DCIT, Ernakulam V. Shri V.H. Yahia, Ernakulam

ITSSA 52/COCH/2008

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8385 (ITAT-COCHIN)
• Duration Of Justice: 4 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 24-08-2012
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 09-08-2012
• Assessment Year: misc
• Appeal Filed On: 30-05-2008
• Court: TRIBUNAL
• Department Lawyers: A S BINDHU
• Assessee Lawyers: P K SASIDHARAN
• Keywords: Search and seizure; Competent authority; Block assessment
• Section: 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.(SS)A. NOS. 50 & 52/COCH/2008 BLOCK PERIOD: 1991-92 TO 2001-02(PART) THE DEPUTY COMMISSIONER OF INCOME-TAX,CIRCLE-1(1), ERNAKULAM VS. 1. M/S. HARBOUR SYNDICATE, ESSAR BUILDING, G.V.IYER ROAD, KOCHI-682 003. [PAN: AABCH 7480H] 2. SHRI V.H. YAHIA, WINDSOR COURT APARTMENTS, ASHIRBHAVAN ROAD, KACHERIPADY, ERNAKULAM-682 018. [PAN:AAAEPY 1068J] (REVENUE-APPELLANT) (ASSESSEE-RESPONDENTS ) C.O. NOS. 15/COCH/2012 & 59/COCH/2008 (ARSG. OUT OF I.T.(SS)A. NOS. 50 & 52/COCH/2008 BLOCK PERIOD: 1991-92 TO 2001-02(PART) 1. M/S. HARBOUR SYNDICATE, ESSAR BUILDING, G.V.IYER ROAD, KOCHI-682 003. 2. SHRI V.H. YAHIA, WINDSOR COURT APARTMENTS, ASHIRBHAVAN ROAD, KACHERIPADY, ERNAKULAM, KOCHI-682 018. VS. THE DEPUTY COMMISSIONER OF INCOME-TAX,CIRCLE-1(1), ERNAKULAM (ASSESSEE-APPELLANT) (REVENUE-RESPONDENTS ) REVENUE BY SMT. A.S. BINDHU, SR. DR ASSESSEE BY SHRI P.K.SASIDHARAN, CA DATE OF HEARING 09/08/2012 DATE OF PRONOUNCEMENT 24/08/2012 I.T.(SS)A. NOS. 50 & 52/COCH/2008 & C.O. NOS. 15/COCH/2012 & 59/COCH/2008/COCH/ 2005 2 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THESE APPEALS HAVE BEEN PREFERRED BY THE RE VENUE AGAINST THE ORDERS PASSED BY THE LD. CIT(A)-I, KOCHI IN THE RESPECTIVE HANDS OF THE ABOVE MENTIONED ASSESSES AND THEY RELATE TO THE BLOCK PERIOD ENDING 06-09-2000. THE ASSESSEE HAS FILED CROSS OBJECTIONS SUPPORTING THE ORDER OF THE LD. CIT(A). 2. SINCE THE ISSUES CONTESTED IN THESE APPEALS ARE ARISING OUT OF THE COMMON SET OF FACTS, THEY WERE HEARD TOGETHER ARE BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. THE FACTS RELATING TO THE ABOVE CITED CASES ARE STATED IN BRIEF. M/S. HARBOUR SYNDICATE IS A PARTNERSHIP FIRM CONSISTING OF FOUR PARTNERS IN WHICH SHRI V.H. YAHIA IS THE MANAGING PARTNER. THE REVENUE CARRIED OUT SEARCH A ND SEIZURE OPERATIONS IN THE HANDS OF SHRI V.H.M. RAFEEQ AND SHRI V.H. YAHIA ON 06-09- 2000. CONSEQUENT TO THE SEARCH OPERATIONS, THE ASSESSMENTS WERE COMPLETED U/S. 144 R.W.S. 158BC OF THE ACT IN THE HANDS OF M/S. HARBOUR SYNDICATE. THE ASSESSMENT IN THE HANDS OF SHRI V.H. YAHIA WAS, HOWEVER, COMPLETED U/S. 158BD R.W.S. 158BC R.W.S. 1 44 OF THE ACT. 4. BEFORE THE LD. CIT(A), THE ASSESSEE CONTENDED TH AT THE SEARCH HAS TAKEN PLACE IN THE HANDS OF SHRI V.H. YAHIA ONLY AND HENCE THE ASS ESSMENT COMPLETED U/S. 158BD IN HIS HANDS IS BAD IN LAW AND VOID AB INITIO. SIMIL ARLY, IT WAS FURTHER CONTENDED THAT THERE WAS NO SEARCH AND SEIZURE OPERATION IN THE HANDS OF M/S. HARBOUR SYNDICATE AND HENCE THE ASSESSMENT COMPLETED U/S. 158 BC IN ITS HANDS I S ALSO BAD IN LAW AND VOID AB INITIO. 5. THE LD. CIT(A) CONSIDERED THE SAID CONTENTIONS A ND AGREED WITH THEM AND ACCORDINGLY QUASHED THE ASSESSMENT PROCEEDINGS. IN THE CASE OF SHRI V.H. YAHIA, THE I.T.(SS)A. NOS. 50 & 52/COCH/2008 & C.O. NOS. 15/COCH/2012 & 59/COCH/2008/COCH/ 2005 3 LD CIT(A) ALSO HELD THAT THE ASSESSMENT ORDER IS BA RRED BY LIMITATION. SINCE THE ASSESSMENT ORDERS WERE QUASHED ON LEGAL ISSUE, THE LD CIT(A) DID NOT CONSIDER THE GROUNDS RAISED ON MERITS. AGGRIEVED BY THE ORDER O F THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE OBSERVATI ONS MADE BY THE LD. CIT(A) IN THE HANDS OF M/S. HARBOUR SYNDICATE IN RESPECT OF THE L EGAL ISSUE RELATING TO THE INVOKING OF JURISDICTION U/S 158BC/158BD OF THE ACT. SINCE THE APPELLANT HAS QUESTIONED THE BASIC LEGA L VALIDITY OF THE IMPUGNED BLOCK ASSESSMENT COMPLETED UNDER SECTION 158BC, IT IS TO BE EXAMINED BEFORE ANY OTHER GROUNDS ARE CONSIDERED IN SUPPORT OF THE ARGUMENT THAT THE APPELLANT FIRM WAS NOT ISSUED A WARRANT OF SEARCH, THE LEARN ED CA FOR THE APPELLANT FURNISHED A COPY OF THE PANCHANAMA DATED 6-9-2000 PREPARED BY THE AUTHORISED OFFICER SHRI K.G.K. PILLAI, INCOME TAX OFFICER (CI B) ERNAKULAM. THE RELEVANT PORTIONS OF THE SAID PANCHANAMA HIGHLIGHTED BY THE LEARNED CA ARE REPRODUCED BELOW:- (A) WARRANT IN CASE OF : SHRI V.H.M. RAFEEQ AND SHRI V.H. YAHIA (B) WARRANT TO SEARCH : M/S. HARBOUR SYNDICATE (DETAILS & OWNERSHIP OF PLACE OF ESSAR BUILDING, G.V. IYER ROAD SEARCH) COCHIN-682 003. TELEPHONE NO. : 668624 (C) (A) AND (B) STATED TO BE ASSESSED BY : (A) (B) - NIL PARA 1 OF THE ABOVE PANCHANAMA READS AS UNDER ON BEING CALLED BY SHRI K.G.K.PILLAI ON 6-9-2000 AT 9.45 A.M., WE THE ABOVE MENTIONED PANCHAS, PRESENTED OURSELVES AT TH E ABOVE PLACE OF SEARCH. THE AUTHORIZED OFFICER, SHRI K.G.K. PILLA I SHOWED THE WARRANT OF AUTHORIZATION DATED 06-09-2000 ISSUED U/S. 132 OF THE INCOME TAX ACT, 1961/37A OF THE W.T. ACT, 1957 IN THE CASE OF (A) ABOVE, TO SEARCH THE PLACE MENTIONED AT (B) ABOVE AND DULY SIGNED AND SEALED BY THE DIRECT OR OF INCOME TAX/COMMISSIONER OF INCOME TAX/ADDL. DIRECTOR OF I NCOME TAX (INVESTIGATION)/DEPUTY COMMISSIONER OF INCOME TAX, COCHIN TO SHRI V.H. YAHYA, WHO WAS PRESENT IN THE SAID PLACE AT THE TIME AND WHO AFTER READING THE SAID AUTHORIZATION/AFTER THE AUTHORIZATION WAS EXPLAINE D IN LOCAL LANGUAGE VIZ. I.T.(SS)A. NOS. 50 & 52/COCH/2008 & C.O. NOS. 15/COCH/2012 & 59/COCH/2008/COCH/ 2005 4 BY SHRI/SMT.. SIGNED IT IN OUR PRESENCE AND ALONG WITH US IN TOKEN OF HAVING PERUSED THE SAME. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLAN T. CHAPTER XIV-B OF THE INCOME TAX ACT, 1961 WITH HEADING SPECIAL PROCEDU RE FOR ASSESSMENT OF SEARCH CASES MAKES IT CLEAR THAT THE PROVISIONS CONTAINE D THEREIN ARE MEANT FOR SEARCH CASES. THIS LEGISLATIVE INTENTION HAS BEEN FURTHE R CLARIFIED BY SEC. 158BA R.W.S. 158BC. SEC. 158BA R.W.S. 132 AND 132A POINTEDLY M AKES THE PERSON SEARCHED AS THEIR RESPECTIVE TARGETS. IT IS THEREFORE A MA TTER OF LEGAL PRESUMPTION THAT IT IS THE PERSON WHO HAS BEEN SEARCHED U/S. 132 OR WHOSE ASSETS, DOCUMENTS OR BOOKS OF ACCOUNTS HAVE BEEN REQUISITIONED U/S. 132 A IS MADE THE SUBJECT OF THE BLOCK ASSESSMENT TO TAX HIS UNDISCLOSED INCOME FOR THE PAST TEN YEARS. THE ASSESSING OFFICER ASSUMES JURISDICTION U/S. 158BA TO PROCEED TO ASSESS THE UNDISCLOSED INCOME OF THE BLOCK PERIOD IN RESPECT OF THE PERSON ON WHOM A SEARCH IS INITIATED U/S. 132 OR REQUISITION MADE U /S. 132A. IN THE PRESENT CASE, ASSESSING OFFICER HAS COMPLE TED THE ASSESSMENT U/S. 158BC ON THE GROUND THAT A SEARCH WAS CONDUCTED IN THE CASE OF THE APPELLANT FIRM. ACTION U/S. 132 SHOULD BE EVIDENCED BY A WA RRANT OF SEARCH ISSUED BY THE COMPETENT AUTHORITY IN THE NAME OF THE ASSESSEE. RULE 112 OF THE INCOME TAX RULES PRESCRIBES THE FORMALITIES IN THIS REGARD IN VIEW OF THE PROVISIONS U/S. 132(1), WARRANT OF AUTHORIZATION OF SEARCH IS TO B E ISSUED AGAINST A PERSON OR AGAINST ANY PERSON WHO FULFILS ANY OF THE THREE CONDITIONS AS LAID DOWN IN SEC. 132(1) IN ITS CLAUSES (A) (B) AND (C). HENCE THE WARRANT OF AUTHORIZATION U/S. IS TO BE ISSUED NOT IN RESPECT OF PREMISES, PLACES OR PROPERTIES, WHICH MAY BE BELONGING TO SUCH PERSON. SUCH PREMISES OR PLACES MAY BE SPECIFIED IN SUCH WARRANT BUT THE AUTHORIZATION HAS TO BE IN RESPECT OF A PERSON. THUS THE SEARCH PROCEEDINGS AND THE CONSEQUENTIAL ASSESSMENT HAVE A CLEAR NEXUS WITH THE WARRANT OF AUTHORIZATION. THE RECORDING OF THE PA NCHANAMA CLEARLY SHOWS THAT THE SEARCH WAS IN THE CASES OF SHRI V.H.M.RAFEEQ A ND SHRI V.H. YAHYA AND NOT IN THE CASE OF THE APPELLANT FIRM. I ACCEPT THE CONT ENTION OF THE APPELLANT FIRM THAT THERE WAS NO SEARCH IN ITS CASE AND THEREFORE ASSE SSMENT U/S. 158BC CANNOT BE DONE IN ITS CASE. I THEREFORE HOLD THAT NO WARRAN T OF AUTHORIZATION OF SEARCH WAS ISSUED AGAINST THE APPELLANT FIRM AND THE CONSEQUE NCE IS THAT THE IMPUGNED ASSESSMENT U/S. 158BC IS DECLARED BAD IN LAW AND V OID AB INITIO AND HENCE QUASHED. 