P.Harish Kumar, Salem V. DCIT, Salem

ITSSA 9/CHNY/2014

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0302 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 26-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 21-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DURGESH SUMIOTT
• Assessee Lawyers: G BASKAR
• Keywords: Income from undisclosed sources; Block assessment
• Section: 131; 132; 144

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL D BENCH, CHE NNAI . , . !' !' !' !' , # # # # $ $ $ $ % %% % BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER I.T(SS).A.NO.09/MDS/2014 BLOCK ASSESSMENT PERIOD:01.04.1996 TO 21.02.2003 P. HARISH KUMAR, NO.12, KANAKKAR STREET, SALEM 636 004. [PAN: AALPH1173J] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE III, 3, GANDHI ROAD, SALEM 636 007. ( &' &' &' &' /APPELLANT ) ( ()&' ()&' ()&' ()&' / RESPONDENT ) &' * + / APPELLANT BY : SHRI G. BASKAR, ADVOCATE ()&' * + / RESPONDENT BY : SHRI DURGESH SUMIOTT, CIT * , / DATE OF HEARING : 18.09.2014 -. * , /DATE OF PRONOUNCEMENT : 26.09.2014 / / / / / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), SALEM, DA TED 27.03.2014 RELEVANT TO THE BLOCK ASSESSMENT PERIOD 01.04.1996 TO 21.02.2003. 2. BRIEF FACTS OF THE CASE ARE THAT THERE WAS SEAR CH UNDER SECTION 132 OF THE INCOME TAX ACT IN THE PREMISES OF SHRI SINGANAM ALA RAMESH BABU AND S. SATYA RAMA MURTHY ON 21.02.2003. THEY ARE ASSESS ED WITH ACIT/CENTRAL CIRCLE/TIRUPATHI. DURING THE COURSE OF SEARCH INCRI MINATING DOCUMENT RELATING I.T. I.T. I.T. I.T.(SS) (SS) (SS) (SS)A. A.A. A. NO. NO. NO. NO.09 0909 09/M/ /M/ /M/ /M/1 11 14 44 4 2 TO SHRI P. HARISH KUMAR [ASSESSEE IN THE PRESENT CA SE] WAS FOUND AND SEIZED FROM D-5, VYSALI APARTMENTS, NO.17, DR. NAIR ROAD, T. NAGAR, CHENNAI VIDE LOOSE SHEET SL.NO. 111 OF ANNEXURE A/S RBO/1 DATED 21.02.2003. THE ASSESSEE ADVANCED A SUM OF .15,00,000/- (AFTER DEDUCTING .1,00,000/- RETAINED FOR PUBLICITY AND OTHER EXPENS ES) FOR DISTRIBUTION RIGHT OF SIX COPIES OF THE FILM RAMACHANDRA FOR SALEM. THE EXPENSES FOR PUBLICITY WOULD HAVE ALSO BEEN INCURRED BY THE ASSESSEE DURIN G THE YEAR ITSELF. IN TOTAL, THE ASSESSEE HAS INVESTED .16,00,000/- DURING THE FINANCIAL YEAR 2002-03 RELEVANT TO THE ASSESSMENT YEAR 2003-04 OUT OF HIS UNACCOUNTED INCOME. THE ASSESSING OFFICER SERVED A NOTICE UNDER SECTION 158BC(C) R.W.S. 158BD OF THE ACT ON 14.12.2006 ASKING THE AS SESSEE TO FILE HIS RETURN OF UNDISCLOSED INCOME IN FORM NO.2B FOR THE BLOCK P ERIOD. A SUMMON UNDER SECTION 131 OF THE ACT WAS ALSO ISSUED CALLING FOR BOOKS OF ACCOUNT AND OTHER DOCUMENTS RELATING TO THE BLOCK PERIOD ON 28.01.200 8. THE ASSESSEE DID NOT APPEAR BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT UNDER SECTION 144 OF THE ACT ON 29.1 2.2008. 3. ON APPEAL, IT WAS SUBMITTED BEFORE THE LD. CIT( APPEALS) THAT SEARCH WAS CONDUCTED IN THE CASE OF SHRI SINGANAMALA RAMES H BABU AND S. SATYA RAMA MURTHY ON 21.02.2003. ASSESSMENT IN THE CASE O F SEARCH PERSON WAS ALSO COMPLETED ON 28.02.2005. NOTICE ISSUED TO THE ASSESSEE UNDER SECTION 158BC(C) R.W.S. 158BD ON 14.12.2006 ALMOST ALL AFTE R 20 MONTHS OF THE I.T. I.T. I.T. I.T.(SS) (SS) (SS) (SS)A. A.A. A. NO. NO. NO. NO.09 0909 09/M/ /M/ /M/ /M/1 11 14 44 4 3 COMPLETION OF ASSESSMENT IN THE CASE OF PERSONS SEA RCHED AND SUBMITTED THAT THE NOTICE WAS ISSUED BEYOND UNREASONABLE PERI OD AND NOT VALID. THE LD. CIT(APPEALS), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CONFIRMED THE ORDER PASSED BY THE ASSESSING OFFICER . THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: 7. I HAVE PERUSED THE ASSESSMENT ORDER AND THE AP PELLANT'S SUBMISSION. THE APPELLANT HAS BASED HIS ARGUMENTS M AINLY ON TWO ISSUES. FIRSTLY, THERE WAS AN EXTRAORDINARY DELAY I N ISSUE OF NOTICE FOR A SEARCH CONDUCTED ON 21.02.2003. THE NOTICE HAS BEEN ISSUED ON 04.12.2006, ALMOST 3 YEARS AND 8 MONTHS AFTER THE D ATE OF SEARCH. THE APPELLANT ALSO STATES THAT THE ASSESSMENT ORDER IN THE CASE OF THE PERSON SEARCHED ITSELF WAS COMPLETED ON 28.02.2005. THE NO TICE HAS BEEN ISSUED ALMOST 20 MONTHS AFTER THE COMPLETION OF THE ASSESSMENT IN THE CASE WHERE SEARCH WAS CONDUCTED. THE APPELLANT RELI ES ON VARIOUS DECISION INTER-ALIA IN GUJARAT HIGH COURT IN 236 IT R 73 WHEREIN IT HAS BEEN HELD AS UNDER: 'THE GUJARAT HIGH COURT (IN 236 ITR 73) HAD REPELLE D THE DEPARTMENT'S CONTENTION THAT A NOTICE UNDER SECTION 158 BD COULD BE ISSUED AT ANY TIME AND THAT AN APPELLATE A UTHORITY CANNOT IMPORT A TIME LIMIT, NOT PRESCRIBED BY LAW. SPEED AND SWIFTNESS WITH WHICH, SUCH PROCEEDINGS SHOULD BE IN ITIATED IS HIGHLIGHTED BY THE HIGH COURT.' THE APPELLANT ALSO RELIES ON THE DECISION OF PUNJAB AND HARYANA HIGH COURT IN 335 ITR 266 AND 338 ITR 239, WHEREIN THE H ON'BLE HIGH COURT HAS HELD THAT 'ACTION UNDER SECTION 158 BD TA KEN AFTER COMPLETION OF ASSESSMENT ON SEARCH PERSON IS INVALI D'. 7.1 I HAVE PERUSED ALL THE CITATION RELIED UPON BY THE APPELLANT. THE APPELLANT HAS NOT BEEN ABLE TO PRODUCE ANY CITATION S EITHER FROM THE JURISDICTIONAL HIGH COURT OR JURISDICTIONAL TRIBUNA L. IN VIEW OF THE FACT THAT THERE IS NO TIME LIMIT FIXED IN THE STATUTE AN D NO DIRECT DECISIONS ARE AVAILABLE FROM THE JURISDICTIONAL AUTHORITIES, THE APPELLANT'S PLEA IS NOT ACCEPTED. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFOR E THE TRIBUNAL. I.T. I.T. I.T. I.T.(SS) (SS) (SS) (SS)A. A.A. A. NO. NO. NO. NO.09 0909 09/M/ /M/ /M/ /M/1 11 14 44 4 4 5. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT AS PER THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT V. CALCUTTA KNITWEARS [2014] 43 TAXMANN.COM 446(SC), SATISFACTI ON NOTE HAS TO BE RECORDED IMMEDIATELY AFTER COMPLETING THE ASSESSMEN T PROCEEDINGS UNDER SECTION 158 BC OF THE ACT OF THE SEARCHED PERSONS. IN THIS CASE NOTICE WAS ISSUED AFTER 20 MONTHS AND SUBMITTED THAT NOTICE HA S TO BE QUASHED AS PER THE ABOVE DECISION OF THE HONBLE SUPREME COURT. 6. ON THE OTHER HAND, THE LD. DR HAS RELIED ON THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. O M PRAKASH & SONS [2012] 347 ITR 500. 7. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THIS CA SE SEARCH WAS CONDUCTED IN THE PREMISES OF SHRI SINGANAMALA RAMESH BABU AND S. SATYA RAMA MURTHY ON 21.02.2003 AND ASSESSMENT WAS COMPLETED ON 28.02 .2005. DURING THE COURSE OF SEARCH SOME DOCUMENTS WERE FOUND RELATING TO THE ASSESSEE AND ACCORDING TO THIS DOCUMENTS, THE ASSESSING OFFICER CAME TO A CONCLUSION THAT THE ASSESSEE HAS INVESTED .16 LAKHS DURING THE FINANCIAL YEAR 2002-03 OUT OF HIS UNACCOUNTED INCOME. BEFORE THE ASSESSING OFFICER, THE ASSESSEE HAS NOT FILED ANY RETURN FOR THE BLOCK PERIOD. ON A PPEAL BEFORE THE LD. CIT(APPEALS), IT WAS CANVASSED BY THE ASSESSEE THAT THE ASSESSMENT WAS INVALID FOR THE REASON THAT THE NOTICE WAS ISSUED A FTER DELAY OF ALMOST 20 I.T. I.T. I.T. I.T.(SS) (SS) (SS) (SS)A. A.A. A. NO. NO. NO. NO.09 0909 09/M/ /M/ /M/ /M/1 11 14 44 4 5 MONTHS. THE LD. CIT(APPEALS), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CONFIRMED THE ORDER PASSED BY THE ASSESSI NG OFFICER. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED BEFORE US TH AT THE NOTICE UNDER SECTION 158BD OF THE ACT WAS ISSUED TO THE ASSESSEE ON 04.12.2006 I.E. AFTER 20 MONTHS OF COMPLETING THE ASSESSMENT IN THE CASE OF SEARCHED PERSONS AND STRONGLY RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V. CALCUTTA KNITWEARS (SUPRA). WE H AVE CAREFULLY CONSIDERED THE DECISION OF THE HONBLE SUPREME COURT, WHEREIN IT WAS HELD AS UNDER: 44. IN THE RESULT, WE HOLD THAT FOR THE PURPOSE O F SECTION 158BD OF THE ACT A SATISFACTION NOTE IS SINE QUA NON AND MUS T BE PREPARED BY THE ASSESSING OFFICER BEFORE HE TRANSMITS THE RECORDS T O THE OTHER ASSESSING OFFICER WHO HAS JURISDICTION OVER SUCH OTHER PERSON S. THE SATISFACTION NOTE COULD BE PREPARED AT EITHER OF THE FOLLOWING S TAGES (A) AT THE TIME OF OR ALONG WITH THE INITIATION OF PROCEEDINGS AGAI NST THE SEARCHED PERSON UNDER SECTION 158BC OF THE ACT; (B) ALONG WI TH THE ASSESSMENT PROCEEDINGS UNDER SECTION 158BC OF THE ACT; AND (C) IMMEDIATELY AFTER THE ASSESSMENT PROCEEDINGS ARE COMPLETED UNDER SECT ION 158BC OF THE ACT OF THE SEARCHED PERSON. 8. IN THE PRESENT CASE, THERE IS NOTHING ON RECORD THAT ANY SATISFACTION NOTE HAS BEEN PREPARED BY THE ASSESSING OFFICER. TH EREFORE, IT IS NECESSARY TO VERIFY THE RECORDS. IN VIEW OF THE ABOVE FACTS, WE, SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) AND REMIT THE MATTER BACK TO T HE LD. CIT(APPEALS) WITH A DIRECTION TO EXAMINE THE RECORDS AND THEREAFTER DEC IDE THE ISSUE AS PER THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT V. CALCUTTA KNITWEARS (SUPRA) AND ALSO CASE LAW RELIED ON BY TH E LD. DR IN THE CASE OF CIT V. OM PRAKASH & SONS [2012] 347 ITR 500 (P&H). ACCORDINGLY, THE I.T. I.T. I.T. I.T.(SS) (SS) (SS) (SS)A. A.A. A. NO. NO. NO. NO.09 0909 09/M/ /M/ /M/ /M/1 11 14 44 4 6 APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATIST ICAL PURPOSE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON FRIDAY, THE 26 TH OF SEPTEMBER, 2014 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER CHENNAI, DATED, THE 26.09.2014 VM/- / * (#,01 21., /COPY TO: 1. &' / APPELLANT, 2. ()&' / RESPONDENT, 3. 3 ( ) /CIT(A), 4. 3 /CIT, 5. 14! (#,# /DR & 6. ! ' 5 /GF.