Smt. Chandrikaben R. Sanghavi, Surat v. The ACIT., Circle-3,, Surat

ITSSA 50/AHD/2007 | misc
Pronouncement Date: 24-12-2010 | Result: Allowed

Appeal Details

RSA Number 5020516 RSA 2007
Bench Ahmedabad
Appeal Number ITSSA 50/AHD/2007
Duration Of Justice 3 year(s) 9 month(s) 13 day(s)
Appellant Smt. Chandrikaben R. Sanghavi, Surat
Respondent The ACIT., Circle-3,, Surat
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 24-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 24-12-2010
Date Of Final Hearing 09-12-2010
Next Hearing Date 09-12-2010
Assessment Year misc
Appeal Filed On 12-03-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD C BENCH (BEFORE S/SHRI G.D. AGARWAL VICE-PRESIDENT AND T.K. SHARMA JUDICIAL MEMBER) IT(SS)A.NO.50/AHD/2007 [BLOCK PERIOD : 1990-91 TO 2000-2001] SMT.CHANDRIKABEN R. SANGHAVI B-902 YOGI COMPLEX OPP: CHOKSI WADI NEW RANDER ROAD SURAT. VS. ACIT CIR.3 SURAT. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MEHUL K. SHAH REVENUE BY : SHRI K. MADHUSUDAN O R D E R G.D. AGARWAL VICE-PRESIDENT : THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-II SURAT DATE D 29.12.2006 ARISING OUT OF THE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 158BD R. W.S. 158BC OF THE INCOME TAX ACT 1961. 2. IN THE MEMORANDUM OF APPEAL THE ASSESSEE HAD RA ISED TWO GROUNDS. FIRST GROUND IS AGAINST THE VALIDITY OF THE ASSESSMENT ORDER AND TH E SECOND AGAINST THE ADDITION OF RS.2 50 000/- SUSTAINED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). HOWEVER THE ASSESSEE AMENDED THE GROUNDS OF APPEAL AND THE AMENDED GROUNDS READ AS UNDER: 1. THAT ON THE FACTS AND IN LAW THE NOTICE U/S.158 BD OF THE ACT IS TIME BARRED AND INVALID AND HENCE THE ASSESSMENT ORDER I S VOID AB-INITIO. 2. THAT THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW A ND ON FACTS IN CONFIRMING THE ADDITION OF RS.2 50 000/- AS ALLEGED CASH PAYME NTS MADE OUTSIDE BOOKS OF ACCOUNTS. 3. WITH REGARD TO GROUND NO.1 IT IS STATED BY THE LEARNED COUNSEL THAT NOTICE UNDER SECTION 158BD WAS ISSUED TO THE ASSESSEE ON 10-6-20 04 ON THE BASIS OF SEARCH CONDUCTED AT THE PREMISES OF M/S.OHM DEVELOPERS. THAT SEARCH WA S CONDUCTED IN HIS PREMISES ON 29-10- 1999 AND BLOCK ASSESSMENT IN HIS CASE WAS COMPLETED ON 30-11-2001. THUS NOTICE WAS ISSUED AFTER MORE THAN TWO AND HALF YEARS OF THE CO MPLETION OF THE BLOCK ASSESSMENT IN THE CASE OF PERSONS SEARCHED. THAT DURING THE COURSE O F SEARCH AT M/S. OHM DEVELOPERS NO BOOKS OF ACCOUNTS OR MATERIAL BELONGING TO THE ASSESSEE W AS FOUND AND MOREOVER NO FINDING WAS RECORDED IN THE BLOCK ASSESSMENT OF OHM DEVELOPERS INDICATING THAT ANY BOOKS OF ACCOUNTS OR SEIZED MATERIALS BELONGING TO THE ASSESSEE WAS FOUN D WHICH MAY JUSTIFY ISSUE OF NOTICE UNDER IT(SS)A.NO.50/AHD/2007 -2- SECTION 158BD IN THE CASE OF THE ASSESSEE. HE POIN TED OUT THAT IDENTICAL ISSUE WAS CONSIDERED BY THE ITAT AHMEDABAD BENCHES IN THE CASE OF SHRI RAMESH AMBALAL VAGHASIA VS. ACIT IN IT(SS)A.NO.80/AHD/2007. THAT IN THE CASE OF RAM ESH AMBALAL VAGHASIA NOTICE UNDER SECTION 158BD WAS ISSUED ON THE BASIS OF SEARCH CON DUCTED IN THE PREMISES OF M/S.OHM DEVELOPERS. IN THAT CASE THE ITAT FOUND THAT NOTIC E UNDER SECTION 158BD WAS ISSUED TWO AND HALF YEARS AFTER THE COMPLETION OF ASSESSMENT U NDER SECTION 158BC THEREAFTER THE ITAT FOLLOWING THE DECISION OF THE SPECIAL BENCH OF THE ITAT IN THE CASE OF MANOJ AGGARWAL VS. DCIT (2008) 113 ITD 377 (DEL)(SB) QUASHED THE NOTIC E ISSUED UNDER SECTION 158BD. THE RELEVANT FINDINGS OF THE ITAT READ AS UNDER: 4. THESE FACTS ARE UNDISPUTED THAT THE BLOCK ASSES SMENT IN THE CASE OF SEARCHED PARTY WAS COMPLETED U/S.158BC OF THE ACT ON 30-11-2 001 AND NOTICE U/S.158BD OF THE ACT IN THE CASE OF THE ASSESSEE WAS ISSUED ON 22-06 -2004. THIS WAS BELATED BY ALMOST TWO AND HALF YEARS. IN VIEW OF THESE FACTS WE ARE OF THE VIEW THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE SPECIAL BENCH OF THE DELHI TRIBUNAL IN THE CASE OF MANOJ AGGARWAL V. DCIT (2008) 113 ITD 377 (DEL.)((S B). WE FIND FROM THE DECISION OF THE SPECIAL BENCH THAT THE ISSUE IS SQUARELY COV ERED BY THE FINDING IN PARA 113 TO 116 WHICH READS AS UNDER:- 113. SECTION 158BD COMMENCES WITH THE WORDS WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY UNDISCLOSED INCOME BE LONGS TO ANY PERSON OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MAD E AND THUS IT IS CLEAR THAT THE SATISFACTION OF THE ASSESSING OFFICER ASSE SSING THE PERSON SEARCHED IS THE FIRST AND FOREMOST REQUIREMENT. THE ASSESSING OFFICER CAN ARRIVE AT THIS SATISFACTION ONLY AFTER ASCERTAINING WHETHER THERE IS ANY UNDISCLOSED INCOME AT ALL AND THIS FINDING CAN BE ARRIVED AT BY HIM ON LY IN THE COURSE OF THE SECTION 158BD ASSESSMENT PROCEEDING. THEREAFTER HE HAS TO ARRIVE AT A FINDING AS TO THE PERSON TO WHOM SUCH INCOME BELONG S. THIS FINDING ALSO CAN BE ARRIVED AT ONLY IN THE COURSE OF THE SECTION 158 BC PROCEEDING IN THE CASE OF THE PERSON SEARCHED. HE MAY FIND THAT PART OF TH E SAID UNDISCLOSED INCOME BELONGS TO THE PERSON SEARCHED AND THE REST BELONGS TO OTHER PERSON OR PERSONS. AT THIS STAGE HE HAS TO GIVE A FINDING IN THIS BEHALF AS TO WHICH OF THE UNDISCLOSED INCOME BELONGS TO THE PERSON TO WHOM TH E REST OF THE INCOME BELONGS. THIS FINDING TOO HAS TO BE ARRIVED AT IN T HE COURSE OF THE SECTION 158BC PROCEEDING. AFTER ARRIVING AT THIS FINDING H E MAKES AN ASSESSMENT OF THE UNDISCLOSED INCOME RELATING TO THE PERSON SEARC HED IN HIS HANDS AND HANDS OVER THE MATERIAL RELATING TO THE UNDISCLOSED INCOME BELONGING TO THE OTHER PERSON OR PERSONS TO THE RESPECTIVE ASSESSING OFFICER. AS SECTION 158BC PROCEEDING IS SPECIFICALLY INTENDED FOR DETER MINING THE UNDISCLOSED INCOME THE MATERIAL UNEARTHED HAS TO BE EXAMINED I N THE COURSE OF THE SAID PROCEEDING AND IF SUCH EXAMINATION SHOWS THAT THE U NDISCLOSED INCOME BELONGS TO SOME OTHER PERSONS A FINDING IN THIS BEH ALF HAS TO BE RECORDED IN THE COURSE OF THE SECTION 158BC PROCEEDING AS SUCH FINDING HAS TO FORM AN INTEGRAL PART OF THE SAID PROCEEDING AND IN CONFORM ITY WITH THE INTENTION BEHIND THE SAID PROVISION. SO IT IS ESSENTIAL THA T SUCH FINDING HAS TO FORM PART OF THE SECTION 158BC PROCEEDING AND SO MUST FI ND A PLACE IN THE ORDER UNDER SECTION 158BC. THE ASSESSING OFFICER ASSESSIN G THE PERSON SEARCHED HAS TO GIVE A FINDING ON EACH AND EVERY MATERIAL AN D EVIDENCE UNEARTHED AFTER A CAREFUL AND JUDICIOUS EVALUATION AND SUCH E XERCISE INVOLVES A FINDING THAT THE UNDISCLOSED INCOME BELONGS TO A SPECIFIED PERSON AS FOUND BY HIM ON IT(SS)A.NO.50/AHD/2007 -3- THE SECTION 158BD PROCEEDING REVOLVES. IF THEREFOR E IN THE COURSE OF THE SECTION 158BC PROCEEDINGS THE ASSESSING OFFICER ASS ESSING THE PERSON SEARCHED DOES NOT GIVE A FINDING THAT ANY PART OF T HE UNDISCLOSED INCOME UNEARTHED BELONGS TO A PERSON OTHER THAN THE PERSON SEARCHED SECTION 158BD CAN NEVER BE INVOKED. IT IS THIS FINDING THA T IS AN INTEGRAL PART OF BOTH THE PROCEEDINGS WHETHER UNDER SECTION 15BC OR 158BD . FOR SUCH FINDING DETERMINES IN WHOSE HANDS THE UNDISCLOSED INCOME UN EARTHED HAS TO BE TAXED. IF THE UNDISCLOSED INCOME BELONGS TO THE PERSON SEA RCHED HE IS SUBJECTED TO BLOCK ASSESSMENT ON SUCH INCOME UNDER SECTION 158BC BUT IF SUCH INCOME OR PART OF SUCH INCOME BELONGS TO A PERSON NOT SEARCHE D SECTION 158BD TAKES OVER. THIS IS THE ESSENCE OF THE ENTIRE ENACTMENT R ELATING TO SEARCH. 114.SECTION 158BE PROVIDES FOR TIME LIMIT FOR COMPL ETION OF BLOCK ASSESSMENT. IT STIPULATES THAT THE ORDER UNDER SEC TION 158 BC SHALL BE PASSED WITHIN TWO YEARS FROM THE END OF THE MONTH IN WHICH THE LAST OF THE AUTHORIZATION FOR SEARCH UNDER SECTION132 WAS EXEC UTED OR FOR REQUISITION UNDER SECTION 132A AS THE CASE MAY BE AND SO THE OR DER ENVISAGED UNDER SECTION 158BC HAS NECESSARILY TO BE PASSED WITHIN T HIS TIME FRAME SET IN LAW. IF THERE IS A TIME-LIMIT FOR PASSING OF SUCH ORDER THERE IS AN IMPLIED TIME-LIMIT FOR GIVING A FINDING AS TO THE PERSON TO WHOM THE U NDISCLOSED INCOME BELONGS WHICH UNDER NO CIRCUMSTANCES CAN BE BEYOND THE TIME -LIMIT SET IN SECTION 158BE. IF THERE IS NO SUCH FINDING GIVEN IN THE OR DER UNDER SECTION 158BC THE PROVISIONS OF SECTION 158BD STAND OUSTED AT THE EXPIRY OF THE SAID TIME- LIMIT FOR THE REASON THAT SUCH A FINDING IS THE VER Y BASIS FOR INVOKING SECTION 158BD. 115. SECTION 158BD AS SAID EARLIER BEGINS WITH THE EXPRESSION WHERE THE ASSESSING OFFICER IS SATISFIED AND SO VERY SECTION IMPLIES A RECORDING OF SATISFACTION. THE SATISFACTION CONTEMPLATED IS A JUDICIOUS SATISFACTION AND NOT A SUBJECTIVE SATISFACTION AND UNLESS THE SAME I S RECORDED IT IS NOT POSSIBLE FOR ANY PERSON TO DISCERN WHETHER THE SATISFACTION MEETS THE REQUIREMENTS OF LAW AT ALL. THE SATISFACTION CAN BE FOUND IN THE O RDER PASSED UNDER SECTION 158BC AND IF NO SUCH ORDER IS PASSED THEN IT WILL H AVE TO BE FOUND IN THE NOTE HANDING OVER THE MATERIAL SEIZED TO THE ASSESSING O FFICER ASSESSING THE OTHER PERSON. IN ANY EVENT IT HAS TO BE IN WRITING AND IN VIEW OF SECTION 158BE THE SAID RECORDING HAS TO BE MADE BEFORE THE TIME SET I N SECTION 158BE EXPIRES. AFTER THE SAID DATE IT IS NOT POSSIBLE TO INVOKE S ECTION 158BD AT ALL. 116. A VIEW IS EXPRESSED THAT WHEREVER A TIME-LIMI T IS INTENDED THE PARLIAMENT HAS PROVIDED FOR THE SAME AND IN THE ABS ENCE OF A SPECIFIC PROVISION MADE IN THIS RESPECT IT HAS TO BE ASSUMED THAT THERE IS NO TIME-LIMIT INTENDED IN LAW. IT HAS TO BE REMEMBERED THAT THE M ATER RELATES TO FIXING HUGE FINANCIAL AND OTHER CIVIL LIABILITY ON THE PERSON A FFECTED AND IT HAS BEEN REPEATEDLY HELD THAT THERE MUST BE A FINALITY TO AN Y PROCEEDING UNDER THE ACT AND THAT A CONCLUDED PROCEEDING CANNOT BE REOPENED AT THE WHIM AND FANCY OF THE ASSESSING OFFICER WITHOUT THE DUE PROCESS OF LAW. STRICT INTERPRETATION OF FISCAL STATUTES IS THE ORDER OF THE DAY AND AS T HE PROVISIONS FOR SEARCH ARE DRACONIAN IN NATURE SUCH PROVISIONS HAVE NECESSARIL Y TO BE STRICTLY CONSTRUED. IT WILL HAVE TO BE REMEMBERED THAT SECTION 158BD PR OVIDES FOR INVOKING JURISDICTION UNDER THE SAID SECTION ENABLING THE AS SESSING OFFICER ASSESSING THE OTHER PERSON IN RESPECT OF WHOM THE ASSESSING O FFICER ASSESSING THE PERSON SEARCHED GIVES A FINDING THAT THE UNDISCLOSE D INCOME UNEARTHED AS A RESULT OF SEARCH BELONGS TO THE SAID PERSON AND ONC E SUCH A FINDING IS GIVEN THE PROVISIONS OF SECTION 158BD COME INTO OPERATION . THIS THEREFORE IT(SS)A.NO.50/AHD/2007 -4- INVOLVES ASSUMPTION OF JURISDICTION AND CANNOT BE C ONSTRUCTED AS A PROCEDURAL MATTER. IN THE ABSENCE OF A FINDING IN THIS BEHALF THERE IS NO JURISDICTION TO THE OTHER ASSESSING OFFICER AT ALL TO PROCEED FURTHER IN THE MATTER. AS THE TIME-LIMIT SET IN SECTION 158BE APP LIES TO SUCH FINDING IT IS ONLY LOGICAL THAT THE SAID TIME-LIMIT AUTOMATICALLY APPLIES FOR INVOKING THE PROVISIONS OF SECTION 158BD AND IT IS FOR THIS REAS ON THAT THE PARLIAMENT DID NOT FIND IT NECESSARY TO SPECIFY A SEPARATE TIME-LI MIT FOR THE SAME AS THE ENACTMENT ITSELF SHOWS THAT BOTH SECTIONS 158BC AND 158BD ARE INTER-LINKED INTERLACED AND INTER-WINDED AND BOTH FORM PART AND PARCEL OF THE SAME CHAPTER. 5. IN VIEW OF THE ABOVE FACTS THAT THE NOTICE U/S.1 58BD R.W.S 158BC OF THE ACT IN THE CASE OF THE ASSESSEE IS ISSUED BELATEDLY BY TWO AND HALF YEARS. THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF THE SPECIAL BEN CH OF MANOJ AGGARWAL (SUPRA) RESPECTFULLY FOLLOWING THE SAME WE ALLOW THE APPEA L OF THE ASSESSEE. 4. ON PERUSAL OF THE ABOVE DECISION WE FIND THAT F ACTS IN THE CASE OF THE ASSESSEE ARE IDENTICAL. IN THAT CASE NOTICE WAS ISSUED ON THE B ASIS OF SEARCH IN THE PREMISES OF OHM DEVELOPERS AND THE BLOCK ASSESSMENT WAS COMPLETED O N 30-11-2001. NOTICE UNDER SECTION 158BD WAS ISSUED ON 22-6-2004 WHILE IN THE CASE OF THE ASSESSEE ALSO NOTICE U/S.158BD WAS ISSUED ON 10-6-2004 ON THE BASIS OF SEARCH IN THE PREMISES OF OHM DEVELOPERS. THUS IN BOTH THE CASES NOTICE WAS ISSUED AFTER MORE THAN T WO AND HALF YEARS OF THE COMPLETION OF THE BLOCK ASSESSMENT OF THE PERSONS SEARCHED. NO MATER IAL WAS BROUGHT ON RECORD BEFORE US TO PROVE THAT ANY FINDING WAS RECORDED BY THE ASSESSIN G OFFICER OF OHM DEVELOPERS IN THE BLOCK ASSESSMENT ORDER THAT ANY SEIZED MATERIAL BEL ONGS TO THE ASSESSEE WHICH MAY BE CONSIDERED AS A SATISFACTION FOR ISSUE OF NOTICE UN DER SECTION 158BD IN THE CASE OF THE ASSESSEE. IN VIEW OF THE ABOVE WE RESPECTFULLY FO LLOWING THE ABOVE DECISION OF THE ITAT QUASH THE NOTICE ISSUED UNDER SECTION 158BD. CONSE QUENTIALLY THE ASSESSMENT COMPLETED IN PURSUANCE OF NOTICE UNDER SECTION 158BD IS ALSO QUA SHED. 5. SINCE WE QUASHED THE NOTICE UNDER SECTION 158BD AND CONSEQUENTIAL ASSESSMENT ORDER THE ISSUE RAISED IN GROUND NO.2 DOES NOT SUR VIVE FOR ADJUDICATION. 6. IN THE RESULT ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 24 TH DECEMBER 2010. SD/- SD/- (T.K. SHARMA ) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 24-12-2010 IT(SS)A.NO.50/AHD/2007 -5- COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR/AR ITAT AHMEDABAD