MA Basith Khan&Others, Hyderabad V. ITO, Hyderabad

ITA 650/HYD/2006

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74566 (ITAT-HYDERABAD)
• Duration Of Justice: 7 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-01-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 20-06-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K C DEVADAS
• Keywords: Reopening of assessment; Search and seizure; Document seized; Competent authority; Block assessment; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER APPEAL BLOCK PERIOD/ ASSESSMENT YEAR APPELLANT RESPONDENT IT(SS)A NO. 183/HYD/2005 BLOCK PERIOD COVERING ASSESSMENT YEARS 1991 - 92 TO 2000 - 01 AND FROM 1.4.2000 TO 24.1.2001 M/S. M.A. BASITH KHAN, HYDERABAD (PAN AGMPB 3230 F ) ASSTT. COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE 3, HYDERABAD ITA NOS. 649/HYD/2006 650/HYD/2006 1294/HYD/2008 1295/HYD/2008 2000 - 01 2001 - 02 1998 - 99 1999 - 2000 M/S. M.A. BASITH KHAN AND OTHERS, HYDERABAD (PAN /GIR NO.1B 604) INCOME TAX OFFICER WARD 7(1), HYDERABAD IT(SS)A NO. 39/HYD/2007 BLOCK PERIOD COVERING ASSESSMENT YEARS 1991 - 92 TO 2000 - 01 AND FROM 1.4.2000 TO 24.1.2001 SMT. KURSHEED BEGUM, HYDERABAD (PAN AGMPB 3230 F ) ASSTT COMMISSIONER OF INCOME - TAX CIRCLE 7(1), HYDERABAD APPELLANT BY : SHRI K.C.DEVADAS RESPONDENT BY : SHRI JEEVAN LAL LAVIDIYA DR DATE OF HEARING 20.12.2013 DATE OF PRONOUNCEMENT 13.02.2014 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER: THERE ARE SIX APPEALS IN ALL IN THIS BUNCH, CONCERNING TWO ASSESSEES, WHO ARE RELATED TO EACH OTHER AS HUSBAND AND WIFE. WHILE TWO OF THEM, BEING IT(SS)A NO.189/HYD/2005 FIELD BY SHRI M.A. BASITH KHAN, AND IT(SS)A NO.39/HYD/2007 FILED BY LATE SMT.KURSHEED BEGUM, ARISE OUT OF THE BLOCK ASSESSMENTS FOR THE BLOCK PERIOD COVERING ASSESSMENT YEARS FROM 1991 - 92 TO I T (SS)A NO.183/HYD/05 AND FIVE OTHERS SHRI M.A.BASITH KHAN, HYDERABAD AND ORS. 2 2000 - 01 AND FROM 1.4.2000 TO 24.1.2001, AND DIRECTED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME - TAX(APPEALS) I, HYDERABAD, THE OTHER FOUR APPEAL S, FILED BY SHRI BASITH KHAN, ARE DIRECTED AGAINST TWO COMMON ORDERS OF THE COMMISSIONER OF INCOME - TAX(APPEALS) VI, HYDERABAD DATED 30.4.2008 FOR ASSESSMENT YEARS 1998 - 99 AND 1999 - 2000; AND OF THE COMMISSIONER OF INCOME - TAX(APPEALS) IV, HYDERABAD DATED 20 .2.2006 FOR THE ASSESSMENT YEARS 2000 - 01 AND 2001 - 02. SINCE COMMON ISSUES ARE INVOLVED, THESE APPEALS ARE BEING DISPOSED OF WITH THIS COMMON ORDER FOR THE SAKE OR CONVENIENCE. APPEALS OF SHRI BASITH KHAN BROS IT(SS)A NO. 183/HYD/2005 2. FACTS IN BRIE F LEADING TO THE FILING OF THIS APPEAL ARE THAT THE ASSESSEE WAS WORKING AS GENERAL MANAGER OF HAPPY HOMES HOUSING GROUP SINCE 1996. SEARCH AND SEIZURE OPERATIONS UDNERS.132 OF THE ACT WERE CONDUCTED IN THE CASE OF DR. SAIFUDDIN AHMED, PROPRIETOR OF HAPPY HOMES HOUSING GROUP. IN THAT CONNECTION, RESIDENTIAL PREMISES OF THE ASSESSEE, I.E. SHRI M.A.BASITH KHAN WERE ALSO SEARCHED, ON THE BASIS OF SEARCH WARRANT ISSUED IN THE CASE OF DR.SAIFUDDIN AHMED. INCRIMINATING MATERIAL WAS ALLEGEDLY FOUND DURING THE SEARCH, WHICH REVEALED THAT I) THE ASSESSEE AND HIS WIFE ACQUIRED SEVERAL PROPERTIES; II) CARRIED ON REAL ESTATE BUSINESS; III) DERIVED SUBSTANTIAL RENTAL INCOME; AND IV) EARNED HUGE CAPITAL GAINS ON THE SALE OF PLOTS. IT WAS NOTICED THAT NO RETURNS WERE FILED EITHER BY THE ASSESSEE OR HIS WIFE. SWORN STATEMENTS OF THE ASSESSEE WERE RECORDED BY THE AUTHORIZED OFFICERS DURING SEARCH ON 24.1.2001 AND SUBSEQUENTLY BY THE ASSISTANT DIRECTOR OF IT(INV) ON 26.2.2001 AND 2.3.2001 SINCE SUBSTANTIAL UNDISCLOSED I NCOME RELATING TO THE ASSESSEE WAS DETECTED IN THE COURSE OF SEARCH OPERATIONS IN THE CASE OF DR. SAIFUDDIN AHMED, NOTICE UNDER S.158BD WAS ISSUED TO THE ASSESSEE ON 28.6.2002. IN RESPONSE TO THE SAID NOTICE, RETURN IN FORM NO.2B WAS FILED. SUBSEQUENTLY, A NOTICE UNDER S.143(2) WAS ISSUED AND ULTIMATELY, BLOCK ASSESSMENT WAS COMPLETED ON A TOTAL UNDISCLOSED INCOME OF RS.23,63,710 FOR THE BLOCK PERIOD, VIDE ORDER OF ASSESSMENT DATED 29.7.2004 PASSED UNDER S.143(3) READ WITH S.158BD READ WITH S.158BC OF T HE IT ACT. I T (SS)A NO.183/HYD/05 AND FIVE OTHERS SHRI M.A.BASITH KHAN, HYDERABAD AND ORS. 3 3. ON APPEAL BEFORE THE CIT(A), ASSESSEE CONTESTED THE BLOCK ASSESSMENT MADE AS ABOVE, NOT ONLY WITH REGARD TO ITS LEGALITY AND VALIDITY, BUT ALSO ON THE MERITS OF THE ADDITIONS MADE. IT WAS THE CONTENTION OF THE ASSESSEE BEFORE THE CIT( A) THAT THE SEARCH UNDER S.132 WAS CONDUCTED AT HIS RESIDENTIAL PREMISES ON 24.1.2001, AND HENCE, THE ASSESSMENT SHOULD HAVE BEEN COMPLETED UNDER S.158BC ON OR BEFORE 30.1.2003, AND HENCE THE ASSESSMENT COMPLETED UNDER S.158BD ON 29.7.2004 IS INVALID AND T IME BARRED. THE CIT(A) DID NOT AGREE WITH THE LEGAL CONTENTIONS OF THE ASSESSEE ON THIS ASPECT OF LEGALITY AND VALIDITY OF THE BLOCK ASSESSMENT MADE, OBSERVING THAT THE PROCEEDINGS WERE CORRECTLY INITIATED UNDER S.158BD IN THE CASE OF THE ASSESSEE, AND HE NCE, THE SAME WERE COMPLETED WITHIN THE TIME LIMIT PRESCRIBED UNDER S.158BE OF THE ACT. HE RELIED IN THIS BEHALF ON THE DECISION OF THE NAGPUR BENCH OF THE TRIBUNAL IN THE CASE OF JATANBAI BAID (96 TAXMAN 24). EVEN ON MERITS OF THE ADDITIONS MADE BY THE ASSESSING OFFICER, THE CIT(A) FOUND NO FORCE IN THE CONTENTIONS OF THE ASSESSEE AND CONFIRMED THE ASSESSMENT MADE BY THE ASSESSING OFFICER, DISMISSING THE APPEAL OF THE ASSESSEE. 4. AGGRIEVED BY THE ORDERS OF THE REVENUE AUTHORITIES, ASSESSEE PREFERR ED SECOND APPEAL BEFORE THE TRIBUNAL, RAISING ELABORATE GROUNDS, NUMBERING AS MANY AS FIFTEEN, RUNNING INTO FOUR TYPED PAGES, QUESTIONING NOT ONLY THE LEGALITY AND VALIDITY OF THE ASSESSMENT MADE AND THE JURISDICTION OF THE ASSESSING OFFICER TO MAKE THE IM PUGNED ASSESSMENT, BUT ALSO REITERATING HIS CONTENTIONS ON THE MERITS OF THE ADDITIONS MADE BY THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT . ASSESSEE ALSO RAISED ADDITIONAL GROUNDS, WHICH READ AS FOLLOWS - 1. AS THE FOUNDATION OF ASSESSMENT IS ON A N ILLEGAL SEARCH THE ENTIRE ASSESSMENT MADE U/S. 158BD OF THE I.T.ACT, 1961 ON 30.6.2005 IS AB INITIO VOID AND IS TO BE QUASHED. 2. WITHOUT PREJUDICE TO ANY OF THE GROUNDS RAISED EARLIER, THE SATISFACTION OF THE ASSESSING OFFICER AS ENJOINED IN S.158BD OF THE I.T.ACT, 1961 NOT HAVING BEEN REACHED/RECORDED THAT ANY UNDISCLOSED INCOME OF THE APPELLANT WAS FOUND DURING 132 PROCEEDINGS OF THE PERSON SEARCHED, THE ENTIRE BLOCK ASSESSMENT PROCEEDINGS/ORDER SUFFERS FROM STATUTORY INFIRMITIES AND IS HENCE I T (SS)A NO.183/HYD/05 AND FIVE OTHERS SHRI M.A.BASITH KHAN, HYDERABAD AND ORS. 4 BAD IN LAW, INVALID AND THEREFORE THE ENTIRE BLOCK ASSESSMENT PROCEEDINGS/ORDER MUST BE QUASHED. 5. SINCE THE ABOVE ADDITIONAL GROUND S ARE LEGAL IN NATURE AND GO TO THE ROOT OF THE MATTER, RELYING ON THE DECISION OF THE APEX COURT IN THE CASE OF NATIONAL THERMAL POWER CORPORATION LTD. V/S. CIT (229 ITR 383) WE ADMIT THE SAME AND PROCEED TO DISPOSE OF THESE APPEALS, TAKING INTO ACCOUNT T HOSE ADDITIONAL GROUNDS AS WELL. 6. AT THE OUTSET, WE MAY TAKE UP FOR CONSIDERATION THE ADDITIONAL GROUNDS ADMITTED, AS THEY GO TO THE ROOT OF THE MATTER. 7. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SEARCH WARRANT WAS NOT IN THE NAME OF THE ASSESSEE, BUT IN THE NAME OF DR.SAIFUDDIN AHMED. HOWEVER, BASED ON THE SAID SEARCH WARRANT, THE RESIDENCE OF THE ASSESSEE, M.A.BASITH KHAN, HAS ALSO BEEN SEARCHED. THAT BEING SO, THE BLOCK ASSESSMENT OUGHT TO HAVE BEEN DONE UNDER S.158BC AND NOT UNDE R S.158BD. IN SUPPORT OF THIS CONTENTION, RELIANCE IS PLACED ON THE DECISION OF THE APEX COURT IN THE CASE OF UNION OF INDIA V/S. AJIT SINGH (260 ITR 80) AND THE JUDGMENT OF HONBLE ORISSA HIGH COURT IN THE CASE OF SIKSHA O ANUSANDHAN V/S. CIT(336 ITR 0 112). WITHOUT PREJUDICE TO THIS CONTENTION, IT IS SUBMITTED THAT IN THE PRESENT CASE, BEFORE TAKING UP THE BLOCK ASSESSMENT UNDER S.158BD, THE SATISFACTION O F THE ASSESSING OFFICER , AS ENJOINED IN S.158BD OF THE I.T. ACT, 1961 , HAS NOT BEEN REACHED/RE CORDED TO THE EFFECT THAT ANY UNDISCLOSED INCOME OF THE ASSESSEE WAS FOUND DURING S. 132 PROCEEDINGS OF THE PERSON SEARCHED, THE ENTIRE BLOCK ASSESSMENT PROCEEDINGS/ORDER SUFFERS FROM STATUTORY INFIRMITIES . IT IS THEREFORE, CONTENDED THAT THE ENTIRE BL OCK ASSESSMENT IS BAD IN LAW, INVALID AND THEREFORE THE ENTIRE BLOCK ASSESSMENT PROCEEDINGS/ORDER MUST BE QUASHED. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, OPPOSING THE ABOVE CONTENTIONS OF THE ASSESSEE, SUBMITTED THAT THE ASSES SMENT IS VERY MUCH LEGAL AND VALID AND SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES. I T (SS)A NO.183/HYD/05 AND FIVE OTHERS SHRI M.A.BASITH KHAN, HYDERABAD AND ORS. 5 9. WE HEARD BOTH SIDES ON THE ISSUE OF LEGALITY AND VALIDITY OF THE BLOCK ASSESSMENT, RAISED IN THE ADDITIONAL GROUNDS OF APPEAL. IT IS THE CONTENTION OF THE ASSES SEE THAT IN THE PRESENT CASE, PROCEEDINGS SHOULD HAVE BEEN INVOKED UNDER S.158BC AND NOT UNDER S.158BD OF THE ACT. IN THE PRESENT CASE, SEARCH INITIALLY HAS TAKEN PLACE ON THE PREMISES OF DR.SAIFUDDIN, AND IT LATER STRETCHED ON TO THE RESIDENTIAL PREMIS ES OF THE ASSESSEE, AND ULTIMATELY, THE IMPUGNED BLOCK ASSESSMENT PROCEEDINGS HAVE BEEN INITIATED IN THE CASE OF THE ASSESSEE. THE QUESTION FOR CONSIDERATION BEFORE US IS WHETHER THE BLOCK ASSESSMENT SHOULD BE COMPLETED UNDER S.158BC OR UNDER S.158 BD OF THE ACT. THERE IS A FUNDAMENTAL DIFFERENCE BETWEEN THE PROVISIONS OF S.158BC AND S.158BD OF THE ACT, AS BROUGHT IN THE RESPECTIVE PROVISIONS OF THOSE SECTIONS ITSELF. THE PROVISIONS OF S.132 MENTION ABOUT CONDUCTING OF SEARCH AT THE PREMISES. IT IS CLEAR FROM THE PROVISIONS OF THIS SECTION THAT SEARCH IS CONDUCTED AT ANY PLACE OR ON A PERSON AUTHORIZED BY THE APPROPRIATE AUTHORITY FOR SUCH SEARCH. FOLLOWING SUCH SEARCH, BLOCK ASSESSMENTS MAY BE WARRANTED EITHER ON THE PERSON SEARCHED OR ON ANY CONNECTED PERSONS, BASED ON THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SUCH SEARCH. S.158BC APPLIES WHEREVER SEARCH WAS CONDUCTED ON THE PREMISES OF THE ASSESSEE AND S.158BD APPLIES ONLY IN A CASE WHERE THERE IS NO SEARCH AND DURING THE COURSE OF SEARCH ON OTHERS PREMISES, THE BOOKS OF ACCOUNT, ETC. BELONGING TO THE ASSESSEE WERE FOUND. AS NOTED ABOVE, IN THE PRESENT CASE, SEARCH HAS TAKEN PLACE PURSUANT TO SEARCH WARRANT ISSUED BY THE COMPETENT AUTHORITY IN RELATION TO DR. SAIFUDDIN. IN THE ABSENCE OF ANY MATERIAL BROUGHT ON RECORD BY THE PARTIES TO THE EFFECT THAT A SEARCH WARRANT HAS BEEN ISSUED IN RELATION TO THE ASSESSEE AS WELL, ANY BLOCK ASSESSMENT CAN BE MADE IN THE HANDS OF THE ASSESSEE ONLY UNDER S.158BD OF THE ACT, AND NOT UNDER S.158BC. WE ARE FORTIFIED IN THIS BEHALF BY THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF CIT V/S. MS.ROHINI S. WALIA (289 ITR 328). CONSEQUENTLY, THE FIRST ADDITIONAL GROUND OF THE ASSESSEE NOTED ABOVE IS DEVOID OF MERIT AND AS SUCH IS LIABL E TO REJECTED. WE DO SO ACCORDINGLY. I T (SS)A NO.183/HYD/05 AND FIVE OTHERS SHRI M.A.BASITH KHAN, HYDERABAD AND ORS. 6 10. NOTWITHSTANDING THE ABOVE POSITION, WE MAY NOTE THAT T HE ASSESSING OFFICER IN THE IMPUGNED BLOCK ASSESSMENT ORDER HAS CITED IN THE CAUSE TITLE AGAINST THE APPROPRIATE COLUMN, BOTH S.158BD READ WITH S.158BC, BES IDES S.143(3), AND AS SUCH THE ASSESSING OFFICER ALSO APPEARS TO BE OF THE VIEW THAT PROVISION S OF S.158BD ALSO APPLY TO THE FACTS OF THE PRESENT CASE , AND CONSEQUENTLY, THE IMPUGNED ASSESSMENT COULD BE TAKEN , AS IF HAVING BEEN DONE IN TERMS OF S.158BD AS WELL. HOWEVER, THE CONDITION PRECEDENT FOR INITIATING A BLOCK ASSESSMENT UNDER S.158BD IS REACHING/RECORDING SATISFACTION BY THE ASSESSING OFFICER , AS ENJOINED IN S.158BD OF THE I.T. ACT, 1961 , TO THE EFFECT THAT INCRIMINATING MATERIAL INDICATING UNDISCL OSED INCOME ASSESSABLE IN THE HANDS OF THE ASSESSEE, WAS FOUND DURING S. 132 PROCEEDINGS OF THE PERSON SEARCHED . ADMITTEDLY, NO SUCH SATISFACTION HAS BEEN RECORDED BY THE ASSESSING OFFICER BEFORE INITIATING THE PROCEEDINGS UNDER S.158BD OF THE ACT, AND , AS NOTED ABOVE, THE ASSESSMENT ORDER REVEALS, AS IF THE ASSESSING OFFICER WAS PROCEEDING TO MAKE THE ASSESSMENT BOTH UNDER S.158BC/158BD, WHICH IS NOT PERMISSIBLE IN LAW. NON - RECORDING OF SATISFACTION BY THE ASSESSING OFFICER IS FATAL TO THE LEGALITY AND V ALIDITY OF THE BLOCK ASSESSMENT MADE . WE ARE SUPPORTED IN THIS BEHALF BY THE DECISION OF THE APEX COURT IN THE CASE OF MANISH MAHESHWARI V/S ASSTT. COMMISSIONER OF INCOME - TAX AND ANOTHER (289 ITR 341), WHEREIN IT HAS BEEN HELD, VIDE HEAD NOTE ON PAGE 341 OF THE REPORTS, AS FOLLOWS - BEFORE THE PROVIS I ON S O F SECTION 158BD OF TH E INCOM E - TAX ACT, 1961, ARE INVOKED AGAINST A PERSON OTHER THAN THE PERSON WHOSE PREMI S ES HAVE BEEN SEARCHED UNDER SECTION 132 OR DOCUM E N T S AND OTHER ASSETS HAVE BEEN REQUISITION E D UN D E R SE C TION 132A, THE CON D IT I ONS PRECEDENT HAVE TO B E SATISFIED. HELD ACCORDINGLY, THAT WHERE THE PREMI S ES OF A DIRECTOR OF A COMPANY AND HIS WIFE WERE SEARCHED UNDER SECTION 132 OF THE INCOME - TAX ACT, 1961, AND A BLOCK ASSESSMENT HAD TO BE DONE IN REL A TION TO THE COMPA N Y, THE ASSESSING OFFICER HAD TO (I ) RECORD HIS SATISFACTION THAT ANY UN D I SC LO S ED INCOME BELON G IN G TO THE COMPANY, AND (II) HAND O VER THE BOOKS O F ACCOUN T AND OTHER DOCUM E N T S AND ASSETS SEIZED TO THE ASSESSING OFFICER HAVING JURISDICTION AGAINST THE COMPANY. CONSEQUENTLY, WE FIND MERIT IN THE SECOND ADDITIONAL GROUND OF THE ASSESSEE NOTED ABOVE. WE ALLOW THE SAME AND ACCORDINGLY, AND CANCEL THE IMPUGNED BLOCK ASSESSMENT MADE IN THE HANDS OF THE ASSESSEE, AS THE SAME HAS BEEN I T (SS)A NO.183/HYD/05 AND FIVE OTHERS SHRI M.A.BASITH KHAN, HYDERABAD AND ORS. 7 DONE WITHOU T COMPLYING WITH THE CONDITION PRECEDENT, VIZ. REACHING/RECORDING OF SATISFACTION AS TO DETECTION UNDISCLOSED INCOME AS A RESULT OF SEARCH ON ANOTHER PERSON. ON THIS LEGAL GROUND ITSELF, THE APPEAL OF THE ASSESSEE DESERVES TO BE ALLOWED. 11. IN TH E LIGHT OF THE FOREGOING DISCUSSION WITH REGARD TO THE ADDITIONAL GROUNDS OF THE ASSESSEE, REST OF THE GROUNDS ORIGINALLY RAISED BY THE ASSESSEE IN THIS APPEAL, EITHER ON THE LEGALITY OF THE ASSESSMENT OR ON THE MERITS OF THE ADDITIONS HAVE BECOME REDUNDAN T AND OF ACADEMIC NATURE, AND AS SUCH WE ARE NOT INCLINED TO GO INTO THE SAME. ALL THOSE GROUNDS ARE ACCORDINGLY DISMISSED AS BEING OF ACADEMIC NATURE AND NOT REDUNDANT. 1 2 . IN THE RESULT, THIS APPEAL OF THE ASSESSEE, BEING IT(SS)A NO.183/HYD/2005, IS T REATED AS ALLOWED. ITA NO.649/HYD/2006 : ASSESSMENT YEAR 2000 - 01 ITA NO.650/HYD/2006 : ASSESSMENT YEAR 2001 - 02 ITA NO.1294/HYD/2008 : ASSESSMENT YEAR 1998 - 99 ITA NO.1294/HYD/2008 : ASSESSMENT YEAR 1998 - 9 9 1 3 . IN THESE FOUR APPEALS DIRECTED AGAINST THE COMMON ORDERS OF THE COMMISSIONER OF INCOME - TAX(APPEALS) VI HYDERABAD DATED 20.2.2006 FOR THE ASSESSMENT YEARS 2000 - 01 AND 2001 - 02 AND OF THE COMMISSIONER OF INCOME - TAX(APPEALS) IV HYDERABAD DATED 30.4 .2008, ASSESSEE ORIGINALLY RAISED A NUMBER OF GROUNDS CONTESTING NOT ONLY THE LEGALITY AND VALIDITY OF THE ASSESSMENTS FOR THE YEARS UNDER APPEAL, MADE BY ISSUANCE OF NOTICE UNDER S.148 OF THE ACT, BESIDES QUESTIONING THE ACTION OF THE CIT(A) IN UPHOLDING THE ADDITIONS MADE BY THE ASSESSING OFFICER. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE ASSESSEE ALSO RAISED THE FOLLOWING ADDITIONAL GROUNDS ON THE LEGAL ASPECTS OF THE MATTER - 1. THE ENTIRE RE - OPENING OF THE ASSESSMENT IS BAD IN LAW AS NO REASONS WERE RECORDED PRIOR TO ISSUE OF NOTICE UNDER S.148 AND THEREFORE, THE ASSESSMENT MADE UNDER S.143(3) READ WITH S.147 DATED 31.3.2005 IS IN VALID AND MUST BE QUASHED. I T (SS)A NO.183/HYD/05 AND FIVE OTHERS SHRI M.A.BASITH KHAN, HYDERABAD AND ORS. 8 2. THE LD CIT(A) FAI LED TO NOTE THAT THE ENTIRE PROCEEDINGS OF THE APPELLANT FLEW FROM THE SEIZED MATERIAL FOUND DURING 132 PROCEEDINGS OF BASITH KHAN ON 24.1.2001 AND THEREFORE, THE APPELLANT OUGHT TO HAVE BEEN SUBJECTED TO THE PROCEEDINGS OF S.158BD WHICH ARE SPECIAL PROVI SIONS AND THEREFORE, THE ASSESSMENT PROCEEDINGS INITIATED UNDER S . 147/148 OF THE INCOME - TAX ACT, 1961 FOR THE ASSESSMENT YEARS 1998 - 99 TO 2001 - 02 ARE BAD IN LAW AND THEREFORE OUGHT TO BE QUASHED. SINCE THE ABOVE ADDITIONAL GROUNDS ARE LEGAL ONE AND GOE S TO THE ROOT OF THE MATTER, WE ADMIT THE SAME AND PROCEED TO DISPOSE OF THESE APPEALS TAKING INTO ACCOUNT THE ABOVE ADDITIONAL GROUNDS. 1 4 . WE HEARD BOTH SIDES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES IN THE LIGHT OF THE MATERIAL AVAILABLE ON RECORD. NOW, WE MAY, AT THE OUTSET, DEAL WITH THE ADDITIONAL GROUNDS WHICH ARE LEGAL IN NATURE AND QUESTION THE VERY INITIATION OF THE PROCEEDINGS UNDER S.147/148 OF THE ACT. ADMITTEDLY AND AS THE VERY OPENING SENTENCE OF THE ASSESSMENT ORDERS PASSED FOR EACH OF THESE YEARS INDICATE, THE ASSESSEE IS A BODY OF INDIVIDUALS CONSISTING OF (I) M.A.BASITH KHAN, (II) MR.MD. SARDAR, (III) MR.M.A.HALEEM (IV) LATE MR. MD. ALI (REP. BY MR. SARDAR ALI); AND (V) MR.MD. YOUSUF; AND THE IMPUGNED ASSESSMENTS HAVE BEEN MA DE BY ISSUANCE OF NOTICES UNDER S.147/148 OF THE ACT, BASED ON THE MATERIAL FOUND DURING THE COURSE OF SEARCH ON THE PREMISES OF SHRI M.A.BASITH KHAN. IN THIS VIEW OF THE MATTER, SINCE THE ASSESSEE - BOI IS INDEPENDENT OF SHRI M.A.BASITH KHAN QUA INDIVIDU AL - IN TERMS OF OUR DISCUSSION IN PARAS 9 AND 10 OF THIS ORDER IN THE CONTEXT OF APPEAL OF SHRI M.A.BASITH KHAN(IND), ASSESSMENTS IN THESE MATTERS MADE ON THE BASIS OF MATERIAL FOUND DURING THE COURSE OF SEARCH ON THE PREMISES OF OTHER PERSON, SHOULD HAVE BEEN DONE UNDER S.158BD OF THE ACT. 1 5 . IT MAY BE NOTED AT THIS JUNCTURE THAT THE SOURCE OF POWER FOR INITIATING ANY LEGAL ACTION IS TRACEABLE TO ACTION UNDER S.132 OF THE INCOME - TAX ACT AND CONSEQUENTLY, TO CHAPTER XIV LAYING DOWN SPECIAL PROCEDURE FOR ASSESSMENT IN SEARCH CASE WOULD APPLY. THE MATERIAL FOUND DURING SEARCH ON THE PREMISES OF SHRI M.A.BASITH KHAN BEING THE SOURCE FOR THE INITIATION OF THE PRESENT ASSESSMENTS, AND THUS, THESE CASES BEING SEARCH CASES, THE PROVISIONS I T (SS)A NO.183/HYD/05 AND FIVE OTHERS SHRI M.A.BASITH KHAN, HYDERABAD AND ORS. 9 CONTAINED IN CHA PTER XIV LAYING DOWN THE BLOCK ASSESSMENT PROCEDURES, ALONE ARE APPLICABLE. THEREFORE, THE PROVISIONS OF S.158BD ENJOINED UPON THE ASSESSING OFFICER OF THE SEARCHED PARTY TO INITIATE THE PROCEEDINGS UNDER THE SAID SECTION, IF HE HAD BEEN ASSIGNED WITH TH E JURISDICTION UNDER S.127 OR PASS ON THE INFORMATION ALONGWITH THE SEIZED DOCUMENTS WITH THE JURISDICTIONAL OFFICER AS REQUIRED UNDER S.158BD. THE ASSESSING OFFICER IN THIS CASE HAS NOT TAKEN ANY ACTION ON THE ABOVE LINES, OR PASSED ON THE INFORMATION TO THE JURISDICTIONAL OFFICER FOR INITIATING ACTION AGAINST THE APPELLANT - BOI UNDER S.158BD CONSEQUENT TO SEARCH, AS WARRANTED BY LAW. WHILE COMPLETING THE ASSESSMENTS UNDER S.148/S.143(3), THE JURISDICTIONAL ASSESSING OFFICER WAS FULLY AWARE OF THE SEARCH A ND CONSEQUENT SEIZURE OF DOCUMENTS, WHICH IS EVIDENT FROM THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT ORDERS FOR THE YEARS UNDER APPEAL ( AS FOR ASSESSMENT YEAR 2000 - 01, SEE PARA 12.1 ON PAGE 17 OF THE ASSESSMENT ORDER). THESE P ROVISIONS OF CHAPTER XIVB GOVERN ASSESSMENTS IN SEARCH CASES AND THE NON - OBSTANTE CLAUSE OF S.158BA, WHICH IS THE CHARGING SECTION, ALSO MAKES IT CLEAR AND OVERRIDES OTHER PROVISIONS OF ASSESSMENT IN REGULAR COURSE. THESE SPECIAL PROVISIONS OVERRIDE THE NORMAL/REGULAR PROVISIONS AND GENERAL PROVISIONS OF ASSESSMENT TO TAX OF ESCAPED INCOME IN A SEARCH CASE UNDER S.147 BECAUSE OF NON - OBSTANTE CLAUSE IN S.158BA. IT IS WELL SETTLED POSITION OF LAW THAT WHEN THERE IS A SPECIAL PROVISION FOR ANY LEGAL ACTION I N THE STATUTE, THE GENERAL PROVISIONS OPERATING IN THE SAME FIELD WOULD BE SUBORDINATE TO THE SPECIFIC PROVISION. THEREFORE, THE PROVISIONS OF S.147 WHICH GOVERN REGULAR ASSESSMENT IN CASE OF ESCAPED INCOME CANNOT BE APPLIED TO REOPENING OF ASSESSMENT IN A CASE COVERED BY SEARCH. THE JURISDICTION OF THE ABOVE PROVISIONS ARE CLEARLY DEMARCATED AND NOT INTER - CHANGEABLE. WE ARE SUPPORTED IN THIS BEHALF BY THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CARGO CLEARING AGENCY V/S. JOINT CIT (307 ITR 1), RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE. 1 6 . IN THE LIGHT OF THE ABOVE DISCUSSION, WE FIND THAT THE RECOURSE MADE BY THE ASSESSING OFFICER IN THESE CASES TO THE PROVISIONS OF S.147/148 READ WITH 143(3), FOR BRINGING TO TAX THE ESCAP ED INCOME, NOTICED ON THE BASIS OF MATERIAL I T (SS)A NO.183/HYD/05 AND FIVE OTHERS SHRI M.A.BASITH KHAN, HYDERABAD AND ORS. 10 FOUND AT THE TIME OF SEARCH ON THE PREMISES OF BASITH KHAN, IS NOT PERMISSIBLE IN LAW. CONSEQUENTLY, THE IMPUGNED ASSESSMENTS ARE LIABLE TO HELD AS INVALID AND DESERVE TO BE CANCELLED. WE DO SO ACCORDINGLY, ALLO WING THE SECOND ADDITIONAL GROUND RAISED BY THE ASSESSEE ON THE LEGALITY AND VALIDITY OF THE RECOURSE MADE BY THE ASSESSING OFFICER TO THE PROVISIONS OF S.147/148 IN A MATTER COVERED BY SEARCH. IN THIS VIEW OF THE MATTER, REST OF THE GROUNDS, INCLUDING THE FIRST ADDITIONAL GROUND EXTRACTED ABOVE, AS WELL AS THE GROUNDS ORIGINALLY RAISED BY THE ASSESSEE IN THESE APPEALS, EITHER ON THE LEGALITY OF THE ASSESSMENT OR ON THE MERITS OF THE ADDITIONS HAVE BECOME REDUNDANT AND OF ACADEMIC NATURE, AND AS SUCH WE ARE NOT INCLINED TO GO INTO THE SAME. ALL THOSE GROUNDS ARE ACCORDINGLY DISMISSED AS BEING OF ACADEMIC NATURE AND REDUNDANT. 