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2015 (3) TMI 851 - GUJARAT HIGH COURT

2015 (3) TMI 851 - GUJARAT HIGH COURT - [2015] 373 ITR 530 (Guj) - Proceedings initiated u/s 158BC - Tribunal accepting the additional grounds of the assessee which were raised after a lapse of 5 years of filing of second round of appeal and 14 years after the search to hold proceedings initiated u/s 158BC against assessee are void initio as the name of these assessees are not appearing in the authorization/requisition - Held that:- If a strict view is taken, one may say that the revenue could n .....

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by the revenue. It was for the revenue to controvert the said material by any contemporaneous record or otherwise. But, it appears that even as per the revenue, the contents of the Panchnama including that of non-appearance of the name in the authorization/requisition of the assessee, remained undisputed. Therefore, it cannot be said that the Tribunal did not give any opportunity to the revenue to meet with the additional ground. We do not find that a participation by the assessee in the earlie .....

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recorded herein above, admittedly, there was no warrant authorization on the name of the assessee and hence, the Tribunal has found the assessment as ab initio void, which, in our view, calls for no interference, on facts and on law. No substantial questions of law would arise for consideration - Decided in favour of assessee. - Tax Appeal No. 1254 of 2014, Tax Appeal No. 1260 of 2014, Tax Appeal No. 1261 of 2014, Tax Appeal No. 1263 of 2014 - Dated:- 9-3-2015 - Jayant Patel And S. H. Vora,JJ. .....

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the revenue. The same read as under: (i) "Whether the Hon'ble Appellate Tribunal has committed substantial error of law in accepting the additional ground of the assessee that since, the name of these assessees are not appearing in the authorization/requisition, proceedings initiated u/s 158BC of the Act against them are void initio without appreciating the fact that the order under dispute was passed in pursuance of an order passed by the Tribunal itself? (ii) Whether the Tribunal was .....

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ces, filed return, participated in block assessment proceedings and accepted the assessment proceedings and further participated in set-aside assessment proceedings and suffered an assessment as per the direction of Hon'ble Tribunal, without raising such contention." 3. As such, broad facts show that initially, there were assessment orders by AO for the year 1996. Such assessments were carried in appeal before the Tribunal since they were block assessment and the Tribunal disposed of th .....

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Tribunal on the point that the order passed under Section 158BC read with Section 254 of the Act is bad in law, invalid or untenable since no warrant authorizing search was issued in the name of the assessee, but on the basis of the warrant issued on the joint name as shown in the Panchnama as that of Arun Choksi, Sanjay Choksi and family and Jolly Tea (India) Ltd. and Jolly group of companies. The Tribunal initially vide order dated 17.8.2010, found that the additional ground being root of the .....

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that the part of the reasons recorded vide order dated 17.8.2010 was modified, but the ultimate additional grounds, which were so permitted, remained unaltered. It further appears that the revenue preferred Special Civil Application No.9044 of 2013 before this Court challenging modification and the reasons recorded by the Tribunal vide order dated 8.11.2012 and this Court in the said petition, vide order dated 13.6.2013, inter alia observed thus: "Ample opportunity will be given to the pet .....

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ccordance with law and on its own merits." 4. It appears that thereafter, the Tribunal heard all the appeals and passed common judgment and order, which is impugned in all the respective tax appeals. The reasons recorded by the Tribunal at para Nos.6 to 8 for ready reference can be reproduced as under: 6. After hearing both the parties in respect of preliminary contentions raised by the revenue, we are of the considered opinion that these objections should have been raised by the revenue at .....

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t; We are refraining ourselves from adjudicating these preliminary objections raised by the revenue. 7. Now coming to the merits of the additional ground, after hearing both the parties, perusing the record and case laws relied by both the parties, we find that in the Panchnama (filed along with additional ground) prepared by the revenue at the time of search in the column 'A' following narration is mentioned:- "Warrant in the case of :Arun Choksi, Sanjay Choksi and family and Jolly .....

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e are reproduced as under:- "292CC. Authorisation and assessment in case of search of requisition- (1) Notwithstanding anything contained in this Act- (i) it shall not be necessary to issue an authorization under section 132 or make a requisition under section 132A separately in the name of the each person; (ii) (ii) where as authorization under section 132 has been issued or requisition under section 132A has been made mentioning therein the name of more than one person, the mention of suc .....

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uthorization or requisition." 8. It is clear from the above that for making assessment u/s 158BC of the Act, it is not necessary to issue authorization u/s 132 or make requisition u/s 132A separately in the name of each person. Authorization or requisition in the name of more than one person is permissible. However assessment or re-assessment can be made only if the name of the person is mentioned in such authorization or requisition. Since there is no dispute about the fact that names of t .....

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se cases assessment framed by Assessing Officer were held to be valid. In view of the above, additional ground raised by the assessee is allowed." 5. The aforesaid shows that the Tribunal on verification of the Panchnama prepared by the revenue at the time of search, found that the warrant is in case of Arun Choksi, Sanjay Choksi and family and Jolly Tea (India) Ltd. and Jolly group of companies and it was not on the name of any of the assessees, who were appellant before the Tribunal. The .....

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al has allowed the appeals mainly on the additional grounds raised by the assessee. 6. Mr. Parikh, learned counsel appearing for the revenue contended that in view of the order passed by this Court in Special Civil Application No.9049 of 2013, it was required for the Tribunal to express its view on the permission of the additional ground. He submitted that when in the earlier round of litigation, at the stage of first assessment made by AO before the Tribunal, when appeals were preferred against .....

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ted that as observed by this court in its order passed in Special Civil Application Nos.9044 of 2013 to 9053 of 2013, the revenue is to raise such ground in the present appeals, substantial questions of law would arise before this court for consideration and hence, this court may examine those questions as raised by the revenue. 7. Whereas, Mr. Soparkar, learned counsel appearing for the assessee, by relying upon two decisions; one of the Apex Court in case of Manish Maheshwari Vs. Assistant Com .....

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jurisdiction with the AO to make block assessment, everything would fall to ground and it cannot be said that such a ground, which is purely a question of law, has been wrongly permitted to be raised by the Tribunal. He submitted that as per the revenue, even before the Tribunal, it remained undisputed that the names of the assessee were not there on the authorization/warrant and once the condition precedent was not satisfied for block assessment under section 128BC, the Tribunal was justified .....

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vil Application Nos.9044 of 2013 to 9053 of 2013 were directed against the order dated 8.11.2012, which was only for rectification of the reasons recorded and that too only first part, but it was not for rectification of any additional ground or the ultimate order for permitting additional ground and the admission of such ground. If a strict view is taken, one may say that the revenue could not agitate such question on the aspects of availability of the additional ground before the Tribunal, whi .....

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otherwise. But, it appears that even as per the revenue, the contents of the Panchnama including that of non-appearance of the name in the authorization/requisition of the assessee, remained undisputed. Therefore, it cannot be said that the Tribunal did not give any opportunity to the revenue to meet with the additional ground. 9. Apart from the above, even if, it is considered for the sake of examination that the ground so raised before the Tribunal could also be raised before this Court in the .....

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ngs before the higher forum or not and this Court in the said decision, observed thus: "The legal position about waiver of such a mandatory provision created in the wider public interest to operate as fetter on the jurisdiction of the authority is well settled that there could never be waiver, for the simple reason that in such cases jurisdiction could not be conferred on the authority by mere consent, but only on conditions precedent for the exercise of jurisdiction being fulfilled. If the .....

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Lordships had gone into this material question as to whether the act in breach of the mandatory provision is per force a nullity. The passage in Macnamara on Nullities and Irregularities, referred to in Ashutosh Sikdar v. BihariLalKirtania [1907] ILR 35 Cal 61 [FB], at page 72, was in terms relied upon as under: "....no hard and fast line can be drawn between a nullity and an irregularity; but this much is clear, that an irregularity is a deviation from a rule of law which does not take awa .....

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icular provision. Their Lordships in terms approved a workable test laid down by Justice Coleridge in Holmes v. Russel [1841] 9 Dowl 487 as under: "It is difficult sometimes to distinguish between an irregularity and a nullity; but the safest rule to determine what is an irregularity and what is a nullity is to see whether the party can waive the objection; if he can waive it,it amounts to an irregularity; if he cannot, it is a nullity." Thereafter it was pointed out that a waiver is a .....

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l position was again reiterated in Superintendent of Taxes v.OnkarmalNathmal Trust, AIR 1975 SC 2065, where the question had arisen in the context of the Assam Taxation (on Goods Carried by Road and on Inland Waterways) Act, 1961. The assessee had obtained an injunction order against the State in a writ petition challenging the validity of the Act. The assessee had not submitted the return under section 7(1) and under section 7(2) a notice had to be issued only within two years from the end of t .....

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e only method for initiation of a valid assessment proceeding under the Act. The period of two years under section 7(2) was a fetter on the power of the authority and was not just a bar of time. It was the scheme of the Act that the service do notice within two years from the end of the return period was an imperative requirement for initiation of assessment proceeding as also reassessment proceeding under the Act. Further proceeding, at page 2071, their Lordships pointed out the settled legal d .....

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of assessment was either as assessee filing a return as contemplated in the Act or an assessee being called upon to file a return as contemplated in the Act. The respondents challenged the Act. The order of injunction did not amount to a waiver of the statutory provisions. The issue of a notice under the provisions of the Act related to the exercise of jurisdiction under the Act in all cases. The learned Chief Justice in terms pointed out that the revenue statutes are based on public policy. Th .....

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g judgment his Lordship, Beg. J., at page 2077, also pointed out that if the notice under section 7(2) was a condition precedent to the exercise of jurisdiction to make the best judgment assessment, the doctrine of waiver could never confer jurisdiction so as to enable the parties to avoid the effect of violating a mandatory provision on a jurisdictional matter even by agreement. This decision completely settles the legal position. It makes a distinction between the provisions which confer juris .....

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do not find that a participation by the assessee in the earlier round of litigation either before the AO or before the Tribunal or consequently before the AO can operate as a bar to the assessee to challenge the jurisdictional authority of the AO under Section 158BC of the Act. 11. On the aspects of applicability and the condition precedent for making block assessment under Section 158BC, we can usefully refer to the observations of the Apex Court in case of Manish Maheshwari (supra). The releva .....

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ments or assets are requisitioned under section 132A, in the case of any person, then:- (a) the Assessing Officer shall (i) in respect of search initiated or books of accounts or other documents or any assets requisitioned after the 30th day of June, 1995 but before the 1st day of January, 1997, serve a notice to such person requiring him to furnish within such time not being less than fifteen days; (ii) in respect of search initiated or books of accounts or other documents or any assets requisi .....

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ed for the purpose of proceeding under this Chapter: Provided further that a person who has furnished a return under this clause shall not be entitled to file a revised return; (b) the Assessing Officer shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158BB and the provisions of section 142, sub-sections (2) and (3) of section 143 and section 144 shall, so far as may be, apply; (c) the Assessing Officer, on determination of the undisclosed .....

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ferences to "block assessment". "158BD. Undisclosed income of any other person Where the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the 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, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdic .....

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itioned under Section 132A. Section 158BD, however, provides for taking recourse to a block assessment in terms of Section 158BC in respect of any other person, the conditions precedents wherefor are: (i) Satisfaction must be recorded by the Assessing Officer that any undisclosed income belongs to any person, other than the person with respect to whom search was made under Section 132 of the Act; (ii) The books of account or other documents or assets seized or requisitioned had been handed over .....

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taxing statute, as is well-known, must be construed strictly. In Sneh Enterprises v. Commissioner of Customs, New Delhi [(2006) 7 SCC 714], it was held: "While dealing with a taxing provision, the principle of 'Strict Interpretation' should be applied. The Court shall not interpret the statutory provision in such a manner which would create an additional fiscal burden on a person. It would never be done by invoking the provisions of another Act, which are not attracted. It is also .....

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652], this Court opined: "In our opinion if there are two possible interpretations of a rule, one which subserves the object of a provision in the parent statute and the other which does not, we have to adopt the former, because adopting the latter will make the rule ultra vires the Act." 10. Law in this regard is clear and explicit. The only question which arises for our consideration is as to whether the notice dated 06.02.1996 satisfies the requirements of Section 158BD of the Act. .....

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rnished. The provisions contained in Chapter XIVB are drastic in nature. It has draconian consequences. Such a proceeding can be initiated, it would bear repetition to state, only if a raid is conducted. When the provisions are attracted, legal presumptions are raised against the assessee. The burden shifts on the assessee. Audited accounts for a period of ten years may have to be reopened. 12. A large number of decisions of various High Courts have been cited at the bar. We would, at the outset .....

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gainst such other person as per the provisions of Chapter XIV-B which would mean that on such satisfaction being reached that any undisclosed income belongs to such other person, he must proceed to serve a notice to such other person as per the provisions of s. 158BC of the Act. If the Assessing Officer who is seized of the matter against the raided person reaches such satisfaction that any undisclosed income belongs to such other person over whom he has no jurisdiction, then, in that event, he .....

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