ACIT, Circle-22(1), V. Vinod Kumar Jolly,

ITSSA 218/DEL/2002

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9152 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 03-11-2009
• Assessment Year: misc
• Appeal Filed On: 20-06-2002
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: Y K KAPOOR
• Keywords: Block assessment
• Section: 142(1); 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D DELHI BEFORE SHRI C.L. SETHI AND SHRI K.G. BANSAL IT(SS) A. NO. 174(DEL)/2002 BLOCK PERIOD ENDING ON 08.07.1999 SHRI VINOD KUMAR JOLLY, DEPUTY COMMISSIONER OF INCOME A-407, DEFENCE COLONY, VS. T AX, COY. CIRCLE 26(3), NEW DELHI. NEW DELHI. IT(SS) A. NO. 218(DEL)/2002 BLOCK PERIOD ENDING ON 08.07.1999 DEPUTY COMMISSIONER OF SHRI VINOD KUMAR JOLLY, INCOME-TAX, COY. CIRCLE 26(3), VS. A -407, DEFENCE COLONY, NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI Y.K. KAPOOR, ADVOCATE DEPARTMENT BY: SMT. KAVITA BHATNAGAR, CIT,DR ORDER PER K.G. BANSAL : AM THESE CROSS APPEALS OF THE ASSESSEE AND THE REVENUE EMANATE FROM THE ORDER OF CIT(APPEALS)-III, NEW DELHI, PASSED ON 29.03.2002 IN APPEAL NO. 17/2001-02, PERTAINING TO THE BLOCK PER IOD ENDING ON 08.07.1999. THE ASSESSEE HAS TAKEN TWO SUBST ANTIVE GROUNDS IN THE APPEAL, WHICH READ AS UNDER:- 1. THAT THE LD. CIT(APPEALS) HAS ERRED IN SUST AINING AN ADDITION OF RS. 1,75,150/- HELD AS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE IT(SS)A 174(DEL)/2002 & IT(SS)A 218(DEL)/2002 2 ASSESSMENT YEAR 1995-96, ON THE BASIS OF A PIE CE OF PAPER. IN DOING SO, THE LD. CIT(APPEALS) HAS TOTALLY OVE R LOOKED THE FACTS OF THE CASE AND HAS FAILED TO APPRECIATE THAT NO SUCH AMOUNT COULD BE HELD AS UNDISCLOSED INCOME FOR THE PURPOSES OF CHAPTER XIVB OF THE I.T.ACT. 2. THAT HAVING HELD THAT THE PIECE OF PAPER DOES SHOW SOME JOTTING, THE LD. CIT(APPEALS) WAS NOT JUSTIFIED IN HOLDI NG THAT THERE WAS SOME PURPORTED TRANSACTION ON WHICH INCOME COUL D BE ASSUMED TO HAVE BEEN EARNED, MERELY ON THE BASIS OF THE AFO RESAID JOTTINGS ALONE AND AS SUCH THE ADDITION AS SUSTAINED DESERVES TO BE DELETED. 1.1 ON THE OTHER HAND, THE REVENUE HAS TAKEN U P ONLY ONE GROUND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(APPEALS) ERRED IN DELETING THE ADDITION OF RS. 2.29 CROR E. 1.2 IN THE COURSE OF HEARING BEFORE US, THE AS SESSEE TOOK AN ADDITIONAL GROUND THAT THE ORDER OF ASSESSMENT AND THE APP ELLATE ORDER CONFIRMING THE ASSESSMENT ARE BAD IN LAW AS NOTICE U/S 143(2) OF THE INCOME-TAX ACT HAS ADMITTEDLY NOT BEEN SERVED UPON THE ASS ESSEE, THUS RENDERING THE ENTIRE ASSESSMENT PROCEEDINGS AS BEING BAD IN LAW AND LIABLE TO BE QUASHED. THE CASE OF THE LD. COUNSEL FOR THE ADMISSION OF THE GROUND IS THAT THE MATTER HAS BEEN DISCUSSED BY THE LD . CIT(APPEALS) IN THE IMPUGNED ORDER AND DECIDED AGAINST THE ASSES SEE. THE GROUND IS PURELY LEGAL IN NATURE, WHICH DOES NOT REQUIRE ANY FURTHER FINDING OF THE IT(SS)A 174(DEL)/2002 & IT(SS)A 218(DEL)/2002 3 FACT. THEREFORE, IT WAS URGED THAT THE GROUND MAY BE ADMITTED FOR ADJUDICATION. THE LD. D.R OPPOSES THE GROUND B Y SUBMITTING THAT THERE IS INORDINATE DELAY IN TAKING UP THIS GROUND, WHICH HAS BEEN FILED ON 25.5.2010, WHILE THE APPEAL HAS BEEN FILED BY THE ASSESSEE ON 27.5.2002. IN THIS RESPECT, THE CASE OF THE LD. COUNSEL IS TH AT THE LAW REGARDING SERVICE OF NOTICE U/S 143(2) IN CONNECTION WITH FRAMIN G OF THE BLOCK-PERIOD ASSESSMENT WAS RATHER UNSETTLED AND AMBIGUOUS. THE LAW HAS NOW BEEN SETTLED BY HONBLE SUPREME COURT IN THE CASE OF ACIT & ANOTHER VS. HOTEL BLUE MOON, WHEREIN THE JUDGMENT WAS DEL IVERED ON 02.02.2010 IN CIVIL APPEAL NO. 1198 OF 2010 AND OTHERS. T HE GROUND HAS BEEN TAKEN UP NOW AFTER THE POSITION IN THIS REG ARD HAS BEEN SETTLED BY THE HONBLE SUPREME COURT. ON CONSIDERATION OF THE RIV AL CONTENTIONS, IT IS HELD THAT THE GROUND IS LEGAL IN NATURE AND THE ASSESSEE HAS TAKEN UP THIS GROUND ON RENDERING OF THE JUDGMENT IN THE CASE OF HOTEL BLUE MOON (SUPRA). THEREFORE, THE GROUND IS ADMITTED FOR ADJUDICATION. 2. THE ADDITIONAL GROUND IS JURISDICTIONAL IN NATURE AND, THEREFORE, THE SAME IS DECIDED AT THE OUTSET. THE FINDING OF THE LD. CIT(APPEALS) IS THAT THE IMPUGNED ASSESSMENT HAD BEEN MADE U/ S 158BC AND NOT U/S 143(3). A NOTICE U/S 143(2) IS TO BE ISSUED WH ERE A RETURN HAS BEEN IT(SS)A 174(DEL)/2002 & IT(SS)A 218(DEL)/2002 4 MADE EITHER U/S 139 OR IN PURSUANCE OF A NOT ICE U/S 142(1). IT HAS NOWHERE BEEN MENTIONED THAT SUCH A NOTICE IS REQUIRED WHEN A RETURN HAD BEEN FURNISHED IN RESPONSE TO NOTICE U/S 1 58BC. THUS, THE OBJECTION OF THE ASSESSEE IN THIS REGARD HAS BEEN DISMISS ED. FOR THE SAKE OF READY REFERENCE, THE FINDINGS OF THE LD. CIT(APPEALS), RECORDED ON PAGES 5 AND 6 OF THE IMPUGNED ORDER, ARE REPRODUCED BELOW:- HE FURTHER ARGUED THAT SINCE NO NOTICE U/S 14 3(2) HAS BEEN ISSUED AFTER FURNISHING THE RETURN, THE AO COULD NOT COMPLETE THE BLOCK ASSESSMENT AS THIS WOULD BE WITHOUT JURISDICTION AND WOULD REQUIRE TO BE QUASHED. HE PLACED R ELIANCE IN THE CASE OF RAKESH S. MARDIA IN ITA NOS. 30, 31, 32/AH D/2000 WHERE THE ITAT HAS QUASHED THE BLOCK ASSESSMENT ON THE GROUND THAT IT WAS MADE WITHOUT JURISDICTION. HE FURTHER ARGUED THAT THE AO HAS MADE THE ASSESSMENT N OT IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN SECTIO N 158BB OF THE IT ACT. UNDER THE AFORESAID SECTION, THE DCIT IS REQUIRED TO COMPUTE THE INCOME FOR EACH OF THE ASSESSMENT YEARS, FALLING IN THE BLOCK PERIOD AND DEDUCT THEREFROM, THE UNDISCLOSED INCOME TO DETERMINE THE UNDISCLOSED I NCOME. IN THE INSTANT CASE, IT WILL BE SEEN THAT THE AF ORESAID MANDATE OF THE STATUTORY PROVISIONS OF CHAPTER XIV-B HA VE NOT BEEN COMPLIED WITH AND AS SUCH FOR THE AFORESAID REASON ALSO. WHEN THE MATTER WAS REFERRED TO THE AO, HE ACK NOWLEDGED THAT NO NOTICE U/S 143(2) HAS BEEN ISSUED. H OWEVER, HE ALSO SAID THAT PROCEEDINGS UNDER CHAPTER XIV-B ARE A SPECIAL PROCEDURE FOR ASSESSMENT FOR SEARCH CAS ES AND ONLY REQUIRES THAT A NOTICE U/S 158BC SHOULD BE IS SUED FOR THE BLOCK PERIOD AND DOES NOT ENVISAGE FOLLOWING OF R EGULAR PROCEDURES, E.G., ISSUE OF NOTICE U/S 143(2) O R MAKING AN ASSESSMENT U/S 143(3). THIS SECTION DEALS WITH THE PROCEDURE OF BLOCK ASSESSMENT WHICH EMPOWERS TH E AO TO CALL FOR A RETURN OF INCOME OF THE BLOCK PERIO D IN A PRESCRIBED FORM AND VERIFIED IN THE SAME MANNER IS A RETURN UNDER CLAUSE (I) OF SUB-CLAUSE (1) OF SE CTION 142. IT(SS)A 174(DEL)/2002 & IT(SS)A 218(DEL)/2002 5 SINCE THE ACT IS VERY CLEAR THAT SECTION 143(2 ) IS TO BE ISSUED WHERE A RETURN HAS BEEN MADE U/S 139 OR IN RES PONSE TO A NOTICE U/S 142(1) NOWHERE IN IT MENTION THAT WH ETHER A RETURN OF INCOME HAS BEEN FURNISHED IN RESPONSE TO SECTION 158BC NOTICE U/S 143(2) IS NECESSARY. LOOKING IN TO THE STATUTE AND A PLAIN READING OF CHAPTER XIV-B TH E APPELLANTS OBJECTIONS ON THIS POINT ARE DISMISSED. 2.1 THE CASE OF THE LD. COUNSEL IS THAT THE ISS UE NOW STANDS SETTLED BY THE DECISION OF HONBLE SUPREME COURT IN THE CA SE OF HOTEL BLUE MOON, IN WHICH IT HAS BEEN HELD THAT SUCH A NOTICE I S REQUIRED TO BE ISSUED EVEN WHEN THE ASSESSMENT HAS BEEN MADE U/S 158BC. THE LD. DR FAIRLY STATES THAT THE JUDGMENT COVERS THE CONTROVERSY AT HAND. 2.2 WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. IN THE AFORESAID JUDGMENT, THE HO NBLE COURT DID NOT AGREE WITH THE SUBMISSIONS OF THE LD. COUNSEL FOR THE REVENUE AND HELD THAT WHERE THE ASSESSING OFFICER IN REPUDIATION OF THE RETURN FILED U/S 158BC(A) PROCEEDS TO MAKE AN ENQUIRY, HE HAS NE CESSARILY TO FOLLOW THE PROVISIONS OF SECTIONS 142 AND 143. FOR THE SAK E OF READY REFERENCE, THE DISCUSSION IN PARAGRAPHS 16 AND 17 OF THIS JUDG MENT ARE REPRODUCED BELOW:- 16. THE CASE OF THE REVENUE IS THAT THE EXPRES SION SO FAR AS MAY BE APPLY INDICATES THAT IT IS NOT EXPEC TED TO FOLLOW THE PROVISIONS OF SECTION 142, SUB-SECTIONS 2 AND 3 OF SECTION IT(SS)A 174(DEL)/2002 & IT(SS)A 218(DEL)/2002 6 143 STRICTLY FOR THE PURPOSE OF BLOCK ASSESSMENT S. WE DO NOT AGREE WITH THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE REVENUE, SINCE WE DO NOT SEE ANY REASON TO RE STRICT THE SCOPE AND MEANING OF THE EXPRESSION SO FAR AS MAY BE APPLY. IN OUR VIEW, WHERE THE ASSESSING OFFIC ER IN REPUDIATION OF THE RETURN FILED UNDER SECTION 158BC(A) PROCEEDS TO MAKE AN ENQUIRY, HE HAS NECESSARILY TO FOLLOW THE PROVISIONS OF SECTION 142, SUB-SECTIONS (2) A ND (3) OF SECTION 143. 17. SECTION 158BH PROVIDES FOR APPLICATION OF THE OTHER PROVISIONS OF THE ACT. IT READS: SAVE AS OTHE RWISE PROVIDED IN THIS CHAPTER, ALL THE OTHER PROVISIONS OF THI S ACT SHALL APPLY TO ASSESSMENT MADE UNDER THIS CHAPTER. THIS IS AN ENABLING PROVISION, WHICH MAKES ALL THE PROVISIONS OF THE ACT, SAVE AS OTHERWISE PROVIDED, APPLICABLE FOR PROCE EDINGS FOR BLOCK ASSESSMENT. THE PROVISIONS WHICH ARE S PECIFICALLY INCLUDED ARE THOSE WHICH ARE AVAILABLE IN CHAP TER XIV-B OF THE ACT, WHICH INCLUDES SECTION 142 AND SUB- SECTIONS (2) AND (3) OF SECTION 143. 2.3 RESPECTFULLY FOLLOWING THIS JUDGMENT, IT IS HE LD THAT THE ORDER OF ASSESSMENT IS BAD IN LAW AS JURISDICTION WAS N OT ASSUMED BY THE AO PROPERLY BY SERVICE OF NOTICE U/S 143(2) ON THE ASSESSEE. 2.4 IN THE RESULT, THE ADDITIONAL GROUND IS AL LOWED. 3. AS THE ASSESSMENT STANDS ANNULLED ON THE JURISDICTIONAL ISSUE, IT IS NOT NECESSARY FOR US TO EXAMINE THE RIVAL GRO UNDS IN RESPECT OF MERITS OF IT(SS)A 174(DEL)/2002 & IT(SS)A 218(DEL)/2002 7 THE ADDITION. THUS, THE AO IS DIRECTED TO ADO PT UNDISCLOSED INCOME AS PER THE RETURN FILED BY THE ASSESSEE. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 11 TH OF JUNE, 2010. SD/- SD/- (C.L. SETHI) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEM BER DATE OF ORDER:11TH JUNE, 2010. SP SATIA COPY OF THE ORDER FORWARDED TO:- 1. SHRI VINOD KUMAR JOLLY, NEW DELHI. 2. DY. CIT, COY. CIRCLE 26(3), NEW DELHI. 3. CIT(A) 4. CIT 5. THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.