The DCIT, Central Circle-2(2),, Ahmedabad v. Pravin Ratilal Share & Stock Brokers Ltd.,, Ahmedabad

ITA 2843/AHD/2008 | 2003-2004
Pronouncement Date: 18-08-2010 | Result: Allowed

Appeal Details

RSA Number 284320514 RSA 2008
Assessee PAN AAACP9124H
Bench Ahmedabad
Appeal Number ITA 2843/AHD/2008
Duration Of Justice 2 year(s) 10 day(s)
Appellant The DCIT, Central Circle-2(2),, Ahmedabad
Respondent Pravin Ratilal Share & Stock Brokers Ltd.,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 18-08-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted A
Tribunal Order Date 18-08-2010
Date Of Final Hearing 16-06-2010
Next Hearing Date 16-06-2010
Assessment Year 2003-2004
Appeal Filed On 08-08-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : AHMEDABA D (BEFORE HON'BLE SHRI G.D. AGRAWAL V.P.(AZ) & HON BLE SHRI T.K. SHARMA J.M. ) I.T.A. NOS. 2840 TO 2845 /AHD./2008 ASSESSMENT YEARS : 2000-2001 TO 2005-2006 DEPUTY COMMISSIONER OF INCOME TAX -VS.- PRAVIN R ATILAL SHARE & STOCK BROKERS LTD. CENTRAL CIRCLE-2(2) AHMEDABAD AHMEDABAD (PAN : AAACP 9124 H) (APPELLANT) (RESPONDENT) & C.O. NO. 225 TO 230/AHD/2008 (ARISING OUT OF I.T.A. NOS.2840 TO 2845 /AHD/2008 ) ASSESSMENT YEARS : 2000-2001 TO 2005-2006 PRAVIN RATILAL SHARE & STOCK BROKERS LTD. VS.- DEPUTY COMMISSIONER OF INCOME TAX AHMEDABAD CENTRAL CIRCLE-2(2) AHMED ABAD (CROSS OBJECTOR) (RESPONDENT) ASSESSEE BY : SHRI DEEPAK SONI DEPARTMENT BY : SHRI ANIL KUMAR D.R. O R D E R PER BENCH : THESE SIX APPEALS BY THE REVENUE AND SIX CROSS OBJ ECTIONS BY THE ASSESSEE ARE AGAINST THE COMMON ORDER DATED 30.05.2008 OF LEARNED COMMIS SIONER OF INCOME TAX(APPEALS)-III AHMEDABAD FOR THE ASSESSMENT YEARS 2000-01 TO 2005- 06. ALL THESE APPEALS AND CROSS OBJECTIONS ARE ARGUED BY COMMON LD. REPRESENTATIVE THEREFORE WE PROCEED TO DECIDE ALL THESE APPEALS AND CROSS OBJECTIONS BY THIS COMMON ORDER F OR THE SAKE OF CONVENIENCE. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S A PUBLIC LIMITED COMPANY ENGAGED AS A DEPOSITORY PARTICIPANT OF NATIONAL SECURITIES DEPOS ITORY LIMITED (IN SHORT NSDL). A SEARCH ACTION UNDER SECTION 132 OF THE INCOME TAX ACT 196 1 WAS CARRIED OUT IN THE GROUP CASES OF M/S. PRAVIN RATILAL SHAREDALAL ON 22.09.2005. A WARRANT OF AUTHORIZATION UNDER SECTION 132 WAS ISSUED IN THE NAME OF THE ASSESSEE. THE ASSESSING O FFICER ISSUED NOTICE UNDER SECTION 143(2) ON 09.03.2006 WHICH WAS SERVED ON THE ASSESSEE ON 09. 03.2006. IN RESPONSE TO THE SAID NOTICE THE 2 ITA NOS.2840-2845/AHD/2008 & CO NOS. 225-230/AHD/2008 ASSESSEE FILED THE RETURN UNDER SECTION 153A ON 04. 07.2006. THEREAFTER THE ASSESSING OFFICER FRAMED THE ASSESSMENT UNDER SECTION 153A READ WITH SECTION 143(3) ON 28.12.2007. THE YEAR- WISE INCOME DECLARED AND ASSESSED BY THE ASSESSEE I S AS UNDER :- ASSTT. YEAR RETURNED INCOME (RS.) ASSESSED INCOME ( RS.) 2000-01 19 65 313/- 32 03 010/- 2001-02 20 51 140/- 28 54 270/- 2002-03 12 88 412/- 2 46 95 131/- 2003-04 19 02 900/- 2 70 71 420/- 2004-05 36 97 020/- 7 86 38 918/- 2005-06 58 08 471/- 2 04 92 670/- 2006-07 1 56 44 000/- 4 37 47 422/- AGAINST THE ADDITIONS/ DISALLOWANCES MADE IN THE AS SESSMENT FRAMED UNDER SECTION 153A READ WITH SECTION 143(3) FOR THE ASSESSMENT YEARS 2000-0 1 TO 2005-06 THE ASSESSEE PREFERRED APPEALS BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEA LS). THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DECIDED THE APPEALS OF THE ASSE SSEE FOR ALL THESE ASSESSMENT YEARS BY COMMON ORDER DATED 30.05.2008 WHEREIN HE ALLOWED PA RTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APP EALS) THE REVENUE IS IN APPEALS AND THE ASSESSEE IS IN CROSS OBJECTIONS BEFORE THE TRIBUNAL . 3. THE YEAR-WISE GROUNDS RAISED BY THE REVENUE IN I TS APPEALS ARE AS UNDER :- A.Y. 2000-2001 (1) THE LEARNED CIT(A.) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE ADDITION OF RS.3 56 000/- ON ACCOUNT OF TRANSACTION IN THE NAME OF SMT. SWATI A. SHAH. (2) THE LD. CIT(A.) HAS ERRED IN LAW AND ON FACTS I N DELETING THE COMMISSION OF RS.4 195/- RECEIVED FROM M/S. HANUMAN PRASAD TRILOKCHAND. A.Y. 2001-2002 (1)THE LEARNED CIT(A.) HAS ERRED IN LAW AND ON FACT S IN DELETING THE ADDITION OF RS.1 45 000/- ON ACCOUNT OF TRANSACTION IN THE NAME OF SMT. SWATI A. SHAH. A.Y. 2002-2003 3 ITA NOS.2840-2845/AHD/2008 & CO NOS. 225-230/AHD/2008 (1)THE LEARNED CIT(A.) HAS ERRED IN LAW AND ON FACT S IN DELETING THE ADDITION OF RS.1 14 000/- ON ACCOUNT OF TRANSACTION IN THE NAME OF SMT. SWATI A. SHAH. (2) THE LEARNED CIT(A.) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE ADDITION ON ACCOUNT OF COMMISSION/ BROKERAGE AND IN VESTMENT IN CIRCULAR TRADING OF PENNY STOCK OF RS.2 22 86 867/-. (3) THE LEARNED CIT(A.) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE DISALLOWANCE OF INTEREST EXPENSES U/S. 14A OF THE A CT. A.Y. 2003-2004 (1)THE LEARNED CIT(A.) HAS ERRED IN LAW AND ON FACT S IN DELETING THE ADDITION OF RS.2 98 000/- ON ACCOUNT OF TRANSACTION IN THE NAME OF SMT. SWATI A. SHAH. (2) THE LEARNED CIT(A.) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE ADDITION ON ACCOUNT OF COMMISSION/ BROKERAGE AND IN VESTMENT IN CIRCULAR TRADING OF PENNY STOCK OF RS.2 36 53 334/-. (3) THE LEARNED CIT(A.) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE DISALLOWANCE OF INTEREST EXPENSES U/S. 14A OF THE A CT. (4) THE LD. CIT(A.) HAS ERRED IN LAW AND ON FACTS I N DELETING THE ADDITION OF RS.70 500/- ON ACCOUNT OF TRANSACTION IN THE NAM E OF SANJAY DAVE. (5) THE LD. CIT(A.) HAS ERRED IN LAW AND ON FACTS I N DELETING THE ADDITION OF RS.6 89 500/- ON ACCOUNT OF TRANSACTION IN THE N AME OF SHRI PARESH CHAUHAN. A.Y. 2004-2005 (1)THE LEARNED CIT(A.) HAS ERRED IN LAW AND ON FACT S IN DELETING THE ADDITION OF RS.65 000/- ON ACCOUNT OF TRANSACTION I N THE NAME OF SMT. SWATI A. SHAH. (2) THE LEARNED CIT(A.) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE ADDITION ON ACCOUNT OF COMMISSION/ BROKERAGE AND IN VESTMENT IN CIRCULAR TRADING OF PENNY STOCK OF RS.7 12 93 682/-. (3) THE LEARNED CIT(A.) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE DISALLOWANCE OF INTEREST EXPENSES U/S. 14A OF THE A CT. (4) THE LD. CIT(A.) HAS ERRED IN LAW AND ON FACTS I N DELETING THE ADDITION OF RS.3 64 950/- ON ACCOUNT OF TRANSACTION IN THE N AME OF SANJAY DAVE. 4 ITA NOS.2840-2845/AHD/2008 & CO NOS. 225-230/AHD/2008 (5) THE LD. CIT(A.) HAS ERRED IN LAW AND ON FACTS I N DELETING THE ADDITION OF RS.24 15 000/- ON ACCOUNT OF TRANSACTION IN THE NAME OF SHRI PARESH CHAUHAN. A.Y. 2005-2006 (1)THE LEARNED CIT(A.) HAS ERRED IN LAW AND ON FACT S IN DELETING THE ADDITION OF RS.29 000/- ON ACCOUNT OF TRANSACTION I N THE NAME OF SMT. SWATI A. SHAH. (2) THE LEARNED CIT(A.) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE ADDITION ON ACCOUNT OF COMMISSION/ BROKERAGE AND IN VESTMENT IN CIRCULAR TRADING OF PENNY STOCK OF RS.99 54 530/-. (3) THE LEARNED CIT(A.) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE DISALLOWANCE OF INTEREST EXPENSES U/S. 14A OF THE A CT. (4) THE LD. CIT(A.) HAS ERRED IN LAW AND ON FACTS I N DELETING THE ADDITION OF RS.6 96 800/- ON ACCOUNT OF TRANSACTION IN THE N AME OF SANJAY DAVE. (5) THE LD. CIT(A.) HAS ERRED IN LAW AND ON FACTS I N DELETING THE ADDITION OF RS.5 60 000/- ON ACCOUNT OF TRANSACTION IN THE N AME OF SHRI PARESH CHAUHAN. 3.1. IN ALL THE CROSS OBJECTIONS GROUNDS NO. 1 TO 3 FOR THE ASSESSMENT YEARS 2000-01 TO 2002- 03 ARE AS UNDER :_ (1) THE ORDER PASSED BY THE ASSESSING OFFICER WAS B AD IN LAW. THE ORDER WAS CONTRARY TO THE PROVISIONS OF LAW AND THE FACTS OF YOUR ASSESSEES CASE. THE ORDER PASSED BY THE ASSESSING OFFICER OUG HT TO HAVE BEEN CANCELLED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). IT IS SUBMITTED THAT IT BE SO HELD NOW. (2) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OUGHT TO HAVE RESPECTED THE PROVISIONS OF LAW AND OUGHT TO HAVE Q UASHED THE ASSESSMENT PROCEEDINGS ON REALIZING THAT NOTICE U/S . 143(2) WAS TIME BARRED AND BAD IN LAW. THE ORDER OF ASSESSMENT FRAM ED BY THE ASSESSING OFFICER IS BAD IN LAW AS IT IS BASED ON THE NOTICE WHICH IS INVALID. THE ASSESSEE SUBMITS THAT THE ORDER FRAMED BY THE ASSES SING OFFICER BE QUASHED. (3) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN UPHOLDING DISALLOWANCE OF DEPRECIATION IN RESPECT O F STOCK EXCHANGE CARD. THE DISALLOWANCE HAS BEEN MADE IN DISREGARD T O THE SUBMISSIONS AND PROVISIONS OF LAW. 5 ITA NOS.2840-2845/AHD/2008 & CO NOS. 225-230/AHD/2008 (3.1) THE ASSESSEE SUBMITS THAT STOCK EXCHANGE CARD WAS A TANGIBLE ASSET OWNED BY THE ASSESSEE AND THE TANGIBLE ASSET WAS USED FOR THE PURPOSE OF THE BUSINESS AND ACCORDINGLY ENTITLED TO DEPRECIATION. THE ASSESSEE SUBMITS THAT THE ASSESSING OFFICER BE DIRE CTED TO ALLOW DEPRECIATION. APART FROM ABOVE IN THE ASSESSMENT YEARS 2002-03 T O 2005-06 GROUND NO. 4 OF CROSS OBJECTIONS IS AGAINST INVOKING PROVISIONS CONTAINED IN SECTION 14A AND MAKING DISALLOWANCE. GROUND NO. 5 FOR THE ASSESSMENT YEARS 2002-03 TO 20 05-06 IS AGAINST UPHOLDING THAT UNINTERRUPTED POWER SUPPLY WAS NOT ENTITLED DEPRECI ATION @ 100% AND THEREBY NOT ALLOWING THE DEPRECIATION ON UPS @ 60%. GROUND NO. 6 OF CROSS OB JECTION FOR THE ASSESSMENT YEAR 2002-03 IS AGAINST CHARGING OF INTEREST AND GROUNDS NO. 5 & 6 OF CROSS OBJECTIONS FOR THE ASSESSMENT YEAR 2002-03 IS UPHOLDING THE ORDER OF LEARNED COMM ISSIONER OF INCOME TAX(APPEALS) AMOUNTING TO RS.27 45 700/- WHICH WAS ASSESSABLE UN DER THE HEAD PROFIT & GAINS OF BUSINESS AND UNDER THE HEAD CAPITAL GAIN. GROUND NO. 7 FOR THE ASSESSMENT YEAR 2005-06 IS NON- ALLOWANCE REBATE UNDER SECTION 88E AND CHARGING OF INTEREST. 4. AT THE TIME OF HEARING BEFORE US ON BEHALF OF A SSESSEE SHRI DEEPAK SONI LD. COUNSEL APPEARED AND CONTENDED THAT AS PER PROVISIONS CONTA INED IN SECTION 143(2) THE ASSESSING OFFICER WAS REQUIRED TO SERVE NOTICE ON THE ASSESSEE UNDER SECTION 143(2) WITHIN A PERIOD OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURNS FOR ALL THESE ASSESSMENT YEARS WERE FILED. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE RETURNS OF INCOME FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION WERE FILED ON 4.7.2006. AS PER THE PR OVISIONS CONTAINED IN SECTION 143(2) THE ASSESSING OFFICER WAS REQUIRED TO SERVE THE NOTICE ON OR BEFORE 31.07.2007. FOR ALL THESE ASSESSMENT YEARS THE ASSESSING OFFICER ISSUED NOTI CES UNDER SECTION 143(2) AND 142(1) ON 14.11.2007. THE LD. COUNSEL OF THE ASSESSEE SUBMITT ED THAT BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) A SPECIFIC GROUND WAS RAISED. T HE RELEVANT GROUND IS GROUND NO.2 WHICH READS AS UNDER :- 4.1. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN PARA 6 THOU GH NARRATED THE CONTENTION OF THE ASSESSEE CHALLENGING VALIDITY OF NOTICES SERVED UNDER SECTIO N 143(2) BUT REFUSED TO ACCEPT THE SAME IN 6 ITA NOS.2840-2845/AHD/2008 & CO NOS. 225-230/AHD/2008 PARA 6.1. IN SUPPORT OF THE CONTENTION THAT ON ACCO UNT OF NON-SERVICE OF NOTICES UNDER SECTION 143(2) WITHIN A PERIOD OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURNS WERE FILED THE LD. COUNSEL OF THE ASSESSEE RELIED ON THE FOLLO WING JUDGMENTS :- (I) CIT VS.- PAWAN GUPTA [2009] 318 ITR 322 (DEL HI); (II) CIT VS.- VISHNU AND CO. P. LTD. [2009] 319 ITR 151 (DELHI); (III) ACIT & ANOTHER VS.- HOTEL BLUE MOON [2010] 321 ITR 362 (SC); (IV)CIT VS.- SAHARA INDIA SAVINGS & INVESTMENT COR PN. LTD. [2010] 321 ITR 371 (SC); (V) CIT VS.- AVI-OIL INDIA P. LTD. [2010] 323 IT R 242 (P&H). 4.2. THE LD. COUNSEL OF THE ASSESSEE TOOK US THROUG H THE RATIO OF ALL THE AFORESAID JUDGMENTS INCLUDING THE LATEST JUDGMENT OF THE HON'BLE SUPREM E COURT IN THE CASE OF ACIT & ANOTHER VS.- HOTEL BLUE MOON [2010] 321 ITR 362 (SC) WHEREIN TH E HEAD-NOTE OF WHICH READS AS UNDER :- IF THE ASSESSING OFFICER FOR ANY REASON REPUDIAT ES THE RETURN FILED BY AN ASSESSEE IN RESPONSE TO NOTICE UNDER SE CTION 158BC(A) OF THE INCOME TAX ACT 1961 RELATING TO A BLOCK ASSESSMENT THE ASSESSING OFFICER MUST NECESSARILY ISSUE NOTICE UNDER SECTION 143(2) OF THE ACT WITHIN THE TIME PRE SCRIBED IN THE PROVISO TO SECTION 143(2). 5. TO SUM UP THE LD. COUNSEL OF THE ASSESSEE PLEA DED THAT SINCE NO NOTICE UNDER SECTION 143(2) WAS ISSUED TO THE ASSESSEE IN RESPECT OF ALL THE ASSESSMENT YEARS UNDER APPEALS WITHIN THE LIMITATION PERIOD PROVIDED IN PROVISO TO SECTION 14 3(2) THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER FOR ALL THE ASSESSMENT YEARS BE QUASHED. 