Chemical Trading & Co., New Delhi V. ITO, New Delhi

ITSSA 41/DEL/2009

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9318 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-04-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-04-2010
• Assessment Year: misc
• Appeal Filed On: 30-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K CHAND; STEPHAN GEORGE
• Assessee Lawyers: B L GUPTA ITP
• Keywords: Validity of assessment; Procedural lapse; Block assessment
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA : VICE PRESIDENT AND SHRI RAJPAL YADAV: JUDICIAL MEMBER IT(SS)A NO. 41/DEL/09 BLOCK PERIOD: 01-4-1996 TO 06-03-2003 CHEMICAL TRADING & CO., VS. INCOME-TAX OFFICER, 290-A, KATRA PADAN TILAK BAZAR, WARD 30(2), NEW DE LHI. DELHI-110006. PAN/ GIR NO. AAFC2156P ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI B.L. GUPTA ITP RESPONDENT BY : S/SHRI STEPHAN GEORGE CIT DR & N.K. CHAND DR O R D E R PER G.E. VEERABHADRAPPA, V.P. : THIS APPEAL, FILED BY THE ASSESSEE, ARISES OUT O F THE ORDER DATED 31-3- 2009 OF THE CIT(APPEALS)-XXV, NEW DELHI FOR THE BLO CK PERIOD 1-4-1996 TO 6-3-2003. 2. THE ASSESSEE HAS TAKEN SEVERAL GROUNDS DISPUTIN G THE VALIDITY OF ASSESSMENT FRAMED U/S 158BC READ WITH SECTION 158BD OF THE INCOME-TAX ACT, 1961. THE MAIN CONTENTION OF THE ASSESSEE BEFO RE US IS THAT SEARCH ACTION IN THE CASE OF M/S GIAN CHAND RAMJI DASS TOO K PLACE ON 6-3-2003. IN PURSUANCE OF THE AFORESAID SEARCH, PROCEEDINGS U/S 158BD WERE INITIATED AGAINST THE ASSESSEE BY ISSUANCE OF NOTICE ON 9-5-2 005. THE ASSESSEE FILED RETURN ON 24-5-2005. THE DATE BY WHICH NOTICE U/S 1 43(2)/142(1) COULD HAVE BEEN ISSUED WAS 31-5-2006, HOWEVER, THE ASSESSING OFFICER ISSUED NOTICE ONLY ON 20-4-2007. IT IS ON THESE UNDISPUTED FACTS, THE LEARNED ASSESSEES 2 COUNSEL CONTENDS THAT THE ASSESSMENT FRAMED UPON TH E ASSESSEE IS LIABLE TO BE QUASHED, AS HELD BY THE ITAT DELHI BENCH E VID E ITS ORDER DATED 12-9- 2008 IN IT(SS)A NO. 201/DEL/06 IN THE CASE OF ACIT VS. LE SMT. KRISHNA KUMARI; AND ITAT DELHI BENCH F VIDE ORDER DATED 2 2-4-2009 IN IT(SS) NO. 22/DEL/2009 IN THE CASE OF MADHU GUPTA VS. CIT( A). THIS ISSUE NOW STANDS CONCLUDED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THE SUPREME COURT IN THE CASE OF ACIT VS. HOTEL BLUE MOON (2010 ) 229 CTR (SC)219. 3. THE LEARNED DR, ON THE OTHER HAND, ALTHOUGH AGRE ED THAT THE ISSUE IN QUESTION IS DIRECTLY COVERED IN FAVOUR OF THE ASSE SSEE BY THE ORDER OF THE SUPREME COURT IN THE CASE OF HOTEL BLUE MOON (SUPR A), BUT HE STRONGLY SUPPORTED THE IMPUGNED ASSESSMENT ORDER. 4. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS AND GONE THROUGH THE RECORDS. THE SUPREME COURT IN IDENTICAL SITUATI ON OBSERVED THAT BY VIRTUE OF CLAUSE (B) OF SECTION 158BC THE AO IS TO COMPLET E THE ASSESSMENT BY FOLLOWING THE PROCEDURE, LIKE ISSUE OF NOTICE U/S 1 42/143(2). IT DOES NOT PROVIDE FOR ACCEPTING THE RETURN AS PROVIDED U/S 14 3(1)(A) OF THE ACT. HOWEVER, A NOTICE U/S 143(2) BECOMES NECESSARY WHEN IT IS NECESSARY TO CHECK THE RETURN. WHERE THE BLOCK RETURN CONFORMS T O THE UNDISCLOSED INCOME INFERRED BY THE AUTHORITIES, THERE IS NO REA SON WHY THE AUTHORITIES SHOULD ISSUE NOTICE U/S 143(2). IF AN ASSESSMENT IS TO BE COMPLETED U/S 143(3) READ WITH SEC. 158BC, NOTICE U/S 143(2) SHOU LD BE ISSUED WITHIN ONE YEAR FROM THE DATE OF FILING OF BLOCK RETURN. OMISS ION ON THE PART OF THE ASSESSING AUTHORITY TO ISSUE NOTICE U/S 143(2) CANN OT, THEREFORE, BE A MERE PROCEDURAL IRREGULARITY AND THE SAME IS NOT CURABLE . IN THE OPINION OF THE SUPREME COURT, PROVISIONS OF SECTION 158BC(B) SPECI FICALLY REFER TO SOME OF THE PROVISIONS OF THE ACT, WHICH ARE REQUIRED TO BE FOLLOWED BY THE ASSESSING OFFICER WHILE COMPLETING THE BLOCK ASSESSMENTS UNDE R CHAPTER XIV-B. IF THE 3 INTENTION OF THE LEGISLATURE WAS TO EXCLUDE THE PRO VISIONS OF CHAPTER XIV, IT WOULD HAVE INDICATED THEREIN. SO, IN THE LIGHT OF T HIS DECISION OF SUPREME COURT, NO ASSESSMENT COULD BE MADE WITHOUT ISSUE OF NOTICE U/S 143(2) AND SUCH NOTICE SHOULD BE ISSUED WITHIN TIME PRESCRIBED IN THE PROVISO TO SECTION 143(2) OF THE ACT. THE OMISSION ON THE PART OF THE ASSESSING OFFICER TO ISSUE NOTICE U/S 143(2) IS FATAL TO THE ASSESSMENT AND TH E SAME IS NOT MERELY A PROCEDURAL IRREGULARITY AND IS NOT EVEN CURABLE. TH US THE IMPUGNED ASSESSMENT ORDER, WHICH IS AT VARIANCE TO THE PRINC IPLE LAID DOWN IN THE AFORESAID DECISION OF THE SUPREME COURT, CANNOT BE SUPPORTED AND THE SAME IS QUASHED. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN ON 9-4-2010. SD/- SD/- (RAJPAL YADAV ) ( G.E. VEERABHADRAPP A ) JUDICIAL MEMBER VICE PRESIDENT DATED: 9 TH APRIL 2010. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR