ACIT, Bangalore V. Late Sri. Chikkanna @ Thammaiah, Bangalore

ITA 894/BANG/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5651 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 14-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMRITA RANJAN SHRI S C
• Section: 143(3); 142(1); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 894/BANG/2010 ASSESSMENT YEAR : 2006-07 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), BANGALORE. : APPELLANT VS. LATE SRI CHIKKANNA @ THAMMAIAH, THROUGH L/R SRI H.C. BYREGOWDA, NO.1288/3, 23 RD MAIN ROAD, MAGADI CHORD ROAD, BANGALORE 560 079. : RESPONDENT APPELLANT BY : SMT. AMRITA RANJAN, ADDL.CIT(DR) RESPONDENT BY : SHRI S. CHATTARAJ, ADVOCATE O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THIS APPEAL IS PREFERRED BY THE REVENUE AGGRIEVED BY THE ORDER OF THE LD.CIT(A) NO.278/ACIT,CC2(2)/CIT(A)-VI /BANG/2008-09 DATED 17.5.2010 FOR THE ASSESSMENT YEAR 2006-07. 2. THE REVENUE HAS RAISED THREE GROUNDS IN ITS APPE AL WHEREIN GROUND NOS.1 AND 3 ARE GENERAL IN NATURE AND DOES NOT SURV IVE FOR ADJUDICATION. GROUND NO.2 IS REPRODUCED HEREINBELOW FOR ADJUDICAT ION: ITA NO.894/BANG/ 10 PAGE 2 OF 5 THE CIT(A) HAS OVERLOOKED THE FACT THAT PROCEEDING S U/S. 153C WERE NOT INITIATED FOR THE ASST. YEAR 2006-07, IT B EING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH THE SEARCH WAS CONDUCTED AND NOTICE U/S. 142(1) WAS ISSUED. T HERE WAS NO REQUIREMENT TO INCORPORATE A SATISFACTION AS LAID DOWN U/S. 153C. HENCE, THE ORDER OF THE CIT(A) DT: 17-5-2010 FOR THE ASST. YEAR 2006-07 IS ERRONEOUS AND REQUIRES TO BE CANCEL LED. 3. THE CORE ISSUE UNDER CONSIDERATION IN THIS CASE IS THE DETERMINATION OF THE YEARS OF ASSESSMENT ASSESSABLE UNDER SECTION 153C OF THE ACT AND FROM THE FACTS AND CIRCUMSTANCE OF THE INSTANT CASE WHETHER SUCH ASSESSMENT FALLS FOR THE ASSESSMENT YEAR 2006-07 IE ., FOR THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEA RCH WAS INITIATED. 4. FACTS IN BRIEF:- SEARCH U/S. 132 WAS CONDUCTED IN THE CASE OF SRI H.C. BYREGOWDA AND GROUP ON 29.3.2006. DURING THE COURSE OF THE SEARCH CERTAIN DOCUMENTS SUPPOSED TO BE BELONGING TO THE A SSESSEE WAS SEIZED WHICH WAS LATER PROVED TO BE NOT BELONGING TO THE A SSESSEE. THE LD. AO INITIATED PROCEEDINGS U/S. 153C OF THE ACT IN THE C ASE OF THE ASSESSEE FOR THE A.Y. 2006-07 WITHOUT RECORDING SATISFACTION. N OTICE U/S. 143(2) AND 142(1) OF THE ACT WAS ISSUED AND THE ASSESSMENT WAS COMPLETED ON 22.12.2008 U/S. 143(3) R.W.S. 153C OF THE ACT. LD . CIT(A) HELD THAT FOR ISSUANCE OF NOTICE U/S. 153C OF THE ACT, THERE SHOU LD BE SOME MATERIAL SEIZED IN RESPECT OF THE ASSESSEE FROM THE PREMISES OF THE PERSON SEARCH WAS CONDUCTED U/S. 132 OF THE ACT. SINCE IN THE C ASE OF THE APPELLANT IT WAS EVIDENT THAT THE MATERIALS WHICH THE ASSESSING OFFICER HAD RELIED AS BELONGING TO THE APPELLANT TO ASSUME JURISDICTION U /S. 153C OF THE I.T. ACT DID NOT BELONG TO THE APPELLANT AND THEREFORE THE I SSUANCE OF NOTICE U/S. 153C OF THE ACT IS BAD IN LAW AND THE ASSESSMENT CO MPLETED U/S. 143(3) ITA NO.894/BANG/ 10 PAGE 3 OF 5 READ WITH SECTION 153 OF THE ACT IS NOT VALID. THU S, HOLDING THIS TECHNICAL ISSUE IN FAVOUR OF THE ASSESSEE, LD. CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE WITHOUT GOING INTO MERITS OF THE CASE. 5. LD. DRS WRITTEN SUBMISSIONS ARE REPRODUCED HER EINBELOW: (A) SECTION 153A(B) COVERS SIX ASSESSMENT YEARS P RECEDING THE ASSESSMENT YEAR IN WHICH THE SEARCH IS CONDUCTED. THE YEAR IN WHICH SEARCH IS CONDUCTED IS THE SEVENTH YEAR FOR WHICH THE STAT UTORY REQUIREMENT IS OF PRIOR APPROVAL AND SAME TIME LIMITATION ONLY. PROV ISIONS OF SECTION 153A ARE SIMILAR TO THOSE OF SECTION 158BC, BLOCK PERIO D COMPRISING OF SIX ASSESSMENT YEARS PRIOR TO THE YEAR IN WHICH SEARCH IS CONDUCTED AND PART OF YEAR (TILL THE DATE OF COMMENCEMENT OF SEARCH). (B) BLOCK PERIOD U/S. 158B(A). BLOCK PERIOD MEA NS THE PERIOD COMPRISING PREVIOUS YEARS RELEVANT TO SIX ASSESSMEN T YEARS PRECEDING THE PREVIOUS YEAR IN WHICH THE SEARCH WAS CONDUCTED UND ER SECTION 132 OR ANY REQUISITION MADE U/S. 132A AND ALSO INCLUDES THE PE RIOD UP TO THE DATE OF THE COMMENCEMENT OF SUCH SEARCH OR DATE OF SUCH REQUISI TION IN THE PREVIOUS YEAR IN WHICH THE SAID SEARCH WAS CONDUCTED OR REQUISITION WAS MADE: PROVIDED THAT WHERE THE SEARCH IS INITIATED OR THE REQUISITION IS MADE BEFORE THE 1 ST DAY OF JUNE, 2001, THE PROVISIONS OF THIS CLAUSE S HALL HAVE EFFECT AS IF FOR THE WORDS SIX ASSESSMENT YEARS, THE WORDS TE N ASSESSMENT YEARS HAD BEEN SUBSTITUTED. BASED ON THE ABOVE WRITTEN SUBMISSIONS, THE LD. DR ARGUED AND PRAYED TO STRIKE DOWN THE ORDER OF THE LD. CIT(A). ITA NO.894/BANG/ 10 PAGE 4 OF 5 6. THE LD. AR SUBMITTED BEFORE US THAT SINCE THE SE ARCH WAS CONDUCTED ON 29.3.2006 AND THE DATE OF LAST PANCHANAMA DRAWN WAS 1.5.2006, THE SEARCH WILL BE DEEMED TO HAVE BEEN COMPLETED ON 1.5 .2006 AND THEREFORE THE ASSESSMENT U/S. 153C(1) READ WITH SECTION 153A( 1)(B) OF THE ACT WILL FALL FOR THE SIX ASSESSMENT YEARS BEGINNING WITH A.Y. 20 06-07 TO 2001-02. HENCE, IN THE INSTANT CASE THE ASSESSMENT FOR THE A SSESSMENT YEAR 2006- 07 HAS TO BE COMPLETED U/S. 153C OF THE ACT, AND RE CORDING OF SATISFACTION IS MANDATORY. SINCE FROM THE FACTS OF THE CASE IT I S EVIDENT THAT THE ASSESSING OFFICER HAD INITIATED PROCEEDINGS U/S. 15 3C OF THE ACT WITHOUT SEIZING ANY MONEY, BULLION, JEWELLERY OR OTHER VALU ABLES, ARTICLES OR THINGS OR BOOKS OF ACCOUNTS OR DOCUMENTS OF THE ASSESSEE FROM THE PREMISES OF THE PERSON SEARCHED BELONGING TO THE ASSESSEE, AND THER EFORE WITHOUT VALID REASON, THE ASSESSMENT IS INVALID. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. SECTION 153C(1) MAKES IT EXPLICIT THAT ASS ESSMENT UNDER THIS SECTION HAS TO BE MADE IN ACCORDANCE WITH THE PROVI SIONS OF SECTION 153A OF THE ACT. SECTION 153A(1)(B) PROVIDES ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDIN G THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. FURTHER THE SECOND PROVISO T O THIS SECTION CLARIFIES THAT ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS R EFERRED TO IN THIS SUB-SECTION PENDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE . FROM THE ABOVE IT IS CRYSTAL CLEAR THAT IN THE C ASE BEFORE US THE ITA NO.894/BANG/ 10 PAGE 5 OF 5 ASSESSMENT YEAR FALLING UNDER THIS SECTION WILL BE THE SIX ASSESSMENT YEARS PENDING AS ON 29.3.2006 I.E. FROM ASSESSMENT YEAR 2 005-06 TO 2000-01. THEREFORE, FOR THE A.Y. 2006-07 THE ASSESSMENT HAS TO BE COMPLETED UNDER THE NORMAL PROVISIONS OF THE ACT AND NOT UNDER SECT ION 153C OF THE ACT. HENCE, RECORDING OF SATISFACTION IS NOT MANDATORY I N THE CASE BEFORE US AND ASSESSMENT MADE IS IN ACCORDANCE WITH LAW. SINCE T HE LD. CIT(A) HAS NOT DECIDED THE CASE ON MERITS BUT HELD IN FAVOUR OF TH E ASSESSEE ON THE TECHNICAL ISSUE, WE REMIT BACK THE CASE TO THE FILE OF THE LD.CIT(A) TO DECIDE THE CASE ON MERITS AND IN ACCORDANCE WITH LAW. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 8 TH DAY OF APRIL, 2011. SD/- SD/- ( GEORGE GEORGE K. ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 8 TH APRIL, 2011. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. C IT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.