Shri. Jitendra Virwani, Bangalore V. Deputy Commissioner of Income Tax, Central Circle - 1(3), Bangalore

ITA 1212/BANG/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9438 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 01-04-2021
• Assessment Year: 2010-2011
• Appeal Filed On: 28-05-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K R NARAYANA
• Assessee Lawyers: S RAMASUBRAMANIAM
• Keywords: Reopening of assessment; Unexplained expenditure; Business income; Residential status; Search and seizure; Document seized; Source of fund; Deemed to accrue or arise in india; Advance ruling; Tangible material; Deemed dividend; Validity of assessment; Block assessment; Onus to prove; Revised return; Documents seized; Reassessment proceedings; Set aside; CHAPTER XIVB
• Section: 69C; 143(3); 142(1); 153A; 115JB; 143(1); 201; 274; 143(2); 207; 64; 43; 48; 73; 72; 13; 153; 22; 32; 147; 148; 263; 132; 10

Judgement Text

ITA NOS.1211 TO 1217/BANG/2019 PAGE 1 OF 73 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K., JUDICIAL MEMBER ITA NO S . 1211 TO 1217/BANG/2019 ASSESSMENT YEAR S : 2009 - 10 TO 2015 - 16 SHRI JITENDRA VIRWANI, NO.341, EMBASSY WOODS, 6/A, CUNNINGHAM ROAD, VASANTHNAGAR, BANGALORE 560 001. PAN: AAVPV 0738P VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(3), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : SHRI S. RAMASUBRAMANIAM, CA RESPONDENT BY : SHRI K.R. NARAYANA, ADDL.CIT(DR) (ITAT), BENGALURU. DATE OF HEARING : 16.07. 202 1 DATE OF PRONOUNCEMENT : 30 .0 7 .202 1 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE ARE GROUP OF 7 APPEALS BY THE ASSESSEE AGAI NST THE COMMON ORDERS OF THE CIT(APPEALS) ALL DATED 25.03.2019 FOR THE AYS 2009-10 TO 2012-13 AND 2013-14 & 2014-15 AS WELL AS SEPARATE O RDER FOR AY 2015-16 DATED 25.3.2019. THESE APPEALS WERE HEARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND B REVITY. 2. THE FACTS OF THESE CASES ARE MOSTLY SIMILAR AS SUCH WE CONSIDER THE FACTS AS NARRATED IN THE ITR NO. 1211/2019 FOR THE AY 2009-10. 3. THE FACTS OF THE CASE IN ITA NO.1211/BANG/ 2019 ARE THAT THE ASSESSEE FILED RETURN OF INCOME CONSISTING OF SALAR Y RECEIPTS, INCOME FROM ITA NOS.1211 TO 1217/BANG/2019 PAGE 2 OF 73 PROPERTY ETC. DISCLOSING TOTAL INCOME OF RS.34,59,3 8,260 ON 30.9.2009. ACCORDING TO THE ASSESSEE, NO NOTICE FOR SCRUTINY A SSESSMENT WAS RECEIVED WITHIN THE TIME PERMITTED UNDER PROVISO TO SECTION 143(2) OF THE ACT AND THEREFORE THE RETURN FILED ON 30.9.2009 HAD ATTAINE D FINALITY ON 7.1.2015. 4. THERE WAS A SEARCH CONDUCTED U/S 132 OF THE ACT IN THE ASSESSEES FARM HOUSE AT TARUNHUNSE VILLAGE, JALA HOBLI, NEXT TO STONE HILL INTERNATIONAL SCHOOL, BANGALORE 562-157 ON 07-01-20 15. CONSEQUENT TO SEARCH A NOTICE U/S 153A WAS ISSUED ON 17-11-2015 T O THE ASSESSEE REQUIRING HIM TO FILE THE RETURN OF INCOME WITHIN 3 0 DAYS FROM THE DATE OF RECEIPT OF NOTICE. IN RESPONSE TO THE NOTICE ISSUED U/S 153A, THE ASSESSEE FILED RETURN ON 28.12.2015 DISCLOSING SAME INCOME A S ORIGINALLY RETURNED. NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH. ACCORDING TO LEARNED AR THERE IS NO REQUIREMENT TO INTERFERE WIT H THE ORIGINAL ASSESSMENT WHICH HAD ATTAINED FINALITY. NOTICE U/S. 142(1) AND 143(2) WAS ISSUED FROM TIME TO TIME CALLING FOR CERTAIN PARTICULARS. DUR ING THE ASSESSMENT PROCEEDINGS, ASSESSEE WAS ASKED TO PRODUCE EVIDENCE FOR THE STATUS MENTIONED AS NON-RESIDENT IN THE RETURN OF INCOME VIDE NOTICE DATED 20.12.2016. THE ASSESSEE MADE SEVERAL SUBMISSIONS ALONG WITH COPIES OF PASSPORT EVIDENCING THE DATES OF ARRIVAL AND DEPART URE TO AND FROM INDIA AND SUBMITTED AS FOLLOWS:- (A) HIS STAY IN INDIA DURING THE RELEVANT YEAR WAS ONLY 174 DAYS. (B) HE LEFT THE COUNTRY FOR THE PURPOSE OF EMPLOYMENT I N FY RELEVANT TO AY 2009-10 AND WAS EMPLOYED IN EMBASSY GROUP INTERNATIONAL, SINGAPORE. (C) AS PER EXPLANATION 1(A) TO SECTION 6(1)(C), HE WAS PERMITTED TO STAY IN INDIA FOR 182 DAYS INSPITE OF BEING A NO N-RESIDENT. 5. THE AO WAS HOWEVER OF THE VIEW THAT THE ASSESSEE DID NOT DISCHARGE THE ONUS OF PROVING HIS NON-RESIDENT STATUS AND THE REFORE HE WAS A RESIDENT AS PER SECTION 6(1)(A) OF THE ACT. SINCE SOME OF THE PAGES OF ITA NOS.1211 TO 1217/BANG/2019 PAGE 3 OF 73 PASSPORT WERE NOT CLEAR, THE ASSESSEE WAS REQUIRED TO FURNISH RELEVANT PAGES OF THE SAME, WHICH WERE ACCORDINGLY FILED. THE ASS ESSEE SUBMITTED THAT HE BEING OUTSIDE INDIA COMES ON A VISIT TO INDIA AND W OULD BE PERMITTED TO STAY IN INDIA FOR 182 DAYS AS PER EXPLANATION (B) TO SEC TION 6(1)(C). EVEN AS PER SECTION 6(1)(C) HE IS A NON-RESIDENT. 6. ACCORDING TO THE AO, THE ASSESSEE WAS DRAWING MO NTHLY SALARY FROM GOLFLINK EMBASSY MANAGEMENT SERVICES PVT. LTD. AND DYNASTY DEVELOPERS (P) LTD. THEREFORE, HE HAD BEEN IN INDIA AND DID N OT LEAVE INDIA, FOR THE PURPOSES OF EMPLOYMENT. THEREFORE THE PERIOD OF 18 2 DAYS MENTIONED IN CLAUSE (A) OF EXPLANATION TO SECTION 6(1)(C) WOULD NOT APPLY AND REJECTED THE ASSESSEES SUBMISSION THAT THE ACT PERMITTED DUAL E MPLOYMENT I.E., EMPLOYMENT IN INDIA AS WELL AS OUTSIDE INDIA. THE AO RELIED ON K. SAMBASIVA RAO V. ITO [2014] 62 SOT 167 (HYD) AND SECOND ITO V. K.Y. PATEL [1990] 33 ITD 714. AS PER THE AO, THE ASSES SEE WAS AN ULTIMATE BENEFICIARY OWNER OF ROMULUS ASSETS LTD. [RAL], A C OMPANY INCORPORATED IN BAHAMAS AND OPERATING FROM SINGAPORE BASED ON INFOR MATION RECEIVED FROM FOREIGN TAX AUTHORITIES. THE ASSESSEE WAS NOT AWAR E OF THIS INFORMATION UNTIL PRODUCED DURING HIS SUMMONS PROCEEDINGS AND SINCE THE SAME WERE FURNISHED ON REQUEST UPON CONCLUDING OF ASSESSMENT PROCEEDINGS, THE ASSESSEE DID NOT HAVE ANY OPPORTUNITY TO DISPROVE T HE SAME. TO HOLD THAT ASSESSEE WAS THE BENEFICIAL OWNER OF RAL, THE AO RE LIED ON THE FOLLOWING INFORMATION:- (I) MINUTES OF THE MEETING OF ROMULUS ASSETS LIMITED DA TED 17.07.2008 GRANTING LIMITED POWER OF ATTORNEY TO TH E APPELLANT AND TO AN EMPLOYEE DIRECTOR OF EMBASSY GR OUP INTERNATIONAL TO OPERATE THE DUETSCHE BANK ACCOUNT IN SINGAPORE. (II) MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS OF ROMULUS ASSETS LIMITED DATED 10.2.2009, RESOLVING TO APPLY FOR LIFE INSURANCE POLICY FOR US $ 1,00,00,00 0 ON ITA NOS.1211 TO 1217/BANG/2019 PAGE 4 OF 73 THE LIFE OF THE APPELLANT AND THE PREMIUM WAS US $ 20,85,000. (III) MINUTES OF THE MEETING OF THE DIRECTORS OF ROMULUS ASSETS LIMITED DATED 18.2.2009, DEMANDING US $ 1,113,736.3 6 FROM DYNASTY BUSINESS PARKS SDN. BHD., BEING THE AM OUNT ADVANCED TOGETHER WITH INTEREST. (IV) IN REPLY, THE APPELLANT SUBMITTED THAT HE WAS NOT T HE BENEFICIAL OWNER OF ROMULUS ASSETS LIMITED AND THAT , THEY HAD BEEN CONFIRMED, BY A DOCUMENT SIGNED BY THE COMPANY MANAGING ROMULUS ASSETS LIMITED, TO THE AO DIRECTLY. AO DID NOT RECEIVE THIS DOCUMENT. HE REJE CTED THE ABOVE SUBMISSION OF THE APPELLANT. (V) THE APPELLANT FURTHER SUBMITTED THAT NONE OF THE A BOVE, MENTION IN PARA 13, INDICATE THAT THE APPELLANT HAD RECEIVED ANY AMOUNT FROM ROMULUS ASSETS LIMITED. (VI) HE REITERATED THAT HE WAS NOT THE BENEFICIAL OWNER AND, HE DID NOT RECEIVE ANY BENEFIT EITHER DIRECTLY OR INDI RECTLY FROM ROMULUS ASSETS LIMITED. (VII) MINUTES OF THE MEETING OF ROMULUS ASSETS LIMITED DA TED 31.8.2009, AUTHORIZING TO PAY THE SECOND INSTALME NT OF THE INSURANCE PREMIUM TAKEN ON THE LIFE OF THE APPELLAN T. (VIII) MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS OF ROMULUS ASSETS LIMITED DATED 19.1.2010, AUTHORIZING TO PAY US $ 10 LAKHS TO MRS. BARKHA MAHTANI. OUT OF TH IS, SHE ADVANCED RS.50 LAKHS TO EMBASSY PROPERTY DEVELOPMENT PRIVATE LIMITED AND RS.4 CRORES TO PET PROPERTIES AND CONSTRUCTIONS PRIVATE LIMITED. ACCO RDING TO THE AO, THIS ESTABLISHED THE LINK BETWEEN ROMULU S ASSETS LIMITED AND EMBASSY GROUP. (IX) IT CAME TO THE NOTICE OF THE APPELLANT THAT MRS. MA HTANI WAS ISSUED SUMMONS BY THE AO TO TESTIFY PERSONALLY ON OATH ABOUT THE RELATIONSHIP BETWEEN ROMULUS ASSETS LIMITED AND EMBASSY GROUP. THE APPELLANT OFFICIALLY PROCURED A COPY OF THE STATEMENT MADE ON OATH BY MR S. MAHTANI IN THIS REGARD. IT IS OBSERVED FROM THE STA TEMENT THAT THERE IS NO SUGGESTION MADE BY MRS. MAHTANI AB OUT RELATIONSHIP BETWEEN ROMULUS ASSETS LIMITED AND THE EMBASSY GROUP. ITA NOS.1211 TO 1217/BANG/2019 PAGE 5 OF 73 (X) MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS DA TED 19.1.2010 AUTHORISING THE DIRECTORS OF ROMULUS ASSE TS LIMITED TO PLEDGE THE ASSETS OF ROMULUS ASSETS LIMI TED IN FAVOUR OF EFG BANK, AS SECURITY FOR THE LOAN EXTEND ED BY THE BANK TO THE APPELLANT. 7. BASED ON THE INFORMATION AVAILABLE, THE AO HAD LISTED OUT SEVERAL PAYMENTS MADE BY ROMULUS ASSETS LIMITED TO VARIOUS PARTIES, AGGREGATING TO RS.30,87,99,113/-. ACCORDING TO THE AO, THESE WE RE THE BENEFITS DERIVED BY THE APPELLANT FROM ROMULUS ASSETS LIMITED. THE ASSESSEE SUBMITTED THAT THE PAYMENTS LISTED OUT NOWHERE INDICATED THAT THEY WERE MADE ON HIS BEHALF. FURTHER, THE OBSERVATIONS OF THE AO WERE B ASED ON SURMISES AND CONJECTURES WITHOUT ANY DOCUMENTARY EVIDENCE WHATSO EVER. THE AO, HOWEVER, REJECTED ALL THE CONTENTIONS OF THE ASSESS EE AND ASSESSED HIS INCOME U/S. 28(IV) OF THE ACT. THE ASSESSEE CHALLE NGED THE ADDITION MADE BY THE AO WHICH WAS SUSTAINED BY THE CIT(APPEALS). SIMILAR ADDITION IS MADE ON ALL OTHER ASSESSMENT YEARS ON ACCOUNT OF UN EXPLAINED INVESTMENT IN M/S ROMULUS ASSETS LIMITED. FURTHER IN AY 2014-1 5 THE ASSESSING OFFICER MADE ADDITION TOWARDS HOUSEWARMING EXPENSES EXPENDE D BY M/S EMBASSY KNOWLEDGE INFRASTRUCTURE PROJECTS PRIVATE LIMITED A T RS.6,93,63,441 U/S 28(IV) OF THE IT ACT AS THE ASSESSE DERIVED BENEFIT FROM THIS EXPENDITURE. FURTHER THERE IS ADDITION IN AY 2015-16 AT RS.98,61 ,071 TOWARDS FARM HOUSE MAINTENANCE EXPENSE INCURRED BY M/S EMBASSY PROPERT Y DEVELOPMENT LIMITED AND M/S EMBASSY SERVICES PRIVATE LIMITED AS ASSESSE DERIVED BENEFIT AS A DIRECTOR OF THESE COMPANIES. FOR THE A Y 2015-16, THE ASSESSING OFFICER MADE ADDITION ON SAME COUNT AT RS.2,28,09,2 81 U/S 28(IV) OF THE IT ACT. 8. IN THE APPEALS IN ITA NOS.1215 TO 1216/BANG/2019 , THERE IS NO DISPUTE NEITHER RELATING TO RESIDENT STATUS OF ASSE SSEE NOR FRAMING OF ASSESSMENT U/S. 153A OF THE ACT. ITA NOS.1211 TO 1217/BANG/2019 PAGE 6 OF 73 9. FOR THE AYS 2009-10 TO 2012-13 THE FIRST COMMON GROUND IN THESE APPEALS WHICH REQUIRE ADJUDICATION IS WITH REGARD T O FRAMING OF ASSESSMENT U/S. 153A OF THE INCOME-TAX ACT, 1961. 10. IN APPEALS NO.1215 TO ITA NO.1217/BANG/2019 FOR AY 2013-14 TO AY 2015-16, THE ASSESSEE CHALLENGES ONLY THE ADDITION MADE IN THE ASSESSMENTS FRAMED U/S. 143(3) OF THE ACT BY THE A O AND SUSTAINED BY THE CIT(APPEALS). 11. NOW COMING TO THE COMMON GROUND IN ITA NOS.1211 TO 1214/BANG/2019 IN AYS 2009-10 TO 2012-13 WITH REGAR D TO VALIDITY OF ASSESSMENT FRAMED U/S. 153A OF THE ACT, THE LD. AR SUBMITTED AS FOLLOWS. 12. THE SEARCH U/S 132 OF THE ACT WAS CONDUCTED ON 07.01.2015. ALL THE RETURNS FOR THE ABOVE ASSESSMENT YEARS WERE FILED B EFORE THE DATE OF THE SEARCH. IN FACT, UPTO AY 2013-14, EVEN THE TIME LIM IT FOR ISSUING THE NOTICE U/S 143(2) OF THE ACT HAD EXPIRED. TIME LIMIT FOR I SSUING NOTICE U/S 143(2) OF THE ACT HAD NOT EXPIRED FOR AY 20I4-15 ON THE DATE OF SEARCH. 