ACIT, New Delhi v. M/s. Balaji Perfumes, Delhi

ITA 508/DEL/2010 | 2004-2005
Pronouncement Date: 19-10-2016 | Result: Allowed

Appeal Details

RSA Number 50820114 RSA 2010
Assessee PAN AXACT1961W
Bench Delhi
Appeal Number ITA 508/DEL/2010
Duration Of Justice 6 year(s) 8 month(s) 15 day(s)
Appellant ACIT, New Delhi
Respondent M/s. Balaji Perfumes, Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 19-10-2016
Appeal Filed By Department
Order Result Allowed
Bench Allotted A
Tribunal Order Date 19-10-2016
Date Of Final Hearing 16-08-2016
Next Hearing Date 16-08-2016
Assessment Year 2004-2005
Appeal Filed On 03-02-2010
Judgment Text
1 ITA NOS. 505 TO 508/DEL/2010 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI G. D. AGRAWAL VICE PRESIDENT AND SMT SUCHITRA KAMBLE JUDICIAL MEMBER I.T.A .NO.-505/DE L/2010 (A.Y 2001-02) I.T.A .NO.-506/DE L/2010 (A.Y 2002-03) I.T.A .NO.-507/DE L/2010 (A.Y 2003-04) I.T.A .NO.-508/DE L/2010 (A.Y 2004-05) I.T.A. NO.-509/DEL/2010 (A.Y. 2005-06) ORDER PER SUCHITRA KAMBLE JM THESE APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDER DATED 12/11/2009 PASSED BY CIT(A)-II NEW DELHI. 2. THE GROUND IN ALL THE APPEALS IS AS FOLLOWS:- 1(A) ON THE FACTS AND IN LAW AND IN THE CIRCUMSTAN CES OF THE CASE THE LD.CIT(A) HAS ERRED IN HOLDING THAT NO VA LID NOTICE U/S 153A OF THE I.T ACT 1961 HS BEEN ISSUED AND ANNULLING THE ASSESSMENT SO MADE. ACIT CENT. CIRCLE 15 ROOM NO. 354 ARA CENTRE E-2 JHANDEWALAN EXTN. NEW DELHI (APPELLANT) VS BALAJI PERFUMES 1/429/23 FRIENDS COLONY GALI NI. 1. G. T. ROAD SHAHDARA DELHI AADFB533G (RESPONDENT) APPELLANT BY SH. RAVI JAIN CIT DR. RESPONDENT BY SH. A. K. JAIN C.A DATE OF HEARING 16.08.2016 DATE OF PRONOUNCEMENT 19.10.2016 2 ITA NOS. 505 TO 508/DEL/2010 2. THE ORDER OF THE LD.CIT(A) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. 3. A SEARCH & SEIZURE ACTION U/S 132(1) OF THE ACT TOOK PLACE ON 22/3/2006 AT THE BUSINESS PREMISES OF M/S BALAJI PE RFUMES GROUP WHICH IS IN THE BUSINESS OF MANUFACTURING AND TRADI NG OF GUTKA UNDER THE BRAND NAME OF MARUTI AJEET & KAVERI. AS MENTIONED BY A.O IN THE ASSESSMENT ORDER THE GROUP BELONGS TO T HE FAMILY OF LATE SH. BISHAN SARUP GUPTA WHO HAS THREE SONS NAMELY SH . ABHAY GUPTA SH. AJAY GUPTA & SH. ANOOP GUPTA. THE WHOLE BUSINESS OF MANUFACTURING OF GUTKA AND SALE/PURCHASE OF ARCANUT ACCORDING TO THE A.O IS LOOKED AFTER BY THREE BROTHERS THROUGH T HE FIRM M/S BALAJI PERFUMES AND M/S ASSAM SUPARI TRADERS. 4. THE ASSESSING OFFICER OBSERVED THAT THE SPECTRUM OF MANUFACTURING CONCERNS IS AS UNDER: I) M/S BALAJI PRODUCTS (A PARTNERSHIP FIRM OF SH. A JAY GUPTA AND SH. ANOOP GUPTA FROM 1/4/1995 TO 25/11/2000). II) M/S BALAJI PRODUCTS ( A PROPRIETARY CONCERN OF SH. AJAY GUPTA FROM 1/5/1999 TO 25/11/2000 AND EVEN CONTINUED THEREAFTER). III) M/S BALAJI PERFUMES (A PARTNERSHIP FIRM OF SH. VARUN GUPTA S/O SH. ABHAY GUPTA AND SMT. DEEPTA GUPTA W/O SH. ANOOP GUPTA 5/2/2001 TO 27/7/2005). 3 ITA NOS. 505 TO 508/DEL/2010 IV) M/S BALAJI PERFUMES (STATED TO BE A PROPRIETARY CONCERN OF SH. VARUN GUPTA FROM 28/7/2005 ONWARDS). V) M/S BALAJI POUCHES (A PARTNERSHIP CONCERN OF SH. AJAY GUPTA AND ERSTWHILE EMPLOYEE SH. VIVEK MISHRA- 18/5/2006 ONWARDS). 5. THE ASSESSING OFFICER HAS MENTIONED IN PARA 8 OF THE ASSESSMENT ORDER (FOR ALL THE YEARS) THAT NOTICE U/ S 153A WAS ISSUED ON 12/11/2007 AND THE ASSESSEE HAS FILED A PHOTOCOP Y OF RETURN OF INCOME. IT IS WORTH MENTIONING THAT THE A.O HAS ME NTIONED IN THE SAME PARA THAT NO RETURN OF INCOME FOR THE PROPRIET ARY FIRM HAS BEEN FILED. HE HAS ISSUED NOTICE U/S 143(2) ALONG WITH QUESTIONNAIRE FIXING THE CASE FOR HEARING ON 12/11/ 2007 BUT NOBODY ATTENDED ON THIS DATE. HOWEVER SUBSEQUENTL Y ON 4/12/2007 THE CASE WAS FIXED AND THERE HAD BEEN PAR T COMPLIANCE. 6. IN THE SAME PARA 8 OF THE ASSESSMENT ORDER (FOR ALL THE YEARS) THE A.O HAS MENTIONED THAT PHOTOCOPY OF PARTNERSHIP DEED WAS ALSO FILED SHOWING THAT SMT. DEEPA GUPTA AND SH. VARUN G UPTA AS PARTNERS. HE HAS ALSO MENTIONED THAT BOOKS OF ACCO UNT OF M/S BALAJI PERFUMES WERE ALSO PRODUCED THOUGH NO VOUCHE RS WERE PRODUCED. BEFORE THE A.O. THE ISSUE OF VALIDITY OF 153A PROCEEDINGS WAS NOT RAISED. HOWEVER THESE ISSUES WERE RAISED ONLY DURING APPELLATE PROCEEDINGS. 4 ITA NOS. 505 TO 508/DEL/2010 7. BEFORE THE CIT(A) THE ASSESSEE HAS TAKEN THE CON TENTION THAT THE PROCEEDINGS UNDER 153A OF THE INCOME-TAX ACT 19 61 WAS NOT VALID IN THE ASSESSEES CASE. THE CIT(A) CALLED FO R REMAND REPORT WHICH WAS RECEIVED ON 5/2/2009. THE CIT(A) HAS HE LD THAT THE PROCEEDINGS INITIATED BY THE ASSESSING OFFICER FOR PASSING ORDER U/S 143 (3) READ WITH SECTION 153A CANNOT BE HELD AS VA LID AND THUS ALLOWED THE APPEAL OF THE ASSESSEE. 8. THE LD. DR SUBMITTED THAT THE ASSESSEE HAS NOT I NFORMED THAT THERE IS A DISSOLUTION OF FIRM THUS WARRANT OF AUT HORITIES CONTAINS THE NAME OF BALAJI UNLESS AND UNTIL DEPARTMENT IS N OT KNOWN ABOUT THE DISSOLUTION OF FIRM IT WILL PROCEED AS IT IS. THE ASSESSEE WAS NEVER CONFRONTED ABOUT THE CIT(A). 9. THE LD. AR SUBMITTED THAT THE CIT(A) HAS CATEGOR ICALLY DECIDED THE PROCEEDINGS U/S 153A HE POINTED OUT PAGE 18 OF HIS PAPER BOOK WHICH WAS BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE CIT(A) THAT INDIVIDUAL VARUN GUPTA HAS ALREADY BEEN GIVEN THE NOTICE AND THE SAME WORDINGS ARE REPRODUCED IN THE NOTICE ISSU ED TO BALAJI PERFUMES MORE SPECIFICALLY MENTIONING INDIVIDUAL. 10. THE LD. AR RELIED ON THE JUDGMENT OF CIT VS. DI MENSION APPARELS PVT. LTD. (DECIDED ON 08.07.2014 BY THE HO NBLE DELHI HIGH COURT) WHEREIN IT IS HELD THAT WITH RESPECT TO PART ICIPATION BY THE 5 ITA NOS. 505 TO 508/DEL/2010 PREVIOUS ASSESSEE SUCH PARTICIPATION BY THE AMALGAM ATED COMPANY IN PROCEEDINGS DID NOT CURE THE DEFECT BECAUSE THER E CAN BE NO STIPULATING LAW. THE ASSESSEE ALSO RELIED ON THE H ONBLE DELHI HIGH COURT JUDGMENT IN CASE OF SPICE INFOTAINMENT LTD. V S CIT (2012) 247 CTR 500 (DEL) WHEREIN IT IS HELD THAT MERE PART ICIPATION BY THE APPELLANT WOULD BE OF NO EFFECT AS THERE IS NO ESTO PPEL AGAINST LAW. 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RECORDS. M/S. BALAJI PERFUMS (PARTNERSHIP FIRM) WAS DISSOLVE D ON 27.07.2005. THIS FACT WAS CLARIFIED AT THE TIME OF SEARCH ITSELF BY SH. VARUN GUPTA ON 22.03.2006 WHICH IS EVIDENT IN HIS S TATEMENT RECORDED ON 22.03.2006. AS THE FIRM WAS DISSOLVED I T BECOMES NON- EXISTENT ENTITY. A SEARCH WARRANT CANNOT BE EXECUTE D/SERVED ON A PERSON WHO IS NOT IN EXISTENCE. THE HONBLE PUNJAB AND HARYANA HIGH COURT IN CASE OF CIT VS. RAKESH KUMAR 313 ITR 305 ISSUANCE OF SEARCH WARRANT IN THE NAME OF DEAD PERSON ITSELF IS AGAINST THE LAW OF NATURAL JUSTICE AND NO VALID ASSESSMENT COUL D HAVE BEEN MADE ON THE STRENGTH OF SUCH AN INVALID SEARCH WARR ANT. BALAJI PERFUMES (FIRM) AND BALAJI PERFUMES (PROP. CONCERN) ARE TWO DIFFERENT PERSONS AS DEFINED U/S 2(31) OF THE INCOM E TAX ACT 1961. BOTH ARE HAVING DIFFERENT PAN. IN THE CASE OF PROP. CONCERN THE ASSESSMENT MADE IN THE NAME OF PROPRIETOR WHEREAS I N THE CASE OF FIRM A SEPARATE PAN IS OBTAINED. FIRM BEING NON-EX ISTENT PERSON NO WARRANT CAN BE EXECUTED ON NON-EXISTENT PERSON. THUS IT WAS FOR PROP. CONCERN AND FURTHER MENTIONING THE NAME O F M/S. BALAJI 6 ITA NOS. 505 TO 508/DEL/2010 PERFUMES WILL INDICATE SEARCH IN THE CASE OF VARUN GUPTA AS HELD BY ITAT DELHI BENCH IN CASE OF DAYAWANTI PROP. M/S. AS SAM SUPARI TRADERS ITA NO. 1634/DEL/2010. THE HONBLE BOMBAY H IGH COURT ALSO IN CASE OF CIT VS. TIRUPATI OIL CORPORATION 24 8 ITR 194 HELD THAT IF ASSESSING OFFICER WANTED TO PROCEED UNDER C HAPTER XIV-B OF THE INCOME TAX ACT 1961 WITH REGARD TO THE UNDISCL OSED INCOME OF THE PARTNER FOR THE PURPOSES OF MAKING BLOCK ASSESS MENT ON THE ASSESSEE FIRM THEN THE ASSESSING OFFICER WAS REQUI RED TO INVOKE SECTION 158BD OF THE ACT AND BLOCK ASSESSMENT MADE ON THE FIRM WITHOUT FOLLOWING THE PROCEDURE UNDER SECTION 158BD OF THE ACT WAS BAD IN LAW. IN THE PRESENT CASE ALSO THE ASSESS ING OFFICER HAS NOT FOLLOWED THE PROCEDURE WHILE FOLLOWING THE INCO RRECT PROVISIONS OF LAW UNDER SECTION 153A OF THE ACT WHICH IS NOT A PPLICABLE IN THE ASSESSEES CASE AS THE ASSESSEE WAS NOT IN EXISTENC E AT THE RELEVANT TIME. AS PER SECTION 153A OF THE ACT ASSESSMENT U/ S 153A OF THE ACT CAN BE COMPLETED ONLY IN THE CASE OF SUCH PERSO N WHERE THE WARRANT U/S 132 OF THE ACT HAS BEEN EXECUTED AS HEL D BY HONBLE PUNJAB AND HARYANA HIGH COURT IN CASE OF CIT VS. RA M SINGH 351 ITR 331 (P&H). THE HONBLE HIGH COURT HELD THAT AN ILLEGAL IS NO SEARCH AND AS NECESSARY COROLLARY IN SUCH A CASE C HAPTER XIV-B WOULD HAVE NO APPLICATION. AS REGARDS THE MENTION OF THE INDIVIDUAL IN THE NOTICE CANNOT BE TAKEN AS MISTAKE AND THE MISTAKE IS NOT CURABLE U/S 292BB OR 292B AS SECTION 292BB O F THE ACT IS APPLICABLE FROM A.Y. 2008-09. THE PARTICIPATION IN THE ASSESSMENT WILL NOT BE TREATED AS ESTOPPEL AGAINST THE LAW EST ABLISHED. AS HELD IN CASE OF CIT VS. SPICE INFOTAINMENT LTD. 247 CTR 500 (DELHI) 7 ITA NOS. 505 TO 508/DEL/2010 CONSENT CANNOT CONFER JURISDICTION. IT IS PERTINENT TO NOTE THAT CIT(A) HAS TAKEN INTO ACCOUNT ALL THE ASPECTS ABOUT THE PR OCEEDINGS CONDUCTED U/S 153A OF THE ACT. THEN HE HAS ALSO GI VEN THE FINDING IN RESPECT OF HOW THE PROCEEDINGS WERE CONDUCTED IN ASSESSEES CASE. THE CIT(A) ALLOWED ALL THE FIVE GROUNDS OF TH E ASSESSEE COMPANY WHILE HOLDING THAT NO VALID NOTICE U/S 153A OF THE ACT WAS ISSUED. THUS THE CIT(A) IS RIGHT IN ALLOWING THE A PPEALS OF THE ASSESSEE. 12. IN THE RESULT APPEALS ARE DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 19 TH OF OCTOBER 2016. SD/- SD/- (G. D. AGRAWAL) (S UCHITRA KAMBLE) VICE PRESIDENT JUDI CIAL MEMBER DATED: 19/10/2016 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT R EGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 17.08.2016 PS 2. DRAFT PLACED BEFORE AUTHOR 18.08.2016 PS 8 ITA NOS. 505 TO 508/DEL/2010 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2016 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 1 9 .10.2016 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 1 9 .10.2016 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.