The ACIT, Circle-8, Surat V. Shri Vasantbhai Vanmalibhai Patel, Surat

ITSSA 141/AHD/2007

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9222 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 09-06-2010
• Assessment Year: misc
• Appeal Filed On: 15-10-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 147; 15

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRIT MUKUL SHRAWAT, JM AND D.C.AGRAWAL, A M ASSTT. CIT, CIR-8, ROOM NO.414, AAYAKAR BHAVAN, MAJURA GATE, SURAT. VS . SHRI VASANTBHAI VANMALIBHAI PATEL, 13/344. ADARSH SOCIETY, ATHWALINES, SURAT. (APPELLANT) .. (RESPONDENT) APPELLANTS BY :- SHRI K. MADHUSUDAN, SR. DR RESPONDENT BY:- SMT. URVASHI SHODHAN, AR O R D E R PER D. C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-V, SURAT, FOR BLOCK PERIOD 1993-94 TO 1998-9 9 & UPTO 30.11.1999. IN THIS CASE REVENUE HAS RAISED FOLLOWI NG GROUND :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A), WITHOUT APPRECIATING FACTS OF THE CASE, HAS ERRED IN DELETING AN ADDITION OF RS.5,95,470/-, BEING INVEST MENT OF ON MONEY IN FLAT, AS MADE BY THE AO, HOLDING THAT THE ISSUE WHICH WAS DECIDED IN THE REGULAR ASSESSMENT PROCEEDINGS W OULD BE OUTSIDE THE PURVIEW OF THE PROCEEDINGS U/S 158BD/15 8BC OF THE ACT. 2. THE FACTS OF THE CASE ARE THAT SEARCH PROCEEDING S WERE CARRIED OUT IN THE CASE OF M/S. OM GROUP. IT WAS GATHERED DURING T HE COURSE OF SEARCH BY THE AO THAT ASSESSEE HAD PAID ON MONEY OF RS. 5 LACS TO M/S OM IT(SS)A NO.141/AHD/2007 BLOCK PERIOD 1993-94 TO 1998-99 & UPTO 30.11.1999 2 ORGANIZERS AGAINST THE PURCHASE OF FLAT NO.G-203, C HANDAN PARK, CITYLIGHT, SURAT. ACCORDINGLY, THE AO REOPENED THE CASE U/S 147 OF THE ACT AND ASSESSMENT FOR ASST. YEAR 1999-00 WAS COMPL ETED ON 31.12.2004 UNDER SECTION 143(3) READ WITH SECTION 147 DETERMIN ING TOTAL INCOME OF RS.6,15,000/- AS AGAINST EARLIER ASSESSED INCOME OF RS.1 LAC. APPEAL OF THE ASSESSEE WAS DISMISSED BY CIT(A) VIDE HIS ORDER NO.CAS-V/103/04- 05 DTD. 10.11.2005. THE ASSESSEE FILED APPEAL BEFOR E THE ITAT AGAINST THE ORDER OF LD. CIT(A). THE TRIBUNAL VIDE ITS ORDER IN ITA NO.341/AHD/2006 FOR ASST. YEAR 1999-00, DATED 5.8.2009 RESTORED THE MATTER TO THE FILE OF THE AO. IN THE MEAN TIME THE AO INITIATED PROCEEDIN GS UNDER SECTION 158BD VIDE NOTICE ISSUED UNDER THAT SECTION ON 24.1 .2005 AND SERVED ON THE ASSESSEE ON 16.3.2005. AFTER CARRYING OUT NECES SARY HEARING TOTAL UNDISCLOSED INCOME WAS WORKED AT RS.5,95,470/-. THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) WHO VIDE HIS IMPUGNED ORDER DATED 30.08.2007 DELETED THE ADDITION OF RS.5,95,470/- BY HOLDING THAT IF THE ISSUE IS DECIDED IN REGULAR ASSESSMENT, THEN IT WOU LD BE OUTSIDE THE PURVIEW OF PROCEEDINGS U/S 158BC/158BD. FOR ARRIVIN G AT THIS DECISION LD. CIT(A) FOLLOWED THE DECISION OF HON. GUJARAT HI GH COURT IN M/S N. R. PAPER & BOARD LTD. VS. CIT 234 ITR 733 (GUJ). TH E REVENUE IS NOW IN APPEAL BEFORE US RAISING THE ABOVE GROUND. 3. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI AL ON RECORD. IN OUR CONSIDERED VIEW THERE IS NO CASE FOR INTERFEREN CE IN THE ORDER PASSED BY THE LD. CIT(A). THE REASONS ARE THAT ONCE REGULA R ASSESSMENT PROCEEDINGS ARE PENDING AND THE ISSUE HAS BEEN CONS IDERED THEREIN THEN THE SAME CANNOT BE CONSIDERED IN PROCEEDINGS U/S 15 8BC OR U/S 158BD. THE LD. CIT(A) HAS CORRECTLY RELIED ON THE DECISION OF HON. GUJARAT HIGH COURT IN THE CASE OF M/S N. R. PAPER & BOARD LTD. V S. CIT (SUPRA). EVEN OTHERWISE PROCEEDINGS U/S 158BD INITIATED AFTER CLO SURE OF THE 3 PROCEEDINGS UNDER SECTION 158BC IN THE CASE OF PERS ONS SEARCHED WOULD BE INVALID. IN THE CASE OF M/S OM DEVELOPERS SEARCH WAS CARRIED OUT ON 29.10.99 AND ASSESSMENT IN THAT CASE UNDER SECTION 158BC WAS COMPLETED ON 30.11.2001 AND NOTICE U/S 158BD WAS ISSUED ON 24 .1.2005 WHICH IS ALMOST AFTER THREE YEARS OF THE CLOSURE OF PROCEEDI NGS UNDER SECTION 158BC IN THE CASE OF PERSONS SEARCHED. FOR THIS PRO POSITION WE RELY ON THE DECISION OF THE TRIBUNAL IN ITA NO.209/AHD/2006 FOR BLOCK PERIOD ASST. YEAR 1990-91 TO 1999-2000 & UPTO 01.04.1999 T O 29.10.1999 IN THE CASE OF KUINTESH BHUPATRAI DESAI VS. ACIT, CIR.3(1) DATED 26.3.2009. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL VIDE PARA -6 OF ITS ORDER ARE AS UNDER :- 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HA VE ALSO PERUSED THE MATERIALS AVAILABLE ON RECORD. IN OUR CONSIDERE D VIEW, THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAI NST THE REVENUE BY THE DECISION OF ITAT, DELHI SPECIAL BENCH IN THE CASE O F MANOJ AGGARWAL (SUPRA). IN THE LIGHT OF DECISION OF ITAT SPECIAL B ENCH, DELHI (SUPRA), THE NOTICE U/S 158BD OUGHT TO HAVE BEEN ISSUED ON OR BE FORE 31.10.2001. THEREFORE, THE NOTICE U/S 158BD ISSUED ON 19.4.2004 TO THE ASSESSEE IS TIME BARRED AND THE ASSESSMENT FRAMED ON THE BASIS OF SUCH DEFECTIVE NOTICE IS BAD, ILLEGAL, WITHOUT JURISDICTION AND VO ID AB INITIO. IN THE CASE OF MANOJ AGGARWAL (SUPRA), ITAT SPECIAL BENCH HELD THAT THE TIME LIMIT SET OUT IN SEC.158BE AUTOMATICALLY APPLIES FOR INVO KING THE PROVISIONS OF SEC.158BD OF THE ACT. RELEVANT OBSERVATIONS OF ITAT DELHI SPECIAL BENCH (SUPRA) ARE AS UNDER :- 116. A VIEW IS EXPRESSED THAT WHEREVER A TIME-LIM IT IS INTENDED, THE PARLIAMENT HAS PROVIDED FOR THE SAME AND IN THE ABSENCE OF A SPECIFIC PROVISION MADE IN THIS RESPECT IT HAS TO B E ASSUMED THAT THERE IS NO TIME-LIMIT INTENDED IN LAW. IT HAS TO B E REMEMBERED THAT THE MATTER RELATES TO FIXING HUGE FINANCIAL AND OTH ER CIVIL LIABILITY ON THE PERSON AFFECTED AND IT HAS BEEN REPEATEDLY H ELD THAT THERE MUST BE A FINALITY TO ANY PROCEEDING UNDER THE ACT AND THAT A CONCLUDED PROCEEDING CANNOT BE REOPENED AT THE WHIM AND FANCY OF THE AO WITHOUT THE DUE PROCESS OF LAW. STRICT IN TERPRETATION OF FISCAL, STATUTES IS THE ORDER OF THE DAY AND AS THE PROVISIONS FOR 4 SEARCH ARE DRACONIAN IN NATURES SUCH PROVISIONS HAV E NECESSARILY TO BE STRICTLY CONSTRUED. IT WILL HAVE TO BE REMEMB ERED THAT SECTION 158BD PROVIDES FOR INVOKING JURISDICTION UNDER THE SAID SECTION ENABLING THE AO ASSESSING THE OTHER PERSON IN RESPE CT OF WHOM THE AO ASSESSING THE PERSON SEARCHED GIVES A FINDING TH AT THE UNDISCLOSED INCOME UNEARTHED AS A RESULT OF SEARCH BELONGS TO THE SAID PERSON AND ONCE SUCH A FINDING IS GIVEN THE PR OVISIONS OF SECTION 158BD COME INTO OPERATION. THIS, THEREFORE, INVOLVES ASSUMPTION OF JURISDICTION AND CANNOT BE CONSTRUED AS A PROCEDURAL MATTER. IN THE ABSENCE OF A FINDING IN T HIS BEHALF, THERE IS NO JURISDICTION TO THE OTHER AO AT ALL TO PROCEE D 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 LIMI T AUTOMATICALLY APPLIES FOR INVOKING THE PROVISIONS OF SECTION 158B D AND IT IS FOR THIS REASON THAT THE PARLIAMENT DID NOT FIND IT NEC ESSARY TO SPECIFY A SEPARATE TIME LIMIT FOR THE SAME AS THE ENACTMENT ITSELF SHOWS BOTH SECTIONS 158BC AND 158BD ARE INTER LINKED, INT ERFACED AND INTERTWINED AND BOTH FORM PART AND PARCEL OF THE SA ME CHAPTER. FROM THE ABOVE, IT IS CLEAR THAT THE TIME LIMIT SET IN SEC.158BE AUTOMATICALLY APPLIES FOR INVOKING THE PROVISIONS O F SEC.158BD OF THE ACT. THE SPECIAL BENCH HAS CATEGORICALLY HELD THAT FOR T HIS REASON, THE LEGISLATURE DID NOT FIND IT NECESSARY TO SPECIFY TH E SEPARATE TIME LIMIT FOR THE SAME, AS THE ENACTMENT ITSELF SHOWS THAT BOTH S ECTION 158BC AND 158BD ARE INTER LINKED, INTER FACED, INTERTWINED AN D BOTH FORM PART AND PARCEL OF THE SAME CHAPTER. RESPECTFULLY FOLLOWING THE DECISION OF ITAT SPECIAL BENCH (SUPRA), WE HOLD THAT THE NOTICE DATE D 19.4.2004 ISSUED U/S 158BD OF THE ACT IS TIME BARRED AND, THEREFORE, THE ASSESSMENT FRAMED ON 27.2.2006 U/S 158BD READ WITH SEC.158BC OF THE ACT IS WITHOUT JURISDICTION AND VOID AB INITIO. ACCORDINGLY, WE QU ASH THE ASSESSMENT ORDER DATED 27.2.2006 FRAMED U/S 158BD READ WITH SE CTION 158BC OF THE ACT. SINCE WE HAVE QUASHED THE ASSESSMENT ORDER AND , THEREFORE, WE DO NOT THINK IT NECESSARY TO DECIDE THE GROUNDS RAISED ON MERITS. THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE TRIBUNA L ORDER, WE DISMISS THE APPEAL FILED BY THE REVENUE. 5 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 11/6/2010 SD/- SD/- (MUKUL SHRAWAT) (D.C.AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DATED : 11/6/2010 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