Income Tax Appellate Tribunal - Mumbai
Kishorilal Gupta, Mumbai vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH 'A' MUMBAI
BEFORE SHRI R.S. SYAL (AM) AND SMT. ASHA VIJAYARAGHAVAN (JM)
IT(SS)A No. 18/Mum/2006
Block Period 01.4.1995 to 14.9.2000
Shri Kishorilal Gupta, The ACIT (OSD)-26(1),
7B, Sneh Milan, Mumbai
Khandelwal Friends CHS,
17th Road, Khar (W), Vs.
Mumbai-400 052
PAN-AABPG 2772J
(Appellant) (Respondent)
Appellant by: Shri Pankaj Toprani
Respondent by: Shri Sravan Kumar
ORDER
PER ASHA VIJAYARAGHAVAN (JM) This appeal filed by the assessee is directed against the order dated 1-.11.2005 passed by the ld. CIT(A)-XXVIII for the Block period 1.4.1995 to 14.9.2000.
2. The facts of the case are that the assessee is a salaried employee employed with Golcha group of companies namely Chandra & Co., Golcha Talkam & Cosmetics Pvt. Ltd. as Chief Executive on a salary of Rs. 15,000/- per month plus bonus etc. The assessee is assessed to tax by the A.C. of I.T. Range-28(2). Besides salary, his other sources of income are dividend, bank interest, capital gain on the sale of shares etc.
3. The AO while completing the assessment u/s. 158BC r.w.s. 143(3) of the I.T. Act, the assessed income at Rs. 95,38,660/-. On further appeal before the Ld. CIT(A), the Ld. CIT(A) partly allowed the assessee's 2 IT(ss)A No.18/M/06 appeal. However on the major issues, the Ld. CIT(A) confirmed the order of the AO.
4. Aggrieved, assessee is in appeal before us.
5. Before us, the Ld. Counsel for the assessee Shri Pankaj Toprani raised an Additional Ground which is as follows:
"On facts and in law, the AO erred in issuing notice u/s. 158BD beyond the limitation period and hence the block assessment is null & void and liable to be quashed."
6. The additional ground is admitted relying on the decision in the case of National Thermal Power Co. Ltd., Vs CIT in which it has been held as under:
"The Tribunal should not be prevented from considering questions of law arising in assessment proceedings, although not raised earlier. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner (Appeals) is too narrow a view to take of the powers of the Tribunal.
Undoubtedly, the Tribunal has the discretion to allow or not to allow a new ground to be raised. But where the Tribunal is only required to consider the question of law arising from facts which are on record in the assessment proceedings, there is no reason why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee.
The Tribunal had jurisdiction to examine a question of law which arose from the facts as found by the income-tax authorities and having a bearing on the tax liability of the assessee."
7. The Ld. Counsel for the assessee submitted as follows:
On the basis of the letter dt. 23.12.2002 from DCIT, Central Circle-21, (Central Range V, Mumbai), the ACIT, Range -28(2), 3 IT(ss)A No.18/M/06 Mumbai issued a notice u/s. 158BD of the I.T. Act. 1961 on 20.1.2003 from which it can be seen that in the said notice u/s.
158BD, the Assessing Officer had wrongly stated that search warrant u/s. 132(1) of the I.T. Act was in the name of the assessee. The AO had also wrongly assumed that there was a search action u/s. 132 of the Act against the assessee on 14.9.2000. The search action on 14.9.2000 was on the Munshi Group of companies and not on the assessee.
8. The Ld. Counsel for the assessee further submitted as follows:
"As per the decision of the Delhi Special Bench in the case of Manoj Agarwal Vs Dy. CIT (113 ITD 377), satisfaction note should precede the date of Block assessment order passed u/s. 158BC. In the above case, satisfaction note has been made after 2 months from the date of passing of 158BC order; hence 158BD proceedings are time-barred.
As per the satisfaction note dt. 23.12.2002, (page No. 36 of the Paper book), the AO passing 158BC order has stated that the appellant may not have accounted the cash loans. Therefore, the use of word 'may' indicate that he himself is not sure and is in doubt and therefore satisfaction on his part may not be equated with the satisfaction contemplated by the Supreme Court decision in the case of Mahish Maheswari Vs ACIT (289 ITR 341) and the Spl. Bench decision in the case of Manoj Agarwal Vs ACIT (supra).
As per the decision of the Delhi Tribunal in the case of Radhey Shyam Bansal Vs ACIT Circle 37(1) New Delhi IT (SS)A No. 12/Del/2007, Shri Manoj Bansal Vs ACIT Circle 37(1), New Delhi IT (SS) A No. 14/Del/2007, Shri Suresh Kumar Vs ACIT Circle 37(1), New Delhi, notice u/s. 158 BD is to be issued within a period of 60 days from completion of the Block assessment of the searched person."
9. The Ld. AR relied on the decision in the case of New Delhi Auto Finance (P) Ltd. Vs JCIT (217 CTR 628) wherein it has been held that "
Mandatory requirement of recording of satisfaction to the effect that undisclosed income belonged to the assessee (other than the person 4 IT(ss)A No.18/M/06 searched) being patently lacking, there was no valid assumption of jurisdiction and block assessment u/s. 158BD was invalid".
10. The Ld. Departmental Representative replied that satisfaction note is part of the 158BC orders.
11. We find that in the case of Manoj Aggarwal Vs DCIT 113 ITD 377 (Del)(SB) it has been held as follows:
"Next question was whether there was any recording of satisfaction that meets the requirement of law. This note recorded that search in the case of 'M' and associate concerns and the block assessment made on him conclusively established the fact that he was involved in providing bogus accommodation book entries to various persons on commission basis and for this purpose he had used the names and bank accounts of various companies, benami proprietorship concerns in the names of his employees, in the names of relatives, various HUF entities and firms and one such concern was the assessee, the bank accounts of which were operated by 'MN' and his father 'B' and that the sources of cash and clearing deposits and the withdrawals from these bank accounts needed to be examined; these accounts had been used for accommodation book entries and, hence, undisclosed income had arisen in the hands of this concern which had been found during the course of search and seizure operations in the case of 'M' and his associate concerns; thus, proceedings u/s. 158BD were applicable in this case. Admittedly, this note was after the date of block assessment in the case of 'M' which was finalized on 29.8.2002. Further, the note of satisfaction was not recorded by the Dy. CIT, Central Circle- 3, New Delhi acting as the AO making the assessment u/s. 158BC of 'M' since the said assessment had been finalized earlier. Clearly the note of satisfaction dt. 19.12.2002 was beyond the date of block assessment in Sec. 158BC proceedings dt. 29.8.2002 in the case of 'M'. Therefore, the satisfaction recorded was belated."
12. Therefore the AO erred in issuing notice u/s. 158BD beyond the limitation period and hence the block assessment is null & void and liable to be quashed.
5 IT(ss)A No.18/M/0613. In the result, the appeal filed by the assessee is allowed.
Order pronounced on this 16th day of March, 2011 Sd/- Sd/-
(R.S. SYAL) (ASHA VIJAYARAGHAVAN)
Accountant Member Judicial Member
Mumbai, Dated 16th March, 2011
Rj
Copy to :
1. The Appellant
2. The Respondent
3. The CIT-concerned
4. The CIT(A)-concerned
5. The DR ' A' Bench
True Copy
By Order
Asstt. Registrar, I.T.A.T, Mumbai
6 IT(ss)A No.18/M/06
Date Initials
1 Draft dictated on: 10.03.2011 Sr.
PS/PS
2. Draft placed before author: 14.03.2011 ______ Sr.
PS/PS
3. Draft proposed & placed before _________ ______ JM/AM
the second member:
4. Draft discussed/approved by _________ ______ JM/AM
Second Member:
5. Approved Draft comes to the Sr. _________ ______ Sr.
PS/PS: PS/PS
6. Kept for pronouncement on: _________ ______ Sr.
PS/PS
7. File sent to the Bench Clerk: _________ ______ Sr.
PS/PS
8. Date on which file goes to the _________ ______
Head Clerk:
9. Date on which file goes to AR
10. Date of dispatch of Order: _________ ______