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2017 (10) TMI 1009 - HC - Income TaxScope of Appeal & The Powers of Appellate Authority - Held that - Under the amended section 251 of the Act, the Appellate Commissioner may confirm, reduce, enhance, or annul the assessment. But he cannot refer the case back to the Assessing Officer for making a fresh assessment; nor can he direct the Officer to decide in accordance with his directions. Records and Satisfaction under Section 158BD - period of limitation - Held that - Supreme Court in Manish Maheshwari v. CIT (2007 (2) TMI 148 - SUPREME COURT OF INDIA) has held that section 158-BD provides for taking recourse to a block assessment in terms of Section 158-BC regarding any other person, the conditions precedent for that are (i) satisfaction must be recorded by the assessing officer that any undisclosed income belongs to any person, other than the person regarding whom search was made under Section 132 of the Act; (ii) the books of accounts or other documents or assets seized or requisitioned had been handed over to the assessing officer having jurisdiction over such other person; and (iii) the assessing officer has proceeded under Section 158-BC against such other person. Because of the authoritative assertion of the legal principles in Manish Maheshwari about section 158 BD, we may obviate any reference to Panchajanyam, whose holding turns on its own facts. The upshot of the discussion is that the assessment order, dt.28.07.2005, is vitiated. The statutory requirement for completing the block assessment under section 158BE(2)(b) is two years from the end of the month in which the notice under this Chapter was served on such other person in respect of search initiated or books of account or other documents or any assets are requisitioned on or after the 1st day of January 1997. Determining the limitation under section 158BE (2)(b) of the Act, the Madras High Court in Commissioner of Income Tax vs. K.M. Ganesan 2009 (11) TMI 572 - Madras High Court has held that if the notice is given first under section 158BC and then correctly given under section 158BD, the limitation runs from the date of first notice. Here, the search under section 132 of the Act was conducted on 04.11.2000; the notice under section 158BC was issued on o8.06.2001. The proceedings were concluded on 28.07.2005, when the Assessing Officer passed the order. The notice under section 158BC of the Act, as is seen, was given way beyond two years ago. Even going by that reckoning, the whole proceedings have been barred by limitation. So, we hold that the impugned order, dt.04.06.2008, of the Appellate Tribunal is unexceptionable and unassailable. The questions of law, therefore, are answered against the Revenue and in favour of the assessee.
Issues Involved:
1. Jurisdictional and procedural correctness of the assessment under section 158BD. 2. Validity of the Tribunal's findings on the properties and income. 3. Authority of the Appellate Commissioner to remand the case. 4. Compliance with the statutory limitation period for completing the block assessment. Issue-wise Detailed Analysis: 1. Jurisdictional and Procedural Correctness of the Assessment under Section 158BD: The Tribunal focused heavily on jurisdictional, procedural, and technical issues rather than the merits. The search conducted on 4 November 2000 at Premkumar's residence by both the Department and CBI led to proceedings under section 158BC of the Act. However, the Appellate Commissioner ruled that the proceedings should have been initiated under section 158BD, which concerns undisclosed income belonging to a person other than the one searched. The Assessing Officer reassessed the case under section 158BD but did not record satisfaction that the disclosed income at the hands of Muhammed Rafeeque actually belonged to Premkumar. The Tribunal found that the Assessing Officer did not independently initiate the section 158BD assessment but acted on the Appellate Commissioner’s directive, which the Tribunal deemed improper. 2. Validity of the Tribunal's Findings on the Properties and Income: The Tribunal found that only two out of nine immovable properties were in the assessee’s name, and the movable properties belonged to family members who were individual assessees. Regarding the income, the Tribunal noted that all records were seized by the CBI, not the Department, and the "Binani Zinc Diary" should not have been used as evidence for the block assessment. The Tribunal concluded that the Department found no material to hold that the assessee had any professional income from MACT cases, and the undisclosed income was not related to the person searched but belonged to another person. 3. Authority of the Appellate Commissioner to Remand the Case: The Appellate Commissioner directed the Assessing Officer to reassess under section 158BD, which was contested. The Tribunal and the High Court noted that the Appellate Commissioner’s power to remand was removed by the Finance (No. 2) Act, 2014, aiming to avoid prolonged litigation and finalize assessments early. The High Court cited multiple precedents, including Dhirendra Nath Gorai v. Sudhir Chandra Ghosh and Commissioner of Income Tax v. Jolly Fantasy World Ltd., to establish that jurisdictional provisions cannot be waived and that the Appellate Commissioner acted beyond his powers by remanding the case and directing reassessment under a specific provision. 4. Compliance with the Statutory Limitation Period for Completing the Block Assessment: The statutory requirement under section 158BE(2)(b) mandates completing the block assessment within two years from the end of the month in which the notice was served. The search was conducted on 4 November 2000, and the notice under section 158BC was issued on 8 June 2001. The proceedings concluded on 28 July 2005, well beyond the two-year limitation period. The High Court found that the entire proceedings were barred by limitation, rendering the assessment invalid. Conclusion: The High Court upheld the Tribunal's decision, finding no fault in its approach. The Tribunal’s quashing of the 158BD assessment was based on jurisdictional and procedural grounds, and the assessment order dated 28 July 2005 was found vitiated and barred by limitation. The appeal was dismissed, and the questions of law were answered against the Revenue and in favor of the assessee.
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