Appeal Details
Counselvise Citation
[2015] 123 COUNSELVISE.COM (IT) 1009 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
3 year(s) 3 month(s) 13 day(s)
Appellant
Respondent
Appeal Type
Cross Objection
Pronouncement Date
22-06-2015
Appeal Filed By
Assessee
Bench Allotted
C
Next Hearing Date
06-06-2013
Assessment Year
2003-2004
Appeal Filed On
09-03-2012
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOLKATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI B. P. JAIN, AM ] I.T (SS) .A NO S . 12 TO 16 /KOL/20 1 2 ASSESSMENT YEAR S : 200 3 - 0 4 TO 200 7 - 0 8 ASSISTANT COMMISSIONER OF INCOME - TAX, VS. SHANTI KUMAR SURANA CENTRAL CIRCLE - XXIII, KOLKATA. (PAN: ALFPS6437D) ( APPELLANT ) ( RESPONDENT ) & C.O. NOS. 13 TO 17/KOL/2012 IN I.T(SS).A NOS.12 TO 16/KOL/2012 ASSESSMENT YEARS : 2003 - 04 TO 2007 - 08 SHANTI KUMAR SURANA VS. ASSISTANT COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE - XXIII, KOLKATA. (CROSS OBJECTOR) (RESPONDENT) & I.T(SS).A NOS.140 & 141/KOL/2011 ASSESSMENT YEARS : 2008 - 09 & 2009 - 10 SHANTI KUMAR SURANA VS. ASSISTANT COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE - XXIII, KOLKATA. (APPELLANT) (RESPONDENT) & I.T(SS).A NOS.17 TO 19/KOL/2012 ASSESSMENT YEARS : 2004 - 05 TO 200 6 - 0 7 ASSISTANT COMMISSIONER OF INCOME - TAX, VS. SURANA MERCANTILES (P) LTD. CENTRAL CIRCLE - XXIII, KOLKATA. (PAN: AABCB4120A) (APPELLANT) (RESPONDENT) & & C.O. NOS. 18 TO 20/KOL/2012 IN I.T(SS).A NOS.17 TO 19/KOL/2012 ASSESSMENT YEARS : 2004 - 05 TO 2006 - 07 SURANA MERCANTILES (P) LTD. VS. ASSISTANT COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE - XXIII, KOLKATA. (CROSS OBJECTOR) (RESPONDENT) DATE OF HEARING : 0 7 .0 5 .2015 DATE OF PRONOUNCEMENT: 22 . 0 6 . 2015 2 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 FOR THE REVENUE : SHRI VIJAY KUMAR, CIT, DR FOR THE ASSESSEE/CROSS OBJECTOR : S/SHRI S. L. KOCHAR & ANIL KOCHAR, ADVOCATE ORDER PER BENCH : I.T(SS)A NOS. 12 TO 16/KOL/2012 BY REVENUE AND CROSS OBJECTION NOS. 13 TO 17/K/2012 BY ASSESSEE ARE ARISING OUT OF COMMON ORDER OF CIT(A) , CENTRAL - II I , KOLKATA IN APPEAL NO S . 87,86,83,84,82 / C C - XXIII/C IT(A) C - III/10 - 11 DATED 2 0 . 12 .20 11 . ASSESSMENT S W ERE FRAMED BY ACIT , CC - XXIII, KOLKATA U/S. 153A READ WITH SECTION 143(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR ASSESSMENT YEAR S 200 3 - 0 4 TO 200 7 - 0 8 VIDE HIS SEPARATE ORDER S ALL DATED 3 1 .1 2 .20 1 0 . IT(SS)A NOS. 140 & 141/K/2011 BY ASSESSEE ARE ARISING OUT OF SEPARATE ORDERS OF CIT(A), CENTRAL - III, KOLKATA IN APPEAL NOS. 85 & 80/CC - XXIII/CIT(A)/C - III/10 - 11 BOTH DATED 28.10.2011. ASSESSMENTS WERE FRAMED BY ACIT, CC - XXIII, KOLKATA U/S. 153A READ WITH SECTION 143(3) OF ACT FOR ASSESSMENT YEARS 2008 - 09 & 2009 - 10 VIDE HIS S EPARATE ORDERS ALL DATED 31.12.2010. 2. I.T(SS)A NOS. 17 TO 19/KOL/2012 BY REVENUE AND CROSS OBJECTION NOS. 18 TO 20/K/2012 BY ASSESSEE ARE ARISING OUT OF COMMON ORDER OF CIT(A), CENTRAL - III, KOLKATA IN APPEAL NOS. 103, 104 & 105/CC - XXIII/CIT(A)C - III/10 - 11 DATED 16.12.2011. ASSESSMENTS WERE FRAMED BY ACIT, CC - XXIII, KOLKATA U/S. 153A READ WITH SECTION 143(3) OF THE ACT FOR ASSESSMENT YEARS 200 4 - 0 5 TO 200 6 - 0 7 VIDE HIS SEPARATE ORDERS ALL DATED 31.12.2010. 3. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE STATED THAT THERE IS A LEGAL ISSUE RAISED IN THE CROSS OBJECTIONS OF THE ASSESSEE S , HENCE THE SAME SHOULD BE HEARD FIRST. 4. THE FIRST LEGAL ISSUE RAISED BY ASSESSEE IN THEIR CROSS OBJECTIONS IS AS REGARDS TO VALIDITY OF ASSESSMENT FRAM ED U/S. 153A OF THE ACT DESPITE THE FACT THAT THERE IS NO 3 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 INCRIMINATING MATERIAL PERTAINING TO SHARE APPLICATION MONEY OR LOANS FOR THE RELEVANT ASSESSMENT YEARS . FOR THIS, ASSESSEE S HA VE RAISED COMMON GROUNDS IN ALL THESE CROSS OBJECTIONS. HENCE, WE WILL DECIDE ALL CROSS OBJECTIONS BY THIS COMMON ORDER. FOR THE SAKE OF BREVITY, WE ARE REPRODUCING THE GROUNDS FROM C.O. NO. 13/KOL/2012 ARISING OUT OF IT(SS)A NOS. 12/KOL/2012 FOR AY 2003 - 04, WHICH READS AS UNDER: 1. FOR THAT THE LD. CIT(A) ERRED IN HOLDING THAT THE PROCEEDINGS INITIATED BY THE AO U/S. 153A OF THE INCOME TAX ACT, 1961 IN THE CASE OF THE RESPONDENT - ASSESSEE WERE VALID AND ENFORCEABLE. 2. FOR THAT THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THERE BEING NO INCRIMINATING MATERIAL FOU ND IN THE COURSE OF SEARCH CONDUCTED U/S. 132 RELATING TO ASSESSMENT YEAR IN APPEAL, THERE WAS NO VALID JURISDICTION WITH THE A.O. TO PASS IMPUGNED ORDER U/S. 143(3)/153A. 3. FOR THAT THE INFORMATION ABOUT THE LOANS OBTAINED BY THE ASSESSEE BEING AVAILAB LE ON RECORD PRIOR TO SEARCH OPERATION U/S. 132, IN THE ABSENCE OF INCRIMINATING MATERIAL FOUND IN SEARCH, NO ADDITION COULD BE MADE IN RESPECT OF COMPLETED ASSESSMENT. 5. BRIEFLY STATED FACTS ARE THAT A SEARCH AND SEIZURE OPERATION U/S. 132 OF THE ACT WAS CONDUCTED AT THE RESIDENCES, OFFICE PREMISES AND BANK LOCKERS ON A NUMBER OF INDIVIDUALS AND GROUP COMPANIES WITHIN THE SURANA GROUP OF CASES ON 19.03.2009. THE ASSESSEE IS ONE OF THE PERSONS SEARCHED U/S. 132 OF THE ACT. THE ASSESSEE IN RESPONSE TO NOTICE U/S. 153A OF THE ACT DISCLOSED THE RETURN OF INCOME AT RS.3,05,880/ - FOR THE RELEVANT AY 2003 - 04 (AS RETURNED ORIGINALLY U/S. 139 OF THE ACT). DURING THE COURSE OF HEAR ING BEFORE US AS WELL AS BEFORE CIT(A), ASSESSEE CONTENDED THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH ON SURANA GROUP OF CASES ON 19.03.2009 EXCEPT THE REGULAR BOOKS OF ACCOUNT FROM WHERE THE AUTHORISED OFFICER HAS FOUND ABOUT SHA RE CAPITAL , UNSECURED LOANS , CONSEQUENTIAL DISALLOWANCE OF INTEREST ON LOANS AND DISALLOWANCE OF EXPENSES OF EXEMPTED INCOME BY INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT, AS RECORDED IN THE BOOKS OF ACCOUNT. SIMULTANEOUSLY, A SEPARATE SEARCH AND SEIZURE OPERATION U/S. 132 OF THE ACT WAS CONDUCTED ON THE RESIDENCE, OFFICE AND BUSINESS PR EMISES OF SHRI SAMBHU KR. MORE CHARTERED ACCOUNTANT ON 09.05.2009. STATEMENT OF SHRI SAMBHU KR MORE WAS RECORDED U/S. 132(4) OF THE ACT. DURING OF SEARCH ON SAMBHU KR MORE A STATEMENT U/S. 132(4) OF THE ACT WAS RECORDED AND THE 4 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 RELEVANT QUERIES I S REPRODUCED IN THE ORDER OF CIT(A) AND THAT OF THE AO, WHICH READS AS UNDER: - 8. DURING THE COURSE OF SURVEY U/S 133A CONDUCTED TODAY IN YOUR BUSINESS PREMISES AT 52, WESTON STREET, KOLKATA - 700012, THE NAMES OF NUMBER OF COMPANIES MOSTLY HAVING THEIR REGISTERED OFFICES AT THE SAID PREMISES HAVE BEEN FOUND. PLEASE FURNISH DETAILS OF THESE COMPANIES ALONG WITH THEIR NATURE OF BUSINESS. ANS. - I DON T REMEMBER THE NAMES OF ALL THE COMPANIES RIGHT NOW. HOWEVER, SOME OF THE COMPANIES RUNNING FROM MY OFFICE ARE: - I. M/S ALFA TIE - UP PVT. LTD. II. M/S. RANG VARDHAN FEBTRADE PVT. LTD. III. M/S. CYGNUS PUBLISHERS LTD. IV. M/S. PAYAAGPUR VYAPAAR PVT. LTD. V. M/S. ANUVRAT TRANSPORT SYSTEM LTD. VI. M/S. M ANUSH DISTRIBUTORS LTD. VII. M/S TEJI MANDI SECURITIES PVT. LTD. VIII. I WILL FURNISH THE DETAILED LIST OF THE ABOVE ON 12/5/2009. 9. ARE YOU DIRECTOR IN ANY OF THE COMPANIES MAINTAINED IN ANS. NO. - 8? ANS. - NO. HOWEVER, I AM A DIRECTOR IN M/S. MORE HIGHRISE PVT. L TD., 52, WESTON STREET, KOLKATA - 700012. IN THE OTHER COMPANIES THE DIRECTORS ARE MY BROTHER SRI RAJ KUMAR MORE AND MY EMPLOYEES, SRI RAVI AGARWAL ETC. 10. PLEASE EXPLAIN THE NATURE OF BUSINESS CONDUCTED BY THE ABOVE MENTIONED COMPANIES. ANS. - ALL THE ABOVE MENTIONED COMPANIES ARE ENGAGED IN THE BUSINESS OF SHARE TRADING, LOANS AND ADVANCES AND INVESTMENT. 11. HAVE ANY OF THE ABOVE MENTIONED COMPANIES ENTERED INTO ANY TRANSACTIONS (SHARES OR LOANS OR OTHERWISE) WITH ENTITIES BELONGING TO SHANTI KUMAR SURANA , PAWAN KUMAR SURANA OF THE SURANA GROUP ? ANS. - YES, MY COMPANIES HAVE ENTERED INTO SHARE AND LOAN TRANSACTIONS WITH COMPANIES BELONGING TO SRI SHANTI KUMAR SURANA 12. PLEASE SPECIFY IN DETAIL THE EXACT NATURE OF THE TRANSACTIONS ENTERED INTO WITH THE C OMPANIES BELONGING TO SHANTI KUMAR SURANA ANS. - IN RESPECT OF ALL THE SAID TRANSACTIONS, FIRST CASH IS RECEIVED FROM SRI SHANTI KUMAR SURANA. THEN AFTER A SERIES OF TRANSACTIONS THROUGH MY COMPANIES, CHEQUES OF RELEVANT AMOUNTS ARE FINALLY ISSUED TO THE R ELEVANT COMPANIES BELONGING TO SRI SHANTI KUMAR SURANA AS PER INSTRUCTIONS RECEIVED FROM SRI SHANTI KUMAR SURANA, FROM TIME TO TIME. 13. PLEASE EXPLAIN IN DETAILS THE TRANSACTIONS WHICH TAKE PLACE AFTER RECEIPT OF CASH FROM SRI SHANTI KUMAR SURANA, TILL T HE ISSUE OF CHEQUES OF RELEVANT AMOUNTS TO COMPANIES BELONGING TO HIS GROUP. 5 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 ANS. - WHENEVER CASH IS RECEIVED, FIRST OF ALL, I PROCURE CHEQUES OF MATCHING AMOUNT ON VARIOUS DATES, FROM THE MARKET. SUBSEQUENTLY, CHEQUES OF RELEVANT AMOUNTS ARE ISSUED FROM MY COMPANIES, AFTER THE FOLLOWING LAYERS OF IN - HOUSE TRANSACTIONS : - A. THE CHEQUES PROCURED FROM THE MARKET ARE INTRODUCED IN THE BOOKS OF ONE OR MORE COMPANIES, IN THE FORM OF SHARE CAPITAL OR AS PROCEEDS FROM SALE OF SHARE INVESTMENTS. B. THEN THE AMOUNTS ARE F URTHER CIRCULATED AMONGST MANY COMPANIES, THROUGH LOAN TRANSACTIONS / ADVANCES / SHARE TRANSACTIONS, ETC. C. FINALLY AS PER THE REQUIREMENT OF SRI. SHANTI KUMAR SURANA, CHERQUES OF APPROPRIATE AMOUNTS ARE FINALLY ISSUED TO HIS COMPANIES IN THE FORM OF SHARE C APITAL OR UNSECURED LOANS. D. I MAY ALSO MENTION THAT IN SOME OF THE CASES, THE SHARES OF SRI SHANTI KUMAR SURANA S COMPANIES ARE BROUGHT BACK BY THE PROMOTERS AND THEIR FAMILY MEMBERS AT 20% OF THE SHARE VALUE, APPROXIMATELY. THE CHEQUES RECEIVED FOR THE SAI D TRANSACTIONS ARE DEPOSITED INTO BANK AND EQUAL OR MATCHING AMOUNT ARE RETURNED BACK TO SR. SHANTI KUAMR SURANA IN CASH. THIS COMPLETES THE ENTIRE CYCLE OF TRANSACTIONS, WHEREBY, HIS UNACCOUNTED MONEY IS BROUGHT INTO THE BOOKS OF HIS COMPANY. THE DE TAILS OF THE SAME ABOVE MENTIONED TRANSACTIONS WILL BE SUBMITTED ON 12/5/2009. 14. PLEASE FURNISH THE NAMES OF THE PERSONS AND COMPANIES FROM WHOM YOU PROCURE CHEQUES IN LIEU OF CASH. ANS. - I PROCURE CHEQUES IN LIEU OF CASH FROM VARIOUS ENTRY OPERATORS . IN THE CASE OF THE CONCERNS OF THE SURANA GROUP, WERE PROCURED FROM SR. DEBESH UPADHYAY AND SR VINOD JAISWAL, HAVING THEIR OFFICES AT WATERLOO STREET AND GIRISH PARK, RESPECTIVELY. HOWEVER, I WILL CHECK THE RECORDS AND SUBMIT DETAILS OF THE SAME ON 12/5/2 009. 15. WHAT IS YOUR REMUNERATION FOR LAUNDERING THE UNACCOUNTED MONEY OF SRI SHANTI KUMAR SURANA BY ROUTING IT THROUGH ACCOMMODATION ENTRIES IN THE BOOKS OF YOUR COMPANIES. AS ENUMERATED ABOVE BY YOU? ANS. - I EARN ON AN AVERAGE 0.6% OF THE CASH RECEIVED AS GROSS COMMISSION INCOME FOR CARRYING OUT THE AFOREMENTIONED ACTIVITIES. AFTER ACCOUNTING FOR EXPENSES, MY NET COMMISSION INCOME IS APPROXIMATELY 0.35% OF THE CASH RECEIVED FROM SR. SHANTI KUMAR SURANA 16. IN CASES WHERE CASH RECEIVED FROM SR SHANTI KU MAR SURANA IS ROUTED BACK TO HIS COMPANIES THROUGH UNSECURED LOANS FROM YOUR COMPANIES, HOW IS THE INTEREST THEREON RECEIVED AND SUBSEQUENTLY ACCOUNTED FOR? ANS. - THE INTEREST ON UNSECURED LOANS IS IN THE RANGE OF 6% TO 12% AND IS RECEIVED IN CHEQUE, NET OF TDS. THIS AMOUNT OF INTEREST INCOME IS OFFERED TO TAX BY THE RELEVANT COMPANIES AND TDS THEREON IS ACCORDINGLY CLAIMED. THE CASH OF AMOUNT EQUAL TO THE NET INTEREST INCOME (CHEQUE AMOUNT) IS GIVEN BACK TO SRI SHANTI KUMAR SURANA. THE TDS AMOUNT IS ALSO GIVEN BACK SUBSEQUENTLY IN THE FORM OF CASH TO SR. SHANTI KUMAR SURANA. ALSO, ANY FURTHER TAX LIABILITY ON ACCOUNT OF THE SAID INTEREST INCOME IS USUALLY VERY SMALL AMOUNT RUNNING INTO A FEW THOUSAND AND IS BORNE BY US. 6 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 17. IN RESPONSE TO Q. NO. 15 YOU HA VE STATED THAT YOUR NET INCOME IS APPROXIMATELY 0.35% OF THE TOTAL CASH RECEIVED FROM SRI. SHANTI KUMAR SURANA. PLEASE STATE THE MODE OF PAYMENT RECEIVED FROM SRI SHANTI KUMAR SURANA. AND ALSO STATE WHETHER THE SAID INCOME HAS BEEN OFFERED TO TAX OR NOT. A NS - I RECEIVED THE SAID INCOME IN CASH. THE RECEIPTS AND EXPENSES OF THE ABOVE TRANSACTIONS ARE OUTSIDE REGULAR BOOKS OF ACCOUNTS. 18. I AM SHOWING YOU THE DETAILS OF ADDITION TO SHARE CAPITAL AND SHARE PREMIUM A/C FOR THE F.Y 2004 - 05 IN THE CASE OF BIKAJI MERCANTILES PVT. LTD (PAN - AABCB4120A) WHICH IS A COMPANY BELONGING TO THE SURANA GROUP . FROM THE DETAILS IT IS SEEN THAT ALL THE 12,24,000 EQUITY SHARES OF THIS COMPANY HAVE BEEN SUBSCRIBED BY THE FOLLOWING COMPANIES A. M/S ALFA TIE - UP PVT. LTD. B. M/S. RANG VARDHAN FEBTRADE PVT. LTD. C. M/S CYGNUS PUBLISHERS LTD. D. M/S PAYAGPOUR VYAPAAR PVT. LTD. E. M/S ANUVRAT TRANSPORT SYSTEM LTD. F. M/S MANUSH DISTRIBUTORS LTD. G. M/S TEJI MANDI SECURITIES PVT. LTD. DOES THESE COMPANIES BELONG TO YOU? IF SO, PLEASE CONFIRM THE MODUS OPEANDI WHICH YOU HAVE ALREADY EXPLAINED IN YOUR RESPONSE TO Q. NO. 13. ANS. - YES, I CONFIRM THAT ALL THE SEVEN COMPANIES BELONG TO ME AND HAVE THEIR REGISTERED OFFICES AT MY BUSINESS AT 52, WESTON STREET, KO LKATA - 700012. I FURTHER CATEGORICALLY CONFIRM THAT WITH REGARD TO THESE 12,24,000 EQUITY SHARES, AN AMOUNT OF RS.(12,24,000 X 20) = RS.,2,44,80,000/ - WAS RECEIVED IN CASH FROM SRI. SHANTI KUMAR SURANA. THE SAME WAS INVESTED BACK IN THE SHARES OF BIKAJI MER CANTILES PVT. LTD. 19. NOW I AM SHOWING YOU DETAILS OF UNSECURED LOANS TAKEN BY BIKAJI MERCANTILES PVT. LTD., DURING THE F.Y 2004 - 05, WHEREIN, IT IS SEEN THAT THIS COMPANY HAS ENTERED INTO UNSECURED LOAN TRANSACTIONS WITH 19 COMPANIES. PLEASE IDENTIFY THE COMPANIES BELONGING TO YOU AND CONFIRM THE MODUS OPEANDI AS EXPLAINED BY YOU IN ANSWER TO Q. NO. 13 AND 14. ANS. - OUT OF THE 19 COMPANIES, 2 COMPANIES NAMELY ANUVRAT TRANSPORT SYSTEMS PVT. LTD., AND MANUSH DISTRIBUTORS LTD., ARE MY COMPANIES, I ALSO CONFI RM THAT AMOUNTS OF RS.3,97,98,082/ - AND RS.4,83,76,460/ - WERE RECEIVED IN CASH FROM SRI. SURANA AND ROUTED BACK TO THE BOOKS OF BIKAJI MERCANTILES PVT. LTD., IN THE FORM OF UNSECURED LOANS. I FURTHER CONFIRM THAT DURING THE YEAR AMOUNTS OF RS.4,07,98,082/ - AND RS.4,53,76,460/ - WERE RECEIVED IN CHEQUE AND THE SAE AMOUNTS WERE RETURNED BACK EITHER IN CASH OR THROUGH CHEQUE IN THE FORM OF SHARE CAPITAL IN M/S BIKAJI MERCANTILES PVT. LTD., I WILL SUBMIT THE DETAILS AFTER VERIFYING OUR RECORDS ON 12/5/2009. 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO PROVIDED COPIES OF ALL STATEMENT OF SHRI SAMBHU KR MORE TO THE ASSESSEE AND ANOTHER STATEME NT OF ASSESSEE WAS RECORDED U/S 131 OF THE ACT ON 15.09.2010, BY VIRTUE OF WHICH HE DENIED HAVING MADE ANY DISCL OSURE OF RS.8 CR. DURING THE COURSE OF POST SEARCH PROCEEDING AND ALSO DENIED HAVING TAKEN ANY ENTRIES IN LIEU OF CASH FROM THE VARIOUS COMPANIES AS ADMITTED 7 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 BY SHRI MORE. THE RELEVANT DETAILS OF ENTRIES NOTED BY THE AO IN ASSESSMENT, WHICH READS AS UNDER : DETAILS OF UNSECURED LOAN TO SHANTI KUMAR SURANA AND GROUP COMPANY NAME OF THE BORROWER NAME OF THE LENDER FINANCIAL YEAR AMOUNT GIVEN REFUND INTEREST SHANTI KR. SURANA ALFA TIE - UP PVT. LTD. 2002 - 03 37,00,000 37,00,000 1,02,345 SHANTI KR. SURANA TEJI MANDI SECURITIES PVT. LTD. 2002 - 03 45,00,000 45,00,000 1,51,170 SUB TOTAL 82,00,000 82,00,000 2,53,515 BIKAJI MERCANTILES PVT. LTD. MANUSH DISTRIBUTORS LTD. 2003 - 04 2,2,50,000 1,22,50,000 1,61,538 BIKAJI MERCANTILES PVT. LTD. ANUVRAT TRANSPORT SYSTEMS LTD. 2003 - 04 2,09,50,000 1,49,50,000 1,66,800 SHANTI KR. SURANA RANG VARDHAN FEBTRADE PVT. LTD. 2003 - 04 15,00,000 15,00,000 12,986 SHANTI KR. SURANA MANUSH DISTRIBUTORS LTD. 2003 - 04 4,65,00,000 2,05,00,000 8,38,093 SHANTI KR. SURANA ANUVRAT TRANSPORT SYSTEMS LTD. 2003 - 04 4,05,00,000 1,20,00,000 6,91,726 SUB TOTAL 13,17,00,000 6,12,00,000 18,71,143 BIKAJI MERCANTILES PVT. LTD. MANUSH DISTRIBUTORS LTD. 2004 - 05 4,75,00,000 4,45,00,000 8,76,460 BIKAJI MERCANTILES PVT. LTD. ANUVRAT TRANSPORT SYSTEMS LTD. 2004 - 05 3,90,00,000 4,00,00,000 7,98,082 S.K. SURANA (HUF) MANUSH DISTRIBUTORS LTD. 2004 - 05 86,00,000 86,00,000 3,58,225 SHANTI KR. SURANA MANUSH DISTRIBUTORS LTD. 2004 - 05 3,95,00,000 5,35,00,000 33,64,636 SHANTI KR. SURANA ANUVRAT TRANSPORT SYSTEMS LTD. 2004 - 05 2,33,00,000 5,18,00,000 36,23,901 S.A. SUPPLIERS PVT. LTD. MANUSH DISTRIBUTORS LTD. 2004 - 05 50,00,000 0 0 S.A. SUPPLIERS PVT. LTD. ANUVRAT TRANSPORT SYSTEMS LTD. 2004 - 05 50,00,000 0 0 SUB TOTAL 16,79,00,000 19,84,00,000 90,21,304 BIKAJI MERCANTILES PVT. LTD. MANUSH DISTRIBUTORS LTD. 2005 - 06 2,73,00,000 4,03,00,000 6,27,090 BIKAJI MERCANGILES ANUVRAT TRANSPORT SYSTEMS LTD. 2005 - 06 1,00,00,000 1,50,00,000 4,44,493 8 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 PVT. LTD. SHANTI KR. SURANA MANUSH DISTRIBUTORS LTD. 2005 - 06 3,40,00,000 4,60,00,000 15,63,288 SHANTI KR. SURANA ANUVRAT TRANSPORT SYSTEMS LTD. 2005 - 06 2,00,00,000 2,00,00,000 2,95,726 AMAR IMPEX PVT. LTD. ANUVRAT TRANSPORT SYSTEMS LTD. 2005 - 06 1,20,00,000 1,20,00,000 91,726 S.A. SUPPLIERS PVT. LTD. MANUSH DISTRIBUTORS LTD. 2005 - 06 0 50,00,000 1,79,178 S.A. SUPPLIERS PVT. LTD. ANUVART TRANSPORT SYSTEMS LTD. 2005 - 06 0 50,00,000 1,80,822 SUB TOTAL 10,33,00,000 14,33,00,000 33,82,323 SHANTI KR. SURANA PAYAGPOUR VYAPAAR PVT. LTD. 2006 - 07 1,35,00,000 1,35,00,000 1,70,137 AMAR IMPEX PVT. LTD. ANUVRAT TRANSPORT SYSTEMS LTD. 2006 - 07 67,00,000 67,00,000 43,529 DEVANSHI CONSULTANTS PVT. LTD. PAYAGPOUR VYAPAAR PVT. LTD 2007 - 08 25,00,000 25,00,000 9,041 DEVANSHI CONSULTANTS PVT. LTD. ANUVRAT TRANSPORT SYSTEMS LTD. 2007 - 08 71,00,000 71,00,000 19,396 SUB TOTAL 2,98,00,000 2,98,00,000 2,42,103 GRAND TOTAL 44,09,00,000 44.09,0,000 1,47,70,388 DETAILS OF SHARE APPLICATION MONEY IN THE GROUP COMPANIES OF SHANTI KUMAR SURANA NAME OF THE COMPANY NAME OF THE APPLICANT FINANCIAL YEAR AMOUNT GIVEN BIKAJI MERCANTILES PVT. LTD. MANUSH DISTRIBUTORS LTD. 2004 - 05 50,00,000 BIKAJI MERCANTILES PVT. LTD. ANUVRAT TRANSPORT SYSTEMS LTD. 2004 - 05 50,00,000 BIKJI MERCANTILES PVT. LTD. TEJI MANDI SECURITIES PVT. LTD. 2004 - 05 30,00,000 BIKAJI MERCANTILES PVT. LTD. RANG VARDHAN FEBTRADE PVT. LTD. 2004 - 05 30,80,000 BIKAJI MERCANTILES PVT. LTD. CYGNUS PUBLISHERS LTD. 2004 - 05 29,00,000 BIKAJI MERCANTILES PVT. LTD. ALFA TIE - UP - PVT. LTD. 2004 - 05 25,00,000 BIKAJI MERCANTILES PVT. LTD. PAYAGPOUR VYAPAAR PVT. LTD. 2004 - 05 30,00,000 DSL TECHNOLOGIES LTD. RANG VARDHAN FEBTRADE PVT LTD. 2004 - 05 20,00,000 DSL TECHNOLOGIES LTD. ALFA TIE - UP PVT. LTD. 2004 - 05 8,00,000 DSL TECHNOLOGIES LTD. PAYAGPOUR VYAPAAR PVT. LTD. 2004 - 05 13,00,000 SUB TOTAL 2,99,80,000 AMAR IMPEX PVT. LTD. PAYAGPOUR VYAPAAR PVT. LTD. 2005 - 06 70,00,000 AMAR IMPEX PVT. LTD. TEJI MANDI SECURITIES PVT. LTD. 2005 - 06 82,15,000 AMAR IMPEX PVT. LTD. ALFA TIE - UP PVT. LTD. 2005 - 06 21,00,000 AMAR IMPEX PVT. LTD. CYGNUS PUBLISHERS LTD. 2005 - 06 80,00,000 AMAR IMPEX PVT. LTD. RANG VARDHAN FEBTRADE PVT. LTD. 2005 - 06 62,50,000 9 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 DEVANSHI CONSULTANTS PVT. LTD PAYAGPOUR VYAPAAR PVT. LTD. 2005 - 06 35,00,000 DEVANSHI CONSULTANTS PVT. LTD TEJI MANDI SECURITIES PVT. LTD. 2005 - 06 35,00,000 DEVANSHI CONSULTANTS PVT. LTD ALFA TIE - UP PVT. LTD. 2005 - 06 35,00,000 DEVANSHI CONSULTANTS PVT. LTD CYGNUS PUBLISHERS LTD. 2005 - 06 24,00,000 S.A. SUPPLIERS PVT. LTD. CYGNUS PUBLISHERS LTD. 2005 - 06 20,00,000 S.A. SUPPLIERS PVT. LTD. TEJI MANDI SECURITIES PVTX. LTD. 2005 - 06 20,00,000 S.A. SUPPLIERS PVT. LTD. ANUVRAT TRANSPORT SYSTEMS LTD. 2005 - 06 25,00,000 S.A. SUPPLIERS PVT. LTD. PAYAGPOUR VYAPPAR PVT. LTD. 2005 - 06 20,00,000 SUB TOTAL 5,29,65,000 GRAND TOTAL 8,29,45,000 7. THE AO ADDED ALL THESE SHARE APPLICATION MONEY AND LOANS AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT , CONSEQUENTIAL DISALLOWANCE OF INTEREST ON LOANS AND DISALLOWANCE OF EXPENSES OF EXEMPTED INCOME BY INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT, IN IDENTICALLY WORDED ASSESSMENT S . THE AO NOTED IN THE ASSESSMENT ORDER THAT A STATEMENT OF SH. RAJ KUAMR MORE , WHO IS BROTHER OF SH SHAMBHU KUMAR MORE IS ONE OF THE DIRECTORS IN THE COMPANIES WHICH WERE FOUND TO BE INDULGED IN PROVID ING ACCOMMODATION ENTRIES TO SH SHANTI KUMAR SURANA AND OTHER GROUP COMPANIES, WAS ALSO RECORDED DURING THE COURSE OF SEARCH ON 9 . 5 . 2009. ANOTHER STATEMENT OF SH. RAJ KUMAR MORE WAS RECORDED U/S 131(1) OF THE ACT ON 21/10/2010 DURING THE COURSE OF ASSESSME NT PROCEEDINGS AND HE STATED THAT HE IS ONLY A DUMMY DIRECTOR IN THESE COMPANIES. SHRI SHAMBHU KUMAR MORE FURNISHED ANOTHER LETTER ON 15/5/2009 TO THE D.D.I.T(INV.) BY WHICH HE FURNISHED A DETAILED LIST OF UNSECURED LOANS, INTEREST ON SUCH LOANS AND SHARE CAPITAL/PREMIUM FOR WHICH HE HAD PROVIDED ACCOMMODATION ENTRIES TO SH. SHANTI KUMAR SURANA AND OTHER GROUP COMPANIES OWNED BY HIM THROUGH THE COMPANIES CONTROLLED BY HIM . THE DETAILS AS FURNISHED BY HIM ARE REPRODUCED IN THE ABOVE PARA. THE AO, IN VIEW O F THE ABOVE STATEMENT OF SHRI SHAMBHU KR MORE HELD THAT THE ASSESSEE HAS AVAILED THE SERVICES OF SHRI SAMBHU KR MORE TO OBTAIN ACCOMMODATION ENTRIES HIMSELF AND THE GROUP COMPANIES. SUBSEQUENTLY, THE AO NOTED THAT THE ASSESSEE VIDE HIS STATEMENT U/S. 132( 4) OF ACT ON 20.03.2009 I.E. THE DATE OF SEARCH DISCLOSED AN ADDITIONAL SUM OF RS.81,83,210/ - TOWARDS UNACCOUNTED JEWELLERY AND SILVER ARTICLES AND IN ANOTHER STATEMENT ON 08.04.2009 HE VOLUNTARILY DISCLOSED AN 10 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 ADDITIONAL INCOME OF RS. 8 CR. ON BEHALF OF H IMSELF, MEMBERS OF HIS FAMILY AND GROUP CONCERNS. THE AO NOTED THAT WHILE FILING RETURNS OF INCOME HE ONLY DISCLOSED CASH AND JEWELLERY AT RS.1,25,50,000/ - . THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS RECORDED STATEMENT OF ASSESSEE U/S. 131(1) ON 15.09.2010, WHEREIN HE DENIED HAVING MADE ANY DISCLOSURE OF RS.8 CR. DURING POST SEARCH PROCEEDINGS AND ALSO DENIED HAVING TAKEN ACCOMMODATION ENTRIES IN LIEU OF CASH. THE AO, FINALLY, NOTED THE FOLLOWING REASONS FOR TREATING THE SHARE APPLICATION AND LOA NS AS INCOME OF THE ASSESSEE AGAINST UNACCOUNTED CASH: 1. BY DISCLOSING AN ADDITIONAL INCOME OF RS.8 CRORES DURING THE COURSE OF POST SEARCH PROCEEDINGS, SRI SURANA INDIRECTLY ADMITTED OF HAVING ENTERED INTO TRANSACTIONS WITH THE AFOREMENTIONED COMPANIES T HROUGH SH. SHAMBHU KUMAR MORE. 2. DURING THE COURSE OF POST SEARCH PROCEEDINGS, D.D.I.T(INV.) CONDUCTED SELECTIVE ENQUIRIES FROM ABN AMRO BANK (THE BANK WHERE THE ASSESSEE AND THE OTHER GROUP CONCERNS MAINTAINED THEIR ACCOUNTTS0 TO TRAIL THE SOURCE OF DEPO SITS OF VARIOUS UNSECURED LOANS AND SHARE CAPITALS IN THE BANK ACCOUNTS OF THE ASSESSEE AND THE OTHER GROUP COMPANIES. THE UNDERSIGNED ALSO CONDUCTED SIMILAR ENQUIRIES FROM THE SAID BANK. FROM SUCH ENQUIRIES THE FOLLOWING FACTS WERE DISCOVERED A. CASH OF R S.4,50,000/ - AND RS.3,70,000/ - DEPOSITED IN THE ACCOUNT (NO. - 1033167) OF SH. VIKAS KUMAR AGARWAL ON 22/12/2004 AND 23/12/2004 RESPECTIVELY. CASH OF RS.3,50,000/ - AND RS.50,000/ - DEPOSITED IN THE ACCOUNT (NO. - 992328) OF M/S. MJ ENTERPRISE ON 23/12/2004 AND 24/12/2004 RESPECTIVELY. BOTH OF THEM UTILIZED THIS AMOUNT TO ADVANCE RS.9,20,000/ - BY TRANSFER TO THE ACCOUNT (NO. - 968357) OF M/S. NITYA COMMODITIES LTD., ON 24/12/2004. THIS CONCERN THEN UTILIZED THIS AMOUNT TO ADVANCE RS.9,00,000/ - BY TRANSFER TO THE A CCOUNT (NO. - 475870) OF M/S. CYGNUS PUBLISHERS LTD. (A COMPANY CONTROLLED BY SH. MORE) ON 24/12/2004. IT UTILIZED THIS AMOUNT TO ADVANCE RS.24,00,000/. - BY TRANSFER TO THE ACCOUNT (NO. - 153894) OF M/S MANUSH DISTRIBUTORS LTD. (ANOTHER COMPANY CONTROLLED BY S H. MORE). THIS COMPANY UTILIZED THIS AMOUNT TO ADVANCE RS.245,00,000/ - BY TRANSFER TO THE ACCOUNT (NO. - 891096) OF M/S. SURANA MERCANTILE PVT. LTD., I.E., THE ASSESSEE AND THE ULTIMATE BENEFICIARY OF THE WHOLE CHAIN OF TRANSACTION. B. CASH OF RS.5,00,000/ - DEP OSITED IN THE ACCOUNT (NO. - 1033167) OF SH. VIKAS KUMAR AGARWAL ON 27/12/2004. CASH OF RS.4,00,000/ - DEPOSITED IN THE ACCOUNT (NO. - 994133) OF M/S. MA TRADING COMPANY ON 27/12/2004. BOTH OF THEM UTILIZED THIS AMOUNT TO ADVANCE RS.19,00,000/ - BY TRANSFER TO T HE ACCOUNT NUMBER 262430 ON 27/12/2004. THIS CONCERN THEN UTILIZED THIS AMOUNT TO ADVANCE RS.25,00,000/ - BY TRANSFER TO THE ACCOUNT (NO. - 243097) OF M/S. ANUVRAT TRANSPORT SYSTEMS LTD. (A COMPANY CONTROLLED BY SH. MORE) ON 27/12/2004. IT UTILIZED THIS AMOUN T TO 11 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 ADVANCE RS.25,00,000/ - BY TRANSFER TO THE ACCOUNT (NO - 891096) OF M/S. SURANA MERCANTILE PVT. LTD. I.E., THE ASSESSEE AND THE ULTIMATE BENEFICIARY OF THIS CHAIN OF TRANSACTION. C. NOTICE U/S 133(6) WAS ISSUED TO SH. VIKAS KUMAR AGARWAL, M/S. MJ ENTERPRISE AND M/S MA TRADING COMPANY TO FURNISH THE SOURCE OF CASH DEPOSITED BY THEM. HOWEVER, NO REPLY WAS RECEIVED FROM THEM. 3. THE ABOVE DESCRIPTION OF THE TRANSACTIONS CLEARLY INDICATE THAT THE CASH DEPOSITS WERE ULTIMATELY TRANSFERRED TO THE ASSESSEE COMPANY. T HE CASH WAS DEPOSITED IN ACCOUNTS OPENED IN THE NAME OF FAKE HOLDERS WHO WERE NOT TRACEABLE. 4. DURING THE COURSE OF SEARCH AT THE OFFICE PREMISES OF THE ASSESSEE COMPANY AT CENTURY TOWERS, 45, SHAKESPEARE SARANI , SEVERAL BOOKS DOCUMENTS WERE FOUND AND SEIZED. ONE SUCH BUNCH MARKED SSI/5 CONTAIN NUMBER OF LOOSE SHEETS WITH NOTINGS AND ABSTRACTS OF MONETARY TRANSACTIONS. PAGE NO. - 56 CONTAIN DETAILS OF FOLLOWING TRANSACTIONS: - FOR KOCHARJI SANGEETA & CO. --- 90,000 FOR BHARTIAJI PAYAGPORE --- 2,60,000 TEJI MANDI --- 2,80,000 ALFA TIE UP --- 1,60,000 RANG VARDHAN --- 2,00,000 PAGE NO. 5 CONTAIN DETAILS OF TRANSACTION OF 2.5 LAKH IN THE NAME OF SKS(H) AND RS.5 LAKH IN THE NAME OF PRABHA. PAGE NO. - 58 CONTAIN DETA ILS OF TRANSACTIONS OF RS.21 LAKH, RS.70,000/ - AND RS.1,50,000/ - IN VARIOUS NAMES. PAGE NO. 51 CONTAIN DETAILS OF TRANSACTIONS @ 4 AND @ 2 IN THE NAME OF VARIOUS PERSONS. PAGE NO. 49 CONTAIN DETAILS OF TRANSACTIONS OF RS.30 LAKH, RS.10 LAKH, RS.50 LAKH AND RS.10 LAKH IN THE NAME OF VARIOUS PERSONS. PAGE NO. 44 CONTAIN NOTINGS OF TRANSACTION OF RS.15 LAKH IN THE NAME OF PRABHO. PAGE NO. - 41 CONTAIN NOTINGS OF TRANSACTION OF RS.2,64,726/ - AND RS.6,66,534/ - . PAGE NO. - 38 CONTAIN NOTINGS OF TRANSACTION OF RS.50,0 00/ - IN THE NAME OF PRADYUMNA AGARWAL AND PAGE NO. 34 CONTAIN NOTINGS OF TRANSACTION OF RS.90,593/ - AND RS.1,22,874/ - IN THE NAMES OF BOSE DEVELOPERS AND SUB DEVELOPERS. SRI SURANA WAS ASKED TO FURNISH PAGE WISE EXPLANATION OF THESE LOOSE SHEETS. IN HIS REPLY, HE STATED THAT THESE ARE ROUGH NOTINGS OR ACCOUNT INFORMATION. BUT NO BASIS OF SUCH NOTINGS WAS FURNISHED. 5. SRI SURANA WAS PROVIDED WITH THE COPIES OF ALL THE STATEMENTS OF SRI MORE RECORDED U/S. 132(4) BEFORE D.D.I.T.(INV) AND U/S 131(1) BY THE UND ERSIGNED AND HE WAS GIVEN AN OPPORTUNITY TO CROSS EXAMINE SRI MORE. ON THE STIPULATED DAY OF 16/12/2010, BOTH SRI MORE AND SRI SURANA APPEARED BEFORE THE UNDERSIGNED BUT SRI SURANA REFUSED TO CROSS EXAMINE SRI MORE. THIS CLEARLY INDICATES THE GUILTY MINDED NESS OF SRI SURANA. 12 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, THE AO FOR ALL THESE ASSESSMENT YEARS 2003 - 04 TO 2007 - 08 HELD THAT THE ASSESSEE AND HIS GROUP CONCERNS HAVE ACCEPTED ACCOMMODATION ENTRIES IN THEIR RESPECTIVE BOOKS OF ACCOUNT T OWARDS UNSECURED LOANS AS WELL AS SHARE CAPITAL/SHARE PREMIUM IN LIEU OF UNACCOUNTED CASH ROUTED THROUGH VARIOUS CONCERNS OF SHRI SHAMBHU KR MORE, AS ADMITTED BY SHRI SAMBHU KR MORE. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A). 8. THE CIT(A) DECIDED THE ISSUE ON JURISDICTION AGAINST THE ASSESSEE BUT ON MERITS DELETED THE ADDITION BY OBSERVING IN PARA 6.8 TO 6.14 AS UNDER: 6.8. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH ALL THE FACTS AND MATERIAL RELEVANT TO THE ISSUES. F ACTS WHICH ARE ON RECORD SHOW THAT THE APPELLANT HAD OBTAINED LOANS BY ACCOUNT PAYEE CHEQUES WHICH HAVE BEEN CLEARED AND CREDITED TO THE APPELLANT S BANK ACCOUNT. THE LOANS HAVE BEEN REFUNDED BY THE APPELLANT BY A/C PAYEE CHEQUES WHICH HAVE BEEN CLEARED FR OM THE BANK ACCOUNT OF THE APPELLANT. THUS ALL THESE TRANSACTIONS OF LOANS RECEIVED AND REFUNDED ARE BY A/C PAYEE CHEQUES THROUGH THE BANKING CHANNEL. IN SUPPORT OF THE LOAN TRANSACTION THE APPELLANT HAD SUBMITTED A/C. CONFIRMATION FROM THE PARTIES STATING PAN OF THE LOAN CREDITORS. THE APPELLANT ALSO SUBMITTED THE CAPITAL BASE OF THOSE CREDITORS WITH REFERENCE TO THE COPIES OF THE ANNUAL ACCOUNTS WHICH WAS OBTAINED FROM THE ROC. THERE IS NO DOUBT ABOUT THE AVAILABILITY OF FUNDS IN THESE COMPANIES WHICH PRO VES THEIR CREDITWORTHINESS. THE APPELLANT HAS ALSO PAID INTEREST ON THESE LOANS AFTER DUE DEDUCTION OF TAX AT SOURCE. THUS IT IS CRYSTAL CLEAR THAT THE APPELLANT HAS FURNISHED ALL DOCUMENTARY EVIDENCES TO PROVE THE IDENTITY AND THE CREDITWORTHINESS OF THE LOAN CREDITORS AS WELL AS THE GENUINENESS OF THE TRANSACTIONS. IT IS A MATTER OF GREAT SURPRISE THAT THE ASSESSMENT ORDER IS ABSOLUTELY SILENT ABOUT THE PLETHORA OF DOCUMENTARY EVIDENCE AVAILABLE DURING THE COURSE OF ASSESSMENT. THE FACT THAT THE AO HAS SI MPLY BRUSHED ASIDE THESE OVERWHELMING DOCUMENTARY EVIDENCE WITHOUT EVEN DISCUSSING THESE IN THE ASSESSMENT ORDER SHOWS THAT THE ASSESSMENT HAS BEEN COMPLETED WITH A CLOSED MIND. 6.9 AS IS APPARENT FROM THE ASSESSMENT ORDER THE O HAS ADDED THE UNSECURED LO ANS FOR ALL THE ASSESSMENT YEARS SOLELY ON THE BASIS OF A STATEMENT MADE BY A THIRD PARTY NAMELY SRI SAMBHU KUMAR MOE AND CERTAIN FACTS STATED IN THE ORDER WHICH IN HIS VIEW CORROBORATE THE STATEMENT OF SRI SAMBHU KUMAR MORE. NOT ONLY THAT, SIMILAR ASSES SMENTS WERE ALSO MADE IN THE CASE OF FIVE OTHER ASSESSEES BELONGING TO THE SURANA GROUP FOR VARIOUS ASSESSMENT YEARS. IN TOTAL UNSECURED LOAN AMOUNTING TO APPROXIMATELY RS.43 CRORSS AND SHARE SUBSCRIPTION AMOUNTING TO APPROXIMATELY RS.8 CORE HAVE BEEN ADDE D U/S. 68 IN RESPECT OF ASSESSEE S OF THIS GROUP. IT IS AN ADMITTED FACT THAT NO INCRIMINATING DOCUMENTS OR EVIDENCE WERE FOUND DURING THE COURSE OF THE SEARCH IN THE PREMISES OF THE APPELLANT WHICH EVEN REMOTELY SUGGEST THAT THE APPELLANT HAS RESORTED TO INTRODUCE ITS UNACCOUNTED CASH THROUGH ACCOMMODATION ENTRIES. THE PREMISES OF SRI SAMBHU KUMAR MORE WERE ALSO SEARCHED BUT NO INCRIMINATING EVIDENCE OR DOCUMENT TO THIS EFFECT WAS FOUND. EVEN SURVEYS CONDUCTED U/S. 133A IN THE BUSINESS PREMISES OF THE COMP ANIES, WHO ARE LOAN CREDITORS AND SHARE SUBSCRIBERS TO THE APPELLANT AND OTHER GROUP COMPANIES, DREW A BLANK AS FAR AS ANY INCRIMINATING EVIDENCE OR DOCUMENT IS CONCERNED. NEITHER DURING THE POST SEARCH ENQUIRIES 13 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 OR ENQUIRIES DURING THE ASSESSMENT PROCEEDI NGS ANY DOCUMENT OR EVIDENCE WERE UNEARTHED EVEN REMOTELY RELATING TO ACCOMMODATION ENTRIES. 6.10 THE RELEVANT PORTION OF THE STATEMENT OF SRI MORE HAS BEEN REPRODUCED IN THE ASSESSMENT ORDER. IT IS APPARENT THAT THE SEARCH AND SURVEY OPERATION IN RESPECT OF SRI MORE AND THE COMPANIES WERE UNDERTAKEN WITH THE OBJECTIVE OF ESTABLISHING SOME LINK BE TWEEN THESE COMPANIES AND THE ASSESSEE OF THE SURANA GROUP. THE MANNER IN WHICH THE STATEMENT WAS TAKEN ALSO INDICATES THE SAME. NO QUESTIONS WERE ASKED TO SRI MORE AS TO WHETHER HE PROVIDES ACCOMMODATION ENTRIES IN GENERAL I.E TO PERSONS OTHER THAN THE SU RANA GROUP. NO QUESTION WAS ASKED AS TO HOW MUCH AMOUNT OF LOAN AND SHARE CAPITAL WERE ARRANGED FOR DIFFERENT ASSESSEES OF THE GROUP OR REGARDING THE DATES ON WHICH CASH AMOUNTS WERE RECEIVED. IN FACT, THE DETAILS OF ADDITION TO SHARE CAPITAL, UNSECURED LO ANS IN THE CASE OF BIKAJI MERCANTILE PVT. LTD. (WHICH WERE LATE CHANGED TO SURANA MERCANTILE PVT. LTD.) FOR THE F.Y. 2004 - 05 WERE SHOWN TO SRI MORE ASKING HIM WHETHER HE HAS ARRANGED ACCOMMODATION ENTRIES FOR THESE AMOUNTS. NOTHING WAS ALSO ASKED ABOUT THE ALLEGED ENTRIES GIVEN TO BIKAJI MERCANTILE PVT. LTD. IN OTHER ASSESSMENT YEARS AS WELL AS ENT5RIES PROVIDED TO OTHER GROUP ENTITIES. SRI MORE ON HIS OWN FURNISHED A LETTER DATED 15.05.2009 TO THE DDIT (INV.) IN WHICH HE PROVIDED A DETAILED LIST OF UNSECUR ED LOANS, INTEREST ON SUCH LOANS, REPAYMENT OF LOANS AND DETAILS OF SHARE CAPITAL / SHARE PREMIUM IN RESPECT OF WHICH HE HAD ALLEGEDLY PROVIDED ACCOMMODATION ENTRIES. THESE DETAILS RUN ACROSS SIX GROUP ENTITIES FOR THE PERIOD F.Y. 2002 - 03 TO F.Y. 2007 - 08. IT IS INTERESTING TO NOTE THAT ANOTHER STATEMENT OF SRI SMBHU KUMAR MORE WAS RECORDED ON 21.10.2010 U/S. 131(1) OF THE I.T. ACT IN WHICH HE HAS CANDIDLY ADMITTED THAT HE HAS ABSOLUTELY NO EVIDENCE REGARDING THE ACCOMMODATION ENTRIES PROVIDED TO THESE GROUP ENTITIES. I AM AT A LOSS TO FATHOM HOW WAS IT POSSIBLE FOR HIM TO SUPPLY IN GRAPHIC DETAIL ALL THE UNSECURED LOANS, SHARE SUBSCRIPTIONS, INTEREST AND REPAYMENT OF LOANS IN RESPECT OF WHICH HE WAS INSTRUMENTAL IN PROVIDING ACCOMMODATION ENTRIES WITHOUT ANY EVIDENCE. APPARENTLY HE HAS TAKEN THESE FIGURES FROM THE BOOKS OF ACCOUNTS OF THE COMPANY RELATING TO ALL THE LOANS AND SHARE SUBSCRIPTIONS GIVEN TO THE ENTITIES OF SURANA GROUP. 6.11 CERTAIN OTHER FACTORS EMERGED FROM THE STATEMENT WHICH REQUIRES TO BE MENTIONED HERE. (A) IN THE STATEMENT DATED 09.05.2009 SRI SAMBHU KUMAR MORE HAS CATEGORICALLY STATED THAT IN THE CASE OF CONCERNS OF SURANA GROUP CHEQUES IN LIEU OF CASH WERE PROCURED FROM SRI DEBESH UPADHYAY AND SRI VINOD JISWAL HAVING THEIR OFFICES AT W ATERLOO STREET AND GIRISH PARK RESPECTIVELY. HOWEVER, SURPRISINGLY NO EFFORTS WERE MADE TO REACH THESE PERSONS, TRACE THEIR BANK ACCOUNTS OR OBTAIN THEIR STATEMENTS. (B) IN THE STATEMENT DATED 21.10.2010 SRI MORE HAS ALOS CATEGORICALLY STATED THAT HE DID N OT PERSONALLY HANDLE THE CASH AND ALL THE CASH TRANSACTIONS HAVE BEEN HANDLED BY ONE MR K.K. BHARTIA. ONCE AGAIN NO EFFORT HAS BEEN MADE TO EXAMINE SRI K. BHARTIA WHO WAS ANOTHER VITAL LINK IN THE ALLEGED ACCOMMODATION ENTRY TRANSACTION. 6.12 THESE FACTOR S CLEARLY INDICATE THAT THE INVESTIGATIONS IN THESE CASES WERE MADE IN A VERY HALF HAZARD MANNER WITH A CLOSED MIND. THE STATEMENT OF A THIRD PARTY I.E. SRI MORE HAS BEEN ACCEPTED AS GOSPEL TRUTH IN SPITE OF HIS CANDID ADMISSION OF NOT HAVING ANY EVIDENCE TO SUPPORT HIS STATEMENT. THE STATEMENT OF A THIRD PARTY DOES NOT HAVE ANY 14 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 EVIDENTIARY VALUE UNLESS SUPPORTED AND CORROBORATED BY EVIDENCE FURNISHED BY HIM OR ANY INDEPENDENT MATERIAL AND EVIDENCES GATHERED FROM OTHER SOURCES. IN THIS BACKGROUND IT IS PER TINENT TO ANALYSE THE FACTORS WHICH IN VIEW OF THE ASSESSING OFFICE CORROBORATES THE STATEMENT OF SRI MORE. (A) IT HAS BEEN STATED BY THE AO THAT BY DISCLOSING THE ADDITIONAL INCOME OF RS.8 CRORE DURING THE POST SEARCH PROCEEDINGS SRI SURANA INDIRECTLY ADMITTED OF HAVING ENTERED INTO TRANSACTIONS WITH THE AFOREMENTIONED COMPANIES THROUGH SRI SAMBHU KUMAR MORE. IT IS SEEN FROM RECORDS THAT THE STATEMENT OF SRI SHANTI KUMAR SURANA WERE RECORDED THRICE. IN THE FIRST STATEMENT RECORDED U/S 132(4) OF THE I.T. ACT DATED 20.03.2009 NO SUCH DISCLOSURE WAS MADE. THE STATEMENT WAS READ TO SRI SURANA IN HINDI BY SRI NARENDRA KOCHAR WHICH INDICATES THAT SRI SURANA DOES NOT UNDERSTAND ENGLISH VERY WELL. ANOTHER STATEMENT WAS RECORDED U/S 132(4) OF THE I.T. ACT ON 8.4.2009. SURPRISINGLY THIS STATEMENT WAS NOT READ TO HIM IN HINDI. IN ANY CASE IN THIS STATEMENT IT WAS STATED I VOLUNTARILY WISH TO DECLARE AN INCOME OF RS.8,00,00,000/ - (RUPEES EIGHT CRORE ONLY) WHICH INCLUDES THE AMOUNT OF INCOME DECLARED BY M Y ELDER BROTHER AND MYSELF ON 19/30 TH MARCH, 2009 . IT WAS ALSO STATED THAT THE DETAILS OF SUCH INCOME, MANNER IN WHICH THE SAME WAS EARNED AS WELL AS THE BREAK UP AND APPLICATIONS THEREOF WILL BE SUBMITTED IN NEXT FEW DAYS. THE THIRD STATEMENT U/S 132(4) WAS RECORDED ON 14.05.2005 WHICH AGAIN WAS NOT READ OVER TO HIM IN HINDI. SURPRISINGLY NO QUESTIONS REGARD THE DETAILS OF THE DISCLOSURE OF RS.8 CRORE WAS ASKED TO HIM. HE WAS ASKED TO COMMENT ON THE STATEMENT OF SRI SAMBHU KUMAR MORE REGARDING HIS ALLEGAT ION ABOUT PROVIDING ACCOMMODATION ENTRIES. IN RESPONSE HE STATED THAT WITHOUT THE COPIES OF STATEMENT OF SRI MORE HE COULD NOT MAKE ANY COMMENT BUT ON HIS PART HE COULD ONLY SAY THAT HE RECEIVED THE CHEQUES OF SHARE CAPITAL AND LOANS AND THE SAME WERE REPA ID BY CHEQUE ONLY. HE CATEGORICALLY STATED THAT HE NEVER HAD ANY CASH TRANSACTIONS WITH THEN. FROM THIS IT IS CRYSTAL CLEAR THAT THE STATEMENT OF SRI SHANTI KUMAR SURANA S DISCLOSURE OF RS.8 CRORE DOES NOT HAVE ANY RELATION TO THE ALLEGED ACCOMMODATION ENT RY TRANSACTIONS. SECONDLY, THESE STATEMENTS RECORDED IN ENGLISH WITHOUT BEING READ DO HIM IN HINDI HAS DUBIOUS EVIDENTIARY VALUE. THIRDLY, APPARENTLY THERE IS NO CORROBORATIVE EVIDENCE OR DOCUMENTS UNEARTHED DURING THE SEARCH WHICH COULD PROVE THAT HE HAD UNDISCLOSED INCOME EXCEPT RS.1,25,50,000/ - ON A/C. OF UNDISCLOSED CASH AND JEWELLERY WHICH SRI SURANA DECLARED IN HIS INDIVIDUAL RETURN FILED U/S. 153A. THUS, I AM OF THE OPINION THAT THE DISCLOSURE OF RS.8 CRORE IN NO WAY CORROBORATES THE STATEMENT OF SR I MORE REGARDING THE ALLEGED ACCOMMODATION ENTRIES. (B) SECONDLY, THE AO MENTIONS ABOUT CASH DEPOSITS IN CERTAIN ACCOUNTS IN THE ABN AMRO BANK WHICH HAVE BEEN REROUTED TO THE APPELLANT COMPANY AS LOANS. THIS POINT HAS BEEN DISCUSSED IN DETAIL IN THE ASSES SMENT ORDER WHICH IS ALSO MADE A PART OF THIS ORDER. IT IS SEEN THAT CASH WAS DEPOSITED IN RELATION TO THE ACCOUNTS OF SRI VIKASH KR. AGARWAL, M/S M.J. ENTERPRISE AND M/S M.A. TRADING CO. IN THE STATEMENT SRI MORE HAS CATEGORICALLY STATED THAT IN RESPECT O F SURANA GROUP CHEQUES IN LIEU OF CASH WERE PROCURED FROM SRI DEBESH UPADHYAY AND SRI VINOD JISWAL. APPARENTLY THESE ACCOUNTS DO NOT BELONG TO THESE PERSONS. THEREFORE, NO NEXUS COULD BE ESTABLISHED BETWEEN THE STATEMENT OF SRI MORE 15 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 AND THE ACCOUNT HOLDERS HAVING CASH DEPOSITS. AGAIN NO EFFORT WAS MADE TO REACH THESE PERSONS AND EXAMINE THEM WITH RESPECT TO THE SOURCE OF CASH DEPOSITED IN THESE ACCOUNTS EXCEPT ISSUING NOTICES U/S 13(6) FOR WHICH NO REPLY WAS RECEIVED. FURTHER, AS PER THE AO THE TOTAL AMOUNT OF CASH DEPOSIT IN THESE ACCOUNTS AMOUNTED TO RS.22,20,000/ - WHEREAS M/.S SURANA MERCANTILE LTD. RECEIVED A LOAN OF RS.50,00,000/ - THROUGH THESE TRANSACTIONS. WHAT ABOUT THE REST OF THE ON AMOUNT RECEIVED? IT IS ALSO INTERESTING TO NOTE THAT THE AO HAS FU RNISHED THE SAME ARGUMENT IN CASE OF ALL THE ASSESSEES OF THIS GROUP N WHICH TOTAL UNSECURED LOAN OF APPROXIMATELY RS.43 CRORE AND SHARE CAPITAL OF APPROXIMATELY RS.8 CRORE HAVE BEEN ADDED U/S 68 IN DIFFERENT ASSESSMENT YEARS. FROM THE ABOVE DISCUSSION IT IS CRYSTAL CLEAR THAT THESE CASH DEPOSITS HAVE NO NEXUS WITH THE ASSESSEE OF THE SURANA GROUP. FURTHER, IT IS PREPOSTEROUS TO CLAIM, ON THE BASIS OF CASH DEPOSIT OF RS.22,20,000/ - , THAT APPROXIMATELY RS.51 CRORE OF UNACCOUNTED CASH HAVE BEEN INTRODUCED TH ROUGH ACCOMMODATION ENTRIES. C) THE AO ALSO SPEAKS ABOUT SEIZED DOCUMENTS SSI/5 WITH NOTINGS AND ABSTRACTS OF MONETARY TRANSACTIONS. I AM OF THE OPINION THAT THESE ROUGH NOTINGS HAVE ABSOLUTELY NO CONNECTION TO THE ALLEGED ACCOMMODATION ENTRIES. SRI SURAN A HAD EXPLAINED IT AS ROUGH NOTINGS AND ACCOUNT INFORMATION. APPARENTLY NO EFFORT HAVE BEEN MADE TO CROSS VERIFY THESE ROUGH NOTINGS WITH REGULAR BOOKS OF ACCOUNTS OF THE APPELLANT. IN THIS VIEW OF THINGS THESE ROUGH NOTINGS, IN NO WAY CAN BE ACCEPTED AS E VIDENCE CORROBORATING THE STATEMENT OF SRI MORE REGARDING PROVIDING ACCOMMODATION ENTRIES. (D) FINALLY THE AO STATES THAT THE APPELLANT REFUSED TO CROSS EXAMINE SRI SAMBHU KUMAR MORE WHICH IS INDICATIVE OF GUILTY MIND OF SRI SURANA. THE APE EXPLAINED THAT SRI SURANA INFORMED THE AO THAT THERE WAS NO NECESSITY OR REQUIREMENT ON HIS PART TO CROSS EXAMINE SRI MORE AS HE HAD ADMITTEDLY ACCEPTED THAT HE HAD ABSOLUTELY NO EVIDENCE IN SUPPORT OF WHAT HE HAD STATED U/S 132(4). THIS INFORMATION WAS GIVEN TO THE AO VIDE LETTER DATED 16.12.2010. IN SUCH A CASE, IN MY OPINION, THE PURPOSE OF CROSS EXAMINATION IS GENERALLY TO DEMAND EVIDENCES SUPPORTING THE ALLEGATIONS AND TRYING TO REBUT THEM. AS SRI MORE CATEGORICALLY ADMITTED OF HAVING NO EVIDENCE I AGREE WITH THE AP PELLANT S CONTENTION REGARDING THE FUTILITY OF CROSS EXAMINATION. THEREFORE, I AM OF THE OPINION THAT THIS ISSUE ALSO DOES NOT IN ANY WAY CORROBORATE THE STATEMENT OF SRI MORE. 6.13 TO SUM UP (A) THE APPELLANT DISCHARGED HIS INITIAL BURDEN BY FURNISHING OVERWHELMING MATERIAL EVIDENCE REGARDING THE LOANS OBTAINED BY HIM TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE LOAN CREDITORS AS WELL AS THE GENUINENESS OF THE TRANSACTIONS. AS AGAINST THE VOLUMINOUS DOCUMENTARY EVIDENCES BROUGHT ON RECORD WHICH REMAINED UNCONTROVERTED, THE AO DID NOT BRING ON RECORD ANY MATERIAL TO DISPROVE THE GENUINENESS OF THE EVIDENCE FU9RNISHED BY THE APPELLANT, NOR BROUGHT ON RECORD ANY MATERIAL WHICH PROVED HIS CONC LUSION 16 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 THAT CASH RECEIVED FROM THE ASSESSEE WAS RETURNED IN CHEQUE FORM. ON THE FACTS AND CIRCUMSTANCES OF THE CASE I AM CONVINCED THAT THE CRITERION LAID DOWN BY THE HON BLE GUJARAT HIGH COURT IN RELATION TO THE CASE OF DCIT VS. ROHINI BUILDERS (256 ITR 3 60) AND HON BLE GUJARAT HIGH COURT IN THE CASE OF NEMICHAND KOTHARI VS. CIT (264 ITR 254) WERE SATISFIED IN THE APPELLANT S CASE. (B) NO INCRIMINATING PAPERS OR DOCUMENTS WERE FOUND IN THE SEARCH OPERATION IN CASE OF THE APPELLANT INDICATING THAT LOANS WER E OBTAINED THROUGH ACCOMMODATION ENTRIES. (C) LATER ON WHEN SEARCH WAS CONDUCTED IN THE CASE OF SAMBHU KR. MORE AND SURVEY OPERATIONS WERE CONDUCTED IN THE CASE OF VARIOUS COMPANIES, WITH WHOM THE APPELLANT HAD TRANSACTIONS, NO PAPER OR DOCUMENT WAS FOUND IMPLICATING THE APPELLANT. FURTHER, NEITHER DURING THE POST SEARCH INVESTIGATION NOR DURING THE ASSESSMENT OR REMAND STAGE ANY INCRIMINATING DOCUMENT / EVIDENCE COULD BE UNEARTHED LINKING THE TRANSACTIONS TO ANY ACCOMMODATION ENTRIES. (D) ONLY ON THE STA TEMENT OF SRI SMBHU KR. MORE WHICH IS ADMITTEDLY BEREFT OF ANY EVIDENCE THE AO HAS PROCEEDED TO BRUSH ASIDE ALL DOCUMENTARY EVIDENCES ADDUCED BY THE ASSESSEE IN SUPPORT OF THE LOANS. I HAVE ALREADY GIVEN MY FINDINGS THAT THE SO CALLED CORROBORATIVE EVIDEN CE ADDUCED BY THE AO ABJECTLY FAILS TO ACTUALLY CORROBORATE THE STATEMENT OF SRI MORE. IN THIS VIEW OF THINGS THE STATEMENT OF SRI MORE REGARDING ARRANGING ACCOMMODATION ENTRIES FOR THE APPELLANT IS NOTHING BUT MERE ALLEGATION BASE DON WHICH NO ADDITION CO ULD BE MADE U/S. 68 OF THE I.T. ACT. 6.14 FOR THE REASONS SET OUT THROUGHOUT THIS ORDER I HAVE NO HESITATION IN HOLDING THAT THE AO WAS NOT JUSTIFIED IN TREATING THE AMOUNT RECEIVED AS LOAN AS UNEXPLAINED CASH CREDIT. THEREFORE, I DELETE THE FOLLOWING ADD ITIONS MADE U/S 68 OF THE I.T. ACT. A.Y . 2003 - 04 UNSECURED LOAN RS. 82,00,000/ - A.Y. 2004 - 05 UNSECURED LOAN RS.8,85,00,000/ - A.Y. 2005 - 06 UNSECURED LOAN RS.6,28,00,000/ - A.Y. 2006 - 07 UNSECURED LOAN RS.5,40,00,000/ - A.Y. 2007 - 08 UNSECURED LOAN RS.1,35,00,000/ - AGGRIEVED, FOR THESE ASSESSMENT YEARS, REVENUE CAME IN APPEAL ON MERITS BEFORE TRIBUNAL AGAINST DELETION WHEREIN ASSESSEE CAME IN CROSS OBJECTION AGAINST VALIDITY OF ASSESSMENT FRAMED U/S. 153A OF THE ACT FOR THE REASON THAT THERE IS NO INCRIMINATING MATER IAL FOR THESE ASSESSMENT YEARS AND THE ASSESSMENTS U/S. 143(3)/143(1) OF THE ACT HAVE ALREADY BEEN COMPLETED AND THE PROCEEDINGS CANNOT BE REVIVED UNLESS THE SAME IS ABATED. IN THESE ASSESSMENT YEARS THE COMPLETED ASSESSMENT CANNOT BE ABATED IN TERM OF TH E PROVISION OF SECTION 153A( 1 ) OF THE ACT . 17 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 9. BEFORE US, LD. COUNSEL FOR THE ASSESSEE FIRST OF ALL STATED THAT FOR ASSESSMENT YEARS 2003 - 04 TO 2007 - 08 ASSESSMENTS WERE COMPLETED ORIGINALLY U/S. 143(3)/143(1) OF THE ACT AND NO PROCEEDINGS, WHATSOEVER, W ERE PENDING BEFORE THE AUTHORITIES UNDER ANY OF THE PROVISIONS OF THE ACT BEFORE THE DATE OF SEARCH I.E. 19.03.2009. AFTER THE COMPLETION OF SEARCH THE AO ISSUED NOTICES U/S. 153A OF THE ACT IN RESPECT TO THESE ASSESSMENT YEARS JUST BASED ON THE STATEMENT OF SHRI SAMBHU KR MORE RECORDED U/S. 132(4) OF THE ACT ON 09.05.2009. ACCORDING TO LD. COUNSEL, THE INCOME TAX DEPARTMENT CONDUCTED A SURVEY U/S. 133A OF THE ACT ON THE BUSINESS PREMISES OF SHRI SAMBHU KR MORE ON 09.05.2009 AND THE SAME WAS CONVERTED INT O SEARCH AND SEIZURE OPERATION U/S. 132 OF THE ACT ON THE VERY SAME DAY. THE DEPARTMENT ON THE BASIS OF SHRI SAMBHU KR MORE CAME TO CONCLUSION THAT HE HAS PROVIDED ACCOMMODATION ENTRIES TO SHRI SHANTI KR SURANA, THE ASSESSEE, AND HIS GROUP COMPANIES IN LI EU OF UNACCOUNTED CASH. APART FROM THE STATEMENT OF SHRI SAMBHU KR MORE THE REVENUE COULD NOT UNEARTH ANY EVIDENCE WHICH PROVES THAT THE ASSESSEE HAS RECEIVED UNSECURED LOANS, SHARE CAPITAL/PREMIUM THROUGH ACCOMMODATION ENTRIES PROVIDED BY SHRI SAMBHU KR MORE. THERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH EITHER ON THE SURANA GROUP OF COMPANIES ON 19.03.2009 OR DURING SEARCH AND SEIZURE OPERATION ON SAMBHU KR MORE ON 09.05.2009. ACCORDING TO LD. COUNSEL, AS THE REVENUE HAS ISSUED NOTICES U/S. 153A OF THE ACT IN RESPECT TO ASSESSEE AND HIS GROUP CONCERNS AFTER SEARCH AND ASSESSEE HAS FILED RETURN IN RESPONSE TO THE SAME DEPICTING THE SAME INCOME AS ORIGINALLY RETURNED AND ASSESSED BY THE DEPARTMENT, IN THE ABSENCE OF ANY INCRIMINATI NG MATERIAL FOUND DURING THE COURSE OF SEARCH, THE REVENUE SHOULD NOT HAVE FRAMED ASSESSMENT. ACCORDING TO HIM, THE ASSESSMENT FRAMED U/S. 153A OF THE ACT WITHOUT INCRIMINATING MATERIAL IS BAD IN LAW AND VOIDABLE. LD. COUNSEL FOR THE ASSESSEE REQUESTED T HE BENCH TO ASK THE REVENUE/LD. CIT, DR TO PRODUCE THE SEARCH MATERIAL/INCRIMINATING MATERIAL ON THE BASIS OF WHICH ASSESSMENT IN THESE YEARS ARE FRAMED U/S. 153A OF THE ACT. LD. COUNSEL FOR THE ASSESSE E ALSO ARGUED THAT ALL THE LOANS , SHARE MONEY/PREMIUM , CONSEQUENTIAL DISALLOWANCE OF INTEREST ON LOANS AND DISALLOWANCE OF EXPENSES OF EXEMPTED INCOME BY INVOKING THE 18 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 PROVISIONS OF SECTION 14A OF THE ACT HAS ALREADY BEEN EXPLAINED AND RECORDED IN THE REGULAR BOOKS OF ACCOUNT ON THE BASIS OF WHICH ASSESSMENTS WERE FRAMED ORIGINALLY BY THE REVENUE. 10. ON THE OTHER HAND, WHEN THE BENCH REQUIRED THE LD. CIT,DR TO PRODUCE THE SEARCH MATERIAL/INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH PERTAINING TO THESE ASSESSMENT YEARS VIDE ORDER SHEET ENTRY DATED 23.04.2005 AND THE RELEVANT ORDER SHEET ENTRY READS AS UNDER: 23.04.2015 : THESE GROUP CASES WERE HEARD PARTLY TODAY. DURING THE COURSE OF HEARING, THE LD. CIT, DR WAS ASKED TO PRODUCE THE SEIZED MATERIAL IN THESE GROUP CASES BECAUSE THE ASSESSEE RA ISED THE JURISDICTIONAL ISSUE THAT THERE IS NO SEARCH MATERIALS. HENCE, NO ADDITION CAN BE MADE WHILE FRAMING ASSESSMENT UNDER SECTION 153A READ WITH SECTION 143(3) OF THE ACT. THE LD. COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO THE REMAND REPORT OF THE AO DATED 23.09.2011, WHEREIN HE HAS CLEARLY ADMITTED THAT THERE IS NO SEARCH MATERIALS I.E. DOCUMENTS OR EVIDENCES FOUND DURING THE COURSE OF SEARCH IN THESE GROUP CASES. THE LD. CIT, DR IS ALSO REQUESTED TO PRODUCE THE SEARCH MATERIALS AND ASSES SMENT RECORDS IN THE CASE OF SHAMBHU KUMAR MORE AND THEIR GROUP CASES SO THAT IT CAN BE CORROBORATED, IF ANY SEARCH MATERIAL IS LINKED TO THE STATEMENT OF SHRI SHAMBHU KUMAR MORE WITH THAT OF ASSESSEE S GROUP CASES, I.E. SHANTI KUMAR SURANA AND GROUP CASES . THE LD. CIT, DR IS ALSO DIRECTED TO GIVE THE DETAILS OF CASH INTRODUCTION, VIS - - VIS THE CHEQUE AS STATED BY SHRI SHAMBHU KUMAR MORE IN HIS DEPOSITION DURING THE COURSE OF SEARCH ON 09.05.2009 ON THEIR RESIDENCE AND BUSINESS PREMISES. IN TERMS OF THE ABOVE, THE CASE IS KEPT AS PART HEARD AND ADJOURNED TO 28.04.2015. BOTH THE PARTIES ARE INFORMED IN THE OPEN COURT. AND THE MATTER WAS ADJOURNED FOR 28.04.2015 AND AGAIN ON 28.04.2015 REVENUE ASKED FOR ADJOURNMENT AND THE MATTER WAS ADJOURNED FINALLY FO R 29.04.2015. ON 29.04.2015 AGAIN LD. CIT, DR WAS DIRECTED TO PRODUCE THE SEARCH MATERIAL AND THE RELEVANT ORDER SHEET ENTRY READS AS UNDER: 29.04.2015: WHEN THESE MATTERS WERE CALLED UP, THE LD. CIT, DR SHRI VIJAY KUMAR STATED THAT HE HAS BROUGHT APPRAI SAL REPORT PREPARED BY ADIT IN THESE GROUP CASES AND HE CAN ARGUE THE SAME. THE LD. CIT, DR WAS ASKED WHETHER HE HAS BROUGHT THE SEIZED MATERIALS OR NOT. HE DENIED THAT THE SAME COULD NOT BE TRACED. THE LD. CIT, DR INSISTED ON HEARING WITHOUT SEIZED MAT ERIALS FOR THE REASON THAT EVERYTHING IS RECORDED IN THE APPRAISAL REPORT. ON THIS, BENCH INSISTED FOR SEIZED MATERIALS. HOWEVER, IN THE INTEREST OF JUSTICE AND TO GIVE A FAIR CHANCE TO REVENUE, THIS LAST ADJOURNMENT IS BEING GIVEN TO PRODUCE THE SEIZED MATERIALS, AS DIRECTED VIDE ORDER SHEET ENTRY DATED 23.04.2015. 19 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 IN TERMS OF THE ABOVE, THIS MATTER IS REFIXED AS PART HEARD ON 07.05.2015 AS LAST OPPORTUNITY TO THE REVENUE. IN CASE, THE REVENUE FAILS TO PRODUCE SEIZED MATERIALS ON THE NEXT DATE OF HEARI NG, ADVERSE INFERENCE WILL BE DRAWN. BOTH THE PARTIES ARE INFORMED IN THE OPEN COURT. AND FINALLY THE MATTER WAS HEARD ON 07.05.2015. LD. CIT, DR FILED SOMETHING IN WRITING WHICH READS AS UNDER: THREE ISSUES. 1) APPRAISAL REPORT AVAILABLE, 4 VOLUMES. 2) 153A CHALLENGED. 3) SEIZED MATERIAL NOT PRODUCED. CIT REQUESTS TIME MAY 2015 4) BOGUS SHARE CAPITAL ISSUE. COVERED IN FAVOUR OF REVENUE BY KOLKATA BENCHES ORDERS. 5) WRITTEN COMMUNICATION BY EMAIL TO CIT AND BY PHONE BY PR. CIT (DR). VOLUME - I PAGE 1 - 3 BACKGROUND OF MAIN PERSONS. SHARE CAPITAL ISSUE PAGES 4 - 7 PERSONS COVERED U/S. 153A PAGE 8 133A (OR 153C) PP 9 - 16 ASSETS FOUND/SEIZED/DOCUMENTS DETECTED. PP 17 - 29 ANALYSIS OF ASSETS AND DOCUMENTS FOUND/SEIZED. PP 30 - 32 STATEMENTS OF DISCLOSURE U/S. 132(4) PP 32 - 6 9 DISCUSSION ON ASSETS/DOCUMENTS AND SOME STATEMENTS PP 69 - 70 STATEMENT. RAJ KUMAR MORE PP 72 - 101 ANALYSIS. HE ALSO FILED A COPY OF LETTER DATED 28.04.2015 DOWNLOADED FROM GMAIL ACCOUNT OF LD. CIT, DR SHRI VIJAY KUMAR , THE RELEVANT EXTRACT OF THE LETTER DATED 28.04.2015 READS AS UNDER: DEAR SHRI SISHI SINHA AND SHRI RAJAT DUTTA, 18 APPEALS RELATING TO SHANTI KUMAR SURANA AND SURANA MERCANTILE (P) LTD. RELATING TO SEARCH PERIODS ARE BEING HEARD IN ITAT. THE CASE WAS LAST HEARD ON 23.4.2015 REQUIRING PR ODUCTION OF SOME PAPERS. PLEASE FIND ENCLOSED HEREWITH A COPY OF THE ITAT ORDER SHEET NOTING DATED 23.4.2015. I ONLY RECEIVED COPY OF APPRAISAL REPORT WITH THREE ANNEXURES ON 27.4.2015 EVENING. IT DOES NOT APPARENTLY SATISFY PARA 2 OF ITAT INSTRUCTIONS DATED 23.4.2015. TODAY, SHRI RAJAT DATTA, DCIT CASE. SINCE ALL PAPERS ARE NOT AVAILABLE, THE MATTER IS REFIXED FOR 29.4.2017. THERE ARE TWO ISSUES. ONE, ACTION U/S. 153A/ 153C IS CHALLENGED. PANCHNAMA AND SEIZED/IMPOUNDED MATERIAL SHOULD TAKE CARE OF THAT. THE MATERIAL NEEDS TO BE PRODUCED. 20 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 THE NEXT ISSUE RELATES TO BOGUS SHARE CAPITAL. IT IS COVERED, IN DEPARTMENT S FAVOUR BY THE FOLLOWING DECISIONS OF KOLKATA BENCHES. 1) ITA NOS. 1533 - 1537/KOL/2012 ETC. ORDERS DATED 12.09.2014, REFERRED TO AS PATANGI TRADE & HOLDINGS PVT. LTD. CASE. 2) ITA NO. 1493/KOL/2013 DATED 19.09.2014, REFERRED TO AS BISAKHA SALES PVT. LTD., KOLKATA. IN TERM OF THE ABOVE FACTUAL POSITION AND OPPORTUNITIES GIVEN ON NUMBER OF TIMES TO THE REVENUE, REVENUE COULD NOT PRODUCE THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH IN RELATION TO SHARE CAPITAL/PREMIUM AND LOANS ADDED BY AO WHILE FRAMING ASSESSMENT U/S. 153A OF THE ACT. 11. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE HAD BORROWED FUNDS AND THESE BORROWINGS ARE DULY CONFIRMED BY THE LENDERS BY PRODUCING LOAN CONFIRMATI ONS. WE FIND THAT THE TR ANSACTIONS OF RECEIPT OF LOAN AND RE - PAYMENTS THEREOF ARE ALL BY ACCOUNT PAYEE CHEQUES. THE A SSESSEE BEFORE US EXPLAINED THE SOURCE OF THE CASH CREDITS APPEARING IN HIS BOOKS AND HAS SUBMITTED CONFIRMATIONS IN SUPPORT OF THE SAME. N OWHERE IN THE ORDER OF ASSESSMENT MADE BY THE AO THERE IS ANY REFERENCE TO ANY PAPER/DOCUMENT SEIZED BY THE SEARCH PARTY IN THE CURSE OF SEARCH U/S 132 IN THE CASE OF THE ASSESSEE AS WELL AS IN THE CASE OF S H RI SHAMBU KUMAR MORE . FURTHER, SURVEY OPERATIONS WERE CONDUCTED U/S 133A IN THE CASE OF COMPANIES WHO HAD ADVANCED LOANS TO ASSESSEE . NO INCRIMINATING PAPER/DOCUMENT WAS FOUND IN THE COURSE OF SUCH SURVEY. THE AO HAS SIMPLY PROCEEDED ON THE BASIS OF A VERBAL STATEMENT OF S H RI SHAMBHU KUMAR MORE WHICH HA S NO EVIDENTIARY VALUE. FIRSTLY BECAUSE HE HIMSELF ADMITTED THAT HE HAS NO EVIDENCE IN SUPPORT OF WHAT HE DEPOSED U/S 132(4) AND SECONDLY, IN FACT IMPORTANT TO NOTE THAT SEARCHES AND SURVEYS MADE BY THE REVENUE D ID NOT BRING OUT ANY EVIDENCE INDICATING ANY FALSEHOOD OF THE TRANSACTIONS. BUT T HE AO HAS SUMMED UP THE MATTER IN HOLDING THAT THE A SSESSE E ACCEPTED ACCOMMODATION ENTRIES FOR HIMSELF AS WELL AS FOR OTHER GROUP CONCERNS IN LIEU OF UNACCOUNTED CASH DUE TO REASONS WHICH HAVE BEEN MENTIONED BY HIM IN THE REMAND REPORT VIDE LETTER DATED 23.09.2011 AS U NDER: - 21 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 KINDLY REFER TO YOUR LETTER DATED 13/9/2011 ON THE ABOVE REFERRED MATTER. LD. A/R OF THE ASSESSEE COMPANY, M/S SURANA MERCANTILE PVT. LTD. HAS FURNISHED CERTAIN DETAILS AND DOCUMENTS IN CONNECTION WITH THE APPEAL PROCEEDINGS BEFORE YOU. COPIES OF THESE DETAILS AND DOCUMENTS HAVE ALSO BEEN FILED BEFORE ME. THESE INCLUDE THE FOLLOWING: - 1. BALANCE SHEET OF COMPANIES UNDER THE CONTROL OF SHRI SHAMBHU KUMAR MORE AND FROM WHICH THE LOANS AND SHARE APPLICAT ION MONEY WAS RECEIVED BY THE ASSESSEE. 2. CONFIRMATIONS IN RESPECT OF UNSECURED LOANS RECEIVED FROM THE SAID COMPANIES. 3. BANK STATEMENTS OF THE ASSESSEE REFLECTING THE CREDIT OF LOANS AND SHARE APPLICATION MONEY AS ABOVE BY CHEQUE OR BY BANK TRANSFER. 4. BALANCE SHEETS OF THE ASSESSEE COMPANY FOR THE VARIOUS YEARS AND DETAILS OF LOANS, SHARE APPLICATION MONEY RECEIVED AND SHARES ISSUED. IN THIS REGARD, I WOULD LIKE TO SUBMIT BEFORE YOUR KINDSELF THAT THE DETAILS AND DOCUMENTS MENTIONED ABOVE WERE AVAILABLE AT TH E TIME OF ASSESSMENT PROCEEDINGS ALSO AND THESE WERE CONSIDERED WHILE FRAMING THE ASSESSMENTS OF THE ASSESSEE. THESE WERE NOT NAY ADDITIONAL EVIDENCE AS MENTIONED IN RULE 46A(1) OF THE I.T. RULES, 1962. HENCE, THE QUESTION OF EXAMINATION OF THE SAME AGAIN AT THIS END DOES NOT ARISE. AS REGARDS YOUR QUERY AS TO WHETHER ANY INCRIMINATING DOCUMENT / EVIDENCE WAS FOUND AND GATHERED DURING THE COURSE OF SEARCH OR POST SEARCH OPERATIONS I WOULD LIKE TO STATE THAT NO SUCH DOCUMENT OR EVIDENCE WAS FOUND. BUT SHRI MORE WAS VERY CATEGORICAL IN HIS STATEMENTS RECORDED U/S. 132(4) AND 131(1) ON VARIOUS OCCASIONS ABOUT THE MODUS OPERANDI! INVOLVED AND CLARIFYING THAT HE HAD REROUTED THE SAID LOANS AFTER TAKING THESE FROM THE ASSESSEE IN CASH AND TRANSFERRING AGAIN TO TH E ASSESSEE THROUGH VARIOUS LAYERS OF BANKING TRANSACTIONS INVOLVING A NUMBER OF CONCERNS. THE FACTS HAVE BEEN DISCUSSED IN THE ASSESSMENT ORDERS ITSELF. AS REGARDS YOUR QUERY AS TO WHETHER THERE WAS ANY MATERIAL EVIDENCE TO PROVE THE CHAIN OF TRANSACTIONS LEADING TO THE DESTINATION OF THE SAID CASH, I WOULD LIKE TO STATE THAT, DURING THE COURSE OF SEARCH, THE INVESTIGATION WING HAD MADE CERTAIN ENQUIRIES FROM THE CONCERNED BANK FROM WHICH IT WAS GATHERED THAT CERTAIN PAYMENTS TO THE ASSESSEE HAD ORIGINATE D FROM CASH DEPOSITS IN VARIOUS ACCOUNTS. THE FACTS RELATED TO THIS ASPECT WERE ALSO DISCUSSED IN THE ASSESSMENT ORDER ITSELF. WE FIND FROM THE ABOVE REMAND REPORT OF THE AO THAT HE HAS OBSERVED THAT THE ASSESSEE HAS FILED THE DOCUMENTS, WHICH INCLUDE (A ) BALANCE SHEET OF COMPANIES FROM WHO LOANS WERE RECEIVED BY THE ASSESSEE, (B) CONFIRMATIONS IN RESPECT OF THE UNSECURED LOANS RECEIVED FROM THE LENDING COMPANIES, (C) BANK STATEMENTS OF THE APPELLANT REFLECTING THE CREDIT OF LOANS RECEIVED BY CHEQUE, (D) BALANCE SHEET OF THE LOAN CREDITORS FOR VARIOUS YEARS. IN THE REMAND REPORT, THE AO HAS OBSERVED THAT DETAILS & DOCUMENTS MENTIONED ABOVE WERE AVAILABLE AT THE TIME OF ASSESSMENT PROCEEDINGS ALSO AND THE SAME WERE CONSIDERED WHILE FRAMING ASSESSMENTS ON TH E ASSESSEE. HE FURTHER OBSERVED THAT SINCE 22 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 THESE ARE NOT ADDITIONAL EVIDENCES AS MENTIONED IN 46A(1) OF THE INCOME TAX RULES, 1962 HENCE THE QUESTION OF EXAMINATION OF THE SAME AGAIN DOES NOT ARISE. FURTHER, WE FIND THAT THE AO SUMMED UP THE MATTER BY HOL DING THAT THE ASSESSEE ACCEPTED ACCOMMODATION ENTRIES FOR HIMSELF AS WELL AS OTHER GROUP CONCERNS IN LIEU OF UNACCOUNTED CASH DUE TO THE FOLLOWING REASONS (THE SAME REPORT IS REPRODUCED IN THE ORDER OF CIT(A): THE APPELLANT DISCLOSED RS.8 CRORES DURING T HE COURSE OF POST SEARCH PROCEEDINGS AND THAT THE APPELLANT INDIRECTLY ADMITTED OF HAVING ENTERED INTO TRANSACTIONS THROUGH SRI MORE. COMMENT THIS MATTER HAS BEEN EXPLAINED BY THE APPELLANT. HE DID NOT MAKE ANY DECLARATION OF INCOME OF RS.8 CRORES. THE AP PELLANT SPECIFICALLY CHALLENGES THE AO S OBSERVATIONS THAT THE APPELLANT ADMITTED OF HAVING ENTERED INTO TRANSACTIONS WITH THE COMPANIES THROUGH SRI SHAMBHU KUMAR MORE. THERE IS NO EVIDENCE OF ADMISSION OF ANY TRANSACTIONS BETWEEN THE APPELLANT AND THE LOA N CREDITORS AS FALSE OR MERELY ACCOMMODATION ENT5RIES. ALL THESE TRANSACTIONS OF LOANS ARE DULY SUPPORTED BY EVIDENCES. IT IS TOTALLY A PERVERSE OBSERVATION MADE BY THE AO. THE AO STATES THAT DURING THE POST SEARCH PROCEEDINGS DDIT (INV.) CONDUCTED A SELE CTIVE ENQUIRES FROM ABN AMRO BANK. THE AO STATES THAT HE ALSO CONDUCTED SIMILAR ENQUIRIES FROM THE SAID BANK. THEREAFTER, IN SUBSEQUENT THREE PARAS THE AO HAS GIVEN CERTAIN NAMES & AMOUNTS. WE FIND THAT THE ASSESSEE WAS NEVER CONFRONTED THIS REPORT AS A RGUED BY LD. COUNSEL FOR ASSESSEE BEFORE US NOW AND EVEN BEFORE CIT(A). 12. FROM THE ABOVE FACTS WE FIND THAT THE ASSESSEE HAS OBTAINED LOANS/SHARE MONEY/PREMIUM IN ALL THE ASSESSMENT YEARS WHICH ARE UNDER APPEAL. IT IS A FACT THAT THE LOAN CONFIRMATIONS ARE ON RECORD ALONG WITH BANK STATEMENTS IN SUPPORT OF THE FACT THAT THE TRA NSACTIONS OF LOAN WERE BY CHEQUES. THE ASSESSEE HAS COLLECTED STATEMENT OF AUDITED ACCOUNTS OF THOSE LIMITED COMPANIES, FROM WHERE THE ASSESSEE HAS OBTAINED LOANS, THE SAME ARE WITH ROC. IT IS ALSO A FACT THAT THE STATEMENTS OF ACCOUNT PROVED THAT THOSE LOAN CREDITORS THAT ALL OF THEM HAVE FUNDS AND THEY HAVE INVESTED IN SHARES AND LOANS OF THE ASSESSEE IN THE YEAR UNDER ASSESSMENTS. BUT NOW IT IS TO BE SEEN FROM THE CORRESPONDENCE BETWEEN THE CIT - IN - CHARGE OF THE ASSESSMENT AND CIT, DR THAT REVENUE COU LD NOT PRODUCE THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH DESPITE 23 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 NUMBER OF OPPORTUNITIES PROVIDED TO REVENUE AS IS EVIDENT FROM THE ORDER SHEET ENTRIES REPRODUCED ABOVE. IN SUCH CIRCUMSTANCES WHETHER IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH THE ASSESSMENTS FRAMED U/S. 153A OF THE ACT RELATING TO THE ASSESSMENT YEARS UNDER APPEAL AND WHERE ORIGINAL ASSESSMENTS HAVE NOT BEEN ABATED BECAUSE NO PROCEEDINGS ARE PENDING IN THOSE ASSESSMENTS, THE ASSESSMENT S FRAMED ARE VALID OR NOT. FOR THIS, NOW WE HAVE TO GO THROUGH THE SECOND PROVISO TO SECTION 153A(1 ) OF THE ACT, WHICH READS AS UNDER: PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN THIS (SUB SECTION) PENDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE. 13. IN VIEW OF THE SECOND PROVISION OF SECTION 1 53 OF THE ACT, IT IS CLEAR THAT ASSESSMENT OR REASSESSMENT RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS PENDING ON THE DATE OF INITIATION OF SEARCH U/S. 132 OF THE ACT SHALL ABATE. IT MEANS IF ON THE DATE OF INITIATION OF SEARCH U/S. 132 OF THE ACT, ANY ASSESSMENT PROCEEDINGS IS INITIATED RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS IT SHALL STAND ABATED AND REVENUE CANNOT PROCEEDING WITH SUCH PROCEEDINGS PENDING ASSESSMENT AFTER INI TIATION OF SEARCH. BUT IN CASE THE ASSESSMENT PROCEEDINGS ARE NOT PENDING AT THE TIME OF INITIATION OF SEARCH U/S. 132 OF THE ACT, THE ASSESSMENT PROCEEDINGS WILL NOT ABATE. HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. SMT. SHAILA AGARWAL (2012) 3 46 ITR 130 (ALL) HAS HELD AS UNDER: 12. A PLAIN READING OF SECTION 153A WOULD SHOW THAT WHERE NOTICE UNDER THIS SECTION IS ISSUED AS RESULT OF ANY SEARCH UNDER SECTION 132, ASSESSMENT OR REASSESSMENT IF ANY RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN T HE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO UNDER SECTION 153, PENDING ON THE DATE OF INITIATION OF SEARCH UNDER SECTION 132 OR REQUISITION UNDER SECTION 132A SHALL ABATE. THE WORDS, PENDING ON THE DATE OF INITIATION OF SEARCH UNDER SECTION 132, OR MAKIN G OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, HAS TO BE ASSIGNED SIMPLE AND PLAIN MEANING. WHERE THE ASSESSMENT OR REASSESSMENT IS FINALISED, THERE ARE NO PENDING PROCEEDINGS TO BE ABATED, AND RESTORED TO THE FILE OF THE ASSESSING OFFICER. TO AB ATE MEANS TO DIMINISH OR TO TAKE AWAY. THE WORD 'ABATEMENT' HAS BEEN DEFINED IN THE CONCISE LAW DICTIONARY (P. RAMANATHA AIYER) AS FOLLOWS: - 'ABATEMENT. 'ABATEMENT' MEANS, IN RESPECT OF ANY CHARGEABLE ACCOUNTING PERIOD, ENDING ON OR BEFORE THE 31ST DAY O F MARCH, 1947 A SUM WHICH BEARS TO A SUM EQUAL TO - 24 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 (A) IN THE CASE OF A COMPANY, NOT BEING A COMPANY DEEMED FOR THE PURPOSES OF SECTION 9 TO BE A FIRM, SIX PER CENT OF THE CAPITAL OF THE COMPANY ON THE FIRST DAY OF THE SAID PERIOD COMPUTED IN ACCORDANCE WITH SCHEDULE II, OR ONE LAKH OF RUPEES, WHICHEVER IS GREATER, OR (B) IN THE CASE OF A FIRM HAVING - (I) NOR MORE THAN TWO WORKING PARTNERS, ONE LAKH OF RUPEES, OR (II) THREE WORKING PARTNERS, ONE AND A HALF OF RUPEES, OR (III) FOUR OR MORE WORKING PARTNERS, TWO LA KH OF RUPEES, OR (C) IN THE CASE OF A HINDU UNDIVIDED FAMILY, TWO LAKHS OF RUPEES, OR (D) IN ANY OTHER CASE, ONE LAKH OF RUPEES, - THE SAME PROPORTION AS THE SAID PERIOD BEARS TO THE PERIOD OF ONE YEAR AND, IN RESPECT OF ANY CHARGEABLE ACCOUNTING PERI OD BEGINNING AFTER THE 31ST DAY OF MARCH, 1947, SUCH SUM AS MAY BE FIXED BY THE ANNUAL FINANCE ACT. [BUSINESS PROFITS TAX ACT (21 OF 1947), S.2 (1)] REMOVAL OR DESTRUCTION, (AS) OF A NUISANCE; FAILURE; PREMATURE END, SUSPENSION OR DIMINUTION, (AS) OF AN ACTION OR OF A LEGACY. THE ACTION OF ABATING; BEING ABATED. {O.XXII, R.1, CPC (5 OF 1908)]; DECREASE [S.12 (3) (B) (I), SPECIFIC RELIEF ACT (47 OF 1963)]. OF AN ACTION OR SUIT: IN CIVIL LAW AN ABATEMENT OF A SUIT IS A COMPLETE TERMINATION OF IT. ABATEM ENT OF A MATTER OR CAUSE IS CAUSED BY THE SAME BECOMING DEFECTIVE ON ACCOUNT OF THE DEATH OF THE PARTIES MATERIALLY INTERESTED. (ENCY. OF THE LAWS OF ENGLAND) A SUSPENSION OR TERMINATION OF PROCEEDINGS FOR WANT OF PROPER PARTIES OR DUE TO SOME TECHNICAL DEFECT. THE ABATEMENT OF THE MAIN ACTION ABATES PROCEEDINGS ANCILLARY OR COLLATERAL TO IT. IN CRIMINAL LAW: ABATEMENT OF PROCEEDINGS CONNOTES THEIR TERMINATION WITHOUT ANY DECISION ON MERITS AND WITHOUT THE ASSENT OF THE PROSECUTOR. (ENCY. OF THE LAWS OF ENGLAND) IN REVENUE LAW: ABATEMENT IS A DEDUCTION FROM OR REFUNDING OF DUTIES ON GOODS DAMAGED DURING IMPORTATION OR IN STORE.' 13. THE WORD 'ABATEMENT' IS REFERABLE TO SOMETHING, WHICH IS PENDING ALIVE, OR IS SUBJECT TO DEDUCTION. THE ABATEMENT REFERS TO SUSPENSION OR TERMINATION OF THE PROCEEDINGS EITHER OF THE MAIN ACTION, OR THE PROCEEDINGS ANCILLARY OR COLLATERAL TO IT. THE WORD IS COMMONLY USED IN THE LEGISLATIO NS, WHICH PROVIDE FOR ABATEMENT OF ACTION/ SUIT; ABATEMENT OF LEGACIES; ABATEMENT OF NUISANCE; AND ALL ACTIONS FOR SUCH NATURE, WHICH HAVE THE PENDENCY OR CONTINUANCE. THE PROCEEDINGS, WHICH HAVE ALREADY TERMINATED ARE NOT LIABLE FOR ABATEMENT UNLESS STATU TE EXPRESSLY PROVIDES FOR SUCH CONSEQUENCE THEREOF. 25 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 14. THE WORD 'PENDING' OCCURRING IN THE SECOND PROVISO TO SECTION 153A OF THE ACT, IS ALSO SIGNIFICANT. IT IS QUALIFIED BY THE WORDS 'ON THE DATE OF INITIATION OF THE SEARCH', AND MAKES IT ABUNDANTLY CL EAR THAT ONLY SUCH ASSESSMENT OR REASSESSMENT PROCEEDINGS ARE LIABLE TO ABATE. 15. THE PENDENCY OF AN APPEAL IN THE TRIBUNAL AGAINST THE ORDER OF ASSESSMENT AGAINST WHICH AN APPEAL HAS BEEN DECIDED BY CIT (A) IS NOT A CONTINUATION OF THE PROCEEDINGS OF A SSESSMENT. AN APPEAL UNDER THE INCOME TAX ACT LIES TO THE APPELLATE TRIBUNAL ON A QUESTION OF LAW. EVEN IF IT IS PENDING ON THE DATE OF SEARCH, NO SUCH INTENTION HAS INDICATED BY THE TRIBUNAL ARISES OUT OF THE PROVISIONS OF SECOND PROVISO TO SECTION 153A, TO ABATE THE PROCEEDINGS, WHICH HAVE BEEN COMPLETED, OR CONCLUDED, AND TO RESTORE ASSESSMENT TO THE FILE OF THE ASSESSING OFFICER. 16. WE DO NOT FIND FORCE IN THE SUBMISSION OF SHRI ASHISH BANSAL THAT WHERE A NOTICE UNDER SECTION 153A HAS BEEN GIVEN AFTE R THE SEARCH OPERATIONS UNDER SECTION 132, FOR FILING ASSESSMENT FOR THE BLOCK PERIOD OF 6 YEARS, AND IF SUCH PERIOD INCLUDES ANY OF THE ASSESSMENT YEAR, THE ABATEMENT OF ASSESSMENT AND RE - ASSESSMENT PROCEEDINGS, TO GIVE WAY TO REASSESSMENT CONSIDERING THE ADDITIONS IN THE ASSESSMENT UNDER SECTION 153A, WILL ALSO INCLUDE THE ASSESSMENT OR RE - ASSESSMENT, WHICH HAS BEEN COMPLETED. IF AS A RESULT OF SEARCH, SOME UNDISCLOSED INCOME IS FOUND TO HAVE ESCAPED ASSESSMENT, THE ASSESSING OFFICER, MAY INITIATE STEPS F OR REASSESSMENT AFTER SANCTION OF COMPETENT AUTHORITY, WITHIN THE PRESCRIBED PERIOD OF LIMITATION. 17. A CIRCULAR NO.7 OF 2003 DATED 5.9.2003 ISSUED BY THE COMMISSIONER OF INCOME TAX HAS CLARIFIED THE POSITION IN PARA 65.5 AS FOLLOWS: - 'THE ASSESSING O FFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME OF EACH OF THESE SIX ASSESSMENT YEARS. ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS PENDING ON THE DATE OF INITIATION OF THE SEARCH UN DER SECTION 132 OR REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE. IT IS CLARIFIED THAT THE APPEAL, REVISION OR RECTIFICATION PROCEEDINGS PENDING ON THE DATE OF INITIATION OF SEARCH UNDER SECTION 132 OR REQUISITION SHALL NOT ABATE. SAVE AS OTHERWISE PROVIDED IN THE PROPOSED SECTION 153A, SECTION 153B AND SECTION 153C, ALL OTHER PROVISIONS OF THIS ACT SHALL APPLY TO THE ASSESSMENT OR REASSESSMENT MADE UNDER SECTION 153A. IT IS ALSO CLARIFIED THAT ASSESSMENT OR REASSESSMENT MADE UNDER SECTION 153A SHALL BE SUBJECT TO INTEREST, PENALTY AND PROSECUTION, IF APPLICABLE. IN THE ASSESSMENT OR REASSESSMENT MADE IN RESPECT OF AN ASSESSMENT YEAR UNDER THIS SECTION, THE TAX SHALL BE CHARGEABLE AT THE RATE OR RATES AS APPLICABLE TO SUCH ASSESSMENT YEAR.' 18. IN STATE OF RAJASTHAN & ORS. V. KHANDAKA JAIN JEWELLERS, (2007) 14 SCC 339 THE SUPREME COURT REITERATING THE PRINCIPLES OF INTERPRETATION OF TAXING STATUTES HELD IN PARA 24 AS FOLLOWS: - 'A TAXING STATUTE HAS TO BE CONSTRUED AS IT IS ALL THESE CONTINGENCIES THAT THE MATTER WAS UNDER LITIGATION AND THE VALUE OF THE PROPERTY BY THAT TIME SHOT UP CANNOT BE TAKEN INTO ACCOUNT FOR INTERPRETING THE PROVISIONS OF A TAXING STATUTE. AS ALREADY MEN TIONED ABOVE A TAXING STATUTE HAS TO BE CONSTRUED STRICTLY AND IF IT IS CONSTRUED STRICTLY THEN THE PLEA THAT THE INCUMBENT TOOK A LONG TIME TO GET A DECREE FOR 26 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 EXECUTION AGAINST THE VENDOR THAT CONSIDERATION CANNOT WEIGH WITH THE COURT FOR INTERPRETING TH E PROVISIONS OF THE TAXING STATUTES.' 19. THE SECOND PROVISO TO SECTION 153A OF THE ACT, REFERS TO ABATEMENT OF THE PENDING ASSSESSMENT OR RE - ASSESSMENT PROCEEDINGS. THE WORD 'PENDING' DOES NOT OPERATE ANY SUCH INTERPRETATION, THAT WHEREVER THE APPEAL AG AINST SUCH ASSESSMENT OR REASSESSMENT IS PENDING, THE SAME ALONGWITH ASSESSMENT OR REASSESSMENT PROCEEDINGS IS LIABLE TO BE ABATED. THE PRINCIPLES OF INTERPRETATION OF TAXING STATUTES DO NOT PERMIT THE COURT TO INTERPRET THE SECOND PROVISO TO SECTION 153A IN A MANNER THAT WHERE THE ASSESSMENT OR REASSESSMENT PROCEEDINGS ARE COMPLETE, AND THE MATTER IS PENDING IN APPEAL IN THE TRIBUNAL, THE ENTIRE PROCEEDINGS WILL ABATE. 20. THERE IS ANOTHER ASPECT TO THE MATTER, NAMELY THAT THE ABATEMENT OF ANY PROCEEDING S HAS SERIOUS CAUSES AND EFFECT IN AS MUCH AS THE ABATEMENT OF THE PROCEEDINGS, TAKES AWAY ALL THE CONSEQUENCES THAT ARISE THEREAFTER. IN THE PRESENT CASE AFTER DEDUCTING BOGUS GIFTS IN THE REGULAR ASSESSMENT PROCEEDINGS, THE PROCEEDINGS FOR PENALTY WERE D RAWN UNDER SECTION 271 (1) (C) OF THE ACT. THE MATERIAL FOUND IN THE SEARCH MAY BE A GROUND FOR NOTICE AND ASSESSMENT UNDER SECTION 153A OF THE ACT BUT THAT WOULD NOT EFFACE OR TERMINATE ALL THE CONSEQUENCE, WHICH HAS ARISEN OUT OF THE REGULAR ASSESSMENT O R REASSESSMENT RESULTING INTO THE DEMAND OR PROCEEDINGS OF PENALTY. 14. IN A RECENT JUDGMENT HON'BLE BOMBAY HIGH COURT, ON THE VERY ISSUE, IN THE CASE OF CIT VS. CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD. IN ITA NO. 523 OF 2013 DATED 21.04.20 15 ALSO CONSIDERING THE JUDGMENT OF THE SPECIAL BENCH OF THE MUMBAI TRIBUNAL IN THE CASE OF ALL CARGO GLOBAL LOGISTICS 137 ITD 287(SB) (MUM) CONSIDERED THE ISSUE THAT, WHETHER SCOPE OF ASSESSMENT U/S. 153A OF THE ACT IN RESPECT TO COMPLETED ASSESSMENT IS LIMITED ONLY TO UNDISCLOSED INCOME AND UNDISCLOSED ASSETS FOUND DURING THE COURSE OF SEARCH OR NOT. HON'BLE HIGH COURT HELD THAT ON A PLAIN READING OF SECTION 153 OF THE ACT IT BECOMES CLEAR THAT ON INITIATION OF THE PROCEEDINGS U/S. 153A OF THE ACT, IT IS ONLY THE ASSESSMENT/REASSESSMENT PROCEEDINGS THAT ARE PENDING ON THE DATE OF CONDUCTING SEARCH U/S. 132 OF THE ACT STAND ABATED AND NOT THE ASSESSMENTS/REASSESSMENTS ALREADY FINALISED FOR THOSE ASSESSMENT YEARS COVERED U/S. 153A OF THE ACT. HON'BLE HIG H COURT ALSO DISCUSSED THE CBDT CIRCULAR NO. 8 OF 2003 DATED 18.09.2003 REPORTED IN 263 ITR (ST.) 61 AT PAGE 107 WHEREIN CBDT HAS CLARIFIED THAT ON INITIATION OF PROCEEDINGS U/S. 153A OF THE ACT THE PROCEEDINGS PENDING IN APPEAL, REVISION OR RECTIFICATION PROCEEDINGS AGAINST FINALISED ASSESSMENT SHALL NOT ABATE. IT IS ONLY BECAUSE THE FINALISED ASSESSMENTS DO NOT ABATE THE APPEAL, REVISION OR RECTIFICATION 27 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 PENDING AGAINST FINALISED ASSESSMENTS WOULD NOT ABATE. THEREFORE, HON'BLE HIGH COURT REJECTED THE A RGUMENTS OF THE REVENUE THAT ON INITIATION OF PROCEEDINGS U/S. 153A OF THE ACT, THE REASSESSMENT FINALISED FOR ASSESSMENT YEARS COVERED U/S. 153A OF THE ACT STANDS ABATED. ONLY THE PENDING ASSESSMENTS GET REVIVED U/S. 153A OF THE ACT. HON'BLE HIGH COURT FURTHER HELD THAT ONCE ASSESSMENT HAS ATTAINED FINALITY, THEN THE AO WHILE PASSING INDEPENDENT ASSESSMENT ORDER U/S. 153A/143(3) OF THE ACT COULD NOT DISTURB THE ASSESSMENT ORDER WHICH HAS ATTAINED FINALITY UNLESS THE MATERIAL GATHERED IN THE COURSE OF SEARCH U/S. 132/153A OF THE ACT ESTABLISHED THAT THE FINALITY ATTAINED IN THE ASSESSMENT WERE CONTRARY TO THE FACTS UNEARTHED DURING THE COURSE OF SEARCH. THE RELEVANT PORTION OF THE JUDGMENT READS AS UNDER: 27. HOWEVER, THE REVENUE'S ARGUMENT WAS T HAT ONCE PROCEEDINGS UNDER SECTION 153A OF THE ACT ARE INITIATED, THEN, THE ORIGINAL ASSESSMENT / REASSESSMENT ORDER ALREADY PASSED IN THE ASSESSMENT YEARS COVERED UNDER SECTION 153A STAND ABATED AND THE ASSESSING OFFICER IS OBLIGED TO PASS FRESH ASSESSMEN T / REASSESSMENT ORDERS AND DETERMINE THE TOTAL INCOME AFRESH FOR THOSE ASSESSMENT YEARS. THUS, EARLIER ASSESSMENT ORDERS ABATE AS THE PROCEEDINGS IN WHICH THEY ARE PASSED HAVE NO LEGAL CONSEQUENCE WAS THE ARGUMENT. ONCE THE NOTICE UNDER SECTION 153A WAS I SSUED AND AN ASSESSMENT ORDER PASSED PURSUANT THERETO, IT IS THAT ORDER WHICH WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 28. IN DEALING WITH THOSE ARGUMENTS, THE DIVISION BENCH OUTLINED THE AMBIT AND SCOPE OF THE POWERS CONFERRED BY SECTION 153A AND OBSERVED THUS : 8) WE FIND IT DIFFICULT TO ACCEPT THE ABOVE CONTENTION RAISED ON BEHALF OF THE REVENUE. THE OBJECT OF INSERTI NG SECTIONS 153A, 153B AND 153C BY FINANCE ACT, 2003 BY DISCARDING THE EXISTING PROVISIONS RELATING TO SEARCH CASES CONTAINED IN CHAPTER XIV B OF THE INCOME - TAX ACT, AS STATED IN THE MEMORANDUM EXPLAINING THE PROVISIONS IN THE FINANCE BILL 2003 (SEE 260 IT R (ST) 191 AT 219) WAS THAT UNDER THE EXISTING PROVISIONS RELATING TO SEARCH CASES, OFTEN DISPUTES WERE RAISED ON THE QUESTION, AS TO WHETHER A PARTICULAR INCOME COULD BE TREATED AS `UNDISCLOSED INCOME' OR WHETHER A PARTICULAR INCOME COULD BE SAID TO BE RE LATABLE TO THE MATERIAL FOUND DURING THE COURSE OF SEARCH, ETC. WHICH LED TO PROLONGED LITIGATION. TO OVERCOME THAT DIFFICULTY, THE LEGISLATURE BY FINANCE ACT 2003, DECIDED TO DISCARD CHAPTER XIV B PROVISIONS AND INTRODUCE SECTIONS 153A, 153B AND 153C IN T HE IT ACT. 9) WHAT SECTION 153A CONTEMPLATES IS THAT, NOTWITHSTANDING THE REGULAR PROVISIONS FOR ASSESSMENT/REASSESSMENT CONTAINED IN THE IT ACT, WHERE SEARCH IS CONDUCTED UNDER SECTION 132 OR REQUISITION IS MADE UNDER SECTION 132A ON OR AFTER 31/5/2003 IN THE CASE O F ANY PERSON, THE ASSESSING OFFICER SHALL ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH RETURN OF INCOME WITHIN THE TIME STIPULATED THEREIN, IN RESPECT OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE 28 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR I N WHICH THE SEARCH IS CONDUCTED OR REQUISITION IS MADE AND THEREAFTER ASSESS OR REASSESS THE TOTAL INCOME FOR THOSE ASSESSMENT YEARS. THE SECOND PROVISO TO SECTION 153A PROVIDES FOR ABATEMENT OF ASSESSMENT/REASSESSMENT PROCEEDINGS WHICH ARE PENDING ON THE DATE OF SEARCH/REQUISITION. SECTION 153A (2) PROVIDES THAT WHEN THE ASSESSMENT MADE UNDER SECTION 153(A)(1)IS ANNULLED, THE ASSESSMENT OR REASSESSMENT THAT STOOD ABATED SHALL STAND REVIVED. 10) THUS ON A PLAIN READING OF SECTION 153A OF THE INCOME - TAX AC T, IT BECOMES CLEAR THAT ON INITIATION OF THE PROCEEDINGS UNDER SECTION 153A, IT IS ONLY THE REASSESSMENT PROCEEDINGS THAT ARE PENDING ON THE DATE OF CONDUCTING SEARCH UNDER SECTION 132 OR MAKING REQUISITION UNDER SECTION 132A OF THE ACT STAND ABATED AND N OT THE ASSESSMENTS/REASSESSMENTS ALREADY FINALISED FOR THOSE ASSESSMENT YEARS COVERED UNDER SECTION 153A OF THE ACT. BY A CIRCULAR NO. 8 OF 2003 DATED 18 - 9 - 2003 (SEE 263 ITR (ST) 61 AT 107) THE CBDT HAS CLARIFIED THAT ON INITIATION OF PROCEEDINGS UNDER SEC TION 153A, THE PROCEEDINGS PENDING IN APPEAL, REVISION OR RECTIFICATION PROCEEDINGS AGAINST FINALISED ASSESSMENT/REASSESSMENT SHALL NOT ABATE. IT IS ONLY BECAUSE, THE FINALISED ASSESSMENTS/REASSESSMENTS DO NOT ABATE, THE APPEAL REVISION OR RECTIFICATION PE NDING AGAINST FINALISED ASSESSMENT/REASSESSMENTS WOULD NOT ABATE. THEREFORE, THE ARGUMENT OF THE REVENUE, THAT ON INITIATION OF PROCEEDINGS UNDER SECTION 153A, THE ASSESSMENTS/REASSESSMENTS FINALISED FOR THE ASSESSMENT YEARS COVERED UNDER SECTION 153A OF T HE INCOME - TAX ACT STAND ABATED CANNOT BE ACCEPTED. SIMILARLY ON ANNULMENT OF ASSESSMENT MADE UNDER SECTION 153A (1) WHAT STANDS REVIVED IS THE PENDING ASSESSMENT / REASSESSMENT PROCEEDINGS WHICH STOOD ABATED AS PER SECTION 153A(1). 11) IN THE PRESENT CAS E, AS CONTENDED BY SHRI MANI, LEARNED COUNSEL FOR THE ASSESSEE, THE ASSESSMENT FOR ASSESSMENT YEAR 1998 - 99 WAS FINALISED ON THE 29 - 12 - 2000 AND SEARCH WAS CONDUCTED THEREAFTER ON 3 - 12 - 2003. THEREFORE, IN THE FACTS OF THE PRESENT CASE, INITIATION OF PROCEE DINGS UNDER SECTION 153A WOULD NOT AFFECT THE ASSESSMENT FINALISED ON 29 - 12 - 2000. 12) ONCE IT IS HELD THAT THE ASSESSMENT FINALISED ON 29.12.2000 HAS ATTAINED FINALITY, THEN THE DEDUCTION ALLOWED UNDER SECTION 80 HHC OF THE INCOME - TAX ACT AS WELL AS THE LOSS COMPUTED UNDER THE ASSESSMENT DATED 29 - 12 - 2000 WOULD ATTAIN FINALITY. IN SUCH A CASE, THE A.O. WHILE PASSING THE INDEPENDENT ASSESSMENT ORDER UNDER SECTION 153A READ WITH SECTION 143 (3) OF THE I.T. ACT COULD NOT HAVE DISTURBED THE ASSESSMENT / REASSE SSMENT ORDER WHICH HAS ATTAINED FINALITY, UNLESS THE MATERIALS GATHERED IN THE COURSE OF THE PROCEEDINGS UNDER SECTION 153A OF THE INCOME - TAX ACT ESTABLISH THAT THE RELIEFS GRANTED UNDER THE FINALISED ASSESSMENT/ REASSESSMENT WERE CONTRARY TO THE FACTS UNE ARTHED DURING THE COURSE OF 153 A PROCEEDINGS. 13) IN THE PRESENT CASE, THERE IS NOTHING ON RECORD TO SUGGEST THAT ANY MATERIAL WAS UNEARTHED DURING THE SEARCH OR DURING THE 153A PROCEEDINGS WHICH WOULD SHOW THAT THE RELIEF UNDER SECTION 80 HHC WAS ERRON EOUS. IN SUCH A CASE, THE A.O. WHILE PASSING ORDER UNDER SECTION 153A READ WITH SECTION 143(3) COULD NOT HAVE DISTURBED THE ASSESSMENT ORDER FINALISED ON 29.12.2000 RELATING TO 29 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 SECTION 80 HHC DEDUCTION AND CONSEQUENTLY THE C.I.T. COULD NOT HAVE INVOKED JUR ISDICTION UNDER SECTION 263 OF THE ACT. 29. WE ARE NOT IN AGREEMENT WITH MR. PINTO THAT THESE OBSERVATIONS ARE MADE IN PASSING OR THAT THEY ARE NOT BINDING ON US BECAUSE THE ESSENTIAL CONTROVERSY BEFORE THE BENCH WAS SOMEWHAT DIFFERENT. HE URGES THAT WA S ONLY IN RELATION TO THE LEGALITY AND VALIDITY OF THE ORDER OF THE COMMISSIONER UNDER SECTION 263 OF THE IT ACT. HAD THAT BEEN THE CASE, THE DIVISION BENCH WAS NOT REQUIRED TO TRACE OUT THE HISTORY OF SECTION 153A OF THE IT ACT AND THE POWER THAT IS CONFE RRED THEREUNDER. WHEN THE REVENUE ARGUED BEFORE THE DIVISION BENCH THAT THE POWER UNDER SECTION 153A CAN BE INVOKED AND EXERCISED EVEN IN CASES WHERE THE SECOND PROVISO TO SUB - SECTION (1) IS NOT APPLICABLE THAT THE DIVISION BENCH WAS REQUIRED TO EXPRESS A SPECIFIC OPINION. THE PROVISION DEALS WITH THOSE CASES WHERE ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO THE ASSESSMENT YEARS FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN SUB - SECTION (1) OF SECTION 153A WERE PENDING. IF THEY WERE PE NDING ON THE DATE OF THE INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, THEY ABATE. IT IS ONLY PENDING PROCEEDINGS THAT WOULD ABATE AND NOT WHERE THERE ARE ORDERS MADE OF ASSESSMENT OR REASSESSME NT AND WHICH ARE IN FORCE ON THE DATE OF INITIATION OF THE SEARCH OR MAKING OF THE REQUISITION. AS THAT SPECIFIC ARGUMENT WAS CANVASSED AND DEALT WITH BY THE DIVISION BENCH AND THAT IS HOW IT WAS CALLED UPON TO INTERPRET SECTION 153A OF THE IT ACT, THEN, E ACH OF THE ABOVE CONCLUSIONS RENDERED BY THE DIVISION BENCH WOULD BIND US. 30. EVEN OTHERWISE, WE AGREE WITH THE DIVISION BENCH WHEN IT OBSERVES AS ABOVE WITH REGARD TO THE AMBIT AND SCOPE OF THE POWERS CONFERRED UNDER SECTION 153A OF THE ACT. SINCE WE A RE NOT REQUIRED TO TRACE OUT THE HISTORY AND WE CAN DO NOTHING BETTER THAN TO REPRODUCE THE OBSERVATIONS AND CONCLUSIONS AS ABOVE THAT WE ARE NOT REPEATING THE SAME. EVEN IF THE EXERCISE OF POWER UNDER SECTION 153A IS PERMISSIBLE STILL THE PROVISION CANNOT BE READ IN THE MANNER SUGGESTED BY MR. PINTO. NOT ONLY THE FINALISED ASSESSMENT CANNOT BE TOUCHED BY RESORTING TO THOSE PROVISIONS, BUT EVEN WHILE EXERCISING THE POWER CAN BE EXERCISED WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTH ER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER 31ST MARCH, 2003. THERE IS A MANDATE TO ISSUE NOTICES UNDER SECTION 153(1)(A) AND ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RE LEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. THUS, THE CRUCIAL WORDS SEARCH AND REQUISITION APPEAR IN THE SUBSTANTIVE PROVISION AND THE PROVISOS. THAT WOULD THROW LIGHT ON THE ISSUE OF APPLICABILITY OF THE PROVI SION. IT BEING ENACTED TO A SEARCH OR REQUISITION THAT ITS CONSTRUCTION WOULD HAVE TO BE ACCORDINGLY. THAT IS THE CONCLUSION REACHED BY THE DIVISION BENCH IN MURLI AGRO (SUPRA) WITH WHICH WE RESPECTFULLY AGREE. THESE ARE THE CONCLUSIONS WHICH CAN BE REACHE D AND UPON READING OF THE LEGAL PROVISIONS IN QUESTION. 31. WE, THEREFORE, HOLD THAT THE SPECIAL BENCH'S UNDERSTANDING OF THE LEGAL PROVISION IS NOT PERVERSE NOR DOES IT SUFFER FROM ANY ERROR OF LAW APPARENT ON THE FACE OF THE RECORD. THE SPECIAL BENCH I N THAT REGARD HELD AS UNDER : 48. THE PROVISION UNDER SECTION 153A IS APPLICABLE WHERE A SEARCH OR REQUISITION IS INITIATED AFTER 31.5.2003. IN SUCH A CASE THE AO IS OBLIGED TO ISSUE NOTICE U/S 153A IN RESPECT OF 6 PRECEDING YEARS, PRECEDING THE YEAR IN WHICH SEARCH ETC. HAS BEEN INITIATED. THEREAFTER HE HAS TO ASSESS OR REASSESS THE TOTAL INCOME OF THESE SIX 30 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 YEARS. IT IS OBLIGATORY ON THE PART OF THE AO TO ASSESS OR REASSESS TOTAL INCOME OF THE SIX YEARS AS PROVIDED IN SECTION 153A(1)(B) AND REITERATED IN THE 1ST PROVISO TO THIS SECTION. THE SECOND PROVISO STATES THAT THE ASSESSMENT OR REASSESSMENT PENDING ON THE DATE OF INITIATION OF THE SEARCH OR REQUISITION SHALL ABATE. WE FIND THAT THERE IS NO DIVERGENCE OF VIEWS IN SO FAR AS THE PROVISION CONTAINED IN SECTION 153A TILL THE 1ST PROVISO. THE DIVERGENCE STARTS FROM THE SECOND PROVISO WHICH STATES THAT PENDING ASSESSMENT OR REASSESSMENT ON THE DATE OF INITIATION OF SEARCH SHALL ABATE. THIS MEANS THAT AN ASSESSMENT OR REASSESSMENT PENDING ON THE DATE OF I NITIATION OF SEARCH SHALL CEASE TO EXIST AND NO FURTHER ACTION SHALL BE TAKEN THEREON. THE ASSESSMENT SHALL NOW BE MADE U/S 153A. THE CASE OF LD. COUNSEL FOR THE ASSESSEE IS THAT NECESSARY COROLLARY TO THIS PROVISION IS THAT COMPLETED ASSESSMENT SHALL NOT ABATE. THESE ASSESSMENTS BECOME FINAL EXCEPT IN SO FAR AND TO THE EXTENT AS UNDISCLOSED INCOME IS FOUND IN THE COURSE OF SEARCH. ON THE OTHER HAND, IT HAS BEEN ARGUED BY THE LD. STANDING COUNSEL THAT ABATEMENT OF PENDING ASSESSMENT IS ONLY FOR THE PURPOSE OF AVOIDING TWO ASSESSMENTS FOR THE SAME YEAR, ONE BEING REGULAR ASSESSMENT AND THE OTHER BEING ASSESSMENT U/S 153A. IN OTHER WORDS THESE TWO ASSESSMENTS COALESCE INTO ONE ASSESSMENT. THE SECOND PROVISO DOES NOT CONTAIN ANY WORD OR WORDS TO THE EFFECT THAT NO REASSESSMENT SHALL BE MADE IN RESPECT OF A COMPLETED ASSESSMENT. THE LANGUAGE IS CLEAR IN THIS BEHALF AND THEREFORE LITERAL INTERPRETATION SHOULD BE FOLLOWED. SUCH INTERPRETATION DOES NOT PRODUCE MANIFESTLY ABSURD OR UNJUST RESULTS AS SECTION 153A (I)( B) AND THE FIRST PROVISO CLEARLY PROVIDE FOR ASSESSMENT OR REASSESSMENT OF ALL SIX YEARS. IT MAY CAUSE HARDSHIP TO SOME ASSESSES WHERE ONE OR MORE OF SUCH ASSESSMENTS HAS OR HAVE BEEN COMPLETED BEFORE THE DATE OF INITIATION OF SEARCH. THIS IS HARDLY OF ANY RELEVANCE IN VIEW OF CLEAR AND UNAMBIGUOUS WORDS USED BY THE LEGISLATURE. THIS INTERPRETATION DOES NOT CAUSE ANY ABSURD ETC. RESULTS. THERE IS NO CASUS OMISSUS AND SUPPLYING ANY WOULD BE AGAINST THE LEGISLATIVE INTENT AND AGAINST THE VERY RULE IN THIS BEH ALF THAT IT SHOULD BE SUPPLIED FOR THE PURPOSE OF ACHIEVING LEGISLATIVE INTENT. THE SUBMISSIONS OF THE LD. COUNSELS ARE MANIFOLD, THE FOREMOST BEING THAT THE PROVISION U/S 153A SHOULD BE READ IN CONJUNCTION WITH THE PROVISION CONTAINED IN SECTION 132(1), T HE REASON BEING THAT THE LATTER DEALS WITH SEARCH AND SEIZURE AND THE FORMER DEALS WITH ASSESSMENT IN CASE OF SEARCH ETC, THUS, THE TWO ARE INEXTRICABLY LINKED WITH EACH OTHER. 49. BEFORE PROCEEDING FURTHER, WE MAY NOW EXAMINE THE PROVISION CONTAINED IN SUB - SECTION (2) OF SECTION 153, WHICH HAS BEEN DEALT WITH BY LD. COUNSEL. IT PROVIDES THAT IF ANY ASSESSMENT MADE UNDER SUBSECTION (1) IS ANNULLED IN APPEAL ETC., THEN THE ABATED ASSESSMENT REVIVES. HOWEVER, IF SUCH ANNULMENT IS FURTHER NULLIFIED, THE ASSESSMENT AGAIN ABATES. THE CASE OF THE LD. COUNSEL IS THAT THIS PROVISION FURTHER SHOWS THAT COMPLETED ASSESSMENTS STAND ON A DIFFERENT FOOTING FROM THE PENDING ASSESSMENTS BECAUSE APPEALS ETC. PROCEEDINGS CONTINUE TO REMAIN IN FORCE IN CASE OF COMPLETED ASSESSMENTS AND THEIR FATE DEPENDS UPON SUBSEQUENT ORDERS IN APPEAL. ON CONSIDERATION OF THE PROVISION AND THE SUBMISSIONS, WE FIND THAT THIS PROVISION ALSO MAKES IT CLEAR THAT THE A BATEMENT OF PENDING PROCEEDINGS IS NOT OF SUCH PERMANENT NATURE THAT THEY CEASE TO EXIST FOR ALL TIMES TO COME. THE INTERPRETATION OF THE LD. COUNSEL, THOUGH NOT SPECIFICALLY STATED, WOULD BE THAT ON ANNULMENT OF THE ASSESSMENT MADE U/S 153(1), THE AO GETS THE JURISDICTION TO ASSESS THE TOTAL INCOME WHICH WAS VESTED IN HIM EARLIER 31 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 INDEPENDENT OF THE SEARCH AND WHICH CAME TO AN END DUE TO INITIATION OF THE SEARCH. 50. THE PROVISION CONTAINED IN SECTION 132 (1) EMPOWERS THE OFFICER TO ISSUE A WARRANT OF SEA RCH OF THE PREMISES OF A PERSON WHERE ANY ONE OR MORE OF CONDITIONS MENTIONED THEREIN IS OR ARE SATISFIED, I.E. - A) SUMMONS OR NOTICE HAS BEEN ISSUED TO PRODUCE BOOKS OF ACCOUNT OR OTHER DOCUMENTS BUT SUCH BOOKS OF ACCOUNT OR DOCUMENTS HAVE NOT BEEN PRODU CED, B) SUMMONS OR NOTICE HAS BEEN OR MIGHT BE ISSUED, HE WILL NOT PRODUCE THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MENTIONED THEREIN, OR C) HE IS IN POSSESSION OF ANY MONEY OR BULLION ETC. WHICH REPRESENTS WHOLLY OR PARTLY THE INCOME OR PROPERTY WHICH HAS NOT BEEN AND WHICH WOULD NOT BE DISCLOSED FOR THE PURPOSE OF ASSESSMENT, CALLED AS UNDISCLOSED INCOME OR PROPERTY. WE FIND THAT THE PROVISION IN SECTION 132 (1) DOES NOT USE THE WORD 'INCRIMINATING DOCUMENT'. CLAUSES (A) AND (B) OF SECTION 132(1) EMPLOY TH E WORDS 'BOOKS OF ACCOUNT OR OTHER DOCUMENTS'. FOR HARMONIOUS INTERPRETATION OF THIS PROVISION WITH PROVISION CONTAINED IN SECTION 153A, ALL THE THREE CONDITIONS ON SATISFACTION OF WHICH A WARRANT OF SEARCH CAN BE ISSUED WILL HAVE TO BE TAKEN INTO ACCOUNT. 51. HAVING HELD SO, AN ASSESSMENT OR REASSESSMENT U/S 153A ARISES ONLY WHEN A SEARCH HAS BEEN INITIATED AND CONDUCTED. THEREFORE, SUCH AN ASSESSMENT HAS A VITAL LINK WITH THE INITIATION AND CONDUCT OF THE SEARCH. WE HAVE MENTIONED THAT A SEARCH CAN BE A UTHORISED ON SATISFACTION OF ONE OF THE THREE CONDITIONS ENUMERATED EARLIER. THEREFORE, WHILE INTERPRETING THE PROVISION CONTAINED IN SECTION 153A, ALL THESE CONDITIONS WILL HAVE TO BE TAKEN INTO ACCOUNT. WITH THIS, WE PROCEED TO LITERALLY INTERPRET TO PRO VISION IN 153A AS IT EXISTS AND READ IT ALONGSIDE THE PROVISION CONTAINED IN SECTION 132(1). 52. THE PROVISION COMES INTO OPERATION IF A SEARCH OR REQUISITION IS INITIATED AFTER 31.5.2003. ON SATISFACTION OF THIS CONDITION, THE AO IS UNDER OBLIGATION TO I SSUE NOTICE TO THE PERSON REQUIRING HIM TO FURNISH THE RETURN OF INCOME OF SIX YEARS IMMEDIATELY PRECEDING THE YEAR OF SEARCH. THE WORD USED IS 'SHALL' AND, THUS, THERE IS NO OPTION BUT TO ISSUE SUCH A NOTICE. THEREAFTER HE HAS TO ASSESS OR REASSESS TOTAL INCOME OF THESE SIX YEARS. IN THIS RESPECT ALSO, THE WORD USED IS 'SHALL' AND, THEREFORE, THE AO HAS NO OPTION BUT TO ASSESS OR REASSESS THE TOTAL INCOME OF THESE SIX YEARS. THE PENDING PROCEEDINGS SHALL ABATE. THIS MEANS THAT OUT OF SIX YEARS, IF ANY ASSE SSMENT OR REASSESSMENT IS PENDING ON THE DATE OF INITIATION OF THE SEARCH, IT SHALL ABATE. IN OTHER WORDS PENDING PROCEEDINGS WILL NOT BE PROCEEDED WITH THEREAFTER. THE ASSESSMENT HAS NOW TO BE MADE U/S 153A (1)(B) AND THE FIRST PROVISO. IT ALSO MEANS THAT ONLY ONE ASSESSMENT WILL BE MADE UNDER THE AFORESAID PROVISIONS AS THE TWO PROCEEDINGS I.E. ASSESSMENT OR REASSESSMENT PROCEEDINGS AND PROCEEDINGS UNDER THIS PROVISION MERGE INTO ONE. IF ASSESSMENT MADE UNDER SUB - SECTION (1) IS ANNULLED IN APPEAL OR OTHER LEGAL PROCEEDINGS, THEN THE ABATED ASSESSMENT OR REASSESSMENT SHALL REVIVE. THIS MEANS THAT THE ASSESSMENT OR REASSESSMENT, WHICH HAD ABATED, SHALL BE MADE, FOR WHICH EXTENSION OF TIME HAS BEEN PROVIDED UNDER SECTION 153B. 53. THE QUESTION NOW IS - WHAT IS THE SCOPE OF ASSESSMENT OR REASSESSMENT OF TOTAL INCOME U/S 153A (1) (B) AND THE FIRST PROVISO? WE ARE OF THE VIEW THAT FOR ANSWERING THIS QUESTION, GUIDANCE WILL HAVE TO BE SOUGHT FROM SECTION 132(1). IF 32 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS RELEVAN T TO THE ASSESSMENT HAD NOT BEEN PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND FOUND IN THE COURSE OF SEARCH IN OUR HUMBLE OPINION SUCH BOOKS OF ACCOUNT OR OTHER DOCUMENTS HAVE TO BE TAKEN INTO ACCOUNT WHILE MAKING ASSESSMENT OR REASSESSMENT OF TOTAL I NCOME UNDER THE AFORESAID PROVISION. SIMILAR POSITION WILL OBTAIN IN A CASE WHERE UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY HAS BEEN FOUND AS A CONSEQUENCE OF SEARCH. IN OTHER WORDS, HARMONIOUS INTERPRETATION WILL PRODUCE THE FOLLOWING RESULTS: - A) IN S O FAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE ORIGINAL ASSESSMENT AND ASSESSMENT U/S 153A MERGE INTO ONE AND ONLY ONE ASSESSMENT FOR EACH ASSESSMENT YEAR SHALL BE MADE SEPARATELY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTH ER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO, (B) IN RESPECT OF NON - ABATED ASSESSMENTS, THE ASSESSMENT WILL BE MADE ON THE BASIS OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT BUT FOUND IN THE COURSE O F SEARCH, AND UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY DISCOVERED IN THE COURSE OF SEARCH. 54. IT MAY BE MENTIONED HERE THAT LD. COUNSEL FOR ALL CARGO GLOBAL LOGISTICS LTD. WAS QUESTIONED ABOUT THE SCOPE OF PENDING ASSESSMENTS AS IT WAS HIS CONTENTION THAT ALL SIX ASSESSMENTS ARE TO BE MADE, IF NECESSARY, ON THE BASIS OF UNDISCLOSED INCOME DISCOVERED IN THE COURSE OF SEARCH. HE WAS SPECIFICALLY QUESTIONED ABOUT THE JURISDICTION OF THE AO TO MAKE ORIGINAL ASSESSMENT ALONG WITH ASSESSMENT U/S 153A, MERGIN G INTO ONE. HOWEVER HE TOOK AN EVASIVE VIEW SUBMITTING THAT THIS QUESTION NEED NOT BE DECIDED IN HIS CASE ALTHOUGH THE QUESTION OF JURISDICTION U/S 153A WAS VEHEMENTLY PRESSED ON ACCOUNT OF WHICH GROUND NO.1 IN THE APPEAL FOR ASSESSMENT YEAR 2004 - 05 WAS AD MITTED AS ADDITIONAL GROUND. HE ALSO WANTED THE ADDITIONAL GROUND TO BE RETAINED IN CASE OF ANY FUTURE CONTINGENCY. 32. WE WOULD BE FAILING IN OUR DUTY IF WE DO NOT NOTE THE RELIANCE PLACED BY MR. PINTO ON THE JUDGMENTS RENDERED BY THE HIGH COURT OF DEL HI AT NEW DELHI AND THE HIGH COURT OF KARNATAKA. MR. PINTO WOULD SUBMIT THAT THE ABOVE OBSERVATIONS AND CONCLUSIONS OF THE SPECIAL BENCH AND REPRODUCED BY US ARE SPECIFICALLY DISAPPROVED IN COMMISSIONER OF INCOME TAX VS. ANIL KUMAR BHATIA BY THE DELHI HIGH COURT. WE DO NOT FIND THIS ARGUMENT TO BE ACCURATE. IN ANIL KUMAR BHATIA AS WELL THE ASSESSMENT INVOLVED THE YEARS 2000 - 01, 2002 - 03 AND 2005 - 06. ONE OF THE QUESTIONS AND WHICH WAS TERMED AS SUBSTANTIAL QUESTION OF LAW WAS THE CORRECTNESS OF THE TRIBUNAL'S ORDER HOLDING THAT THE ASSESSING OFFICER WRONGLY INVOKED SECTION 153A OF THE IT ACT. THE FACTS AS NOTED WERE THAT IN THE CASE OF AN INDIVIDUAL ASSESSEE AND WHO WAS CARRYING ON BUSINESS IN THE NAME AND STYLE OF M/S. A.K. TRADERS, THERE WAS A SEARCH OF HIS RESIDENCE AND BUSINESS PREMISES ON 13TH DECEMBER, 2005 UNDER SECTION 132 OF THE ACT. PURSUANT TO THE SEARCH, THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 153A OF THE IT ACT AND CALLED UPON THE ASSESSEE TO FILE THE RETURN OF INCOME FOR THE SIX YEARS AS ENVISAGED IN THAT SECTION. NOTICES UNDER SECTION 142(1) AND 143(2) ALONGWITH A DETAILED QUESTIONNAIRE WERE ISSUED IN RESPONSE TO WHICH THE ASSESSEE SUBMITTED AN EXPLANATION. AFTER CONSIDERATION THEREOF, THE ASSESSING OFFICER MADE ADDITIONS TO THE INCOME R ETURNED IN RESPECT OF THE ASSESSMENT YEARS UNDER CONSIDERATION WHICH INCLUDED AN AMOUNT OF RS.1,50,000/ - GIVEN BY THE 33 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 ASSESSEE AS A LOAN TO SMT. MOHINI SHARMA ON 10TH DECEMBER, 2003. THIS INFORMATION WAS MADE AVAILABLE BUT THE LOAN WAS NOT REFLECTED IN THE RETURN OF INCOME FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2003 - 04. THE ASSESSING OFFICER, THEREFORE, CONCLUDED THAT THIS LOAN WAS GIVEN OUT OF UNACCOUNTED INCOME OF THE ASSESSEE. ACCORDINGLY, THE SAME WAS ADDED IN THE INCOME OF THE ASSESSEE FOR THE A SSESSMENT YEAR 2003 - 04 AND AN ORDER WAS MADE TO THAT EFFECT. AGAINST THIS ADDITION, THE APPEAL WAS PREFERRED BEFORE THE COMMISSIONER OF INCOME TAX CONTENDING, INTER ALIA, THAT THE SEIZED PAPER ON THE BASIS OF WHICH THE ADDITION WAS MADE DID NOT CONTAIN THE SIGNATURE OF THE ASSESSEE; THAT NO LOAN WAS GIVEN TO MOHINI SHARMA. THERE WAS NO ADMISSION OF THE STATEMENT OF MOHINI SHARMA TO THAT EFFECT AND THERE WAS ONLY A PROPOSAL. THE COMMISSIONER OF INCOME TAX CONFIRMED THIS ADDITION IN THE ASSESSING OFFICER'S OR DER. IN RESPECT OF ASSESSMENT YEARS 2004 - 05 AND 2005 - 06 THERE WERE APPEALS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) QUESTIONING THE ADDITIONS MADE IN THE ASSESSMENT ORDERS FOR THOSE YEARS. WHILE DISPOSING OF THESE APPEALS, THE COMMISSIONER OF INCOME TAX DIRECTED THE ASSESSING OFFICER TO ASSESS THE NOTIONAL INTEREST ON THE LOAN GIVEN TO MOHINI SHARMA WHICH ADDITION HE CONFIRMED IN HIS APPELLATE ORDER. THESE TWO ORDERS OF THE COMMISSIONER WERE CARRIED IN APPEAL TO THE TRIBUNAL AND THEREAFTER THE DELHI HIGH COURT NOTED THE TRIBUNAL'S CONCLUSIONS. IT NOTED THE ARGUMENTS BEFORE THE TRIBUNAL AND THEREUPON THE TRIBUNAL HAVING DELETED THESE ADDITIONS AND THE NOTIONAL INTEREST, THE MATTER WAS TAKEN IN APPEAL TO THE HIGH COURT OF DELHI UNDER SECTION 260A OF THE IT ACT BY THE REVENUE. 33. THE ARGUMENTS, THEREFORE, HAVE BEEN NOTED AND FROM PARAGRAPHS 16, SECTION 153A WAS ANALYSED. 34. MR. PINTO HEAVILY RELIED ON PARAGRAPHS 18, 19 AND 20 OF THE JUDGMENT OF THE HON'BLE HIGH COURT OF DELHI. HE ALSO RELIED ON PARAGRAPH 21 TO CONTEND THAT THE SPECIAL BENCH DECISION HAS NOT BEEN APPROVED BY THE HIGH COURT OF DELHI. 35. THE DELHI HIGH COURT'S JUDGMENT MUST BE SEEN IN THE CONTEXT OF THE ESSENTIAL CONTROVERSY BEFORE IT. PERTINENTLY, THAT CONTROV ERSY AROSE BECAUSE OF A SEARCH BEING CONDUCTED AT THE RESIDENCE AND BUSINESS PREMISES OF THE ASSESSEE. FOUNDATION OF THE ACTION UNDER SECTION 153A BEING THE SEARCH THAT THE HIGH COURT OF DELHI WAS REQUIRED TO CONSIDER THE AMBIT AND SCOPE OF THE POWERS. FUR THER, PERTINENTLY THE DELHI HIGH COURT DID NOT IGNORE ANY OF THE PROVISIONS. THOSE ARE CORRECTLY UNDERSTOOD BY THE DELHI HIGH COURT. WE DO NOT SEE HOW AND WHERE THE DELHI HIGH COURT DISAPPROVES THE VIEW TAKEN BY THE TRIBUNAL THAT ITS OBSERVATIONS CAN BE RE AD TORN FROM THE CONTEXT. ONCE THESE OBSERVATIONS AND NOTED BY US FROM THE PARAGRAPHS CITED BY MR. PINTO ARE READ AS A WHOLE AND IN ENTIRETY, IT IS NOT POSSIBLE TO AGREE WITH MR. PINTO THAT THE HIGH COURT OF DELHI REACHED A CONCLUSION DIFFERENT THAN THE VI EW TAKEN BY OUR DIVISION BENCH. 36. SIMILAR IS THE CASE WITH THE DIVISION BENCH JUDGMENT OF THE HIGH COURT OF KARNATAKA AT BANGALORE. THERE AS WELL A REAL ESTATE FIRM WAS THE ASSESSEE. A RETURN OF INCOME WAS FILED AND WHEN AN ORDER UNDER SECTION 143(3) O F THE ACT CAME TO BE PASSED ON 31ST DECEMBER, 2010, FOR ASSESSMENT YEAR 2008 - 09 THAT A SEARCH TOOK PLACE IN THE PREMISES OF THE ASSESSEE ON 12TH APRIL, 2011. IN THE COURSE OF SEARCH, INCRIMINATING MATERIAL LEADING TO UNDISCLOSED INCOME WAS SEIZED. THEREFOR E, THE PROCEEDINGS UNDER SECTION 153A OF THE ACT CALLING UPON THE ASSESSEE TO FILE RETURN OF INCOME UNDER SECTION 153A(1)(A) CAME TO BE INITIATED BY A NOTICE DATED 13TH JANUARY, 2012. RETURN OF INCOME 34 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 WAS FILED PURSUANT TO RECEIPT OF SUCH NOTICE AND FOR SI X YEARS AS REQUIRED BY THE PROVISION. WHEN THIS RETURN WAS UNDER CONSIDERATION ON 14TH MARCH, 2013, THE COMMISSIONER OF INCOME TAX INITIATED PROCEEDINGS UNDER SECTION 263 OF THE ACT ON THE GROUND THAT THE ORDER DATED 31ST DECEMBER, 2010 IN RELATION TO THE RETURN OF INCOME FOR ASSESSMENT YEAR 2008 - 09 AND HOLDING THAT THE SAME IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE CAME TO BE PASSED. THE ASSESSEE FILED HIS OBJECTION BUT THE COMMISSIONER MAINTAINED HIS ACTION UNDER SECTION 263. THAT IS HOW THE AGGRIEVED ASSESSEE CARRIED THE MATTER IN APPEAL TO THE TRIBUNAL AND BEFORE THE TRIBUNAL IT WAS CONTENDED THAT ONCE SECTION 263 OF THE ACT HAS BEEN INVOKED DURING THE PENDENCY OF PROCEEDINGS UNDER SECTION 153A OF THE ACT, THEN, THAT WAS IMPERMISSIBLE. THAT WAS IMPERMISSIBLE FOR THE ASSESSMENTS INCLUDING FOR THE ASSESSMENT YEAR 2008 - 09 STAND REOPENED. ONCE THEY ARE REOPENED, THEN, THERE IS NO ORDER OF ASSESSMENT IN FORCE AND IN REGARD TO WHICH ANY ACTION UNDER SECTION 263 OF THE IT ACT CAN BE INITIATED. IT IS IN DEALING WITH THIS ARGUMENT AND WHICH WAS NEGATIVED BY THE TRIBUNAL THAT ALL THE OBSERVATIONS OF THE HIGH COURT OF KARNATAKA HAVE BEEN MADE. IN PARAGRAPHS 5 AND 6, THE ARGUMENTS HAVE BEEN NOTED AND THEREAFTER THE PROVISION HAS BEEN REPRODUCED. IN P ARAGRAPH 9, EXTENSIVE REFERENCE HAS BEEN MADE TO THE JUDGMENT IN ANIL KUMAR BHATIA OF THE HIGH COURT OF DELHI (SUPRA) AND THEN THE FOLLOWING OBSERVATIONS IN PARAGRAPHS 10 AND 11 ARE MADE: 10. SECTION 153A OF THE ACTS START WITH A NON OBSTANTE CLAUSE. TH E FETTERS IMPOSED UPON THE ASSESSING OFFICER BY THE STRICT PROCEDURE TO ASSUME JURISDICTION TO REOPEN THE ASSESSMENT UNDER SECTIONS 147 AND 148, HAVE BEEN REMOVED BY THE NON OBSTANTE CLAUSE WITH WHICH SUB SECTION (1) OF SECTION 153A OPENS. THE TIME - LIMIT W ITHIN WHICH THE NOTICE UNDER SECTION 148 CAN BE ISSUED, AS PROVIDED IN SECTION 149 HAS ALSO BEEN MADE INAPPLICABLE BY THE NON OBSTANTE CLAUSE. SECTION 151 WHICH REQUIRES SANCTION TO BE OBTAINED BY THE ASSESSING OFFICER BY ISSUE OF NOTICE TO REOPEN THE ASSE SSMENT UNDER SECTION 148 HAS ALSO BEEN EXCLUDED IN A CASE COVERED BY SECTION 153A. THE TIME - LIMIT PRESCRIBED FOR COMPLETION OF AN ASSESSMENT OR REASSESSMENT BY SECTION 153 HAS ALSO BEEN DONE AWAY WITH IN A CASE COVERED BY SECTION 153A. WITH ALL THE STOPS H AVING BEEN PULLED OUT, THE ASSESSING OFFICER UNDER SECTION 153A HAS BEEN ENTRUSTED WITH THE DUTY OF BRINGING TO TAX THE TOTAL INCOME OF AN ASSESSEE WHOSE CASE IS COVERED BY SECTION 153A, BY EVEN MAKING REASSESSMENTS WITHOUT ANY FETTERS, IF NEED BE. THEREFO RE, IT IS CLEAR EVEN IF AN ASSESSMENT ORDER IS PASSED UNDER SECTION 143(1) OR 143(3) OF THE ACT, THE ASSESSING OFFICER IS EMPOWERED TO REOPEN THOSE PROCEEDINGS AND REASSESS THE TOTAL INCOME TAKING NOTE OF THE UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING TH E SEARCH. AFTER SUCH REOPENING OF THE ASSESSMENT, THE ASSESSING OFFICER IS EMPOWERED TO ASSESS OR REASSESS THE TOTAL INCOME OF THE AFORESAID YEARS. THE CONDITION PRECEDENT FOR APPLICATION OF SECTION 153A IS THERE SHOULD BE A SEARCH UNDER SECTION 132. INITI ATION OF PROCEEDINGS UNDER SECTION 153A IS NOT DEPENDENT ON ANY UNDISCLOSED INCOME BEING UNEARTHED DURING SUCH SEARCH. THE PROVISO TO THE AFORESAID SECTION MAKES IT CLEAR THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH AS SESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS. IF ANY ASSESSMENT PROCEEDINGS ARE PENDING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN THE AFORESAID SUB - SECTION ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132, THE SAID PROCEED ING SHALL ABATE. IF SUCH PROCEEDINGS ARE ALREADY 35 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 CONCLUDED BY THE ASSESSING OFFICER BY INITIATION OF PROCEEDINGS UNDER SECTION 153A, THE LEGAL EFFECT IS THE ASSESSMENT GETS REOPENED. THE BLOCK ASSESSMENT ROPED IN ONLY THE UNDISCLOSED INCOME AND THE REGULAR ASSESSMENT PROCEEDINGS WERE PRESERVED, RESULTING IN MULTIPLE ASSESSMENTS. UNDER SECTION 153A, HOWEVER, THE ASSESSING OFFICER HAS BEEN GIVEN THE POWER TO ASSESS OR REASSESS THE TOTAL INCOME OF THE SIX ASSESSMENT YEARS IN QUESTION IN SEPARATE ASSESSMENT O RDERS. THE ASSESSING OFFICER IS EMPOWERED TO REOPEN THOSE PROCEEDINGS AND REASSESS THE TOTAL INCOME, TAKING NOTE OF THE UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH. HE HAS BEEN ENTRUSTED WITH THE DUTY OF BRINGING TO TAX THE TOTAL INCOME OF AN A SSESSEE WHOSE CASE IS COVERED BY SECTION 153A, BY EVEN MAKING REASSESSMENTS WITHOUT ANY FETTERS. THIS MEANS THAT THERE CAN BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX ASSESSMENT YEARS, IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME W OULD BE BROUGHT TO TAX. WHEN ONCE THE PROCEEDINGS ARE INITIATED UNDER SECTION 153A OF THE ACT, THE LEGAL EFFECT IS EVEN IN CASE WHERE THE ASSESSMENT ORDER IS PASSED IT STANDS REOPENED. IN THE EYE OF LAW THERE IS NO ORDER OF ASSESSMENT. RE - OPENED MEANS TO D EAL WITH OR BEGIN WITH AGAIN. IT MEANS THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS. ONCE THE ASSESSMENT IS REOPENED, THE ASSESSING AUTHORITY CAN TAKE NOTE OF THE INCOME DISCLOSED IN THE EARLIER RETURN, ANY UNDISC LOSED INCOME FOUND DURING SEARCH OR AND ALSO ANY OTHER INCOME WHICH IS NOT DISCLOSED IN THE EARLIER RETURN OR WHICH IS NOT UNEARTHED DURING THE SEARCH, IN ORDER TO FIND OUT WHAT IS THE TOTAL INCOME OF EACH YEAR AND THEN PASS THE ASSESSMENT ORDER. THEREFO RE, THE COMMISSIONER BY VIRTUE OF THE POWER CONFERRED UNDER SECTION 263 OF THE ACT GETS NO JURISDICTION TO INITIATE PROCEEDINGS UNDER THE SAID PROVISION BECAUSE THE CONDITION PRECEDENT FOR INITIATING PROCEEDINGS UNDER SECTION 263 IS ANY ORDER PASSED UNDER THE ACT BY THE ASSESSING OFFICER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. ONCE THE ORDER PASSED BY THE ASSESSING OFFICER GETS REOPENED, THERE IS NO ORDER WHICH CAN BE SAID TO BE ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE WHICH CONFERS JURISDICTION ON THE COMMISSIONER TO EXERCISE THE POWER OF THE JURISDICTION. 11. THE TRIBUNAL HAS PROCEEDED ON THE ASSUMPTION BY VIRTUE OF THE JUDGMENT OF THE SPECIAL BENCH OF THE MUMBAI, THE SCOPE OF ENQUIRY UNDER S ECTION 153A IS TO BE CONFINED ONLY TO THE UNDISCLOSED INCOME UNEARTHED DURING SEARCH AND IF THERE IS ANY OTHER INCOME WHICH IS NOT THE SUBJECT MATTER OF SEARCH, THE SAME CANNOT BE TAKEN INTO CONSIDERATION. THEREFORE, THE REVISIONAL AUTHORITY CAN EXERCISE T HE POWER UNDER SECTION 263. IN THE ENTIRE SCHEME OF 153A OF THE ACT, THERE IS NO PROHIBITION FOR THE ASSESSING AUTHORITY TO TAKE NOTE OF SUCH INCOME. ON THE CONTRARY, IT IS EXPRESSLY PROVIDED UNDER SECTION 153A OF THE ACT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS WHICH MEANS THE SAID TOTAL INCOME INCLUDES INCOME WHICH WAS RETURNED IN THE EARLIER RETURN, THE INCOME WHICH WAS UNEARTHED DURING SEARCH AND INCOME WHICH IS NOT THE SUBJECT MATTER OF AFORESAID TWO INC OME. IF THE COMMISSIONER HAS COME ACROSS ANY INCOME THAT THE ASSESSING AUTHORITY HAS NOT TAKEN NOTE OF WHILE PASSING THE EARLIER ORDER, THE SAID MATERIAL CAN BE FURNISHED TO THE ASSESSING AUTHORITY AND THE ASSESSING AUTHORITY SHALL TAKE NOTE OF THE SAID IN COME ALSO IN DETERMINING THE TOTAL 36 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 INCOME OF THE ASSESSEE WHEN THE EARLIER PROCEEDINGS ARE REOPENED AND THAT INCOME ALSO SHALL BECOME THE SUBJECT MATTER OF SAID PROCEEDINGS. IN THAT VIEW OF THE MATTER THE REASONING GIVEN BY THE TRIBUNAL IS NOT JUSTIFIED. T HE COMMISSIONER DID NOT HAVE JURISDICTION TO INITIATE ANY PROCEEDINGS UNDER SECTION 263 OF THE ACT. 37. WE DO NOT SEE AS TO HOW WHILE ALLOWING THE APPEAL OF THE ASSESSEE AND SETTING ASIDE THE ORDER OF THE COMMISSIONER UNDER SECTION 263 COULD THE JUDGMEN T BE SAID TO BE LAYING DOWN A PROPOSITION AND AS CANVASSED BY MR. PINTO. TRUE IT IS THAT THE ASSESSMENT WHICH HAS TO BE MADE IN PURSUANCE OF THE NOTICE IS IN RELATION TO THE SIX YEARS. AN ORDER WILL HAVE TO BE MADE IN THAT REGARD. WHILE MAKING THE ORDER TH E INCOME OR THE RETURN OF INCOME FILED FOR ALL THESE ASSESSMENT YEARS IS TO BE TAKEN INTO ACCOUNT. A REFERENCE WILL HAVE TO BE MADE TO THE INCOME DISCLOSED THEREIN. HOWEVER, THE SCOPE OF ENQUIRY, THOUGH NOT CONFINED AS HELD BY THE HIGH COURT OF KARNATAKA, IT ESSENTIALLY REVOLVES AROUND THE SEARCH OR THE REQUISITION UNDER SECTION 132A AS THE CASE MAY BE. WE DO NOT FIND ANYTHING IN THESE OBSERVATIONS AND REPRODUCED ABOVE WHICH WOULD ENABLE US TO CONCLUDE THAT THE DIVISION BENCH JUDGMENT OF THIS COURT IN THE C ASE OF MURLI AGRO REQUIRES RECONSIDERATION OR DOES NOT LAY DOWN A CORRECT PRINCIPLE OF LAW. WE CANNOT, THEREFORE, ACCEDE TO THE SUBMISSIONS OF MR. PINTO AND REVISIT ANY OF THE CONCLUSIONS RENDERED BY THE DIVISION BENCH OF THIS COURT. 15. IN VIEW OF THE F ACTS IN ENTIRETY AND THE LEGAL PRINCIPLES ENUNCIATED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD. , SUPRA, OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF SHAILA AGARWAL, SUPRA AND MUMBAI SPECIAL BENCH DE CISION IN THE CASE OF ALL CARGO GLOBAL LOGISTICS, SUPRA, WE ARE OF THE VIEW THAT THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH IN THE PRESENT CASE FOR THESE ASSESSMENT YEARS, EXCEPT THE STATEMENT OF ONE SHRI SAMBHU KR MORE, AS ADMITT ED BY THE AO IN HIS REMAND REPORT DATED 23.09.2011 AND DESPITE NUMBER OF OPPORTUNITIES REVENUE COULD NOT PRODUCE ANY INCRIMINATING MATERIAL BEFORE THE BENCH AND THE ASSESSMENTS ARE ALREADY COMPLETED FOR THESE ASSESSMENT YEARS ORIGINALLY, THE ASSESSMENTS FR AMED U/S. 153A OF THE ACT IS IN VALID AND HENCE, QUASHED. 16. ACCORDINGLY, THE CROSS OBJECTIONS OF THE ASSESSEE IN CO NOS. 13 TO 20/KOL/2012 ARE ALLOWED. 1 7 . IN REGARD TO THE REVENUE S APPEALS IN IT(SS)A NOS.12 TO 1 9 /K/2012, THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION ON MERITS BY CIT(A). SINCE WE HAVE ALREADY QUASHED THE ASSESSMENT FRAMED U/S. 153A OF THE ACT ON LEGAL ISSUE, WE NEED NOT TO 37 IT (SS) A NO S . 12 TO 16 /K/201 2 & CO NOS. 13 TO 17/K/2012 & IT(SS)A NOS. 140 & 141/K/2011 SHANTI KUMAR SURANA AY S 2003 - 04 TO 200 7 - 0 8 & IT(SS)A NOS. 17TO19/K/2012 & CO NOS. 18TO20/K/2012 SURANA MERCANTILES (P) LTD., AYS. 2004 - 05 TO 2006 - 07 ADJUDICATE THE MATTER OF REVENUE S APPEALS ON MERITS. HENCE, CONSEQU ENTIALLY THESE APPEALS OF REVENUE ARE DISMISSED. 18 . IN REGARD TO THE ASSESSEE S APPEALS IN IT(SS)A NOS.140 & 141/KO/2011 THE ASSESSEE HAS NOT PRESSED THESE APPEALS . HENCE, THE SAME ARE DISMISSED AS NOT PRESSED. 19 . IN THE RESULT , REVENUE S APPEALS IN IT(SS)A NOS. 12 TO 19/KOL/2012 ARE DISMISSED AND ASSESSEE S CROSS OBJECTIONS NOS. 13 TO 20/KOL/2012 ARE ALLOWED. APPEALS OF ASSESSEE IN IT(SS)A NOS. 140 & 141/KOL/2011 ARE DISMISSED. 20 . ORDER IS PRONOUNCED IN THE OPEN COURT ON 22 .06.2015 SD/ - SD/ - ( B. P. JAIN ) (MAHAVIR SINGH) ACCOUNTANT MEMBER J UDICIAL MEMBER DATED : 22 ND JUNE , 201 5 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . A PPELLANT ACIT, CC - XXIII, KOLKATA . 2 RESPONDENT M/S. SURANA MERCANTILES (P) LTD. & SHRI SHANTI KUMAR SURANA, 505, CENTURY TOWER, 45, SHAKESPEARE SARANI, KOLKATA - 700 017. 3 . THE CIT (A), KOLKATA 4. 5. CIT KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .
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