Shri. S. V. Srinivasa Babu, Bangalore V. DCIT(Inv), Bangalore

ITSSA 21/BANG/2009

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8128 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 16-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-09-2011
• Assessment Year: misc
• Appeal Filed On: 02-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARSHA PRAKASH
• Keywords: Principle of natural justice; Reasonable cause; Block assessment
• Section: 32; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SHRI N.BARATHVAJA SANKAR, VICE-PRESIDENT AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER IT(SS)A NO.21(BANG)/2009 (BLOCK PERIOD: 1989-90 TO 27-3-1999) SHRI S.V.SRINIVASA BABU, NO.7, 1 ST FLOOR, 32 ND CROSS, KILARI ROAD, BANGALORE. PAN/GIR NO.BA-130 VS. APPELLANT DEPUTY COMMISSIONER OF INCOME-TAX (INV.) CIRCLE 2(1), BANGALORE. RESPONDENT APPELLANT BY: SHRI S.PARTHASARATHI. RESPONDENT BY : SHRI HARSHA PRAKASH. DATE OF HEARING: 14-09-2011. DATE OF PRONOUNCEMENT: 16-09-2011 O R D E R PER GEORGE GEORGE K, JM: THIS APPEAL INSTITUTED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(APPEALS)-II, BANGALORE, DATED 27-2-2009, THE MATTER PERTAINS TO BLOCK ASSESSMENT YEARS 1989- 90 TO 1999-00 I.E. UPTO 27-3-1999. THE ISSUE INVOLVED IN THIS CASE IS WHETHER THE CIT(A) IS JUSTIFIED IN DISMISSING THE A PPEAL IN LIMINE ON THE GROUND THAT ADMITTED TAX HAS NOT BEEN PAID. IT(SS)A 21(BANG)/2009 PAGE 2 OF 5 2. BRIEFLY STATED, FACTS OF THE CASE ARE AS FOLLOWS : THE ASSESSEE IS AN INDIVIDUAL. HE IS AN INCOME-TAX PRA CTITIONER. A SEARCH U/S 132 OF THE INCOME-TAX ACT, 1961 [HEREINA FTER REFERRED TO AS 'THE ACT'] WAS CONDUCTED IN THE OFFI CE AND THE RESIDENTIAL PREMISES OF THE ASSESSEE ON 27-3-1999. NOTICE U/S 158BC WAS ISSUED ON 21-6-1999 AND IN RESPONSE TO TH E SAME, RETURN OF INCOME WAS FILED DECLARING TOTAL UNDISCLO SED INCOME AMOUNTING TO ` 40 LAKHS. THE AO NOTED THAT THE INCOME SO OFFERED WAS SUBSEQUENTLY SOUGHT TO BE OFFERED BY TH E ASSESSEE IN THE HANDS OF HIMSELF AND EIGHT OTHER PERSONS. O N ACCOUNT OF LACK OF CO-OPERATION FROM THE ASSESSEES SIDE, THE ASSESSMENT WAS CONCLUDED BRINGING TO TAX THE SUM OF ` 40 LAKHS DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FILED. 2.1 THE ASSESSEE, AGGRIEVED BY THE ASSESSMENT COMPLETED, CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. IN FILING THE APPEAL BEFORE T HE FIRST APPELLATE AUTHORITY, THERE WAS A DELAY OF 150 DAYS. IT IS SEEN FROM RECORDS THAT THE APPEAL BEFORE THE THEN CIT(A) WAS TAKEN UP FOR HEARING. THEREAFTER THERE WAS A CHANGE IN T HE INCUMBENT AND THE NEW CIT(A) PASSED APPELLATE ORDER ON 30-7-2 003. THE CIT(A) DISMISSED THE APPEAL ON THE GROUND THAT THE DELAY IN FILING THE APPEAL IS NOT CONDONED. IN DOING SO, TH E CIT(A) REJECTED THE ASSESSEES CONTENTION THAT THE PREVIOU S CIT(A) HAD IMPLIEDLY CONDONED THE DELAY IN FILING THE APPEAL A S HE HAD TAKEN UP THE APPEAL FOR HEARING ON MERITS. IT(SS)A 21(BANG)/2009 PAGE 3 OF 5 2.2 ON FURTHER APPEAL BY THE ASSESSEE, THE TRIBUNAL TRIBUNAL VIDE ITS ORDER DATED 27-2-2004 REMANDED TH E MATTER BACK TO THE CIT(A) TO CONSIDER THE ISSUE ON MERITS. THE TRIBUNAL WAS OF THE VIEW THAT THE PREVIOUS CIT(A) H AD IMPLIEDLY CONDONED THE DELAY. MOREOVER, THE TRIBUNAL, AFTER P ERUSING THE REASONS FOR DELAY IN FILING THE APPEAL, HELD THAT T HEY WERE SATISFIED THAT THERE WAS A REASONABLE CAUSE FOR DEL AY IN FILING THE APPEAL. 2.3 THEREAFTER, THE MATTER WAS TAKEN UP BY THE CIT( A) AND HE NOTICED THAT OUT OF THE TOTAL TAX PAYABLE O N THE ADMITTED INCOME, AN AMOUNT OF ` .8,75,000/- WAS YET TO BE PAID AS ON THE DATE OF HEARING OF THE APPEAL. THEREFORE, HE DISMISSED THE APPEAL IN LIMINE BY REFERRING TO SECTION 249(4) (A) ON THE GROUND THAT THE ADMITTED TAX HAS NOT BEEN PAID. 3. AGGRIEVED BY THE DISMISSAL OF APPEAL BY THE FIRS T APPELLATE AUTHORITY, THE ASSESSEE IS IN APPEAL BEFO RE US. 3.1 LEARNED COUNSEL FOR THE ASSESSEE HAS FILED PAPE R BOOK CONTAINING 115 PAGES CONSISTING OF THE COMMENT S OF THE ITO TO THE CIT(A) AND ASSESSEES RESPONSE TO THE RE MAND REPORT OF THE ITO. VARIOUS OTHER MATERIAL THAT ARE PRODUCE D BEFORE THE LOWER AUTHORITIES ARE ALSO ENCLOSED. LEARNED COUNS EL FOR THE ASSESSEE NARRATED THE BACKGROUND OF THE CASE. IT W AS SUBMITTED THAT THE ASSESSEE WAS NOT INFORMED THAT T HE APPEAL CANNOT BE ENTERTAINED ON THE GROUND THAT THE ADMITT ED TAX WAS NOT PAID. ONLY ON RECEIPT OF THE IMPUGNED ORDER OF THE CIT(A), THE ABOVE ISSUE HAD SURFACED. SINCE THE ASSESSEES OBJECTION IT(SS)A 21(BANG)/2009 PAGE 4 OF 5 ON THE ISSUE OF NON-PAYMENT OF ADMITTED TAX WAS NEV ER CALLED FOR, THE IMPUGNED ORDER OF THE CIT(A) IS VIOLATIVE OF THE PRINCIPLES OF NATURAL JUSTICE. IT WAS CONTENDED TH AT INCOME DECLARED IN THE RETURN OF INCOME DID NOT BELONG TO THE ASSESSEE AND THEREFORE HE WAS NOT OBLIGED TO PAY TAXES. I T WAS FURTHER SUBMITTED THAT THE SEARCH U/S 132 ITSELF IS BAD IN LAW AND CONSEQUENTLY NO PROCEEDINGS COULD BE UNDERTAKEN UND ER CHAPTER XIVB OF THE ACT. IT WAS SUBMITTED THAT THE VALIDITY OF THE SEARCH IS IN QUESTION AND THE TRIBUNAL IS EMPOW ERED TO GO INTO THE ABOVE ISSUE BY VIRTUE OF THE JUDGMENT OF T HE HONBLE HIGH COURT OF KARNATAKA IN C.RAMAIAH REDDYS CASE ( ITA NO.503 OF 2003 DATED 8-9-2010). 3.2 LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OT HER HAND, STRONGLY RELIED ON THE CONCLUSION DRAWN BY TH E FIRST APPELLATE AUTHORITY. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ON THE MATERIALS AVAILABLE, TH ERE IS NOTHING TO SUGGEST THAT THE ASSESSEE WAS INFORMED THAT THE APPEAL CANNOT BE ENTERTAINED FOR THE REASON THAT ADMITTED TAX HAS NOT BEEN PAID. THEREFORE, THE IMPUGNED ORDER HAS VIOL ATED THE PRINCIPLES OF NATURAL JUSTICE. HENCE, IN THE INTER EST OF JUSTICE, THE MATTER IS REMANDED BACK TO THE CIT(A) TO CONSID ER THE ASSESSEE OBJECTION WITH REGARD TO NON-ENTERTAINMENT OF APPEAL ON THE GROUND OF NON-PAYMENT OF ADMITTED TAX. IT(SS)A 21(BANG)/2009 PAGE 5 OF 5 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER,2011 SD/- SD/ - (N.BHARATHVAJA SANKAR) VICE-PRESIDENT (GEORGE GEORGE K) JUDICIAL MEMBER EKS COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) CONCERNED 4. CIT 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE