The ITO, Ward-4(3), Baroda V. M/s. Shroff Oil Mfg.Co.P.Ltd., Baroda

ITSSA 521/AHD/2011

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2175 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 15-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 15-06-2016
• Assessment Year: misc
• Appeal Filed On: 07-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS VIBHA BHALLA
• Section: 133A; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ IT(SS)A.NO.521/AHD/2011 WITH CO NO.230/AHD/2011 /BLOCK ASSTT. YEAR: 01.04.1989 O 05.08.1999] ITO, WARD - 4(3) BARODA. VS M/S.SHROFF OIL MFG. COP. P.LTD. AT & POST : LUNA, PADRA ROAD PADRA, DIST. BARODA. %& / (APPELLANT) '( %& / (RESPONDENT) REVENUE BY : MRS.VIBHA BHALLA, CIT-DR ASSESSEE BY : NONE / DATE OF HEARING : 15/06/2016 / DATE OF PRONOUNCEMENT: 15/06/2016 )*/ O R D E R REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST TH E ORDER OF THE LD.CIT(A) DATED 20.6.2011 PASSED FOR THE BLOCK PERIOD STARTIN G FROM 1.4.1989 TO 5.8.1999. 2. ON RECEIPT OF NOTICE IN THE REVENUES APPEAL, TH E ASSESSEE HAS FILED CO BEARING NO.230/AHD/2011. 3. THE REVENUE IN ITS APPEAL HAS PLEADED THAT THELD .CIT(A) HAS ERRED IN QUASHING THE ASSESSMENT ORDER PASSED UNDER SECTION 158BD OF THE INCOME TAX ACT ON THE GROUND THAT THE LD.AO OF THE SEARCHED PERSON HAS NOT RECORDED SATISFACTION BEFORE TRANSMITTING THE RECORD TO THE AO OF THE PRE SENT ASSESSEE. 4. BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SE IZURE OPERATION WAS CONDUCTED UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 ON 5. 8.1999 IN THE CASE OF M/S.P.P. IT(SS)A NO.521/AHD/2011 WITH CO 2 SHROFF. M/S.P.P.SHROFF IS LEADING FINANCING CONCER N OF BARODA. THE ASSESSEE IS A SISTER CONCERN OF THIS CONCERN. A SURVEY UNDER SEC TION 133A OF THE ACT WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE. THE LD.AO HAD ISSUED A NOTICE UNDER SECTION 158BD OF THE INCOME TAX DIRECTING THE ASSESSEE TO F ILE ITS RETURN OF INCOME. THE ASSESSEE HAS FILED ITS RETURN OF INCOME FOR THE BLO CK PERIOD ON 18.12.2000 RETURNING NIL INCOME. THE AO HAS PASSED AN ASSESSMENT ORDER ON 16.3.2001 DETERMINING TOTAL UNDISCLOSED INCOME FOR THE BLOCK PERIOD AT RS .14,90,000/-. 5. ON APPEAL, IT WAS CONTENDED BY THE ASSESSEE THAT AS PER THE SCHEME OF SECTION 158BD, THE AO OF THE SEARCHED PERSON WAS REQUIRED T O RECORD A SATISFACTION EXHIBITING THE FACT THAT MATERIAL FOUND DURING THE COURSE OF SEARCH RELATES TO THE ANY THIRD PERSON, AND INCOME IN THE HANDS OF THE THIRD PERSON I.E. OTHER THEN, THE SEARCH PERSON, IS REQUIRED TO BE TAXED FOR THE BLOCK PERIO D. THEREAFTER THAT OFFICER HAS TO TRANSMIT THE RECORD TO THE AO HAVING JURISDICTION O VER OTHER PERSON. IN THE PRESENT CASE, THE AO HAS NOT RECORDED SATISFACTION BEFORE T AKING COGNIZANCE UNDER SECTION 158BD OF THE ACT. THEREFORE, THE ASSESSMENT ORDER IS NOT SUSTAINABLE. IN SUPPORT OF HIS CONTENTION, THE ASSESSEE RELIED UPON THE ORDERS OF THE ITAT IN THE CASE OF ACIT VS. SMT. MUKTA GOENKA, 137 TTJ (JAB) TM 249 AND KRI SHNA SUGAR CORPORATION VS. DCIT, 133 TTJ 33 (LUCK). THE LD.CIT(A) WAS SATISFI ED WITH THE CONTENTIONS OF THE ASSESSEE AND QUASHED THE ASSESSMENT ORDER BY OBSERV ING AS UNDER: 5.3 I HAVE CONSIDERED THE REMAND REPORT AND THE S UBMISSIONS MADE BY THE ASSESSEE. AS IS APPARENT FROM THE REMAND REPORT, NO SATISFACTION NOTE IS AVAILABLE ON RECORD FOR INITIATING PROCEEDINGS U/S 158BD IN THE CASE OF THE APPELLANT. MOREOVER SINCE THE ASSESSEE'S ADDITIONAL GROUND CHALLENGING THE INITIATION OF PROCEEDINGS U/S 158BD HAS BEEN ALLOWE D BY ITAT, HENCE THE AO'S ARGUMENT IN REMAND REPORT THAT NO SUCH GROUNDS WERE TAKEN BEFORE THE AO OR CIT (A) CANNOT BE ENTERTAINED AT THIS STAGE. HENCE, AS PER THE RATIO LAID DOWN BY HON'BLE SUPREME COURT IN THE CASE OF M ANISH MAHESHWARI (SUPRA) AND BY ITAT, JABALPUR BENCH IN THE CASE OF MUKTA GOENKA (SUPRA), THE PROCEEDINGS INITIATED UNDER SECTION 158BD IN TH E CASE OF THE ASSESSEE ARE HELD TO BE VOID AB INTIO. ACCORDINGLY THE ASSESSMEN T ORDER PASSED IN CONSEQUENCE TO THE PROCEEDING INITIATED IN THE CASE OF THE ASSESSEE BY ISSUING NOTICE UNDER SECTION 158BD IS ALSO HELD TO BE NULL AND VOID. IT(SS)A NO.521/AHD/2011 WITH CO 3 6. AS THE LEGAL ISSUE HAS BEEN DECIDED IF FAVOUR OF THE ASSESSEE, HENCE NO FINDINGS ARE BEING GIVEN ON MERITS OF THE CASE. 7. NO ADDITIONAL GROUNDS HAVE BEEN RAISED IN TERMS OF RESIDUARY GROUND AND HENCE NO ADJUDICATION IS REQUIRED. 6. BEFORE THE TRIBUNAL, IN RESPONSE TO THE NOTICE O F HEARING, SHRI J.P. SHAH HAS MOVED AN APPLICATION FOR ADJOURNMENT ON THE GROUND THAT HE IS BUSY IN A PART HEARD MATTER BEFORE THE HONBLE HIGH COURT. HOWEVER, AFT ER GOING THROUGH THE RECORD, WITH THE ASSISTANCE OF THE LD.CIT-DR, I AM OF THE V IEW THAT THERE IS NO MERIT IN THIS APPEAL, AND NO ASSISTANCE FROM THE ASSESSEE IS REQU IRED. I DO NOT FIND ANY JUSTIFIABLE REASON TO GRANT ADJOURNMENT TO THE ASSESSEE, BECAUS E, THIS APPEAL IS ON THE BOARD SINCE 3.3.2015. TIME AND AGAIN ADJOURNMENTS HAVE B EEN SOUGHT BY THE ASSESSEE. THEREFORE, THE APPLICATION FOR ADJOURNMENT IS REJEC TED, AND I PROCEED TO DECIDE THE APPEAL EX PARTE QUA THE ASSESSEE. 7. THE LD.CIT-DR CONTENDED THAT THE AO IN THE PRESE NT CASE IS COMMON, I.E. SAME OFFICER HAVE JURISDICTION OVER THE SEARCHED PE RSON. THEREFORE, IT WAS NOT INCUMBENT UPON THE AO TO RECORD ANY SATISFACTION FO R INITIATING THE PROCEEDINGS UNDER SECTION 158BD OF THE INCOME TAX ACT. I CONFR ONTED THE LD.DR WITH THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS. CALCUTTA KNITWEARS, 362 ITR 673. THE HONBLE SUPREME COURT IN CONCLUDI NG PARAGRAPHS HAS PROPOUNDED THE FOLLOWING POSITION OF LAW: IN THE RESULT, WE HOLD THAT FOR THE PURPOSE OF SEC TION 158BD OF THE ACT A SATISFACTION NOTE IS SINE QUA NON AND MUST BE PREPARED BY THE ASSESSING OFFICER BEFORE HE TRANSMITS THE RECORDS TO THE OTHE R ASSESSING OFFICER WHO HAS JURISDICTION OVER SUCH OTHER PERSON. THE SATISF ACTION NOTE COULD BE PREPARED AT EITHER OF THE FOLLOWING STAGES : (A) AT THE TIME OF OR ALONG WITH THE INITIATION OF PROCEEDINGS AGAINST THE SEARCHED PERSON UNDER SECTION 158BC OF THE ACT; (B) ALONG WITH THE ASSESSMENT PRO CEEDINGS UNDER SECTION 158BC OF THE ACT; AND (C) IMMEDIATELY AFTER THE ASS ESSMENT PROCEEDINGS ARE COMPLETED UNDER SECTION 158BC OF THE ACT OF THE SEA RCHED PERSON. 8. IT IS PERTINENT TO OBSERVE THAT WHERE THE AO HAP PENS TO BE A COMMON OFFICER WHO HAS TERRITORIAL JURISDICTION OVER THE SEARCHED PERSON AND OTHER PERSON, IN THAT IT(SS)A NO.521/AHD/2011 WITH CO 4 CASE ALSO, THE AO HAS TO RECORD SATISFACTION AT THE STAGES CONTEMPLATED IN THE ABOVE JUDGMENT OF THE HONBLE SUPREME COURT. IN OTHER WO RDS, WHEN THE AO WAS FRAMING THE ASSESSMENT ORDER OF THE SEARCHED PERSON , HE MUST HAVE ANALYSED THE SEIZED MATERIAL. ON AN ANALYSIS OF THE SEIZED MATE RIAL, HE WOULD COME OUT THAT THE INCOME IS TAXABLE IN THE HANDS OF SOME OTHER PERSON , WHO WAS NOT COVERED UNDER SEARCH OPERATION. AT THAT STAGE, HE HAS TO RECORD SATISFACTION, AND THEREAFTER, ISSUE NOTICE TO OTHER PERSON. STAGES HAVE BEEN EXPLAINED BY THE HONBLE SUPREME COURT IN THE CASE OF CALCUTTA KNITWEAR (SUPRA). IN THE P RESENT CASE, WHILE PROCESSING THE RETURN OF SUCH SEARCHED PERSON, THE AO HAS NEVER AP PLIED HIS MIND ON THE FACT THAT INCOME ON THE BASIS OF SEIZED MATERIAL IS ALSO ASSE SSABLE IN THE HANDS SOME OTHER PERSON WHO WAS NOT COVERED UNDER SEARCH PROCEEDINGS . THEREFORE, TO MY MIND, THE LD.CIT(A) HAS RIGHTLY QUASHED THE ASSESSMENT ORDER PASSED UNDER SECTION 158BD OF THE INCOME TAX. 9. AS FAR AS CO IS CONCERNED, SUB-SECTION 4 OF SECT ION 253 OF THE INCOME TAX ACT, AUTHORIZE THE RESPONDENT TO FILE CO AGAINST AN Y PART OF THE ORDER OF THE APPELLATE AUTHORITY. SUCH OBJECTION IS TO BE VERI FIED IN PRESCRIBED MANNER. A PERUSAL OF THE CO WOULD INDICATE THAT THE ASSESSEE HAS NOT SHOWN HIS GRIEVANCE AGAINST ANY PART OF THE IMPUGNED ORDER. THE CO IS IN SUPPORT OF THE LD.CIT(A)S ORDER, AND AS SUCH, CO IS NOT MAINTAINABLE, HENCE, DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE AND CR OSS OBJECTION OF THE ASSESSEE, BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 15 TH JUNE, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 15/06/2016