The DCIT, Circle-3,, Surat v. Shri Shailesh M. Desai, Surat

ITSSA 66/AHD/2007 | misc
Pronouncement Date: 15-10-2010 | Result: Dismissed

Appeal Details

RSA Number 6620516 RSA 2007
Assessee PAN ABKPD0710B
Bench Ahmedabad
Appeal Number ITSSA 66/AHD/2007
Duration Of Justice 3 year(s) 6 month(s) 13 day(s)
Appellant The DCIT, Circle-3,, Surat
Respondent Shri Shailesh M. Desai, Surat
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 15-10-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 15-10-2010
Date Of Final Hearing 07-10-2010
Next Hearing Date 07-10-2010
Assessment Year misc
Appeal Filed On 02-04-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI BHAVNESH SAINI (JM) AND SHRI D.C. AGARW AL (AM) I.T(SS)A. NO.66/AHD/2007 (BLOCK PERIOD : AY 90-91 TO 99-2000 & UPTO 29-10-99 ) DY.CIT CIR.3 VS SHRI SHAILESH M DESAI SURAT F-301 CHANDAN PARK CITYLIGHT AREA SURAT PAN : ABKPD0710B (APPELLANT) (RESPONDENT) I.T(SS)A. NO.72/AHD/2007 (BLOCK PERIOD : AY 90-91 TO 99-2000 & UPTO 29-10-99 ) SHRI SHAILESH M DESAI VS THE DY.CIT CIR.3 SURAT SURAT (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI RAJIB JAIN ASSESSEE BY : SHRI RASESH SHAH O R D E R PER BENCH : BOTH THE CROSS APPEALS ARE DIRECTED AGA INST THE ORDER OF LD CIT(A)-II SURAT DATED 22-01-2007 FOR THE ABOVE BLOCK PERIOD 2. THE DEPARTMENT PREFERRED THE APPEAL ON THE FOLLO WING EFFECTIVE GROUND: 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED CIT[A} HAS ERRED IN DELETING THE ADDITI ON OF RS.3 15 000/- ON ACCOUNT OF INVESTMENT MADE BY THE ASSESSEE IN PURCHASING A FLAT NO.F-301 CHANDAN PAR K CITYLIGHT AREA SURAT. 3. THE ASSESSEE PREFERRED THE APPEAL ON THE FOLLOWI NG EFFECTIVE GROUNDS: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN TAKING ACTION U/S 158BD OF THE ACT. ITSSA. NO.66/AHD/2007 & ITSS NO. 72/AHD/2007 2 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN TAKING ACTION U/S 158BD OF THE ACT AFTER LAPSE OF ABOUT 5 YEARS. 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN PARTLY CONFIRMING THE ADDITI ON OF RS.3 46 000/- OUT OF ADDITION OF RS.6 61 000/- MADE BY ASSESSING OFFICER FOR ALLEGED UNDISCLOSED INCOME IN VESTED IN PURCHASE IN FLAT. 4. IT IS THEREFORE PRAYED THAT THE ACTION U/S 158BD OF THE ACT SHOULD BE TREATED AS INVALID BEING WRONGLY TAKEN AN D BEING NOT TAKEN WITHIN REASONABLE TIME. IT IS ALSO PRAYE D THAT THE ADDITIONS MADE BY ASSESSING OFFICER AND CONFIRMED B Y COMMISSIONER OF INCOME TAX (APPEALS) MAY PLEASE BE DELETED. 4. BRIEFLY THE FACTS OF THE CASE ARE THAT SEARCH A CTION U/S 132 OF THE ACT WAS CARRIED OUT AT THE PREMISES OF M/S OHM DEVELOPERS SURAT ON 29 TH OCTOBER 1999. DURING THE COURSE OF SEARCH BOOKS OF ACCOUNT AND OT HER INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED WHICH WERE ALSO CONCERNING TH E ASSESSEE AND OTHERS. AFTER MAKING PRELIMINARY ENQUIRIES THE PROCEEDINGS U/S 158BD R.W.S. 158BC OF THE ACT WERE INITIATED AGAINST THE ASSESSEE ON 22-0 6-2004 WHICH WAS SERVED UPON ASSESSEE ON 29-06-2004. THE ASSESSING OFFICER AFTER CONSIDERING THE MATERIAL ON RECORD COMPUTED THE UNDISCLOSED INCOME ON WHICH PART RELIEF IS ALLOWED BY THE LD.CIT(A). THE REVENUE AS WELL AS T HE ASSESSEE ARE IN APPEAL ON THE ABOVE GROUNDS OF APPEAL. 5. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AND SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN INITIATING THE P ROCEEDINGS U/S 158BD OF THE I.T. ACT AFTER LAPSE OF ABUT 5 YEARS. HE HAS SUBMITTED THAT THE BLOCK ASSESSMENT IN THE CASE OF OHM DEVELOPERS WAS COMPLETED ON 30-11-2 001 AND REFERRED TO ORDER OF ITAT AHMEDABAD BENCH D IN THE GROUP CASES OF VIMAL VADILAL SHAH & ORS ITSSA. NO.66/AHD/2007 & ITSS NO. 72/AHD/2007 3 IN IT(SS)A. NO10 & 28/AHD/2008 & ORS ORDER DATED 21 -05-2010 WHEREBY IN THE GROUP CASES RELATING TO M/S OHM DEVELOPERS PROCEEDI NGS U/S 158BD HAVE BEEN QUASHED. LEARNED COUNSEL FOR THE ASSESSEE THEREFO RE SUBMITTED THAT THE PROCEEDINGS AGAINST THE ASSESSEE MAY ALSO BE QUASHE D ACCORDINGLY. ON THE OTHER HAND LD.DR RELIED UPON THE ORDERS OF AUTHORI TIES BELOW. 6. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE AR E OF THE VIEW THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF ITAT AHMEDABAD BENCH D (CAMP AT SURAT) IN THE CASE OF VIMAL VADILAL SHAH & ORS (SUPRA) IN WHICH THE TRIBUNAL AT PARAGRAPH 11 OF TH E ORDER HELD AS UNDER:- 11. IN E.J. ULAHANNA V. ACIT IN ITA NO.19/AHD/2007 PRONOUNCED ON 18-03-2009 FOLLOWING THE DECISION OF SPECIAL BENCH IN THE CASE OF MANOJ AGARWAL (SUPRA) HELD THAT WITH OUT THERE BEING SATISFACTION RECORDED PRIOR TO COMPLETION OF ASSESS MENT OF THE PERSON SEARCHED PROCEEDINGS SO INITIATED U/S 158BD OF THE ACT WILL NOT BE VALID. IN THAT CASE NOTICE U/S 158BD OF THE ACT WAS ISSUED ON 10-06-2004. BUT SEARCHED AGAINST OHM DEVELOPERS WAS CARRIED OUT ON 29-10-1999 THEREFORE ASSESSMENT U./S 158BD THEREOF COMPLETED AFTER 31-10-2001 COULD NOT BE HELD VALID. IN THE CASE OF SHRI VISHNUBHAI R BAROT V. ACIT IN IT(SS)A NO.104/AHD/2009 ITAT AHMEDABAD D BENCH PRONOUNCED ON 18-12-2009 IT WA S HELD FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI V. ACIT (2007) 289 ITR 341 (SC) A ND MANOJ AGARWAL (SUPRA) THAT IF THE ASSESSMENT U/S.158BC OF THE ACT IN THE CASE OF PERSON SEARCH (OHM DEVELOPERS) WAS COMPLETE D ON 30-11- 2001 THEN ISSUING NOTICE U/S 158BD OF THE ACT ON 29 -03-2006 AGAINST ASSESSEE IS BARRED BY LIMITATION. SIMILAR VIEW WAS TAKEN BY THE ITAT AHEMDABAD BENCH IN IT(SS)A NO.25/AHD/2007 IN THE CASE OF ADIL PARVEZ RANDERIA V. ACIT CC-3(1) SURA T PRONOUNCED ON 01-09-2008. FOLLOWING THESE DECISIONS WE HOLD T HAT THE BLOCK ASSESSMENT FRAMED IN CASE OF ALL THE ABOVE ASSESSEE ARE NOT LEGALLY VALID AND THEREFORE ARE QUASHED FOR THE REA SON THAT NOTICES U/S 158BD OF THE ACT WERE ISSUED IN THESE CASES LON G AFTER COMPLETION OF ASSESSMENT IN THE CASE OF PERSON SEAR CHED I.E. OHM DEVELOPERS. 7 WE MAY ALSO POINT OUT THAT RECENTLY THE HONBLE P UNJAB & HARYANA HIGH COURT IN ITS UNREPORTED JUDGMENT IN ITA NO. 379 OF 2010 DATED 25-08-2010 IN THE ITSSA. NO.66/AHD/2007 & ITSS NO. 72/AHD/2007 4 CASE OF CIT-I LUDHIANA VS M/S PARVEEN FABRICS PVT LTD DISMISSED THE APPEAL FILED BY THE DEPARTMENT BY PASSING THE FOLLOWING OR DER: 1. THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE U NDER SECTION 260A OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT) AGAINST THE ORDER OF THE INCOME TAX APPELLATE TRIBU NAL CHANDIGARH BENCH (B) CHANDIGARH (HEREINAFTER REFERRED TO AS THE TRIBUNAL) PASSED IN I.T.(SS)A. NO19/CHAND/2009 DATED 127.8.20 09 FOR THE BLOCK PERIOD 01.04..1996 TO 05.02.2003 PROPOSING T O RAISE THE FOLLOWING SUBSTANTIAL QUESTION OF LAW:- WHETHER ON THE FACTS AND IN LAW THE HONBLE INCOM E TAX APPELLATE TRIBUNAL WAS JUSTIFIED IN HOLDING THE REC ORDING OF SATISFACTION U/S 158BD BY THE ASSESSING OFFICER OF THE PERSON SEARCHED AND CONSEQUENCE ISSUANCE AND SERVIC E OF NOTICE U/S 158BDE ON 2.12.2006 WAS BELATED AND BEYO ND THE PERIOD PRESCRIBED BY LAW WHEN THE SECTION 158 B D READ WITH SECTION 158BE DOES NOT SPECIFY THAT SATISFACTI ON HAS TO BE RECORDED BY THE ASSESSING OFFICER BEFORE COMPLET ION OF ASSESSMENT U/S 158BC OF THE INCOME TAX ACT 1961? 2 A SEARCH WAS CONDUCTED ON 5.2.2003 AT THE RESIDEN CE OF ONE S.K. BHATIA AND FROM THE SEIZED DOCUMENTS AND AFTE R FINALIZING BLOCK ASSESSMENT AGAINST THE SEARCHED PERSON ON 28. 2.2005 PROCEEDINGS WERE ALSO TAKEN AGAINST THE RESPONDENT AFTER RECORDING SATISFACTION ON 31.3.2006. NOTICE UNDER SECTION 15 8BD WAS ISSUED ON 2.12.2006 WHICH WAS CONTESTED BY THE RESPONDENT ON THE GROUND THAT THE SATISFACTION NOTE ITSELF WAS AFTER CONCLUSION OF THE PROCEEDINGS AND NOT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THIS PLEA WAS UPHELD BY THE CIT(A) FOLLOWING EARLIE R JUDGMENT FO THE TRIBUNAL IN MANOJ AGGARWAL V. DCIT (2008) 113 KTD 377 (DEL)(SB). THE TRIBUNAL AFFIRMED THE SAID VIEW. 3. WE HAVE HEARD LEARNED COUNSEL FOR THE REVENUE. 4. AN IDENTICAL MATTER WAS CONSIDERED BY THIS COURT IN ORDER DATED 207.2010 IN ITA NO.591 OF 2009 COMMISSIONER OF INCOME-TAX-I LUDHIANA V. MRIDULA PROP. M/S DHRUV FABRICS LUDHIANA AND IT WAS OBSERVED: THE ACT NO WHERE SPECIFICALLY PRESCRIBES ANY TIME LIMIT OR LIMITATION FOR INITIATION OF PROCEEDINGS UNDER SECT ION 158BD OF THE ACT OR FOR RECORDING OF SATISFACTION BEFORE TAKING ACTION UNDER THAT PROVISION. THE PLAIN AND REASONABLE CON STRUCTION THAT CAN BE PLACED ON THE AFORESAID PROVISION WOULD BE THAT ITSSA. NO.66/AHD/2007 & ITSS NO. 72/AHD/2007 5 THE RECORDING OF SATISFACTION FOR TAKING ACTION AGA INST ANY OTHER PERSON UNDER SECTION 158BD OF THE ACT HAS TO BE BETWEEN INITIATION OF PROCEEDINGS UNDER SECTION 158 BC AND BEFORE COMPLETION OF BLOCK ASSESSMENT UNDER SECTION 158BC OF THE ACT IN THE CASE OF THE PERSON SEARCHED I WOULD THUS MEAN THAT THE ACTION CONTEMPLATED UNDE R SECTION 158BD OF THE ACT AGAINST A THIRD PARTY TO A SEARCH IS NECESSARILY TO BE DURING THE COURSE OF BLOCK ASSESS MENT PROCEEDINGS UNDER SECTION 158BC OF THE SEARCHED PER SON. IT CANNOT BE AFTER THE CONCLUSION OF THE SAME AS TH ERE IS NO OCCASION FOR AN ASSESSING OFFICER TO EXAMINE THE SE IZED MATERIAL OR DOCUMENTS OF THE SEARCHED PERSON WHEN T HE BLOCK ASSESSMENT PROCEEDINGS HAVE CONCLUDED AND NO OTHER PROCEEDINGS ARE PENDING BEFORE HIM. IF ANY OTHER T IME LIMIT IS READ IN THE PROVISIONS / STATUTE IT SHALL LEAD TO ANOMALY AND WOULD BE ARBITRARY AND UNREASONABLE. IT COULD NOT BE READ IN THE PROVISION THAT WHERE BLOCK ASSESSMENT U NDER SECTION 158BC OF THE ACT IN THE CASE OF AN ASSESSEE AGAINST WHOM ACTION UNDER SECTION 132 OR 132A OF THE ACT HA D BEEN CARRIED OUT IS FINALIZED REVENUE CAN TAKE ACTION A T ANY TIME IN THE ABSENCE OF ANY SPECIFIC LIMITATION PRESCRIBE D IN THE STATUTE. A CONSTRUCTION WHICH LEADS TO SUCH AN ANO MALY SHOULD BE AVOIDED. 5. THE VIEW TAKEN BY THE TRIBUNAL IS THUS IN ACCO RDANCE WITH THE VIEW TAKEN BY THIS COURT. NO SUBSTANTIAL QUEST ION OF LAW ARISES. 6. THE APPEAL IS DISMISSED. 8. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT O F THE ABOVE DECISIONS WE DO NOT FIND ANY JUSTIFICATION FOR INITIATION OF BLOCK ASSESSMENT PROCEEDINGS U/S 158BD OF THE I.T. ACT AGAINST THE ASSESSEE AFTER LONG GAP OF COMPLETION OF THE ASSESSMENT IN THE CASE OF PERSONS SEARCHED VIZ. M/ S OHM DEVELOPERS. WE ACCORDINGLY SET ASIDE THE ORDER OF AUTHORITIES BELO W AND QUASH THE SAME. AS A RESULT GROUNDS 1 & 2 OF THE APPEAL OF THE ASSESSEE ARE ALLOWED 9. IN VIEW OF THE ABOVE FINDING THERE IS NO NEED T O DISCUSS THE ADDITION ON MERIT BECAUSE IT WOULD ONLY BE ACADEMIC IN NATURE. 10. IN THE RESULT DEPARTMENTAL APPEAL IS DISMISSED AND APPEAL OF THE ASSESSEE IS ALLOWED. ITSSA. NO.66/AHD/2007 & ITSS NO. 72/AHD/2007 6 ORDER PRONOUNCED ON THIS 15 TH DAY OF OCTOBER 2010. SD/- SD/- (D.C. AGARWAL) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DT :15 TH OCTOBER 2010 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-I SURAT 4. THE CIT(A)-II SURAT 5. THE DR D BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT AHMEDABAD BENCH