Sri. RAMESH N. PARDIWALA, MUMBAI v. DCIT Rg. - 24(1), MUMBAI

ITA 2970/MUM/2007 | 2002-2003
Pronouncement Date: 09-02-2010 | Result: Dismissed

Appeal Details

RSA Number 297019914 RSA 2007
Assessee PAN AABPP3977A
Bench Mumbai
Appeal Number ITA 2970/MUM/2007
Duration Of Justice 2 year(s) 9 month(s) 22 day(s)
Appellant Sri. RAMESH N. PARDIWALA, MUMBAI
Respondent DCIT Rg. - 24(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-02-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 09-02-2010
Date Of Final Hearing 06-01-2010
Next Hearing Date 06-01-2010
Assessment Year 2002-2003
Appeal Filed On 17-04-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI BEFORE SHRI R V EASWAR SENIOR VICE PRESIDENT AND SHRI P M JAGTAP ACCOUNTANT MEMBER I T A NO: 2970/MUM/2007 (ASSESSMENT YEAR: 2002-03) SHRI RAMESH N PARDIWALA MUMBAI APPELLANT (PAN: AABPP3977A) VS DEPUTY COMMISSIONER OF INCOME TAX 24(1) MUMBAI RESPONDENT APPELLANT BY: SHRI PRADEEP KAPASI RESPONDENT BY: SHRI ARUN C BHARAT O R D E R R V EASWAR SENIOR VICE PRESIDENT: THIS IS AN APPEAL BY THE ASSESSEE AND IT RELATES T O THE ASSESSMENT YEAR 2002-03. THE ASSESSEE IS AN INDIVIDUAL. THE APPEA L ARISES OUT OF THE REASSESSMENT ORDER MADE UNDER SECTION 143(3) READ W ITH SECTION 147 OF THE INCOME TAX ACT 1961 ON 30.12.2005. 2. THE GROUNDS TAKEN BEFORE US ARE 7 IN NUMBER. TH E ISSUE HOWEVER IS ONE VIZ. WHETHER THE ASSESSING OFFICER HAD THE JURISDIC TION TO REOPEN THE ASSESSMENT UNDER SECTION 147 OF THE ACT. 3. THERE WAS A SEARCH UNDER SECTION 132 OF THE ACT IN THE GROUP CASES OF A COMPANY BY NAME M/S COMPUTER GRAPHICS P LTD. AT CHE NNAI. THE SEARCH TOOK PLACE ON 28.11.2001. THE ASSESSEE WAS ALSO COVERED IN THE SEARCH. THE SEARCH CONCLUDED ON 20.03.2002. IN THE COURSE OF THE SEAR CH A PANCHNAMA WAS PREPARED ACCORDING TO WHICH JEWELLERY VALUED AT RS .8 91 895/- WAS FOUND AND CASH OF RS.5 50 000/- WAS ALSO FOUND. THE ENTIRE J EWELLERY WAS SEIZED AND OUT OF THE CASH FOUND A SUM OF RS.1 50 000/- WAS SEIZED. THE PANCHNAMA IS DATED 03.01.2002. ON 11.10.2002 THE ASSESSEE FILED A RET URN OF INCOME DECLARING TOTAL INCOME OF RS.2 81 04 580/-. A COPY OF THE RETURN I S AT PAGES 54 TO 56 OF THE 2 PAPER BOOK AND IT IS SEEN THEREFROM THAT THE ASSESS EE DERIVED INCOME OF RS.24 00 000/- FROM SALARY SOME SMALL INCOME FROM PROPERTY INCOME OF RS.1 29 00 000/- FROM BUSINESS CAPITAL GAINS OF RS .19 72 000/- AND DIVIDEND INCOME OF RS.2 31 00 000/-. THE RETURN WAS PROCESS ED UNDER SECTION 143(1) ON 28.05.2003. IT WOULD APPEAR THAT THOUGH THERE WAS A SEARCH OF THE ASSESSEE UNDER SECTION 132 OF THE ACT NO PROCEEDINGS WERE I NITIATED TO ASSESS HIM UNDER SECTION 158BC AND NO NOTICE WAS ISSUED TO HIM UNDER THIS SECTION. HOWEVER ON 29.04.2004 A NOTICE UNDER SECTION 158BD OF THE ACT WAS ISSUED. IT MAY BE MENTIONED HERE THAT SECTION 158BD APPLIES TO A PERS ON WHO HAS NOT BEEN SEARCHED BUT MATERIALS CONNECTING HIM TO UNDISCLOSE D INCOME FOUND DURING THE SEARCH CONDUCTED ON ANY OTHER PERSON HAS BEEN FOUND AND THE ASSESSING OFFICER WHO ASSESSES THE SEARCHED PERSON IS SATISFIED THAT THE UNDISCLOSED INCOME FOUND DURING THE SEARCH BELONGS TO ANY OTHER PERSON . APPARENTLY THE NOTICE UNDER SECTION 158BD WAS ISSUED TO THE ASSESSEE ON T HE FOOTING THAT THE SEARCH MADE UNDER SECTION 132 DISCLOSED MATERIAL SHOWING T HAT THE UNDISCLOSED INCOME BELONGS TO THE ASSESSEE. AN ASSESSMENT ORDER UNDER SECTION 158BD READ WITH SECTION 158BC WAS PASSED ON 13.04.2006 A COPY OF W HICH IS AT PAGES 42 TO 47 OF THE PAPER BOOK AND IN THIS ASSESSMENT ORDER THE CASH OF RS.1 50 000/- AND THE JEWELLERY OF RS.8 91 895/- AGGREGATING TO RS.1 0 41 895/- WAS ASSESSED IN THE ASSESSEES HANDS. 4. ON 13.10.2005 THE ASSESSING OFFICER ISSUED NOTIC E UNDER SECTION 148 OF THE ACT TO THE ASSESSEE CALLING UPON HIM TO FILE TH E RETURN OF INCOME. THE ASSESSEE DID NOT FILE A RETURN IN RESPONSE TO THE N OTICE BUT SUBMITTED THAT THE RETURN FILED EARLIER ON 11.10.2002 MAY BE TREATED A S A RETURN IN RESPONSE TO THE NOTICE. THE ASSESSING OFFICER THEREAFTER ISSUED NO TICE UNDER SECTION 143(2) AND 3 AFTER MAKING THE NECESSARY ENQUIRY COMPLETED THE RE ASSESSMENT BY ORDER DATED 30.12.2005 IN WHICH HE DETERMINED THE TOTAL I NCOME AT RS.2 91 46 480/- WHICH INCLUDED THE CASH OF RS.1 50 000/- ADDED UNDE R SECTION 69A AND JEWELLERY OF RS.8 91 895/- ADDED UNDER SECTION 69C. BOTH THE SE ADDITIONS WERE MADE AS UNACCOUNTED UNDISCLOSED INCOME. 5. AGAINST THE ASSESSMENT MADE UNDER SECTION 158BD BY ORDER DATED 13.04.2006 AND THE REASSESSMENT MADE BY ORDER DATED 30.12.2005 THE ASSESSEE FILED APPEALS BEFORE THE CIT(A) WHO DISPO SED OFF BOTH THE APPEALS BY THE SAME ORDER ON 21.02.2007. AS REGARDS THE APPEA L AGAINST THE ASSESSMENT MADE UNDER SECTION 158BD THE CIT(A) HELD THAT THE ASSESSING OFFICER HAD WRONGLY INVOKED SECTION 158BD TO THE ASSESSEES CAS E AND ACCORDINGLY ANNULLED THE ORDER DATED 13.04.2006. HOWEVER THE CIT(A) DI SMISSED THE ASSESSEES APPEAL FILED AGAINST THE REASSESSMENT ORDER DATED 3 0.12.2005 HOLDING THAT THE ASSESSING OFFICER WAS WELL WITHIN HIS JURISDICTION IN REOPENING THE ASSESSMENT UNDER SECTION 147. HE OPINED THAT INCOME CHARGEABL E TO TAX HAD ESCAPED ASSESSMENT BECAUSE OF NON INITIATION OF PROCEEDINGS UNDER SECTION 158BC. HE ALSO NOTICED THAT THE ASSESSING OFFICER HAD ACTUALL Y ISSUED THE NOTICE UNDER SECTION 148 ON THE BASIS OF INFORMATION SENT TO HIM BY THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE IV(2) CHENNAI VIDE LETTER DATED 29.04.2004. ACCORDING TO THE CIT(A) THIS WAS SUFF ICIENT REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. SINCE THE ASSESSING OFFICER HAD ALSO RECORDED REASONS BEFORE ISSUE OF THE REOPENING NOTI CE AND SINCE THE ASSESSEE HAD ALSO ADMITTED THAT THE CASH AND JEWELLERY SEIZE D DURING THE SEARCH REPRESENTED UNDISCLOSED INCOME THE CIT(A) HAD NO D IFFICULTY IN UPHOLDING THE REASSESSMENT AND DISMISSING THE ASSESSEES APPEAL. 4 6. IT IS AGAINST THE AFORESAID DECISION OF THE CIT( A) UPHOLDING THE REASSESSMENT PROCEEDINGS THAT THE ASSESSEE HAS COM E IN FURTHER APPEAL BEFORE THE TRIBUNAL. THE LEARNED REPRESENTATIVE FOR THE A SSESSEE DID NOT DISPUTE THE LEGAL POSITION THAT SECTION 147 WAS APPLICABLE EVEN IN RESPECT OF A BLOCK ASSESSMENT MADE UNDER SECTION 158BC / 158BD OF THE ACT BUT SUBMITTED THAT ON THE FACTS OF THE PRESENT CASE THE REASSESSMENT W AS WITHOUT JURISDICTION SINCE THE ASSESSING OFFICER WAS ALREADY AWARE OF ALL THE FACTS AT THE TIME OF COMPLETING THE ASSESSMENT UNDER SECTION 158BD AND THEREFORE THERE WAS NO REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED A SSESSMENT. HE RELIED ON THE ORDER OF THE MUMBAI BENCH OF THE TRIBUNAL IN TH E CASE OF AIPITA MARKETING (P) LTD. VS. ITO (2008) 21 SOT 302 (MUM) AND THE ORDER OF THE JODHPUR BENCH OF THE TRIBUNAL IN ACIT VS. RAMESH CHAND SONI (2006) 105 T TJ (JD) 262. WE ARE UNABLE TO ACCEPT THE CONTENTION. WE ARE IN AGREEME NT WITH THE FINDING OF THE CIT(A) THAT THE ASSESSING OFFICER HAD VALIDLY ISSUE D NOTICE UNDER SECTION 148 ON THE GROUND THAT INCOME CHARGEABLE TO TAX HAD ESCAPE D ASSESSMENT BECAUSE OF NON FRAMING OF A BLOCK ASSESSMENT UNDER SECTION 158 BC OF THE ACT AND ALSO BECAUSE OF THE LETTER DATED 24.05.2005 WRITTEN BY T HE ASSESSEES REPRESENTATIVES ADMITTING THAT THE SEIZED CASH AND JEWELLERY REPRES ENTED THE ASSESSEES UNDISCLOSED INCOME NOT RECORDED IN THE REGULAR BOOK S OF ACCOUNT. THE ASSESSING OFFICER HAD INVOKED A WRONG SECTION VIZ. SECTION 158BD OF THE ACT TO MAKE A BLOCK ASSESSMENT IN THE FIRST INSTANCE WHER EAS HE OUGHT TO HAVE INVOKED SECTION 158BC. THE ASSESSMENT MADE UNDER SECTION 1 58BD WAS NO ASSESSMENT IN THE EYES OF LAW. WE ARE ALSO IN AGRE EMENT WITH THE FINDING OF THE CIT(A) THAT IN THE ABOVE CIRCUMSTANCES THE ASSESSIN G OFFICER HAD REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED A SSESSMENT. THE CHARGEABLE 5 INCOME CAN BE SAID TO HAVE ESCAPED ASSESSMENT ALSO IN A CASE WHERE NO VALID ASSESSMENT HAD BEEN MADE IN THE FIRST INSTANC E THOUGH A RETURN HAD BEEN FILED BY THE ASSESSEE. THE SEARCH UNDER SECTION 13 2 TOOK PLACE ON 28.11.2001 AND IT IS NOT DISPUTED THAT IN THE PANCHNAMA DATED 03.01.2002 CASH AND JEWELLERY AGGREGATING TO RS.10 41 895/- WERE SEIZED . HOWEVER THE ASSESSING OFFICER DID NOT ISSUE ANY NOTICE UNDER SECTION 158B C AND MAKE AN ASSESSMENT UNDER THAT SECTION BUT NOTICING THE OMISSION ISSU ED A NOTICE UNDER SECTION 158BD ERRONEOUSLY AND COMPLETED THE ASSESSMENT UNDE R THAT SECTION INCLUDING THE UNDISCLOSED INCOME THEREIN. HOWEVER EVEN BEFO RE THE COMPLETION OF THE ASSESSMENT UNDER SECTION 158BD THE ASSESSING OFFIC ER ISSUED NOTICE UNDER SECTION 148 ON 13.10.2005 ON THE BASIS OF THE LETTE R OF THE ASSESSEES REPRESENTATIVE DATED 24.05.2005. IN THESE CIRCUMST ANCES IT IS NOT POSSIBLE TO ACCEPT THE SUBMISSION OF THE ASSESSEE THAT THE REAS SESSMENT PROCEEDINGS WERE WITHOUT JURISDICTION. ON THE DATE WHEN THE NOTICE WAS ISSUED THERE WAS AN ESCAPE OF INCOME CHARGEABLE TO TAX WHICH HAD BEEN ADMITTED BY THE ASSESSEE HIMSELF. WE ACCORDINGLY AGREE WITH THE CIT(A) THAT THE REASSESSMENT PROCEEDINGS WERE NOT WITHOUT JURISDICTION. WE CONF IRM THE SAME. NO ARGUMENTS WERE ADVANCED ON THE MERITS OF THE ADDITION OF RS.1 0 41 895/-. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DIS MISSED WITH NO ORDER AS TO COSTS. ORDER PRONOUNCED ON 9 TH FEBRUARY 2010. SD/- SD/- (P M JAGTAP) (R V EASWAR) ACCOUNTANT MEMBER SENIOR VICE PRESIDENT MUMBAI DATED 9 TH FEBRUARY 2010 SALDANHA 6 COPY TO: 1. SHRI RAMESH N PARDIWALA M/S NIPPON ENTERPRISE 218 HIGH TECH INDUSTRIAL CENTER CAVES ROAD JOGESHWARI (EAST) MUMBAI 400 060 2. DCIT 2491) 3. CIT-24 4. CIT(A)-XXIV 5. DR D BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR ITAT MUMBAI