DCIT, New Delhi V. M/s Welworth Properties Ltd, New Delhi

ITSSA 21/DEL/2010

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9153 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 21 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 13-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 13-07-2010
• Assessment Year: misc
• Appeal Filed On: 22-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMBIT TRIPATI
• Keywords: Block assessment
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `I : NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER I.T.(SS) A.NO.21/DEL/2010 BLOCK PERIOD : 01.04.1996 TO 15.07.2002 DY. COMMISSIONER OF INCOME-TAX, M/S. WELWORTH PROPE RTIES LTD., CIRCLE 18(1), NEW DELHI. VS. 341-C/A6, PASCHIM VIH AR, NEW DELHI. PAN: AAACW0825C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SAMBIT TRIPATI, DR. RESPONDENT BY : NONE. O R D E R PER C.L. SETHI, JUDICIAL MEMBER. THE REVENUE IS IN APPEAL AGAINST THE ORDER DATED 15 .02.2010 PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IN THE MATTER OF AN ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER SECT ION 158BD READ WITH 158BC/143(3) OF THE INCOME-TAX ACT, 1961 (THE ACT) FOR THE BLOCK PERIOD 01.04.1996 TO 15.07.200. 2 2. GROUNDS RAISED BY THE REVENUE ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, LD. CIT(A) HAS ERRED IN HOLDING THAT NO SATISFACTION WA S RECORDED BY THE AO OF THE SEARCHED PARTY, IGNORING THE FACT THAT SATISFACTION RECORDED BY THE DDIT (INVESTIGATION) I N THE APPRAISAL REPORT ON THE BASIS OF THE SEIZED MATERIA L, IS THE SATISFACTION OF THE AO FOR THE PURPOSE OF INVOKING PROVISIONS OF SECTION 158BD OF INCOME TAX ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, LD. CIT(A) HAS FURTHER ERRED IN ANNULLING THE ASSESSMENT ON TH E GROUND THAT THE AO WAS FOUND TO BE LACKING IN JURISDICTION TO P ROCEED AGAINST THE ASSESSEE COMPANY AS PER THE PROVISIONS OF SECTION 158BD OF THE INCOME TAX ACT, 1961. 3. WE HAVE HEARD THE LEARNED DR AND NONE FOR THE AS SESSEE WAS PRESENT. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AU THORITIES BELOW. 4. AGAINST THE ASSESSMENT MADE BY THE ASSESSING OFF ICER UNDER SECTION 158BD READ WITH SECTION 158BC OF THE ACT, THE ASSES SEE HAD FILED APPEAL BEFORE THE LEARNED CIT(A) TAKING A GROUND THAT THE ASSESSMENT MADE BY THE AO WAS BAD IN LAW INASMUCH AS, THE AO OF THE SEARCH ED PERSON HAS FAILED TO RECORD A SATISFACTION REQUIRED UNDER SEC. 158BD OF THE ACT BEFORE ISSUING ANY NOTICE UNDER SEC. 158BC READ WITH SECTION 158BD TO THE ASSESSEE. AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE INCLUDING LETTER DATED 22 ND /24 TH NOVEMBER, 2004 WRITTEN BY THE ASSTT. COMMISSIONER OF INCOME- TAX, CIRCLE-13, NEW DELHI, I.E. THE AO OF THE SEARC HED PERSON, TO THE AO OF THE PRESENT ASSESSEE, AND AFTER CONSIDERING THE ORD ER OF HIS PREDECESSOR IN THE 3 CASE M/S. UTSAV SECURITIES PVT. LTD. BASED ON IDENT ICAL FACTS, AND WHICH HAS BEEN UPHELD BY THE TRIBUNAL VIDE ORDER DATED 20.11. 2009 IN IT(SS) APPEAL NO.58/DEL/2009, THE LEARNED CIT(A) HAS TAKEN A VIEW THAT THE ASSESSMENT ORDER MADE BY THE AO WAS NOT VALID AS THE AO WAS LA CKING JURISDICTION TO PROCEED AGAINST THE ASSESSEE COMPANY AS PER THE REQ UIREMENT CONTAINED IN SECTION 158BD OF THE ACT. THE LEARNED CIT(A) THERE FORE, CANCELLED THE ASSESSMENT MADE BY THE AO. HENCE, THE DEPARTMENT I S IN APPEAL BEFORE US. 5. IN THE ASSESSEES CASE NO SEARCH HAD TAKEN PLACE AGAINST THE ASSESSEE. A SEARCH ACTION UNDER SECTION 132 WAS TAKEN AGAINST ONE SHRI N.C. BANSAL. THE AO OF THE PRESENT ASSESSEE ISSUED A NOTICE U/S 158BD READ WITH SEC. 158BC ON 21.03.2003 AND ANOTHER ONE ON 22.06.2004 A SKING THE ASSESSEE TO FURNISH TRUE AND CORRECT RETURN OF UNDISCLOSED INCO ME FOR THE BLOCK PERIOD. THE AO OF THE PRESENT ASSESSEE WROTE A LETTER DATED 16.11.2004 TO THE AO OF SEARCHED PERSON REQUESTING HIM TO HANDOVER THE COPI ES OF SEIZED MATERIAL RELEVANT TO INITIATE PROCEEDINGS U/S 158BD IN ASSES SEES CASE AS WELL AS HIS SATISFACTION NOTE ALONG WITH ANY OTHER MATERIAL, WH ICH MAY BE RELEVANT TO FINALIZE THE BLOCK ASSESSMENT IN THE CASE OF THE AS SESSEE. IN RESPONSE TO THIS, THE ACIT, CIRCLE-13, NEW DELHI I.E. THE AO OF SEARC HED PERSON INTIMATED THE AO OF THE PRESENT ASSESSEE AS UNDER:- IN THIS CONNECTION, IT IS SUBMITTED THAT DY. DIREC TOR OF INCOME- TAX (INV.), UNIT-IV(1), NEW DELHI HAD SENT APPRAISA L REPORT OF 4 SHRI N.C. BANSAL TO THE ADDL. CIT, RANGE 18, NEW DE LHI FOR TAKING NECESSARY ACTION IN THE CASES MENTIONED AS P ER YOUR LETTER. ACTION IN THE CASE OF M/S. WELWORTH PROPER TIES (P) LTD. AND M/S. UTSAV SECURITIES PVT. LTD. WAS SUGGESTED O N THE BASIS OF REASONS RECORDED IN THE APPRAISAL REPORT BY THE DDIT (INV.), UNIT IV(1), NEW DELHI (COPY ENCLOSED). NO SUCH REA SONS WERE RECORDED IN RESPECT OF M/S. YAMUNA EXIM & SOFTWARE (P) LTD. YOU WILL APPRECIATE THAT AS PER REASONS, ONLY REFER ENCE OF THESE COMPANIES APPEAR IN THE SEIZED MATERIAL AND NO INCR IMINATING DOCUMENTS WERE FOUND RELATING TO THESE COMPANIES. FROM THE ABOVE COMMUNICATION BETWEEN THE AO OF THE PRESENT ASSESSEE AND THE AO OF THE SEARCHED PERSON, IT IS CLEAR THAT THE AO HAS ISSUED NOTICE U/S 158BD READ WITH SECTION 158BC ON THE BASIS OF APPRA ISAL REPORT SUBMITTED BY THE ADDITIONAL DIT (INVESTIGATION) AND NOT ON TH E BASIS OF ANY SATISFACTION NOTE RECORDED BY THE AO HAVING JURISDICTION OVER TH E SEARCHED PERSON. THE IDENTICAL PROCEEDINGS WERE ALSO INITIATED IN THE CA SE OF ANOTHER ASSESSEE NAMELY M/S. UTSAV SECURITIES PVT. LTD. ON THE BASIS OF APPRAISAL REPORT SUBMITTED BY THE ADIT (INV.), AND IN THAT CASE THE LEARNED CIT(A) HELD THE ASSESSMENT ORDER TO BE NULL AND VOID FOR WANT OF AN Y SATISFACTION ON THE PART OF THE AO OF THE SEARCHED PERSON AS REQUIRED U/S 15 8BD OF THE ACT. THE LEARNED CIT(A) HAS ALSO STATED IN HIS ORDER THAT OR DER OF HIS PREDECESSOR ANNULLING THE ASSESSMENT IN THE CASE OF M/S. UTSAV SECURITIES PVT. LTD., HAS BEEN CONFIRMED BY THE ITAT, DELHI VIDE ORDER DATED 20.11.2009 IN IT(SS) A NO.58/DEL/2009. FROM THE ABOVE DISCUSSION, IT IS C LEAR THAT THERE WAS NO SATISFACTION BEING RECORDED BY THE AO OF THE SEARCH ED PERSON AS REQUIRED U/S 5 158BD OF THE ACT. THIS IS FURTHER CLEAR AND ESTABL ISHED FROM THE GROUND RAISED BY THE REVENUE, WHERE THE REVENUE HAD ADMITT ED THAT SATISFACTION WAS RECORDED BY THE DDIT (INV.) IN THE APPRAISAL REPORT . THE REVENUES CASE IS THAT THE SATISFACTION RECORDED BY THE DDIT (INV.) I N THE APPRAISAL REPORT IS TO BE TREATED AS THE SATISFACTION OF THE AO HAVING JUR ISDICTION OF THE SEARCHED PERSON FOR THE PURPOSE OF INVOKING PROVISIONS OF SE CTION 158BD OF THE ACT WHICH STAND, IN OUR CONSIDERED VIEW, IS NOT AT ALL MAINTAINABLE IN THE LIGHT OF THE SPECIFIC PROVISIONS CONTAINED IN SEC. 158BD, UN DER WHICH THE SATISFACTION IS TO BE RECORDED BY THE AO MAKING THE ASSESSMENT O F THE PERSON SEARCHED. THE APPRAISAL REPORT OF INVESTIGATION DEPARTMENT CA NNOT BE MADE BASIS TO FULFILL THE REQUIREMENT OF SEC. 158BD OF THE ACT UN LESS THE AO OF THE SEARCHED PERSON HAS APPLIED HIS MIND TO THE SEIZED MATERIAL AND CAME TO THE SATISFACTION THAT THE UNDISCLOSED INCOME BELONGS TO PERSON OTHER THAN THE SEARCHED PERSON. IN THIS RESPECT, A REFERENCE MAY BE MADE TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MANISH MAHESHW ARI VS. ACIT (2007) 289 ITR 341 (SC), WHEREIN IT HAS BEEN HELD THAT REC ORDING THE SATISFACTION BY THE AO OF THE SEARCHED PERSON REQUIRED UNDER SECTIO N 158BD, IS MANDATORY. IN THE LIGHT OF THE VIEW WE HAVE TAKEN ABOVE, WE, T HEREFORE, UPHOLD THE ORDER OF THE CIT(A) IN ANNULLING THE ASSESSMENT BEING NUL L AND VOID FOR WANT OF 6 SATISFACTION REQUIRED U/S 158BD OF THE ACT BEFORE I NITIATING ANY PROCEEDINGS AGAINST THE PRESENT ASSESSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THIS DECISION IS PRONOUNCED IN THE OPEN COURT IMMED IATELY AFTER THE HEARING WAS OVER ON 13 TH JULY, 2010. SD/- SD/- (A.K. GARODIA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13 TH JULY, 2010. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.