LEKSHMI TRADERS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This appeal is filed against annexure H order passed by the Income-tax Appellate Tribunal, Cochin Bench. The main question raised is whether the rejection of the plea by the appellant to raise an additional ground is justified or not. The view taken by the Tribunal is that in the light of the judgment rendered by the Division Bench on an earlier round of litigation between the same parties, in I.T.A. Nos. 146 of 2009 and 1510 of 2009, the Tribunal cannot allow the appellant to raise additional grounds. Now, we will come to the bare facts for the disposal of the appeal. The appellant is a partnership firm and the Assessing Officer has adopted the status as association of persons. They are involved in liquor business. In the premises of one of the partners of the association of persons, viz., Shri R. Prasad, a search was conducted on February 23, 1999, under section 132 of the Income-tax Act, 1961 (for short "the Act"). Thereafter, assessment proceedings were commenced against the firm and annexure A is the notice issued under section 158BD of the Act. The block period is from April 1, 1988, to February 23, 1999. After the filing of the return by the assessee, disclosing an income of Rs. 5,30,000, the block assessment was completed by the Deputy Commissioner of Income-tax, Circle I, Kollam, on December 28, 2001, and by annexure B, a block assessment order has been passed. In appeal filed by the appellant, the Commissioner of Income-tax (Appeals) passed annexure C order by partly allowing the same. The appellant filed an appeal before the Income-tax Appellate Tribunal, Cochin Bench, and an additional ground was raised as per annexure D. The Department also filed an appeal. The contention raised in the additional ground raised therein was that the notice issued under section 158BD of the Act is invalid. It was pointed out that the assessing authority can issue notice only as per section 158BC of the Act and that the notice should have been issued under section 158BC read with section 158BD of the Act. The Tribunal accepted the contentions of the appellant and held that the notice issued was invalid and the assessment in consequence of the notice was also not valid. Annexure E is the order passed by the Tribunal. This was taken in appeal by the Department before this court and, consequently, annexure F judgment was rendered by this court. The matter went back and the appellant again raised an additional ground relying upon the decision of the apex court in Manish Maheshwari v. Deputy CIT, 2007 289 ITR 341. The said additional ground was refused to be admitted by the Tribunal. The Tribunal apparently has taken the view that the powers of the Tribunal are confined to the order of the remand passed by this court as per annexure F wherein, while disposing of the appeal, a direction was given by this court to consider the appeal on the merits. On that score, the appellant's plea has not been accepted.

(2.) We heard the learned counsel for the appellant, Shri P. Gopinath Menon and the learned senior counsel for the Department, Shri P. K.R. Menon.

(3.) Learned counsel for the appellant, Shri P. Gopinath Menon, contended that the additional ground raised by the appellant is on a question of law. It cannot be said that the powers of the Tribunal are limited so as to consider the same. It is submitted that in the earlier round of litigation, the only question considered by this court was regarding the validity of the notice. Herein, the contention raised is that the Assessing Officer should have appreciated that the conditions precedent for making block assessment are mandatory and fully satisfied and that when the block assessment of a person other than the person whose premises have been searched is carried out, the Assessing Officer assessing the searched person has to record the satisfaction that some undisclosed income belonged to the other person and then the Assessing Officer has to hand over the books of account and other documents and assets seized to the Assessing Officer having jurisdiction of that other person. It is submitted that these statutory requirements have not been complied with and, therefore the entire assessment is invalid. It is submitted that the above legal position has been laid down by the apex court in Manish Maheshwari's case .