1 7 . IN THE RESULT, THESE FOUR APPEALS OF THE ASSESSEE, BEING ITA NO.649 AND 650/HYD/2005 AND ITA NOS.1294 AND 1295/HYD/2007, ARE TR EATED AS ALLOWED. APPEAL SMT. KURSHEED BEGUM IT(SS)A NO.39/HYD/2007 1 8 . FACTS AND CIRCUMSTANCES OF THIS CASE, CONCERNING LATE SMT.KURHSEED BEGUM, ARE IDENTICAL TO THOSE DISCUSSED IN THE CONTEXT OF HER HUSBANDS APPEAL, IT(SS)A NO.183/HYD/2005 . SEARCH HAS TAKEN PLACE ON HER RESIDENTIAL PREMISES BASED ON THE WARRANT ISSUED IN THE NAME OF DR.SAIFUDDIN, AND THE IMPUGNED BLOCK ASSESSMENT HAS BEEN COMPLETED UNDER S.143(3) READ S.158BD OF THE ACT, ON 30.6.2005. IN THIS CASE ALSO, ADDITIONAL GROUNDS CONTEST ING THE ASSESSMENT MADE UNDER S.158BD AND NOT UNDER S.158BC HAVE BEEN RAISED, IN ADDITION TO THE GROUNDS ORIGINALLY RAISED IN THE APPEAL, CONTESTING THE ASSESSMENT NOT ONLY ON ITS MERITS BUT ALSO ON ITS LEGALITY AND VALIDITY. FOR THE REASONS DISCUSSED IN P ARA 5 ABOVE, WE ADMIT THE ADDITIONAL GROUNDS, WHICH ARE LEGAL IN NATURE A ND GO TO THE ROOT OF THE MATTER. I N THIS CASE , THOUGH THE BLOCK ASSESSMENT HAS BEEN COMPETED UNDER S.158BD OF THE ACT, WITHOUT FULFILLING THE REACHING/RECORDING OF SATISFACTION BY THE ASSESSING OFFICER WITH REGARD TO UNEARTHING OF INCRIMINATING MATERIAL REVEALING UNDISCLOSED INCOME ASSESSABLE IN THE HANDS OF THE ASSESSEE. I T (SS)A NO.183/HYD/05 AND FIVE OTHERS SHRI M.A.BASITH KHAN, HYDERABAD AND ORS. 11 SINCE RECORDING OF SUCH A SATISFACTION HAS NOT BEEN DONE BY THE ASSESSING OFFICER IN THIS CASE AS WELL, FOR TH E DETAILED REASONS DISCUSSED WHILE DEALING WITH THE APPEAL OF SHRI BASIT KHAN, IN PARA 10 HEREINABOVE, THE IMPUGNED ASSESSMENT CANNOT BE SUSTAINED. WE DO SO ACCORDINGLY, ACCEPTING THE LEGAL CONTENTIONS RAISED BY THE ASSESSEE IN THE ADDITIONAL GROUNDS. IN THIS VIEW OF THE MATTER, REST OF THE GROUNDS, ORIGINALLY RAISED BY THE ASSESSEE IN THIS APPEAL, EITHER ON THE LEGALITY OF THE ASSESSMENT OR ON THE MERITS OF THE ADDITIONS HAVE BECOME REDUNDANT AND OF ACADEMIC NATURE, AND AS SUCH WE ARE NOT INCLINED TO GO INTO THE SAME. ALL THOSE GROUNDS ARE ACCORDINGLY DISMISSED AS BEING OF ACADEMIC NATURE AND NOT REDUNDANT. 1 9 . IN THE RESULT, THIS APPEAL OF THE ASSESSEE, BEING IT(SS)A NO.39/HYD/2007, IS TREATED AS ALLOWED. 20 . TO SUM UP, ALL THE SIX APPEALS OF TH E ASSESSEES ARE TREATED AS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 13.02.2014 SD/ - SD/ - (CHANDRA POOJARI ) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DT / - 13 TH FEBRUARY, 2014 COPY FORWARDED TO: 1. 2. 3. SHRI BASITH KHAN, C/O. M/S. SEKHAR & COI., CHARTERED ACCOUNTANT, 133/4, R.P.ROAD, SECUNDERABAD 500 003 SMT. KURHSEED BEGUM, L/R. SHRI M.A.BASITH KHAN, C/O. M/S. SEKHAR & CO., CHARTERED ACCOUNTANT, 133/4, R.P.ROAD, SECUNDERABAD 500 003 SHRI BASITH KHAN AND OTHERS, C/O. M/S. SEKHAR & CO., CHARTERED ACCOUNTANT, 133/4, R.P.ROAD, SECUNDERABAD 500 003 4 . ASST. COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE 3, HYDERABAD I T (SS)A NO.183/HYD/05 AND FIVE OTHERS SHRI M.A.BASITH KHAN, HYDERABAD AND ORS. 12 5. ASST. COMMISSIONER OF INCOME - TAX CIRCLE 7(1) HYDERABAD 6. 7 8 COMMISSIONER OF INCOME - TAX(APPEALS) I, HYDERABAD COMMISSIONER OF INCOME - TAX(APPEALS) - VI, HYDERABAD COMMISSIONER OF INCOME - TAX(APPEALS) IV, HYDERABAD 9. 10 11 COMMISSIONER OF INCOME - TAX CENTRAL HYDERABAD COMMISSIONER OF INCOME - TAX V HYDERABAD COMMISSIONER OF INCOME - TAX III, HYDERABAD 12. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S