Deputy Commissioner of Income Tax, CC-1(4), Bangalore V. Sri. A.N. Sanjay, Bangalore

MA 40/BANG/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7574 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 23-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 16-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G GANESH DEPT
• Assessee Lawyers: V SRINIVASAN
• Keywords: Period of limitation; Time period of passing order; Documents seized; Reassessment proceedings
• Section: 153A; 6; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT MP NOS.39 & 40/BANG/2018 [IN I TA NO S . 120 & 123/BANG/2015] ASSESSMENT YEAR S : 2005 - 0 6 THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(4), BANGALORE. VS. SHRI S.N. MURALI MOHAN PAN: AHLPS 2340F SHRI S.N. SHARATH KUMAR PAN: AHLPS 2341E # 33/3, SRI RANGADHAMA, 2 ND CROSS, SHANKAR MUTT ROAD, BASAVANGUDI, BANGALORE 560 004. APP LIC ANT RESPONDENT APP L IC ANT BY : SHRI G. GANESH, STANDING COUNSEL FOR DEPT. R E SPONDENT BY : SHRI V. SRINIVASAN, ADVOCATE DATE OF HEARING : 19. 0 7 . 201 9 DATE OF PRONOUNCEMENT : 23 . 0 7 . 201 9 O R D E R THESE ARE MISCELLANEOUS PETITIONS FILED BY THE RE VENUE U/S. 254(2) OF THE INCOME-TAX ACT, 1961 [THE ACT] PRAYING THAT T HERE ARE CERTAIN APPARENT ERRORS IN THE ORDER OF TRIBUNAL, WHICH NEEDS TO BE RECTIFIED IN ITA NOS.120 & 123/BANG/2015 IN THE CASE OF SHRI S.N. MURALI MOHAN AND SHRI S.N. SHARATH MOHAN. 2. THE PROCEEDINGS AGAINST THESE ASSESSEES COMMENC ED U/S. 153C OF THE ACT. THE PLEA TAKEN BY THE ASSESSEE IN THESE T WO APPEALS WAS THAT THE MP NOS.39 & 40/BANG/2018 PAGE 2 OF 8 ADMITTED FACTUAL POSITION WAS THAT THERE WAS A SEAR CH IN THE CASE OF PRATHIBHA JEWELLERY HOUSE ON 02.05.2010 IN WHICH CE RTAIN DOCUMENTS ALLEGEDLY BELONGING TO ASSESSEES WERE FOUND. THE A O OF PRATHIBHA JEWELLERY HOUSE HANDED OVER THE ASSESSEES PAPERS T O THE AO OF ASSESSEES ON 02.05.2011. THEREUPON PROCEEDINGS U/S . 153C OF THE ACT WERE INITIATED AGAINST THE AFORESAID TWO ASSESSEES. IN TERMS OF FIRST PROVISO TO SECTION 153C(1) OF THE ACT, THE DATE OF SEARCH A S FAR AS THESE TWO ASSESSEES ARE CONCERNED HAVE TO BE CONSTRUED AS THE DATE ON WHICH THE AO OF THE AFORESAID TWO ASSESSEES RECEIVES THE SEIZ ED MATERIAL ON REQUISITION FROM THE AO WHOSE PREMISES WAS SEARCHED AND IN WHOSE SEARCH DOCUMENTS ALLEGEDLY BELONGING TO THE ASSESSE ES WERE FOUND. IN THE CASE OF A SEARCH U/S. 132 OF THE ACT WHICH TAKES PL ACE ON OR AFTER 31.05.2003, AS PER THE 2 ND PROVISO OF SECTION 153C OF THE ACT, THE AO HAS TO FRAME AN ASSESSMENT FOR SIX ASSESSMENT YEARS IMM EDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO PREVIOUS YEAR IN WH ICH THE SEARCH IS CONDUCTED OR REQUISITION IS MADE. 3. IN THE TWO APPEALS OF THE AFORESAID ASSESSEES, THE DATE OF SEARCH IN TERMS OF 1 ST PROVISO TO SECTION 153C(1) OF THE ACT WAS 02.05.20 11. IN TERMS OF 2 ND PROVISO, SIX ASSESSMENT YEARS IMMEDIATELY PRECEDIN G THE ASSESSMENT YEAR RELEVANT TO PREVIOUS YEAR IN WHICH THE SEARCH IS CONDUCTED OR REQUISITION IS MADE, WOULD BE AYS 2006 -07 TO 2011-12. SINCE THE AY 2005-06 IS NOT PART OF THE SIX ASSESSMENT YE ARS CONTEMPLATED UNDER 2 ND PROVISO TO SECTION 153C OF THE ACT, THE ASSESSEE T OOK A PLEA THAT AY 2005-06 CANNOT BE THE SUBJECT MATTER OF BLOCK ASSES SMENT YEAR. SIMILAR PLEA WAS TAKEN IN THE CASE OF SRI SAKA NARASIMHULU CHETTY FOR AY 2005-06 AND THE TRIBUNAL VIDE ITS ORDER DATED 04.07.2016 IN ITA NO.117 OF 2015 UPHELD THE PLEA OF ASSESSEE AND QUASHED THE ASSESSM ENT FOR AY 2005-06 WITH THE FOLLOWING OBSERVATIONS:- MP NOS.39 & 40/BANG/2018 PAGE 3 OF 8 5. IN THE INSTANT CASE, UNDISPUTEDLY THE SEARCH W AS CONDUCTED IN THE GROUP OF PRATHIBHA JEWELLERY HOUSE ON 2.5.20 10 AND THE AO HAVING JURISDICTION OVER THE ASSESSEE RECEIVED T HE INFORMATION ON 2.5.2011 ON WHICH DATE THE CASE WAS NOTIFIED. AF TER RECORDING THE REASONS FOR INITIATION OF THE PROCEEDINGS, NOTI CE U/S. 153C OF THE ACT WAS ISSUED ON 8.8.2011. THEREFORE, THE RELE VANT PREVIOUS YEAR IN WHICH THE AO HAVING JURISDICTION OVER THE A SSESSEE HAS RECEIVED THE MATERIAL IS 2011-12 AND THE RELEVANT A SSESSMENT YEAR IS 2012-13. THEREFORE, THE RELEVANT SIX ASSESSMENT YEARS PRECEDING TO THE ASSESSMENT YEAR 2012-13 ARE UPTO A .Y. 2006-07. THEREFORE, THE AO HAS NO JURISDICTION TO FRAME THE ASSESSMENT FOR THE AY 2005-06. 6. PER CONTRA, THE LD. DR CONTENDED THAT THE AO HAS JURISDICTION TO FRAME THE ASSESSMENT OVER THE IMPUG NED ASSESSMENT YEAR 2005-06. 7. HAVING CAREFULLY EXAMINED THE RELEVANT PROVISION S OF THE ACT IN THE LIGHT OF THE RIVAL SUBMISSIONS, I FIND T HAT THIS GROUND WAS NEVER RAISED BEFORE THE LOWER AUTHORITIES, THER EFORE THEY HAD NO OCCASION TO ADJUDICATE THE SAME; BUT BEFORE ME I T IS RAISED FIRST TIME. FOR THE SAKE OF REFERENCE, I EXTRACT THE RELE VANT PROVISIONS OF SECTION 153A AND PROVISO TO SECTION 153C HEREUND ER:- 153A. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SE CTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, IN THE CASE OF A PERSON WHERE A SEARCH IS INIT IATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FU RNISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING W ITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETT ING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APP LY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRE D TO BE FURNISHED UNDER SECTION 139; MP NOS.39 & 40/BANG/2018 PAGE 4 OF 8 (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSE SSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE: PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FAL LING WITH SUCH SIX ASSESSMENT YEARS: 153C. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SE CTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONG S OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SE CTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSO N AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INC OME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF S ECTION 153A: PROVIDED THAT IN CASE OF SUCH OTHER PERSON, THE REF ERENCE TO THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A IN THE SECOND PROVIS O TO SUB- SECTION (1) OF SECTION 153A SHALL BE CONSTRUED AS R EFERENCE TO THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HA VING JURISDICTION OVER SUCH OTHER PERSON: 8. ON A CAREFUL PERUSAL OF THE AFORESAID PROVISIONS OF SECTION 153A AND SECTION 153C, I FIND THAT THE AO U/S. 153A OR SEC. 153C ISSUED A NOTICE TO THE ASSESSEE ON ACCOUNT OF SEARCH FOR FRA MING ASSESSMENT FOR SIX ASSESSMENT YEARS PRECEDING TO TH E ASSESSMENT YEAR RELEVANT TO PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. FOR THE PURPOSE OF SECTION 153C, THE REFERENCE TO DATE OF INITIATION OF SEARCH U/S. 132 OR MAKING OF REQUISITION U/S. 132A IN THE SECOND PROVISO TO SUB- SECTION OF MP NOS.39 & 40/BANG/2018 PAGE 5 OF 8 SECTION 153A SHALL BE CONSTRUED AS REFERENCE TO THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSE TS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HAVING JURIS DICTION OVER SUCH OTHER PERSON. UNDISPUTEDLY, THE AO HAS INITIAT ED THE PROCEEDINGS U/S. 153C OF THE ACT ON 8.8.2011 RELEVA NT TO PREVIOUS YEAR 2011-12 AND THE A.Y. 2012-13. THEREFORE, THE A SSESSMENT YEARS FOR WHICH THE AO HAS JURISDICTION TO FRAME TH E ASSESSMENTS ARE FROM AY 2011-12 TO AY 2006-07. SINCE IN THE IMP UGNED AY 2005-06 THE AO HAS NO JURISDICTION TO FRAME THE ASS ESSMENT IN TERMS OF THE AFORESAID DISCUSSION, I HOLD THAT THE ASSESSMENT FRAMED FOR AY 2005-06 OVER THE ASSESSEE ON ACCOUNT OF SEARCH IS NOT VALID AND I THEREFORE QUASH THE ASSESSMENT FRAM ED CONSEQUENT TO THE SEARCH U/S. 153C OF THE ACT. 4. THE AFORESAID ORDER OF THE TRIBUNAL WAS FOLLOWED BY THIS TRIBUNAL IN THE CASE OF AFORESAID TWO ASSESSEES IN THE ORDER DA TED 26.03.2017 AND THE ASSESSMENT WAS QUASHED FOR AY 2005-06 IN THE CASE O F AFORESAID TWO ASSESSEES WITH THE FOLLOWING OBSERVATIONS:- 3. HAVING CAREFULLY EXAMINED THE ORDER OF TRIBUNA L DATED 04.07.2016 AND THE ADDITIONAL GROUNDS RAISED IN THE SE APPEALS, WE FIND THAT THIS ISSUE OF LIMITATION HAS ALREADY BEEN EXAMINED BY THE TRIBUNAL IN ITA NO.117/BANG/2015 IN WHICH IT HAS BE EN HELD THAT ASSESSMENT FRAMED FOR AY 2005-06 OVER THE ASSESSEE ON ACCOUNT OF SEARCH IS NOT VALID AND THE TRIBUNAL ACCORDINGLY QUASHED THE ASSESSMENT FRAMED CONSEQUENT TO SEARCH U/S. 153C OF THE ACT. SIMILAR IS THE POSITION IN THE IMPUGNED APPEALS AS THE ASSESSMENT YEAR IS 2005-06 AND THE FACTS ARE SAME. THEREFORE, FOLLOWING THE SAID ORDER OF THE TRIBUNAL, WE HOLD THAT ASSESSMENT FRAMED IN THESE APPEALS ON ACCOUNT OF SEARCH IS NOT VALID AND WE THEREFORE QUASH THE ASSESSMENTS FRAMED CONSEQUENT TO SEARCH U /S. 153C OF THE ACT. ACCORDINGLY, THE ADDITIONAL GROUNDS IN TH ESE APPEALS ARE DISPOSED OF. 5. IN THESE MPS, THE REVENUE HAS CONTENDED THAT TH E AFORESAID CONCLUSIONS WERE INCORRECT FOR THE FOLLOWING REASON S:- AS PER PROVISION OF SECTION 153C (1) OF THE ACT, A FTER RECEIPT OF THE SEIZED MATERIAL PERTAINING TO THE OTHER PERSON, THE ASSESSING MP NOS.39 & 40/BANG/2018 PAGE 6 OF 8 OFFICER SHALL INITIATE PROCEEDINGS OF SECTION 153A (1) AND THE FIRST PROVISO, THE ASSESSING OFFICER HAS TO ASSESS OR REA SSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING W ITHIN SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSME NT YEAR TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED. AS PER FIRST PROVISO TO THE SUB-SECTION (1) OF SECTION 153C, IN THE CASE OF SUCH OTHER PERSON (UNSEARCHED PERSON), THE DATE OF RECEIVING THE SEIZED MATERIAL BY THE ASSESSING OFFICER OF SUCH 'O THER PERSON' SHALL BE CONSTRUED AS THE DATE OF SEARCH U/S 132 FO R THE PURPOSE OF SECOND PROVISO TO SUB-SECTION (1) OF SECTION 153A. IN THIS CONNECTION, IT IS SEEN THAT THE SECOND PROVISO TO S UB-SECTION (1) OF SECTION 153A PROVIDES ONLY FOR THE ABATEMENT OF ANY ASSESSMENT OR REASSESSMENT PROCEEDINGS PENDING ON THE DATE OF IMITATION OF SEARCH. THUS, SECOND PROVISO TO SUB-SECTION (1) OF SECTION 153A DOES NOT SPEAK ANYTHING ABOUT LIMITATION PERIOD FOR CONSIDERING ASSESSMENT YEARS FOR THE PURPOSE OF INITIATING ASSE SSMENT OR REASSESSMENT PROCEEDINGS U/S 153C OF THE ACT. THERE FORE THERE EXISTS NO INCONFORMITY IN THE INITIATION OF THE PRO CEEDINGS. 6. THE LD. DR REITERATED THE STAND OF REVENUE AS CO NTENDED IN THE MISCELLANEOUS PETITIONS. 7. THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT TH AT THE TRIBUNAL IN THESE TWO APPEALS HAS FOLLOWED ITS ORDER IN ITA NO. 117/BANG/2015 DATED 04.07.2016 AND THAT ORDER HAS NOT BEEN CHALLENGED B Y THE REVENUE AS ERRONEOUS U/S. 254(2) OF THE ACT. 8. THE LD. DR ALSO PLACED RELIANCE ON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF HI TECH ARAI LTD., ITA NO.670 & 671/2009, JUDGMENT DATED 01.09.2009 WHEREIN THE HONBLE HIGH COURT OBSERVED THAT WHEN AN ORDER OF TRIBUNAL IS FOUND TO BE CORRECT, THE FACT THAT IT HAD NOT FOLLOWED AN EARLIER ORDER OF COORDINATE BENCH IS NOT RELEVANT AND THAT IT IS NOT EXPECTED OF THE TRIBUNAL TO BLINDLY FOLLOW ITS OWN EARLIER ORDER. 9. WE HAVE CONSIDERED THE AFORESAID DECISION AND WE ARE OF THE VIEW THAT IT IS OF NO RELEVANCE TO THE ISSUE BEFORE US I N THESE MISCELLANEOUS MP NOS.39 & 40/BANG/2018 PAGE 7 OF 8 PETITIONS. IN THE PRESENT CASE, THE TRIBUNAL HAS F OLLOWED AN EARLIER ORDER OF COORDINATE BENCH AND HAS NOT TAKEN A VIEW DIFFERENT FROM THE VIEW TAKEN EARLIER BY COORDINATE BENCH. THEREFORE, THE AFORES AID DECISION OF HONBLE MADRAS HIGH COURT IS OF NOT OF ANY HELP TO THE PLEA OF THE DEPARTMENT. 10. WE ARE OF THE VIEW THAT THE TRIBUNAL HAS RIGHTL Y COME TO THE CONCLUSION THAT AY 2005-06 IS NOT PART OF BLOCK OF SIX ASSESSMENT YEARS CONTEMPLATED UNDER THE 2 ND PROVISO TO SECTION 153C(1) OF THE ACT AND HAS RIGHTLY QUASHED THE ASSESSMENT FOR THE AY 2005-06. WE ARE THEREFORE OF THE VIEW THAT THERE IS NO MISTAKE, MUCH LESS, A MIS TAKEN APPARENT ON THE FACE OF RECORD CALLING FOR INTERFERENCE U/S. 254(2) OF THE ACT. WE THEREFORE DISMISS THESE MISCELLANEOUS PETITIONS. 11. IN THE RESULT, THE MISCELLANEOUS PETITIONS ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF JULY, 2019. SD/- ( N.V . VASU DEVAN ) VICE PRESIDENT BANGALORE, DATED, THE 23 RD JULY, 2019. / D ESAI S MURTHY / MP NOS.39 & 40/BANG/2018 PAGE 8 OF 8 COPY TO: 1. THE A PPLICANT 2. THE R ESPONDENT (S) (2) 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUA R D F ILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.