TMI Blog2004 (8) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... sting assessees in their individual capacity as well as separately existing assessees in the capacity of HUFs (being represented by them) as partners of the firm, M/s New Alankar Jewellers. The firm was also regular assessee. 4.1 On 19th Jan., 2000, the IT Department carried out a search action at the business premises of the partnership firm as well as at the residential premises at Sarrafa Mohalla, Chatarpur, which, as per the Revenue, was the residence of Shri Ajay Kumar Saraf, Vijay Kumar Saraf and Anand Kumar Saraf. Since the copy of search warrant is not on record, it is gathered from the copies of Panchnama placed at pp. 19 and 36 of the assessee's paper book Vol. (0) that the same would have been in the name of Shri Ashok Sarraf, Vijay Sarraf, Anand Sarraf and Ajay Sarraf (Agarwal). 4.2 During the course of search at the alleged residential premises, gold jewellery weighing 1,101 gms. (gross weight), documents relating to the purchase of agricultural land in the name of Vijay Kumar, shares worth Rs. 30,000 in the name of Ajay Kumar, cash of Rs. 39,650 from the room of Shri Anand Kumar and documents for investment of Rs. 5,00,000 in a shop in the name of Pramod Kumar A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds has been considered essential for administrative convenience and co-ordinated investigation. Schedule Sl. No. Name of the assessee Assessed with To be centralised with (1) (2) (3) (4) 1. M/s Alankar Jewellers (BF), Chatarpur ITO, Ward Chatarpur Dy. CIT (Inv.) Circle 2(1), Jabalpur. 2 to 7 not relevant 8. Shri Vijay Kumar Agarwal S/o Late Shri Chhotelal, P/o M/s New Alankar Jewellers, Chatarpur. " '' 9. not relevant 10. Shri Anand Kumar Agarwal S/o Late Shri Chhotelal, P/o M/s New Alankar Jewellers, Chatarpur. '' '' 11. not relevant 12. Shri Ajay Kumar Agarwal S/o Late Shri Chhotelal, P/o M/s New Alankar Jewellers, Chatarpur. '' '' 13 to 20 not relevant. 5. Thereafter, the Dy. CIT, Jabalpur, issued notice under s. 158BC of the IT Act on 5th June, 2000, and since the notices in all the three cases are in the same language and for the sake of convenience, the notice in the case of Vijay Kumar Agarwal is reproduced as under : "Notice under s. 158BC of the IT Act, 1961 Office of the Dy. CIT, Cir. 2(1), Jabalpur Block period 1st April, 1989 to 31st March, 1999 And from 1st April, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total(Rs.) Total income after order of CIT (Rs.) 1. Vijay Kumar 1,98,330 1,14,500 1,00,000 — — 4,12,830 33,000 2. Ajay Kumar — — 1,00,000 — 30,000 1,30,000 Nil 3. Anand Kumar — — 1,00,000 30,000 — 1,30,000 Nil 10. On appeal, the CIT(A) as per orders dt. 4th April, 2003, deleted the whole of undisclosed income in the cases of Ajay Kumar, Anand Kumar (individuals). 10.1 So far as the case of Vijay Kumar (individual) is concerned, the CIT(A) deleted the whole of the undisclosed income, considered by the AO on account of alleged undisclosed investment in agricultural land and in shop. So far as investment in gold jewellery is concerned, the CIT(A) accepted the gold jewellery weighing 1,001 gms., as disclosed and sustained the addition on account of alleged undisclosed investment in 100 gms. of gold jewellery. The relevant part of the order of CIT(A) reads as under: "I have considered the arguments of the learned Authorised Representative and perused the assessment order. The AO in effect has accepted that according to the appellant's family status to the extent of 500 gms. of jewellery can be treated as ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces issued under s. 158BC of the Act did not indicate the specific status, the general impression entertained by the appellants was that the assessments of block period were being made in the case of partners of M/s New Alankar Jewellers and not of individuals. The counsel further submitted that in view of these facts, the appellants were under the impression that they were called upon to furnish the returns of undisclosed income of HUFs and that was the reason that they had furnished the returns of undisclosed income in the status of HUFs. The counsel further submitted that the AO, having completed the assessments after considering the returns in the status of HUFs, the impression was further strengthened that the assessment orders for block period dt. 30th Jan., 2002, were in cases of partners (HUFs) and the status mentioned in the assessment orders as "individual" was by mistake. According to the learned counsel, this impression was further strengthened from the order of block assessment in the case of the firm itself, wherein the status had been mentioned as "individual" instead of 'registered firm' or 'firm'. 14.1 The learned counsel, therefore, submitted that it was in vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue, have to consider the facts relating to this issue and as have been revealed from the records, which are as under: From the copies of Panchnama, dt. 19th Jan., 2000, copies of notices under s. 158BC of the Act, dt. 5th June, 2000, in all the three cases, the order of the CIT, transferring the jurisdiction under s. 127 of the Act, the returns filed by the partners of the firm, i.e., HUFs, the notices issued under ss. 143(2) and 142(1) of the Act and the assessment orders for block period, which reveal that; (i) Search action was on the basis of search warrant in the names of four persons, namely, Vijay Kumar Saraf, Ajay Kumar Saraf, Anand Kumar Saraf and Ashok Kumar Saraf. (ii) The Panchnama was in the names of Ashok Saraf, Vijay Saraf, Anand Saraf and Ajay Saraf (Agarwal). (iii) Notices under s. 158BC of the Act were issued in cases of individuals and not in cases of HUFs. (iv) Jurisdiction under s. 127 of the Act was transferred in the case of partners of M/s New Alankar Jewellers, who happened to be HUFs and not individuals. (v) Notices under s. 143(2) and 142(1) were issued to the partners of M/s New Alankar Jewellers, i.e., in cases of HUFs and not in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (ii) The second objection raised by the counsel was that the jurisdiction over the firm and its partners' HUFs was transferred by CIT, Jabalpur, from ITO, Chatarpur, to Dy. CIT, Jabalpur and, therefore, the transfer of jurisdiction from Dy. CIT, Jabalpur, to Asstt. CIT, Gwalior, was illegal and bad in law for the following reasons: (a) Under the law, jurisdiction from one station to other station can be transferred only under s. 127 of the Act and, that too, after allowing the assessee opportunity of being heard. But so far as the alleged transfer of jurisdiction from Dy. CIT, Jabalpur to Asstt. CIT, Gwalior, is concerned, neither the assessees were granted an opportunity nor have they been shown any order under s. 127 of the Act passed by the CIT. (b) In the remand report called by the CIT(A) and the assessees' reply thereto, the jurisdiction from Jabalpur to Gwalior seems to have been transferred by Addl. CIT, Gwalior, under s. 120 of the Act, which did not have legal force and for that purpose relied upon a decision of Hon'ble Supreme Court reported in CIT vs. Kurban Hussain Ibrahimji Mithiborwala 1973 CTR (SC) 454 ; (1971) 82 ITR 821 (SC). (iii) The notices issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal, Jabalpur Bench, in the case of Sulochana Devi Jaiswal 32 ITC 41. In support of the above submissions, the counsel for the assessee relied on the following case laws: (i) CIT vs. Kurban Hussain Ibrahimji Mithiborwala (ii) Mohd. Rafiqbhai Ors. vs. Asstt. CIT (2000) 67 TTJ (All) 191 (iii) Empire Estate vs. ITO (1992) 41 ITD 23 (Bom) (iv) T.S. Sujatha vs. Union of India Anr. (1999) 151 CTR (Ker) 29 : (1999) 239 ITR 488 (Ker) (v) Gokul Chand vs. ITO (1995) 125 CTR (All) 146 : (1995) 211 ITR 738 (All) (vi) T.S. Sujatha vs. Union of India Anr. (1998) 149 CTR (Ker) 343 : (1999) 238 ITR 599 (Ker) (vii) Lakshmibai vs. ITO (1972) 86 ITR 804 (Mys) (viii) Balchand Malaiya Ors. vs. CIT (1983) 32 CTR (MP) 128 : (1983) 144 ITR 791 (MP) (ix) K. Madhvan Nambiar vs. WTO (1982) 134 ITR 695 (Ker) (x) Addl. CIT vs. Chunnilal (1979) 11 CTR (All) 240 : (1979) 117 ITR 976 (All) (xi) Shyam Sunder Bajaj vs. ITO (1973) 89 ITR 317 (Cal) (xii) Ravinder Narain vs. ITO (1974) 96 ITR 612 (Del) (xiii) Madanlal Choudhary vs. ITO (1979) 119 ITR 351 (Cal) (xiv) ITO vs. Chandi Prasad Modi (1979) 119 ITR 340 (Cal) (xv) CIT vs. B. Ranga Reddy (1979) 10 CTR (AP) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is respect. I, therefore, am of the opinion that the Asstt. CIT, Gwalior, did not have, in absence of order under s. 127 of the Act, jurisdiction over the cases of the partners of M/s New Alankar Jewellers, which were HUFs or the cases of individuals, namely, Shri Vijay Kumar Agarwal, Ajay Kumar Agarwal and Anand Kumar Agarwal and, therefore, any order passed by Asstt. CIT, Gwalior, in cases of partners of M/s New Alankar Jewellers or in cases of Shri Vijay Kumar Agarwal, Ajay Kumar Agarwal and Shri Anand Kumar Agarwal had to be held to be void ab initio for want of jurisdiction. 24. The assessees' next objection is that the returns had been filed in the status of HUFs, but the assessments have been framed in the status of individuals, which has vitiated the assessments framed in the status of individuals because the AO had no jurisdiction to change the status of the assessee. I, after having considered the factual position, am of the opinion that the Revenue having admitted [as is evident from remand report furnished by the AO before the CIT(A)] that since the search having been carried out in the cases of individuals, and notices under s. 158BC of the Act having been issued in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al position is accepted, the only conclusion is that neither the Dy. CIT, Jabalpur, nor Asst. CIT, Gwalior, had jurisdiction to frame assessments of block period in the cases of individuals—neither under s. 158BC, nor under s. 158BD r/w s. 158BC. Consequently, the assessments framed by the Asstt. CIT, Gwalior, in status of individual in the cases of three individuals on 30th Nov., 2000, are held to be illegal and bad in law and void ab initio for want of jurisdiction. 26. So far as the merits of the issue relating to undisclosed income of Rs. 33,000 raised in the case of Vijay Kumar Agarwal is concerned, I, after having gone through the decision of Tribunal, Jabalpur, in the case of Sulochna Devi, Board's Circular No. 1916, dt. 11th May, 1994, and specially the findings of the CIT(A) himself at pp. 3 and 4 of his order, wherein the issue relating to source of gold jewellery has been discussed, am of the opinion that the CIT(A) has sustained the addition of Rs. 33,000 only for the sake of addition, otherwise, he had completely and validly accepted the source of investment in gold jewellery weighing 1,101 gms. (gross). 26.1 Even otherwise, after having gone through various repl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissed. 33. IT(SS)A No. 30/Agra/2003: In this, Revenue has objected to the order of CIT(A), dt. 4th April, 2003, by way of following grounds: "1. On the facts and in the circumstances of the case, the learned CIT(A) erred in deleting the addition of Rs. 30,000 from block assessment on account of unsatisfactorily explained cash before the AO. 2. On the facts and in the circumstances of the case, the learned CIT(A) erred in deleting the unexplained investment of Rs. 1 lakh from block assessment in purchase of shop by accepting the explanation that it belonged to HUF by whom the return showing such investment was filed belated or was otherwise invalid." 34. On merits, since the assessment framed in the individual status for block period in the case of Shri Anand Kumar Agarwal has been cancelled being bad in law and void ab initio as per order in IT(SS)A No. 18/Agr/2003 of the even date, the Revenue's appeal does not survive and, therefore, the same stands dismissed. 35. Even otherwise, the tax effect in this Revenue's appeal, being less than Rs. 1,00,000, the appeal is considered as having been filed in contravention of CBDT instruction; the same is liable to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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