B.S. Arun Kumar, Davangere v. ACIT, Davangere

ITA 581/BANG/2010 | 1998-1999
Pronouncement Date: 28-01-2011 | Result: Allowed

Appeal Details

RSA Number 58121114 RSA 2010
Bench Bangalore
Appeal Number ITA 581/BANG/2010
Duration Of Justice 9 month(s) 5 day(s)
Appellant B.S. Arun Kumar, Davangere
Respondent ACIT, Davangere
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 28-01-2011
Date Of Final Hearing 27-01-2011
Next Hearing Date 27-01-2011
Assessment Year 1998-1999
Appeal Filed On 22-04-2010
Judgment Text
PAGE 1 OF 8 ITA NO.580 & 581/BANG/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SHRI GEORGE GEORGE K. J.M. AND SHRI A MOHAN ALANKAMONY A.M. ITA NO.580 & 581/BANG/2010 (ASST. YEARS 1996-97 & 1998-99) SHRI B S ARUN KUMAR #673 CHOWKIPET DAVANGERE. - APPELLANT VS THE ASST. COMMISSIONER OF INCOME TAX CIRCLE-1 DAVANGERE. - RESPONDENT APPELLANT BY : SHRI S VENKATESAN C.A. RESPONDENT BY : SHRI G V GOPALA RAO CIT-I O R D E R PER GEORGE GEORGE K : THESE TWO APPEALS PREFERRED BY THE ASSESSEE ARE DIRECTED AGAINST SEPARATE ORDERS OF THE CIT(A) HUB LI. THE RELEVANT ASSESSMENT YEARS ARE 1996-97 AND 1998-99. THE ORDE RS OF THE CIT(A) EMANATE FROM THE ORDERS OF THE AO GIVING EFF ECT TO THE ITAT ORDER DATED 31.1.2008. 2. IDENTICAL GROUNDS ARE RAISED IN THESE APPEALS E XCEPT FOR VARIATIONS IN ADDITIONS MADE ON MERITS. 3. THE ASSESSEE HAS RAISED TEN GROUNDS. GROUND NO S.1 9 AND 10 ARE GENERAL IN NATURE AND NO SPECIFIC ADJUDI CATION IS CALLED FOR AND HENCE THEY ARE DISMISSED. PAGE 2 OF 8 ITA NO.580 & 581/BANG/2010 2 3. GROUND NO.8 RELATES TO LEVY OF INTEREST U/S 234B OF THE ACT. 3.1 LEVY OF INTEREST U/S 234B IS MANDATORY AND CONSE QUENTIAL IN NATURE AND HENCE THIS GROUND IS DISMISSED. 4. IN THE OTHER GROUNDS THE ASSESSEE HAS CHALLENG ED THE VALIDITY OF THE ORDERS PASSED BY THE AO WHILE GIVING EFFECT TO THE ORDER OF THE ITAT THE VALIDITY OF SEARCH PROCEEDING S AND THE ADDITIONS MADE ON MERITS. ITA NO.580/BANG/2010 5. THE BRIEF FACTS OF THE CASE ARE AS FOLLOWS:- THE ASSESSEE WAS ORIGINALLY ASSESSED UNDER THE OR DER OF BLOCK ASSESSMENT DATED 29/11/1999 ON A TOTAL INCOME OF RS.3 33 950/-. THE BLOCK ASSESSMENT WAS CHALLENGED BEFORE THE FIRST APPELLATE AUTHORITY WHO PARTLY ALLOWED THE APPEAL. ON FURTHER APPEAL THE TRIBUNAL VIDE ITS COMMON ORDER DATED 31/1/2008 IN ITA NO.109/BANG/2002 CANCELLED THE ASSESSMENT ON THE GR OUND OF LIMITATION AND DID NOT ADJUDICATE THE ISSUE ON MERI TS. THE RELEVANT FINDINGS OF THE TRIBUNAL AT PARA 34.9 AT PAGE 135 R EADS AS FOLLOWS:- 34.9 SINCE WE ARE HOLDING THAT THE ASSESSMENT ORDERS ARE BARRED BY LIMITATION AND SUCH ORDERS ARE BEING CANCELLED THEREFORE WE ARE NOT ADJUDICATING THE ISSUES ON MERIT. 5.1 THUS THE TRIBUNAL CANCELLED THE BLOCK ASSESSM ENT ORDER PASSED IN THE CASE OF ASSESSEE WITHOUT ADJUDICATING THE ISSUE ON PAGE 3 OF 8 ITA NO.580 & 581/BANG/2010 3 MERITS. THE AO WHILE GIVING EFFECT TO THE ITAT OR DER PASSED ORDER ON 30.12.2008 FOR THE CONCERNED ASST. YEAR MAKING CE RTAIN ADDITIONS. 6. AGGRIEVED BY THE ORDER OF THE AO GIVING EFFECT T O THE ITAT ORDER THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) AND CONTENDED THAT ONCE A BLOCK ASSESSMENT ORDER IN THE CASE OF THE ASSESSEE IS CANCELLED BY THE TRIBUNAL WITHOUT ADJUDI CATING THE ISSUE ON MERITS THE PROTECTIVE ADDITION MADE IN THE CASE OF THE ASSESSEE GETS AUTOMATICALLY DELETED. IT WAS FURTHER ARGUED THAT THE AO HAS NOT ASSUMED THE JURISDICTION VALIDLY BY ISSUING NOTICE U /S 142(1) OR U/S 148 AND THEREFORE THE ORDER PASSED BY THE AO IS INVALID WITHOUT ASSUMPTION OF JURISDICTION. 7. THE CIT(A) HOWEVER DISMISSED THE APPEALS OF T HE ASSESSEE BY HOLDING THAT ITAT HAS GIVEN A CLEAR FIND ING WHILE DELETING THE ADDITION IN THE CASE OF THE FIRM THAT ADDITION IS REQUIRED TO BE MADE IN THE HANDS OF THE ASSESSEE. THEREFORE THE A.O. HAS VALIDLY ASSUMED THE JURISDICTION WHILE GIVING EFFECT TO THE ORDER OF THE ITAT. 8. AGGRIEVED BY THE ORDER PASSED BY THE FIRST APPELL ATE AUTHORITY THE ASSESSEE HAS PREFERRED THIS APPEAL BE FORE US. 9. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. 10. ON THE OTHER HAND THE LEARNED DR SUPPORTED TH E FINDINGS/CONCLUSIONS OF THE CIT(A). PAGE 4 OF 8 ITA NO.580 & 581/BANG/2010 4 11. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. THE BLOCK ASSESSMENT IN THE CA SE OF THE ASSESSEE WAS PASSED ON 29.11.1999 ON THE TOTAL INCOME OF RS. 3 33 950/-. FOR THE CONCERNED ASST. YEAR THE AO HAD MADE ADDITION O F RS.50 000/- AS UNEXPLAINED INVESTMENT IN FIXED DEPOSITS FOR AY 199 6-97 ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE AND S UBSTANTIVE ADDITION WAS MADE IN THE HANDS OF THE FIRM M/S B N B TRADING CO. THE TRIBUNAL IN ITS COMMON ORDER HAD DELETED CERTAIN AD DITIONS MADE IN THE HANDS OF THE FIRM BUT THE BLOCK ASSESSMENT MAD E IN THE HANDS OF THE ASSESSEE WAS CANCELLED BY HOLDING THE SAME TO BE BARRED BY LIMITATION. 11.1 ALTHOUGH THE TRIBUNAL VIDE ORDER CITED SUPRA HAS CANCELLED THE BLOCK ASSESSMENT IN THE CASE OF THE A SSESSEE AND DID NOT GO INTO THE ISSUE ON MERITS THE A.O. WHILE GIV ING EFFECT TO THE ORDER OF THE ITAT INDEPENDENTLY PASSED SEPARATE OR DERS FOR THE ASST. YEARS CONCERNED NAMELY 1996-97 AND 1998-99 WI THOUT EVEN GIVING NOTICE TO THE ASSESSEE AND ALSO NOT GIVING O PPORTUNITY OF BEING HEARD IN