Shri Jitendra H.Modi,HUF, Surat V. The ACIT.,Circle-5, Surat

ITSSA 200/AHD/2010

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 2947 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 year(s) 19 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 16-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 09-03-2017
• Assessment Year: misc
• Appeal Filed On: 26-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M G PATEL
• Keywords: Period of limitation
• Section: 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) IT(SS)A. NO: 200/AHD/2010 (BLOCK PERIOD: 1992-93 TO 2001-02) JITENDRA H. MODI HUF 7, VATSLYA MARUTI ENCLAVE, NEAR RANDER ROAD, ADAJAN, SURAT V/S ASST. COMMISSIONER OF INCOME TAX CIRCLE-5, SURAT (APPELLANT) (RESPONDENT) PAN: AABHJ3139A APPELLANT BY : SHRI M.G. PATEL, AR RESPONDENT BY : SHRI SANJAY AGARWAL, CIT/ D. R. ( )/ ORDER DATE OF HEARING : 09 -03-201 7 DATE OF PRONOUNCEMENT : 16 -03-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. WITH THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE C ORRECTNESS OF THE ORDER OF THE LD. CIT(A)-IV, SURAT DATED 30.11.2009 PERTAI NING TO THE BLOCK PERIOD. 1992-93 TO 2001-02. IT(SS)A NO. 200/AHD/2010 . B.P. 1992-9 3 TO 2001-02 2 2. THE SUBSTANTIVE GRIEVANCE OF THE OF THE ASSESSEE RE ADS AS UNDER:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-IV , SURAT HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE BY NOT UPHOLDING THE C LAIM OF THE APPELLANT THA THE PROCEEDINGS INITIATED U/S 158BD ARE BAD AT LAW. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-IV , SURAT HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE BY NOT UPHOLDING THE C ONTENTION OF THE APPELLANT THAT PROCEEDINGS OF ASSESSMENT WERE BAD AT LAW IN AS MUC H NO NOTICE U/S 158BC WAS ISSUED BY THE ASSESSING OFFICER. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-IV , SURAT HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE IN NOT UPHOLDING THE C ONTENTION OF THE APPELLANT THAT NO SATISFACTION WAS RECORDED AT ALL OR WITHIN TIME BY THE ASSESSING OFFICER IN THE CASE AND, THEREFORE, THE ASSESSMENT WAS BAD AT LAW. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-IV , SURAT HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE IN NOT UPHOLDING THE C ONTENTION OF THE APPELLANT THAT NOTICE U/S 158BD WAS NOT ISSUED WITHIN THE TIME LIM IT AND, THEREFORE, THE ASSESSMENT WAS BAD AT LAW. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-IV , SURAT HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE BY CONFIRMING THE ADDI TION OF RS 36,67,115/- AS UNDISCLOSED INCOME FOR BLOCK PERIOD THOUGH THERE WA S NO EVIDENCE TO SUSTAIN ADDITION MADE. 3. THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUND W HICH READS AS UNDER:- WITHOUT PREJUDICE TO THE GROUNDS OF APPEAL TAKEN I N THE APPEAL, THE APPELLANT CONTENDS THAT PROCEEDINGS INITIATED U/S. 158BD IN C ASE OF THE APPELLANT ARE BAD AT LAW IN AS MUCH AS NO SATISFACTION HAS BEEN RECOR DED BY THE ASSESSING OFFICER IN CASE OF SHRI JITENDRA H. MODI (INDIVIDUAL) N WHOSE CASE SEARCH WAS CONDUCTED. 4. WITH GROUNDS NO. 1 TO 5, THE ASSESSEE HAS CHALLENGE D THE VALIDITY OF THE ASSESSMENT ORDER DATED 29.12.2008 ON THE GROUND THA T THE NOTICE ISSUED U/S. 158BD WAS NOT ISSUED WITHIN THE TIME LIMIT AND , THEREFORE, THE ASSESSMENT WAS BAD AT LAW AND THE LD. CIT(A) ERRED IN CONFIRMING THE ASSESSMENT ORDER. IT(SS)A NO. 200/AHD/2010 . B.P. 1992-9 3 TO 2001-02 3 5. RIVAL CONTENTIONS WERE HEARD AT LENGTH AND WITH THE ASSISTANCE OF THE LD. COUNSEL, WE HAVE CAREFULLY PERUSED THE RELEVANT DOC UMENTARY EVIDENCES BROUGHT ON RECORD IN THE FORM OF A PAPER BOOK IN TH E LIGHT OF RULE 18(6) OF THE ITAT RULES. 6. A SEARCH WAS CONDUCTED AT THE PREMISES OF SHRI JITE NDRA H. MODI ON 17.04.2001 AND THE ASSESSMENT ORDER WAS FRAMED IN H IS CASE U/S. 158BC VIDE ORDER DATED 30.04.2003. THE SATISFACTION NOTE WAS RECORDED BY THE ACIT CENTRAL CIRCLE-III, SURAT ON 20.01.2004 MAKING OUT A CASE IN RESPECT OF THE APPELLANT. SUBSEQUENT TO RECEIVING THIS SATISFA CTION NOTE, THE ASSESSING OFFICER ISSUED NOTICE U/S. 158BD IN THE CASE OF THE APPELLANT ON 18.04.2007 AND, THEREAFTER, THE ASSESSMENT WAS FRAMED U/S. 158 BC R.W.S. 144 ON 29.12.2008. THESE ARE THE UNDISPUTED FACTS EMANATIN G FROM THE ORDERS OF THE AUTHORITIES BELOW. 7. THE BONE OF CONTENTION BETWEEN THE ASSESSEE AND THE REVENUE RELATES TO (I) THE ISSUE OF SATISFACTION NOTE (II) THE ISSUE OF NOTICE U/S. 158BD 8. THE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY STATED THAT THE SATISFACTION NOTE WAS RECORDED BY AN INORDINATE DELAY MAKING ASS ESSMENT ORDER LIABLE TO BE QUASHED. THE LD. COUNSEL FURTHER STATED THAT EVEN AFTER RECEIVING THE SATISFACTION NOTE, THE ASSESSING OFFICER ISSUED THE NOTICE WHICH WAS AGAIN EXORBITANTLY LATE. THE LD. COUNSEL CONCLUDED BY SAY ING THAT SUCH ACTION OF IT(SS)A NO. 200/AHD/2010 . B.P. 1992-9 3 TO 2001-02 4 THE A.O. IS NOT JUSTIFIABLE AND, THEREFORE, THE ASS ESSMENT ORDER DESERVES TO BE QUASHED. 9. PER CONTRA, THE LD. D.R. STRONGLY STATED THAT NO PE RIOD OF LIMITATION HAS BEEN PRESCRIBED UNDER THE ACT FOR THE RECORDING OF THE S ATISFACTION AND THE SUBSEQUENT ISSUE OF NOTICE U/S. 158BD IN THE CONNEC TED CASE. IT IS THE SAY OF THE LD. D.R. THAT WHEN NO PERIOD OF LIMITATION IS P RESCRIBED A REASONABLE DELAY FOR A REASONABLE PERIOD OF TIME SHOULD NOT CO ME IN DECIDING WHETHER THE ASSESSMENT ORDER IS BAD IN LAW. THE LD. D.R. RE LIED UPON THE DECISION IN THE CASE OF MAHINDRA & MAHINDRA LTD. IN TAX APPEAL NO. 3489 OF 2009. THE FACTUAL MATRIX CAN BE UNDERSTOOD BY THE FOLLOWING C HART:- SR. NO. PARTICULARS DATE 1. SEARCH CONDUCTED ON SHRI JITENDRA MODI (INDIVIDUAL) 17.04.2001 2. DATE OF ASSESSMENT ORDER U/S.158BC IN CASE OF SHRI JITENDRA MODI (INDIVIDUAL) BY ACIT, CENTRAL CIRCLE 3, SURAT. 30.04.2003 3. SATISFACTION NOTE BY ACIT, CENTRAL CIRCLE 3, SURAT. 20.01.2004 4. LETTER ADDRESSED TO ACIT, RANGE-5, SURAT. 04.02.2004 5. NOTICE U/S.158BD ISSUED IN THE CASE OF JITENDRA H MODI HUF BY ACIT, CIRCLE 5, SURAT. 18.04.2007 6 ORDER U/S. 158BC R.W.S. 144 PASSED 29.12.2008 IT(SS)A NO. 200/AHD/2010 . B.P. 1992-9 3 TO 2001-02 5 10. THE HONBLE SUPREME COURT WHILE DECIDING THE CASE O F CIT VS. CALCUTTA KNITWEARS 362 ITR 673 HAS LAID DOWN CERTAIN PRINCIP LES FOR THE PURPOSE OF SECTION 158BD OF THE ACT QUA THE SATISFACTION NOTE AND THE SAME READS AS UNDER:- IN THE RESULT, WE HOLD THAT FOR THE PURPOSE OF SEC TION 158BD OF THE ACT A SATISFACTION NOTE IS SINE QUA NON AND MUST BE PREPA RED BY THE ASSESSING OFFICER BEFORE HE TRANSMITS THE RECORDS TO THE OTHER ASSESS ING OFFICER WHO HAS JURISDICTION OVER SUCH OTHER PERSON. THE SATISFACTION NOTE COULD BE PREPARED AT EITHER OF THE FOLLOWING STAGES: (A) AT THE TIME OF OR ALONG WITH THE INITIATION OF PROCEEDINGS AGAINST THE SEARCHED PERSON UNDER SECTION 158BC OF THE ACT; (B) ALONG WITH THE ASSESSMENT PROCEEDINGS UNDER SECTION 158BC OF THE A CT ; AND (C) IMMEDIATELY AFTER THE ASSESSMENT PROCEEDINGS ARE COMPLETED UNDE R SECTION 158BC OF THE ACT OF THE SEARCHED PERSON. 11. THESE PRINCIPLES WERE CONSIDERED AT LENGTH BY THE H ONBLE HIGH COURT OF DELHI IN THE CASE OF BHARAT BHUSHAN JAIN IN 370 ITR 695. THE RELEVANT PART OF THE ORDER READS AS UNDER:- 4. SO FAR AS THE DETERMINATION WHETHER THE SATISFAC TION RECORDED WAS IN CONFORMITY WITH SECTION 158BD IS CONCERNED, THERE I S NO CONTROVERSY IN VIEW OF THE CONCURRENT FINDINGS. HAVING REGARD TO THE ORDER OF THIS COURT IN CIT VS. RADHEY SHYAM BANSAL (SUPRA), THE BONE OF CONTENTION IS WHE THER THE PERIOD WHEN THE SATISFACTION NOTE WAS RECORDED, WAS CONTEMPORANEOUS WITH THE PERIOD IN WHICH ASSESSMENT PROCEEDINGS OF THE SEARCHED PERSONS WERE CARRIED OUT, AS HELD BY THE JUDGMENT OF THE SUPREME COURT IN CIT VS. CALCUTTA K NITWEARS (SUPRA). IN EACH OF THE CASES IT IS EVIDENT THAT THE SATISFACTION NOTE WAS RECORDED ALMOST OR JUST SHORT OF OR MORE THAN A YEAR AFTER THE COMPLETION OF ASSE SSMENT OF THE SEARCHED PERSON. IN I.T.A. NO. 279 OF 2010, THE SATISFACTION NOTE WAS RECORDED ON AUGUST 26, 2003, I.E. FOUR DAYS SHORT OF A YEAR AFTER COMP LETION OF ASSESSMENT OF THE SEARCHED PERSON; IN I.T.A. NO. 1145 OF 2010 IT IS R ECORDED ON JANUARY 14, 2004, IT(SS)A NO. 200/AHD/2010 . B.P. 1992-9 3 TO 2001-02 6 I.E., ABOUT ONE YEAR AND FOUR MONTHS AFTER SEARCHED PERSONS ASSESSMENT IS COMPLETED. IN ITA NOS. 1313 OF 2010 AND 1326 OF 201 0, SATISFACTION NOTES WERE RECORDED ON JUNE 4, 2003, I.E., ABOUT NEARLY 10 MON THS AFTER COMPLETION OF THE ASSESSMENT OF THE SEARCHED PERSON. 12. AND THE HONBLE DELHI HIGH COURT FINALLY CONCLUDED AS UNDER:- 6. HAVING REGARD TO THE INTENT OF THE SUPREME COURT IN PARAGRAPH 44 OF THE CALCUTTA KNITWEARS (SUPRA), WHERE IT WAS INDICATED THAT THE REVENUE HAS TO BE VIGILANT IN ISSUING NOTICE TO THE THIRD PARTY UNDER SECTION 158 BD, IMMEDIATELY AFTER THE COMPLETION OF ASSESSMENT OF THE SEARCHED PERSON, TH IS COURT IS OF THE OPINION THAT A DELAY RANGING BETWEEN 10 MONTHS OF ONE AND HALF Y EARS CANNOT BE CONSIDERED CONTEMPORANEOUS TO ASSESSMENT PROCEEDINGS. WE ARE O F THE OPINION THAT NOTICES WERE NOT ISSUES IN CONFORMITY WITH THE REQUIREMENTS OF SECTION 158BD, AND WERE UNDULY DELAYED. THE APPEALS OF THE REVENUE, ACCORDI NGLY, FAIL AND ARE DISMISSED . 13. A PERUSAL OF THE AFOREMENTIONED GUIDELINES OF THE S UPREME COURT IN THE CASE OF CALCUTTA KNITWEARS (SUPRA) AND THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF BHARAT BHUSHAN JAIN (SUPR A) CLEARLY EMPHASIZE THAT THE NOTICE AND THE ASSESSMENT PROCEEDINGS SHOU LD BE INITIATED IMMEDIATELY AFTER THE COMPLETION OF ASSESSMENT OF T HE SEARCHED PERSON. 14. THE CONCISE OXFORD DICTIONARY NINTH EDITION DEFINES THE WORD IMMEDIATELY- WITHOUT PAUSE OR DELAY. 15. THE MACMILLAN ENGLISH DICTIONARY GIVES THE DEFINITI ON OF IMMEDIATELY WITHOUT DELAY, VERY QUICKLY AND WITHOUT DELAY, JUST BEFORE OR JUST AFTER AN EVENT. IT(SS)A NO. 200/AHD/2010 . B.P. 1992-9 3 TO 2001-02 7 16. THE MITRAS LEGAL & COMMERCIAL DICTIONARY DEFINES T HE WORD IMMEDIATELY- A PROVISION TO THE EFFECT THAT A THI NG MUST BE DONE IMMEDIATELY MEANS THAT IT MUST BE DONE AS SOON AS POSSIBLE IN THE CIRCUMSTANCES, THE NATURE OF THE ACT TO BE DONE BEI NG TAKING INTO ACCOUNT. IT FURTHER PROVIDES THAT THE WORD IMMEDIATELY IS STRONGER THAN THE EXPRESSION WITHIN A REASONABLE TIME, AND IMPLY PR OMPT, VIGOROUS ACTION, WITHOUT ANY DELAY. 17. SIMILARLY, LAW LEXICON SUPPLEMENT CONTAINS THE DEFI NITION OF IMMEDIATELY AS- TO CONVEY A SENSE OF URGENCY AND LASTLY BLACKS LAW DICTIONARY HAS DEFINED THE WORD IMMEDIATELY- WITHOUT INTERVAL OF TIME, WITHOUT DELAY, STRAIGHTWAY, OR WITHOUT ANY DELAY OR LAPSE OF TIME. ONCE AGAIN, IT HAS BEEN MENTIONED THAT THE WORK IMMEDIATELY IS STRONGER THAN THE EXPRESSION WITHIN A REASONABLE TIME, AND IMPLY PROMPT, VIGOR OUS ACTION, WITHOUT ANY DELAY. 18. SINCE THE HONBLE SUPREME COURT AND THE HONBLE HI GH COURT OF DELHI HAVE EMPHASIZED THAT THE ACTION OF THE A.O. SHOULD BE I MMEDIATELY, THEREFORE, COMING BACK TO THE FACTUAL MATRIX EXHIBITED ELSEWHE RE, THERE IS NO DISPUTE THE ASSESSMENT IN THE CASE OF SEARCHED PERSON WAS C OMPLETED ON 30.04.2003. IT IS ALSO NOT IN DISPUTE THAT THE SATI SFACTION NOTE IS DATED 20.01.2004 WHICH MAKES A DELAY OF NINE MONTHS. BUT WHAT IS ALARMING IS TO FIND THAT THE NOTICE ISSUED BY THE A.O. IN THE CASE OF APPELLANT IS ON 18.04.2007 WHICH IS ABOUT 33 MONTHS AFTER RECEIVING THE SATISFACTION NOTE. IT(SS)A NO. 200/AHD/2010 . B.P. 1992-9 3 TO 2001-02 8 19. IF THE AFORE-STATED DELAY IS CONSIDERED IN THE LIGH T OF THE JUDICIAL DECISIONS DISCUSSED HEREINABOVE QUA THE DICTIONARY MEANING OF THE WORK IMMEDIATELY, IN OUR CONSIDERED OPINION, THE BALAN CE OF CONVENIENCE IS DEFINITELY TILTED IN FAVOUR OF THE ASSESSEE AND, TH EREFORE, WE ARE INCLINED TO HOLD THAT THE ASSESSMENT ORDER MADE U/S. 158BD OF T HE ACT R.W.S. 154 PURSUANT TO THE INORDINATE DELAY IN RECORDING THE S ATISFACTION AND FURTHER ISSUANCE OF NOTICE IS BAD IN LAW AND DESERVES TO BE QUASHED. WE, ACCORDINGLY, QUASH THE ASSESSMENT ORDER. 20. BEFORE CLOSING, THE LD. D.R. HAS RELIED UPON THE DE CISION IN THE CASE OF MAHINDRA & MAHINDRA LTD. (SUPRA). IN OUR UNDERSTAND ING OF THE FACTS OF THE CASE IN HAND, WE DO NOT FIND THE SAID DECISION APPL ICABLE. IN OUR UNDERSTANDING WHAT SHOULD BE THE REASONABLE PERIOD DEPENDS UPON CERTAIN RELEVANT FACTORS, THE FIRST RELEVANT FACTOR IS THAT THE SEARCHED PERSON I.E. SHRI JITENDRA MODI IS AN INDIVIDUAL AND THE APPELLA NT BEFORE US IS JITENDRA MODI (HUF), BOTH THE SEARCHED AND THE APPELLANT ARE ASSESSED AT SURAT ONLY, THEREFORE, IT WOULD HAVE BEEN JUST A MATTER O F FEW DAYS IN RECORDING THE SATISFACTION NOTE AND TRANSMITTING THE SAME TO THE CONCERNED ASSESSING OFFICER. WE FAIL TO UNDERSTAND WHEN BOTH THE PERSON S ARE ASSESSED AT THE SAME PLACE AND PERHAPS WITHIN THE SAME JURISDICTION AS ONE IS ASSESSED IN INDIVIDUAL CAPACITY AND THE OTHER IS THE HUF OF THE INDIVIDUAL. THE DELAY OF 9 MONTHS ON THE GIVEN FACTS OF THE CASE IS DEFINITELY UNREASONABLE. THEREFORE, WE DECLINE TO ACCEPT THE REASONING GIVEN IN THE CAS E OF MAHINDRA & MAHINDRA LTD. (SUPRA). IT(SS)A NO. 200/AHD/2010 . B.P. 1992-9 3 TO 2001-02 9 21. SINCE, WE HAVE QUASHED THE ASSESSMENT ORDER; WE DO NOT FIND IT NECESSARY TO DWELL INTO THE MERITS OF THE CASE. 22. APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 16 - 03- 20 17 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 16 /03/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD