TaxTMI 
TaxTMI 
2021 (3) TMI 512
X X X X Extracts X X X X
X X X X Extracts X X X X
....le Supreme Court in the case of Gunjan Girishbhai Mehta v. Director of Investigation reported in (2017) 393 ITR 310(SC). 2. The brief background of this case is that there was a search and seizure operations conducted by Revenue u/s 132(1) of the Income-tax Act, 1961 against Shri Munna Lal Verma at his residential and business at Nautanwa and Gorakhpur, on 08.12.1999. Shri Munna Lal Verma had expired on 06.10.1999. The assessee is wife of Shri Munna Lal . 2.2 Since, as per version of Revenue , certain incriminating documents and undisclosed assets belonging to the assessee were found and seized during the course of search operations conducted by Revenue against Shri Munna Lal Verma, proceedings u/s 158BD of the 1961 Act were initiated by Revenue against the assessee. Consequently, the learned Assessing Officer issued notice u/s 158BC read with Section 158BD to the assessee on 11.01.2002 for the Block Period 01.04.1989 to 08.12.1999, requiring her to file return of income in prescribed form setting forth her total income including undisclosed income for the Block Period, within 45 days of service of notice which was served on the assessee on 12.01.2002. In response thereof, th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... namely Mr. Munna Lal Verma on 08.12.1999 and proceedings initiated u/s 158BD of the 1961 Act against assessee are bad in law. The assessee had contended before ld. CIT(A) that all investments in properties were disclosed in wealth tax returns filed by assessee, and hence proceedings u/s 158BD are bad in law. The ld. CIT(A) dismissed these legal objections raised by assessee , and partly allowed the appeal filed by assessee, vide appellate orders dated 29.11.2005. 2.4 Still Aggrieved , the assessee filed second appeal with tribunal challenging the aforesaid appellate order passed by ld. CIT(A). The tribunal . vide appellate order dated 01.02.2016 , was pleased to allow the appeal filed by assessee on the legal ground that the search conducted by Revenue on Mr. Munna Lal Verma on 08.12.1999 was invalid , as search warrants were issued by Revenue on a deceased person namely Mr. Munna Lal Verma who expired on 06.10.1999 and the search having taken place on 08.12.2009, and hence all consequential proceedings are bad in law and liable to be quashed which led to quashing of block period assessment order framed by Revenue against the assessee under the provisions of Section 158BD read ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the other grounds relating to the other issue do not require adjudication. 6. In the result, the appeal filed by the assessee is allowed." 2.5 The Revenue being aggrieved by tribunal's order dated 01.02.2016 moved first miscellaneous application with the tribunal bearing number M.A.No.19/Alld/2016 arising out of ITA No. 135/Alld./2016 , which was dismissed by tribunal vide orders dated 28.11.2016, wherein tribunal held as under: "3. After hearing learned D.R. and going through the Misc. Application, we noted that in this case the Tribunal has quashed the assessment vide order dated 01/02/2016 by observing as under: "We therefore , agree with the contention of learned A.R. and quash the assessment made on the assessee in consequence of the search carried out on a deceased person. Since we have already quashed the assessment, therefore, in our opinion the other grounds relating to the other issues do not require any adjudication." The Misc. Application has been moved on the contention that this Tribunal does not have the jurisdiction to adjudicate upon the issue of validity of the search conducted u/s 132 of the Act. The issue about the jurisdic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....D would also be invalid. We do not agree. The issue of invalidity of the search warrant was not raised at any point of time prior to the notice under Section 158BD. In fact, the petitioner had participated in the proceedings of assessment initiated under Section 158BC of the Act. The information discovered in the course of the search, if capable of generating the satisfaction for issuing a notice under Section 158BD, cannot altogether become irrelevant for further action under Section 158BD of the Act. 5. The reliance placed on the decision of the High Court of Punjab and Haryana in CIT v. Rakesh Kumar, Mukesh Kumar [2009] 313 ITR 305/178 Taxman 224 against which Special Leave Petition [SLP(C) NO. CC 3623/2009] has been dismissed by this Court and the decision of this Court in Asstt. CIT v. A.R. Enterprises [2013] 350 ITR 489/212 Taxman 531/29 taxmann.com 50 (SC) are on entirely different facts. 6. In Rakesh Kumar, Mukesh Kumar (supra) the challenge was to the proceedings of assessment under Section 158 BC of the Act on the basis of a search warrant issued in the name of a dead person. The issue in A.R. Enterprises (supra) has no similarity to the issue in hand, n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ality and validity of search on the grounds that search was conducted on deceased person during the course of assessment proceedings. It was submitted by ld. DR that this legal issue of issuing of search warrant on deceased person and consequently block period assessment framed against assessee who is wife of the person search is to be quashed on the ground that the search warrant was issued in the name of deceased person, was not even raised before ld. CIT(A) . It was submitted by ld. DR that no ground of appeal is taken even before the tribunal as to invalidity of search owing to the search conducted on deceased person, as per grounds of appeal filed before the tribunal. Our attention was drawn to grounds of appeal filed by assessee in memo of appeal filed with tribunal. It is submitted by ld. DR that the said issue was raised for the first time before the tribunal at the time of hearing of the appeal before the Bench. Thus, in the nutshell it was submitted that the assessee participated and co-operated in all the proceedings before AO and ld. CIT(A) and never ever this issue of invalidity of search owning to search being conducted on deceased person was raised by assessee , prio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....filled and hence , this second MA filed by Revenue is liable to be quashed. It was also submitted that the assessee has raised ground number 2 before the tribunal, wherein legal challenge was raised to initiation of proceedings u/s 158BD of the Act, being bad in law, the block assessment order dated 30.01.2004 is liable to be held and declared as non-est in the eyes of law and prayers were made to dismiss this MA and upheld the appellate order dated 01.02.2016 passed by tribunal 2.10. We have considered rival contentions and perused the material on record. We have observed that there was a search and seizure operations conducted by Revenue u/s 132(1) of the Income-tax Act, 1961 against Shri Munna Lal Verma at his residential and business at Nautanwa and Gorakhpur, on 08.12.1999. Shri Munna Lal Verma had expired on 06.10.1999. The assessee is wife of Shri Munna Lal . Since as per version of Revenue , certain incriminating documents and undisclosed assets pertaining to the assessee were found and seized during the course of search and seizure operations conducted by Revenue u/s 132(1) of the 1961 Act against Shri Munna Lal, the proceedings u/s 158BD were initiated against the asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Lal Verma, husband of the assessee on 08.12.1999. These legal jurisdictional objections were disposed of by both the authorities below by speaking order, but there was no legal challenge raised by assessee before lower authorities as to the search being invalid on the grounds that search warrant was issued in the name of deceased person. The assessee has claimed that vide ground number 2 raised before the tribunal, it has challenged the legality and validity of search. The ground number 2 raised by assessee in memo of appeal filed with tribunal is reproduced hereunder: "2. Because the very initiation of proceedings under section 158BD , being bad in law , the block assessment order dated 30.1.2004 is liable to be held and declared as nonest in the eyes of law." As could be seen , the above ground of appeal is general in nature and there is no specific mention that assessee is seeking quashing of assessment order passed against the assessee on the grounds that the search conducted by Revenue u/s 132(1) of the 1961 Act on 08.12.1999 against the husband of the assessee who expired on 06.10.1999 is invalid on the grounds that search warrant was issued in the name of a decea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n place on 8.12.1999. In view of the provision of Section 132(1) , the designated authority of the Revenue can take the search and seizure action only if they have the information in their possession and has the reasons to believe relating to the particular person. In our opinion, it cannot be a person who is not in existence the assessment. Under Chapter XIVB Assessment has to be made in consequence of a search carried out u/s. 132 to assess the undisclosed income of the assessee. If the search itself is invalid, we are of the view that no assessment can be made in consequence of such search. The learned DR even though relied upon the order of the CIT(A) but could not adduce any evidence or any case law which has taken a contrary view. The provision of Section 158BD will also apply where the Assessing Officer is satisfied that any undisclosed income belongs to any person other than the person with respect to him search was made u/s. 132 since the person in respect of search was made u/s. 132 was not in existence and it is invalid , therefore, the provision of Section 158BD in our opinion can also not apply. We therefore agree with the contention of the learned AR and quash the ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rder that the tribunal vide its appellate order dated 01.02.2016 has not adjudicated on the issue of validity of search but only assessment framed was quashed as the search was conducted on deceased person. If both the appellate order dated 01.02.2016 passed by tribunal and the order dated 28.11.2016 passed by tribunal in first MA filed by Revenue are read together, it is clear that there is a mistake apparent in record as the appellate order dated 01.02.2016 passed by tribunal held that since search warrant was issued in the name of deceased person, the search was held to be invalid by tribunal and thereafter as a necessary corollary to the same, consequential assessment proceedings were held to be bad in law and block period assessment framed against the assessee by invoking provisions of Section 158BD was quashed, while in MA order it is stated that search was not declared invalid by the tribunal in its orders dated 01.02.2016 , but only assessment was quashed as search has been carried out on a deceased person. There is an obvious conflict , as unless search is declared invalid, the consequential assessments cannot be quashed . Thus, mistake apparent from record has emerged in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....similarity to the issue in hand, namely, the validity of the proceedings under Section 158BD of the Act. 7. For the aforesaid reasons, we find no merit in this Special Leave Petition. The same is accordingly dismissed." The Hon'ble Supreme Court in the above judgment, thus, held that the information discovered in the course of search , if capable of generating the satisfaction for issuing a notice u/s. 158BD , cannot altogether become irrelevant for further action u/s. 158BD of the Act. The assessee in the instant case before us, participated and co-operated in proceedings before the lower authorities as detailed above (same is not repeated for sake of brevity) and never raised this issue of invalidity of search on the grounds that the search warrant was issued in the name of deceased person. The Revenue has claimed that it has unearthed incriminating material and undisclosed assets pertaining to assessee during the course of search operations conducted by it on the husband of the assessee namely Shri Munna Lal Verma , on 08.12.1999. Thus, the proceedings conducted u/s 158BD cannot be held to be bad in law in the instant case, which is in consonance with ratio of decisi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... relating to interest payable on compensation/enhanced compensation. Subsequently, MA No. 5/Delhi/2008 was filed before the Special Bench and the following order dt. 26th Sept., 2008 was passed : "IN THE INCOME TAX TRIBUNAL Delhi Bench 'E' Special Bench Before Hon'ble President Shri Vimal Gandhi, Shri I.P. Bansal, JM and Shri P.M. Jagtap, AM MA No. 5/Delhi/2008 (ITA No. 2964/Delhi/2002) Asst. yr. 1995-96 Dy. CIT, Cir.II, Meerut vs.Shri Padam Prakash (HUF), 21, Shivaji Road, Meerut, C/o M/s Malik & Co., 305/7, Thapar Nagar, Meerut. (Department) (Assessee) Assessee by : Shri H.G. Malik, Adv. Department by : Shri Alok Kumar, Sr. D.R. Order-Vimal Gandhi, President : This miscellaneous application has been filed by the assessee under s. 254(2) of the IT Act alleging that in the Special Bench decision dt. 29th Sept., 2006, the Bench failed to record any finding on the decision of Hon'ble Karnataka High Court in the case of Chief CIT & Anr. v. Smt. Shantavva [2004] 188 CTR (Kar.) 162 : [2004] 267 ITR 67 (Kar.) and on the case of CWT v. T. Girijammal [2006] 284 ITR 482 (Mad.) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....en filed as directed. The Special Bench is sitting for the third time to hear this small issue. The Revenue has sought further time to move a fresh application. There is no co-operation from the assessee's side who has also sought an adjournment. In the circumstances of the case, we are of the view that there is no need to adjourn the hearing as the matter can be disposed of without further loss of time. 6. On the facts and circumstances of the case and in view of the development noted above, it is more than clear that the observations made in order dt. 26th Sept., 2008 are not sustainable under the law and constitute a mistake apparent from record. The order would lead to unnecessary confusion when the matter has been clarified by the Hon'ble Supreme Court. Accordingly, order dt. 26th Sept., 2008 is rectified and is withdrawn. It is held that anything stated in the aforesaid order shall not affect the rights of the parties. It stands withdrawn. The miscellaneous application is allowed in terms stated above." As can be seen from aforesaid decision of Hon'ble Special Bench of ITAT(Delhi) , the first MA filed by Revenue was dismissed by the tribunal. The second MA....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to move in the world of law only on the crutches of precedents, useful reference may be made to the decision of the apex Court rendered some three decades back in the year 1962 in the case of East India Commercial Co. Ltd. reported in AIR 1962 SC 1893. 6. It is, therefore, the bounden duty of all Courts and Tribunals within the territory of India to bring their judgments and orders in consonance and in conformity with the law of the land as declared by the Highest Court of this country. The judgment of the Hon'ble Supreme Court in Singhania's case (supra) has finally enunciated, pronounced and declared the correct interpretation and application of the provisions of rule 1D of the Wealth-tax Rules. In the instance case, the Assessing Officer has very rightly applied the correct law for valuing the unquoted equity shares on break up method as prescribed under rule 1D. But the first appellate authority did not agree with the Assessing Officer and directed him to value those unquoted equity shares on profit earning or yield basis on the basis of the Supreme Court's decision in the case of Smt. Kusumben D. Mahadevia (supra), and this Tribunal approved the decision o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessee's authorised representative that in spite of the decision of the Supreme Court in Singhania's case (supra), the issue regarding the valuation of unquoted shares was a debatable one and, therefore, outside the ambit and scope of section 35 of the Wealth-tax Act. Our learned Brothers also conceded that even after the decision of the Supreme Court, investigation or enquiry into the facts are required for valuing unquoted equity shares and, therefore, the matter is beyond the provisions of section 35 of the Act. 9. The Hon'ble Supreme Court in Singhania's case (supra) has discussed the judgment rendered by the Hon'ble Gujarat High Court in the case of Ashok K. Parikh (supra) and has overruled it, impliedly, as is evident from the summary of final conclusion given in clause (4) printed at page 34 of the reports (207 ITR). This apart, from the direction given by Their Lordships of the Hon'ble Supreme Court in Singhania's case at pages 34 and 35 of the said reports (207 ITR), it is indubitably crystal clear that all appeals pending in the Supreme Court on the validity, application and interpretation of rule 1D shall be deemed to have been ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s this Revenue's application and involve the Revenue and the assessee into frivolous and vexatious litigation, yielding no substantial or tangible gains to any litigant. It will be, as a matter of fact, against public policy to proliferate and prolong unwanted, undesirable and unwarranted litigation particularly after Supreme Court judgment which we reiterate declares the law of the land. 12. The stand of the Assessing Officer has been vindicated by the judgment of the Supreme Court in Singhania's case. The Revenue has finally emerged victorious in the legal battle on the issue of valuation of unquoted equity shares after several years in the Highest Court of the land and, therefore, it is but fair and just that it should reap and taste the fruits of success by amending and rectifying, in accordance with the provisions of section 35 of the Wealth-tax Act, the appeal order dated 30th December, 1993. 13. Strictly speaking, this Tribunal should, as directed by the Supreme Court in Singhania's case suo motu and without waiting for any application from the Revenue, pass appropriate order under section 35 of the Wealth-tax Act rectifying the appeal order pas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....filed by Revenue , allowed the MA filed by Revenue and reversed the main appellate order passed by tribunal to bring it in line with the judgment passed by Hon'ble Supreme Court in the case of Bharat Hari Singhania v. CWT (1994) reported in (1994) 207 ITR 1(SC). The tribunal appellate order was passed on 30.12.1993. The first MA filed by Revenue was finally heard on 27.09.1994 and disposed of by order dated 21.10.1994. The Hon'ble Supreme Court pronounced the judgment in the case of Bharat Hari Singhania(supra)16.02.1994 , which was after the main appellate order passed by tribunal on 30.12.1993. Thereafter, Revenue filed second MA with tribunal agitating that the tribunal appellate order dated 30.12.1993 suffers from mistake apparent from record as the same is not in conformity with the ratio of judgment dated 16.02.1994 of Hon'ble Supreme Court in the case of Bharat Hari Singhania(supra) and it was sought that amendment be made in appellate order passed by tribunal to bring it in line with aforesaid decision of Hon'ble Supreme Court. The tribunal , thus, allowed the second MA filed by Revenue and consequently, allowed the appeal filed by Revenue, keeping in view ratio of decision....