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TMI Blog2008 (4) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... ck assessment dt. 30th Sept., 1997 was set aside by the Tribunal, Pune Bench, Pune, vide order dt. 5th March, 2003 in IT(SS)A No. 131/Pn/1997 [reported as Prakash Bhalaji Bafna vs. Asstt. CIT (2004) 82 TTJ (Pune) 667-Ed.]. The AO has stated that the Hon'ble Tribunal has set aside the assessment with a direction to pass fresh assessment order in accordance with the provisions of law after providing adequate reasonable opportunity of being heard to the assessee. Fresh assessment has been made by the AO on 25th Feb., 2005, which according to the assessee, is beyond time-limit provided under s. 153(2A) of the Act, inasmuch as the order of the Tribunal, dt. 5th March, 2003, was sent by registered post to the then CIT-IV, Pune, on 24th March, 2003 which was served upon the CIT-IV, Pune, by 31st March, 2003 in the normal course and as such the concerned assessment should have been completed by the AO before 31st March, 2004 as provided under s. 153(2A) of the Act. In support of the contentions advanced by the learned counsel for the assessee, reliance was placed on the decision of Tribunal, Delhi 'A' Bench, in the case of CIT vs. Hindustan Times Ltd. (1990) 34 ITD 277 (Del) and the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 2B on 30th Dec., 1996. In the block return, the assessee declared undisclosed income at Rs. nil. After examining the facts of the case and after hearing the assessee, the AO prepared a draft block assessment order on 25th Sept., 1997, by determining the total undisclosed income at Rs. 40,44,250, a copy of which was forwarded by the AO to the assessee vide letter No. PN.AC.Cir.3(3)/1997-98 dt. 25th Sept., 1997 with an intimation to the assessee that the assessee may seek an opportunity of being heard before Hon'ble CIT, Prapikar Sadan, 60/61 Erandawane, Karve Road, Pune-411004, at 11.30 a.m. on 26th Sept., 1997. After taking the approval from the aforesaid CIT, the AO completed the block assessment under s. 158BC on 30th Sept., 1997 determining the total undisclosed income of the assessee at Rs. 70,18,180. Being aggrieved with the AO's block assessment order dt. 30th Sept., 1997, the assessee preferred an appeal before the Tribunal. The appeal so filed before the Tribunal was registered as IT(SS)A No. 131/Pn/1997. In this appeal, the Asstt. CIT, Cir. 3(3) was made as the respondent being the AO who passed the block assessment order on 30th Sept., 1997. After hearing both the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal. Therefore, the Registry was very much justified to send the Tribunal's order dt. 5th March, 2003 by R.P.A.D. to the office of the CIT, Karve Road, Pune-411004, who had jurisdiction over the case when the assessment was made by the AO and also when the appeal was filed by the assessee before the Tribunal. Be it also stated here that the CIT, Karve Road, Pune, was the authority, who approved the draft assessment order made by the AO under s. 158BC of the Act. 9. In the light of the provisions contained in sub-s. (3) of s. 254 as it stands after the amendment made by the Finance (No. 2) Act, 1991 w.e.f. 27th Sept., 1991, the Tribunal is required to send a copy of any order passed by it under s. 254 of the Act to the assessee and to the CIT. Rule 35 of the Income-tax (Appellate Tribunal) Rules, 1963 also prescribes the same thing. It is pertinent to note that between 1st April, 1988 and 26th Sept., 1991 under s. 254(3) of the Act, the Tribunal was required to send a copy of any order passed under s. 254 to the assessee and to the Chief CIT or the CIT. As a result of the amendment effective from 27th Sept., 1991 of s. 254(3) by the Finance (No. 2) Act, 1991, the position as it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO, the designation of which is mentioned in the memorandum of appeal unless otherwise modified or amended subsequently by any application filed either by the appellant or by the respondent before the Tribunal. 10. It is also pertinent to note that if the Chief CIT or CIT is aggrieved of any part of the order passed by the Tribunal may file an appeal to the High Court as provided in sub-s. (2) of s. 260A of the Act, and such appeal by the Chief CIT or CIT shall be filed within 120 days from the date on which the order appealed against is received by the Chief CIT or CIT. It is thus clear that for the purpose of computing the limitation period of 120 days for filing the appeal to the High Court by the Department, the relevant date is the date on which the order passed by the Tribunal is received by the Chief CIT or the CIT and not the date on which the order of the Tribunal is received by the concerned AO or the date on which the concerned officer has given effect to the Tribunal's order. What is material is the date on which order of the Tribunal is received by the Chief CIT or the CIT for the purposes of filing an appeal by the Department to the High Court. Similarly, if the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provides that the Tribunal shall send a copy of any order passed by the Tribunal to the assessee and to the CIT. (iv) Sec. 260A(2) and s. 260A(2)(c) provide that the Chief CIT or the CIT may file an appeal to the High Court against any order passed by the Tribunal within 120 days from the date on which the order appealed against is received by the assessee or the Chief CIT or CIT. 11. In the light of the scheme of the Act contained in the aforesaid provisions, it is amply clear that the date of receipt of the appellate order appealed against by the CIT or Chief CIT, as the case may be, is material for the purposes of filing an appeal by the CIT to the Tribunal and by the Chief CIT or CIT to the High Court and for the purposes of computing the period of limitation for filing such appeal. Identical-provisions as analogous to the provisions contained in ss. 253(3) and 260A(2)(a) have been made by the legislature with reference to the time-limit provided for completing the fresh assessment by the AO on its remand either by the CIT(A) or by the Tribunal or by any authority as mentioned in sub-s. (2A) of s. 153 of the Act, and also with reference to the provisions providing for the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with reference to the receipt of the order of the CIT(A) or, as the case may be, the Tribunal, by the CIT or the Chief CIT and not from the date when the appeal effect was given by the AO on the strength of any copy of order otherwise communicated to him either by the assessee or any other means. The relevant portion of the said order is as under: "8.17 We further deem it necessary to take note of the following provisions of the IT Act, which relate to the procedure of appeals to the CIT(A), or the Tribunal and the Hon'ble High Court, and which are necessary to be considered to decide the aforesaid controversy involved in these appeals. Sub-s. (1) of s. 253 provides the provision for filing appeal to the Tribunal by any assessee. Sub-s. (2) of s. 253 makes a provision for filing appeal to the Tribunal by the CIT. Sub-s. (1) of s. 253 begins with the words, 'Any assessee aggrieved by any of the following orders may appeal to the Tribunal against such order.' Sub-s.(2) of s. 253 begins with the words, 'The CIT may, if he objects to any order passed by a Dy. CIT(A) before the 1st day of Oct., 1998 or, as the case may be, a CIT(A) under s. 154 or s. 250, direct the AO to appeal to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sought to be appealed against is communicated to the CIT as provided under main sub-s. (3) of s. 253 of the Act. On a plain reading of sub-s. (3) of s. 254 of the Act, it is clear beyond any doubt that the Tribunal is required to send a copy of any order passed under s. 254 to the assessee and to the CIT, on being aggrieved by any order passed by the Tribunal, the right of filing an appeal to the High Court by the Department has been conferred upon the Chief CIT or the CIT, and such appeal by the Chief CIT or the CIT shall be filed within one hundred and twenty days from the date on which the order of the Tribunal appealed against is received by the Chief CIT or CIT as would be clear from sub-s. (2) of s. 260A of the Act. In s. 275(1)(a), the unequivocal and plain words used by the legislature are 'six months from the end of the month in which the order of the CIT(A) or, as the case may be, the Tribunal is received by the Chief CIT or CIT....' 8.19 Thus, in the light of unambiguous and clear provisions contained in ss. 250(7), 253(2), 253(3), 254(3), 260A and s. 275(1)(a), the expression 'the order of the CIT(A) or, as the case may be, the Tribunal is received by the Chief CIT or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made on any person is made on a person who was not an authorized agent of that person, the service made would be no valid service. Sub-s. (7) of s. 250 and sub-s. (3) of s. 254 provide that the order passed by the CIT (A) or, as the case may be, by the Tribunal shall be required to be communicated or sent to the assessee and to the Chief CIT or the CIT, or to the assessee and to the CIT, respectively so that the assessee and the CIT or the Chief CIT to whom the order is so communicated or sent may, if aggrieved, seek redress in a higher forum by filing an appeal within the stipulated time as per law. The Chief CIT or CIT is only empowered to file an appeal for the Department to the High Court within the stipulated time as provided under s. 260A(2) of the Act, and as such, the order passed by the Tribunal is to be validly served on the CIT in the manner laid down under s. 254(3) of the Act. Unless and until the order passed by the Tribunal is validly communicated to the CIT as required under s. 254(3) of the Act, the time-limit for filing an appeal to the High Court would not begin to run. This analogy would be equally applicable in respect of the order passed by the CIT(A), and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he last information and materials available in the records. Therefore, the date on which the order of the Tribunal was received by the CIT, Karve Road, Pune, would be material for the purpose of computing the period of limitation for passing the fresh assessment order by the AO. 17. In the present case, the assessee has produced a copy of issuing register maintained by the Tribunal showing that the copy of the order was issued on 24th March, 2003 to the CIT, Karve Road, Pune. No material is available on record to show that when the same was actually delivered at the post office for onward delivery to the addressee. However, having regard to the practice followed in the Tribunal, the copy of the order issued on 24th March, 2003 might have been posted either on the same day or otherwise on 25th March, 2003. No direct evidence or materials have been produced before us as to when this order was actually received by the CIT, Karve Road, Pune. The learned counsel for the assessee has submitted that having regard to the normal time taken for delivering the registered letter at the same place of posting, the letter should have been served upon the CIT, Karve Road, Pune, on or before 31st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would expire only on 31st March, 2005 and there would be no much material difference in the time-barring date. We, therefore, reject this ground on the facts of the case by taking the date of service of order as 2nd April, 2003. The ground of limitation thus raised by the assessee is rejected. 18. The next ground relates to determination of undisclosed income at Rs. 41,25,925 by the AO. 19. Following amounts have been treated to be the undisclosed income for the block period by the AO: Undisclosed income as per para 3.1.1 Rs. 2,75,000 Undisclosed income as per para 3.1.2 Rs. 8,250 Undisclosed income as per para 3.1.3 Rs. 16,000 Undisclosed income as per para 3.1.5 Rs. 4,00,000 Undisclosed income as per para 3.1.6 Rs. 2,52,000 Undisclosed income as per para 3.1.7 Rs. 18,73,925 Undisclosed income as per para 3.1.8 Rs. 4,00,000 Undisclosed income as per para 3.1.9 Rs. 9,00,000 ---------------- Rs. 41,25,92,520 ---------------- In this connection, it is pertinent to note that the original assessment order made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee. 27. As regards the addition made in respect of unexplained investment in construction of house property is concerned, this matter also requires further investigation. The comparison of the valuation made by the registered valuer and DVO should be made and exact reasons of the difference should be ascertained. The AO will have to examine both the DVO as well as registered valuer for arriving at proper estimate of cost of construction of house property in question. The AO will also take into consideration the submissions made on behalf of the assessee whether such addition would come within the ambit of undisclosed as defined for the purposes of Chapter XIV-B. 28. On a careful consideration of the entire relevant facts, we are of the considered opinion that the assessment made by the AO should be set aside and the entire matter should be restored back to him for passing fresh order after conducting further probe and detailed investigation in accordance with the provisions of law and after providing a reasonable opportunity to the assessee. The AO may, inter alia, consider the following points while making further probe and investigation in the course of de novo/fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluding the statement of Mr. R.D. Mehta will have to be recorded in the presence of the assessee. However, on going through the present assessment order, we find that the AO did not make any further inquiry or investigation nor the statement of Shri R.D. Mehta was recorded in the presence of the assessee giving an opportunity to the assessee to cross-examine him. The AO has simply repeated the addition by merely saying that the assessee had admitted before the FERA authorities that interpretation of "27.50" is Rs. 2,75,000. The source of Rs. 2,75,000 was not examined by the AO. Further, question as to whether the same can be said to be undisclosed income of the assessee has also not been examined. The AO has not followed the direction given by the Tribunal as mentioned in Tribunal's earlier order dt. 5th March, 2003. In this view of the matter, and at this second round of appeal, we have left no other alternative but to delete the addition which has been made merely on the basis of surmise and conjuncture. The AO should have made a further inquiry and proof as so directed by the Tribunal in its earlier order dt. 5th March, 2003. We, therefore, delete the same. 23. The next addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... house property. This addition has been made on the basis of valuation report given by the DVO. In this connection, the Tribunal directed the AO that the comparison of the valuation made by the registered valuer and the DVO should be made, and exact reasons of the difference should be ascertained. The Tribunal also directed that the AO will have to examine both the DVO as well as registered valuer for arriving at appropriate estimate of cost of construction of house property in question. It was also mentioned by the Tribunal that the AO will also take into consideration the submissions made on behalf of the assessee whether such addition would come within the ambit of undisclosed income as defined for the purposes of Chapter XIV-B of the Act. In the fresh assessment, no such exercise as directed by the Tribunal has been done by the AO. The AO has made this addition merely on the basis of DVO's report. No search material has been pointed out to show and indicate that the assessee made unexplained investment in the construction of the house property. The AO has not brought out any material to show that this addition falls within the ambit of undisclosed income as defined for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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