Income Tax Appellate Tribunal - Mumbai
Gautam Steel, Mumbai vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES "G", MUMBAI
BEFORE SHRI. J. SUDHAKAR REDDY (A.M.) AND SHRI. R.S. PADVEKAR (J.M.)
ITA No.2308/MUM/2009
ASSESSMENT YEAR : 2000-2001
Income Tax Officer, Ward 23(2), M/s. Gautam Steel
C-10, 2nd Flr., R.No.204, A-1/6, Jeevan Nagar,
Pratayaksha Kar Bhavan, Mithagar Rd., Mulund (E),
BKC, Bandra (E), Mumbai - 51. Vs. Mumbai - 400 081.
PAN : AAAFG3699M
(Applicant) (Respondent)
C.O. No.196/MUM/2009
Arising out of ITA No.2308/MUM/2009
ASSESSMENT YEAR : 2000-2001
M/s. Gautam Steel Income Tax Officer, Ward 23(2),
A-1/6, Jeevan Nagar, C-10, 2nd Flr., R.No.204,
Mithagar Rd., Mulund (E), Pratayaksha Kar Bhavan,
Mumbai - 400 081. Vs. BKC, Bandra (E), Mumbai - 51.
PAN : AAAFG3699M
(Cross Objector) (Respondent)
Applicant by : Mr. Mohd. Usman
Respondent by : Mr. Prakash Pandit
ORDER
PER R.S. PADVEKAR, J.M.
The Revenue has filed this appeal challenging the impugned order of the CIT(A), Mumbai, dated 30.01.2009 for the Assessment Year 2000-2001. This appeal is arising out of the assessment framed by the Assessing Officer by initiating proceedings u/s. 147 of the Income-tax Act, 1961.
2. The Revenue has taken the following effective grounds, which read as under: -
2 ITA No.2308/MUM/2009 C.O. No.196/MUM/2009 A.Y.: 2000-2001"i) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that the notice issued u/s.147 was invalid and the subsequent assessment made u/s.143(3) r.w.s. 147 as void.
ii) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that the notice u/s.147 suffered for the want of compliance of the conditions stipulated in the said section.
iii) The appellant craves leave to add, to amend, alter, substitute or modify any of the above ground or add a fresh ground as and when found necessary either before or at the time of hearing."
3.1 The facts reveal from the record are as under. The assessee is a partnership firm carrying on the business of exporting of stainless steel utensils and cutleries to foreign countries for last more than 15 years. For the assessment year 2000-2001, the assessee was 100% Export Oriented Unit and also claimed deduction u/s.80HHC which was equivalent to the gross income of Rs.54,16,525/-.
3.2 There was a search and seizure operation u/s.132 of the I.T. Act by the Director of the Investigation (H.Q.)- 3 in the case of Shri Jayantilal L Shah and his sons namely; Shri Pradeep J Shah and Shri Hitesh J Shah. During the course of search and seizure proceedings u/s.132 of the I.T. Act Shri Shah made a statement on 26.02.2001 that they have given bogus bills in stainless steel market to the tune of Rs.24.00 crores for the year ended on 31.03.2000 and charged a commission for the same. The D.D.I. (H.Q.)-3 passed said information to the Assessing Officer of the assessee and on the basis of the said information, more particularly relying on the statement of Jayantilal L. Shah and others and issued Notice to the assessment u/s.158BC r.w.s. 158BD of the I.T. Act for the block period 01.04.1991 to 26.02.2001 on 10.01.2002.
3.3. The Assessing Officer made an assessment u/s.158BD r.w.s.143(3) of the Act dated 28.01.2004 determining total income of the assessee for the 3 ITA No.2308/MUM/2009 C.O. No.196/MUM/2009 A.Y.: 2000-2001 block period at Rs.2,04,55,604/-. The said assessment included nothing but the alleged bogus purchased made from Jayantilal L Shah and others. The assessee challenged the assessment order before the CIT(A) who dismissed the appeal. The assessee challenged the order of the CIT(A) before the Tribunal and vide order dated 28.11.2005 the Tribunal allowed the appeal filed by the assessee on jurisdictional ground holding that the Assessing Officer was not justified in assuming jurisdiction u/s.158BD of the I.T. Act and quashed the entire assessment proceedings in case of the Assessee. The Tribunal did not adjudicate the grounds taken on merit as the appeal was allowed on jurisdictional issue.
3.4 Subsequently, the Assessing Officer initiated the proceedings u/s.147 and issued the notice to the assessee u/s.148 of the act on 31.03.2007 for the A.Y. 2000-01. The assessee informed the Assessing Officer that the return file for the A.Y. 2000-01 on 19.01.2001 may be treated as Return file in response to Notice under sec.148 of the Act. The assessee also requested the Assessing Officer to give reasons recorded for issuance of the Notice u/s.148 of the act.
3.5 The Assessing Officer furnished reasons to the assessee and as per reasons recorded, it was stated that the issue of non-genuineness was covered under the block assessment period u/s.158BD r.w.s. 143(3) of the I.T. Act and, the same was not considered while processing the return filed u/s.143(1) of the I.T. Act for the A.Y. 2000-01. It was also stated that the income to the extent of Rs.95,40,410/- has been suppressed by the assessee.
4. The assessee filed an objection to the Assessing Officer while its letter dated 12.09.2007 for issuing him a notice u/s.148. The Assessee also requested the Assessing Officer to dispose off his application by passing an appropriate order. The assessee also requested the Assessing Officer to give copy of the sanction given by the Addl. CIT(A) as per provision of section 151 of the I.T. Act. It appears that Assessing Officer did not give reply to the 4 ITA No.2308/MUM/2009 C.O. No.196/MUM/2009 A.Y.: 2000-2001 assessee but proceeded with by giving a questioner dated 05.11.2007 together with notice u/s.143(7) of the I.T. Act. The assessee again filed a letter before the Assessing Officer on 08.11.2007 and also filed copy of the correspondence, it had with the Assessing Officer. The Assessing Officer rejected the objection of the assessee and proceeded with the assessment. It appears that the assessee filed Writ Petition in the Hon'ble High Court and the Hon'ble High Court granted interim stay for the assessment proceeding initiated against the assessee. Subsequently, the Writ Petition filed by the assessee was dismissed. The Assessing Officer after long drawn process of assessment proceeding and after considering the submissions made by the assessee as well as evidence on record, made the high pitched assessment by making the addition of Rs.95,40,410/- towards alleged unapproved purchases u/s.69C of the I.T. Act. The assessee challenged the authority of Assessing Officer to issue a notice u/s.148 by taking contention that the said notice was invalid as it was in respect of the income escaped found as a result of search u/s.132 of the Act and which has already been dealt with by the Assessing Officer by making assessment order u/s. 158BD r.w.s. 143 of the I.T. Act as per the special provisions of chapter XIV-B of the I.T. Act. It was further contended that as the provisions u/s.147 are initiated on the same facts and evidence which was subject matter of the proceeding u/s.158BD of the I.T. Act and hence, the proceeding initiated by the A.O. was bad in law. The assessee found favour with the learned CIT(A) who was the opinion that a notice u/s.148 has been issued beyond the period of four years and reasons for issuing the notice was issued on material gathered during the course of search and hence, there was no other material before the A.O. to issue notice under sec. 148 of the Act. In view of the learned CIT(A) the assessee's case was squarely covered by the decision of the Hon'ble Jurisdictional High Court in case of Smt. Mira A. Naik (221 CTR 147(B0m) Panjim Bench. The learned CIT(A) held that the notice u/s.148 issued by the Assessing Officer was invalid and he, cancelled the assessment framed by the A.O. . Now the Revenue is in appeal before us.
5 ITA No.2308/MUM/2009 C.O. No.196/MUM/2009 A.Y.: 2000-20015. We have heard the rival submission of the parties and also perused the record. The facts are stated detail here in above. It is not disputed in this case that the assessment u/s.158BD was framed against the assessee in consequent of search and seizer operation u/s.132 of the Act against Jayantilal Shah & Others. It is also not disputed in this case that the block assessment made by the Assessing Officer was quashed by the Tribunal while order dated 28.11.2005 and that was not challenged by the Revenue. Subsequently, the Assessing Officer initiated proceeding u/s.147 and issued the notice of the assessee u/s.148. The arguments of the learned counsel is that the Assessing Officer initiated proceedings u/s.147 and the basis for the same was the material found during the course of search against Shri Jayantilal Shah and there was no other material before the Assessing Officer to issue the notice u/s.148 to the assessee. The learned counsel argued that the assessee's case is squarely covered by the decision of Hon'ble High Court of Bombay (Panjim Bench) in the case of Smt. Mira Naik and Others (Supra). We, therefore, pleaded that the order of the learned CIT(A) which is in accordance with law may be confirmed. Per contra the learned D.R. supported the action of the Assessing Officer for issuing notice to the Assessing Officer u/s.148 of the I.T. Act.
6. In the case of Smt. Mira A. Naik (supra) there was a search at the residence of late Anant Naik and his family u/s.132 of the Act and some assets were seized and statements were also recorded during the course of search. The block assessment framed in the case of late Anant Naik was quashed by the Tribunal, Pune Bench vide order dated 07.06.1999 thereafter the assessee was issued the notice u/s.148 of the I.T. Act. In that case the objection was raised for issuing the notice u/s.148 by stating that the notice did not disclosed any reason other than the reasons on which block assessment was made. The assessee challenged the notice u/s.148 by way of Writ Petition u/s.226 of the Constitution before the Hon'ble High Court of Bombay at Panjim (Goa). The Hon'ble High Court allowed the writ petition filed by the assessee and held as under:
6 ITA No.2308/MUM/2009 C.O. No.196/MUM/2009 A.Y.: 2000-2001"22. For the present petition, it is not necessary to consider and determined or decide any larger issues or controversy. The factual situation in the present case is undisputed. The search and seizure proceedings culminated in block assessment, which block assessment was subject-matter of challenge at the instance of the petitioners perusal of the order of the Tribunal would reveal that the Tribunal was called upon to decide the contentions, which have been raised in para of one of its orders. One of the contentions raised was that the assessment extends to income disclosed in regular proceeding before the Assessing Officer. The Tribunal has permitted authorities to make detailed submissions and thereafter in paa 12 of the order has gone into the details of the search proceedings. Thereafter, it considered the law or the point and subsequently held that the assessment cannot be sustained and the appeal challenging the search and seizure deserves to be allowed. Reasons are contained in paras 12 to 18 of the order passed by the Tribunal. The search and seizure proceedings were commented upon and it is worthwhile noting that the orders were delivered on 7th June 1999 and subsequently, the Department challenged them under 260A of the I.T. Act but even that challenge in this Court has failed.
23. It is also not disputed before us that the block assessment was carried out and the block assessment was the subject-matter of the proceedings. Therefore, the notices which merely state that there is reason to believe that the income chargeable to tax for the relevant Assessment Year has escaped assessment without anything more, cannot be said to be something which would enable the authorities to involve Sec.147 of the I.T. Act in the peculiar facts of this case. The notices are identical and neither any details of the income chargeable to tax are disclosed in the notice nor it has been set out as to how that can be termed as having escaped assessment within the meaning of S.147. The reasons are supplied are recorded in an order sheet for the years in question. The reasons in the order-sheets and the same being supplied only after reminders to the Department. There is much substance in the contentions of Shri Nadkarni that the search having resulted in block assessment and the Department having resorted to S.158BA to S.158BC of the I.T. Act, it cannot be said that the income escaped assessment. In these proceedings the income was assessed and taxed after it was brought to the notice of the Assessing Officer. Merely because the block assessment was not upheld by the authorities under the I.T. Act, it cannot be reason enough in this case to invoke S.147of the same. The income has not escaped assessment in the admitted factual position. We are of the view that even the order sheet does not meet the requirement in law. The same merely sets out that the seized material and inquiries with the assessee at the time of search, reveal that the income as per particulars is unaccounted in the books of the seizure. Therefore, there is reason to believe that the income has escaped assessment. The reasons clearly show 7 ITA No.2308/MUM/2009 C.O. No.196/MUM/2009 A.Y.: 2000-2001 that there is no references to any block assessment or the proceedings pursuant thereto.
31. In our view, it is the attempt of the Department to somehow or the other reopen the proceedings and more particularly the block assessment which they could not successfully support and sustain right upto this Court. That this is the attempts which is apparent from the notices and, therefore, the reasons which are relied upon fail to indicate any escapement or concealment of income by the assessee or suppression of any material facts by him. Therefore, they do not meet the required satisfaction u/s.147 of the I.T. Act. In fact, this is an instance identical to the one before the Hon'ble Supreme Court in the case of CIT vs. Rao Thakur Narayan Singh (supra).
32. On this ground alone, the petition deserves to be allowed. Any larger issue need not be considered. In the view we have taken on merits, the ambit and scope of the powers of the block assessment and resort to s.147 thereafter being impermissible, is a matter which need not be gone into in further details in the light of the admitted factual position. The arguments on mala fides and bias also need not be answered in this case for the same reason."
7. As far as present case is concerned on the perusal of the record we find that the proceedings u/s. 147 are initiated on the basis of material seized during the course of search and admittedly the block assessment was also framed which was quashed by the Tribunal was also on the same evidence and seized material in the course of search. Nothing is on record to suggest that there was any thing more before the A.O. for formation for belief as contemplated under sec.147 of the Act. Moreover, legislature specifically provided the procedure for dealing with the case in which search and seizer operation is carried out u/s.132 of the I.T. Act. In our opinion, the principles laid down by the Hon'ble High Court of Bombay in the case of Smt. Mira Naik (supra) are squarely applicable to the assessee's case. In our considered view no interfere is called for in the order of the learned CIT(A) and same is accordingly upheld.
8. So far as assessee's cross objection is concerned it became infractuos as the Revenue appeal is dismissed upholding the order of the learned CIT(A) as entire assessment itself is quashed.
8 ITA No.2308/MUM/2009 C.O. No.196/MUM/2009 A.Y.: 2000-20019. In the result, Revenue's appeal as well as assessee's cross objection is dismissed.
Order pronounced on this day of 9th March, 2010.
Sd/- Sd/-
(J. SUDHAKAR REDDY) (R.S. PADVEKAR)
(ACCOUNTANT MEMBER) (JUDICIAL MEMBER)
Mumbai, Dated 9th March, 2010.
Janhavi/Neelam
Copy to:
1. The appellant
2. The respondent
3. Commissioner of Income Tax (Appeals)-XIII, Mumbai
4. Commissioner of Income Tax, City-XIII, Mumbai
5. Departmental Representative, Bench 'B', Mumbai //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI 9 ITA No.2308/MUM/2009 C.O. No.196/MUM/2009 A.Y.: 2000-2001 Date Initials
1. Draft dictated on 03-03-10 PS
2. Draft placed before author 04-03-10 PS
3. Draft proposed & placed before the Second AM/JM Member
4. Draft discussed/approved by Second Member AM/JM
5. Approved Draft comes to the Sr. PS PS
6. Kept for pronouncement on PS
7. File sent to the Bench Clerk PS
8. Date on which file goes to the Head Clerk
9. Date of dispatch of Order