CIT, CHANDIGARH vs. SHAKUNTLA DEVI

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ITA/694/2008HC Punjab & HaryanaPHHC01080710200803 September 2014Author: MR. JUSTICE SURINDER GUPTA,MR. JUSTICE DR. RAVI RANJAN4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court found that the issue required to be decided afresh in light of the judgments of the Supreme Court in M/s Calcutta Knitwears Ludhiana and the High Court's own decision in M/s Om Parkash and Sons. Consequently, the High Court set aside the impugned order of the ITAT dated 27.11.2007 and remitted the matter back to the ITAT. The ITAT was directed to decide the appeal afresh in accordance with law after affording an opportunity of hearing to the parties. The High Court did not decide the substantial question of law on merits but remanded the case for reconsideration based on the cited precedents.

What were the facts?

The Revenue (Commissioner of Income Tax-I, Chandigarh) appealed against an order of the Income Tax Appellate Tribunal (ITAT) dated 27.11.2007. The ITAT had allowed an appeal filed by the assessee, Smt. Shakuntla Devi, for the block period 1.4.1985 to 17.7.1995. The ITAT held that the Assessing Officer's assumption of jurisdiction to make an assessment under Chapter XIV-B was vitiated in law. This was because the notice under section 158BD read with section 158BC of the Income Tax Act, 1961, was issued on 13.9.1996, while the satisfaction note under section 158BD was dated 10.9.1996 and referred to assessments completed on 30.7.1996 in the cases of M/s Chandigarh Steel Products and Shri Anil Gupta, who were searched under section 132(1). The Revenue's appeal to the High Court challenged the ITAT's finding regarding the timing of the satisfaction note.

What were the issues?

1. Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was right in drawing a conclusion that the satisfaction under section 158BD of the IT Act has to be recorded before the completion of assessment under section 158BC of the I.T.Act? Assessee's contentions: The judgment does not record specific contentions for the assessee. However, the ITAT's order, which was upheld by the High Court in setting aside and remanding, found that the satisfaction under section 158BD was recorded after the completion of assessments in related cases, vitiating the jurisdiction. Revenue's contentions: The Revenue argued that the ITAT's judgment was contrary to the High Court's decision in CIT, Faridabad vs. M/s Om Parkash and Sons (ITA No.147 of 2010) and the Supreme Court's decision in CIT III vs. M/s Calcutta Knitwears Ludhiana (Civil Appeal No.3958 of 2014). The Revenue relied on the Supreme Court's observation that a satisfaction note under section 158BD is sine qua non and can be prepared at various stages, including immediately after the assessment proceedings under section 158BC of the searched person are completed. Based on these pronouncements, the Revenue requested a remand to the Tribunal for a fresh decision.

Which sections of the Income-tax Act were involved?

Section 260A,Section 132,Section 158BC,Section 158BD

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision: 03.09.2014 The Commissioner of Income Tax- I, Chandigarh ……Appellant Vs. Smt. Shakuntla Devi …..Respondent CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTAL HON’BLE MR. JUSTICE FATEH DEEP SINGH Present: Ms. Urvashi Dhugga, Advocate for the appellant. Mr. M.R.Sharma, Advocate for the respondent.

Ajay Kumar Mittal,J.

1.

This appeal has been preferred by the revenue under section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 27.11.2007, Annexure A.2 passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'B' (in short, “the Tribunal”) in ITA No.1227/Chandi/1996 for the block period 1.4.1985 to 17.7.1995, claiming following substantial question of law:- “Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was right in drawing a conclusion that the satisfaction under section 158BD of the IT Act has to be recorded before the completion of assessment under section 158BC of the I.T.Act?”

3.

Briefly, the facts necessary for adjudication of the controversy GURBAX SINGH 2014.10.07 12:21 I attest to the accuracy and integrity of this document High Court Chandigarh involved as narrated in the appeal may be noticed. Search under section 132 (1) of the Act was conducted at the business premises of M/s Chandigarh Wires Pvt. Limited, the residence of its Director Shri Anil Gupta, business premises of M/s Chandigarh Steel Products and its proprietor Shri Sunil Gupta in July/August 1995. In the case of the assessee, the Assessing Officer issued notice under section 158BC read with section 158BD of the Act on 13.9.1996 calling upon the assessee to furnish a return of income for the block period 1.4.1985 to 17.7.1995. The Assessing officer thereafter determined the undisclosed income of the assessee for the block period at ` 1,39,96,007/- vide assessment order dated 28.10.1996, Annexure A.

1.

Aggrieved by the order,the assessee filed appeal before the Tribunal. Vide order dated 27.11.2007, Annexure A.2, the Tribunal allowed the appeal holding that the assumption of juri iction by the Assessing officer to make the impugned assessment under Chapter XIV B by issuance of notice under section 158BD read with Section 158BC dated 13.9.1996 was vitiated in law. The Tribunal observed that notice under section 158BC read with section 158BD of the Act was issued on 13.9.1996 and the satisfaction dated 10.9.1996 which referred to the assessments made under section 158BC of the Act in the case of M/s Chandigarh Steel Products and Shri Anil Gupta were dated 30.7.1996. It was also mentioned that the purported satisfaction under section 158BD of the Act had been recorded after the completion of assessments in the case of persons who were searched under section 132(1) of the Act. Hence the instant appeal by the revenue.

4.

We have heard learned counsel for the parties and perused the record. GURBAX SINGH 2014.10.07 12:21 I attest to the accuracy and integrity of this document High Court Chandigarh

5.

Learned counsel for the appellant-revenue submitted that the judgment of the Tribunal is contrary to the decision of this Court in Commissioner of Income Tax, Faridabad vs. M/s Om Parkash and Sons, ITA No.147 of 2010 decided on 14.2.2011. It was also urged that the Apex Court recently while delving into identical issue, in Commissioner of Income Tax III vs. M/s Calcutta Knitwears Ludhiana, Civil Appeal No.3958 of 2014 (arising from Special Leave Petition (C) No.10542 of 2011) decided on 12.3.2014 observed as under:- “47. In the result, we hold that for the purpose of section 158BD of the Act a satisfaction note is sine qua non and must be prepared by the assessing officer who has juri iction over such other person. The satisfaction note could be prepared at either of the following stages: (a) at the time of or alongwith the initiation of proceedings against the searched person under section 158BC of the Act; (b) along with the assessment proceedings under section 158BC of the Act; and (c) immediately after the assessment proceedings are completed under section 158BC of the Act of the searched person.” On the aforesaid premises,it was submitted that the matter be remanded to the Tribunal with a direction to decide the same afresh in the light of observations made in the aforesaid pronouncements.

6.

Learned counsel for the respondent could not seriously dispute that the matter requires to be adjudicated in the light of the aforementioned judgments.

7.

After hearing learned counsel for the parties, we find that the issue requires to be decided afresh in the light of the judgments of the Apex Court in M/s Calcutta Knitwears Ludhiana and this Court in M/s Om Parkash and sons's cases (supra). Accordingly, we set aside the impugned GURBAX SINGH 2014.10.07 12:21 I attest to the accuracy and integrity of this document High Court Chandigarh order dated 27.11.2007, Annexure A.2 passed by the Tribunal and remit the matter back to it to decide the same afresh in accordance with law after affording an opportunity of hearing to the parties. (Ajay Kumar Mittal) Judge September 03, 2014 (Fateh Deep Singh) Judge ‘gs' GURBAX SINGH 2014.10.07 12:21 I attest to the accuracy and integrity of this document High Court Chandigarh

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