TMI Blog2012 (11) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... erits and have held in favour of the petitioner, the AO can have no reason to believe that income chargeable to tax has escaped assessment. For this reason also, the reopening of assessment under section 147 is without jurisdiction - in favour of assessee. - Special Civil Application No. 12394 of 2002 - - - Dated:- 3-9-2012 - Akil Kureshi And Harsha Devani, JJ Appellant Rep. by : Mr J P Shah Respondent Rep. by : Mr Manav A Mehta JUDGEMENT Per : Harsha Devani, J : 1. The petitioner, a partnership firm, has challenged the notice dated 22nd January, 2002 issued by the respondent under section 148 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') seeking to reopen its assessment for assessment year 1999-2000. 2. The facts of the case as stated in the petition are that on 27th January, 1999, search proceedings were conducted under section 132 of the Act in the case of the petitioner. The authorised officers seized certain ornaments as also registers which were showing the names of parties who had given these ornaments by way of loan or for remaking. Such registers also showed the weight of the ornaments given by the parties. During the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t this stage that the petitioner has filed the present petition. 4. In the aforesaid factual background, Mr. J.P. Shah, learned counsel for the petitioner assailed the impugned notice by submitting that the Assessing Officer seeks to reopen the assessment on issues which have already been decided by the Commissioner (Appeals) in favour of the petitioner as confirmed by the Tribunal. Inviting attention to the reasons recorded, it was pointed out that the assessment was sought to be reopened in relation to the deletion of addition of Rs.29,77,726/- made by the Commissioner (Appeals) during the course of block assessment. Referring to the order of Commissioner (Appeals), it was pointed out that such issue has been dealt with on merits by the Commissioner (Appeals) who on the basis of the evidence on record found that there is no justification for making such addition and had deleted the same. From the order passed by the Tribunal in the appeal preferred by the Department, it was pointed out that the Tribunal has recorded that the assessee was successful in proving to the hilt the genuineness of the transactions encompassing all its aspects. The assessee had duly discharged its onus. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h action, gold ornaments and silver articles weighing of 16156.7 grams of old ornaments and 72.649 Kg. of silver articles aggregating total value of Rs.68,89,252/- were found. Out of which 7092.3 grams of gold ornaments were sized and 18.648 Kg of silver and silver ornaments were put under deemed seizure u/s.132(1) second proviso. The assessee firm is engaged in job work of gold and silver ornaments and also trading thereof. It filed the return of income for the block period declaring total income of Rs.NIL on 30.8.1999 at Mumbai. Subsequently due to order u/s.127(2) of the Act passed by the CIT, Mumbai City-XII dtd.22.12.1999, the case is assigned to the erstwhile Investigation Circle-3(1). The block assessment for the period of A.Y. 1988-89 to A.Y. 1997-98 and partial period from 1.4.98 to 28.1.98 was made u/s.158BC(c) of the Act determining total undisclosed income of Rs.48,49,902/- comprising mainly of gold ornaments claimed to belonging to customers of Rs.29,77,726/- on 27.3.2001. Being aggrieved by the said order the assessee preferred an appeal to the CIT(A)-III, Surat. The Ld. CIT(A) vide order No.CAS/III/51/2000-01 dtd.9.5.2001 while deciding assessee's appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.3.98 has been drawn in respect of old ornaments received on 28.3.98. Thus, last year's detail clearly bring out the fact that within 3 days ornaments have been returned. Same is the case with the incoming receipt book. Last year's incoming receipt book does not contain first copy i.e. customers copy. If customers do not claim copy what is the need of tearing it. It is nothing but preparing paper work to cover up real transaction. This year due to search action u/s.132, the assessee did not had the time to meticulously plan and complete the paper work and physically checking of stock altered all calculations. IV. It is known that if any customer gives old ornaments for conversion into new ornaments he would definitely provide details of items, i.e. whether bangles, necklace etc. to prepared, the designs etc. and jewellers would note the same in the order book but no such order details have been found and order book which have been seized contains details of such persons whose name are not written in register No.11 etc. Thus, there is no order detail in respect of these huge stock brought in to perform the job work. V. Once the customer takes back his gold ornament, at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the block assessment made under section 158BC(c) of the Act total undisclosed income of the petitioner had been determined at Rs.48,49,902/- comprising mainly of gold ornaments valued at Rs.29,77,726/- claimed to be belonging to customers. It is also amply clear that the Assessing Officer was well aware of the fact that the Commissioner (Appeals) had, on merits, deleted majority of the additions including the addition of Rs.29,77,726/- made in the block assessment under section 158BC of the Act. Moreover, it may be significant to note that on a conjoint reading of the assessment order under section 158BC of the Act and the reasons recorded it is found that from the third unnumbered paragraph to paragraph VII of the reasons, the respondent has, word by word, reproduced either wholly or major portions of the contents of paragraphs 14-2, 14-15, 14-6, 14-7 and 14-9 of the assessment order. In paragraphs VIII and IX of the reasons, the respondent has observed that in quality wise stock register it is nowhere indicated as to whether the incoming items belong to the customers or the whole stock belongs to the assessee and in paragraph IX he has recorded that during the course of search pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isclosed income of the block period and not the total income or loss of the previous year required to be assessed in the normal regular assessment under section 143(3), where the Assessing Officer makes an inquiry to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner and on the basis of the evidence produced by the assessee, the evidence obtained on the specific points and all relevant material which he has gathered assesses the total income or loss and determines the sum payable thereon as per that assessment. This exercise under section 143(2) and (3) for regular assessment stands in contrast to the exercise of the Assessing Officer under section 158BB read with section 158BC (b), where he has to assess only the undisclosed income of the block period on the basis of the evidence found and material available as a result of the search conducted by the authorised officer under section 132 of the Act. These provisions operate entirely for different purposes, one for assessing undisclosed income of the block period while the other for assessing the total income or loss of the previous year in a regular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner (Appeals) deleting such addition was upheld by the Tribunal. Thus, when the undisclosed income determined by the Assessing Officer included Rs.29,77,726/- being the value of gold ornaments which the assessee claimed to be belonging to its customers was subject matter of block assessment, the same cannot be made the subject matter of regular assessment under Chapter XIV of the Act. Under the circumstances, the reopening of assessment in relation to a matter which was subject matter of block assessment is evidently without jurisdiction. 13. Another notable aspect of the matter is that in the block assessment the issue regarding gold ornaments valued at Rs.29,77,726/- had been considered by the Assessing Officer. In the assessee s appeal, the Commissioner (Appeals) had examined the issue on merits and had recorded that in the facts of the present case, the assessee had discharged the onus in respect of the deposits of gold received by it. It was recorded that the assessee had not only filed confirmations of parties but had filed affidavits of the depositors. The genuineness of the affidavits has been verified by the Assessing Officer through examination of the depositors in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remark of the Commissioner (Appeals) relating to what was found recorded at the time of the search namely, items which were excluded for the purpose of block assessment has been misconstrued by the Assessing Officer as a licence to reopen the assessment in respect of the very same items which were subject matter of the block assessment. 15. Thus, it is apparent that the Assessing Officer seeks to reopen the assessment in relation to an item, viz., gold ornaments valued at Rs.29,77,726/- which was already subject matter of block assessment wherein such addition was made in the order under section 158BC of the Act and was subject matter of appeal before the Commissioner (Appeals) (and subsequently before the Tribunal). The said issue has been treated as being subject matter of block assessment and examined on merits by the Commissioner (Appeals) and has been deleted. Such addition was not deleted on the ground that the same was subject matter of regular assessment. Under the circumstances, once such issue has already been decided by the appellate authority, it is not open for the Assessing Officer to seek to reopen the assessment on the same grounds as this would tantamount to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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