M/s Nandi Hills Hotels & Resorts Ltd., Bangalore V. Asst.C.I.T., Bangalore

ITSSA 1/BANG/2016

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6778 (ITAT-BANGALORE)
• Duration Of Justice: 5 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-09-2021
• Assessment Year: misc
• Appeal Filed On: 18-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANKAR GANESH
• Assessee Lawyers: BHASKAR
• Keywords: Rectification of order; Search and seizure; Retrospective amendment; Block assessment; Set aside
• Section: 158BC; 113; 13; 158BD; 154

Judgement Text

IT(SS)A NO.1/BANG/2016 M/S. NANDI HILLS HOTELS & RESORTS LTD., BENGALURU IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER IT(SS)A NO.1/BANG/2016 BLOCK PERIOD : 01.04.1990 TO 24.01.2001 M/S. NANDI HILLS HOTELS & RESORTS LTD. CITY POINT 2 ND FLOOR, 13 TH INFANTRY ROAD BENGALURU 560 001 PAN NO : AAACN5900H VS. ACIT CIRCLE-12(1) BENGALURU APPELLANT RESPONDENT APPELLANT BY : SHRI BHASKAR, A.R. RESPONDENT BY : SHRI SANKAR GANESH, D.R. DATE OF HEARING : 07.09.2021 DATE OF PRONOUNCEMENT : 08.09.2021 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 22-01-2016 PASSED BY LD CIT(A)-5, BENGALURU AND IT RELATES TO THE BLOCK PERIOD ENDING 24.1.2001. THE ASSESSEE IS AGG RIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE SURCHARGE L EVIED U/S 113 OF THE INCOME-TAX ACT,1961 ['THE ACT' FOR SHORT]. 2. THE FACTS RELATING TO THE ABOVE SAID ISSUE ARE STATED IN BRIEF. THE REVENUE CARRIED OUT SEARCH AND SEIZURE OPERATIO NS IN THE CASE OF JANSONS GROUP ON 24.01.2001. AS PART OF THE OPERAT ION, THE PREMISE OF THE ASSESSEE WAS ALSO SUBJECTED TO SEARCH OPERAT IONS. IT(SS)A NO.1/BANG/2016 M/S. NANDI HILLS HOTELS & RESORTS LTD., BENGALURU PAGE 2 OF 5 SUBSEQUENTLY, THE ASSESSMENT WAS COMPLETED IN THE H ANDS OF THE ASSESSEE ON 30-10-2009 U/S 158BD R.W.S 158BC R.W.S. 163 OF THE ACT AND UNDISCLOSED INCOME WAS DETERMINED AT RS.3,8 0,01,436/-. THE ASSESSING OFFICER LEVIED TAX @ 60% AMOUNTING TO RS.2,28,00,861. 3. THE AO NOTICED THAT THE ASSESSMENT ORDER REF ERRED ABOVE SUFFERS FROM MISTAKE APPARENT FROM RECORD, SINCE SURCHARGE REQUIRED TO BE CHARGED AS PER THE PROVISO TO SEC. 113 OF THE ACT W AS OMITTED TO BE CHARGED IN THE ASSESSMENT ORDER. ACCORDINGLY, THE AO INITIATED PROCEEDINGS U/S 154 OF THE ACT AND LEVIED SURCHARGE OF RS.29,64,112/- U/S 113 OF THE ACT. THE LD CIT(A) AL SO CONFIRMED THE SAME. 4. THE LD A.R SUBMITTED THAT THE PROVISO TO SE C.113 OF THE ACT, WHICH ENABLED LEVY OF SURCHARGE, WAS INTRODUCED IN SEC.113 WITH EFFECT FROM 1.6.2002. HE SUBMITTED THAT THE HONBL E SUPREME COURT HAS HELD THAT THE ABOVE SAID PROVISO TO SEC.113 SHA LL HAVE PROSPECTIVE OPERATION ONLY. THE LD A.R SUBMITTED THAT THE SEAR CH IN THE INSTANT CASE HAS TAKEN PLACE ON 24.1.2001, I.E., PRIOR TO I NSERTION OF THE PROVISO TO SEC.113 OF THE ACT. ACCORDINGLY, THE LD A.R SUBMITTED THAT THE ABOVE SAID PROVISO, WHICH ENABLED LEVY OF SURCH ARGE, SHALL NOT APPLY TO THE PRESENT CASE. IN THIS REGARD, THE LD A.R PLACED HIS RELIANCE ON THE DECISION RENDERED BY HONBLE SUPREM E COURT IN THE CASE OF VATIKA TOWNSHIP PRIVATE LTD (367 ITR 466), WHEREIN IT WAS FINALLY HELD AS UNDER:- 41. AS A RESULT OF THE AFORESAID DISCUSSION, THE A PPEALS FILED BY THE INCOME TAX DEPARTMENT ARE HEREBY DISMISSED. APPEALS OF THE ASSESSEES ARE ALLOWED DELETING THE SURCHARGE LEVIED BY THE ASSESSING OFFI CER FOR THIS BLOCK ASSESSMENT PERTAINING TO THE PERIOD PRIOR TO 1ST JU NE, 2002. IT(SS)A NO.1/BANG/2016 M/S. NANDI HILLS HOTELS & RESORTS LTD., BENGALURU PAGE 3 OF 5 ACCORDINGLY, HE CONTENDED THAT THE SURCHARGE LEVIED IN THE IMPUGNED RECTIFICATION ORDER IS LIABLE TO BE DELETED. 5. ON THE CONTRARY, THE LD D.R SUPPORTED THE OR DER PASSED BY LD CIT(A). HE FURTHER SUBMITTED THAT THE DECISION WAS RENDERED BY HONBLE SUPREME COURT IN THE CASE OF VATIKA TOWNSHI P P LTD (SUPRA) ON 15.9.2014, WHILE THE IMPUGNED RECTIFICATION ORDE R WAS PASSED ON 09-03-2012. HE FURTHER SUBMITTED THAT THE DECISION OF HONBLE SUPREME COURT RENDERED IN THE CASE OF SURESH N GUPT A (297 ITR 322)(SC) WAS AVAILABLE AT THE TIME WHEN THE RECTIFI CATION ORDER WAS PASSED, WHEREIN IT WAS HELD THAT THE PROVISO TO SEC .113 OF THE ACT SHALL HAVE RETROSPECTIVE OPERATION. ACCORDINGLY, THE LD D.R SUBMITTED THAT THE AO HAS LEVIED SURCHARGE AS PER T HE LAW INTERPRETED BY HONBLE SUPREME COURT IN THE CASE OF SURESH N GU PTA (SUPRA), WHICH WAS PREVAILING AT THAT POINT OF TIME. HENCE OMISSION ON THE PART OF THE AO TO LEVY SURCHARGE IN THE ASSESSMENT ORDER WAS CLEARLY A MISTAKE APPARENT FROM RECORD AND HENCE THE AO WAS JUSTIFIED IN PASSING THE IMPUGNED RECTIFICATION ORDER LEVYING SU RCHARGE UPON THE ASSESSEE. 6. THE LD A.R SUBMITTED THAT THE DECISION IN T HE CASE OF VATIKA TOWNSHIP P LTD (SUPRA) WAS RENDERED BY LARGER BENCH OF HONBLE SUPREME COURT AND IT HAS REVERSED THE DECISION REND ERED BY THE DIVISION BENCH IN THE CASE OF SURESH N GUPTA (SUPRA ). HE FURTHER SUBMITTED THAT THE HONBLE SUPREME COURT ONLY INTER PRETS THE LAW AND HENCE ITS INTERPRETATION SHALL BE OPERATIONAL S INCE THE INCEPTION OF THE RELEVANT PROVISION. HE SUBMITTED THAT THE H ONBLE SUPREME COURT HAS HELD IN THE CASE OF VATIKA TOWNSHIP P LTD THAT THE SURCHARGE PRESCRIBED UNDER THE PROVISO TO SEC.113 C ANNOT BE LEVIED IT(SS)A NO.1/BANG/2016 M/S. NANDI HILLS HOTELS & RESORTS LTD., BENGALURU PAGE 4 OF 5 ON THE BLOCK ASSESSMENT PERTAINING TO THE PERIOD PR IOR TO 1 ST JUNE 2002. 7. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE CONTENTION OF THE LD A.R THAT THE HONBLE SUPREME COURT ONLY INTE RPRETS THE LAW AND HENCE ITS INTERPRETATION SHALL BE OPERATIONAL S INCE THE INCEPTION OF THE RELEVANT PROVISION IS SUPPORTED BY THE DECIS ION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF SAURASHTRA KUTCH STOCK EXCHANGE LTD (173 TAXMAN 322 (SC) WHEREIN IT WAS HELD AS UNDER: IT IS ALSO WELL SETTLED THAT A JUDICIAL DECISION AC TS RETROSPECTIVELY. ACCORDING TO BLACKSTONIAN THEORY, IT IS NOT THE FUNCTION OF T HE COURT TO PRONOUNCE A NEW RULE BUT TO MAINTAIN AND EXPOUND THE OLD ONE. IN OTHER WORDS, THE JUDGES DO NOT MAKE LAW; THEY ONLY DISCOVER OR FIND THE COR RECT LAW. THE LAW HAS ALWAYS BEEN THE SAME. IF A SUBSEQUENT DECISION ALTERS THE EARLIER ONE, IT (THE LATER DECISION) DOES NOT MAKE A NEW LAW. IT ONLY DI SCOVERS THE CORRECT PRINCIPLE OF LAW WHICH HAS TO BE APPLIED RETROSPECT IVELY. TO PUT IT DIFFERENTLY, EVEN WHERE AN EARLIER DECISION OF THE COURT OPERATE D FOR QUITE SOMETIME, THE DECISION RENDERED LATER ON WOULD HAVE RETROSPECTIVE EFFECT, CLARIFYING THE LEGAL POSITION WHICH WAS EARLIER NOT CORRECTLY UNDE RSTOOD.[PARA 42] IT IS EVIDENT FROM THE ABOVE THAT THE DECISIONS REN DERED BY THE HONBLE COURTS DO NOT MAKE ANY NEW LAW; THEY ONLY CLARIFY T HE LEGAL POSITION WHICH WAS EARLIER NOT CORRECTLY UNDERSTOOD. FURTHER , SUCH LEGAL POSITION CLARIFIED BY THE COURTS HAS RETROSPECTIVE EFFECT AS THE LAW WAS ALWAYS THE SAME AND NO AMENDMENT HAS BEEN MADE TO T HE LAW BY THE DECISION RENDERED BY THE COURTS. THE HONBLE SU PREME COURT HAS ALSO OBSERVED THAT, IF A SUBSEQUENT DECISION ALTERS THE EARLIER ONE, IT (THE LATER DECISION) DOES NOT MAKE A NEW LAW, BUT I T ONLY DISCOVERS THE CORRECT PRINCIPLE OF LAW WHICH HAS TO BE APPLIED RE TROSPECTIVELY. ACCORDINGLY, ONCE THE LEGAL POSITION CLARIFIED BY T HE COURTS IS CONSIDERED TO HAVE RETROSPECTIVE EFFECT, IT CAN BE INFERRED THAT SUCH LEGAL POSITION WAS ALWAYS THE CORRECT POSITION OF L AW AND WAS ALWAYS PREVAILING. IT CAN BE SAID THAT THE SAID POSITION A LSO EXISTED AT THE TIME OF PASSING OF THE IMPUGNED RECTIFICATION ORDER BY THE ASSESSING IT(SS)A NO.1/BANG/2016 M/S. NANDI HILLS HOTELS & RESORTS LTD., BENGALURU PAGE 5 OF 5 OFFICER. IN THAT CASE, THE AO WAS NOT JUSTIFIED IN LEVYING SURCHARGE IN THE HANDS OF THE ASSESSEE, SINCE THE BLOCK ASSESSME NT WAS COMPLETED FOR THE PERIOD ENDING PRIOR TO 1.6.2002. 8. ACCORDINGLY, WE ARE OF THE VIEW THAT THE DEC ISION RENDERED BY LD CIT(A) IS CONTRARY TO THE ESTABLISHED PRINCIPLES OF INTERPRETATION OF LAW. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY LD CIT(A) AND DIRECT THE AO TO DELETE THE SURCHARGE LEVIED IN THE HANDS OF THE ASSESSEE IN THE BLOCK ASSESSMENT ORDER PASSED FOR T HE BLOCK PERIOD ENDING 24.01.2001. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH SEPT, 2021. SD/- (N.V. VASUDEVAN ) VICE PRESIDENT SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 8 TH SEPT, 2021. VG/SPS COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.