THE DCIT, Kakinada V. St.Mary's Educational Society, Kakinada

ITSSA 3/VIZ/2014

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3498 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 06-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 10-11-2015
• Assessment Year: misc
• Appeal Filed On: 16-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V MADHUVANI
• Keywords: Search and seizure; Period of limitation; Block assessment
• Section: 143(3); 12A; 132

Judgement Text

IT(SS)A NOS.2&3/VIZAG/2014 ST. MARYS EDUCATIONAL SOCIETY, KAKINADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.(SS)A.NO.2/VIZAG/2014 ( / ASSESSMENT YEAR: 1890-90 TO 29.1.1999) ST. MARYS EDUCATIONAL SOCIETY KAKINADA DCIT, CIRCLE - 1, KAKINADA [PAN NO. AAAAS5688P ] ( ' / APPELLANT) ( ()' / RESPONDENT) ./I.T.(SS)A.NO.3/VIZAG/2014 ( / ASSESSMENT YEAR: 1890-90 TO 29.1.1999) DCIT, CIRCLE - 1, KAKINADA ST. MARYS EDUCATIONAL SOCIETY KAKINADA ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI V. MADHUVANI, DR / DATE OF HEARING : 14.09.2017 / DATE OF PRONOUNCEMENT : 06.10.2017 IT(SS)A NOS.2&3/VIZAG/2014 ST. MARYS EDUCATIONAL SOCIETY, KAKINADA 2 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THESE CROSS APPEALS FILED BY THE ASSESSEE AS WELL AS THE REVENUE ARE DIRECTED AGAINST THE ORDER OF THE COMMI SSIONER OF INCOME TAX (APPEALS), {CIT(A)}, VISAKHAPATNAM VIDE ITA NO. 0257/2012- 13/ACIT,C-1/KKD/2013-14 DATED 28.3.2014 FOR THE ASS ESSMENT YEAR 1989-90 TO 29.1.1999. 2. GROUND NO.2 IS RELATED TO THE VALIDITY OF ISSUE OF NOTICE U/S 158 BD OF THE INCOME TAX ACT, (HEREINAFTER CALLED AS THE ACT) IN THE ASSESSEES CASE. THE ASSESSEE IS EDUCATIONAL SOCIETY IN THE N AME AND STYLE OF SAINT MARYS EDUCATIONAL SOCIETY REGISTERED WITH REGISTRAR OF COOPERATIVE SOCIETIES AND THE EDUCATIONAL INSTITUTI ONS ARE BEING OPERATED IN THE NAME AND STYLE OF SAINT MARYS COLLEGE OF E DUCATION AND SAINT MARYS MODEL HIGH SCHOOL. A SEARCH U/S 132 OF THE ACT WAS CARRIED OUT ON 29.1.1999 IN THE PREMISES OF SAINT MARYS COLLE GE EDUCATION AS WELL AS THE RESIDENTIAL PREMISES OF MEMBERS OF THE SOCIE TY INCLUDING SRI K. RAJ KUMAR, MEMBER OF THE SOCIETY. DURING THE SEARCH AND SEIZURE OPERATIONS CERTAIN INCRIMINATING MATERIAL WAS FOU ND AND SEIZED INDICATING THE UNDISCLOSED INCOME. THE ASSESSEE AL SO DID NOT FILE THE APPLICATION IN FORM NO.10A FOR REGISTRATION U/S 12A AND ALSO THE RETURN IT(SS)A NOS.2&3/VIZAG/2014 ST. MARYS EDUCATIONAL SOCIETY, KAKINADA 3 OF INCOME TILL THE DATE OF SEARCH. THE ASSESSING O FFICER (AO IN SHORT) HAD ISSUED THE NOTICE U/S 158BC OF THE ACT TO SAIN T MARYS COLLEGE OF EDUCATION ON 25.5.1999, ONE OF THE ARMS OF THE SO CIETY. IN RESPONSE THE NOTICE ISSUED U/S 158BC, THE ASSESSEE FILED THE RETURN OF INCOME FOR THE BLOCK PERIOD IN THE NAME OF SAINT MARYS EDUCA TIONAL SOCIETY ON 02.08.1999 AND THE ASSESSMENT ORDER U/S 143(3) R.W. S. 158BC OF THE ACT WAS PASSED ON 30.01.2001 IN THE NAME OF SAINT MARY S COLLEGE OF EDUCATION AND ASSESSED THE INCOME FOR THE BLOCK PE RIOD AT RS.99,86,408/-. THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) OBJECTING THE ASSESSMENT MADE IN THE NAME OF SAINT MARYS COLLEGE OF EDUCATION INSTEAD OF SAINT MARYS EDUCATIONAL SOC IETY, SINCE SAINT MARYS COLLEGE OF EDUCATION IS ONE OF THE INSTITUTI ONS RUN BY THE SOCIETY, WHICH IS NOT A SEPARATE LEGAL ENTITY. SAINT MARYS EDUCATIONAL SOCIETY BEING THE SOCIETY RUNNING THE EDUCATIONAL INSTITUTI ON. THE CIT(A), RAJAHMUNDRY HAD PASSED AN ORDER ON 20.12.2001 HOLDI NG THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING THE AS SESSMENT IN THE HANDS OF THE COLLEGE WITHOUT TAKING THE COGNIZANCE OF THE EXISTENCE OF THE SOCIETY. FOR THE SAKE OF CLARITY AND CONVENIENCE, WE EXTRACT THE RELEVANT PARA NO. 7 AND 7.1 OF THE LD. CIT(A)S ORDER IN THE CASE OF SAINT MARYS COLLEGE OF EDUCATION. IT(SS)A NOS.2&3/VIZAG/2014 ST. MARYS EDUCATIONAL SOCIETY, KAKINADA 4 7. WITH REGARD TO THE ASSESSMENT MADE IN THE HANDS OF THE APPELLANT, IT MAY BE SEEN THAT THE APPELLANT IS ONLY ONE OF TH E WINGS OF THE SOCIETY, NAMELY, ST. MARYS EDUCATIONAL SOCIETY WHICH IS THE ONLY LEGAL ENTITY BY VIRTUE OF ITS BEING REGISTERED UNDER THE PROVISIONS OF SOCIETIES REGISTRATION ACT, 1860. WHILE COMPLETING THE ASSESSMENT, THE AS SESSING OFFICER HAS DISREGARDED THE FACT OF EXISTENCE OF THE SOCIETY AN D CONSIDERED THE APPELLANT COLLEGE AS A SEPARATE AND IDENTIFIABLE EN TITY FOR THE PURPOSE OF TAXATION AND COMPLETED THE ASSESSMENT ACCORDINGLY I N THE HANDS OF THE COLLEGE. SINCE ST. MARYS EDUCATIONAL SOCIETY IS H AVING 3 WINGS AS STATED ABOVE, IF AT ALL ANY ASSESSMENT IS TO BE DONE, IT S HOULD HAVE BEEN ON THE LEGAL ENTITY ALONE ALONG WITH ITS BRANCHES AND WING S AS A WHOLE AND NOT AS BRANCHES AND WINGS SEPARATELY. IT IS SEEN THAT WHIL E FILING THE RETURN IN FORM NO.2B FOR THE BLOCK PERIOD, THE FACT THAT THE APPELLANT COLLEGE IS BEING RUN UNDER THE OWNERSHIP AND MANAGEMENT OF THE SOCIETY HAS BEEN CLEARLY BROUGHT OUT FOR THE INFORMATION OF THE ASSE SSING OFFICER. FURTHER, THE FOLLOWING EVIDENCES WERE PRODUCED FOR MY PERUSA L IN SUPPORT OF THE ABOVE CONTENTIONS:- (A) MEMORANDUM OF ASSOCIATION OF THE SOCIETY DULY REGIS TERED UNDER THE SOCIETIES REGISTRATION ACT, WHEREIN CLAUSE NO.3 THEREOF SPEAKS OF THE OBJECTIVES AND AIMS THEREOF WHICH INCLUDE TH E ESTABLISHMENT OF SCHOOLS, COLLEGES AND TRAINING INSTITUTIONS FOR THE PURPOSE OF IMPARTING AND PROMOTION OF EDUCATION. (B) ORDER DATED 5.3.1984 OF THE SECRETARY OF GOVERNMENT OF ANDHRA PRADESH, DEPT. OF EDUCATION, ADDRESSED TO ST. MARY S EDUCATIONAL SOCIETY, GRANTING PERMISSION TO OPEN B.ED., COLLEGE IN THE NAME OF ST. MARYS COLLEGE OF EDUCATION, AT KAKINADA. (C) CERTIFICATE OF RECOGNITION OF MINORITY EDUCATIONAL INSTITUTION DATED 7.9.1995 ISSUED BY COMMISSIONER & DIRECTOR OF SCHOO L EDUCATION, DEPT. OF EDUCATION, GOVERNMENT OF ANDHRA PRADESH. 7.1 FROM THE ABOVE DOCUMENTARY EVIDENCES, IT IS VER Y CLEAR THAT THE APPELLANT COLLEGE IS NOTHING BUT A WING/EXTENSION O F ST. MARYS EDUCATIONAL SOCIETY. IT IS PLEADED THAT ALL THE ABOVE DOCUMENTA RY EVIDENCES WERE PRODUCED BEFORE THE ASSESSING OFFICER AS WELL, HOWE VER, THE SAME WERE NOT CONSIDERED BY THE ASSESSING OFFICER AND THE A.O ., HAS TREATED THE APPELLANT COLLEGE AS A AOP. AS COULD BE SEEN FROM THE DOCUMENTARY EVIDENCES LISTED ABOVE, WHICH WERE PERUSED BY ME, I T IS VERY CLEAR THAT THE APPELLANT COLLEGE IS ONLY AN EXTENSION OF THE SOCIE TY AND DOES NOT HAVE A SEPARATE LEGAL ENTITY DISTINCT FROM THE SOCIETY. T HEREFORE, IN MY OPINION, THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING TH E ASSESSMENT IN THE HANDS OF THE APPELLANT COLLEGE WITHOUT TAKING COGNI ZANCE OF THE EXISTENCE OF THE SOCIETY. 3. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE AS SESSEE WENT ON APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL(ITA T) AND THE HONBLE IT(SS)A NOS.2&3/VIZAG/2014 ST. MARYS EDUCATIONAL SOCIETY, KAKINADA 5 ITAT IN ITS APPEAL NO.23/VIZAG/2002 DATED 19.06.200 9 ANNULLED THE ASSESSMENT PASSED BY THE A.O. AND CONFIRMED THE ORD ER OF THE LD.CIT(A). FOR READY REFERENCE, WE EXTRACT THE RELE VANT PARAGRAPH OF THE ASSESSMENT ORDER. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE DOCUMENTS P LACED ON RECORDS. FROM A CAREFUL PERUSAL OF STATEMENT OF MR K RAJ KUM AR RECORDED BY THE SEARCH PARTY DURING THE COURSE OF SEARCH OR THE REAFTER WHICH ARE AVAILABLE AT PAGE 214 TO 228, WE FIND THAT IT WAS B ROUGHT TO THE NOTICE OF THE SEARCH PARTY AT THE FIRST INSTANCE TH AT THE ASSESSEE I.E., ST MARY'S COLLEGE OF EDUCATION IS A WING OF ST MARY 'S EDUCATIONAL SOCIETY DULY REGISTERED UNDER THE SOCIETIES REGISTR ATION ACT. IT WAS ALSO DEPOSED BEFORE THE SEARCH PARTY THAT THE AFFAI RS OF THE ASSESSEE WERE MANAGED AND LOOKED AFTER BY THE AFORESAID SOCI ETY. THESE FACTS WERE REPEATEDLY BROUGHT TO THE NOTICE OF THE AG. CO PY OF THE MEMORANDUM OF ASSOCIATION OF THE SOCIETY WAS ALSO F ILED BEFORE THE AG AND THE SEARCH PARTY IN SUPPORT OF THESE CONTENT IONS. DESPITE OF ALL THESE FACTS, THE NOTICE U/S 158BC WAS ISSUED IN THE NAME OF THE ASSESSEE I.E., ST MARY'S COLLEGE OF EDUCATION. THOU GH THE NOTICE WAS ISSUED IN THE NAME OF THE ASSESSEE I.E., ST MARYS COLLEGE OF EDUCATION BUT THE BLOCK RETURN WAS FILED BY THE ST. MARYS EDUCATIONAL SOCIETY, DECLARING A NIL RETURN ON THE GROUND THAT THE ENTIRE RECEIPTS/INCOME OF THE SOCIETY IS EXEMPTED F ROM INCOME TAX ACT U/S 10(22) OF THE IT ACT. ALONG WITH THE RETUR N, A LETTER WAS FILED BEFORE THE AO STATING THEREIN THE OBJECTS OF THE SO CIETY AND THE DETAILS OF THE INSTITUTIONS. IT HAS BEEN REPEATEDL Y TOLD TO THE AO THAT THE ASSESSEE I.E., ST. MARY COLLEGE OF EDUCATION HA S NO LEGAL INDEPENDENT ENTITY AND IT IS A SOCIETY WHICH RUNS A LL ITS WINGS INCLUDING THE ASSESSEE BUT THE AO WAS ADAMANT TO FR AME THE ASSESSMENT IN THE HANDS OF THE ASSESSEE I.E., ST MA RYS COLLEGE OF EDUCATION AFTER TREATING IT TO BE AOP. SINCE THE A SSESSEE IS NOT A LEGAL ENTITY AND IS MERELY A WING OF THE SOCIETY, W HO HAS GOT EXEMPTION U/S 10(22) OF THE ACT, NO ASST. CAN BE FR AMED IN THE HANDS OF THE WINGS OR A BRANCH OF THE SOCIETY. WE THEREF ORE, FIND OURSELVES ARE IN AGREEMENT WITH THE ORDER OF THE CIT(A) WHO H AS RIGHTLY HELD THAT THE ASSESSMENT IN THE HANDS OF THE ASSESSEE CA NNOT BE FRAMED. ACCORDINGLY, THE BLOCK ASSESSMENT IN THE HANDS OF T HE ASSESSEE DESERVES TO BE ANNULLED. WE THEREFORE, CONFIRM THE ORDER OF THE CIT(A) ANNULLING THE ASSESSMENT. SINCE THE ASSESSM ENT HAS BEEN ANNULLED, WE FIND NO JUSTIFICATION TO DEAL WITH THE ISSUES ON MERIT AS NO SPECIFIC ARGUMENTS WERE ADVANCED BY BOTH THE PAR TIES. IT(SS)A NOS.2&3/VIZAG/2014 ST. MARYS EDUCATIONAL SOCIETY, KAKINADA 6 4. SUBSEQUENTLY, THE A.O. HAS ISSUED THE NOTICE U/S 158BD OF THE ACT IN THE NAME OF THE ASSESSEE SOCIETY ON 15.11.2010 U /S 158BD OF THE ACT, WHICH IS CHALLENGED BY THE ASSESSEE IN THIS AP PEAL. THE ASSESSMENT WAS COMPLETED U/S 158BA R.W.S. 158BD OF THE ACT FOR THE BLOCK PERIOD FROM 1989-90 TO 29.1.1999 BY ORDER DATED 20.11.2012 ON TOTAL INCOME OF RS.1,24,79,510/-. 5. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND CHALLENGED THE VALIDITY OF IS SUE OF NOTICE U/S 158BD OF THE ACT AFTER 11 YEARS FROM THE DATE OF THE SEARCH. THE CIT(A) HAS UPHELD THE NOTICE OBSERVING THAT THERE I S NO MANDATORY TIME LIMIT FIXED FOR ISSUE OF NOTICE U/S 158 BD OF THE A CT. FOR THE SAKE OF CONVENIENCE AND CLARITY WE EXTRACT THE RELEVANT PAR AGRAPH OF THE LD. CIT(A) AS UNDER: 5.3 I HAVE CONSIDERED THE SUBMISSIONS MADE. I FIN D THAT THE AO HAS DISCUSSED THE BACKGROUND FOR ISSUE OF NOTICE U/ S 158BD IN THE IMPUGNED ASSESSMENT ORDER AS UNDER: ISSUE OF NOTICE U/S.158BD: A SEARCH AND SEIZURE OPERATION WAS UNDERTAKEN ON 29 .01.1999 IN THE PREMISES OF M/S. ST.. MARY'S COLLEGE OF EDUC ATION AND IN THE RESIDENTIAL PREMISES OF THE MEMBERS OF THE SOCI ETY, DURING THE COURSE OF WHICH CASH OF RS.5,76,050/- SEIZED AN D ALSO A DISCLOSURE U/S.132(4) OF RS.50 LAKHS WAS GIVEN BY T HE MEMBER SRI K. RAJKUMAR IN THE HANDS OF THE SOCIETY. THE BL OCK ASSESSMENTS IN THE HANDS OF SRI K. RAJKUMAR AND M/S . ST. MARY'S COLLEGE OF EDUCATION WERE COMPLETED SEPARATE LY. HOWEVER, THE ASSESSEE-SOCIETY FILED THE RETURN OF I NCOME ADMITTING NIL INCOME AND CLAIMED EXEMPTION U/S. 10(22)/10(23C) OF THE ACT ON 02.08.1999. SINCE NO W ARRANT U/S. 132 WAS ISSUED IN THE NAME OF THE ASSESSEE-SOCIETY, AS PER THE IT(SS)A NOS.2&3/VIZAG/2014 ST. MARYS EDUCATIONAL SOCIETY, KAKINADA 7 PROVISIONS OF SECTION 158BD, THE ASSESSEE SOCIETY F ALLS UNDER THE CATEGORY OF 'ANY OTHER PERSON', WHERE THE ASSES SING OFFICER IS SATISFIED THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THAN THE PERSON IN RESPECT OF WHOM SEARCH WAS MADE U/S. 132 OR WHOSE BOOKS OF ACCOUNT OR OTHER DOCUMEN TS OR ANY ASSETS WERE REQUISITIONED U/S,132A, THEN THE BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS SEIZED OR REQUISITION ED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDI CTION OVER SUCH OTHER PERSON AND THAT AO SHALL PROCEED AGAINST SUCH OTHER PERSON AND THE PROVISIONS OF THIS CHAPTER SHALL APP LY ACCORDINGLY. THERE IS NO TIME LIMIT PRESCRIBED FOR ANY PROCEEDINGS BEING INITIATED UNDER THE PROVISIONS OF SECTION 158BD OF THE ACT. AS SUCH, THE NOTICE U/S.158BD HAS RIGHTLY ISSUED IN THE ASSESSEE'S CASE, WHICH IS VALID AS PE R LAW. AS SUCH, THE NOTICE U/S.158BD HAS RIGHTLY ISSUED IN TH E ASSESSEE'S CASE WHICH IS VALID AS PER LAW. THE CASE LAWS RELIE D UPON BY THE ASSESSEE ARE DISTINGUISHABLE FROM THE FACTS AND CIR CUMSTANCES OF THE ASSESSEE'S CASE. 5.4 I FIND THAT THE INITIAL PROCEEDINGS WERE INITIAT ED U/S.158BC IN THE CASE OF ST. MARY'S COLLEGE OF EDUCATION UNDER THE I MPRESSION IT WAS AN AOP. THE BLOCK ASSESSMENT ORDER PASSED PURSUANT THERETO HAS BEEN ANNULLED BOTH BY THE CIT(A) AND ITAT. THEREAFT ER THE IMPUGNED PROCEEDINGS HAVE BEEN INITIATED AGAINST TH E ASSESSEE SOCIETY U/S.158BD OF THE I.T. ACT. IT HAS TO BE SEE N WHETHER THE PROCEEDINGS INITIATED AGAINST THE ASSESSMENT SOCIET Y UNDER SECTION 158BD IS IN ACCORDANCE WITH THE PROVISIONS OF THE A CT. THE PROCEEDINGS U/S.158BD CAN BE INVOKED IF THE MATERIA LS SEIZED DURING THE SEARCH OPERATION SHOW UNDISCLOSED INCOME RELATING TO 'ANY OTHER PERSON' OTHER THAN THE PERSON IN RESPECT OF WHOM SEARCH WAS MADE U/S.132 OF THE I.T. ACT. AS THE SEARCH WAR RANT IS NOT IN THE NAME OF THE ASSESSEE-SOCIETY, (WHICH WAS NOT IN DISPUTE), THE ASSESSEE-SOCIETY WOULD FALL IN THE CATEGORY OF 'ANY OTHER PERSON'. CERTAIN INCRIMINATING MATERIALS HAVE BEEN SEIZED RE LATING TO THE ASSESSEE-SOCIETY DURING THE SEARCH AND IN RELATION THERETO CERTAIN DISCLOSURE HAS BEEN MADE U/S.132(4) OF THE I.T.ACT. THUS THE CONDITIONS STIPULATED IN SECTION 158BD IS SATISFIED . 5.5 THE AR ARGUED THAT THE NOTICE U/S 158BC AND 158 BD HAS BEEN ISSUED ON THE SAME PERSON AND IS NOT PERMISSIB LE. I AM NOT ABLE TO AGREE TO THIS CONTENTION. THE NOTICE U/S 1 58BC WAS ISSUED TO ST. MARYS COLLEGE OF EDUCATION AND NOT TO THE A SSESSEE I.E. ST. MARYS EDUCATIONAL SOCIETY. IT IS FOR THIS REASON THAT THE ASSESSMENT MADE ON ST. MARYS COLLEGE OF EDUCATION IN THE STATUS OF AOP WAS ANNULLED. IT WAS HELD THAT THE ST. MARY' S COLLEGE OF EDUCATION, THOUGH A WING OF THE SOCIETY IS NOT THE SAME ENTITY AS THE ASSESSEE SOCIETY. IN VIEW OF SUCH A LEGAL POSITION UPHELD BY THE HON'BLE ITAT THE ARGUMENT RAISED BY THE AR IS NOT T ENABLE AND IS IT(SS)A NOS.2&3/VIZAG/2014 ST. MARYS EDUCATIONAL SOCIETY, KAKINADA 8 LIABLE FOR REJECTED. 5.6 THE AR ALSO ARGUED THAT THE SATISFACTION RECORD ED FOR ISSUE OF NOTICE U/S.158BD WAS DONE AFTER THE COMPLETION OF B LOCK ASSESSMENT AND AS A RESULT THE IMPUGNED ASSESSMENT HAS TO BE D ECLARED INVALID. IT WAS ALSO CONTENDED THAT THE NOTICE U/S.158BD WAS ISSUED BEYOND REASONABLE TIME. I HAVE CONSIDERED THE SUBMISSIONS MADE. IT COULD BE SEEN THAT THE AO HAD FRAMED THE ASSESSMENT U/S.158B C AND ASSESSED THE UNDISCLOSED INCOME IN THE HANDS OF THE ST. MARY 'S COLLEGE OF EDUCATION AND SUCH A COURSE OF ACTION WAS HELD TO B E LEGALLY UNTENABLE BY THE HON'BLE ITAT VISAKHAPATNAM BENCH. TILL SUCH DECISION RENDERED BY THE HON'BLE ITAT, THERE WAS NO EXISTING CAUSE FOR THE AO TO ISSUE NOTICE AGAINST THE SOCIETY SEPA RATELY U/S.158BD. AS A RESULT OF THE ORDER OF THE HON'BLE ITAT ANNULLING THE BLOCK ASSESSMENT ORDER PASSED IN THE NAME OF ST. MARY'S C OLLEGE OF EDUCATION, THERE WAS SUFFICIENT CAUSE EXISTING WITH THE AO TO PROCEED U/S.158BD TO ISSUE NOTICE TO THE ASSESSEE-SOCIETY. SUCH A NOTICE HAS BEEN ISSUED WITHIN REASONABLE TIME OF THE PASSING O F THE ORDER OF THE HON'BLE ITAT. FURTHER, A CAREFUL AND PLAIN READING OF SECTION 158BD WOULD SHOW THAT THERE IS NO MANDATE OR TIME LIMIT F IXED FOR ISSUE OF NOTICE U/S.158BD/ NO CONDITION HAS BEEN STIPULATED U/S.158BD THAT SUCH NOTICE HAS TO BE ISSUED BEFORE COMPLETION OF A SSESSMENT U/S.158BC. THE HON'BLE SUPREME COURT IN THE CASE OF CALCUTTA KNIT WEARS LTD HAS HELD THAT THE PLAIN MEANING CONTAINED IN SECTION 158BD SHOULD BE ADOPTED. IN VIEW OF THE ABOVE DISCUSSION, I DO NOT FIND ANY MERIT IN THE CONTENTIONS RAISED BY THE AR. THE NOTI CE ISSUED U/S.158BD IS HELD TO BE VALID. 6. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), ASSESS EE IS IN APPEAL BEFORE THE TRIBUNAL. APPEARING FOR THE ASSESSEE, T HE LD. A.R. ARGUED THAT IN THIS CASE THE SEARCH WAS CONDUCTED ON 29.01 .1999 AND THE NOTICE U/S 158BD OF THE ACT WAS ISSUED ON 15.11.2010 I.E. AFTER THE 11 YEARS OF CONDUCTING THE SEARCH AND THE ISSUE OF NOTICE IS NOT VALID IN THIS CASE. THE LD. A.R. FURTHER ARGUED THAT EVEN IF IT IS PRES UMED THAT THE PROCEEDINGS U/S 158BC OF THE ACT WERE COMPLETED AFT ER THE PRONOUNCEMENT OF THE ORDER OF THE ITAT, THE ASSESSI NG OFFICER HAS TAKEN IT(SS)A NOS.2&3/VIZAG/2014 ST. MARYS EDUCATIONAL SOCIETY, KAKINADA 9 MORE THAN 1 YEAR 4 MONTHS TIME FOR ISSUE OF NOTICE AND THE TIME TAKEN BY THE A.O. IS UNREASONABLE AND BEYOND THE PERMISSI BLE LIMIT FOR ISSUE OF NOTICE U/S 158BD OF THE ACT. BY ANY MEANS, THE NOT ICE U/S 158BD OF THE ACT IS TIME BARRED BY LIMITATION. LD. A.R. RELIED ON THE HONBLE ORDERS OF THE HIGH COURT OF DELHI IN THE CASE OF CIT VS. BHAR AT BHUSHAN JAIN AND OTHERS REPORTED IN 138 DTR (DEL) 97 AND ARGUED THAT SATISFACTION RECORDED MORE THAN A YEAR AFTER COMPLETION OF ASSES SMENT OF THE SEARCHED PERSON IS CONSIDERED TO BE NOT CONTEMPORAN EOUS FOR THE ASSESSMENT PROCEEDINGS AND ARGUED THAT NOTICE ISSUE D IN THE ASSESSEES CASE IS BEYOND THE TIME LIMIT MENTIONED IN THE INCO ME TAX AND REQUIRED TO BE QUASHED. 7. ON THE OTHER HAND, THE LD. D.R. RELIED ON THE OR DERS OF THE LOWER AUTHORITIES. 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. IN THIS CASE, SEARCH U/S 132 OF THE ACT WAS CARRIED OUT ON 29.01.1999 AND THE ASSESSMENTS WERE FRAMED IN THE NAME OF SAINT MARYS COLLEGE OF EDUCATION, WHICH WERE ANNULLED BY THE APPELLATE AUT HORITIES BY AN ORDER DATED 19.06.1999 OF ITAT, VISAKHAPATNAM. THE A.O. ISSUED NOTICE THE U/S 158BD OF THE ACT IN THE CASE OF THE ASSESSEE ON 15.10.2010 I.E. AFTER 11 YEARS 9 MONTHS. AS PER THE PROVISIONS OF SECTIO N 158BFA OF THE ACT, IT(SS)A NOS.2&3/VIZAG/2014 ST. MARYS EDUCATIONAL SOCIETY, KAKINADA 10 THE TIME LIMIT FOR COMPLETION OF BLOCK ASSESSMENTS WAS 2 YEARS IN THE CASE OF 158BC OF THE ACT FROM THE END OF THE MONTH IN WHICH THE LAST AUTHORIZATION FOR SEARCH U/S 132 OF THE ACT WAS EXE CUTED AND IN THE CASE OF 158BD OF THE ACT., 2 YEARS FROM THE END OF THE M ONTH IN WHICH THE NOTICE U/S 158BD OF THE ACT WAS ISSUED. FOR READY REFERENCE, WE REPRODUCE SECTION 158BE OF THE ACT WHICH PLACES TIM E LIMIT FOR COMPLETION OF BLOCK ASSESSMENT AS UNDER: TIME LIMIT FOR COMPLETION OF BLOCK ASSESSMENT. 158BE [(1) THE ORDER UNDER SECTION 158BC SHALL BE PASSED (A) WITHIN ONE YEAR FROM THE END OF THE MONTH IN WHICH THE LAST OF THE AUTHORIZATIONS FOR SEARCH UNDER SECTION 132 OR FOR REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE WAS EXECUTED IN CA SES WHERE A SEARCH IS INITIATED OR BOOKS OF ACCOUNT OR OTHER DO CUMENTS OR ANY ASSETS ARE REQUISITIONED AFTER THE 30 TH DAY OF JUNE, 1995, BUT BEFORE THE 1 ST DAY OF JANUARY, 1997: (B) WITHIN TWO YEARS FROM THE END OF THE MONTH IN WHICH THE LAST OF THE AUTHORIZATIONS FOR SEARCH UNDER SECTION 132 OR FOR REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, WAS EXECUTED IN C ASES WHERE A SEARCH IS INITIATED OR BOOKS OF ACCOUNT OR OTHER DO CUMENTS OR ANY ASSETS ARE REQUISITIONED ON OR AFTER THE 1 ST DAY OF JANUARY, 1997. (2) THE PERIOD OF LIMITATION FOR COMPLETION OF BLOC K ASSESSMENT IN THE CASE OF THE OTHER PERSON REFERRED TO IN SECTION 158BD SH ALL BE A) ONE YEAR FROM THE END OF THE MONTH IN WHICH THE NOT ICE UNDER THE CHAPTER WAS SERVED ON SUCH OTHER PERSON IN RESPECT OF SEARCH INITIATED OR BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ANY ASSET S REQUISITIONED AFTER THE 30 TH DAY OF JUNE, 1995, BUT BEFORE THE 1 ST DAY OF JANUARY, 1997; AND B) TWO YEARS FROM THE END OF THE MONTH IN WHICH THE NO TICE UNDER THIS CHAPTER WAS SERVED ON SUCH OTHER PERSON IN RESPECT OF SEARCH INITIATED OR BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ANY ASSET S ARE REQUISITIONED ON OR AFTER THE 1 ST DAY OF JANUARY, 1997.] IT(SS)A NOS.2&3/VIZAG/2014 ST. MARYS EDUCATIONAL SOCIETY, KAKINADA 11 9. AS PER SECTION 158BE OF THE ACT, THE ASSESSMENT IN THE CASE OF 158BD OF THE ACT SHOULD BE COMPLETED WITHIN 2 YEARS FROM THE END OF THE MONTH IN WHICH THE NOTICE UNDER THE CHAPTER WAS SERVED ON THE ASSESSEE. 10. IN THIS CASE, THE ASSESSMENTS U/S 158BC OF THE ACT WAS COMPLETED I.E. SEARCHED PERSONS ON 30.01.2001 AND THE A.O. HA D ISSUED THE NOTICE U/S 158BD OF THE ACT ON 15.10.2010 AFTER 9 YEARS 9 MONTHS OF COMPLETION OF ASSESSMENTS U/S 158BC. HONBLE PUNJAB AND HARYANA HIGH COURT [2012] 20 TAXMANN.COM 575 (PUNJAB & HARYANA) HELD THAT NOTICE UNDER SECTION 158 BD NECESSARILY HAS TO BE INITIATED BEFORE COMPL ETION OF THE BLOCK ASSESSMENTS. FOR READY REFERENCE WE REPRODUCE RELEV ANT PART OF THE HONBLE HIGH COURT ORDER AS UNDER: 7. SECTION 158BE OF THE ACT PRESCRIBES THE TIME LIMIT FOR FRAMING OF ASSESSMENTS UNDER SECTIONS 158BC AND 158BD OF THE ACT. THE ASSESSING OFFICER OF THE PERSON AGAINST WHOM ACTION UNDER SECTION 132 OR 132A OF THE ACT HAS BEE N TAKEN, IS THE ASSESSING OFFICER WHO INITIATES THE PROCEEDINGS UNDER SECTION 158BD OF TH E ACT BY RECORDING SATISFACTION THAT ANY UNDISCLOSED INCOME BELONGS TO SUCH OTHER PERSON SO AS TO TAKE ACTION UNDER SECTION 158BD OF THE ACT AGAINST THAT PERSON. THE ACT NOWHERE SPECIF ICALLY PRESCRIBES ANY TIME LIMIT OR LIMITATION FOR INITIATION OF PROCEEDINGS UNDER SECT ION 158BD OF THE ACT OR FOR RECORDING OF SATISFACTION BEFORE TAKING ACTION UNDER THAT PROVIS ION. THE PLAIN AND REASONABLE CONSTRUCTION THAT CAN BE PLACED ON THE AFORESAID PROVISION WOULD BE THAT THE RECORDING OF SATISFACTION FOR TAKING ACTION AGAINST ANY OTHER PERSON UNDER SECTIO N 158BD OF THE ACT HAS TO BE BETWEEN INITIATION OF PROCEEDINGS UNDER SECTION 158BC AND B EFORE COMPLETION OF BLOCK ASSESSMENT UNDER SECTION 158BC OF THE ACT IN THE CASE OF THE P ERSON SEARCHED. IT WOULD, THUS, MEANS THAT THE ACTION CONTEMPLATED UNDER SECTION 158BD OF THE ACT AGAINST A THIRD PARTY TO A SEARCH, IS NECESSARILY TO BE DURING THE COURSE OF BLOCK ASSESS MENT PROCEEDINGS UNDER SECTION 158BC OF THE SEARCHED PERSON. IT CANNOT BE AFTER THE CONCLUS ION OF THE SAME AS THERE IS NO OCCASION FOR AN ASSESSING OFFICER TO EXAMINE THE SEIZED MATERIAL OR DOCUMENTS OF THE SEARCHED PERSON WHEN THE BLOCK ASSESSMENT PROCEEDINGS HAVE CONCLUDE D AND NO OTHER PROCEEDINGS ARE PENDING BEFORE HIM. IF ANY OTHER TIME LIMIT IS READ IN THE PROVISIONS/STATUTE, IT SHALL LEAD TO ANOMALY AND WOULD BE ARBITRARY AND UNREASONABLE. IT COULD NOT BE READ IN THE PROVISION THAT WHERE BLOCK ASSESSMENT UNDER SECTION 158BC OF THE A CT IN THE CASE OF AN ASSESSEE AGAINST IT(SS)A NOS.2&3/VIZAG/2014 ST. MARYS EDUCATIONAL SOCIETY, KAKINADA 12 WHOM ACTION UNDER SECTION 132 OR 132A OF THE ACT HA D BEEN CARRIED OUT IS FINALIZED, THE REVENUE CAN TAKE ACTION AT ANY TIME IN THE ABSENCE OF ANY SPECIFIC LIMITATION PRESCRIBED IN THE STATUTE. A CONSTRUCTION WHICH LEADS TO SUCH AN ANOMALY SHOULD BE AVOIDED. APPLYING THE DECISION OF HONBLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE LAW CITED THE A.O. SHOULD HAVE ISSUED THE NOTICE U/S 158BD OF THE ACT BEFORE 30.1.2001 AND COMPLETED THE BLOCK AS SESSMENT U/S 158BD OF THE ACT BEFORE 31.01.2003 AS PER THE TIME LIMIT PROVIDED U/S 158BE OF THE ACT. BY ANY REASONING THE ISSUE OF NO TICE AFTER 9 YEARS AND 9 MONTHS OF COMPLETION OF ASSESSMENTS OF SEARCHED P ARTY CONSIDERED TO BE UNREASONABLE AND CANNOT BE CONSIDERED TO BE CONT EMPORANEOUS TO THE ASSESSMENT PROCEEDINGS. EVEN AFTER PRONOUNCEME NT OF THE ORDER BY THE HONBLE ITAT, VISAKHAPATNAM, THE NOTICE U/S 158 BD OF THE ACT WAS ISSUED AFTER 1 YEAR 4 MONTHS. HONBLE DELHI HIGH CO URT IN BHARAT BHUSHAN JAIN AND OTHER (SUPRA) HELD THAT RECORDING OF SATISFACTION AFTER MORE THAN 1 YEAR A CANNOT BE CONSIDERED TO BE CONTE MPORANEOUS TO ASSESSMENT PROCEEDINGS. FOR READY REFERENCE, WE EX TRACT THE RELEVANT PARAGRAPH OF THE HONBLE DELHI HIGH COURT AS UNDER: 6. HAVING REGARD TO THE INTENT OF THE SUPREME COUR T IN PARA 44 OF THE CALCUTTA KNITWEARS (SUPRA), WHERE IT WAS INDICATED THAT THE REVENUE HAS TO BE VIGILANT IN ISSUING NOTICE TO THE THIRD PARTY UNDER S. 158BD, IMMEDIATELY AFTER THE COMPLETION OF ASSESSMENT OF T HE SEARCHED PERSON THIS COURT IS OF THE OPINION THAT A DELAY RANGING B ETWEEN 10 MONTHS AND 1 YEARS CANNOT BE CONSIDERED CONTEMPORANEOUS TO ASS ESSMENT PROCEEDINGS. WE ARE OF THE OPINION THAT NOTICES WE RE NOT ISSUED IN CONFORMITY WITH THE REQUIREMENTS OF S. 158BD AND WE RE UNDULY DELAYED. THE APPEALS OF THE REVENUE ACCORDINGLY FAIL AND ARE DISMISSED. IT(SS)A NOS.2&3/VIZAG/2014 ST. MARYS EDUCATIONAL SOCIETY, KAKINADA 13 11. IN THIS CASE THE NOTICE UNDER SECTION 158 BD WA S ISSUED AFTER 9 YEARS AND 9 MONTHS OF COMPLETION OF BLOCK ASSESSMEN T IN THE CASE OF SEARCHED PERSON. EVEN IF THE TIME LIMIT IS CONSIDER ED AFTER THE RENDERING THE DECISION OF THE HONBLE ITAT THE AO TOOK MORE T HAN 1 YEAR FOUR MONTHS FROM THE DATE OF THE ORDER OF THE TRIBUNAL. HOWEVER THE TIME LIMIT HAS TO BE CONSIDERED NOT FROM THE DATE OF THE ORDERS PASSED BY THE ITAT, BUT TIME LIMIT STARTS FROM BLOCK ASSESSMENT O RDERS PASSED BY THE AO IN THE CASE OF SEARCHED PERSON. HENCE THE FACTS OF THE ASSESSEES CASE IS SQUARELY COVERED BY THE ORDER OF THE DELHI HIGH COURT, AS WELL AS THE DECISION OF HONBLE HIGH COURT OF PUNJAB AND HA RYANA CITED (SUPRA ). THE LD. DR DID NOT BRING ANY OTHER ORDER/ JUDGEMENT TO CONTROVERT THE DECISION CITED. THEREFORE WE HOLD THAT NOTICE ISSUE D U/S 158BD IS BEYOND THE TIME LIMIT PRESCRIBED UNDER THE ACT AND THE S AME CANNOT BE VALID. ACCORDINGLY WE QUASH THE NOTICE ISSUED U/S 158BD OF THE ACT AND ANNUL THE ASSESSMENT MADE U/S 158BD, AND ALLOW THE APPEAL OF THE ASSESSEE. SINCE WE HAVE QUASHED THE NOTICE U/S 158BD OF THE ACT, WE CONSIDER IT IS NOT NECESSARY TO ADJUDICATE THE OTHE R GROUNDS RAISED IN THE APPEAL OF THE ASSESSEE. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. IT(SS)A NOS.2&3/VIZAG/2014 ST. MARYS EDUCATIONAL SOCIETY, KAKINADA 14 IT SS(A) 3/VIZAG/2014 : 12. THIS IS AN APPEAL FILED BY THE REVENUE ON MERI TS. IN ASSESSEES APPEAL, WE HAVE QUASHED THE NOTICE U/S 158BD OF THE ACT HOLDING THAT THE NOTICE IS NOT VALID AND ANNULLED THE ASSESSMENT MADE U/S 158BD. THEREFORE, WE DO NOT CONSIDER IT NECESSARY TO ADJUD ICATE ON MERITS AND ACCORDINGLY DISMISS THE APPEAL OF THE REVENUE. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN IT(SS)A NO.2/VIZAG/2014 IS ALLOWED AND THE APPEAL FILED BY THE REVENUE IN IT(SS) NO.3/VIZAG/2014 IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 6 TH OCT17. SD/- SD/- ( . ) ( . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 06.10.2017 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT ST. MARYS EDUCATIONAL SOCIETY, D.NO.1-36, SARPAVARAM JUNCTION, KAKINADA 2. / THE RESPONDENT THE DCIT, CIRCLE-1, KAKINADA 3. + / CIT, RAJAHMUNDRY 4. + / THE PRINCIPAL CIT-2, VISAKHAPATNAM 5. + ( ) / THE CIT (A), VISAKHAPATNAM 6. # . , . , # / DR, ITAT, VISAKHAPATNAM 7 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM