IT: Where Assessing Officer had not granted opportunity to assessee and had not recorded satisfaction prior to initiation of assessment proceedings under section 158BD, he would not be permitted to initiate fresh block assessment proceedings
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[2013] 38 taxmann.com 303 (Delhi)
HIGH COURT OF DELHI
Commissioner of Income-tax
v.
Elegant Travels (P.) Ltd.*
SANJIV KHANNA AND SANJEEV SACHDEVA, JJ.
IT APPEAL NO. 2018 OF 2010†
AUGUST 5, 2013
Section 158BD, read with section 254, of the Income-tax Act, 1961 - Block assessment in search cases - Undisclosed income of any other person - Tribunal finding that Addl. DIT (Inv.) was not authorized at relevant time to issue warrant of authorization under section 158BD, held same invalid and remanded matter - Tribunal though accepted assessee's contention that no valid opportunity was granted to assessee before making impugned block assessment order, did not permit Assessing Officer to initiate fresh assessment order on that ground - While on one hand appeal was filed by revenue against above order of Tribunal, on other hand, Assessing Officer passed fresh order under section 158BD, read with section 254 - Whether since original block assessment order was actually set aside not on ground of failure to follow principles of natural justice but for different reason and Tribunal did not permit and allow revenue to initiate fresh block assessment proceedings, fresh assessment order passed by Assessing Officer was to be quashed - Held, yes [Para 8] [In favour of assessee]
CASES REFERRED TO
Dr. Nalini Mahajan v. DIT (Investigation) [2001] 252 ITR 123/[2002] 122 Taxman 897 (Delhi) (para 7).
Rohit Madan for the Appellant.
JUDGMENT
1. The present appeal by the Revenue pertains to the block assessment period 1st April, 1986 to 6th November, 1996 and impugns order dated 16th October, 2009. The said order records that the Assessing Officer could not have passed order dated 31st December, 2008 under Section under Section 158 BD read with Section 254 of the Income Tax Act, 1961 in view of the earlier order of the tribunal dated 5th April, 2007.
2. By order dated 10th October, 2011, the following substantial questions of law were framed:—
| "1. | Whether the learned ITAT erred in law and on merits in quashing the Assessment order on the ground of lack of jurisdiction | |
| 2. | Whether the learned ITAT erred in holding that no satisfaction was recorded by the assessee while initiating proceedings u/s 158 BD of the Income Tax Act, 1961 as the Assessing Officer of the person searched and the assessee was the same?" |
3. Learned counsel for the appellant submits that the order dated 5th April, 2007 did not bar or prohibit the Assessing Officer from reopening the assessment and passing a fresh assessment order. He submits that the order dated 5th April, 2007 was passed upon the premise that the Assessing Officer should have granted an opportunity before reasons or satisfaction was recorded under Section 158 BD of the Act.
4. We have examined the order dated 5th April, 2007, wherein the following final findings have been recorded:—
"90. Similarly accepting the assessee's contention that no valid opportunity was granted to the assessees before making the impugned assessment order and that the satisfaction was not recorded by the Assessing Officer before initiating proceedings under section 158 of the Act, we set aside the impugned assessment orders in all the cases noted above on this preliminary issue. Since we are setting aside the assessment order on legal ground, there is no need to discuss other grounds taken in all these appeals on merit.
91. In the result, I.T.A. No.349/Del/97 is partly allowed as discussed above and all other appeals are allowed."
5. It is clear from reading of the aforesaid paragraph that the Assessing Officer was not permitted to reassess or pass a fresh assessment order for the block assessment period. No order of remand or remit was passed. In case order dated 5th April, 2007 was erroneous and contrary, an appeal against the said order should have been filed. In fact, counsel for the appellant submits that ITA No.464/2012 has been filed against the said order along with an application for condonation of delay.
6. Impugned order passed by the tribunal dated 16th October, 2009 cannot be challenged and questioned on the ground that order dated 5th April, 2007 was incorrect or erroneous and an order of remand should be passed.
7. Tribunal in their order dated 5th April, 2007 had relied upon decision of Delhi High Court in the case of Dr. Nalini Mahajan v. DIT (Investigation)[2001] 252 ITR 123/[2002] 122 Taxman 897. In Dr. Nalini Mahajan's case, (supra) the issue which had arisen related to the officer, who was authorized and competent to issue warrant of authorization for search. The decision was, as per the tribunal in favour of the assessee. It has been recorded in paragraph 89 of the order dated 5th April, 2007 as under:—
"Examining the facts of the case in hand in the above background, we find that there is no dispute that the warrant of authorization was issued by the Addl. DIT (Inv.). Nothing is placed or recorded before us during the course of hearing to show that at the relevant time, the Addl OIT (Inv.) was authorized to issue warrant of authorization. We, therefore, have no option but to declare the warrant of authorization in the case of Sanjeev Anand as invalid."
8. It was accordingly held that the authorization in the case of Sanjeev Anand was invalid and, therefore, the authorization under Section 158 BD issued in the case of respondent herein is also invalid. It is clear from the aforesaid facts that the appellant has completely misunderstood the order dated 5th April, 2007. The block assessment order was not set aside on the ground of failure to follow the principles of natural justice, but for different reasons. Moreover, the order dated 5th April, 2007 did not permit and allow the appellant to initiate fresh block assessment proceedings.
9. Question number 1 is accordingly answered against the Revenue and in favour of the respondent assessee. Question number 2 need not be answered in view of the findings recorded above. We clarify that the findings recorded in this order, will not be a ground to dismiss any appeal filed by the Revenue wherein they have challenged the order dated 5th April, 2007.
The appeal is disposed of.
Regards
Prarthana Jalan
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