M/S. ACIT CIR 21(3), MUMBAI V. THE SNEHA ENTERPRISES, MUMBAI

ITSSA 47/MUM/2008

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8628 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 05-01-2011
• Assessment Year: misc
• Appeal Filed On: 05-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R G TRALSHAWALA
• Keywords: Unexplained cash credit; Unexplained expenditure; Procedural lapse; Block assessment
• Section: 69C; 143(3); 68; 145; 132; 144; 15

Judgement Text

1 IT(SS) 47/MUM/2008 I II IN THE INCOME TAX APPELLATE TRIBUNAL N THE INCOME TAX APPELLATE TRIBUNAL N THE INCOME TAX APPELLATE TRIBUNAL N THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH MUMBAI BENCH MUMBAI BENCH MUMBAI BENCH E EE E MUMBAI MUMBAI MUMBAI MUMBAI BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI R R R R K PANDA, AM K PANDA, AM K PANDA, AM K PANDA, AM & SMT ASHA VIJAYARAGHAVAN, JM & SMT ASHA VIJAYARAGHAVAN, JM & SMT ASHA VIJAYARAGHAVAN, JM & SMT ASHA VIJAYARAGHAVAN, JM IT ITIT IT(SS) (SS) (SS) (SS) NO. NO. NO. NO. 47/MUM/2008 47/MUM/2008 47/MUM/2008 47/MUM/2008 (B P 21.7.1995 TO 24.1.2001) THE ASST COMMR OF INCOME TAX CIR 21(3), MUMBAI VS M/S SNEHA ENTERPRISES D-101 PRASHANT APARTMENT, POWAI MUMBAI 76 (APPELLANT) (RESPONDENT) PAN PAN PAN PAN AAAFS9847D AAAFS9847D AAAFS9847D AAAFS9847D ASSESSEE BY: SHRI R G TRALSHAWALA REVENUE BY: SHRI D SONGATE O OO O R RR R D DD D E EE E R RR R PER PER PER PER R RR R K PANDA K PANDA K PANDA K PANDA: :: : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 4.1.2008 OF THE CIT(A) - XXI MUMBAI FOR THE BLOCK PERIOD 1.7.1995 TO 24.1.2001. 2 IN THIS CASE SEARCH ACTION IN THE CASE OF M/S PRA SHANT & SEJAL JEWELLERS AND OTHERS WAS CARRIED ON U/S 132 OF THE I T ACT ON 24. 1.2001. SUBSEQUENT TO THE SEARCH ACTION, DOCUMENTS PERTAINING TO THE ASSESSEE WERE SEIZED FROM THE PREMISES. ACCORDINGLY, THE ASSESSING OFFICER ISSU ED NOTICE U/S 158BD ON 4.12.2003. IN RESPONSE TO THE SAME, THE ASSESSEE F ILED RETURN IN FORM B ON 23.1.2003 DECLARING LOSS OF ` . 47,03,443/-. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT DETERMINING THE TOTAL INCOME AT ` . 77,03,443/- BY MAKING AN ADDITION OF ` . 47,03,433/- BEING UNACCOUNTED CASH U/S 69C OF THE ACT AND ANOTHER ` . 30 LACS BEING UNEXPLAINED CASH CREDIT U/S 68 OF T HE I T ACT. 2 IT(SS) 47/MUM/2008 3 IN APPEAL, THE CIT(A) DELETED BOTH THE ADDITION F OR WHICH THE REVENUE IS IN APPEAL HERE BEFORE US WITH THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD CIT(A ERRED IN DELETING THE ADDITION OF ` . 47,03,433/- BEING UNACCOUNTED EXPENDITURE U/S 69C OF THE I T ACT, 1961 II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD CIT(A) ERRED IN DELETING THE ADDITION OF ` 30 LACS BEING UNEXPLAINED CASH CREDIT U/S 68 OF THE I T ACT. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BEING PERVERSE AND CONTRARY TO LAW BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4 THE ASSESSEE IN THIS CASE HAS EARLIER VIDE APPLIC ATION DATED 8.2. 2010 RAISED THE FOLLOWING GROUND UNDER RULE 27 OF THE IT AT RULES: THE LD ASSESSING OFFICER AND CIT(A) ERRED IN NOT APPRECIATING THAT THE BLOCK ASSESSMENT ORDER IS BAD IN LAW AND LIABLE TO BE QUASHED FOR THE REASON THAT THE SAME IS PASSED WITHOUT ISSUING NOTI CE U/S 143(2) OF THE ACT, WHICH IS MANDATORY AND PREREQUISITE FOR ASSUMI NG JURISDICTION FOR FRAMING BLOCK ASSESSMENT. 5 REFERRING TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF NTPC REPORTED IN 229 ITR 383 AND A HOST OF OTHER D ECISIONS, IT WAS MENTIONED THAT THE ISSUE CAN BE AGITATED EVEN IF NO APPEAL OR CROSS APPEAL IS FILED BY THE RESPONDENT. 5.1 SUBSEQUENTLY, THE ASSESSEE VIDE APPLICATION U/S 254 OF THE I T ACT 1961 DATED 26.10.2010 REQUESTED THE TRIBUNAL TO ADMIT TH E FOLLOWING ADDITIONAL GROUND WHICH READS AS UNDER: 3 IT(SS) 47/MUM/2008 THE LD ASSESSING OFFICER AND CIT(A ERRED IN NOT A PPRECIATING THAT THE BLOCK ASSESSMENT ORDER IS BAD IN LAW AND LIABLE TO BE QUASHED FOR THE REASON THAT THE SAME IS PASSED WITHOUT ISSUING NOTI CE U/S 143(2) OF THE ACT, WHICH IS MANDATORY AND PREREQUISITE FOR ASSUMI NG JURISDICTION FOR FRAMING BLOCK ASSESSMENT. 6 IT WAS SUBMITTED THAT THE ABOVE APPLICATION IS MA DE FOR RAISING THE LEGAL CONTENTION, WHICH COULD BE RAISED AT ANY TIME AS HA S BEEN HELD BY THE HONBLE SUPREME COURT IN THE CASE OF NTPC (SUPRA). REFERRI NG TO THE FOLLOWING DECISIONS, IT WAS SUBMITTED THAT COURTS HAVE HELD THAT THE ISS UE CAN BE AGITATED EVEN IF NO APPEAL OR CROSS APPEAL IS FILED BY THE RESPONDENT. I) DAHOD SAHAKARI KHARID VECHAN SANG LTD VS CIT 28 2 ITR 321 (GUJ) II) ASSAM CO (INDIA) LTD VS CIT 256 ITR 423 (GAU) III) CIT VS SMT S VIJAYALAKSHMI 242 ITR 46 (MAD) 7 THE LD DR, ON THE OTHER HAND OBJECTED TO THE APPL ICATION MADE UNDER RULE 27 OF THE ITAT RULES. 8 THE LD COUNSEL FOR THE ASSESSEE, IN HIS REJOINDER REFERRING TO THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF CABL E NEWS NETWORK LP, LLP VS ASST DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION ) REPORTED IN 36 DTR 233 SUBMITTED THAT RESPONDENT CAN SUPPORT THE ORDER OF THE CIT(A) BY TAKING ANY GROUND. REFERRING TO THE DECISION OF THE HONBLE SU PREME COURT IN THE CASE OF ACIT & ANOTHER VS HOTEL BLUE MOO REPORTED IN 321 I TR 362 (SC) HE SUBMITTED THAT WHERE NO NOTICE U/S 143(2) IS ISSUED IN CASE OF BLOCK ASSESSMENT, THE ENTIRE ASSESSMENT BECOMES BAD IN LAW AND LIABLE TO BE QUAS HED. 4 IT(SS) 47/MUM/2008 9 AFTER HEARING THE RIVAL SUBMISSIONS MADE BY BOTH THE PARTIES, THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ADMITTE D. 10 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BOTH THE PARTIES. THE LD DR FAIRLY CONCEDED THAT NO NOTICE U/S 143(2) HAS BEEN ISSUED IN THE INSTANT