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TMI Blog2014 (11) TMI 607X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of the Sree Gokulam Chits and Finance Company Limited was proceeded under Section 158BC of the Act - It is only on the basis of the block assessment of the person with respect to whom search was made under Section 132 of the Act, proceedings under Section 158BD of the Act in respect of any other person can be initiated - the provisions of Sections 158BD and 158BC are intertwined - the jurisdiction to issue notice u/s 158BD of the Act to any person, other than the person with respect to whom search was made, and the consequent time limit prescribed under Section 158BE of the Act in respect of third parties, would certainly be included within the two years period given to the AO for completion of block assessment under section 158BE(1) of the Act - When such an inference can be drawn from a bare reading of the provisions which are explicit, it does not lie in the mouth of the Revenue to state that there is no time limit prescribed in the statute for initiation of proceedings under Section 158BD of the Act – in Commissioner of Income Tax v. Umesh Chandra Gupta [2014 (2) TMI 521 - DELHI HIGH COURT] also the same has been held – as such no substantial question of law arises for cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law: Whether, on the facts and in the circumstances of the case, the Tribunal was right in quashing the order under Section 263 of the Act when the assessee has not produced any evidence for claiming 50% of commission receipt as expenditure to earn such commission income? 3. T.C.(A) Nos.651 and 652 of 2014 are filed calling in question the order of the Income Tax Appellate Tribunal 'C' Bench, Chennai, dated 21.3.2013 made in I.T.(SS) A.Nos.10/Mds/2012 and 19/Mds/2012 for the block assessment years 1991-1992 to 2001-2002, raising the following questions of law: T.C.(A) No.651 of 2014: Whether, on the facts and in the circumstances of the case, the Tribunal was right in quashing the order under Section 263 of the Act when the assessee has not produced any evidence for claiming 50% of commission receipt as expenditure to earn such commission income? T.C.(A) No.652 of 2014: (i)Whether, on the facts and in the circumstances of the case, the Tribunal was right in quashing the block assessment order on the ground that the block assessment notice under Section 158BD was issued beyond the time prescribed? (ii)Whether, on the facts and in the circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s.247 and 248 of 2014: 4.5.1. The assessee challenged the ex parte order dated 29.5.2009 by way of appeal before the Commissioner of Income Tax (Appeals) contending that notice under Section 158BD of the Act was issued beyond two years period of completion of assessment under Section 158BC of the Act in the case of Sree Gokulam Chits and Finance Company Limited and, therefore, the present proceedings are time barred. 4.5.2. Pending the said appeal, the appellant (Commissioner of Income Tax, Central I, Chennai) reviewed the assessment order dated 29.5.2009 on the ground that deducting 50% of commission receipts as incidental expenditure incurred by the assessee is erroneous and prejudicial to the interest of the Revenue. By order dated 30.3.2012, the appellant set aside the assessment order dated 29.5.2009 and directed the Assessing Officer to redo the assessment after affording an opportunity to the assessee. Aggrieved by the order dated 30.3.2012 passed under Section 263 of the Act, the assessee filed an appeal before the Tribunal in I.T.(SS) A.No.14/Mds/2012. 4.5.3. In the appeal preferred by the assessee against the assessment order dated 29.5.2009, the Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educting 50% of commission receipts as incidental expenditure incurred by the assessee is erroneous and prejudicial to the interest of the Revenue. By order dated 30.3.2012, the appellant set aside the assessment order dated 29.5.2009 and directed the Assessing Officer to redo the assessment after affording an opportunity to the assessee. 4.7.3. Pursuant to the said order passed by the Commissioner of Income Tax on 30.3.2012, the Assessing Officer, by order dated 20.3.2013, passed an assessment order under Sections 263 and 158BD read with Section 144 of the Act treating the entire amount of commission received by the assessee as undisclosed income. 4.7.4. Aggrieved by the order dated 30.3.2012 passed under Section 263 of the Act, the assessee filed an appeal before the Tribunal in I.T.(SS) A.No.10/Mds/2012 and challenging the order dated 9.3.2012 passed by the Commissioner of Income Tax (Appeals), the revenue filed I.T.(SS) A.No.19/Mds/2012. 4.7.5. The Tribunal, by order dated 21.3.2013, allowed the appeal of the assessee and dismissed the appeal filed by the revenue. 4.7.6. Challenging the said order, the revenue has filed appeals in T.C.(A) Nos.651 and 652 of 2014 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtwined. In other words, the jurisdiction to issue notice under Section 158BD of the Act to any person, other than the person with respect to whom search was made, and the consequent time limit prescribed under Section 158BE of the Act in respect of third parties, would certainly be included within the two years period given to the Assessing Officer for completion of block assessment under section 158BE(1) of the Act. When such an inference can be drawn from a bare reading of the provisions which are explicit, it does not lie in the mouth of the Revenue to state that there is no time limit prescribed in the statute for initiation of proceedings under Section 158BD of the Act. 10. The above said view of this Court is fortified by a decision of the Delhi High Court in Commissioner of Income Tax v. Umesh Chandra Gupta, [2014] 362 ITR 1, wherein it is held as under: The period of limitation in respect of the primary individual, i.e., the searched person is controlled by section 158BE(1) which is subject to well defined exceptions under Explanation (1) to that provision. If the Revenue's logic were to prevail, while the authority to carry out assessment in the case of third p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , (2011) 333 ITR 281, Senior counsel for the respondent-assessee submitted that the Assessing Officer was bound to initiate simultaneous proceedings under Section 158BD against the respondent-assessee i.e. along with Section 158BC assessments initiated against the group of concerns searched by the department. Senior counsel for the Revenue submitted that there is no time limit prescribed under the Act for issuance of notice under Section 158BD and according to him, the Assessing Officer has to first complete the assessment that gets time barred first and then proceed to make assessment under Section 158BD later. Besides finding force in this contention, we also feel that it is only on completion of assessment under Section 158BC on the searched assessee the Assessing Officer can conclude that the remaining income in respect of which details were collected during search could be assessed in the hands of other assessees. In fact, bifurcation of income relating to searched assesses and income relating to others will be clear only after determining the income of the searched assessees. So much so, in our view, a prudent officer should first complete assessment under Section 158BC on se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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