TMI Blog2017 (10) TMI 379X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribed under the act and the same cannot be valid. Accordingly we quash the notice issued u/s 158BD of the Act and annul the assessment made u/s 158BD, and allow the appeal of the assessee. - I.T. (SS) A. No. 2/Vizag/2014, I.T. (SS) A. No. 3/Vizag/2014 - - - Dated:- 6-10-2017 - Shri V. Durga Rao, Judicial Member And Shri D. S. Sunder Singh, Accountant Member Appellant by : Shri G.V.N. Hari, AR Respondent by : Shri V. Madhuvani, DR ORDER Per D. S. Sunder Singh, Accountant Member These cross appeals filed by the assessee as well as the revenue are directed against the order of the Commissioner of Income Tax (Appeals), {CIT(A)}, Visakhapatnam vide ITA No.0257/2012- 13/ACIT,C-1/KKD/2013-14 dated 28.3.2014 for the assessment year 1989-90 to 29.1.1999. 2. Ground no.2 is related to the validity of issue of notice u/s 158 BD of the Income Tax Act, (hereinafter called as the Act ) in the assessee s case. The assessee is educational society in the name and style of Saint Mary s Educational Society registered with Registrar of Cooperative Societies and the educational institutions are being operated in the name and style of Saint Mary s College of Educati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly in the hands of the college. Since St. Mary s Educational Society is having 3 wings as stated above, if at all any assessment is to be done, it should have been on the legal entity alone along with its branches and wings as a whole and not as branches and wings separately. It is seen that while filing the Return in Form No.2B for the block period, the fact that the appellant college is being run under the ownership and management of the Society has been clearly brought out for the information of the Assessing Officer. Further, the following evidences were produced for my perusal in support of the above contentions:- (a) Memorandum of Association of the Society duly registered under the Societies Registration Act, wherein clause No.3 thereof speaks of the objectives and aims thereof which include the establishment of schools, colleges and training institutions for the purpose of imparting and promotion of education. (b) Order dated 5.3.1984 of the Secretary of Government of Andhra Pradesh, Dept. of Education, addressed to St. Mary s Educational Society, granting permission to open B.Ed., College in the name of St. Mary s College of Education, at Kakinada. (c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... name of the assessee i.e., St Mary s College of Education but the block return was filed by the St. Mary s Educational Society, declaring a nil return on the ground that the entire receipts/income of the society is exempted from Income Tax Act u/s 10(22) of the IT Act. Along with the return, a letter was filed before the AO stating therein the objects of the society and the details of the institutions. It has been repeatedly told to the AO that the assessee i.e., St. Mary College of Education has no legal independent entity and it is a society which runs all its wings including the assessee but the AO was adamant to frame the assessment in the hands of the assessee i.e., St Mary s College of Education after treating it to be AOP. Since the assessee is not a legal entity and is merely a wing of the society, who has got exemption u/s 10(22) of the Act, no asst. can be framed in the hands of the wings or a branch of the society. We therefore, find ourselves are in agreement with the order of the CIT(A) who has rightly held that the assessment in the hands of the assessee cannot be framed. Accordingly, the block assessment in the hands of the assessee deserves to be annulled. We theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anded over to the assessing officer having jurisdiction over such other person and that AO shall proceed against such other person and the provisions of this chapter shall apply accordingly. There is no time limit prescribed for any proceedings being initiated under the provisions of section 158BD of the Act. As such, the notice u/s.158BD has rightly issued in the assessee's case, which is valid as per law. As such, the notice u/s.158BD has rightly issued in the assessee's case which is valid as per law. The case laws relied upon by the assessee are distinguishable from the facts and circumstances of the assessee's case. 5.4 I find that the initial proceedings were initiated u/s.158BC in the case of St. Mary's College of Education under the impression it was an AOP. The block assessment order passed pursuant thereto has been annulled both by the CIT(A) and ITAT. Thereafter the impugned proceedings have been initiated against the assessee society u/s.158BD of the I.T. Act. It has to be seen whether the proceedings initiated against the assessment society under section 158BD is in accordance with the provisions of the Act. The proceedings u/s.158BD can be invoke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Further, a careful and plain reading of section 158BD would show that there is no mandate or time limit fixed for issue of notice u/s.158BD/ No condition has been stipulated u/s.158BD that such notice has to be issued before completion of assessment u/s.158BC. The Hon'ble Supreme Court in the case of Calcutta Knit Wears Ltd has held that the plain meaning contained in section 158BD should be adopted. In view of the above discussion, I do not find any merit in the contentions raised by the AR. The notice issued u/s.158BD is held to be valid. 6. Aggrieved by the order of the Ld. CIT(A), assessee is in appeal before the Tribunal. Appearing for the assessee, the Ld. A.R. argued that in this case the search was conducted on 29.01.1999 and the notice u/s 158BD of the Act was issued on 15.11.2010 i.e. after the 11 years of conducting the search and the issue of notice is not valid in this case. The Ld. A.R. further argued that even if it is presumed that the proceedings u/s 158BC of the Act were completed after the pronouncement of the order of the ITAT, the assessing officer has taken more than 1 year 4 months time for issue of notice and the time taken by the A.O. is unrea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n cases where a search is initiated or books of account or other documents or any assets are requisitioned on or after the 1st day of January, 1997. (2) The period of limitation for completion of block assessment in the case of the other person referred to in section 158BD shall be- a) one year from the end of the month in which the notice under the Chapter was served on such other person in respect of search initiated or books of account or other documents or any assets requisitioned after the 30th day of June, 1995, but before the 1st day of January, 1997; and b) two years from the end of the month in which the notice under this Chapter was served on such other person in respect of search initiated or books of account or other documents or any assets are requisitioned on or after the 1st day of January, 1997.] 9. As per section 158BE of the Act, the assessment in the case of 158BD of the Act should be completed within 2 years from the end of the month in which the notice under the chapter was served on the assessee. 10. In this case, the assessments u/s 158BC of the Act was completed i.e. searched persons on 30.01.2001 and the A.O. had issued the notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction which leads to such an anomaly should be avoided. Applying the decision of Hon ble High Court of Punjab Haryana in the case law cited the A.O. should have issued the notice u/s 158BD of the Act before 30.1.2001 and completed the block assessment u/s 158BD of the Act before 31.01.2003 as per the time limit provided u/s 158BE of the Act. By any reasoning the issue of notice after 9 years and 9 months of completion of assessments of searched party considered to be unreasonable and cannot be considered to be contemporaneous to the assessment proceedings. Even after pronouncement of the order by the Hon ble ITAT, Visakhapatnam, the notice u/s 158BD of the Act was issued after 1 year 4 months. Hon ble Delhi High Court in Bharat Bhushan Jain and other (supra) held that recording of satisfaction after more than 1 year a cannot be considered to be contemporaneous to assessment proceedings. For ready reference, we extract the relevant paragraph of the Hon ble Delhi High Court as under: 6. Having regard to the intent of the Supreme Court in Para 44 of the Calcutta Knitwears (supra), where it was indicated that the Revenue has to be vigilant in issuing notice to the third par ..... X X X X Extracts X X X X X X X X Extracts X X X X
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