ACIT, Circle -2(2), Hyderabad V. Sri. Gyan Kumar Agarwal, Hyderabad

CO 25/HYD/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8713 (ITAT-HYDERABAD)
• Duration Of Justice: 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-06-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 30-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M B REDDY
• Assessee Lawyers: SYED JAMEELUDDIN
• Keywords: Unexplained investment; Income from undisclosed sources; Loose papers; Document seized; Opportunity of cross examination; Block assessment; Onus to prove; Documents seized
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBE R AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMB ER IT(SS)A NO.3/HYD/2013 : BLOCK PERIO D FROM 1997-98 TO 2002-03 THE ASST. COMMISSIONER OF INCOME-TAX CIRCLE 2(2), HYDERABAD V/S SHRI GYAN KUMAR AGARWAL, HYDERABAD ( PAN ABGPA 5780 L) (APPELLANT) (RESPONDENT) CROSS OBJECTION NO.25/HYD/2013 (IT(SS)A NO.3/HYD/2013) : BLOCK PERIOD FROM 1997-98 TO 2002-03 SHRI GYAN KUMAR AGARWAL, HYDERABAD ( PAN ABGPA 5780 L ) V/S THE ASST. COMMISSIONER OF INCOME - TAX CIRCLE 2(2), HYDERABAD (CROSS OBJECTOR) (RESPONDENT) ASSESSEE BY : SHRI SYED JAMEELUDDIN DEPARTMENT BY : SHRI M.B.REDDY, CIT DR DATE OF HEARING 20.06.2013 DATE OF PRONOUNCEMENT 28.06.2013 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL BY THE REVENUE AND CROSS-OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMM ISSIONER OF INCOME- TAX(APPEALS) III, HYDERABAD DATED 9 TH JANUARY, 2013 FOR THE BLOCK PERIOD FROM 1997-98 TO 2002-03. SINCE COMMON ISSUES ARE IN VOLVED, THESE MATTERS ARE BEING DISPOSED OF WITH THIS COMMON ORDE R FOR THE SAKE OF CONVENIENCE. IT(SS)A NO.3/HYD/2013 & CO 25/H/13 SHRI GYAN KUMAR AGARWAL, HYDERABAD 2 2. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS FOR THE CROSS-OBJECTION, AND HAS FILE D A LETTER DATED 19.6.2013 IN THAT BEHALF. CROSS OBJECTION IS ACCOR DINGLY DISMISSED. REVENUES APPEAL: IT(SS)A NO.3/HYD/2013 3. EFFECTIVE GROUNDS OF THE REVENUE IN ITS APPEAL ARE AS FOLLOWS- 1. THE ORDER OF CIT(A) IS ERRONEOUS ON FACTS AND I N LAW. 2. THE CIT(A) ERRED IN LAW IN NOT APPRECIATING TH AT U/S. 132(4A), THE ONUS IS ON THE ASSESSEE TO REBUT THE EVIDENCE F OUND IN HIS POSSESSION AND THE SAME CANNOT BE SHIFTED TO THE DE PARTMENT. 3. THE CIT(A) ERRED IN LAW IN NOT APPRECIATING THE FACT THAT THE ASSESSEE DID NOT UTILIZE THE OPPORTUNITY PROVIDED I N SET ASIDE PROCEEDINGS PERSISTED WITH DEN9AL BUT DID NOT PRODU CE ANY COGENT PROOF FOR HIS CLAIM. 4. THE CIT(A) ERRED IN LAW AND ON FACTS IN GRANTING RELIEF TO THE ASSESSEE THOUGH THE ASSESSEE DID NOT DISCHARGE THE ONUS OF REBUTTING THE EVIDENCE ON RECORD. 5. THE CIT(A) ERRED ON FACTS AND IN LAW IN NOT CONS IDERING THE EVIDENCE ON TOTALITY BECAUSE CERTAIN OTHER REGISTER S SEIZED DURING THE SEARCH OFFER ADMITTED PROOF THAT THE FAM ILY MEMBERS OF THE ASSESSEE ARE ENGAGED IN MONEY LENDING BUSINE SS. 6. THE CIT(A) ERRED ON FACTS AND IN LAW IN IGNORING THE EVIDENCE ON RECORD IN THE FORM OF REGISTER CONTAINING MONEY LENDING ACTIVITY AND ALSO IN HOLDING THAT THE EVIDENCE IS A DUMB RECORD. 7. 4. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSM ENT IN THIS CASE WAS ORIGINALLY FRAMED UNDER S.158BC READ WITH S.143 (3) OF THE ACT, ON 31.1.2005 AS FOLLOWS- 1. UNEXPLAINED JEWELLERY (AS ADMITTED) RS. 2,66,0 45 2. UNACCOUNTED CASH(AS ADMITTED) RS. 2,38,700 3. UNEXPLAINED INVESTMENT IN SHARES IN M/S. GVK LEASING FINANCE CO. IT(SS)A NO.3/HYD/2013 & CO 25/H/13 SHRI GYAN KUMAR AGARWAL, HYDERABAD 3 (AS AGAINST RS.2,25,900 ADMITTED BY THE ASSESSEE) RS. 14,42,000 5.UNEXPLAIEND MONEY LENDING RS. 2,55,50,00 0 _______________ TOTAL RS. 2,94,96,745 ________________ 5. WHEN THE ABOVE ASSESSMENT, PARTICULARLY IN RELA TION TO INCOME ON ACCOUNT OF UNEXPLAINED MONEY LENDING OF RS.2,55, 50,000 WAS ULTIMATELY SUBJECT MATTER OF APPEAL BEFORE THE TRIB UNAL, IN IT(SS)A NO.22/HYD/2008, THE TRIBUNAL VIDE PARA 18 OF ITS OR DER DATED 18 TH FEBRUARY, 2011, HELD AS FOLLOWS- 18. BUT THE ISSUE BEFORE US NOW REMAINS IS THAT WH ETHER THE SEIZED MATERIAL A/GAR/05 CAN BE THE BASIS FOR ADDITION OF RS.2,55,50,000/- AS SEEN FROM THE ABOVE SEIZED MATERIALS, THESE ARE JUS T HAND WRITTEN LOOSE DOCUMENTS. THE DEPARTMENT GOT VERIFIED THE HANDWRIT ING OF THE SEIZED MATERIAL A/GAR/05 FROM THE GOVT. EXAMINER OF QUESTI ONED DOCUMENTS, DIRECTORATE OF FORENSIC SCIENCE, GOVT. OF INDIA WHO HAD GIVEN REPORT THAT ON COMPARISON OF THE QUESTIONED DOCUMENTS AND SPECI MEN WRITINGS OF THE ASSESSEE AND HIS FAMILY MEMBERS THE AUTHORSHIP OF T HE QUESTIONED DOCUMENT DOES NOT TALLY WITH THE SEIZED MATERIAL A/ GAR/05. BUT THIS REPORT OF THE HANDWRITING EXPERTS IS NOT BINDING ON THE DEPARTMENT. IT IS ONLY CIRCUMSTANTIAL EVIDENCE. THERE IS NO NECESSITY TO THE DEPARTMENT TO PROVE THE AUTHORSHIP OF THIS DOCUMENT. THE OTHER PL EA OF THE ASSESSEE IS THAT THE DOCUMENTS ARE PLANTED ONE AND IT CANNOT BE RELIED FOR THE PURPOSE OF ASSESSMENT. THOUGH THE ASSESSEE REFUSED THAT THE DOCUMENTS ARE NOT BELONG TO HIM, THE BURDEN IS CAST UPON THE ASSESSEE TO PROVE CONCLUSIVELY THAT IT DOES NOT BELONG TO THE ASSESSE E. THERE IS NO PRESUMPTION IN LAW THAT THE ASSESSING OFFICER IS SU PPOSED TO DISCHARGE TAX LIABILITY BY DIRECT EVIDENCE ONLY AND THEREUPON THE UNDISCLOSED INCOME BEYOND DOUBT. THE UNDISCLOSED INCOME OF THE ASSESSE E IS TO BE COMPUTED BY THE ASSESSING OFFICER ON THE BASIS OF AVAILABLE RECORD. IN MANY A TIME, IT IS VERY IMPORTANT TO HAVE DIRECT EVIDENCE OR CONCLU SIVE EVIDENCE TO PROVE TO DETERMINE THE UNDISCLOSED INCOME. WHEN THE ASSES SEE GIVES AN EVASIVE REPLY TO THE ASSESSING OFFICER, HE HAS NO CHOICE BU T TO TAKE ESTIMATION OF THE INCOME. THE ONLY THING IS IT SHOULD BE REASONAB LE ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. IT SHOULD NOT BE BASE D ON CONJUNCTURES AND SURMISES. AS OF NOW MATERIAL CONSIDERED BY THE ASSE SSING OFFICER FOR MAKING THE ADDITION IS ONLY THE SEIZED MATERIAL MAR KED AS A/GAR/05 WHICH IS A NOTEBOOK CONTAINING THE DETAILS OF DAY T O DAY LEDGER ACCOUNT OF VARIOUS PERSONS TO WHOM THE MONEY WAS ADVANCED. IN VIEW OF THIS, WE HAVE TO CONSIDER THE SEIZED MATERIAL A/GAR/05 TO SE E WHETHER IT IS ENOUGH TO MAKE ADDITION. IN OUR OPINION, THIS DOCUM ENT IS ONLY NOTE BOOK/LOOSE SLIPS. WE HAVE TO LOOK INTO THE STATEMEN T RECORDED U/S 132(4) OR 132(4A) OF THE IT ACT. THE SEIZED MATERIAL A/GAR /05 FOUND DURING THE COURSE OF SEARCH AND THE STATEMENT RECORDED IS SOME PIECE OF EVIDENCE TO MAKE AN ADDITION. THE ASSESSING OFFICER HAS TO ESTA BLISH THE LINK BETWEEN THE SEIZED MATERIAL A/GAR/05 AND WITH OTHER BOOKS O F ACCOUNTS OF THE ASSESSEE. IT CANNOT BE CONSIDERED ALONE AS CONCLUSI VE EVIDENCE. THE WORD 'MAY BE PRESUMED' APPEAR IN SECTION 132(4A) GIVES A N OPTION TO THE IT(SS)A NO.3/HYD/2013 & CO 25/H/13 SHRI GYAN KUMAR AGARWAL, HYDERABAD 4 AUTHORITIES CONCERNED TO PRESUME THE THINGS. BUT IT IS REBUTTABLE AND IT DOES NOT GIVE A DEFINITE AUTHORITY AND CONCLUSIVE E VIDENCE. THE ASSESSEE HAS EVERY RIGHT TO REBUT THE SAME BY PRODUCING THE SAME IN SUPPORT OF HIS CLAIM. THE ENTIRE CASE DEPENDS ON THE RULE OF EVIDE NCE. THE ASSESSEE HAS EVERY RIGHT TO SHIFT THE BURDEN OF PROOF. THERE IS NO CONCLUSIVE PRESUMPTION. IN THE PRESENT CASE, ASSESSEE AS WELL AS THE ASSESSEE'S SON AND ALSO ASSESSEE'S BROTHER SHRI S.K. AGARWAL CATEG ORICALLY STATED IN EVERY STAGE OF EXAMINATION AND STATEMENT RECORDED U/S 132 (1) OR 132 THAT THE SEIZED MATERIAL A/GAR/05 IS NOT AT ALL BELONGED TO THEM. IN SPITE OF THIS THE ASSESSING OFFICER PROCEEDED TO CONCLUDE THAT TH ESE SEIZED MATERIALS ARE CONCLUSIVELY BELONGED TO THE ASSESSEE. LEAVE AL ONE THE ISSUE RELATING TO AUTHORSHIP OF THE DOCUMENT SEIZED AND THE FINDIN GS OF THE GEQD, THE DEPARTMENT SHOULD FIND OUT AND ESTABLISH THE NEXUS OF THESE SEIZED MATERIALS TO THE ASSESSEE'S BUSINESS WHILE CONCLUDI NG BLOCK ASSESSMENT THE ASSESSING OFFICER SHALL BE SPECIFIC ABOUT THE N ATURE OF NEXUS OF THE SEIZED MATERIAL TO THE BUSINESS OF THE ASSESSEE. TH E ALLEGATION OF THE DEPARTMENT IS THE SEIZED MATERIAL THAT REFLECTED MO NEY LENDING BUSINESS OF THE ASSESSEE. BUT THEY ARE NOT ABLE TO UNEARTH A NY BACKGROUND WITH REGARD TO THE MONEY LENDING BUSINESS LIKE LOAN AGRE EMENT, PROMISSORY NOTES, SECURITY DETAILS, BANK ACCOUNT RECEIPTS VOUC HERS OR ANY OTHER CORROBORATIVE EVIDENCE. WITHOUT ANY OF THESE, THE D EPARTMENT HAS TAKEN A VIEW THAT THE ASSESSEE IS CARRYING ON THE MONEY LEN DING BUSINESS. MORE SO, THERE ARE SO MANY NAMES OF THE PERSONS WHOSE AD DRESSES ARE NOT AT ALL TRACEABLE. THE DEPARTMENT NOT TRACED AND EXAMIN ED ANY OF THEM. THERE IS NO INFORMATION FROM ANY PARTY THAT THEY HAVE TAK EN LOAN FROM THE ASSESSEE. THERE IS NO EVIDENCE AS TO WHETHER THEY R EPAID THE LOANS TOWARDS THE PRINCIPAL AMOUNT AND INTEREST. THE DEPA RTMENT CANNOT DRAW INFERENCE ON THE BASIS OF SUSPICION, CONJUNCTURE AN D SURMISE. SUSPICION, HOWEVER STRONG CANNOT TAKE PLACE OF MATERIAL IN SUP PORT OF THE FINDINGS OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHOULD ACT IN A JUDICIAL MANNER, PROCEED WITH JUDICIAL SPIRIT AND SHOULD COM E TO A JUDICIAL CONCLUSION. THE ASSESSING OFFICER IS REQUIRED TO AC T FAIRLY AS A REASONABLE PERSON AND NOT ARBITRARILY AND CAPRICIOUSLY. ASSESS MENT MADE SHOULD HAVE ADEQUATE MATERIAL AND IT SHOULD STAND ON ITS OWN LE GS. THE ASSESSING OFFICER WITHOUT EXAMINING ANY PARTY, WHO HAS TAKEN THE LOAN FROM THE ASSESSEE, CANNOT COME TO THE CONCLUSION THAT THE AS SESSEE LENDS MONEY. THE BASIS FOR ADDITION IS ONLY NOTE BOOK/LOOSE SLIP S. THESE NOTE BOOK/LOOSE SLIPS ARE UNSIGNED DOCUMENTS. THE ASSESS ING OFFICER HAS NOT ESTABLISHED NEXUS BETWEEN THE NOTE BOOK/LOOSE SLIPS AND BUSINESS OF THE ASSESSEE. THERE IS NO NARRATION REGARDING THE ADDRE SS OF THE PARTIES, THE EXACT AMOUNT OF LOAN, PERIOD OF ADVANCE, RATE OF IN TEREST AND INSTALMENTS DUE. ALSO THERE IS NO EVIDENCE FOR REPAYMENT OF MON EY TOWARDS THE LOAN. THERE IS NO VALID SEIZED MATERIAL TO COME TO THE CO NCLUSION THAT THE ASSESSEE HAS ACTUALLY MADE AN ADVANCE OF THAT AMOUN T I.E. RS.2,55,50,000/- . THE NOTE BOOK/LOOSE SLIPS MARKED A/GAR/05 FOUND DURING THE COURSE OF SEARCH IS A DUMB DOCUMENT HAVI NG NO EVIDENTIARY VALUE, NO ADDITION CAN BE MADE IN THE ABSENCE OF CO RROBORATIVE MATERIAL. IF THERE IS CIRCUMSTANTIAL EVIDENCE IN THE FORM OF PROMISSORY NOTES, LOAN AGREEMENT AND ADDRESS OF THE PARTIES OR BANK ENTRIE S, THE ADDITION IS TO BE MADE ON THAT BASIS TO THE EXTENT OF MATERIAL AVAILA BLE. THE ASSESSEE IS NOT EXPECTED TO EXPLAIN THE LOOSE PAPERS FOUND AS THERE IS NO EVIDENCE OTHER THAN NOTE BOOK/LOOSE SLIPS CARRYING ON MONEY LENDIN G BUSINESS OF THE ASSESSEE. THE ASSESSING OFFICER HAS FAILED TO PROVE THE MONEY LENDING BUSINESS CARRIED ON BY THE ASSESSEE ON THE BASIS OF SEIZED MATERIAL A/GAR/05. IN OUR OPINION, NO ADDITION CAN BE MADE O N THE BASIS OF DUMB DOCUMENTS/NOTE BOOK/LOOSE SLIPS IN THE ABSENCE OF A NY OTHER MATERIAL TO SHOW THAT THE ASSESSEE HAS CARRIED ON MONEY LENDING BUSINESS. NOTING ON THE NOTE BOOK/DIARY/LOOSE SHEETS ARE REQUIRED TO BE SUPPORTED/ CORROBORATED BY OTHER EVIDENCE AND ARE ALSO INCLUDE THE STATEMENT OF A PERSON WHO ADMITTEDLY IS A PARTY TO THE NOTING AND STATEMENT FROM ALL THE PERSONS WHOSE NAMES THERE ON THE NOTE BOOK/LOOSE SL IPS AND THEIR IT(SS)A NO.3/HYD/2013 & CO 25/H/13 SHRI GYAN KUMAR AGARWAL, HYDERABAD 5 STATEMENTS TO BE RECORDED AND THEN SUCH STATEMENT U NDOUBTEDLY SHOULD BE CONFRONTED TO THE ASSESSEE AND HE HAS TO BE ALLO WED TO CROSS EXAMINE THE PARTIES. IN THE PRESENT CASE, UNDOUBTEDLY NO ST ATEMENT FROM THE PARTIES WHOSE NAMES FOUND IN THE NOTE BOOK/LOOSE SL IPS HAS BEEN RECORDED AND ASSESSEE SUCH THERE IS NO QUESTION OF CROSS EXAM INATION OF THEM AND ENTIRE ADDITION IN THE HANDS OF THE ASSESS EE ON THE BASIS OF UNCORROBORATED WRITINGS IN THE LOOSE PAPERS FOUND D URING THE COURSE OF SEARCH IS NOT POSSIBLE. THE EVIDENCE ON RECORD IS N OT SUFFICIENT TO SUPPORT THE REVENUE'S CASE THAT HUGE MONEY LENDING BUSINESS HAS BEEN CARRIED ON BY THE ASSESSEE OUTSIDE THE