Ashokkumar N.Parekh, Surat V. The ACIT.,Circle-9, Surat

ITSSA 168/AHD/2007

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8604 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 04-02-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 01-02-2011
• Assessment Year: misc
• Appeal Filed On: 17-12-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D S CHAUDHRY SRDR
• Assessee Lawyers: B R POPAT
• Keywords: Block assessment
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER IT(SS)A NO.168/AHD/2007 BLOCK ASSESSMENT FROM: 1990-91 TO 99-00 UPTO 29.10.99 DATE OF HEARING:1.2.11 DRAFTED:2.2.11 ASHOKKUMAR N PAREKH, C/O. SHITAL FURNITURE, NR. OLD GITANJALI CINEMA, VARACHHA ROAD, SURAT PAN NO.AKKPP4957H V/S . ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE-0, SURAT (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI B.R. POPAT, AR RESPONDENT BY:- SHRI D.S. CHAUDHRY, SR-DR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THIS APPEAL BY ASSESSEE IS ARISING OUT OF THE ORDE R OF COMMISSIONER OF INCOME-TAX (APPEALS)-V, SURAT IN APPEAL NO.CAS-V/83 /06-07 DATED 07-09-2007. THE BLOCK ASSESSMENT WAS FRAMED BY ACIT CIRCLE-9, SURAT U/S158BD R.W.S. 158BC OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) VIDE HIS ORDER DATED 26- 05-2006 FOR THE BLOCK PERIOD 1990-91 TO 29-10-1999. 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF CIT(A) IN UPHOLDING THE VALIDITY OF BLOCK ASSESSMENT ORDER FR AMED IN RESPONSE TO NOTICE U/S.158BD OF THE ACT. FOR THIS, ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.1 :- 1. THE LEARNED C.I.T.(A) ERRED IN UPHOLDING THE VA LIDITY OF THE ASSESSMENT ORDER PASSED BY THE A.O BY ISSUE OF NOTICE U/S.158B D OF THE ACT, WHICH IS BAD IN LAW. IT(SS)A NO.168/AHD/2007 B.P. 90- 91 TO 29.10.99 ASHOKKUMARN PAREKH V. ACIT, CIR-9 SRT PAGE 2 3. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE, SHRI B.R. POPAT STATED THAT THE ASSESSEE HAD RAISED THE PLEA BEFORE ASSESSING OFFIC ER DURING BLOCK ASSESSMENT PROCEEDINGS U/S 158BD R.W.S. 158BC OF THE ACT. HE R EFERRED TO PARA-6.1 OF BLOCK ASSESSMENT ORDER, WHEREIN THE ASSESSING OFFICER HAS REJECTED THE PLEA OF THE ASSESSEE, WHICH READS AS UNDER:- 6.1 AS REGARDS THE ASSESSEES FIRST CONTENTION OF INORDINATE AND SUSPICIOUS DELAY OF NEARLY TWO AND HALF YEARS IN ISSUANCE OF N OTICE UNDER SECTION 158BD (PARA-4 OF THIS ORDER MAY BE REFERRED TO), IT WOULD BE SUFFICE TO SAY THAT AS PER THE PROVISIONS OF SECTION 158BD OF THE ACT, THERE I S NO PRESCRIBED LIMIT OF TIME FOR ISSUING OF NOTICE UNDER SECTION 158BD R.W.S. 15 8BC. THEREFORE, THE ASSESSEES CONTENTION IS FOUND TO BE LEGALLY INCORR ECT. LD. COUNSEL FOR ASSESSEE ALSO REFERRED TO ORDER OF CIT(A), BY VIRTUE OF WHICH, HE HAS CONFIRMED THE JURISDICTION ISSUE IN FAVOUR OR REVEN UE VIDE PARA-2.7(III) OF HIS APPELLATE ORDER AS UNDER:- 2.7 (III) AS FAR AS THE CONTENTION OF THE ASSESSEE WITH REGARD TO THE LEGALITY OF THE NOTICE, THE A.O HAS DEALT WITH THE SAME IN PARA 6.1 AND 6.2 OF THE ORDER, WHICH IS PRECISE. 4. IN VIEW OF THE ABOVE, LD. COUNSEL FOR THE ASSESS EE STATED THAT SEARCH IN THE GROUP CASES OF M/S. OHM DEVELOPERS/ORGANIZER WAS CO NDUCTED BY INCOME-TAX DEPARTMENT U/S.132 OF THE ACT ON 29-10-1999 AND BLO CK ASSESSMENT IN THE CASE OF M/S OHM DEVELOPERS/ORGANIZERS WAS MUST HAVE BEEN CO MPLETED LATEST BY 31-10- 2001. HE NARRATED THAT IN THE CASE OF ASSESSEE NOTI CE U/S 158BD OF THE ACT DATED 12-04-2004 AND SERVED UPON ASSESSEE ON 12-05-2004 I .E ISSUED AFTER ALMOST TWO AND HALF YEARS AFTER COMPLETION OF BLOCK ASSESSMENT ORDER IN THE SEARCHED PARTY. HE STATED THAT NO SATISFACTION IN THE CASE OF M/S OHM DEVELOPERS/ORGANISER WAS RECORDED, WHILE FRAMING BLOCK ASSESSMENT, QUA THE A SSESSEE. 5. HE RELIED ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF MANISH MAHESHWARI V. ACIT [2007] 289 ITR 341/159 TAXMAN 258 (SC) WHEREIN IT I S HELD, THAT BEFORE CHAPTER XIV-B COULD BE INVOKED AGAINST A PERSON OTHER THAN A PERSON IT(SS)A NO.168/AHD/2007 B.P. 90- 91 TO 29.10.99 ASHOKKUMARN PAREKH V. ACIT, CIR-9 SRT PAGE 3 WHO IS PUT TO SEARCH UNDER SECTION 132 OR A REQUISI TION UNDER SECTION 132A, THE CONDITIONS PRESCRIBED UNDER SECTION 158BD ARE REQUI RED TO BE STRICTLY COMPLIED WITH. THE SUPREME COURT HAS HELD THAT CONDITIONS PRECEDEN T IN SUCH CASES, FOR TAKING RECOURSE OF BLOCK ASSESSMENT IN TERMS OF SECTION 15 8BD, REQUIRE THE ASSESSING OFFICER TO RECORD A SATISFACTION THAT ANY UNDISCLOS ED INCOME BELONGS TO ANY PERSON OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH I S MADE UNDER SECTION 132 OR A REQUISITION IS PUT UNDER SECTION 132A. SECONDLY, TH E BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED ARE REQ UIRED TO BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OT HER PERSON. THE SUPREME COURT HAS FURTHER HELD THAT ONLY UPON THE HAPPENING OF TH E AFORESAID THAT THE ASSESSING OFFICER HAVING JURISDICTION OF THE OTHER PERSON S HALL PROCEED UNDER SECTION 158BC AGAINST SUCH OTHER PERSON. WITH THE ABOVE DISCUSSIO N, A PREMISE, WHICH CAN BE SAFELY DEDUCED, IS THAT THE SATISFACTION AS CONTEMP LATED UNDER SECTION 158BD IS TO BE OF THE ASSESSING OFFICER OF THE PERSON WHO HAS B EEN PUT TO SEARCH OR REQUISITION UNDER SECTION 132 OR 132A RESPECTIVELY. ANOTHER PRE MISE WHICH CAN BE SAFELY DEDUCED FROM THE DECISION OF THE SUPREME COURT IS T HAT THE REQUIREMENT OF RECORDING OF SUCH SATISFACTION IS A MANDATORY CONDITION. THER EFORE, THE PLEA ADVANCED ON BEHALF OF THE REVENUE THAT THE SATISFACTION IN SUCH CASES COULD ONLY BE DISCERNIBLE ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND SUCH SATISFACTION NEED NOT BE SPECIFICALLY RECORDED, COULD NOT BE ACCEPTED. IN TH IS VIEW OF THE MATTER, IT COULD BE SAID THAT THE SATISFACTION CONTEMPLATED UNDER SECTI ON 158BD TO THE EFFECT THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON OTHER THA N THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER SECTION 132 OR REQUISIT ION MADE UNDER SECTION 132A, IS TO BE RECORDED IN WRITING BY THE ASSESSING OFFIC ER OF THE PERSON WITH RESPECT TO WHOM SEARCH UNDER SECTION 132 OR A REQUISITION UNDE R SECTION 132A IS MADE. [PARA 23] FURTHER, THE SATISFACTION CONTEMPLATED UNDER SECTIO N 158BD, IS REQUIRED TO BE RECORDED BY THE ASSESSING OFFICER OF THE PERSON SEA RCHED AT ANY TIME BUT NOT LATER THAN THE FINALIZATION OF ASSESSMENT OF UNDISCLOSED INCOME FOR THE BLOCK PERIOD UNDER CHAPTER XIV-B IN THE CASE OF THE PERSON PUT TO SEAR CH OR REQUISITION, AS THE CASE MAY BE. SECONDLY, INSOFAR AS THE ISSUANCE OF NOTICE UND ER SECTION 158BD IS CONCERNED, THE SAME IS TO BE ISSUED BY THE ASSESSING OFFICER O F THE PERSON OTHER THAN THE PERSON PUT TO SEARCH UNDER SECTION 132 OR REQUISITI ON UNDER SECTION 132A. THAT TOO, AFTER TRANSMISSION OF THE RELEVANT MATERIAL FROM TH E FIRST MENTIONED ASSESSING OFFICER, I.E., THE ASSESSING OFFICER OF THE PERSON PUT TO SEARCH UNDER SECTION 132 OR IT(SS)A NO.168/AHD/2007 B.P. 90- 91 TO 29.10.99 ASHOKKUMARN PAREKH V. ACIT, CIR-9 SRT PAGE 4 REQUISITION UNDER SECTION 132A. THEREFORE, A REASON ABLE TIME LAG BETWEEN THE DATE OF RECORDING OF SATISFACTION AND ISSUANCE OF NOTICE UN DER SECTION 158BD IS ENVISAGED IN THE ACT ITSELF. [PARA 27] 6. SIMILAR VIEW WAS TAKEN BY ITAT DELHI BENCH IN TH E CASE OF MANOJ AGARWAL V. DCIT (2008) 113 ITD 377 (DEL) (SB), IT WAS HELD AS UNDE R:- SECTION 158BD, READ WITH SECTIONS 158BC AND 147, OF THE INCOME-TAX ACT, 1961 - BLOCK ASSESSMENT IN SEARCH CASES - UNDISCLOS ED INCOME OF ANY OTHER PERSON - BLOCK PERIOD 1-4-1990 TO 20-8-2000 - WHETH ER FOR INITIATING ACTION UNDER SECTION 158BD, FIRST AND FOREMOST REQUIREMENT IS THAT ASSESSING OFFICER MAKING BLOCK ASSESSMENT IN CASE OF PERSON SEARCHED, HAS TO BE SATISFIED THAT UNDISCLOSED INCOME DETECTED BELONGS TO SOME PERSON OTHER THAN PERSON SEARCHED AND, THUS, SECTION ITSELF CONTEMPLATES SAT ISFACTION ON PART OF ASSESSING OFFICER MAKING ASSESSMENT IN CASE OF PERS ON SEARCHED; RECORDING OF SATISFACTION IS MANDATORY AND IMPERATIVE BEFORE ASSUMPTION OF JURISDICTION UNDER SECTION 158BD - HELD, YES WHETHER NOTE OF S ATISFACTION MUST CONTAIN A POSITIVE FINDING BY ASSESSING OFFICER MAKING ASSE SSMENT UNDER SECTION 158BC INDICATING THEREIN UNDISCLOSED INCOME FOUND A S A RESULT OF HIS EXAMINATION OF SEIZED MATERIAL AND PERSON TO WHOM S UCH INCOME BELONGS - HELD, YES 7. ON THE OTHER HAND, LD. SR-DR RELIED ON THE BLOCK ASSESSMENT ORDER AND THE ORDER OF CIT(A). 8. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT SEARCH ON M/S OHM DEVELOPERS /ORGANIZER WAS CONDUCTED BY INCOME-TAX DEPARTMENT U/S.132 OF THE ACT ON 29-10-1 999 AND NOTICE U/S.158BD IN THE CASE OF ASSESSEE WAS ISSUED VIDE DATED 12-04-20 04 WHICH WAS SERVED ON ASSESSEE ON12-05-2004. WE FIND THAT NONE OF THE AUT HORITIES BELOW HAVE RECORDED THE FINDING WHETHER ANY SATISFACTION QUA ASSESSEE W AS RECORDED WHILE COMPLETING THE BLOCK ASSESSMENT IN THE CASE OF M/S. OHM DEVELO PERS/ORGANIZERS. WE ARE NOT AWARE AND EVEN IT IS NOT BROUGHT ON RECORD EITHER B Y ASSESSING OFFICER OR BY CIT(A) AND EVEN NOW BY LD. COUNSEL FOR THE ASSESSEE OR BY LD. SR-DR, THE DATE OF COMPLETION OF BLOCK ASSESSMENT IN THE CASE OF M/S. OHM DEVELOPERS/ORGANISER AND WHETHER ANY SATISFACTION QUA THE ASSESSEE WAS RECOR DED IN THE CASE OF M/S.OHM DEVELOPERS/ORGANISER AND IN THE ABSENCE OF THESE FA CTS, WE ARE UNABLE TO DECIDE THE ISSUE OF JURISDICTION WHETHER THE ASSESSING OFFICER HAS RIGHTLY ASSUMED THE JURISDICTION FOR ISSUING NOTICE U/S. 158BD OF THE A CT. HOWEVER, IN THIS CASE, IF THERE IS IT(SS)A NO.168/AHD/2007 B.P. 90- 91 TO 29.10.99 ASHOKKUMARN PAREKH V. ACIT, CIR-9 SRT PAGE 5 NO SATISFACTION RECORDED BY ASSESSING OFFICER OF M/ S OHM DEVELOPER/ORGANIZER ON OR BEFORE COMPLETION OF BLOCK ASSESSMENT, THE ASSESSIN G OFFICER OF THE ASSESSEE CANNOT ASSUME JURISDICTION U/S.158BD OF THE ACT. AC CORDINGLY, THESE FACTS NEEDS VERIFICATION AND ASSESSING OFFICER WILL DECIDE THE ISSUE IN THE LIGHT OF DECISION OF HONBLE APEX COURT IN THE CASE OF MANISH MAHESHWARI (SUPRA) AND OF SPECIAL BENCH OF DELHI TRIBUNAL IN THE CASE OF MANOJ AGARWAL (SUPRA). ACCORDINGLY, THIS ISSUE OF ASSESSEE IS SET ASIDE TO THE FILE OF ASSESSING OFFI CER. AS THE MAIN ISSUE OF JURISDICTION IS SET ASIDE TO THE FILE OF ASSESSING OFFICER, THE ISSUE ON MERITS HAS ALSO BEEN SENT BACK TO THE FILE OF ASSESSING OFFICER FOR ADJUDICATION. 9. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 04/02/2011 SD/- SD/- (N.S.SAINI) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED : 04/02/2011 *DKP COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-V, SURAT 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD