TaxTMI 
TaxTMI 
2012 (10) TMI 541
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.... of limitation for reopening of assessment must be understood to be applicable to assessment under Chapter XIV-B. 3. That the ld. Commissioner of Income Tax (Appeals) has erred in law and on facts in holding the initiation of proceedings u/s 147 in the hands of individuals is justified in view of the ratio of decision of Hon'ble Guwahati High Court in the case of CIT v. Peer Chand Ratan Lal Baid HUF [2010] 322 ITR 544. 4. That the order of learned Commissioner of Income-tax (Appeals), Agra being erroneous in law and on facts deserves to be quashed and that of the Assessing Officer deserves to be restored. 5. That the appellant craves leave to add or alter any or more ground or grounds of appeal as may be deemed fit at the time of hearing of appeal." 3. The grounds raised by the assessee in its Cross Objection are as under :- "1. (a) Because as no valid proceedings u/s 147 read with section 148 of the Act has been initiated in the case of the respondent, thus in the light of facts and in law the learned CIT(A)-II, Agra has correctly annul the reassessment framed by the AO. (b) Because in any view of the facts of the case of the respondent assessee and in the light of ....
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....or undisclosed income of the petitioners and thereafter the Department should proceed in the matter. In consequence to the direction of the Hon'ble High Court, the DCIT, Circle-1, Jhansi passed an order dated 14.01.2000 and came to the conclusion that the seized amount was undisclosed income of these three persons from whose possession the cash was recovered and requisitioned under section 132A of the Act. Again the appellants filed second Writ Petitions before the Hon'ble High Court and the High Court dismissed the Writ Petitions holding that petitioners had the right to appeal under section 246A of the Act before the CIT(A). These three individuals filed appeal before the CIT(A) which was dismissed by the CIT(A). Again all the three persons filed Writ Petitions before the Hon'ble High Court. Again, the High Court dismissed the Writ Petitions holding that the appellant had right to appeal before the I.T.A.T. 5. Apart from the above proceedings, proceeding under section 158BC of the Act was initiated in the status of A.O.P. consisting of Shri Vidit Kumar Agarwal, Shri Ram Kishan Agarwal & Shri Deepak Agarwal. The assessment was made in the status of A.O.P. vide order d....
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....t on the basis of authorization issued by the Director (Income-tax) Kanpur and issued notices under section 131 of the Act in the case of all the aforesaid three individuals on 3.6.1998. In their statements, all the three persons stated that they were carrying the cash so seized for the purpose of real state property through Sri Kailash Agarwal (Kamarya) to whom the cash was expected to be handed over. As regards to source of acquisition of the cash, Sri Deepak Agarwal stated that the cash of Rs. 8,34,600/- belongs to him. The remaining Rs. 16,00,000/- and Rs. 8,00,000/- was admitted by Sri Vidit Kumar Agarwal and Sri Ram Kishan Agarwal respectively as belongs to them. The statement of above named Sri Kailash Agarwal (Kamariya) was also recorded on oath on which he denied to have any connection with the cash seized and even knowledge of any land deal with them. In view of the above, block assessment proceedings were started u/s. 158 BC of the Income-tax, 1961. In the meantime, the assessee filed writ petitions before the Hon'ble High Court, Allahabad challenging the requisition order dated 4.6.1998 and prayed or the stay of the block assessment proceedings. The Hon'ble Alla....
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....umar Agarwal was found unexplained sources. It, was, therefore, held as undisclosed income of these persons. As there is no error such conclusion of the AO, it is upheld" On the perusal of order dated 20.01.2005 by Hon'ble ITAT, Agra Bench, Agra in Para No.7 of the order which is emerged as under :- "In the statement recorded by the Learned ACIT, Sri Ram Kishan Agarwal has admitted that cash of Rs. 8 lacs belonged to him, whereas cash amounting to Rs.l6 lacs belonged to Sri Vidit Kumar Agarwal, and cash amounting to Rs. 8,34,600/- belonged to Sri Deepak Agarwal." Thus from the above, the Hon'ble ITAT has held that the cash so seize actually was belonging to the three individuals namely:- 1. Sri Ram Kishan Agarwal S/o Sri Shiv Ram Agarwal 2. Sri Vidit Kumar Agarwal 3. Sri Deepak Kumar Agarwal The Hon'ble ITAT, Agra in the above order has further observed in Para No.42 on Page No.29 as under :- "In view of the above discussion, we are of the opinion that there is OP and consequently no assessment could be frame in the status of AOP" Again in Para No.37 on page No.26 of the above appellate order, it has further been observed that :- "This aspect can fur....
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....as below :- "2.1 I have analysed the matter and I agree with the Ld. AR that where books of accounts, assets etc. have been requisitioned after 30.6.1995, the AO can only invoke the provisions of Chapter XIV B and cannot take action under the provisions of sec. 147 of the Act. I also agree with the Ld. AR that the Hon'ble ITAT while deciding the appeal in the case of the AO has not given any direction to the AO to initiate proceedings u/s 147 of the Act. I am of the opinion as the cash had been requisitioned u/s132A of the Act, therefore, the action had to be taken under the provisions of Chapter XIVB of the Act notwithstanding whether in the case of AOP or individuals. For this proportion of law reliance is placed on the judgement of Cargo Clearing Agency Gujrat v. JCIT (307 ITR 1) (Guj) the held portion of which reads as under :- "When one considers the entire scheme relating to procedure for assessment/reassessment s laid down in the group of sections from sec.147 to sec.153 and compares the same with special procedure for assessment of search cases under Chapter XIVB it becomes apparent that the that the normal procedure laid down in Chapter XIV has been given a go bye ....
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.... the Act be made applicable." Also, recently Hon'ble High Court of Kerala in the case of CIT v. Sivanandan (52 DTR) Ker. 428 held that once the AO proceeds to make block assessment u/s 1588C based on materials gathered during search u/s 132 he cannot proceed to make reassessment u/s 147 on the basis of same material. Reliance in this regard has been aptly placed by the Ld. AR, on the following case laws :- (i) Mangal Singh, HUF v. ACIT 42 DTR 58 (Del) (ii) Western India Baker (P) Ltd. v. ACIT 87 ITD 607 (Mum.) Following these judgements I hold that initiation of reassessment proceedings in both the cases was avoid ab-initio and, therefore, I annul the assessments framed by AO, in case of both the appellants. It is not considered necessary to adjudicate upon other grounds of appeal as I have annulled the assessments. However, the concerned Range Heads are directed to explore the possibilities of initiation of penalty proceedings u/s 271D of the Act as there is prima-facie violation of sec.269SS of the Act." 8. We have heard the ld. Representatives of the parties and records perused. The issue under consideration is whether under the facts and circumstances of the case, ....
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....escaped assessment, for which an assessee is assessable under the Act during the previous year corresponding to the relevant assessment year. 8.2 The Chapter XIV-B of the Act lays down a special procedure for assessment of search cases. When one considers the entire scheme relating to procedure for assessment/reassessment as laid down in the group of sections from section 147 to section 153 of the Act and compares the same with special procedure for assessment of search cases under Chapter XIV-B of the Act it becomes apparent that the normal procedure laid down in Chapter XIV of the Act has been given a go by. Under section 158B of the Act, "block period" and "undisclosed income" have been defined. Section 158BA of the Act opens with non obstante clause and provides that in a case of search initiated after June 30, 1995, the Assessing Officer shall proceed to assess the undisclosed income in accordance with the provisions of Chapter XIV-B of the Act, notwithstanding anything contained in any other provisions of the Act. Therefore, the provisions of section 158BA(1) of the Act have to be read in conjunction with section 158BH of the Act. The Legislature has provided a special proce....
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....e Bill as well as various Circulars issued by the Central Board of Direct Taxes explaining different amendments. 8.4 Section 158BC of the Act itself indicates that where the Legislature wanted to incorporate other provisions of the Act a specific mention has been made, when a provision has been made for adopting sections 142, 143, 144 and 145 of the Act. Contra, where the Legislature does not want a provision, not falling within Chapter XIV-B of the Act, to be resorted to the two provisos under clause (a) of section 158BC of the Act have specifically made this clear. The first proviso stipulates that no notice under section 148 is required to be issued for the purpose of proceeding under Chapter XIV-B of the Act. The second proviso stipulates that person, who has already furnished a return under section 158BC (a) of the Act, shall be entitled to file a revised return as provided for in section 139(5) of the Act. Thus, these provisions are inherent indicators in the special procedure scheme to show that suction 158BH of the Act has limited application. There is one more aspect of the matter. Entire Chapter XIV-B of the Act relates to assessment of search cases, viz., undisclosed in....
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....v. JCIT, 307 ITR 1 (Guj) held as under: (page no.29) "Thus, viewed from any angle, the stand of the Revenue does not merit acceptance. Once assessment has been framed under section 158BA of the Act in relation to undisclosed income for the block period as a result of search there is no question of the Assessing Officer issuing notice under section 148 of the Act for reopening such assessment as the said concept is abhorrent to the special scheme of assessment of undisclosed income of block period. At the cost of repetition it is required to be stated and emphasized that the first proviso under section 158BC(a) of the Act specifically provides that no notice under section 148 of the Act is required to be issued for the purpose of proceeding under Chapter XIV-B of the Act. In the circumstances, the impugned notice dated April 16, 1999, under section 148 of the Act cannot be upheld and is hereby quashed and set aside." 8.6 Hon'ble Kerala High Court in the case of CIT v. Sivanandan (52 DTR) Ker. 428 wherein it has been held that once the A.O. proceeds to make block assessment u/s. 158BC based on materials gathered during search u/s 132, he cannot proceed to make reassessment u....
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....the Revenue does not help to the Revenue, rather this judgement is against the Revenue as the Court has clearly held that the proviso deals with the stage of initiation of block proceeding and the said proviso provides that no notice under section 148 is required to be issued for the purpose of proceedings under the Chapter XIV of the Act whereas in the case under consideration, the A.O. initiated proceedings under section 147 by issuing notice under section 148 of the Act for the A.Y. 1999-2000 which is a part of block period assessment and there was no original block period assessment. Under the facts and circumstances, the action taken by the A.O. is not in accordance with law. The material based on which the A.O. reopened the regular assessment is the material pertained to requisition under section 132A of the Act and such material is subject to only block assessment. The Hon'ble M.P. High Court in case of Ramballabh Gupta v. ACIT & Others, 288 ITR 347 (M.P.) wherein it has been held that the A.O. does not have jurisdiction to issue notice under section 148 of the Act in respect of those 6 Assessment Years which falls within the exclusive jurisdiction of section 153A of the....