The ACIT, Circle-3, Surat V. Madhurika K.Lakhani, Surat

ITSSA 13/AHD/2008

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9233 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 02-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 17-05-2010
• Assessment Year: misc
• Appeal Filed On: 18-01-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H P MEENA
• Assessee Lawyers: POONAM JO SHI
• Keywords: Block assessment
• Section: 132

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AT SURAT CAMP BEFORE S/SHRI T.K.SHARMA, JM AND D.C.AGRAWAL, AM ASSTT. CIT, CIRCLE-3, SURAT. VS . SMT. MADHURIKA K. LAKHANI, B-204, YOGI COMPLEX, NEW RANDER ROAD, SURAT. (APPELLANT) .. (RESPONDENT) AND SMT. MADHURIKA K. LAKHANI, B-204, YOGI COMPLEX, NEW RANDER ROAD, SURAT. VS . ASSTT. CIT, CIRCLE-3, SURAT. (APPELLANT) .. (RESPONDENT) REVENUE BY :- SHRI H. P. MEENA, SR. DR ASSESSEE BY:- SMT. POONAM JOSHI, AR O R D E R PER D. C. AGRAWAL, ACCOUNTANT MEMBER . THESE ARE TWO CROSS APPEALS ONE FILED BY THE REVEN UE AND THE OTHER FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT( A) DATED 31.10.2007. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUND :- IT(SS)A NO.13/AHD/2008 BLOCK ASST. PERIOD:1990-91 TO 1999-2000 IT(SS)A NO.19/AHD/2008 BLOCK ASST. PERIOD:1990-91 TO 1999-2000 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.6,26,250/- OUT OF TH E TOTAL ADDITION OF RS.9,25,000/- MADE ON ACCOUNT OF UNEXPLAINED INV ESTMENT IN THE FLAT. WHEREAS THE ASSESSEE HAS RAISED THE FOLLOWING GROUN DS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE DECISION OF THE A O WHO RELIED UPON THE MATERIAL SEIZED IN THE CASE OF THE BUILDER WHO HAS CONSTRUCTED THE FLAT BOOKED BY THE APPELLANT AND SM T. JAYLAXMI JAYANTILAL LAKHANI JOINTLY, WITHOUT GIVING SUFFICIE NT OPPORTUNITY TO THE APPELLANT, AS THE SAME IS NOT BINDING TO THE APPELLANT. 2. WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) IS N OT JUSTIFIED IN UPHOLDING THE DECISION OF THE AO WITHOUT GIVING DUE CONSIDERATION TO THE SUBMISSIONS MADE AND CASE LAWS REFERRED TO IN THE SUBMISSIONS MADE BEFORE HIM. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE DECISION OF THE A O IN ADDING RS.2,26,300/- AS PAYMENT OF ON MONEY AND TREATING T HE SAME AS UNDISCLOSED INVESTMENT IN PURCHASE OF FLAT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE DECISION OF THE A O IN ADDING RS.68,000/- AS PAYMENT MADE AGAINST EXTRA MARBLE WO RK TREATING THE SAME AS UNDISCLOSED INVESTMENT AS THIS INVESTMENT WAS SATISFACTORILY EXPLAINED. 5. WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) IS N OT JUSTIFIED IN HOLDING THE AFORESAID INVESTMENT WHOLLY IN THE HAND S OF THE APPELLANT AS THE APPELLANT IS A JOINT HOLDER ALONG WITH SMT. JAYLAXMI JAYANTILAL LAKHANI. IN ADDITION, THE ASSESSEE HAS RAISED FOLLOWING ADDI TIONAL GROUND:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT, THE ORDER PASSED BY THE AO AND CONF IRMED BY THE LD. CIT(A) IS BAD-IN-LAW AS THE NOTICE U/S 158BD OF THE ACT IS ISSUED TO THE APPELLANT BELATEDLY BY MORE THAN THRE E YEARS. 3 THEREFORE, THE ORDERS SO PASSED AGAINST THE PROVISI ONS OF THE LAW DESERVES TO BE QUASHED. 3. AFTER HEARING THE PARTIES WE ADMIT THE ADDITIONA L GROUND AS IT GOES TO THE ROOT OF THE MATTER. 4. FIRST WE TAKE UP ASSESSEES APPEAL. THE FACTS OF THE CASE ARE THAT A SEARCH UNDER SECTION 132 OF THE ACT WAS CARRIED OUT ON THE BUSINESS AND RESIDENTIAL PREMISES OF M/S OHM DEVELOPERS, SURAT O N 29.10.1999 AND BLOCK ASSESSMENT IN THAT CASE U/S 158BC WAS COMPLET ED ON 30.11.2001. CERTAIN DOCUMENTS PERTAINING TO THE ASSESSEE FOR RE LEVANT BLOCK ASSESSMENT YEAR WERE FOUND WHICH ARE MENTIONED BY T HE AO IN THE BLOCK ASSESSMENT ORDER AS UNDER :- 2. IT WAS NOTICED FROM THE PAGE NO.134 & 135 AND F URTHER PAGE NO.17 OF KHATAVAHI FOUND AND SEIZED AS PER ANNEXURE BS-4 AND PAGE NO.100 & 101 OF ANNEXURE-BS-1 TO PANCHNAMA DATED 29.10.1999 THAT THE ASSESSEE HAD PURCHASED THE FLAT NO.B-204 IN YOGI COMPLEX, NE W RANDER ROAD, SURAT FOR WHICH TOTAL PAYMENT OF RS.7,25,000/- INCL UDING RS.68,000/- EXTRA FOR MARBLE WAS MADE TILL THE DATE OF SEARCH I .E. 20.10.1999. THE BOOKS OF ACCOUNTS SEIZED CONTAINED CATEGORICAL NOTI NGS OF RECEIPT OF DOCUMENTED PRICE AND ON MONEY. DURING THE SEARCH PR OCEEDINGS, THE PARTNERS OF THE FIRM, AND ASSOCIATED PERSONS, HAVE CATEGORICALLY ACCEPTED RECEIPT OF ON MONEY OVER AND ABOVE THE DOCUMENTED C ONSIDERATION. 5. THE FACTS RELATING TO THE SERVICE OF NOTICE U/S 158BD HAS BEEN RECORDED BY THE AO IN PARA 6 OF HIS ORDER AS UNDER :- 6. AS SUCH INTIMATION WAS PASSED ON TO THE ACIT, C IR-3, SURAT THE COPIES OF RELEVANT DOCUMENTS CONCERNING THE CASE OF THE ASSESSEE FOR THE BLOCK ASSESSMENT PERIOD AS ABOVE. HAVING DULY SCRUT INIZED THE SEIZED BOOKS OF ACCOUNT AND DOCUMENTS AND STATEMENT RECORD ED U/S 132(4) OF SHRI KETANBHAI O. DER, PARTNER OF M/S OHM ORGANIZER S THAT THE ASSESSEE NAMED ABOVE HAD MADE PAYMENT OF ON MONEY IN THE P URCHASE OF FLAT, 4 NOTICE UNDER SECTION 158BD R.W.S. 158BC OF THE I.T. ACT DATED 04.02.2005 WAS ISSUED AND DULY SERVED UPON THE ASSESSEE ON 14. 02.2005. IN RESPONSE TO THE NOTICE UNDER SECTION 158BD R.W.S. 158BC THE RETURN OF INCOME FOR THE BLOCK PERIOD WAS REQUIRED TO BE FILED WITHIN 45 DAYS OF THE SERVICE OF NOTICE. THE RETURN OF INCOME OF THE BLOCK PERIOD SH OWING UNDISCLOSED INCOME OF RS.NIL WAS FILED ON 09.05.2005. IN THE BL OCK RETURN OF INCOME THE ASSESSEE HAS SHOWN NIL TOTAL INCOME INCLUDING U NDISCLOSED INCOME COMPUTED U/S 158BB FOR ASST. YEAR 1990-91 TO 2000-0 1 AND THE RETURNED INCOME/ASSESSED INCOME AS ON THE DATE OF SEARCH IS MENTIONED AS N.A. 6. THESE FACTS ARE UNDISPUTED. THE BLOCK ASSESSMENT IN THE CASE OF PERSON SEARCHED WAS COMPLETED ON 30.11.2001 AND NOT ICE U/S 158BD IN THE CASE OF ASSESSEE WAS ISSUED ON 4.2.2005. THIS I S BELATED BY ALMOST THREE YEARS. IN VIEW OF THESE FACTS, WE ARE OF THE VIEW THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF SPECIAL BENCH ITAT DELHI IN THE CASE OF MANOJ AGGARWAL VS. DCIT (2008) 113 ITD 377 (DEL)(SB). WE FIND FROM THE DECISION OF THE SPECIAL BENCH THAT TH E ISSUE IS SQUARELY COVERED BY THE FINDING IN PARA 113 TO 118 WHICH REA DS AS UNDER :- '113. SECTION : 158BD COMMENCES WITH THE WORDS 'WHE RE THE ASSESSING OFFICER IS SATISFIED THAT ANY UNDISCLOSED INCOME BE LONGS TO ANY PERSON, OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH W AS MADE' AND THUS IT IS CLEAR THAT THE SATISFACTION OF THE ASSESSING OFF ICER ASSESSING THE PERSON SEARCHED IS THE FIRST AND FOREMOST REQUIREMENT. THE ASSESSING OFFICER CAN ARRIVE AT THIS SATISFACTION ONLY AFTER ASCERTAINING WHETHER THERE IS ANY UNDISCLOSED INCOME AT ALL AND THIS FINDING CAN BE A RRIVED AT BY HIM ONLY IN THE COURSE OF THE SECTION 158BD ASSESSMENT PROCE EDING. THEREAFTER, HE HAS TO ARRIVE AT A FINDING AS TO THE PERSON TO WHOM SUCH INCOME BELONGS. THIS FINDING ALSO CAN BE ARRIVED AT ONLY IN THE COU RSE OF THE SECTION 158BC PROCEEDING IN THE CASE OF THE PERSON SEARCHED . HE MAY FIND THAT PART OF THE SAID UNDISCLOSED INCOME BELONGS TO THE PERSON SEARCHED AND THE REST BELONGS TO OTHER PERSON OR PERSONS. AT THI S STAGE, HE HAS TO GIVE A FINDING IN THIS BEHALF AS TO WHICH OF THE UNDISCLOS ED INCOME BELONGS TO THE PERSON TO WHOM THE REST OF THE INCOME BELONGS. THIS FINDING TOO HAS TO BE ARRIVED AT IN THE COURSE OF THE SECTION 158BC PROCE EDING. AFTER ARRIVING AT THIS FINDING, HE MAKES AN ASSESSMENT OF THE UNDI SCLOSED INCOME RELATING TO THE PERSON SEARCHED IN HIS HANDS AND HA NDS OVER THE MATERIAL RELATING TO THE UNDISCLOSED INCOME BELONGING TO THE OTHER PERSON OR 5 PERSONS TO THE RESPECTIVE ASSESSING OFFICER. AS SEC TION 158BC PROCEEDING IS SPECIFICALLY INTENDED FOR DETERMINING THE UNDISC LOSED INCOME, THE MATERIAL UNEARTHED HAS TO BE EXAMINED IN THE COURSE OF THE SAID PROCEEDING AND IF SUCH EXAMINATION SHOWS THAT THE UNDISCLOSED INCOME BELONGS TO SOME OTHER PERSONS A FINDING IN THIS BEH ALF HAS TO BE RECORDED IN THE COURSE OF THE SECTION 158BC PROCEEDING AS SU CH FINDING HAS TO FORM AN INTEGRAL PART OF THE SAID PROCEEDING AND IN CONF ORMITY WITH THE INTENTION BEHIND THE SAID PROVISION. SO IT IS ESSEN TIAL THAT SUCH FINDING HAS TO FORM PART OF THE SECTION 158BC PROCEEDING AND SO MUST FIND A PLACE IN THE ORDER UNDER SECTION 158BC . THE ASSESSING OFFICER ASSESSING THE PERSON SEARCHED HAS TO GIVE A FINDING ON EACH AND E VERY MATERIAL AND EVIDENCE UNEARTHED AFTER A CAREFUL AND JUDICIOUS EV ALUATION AND SUCH EXERCISE INVOLVES FINDING THAT THE UNDISCLOSED INCO ME BELONGS TO A SPECIFIED PERSON AS FOUND BY HIM ON THE SECTION 158 BD PROCEEDING REVOLVES. IF THEREFORE, IN THE COURSE OF THE SECTIO N 158BC PROCEEDINGS THE ASSESSING OFFICER ASSESSING THE PERSON SEARCHED DOE S NOT GIVE A FINDING THAT ANY PART OF THE UNDISCLOSED INCOME UNEARTHED B ELONGS TO A. PERSON OTHER THAN THE PERSON SEARCHED, SECTION 158BD CAN NEVER BE INVOKED. IT IS THIS FINING THAT IS AN INTEGRAL PART OF BOTH THE PROCEEDINGS WHETHER UNDER SECTION 15BC OR 158BD, FOR, SUCH FINDING DE TERMINES IN WHOSE HANDS THE UNDISCLOSED INCOME UNEARTHED HAS TO BE TA XED. IF THE UNDISCLOSED INCOME BELONGS TO THE PERSON SEARCHED, HE IS SUBJECTED TO BLOCK ASSESSMENT ON SUCH INCOME UNDER SECTION 158BC BUT IF SUCH INCOME OR PART OF SUCH INCOME BELONGS TO A PERSON NOT SEAR CHED, SECTION 15S8D TAKES OVER. THIS IS THE ESSENCE OF THE ENTIRE ENACT MENT RELATING TO SEARCH.' 114. SECTION 158BE PROVIDES FOR TIME LIMIT FOR COMP LETION OF BLOCK ASSESSMENT, IT STIPULATES THAT THE ORDER UNDER SE CTION 158 BC SHAFT BE PASSED WITHIN TWO YEARS FROM THE END OF THE MONTH I N WHICH THE LAST OF THE AUTHORIZATION FOR SEARCH UNDER SECTION 132 WAS EX ECUTED OR FOR REQUISITION UNDER SECTION 132A AS THE CASE MAY BE A ND SO THE ORDER ENVISAGED UNDER SECTION 158BC HAS NECESSARILY TO BE PASSED WITHIN THIS TIME FRAME SET IN LAW. IF THERE IS A TIME-LIMIT FOR PASSING OF SUCH ORDER, THERE IS AN IMPLIED TIME-LIMIT FOR GIVING A FINDING AS TO THE PERSON TO WHOM THE UNDISCLOSED INCOME BELONGS WHICH UNDER NO CIRCUMSTANCES CAN BE BEYOND THE TIME-LIMIT SET IN SECTION 158BE IF THERE IS NO SUCH FINDING GIVEN IN THE ORDER UNDER SECTION 158BC, THE PROVISI ONS OF SECTION 158BD STAND OUSTED AT THE EXPIRY OF THE SAID TIME-LIMIT F OR THE REASON THAT SUCH A FINDING IS THE VERY BASIS FOR INVOKING SECTION 158B D. 6 115. SECTION 158BD AS SAID EARLIER BEGINS WITH THE EXPRESSION 'WHERE THE ASSESSING OFFICER IS SATISFIED' AND SO VERY SECTION IMPLIES A RECORDING OF SATISFACTION. THE\ SATISFACTION CONTEMPLATED IS A J UDICIOUS SATISFACTION AND NOT A' SUBJECTIVE SATISFACTION AND UNLESS THE SAME IS RECORDED IT IS NOT POSSIBLE FOR ANY PERSON TO DISCERN WHETHER THE SATI SFACTION MEETS THE REQUIREMENTS OF LAW AT AFT. THE SATISFACTION CAN BE FOUND IN THE ORDER PASSED UNDER SECTION 158BC AND IF NO SUCH ORDER IS PASSED THEN IT WILL HAVE TO BE FOUND IN THE NOTE HANDING OVER THE MATER IAL SEIZED TO THE ASSESSING OFFICER ASSESSING THE OTHER PERSON IN ANY EVENT, IT HAS TO BE IN WRITING AND IN VIEW OF SECTION 158B&, THE SAID RECO RDING HAS TO BE MADE BEFORE THE TIME SET IN SECTION 158BE EXPIRES. AFTER THE SAID DATE, IT IS NOT POSSIBLE TO INVOKE SECTION 158BD AT ALL. 116. A VIEW IS EXPRESSED THAT WHEREVER & TIME- LIMIT IS INTENDED, THE PARLIAMENT HAS PROVIDED FOR THE SAME AND IN THE ABS ENCE OF A SPECIFIC PROVISION MADE IN THIS RESPECT IT HAS TO BE ASSUMED THAT THERE IS NO TIME- LIMIT INTENDED IN LAW. IT HAS TO BE REMEMBERED THAT THE MATER RELATES TO FIXING HUGE FINANCIAL AND OTHER CIVIL LIABILITY ON THE PERSON AFFECTED AND IT HAS BEEN REPEATEDLY HELD THAT THERE MUST BE A FINAL ITY TO ANY PROCEEDING UNDER THE ACT AND THAT A CONCLUDED PROCEEDING CANNO T BE REOPENED AT THE WHIM AND FANCY OF THE ASSESSING OFFICER WITHOUT THE DUE PROCESS OF TAW. STRICT INTERPRETATION OF FISCAL STATUTES IS THE ORD ER OF THE DAY AND AS THE PROVISIONS FOR SEARCH ATE DRACONIAN IN NATURE SUCH PROVISIONS HAVE .NECESSARILY TO BE STRICTLY CONSTRUED. IT WILL HA VE TO BE REMEMBERED THAT SECTION 158BD PROVIDES FOR INVOKING JURISDICTI ON UNDER THE SAID SECTION ENABLING THE ASSESSING OFFICER ASSESSING TH E OTHER PERSON IN RESPECT OF WHOM THE ASSESSING OFFICER ASSESSING THE PERSON SEARCHED GIVES A FINDING THAT THE UNDISCLOSED INCOME UNEARTH ED AS A RESULT OF SEARCH BELONGS TO THE SAID PERSON AND ONCE SUCH A F INDING IS GIVEN THE PROVISIONS OF SECTION 158BD COME INTO OPERATION. TH IS, THEREFORE, INVOLVES ASSUMPTION OF JURISDICTION AND CANNO T BE CONSTRUCTED AS A PROCEDURAL MATTER. IN THE ABSENCE OF A FINDING IN T HIS BEHALF, THERE IS NO JURISDICTION TO THE OTHER ASSESSING OFFICER AT ALL TO PROCEED FURTHER IN THE MATTER. AS THE TIME-LIMIT SET IN SECTION 158BE APPL IES TO SUCH FINDING, IT IS ONLY LOGICAL THAT THE SAID TIME-LIMIT AUTOMATI CALLY APPLIES FOR INVOKING THE PROVISIONS OF SECTION 158BD AND IT IS FOR THIS REASON THAT THE PARLIAMENT DID NOT FIND IT NECESSARY TO SPECIFY A S EPARATE TIME-LIMIT FOR THE SAME, AS THE ENACTMENT ITSELF SHOWS THAT BOTH S ECTIONS 158BC AND 158BD ARE INTER-LINKED, INTERLACED AND INTER-WINDED AND BOTH FORM PART AND PARCEL OF THE SAME CHAPTER.' 7 IN VIEW OF THE ABOVE FACTS, WE OBSERVE THAT THE NOT ICE U/S 158 BD R.W.S. 158BC OF THE ACT IN THE CASE OF THE ASSESSEE IS ISS UED BELATEDLY BY ALMOST THREE YEARS. THEREFORE, THIS ISSUE IS SQUARELY COVE RED BY THE DECISION OF THE SPECIAL BENCH IN THE CASE OF MANOJ AGGARWAL (SU PRA), AND RESPECTFULLY FOLLOWING THE SAME WE ALLOW THE APPEAL OF THE ASSESSEE AND DISMISS THE APPEAL FILED BY THE REVENUE. ORDER WAS PRONOUNCED IN OPEN COURT ON 02/07/2010 SD/- SD/- (T.K. SHARMA) (D.C.AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DATED : 02/07/2010 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD