Income Tax Appellate Tribunal - Mumbai
Gopal S. Agrawal, Mumbai vs Assessee on 13 January, 2012
IN THE INCOME TAX APPELL ATE TRIBUNAL
MUMBAI BENCHES, 'G', MUMBAI
BEFORE SHRI R.S. SYAL (A.M.) AND SHRI D.K.AGARWAL (JM)
IT(SS)A No.23/Mum/2011
(Block period 1 .4.1996 to 31.12.2002)
Gopal S Agrawal, Dy. Co mmissioner of
252, Shubdhas CHS, Income Tax,
Sir, Packhanwala Road, 26(2),
Worli, Ayurved Prachar Sanstha
Mumbai- 400018. Building,
V/s Charni Road,
PAN:ABEPA4674P
Mumbai
APPELLANT RESPONDENT
Date of Hearing : 13.1.2012
Date of Pronouncement : 27.1.2012
Appellant by : Shri F.V.Irani,
Respondent by : Shri Pawan Ved.
O R D E R
PER D.K.AGARWAL (JM) This appeal preferred by the assessee is dire cted against the order dated 17.1.2011 passed by the ld. CIT(A) for the Block period 1.4.1996 to 31.12.2002
2. Briefly stated facts of the case are that the assessee is a Member o f the Legislative Council of Maharashtra State. A search action u/s 132 of the Income Tax Act 1961 (the Act) was carried out in the IT(SS) A No.23/Mum/2011 2 (Block p eriod 1.4 .1996 to 3 0.12.2 002) group cases of M/s N.A.Fabrics Pvt.Ltd., (2) M/s MKT Sales, (3) Shri Nirmal A Banwani and (4) late Shri Pravin M. Shah on 30.12.2002 and on subsequent dates. During the course of search, various documents/loose papers were found and seized from the premises of this gro up. In the light of these seized material/documents and statements recorded of Shri Nirmal A.Banwani and late Shri P.M.Shah Block Assessment orders u/s 158BC of the Act were passed in these cases on 6.7.2007. In the course of assessment proceedings o f aforementioned assessees it was found that documents/loose papers seized during the se arch also reveal that Shri Gopal Agrawal, an M.L.A.of Maharashtra Legislative Assembly received commission to the tune of Rs.2.75 crores approximately in the financial years 2001-02 and 2002-03. Consequently, notice u/s 158BD of the Act was issued by the DCIT, Circle -7, Nagpur on 3.9.2007. In response, the assessee filed block return declaring undisclosed income at Rs.Nil. Notice u/s 143(2) of the Act was issued on 4.3.2008 and served on the assessee on 5.3.2008. Later o n notice u/s 142(1) of the Act was also issued on 7.10.2008 and IT(SS) A No.23/Mum/2011 3 (Block p eriod 1.4 .1996 to 3 0.12.2 002) served on the assessee on 10.10.2008. In the absence of any compliance a final opportunity was offered to the assessee to present his case. Accordingly, a show cause no tice was served on the assessee on 10.9.2009, wherein the assessee was informed that on the basis of documents seized in the course of search a total addition to the tune of Rs.2,78,40,000/- is propo sed to be made for the block period. In response, the assessee objected to the additio n proposed by inte ralia stating that he has already denied the receipt of Rs.2,78,40,000/- from Shri Nirmal Banwani and late Shri Pravin M. shah, in the course of their assessment proceedings. He further stated that he does not know these persons and, therefore, there is no question of receipt of any commission payment from these persons. He also stated that as, he did not receive mo ney from these persons, therefore, he filed Nil return fo r the Block period. The AO recorde d the statement of Shri Gopal Agarwal, the assessee u/s.131 o f the Act wherein he denied knowing either Shri Nirmal Banwani and Late Shri Pravin M. Shah. He also denied the re ceipt of any commission/ payment from these persons. However, IT(SS) A No.23/Mum/2011 4 (Block p eriod 1.4 .1996 to 3 0.12.2 002) the AO in view of the documents seized during the course of the search and the statements of Shri Nirmal Banwani and Late Shri Pravin M. Shah has determined undisclosed income of the assessee at Rs. 2,78,40,000/- vide order dated 29.9.2009 passed u/s 158BD of the Act.
3. On appeal before the ld. CIT(A), the assessee has taken the following gro unds :
"1. The ld. Assessing Officer erred in passing his impugned block assessment orde r u/s 158BD dated 29.9.2009 assessing the appellant at an undisclosed income of Rs.2,78,40,000/-.The learned Assessing Officer he re failed to note that the appellant's case was not covered under the provisions of section 158BD in the first place and that the notice issued u/s. 158BD was thus without any jurisdiction.
2. The learned Assessing Officer also failed to appreciate that the block assessment order u/s.158BD passed on 29.9.2009 was time barred and hence bad in law.
3. Without prejudice to the above and even on me rits, the ld. Assessing Officer erred in making the addition of Rs.2,78,40,000/- on me re suspicion and without any proof on hand.
4. That ld A.O. erred in passing the order u/s.158BD without granting the Appellant an ade quate opportunity of being heard. The order passed by him is in contrave ntio n of principles of natural justice and hence bad in law."
IT(SS) A No.23/Mum/2011 5 (Block p eriod 1.4 .1996 to 3 0.12.2 002)
4. The ld. CIT(A) after considering the assessee's submissions observed and held that ".....the letter written on dt. 13.7.2007 after concluding the assessment u/s 158BC in the case of Shri Nirmal A.Banwani clarify all the facts of the case. All these facts are clear and requirements of law, in my opinion, was complied before completion of assessment, therefore, the AO has properly assumed the jurisdiction to issue a valid notice u/s 158BD as per the Income Tax Act". On merits, the ld. CIT(A) while observing that the Assessing Officer after taking into conside ration various documents has prope rly made the addition, upheld the addition of Rs.2,78,40,000/- made by the AO.
5. Being aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us.
6. Ground No.1 reads as under :
"1. The ld.CIT(A) failed to appreciate that the block assessment pro ceedings initiated against the Appellant u/s. 158BD are invalid, contrary to the provisions of law and without reaching at satisfaction in an objective manner no r based on cogent materials/ documents seized at the time of search."
IT(SS) A No.23/Mum/2011 6 (Block p eriod 1.4 .1996 to 3 0.12.2 002)
7. At the time of hearing the ld. Counsel for the assessee submits that under the provisio ns of se ction 158BD, the Assessing Officer making the block assessment in case of person searched has to be satisfied that undisclosed income detected belongs to some persons other than person searched. On being so satisfied, AO will handover the seized materials to the Assessing Officer having jurisdiction over such other person so that he can make a block assessment on him. Such satisfaction must be recorded by the Assessing Officer making the search related assessment is a mandatory condition, failure of which an assessment made u/s 158BD will be without jurisdiction and cannot be sustained in law. He further submits that the assessee vide letter dated 30.4.2010 appe aring at page 37 of the assessee's paper book sought from the Assessing Office r a copy the satisfaction note sent to the jurisdictional Assessing Office r of the assessee. He further submits that in this regard the assessee has received the following documents from the Assessing Officer: (a) Le tter dated 13.7.2007 by Dy. CIT, Central Circle -47, Mumbai to the Income Tax Officer, Gondiya and (b) IT(SS) A No.23/Mum/2011 7 (Block p eriod 1.4 .1996 to 3 0.12.2 002) Certified copy of order sheet dated 3.9 .2007 of DCIT, Circle -7, Nagpur appearing at page 27 to 29 of the assessee' s paper book. He further submits that these documents do not even show an iota of evidence that such satisfaction has been recorded by the said Assessing Office r. Therefore, the block assessment made by the Assessing Officer u/s 158BD is without jurisdiction and bad in law. In suppo rt, the re fe rence was also made to the copy o f show cause no tice issued by the AO appearing at page s 1,2 and 3 of the assessee' s paper book. The reliance was also placed on the decision of the Special Bench of the Tribunal in
(a) Manoj Aggarwal V/s DCIT (2008) 113 lTD 377 (Del) (SB), (b) CIT V/s. Parveen Fabrics(P.) Ltd. {2011} 198 Taxman 463 (P & H.), (c) CIT V/s Mridula, Prop. Dhruv Fabrics (2011) 335 ITR 266 (P&H), (d) CIT V/s Rame sh Kumar, Proprieto r (2011) 14 Taxman.com 163 (P&H) and (e) the de cision of the Tribunal in DCIT V/s M/s Arihant Impex and vice-versa in IT(SS)A No.63/Mum/2007 and IT(SS)A No.52/Mum/2007 (blo ck period 1.4.1995 to 10.5.2007) dated 4.2.2009. He, therefore, submits that since no satisfaction has been recorde d, the block IT(SS) A No.23/Mum/2011 8 (Block p eriod 1.4 .1996 to 3 0.12.2 002) assessment o rder passed u/s.158BD of the Act be quashed.
8. On the que rry raised by the bench as to whether any such satisfaction was recorded in the group cases of M/s.N.A. Fabrics Pvt. Ltd.; (2) M/s. M K T Sales, (3) Shri. Nirmal A. Banwani and (4) Late Shri Pravin M. Shah, the ld. counsel for the assessee, on the next date of hearing, placed on record the copy of ITAT order in the case of Late Pravin M.Shah V/s DCIT and Nirmal A.Banwani V/s DCIT vice-versa in IT(SS) No.31/Mum/2008, IT(SSA) No.32/Mum/2008, IT(SS)A No.52/Mum/2008 and IT(SS)A No.53/Mum/2008 (block period 1.4.1996 to 31.12.2002) dated 31.3.2011, to show that in the case of late Pravin M.Shah, the Tribunal has held that the assessment o rder passed in this case is beyond the pe riod of limitation specified u/s 158BE and the said asse ssment o rder is bad in law and has to be cancelled. He furthe r submits that the similar view was taken in the case of Nirmal A.Banwani. He furthe r submits that against the order passed by the Tribunal, in the case of late Pravin M. Shah, the Revenue has filed appeal before the IT(SS) A No.23/Mum/2011 9 (Block p eriod 1.4 .1996 to 3 0.12.2 002) Hon'ble Jurisdictional High Court. The Ho n'ble Juri sdictional High Court in CIT V/s Late P.M.Shah in Income Tax Appeal (Lod) No.1243 of 2011, dated 29.11.2011 held that no fault can be found with the decision of the ITAT in holding that the block assessment order passed by the AO was time barred and acco rdingly dismissed the Revenue's appeal. In the light of the above, he submits that since no satisfaction has been recorded in the case of Late Pravin .M. Shah and Nirmal A Banwani, therefore , the block assessment order passed by the AO in the case of the assessee be quashed. He further submits that even otherwise, as held by the ld. CIT(A), that letter written on 13 .7.2007(supra) after co ncluding the assessment u/s 158BC in the case of Nirmal A Banwani shows that the said letter was written after completion of the assessments of Shri Nirmal A Banwani and Late Shri Pravin M. Shah which were completed on 06.07.2007, therefore, the satisfaction was recorded after the completion of assessment of Shri Nirmal A Banwani and Late Shri Pravin M.Shah. He furthe r submits that in any case since the assessment of Shri Nirmal A Banwani and Late Pravin IT(SS) A No.23/Mum/2011 10 (Block p eriod 1.4 .1996 to 3 0.12.2 002) M. Shah have been quashed by the Tribunal, therefore, no satisfaction as provided u/s 158BD exists and the refore, the order passed in the case of the assessee be quashed.
9. On the other hand, the ld. DR while relying on the o rde r of the AO and the ld. CIT(A) fairly admits that the assessments in the case of Shri Nirmal A Banwani and late Shri Pravin M. Shah have been quashed by the Tribunal and the asse ssments in the group cases of M/s N.A.Fabrics Pvt.Ltd. and M/s MKT Sales have been made on the protective basis, therefore, the issue may be decided accordingly.
10. We have carefully considered the submissions of the rival parties and perused the material available on reco rd. We find that the facts are not in dispute. We further find that in this case, the AO has made the assessment on the basis of letter dated 13.7.2007 (wrongly mentioned by the AO in the order sheet dated 3.9.2007 in the assessee's case appearing at page 29 of the assessee's paper book as 13.8.2007). The letter dated 13.7.2007 is reproduced as unde r :
"N O .DC I T /C C - 47/ N A F G r ou p/ 200 7- 08 O ff ic e of t he IT(SS) A No.23/Mum/2011
11 (Block p eriod 1.4 .1996 to 3 0.12.2 002) D y . C om m iss ion er of In com e- ta x, C e nt r a l C ir cle- 47, R .N o. 65 8, Aa ya ka r B hav a n, M.K , Roa d, M um ba i- 400 0 2 0.
D a t e: 13. 0 7. 20 0 7.
T he I n com e-t a x O f f ic er, G o ndi ya W a r d , F ulc hur R oa d, G o ndi ya - 4 416 0 1.
Su b: I nt im at io n o f ca sh t ra ns act ion s w it h M/ s.N .A .Fa br ic s g r oup ca se s b y S hr i G op a l A gr awa l, MLC / ML A, G on diy a F or A .Y . 2 0O 2- 0 3/ 2O O 3 -O 4 - - r e g.
A s ea r ch a ct io n u/ s 1 32 wa s c ar r ied o ut in t he gr ou p ca s es of M/ s N .A .F a br i cs P v t . Lt d. , v iz ( 1) M/ s N .A .F a br ics P v t . Lt d . ( 2) M / s MK T S a le s, ( 3) S hr i N ir ma l A B anwa ni a nd ( 4 ) La t e S hr i P r av i n M. S ha h o n 3 0. 12 . 20 0 2 a n d on su bs eq uen t dat e s. D ur i ng t h e c ours e of s ea r ch , va r iou s do cum e nt s / loo se pa per s a nd c om put er iz ed d at a w er e f o und a n d se iz ed fr om t h e pr e m ise s of t hi s gr o up, w h ich p er t a in to una cc ou nt e d t r a nsa ct io ns of t h e bu si nes s es of t h es e as s es se e, viz . s up ply of v ar io us it em s t o t he diff er ent G ov t ./ s em i G o vt . or ga niz at io ns , w hic h w er e not d isc lo se d t o t h e Inc om e- t a x D e par t m en t a t a ll .
2 . C o ns ide r ing t hes e se iz ed m a t er ia l / d oc um ent s/ c om pu t er iz ed boo k s o f a c co unt s a nd t he st a t em ent s r ec or d ed of S hr i N irm a l A . B a nw a ni a nd La t e S hr i P ra v in M. S ha h d ur i n g t he c our s e o f s e ar ch a s w e ll a s p ost i nv es t i ga t i on wor k a n d b lock a ss ess m e nt pr o ce ed ing s, t h e bl oc k a ss ess m e nt u/ s 15 8B C i n a bov e m ent i one d ca s es ha v e be en c om pl et ed on 6 .7 . 20 07.
3. Shr i G op a l A g ra w a l, M LC / M LA , t hr o ug h his c ont a ct s in pol it ica l / bur ea u cr a t ic c ir cle us ed t o pr o cur e co nt a ct s f or th e a ss es se e( s) . F or t his he use d to p ay com m issi o n in ca s h to p oli t icia ns and b ur ea ucr a t s. T h e as se ss ee ( s) ha v e p a id R s. 2. 7 5 cr or es t o S hr i G o pa l A gr aw a l f or pr o c ur ing t h e c ont ra ct s . T he se p ay m e nt s w er e dis a llow e d u/ s 3 7( 1) o f t h e I T A ct a n d ha v e t o b e a d ded in t he in com e of Shr i G opa l A gr aw a l. A s per pa g es 11 0 t o 1 13 of An ne x ur e A - 3 3 t o P a nc hna m a da t e d 31 . 12. 2 002 ( c op y e nc los ed) t h es e a ss es s es hav e s ho w n pa ym en t of Rs . 2, 7 5, 00 , 000 / - t o S hr i G o pa l A gr a w a l bet w ee n t h e p er iod fr om 1. 4. 2 00 1 t o 31 . 03. 2 002 a n d 01 . 04. 2 00 2 t o 3 012 . 2 00 2. T he pa y m e nt of c om m is s ion t o S hr i G opa l ha s bee n a dm it t ed b y bot h t he a sse ss ee s ( S hr i N ir ma l IT(SS) A No.23/Mum/2011 12 (Block p eriod 1.4 .1996 to 3 0.12.2 002) A.B a nw a ni a n d La t e S hr i P r a v in M . S ha h) in t h eir r es pe ct i v e st at em e nt s r ec or de d a t se v er a l t im es.
4. I a m a ls o e nc los ing her ew it h co py of pa g e N o. 39 of A n ne x ur e A/ 37 t o P a nc hna m a d at e d 3 1. 12 . 20 0 2, s ho wi ng t h e st at em e nt o f C om m iss io n Ac c ount of S hr i G o pa l A gr a wa l fr om t he per iod fr om 1 .4 . 20 01 t o 31 . 3 . 20 02, w hic h a ls o r e v ea ls n et c om m i ss ion pa y m en t of R s. 1, 38 , 40, 0 5 5 /-
5. In p ar a 14. 3 ( c) of t h e b loc k a ss es sm e nt or d er in t he ca s e o f Shr i N ir m a l A B a nw a ni, t h e e xt r a ct s o f st a t em ent s r ec or d ed o f Shr i N ir ma l A B a nw a ni a n d Lat e Shr i P r av in M.S ha h ha v e b ee n r e- pr o du ce d v iz .
i) St a t em en t of La t e Shr i Pr a v in
M .S ha h r e cor ded on 30. 1 . 20 0 3
ii ) St a t em en t of La t e Shr i Pr a v in M.S ha h
r ec or d ed on 5 . 2. 20 03
ii i) St a t em en t of S hr i N ir m a l A B a nwa ni
r ec or d ed on 3 0. 12 . 200 2
iv ) St a t em en t of S hr i N ir m a l A B a nwa ni
r ec or d ed on 6 . 1. 20 03
6. As p er r e c or ds, S h r i G o pa l A gr aw a l r ec e iv e d a ppr ox im a t e ly R s. 2 . 75 cr or e s in F. Y . 20 01- 02 a n d 2 002 - 0 3. T h es e a ss es s m e nt s for A Y 20 02- 0 3 a n d 2 003 - 0 4 ne ed t o b e r e- op en ed f or t a x i n g t he a m o unt s r ec e iv e d fr om t h e as se ss ee ( s) . I am a ls o e nc los in g h er ew it h a co py of t he a ss es sm ent or d er u/ s 1 58B C d at ed 6 . 7. 2 00 7 in t h e c as e of S hr i N ir m a l A B a nwa ni f or y our r ea dy r ef er e nc e f or t a k in g ne ce ss ar y a ct ion i n t he ca s e of S hr i G o pa l A gr a wa l, M LA a s de em f it .
7. If a ny s eiz ed r ec or d s/ d oc um ent s or f urt h er d et a i ls a r e n ee de d, ple as e in t im a t e us i mm ed iat e ly s o t ha t I ca n be s upp li ed w ell in t im e.
S d/ -
( V. V. S ha st r i) Dy .C om m i ss ion er o f In co me Ta x, C e nt r a l C ir cle - 47, M um b a i.
E nc l: 1 .P a ge N o. 11 0 t o 1 13 of A n nex ur e A/ 33 2 .P a g e N o . 39 o f A nn ex ur e A / 3 7 3 .A sst t .O r der u/ s 15 8B C in t he ca s e of S hr i N ir ma l A B anwa ni IT(SS) A No.23/Mum/2011 13 (Block p eriod 1.4 .1996 to 3 0.12.2 002) C o py su bm it t ed for inf or ma t ion t o -
1 . T he C om m iss ion er of I n com e Ta x - I V, N a gpur .
2 . T he A ddl . C om m i ss ion er o f In com e -T a x , Ra ng e- 7, N a gpu r .
3 . T he A ddl .C om m i ss ion er of In com e Ta x, C .R .- M um b a i.
S d/ -
D.C . I. T ., C .C . - 47, M um b a i. "
11. We further find that the block assessments in the case of Late .Shri Pravin M. Shah and Shri Nirmal A Banwani we re completed on 6.7.2007 i.e. prior to the abo ve letter dated 13.7.2007. We further find that the said assessments were quashed by the, Tribunal vide order dated 31.3.2011 (supra) . We further find that the Hon'ble Jurisdictional High Court in the case of Late Pravin M.Shah has also upheld the view of the Tribunal in holding that the block assessment order passed by the AO was time barred.
12. In Manoj Aggarwal(supra) the Special Bench of the Tribunal as held vide para 126 at page 495 of the report as under:
"..... In orde r to ascertain whether in the course of the assessme nt proceeding in the case of Manoj Aggarwal u/s.158BC there is any finding of any undisclosed income in the case of the appellant; even there, we did no t come acro ss any finding that any part of the undisclosed income belongs to IT(SS) A No.23/Mum/2011 14 (Block p eriod 1.4 .1996 to 3 0.12.2 002) the appellant or any reference to any material therein indicating the same. In the circumstances, we have to hold that the satisfaction note dated 19.12.2002 is not the one contemplated in section 158BD and further that even if its assumed to be in terms of the said section it does not even remotely show that there is undisclosed income belonging to the appellant firm calling fo r the assumption of jurisdictio n u/s.158BD. In the circumstance, we hold that the said note of satisfaction 158BD. In the circumstance, we hold that the said note of satisfaction is non-established in law and further that the section 158BD proceedings pursuant thereto is invalid and void ab initio on this ground also."
13. In CIT V/s Mridula, Prop. Dhruv Fabrics (2011) 335 ITR 266 (P&H) it has been held (page. 271):
"... ...The Act no where specifically prescribes any time limit or limitation for initiation of proceedings unde r section 158BD o f the Act or for recording of satisfaction before taking action under that provision. The plain and reaso nable construction that can be placed on the aforesaid provision would be that the recording of satisfaction for taking action against any other person under section 158BD of the Act has to be between initiation of proceedings under section 158BC and before completion of block assessment under section 158BC of the Act in the case of the person searched. It would, thus, means that the action contemplated under section 158BD o f the Act against a third party to a search, is nece ssarily to be during the course of block assessment proceedings under section 158BC of the searched person. It cannot be after the conclusion of the same as there is no occasion fo r an Assessing Officer to examine the seized mate rial or documents of the searched person when the block assessment proceedings have concluded and no other proceedings are pending before him. If any other time limi t is re ad in the provisions/statute, IT(SS) A No.23/Mum/2011 15 (Block p eriod 1.4 .1996 to 3 0.12.2 002) it shall lead to anomaly and would be arbitrary and unreasonable. It could not be read in the provision that whe re block assessment under section 158BC of the Act in the case of an assessee against whom action under section 132 or 132A of the Act had been carried out is finalized, the Revenue can take action at any time in the absence of any specific limitation pre scribed in the statute. A construction which leads to such an anomaly should be avoided. "
14. The Tribunal, in the case of DCIT V/s M/s Arihant Impex and vice-versa (supra) vide paragraphs 4 of its order has held as under :
"4. We have heard the rival submissions and perused the relevant mate rial on record. There is no dispute about the fact that the search action was taken u/s 132(1) on Shri Ashok P.Shah, Shri Niranjan P. Shah and Shri Chirag A Shah on 10.5.2001. The block assessments in their case s have been framed u/s 158BC vide orders of the Assessing Officer on 14.5.2003, copies of which orders have been placed in the paper book. Admittedly the satisfaction in the case of the present assessee, which is a pre-condition for initiating proceedings u/s 158BD was recorded on 22.3.2004. The Special Bench o f the Tribunal in the case of Manoj Aggarwal has held that se ction 158BE provides the time limit for completion of block assessment which implies that the order u/s 158BC shall be passed within two years from the end of the month in which the last of the authorizatio ns for search u/s 132 was executed. It has further been held in this case that if there is a time limit for passing such order, then there is an implied time limit for giving a finding as to the person to whom the undisclosed income belongs which unde r no circumstances can be beyond the time limit set in section 158BE. Going by the mandate of the Special Bench orde r it is clear that the order u/s 158BC in respe ct of the persons searche d u/s 132(1) could have been IT(SS) A No.23/Mum/2011 16 (Block p eriod 1.4 .1996 to 3 0.12.2 002) passed up to 31.5.2003 being two years from the end of the month in which the last of the authorizatio n was executed, which date in these cases in 10.5.2001. The passing o f the block assessment orders in the case of Shri Ashok P.Shah etc. on 14.5.2003 is within the prescribed time limit u/s 158BC,No w as per the Special Bench order the same time limit has to be considered for reco rding satisfaction in respect of "any other person" referred to in section 158BD, which in the instant case is the present assessee. Going by the same yardstick the satisfaction ought to have been reco rded on or before 31.5.2003 before taking action against the assessee in terms of se ction 158BD. Since the satisfaction was recorded by the Assessing Officer on 22.3.2004, as is emanating from the block assessment order passed in the case of the assessee itself, it is clear that such satisfaction was reco rded beyond the time limit provided u/s 158BE. We are bound by the decision taken by the Special Bench in theafore noted case of Manoj Aggarwal. Resultantly all the pro ceedings flowing out of the time barre d initiation u/s 158BD need to be quashed. We order accordingly. In such situation there is no need for disposing off the cross appeals on merits."
15. In C.I.T. vs. Ramesh Kumar (2011) 338 ITR 126 (P & H) it has been observed and held (head note):
"In a search operation u/s.132(1) of the Income Tax Act, 1961, carried out at the residence of B certain documents were seized which related to two business concerns. The assessee made purchases from one of the two concerns during the financial years 2001-02 and 2002-03. The Assessing Officer having jurisdiction over B sent his satisfaction u/s.158BD of the Act in the case of the assessee for the block period from April 1, 1998, to February 5, 2003, on July 15, 2005. The undisclosed income of the assessee for the block period was finalized at Rs.8,81,830 u/s.158BC r.w.s. 158BD of the Act, on December 18, 2007. The Commissioner(Appeals) held that assumption of IT(SS) A No.23/Mum/2011 17 (Block p eriod 1.4 .1996 to 3 0.12.2 002) jurisdictio n by the Assessing Officer u/s.158BD of the Act and the proceedings initiated pursuant thereto were invalid and void as the block assessment orders in the case of B were passed on March 30, 2005, whereas the satisfaction note in the case of the asse ssee was recorded on July 15, 2005. The Tribunal upheld the order passed by the Commissioner (Appeals). On further appeal:
Held, dismissing the appeal, that the action contemplated u/s.158BD of the Act against a third perso n was nece ssarily to be during the course of block assessment proceedings u/s.158BC of the perso n searched. It could not be after the conclusion of the block assessment as there was no occasion for an Assessing Officer to examine the seized material or documents of the person searched when the block assessment proceedings had concluded and no other proceedings were pending before him."
16. In C.I.T. vs. Calcutta Knitwears (2011) 338 ITR 239 (P & H) it has been held (head note):
"Held, dismissing the appeal, that since the block assessment in the case of the S group u/s.158BC of the Act was framed on March 30, 2005, whe reas the satisfaction as contemplated u/s.158BD in the case of the assessee was recorded on July 15, 2005, the procee dings were bad in law."
17. Judged on the anvil of the afore said decisions to the facts of the present case we find that since the block assessme nt in the cases of Shri Nirmal A Banwani and Late Shri Pravin M.Shah were framed on 6.7.2007, whereas the satisfaction note/letter was written on 13 .7.2007 and the fact that despite more than one opportunity provided to the Revenue, the IT(SS) A No.23/Mum/2011 18 (Block p eriod 1.4 .1996 to 3 0.12.2 002) Revenue has placed no material on record to show including the office no te, if any, in the relevant block assessment orders passed u/s.158BC, as held in the case of CIT V/s Mukta Metal Works (2011) 336 ITR 555 (P&H) that the office note by itself met the requirement for procee ding u/s 158BD, as to whether any such satisfaction has bee n recorded by the respective AOs' in the cases of M/s N.A.Fabrics, M/s MKT Sales, Shri Nirmal A. Banwani and Late Shri Pravin M. Shah as according to the provisions of section 158 BD of the Act the satisfaction has to be reco rded between the initiation of the pro ceedings u/s 158BC and before completion of block assessment u/s 158BC of the Act in the case of person searche d. It could not be after the conclusion of the block assessment as there was no occasio n for an AO to examine the seized material or documents of the person searched whe n the block assessment proceedings had concluded and no other proceedings were pending before him. In this view of the matter and keeping in view that the assessments in the case of Late Shri Pravin M Shah and Shri Nirmal A Banwani have been quashed by the Tribunal and confirmed by IT(SS) A No.23/Mum/2011 19 (Block p eriod 1.4 .1996 to 3 0.12.2 002) the Hon'ble Jurisdictional High Court in the case of Late Shri Pravin M Shah, we are of the vie w that the assessment order passed by the AO and confirmed by the ld. CIT(A) is contrary to the provisio ns of section 158BD of the Act and needs to be quashed and accordingly, we quash the impugned assessment order passed by the AO and confirmed by the ld. CIT(A). We hold and order accordingly. The legal ground taken by the assessee is, therefore, allowed.
18. Since we have quashed the assessment, therefore, we do not co nsider it necessary to adjudicate the other grounds taken by the assessee on merits and accordingly the same are treated as infructuous and, hence, rejected.
19. In the result, the assessee's appe al stands partly allowed.
Order pronounced in the open court on 27 t h Jan., 2012.
Sd sd
(R.S. SYAL) (D.K.AGARWAL)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, 27th January, 2012
IT(SS) A No.23/Mum/2011
20 (Block p eriod 1.4 .1996 to 3 0.12.2 002)
SRL:
Copy to:
1. Appellant
2. Respondent
3. CIT Co ncerned
4. CIT(A) concerned
5. DR conce rned Bench
6. Guard file.
BY ORDER
True co py
ASSTT. REGISTRAR,
ITAT, MUMBAI