Shri Badri Ram Choudhary, JODHPUR V. DCIT, JODHPUR

ITSSA 5/JODH/2010

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7614 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 23-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-03-2012
• Assessment Year: misc
• Appeal Filed On: 25-03-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: U C JAIN
• Keywords: Search and seizure; Opportunity of being heard; Question of law; Reassessment proceedings
• Section: 143(3); 153A; 132

Judgement Text

1 ITSSA 5(2)-10 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH JODHPUR. ( BEFORE SHRI R.K. GUPTA AND SHRI SANJAY ARORA ) ITSSA NO. 5/JODH/2010 BLOCK PERIOD : 01.04.1996 TO 06.02.2003. SHRI BADRI RAM CHOUDHARY, VS. THE DCIT, CENTRAL CIRCLE-1, B-6, SHRAMIKPURA, JODHPUR. JODHPUR. ITSSA NO. 7/JODH/2010 BLOCK PERIOD : 01.04.1996 TO 06.02.2003. THE DCIT, CENTRAL CIRCLE-1, VS. SHRI BADRI RAM C HOUDHARY, JODHPUR. B-6, SHRAMIKPURA, JODHPUR. (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI U.C. JAIN DEPARTMENT BY : SHRI SUNIL MATHUR DATE OF HEARING : 19.03.2012. DATE OF PRONOUNCEMENT : 23.3.2012 ORDER DATED : 23/03/2012. PER R.K. GUPTA, J.M. THESE ARE TWO APPEALS BY ASSESSEE AND DEPARTMENT A GAINST THE ORDER OF ASSESSING OFFICER PASSED UNDER SECTION 158BC/254 READ WITH SE CTION 142(2A) OF THE IT ACT. 2. THESE APPEALS ARE IN SECOND ROUND HERE BEFORE TH E TRIBUNAL AS AGAINST ORIGINAL ASSESSMENT ORDER, THE ASSESSEE HAD FILED APPEAL BEF ORE LD. CIT (A) AND THEREAFTER BEFORE TRIBUNAL AND THE TRIBUNAL HAD SET ASIDE THE ORDER O F LD. CIT (A) AND REMANDED THE MATTER BACK TO THE FILE OF ASSESSING OFFICER TO PASS A FRE SH ORDER AFTER AFFORDING REASONABLE 2 OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS ORIGI NALLY THE ASSESSEE WAS NOT AFFORDED REASONABLE OPPORTUNITY OF BEING HEARD BY THE ASSESS ING OFFICER. THIS ORDER WAS PASSED BY THE TRIBUNAL VIDE ORDER DATED 25.10.2007. THERE AFTER THE ASSESSMENT WAS COMPLETED UNDER SECTION 158BC/254 READ WITH SECTION 142(2A) A FRESH. 3. ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A). T HE LD. CIT (A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 4. NOW AGAINST THE ORDER OF LD. CIT (A) DATED 29.1. 2010 DECIDED IN I.T. APPEAL NO. 50/2009-10 BOTH THE PARTIES I.E. ASSESSEE AND DEPAR TMENT ARE IN APPEAL HERE BEFORE THE TRIBUNAL. 5. AGAINST THE ORDER OF TRIBUNAL DATED 25.10.2007, THE ASSESSEE FILED MISCELLANEOUS APPLICATION BEFORE THE TRIBUNAL BY WHICH IT WAS STA TED THAT ASSESSEE HAD RAISED LEGAL GROUND I.E. GROUND NO. 1(A) WHICH COULD NOT BE DISP OSED OFF. IT WAS FURTHER SUBMITTED THAT ASSESSEE HAD ALSO RAISED A GROUND NO. 14 AS ADDITIO NAL GROUND WHICH WAS ALSO LEFT TO BE DECIDED. THEREAFTER THE TRIBUNAL PASSED THE ORDER ON 19.9.2008 BY WHICH THE ORDER OF TRIBUNAL WAS RECALLED TO THE EXTENT TO DISPOSE OFF THE LEGAL GROUND I.E. GROUND NO. 1 (A) AND 14 WHICH WERE LEFT TO BE DECIDED. THEREAFTER, TRIBUNAL DID NOT DECIDE THE GROUND NO. 1(A) BY OBSERVING THAT THE TRIBUNAL HAS NO JURISDIC TION TO DECIDE THE VALIDITY OF SEARCH, THEREFORE, GROUND NO. 1 (A) WAS NOT DISPOSED OFF. 5.1. GROUND NO. 14 WHICH WAS AN ADDITIONAL GROUND, REMAINED UNDECIDED, WAS NOT ADMITTED BY THE TRIBUNAL WHILE PASSING ORDER DATED 19.9.2008. THEREAFTER ASSESSEE FILED AN APPEAL AGAINST ORDER DATED 29.1.2009 OF THE TRIB UNAL BEFORE HONBLE RAJASTHAN HIGH COURT IN ITA NO. 161/2011 RAISING FOLLOWING SUBSTAN TIAL QUESTION OF LAW :- 3 WHETHER THE TRIBUNAL IS JUSTIFIED IN HOLDING THAT IT CAN NOT EXAMINE THE LEGALITY AND CORRECTNESS OF THE RAID CO NDUCTED UNDER SECTION 132 OF THE ACT BECAUSE THE VERY ISSUE IS PE NDING BEFORE THE HIGH COURT IN W.P. NO. 5626/2005. 5.2. BEFORE HONBLE HIGH COURT, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THEY DO NOT WANT TO PROSECUTE THE WRIT PETITION IN THE HIGH COURT AND THE SAME MAY BE ALLOWED AS WITHDRAWN AND REQUESTED TO DISPOSE OFF THE APPEAL F ILED AGAINST ORDER DATED 29.1.2009 IN ITA NO. 161/2011. THEREAFTER, THE HONBLE HIGH COU RT PASSED ORDER BY WHICH IT WAS ALLOWED TO WITHDRAW THE WRIT PETITION AND IN RESPEC T TO APPEAL IN ITA NO. 161/2011 THE HONBLE HIGH COURT SET ASIDE THE ORDER OF TRIBUNAL DATED 29.1.2009 AND DIRECTED THE TRIBUNAL TO DECIDE THE SAME AFRESH ON MERITS STRICT LY IN ACCORDANCE WITH LAW. WHILE DECIDING THE APPEAL, THE TRIBUNAL WOULD NOT ONLY DE CIDE ALL THE ISSUES RAISED IN APPEAL ON MERITS BUT ALSO TO DECIDE THE ISSUES RELATING TO LE GALITY AND VALIDITY OF THE RAID CHALLENGED BY THE APPELLANT AFTER GIVING DUE OPPORTUNITY TO TH E DEPARTMENT TO JUSTIFY THE RAID PROCEEDINGS CONDUCTED UNDER SECTION 132 IBID. THE HONBLE HIGH COURT ALSO DIRECTED TO DECIDE THE APPEAL WITHIN A PERIOD OF 6 MONTHS. 5.3. THEREAFTER AS PER DIRECTION OF HONBLE HIGH CO URT, THE CASE WAS FIXED FOR HEARING AND AFTER HEARING THE PARTIES IN DETAIL AND AFTER E XAMINING THE SATISFACTION RECORDED BY HE DEPARTMENT BEFORE CONDUCTING THE SEARCH AND CONSIDE RING THE DETAILED WRITTEN SUBMISSIONS FILED ON BEHALF OF BOTH THE PARTIES I.E . ASSESSEE AND DEPARTMENT AND TAKING INTO CONSIDERATION THE VARIOUS CASE LAWS RELIED UPO N BY BOTH THE PARTIES, THE TRIBUNAL HELD THAT THE SEARCH IN CASE OF ASSESSEE WAS NOT VALID A ND GROUND NO. 1(A) STANDS DECIDED IN FAVOUR OF THE ASSESSEE. THIS ORDER WAS PASSED BY T HE TRIBUNAL IN ITSSA NO. 55/JP/2006 VIDE ORDER DATED 19.01.2012. 4 6. NOW THE LD. COUNSEL OF THE ASSESSEE, AT THE VERY OUTSET, SUBMITTED THAT SINCE THE SEARCH HAS BEEN HELD AS INVALID, THEREFORE, THE ASS ESSMENT SO COMPLETED BY THE ASSESSING OFFICER UNDER SECTION 158BC HAVE BECOME VOID ABINIT IO AND ACCORDINGLY THE APPEALS OF THE ASSESSEE AS WELL AS OF THE DEPARTMENT HAVE NOW BECOME INFRUCTUOUS. IT WAS FURTHER SUBMITTED THAT SINCE ORIGINAL ASSESSMENT ORDER HAS BECOME NON EST BECAUSE THE SEARCH HAS BEEN HELD BY HE TRIBUNAL AS INVALID, THEREFORE, ANY ORDER PASSED IN CONSEQUENCE OF THE ASSESSMENT HAVE ALSO BECOME INVALID AND INFRUCTUOUS IN NATURE. ACCORDINGLY IT WAS PRAYED THAT APPEAL OF THE ASSESSEE AS WELL AS OF TH E DEPARTMENT ARE NOT MAINTAINABLE NOW. 7. IN REPLY, THE LD. CIT D/R SUBMITTED THAT THOUGH THE TRIBUNAL HAS HELD THAT SEARCH WAS INVALID BUT THE HONBLE HIGH COURT HAD DIRECTED THE TRIBUNAL TO DISPOSE OFF THE ISSUE ON MERIT AS WELL AS LEGAL GROUND. THE LEGAL GROUND HAS BEEN DECIDED BY THE TRIBUNAL WHILE PASSING ORDER IN ITSSA NO. 55/JP/2006 DATED 1 9.1.2012, HOWEVER, NO FINDING HAS BEEN GIVEN ON MERIT. THEREFORE, NOW SINCE THE APPEA L OF THE ASSESSEE AS WELL AS OF THE DEPARTMENT HAS BEEN FIXED, ACCORDINGLY THEY SHOULD BE DECIDED ON MERIT. 8. WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED T HEM CAREFULLY. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERI AL ON RECORD AND SUBMISSIONS OF BOTH THE PARTIES, WE FIND THAT BOTH THESE APPEALS HAVE B ECOME INFRUCTUOUS IN NATURE AND, THEREFORE, THEY ARE NOT MAINTAINABLE. HAVING CONSI DERED THE SUBMISSIONS OF LD. CIT D/R, AFTER PERSUADING OURSELVES, WE ARE NOT IN AGREEMENT WITH THE CONTENTION OF LD. CIT D/R BECAUSE OF THE REASON THAT HONBLE RAJASTHAN HIGH C OURT HAS SET ASIDE THE ORDER OF THE TRIBUNAL DATED 29.1.2009 AND DIRECTED THE TRIBUNAL TO DISPOSE OFF THE LEGAL GROUND AS WELL AS GROUND ON MERIT. THE ORDER OF TRIBUNAL DATED 29 .1.2009 WAS AGAINST THE ORDER OF LD. CIT (A) WHICH WAS PASSED AGAINST ORIGINAL ASSESSMEN T ORDER PASSED UNDER SECTION 5 158BC. BEFORE DECIDING THE LEGAL GROUND VIDE ORDER DATED 29.1.2009, THE TRIBUNAL HAS PASSED AN ORDER VIDE ORDER DATED 25.10.2007 BY WHIC H THE GROUNDS ON MERIT WERE SET ASIDE TO THE FILE OF ASSESSING OFFICER TO PASS A FR ESH ORDER AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD. THEREAFTER, ASSESSING OFFICER PASSED ORDER UNDER SECTION 158BC/254 READ WITH SECTION 142(2A) AND AGAINST THI S ORDER ASSESSEE FILED APPEAL BEFORE LD. CIT (A) WHO ALLOWED THE APPEAL PARTLY IN FAVOUR OF THE ASSESSEE AND PARTLY IN FAVOUR OF THE DEPARTMENT AND AGAINST THIS ORDER OF LD. CIT (A) BOTH ARE IN APPEAL HERE BEFORE THE TRIBUNAL NOW AS STATED ABOVE. 8.1. THE ORDER OF TRIBUNAL DATED 29.1.2009 WAS SET ASIDE BY THE HONBLE HIGH COURT WHICH WAS AGAINST ORIGINAL ASSESSMENT ORDER. SINCE THE TRIBUNAL HAS DECIDED THE LEGAL GROUND BY HOLDING THAT SEARCH WAS INVALID, THEREFOR E, ORIGINAL ASSESSMENT HAS BECOME NON EST AND, THEREFORE, FOR THIS REASON THE GROUNDS ON MERIT WERE NOT DECIDED BY THE TRIBUNAL. FOR THESE REASONS THE REASSESSMENT PROCEEDINGS WHIC H ARE IN CONSEQUENCE TO THE ORIGINAL ASSESSMENT ORDER AND, THEREFORE, THEY HAVE ALSO BEC OME INFRUCTUOUS AS THESE ARE ALSO NON EST. IN VIEW OF THE ABOVE REASONS, WE REJECT THE C ONTENTION OF LD. CIT D/R, AND IT IS A SETTLED POSITION IN LAW THAT ONCE SEARCH HAS BEEN H ELD INVALID, THE ASSESSMENT COMPLETED ON THE BASIS OF SEARCH DOES NOT STAND. / THIS VERY ISSUE HAS BEEN DECIDED BY THE MUMBAI BENCH OF THE TRIBUNAL IN CASE OF M/S. J.M. TRADING CORPORATION, 20 SOT 489 IN WHICH IT WAS HELD THAT SEARCH WAS NOT VALID AGAINST THE ASSE SSEE HENCE ASSESSMENT OF ASSESSEE UNDER SECTION 143(3) READ WITH SECTION 153A IN PURS UANCE OF SUCH INVALID SEARCH HAD TO BE DECLARED AS NULL AND VOID. WHILE HOLDING SO, VA RIOUS CASE LAWS HAS BEEN CONSIDERED BY THE TRIBUNAL INCLUDING THE DECISION OF SPECIAL BENC H IN CASE OF C. RAMAIAH REDDY, 268 6 ITR 491 (BANG)(SB), IN CASE OF KELVINATOR OF INDIA LTD., 256 ITR 1 (DEL.)(FB), M.B. LAL, 279 ITR 298 (DEL.) AND NAWAL KISHORE & SONS JEWELLE RS, 81 TTJ 362 (LUCK)(SB). 8.2. IN THE PRESENT CASE ALSO THE FACTS ARE IDENTIC AL. THE SEARCH HAS BEEN HELD INVALID BY THE TRIBUNAL. THEREFORE, THE ASSESSMENT COMPLET ED UNDER SECTION 158BC ORIGINALLY HAS ALSO BECOME INVALID. ACCORDINGLY WE HOLD THAT THE CONSEQUENTIAL ASSESSMENT ORDER PASSED HAS ALSO BECOME INVALID AND THE APPEAL OF TH E ASSESSEE AS WELL AS OF THE DEPARTMENT ARE DISMISSED. 9. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. 10. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 23 .3.2012. SD/- SD/- ( SANJAY ARORA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JODHPUR, COPY FORWARDED TO :- SHRI BADRI RAM CHOUDHARY, JODHPUR. THE DCIT, CENTRAL CIRCLE-1, JODHPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITSSA NO. 5(2)/JODH/2010 ) BY ORDER, AR ITAT JODHPUR.