PERSON BEFORE THE ORDERS WERE PASSED. THE AO HAS ALSO CHARGED INTEREST U/S 234B OF THE ACT WHICH CANNOT BE LEVIED IN THE BLOCK ASSESSMENT AT ALL. 11.2 IN THE ORDER OF THE AO IT IS STATED AS UNDER :- CONSEQUENT ON THE DECISION OF THE HONBLE ITAT BENCH A BANGALORE IN THEIR ORDER IN ITA NO.110/BANG/2002 DATED 31/01/2008 THE FOLLOWING AMOUNTS NEEDS TO BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE. THE TOTAL INCOME OF THE ASSESSEE FOR THE ABOVE SAID ASSESSMENT YEAR IS AS UNDER. PAGE 5 OF 8 ITA NO.580 & 581/BANG/2010 5 THE INCOME TAKEN IS THE INCOME ORIGINALLY RETURNED A ND ALSO CERTAIN ADDITIONS ARE MADE SUBSTANTIVELY. THIS ORDER IS PUR PORTED TO BE PASSED CONSEQUENT TO THE DECISION OF THE ITAT IN IT (SS)A NO.109/BANG/2002 DATED 31/1/2008. WHEN THE ITAT HA S NOT DEALT WITH THE MERITS ABOUT THE EXPLANATION GIVEN THE QU ESTION OF ADDING THE SAID SUM WOULD NOT ARISE FOR CONSIDERATION AT A LL SINCE THEY HAVE CANCELLED THE ASSESSMENT. THE AO HAS NOT ISSUED AN Y NOTICE EITHER U/S 142(1) OR U/S 148 OF THE ACT TO ASSUME JURISDI CTION FOR EACH ONE OF THESE ASSESSMENT YEARS TO CONSIDER EACH ONE OF TH E ORDERS AS NORMAL REGULAR ASSESSMENT ORDERS. THEREFORE IF TH ESE ORDERS ARE CONSIDERED AS REGULAR ASSESSMENTS MADE THEN IN AS MUCH AS THE AO HAS NOT ASSUMED JURISDICTION TO MAKE AN ASSESSMENT U/S 143(3) BY ISSUING NOTICES U/S 142(1) OR U/S 148 OF THE ACT. THEREFORE THE ASSESSMENTS MADE REQUIRE TO BE CANCELLED AS NOT BEI NG IN ACCORDANCE WITH LAW. 11.3 HOWEVER IN SO FAR AS TAXES ON THE RETURNED I NCOME ARE CONCERNED IT IS FOR THE DEPARTMENT TO TAKE APPROPR IATE RECOVERY PROCEEDINGS THOUGH THE BLOCK ASSESSMENT HAS BEEN C ANCELLED BY THE ITAT VIDE COMMON ORDER DATED 31.1.2008 IN THE LIGHT OF THE HONBLE SUPREME COURT DECISION IN THE CASE OF CIT V SHELLY P RODUCTS AND ANOTHER 261 ITR 367. 11.4 IN THE RESULT THE APPEAL (ITA NO.580/10) FIL ED BY THE ASSESSEE IS ALLOWED. PAGE 6 OF 8 ITA NO.580 & 581/BANG/2010 6 581/BANG/2010 12. THE BRIEF FACTS OF THE CASE ARE AS FOLLOWS:- THE ASSESSEE WAS ORIGINALLY ASSESSED UNDER THE OR DER OF BLOCK ASSESSMENT DATED 29/11/1999 ON A TOTAL INCOME OF RS.3 33 950/-. IN THE SAID ORDER OF BLOCK ASSESSM ENT FOR AY 1998- 99 APART FROM INCOME RETURNED THE AO MADE AN ADDI TION OF RS.60 000/- AS UNEXPLAINED INVESTMENT IN FIXED DEPO SITS ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE AND SUBSTANTIVE ADDITION MADE IN THE HANDS OF THE FIRM M/S BNB TRADING CO. AGGRIEVE D BY THE SAID ORDER OF BLOCK ASSESSMENT THE ASSESSEE INSTITUTED APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) DAVANGERE WH O BY HIS ORDER IN ITA NO.402/DVG/CIT/99-00 DATED 5/3/2002 PARTLY ALLO WED THE APPEAL. ON FURTHER APPEAL THE TRIBUNAL VIDE ITS CO MMON ORDER DATED 31/1/2008 IN ITA NO.109/BANG/2002 CANCELLED THE ASS ESSMENT ON THE GROUND OF LIMITATION AND DID NOT ADJUDICATE THE ISS UE ON MERITS. THE RELEVANT FINDINGS OF THE TRIBUNAL AT PARA 34.9 AT P AGE 135 READS AS FOLLOWS:- 34.9 SINCE WE ARE HOLDING THAT THE ASSESSMENT ORDERS ARE BARRED BY LIMITATION AND SUCH ORDERS ARE BEING CANCELLED THEREFORE WE ARE NOT ADJUDICATING THE ISSUES ON MERIT. 12.1 THUS THE TRIBUNAL CANCELLED THE BLOCK ASSESS MENT ORDER PASSED IN THE CASE OF ASSESSEE WITHOUT ADJUDICATING THE ISSUE ON MERITS. THE AO WHILE GIVING EFFECT TO THE ITAT OR DER PASSED ORDER ON 30.12.2008 FOR THE CONCERNED ASST. YEAR MAKING CE RTAIN ADDITIONS. PAGE 7 OF 8 ITA NO.580 & 581/BANG/2010 7 12.2 AGGRIEVED BY THE ORDER OF THE AO GIVING EFFECT TO THE ITAT ORDER THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) AND CONTENDED THAT ONCE A BLOCK ASSESSMENT ORDER IN THE CASE OF THE ASSESSEE IS CANCELLED BY THE TRIBUNAL WITHOUT ADJUDI CATING THE ISSUE ON MERITS THE PROTECTIVE ADDITION MADE IN THE CASE OF THE ASSESSEE GETS AUTOMATICALLY DELETED. IT WAS FURTHER ARGUED THAT THE AO HAS NOT ASSUMED THE JURISDICTION VALIDLY BY ISSUING NOTICE U /S 142(1) OR U/S 148 AND THEREFORE THE ORDER PASSED BY THE AO IS INVALID WITHOUT ASSUMPTION OF JURISDICTION. 12.3 THE CIT(A) HOWEVER DISMISSED THE APPEALS OF THE ASSESSEE BY HOLDING THAT ITAT HAS GIVEN A CLEAR FIND ING WHILE DELETING THE ADDITION IN THE CASE OF THE FIRM THAT ADDITION IS REQUIRED TO BE MADE IN THE HANDS OF THE ASSESSEE. THEREFORE THE A.O. HAS VALIDLY ASSUMED THE JURISDICTION WHILE GIVING EFFECT TO THE ORDER OF THE ITAT. 12.4 AGGRIEVED BY THE ORDER PASSED BY THE FIRST APPE LLATE AUTHORITY THE ASSESSEE HAS PREFERRED THIS APPEAL BE FORE US. 12.5 THE LEARNED COUNSEL FOR THE ASSESSEE REITERAT ED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. 12.6 ON THE OTHER HAND THE LEARNED DR SUPPORTED T HE FINDINGS/CONCLUSIONS OF THE CIT(A). 12.7 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSE D THE MATERIAL ON RECORD. IN VIEW OF OUR REASONING STAT ED IN PARA 11 TO 11.4 PAGE 8 OF 8 ITA NO.580 & 581/BANG/2010 8 IN ITA NO.580/2010 WE HOLD THAT THE AOS ORDER GIV ING EFFECT TO THE ITAT ORDER IS NOT VALID AND SUSTAINABLE IN LAW. 12.8 IN THE RESULT THE APPEAL (ITA NO.581/10) FIL ED BY THE ASSESSEE IS ALLOWED. THE ORDER PRONOUNCED ON FRIDAY THE 28 TH DAY OF JANUARY 2011 AT BANGALORE. SD/- SD/- (A MOHAN ALANKAMONY) (GEORGE GEORGE K) ACCOUNTANT MEMBER 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/27.1. BY ORDER ASST. REGISTRAR ITAT BANGALORE.