ACIT, UDAIPUR V. M/s. Sohan Lal & Party, UDAIPUR

ITSSA 3/JODH/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0245 (ITAT-JODHPUR)
• Duration Of Justice: 11 month(s) 28 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-06-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-05-2014
• Assessment Year: misc
• Appeal Filed On: 14-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR DEEPAK SEHGAL
• Assessee Lawyers: SHRAVAN KUMAR GUPTA
• Keywords: Block assessment
• Section: 132

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITSSA NO.02/JODH/2013 (A.Y. 1989-90 TO 1998-99) ACIT, CIRCLE-2, VS. M/S. S OHAN LAL & PARTY, UDAIPUR. C/O M/S. TANK INTERNATIONAL HOTEL, BAPU BAZAR, UDAIPUR. (APPELLANT) (RESPONDENT) ITSSA NO.03/JODH/2013 (A.Y. 1989-90 TO 1998-99) ACIT, CIRCLE-2, VS. M/S. S ARDAR SINGH & PARTY, UDAIPUR. C/O M/S. TANK INTERNATIONAL HOTEL, BAPU BAZAR, UDAIPUR. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SHRAVAN KUMAR GUPTA. DEPARTMENT BY : DR. DEEPAK SEHGAL - D.R. DATE OF HEARING : 07/05/2014. DATE OF PRONOUNCEMENT : 12/06/2014. 2 O R D E R PER HARI OM MARATHA, J.M SINCE THE ABOVE CAPTIONED TWO APPEALS HAVE BEEN HE ARD TOGETHER AND INVOLVE ALMOST IDENTICAL GROUNDS, WE ARE PROCEE DING TO DISPOSE THEM OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENC E, CONGRUENCE AND BREVITY. ITSSA NO. 2/JU /2013 2. THIS IS AN APPEAL BY THE DEPARTMENT DIRECTED AGA INST THE ORDER DATED 28/03/2013 OF LD. CIT(A), UDAIPUR. THE FOLLO WING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF THE CASE, THE ID CIT(A) HAS ERRED IN:- 1(I) ENTERTAINING AND CONSIDERING THE GROUND REGAR DING VALIDITY OF NOTICE ISSUED U/S 158BD OF THE IT. ACT IN THE PRESENT APPEAL ORDER PASSED IN CONSEQUENT TO THE DIRECTION OF HON'BLE ITAT IN APPEAL ITSSA NO. 50/JDPR/2006 VIDE ORDER DATED 05.03.2008 DESPITE TH E FACT THAT THE HON'BLE ITAT HAS ALREADY CONSIDERED T HIS GROUND AND HAS HELD THAT NOTICE U/S 158BD OF THE IT . ACT 3 WAS APPROPRIATELY ISSUED AND NON-MENTION OF SECTION 158BC IN THIS NOTICE CANNOT MAKE IT INVALID. 1(II) EXCEEDING HIS JURISDICTION AND NOT FOLLOWING THE JUDICIAL DISCIPLINE BY DECIDING THE ISSUE WHICH HAS ALREADY BEEN DECIDED IN THE INSTANT CASE FOR THE SAME BLOCK PERI OD BY THE HON'BLE ITAT. 1(III) NOT FOLLOWING THE DIRECTION OF THE HON'BLE ITAT GIVEN BY THE HON'BLE WHILE RESTORING BACK THE MATTER IN AS M UCH AS THAT THE MATTER WAS RESTORED BACK TO BE DECIDED AFRESH ON MERIT WHEREAS VALIDITY OF NOTICE U/S 158B D OF THE IT. ACT WAS ALREADY UPHELD BY THE HON'BLE ITAT. 2. WITHOUT PREJUDICE TO GROUND NO. 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID CI T(A) HAS ERRED IN HOLDING THAT THE INITIATION OF BLOCK ASSESSMENT PROCEEDINGS IS BAD IN LAW AND ILLEGAL BY OBSERVING THAT SEC. 292B CANNOT COME TO THE RESCUE OF THE AO FOR NOT MENTIONING SEC. 158BC IN THE NOTICES ISSUED U/S 158BD OF THE IT. ACT TO THE ASSESSEE, IG NORING THE FACT THAT EVEN IF THERE IS MINOR DEFECT/TYPING ERROR IN THE NOTICES ISSUED U/S 158BD OF THE IT. ACT, IT IS VERY WELL COVERED AND SHIELDED BY SEC. 292B OF THE IT. A CT AS EXPRESSLY MENTIONED IN THE SEC. 292B OF THE IT. ACT . 4 3. ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES O F THE CASE, THE ID CIT(A) HAS ERRED IN DELETING THE ADDIT ION MADE BY THE AO IN DETERMINING TOTAL UNDISCLOSED INCOME OF RS. 52,68,910/- WITHOUT PROPERLY APPRECIA TING THE FACTS OF THE CASE. 2. THE BACKGROUND FACTS LEADING TO THIS APPEAL ARE THA T THE ASSESSEE- AOP FILED ITS RETURN OF INCOME [ROI] FOR A.Y. 1996- 97 AND 1997-98 AND REGULAR ASSESSMENT WAS FRAMED. SUBSEQUENTLY, SEARC H AND SEIZURE OPERATIONS U/S 132 OF THE INCOME-TAX ACT, 1961 [HER EINAFTER REFERRED TO AS 'THE ACT', FOR SHORT] WERE CARRIED OUT AT THE RESID ENTIAL PREMISES OF SHRI KALYAN SINGH CHOUHAN ON 6.5.1998 WHO IS ONE OF THE MEMBER OF THE AOP. DURING SEARCH, A LOOSE PAPER WAS FOUND FROM HIS RE SIDENCE WHICH IS STATED TO BE RELATED TO M/S SARDAR SINGH AND PARTY. THIS PAPER WAS SEIZED AS PER ANNEXURE 22 AT PAGE 39. DURING ASSESSMENT PROCEED INGS IN THE CASE OF SHRI KALYAN SINGH CHOUHAN THE A.O. HAS OBSERVED THAT THE NOTINGS AND UNDISCLOSED INCOME BASED ON THIS SEIZED PAPER RELAT ES TO THE AOP AND NOT THE ASSESSEE AS AN INDIVIDUAL. ACCORDINGLY, A NOTI CE U/S 158BD OF THE ACT WAS ISSUED TO THE ASSESSEE-AOP ON 21/22-03-2000 BY THE A.O. THE ASSESSEE OBJECTED TO THE INITIATION OF PROCEEDINGS U/S 158BD OF THE ACT. ONE MORE NOTICE U/S 158BD WAS ISSUED ON 11.7.2002 ON THE BAS IS OF SAME PAPER FOUND DURING THE COURSE OF SEARCH AT THE RESIDENCE OF SHR I KALYAN SINGH CHOUHAN 5 AND THE ASSESSEE AGAIN CHALLENGED THE LEGALITY OF T HESE PROCEEDINGS INITIATED AGAINST IT. BUT SIMULTANEOUSLY, THE ASSE SSEE AOP FILED ITS RETURN OF UNDISCLOSED INCOME REQUIRED TO BE FILED UNDER BL OCK ASSESSMENT. THE A.O. FRAMED BLOCK ASSESSMENT ORDER U/S 158BD OF TH E ACT ON 28.7.2004 AND HAS ASSESSED THE UNDISCLOSED INCOME AT RS. 52,68,91 0/-. AGGRIEVED BY THIS ORDER, APPEAL WAS PREFERRED AND THE LD. CIT(A) VIDE HIS ORDER DATED 27.3.2006 HAS FOUND THAT NO VALID NOTICE U/S 158BC ALONGWITH NOTICE U/S 158BC OF THE ACT IS MANDATORY FROM 1.6.2002. HE H AS FURTHER OBSERVED THAT PROCEEDINGS INITIATED U/S 158BD IN THE MONTH O F MARCH 2000 WAS DROPPED AND FRESH NOTICE U/S 158BD WAS ISSUED IN TH E MONTH OF MARCH 2002. HE HAS ALSO OBSERVED THAT THIS DEFECT CANNOT BE COR RECTED BY RESORTING TO THE PROVISIONS OF SECTION 292B OF THE ACT. AGAINST THIS ORDER DATED 27.3.2006, THE DEPARTMENT PREFERRED APPEAL BEFORE T HE APPELLATE TRIBUNAL WHO VIDE ORDER DATED 5.3.2008 SET ASIDE THE ORDER O F THE LD. CIT(A) AND RESTORED THE MATER BACK TO HIS FILE WITH THE DIRECT ION TO TAKE UP THE ISSUE AFRESH ON MERITS AS PER LAW. THIS ORDER WAS RENDER ED EX PARTE. IN FACT, THE TRIBUNAL HAD REVERSED THE FINDING GIVEN ON LEGAL I SSUE BY THE LD. CIT(A). IN THE SET ASIDE ORDER THE LD. CIT(A) TOOK UP THE CASE AND DECIDED THE MERITS WHICH WERE CHALLENGED BEFORE HIM IN THE ORIGINAL RO UND. 6 3. IT IS A PECULIAR CIRCUMSTANCE NOTICED IN THIS CA SE AND AN INDEPENDENT AND ANOTHER NOTICE ISSUED U/S 158BD TO THE ASSESSEE -AOP ON 11.7.2002 BY THE ACIT, CENTRAL I, UDAIPUR FOR THE SAME BLOCK PER IOD AND AFTER IGNORING THE PAST PROCEEDINGS UNDERTAKEN BY ISSUANCE OF NOTI CE ON 21/22-3-2000. IN FACT, THERE WERE TWO AOPS DURING THE PERIOD RELEVAN T TO A.Y. 1996-97 AND 1997-98. THE LICENCE FOR THIS BUSINESS OF LIQUOR W AS ISSUED BY THE COMMISSIONER EXCISE, UDAIPUR TO DIFFERENT AOPS. TH E OBJECTION OF THE ASSESSEE HAS BEEN THAT WHEN ALREADY BLOCK ASSESSMEN T ORDER HAS BEEN PASSED ISSUING OF ANOTHER NOTICE DATED 11.7.2002 IS ILLEGAL. IT MAY BE MENTIONED THAT AFTER THE ORDER OF THE LD. CIT(A) [I N THE FIRST ROUND] DATED 27.3.2006 WHICH ANNULLED THE ASSESSMENT ORDER DATED 19.7.2004, THE REVENUE FILED APPEAL AGAINST THE SAME ORDER BEFORE THE APPELLATE TRIBUNAL AND SIMULTANEOUSLY ISSUED ANOTHER INDEPENDENT NOTIC E U/S 158BD R.W.S 158BC ON 28.6.2000 FOR THE SAME BLOCK PERIOD TO THE SAME ASSESSEE. IN THIS BACKGROUND, IT WAS ARGUED THAT BOTH PARALLEL PROCEE DINGS HAVE BEING CONTRADICTORY IN NATURE WOULD NOT SURVIVE AS NO NEW FACT OR MATERIAL HAS COME OR BROUGHT ON RECORD. BE THAT AS IT MAY, THE LD. CIT(A) IN THE SECOND ROUND PASSED THE PRESENT APPELLATE ORDER ON MERITS AS WELL AS ON DIFFERENT LEGAL ISSUES RAISED BEFORE HIM. THE LD. CIT(A) HAS OBSERVED THAT THE LOOSE PAPER [ANNEXURE 22/PG 39] FOUND FROM THE RESIDENTIA L PREMISES OF SHRI 7 KALYAN SINGH CHOUHAN DURING SEARCH PROCEEDINGS DID NOT INDICATE THE NAME, DATE AND NATURE OF TRANSACTION AND IT IS SIMPLE LOO SE PAPER NOT SIGNED BY ANYBODY ELSE. HE HAS OBSERVED THAT THIS PAPER CANN OT BE TERMED AS BOOKS OF ACCOUNT. HE HAS OBSERVED THAT THERE IS NO CORRO BORATIVE EVIDENCE WHICH CAN SUPPORT THIS PAPER. HE HAS OBSERVED THAT NO AD VERSE INFERENCE CAN BE DRAWN ON THE BASIS OF SUCH A LOOSE PAPER. THE PRES UMPTION U/S 292C OF THE ACT WOULD ALSO NOT BE AVAILABLE TO THE REVENUE IN T HIS REGARD. THIS PAPER WAS NOT WRITTEN BY ANY OF THE MEMBERS OF THE AOP. ACCORDINGLY, ADDITION OF RS. 41,82,950/- MADE BY THE A.O. HAS BEEN DELETE D. NOW THE REVENUE HAS COME IN APPEAL AGAINST THIS ORDER DATED 28.3.20 13. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE IN AGREEMENT WITH THE LD. CIT-LD DR THAT GROUND NOS. (I) TO (III) HAVE BE EN CORRECTLY RAISED AND HAVE TO BE ALLOWED BECAUSE THE TRIBUNAL IN THE FIRS T ROUND HAS SIMPLY DIRECTED THE LD. CIT(A) TO DECIDE THE ISSUE ON MERI TS AND NOT THE LEGALITY. THEREFORE, GROUND NO. 1 OF THIS APPEAL STANDS ALLOW ED. 5. GROUND NO. 2 ALSO GOES ALONGWITH GROUND NO. 1 AN D THEREFORE, IT IS ALSO TO BE ALLOWED BECAUSE BOTH THESE GROUNDS ALREA DY STAND ALLOWED BY THE TRIBUNAL IN THE FIRST ROUND AND WE CANNOT INTER FERE WITH OUR OWN FINDINGS GIVEN IN THE FIRST ROUND AND WHICH HAS ATT AINED FINALITY AS NOBODY HAS APPEALED AGAINST THIS FINDING OF THE TRIBUNAL. 8 6. GROUND NO. 3 OF REVENUES APPEAL IS ON THE MERIT S OF THE CASE. FACTS OF THIS GROUND ARE THAT THE A.O. HAS COMPUTED TOTAL UNDISCLOSED INCOME FROM BUSINESS AT RS. 41,82,946/-. THIS INCOME HAS BEEN COMPUTED ON THE BASIS OF PAGE 39 OF ANNEXURE 22 FOUND AND SEIZED FR OM THE RESIDENCE OF SHRI KALYAN SINGH CHOUHAN BY ESTIMATING INCOME @ 5% NET PROFIT WHICH COMES TO RS. 62,53,600/-. AFTER REDUCING THE PROFIT ALREADY DISCLOSED IN A.Y. 1996-97 AT RS. 20,70,654/- THE REMAINING AMOUNT OF RS. 41,8 2,946/- HAS BEEN ADDED AS UNDISCLOSED INCOME FROM BUSINESS. AS PER THIS P AGE, THE PROFIT FALLING TO THE SHARE OF SHRI KALYAN SINGH CHOUHAN @ 5% HAS BEE N MENTIONED IN A.Y. 1996-97 AND A.Y. 1997-98 AT RS. 1,94,005/- AND RS. 1,18,675/-, RESPECTIVELY. THEREFORE, THE PROFIT OF THE AOP AS A WHOLE HAS BEEN WORKED OUT AT RS. 62,53,600/-. THIS ADDITION HAS BEEN DE LETED BY THE LD. CIT(A) WITH REASONS WHICH WE HAVE ALREADY MENTIONED. 7. BEFORE US, BOTH THE PARTIES HAVE REITERATED THEI R EARLIER ARGUMENTS TAKEN BEFORE THE LD. CIT(A). 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE HAVE FOUND THAT THIS PAPER CANNOT BE MADE THE BASIS FOR MAKING THE IMPUGNED AD DITION. THIS PAPER HAS NOT BEEN FOUND WRITTEN BY ANY OF THE MEMBER OF THE AOP. THE STATEMENT OF SHRI KALYAN SINGH CHOUHAN WAS TAKEN WH ICH ALSO DOES NOT 9 SUPPORT THE WRITING ON THIS PAPER. AFFIDAVITS PLAC ED ON RECORD OF VARIOUS PERSONS OF AOP HAVE REMAINED UNCONTROVERTED. THUS THERE IS NO CORROBORATIVE EVIDENCE FOUND TO SUPPORT THIS PAGE W HICH SEEMS TO BE ROUGH DRAFT NOTING AND NOT REFLECTING ANY ACTUAL TRANSACT ION. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE IMPUGNED DELETIO N IS QUITE IN ORDER. THEREFORE, WE CONFIRM IT AND DISMISS THE GROUND OF APPEAL OF THE DEPARTMENT QUA GROUND NO. 3. 8.1 IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ITSSA NO. 3/JU/2013 9. THIS IS AN APPEAL BY THE DEPARTMENT DIRECTED AGA INST THE ORDER DATED 28/03/2013 OF LD. CIT(A), UDAIPUR. THE FOLLO WING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF T HE CASE, THE ID CIT(A) HAS ERRED IN:- 1(I) ENTERTAINING AND CONSIDERING THE GROUND REGAR DING VALIDITY OF NOTICE ISSUED U/S 158BD OF THE IT. ACT IN THE PRESENT APPEAL ORDER PASSED IN CONSEQUENT TO THE DIRECTION OF HON'BLE ITAT IN APPEAL ITSSA NO. 51/JDPR/2006 VIDE ORDER DATED 05.03.2008 READ WITH APPEAL ITSSA NO. 50/JDPR/2006 VIDE ORDER DATED 05/03/2008 (M/S. SOHAN LAL & PARTY), DESPITE THE FA CT 10 THAT THE HON'BLE ITAT HAS ALREADY CONSIDERED THIS GROUND AND HAS HELD THAT NOTICE U/S 158BD OF THE IT . ACT WAS APPROPRIATELY ISSUED AND NON MENTION OF SECTION 158BC IN THIS NOTICE CANNOT MAKE IT INVALID. 1(II) EXCEEDING HIS JURISDICTION AND NOT FOLLOWING THE JUDICIAL DISCIPLINE BY DECIDING THE ISSUE WHICH HAS ALREADY BEEN DECIDED IN THE INSTANT CASE FOR THE SAME BLOCK PERI OD BY THE HON'BLE ITAT. 1(III) NOT FOLLOWING THE DIRECTION OF THE HON'BLE ITAT GIVEN BY THE HON'BLE WHILE RESTORING BACK THE MATTER IN AS M UCH AS THAT THE MATTER WAS RESTORED BACK TO BE DECIDED AFRESH ON MERIT WHEREAS VALIDITY OF NOTICE U/S 158B D OF THE IT. ACT WAS ALREADY UPHELD BY THE HON'BLE ITAT. 2. WITHOUT PREJUDICE TO GROUND NO. 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID CI T(A) HAS ERRED IN HOLDING THAT THE INITIATION OF BLOCK ASSESSMENT PROCEEDINGS IS BAD IN LAW AND ILLEGAL BY OBSERVING THAT SEC. 292B CANNOT COME TO THE RESCUE OF THE AO FOR NOT MENTIONING SEC. 158BC IN THE NOTICES ISSUED U/S 158BD OF THE IT. ACT TO THE ASSESSEE, IG NORING THE FACT THAT EVEN IF THERE IS MINOR DEFECT/TYPING ERROR IN THE NOTICES ISSUED U/S 158BD OF THE IT. ACT, IT IS VERY WELL COVERED AND SHIELDED BY SEC. 292B OF THE IT. A CT AS EXPRESSLY MENTIONED IN THE SEC. 292B OF THE IT. ACT . 11 3. ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES O F THE CASE, THE ID CIT(A) HAS ERRED IN DELETING THE ADDIT ION MADE BY THE AO IN DETERMINING TOTAL UNDISCLOSED INCOME OF RS. 52,68,910/- WITHOUT PROPERLY APPRECIA TING THE FACTS OF THE CASE. 10. FACTS, CIRCUMSTANCES AND ARGUMENTS ARE SAME AND SIMILAR IN THIS CASE ALSO. THEREFORE, WITH SIMILAR REASONING, WE DECIDE THIS APPEAL BY CONFIRMING THE IMPUGNED DELETION ON MERITS AND ALLO W THE GROUND RAISED ON LEGALITY. 10.1. AS A RESULT, THIS APPEAL IS PARTLY ALLOWED. 11. TO SUM UP, BOTH THE APPEALS OF THE REVENUE ARE PARTLY ALLOWED. (ORDER PRONOUNCED IN THE COURT ON 12 TH JUNE, 2014). SD/- SD/- (N.K.SAINI) (HARI OM MARATHA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 12 TH JUNE, 2014. VL/ COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT ASSISTANT REGISTR AR 4. THE CIT(A) 5. THE D.R