2007 (11) TMI 697 - HC - Income Tax

Summary

Issues Involved:
The issues involved in this case are:
1) Jurisdiction of Assessing Officer for passing assessment in block period 1986-87 to 1996-97.
2) Failure of Tribunal to consider transactions with M/s Benani for assessment years 1994-95 and 1996-97.

Jurisdiction of Assessing Officer:
The appellant, the revenue, challenged the Tribunal's decision regarding the Assessing Officer's jurisdiction to pass assessment for the block period 1986-87 to 1996-97. The materials were seized during a search at M/s. Esanda Finance Limited's premises, and a subsequent survey was conducted under section 133A of the Act. The Managing Director of the assessee admitted to engaging in fictitious lease transactions to earn commission income. The Tribunal held that the Assessing Officer had no jurisdiction to pass the assessment, which led to the revenue's appeal.

Failure to Consider Transactions:
The Tribunal failed to take into account that transactions with M/s Benani were dated 4-4-1994 and were not offered in the return of income for the assessment year 1994-95. These transactions were only included in the regular returns for the assessment year 1996-97 to circumvent the search and seizure conducted by the Department. This failure to consider the timing of transactions was a key point raised in the appeal by the revenue.

Court's Decision:
The Court noted that the Tribunal had passed the order before the Finance Act, 2002 came into force, which amended the provisions of Section 158B and 158BB of the Income Tax Act. The Court was requested to remand the matter to the Tribunal for re-examination based on the amended provisions. Considering that the appeal was a continuous process of the original proceedings, the Court decided to allow the appeal without delving into the questions of law and remanded the matter to the Tribunal for fresh consideration in accordance with the amended provision of Section 158BB of the Income Tax Act. Consequently, the appeal was allowed.