The ITO,Wad-3(2), Surat V. Shri Dinesh B.Gandhi, Surat

ITSSA 660/AHD/2010

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0511 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 27-01-2015
• Assessment Year: misc
• Appeal Filed On: 20-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Procedural lapse; Block assessment
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBE R AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER (SS) ./ I.T(SS).A. NO.660/AHD/2010 (BLOCK PERIOD : 1990-91 TO 1999-2000 ) THE INCOME TAX OFFICER WARD-3(2) SURAT / VS. SHRI DINESH B.GANDHI 3, MADHUR PARK ADAJAN, SURAT ./ ./ PAN/GIR NO. : ACAPG 7352 B ( / APPELLANT ) .. ( / RESPONDENT ) AND CO NO.290/AHD/2010 BP 1990-91 TO 1999-2000 (IN IT(SS)A NO.660/AHD/2010 BP 1990-91 TO 1999-20 00) SHRI DINESH B.GANDHI VS. THE INCOME TAX OFFICER SURAT WARD-3(2), SURAT (CROSS OBJECTOR) .. (RESPONDE NT) REVENUE B Y : SHRI O.P. VAISHNAV, CIT-DR ASSESSEE B Y : SHRI M.K. PATEL, AR / DATE OF HEARING 27/01/2015 !' / DATE OF PRONOUNCEMENT 29/01/2015 / O R D E R PER SHAILENDRA KUMAR YADAV, JM : BOTHE THE APPEAL AND THE CROSS-OBJECTION ARE ARISIN G FROM THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, SUR AT DATED 24/05/2010 PASSED FOR BLOCK PERIOD, AY 1990-91 TO 1 999-2000 ON SIMILAR ISSUE. SO, BOTH THE APPEAL AND THE CROSS O BJECTION ARE TAKEN UP IT(SS)A NO.660/AHD/2010 (BY REVENUE) AND CO 290/AHD/2010 (BY ASSESSEE) ITO VS. SHRI DINESH B.GANDHI BLOCK PERIOD 1990-91 TO 1999-2000 - 2 - TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLID ATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE APPEAL FILED BY THE REVENU E, I.E. IT(SS)A NO.660/AHD/2010. THE REVENUE HAS RAISED THE FOLLOWI NG GROUNDS OF APPEAL:- [1] ON THE FACTS AND CIRCUMSTANCE OF THE CASE AN D IN LAW, THE LD.CIT(A) HAS ERRED IN ACCEPTING THE CLAIM OF THE A SSESSEE THAT THE NOTICE U/S.143(2) WAS NOT VALIDLY SERVED ON THE ASS ESSEE IGNORING THE DOCUMENTARY EVIDENCE AVAILABLE ON THE RECORD AN D THE SUBSEQUENT CONDUCT OF THE ASSESSEE IN MAKING SUBMIS SIONS BEFORE THE AO. [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESS ING OFFICER. [3] IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) MAY BE SET- ASIDE AND THAT OF ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EXTENT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE ES PREMISES WAS SEARCHED U/S.132 OF THE I.T.ACT, 1961 ON 29/07/1999 . IN CONNECTION WITH THE SEARCH IN THE CASE OF M/S.CALISONS PVT.LTD., A PROCESS HOUSE WHERE THE ASSESSEE HAD BEEN EMPLOYED AS A DYEING MASTER. THE ASSESSEE FILED BLOCK-RETURN ON 25/11/1999 DECLARING UNDISCLOSED IN COME OF RS.17 LACS, A SUM WHICH HAVE BEEN DECLARED U/S.132(4) OF THE ACT. THE BLOCK ASSESSMENT WAS COMPLETED BY THE DCIT, CC-2, SURAT O N 31/07/2011 DETERMINING THE TOTAL UNDISCLOSED INCOME