DCIT, CHENNAI V. Emcorp Finance Ltd., CHENNAI

ITSSA 9/CHNY/2013

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9591 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 1 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 31-10-2013
• Assessment Year: misc
• Appeal Filed On: 16-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Procedural lapse; Block assessment
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER IT(SS)A NO.9/MDS/2013 (BLOCK PERIOD : 1990-91 TO 2000-01 & 01.04.200 0 TO 24.01.2001) THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-I(3), 121, M.G.ROAD, CHENNAI-600 034. VS. M/S. EMCORP FINANCE LTD. 12/16, WALLACE GARDEN 2 ND STREET, NUNGAMBAKKAM, CHENNAI-600 006. PAN:AAACE1501B (APPELLANT) (RESPONDENT) APPELLANT BY : MR. ANIRUDH RAI, CIT RESPONDENT BY : MR. A.S.SRIRAMAN, ADVOCATE DATE OF HEARING : 31 ST OCTOBER, 2013 DATE OF PRONOUNCEMENT : 18 TH NOVEMBER, 2013 O R D E R PER CHALLA NAGENDRA PRASAD, JM : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, CHENNA I DATED 23.01.2013 FOR THE BLOCK PERIOD FROM 1990-91 TO 20 00-01 & 01.04.2000 TO 24.01.2001. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1.A ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME IT(SS)A NO.9/MDS//2013 2 TAX (APPEALS) HAS ERRED IN HOLDING THE ASSESSMENT TO BE VOID. 1.B THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO NOTE THAT PROVISO TO SECTION 148 REFERS TO ASSESSMENT, REASSESSMENT OR RECOMPUTATION AS SPECIFIED IN SUB-SECTION (2) OF SECTION 153 AND A COMBINED READING OF SECTION 158BC(B) AND PROVISO 1 TO SECTION 158BC LEADS TO THE CONCLUSION THAT THE BLOCK ASSESSMENT U/S.158BC IS AKIN TO REASSESSMENT/RECOMPUTATION U/S.153(2) AND HENCE THE PROVISIONS OF PROVISO TO SECTION 148 OUGHT TO HAVE BEEN APPLIED IN THIS CASE. 1.C THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO CONSIDER THE JUDGEMENT OF HONBLE HIGH COURT OF MADRAS IN THE CASE OF CIT VS. MRS. C.MALATHY 294 ITR 532 (MAD) WHEREIN IT IS HELD THAT THE NOTICE U/S.143(2) ISSUED AFTER THE EXPIRY OF TWELVE MONTHS IN THE CASES WHERE RETURNS OF INCOME WERE FILED FROM OCTOBER 1, 1991 TO SEPTEMBER 30, 2005 WILL NOT INVALIDATE THE ASSESSMENT PROCEEDINGS AND THAT SUCH NOTICE WOULD BE DEEMED TO BE A VALID NOTICE. 3. AT THE TIME OF HEARING, THE COUNSEL FOR THE ASSE SSEE SUBMITS THAT THE ASSESSMENT IS BARRED BY LIMITATION , AS THE NOTICE UNDER SECTION 143(2) WAS NOT SERVED WITHIN T HE TIME PRESCRIBED AND THEREFORE, THE ASSESSMENT IS BAD IN LAW, IN IT(SS)A NO.9/MDS//2013 3 VIEW OF THE DECISION OF THE HONBLE SUPREME COURT I N THE CASE OF ACIT & ORS VS. HOTEL BLUE MOON (321 ITR 362). THE COUNSEL FOR THE ASSESSEE SUBMITS THAT IN FACT, THE COMMISSIONER OF INCOME TAX (APPEALS) FOLLOWING THE ABOVE DECISION OF THE HONBLE SUPREME COURT HELD THAT ASS ESSMENT CANNOT STAND AS THE SAME IS VOID. 4. THE DEPARTMENTAL REPRESENTATIVE FAIRLY CONCEDES THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY T HE DECISION OF THE HONBLE SUPREME COURT CITED ABOVE. 5. HEARD BOTH SIDES. PERUSED THE ORDERS OF THE LOWE R AUTHORITIES AND THE CASE LAW RELIED ON. THE COMMISS IONER OF INCOME TAX (APPEALS), WHILE COMING TO THE CONCLUSIO N THAT THE ASSESSMENT IS VOID AB-INITIO OBSERVED AS UNDER:- 6 . THE RECORDS SHOW THAT TH E NOT I CE WAS ISSUED ON 22-05-2003. TO THE P R OPOSITION , THAT NOT I CE CANNOT BE ISSUED BEYOND 22 - 04 - 2003, THE APPELLANT HAD SUBMI TT ED AS UNDER: - (1) FOR THE PURPOSE OF BLOCK ASST . U/S . 158 BC, THE PROVISIONS OF SEC.142 AND SUB SEC . (2) AND (3 ) OF SEC.143 ARE APPLICABLE. IT(SS)A NO.9/MDS//2013 4 (2) NO BLOCK ASSESSMENT CAN BE MADE WITHOUT ISSUING OF NOTICE U/S . 143(2). (3) NOTICE U/S.143(2) CAN BE DISPENSED WITH IF THE A.O. PROCEEDED TO DETERMINE THE INCOME ON THE BASIS OF THE RETURN WITHOUT SCRUTINY . (4) AS PER 2 PROVISO OF SEC . 158BC THE WORDS ' SO FAR AS MAY BE' DO NOT GIVE ANY DISCRETION TO THE A.O. FOR ISSUE OF NOT I CE U/S . 143(2). (5) THE CIRCULAR NO . 717 , DATED AUGUST 14, 1995 (1995) 215 ITR 70,98 CLAUSE (E) PROVIDES FOR THE PROCEDURE OF MAKING BLOCK ASSESSMENT. IT HAS BEEN SAID THAT THE SECTION DOES NOT PROVIDE ACCEPTING THE RETURN U/S.143(1 ) (A). THE ASSESSMENT HAS TO BE COMPLETED ONLY U/S.143(3 ) R.W.S.158BC . NOTICE U/S.143(2) SHOULD BE ISSUED WITHIN 1 YEAR FROM THE DATE OF FILING OF BLOCK RETURN. THE APPELLANT RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF HOTEL BLUE MOON 321 ITR 362, TO CONTEND THAT OMISSION TO ISSUE NOTICE U/S.143(2) WITHIN THE TIME L IMIT PRESCRIBED CANNOT BE A PROCEDURAL IRREGULARITY AND IS NOT A CURABLE DEFECT . 7 . IN SHORT , THE CONTENTION IS THAT AS THE NOTICE U/S.143(2) HAS BEEN ISSUED BEYOND IT(SS)A NO.9/MDS//2013 5 THE TIM E LIMIT PRESC R IBED UNDER THE ACT , THE ASSESSMENT M A DE CANNOT STAND. I HAVE CONSIDERED THE DECISIONS RELIED UPON. THE RETURN HAS BEEN FILED ON 23.04.2002. BLOCK ASSESSMENT U/S.158BC CANNOT BE COMPLETED WITHOUT SCRUTINY. FOR COMPLETION OF ASSESSMENT U/S.143(3) R.W. SEC.158 BC, NOTICE U/S.143(2) HAS TO BE MANDATORILY ISSUED. THE NOTICE U/S.143(2) SHOULD HAVE BEEN ISSUED WITHIN 1 YEAR FROM THE DATE OF FILING OF BLOCK RETURN. THE BLOCK RETURN HAVING BEEN FILED ON 23-04- 2002, THE NOTICE SHOULD HAVE BEEN ISSUED BEFORE 22-04-2003. THE NOTICE WAS ISSUED ON 22-05-2003. UNDER THE CIRCUMSTANCES, FOLLOWING DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF 'HOTEL BLUE MOON' IN 321 ITR 362 IN PAGE 369, WHEREIN IT HAS BEEN HELD THAT THE A.O. MUST NECESSARILY ISSUE NOTICE U/S.143(2) OF THE I . T.ACT WITHIN THE TIME PRESCRIBED IN THE PROVISO TO SEC . 143(2) OF THE ACT, I AM CONSTRAINED TO HOLD THAT THE NOTICE HAS BEEN ISSUED BEYOND THE TIME LIMIT PRESCRIBED AND HENCE THE ASSESSMENT CANNOT STAND. THEREFORE THE ASSESSMENT IS HELD TO BE VOID AB INITIO. AS THE ASSESSMENT IS HELD TO BE VOID, THE GROUNDS RAISED RELATING TO YEAR WISE COMPUTATION , ETC . ARE NOT ADJUDICATED. 6. ON GOING THROUGH THE ORDER OF THE COMMISSIONER O F INCOME TAX (APPEALS), WE FIND THAT BLOCK RETURN WAS FILED ON 23.04.2002 AND THE NOTICE UNDER SECTION 143(2) SHOU LD HAVE BEEN ISSUED BEFORE 22.04.2003. HOWEVER, IN THIS CAS E, NOTICE WAS ISSUED ON 22.05.2003. SINCE NOTICE UNDER SECTIO N 143(2) IT(SS)A NO.9/MDS//2013 6 WAS NOT ISSUED WITHIN THE TIME PRESCRIBED IN PROVIS O TO SECTION 143(2) OF THE ACT, THE BLOCK ASSESSMENT MADE IS VOID AB-INITIO , IN VIEW OF THE DECISION OF THE HONBLE SUPREME COUR T IN THE CASE OF ACIT VS. HOTEL BLUE MOON (SUPRA). IN THE CIRCUMSTANCES WE UPHOLD THE ORDER OF THE COMMISSION ER OF INCOME TAX (APPEALS) AND REJECT THE GROUNDS OF APPE AL RAISED BY THE REVENUE. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON MONDAY, THE 18 TH DAY OF NOVEMBER, 2013 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY ) (CHALLA NAGENDRA PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI. DATED THE 18 TH NOVEMBER, 2013. SOMU COPY TO: (1) APPELLANT (4 ) CIT(A) (2) RESPONDENT (5 ) D.R. (3) CIT (6 ) G.F.