SHYAMKUMAR P. MODI, MUMBAI V. ASST CIT RG 26(2), MUMBAI

ITSSA 28/MUM/2012

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0004 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 15-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: misc
• Appeal Filed On: 01-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GIRIJA DALAL
• Keywords: Search and seizure; Period of limitation; Non compliance; Block assessment; Time period of passing order
• Section: 263; 132

Judgement Text

` IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI . . , !' #'' ' , $ % BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ( &'( ) '*+, ) : 28 / / 2012 , ( 1.4.1986 31.3.1996) ITSS(A) NO. : 28/MUM/2012 BLOCK PERIOD 1.4.1986 TO 31.3.1996 MR. SHYAMKUMR P. MODI, 105, B. SUNDER BAUG, OPP. JAIN TEMPLE, MATHURADAS ROAD, KANDIVALI WEST, MUMBAI -400 093 PAN: AABPM 6553 B VS ASST CIT -26(2), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIJAY MEHTA RESPONDENT BY : SHRI GIRIJA DALAL !' /DATE OF HEARING : 06-01-2014 #$%& !' / DATE OF PRONOUNCEMENT : 15-01-2014 ( O R D E R #'' ' , : PER VIVEK VARMA, JM: THE INSTANT APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF CIT (A) 28, MUMBAI, DATED 28.08.2012, THE FOLLOWING GROUNDS H AVE BEEN RAISED: THE FOLLOWING GROUNDS ARE WITHOUT PREJUDICE TO EACH OT HER. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE 1. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THE FACT S OF THE CASE PROPERLY AND THE LAW APPLICABLE THERETO AND THEREFORE ERRED IN UPHOLDING T HE ORDER OF AO. THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE ASSESSMENT ORDER PASSED WAS BEYOND TIME LIMITATIONS UNDER I.T. ACT AND THEREFORE ILLEGAL TO BE QUASHED AS SUCH. 2. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT THE D ATE OF RECEIPT OF THE ORDER FROM SETTLEMENT COMMISSION BY THE COMMISSIONER OF INCOME TAX WAS IRRELEVANT IN WORKING OUT THE TIME LIMITATIONS FOR PASSING ASSESSMEN T ORDER. 3. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE OFFICES OF T HE AO, THE COMMISSIONER, THE SETTLEMENT COMMISSION OPERATE IN DIFFERENT DOMAINS W ITHOUT INFORMATION OF WHAT HAPPENS IN OTHER DEPARTMENTS AND THEREFORE EVEN THOUGHT UNDER LAW THE APPLICATION BEFORE THE SETTLEMENT COMMISSION GOT ABATED O N 31.07.2007 THE COMMISSIONER HAVING RECEIVED THE SAID ORDER OF THE SETT LEMENT COMMISSION ON 23.2.2009, THE ORDER PASSED BY THE AO ON 31.3.2009 WAS WITHIN TIME LIMIT U/S 153(2A) OF THE ACT. HE OUGHT TO HAVE APPRECIATED TH AT FIVE CASES WERE HELD ABATED MR. SHYAMKUMR P . MODI IT(SS) A 28/MUM/2012 2 BY THE SETTLEMENT COMMISSION AND AOS ASSESSEE IN OTHER CASES HAVE PASSED ORDERS ON 3.4.2008. HE OUGHT TO HAVE FURTHER APPREC IATING THAT THE AO DID NOT HAVE THE RELEVANT RECORDS TO PROVE HIS CASE WHILE HE H AS REPORTED THAT THE RECORDS WERE NOT AVAILABLE TO THE CIT(A). THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND, VA RY OR DELETE ANY OR ALL THE ABOVE GROUNDS OF APPEAL. 2. THE SOLITARY LEGAL ISSUE PERTAINS TO THE LEGALITY OF THE O RDER PASSED U/S 158BC BY THE AO, DATED 28.03.2009. 3. THE BRIEF FACTS ARE THAT, THERE WAS A SEARCH AND SEIZURE OPERA TION U/S 132(1) OF THE INCOME TAX ACT, 1961, ON THE ASSESSEE ON 01.04.1996. SINCE THE PERIOD PERTAINED TO THE PERIOD OF BLO CK ASSESSMENT PROCEEDINGS UNDER CHAPTER XIVB, ASSESSMENT OF UNDISCLOSED INCOME FOUND AT THE TIME OF SEARCH WAS FRAMED U/S 158BC, VIDE ORDER DATED 17.04.1997. AGAINST THIS ORDER, THE ASSESSEE AGITATED BEFORE THE ITAT. THE ITAT, SET ASIDE THE ORDER PASSED U/S 158BC BY THE AO AND DIRECTED HIM TO FRAME THE ASSESSME NT AFRESH, VIDE ITAT ORDER DATED 14.09.1998. 4. THEREAFTER, THE ASSESSEE MOVED AN APPLICATION U/S 245 C AND THE ENTIRE SEQUENCE OF EVENTS IS AS UNDER: SR. NO. DATE PARTICULARS 1 01.04.1996 SEARCH U/S 132 OF THE ACT 2 17.04.1997 BLOCK ASSESSMENT ORDER PASSED 3 14.09.1998 ORDER OF ITAT SETTING ASIDE ASSESSMENT TO THE FILE OF THE ASSESSING OFFICER 4 07.03.2001 APPLICATION MADE TO SETTLEMENT COMMISSIO N U/S 245C OF THE ACT 5 31.03.2001 TIME LIMIT FOR PASSING FRESH ORDER U/S 153 (2A) (BUT FOR SETTLEMENT APPLICATION) EXPIRED 6 08.01.2003 SETTLEMENT COMMISSION PASSED ORDER U/S 2 45D(1) ADMITTING THE APPLICATION 7 31.07.2007 SETTLEMENT APPLICATION ABATED U/S 245HA( 1)(II) R.W.S. 245(2D) OF THE ACT 8 24.08.2007 TIME LIMIT FOR PASSING FRESH ORDER EXPIRED AS PER SEC. 245HA(4)(DE HORSE SECOND PROVISO TO S. 153(4) 9 31.01.2008 SETTLEMENT COMMISSION PASSED ORDER U/S 245HA( 1)(II) 10 31.07.2008 TIME LIMIT FOR PASSING FRESH ORDER EXPIRE D AS PER SECOND PROVISO TO S.153(4) 11 23.02.2009 ORDER OF SETTLEMENT COMMISSION ALLEGEDLY RECE IVED BY CIT 12 31.03.2009 IMPUGNED ASSESSMENT ORDER PASSED 5. AS PER THE GROUNDS OF APPEAL, THE ISSUE BEFORE US IS, W HETHER, THE IMPUGNED ORDER U/S 158BC IS PASSED WITHIN TIME AND V ALID, OR IT MR. SHYAMKUMR P . MODI IT(SS) A 28/MUM/2012 3 WAS FRAMED BEYOND TIME LIMIT PRESCRIBED UNDER THE LAW AND THUS INVALID AND DESERVES TO BE ANNULLED. 6. FROM THE ABOVE DATES AND EVENTS/CHRONOLOGY OF EVEN TS, WE HAVE TO DISSECT THE PERIOD INTO TWO PARTS, I.E. PRIOR TO THE PER IOD OF FILING OF APPLICATION U/S 245C AND PERIOD AFTER FILING OF APPLICATION U/S 245C. 7. AS SEEN FROM THE DATES AND EVENTS, C OORDINATE BENCH OF THE ITAT DIRECTED THE AO TO FRAME THE ASSESSMENT U/S 158BC AFRE SH, VIDE ORDER DATED 14.09.1998. THE AO FRAMED THE ORDER U/S 158BC, AS PER THE DIRECTIONS OF THE ORDER OF THE ITAT ON 31.03.2009. 8. AS PER THE PROVISIONS OF SECTION 153(2A), THE AO SHOULD HAVE COMPLETED THE ASSESSMENT U/S 158BC ON OR BEFORE 31.03.2 000 RELEVANT PROVISION READS AS UNDER: (2A) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTIONS (1) AND (2), IN RELATION TO THE ASSESSMENT YEAR COMMENCING ON THE 1 ST DAY OF APRIL, 1971, AND ANY SUBSEQUENT ASSESSMENT YEAR, AN ORDER OF FRESH ASSESSMENT UNDER SECTION 146 OR IN PURSUANCE OF AN ORDER, UNDER SECTION 250, SECTION 254, SECTION 263 OR SECTION 264, SETTING ASIDE OR CANCELING AN ASSESSMENT, MAY BE MADE AT ANY TIME BEFO RE THE EXPIRY OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER UNDER SECTION 146 CANCELLING THE ASSESSMENT IS PASSED BY THE ASSESSING OFFICER OR THE ORDER UNDER SECTION 250 OR SECTION 254 IS RECEIVED BY THE CHIEF COMMISSIONER OR COMMISSIONE R OR, AS THE CASE MAY BE, THE ORDER UNDER SECTION 263 OR SECTION 264 IS PASSED BY T HE CHIEF COMMISSIONER OR COMMISSIONER. 9. THEREFORE, ACCORDINGLY, THE AO SHOULD HAVE FRAMED THE ASSESSMENT U/S 158BC ON OR BEFORE 31.03.2001. 10. BUT THE ASSESSEE, BEFORE THE EXPIRY OF LIMITATION PERIOD OF 31.03.2001, CHOSE TO APPROACH THE SETTLEMENT COMMISSION, B Y FILING AN APPLICATION U/S 245C ON 07.03.2001. 11. SINCE THE ASSESSEE FILED AN APPLICATION U/S 245C(1) BEFOR E THE SETTLEMENT COMMISSION, THE AO WAS BARRED TO FRAME THE AS SESSMENT, AS PER EXPLANATION 1(V) TO SECTION 153(4), WHICH READS AS UNDER: .. IN A CASE WHERE AN APPLICATION MADE BEFORE THE INCO ME-TAX SETTLEMENT COMMISSION UNDER SECTION 245C IS REJECTED BY IT OR IS N OT ALLOWED TO BE PROCEEDED WITH BY IT, THE PERIOD COMMENCING FROM THE DATE ON WHICH SUCH APPLICATION IS MADE AND ENDING WITH THE DATE ON WHICH THE ORDER UNDER SUB- SECTION (1) OF SECTION 245D IS RECEIVED BY THE COMMISSIONE R UNDER SUB-SECTION (2) OF THAT SECTION, MR. SHYAMKUMR P . MODI IT(SS) A 28/MUM/2012 4 12. WITH THE ATTRACTION OF THE ABOVE PROVISION, THE AO WA S BARRED TO TAKE ANY ACTION TILL THE CASE, AS FILED BY THE ASSESSEE HA VE BEEN REJECTED. 13. HOWEVER, THE SETTLEMENT COMMISSION ALLOWED THE CASE T O BE PROCEEDED WITH VIDE AN ORDER DATED 08.01.2003. SINCE THE CASE WAS ALLOWED TO BE PROCEEDED WITH, THE CASE OF THE ASSESSEE N OW HAD TO PROCEED AS PER THE PROVISIONS OF CHAPTER XIXA OF THE IN COME TAX ACT, 1961. ACCORDING TO THE PROVISIONS OF CHAPTER XIXA, THE ASSESSEE HAD TO DEPOSIT THE ADMITTED TAX WITHIN 35 DAYS OF THE RECEIPT OF ORDER U/S 245D(1). THIS ORDER, BESIDES BEING SERVED ON THE ASSESSEE ALSO SERVED ON THE CIT (CC-I), MUMBAI, CIT(DR), DI, ITSC, ADD DI, ITSC AND THE AO, WITH THE DIRECTION TO THE CIT (CC-I) TO REPORT TO T HE COMMISSION, WHETHER THE APPLICANT ASSESSEE HAS PAID THE ADDITIONAL T AX WITHIN THE STIPULATED TIME. 14. HOWEVER, THE ASSESSEE DID NOT PAY THE ADDITIONAL TA X WITHIN THE STIPULATED PERIOD. 15. IN THE MEANWHILE, PROVISIONS IN CHAPTER XIXA SAW CER TAIN AMENDMENTS, ACCORDING TO WHICH, CERTAIN IMPORTANT CHANGES WERE BROUGHT IN, IN SECTION 245D, PERTAINING TO ADMISSION OF THE C ASES AND THE EFFECT OF NON PAYMENT OF ADDITIONAL TAXES UPTO 31.07.200 7 WOULD RESULT IN THE CASE TO BE HELD TO BE NON MAINTAINABLE (WE ARE NOT GOING INTO ALL THE PROVISIONS, BUT ARE RESTRICTING OURSELVES TO TH E RELEVANT PROVISIONS). AS MENTIONED IN THE EARLIER PARA, THE LEGISLATURE AMENDED SECTION 245D(2D), WHICH APPLIED TO THOSE ASSESSEE WHOSE C ASES WERE ALLOWED TO BE PROCEEDED WITH, BUT THEY HAD NOT PAID THE TAXES. FOR THOSE CLASS OF PERSONS, THE PROVISION OF SECTION 245(2D) CLOS ED THE DOORS FOR COMPLETING THE SETTLEMENT PROCEEDINGS. IN THIS M ANNER, THOSE CASES, WHERE ADDITIONAL TAXES WERE NOT PAID, THE APPLICATIO N WERE SOUGHT TO BECAME NON MAINTAINABLE, AND NON COMPLIANCE PROCEEDINGS WERE TO BE INITIATED U/S 245HA. ACCORDING TO THOSE PROVIS IONS, SINCE MR. SHYAMKUMR P . MODI IT(SS) A 28/MUM/2012 5 THE ASSESSEE DID NOT PAY THE ADDITIONAL TAXES, THE CASE OF THE ASSESSEE GOT ABATED ON 31.07.2007 VIDE THE ORDER U/S 245HA(1)(II). 16. AS A CONSEQUENCE TO THIS ORDER, THE CASE OF THE AS SESSEE WENT BACK TO 07.03.2001 AND AS PER THE PROVISIONS, THE FRESH O RDER HAD TO BE PASSED BY THE AO I.E., UPTO 31.03.2001, WITHIN 25 DAYS, AS IF THE ASSESSEE HAD NOT APPROACHED THE SETTLEMENT COMMISSION AND THE CASE OF THE ASSESSEE WOULD PROCEEDED UNDER NORMAL ASSESSMEN T PROCEEDINGS AS PER SECTION 245HA(2), WHICH READS AS UNDER: (2) WHERE A PROCEEDING BEFORE THE SETTLEMENT COMMISSION ABATES, THE ASSESSING OFFICER, OR, AS THE CASE MAY BE, ANY OTHER INCOME-TAX AUTHORITY BEFORE WHOM THE PROCEEDING AT THE TIME OF MAKING THE APPLICATION WAS PE NDING, SHALL DISPOSE OF THE CASE IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT AS IF NO APPLICATION UNDER SECTION 245C HAD BEEN MADE. 17. ACCORDINGLY, THE AO WAS REQUIRED TO PASS THE ORDER U/S 158BC WITHIN 25 DAYS, I.E. ON OR UPTO 29.02.2008 (FEBRUARY HAVING 2 9 DAYS IN 2008) OR EVEN IF WE TAKE DATE OF RECEIPT OF ORDER ON 23.0 2.2009 AS MENTIONED IN THE IMPUGNED ORDER, THE BARRING DATE WOULD BE ON OR BEFORE 19.03.2009 (AS PER 245HA(2)). 18. SINCE THE IMPUGNED ORDER HAS BEEN PASSED ON 31.03.2 009, THIS, IN OUR OPINION GOT BARRED BY LIMITATION BY 12 DAYS. 19. IN THESE CIRCUMSTANCES, WE HOLD THAT THE ORDER PAS SED U/S 158BC IS BARRED BY LIMITATION AND IS THEREFORE ANNULLED. CONS EQUENTLY, ORDER PASSED BY THE CIT(A) BECOME VOID. 20. IN THE RESULT, THE APPEAL, AS FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JANUARY, 2014. SD/- SD/- ( . . ) ( #'' ' ) (R. C. SHARMA) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 15 TH JANUARY, 2014 MR. SHYAMKUMR P . MODI IT(SS) A 28/MUM/2012 6 ) / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) THE CIT (A)-28, MUMBAI 4) THE CIT -26, MUMBAI, 5) *+ ) ),- , . ! ,-& , /01 / THE D.R. E BENCH, MUMBAI. 6) +2 3 COPY TO GUARD FILE. .45 / BY ORDER / / TRUE COPY / / 6 / 7 08 . ! ,-& , /01 DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *:;7 . ) . * CHAVAN, SR. PS