M/s. Nath Ji Enterprises (P) Ltd, Faridabad V. ACIT, New Delhi

ITSSA 13/DEL/2008

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0809 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 13-05-2015
• Assessment Year: misc
• Appeal Filed On: 29-01-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Assessee Lawyers: ASHWANI TANEJA
• Keywords: Bogus Share capital; Block assessment
• Section: 132; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E , NEW DELHI) BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER I.T.(SS) NO. 13/DEL/2008 BLOCK ASSESSMENT PERIOD : 12.04.1993 TO 14.08.1996 M/S. NATH JI ENTERPRISES P. LTD., VS. ACIT, RANGE II, E-18, NEHRU GROUND, NIT, FARIDABAD FARIDABAD GIR / PAN:AACCN-0549C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI TANEJA, ADV. RESPONDENT BY : SHRI P DAM KANUNJNA, SR. DR DATE OF HEARING : 13.05.2015 DATE OF PRONOUNCEMENT : 22.06.2015 ORDER PER INTURI RAMA RAO, AM: THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE OR DER OF ASSESSMENT MADE U/S 158BD READ WITH SECTION 254 OF THE I. T. A CT, 1961 DATED 28.12.2007 PASSED BY ADDL. COMMISSIONER OF INCOME T AX RANGE II, FARIDABAD. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT I N THIS CASE, THE ORIGINAL BLOCK ASSESSMENT WAS COMPLETED ON 24.06.1998 AT THE INCOME OF RS.3,90,40,841/- FOR THE BLOCK PERIOD FROM 12.04.19 93 TO 14.08.1996 AGAINST NIL BLOCK INCOME FILED ON 15.06.1998. AGAINST TH IS ASSESSMENT ORDER, APPEAL WAS PREFERRED BY THE APPELLANT BEFORE THE HO NBLE TRIBUNAL. THE HONBLE TRIBUNAL VIDE ITS ORDER DATED 08.11.2006, S ET ASIDE DE NOVO THE ASSESSMENT. CONSEQUENTLY, THE ACIT, RANGE II, FARI DABAD COMPLETED THE IT(SS) NO.13/DEL/2008 2 ASSESSMENT U/S 158BD READ WITH SECTION 254 OF THE A CT VIDE ORDER DATED 28.12.2007 AFTER MAKING ADDITION OF RS.13,72,788/- AS UNDISCLOSED INCOME. AGAINST THIS ORDER, THE PRESENT APPEAL WAS FILED RA ISING FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ASSESSEE DENIES ITS LIABILITY TO BE AS SESSED AT AN UNDISCLOSED INCOME OF RS. 13,72,790/- AND ACCORDING LY DENIES ITS LIABILITY TO PAY TAX ON THAT. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. A.O. HAS ERRED IN LAW AND ON FACTS IN ASSUMING JURISDICTION OVER THE CASE OF THE APPELLANT AND THAT TOO UNDER SECTIO N 158 BD OF THE INCOME TAX ACT, 1961 &. ASSESSMENT ORDER THUS PASSE D IS BAD IN LAW AND ON FACTS, INTER ALIA, ON THIS GROUND ALONE. 3. THAT IN ANY VIEW OF THE MATTER AND IN ANY CASE, ASSUMPTION OF JURISDICTION UNDER SECTION 158 BD OF THE INCOME TAX ACT, 1961 IS BAD IN LAW WITHOUT FULFILLING THE REQUISITE CONDITIONS AS MANDATED BY THAT SECTION. 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE AND IN ANY VIEW OF THE MATTER AND IN ANY CASE THE A SSESSMENT ORDER PASSED BY LD. A.O. IS BAD IN LAW BEING BARRED BY LI MITATION. 5. THAT HAVING REGARD TO THE FACTS & CIRCUMSTANCES OF THE CASE LD. A.O. HAS ERRED IN LAW AND ON FACTS IN MAKING AN ADD ITION OF RS. 13,72,790/- ON ACCOUNT OF ALLEGED UNEXPLAINED SHARE CAPITAL. 6. THAT IN ANY VIEW OF THE MATTER AND IN ANY CASE, ADDITION OF RS. 13,72,790/- ON ACCOUNT OF SHARE CAPITAL IS BAD IN L AW BEING NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COUR SE OF SEARCH, MORE SO WHEN THE SAME WAS DULY APPEARING IN THE REG ULAR BOOKS OF THE ASSESSEE, AND, THUS, BEYOND THE SCOPE OF BLOCK ASSESSMENT. 7. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE LD A.O. HAS ERRED IN LAW AND ON FACTS IN FRAMING TH E ASSESSMENT WITHOUT GIVING ADEQUATE OPPORTUNITY OF HEARING. 8. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE LD. A.O. HAS ERRED IN LAW AND ON FACTS IN FRAMING T HE ASSESSMENT WITHOUT FOLLOWING THE DIRECTIONS OF THE HON'BLE INC OME TAX APPELLATE TRIBUNAL CORRECTLY. 3. DURING THE COURSE OF HEARING, LD. COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THERE WAS NO SATISFACTION RECORDED BY THE A.O. BEFORE INITIATING THE IT(SS) NO.13/DEL/2008 3 PROCEEDINGS U/S 158BD OF THE ACT. HE FURTHER SUBMI T4ED THAT THE FAILURE TO DO SO WILL VITIATE THE VERY ASSESSMENT PROCEEDINGS. IN THIS CONNECTION, HE RELIED UPON THE FOLLOWING DECISIONS: I) CIT VS MANISH MAHESHWARI 289 ITR 341 (S.C.) II) CIT VS DAWN VIEW FARMS P. LTD. 15 DTR 83 (DEL.) III) MANOJ AGGARWAL 113 ITD 377 (DEL.) IV) NEW DELHI AUTO FINANCE 300 ITR 83 (DEL.) V) RADHEY SHYAM BANSAL VS ACIT I.T.A.NO. 12/DEL/200 7 VI) ACIT VS KISHORI LAL BALWANT RAI 17 SOT 380 (CHD .) 4. IN SUPPORT OF THE CONTENTION THAT NO SATISFACTIO N WAS RECORDED AND LD. COUNSEL FOR THE ASSESSEE FILED A COPY OF LETTER WRI TTEN BY ACIT, RANGE II, FARIDABAD ADDRESSED TO CIT, DR, F BENCH, INCOME T AX APPELLATE TRIBUNAL, KHAN MARKET, NEW DELHI WHEREIN IT WAS STATED THAT N O SATISFACTION NOTICE WAS RECORDED IN THE CASE AND COPY OF LETTER IS REPR ODUCED BELOW: NO. ACIT I C-1I1 FBD I 09-10/ OFFICE OF THE ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-II, FARIDABAD. DATE :03.08.2009 TO THE COMMISSIONER OF INCOME TAX, (DR) F-BENCH, INCOME TAX APPELLATE TRIBUNAL KHAN MKT., NEW DELHI. SIR, SUB - FURNISHING OF COPY OF SATISFACTION RECORDED B EFORE THE HON'BLE ITAT IN THE CASE OF M/S NATH JI ENTERPRISES PVT. LT D. , FARIDABAD FOR THE BLOCK PERIOD 01.04.1986 TO 14.08.1996- REGARDIN G . KINDLY REFER TO TELEPHONIC CONVERSATION HELD WITH T HE UNDERSIGNED ON THE ABOVE NOTED SUBJECT. AS PER RECORDS AVAILABLE IN THIS OFFICE NO SATISFAC TION NOTE FOUND RECORDED BEFORE INITIATION OF PROCEEDING U/S 15880 OF THE I. T. ACT, 1961. THIS IS FOR YOUR KIND PERUSAL. YOURS FAITHFULLY, SD./- (YAMINI) IT(SS) NO.13/DEL/2008 4 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-II, FARIDABAD. 5. ON THE OTHER HAND LD. D.R. VEHEMENTLY PLACED REL IANCE ON THE ORDERS OF LOWER AUTHORITIES. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED ON RECORD. THE RECORDING OF SATISFACTION U/S 158BD IS A CONDITION PRECEDENT FOR INVOKING THE JURISDICTION U/S 158BC. THE HONBLE A PEX COURT IN THE CASE OF CIT VS MANISH MAHESHWARI 289 ITR 341 HAD CONSIDERED THE AMBIT ON THE SCOPE OF SECTION 158 BC AND 158BD VIDE PARA 11 & 12 AS UNDER: 11. THE CONDITION PRECEDENT FOR INVOKING A BLOCK A SSESSMENT IS THAT A SEARCH HAS BEEN CONDUCTED UNDER SECTION 132, OR D OCUMENTS OR ASSETS HAVE BEEN REQUISITIONED UNDER SECTION 132A. THE SAID PROVISION WOULD APPLY IN THE CASE OF ANY PERSON IN RESPECT OF WHOM SEARCH HAS BEEN CARRIED OUT UNDER SECTION 132A OR DOCUMENTS OR ASSETS HAVE BEEN REQUISITIONED UNDER SECTION 132A. SECTION 158B D, HOWEVER, PROVIDES FOR TAKING RECOURSE TO A BLOCK ASSESSMENT IN TERMS OF SECTION 158BC IN RESPECT OF ANY OTHER PERSON, THE CONDITION S PRECEDENT WHEREFOR ARE: (I) SATISFACTION MUST BE RECORDED BY THE ASSESSING OFFICER THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UND ER SECTION 132 OF THE ACT; (II) THE BOOKS OF ACCOUNT OR OTHER DOCU MENTS OR ASSETS SEIZED OR REQUISITIONED HAD BEEN HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON; AND (II I) THE ASSESSING OFFICER HAS PROCEEDED UNDER SECTION 158BC AGAINST S UCH OTHER PERSON. 12. THE CONDITIONS PRECEDENT FOR INVOKING THE PROVI SIONS OF SECTION 158BD, THUS, ARE REQUIRED TO BE SATISFIED BEFORE TH E PROVISIONS OF THE SAID CHAPTER ARE APPLIED IN RELATION TO ANY PERSON OTHER THAN THE PERSON WHOSE PREMISES HAD BEEN SEARCHED OR WHOSE DO CUMENTS AND OTHER ASSETS HAD BEEN REQUISITIONED UNDER SECTION 1 32A OF THE ACT. IT(SS) NO.13/DEL/2008 5 7. FROM THE ABOVE, IT IS CLEAR THAT RECORDING OF SA TISFACTION BEFORE ISSUANCE OF NOTICE U/S 158BD IS SINE QUA NON. IN THIS CASE, IT IS CLEAR FROM THE LETTER FURNISHED BY ACIT, RANGE II, FARIDABAD T HAT NO SATISFACTION WAS RECORDED BY THE A.O. BEFORE ISSUANCE OF NOTICE U/S 158BD. THEREFORE, WE HAVE NO HESITATION TO QUASH THE BLOCK ASSESSMENT MA DE U/S 158BD VIDE ORDER DATED 28.12.2007 PASSED U/S 158BD READ WITH SECTION 254 OF THE I. T. ACT, 1961 PASSED BY ACIT, CIRCLE II, FARIDABAD. 8. IN VIEW OF ABOVE, APPEAL FILED BY ASSESSEE IS AL LOWED. 9. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JUNE, 2015. SD./- SD./- ( I. C. SUDHIR) (INTURI RAMA RAO ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 22 ND JUNE, 2015 SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 24/6 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 24,25 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 22/6/15 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 22/6 SR. PS/PS 7 FILE SENT TO BENCH CLERK 26/6 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER