The Asstt. Comm. of Income Tax, Circle -3(1), Surat V. Shri Vijaysing P. Solanki, Surat

ITSSA 10/AHD/2005

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9366 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-04-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 13-04-2010
• Assessment Year: misc
• Appeal Filed On: 24-01-2005
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA SRDR
• Assessee Lawyers: S N DIVATIA
• Keywords: Opportunity of being heard; Block assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI A.N.PHAUJA, ACCOUNTANT MEMBER IT(SS)A NO.10/AHD/2005 BLOCK PERIOD FROM 01/04/1989 TO 02/12/1999 DATE OF HEARING:13.4.10 DRAFTED:1234.10 ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE-3(1), SURAT V/S. SHRI VIJAYSING P SOLANKI, 1, SHREENATHJI PLOT, UNION PARK GALI, GHOD DOD ROAD, SURAT PAN NO.ACIPS4825P (APPELLANT) .. (RESPONDENT) IT(SS)A NO.213/AHD/2005 BLOCK PERIOD 01/04/1989 TO 02/12/1999 ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE-3(1), SURAT V/S. SMT. VANITABEN PRABHATSING SOLANKI, 1, SHREENATHJI PLOT, UNION PARKGALI, GHOD DOD ROAD, SURAT PAN NO.ACIPS4826G (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI S.N. DIVATIA, AR REVENUE BY:- SHRI C.K. MISHRA, SR-DR O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THESE TWO APPEALS BY THE REVENUE ARE ARISING OUT O F DIFFERENT ORDER OF COMMISSIONER OF INCOME-TAX(APPEALS)-II, SURAT IN AP PEAL NOS.CAS(II)/45 & 95/04-05 DATED 04-11-2004 AND 15-04-2005. THE BLOCK ASSESSME NTS WERE FRAMED BY THE ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE-3(1), SUR AT U/S.158BD R.W.S. 1258BC OF IT(SS)A NO.10 & 213/AHD/05 ACI, CIR-3(1) SURAT V SH/SM. V.P. SONANKI PAGE 2 THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) VIDE HIS ORDERS DATED I.E.31-08-2004 AND 11-03-2005 FOR THE BLOCK PERIOD FROM 01-04-1989 TO 02-12-1999. FIRST WE WILL TAKE UP REVENUES APPEAL IT(SS)A NO.1 0/AHD/2005. 2. THIS IS A DEPARTMENTAL APPEAL BUT THE ASSESSEE W ANTS TO DEFEND THE ORDER OF CIT(A) UNDER RULE 27 OF APPELLATE TRIBUNAL RULES, 1963, ON THE ISSUE OF JURISDICTION, I.E. THAT THE NOTICE ISSUED U/S.158BD OF THE ACT IS WITHOUT SATISFACTION AND EVEN NOTICE ISSUED U/S 143(2) OF THE ACT IS BARRED BY LIMITATIO N AS THE NOTICE IS ISSUED BEYOND THE PRESCRIBED TIME-LIMIT. ACCORDING TO HIM, ONCE NO NO TICE U/S 143(2) IS ISSUED, NO BLOCK ASSESSMENT CAN BE FRAMED IN VIEW OF THE DECISION OF HONBLE APEX COURT IN THE CASE OF UNDER RULE 27 OF APPELLATE TRIBUNAL RULES WE PER MIT THE ASSESSEE TO RAISE THIS ISSUE AND HEAR THE ISSUE. 3. THE BRIEF FACTS ARE THAT A SEARCH ACTION U/S.132 OF THE ACT WAS CARRIED OUT ON THE RESIDENCE AND BUSINESS PREMISES OF ONE M/S.MAHA VIR TIMBER GROUP ON 02-12- 1999 AND DURING THE SEARCH, VARIOUS INCRIMINATING P APERS WERE FOUND AND SEIZED. DURING BLOCK ASSESSMENT PROCEEDINGS IN THE CASE OF M/S.MAHAVIR TIMBER GROUP, IT IS FOUND THAT SOME DOCUMENTS/PAPERS SEIZED DURING THE COURSE OF SEARCH ARE RELATED TO SHRI VIJAYSINH P SOLANKI AND INTIMATION TO THAT EFF ECT WAS SENT BY THE ASSESSING OFFICER OF M/S. MAHAVIT TIMBER GROUP TO THE OFFICE OF THE ASSESSING OFFICER OF THE PRESENT ASSESSEE, I.E. ASSTT. COMMISSIONER OF INCOM E-TAX, CIRCLE-3(1) SURAT IN LIEU OF THIS INTIMATION, NOTICE U/S.158BD OF THE ACT WAS IS SUED AND THE ASSESSEE FILED BLOCK RETURN FOR THE BLOCK PERIOD ON 28-10-2002. THE ASSE SSEE BEFORE US COULD NOT DEMONSTRATE WHEN NOTICE U/S.158BD OF THE ACT WAS IS SUED AND IS BEYOND REASONABLE PERIOD AND IT COULD NOT ESTABLISH THAT THERE IS NO SATISFACTION RECORDED. HOWEVER, THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO PARA-3.6 OF THE ASSESSMENT ORDER AND THE RELEVANT PARA-3.6 WHERE THE OBJECTION REGARDING NON -ISSUANCE OF NOTICE U/S.143(2) OF THE ACT RAISED IS DEALT BY THE ASSESSING OFFICER AS UNDER:- 3.6 I HAVE CAREFULLY GONE THROUGH THE FACTS AND CI RCUMSTANCES OF THE CASE. I HAVE ALSO CONSIDERED HE WRITTEN SUBMISSION FURNISHE D BY HE ASSESSEE FROM TIME TO TOME. I HAVE PAID DUE REGARD TO EXAMINATION OF SHRI DAMODABHAI PATEL AND CROSS EXAMINATION OF SHRI DAMODARBHAI PATEL BY SHRI VIJAYSINH P SOLANKI ALIAS SHRI RAJUBHAI AND THE STATEMENT OF SHRI MOHAN BHAI RECORDED ON OATH. I HAVE DULY GONE THROUGH SEVERAL JUDGEMENTS CITED ON BEHALF OF THE ASSESSEE. IT(SS)A NO.10 & 213/AHD/05 ACI, CIR-3(1) SURAT V SH/SM. V.P. SONANKI PAGE 3 IN THE COURSE OF THE 158D PROCEEDINGS ASSESSEE PRIM ARILY RAISED TWO OBJECTIONS:- (I) THAT NOTICE U/S.143(2) HAS NOT BEEN ISSUED AND SERVED WITHIN STIPULATED TIME LIMIT OF I.T. ACT AND THEREFORE, AS SESSMENTS ARE NOT VALID. (II) ALLEGED ON MONEY RECEIPT OF RS.1,31,50,000 CAN NOT BE ASSESSED IN HIS HAND ON THE PAPERS AND DOCUMENTS FO UND FROM UNRELATED THIRD PARTY. AS REGARDS THE VALIDITY OF ISSUE AND SERVICE OF NOT ICE U/S.143(2) OF THE ACT, I WOULD LIKE TO CITE FOLLOWING TRIBUNAL DECISIONS AS UNDER:- (I) IN THE CASE OF NANDKISHOR & SONS JEWELLERS VS. DY. CIT 87 ITD 407, THE LD. ITAT LUCKNOW BENCH HELD THAT THE ISSUE OF NOTICE U/S.143(2) FOR THE PURPOSE OF 158BC/158BD ASSESSMEN T IS ONLY A PROCEDURAL REQUIREMENT AND NOT MANDATORY REQUIREM ENT. IT WAS FURTHER HELD THAT NON-ISSUANCE OF NOTICE U/S.143(2) DOES NOT LEAD ASSESSMENT TO NULLITY. (II) IN THE CASE OF NARENDRAKUMAR JAIN & OTHERS VS. DCIT (2002) 74 TTJ LUCKNOW 848, IT IS HELD THAT IN ORDER TO GIVE A REASONABLE OPPORTUNITY TO THE ASSESSEE TO EXPLAIN ITS CASE, TH E SERVICE OF NOTICE U/S. 143(2) IS IMPERATIVE REQUIREMENT OF LAW . THESE TWO JUDGEMENS CITED ABOVE UNDERLINES THE NEED FOR ISSUE OF NOTICE U/S.143(2) IN THE COURSE OF BLOCK ASSESSMENT PROCEE DS, TO ENABLE THE ASSESSEE TO REPRESENT HIS CASE IN A FAIR AND PROPER MANNER. IT MAY BE STATED THAT ISSUANCE OF NOTICE IS NECESSARY, WHEREAS NON I SSUANCE WITHIN THE STIPULATED TIME DOES NOT VITIATE PROCEEDINGS U/S. 1 58BD OF THE ACT. IN THE INSTANT CASE, IN RESPONSE TO NOTICE U/S.143(2), ASS ESSEE HAVE RESPONDED AFFIRMATIVELY BY FURNISHING DETAILS AND ATTENDING F ROM TIME TO TIME. THEREFORE, IT CAN NOT BE SAID THAT ASSESSEE HAS NOT BEEN ALLOWED REASONABLE AND FAIR OPPORTUNITY. THEREFORE, ARGUMENT THAT ISSUANCE OF N OTICE U/S.143(2) WITHIN STIPULATED TIME IS A MUST IS NOT TENABLE. 4. WHEN THIS WAS CONFRONTED TO LD. DR SHRI C.K. MIS HRA, HE FAIRLY STATED THAT THIS ISSUE THAT NO NOTICE U/S.143(2) OF THE ACT HAS BEEN ISSUED OR NOTICE U/S.143(2) HAS BEEN ISSUED BEYOND STATUTORY TIME OF 12 MONTHS, THE FACTS ARE NOT EMANATING OUT OF THE ORDER OF LOWER AUTHORITIES. HE STATED THAT NO D OUBT THIS ISSUE WAS RAISED BY THE ASSESSEE BEFORE CIT(A) IN THE GROUNDS OF APPEAL, WH EN THE LD. DR WAS SHOWN MEMO OF APPEAL AS RAISED BEFORE CIT(A) AND PARTICUL ARLY GROUND NO.3 RAISED BEFORE CIT(A) AS UNDER:- 3. THE BLOCK ASSESSMENT ORDER PASSED BY THE LEARNE D A.O IS LIABLE TO BE QUASHED AS THE NOTICE U/S.143(2) WAS NOT ISSUED WIT HIN THE PERIOD OF ONE YEAR AS LAID DOWN IN PROVISO TO SECTION 143(2) AND THERE FORE THE ENTIRE BLOCK ASSESSMENTS WERE WITHOUT JURISDICTION AND TIME BARR ED. IT(SS)A NO.10 & 213/AHD/05 ACI, CIR-3(1) SURAT V SH/SM. V.P. SONANKI PAGE 4 ON THIS, LD. DR FAIRLY STATED THAT THIS ISSUE HAS N OT BEEN DEALT WITH BY THE CIT(A) AND HE REQUESTED THE BENCH THAT, LET THIS ISSUE BE DECI DED BY CIT(A) FIRST AFTER EXAMINING THE RECORDS. 5. AFTER GOING THROUGH THE FACTS OF THE CASE, WE FI ND THAT THE SPECIFIC GROUND RAISED BY THE ASSESSEE THAT NO NOTICE U/S.143(2) IS ISSUED BY THE ASSESSING OFFICER OR IT IS ISSUED BEYOND THE PRESCRIBED TIME-LIMIT, I T REQUIRES VERIFICATION AND THIS GROUND NEEDS ADJUDICATION AT THE LEVEL OF CIT(A). IT APPAR ENTLY SEEMS FROM THE ASSESSMENT ORDER THAT NO NOTICE U/S.143(2) HAS BEEN ISSUED IN THE PRESENT CASE BUT THIS FACT REQUIRES VERIFICATION AT THE LEVEL OF CIT(A). SINCE THE CIT(A) HAS NOT ADJUDICATED THE SPECIFIC ISSUE, WE SEND BACK THIS ISSUE TO THE FILE OF CIT(A). THIS ISSUE OF THE REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE S. 6. SINCE WE HAVE SET ASIDE THE ISSUE ON JURISDICTIO NAL, THE CIT(A) WILL ALSO DECIDE THE ISSUES ON MERITS AFRESH AFTER PROVIDING REASONA BLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, IN CASE THE NOTICE U/S.143(2) OF THE ACT ISSUED WITHIN THE STIPULATED TIME. NOW COMING TO IT(SS)213/AHD/2005 OF REVENUES APPEA L 7. IN THIS APPEAL OF THE REVENUE ALSO, LD. COUNSEL FOR THE ASSESSEE STATED THAT THERE IS NO SATISFACTION RECORDED IN THE CASE OF M/ S. MAHAVIR TIMBER GROUP OF CASES, THE MAIN SEARCHED PERSON. HE STATED THAT ONCE THERE IS NO SATISFACTION RECORDED, THE BLOCK ASSESSMENT U/S.158BD OF THE ACT CANNOT BE FRA MED IN VIEW OF THE DECISION OF HONBLE APEX COURT IN THE CASE OF MANISH MAHESHWARI V. ACIT (2007) 289 ITR 341 (SC). WE FIND THAT THIS BEING A JURISDICTIONAL ISSU E, WE PERMIT THE ASSESSEE TO RAISE THE ASSESSEE UNDER RULE 27 OF APPELLATE TRIBUNAL RU LES 1963. THE MAIN FACTS ARE ALREADY DISCUSSED IN IT(SS)A NO.10/AHD/2005 ABOVE, AS THIS BLOCK ASSESSMENT EMANATES FROM THE SAME SEARCH AND THE ONLY JURISDIC TIONAL ISSUE NOW RAISED BY THE ASSESSEE FOR SUPPORTING THE ORDER OF CIT(A) IS THAT NO SATISFACTION WAS RECORDED QUA THE PRESENT ASSESSEE IN THE CASE OF SEARCHED PERSON , I.E. IN THE CASE OF M/S. MAHAVIR TIMBER GROUP WHOSE PARTNER IS SHRI DAMODARBHAI PATE L. WE FIND FROM THE FACTS NARRATED BY THE LOWER AUTHORITIES THAT THE NOTICE U /S.158BD OF THE ACT WAS ISSUED ON THE BASIS OF BLOCK ASSESSMENT PROCEEDINGS INITIATED U/S.158BD R.W.S. 158BC OF THE ACT IN THE CASE OF ASSESSEES SON SHRI VIJAYSINH P SOLANKI AND ON THE BASIS OF THE IT(SS)A NO.10 & 213/AHD/05 ACI, CIR-3(1) SURAT V SH/SM. V.P. SONANKI PAGE 5 SAME THE BLOCK ASSESSMENT WAS COMPLETED IN THE ASSE SSEES CASE U/S.158BD OF THE ACT. IT IS NOT CLEAR, WHETHER ANY SATISFACTION IS RECORDED IN THE CASE OF SEARCHED PARTY I.E. M/S. MAHAVIR TIMBER GROUP OR NOT. IN CAS E, THERE IS NO SATISFACTION RECORDED IN THE CASE OF M/S.MAHAVIR TIMBER GROUP QU A THE ASSESSEE, THE BLOCK ASSESSMENT CANNOT BE FRAMED. IN THE ABSENCE OF ANY RECORDS, WE SET ASIDE THIS ISSUE TO THE FILE OF CIT(A) AND DIRECT HIM TO VERIF Y THE RECORDS OF M/S. MAHAVIR TIMBER GROUP AND PASS A SPEAKING ORDER ON ASSUMPTION OF JU RISDICTION U/S.158BD OF THE ACT IN VIEW OF THE DECISION OF HONBLE APEX COURT IN TH E CASE OF MANISH MAHESWARI (SUPRA). ACCORDINGLY, THIS ISSUE OF THE REVENUES APPEAL IS SET ASIDE TO THE FILE OF CIT(A). 8. SINCE WE HAVE SET ASIDE THE ISSUE ON JURISDICTIO NAL, THE CIT(A) WILL ALSO DECIDE THE ISSUES ON MERITS AFRESH AFTER PROVIDING REASONA BLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, IN CASE THERE IS SATISFACTION RECORDE D IN THE CASE OF SEARCHED PARTY I.E. M/S. MAHAVIR TIMBER GROUP. 9. IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 30/04/2010 SD/- SD/- (A.N.PHAUJA) (MAHAVIR SINGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 30/04/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-II, SURAT 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD