Sri. MOHD. ZUBAIR ALIAKBAR, MUMBAI v. ACIT CIR. - 13(3), MUMBAI

ITSSA 2/MUM/2007 | misc
Pronouncement Date: 25-02-2011 | Result: Allowed

Appeal Details

RSA Number 219916 RSA 2007
Assessee PAN AADPA5311K
Bench Mumbai
Appeal Number ITSSA 2/MUM/2007
Duration Of Justice 4 year(s) 1 month(s) 21 day(s)
Appellant Sri. MOHD. ZUBAIR ALIAKBAR, MUMBAI
Respondent ACIT CIR. - 13(3), MUMBAI
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 25-02-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 25-02-2011
Date Of Final Hearing 28-12-2010
Next Hearing Date 28-12-2010
Assessment Year misc
Appeal Filed On 04-01-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI J.SUDHAKAR R EDDY(A.M) IT(SS)A 2/MUM/2007 (BLOCK PERIOD 1/4/1991 TO 5/03/2001) SHRI MOHD ZUBAIR ALIAKBAR M/S. SNOVITE CLEANING WORKS 145 HABIB BLDG. S.V.P.ROAD DONGRI MUMBAI 09. PAN:AADPA 5311K (APPELLANT) VS. ACIT CIR.13(3) MUMBAI. (RESPONDENT) APPELLANT BY : SHRI N.M.PORWAL RESPONDENT BY : SHRI HARI GOVIND SINGH ORDER PER N.V.VASUDEVAN J.M THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 3/10/2006 OF CIT(A) 13 MUMBAI RELATING TO THE BLOCK PERIOD 1/4/1991 TO 5/3/2001. 2. THE FACTS GIVING RISE TO THE PRESENT APPEAL BY T HE ASSESSEE ARE AS FOLLOWS: ONE SHRI J.K.GANDHI RESIDENT OF LOWER PAREL MUMB AI WAS ARRESTED BY RAILWAY POLICE VASCO GOA ON 3/3/2001. AT THE TIME OF HIS ARREST HE WAS IN POSSESSION OF RS. 9 25 000/- WHICH WAS SEIZED BY RA ILWAY POLICE. HE COULD NOT GIVE ANY SATISFACTORY ANSWER ABOUT THE CASH. A WARRANT OF AUTHORIZATION U/S. 132A OF THE INCOME TAX ACT 1961 DATED 5/3/2001 WAS ISSUED AND THE CASH WAS SEIZED BY THE DEPARTMENT. THE STATEMENT OF SHRI J.K.GANDHI WAS R ECORDED U/S. 132(4) OF THE INCOME TAX ACT 1961 (THE ACT). IN HIS STATEMENT SHRI J.K.GANDHI STATED THAT THE CASH BELONGED TO MR.A.R.DAMDA PROPRIETOR OF SNOVIT E LAUNDRY AND HE WAS ASKED BY IT(SS)A 2/MUM/2007 2 HIM TO HAND OVER THE MONEY AT HIS RESIDENCE AT BHAT KAL. HE COULD NOT PROVIDE THE EXACT LOCATION OF SUCH RESIDENCE AT BHATKAL. ANOTH ER STATEMENT OF SHRI J.K.GANDHI WAS RECORDED BY DDIT MUMBAI ON 31/12/2001. IN HIS STATEMENT HE CONFIRMED THAT THE AMOUNT OF R. 9 25 000/- WAS GIVEN TO HIM BY SHR I A.R. DAMDA IN ORDER TO DELIVER THE SAME AT HIS NATIVE PLACE AT BHATKAL. ON 28/12/ 2001 THE DDIT MUMBAI RECORDED STATEMENT OF SHRI A.R.DAMDA. IN HIS STATEMENT SHR I DAMDA ACCEPTED THAT THE AMOUNT OF RS. 9 25 000/- SEIZED BY THE DEPARTMENT F ROM SHRI J.K.GANDHI WAS TO BE DELIVERED TO HIS WIFE AT BHATKAL. IN THIS STATEME NT SHRI DAMDA STATED THAT THE AMOUNT WAS SENT TO ACQUIRE 45% PARTNERSHIP SHARE HE LD SHRI R.ABDUL LATIF AND SMT. S.LATIF IN A PARTNERSHIP FIRM. HE ALSO REFERRED AB OUT THE PROPOSED INDUCTION OF TWO NEW PARTNERS I.E. LOKESH JAIN AND ZIA UR REHMAN. I N THIS STATEMENT SHRI DAMDA STATED THAT OUT OF RS. 9 25 000/- RS.5 00 000/- B ELONGED TO HIM WHEREAS RS. 1 00 000/- RS. 1 00 000/- AND RS. 2 25 000/- BELON GED TO ZIA UR REHMAN MOHAMMED ZUBAIR (THE APPELLANT IN THIS APPEAL) AND SHRI LOKESH JAIN RESPECTIVELY. SHRI DAMDA EXPLAINED THE AMOUNT OF CASH BY SAYING THAT RS. 2 00 000/- IS OUT OF CASH IN HAND RS. 1 59 600/- WAS FROM WITHDRAWAL FR OM M/S. SNOVITE CLEANING WORKS AND RS. 1 70 000/- WAS FROM PERSONAL SAVINGS FROM L AST FIVE YEARS. ON THAT DATE I.E. 28/12/2001 STATEMENTS OF OTHER THREE PERSONS I.E. SHRI MOHD. ZUBAIR(THE APPELLANT IN THIS APPEAL) SHRI LOKESH JAIN AND SHRI ZIA UR REHM AN WERE TAKEN. ALL OF THEM CONFIRMED WHAT SHRI DAMDA DEPOSED IN HIS STATEMENT. ALL OF THEM EXPLAINED THE SOURCE OF FUNDS TO THE EXTENT OF CASH SEIZED WHICH BELONGED TO THEM AS PAST SAVINGS. 3. IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSEE HAD TO EXPLAIN THE SOURCE OF RS. 1.00 LAC OUT OF THE CASH SEIZED FROM THE POSSESSION OF J.K.GANDHI. THE ASSESSEE EXPLAINED THE SOURCE OF A SUM OF RS.1.00 L AC BY FILING A STATEMENT OF SOURCE OF INVESTMENT OF RS. 1.00 LAC ALONG WITH A LETTER DATED 18/2/2005 WHICH WAS FILED BEFORE THE ASSESSING OFFICER. HE HAD FILED COPY OF HIS ACCOUNT AS PARTNER IN M/S. SNOWHITE CLEANING WORKINGS AND BANK ACCOUNT WITH FR IENDS COMPANY-OPERATIVE BANK LTD. FOR THE PERIOD 1/1/1998 TO 13/3/2001 WHE REIN CASH WITHDRAWAL OF RS. IT(SS)A 2/MUM/2007 3 89 800/- BY THE ASSESSEE WAS REFLECTED. THE EXPLAN ATION WITH REGARD TO THE SOURCE OF AVAILABILITY OF RS. 1.00 LAC WAS NOT ACCEPTED BY TH E ASSESSING OFFICER. THE CIT(A) ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER HENCE THE PRESENT APPEAL BY THE ASSESSEE BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING OF THE APPEAL IT WAS SUBM ITTED ON BEHALF OF THE ASSESSEE THAT THE SORUCE OF RS. 9 25 000/- WHICH WAS SEIZED FROM THE POSSESSION OF MR. J.K.GANDHI WAS EXPLAINED BY MR.A.R.DAMDA AS RS. 5.0 0 LACS BELONGING TO HIM AND SUM OF RS. 1.00 LAC BELONG TO ZIA UR REHMAN RS. 1 .00 TO MOHAMMED ZABAR ALI AKBAR(THE APPELLANT IN THIS APPEAL) AND RS.2.25 LA CS BELONGING TO SHRI LOKESH JAIN. IT WAS FURTHER BROUGHT TO OUR NOTICE THAT CIT(A) BY A COMMON ORDER DATED 3/10/2006 DECIDED THE APPEALS A.R.DAMDA THE ASSESSEE AND ZI A UR REHMAN. IT WAS FURTHER BROUGHT TO OUR NOTICE THAT SHRI A.R.DAMDA AND ZIA U R REHMAN FILED AN APPEAL BEFORE THE HONBLE ITAT IN IT(SS)A 1/M/07 AND IT(SS)A3/M/0 7 RESPECTIVELY. IN THOSE APPEAL APART FROM CHALLENGING THE ADDITIONS MADE BY THE AS SESSING OFFICER ON MERITS THOSE APPELLANTS ALSO RAISED AN ISSUE THAT ASSESSMENT PRO CEEDINGS WHICH WERE MADE AGAINST THOSE ASSESSEES UNDER SECTION 158BD OF THE ACT WERE BAD IN LAW BECAUSE THE NOTICE UNDER SECTION 158BD ISSUED TO THOSE ASSE SSEES DID NOT RECORD THE SATISFACTION AS TO HOW THE ASSESSING OFFICER ENTERT AINED A BELIEF THAT THE UNDISCLOSED INCOME PERTAIN TO THE ASSESSEES. THE HONBLE TRIBU NAL UPHELD THE CONTENTION OF THOSE ASSESSEE AND HELD AS FOLLOWS: 6. THE LD. COUNSEL FOR THE ASSESSEE WHILE REITERAT ING THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW SUBMITTED THAT THERE W AS NO MATERIAL BELONGING TO THE ASSESSEE FOUND DURING THE COURSE OF SEARCH. HE SUBMITTED THAT AS REQUIRED UNDER THE PROVISIONS OF SEC.158BD AO HAS TO RECORD THE SATISFACTION THAT INCOME BELONGED TO THE ASSESSEE. HE DREW OUR A TTENTION TO THE NOTICE U/S.158BD OF THE ACT DATED 18-11-2005 PLACED AT PA GE 70 OF THE PAPER BOOK TO DEMONSTRATE THAT THE AO HAS NOT RECORDED HIS SAT ISFACTION AS REQUIRED UNDER LAW. HE PLACED RELIANCE UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI [CITED SUPRA] WHE REIN THE HON'BLE SUPREME COURT HAS HELD AS UNDER- IT(SS)A 2/MUM/2007 4 6.THE CONDITION PRECEDENT FOR INVOKING A BLOCK ASS ESSMENT IS THAT A SEARCH HAS BEEN CONDUCTED UNDER SECTION 132 OR DOCUMENTS OR ASSETS HAVE BEEN REQUISITIONED UNDER SECTION 132A. THE SAID PROVISIO N WOULD APPLY IN THE CASE OF ANY PERSON IN RESPECT OF WHOM SEARCH HAS BEEN CA RRIED OUT UNDER SECTION 132A OR DOCUMENTS OR ASSETS HAVE BEEN REQUISITIONED UNDER SECTION 132A. SECTION 158BD HOWEVER PROVIDES FOR TAKING RECOURS E TO A BLOCK ASSESSMENT IN TERMS OF SECTION 158BC IN RESPECT OF ANY OTHER P ERSON THE CONDITIONS PRECEDENT WHEREFOR ARE: (I) SATISFACTION MUST BE RE CORDED BY THE ASSESSING OFFICER THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER S ECTION 132 OF THE ACT; (II) THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASS ETS SEIZED OR REQUISITIONED HAD BEEN HANDED OVER TO THE ASSESSING OFFICER HAVI NG JURISDICTION OVER SUCH OTHER PERSON; AND (III) THE ASSESSING OFFICER HAS PROCEEDED UNDER SECTION 158BC AGAINST SUCH OTHER PERSON. THE CONDITIONS PRECEDENT FOR INVOKING THE PROVISION S OF SECTION 158BD THUS ARE REQUIRED TO BE SATISFIED BEFORE THE PROVISIONS OF THE SAID CHAPTER ARE APPLIED IN RELATION TO ANY PERSON OTHER THAN THE PE RSON WHOSE PREMISES HAD BEEN SEARCHED OR WHOSE DOCUMENTS AND OTHER ASSETS H AD BEEN REQUISITIONED UNDER SECTION 132A OF THE ACT. XX XX XX XX LAW IN THIS REGARD IS CLEAR AND EXPLICIT. THE ONLY QUESTION WHICH ARISES FOR OUR CONSIDERATION IS AS TO WHETHER THE NOTICE DATED FEB RUARY 6 1996 SATISFIES THE REQUIREMENTS OF SECTION 158BD OF THE ACT. THE SAID NOTICE DOES NOT RECORD ANY SATISFACTION ON THE PART OF THE ASSESSING OFFICER. DOCUMENTS AND OTHER ASSETS RECOVERED DURING THE SEARCH HAD NOT BEEN HANDED OVE R TO THE ASSESSING OFFICER HAVING JURISDICTION IN THE MATTER. 7. THE LD. DR ON THE OTHER HAND SUPPORTED THE OR DERS OF THE AUTHORITIES BELOW. 8. HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDE RED THEIR RIVAL CONTENTIONS WE FIND THAT THE NOTICE DATED 18-11-20 05 ISSUED U/S.158BD DOES NOT CONTAIN ANY SATISFACTION OF THE AO THAT THE INCOME PERTAINS TO THE ASSESSEE. THIS NOTICE IS SIMILAR TO THE NOTICE CONSIDERED BY THE HON'BLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI [CITED SUPRA] WHICH IS REPRODUCED AT PAGE 345 OF 289 ITR. FOR THE SAKE OF CLARITY THE SAME IS REPRODUCED AS UNDER- TO INDORE CONSTRUCTION CO.PVT.LTD. 380 JAWAHAR MARG INDORE. IT(SS)A 2/MUM/2007 5 IN PURSUANCE OF THE PROVISIONS OF SECTION 158BC OF THE INCOME TAX ACT 1961 YOU ARE REQUESTED TO PREPARE A TRUE AND CORRECT RETURN OF YOUR TOTAL INCOME INCLUDING THE UNDISCLOSED INCOME IN RESPECT OF WHICH YOU AS INDIVIDUAL/HUF/FIRM/COMPANY/AOP/BODY OF INDIVIDUAL/ LOCAL AUTHORITY ARE ASSESSABLE FOR THE BLOCK PERIOD MENTIONED IN SECTIO N 15L8B(A) OF THE INCOME TAX ACT 1961. THE RETURN SHOULD BE IN THE PRESCRIBED FORM NO.2B A ND BE DELIVERED IN THIS OFFICE WITHIN 16 DAYS OF SERVICE OF THIS NOTIC E DULY VERIFIED AND SIGNED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 140 OF TH E INCOME TAX ACT 1961. THE NOTICE ISSUED U/S.158BD IN THE CASE OF THE ASSE SSEE IS AS UNDER- IN PURSUANCE OF THE PROVISIONS OF SECTION 158BD O F THE I.T.ACT 1961 YOU ARE REQUESTED TO PREPARE A TRUE AND CORRECT RET URN OF YOUR TOTAL INCOME INCLUDING THE UNDISCLOSED INCOME IN RESPECT OF WHIC H YOU AS AN INDIVIDUAL IS ASSESSABLE FOR THE BLOCK PERIOD MENTIONED IN SECTIO N 158B(A) OF THE INCOME TAX ACT 1961. THE RETURN SHOULD BE IN THE PRESCRIBED FORM NO.2B AND BE DELIVERED IN THIS OFFICE WITHIN 30 DAYS OF SERVICE OF THIS NOTIC E DULY VERIFIED AND SIGNED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 140 OF TH E I.T.ACT 1961. THUS IT CAN BE SEEN THAT THE NARRATION IN THE NOTI CES IN THE ASSESSEES CASE AS WELL AS THE CASE BEFORE THE HON'BLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI [CITED SUPRA] ARE SAME EXCEPT FOR THE NUMBER OF DAYS FOR FILING THE RETURN. IT IS AFTER CONSIDERING THE NOTICE THAT THE HON'BLE SUPREME COURT HAS OBSERVED THAT THE NOTICE IN WHICH AO HAS NOT RECORDED HIS SATISFACTION IS NOT VALID. THEREFO RE THE ISSUE IS COVERED BY THE SAID DECISION OF THE HON'BLE APEX COURT. FUR THER THIS DECISION HAS BEEN FOLLOWED BY VARIOUS HIGH COURTS AND TRIBUN ALS IN THE FOLLOWING CASES- A) NEW DELHI AUTO FINANCE (P) LTD. VS. JT. CIT 4 D TR 318 [DEL] B) CIT VS. FEATHER BREWERIES & MARKET 166 TAXMAN 2 71 [DEL] C) ASST.CIT V. KISHORE LAL BALWANT RAJ 17 SOT 380 [CHD] D) SHRI BALRAJ GUPTA V. ACIT IN IT[SS]A.NO.40/M/07 [MUM] E) SHORELINE HOTEL (P) LTD. VS. DY. CIT (2008) 8 DTR 168 [TRI] F) DY. CIT V. NITS SOFTECH LTD. (2OO8) 8 DTR (DEL) (TRIB) 269 G) AMITY HOTELS PVT. LTD. V. CIT & ORS. 272 ITR 75 (DEL) 9. RESPECTFULLY FOLLOWING THE AFORESAID DECISIONS WE ALLOW GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE. IT(SS)A 2/MUM/2007 6 5. THE LD. COUNSEL FOR THE ASSESSEE ALSO FILED BEFO RE US A COPY OF THE NOTICE ISSUED UNDER SECTION 158BD OF THE ACT TO THE ASSES SEE WHICH IS IDENTICAL TO THE NOTICE ISSUED TO THE ASSESSEE IN THE CASE OF SHRI A .R DAMDA AND ZIA UR REHMAN IT WAS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE T HAT THE ASSESSMENT HAS TO BE QUASHED ON THE GROUND THAT THE NOTICE ISSUED UNDER SECTION 158BD OF THE ACT DOES NOT RECORD SATISFACTION THAT THE UNDISCLOSED INCOME IN QUESTIONS BELONGS TO THE ASSESSEE. 6. THE LD. D.R ON THE OTHER HAND SUBMITTED THAT TH E ASSESSING OFFICER OF SHRI J.K.GANDHI HAD FORWARDED A LETTER DATED 28/7/2003 P OINTING OUT THE CIRCUMSTANCES UNDER WHICH CASH OF RS.9.25 LACS WAS SEIZED FROM TH E POSSESSION OF SHRI J.K.GANDHI AND AS TO HOW HE HAD EXPLAINED THE SEIZED CASH A S BELONGING TO THE ASSESSEE TO THE EXTENT OF RS. 1.00 LAC. HE FURTHER DREW OUR AT TENTION TO THE FACT THAT ASSESSING OFFICER RECORDED THE SATISFACTION THAT THE ASSESSEE IN THE PRESENT APPEAL COULD NOT SATISFACTORILY EXPLAIN THE NATURE AND SOURCE OF ACQ UISITION OF THE CASH. ACCORDING TO HIM THIS WAS SUFFICIENT COMPLIANCE TO THE REQUIREME NT OF LAW AND THEREFORE PROCEEDINGS UNDER SECTION 158BD COULD NOT BE HELD T O BE INVALID. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THE NOTICE UNDER SECTION 158BD IN THE CASE OF THE ASSESSEE IS IN-PAR I MATERIA THE SAME AS THE NOTICE ISSUED IN THE CASE OF SHRI A.R.DAMDA AND ZIA UR RE HMAN. THE TRIBUNAL IN THE ABOVE CASES HAD HELD THAT NOTICE UNDER SECTION 158 BD SHOULD RECORD SATISFACTION. SINCE THE NOTICE IN THE CASE OF THE ASSESSEE AND TH E NOTICES ISSUED IN THE CASE OF SHRI A.R. DAMDA ABD ZIA UR REHMAN ARE IDENTICAL WE ARE OF THE VIEW THAT THE DECISION OF THE TRIBUNAL IN THOSE CASES WILL BE BIN DING. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF SHRI A.R. DAMDA AND ZIA UR REHMAN WE HOLD THAT THE PROCEEDINGS UNDER SECTION 158 BD ARE INVAL ID. WE HOLD ACCORDINGLY AND IT(SS)A 2/MUM/2007 7 ALLOW THE APPEAL BY THE ASSESSEE ON THIS ISSUE. TH E OTHER ISSUES ON MERITS ARE NOT BEING CONSIDERED IN VIEW OF THE DECISION ON THE PRE LIMINARY ISSUE. 8. IN THE RESULT THE APPEAL BY THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 25 TH DAY OF FEBRUARY 2011. SD/- SD/- (J.SUDHAKAR REDDY) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED. 25 TH FEB.2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RE BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR I TAT MUMBAI BENCHES MUMBAI. VM. IT(SS)A 2/MUM/2007 8 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 17/2/11 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 18/2/11 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER