NIRMAL A BANWANI, MUMBAI V. DCIT CEN CIR 47,

ITSSA 42/MUM/2011

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8065 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 27-09-2011
• Assessment Year: misc
• Appeal Filed On: 27-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A V SONDE
• Keywords: Search and seizure

Judgement Text

1 IT(SS) NO 42 & 43/MUM/2011. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI C BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI T R SOOD , AM & SHRI VIJAY PAL RAO, JM IT(SS) NO 42/MUM/2011. ((BLOCK PERIOD 1.4.1996 TO 31.12.2002 ) NIRMAL A BANWANI B-509 PERL APARTMENTS 3 RD CROSS LANE LOKHANDWALA COMPLEX ANDHERI (W) MUMBAI 58 PAN NO. AAHPB 8581E VS THE DY COMMR OF INCOME TAX CEN.CIR 47 MUMBAI (APPELLANT) (RESPONDENT) IT(SS) NO 43/MUM/2011. (BLOCK PERIOD 1.4.1996 TO 30.12.2002 ) LATE PRAVIN M SHAH THRO LEGAL HEAR VIRAANG P SHAH B-509 PERL APARTMENTS 3 RD CROSS LANE LOKHANDWALA COMPLEX ANDHERI (W) MUMBAI 58 PAN NO. AKQPS3958K VS THE DY COMMR OF INCOME TAX CEN.CIR 47 MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY A V SONDE REVENUE BY SHRI DEVI SINGH DT.OF HEARING 27.9.2011 DT OF PRONOUNCEMENT 30 TH SEPT 2011 PER VIJAY PAL RAO, JM THESE APPEALS BY TWO DIFFERENT ASSESSES ARE DIRECT ED AGAINST THE SEPARATE ORDERS OF THE CIT(A) BOTH DATED 24 TH JAN 2011 ARISING FROM THE PENALTY LEVIED U/S 158BFA(2) FOR THE BLOCK PERIOD 1.4.1996 TO 30.12.20 02. 2 IT(SS) NO 42 & 43/MUM/2011. 2 THE ONLY COMMON GROUND RAISED BY THE ASSESSEES IN THESE APPEALS READS AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) HAS ERRED IN CONFIRMING THE PENALTY IMPOSED MADE BY TH E ASSESSING OFFICER U/S 158BFA(2) OF I T ACT WITHOUT APPRECIATING THE FACTS OF THE CASE. 3 SINCE THE ASSESSES, IN BOTH THESE APPEALS ARE CON NECTED AND DISPUTE ARISING FROM THE SAME SEARCH AND SEIZURE ACTION; THEREFORE, BOTH THESE APPEALS ARE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS COMPOSI TE ORDER. 4 WE HAVE HEARD THE LD AR AS WELL AS THE LD DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD AR OF THE ASSESSEE HAS S UBMITTED THAT IN THE QUANTUM APPAL, THE TRIBUNAL HAS CANCELLED THE ASSESSMENT OR DERS PASSED U/S 158BC; THEREFORE, THE PENALTY LEVIED U/S 158BFA(2) IS NOT SUSTAINABLE. 5 AFTER CONSIDERING THE RIVAL CONTENTION AND RELEVA NT MATERIAL ON RECORD, AT THE OUTSET, WE NOTE THAT THE TRIBUNAL IN ASSESEES APPE AL IN IT(SS) NO.31 & 32/MUM/2008 VIDE ORDER DATED 31.3.2011 IN PARA 23 HAS CANCELLED THE ASSESSMENT ORDERS AS UNDER: 23. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND ALSOCAREFULLY CONSIDERED ALL THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE AWELL AS THE DEPARTMENT AND ALL THE RELEVANT CASE LAW CITED AT BA R BY BOTH THE PARTIES. THE ASSESSEE WAS PARTNER IN M/S. MKT SALES AND HE WA S ALSO DOING THE BUSINESS IN HIS INDIVIDUAL CAPACITY. AS PER THE FOL DER CONTAINING THE SEARCH DOCUMENT PRODUCED BY THE LD. CIT D.R., IT IS SEEN T HAT IN THE COMMON SEARCH WARRANT (SERIAL NO.MUM/C./2813) DATED 30.12.2002, THE NAME OF THE ASSESSEE IS MENTIONED. IT APPEARS THAT THE ASSESSEE WAS CARRY ING ON THE BUSINESS FROM THE COMMON PREMISES OF M/S. N.A. FABRICS P. LTD. IN THE 3/14-15, MOHATTA MARKET, FALTAN ROAD, MUMBAI 400 001. THOUGH THE SEA RCH WAS CONCLUDED ON 31.12.2002 BUT THE PROHIBITORY ORDER IN RESPECT OF ONE WOODEN SHELVE/CUPBOARD PASSED U/S.132(3) WAS LIFTED ON 7.2. 2003. ONE ADDITIONAL ASPECT IN THE CASE OF THE ASSESSEE IS THAT ANOTHER W ARRANT WAS ISSUED ON 23.1.2003 BUT THAT WAS IN RESPECT OF LOCKER NO.64 IN THE UNITED WESTERN BANK LTD., DADAR (EAST), MUMBAI. THE ORIGINAL SEARCH WARRA NT DATED 23.1.2003 OR ITS COPY WAS NOT MADE AVAILABLE TO US, AS IT WAS NOT IN THE FOLDER PRODUCED BY THE LD. CIT DR BUT AS PER THE PANCHNAMA, IT APPEARS THAT THE SAID SEARCH WARRANT WAS ONLY IN RESPECT OF LOCKER NO.64, WHICH WA S STANDING IN THE NAME 3 IT(SS) NO 42 & 43/MUM/2011. OF SHRI PRAVIN M. SHAH, WHICH WAS FOUND EMPTY. THERE I S NO PROOF OF ANY OTHER SEARCH WARRANT WHICH WAS INDIVIDUALLY ISSUED AGAINST THE ASSESSEE. AS THE ORIGINAL SEARCH WARRANT IS NOT BEFORE US, IT IS DIFF ICULT FOR US TO GIVE ANY FINDING WHETHER THE SAID SEARCH WARRANT WAS SPECIFICALLY DIREC TED AGAINST AND WHETHER IN THE SAID SEARCH WARRANT THE NAME OF SHRI P RAVIN M. SHAH WAS MENTIONED OR THE SEARCH WARRANT WAS RESTRICTED TO LOC KER NO.64 OF THE UNITED WESTERN BANK, DADAR (EAST), MUMBAI WHICH WAS FOUND E MPTY AND IT IS CLEAR FROM THE PANCHNAMADRAWN ON 25.1.2003. ON THE EXECUTI ON OF THE SAID WARRANT, NOTHING WAS SEIZED. AS PER THE PROVISIONS OF SECTION 132(1)(I) AS WELL AS (II), THE AUTHORIZED OFFICER CAN ENTER AND SEARCH ANY BUILDING, PLACE, VESSEL, VEHICLE OR AIRCRAFT WHERE HE HAS REASON TO SUSP ECT THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THIN GS ARE KEPT AND HE CANBREAK OPEN THE LOCK OF ANY DOOR, BOX, LOCKER, SAFE, ALMIRA S ETC. FOR EXERCISING THE POWER CONFERRED IN CLAUSE (I) WHERE THE KEYS THEREOF A RE NOT AVAILABLE. IT IS NOT NECESSARY THAT THE BUILDING OR PLACE SHOULD BELO NG TOTHE ASSESSEE. NOWHERE IT IS DISPUTED THAT LOCKER NO.64 IN THE UNITE D WESTERN BANK, DADAR (EAST), MUMBAI BELONGS TO THE ASSESSEE AND EVEN IF NOTHING IS FOUND IN THAT BUT ADMITTEDLY THE SEARCH WARRANT WAS EXECUTED ON 23 .1.2003. THE A.O. HAS TIME LIMIT UPTO 31.1.2005 TO PASS AN ASSESSMENT ORDE R. THE ASSESSEE FILED THE APPLICATION