DCIT, Trivandrum V. Anil Das R., Trivandrum

ITSSA 33/COCH/2007

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7816 (ITAT-COCHIN)
• Duration Of Justice: 4 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 06-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 03-01-2012
• Assessment Year: misc
• Appeal Filed On: 21-06-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: COCH CO NO; VIJAYAPRABHA ITSSA NOS
• Assessee Lawyers: T M SREEDHARAN
• Keywords: Block assessment
• Section: 132

Judgement Text

1 IT(SS)A NOS 30 & 33/COCH/2007 CO NO.41 & 59/COCH/2007 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) & SHRI B.R. BASKARAN (AM) IT(SS)A NO.30/COCH/2007 (BLOCK PERIOD 01-04-1989 TO 27-07-1993) THE DY.CIT, CIR.1(1) VS SUNIL DAS R TRIVANDRUM TC-48/410, PRA 129 POONTHURA PO, PAZHANCHIRA TRIVANDRUM-16 PAN : ADQPR8830G (APPLICANT) (RESPONDENT) C.O. NO.41/COCH/2007 (ARISING OUT OF IT(SS)A NO.30/COCH/2007) (BLOCK PERIOD 01-04-1989 TO 27-07-1993) SUNIL DAS R VS THE DY.CIT, CIR.1(1) TRIVANDRUM TRIVANDRUM (CROSS OBJECTOR) (RESPONDENT) IT(SS)A NO.33/COCH/2007 (BLOCK PERIOD 01-04-1989 TO 27-07-1993) THE DY.CIT, CIR.1(1) VS ANIL DAS R TRIVANDRUM TC-48/4185 POONTHURA PO, AMBALATHARA TRIVANDRUM PAN : AEXPR5691C (APPLICANT) (RESPONDENT) C.O. NO.59/COCH/2007 (ARISING OUT OF IT(SS)A NO.33/COCH/2007) (BLOCK PERIOD 01-04-1989 TO 27-07-1993) ANIL DAS R VS THE DY.CIT, CIR.1(1) TRIVANDRUM TRIVANDRUM (CROSS OBJECTOR) (RESPONDENT) ASSESSEE BY : SHRI T.M. SREEDHARAN REVENUE BY : MS. VIJAYAPRABHA 2 IT(SS)A NOS 30 & 33/COCH/2007 CO NO.41 & 59/COCH/2007 DATE OF HEARING : 04-01-2012 DATE OF PRONOUNCEMENT : -01-2012 O R D E R PER N.R.S. GANESAN (JM) THE REVENUE HAS FILED THE APPEALS IN RESPECT OF TW O DIFFERENT ASSESSES AGAINST THE INDEPENDENT ORDERS OF THE COMMISSIONER OF INCOME-TAX (A)-I, TRIVANDRUM DATED 08-02- 2007 FOR THE BLOCK PERIOD 01-04-1989 TO 27-07-1993 AND T HE ASSESSES HAVE FILED THE CROSS OBJECTIONS AGAINST THE VERY SAME ORDER OF THE COMMISSIONER OF INCOME-TAX(A). THEREFORE, WE HEARD BOTH THE APPEALS AND THE CROSS OBJECTIONS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2. THE ISSUE RAISED IN THE CROSS OBJECTIONS GO TO T HE ROOT OF THE ASSESSMENT I.E. WITH REGARD TO THE VALIDITY OF THE BLOCK ASSESSMENT ORDER . THEREFORE, WE TAKE UP THE CROSS OBJECTIONS FIRST. 3. SHRI T.M. SREEDHARAN, THE LD.SENIOR COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE WAS A SEARCH ON 27-07-1999 IN THE CASE OF SHRI M REGH UNATHAN AND THE BLOCK ASSESSMENT WAS COMPLETED IN RESPECT OF THE PERSON S EARCHED ON 31-07-2001. NOTICE U/S 158BD WERE ISSUED IN RESPECT OF THE PRESENT ASSESSE S ON 27-09-2004. THE BLOCK ASSESSMENT WAS COMPLETED ON 02-02-2007. ACCORDING TO THE LD.SENIOR COUNSEL, THERE WAS A DELAY OF MORE THAN THREE YEARS IN ISSUING THE NOTICE U/S 158BD IN RESPECT OF THE PRESENT ASSESSES AFTER COMPLETION OF THE ASSESSMENT IN RESPECT OF THE PERSON SEARCHED AND THERE WAS MORE THAN SEVEN YEARS FOR COMPLETING THE BLOCK ASSESSMENT FROM THE DATE OF SEARCH. REFERRING TO THE JUDGMENT OF THE P UNJAB & HARYANA HIGH COURT IN COMMISSIONER OF INCOME-TAX VS PRAVIN FABRICS 198 TAX MAN 493, THE LD. SENIOR COUNSEL SUBMITTED THAT THE NOTICES ISSUED AFTER EXPIRY OF T HREE YEARS ARE BARRED BY LIMITATION. 3 IT(SS)A NOS 30 & 33/COCH/2007 CO NO.41 & 59/COCH/2007 4. MS. VIJAYAPRABHA, THE LD.DR SUBMITTED THAT NO TI ME LIMIT IS PRESCRIBED FOR ISSUING NOTICE U/S 158BD OF THE ACT IN RESPECT OF PERSON O THER THAN SEARCHED PERSON. THEREFORE, SO LONG AS THE DELAY IN ISSUING THE NOTI CE CANNOT BE ATTRIBUTED TO THE ASSESSING OFFICER, THE ASSESSMENT ORDER PASSED U/S 158BD IS VALID. THEREFORE, ACCORDING TO THE LD.DR, THE ASSESSING OFFICER HAS VALIDLY PAS SED THE ASSESSMENT ORDERS AFTER ISSUING NOTICE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE BLOCK ASSE SSMENT PROCEEDINGS IN THE CASE OF SHRI M REGHUNTHAN WAS COMPLETED U/S 158BC ON 31-07-2001. NO DOUBT, THERE IS NO PROVISION IN THE INCOME-TAX ACT FIXING THE TIME LIMI T FOR ISSUING NOTICE U/S 158BD OF THE ACT IN RESPECT OF THE PERSON OTHER THAN SEARCHED, B UT, IT DOES NOT MEAN THAT THE ASSESSING OFFICER CAN ISSUE THE NOTICE AT HIS SWEET WILL AT ANY TIME. FINALITY OF THE PROCEEDINGS CANNOT BE SEEN SO LIGHTLY. SECTION 132 (9A) ENABLES THE AUTHORIZED OFFICER TO EXAMINE THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS O R ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES AND IF IT IS NOT RELATAB LE TO ANY PERSON AGAINST WHOM SEARCH WAS CONDUCTED, HE HAS TO HAND OVER THE SAME TO THE CONCERNED ASSESSING OFFICER HAVING JURISDICTION OVER SUCH PERSON WITHIN THE PERIOD OF 60 DAYS FROM THE DATE ON WHICH THE LAST AUTHORIZATION FOR THE SEARCH WAS EXECUTED. TH EREFORE, U/S 132(9A) OF THE ACT, THE OFFICER, WHO HAS CONDUCTED THE SEARCH HAS TO EXAMIN E THE DOCUMENTS WITHIN 60 DAYS AND IF IT DOES NOT RELATE TO THE PERSON AGAINST WHO M SEARCH WAS CONDUCTED, HE HAS TO HANDOVER THE SAME TO THE CONCERNED OFFICER, WHO IS HAVING JURISDICTION OVER THE PERSON AGAINST WHOM THE MATERIAL WAS FOUND. THIS IS THE F IRST AVAILABLE OPPORTUNITY TO EXAMINE THE SEIZED MATERIAL. MOREOVER, IN THE COURSE OF BL OCK ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS THOROUGHLY EXAMINED ALL THE D OCUMENTS. THEREFORE, IT IS FOR THE 4 IT(SS)A NOS 30 & 33/COCH/2007 CO NO.41 & 59/COCH/2007 ASSESSING OFFICER TO ISSUE THE NOTICE WITHIN THE RE ASONABLE TIME. THEREFORE, EVEN THOUGH NO TIME LIMIT FOR ISSUING NOTICE U/S 158BD W AS PRESCRIBED UNDER THE SCHEME OF THE ACT, THE ASSESSING OFFICER HAS TO ISSUE THE NOT ICE WITHIN A REASONABLE PERIOD OF TIME AFTER EXPIRY OF 60 DAYS FROM THE DATE OF LAST AUTHO RIZATION FOR SEARCH WAS EXECUTED. IN THIS CASE, ADMITTEDLY, THE SEARCH WAS CONDUCTED ON 27-07-1999 AND THE ASSESSMENT PROCEEDINGS IN THE CASE OF THE PERSON WHO WAS SEARC HED WAS COMPLETED ON 31-07- 2001. THEREFORE, WE ARE OF THE OPINION THAT THE IS SUE OF NOTICE U/S 158BD ON 27-09- 2004 AFTER EXPIRY OF THREE YEARS IS BEYOND THE REAS ONABLE PERIOD. WE FIND THAT THIS ISSUE WAS EXAMINED BY A FIVE MEMBER BENCH OF THIS T RIBUNAL AT DELHI IN MANOJ AGARWAL VS DCIT (2008) 113 ITD 377 (DEL)(SB). THE SPECIAL BENCH OF THE TRIBUNAL EXAMINED THE SCHEME OF THE ACT AND OBSERVED ON PAGE 481, PARAGRA PH 110 & 111, AS UNDER 110. IT IS CLEAR FROM THE ABOVE THAT THE PROVISIONS OF SECTION 158BD ARE THUS INEXTRICABLY INTERLINKED AND INTERTWINED WITH SECTION 158BC AND THEY ARE LIKE SIA MESE TWINS. IN THE CIRCUMSTANCE, IT IS NOT POSSIBLE TO VIEW SECTION 158BD IN ISOLATION AND DE HORS SECTION 158BC AS THA T WOULD MILITATE AGAINST THE INTENTION BEHIND THE ENACTMENT OF CHAPTER XIV-B TO PROVIDE FOR A COMPLETE CODE FOR ASS ESSMENT OF UNDISCLOSED INCOME AS DIFFERENT FROM THE ASSESSM ENT OF NORMAL INCOME IN REGULAR ASSESSMENT. THE CONCEPT O F UNDISCLOSED INCOME AS DIFFERENT FROM WHAT WE MAY CA LL AS NORMAL OR REGULAR INCOME IS AT THE VERY CORE OF THIS CHAPTER. 111. IT IS IN THIS CONTEXT THAT WE HAVE TO VIEW THE PROVISIONS OF SECTION 158BD OF THE ACT. IT IS NOT AS IF THE S AID PROVISION CAN BE INVOKED AT THE WHIMS OF THE ASSESSING OFFICER . ON THE OTHER HAND, THE SECTION HAS CERTAIN BUILT IN REQUIR EMENTS WHICH HAVE TO BE SCRUPULOUSLY FOLLOWED AS HELD IN T HE CASE OF MANISH MAHESHWARI (SUPRA) IF AN ATTACK AGAINST AN OR DER UNDER THIS SECTION HAS TO BE REPELLED. THE FIRST P RE-CONDITION IS THAT THE ASSESSING OFFICER EXAMINING THE MATERIA L FOUND AS 5 IT(SS)A NOS 30 & 33/COCH/2007 CO NO.41 & 59/COCH/2007 A RESULT OF SEARCH OR OTHER RELATED PROCEEDINGS AS IN SECTION 132A SHOULD DETERMINE WHETHER THE MATERIAL THROWS U P ANY INCOME WHICH CAN BE TERMED AS UNDISCLOSED. IF SO, HE HAS TO IDENTIFY SUCH UNDISCLOSED INCOME. THE NEXT STEP IS TO DETERMINE TO WHOM SUCH UNDISCLOSED INCOME BELONGS. IT MAY HAPPEN THAT SUCH INCOME MAY NOT BELONG TO THE P ERSON SEARCHED IN RESPECT OF WHOM HE HAS JURISDICTION, IN WHICH EVEN HE HAS NO OTHER OPTION BUT TO GIVE A FINDING T HAT THE UNDISCLOSED INCOME DOES NOT BELONG TO HIS ASSESSEE BUT THAT IT BELONGS TO ANOTHER PERSON WHOM HE HAS TO IDENTIF Y AND DETERMINE. THESE HAVE TO BE POSITIVE FINDINGS FOR THE REASON THAT THE SECTION DOES NOT GIVE ANY ELBOW ROOM FOR T HE ASSESSING OFFICER TO SAY IT MAY BELONG TO A OR TO B OR TO C. HE HAS TO INFER ON THE BASIS OF THE MATERIAL AND EVIDE NCE FOUND THAT SUCH INCOME BELONGS TO A SPECIFIED PERSON AND IDENTIFIED BY HIM. AFTER ARRIVING AT THIS FINDING, HE HAS TO HAND OVER SUCH MATERIAL, DOCUMENTS ETC., TO THE ASS ESSING OFFICER HAVING JURISDICTION OVER THE SAID OTHER PER SON AT THAT MATERIAL POINT OF TIME AND IT IS AT THAT STAGE THE SECOND ASSESSING OFFICER ASSUMES JURISDICTION AT THAT POIN T OF TIME. IF THE ASSESSING OFFICER ASSESSING THE PERSON SEARC HED DOES NOT FIND ANY UNDISCLOSED INCOME AT ALL, OR DOES NOT ARRIVE AT ANY FINDING IN RESPECT OF THE SAME OR HAVING ARRIVE D AT SUCH FINDING DOES NOT HAND OVER THE MATERIAL TO THE SECO ND ASSESSING OFFICER, THE PROVISIONS OF SECTION 158BD DO NOT COME INTO OPERATION AT ALL. THE SPECIAL BENCH AGAIN OBSERVED AS FOLLOWS ON PAGE 484 AT PARAGRAPH 114 & 115: 114. SECTION 158BE PROVIDES FOR TIME LIMIT FOR COMP LETION OF BLOCK ASSESSMENT. IT STIPULATES THAT THE ORDER U NDER SECTION 158BC SHALL BE PASSED WITHIN TWO YEARS FROM THE END OF THE MONTH IN WHICH THE LAST OF THE AUTHORIZATION FOR SEARCH UNDER SECTION 132 WAS EXECUTED OR FOR REQUISITION U NDER SECTION 132A A THE CASE MAY BE AND SO THE ORDER ENV ISAGED UNDER SECTION 158BC HAS NECESSARILY TO BE PASSED WI THIN THIS TIME FRAME SET IN LAW. IF THERE IS A TIME-LIMIT FOR PASSING SUCH ORDER, THERE IS AN IMPLIED TIME LIMIT FOR GIVING A FINDING AS TO 6 IT(SS)A NOS 30 & 33/COCH/2007 CO NO.41 & 59/COCH/2007 THE PERSON TO WHOM THE UNDISCLOSED INCOME BELONGS W HICH UNDER NO CIRCUMSTANCE CAN BE BEYOND THE TIME-LIMIT S ET IN SECTION 158BE. IF THERE IS NO SUCH FINDING GIVEN I N THE ORDER UNDER SECTION 158BC, THE PROVISIONS OF SECTION 158B D STAND OUSTED AT THE EXPIRY OF THE SAID TIME LIMIT FOR THE REASON THAT SUCH A FINDING IS THE VERY BASIS FOR INVOKING SECTIO N 158BD. 115. SECTION 158BD AS SAID EARLIER BEGINS WITH THE EXPRESSION WHERE THE ASSESSING OFFICER IS SATISFIE D AND SO THE VERY SECTION IMPLIES A RECORDING OF SATISFACTIO N. THE SATISFACTION CONTEMPLATED IS A JUDICIOUS SATISFACTI ON AND NOT A SUBJECTIVE SATISFACTION AND UNLESS THE SAME IS RECO RDED IT IS NOT POSSIBLE FOR ANY PERSON TO DISCERN WHETHER THE SATISFACTION MEETS THE REQUIRES OF LAW AT ALL. THE SATISFACTION CAN BE FOUND IN THE ORDER PASSED UNDER SECTION 158B C AND IF NO SUCH ORDER IS PASSED THEN IT WILL HAVE TO BE FOU ND IN THE NOTE HANDING OVER THE MATERIAL SEIZED TO THE ASSESS ING OFFICER ASSESSING THE OTHER PERSON. IN ANY EVENT, IT HAS TO BE IN WRITING AND IN VIEW OF SECTION 158BE, THE SAID R ECORDING HAS TO BE MADE BEFORE THE TIME SET IN SECTION 158BE EXPIRES. AFTER THE SAID DATE, IT IS NOT POSSIBLE TO INVOKE S ECTION 158BD AT ALL. IN VIEW OF THE ABOVE, ISSUE OF NOTICE U/S 158BD AFT ER THREE YEARS FROM THE DATE OF COMPLETION OF THE ASSESSMENT IN RESPECT OF THE PERS ON AGAINST WHOM SEARCH WAS CARRIED OUT IS BARRED BY LIMITATION. A SIMILAR VIEW WAS TAKE N BY HYDERABAD BENCH OF THIS TRIBUNAL IN THE CASE OF DY.CIT, CIR. VS SHRI P VENKATA RAMANA IN ITSSA NO.08/HYD/2010 ORDER DATED 11-02-2011. A SIMILAR VIEW WAS ALSO TAKEN BY TH E GUJARAT HIGH COURT ALSO IN THE CASE OF KHANDUBHAI VASANJI DESAI & ORS VS DCIT (1999 ) 236 ITR 73 (GUJ). THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS ALSO TAKEN A SIMILAR VIEW IN ASSIST.COMMISSIONER OF INCOME- TAX VS SMT. CICY P THOMAS IN ITSS NO.32/COCH/2007 A ND CO NO.37/COCH/2007 ORDER DATED 22-12-2011. 7 IT(SS)A NOS 30 & 33/COCH/2007 CO NO.41 & 59/COCH/2007 7. IN VIEW OF THE ABOVE, IN OUR OPINION, THE BLOCK A SSESSMENT ORDER PASSED AGAINST THE ASSESSEE U/S 158BD IS BARRED BY LIMITATION. ACC ORDINGLY, THE SAME IS QUASHED. 8. IN THE RESULT, THE REVENUE APPEALS ARE DISMISSED AND THE CROSS OBJECTIONS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 06 TH DAY OF JANUARY, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 06 TH JANUARY, 2012 PK/- COPY TO: 1. SHRI ANIL DAS R, TC-48 /4185, VAISHANAVAM, POONTHURA PO, AMBALATHARA, TRIVANDRUM / SHRI SUNIL DAS R, TC 48/410, PRA NO.12 9, POONTHURA PO, PAZHANCHIRA, TRIVANDRUM 2. ASSIST.COMMISSIONER OF INCOME-TAX, CIR.1(1), TRIVA NDRUM 3. THE COMMISSIONER OF INCOME-TAX(A)-I, TRIVANDRUM 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, CO CHIN BENCH