7. HOWEVER, THE LD. DR SUBMITTED THAT THE HONBLE J URISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. LEKSHMI TRADERS (2012) (344 ITR 281 ), HAS HELD THAT THE PROCEDURE FOR ASSESSMENT OF A PERSON OTHER THAN THE SEARCHED PERS ON U/S. 158BD IS THE SAME AS THE PROCEDURE CONTAINED IN SEC. 158BC. IT WAS FURTHER H ELD THAT THE ASSESSMENT INITIATED U/S 158BD IS ALSO REQUIRED TO BE COMPLETED U/S 158BC ON LY. ACCORDINGLY, THE LD. DR I.T.(SS)A. NOS. 50 & 52/COCH/2008 & C.O. NOS. 15/COCH/2012 & 59/COCH/2008/COCH/ 2005 5 SUBMITTED THAT THE ASSESSMENT COULD NOT BE HELD VOI D AB INITIO FOR THE REASON THAT THE ASSESSING OFFICER HAS MENTIONED INCORRECT PROVISION S OF LAW. 8. WE HAVE CAREFULLY CONSIDERED THE DECISION RE NDERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF LEKSHMI TRADERS, SUPRA. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE RELEVANT OBSERVATIONS MADE BY THE HONBLE JURISDICTIONAL HIGH COURT IN THIS CONNECTION:- BUT THE ONLY QUESTION RAISED IS WHETHER THE NOTIC E ISSUED BY THE DEPARTMENT BASED ON WHICH THE BLOCK ASSESSMENT WAS COMPLETED IS VALID OR NOT. WHAT WE FIND FROM SEC. 158BD IS THAT NO INDEPENDENT NOTICE IS CONTEMPLATED UNDER THE SAID SECTION BECAUSE IT ONLY GIVES JURISDICTION TO THE ASSESSING OFFICER TO ASSESS A PERSON OTHER THAN THE SEARCHED PERSON BASED ON MAT ERIALS GATHERED DURING SEARCH. WHAT IS STATED IN SEC. 158BD IS THAT WHEN ANY EVIDENCE IS COLLECTED ABOUT INCOME EARNED BY A PERSON OTHER THAN THE PER SON SEARCHED U/S. 132, THE OFFICER WHO CONDUCTED THE SEARCH SHALL HAND OVER T HOSE MATERIALS AND EVIDENCE TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON TO BE PROCEEDED FOR ASSESSMENT, AND ONCE THE MATERIALS A RE HANDED OVER, THE ASSESSING OFFICER HAVING JURISDICTION OVER THE PER SON TO BE ASSESSED SHOULD ISSUE NOTICE AND MAKE ASSESSMENT U/S. 158BC . IN OTHER WORDS, THE PROCEDURE FOR ASSESSMENT OF A PERSON OTHER THAN THE SEARCHED PER SON UNDER SEC. 158BD IS THE SAME PROCEDURE CONTAINED IN SEC. 158B C. SINCE NO NOTICE IS PRESCRIBED U/S 158BD, WHAT IS REQUIRED IS TO IS SUE AN INTIMATION ABOUT THE INITIATION OF PROCEEDINGS U/S. 158BD BY THE OFFICER, AND THEN TO CALL FOR RETURN IN FORM 2B PRESCRIBED UNDER RUL E 12(1)(A) FOR ASSESSMENT U/S. 158BC OF THE ACT. IN OTHER WORDS, WHEN THE ASSESSEE ADMITS RECEIPT O F NOTICE AND FILES ITS PROPER RETURN IN THE PRESCRIBED FORM IN TERMS OF THE NOTI CE, WE DO NOT THINK THAT THE ASSESSEE IS ENTITLED TO CONTEND THAT THE NOTICE IS NOT SERVED IN ACCORDANCE WITH THE PROCEDURE PRESCRIBED UNDER THE ABOVE SECTIONS. IN OUR VIEW, PROOF OF THE DETAILED PROCEDURE ADOPTED FOR SERVICE OF NOTICE U NDER SUB-SEC. (2) OF SEC. 282 IS REQUIRED TO BE ENQUIRED INTO ONLY WHEN THE ASSESSE E COMPLAINS NON-RECEIPT OF NOTICE. IN OTHER WORDS, WHEN NOTICE ISSUED IS ACC EPTED BY THE ASSESSEE AND RETURN IS FILED IN TERMS OF THE NOTICE, THE ASSESS EE CANNOT CONTEND THAT THERE IS NO SERVICE OF NOTICE IN TERMS OF THE SECTION. BES IDES THE ABOVE, WHAT WE FIND IS THAT ANNEXURE D NOTICE IS A NOTICE PRESCRIBED UNDE R RULE 12(1)(A) OF THE RULES AND IN THE SAID NOTICE WHAT IS CALLED FOR IS RETUR N IN THE PRESCRIBED FORMAT, I.E., IN FORM 2B, WHICH IS FOR MAKING BLOCK ASSESSMENT U/S. 158BC. SO MUCH SO, EVEN THOUGH THE ASSESSING OFFICER HAS CORRECTED SEC. 1 58BC TO SEC. 158BD, THE CONTENTS OF THE NOTICE SATISFY THE REQUIREMENT OF A NOTICE UNDER SEC. 158BC AS WELL. I.T.(SS)A. NOS. 50 & 52/COCH/2008 & C.O. NOS. 15/COCH/2012 & 59/COCH/2008/COCH/ 2005 6 9. IN VIEW OF THE DECISION OF THE HONBLE JURISDICT IONAL HIGH COURT EXTRACTED ABOVE, WE AGREE WITH THE CONTENTIONS OF THE DEPARTMENT THA T THE ASSESSMENT CANNOT BE HELD AS VOID AB INITIO, IF THE ASSESSING OFFICER DID NOT MENTION THE RELEVANT SECTION CORRECTLY IN THE ASSESSMENT ORDER. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE LD. CIT(A) ON THIS POINT. 10. SINCE THE LD. CIT(A) DID NOT ADJUDICATE THE APP EALS ON MERITS, WE SET ASIDE BOTH THE APPEALS TO HIS FILE FOR ADJUDICATING THE GROUND S RAISED ON MERITS. IN THE CASE OF SHRI V.H.YAHIA, THE LD CIT(A) HAS ALSO HELD THAT THE ASS ESSMENT IS BARRED BY LIMITATION. SINCE THE DECISION OF LD CIT(A) IN RESPECT OF THE J URISDICTION OF THE ASSESSING OFFICER IS SET ASIDE, WE SET ASIDE THE ISSUE RELATING TO THE L IMITATION ALSO TO HIS FILE WITH THE DIRECTION TO EXAMINE THE SAME AFRESH IN THE SET ASI DE PROCEEDINGS. 11. SINCE THE APPEALS FILED BY THE REVENUE HAVE BEE N SET ASIDE TO THE FILE OF THE LD. CIT(A), THE CROSS OBJECTIONS FILED BY THE ASSESSEES STAND DISMISSED. 12. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTIONS FILED BY THE ASSE SSES ARE DISMISSED. PRONOUNCED ACCORDINGLY O N 24-08-2012 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 24TH AUGUST, 2012 GJ COPY TO: 1. M/S. HARBOUR SYNDICATE, ESSAR BUILDING, G.V.IYER ROAD, KOCHI-682 003. 2. SHRI V.H. YAHIA, WINDSOR COURT APARTMENTS, ASHIR BHAVAN ROAD, KACHERIPADY, ERNAKULAM, KOCHI-682 018. 3.THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1(1 ), ERNAKULAM. 4.THE COMMISSIONER OF INCOME-TAX(APPEALS)-I, KOCHI. I.T.(SS)A. NOS. 50 & 52/COCH/2008 & C.O. NOS. 15/COCH/2012 & 59/COCH/2008/COCH/ 2005 7 5.THE COMMISSIONER OF INCOME-TAX, KOCHI. 6. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 7. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN