C.K. Ammukutty Amma, Pathanamthitta V. ACIT, Kottayam

ITSSA 71/COCH/2004

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7818 (ITAT-COCHIN)
• Duration Of Justice: 7 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 06-01-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 04-01-2012
• Assessment Year: misc
• Appeal Filed On: 29-07-2004
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: A GOPALAKRISHNAN
• Keywords: Search and seizure; Block assessment
• Section: 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKARA N, AM I.T.(SS)A NO. 71/COCH/2004 BLOCK PERIOD: 1985-86 TO 1995-96 UPTO 29-11-1995 SMT. C.K. AMMUKUTTY AMMA, PRASANTHI, KAITHAKODY P.O., AYROOR, PATHANAMTHITTA DISTRICT. [PAN: VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1, KOTTAYAM (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI A.GOPALAKRISHNAN, CA REVENUE BY MS. S. VIJAYAPRABHA, DR DATE OF HEARING 03/01/2012 DATE OF PRONOUNCEMENT 6 /01/2012 O R D E R PER B.R.BASKARAN, AM THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 29-06-2004, PASSED BY THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1, KOTTAYAM AND IT RELATES TO THE BLOCK PERIOD ENDING 29-11-1995. 2. THE ASSESSEE, INTER ALIA, HAS CHALLENGED THE VAL IDITY OF THE IMPUGNED BLOCK ASSESSMENT ORDER. SINCE IT GOES TO THE ROOT OF THE ASSESSMENT, WE PREFER TO ADJUDICATE THE SAME FIRST. 3. THE FACTS NECESSARY FOR ADJUDICATION OF THIS ISS UE IS STATED IN BRIEF. THE DEPARTMENT CARRIED OUT A SEARCH AND SEIZURE OPERATI ON IN THE HANDS OF THE ASSESSEES HUSBAND, SHRI C.G.NAIR ON 29-11-1995. THE BLOCK ASS ESSMENT, IN THE HANDS OF SHRI C.G.NAIR WAS INITIALLY COMPLETED ON 29-11-1996. IN THE APPEAL PREFERRED BY THE SAID SHRI I.T.(SS)A. NO.71 /COCH/2004 2 C.G. NAIR, THE TRIBUNAL SET ASIDE THE ASSESSMENT A ND ACCORDINGLY, THE ASSESSING OFFICER REFRAMED THE ASSESSMENT ON 15-03-2000. THUS, AFTER COMPLETION OF MORE THAN THREE YEARS FROM THE DATE OF COMPLETION OF BLOCK ASSESSMENT PRO CEEDINGS IN THE HANDS OF SHRI C.G. NAIR, THE ASSESSING OFFICER INITIATED BLOCK ASSESSM ENT PROCEEDINGS IN THE HANDS OF THE ASSESSEE U/S 158BD OF THE ACT ON 26.6.2003 BY ISSU ING NOTICE U/S. 158BC R.W.S. 158BD OF THE ACT. IN PURSUANCE THEREOF, THE BLOCK ASSESS MENT WAS COMPLETED ON 29-06-2004. THE LD. COUNSEL FOR THE ASSESSEE, BY PLACING RELIAN CE ON THE DECISION OF 5-MEMBER SPECIAL BENCH OF THE TRIBUNAL IN THE CASE MANOJ AGA RWAL VS. DCIT (2008) 113 ITD 377 (DEL.) (SB) AND 117 TTJ 145, SUBMITTED THAT THE NOT ICE ISSUED IN THE HANDS OF THE ASSESSEE, BEING SUBSTANTIALLY DELAYED BY MORE THAN THREE YEARS, IS BARRED BY LIMITATION. 4. THE LD. DR, ON THE CONTRARY, SUBMITTED THAT TH E ACT HAS NOT PRESCRIBED ANY TIME LIMIT FOR ISSUING NOTICE UNDER SECTION 158BD OF THE ACT AND THEREFORE, THE DELAY IN ISSUING NOTICE CANNOT INVALIDATE THE ASSESSMENT PROCEEDINGS , SO LONG AS THE ASSESSMENT IS COMPLETED WITHIN TIME LIMIT PRESCRIBED UNDER THE AC T AFTER THE ISSUE OF THE SAID NOTICE. SHE FURTHER SUBMITTED THAT THE ASSESSING OFFICER HA S COMPLETED THE ASSESSMENT WITHIN THE PRESCRIBED PERIOD AFTER THE ISSUE OF NOTICE U/S. 15 8BD TO THE ASSESSEE. 5. AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THIS B ENCH IN THE CASE OF DCIT VS. ANIL DAS R AND OTHERS IN IT(SS)A NO. 30/COCH/2007 AND OR S.; WHEREIN IT HAS BEEN HELD THAT THE NOTICE ISSUED U/S. 158BD OF THE ACT AFTER THREE YEARS FROM THE DATE OF COMPLETION OF ASSESSMENT IN THE HANDS OF THE PERSON AGAINST WHOM THE SEARCH WAS CARRIED OUT IS BARRED BY LIMITATION. FOR THE SAKE OF CONVENIENCE, WE EXT RACT BELOW THE OBSERVATIONS MADE IN THE CASE CITED ABOVE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND A LSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT TH E BLOCK ASSESSMENT PROCEEDINGS IN THE CASE OF SHRI M REGHUNTHAN WAS COMPLETED U/S 158BC ON 31-07-2001. NO DOUBT, THERE IS NO PROVISION IN THE INCOME-TAX ACT FIXING THE TIME LIMIT FOR ISSUING NOTICE U/S 158BD OF THE ACT IN RESPECT OF THE PERS ON OTHER THAN SEARCHED, BUT, IT DOES NOT MEAN THAT THE ASSESSING OFFICER CAN ISSUE THE NOTICE AT HIS SWEET WILL AT ANY TIME. FINALITY OF THE PROCEEDINGS CANNOT BE S EEN SO LIGHTLY. SECTION 132(9A) I.T.(SS)A. NO.71 /COCH/2004 3 ENABLES THE AUTHORIZED OFFICER TO EXAMINE THE BOOK S OF ACCOUNT OR OTHER DOCUMENTS OR ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES AND IF IT IS NOT RELATABLE TO ANY PERSON AGAINST WHOM SEARCH WAS CONDUCTED, H E HAS TO HAND OVER THE SAME TO THE CONCERNED ASSESSING OFFICER HAVING JURISDIC TION OVER SUCH PERSON WITHIN THE PERIOD OF 60 DAYS FROM THE DATE ON WHICH THE LAST AUTHORIZATION FOR THE SEARCH WAS EXECUTED. THEREFORE, U/S 132(9A) OF THE ACT, THE OFFICER, WHO HAS CONDUCTED THE SEARCH HAS TO EXAMINE THE DOCUMENTS WITHIN 60 DAYS AND IF IT DOES NOT RELATE TO THE PERSON AGAINST WHOM SEARCH WAS CONDUCTED, HE H AS TO HANDOVER THE SAME TO THE CONCERNED OFFICER, WHO IS HAVING JURISDICTION OVER THE PERSON AGAINST WHOM THE MATERIAL WAS FOUND. THIS IS THE FIRST AVAILABLE O PPORTUNITY TO EXAMINE THE SEIZED MATERIAL. MOREOVER, IN THE COURSE OF BLOCK ASSESS MENT PROCEEDINGS, THE ASSESSING OFFICER HAS THOROUGHLY EXAMINED ALL THE DOCUMENTS. THEREFORE, IT IS FOR THE ASSESSING OFFICER TO ISSUE THE NOTICE WITHIN THE R EASONABLE TIME. THEREFORE, EVEN THOUGH NO TIME LIMIT FOR ISSUING NOTICE U/S 158BD WAS PRESCRIBED UNDER THE SCHEME OF THE ACT, THE ASSESSING OFFICER HAS TO IS SUE THE NOTICE WITHIN A REASONABLE PERIOD OF TIME AFTER EXPIRY OF 60 DAYS FROM THE D ATE OF LAST AUTHORIZATION FOR SEARCH WAS EXECUTED. IN THIS CASE, ADMITTEDLY, TH E SEARCH WAS CONDUCTED ON 27-07- 1999 AND THE ASSESSMENT PROCEEDINGS IN THE CASE OF THE PERSON WHO WAS SEARCHED WAS COMPLETED ON 31-07-2001. THEREFORE, WE ARE OF THE OPINION THAT THE ISSUE OF NOTICE U/S 158BD ON 27-09-2004 AFTER EXPIRY OF THR EE YEARS IS BEYOND THE REASONABLE PERIOD. WE FIND THAT THIS ISSUE WAS EX AMINED BY A FIVE MEMBER BENCH OF THIS TRIBUNAL AT DELHI IN MANOJ AGARWAL VS DCIT (2008) 113 ITD 377 (DEL)(SB). THE SPECIAL BENCH OF THE TRIBUNAL EXAM INED THE SCHEME OF THE ACT AND OBSERVED ON PAGE 481, PARAGRAPH 110 & 111, AS UNDER 110. IT IS CLEAR FROM THE ABOVE THAT THE PROVISIONS OF SECTION 158BD ARE THUS INEXTRICABLY INTERLINKED AND