACTS T HAT WE CANNOT ADJUDICATE UPON THE VALIDITY OR OTHERWISE THE ACTION OF ITSC BUT IT IS A FACT THAT APPLICATION WAS ADMITTED BY ITSC AND PENDING, THEREFORE, CIT, CENTRAL-1, KOLKATA COU LD NOT HAVE EXERCISED REVISIONARY JURISDICTION U/S. 263 OF THE ACT, SINCE U/S. 245F(2 ) OF THE ACT EXCLUSIVE JURISDICTION LIES WITH ITSC IN RESPECT OF CASES WHERE APPLICATION IS PENDI NG. REGARDING THE VALIDITY OF ADMISSION OF APPLICATION U/S. 245D(3) OF THE ACT, HONBLE CALCUT TA HIGH COURT IS SEIZED WITH THE MATTER, WHICH WAS CHALLENGED BY THE DEPARTMENT IN RESPECT T O APPLICABILITY OF DEFINITION OF CASE AS AMENDED BY THE FINANCE ACT, 2007 W.E.F. 1.6.2007 OF SEC. 245A(B) OF THE ACT. IN OUR VIEW, ONCE APPLICATION IS ADMITTED BY ITSC U/S. 245D(3), THE MATTER IS PENDING BEFORE ITSC AND IN VIEW OF THE PROVISIONS OF SECTION 245F(2) OF THE AC T ITSC IS HAVING EXCLUSIVE JURISDICTION OVER 9 ITA 468/K/2009 IMTIHAN COMMERCIAL PVT. LTD. A.Y.04-05 THE CASE, NO AUTHORITY UNDER THE ACT CAN ADJUDICATE OR DECIDE RELATING TO THAT CASE ANY ISSUE AS IN THE PRESENT CASE THE REVISION ORDER PASSED BY CIT, CENTRAL-1, KOLKATA U/S. 263 OF THE ACT. HENCE, THE REVISION ORDER PASSED U/S. 263 OF THE AC T BY CIT, CENTRAL-1, KOLKATA IS WITHOUT JURISDICTION AND QUASHED. 9. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. 10. ORDER PRONOUNCED IN OPEN COURT ON 05.08.2011. SD/- SD/- . . , ! ' '' ' # # # # , ! (S. V. MEHROTRA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( / / / /) )) ) DATED :5TH AUGUST, 2011 '01 %23 4' JD.(SR.P.S.) . 5 ,6 76'8- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT M/S. IMTIHAN COMMERCIAL PVT. LTD., 7C, KIRAN SHANKAR ROY ROAD, KOLKATA-700 001. 2 ,-*+ / RESPONDENT, CIT, CENTRAL-1, KOLKATA. 3 . ITO, WARD-1(2), KOLKATA. 4 . '= ,% / DR, KOLKATA BENCHES, KOLKATA -6 ,/ TRUE COPY, .%>/ BY ORDER, #3 /ASSTT. REGISTRAR .