Suresh Onkarmal Sanghvi, Pune V. Assistant Commissioner of Income tax, Pune

ITSSA 21/PUN/2017

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 5020 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 14-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Block assessment
• Section: 158BC(c); 158BC; 158BD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, PUNE SHRI PARTHA SARATHI CHAUDHURY, JM AND DR. DIPAK P. RIPOTE, AM IT(SS) A. No. 21/PUN/2017 Block assessment years: 1996-97 to 2002-03 (Part) Mr. Suresh O. Sanghavi, Prop. Anmol Cements & Sales 31-A Timber Market, Pune-411 042. Appellant PAN: Vs. The Asstt. Central Circle 1(2), Pune Respondent Appellant by : Shri Neelesh Khandelwal Respondent by : Shri S.P. Walimbe Date of Hearing : 09-03-2022 Date of Pronouncement : 10-03-03-2022 ORDER PER PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER This appeal preferred by the assessee emanates from the order of the ld. CIT(A)-11, Pune, dated 30-11-2016 for the block assessment years 1996-97 to 2002-03 on the following grounds of appeal: 1. On facts & circumstances prevailing in the case & as per provisions of law, it be held that the order passed by the assessing officer and that confirmed by the 1st appellate authority, in terms of provisions of sec. 158BC (c) r.w.s. 158 BD of the IT Act, 1961 be held as invalid, illegal and not tenable in law & is without resuming jurisdiction in terms of the relevant provisions of the Act. The order passed be cancelled. 2. Without prejudice to ground No.1 & in the alternative, it be held that order passed by the assessing officer is barred by limitation of time, & is not tenable in law & the same be cancelled. 3. Without prejudice to ground no. 1 & 2, & in the alternative, on 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 the appellant in terms of provisions of Chapter XIVB of the Act. It further be held that income assessed by the assessing officer as undisclosed income of Rs.37,92,587/- as discussed in para 20 of the Order & that of Rs. 7,08,740/- on account of alleged excess value of stock is erroneous and contrary to the relevant provisions of the Act. The income so assessed be deleted fully and the appellant be granted just & proper reliefs in these respects. 4. The appellant prays that the appeal be allowed condoning the delay in filing the appeal. The appellant be granted just and proper relief in this respect. 5. The appellant prays to be allowed to add, amend, deleted, modify, rectify, any grounds of appeal at the time of hearing. 2 IT(SS)A No. 21PUN/2017 Suresh O. Sanghavi Block period: 1996-97 to 2002-03 2. The relevant facts are that search and seizure proceedings u/s 132(1) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) were conducted at the business and residential premises of Sanghavi group of assessees on 11-10- 2001 at various places. The group is mainly engaged in the business of trading in timber, scrap, industrial gases and cement, etc. During the course of search, stock of timber valued at Rs. 75,34,179/- was put under deemed seizure in the case of M/s. Sanghavi Dhiraji Bhutaji and Sons and M/s. Sanghavi Malchand Dhiraji & Sons. Notice u/s 158BC of the Act was issued in the name of the assessee, Prop. Anmol Cement, on 6-5-2002, which was objected to by the assessee on the ground that there was no such concern called as „Anmol Cements‟ and hence the same was cancelled by the ld. A.O. Thereafter, fresh notice came to be issued u/s 158BC of the Act on 30-10-2002 in response to which, the assessee filed a return for the block period 1-4-1994 to 11-10-2001 on 2-12-2002 declaring NIL income. It was submitted that as the first notice issued on 6-5-2002 was cancelled being erroneous, it was apprehensive that the search warrant issued also may be erroneous and proceedings conducted under such search warrant may not be valid. The assessee therefore, requested the ld. A.O that copy of the search warrant obtained in his case in terms of provisions of sec. 132(1) of the Act for carrying out search on the concerned assessee, may be issued to him. After verifying the contention of the assessee, the ld. A.O dropped the proceedings initiated u/s 158BC of the Act. However, since books of accounts and other documents pertaining to the assessee firm were found and seized, proceedings u/s 158BD of the Act were initiated and notice dated 16-10- 2003 u/s 158BD of the Act was issued and served on 18-10-2003. However, no return of income was filed by the assessee in response to such notice issued u/s 158BD of the Act. It was contended that the notice was not valid. The ld. A.O did not agree with the contention of the assessee that the proceedings initiated u/s 158BD of the Act were ab iniitio void and then finalised the assessment u/s 3 IT(SS)A No. 21PUN/2017 Suresh O. Sanghavi Block period: 1996-97 to 2002-03 158BC(c) read with sec. 158BD of the Act vide order dated 28-10-2005. Aggrieved, the assessee carried the matter in appeal before the ld. CIT(A). 3. The ld. CIT(A) considered the submissions of the assessee and found that identical submissions were made before his predecessor who had an occasions to deal with such submissions in the earlier round of litigation. The ld. CIT(A) found no mistake of law or facts apparent on record and accordingly directed the ld. A.O to follow the earlier order of his predecessor as far as merits of the additions are concerned. Still aggrieved, the assessee is in further appeal before us. 4. In this case, the ld. A.R. for the assessee at the very outset submitted that the only contention is once the proceedings u/s 158BC of the Act were dropped, then there cannot be any proceedings u/s 158BD of the Act. The ld. A.R submitted that this issue is covered by various decisions of Pune Bench of the Tribunal. Demonstrating the facts in the present case, the ld. A.R brought to our notice pages 1, 3 and 11 annexed in the paper book filed before us, that initially proceedings were started by the ld. A.O u/s 158BC of the Act and thereafter, vide notice dated 16-10-2003, the proceedings were initiated u/s 158BD of the Act. It is an undisputed fact that proceedings u/s 158BC were started, however, no assessment was done. Undisputedly, also the proceedings u/s 158BD of the Act were undertaken. It is the contention of the ld. A.R before us that proceedings initiated by issuance of notice u/s 158BD of the Act after proceedings u/s 158BC of the Act have been dropped, in such a scenario, the initiation of proceedings u/s 158BD of the Act is void ab initio. In the absence of any assessment being completed u/s 158BC of the Act there is no merit in initiating proceedings u/s 158BD of the Act. The ld. A.R further submitted that in order to regularise the proceedings and to remove any technical flaw also, proceedings u/s 158BD of the Act cannot be initiated in absence of completion of proceedings initiated u/s 158BC of the Act. We find that the arguments of the assessee is fortified by various decisions of the Tribunal and one such decision 4 IT(SS)A No. 21PUN/2017 Suresh O. Sanghavi Block period: 1996-97 to 2002-03 is that of the sister concern of the assessee in IT(SS) A No. 9/PUN/2017 dated 12-7-2019 for the block assessment years 1996-97 to 2002-03, wherein the Tribunal has held as follows: “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) and 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 the assessee are allowed.” 5. The ld. D.R fairly conceded that in the identical facts and circumstances, the judicial principles laid down through the consistent view taken by the Tribunal in the cases of sister concern of the assessee that when the proceedings u/s 158BC of the Act have been dropped, there is no legal existence and validity of the proceedings u/s 158BD of the Act and such consistent view has to be followed. Reverting to the facts of the present case, undisputedly the proceedings u/s 158BC of the Act were initiated and dropped. That without completion of the said proceedings u/s 158BC of the Act, there was initiation of the proceedings u/s 158BD of the Act by the Department. Respectfully following our findings in the aforesaid decisions, we are of the considered view that initiation of the proceedings u/s 158BD of the Act was without jurisdiction and void ab initio. . Grounds raised by the assessee are allowed. 6. In the result, the appeal of the assessee is allowed. 7. Order pronounced in the open court on this 10 th day of March 2022. Sd/- sd/- (DR. DIPAK P. RIPOTE) (PARTHA SARATHI CHAUDHURY) ACCOUNTNT MEMBER JUDICIAL MEMBER Pune; Dated, this 10 th day of March 2022 Ankam 5 IT(SS)A No. 21PUN/2017 Suresh O. Sanghavi Block period: 1996-97 to 2002-03 Copy of the Order forwarded to : 1. The Appellant. 2. The Respondent. 3. The CIT(A)-11, Pune 4. The Pr. CIT (Central) Pune. 5. The D.R. (ITAT)‟A‟ Bench, Pune 5. Guard File BY ORDER, Sr. Private Secretary ITAT, Pune. ////True Copy //// 6 IT(SS)A No. 21PUN/2017 Suresh O. Sanghavi Block period: 1996-97 to 2002-03 Date 1 Draft dictated on 09-03-2022 Sr.PS 2 Draft placed before author 10-03-2022 Sr.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 Sr.PS Kept for pronouncement on Sr.PS 7 Date of uploading of order Sr.PS 8 File sent to Bench Clerk Sr.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