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Deputy Commissioner of Income-Tax Versus V.S. Chauhan

2016 (2) TMI 980 - ITAT DELHI

Validity of assessment order passed under section 143(3)/158BC - period of limitation - Held that:- Undisputedly, in the present case of the assessee, the search was conducted on March 19, 2002, and notice under section 158BC of the Act was issued to the assessee on May 9, 2002. Thus, both the dates falls well before June 1, 2002, when the new Explanation 1 to this section was in existence. Prior to the insertion of the new Explanation 1 with effect from June 1, 2002, Explanation 1, as inserted .....

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h under section 132 or for requisition under section 132A, as the case may be, was executed in cases where a search is initiated or books of account or other documents or any assets are requisitioned on or after the January 1, 1997. Keeping all these material facts in totality in its mind, the learned Commissioner of Income-tax (Appeals) has rightly held that the new Explanation 1 inserted to section 158BE of the Act with effect from June 1, 2002 was not retrospective and thus the assessment ord .....

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ial Member) 1. The Revenue has questioned the first appellate order on the following grounds : "1. The order of the learned Commissioner of Income-tax (Appeals) is not correct in law and facts : 2. Whether, on the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) was correct in holding that the assessment order passed under section 143(3)/158BC on July 14, 2011, has got barred by limitation on May 30, 2011, whereas in accordance with the .....

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ner of Income-tax (Appeals) has erred in deleting the addition without going into the merits of the case in respect of the addition of ₹ 20,60,950 on account of the estimation of professional income at ₹ 24,00,000. 5. On the facts and in the circumstances of the case as well as in law, the learned Commissioner of Income-tax (Appeals) has erred in deleting the addition without going into the merits of the case in respect of the addition of ₹ 5,31,000 on account of the alleged un .....

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in deleting the addition without going into the merits of the case in respect of the addition of ₹ 1,79,135 out of professional charges paid. 8. On the facts and in the circumstances of the case as well as in law, the learned Commissioner of Income-tax (Appeals) has erred in deleting the addition without going into the merits of the case in respect of the addition of ₹ 18,88,093 under section 68 of the Income-tax Act, 1961, on account of the alleged unsecured cash credit (loans) from .....

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without going into the merits of the case in respect of the addition of ₹ 19,01,678 on account of unexplained investment deposit in bank account. 11. On the facts and in the circumstances of the case as well as in law, the learned Commissioner of Income-tax (Appeals) has erred in deleting the addition without going into the merits of the case in respect of the addition of ₹ 6,32,630 on account of undisclosed investment towards construction of income." 2. Since the issue raised i .....

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under section 143(3)/ 158BC of the Income-tax Act, 1961, for the block period April 1, 1995, to March 19, 2002, was passed on July 14, 2011. The assessee contended that the order was barred by limitation, which has been accepted by the learned Commissioner of Income-tax (Appeals), which has been questioned by the Revenue before us. 5. In support of the grounds, the learned Commissioner of Income-tax (Departmental representative) contended that the proviso to Explanation 1 to section 158BE(2) of .....

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ppellate order and reiterated the submissions made before the learned Commissioner of Income-tax (Appeals). He submitted that Explanation 1 to section 158BE(2) of the Act was initially introduced in 1996 by way of the Finance (No. 2) Act, 1996, and later on it was amended in 1998. On both these occasions, it was specifically provided that the amendments are retrospective and shall be applicable from July 1, 1995. Hence, it cannot be said that the amendment brought in with effect from June 1, 200 .....

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ative submitted further that the block assessment is a code by itself and limitation of passing the assessment order has been provided in this code itself in section 158BE of the Act. As per this section, limitation is with reference to the date of search. The proviso inserted with effect from June 1, 2002, in the section is relevant and effective for the search made on or after June 1, 2002. In the present case, not only the date of search was prior to June 1, 2002, but also the date of notice .....

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while passing the final order, has specifically directed that for the purpose of calculation of limitation for completing the block assessment proceeding, the period with effect from the date of stay order till the appearance of the Commissioner (assessee) was directed to be excluded. The Assessing Officer had passed the order on July 24, 2011, much beyond the time permitted by the hon'ble High Court, thus, the learned Commissioner of Income-tax (Appeals) had rightly held that the order dat .....

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March 17, 2004, when the Assessing Officer was having 15 days more at his disposal to pass the assessment order for the block period, the assessee had preferred a writ petition before the hon'ble Allahabad High Court and the hon'ble High Court ordered on March 17, 2004, as "in the meantime, the block assessment proceedings may go on but no final order shall be passed". The hon'ble Allahabad High Court ultimately dismissed the said writ petition preferred by the assessee, v .....

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shall be excluded." 9. The petitioner (assessee) in compliance with the order of the hon'ble High Court had appeared before the Assessing Officer on May 16, 2011, and the Assessing Officer was to pass the assessment order for the block period by May 30, 2011, i.e., within 15 days from May 16, 2011, but the Assessing Officer has passed the assessment order on July 14, 2011. Now, we have to examine as to whether the learned Commissioner of Income- tax (Appeals) was justified in treating t .....

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ad made it clear that in the meantime the block assessment proceedings may go on but no final order shall be passed. There is no dispute that when the interim order on March 17, 2004, was passed by the hon'ble High Court, 15 days were remaining with the Assessing Officer to pass the assessment order for the block period as per the limitation prescribed under section 158BE of the Act. The writ petition was finally disposed of by the hon'ble High Court on May 2, 2011, wherein the hon'b .....

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he contentions of the learned Commissioner of Income-tax (Departmental representative) that the proviso to Explanation 1 to section 158BE(2) of the Act inserted with effect from June 1, 2002 will be effective from the retrospective effect it being procedural and clarificatory in nature. In the case of MOI Engg. Ltd. v. State of Punjab (VAT) (supra), the hon'ble Punjab and Haryana High Court has been pleased to hold that if notice of assessment had already been given, the assessment was to be .....

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etrospective and shall be applicable from July 1, 1995, but no such retrospective effect has been mentioned by the Legislature while bringing the amendment by way of insertion of new Explanation 1 to this section with effect from June 1, 2002. Undisputedly, in the present case of the assessee, the search was conducted on March 19, 2002, and notice under section 158BC of the Act was issued to the assessee on May 9, 2002. Thus, both the dates falls well before June 1, 2002, when the new Explanatio .....

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