Ita 1201/09 & Conn v. Ita 1201/09 & Conn

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN TUESDAY, THE 10TH DAY OF JANUARY 2012/20TH POUSHA 1933 ITA.No. 1201 of 2009 ( ) ------------------------AGAINST ORDER DATED 09/05/2008 IN ITA.215/2005 ofI.T.A.TRIBUNAL,COCHIN BENCH APPELLANT(S)/APPELLANT: ---------------------- THE COMMISSIONER OF INCOME TAX, COCHIN. BY ADVS.SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S):/ RESPONDENTS -------------- M/S.BIMBIS SOUTH STAR, SHANMUGHAM ROAD, ERNAKULAM. BY SRI.T.M.SREEDHARAN (SR.) SRI.V.P.NARAYANANSMT.NISHA JOHN SMT.BOBY M.SEKHAR THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 10-01-2012, ALONG WITH ITA.NOS.1218,1268 & 1311 OF 2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: 10-01-2012, ALONG WITH ITA.NOS.1218,1268 & 1311 OF 2009, ITA NO.1201/2009 APPENDIX APPELLANT'S EXHIBITS ANNEXURE-A :COPY OF ASSESSMENT ORDER DATED 23/03/2001 FOR THEBLOCK PERIOD FROM 01/04/1988 TO 10/03/1999. ANNEXURE-B :COPY OF ORDER DATED 28/09/2005 OF THECOMMISSIONER OF INCOME TAX (APPEALS). ANNEXURE-C :COPY OF ORDER DATED 09/05/2008 OF THE INCOME TAXAPPELLATE TRIBUNAL, COCHIN BENCH IN IT (S&S) A NO.215/COCH/2005. //TRUE COPY// jg PA TO JUDGE. C.R. C.N.RAMACHANDRAN NAIR, &K.VINOD CHANDRAN, JJ. .................................................................... I.T. Appeal Nos.1201,1218,1268 & 1311 of 2009 ....................................................................Dated this the 10th day of January, 2012. JUDGMENT Ramachandran Nair, J. The two sets of appeals pertain to two assessees, one by nameM/s.Bimbis South Star and the other by name M/s.Khyber Foods, bothassessed based on search conducted under Section 132 of the IncomeTax Act. Even though there is only one assessment, the two appealshappened to be filed in the case of two assessees only because both theRevenue as well as the assessee were in appeal before the Tribunal.We have heard Senior counsel Sri.P.K.R.Menon appearing for theRevenue and Senior counsel Sri.T.M.Sreedharan appearing for therespondent. 2. The only question raised is whether the Tribunal was justifiedin holding that the assessments were invalid for the reason that searchwarrant issued in Form 45 was invalid. The contention of Seniorcounsel for the Revenue is that assessee never had a case on thevalidity of assessments except at the Tribunal stage when the assessee ITA 1201/09 & conn raised additional grounds in second appeals contending that warrantsissued in the name of group concerns is invalid. The assessees insupport of their contention against validity of assessment heavily reliedon the order issued by the Tribunal in the case of a group of relatedassessees namely, P.C.Roy, Jose Kurian and others commonly calledCARBO Group of concerns, the assessments of whom were alsocancelled by the Tribunal on the ground that search warrant issued wasin the name of group concerns with names of the assessees separatelystated therein. Senior counsel for Revenue has relied on DivisionBench decision of this court in JOSE CYRIAC Vs. COMMISSIONEROF INCOME TAX reported in (2011) 336 ITR 241 wherein this courtreversed the said order of the Tribunal relied on by them in allowingthe assessee's claim in these cases. Since the Tribunal has relied ontheir own order which stands now reversed by judgment of this courtabove referred, the appeals filed by the Revenue have to be necessarilyallowed by vacating the orders of the Tribunal and with direction to theTribunal to decide the appeals on merits. However, since counsel for ITA 1201/09 & conn ITA 1201/09 & conn the respondent has raised a contention about the maintainability, wehave to necessarily examine the nature of the infirmity pointed out inthese cases. In this regard we called for copies of the warrants issuedin Form No.45 and also the Panchanamas prepared. It is seen thatsimultaneous search was made based on warrants issued under Section132 in three premises on 10.3.1999. One of the premises searchedunder the warrant issued consist several establishments in the samebuilding under the names Bimbis Fast Food, Bimbis Ice Cream, KhyberHayath (sadhya) and Lala Fast Food. So far as the search conducted inthese buildings at DH Road, Jose Junction, Ernakulam, is concerned,we notice that after writing in the warrant in Form 44 that theestablishment to be searched is “Bimbis Group of Concerns”, it isspecifically stated that the premises to be searched are as follows“Bimbis, D.H.Road, Jose Junction, Cochin, with concerns such asBimbis Fast Food, Bimbis Ice Cream, Khaiber Hayath (sadhya) andLala Fast Food. Admittedly all these concerns are housed in one andthe same building and the department proceeded to search the premises ITA 1201/09 & conn as it is a group of concerns with common store room and commonfacilities. It is also pertinent to note from the search records producedby the department that food bills raised against the customers byKhyber Hayath (sadhya) restaurant and Bimbis Fast Food show thesame telephone number 382357, which intrinsically prove that all theconcerns are owned and managed by same party, though under separategroup names and concerns for the purpose of income tax benefits. Ongoing through the Tribunal's order we notice that Tribunal has takenonly one line from the warrant wherein the premises to be searched isstated as Bimbis Group of concerns and the Tribunal has not cared tonote the individual names of assessees mentioned in the warrant whichare extracted by us above. It is also seen that all the Panchanamas aftersearch were received by the common person by name P.A.AbdulGafoor, Manager of the concern. During search it was also noticed thatall the group concerns had common store in the same building. It isseen that simultaneously on 10.3.1999 itself the Managing Partner'shouse as well as another premises of the Bimbis functioning in another ITA 1201/09 & conn place at Ernakulam was also searched based on separate warrants. Somuch so, what we notice is that a common warrant is issued forsearching several assessees functioning as a connected group in thesame building and wherever the assessees were to be searched in otherbuildings, separate warrants were issued. We, therefore, find that thesearch is carried out strictly by following the procedure containedunder Rule 112 and by issuing warrant by giving the names of each andevery assessee separately after describing all of them as “BimbisGroup of Concerns”. Further, when notice after search was issued,each and every assessee without any objection filed return andcontested the assessment on merit. In the first appeal stage also theyhad no contention that block assessments were invalid for want ofseparate warrants in the case of each and every assessee. However, atthe second appeal stage the assessees raised the contention thatwarrants were defective and the Tribunal without even reading theentries in the warrant in the prescribed form, upheld the claim ofassessees. In exactly similar circumstances we decided the above ITA 1201/09 & conn referred reported case by reversing the order of the Tribunal upholdingthe validity of assessments and by directing the Tribunal to decide theappeal on merits. Since the Tribunal has followed their order inallowing assessee's claim which stands now reversed, we allow theseappeals by setting aside the orders of the Tribunal and by restoring theappeals back to the Tribunal for decision on merits. Sd/-C.N.RAMACHANDRAN NAIRJudge Sd/- K.VINOD CHANDRANJudge True copy P.S. to Judge pms