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2008 (11) TMI 702 - ITAT DELHI

2008 (11) TMI 702 - ITAT DELHI - TMI - IT(SS)A No. 13/Del/2007 - Dated:- 7-11-2008 - Rajpal Yadav, J.M. And K.G. Bansal, A.M. Ms. Rano Jain, for the Appellant. B. Koteshwara Rao, for the Respondent. ORDER RAJPAL YADAV, J.M.: The assessee is in appeal before us against the order of learned CIT(A), dt. 30th Oct., 2006 passed for the block period starting from asst. yr. 1991-92 and ending on 3rd Aug., 2002. The grounds of appeal taken by the assessee are not in consonance with r. 8 of ITAT Rules, t .....

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premises of M/s Friends Portfolios (P) Ltd. and the residential premises of its director Shri Manoj Aggarwal on 30th Aug., 2000. According to the AO, during the course of search, documentary evidence indicating the fact that Shri Manoj Aggarwal was giving bogus accommodation entries to various persons was found. The AO who has assessed Shri Manoj Aggarwal passed an information to the AO of the present assessee on 15th July, 2003 indicating the fact that assessee is one of the mediators who has .....

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undisclosed income at ₹ 3,52,25,105. On appeal, learned CIT(A) observed that only commission income earned by the assessee in helping Shri Manoj Aggarwal for giving accommodation entry is to be assessed in the hands of the assessee. In this way, the commission income on the total transaction was computed at ₹ 5,20,568 and the same has been confirmed. 4. The learned counsel for the assessee on the strength of Tribunal s order passed in IT(SS)A No. 12/Del/2007 in the case of Radhey Shy .....

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the completion of assessment order in the case of Shri Manoj Aggarwal. Thus, the proceedings are vitiated and declared to be null and void. In her second fold of submissions, she contended that no satisfaction was recorded by the AO who has passed assessment under s. 158BD (sic-158BC) of the Act in the case of person searched. In the absence of proper satisfaction exhibiting the fact that during the course of the search incriminating material was found indicating the fact that assessee has undi .....

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under s. 158BC of the Act. In support of her contention, she relied upon the decision of Hon ble Supreme Court in the case of Manish Maheshwari vs. Asstt. CIT (2007) 208 CTR (SC) 97 : (2007) 289 ITR 341 (SC). 5. On the other hand, the learned Departmental Representative with regard to first fold of submission contended that no time-limit is provided in s. 158BD of the Act in issuance of a notice. The Courts and Tribunals cannot import time-limit at their own. In order to appraise us as to how t .....

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o the words of the statute and the so-called equitable construction of those words of the statute is not permissible. The task of the Court is to construe the provisions of the taxing enactments according to the ordinary and natural meaning of the language used and then to apply that meaning to the facts of the case. With regard to the second fold of submission, he pointed out that satisfaction was recorded by the AO of Manoj Aggarwal while passing order under s. 158BC of the Act. He produced on .....

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entions and gone through the records carefully. The first contention of the learned counsel for the assessee is that notice under s. 158BD has been issued after 19 months of passing the order under s. 158BC in the case of the person searched. Thus, there is huge delay in issuance of such notices and such notice ought to have been issued in a reasonable time. The Tribunal in the case of Radhey Shyam Bansal (supra) has considered this issue elaborately and one of us (AM) is a party to that order. .....

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the assessee, it may be recalled, was that the notice should have been issued at least within a reasonable time after the completion of the assessment of the searched person. In the present case, the block assessment of Manoj Aggarwal was completed on 29th Aug., 2002 but the notice under s. 158BD was issued only on 22nd March, 2004, that is about 19 months later. The further contention based on the judgment of the Gujarat High Court in Khandubhai Vasanji Desai vs. Dy. CIT (1998) 150 CTR (Guj) 5 .....

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ted the search against a person has to hand over the books of account, documents and assets seized to the ITO having jurisdiction over the person to whom the books of account, documents and assets seized relate, within 15 days of the seizure and thereafter the AO is required to serve notice on such person to whom the books of account etc. relate requiring him to furnish a block return under s. 158BC. The Gujarat High Court was concerned with the constitutional validity of s. 158BD of the Act and .....

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hould be done within 15 days of the seizure. The obvious implication is that the satisfaction that the income reflected in the seized material belongs to some person other than the person searched should also be reached within the aforesaid period of 15 days so that the same can be transmitted along with the books of account, documents, etc. seized during the search. The period of 15 days has been amended to 60 days by the Finance Act, 2002, w.e.f. 1st June, 2002. It is noteworthy that the amend .....

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ally starts from the date of search. The period was highlighted by the Gujarat High Court only to emphasise the speed and swiftness within which the proceedings should be taken against such persons. That object does not appear to have been achieved in the present case in view of the unreasonable delay in issuing the notice under s. 158BD not only after the date of search but also after the date of completion of the block assessment of Manoj Aggarwal. Even if the period of 60 days is to be reckon .....

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the AO having jurisdiction over Manoj Aggarwal, the condition precedent for invoking s. 158BD against Radhey Shyam Bansal has not been satisfied. The block assessment made on Radhey Shyam Bansal is therefore bad in law and is required to be cancelled. In addition, the notice under s. 158BD has been issued to the assessee Radhey Shyam Bansal well beyond a reasonable period of time reckoned either from the date of search (3rd Aug., 2000), or from the date of block assessment on Manoj Aggarwal (29t .....

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d that no time-limit is provided under s. 158BD of the Act for issuance of notice, we are of the opinion that the Tribunal in the case of Radhey Shyam Bansal (supra) has considered all these aspects. It found that no doubt such time-limit is not provided in the section but notice ought to have been issued in a reasonable time. In that process, Tribunal has considered the other machinery provisions available in the Act as well as the decision of Hon ble Gujarat High Court in the case of Khandubha .....

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onfirmed the addition. Meanwhile, the taxes paid by the assessee have been refunded to it because the demands have been wiped off in view of the orders of the learned first appellate authority. The Department made fresh demand and the assessee repaid within time. However, a dispute arose regarding interest under s. 220(2) of the Act. The assessee filed a writ petition in the Hon ble High Court challenging the demand of interest on the ground that it was not in default because it had paid the tax .....

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