M.Janakiraman, CHENNAI V. ACIT, CHENNAI

MA 135/CHNY/2010

• Counselvise Citation: [2010] 123 COUNSELVISE.COM (IT) 4879 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 28 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 13-08-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-08-2010
• Assessment Year: misc
• Appeal Filed On: 15-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TAPAS KUMAR DUTTA
• Assessee Lawyers: P VALSALAN
• Keywords: Document seized; Block assessment; Reason to believe; Documents seized
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH B : CHENNAI [BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER] M.A NO.123/MDS/2010 [IN I.T.(SS)A.NO.62/MDS/05] BLOCK ASSESSMENT PERIOD 1-4-1990 TO 7-6-2000 SMT P.A. RANI W/O SHRI M. JANAKIRAMAN 530, OLD NO.702, E.V. ROAD AMINJIKARAI CHENNAI 29 VS THE ACIT CIRCLE XIII CHENNAI [PAN - AAEPR4488D] (APPLICANT) (RESPONDENT) M.A NO.135/MDS/2010 [IN I.T.(SS)A.NO.63/MDS/05] BLOCK ASSESSMENT PERIOD 1-4-1990 TO 7-6-2000 SHRI M. JANAKIRAMAN 530, OLD NO.702, E.V. ROAD AMINJIKARAI CHENNAI 29 VS THE ACIT CIRCLE XIII CHENNAI [PAN - AAAPJ7477Q] (APPLICANT) (RESPONDENT) APPLICANTS BY : SHRI P.VALSALAN RESPONDENT BY : SHRI TAPAS KUMAR DUTTA O R D E R PER ABRAHAM P.GEORGE, AM: THESE ARE MISCELLANEOUS APPLICATIONS FI LED BY THE RESPECTIVE ASSESSEES AGAINST THE CONSOLIDATED ORDER OF THIS TR IBUNAL DATED MA 123 & 135/2010 :- 2 -: 7.12.2007 IN THE ABOVE MENTIONED APPEALS. GRIEVANC E OF THE ASSESSEES RAISED THROUGH THESE MISCELLANEOUS APPLIC ATIONS IS THAT THERE WAS NO RECORDING OF SATISFACTION BY THE ASSESSING OFFICER OF THE SEARCHED PERSONS AND HANDING OVER OF THE SEIZED MAT ERIAL TO THE ASSESSING OFFICER OF THE OTHER PERSON AS MANDATED IN SECTION 158BD OF THE INCOME-TAX ACT, 1961(IN SHORT THE ACT) AND THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF MANISH MAHESWARI VS ACIT, 289 ITR 341 DATED 23.3.2007 WAS NOT CONSIDERED BY THE TRI BUNAL. THE ASSESSEE ALSO RELIES ON THE DECISION OF HON'BLE JUR ISDICTIONAL HIGH COURT IN SOUTHERN INDUSTRIAL CORPORATION VS CIT, 258 ITR 481. 2. THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF SEARCH U/S 132 OF THE ACT IN THE CASE OF ONE SHRI T. RANGROOP CHAND CHORDIA ON 7.6.2000, DETAILS REGARDING PROPERTY TRANSACTIONS I N RAMANIYAM CITADEL AT BLOCK NO.10, ARUMBAKKAM VILLAGE, POONAM ALLEE HIGH ROAD, CHENNAI, WAS FOUND IN THE CASE OF THE ASSESSEES, SH RI M.JANAKIRAMAN AND HIS WIFE, SMT P.A.RANI. IT HAS BEEN NOTED THAT BOTH OF THEM HAD SOLD THE RESIDENTIAL AND COMMERCIAL UNITS CONSTRUCT ED ON THE BASIS OF AGREEMENT ENTERED INTO BY THEM WITH ONE BUILDER, M/ S RAMANIYAM REAL ESTATE PVT. LTD, AND THE SUBSTANTIAL CAPITAL G AINS WAS NOT DISCLOSED TO THE DEPARTMENT. ON THE BASIS OF THIS, PROCEEDINGS U/S 158BD OF THE ACT WAS INITIATED IN THESE CASES. IN RESPONSE TO THE MA 123 & 135/2010 :- 3 -: NOTICES ISSUED, THE ASSESSEES FILED THEIR RESPECTIV E RETURN OF INCOME IN FORM 2B ON 28.1.2004 ADMITTING UNDISCLOSED INCOME A S NIL. AGAINST INITIATION OF ACTION U/S 158BD, THE ASSESSEE RAISED OBJECTION BEFORE THE ASSESSING OFFICER WHICH IS NOTED DOWN AT PAGE 10 IN PARA 3 OF THE ASSESSMENT ORDER AND THE SAME IS REPRODUCED HEREIN BELOW: 3. THE ASSESSEES REPRESENTATIVE HAS ALSO RAISED OBJECTIONS TO THE INITIATION OF PROCEEDINGS U/S 158 BD. IT IS TO BE NOTED THAT A SEARCH OPERATION U/S 132 WAS CON DUCTED IN THE CASE OF SHRI T.RANGROOP CHORDIA & OTHERS ON 7.6.2000. DURING THE COURSE OF SEARCH THE INFORMAT ION ABOUT THE RAMANIYAM CITADEL TRANSACTION HAS COME TO LIGHT AND THIS INFORMATION HAS BEEN FORWARDED TO TH E ASSESSING OFFICER. ON THE BASIS OF THE INFORMATION AVAILABLE, THE PROCEEDINGS U/S 158BD HAVE BEEN VALI DLY INITIATED AND THE ASSESSEES ARGUMENT IN THIS REGAR D IS REJECTED. 3. AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A) BY RAISING FOLLOWING GROUNDS: 1. 1. THE CIT (A) ERRED IN UPHOLDING THE JURISDICT ION OF THE ASSESSING OFFICER IN ISSUING THE NOTICE U/S 158BD. 1.2. THE CIT (A) HAVING FOUND THAT THERE WAS NO SEIZED MATERIAL WHICH HAS BEEN REFERRED TO OR RELIE D UPON FOR INITIATING THE PROCEEDINGS FOR BLOCK ASSESSMENT, WENT WRONG IN NOT QUASHING THE PROCEEDINGS. 1.3. THE CIT (A) OUGHT TO HAVE SEEN THAT THE VERY REASONS RECORDED BY THE ASSESSING OFFICER BEFORE ISSUING NOTICE UJS.158BD DEMONSTRATES THAT THERE WAS NO REASON TO BE 'SATISFIED' THAT THERE IS UNDISCLOSED INCOME WHICH REQUIRES TO BE CONSIDERED IN THE BLOCK ASSESSMENT OF THE ASSESSEE. MA 123 & 135/2010 :- 4 -: 2.1. THE CIT (A) OUGHT TO HAVE ALSO SEEN THAT ONLY THE MATERIALS COLLECTED IN THE COURSE OF THE SURVEY HAD BEEN MADE USE OF TO FRAME THE BLOCK ASSESSMENT AND THEREFORE PROCEEDINGS UNDER CHAPTER XIV-B IS UNTENABLE. 2.2. THE CIT (A) HAVING FOUND THAT EXTENSIVE ENQUIRIES HAVING BEEN MADE DURING POST SURVEY ENQUIRY ALL THE FACTS RELATING TO THE LAND TRANSACT ION ALREADY FORMS PART OF THE DEPARTMENT RECORDS AND AS SUCH IT IS INCORRECT TO HOLD THAT THE DETAILS HAD C OME TO SURFACE ONLY BECAUSE OF THE SEARCH. 2.3. THE VIEW OF THE CIT (A) THAT SINCE THE ASSESSEE HAD NOT COME FORWARD WITH ANY DISCLOSURE DURING THE SURVEY, THE ASSESSING OFFICER WAS WITHIN HIS POWERS TO INVOKE THE PROVISIONS OF SEC. 158BD O F THE INCOME-TAX ACT IS TOTALLY INCORRECT. 4. THE LD. CIT(A) WAS ALSO NOT AGREEABLE WITH THE CONT ENTION OF THE ASSESSEE. VIDE PARA 10.18, HE HAS HELD AS UNDER: 10.18 SO, IF A SURVEY OPERATION IS FOLLOWED BY A SEARCH OPERATION AND WHEN THE APPELLANT HAD NOT COME FORWA RD WITH ANY DISCLOSURE DURING THE SURVEY OR SEARCH, TH E ASSESSING OFFICER WAS WELL WITHIN HIS JURISDICTION TO INVOKE THE PROVISIONS OF SECTION 158BD AGAINST THE APPELLA NT. 5. THEREAFTER, BEING FURTHER AGGRIEVED, THE ASSESSEE C AME UP IN APPEAL BEFORE THE TRIBUNAL IN SECOND APPEAL. THE T RIBUNAL HAS GIVEN THE FOLLOWING FINDING: MA 123 & 135/2010 :- 5 -: 2. IT(SS)A NOS. 62 & 63/MDS/05 : THE FIRST COMMON GROUND RAISED IN THE ASSESSEES APPEALS PERT AINS TO THE UPHOLDING OF THE JURISDICTION OF THE AO IN ISSU ING THE NOTICE U/S 158BD OF THE INCOME-TAX ACT, 1961. THE BRIEF FACTS ARE THAT THERE WAS A SEARCH ACTION U/S 132 ON 7.6.2000 IN THE GROUP CASES OF SHRI T. RANGROOP CHAND CHORDI A AND SHRI KAILASH CHAND CHORDIA. EARLIER THERE WAS A SU RVEY CONDUCTED IN ALL THEIR PREMISES ON 15.12.1999. IT WAS DISCOVERED THAT THE ASSESSEE ALONG WITH HIS WIFE, S MT. P.A. RANI HAD ENTERED INTO A JOINT VENTURE AGREEMENT WIT H THE BUILDER, M/S RAMANIYAM REAL ESTATE PVT. LTD. FOR TH E CONSTRUCTION OF RESIDENTIAL AS WELL AS COMMERCIAL C OMPLEXES. AS PER THE JOINT VENTURE AGREEMENT DT. 8.7.1994 THE BUILDER WAS TO DEVELOP CERTAIN LANDS OWNED BY THE ASSESSEE AND HIS WIFE JOINTLY AND PUT UP CONSTRUCTION CALLED RAMANI YAM CITADEL AT BLOCK NO.10, ARUMBAKKAM VILLAGE, POONAMALLEE HIG H ROAD, CHENNAI. SUBSEQUENT TO THE SEARCH ACTION THE AO IS SUED NOTICE U/S 158BD TO BOTH THE ASSESSES. 3. BEFORE US LEARNED COUNSEL FOR THE ASSESSEE RE-IT ERATED THE SUBMISSIONS MADE BEFORE THE CIT(A). ON THE OTH ER HAND, LD. D.R. SUBMITTED THAT DURING THE COURSE OF SEARC H VARIOUS INCRIMINATING DOCUMENTS, CASH AND JEWELLERY WERE FO UND. FURTHER THE RESIDENTIAL PREMISES OF MR. JANAKIRAMAN AT NO.9, AA BLOCK III STREET, ANNA NAGAR WEST, CHENNAI-40 WAS ALSO COVERED BY WARRANT OF AUTHORISATION AND CERTAIN DET AILS REGARDING PROPERTY TRANSACTIONS WERE FOUND, THE FAC T OF WHICH HAD NEVER BEEN BROUGHT TO THE KNOWLEDGE OF TH E DEPARTMENT BY THE ASSESSEE. THEREFORE, THE AO HAS REASON TO BELIEVE THAT THE ASSESSEE HAD CONCEALED HIS INCO ME DURING THE RELEVANT BLOCK PERIOD. HENCE NOTICE U/S 158BD WAS ISSUED. THE DETAILS OF THE ASSESSEES INVESTMENT I N M/S HOTEL SARAVANA BHAVAN AMOUNTING TO RS. 7.50 LAKHS W ERE ALSO FOUND DURING THE SEARCH ACTION. THE LD. D.R. SUBMI TTED THAT THERE WERE ALSO SEIZED MATERIALS BEARING NO. ANN.RJ /LS/S PERTAINING TO CERTAIN CONSTRUCTIONS AT DOOR NO.209, BLOCK N, II AVENUE, ANNA NAGAR, CHENNAI-40. MA 123 & 135/2010 :- 6 -: 4. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI ALS ON RECORD. DURING THE COURSE OF SEARCH ACTION IN T HE CASE OF CHORDIA GROUP THE SEARCH PARTY CAME TO THE KNOWLEDG E OF VARIOUS UNDISCLOSED TRANSACTIONS OTHER THAN RELATIN G TO THE DEVELOPMENT OF THE PROPERTY RAMANIYAM CITADEL, ARUMBAKKAM VILLAGE, POONAMALLEE HIGH ROAD, CHENNAI. THERE WAS SPECIFIC INFORMATION REGARDING INVESTMENT OF RS . 7.5 LAKHS WITH HOTEL SARAVANA BHAVAN AND ALSO OTHER PRO PERTY AT NO.9, AA BLOCK, III STREET, ANNA NAGAR WEST, CHEN NAI-40. THIS INFORMATION WAS NOT DISCLOSED TO THE DEPARTMEN T PRIOR TO THE SEARCH ACTION. AO HAS THEREFORE PRIMA FACIE REASON TO BELIEVE THAT THESE ARE UNDISCLOSED TRANSACTIONS. A O AFTER COMPLYING WITH THE REQUIREMENT OF SECTION 158BD ISS UED NOTICE ACCORDINGLY. WE DO NOT FIND ANY FAULT IN IS SUING THE NOTICE UNDER SECTION 158BD. THE SAME IS THEREFORE CONFIRMED AND THE ASSESSEES GROUNDS IN THIS REGARD ARE REJECTED. 6. NOW, THE ASSESSEES, THROUGH THESE MISCELLANEOUS APP LICATIONS HAVE PRAYED FOR RECALL OF THE ORDER OF THE TRIBUNAL ON JURISDICTION ASPECT BY MENTIONING THAT THERE WAS NO RECORDING OF SATISFACTION OF THE ASSESSING OFFICER OF THE SEARCHED PERSON AND THAT THE SEIZED DOCUMENTS WERE NOT HANDED OVER BY THE ASSESSING OFF ICER OF THE SEARCHED PERSON TO THE ASSESSING OFFICER OF THE OTHER PERSON I.E THE ASSESSEES. ACCORDING TO THE PETITIONS, PRE-REQUIS ITE CONDITIONS ARE REQUIRED TO BE SATISFIED PRIOR TO ISSUANCE OF A VAL ID NOTICE U/S 158BD AS MANDATED IN THE PROVISIONS OF SECTION 158BD ITSELF WHICH HAS BEEN CLEARLY SPELT OUT AND DECLARED BY THE HON'BLE SUPRE ME COURT IN THE CASE OF MANISH MAHESWARI VS ACIT, 289 ITR 341. MA 123 & 135/2010 :- 7 -: 7. THE PARTIES WERE HEARD ON THIS ISSUE IN DETAIL. DU RING HEARING, IT WAS ASCERTAINED FROM THE LD.DR AS TO WHETHER THE AS SESSING OFFICER OF THE SEARCHED PARTY HAS RECORDED HIS SATISFACTION AS IS REQUIRED U/S 158BD OF THE ACT THAT ANY UNDISCLOSED INCOME FOUND DURING THE COURSE OF SEARCH DID BELONG TO OTHER PERSON I.E THE ASSE SSEES BEFORE US. THE FRANK REPLY FROM THE LD.DR WAS THAT NO SUCH SATISFA CTION WAS RECORDED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER OF THE SEARCHED PARTY BUT HE FURTHER ADDED THAT THE ASSESSING OFFI CER OF THESE ASSESSEES AS MENTIONED ABOVE, IS OF PRIMA-FACIE VIE W THAT UNDISCLOSED INCOME HAS BEEN CONCEALED BY THEM. WE HAVE ALSO EX AMINED THE RECORDS IN DETAIL. IT IS FOUND FOR CERTAIN THAT NO SUCH SATISFACTION WAS RATHER RECORDED NOR THE SEIZED DOCUMENTS WERE HANDE D OVER BY THE ASSESSING OFFICER OF THE SEARCHED PARTY TO THE AS SESSING OFFICER OF THESE ASSESSEES AS REQUIRED U/S 158BD. RATHER IT B ECOMES MANIFEST FROM THE CO-JOINT READING OF THE RECORDS THAT THE A SSESSING OFFICER WAS NOT EVEN CERTAIN AS TO WHETHER THIS UNDISCLOSED INC OME HAS TO BE ASSESSED IN THE HANDS OF THE SEARCHED PARTY OR I N THE HANDS OF THESE ASSESSEES ON PROTECTIVE BASIS. ALL THESE FACTORS G O TOGETHER TO ESTABLISH THAT THE PRE-REQUISITE CONDITIONS OF SECT ION 158BD HAVE NOT BEEN FULFILLED. THE SATISFACTION OF THE ASSESSING OFFICER HAS TO BASE ON A SPECIFIC AND CONCRETE MATERIAL FOUND DURING THE S EARCH AND THE SAME MA 123 & 135/2010 :- 8 -: IS SEIZED THERE FROM AND THEREAFTER IT IS ASCERTAIN ED THAT THE SAME DOES NOT BELONG TO THE SEARCHED PARTY BUT REALLY BELON GS TO SOME OTHER PERSON. ON THE REQUEST OF THE ASSESSEE, COMMENTS FROM THE ASSESSING OFFICER WERE CALLED FOR BY THE LD. CIT(A) REGARDING RECORDING OF SATISFACTION AND HANDING OVER OF THE SEIZED MATE RIAL TO THE ASSESSING OFFICER OF THESE ASSESSEES. THE ASSESSING OFFICER GAVE EVASIVE REPLY AND SIMPLY STATED THAT THE PROCEEDINGS U/S 158BD HA VE BEEN LEGALLY INITIATED. THE SATISFACTION OF THE ASSESSING OFFIC ER OF THESE ASSESSEES IS AN IRRELEVANT MATTER IN SO FAR AS ASSUMPTION OF JURISDICTION U/S 158BD IS CONCERNED. WHAT TRANSPIRES FROM THE RECORDS IS THAT THE ASSESSING OFFICER OF THESE ASSESSEES HAD INITIATED ACTION AFT ER BEING SATISFIED THAT FORMED THE BASIS FOR ISSUE OF NOTICE AND NOT THE SA TISFACTION OF THE ASSESSING OFFICER OF THE SEARCHED PARTY. 8. THE INCOME TAX APPELLATE TRIBUNAL, WHO EXERCISES JUDICIAL POWERS, CAN HEAR THE APPEAL FILED AGAINST THE ORDER OF THE LD. CIT(A) AND PASS AN ORDER U/S 254(1) OF THE ACT. IN CASE, ANY MISTAKE APPARENT FROM THE RECORD CREEPS IN THIS ORDER, THE SAME CAN BE RECTIFIED UNDER SUB-SECTION (2) OF SECTION 254 OF T HE ACT WITHIN A SPECIFIED TIME PROVIDED THEREIN ON AN APPLICATION T O THAT EFFECT EITHER FILED BY THE ITO OR THE ASSESSEE. SECTION 254(2) I S BEING EXTRACTED BELOW FOR READY REFERENCE: MA 123 & 135/2010 :- 9 -: 254 (2) THE APPELLATE TRIBUNAL MAY, AT ANY TIME WITHIN FOUR YEARS FROM THE DATE OF THE ORDER, WITH A VIEW TO RECTIFYING ANY MISTAKE APPARENT FROM THE RECORD , AMEND ANY ORDER PASSED BY IT UNDER SUB-SECTION (1), AND SHALL MAKE SUCH AMENDMENT IF THE MISTAKE IS BROUGHT TO ITS NOTICE BY THE ASSESSEE OR THE ASSESSING OFFICER : PROVIDED THAT AN AMENDMENT WHICH HAS THE EFFECT OF ENHANCING AN ASSESSMENT OR REDUCING A REFUND OR OTH ERWISE INCREASING THE LIABILITY OF THE ASSESSEE, SHALL NOT BE MADE UNDER THIS SUB-SECTION UNLESS THE APPELLATE TRIBUNA L HAS GIVEN NOTICE TO THE ASSESSEE OF ITS INTENTION TO DO SO AN D HAS ALLOWED THE ASSESSEE A REASONABLE OPPORTUNITY OF BE ING HEARD . [ PROVIDED FURTHER THAT ANY APPLICATION FILED BY THE ASSESSEE IN THIS SUB-SECTION ON OR AFTER THE 1ST DA Y OF OCTOBER, 1998, SHALL BE ACCOMPANIED BY A FEE OF FIF TY RUPEES.] 9. NEEDLESS TO MENTION THAT A TRIBUNAL IS A CREATURE O F THE INCOME- TAX ACT AND HAS TO EXERCISE ITS JURISDICTION UNDER THE ENABLING OR EMPOWERING TERMS OF THIS STATUTE. IT CANNOT ASSUME INHERENT JURISDICTION BEYOND THE DELINEATED POWERS CONFERRED ON IT. THE POWER OF RECTIFICATION WHICH HAS BEEN SPECIFICALLY CONFER RED ON IT BY THE ABOVE PROVISION HAS TO BE EXERCISED IN ITS LETTER AND SPI RIT, IN THE TERMS OF THIS PROVISION. THE POWER OF RECTIFICATION DEFINITELY I S NOT A POWER OF REVISION OR REVIEW. APART FROM THE PLAIN READING O F THE ABOVE PROVISION, THE MEANING OF THE PHRASE A MISTAKE AP PARENT FROM THE RECORD HAS BEEN INTERPRETED BY VARIOUS COURTS AND THE TRIBUNALS AT DIFFERENT TIMES BUT STILL THIS EXPRESSION HAS NOT B EEN FINALLY DEFINED AS MA 123 & 135/2010 :- 10 - : SETTLED. WHAT IS A MISTAKE APPARENT FROM THE REC ORD DEPENDS ON VARIOUS FACTS AND CIRCUMSTANCES. THE COURTS EVEN D IFFER ON CERTAIN SET OF FACTS WHETHER THEY CONSTITUTE RECTIFIABLE MISTAK E UNDER THIS SECTION OR NOT. BUT BROADLY SPEAKING ALL THE DECISIONS HAV E SETTLED ONE THING THAT THE TRIBUNAL HAS GOT NO POWER OF REVIEW OF ITS OWN ORDER. IT IS ALSO SETTLED THAT U/S 254(2) OF THE ACT, THE TRIBUN AL CAN AMEND, AT ANY TIME WITHIN FOUR YEARS FROM THE DATE OF AN ORDER, P ASSED BY IT U/S 254(1), WITH A VIEW TO RECTIFY ANY MISTAKE APPARENT FROM THE RECORD, EITHER SUO MOTU OR ON AN APPLICATION OF THE PARTY. IN VERY SIMPLE TERMS THE HON'BLE CALCUTTA HIGH COURT WHILE DECIDIN G THE CASE OF M/S BATA INDIA LTD VS DY. CIT & OTHERS [1996] 217 ITR 8 71 (CAL) BY OBSERVING THAT WHEN A PREJUDICE RESULTING FROM AN ERROR IS ATTRIBUTABLE TO THE TRIBUNALS MISTAKE, ERROR OR OMISSION, IT IS ITS BOUNDEN DUTY TO SET IT RIGHT. THE VARIOUS COURTS HAVE TAKEN THEIR DIFFERENT VIEWS IN RESPECT OF CERTAIN SET OF FACTS OF A GIVEN CASE. 10. RELIANCE HAS BEEN PLACED ON THE RECENT DECISION OF THE HON'BLE SUPREME COURT RENDERED IN THE CASE OF MANISH MAHESW ARI VS ACIT, 289 ITR 341, WHEREIN IT HAS BEEN CATEGORICALLY HELD THAT FOR PROCEEDINGS U/S 158BD, THE ASSESSING OFFICER IS REQ UIRED TO RECORD HIS SATISFACTION IN WRITING IN THE CASE OF THE ASSESSEE WHO HAS BEEN MA 123 & 135/2010 :- 11 - : SEARCHED. HELD PORTION OF THIS DECISION IS BEING R EPRODUCED HEREINBELOW FOR READY REFERENCE: BEFORE THE PROVISIONS OF SECTION 158BD OF T HE INCOME- TAX ACT, 1961, ARE INVOKED AGAINST A PERSON OTHER T HAN THE PERSON WHOSE PREMISES HAVE BEEN SEARCHED UNDER SECT ION 132 OR DOCUMENTS AND OTHER ASSETS HAVE BEEN REQUISITIONED UNDER SECTION 132A, THE CONDITIONS PR ECEDENT HAVE TO BE SATISFIED. HELD ACCORDINGLY, THAT WHERE THE PREMISES OF A DIRE CTOR OF A COMPANY AND HIS WIFE WERE SEARCHED UNDER SECTION 13 2 OF THE INCOME-TAX ACT, 1961 AND A BLOCK ASSESSMENT HA D TO BE DONE IN RELATION TO THE COMPANY, THE ASSESSING O FFICER HAD TO (I) RECORD HIS SATISFACTION THAT ANY UNDISCL OSED INCOME BELONGED TO THE COMPANY, AND (II) HAND OVER THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS AND ASSETS SEI ZED TO THE ASSESSING OFFICER HAVING JURISDICTION AGAINS T THE COMPANY. 11. IT SEEMS THAT INADVERTENTLY THE ISSUE REGARDING REC ORDING OF SATISFACTION AND HANDING OVER OF THE RECORDS AS PER SECTION 158BD WAS NOT DEALT WITH BY THE TRIBUNAL WHILE DECIDING THE A PPEALS. SINCE NOTHING IS FOUND TO BE MENTIONED ABOUT THE PRE-REQU ISITE CONDITIONS, IN ANY CASE, THE DECISION OF HON'BLE SUPREME COURT WH ICH TANTAMOUNT TO A PROVISION OF LAW BEING IN EXISTENCE FROM ITS VERY INCEPTION IN VIEW OF ARTICLE 141 OF CONSTITUTION OF INDIA. IN THAT VIEW OF THE MATTER, EVEN A SUBSEQUENT DECISION RENDERED BY HON'BLE SUPREME COU RT WHEREBY A PARTICULAR PROVISION HAS BEEN INTERPRETED IN A PART ICULAR MANNER HAS TO BE TREATED AS THE LAW ON THE DATE OF ENFORCEMENT O F THAT PARTICULAR ENACTMENT. IN CASE THE DECISION OF HON'BLE SUPREM E COURT REMAINS MA 123 & 135/2010 :- 12 - : UNNOTICED OR UNDEALTWITH EVEN IF IT WAS AVAILABLE A T THAT PARTICULAR TIME. IT ALSO AMOUNTS TO A MISTAKE APPARENT FROM R ECORD. IN THE CASE OF HONDA SIEL ROWER PRODUCTS LTD VS CIT, 295 ITR 46 6, THE APEX COURT HAS CATEGORICALLY HELD AS UNDER: THE PURPOSE BEHIND THE ENACTMENT OF SECTION 254(2) OF THE INCOME-TAX ACT, 1961, DEALING WITH THE POWER OF THE APPELLATE TRIBUNAL TO AMEND ANY ORDER PASSED BY IT UNDER SUB-SECTION (1), IF ANY MISTAKE APPARENT FROM THE RECORD IS BROUGHT TO ITS NOTICE, IS BASED ON THE FUNDAMENTAL PRINCIPLE THAT NO PARTY APPEARING BEFORE THE APPELLATE TRIBUNAL, BE IT AN ASSESSEE OR THE DEPARTMENT, SHOULD SUFFER ON ACCOUNT OF ANY MISTAKE COMMITTED BY THE TRIBUNAL. THIS FUNDAMENTAL PRINCIPLE HAS NOTHING TO DO WITH THE INHERENT POWERS OF THE TRIBUNAL. IF PREJUDICE HAS RESULTED TO THE PARTY, WHICH PREJUDICE IS ATTRIBUTABLE TO THE TRIBUNAL'S MISTAKE, ERROR OR OMISSION, AND WHICH ERROR IS A MANIFEST ERROR, THEN THE TRIBUNAL WOULD BE JUSTIFIED IN RECTIFYING ITS MISTAKE. WHEN PREJUDICE RESULTS FROM AN ORDER ATTRIBUTABLE TO THE TRIBUNAL'S MISTAKE, ERROR OR OMISSION, THEN IT IS THE DUTY OF THE TRIBUNAL T O SET IT RIGHT. ATONEMENT TO THE WRONGED PARTY BY THE COURT OR THE TRIBUNAL FOR THE WRONG COMMITTED BY IT HAS NOTHING TO DO WITH THE CONCEPT OF INHERENT POWER OF REVIEW. 12. THUS, ANY PREJUDICE CAUSED TO A PARTY DUE TO TRIBUN ALS ERROR OR OMISSION WHICH IS A MANIFEST ERROR THEN THE TRIBUNA L WOULD BE JUSTIFIED IN RECTIFYING ITS MISTAKE. THE HON'BLE SUPREME COU RT IN THE CASE OF ACIT VS SAURASHTRA KUTCH STOCK EXCHANGE LTD, 305 I TR 227, HAS HELD THAT EVEN IF THE DECISION OF THE HON'BLE JURISDICTI ONAL HIGH COURT WAS NOT BROUGHT TO THE NOTICE OF THE TRIBUNAL AND IT WA S BROUGHT TO ITS NOTICE BY WAY OF RECTIFICATION APPLICATION FILED U/ S 254(2), THIS AMOUNTS MA 123 & 135/2010 :- 13 - : TO A MISTAKE APPARENT FROM RECORD WHICH REQUIRES RE CTIFICATION. IN THE GIVEN CASE, THE DECISION OF HON'BLE SUPREME COURT W AS EITHER NOT BROUGHT TO THE NOTICE OF THE BENCH OR IT WAS INADV ERTENTLY LOST SITE OF. THEREFORE, IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, NON- RECORDING OF SATISFACTION AND NOT HANDING OVER OF T HE RECORDS AS STATED ABOVE TO THE ASSESSING OFFICER OF THESE ASSESSEES, DOES AMOUNT TO A MISTAKE APPARENT FROM RECORD IN VIEW OF THE ABOVE M ENTIONED CELEBRATED DECISION OF HON'BLE SUPREME COURT IN THE CASE OF MANISH MAHESWARI (SUPRA). THE HON'BLE MADRAS HIGH COURT I N THE CASE OF SOUTHERN INDUSTRIAL CORPORATION LTD VS CIT, 258 ITR 481, HAS CLEARLY HELD THAT WHEN A STATUTORY PROVISION IS INTERPRETED BY THE SUPREME COURT IN A MANNER DIFFERENT FROM THE INTERPRETATION MADE IN THE EARLIER DECISIONS OF A SMALLER BENCH, THE ORDER WHICH DOES NOT CONFORM TO THE LAW SO LAID DOWN WOULD CLEARLY SUFFER FROM A MISTAK E WHICH WOULD BE APPARENT FROM RECORD. 13. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF NEE TA S. SHAH & OTHERS VS CIT , 191 ITR 77, HAS HELD THAT WHEN AN EARLIER ORDER OF THE APPELLATE TRIBUNAL IS FOUNDED ON A MISTAKEN ASS UMPTION AND THE ERROR IS DISCOVERED, THE POWER OF RECTIFICATION U/S 254(2) CAN BE INVOKED BECAUSE THE VERY BASIS OF THE EARLIER ORDER REQUIRES RECTIFICATION. THUS, CO-JOINT READING OF ALL THESE DECISIONS IN THE LIGHT OF MA 123 & 135/2010 :- 14 - : THE PREVAILING FACTS OF THIS CASE, WE ARE OF THE CO NSIDERED OPINION THAT RECTIFIABLE MISTAKE HAS CREPT INTO THE TRIBUNAL ORD ER AND SINCE FURTHER FACTS ARE NOT REQUIRED TO BE ASCERTAINED IN THE GIV EN SCENARIO, WE DEEM IT A FIT CASE TO ALLOW THE LEGAL PLEA RAISED BY THE ASSESSEES IN THEIR APPEALS IN RESPECT OF RECALLING THE ORDER AN D AGAIN HEARING OF THIS VERY SAME ISSUE WOULD AMOUNT TO WASTAGE OF TIME AND ENERGY. THEREFORE, WE AMEND THE TRIBUNAL ORDER IN QUESTION BY ALLOWING THE LEGAL PLEA BY HOLDING THAT THE ASSESSMENT ORDERS U/ S 158BD IN BOTH THESE CASES ARE WITHOUT ASSUMPTION OF VALID JURISDI CTION AND NEEDS TO BE QUASHED. CONSEQUENTLY, WE QUASH THE BLOCK ASSES SMENTS IN BOTH THESE CASES AND ALLOW THE APPEALS IN VIEW OF THE DE CISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MANISH MAHESW ARI (SUPRA) AS DISCUSSED ABOVE. 14. IN THE RESULT, BOTH THE MISCELLANEOUS PETITIONS ARE ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 13.8.2010 SD/- SD/- (HARI OM MARATHA ) JUDICIAL MEMBER (ABRAHAM P GEORGE) ACCOUNTANT MEMBER DATED: 13 TH AUGUST, 2010 RD COPY TO: APPELLANT /RESPONDENT/CIT(A)/CIT/DR