M/s. Shriram Nutrients Ltd., V. The DCIT, 1(1),

ITA 758/IND/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2494 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 11 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-12-2009
• Assessment Year: 1996-1997
• Appeal Filed On: 12-12-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: S S DESHPANDE
• Keywords: Bogus Share capital; Unexplained investment; Search and seizure; Share purchase agreement; Additional evidence; Block assessment; Reason to believe; Reassessment proceedings; Set aside
• Section: 274; 251; 264; 147; 68; 246; 148; 132; 154

Judgement Text

1 IN THE INCOME TAX APPELATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH AND SHRI V.K. GUPTA, AM ITA NOS.758 & 759/IND/07 A.YS.1996-97 & 1997-98 SHRIRAM NUTRIENTS DEWAS APPELLANT PAN AABCB-203Q VS DY. COMMR. OF INCOMETAX 1(1) UJJAIN RESPONDENT APPELLANT BY SHRI S.S. DESHPANDE, CA RESPONDENT BY SMT. APARNA KARAN, SR.DR O R D E R PER JOGINDER SINGH, JM BOTH THESE APPEALS ARE BY THE ASSESSEE FOR THE ASS ESSMENT YEARS 1996-97 AND 1997-98 RESPECTIVELY ON THE GROUND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS), UJJAIN, HAS ERRED IN MAKING CONFIRMATION OF THE ADD ITIONS OF RS. 14,35,000/- AND RS. 8,90,000/-, RESPECTIVELY, MADE ON ACCOUNT BOGUS INVESTMENT IN SHARE CAPITAL. 2. THE ASSESSEE HAS ALSO FILED AN APPLICATION FOR A DMISSION OF FOLLOWING ADDITIONAL GROUNDS :- 2 (I) THE REOPENING OF THE ASSESSMENT IS BADE IN LAW IN AS MUCH AS THE ASSESSMENT ORDER HAS BEEN REOPENED MERELY ON THE DI RECTION GIVEN BY THE LEARNED CIT(A) IN THE BLOCK ASSESSMENT . (II) THE ASSESSMENT ORDER FRAMED IS BARRED BY LIMITATION BEYOND THE TIME LIMIT SINCE THE LEARNED CIT(A) COULD NOT GIVE DIRECTION UNDER EXPLANATION TO SECTION 153 AS HELD BY THE HON ORABLE TRIBUNAL IN THE CASE OF ASSESSEE. (III) THE ASSESSMENT ORDER MAY PLEASE BE CANCELLED. 3. DURING HEARING OF THESE APPEALS, WE HAVE HEARD S HRI S.S. DESHPANDE, LEARNED COUNSEL FOR THE ASSESSEE, AND MRS. APARNA K ARAN, LEARNED SENIOR DR. IT WAS PLEADED ON BEHALF OF THE ASSESSEE THAT IN THE I MPUGNED CASES THE APPEALS WERE FILED AGAINST THE ORDER PASSED BY THE LEARNED FIRST APPELLATE AUTHORITY ON 26.10.2007 FOR THE ADDITION MADE ON ACCOUNT OF SHAR E CAPITAL. THE REASSESSMENTS WERE REOPENED ON THE BASIS OF DIRECTI ON GIVEN BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IN THE BLOCK AS SESSMENT. THE REASONS RECORDED BY THE ASSESSING OFFICER WERE ALSO ON THE BASIS OF DIRECTION OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). AGAIN ST THE DIRECTION GIVEN BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS), TH E ASSESSEE PREFERRED CROSS OBJECTION IN IT(SS) A. NO. 126/IND/05 WHEREIN THE T RIBUNAL HELD THAT THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS NO POWER TO GIVE SUCH DIRECTION. IT WAS PLEADED THAT THE ASSESSMENT WAS R EOPENED ON 6.3.2006 WHICH IS BAD IN LAW AND BEYOND THE PRESCRIBED TIME LIMIT. A PLEA WAS ALSO RAISED THAT AT THE TIME OF FILING OF APPEAL ON 7.12.2007, THE ORDE R OF THE TRIBUNAL WAS NON- EXISTENT. CONSEQUENTLY, THE ASSESSEE COULD NOT TAK E THE ADDITIONAL GROUND ABOUT 3 THE ILLEGALITY OF REOPENING. CONSEQUENTLY, IT WAS SUBMITTED THAT THE AFORESAID ADDITIONAL GROUNDS MAY BE ALLOWED. 4. ON THE OTHER HAND, THE LEARNED DR STRONGLY DEFEN DED THE DIRECTION OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) BY CONT ENDING THAT THE ASSESSING OFFICER HAS APPLIED HIS MIND, THEREFORE, THE ADDITI ONAL GROUNDS RAISED BY THE ASSESSEE MAY NOT BE ALLOWED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GON E THROUGH THE MATERIAL AVAILABLE ON RECORD. THE FACTS RAISED BY THE ASSES SEE IN ITS APPLICATION DATED 24.2.2009 FOR ADMISSION OF ADDITIONAL GROUNDS HAVE ALSO BEEN CONSIDERED. IT IS SEEN THAT THE ASSESSEE FILED THE RETURN FOR THE ASS ESSMENT YEAR 1997-98 ON 18.12.1996 AND THE DATE OF SEARCH WAS 5.12.2001. T HE BLOCK ASSESSMENT ORDER IS DATED 26.12.2003 AND THE ORDER OF THE LEARNED CO MMISSIONER OF INCOMETAX (APPEALS) IS DATED 13.7.2005. THE TRIBUNAL PASSED ITS ORDER ON 17.10.2008 WHEREAS THE REASONS RECORDED UNDER SECTION 148 OF T HE ACT ARE DATED 6.3.2006 AND THE NOTICE UNDER SECTION 148 WAS ISSUED ON 6.3. 2006 WHEREAS THE ASSESSMENT WAS FRAMED ON 7.11.2006. THE ASSESSEE FILED THE AP PEAL BEFORE THE TRIBUNAL ON 12.12.2007, THEREFORE, ONE CLEAR FACT IS OOZING OUT THAT THE ORDER OF THE TRIBUNAL DATED 17.10.2008 WAS NOT AVAILABLE BEING NON-EXISTE NT. CONSEQUENTLY, IT IS A FIT CASE FOR ADMISSION OF ADDITIONAL EVIDENCE. WE, THE REFORE, IN THE INTEREST OF JUSTICE, ALLOW THE APPLICATION OF THE ASSESSEE AND ADMIT THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE. 4 6. BEFORE COMING TO ANY CONCLUSION, WE ARE REPRODUC ING HEREWITH THE REASONS RECORDED BY THE ASSESSING OFFICER UNDER SEC TION 148 DATED 6.3.2006 :- A SEARCH AND SEIZURE OPERATION U/S 132 OF I.TAX AC T 1961 WAS CONDUCTED AT THE RESIDENCE OF DIRECTORS & BUSIN ESS PREMISES OF THE CO. ON 5.12.2001 WHICH WAS COMPLETE D ON 8.12.2001. ACCORDINGLY, THE BLOCK ASSESSMENT OF AS SESSEE FOR THE BLOCK 1.4.95 TO 5.12.01 WAS COMPLETED ON 26.12.2003. DURING THE BLOCK ASSESSMENT PROCEEDING S THE THEN A.O. CONDUCTED ENQUIRIES IN RESPECT OF GENUINE NESS OF SHARE CAPITAL AND HELD THAT INVESTMENT IN SHARE CAP ITAL IN VARIOUS NAMES WAS NOT GENUINE INVESTMENT BY SHARE HOLDERS. ACCORDINGLY, HE MADE AN ADDITION OF RS.58,00,000/- IN THE TOTAL INCOME OF BLOCK PERIOD. IN FIRST APPEAL, THE LD. CIT(A), UJJAIN, HELD THAT OUT OF 58,00,000/- SHARE CAPITAL OF RS.29,65,000/- PERTAIN ED TO PRIOR PERIOD OF BLOCK PERIOD, HENCE HE DELETED RS.29,65,000/-. FOR BALANCE SHARE CAPITAL OF RS.28 ,35,000/-, THE LEARNED CIT(A) DIRECTED TO ISSUE NOTICE U/S 14 8 AND TAXED THE SHARE CAPITAL IN THE FOLLOWING ASST. YEAR S ASSTT. YEAR 1996-97 RS. 14,35,000/- ASSTT. YEAR 1997-98 RS.08,90,000/- ASSTT. YEAR 2002-03 RS.05,10,000/- TOTAL RS.28,35,000/- THESE DIRECTIONS WERE GIVEN BY LD. CIT(A) WHILE DEC IDING THE APPEAL NO. U-808/04-05 IN CASE OF ASSESSEE UNDER EX PLANATION 2 TO SECTION 153. ON THE BASIS OF ABOVE FACTS, I REASON TO BELIEVE T HAT AN AMOUNT OF RS. 14,35,000/- IS CHARGEABLE TO TAX IN ASST. YEAR 1996-97 HAS ESCAPED ASSESSMENT. ACCORDINGLY NOTICE U/S 148 REA D WITH SECTION 150 IS ISSUED. THE TRIBUNAL IN THE BLOCK ASSESSMENT CASE OF THE AS SESSEE (IT(SS) A NO. 126/IND/05) (BLOCK PERIOD 1.4.1995 TO 5.12.2001) BY FOLLOWING THE DECISIONS OF THE HONBLE JURISDICTIONAL HIGH COURT IN ACIT V. RA JARAM AND BROTHERS; 274 5 ITR 122; KARNATAKA HIGH COURT IN THE CASE OF CONSOL IDATED COFFEE LIMITED V. ITO; 155 ITR 729; ALLAHABAD HIGH COURT IN THE CASE OF HRIDA NARAYAN YOGENDRA PRAKASH; 82 ITR 136; HONBLE SUPREME COURT IN STELLERS INVESTMENT LIMITED; 251 ITR 263 AND THE DECISION OF THE TRIBU NAL IN ACIT V. DR. R.D. JAIN (ITA NOS. 416 & 417/IND/2003) HELD THAT THERE IS NO JUSTIFICATION IN MAKING ANY ADDITION OF RS. 28.35 LACS. THE RELEVANT PORTION O F THE ORDER IS REPRODUCED HEREUNDER :- 7. NEXT GROUND OF APPEAL IS THAT THE LD.CIT(A) ER RED IN GIVING DIRECTION TO ASSESS UNEXPLAINED INVESTMENT O F RS. 28,35,000/-. 8. FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY HAS SHOWN TO HAVE INTRODUCED SHARE CAPITAL OF RS. 58 LAKHS OUT O F THAT CIT(A) FOUND THAT THE AMOUNT OF RS. 29.65 LAKHS PERTAINED TO SHARE CAPITAL ISSUED BEFORE 31.3.1995. A COPY OF AUDIT BA LANCE SHEET FOR THE ASSESSMENT YEAR 1995-96 WAS FILED. THE CIT(A) O BSERVED THAT THE SAME WAS OUTSIDE THE SCOPE OF BLOCK ASSESSMENT PROCEEDINGS AS THE BLOCK PERIOD CONSISTED OF 1.4.1995 TO 5.12.2 001. THEREFORE, THE ADDITION TO THIS EXTENT WAS BEYOND THE SCOPE OF BLOCK ASSESSMENT. HENCE, THE SAME WAS DELETED. 9. REGARDING THE BALANCE OF SHARES AMOUNTING TO RS. 28 .35 LAKHS, IT IS EXPLAINED TO THE CIT(A) THAT THE COMPLETE LIS T OF SHAREHOLDERS INCLUDING THE SHARE CERTIFICATES NUMBER AND SHARE A PPLICATION FORM HAVE BEEN FILED BEFORE THE A.O. SOME OF THE SH AREHOLDERS HAVE DENIED ABOUT THE PURCHASE OF SHARE. HOWEVER, A FFIDAVITS OF THOSE SHAREHOLDERS AND THE PROOF OF THEIR IDENTITY WAS FURNISHED TO THE CIT(A) AND PLACING RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF STELLERS INVESTMENT L IMITED, 251 ITR 263, IT IS SUBMITTED THAT NO ADDITION ON THIS A CCOUNT CAN BE MADE. HOWEVER, THE LD.CIT(A) DECIDED THIS ISSUE IN PARA 4.8.4 OF PAGE 19, WHICH IS REPRODUCED AS UNDER :- 6 4.8.4 IN THE DETAILED FINDINGS, AS HIGHLIGHTED, THE A.O. HAS MADE OUT A CLEAR CASE THAT INVESTMENT IN SHARE CAPI TAL IN VARIOUS NAMES WAS NOT GENUINE INVESTMENT BY SHAREHO LDERS. THE AFFIDAVITS FURNISHED LATER BY THE APPELLANT IN COURSE OF APPEAL PROCEEDINGS WERE ALSO FOUND TO BE PRIMA FACI E EXTREMELY DOUBTFUL. HOWEVER, THE FACT REMAINS THAT THIS SHARE CAPITAL APPEARED IN THE BOOKS OF ACCOUNT OF T HE APPELLANT COMPANY PRIOR TO CONDUCT OF SEARCH. NO EV IDENCE IN COURSE OF SEARCH WAS FOUND TO THE EFFECT THAT TH IS SHARE CAPITAL WAS BOGUS OR INGENUINE SHARE CAPITAL, NOR W AS THERE ANY SUCH ADMISSION TO THIS EFFECT IN THE STATEMENT RECORDED IN SEARCH PROCEEDINGS. THUS, CLEARLY SUCH ADDITION WAS OUTSIDE THE SCOPE OF THE UNDISCLOSED INCOME AS DEFI NED IN SECTION 158B(B). ACCORDINGLY, SUCH ADDITION IS HERE BY DIRECTED TO BE DELETED SUBJECT TO THE DIRECTION TO THE A.O. TO INITIATE REASSESSMENT PROCEEDINGS FOR THE RELEVANT ASSESSMENT YEARS BY ISSUE OF NOTICE U/S 148 ON THE BASIS OF DETAILS OF INVESTMENT AS NOTED HEREINAFTER TO BRING TO TAX SUCH UNDISCLOSED INVESTMENT IN THE FORM OF SHARE CA PITAL IN APPROPRIATE YEARS. IN THE CASE OF THE APPELLANT, ON THE BASIS OF ENQUIRY CONDUCTED BY THE ASSESSING OFFICER AND T OTAL FAILURE ON THE PART OF THE APPELLANT TO ESTABLISH G ENUINENESS OF SUCH SHARE CAPITAL INTRODUCED AND TO ESTABLISH I DENTITY AND/OR CREDITWORTHINESS OF SUCH ALLEGED SHAREHOLDER S, IT IS CLEARLY ESTABLISHED SUCH SHARE CAPITAL WAS BOGUS AN D LIABLE FOR ADDITION U/S 68 IN VIEW OF FURTHER DETAILED FIN DINGS RECORDED HEREINAFTER. THUS, SUCH FINDINGS, FOR CONS IDERING THE TAXABILITY OF SUCH BOGUS SHARE CAPITAL IN REGUL AR ASSESSMENT PROCEEDINGS IN APPROPRIATE ASSESSMENT YE ARS, ARE CONSIDERED NECESSARY FOR DECIDING THE APPEAL. S UCH DIRECTIONS ARE ISSUED BY VIRTUE OF POWER VESTED IN CIT(A) IN DECIDING THE APPEAL R/W EXPLN. 2 TO SECTION 153.. A.Y. 1996-97 RS. 14,35,000/- A.Y. 1997-98 RS. 8,90,000/- A.Y. 2002-03 RS. 5,10,000/- RS. 28,35,000/- 10. FROM THE ABOVE, IT MAY BE NOTED THAT NO EVIDENC E IN THE COURSE OF SEARCH WAS FOUND TO THE EFFECT THAT THIS SHARE CAPITAL WAS 7 BOGUS OR INGENUINE SHARE CAPITAL NOR WAS THERE ANY SUCH ADMISSION TO THIS EFFECT IN THE STATEMENT RECORDED IN SUCH PROCEEDINGS. HENCE, THE CIT(A) HAS RIGHTLY HELD THA T SUCH ADDITION WAS OUTSIDE THE SCOPE OF THE BLOCK ASSESSM ENT PROCEEDINGS, IN VIEW OF UNDISCLOSED INCOME AS DEFIN ED IN SECTION 158B(B) OF THE ACT. HOWEVER, THE CIT(A) ERRED IN DI RECTING TO INITIATE REASSESSMENT PROCEEDINGS FOR ASSESSMENT YE AR 1996-97, 1997-98 & 2002-03 BY ISSUE OF NOTICE U/S 148 ON THE BASIS OF DETAILS OF INVESTMENT TO BRING TO TAX SUCH INVESTME NT IN THE SHARE CAPITAL IN APPROPRIATE YEAR. SUCH DIRECTION PROVED THAT THE CIT(A) HAS TRAVELLED BEYOND THE SCOPE OF HIS POWER. THE HO NBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. HRIDA N ARAYAN YOGENDRA PRAKASH , 82 ITR 136, HAS HELD THAT WHERE IN DEALING WITH THE PROPRIETORY OF THE ASSESSMENT FOR A CERTAI N ASSESSMENT YEAR, THE FIRST APPELLATE AUTHORITY FINDS THAT CERT AIN AMOUNT, INCLUDED BY THE ASSESSING OFFICER AS BELONGING TO T HE ASSESSEE FROM UNDISCLOSED SOURCES AND DISPUTED BY THE ASSESS EE, DID NOT RELATE TO THAT YEAR, THAT FINDING IS SUFFICIENT TO DISPOSE OF THE APPEAL BEFORE HIM. HE CANNOT PROCEED TO FIND THAT T HE INCOME RELATING TO ANY OTHER PARTICULAR ASSESSMENT. THIS I SSUE HAS ALREADY BEEN DECIDED BY THIS BENCH IN THE CASE OF ACIT VS. DR. R. D. JAIN IN I.T.A.NOS. 416 & 417/IND/2003 FOR ASSESSMENT YEA R 1998-99 DATED 31.8.2005, WHEREIN IT IS HELD AS UNDER :- 7. AS WE HAVE SEEN IN THE INSTANT CASE, THE LD.CI T(A) BIFURCATED THE INCOME DECLARED FOR THE ASSESSMENT Y EAR 1998-99 IN THREE ASSESSMENT YEARS I.E. ASSESSMENT Y EAR 1996-97, 1997-97 AND 1998-99. THEREFORE, KEEPING IN VIEW, THE ABOVE FACTS AND CIRCUMSTANCES, WE SET ASIDE THE ORDER OF THE LD.CIT(A) TO THE FILE OF THE CIT(A), WITH THE D IRECTION THAT HE WILL DECIDE THE APPEAL DE NOVO AFTER PROVID ING ADEQUATE OPPORTUNITY TO THE ASSESSEE. IT IS FURTHER DIRECTED THAT THE LD.CIT(A) WILL NOT TRAVEL BEYOND THE ASSES SMENT ORDER AND THE ASSESSMENT YEAR. WE, THEREFORE, DIREC T ACCORDINGLY, HOWEVER, THE APPEAL OF THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 11. THIS ISSUE HAS ALSO BEEN DECIDED BY THIS JURIS DICTIONAL HIGH COURT OF M.P. INDORE BENCH IN THE CASE OF ACIT VS. RAJARAM AND BROTHERS, 274 ITR 122, WHEREIN IT IS HELD AS UNDER : 8 HELD, DISMISSING THE APPEAL, THAT ONCE THE BLOCK ASSESSMENT FOR THE PERIOD APRIL 1, 1988, TO AUGUST, 11,1998, WAS GONE INTO IN PROCEEDINGS UNDER SECTION 158BC OF THE INCOME-TAX ACT, 1961, AND APPROPRIATE RELIEFS BY WAY OF ADDITION AND/OR DELETION WERE GIVEN TO TH E ASSESSEE BY THE ASSESSING OFFICER AND BY THE COMMIS SIONER (APPEALS) AND BY THE TRIBUNAL ON THE FACTS, THERE W AS NO NEED TO GIVE THIS LIBERTY TO THE A.O. TO AGAIN INIT IATE PROCEEDINGS UNDER SECTION 148 IN RESPECT OF THE CON CLUDED REGULAR ASSESSMENT FOR THE YEAR 1998-99. IT WAS MAD E MORE SO, WHEN NO REASONS WERE ASSIGNED AS TO WHY AND UND ER WHAT CIRCUMSTANCES AND ON WHAT BASIS, THIS LIBERTY WAS BEING GIVEN BY THE COMMISSIONER (APPEALS) TO THE A. O. FOR INITIATING OF THE PROCEEDINGS U/S 148 OF THE ACT AN D THAT FOR THE ASSESSMENT YEAR 1998-99. IN ORDER TO GRANT THIS LIBERTY TO THE A.O. FOR INITIATING PROCEEDINGS U/S 148 OF THE ACT AGAINST THE ASSESSEE, IT WAS NECESSARY TO RECORD A FINDING THAT A CASE FOR INITIATING OF PROCEEDINGS UNDER SEC TION 148 WAS MADE OUT. THE NOTICE U/S 148 WAS NOT VALID. 12.SIMILAR VIEW HAS ALSO BEEN TAKEN BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CONSOLIDATED COFFEE LIMIT ED VS. ITO, 155 ITR 729. 13. PLACING RELIANCE ON THE ABOVE DECISION, WE Q UASH THE DIRECTION ISSUED BY THE LD. CIT(A) TO INITIATE REAS SESSMENT PROCEEDINGS U/S 148 FOR THE ASSESSMENT YEARS 1996-9 7, 1997-98 AND 2002-03. FURTHER, IT IS ALREADY MENTIONED THAT NO EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH IN REGARD TO THE SHARE CAPITAL OF RS. 28.35 LAKHS SUGGESTING THAT THE SAME IS BOGUS OR INGENUINE SHARE CAPITAL. IN ADDITION TO THAT IT IS ALSO FOUND AS NOTE BY THE LD. CIT(A) THAT SUCH SHARE CAPITAL APPEARED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY PRIOR TO THE CONDUC T OF SEARCH. IN SUCH CIRCUMSTANCES, THERE IS NO JUSTIFICATION TO MAKE ANY ADDITION OF RS. 28.35 LAKHS. THEREFORE, TO THIS EXT ENT, THE ORDER OF THE CIT(A) IS UPHELD. HENCE, THIS GROUND OF APPEAL IS DISMISSED. 7. THE TRIBUNAL VIDE PARA 13 ABOVE QUASHED THE DIRECTION ISSUED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) TO INIT IATE REASSESSMENT 9 PROCEEDINGS UNDER SECTION 148 OF THE ACT FOR THE IM PUGNED ASSESSMENT YEARS I.E. 1996-97 AND 1997-98 AND 2002-03 BY MENTIONING THAT NO EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH IN REGARD TO SHARE CAPI TAL OF RS.28.35 LACS SUGGESTING THE SAME TO BE BOGUS OR NON-GENUINE SHARE CAPITAL B Y FURTHER MENTIONING THAT THE SHARE CAPITAL APPEARED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY PRIOR TO CONDUCTING THE SEARCH. IF THE AFORESAID F ACTS ARE ANALYSED, ONE CLEAR FACT IS OOZING OUT THAT THE DIRECTION OF THE LEARNED COM MISSIONER OF INCOMETAX (APPEALS) WAS QUASHED BY THE TRIBUNAL IN ITS ORDER DATED 17 TH OCTOBER, 2008, THEREFORE, THERE REMAINS NO DIRECTION OF REOPENING THE ASSESSMENT. CONSEQUENTLY, THE PROVISIONS OF SECTIONS 150 TO 152 ARE NOT APPLICABLE. EVEN IF THE REASONS RECORDED BY THE ASSESSING OFFICER ARE A NALYSED, THESE WERE RECORDED ON THE DIRECTION OF THE LEARNED COMMISSIONER OF INC OMETAX (APPEALS) AND NO INDEPENDENT BELIEF/FINDING HAS BEEN MENTIONED BY TH E ASSESSING OFFICER. THE DIRECTION OF THE TRIBUNAL IN QUASHING THE ADDITION HAS NOT BEEN CHALLENGED BY THE DEPARTMENT BEFORE THE HONBLE HIGH COURT, THERE FORE, THE ORDER OF THE TRIBUNAL HAS ATTAINED FINALITY. EVEN THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND AND HAS MERELY ACTED UPON THE DIRECTION OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). IN VIEW OF THE ABOVE FACTS, W E ARE REPRODUCING HEREUNDER SECTION 149 OF THE ACT :- TIME LIMIT FOR NOTICE. 149. 37 [(1) NO NOTICE UNDER SECTION 148 SHALL BE ISSUED 38 FOR THE RELEVANT ASSESSMENT YEAR, 39 [( A ) IF FOUR YEARS HAVE ELAPSED FROM THE END OF THE RE LEVANT ASSESSMENT YEAR, UNLESS THE CASE FALLS UNDER CLAUSE ( B ); 10 ( B ) IF FOUR YEARS, BUT NOT MORE THAN SIX YEARS, HAVE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSME NT AMOUNTS TO OR IS LIKELY TO AMOUNT TO ONE LAKH RUPEE S OR MORE 40 FOR THAT YEAR.] EXPLANATION. IN DETERMINING INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT FOR THE PURPOSES OF TH IS SUB- SECTION, THE PROVISIONS OF EXPLANATION 2 OF SECTION 147 SHALL APPLY AS THEY APPLY FOR THE PURPOSES OF THAT SECTIO N.] (2) THE PROVISIONS OF SUB-SECTION (1) AS TO THE ISS UE OF NOTICE SHALL BE SUBJECT TO THE PROVISIONS OF SECTION 151 . (3) IF THE PERSON ON WHOM A NOTICE UNDER SECTION 148 IS TO BE SERVED IS A PERSON TREATED AS THE AGENT OF A NON-RE SIDENT UNDER SECTION 163 AND THE ASSESSMENT, REASSESSMENT OR RECOMPUTATION TO BE MADE IN PURSUANCE OF THE NOTICE IS TO BE MADE ON HIM AS THE AGENT OF SUCH NON-RESIDENT, THE NOTICE SHALL NOT BE ISSUED AFTER THE EXPIRY OF A PERIOD OF TWO YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. IN THE AFORESAID SECTION, THE PRESCRIBED LIMIT FOR ISSUANCE OF NOTICE UNDER SECTION 148 IS SIX YEARS WHICH HAS ALREADY EXPIRED AS THE N OTICE WAS SUPPOSED TO BE ISSUED UPTO 31.3.2004. 8. DURING HEARING OF THIS APPEAL, THE LEARNED DR CO NTENDED THAT THE PROVISIONS OF SECTIONS 150 TO 152 OF THE ACT ARE AP PLICABLE IN THE PRESENT APPEALS. THEREFORE, WE ARE REPRODUCING HEREUNDER TH E AFORESAID SECTIONS :- PROVISION FOR CASES WHERE ASSESSMENT IS IN PURSUAN CE OF AN ORDER ON APPEAL, ETC. 150. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 149 , THE NOTICE UNDER SECTION 148 MAY BE ISSUED AT ANY T IME FOR THE PURPOSE OF MAKING AN ASSESSMENT OR REASSESSMENT OR RECOMPUTATION IN CONSEQUENCE OF OR TO GIVE EFFECT T O ANY FINDING OR DIRECTION CONTAINED IN AN ORDER PASSED BY ANY AU THORITY IN ANY PROCEEDING UNDER THIS ACT BY WAY OF APPEAL, REFEREN CE OR REVISION [OR BY A COURT IN ANY PROCEEDING UNDER ANY OTHER LA W]. (2) THE PROVISIONS OF SUB-SECTION (1) SHALL NOT APP LY IN ANY CASE WHERE ANY SUCH ASSESSMENT, REASSESSMENT OR RECOMPUT ATION AS IS REFERRED TO IN THAT SUB-SECTION RELATES TO AN ASSES SMENT YEAR IN 11 RESPECT OF WHICH AN ASSESSMENT, REASSESSMENT OR REC OMPUTATION COULD NOT HAVE BEEN MADE AT THE TIME THE ORDER WHIC H WAS THE SUBJECT-MATTER OF THE APPEAL, REFERENCE OR REVISION , AS THE CASE MAY BE, WAS MADE BY REASON OF ANY OTHER PROVISION L IMITING THE TIME WITHIN WHICH ANY ACTION FOR ASSESSMENT, REASSE SSMENT OR RECOMPUTATION MAY BE TAKEN. [ SANCTION FOR ISSUE OF NOTICE. 151. (1) IN A CASE WHERE AN ASSESSMENT UNDER SUB-SECTI ON (3) OF SECTION 143 OR SECTION 147 HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER, WHO IS BELOW THE RANK OF ASSI STANT COMMISSIONER [OR DEPUTY COMMISSIONER], UNLESS THE [ JOINT] COMMISSIONER IS SATISFIED ON THE REASONS RECORDED B Y SUCH ASSESSING OFFICER THAT IT IS A FIT CASE FOR THE ISS UE OF SUCH NOTICE] : PROVIDED THAT, AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, NO SUCH NOTICE SHALL BE I SSUED UNLESS THE CHIEF COMMISSIONER OR COMMISSIONER IS SATISFIED , ON THE REASONS RECORDED BY THE ASSESSING OFFICER AFORESAID , THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. (2) IN A CASE OTHER THAN A CASE FALLING UNDER SUB-S ECTION (1), NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER, WHO IS BELOW THE RANK OF [JOINT] COMMISSIONER, AFTE R THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSME NT YEAR, UNLESS THE [JOINT] COMMISSIONER IS SATISFIED, ON THE REASO NS RECORDED BY SUCH ASSESSING OFFICER, THAT IT IS A FIT CASE FOR T HE ISSUE OF SUCH NOTICE.] [ EXPLANATION. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT THE JOINT COMMISSIONER, THE COMMISSIONER OR TH E CHIEF COMMISSIONER, AS THE CASE MAY BE, BEING SATISFIED O N THE REASONS RECORDED BY THE ASSESSING OFFICER ABOUT FITNESS OF A CASE FOR THE ISSUE OF NOTICE UNDER SECTION 148 , NEED NOT ISSUE SUCH NOTICE HIMSELF.] OTHER PROVISIONS. 152. (1) IN AN ASSESSMENT, REASSESSMENT OR RECOMPUTATION MADE UNDER SECTION 147 , THE TAX SHALL BE CHARGEABLE AT THE RATE OR RATES AT WHICH IT WOULD HAVE BEEN CHARGED HAD THE INCOME NOT ESCAPED ASSESS MENT. (2) WHERE AN ASSESSMENT IS REOPENED [UNDER SECTION 147 ], THE ASSESSEE MAY, IF HE HAS NOT IMPUGNED ANY PART OF THE ORIGINAL ASSESS MENT ORDER FOR THAT YEAR EITHER UNDER SECTIONS 246 TO 248 OR UNDER SECTION 264 , CLAIM THAT THE PROCEEDINGS UNDER SECTION 147 SHALL BE DROPPED ON HIS SHOWING THAT HE HAD BEEN ASSESSED ON AN AMOUNT OR TO A SUM NOT LOWER TH AN WHAT HE WOULD BE RIGHTLY LIABLE FOR EVEN IF THE INCOME ALLEGED TO HA VE ESCAPED ASSESSMENT HAD 12 BEEN TAKEN INTO ACCOUNT, OR THE ASSESSMENT OR COMPU TATION HAD BEEN PROPERLY MADE : PROVIDED THAT IN SO DOING HE SHALL NOT BE ENTITLED TO REOPE N MATTERS CONCLUDED BY AN ORDER UNDER SECTION 154 , 155 , 260 , 262 , OR 263 . 9. ON CONSIDERATION OF THE FACTS AND THE RIVAL SUBM ISSION, WE ARE OF THE VIEW THAT THE PROVISIONS OF SECTIONS 150 TO 152 OF THE A CT ARE NOT APPLICABLE TO THE PRESENT FACTS BECAUSE THE DIRECTION OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS ALREADY BEEN QUASHED BY THE TRIBUNAL VIDE AFORESAID ORDER DATED 17 TH OCTOBER, 2008 BY HOLDING THAT THE LEARNED CIT(A) C OULD NOT GIVE DIRECTION UNDER EXPLANATION TO SECTION 153 OF THE ACT, THEREF ORE, IT CAN BE SAID THAT THE SAID DIRECTIONS ARE NON-EXISTENT. HERE SINCE THE ASSESSMENT WAS REOPENED ON THE DIRECTION OF THE LEARNED CIT(A) WHICH HAS ALREADY B EEN QUASHED AND THE PRESCRIBED PERIOD HAS ALREADY EXPIRED, THEREFORE, REOPENING IS BAD IN LAW. CONSEQUENTLY, BOTH THESE APPEALS OF THE ASSESSEE A RE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 11 TH DECEMBER, 2009. (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DECEMBER 11, 2009 COPY TO APPELLANT, RESPONDENT, CIT, CIT(A), DR *D/-