CASE. WE FIND THE HONBLE SUPREME COURT IN THE CAS E OF ACIT & ANOTHER VS HOTEL BLUE MOON REPORTED IN 321 ITR 362 (SC) HAS HE LD AS UNDER: IF THE AO, FOR ANY REASON, REPUDIATES THE RETURN F ILED BY AN ASSESSEE IN RESPONSE TO NOTICE U/S 158BC(A) OF THE I T ACT, 196 1 RELATING TO A BLOCK ASSESSMENT, THE AO MUST NECESSARILY ISSUE NOTICE U/ S 143(2) OF THE ACT WITHIN THE TIME PRESCRIBED IN THE PROVISO TO SEC. 1 43(2). BY MAKING THE ISSUE OF NOTICE MANDATORY, SECTION 15 8BC, DEALING WITH BLOCK ASSESSMENTS, MAKES SUCH NOTICE THE VERY FOUND ATION FOR JURISDICTION. SUCH NOTICE IS REQUIRED TO BE SERVED ON THE PERSON WHO IS FOUND TO HAVE UNDISCLOSED INCOME. SECTION 158BC PROVIDES FOR ENQUIRY AND ASSESSMENT. AFTER THE RETURN IS FILED, CLAUSE (B) OF SEC. 158BC PROVES THAT THE AO SHALL PROCEED TO DETERMINE THE UNDISCLOSED INCOME OF THE BLOCK PERIO D IN THE MANNER LAID DOWN IN SECTION 158BB AND THE PROVISIONS OF SECTIO N 142, SUB SECTIONS (2) AND (3) OF SECTION 143, SECTION 144 AND SECTION 145 SHALL, SO FAR AS MAY BE APPLY/ THIS INDICATES THAT THIS CLAUSE ENABLES THE AO, AFTER THE RETURN IS FILED, TO COMPLETE THE ASSESSMENT U/S 143(2) BY FOL LOWING THE PROCEDURE LIKE ISSUE OF NOTICE U/S 143(2)/142. THIS DOES NOT PROVIDE ACCEPTING THE RETURN AS PROVIDED U/S 143(1)(A); THE OFFICER HAS T O COMPLETE THE ASSESSMENT U/S 143(3) ONLY. IF AN ASSESSMENT IS TO BE COMPLETED U/S 143(3) READ WITH SECTION 158BC, NOTICE U/S 143(2) S HOULD BE ISSUED WITHIN ONE YEAR FROM THE DATE OF FILING OF THE BLOCK RETUR N. OMISSION ON THE PART OF THE ASSESSING AUTHORITY TO ISSUES NOTICE U/S 143(2) CANNOT BE A PROCEDURAL IRREGULARITY AND IS NOT CURABLE. THEREFORE, THE REQ UIREMENT OF NOTICE U/S 143(2) CANNOT BE DISPENSED WITH. 11 SINCE IN THE INSTANT CASE, ADMITTEDLY, NO NOTICE U/S 143(2) HAS BEEN ISSUED; THEREFORE, THE BLOCK ASSESSMENT ORDER PASSE D BY THE ASSESSING OFFICER IS 5 IT(SS) 47/MUM/2008 BAD IN LAW AND LIABLE TO BE QUASHED. ACCORDINGLY, THE ASSESSMENT ORDER IS QUASHED AND THE VARIOUS ADDITIONS MADE BY THE ASSES SING OFFICER DO NOT SURVIVE. SINCE THE ENTIRE ASSESSMENT ORDER IS HELD TO BE BAD IN LAW AND IS QUASHED; THEREFORE, THE ORDER OF THE CIT(A) DELETING THE ADD ITION IS UPHELD, ALTHOUGH ON DIFFERENT GROUNDS. THE GROUNDS RAISED BY THE REVEN UE ARE NOT BEING ADJUDICATED ON MERIT SINCE THE SAME, IN OUR OPINION BECOMES ONL Y ACADEMIC IN NATURE. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMI SSED. 12 IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON THE 28 TH DAY OF JAN 2011. SD/- SD/- ( (( (S SS SMT ASHA VIJAYARAGHAVAN MT ASHA VIJAYARAGHAVAN MT ASHA VIJAYARAGHAVAN MT ASHA VIJAYARAGHAVAN ) )) ) JUDICIAL MEMBER ( (( ( R K PANDA R K PANDA R K PANDA R K PANDA ) )) ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED:28 TH , JAN 2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI