Shri Rasiklal Nagindas Shah, Surat V. The Dy.CIT.,Circle-3, Surat

ITSSA 47/AHD/2008

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9334 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-05-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-05-2010
• Assessment Year: misc
• Appeal Filed On: 07-04-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV KASHYAP SRDR
• Assessee Lawyers: R N VEPARI
• Keywords: Block assessment
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AT SURAT CAMP, AHMEDABAD BEFORE SHRI T.K. SHARMA, JUDICIAL MEMBER, AND SHRI D. C. AGRAWAL, ACCOUNTANT MEMBER IT(SS)A NO.47/AHD/2008 BLOCK PERIOD: 1996-97 UPTO 19.12.2001 DATE OF HEARING:18.5.10 DRAFTED:19.5.10 SHRI RASIKLAL NAGINDAS SHAH, 205, CHANDANBALA APARTMENT, NR. MUNICIPAL COMMISSIONERS BUNGALOW, ATHWALINES, SURAT PAN NO.ACXPS6095A V/S . DY. COMMISSIONER OF INCOME-TAX, CIRCLE-3, SURAT (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI R.N.VEPARI, AR RESPONDENT BY:- SHRI SANJEEV KASHYAP, SR-DR O R D E R PER D.C.AGRAWAL, ACCOUNTANT MEMBER:- THIS APPEAL FILED BY ASSESSEE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX(A)-II, SURAT DATED 08-01-2008 RAISING TH E FOLLOWING GROUNDS :- (1) THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS ) ERRED IN CONFIRMING ADDITION OF RS.1.00,000/- AS ASSESSEES UNDISCLOSED INCOME- TAX WHEN THE ASSESSEE HAD NOT MADE ANY INVESTMENT O F RS.1,00,000/- AS ALLEGED. (2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION IS REQUIRED TO BE DELETED. IN ADDITION TO THIS ASSESSEE HAS RAISED FOLLOWING A DDITIONAL GROUND:- APPELLANT SUBMITS THAT ORDER PASSED U/S.158D OF TH E ACT IS VOID AB INITIO AS PROCEEDINGS U/S.158BD WERE INITIATED LONG AFTER ORDER U/S.158BC WAS PASSED IN CASE OF PARIVAR TELEVISIONS P.LTD. IT(SS)A NO.47/AHD/2008 B.P. 96-97 TO 12.12.01 SH. RASIKLAL N SHAH V. DCIT, CIR-3, SRT PAGE 2 2. AFTER DISCUSSING THE ISSUE WITH LD. SR-DR AND AR WE ADMIT ADDITIONAL GROUND FOR ADJUDICATION IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CORPORATION LTD. V. CIT (1998) 229 ITR 383 (SC). IN THIS CASE SEARCH U/S.132 OF THE ACT W AS CARRIED OUT IN THE PREMISES OF M/S. PARIWAR TELEVISION PVT. LTD. ON 19-12-2001. CERTAIN BOOKS OF ACCOUNTS RELATING TO THE ASSESSEE WERE ALSO SEIZED AS PER ANNEXURE-BS-36 AND BS-46. THE ASSESSING OFFICER HAVING JURISDICTI ON OVER THE CASE OF M/S. PARIWAR TELEVISION PVT. LTD., SURAT FOUND THAT CERT AIN LOAN TRANSACTIONS IN THE NAME OF THE ASSESSEE. 3. THE FACTS ARE THAT THE SEARCH AT THE PREMISES OF M/S. PARIWAR TELEVISION PVT. LTD. WAS CARRIED ON 19-12-2001 AND BLOCK ASSES SMENT IN THAT CASE U/S.158BC OF THE ACT WAS FINALIZED ON 13-12-2003, W HEREAS NOTICE U/S.158BD OF THE ACT WAS ISSUED IN THE CASE OF ASSESSEE ON 10 -01-2005. 4. LOOKING TO THIS FACT AND CONSIDERING THE RIVAL S UBMISSIONS, WE ADMIT THE ADDITIONAL GROUND OF THE ASSESSEE. WE HAVE HEARD T HE PARTIES AND CAREFULLY PERUSED THE MATERIALS ON RECORD. THE ONLY ISSUE IN VOLVED IN THIS APPEAL WHICH IS GERMAN TO THE ENTIRE BLOCK ASSESSMENT IS WHETHER PROCEEDINGS U/S.158BD WERE VALIDLY INITIATED. 5. T HE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE TOOK T HE ARGUMENTS THAT NOTICE U/S.158BD OF THE ACT CANNOT BE ISSUED AFTER CLOSER OF THE BLOCK ASSESSMENT PROCEEDINGS U/S.158BC OF THE ACT IN THE CASE OF PERSON SEARCHED FROM WHICH CASE THE PROCEEDINGS U/S.158BD OF THE AC T AGAINST THIS ASSESSEE ARE TO INITIATED. THEY RELIED ON SEVERAL JUDGMENTS WHIC H ARE DISCUSSED HEREINBELOW:- (I) ITAT CHANDIGARH BENCH IN THE CASE OF ACIT V. K ISORILAL BALBANT RAI (2007) 17 SOT 380 (CHANDIGARH) HELD AS UNDER:- THE NATURE OF THE PROVISIONS OF SECTION 158BD HAS B EEN CONSIDERED BY THE APEX COURT IN THE CASE OF MANISH MAHESHWARI V. ASSTT. CIT [2007] 289 ITR 341/159 TAXMAN 258 (SC). THE APEX COURT HELD THAT BEFORE CHAPTER IT(SS)A NO.47/AHD/2008 B.P. 96-97 TO 12.12.01 SH. RASIKLAL N SHAH V. DCIT, CIR-3, SRT PAGE 3 XIV-B COULD BE INVOKED AGAINST A PERSON OTHER THAN A PERSON WHO IS PUT TO SEARCH UNDER SECTION 132 OR A REQUISITION UNDER SECTION 132A, THE CONDITIONS PRESCRIBED UNDER SECTION 158BD ARE REQUI RED TO BE STRICTLY COMPLIED WITH. THE SUPREME COURT HAS HELD THAT COND ITIONS PRECEDENT IN SUCH CASES, FOR TAKING RECOURSE OF BLOCK ASSESSMENT IN TERMS OF SECTION 158BD, REQUIRE THE ASSESSING OFFICER TO RECORD A SA TISFACTION THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH IS MADE UNDER SECTION 132 OR A REQUISITION IS PUT UNDER SECTION 132A. SECONDLY, THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED ARE REQUIRED TO B E HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OT HER PERSON. THE SUPREME COURT HAS FURTHER HELD THAT ONLY UPON THE H APPENING OF THE AFORESAID THAT THE ASSESSING OFFICER HAVING JURISDI CTION OF THE OTHER PERSON SHALL PROCEED UNDER SECTION 158BC AGAINST S UCH OTHER PERSON. WITH THE ABOVE DISCUSSION, A PREMISE, WHICH CAN BE SAFELY DEDUCED, IS THAT THE SATISFACTION AS CONTEMPLATED UNDER SECTION 158BD IS TO BE OF THE ASSESSING OFFICER OF THE PERSON WHO HAS BEEN PUT TO SEARCH OR REQUISITION UNDER SECTION 132 OR 132A RESPECTIVELY. ANOTHER PRE MISE WHICH CAN BE SAFELY DEDUCED FROM THE DECISION OF THE SUPREME COU RT IS THAT THE REQUIREMENT OF RECORDING OF SUCH SATISFACTION IS A MANDATORY CONDITION. THEREFORE, THE PLEA ADVANCED ON BEHALF OF THE REVEN UE THAT THE SATISFACTION IN SUCH CASES COULD ONLY BE DISCERNIBL E ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND SUCH SATISFACTION NEED NOT BE SPECIFICALLY RECORDED, COULD NOT BE ACCEPTED. IN TH IS VIEW OF THE MATTER, IT COULD BE SAID THAT THE SATISFACTION CONTEMPLATED UN DER SECTION 158BD TO THE EFFECT THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UN DER SECTION 132 OR REQUISITION MADE UNDER SECTION 132A, IS TO BE RECOR DED IN WRITING BY THE ASSESSING OFFICER OF THE PERSON WITH RESPECT TO WHO M SEARCH UNDER SECTION 132 OR A REQUISITION UNDER SECTION 132A IS MADE. [PARA 23] FURTHER, THE SATISFACTION CONTEMPLATED UNDER SECTIO N 158BD, IS REQUIRED TO BE RECORDED BY THE ASSESSING OFFICER OF THE PERS ON SEARCHED AT ANY TIME BUT NOT LATER THAN THE FINALIZATION OF ASSESSM ENT OF UNDISCLOSED INCOME FOR THE BLOCK PERIOD UNDER CHAPTER XIV-B IN THE CASE OF THE PERSON PUT TO SEARCH OR REQUISITION, AS THE CASE MA Y BE. SECONDLY, INSOFAR AS THE ISSUANCE OF NOTICE UNDER SECTION 158BD IS CO NCERNED, THE SAME IS TO BE ISSUED BY THE ASSESSING OFFICER OF THE PERSON OTHER THAN THE PERSON PUT TO SEARCH UNDER SECTION 132 OR REQUISITION UNDE R SECTION 132A. THAT TOO, AFTER TRANSMISSION OF THE RELEVANT MATERIAL FR OM THE FIRST MENTIONED ASSESSING OFFICER, I.E., THE ASSESSING OFFICER OF THE PERSON PUT TO SEARCH UNDER SECTION 132 OR REQUISITION UNDER SECTION 132A . THEREFORE, A IT(SS)A NO.47/AHD/2008 B.P. 96-97 TO 12.12.01 SH. RASIKLAL N SHAH V. DCIT, CIR-3, SRT PAGE 4 REASONABLE TIME LAG BETWEEN THE DATE OF RECORDING O F SATISFACTION AND ISSUANCE OF NOTICE UNDER SECTION 158BD IS ENVISAGED IN THE ACT ITSELF. [PARA 27] SIMILAR VIEW WAS TAKEN BY ITAT DELHI BENCH IN THE C ASE OF MANOJ AGARWAL V. DCIT (2008) 113 ITD 377 (DEL) (SB), IT WAS HELD AS UNDE R:- SECTION 158BD, READ WITH SECTIONS 158BC AND 147, OF THE INCOME-TAX ACT, 1961 - BLOCK ASSESSMENT IN SEARCH CASES - UNDISCLOS ED INCOME OF ANY OTHER PERSON - BLOCK PERIOD 1-4-1990 TO 20-8-2000 - WHETHER FOR INITIATING ACTION UNDER SECTION 158BD, FIRST AND FO REMOST REQUIREMENT IS THAT ASSESSING OFFICER MAKING BLOCK ASSESSMENT IN C ASE OF PERSON SEARCHED, HAS TO BE SATISFIED THAT UNDISCLOSED INCO ME DETECTED BELONGS TO SOME PERSON OTHER THAN PERSON SEARCHED AND, THUS, S ECTION ITSELF CONTEMPLATES SATISFACTION ON PART OF ASSESSING OFFI CER MAKING ASSESSMENT IN CASE OF PERSON SEARCHED; RECORDING OF SATISFACTI ON IS MANDATORY AND IMPERATIVE BEFORE ASSUMPTION OF JURISDICTION UNDER SECTION 158BD - HELD, YES WHETHER NOTE OF SATISFACTION MUST CONTAIN A P OSITIVE FINDING BY ASSESSING OFFICER MAKING ASSESSMENT UNDER SECTION 1 58BC INDICATING THEREIN UNDISCLOSED INCOME FOUND AS A RESULT OF HI S EXAMINATION OF SEIZED MATERIAL AND PERSON TO WHOM SUCH INCOME BELONGS - H ELD, YES IN THE CASE OF BHARAT BHUSHAN JAINS V. ACIT (2009) 17 DTR 498 (DEL) TRIBUNAL HELD THAT PROCEEDINGS U/S.158BD INITIATED AFTER 19 MONTHS OF COMPLETION OF PROCEEDINGS U/S.158BC CANNOT BE SUSTAINED. IT WAS H ELD IN THE CASE OF SAROJ NURSING HOME V. ACIT (2009) 116 ITD 311 (LUCKNOW) THAT PROCEEDINGS U/S.158BD CAN BE INITIATED ON THE SATISFACTION OF T HE ASSESSING OFFICER HAVING JURISDICTION OVER PERSON SEARCHED TO TAX UNDISCLOSE D INCOME-TAX PERTAINING TO THIRD PERSON WHO IS NOT SUBJECTED TO SEARCH AND BOO KS OF ACCOUNT IN OTHER DOCUMENTS WERE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH THIRD PERSON BUT PROCEEDINGS INITIATED U/S.15 8BD OF THE ACT AFTER A PERIOD OF SIX YEARS CANNOT BE REGARDED AS VALID. 6. IN E.J. ULAHANNA V. ACIT IN ITA NO.19/AHD/2007 PRONOUNCED ON 18-03- 2009, FOLLOWING THE DECISION OF SPECIAL BENCH IN TH E CASE OF MANOJ AGARWAL (SUPRA) HELD THAT WITHOUT THERE BEING SATISFACTION RECORDED PRIOR TO COMPLETION OF ASSESSMENT OF THE PERSON SEARCHED PROCEEDINGS SO IN ITIATED U/S.158BD OF THE ACT IT(SS)A NO.47/AHD/2008 B.P. 96-97 TO 12.12.01 SH. RASIKLAL N SHAH V. DCIT, CIR-3, SRT PAGE 5 WILL NOT BE VALID. IN THAT CASE NOTICE U/S.158BD OF THE ACT WAS ISSUED ON 10-06- 2004. BUT SEARCHED AGAINST OHM DEVELOPERS WAS CARRI ED OUT ON 29-10-1999, THEREFORE ASSESSMENT THEREOF COMPLETED AFTER 31-10- 2001 COULD NOT BE HELD VALID. IN THE CASE OF SHRI VISHNUBHAI R BAROT V. ACIT IN IT(SS)A NO.104/AHD/2009 ITAT AHMEDABAD D BENCH PRONOUNCED ON 18-12-2009 , IT WAS HELD, FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI V. ACIT (2007) 289 ITR 341 (SC) AND MANOJ AGARWAL (SUPRA) THAT IF THE ASSESSMENT U/S.158BC OF THE ACT IN THE CASE OF ASSESSEE WAS COMPLETED ON 13-12-2003 THEN ISSUING NOTICE U/S.158 BD OF THE ACT ON 29-03- 2006 AGAINST ASSESSEE SHOULD BE BARRED BY LIMITATIO N. SIMILAR VIEW WAS TAKEN BY THE ITAT AHMEDABAD BENCH IN IT(SS)A NO.25/AHD/2007 IN THE CASE OF ADIL PARVEZ RANDERIA V. ACIT, CC-3(1) SURAT PRONOUNCED ON 01-09-2008. 7. AS A RESULT, WE ACCORDINGLY, THE APPEAL OF THE A SSESSEE IS ALLOWED. 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 21/05/2010 SD/- SD/- (T.K.SHARMA) (D. C.AGRAWAL) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, DATED : 21/05/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-II, SURAT 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD