Case Law Details
Brief of the Case: ITAT Delhi held In the case of ACIT vs. Raj Kumar Jalan that in view of the proposition laid down by the Honble Delhi high Court in the case of CIT Vs. Bharat Bhusan Jain and others in ITA No.648/09 and 669/2009 etc order dated 08.01.2015, we are of the view that the period of above three years cannot be considered as “immediate” or “immediately proximate” in point of time to the completion of the block assessment u/s 158BD. The assessment itself is bad in law. Thus application under Rule 27 of the ITAT Rules is allowed.
Facts of the Case: The AO initiated proceedings u/s 158BD after a long gap of 3 years from the date of completion of block assessment in the case of M/s Bemco Jewellers P. Ltd. The ld counsel for the assessee submitted a specific ground before the CIT(A), that the proceedings initiated by the AO u/s 158BD is bad in law. He further argued that CIT(A) had dealt with this issue but he had not specifically adjudicated the same and as the first appellate authority had not adjudicated this issue, an application under Rule 27 of the ITAT Rules is moved by him and prayed that the same be admitted.
Contention of the Assessee: The ld counsel for the assessee relied on the decision of the Tribunal in the case of ITO Vs. Smt. Gurinder Kaur (2006) 102 ITD 189 (Delhi) in which it was held that the scope of the Rule 27 permits the assessee to file an application when the assessee had agitated an issue before the ld CIT(A) and also the proposition that if the appellate authority has not adjudicated the issue, then it can be presumed that the issue had been decided against the assessee.
Assessee relied on the judgements of the Hon’ble Delhi High Court in the case of CIT Vs. Bharat Bhusan Jain and others in ITA No.648/09 and 669/2009 etc order dated 08.01.2015, in which it was held that the revenue can be given at best, latitude of six months which can be considered as “immediate” or immediately proximate in point of time, after considering the judgement of the Hon’ble Supreme Court in the case of CIT Vs. Calcutta Knitwears, Ludhina 362 ITR 673 (SC).
Contention of the Revenue: The ld DR submitted that under Rule 27 of the ITAT Rules, the present application is not maintainable as an application under Rule 27 can be filed only in support of the order of the CIT(A) and whereas the assessee seeks to dispute the order of the first appellate authority on the issue. Also submitted that as the first appellate authority has not adjudicated this matter and hence it cannot be presumed that the decision on this issue is against the assessee.
Held by CIT (A): The CIT (Appeals) held that the assessee has challenged the block assessment proceedings on the ground that the AO had initiated proceedings without any inquiry and without any proper justification. It has also submitted that the assessee already declared the transaction of sale of jewellery in the return of income and the AO was not justified to initiate the proceedings u/s 158BD and the assessee also relied on various case laws in support of the claim of the assessee. It is submitted that there is no proper satisfaction for initiating proceedings u/s 158BD. It is also submitted that the search was conducted on 03/08/2000 and the block assessment was completed on 29/08/2002 whereas the notice u/s 158BD was issued much after vide the notice dated 10/02/2006 and as such the proceedings u/s 158BD are invalid.
Held by ITAT
Rule 27 of ITAT Rules reads as follows: – “27. The respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him.”
Followings the judgement of Income-tax Officer Vs. Smt. Gurinder Kaur (2006) 102 ITD 189 (Delhi), in which it was decided that whether it is the appellant or the respondent before the Tribunal, new points or contentions can be raised provided they did not involve investigation into facts (as contrasted with the record) and that an opportunity is given to the other side to meet the contentions , we admit this application under Rule 27 of the ITAT Rules as the assessee has raised a ground before the CIT(A) and the CIT(A) discussed the issue but had not given a decision on the same.
In the case of CIT Vs. Bharat Bhusan Jain and others in ITA No.648/09 and 669/2009 etc order dated 08.01.2015, it was held that the revenue has to be vigilant in issuing notice to the third party under section 158BD, immediately after the completion of the assessment of the search person. A delay ranging between 10 months of 1/12 years cannot be considered reasonable. Further the revenue can be given at best, latitude of six months which can be considered as “immediate” or immediately proximate in point of time, after considering the judgement of the Hon’ble Supreme Court in the case of CIT Vs. Calcutta Knitwears, Ludhina 362 ITR 673 (SC). The same proposition was followed in the case of CIT vs. Alaka Bhandari , 996/2009 and CIT vs. Ashok Kumar & Sons HUF in ITA 1163/2009, dated 08/01/2015.
Following this proposition, it is held that the period of above three years cannot be considered as “immediate” or “immediately proximate” in point of time to the completion of the block assessment u/s 158BD.
Accordingly, appeal of the revenue dismissed.
