Sri. Chandra Reddy, Bangalore v. DCIT, Bangalore

ITA 1159/BANG/2010 | 2007-2008
Pronouncement Date: 29-03-2011 | Result: Allowed

Appeal Details

RSA Number 115921114 RSA 2010
Bench Bangalore
Appeal Number ITA 1159/BANG/2010
Duration Of Justice 5 month(s) 11 day(s)
Appellant Sri. Chandra Reddy, Bangalore
Respondent DCIT, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 29-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 29-03-2011
Date Of Final Hearing 23-03-2011
Next Hearing Date 23-03-2011
Assessment Year 2007-2008
Appeal Filed On 18-10-2010
Judgment Text
PAGE 1 OF 8 ITA NOS. 1156 TO 1159/BANG/2010 1 IN THE INOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE DR. O K NARAYANAN VICE PRESIDENT AND SMT. P MADHAVI DEVI J.M. ITA NOS. 1156 TO 1159/BANG/2010 (ASST. YEARS 2004-05 TO 2007-08) SRI CHANDRA REDDY 1 ST CROSS NEAR RAMA TEMPLE BEHIND GOVT. PRIMARY SCHOOL ANNASANDRAPALYA BENGALURU. -APPELLANT VS THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1(4) BENGALURU. - RESPONDENT APPELLANT BY : SHRI S VENKATESAN C.A. RESPONDENT BY : SHRI HARSHA PRAKASH CIT-II O R D E R PER P MADHAVI DEVI : ALL THESE APPEALS ARE FILED BY THE ASSESSEE FOR T HE ASST. YEARS 2004-05 TO 2007-08. 2. IN ALL THE FOUR APPEALS THE ISSUES INVOLVED A RE THE VALIDITY OF THE SEARCH ITSELF AND THE CONSEQUENTIAL ADDITIONS TO THE ASSESSEES INCOME. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL. THE ASSESSEE HAD FILED HIS RETURN OF I NCOME U/S 139 OF THE ACT DECLARING CERTAIN INCOME. THEREAFTER SEAR CH ACTION U/S PAGE 2 OF 8 ITA NOS. 1156 TO 1159/BANG/2010 2 132 WAS CARRIED ON 31.12.2006 IN THE RESIDENTIAL PR EMISES OF THE ASSESSEE AND CERTAIN INCRIMINATING DOCUMENTS WERE F OUND AND SEIZED. NOTICE U/S 153A WAS ISSUED TO THE ASSESSE E AND CONSEQUENT TO THE SAME THE ASSESSEE FILED ITS RETU RN OF INCOME EXCLUDING CERTAIN PORTION OF INCOME WHICH WAS ERRO NEOUSLY OFFERED IN THE ORIGINAL RETURN OF INCOME FILED U/S 139 OF T HE ACT. DURING THE ASSESSMENT PROCEEDINGS U/S 153A THE AO OBSERVE D THAT THE ASSESSEE HAS NOT GIVEN ANY REASON FOR REDUCING THE EARLIER DECLARED INCOME AND HENCE HELD THAT THE INCOME SHOWN IN THE EARLIER RETURN SHOULD BE TAKEN FOR COMPUTATION PURPOSE. ACCORDING LY HE MADE ADDITIONS TO THE INCOME OF THE ASSESSEE. 4. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE CIT(A) CHALLENGING BOTH THE VALIDITY OF SEARCH P ROCEEDINGS AND ALSO THE ADDITIONS MADE TO THE INCOME OF THE ASSESS EE. THE CIT(A) ENHANCED THE INCOME FOR THE ASST. YEARS 2004-05 200 5-06 AND 2007-08. 5. AGGRIEVED BY THE SAME THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 6. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SEARCH WARRANT WAS ISSU ED IN THE NAME OF THE ASSESSEE AND ALSO HIS WIFE SMT. C PADMA. IN SUCH A CASE ACCORDING TO HIM THE ASSESSMENT SHOULD ALSO BE MAD E JOINTLY AS AN AOP OR BOI AND CANNOT BE MADE IN INDIVIDUAL HANDS. IN SUPPORT OF THIS CONTENTION THE LEARNED COUNSEL FOR THE ASSESS EE RELIED ON THE PAGE 3 OF 8 ITA NOS. 1156 TO 1159/BANG/2010 3 JUDGEMENT OF THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF SHRI P J KUMAR IN ITA NOS.6005 & 6006/2010 DATED 17 TH SEPTEMBER 2010 IN WHICH THE HONBLE HIGH COURT HAS HELD THAT AN ORDER OF BLOCK ASSESSMENT PASSED U/S 158BC OF THE A CT ON THE INDIVIDUAL ASSESSEE IS BAD IN LAW WHERE THE AUTHORI ZATION FOR SEARCH HAS BEEN ISSUED IN MORE THAN ONE NAME. HE SUBMITTE D THAT THE HONBLE HIGH COURT OF KARNATAKA HAS FOLLOWED THE JU DGEMENT OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF VANDANA VERMA REPORTED IN 227 CTR 388 WHEREIN IT WAS HELD THAT TH E EXECUTION OF A JOINT WARRANT OF AUTHORIZATION PRE-SUPPOSES THAT THE SEARCH HAS BEEN CONDUCTED AGAINST THE PERSONS NAMED IN THE WAR RANT IN THE STATUS OF AOP AND THEREFORE THE PERSON SEARCHED IS THE AOP OF THE PERSONS NAMED IN THE WARRANT AND NOT THE INDIVI DUALS MENTIONED IN THE WARRANT. THUS ACCORDING TO THE LEARNED COU NSEL FOR THE ASSESSEE THE SEARCH ITSELF IS INVALID AND VOID ABI NITO AND THEREFORE THE CONSEQUENTIAL ASSESSMENTS SHOULD BE KNOCKED DOW N. A COPY OF THE ORDER OF THE HONBLE HIGH COURT IS ALSO PLACED BEFORE US. 7. THE LEARNED DR ON THE OTHER HAND SUPPORTED T HE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE AND HIS WIFE LIVE IN THE SAME PREMISES AND THEREFOR E THE WARRANT OF AUTHORIZATION HAS MENTIONED THEIR NAMES IN THE S AME WARRANT FOR SEARCHING THE PREMISES AND IT DOES NOT MEAN THAT IT IS AN AOP OF THE ASSESSEE AND HIS WIFE WHO HAS BEEN SEARCHED. PAGE 4 OF 8 ITA NOS. 1156 TO 1159/BANG/2010 4 8. HAVING HEARD BOTH THE PARTIES ON THIS LEGAL ISS UE OF THE VALIDITY OF THE SEARCH WE FIND THAT THE ISSUE I S FAIRLY COVERED BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH C OURT IN THE CASE OF P J KUMAR (CITED SUPRA) WHEREIN AT PARAS 3 TO 9 IT HAS BEEN HELD AS UNDER:- 3. THE ASSESSEE SHRI P J KUMAR WAS A PROPRIETOR OF SAINIK SALES CORPORATION BELLARY ENGAGED IN THE TRADE OF EDIBLE OIL AND VANASPATI. THERE WAS A SEARCH AND SEIZURE ACTION ON 7.12.1995 AT THE RESIDENCE OF THE ASSESSEE. SUBSEQUENTLY ASSESSMENT WAS COMPLETED UNDER SECTION 158BC(C) OF THE ACT ON 31.1.1997. THE ASSESSEE PREFERRED AN APPEAL AGAINST THE SAID ORDER BEFORE THE TRIBUNAL. THE MATTER WAS REMANDED BACK TO THE TRIBUNAL TO REDO THE ASSESSMENT. THE ORDER OF ASSESSMENT WAS PASSED ON 17.3.2006. AGGRIEVED BY THE SAME THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL. 4. THE OTHER ASSESSEE DR. L GULSHAN KUMAR EVEN IN HIS CASE THERE WAS A SEARCH UNDER SECTION 132 IN THE CASE OF SAINIK GROUP OF CASES BELLARY ON 7.12.95. THE ORDER OF ASSESSMENT CAME TO BE MADE ON 29.8.1997. IN THE APPEAL PREFERRED AGAINST THE SAID ORDER BY THE ASSESSEE THE ORDER WAS SET ASIDE AND MATTER WAS REMANDED TO THE ASSESSING AUTHORITY WITH CERTAIN GUIDELINES. ASSESSEE SPECIFICALLY CONTENDED THAT THE SEARCH WARRANT WAS IN THE JOINT NAME OF SRI P J KUMAR AND HIS WIFE SMT. SATPHAL BEHL AND ALSO RELIED ON PANCHANAMA AFTER THE SEARCH AND CONTENDED THAT SUCH JOINT PAGE 5 OF 8 ITA NOS. 1156 TO 1159/BANG/2010 5 WARRANT CANNOT BE MADE TO MAKE INDIVIDUAL ASSESSMENT. THE ASSESSEE SRI P J KUMAR ALSO OBJECTED TO THE ASSESSMENT ON THE GROUND THAT THE CONDITION SPECIFIED UNDER SECTION 132(1)(A) AND (B) DID NOT EXIST. AS FAR AS THE CONDITION UNDER SECTION 132(1)(C) IS CONCERNED INDICATING THE REASONS TO BELIEVE THAT THE ASSESSEE WAS NOT IN POSSESSION OF ANY MONEY OR ASSET WHICH THE ASSESSEE HAS NOT DISCLOSED FOR THE PURPOSE OF INCOME TAX TO ENABLE THE AUTHORISING OFFICER TO ISSUE WARRANT AND CONSEQUENTLY THE BLOCK ASSESSMENT. THE ASSESSEE RELIED ON THE DECISION OF THE APEX COURT IN 260 ITR 80. THE TRIBUNAL RELYING ON THE JUDGEMENT OF ALLAHABAD HIGH COURT IN THE CASE OF VANDANA VERMA HELD THAT WARRANT ISSUED IN THE JOINT NAME OF SRI P J KUMAR AND HIS WIFE SMT. SATPHAL BEHL AND THE ASSESSMENT IS COMPLETED IN THE INDIVIDUAL NAME AND CAPACITY AND THEREFORE ASSESSMENT ORDERS ARE ILLEGAL AND THEREFORE IT SET ASIDE BOTH THE ORDERS PASSED IN FAVOUR OF THE SAID TWO ASSESSEES. AGGRIEVED BY THE SAME THE REVENUE IS BEFORE THIS COURT. 5. IN THE AFORESAID CASE OF VANDANA VERMA REPORTED IN ITR INCOME TAX APPEAL 21/2009 AFTER REFERRING TO SECTION 132 AND ALSO DEFINITION OF A PERSON AS DEFINED UNDER SECTION 2.31 OF THE INCOME TAX ACT AND AFTER REVIEWING THE ENTIRE CASE LAW ON THE POINT THE ALLAHABAD HIGH COURT HELD AS UNDER: IN VIEW OF THE ABOVE IN OUR OPINION THE WARRANT OF AUTHORIZATION MUST BE ISSUED PAGE 6 OF 8 ITA NOS. 1156 TO 1159/BANG/2010 6 INDIVIDUALLY BY THE DIRECTOR/COMMISSIONER AT THE TIME OF ISSUING THE SAME. IF THE SAME IS NOT ISSUED INDIVIDUALLY THEN ASSESSMENT CANNOT BE MADE IN AN INDIVIDUAL CAPACITY AS DONE BY THE ASSESSING OFFICER IN THE INSTANT CASE. THE WARRANT WAS ISSUED JOINTLY AS STATED HEREIN ABOVE SO THE ASSESSMENT WILL HAVE TO BE MADE COLLECTIVELY IN THE NAME OF BOTH THE PERSONS IN THE STATUS OF AOP/BOI. THUS THE TRIBUNAL HAS RIGHTLY HELD THAT ASSESSMENT COULD NOT BE FRAMED IN AN INDIVIDUAL CAPACITY BUT IT SHOULD BE FRAMED EITHER AS ASSOCIATION OF PERSONS OR AS BODY OF INDIVIDUAL. 6. IN THESE CASES IT IS NOT IN DISPUTE THAT THE AUTHORIZATION ISSUED BY THE COMPETENT AUTHORITY WAS IN THE NAME OF TWO PERSONS WHEREAS THE ASSESSMENT ORDER IS MADE IN THE NAME OF INDIVIDUALS. THEREFORE THE SAID JUDGEMENT APPLIES WITH FULL FORCE TO THE FACTS OF THIS CASE. 7. IT WAS CONTENDED THAT SUCH OBJECTION WAS NOT TAKEN WHEN ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL ON AN EARLIER OCCASION SUCH OBJECTION TAKEN FOR THE FIRST TIME IN THE APPEAL PREFERRED BEFORE THE TRIBUNAL AND THEREFORE THE TRIBUNAL WAS NOT JUSTIFIED IN ENTERTAINING THE SAID GROUND. PAGE 7 OF 8 ITA NOS. 1156 TO 1159/BANG/2010 7 8. WE DO NOT SEE ANY MERIT IN THIS CONTENTION. INITIATION OF PROCEEDINGS FOR BLOCK ASSESSMENT COMMENCES WITH A SEARCH UNDER SECTION 132 OF THE ACT. IT IS SETTLED LAW THAT THE SEARCH TO BE CONDUCTED SHOULD BE STRICTLY IN ACCORDANCE WITH LAW. IF AN AUTHORIZATION IS ISSUED IN THE NAME OF TWO PERSONS AND IF BLOCK ASSESSMENT ORDER TO BE PASSED IT SHOULD BE PASSED IN THE NAME OF TWO PERSONS. IF THE ORDER IS PASSED IN THE NAME OF AN INDIVIDUAL AND NOT IN RESPECT OF BOTH THE PERSONS MENTIONED IN THE AUTHORIZATION ON THE FACE OF IT THE PROCEEDINGS INITIATED AND THE ASSESSMENT ORDER PASSED IS ILLEGAL. NO FURTHER ENQUIRY REQUIRES TO BE DONE IN THIS ASPECT. 9. IN THAT VIEW OF THE MATTER EVEN IF SUCH OBJECTION IS NOT TAKEN ON THE EARLIER OCCASION THE ASSESSEE HAS A RIGHT TO CHALLENGE THE ORDER ON THAT GROUND BEFORE THE TRIBUNAL WHICH HE HAS DONE. WE DO NOT FIND ANY SUBSTANCE IN THIS CONTENTION ACCORDINGLY WE DO NOT SEE ANY MERIT IN THIS APPEAL. NO SUBSTANTIAL QUESTION OF LAW ARISEN FOR CONSIDERATION. 9. AS THE FACTS AND CIRCUMSTANCES OF THIS CASE ARE SIMILAR TO THE CASE CITED SUPRA RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA WE HOLD THAT THE A SSESSMENTS IN INDIVIDUAL HANDS ARE NOT PROPER AND WE SET ASIDE TH E ASSESSMENTS. AS WE HAVE DECIDED THE LEGAL ISSUE IN FAVOUR OF THE ASSESSEE WE DO NOT SEE ANY REASON TO GO INTO THE OTHER ISSUES RAISE D BY THE ASSESSEE ON MERITS. PAGE 8 OF 8 ITA NOS. 1156 TO 1159/BANG/2010 8 10. IN THE RESULT THE APPEALS FILED BY THE ASSESSE E ARE ALLOWED. THE ORDER PRONOUNCED ON TUESDAY THE 29 TH DAY OF MARCH 2011 AT BANGALORE. SD/- SD/- (DR. O K NARAYANAN) (P MADHAVI DE VI) VICE PRESIDENT JUDICIAL MEMBER COPY TO : 1) THE ASSESSEE (2) THE REVENUE (3) THE CIT(A) CONCERNED. (4) THE CIT CONCERNED. (5) THE DR (6) GUARD FILE. MSP/24.3. BY ORDER ASST. REGISTRAR ITAT BANGALORE.