INTERTW INED WITH SECTION 158BC AND THEY ARE LIKE SIAMESE TWINS. IN THE CIRCUMSTANCE, IT IS NOT POSSIBLE TO VIEW SECTION 15 8BD IN ISOLATION AND DE HORS SECTION 158BC AS THAT WOULD M ILITATE AGAINST THE INTENTION BEHIND THE ENACTMENT OF CHAPT ER XIV-B TO PROVIDE FOR A COMPLETE CODE FOR ASSESSMENT OF UN DISCLOSED INCOME AS DIFFERENT FROM THE ASSESSMENT OF NORMAL I NCOME IN REGULAR ASSESSMENT. THE CONCEPT OF UNDISCLOSED INC OME AS DIFFERENT FROM WHAT WE MAY CALL AS NORMAL OR REG ULAR INCOME IS AT THE VERY CORE OF THIS CHAPTER. 111. IT IS IN THIS CONTEXT THAT WE HAVE TO VIEW THE PROVISIONS OF SECTION 158BD OF THE ACT. IT IS NOT AS IF THE S AID PROVISION CAN BE INVOKED AT THE WHIMS OF THE ASSESSING OFFICE R. ON THE OTHER HAND, THE SECTION HAS CERTAIN BUILT IN REQUIR EMENTS WHICH HAVE TO BE SCRUPULOUSLY FOLLOWED AS HELD IN THE CAS E OF MANISH MAHESHWARI (SUPRA) IF AN ATTACK AGAINST AN O RDER UNDER THIS SECTION HAS TO BE REPELLED. THE FIRST P RE-CONDITION I.T.(SS)A. NO.71 /COCH/2004 4 IS THAT THE ASSESSING OFFICER EXAMINING THE MATERIA L FOUND AS A RESULT OF SEARCH OR OTHER RELATED PROCEEDINGS AS IN SECTION 132A SHOULD DETERMINE WHETHER THE MATERIAL THROWS U P ANY INCOME WHICH CAN BE TERMED AS UNDISCLOSED. IF SO, HE HAS TO IDENTIFY SUCH UNDISCLOSED INCOME. THE NEXT STEP IS TO DETERMINE TO WHOM SUCH UNDISCLOSED INCOME BELONGS. IT MAY HAPPEN THAT SUCH INCOME MAY NOT BELONG TO THE PERSO N SEARCHED IN RESPECT OF WHOM HE HAS JURISDICTION, IN WHICH EVEN HE HAS NO OTHER OPTION BUT TO GIVE A FINDING T HAT THE UNDISCLOSED INCOME DOES NOT BELONG TO HIS ASSESSEE BUT THAT IT BELONGS TO ANOTHER PERSON WHOM HE HAS TO IDENTIFY A ND DETERMINE. THESE HAVE TO BE POSITIVE FINDINGS FOR THE REASON THAT THE SECTION DOES NOT GIVE ANY ELBOW ROOM FOR T HE ASSESSING OFFICER TO SAY IT MAY BELONG TO A OR TO B OR TO C. HE HAS TO INFER ON THE BASIS OF THE MATERIAL AND EV IDENCE FOUND THAT SUCH INCOME BELONGS TO A SPECIFIED PERSO N AND IDENTIFIED BY HIM. AFTER ARRIVING AT THIS FINDING, HE HAS TO HAND OVER SUCH MATERIAL, DOCUMENTS ETC., TO THE ASS ESSING OFFICER HAVING JURISDICTION OVER THE SAID OTHER PER SON AT THAT MATERIAL POINT OF TIME AND IT IS AT THAT STAGE THE SECOND ASSESSING OFFICER ASSUMES JURISDICTION AT THAT POIN T OF TIME. IF THE ASSESSING OFFICER ASSESSING THE PERSON SEARC HED DOES NOT FIND ANY UNDISCLOSED INCOME AT ALL, OR DOES NOT ARRIVE AT ANY FINDING IN RESPECT OF THE SAME OR HAVING ARRIVE D AT SUCH FINDING DOES NOT HAND OVER THE MATERIAL TO THE SECO ND ASSESSING OFFICER, THE PROVISIONS OF SECTION 158BD DO NOT COME INTO OPERATION AT ALL. THE SPECIAL BENCH AGAIN OBSERVED AS FOLLOWS ON PAGE 484 AT PARAGRAPH 114 & 115: 114. SECTION 158BE PROVIDES FOR TIME LIMIT FOR COMP LETION OF BLOCK ASSESSMENT. IT STIPULATES THAT THE ORDER UNDER SECTION 158BC SHALL BE PASSED WITHIN TWO YEARS FROM THE END OF THE MONTH IN WHICH THE LAST OF THE AUTHORIZATION FOR SE ARCH UNDER SECTION 132 WAS EXECUTED OR FOR REQUISITION UNDER S ECTION 132A A THE CASE MAY BE AND SO THE ORDER ENVISAGED U NDER SECTION 158BC HAS NECESSARILY TO BE PASSED WITHIN T HIS TIME FRAME SET IN LAW. IF THERE IS A TIME-LIMIT FOR PAS SING SUCH ORDER, THERE IS AN IMPLIED TIME LIMIT FOR GIVING A FINDING AS TO THE PERSON TO WHOM THE UNDISCLOSED INCOME BELONGS W HICH UNDER NO CIRCUMSTANCE CAN BE BEYOND THE TIME-LIMIT SET IN I.T.(SS)A. NO.71 /COCH/2004 5 SECTION 158BE. IF THERE IS NO SUCH FINDING GIVEN I N THE ORDER UNDER SECTION 158BC, THE PROVISIONS OF SECTION 158B D STAND OUSTED AT THE EXPIRY OF THE SAID TIME LIMIT FOR THE REASON THAT SUCH A FINDING IS THE VERY BASIS FOR INVOKING SECTI ON 158BD. 115. SECTION 158BD AS SAID EARLIER BEGINS WITH THE EXPRESSION WHERE THE ASSESSING OFFICER IS SATISFIE D AND SO THE VERY SECTION IMPLIES A RECORDING OF SATISFACTIO N. THE SATISFACTION CONTEMPLATED IS A JUDICIOUS SATISFACTI ON AND NOT A SUBJECTIVE SATISFACTION AND UNLESS THE SAME IS RECO RDED IT IS NOT POSSIBLE FOR ANY PERSON TO DISCERN WHETHER THE SATISFACTION MEETS THE REQUIRES OF LAW AT ALL. THE SATISFACTION CAN BE FOUND IN THE ORDER PASSED UNDER SECTION 158BC AND IF NO S UCH ORDER IS PASSED THEN IT WILL HAVE TO BE FOUND IN THE NOTE HANDING OVER THE MATERIAL SEIZED TO THE ASSESSING OFFICER A SSESSING THE OTHER PERSON. IN ANY EVENT, IT HAS TO BE IN WRITIN G AND IN VIEW OF SECTION 158BE, THE SAID RECORDING HAS TO BE MADE BEFORE THE TIME SET IN SECTION 158BE EXPIRES. AFTER THE S AID DATE, IT IS NOT POSSIBLE TO INVOKE SECTION 158BD AT ALL. IN VIEW OF THE ABOVE, ISSUE OF NOTICE U/S 158BD AF TER THREE YEARS FROM THE DATE OF COMPLETION OF THE ASSESSMENT IN RESPECT OF THE PER SON AGAINST WHOM SEARCH WAS CARRIED OUT IS BARRED BY LIMITATION. A SIMILAR VIE W WAS TAKEN BY HYDERABAD BENCH OF THIS TRIBUNAL IN THE CASE OF DY.CIT, CIR. VS SH RI P VENKATA RAMANA IN ITSSA NO.08/HYD/2010 ORDER DATED 11-02-2011. A SIMILAR VIEW WAS ALSO TAKEN BY THE GUJARAT HIGH COURT ALSO IN THE CASE OF KHANDUBHAI VASANJI DESAI & ORS VS DCIT (1999) 236 ITR 73 (GUJ). THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS ALSO TAKEN A SIMILAR VIEW IN ASSIST.COMMISSIONER OF INCOME-TAX VS SMT. CICY P THOMAS IN ITSS NO.32/COCH/2007 AND CO NO.37/COCH/2007 ORDER DATED 22-12-2011. 7. IN VIEW OF THE ABOVE, IN OUR OPINION, THE BLOCK ASSESSMENT ORDER PASSED AGAINST THE ASSESSEE U/S 158BD IS BARRED BY LIMITA TION. ACCORDINGLY, THE SAME IS QUASHED. 6. IN CONSISTENT WITH THE VIEW TAKEN IN THE ABOVE C ITED CASE, WE HOLD THAT THE BLOCK ASSESSMENT ORDER PASSED IN THE HANDS OF THE ASSESSE E U/S. 158BD IS TIME BARRED BY LIMITATION. ACCORDINGLY, WE QUASH THE SAME. SINCE WE HAVE DECIDED THE LEGAL ISSUE IN FAVOUR OF THE ASSESSEE, WE DO NOT FIT IT NECESSARY TO ADJUDICATE OTHER GROUNDS RAISED BY THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. I.T.(SS)A. NO.71 /COCH/2004 6 PRONOUNCED ACCORDINGLY ON 6.1.2012. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 6TH JANUARY, 2012 GJ COPY TO: 1. SMT. C.K. AMMUKUTTY AMMA, PRASANTHI, KAITHAKOD Y P.O., AYROOR, PATHANAMTHITTA DISTRICT. 2. THE ASSITANT COMMISSIONER OF INCOME TAX, CIRCLE- 1, KOTTAYAM 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, 4. THE COMMISSIONER OF INCOME-TAX, KOTTAYAM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE .