Shri Sumeet Kumar Agarwal, Bhopal V. The ACIT 3(1), Bhopal

ITSSA 36/IND/2012

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7447 (ITAT-INDORE)
• Duration Of Justice: 2 month(s) 21 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2001-2002
• Appeal Filed On: 08-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KESHAVE SAXENA
• Assessee Lawyers: GIRISH AGRAWAL; H P VERMA ASHISH GOYAL
• Keywords: Search and seizure; Validity of assessment; Procedural lapse; Block assessment
• Section: 143(3); 153A; 32; 145; 132; 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER IT(SS)A NOS. 34, 50, 51 & 52/IND/2012 AYS 2001-02, 2004-05, 2005-06 & 2006-07 SACHIN KUMAR AGRAWAL, BHOPAL PAN ABXPA 1996 R :: APPELLANT VS ACIT-3(1), BHOPAL :: RESPONDENT IT(SS)A NOS. 36 & 35/IND/2012 AYS 2001-02 & 2006-07 SUMEET KUMAR AGRAWAL, BHOPAL PAN ABXPA 1997 Q :: APPELLANT VS ACIT-3(1), BHOPAL :: RESPONDENT IT(SS)A NOS. 37, 38 & 39/IND/2012 AYS 2001-02, 2004-05 & 2005-06 SMT. CHANDRAKANTA AGRAWAL, BHOPAL PAN ABXPA 2001 M :: APPELLANT VS ACIT-3(1), BHOPAL :: RESPONDENT 2 IT(SS)A NO. 40/IND/2012 AY 2001-02 SHYAM MANOHAR AGRAWAL HUF, BHOPAL PAN AAOHS 2899 K :: APPELLANT VS ACIT-3(1), BHOPAL :: RESPONDENT IT(SS)A NOS. 41, 42, 43 & 44/IND/2012 AYS 2001-02, 2002-03, 2003-04 & 2004-05 SHYAM MANOHAR AGRAWAL, BHOPAL PAN ABXPA 1999 A :: APPELLANT VS ACIT-3(1), BHOPAL :: RESPONDENT IT(SS)A NOS. 45, 46, 47, 48 & 49/IND/2012 AYS 2001-02, 2002-03, 2003-04, 2004-05 & 2006-07 AMIT KUMAR AGRAWAL, BHOPAL PAN ABXPA 1998 B :: APPELLANT VS ACIT-3(1), BHOPAL :: RESPONDENT APPELLANT S BY S/SHRI H.P. VERMA, ASHISH GOYAL AND GIRISH AGRAWAL RESPONDENT BY SHRI KESHAVE SAXENA 3 DATE OF HEARING 25 .04.2012 DATE OF PRONOUNCEMENT 30 .04.2012 O R D E R PER JOGINDER SINGH , JUDICIAL MEMBER THE ABOVE ASSESSEES ARE AGGRIEVED BY THE IMPUGNED ORDERS DATED 1.11.11, 23.12.11, 12.10.11, 21.10.11, 11.10. 11, 12.10.11, 11.10.11, 24.11.11, 5.12.11,RESPECTIVELY, PASSED B Y THE LEARNED FIRST APPELLATE AUTHORITY, BHOPAL. 2. VIDE LETTER DATED 12 TH APRIL, 2012 THE ASSESEE HAS REAISED A GROUND BEFORE THE BENCH TO THE EFFECT THAT NO NOTIC E U/S 143(2) WAS ISSUED TO THE ASSESSEE WHICH RENDERED THE ORDER PAS SED BY THE AO AS NOT SUSTAINABLE IN LAW. 3. DURING HEARING OF THESE APPEALS, WE HAVE HEARD S /SHRI H.P. VERMA, ASHISH GOYAL AND GIRISH AGRAWAL, LD. COUNSEL FOR THE ASSESSEES AND SHRI KESHAVE SAXENA, LD. CIT/DR ON TH E LEGAL ISSUE OF 143(2) NOTICE. MR. SAXENA SOUGHT ONE DAY TIME TO ASCERTAIN THE FACTUAL POSITION REGARDING ISSUANCE OF NOTICES U/S 143(2) OF THE ACT FROM THE ASSESSING OFFICER. ON 25.4.2012 ITSELF THE LD.CIT DR FURNISHED A LETTER FROM THE AO MENTIONING THAT THE RECORD IS BEING 4 TRACED (COPY AVAILABLE ON RECORD). ON 27.04.2012 T HE LD.CIT DR AGAIN FILED A LETTER DATED 26.04.2012 MENTIONING TH AT NOTICES U/S 143(2) WERE SENT TO THE ASSESSEE FOR ASSESSMENT YEA R 2007-08 BUT NO NOTICES U/S 143(2) WERE FOUND IN THE FILE FOR OT HER ASSESSMENT YEARS AND ARE BEING TRACED. HOWEVER, THE LD. COUNSE L FOR THE ASSESSEE ASSERTED THAT NO SUCH NOTICES WERE ISSUED/ SERVED UPON THE ASSESSEES FOR ANY OF THE ASSESSMENT YEARS UNDER CONSIDERATION. 4. IN THE IMPUGNED APPEALS IDENTICAL GROUND/GROUNDS HAVE BEEN RAISED ON MERIT. THE ASSESSEES BY WAY OF APPLICATIO N HAS FILED LEGAL GROUND CHALLENGING THAT NO NOTICES U/S 143(2) OF T HE ACT WERE ISSUED/SERVED UPON THE ASSESSEES . THE GROUNDS ON M ERIT ARE REPRODUCED HEREUNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED AND WAS NOT JUSTIFIED IN DISMISSING THE APPEAL IN PART AND SUSTAINING THE ASSESSMENT ORDER OF THE LD. AO UNDER THIS APPEAL WHICH IS CONTRARY TO THE MATERIAL ON RECORDS AND PROVISIONS OF THE ACT, UNJUST, BAD IN LAW AND WITHO UT JURISDICTION. SO AS TO BE MORE SPECIFIC, THE AFOREMENTIONED GROUN D WAS REVISED BY THE ASSESSEES VIDE LETTER DATED 12 TH APRIL, 2012 AS UNDER : 5 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED AND WAS NOT JUSTIFIED IN DISMISSING THE APPEAL AND SUSTAINING THE ASSESSMENT ORDER OF THE LD. AO UNDER THIS APPEAL WHICH IS CONTRARY TO THE MATERIAL ON RECORDS AND PROVISIONS OF THE ACT, UNJUST, BAD IN LAW AND WITHO UT JURISDICTION PARTICULARLY WHEN A. NO INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE REVEALING UNDISCLOSED INCOME WAS FOUND DURING THE SEARCH; AND B. IN THE ASSESSMENT OF SEARCHED PERSON, NO SATISFACTION HAS BEEN RECORDED ON THE BASIS OF MATERIAL FOUND DURING THE SEARCH AND BELONGING TO THE ASSESSEE, TO PROCEED AGAINST THE ASSESSEE; AND ALSO C. NO NOTICE U/S 143(2) WAS ISSUED/SERVED ON THE ASSESSEE. SINCE THE LEGAL GROUND HAS BEEN RAISED BY THE ASSE SSEES CHALLENGING THE VALIDITY OF ASSESSMENT SO FRAMED WI THOUT ISSUANCE OF THE NOTICE U/S 143(2) OF THE ACT, WE ARE DUTY BO UND TO TAKE COGNIZANCE OF THE SAME SINCE IT GOES TO THE VERY RO OT OF THE VALIDITY OF ASSESSMENT SO FRAMED. IN VIEW OF THE SETTLED POS ITION OF THE LAW THIS LEGAL GROUND IS ADMITTED. 5. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSEES IS THAT SINCE NO NOTICE U/S 143(2) OF THE ACT WAS ISSUED/SERVED U PON THE ASSESSEES AND NO INCRIMINATING MATERIAL, BELONGING TO THE 6 ASSESSEES, REVEALING UNDISCLOSED INCOME WAS FOUND, DURING SEARCH, THEREFORE, IN THE ABSENCE OF NON-ISSUANCE OF NOTICE U/S 143(2) OF THE ACT, THE ASSESSMENT DESERVE TO BE QUASHED, FOR WHIC H, THE LD. COUNSEL FOR THE ASSESSEES RELIED UPON THE DECISION FROM HONBLE APEX COURT IN THE CASE OF HOTEL BLUE MOON (2010) 18 8 TAXMAN 113 (SC) AND THE DECISION FROM HONBLE JURISDICTIONAL H IGH COURT IN ASHOK ANAND (2011) 17 ITJ 112 (MP). ON THE OTHER HA ND, THE LD. CIT/DR RELIED UPON THE ORDERS OF THE LD. REVENUE AU THORITIES BUT DID NOT CONTROVERT THE ASSERTION OF THE ASSESSEE TH AT THE IMPUGNED ISSUE IS COVERED IN FAVOUR OF THE ASSESSEES BY THE AFORESAID ORDERS. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT SEARCH AND SEIZURE OPERATION U/S 132(1) OF THE ACT WAS CARRIED OUT IN THE CASE OF SHYAM MANOHAR AGRAWAL ON 5.1.2007. THE ASSESSEE IS THE SON OF SHRI SHYAM MANOHAR AGRAWAL. IN THE SEARCH, DOCUMEN TS RELATING TO THE ASSESSEE WERE ALSO FOUND. AFTER RECORDING R EASONS, THE A.O. ISSUED NOTICE U/S 153C. IN RESPONSE, THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2001-02 WAS FILED ON 16.6.2008 VERI FYING TOTAL INCOME AT RS. 70,350/-. THE AO ACCORDINGLY PASSED THE ORDER BY 7 ASSESSING THE TOTAL INCOME AT RS. 23,86,260/-. FEL T AGGRIEVED BY THE ADDITION SO MADE, THE ASSESSEE PREFERRED APPEAL BEF ORE THE LEARNED CIT(A), WHO AFTER HEARING THE LEARNED COUNSEL FOR T HE ASSESSEE, OBSERVED THAT THERE WAS NO ILLEGALITY IN THE ASSESS MENT ORDER AS THE AO HAS RECORDED SATISFACTION U/S 153C OF THE ACT WH ICH IS A CONDITION PRECEDENT. SO FAR AS THE ADDITION OF RS. 2,93,206/- TOWARDS OPENING BALANCE OF CASH IN HAND WAS CONCERN ED, THE CIT(A) FOUND THAT THE ASSESSEE DID NOT SUBMIT ANY EVIDENCE TO SUPPORT ITS CLAIM OF OPENING BALANCE EXCEPT A BALANCE SHEET WH ICH WAS PREPARED AFTER THE SEARCH ACTION, WHICH CANNOT BE T REATED AS RELIABLE EVIDENCE. HE, THEREFORE, TREATED THE SAME AS UNBELIEVABLE EVIDENCE AND ACCORDINGLY CONFIRMED THE ADDITION IN QUESTION. 7. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUN AL. IDENTICALLY, ON THE ISSUANCE OF NON-SERVICE OF NOTI CE U/S 143(2) OF THE ACT, WHICH IS A MANDATORY REQUIREMENT, THIS BEN CH OF THE TRIBUNAL IN THE CASE OF SMT. SUDHA KESARWANI AND OT HERS [IT(SS)A NOS.179/IND/2011 ETC.], VIDE ORDER DATED 26.3.2012, DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEES. THE RELEVANT PORT ION OF THE SAME IS REPRODUCED HEREUNDER: - 8 THIS BUNCH OF 26 APPEALS IS BY DIFFERENT ASSESSEES CHALLENGING THE ORDERS OF THE LEARNED FIRST APPELLATE AUTHORITY, BHOPAL, DATED 13.9.20011, 9.9.2011, 7.9.2011, 12.9.2011 AND 8.9.2011 ON DIFFERENT GROUN DS. 2. DURING HEARING OF THESE APPEALS, THE LEARNED COUNSEL FOR THE ASSESSEE, SHRI H.P. VERMA, ALONG WIT H SHRI GIRISH AGRAWAL, REPRESENTED THESE ASSESSES WHEREAS SHRI KESHAV SAXENA, LEARNED CIT DR AND SHRI ARUN DEWAN, LEARNED SENIOR DR, REPRESENTED THE DEPARTMENT. THE ASSESSEE HAS CHALLENGED THE IMPUGNE D ORDERS ON TWO COUNTS I.E. SINCE NO NOTICE U/S 143(2 ) OF THE ACT WAS ISSUED AND SERVED TO THE ASSESSEE BY THE LEARNED ASSESSING OFFICER, THEREFORE, THE ASSESSMEN T COMPLETED UNDER SECTION 153C/143(3) OF THE ACT, IS CONTRARY TO THE PROVISIONS OF THE ACT AND SECONDLY, SINCE THE ASSESSMENT OF THE SEARCHED PERSON (AS PER THE DEPARTMENT) SHRI PRADEEP KESHARWANI WAS COMPLETED U/S 153A ON 29.3.2006, NOTICE U/S 153C IS ILLEGAL, INVALID AND UNTENABLE IN LAW AS THE ORDER U/S 153C WAS PASSED WITHOUT SERVICE OF NOTICE UNDER SECTION 143( 2) OF THE ACT FOR WHICH THE LEARNED COUNSEL CONTENDED THAT SINCE THERE WAS NO WARRANT OF AUTHORISATION WHICH H AS BEEN ISSUED AND EXECUTED IN THE NAME OF SHRI PRADEEP KESHARWANI, ASSUMPTION OF JURISDICTION BY THE LEARN ED ASSESSING OFFICER TO FRAME ASSESSMENT U/S 153A/143( 3) OF THE ACT WAS AB INITIO VOID AND UNLAWFUL. IT WAS F URTHER SUBMITTED THAT THE IMPUGNED ISSUE IS COVERED BY THE DECISION OF THE JABALPUR BENCH OF THE TRIBUNAL (ITA NO. 91-93 AND 96/JAB/2007 DATED 26.4.2007 AND THE DECISION OF THE INDORE BENCH OF THE TRIBUNAL (ITA NO .90, 94 AND 95/JAB/2007) IN THE CASE OF DCIT VS. SHRI PRADEEP KESARWANI. A PLEA WAS ALSO RAISED THAT IN V IEW OF THE DECISION FROM HONBLE APEX COURT IN THE CASE OF HOTEL BLUE MOON (2010) 188 TAXMAN 113 (SC), ASHOK ANAND (2011) 17 ITJ 112 (MP), RAJAT JEWELLERS PRIVAT E LIMITED (2009) 12 ITJ 80 (INDORE), G.M. INFRASTRUCT URE (2010) 14 ITJ 623 (INDORE), SHRIKANT RATHI (2012) 19 ITJ 307 (INDORE) AND THE RATIO LAID DOWN IN KHANDOOBHAI VASANTJI DESAI; 236 ITR 73 (GUJ) AND IN THE ABSENCE OF SERVICE OF SUCH NOTICE, NO ADDITION CAN BE MADE. TH E LEARNED COUNSEL FOR THE ASSESSEE ALSO RELIED ON THE 9 DECISION FROM HONBLE APEX COURT IN HOTEL BLUE MOONS PRIVATE LIMITED. 2.1 ON THE OTHER HAND, THE LEARNED CIT DR FAIRLY ADMITTED THAT NO WARRANT OF AUTHORISATION WAS ISSUED IN THE NAME OF SHRI PRADEEP KESHARWANI BUT STILL THERE IS NO RESTRICTION TO COVER THE IMPUGNED PERSONS AND THE S EARCH WAS ARGUED TO BE VALID. RELIANCE WAS PLACED UPON TH E DECISION IN PURANMAL VS. DIT (93 ITR 505) (SC). A PL EA WAS ALSO RAISED THAT EVEN IF INVOCATION OF SECTION 153A IS INVALID, STILL THE MATERIAL CAN BE USED AGAINST THE PRESENT ASSESSES. THE LEARNED CIT DR ALSO TOOK THE PLEA THA T THE DECISION IN THE CASE OF HOTEL BLUE MOON WAS RENDERED IN THE CONTEXT OF ASSESSMENT U/S 158BC AND NOT IN THE CONTEXT OF ASSESSMENT FRAMED U/S 153C OF THE ACT, A S SECTION 153BC FALLS WITHIN DIFFERENT CHAPTER OF THE ACT WHICH CHAPTER XIVB. IT WAS FURTHER PLEADED THAT IN THE LANGUAGE OF SECTION 153A/153C OF THE ACT, NO NOTICE UNDER SECTION 143(2) IS REQUIRED TO BE ISSUED PRIOR TO FRAMING THE ASSESSMENT. 2.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACT S, IN BRIEF, ARE THAT A SEARCH AND SEIZURE ACTION U/S 132 (1) OF THE INCOME TAX ACT, 1961 WAS CONDUCTED IN SAHU GROUP OF CASES ON 10.12.2003. THE STAND OF THE REVENUE I S THAT SOME INCRIMINATING DOCUMENTS WERE FOUND INDICATING INVOLVEMENT OF THE PRESENT ASSESSES. THE LEARNED ASSESSING OFFICER OF THE PRESENT ASSESSEES CLAIMED TO HAVE RECEIVED INFORMATION THAT THERE WAS SOME MATERI AL, PRIMA FACIE EVIDENCING EVASION OF TAXES, WAS FOUND DURING THE COURSE OF SEARCH OF SAHU GROUP, RELATING TO PRESENT ASSESSEES. ON THE BASIS OF THIS INFORMATION , THE ASSESSING OFFICER ISSUED NOTICE U/S 153A READ WITH SECTION 153C OF THE ACT. IN RESPONSE TO THIS NOTIC E, THE ASSESSEE (MRS. SUDHA KESARWANI) FURNISHED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 1999-00 VERIFYING T OTAL INCOME AT RS.55,200/-. HOWEVER, THE LEARNED ASSESS ING OFFICER FRAMED THE ASSESSMENT UNDER SECTION 153A REA D WITH 153C/143(3) OF THE ACT ASSESSING THE TOTAL INC OME AT RS.6,43,234/- ON 31.3.2008. THE OTHER CASES WERE A LSO ARGUED TO BE IDENTICAL. ON APPEAL, THE LEARNED CIT( A) AFFIRMED THE STAND OF THE LEARNED ASSESSING OFFICER . THE 10 AGGRIEVED ASSESSEE ARE IN FURTHER APPEAL BEFORE THE TRIBUNAL. 3. ON PERUSAL OF RECORD AND AFTER HEARING THE RIVAL SUBMISSIONS, WE FIND THAT EVEN THE LEARNED CIT(A) VID E LETTER DATED 25.8.2010 RAISED A SPECIFIC QUERY TO THE LEARNED ASSESSING OFFICER ON THE ISSUANCE OF NOTICE U/S 143(2) OF THE ACT AND IN TURN THE ASSESSING OFFICER IN THE REMAND REPORT DATED 23.11.2010 CONFIRMED THAT NO SU CH NOTICES U/S 143(2) OF THE ACT WERE ISSUED TO THE ASSESSEES. HOWEVER, THE LEARNED ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 153C/143(3) WITHOUT ISSUANCE OF NOTICE UNDER SECTION 143(2) OF T HE ACT FOR ALL THE ASSESSMENT YEARS. THE ASSESSEE HAS CHALLENGED THE VALIDITY OF ASSESSMENT ON THE GROUND O F NON-ISSUANCE OF NOTICE U/S 143(2) OF THE ACT. 3.1 IN VIEW OF THE ABOVE FACTS, IF THE LANGUAGE USE D IN EXPLANATION (I) TO SECTION 153A OF THE ACT IS ANALY SED, IT SPECIFICALLY STATES THAT EXPLANATION FOR REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT (I) SAVE AS OTHERWISE, PROVIDED IN THIS SECTION, SECTION 153B AND SECTION 153C, ALL OTHER PROVISIONS OF THIS ACT SHALL APPLY TO THE ASSESSMENT MADE UNDER THIS SECTIO N; (II) SECTION 153A(1) STIPULATES INTER ALIA THAT THE ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH O THER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A MEANING THEREBY THAT THE LEGISLATURE IN ITS WISDOM HAS USED THE WORD SHALL MAKING IT MANDATORY REQUIREMENT TO ISSUE NOTICE UNDER SECTION 143(2) OF THE ACT, SO AS TO COMPLETE THE ASSESSMENT. DURING HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE CLAIMED THAT THE IMPUGNED ISSUE IS COVERED BY THE ORDE R OF THE TRIBUNAL IN DCIT VS. SHRI PRADEEP KESHARWANI (ITA NO.90, 94 AND 95/JAB/2007) DATED 15 TH MARCH, 2011, THEREFORE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION OF THE SAID ORDER :- 11 THESE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE CONSOLIDATED ORDER OF CIT(A) DATED 18.01.2007 FOR THE ASSESSMENT YEARS 1998-99 TO 2004 - 05 IN THE MATTER OF ORDER PASSED U/S 153A READ WITH SECTION 143(3) OF THE INCOME-TAX ACT, 1961. 2. COMMON GROUNDS HAVE BEEN TAKEN IN ALL THE THREE YEARS UNDER CONSIDERATION, WHICH READ AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE MER ITS OF THE CASE AND TREATING THE ORDER OF THE AO TO BE AB IN ITIO NULL AND VOID. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THE PROV ISIONS OF SECTION 292B OF THE INCOME-TAX ACT, 1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THE SECT ION OF HON'BLE HIGH COURT OF MADRAS IN THE CASE OF AREVA T & D INDIA LIMITED VS. ACIT CASE NO.2278 OF 2006 (2007) C TR (MAD) 497 WHEREIN IT IS HELD THAT MERE PROCEDURAL IRREGULARITIES WILL NOT MAKE THE ASSESSMENT NULLITY IN LAW. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE ORDER OF THE LD. CIT(A) ON THE ABOVE ISSUES MAY BE SET ASIDE AND THAT OF THE AO BE RESTORED. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. 4. FACTS IN BRIEF ARE THAT SEARCH ACTION U/S 132 WAS INITIATED AGAINST MR.SANTOSH KUMAR SAHU AND M/S. ASHOK TRADERS. HOWEVER, NOTICE U/S 153A WAS ISSUED I N THE NAME OF ASSESSEE AGAINST WHOM NO SEARCH ACTION WAS CARRIED OUT IN PURSUANCE TO WARRANT OF AUTHORIZ ATION ISSUED IN HIS NAME. MAIN PLEA OF THE ASSESSEE WAS TH AT THERE WAS NO WARRANT OF AUTHORIZATION, WHICH HAD BE EN ISSUED AND EXECUTED IN ASSESSEES OWN CASE. ACCORDINGLY, IT WAS PLEADED THAT ASSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER TO FRAME ASSE SSMENT U/S 153A WAS AB INITIO VOID AND UNLAWFUL. 5. AT THE OUTSET, IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE THAT IN CASE OF ASSESSEE SHRI PRADEEP KESHARWANI, AGAINST THE VERY SAME ORDER OF CIT(A) DATED 18 TH JANUARY, 2007, APPEALS WERE FILED BY THE DEPARTMENT IN RESPECT OF ASSESSMENT YEAR 1999- 12 2000, 2000-01, 2001-02 AND 2004-05 AND ON THE SIMILA R FACTS, THE CIT(A) HAS CONCLUDED THAT PROCEEDINGS IN ITIATED U/S 153A WAS AB INITIO NULL AND VOID. AN APPEAL WAS FILED BY THE DEPARTMENT AGAINST THIS ORDER OF THE CI T(A) BEFORE THE TRIBUNAL, JABALPUR BENCH AND THE JABALPUR BENCH VIDE ORDER DATED 26.4.2007 DISMISSED ALL THE FO UR APPEALS OF THE REVENUE. HE, ACCORDINGLY, PLEADED THA T THE ISSUE IN QUESTION IS SQUARELY COVERED BY THE ORD ER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSM ENT YEARS 1999-2000 TO 2001-02 AND 2004-05. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND ALSO ORDER OF THE TRIBUNAL DATED 26.4.2007 IN ASSESSEES OWN CASE IN RESPECT OF FOUR ASSESSMENT YEARS, WHICH WAS ALSO DECIDED IN THE SAME BUNCH OF APPEAL BY THE LD. CIT(A) VIDE ORDER DATED 18 TH JANUARY, 2007. THERE IS NO DISPUTE WITH REGARD TO THE FACTUAL POSITION THAT NO SEARCH WAS CARRIED OUT AT ASSESSEES PREMISES IN PURSUANCE OF AUTHORIZATION ISSUED IN THE NAME OF THE ASSESSEE. IT IS ALSO CLEAR FROM THE ORDER OF THE CIT(A) THAT IN PUR SUANCE OF THE LEGAL OBJECTION OF THE ASSESSEE FOR FRAMING ASSESSMENT U/S 153A, REPORT WAS SOUGHT FROM THE AO, WHICH HE FILED VIDE LETTER DATED 29.12.2006. IN THE RE PLY, THE AO HAS STATED THAT THE ASSESSEE IN RESPONSE TO THE NOTICE U/S 153A, DID NOT FILE ANY OBJECTION AND IN V IEW OF THIS FACT, THE OBJECTION NOW RAISED DESERVES TO BE REJECTED. IT WAS ALSO ADMITTED THAT WARRANT OF AUTHORIZATION IN PURSUANCE TO WHICH HIS RESIDENCE W AS COVERED WAS IN THE NAMES OF MR. SANTOSH KUMAR SAHU AND M/S. ASHOK TRADERS AND DURING THE COURSE OF THIS SEARCH ACTION, INCRIMINATING DOCUMENTS LIKE BANK PA SS BOOK AND CASH WERE SEIZED. THE LD. CIT(A) HAS CONSIDERED THE COMMENTS OF THE AO. THE TRIBUNAL IN IT S ORDER DATED 26.4.2007 AFTER ELABORATELY DISCUSSING THE PROVISIONS OF SECTION 153A HELD AS UNDER :- SINCE LANGUAGE OF THE PROVISION IS VERY CLEAR WHICH MANDATES THAT NOTICE UNDER THIS SECTION CAN BE ISSUE D TO SUCH PERSON IN WHOSE CASE SEARCH IS INITIATED U/S 1 32 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY OTHER ASSE TS ARE REQUISITIONED U/S 132A AFTER THE 31 ST DAY OF MAY, 2003, AND UNDISPUTEDLY NEITHER ANY SEARCH ACTION U/S 132 HAS BEEN AUTHORIZED OR CONDUCTED IN THIS CASE NOR 13 BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY OTHER ASSE TS ARE REQUISITIONED U/S 132A AT ALL AFTER THE STIPULAT ED DATE, THEREFORE, I AM OF THE CONSIDERED VIEW THAT NE ITHER ANY NOTICE COULD BE ISSUED UNDER THIS SECTION NOR ASSESSMENT BE FRAMED U/S 153A OF THE INCOME-TAX ACT, 1961, IN VIEW OF FACTS, CIRCUMSTANCES AND DISCUSSIO NS AS HELD IN THE EARLIER PARAGRAPHS. SO THE ACTION OF THE AO IN THIS REGARD IS UNWARRANTED, UNCALLED FOR AND BAD IN L AW, WHICH HAS RIGHTLY BEEN HELD TO BE AB INITIO VOID BY LD. CIT(A). WHILE CONCURRING WITH HIS FINDINGS AND CONCL USION IN VIEW OF SPECIFIC PROVISION IN THIS REGARD AND INTERPRETATIONS AS GIVEN BY VARIOUS COURTS, I UPHOL D THE ACTION OF THE LD. CIT(A) AND DISMISS ALL THE APPEALS OF THE REVENUE. 7. THE FACTS IN ALL THE THREE ASSESSMENT YEARS UNDER CONSIDERATION, ARE ALSO FOUND TO BE PARI-MATERIA WITH THE FACTS OF ASSESSMENT YEAR 1999-2000 TO 2001-02 AND 2004-05, WHICH HAS BEEN DEALT WITH BY THE TRIBUNAL I N ITS ORDER AND HAS BEEN NARRATED IN PARAS 2, 3, 4 & 5 OF HIS ORDER, WHICH READS AS UNDER :- 2. THESE APPEALS ARISE OUT OF THE CONSOLIDATED ORDER WERE HEARD TOGETHER AND INVOLVE SAME FACTS AND SIMILAR ISSUE, HENCE, BEING DISPOSED OFF BY SINGLE ORDER FOR THE SAKE OF CONVENIENCE. 3. BEFORE LD. CIT(A), IN ALL THESE CASES, A BASIC OBJECTION WAS RAISED VIZ. THAT THE NOTICES ISSUED U /S 153A WAS VOID OF JURISDICTION AND HENCE THE IMPUGNED ORDERS SO PASSED ARE AB INITIO NULL AND VOID FOR TH E REASON THAT NO SEARCH ACTION HAD BEEN AUTHORIZED IN T HE CASE OF THE ASSESSEE. NOTICE U/S 153A CAN ONLY BE I SSUED IN A CASE WHERE ACTION HAS BEEN CARRIED OUT IN PURSU ANT TO WARRANT OF AUTHORIZATION ISSUED IN THAT CASE IT I S STATED BEFORE THE FIRST APPELLATE AUTHORITY THAT THERE WAS NO WARRANT OF AUTHORIZATION WHICH HAD BEEN ISSUED AND EXECUTED IN THE ASSESSEES OWN CASE. A COPY OF THIS PRELIMINARY OBJECTION WAS GIVEN TO THE AO FOR HIS COMMENTS, WHICH HE FILED VIDE LETTER DATED 29.12.06. IN REPLY, THE AO HAS STATED THAT THE ASSESSEE IN RESPO NSE TO THE NOTICE U/S 153A DID NOT FILE ANY OBJECTION, AND IN VIEW OF THIS FACT, THE OBJECTION NOW RAISED DESERVE S TO BE REJECTED. FURTHER THE RESIDENTIAL PREMISES OF THE AS SESSEE 14 HAD BEEN COVERED UNDER A SEARCH ACTION BUT AT THE SAM E TIME HAS ADMITTED THE WARRANT OF AUTHORIZATION IN PURSUANCE TO WHICH HIS RESIDENCE WAS COVERED WAS IN THE NAMES OF MR. SANTOSH KUMAR SAHU & M/S. ASHOK TRADERS AND DURING THE COURSE OF THIS SEARCH ACTION INCRIMINATING DOCUMENT LIKE BANK PASS BOOKS AND CASH WERE SEIZED. FURTHER IN PARA 6 HE HAS CONCLUDED THAT IN VIEW OF THESE FACTS, THE PROCEEDINGS U/S 153A MAY B E HELD TO BE VALIDLY INITIATED. 4. IN ORDER TO COUNTER THE COMMENTS OF THE AO, THE ASSESSEES COUNSEL HAS STATED BEFORE THE FIRST APPE LLATE AUTHORITY THAT AO HAS SOUGHT TO JUSTIFY ASSUMPTION OF JURISDICTION TO PROCEED AGAINST THE ASSESSEE ON THE GROUND THAT IN RESPONSE TO THE NOTICE ISSUED U/S 15 3A, THE ASSESSEE DID NOT RAISE ANY OBJECTION. IT IS A WE LL SETTLED POSITION OF LAW THAT THE LEGALITY OF AN ORDE R CAN BE QUESTIONED AT ANY STAGE. AS PER THE PROVISIONS OF SEC TION 153A THE PRE-REQUISITE CONDITION TO ASSUME JURISDIC TION TO PROCEED AGAINST A PERSON IS THAT A SEARCH ACTION SHO ULD HAVE BEEN CARRIED OUT IN PURSUANT TO THE WARRANT OF AUTHORIZATION ISSUED IN THE NAME OF THAT PERSON AS T HE WORDS USED FOR ASSUMING JURISDICTION IN THE NAME OF THAT PERSON AS THE WORDS USED FOR ASSUMING JURISDICTION IN THIS SECTION ARE IN THE CASE OF A PERSON WHERE A S EARCH ACTION IS INITIATED. THIS FACT HAS EVEN BEEN CLEAR LY STATED IN SECTION 153B(2)(A) WHICH IS REPRODUCED HEREUNDER : IN THE CASE OF SEARCH, ON THE CONCLUSION OF SEARCH AS RECORDED IN THE LAST PANCHNAMA DRAWN IN RELATION TO A NY PERSON IN WHOSE CASE THE WARRANT OF AUTHORIZATION H AS BEEN ISSUED. 5. THE AO HAS NOT DISPUTED THE FACT THAT NO SEARCH ACTION HAS BEEN INITIATED IN THE CASE OF THE ASSESSE E. HIS RESIDENCE WAS COVERED IN PURSUANT TO THE SEARCH ACTI ON INITIATED IN THE CASE OF MR. SANTOSH KUMAR SAHU AND M/S. ASHOK TRADERS. THE AO THUS HAS WRONGLY ASSUMED JURISDICTION U/S 153A TO PROCEED AGAINST THE ASSESS EE. IT WAS THUS PLEADED THAT THE ORDERS SO PASSED THEREFORE ARE AB INITIO NULL AND VOID. 8. AS THE FACTS ARE COMMON THE ISSUE UNDER DISPUTE IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE REMAINING ASSESSMENT 15 YEARS, COMPRISING IN THE SAME ORDER OF THE CIT(A), W E RESPECTFULLY FOLLOW THE ORDER OF THE TRIBUNAL AND UP HOLD THE ACTION OF THE CIT(A). 9. IN THE RESULT, ALL THE APPEALS OF THE REVENUE ARE DISMISSED. 5. IT IS PERTINENT TO MENTION THAT THE AFORESAID OR DER ALSO PERTAINS TO THE SAME GROUP WHEREIN SEARCH U/S 132 WAS INITIATED AGAINST SHRI SANTOSH KUMAR SAHU AND M/ S ASHOK TRADERS AND SINCE NO NOTICE U/S 153A OF THE ACT WAS ISSUED IN THE NAME OF SHRI PRADEEP KESARWANI AGAINST WHOM NO SEARCH ACTION WAS CARRIED OUT, PURSUANCE OF WARRANT OF AUTHORISATION. THE RESIDENC E OF SHRI KESHARWANI WAS COVERED PURSUANT TO SEARCH ACTIO N INITIATED IN THE CASE OF SHRI SANTOSH KUMAR SAHU. I T WAS HELD THAT THE ASSESSING OFFICER WRONGLY ASSUMED JURISDICTION U/S 153A OF THE ACT TO PROCEED AGAINST THE ASSESSEE. IDENTICALLY, VIDE ORDER DATED 26.4.2007 THE JABALPUR BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. PRADEEP KESHARWANI (ITA NOS. 91 AND 92/JAB/2007) HELD THE ACTION OF THE ASSESSING OFFICER AS UNWARRA NTED AND VOID AB INITIO. CHAPTER XIVB PROVIDES FOR AN ASSESSMENT OF UNDISCLOSED INCOME UNEARTHED AS A RESUL T OF SEARCH WITHOUT AFFECTING THE REGULAR ASSESSMENT MADE OR TO BE MADE. SECTION 158BC OF THE ACT STIPULATES THAT CHAPTER XIVB WOULD HAVE AN APPLICATION WHERE SEARCH HAS BEEN EFFECTED UNDER SECTION 132 OF THE ACT OR ON REQUISITION OF BOOKS OF ACCOUNTS, OTHER DOCUMENTS OR ASSET UNDER SECTION 132A. ISSUANCE OF NOTICE IS MANDATORY AND SUCH NOTICE IS THE VERY FOUNDATION FOR JURISDICTION WHICH IS REQUIRED TO BE ISSUED/SERVED UPON THE ASSESSEE WITHIN THE STIPULATED PERIOD. SECTION 158BC(B) PROVIDES FO R AN INQUIRY AND ASSESSMENT. THE SAID PROVISION READS T HE ASSESSING OFFICER SHALL PROCEED TO DETERMINE THE UNDISCLOSED INCOME OF THE BLOCK PERIOD IN THE MANNER LAID DOWN IN SECTION 158BB AND THE PROVISIONS OF SECTION 1 42 SUB-SECTIONS(2) AND (3) OF SECTION 143, 144 AND 145 SHALL, SO FAR AS MAY BE, APPLY. AN ANALYSIS OF THIS SUB-S ECTION INDICATES THAT AFTER THE RETURN IS FILED, THIS CLAU SE ENABLES THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT BY FOLLOWING THE PROCEDURES LIKE ISSUE OF NOTICE UNDER SECTION 143(2)/142 AND COMPLETE THE ASSESSMENT U/S 143(3). 16 THE ASSESSING OFFICER HAS TO COMPLETE THE ASSESSMEN T UNDER SECTION 143(3) ONLY. IN CASE OF DEFAULT IN NOT FILING THE RETURN OR NOT COMPLYING WITH THE NOTICE U/S 143(2)/142, THE ASSESSING OFFICER IS AUTHORISED TO COMPLETE THE ASSESSMENT EX-PARTE U/S 144. OMISSION ON THE PART OF THE ASSESSING OFFICER TO ISSUE NOTICE U /S 143(2) CANNOT BE A PROCEDURAL IRREGULARITY AND THE SA ME IS NOT CURABLE, THEREFORE, THE REQUIREMENT OF A NOT ICE U/S 143(2) CANNOT BE DISPENSED WITH. IN VIEW OF THESE F ACTS AND THE REQUIREMENT OF THE ACT, THE DECISION FROM H ONBLE APEX COURT IN THE CASE OF ACIT V. HOTEL BLUE MOON ( 2010) 188 TAXMAN 113 (SC) CLEARLY COMES TO THE RESCUE TO T HE ASSESSEE. EVEN OTHERWISE, THE SCHEME OF BLOCK ASSESSMENT HAS BEEN EXPLAINED BY THE CENTRAL BOARD OF DIRECT TAXES IN PARAGRAPH 39.3 OF CIRCULAR NO. 717 DATED 14 TH MARCH, 1995 (1995) 215 ITR 70. FOR THE PURPOSES O F THIS CASE, CLAUSE (E) IS EXTRACTED HEREUNDER :- (E) PROCEDURE FOR MAKING THE ASSESSMENT : (I) THE ASSESSING OFFICER SHALL SERVE A NOTICE ON SUCH PERS ON REQUIRING HIM TO FURNISH WITHIN SUCH TIME, NOT BEIN G LESS THAN 15 DAYS, AS MAY BE SPECIFIED IN THE NOTICE, A R ETURN IN THE PRESCRIBED FORM AND VERIFIED IN THE SAME MANNE R AS A RETURN UNDER CLAUSE (I) OF SUB-SECTION (1) OF S ECTION 142 SETTING FORTH HIS TOTAL INCOME INCLUDING UNDISC LOSED INCOME FOR THE BLOCK PERIOD. THE OFFICER SHALL PRO CEED TO DETERMINE THE UNDISCLOSED INCOME OF THE BLOCK PERIOD A ND THE PROVISIONS OF SECTION 142,SUB-SECTIONS (2) AND (3) OF SECTION 143 AND SECTION 144 SHALL APPLY ACCORDINGLY . SECTION 143(2) IS A MANDATORY PROVISION, WHETHER ONE LOOKS IT FROM STANDPOINT OF A REGULAR ASSESSMENT OR FROM ASSESSMENT UNDER CHAPTER XIVB. THE CASE OF THE ASSESSEE IS FURTHER FORTIFIED BY THE RATIO LAID DOW N BY HONBLE PUNJAB AND HARYANA HIGH COURT IN CIT V. AVI- OIL INDIA PRIVATE LIMITED (2010) 323 ITR 242 (P&H) WHER EIN IT WAS HELD THAT THE DEPARTMENT COULD NOT RESORT T O SECTION 292B OF THE ACT TO VALIDATE THE MANDATORY REQUIREMENT OF SERVICE AS POSTULATED UNDER SECTION 14 3(2) OF THE ACT. THEREFORE, NON-COMPLIANCE WITH SECTION 143(2) OF THE ACT COULD NOT BE TREATED AS A DEFECT IN SERVIC E OF NOTICE WHICH COULD BE CURED UNDER SECTION 292B OF THE ACT. IT IS PERTINENT TO MENTION HERE THAT AGAINST THIS DECISION, THE SPECIAL LEAVE PETITION FILED BY THE 17 DEPARTMENT WAS DISMISSED BY THE HONBLE APEX COURT (2009) 317 ITR (ST.) 1. THE CASE OF THE ASSESSEE IS RATHER ON MORE STRONGER FOOTING BECAUSE EVEN NO NOTICE U/S 143(2) OF THE ACT WAS ISSUED TO THE ASSESSEE WHICH IS AN UNDISPUTED FACT. THE CASE OF THE ASSESSEE IS FURTHE R FORTIFIED BY THE DECISION OF THE HONBLE JURISDICTI ONAL HIGH COURT IN THE CASE OF ASHOK ANAND (2011) 17 ITJ 112 ( MP) WHEREIN THE DECISION OF THE HOTEL BLUE MOON (SUPRA) WAS FOLLOWED. THE CASE OF THE ASSESSEE IS ALSO SHELTERE D BY THE DECISION OF THE TRIBUNAL OF INDORE BENCH IN GM INFRASTRUCTURE (2010) 14 ITJ 623 (INDORE), NARENDRA SINGH (2011) 138 TTJ 615 (AGRA); SHRIKANT RATHI (2012) 19 ITJ 307 (IND), KUBER TOBACCO PRODUCTS (2009) 28 SOT 292 (DEL) (SB), RATIO LAID DOWN IN CEBON INDIA LIMITED (20 09) 184 TAXMAN 290 (P&H). IN VIEW OF THE UNCONTROVERTE D FACT AND THE JUDICIAL PRONOUNCEMENTS DISCUSSED ABOVE, SINCE NO NOTICE U/S 143(2) OF THEM ACT WAS ISSUED T O THE ASSESSEE, THEREFORE, THE ASSESSMENT IS VOID AB INIT IO. 5.1 SINCE WE HAVE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE ON THE ISSUE OF NON-ISSUANCE OF NOTICE U/S 143(2) OF THE ACT, THEREFORE, WE ARE REFRAINING OUR SELVES TO GO INTO ACADEMIC DISCUSSION ON THE LEGALITY OF NOTI CE U/S 153C OF THE ACT. IN THE RESULT, ALL THE APPEALS OF THE ASSESSES ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 26 TH MARCH, 2012. 8. IN THE AFORESAID ORDER THE BENCH, AFTER FOLLOW ING THE DECISIONS FROM HONBLE APEX COURT IN HOTEL BLUE MOON(2010) 18 8 TAXMAN 113(SC) , VARIOUS HIGH COURTS INCLUDING HONBLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF ASHOK ANAND (2011) 17 ITJ 112 (MP), THE SUM AND SUBSTANCE OF WHICH ARE THAT ISSUANCE OF NOTICE U/S 143(2) OF THE ACT IS A MANDATORY REQUIREMENT, CONCLUDED IN TH E FAVOUR OF THE 18 ASSESSEE. CIRCULAR NO.717 DATE 14 TH MARCH,1995 (215 ITR 70) WAS ALSO CONSIDERED . HOWEVER, FACTUAL POSITION REGARDING ISSUANCE AND SERVICE OF NOTICES U/S143(2) OF ACT HAS NEITHER BEEN DISCUSSED BY THE AO NOR BY THE CIT(A). HOWEVER, THIS ISSUE WAS RAISED BEFO RE US FOR THE FIRST TIME BY WAY OF ADDITIONAL GROUND. THE POSITION IS STILL CLOUDY AS IS EVIDENT FROM LETTERS DT. 25 TH AND 26 TH APRIL, 2012 FILED BY THE LD.CIT DR. IT IS ALSO A FACT THAT THIS LEGAL GROUND WAS NO T RAISED BY THE ASSESSEE EITHER BEFORE THE ASSESSING OFFICER OR BEF ORE THE LD.CIT(A) OR IN THE ORIGINAL GROUNDS FILED BEFORE THE TRIBUNA L, BUT HAS BEEN RAISED FIRST TIME BEFORE THIS TRIBUNAL BY WAY OF AD DITIONAL GROUND. HOWEVER, MANDATORY REQUIREMENT OF ISSUE OF NOTICE U /S 143(2) IS A PURE LEGAL ISSUE, IT CAN BE RAISED EVEN BEFORE TRIB UNAL FOR THE FIRST TIME, THEREFORE, IN THE INTEREST OF JUSTICE, WE RE MAND THESE APPEALS TO THE FILE OF THE LD. AO FOR FRESH ADJUDICATION AF TER ASCERTAINING FACTS FROM THE RECORD AND DECIDE IN THE LIGHT OF REASONIN G/DECISIONS MENTIONED IN THE DECISIONS QUOTED IN THE AFORESAID ORDER DT.26.03.201.IF THE LD.AO FINDS THAT NO NOTICES U/S 143(2) OF THE ACT WERE SERVED UPON THE ASSESSEES THEN THE ASSESSMENT SO FRAMED 19 DESERVES TO BE QUASHED OTHERWISE HE IS FREE TO ADJU DICATE ON THE BASIS OF AVAILABLE MATERIAL/TRUE FACTS. NEEDLESS TO MENTION HERE THAT THE ASSESSEE BE PROVIDED DUE OPPORTUNITY OF BEING H EARD. FINALLY, ALL THE APPEALS OF THE ASSESSEES ARE ALLO WED FOR STATISTICAL PURPOSE ONLY. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 30. 4.2012. SD SD (R.C.SHARMA) (JOGINDER SING H) ACCOUNTANT MEMBER JUDICIA L MEMBER DATED: 30.4.2012 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE