Late Shri Ratanlal Shankarlal Sanghvi, through L/H Mr. Pravin Popatlal Siyakariya, Pune V. Assistant Commissioner of Income tax, Pune

ITSSA 19/PUN/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5649 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 01-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 08-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KESANG Y SHERPA
• Assessee Lawyers: RAJEEV THAKKAR
• Keywords: Search and seizure; Block assessment; CHAPTER XIVB
• Section: 158BC(c); 158BC; 158BD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI R.S.SYAL, VP AND SHRI PARTHA SARATHI CHAUDHURY , JM . / I T (SS) A NO. 19 /PUN/20 17 BLOCK PERIOD : 1996 - 97 TO 2002 - 03 MR. PRAVIN POPATLAL SIYAKARIYA L/H OF LATE SHRI RATANLAL SHANKARLAL SANGHVI C/O SHAH KHANDELWAL JAIN & ASSOCIATES CHARTER E D ACCOUNTANTS, LEVEL - 3, RIVERSIDE BUSINESS BAY, WELLESLEY ROAD, NEAR RTO, PUNE - 411 001. PAN : AKHPS8119H ....... / APPELLANT / V/S. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(2), PUNE. / RESPONDENT A SSESSEE BY : SHRI RAJ EE V THAKKAR REVENUE BY : SMT. KESANG Y SHERPA / DATE OF HEARING : 01 .10 .2020 / DATE OF PRONOUNCEMENT : 01 .10 .2020 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(APPEALS), PUNE - 11 DATED 30.11.2016 FOR THE ASSESSMENT YEARS 1996 - 97 TO 2002 - 03 AS PER THE FOLLOWING GROUNDS OF APPEAL ON RECORD: 2 IT (SS) A NO. 19 /PUN/20 17 BLOCK PERIOD 1996 - 97 TO 2002 - 03 1. ON FACTS & CIRCUMSTANCES PREVAILING IN THE CASE & AS PER PROVISIONS OF LAW , IT BE HELD THAT THE ORDER PASSED BY THE ASSESSING OFFICER IN TERMS OF PROVISIONS OF SEC . 158BC(C) R . W.S. 158B D OF THE I NCOME TAX ACT , 1961 & CONFIRMED BY THE 1 S T APPELLATE AUTHORITY BE HELD AS INVALID , ILLEGAL & NOT TENABLE IN LAW & IS WITHOUT ASSUMING JURISDICTION BY THE ASSESSING OFFICER IN TERMS OF THE RELEVANT PROVISIONS OF THE ACT FOR THE PURPOSE OF ASSESSMENT . THE ORDER PASSED BY THE ASSESSING OFFICER & CONF IRMED BY THE 1 ST APPELLATE AUTHORITY BE CANCELLED . 2. WITHOUT PREJUDICE TO GROUND NO. 1 & IN THE ALTERNATIVE IT BE HELD THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS BARRED BY LIMITATION OF TIME , & IS NOT TENABLE IN LAW & SAME BE CANCELLED . 3 . WITHOUT PREJUDICE TO GROUND N O . 1 & 2 & IN THE ALTERNATIVE , ON THE FACTS & CIRCUMSTANCES PREVAILING IN THE CASE & AS PER PROVISIONS OF LAW, IT BE HELD THAT THERE IS NO UNDISCLOSED INCOME ASSESSABLE IN THE HANDS OF APPELLANT IN TERMS OF PROVISIONS OF CHAPTER XIVB OF THE ACT . IT FURTHER BE HELD THAT INCOME ASSESSED BY THE ASSESSING OFFICER AS UND I SCLOSED INCOME OF RS . 34,75 , 530 / - IS ERRONEOUS & CONTRARY TO THE RELEVANT PROVISIONS OF THE ACT. THE INCOME SO ASSESSED BE DELETED FULLY. THE APPELLANT BE GRANTED PROPER R ELIEF IN THIS RESPECT . 2. THE ASSESSEE HAS PREFERRED BOTH LEGAL GROUNDS AS WELL AS GROUNDS ON MERITS. AT THE TIME OF HEARING THROUGH VIDEO CONFERENCE, THE LD. AR SUBMITTED THAT HE W ILL PRESS LEGAL GROUNDS FIRST AND IF ON L EGAL GROUNDS, ASSESSEE SUCCEEDS, THE GROUNDS ON MERITS WOULD BECOME ACADEMIC IN NATURE. 3. THE RELEVANT FACTS IN THIS CASE ARE THAT SEARCH AN D SEIZURE PROCEEDINGS U/S.132 OF THE INCOME TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS THE ACT ) WERE CONDUCTED AT THE BUSINESS AND RESIDENTIAL PREMISES OF SANGHVI GROUP OF ASSESSES ON 11.10.2001 AT 31 - A/B, TIMBER MARKET, PUNE - 42 ; A - 14, SHATRUNJAY DARSHAN SOCIETY, SHANKAR SETH ROAD, PUNE - 411 037 ; 259 A/1, UPDHYAN NAGAR, BHAVANI PETH, PUNE AND 85 6/7, BHAVANI PETH, A. D. CAMP CHOUK, PUNE. THE GROUP I S MAINLY ENGAGED IN THE BUSINESS OF TRADING IN TIMBER, SCRAP, INDUSTRIAL GASES AND CEMENT ETC. 3.1 DURING THE COURSE OF SEARCH, STOCK OF TIMBER VALUED AT RS.75,34,179/ - WAS PUT UN DER DEEMED SEIZURE IN THE CASE OF M/S. SANGH VI DHIRAJI BHUTAJI & 3 IT (SS) A NO. 19 /PUN/20 17 BLOCK PERIOD 1996 - 97 TO 2002 - 03 SONS AND M/S. SANGHVI MALCHAND DHIRAJI & SONS . BESIDES, VOLUMIN OUS BOOKS OF ACCOUNTS AND DOCUMENTS WERE ALSO SEIZED FROM THE BUSINESS AND RESIDENTIAL PREMISES. STATEMENTS OF THE PERSONS CONCERNED AN D THOSE WERE PRESENT IN RESPECTIVE PREMISES WERE RECORDED DURING THE COURSE OF SAID SEARCH AND SEIZURE PROCEEDINGS. A NOTICE U/S.158BC OF THE ACT WAS ISSUED ON 28.07.2003 IN THE NAME OF SHRI RATANLAL S. SANGHVI. IN RESPONSE TO THE NOTICE, THE ASSESSEE MADE SUBMISSIONS BEFORE THE ASSESSING OFFICER WHICH IS ON RECORD IN THE ASSESSMENT ORDER ITSELF. THE CONTENTIONS OF THE ASSESSEE WERE VERIFIED BY THE ASSESSING OFFICER AND PROCEEDINGS INITIATED U/S.158BC OF THE ACT WERE DROPP ED. HOWEVER, SINCE BOOKS OF ACCOUNTS AND SEVERAL DOCUMENTS PERTAINING TO THE ASSESSEE WERE FOUND AND SEIZED, THE PROC EEDINGS U/S.158BD OF THE ACT WERE INITIATED AND ACCORDINGLY, NOTICES U/S.158BD OF THE ACT W ERE ISSUED TO THE ASSESSEE AND HE WAS ASKED TO SUBMIT THE RETURN FOR THE BLOCK PERIOD WITHIN 45 DAYS OF RECEIPT OF THE NOTICE. 4. THE LD. AR OF THE ASSESSEE AT THE TIME OF HEARING THROUGH VIDEO CONFERENCE SUBMITTED THAT ON CE THE PROCEEDINGS U/S.158BC OF THE ACT WERE DROPPED THERE CANNOT BE ANY PROCEEDINGS U/S.158BD OF THE ACT AND THEREFORE, THE ASSESSMENT ORDER IN THIS CASE OF THE ASSESSEE IS BAD IN LAW AND LIABLE TO BE QUASHED. 4.1 THE LD. AR OF THE ASSESSEE FIRST DEMONSTRATED REFERRING TO PAGE 46 OF TH E PAPER BOOK WHEREIN SATISFACTION IS RECORDED BY THE ASS ESSING OFFICER FOR DROPPING THE PROCEEDINGS U/S.158BC OF THE ACT AND THEREIN, IT IS CRYSTAL CLEAR THAT THE MATTER WAS DISCUSSED WITH THE CIT (C) , PUN E, ADDL. CIT CR - 2, PUNE AND ALSO WITH THE JOINT DIT (ADMIN), OFFICE OF THE DGIT , PUNE AND AS PER THEIR 4 IT (SS) A NO. 19 /PUN/20 17 BLOCK PERIOD 1996 - 97 TO 2002 - 03 DIRECTION, THE PROCEEDINGS INITIATED U/S.158BC O F THE ACT WERE DROPPED, SINCE THERE IS TECHNICAL FLAW, THE CASE IS BEING COVERED U/S.158BD OF THE ACT. 4.3 THE LD. AR OF THE ASSESSEE VEHEMENTLY SUBMITTED THAT IN ORDER TO UNDERTAKE PROCEEDINGS U /S.158BD OF THE A CT THERE HAS TO BE A PROCEEDING U/S.158BC OF THE ACT AND WITHOUT PROCEEDINGS U/S.158BC OF THE ACT, THE PROCEED INGS U/S.158 BD CANNOT BE EXERCISED AND HE RELIED ON VARIOUS DECISION S OF THE PUNE BENCH OF THE TRIBUNAL IN RELATION TO THE SISTER CONCERNS OF THE ASSESSEE VIZ. ( A ) ITO VS. SHRI SANGHVI ON KARLAL RATANLAL & CO, ITA NO .88 6 /PUN/2013 , BLOCK PERIOD 1996 - 97 TO 2002 - 03 . ( B ) SHRI SANGHVI ONKARLAL RATANLAL & CO. VS. ACIT, ITA NO.937/PUN/2013, BLOCK PERIOD 1996 - 97 - 2002 - 03 . ( C ) SHRI MANROOPLAL MALAJI SANGHVI - HUF VS. ACIT, ITA NO.08/PUN/2017, BLOCK ASSESSMENT PERIOD 1996 - 97 TO 2002 - 03 . ( D ) SANGHVI DHIRAJI BHUTAJI & SONS VS. ACIT, ITA NO.10/PUN/2017, BLOCK ASSESSMENT PERIOD 1996 - 97 TO 2002 - 03 . ( E ) SHRI POPATLAL MALAJI SANGHVI - HUF VS. ACIT, IT(SS)A NO.9/PUN/2017, ASSESSMENT YEARS 1996 - 97 TO 2002 - 03 . 5. PER CONTRA, THE LD. DR RELIED HEAVILY ON THE ORDERS OF THE SUB ORDINATE AUTHORITIES. 6. WE HAVE PERUSED THE CASE RECORDS AND HEARD THE RIVAL CONTENTIONS. WE HAVE ALSO ANALYZED THE FACTS AND CIRCUMSTANCES IN THIS CASE AND CONSIDERED THE JUDICIAL PRONOUNCEMENTS PLACED BEFORE US. THE FACTS ON RECORD CLEARLY DEMONSTRATE S THAT IN THE ASSESSMENT ORDER AND THE NOTE ON SATISFACTION RECORDED BY THE ASSESSING OFFICER FOR DROPPING THE PROCEEDINGS U/S.158BC OF THE ACT THAT THE REVENUE AUTHORITIES ON ANALYZING THE FACTS AND 5 IT (SS) A NO. 19 /PUN/20 17 BLOCK PERIOD 1996 - 97 TO 2002 - 03 CIRCUMSTANCES RELATING TO THE AS SESSEE HAS TAKEN THIS CONSCIOUS DECISION, HOWEVER, IN ORDER TO REGULARIZE THE PROCEEDINGS AND RE MOVE THE TECHNICAL FLAW, NOTICE U/S.158BD OF THE ACT HAVE BEEN ISSUED AND ASSESSMENT WAS COMPLETED. IT IS THE CONTENTION OF THE LD. AR BEFORE US THAT PROCEEDINGS INIT IATED BY THE ISSUANCE OF NOTICE U/S.158BD OF THE ACT AFTER TH E PROCEEDINGS U/S.158B C OF THE ACT HAS BEEN DROPPED , I N SUCH SCENARIO , THERE IS NO QUESTION OF INITIATING THE PROCEEDINGS U/S.158BD OF THE ACT. IN ABSENCE OF ANY ASSESSMENT BEING MADE U/S.158BC OF THE ACT, THERE IS NO MERIT IN INITIATING THE PROCEEDINGS U/S.158BD OF THE ACT. 7. WE FIND THAT THIS ARGUMENT OF THE ASSESSEE IS FORTIFIED BY VARIOUS DECISIONS OF THE TRIBUNAL RELIED ON BY THE LD. AR OF THE ASSE SSEE WHICH IS ON RECORD. W E WOULD REFER TO THE RELEVANT PORTION OF THE FINDINGS OF THE TRIBUNAL IN THE LATEST DECISION OF ONE OF THE SISTER CONCERNS OF THE ASSESSEE IN ITA NO.9/PUN/2017 (SUPRA.) AND THE SAME READS AS UNDER: 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT IN THE CASE OF SHRI MANROOPLAL MALAJI SANGHVI (HUF) AND OTHER (SUPRA) THE CO - ORDINATE BENCH OF THE TRIBUNAL HAS HELD THAT ONCE THE PROCEEDINGS U/S 158BC HAVE BEEN DROPPED, THERE WAS NO QUESTION OF INITIATING PROCEEDINGS U/S 158BD OF THE ACT. IN THE PRESENT CASE, IT IS AN UNDISPUTED FACT THAT THE PROCEEDINGS HAVE BEEN INITIATED U/S 158BC(C) R.W .S. 158BD OF THE ACT. BEFORE US, REVENUE HAS NOT POINTED OUT ANY DISTINGUISHING FACTS IN THE PRESENT CASE AND THAT OF MANROOPLAL MALAJI SANGHVI (HUF) AND OTHER (SUPRA). WE THEREFORE FOLLOWING THE DECISION IN THE CASE OF MANROOPLAL MALAJI SANGHVI (HUF) AN D OTHER (SUPRA ) HOLD THAT INITIATION OF PROCEEDINGS U/S 158BD OF THE ACT WAS WITHOUT JURISDICTION IN THE ABSENCE OF 158BC PROCEEDINGS AND ACCORDINGLY, THE ASSESSMENT ORDER PASSED U/S 158BC R.W.S. 158BD OF THE ACT DOES NOT SURVIVE. THUS, THE GROUNDS OF TH E ASSESSEE ARE ALLOWED. 8. THE LD. DR ON PRINCIPLE AGREED THAT THE FACTS AND CIRCUMSTANCES ARE ABSOLUTELY IDENTICAL IN RESPECT OF THE ASSESSEE FOR THIS YEAR WITH THOSE FACTS 6 IT (SS) A NO. 19 /PUN/20 17 BLOCK PERIOD 1996 - 97 TO 2002 - 03 AND CIRCUMSTANCES WHICH WERE CONSIDERED IN THE DECISION REFE RRED BEFORE US. THE LD. DR ALSO CONCEDED THAT IT IS A CONSISTENT VIEW TAKEN BY THE TRIBUNAL IN THE CASES OF SISTER CONCERNS OF THE ASSESSEE THAT W HEN THE PROCEEDINGS U/S.158BC OF THE ACT HAS BEEN DROPPED THEN THERE IS NO LEGAL EXISTENCE AND VALIDITY OF PROCEEDINGS U/S.158BD OF THE ACT BY THE RE VENUE AUTHORITIES. REVERTING TO THE FACTS OF THE PRESENT CASE, IT IS UNDISPUTED FACT THAT PROCEEDINGS U/S.158BC OF THE ACT WERE INITIATED AND DROPP ED AS PER SATISFACTION NOTED ON RECORD BY THE REVENUE AUTHORITIES. WHEN THE FACTS ARE IDENTICAL THERE IS NO REASON FOR US TO DEVIATE FROM OUR VIEW TAKE N IN THE CASES REFERRED BEFORE US BY THE LD. AR OF THE ASSESSEE. THEREFORE, FOLLOWING OUR FINDINGS IN THOSE CASES REFERRED HEREINABOVE, WE ARE OF THE CONSIDERED VIEW THAT INITIATION OF PROCEEDI NGS U/S.158BD OF THE ACT WAS WITHOUT JURISDICTION IN ABSENCE OF PROCEEDINGS U/S.158BC OF THE ACT AND ACCORDINGLY, ASSESSMENT ORDER PASSED U/S.158BC (C) R.W.S 158BD OF THE ACT DOES NOT SURVIVE. THUS, LEGAL GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 9. SINCE THE ASSESSEE SUCCEEDS IN LEGAL GROUNDS, GROUNDS ON MERITS BECOME ACADEMIC IN NATURE. 10. IN THE RESULT, APPEAL OF THE ASSES SEE IS ALLOWED. ORDER PRO NOUNCED ON 01 ST DAY OF OCTOB ER, 20 20 . SD/ - SD/ - R.S.SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 01 ST OCTOBER , 2020. SB 7 IT (SS) A NO. 19 /PUN/20 17 BLOCK PERIOD 1996 - 97 TO 2002 - 03 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS), PUNE - 11. 4. THE PR. CIT(CENTRAL), PUNE. 5 . , , , / DR, ITAT, A BENCH, PUNE. 6 . / GUARD FILE. // TRUE COPY // / BY ORDER, / PRIVATE SECRETARY , / ITAT, PUNE . 8 IT (SS) A NO. 19 /PUN/20 17 BLOCK PERIOD 1996 - 97 TO 2002 - 03 DATE 1 DRAFT DICTATED ON 01 . 10 .2020 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR O 1 .10 .2020 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER