Shri Balavantbhai Vanmalidas Mehta, Surat v. The ACIT., Cicle-3,, Surat

ITSSA 65/AHD/2007 | misc
Pronouncement Date: 21-12-2010 | Result: Allowed

Appeal Details

RSA Number 6520516 RSA 2007
Assessee PAN ACJPM1551H
Bench Ahmedabad
Appeal Number ITSSA 65/AHD/2007
Duration Of Justice 3 year(s) 8 month(s) 22 day(s)
Appellant Shri Balavantbhai Vanmalidas Mehta, Surat
Respondent The ACIT., Cicle-3,, Surat
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 21-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 21-12-2010
Date Of Final Hearing 15-12-2010
Next Hearing Date 15-12-2010
Assessment Year misc
Appeal Filed On 30-03-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA J.M. & HON' BLE SHRI A.N. PAHUJA A.M. ) I.T.(SS)A. NO. 65/AHD./2007 ASSESSMENT YEAR : BLOCK PERIOD FROM 1990-91 TO 1999 -2000 SHRI BALVANTRAI VANMALIDAS MEHTA SURAT -VS.- ASS ISTANT COMMISSIONER OF INCOME TAX (PAN : ACJPM 1551 H) CIRCLE-3 SURAT (APPELLANT) (RESP ONDENT) APPELLANT BY : SHRI RASESH SHAH RESPONDENT BY : DR. (SMT.) SHALINI VERM A SR. D.R. O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 11.01.2007 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II SURAT FOR THE BLOCK ASSESSMENT PERIOD 1990-91 TO 1999-2000. 2. BRIEFLY STATED THE FACTS ARE THAT AT THE PREMISE S OF M/S. OHM DEVELOPERS A SEARCH WAS CARRIED OUT ON 29.10.1999 AND IN THE SEARCH CERTAIN DOCUMENTS WERE FOUND SHOWING THAT THE ASSESSEE HAD PURCHASED FLAT NO. A-105 IN YOGI COMPL EX AND HAD PAID ON-MONEY. IN ORDER TO TAX THE ON-MONEY THE ASSESSING OFFICER FIRST CARRIED O UT SOME PRELIMINARY ENQUIRIES AND THEN FINALLY ISSUED NOTICE UNDER SECTION 158BD TO THE ASSESSEE O N 10.06.2004 FOR THE BLOCK ASSESSMENT YEAR 1990-91 TO 1999-2000 AND FROM 1.4.1999 TO 29.10.199 9 REQUIRING THE ASSESSEE TO FILE THE RETURN OF INCOME FOR THE BLOCK PERIOD WITHIN 45 DAYS. THER EAFTER THE ASSESSING OFFICER FRAMED THE ASSESSMENT UNDER SECTION 158BD READ WITH SECTION 15 8BC ON 29.03.2006 WHEREIN HE ASSESSED THE UNDISCLOSED INCOME OF RS.2 25 000/- BEING THE P AYMENT MADE FOR ACQUISITION OF THE AFORESAID FLAT IN CASH WHICH IS UNACCOUNTED INCOME OF THE BL OCK PERIOD. 3. ON APPEAL BEFORE THE LEARNED COMMISSIONER OF INC OME TAX(APPEALS) THE ASSESSEE CONTENDED THAT JURISDICTION UNDER SECTION 158BD CAN BE ASSUMED ONLY IN CASES WHERE IT IS FOUND THAT UNDISCLOSED INCOME BELONGED TO A PERSON OTHER THAN THE PERSON SEARCHED. IT WAS ALSO CONTENDED THAT THOUGH THERE IS NO TIME LIMIT FOR IS SUE OF NOTICE UNDER SECTION 158BD YET THE 2 IT(SS)A NO. 65-AHD-2007 COURTS HAVE HELD THAT THAT SAME MUST BE ISSUED WITH IN A REASONABLE TIME. IN THE CASE OF THE ASSESSEE THE NOTICE WAS ISSUED AFTER A PERIOD OF FO UR YEARS AND NINE MONTHS FROM THE DATE OF SEARCH. THEREFORE THE ENTIRE ASSESSMENT WAS BAD IN LAW. IN SUPPORT OF THIS RELIANCE WAS PLACED ON THE DECISION OF THE ITAT HYDERABAD BENCH IN THE CASE OF P. MAHENDER REDDY VS.- DCIT [2005] 2 SOT 696 AND THE DECISION OF THE HON'BLE GU JARAT HIGH COURT IN THE CASE OF KHANDUBHAI VASANJI DESAI VS.- DCIT 236 ITR 73. BEFORE THE LEA RNED COMMISSIONER OF INCOME TAX (APPEALS) IT WAS ALSO CONTENDED THAT NO MATERIAL W AS FOUND FROM THE POSSESSION OF THE ASSESSEE WHICH WOULD INDICATE THAT THE ASSESSEE HAD PAID ON- MONEY OF RS.2 25 000/- TO M/S. OHM DEVELOPERS. THE ADDITION WAS MADE ONLY ON THE BASIS OF LOOSE PAPERS FOUND AT THE PREMISES OF M/S. OHM DEVELOPERS. RELYING ON THE DECISION OF TH E ITAT AHMEDABAD BENCH IN THE CASE OF PRARTHANA CONSTRUCTION PVT. LTD. VS.- DCIT 70 TTJ 122 IT WAS ARGUED THAT NO ADDITION COULD BE MADE ON THE BASIS OF LOOSE PAPERS FOUND AT THE PREM ISES OF A THIRD PARTY. 4. AFTER CONSIDERING THE AFORESAID SUBMISSIONS IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT ONLY TIME GAP BETWEEN THE PROCEEDINGS INITIATED UNDER SECTION 158BC IN THE CASE OF M/S. O HM DEVELOPERS AND M/S. OHM ORGANIZERS AND THE ISSUE OF NOTICE TO THE ASSESSEE WAS UTILIZED B Y THE DEPARTMENT IN MAKING THE NECESSARY INQUIRIES WITH THE PERSONS WHOSE NAMES AND ACCOUNTS APPEARED IN THE BOOKS OF THE PERSONS SEARCHED BEFORE SATISFYING THEMSELVES THAT THE CAS ES WERE FIT FOR BEING PROCEEDED AGAINST UNDER THE PROVISIONS OF SECTION 158BD OF THE ACT. THEREFO RE THERE WAS NOT ANY UNUSUAL DELAY TO INVALIDATE THE PROCEEDINGS INITIATED AND IN FACT T HE NOTICE WAS ISSUED WITHIN A REASONABLE TIME. 5. ON MERIT ALSO THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) CONFIRMED THE ADDITION FOR THE DETAILED REASONS GIVEN IN PARA 6.7 & 6.8 OF THE IMPUGNED ORDER. AGGRIEVED WITH THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING GROUNDS :- (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS LAW ON THE SUBJECT THE LEARNED CIT (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN ASSUMING JURISDICTION U /S. 158BD OF THE I.T. ACT. (2) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT THE LEARNED CIT(APPEALS) HAS ERRED IN CONF IRMING THE ACTION OF 3 IT(SS)A NO. 65-AHD-2007 THE ASSESSING OFFICER IN MAKING ADDITION OF RS.2 25 000/- ON ACCOUNT OF UNDISCLOSED INVESTMENT IN IMMOVABLE PROPERTY. (3) IT IS THEREFORE PRAYED THAT ABOVE ADDITION MA DE BY ASSESSING OFFICER AND CONFIRMED BY CIT (APPEALS) MAY PLEASE BE DELETE D. 6. AT THE TIME OF HEARING BEFORE US ON BEHALF OF A SSESSEE SHRI RASESH SHAH LD. COUNSEL APPEARED AND CONTENDED THAT SEARCH IN THE CASE OF M /S. OHM DEVELOPERS WAS CONDUCTED ON 29.10.1999 AND THE ASSESSING OFFICER FRAMED THE ASS ESSMENT IN THE MONTH OF NOVEMBER 2001. IN THE CASE OF ASSESSEE NOTICE UNDER SECTION 158BD WA S ISSUED ON 10.02.2004. RELYING ON THE REASONING GIVEN BY THE ITAT AHMEDABAD (CAMP AT SUR AT) BENCH IN ITS ORDER DATED 21.05.2010 IN THE CASE OF ACIT CIRCLE-3 SURAT VS.- VIMAL VA DILAL SHAH SURAT AND VICE-VERSA AND OTHERS IN IT(SS)A NOS. 10 & 28/AHD/2008 NOTICE UNDER SECTION 158BD CANNOT BE ISSUED AFTER THE CLOSURE OF BLOCK ASSESSMENT PROCEEDINGS IN THE CASE OF PERSON SEARCH FROM WHICH THE PROCEEDINGS UNDER SECTION 158BD OF THE ACT AGAINST THE ASSESSEE WERE INITIATED. HE SUBMITTED THAT ON THIS BASIS ALONE THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER BE QUASHED. 7. ON THE OTHER HAND SMT. SHALINI VERMA LD. SR. D .R. APPEARING ON BEHALF OF THE REVENUE COULD NOT CONTROVERT THE AFORESAID SUBMISSIONS MADE BY THE LD. COUNSEL OF THE ASSESSEE. 8. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUT HORITIES BELOW. IN THIS CASE SEARCH UNDER SECTION 132 OF THE ACT WAS CARRIED OUT IN THE BUSIN ESS PREMISES OF M/S. OHM ORGANIZERS SURAT ON 29.10.1999. CERTAIN BOOKS OF ACCOUNTS AND DOCUME NTS RELATING TO THE ASSESSEE WERE ALSO SEIZED. THE ASSESSING OFFICER HAVING JURISDICTION O VER THE CASE OF M/S. OHM ORGANIZERS SURAT FOUND THAT CERTAIN INVESTMENT IN PURCHASE OF FLATS/ SHOPS WERE MADE BY THE ASSESSEE AND PAYMENT OF ON-MONEY WAS MADE BY HIM TO THE BUILDER. THEREAF TER CERTAIN INQUIRIES WERE CARRIED OUT FROM THE ASSESSEE UNDER SECTION 133(6) OF THE ACT BY WAY OF NOTICE ISSUED ON U/S. 133(6). FURTHER LETTERS WERE ALSO ISSUED. HOWEVER NOTICE UNDER SEC TION 158BD WAS ISSUED TO THE ASSESSEE ON 10.06.2004. IN THE IMPUGNED ORDER THE LD. CIT(A) U PHELD THE LEGALITY OF ACTION UNDER SECTION 158BD OF THE ACT. 9. IT IS PERTINENT TO NOTE THAT IN THE CASE OF ACIT CIRCLE-3 SURAT VS.- VIMAL VADILAL SHAH SURAT AND VICE-VERSA AND OTHERS OF ITAT AHMEDABAD (CAMP AT SURAT) IN IT(SS)A. NOS. 10 & 4 IT(SS)A NO. 65-AHD-2007 28/AHD/2008 (SUPRA) RELIED BY THE LD. COUNSEL OF TH E ASSESSEE ON IDENTICAL FACTS WE HAVE QUASHED THE BLOCK ASSESSMENT VIDE DECISION DATED 21 .05.2010 FOR THE REASONS THAT NOTICE ISSUED UNDER SECTION 158BD OF THE ACT WAS INVALID BECAUSE THIS WAS ISSUED AFTER COMPLETION OF ASSESSMENT IN THE CASE OF PERSON SEARCHED I.E. M/S. OHM DEVELOPERS. RELEVANT PARAS OF THE SAID DECISION ARE AS UNDER :- IN THE CASE OF BHARAT BHUSHAN JAINS V. ACIT (2009) 17 DTR 498 (DEL) TRIBUNAL HELD THAT PROCEEDINGS U/S.!58BD INITIATED AFTER 19 MONTHS OF COMPLETION OF PROCEEDINGS U/S.158BC CANNOT BE SUSTAINED. IT WAS H ELD IN THE CASE OF SAROJ NURSING HOME