M/s. Cosmic Textiles (P) Ltd., Surat V. The Dy.CIT.,Circle-1, Surat

ITSSA 160/AHD/2009

• Counselvise Citation: [2014] 121 COUNSELVISE.COM (IT) 9979 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 23-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-12-2013
• Assessment Year: misc
• Appeal Filed On: 25-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T P KRISHNA KUMAR
• Assessee Lawyers: KK SHAH
• Keywords: Question of law; Competent authority; Block assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER IT(SS)A NO.160/AHD/2009 M/S. COSMIC TEXTILES (P) LTD., P-770, NEW GIDC, KATARGAM, SURAT PAN: AAACC 9403A V/S. DCIT, CIRCLE-1, SURAT (APPELLANT) (RESPONDENT) IT(SS)A NO.61/AHD/2010 DCIT, CIRCLE-1, SURAT V/S. M/S. COSMIC TEXTILES (P) LTD., P-770, NEW GIDC, KATARGAM, SURAT PAN: AAACC 9403A (APPELLANT) (RESPONDENT) REVENUE BY : SHRI T.P. KRISHNA KUMAR CIT- D.R. ASSESSEE(S) BY : SHRI K.K. SHAH, A.R. / DATE OF HEARING : 19/12/2013 / DATE OF PRONOUNCEMENT: 23/01/2014 O R D E R PER SHRI MUKUL KUMAR SHRAWAT, J.M. THESE TWO CROSS APPEALS RESPECTIVELY FILED BY THE A SSESSEE AND REVENUE DEPARTMENT ARE ARISING FROM AN ORDER OF LEARNED CIT(A)-I SURAT, DATED 10 TH NOVEMBER, 2009. 2. AT THE OUTSET, WE HAVE BEEN INFORMED THAT THE AS SESSEE HAS RAISED AN ADDITIONAL GROUND FOR THE FIRST TIME BEFO RE THE TRIBUNAL. THE ADDITIONAL GROUND READS AS UNDER: ITA NO.160, 61/AHD/2010 M/S. COSMIC TEXTILES (P) LTD. V/S. DCIT, CIRCLE-1, SURAT - 2 - THE LEARNED DCIT GROSSLY ERRED IN ISSUING NOTICE U/ S. 158BD R.W.S. 158BC OF THE ACT ON 23.09.2004 AND WAS RECEIVED ON 08.10.2004 I.E. AFTER THE COMPLETION OF BLOCK ASSESSMENT PROCEEDINGS IN T HE CASE OF HARIPRASAD MALPANI ON 30.06.2004 AND, THEREFORE, THE ENTIRE PR OCEEDINGS ARE TIME BARRED AND ARE REQUIRED TO BE QUASHED. 2.1 IN THIS REGARD, THE ASSESSEE HAS ALSO FURNISHED A WRITTEN SUBMISSION, RELEVANT PORTION IS EXTRACTED BELOW: 1) THE LEARNED DCIT GROSSLY ERRED IN ISSUING NOTICE U/S. 158BD R.W.S. 158 BC OF THE ACT ON 23.09.2004 AND WAS RECE IVED ON 08.10.2004 I.E. AFTER THE COMPLETION OF BLOCK ASSESSMENT PROCE EDINGS IN THE CASE OF HARIPRASAD MALPANI ON 30.06.2004 AND, THEREFORE, TH E ENTIRE PROCEEDINGS ARE TIME BARRED AND ARE REQUIRED TO BE QUASHED. 1.1 THE APPELLANT FILES HEREWITH COPY OF SATISFACTI ON NOTE AND IT IS SUBMITTED THAT THE SATISFACTION NOTE WAS PREPARED ON 27.08.2004 AND THE SEIZED RECORDS ETC. WITH THE SATISFACTION NOTE WAS SENT ON 31.08.2004 TO THE AO OF THE APPELLANT AND, THEREFORE, THE BLOCK ASSESSMENTS U/S. 158BD OF THE ACT WERE INITIATED AFTER THE COMPLETION OF BLOCK ASSESS MENT PROCEEDINGS IN THE CASE OF PERSON (SHRI HARIPRASAD MALPANI) WHO WAS SE ARCHED ON 30.06.2004. THE SUMMARIES OF RELEVANT DATES ARE AS UNDER. A) SEARCH TOOK PLACE IN THE CASE OF HARIPRASAD MALP ANI ON 13.6.2002 B) BLOCK ASSESSMENT PROCEEDINGS IN THE CASE OF SEAR CH PERSON I.E. HARIPRASAD MALPANI WAS COMPLETED ON 30.6.2004 C)SATISFACTION NOTE WAS PREPARED ON 27.8.2 004 D)SATISFACTION NOTE WAS TRANSFERRED TO THE CONCERNE D ACIT ON 31.8.2004 E) NOTICE DATED 23.09.2004 U/S. 158BD OF THE ACT WA S SERVED ON8.10.2004 THE APPELLANT URGES THAT, NOTICE U/S. 158BD WAS SER VED ON 08.10.2004 I.E. AFTER THE COMPLETION OF ASSESSMENT U/S. 158BC OF TH E ACT IN THE CASE OF SEARCHED PERSON AND, THEREFORE, THE ROCEEDINGS U/S . 158BD ARE REQUIRED TO BE QUASHED. 1.2 THE APPELLANT STRONGLY URGES THAT THE ISSU E IS SQUARELY COVERED BY THE FOLLOWING DECISIONS. A) MA NOJ AGRAWAL V/S. DCIT (2009) 310 ITR (AT) 99 (DEL) (SB). ITA NO.160, 61/AHD/2010 M/S. COSMIC TEXTILES (P) LTD. V/S. DCIT, CIRCLE-1, SURAT - 3 - 2.2 IN ADDITION TO THE ABOVE CASE LAW, FEW OTHER UN REPORTED DECISIONS OF ITAT AHMEDABAD BENCH HAVE ALSO BEEN CI TED IN THE SAID WRITTEN SUBMISSION, NOT REPRODUCED KEEPING BREVITY IN MIND. HOWEVER, THE ADMITTED FACTUAL POSITION IS THAT THE AFORE-REPRODUCED ADDITIONAL GROUND WAS NOT RAISED BEFORE THE LOWER A UTHORITIES. 2.3 FROM THE SIDE OF THE REVENUE, LEARNED DR HAS OB JECTED THE ADMISSION OF ADDITIONAL GROUND AT THE SECOND STAGE OF APPEAL. IN SUPPORT OF THIS CONTENTION HE HAS CITED CIT VS. TOL LARAM HASSOMAL, 153 TAXMANN 532 (MP). HE HAS PLEADED THAT THE INFOR MATION AS GIVEN IN THE WRITTEN SUBMISSION HAS NOT BEEN VERIFIED BY THE LOWER AUTHORITIES; THEREFORE, IT IS NOT PROPER TO PLACE R ELIANCE ON ALL THOSE INFORMATION AT THIS STAGE OF APPEAL. 2.4 WE HAVE HEARD BOTH THE SIDES. THE LEGAL ASPECT OF THE ISSUE RAISED THROUGH ADDITIONAL GROUND; AS PLACED BEFORE US; IS CONSIDERED. AS FAR AS THE RAISING OF AN ADDITIONAL GROUND IS CO NCERNED, THE SAME IS A LEGAL GROUND CHALLENGING THE VALIDITY OF THE ASSE SSMENT IN QUESTION. WE HAVE NOTED THAT THE IMPUGNED ORDER WAS PASSED BY THE AO U/S. 158BD R.W.S. 144 OF IT ACT, DATED 25.09.2006. ONCE THE ASSESSEE IS RAISING THE LEGAL GROUND THEN THIS GROUND IS REQUIR ED TO BE ADJUDICATED UPON BY A COMPETENT AUTHORITY. IN THIS CONNECTION, WE HAVE PERUSED A WELL KNOWN DECISION OF HONBLE APEX COURT PRONOUNCE D IN THE CASE OF NATIONAL THERMAL POWER COMPANY LIMITED, 229 ITR 383 (SC) WHEREIN, IN SHORT, THE HONBLE COURT HAS OPINED THA T THERE IS NO REASON WHY THE ASSESSEE SHOULD BE PREVENTED FROM RAISING A QUESTION BEFORE THE TRIBUNAL FOR THE FIRST TIME, SO LONG AS RELEVAN T FACTS ARE ON RECORD IN RESPECT OF THE SAID GROUND. ACCORDING TO HONBLE COURT, THE ITA NO.160, 61/AHD/2010 M/S. COSMIC TEXTILES (P) LTD. V/S. DCIT, CIRCLE-1, SURAT - 4 - TRIBUNAL HAS THE DISCRETION TO ALLOW OR NOT TO ALLO W A NEW GROUND TO BE RAISED. HOWEVER THE HONBLE COURT HAS ALSO OPINE D THAT THE ONLY REQUIREMENT IS THAT THE SAID QUESTION OF LAW SHOULD ARISE FROM THE FACTS ON RECORD IN THE ASSESSMENT PROCEEDINGS. RESPECTFUL LY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT AS FAR AS THE ADMISSION OF THIS ADDITIONAL GROUND IS CONCERNED, WE HEREBY HOLD THAT THE SAME IS HEREBY ADMITTED. 2.5 NEXT QUESTION IS THAT WHETHER THIS ADDITIONAL G ROUND WHICH IS CHALLENGING THE JURISDICTION OF THE ASSESSMENT CAN BE DECIDED ON MERITS AT THIS STAGE WHEN CERTAIN DATES AND THE BAS IS ON WHICH PROCEEDINGS U/S.158BD WERE INITIATED AGAINST THE AS SESSEE HAVE SO FAR NOT BEEN EXAMINED BY THE REVENUE AUTHORITIES. THIS SITUATION HAS ALSO BEEN ADDRESSED BY THE HONBLE MADHYA PRADESH H IGH COURT (INDORE BENCH) IN THE CASE OF CIT VS. TOLLASAM HASSOMAL, 153 TAXMANN 532 (MP) WHEREIN THE LAW PRONOUNCED WAS THAT IN A SITUATION WHEN AN ADDITIONAL GROUND HAS BEEN RAISED FOR THE FIRST TIME BEFORE THE TRIBUNAL THAN IF THE TRIBUNAL CONSIDER T O ADMIT THAT ADDITIONAL GROUND THEN INSTEAD OF DECIDING ON MERIT S THE TRIBUNAL SHOULD SET ASIDE THE IMPUGNED ORDER AND REMAND THE CASE BACK TO THE STAGE OF LEARNED CIT(A) FOR DECIDING THAT APPEAL AF TER CONSIDERING THAT ADDITIONAL GROUND ON MERITS. FOR READY REFERENCE, R ELEVANT PARAGRAPH OF THE CITED PRECEDENT IS REPRODUCED BELOW: 7. IN OUR CONSIDERED VIEW, THEREFORE, THE TRIBUNAL HAVING PERMITTED THE ASSESSEE TO RAISE FOUR ADDITIONAL GROUNDS TREATING THEM TO BE L EGAL GROUNDS IN APPEAL FOR THE FIRST TIME, SHOULD HAVE SET ASIDE THE ORDER OF CIT (APPEA LS) AND REMANDED THE CASE TO THE CIT (APPEALS) FOR DECIDING THE APPEAL BY CIT (APPEALS) AFRESH ON ALL THE ISSUES INCLUDING ON THOSE FOUR GROUNDS RAISED BY THE ASSESSEE IN THE AP PEAL BEFORE THE TRIBUNAL RATHER THAN TO DECIDE THE SAME MERITS FOR THE FIRST TIME BY THE MSELVES AND SET ASIDE THE ORDER OF CIT (APPEALS) AS ALSO THE ASSESSMENT ORDER. HAD THE CAS E BEEN REMANDED BY THE TRIBUNAL, THE CIT (APPEALS) WOULD HAVE BEEN IN A POSITION TO EXAMINE THE ISSUE FOR THE FIRST TIME IN RELATION TO THOSE FOUR GROUNDS WHICH HE DID NOT DEC IDE FOR WANT OF ANY ATTACK ON THOSE GROUNDS INITIALLY IN THE FIRST ROUND. IT CANNOT BE DISPUTED THAT CIT (APPEALS) HAD ITA NO.160, 61/AHD/2010 M/S. COSMIC TEXTILES (P) LTD. V/S. DCIT, CIRCLE-1, SURAT - 5 - JURISDICTION TO EXAMINE THOSE FOUR GROUNDS HAD IT B EEN RAISED BEFORE HIM IN APPEAL EVEN IN THE FIRST ROUND. WE THUS CANNOT SUBSCRIBE TO THE APPROACH AND THE MANNER IN WHICH THE TRIBUNAL ALLOWED THE ASSESSEE TO RAISE ADDITIONAL G ROUNDS IN APPEAL FOR THE FIRST TIME AND THEN DECIDING THE APPEAL ON THOSE GROUNDS BY NOT ON LY SETTING ASIDE OF THE ORDER OF CIT (APPEALS) BUT EVEN PROCEEDING TO ANNUL THE ORDER OF ASSESSING OFFICER ALSO. SUCH APPROACH IS NEITHER LEGAL, NOR PROPER. IT ONLY EXHI BITS THE ANXIETY OF THE TRIBUNAL TO DECIDE THE APPEAL ON MERITS EVEN ON THOSE POINTS WH ICH DID NOT ARISE FOR DECISION OUT OF THE ORDER OF CIT (APPEALS). IN OTHER WORDS, INSTEAD OF CONCENTRATING OR THE ISSUES ALREADY DECIDED BY THE CIT (APPEALS), THE TRIBUNAL ONLY CONCENTRATED ON THOSE GROUNDS WHICH HAD NOT BEEN TAKEN BEFORE CIT (APPEALS) AND T HEN ANSWERED THEM IN FAVOUR OF ASSESSEE BY COMPLETELY ANNULLING THE_WHOLE ASSESSME NT. THERE WOULD HAVE BEEN NO PREJUDICE CAUSED TO EITHER PARTY IF THE CASE HAD BE EN REMANDED_TO_CIT (APPEALS) AND ONCE THE PRAYER TO RAISE ADDITIONAL GROUNDS WAS ALL OWED BY THE TRIBUNAL IN FAVOUR OF ASSESSEE. WHEN A LITIGANT HAS A RIGHT TO SEEK ADJUD ICATION ON A PARTICULAR POINT FROM ONE MORE AUTHORITY [AS IN THIS CASE CIT (APPEALS)] AND AGAIN ACQUIRE A RIGHT TO REITERATE THE CHALLENGE BEFORE THE HIGHER APPELLATE AUTHORITY (SU CH AS TRIBUNAL) IN CASE IF THE CHALLENGE IS DECIDED AGAINST THE FIRST APPELLATE AU THORITY, THEN IN SUCH EVENT, THERE IS NO JUSTIFIABLE REASON AS TO WHY A LITIGANT IS DEPRIVED OF SUCH AN OPPORTUNITY. WE, THEREFORE, DO NOT AGREE TO SUCH APPROACH RESORTED TO BY THE TR IBUNAL AND HENCE, WE SET ASIDE THE IMPUGNED ORDER? 8. IN VIEW OF FOREGOING DISCUSSION, WE DO NOT CONSI DER IT NECESSARY TO EXAMINE ANY OTHER ISSUES LE., QUESTIONS ALREADY FRAMED AND DECIDED BY THE TRIBUNAL THOUGH URGED BY LEARNED COUNSEL FOR REVENUE ON VARIOUS LEGAL GROUND S WITH REFERENCE TO DECIDED CASES OF SUPREME COURT AND HIGH COURTS BY CONTENDING THAT NO NE OF THEM ARE LEGALLY SUSTAINABLE AND HENCE, WE ANSWER ONLY ADDITIONAL QUESTION OF LA W FRAMED IN FAVOUR OF REVENUE AND AGAINST THE ASSESSEE (RESPONDENT). AS A RESULT, THE APPEAL SUCCEEDS AND IS HEREBY ALLOWED. THE IMPUGNED ORDERS OF TRIBUNAL IS SET ASI DE, SO ALSO THAT OF CIT (APPEALS) WHICH WAS SUBJECT-MATTER OF APPEAL BEFORE THE TRIBU NAL IN AN APPEAL FILED BY THE ASSESSEE. INDEED, THIS BEING A CONSEQUENCE OF THE I NDULGENCE GRANTED BY THE TRIBUNAL TO THE ASSESSEE IN PERMITTING THEM TO RAISE FOUR ADDIT IONAL GROUNDS TO URGE THE SAME HAS TO BE GIVEN EFFECT TO. AS A CONSEQUENCE, THE CIT (APPE ALS) IS NOW DIRECTED TO DECIDE THE APPEAL FILED BY THE RESPONDENT (ASSESSEE) AFRESH ON MERITS INCLUDING ON THE FOUR ADDITIONAL GROUNDS RAISED BY THE ASSESSEE. WE, HOWE VER, MAKE IT VERY CLEAR THAT CIT (APPEALS) WOULD NOT TAKE INTO CONSIDERATION ANY OF THE FINDINGS AND OBSERVATIONS MADE BY THE TRIBUNAL ON ANY OF THE ISSUES RAISED BY THE ASSESSEE, NOR CIT (APPEALS) WILL BE INFLUENCED BY ANY OF THEM. IN OTHER WORDS, THE CIT (APPEALS) WILL DECIDE THE APPEAL STRICTLY IN ACCORDANCE WITH LAW ON MERITS AS IF THE RE IS NO FINDING ON ANY OF THE ISSUES EVER RECORDED BY THE TRIBUNAL BECAUSE ONCE WE' SET ASIDE THE ORDER OF TRIBUNAL, THEN SUCH ORDER IS REGARDED AS BEING NOT IN EXISTENCE AN D CANNOT BE LOOKED INTO FOR ANY PURPOSE, NOR CAN BE RELIED ON OR REFERRED TO BY ANY AUTHORITY MUCH LESS AN AUTHORITY SUBORDINATE TO THE TRIBUNAL. NEEDLESS TO OBSERVE, T HE FOUR ADDITIONAL ISSUES URGED BY THE ASSESSEE WILL HAVE TO BE DECIDED BY CIT (APPEALS) K EEPING IN VIEW THE LAW LAID DOWN BY SUPREME COURT AND HIGH COURTS IN SEVERAL CASES HOLD ING THE FIELD IN THEIR RIGHT PERSPECTIVE. LET THIS BE DONE WITHIN SIX MONTHS BY CIT (APPEALS) FROM THE DATE OF APPEARANCE. PARTIES TO APPEAR BEFORE THE CIT (APPEA LS) ON 3-4-2006. 3. IN THE LIGHT OF THE FOREGOING DISCUSSION, WE HER EBY RESTORE ALL THE ISSUES OF THE ASSESSEE BACK TO THE STAGE OF THE FIRST APPELLATE AUTHORITY TO FIRST ADJUDICATE THIS LEGAL MATTER OF JURISDICTION OF THE IMPUGNED ASSESSMENT AS PER LAW; NEEDLESS TO SAY AFT ER PROVIDING A REASONABLE OPPORTUNITY OF HEARING TO BOTH THE SIDES . ITA NO.160, 61/AHD/2010 M/S. COSMIC TEXTILES (P) LTD. V/S. DCIT, CIRCLE-1, SURAT - 6 - 3.1 THE CONSEQUENTIAL EFFECT OF THE ABOVE ORDER IS THAT THE CONNECTED APPEAL OF THE REVENUE SHOULD ALSO GO BACK TO THE FILE OF LEARNED CIT(A); HENCE, REMANDED BACK FOR DE NOVO AD JUDICATION AS PER LAW. 4. IN THE RESULT, BOTH THE APPEALS ARE HEREBY REMAN DED FOR DE NOVO CONSIDERATION; HENCE, TO BE HELD AS ALLOWED BUT FOR STATISTICAL PURPOSE ONLY. SD/- SD/- (ANIL CHATURVEDI) (MUKU L KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 23/01/2014 PRABHAT KR. KESARWANI, SR. P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD