ACIT, New Delhi V. Sh. Raj Kumar Jalan, New Delhi

ITSSA 28/DEL/2012

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0813 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 01-07-2015
• Assessment Year: misc
• Appeal Filed On: 02-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK WADEKAR
• Keywords: Block assessment; Reason to believe

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F , NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND AND SHRI C.M. GARG, JUDICIAL MEMBER IT (SS) A NO. 28 /DEL/ 201 2 BLOCK PERIOD: 01.04.1996 TO 03.08.2000 ACIT CIRCLE - 29(1), ROOM NO.107, DRUM SHAPE BUILDING, I.P. ESTATE, NEW DELHI VS. RAJ KUMAR JALAN, PROP. M/S BR AGGARAWAL & CO, 131, MOTI BAZAR, 2 ND FLOOR, CHANDNI CHOWK, NEW DELHI PAN:AAAPJ1073E (APPELLANT) (RESPONDENT) APPELLANT BY : SH.VIVEK WADEKAR, CIT DR RESPONDENT BY : SH. KAPIL GOEL, ADV DATE OF HEARING : 01.07.2015 DATE OF PRONOUNCEMENT : 08 . 07 .2015 ORDER PER J. SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE REVENUE AGAINST THE O RDER DATED 23.02.2012 OF LD.CIT(A) - XXX , NEW DELHI PERTAINING TO THE ASSESSMENT YEAR 2007 - 08 ON THE FOLLOWING GROUND WHICH READS AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.45,96,750/ - MADE BY THE AO ON ACCOUNT OF ACCOMMODATION ENTRY RECEIVED BY THE ASSESSEE ON THE BASIS OF BOGUS SALE OF JEWEL LE RY. 2. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD TAKEN A S PECIFIC GROUND BEFORE THE LD CIT(A) , THAT THE PROCEEDINGS INITIATED BY THE AO U/S 158BD IS BAD IN LAW. THE AO INITIATED PRO CEEDINGS U/S 158BD AFTER A LONG GAP OF 3 YEARS FROM THE DATE OF COMPLETION OF BLOCK ASSESSMENT IN THE CASE OF M/S BEMCO JEWELLERS P . LTD WHICH WAS COMPLETED ON 29.08.2002 AND THAT THE LD CIT(A) HAD DEALT WITH THIS ISSUE AT PARAS 5.1 TO 5.7 OF HIS ORDER BUT HE HAD NOT SPECIFICALLY ADJUDICATED THE SAME. HE ARGUED THAT AS THE FIRST APPELLATE AUTHORITY HAD NOT ADJUDICATED THIS ISSUE, AN AP PLICATION U NDER R ULE 27 OF THE ITAT RULES IS MOVED BY HIM AND PRAYED THAT THE SAME BE ADMITTED. 3. THE LD DR ON THE OTHER HAND SUBMITTED THAT UNDER RULE 27 OF THE ITAT RULES THE PRESENT APPLICATION IS NOT MAINTAINABLE. AS PER THE LD DR AN PAGE 2 OF 6 APPLICATION UNDE R RULE 27 CAN BE FILED ONLY IN SUPPORT OF THE ORDER OF THE LD CIT(A) AND WHEREAS THE ASSESSEE SEEKS TO DISPUTE THE ORDER OF THE FIRST APPELLATE AUTHORITY ON THIS ISSUE. HE ALTERNATIVELY SUBMITS THAT A S THE FIRST APPELLATE AUTHORITY HAS NOT ADJUDICATED THIS MA TTER AND HENCE IT CANNOT BE PRESUME D THAT THE DECISION ON THIS ISSUE IS AGAINST THE ASSESSEE. 4 . IN REPLY THE LD COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF I T O V S . S M T . G U R I N D E R K A U R ( 2 0 0 6 ) 1 0 2 I T D 1 8 9 ( DELHI ) FOR THE PROPOSITION THAT THE SCOPE OF THE RULE 27 PERMITS THE ASSESSEE TO FILE AN APPLICATION WHEN THE ASSESSEE HAD AGITATED AN ISSUE BEFORE THE LD CIT(A) AND ALSO THE PROPOSITION THAT IF THE APPELLATE AUTHORITY HAS NOT ADJUDICATED THE ISSUE, THEN IT CAN B E PRESUMED THAT THE ISSUE HAD BEEN DECIDED AGAINST THE ASSESSEE. ON MERITS HE RELIED ON THE JUDGEMENTS OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. BHARAT BHUSAN JAIN AND OTHERS IN ITA NO. 648/09 AND 669/2009 ETC ORDER DATED 08.01.2015, WHEREIN THE HONBLE HIGH COURT HAS HELD THAT THE REVENUE CAN BE GIVEN AT BEST , LATITUDE OF SIX MONTHS WHICH CAN BE CONSIDERED AS IMMEDIATE OR IMMEDIATELY PROXIMATE IN POINT OF TIME , A FTER CONSIDERING THE JUD GEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. CALCUTTA KNITWEARS, LUDHINA 362 ITR 673 (SC). THE LD DR DISPUTE D THIS CONTENTION OF THE ASSESSEE. 5 . RIVAL CONTENTION S HEARD. ON A CAREFUL CONSIDERATION OF RIVAL CONTENTION, A PERUSAL OF THE PAPER S ON RECORD , THE ORDERS OF THE AUTHORITIES BELOW AND CASE LAWS CITED , WE H O LD THAT AS FOLLOWS: 6 . THE ASSESSEE BEFORE THE FIRST APPELLATE AUTHORITY RAISED THE FOLLOWING GROUND OF APPEAL. GROUND NO.3: THAT ISSUANCE OF NOTICE U/S 158BC/BD DATED 10.02.2006 R ECEIVED ON 20.02.2006, NOTICE U/S 158 BC R.W.S. 158 BD DATED 05.09.2007 RECEIVED ON 06.09.2007 AND PROCEEDINGS THERE UNDER ARE BARRED BY LIMITATION IN AS MUCH AS SEARCH WAS CONDUCTED IN THE CASE OF BEMCO JEWELLERS PVT. LTD. ON 03.08.2000 AND ASSESSMENT ORD ER IN CASE OF THE SEARCHED PARTY WAS PASSED ON 29.08.2002. GROUND NO.4 : THAT THE LETTER DATED 19.01.2004 REGARDING ISSUANCE OF NOTICE U/S 158 BC/BD WAS ISSUED BY THE LD DCIT, C.C. - 3 TO THE ACIT, CIRCLE 29(1) MUCH AFTER THE COMPLETION OF ASSESSMENT IN CASE OF BEMCO PAGE 3 OF 6 JEWELLERS PVT. LTD ON 29.08.2002. THIS FACT ITSELF RENDERS THE SAID NOTICES AS WELL AS THE PROCEEDINGS THERE UNDER INVALID AND VOID. 7 . THE LD CIT(A) HAD DISCUSSED THESE GROUNDS AT PAGE 5.4 OF THE ORDER, WHICH READS AS FOLLOWS: - 5.4. THE ASSES SEE HAS CHALLENGED THE BLOCK ASSESSMENT PROCEEDINGS ON THE GROUND THAT THE AO HAD INITIATED PROCEEDINGS WITHOUT ANY INQUIRY AND WITHOUT ANY PROPER JUSTIFICATION. IT HAS ALSO SUBMITTED THAT THE ASSESSEE ALREADY DECLARED THE TRANSACTION OF SALE OF JEWELLERY IN THE RETURN OF INCOME AND THE AO WAS NOT JUSTIFIED TO INITIATE THE PROCEEDINGS U/S 158BD AND THE ASSESSEE ALSO RELIED ON VARIOUS CASE LAWS IN SUPPORT OF THE CLAIM OF THE ASSESSEE. IT IS SUBMITTED THAT THERE IS NO PROPER SATISFACTION FOR INITIATING PROCEE DINGS U/S 158BD. IT IS ALSO SUBMITTED THAT THE SEARCH WAS CONDUCTED ON 03/08/2000 AND THE BLOCK ASSESSMENT IN THE CASE OF M/S BEMCO JEWELLERS P LTD WAS COMPLETED ON 29/08/2002 WHEREAS THE NOTICE U/S 158BD WAS ISSUED MUCH AFTER VIDE THE NOTICE DATED 10/02/2 006 AND AS SUCH THE PROCEEDINGS U/S 158BD ARE INVALID. 8 . THE FIRST ISSUE THAT IS TO BE ADJUDICATED IS WHETHER THE ASSESSEE HAS RIGHT TO FILE AN APPLICATION UNDER RULE 27 OF THE ITAT RULES. 9 . RULE 27 OF ITAT RULES READS AS FOLLOWS: - 27. THE RESPONDENT, THOUGH HE MAY NOT HAVE APPEALED, MAY SUPPORT THE ORDER APPEALED AGAINST ON ANY OF THE GROUNDS DECIDED AGAINST HIM. 10 . THE ITAT IN THE CASE OF INCOME - TAX OFFICER VS. SMT. GURINDER KAUR (2006) 102 ITD 189 (DELHI), WHEREIN THE CO - ORDINATE HELD AS FOLLOWS: - 10. BEFORE WE PROCEED FURTHER, IT IS NECESSARY TO CLEAR THIS POINT, NAMELY, WHETHER THE ASSESSEE CAN RAISE THESE POINTS BEFORE THE TRIBUNAL FOR THE FIRST TIME AS A RESPONDENT DEFENDING THE ORDER OF THE CIT(A) WHICH WAS BASED ON THE ONLY QUESTION WHETHER TH E REASONS RECORDED BY THE ASSESSING OFFICER AMOUNTED TO REASON TO BELIEVE OR REASON TO SUSPECT. THE MATTER IS NOT RES INTEGRA. RULE 27 OF THE APPELLATE TRIBUNAL RULES, SAYS THAT THE RESPONDENT IN AN APPEAL CAN SUPPORT THE ORDER APPEALED AGAINST ON ANY OF T HE GROUNDS DECIDED AGAINST HIM EVEN THOUGH HE MAY NOT HAVE FILED AN INDEPENDENT APPEAL OR CROSS - OBJECTION. THIS RULE CLEARLY SUPPORTS THE ASSESSEE. IN THE PRESENT CASE, THE ASSESSEE HAS RAISED THE POINT OF NON - RECORDING OF REASON IN GROUND NO. 2 BEFORE THE CIT(A) THOUGH THIS GROUND IS NOT SO CATEGORICAL AS THE LD. COUNSEL FOR THE ASSESSEE WANTS US TO READ. EVEN SO, SUCH GROUND CAN BE INFERRED FROM THE FACT THAT THE ASSESSEE HAS BEEN REPEATEDLY ASKING FOR THE REASONS RECORDED WHICH WERE NOT SUPPLIED TO HER. EVEN BEFORE THE TRIBUNAL RIGHT FROM SEPTEMBER, 2004, THE ASSESSEE HAS BEEN REQUESTING FOR PRODUCTION OF THE DEPARTMENT'S RECORDS OBVIOUSLY CALLING UPON THE DEPARTMENT TO SHOW THAT REASONS FOR REOPENING HAVE BEEN RECORDED, BUT DUE TO SOME DIFFICULTY OR THE OTHER, THE DEPARTMENT HAS NOT BEEN ABLE TO PRODUCE PAGE 4 OF 6 THE RECORDS. THE CIT(A) HAS NOT RECORDED ANY FINDING ON THE QUESTION WHETHER THE REASONS WERE RECORDED OR NOT, BUT HAVING REGARD TO THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN ROHTAK AND HISSAR DISTRIC TS ELECTRIC SUPPLY CO. (P.) LTD, V. CIT , IT IS POSSIBLE TO HOLD THAT HE FOUND AGAINST THE ASSESSEE ON THIS POINT. ON THIS REASONING, IT IS OPEN TO THE ASSESSEE TO RAISE THE QUESTION OF NON - RECORDING OF REASONS FOR REOPENING THE ASSESSMENT BEFORE THE TRIBU NAL FOR THE FIRST TIME AND SEEK TO SUPPORT THE ULTIMATE DECISION OF THE CIT(A). EVEN THE NON - DISCLOSURE OF THE REASONS CAN BE SAID TO BE COVERED BY GROUND NO. 2 TAKEN BEFORE THE CIT(A) AND IN THE ABSENCE OF ANY DEFINITE DECISION BY THE CIT(A), THE SAME CON CLUSION WOULD FOLLOW NAMELY, THAT IT IS OPEN TO THE ASSESSEE TO INVOKE RULE 27 EVEN IN RESPECT OF THIS POINT. AS REGARDS THE APPROVAL OF THE JCIT UNDER SECTION 151(1), IT IS FAIRLY ADMITTED ON BEHALF OF THE ASSESSEE THAT THIS WAS NOT SPECIFICALLY TAKEN EIT HER BEFORE THE ASSESSING OFFICER OR BEFORE THE CIT(A) AND, THEREFORE, WE HOLD THAT RULE 27 MAY NOT BE STRICTLY SPEAKING AVAILABLE TO THE ASSESSEE. 11. EVEN DE HORS RULE 27 OF THE APPELLATE TRIBUNAL RULES, IT IS OPEN TO THE RESPONDENT IN AN APPEAL BEFORE TH E TRIBUNAL TO RAISE A NEW GROUND IN DEFENCE OF THE ORDER APPEALED AGAINST. IT HAS BEEN SO HELD BY THE SUPREME COURT IN HUKAM CHAND MILLS LTD. V. CIT OF THE REPORT IT WAS HELD THAT EVEN ASSUMING THAT RULE 27 IS NOT STRICTLY APPLICABLE, THE TRIBUNAL HAS INHE RENT POWERS UNDER SECTION 254(1) TO ENTERTAIN THE ARGUMENT OF THE RESPONDENT WHICH AMOUNTED TO A NEW GROUND. IT WAS FURTHER HELD BY THE SUPREME COURT AS FOLLOWS: IT IS NECESSARY TO STATE THAT RULES 12 AND 27 ARE NOT EXHAUSTIVE AND THE POWERS OF THE APPELL ATE TRIBUNAL. THE RULES ARE MERELY PROCEDURAL IN CHARACTER AND DO NOT, IN ANY WAY, CIRCUMSCRIBE OR CONTROL THE POWER OF THE TRIBUNAL UNDER SECTION 33(4) OF THE ACT. IT IS SIGNIFICANT TO NOTE THAT IN THE CASE BEFORE THE SUPREME COURT, THE DEPARTMENT WHICH WAS THE RESPONDENT SOUGHT TO RAISE A NEW PLEA IN DEFENCE OF THE ORDER APPEALED AGAINST. EARLIER, IN NEW INDIA LIFE ASSURANCE CO. LTD. V. CIT , THE BOMBAY HIGH COURT WHILE POINTING OUT THE DIFFERENCE BETWEEN AN APPELLANT AND RESPONDENT BEFORE THE APPELLATE COURT, OBSERVED AT PAGE 55 THAT THE RESPONDENT 'MAY SUPPORT THE DECISION OF THE TRIAL COURT, NOT ONLY ON THE GROUND CONTAINED IN THE JUDGMENT OF THE TRIAL COURT, BUT ON ANY OTHER GROUND'. LATER, IN THE CASE OF B.R. BAMASI V. CIT , THE BOMBAY HIGH COURT WHI CH WAS DEALING WITH THE CASE OF RIGHT OF THE RESPONDENT TO DEFEND THE ORDER APPEALED AGAINST HELD THAT THE RESPONDENT WOULD BE ENTITLED TO RAISE A NEW GROUND IN DEFENCE OF THE ORDER APPEALED AGAINST, PROVIDED IT IS A GROUND OF LAW AND DOES NOT NECESSITATE ANY OTHER EVIDENCE TO BE RECORDED, THE NATURE OF WHICH WOULD NOT ONLY BE A DEFENCE TO THE APPEAL ITSELF, BUT MAY ALSO AFFECT THE VALIDITY OF THE ENTIRE ASSESSMENT PROCEEDINGS. IT WAS PAGE 5 OF 6 FURTHER HELD THAT THE GROUND SERVED AS A WEAPON OF DEFENCE AGAINST THE AP PEAL AND, IF ACCEPTED SHOULD NOT PLACE THE APPELLANT IN A WORSE THAN HE WOULD HAVE BEEN, HAD HE NOT APPEALED. IN CIT V. GILBERT AND BARKAR MFG. CO. , THE BOMBAY HIGH COURT MADE NO DISTINCTION BETWEEN THE APPELLANT AND RESPONDENT IN AN APPEAL BEFORE THE TRI BUNAL AND HELD THAT BOTH WERE ENTITLED TO RAISE NEW POINTS OR CONTENTIONS SUBJECT ONLY TO THE CONDITION FIRSTLY THAT NO NEW FACTS ARE REQUIRED TO BE BROUGHT ON RECORD IS CAPABLE OF BEING DISPOSED OF ON THE FACTS ON RECORD AND SECONDLY THAT AN OPPORTUNITY I S GIVEN TO THE OTHER SIDE TO MEET THAT POINT WHICH IS ALLOWED TO BE RAISED FOR THE FIRST TIME IN THE APPEAL. THIS WAS ALSO A CASE OF THE RESPONDENT. TO THE SAME EFFECT ARE THE DECISIONS OF THE ALLAHABAD, GAUHATI, KERALA AND GUJARAT HIGH COURTS CITED ON BEH ALF OF THE ASSESSEE. THEREFORE, WHETHER IT IS THE APPELLANT OR THE RESPONDENT BEFORE THE TRIBUNAL, NEW POINTS OR CONTENTIONS CAN BE RAISED PROVIDED THEY DID NOT INVOLVE INVESTIGATION INTO FACTS (AS CONTRASTED WITH THE RECORD) AND THAT AN OPPORTUNITY IS GIV EN TO THE OTHER SIDE TO MEET THE CONTENTIONS. APPLYING THESE PRINCIPLES TO THE PRESENT CASE, WE OVERRULE THE PRELIMINARY OBJECTION OF THE LD. SR. DR AND PERMIT THE ASSESSEE TO RAISE THE NEW POINTS BEFORE US AS A RESPONDENT. 11 . NO CONTRARY DECISION IS BRO UGHT TO OUR NOTICE BY THE LD DR. 12 . APPLYING THE PROPOSITION LAID DOWN HEREIN TO THE FACT OF TH IS CASE, WE ADMIT THIS APPLICATION UNDER RULE 27 OF THE ITAT RULES AS THE ASSESSEE HAS RAISED A GROUND BEFORE THE LD CIT(A) AND THE LD CIT(A) DISCUSSED THE ISS UE BUT HAD NOT GIVEN A DECISION ON THE SAME. 13 . ON MERITS WE FIND THAT THE BLOCK ASSESSMENT IN THE CASE OF M/S BEMCO JEWELLERS P LTD WAS COMPLETED ON 29.08.2002 U/S 158BD CONSEQUENT TO SEARCH CONDUCTED ON 03.08.2000. NOTICE U/S 158BD WAS ISSUED TO THE AS SESSEE ON 10.02.2006. THUS THE PERIOD OF MORE THAN THREE YEARS HAS ELAPSED SINCE THE COMPLETION OF THE ASSESSMENT IN THE CASE OF M/S. BEMCO JEWELLERS PVT. LTD. 14 . THE HONBLE DELHI HIGH COURT IN THE CASE OF SHRI BHARAT BHUSAN JAIN (SUPRA) HELD AS FOLLOWS: - 6. HAVING REGARD TO THE INTENT OF THE SUPREME COURT IN PARA - 44 OF THE CALCUTTA KNITWEAR (SUPRA), WHERE IT WAS INDICATED THAT THE REVENUE HAS TO BE VIGILANT IN ISSUING NOTICE TO THE THIRD PARTY UNDER SECTION 158BD, IMMEDIATELY AFTER THE COMPLETIO N OF ASSESSMENT OF THE SEARCH PERSON, THIS COURT IS OF THE PINION THAT A DELAY RANGING BETWEEN 10 MONTHS OF 1 YEARS CANNOT BE CONSIDERED CONTEMPORANEOUS TO ASSESSMENT PROCEEDINGS. WE ARE OF THE OPINION THAT NOTICES WERE NOT ISSUED IN CONFORMITY WITH THE REQUIREMENTS OF SECTION 158BD, AND WERE UNDULY DELAYED. THE APPEALS OF THE REVENUE ACCORDINGLY FAIL AND ARE DISMISSED. (EMPHASIS OVER) PAGE 6 OF 6 15 . IN THE CASE OF CIT VS. ALAKA BHANDARI , 996/2009 AND CIT VS. ASHOK KUMAR & SONGS HUF IN ITA 1163/ 2009, JUDGEMENT D ATED 08.01.2015, THE HONBLE COURT CONSIDERED THE DIRECTION OF THE SUPREME COURT IN THE CASE OF CIT VS. CALCUTTA KNITWEARS, LUDHIANA 362 ITR 673 (SC) AND HAD TAKEN A SIMILAR VIEW . 16 . IN VIEW OF THE PROPOSITION LAID DOWN BY THE JURISDICTIONAL HIGH COURT , WE HOLD THAT THE PERIOD OF ABOVE THREE YEARS CANNOT BE CONSIDERED AS IMMEDIATE OR IMMEDIATELY PROXIMATE IN POINT OF TIME TO THE COMPLETION OF THE BLOCK ASSESSMENT U/S 158BD. IN CONSEQUENTLY WE HOLD THAT THE ASSESSMENT ITSELF IS BAD IN LAW. THUS THIS APPLICATION UNDER RULE 27 OF THE ITAT RULES IS ALLOWED. 17 . IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 8 T H JULY , 2015 . - S D / - - S D / - ( C.M. GARG ) ( J. SUDHAKAR REDDY ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 8 T H JULY, 2015 AKK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR