Income Tax Appellate Tribunal - Kolkata
Nirmal Ghosh Bag vs Deputy Commissioner Of Income Tax on 25 January, 2002
Equivalent citations: [2002]82ITD788(CAL)
ORDER
R.P. Garg, Vice President
1. This is an appeal by the assessee against the order of the AO under Section 158BC arising out of search and seizure proceedings.
2. A preliminary objection about the validity of the assessment under Chapter XIV-B was raised by the assessee by way of the following two questions :
"1. That the provisions of Section 158BA of IT Act, 1961 were not applicable in this case because the requisition under Section 132A was made much before 30th June, 1995. The invoking of the provisions of Chapter XIV-B of the IT Act in the facts of this case is ab witio wrong, illegal and without jurisdiction, and the assessment framed under Chapter XIV-B is a nullity and liable to be quashed.
2. That the conditions precedent for initiating action under Section 132 or 132A did not exist and were not satisfied. Therefore, the issuance of Warrant of Authorisation under Section 132A and all proceedings taken and order passed in pursuance thereof are wrong, illegal and bad-in-law."
3. These two grounds were raised as additional grounds and being question of law and go to the root of the matter and also they deal with the grounds requiring no investigation of facts, these are admitted for consideration.
4. The facts are that a search under Narcotics, Drugs and Phycotrophic Substances Act was conducted by the Customs authorities at the assessee's residence on 6th Sept., 1991. Cash of Rs. 48,900 and two Fixed Deposit receipts of Rs. 56,046' and Rs. 24,368 were found and seized by the Customs authorities. It seems no case was made out against the assessee under the Narcotics, Drugs and Phycotrophic Substances Act but the information was given to the IT Department about this search and seizure.
5. After examining the assessee under Section 131 on 18th Nov., 1991, assets were requisitioned under Section 132A on 2nd Dec., 1991 by Directorate of IT, Kolkata by issuing warrant of authorisation of even date. The matter lay at that stage for quite sometime. Suddenly, on 4th Dec., 1995 another warrant of authorisation was issued and the possession of the cash and the FDRs were taken by the IT Department. By this time, Chapter XIV-B for making block assessment came into force w.e.f. 1st July, 1995 and the assessment of the assessee was proceeded under this Chapter. The assessee's contention is that warrant of authorisation was first issued on 2nd Dec., 1991 and, therefore; this Chapter XIV-B introducing special provision for making block assessment does not apply. It is the contention of the assessee that such proceedings were initiated on that day and that day being prior to 1st July, 1995, the provision of Section 158BA would not come into play. The alternative contention of the assessee was that the condition for initiating action under Sections 132 and 132A did exist and, therefore, the second warrant of authorisation was not valid because the information about the existence of the money and the fixed assets was already with the Department since 1991. It is further submitted that the assessee had no obligation to show the cash and FDRs to any authority under the IT Act because he was not having taxable income.
6. Learned Departmental Representative, on the other hand, submitted that 1991 search warrant was signed by the DI but no action was taken and it was kept in the file and, therefore, it could not be a case of initiation of proceedings. It was submitted that though the DI has signed the warrant of authorisation, authorising the DDI but the place and period were left to be decided at the sweet will of the latter. Be that as it may, the Revenue's contention that it was the second warrant which was executed was not material one for invoking the jurisdiction under Chapter XIV-B and, therefore, the AO rightly assumed jurisdiction. '
7. We have heard the parties and considered the rival submissions. Chapter XIV-B is a special provision for assessment in cases of search and seizure inserted by the Finance Act, 1995, w.e.f. 1st July, 1995. Section 158BA provides for assessment of undisclosed income as a result of search and it is a non obstante clause excluding the applicability of the other provisions of the Act. Sub-section (1) of this section provides as under :
"158BA. (1) Notwithstanding anything contained in any other provisions of this Act, where after the 30th June, 1995 a search is initiated under Section 132 or books of account, other documents or any assets are requisitioned under Section 132A in the case of any person, then, the AO shall proceed to assess the undisclosed income in accordance with the provisions of this Chapter."
8. On a plain reading of this section, it is clear that the AO shall proceed to assess the undisclosed income in accordance with the provisions of this Chapter only when search was initiated under Section 132 or books of account or other documents or any assets were requisitioned under Section 132A after the 30th day of June, 1995. In this case, admittedly the warrant of authorisation under Section 132A was signed on 4th Dec., 1991 and this is an action for initiating proceedings under Section 132A within the meaning of provision of Section 158BA of the Act. Whether the warrant was actually executed or not or the assets were taken possession of by the Revenue thereunder or not and the date on which the possession of the assets taken by the Revenue under this section is immaterial. What the section requires is that, the search is initiated or the assets are requisitioned under Section 132A. Initiation means the first action taken. It is not the end result of the action taken thereunder. A reference to the provision of Section 158BE would throw some light on, this issue which provides for the time-limit for completion of block assessment. Sub-section (1) of this section reads as under :
"158BE. (1) The order under Section 158BC shall be passed-
(a) within one year from the end of the month in which the last of the authorisations for search under Section 132 or for requisition under Section 132A, as the case may be, was executed in cases where a search is initiated or books of account or other documents or any assets are requisitioned after the 30th June, 1995, but before the 1st Jan., 1997;
(b) within two years from the end of the month in which the last of the authorisations for search under Section 132 or for requisition under Section 132A, as the case may be, was executed in cases where a search is initiated or books of account or other documents of any assets are requisitioned on or after the 1st Jan., 1997."
(underlining, italicised in print, by us)
9. On comparison we found that there is difference in the use of the language between the two Sections 158BA and 158BE. Whereas Section 158BA provides for its applicability on initiation of proceedings under Section 132 or requisition of books of account and other documents or assets under Section 132A, Section 158BE providing for the time-limit start counting from the date of execution of the initiated search under Section 132 or requisitioned of books of account, etc. under Section 132A of the Act. The later Section 158BE used both the terms 'executed' as well as 'initiated' and it makes a clear difference between two concepts. Under these circumstances, the contention of the Departmental Representative that the warrant of authorisation under Section 132A was actually executed in 1995 and that being a date after 30th June, 1995, the provision of Section 158BA of the Act would apply has no force. What is material for invoking the special provision is initiation of the search or requisition of books of account or other assets and it would be immaterial whether it was executed action or dropped or not executed for whatever reason. The first action was initiated much before the vulnerable date from which the operation of the new provision comes into play. The first action, in this case, as aforesaid, was on 4th Dec., 1991 and, therefore, in our opinion, the provision of the new Chapter would have no application in the present case and the assessments made thereunder are to be held invalid. We accordingly set aside the same. The Revenue would, however, be at liberty to proceed with the case under the other provisions of the Act in accordance with law.
10. The arguments have been advanced by either sides on merits, but in view of our finding aforesaid, it is not necessary to deal with the same.
11. In the result, the appeal is allowed.