Amarjeet Singh Sobti, V. ACIT, Central Circle-16,

ITSSA 145/DEL/2003

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9608 (ITAT-DELHI)
• Duration Of Justice: 10 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 29-10-2013
• Assessment Year: misc
• Appeal Filed On: 23-04-2003
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S MEENA
• Assessee Lawyers: SALIL KAPOOR SANAT KAPOOR
• Keywords: Search and seizure; Procedural lapse; Assessment record; Block assessment
• Section: 143(3); 145; 144

Judgement Text

IT(SS)NO.145 & 205/D/2003 BLOCK PERIOD 91 TO 2000-01 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `H NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.(SS)A.NO.145/DEL/2003 BLOCK PERIOD 91 TO 2000-01 SHRI AMARJEET SINGH SOBTI, VS ASSTT.COMMISSI ONER OF INCOME TAX, 109, NARANG COLONY, CE NTRAL CIRCLE-16, NEW DELHI. JANAK PURI, NEW DELHI. I.T.(SS)A.NO.205/DEL/2003 BLOCK PERIOD 91-92 TO 2000-01 DY.COMMISSIONER OF INCOME TAX, VS SHRI AMAR JEET SINGH SOBTI, CENTRAL CIRCLE-16, NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: S/SHRI SALIL K APOOR, SANAT KAPOOR RESPONDENT BY : SHRI R.S. MEENA, C.I.T. DR O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THESE APPEALS HAVE EMERGED FROM THE ORDER OF THE C OMMISSIONER OF INCOME TAX(A)-II, NEW DELHI DATED 26.12.2012 IN APP EAL NO. DEL/CITA2/02-03/175 FOR THE BLOCK PERIOD OF AY 1991 -92 TO 2000-01 (UPTO 07.06.2000). 2. AT THE OUTSET, WE FIND IT APPROPRIATE TO TAKE UP LEGAL GROUND NO.1 AND 1.1 OF THE ASSESSEE IN ITA NO. 145/D/2003 WHICH REA D AS UNDER:- IT(SS)NO.145 & 205/D/2003 BLOCK PERIOD 91 TO 2000-01 2 1. THAT THE LEARNED C.I.T.(APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN NOT DECIDING THE ISSUE RELAT ING TO THE LEGALITY AND VALIDITY OF SEARCH CONDUCTED U/S 13 2( 1) OF THE I T. ACT. THE FINDING THAT NO JURISDICTION IS VESTE D IN HIM TO DECIDE THE LEGALITY OF THE SEARCH IS WHOLLY INCORRE CT AND IS IN DISREGARD OF THE RELEVANT PROVISIONS OF LAW. THE REASONS GIVEN FOR NOT INTERFERING WITH THE ISSUE RELATING T O LEGALITY OF SEARCH ARE WHOLLY IRRELEVANT AND ARE IN DISREGAR D OF THE FACT THAT SINCE THE JURISDICTION TO FRAME AN ASSESS MENT UNDER CHAPTER XIVB AROSE ONLY AS A RESULT OF SEARCH U/S 132, THE LEGALITY OF SEARCH COULD HAVE BEEN VALIDLY CHALLENGED BEFORE THE APPELLATE AUTHORITY. 1.1 THAT THE LEARNED C.I.T.(A) HAS FAILED TO APPREC IATE THAT NO INCRIMINATING MATERIAL HAVING BEEN FOUND AN D SEIZED AT THE TIME OF SEARCH, THE ASSESSMENT FRAMED U/S 158BC OF THE I T. ACT OF THE ALLEGED UNDISCLOSED IN COME UNDER CHAPTER XIV -B OF THE I.T. ACT, IS WHOLLY ILL EGAL AND UNSUSTAINABLE. 3. WE HAVE HEARD RIVAL ARGUMENTS OF BOTH THE PARTIE S AND CAREFULLY CONSIDERED AND PERUSED THE RECORD PLACED BEFORE US. APROPOS THESE LEGAL GROUNDS, LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT DURING THE BLOCK PERIOD OF THIS SEARCH AND SEIZURE CASE, BLOCK ASSESSMENT WAS TO BE MADE AND IT WAS MANDATORY ON THE PART OF REVENUE TO ISSUE NOTICE U/ S 143(2) OF THE INCOME TAX ACT (FOR SHORT THE ACT) WITHIN THE PRESCRIBED T IME WHICH IS A MANDATORY COMPLIANCE ON THE PART OF REVENUE. THE COUNSEL FUR THER SUBMITTED THAT SUCH NOTICE U/S 143(2) OF THE ACT IS THE VERY FOUNDATION OF ASSUMPTION OF JURISDICTION AND SUCH NOTICE IS REQUIRED TO BE SERV ED ON THE PERSON WHO IS IT(SS)NO.145 & 205/D/2003 BLOCK PERIOD 91 TO 2000-01 3 FOUND TO HAVE UNDISCLOSED INCOME. REPLYING TO THE ABOVE, LD. DR FAIRLY CONCEDED THAT ON CAREFUL PERUSAL OF THE BLOCK ASSES SMENT RECORD, HE COULD NOT TRACE OUT THE ISSUANCE AND SERVICE OF THE NOTIC E ON THE ASSESSEE U/S 143(2) OF THE ACT. THE DR ALSO SUBMITTED THAT AS PER BLOC K ASSESSMENT PERIOD PERTAINING TO THIS CASE, AS PER PROVISO ATTACHED TO CLAUSE (II) OF SECTION 143(2) OF THE ACT, NO NOTICE SHALL BE SERVED ON THE ASSESS EE AFTER EXPIRY OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETUR N IS FURNISHED. 4. ON CAREFUL CONSIDERATION OF ABOVE CONTENTIONS AN D SUBMISSIONS ON THE LEGAL GROUNDS RAISED BY THE ASSESSEE, IT WOULD BE A PPROPRIATE TO CONSIDER RELATED STATUTORY PROVISIONS OF THE ACT. AS PER BL OCK PERIOD PERTAINING TO THE PRESENT APPEALS I.E. 1991-92 TO 2000-01 (UPTO TO 07 .06.2000), THE PROVISIONS OF SECTION 158BA AND 158BC WERE EFFECTIVE. FROM A CAREFUL READING OF RELEVANT PROVISIONS, WE CLEARLY OBSERVE THAT IF THE ASSESSING OFFICER, FOR ANY REASON, REPUDIATES THE RETURN FILED BY THE ASSESSEE IN RESPONSE TO THE NOTICE U/S 158BC(A) OF THE ACT RELATING TO A BLOCK ASSESSM ENT, THE ASSESSING OFFICER MUST NECESSARILY ISSUE NOTICE U/S 143(2) OF THE ACT WITHIN THE TIME PRESCRIBED IN THE PROVISO ATTACHED TO CLAUSE (II) O F SECTION 143(2) OF THE ACT. SECTION 158BC PROVIDES FOR INQUIRY AND ASSESSMENT. AFTER THE RETURN IS FILED, CLAUSE (B) OF SECTION 158BC PROVIDES THAT TH E ASSESSING OFFICER SHALL PROCEED TO DETERMINE THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD IN THE IT(SS)NO.145 & 205/D/2003 BLOCK PERIOD 91 TO 2000-01 4 MANNER LAID DOWN IN SECTION 158BB AND THE PROVISION S OF SECTION 142 OF THE ACT, AND SUB-SECTION (2) AND (3) OF SECTION 143, SE CTION 144 AND SECTION 145 SHALL, SO FAR AS MAY BE, APPLY. THIS SCHEME OF STA TUTORY PROVISIONS INDICATES THAT THIS CLAUSE ENABLES THE ASSESSING OFFICER, AFT ER THE RETURN IS FILED TO COMPLETE THE ASSESSMENT U/S 143(2) OF THE ACT BY FO LLOWING THE PROCEDURE LIKE ISSUANCE OF NOTICE U/S 143(2) OF THE ACT. THI S DOES NOT PROVIDE ACCEPTING THE RETURN AS PROVIDED U/S 143(1)(A) OF T HE ACT. AS PER THESE PROVISIONS THE ASSESSING OFFICER HAS TO COMPLETE TH E ASSESSMENT U/S 143(3) OF THE ACT ONLY. FURTHER, WE ALSO CLEARLY OBSERVE THAT IF THE ASSESSMENT IS TO BE COMPLETED U/S 143(3) R/W SECTION 158BC OF THE AC T, THEN NOTICE U/S 143(2) OF THE ACT SHOULD BE ISSUED WITHIN ONE YEAR FROM THE DATE OF FILING OF BLOCK RETURN. WE ALSO CLEARLY OBSERVE THAT OMISSIO N ON THE PART OF ASSESSING AUTHORITY TO ISSUE NOTICE U/S 143(2) OF THE ACT CAN NOT BE A PROCEDURAL IRREGULARITY AND IS NOT CURABLE, THEREFORE, THE REQ UIREMENT OF SECTION 143(2) OF THE ACT CANNOT BE DISPENSED WITH. 5. ON THIS LEGAL ISSUE, WE FIND IT APPROPRIATE TO T AKE COGNIZANCE OF JUDGMENT OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF ACIT VS HOTEL BLUE MOON (2010) 321 ITR 362 (SC) AND THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF C .I.T. VS PAWAN GUPTA (2009) 318 ITR 322 (DEL) WHEREIN IT HAS BEEN HELD THAT IN THE CASE OF SEARC H IT(SS)NO.145 & 205/D/2003 BLOCK PERIOD 91 TO 2000-01 5 AND SEIZURE WHERE UNDISCLOSED INCOME IS DETECTED AN D BLOCK ASSESSMENT HAS TO BE MADE, THEN NOTICE U/S 143(2) OF THE ACT MUST BE GIVEN TO THE ASSESSEE IF ASSESSING OFFICER DOES NOT ACCEPT THE RETURN. IN T HE CASE OF PAWAN GUPTA (SUPRA), THEIR LORDSHIPS HELD THAT BLOCK ASSESSMENT WITHOUT NOTICE U/S 143(2) OF THE ACT WOULD RENDER THE ASSESSMENT INVALID. 6. IN THE PRESENT CASE, THE DR HAS FAIRLY CONCEDED THAT AS PER BLOCK ASSESSMENT RECORD AVAILABLE WITH HIM, THERE IS NO E VIDENCE OF ISSUANCE AND SERVICE OF NOTICE ON THE ASSESSEE U/S 143(2) OF THE ACT. UNDER THESE CIRCUMSTANCES, WE ARE INCLINED TO HOLD THAT THE BLO CK ASSESSMENT ORDER IS INVALID BECAUSE THE REVENUE IS UNABLE TO SUBSTANTIA TE THE FACT THAT A MANDATORY NOTICE U/S 143(2) OF THE ACT WAS ISSUED O N THE ASSESSEE WITHIN THE PRESCRIBED TIME LIMIT AND IT WAS SERVED ON THE ASSE SSEE. ACCORDINGLY, BLOCK ASSESSMENT ORDER BEING INVALID IS QUASHED. HENCE, GROUND NO. 1 AND 1.1 OF THE ASSESSEE ARE ALLOWED. 7. SINCE AS PER DISCUSSIONS MADE HEREINABOVE ON THE LEGAL GROUNDS, WE HAVE QUASHED BLOCK ASSESSMENT ORDER, THEREFORE, REM AINING GROUNDS OF THE ASSESSEE I.E. GROUND NO. 2 TO 6 IN ITA NO. 154/D/20 03 AND SOLE GROUND OF THE REVENUE IN ITA NO. 205/D/2003 DO NOT SURVIVE FOR AD JUDICATION ON MERITS. 8. THE RESULT IS THAT THE APPEAL OF THE ASSESSEE IS ALLOWED ON LEGAL GROUNDS AND APPEAL OF THE REVENUE IS DISALLOWED. IT(SS)NO.145 & 205/D/2003 BLOCK PERIOD 91 TO 2000-01 6 ORDER PRONOUNCED IN THE OPEN COURT ON 22.11.2013. SD/- SD/- (G.D. AGRAWAL) (CHANDRAMOHAN GARG) VICE PRESIDENT JUDICIAL MEMBER DT. 22ND NOVEMBER 2013 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR