CIT Vs. MUKESH B SHAH

JUDGEMENT

(1.) In this appeal under Sec. 260A of the Income Tax Act, 1961 (the Act) the Appellant-Revenue has proposed following question stated to arise out of order dated 2nd May, 2008 made by the Income Tax Appellate Tribunal, Ahmedabad Bench D (the Tribunal):

(2.) A search was carried out on 30-4-1998 in the Khadkhad Group cases. During the course of search, it was noticed that the Assessee and his family members had advanced loans to various persons through Khadkhad Group. The Respondent-Assessee, being a non-resident Indian, a notice came to be issued on 7th Jan., 1999 under Sec. 158BD of the Act on Shri AshOk B. Shah, power of attorney holder of the Assessee. Initially neither the Assessee nor his power of attorney responded to the notice. However, subsequently, the power of attorney along with accountant attended on behalf of the Assessee and requested for time for furnishing required information. Subsequently, statement of the power of attorney was also recorded under Sec. 131(1A) of the Act. The assessing officer framed assessment under Sec. 158BD read with Sec. 144 of the Act computing the total undisclosed income of the Respondent Assessee at. Rs. 15,34,880.

(3.) The Assessee carried the matter in appeal before Commissioner (Appeals) before whom it was contended that in case of a non-resident, the assessment has to be made on the agent who is the representative Assessee as per provisions of Sec. 163(1) of the Act. Commissioner (Appeals) observed that the assessment order showed that the assessment had been made through Shri Ashok B. Shah as legal representative of Shri Mukesh B. Shah, who happens to be a nonresident. That assessment could have been made on the legal representative only after he was appointed as an agent within the meaning of Sec. 163 of the Act. In the present case no opportunity had been provided to Shri Ashok B. Shah for being treated as legal representative and in fact no order treating him as an agent had been passed. Commissioner (Appeals), accordingly, allowed the appeal and annulled the assessment.