13. IT IS WELL SETTLED THAT THE SCOPE OF ASSESSMENT U/S 153A OF THE ACT DEPENDS ON THE FACT WHETHER THE ASSESSMENT IS PENDI NG AND THEREFORE ABATES OR ASSESSMENT IS NOT PENDING AND THEREFORE, IT DOES NOT ABATE. IN THIS CONNECTION, IT WAS SUBMITTED THAT FOR THE AY 2009-1 0 TO 2013-14 (BOTH INCLUSIVE) THE ONLY ADDITION MADE IS IN RESPECT OF CERTAIN PAYMENTS MADE BY RAL U/S 28(IV) OF THE ACT AND S.69C OF THE ACT. THE VARIOUS MATERIALS RELIED ON BY THE AO TO MAKE THE ABOVE ADDITION WERE OBTAIN ED BY HIM FROM FOREIGN TAX DIVISION OF THE MINISTRY OF FINANCE BY MAKING A REQUEST AS PER THE PRO- FORMA OF 'REQUEST FOR INFORMATION UNDER THE PROVIS ION OF TAX TREATIES' PLACED AT PAGE 538 OF PB. BASED ON THE INFORMATION RECEIVED FROM FOREIGN TAX AUTHORITIES IT IS OBSERVED THAT THE ASSESSEE, S HRI JITENDRA MOHANDAS VIRWANI IS THE ULTIMATE BENEFICIAL OWNER O F RAL, A COMPANY ITA NOS.1211 TO 1217/BANG/2019 PAGE 7 OF 73 INCORPORATED IN THE BAHAMAS AND OPERATING FROM SING APORE. THEREFORE, IT IS CLEAR THAT THE ASSESSMENT HAS NOT BEEN MADE ON ANY INCRIMINATING MATERIALS WHICH WERE SEIZED DURING THE SEARCH. 14. FOR THE AYS 2014-15 AND 2015-16, THE AO MADE A DDITION IN RESPECT OF HOUSEWARMING EXPENSES AND THE GUEST HOUSE MAINTE NANCE EXPENSES U/S 28(IV) OF THE ACT. IT WAS SUBMITTED THAT THE AO HA S SIMPLY REFERRED TO THE DOCUMENTS SEIZED AND INVENTORISED AS A/JV01 (PAGE 7 8). IT WAS SUBMITTED THAT THIS IS NOT A DOCUMENT SEIZED AS SUCH, IT IS A PRINTOUT TAKEN FROM THE COMPUTER. THE PANCHANAMA WHICH IS PLACED AT PAGE 1 OF THE PAPER BOOK STATES VERY CLEARLY THAT NO DOCUMENTS WERE SEIZED. A PERUSAL OF THE DOCUMENT MARKED A/JV01 WOULD SHOW THAT THERE IS NOTHING INCRIMINATING THEREIN, IT DOES NOT SHOW ANY UNDISCLOSED INCOME OF THE APPELLANT. IT IS AN UN-SIGNED MERE DUMB DOCUMENT. HENCE, THIS DOCUMENT CANNOT BE CONSIDERED AS INCRIMINATING IN NATURE. I N RESPECT OF FARMHOUSE MAINTENANCE CHARGES, THE ASSESSMENT ORDER DOES NOT REFER TO ANY SEIZED MATERIAL. THE ENTIRE ADDITION IS BASED ON THE INTERPRETATION OF T HE LAW AND NOT ON THE BASIS OF ANY INCRIMINATING MATERIAL WHICH SHOWS UNDISCLOS ED INCOME. 15. THEREFORE, IT IS CLEAR THAT NEITHER THE ADDITIO N IN RESPECT OF RAL NOR THE ADDITIONS IN RESPECT OF THE HOUSEWARMING EXPENSES A ND GUEST HOUSE MAINTENANCE EXPENSES HAVE BEEN MADE ON THE BASIS OF ANY SEIZED INCRIMINATING MATERIALS. IN THIS CONNECTION IT WAS SUBMITTED THAT IN RESPECT OF NON-PENDING NON-ABATED ASSESSMENTS, ANY ADDITION CA N BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL IN AN ASSESSMEN T U/S 153A OF THE ACT RELYING ON THE FOLLOWING DECISIONS:- CIT VS IBC KNOWLEDGE PARK P. LTD 385 ITR 346 (KAR) ACIT VS CORNERSTONE PROPERTIES PVT LTD (ITA NO. 171 4 TO L 717/BANG/2013) CIT VS KABUL CHAWLA 380 ITR 573( DELHI) ITA NOS.1211 TO 1217/BANG/2019 PAGE 8 OF 73 16. THE LD. AR FURTHER SUBMITTED THAT THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN CANARA HOUSING DEVELOPMENT COMPANY VS DCIT 274 CTR 122 (KARN) RELIED ON BY THE CIT(A) IS NOT DIRECTLY ON THE ISSUE. THE ISSUE THERE WAS WHETHER THE COMMISSIONER CAN REVISE AN ORDER OF ASSESSMENT PASSED U/S 143(3) OF THE ACT AFTER A SEA RCH ASSESSMENT HAS BEEN MADE U/S 153A OF THE ACT FOR THE VERY SAME ASS ESSMENT YEAR. THE HON'BLE HIGH COURT HELD THAT THE ORIGINAL ORDER U/S 143(3) CANNOT BE REVISED U/S 263 OF THE ACT. THE HON'BLE HIGH COURT OBSERVE D THAT ONCE THE ASSESSMENT IS REOPENED, THE ASSESSING AUTHORITY CAN TAKE NOTE OF THE INCOME DISCLOSED IN THE EARLIER RETURN, ANY DISCLOS ED INCOME FOUND DURING THE SEARCH OR AND ALSO ANY OTHER INCOME WHICH IS NOT DI SCLOSED IN THE EARLIER RETURN OR WHICH IS NOT UNEARTH DURING THE SEARCH. T HE ABOVE OBSERVATIONS CANNOT BE APPLIED BEREFT OF CONTEXT. THE HON'BLE HI GH COURT WAS NOT DEALING WITH THE ISSUE WHETHER WHILE FRAMING AN ASSESSMENT U/S 153A OF THE ACT AN ADDITION NOT SUPPORTED