LEKSHMI TRADERS vs THE COMMISSIONER OF INCOME TAX | BharatTax

Loading judgment…

LEKSHMI TRADERS vs THE COMMISSIONER OF INCOME TAX | BharatTax

impugned order. The operative portion of the judgment dated 02.07.2014 reads as follows: “11. Learned counsel for the appellant Shri Gopinath Menon further submitted that what is raised as an additional ground by the appellant is a question of law, that too by relying upon the decision of the Apex Court in Manish Maheswhari's case ((2007) 289 ITR 341 SC). It is therefore submitted that the parties are not prevented from raising a question of law and it is upto the Tribunal to consider the acceptability of the same and such a power of the Tribunal is not curtailed by the judgment rendered by the Division Bench as per Annexure F. The learned Senior Counsel for the Revenue reiterated that the decision applicable in this case is Panchajanyam Management Agencies' case ((2011) 333 ITR 281). We need not resolve the said controversy in this appeal, as it is upto the Tribunal to consider the same. We are definitely of the view that the powers of the Tribunal are not curtailed by the judgment of the Division Bench as Annexure F, merely because the said judgment, in the operative portion "directed the matter to be considered on merits after hearing the parties." It is also not correct to say that the decision of the Division Bench concerning the validity of the notice will prevent the Tribunal to consider any other ground which the appellant has raised for consideration. It cannot therefore be said that when this 'Court sent back the matter for fresh consideration, no other points than those raised in the grounds of appeal can be considered and no additional ground can be allowed to be raised for consideration. We accordingly answer the questions raised, in favour of the assessee and against the Revenue. In that View of the matter, we allow the appeal and set aside Annexure H order passed by the Tribunal: The Tribunal will consider the matter afresh in the light of the findings rendered by us above and it is upto the Tribunal to consider the additional ground raised by the appellant and take appropriate decision as enjoined by law. No costs.”

read thus: Calcutta Knitwears case It is the duty of the court while interpreting the machinery provisions of a taxing statute to give effect to its manifest purpose. Wherever the intention to impose liability is clear, the courts ought not be hesitant in espousing a commonsense interpretation to the machinery provisions so that the charge does not fail. The machinery provisions must, no doubt, be so construed as would effectuate the object and purpose of the statute and not defeat the same (Whitney v. IRC [1926] AC 37, CIT v. Mahaliram Ram jidas [1940] 8 ITR 442 (PC), India United Mills Ltd. v. CEPT (1955] 27 [TR 20 (SC) and Gursahai Saigal v. CIT (1963] 48 ITR (SC) 1; CWT v. Sharean Kumar Swarup and Sons [1994] 6 SCC 6231; CIT v. National Taj Traders [1980] 1 SCC 3702; Associated Cement Co. Ltd. v. CTO [1981] 48 STC 466 (SC)). Francis Bennion in Bennion on Statutory Interpretation, 5th Ed., Lexis Nexis in support of the aforesaid proposition put forth as an illustration that since charge made by the legislator in procedural provisions is excepted to be for the general benefit of litigants and others, it is presumed that it applies to pending as well as future proceedings. Having said that, let us revert to discussion of section 158BD of the Act. 38 The said provision is a machinery provision and inserted in the statute book for the purpose of carrying out assessments of a person other than the searched person under section 132 or section 132A of the Act. Under section 158BD of the Act, if an officer is satisfied that there exists any undisclosed income which may belong to a other person other than the searched person under section 132 or section 132A of the Act, after recording such satisfaction, may transmit the records/documents/chits/papers etc to the Assessing Officer having jurisdiction over such other person. After receipt of the aforesaid satisfaction and upon examination of the said other documents relating to such other person, the jurisdictional Assessing Officer may proceed to issue a notice for the purpose of completion of the assessments under section 158BD of the Act, the other provisions of

Chapter XIV-B shall apply. AR Enterprises case 14. In Asst. CIT v. Hotel Blue Moon [2010] 3 SCC 259 at page 2642, one of s (H. L. Dattu J.), while explaining the purport of Chapter XIV-B of the Act, has observed that a search is the sine qua non for the block assessment; the special provisions are devised to operate in the distinct field of undisclosed income and are clearly in addition to the regular assessments covering the previous years falling in the block period, intended to provide à mode of assessment of undisclosed income, which has been detected as a result of search. Hence, from the aforementioned discussion, it is clear that a valid search under section 132 of the Act is a sine qua non for invoking block assessment proceedings under Chapter XIV-B. Further, according to section 158BD of the Act, the Assessing Officer must record his or her satisfaction that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 of the Act. 15. It seems that these requisites were in fact not adhered to in the present case. During the course of the hearing, learned counsel for the assessee did contend that the Revenue did not have jurisdiction to invoke Chapter XIV-B of the Act, against the assessee. According to the learned counsel, before initiating proceedings under section 158BD of the Act, the Assessing Officer had not recorded his satisfaction that any undisclosed income belonged to the assessee or that the assessee did not have the intention to disclose their income. Hence, the block assessment proceedings against the assessee should be quashed. However, we are unable to appreciate the submission of the learned counsel at this stage, since the same was never urged before the High Court and the Tribunal. Hence, we refrain from making any observations on a contention that had never been argued before the High Court and the Tribunal. We shall restrict our opinion strictly to the issue before us, viz., whether the payment of advance tax for the relevant assessment year is tantamount to the disclosure of income for the purpose of application of Chapter XIV-B of the Act.