Smt. Rajkumari Chandak v. The Asst. Commissioner of Income-tax, Company Circle I (Inv.)
[Citation -2015-LL-0429-9]

Citation 2015-LL-0429-9
Appellant Name Smt. Rajkumari Chandak
Respondent Name The Asst. Commissioner of Income-tax, Company Circle I (Inv.)
Court HIGH COURT OF MADRAS
Relevant Act Income-tax
Date of Order 29/04/2015
Judgment View Judgment
Keyword Tags condition precedent • search proceedings • undisclosed income • block assessment • search warrant • block period
Bot Summary: In para-2 of the said order of the Tribunal dated 12.4.99, the objection of all the assessees that the assessing officer had no jurisdiction to issue the notice under Section 158BC as there was no search or requisition made by the Income Tax Department have been recorded by the Tribunal. The further stand of the assessees that on an earlier occasion, vide order dated 8.10.97, the Tribunal cancelled the assessment on a similar plea has also been recorded by the Tribunal. Taking note of the assessees stand that there was no search or requisition and also taking note of the earlier order of the Tribunal, the Tribunal, vide its order dated 12.4.99, gave a finding that there was no search or requisition issued and that in the case of this assessee also, recorded that the search under Section 132 of the Act took place only in the case of Bojraj Chandak and Madanmohan Chandak. In the order of this Tribunal dated 8.10.1997 in the aforesaid cases the Tribunal observed at pages 11 and 14 that - Page - 11 When that is the case, we fail to understand how these appellant-assessees can be brought into the net of Chapter XIV-B of the Act. We set aside the order of the Tribunal and remand the matter back to the Tribunal leaving all contentions of the parties open. The contention of Dr.Anitha Sumanth, learned counsel appearing for the appellant is that the jurisdictional issue, as relied on by the Tribunal, based on the decision of the Madhya Pradesh High Court, has been reversed by the Supreme Court and the order of the Tribunal is liable to be set aside. Since the earlier order of the Tribunal dated 12.4.99 does not deal with each one of the assessee, but based on a common order passed by the Tribunal, the error in the present case is apparent on the face of the record.


IN HIGH COURT OF JUDICATURE AT MADRAS DATE : 29.04.2015 CORAM HONOURABLE MR. JUSTICE R.SUDHAKAR AND HONOURABLE MS. JUSTICE K.B.K.VASUKI T.C.A. NO. 2202 OF 2006 Smt. Rajkumari Chandak .. Appellant - Vs - Asst. Commissioner of Income Tax Company Circle I (Inv.) 121, Nungambakkam High Road Chennai 600 034. .. Respondent Appeal filed under Section 260-A of Income Tax Act against order dated 28.02.06 passed by Income Tax Appellate Tribunal, Chennai 'B' Bench, Chennai, made in ITA No.1954/Mds/1996. For Appellant : Dr. Anitha Sumanth For Respondent : Mr. T.R.Senthil Kumar JUDGMENT (DELIVERED BY R.SUDHAKAR, J.) Aggrieved by order of Tribunal in allowing appeal filed by Revenue, appellant/assessee is before this Court by filing present appeal. This Court, vide order dated 29.08.06, while admitting appeal, framed following substantial questions of law for consideration :- 2 "1. Whether on facts and in circumstances of case, Tribunal is right in law in holding that plea regarding jurisdiction is bereft of cogency? 2. Whether on facts and in circumstances of case Tribunal ought not to have held that in absence of warrant of authorisation in name of appellant, issue of notice under Section 158BC and consequently block assessment made on basis of said notice is without jurisdiction and said assessment is liable to be quashed? 3. Whether on facts and in circumstances of case Tribunal is right in law in not quashing assessment on ground that it is not based on materials seized or found at time of search? 4. Whether on facts and in circumstances of case, Tribunal is right in law in not deleting income relating to year 1995-96 from block assessment on ground that due date for filing return had not expired before date of search and also on ground that such income is duly disclosed before search?" 2. facts, in nutshell, are as hereunder :- It appears that Income Tax Department conducted search invoking provisions of Section 132 of Income Tax Act (for short 'Act') on various premises of different textile dealers in Godown Street on 31.8.95 and on other dates. In course of said search operation, books of accounts and documents were seized from various dealers. It is also case of Department, which is not denied by appellant herein, that search was conducted insofar as business premises of Nav Bharat 3 Corporation at No.28, Godown Street, Madras-1. Based on so called search proceedings initiated on various dealers, several assessment orders have been passed in respect of said dealers of textiles invoking provisions of Chapter XIV-B - Block Assessment. Insofar as present appellant is concerned, assessment order came to be passed for block assessment year 1986-1987 to 1995-1996 showing address of individual appellant - Rajkumari Chandak, 34, Godown Street, Chennai 600 001, and assessment order reads as one under Section 143 (3) read with Section 158BC of Act. Notice under Section 158BC (a) of Act is said to have been issued on assessee, copy of which is not available in records, and return for block period was filed by assessee. Such documents, despite best efforts by either side, were not available. assessment order for block period was passed by Income Tax Department and tax liability was determined at Rs.10,30,834/= insofar as this appellant is concerned. Many of dealers, who suffered similar orders, filed appeals to Tribunal, which came to be disposed of by common order dated 12.4.99. 3. In para-2 of said order of Tribunal dated 12.4.99, objection of all assessees that assessing officer had no jurisdiction to issue notice under Section 158BC as there was no search or requisition made by Income Tax Department have been recorded by Tribunal. said objections of assessees is recorded based on affidavit filed 4 before Tribunal that there was no search or requisition made by Income Tax Department. further stand of assessees that on earlier occasion, vide order dated 8.10.97 (ITA No.1925 & 1926/1996, etc.), Tribunal cancelled assessment on similar plea has also been recorded by Tribunal. Taking note of assessees stand that there was no search or requisition and also taking note of earlier order of Tribunal, Tribunal, vide its order dated 12.4.99, gave finding that there was no search or requisition issued and that in case of this assessee also, recorded that search under Section 132 of Act took place only in case of Bojraj Chandak and Madanmohan Chandak. After recording observations, impugned assessment orders of all appellants were set aside and appeals were allowed. relevant portion of order of Tribunal is extracted hereinbelow for better clarity :- "2. We have heard both sides and perused records. In these appeals, block assessments were completed under Section 158-BC of Income Tax Act. assessee has challenged that Assessing Officer has no jurisdiction to issue notice under Section 158BC as there was no search or requisition made by revenue. assessees filed affidavits duly sworn by them to this effect. Under similar circumstances in connected matters this Tribunal cancelled assessment. relevant order of this Tribunal in connected matters dated 8.10.1997 in ITA Nos.1925, 1926 ...../Mds/96 in case of Urmila Chandak and Others was produced. copy of that order is placed on record. Besides that learned counsel for assessees also produced copy of order of this Tribunal dated 2.7.1998 in R.A. 5 Nos.804 to 835/Mds/97 arising out of order of this Tribunal dated 8.10.1997 in aforesaid cases. facts show that there was no search or requisition issued in case of these assessees. search under section 132 took place only in case of Shri Bhojraj Chandak and Shri Madanmohan Chandak. In order of this Tribunal dated 8.10.1997 in aforesaid cases (Urmila Chandak & Otrs.) Tribunal observed at pages 11 and 14 that -- Page - 11 "When that is case, we fail to understand how these appellant-assessees can be brought into net of Chapter XIV-B of Act. Therefore, Assessing Officer did not derive any jurisdiction, authority or power to issue notice to any appellant herein as provided in Sec.158BC of Act. From these facts, it is very clear that notice under Section 158BC has been issued contrary to legal requirements and therefore as contended by Shri Kumbhat, Assessing OFficer had no jurisdiction to issue any notice and consequently impugned assessments made pursuant to such illegal notices cannot stand in eye of law and have to be annulled." Page-14 : Further Hon'ble Madras High Court again reiterated same principle in case of Mariam Aysha - Vs - Commissioner of Agricultural Income-Tax (104 ITR 381) at page 384 that consent cannot give jurisdiction is essential principle of law and taxing authority can act only if there is power under statute to do so. Their Lordships of Gujarat High Court in well reasoned and elaborate judgment rendered in case of P.V.Doshi - Vs - CIT (113 ITR 22) have laid down after discussing ratio and principle enunciated by Hon'ble Supreme Court in several cases that 6 jurisdiction can neither be waived nor conferred by consent or acquiescence. From these authorities, we have no hesitation or doubt in out mind to hold that Assessing Officer did not possess valid jurisdiction to issue notices to various appellant assessees herein in terms of Section 158BC of Act nor he had any power, authority or jurisdiction to make or pass any orders of assessment in respect of block period as are questioned by appellants in these appeals. impugned assessment orders of block period made on 29.8.1996 are, therefore, clearly without jurisdiction and are liable to be quashed and we hereby quash same." 4. matter was pursued by Department before this Court in TCA Nos.240 and 241/2000 in respect of two of assessees. specific case of Department in earlier round of litigation before this Court was that in case of one assessee, there was, in fact, search of premises of assessee and block assessment was made in case of other assessee invoking provisions of Section 158BD, which is on basis of materials gathered at time of search. However, this Court was of view that Tribunal did not apply its mind to facts of case and that facts necessary in respect of two assessees were not examined and, therefore, this Court held that it was not appropriate to decide issue one way or other. order of this Court, for better clarity, is extracted hereinbelow :- "2. order on which Tribunal placed reliance contains specific finding that there was no search in premises of those assessees. submission made before us by 7 learned counsel for Revenue is that in case of one of these assessees there was in fact search in premises of assessee and that block assessment made in case of other assessees also does not require or warrant any interference as these assessments had been made on basis of materials gathered at time of search. Other contentions were also sought to be placed before us by Revenue which we find it unnecessary to consider, having regard to order that we now propose to make. 3. Tribunal has not applied its mind to facts of case of two assessees before us. Unless all facts are placed before us and examined by us, it would be hazardous to hold that Tribunal is either right or wrong in conclusion that it has reached. We, therefore, set aside order of Tribunal and remand matter back to Tribunal leaving all contentions of parties open. It will be open to Revenue as also to assessees to place their respective cases before Tribunal and also invite its attention to such documents they think are supportive of their respective cases. 4. appeals are allowed and matter is remitted back to Tribunal." Accordingly, this Court remanded matter back to Tribunal for fresh consideration leaving all contentions of parties open. 5. On remand, Tribunal passed fresh order on 28.2.06. objection raised by present appellant, before Tribunal on remand, for better clarity and appreciation of case, is extracted hereinbelow :- "6. At threshold, assessee has taken amiss to 8 jurisdictional aspect of impugned block assessment order. Following has been urged :- "The learned Assessing Officer erred in law in assuming jurisdiction u/s 158BC of Income Tax Act, 1961 inasmuch as no authorisation u/s 132 of Income Tax Act, 1961, was issued in name of assessee. assessment framed consequent to issue of said notice is contrary to law and is, therefore, unsustainable." 6. On question of jurisdiction raised by assessee, Tribunal placed reliance on decision in Commissioner of Income Tax - Vs - Indore Constructions P. Ltd. (279 ITR 545), wherein Madhya Pradesh High Court held as under :- "Where search warrant is issued in name of director and undisclosed income of company is discovered, Assessing Officer has jurisdiction to proceed under section 158BC . In such case, no separate authorization as contemplated under section 132 for this assessee, i.e., company, is required. very object of section 158BD is to give jurisdiction to Assessing Officer to proceed against any person (assessee) other than person against whom search warrant is issued under section 132 or section 132A provided any undisclosed income belonging to such person is recovered in search operation." 7. Tribunal, thereafter, went on to decide issue and dismissed appeal on jurisdiction and remanded matter to assessing officer for purpose of redetermining assessment, against which present 9 appeal has been filed by assessee, primarily on questions of law, which have been extracted supra. 8. However, learned counsel appearing on either side conceded that core issue, that arises for consideration in this appeal is 2 nd substantial question of law and if same is answered, other questions of law become academic. Accordingly, this Court proposes to deal with 2nd substantial question of law. 9. contention of Dr.Anitha Sumanth, learned counsel appearing for appellant is that jurisdictional issue, as relied on by Tribunal, based on decision of Madhya Pradesh High Court, has been reversed by Supreme Court and, therefore, order of Tribunal is liable to be set aside. 10. Before proceeding to decide issue as raised by appellant/assessee, it would be relevant to have cursory look at provisions of Section 158BD of Act, which has been deliberated by Madhya Pradesh High Court on which reliance has been placed by Tribunal to arrive at finding. 11. core issue decided by Madhya Pradesh High Court in case of Indore Constructions (supra) is whether Section 158BD of Act 10 gives jurisdiction to assessing officer to proceed against any person other than person against whom search warrant is issued under Section 132 or Section 132A of Act, provided any undisclosed income, belonging to such person is recovered in said operation. 12. For better appreciation of case on hand, Section 158BD, on which thrust is given by Department to proceed against appellant/assessee, is quoted hereunder :- "Undisclosed income of any other person. 158BD. Where Assessing Officer is satisfied that any undisclosed income belongs to any person, other than person with respect to whom search was made under section 132 or whose books of account or other documents or any assets were requisitioned under section 132A, then, books of account, other documents or assets seized or requisitioned shall be handed over to Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed [under section 158BC] against such other person and provisions of this Chapter shall apply accordingly." 13. However, it is brought to notice of this Court by learned counsel for appellant/assessee that above decision of Madhya Pradesh High Court has been reversed by Supreme Court in Indore Construction P. Ltd. - Vs - Commissioner of Income Tax (2007 (289) ITR 341 (SC)), wherein Supreme Court has held that condition precedent for invoking provisions of Section 158BD are to be satisfied 11 before provisions of chapter are followed. relevant portion of order of Supreme Court is extracted hereunder :- "11. condition precedent for invoking block assessment is that search has been conducted under section 132, or documents or assets have been requisitioned under section 132A. said provision would apply in case of any person in respect of whom search has been carried out under section 132A or documents or assets have been requisitioned under section 132A. Section 158BD, however, provides for taking recourse to block assessment in terms of section 158BC in respect of any other person, conditions precedent wherefor are : (i) satisfaction must be recorded by Assessing Officer that any undisclosed income belongs to any person, other than person with respect to whom search was made under section 132 of Act ; (ii) books of account or other documents or assets seized or requisitioned had been handed over to Assessing Officer having jurisdiction over such other person ; and (iii) Assessing Officer has proceeded under section 158BC against such other person. 12. conditions precedent for invoking provisions of section 158BD, thus, are required to be satisfied before provisions of said Chapter are applied in relation to any person other than person whose premises had been searched or whose documents and other assets had been requisitioned under section 132A of Act." 14. Heard learned counsel appearing for appellant and learned standing counsel appearing for respondent and perused materials available on record as also decisions relied on by learned 12 counsel on either side. Keeping above ratio of Supreme Court in mind, this Court proceeds to analyse case on hand. 15. In present case, even at threshold it is to be stated without any contradiction that issue, as fell before Madhya Pradesh High Court, which has been reversed by Supreme Court, does not arise for consideration, as we find that there is some confusion in facts that was urged by parties in course of assessment, appeal before Tribunal as also before this Court in earlier round of litigation, which has given rise to this present round of litigation. 16. In order to verify correctness as to whether there was search conducted in premises of assessee consequent upon search notice under Section 132 of Act, this Court called for records of this Court in earlier round of litigation in TCA Nos.240 and 241/2000. In said documents, objection raised by learned counsel for appellant that there was no search conducted by respondent in premises of assessee, be it business premises or residence premises, is found to be justified from reading of record of proceedings dated 31.8.95 in relation to Nav Bharat Corporation at No.28, Godown Street. It was case of survey under Section 133A of Act and on that basis alone entire proceedings has happened. For better clarity, relevant portion of proceedings, which shows that only survey was conducted in premises of 13 Nav Bharat Corporation, is extracted hereinbelow - "Inventory of stocks taken at business premises of M/s.Nav Bharat Corporation, 28, Godown St., Madras - 1, during course of search / survey u/s 133A on 31/08/95." 17. above document, which is undisputed and forms part of Court records, makes it clear that confusion has apparently happened because search under Section 132 of Act commenced in case of other assessees as well and, therefore, all similarly placed persons were clubbed together and assessment orders were passed. However, neither in course of passing assessment order nor during appeal proceedings before Tribunal or this Court, attention was drawn to survey proceedings under Section 133A of Act, insofar as present assessee is concerned. Since all cases were taken up together as one lot and assessment orders were passed, error could have happened. Since earlier order of Tribunal dated 12.4.99 does not deal with each one of assessee, but based on common order passed by Tribunal, error in present case is apparent on face of record. This error was also not brought to notice of this Court in earlier round of litigation. typed set of documents filed in earlier round of litigation by assessee in TCA Nos.240 and 241/2000 shows that it is case of only survey u/s 133A and search has been clearly deleted. There is no dispute on this fact, as same is borne out by document. If it is case of survey 14 under Section 133A of Act, as is evident from document, block assessment, invoking provisions of Sections 158BC does not arise, as there is no search in terms of Section 132 of Act. In view of above, 2nd substantial question of law, on question of jurisdiction, is answered in favour of appellant/assessee and against respondent/Revenue. 18. In view of above answer to 2 nd substantial question of law, other questions of law, as framed, become academic and, therefore, they are not being dealt with. 19. In result, this appeal is allowed and order passed by Tribunal dated 28.02.06 is set aside. However, in circumstances of case, there shall be no order as to costs. (R.S.J.) (K.B.K.V.J.) 29.04.2015 Index : Yes Internet : Yes GLN 15 To 1. Asst. Commissioner of Income Tax Company Circle I (Inv.) 121, Nungambakkam High Road Chennai 600 034. 2. Income Tax Appellate Tribunal Chennai 'B' Bench Chennai. 16 R.SUDHAKAR, J. AND K.B.K.VASUKI, J. GLN T.C.A. NO. 2202 OF 2006 29.04.2015 Smt. Rajkumari Chandak v. Asst. Commissioner of Income-tax, Company Circle I (Inv.)
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