M/s. Ahmed Aliji & Co., Mumbai V. The ACIT., Cent.Circle-1(4), Ahmedabad

ITSSA 126/AHD/2007

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9365 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 30 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-04-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 22-04-2010
• Assessment Year: misc
• Appeal Filed On: 31-07-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C
• Assessee Lawyers: NARENDRA BRAHMBHATT
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI MUKUL SHRAWAT, JUDICIAL MEMBER AND SHRI D.C. AGRAWAL, ACCOUNTANT MEMBER DATE OF HEARING : 22/04/2010 DRAFTED ON:30/04 /2010 IT(SS)A NO.126/AHD/2007 BLOCK PERIOD : 01/04/1991 TO 09/01/2001 M/S.AHMED ALIJI & CO. UNIT NO.19, AAREY MILK COLONY GOREGAON (EAST) MUMBAI VS. THE ASSTT.CIT CENTRAL CIRCLE-1(4) AHMEDABAD PAN/GIR NO. : AAAFA 0609 H (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI NARENDRA BRAHMBHATT RESPONDENT BY: SHRI M.C. PANDIT, SR.D.R. O R D E R PER SHRI MUKUL SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WH ICH HAS EMANATED FROM THE ORDER OF THE LEARNED CIT(APPEALS)-IV, AHME DABAD DATED08/03/2007. 2. AS PER THE GROUNDS OF APPEAL, FEW GROUNDS HAVE B EEN RAISED WHICH ARE IN RESPECT OF THE QUANTUM ADDITION WHICH WAS SU STAINED BY THE LEARNED CIT(APPEALS). HOWEVER, AT THE OUTSET, THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS VEHEMENTLY STATE D THAT A PRIMARY LEGAL GROUND HAS TO BE DEICED FIRST WHICH HAS SOMEHOW BEE N OVERLOOKED WHILE RAISING THE GROUNDS OF APPEAL. HE HAS DRAWN OUR AT TENTION ON THE SAID LEGAL ISSUE WHICH PERTAINED TO THE INVOCATION OF JU RISDICTION U/S.158BD OF IT(SS)A NO.126/A HD/2007 M/S.AHMED ALIJI & CO. VS. ACIT BLOCK PERIOD : 01/04/1991 TO 09/01/2001 - 2 - THE I.T. ACT, 1961. IN THIS REGARD, OUR ATTENTION WAS DRAWN ON THE GROUND WHICH WAS RAISED BEFORE THE LEARNED CIT(APPEALS) AS FOLLOWS:- 1. THE LD. ASSESSING OFFICER HAS ERRED IN LAW AND ON FACTS IN INITIATING AND CONDUCTING THE PROCEEDINGS U/S.158BD WHEN THERE WERE NO CIRCUMSTANCES EXISTING WHICH ENABLE THE LD. ASSESSING OFFICER TO INITIATE AND CONDUCT SUCH ASSESSMENT PRO CEEDINGS. THE LD. ASSESSING OFFICER HAS ERRED IN LAW AND ON FACTS IN INITIATING AND CONDUCTING THE PROCEEDINGS U/S.158BD WHEN HIS EARLI ER ACTION OF ASSESSMENT U/S.158BC AGAINST THE VERY SAME ASSESSEE WAS HELD TO BE INVALID BY HON'BLE CIT(A)-RANGE-1, AHMEDABAD VID E APPELLANT ORDER DTD. 09/04/2003. 2.1. OUR ATTENTION HAS ALSO BEEN DRAWN ON THE VERDI CT OF LEARNED CIT(APPEALS) IN RESPECT OF THIS GROUND; RELEVANT PA RAGRAPH NOS.2 & 3 ARE REPRODUCED BELOW:- 2. THE FIRST GROUND OF APPEAL IS REGARDING BLOCK A SSESSMENT PROCEEDINGS U/S.158BD OF THE I.T.ACT, 1961 WHICH WA S CHALLENGED BY LD. AUTHORISED REPRESENTATIVE AS WITHOUT JURISDI CTION. LD. AUTHORISED REPRESENTATIVE CONTENDED THAT SEARCH WAS CONDUCTED IN CASE OF THE NANDOLIYA GROUP OF CASES AND THE APPELL ANT JOINTLY OCCUPIED THE SAME PREMISES WHERE SEARCH WAS CONDUCT ED. HOWEVER, THE NAME OF THE APPELLANTS WAS NOT MENTIO NED IN THE WARRANT OF AUTHORIZATION. BUT, A REGISTER SEIZED AS ANNEXURE-A-7 CONTAINING THE TOTAL OF THE SALE OF THE MILK WHICH WAS NOT OFFERED FOR TAXATION AS WARRANT OF AUTHORIZATION WAS IN RES PECT OF PREMISES REQUIRED TO BE SEARCHED. CONSEQUENTLY, N OTICE U/S.158BC WAS ISSUED WHICH WAS DROPPED SINCE NAME O F THE APPELLANT WAS NOT THERE IN THE WARRANT OF AUTHORIZA TION AND THEREAFTER PROCEEDINGS U/S.158BD WERE INITIATED BY WAY OF ISSUE OF NOTICE ON 10.09.2003 WHICH WAS SERVED UPON THE APPE LLANT. 3. I HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF LD.A.R. AS WELL AS GONE THROUGH THE RECORDS. ON PERUSAL OF PROVISIONS CONTAINED U/S.158BC, IT HAS BEEN CLEARLY MENTIONED THAT NOTICE CAN IT(SS)A NO.126/A HD/2007 M/S.AHMED ALIJI & CO. VS. ACIT BLOCK PERIOD : 01/04/1991 TO 09/01/2001 - 3 - BE ISSUED ONLY IN CASE OF THOSE PERSONS WHO WERE SE ARCHED U/S.132. BUT FOR THE PURPOSE OF MAKING ASSESSMENT IN CASE OF OTHER PERSONS WHO WERE NOT SEARCHED U/S.132 REQUIRED TO BE ASSESSED U/S.158BD IF THE AO IS SATISFIED THAT ANY UNDISCLOS ED INCOME BELONGS TO SUCH OTHER PERSON. HENCE IT IS EVIDEN T THAT NO SEARCH WARRANT U/S.132 IS REQUIRED TO BE EXECUTED FOR MAKI NG ASSESSMENT U/S.158BD AND IT IS ONLY THE SATISFACTION OF THE AO WHICH IS SUFFICIENT FOR MAKING ASSESSMENT U/S.158BD. FURTH ER, CHANGE IN CONSTITUTION OR ITS RECONSTITUTION DOE3S NOT BRING INTO EXISTENCE A NEW ENTITY RATHER IT IS TREATED AS CONTINUATION OF OLD FIRM AS PER THE PROVISIONS CONTAINED UNDER PARTNERSHIP ACT. HENCE, THE LIABILITY OF THE FIRM TO PAY TAXES CANNOT BE ABSOLVED ON THE BASIS THAT CHANGES IN CONSTITUTION BRING INTO EXISTENCE A NEW FIRM WITHOUT LIABILITY TO PAY TAXES OF THE OLD FIRM. KEEPING IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, THE CONTENTION S OF LD. AUTHORISED REPRESENTATIVE ARE HEREBY REJECTED AND H ENCE FIRST GROUND OF APPEAL IS HEREBY DISMISSED. 2.3. WITH THIS LEGAL AND FACTUAL BACKGROUND, IT WAS INFORMED THAT THIS GROUND HAS TO BE FIRST DECIDED BEING LEGAL AND FUND AMENTAL ISSUE OF THE INVOCATION OF JURISDICTION WHICH HAS, IN FACT, ALSO EMERGED FROM THE STATEMENT OF FACTS; RELEVANT PORITI8ON REPRODUCED BELOW:- THIS IS THE SECOND ROUND OF ASSESSMENT/APPEAL PROCEEDINGS. 13. THE NOTICE U/S.158BD IS ISSUED AFTER THE ORDER PASSED BY HON'BLE CIT(A) HOLDING THE FIRST ROUND OF PROCEEDIN GS AND THE ASSESSMENT AS INVALID, SO AS TO ROPE IN THE ASSESSE E ANY HOW, APPLYING UNWARRANTED PROVISIONS OF THE ACT, WHICH A RE NOT APPLICABLE TO THE CASE OF THE ASSESSEE. 14. THERE WAS NO SEIZURE OF ANY (I) BOOKS OF ACCOU NT, OR (II) OTHER DOCUMENTS, PERTAINING TO THE ASSESSEE OR (III) ASSE TS OWNED BY THE ASSESSEE FROM THE PREMISES OF SHRI MOHMADALIJI NAND OLIA AND OTHERS IN WHOSE CASE SEARCH PROCEEDINGS U/S.132 WER E CONDUCTED. IN OTHER WORDS THERE DOES NOT EXIST ANY GROUND FOR ISSUANCE OF IT(SS)A NO.126/A HD/2007 M/S.AHMED ALIJI & CO. VS. ACIT BLOCK PERIOD : 01/04/1991 TO 09/01/2001 - 4 - NOTICE U/S.158BD TO THE ASSESSEE BY THE LEARNED A.O . THE LEARNED A.O. IN HIS ASSESSMENT ORDER U/S.158BD ON PAGE 23, PARA 5(B) HAS ACCEPTED THE FACT THAT NO RECORD PERTAINING TO THE ASSESSEE WAS FOUND. 