FOR THE BL OCK PERIOD AT RS.52,57,060/-. THE ASSESSEE PREFERRED AN APPEAL B EFORE THE CIT(A)-II, AHMEDABAD, WHO VIDE HIS ORDER DATED 20/03/2002, CON FIRMED ALL THE IT(SS)A NO.660/AHD/2010 (BY REVENUE) AND CO 290/AHD/2010 (BY ASSESSEE) ITO VS. SHRI DINESH B.GANDHI BLOCK PERIOD 1990-91 TO 1999-2000 - 3 - ADDITIONS MADE BY THE AO, BUT DELETED THE SURCHARGE LEVIED. THE ASSESSEE WENT IN APPEAL BEFORE THE ITAT AGAINST THE ORDER OF THE CIT(A), AND THE TRIBUNAL VIDE ITS ORDER DATED 07/12/2006 PA SSED IN IT(SS)A NO.93/AHD/2002 SET ASIDE THE MATTER TO THE FILE OF THE CONCERNED CIT(A) ON THE GROUND THAT THE CIT(A) HAD UPHELD THE ADDITI ONS MERELY BY QUOTING THE AO, WITHOUT PASSING A SPEAKING ORDER. THE ITAT DIRECTED THAT THE APPEAL BE DECIDED AFRESH BY CIT(A), AFTER GIVING AN OPPORTUNITY TO THE ASSESSEE OF BEING HEARD AND AFTER CONSIDERIN G THE MATERIALS OF THE CASE TO PASS A SPEAKING ORDER. ASSESSEE HAS CONTE STED THE LEGAL VALIDITY OF THE ORDER PASSED BY THE AO U/S.158BC OF THE ACT ON THE GROUND THAT NOTICE U/S.143(2) WAS SERVED ON THE ASSESSEE FOR TH E FIRST TIME ON 26/07/2001 WHICH WAS BEYOND THE PRESCRIBED TIME LIM IT. THE CIT(A) HAVING CONSIDERED THE WRITTEN SUBMISSIONS ON THE IS SUE DISCUSSED ABOVE, GRANTED RELIEF TO THE ASSESSEE, WHEREBY THE CIT(A) HELD THAT THE ASSESSMENT ORDER WAS ILLEGAL AND VOID AB INITIO . 3. BEFORE US, THE MATTER HAS BEEN OPPOSED ON BEHA LF OF THE REVENUE BY THE LD.DR WHO SUBMITTED THAT THE CIT(A) WAS IN S ET-ASIDE PROCEEDINGS WAS NOT JUSTIFIED IN ENTERTAINING THE LEGAL ISSUE W HILE THE MATTER WAS RESTORED ON MERIT ONLY. ACCORDINGLY, THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF AO IS BE RESTORED. ON THE OTHER HAND, THE LD.AR FOR THE ASSESSEE SUPPORTED THE ORDER OF THE CIT(A). 4. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND H AVING GONE THROUGH THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT AS PER ORDER-SHEET NOTING DATED 31/08/2000 A NOTICE U/S.142(1) OF THE ACT WAS ISSUED TO FILE REPLY IT(SS)A NO.660/AHD/2010 (BY REVENUE) AND CO 290/AHD/2010 (BY ASSESSEE) ITO VS. SHRI DINESH B.GANDHI BLOCK PERIOD 1990-91 TO 1999-2000 - 4 - ON OR BEFORE 21/09/2000. THERE IS NO MENTION OF N OTICE U/S.143(2) OF THE ACT WHICH APPARENTLY WAS ALSO ISSUED. THE CIT( A) OBSERVED FROM THE RECORD THAT THIS NOTICE WAS SERVED ON ASSESSEE S AR ON 26/07/2001, I.E. JUST 5 DAYS BEFORE THE IMPUGNED ASSESSMENT WAS PASSED. THUS, THERE WAS A DELAY OF 7 MONTHS AND 26 DAYS IN THE LIGHT OF THE HONBLE SUPREME COURT RENDERED IN THE CASE OF ACIT & ORS VS. HOTEL BLUE MOON REPORTED AT (2010) 229 CTR 219. IN THE SAID CASE, THE HONB LE APEX COURT HELD AS UNDER:- HOWEVER, IF AN ASSESSMENT IS TO BE COMPLETED UNDER S. 143(3) R/W S. 158BC, NOTICE UNDER S. 143(2) SHOULD BE ISSUED WITH IN ONE YEAR FROM THE DATE OF FILING OF BLOCK RETURN. OMISSION ON THE PART OF THE ASSESSING AUTHORITY TO ISSUE NOTICE UNDER S. 143(2) CANNOT BE A PROCEDURAL IRREGULARITY AND THE SAME IS NOT CURABLE AND, THERE FORE, THE REQUIREMENT OF NOTICE UNDER S. 143(2) CANNOT BE DISPENSED WITH. THE OTHER IMPORTANT FEATURE THAT REQUIRES TO BE NOTICED IS THAT THE S. 158BC(B) SPECIFICALLY REFERS TO SOME OF THE PROVISIONS OF THE ACT WHICH R EQUIRES TO BE FOLLOWED BY THE AO WHILE COMPLETING THE BLOCK ASSESSMENTS UN DER CHAPTER XIV- B. THIS LEGISLATION IS BY INCORPORATION. THIS SECTI ON EVEN SPEAKS OF SUB- SECTIONS WHICH ARE TO BE FOLLOWED BY THE AO. HAD TH E INTENTION OF THE LEGISLATURE WAS TO EXCLUDE THE PROVISIONS OF CHAPTE R XIV, THE LEGISLATURE WOULD HAVE OR COULD HAVE INDICATED THAT ALSO. A REA DING OF THE PROVISION WOULD CLEARLY INDICATE, IF THE AO, FOR ANY REASON, REPUDIATES THE RETURN FILED BY THE ASSESSEE IN RESPONSE TO NOTICE UNDER S . 158BC(A), THE AO MUST NECESSARILY ISSUE NOTICE UNDER S. 143(2) WITHI N THE TIME PRESCRIBED IN THE PROVISO TO S. 143(2). WHERE THE LEGISLATURE INTENDED TO EXCLUDE CERTAIN PROVISIONS FROM THE AMBIT OF S. 158BC(B) IT HAS DONE SO SPECIFICALLY. THUS, WHEN S. 158BC(B) SPECIFICALLY R EFERS TO S. 143(2), APPLICABILITY OF THE PROVISO THERETO CANNOT BE EXCL UDED. THE CLARIFICATION GIVEN BY CBDT IN ITS CIRCULAR NO. 717 , DT. 14TH AUG., 1995, HAS A BINDING EFFECT ON THE DEPARTMENT, BUT N OT ON THE COURT. THIS CIRCULAR CLARIFIES THE REQUIREMENT OF LAW IN RESPEC T OF SERVICE OF NOTICE UNDER SUB-S. (2) OF S. 143. ACCORDINGLY, EVEN FOR T HE PURPOSE OF CHAPTER XIV-B, FOR THE DETERMINATION OF UNDISCLOSED INCOME FOR A BLOCK PERIOD UNDER THE PROVISIONS OF S. 158BC, THE PROVISIONS OF S. 142 AND SUB-SS. (2) AND (3) OF S. 143 ARE APPLICABLE AND NO ASSESSM ENT COULD BE MADE WITHOUT ISSUING NOTICE UNDER S. 143(2). THE SUBMISS IONS OF THE COUNSEL IT(SS)A NO.660/AHD/2010 (BY REVENUE) AND CO 290/AHD/2010 (BY ASSESSEE) ITO VS. SHRI DINESH B.GANDHI BLOCK PERIOD 1990-91 TO 1999-2000 - 5 - FOR THE REVENUE THAT THE EXPRESSION 'SO FAR AS MAY BE APPLY' INDICATES THAT IT IS NOT EXPECTED TO FOLLOW THE PROVISIONS OF S. 142, SUB-SS. (2) AND (3) OF S. 143 STRICTLY FOR THE PURPOSE OF BLOCK ASS ESSMENTS CANNOT BE ACCEPTED, SINCE THERE IS NO REASON TO RESTRICT THE SCOPE AND MEANING OF THE EXPRESSION 'SO FAR AS MAY BE APPLY'. 5. WHILE APPLYING THE RATIO OF HONBLE APEX COURT I N THE CASE OF HOTEL BLUE MOON (SUPRA) TO THE FACTS OF CASE AND OT HER DECISIONS HELD THAT ALL BLOCK ASSESSMENT ARE NULL AND VOID WHERE NOTICE U/S.143(2) OF THE ACT WAS SERVED ON THE ASSESSEE BEYOND PRESCRIBED TIME L IMIT. THE CIT(A) FINALLY HELD THAT IN THE CASE OF THE ASSESSEE, SINC E THE NOTICE U/S.143(2) WAS NOT SERVED ON THE ASSESSEE WITHIN THE PERIOD O F 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE BLOCK-RETURN OF INCOM E WAS FURNISHED, THE ASSESSMENT ORDER DATED 31/07/2001 WAS PATENTLY ILLE GAL AND VOID AB INITIO . THIS LEGAL AND FACTUAL FINDING OF CIT(A) IS NO N EED OF ANY INTERFERENCE, SAME IS HEREBY UPHELD BY US. AS A R ESULT, APPEAL OF THE REVENUE IS REJECTED. 6. NOW, WE TAKE UP THE CROSS OBJECTION NO.290/AHD/ 2010 (ARISING OUT OF IT(SS)A NO.660/AHD/2010) FILED BY THE ASSESS EE, WHEREIN FOLLOWING GROUNDS HAVE BEEN TAKEN:- [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT-APPEALS-II, SUR AT HAS RIGHTLY HELD THE ASSESSMENT ORDER DATED 31/07/2001 AS ILLEG AL AND ABINITIO VOID IN ABSENCE OF SERVICE OF STATUTORY NOTICE U/S. 143(2) OF THE ACT RELYING ON THE HONBLE SUPREME COURT IN THE CASE OF HOTEL BLUE MOON. IT(SS)A NO.660/AHD/2010 (BY REVENUE) AND CO 290/AHD/2010 (BY ASSESSEE) ITO VS. SHRI DINESH B.GANDHI BLOCK PERIOD 1990-91 TO 1999-2000 - 6 - [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT(A)-II, SURAT AF TER HAVING EXAMINED THE RECORDS AND DISCUSSED THE CASE WITH TH E A.O. CAME TO A CONCLUSION THAT THE STATUTORY NOTICE WAS SERVE D ON THE ASSESSEES A.R. ON 26/07/2001 I.E. JUST FIVE DAYS B EFORE THE DATE OF IMPUGNED ASSESSMENT ORDER PASSED ON 31/07/2001. YOUR RESPONDENT THEREFORE PRAYS THAT LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND RELYING ON THE CASE L AWS, LEARNED CIT(APPEALS)-II SURAT HAS RIGHTLY TREATED THE BLOCK ASSESSMENT AS ILLEGAL AND ABINITIO VOID. YOUR RESPONDENT FURTHER RESERVES HIS RIGHT TO ADD, ALTER OR TO AMEND ANY OF THE AFORESAID GROUNDS AT THE TIME OF H EARING OF AN APPEAL. 7. THE ABOVE ISSUE RAISED IN THIS CROSS-OBJECTION B Y THE ASSESSEE IS NOTHING BUT IS SUSTENANCE OF THE ORDER OF THE CIT(A ) WHICH HAS ALREADY BEEN DECIDED BY US AS DISCUSSED IN REVENUES APPEAL -SUPRA. SO, THE ISSUE RAISED IN CROSS-OBJECTION HAS BECOME INFRUCTUOUS. AS A RESULT, CROSS- OBJECTION FILED BY THE ASSESSEE IS DISMISSED AS INF RUCTUOUS. 8. IN THE RESULT, REVENUES APPEAL AND ASSESSEE S CROSS-OBJECTION BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 29 TH , THE THURSDAY OF JANUARY, 2015 AT AHMEDABAD. SD/- SD/- (ANIL CHATURVEDI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 29/01/2015 %.., .'../ T.C. NAIR, SR. PS IT(SS)A NO.660/AHD/2010 (BY REVENUE) AND CO 290/AHD/2010 (BY ASSESSEE) ITO VS. SHRI DINESH B.GANDHI BLOCK PERIOD 1990-91 TO 1999-2000 - 7 - ! ' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ()* + / CONCERNED CIT 4. + ( ) / THE CIT(A)-II, SURAT 5. ./0 '')* , )*' , ( / DR, ITAT, AHMEDABAD 6. 034 5 / GUARD FILE. / BY ORDER, . ' //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 27.1.15 (DICTATION-PAD 10- P AGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 27.1.15 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.29.1.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 29.1.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER