Sri Amar Kumar Agarwal, Patna V. ACIT, Patna

CO 7/PAT/2009

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7064 (ITAT-PATNA)
• Duration Of Justice: 2 year(s) 5 month(s) 19 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-02-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 04-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RISHI RAJ SINHA
• Assessee Lawyers: A K RASTOGI; A K AGARWAL S
• Keywords: Unexplained investment; Value adopted by valuation officer; Search and seizure; Valuation report; Assessment record; Block assessment

Judgement Text

IT(SS)A NO05/PATNA/2009 & CO NO.07/PATNA/09 AMAR KR. AGARWAL, PATNA 1 IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH, PATNA BEFORE: SHRI B.R. MITTAL, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER IT (SS) A NO. 05 / PATNA / 20 09 BLOCK ASSESSMENT YEAR : 1989 - 90 TO 1999 - 2000 ACIT, CENTRAL CI RCLE - 1 PATNA VS. SHRI AMAR KR. AGARWAL PATNA (APPELLANT) (RESPONDENT) PAN NO.AAPPA 3158E CO NO.07/PATNA/2009 (ARISING OUT OF IT(SS)A NO.05/PATNA/2009) BLOCK ASSESSMENT YEAR : 1989 - 90 TO 1999 - 2000 SHRI AMAR KR. AGARWAL PATNA VS. ACIT, CENTRAL CI RCLE - 1 PATNA (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI A.K. RASTOGI & SHRI A.K. AGARWAL, ADVOCATES RESPONDENT BY: SHRI RISHI RAJ SINHA, D.R. DATE OF HEAR I NG: 22 .02.2012 DATE OF PRONOUNCEMENT: 24 .02.2012 ORDER PER B.R. MITTAL, JUDICIAL MEMBER:- THE DEPARTMENT HAS FILED THIS APPEAL FOR THE BLOC K PERIOD 1989-90 TO 1999-2000 AGAINST THE ORDER OF LD. CIT(A) DATED 19. 5.2009 ON FOLLOWING GROUNDS: 1. FOR THAT THE LD. CIT(A)-II, PATNA WAS ERRED IN FACT AS WELL AS LAW IN DELETING THE SUM OF RS.17,40,000/- ON ACCOUNT OF CA SH TRANSACTION APPEARED IN THE BUNCH OF LOOSE SHEETS, RS.5,38,250/ - ON ACCOUNT OF COMMISSION INCOME, RS.5,06,000/- AND RS.6,93,000/- ON ACCOUNT OF UNDISCLOSED INVESTMENT MADE IN THE PROPERTIES, RS.8 0,96,464/- AND RS.1,75,46,441/- ON ACCOUNT OF UNEXPLAINED INVESTME NT AS SHARE APPLICATION MONEY IN M/S. AGRASEN COMMERCIAL SERVIC E (P) LTD. AND M/S. SUMIT COAL PRODUCTS LTD. WITHOUT PROPER APPREC IATION OF FINDINGS OF THE A.O. IN HIS ASSESSMENT ORDER AND REMAND REPO RT. 2. FOR THAT THE APPELLANT CRAVES LEAVES TO URGE, ADD O R ALTER ANY OTHER GROUND OR GROUNDS AT THE TIME OF HEARING. IT(SS)A NO05/PATNA/2009 & CO NO.07/PATNA/09 AMAR KR. AGARWAL, PATNA 2 2. THE ASSESSEE HAS FILED CROSS OBJECTION AND IN TH E CROSS OBJECTION, THE ASSESSEE HAS DISPUTED THE ORDER OF LD. CIT(A) IN NO T DELETING THE INTEREST CHARGED U/S 158BFA(1) OF INCOME-TAX ACT. 3. THE RELEVANT FACTS ARE THAT A SEARCH U/S 132(1) WAS CONDUCTED UPON THE ASSESSEE IN CONNECTION WITH THE SEARCH OF SHRI SUDARSHAN KUMAR BANSAL. PURSUANT THERETO, ASSESSMENT FOR THE BLOCK PERIOD F ROM 1989-90 TO 1999- 2000 WAS PASSED U/S 158BC OF THE ACT ON 23.11.2000. 4. DURING THE COURSE OF SEARCH AND SEIZURE OPERATIO N, LOOSE SHEETS MARKED A-9, A-11 TO A-17 & A-21 WERE SEIZED AT RESI DENTIAL PREMISES OF SHRI RATAN HAVELIA, BROTHER-IN-LAW OF SHRI S.K. BANSAL. THESE LOOSE SHEETS WERE FOUND TO HAVE RECORDED TRANSACTIONS RELATED TO FINA NCIAL YEARS 1995-96 TO 1998-99. SHRI S.K. BANSAL ADMITTED THAT THESE LOOS E SHEETS CONTAIN TRANSACTIONS PERTAINING TO HIS BUSINESS ACTIVITIES IN PATNA AND ALSO ADMITTED TO HAVE RECEIVED ON MONEY ON SALE OF FLATS/SHOP/OFFICE SPACE IN DIFFERENT PROJECTS. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER CITED A FEW INSTANCES WHERE MONEY WAS APPARENTLY PAID BY THE ASSESSEE AND HIS WIFE AS BOOKING AMOUNT FOR DIFFERENT FLATS/SHOPS WHICH ARE SUMMARIZ ED BY ASSESSING OFFICER AT PAGE 12 OF THE ASSESSMENT ORDER. THE ASSESSING OFF ICER INFERRED THAT THE ASSESSEE HAD MADE UNDISCLOSED INVESTMENTS IN IMMOVA BLE PROPERTIES AND THE SOURCE OF PAYMENT IS ALSO IN CASH AND SOURCE OF SUC H INVESTMENT HAS NOT BEEN EXPLAINED, THE ASSESSING OFFICER MADE THE ADDI TION OF RS.17,40,594/- AS UNEXPLAINED INVESTMENT AND ALSO MADE AN ADDITION OF RS.5,38,250/- ON ACCOUNT OF COMMISSION INCOME. 5. IN THE FIRST APPEAL, THE LD. CIT(A) HAS CONSIDER ED THE FACT THAT SHRI S.K. BANSAL IN HIS APPLICATION BEFORE HONBLE SETTLEMENT COMMISSION ACCEPTED OWNERSHIP OF SEIZED MATERIALS BEING LOOSE SHEETS A- 9, A-11 TO A-17 & A-21 AND OFFERED INCOME ARISING OUT OF SUCH TRANSACTION IN HIS HAND. ACCORDINGLY, THE SETTLEMENT COMMISSION VIDE ITS ORDER DATED 28.1 2.2007 CONSIDERED THE SEIZED MATERIAL IN THE HAND OF SHRI S.K. BANSAL AND LD. CIT(A) HAS DELETED THE SAID ADDITIONS OF RS.17,40,594/- AND RS.5,38,250/- MADE BY THE ASSESSING IT(SS)A NO05/PATNA/2009 & CO NO.07/PATNA/09 AMAR KR. AGARWAL, PATNA 3 OFFICER. THE DEPARTMENT HAS DISPUTED THIS FINDING OF LD. CIT(A) BEFORE TRIBUNAL. 6. DURING THE COURSE OF HEARING BEFORE US, THE LD. D.R. HAS NOT DISPUTED THE ABOVE FACTS SAVE AND EXCEPT RELYING ON THE ORDE R OF THE ASSESSING OFFICER. HOWEVER, LD. A.R. SUBMITTED THAT CIT(A) ALSO SOUGHT A REMAND REPORT FROM THE ASSESSING OFFICER AND HE CONFIRMED THAT THE SAI D SEIZED LOOSE SHEETS ON THE BASIS OF WHICH THE ASSESSING OFFICER MADE ADDIT IONS IN THE HAND OF THIS ASSESSEE HAD BEEN CONSIDERED BY THE HONBLE SETTLEM ENT COMMISSION IN THE HAND OF SHRI S.K. BANSAL AND THEREFORE, THE ORDER O F LD. CIT(A) IS JUSTIFIED TO DELETE THE ADDITIONS MADE BY THE ASSESSING OFFICER. 7. ON CONSIDERATION OF ABOVE SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE PARTIES AND CONSIDERING THE RELEVANT PART OF LD . CIT(A) AT PAGES 16 & 17, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CI T(A) AS THE LOOSE SHEET ON THE BASIS OF WHICH ADDITIONS WERE MADE BY A.O. HAS BEEN CONSIDERED IN THE HAND OF SHRI BANSAL BY THE HONBLE SETTLEMENT COMMI SSION IN ITS ORDER DATED 28.12.2007. HENCE WE UPHOLD THE ORDER OF LD. CIT(A ) AND REJECT THIS PART OF GROUND OF APPEAL TAKEN BY THE DEPARTMENT. 8. THE DEPARTMENT HAS ALSO DISPUTED THE ORDER OF LD . CIT(A) IN RESPECT OF DELETION OF RS.5,06,000/- AND RS.6,93,000/- MADE BY THE ASSESSING OFFICER ON THE BASIS OF DVO REPORT. 9. IT IS RELEVANT TO STATE THAT ASSESSING OFFICER M ADE ADDITION OF RS.5,06,000/- ON ACCOUNT OF DIFFERENCE IN THE AMOUN T AS DISCLOSED BY THE ASSESSEE IN THE RETURN FILED PRIOR TO DATE OF SEARC H DISCLOSING AMOUNT OF RS.4 LAKHS IN RESPECT OF FLAT NO.502, SURYA VIHAR, PATNA AND WHEREAS DVO IN HIS REPORT ESTIMATED VALUE AT RS.9,06,000/-. FURTHER, THE ASSESSING OFFICER HAS ALSO MADE THE ADDITION OF RS.6,93,000/- AS UNEXPLAI NED INVESTMENT IN THE OFFICE PREMISES AT MEZZANINI FLOOR OF SURYA VIHAR A PARTMENT, EXIHIBITION ROAD, PATNA ON THE BASIS OF DVO REPORT. IT IS RELEVANT T O STATE THAT THE ASSESSEE CONTENDED THAT THE SAID PROPERTY STOOD DISCLOSED IN THE RETURN FILED PRIOR TO IT(SS)A NO05/PATNA/2009 & CO NO.07/PATNA/09 AMAR KR. AGARWAL, PATNA 4 SEARCH AND NO INCRIMINATING MATERIAL/EVIDENCE WAS F OUND DURING THE COURSE OF SEARCH TO INDICATE PAYMENTS BEYOND DISCLOSED AMOUNT . HOWEVER, ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESS EE. BEING AGGRIEVED, ASSESSEE HAS FILED APPEAL BEFORE THE FIRST APPELLAT E AUTHORITY. 10. LD. CIT(A) HAS DELETED THE SAID ADDITIONS CONSI DERING THE FACT THAT NO EVIDENCES HAD BEEN FOUND DURING THE SEARCH SHOWING ANY UNACCOUNTED INVESTMENT IN ABOVE PROPERTIES AND ALSO ON THE FACT THAT NO ADDITION COULD BE MADE IN THE BLOCK ASSESSMENT ON THE BASIS OF VALUAT ION REPORT. HENCE, DEPARTMENT IN APPEAL. 11. DURING THE COURSE OF HEARING, LD. D.R. SUPPORTE D THE ORDER OF ASSESSING OFFICER AND SUBMITTED THAT DVO HAS RIGHTL Y ESTIMATED THE INVESTMENT IN THE PROPERTY AND THE DIFFERENCE MADE BY THE ASSESSING OFFICER IS JUSTIFIED. ON THE OTHER HAND, LD. A.R. SUPPORTED T HE ORDER OF LD. CIT(A) AND SUBMITTED THAT THE ASSESSEE FILED REGULAR RETURNS U /S 139(1) BEFORE THE SEARCH HAD TAKEN PLACE AND DISCLOSED INVESTMENTS IN THE AF ORESAID TWO PROPERTIES. HE FURTHER SUBMITTED THAT NO MATERIAL WAS FOUND DUR ING SEARCH TO INDICATE ANY ADDITIONAL INVESTMENT MADE BY ASSESSEE IN ABOVE REFERRED PROPERTIES. 12. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF AUTH ORITIES BELOW AND SUBMISSIONS OF LD. REPRESENTATIVE OF BOTH THE PARTI ES. IT IS A FACT THAT NO EVIDENCE OR MATERIAL HAS BEEN FOUND DURING THE COUR SE OF SEARCH EVIDENCING ANY INVESTMENT MADE BY THE ASSESSEE IN THE AFORESAI D PROPERTY OVER AND ABOVE THE INVESTMENT DISCLOSED IN THE RETURN FILED. MOREOVER, THE HONBLE DELHI HIGH COURT HAS HELD IN THE CASE OF CIT VS. SU NIL KUMAR GUPTA 193 TAXATION 47 THAT ASSESSING OFFICER IS NOT JUSTIFIED TO MAKE ADDITION SOLELY ON THE BASIS OF VALUATION REPORT IN THE BLOCK ASSESSME NT AS THE SAID VALUATION REPORT. FURTHER, HONBLE MADHYA PRADESH HIGH COURT HAS ALSO HELD IN THE CASE OF CIT VS. KHUSHLALCHAND KUMAR 263 ITR 77 THAT IN VIEW OF THE LANGUAGE OF SUB-SECTION (1) OF SECTION 158BB OF THE ACT, THE ADDITION WITH REGARD TO THE INVESTMENT IN CONSTRUCTION CANNOT BE MADE IN A BLOC K ASSESSMENT ON ACCOUNT OF UNEXPLAINED INVESTMENT ON THE BASIS OF DVO REPOR T. IN VIEW OF ABOVE, WE IT(SS)A NO05/PATNA/2009 & CO NO.07/PATNA/09 AMAR KR. AGARWAL, PATNA 5 UPHOLD THE ORDER OF LD. CIT(A) IN DELETING THE ADDI TION OF RS.6,93,000/- AND RS.5,06,000/- MADE BY THE ASSESSING OFFICER ON ACCO UNT OF UNDISCLOSED INVESTMENT IN THE PROPERTIES ON THE BASIS OF DVOS REPORT. 13. THE DEPARTMENT HAS ALSO DISPUTED THE ORDER OF L D. CIT(A) IN DELETING THE AMOUNT OF RS.80,96,464/- AND RS.1,75,46,441/- O N ACCOUNT OF UNEXPLAINED INVESTMENT AS SHARE APPLICATION MONEY I N M/S. AGRASEN COMMERCIAL SERVICE (P) LTD. AND M/S. SUMIT COAL PRO DUCTS PVT. LTD. RESPECTIVELY. 14. THE ASSESSING OFFICER HAS STATED THAT THE ASSES SEE INTRODUCED IN THE NAME OF DIFFERENT PERSONS AN UNACCOUNTED MONEY IN T HE FORM OF SHARE APPLICATIONS OF RS.80,96,464/- IN THE COMPANY M/S. AGRASEN COMMERCIAL SERVICE (P) LTD. AND RS.1,75,46,441/- IN THE COMPAN Y M/S. SUMIT COAL PRODUCTS LTD. HE STATED THAT THE ASSESSEE MADE BEN AMI INVESTMENTS AND THEY WERE NOT IN THE NATURE OF SHARE APPLICATION. 15. IT IS RELEVANT TO STATE THAT M/S. AGRASEN COMME RCIAL SERVICE (P) LTD. AND M/S. SUMIT COAL PRODUCTS PVT. LTD. ARE PRIVATE LIMITED COMPANIES AND THE WIFE OF THE ASSESSEE IS THE DIRECTOR IN BOTH THE AF ORESAID COMPANIES. THE ASSESSING OFFICER STATED THAT IN THE ASSESSMENT ORD ER OF THOSE COMPANIES, IT WAS HELD THAT THOSE COMPANIES WERE NOT GENUINE BUSI NESS COMPANIES AND HAD BEEN FLOATED ONLY TO LAUNDER UNACCOUNTED MONEY OF THE ASSESSEE AND OF SHRI S.K. BANSAL. THE ASSESSING OFFICER STATED THA T MERE PAYMENT OF MONEY THROUGH ACCOUNT PAYEE CHEQUES DO NOT PROVE THAT TRA NSACTIONS WERE GENUINE. THE ASSESSING OFFICER STATED THAT IN THE CASE OF SO ME OF THE SHARE APPLICANTS, CASH WAS DEPOSITED JUST PRIOR TO DATE OF INVESTMENT AND THERE AFTER CHEQUES WERE ISSUED IN FAVOUR OF THE ABOVE NAMED TWO COMPAN IES. THE ASSESSING OFFICER HAS GIVEN THE DETAILS OF SUCH TRANSACTIONS AT PAGE 8 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER DID NOT CONSIDER THE GENUINENESS OF THE INVESTMENTS AS SHARE APPLICATION MONEY MADE BY APPL ICANTS AND ACCORDINGLY MADE THE AFORESAID ADDITIONS IN THE HAND OF THIS AS SESSEES. BEING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AU THORITY. IT(SS)A NO05/PATNA/2009 & CO NO.07/PATNA/09 AMAR KR. AGARWAL, PATNA 6 16. ON BEHALF OF THE ASSESSEE IT WAS CONTENDED THAT NO SEARCH HAD BEEN CONDUCTED ON M/S. AGRASEN COMMERCIAL SERVICE (P) LT D. AND M/S. SUMIT COAL PRODUCTS PVT. LTD. FURTHER, NO MATERIAL RELATING T O THOSE COMPANIES WAS FOUND DURING THE SEARCH OPERATION AT THE ASSESSEES PREMISES. IT WAS SUBMITTED THAT NOT A SINGLE EVIDENCE/MATERIAL WAS F OUND AT THE TIME OF SEARCH TO SUGGEST THE CONCLUSION ARRIVED AT BY ASSESSING O FFICER. THE ASSESSEE ALSO CONTENDED BEFORE THE FIRST APPELLATE AUTHORITY THAT THE AFORESAID AMOUNTS WERE ALSO ADDED IN THE HAND OF THOSE RESPECTIVE COM PANIES ON PROTECTIVE BASIS BY THE ASSESSING OFFICER IN THE COMPANYS ASS ESSMENTS BUT LD. CIT(A) ANNULLED THOSE PROTECTIVE ASSESSMENTS MADE IN THE C ASES OF M/S. AGRASEN COMMERCIAL SERVICE (P) LTD. AND M/S. SUMIT COAL PRO DUCTS PVT. LTD. IT WAS SUBMITTED THAT NO FURTHER APPEAL WAS FILED BY THE D EPARTMENT AGAINST THE SAID ORDER OF LD. CIT(A). IT WAS ALSO CONTENDED THAT RE GULAR RETURNS WERE FILED IN RESPECT OF SAID SHARE APPLICATION MONEY BEFORE THE DATE OF SEARCH AND THERE IS NO EVIDENCE OF ANY INVESTMENT WAS MADE BY THE AS SESSEE AS BENAMI IN THE AFORESAID TWO COMPANIES. 17. LD. CIT(A) SOUGHT REMAND REPORT FROM THE ASSESS ING OFFICER AND HAS STATED THAT NO COMMENTS HAVE BEEN MADE BY THE ASSES SING OFFICER IN HIS REMAND REPORT DATED 10.5.2007 INSPITE OF THE FACT T HAT COPIES OF THE RETURNS OF THE COMPANIES ALONG WITH THE AUDITED ACCOUNTS FO R THE ASSESSMENT YEARS 1995-96 TO 1999-2000 OF M/S. SUMIT COAL PRODUCTS PR IVATE LTD. AND FOR THE ASSESSMENT YEARS 1996-97 TO 1999-2000 OF M/S. AGRAS EN COMMERCIAL SERVICE (P) LTD. WERE SENT TO HIM, AND THE SAME WERE PLACED IN THE PAPER BOOK FILED BY THE ASSESSEE. LD. CIT(A) BY THE IMPUGNED ORDER, RELEVANT PART OF WHICH IS APPEARING AT PAGE 25 TO 27, DELETED AFORESAID ADDIT IONS MADE BY THE ASSESSING OFFICER WHICH IS AS UNDER: I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SU BMISSIONS MADE ON BEHALF OF THE APPELLANT. I FIND THAT THE AO HAS IN ITIATED PROCEEDINGS U/S 158BC/158BB IN THE HANDS OF THE AFOREMENTIONED TWO COMPANIES OF WHICH THE APPELLANTS WIFE SMT. SHAKUNTALA DEVI IS ONE OF THE DIRECTORS AND HAS PASSED ORDER ON 29.9.2000 WHEREIN INCOME HAS BEEN D ETERMINED ON PROTECTIVE BASIS AT RS.71,35,096/- AND RS.1,99,98,4 41/- WITH AN OBSERVATION THAT THE SAME IS TO BE ADDED ON SUBSTANTIVE BASIS I N THE HANDS OF THE IT(SS)A NO05/PATNA/2009 & CO NO.07/PATNA/09 AMAR KR. AGARWAL, PATNA 7 APPELLANT. I ALSO FIND THAT THE PROTECTIVE ASSESSME NTS IN THE HANDS OF THE COMPANIES WERE SUBJECTED TO APPEAL BEFORE CIT(A), D HANBAD WHO VIDE HIS ORDER DATED 14.9.2004 HAS ANNULLED THE ASSESSMENTS AFTER HOLDING THAT NO SEARCH WARRANT WAS ISSUED IN THE NAME OF M/S. AGRAS EN COMMERCIAL SERVICES (P) LTD. AND M/S. SUMIT COAL PRODUCTS (P) LTD. AND THAT IF NO SEARCH WARRANT WAS ISSUED IN THE NAME OF THE ASSESSEES THE PROCEED INGS INITIATED U/S 158BC WAS VOID AB INITIO AND WITHOUT JURISDICTION. THERE FORE THE CIT(A) HAS HELD THAT IN ABSENCE OF ANY SEARCH WARRANT AND PUNCHNAMA S IN THE CASE OF THE APPELLANT COMPANIES, THE ORDER PASSED U/S 158BC/158 BB IS NO DOUBT ILLEGAL AND WITHOUT JURISDICTION AND THEREFORE ANNULLED. I T IS ALSO AN ADMITTED POSITION THAT THE DEPARTMENT DID NOT AGITATE THE MA TTER BEFORE THE TRIBUNAL AND HENCE THE VERDICT OF CIT(A), DHANBAD HAS ATTAIN ED FINALITY. IT IS FURTHER OBSERVED THAT THE ASSESSING OFFICER IN HIS REMAND REPORT DATED 10.5.2007 HAS RELIED UPON THE ADVERSE FINDING RECORDED IN THE ASSESSMENT ORDERS OF THE TWO COMPANIES WHEREIN IT HAS BEEN ALLEGED THAT THES E COMPANIES WERE NOT GENUINE BUSINESS COMPANIES AND WERE FLOATED TO LAUN DER UNACCOUNTED MONEY OF THE APPELLANT AND S.K. BANSAL. THERE IS THEREFO RE MERIT IN THE SUBMISSION OF THE AR OF THE APPELLANT THAT THERE IS NO INDEPEN DENT FINDING IN THE IMPUGNED ASSESSMENT ORDER OF THE APPELLANT FOR MAKI NG THESE ADDITIONS ON SUBSTANTIVE BASIS. THERE IS ALSO MERIT IN THE SUBM ISSION OF THE AR OF THE APPELLANT THAT THE ADVERSE FINDINGS IN THE CASE OF THE AFORESAID TWO COMPANIES NO LONGER SURVIVE AFTER THE ORDER OF THE CIT(A), DHANBAD DATED 14.9.2004 AS THE SAID ASSESSMENT ORDERS IN THE CASE OF THE TWO COMPANIES HAVE BEEN ANNULLED AND NO SECOND APPEAL HAS BEEN FI LED BY THE DEPARTMENT BEFORE THE TRIBUNAL THEREBY ACCEPTING THE VERDICT O F THE CIT(A). IT IS FURTHER OBSERVED THAT IN THE WRITTEN SUBMISSIONS DATED 10.1 1.2004 FILED BY THE APPELLANT DURING THE COURSE OF APPELLATE PROCEEDING S IT WAS SUBMITTED THAT M/S. AGRASEN COMMERCIAL SERVICES (P) LTD. AND M/S. SUMIT COAL PRODUCTS (P) LTD. HAS BEEN FILING THEIR INCOME-TAX RETURNS REGUL ARLY AND THAT THE TRANSACTIONS, INCOME, EXPENDITURE, ASSETS AND LIABI LITIES HAVE BEEN CLEARLY SHOWN AND DISCLOSED TO THE DEPARTMENT IN THEIR ASSE SSMENT RECORDS WHICH IS WELL BEFORE THE DATE OF SEARCH OPERATION AT THE PRE MISES OF THE APPELLANT. IT WAS SUBMITTED THAT NO UNDISCLOSED MATERIAL OF ANY N ATURE WAS FOUND DURING SEARCH AT THE PREMISES OF THE APPELLANT. IT WAS FU RTHER SUBMITTED THAT THE BOOKS OF ACCOUNT HAS BEEN REGULARLY AUDITED BY THE CHARTERED ACCOUNTANT AS PER PROVISIONS OF THE I.T. ACT AND THAT THE AUDITED SET OF ACCOUNTS/FINANCIAL STATEMENT, AUDITORS REPORT AND DIRECTORS REPORT H AVE BEEN FILED REGULARLY IN COMPLIANCE TO THE MANDATE OF THE I.T. ACT IN RESPEC TIVE ASSESSMENT YEARS WHICH IS PRIOR TO THE DATE OF SEARCH. COPY OF ACKN OWLEDGEMENT OF I.T. RETURNS, AUDITORS REPORT, AUDITED BALANCE SHEET AN D OTHER FINANCIAL STATEMENTS OF M/S. AGRASEN COMMERCIAL SERVICES (P) LTD. FOR A.YS 1996-97, 1997-98, 1998-99 AND 1999-2000 AND FOR THE A.YS 199 5-96, 1997-98, 1999- 99 AND 1999-2000 OF M/S. SUMIT COAL PRODUCTS (P) LT D. WERE ALSO MADE A PART OF THE PAPER BOOK AND SENT TO THE A.O. FOR HIS COMM ENTS IN THE REMAND PROCEEDINGS. IT IS HOWEVER, OBSERVED THAT THE REMA ND REPORT OF THE ASSESSING OFFICER IS COMPLETELY SILENT ON THIS ISS UE MEANING THEREBY THAT HE HAS NOTHING ADVERSE TO COMMENT ON THE ABOVE SUBMISS IONS OF THE APPELLANT. I AM IN COMPLETE AGREEMENT WITH THE SUBMISSION OF T HE AR OF THE APPELLANT THAT THE ADDITIONS MADE IN RESPECT OF DISCLOSED TRA NSACTIONS IN REGULAR RETURNS IT(SS)A NO05/PATNA/2009 & CO NO.07/PATNA/09 AMAR KR. AGARWAL, PATNA 8 FILED U/S 139/142(1)/148 IS NOT PERMITTED IN BLOCK ASSESSMENT PROCEEDINGS AND THAT ANY ADVERSE INFERENCE, IF ANY, ON SUCH DIS CLOSED TRANSACTIONS COULD BE DRAWN ONLY IN REGULAR ASSESSMENT PROCEEDINGS AND NOT IN BLOCK ASSESSMENT PROCEEDINGS. THE ABOVE PROPOSITION OF L AW STANDS SETTLED BY VARIOUS JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE AR OF THE APPELLANT AND ALREADY DISCUSSED HEREINABOVE. IT IS FURTHER OBSER VED THAT THE ASSESSING OFFICER IN HIS REMAND REPORT HAS ALSO NOT COMMENTE D OR DISPUTED THE CONTENTION OF THE APPELLANT THAT NO DOCUMENT OR PAP ER WAS FOUND DURING THE SEARCH AT THE OFFICE AND RESIDENTIAL PREMISES OF TH E APPELLANT INDICATING INVESTMENTS MADE BY OTHERS IN THESE COMPANIES REPRE SENTS THE INCOME OF THE ASSESSEE. IT IS FURTHER OBSERVED THAT THE ASSESSIN G OFFICER IN HIS REMAND REPORT IN RESPECT OF THE AFORESAID TWO GROUNDS OF A PPEAL AFTER BASICALLY REPRODUCING WHAT HAS BEEN STATED IN THE IMPUGNED AS SESSMENT ORDER HAS STATED THAT THE ASSESSEE HAS NOW FILED PHOTOCOPY F ROM THE CONCERNED PERSONS TO ESTABLISH IDENTITY AND GENUINENESS OF TH E TRANSACTIONS AND THE SAME MAY BE ACCEPTED. IN THE FACTS AND CIRCUMSTAN CES OF THE CASE AS DISCUSSED HEREINABOVE, IT IS HELD THAT THE ASSESSIN G OFFICER WAS NOT JUSTIFIED IN HOLDING THAT THE INVESTMENTS MADE IN THE COMPANI ES AS SHARE APPLICATION MONEY ETC. BELONGS TO THE APPELLANT. THE ADDITIONS MADE ON THESE COUNTS ARE THEREFORE ORDERED TO BE DELETED. HENCE, DEPARTMENT IS IN APPEAL BEFORE THE TRIBUNAL . 18. DURING THE COURSE OF HEARING, LD. D.R. MADE HIS SUBMISSIONS REITERATING THE OBSERVATION OF ASSESSING OFFICER MA DE IN THE ASSESSMENT ORDER. HE SUBMITTED THAT THESE COMPANIES ACTED AS CONDUIT TO LAUNDER UNACCOUNTED MONEY OF THE ASSESSEE. HE SUBMITTED THAT THE ADDIT IONS MADE BY THE ASSESSING OFFICER SHOULD BE CONFIRMED. HOWEVER, LD . A.R. MADE HIS SUBMISSIONS ON THE LINES OF THE SUBMISSIONS MADE BE FORE THE AUTHORITIES BELOW. HE SUBMITTED THAT THESE AMOUNTS WERE NOT AP PEARING IN ASSESSEES BOOKS BUT WERE APPEARING IN THE BOOKS OF THE RESPEC TIVE COMPANIES. HE SUBMITTED THAT THE ORDER OF LD. CIT(A) BE CONFIRMED . 19. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE PARTIES AND ORDERS OF AUTHOR ITIES BELOW. WE OBSERVE THAT THE ASSESSING OFFICER HAS MADE THE AFORESAID A DDITIONS IN THE HAND OF THE ASSESSEE ONLY ON PRESUMPTIONS AND ASSUMPTIONS AND I S NOT BASED ON ANY COGENT MATERIAL ON RECORD THAT UNACCOUNTED MONEY OF THE ASSESSEE HAS BEEN INVESTED IN THE COMPANIES NAMELY M/S. AGRASEN COMME RCIAL SERVICE (P) LTD. AND M/S. SUMIT COAL PRODUCTS PVT. LTD. IN THE NAME OF OTHER PERSONS. NO EVIDENCE TO THIS EFFECT HAS BEEN BROUGHT ON RECORD BY THE DEPARTMENT TO IT(SS)A NO05/PATNA/2009 & CO NO.07/PATNA/09 AMAR KR. AGARWAL, PATNA 9 SUBSTANTIATE THE ABOVE ASSUMPTIONS OF THE ASSESSING OFFICER. ON THE OTHER HAND, DEPARTMENT HAS NOT DISPUTED CONTENTION OF LD. A.R. THAT THE SAID AMOUNT WAS REFLECTED IN THE BOOKS OF ACCOUNTS OF TH E RESPECTIVE COMPANIES AND THE RETURNS WERE ALSO FILED PRIOR TO THE SEARCH . HOWEVER, ASSESSING OFFICER MADE PROTECTIVE ASSESSMENTS IN RESPECT OF T HE SAID AMOUNTS OF THE RESPECTIVE COMPANIES BUT THE FIRST APPELLATE AUTHOR ITY ANNULLED THAT ASSESSMENTS AND NO FURTHER APPEALS WERE FILED BY TH E DEPARTMENT AGAINST THAT ORDER OF LD. CIT(A). WE OBSERVE THAT BOTH THE COMPANIES NAMELY M/S. AGRASEN COMMERCIAL SERVICE (P) LTD. AND M/S. SUMIT COAL PRODUCTS PVT. LTD. ARE REGULARLY ASSESSED TO INCOME-TAX AND THE TRANSA CTIONS HAVE BEEN CLEARLY SHOWN AND DISCLOSED IN THEIR ASSESSMENT RECORDS WEL L BEFORE THE DATE OF SEARCH OPERATION AT THE PREMISES OF THE ASSESSEE. THE SAID FINDING HAS BEEN GIVEN BY LD. CIT(A) CATEGORICALLY IN THE IMPUGNED O RDER AND THE DEPARTMENT HAS NOT BEEN ABLE TO CONTROVERT THE SAME. IN THE A BSENCE OF ANY MATERIAL ON RECORD TO THE CONTRARY, WE DO NOT FIND ANY REASON T O INTERFERE WITH THE ORDER OF LD. CIT(A). HENCE, WE UPHOLD HIS ORDER IN DELET ING THE SAID ADDITIONS OF RS.80,96,464/- AND RS.1,75,46,441/- MADE BY THE ASS ESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT OF SHARE APPLICAT ION MONEY IN M/S. AGRASEN COMMERCIAL SERVICE (P) LTD. AND M/S. SUMIT COAL PRODUCTS PVT. LTD. RESPECTIVELY. 20. IN VIEW OF THE ABOVE, THE GROUND OF APPEAL TAKE N BY THE DEPARTMENT IS REJECTED. 21. NOW WE TAKEN UP THE GROUND OF CROSS OBJECTION A S TO WHETHER CHARGING OF INTEREST U/S 158BFA(1) OF THE ACT IS JUSTIFIED O R NOT. 22. LD. A.R. SUBMITTED THAT THE ASSESSEE FILED THE RETURN OF THE BLOCK PERIOD WITHIN 45 DAYS AND HENCE LEVY OF INTEREST IS NOT JUSTIFIED. HOWEVER, LD. CIT(A) HAS NOT CONSIDERED THE ABOVE GROUND TAKE N BY THE ASSESSEE BEFORE HIM AND HAS MERELY STATED THAT CHARGING OF I NTEREST IS CONSEQUENTIAL IN NATURE. IT(SS)A NO05/PATNA/2009 & CO NO.07/PATNA/09 AMAR KR. AGARWAL, PATNA 10 23. AT THE TIME OF HEARING, LD. A.R. REFERRED THE D ECISION OF ITAT PATNA BENCH IN THE CASE OF ACIT VS. SHRI O.P. DALMIA IN I T(SS)A NO.69/PATNA/2004 DATED 4.1.2008 AND SUBMITTED THAT THE TRIBUNAL HAS HELD THAT IF THE ASSESSEE HAS FILED THE RETURN WITHIN 45 DAYS AND THERE WAS N O DELAY ON THE PART OF THE ASSESSEE, LEVY OF INTEREST U/S 158BFA(1) IS NOT JUS TIFIED AS THE CHARGING OF INTEREST IS PENAL IN NATURE AND THE LEVY OF SAME IS NOT AUTOMATIC UNLESS THERE IS ANY DEFAULT ON THE PART OF THE ASSESSEE OR THERE IS LACK OF BONA FIDE. DURING THE COURSE OF HEARING, LD. D.R. COULD NOT CO NTROVERT ABOVE CONTENTION OF THE LD. A.R. 24. CONSIDERING THE FACTS OF THE CASE AND IN THE AB SENCE OF ANY REASONS BEING GIVEN BY THE AUTHORITIES BELOW FOR LEVY OF IN TEREST U/S 158 BFA(1), WE ALLOW THE GROUND OF CROSS OBJECTION TAKEN BY THE AS SESSEE. 25. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED AND WHEREAS CROSS OBJECTION OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON 24 TH FEBRUARY, 2012 SD/ - SD/ - ( SHAMIM YAH YA ) ( B.R. MITTAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS PATNA, DATED 24 TH FEBRUARY, 2012 COPY TO 1 ACIT, CENTRAL CIRCLE - 1, PATNA 2 SHRI AMAR AGARWAL, 502, SURYA VIHAR APARTMENT, EXHI BITION ROAD, PATNA 3 CIT, PATNA 4 THE CIT (A) , PATNA 5 THE DR, ITAT, PATNA 6 GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PATNA