2015 (4) TMI 406 - HC - Income Tax

Validity of the order u/s 158BD read with section 158BC - precondition for invoking section 158BD is not satisfied as accepted by Tribunal - Held that - The Tribunal applying the language of the sections concerned and the Judgment of Manish Maheshwari vs. Assistant Commissioner of Income Tax 2007 (2) TMI 148 - SUPREME COURT OF INDIA concluded that the principal condition for invoking the provisions was not satisfied. These conclusions holding that the block assessment under section 158BD read with 143(3) of the Income Tax Act 1961 is void ab initio do not raise any substantial question of law. We are not in agreement with Mr. Pinto that the revised questions of law would arise because the Tribunal has refrained from expressing any opinion on merits. It has not set aside the addition made by the Assessing Officer in the case of the Assessee before us nor sustained it. It has simply quashed the proceedings for want of jurisdiction and based on the satisfaction which has to be arrived at as a principal condition within the meaning of section 158BD of the Income Tax Act 1961. Therefore the Tribunal s conclusion has not in any manner prejudiced the Revenue nor affected the other remedies and powers available to it under the Act. It can bring the amounts if any to tax and in the case of the present Assessee by taking recourse of law. Therefore all the more we do not think that the Tribunal s conclusions which are otherwise not perverse or vitiated by any error of law apparent on the face of the record need to be interfered with by us. No substantial question of law. - Decided against revenue.

Summary

Issues:
Challenge to order by Revenue regarding block assessment under Income Tax Act, 1961 for the period April 1996 to January 2003.

Analysis:
The appeal by the Revenue challenged the order of the Income Tax Appellate Tribunal, Mumbai, for the block period assessment years from April 1996 to January 2003. The case involved a survey and seizure operation under section 132 of the Income Tax Act, 1961 at the premises of two companies engaged in real estate dealings. The Assessing Officer concluded that onmoney was received on sale of flats in certain projects, not recorded in the books of account. The block assessment in one company led to proceedings against the other company and the present assessee. The Tribunal was approached with the argument questioning the validity of the proceedings under section 158BD of the Income Tax Act, 1961. In the first round of litigation, the matter was remitted back to the Commissioner for examination. In the second round, the Tribunal found that the principal condition for invoking the provisions was not satisfied, rendering the block assessment void ab initio.

The Tribunal extensively analyzed the rival contentions, the language of the relevant sections, and the facts of the case. Referring to a Supreme Court judgment, it concluded that the principal condition for invoking the provisions of section 158BD was not met, leading to the block assessment being declared void ab initio. The Tribunal's decision did not raise any substantial question of law, as it did not address the merits of the addition made by the Assessing Officer but focused on the lack of jurisdiction in initiating the proceedings under section 158BD.

The Court disagreed with the appellant's argument that revised questions of law should arise due to the Tribunal not expressing an opinion on merits. It noted that the Tribunal's decision did not prejudice the Revenue's ability to bring any amounts to tax through other legal avenues. Therefore, the Court found no reason to interfere with the Tribunal's conclusions, as they were not erroneous or perverse. The appeal was dismissed for lacking merit, with no costs awarded.