M/s Ghanshyamdas Gems & Jewels, Hyderabad v. DCIT, Hyderabad

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A HYDERABAD BEFORE SHRI G.C.GUPTA VICE-PRESIDENT AND SHRI AKBER BASHA ACCOUNTANT MEMBER IT(SS)A NO.26/HYD/2008 : BLOCK PERIOD 1997-98 TO 2003- 04 M/S. GHANSHYAMDAS GEMS & JEWELS GUNFOUNDRY HYDERABAD. (GIR NO.G-301/CC-5) VS ASST. COMMISSIONER OF INCOME- TAX CENTRAL CIRCLE 5 HYDERABAD. (ASSESSEE) (RESPONDENT) APPELLANT BY : SRI C. SUBRAMAIAM RESPONDENT BY : SHRI A. PATRA O R D E R PER AKBER BASHA ACCOUNTANT MEMBER: THIS APPEAL BY THE ASSESSEE FOR THE BLOCK ASSESSMENT PERIOD FROM 1997-98 TO 2003-04 IS DIRECTED AGAINST THE ORDER OF THE CIT (A)-I HYDERABAD DATED 25-8-2008. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTN ERSHIP FIRM CONSISTING OF FIVE PARTNERS AND IT CAME INTO EXISTE NCE WITH EFFECT FROM 18-3-1998. IT IS CARRYING ON BUSINESS IN PURCHASE AN D SALE OF GOLD JEWELLERY AND GEMS. THERE WERE SEARCH OPERATIONS IN TH E BUSINESS PREMISES AT C-1 MAYUR KUSHAL COMPLEX ABIDS ON 14-2-2 003 WHICH WAS CONCLUDED ON 25-2-2003 AND CONSEQUENT UPON THE SAID SEARCH OPERATIONS NOTICE UNDER SECTION 158BC OF THE ACT WAS ISSU ED ON 29-4- 2003 AND IN RESPONSE THERETO THE ASSESSEE-FIRM FILED THE BLOCK PERIOD RETURN ON 28-5-2003 DECLARING THEREIN NIL UNDISCLOSED I NCOME. AFTER NEARLY 20 MONTHS A NOTICE UNDER SECTION 143(2) WAS ISSUED TO THE 2 ASSESSEE FIRM ON 2-2-2005 ALONG WITH A QUESTIONNAIRE ASKI NG FOR DETAILS AS TO WHY THE CASH OF RS.47 00 000 AND FOREIGN CURRENCY E QUIVALENT TO RS.21.65 LAKHS WHICH WAS SEIZED FROM ABDULLAH ALLEGED T O BE ONE OF THE EMPLOYEES OF THE ASSESSEE AT MUMBAI AIRPORT SHOULD NOT BE TREATED AS UNDISCLOSED INCOME AND THE CASE WAS POSTED ON 8-2-2005 IN WHICH DATE A LETTER WAS FILED BY THE ASSESSEE STATING THAT ITS MANAGI NG PARTNER WAS NOT WELL DUE TO DENTAL SURGERY AND SUMMONS WERE ALSO ISSUED TO THE FIRM AND NOT TO THE MANAGING PARTNER BY NAME REQU IRING TO APPEAR ON 10-2-2005 AND IN RESPONSE TO THE SUMMONS. THE ASSESSING OFF ICER AFTER ELABORATELY DISCUSSING THE POINTS AT ISSUE TREATED AN AMO UNT OF RS.68 65 389 AS UNDISCLOSED INCOME OF THE ASSESSEE FIRM AND L EVIED TAX THEREON AT RS.43 25 191 IN THE IMPUGNED ASSESSMENT ORDER . AGGRIEVED THE ASSESSEE WENT IN APPEAL BEFORE THE CIT (A). THE CI T (A) BY CONFIRMING THE ORDER OF THE ASSESSING OFFICER DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED AGAINST THE ORDER OF THE CIT (A) T HE ASSESSEE IS IN APPEAL BEFORE US. 3. AT THE OUTSET WE FIND THAT THE ASSESSEE HAS TAKEN G ROUND NO.1.7 WHICH READ AS UNDER: 'THE ASSESSING OFFICER FAILED TO ISSUE NOTICE U/S 1 43(2) OF THE IT ACT AS REQUIRED UNDER THE PROVISIONS OF STATUTE THEREFORE THE FAILURE ON THIS COUNT IS IN VIOLATION OF THE STATUTORY PROVISIONS O F LAW AND ASSESSMENT SO COMPLETED IS AB INITIO VOID. IN THE ABOVE GROUND THE ASSESSEE CONTENDED THAT THE ASSE SSING OFFICER FAILED TO ISSUE NOTICE UNDER S. 143(2) OF THE ACT AS RE QUIRED UNDER THE PROVISIONS OF THE SAID STATUTE AND THEREFORE THE FAILUR E ON THIS COUNT IS IN VIOLATION OF THE STATUTORY PROVISIONS OF LAW AND THE ASSESSMENT SO COMPLETED IS AB INITIO VOID. THIS GROUND WAS NOT TAKEN BEFORE THE CIT (A) AND WE FIND THAT THIS GROUND GOES TO THE ROOT OF THE MATTER AND 3 HENCE IN THE INTEREST OF JUSTICE WE REMIT THIS ISSUE TO THE FILE OF THE CIT (A) FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. SINCE WE ARE REMITTING THIS ISSUE TO THE FILE OF THE CIT (A) WE ARE NOT ADJU DICATING THE OTHER GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL. 4. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS TREATE D AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 16 -04-2010. SD/- G.C.GUPTA SD/- AKBER BASHA VICE PRESIDENT ACCOUNTANT MEMBER. DT/- 16TH APRIL 2010 COPY FORWARDED TO: 1. M/S. GHANSHYAMDAS GEMS & JEWELS C-1 MAYUR KUSH AL COMPLEX GUNFOUNDRY ABIDS HYDERABAD. 2 THE ACIT CENTRAL CIR-5 HYDERABAD. 3. 4. CIT (A)-I HYDERABAD. CIT AP HYDERABAD. 5. THE DEPARTMENTAL REPRESENTATIVE ITAT HYDERABAD. JMR