6. SHRI ANIL KUMAR LD. D.R. APPEARING ON BEHALF OF THE REVENUE VEHEMENTLY OBJECTED TO THE AFORESAID SUBMISSIONS MADE BY THE LD. COUNSEL OF TH E ASSESSEE. HE SUBMITTED THAT VARIOUS JUDGMENTS RELIED BY THE LD. COUNSEL OF THE ASSESSEE ARE PERTAINED TO BLOCK ASSESSMENT MADE UNDER CHAPTER XIV-B OF THE INCOME TAX ACT 1961. IN THE C ASE OF ASSESSEE BEFORE US THE ASSESSMENT IS FRAMED UNDER NEW SCHEME PROVIDED IN SECTION 153A TO SECTION 153D UNDER CHAPTER XIV OF THE INCOME TAX ACT 1961. THE LD. D.R. ACCORDINGLY CONT ENDED THAT VARIOUS DECISIONS RELIED BY THE LD. COUNSEL OF THE ASSESSEE ARE NOT APPLICABLE UNDE R NEW SCHEME OF ASSESSMENTS WHICH THE 7 ITA NOS.2840-2845/AHD/2008 & CO NOS. 225-230/AHD/2008 ASSESSING OFFICER IS REQUIRED TO MAKE IN CASE OF SE ARCH OR REQUISITION UNDER CHAPTER XIV OF THE INCOME TAX ACT 1961. 7. WITHOUT PREJUDICE TO ABOVE THE LD. D.R. SUBMITT ED THAT AS PER PROVISIONS OF SECTION 143(2) OF THE ACT NOTICE WAS ISSUED FOR AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN CASE THE ASSESSING OFFICER WANTS TO SCRUTINIZE THE RETURN FILED UNDER SECTION 139 OR 143(2) FOR PASSING ORDER UNDER SECTION 143(3) THOUGH THE PROV ISIONS OF SECTION 143(2) WERE AMENDED WITH EFFECT FROM 1.4.1989 AND 1.6.2002 BUT ONLY THE CIR CUMSTANCES FOR ISSUE OF NOTICE WERE CHANGED. ONLY NAME OF CLAUSE (II) TO SECTION 143(2) HAS BEEN GIVEN W.E.F. 1.6.02 TO SECTION 143(2) AS WAS AVAILABLE W.E.F. 1.4.1989. CLAUSE (II) OF SECTION 1 43(2) INSERTED W.E.F. 1.6.2002 IS SAME AS SECTION 143(2) AS WAS AVAILABLE W.E.F. 1.4.1989. THERE IS N O CHANGE IN SUBSTANCE FROM PRE-1989 THE NOTICE WAS TO BE ISSUED FOR AFFORDING AN OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE IF THE ASSESSING OFFICER WANTS TO SCRUTINIZE THE RETURN. T HUS THREE IS NO MATERIAL CHANGE IN THE SUBSTANCE OF THE PROVISIONS IN PRE-1989 AND POST- 2 002. 8. CONTINUING HIS ARGUMENT THE LD. D.R. POINTED OU T THAT PROVISIONS OF SECTION 143(2) ARE MACHINERY PROVISIONS AND PART OF THE PROCEDURAL LAW . IT IS ALSO AN WELL SETTLED POSITION THAT WHILE CHANGING PROVISIONS ARE REQUIRED TO BE CONSTRUED ST RICTLY MACHINERY SECTION ARE NOT GENERALLY SUBJECT TO RIGOROUS CONSTRUCTION. THE COURSE ARE EX PECTED TO CONSTRUE MACHINERY SECTION IN SUCH A MANNER DATE OF CHARGE TO TAX IS NOT DEFEATED. IT WA S FURTHER SUBMITTED THAT NON-COMPLIANCE WITH PROCEDURAL LAW IS MERELY IN IRREGULARITY CAPABLE OF BEING RECTIFIED UNLIKE THE JURISDICTION LAPSE. FOR THIS RELIANCE WAS PLACED ON THE CASES REPORTED IN 79 ITR 505 (SC) 219 ITR 737 (SC). SIMILAR VIEW WAS ALSO TAKEN BY THE HON'BLE ALLAHABA D HIGH COURT IN THE CASE OF [2002] 469 ITR 473 (ALLD.). 9. THE LD. D.R. FURTHER SUBMITTED THAT THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS.- SHYAM PRAKASH GUPTA [165 ITR 501] HELD THAT A SSESSMENT COMPLETED WITHOUT SERVICE OF NOTICE UNDER SECTION 143(2) IS NOT VOID-AB-INITIO A ND IS NOT LIABLE TO BE ANNULLED. IN THIS DECISION THE HON'BLE RAJASTHAN HIGH COURT HAS FOLLOWED THE D ECISION OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF SANT BABA -VS.- CIT [90 ITR 1 97 (ALLD.). THE HON'BLE KERALA HIGH COURT IN THE CASE OF [237 ITR 443] HELD REFERRING TO THE HO N'BLE SUPREME COURT JUDGMENT IN 79 ITR 505 8 ITA NOS.2840-2845/AHD/2008 & CO NOS. 225-230/AHD/2008 (SC) AND 40 ITR 298 (SC) THAT WANT OF NOTICE WOULD NOT MAKE THE ASSESSMENT BAD IN LAW. THE ASSESSMENT PROCEEDING DOES NOT CEASE TO BE A PROCEE DING UNDER THE ACT MERELY BY REASON OF WANT OF NOTICE. 10. THE LD. D.R. ALSO RELIED ON THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF [294 ITR 233] (MAD.) WHEREIN THE HON'BLE MADRAS HI GH COURT HAS HELD THAT ASSESSEE HAD CONTINUOUSLY APPEARED AND PARTICIPATED IN ALL THE A SSESSMENT PROCEEDINGS. IT IS NOT THE CASE OF THE ASSESSEE THAT NO PROPER OPPORTUNITY WAS GIVEN IN HI S CASE. THE ONLY CONTENTION WAS THAT THERE WAS NO NOTICE UNDER SECTION 143(2) BEFORE COMPLETED THE RE-ASSESSMENT. TAKING INTO CONSIDERATION THE ABOVE FACTORS IT WAS HELD THAT ONLY IRREGULARITIES ARE COMMITTED BY ASSESSING OFFICER WHILE COMPUTING RE-ASSESSMENT PROCEEDINGS. THE IRREGULARI TY FOR WANT OF SAME PRESCRIBED RELATES OR MODE OF PROCEEDINGS NULLITY IS OR IN FACT HAVING FO R SUPPORT VALIDITY. IN THIS CASE THE SEARCH WAS CONDUCTED. THE MATERIAL WAS SEIZED WHICH INDICATES THAT THE ASSESSEE HAS CONCEALED INCOME. THE VALID NOTICE FOR FILING THE RETURN OF INCOME WAS IS SUED. OPPORTUNITY OF BEING HEARD WAS ALSO PROVIDED. THE ASSESSMENTS WERE FRAMED WITHIN THE LI MITATION PROVIDED THEREFORE THE PLEA OF THE ASSESSEE TO QUASH THE ASSESSMENT BE REJECTED. 11. IN REPLY THE LD. COUNSEL OF THE ASSESSEE SUBMI TTED THAT THE ISSUE OF NOTICE UNDER SECTION 143(2) WITHIN PRESCRIBED TIME IS MANDATORY. THIS HA S BEEN HELD RECENTLY BY THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF ACIT VS.- HOT EL BLUE MOON [321 ITR 362] (SC). THE LD. COUNSEL OF THE ASSESSEE FURTHER EXPLAINED THAT THE VIEW TAKEN BY THE HON'BLE SUPREME COURT IN THE CASE OF HOTEL BLUE MOON (SUPRA) IS ON INTERPRET ATION OF CLAUSE (B) OF SECTION 158BC WHICH PRESCRIBES PROCEDURE FOR BLOCK ASSESSMENT UNDER CHA PTER XIV-B. THE SAID CLAUSE READS AS UNDER :- THE ASSESSING OFFICER SHALL PROCEED TO DETERMINE T HE UNDISCLOSED INCOME OF THE BLOCK PERIOD IN THE MANNER LAID DOWN IN SECTION 158BB AND THE PROVISIONS OF SECTION 142 SUB-SECTIONS (2) AND (3) OF SECTION 143 SUBSTITUTED FOR AND SECTION 144 BY THE FINANCE ACT 2002 WITH RETROSPECTIVE EFFECT FROM 1.7.1995 [SECTION 144 AND SECTION 145] SHALL SO FAR AS MAY BE APPLY. 9 ITA NOS.2840-2845/AHD/2008 & CO NOS. 225-230/AHD/2008 12. UNDER NEW PROCEDURE AS PER CLAUSE (A) OF SECTI ON 153A ALSO ASSESSING OFFICER WAS REQUIRED TO ISSUE NOTICE UNDER SECTION 143(2) WITHI N PRESCRIBED TIME OF 12 MONTHS. THE SAID CLAUSE READS AS UNDER :- (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO F URNISH WITHIN SUCH PERIOD AS MAY BE SPECIFIED IN THE NOTICE THE RETU RN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B) IN THE PRESCRIBED FORM A ND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PART ICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL SO FAR AS MAY BE APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN R EQUIRED TO BE FURNISHED UNDER SECTION 139. 13. THE LD. COUNSEL OF THE ASSESSEE BY REFERRING TO THE BOTH CLAUSES POINTED OUT THAT UNDER CLAUSE (A) TO SECTION 153A ALSO IT IS CLEARLY MENT IONED THE PROVISIONS OF THIS ACT SHALL SO FAR AS MAY BE APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139. THE LD. D.R. POINTED OUT THAT IN THIS CASE TH E ASSESSING OFFICER HAS ALSO ISSUED NOTICE UNDER SECTION 143(2). THIS WAS ISSUED BUT NOT WITHIN TIME . THEREFORE EVEN THE ASSESSING OFFICER IS ADMITTING THAT NOTICE UNDER SECTION 143(2) WAS REQU IRED TO BE ISSUED. ONCE IT WAS NOT ISSUED WITHIN TIME THE DECISIONS WHICH WERE RENDERED UND ER CHAPTER XIV-A OF THE INCOME TAX ACT WILL BE APPLICABLE UNDER NEW SCHEME OF ASSESSMENT I N CASE OF SEARCH OR REQUISITION (SECTION 153A TO 153D). HE ACCORDINGLY CONTENDED THAT ASSESSMENT FRAMED FOR ALL THESE ASSESSMENT YEARS UNDER SECTION 153A READ WITH SECTION 143(3) BE QUASHED. 14. AFTER HEARING BOTH THE SIDES WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT BEFORE THE LEAR NED COMMISSIONER OF INCOME TAX(APPEALS) IN RESPECT OF ALL THE ASSESSMENT YEARS THE ASSESSEE R AISED GROUND NO. 2 WHICH READS AS UNDER :- 2. THE ASSESSING OFFICER OUGHT TO HAVE RESPECTED T HE PROVISIONS OF LAW AND OUGHT TO HAVE DROPPED THE ASSESSMENT PROCEE DINGS ON REALIZING THAT NOTICE U/S. 143(2) WAS TIME BARRED AND BAD IN LAW. THE ORDER OF ASSESSMENT FRAMED BY THE ASSESSING OFFICER IS BAD I N LAW AS IT IS BASED ON THE NOTICE WHICH IS INVALID. THE APPELLANT SUBMI TS THAT THE ORDER FRAMED BY THE ASSESSING OFFICER BE QUASHED. 10 ITA NOS.2840-2845/AHD/2008 & CO NOS. 225-230/AHD/2008 IN PARA 6 OF THE IMPUGNED ORDER THE LEARNED COMMIS SIONER OF INCOME TAX(APPEALS) MENTIONED THE CONTENTION (SUPRA) OF THE ASSESSEE WITH REGARD TO PLEA RAISED IN GROUND NO. 2. THE SAID PARA IS RE-PRODUCED HEREUNDER :- 6. IT WAS AVERTED THAT THERE WAS NO ACTION U/S. 13 2 BUT IT WAS U/S. 133A AND SO THE ORDERS U/S. 153A WERE BAD IN L AW PARTICULARLY WHEN THE BREAK-UP / DETAILS OF THE DEMAND WERE ALSO NOT PROVIDED AND THE TAX WAS NOT DETERMINED. REFERENCE WAS MADE TO THE DECISIONS OF SUPREME COURT IN CASE OF K.K. RAY VS.- CIT 191 ITR 635 ETC. IT WAS ARGUED THAT THE JOINT CIT SHOULD HAVE PROVIDED OPPORTUNITY TO THE APPELLANT BEFORE APPROVING THE ORDER. FURTHER THE APPELLANT WAS EITHER NOT PROVIDED THE COPIES OF THE SEIZED DOCUME NTS/ RECORDED STATEMENTS OR WAS GIVEN THESE VERY LATE. THE NOTIC E(S) U/S. 143(3) WERE ALSO NOT SERVED WITHIN THE SPECIFIED PERIOD OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN WAS FURNIS HED. REFERENCE IN THIS REGARD WAS MADE TO THE DECISIONS REPORTED IN 2 89 ITR 28 111 TTJ 742 287 ITR 360 (GUJ.) ETC. IT WAS ALSO SUBMIT TED THAT ASSESSMENTS WERE FRAMED AFTER A VERY BRIEF PERIOD OF HEARING IN VIOLATION OF NATURAL JUSTICE. AS SUCH THE ASSESSME NTS WERE AB INITIO VOID ON LEGAL GROUNDS ALONE. NOW LET US EXAMINE HOW THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DEALT WITH THE PLEA RAISED BY THE ASSESSEE IN GROUND NO. 2 AND CONTENTION IN THIS REGARD MENTIONED IN THE AFORESAID PARA. THE ENTIRE DECISION OF LEARNED COMM ISSIONER OF INCOME TAX(APPEALS) IS CONTAINED IN PARA 6.1 WHICH IS AS UNDER :- 6.1. THE CONTENTIONS AND THE ARGUMENTS ON THESE LE GAL ISSUES WERE CAREFULLY CONSIDERED. IT IS SEEN THAT THE APPELLANT HAD PROCEEDED ON WRONG PREMISES. THUS IT HAD PRESUMED ITS OWN CASE TO BE OF A SURVEY WHEREAS IT WAS ASCERTAINED FROM THE DOCUMEN TARY EVIDENCE THAT A SEARCH HAD BEEN CONDUCTED AT THE BUSINESS PR EMISES OF THE APPELLANT AND RESIDENTIAL PREMISES OF ITS DIRECTORS ON 22 ND AND 23 RD OF SEPTEMBER 2005 IN WHICH COMPUTER HARD DISK LOO SE PAPERS FLOPPIES ETC. WERE SEIZED AS PER ANNEXURE A ANNEX URE O AND ANNEXURE BFS. THE STATEMENT OF SHRI JIGAN SHAREDALA L WAS ALSO RECORDED ON 23.9.2005 AND THAT OF SHRI ATUL PRAVIN ON 22.09.05 (AS PER THE RELEVANT PANCHANAMAS). THUS THIS BEING A S EARCH CASE THERE WAS NO INFIRMITY IN THE ACTION OF THE A.O. IN INVOK ING THE PROVISIONS OF SECTION 153A. FURTHER THE APPELLANT HAS NOT CIT ED SPECIFIC INSTANCES OF ANY OPPORTUNITY HAVING BEEN DENIED. NO ADDITIONAL EVIDENCE HAS BEEN FILED. IN FACT NO CAUSE OF ACTIO N HAS BEEN SPECIFICALLY BROUGHT ON RECORD IN SUPPORT OF THE CO NTENTION THAT PRINCIPLES OF NATURAL JUSTICE WERE NOT FOLLOWED. TH E HEARING BY THE 11 ITA NOS.2840-2845/AHD/2008 & CO NOS. 225-230/AHD/2008 JCIT BEFORE GRANTING APPROVAL IS NOT MANDATORY. TH US THE RELATED GROUNDS OF APPEAL CHALLENGING THE VALIDITY OF THE A SSESSMENT ORDERS ARE REJECTED. 15. FROM THE PERUSAL OF THE DECISION OF LEARNED COM MISSIONER OF INCOME TAX(APPEALS) (SUPRA) IT CAN BE SEEN THAT THOUGH THE LEARNED COM MISSIONER OF INCOME TAX(APPEALS) HAS DEALT WITH THE OTHER CONTENTIONS OF THE ASSESSEE BUT THE CONTENTION OF THE ASSESSEE CHALLENGING THE VALIDITY OF ASSESSMENT ON ACCOUNT OF NON-ISSUANCE O F NOTICE UNDER SECTION 143(2) OF THE ACT WITHIN PRESCRIBED TIME WAS NOT ADJUDICATED. THUS TH E ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THIS REGARD IS CRYPTIC. AS PER PROV ISIONS CONTAINED IN SUB-SECTION 6 OF SECTION 250 THE ORDER OF LEARNED COMMISSIONER OF INCOME TA X(APPEALS) SHALL BE IN WRITING AND SHALL STATE THE POINT OF DETERMINATION DECISION THEREON AND REASONS FOR THE DECISIONS. SINCE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS NOT ADJUDICATED THE GROUND NO. 2 THE IMPUGNED ORDER OF LEARNED COMMISSIONER OF INCOME TA X(APPEALS) IS SET ASIDE AND HE IS DIRECTED TO FIRST ADJUDICATE THE GROUND NO. 2 WHEREBY THE AS SESSEE CONTENDED THAT ON ACCOUNT OF NON- ISSUANCE OF NOTICE UNDER SECTION 143(2) WITHIN THE PRESCRIBED TIME THE ASSESSMENT FRAMED BE QUASHED. THEREAFTER IF NECESSARY THE LEARNED COMM ISSIONER OF INCOME TAX(APPEALS) WILL DECIDE THE REMAINING GROUNDS OF APPEALS AFRESH IN A CCORDANCE WITH LAW AFTER GIVING OPPORTUNITY OF BEING HEARD TO BOTH THE SIDES. 16. IN THE RESULT FOR STATISTICAL PURPOSES THE AP PEALS OF THE REVENUE AS WELL AS THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE TREATED AS ALL OWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 18.08.20 10 SD/- SD/- (G.D. AGRAWAL) (T.K. SHARMA ) VICE-PRESIDENT (AZ) JUDICIAL MEMBER DATED : 18 / 08 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGI STRAR ITAT AHMEDABAD LAHA/SR.P.S.