Shri Sachin Kamath, Bangalore V. Deputy Commissioner of Income Tax, Circle-1(2)(1), Bangalore

CO 29/BANG/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5581 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-01-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 02-03-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S SRINIVASAN
• Keywords: Depreciation; Document seized; Principle of natural justice; Peak credit; Assessment record; Tax effect; Retraction; Condonation of delay; Reason to believe; Documents seized; Reassessment proceedings
• Section: 147; 148; 132; 139; 143(3); 133A; 153A; 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, BENGALURU BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NOS.1780 TO1785/BANG/2017 (ASSESSMENT YEARS:2006-07 TO 2011-12) DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 1(2)(1), BENGALURU. VS. APPELLANT SHRI SACHIN KAMATH, G-1, NAVEEN APARTMENTS, 13 TH MAIN, VASANTHNAGAR, BENGALURU-560052. PAN:ACQPK 0813 M RESPONDENT AND CROSS OBJN. NOS.27 TO 32/BANG/ 2018 (IN ITA NOS.1780 TO 1785/BANG/2017) (ASSESSMENT YEARS:2006-07 TO 2011-12) (BY ASSESSEE) REVENUE BY : DR.PRADEEP KUMAR,P.V., ADDL.CIT(DR) ASSESSEE BY : SHRI S.SRINIVASAN, CA. DATE OF HEARING : 11/01/2019 DATE OF PRONOUNCEMENT : 31 /01/2019 O R D E R PER BENCH: THESE ARE APPEALS FILED BY THE REVENUE AGAINST DIF FERENT ORDERS OF THE CIT(A)-1, BENGALURU, FOR ASSESSMENT YEARS 20 06-07 TO 2011-12. THE ASSESSEE HAS FILED CROSS OBJECTIONS IN REVENUE APPEALS. SINCE COMMON ISSUES ARE INVOLVED, ALL THE APPEALS AND CRO SS OBJECTIONS WERE CLUBBED AND HEARD TOGETHER AND CONSOLIDATED ORDER I S BEING PASSED. WE SHALL FIRST TAKE UP THE REVENUES APPEALS. ITA NO.1780 TO 1785-B-17 & CO 27 TO 32-B-2018 PAGE 2 OF 22 2. ALL THE APPEALS ARE DIRECTED AGAINST THE ORDER O F THE CIT(A) PASSED U/S 147 R.W.S. 143(3) AND 250 OF THE INCOME- TAX ACT,1961 ['THE ACT' FOR SHORT] EXCEPT THE APPEAL ITA NO.1785/BANG/ 2017 WHICH IS PASSED U/S 143(3) AND 250 OF THE ACT. 3. FOR THE SAKE OF CONVENIENCE, WE SHALL TAK E UP THE REVENUES APPEAL ITA NO.1780/BANG/2017 FOR ASSESSMENT YEAR 20 06-07. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED CIT (APPEALS), IN SO FAR A S IT IS PREJUDICIAL TO THE INTEREST OF REVENUE, IS OPPOSED TO LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD. CIT (A) ERRED IN NOT APPRECIATING THE FACT THAT THE AO HAD MADE ADDITION ON THE BASIS OF INDIVIDUAL PAY MENTS AND RECEIPTS THAT THE ASSESSEE HAD WITH SHRI P. DAY ANANDA PAI AND M/S CANARA HOUSING DEVELOPMENT COMPANY (CHDC) AS FOUND IN THE SEIZED MATERIAL. 3. THE LD. CIT (A) ERRED IN NOT APPRECIATING THE FACT THAT COLOUR OF THE INCOME CHANGES WHENEVER MONEY PASSES FROM ONE HAND TO ANOTHER. THUS NATURE OF UNACCOUNTABLE I NCOME AND ITS TAXABILITY NEEDS TO BE EXAMINED IN THE HAND S OF THE ASSESSEE INDEPENDENTLY. 4. THE LD. CIT (A) ERRED IN IGNORING THE FACT THAT THE ASSESSEE HAD PRESENTED THE DIFFERENT VERSIONS OF FACTS TO TH E AO ON DIFFERENT POINT OF TIME I.E. INITIALLY IN THE STATE MENT RECORDED ON OATH, THE ASSESSEE CONFIRMED THE CASH TRANSACTIONS RECORDED IN THE LEDGERS OF DUMMY TALLY SOFTWARE (DTTE) AND ACKNOWLEDGED THAT THESE WERE RELATED WITH HIS INVESTMENTS IN VARIOUS PROPERTIES, HOWEVER, LATER ON, DURING THE ASSESSMENT PROCEEDING S, HE COMPLETELY REVERSED HIS STANCE AND DISOWNED EVERYTH ING RECORDED IN THE LEDGERS OF THE DTEE AND OTHER ANNEX URE OF THE SEIZED DOCUMENTS AND THEREAFTER CLAIMED THAT SI NCE TRANSACTIONS HAVE BEEN WHOLLY OWNED BY THE M/S CHDC BEFORE THE HON'BLE INCOME TAX SETTLEMENT COMMISSION (ITSC), HE SHOULD NOT BE TAXED. THIS RETRACTION OF THE ITA NO.1780 TO 1785-B-17 & CO 27 TO 32-B-2018 PAGE 3 OF 22 STATEMENT GIVEN UNDER OATH TANTAMOUNT TO DISREGARD OF LAW AND SUBVERSION OF THE FACTS. 5. THE LD. CIT (A) ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSEE IS AN INVESTOR IN THE BUSINESS OF SHRI P. DAYANANDA PAI AND M/S CANARA HOUSING DEVELOPMENT COMPANY (CHD C) AS PER ASSESSEE'S STATEMENT RECORDED BY THE DEPARTM ENT AT VARIOUS POINT OF TIME. THEREFORE, THIS FACT SHOULD HAVE BEEN ASSESSED INDEPENDENTLY IN APPEAL. 6. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE ORDER OF T HE LD. CIT (A) BE REVERSED AND THAT OF THE ASSESSING OFFICER B E RESTORED. 7. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO MEN D OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF APPEAL. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS IN REAL ESTATE BUSINESS AND FILED THE RETURN OF INCOME FOR ASSESSM ENT YEAR 200607 ON 05/01/2009 DISCLOSING TOTAL INCOME OF RS.3,25,00 0/- AND THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE ACT. SUB SEQUENTLY, THE AO HAS REASON TO BELIEVE THAT THERE IS ESCAPEMENT OF I NCOME AND NOTICE U/S 148 WAS ISSUED AND ALSO NOTICE U/S 143(2) OF THE AC T WAS ISSUED. IN COMPLIANCE, LEARNED AR APPEARED FROM TIME TO TIME. THE AO, IN THE SEARCH PROCEEDINGS AT THE RESIDENCE OF SMT. ADLEENS KAGOO IN CONNECTION WITH SHRI DAYANANDA PAI, CERTAIN CDS WER E FOUND AND THEY WERE SEIZED, WHICH CONTAIN INFORMATION AND DATA PER TAINING TO UNACCOUNTED RECEIPTS AND PAYMENTS OF SHRI DAYANANDA PAI AND GROUP. THE LEDGER ACCOUNT REVEALED UNACCOUNTED CASH TRANSA CTIONS BETWEEN THE ASSESSEE AND SHRI DAYANANDA PAI. FURTHER, BASE D ON THE SEIZED MATERIAL, SURVEY U/S 133A OF THE ACT WAS CONDUCTED ON THE PREMISES OF THE ASSESSEE ON 03/06/2011 AND CONSEQUENT TO SEARCH PROCEEDINGS ON ITA NO.1780 TO 1785-B-17 & CO 27 TO 32-B-2018 PAGE 4 OF 22 THE PREMISES OF SHRI DAYANANDA PAI AND M/S. CANARA HOUSING DEVELOPMENT COMPANY [CHD FOR SHORT]. ACTING ON SEIZED MATERIAL AND CASH TRANSACTIONS, THE AO RECORDED REASONS FOR ISSUE OF NOTICE FOR RE-ASSESSMENT AND ALSO COPY OF THE REASONS WERE SUP PLIED TO THE ASSESSEE. THE AO DEALT ON THE LEDGER ACCOUNT COPIE S IN THE NAME OF ASSESSEE IN THE SEARCH PROCEEDINGS OF SHRI DAYANAND A PAI AND SUCH LEDGER ACCOUNT CONTAINED TRANSACTION FROM DUMMY TAL LY TRAINING ENVIRONMENT [DTTE FOR SHORT] WHICH THE AO HAS REF ERRED AT PAGES 3 AND 4 OF THE ASSESSMENT ORDER. THE ASSESSEE WAS PRO VIDED AN OPPORTUNITY TO EXPLAIN THE NATURE OF TRANSACTIONS I N SEIZED LEDGER AND THE AO HAS WORKED OUT THE PEAK CREDIT. SHOW-CAUSE NOTICE WAS ALSO ISSUED. THE ASSESSEE FILED REPLY ON 7/3/2013, 18/3 /2018 AND 25/03/2013 WHICH WAS DEALT BY THE AO AT PAGES 5, 6 AND 7 OF THE ASSESSMENT ORDER. THE AO, CONSIDERING THE STATEMEN TS RECORDED AND PARTICULAR QUESTIONS RAISED IN THE STATEMENTS HAS CONCLUDED THAT THE ASSESSEE COULD NOT EXPLAIN THE TRANSACTIONS FOUND I N THE SEIZED LEDGER; IN SPITE OF PROVIDING ADEQUATE OPPORTUNITY AND THE ASSESSEE COULD NOT SUBSTANTIATE WITH ANY EVIDENCE OR SUPPORT, FINALLY AO MADE DISALLOWANCE OF PEAK CASH BALANCE OF RS.1,92,10,000/- AS UNEXPLA INED INCOME OF THE ASSESSEE FROM OTHER SOURCES AND PASSED ORDER U/S 14 7 R.W.S. 143(3) OF THE ACT DATED 28/03/2012. 5. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN AP PEAL WITH THE CIT(A). THE CIT(A), CONSIDERED THE SUBMISSIONS, GR OUNDS OF APPEAL AND THE FINDINGS OF THE AO ON THE GROUNDS OF RE-ASSESSM ENT AND THE STATEMENT RECORDED AND THE COMPARATIVE SUMMARY OF V ARIOUS TRANSACTIONS. THE CIT(A) MADE OBSERVATIONS IN PARA .6 OF THE ORDER THAT ITA NO.1780 TO 1785-B-17 & CO 27 TO 32-B-2018 PAGE 5 OF 22 IN THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSE E HAS FILED THE COPY OF THE SETTLEMENT COMMISSION ORDER OF SHRI DAYANAND A PAI AND CHD AND REQUESTED THROUGH LETTER DATED 1/3/2016 ON 3/3/ 2016 TO DELETE THE ADDITION. THE CIT(A) CONSIDERED AND REFERRED IN PA RA.7 OF THE ORDER, AND THE LETTER SUBMITTED BY SHRI DAYANANDA PAI AND CHG ON 18/3/2016 IN RESPECT OF ENTRIES IN THE NAME OF THE ASSESSEE. THE CIT(A) ADMITTED THE ADDITIONAL GROUND FILED BY THE ASSESSEE ON THE LEGAL PROVISIONS OF SECTION 147 AND PROCEEDINGS U/S 153 R.W.S 153A AND DISMISSED THE ADDITIONAL GROUND OF APPEAL BY OBSERVING THAT THERE IS NOTHING TO PROHIBIT THE AO TO HAVE INITIATED PROCEEDINGS U/S 1 47 AND CONCLUDING THE ASSESSMENT AND CONFIRMED THE VALIDITY OF ORDER U/S 143(3) AND 147 OF THE ACT. 6. FURTHER, THE CIT(A) DEALT ON THE FINDINGS OF THE HONBLE SETTLEMENT COMMISSION ORDER DATED 19/10/2015 AND HA S EXTRACTED THE POINTS AT PARA.14 WHICH READ AS UNDER: 14. NO W, I TAKE UP THE MAIN ISSUE REGARDING MATTERS WITH RESPECT OF THE DUMMY TALLY. ON PERUSAL OF THE ORDER OF THE HON'BLE SETTLEMENT COMMISSION DATED 19/10/2015, SUBMITTED B Y THE APPELLANT DURING THE COURSE OF THE APPEAL PROCEEDIN GS, IN RESPECT OF M/S.CANARA HOUSING DEVELOPMENT COMPANY (CHDC) AND MR.P.DAYANANDA PAI, I FOUND THE FOLLOWIN G OBSERVATIONS RELEVANT FOR THE ISSUE ON HAND WITH RE GARD TO THE APPELLANT HEREIN:- PAGE 4 OF 74 - POINT NO.2.5 OF THE SC ORDER:- THE APPLICANT(CHDC) SUBMITS IN THE 50F THAT THE ENTRIES OF DEBIT AND CREDIT IN SEVERAL NAMES APPEARING IN THE DUMMY TALLY DO NOT RELATE TO SUCH THIRD PARTIES BUT ARE BEING CONSIDERED AS ADDITIONAL INCOME RELATED TO TH E APPLICANT(CHDC) AND DR.P.DAYANANDA PAI. ACCORDINGLY THE APPLICANT(CHDC) AND DR.P.DAYANANDA PAI HAVE CUL LED OUT ENTRIES IN DIFFERENT NAMES AS RELATED TO THE APPLICANT(CHDC) AND DR.P.BAYANDA PAI. THEREAFTER, A LL SUCH ITA NO.1780 TO 1785-B-17 & CO 27 TO 32-B-2018 PAGE 6 OF 22 ENTRIES WHETHER DEBIT OR CREDIT ARE CONSIDERED AS I NCOME INFLOW OR OUTFLOW OF THE APPLICANT(CHDC) AND DR.P.DAYANAND A PAI. PAGE 62 OF 74 - POINT NO.12.1 - PEAK CREDIT: 12.1.1 :- THEFIRST QUESTION THAT NEEDS TO BE RESOLVED BY US, IS WHETHE R THE PEAK CREDIT METHOD CAN BE ADOPTED AS A RELIABLE METHOD F OR A CORRECT DETERMINATION OF THE APPLICANT'S INCOME? THE ISSUE RELATES TO THE SEIZED EVIDENCE MARKED AS ANNEXURE A/AK/PDP/06 WHICH CONSISTS OF A SET OF 6 CDS, A PEN DRIVE AND FLOPPY DRIVE. THE ABOVE CDS CONTAINED TALLY ACCOUNTS DATA COMPLETE WI TH LEDGERS, CASH BOOK, BALANCE HSEET, P&: ACCOUNT, ETC . UNDER THE CAPTION DUMMY TALLY TRAINING ENVIRONMENT. THIS EVID ENCE WAS SEIZED AT THE RESIDENCE OF 5MT.ADLENE KAGOO, P5 TO DR.P.DAYANANDA PAI. THE ENTRIES IN THE DUMMY TALLY HAVE BEEN OWNED UP BY DR.DAYANANDA PAL AS BELONGING TO H IM AND HIS FIRM I.E. CHDC. PAGE 63 OF 74 - POINT NO.12.1.3 OF THE 5C ORDER:-TH US THE AGGREGATE UNDISCLOSED INCOME ON THE BASIS OF THE RE VISED PEAK WOULD BE RS.171,33,35,796 (BEING THE AGGREGATE OF P EAK CREDIT SET OUT IN LETTER DATED 16.09.2015 FROM PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL, BANGALURU) LES S EXPENSES OF RS.13,82,48,882 I.E NET OF 157,50,86,91 4. WHEN THIS WAS POINTED OUT TO THE AR DURING THE COURSE OF THE FINAL HEARING, HE GAVE HIS CONSENT TO OFFER AN ADDITIONAL UNDISCLOSED INCOME BEING 75% OF RS.157,50,86,914 WHICH WORKS OU T TO RS.118,13,15,186/- IN THE HANDS OF THE PRESENT APPL ICANT. THE CIT(A) HAVING CONSIDERED THE SETTLEMENT COMMISS ION ORDER, MADE OBSERVATIONS THAT THE ASSESSEE IS A LIAISON PERSON IN REAL ESTATE BUSINESS ASSISTING SHRI DAYANANDA PAI AND HIS FIRM CHD FOR C ONSTRUCTION OF FLATS. IN THE COURSE OF REAL ESTATE BUSINESS ACTIVITIES, T HE ASSESSEE USED TO RECEIVE FUNDS FROM PARTIES TO BE UTILIZED FOR AND F URTHER ON BEHALF OF PARTIES THE AMOUNTS COLLECTED BY THE ASSESSEE AND R EMITTED TO SHRI DAYANANDA PAI AND CHD SUCH TRANSACTIONS DOES NOT HA VE INCOME ELEMENT AND HAS BEEN ACCOUNTED BY THE APPLICANTS IN THE SETTLEMENT COMMISSION. FURTHER, THE CIT(A) OBSERVED IN PARAS. 18 AND 19 WHICH READ AS UNDER: ITA NO.1780 TO 1785-B-17 & CO 27 TO 32-B-2018 PAGE 7 OF 22 18. THE APPELLANT HEREIN HAS BEEN A CONDUIT FOR THE CA SH TRANSACTIONS OF MR.P. DAYANANDA PAI AND M/S. CHDC, IN GENERAL AND SPECIFICALLY WITH RESPECT OF TRANSACTIO NS MENTIONED IN THE DUMMY TALLY. FURTHER IT IS A FACT ON RECORD THAT BEFORE THE HON'BLE SETTLEMENT COMMISSION, THE SAID MR.P.DAYANANDA PAI AND M/S.CHDC ALSO AGREED TO THE DATA AS DETAILED IN THE DUMMY TALLY AND ACCEPTED TO THE SAME BY THE DEPARTMENT AND ADDITIONAL INCOME WAS DETERMI NED ACCORDINGLY IN THE HANDS OF THE SAID MR.P.DAYANANDA PAI AND M/S.CHDC IN THE RESPECTIVE ASSESSMENT YEARS. FU RTHER IN RESPECT OF THE ENTRIES IN THE DUMMY TALLY, THE DEPARTMENT HAS FAILED TO CONVINCINGLY PROVE THAT TH E TRANSACTIONS OF THE APPELLANT HEREIN WITH THE SAID MR.P.DAYANANDA PAI AND M/SCHDC ARE IN THE NATURE OF PURCHASE AND SALE. 19. IN THE LIGHT OF THE ABOVE FACTS ON RECORD IN THAT THIS APPELLATE ORDER FOR AY 2006-07 IS BASED ON THE SEIZED MATERIALS LIKE DUMMY TALLY PRINTOUT & HANDWRITTEN RECEIPTS SEIZED FROM THE RESIDENCE OF O NE OF THE EMPLOYEES OF M/S.CHDC AND THEIR OFFICES. THE ENTRIES IN THE DUMMY TALLY, WHICH IS THE PRIME FACTOR FOR MAKING ADDITIONS IN THE HANDS OF THE APPELLANT HEREIN, HAVE BEEN OWNED UP BY THE SAID MR.P.DAYANANDA PAI AND M/S.CHDC BEFORE THE HON'BLE SETTLEMENT COMMISSION AND WAS TAXED IN THEI R HANDS. NO CONVINCING PROOF OF PURCHASE AND SALE FOR PROPERTIES OR INVESTMENTS IN RESPECT OF THE ENTRIES IN THE DUMMY TALLY WAS BROUGHT FORTH BY THE DEPARTMENT TO TAX THE SAME IN THE HANDS OF THE APPELLANT, IN VIEW OF ABOVE, THE IMPUGNED ADDITIONS OF RS.1,92,10,000/- FROM THE DUMMY TALLY MADE BY THE AO IS HEREBY DELETED. ACCORDINGLY THE APPEAL IS ALLOWED ON MERITS, WHILE REJECTING THE LEGAL OBJECT IONS RAISED. ITA NO.1780 TO 1785-B-17 & CO 27 TO 32-B-2018 PAGE 8 OF 22 AND FINALLY, THE CIT(A) CONCLUDED THAT THE ADDITION BY THE AO BASED ON DUMMY TALLY ACCOUNT CANNOT BE SUSTAINED AND DELETED THE ADDITION AND PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AND PASSE D ORDER ON 18/05/2017. 7. AGGRIEVED BY THE ORDER, THE REVENUE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. BEFORE US, LEARNED DR ARGUED GROUND S AND REFERRED TO THE FINDINGS OF THE AO AND THE STATEMENTS AND PARTI CULAR DOCUMENTS SEIZED. THE LEARNED DR EMPHASIZED THAT THE ADDITIO N MADE BY THE AO IN RESPECT OF INDIVIDUAL PAYMENTS AND RECEIPTS OF S HRI DAYANANDA PAI AND CHD ARE LACK OF EXPLANATION OF SOURCE OF THE AS SESSEE AND HAS TO BE TAXED IN ASSESSEES INDIVIDUAL HANDS AND CANNOT BE VIEWED FROM THE BUSINESS POINT OF VIEW OF SHRI DAYANANDA PAI AND CH D. THE AO RELIED ON THE EVIDENCE AVAILABLE BASED ON THE DUMMY TALLY ACCOUNT THAT THE ASSESSEE WAS INVOLVED IN MAKING CASH ADVANCES TO SH RI DAYANANDA PAI AND OTHERS AND SUCH AMOUNTS ARE RETURNED TO THE ASS ESSEE. THOUGH THE ASSESSEE WAS PROVIDED ADEQUATE OPPORTUNITY BUT COULD NOT ESTABLISH WITH ANY EVIDENCE IN SUPPORT OF THE SOURCES. 8. THE LEARNED DR MENTIONED THAT BEFORE THE SE TTLEMENT COMMISSION, SHRI DAYANANDA PAI AND CHD HAVE MADE AP PLICATION FOR DISOWNING THE FUNDS BUT NOT THE ASSESSEE SOURCES WH ICH COULD NOT BE EXPLAINED AND THE FACT REMAINS THAT THE ASSESSEE HA S ADVANCED AMOUNTS AND RECEIVED BACK IN SOME INSTANCES AND THE SOURCES OF THE ASSESSEE HAS TO BE CONSIDERED SEPARATELY AND CANNOT BE MERGED WITH THE DISOWNING OFFER MADE BY SHRI DAYANANDA PAI AND CHD WHICH RELATES TO THEIR INDIVIDUAL ASSESSMENTS AND THE ASSESSEES SOURCES HAS TO BE INDEPENDENTLY ASSESSED IN HIS HANDS AND NOT ON THIR D PARTY. WHEREAS ITA NO.1780 TO 1785-B-17 & CO 27 TO 32-B-2018 PAGE 9 OF 22 THE CIT(A) HAS ONLY REFERRED TO THE OBSERVATIONS OF THE SETTLEMENT COMMISSION ON PEAK CREDIT AS REFERRED INPARA.14 OF THE ORDER BUT NO INDIVIDUAL PEAK CREDIT HAS BEEN WORKED OUT IN RESPE CT OF TRANSACTION OF THREE PARTIES SHRI DAYANANDA PAI, CHD AND THE ASSES SEE. EVEN THE CIT(A)S ORDER DOES NOT SPECIFY THE BASIS ON WHICH THE FACTS HAVE BEEN VERIFIED ON SOURCES BUT ONLY RELIED ON THE STATEMEN TS OF APPLICANT AND OBSERVATIONS BEFORE THE SETTLEMENT COMMISSION. THE LEARNED DR FURTHER SUBMITTED THAT THE SOURCES WERE NOT EXPLAIN ED BY THE ASSESSEE EVEN BEFORE THE TRIBUNAL AND PRAYED FOR ALLOWING TH E REVENUE APPEAL. 9. CONTRA, THE LEARNED AR SUPPORTED THE ORDER OF TH E CIT(A) ON THIS DISPUTED ISSUE AND STATED THAT THE ASSESSEE IS ONLY AN ACCOMMODATOR AND COLLECTS ADVANCES FROM PROPERTY PURCHASERS AND ACCUMULATES THE FUND/PROPERTY AND TRANSACTS WITH SHRI DAYANANDA PAI AND CHD AND THERE IS NO ELEMENT OF INCOME. WHEREAS THE PERSONS/ APPLICANTS BEFORE THE SETTLEMENT COMMISSION HAVE ACCEPTED AS THEIR IN COME AND PAID TAXES AND THE SETTLEMENT COMMISSION HAS WORKED OUT THE BASIS OF TAXABILITY FOR THE ASSESSMENT YEAR. THE LEARNED AR VEHEMENTLY EMPHASIZED THAT SINCE SAID AMOUNTS HAVE BEEN SUBJEC TED TO TAX, AS PER DIRECTIONS OF THE SETTLEMENT COMMISSION THE SAME AM OUNT CANNOT ONCE AGAIN BE TAXED IN THE HANDS OF THE ASSESSEE AS IT A MOUNTS TO DOUBLE TAXATION WHICH IS ILLEGAL AND VIOLATES THE PRINCIPL ES OF NATURAL JUSTICE. THE LEARNED AR FILED INFORMATION ON THIS ISSUE DEAL T IN THE SETTLEMENT COMMISSION TO SUBSTANTIATE THE PEAK CREDIT WORKED O UT AND PRAYED FOR DISMISSAL OF THE REVENUES APPEAL. ITA NO.1780 TO 1785-B-17 & CO 27 TO 32-B-2018 PAGE 10 OF 22 10. WE HEARD RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. PRIMA FACIE, THE WHOLE CRUX OF THE ISSUE REVOLVES O N THE PEAK CREDIT OFFERED BY THE APPLICANTS BEFORE THE SETTLEMENT COM MISSION VIZ. SHRI DAYANANDA PAI AND CHD. THE LEARNED DRS CONTENTION THAT THE TRANSACTION OF THE ASSESSEE WITH SHRI DAYANANDA PAI IS ONE TO ONE AND THE ASSESSEE SHOULD EXPLAIN THE SOURCES. WE FOUND THAT THE ASSESSEE HAS NOT FILED APPLICATION BEFORE THE SETTLEMENT COM MISSION ON HIS ASSESSMENT BUT ONLY SHRI DAYANANDA PAI AND CHD HAVE FILED APPLICATION AND THE HONBLE SETTLEMENT COMMISSION HAS PASSED OR DERS DATED 19/10/2015 WHICH THE CIT(A), ON THIS SPECIFIC ISSUE , HAS REFERRED AT PARA.14 WHICH IS EXTRACTED IN PAGE 5 OF THIS ORDER. FURTHER THE CONTENTIONS OF THE LEARNED AR THAT THE SAID AMOUNT DOES NOT BELONG TO THE ASSESSEE AND ARE ONLY ADVANCES FOR THE PROPERTY DEVELOPMENT AND DOES NOT INCLUDE PROFIT OR INCOME ELEMENT. THE SET TLEMENT COMMISSION CONSIDERED THE PEAK CREDIT WORKED OUT IN RESPECT OF TRANSACTION OF SHRI DAYANANDA PAI AND CHD AND GRANTED THE RELIEF. WHER EAS THE LEARNED DR EMPHASIZED ON THE PEAK CREDIT AND ARGUED THAT TH E INDIVIDUAL PEAK CREDIT OF THE ASSESSEE WITH PARTIES WAS NOT WORKED OUT IN THE PROCEEDINGS AND CIT(A) ORDER IS SILENT ON THIS ISSU E, BUT THE CIT(A) CONSIDERED THE FACT THAT HAS BEEN OWNED BY THE SETT LEMENT COMMISSION APPLICANTS, BUT PRIMA FACIE NOTHING WAS BROUGHT ON RECORD TO SUBSTANTIATE THE SOURCES AND THE PAYMENTS FOR THIS ASSESSMENT YEAR. WE FOUND THE ARGUMENTS OF THE LEARNED DR ARE REALIS TIC. ON PERUSAL OF THE CIT(A) ORDER, WE FOUND THAT THE CIT(A) HAS REFE RRED TO THE OBSERVATIONS OF THE HONBLE SETTLEMENT COMMISSION I N PARTICULAR TO SHRI ITA NO.1780 TO 1785-B-17 & CO 27 TO 32-B-2018 PAGE 11 OF 22 DAYANANDA PAI AND CHD AND NOWHERE THERE IS ANY REFE RENCE ON SUCH INDIVIDUAL PEAK CREDIT CALCULATIONS. 11. IN THE COURSE OF HEARING, THE LEARNED AR H AS FILED MATERIAL IN RESPECT OF PEAK CREDIT WORKING OF CHD AND THE ASSES SEE FOR THE ASSESSMENT YEARS 2006-07 TO 2011-12 AND REFERRED TO THE MARKINGS. WE ARE OF THE OPINION THAT THESE FACTS WERE NEVER B ROUGHT ON RECORD BEFORE THE LOWER AUTHORITIES. LEARNED AR VEHEMENTL Y SUBMITTED THAT SINCE ASSESSEES SOURCES HAS BEEN OFFERED BY WAY OF PEAK CREDIT BY THE APPLICANT BEFORE THE SETTLEMENT COMMISSION, THE SAM E CANNOT BE TAXED TWICE. BUT WE ARE UNABLE TO UNDERSTAND THE METHODO LOGY OF CONSOLIDATED PEAK CREDIT CONSIDERED AND THERE IS NO REFERENCE TO PEAK CREDIT CALCULATION IN RESPECT OF THIS ASSESSEE. TH E DETAILS FILED BY THE LEARNED AR ARE FOR THE FIRST TIME BEFORE THE TRIBUN AL BASED ON THE STATEMENTS RECORDED IN DUMMY TALLY ACCOUNT IN THE C OURSE OF SEARCH OPERATIONS OF SHRI DAYANANDA PAI AND CHD. WE, THERE FORE, CONSIDERING THE MATERIAL FILED ON RECORD AND THE SETTLEMENT COM MISSION AND CIT(A)S OBSERVATIONS, ARE OF THE SUBSTANTIVE OPINI ON THAT THESE FACTS ARE TO BE EXAMINED AND VERIFIED AND THE MATTER NEED S TO BE RE- CONSIDERED FOR LIMITED PURPOSE FOR CALCULATION OF P EAK CREDIT BETWEEN THE TRANSACTION OF THE ASSESSEE, SHRI DAYANANDA PAI AND CHD ON THE BASIS OF DOCUMENTS FILED IN THE COURSE OF HEARING A ND ACCORDINGLY, WE RESTORE THIS DISPUTED ISSUE TO THE FILE OF THE CIT( A) WHO SHALL CALL FOR REMAND REPORT FROM THE AO ON THESE ISSUES AND PASS A SPEAKING ORDER ON THE PEAK CREDIT CALCULATION ONLY. THE ASSESSEE S HALL CO-OPERATE IN SUBMITTING INFORMATION AT THE EARLIEST AND WE ALLOW THE GROUNDS OF APPEAL OF REVENUE FOR STATISTICAL PURPOSES. ITA NO.1780 TO 1785-B-17 & CO 27 TO 32-B-2018 PAGE 12 OF 22 IN THE RESULT, THE REVENUES APPEAL FOR THE ASSESS MENT YEAR 2006- 07 IS ALLOWED FOR STATISTICAL PURPOSES. 12. SINCE THE FACTS AND CIRCUMSTANCES AND THE ISSUE S RAISED IN THE REVENUES APPEALS FOR ASSESSMENT YEARS 2007-08 TO 2 011-12 ARE SIMILAR TO THE REVENUES APPEAL FOR ASSESSMENT YEAR 2006-07 , FOR PARITY OF REASONS MENTIONED IN THE REVENUES APPEAL FOR ASSES SMENT YEAR 2006- 07, THE REVENUES APPEALS FOR ASSESSMENT YEARS 2007 -08 TO 2011-12 ARE ALSO RESTORED TO THE FILE OF CIT(A) AND ALLOW G ROUNDS OF APPEAL OF THE REVENUE FOR STATISTICAL PURPOSES. 13. THE ASSESSEE HAS FILED CROSS OBJECTIONS IN THE REVENUES APPEALS. AT THE TIME OF HEARING OF THE CROSS OBJECTIONS, THE ASSESSEE HAS FILED APPLICATION FOR CONDONATION OF DELAY IN FILING THE CROSS OBJECTIONS. WE, HAVING CONSIDERED THE LEARNED ARS SUBMISSIONS, THE AFFIDAVIT AND APPLICATION FOR CONDONATION OF DELAY AND ALSO THERE IS NO SERIOUS OBJECTION FROM THE LEARNED DR, WE CONSIDER IT APPRO PRIATE TO CONDONE THE DELAY IN FILING THE CROSS OBJECTIONS AND ADMIT THE SAME. 14. THE ASSESSEE HAS RAISED COMMON ISSUES IN THE CR OSS OBJECTIONS FOR ASSESSMENT YEARS 2006-07 TO 2011-12. FOR THE S AKE OF CONVENIENCE, WE TAKE UP THE CO NO.27/BANG/2018 FOR THE ASSESSMENT YEAR 2006-07. THE ASSESSEE RAISED THE FOLLOWING GRO UNDS OF CROSS OBJECTIONS: 1. THE REASSESSMENT U/S 147/148 IN THE APPEAL FILED B Y THE DEPARTMENT IS ILLEGAL AS THE REASSESSMENT PROCEEDIN GS ARE BASED ON MATERIAL SEIZED DURING SEARCH IN TERMS OF PROVISIONS OF SECTION 132 AT THIRD PARTY PLACE. ITA NO.1780 TO 1785-B-17 & CO 27 TO 32-B-2018 PAGE 13 OF 22 2. THE AO OUGHT TO HAVE PROCEEDED IN TERMS OF SECTION 153C WHENEVER MATERIAL SEIZED U/S 132 AT THIRD PARTY PLA CE IS UTILISED FOR REOPENING ASSESSMENTS RELATED TO THE MATERIAL S EIZED. 3. THE HON'BLE TRIBUNAL MAY THEREFORE KINDLY CONSIDER THE CROSS OBJECTION RAISED AND DISMISS THE DEPARTMENTAL APPEA L. 15. LEARNED AR ARGUED THAT THE ASSESSMENT U/S 147 I S ILLEGAL AND VOID AS THE SEARCH U/S 132 OF THE ACT HAS TAKEN PLA CE AT THIRD PARTY PLACE AND WHEN THERE IS SEARCH U/S 132 OF THE ACT O N THIRD PARTY PREMISES, ASSESSMENT BASED ON THE SEIZED MATERIAL S HALL BE UNDER THE PROVISIONS OF SECTION 153C OF THE ACT. THE LEARNED AR FILED WRITTEN SUBMISSIONS AND RELIED ON THE DECISION OF THE HONB LE CALCUTTA HIGH COURT IN THE CASE OF RAWATMAL HARAKCHAND VS. CIT (129 ITR 346) (CAL) AND THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. IBC KNOWLEDGE PARK (P) LTD., (2016) 287 CTR 261(KAR) AND PARTICULAR ATTENTION WAS DRAWN TO PARA.50 OF THE JU DGMENT AND SUBMITTED THAT PROCEEDINGS U/S 153C SHALL PREVAIL. THE LEARNED AR ALSO RELIED ON THE DECISION OF THE CO-ORDINATE BENCH IN ITO VS. ARUN KUMAR KAPOOR (2011) 58 DTR(AT) 201(ITAT, AMRITSAR). 16. CONTRA, THE LEARNED DR SUBMITTED THAT THE AO HA S RIGHTLY PASSED ORDER U/S 143(3) R.W.S. 147. THE LEARNED DR RELIED ON THE DECISION OF AHMEDABAD BENCH OF TRIBUNAL IN THE CASE OF SHAILESH S. PATEL VS. ITO (97 TAXMANN.COM 570), CIT VS. D.K. GARG (84 TAXMANN.COM 257 )(DEL) B.KISHORE KUMAR VS. DCIT (62 TAXMANN.COM 215)(SC), B.KISHORE KUMAR VS. DCIT (52 TAXMAN. 449((MADRAS), BHAGIRATH AGGARWAL VS. CIT (31 TAXMANN.COM 274(DEL). ITA NO.1780 TO 1785-B-17 & CO 27 TO 32-B-2018 PAGE 14 OF 22 17. AFTER HEARING THE SUBMISSIONS OF BOTH THE PART IES ON THE DISPUTED ISSUE OF ASSESSMENT U/S 143(3) R.W.S. 147, THOUGH T HE ASSESSEES PREMISES WAS NOT SEARCHED U/S 132, THE FACT REMAINS THAT THE ASSESSEE IS ONLY A THIRD PARTY AND THE DETAILS WHICH ARE UNE ARTHED IN THE CASE OF A SEARCHED PERSON OR BELONGING TO ASSESSEE ARE PRIM A FACIE CANNOT BE DISBELIEVED. THE LEARNED AR HAS VEHEMENTLY ARGUED ON THE ASPECT OF APPLICABILITY OF PROVISIONS OF SEC.153C OF THE ACT BUT WE CONSIDER IT APPROPRIATE TO REFER TO THE PROVISIONS OF SECTION 1 53C AND SECTION 147 WHICH READ AS UNDER: ASSESSMENT OF INCOME OF ANY OTHER PERSON. 153C. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONG S OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTI ON 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR R EQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVIN G JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER S HALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A : [ PROVIDED THAT IN CASE OF SUCH OTHER PERSON, THE REFERENCE T O THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MA KING OF REQUISITION UNDER SECTION 132A IN THE SECOND PROVISO TO SECTION 153A SHALL BE CONSTRUED AS REFERENCE TO THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY T HE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON. (2) WHERE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS S EIZED OR REQUISITIONED AS REFERRED TO IN SUB-SECTION (1) HAS OR HAVE BEEN RECEIVED BY THE ASSESSING OFFICER HAVING JURISDICTI ON OVER SUCH OTHER PERSON AFTER THE DUE DATE FOR FURNISHING THE RETURN OF INCOME FOR THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YE AR IN WHICH SEARCH IS CONDUCTED UNDER SECTION 132 OR REQUISITION IS MA DE UNDER SECTION 132A AND IN RESPECT OF SUCH ASSESSMENT YEAR ( A ) NO RETURN OF INCOME HAS BEEN FURNISHED BY SUCH OTHER PERSON AND NO NOTICE UNDER SUB-SECTION (1) OF SECTI ON 142 HAS BEEN ISSUED TO HIM, OR ITA NO.1780 TO 1785-B-17 & CO 27 TO 32-B-2018 PAGE 15 OF 22 ( B ) A RETURN OF INCOME HAS BEEN FURNISHED BY SUCH O THER PERSON BUT NO NOTICE UNDER SUB-SECTION (2) OF SECTION 143 HAS BEEN SERVED AND LIMITATION OF SERVING THE NOTICE UNDER S UB-SECTION (2) OF SECTION 143HAS EXPIRED, OR ( C ) ASSESSMENT OR REASSESSMENT, IF ANY, HAS BEEN MA DE, BEFORE THE DATE OF RECEIVING THE BOOKS OF ACCOUNT O R DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFF ICER HAVING JURISDICTION OVER SUCH OTHER PERSON, SUCH ASSESSING OFFICER SHALL ISSUE THE NOTICE AND ASSESS OR REASSESS TOTAL INCOM E OF SUCH OTHER PERSON OF SUCH ASSESSMENT YEAR IN THE MANNER PROVID ED IN SECTION 153A. SIMILARLY, PROVISIONS OF SECTIONS 147 AND 148 READ AS UNDER: [ INCOME ESCAPING ASSESSMENT. 147. IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 T O 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTED THE LOSS OR THE DEPRECIATION ALLOWANCE O R ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT Y EAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 1 53, REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER T HE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE 1 ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE T O A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS 1 NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR. EXPLANATION 1. PRODUCTION BEFORE THE ASSESSING OFFICER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEEN DISCOVERED BY TH E ASSESSING OFFICER WILL NOT NECESSARILY 1 AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROVISO. EXPLANATION 2. FOR THE PURPOSES OF THIS SECTION, THE FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE INCOME CHARG EABLE TO TAX HAS ESCAPED ASSESSMENT, NAMELY : ( A ) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INCOME OF AN Y OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DURING THE ITA NO.1780 TO 1785-B-17 & CO 27 TO 32-B-2018 PAGE 16 OF 22 PREVIOUS YEAR EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX ; ( B ) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED B Y THE ASSESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION, ALLOWANCE OR RELIEF IN THE RETURN ; ( C ) WHERE AN ASSESSMENT HAS BEEN MADE, BUT ( I ) INCOME CHARGEABLE TO TAX HAS BEEN UNDERASSESSED ; OR ( II ) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RATE ; OR ( III ) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCESS IVE RELIEF UNDER THIS ACT ; OR ( IV ) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED ISSUE OF NOTICE WHERE INCOME HAS ESCAPED ASSESSMENT . 3 148. 4 [(1)] BEFORE MAKING THE ASSESSMENT, REASSESSMENT OR RECOMPUTATION UNDER SECTION 147, THE ASSESSING OFFI CER SHALL SERVE 5 ON THE ASSESSEE A NOTICE REQUIRING HIM TO FURNISH WITHIN SUCH PERIOD, 6 [* * *] AS MAY BE SPECIFIED IN THE NOTICE, A RETURN OF HIS INCOME OR THE INCOME OF ANY OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DURING THE PREVIOUS YEAR CORRESPONDING TO THE RELEVANT ASSESSMENT YEAR, IN THE PRESCRIBED FOR M AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRES-CRIBED; AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE 7 , APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139 :] 8 [PROVIDED THAT IN A CASE ( A ) WHERE A RETURN HAS BEEN FURNISHED DURING THE PE RIOD COMMENCING ON THE 1ST DAY OF OCTOBER, 1991 AND ENDI NG ON THE 30TH DAY OF SEPTEMBER, 2005 IN RESPONSE TO A NO TICE SERVED UNDER THIS SECTION, AND ( B ) SUBSEQUENTLY A NOTICE HAS BEEN SERVED UNDER SUB -SECTION (2) OF SECTION 143 AFTER THE EXPIRY OF TWELVE MONTHS SP ECIFIED IN THE PROVISO TO SUB-SECTION (2) OF SECTION 143, AS I T STOOD IMMEDIATELY BEFORE THE AMENDMENT OF SAID SUB-SECTIO N BY THE FINANCE ACT, 2002 (20 OF 2002) BUT BEFORE THE EXPIR Y OF THE TIME LIMIT FOR MAKING THE ASSESSMENT, RE-ASSESSMENT OR RE- COMPUTATION AS SPECIFIED IN SUB-SECTION (2) OF SECT ION 153, EVERY SUCH NOTICE REFERRED TO IN THIS CLAUSE SHALL BE DEEMED TO BE A VALID NOTICE: PROVIDED FURTHER THAT IN A CASE ( A ) WHERE A RETURN HAS BEEN FURNISHED DURING THE PE RIOD COMMENCING ON THE 1ST DAY OF OCTOBER, 1991 AND ENDI NG ON THE ITA NO.1780 TO 1785-B-17 & CO 27 TO 32-B-2018 PAGE 17 OF 22 30TH DAY OF SEPTEMBER, 2005, IN RESPONSE TO A NOTIC E SERVED UNDER THIS SECTION, AND ( B ) SUBSEQUENTLY A NOTICE HAS BEEN SERVED UNDER CLA USE ( II ) OF SUB-SECTION (2) OF SECTION 143 AFTER THE EXPIRY OF TWELVE MONTHS SPECIFIED IN THE PROVISO TO CLAUSE ( II ) OF SUB-SECTION (2) OF SECTION 143, BUT BEFORE THE EXPIRY OF THE TIME L IMIT FOR MAKING THE ASSESSMENT, RE-ASSESSMENT OR RE-COMPUTAT ION AS SPECIFIED IN SUB-SECTION (2) OF SECTION 153, EVERY SUCH NOTICE REFERRED TO IN THIS CLAUSE SHALL BE DEEMED TO BE A VALID NOTICE.] 9 EXPLANATION. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED T HAT NOTHING CONTAINED IN THE FIRST PROVISO OR THE SECON D PROVISO SHALL APPLY TO ANY RETURN WHICH HAS BEEN FURNISHED ON OR AFTER THE 1ST DAY OF OCTOBER, 2005 IN RESPONSE TO A NOTICE SERVED UND ER THIS SECTION.] (2) THE ASSESSING OFFICER SHALL, BEFORE ISSUING AN Y NOTICE UNDER THIS SECTION, RECORD HIS REASONS FOR DOING SO. ON PERUSAL OF THE PROVISIONS, THE AO HAS CHOSEN TO GO AHEAD IN THE ASSESSEES CASE BY ISSUING NOTICE U/S 147 OF THE AC T AND COMPLETED THE ASSESSMENT U/S 148 R.W.S. 143(3). THE FACT REMAINS THAT THE ASSESSEE IS A THIRD PARTY AND THE DOCUMENTS SEIZED IN THE SE ARCH PROCEEDINGS OF SHRI DAYANANDA PAI AND CHD ARE RELATED TO ASSESSEE AND BELONG TO HIM. THE LEARNED AR SUBMITTED THAT THE AMOUNT MENTIONED IN THE SEIZED DOCUMENTS HAS BEEN OWNED BY THE APPLICANTS OF THE S ETTLEMENT COMMISSION VIZ., SHRI DAYANANDA PAI AND CHD THOUGH BELONGING TO THE ASSESSEE. BUT THE LEARNED AR COULD NOT CONTROVERT WITH ANY MATERIAL EVIDENCE EXCEPT SUBMITTING THAT THE AMOUNT OWNED BY THE APPLICANTS IN THE SETTLEMENT COMMISSION BELONGS TO THE ASSESSEE FURTHER, THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF ACIT VS. SRINVAS RAO HOSKOTE IN ITA NOS.1154 & 1155/BANG/2015 DATED 21/02/2018 RELIED BY THE LEARNED AR, THE REVENUE FILED APPEAL TO THE HONBLE HIGH COURT AND THE HONBLE HIGH COURT DISMISSED THE REVENUES APPEAL ON THE GROUND OF LOW TAX EFFECT. AS FAR AS OUR VIEW IS CO NCERNED, ON THE ASSESSMENT U/S 147 R.W.S 143(3) OR 153C OF THE ACT, WE CONSIDER IT ITA NO.1780 TO 1785-B-17 & CO 27 TO 32-B-2018 PAGE 18 OF 22 APPROPRIATE TO REFER TO THE PROVISIONS AND THE DECI SIONS AS ENVISAGED IN THE CASE OF SHAILESH S. PATEL VS. ITO (97 TAXMANN.COM 570) (AHMEDABAD.TRIB) AND WE CONSIDER IT TO REFER TO THE OBSERVATIONS AT PARA.14.2, 1 AND 14.2.3 AND 14.5 OF THE ORDER WHIC H READ AS UNDER: 14.1 BEFORE WE PROCEED FOR DETERMINATION OF ISSUE, IT W OULD BE PERTINENT TO REFER TO THE PROVISIONS OF S. 153C AND ALSO S. 147 OF THE ACT, AS APPEARING IN THE STATUE AT THE RELEVANT TIM E, TO THE EXTENT AS MAY BE RELEVANT IN THE CONTEXT. 'ASSESSMENT OF INCOME OF ANY OTHER PERSON . - 153C. [(1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY M ONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOO KS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIO NED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDI CTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCE ED AGAINST EACH SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTIC E AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A :] [ PROVIDED THAT IN CASE OF SUCH OTHER PERSON, THE REFERENCE TO THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A IN THE SECOND PROVIS O TO [SUB-SECTION (1) OF] SECTION 153A SHALL BE CONSTRUED AS REFERENC E TO THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSE TS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HAVING JURIS DICTION OVER SUCH OTHER PERSON.] ' [UNDERLINE IS OURS] 'INCOME ESCAPING ASSESSMENT. 147. IF THE [ASSESSING] OFFICER [HAS REASON TO BELI EVE] THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PRO CEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIA TION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE AS SESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTION S 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE R ELEVANT ITA NO.1780 TO 1785-B-17 & CO 27 TO 32-B-2018 PAGE 19 OF 22 ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THI S SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT A SSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASS ESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON TH E PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN R ESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR: [ PROVIDED FURTHER --------- ' 14.2 ON A BARE READING OF S. 153C NOTED ABOVE, IT IS SE LF EVIDENT THAT THIS PROVISION GOVERNS ASSESSMENT OF INCOME OF A PE RSON OTHER THAN A PERSON IN WHOSE CASE SEARCH WAS INITIATED. 14.2.1 ALSO, THIS PROVISION ALONG WITH OTHER PROVISIONS O F S. 153A TO 153D EXERTS AN OVERRIDING EFFECT OVER THE PROVIS IONS OF SECTIONS 139, 147, 148, 149, 151 AND 153 OF THE ACT SINCE TH ESE PROVISIONS CONTAIN NON-OBSTANTE CLAUSE. SECONDLY, THE ASSESSME NT PROCEEDINGS UNDER S. 153C ARE FAR MORE ONEROUS QUA S. 147 IN TH E SENSE THAT PROCEEDINGS ARE INITIATED FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE YEAR IN WHICH SEARCH U/S. 132 IS INIT IATED OR REQUISITION IS MADE U/S.132A. THIRDLY, THE PROVISIONS OF SECTIO N 153C ARE ANALOGOUS TO SECTION 158BD OF THE ACT. THEREFORE, D ECISION OF THE APEX COURT IN THE CASE OF MANISH MAHESHWARI V. ASSTT. CIT [2007] 159 TAXMAN 258/289 ITR 341 WOULD ALSO APPLY WHERE A SSESSMENT IS TO BE MADE U/S. 153C. AS PER THE AFORESAID DECIS ION, THE PRECONDITION FOR INVOKING JURISDICTION FOR ISSUE OF NOTICE U/S. 153C IS THAT THE AO MUST 'RECORD SATISFACTION' AS TO THE SEIZED MATERIAL 'BELONGS TO' THE THIRD PERSON I.E. ASSESSEE. . . . . . . . 14.2.3 THEREFORE, QUESTION POSED WHETHER, IN VIEW OF THE PHRASEOLOGY EMPLOYED IN THE SECTION, IF THE BOOKS O F ACCOUNT BELONG TO THE PERSON SEARCHED BUT ENTRY IN SUCH BOOKS REFL ECT THE UNDISCLOSED INCOME OF THE THIRD PARTY THEN, WHETHER THE AO CAN ASSUME JURISDICTION UNDER S.153C TO ASSESS SUCH UND ISCLOSED INCOME OR NOT. THE EXPRESSION 'BELONGS TO' WAS A SUBJECT M ATTER OF DEBATE. THE POINT IN ISSUE WAS EXAMINED BY HON'BLE DELHI HI GH COURT IN PEPSICO INDIA HOLDINGS (P.) LTD. ( SUPRA ). IT OBSERVED IN ESSENCE THAT EXPRESSION BELONGING TO ASSESSEE IMPLIES SOMET HING MORE THAN IDEA OF CASUAL ASSOCIATION. IT WAS OBSERVED BY THE HON'BLE DELHI HIGH COURT THAT S. 153C CANNOT BE INVOKED UNLESS TH E AO IS SATISFIED FOR COGENT REASONS THAT THE SEIZED DOCUME NTS DO NOT BELONG TO THE SEARCHED PERSON. IT WAS OBSERVED THAT FINDIN G OF PHOTOCOPIES WITH THE SEARCHED PERSON DOES NOT NECESSARILY MEAN AND IMPLY THAT THEY 'BELONG' TO THE PERSON HOLDING THE ORIGINALS. THE DISTINCTION BETWEEN 'BELONGS TO' AND 'RELATES TO' OR 'REFERS TO ' MUST BE BORNE IN MIND BY THE AO. THE ASSESSING OFFICERS SHOULD NO T CONFUSE THE EXPRESSION 'BELONGS TO' WITH THE EXPRESSIONS 'RELAT ES TO' OR 'REFERS TO'. THE HON'BLE COURT WENT ON THE EXPLAIN THE PURP ORT OF THE EXPRESSION BY GIVING ILLUSTRATION THAT A REGISTERED SALE DEED, FOR ITA NO.1780 TO 1785-B-17 & CO 27 TO 32-B-2018 PAGE 20 OF 22 EXAMPLE, 'BELONGS TO' THE PURCHASER OF THE PROPERTY ALTHOUGH IT OBVIOUSLY 'RELATES TO' OR 'REFERS TO' THE VENDOR. I N THIS EXAMPLE IF THE PURCHASER'S PREMISES ARE SEARCHED AND THE REGIS TERED SALE DEED IS SEIZED, IT CANNOT BE SAID THAT IT 'BELONGS TO' T HE VENDOR JUST BECAUSE HIS NAME IS MENTIONED IN THE DOCUMENT. IN T HE CONVERSE CASE IF THE VENDOR'S PREMISES ARE SEARCHED AND A CO PY OF THE SALE DEED IS SEIZED, IT CANNOT BE SAID THAT THE SAID COP Y 'BELONGS TO' THE PURCHASER JUST BECAUSE IT REFERS TO HIM AND HE (THE PURCHASER) HOLDS THE ORIGINAL SALE DEED. IN THIS LIGHT, IT IS OBVIOU S THAT NONE OF THE THREE SETS OF DOCUMENTS - COPIES OF PREFERENCE SHAR ES, UNSIGNED LEAVES OF CHEQUE BOOKS AND THE COPY OF THE SUPPLY A ND LOAN AGREEMENT - CAN BE SAID TO 'BELONG TO' THE PETITION ER. . . . . . . . . . 14.5 THE DECISIONS CITED ON BEHALF OF THE ASSESSEE ARE CLEARLY DISTINGUISHABLE AND DO NOT RAISE ANY CONFLICT WITH POSITION OF LAW NARRATED ABOVE. THE DECISION RENDERED BY THE GUJARA T HIGH COURT IN THE CASE OF CARGO CLEARING AGENCY V. JT. CIT [2008] 307 ITR 1 HAS BEEN RENDERED UNDER A DIFFERENT SCHEME FOR ASSESSME NT OF SEARCH CASES I.E. WITH REFERENCE TO BLOCK PERIOD REGIME. T HE HON'BLE GUJARAT HIGH COURT ALSO ECHOES THAT IN CASE OF CONF LICT BETWEEN THE OPERATION OF ERSTWHILE SECTION 158BC OF THE ACT (PE RTAINING TO ERSTWHILE ASSESSMENT PROCEDURE IN THE CASE OF THIRD PERSON UNDER OLD SCHEME) AND SECTION 147/148 OF THE ACT UNDER NORMAL PROVISIONS, PROVISIONS OF ERSTWHILE SECTION 158BC WILL PREVAIL. THE HON'BLE GUJARAT HIGH COURT HAS ALSO OPINED THAT PROCEEDINGS UNDER S.147/148 OF THE ACT WILL NOT LIE WHERE IT IS REPUG NANT TO THE PROCEDURE LAID DOWN UNDER ERSTWHILE CHAPTER XIV-B R ELATING TO SEARCH CASES. IN THE INSTANT CASE, WHERE THE ONEROU S PROCEEDINGS UNDER S. 153C OF THE ACT HAS NOT BEEN INVOKED AND C OULD NOT POSSIBLY BE INVOKED, THERE WAS NO IMPEDIMENT FOR IN ITIATING PROCEEDINGS UNDER S.147 OF THE ACT BY THE AO AS DIS CUSSED IN ELABORATION ABOVE. THEREFORE, IN CARGO CLEARING AGE NCY AND OTHER DECISIONS OF THE CO-ORDINATE BENCH CITED ON BEHALF OF THE ASSESSEE RENDERED ON SIMILAR LINES DO NOT GIVE RISE TO ANY C ONFLICT AND ARE OF NO ASSISTANCE TO THE ASSESSEE. 18. WE ARE OF THE CONSIDERED OPINION THAT THE DOCUMENTS SEIZED IN THE DUMMY TALLY ACCOUNT BELONGS TO THIRD PARTY, I.E . THE ASSESSEE. WE CONCUR WITH THE DECISION OF THE AHMEDABAD BENCH IN THE CASE OF SHAILESH S. PATEL (SUPRA) IN RESPECT OF ALTERNATIVE REMEDY AVAILABLE TO THE AO FOR INITIATING REASSESSMENT PROCEEDINGS U/S 147 OF THE ACT AND ACCORDINGLY, WE DISMISS THE CROSS OBJECTIONS OF THE ASSESSEE. SINCE THE FACTS AND CIRCUMSTANCES AND THE GROUNDS OF CROSS OB JECTIONS FOR ITA NO.1780 TO 1785-B-17 & CO 27 TO 32-B-2018 PAGE 21 OF 22 ASSESSMENT YEARS 2007-08 TO 2010-11 ARE SIMILAR, TH E REASONS GIVEN FOR ASSESSMENT YEAR 2006-07 WILL APPLY MUTATIS MUTANDIS. ACCORDINGLY, THE CROSS OBJECTIONS FILED BY THE ASSESSEE FOR ASSE SSMENT YEARS 2007- 08 TO 2010-11 ARE ALSO DISMISSED. 19. IN THE CROSS OBJECTIONS FOR ASSESSMENT YEAR 201 1-12, THE ASSESSEE HAS FILED REVISED GROUNDS OF CROSS OBJECTI ON CHALLENGING THE VALIDITY OF ISSUE OF NOTICE U/S 143(2) OF THE ACT. AT THE TIME OF HEARING, THE LEARNED AR SUBMITTED THAT FOR THE ASSESSMENT YE AR 2011-12, THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT WITH OUT ISSUING NOTICE U/S 143(2) OF THE ACT. ON PERUSAL OF THE ASSESSMEN T ORDER, WE FOUND THAT NOTICE U/S 143(2) WAS ISSUED ON 20/01/2014. W HEN WE CALLED FOR ASSESSMENT RECORDS OF THE AO, THE SAID INFORMATION COULD NOT BE EXPLAINED AND ALSO THERE IS NO FINDING OF THE CIT(A ) ON THIS LEGAL ISSUE WHICH WAS RAISED. HENCE, WE CONSIDER IT APPROPRIAT E TO REMIT THIS DISPUTED ISSUE TO THE FILE OF THE CIT(A) FOR ADJUDI CATION. ACCORDINGLY, THE CROSS OBJECTION FOR THE ASSESSMENT YEAR 2011-12 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 19. IN THE RESULT, THE REVENUES APPEALS BEARING ITA NOS. 1780 TO 1785/BANG/2017 ARE ALLOWED FOR STATISTICAL PURPOSES AND CO NOS. 2 7 TO 31/BANG/2018 ARE DISMISSED AND CO NO.32/BANG/201 8 FOR ASSESSMENT YEAR 2011-12 IS PARTLY ALLOWED FOR STATI STICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT O N 31 ST JANUARY, 2019. SD/- SD/- ( CHANDRA POOJARI ) ( PAVAN KUMAR GADALE ) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : BENGALURU D A T E : 31/01/2019. SRINIVASULU, SPS ITA NO.1780 TO 1785-B-17 & CO 27 TO 32-B-2018 PAGE 22 OF 22 COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)- 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL BANGALORE