M/s. Gangotri Exports Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITSSA 23/DEL/2010

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 8955 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 14 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-09-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 01-09-2010
• Assessment Year: misc
• Appeal Filed On: 03-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BK GUPTA
• Keywords: Opportunity of being heard; Accommodation entries; Block assessment
• Section: 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `C : NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER I.T.(SS)A.NO.23/DEL/2010 BLOCK ASSESSMENT PERIOD : 01.04.1990 TO 03.08.2000 M/S. GANGOTRI EXPORTS PVT. LTD., DY. COMMI SSIONER OF INCOME-TAX, 7, KIRAN VIHAR, NEW DELHI. VS. CIRCLE 12(1), NEW DELHI. PAN: AAACG0307P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S ANAT KAPOOR, ADVOCATE RESPONDENT BY : SHRI B.K . GUPTA, SR. DR. O R D E R PER C.L. SETHI, JUDICIAL MEMBER. THE ASSESSEE IS IN APPEAL AGAINST THE EX PARTE ORDE R DATED 13 TH DECEMBER, 2006 PASSED BY THE COMMISSIONER OF INCOME -TAX (APPEALS) IN THE MATTER OF AN ASSESSMENT MADE UNDER SEC. 158BD O F THE INCOME-TAX ACT, 1961 (THE ACT) FOR THE BLOCK PERIOD 01.04.1990 TO 0 3.08.2000. 2. ONE OF THE GROUND TAKEN BY THE ASSES SEE IS AGAINST THE CIT(A)S ORDER IN PASSING APPELLATE ORDER WITHOUT P ROVIDING A REASONABLE 2 OPPORTUNITY OF BEING HEARD. THIS GROUND BEING GROU ND NO.5 READS AS UNDER:- 5. THAT ON THE FACTS CIRCUMSTANCES AND LEGAL POSIT ION OF THE CASE THE LEARNED CIT(A) HAS ERRED IN LAW IN PASSING THE APPELLATE ORDER WITHOUT PROVIDING A REASONABLE OPPO RTUNITY OF THE BEING HEARD. 3. THE ASSESSEE HAS ALSO TAKEN SOME PRELIMINARY LEG AL GROUNDS CHALLENGING THE VALIDITY OF NOTICE ISSUED UNDER SEC TION 158BD OF THE ACT AGAINST THE ASSESSEE. THESE GROUNDS ARE AS UNDER:- 1. THAT THE NOTICE ISSUED U/S 158BD IS VAGUE, ILLE GAL, BAD IN LAW AND WITHOUT JURISDICTION AND THE ORDER PASSED U NDER SAID SECTION IS ALSO ILLEGAL, BAD IN LAW AND WITHOUT JUR ISDICTION. 2. THAT NO SATISFACTION HAS BEEN RECORDED BY THE AS SESSING OFFICER PRIOR TO THE ISSUANCE OF THE NOTICE U/S 158 BD HENCE THE SAME IS ILLEGAL AND WITHOUT JURISDICTION. 3. THE NOTICE ISSUED U/S 158BD AND THE ORDER PASSED U/S 158BD ARE ILLEGAL, BAD IN LAW AND ALSO BARRED BY TIME LIM ITATION. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSE D THE MATERIAL ON RECORD. IN THIS CASE, NOTICE UNDER SECTION 158B D READ WITH SECTION 158BC WAS ISSUED TO THE ASSESSEE ON 29.12.200 3, WHICH WAS RECEIVED BY THE ASSESSEE ON 07.01.2004. IN THE ASSE SSMENT ORDER, THE ASSESSING OFFICER HAS STATED THAT NOTICE UNDER SEC. 158BD WAS ISSUED TO THE ASSESSEE ON 29.12.2003 IN PURSUANCE TO TH E INTIMATION/INFORMATION RECEIVED FROM THE DEPUTY COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE- 3 III, NEW DELHI VIDE HIS LETTER F. NO.DCIT/CC-3/ 2002-03/641 DATED 11/13-02-2003 WHERE IT WAS STATED THAT A SEARCH AN D SEIZURE OPERATION UNDER SECTION 132 OF THE INCOME-TAX ACT WAS CON DUCTED IN THE CASE OF ONE SHRI MANOJ AGGARWAL AND M/S. FRIENDS PORTFOLIO PVT. LTD. ON 03.08.2000; ASSESSMENT UNDER SECTION 158BC IN THE CASE OF FRIENDS PORTFOLIO PVT. LTD. WAS COMPLETED ON 29.08.2002; AND A COPY OF ASSESSMENT ORDER WAS ALSO ENCLOSED WITH THE SAID LETTER OF DY. CIT, CENTRAL CIRCLE-III, NEW DELHI. IT WAS FURTHER M ENTIONED IN THAT LETTER THAT AN ELABORATE DISCUSSION WAS MADE IN THE ASSES SMENT ORDER TO THE EFFECT THAT THE DOCUMENTS FOUND DURING THE COURSE OF THE SEARCH AND ENQUIRIES CONDUCTED DURING ASSESSMENT PROCEEDINGS WOULD ESTABLISH BEYOND DOUBT THAT SHRI MANOJ AGGARWAL HAD BEEN MAKI NG BOGUS ACCOMMODATION ENTRIES TO VARIOUS PERSONS AND THIS A SSESSEE I.E. M/S. GANGOTRI EXPORT PVT. LTD. HAS ALSO RECEIVED A TOT AL AMOUNT OF RS.14,60,000/- BY DD MADE VIDE CHEQUE NO.96917 5 DRAWN ON ACCOUNT NO.1224, VIJAYA BANK, VIGYAN VIHAR, NEW DELHI FROM M/S. FRIENDS PORTFOLIO PVT. LTD. IT WAS FURTHER STATED IN THE L ETTER THAT THIS AMOUNT CONSTITUTED UNDISCLOSED INCOME OF M/S. GANGOTRI EXPORT PVT. LTD. AND THE PAPER SEIZED DURING THE COURSE OF SEARCH AND ENQUIRIES CONDUCTED DURING THE ASSESSMENT PROCEEDINGS HAS CLEARLY ESTAB LISHED THAT THE 4 UNDISCLOSED INCOME BELONGED TO PRESENT ASSESSEE M/S . GANGOTRI EXPORTS PVT. LTD., WHICH WAS FOUND DURING THE COURSE OF SEARC H OF MR. MANOJ AGGARWAL. THEREFORE, PROCEEDINGS UNDER SEC. 158BC READ WITH SEC. 158BD WERE JUSTIFIED AGAINST THE PRESENT ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT NO SATISFACTION AS REQUIRED UNDER SEC. 158BD WAS RECORDED BY THE DCIT, CENTRAL CIRCLE-III , BEFORE COMPLETION OF THE ASSESSMENT OF SHRI MANOJ AGGARWAL OR M/S. FR IENDS PORTFOLIO PVT. LTD., AND SINCE THE SATISFACTION WAS NOT RECORDE D BEFORE COMPLETION OF THE BLOCK ASSESSMENT PROCEEDINGS UNDER SECTION 15 8BC IN THE CASE OF MANOJ AGGARWAL, AND/OR FRIENDS PORTFOLIO PVT. LTD., THE INTIMATION OR INFORMATION SENT BY THE DCIT, CENTRAL CIRCLE-III, D ELHI VIDE LETTER DATED 11/13.02.200 IS BEYOND LIMITATION AS SO HELD BY SPE CIAL BENCH OF ITAT, DELHI IN THE CASE OF MANOJ AGGARWAL VS. DCIT (DELHI )(SB) REPORTED IN (2008) 113 ITD 377, WHERE IT HAS BEEN HELD THAT SA TISFACTION SHOULD BE NOTED BEFORE THE COMPLETION OF THE BLOCK ASSESSME NT IN THE CASE OF A PERSON, WHO IS SEARCHED. 5. WE HAVE CONSIDERED THE ABOVE CONTENTIONS OF T HE LEARNED COUNSEL FOR THE ASSESSEE. THE LEARNED DR POINTED OUT THAT THE SATISFACTION WAS ALREADY RECORDED IN THE BODY OF THE ASSESSMENT ORDE R OF M/S. FRIENDS PORTFOLIO PVT. LTD. AS WELL AS SHRI MANOJ AGG ARWAL AS SO CLEARLY STATED 5 IN THE INTIMATION DATED 11/13.02.2003 OF THE DY. CI T, CENTRAL CIRCLE-III, NEW DELHI WHERE THE A.O. HAS CLEARLY STATED THAT AL L THE FACTS HAVE BEEN ELABORATED IN THE ASSESSMENT ORDER. HE THEREFORE , SUBMITTED THAT THE SATISFACTION THAT UNDISCLOSED INCOME BELONGS TO THE PRESENT ASSESSEE WAS ALREADY RECORDED IN THE ASSESSMENT ORDER OF SHRI MA NOJ AGGARWAL AND/OR M/S. FRIENDS PORTFOLIO PVT. LTD. AS WOULD BE CLEAR FROM THE INTIMATION DATED 11/13.02.2003 SENT BY THE DCIT, CC-III, NEW DELHI T O THE PRESENT A.O. WE HAVE CONSIDERED THIS ASPECT OF THE MATTER AND HAVE ALSO GONE THROUGH THE PAPER BOOK FILED BY THE ASSESSEE. IN THE ASSESSMEN T ORDER OF THE PRESENT ASSESSEE, THE AO HAS REPRODUCED THE CONTENTS OF THE INTIMATION SENT BY THE DCIT, CC-III, NEW DELHI DATED 11/13.02.2003 TO THE PRESENT ASSESSING OFFICER WHERE IT HAS BEEN CLEARLY STATED THAT A COP Y OF THE ASSESSMENT ORDER IN THE CASE OF M/S. FRIENDS PORTFOLIO PVT. LTD. IS ENCLOSED, BUT THE SAME HAS NOT BEEN ENCLOSED ALONG WITH THE COPY OF THE AS SESSMENT ORDER FILED IN THE APPEAL RECORD. IT IS THUS, VERY DIFFICULT TO EXAMINE AS TO WHETHER ANY SATISFACTION REQUIRED UNDER SEC. 158BD WAS RECORDED IN THE ASSESSMENT ORDER OR NOT. HOWEVER, POSITION OF LAW IS CLEAR FROM THE DECISION OF SPECIAL BENCH OF ITAT IN THE ABOVE REFE RRED CASE THAT THE PROCEEDINGS UNDER SEC. 158BD WOULD BE INVALID IF NOTE OF SATISFACTION HAS NOT BEEN MADE BEFORE THE ASSESSMENT UNDER SECTION 158BC IS MADE 6 IN THE CASE OF THE PERSON WHO WAS SEARCHED UNDER SE C. 132 OF THE ACT. IN THIS CONNECTION, PARA 124 TO 127 OF THE DECISION ARE REL EVANT. MOREOVER, THE LEARNED CIT(A) HAS ALSO NOT EXAMINED ALL THE FACTS OF THE CASE AND DECIDED THIS ISSUE EX PARTE IN THE ABSENCE OF THE ASSESSEE. THE CIT(A) HAS STATED IN THE ORDER THAT THE NOTICES OF HEARING WERE ISSUED O N 25.07.2006 FIXING THE MATTER ON 03.08.2006 AND THEREAFTER ISSUED ON 07.08 .2006 FIXING THE MATTER ON 22.08.2006. HE FURTHER STATED THAT THERE WAS NO ATTENDANCE ON THE GIVEN DATES. HOWEVER, HE FAILED TO RECORD A FINDING AS T O WHEN AND HOW THESE NOTICES OF HEARING WERE SERVED UPON THE ASSESSEE AN D WHETHER THE ASSESSEE WAS ALLOWED ADEQUATE TIME TO ENABLE HIM TO APPEAR B EFORE THE CIT(A). THEREFORE, WHEN THIS ORDER IS PASSED EX PARTE AND A LL THE FACTS HAVE NOT BEEN TAKEN INTO ACCOUNT PROPERLY, WE FIND IT FIT AND PRO PER TO RESTORE THE MATTER BACK TO THE FILE OF THE CIT(A) FOR HIS FRESH ADJUDI CATION AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. THE LEARNED CIT(A) SHALL CONSIDER AND DECIDE THE ISSUE AFTER TAKING IN TO ACCOUNT THE DECISION OF SPECIAL BENCH OF ITAT IN THE CASE OF MANOJ AGGARWAL VS. DCIT (DELHI)(SB) REPORTED IN (2008) 113 ITD 377 AND SOME OTHER DECISIONS OF THE TRIBUNAL ON WHICH THE ASSESSEE MAY WISH TO RELY IN SUPPORT OF ITS CONTENTION THAT THE BLOCK ASSESSMENT PROCEEDINGS MADE UNDER SE C. 158BD ARE ILLEGAL AND VOID AB INITIO. THE OTHER GROUNDS ON MERIT OF THE ADDITION SHALL ALSO BE 7 CONSIDERED SEPARATELY AFTER EXAMINING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE AND CONSIDERING ALL THE CONTENTIONS OF THE ASS ESSEE. WE ORDER ACCORDINGLY. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED TO BE ALLOWED FOR STATISTICAL PURPOSES. 7. THIS DECISION IS PRONOUNCED IN THE OPEN COURT ON 17 TH SEPTEMBER, 2010. SD/- SD/- (A.K. GARODIA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMB ER DATED: 17 TH SEPTEMBER, 2010. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.