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TMI Blog2014 (5) TMI 860X X X X Extracts X X X X X X X X Extracts X X X X ..... te may require that the words and expressions be read in conformity with the context. Whether Explanation 2 to Section 158BE can be extended to interpret Section 158B(a) of the Act – Held that:- The opening words of the said Explanation indicate that the same has been introduced for the purposes of creating a legal fiction - This is clear from the use of the words “deemed to have been executed” - The opening words of the said Explanation also clearly indicate that the legal fiction has been introduced for the purposes of removing any doubt with regard to the expression “authorization which is referred to in Section 158BE(1)” - the Legislature did not intend to extend this Explanation for interpreting any other provision except as specifically indicated - the scope of legal fiction in a statute would be confined only for the purposes for which it has been introduced – Relying upon The Supreme Court in the case of Vodafone International Holdings BV v. Union of India [2012 (1) TMI 52 - SUPREME COURT OF INDIA] - the ordinary, natural meaning of the words used u/s 158B(a) need not be departed from - There is no ambiguity in the language - the definition of the expression “Block Peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 003, in proceedings initiated under Section 158BC of the Act. ITA No.321/2012 is an appeal filed by the Commissioner of Income Tax (Revenue) under Section 260A of the Act challenging the order dated 23.12.2010 passed by the Tribunal whereby the Tribunal has reduced the penalty imposed under Section 158BFA(2) of the Act from Rs.15,46,068/- to Rs.1,28,568/-. Since the substratal controversy in the two appeals relates to the proceedings under Chapter XIV-B of the Act, the same have been taken up together. ITA No.765/2010 2. Brief stated, the relevant facts pertaining to ITA No.765/2010 are as follows:- 2.1 The assessee derives commission income from purchase and sale of properties and from the trading of transistor parts. The assessee also worked/works as an informer for Directorate of Revenue Intelligence (DRI). On 15.06.2001, the Central Bureau of Investigation (CBI) conducted a search at different premises which belonged to the assessee and seized cash amounting to Rs.1,12,50,000/-. On 18.09.2001, the Director of Income Tax (Investigation) issued a warrant of authorization under section 132A of the Act to CBI to deliver the books of account, documents and the assets seized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 and the same was also dismissed on 22.01.2010. Aggrieved by the order dated 30.04.2009 passed in IT(SS) No.174/D/2006, the assessee has filed the present appeal (ITA No. 765/2010). 2.7 This court, by an order dated 02.07.2010, framed the following questions of law in ITA No.765/2010:- 1. Whether on the facts and circumstances of the case, the tribunal was justified in law to validly conclude that, block period was 1.4.1996 to 21.03.2003 despite the fact that Section 158BA of the Act specifically provides that block period ends on the date on which, requisition was made under Section 132A of the Act and as such, the correct block period was 1.4.1996 to 18.9.2001? 2. Whether the tribunal was justified to uphold the determination of the undisclosed income of the appellant at Rs.1,14,54,077/- despite the fact that, block period on the facts of the case comprised of the period 1.4.1996 to 18.9.2001 and not block period determined by the tribunal as 1.4.1996 to 21.03.2003? 3. Whether the Income Tax Appellate Tribunal is correct in law in assessing the amount of Rs.22,50,000/- received by the appellant as cash reward from the Directorate of Revenue Intelligence (DRI) as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorization under Section 132A cannot be held to be the date on which requisition under Section 132A was made. It is submitted that, both in law and in fact, there is a difference between the date on which requisition is made and the date on which the authorization for requisition is executed under section 132A of the Act. 5. The learned counsel for the assessee also contended that a sum of Rs.22,50,000/- could not be assessed as undisclosed income as the assessee had declared the same as being a part of the cash rewards aggregating Rs.27,00,000/- received from the DRI. The learned counsel also drew our attention to the affidavit filed by the assessee before the Assessing Officer that indicated the details of the said cash rewards and a certificate issued by Additional Director General confirming payment of a cash reward of Rs.8,00,000/- on 06.04.2000. It was submitted that in view of the said documents, the conclusion of the Assessing Officer that the said sum was unexplained income was perverse. 6. The learned counsel for the Revenue submitted that the requisition mentioned under Section 158B(a) of the Act relates to the date of the execution of the authorization issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 132A is made. It also includes a part of the previous year till the date when the search under section 132 of the Act is conducted or such requisition under section 132A is made. 11. In the present case, the Director of Income Tax (Investigation) issued a warrant of authorization under section 132A of the Act, on 18.09.2001, and the Income Tax Authorities received the books of accounts and other documents on 21.03.2003. On 28.05.2003, the Assessing Officer issued a notice to the assessee under Section 158BC of the Act to file a return of undisclosed income for the block period of 01.04.1996 to 21.03.2003. In response to the aforesaid notice, a return declaring undisclosed income was filed by the assessee. Subsequently, by an order dated 24.03.2005, the Assessing Officer completed the assessment under Section 158BC of the Act. The moot question is whether the Block period should end on 18.09.2001 (i.e. the date of the requisition) or on 21.03.2003 (i.e. the date on which the records were received) 12. The learned counsel for the Revenue has relied upon the decision of a Division Bench of the Allahabad High Court in Chandra Prakash Aggarwal v. Assistant Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorisation referred to in sub-section (1) shall be deemed to have been executed, (a) in the case of search, on the conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued; (b) in the case of requisition under section 132A, on the actual receipt of the books of account or other documents or assets by the Authorised Officer. 14. It is settled law that the words of a statute must be understood in the natural, ordinary sense. Phrases and sentences must be construed according to their grammatical meaning, unless construing the words of a statute as per their ordinary meaning would lead to absurdity. The ordinary meaning of words and expressions may also be discarded where it leads to inconsistencies and repugnancies with the other provisions of the Act. In such circumstances, the context of the statute may require that the words and expressions be read in conformity with the context. 15. The Oxford dictionary defines requisition as The action or an act of formally requiring or demanding that a duty etc. be performed; a written demand of this nature. It is difficult to accept that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meaning, but when one finds that in a statute the Legislature has, in different sections, used the one or the other word, the conclusion is irresistible that the Legislature intended to use the one word in a sense different from the other. 19. The Supreme Court in the case of Commissioner of Income Tax, New Delhi v. East West Import and Export (P) Ltd., Jaipur: (1989) SCC 1 760, observed as under:- There is abundant authority to support the stand of the counsel for the revenue that when the situation has been differently expressed the legislature must be taken to have intended to express a different intention. 20. Following the rule of interpretation as applied by the courts in the aforesaid decisions and on a plain reading of Section 158B(a) and Explanation 2 to Section 158BE, one would have difficulty in accepting that the expression requisition was made must be read to mean the same as authorizations for requisition was executed . Notwithstanding, our reservations in reading two expressions in a given statute in the same manner as pointed out above, it must be accepted that in given cases it may be necessary to read different expression to convey the same meaning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the fiction is created, but in construing the fiction it is not to be extended beyond the purpose for which it is created, or beyond the language of section by which it is created. 22. Keeping the aforesaid in view, we must also examine whether, in the context of the scheme under Chapter XIV-B of the Act, the said Explanation ought to be extended to interpret the meaning of Block Period as defined under Section 158B(a) of the Act. In this regard, it would be relevant to observe that the provision of Section 158BE(1) of the Act relates to the period of limitation within which the order of block assessment must be passed under Section 158BC of the Act. The purpose of Section 158BE(1) of the Act is to specify sufficient time within which the Assessing Officer is expected to complete the exercise of assessment pursuant to the material that has been found against the assessee. The date on which the Assessing Officer comes into possession of the assets and books of accounts of the assessee, would be relevant for determining the said period. An Assessing Officer cannot be expected to proceed and conclude the exercise of assessment in absence of the requisite records, documents and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There is, first of all, no ambiguity in the language. Secondly, the definition of the expression Block Period as understood by the plain language of Section 158B(a) also conforms to the scheme of Chapter XIV-B of the Act. We, therefore, find no reason to read the expression requisition was made to not mean the date on which the authorized officer made the requisition but to mean the date when he received the records/assets pursuant thereto. 26. The decision of the Allahabad High Court in Chandra Prakash Aggarwal (supra), is not in the context of the question that has been raised in the present appeal. The question raised in that matter was with regard to the jurisdiction of an Assessing Officer to issue a notice under Section 148 of the Act prior to the receipt of books of accounts/ assets of an assessee in respect of whom a requisition under Section 132A had been made. We are unable to concur with the view that requisition can be stated to be made only when the records/assets are received. 27. The counsel for the Revenue had also relied upon the judgment of the Madras High Court in the case of Lakshmi Jewellary v. Deputy Commissioner of Income Tax: (2001) 252 ITR 712, i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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