V. ACIT (2009) 116 ITD 311 (LUCKNOW) T HAT PROCEEDINGS U/S.158BD CAN BE INITIATED ON THE SATISFACTION OF THE ASSESSI NG OFFICER HAVING JURISDICTION OVER PERSON SEARCHED TO TAX UNDISCLOSED INCOME-TAX PERTA INING TO THIRD PERSON WHO IS NOT SUBJECTED TO SEARCH AND BOOKS OF ACCOUNTS AND IN OT HER DOCUMENTS WERE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION O VER SUCH THIRD PERSON BUT PROCEEDINGS INITIATED U/S.L58BD OF THE ACT AFTER A PERIOD OF SIX YEARS CANNOT BE REGARDED AS VALID. 11. IN E.J. ULAHANNA V. ACIT IN ITA NO. 19/AHD/200 7 PRONOUNCED ON 18-03- 2009 FOLLOWING THE DECISION OF SPECIAL BENCH IN TH E CASE OF MANOJ AGARWAL (SUPRA) HELD THAT WITHOUT THERE BEING SATISFACTION RECORDED PRIOR TO COMPLETION OF ASSESSMENT OF THE PERSON SEARCHED PROCEEDINGS SO IN ITIATED U/S. 158BD OF THE ACT WILL NOT BE VALID. IN THAT CASE NOTICE U/S. 158BD O F THE ACT WAS ISSUED ON 10-06- 2004. BUT SEARCHED AGAINST OHM DEVELOPERS WAS CARRI ED OUT ON 29-10-1999 THEREFORE ASSESSMENT U/S. 158BD THEREOF COMPLETED A FTER 31-10-2001 COULD NOT BE HELD VALID. IN THE CASE OF SHRI VISHNUBHAI R BAROT V. ACIT IN IT(SS)A. NO.L04/AHD/2009 ITAT AHMEDABAD 'D' BENCH PRONOUNCE D ON 18-12-2009 IT WAS HELD FOLLOWING THE DECISION OF HON'BLE SUPREME COU RT IN THE CASE OF MANISH MAHESHWARI V. ACIT (2007) 289 ITR 341 (SC) AND MANO J AGARWAL (SUPRA) THAT IF THE ASSESSMENT U/S. 158BC OF THE ACT IN THE CASE OF PERSON SEARCHED (OHM DEVELOPERS) WAS COMPLETED ON 30-11-2001 THEN ISSUIN G NOTICE U/S.158BD OF THE ACT ON 29-03-2006 AGAINST ASSESSEE IS BARRED BY LIMITAT ION. SIMILAR VIEW WAS TAKEN BY THE ITAT AHMEDABAD BENCH IN IT(SS)A NO.25/AHD/2007 IN THE CASE OF ADIL PARVEZ RANDERIA V. ACIT CC-3(1) SURAT PRONOUNCED ON 01-09 -2008- FOLLOWING THESE DECISIONS WE HOLD THAT THE BLOCK ASSESSMENT FRAMED IN CASE OF ALL THE ABOVE ASSESSEE 5 IT(SS)A NO. 65-AHD-2007 ARE NOT LEGALLY VALID AND THEREFORE ARE QUASHED FOR THE REASON THAT NOTICES U/S. 158BD OF THE ACT WERE ISSUED IN THESE CASES LONG AF TER COMPLETION OF ASSESSMENT IN THE CASE OF PERSON SEARCHED I.E. OHM DEVELOPERS. 10. WE FOLLOWING THE DECISION OF TRIBUNAL IN THE CA SE OF VIMAL VADILAL SHAH SURAT (SUPRA) QUASH THE BLOCK ASSESSMENT FAMED ON THE GROUND THAT NOTICE UNDER SECTION 158BD OF THE ACT WHICH WAS ISSUED LONG AFTER COMPLETION OF ASSESSMEN T IN THE CASE OF PERSON SEARCHED I.E. OHM DEVELOPERS . 11. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 16.12.20 10 SD/- SD/- (A.N. PAHUJA) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 16 / 12 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A.) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REG ISTRAR ITAT AHMEDABAD LAHA/SR.P.S.