Pallavi Sood, New Delhi V. ACIT, New Delhi

ITSSA 7/DEL/2013

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 1703 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 23-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 09-02-2016
• Assessment Year: misc
• Appeal Filed On: 15-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R B MEENA
• Keywords: Search and seizure; Document seized; Opportunity of being heard; Principle of natural justice; Question of law; Block assessment; Documents seized
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SH. S UDHANSHU SRIVASTAVA , JM IT(SS)A NO. 07 /DEL/201 3 : BLOCK PERIOD : 01.04.1989 TO 17.06.1999 PALLAVI SOOD, Y - 72 (G.F.), HAUZ KHAS, NEW DELHI - 110016 VS ASSTT. COMMI SSIONER OF INCOME TAX, CIRCLE - 32 (1), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A PUPS4525E ASSESSEE BY : SH. SATYEN SETHI, ADV. REVENUE BY : SH. R. B . MEENA , CIT DR DATE OF HEARING : 09 .0 2 .201 6 DATE OF PRONOUNCE MENT : 23 .03 .201 6 ORDER PER N. K. SAINI, AM : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 31.01.2013 OF LD. CIT(A) - X XV I , DELHI. 2. THE ONLY EFFECTIVE GROUND R AISED IN THIS APPEAL READS AS UNDER: THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, WHETHER THE AUTHORITIES BELOW WERE JUSTIFIED IN CONFIRMING THE ADDITION OF RS.40.80 LACS FOR THE REASON THAT THERE IS NO PROVISION IN THE INCOME TAX ACT TO FILE THE REVISED INCOME TAX RETURNS BY POST AND WITHOUT MAKING PAYMENT OF TAXES ON THE REVISED INCOME. IT(SS) A NO. 07 /DE L/2013 PALLAVI SOOD 2 3. THE ASSESSEE ALSO MOVED AN APPLICATION UNDER RULE 11 OF INCOME TAX (AT) RULES, 1963 FOR ADMISSION OF THE ADDITIONAL GROUND WHICH READ AS UNDER: 1. T HE PRESENT APPEAL ARISES OUT OF ORDER DATED 28.12.2009 PASSED UNDER SECTION 254 / 158BD OF THE INCOME TAX ACT, 1961 (BRIEFLY 'THE ACT'). 2. THAT ON 4.3.1999, SEARCH AND SEIZURE OPERATIONS UNDER SECTION 132 OF THE ACT WERE CONDUCTED IN THE CASE OF MR. KULD EEP SOOD, HUSBAND OF THE APPELLANT. 3. THOUGH THE SEARCH OPERATIONS WERE CARRIED ON IN THE CASE OF HUSBAND OF THE APPELLANT, HOWEVER, NO SEARCH UNDER SECTION 132 OR REQUISITION UNDER SECTION 132A OF THE ACT WAS MADE IN THE CASE OF THE APPELLANT. 4. NOTWI THSTANDING THE ADMITTED POSITION THAT NO SEARCH OR REQUISITION WAS MADE EITHER IN THE CASE OF APPELLANT OR TRANSWORLD INTERNATIONAL, PROPRIETORSHIP FIRM OF THE APPELLANT, PROCEEDINGS WERE INITIATED UNDER SECTION 158BC OF THE ACT. SINCE THE INITIATION OF PR OCEEDINGS UNDER SECTION 158BC WAS BAD IN LAW, THEREFORE, THE APPELLANT, IN RESPONSE SUBMITTED THAT THE PROCEEDINGS MAY BE TAKEN UP UNDER SECTION 158BD OF THE ACT. 5. SUBSEQUENT TO THE SUBMISSION OF THE APPELLANT THAT PROCEEDINGS UNDER SECTION 158BC ARE BA D IN LAW, THE THEN ASSESSING OFFICER VIDE LETTER NO.351 DATED 27.3.2001 INFORMED THE APPELLANT THAT: IT(SS) A NO. 07 /DE L/2013 PALLAVI SOOD 3 'NOTICE U/S 158BC DATED 29.11.2000 WAS ISSUED TO YOU BY THIS OFFICE FOR THE BLOCK PERIOD 1.4.89 TO 7.4.99. THIS NOTICE MAY BE READ W.E.F. THE DATE OF ITS ISSUE AS NOTICE U/S 158BC READ WITH 158BD FOR THE BLOCK PERIOD 1.4.89 TO 17.6.99. YOU ARE REQUESTED TO MAKE NECESSARY AMENDMENTS IN THE AFORESAID NOTICE AND COMPLY THEREWITH IMMEDIATELY.' 6. THAT SECTION 158BD PERMITS INITIATION OF PROCEEDINGS UNDER CHAPT ER XIV - B OF THE ACT AGAINST THE PERSON OTHER THAN THE PERSON SEARCHED, ON SATISFACTION OF THE ASSESSING OFFICER OF THE PERSON SEARCHED THAT THE SEIZED DOCUMENTS / UNDISCLOSED INCOME BELONGS TO THAT OTHER PERSON. RECORDING OF SATISFACTION BY THE ASSESSING O FFICER OF THE PERSON SEARCHED IS FUNDAMENTAL TO INITIATE PROCEEDINGS IN THE HANDS OF THAT OTHER PERSON. 7. THE LAW IS WELL SETTLED THAT MANDATE OF SECTION 158BD I.E. RECORDING OF SATISFACTION THAT THE UNDISCLOSED INCOME BELONGS TO THE PERSON OTHER THAN TH E PERSON WITH RESPECT TO WHOM THE SEARCH WAS CONDUCTED IS SINE - QUA NON FOR INITIATION OF VALID PROCEEDINGS UNDER SECTION 158BD OF THE ACT. 8. THAT NO SATISFACTION UNDER SECTION 158BD WAS RECORDED BEFORE CONVERTING THE NOTICE UNDER SECTION 158BC TO THE PRO CEEDINGS UNDER SECTION 158BD OF THE ACT. 9. SINCE THE REQUISITE SATISFACTION WAS NOT RECORDED, THEREFORE, THE VERY INITIATION OF PROCEEDING UNDER SECTION 158BD WAS INVALID AND BAD IN LAW AND IT(SS) A NO. 07 /DE L/2013 PALLAVI SOOD 4 WHATEVER FOLLOWED THE INVALID INITIATION OF PROCEEDING WAS ALSO INVALID AND BAD IN LAW. 10. IN THIS VIEW OF THE MATTER, IT IS SUBMITTED THAT THE BLOCK ASSESSMENT ORDER UNDER SECTION 158BD DATED 31.12.2001 AND ALL THE SUBSEQUENT ORDERS INCLUDING THE ORDER DATED 28.12.2009 PASSED UNDER SECTION 254 / 158BD OF THE ACT ARE INVALID AND BAD IN LAW. 11. IN THIS BACKGROUND, THE APPELLANT SEEKS TO RAISE FOLLOWING ADDITIONAL GROUND: 'THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, JURISDICTION UNDER SECTION 158BD OF THE ACT WAS NOT VALIDLY INITIATED, INASMUCH AS, REQUISITE SAT ISFACTION UNDER SECTION 158BD WAS NOT RECORDED. THEREFORE, THE BLOCK ASSESSMENT AND THE SUBSEQUENT ORDERS ASSESSING THE UNDISCLOSED INCOME IN THE HANDS OF THE APPELLANT ARE INVALID AND BAD IN LAW.' 12. THAT THE LAW IS WELL SETTLED THAT THE OBJECTION TO TH E JURISDICTION CAN BE RAISED AT ANY STAGE OF THE PROCEEDING INCLUDING THE COLLATERAL PROCEEDINGS. AN ASSESSEE CANNOT CONFER JURISDICTION, WHERE THE SAME WAS LACKING. DEFECT OF JURISDICTION CANNOT BE CURED BY CONSENT OR WAIVER, FOR LACK OF JURISDICTION GOES TO THE ROOT OF THE MATTER AND THERE CAN BE NO ACQUIESCENCE IN THE MATTER OF JURISDICTION. 13. THAT IN NTPC LTD. V. CI T (1998) 229 ITR 383, THE HON'BLE SUPREME COURT HAS REITERATED THE WIDE POWERS THAT THIS HON'BLE TRIBUNAL HAS IN ADMITTING THE ADDITIONAL GROUND. THE TRIBUNAL IS EMPOWERED TO CONSIDER FUNDAMENTAL QUESTION OF JURISDICTION IN IT(SS) A NO. 07 /DE L/2013 PALLAVI SOOD 5 THE SECOND ROUND OF PROCEEDINGS, ALTHOUGH THE SAME WAS NOT RAISED EARLIER. 14. IN VIEW OF WHAT HAS BEEN PUT FORTH ABOVE, IT IS REQUESTED THAT THE ADDITIONAL GROUND MAY BE ADMITTED AND ADJUDICATED UPON IN DISPOSING THE APPEAL. THE ADMISSION OF ADDITIONAL GROUNDS WOULD ONLY ADVANCE THE CAUSE OF JUSTICE. 4. DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE CONTENTS OF THE AFORESAID APPLICATION A ND REQUESTED TO ADMIT THE ADDITIONAL GROUND. 5. IN HIS RIVAL SUBMISSIONS THE LD. DR OPPOSED THE ADMISSION OF THE ADDITIONAL GROUND AND SUBMITTED THAT NO SUCH GROUND WAS TAKEN BEFORE THE LD. CIT(A), THEREFORE, IT MAY NOT BE ADMITTED. 6 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE M ATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE WAS NOT BEFORE THE LD. CIT(A). HOWEVER, THE ADDITIONAL GROUN D NOW RAISED IS PURELY A LEGAL GROUND AND THE RELEVANT MATERIAL RELATED TO THIS GROUND IS AVAILABLE ON THE RECORD. THEREF ORE, IT DESERVES TO BE ADMITTED, I N VIEW OF THE RATIO LAID DOWN BY THE HON BLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL IT(SS) A NO. 07 /DE L/2013 PALLAVI SOOD 6 POWER CO. LTD. VS CIT (1998) 22 9 ITR 383 WHEREIN IT HAS BEEN HELD AS UNDER: THE POWER OF THE TRIBUNAL IN DEALING WITH APPEALS IS THUS EXPRESSED IN THE WIDEST POSSIBLE TERMS. THE PURPOSE OF THE ASSESSMENT PROCEEDINGS BEFORE THE TAXING AUTHORITIES IS TO ASSESS CORRE CTLY THE TAX LIABILITY OF AN ASSESSEE IN ACCORDANCE WITH LAW. IF, FOR EXAMPLE, AS A RESULT OF A JUDICIAL DECISION GIVEN WHILE THE APPEAL IS PENDING BEFORE THE TRIBUNAL, IT IS FOUND THAT A NON - TAXABLE ITEM IS TAXED OR PERMISSIBLE DEDUCTION IS DENIED, THERE IS NO REASON WHY THE ASSESSEE SHOULD BE PREVENTED FROM RAISING THAT QUESTION BEFORE THE TRIBUNAL FOR THE FIRST TIME, SO LONG AS THE RELEVANT FACTS ARE ON RECORD IN RESPECT OF THE ITEM. UNDOUBTEDLY, THE TRIBUNAL HAS THE DISCRETION TO ALLOW OR NOT TO ALLOW A NEW GROUND TO BE RAISED. BUT WHERE THE TRIBUNAL IS ONLY REQUIRED TO CONSIDER THE QUESTION OF LAW ARISING FROM FACTS WHICH ARE ON RECORD IN THE ASSESSMENT PROCEEDINGS, THERE IS NO REASON WHY SUCH A QUESTION SHOULD NOT BE ALLOWED TO BE RAISED WHEN IT IS NE CESSARY TO CONSIDER THAT QUESTION IN ORDER TO CORRECTLY ASSESS THE TAX LIABILITY OF AN ASSESSEE. 7. THE ADDITIONAL GROUND NOW RAISED BY THE ASSESSEE ALTHOUGH GOES TO THE ROOT OF THE MATTER BUT IT WAS NOT BEFORE THE LOWER AUTHORITIES AND THE PRINCIPLES OF NATURAL JUSTICE REQUIRES THAT THE OPPORTUNITY IS TO BE GIVEN TO BOTH THE PARITIES. WE, THEREFORE, SET ASIDE THIS ISSUE TO THE FILE OF THE LD. CIT(A) TO BE ADJUDICATE D IN ACCORDANCE WITH LAW AFTER IT(SS) A NO. 07 /DE L/2013 PALLAVI SOOD 7 PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE , AFTER MAKING THE PROPER VERIFICATION FROM THE RECORD AS TO WHETHER THE REQUISITE SATISFACTION U/S 158BD OF THE ACT WAS RECORDED BY THE AO BEFORE CONVERTING THE NOTICE U/S 158BC OF THE ACT TO THE NOTICE U/S 158BD OF THE ACT. 8 . IN THE RESULT , APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ( ORDER PRON OUNCED IN THE COURT ON 23 /03 / 2016 ) SD/ - SD/ - ( SUDHANSHU SRIVASTAVA ) ( N. K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 23 / 03 /2016 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR