DCIT, Satara V. M/s. D.K. Palkar Brothers, Karad

MA 155/PUN/2010

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 9547 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-04-2012
• Assessment Year: misc
• Appeal Filed On: 26-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Block assessment
• Section: 2

Judgement Text

1 INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER MA NO. 155/PN/2010 (ARISING OUT OF ITA NO.362/PN/2000) (BLOCK PERIOD FROM 01-04-1986 TO 24-02-1997) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3(4), SATARA. .. APPLICANT VS. M/S. D.K. PALKAR BROTHERS, 6, RAVIWAR PETH, KARAD, TAL : KARAD, DIST : SATARA. .. RESPONDENT G.I.R. NO. 303-D APPLICANT BY : MS. ANN KAPTHUAMA RESPONDENT BY : SRI M.K. KULKARNI DATE OF HEARING : 05-10-2012 DATE OF PRONOUNCEMENT : 10-10-2012 ORDER PER R.K. PANDA, AM : THE REVENUE THROUGH THIS MISCELLANEOUS APPLICATION REQUESTS THE TRIBUNAL TO RECTIFY THE ORDER PASSED BY IT U/S.254(2) OF TH E ACT. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A FIRM. ASSESSMENT IN THIS CASE WAS COMPLETED U/S.158BC(C) OF THE INCOME TAX A CT ON 26-02-1999 FOR THE BLOCK PERIOD FROM 01-04-1986 TO 24-02-1997 DETERMIN ING THE TOTAL UNDISCLOSED INCOME AT RS.20,35,406/-. BEFORE THE CIT(A) THE VA LIDITY OF THE ASSESSMENT WAS CHALLENGED ON THE GROUND THAT THERE WAS NO SEARCH A CTION CONDUCTED IN ITS PREMISES U/S.132 OF THE ACT BUT ONLY A SURVEY ACTION U/S.133 A OF THE INCOME TAX ACT WAS CONDUCTED. 3. THE LEARNED CIT(A) RELYING ON THE DECISION IN TH E CASE OF VED PRAKASH SANJAY KUMAR REPORTED IN 107 TAXMANN 242 HELD THAT THE NOTICE ISSUED BY THE AO U/S.158BC(A) IS DEFECTIVE AND VOID AB-INITIO SINCE RIGHT FROM THE TIME OF ISSUE OF 2 NOTICE U/S.158BC(A) THE ASSESSEE WAS CHALLENGING TH E VALIDITY OF THE NOTICE. HE HOWEVER HELD THAT NON RECORDING OF SATISFACTION U/S .158BD IS A TECHNICAL ERROR WHICH IS COVERED U/S.292B. HE ACCORDINGLY HELD THA T THE AO CAN COMPLETE THE ASSESSMENT U/S.158BD. THE REVENUE FILED AN APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL VIDE ORDER DATED 09-02-2010 HELD THAT THE PROCEEDINGS UNDER 158BC ARE VOID AB-INITIO. IT ALSO HELD THAT THE CIT(A) ERRED IN INVOKING THE PROVISIONS OF SECTION 158BD. THE RELEVANT OBSERVATIONS OF THE TR IBUNAL ARE AS UNDER : 10. CONSIDERING THE ABOVE RIVAL POSITIONS OF THE P ARTIES IN DISPUTE, WE HAVE ASKED TO REVENUE TO DEMONSTRATE THE FACT OF EXISTENCE OF PAN CHANAMA, WARRANT OF AUTHORIZATION ETC. WITH EVIDENCES. IN THIS REGARD, THE TRIBUNAL GRANTED LARGE NUMBER OF ADJOURNMENTS TO THE REVENUE AND WITHOUT ANY SUCCESS. THUS, THE DEPARTMENT HAS FAILED TO ESTABLISH THAT THERE EXISTS ANY WARRANT OF AUTHORIZATION IN THE NA ME OF THE ASSESSEE AND THE EXISTENCE OF ANY REFERENCES TO THE SAID WARRANT IN THE IMPUGNED PANCHANAMA. IN THIS BACKGROUND OF THE ABOVE, WE CAN UNDERSTAND THE CIRCUMSTANCES, UND ER WHICH THE CIT(A) HAD TO HELD THAT THE PROCEEDINGS U/S.158BC AS VOID AB-INITIO. 11. REGARDING THE CURABILITY OF THE PROCEDURAL DEFI CIENCIES WITH REGARD TO CONDITION OF SATISFACTION IN WRITING, WE HAVE PERUSED THE APE X COURTS JUDGMENT IN THE CASE OF MANISH MAHESHWARI (289 ITR 341) (SC) AND CHANDIGARH BENCH DECISION IN THE CASE OF KISHORILAL BALWANT RAI (17 SOT 380) (CHA) AND NOTIC ED THAT THE SAID JUDGMENT IS ENTIRELY IN FAVOUR OF THE ASSESSEE AS IT FORTIFIES THE VIEWS THAT THE AO OF THE SEARCHED PERSON IS UNDER STATUTORY OBLIGATION TO RECORD HIS FINDING AB OUT SATISFACTION ABOUT THE EXISTENCE OF THE UNDISCLOSED INCOME AND ITS RELATIONSHIP WITH TH E OTHER PERSON BEFORE THE INCRIMINATING MATERIAL IS HANDED OVER TO THE AO OF THE OTHER PERSON, THE ASSESSEE, BEFORE THE PROCEEDINGS U/S.158BD ARE INITIATED BY ISSUE OF NOTICE. CONSIDERING THE FACT THAT THE AO FAILED TO RECORD SATISFACTION OR PRODUCE THE SAM E BEFORE US, WE ARE OF THE CONSIDERED OPINION, THE APEX COURTS JUDGMENT IN THE CASE OF M ANISH MAHESHWARI (SUPRA) APPLY TO THE FACTS OF THE CASE AND THE REMEDIED ATTEMPTED TO BE PROVIDED BY THE CIT(A) IS ILLEGAL. IN ANY CASE, IT IS NOT THE AOS STAND THAT THE BLOC K ASSESSMENT IS MADE U/S.158BD. RESPECTFULLY FOLLOWING THE JUDGMENT OF HONBLE SUPR EME COURT AND CONSIDERING THE GLARING FACT OF NOT RECORDING A SATISFACTION, WE AR E OF THE CONSIDERED OPINION THAT THE CIT(A) HAS ERRED IN INVOKING THE PROVISIONS OF SECT ION 158BD OF THE ACT. ACCORDINGLY, THE BLOCK ASSESSMENT MADE U/S.158BC IS WITHOUT JURI SDICTION AND THEREFORE, IS VOID AB- INITIO. IN CONTINUATION, THE FINDING OF CIT(A) IN ATTEMPTING TO SALVAGE OF THE BLOCK ASSESSMENT BY THE INVOKING THE PROVISIONS OF 158BD IS ALSO IMPROPER AND THE SAME IS NOT IN ACCORDANCE WITH THE SETTLED PRINCIPLES AS LAID D OWN BY THE APEX COURT AS DISCUSSED ABOVE. ACCORDINGLY, GROUND 1 IS DISMISSED. 4. NOW THE REVENUE THROUGH THIS MISCELLANEOUS APPLI CATION REQUESTS THE TRIBUNAL TO RECTIFY THE ORDER U/S.254(2) OF THE INC OME TAX ACT. THE RELEVANT PRAYER PART OF THE MA FROM PARA 8 TO 11 ARE AS UNDER : 8. IT IS SUBMITTED THAT IN THIS CASE, THERE EXISTS A PANCHANAMA, WHICH CLEARLY SHOWS THAT THERE WAS A WARRANT OF AUTHORISATION IN THE CA SE OF THE ASSESSEE. THIS PANCHANAMA RECORDS THAT SHRI A.D. SHETE ITO (INV.), ICHALKARAN JI SHOWED THE WARRANT OF AUTHORISATION DT 20-02-1997 TO SHRI ACHYUT KASHINATH PALKAR WHO W AS PRESENT IN THE PREMISES OF M/S. PALKAR JEWELLERS AND M/S. D.K. PALKAR BROTHERS, RAV IWAR PETH, KARAD. FROM THE SAID PANCHANAMA IT IS VERY CLEAR THAT THERE WAS WARRANT OF AUTHORISATION IN THE CASE OF M/S. 3 PALKAR JEWELLERS AND M/S. D.K. PALKAR BROTHERS. A COPY OF THE SAID PANCHANAMA ALONG WITH ITS ANNEXURES, DRAWN IN RESPECT OF M/S. D.K. P ALKAR BROTHERS IS ENCLOSED HEREWITH AS ANNEXURE G. 9. SINCE THIS IS A CASE WHERE WARRANT OF AUTHORIZAT ION EXISTED IN THE CASE OF ASSESSEE, AS IS CLEARLY EVIDENCED FROM THE PANCHANAMA, THE JU RISDICTION WAS RIGHTLY EXERCISED BY THE ASSESSING OFFICER, U/S.158BC OF THE I.T. ACT. THE ADIT (INV)-II, KOLHAOUR, IN HIS LETTER D.NO.KOP/ADIT/(INV)-II/PALKAR GR./2006-07/24, DT.29 -05-2006 ADDRESSED TO ACIT, SATARA, CLEARLY STATED THAT A WARRANT OF AUTHORISAT ION DT.20-02-1997 WAS ISSUED IN THE NAME OF THE ASSESSEE BY THE DIT (INV.), PUNE. 10. IN VIEW OF THE ABOVE FACTS, IT IS SUBMITTED THA T IN THIS CASE, THERE EXISTS A PANCHANAMA, IN WHICH IT IS CLEARLY MENTIONED THAT W ARRANT OF AUTHORISATION WAS ISSUED IN THE CASE OF THE ASSESSEE. THEREFORE, IN THIS CASE, ACTION U/S.132 WAS TAKEN AND SHOP PREMISES OF THE ASSESSEE HAVE BEEN SEARCHED U/S.132 OF THE I.T. ACT. DURING THE SEARCH ACTION, CERTAIN BOOKS OF ACCOUNTS/DOCUMENTS OF THE ASSESSEE HAVE BEEN SEIZED. THEREFORE, THE PROVISIONS OF SECTION 158BC(A) OF THE I.T. ACT HAVE BEEN CORRECTLY INITIATED IN THIS CASE. THE QUESTION OF APPLYING PROVISIONS OF SECTI ON 292B DOES NOT ARISE AT ALL IN THIS CASE. IT IS ACTUALLY A CASE OF A SEARCH ACTION AND NOT OF A SURVEY. 11. IN VIEW OF THE ABOVE FACTS, IT IS REQUESTED THA T THE ORDER PASSED BY THE HONBLE ITAT, PUNE BENCH A, PUNE IN ITA NO. 362/PN/00 DT. 09-02-2010, MAY KINDLY BE RECTIFIED U/S.254(2) OF THE I.T. ACT, 1961 AND GROU NDS OF APPEAL RAISED BY THE REVENUE MAY BE DECIDED ON MERITS. 4.1 THE LEARNED DR RELIED ON THE CONTENTS OF THE MA . 5. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHE R HAND FILED A COPY OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT A ND SUBMITTED THAT THE REVENUE HAD CHALLENGED THE ORDER OF THE TRIBUNAL BEFORE THE HONBLE HIGH COURT AND THE HONBLE HIGH COURT VIDE ITS ORDER DATED 24-09-2012 IN ITA NO.4889/2010 HAS DISMISSED THE APPEAL FILED BY THE REVENUE. FOR THI S PURPOSE THE LEARNED COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE QUESTIONS REFERRED BEFORE THE HONBLE HIGH COURT AND THE OBSERVATION OF THE HONB LE HIGH COURT WHICH ARE AS UNDER : 1. ACCORDING TO THE REVENUE, THE FOLLOWING TWO QUE STIONS OF LAW ARISE OUT OF THE ORDER OF THE ITAT DATED 9 TH FEBRUARY, 2010. (1) WHETHER ON FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE ITAT IS CORRECT IN RELYING ON THE DECISION OF MANIS H MAHESHWARI AS REPORTED IN 289 ITR 341 (SC) DESPITE THE FACT THAT THERE WAS WA RRANT OF AUTHORIZATION IN THE CASE OF THE ASSESSEE AS IS CLEARLY EVIDENCED BY PAN CHANAMA DATED 25-02-1997 DRAWN IN THE CASE OF THE ASSESSEE (IN RESPECT OF PA RTY NO.2) AND LETTER F.NO. KOP/ADI/(INV.)-II/PALKAR GR./2006-07/24 DATED 29-05 -2006 FROM ADIT (INV.)-II, KOLHAPUR ? (2) WHETHER ON FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE ITAT IS CORRECT IN HOLDING THAT THE ASSESSMENT IS W ITHOUT JURISDICTION DESPITE THE FACT THAT CONDUCT OF SEARCH IN THE PREMISES OF THE ASSESSEE IS EVIDENCED BY PANCHANAMA DRAWN IN THE CASE OF THE ASSESSEE ON 25- 02-1997 ? 4 2. ADMITTEDLY, THE ALLEGED WARRANT OF AUTHORIZATION DATED 20 TH FEBRUARY, 1997 WAS NOT PRODUCED BEFORE THE ITAT. EVEN IN THIS APPEAL, THE REVENUE HAS NOT ANNEXED A COPY OF THE WARRANT OF AUTHORIZATION DATED 20 TH FEBRUARY, 1997. IN THESE CIRCUMSTANCES, THE DECISION OF THE ITAT IN HOLDING THAT THE PROCEEDING S HAVE BEEN INITIATED WITHOUT ANY WARRANT OF AUTHORISATION CANNOT BE FAULTED. ACCORD INGLY, WE SEE NO MERIT IN THE APPEAL AND THE SAME IS HEREBY DISMISSED WITH NO ORDER AS T O COSTS. HE ACCORDINGLY SUBMITTED THAT THE REVENUE THROUGH T HIS MA IS TRYING TO REQUEST THE TRIBUNAL TO REVIEW ITS OWN ORDER WHICH IS NOT PERMI SSIBLE IN LAW AND THEREFORE THE SAME SHOULD BE DISMISSED. 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES. WE FIND AFTER THE TRIBUNAL PASSED THE ORDER ANNULLING THE A SSESSMENT THE REVENUE PREFERRED AN APPEAL BEFORE THE HONBLE JURISDICTIONAL HIGH CO URT. WE FIND THE HONBLE HIGH COURT VIDE ORDER DATED 24-09-2012 HAS ALREADY OBSE RVED THAT THE REVENUE HAS NOT PRODUCED THE WARRANT OF AUTHORISATION DATED 20-02-1 997 BEFORE THE ITAT NOR ANNEXED A COPY OF THE SAME BEFORE THE HONBLE HIGH COURT. ACCORDINGLY, THE HONBLE HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL WHEREIN IT WAS HELD THAT THAT THE PROCEEDINGS HAVE BEEN INITIATED WITHOUT ANY WAR RANT OF AUTHORISATION. NOW THAT THE ISSUE HAS ATTAINED FINALITY BY THE ORDER OF THE HONBLE HIGH COURT, THEREFORE, THE MA FILED BY THE REVENUE IS NOTHING BUT A REQUEST TO THE TRIBUNAL TO REVIEW ITS OWN ORDER WHICH IS NOT PERMISSIBLE IN LAW. UNDER THESE CIRCUMSTANCES, THE MA FILED BY THE REVENUE DESERVES TO BE DISMISSED. WE HOLD ACCO RDINGLY. 7. IN THE RESULT, THE MA FILED BY THE REVENUE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 10 TH DAY OF OCTOBER 2012. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTAN T MEMBER PUNE, DATED THE 10 TH OCTOBER 2012 SATISH COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. DEPARTMENT 3. CIT(A)-KOLHAPUR 4. D.R. A BENCH, PUNE 5. GUAR D FILE BY ORDER // TRUE COPY // SENIO R PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE 5