IN THE ITAT AGRA BENCH
Assistant Commissioner of Income-tax – 6, Jhansi
versus
Vidit Kumar Agarwal
IT APPEAL NO. 279 (AGRA) o f 2011
C.O. No. 57 (Agra) of 2011
[ASSESSMENT YEAR 1999-2000]
OCTOBER 12, 2012
ORDER
A.L. Gehlot, Accountant Member
The appeal by the Revenue and the Cross Objection by the assessee have been filed against the order dated 31.03.2011 passed by the Ld. CIT(A)-II, Agra for the Assessment Year 1999-2000.
2. The grounds raised by the Revenue in its appeal are as under:-
“1. The Ld Commissioner of Income Tax (Appeals) has erred in law and on facts in holding the initiation of proceedings u/s 147 in the case as bad in law void ab-initio without properly appreciating the facts & circumstances of the case.
2. That the ld Commissioner of Income Tax (Appeals) has erred in law and on facts in holding the initiation of proceedings u/s 147 in the case as bad in law, void ab-initio ignoring the fact that in the absence of any separate and specific period of limitation for reopening of block assessment in Chapter XIV-B, the provisions contained in Chapter XIV prescribing the period of limitation for reopening of assessment must be understood to be applicable to assessment under Chapter XIV-B.
3. That the ld. Commissioner of Income Tax (Appeals) has erred in law and on facts in holding the initiation of proceedings u/s 147 in the hands of individuals is justified in view of the ratio of decision of Hon’ble Guwahati High Court in the case of CIT v. Peer Chand Ratan Lal Baid HUF [2010] 322 ITR 544.
4. That the order of learned Commissioner of Income-tax (Appeals), Agra being erroneous in law and on facts deserves to be quashed and that of the Assessing Officer deserves to be restored.
5. That the appellant craves leave to add or alter any or more ground or grounds of appeal as may be deemed fit at the time of hearing of appeal.”
3. The grounds raised by the assessee in its Cross Objection are as under :-
“1. (a) Because as no valid proceedings u/s 147 read with section 148 of the Act has been initiated in the case of the respondent, thus in the light of facts and in law the learned CIT(A)-II, Agra has correctly annul the reassessment framed by the AO.
(b) Because in any view of the facts of the case of the respondent assessee and in the light of relevant provisions of law the reassessment proceedings initiated by AO are illegal, bad in law and abinitio void and thus correctly annulled by the learned CIT(A)-II, Agra.
2. Because the learned CIT(A)-II, Agra grossly erred and transgressed his jurisdiction to give direction at page 12 of the impugned appeal order to concerned Ranges Heads to explore the possibilities of initiation of penalty proceedings u/s 271D of the Act for alleged prima-facie violation of section 269SS of the Act, though the issue relating to penalty u/s 271D of the Act was not subject matter of appeal or even under consideration of AO or learned CIT(A)-II, Agra.
3. Because the direction made by the learned CIT(A)-II, Agra to the concerned Range Heads to explore the possibilities of initiation of penalty proceedings u/s 271D of the Act for alleged prima-facie violation of section 269SS of the Act being both against the facts and in law thus the same is illegal and bad in law.
The respondent seeks permission to modify and/or add any other ground/grounds of cross objection as the circumstances of the case might require or justify.”
4. The brief facts of the case are that on 03.06.1998 Police Authorities at Jhansi intercepted a car in which three persons namely Shri Ram Kishan Agarwal, Shri Vidit Kumar Agarwal (assessee) and Shri Deepak Agarwal were traveling. The Driver of the car was Shri Kamta Prasad Agarwal. On search of the vehicle, the Police authorities found cash of Rs. 32,34,600/- in three bags. The Police authorities recorded the statement of occupants of the car and the information was passed on to Income Tax Department. Consequently cash of Rs.32,34,600/- was requisitioned by the Department under section 132A of the Income Tax Act, 1961 (‘the Act’ hereinafter). As per the A.O. the assessment proceedings in the name of A.O.P. consisting of Shri Vidit Kumar Agarwal, Shri Ram Kishan Agarwal & Shri Deepak Agarwal were initiated under the provisions of Chapter XIVB of the Act. Thereafter all the three individual Shri Vidit Kumar Agarwal, Shri Ram Kishan Agarwal & Shri Deepak Agarwal filed Wit Petitions before the Hon’ble Allahabad High Court challenging the initiation of assessment proceedings. The Hon’ble High Court disposed of all these writs with the direction to the Department to decide as to whether the aforesaid amount which was seized was disclosed or undisclosed income of the petitioners and thereafter the Department should proceed in the matter. In consequence to the direction of the Hon’ble High Court, the DCIT, Circle-1, Jhansi passed an order dated 14.01.2000 and came to the conclusion that the seized amount was undisclosed income of these three persons from whose possession the cash was recovered and requisitioned under section 132A of the Act. Again the appellants filed second Writ Petitions before the Hon’ble High Court and the High Court dismissed the Writ Petitions holding that petitioners had the right to appeal under section 246A of the Act before the CIT(A). These three individuals filed appeal before the CIT(A) which was dismissed by the CIT(A). Again all the three persons filed Writ Petitions before the Hon’ble High Court. Again, the High Court dismissed the Writ Petitions holding that the appellant had right to appeal before the I.T.A.T.
5. Apart from the above proceedings, proceeding under section 158BC of the Act was initiated in the status of A.O.P. consisting of Shri Vidit Kumar Agarwal, Shri Ram Kishan Agarwal & Shri Deepak Agarwal. The assessment was made in the status of A.O.P. vide order dated 29.06.2000. The A.O.P. preferred appeal before the CIT(A). The CIT(A) vide his order dated 31.05.2002 held that the cash seized represented undisclosed income of the A.O.P. The A.O.P. further filed appeal before the I.T.A.T and the I.T.A.T. vide its order dated 20.01.2005 in IT(SS)A No.21/Agr/2002 allowed the appeal of A.O.P. by holding that the assessment in the status of A.O.P. was bad in law and, therefore, quashed the order passed under section 158BC of the Act. The relevant finding of I.T.A.T. which has been reproduced by the CIT(A) at page no.3 of his order from paragraph no.48 of the order of I.T.A.T. is as under :-
“So far as issue relating to assessee’s claim that cash belonging to three individuals stand explained by them, we are of the opinion that in view of above discussion, the issue, so far as present assessee is concerned, is only academic because whether the cash was explained or unexplained, the fact remains that action can be taken only in the hands of individuals and not in the hands of AOP.”
6. On receipt of I.T.A.T.’s order, the A.O. initiated proceedings under section 148 of the Act and made the assessment which is the impugned Assessment Order. The reasons for reopening recorded by the A.O. which is reproduced in Paper Book filed by the assessee at page nos.101 to 104 reads as under :-
“Reasons recorded u/s 147 of the Income-tax Act, 1961 in the case of Sri Vidit Kumar Agarwal, Behind Bandhu Press Sabun Gram, Mauranipur, Jhansi for A.Y. 1999-2000
According to brief facts of the case, on the night of 3.6.1998, Police Party at Jhansi intercepted a Maruti Car bearing Registration No.PB-08-T-8130 in which three persons namely Sri Ram Kishan Agarwal, Sri Vidit Kumar Agarwal and Sri Deepak Kumar Agarwal, in addition to the driver were travelling.
On checking by the Police, cash of Rs.32,34,600/- contained in three bags was found. The police had also found a slips from the possession of Sri Ram Kishan Agarwal containing the following details :-