15.THE LEARNED A.O. HAS NOT BROUGHT ON RECORD NOR H AS COMMUNICATED TO THE ASSESSEE HIS SATISFACTION FOR ISSUE OF NOTICE U/S.158BD: (A) FIRSTLY THAT THE (I) BOOKS OF ACCOUNT, (II) DOCUMENTS, AND /OR (III) ASSETS, ARE FOUND TO BE BELONGING TO THE AS SESSEE. (B) AND SECONDLY THAT ANY INCOME HAS RESULTED FROM SUCH BOOKS OF ACCOUNT, DOCUMENTS AND/OR ASSETS, IF AT AL L FOUND. 3. THIS PRELIMINARY OBJECTION OF LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE APPEARS TO BE VALID BECAUSE THE QUE STION OF JURISDICTION HAS TO BE DECIDED FIRST AND, THEREAFTER, ONLY THE QUESTION OF CORRECTNESS OF THE QUANTUM ADDITIONS CAN BE ADJUDICATED UPON. A S FAR THE APPLICABILITY OF THE PROVISIONS OF SECTION 158BD ARE CONCERNED, T HE STATUTORY REQUIREMENT IS RECORDING OF SATISFACTION AS ENVIS AGED FROM THE RELEVANT PROVISIONS REPRODUCED BELOW:- 158BD. UNDISCLOSED INCOME OF ANY OTHER PERSON WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY U NDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THAN THE PERSON WITH R ESPECT TO WHOM SEARCH WAS MADE UNDER SECTION 132 OR WHOSE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ANY ASSETS WERE REQUISITIONED UNDER SE CTION 132A, THEN, THE BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURI SDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCE ED UNDER SECTION 158BC AGAINST SUCH OTHER PERSON AND THE PROVISIONS OF THI S CHAPTER SHALL APPLY ACCORDINGLY. IT(SS)A NO.126/A HD/2007 M/S.AHMED ALIJI & CO. VS. ACIT BLOCK PERIOD : 01/04/1991 TO 09/01/2001 - 5 - 3.1. IT APPEARS THAT THE LEARNED CIT(APPEALS) HAS N OT CALLED FOR THE REQUISITE REPORT FROM THE REVENUE DEPARTMENT TO ASC ERTAIN WHETHER THE REQUISITE CONDITIONS AS LAID DOWN U/S.158BD OF THE I.T. ACT, 1961 HAVE ACTUALLY BEEN COMPLIED WITH OR NOT. DUE TO THIS RE ASON, WE DEEM IT PROPER AND JUSTIFIABLE TO RESTORE THIS LEGAL GROUND BACK TO THE STAGE OF FIRST APPEAL FOR AFRESH ADJUDICATION, NEEDLESS TO SAY, AF TER PROVIDING REASONABLE OPPORTUNITIES TO BOTH THE SIDES. HE IS EXPECTED TO FACTUALLY AS WELL AS LEGALLY ASCERTAIN THE CORRECT APPLICATION OF THE AF OREMENTIONED IT PROVISION AS PER LAW. WITH THESE DIRECTIONS, THE ISSUE IS HEREBY SET ASIDE TO BE DECIDED BY THE LEARNED CIT(APPEALS), THEREFOR E THE GROUND MAY BE TREATED AS ALLOWED ONLY FOR STATISTICAL PURPOSES. 4. APPEAL IS HEREBY ALLOWED ONLY FOR STATISTICAL PURPOSES PROTANTO. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 30 TH APRIL, 2010. SD/- SD/- ( D.C. AGRAWAL) ( MUKUL SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 30 / 04 /2010 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT . 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-IV, AHMEDABAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD