Commissioner Of Income-Tax, Faridabad v. M/S Sanwaria Banquets (P) Ltd

Income-tax Appeal No.492 of 2010 **** IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH Income-tax Appeal No.492 of 2010Date of decision: 14.2.2011 Commissioner of Income-Tax, Faridabad ...Appellant Versus M/s Sanwaria Banquets (P) Ltd. ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Ms. Urvashi Dhugga, Sr. Standing Counsel for the appellant. **** ADARSH KUMAR GOEL, J ( Oral). 1.This order will dispose of Income Tax Appeals No.492and 443 of 2010 as both the appeal involve common questions. 2.ITA No.492 of 2010 has been preferred by the revenueunder Section 260A of the Income Tax Act, 1961 (for short “the Act”)against the order dated 4.9.2009 of the Income Tax AppellateTribunal, Delhi Bench 'G', Delhi in I.T.A. No.95/Del/2008 for the blockassessment period 1.4.1990 to 3.8.2000 raising followingsubstantial questions of law:- “i)Whether on the facts and in the circumstance of thecase, the ld. ITAT was right in law in holding that thenotice u/s 158BD issued on 23.9.2004 is beyond reasonable time from the date of completion of theblock assessment in the case of searched persons,therefore, on the limitation ground, the proceedingsinitiated u/s 158BD are invalid and are thus, liable tobe cancelled even though there is no time limitprescribed for issuing notice u/s158 as per section158BD read with section 158BC of the Income TaxAct, 1961? ii) Without prejudice to the question No.(I) above,whether, the ld. ITAT was right in law in holding thatthe proceedings initiated u/s 158BD are invalid andare thus liable to be cancelled on the limitationground though section 292B of the Income Tax Act,1961 specifically provides that no proceeding underIncome Tax Act, 1961 shall be invalid or shall bedeemed to be invalid by reason of any mistake,omission or defect in a notice?iii)Whether on the facts and in the circumstancesof the case, the ld. ITAT was right in law in notadjudicating the other grounds i.e. satisfy therequirement of section 158BD in holding that sincethe notice u/s 158BD has been held to be beyondtime rendering it invalid and not confirming the orderof the Assessing Officer? iv) Whether on the facts and in the circumstances of the case, the ld. ITAT has erred in dismissing theappeal of the revenue and upholding the order ofCIT(A) that the proceedings u/s 158BD wereinitiated without properly recording the satisfactionas required under that section disregarding the factthat the Assessing officer, New Delhi havingjurisdiction over the searched person i.e. Shri ManojAggarwal and M/s Friends Portfolio (P) Ltd. vide hisletter No.181 dated 6.8.2003 has communicated hissatisfaction to the Assessing Officer of this case(Annexure-A enclosed) and also in assessmentorder itself in the case of an M/s Friends Portfolio(P) Ltd. mentioned that unexplained deposits in itsbank account relate to various persons who havetaken accommodation entries and to protect theinterest of revenue, he added the same to theincome of the company i.e. and Friends Portfolio (P)Ltd., on protective basis?” 3.Block assessment proceedings were initiated against theassessee on account of material found during the search on theresidential and office premises of Manoj Aggarwal and his associatesM/s Friends Portfolio P Ltd. on 3.8.2000. During the assessment ofthe searched person which was completed on 29.8.2002, it wasnoticed that Manoj Aggarwal was engaged in giving bogusaccommodation book entries and the persons to whom such entries 3.Block assessment proceedings were initiated against theassessee on account of material found during the search on theresidential and office premises of Manoj Aggarwal and his associatesM/s Friends Portfolio P Ltd. on 3.8.2000. During the assessment ofthe searched person which was completed on 29.8.2002, it wasnoticed that Manoj Aggarwal was engaged in giving bogusaccommodation book entries and the persons to whom such entries were given included the assessee. On requisite satisfaction havingbeen formed, the concerned assessing officer was informed whogave notice and initiated block assessment proceedings. Theassessing officer found that assessee had undisclosed income whichwas shown as proceeds of sale of shares through M/s FriendsPortfolio P Ltd. The transactions were bogus and infact amount wasreceived by way of accommodation entries which representedundisclosed income of the assessee. On appeal, the CIT(A) setaside the additions without going into merits only on the ground thatnotice under Section 158BD was beyond reasonable time afterformation of satisfaction during assessment of searched person anddid not give the requisite period of 15 days as required under Section158BD. It was further held that the said notice was issued withoutproperly recording the satisfaction. The said view has been affirmedby the Tribunal. 4.Learned counsel for the revenue points out that in theorder passed today in ITA No.158of 2010 (Commissioner ofIncome-Tax, Faridabad Vs. M/s Om Parkash and sons) it hasbeen held in identical circumstances that the notice under Section158BD could not be held to be beyond reasonable time and requisitesatisfaction had been formed. Similarly in ITA No.558 of 2006(Commissioner of Income-Tax, Faridabad Vs. Navin Verma)decided on 1.2.2011, it has been held that if period specified innotice under Section 158BD was less than 15 days, the proceedingscould not be held to be nullity in absence of prejudice to the assessee. Learned counsel for the revenue, thus, submits that thequestions raised in both these appeals are fully covered by orders ofthis Court and the appeals deserve to be allowed. This being theposition, we do not consider necessary to issue notice to theassesses since we are remanding the matter to the CIT(A) for freshdecision in accordance with law after hearing the assesses. 5.Accordingly, both the appeals are allowed and impugnedorders are quashed. The matters are remanded to the CIT(A) forfresh decision in accordance with law. Since this order is beingpassed without notice to the assesses in the light of orders of thisCourt, we make it clear that if the assesses are aggrieved by thisorder, they will be at liberty to move this Court. (Adarsh Kumar Goel) Judge February 14, 2011Pka (Ajay Kumar Mittal) Judge