Smt. Belaben P.Doshi, Surat V. The ACIT., Circle-3(1), Surat

ITSSA 49/AHD/2007

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8293 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 15-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 13-07-2011
• Assessment Year: misc
• Appeal Filed On: 07-03-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JASBIR S CHOUHAN
• Assessee Lawyers: RAJESH UPADHYAYAR
• Keywords: Block assessment
• Section: 133(6); 132

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE S/SHRI D. K. TYAGI, JM AND A. MOHAN ALANKAMO NY, AM SMT. BELABEN P. DOSHI, A- 405, YOGI COMPLEX, OPP. CHOKSHI WADI, NEW RANDER ROAD, SURAT. VS. ASSTT. CIT, CIRCLE-3(1), SURAT. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI RAJESH UPADHYAY,AR RESPONDENT BY:- SHRI JASBIR S. CHOUHAN, SR.D.R. O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING FO LLOWING GROUNDS :- (1) LD. A.O. HAS ERRED IN LAW AND ON FACTS TO ISSUE NOT ICE U/S 158BD R.W.S. 158BC OF I.T. ACT, 1961. (2) ADDITION OF RS.1,40,000/- UNDER THE HEAD UNDISCLOSE D INCOME, CANNOT BE MADE ON THE BASIS OF DISCLOSURE MADE BY M /S OM ORGANIZERS WHO CARRIED OUT BUILDING PROJECT IN THE NAME OF YOGI COMPLEX. IN ADDITION TO THE ABOVE, THE ASSESSEE HAS RAISED A N ADDITIONAL GROUND AS UNDER:- VIDE LETTER DATED 1/9/2008- THE LD. ASSTT. CIT, CIRCLE 3(1), SURAT HAS ERRED IN LAW AND ON FACTS TO COMPLETE ASSESSMENT PROCEEDINGS FOR THE BLOCK PE RIOD UNDER IT(SS)A NO.49/AHD/2007 BLOCK PERIOD 1990-91 TO 1999-2000 AND UPTO 29/10/1999 IT(SS)A NO.49/AHD/2007 BLOCK PERIOD 1990-91 TO 1999-2000 & PERIOD UPTO 19- 10-1999 2 APPEAL WITHOUT HAVING BEEN SERVED UPON THE APPELLAN T A NOTICE UNDER SECTION 143(2) OF THE ACT. HOWEVER, THE ASSE SSEE DID NOT PRESS THIS GROUND AT THE TIME OF HEARING. FURTHER, THE ASSESSEE HAS RAISED THE FOLLOWING ADDI TIONAL GROUNDS VIDE LETTER DATED 8/9/2008:- (1) ON FACTS AND CIRCUMSTANCES OF THE CASE, THE PROCEED INGS INITIATED U/S 158BD OF THE ACT AGAINST THE APPELLAN T MUCH AFTER FRAMING OF BLOCK ASSESSMENT OF M/S OHM ORGANIZERS I .E. SEARCHED PERSON IS BAD IN THE EYES OF LAW AND LIABL E TO THE QUASHED. (2) ON FACTS AND CIRCUMSTANCES OF THE CASE, THE PROCEED INGS INITIATED U/S 158BD OF THE ACT BY THE ASSTT. CIT, C IR.391), SURAT AND UPHOLD BY CIT(A)-II, SURAT AGAINST THE APPELLAN T MUCH AFTER GETTING INTIMATION FROM DY. CIT, CC-1, SURAT IS BAD IN THE EYES OF LAW AND LIABLE TO BE QUASHED. (3) ON FACTS AND CIRCUMSTANCES OF THE CASE, THERE WAS N O JUSTIFICATION FOR INITIATING THE PROCEEDINGS UNDER S.158BD OF THE ACT IN ABSENCE OF SATISFACTION THAT REQUIRED UNDER THE LAW AND AS SUCH THE ASSESSMENT FRAMED THEREOF IS NULL AND VOID AND LIABLE TO BE DECLARED SO. 2. THE FACTS OF THE CASE ARE THAT A SEARCH U/S 132 OF THE ACT WAS CARRIED OUT AT THE PREMISES OF M/S OHM DEVELOPERS/O RGANIZERS ON 29/10/1999. IN THE COURSE OF THE SEARCH OF THE PREM ISES OF M/S OHM DEVELOPERS AND M/S OHM ORGANIZERS, EVIDENCE WAS FOU ND REGARDING THE RECEIPT OF ON MONEY FROM VARIOUS PERSONS WHO HAD BO OKED FLATS AND SHOPS AT YOGI COMPLEX, RANDER ROAD, SURAT. DURING T HE COURSE OF SEARCH, THE PARTNERS OF THE FIRM WHOSE STATEMENTS WERE RECO RDED ON OATH, ADMITTED TO HAVE RECEIVED ON MONEY AS PER THE ACCOUNTS SEIZE D IN THE COURSE OF IT(SS)A NO.49/AHD/2007 BLOCK PERIOD 1990-91 TO 1999-2000 & PERIOD UPTO 19- 10-1999 3 SEARCH. THE ON MONEY SO RECEIVED WAS ASSESSED IN TH E HANDS OF M/S OHM DEVELOPERS AND M/S OHM ORGANIZERS AND THE ADDITION MADE IN BLOCK ASSESSMENT PROCEEDINGS WAS CONFIRMED BY THE HON. IT AT, AHMEDABAD BENCH. THE AO DURING THE COURSE OF ASSESSMENT PROCE EDINGS ON VERIFICATION FOUND THAT SOME DOCUMENTS/PAPERS SEIZE D DURING THE SEARCH ARE RELATED TO THE ASSESSEE. THEREFORE, ACTION U/S 158BD WAS INITIATED IN THE CASE OF THE ASSESSEE. 3. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) WH EREIN WRITTEN SUBMISSION WAS MADE. IN THE WRITTEN SUBMISSION IT W AS PLEADED THAT DURING THE SEARCH IN THE PREMISES OF M/S OHM DEVELO PERS AND M/S OHM ORGANIZERS, NO MATERIAL WAS FOUND WHICH WOULD ENABL E THE AO TO DRAW THE SATISFACTION THAT THE ASSESSEE HAD PURCHASED PR OPERTY OUT OF UNDISCLOSED INCOME. NO SEARCH WAS CONDUCTED IN THE CASE OF ASSESSEE AND THE NOTICE WAS ISSUED ON THE BASIS OF VARIOUS INQUI RIES CONDUCTED BY DIFFERENT AUTHORITIES. IT WAS FURTHER CONTENDED THA T NO MATERIAL PERTAINING TO THE ASSESSEE WAS EITHER FOUND OR SEIZED FROM THE PREMISES OF M/S OHM DEVELOPERS. MOREOVER IT WAS CONTENDED THAT ANY MATE RIAL COMING INTO THE POSSESSION OF THE AO AFTER INVOKING THE PROVISIONS OF SECTION 158BD OR ANY MATERIAL WHICH DOES NOT PERTAIN TO SUCH OTHER P ERSON, CANNOT BE TAKEN INTO CONSIDERATION FOR EXERCISING JURISDICTION UNDE R THE SAID SECTION. IN THE ABSENCE OF SUCH SATISFACTION THE ASSESSMENT MADE ON ANY OTHER PERSON IT(SS)A NO.49/AHD/2007 BLOCK PERIOD 1990-91 TO 1999-2000 & PERIOD UPTO 19- 10-1999 4 WOULD BE ILLEGAL AND VOID AB-INITIO. FURTHER THE NO TICE U/S 158BD WAS ISSUED AFTER ALMOST SIX YEARS AND AFTER MAKING IN-D EPTH ENQUIRIES AND INVESTIGATIONS, THE PROCEEDINGS INITIATED THEREFORE , WERE BARRED BY LIMITATION. THE ASSESSEE RELIED ON FOLLOWING CASE L AWS:- (I) P. MAHENDRA REDDY VS. ACIT (2005) 2 SOT 696 (HYD-TR IB) (II) SUBBARAJU & CO. VS. ACIT (2004) 91 ITD 118 (BANG-TR IB) 3.1 THE CIT(A) OBSERVED THAT THE PARTNERS OF M/S OH M DEVELOPERS HAD ACCEPTED THAT THE NOTINGS IN SUCH BOOKS OF ACCOUNT CONTAINED AMOUNTS RECEIVED FROM VARIOUS PARTIES BOTH IN CHEQUE AND IN CASH, FOR THE PURPOSE OF BOOKING FLATS AND SHOPS. THE EVIDENCE WAS SUFFIC IENT FOR THE AO TO FORM THE SATISFACTION THAT THE AMOUNTS PAID IN CASH BY THE ASSESSEE REPRESENTED THE ASSESSEES UNDISCLOSED INCOME. THE EVIDENCE WAS FOUND FROM THE PREMISES OF THE PERSON WHO WAS SEARCHED. O N THE BASIS OF SUCH FINDING, INQUIRIES WERE MADE WITH THE ASSESSEE THRO UGH A LETTER ISSUED U/S 133(6) OF THE I.T. ACT DATED 8/1/2002. ON RECEIPT O F THE REPLIES TO THE QUERIES RAISED IN THE SAID LETTER, THE AO WAS SATIS FIED THAT THIS WAS A FIT CASE FOR INITIATING PROCEEDINGS U/S 158BD OF THE AC T. THE SEIZED MATERIAL WAS HANDED OVER BY THE INVESTIGATION WING TO THE AO . SO ALL THE CONDITIONS U/S 158BD R.W.S. 158BC WERE CLEARLY SATI SFIED. COMING TO THE DELAY IN THE ISSUE OF NOTICE, AFTER THE SEARCH ON 2 9/10/1999, ENQUIRIES WERE INITIATED WITH ALL THE PERSONS WHOSE NAMES AND THE PAYMENTS MADE IT(SS)A NO.49/AHD/2007 BLOCK PERIOD 1990-91 TO 1999-2000 & PERIOD UPTO 19- 10-1999 5 BY THEM, FEATURED IN THE BOOKS OF ACCOUNT OF M/S OH M DEVELOPERS AND M/S OHM ORGANISERS. THIS TOOK CONSIDERABLE TIME. IN ITIALLY LETTERS U/S 133(6) WERE ISSUED. IN THE CASE OF THE ASSESSEE, TH IS WAS ISSUED ON 8/1/2002. THE ASSESSEE REPLIED VIDE LETTER DATED 12 /4/2004. IT WAS ONLY AFTER THIS, THAT THE NOTICE U/S 158BD WAS ISSUED ON 12/4/2004. THESE FACTS CLEARLY SHOW THAT FIRSTLY, THERE WAS SUFFICIENT APP LICATION OF MIND BY THE AO AND AFTER HAVING SATISFIED HIMSELF THAT THE EVID ENCE FOUND IN COURSE OF THE SEARCH SHOWS THAT THE CASH PAYMENTS MADE BY THE ASSESSEE REPRESENTED THE ASSESSEES UNDISCLOSED INCOME. SECO NDLY, THERE WAS NO TIME GAP BETWEEN THE ASSESSEES REPLY TO THE LETTER U/S 133(6) AND THE ISSUE OF THE NOTICE U/S 158BD OF THE ACT. THE NOTIC E WAS ISSUED ON THE SAME DAY. AFTER INTERPRETING THE CASE LAWS CITED BY THE ASSESSEE AND CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THE CIT (A) FINALLY HELD AS UNDER :- 6.2 IN VIEW OF THE ABOVE, IT IS HELD THAT THERE IS ABSOLUTELY NO MERIT IN THE CONTENTIONS OF THE AR. THE NOTICE U/S 158BD WAS ISSUED WITHIN A REASONABLE TIME AND THE AO HAD FULLY SATISFIED HIMS ELF BEFORE ISSUING THE SAID NOTICE, ON THE BASIS OF THE MATERIALS PERTAINI NG TO THE ASSESSEE, FOUND AND SEIZED IN COURSE OF THE SEARCH OF THE PREMISES OF M/S OHM DEVELOPERS AND OHM ORGANISERS. THE PROCEEDINGS THUS INITIATED WERE VALID IN LAW, AND SO WAS THE ORDER PASSED U/S 158BD R.W.S. 158BC OF THE I.T. ACT, IN THE CASE OF THE ASSESSEE. THE APPEAL ON THIS GROUND IS THEREFORE, REJECTED. THE ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. IT(SS)A NO.49/AHD/2007 BLOCK PERIOD 1990-91 TO 1999-2000 & PERIOD UPTO 19- 10-1999 6 4. WE HAVE HEARD THE RIVAL PARTIES. AT THE BEGINNIN G OF THE HEARING THE LD. AR PRODUCED BEFORE THE BENCH THE ORDER OF THE T RIBUNAL IN IT(SS)A NO.166/AHD/2007 FOR THE BLOCK PERIOD 1989-90 TO 199 9-2000 WHEREIN A SIMILAR ACTION U/S 158BD WAS TAKEN AGAINST SHRI VIJ AY AMRITLAL BASED ON THE SAME SEARCH CONDUCTED IN THE PREMISES OF M/S OH M ORGANIZERS AND M/S OHM DEVELOPERS IN IDENTICAL CIRCUMSTANCE WHEREI N THE TRIBUNAL DISPOSED OF THE MATTER ON THE IDENTICAL ISSUE AS UN DER :- 9. IN E.J. ULAHANNA V. ACIT IN ITA NO.19/AHD/2007 PRONOUNCED ON 18-03-2009, FOLLOWING THE DECISION OF SPECIAL BENCH IN THE CASE OF MANOJ AGARWAL (SUPRA) HELD THAT WITHOUT THERE BEING SATISFACTION RECORDED PRIOR TO COMPLETION OF ASSESSMENT OF THE P ERSON SEARCHED PROCEEDINGS SO INITIATED U/S.158BD OF THE ACT WILL NOT BE VALID. IN THAT CASE NOTICE U/S.158BD OF THE ACT WAS ISSUED ON 10-0 6-2004. BUT SEARCHED AGAINST OHM DEVELOPERS WAS CARRIED OUT ON 29-10-199 9, THEREFORE ASSESSMENT U/S. 158BD 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 HONBL E 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 AC T IN THE CASE OF PERSON SEARCHED (OHM DEVELOPERS) WAS COMPLE TED ON 30-11-2001 THEN ISSUING NOTICE U/S.158BD OF THE ACT ON 29-03-2 006 AGAINST ASSESSEE IS BARRED BY LIMITATION. 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. FOLLOWING THESE DECISIONS WE HOLD THAT THE BLOCK ASSESSMENT FAMED I N CASE OF ALL THE ABOVE ASSESSEE ARE NOT LEGALLY VALID AND THEREFORE ARE QUASHED FOR THE REASON THAT NOTICES U/S.158BD OF THE ACT WERE ISSUE D IN THESE CASES LONG AFTER COMPLETION OF ASSESSMENT IN THE CASE OF PERSO N SEARCHED I.E. OHM DEVELOPERS . IT(SS)A NO.49/AHD/2007 BLOCK PERIOD 1990-91 TO 1999-2000 & PERIOD UPTO 19- 10-1999 7 5. IN THE LIGHT OF ABOVE FINDINGS, WE ARE BOUND TO ALLOW THE APPEAL OF THE ASSESSEE SINCE THE FACTS AND CIRCUMSTANCES OF T HE CASE ARE IDENTICAL. IT IS ORDERED ACCORDINGLY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER WAS PRONOUNCED IN OPEN COURT ON 15/7/11. SD/- SD/- (D.K. TYAGI) (A. MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DATED : 15/7/11. MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD IT(SS)A NO.49/AHD/2007 BLOCK PERIOD 1990-91 TO 1999-2000 & PERIOD UPTO 19- 10-1999 8 1.DATE OF DICTATION 13/7/11. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER 13/7/11. /OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..