GURU ASHISH SHIP BREAKERS vs. ASSISTANT COMMISSIONER OF INCOME TAX

Facts

The assessee, Guru Ashish Ship Breakers, is a firm regularly assessed to tax. A search and seizure under Section 132 of the Income Tax Act, 1961, was conducted on June 30, 1999. Following this, an assessment order was passed by the Assessing Officer under Section 158BD on June 27, 2001, determining total undisclosed income for the block period April 1, 1989, to June 30, 1999, at Rs. 1,41,14,952. The assessee appealed to the CIT(Appeals) on merits and the legality of the search. The Revenue then appealed to the Income Tax Appellate Tribunal (ITAT), which partly allowed the appeal. The present appeal is filed by the assessee against the ITAT's order.

Held

The High Court held that the Income Tax Appellate Tribunal's direction to the Assessing Officer to issue notice under Section 148 of the Income Tax Act, 1961, was contrary to the decision of the High Court in Adani Exports v. Deputy Commissioner of Income-tax (Assessments). The Court found that such a direction could not be issued against the department. Consequently, the direction issued by the Tribunal in paragraph 13 of its order to examine discrepancies by issuing notices under Section 148 was quashed and set aside. The directions given by the Tribunal in paragraphs 11 and 12 of its order were not disturbed. The appeal was partly allowed.

Key Issues

1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in law in directing the Assessing Officer to issue notice under Section 148 of the Income Tax Act, 1961, in relation to an Assessment Year which was not before the Tribunal by way of appeal from regular assessment proceedings? Assessee's Contention: The assessee's appeal challenges the ITAT's direction to issue notices under Section 148. The judgment does not explicitly record the assessee's arguments on this specific issue, but the framing of the question of law indicates the assessee is contesting this direction. Revenue's Contention: The Revenue, through its advocate, pointed out that a notice under Section 148 had already been issued in view of the Tribunal's observations. The Revenue relies on the High Court's decision in Adani Exports v. Deputy Commissioner of Income-tax (Assessments) [1999] 240 ITR 224 (Gujarat).