BEFORE THE SETTLEMENT COMMISSION ON 18.1 .2005 WHICH WAS DISMISSED 0N 29.08.06 AND ORDER DISMISSING THE APPLIC ATION FILED BY THE ASSESSEE WAS RECEIVED BY THE LD. CIT MUMBAI HAVING JURISDICTION OVER THE ASSESSEES CASE ON15.9.2006 AND HENCE, THE A.O. HAD THE TIME LIMIT UPTO 14.11.2006 FOR PASSING THE ASSESSMENT ORDER. THE A.O . PASSED THE ORDERS / DIRECTIONS U/S.142(2A) OF THE ACT ON 9.11.2006 FOR SPECIAL AUDIT THAT WAS WITHIN 60 DAYS FROM 15.9.2006 AND HENCE, IN VIEW OF CLAUSE (II) TO EXPLANATION 1 BELOW SECTION 158BE THE A.O. GOT FURTHER EXTENSION OF TIME FOR PASSING THE ASSESSMENT ORDER TILL THE DATE ON WHICH THE SPECIAL A UDIT REPORT WAS FURNISHED, THAT WAS ON 7.5.2007. AS ARGUED BY THE LD. CIT D.R THE A.O. WAS GOT THE FURTHER EXTENSION OF THE 60 DAYS FROM 7.5.2007 TO P ASS THE ASSESSMENT ORDER BEFORE 6.7.2007 AND HENCE, THE ASSESSMENT ORDER PAS SED ON 6.7.2007 CANNOT BE SAID TO BE PASSED BEYOND THE TIME LIMIT AS SPECI FIED U/S.158BE. IN THE CASE OF THE PRESENT ASSESSEE, ADMITTEDLY, NO OPPORTUNITY WAS GIVEN BY THE A.O. BEFORE PASSING THE ORDER/DIRECTIONS U/S.142(2A) AND HENCE, AS HELD BY US IN THE CASE OF NIRMAL A. BANWANI FOLLOWING THE PRINCIPL ES LAID DOWN IN THE CASE OF RAJESH KUMAR (SUPRA) THE SAID DIRECTIONS/ORDER ARE TO BE HELD AS BAD IN LAW AND VOID AB INITIO. WE, THEREFORE, FOLLOWING OUR REASO NS GIVEN IN THE CASE OF SHRI NIRMAL A. BANWANI HOLD THAT THE A.O. CANNOT BE GIVEN THE BENEFIT OF THE FURTHER EXTENSION OF TIME BY EXCLUDING THE PERIOD FRO M THE DATE OF PASSING THE DIRECTIONS U/S.142(2A) ON 9.11.2006 TO THE DATE OF FURNISHING THE SPECIAL AUDIT REPORT ON 7.5.2007 AND AT THE MOST THE A.O. SHOULD HA VE PASSED THE ASSESSMENT ORDER WITHIN 60 DAYS FROM 15.9.2006 I.E. TH E DATE ON WHICH THE ORDER OF THE SETTLEMENT COMMISSION WAS RECEIVED BY THE LD. CIT MUMBAI. IN THE CASE OF THE PRESENT ASSESSEE, THE ASSESSMENT ORD ER IS PASSED ON 6.7.2007 AND HENCE, IN OUR OPINION, THE ASSESSMENT ORDER IS BA D IN LAW. WE HAVE NO OPTION BUT TO CANCEL THE ASSESSMENT ORDER PASSED BY THE A.O. FOR THE BLOCK PERIOD I.E. 1.4.1996 TO 31.12.2002 DATED 6.7.2007 A ND WE ACCORDINGLY ALLOW THE GROUNDS TAKEN BY THE ASSESSEE ON THE ISSUE OF T IME LIMIT FOR PASSING THE ASSESSMENT ORDER. 4 IT(SS) NO 42 & 43/MUM/2011. THEREFORE, THE PENALTY ORDERS U/S 158BFA(2) DO NOT SURVIVE AS THE BASIS OF THE PENALTY ORDER ITSELF HAS BEEN CANCELLED BY THE TRIBUNAL. AC CORDINGLY, WE CANCEL THE PENALTY ORDER IN BOTH THE CASES. 6 IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED ON THE 30 TH DAY OF SEPT 2011. SD/ SD/ ( T R SOOD ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 30 TH ,SEPT 2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI