DCIT,, Ludhiana v. M/s Excellent Fashion Weavers,, Ludhiana

ITSSA 6/CHANDI/2010 | misc
Pronouncement Date: 23-03-2011 | Result: Allowed

Appeal Details

RSA Number 621516 RSA 2010
Assessee PAN AAAFE4105C
Bench Chandigarh
Appeal Number ITSSA 6/CHANDI/2010
Duration Of Justice 10 month(s) 16 day(s)
Appellant DCIT,, Ludhiana
Respondent M/s Excellent Fashion Weavers,, Ludhiana
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 23-03-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 23-03-2011
Date Of Final Hearing 11-02-2011
Next Hearing Date 11-02-2011
Assessment Year misc
Appeal Filed On 07-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL: SMC BENCH: CHANDIGARH BEFORE HONBLE SHRI D K SRIVASTAVA AM IT(SS)A NO. 6/CHANDI/2010 BLOCK PERIOD: 1.4.98 TO 5.2.2003 D.C.I.T. C-II LUDHIANA V M/S EXCELLENT FASHION W EAVERS ST NO. 20 OPP. KAUSHALYA DEVI DISPENSARY NEW MADHOPURI LUDHIANA PIN: AAAFE 4105 C (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. JAI SHREE SHARMA RESPONDENT BY: SHRI RAJEEV KAUSHAL ORDER THE APPEAL FILED BY THE DEPARTMENT IS DIRECTED AGA INST THE ORDER PASSED BY THE LD. CIT(A) ON 18.2.2010 ON THE FOLLOWING GR OUNDS: 1 THAT THE LD. CIT(A) ERRED IN LAW AND FACTS IN HO LDING THE ASSESSMENT AS INVALID FOR THE REASONS THAT THE SATI SFACTION U/S 158BD BY THE AO OF THE PERSON SEARCHED WAS NOT RECORDED DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF BHATIA GROUP AND CONSEQUENT ISSUANCE AND SERVICE OF NOTICE U/S 158BD WAS BELATE D AND BEYOND THE PERIOD PRESCRIBED BY LAW IGNORING THE FACT THAT SE CTION 158 BD READ WITH SECTION 158BE DOES NOT SPECIFY THAT SATISFACTION HA S TO BE RECORDED BY THE AO BEFORE THE COMPLETION OF ASSESSMENT U/S 158BC OF IT ACT 1961. 2 THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AN D THAT OF THE AO BE RESTORED. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT SE ARCH AND SEIZURE OPERATIONS WERE CARRIED OUT U/S 132 OF IT ACT IN THE CASE OF S HRI S.K. BHATIA PURSUANT TO WHICH THE ASSESSMENT IN THE CASE OF SHRI S.K. BHATI A WAS COMPLETED U/S 158 BC ON 13.2.2005. IT IS STATED IN THE ASSESSMENT ORDER THAT THE SATISFACTION REACHED BY THE AO IN THE CASE OF SHRI S.K. BHATIA WAS CONVE YED VIDE HIS LETTER NO. 525- 28 DATED 15.7.2005 TO THE AO HAVING JURISDICTION O VER THE ASSESSEE IN TERMS OF SECTION 158BD PURSUANT TO WHICH NOTICE U/S 158 BD / 158BC WAS SERVED ON THE ASSESSEE ON 19.12.2005. IT IS FURTHER STATED THAT BLOCK RETURN IN FORM NO. 2B WAS FILED BY THE ASSESSEE ON 19.12.2005 RETURNING U NDISCLOSED INCOME AT NIL. IN PARA 11 OF ASSESSMENT ORDER IT IS FURTHER STATED TH AT THE AS HAD ITSELF ADMITTED THAT IMPUGNED SUM REPRESENTING PURCHASES WERE UN-AC COUNTED FOR. IN THIS VIEW OF THE MATTER THE AO CONSIDERED THE IMPUGNED INVES TMENT AS UNDISCLOSED INVESTMENT MADE BY THE ASSESSEE U/S 69 OF IT ACT. 3. AGGRIEVED BY THE ORDER PASSED BY THE LD. CIT(A) THE DEPARTMENT IS NOW IN APPEAL BEFORE THIS TRIBUNAL. IN SUPPORT OF APPEAL THE DR SUBMITTED THAT THE LD. CIT(A) TOOK DATE OF LETTER BY WHICH THE SATISFACTIO N WAS CONVEYED TO THE AO AS THE DATE OF RECORDING THE SATISFACTION. HE SUBMITT ED THAT DATE OF CONVEYING THE SATISFACTION CANNOT BE THE DATE OF RECORDING THE SA TISFACTION. HE SUBMITTED THAT SATISFACTION WAS REACHED BY THE CONCERNED AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF SHRI S.K. BHATIA AND THE REFORE THE LD. CIT(A) WAS NOT JUSTIFIED IN TREATING THE DATE OF COMMUNICATION OF SATISFACTION AS THE DATE OF RECORDING SATISFACTION. IN SUPPORT OF HER CASE SHE RELIED ON THE ORDER OF THIS TRIBUNAL IN SUBHAN JAVEED IN ACIT V 122 ITD 307. H ER NEXT SUBMISSION WAS THAT THE ISSUE IN APPEAL HAS BEEN CONSIDERED BY THE HON' BLE JURISDICTIONAL HIGH COURT IN ITS JUDGMENT DATED 14.2.11 IN CIT FARIDABAD V. OM PARKASH AND SONS IN IT APPEAL NO. 147 OF 2010. THEREFORE THE ORDER PASSE D BY THE LD. CIT(A) NEEDS TO BE EXAMINED IN THE LIGHT OF PRINCIPLES LAID DOWN BY HON'BLE HIGH COURT IN THE AFORESAID JUDGMENT. 4. IN SUPPORT OF APPEAL THE AUTHORIZED REPRESENTATI VE FOR THE ASSESSEE SUPPORTED THE ORDER PASSED BY THE LD. CIT(A) AND MO RE PARTICULARLY IN DECISIONS IN (1) MANOJ AGGARWAL V DCIT 113 ITD 377 (2008) 11 DTR 1 (DEL) (SB) (2) SHAKUNTLA DEVI V. ACIT I.T.A NO. 1227/CHD/1996 (3) DCIT V. CSL SECURITIES PVT LTD 15 DTR 318 (4) MUNISH MAHESHWARI V. CIT 289 I TR 341 (5) ACIT V. KRISHAN LAL BALWANT RAI 17 SOT 380. 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CON SIDERED THEIR SUBMISSIONS. IN THE JUDGMENT RENDERED BY THE HON'B LE JURISDICTIONAL HIGH COURT IN CIT V. OM PARKASH SONS IN I.T. APPEAL NO. 147 OF 2010 THE HON'BLE HIGH COURT HAS HELD AS UNDER: 17 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE ARE SATISFIED THAT THE QUESTIONS RAISED ON BEHALF OF THE REVENUE HAVE TO B E ANSWERED IN ITS FAVOUR AND AGAINST THE ASSESSEE. IT IS PATENT FROM THE ORDER OF ASSESSMENT IN THE CASE OF SEARCHED PERSON THAT DURI NG THE ASSESSMENT OF THE SEARCHED PERSON THE AO WAS SATISFIED THAT THE ASSESSEE HAD UNDISCLOSED INCOME WHICH HAD NEXUS TO THE MATERIAL FOUND DURING SEARCH. IN THESE CIRCUMSTANCES THE JUDGMENT OF THIS COURT I N MRIDULA COULD NOT COME TO THE RESCUE OF THE ASSESSEE AS THAT WAS HELD THEREIN WAS THAT REQUISITE SATISFACTION MUST BE FORMED DURING ASSESS MENT OF SEARCHED PERSON. THIS COURT DID NOT HOLD THAT LAW REQUIRED ANY PARTICULAR FROM IN WHICH THE SAME SHOULD BE RECORDED. IN THE PRESENT CASE SUCH SATISFACTION HAVING BEEN DULY FORMED LEARNED COUNSEL FOR THE RE VENUE RIGHTLY RELIED UPON THE JUDGMENT OF THIS COURT IN CIT V. PEAREY LA L AND SONS (EP) LTD. (2009) 308 ITR 438 (HON'BLE PUNJAB & HARYANA HIGH C OURT) TO SUBMIT THAT REQUIREMENT OF LAW WAS MET. AS REGARDS DELAY IN IS SUING NOTICE TO THE ASSESSEE WE FIND MERIT IN THE CONTENTION THAT IT WA S A CASE WHICH INVOLVED A HUGE FRAUD OF TAX EVASION WHERE BUSINESS OF SEARC HED PERSON WAS TO GIVE ACCOMMODATION ENTRIES RESULTING IN TAX EVASION TO THE EXTENT OF RS. 132 CRORES IN TOTAL SPREAD OVER THE CASES OF VARIO US ASSESSEES IN ALL OVER INDIA. THE COORDINATION BY THE AO OF THE SEARCHED PERSON WAS TIME CONSUMING AFFAIR. IN THESE CIRCUMSTANCES DELAY CA NNOT BE HELD TO BE UNREASONABLE AND CANNOT BE HELD TO VITIATE THE ASSE SSMENT. NO DOUBT ONCE SATISFACTION IS FORMED DURING BLOCK ASSESSMENT OF SEARCH PERSON ACTION MUST BE PROMPTLY TAKEN AS SUBMITTED ON BEHAL F OF THE ASSESSEE AND AS HELD BY THE GUJARAT HIGH COURT IN KHANDUBHAI VAS ANJI DESAI AND OTHERS V. DCIT AND ANOTHER (1999) 236 ITR 73. WHETHER OR NOT ACTION WAS PROMPT DEPENDS UPON CIRCUMSTANCES OF EACH CASE. 18 THE LD. CIT(A) AS WELL AS THE TRIBUNAL ARE NOT J USTIFIED IN HOLDING THAT NO REQUISITE SATISFACTION WAS RECORDED AND THA T BLOCK ASSESSMENT PROCEEDINGS ARE VITIATED. THE QUESTIONS HAVE TO BE ANSWERED IN FAVOUR OF THE REVENUE ACCORDINGLY. ON REACHING THIS CONCLUSIO N EVEN THOUGH WE WOULD HAVE QUASHED THE IMPUGNED ORDERS AND RESTORED THE ORDER OF THE ASSESSMENT OFFICER BY WAY OF ABUNDANT CAUTION WE CONSIDER IT APPROPRIATE TO GIVE FURTHER OPPORTUNITY TO THE ASSE SSEE AND FOR THIS PURPOSE WE REMAND THE MATTER TO THE LD. CIT(A) FOR FRESH DECISION IN ACCORDANCE WITH LAW. THE ASSESSEE MAY APPEAR BEFOR E THE LD. CIT(A) ON 25.4.2011. 6. THE AFORESAID JUDGMENT HAS BEARING ON THE ISSUE UNDER APPEAL. IT IS WELL ESTABLISHED THAT THE ORDER PASSED BY THIS TRIBUNAL CANNOT HAVE OVER RIDING EFFECT ON THE JUDGMENT OF SUPERIOR FORUM AND MORE PARTICUL ARLY THE HON'BLE JURISDICTIONAL HIGH COURT. IN THIS VIEW OF THE MATT ER WE SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) AND RESTORE THE MATTER TO HIS FILE FOR FRESH DECISION INCONFORMITY WITH THE PRINCIPLES LAID DOWN BY HON'B LE JURISDICTIONAL HIGH COURT IN CIT V. OM PARKASH & SONS (SUPRA) FOR FRESH DECISION IN INCONFORMITY WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO B OTH THE PARTIES. BOTH THE PARTIES ARE FREE TO MAKE THEIR SUBMISSIONS IN THEIR CASES. THE LD. CIT(A) WILL DEAL WITH THE MATTER TO DISPOSE OFF THE MATTER BY A SPEA KING ORDER. 7. APPEAL FILED BY THE DEPARTMENT IS TREATED AS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 23 MARCH 2011 SD/- (D K SRIVASTAVA) ACCOUNTANT MEMBER CHANDIGARH: THE 23 MARCH 2011 SURESH COPY TO: 1. THE APPELLANT D.C.I.T. C-II LUDHIANA 2. THE RESPONDENT M/S EXCELLENT FASHION WEAVER LU DHIANA 3. THE CIT(A)-I LUDHIANA 4. THE LD. CIT LUDHIANA 5. THE D.R INCOME-TAX DEPARTMENT CHANDIGARH TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT CHANDIGARH