SAYANERGY MULTIBASE LTD, DAMAN v. THE DY,CIT CENT CIR.1, BARODA

ITSSA 360/AHD/2002 | misc
Pronouncement Date: 23-07-2010 | Result: Allowed

Appeal Details

RSA Number 36020516 RSA 2002
Assessee PAN SINCE2007A
Bench Ahmedabad
Appeal Number ITSSA 360/AHD/2002
Duration Of Justice 7 year(s) 7 month(s) 10 day(s)
Appellant SAYANERGY MULTIBASE LTD, DAMAN
Respondent THE DY,CIT CENT CIR.1, BARODA
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 23-07-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 23-07-2010
Date Of Final Hearing 23-06-2010
Next Hearing Date 23-06-2010
Assessment Year misc
Appeal Filed On 13-12-2002
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD D BENCH (BEFORE S/SHRI G.D. AGARWAL VICE-PRESIDENT AND MAHAVIR SINGH JUDICIAL MEMBER) IT(SS)A.NO.360/AHD/2002 [BLOCK 1998-89 TO 12-1-1999] SYNERGY MULTIBASE LTD. 74/5-6 DAMAN INDUSTRIAL ESTATE KADAIYA VILLAGE NANI DAMAN 396 210 (UT) VS. DCIT CENT.CIR.1 BARODA. IT(SS)A.NO.79/AHD/2004 [BLOCK 1998-89 TO 12-1-1999] ACIT VAPI. VS. SYNERGY MULTIBASE LTD. 74/5-6 DAMAN INDUSTRIAL ESTATE KADAIYA VILLAGE NANI DAMAN 396 210 (UT) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.N. SOPARKAR REVENUE BY : SHRI K. MADHU SUDAN O R D E R PER G.D. AGRAWAL VICE-PRESIDENT: THESE ARE TWO APPEALS ONE BY THE ASSESSEE AND ANOTHER BY THE REVENUE AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-V BARODA. 2. IN THIS APPEAL OF THE ASSESSEE THE FOLLOWING GR OUNDS ARE RAISED: 1.1 THE LD.CIT(A) ERRED IN NOT REFUTING THE ADDITI ON OF RS.7 05 088/- ALLEGED TO BE THE DIFFERENCE BETWEEN THE VALUES OF STOCK OF RAW MATERIALS GIVEN TO BANK AND AS DETERMINED BY THE LD.AO CONSID ERING THE BOOKS OF ACCOUNTS. THE DETAILS OF THE CONTEMPLATED ADDITION IS AS UNDER: RS.628 067/- DIFFERENCE BETWEEN VALUE OF STOCK OF R AW MATERIALS GIVEN TO BANK AND AS PER BOOKS OF ACCOUNTS AMOUNTING TO RS.12 156 781/- AND RS.11 528 714/- RESPECTIVELY. IT(SS)A.NO.360/AHD/2002 -2- RS.77 021/- DIFFERENCE BETWEEN VALUE OF RAW MATERIA LS LYING IN GODOWN AT MUMBAI AND AS PER BOOKS OF ACCOUNTS AMOUNTING TO RS.673 474/- AND RS.596 453/- RESPECTIVELY. -------------- 705 088/- TOTAL ====== 1.2 THE LD.CIT-A OUGHT TO HAVE GIVEN A MERE SPECIFI C AND SPEAKING GROUND OF DECISION FOR REJECTING THE ABOVE GROUND O F APPEAL OF THE APPELLANT. 2. THE LD.CIT(A) ERRED IN CONFIRMING THE ADDITION O F RS.27 193/- MADE BY THE LD.AO BY APPLYING A GP RATE OF 20% ON R S.135 967/- ALLEGED TO BE UNACCOUNTED SALES BY THE APPELLANT. THE ASSESSEE HAS ALSO RAISED THE FOLLOWING ADDITION AL GROUNDS: 1. THE LD. AO ERRED IN ASSUMING THE JURISDICTION U /S.158BD OF THE ACT AND IN ASSESSING THE INCOME OF THE APPELLANT FO R BLOCK PERIOD PARTICULARLY WHEN THE ENTIRE ADDITION MADE HAS BEEN ON THE BASIS OF THE ALLEGED DISCREPANCY IN THE STOCK STATEMENT SUBMITTE D TO THE BANK FOUND DURING SURVEY ACTION U/S.133A AT THE PREMISES OF TH E APPELLANT AND NOT ON THE BASIS OF MATERIAL FOUND DURING SEARCH ACTION AT SOME OTHER AASSESSEES PLACE. IT IS SUBMITTED THAT IT BE SO H ELD NOW AND THE ORDER PASSED BY THE LD.AO U/S.158BD(B) R.W.S. 1258BG(B) B E QUASHED. 2. WITHOUT PREJUDICE TO ABOVE ADDITIONAL GROUND O.1 EVEN IF IT IS HELD THAT JURISDICTION TO ASSESSEE THE APPELLANT U/ S.158BD IS VALIDLY ASSUMED THE KIND OF ADDITION WHICH IS MADE IS NOT ON THE BASIS OF SEIZED MATERIAL DURING THE SEARCH PROCEEDINGS AT OTHER ASS ESSEES PLACE BUT ON THE BASIS OF MATERIAL FOUND DURING SURVEY PROCEEDIN GS AT THE PREMISES OF THE APPELLANT AND HENCE ADDITION MADE IF ANY ON TH E BASIS OF SUCH MATERIAL CAN ONLY BE MADE IN REGULAR ASSESSMENT PRO CEEDINGS AND NOT IN THE BLOCK ASSESSMENT PROCEEDINGS. IT IS SUBMITTED THAT IT BE SO HELD NOW. 3. WITHOUT PREJUDICE TO ANY OF THE FORGOING ADDITIO NAL GROUNDS IT IS SUBMITTED THAT AS FAR AS ADDITION OF RS.7 05 088/- ON ACCOUNT OF DIFFERENCE IN VALUE OF STOCK OF RAW MATERIAL SUBMIT TED TO BANK AND IN ACCOUNT BOOKS AS ON 31-3-1998 IS CONCERNED THE SAM E CANNOT RESULT IN TO ANY EFFECTIVE ADDITION FOR THE BLOCK PERIOD AS T HE ADDITION TO CLOSING STOCK ON 31-3-98 BECOMES ADDITION TO OPENING STOCK FOR 1-4-98 WHICH ALSO FALLS IN THE BLOCK PERIOD. IT IS SUBMITTED TH AT IT BE SO HELD NOW AND ADDITION MADE ON THIS COUNT BE DELETED EVEN ON THIS GROUND. IT(SS)A.NO.360/AHD/2002 -3- 3. AT THE TIME OF HEARING BEFORE US IT WAS POINTED OUT BY THE LEARNED COUNSEL THAT THE AO HAS COMPLETED THE ASSESSMENT UN DER SECTION 158BD IN THE CASE OF ASSESSEE WHEN A SURVEY UNDER SECTION 133A H AS TAKEN PLACE AT THE BUSINESS PREMISES OF THE ASSESSEE. THAT IN THE ASS ESSMENT ORDER THE AO HAS NOT GIVEN ANY REASON FOR TAKING UP THE PROCEEDINGS UNDER SECTION 158BD IN THE CASE OF THE ASSESSEE. THE ASSESSED INCOME OF THE B LOCK PERIOD WAS RS.7 32 281/- . THIS CONSISTS OF TWO ITEMS AS UNDE R: I) ADDITION ON ACCOUNT OF ALLEGED DIFFERENCE BETWEEN T HE STOCK STATEMENT GIVEN TO THE BANK AND STOCK AS SHOWN IN T HE BOOKS OF ACCOUNTS OF RS.7 05 088/-; II) ADDITION ON ACCOUNT OF DIFFERENCE IN THE STOCK AS F OUND DURING THE COURSE OF SURVEY RS.27 193/- THUS NO ADDITION WAS MADE ON THE BASIS OF ANY ALLE GED SEIZED MATERIAL IN THE CASE OF SOME OTHER ASSESSEE WHOSE PREMISES HAS BEEN SEARCHED. IT WAS THEREFORE CONTENDED BY THE LEARNED COUNSEL THAT THE RE WAS NO BASIS FOR TAKING UP OF THE PROCEEDINGS UNDER SECTION 158BD IN THE CASE OF THE ASSESSEE. IN SUPPORT OF THIS CONTENTION THE LEARNED COUNSEL FOR THE ASS ESSEE HAS RELIED UPON THE DECISION OF HONBLE APEX COURT IN THE CASE OF MANIS H MAHESHWARI VS. ACIT 289 ITR 341 (SC). 4. THE LEARNED DR ON THE OTHER HAND REQUESTED FOR THE TIME FOR PRODUCING THE SATISFACTION NOTE IF ANY RECORDED FOR INITIAT ION OF THE PROCEEDINGS UNDER SECTION 158BD. FROM THE PERUSAL OF OUR RECORD WE FIND THAT THIS MATTER IS BEING ADJOURNED TIME AND AGAIN SINCE 2007 AND THE A DJOURNMENT IS BEING SOUGHT BY THE REVENUE FOR PRODUCING THE SATISFACTION NOTE. THE LEARNED DR WAS FAIR ENOUGH TO STATE THAT THE OFFICE OF THE CIT-DR IS WR ITING TO THE AO FOR PRODUCING THE SATISFACTION NOTE FROM OCTOBER 2007 WHEN THE BENCH FOR THE FIRST TIME ASKED FOR THE SATISFACTION NOTE. HE HAS ALSO PRODUCED COPY OF THE CORRESPONDENCE BETWEEN THE OFFICE OF THE CIT-DR AND THE AO. HE POINTED OUT IT(SS)A.NO.360/AHD/2002 -4- THAT THE JURISDICTION OF THE ASSESSEE HAS CHANGED F ROM ONE AO TO ANOTHER AND THEREFORE THE AO ARE UNABLE TO LAY HAND ON THE SATI SFACTION NOTE FOR INITIATING THE PROCEEDINGS UNDER SECTION 158BD. 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THA T THE HONBLE APEX COURT HAS CONSIDERED THE ISSUE OF INITIATION OF PROCEEDIN GS UNDER SECTION 158BD IN THE CASE OF MANISH MAHESHWARI (SUPRA). THEIR LORDS HIPS HELD AS UNDER: BEFORE THE PROVISIONS OF SECTION 158BD OF THE INCO ME-TAX ACT 1961 ARE INVOKED AGAINST A PERSON OTHER THAN THE PERSON WHOSE PREMISES HAVE BEEN SEARCHED UNDER SECTION 132 OR DOCUMENTS AND OT HER ASSETS HAVE BEEN REQUISITIONED UNDER SECTION 132A THE CONDITIO NS PRECEDENT HAVE TO BE SATISFIED. HELD ACCORDINGLY THAT WHERE THE PREMISES OF A DIRE CTOR OF A COMPANY AND HIS WIFE WERE SEARCHED UNDER SECTION 132 OF THE INCOME-TAX ACT 1961 AND A BLOCK ASSESSMENT HAD TO BE DONE IN RELAT ION TO THE COMPANY THE ASSESSING OFFICER HAD TO (I) RECORD HIS SATISFA CTION THAT ANY UNDISCLOSED INCOME BELONGED TO THE COMPANY AND (II ) HAND OVER THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS AND ASSETS SEI ZED TO THE ASSESSING OFFICER HAVING JURISDICTION AGAINST THE COMPANY. FROM THE ABOVE IT IS EVIDENT THAT THE SATISFACTION NOTE OF THE AO OF THE PERSONS SEARCHED IS NECESSARY SO AS TO INITIATE PROCEEDINGS UNDER SECTION 158BD IN THE CASE OF ANOTHER ASSESSEE. HOWEVER IN THE CASE UND ER APPEAL THE REVENUE IS UNABLE TO PRODUCE ANY SATISFACTION NOTE DESPITE EN OUGH OPPORTUNITIES HAVE BEEN GIVEN. FOR THE FIRST TIME ON 3-10-2007 THE B ENCH DIRECTED THE CIT-DR TO PRODUCE THE SATISFACTION NOTE AND THE CIT-DR VIDE H IS LETTER DATED 12-10-2007 REQUESTED THE AO TO FURNISH THE COPY OF THE SATISFA CTION NOTE RECORDED BY THE AO. COPY OF THE LETTER OF THE CIT-DR READS AS UNDE R: OFFICE OF THE COMMISSIONER OF INCOME-TAX-III INCOME TAX APPELLATE TRIBUNAL 2 ND FLOOR NEPTUNE TOWER OPP: NEHRU BRIDGE ASHRAM ROAD AHMEDABAD. NO.CIT(ITAT)-IIIC BENCH/07-08 DATE : 12-10-2007 IT(SS)A.NO.360/AHD/2002 -5- TO THE DY.CIT CENTRAL CIRCLE-I BARODA. SUB: ASSESSEES APPEAL IN THE CASE OF SYNERGY MULTI BASE LTD. BARODA A.Y.1988-89 TO 12-01-1999 ITA NO.360/A/2002. PLEASE REFER TO THE ABOVE. 2. DURING THE COURSE OF HEARING THE APPELLANT HAS FILED ADDITIONAL GROUNDS OF APPEAL BEFORE THE HONBLE C BENCH ITAT AHMED ABAD (COPY ENCLOSED HEREWITH FOR READY REFERENCE). PLEASE SEND YOUR CO MMENTS ON THE ADDITIONAL GROUND. 3. YOU ARE ALSO REQUESTED TO FURNISH THE RELEVANT C ASE RECORDS IN THIS CASE. 4. FURTHER YOU ARE REQUESTED TO FURNISHING A COPY OF SATISFACTION NOTE RECORDED BY THE AO WHO SENT THE SEIZED MATERIAL TO YOUR OFFICE AND IF YOU ARE THE AO FOR THE SEARCHED PERSONS AND THIS ASSESSEE THEN SHOW THE BASIS ON WHICH ACTION US/.158BD WAS TAKEN. 5. THE ABOVE INFORMATION REPORTS AND DOCUMENTS ALO NG WITH CASE RECORDS SHOULD BE FURNISHED WITHIN A FORTNIGHT POSITIVELY. SD/- (N.S.DAYAM) CIT(DR)/ITAT-III AHMEDABAD THEREAFTER THERE ARE SEVERAL CORRESPONDENCES BETWE EN THE OFFICE OF THE CIT-DR AND THE AO THE COPIES OF WHICH ARE PLACED BEFORE U S BY THE LEARNED DR. HOWEVER FACT REMAINS THAT THE DEPARTMENT IS UNABLE TO PRODUCE THE SATISFACTION NOTE SO FAR. IN THE ASSESSMENT ORDER ALSO THE AO HAS NOT DISCUSSED ANY SATISFACTION NOTE HAVING BEEN RECORDED BY THE AO OF THE PERSONS SEARCHED. HE HAS ALSO NOT DISCUSSED ANY MATERIAL SEIZED FROM THE PERSONS SEARCHED WHICH IS PERTAINING TO THE ASSESSEE. IN VIEW OF THE TOTALIT Y OF THE ABOVE FACTS WE HAVE NO ALTERNATIVE BUT TO HOLD THAT THE REVENUE IS UNABLE TO ESTABLISH THAT A PROPER SATISFACTION NECESSARY FOR INITIATION OF THE PROCEE DINGS UNDER SECTION 158BD WAS RECORDED. WE THEREFORE QUASH THE PROCEEDINGS I NITIATED UNDER SECTION IT(SS)A.NO.360/AHD/2002 -6- 158BD AND CONSEQUENTIALLY THE ASSESSMENT ORDER PASS ED FOR THE BLOCK PERIOD IS ALSO CANCELLED. 6. SINCE WE HAVE ALREADY CANCELLED THE IMPUGNED ASS ESSMENT ORDER VARIOUS GROUNDS RAISED BY THE ASSESSEE AGAINST THE ADDITIONS NEED NO ADJUDICATION. SIMILARLY THE REVENUES APPEAL IN I TA NO.79/AHD/2004 DOES NOT SURVIVE IN VIEW OF OUR QUASHING OF ASSESSMENT P ROCEEDINGS UNDER SECTION 158BD FOR THE IMPUGNED BLOCK PERIOD. ACCORDINGLY WE DISMISS THE REVENUES APPEAL. 7. IN THE RESULT THE ASSESSEES APPEAL IS ALLOWED AND THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 23 RD JULY 2010. SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 23-07-2010 VK* COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER AR ITAT AHMEDABAD