Mohanlal Singh, Hyderabad V. ACIT, Hyderabad

ITSSA 47/HYD/2009

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 7886 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 14-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 04-07-2011
• Assessment Year: misc
• Appeal Filed On: 21-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B V PRASAD REDDY
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained expenditure; Block assessment
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEM BER IT(SS)A NO.47/HYD/2009 (BLOCK PERIOD FROM 1991-9 02 TO 2001-02) SHRI MOHANLAL SINGH, (L/R OF LATE SMT. SUGUNA DEVI), HYDERABAD ( PAN - NOT AVAILABLE ) V/S. ASST. COMMISSIONER OF INCOME - TAX CIRCLE 7(1), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.RAMA RAO RESPONDENT BY : SHRI B.V.PRASAD REDDY DATE OF HEARING 3.11.2011 DATE OF PRONOUNCEMENT 14.12.2011 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-III HYDERABAD D ATED 16.3.2009 FOR THE BLOCK PERIOD FROM 1991-92 TO 2000-01. 2. ASSESSEE RAISED THE FOLLOWING GROUNDS- 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME -TAX(APPEALS) IS ERRONEOUS TO THE EXTENT IT IS PREJUDIC IAL TO THE APPELLANT. 2. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN NOT ALLOWING DEDUCTION U/S. 54 OF THE ACT ON THE GROUND THAT THE CONSTRUCTED AREA WAS RECEIVED AFTER A PERIOD OF 3 YEARS FROM THE DATE OF TRANSFER. THE LE ARNED COMMISSIONER OF INCOME-TAX(APPEALS) OUGHT TO HAVE CONSIDERED THE FA CT THAT IT IS ONLY AN EXCHANGE OF THE PROPERTY. IT(SS)A NO.47/HYD/09 SHRI MOHANLAL SINGH, (L/R OF LATE SMT. SUGUNA DEVI), HYDERABAD 2 3. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) OUGHT TO HAVE SEEN THAT THERE IS NO TRANSFER OF PROPERTY ON THE DATE O F DEVELOPM ENT AGREEMENT AND THE PROPERTY WAS TRANSFERRED ONLY IN THE YEAR 1997 WHEN THE CONSTRUCTED AREA WAS TRANSFERRED TO THE APPELLA NT HEREIN. 4. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) IS NOT CORRECT IN HOLDING THAT THE 3 YEARS PERIOD HAS TO BE RECKONED FROM THE DATE OF DEVELOPM ENT AGREEMENT. HE OUGHT TO HAVE HELD THAT THE PERI OD OF THREE YEARS HAS TO BE RECKONED FROM THE DATE OF HANDING O VER THE POSSESSION OF CONSIDERATION. 5. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.1. 0 LAKH ON ACCOUNT OF UNEXPLAINED EXPENDITURE. 6. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN TREATING THE AMOUNT OF RS.4,00,000 AS REPRESENTING THE AMOUNT BORROWED ON THE PROMISSO RY NOTES BY LATE SMT. SUGUNA DEVI. 7. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) OUGHT TO HAVE SEEN THAT THE PROVISIONS OF SEC.68 HAVE NO APPLICATION T O THE FACTS OF THE APPELLANTS CASE HEREIN 8. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER AS UNEXP LAINED IN RESPECT OF PAYM ENTS MADE TO THE DEVELOPER WITHOUT CONSIDERING THE FACT THAT THE APPELLANT HAS SUBSTANTIAL SOURCES; 9. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.80 ,000 WHICH REPRESENTS THE AMOUNTS PAID FOR VACATING THE TENANT S AND IS A CAPITAL AMOUNT RECEIVED BY THE APPELLANT AND ACCORDINGLY OU GHT TO HAVE DELETED THE ADDITION OF RS.80,000/- MADE. 3. IN THE COURSE OF HEARING, THE ASSESSEE FILED TH E FOLLOWING ADDITIONAL GROUND OF APPEAL- THE ORDER U/S. 158BD PASSED ON 30-06-3006 IS NOT V ALID AS THE NOTICE U/S. 158BD WAS ISSUED LONG AFTER THE ASSESSM ENT IN THE CASE OF THE SEARCHED PARTY WAS COMPLETED. 4. ASSESSEE PRAYED FOR ADMISSION OF THE ABOVE ADDI TIONAL GROUND FOR THE REASON THAT IT IS A LEGAL GROUND AND THAT HE CO ULD NOT RAISE SUCH A GROUND BEFORE THE FIRST APPELLATE AUTHORITY DUE TO BONA FI DE LAPSE ON HIS PART. HE RELIED ON THE DECISION OF THE PUNJAB AND HARYANA HIGH COUR T IN THE CASE OF CIT V/S. PRAVEEN FABRICS (P) LTD. (198 TAXMAN 463) AND SUBMI TTED THAT THE ISSUE IT(SS)A NO.47/HYD/09 SHRI MOHANLAL SINGH, (L/R OF LATE SMT. SUGUNA DEVI), HYDERABAD 3 INVOLVED IN THE ADDITIONAL GROUND IS COVERED IN FA VOUR OF THE ASSESSEE AND HENCE THE SAME MAY BE DECIDED ON MERITS. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, THOUGH DID NOT SERIOUSLY OBJECT TO THE ADMISSION OF THE ADDITIONAL GROUND, SUBMITTED THAT AS PER THE PROVISIONS OF S.158BD, TH ERE IS NO TIME LIMIT TO ISSUE A NOTICE, AND CONSEQUENTLY, THERE IS NO DEFECT IN T HE NOTICE ISSUED UNDER S.158BD OF THE ACT IN THIS CASE. HE RELIED ON THE DECISION OF THE GUJARAT HIGH COURT IN THE CASE OF KHANDUBHAI VASANJI DESAI AND O THERS V/S. DCIT (236 ITR 73). FURTHER RELIANCE IS ALSO PLACED ON THE DECISIO N OF THE AMRUTSAR BENCH OF THE TRIBUNAL IN THE CASE OF VIJAY SEHGAL (HUF) V/S ACI T (100 ITD 560), WHEREIN IT WAS HELD THAT NO TIME-LIMIT WAS PRESCRIBED UNDER S. 158BD OF THE ACT FOR THE ISSUANCE OF NOTICE UNDER S.158BD OF THE ACT. 6. AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES O F THE CASE AND THE BONA FIDE OMISSION ON THE PART OF THE ASSESSEE IN N OT RAISING SUCH A GROUND BEFORE THE FIRST APPELLATE AUTHORITY, WE ACCEDE TO THE REQUEST OF THE ASSESSEE AND ADMIT THE ADDITIONAL GROUND. HOWEVER, AS THIS GROUND IS TAKEN FOR THE FIRST TIME BEFORE US AND AS SUCH THE CIT(A) HAS NO OCCAS ION TO CONSIDER THE SAME, WE FEEL IT JUST AND PROPER TO SET ASIDE THIS GROUN D TO THE FILE OF THE CIT(A). AS FOR THE PLEA OF THE ASSESSEE THAT THE ISSUE INVOLVE D IN THE ABOVE ADDITIONAL GROUND IS SQUARELY COVERED IN FAVOUR OF THE ASSESSE E BY THE JUDGMENT OF THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT V/ S. PRAVEEN FABRIC P. LTD. (SUPRA), WE FIND THAT IT WAS HELD IN THAT CASE AS F OLLOWS- 4. AN IDENTICAL M ATTER WAS CONSIDERED BY THIS COURT IN ORDER DT.20 TH JULY, 2010 IN IT APPEAL NO. 591 OF 2009, CIT V/S. MRIDULA, PROP. M/S.DHRUV FABRICS, LUDHIANA AND IT WAS OBSERVED: THE ACT NOWHERE SPECIFICALLY PRESCRIBES ANY TIME L IMIT OR LIMITATION FOR INITIATION OF PROCEEDINGS UNDER S.15 8BD OF THE ACT OR IT(SS)A NO.47/HYD/09 SHRI MOHANLAL SINGH, (L/R OF LATE SMT. SUGUNA DEVI), HYDERABAD 4 FOR RECORDING OF SATISFACTION BEFORE TAKING ACTION UNDER THAT PROVISION. THE PLAIN AND REASONABLE CONSTRUCTION TH AT CAN BE PLACED ON THE AFORESAID PROVISION WOULD BE THAT THE RECORDING OF SATISFACTION FOR TAKING ACTION AGAINST ANY OTHER P ERSON UNDER S.158BD OF THE ACT HAS TO BE BETWEEN INITIATION OF PROCEEDINGS UNDER S.158BC AND BEFORE COMPLETION OF BLOCK ASSESS MENT UNDER S.158BC OF THE ACT IN THE CASE OF THE PERSON SEARCH ED. IT WOULD, THUS, MEAN THAT THE ACTION CONTEMPLATED UNDER S.158 BD OF THE ACT AGAINST A THIRD PARTY TO A SEARCH, IS NECESSARY TO BE DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS UNDER S.158 BC OF THE SEARCHED PERSON. IT CANNOT BE AFTER THE CONCLUSION OF THE SAME AS THERE IS NO OCCASION FOR AN AO TO EXAMINE THE SEIZE D MATERIAL OR DOCUMENTS OF THE SEARCHED PERSON WHEN THE BLOCK ASS ESSMENT PROCEEDINGS HAVE CONCLUDED AND NO OTHER PROCEEDINGS ARE BEING BEFORE HIM. IF ANY OTHER TIME-LIMIT IS READ IN THE PROVISIONS/STATUTE, IT SHALL LEAD TO ANOMALY AND WO ULD BE ARBITRARY AND UNREASONABLE,. IT COULD NOT BE READ IN THE PRO VISION THAT WHERE BLOCK ASSESSMENT UNDER S.158BC OF THE ACT I N THE CASE OF AN ASSESSEE AGAINST WHOM ACTION UNDER S.132 AND 132 A OF THE ACT HAS BEEN CARRIED OUT IS FINALIZSED. REVENUE CAN TA KE ACTION AT ANY TIME IN THE ABSENCE OF ANY SPECIFIC LIMITATION PRES CRIBED IN THE STATUTE. A CONSTRUCTION WHICH LEADS TO SUCH AN ANO MALY SHOULD BE AVOIDED. 5. THE VIEW TAKEN BY THE TRIBUNAL IS, THUS, IN ACCO RDANCE WITH THE VIEW TAKEN BY THIS COURT. . 7. WE FIND THE DECISION OF THE GUJARAT HIGH COUR T IN THE CASE OF KHANDUBHAI VASANJI DESAI AND OTHERS V/S. DCIT (SUPR A), RELIED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, HAS NO BEARING WITH REGARD TO THE ISSUE INVOLVED IN THE ADDITIONAL GROUND RAISED BY THE ASS ESSEE. ON CAREFUL CONSIDERATION OF THE RIVAL SUBMISSIONS IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE CASE-LAW RELIED UPON BY THE PARTIES, WE DEEM IT JUST AND PROPER TO SET ASIDE THE IMPUGNED ORDER OF THE CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE CIT(A) FOR FRESH DISPOSAL OF THE APPEAL, AFTER ADJUDICATING ON THE LEGAL ISSUE RAISED BY THE ASSES SEE BEFORE US, AS NOTED ABOVE, AFTER VERIFYING THE RECORDS, IN THE LIGHT O F THE ABOVE ARGUMENTS AMONG OTHER CONTENTIONS THAT MAY BE ADVANCED BEFORE HIM, IN ACCORDANCE WITH LAW, AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO T HE ASSESSEE. CONSEQUENTLY, ADDITIONAL GROUND OF THE ASSESSEE IS ALLOWED FOR ST ATISTICAL PURPOSES. IT(SS)A NO.47/HYD/09 SHRI MOHANLAL SINGH, (L/R OF LATE SMT. SUGUNA DEVI), HYDERABAD 5 8. IN VIEW OF OUR ABOVE FINDING ON THE ADDITIONAL GROUND, WE ARE NOT INCLINED AT THIS STAGE, TO GO INTO THE MERITS OF OT HER GROUNDS RAISED BY THE ASSESSEE THIS STAGE. 9. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT O N 14/12/2011 SD/- SD/- (ASHA VIJAYARAGHAVAN) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER DT/- 14 TH DECEMBER, 2011 COPY FORWARDED TO: 1. SHRI MOHANLAL SINGH, (L/R OF LATE SMT. SUGUNA DEVI ), C/O. SHRI S.RAMA RAO, ADVOCATE, FLAT NO.103, H.NO.3-6-54 2/4, INDIRADEVI NILAYAM, STREET NO.7, HIMAYATNAGAR, HYDE RABAD 500 029 2. ASST. COMMISSIONER OF INCOME - TAX CIRCLE 7 ( 1 ), HYDERABAD. 3. COMMISSIONER OF INCOME - TAX(APPEALS) - III, HYDERABAD. 4. COMMISSIONER OF INCOME-TAX II HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S.