BUSINESS OF THE ASSESSE E. THIS IS THE BLOCK ASSESSMENT AND WE ARE CONCERNED ONLY WITH THE UNDIS CLOSED INCOME AND WE HAVE TO CONSIDER ONLY MATERIAL AND EVIDENCE DETE CTED AS A RESULT OF SEARCH. IT MEANS THAT IF AN EXAMINATION OF THE MATE RIAL ALREADY ON RECORD BEFORE SEARCH OR IF AS A RESULT OF SOME EXTERNAL IN FORMATION OR SOME OTHER SOURCES OTHER THAN A SEARCH, IT IS FOUND THAT SOME INCOME HAD ESCAPED ASSESSMENT AND THEN IT IS OPEN FOR THE ASSESSING OF FICER TO RESORT TO A REGULAR ASSESSMENT INCLUDING REOPENING OF A COMPLET ED ASSESSMENT IF SO ADVISED. BUT HE CANNOT DRAG THESE ITEMS INTO THE BL OCK ASSESSMENT PROCEEDINGS ENVISAGED UNDER CHAPTER XIV-B OF THE I. T. ACT. IN OUR OPINION EVIDENCE AVAILABLE WITH THE ASSESSING OFFICER AS A RESULT OF SEARCH IS TO BE USED FOR THE PURPOSE OF DETERMINING THE UNDISCLOSED INCOME OF THE BLOCK PERIOD. THE EVIDENCE, IF ANY, RELIED ON BY THE ASSE SSING OFFICER FOR THE PURPOSE OF DETERMINING THE UNDISCLOSED INCOM E OF THE BLOCK ASSESSMENT IS TO BE PUT BEFORE THE ASSESSEE FOR HIS COMMENTS BEFO RE COMPLETING ASSESSMENT. MORE SO, IF THE ASSESSING OFFICER WANTS TO RELY ON THE STATEMENT OF ANY THIRD PARTY THE SAME IS REQUIRED T O BE FURNISHED TO THE ASSESSEE AND IF THE ASSESSEE WANTS TO CROSS EXAMINE ANY OF THE PARTIES WHOSE STATEMENT WAS RELIED ON BY THE ASSESSING OFFI CER THE SAME IS TO BE PROVIDED TO THE ASSESSEE. IN THE PRESENT CASE THE A SSESSEE IS HAVING GRIEVANCE FOR NOT PROVIDING THE OPPORTUNITY OF CROS S EXAMINING THE PARTIES WHOSE STATEMENTS WERE RELIED ON BY THE ASSESSING OF FICER WHILE COMPLETING THE ASSESSMENT. THE CIRCUMSTANCES SURROU NDING THE CASE ARE NOT STRONG ENOUGH TO JUSTIFY THE REJECTION OF ASSES SEE'S PLEA ASKING THE OPPORTUNITY OF CROSS EXAMINATION. IN VIEW OF THIS, WE SET ASIDE THE BLOCK ASSESSMENT ORDER AND REMAND BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER. WE DIRECT THE ASSESSING OFFICER TO GIVE AN OPPORTUNITY OF CROSS EXAMINATION OF THE PARTIES AS REQUIRED BY THE ASSES SEE AND THEREAFTER IF THERE IS ANY SUFFICIENT EVIDENCE OTHER THAN THE UNS UBSTANTIATED NOTE BOOK/LOOSE SLIPS MARKED AS DOCUMENT A/GAR/5 OR IF T HIS DOCUMENT (VIZ., A/GAR/05) SUBSTANTIATED BY ANY OTHER EVIDENCE TO ES TABLISH THAT THE ASSESSEE IS HAVING UNDISCLOSED INCOME, THEN THE ASS ESSING OFFICER SHALL COMPLETE THE ASSESSMENT IN ACCORDANCE WITH LAW DETE RMINING THE UNDISCLOSED INCOME COVERING THIS BLOCK PERIOD IN AD DITION TO THE OTHER UNDISCLOSED INCOME UNCONTESTED BEFORE US. IT IS NEE DLESS TO SAY THAT THE EVIDENCE TO BE CONSIDERED BY THE ASSESSING OFFICER FOR THIS BLOCK ASSESSMENT IS ALL THE EVIDENCE ON RECORD FOUND AS R ESULT OF SEARCH OR REQUISITION OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS AND SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WITH THE ASSESSING OFFICER AND RELATABLE TO SUCH EVIDENCE. 6. CONSEQUENT TO THE ABOVE ORDER OF THE TRIBUNAL, THE ASSESSING OFFICER FRAMED THE ASSESSMENT UNDER S.158BC READ W ITH S.143(3) AND 254 OF THE I.T. ACT, VIDE ORDER DATED 22.12.2011, W HEREBY HE DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.2,74,96,700 AS FOLLOWS- IT(SS)A NO.3/HYD/2013 & CO 25/H/13 SHRI GYAN KUMAR AGARWAL, HYDERABAD 6 TOTAL UNDISCLOSED INCOME DETERMINED AS PER ORDER GIVING EFFECT TO THE ORDER OF HONBLE ITAT DT.21.6.2006 RS.19,465,700 ADD: UNEXPLAINED INVESTMENT IN MONEY LENDING BUSINESS AS DISCUSSED ABOVE RS.2,55,50 ,000 TOTAL UNDISCLOSED INCOME RS.2,74,96,700 7. AGAINST THE ADDITION OF RS.2,55,50,000 MADE BY THE ASSESSING OFFICER IN THE ABOVE ASSESSMENT , ASSESSEE PREFERRE D APPEAL BEFORE THE CIT(A). THE CIT(A) DELETED THE SAID ADDITION, VIDE PARA 10 OF THE IMPUGNED ORDER, WHICH READS AS FOLLOWS- 3.10 .THERE IS NO DOUBT ABOUT THE FACT THAT THE HONOURABLE ITAT HAS CLEARLY HELD THAT THE TWO DOCUMENTS IN QUESTION ARE ONLY DUMB DOCUMENTS AND CANNOT BE RELIED UPON TO MAKE ANY ADDITION. IT HAS BEEN HELD THAT THE ASSESSING OFFICER HAS TO COLLECT OTHER EVIDENCE TO PROVE THAT UNACCOUNTED MONEY LENDING BUSINESS WAS BEING CARRIED OUT BY THE APPELLANT. I N THE ABSENCE OF ANY OTHER LOAN NOTES, PRO-NOTES OR OTHER RELEVANT CONTRACTS WHICH SUBSTANTIATE THE ENTRIES IN THE CONCERN SEIZED DOCUMENTS, NO PRESUMPTION AS TO THE UNACCOUNTED BUSINESS AND UNACCOUNTED INCOME EARNED CAN BE MADE. IT HAS BEEN CATEGORICALLY HELD BY THE ITAT THAT NO ADDITION IS TO BE MADE ONLY ON THE BAS IS OF THE SEIZED DOCUMENTS. IN FIND FROM THE ASSESSMENT ORDER, THE RELEVANT PORTI ON OF WHICH HAS BEEN QUOTED ABOVE THAT THE ASSESSING OFFICER HAS ONLY RELIED UP ON THE EARLIER ORDER TO MAKE THE ADDITIONS IN QUESTION. IN FACT THE DIRECTION OF TH E HONOURABLE ITAT HAD NOT BEEN COMPLIED WITH. IT IS VERY CLEAR THEREFORE THAT ABS OLUTELY NO ADDITION IS CALL FOR BASED ON THE DOCUMENTS ALREADY HELD TO BE UNRELIABL E BY THE HONOURABLE ITAT. THEREFORE, I HAVE NO OPTION BUT TO DELETE THE ADDIT ION IN QUESTION. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. 8. REVENUE IS IN APPEAL AGAINST THE ABOVE ORDER OF THE CIT(A). 9. WE HEARD BOTH THE PARTIES AND PERUSED THE MATER IAL ON RECORD. IN THE EARLIER ORDER, THE TRIBUNAL CLEARLY OBSERVED THAT THE TWO DOCUMENTS ON WHICH RELIANCE WAS PLACED IN THE EARLI ER PROCEEDINGS WERE ONLY DUMB DOCUMENTS AND CANNOT BE RELIED UPON TO MA KE ANY ADDITION. THE ASSESSING OFFICER WAS DIRECTED TO MAKE ANY ADDI TION, IF HE CAN GATHER ANY EVIDENCE TO SUBSTANTIATE THE ENTRIES IN THE SEI ZED MATERIAL LIKE NOTE BOOK AND LOOSE SLIPS, WHICH OTHERWISE ARE ONLY ISOL ATED AND DUMB DOCUMENTS, AND THAT TOO AFTER GIVING THE ASSESSEE O PPORTUNITY OF CROSS EXAMINE THE PARTIES. IF THERE WAS NO SUFFICIENT EVI DENCE, OTHER THAN THE SEIZED MATERIAL MARKED AS A/GAR/5 OR IF THOSE DOC UMENTS ARE UNSUBSTANTIATED BY ANY OTHER DOCUMENTS TO ESTABLISH THAT THE ASSESSEE IS IT(SS)A NO.3/HYD/2013 & CO 25/H/13 SHRI GYAN KUMAR AGARWAL, HYDERABAD 7 HAVING UNDISCLOSED INCOME, IT WAS HELD THAT NO ADDI TION CAN BE MADE. BEING SO, AS HELD BY THE CIT(A) IN THE IMPUGNED ORD ER, THE ASSESSING OFFICER CANNOT, ONCE AGAIN, RELY SOLELY ON THE VERY SAME SEIZED DOCUMENTS MARKED AS A/GAR/5 AND REPEAT THE ADDITI ON SET ASIDE BY THE TRIBUNAL. UNTIL AND UNLESS THE ASSESSING OFFICER I S ABLE TO ESTABLISH ANY UNDISCLOSED INCOME BY GATHERING ANY MATERIAL RELEVA NT TO THE SEIZED MATERIAL, HE IS PRECLUDED FROM RELYING ON THE LOOSE SLIPS AND NOTE BOOK, ETC. ALONE FOR MAKING THE ADDITION IN QUESTION. WHI LE PASSING THE CONSEQUENTIAL ORDER, THE ASSESSING OFFICER WHOLLY R ELIED ON THE UNSUBSTANTIATED SEIZED MATERIAL ALONE, AND THEREBY DID NOT STRICTLY COMPLY WITH THE DIRECTIONS OF THE TRIBUNAL. THE CIT(A) IN THE CIRCUMSTANCES OF THE CASE, TAKING DUE COGNIZANCE OF THE SPECIFIC DIR ECTIONS OF THE TRIBUNAL, HAS CORRECTLY DELETED THE ADDITION MADE BY THE ASSE SSING OFFICER. 10. IT IS PERTINENT TO MENTION AT THIS JUNCTURE T HAT THE INCOME-TAX AUTHORITIES ARE REQUIRED TO EXERCISE THEIR POWERS I N ACCORDANCE WITH LAW, AS PER THE POWER GIVEN TO THEM IN SPECIFIC SECTIONS . IF THE POWERS CONFERRED ON A PARTICULAR AUTHORITY ARE EXERCISED B Y ANOTHER AUTHORITY WITHOUT MANDATE OF LAW, IT WOULD CREATE CHAOS IN TH E ADMINISTRATION OF LAW AND HIERARCHY OF ADMINISTRATION WOULD MEAN NOTHING. JUDGMENT OF A HIGHER FORUM CANNOT BE SUBSTITUTED BY THE DECISIONS OF THE LOWER AUTHORITIES. JUDICIAL DISCIPLINE REQUIRES THAT THE RE CANNOT BE ANY AMOUNT OF DISREGARD TO THE SUPERIOR AUTHORITY IN THE HIERA RCHY BY THE ASSESSING OFFICER. WHEN ONCE THE TRIBUNAL DECIDES AN ISSUE IN ONE WAY, THE ONLY COURSE AVAILABLE TO THE ASSESSING OFFICER IS TO FOL LOW THE ORDER OF THE TRIBUNAL IN TRUE SPIRITS, AND IT IS NOT PERMISSIBLE FOR THE ASSESSING OFFICER TO TAKE A DIFFERENT VIEW, OR TO SIT IN JUDGMENT OVE R THE ORDER OF THE TRIBUNAL BY INTERPRETING THE SAME IN THE MANNER HE WANTED. THUS, THE ASSESSING OFFICER IS DUTY BOUND TO STRICTLY ADHERE TO THE DIRECTIONS OF THE TRIBUNAL WHILE RE-DECIDING THE ISSUES IN PURSUANCE OF THE ORDERS OF THE TRIBUNAL. AT THIS JUNCTURE, IT IS APT TO REFER TO THE DECISION OF THE IT(SS)A NO.3/HYD/2013 & CO 25/H/13 SHRI GYAN KUMAR AGARWAL, HYDERABAD 8 JURISDICTIONAL HIGH COURT IN THE CASE OF STATE OF A NDHRA PRADESH V/S. CTO AND ANOTHER (169 ITR 564), WHEREIN IT HAS BEEN HELD AS FOLLOWS- THE TRIBUNALS FUNCTIONING WITHIN THE JURISDICTION OF A PARTICULAR HIGH COURT IN RESPECT OF WHOM THE HIGH COURT HAS TH E POWER OF SUPERINTENDENCE UNDER ARTICLE 227 ARE BOUND TO FOL LOW THE DECISIONS OF THE HIGH COURT UNLESS, ON AN APPEAL TO THE SUPREME COURT, THE OPERATION OF THE JUDGMENT IS SUSPENDED. IT IS NOT PERMISSIBLE FOR THE AUTHORITIES AND THE TRIBUNALS T O IGNORE THE DECISIONS OF THE HIGH COURT OR TO REFUSE TO FOLLOW THE DECISIONS OF THE HIGH COURT ON THE PRETEXT THAT AN APPEAL HAS BE EN FILED IN THE SUPREME COURT WHICH IS PENDING OR THAT STEPS ARE BEING TAKEN TO FILE AN APPEAL. IF ANY AUTHORITY OR THE TRIBUNAL R EFUSES TO FOLLOW ANY DECISION OF THE HIGH COURT ON THE ABOVE GROUNDS , IT WOULD BE CLEARLY GUILTY OF COMMITTING CONTEMPT OF THE HIGH C OURT AND IS LIABLE TO BE PROCEEDED AGAINST. AT THIS JUNCTURE, IT IS ALSO PERTINENT TO MENTION T HE OBSERVATIONS OF THE HIGH COURT, BY PLACING RELIANCE ON THE JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF SUBRAMANIAN ITO V/S SIEMENS IN DIA LTD. (156 ITR 11), WHICH ARE AS FOLLOWS- REFERENCE MAY ALSO BE INVITED TO THE DECISION OF T HE BOMBAY HIGH COURT IN SUBRAMANIAN, ITO V. SIEMENS INDIA LTD. [19 85] 156 ITR 11. THE QUESTION THAT AROSE FOR CONSIDERATION IN T HIS CASE IS WHETHER THE INCOME-TAX OFFICER IS BOUND BY THE DECI SION OF A SINGLE JUDGE OR A DIVISION BENCH OF THE COURT WITHI N WHOSE JURISDICTION HE IS OPERATING EVEN IF AN APPEAL HAS BEEN PREFERRED AGAINST SUCH DECISION AND IS PENDING. THE FOLLOWING OBSERVATIONS OF THE BOMBAY HIGH COURT MAY BE EXTRACTED : 'SO FAR AS THE LEGAL POSITION IS CONCERNED, THE ITO WOULD BE BOUND BY A DECISION OF THE SUPREME COURT AS ALSO BY A DECISION OF THE HIGH COURT OF THE STATE WITHIN WHOS E JURISDICTION HE IS (FUNCTIONING), IRRESPECTIVE OF T HE PENDENCY OF ANY APPEAL OR SPECIAL LEAVE APPLICATION AGAINST THAT JUDGMENT. HE WOULD EQUALLY BE BOUND BY A DECISION O F ANOTHER HIGH COURT ON THE POINT, BECAUSE NOT TO FOL LOW THAT DECISION WOULD BE TO CAUSE GRAVE PREJUDICE TO THE A SSESSEE. WHERE THERE IS A CONFLICT BETWEEN DIFFERENT HIGH CO URTS, HE MUST FOLLOW THE DECISION OF THE HIGH COURT WITHIN W HOSE JURISDICTION HE IS (FUNCTIONING), BUT IF THE CONFLI CT IS BETWEEN DECISIONS OF OTHER HIGH COURTS, HE MUST TAKE THE VI EW WHICH IS IN FAVOUR OF THE ASSESSEE AND NOT AGAINST HIM. SIMILARLY, IF THE INCOME-TAX APPELLATE TRIBUNAL HAS DECIDED A POINT IN FAVOUR OF THE ASSESSEE, HE CANNOT IGNORE T HAT DECISION AND TAKE A CONTRARY VIEW, BECAUSE THAT WOU LD EQUALLY PREJUDICE THE ASSESSEE. ' (EMPHASIS SUPPLIED) IT(SS)A NO.3/HYD/2013 & CO 25/H/13 SHRI GYAN KUMAR AGARWAL, HYDERABAD 9 THE CIT(A), HAVING FOUND THAT THE ASSESSING OFFICER IN THE PRESENT CASE, HAS NOT STRICTLY COMPLIED WITH THE DIRECTIONS OF TH E TRIBUNAL, AND HAS, WITHOUT GATHERING ANY CORROBORATIVE EVIDENCE, REPEA TED THE ADDITIONS BASED ON THE VERY SAME MATERIAL WHICH THE TRIBUNAL HELD TO BE DUMB DOCUMENTS AND HENCE NOT RELIABLE, HAS DELETED THE S AME. WE FIND NO INFIRMITY IN THE ACTION OF THE CIT(A) IN THIS BEHAL F. 11. IN THE LIGHT OF THE ABOVE DISCUSSION, WE UPHO LD THE IMPUGNED ORDER OF THE CIT(A) AND REJECT THE GROUNDS OF THE R EVENUE IN THIS APPEAL. 12. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 13. TO SUM UP, APPEAL OF THE REVENUE AS WELL AS CR OSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 28.06.2013 SD/- SD/- (ASHA VIJAYARAGHAVAN) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER. DT/- 28TH JUNE, 2013 COPY FORWARDED TO: 1. 2. 3 4. SHRI GYAN KUMAR AGARWAL, D.NO.15-9-480, MAHABOOBGUN J, HYDERABAD ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE 2(2), HYDE RABAD COMMISSIONER OF INCOME-TAX(APPEALS) III HYDERABAD COMMISSIONER OF INCOME-TAX II HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD B.V.S.