M.Bhawarlal Jain, CHENNAI V. DCIT, CHENNAI

ITSSA 6/CHNY/2010

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8127 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-08-2011
• Assessment Year: misc
• Appeal Filed On: 26-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH K SAHAY DRIV
• Assessee Lawyers: R G MUTHUKUMARAN
• Keywords: Principle of natural justice; Block assessment
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T (SS) A. NO. 6/MDS/2010 (BLOCK ASSESSMENT PERIOD : 1.4.1995 TO 28.12.2001) SHRI M. BHAWARLAL JAIN, FLAT NO.4A, GARDEN APARTMENTS, 68, PURASAWAKKAM HIGH ROAD, CHENNAI 600 007. PAN : AAHPJ1632N (APPELLANT) V. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(5), CHENNAI 600 034. (RESPONDENT) APPELLANT BY : SHRI R.G. MUTHUKUMARAN, ADVOCATE RESPONDENT BY : SHRI AVINASH K. SAH AY, DR-IV DATE OF HEARING : 25.08.2011 DATE OF PRONOUNCEMENT : 25.08.2011 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE ASSESSEE, THE FOLLOWI NG GROUNDS HAVE BEEN TAKEN:- I.T (SS) A. NO. 6/MDS/10 2 (A) THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S)- II DATED 31.03.2008, IS ERRONEOUS, VITIATED BY FACTU AL AS WELL AS LEGAL ERRORS AND LIABLE TO BE CANCELLED. (B) THE COMMISSIONER OF INCOME TAX (APPEALS)-II ERRED I N ADJUDICATING THE APPEAL WITHOUT NOTICE TO THE APPEL LANT AND WITHOUT ANY OPPORTUNITY OF HEARING. THIS IS IN VIOLA TION OF THE PRINCIPLES OF NATURAL JUSTICE. (C) THE COMMISSIONER OF INCOME TAX (APPEALS)-II ERRED I N REJECTING THE APPEAL ON THE BASIS OF THE INCOME TAX SETTLEMENT COMMISSION, DATED 14.03.2008, AND OUGHT TO HAVE NOTED THAT THE IMPUGNED ORDER AROSE IN CONSEQU ENCE OF AN ORDER OF ASSESSMENT PURSUANT TO AN ORDER OF T HE CIT U/S. 263 OF THE INCOME TAX ACT AND WAS NOT CONNECTE D WHATSOEVER WITH THE PROCEEDINGS PENDING BEFORE THE INCOME TAX SETTLEMENT COMMISSION. (D) THE COMMISSIONER OF INCOME TAX (APPEALS)-II ERRED I N NOT ADJUDICATING ON THE TWO ISSUES ARISING OUT OF THE O RDER OF ASSESSMENT DATED 31.12.2007 VIZ. THE COST OF CONSTR UCTION IN RESPECT OF THE APPELLANTS PROPERTY AT 13, ABIRA MI STREET, CHENNAI 600 084, AMOUNTING TO ` 13 LAKHS AND THE CREDIT TO THE APPELLANTS CAPITAL ACCOUNT OF A SUM OF ` 63.29 LAKHS. (E) THE COMMISSIONER OF INCOME TAX (APPEALS)-II ERRED I N ALLOWING THE GROUND CONCERNING THE COST OF CONSTRUC TION WHICH HAS BEEN ALLOWED BY THE TRIBUNAL VIDE ITS ORDE R DATED IN THE APPEAL CHALLENGING THE COMMISSIONERS ORDER U/S. 263, DATED 27.03.2008. (F) THE COMMISSIONER OF INCOME TAX (APPEALS)-II OUGHT T O HAVE ADJUDICATED ON THE SPECIFIC GROUND RAISED BY TH E APPELLANT PERTAINING TO THE CREDIT OF ` 61 LAKHS AND OUGHT TO HAVE CONSIDERED THE APPELLANTS APPLICATIONS IN REGARD TO THE SAME. (G) THE COMMISSIONER OF INCOME TAX (APPEALS)-II ERRED I N CONCLUDING THAT THE APPELLANTS APPEAL BECOMES INFR UCTUOUS IN VIEW OF THE ORDER PASSED BY THE INCOME TAX SETTLE MENT COMMISSIONER WHEN THE ORDER OF THE INCOME TAX I.T (SS) A. NO. 6/MDS/10 3 SETTLEMENT COMMISSION IS IN NO WAY RELEVANT TO THE IMPUGNED PROCEEDINGS, THAT HAD EMANATED FROM THE OR DER PASSED U/S. 263 BY THE COMMISSIONER OF INCOME TAX. 2. SHORT FACTS APROPOS ARE THAT ASSESSEE WAS SUBJEC TED TO SEARCH ON 28.12.2001 AND PURSUANT THERETO, ASSESSMENT UNDE R SECTION 158BC READ WITH SECTION 143(3) OF INCOME-TAX ACT, 1 961 (IN SHORT THE ACT) WAS MADE ON 24.2.2005. ASSESSEE FILED A N APPEAL BEFORE LD. CIT(APPEALS) CHALLENGING THE SAID ASSESSMENT AN D ALSO AN APPLICATION BEFORE INCOME TAX SETTLEMENT COMMISSION . IT SEEMS INCOME TAX SETTLEMENT COMMISSION HAD PASSED AN ORDE R ON 14.3.2008 ON ASSESSEES APPLICATION. IN THE MEANTI ME, ASSESSEE RECEIVED NOTICE FROM CIT PROPOSING REVISION OF ASSE SSMENT UNDER SECTION 263 OF THE ACT. AS PER LD. CIT, THE ASSESS MENT WAS ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE IN TERESTS OF THE REVENUE AND DIRECTED THE A.O. TO REASSESS THE DIFFERENCE IN COST OF CONSTRUCTION IN RESPECT OF A PROPERTY AT 13, ABIRAM I STREET, CHENNAI- 84 AND ALSO TO CONSIDER AFRESH CREDIT OF ` 61 LAKHS IN THE CAPITAL ACCOUNT FOR WHICH, AS PER LD. CIT, NO PROPER EVIDEN CE WAS ADDUCED BY THE ASSESSEE. PURSUANT TO THE DIRECTION OF LD. CIT, THE ASSESSMENT WAS REVISED AND A FRESH ORDER UNDER SECTION 158BC R EAD WITH I.T (SS) A. NO. 6/MDS/10 4 SECTION 143(3) AND SECTION 263 OF THE ACT WAS PASSE D BY THE ASSESSING OFFICER ON 31.12.2007. AGAINST THE SAID ORDER, ASSESSEE MOVED IN APPEAL BEFORE LD. CIT(APPEALS), WHO DISPOS ED OF HIS APPEAL WITH FOLLOWING OBSERVATIONS:- 3. THE APPELLANT IS AN INDIVIDUAL DOING BUSINESS IN WHOLESALE GOLD JEWELLERY AND IS ENGAGED REFINANCING THE ITEMS OF GOLD JEWELLERY TAKEN ON PLEDGE BY THE OTHER PAWN BROKERS. THERE WAS A SEARCH IN THE APPELLANTS CASE ON 28.12.2001. IN RESPONSE TO NOTICE U/S 158BC THE APPELLANT FILED HIS BLOCK RETU RN ON 13.11.2002 SHOWING THE INCOME AT ` 16,00,000/-. THE IMPUGNED BLOCK ASSESSMENT WAS PASSED ON 24.02.2005 DETERMINI NG THE TOTAL UNDISCLOSED INCOME AT ` 2,50,33,340/-. AGGRIEVED BY THE ADDITIONS MADE BY THE A.O., THE APPELLANT HAS FILED THE PRESENT APPEAL. MEANTIME THE APPELLANT HAS ALSO FILED AN A PPLICATION BEFORE THE INCOME TAX SETTLEMENT COMMISSION AGAINST THE BLOCK ASSESSMENT. THE INCOME TAX SETTLEMENT COMMISSION, ADDITIONAL BENCH, CHENNAI HAS PASSED AN ORDER U/S 245D(4) ON 1 4.03.2008 ON THE APPELLANTS SETTLEMENT APPLICATION NO.TN/CN52/0 506/29/IT. IN VIEW OF THE ORDER PASSED BY THE INCOME TAX SETTLE MENT COMMISSION, THE APPELLANTS APPEAL BECOMES INFRUCTU OUS HENCE THE SAME IS DISMISSED. 3. NOW BEFORE US, LEARNED A.R. INITIALLY PLEADED FO R ADJOURNMENT. HOWEVER, WE FIND THAT LARGE NUMBER OF ADJOURNMENTS WERE GRANTED AT THE BEHEST OF THE ASSESSEE AND NO PROPER REASON HAS BEEN GIVEN FOR FURTHER ADJOURNMENT. HENCE THIS WAS NOT CONSIDERED . I.T (SS) A. NO. 6/MDS/10 5 4. ASSAILING THE ORDER OF LD. CIT(APPEALS), LEARNED A.R. SUBMITTED THAT THE APPEAL OF THE ASSESSEE WAS AGAINST THE ASS ESSMENT DONE PURSUANT TO PROCEEDINGS UNDER SECTION 263 OF THE AC T AND NOT AGAINST THE ORIGINAL ASSESSMENT. 5. PER CONTRA, LEARNED D.R. SUPPORTED THE ORDER OF LD. CIT(APPEALS). 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. IT IS CLEAR THAT LD. CIT(APPEALS) PROCEEDED ON AN ASSU MPTION THAT THE APPEAL WAS AGAINST THE ORIGINAL BLOCK ASSESSMENT DO NE ON THE ASSESSEE. WE FIND THAT THE APPEAL FILED BY THE ASS ESSEE WAS AGAINST AN ASSESSMENT DONE IN PURSUANT TO AN ORDER OF LD. C IT UNDER SECTION 263 OF THE ACT. THE EFFECT OF THE APPLICATION FIL ED BY THE ASSESSEE BEFORE INCOME TAX SETTLEMENT COMMISSION AND ORDER O F INCOME TAX SETTLEMENT COMMISSION ON THE ASSESSMENT DONE PURSUA NT TO PROCEEDING UNDER SECTION 263, HAVE NOT BEEN CONSIDE RED BY LD. CIT(APPEALS) THUS REFUSING TO CONSIDER THE APPEAL O F THE ASSESSEE IN A REASONED MANNER. WE ARE OF THE OPINION THAT LD. CIT(APPEALS) HAS NOT MENTIONED WHY HE CONSIDERED THE APPEAL FILED BY THE ASSESSEE AS I.T (SS) A. NO. 6/MDS/10 6 INFRUCTUOUS. WE, THEREFORE, SET ASIDE THE ORDER OF LD. CIT(APPEALS) AND REMIT THE SAME BACK TO LD. CIT(APPEALS) FOR FRE SH CONSIDERATION SO AS TO PASS A SPEAKING ORDER. 7. IN THE RESULT, THE APPEAL FILED BY ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON THE TWENTY FIFTH DAY OF AUGUST, 2011. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 25 TH AUGUST, 2011. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-II, CHENNAI-34 (4) CIT, CENTRAL-II, CHENNAI (5) D.R. (6) GUARD FILE