Maheshwari Synthetics Private Limited V. Commissioner of Income Tax (Central), Ludhiana and another

ITA/101/2001

AI Insights

The case involves M/s Maheshwari Synthetics Private Limited, Hoshiarpur, the appellant, contesting the decisions made by the Commissioner of Income Tax (Central), Ludhiana, and another respondent, regarding a block assessment order. The appeals challenged the order dated 4.12.2000 by the Income Tax Appellate Tribunal, Amritsar, which addressed the legality and procedural fairness of the block assessment conducted post-search operations. The primary legal questions revolved around the timeliness of the block assessment and the adequacy of the opportunity provided to the assessee during the assessment proceedings. The Tribunal's decision to remand the case for a fresh assessment was based on the finding that the assessee was not given a reasonable opportunity to be heard, a principle rooted in the adherence to natural justice.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 672680 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 17-11-2014
• Assessment Year: misc
• Other Referred Cases: T.O.Abrahim & Co. versus Assistant Director of Income Tax (Investigation) and others, (1999) 238 ITR 501 (Kerala)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: RAJESH KATOCH
• Assessee Lawyers: PANKAJ JAIN; DIVYA SURI; SACHIN BHARDWAJ
• Keywords: Block assessment; Limitation Period; Natural Justice; Remand
• Section: 158BE

Judgement Text

"Income Tax Appeal No.101 of 2001 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Income Tax Appeal No.101 of 2001 Date of Decision: 17.11.2014 M/s Maheshwari Synthetics Private Limited, Hoshiarpur ..Appellant versus Commissioner of Income Tax (Central), Ludhiana and another. ..Respondents CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE B.S.WALIA Present: Mr. Pankaj Jain, Senior Advocate, with Ms. Divya Suri, Advocate and Mr. Sachin Bhardwaj, Advocate for the appellant. Mr. Rajesh Katoch, Advocate, for the respondents. RAJIVE BHALLA, J. (ORAL) By way of this order, we shall dispose of Income Tax Appeals Nos.101, 102, 103, 104, 105, 106, 107, 108, and 139 of 2001 as they require an answer of the same substantial questions of law and lay challenge of the same order dated 4.12.2000 passed by the Income Tax Appellate Tribunal. The assessee is before us challenging assessment order dated 26.9.1997 and order dated 4.12.2000 passed by the KUMAR VIRENDER 2014.12.23 14:34 I attest to the accuracy and authenticity of this docunt High Court Chandigarh Income Tax Appeal No.101 of 2001 2 Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (hereinafter referred to as “the Tribunal”).Counsel for the assessee/appellant and the respondents are ad idem that decision on questions of law framed on 27.11.2002, at the time of admission of the appeals, shall answer questions of law, arising in ITA Nos.102 to 108 and 139 of 2001. The questions of law are as follows:- “1) Whether the Tribunal was right in law in holding that the block assessment was not barred by time? 2) Whether the Tribunal was justified in not quashing the assessment order after holding that the assessee had not been afforded a reasonable opportunity of hearing during the assessment proceedings? 3) Whether the Tribunal was right in law in not framing the block assessment in the status of “association of persons” even after holding it to be a case of Maheshwari Group?” Counsel for the assessee/appellant fairly concedes that the third question does not survive and, therefore, confines his argument to questions nos. 1 and 2 only. Counsel for the assessee submits that the block assessment, was barred by time as the period of limitation for concluding assessment was one year from the date of KUMAR VIRENDER 2014.12.23 14:34 I attest to the accuracy and authenticity of this docunt High Court Chandigarh Income Tax Appeal No.101 of 2001 3 conclusion of the search. The subsequent amendment, in Section 158BE of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), by adding Explanations 2(a) and (b), that increased the period for limitation to two years, does not apply to the case of the assessee. It is further argued that a perusal of the record reveals that adequate opportunity was not provided to the assessee as relevant documents, were supplied, after delay. The Tribunal having accepted that adequate opportunity was not provided to the assessee, it should not have remanded the matter to the Assessing Officer for adjudication afresh. Counsel for the revenue, however, submits that Explanation 2(a) and (b), added in Section 158BE of the Act, is merely clarificatory and as the assessment order was passed within two years of conclusion of the search, the Tribunal has rightly held that the assessment order is not barred by limitation. Counsel for the revenue further submits that the Tribunal was well within its jurisdiction to remand the assessment to the Assessing Officer and though certain other findings recorded by the Tribunal are under challenge in appeals filed by the revenue, the order passed by the Tribunal holding that the assessment is not barred by limitation or remanding the matter for adjudication afresh, does not call for interference. We have heard counsel for the parties and appraised KUMAR VIRENDER 2014.12.23 14:34 I attest to the accuracy and authenticity of this docunt High Court Chandigarh Income Tax Appeal No.101 of 2001 4 the impugned order, but find no reason to answer questions 1 and 2, in favour of the assessee/appellant. The search commenced on 30.8.1996. Admittedly, the assessment order was passed on 26.9.1997. During this period, the Act was amended by adding Explanation 2(a) and (b) to Section 158BE, of the Act, which reads as follows:- “ Explanation 2: For the removal of doubts, it is hereby declared that the authorisation referred to in sub- section (1) shall be deemed to have been executed:- (a) in the case of search, on the conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued; (b) in the case of requisition under section 132 A on the actual receipt of the books of account or other documents or assets by the authorised officer.” The explanation is clarificatory and, therefore, applies to the assessment proceedings. The Tribunal has rightly held that the assessment cannot be said to be barred by limitation and for the said purpose, has rightly relied upon a judgment of the Kerala High Court in T.O.Abrahim & Co. versus Assistant Director of Income Tax (Investigation) and others, (1999) 238 ITR 501 (Kerala). We find no reason to differ with the interpretation of the High Court of Kerala or the opinion recorded KUMAR VIRENDER 2014.12.23 14:34 I attest to the accuracy and authenticity of this docunt High Court Chandigarh Income Tax Appeal No.101 of 2001 5 by the Tribunal. The first question is answered against the assessee. As regards the second question, the Tribunal has, while holding that adequate opportunity was not provided to assessee, remanded the matter to the Assessing Officer for adjudication afresh. We are unable to infer any prejudice that may have been caused to the assessee as the assessee's argument of lack of adequate opportunity was accepted. The assessment order was, therefore, rightly set aside and the matter was remitted to afford adequate opportunity to the assessee to put forth its case. A principle that inhers in all adjudications is that If an order is set aside for want of adherence to principles of natural justice, a Court or a Tribunal, shall call upon the authority that has violated principles of natural justice to re-appraise the matter and record a fresh order. The Tribunal, has, after due consideration of proceedings before the Assessing Officer, recorded a finding that adequate opportunity was not granted to the assessee and rightly remanded the matter for providing adequate opportunity to the assessee. We are in complete agreement with the opinion recorded by the Tribunal and find no reason to hold that the impugned order is perverse or arbitrary. The second question is also answered against the assessee. In view of what has been recorded hereinabove, we KUMAR VIRENDER 2014.12.23 14:34 I attest to the accuracy and authenticity of this docunt High Court Chandigarh Income Tax Appeal No.101 of 2001 6 answer question nos.1 and 2, against the assessee and dispose of all the appeals accordingly. ( RAJIVE BHALLA ) JUDGE ( B.S. WALIA ) 17.11.2014 JUDGE VK KUMAR VIRENDER 2014.12.23 14:34 I attest to the accuracy and authenticity of this docunt High Court Chandigarh "