The ITO, Ward-3(1),, Surat v. Shri Vijaybhai R. Topiwala, Surat

ITSSA 661/AHD/2010 | misc
Pronouncement Date: 31-07-2015 | Result: Dismissed

Appeal Details

RSA Number 66120516 RSA 2010
Assessee PAN AAQPT3024R
Bench Ahmedabad
Appeal Number ITSSA 661/AHD/2010
Duration Of Justice 4 year(s) 11 month(s) 10 day(s)
Appellant The ITO, Ward-3(1),, Surat
Respondent Shri Vijaybhai R. Topiwala, Surat
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 31-07-2015
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 31-07-2015
Date Of Final Hearing 28-07-2015
Next Hearing Date 28-07-2015
Assessment Year misc
Appeal Filed On 20-08-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD BEFORE SHRI G.D. AGRAWAL VICE PRESIDENT AND SHRI S.S. GODARA JUDICIAL MEMBER IT (SS) A NO . 661 / AHD/ 20 10 WITH CO NO.291/AHD/2010 (BLOCK PERIOD: 1990 - 91 TO 1999 - 00) ITO WARD - 3(1) SURAT. VS SHRI V IJAYBHAI R. TOPIWALA DEVANG 30 NARMAD NAGAR ATHWALINES SURAT. PAN: AAQPT 3024R (APPELLANT) (RESPONDENT) REVENUE BY : S HRI ANIL KUMAR CIT - D.R. ASSESSEE(S) BY : SHRI M.K. PATEL A.R. / DATE OF HEARING : 2 8 / 0 7 /201 5 / DATE OF PRONOUNCEMENT: 31 / 0 7 /201 5 / O R D E R PER S.S. GODARA JUDICIAL MEMBER THIS REVENUE S APPEAL AND ASSESSEE S C ROSS O BJECTION FOR A.Y . 19 90 - 91 TO 1999 - 00 AND UPTO ON 29.7.2009 ARISE S FROM ORDER OF CIT(A) - II SURAT DATED 24.5.2010 I N CASE NO . CAS/II/420/09 - 10 IN PROCEEDINGS UNDER SECTION 158BC(C) OF THE INCOME TAX ACT 1961 IN SHORT THE ACT . 2. THE REVENUE S SOLE SUBSTANTIVE GROUND CHA LLENGES THE CIT(A) ORDER ACCEPTING ASSESSEE S ARGUMENT THAT THE NOTICE ISSUED U/S.143(2) WAS NOT VALIDLY SERVED FOR QUASH ING THE IT (SS) A NO. 661 /AHD/ 20 10 WITH CO NO.291/AHD/2010 SHRI VIJAYBHAI R. TOPIWALA . BLOCK PERIO D 1990 - 91 TO 1999 - 00 - 2 - ASSESSMENT ORDER DATED 31.7.2001 . THE ASSESSEE S CROSS OBJECTION IS STATED TO BE SUPPORTIVE OF THE CIT(A) ORDER. 3. THE ASSES SEE IS ASSESSED AS AN INDIVIDUAL. THE DEPARTMENT CONDUCTED A SEARCH AT HIS RESIDENTIAL PREMISES ON 29.7.1999. THIS CULMINATED IN ISSUANCE OF A SECTION 15 8 BC NOTICE DATED 15.10.1999. THE ASSESSEE FILED RETURN ON 25.11.1999 ADMITTING UNDISCLOSED INCOME OF RS .30 LACS. THE ASSESSING OFFICER THEREAFTER COMPLETED ASSESSMENT ON 31.7.2001 MAKING VARIOUS ADDITIONS AGGREGATING TO RS.40 50 950/ - PERTAINING TO THE IMPUGNED BLOCK PERIOD FROM ASSESSMENT YEAR 1990 - 91 TO 29.7.1999. 4. THE ASSESSEE PREFERRED APPEAL. HE CHA LLENGED VALIDITY OF THE SECTION 142(3) NOTICE ON THE GROUND THAT THE SAME WAS NOT SERVED WITHIN A PERIOD OF TWELVE MONTHS FROM THE END OF THE MONTH OF FURNISHING THE RETURN IN QUESTION. THE CIT(A) HAS ACCEPTED THIS LEGAL PLEA FOR INVALIDATING THE ASSESSMEN T FRAMED IN QUESTION AS UNDER: 6. I HAVE CAREFULLY CONSIDERED THE MATTER. I HAVE DISCUSSED THE ISSUE WITH THE AO AND HAVE EXAMINED THE ASSESSMENT RECORDS IN HIS PRESENCE. I FIND THE AR'S CONTENTION TO BE FACTUALLY CORRECT. AS PER THE ORDER SHEET NOTING DA TED 31 - 08 - 2000 'A NOTICE U/S 142(1) OF THE ACT IS ISSUED TO FILE REPLY ON OR BEFORE 21 - 09 - 2000'. THERE IS NO MENTION OF THE NOTICE U/S 143(2) WHICH APPARENTLY WAS ALSO ISSUED ON THE SAID DATE. THE RECORDS CLEARLY SHOW THAT THIS NOTICE WAS SERVED ON THE AS SESSEE'S AR ON 26 - 07 - 2001 I.E. IT (SS) A NO. 661 /AHD/ 20 10 WITH CO NO.291/AHD/2010 SHRI VIJAYBHAI R. TOPIWALA . BLOCK PERIO D 1990 - 91 TO 1999 - 00 - 3 - JUST FIVE DAYS BEFORE THE IMPUGNED ASSESSMENT ORDER AS PASSED. THERE WAS THUS A DELAY OF SEVEN MONTHS AND 26 DAYS. IN THE CASE OF HOTEL BLUE MOON (SUPRA) THE HON'BLE SUPREME COURT HAS OBSERVED: 'HOWEVER IF AN ASSESSMENT IS TO BE COMPLETED UNDER SECTION 143(3) READ WITH SECTION 158 - BC NOTICE UNDER SECTION 143(2) SHOULD BE ISSUED WITHIN ONE YEAR FROM THE DATE OF FILING OF BLOCK - RETURN. OMISSION ON THE PART OF THE ASSESSING AUTHORITY TO ISSUE NOTICE UNDER SECTION 143(2) CANNO T BE A PROCEDURAL IRREGULARITY AND THE SAME IS NOT CURABLE AND THEREFORE THE REQUIREMENT OF NOTICE UNDER SECTION 143(2) CANNOT BE DISPENSED WITH. THE OTHER IMPORTANT FEATURE THAT REQUIRES TO BE NOTICED IS THAT THE SECTION 158 BC(B) SPECIFICALLY REFERS TO SOME OF THE PROVISIONS OF THE ACT WHICH REQUIRES TO BE FOLLOWED BY THE ASSESSING OFFICER WHILE COMPLETING THE BLOCK ASSESSMENTS UNDER CHAPTER XIV - B OF THE ACT. THIS LEGISLATION IS BY INCORPORATION. THIS SECTION EVEN SPEAKS OF SUBSECTIONS WHICH ARE TO BE F OLLOWED BY THE AO. HAD THE INTENTION OF THE LEGISLATURE WAS TO EXCLUDE THE PROVISIONS OF CHAPTER XIV OF THE ACT THE LEGISLATURE WOULD HAVE OR COULD HAVE INDICATED THAT ALSO. A READING OF THE PROVISION WOULD CLEARLY INDICATE IN OUR OPINION IF THE AO IF FOR ANY REASON REPUDIATES THE RETURN FILED BY THE ASSESSES IN RESPONSE TO NOTICE UNDER SECTION 158 BC(A) THE AO MUST NECESSARILY ISSUE NOTICE UNDER SECTION 143(2) OF THE ACT WITHIN THE TIME PRESCRIBED IN THE PROVISO TO SECTION 143(2) OF THE ACT. WHERE TH E LEGISLATURE INTENDED TO EXCLUDE CERTAIN PROVISIONS FROM THE AMBIT OF SECTION 158 BC(B) IT HAS DONE SO SPECIFICALLY. THUS WHEN SECTION 158 BC(B) SPECIFICALLY REFERS TO SECTION 143(2) APPLICABILITY OF THE PROVISO THERETO CANNOT BE EXCLUDED. THE CLARIFICA TION GIVEN BY CBDT IN ITS CIRCULAR NO. 717 DATED 14TH AUGUST 1995 HAS A BINDING EFFECT ON THE DEPARTMENT BUT NOT ON THE COURT. THIS CIRCULAR CLARIFIES THE REQUIREMENT OF LAW IN RESPECT OF SERVICE OF NOTICE UNDER SUB - SECTION (2) OF SECTION 143 OF THE ACT . ACCORDINGLY EVEN FOR THE PURPOSE OF CHAPTER XIV - B FOR THE DETERMINATION OF UNDISCLOSED INCOME FOR A BLOCK PERIOD UNDER THE PROVISIONS OF SECTION 158 BC THE PROVISIONS OF SECTION 142 AND SUB - SECTIONS (2) AND (3) OF SECTION 143 ARE APPLICABLE AND NO ASS ESSMENT COULD BE MADE WITHOUT ISSUING NOTICE UNDER SECTION 143(2) OF THE ACT. THE SUBMISSIONS OF THE COUNSEL FOR THE REVENUE THAT THE EXPRESSIONS 'SO FAR AS MAY BE APPLY' INDICATES IT (SS) A NO. 661 /AHD/ 20 10 WITH CO NO.291/AHD/2010 SHRI VIJAYBHAI R. TOPIWALA . BLOCK PERIO D 1990 - 91 TO 1999 - 00 - 4 - THAT IT IS NOT EXPECTED TO FOLLOW THE PROVISIONS OF SECTION 142 SUB - SECTIO NS (2) AND (3) OF SECTION 143 STRICTLY FOR THE PURPOSE OF BLOCK ASSESSMENTS CANNOT BE ACCEPTED SINCE THERE IS NO REASON TO RESTRICT THE SCOPE AND MEANING OF THE EXPRESSION 'SO FAR AS MAY BE APPLY'.' 6.1 THE RATIO OF THE CASE OF HOTEL BLUE MOON SQUARELY C OVERS THE CASE OF THE ASSESSEE SINCE THE FACTS ARE THE SAME WHILE DECIDING THIS CASE THE HON'BLE SUPREME COURT AFFIRMED THE DECISION OF THE GUWAHATI HIGH COURT IN IT APPEAL NO. 41 OF 2004 DATED 09 - 02 - 2007 AND ALSO THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF PAWAN GUPTA & ORS (2009) 223 CTR 487. THE HON'BLE COURT ALSO APPROVED THE DECISION OF THE HON'BLE GUWAHATI HIGH COURT IN THE CASE OF BANDANA GOGOL (2007) 289 ITR 28. 6.2 FURTHER IN THE CASES OF JAYPRAKASH J MANGTANI V/S ACIT (2009) 2 2 DTR 320 JASHMATBHAI NANUBHAI VIDIYA V/S ACIT IT (SS) A NO. 41 & 85/AHD/2003 AND ARVINDBHAI C JHAVERI V/S ACIT CENTRAL CIRCLE - 4 SURAT IN IT(SS)A 39 AND 94/AHD/2003 THE HON'BLE ITAT AHMEDABAD BENCH HAS ANNULLED BLOCK ASSESSMENT ORDERS (IN THESE CASES) ON THE GROUND THAT THE NOTICE U/S 143(2) WAS NOT ISSUED WITHIN THE PRESCRIBED TIME LIMIT I.E. WITHIN ONE YEAR FROM THE DATE OF FILING OF THE BLOCK - RETURN. WHILE DOING SO THE ITAT HAS PLACED RELIANCE ON THE DECISION OF THE GUWAHATI HIGH COURT IN THE CASE O F BANDANA GOGOL V/S CIT (2007) 209 CTR 21 AND 289 ITR 28 APART FROM THE FOLLOWING OTHER CASES: ; (I) ACIT V/S R.P.SINGH (2007) 111 TTJ (DEL) 880 (II) CPR CAPITAL SERVICES LTD. V/S DCIT (2008) 115 TTJ (DEL) 528 ( II I) RAKESH S MARDIA V/S DCIT (2002) 74 TTJ (AHD) 836 6.3 THUS EVEN BEFORE THE HON'BLE SUPREME COURT HAD PRONOUNCED ITS DECISION IN THE CASE OF HOTEL BLUE MOON VIDE THEIR ORDER DATED 02 - 02 - 2010 THE HON'BLE ITAT AHMEDABAD BENCH HAD ALREADY TAKEN A FIRM VIEW IN THIS REGARD TREATING ALL BLOCK - ASSE SSMENTS AS NU LL AND VOID WHERE NOTICE U/S 143(2) WAS SERVED ON THE ASSESSEE BEYOND THE PRESCRIBED TIME LIMIT . IT (SS) A NO. 661 /AHD/ 20 10 WITH CO NO.291/AHD/2010 SHRI VIJAYBHAI R. TOPIWALA . BLOCK PERIO D 1990 - 91 TO 1999 - 00 - 5 - 6.4 RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT (SUPRA) AND THE HON'BLE ITAT AHMEDABAD BENCH (SUPRA) I HOLD THAT IN THE CAS E OF THE ASSESSEE SINCE THE NOTICE' U/S 143(2) WAS NOT SERVED ON THE ASSESSEE WITHIN THE PERIOD OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE BLOCK - RETURN OF INCOME WAS FURNISHED THE ASSESSMENT ORDER DATED 31 - 07 - 2001 WAS PATENTLY ILLEGAL AND ABINIT IO VOID. 6.5 SINCE THE HON'BLE ITAT IN ALL THE CASES DISCUSSED AND CITED ABOVE DID NOT GO INTO THE MERITS OF ANY OF THE CASES I ALSO DO NOT FIND IT NECESSARY TO DECIDE THE CASE ON MERITS. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE CASE F ILE. THE REVENUE S FIRST ARGUMENT IS THAT THE HON BLE APEX COURT IN HOTEL BLUE MOON S CASE STIPULATES ONLY ISSUANCE OF SECTION 143(2) NOTICE WITHIN A PERIOD OF TWELVE MONTHS FROM THE END OF THE MONTH OF FILING OF THE RETURN . IT PRODUCES ORIGINAL RECORD OF SECTION 158BC NOTICE ASKING FOR ASSESSEE S RETURN DATED 14.10.1999. THE ASSESSEE S RETURN CAME ON 25.11.1999. THE ASSESSING OFFICER THEREAFTER ISSUED A SECTION 143(2) NOTICE ON 31.8.2000. THE SAME WAS SERVED ON 26.7.2001. THE REVENUE ACCORDINGLY ARGUES THA T THIS ISSUANCE OF NOTICE HAPPENS TO BE WITHIN THE ABOVESTATED STATUTORY LIMITATION OF ONE YEAR. IT FURTHER CONTEND S THAT THE DECISION OF HON BLE APEX COURT HEREINABOVE HAS NOT BEEN APPRECIATED IN ITS TRUE SPIRIT. A PERUSAL OF SECTION 143(2) PROVISO AS IT EXISTED BEING SUBSTITUTED W.E.F. 1.4.2008 MAKES IT CLEAR THAT NO NOTICE UNDER CLAUSE ( II ) OF SECTION 143(2) SHALL BE SERVED AFTER THE EXPIRY OF TWELVE MONTH FROM THE END OF THE MONTH IN WHICH THE RETURN IS FURNISHED. THE EXPRESSION IT (SS) A NO. 661 /AHD/ 20 10 WITH CO NO.291/AHD/2010 SHRI VIJAYBHAI R. TOPIWALA . BLOCK PERIO D 1990 - 91 TO 1999 - 00 - 6 - SERVED IN OUR VIEW HAP PENS TO BE MUCH DISTINCT THAN THE EXPRESSION ISSUED . WE MAKE IT CLEAR THAT THE PRESENT IS A TAX STATUT E WHEREIN SUCH EXPRESSIONS USED HA VE TO BE LITERALLY INTERPRETED. WE ARE OF THE OPINION THAT THE WORD SHALL USED IN THE PROVISION ALSO HIGHLIGHTS THE EXPRESSION TO BE OF MANDATORY CHARACTER . A CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. SHRI DINESH B. GANDHI IN IT(SS)A NO.660/AHD/2010 HAS REJECTED A SIMILAR ARGUMENT OF THE REVENUE WHEREIN THE VERY D ATES OF RETURN FOLLOWED BY ISSUANCE AND SE RVICE OF SECTION 143(2) NOTICE S WERE INVOLVED. THE REVENUE S FAIL S TO POINT OUT ANY DISTINCTION ON FACT S OR LAW. WE ACCORDINGLY REJECT ITS FIRST CONTENTION. 6. THE REVENUE S SECOND CONTENTION IS THAT SECTION 158BC IN CHAPTER XIV - B IS A COMPLETE CODE IN IT SELF WHEREIN SECTION 143(2) DOES NOT APPLY IN TOTO. SECTION 158BC(B) CLEARLY STIPULATES THE PROCEDURE TO BE FOLLOWED BY AN ASSESSING OFFICER IN DETERMINING UNDISCLOSED INCOME OF THE RELEVANT BLOCK PERIOD IN THE MANNER LAID DOWN IN SECTION 158BB AND THE PRO VISIONS OF 142 AND 143(2) AND (3) ETC . WE ACCORDINGLY REJECT THIS SECOND ARGUMENT AS WELL. THE REVENUE S SOLE SUBSTANTIVE GROUND FAILS. THE CIT(A) ORDER QUASHING THE IMPUGNED ASSESSMENT ON THE GROUND OF VALIDITY OF SECTION 143(2) NOTICE STANDS UPHELD. IT (SS) A NO. 661 /AHD/ 20 10 WITH CO NO.291/AHD/2010 SHRI VIJAYBHAI R. TOPIWALA . BLOCK PERIO D 1990 - 91 TO 1999 - 00 - 7 - T HE ASSESSEE S CROSS OBJECTION SUPPORTIVE OF THE CIT(A) ORDER HAS BEEN RENDERED INFRUCTUOS. 7 . THE REVENUE S APPEAL IT (SS)A 66/AHD/2010 IS DISMISSED AND ASSESSEE S CROSS OBJECTION 291/AHD/2010 IS DISMISSED AS HAVING BECOME INFRUCTUOUS. ORDER PRONOUNCED I N THE COURT ON THIS DAY THE 31ST JU LY 201 5 AT AHMEDABAD . SD / - SD/ - ( G.D. AGRAWAL ) ( S.S. GODARA ) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD; DATED 31 / 0 7 / 20 1 5 PRABHAT KR. KESARWANI SR. P . S . / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III AHMEDABAD 5. / DR ITAT AHMEDABAD 6. / GUARD FILE . / BY ORDER / ( DY./ASSTT.REGISTRAR) / IT AT AHMEDABAD