BY ANY INCRIMINATING MATERIA L CAN BE MADE IN THE CASE OF A NON-PENDING AND NON-ABATING ASSESSMENT. THE HO N'BLE BOMBAY HIGH COURT IN CIT V CONTINENTAL WAREHOUSING CORPORATION LTD 374 I TR 645 AT PAGES 667 TO 670 DISCUSSES THE DECISION OF THE CANA RA HOUSING. THE HON'BLE BOMBAY HIGH COURT HELD, WE DO NOT FIND ANYTHING IN THESE OBSERVATIONS AND REPRODUCE ABOVE WHICH WOULD ENABLE US TO CONCLUDE THAT THE DIVISION BENCH JUDGMENT OF THIS COURT IN THE CA SE OF MURLI AGRO REQUIRES RECONSIDERATION OR DOES NOT LAY DOWN THE CORRECT PR INCIPLE OF LAW . IT IS ALSO SUBMITTED THAT OBSERVATIONS IN THE PARAGRAPH 10 OF CANARA HOUSING ARE NOT RATIO DECIDENDI AND THEREFORE, NOT BINDING. FOR THI S PURPOSE, RELIANCE WAS PLACED ON THE DECISION OF THE HON'BLE SUPREME COURT IN MAVILAYI SERVICE CO- OPERATIVE BANK LTD VS CIT 431 ITR I (SC). 17. IN MAVILAYI SERVICE CO-OPERATIVE BANK LTD (SUPRA) IT WAS HELD THAT HE RATIO DECIDENDI IN CITIZEN CO-OPERATIVE SOCIETY LTD . WOULD DEPEND UPON THE CONCLUSION ARRIVED AT ON THE FACTS IN THAT CASE, TH E CASE BEING AN AUTHORITY ITA NOS.1211 TO 1217/BANG/2019 PAGE 9 OF 73 FOR WHAT IT ACTUALLY DECIDES IN LAW AND NOT FOR WHA T MAY SEEM TO LOGICALLY FOLLOW FROM IT. THUS, THE STATEMENT OF THE PRINCIPL E OF LAW APPLICABLE TO THE LEGAL PROBLEMS DISCLOSED BY THE FACTS ALONE IS THE BINDING RATIO OF THE CASE, THE JUDGEMENT BASED ON THE COMBINED EFFECT OF THE STATEMENTS OF THE PRINCIPLE OF LAW APPLICABLE TO THE MATERIAL FACTS O F THE CASE CANNOT BE DESCRIBED AS THE RATION DECIDENDI OF THE JUDGEMENT. NOR CAN IT BE SAID THAT THE A.O CAN GO BEHIND THE MATERIAL FACTS AND ARRIVE AT A CONCLUSION. 18. IT IS FURTHER SUBMITTED THAT THE DECISION OF TH E HON'BLE KARNATAKA HIGH COURT IN CANARA HOUSING IS NO LONGER GOOD LAW IN VI EW OF THE DECISION OF THE HON'BLE SUPREME COURT IN PCIT VS MEETA GUTGUTIA(SLP C.NO. 16 16287 OF 2018) . [405 ITR STATUTE 28]. THE HON'BLE SUPREME COURT D ISMISSED SLP FILED AGAINST THE DELHI HIGH COURT JUDGMENT IN PCIT VS MEETA GUTGUTIA 395 ITR 526 . THE HON'BLE DELHI HIGH COURT HELD THAT POWER U/S 153A OF INCOME TAX ACT 1961 ENABLES THE ASSESSING AUTHORITY TO REOPEN THE ASSESSMENT FOR SIX YEAR PRIOR TO THE YEAR OF SEARCH U/S 132, IF DURING THE COURSE OF SEARCH U/S 132 INCRIMINATING MATERIAL JUSTIFYING THE REOPENING OF ASSESSMENT FOR EACH OF SIX PREVIOUS YEARS IS FOUND. IT WAS HELD THAT ASSES SMENT U/S 153A CAN BE MADE FOR A YEAR ONLY IF SOME INCRIMINATING MATERIAL FOR THAT PARTICULAR ASSESSMENT YEAR IS FOUND. THE DELHI HIGH COURT WAS DEALING WITH THE CASE OF THE ASSESSMENT U/S 153A IN THE CASE OF A SEARCHE D PERSON. IT WAS HELD THEREIN THAT FOR THE ASSESSMENT YEARS 2001 TO 2003- 04 NO ADDITIONS CAN BE MADE IN AN ASSESSMENT MADE U/S 153A IF THERE ARE NO INCRIMINATING MATERIAL. THIS PROPOSITION HAS BEEN ACCEPTED BY THE SUPREME C OURT BY DISMISSING THE SLP. 19. THE AR ALSO RELIED ON THE CO-ORDINATE BENCH DEC ISION OF THE TRIBUNAL IN YUNUS ZIA VS DCIT, CENTRAL CIRCLE 1(1) (ITA NO. 126 TO 130/BANG/2013) WHEREIN IT WAS HELD THAT CANARA HOUS ING WOULD APPLY ONLY IF SOME INCRIMINATING MATERIALS WERE FOUND DURING T HE SEARCH. HE DREW OUR ITA NOS.1211 TO 1217/BANG/2019 PAGE 10 OF 73 ATTENTION TO THE SPECIFIC OBSERVATIONS IN PARAGRAPH 18 OF THE TRIBUNALS ORDER ARE AS FOLLOWS:- IN OUR CONSIDERED OPINION, IT MAY BE PLAUSIBLE VIEW TH AT IF SUCH INCRIMINATING MATERIAL LEADING TO UNDISCLOSED INCOM E IS SEIZED FOR AT LEAST ONE YEAR OUT OF RELEVANT SIX YEARS, SUCH A DDITION MAY BE MADE TO ANY CASE WHERE THERE IS NO SUCH INCRIMINATI NG MATERIAL LEADING TO UNDISCLOSED INCOME IS SEIZED EVEN FOR ON E YEAR OUT OF RELEVANT SIX YEARS, NO SUCH ADDITION MUST BE MADE A ND THE ADDITIONS MUST BE CONFINED TO THE RETURN INCOME AND ADDITIONS MADE BY THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT PROCEE DINGS. 20. IT WAS SUBMITTED THAT THEREFORE THE ADDITIONS MADE FOR ALL THE YEARS I.E., FROM 2009- 10 TO 204-15, ARE NOT BASED ON ANY INCRIMINATING MATERIAL. THE ADDITIONS IN RESPECT OF RAL IS MADE ON THE BASI S OF DOCUMENTS RECEIVED FROM FOREIGN TAX DIVISION AND THE ADDITION IN RESPE CT OF HOUSEWARMING EXPENDITURE IS BASED ON AN UN-SIGNED DUMB DOCUMENT WHICH IS A COMPUTER PRINT-OUT NOT SIGNED BY ANYBODY. THE AO SHOULD BRI NG ON RECORD CORROBORATIVE EVIDENCE TO PROVE THE SAME. IT IS CLE AR FROM THE ASSESSMENT ORDER THAT THE ADDITION HAS BEEN MADE ON THE BASIS OF THE INFORMATION OBTAINED FROM THE FINANCIAL STATEMENTS OF M/S. EMBA SSY KNOWLEDGE INFRASTRUCTURE PVT LTD. THE AMOUNT ADDED AS INCOME FOR THE AY 2014-15 HAS NO RELEVANCE WHATSOEVER TO THE ALLEGED SEIZED MATER IAL WHICH IS AVAILABLE IN PAGE NO. 1146 OF THE PAPER BOOK. THEREFORE, THE S EIZED MATERIAL AT PAGE 1146 IS NOT AN INCRIMINATING MATERIAL. AS FAR AS GU ESTHOUSE MAINTENANCE CHARGES ARE CONCERNED, AS STATED EARLIER, THERE IS NO REFERENCE WHATSOEVER TO THE INCRIMINATING MATERIAL. HENCE, IN THE ABSENC E OF ANY INCRIMINATING MATERIAL, NO ADDITION CAN BE MADE WHILE FRAMING AN ASSESSMENT U/S 153A IF THE ASSESSMENT FOR THE RELEVANT ASSESSMENT YEARS IS NON-PENDING AND NON- ABATING. ITA NOS.1211 TO 1217/BANG/2019 PAGE 11 OF 73 21. IT WAS SUBMITTED THAT FOR THE AY 2010-11, THE ASSESSMENT WAS COMPLETED ON 27.12.2012 WHICH IS BEFORE THE DATE OF SEARCH. THEREFORE, THE ASSESSMENT FOR THE AY 2010-11 IS NON-PENDING AND NO N-ABATING ASSESSMENT. FOR THE AYS 2009-10, 2011-12, 2012-13 A ND 2013-14, THE TIME LIMIT FOR ISSUING THE NOTICE U/S 143(2) EXPIRED ON 30.09.2010, 30.09.2012, 30.09.2013 AND 30.09.2014 RESPECTIVELY. HENCE, TH E TIME LIMIT FOR ISSUING NOTICE U/S 143(2) HAS EXPIRED BEFORE THE DATE OF S EARCH. (THE DATE OF SEARCH BEING 7.1.2015). THE ASSESSMENTS FOR THE ABOVE YEA RS ARE ALSO NON-PENDING AND NON-ABATING. RELIANCE WAS PLACED ON THE FOLLO WING DECISIONS WHEREIN IT WAS HELD THAT IF THE TIME LIMIT FOR ISSUING NOTI CE HAD EXPIRED ON THE DATE OF SEARCH, ASSESSMENTS ARE NOT TO BE TREATED AS PENDIN G ASSESSMENT:- CHINTELS INDIA LTD VS DCIT 397 ITR 416 (DEL) DCIT VS SARVANA STORES 61 ITR(TRIB) 20 22. IN THIS CONNECTION, IT WAS FURTHER SUBMITTED TH AT THAT THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN CANARA HOUSING DEVELOPMENT COMPANY VS DCIT 274 CTR 122 AS RELIED ON BY THE CIT(A) IS NOT DIRECTLY ON THE ISSUE. THE ISSUE THERE WAS WHETHER THE COMMI SSIONER CAN REVISE AN ORDER OF ASSESSMENT PASSED U/S 143(3) OF THE ACT AF TER A SEARCH ASSESSMENT HAS BEEN MADE U/S 153A OF THE ACT FOR TH E VERY SAME ASSESSMENT YEAR. THE HON'BLE HIGH COURT HELD THAT T HE ORIGINAL ORDER U/S 143(3) CANNOT BE REVISED U/S 263 OF THE ACT. IN PA RAGRAPH 10 OF THE ORDER THE HON'BLE HIGH COURT OBSERVED THAT ONCE THE ASSES SMENT IS REOPENED, THE ASSESSING AUTHORITY CAN TAKE NOTE OF THE INCOME DISCLOSED IN THE EARLIER RETURN, ANY DISCLOSED INCOME FOUND DURING THE SEARC H OR AND ALSO ANY OTHER INCOME WHICH IS NOT DISCLOSED IN THE EARLIER RETURN OR WHICH IS NOT UNEARTHED DURING THE SEARCH. IT WAS SUBMITTED THAT THE ABOVE OBSERVATIONS CANNOT BE APPLIED BEREFT OF CONTEXT. THE HON'BLE HIGH COURT W AS NOT DEALING WITH THE ITA NOS.1211 TO 1217/BANG/2019 PAGE 12 OF 73 ISSUE WHETHER WHILE FRAMING AN ASSESSMENT U/S 153A OF THE ACT, AN ADDITION NOT SUPPORTED BY ANY INCRIMINATING MATERIA L CAN BE MADE IN THE CASE OF A NON-PENDING AND NON- ABATING ASSESSMENT. IT WAS SUBMITTED THAT THE HON'BLE BOMBAY HIGH COURT IN CIT VS CONTINENTAL WAREHOUSING CORPORATION LTD 374 ITR 645 AT PAGES 667 TO 670 DISCUSSED THE DECISION OF THE CANARA HOUSING (SUPRA) . IN PARAGRAPH 37 AT PAGE 670 THE HON'BLE BOMBAY HIGH COURT HELD THAT:- WE DO NOT FIND ANYTHING IN THESE OBSERVATIONS AND REPRODUCE ABOVE WHICH WOULD ENABLE US TO CONCLUDE THAT THE DI VISION BENCH JUDGMENT OF THIS COURT IN THE CASE OF MURLI A GRO REQUIRES RECONSIDERATION OR DOES NOT LAY DOWN THE CORRECT PR INCIPLE OF LAW. 23. IT WAS SUBMITTED THAT OBSERVATIONS IN THE PARA GRAPH 10 OF CANARA HOUSING ARE NOT RATIO DECIDENDI AND THEREFORE, NOT BINDING. FOR THIS PURPOSE, HE PLACED RELIANCE ON THE DECISION OF THE HON'BLE SUPREME COURT IN MAVILAYI SERVICE CO-OPERATIVE BANK LTD VS CIT 431 I TR 1 . THEREFORE, THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN CANARA HOUSING (SUPRA) IS NO LONGER GOOD LAW IN VIEW OF THE DECISION OF TH E HON'BLE SUPREME COURT IN PCIT VS MEETA GUTGUTIA(SLP C.NO. 16 16287 OF 2018) 405 ITR STATUTE 28 . THE HON'BLE SUPREME COURT DISMISSED SLP FILED AGAINST THE DELHI HIGH COURT JUDGMENT IN PCIT VS MEETA GUTGUTIA 395 ITR 526 . THE HON'BLE DELHI HIGH COURT HELD THAT POWER U/S 153A OF INCOME TAX ACT 1961 ENABLES THE ASSESSING AUTHORITY TO REOPEN THE ASSESSMENT FOR SIX YEAR PRIOR TO THE YEAR OF SEARCH U/S 132, IF DURING THE COURSE OF SEARCH U/S 132 INCRIMINATING MATERIAL JUSTIFYING THE REOPENING OF ASSESSMENT FOR EACH OF SIX PREVIOUS YEARS IS FOUND. ASSESSMENT U/S 153A CAN BE MADE FOR A YEAR ONLY IF SOME INCRIMINATING MATERIAL FOR THAT PARTIC ULAR ASSESSMENT YEAR IS FOUND. IT MAY KINDLY BE NOTED THAT THE DELHI HIG H COURT WAS DEALING WITH THE CASE OF THE ASSESSMENT U/S 153A IN THE CASE OF A SEARCHED PERSON. IT ITA NOS.1211 TO 1217/BANG/2019 PAGE 13 OF 73 WAS HELD THEREIN THAT FOR THE AYS 2001 TO 2003-04 N O ADDITIONS CAN BE MADE IN AN ASSESSMENT MADE U/S 153A IF THERE IS NO INCRIMINATING MATERIAL. THIS PROPOSITION HAS BEEN ACCEPTED BY THE SUPREME C OURT BY DISMISSING THE SLP. 24. THE LD. AR ALSO RELIED ON THE CO-ORDINATE BENCH DECISION OF THE TRIBUNAL IN YUNUS ZIA VS DCIT, CENTRAL CIRCLE 1(1) (ITA NO. 126 TO 130/BANG/2013) WHEREIN IT WAS HELD THAT CANARA HOUSING (SUPRA) WOULD APPLY ONLY IF SOME INCRIMINATING MATERIAL IS FOUND DURING THE SEARCH. THE TRIBUNAL HELD AS FOLLOWS:- IN OUR CONSIDERED OPINION, IT MAY BE PLAUSIBLE VIEW TH AT IF SUCH INCRIMINATING MATERIAL LEADING TO UNDISCLOSED INCOM E IS SEIZED FOR AT LEAST ONE YEAR OUT OF RELEVANT SIX YEARS, SUCH A DDITION MAY BE MADE TO ANY CASE WHERE THERE IS NO SUCH INCRIMINATI NG MATERIAL LEADING TO UNDISCLOSED INCOME IS SEIZED EVEN FOR ON E YEAR OUT OF RELEVANT SIX YEARS, NO SUCH ADDITION MUST BE MADE A ND THE ADDITIONS MUST BE CONFINED TO THE RETURN INCOME AND ADDITIONS MADE BY THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT PROCEE DINGS. 25. THE LD. AR THUS SUBMITTED THAT THE ADDITIONS MA DE FOR ALL THE YEARS I.E., FROM AY 2009- 10 TO 204-15 ARE NOT BASED ON A NY INCRIMINATING MATERIAL. THE ADDITIONS IN RESPECT OF RAL IS MADE O N THE BASIS OF DOCUMENTS RECEIVED FROM FOREIGN TAX DIVISION AND TH E ADDITION IN RESPECT OF HOUSEWARMING EXPENDITURE IS BASED ON AN UN-SIGNE D DUMB DOCUMENT WHICH IS A COMPUTER PRINT-OUT NOT SIGNED BY ANYBODY AND THE AO SHOULD BRING ON RECORD CORROBORATIVE EVIDENCE TO PROVE THE SAME. IT IS CLEAR FROM THE ASSESSMENT ORDER THAT THE ADDITION HAS BEEN MAD E ON THE BASIS OF THE INFORMATION OBTAINED FROM THE FINANCIAL STATEMENTS OF M/S. EMBASSY KNOWLEDGE INFRASTRUCTURE PVT LTD. [EKIPL]. THE AMO UNT OF ADDITION AS INCOME FOR THE AY 2014-15 HAS NO RELEVANCE WHATSOEV ER TO THE ALLEGED SEIZED MATERIAL WHICH IS AVAILABLE IN PAGE NO. 1146 OF THE PAPER BOOK. THEREFORE, THE SEIZED MATERIAL AT PAGE 1146 IS NOT AN INCRIMINATING ITA NOS.1211 TO 1217/BANG/2019 PAGE 14 OF 73 MATERIAL. AS FAR AS GUESTHOUSE MAINTENANCE CHARGES ARE CONCERNED, THERE IS NO REFERENCE WHATSOEVER TO THE INCRIMINATING MAT ERIAL. HENCE, IN THE ABSENCE OF INCRIMINATING MATERIAL, NO ADDITION CAN BE MADE WHILE FRAMING AN ASSESSMENT U/S 153A, IF THE ASSESSMENT FOR THE R ELEVANT ASSESSMENT YEARS IS NON-PENDING AND NON-ABATING. 26. THE LD. AR THUS SUBMITTED THAT FOR AY 2010-11 ASSESSMENT WAS COMPLETED ON 27.12.2012 WHICH IS BEFORE THE DATE OF SEARCH AND THEREFORE THE ASSESSMENT FOR AY 2010-11 IS NON-PENDING AND NO N-ABATING ASSESSMENT. FOR AYS 2009-10 TO 2013-14, THE TIME L IMIT FOR ISSUING NOTICE US/. 143(2) EXPIRED ON 30.9.2010, 30.9.2012, 30.9.2 013 & 30.9.2014 RESPECTIVELY AND HENCE THE TIME LIMIT FOR ISSUING N OTICE U/S. 143(2) EXPIRED BEFORE THE DATE OF SEARCH I.E 7.1.2015. THE ASSESS MENTS FOR THESE ASSESSMENT YEARS ARE ALSO NON-PENDING AND NON-ABATI NG. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS:- (A) CHINTELS INDIA LTD VS DCIT 397 ITR 416 (DEL) WHEREIN IT WAS HELD AS FOLLOWS:- 21. IN THE PRESENT CASE, THE FACTS SPEAK FOR THEMSELVE S. THE ASSESSEE FILED ITS RETURN ON 21ST OCTOBER, 2008. TH E RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT ON 27TH M ARCH, 2010. IT HAS HELD BY THIS COURT IN INDU LATA RANGWALA ( SUPRA ) THAT THE MERE PROCESSING OF A RETURN UNDER SECTION 143(1) OF THE ACT AND THE SENDING OF AN INTIMATION TO THE ASSESSEE WILL N OT MAKE IT AN 'ASSESSMENT'. AT THE SAME TIME, THE CONSEQUENCES OF THE DEPARTMENT NOT ISSUING A NOTICE UNDER SECTION 143(2 ) OF THE ACT WITHIN THE TIME STIPULATED AS FAR AS THE FILING OF THE RETURN IN NORMAL COURSE IS CONCERNED WAS NOT EXAMINED EITHER IN KABUL CHAWLA ( SUPRA ) OR INDU LATA RANGWALA ( SUPRA ). AS NOTICE BY THE PUNJAB & HARYANA HIGH COURT IN VIPAN KHANNA ( SUPRA ), THE CBDT CIRCULAR MAKES IT ABUNDANTLY CLEAR THAT ONCE A N ASSESSEE DOES NOT RECEIVE A NOTICE UNDER SECTION 143(2) OF T HE ACT WITHIN THE PERIOD STIPULATED THEN SUCH AN ASSESSEE 'CAN TA KE IT THAT THE RETURN FILED BY HIM HAS BECOME FINAL AND NO SCRUTIN Y PROCEEDINGS ARE TO BE STARTED IN RESPECT OF THAT RETURN.' 22. THE INEVITABLE CONCLUSION, THEREFORE, IN THE PRESE NT CASE, IS THAT THE ITAT WAS IN ERROR IN HOLDING THAT THE ASSE SSMENT FOR AY 2008-09 SHOULD BE TREATED AS 'PENDING' WHEREAS IN T ERMS OF THE ITA NOS.1211 TO 1217/BANG/2019 PAGE 15 OF 73 ABOVE CBDT CIRCULAR IT SHOULD BE TREATED AS FINAL I N RESPECT OF WHICH NO SCRUTINY ARE TO BE STARTED. (B) DCIT VS SARVANA STORES 61 ITR(TRIB) 20 WHEREIN THE TRIBUNAL HELD AS FOLLOWS:- IN THE CASE BEFORE US, EVEN THOUGH NO ASSESSMENT O RDER WAS PASSED, THE TIME LIMIT FOR ISSUING NOTICE UNDER SEC TION 143(2) OF THE ACT HAS EXPIRED. HENCE, THE ASSESSMENT PROCEEDI NG INITIATED ON THE BASIS OF THE RETURN FILED BEFORE THE DATE OF SEARCH WAS TERMINATED BY OPERATION OF LAW. IN OTHER WORDS, ONC E THE TIME LIMIT FOR ISSUING NOTICE UNDER SECTION 143(2) OF TH E ACT EXPIRED, ON THE BASIS OF RETURN FILED EARLIER, THE ASSESSMEN T PROCEEDING IS TERMINATED AND IT CANNOT BE SAID THAT IT WAS PENDIN G ON THE DATE OF SEARCH. IN THIS CASE, THE ASSESSMENT PROCEEDING WAS TERMINATED BY OPERATION OF LAW SINCE THE TIME LIMIT FOR ISSUING NOTICE UNDER SECTION 143(2) EXPIRED. THEREFORE, THE CONCLUDED ASSESSMENT BY OPERATION OF LAW ON EXPIRY OF TIME LI MIT FOR ISSUING NOTICE UNDER SECTION 143(2), CANNOT BE REOPENED. HE NCE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IN THE A BSENCE OF ANY MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIO N, THERE CANNOT BE ANY ASSESSMENT FOR THE BLOCK PERIOD UNDER SECTION 153A OF THE ACT. HENCE, THE CIT(APPEALS) HAS RIGHTL Y DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 27. IT WAS FURTHER SUBMITTED THAT EVEN IF AN INTIM ATION U/S. 143(1) HAS BEEN ISSUED BEFORE THE DATE OF SEARCH, IT CANNOT BE SAID THAT ASSESSMENT IS PENDING UNLESS THE NOTICE U/S. 143(2) HAS BEEN ISSU ED PLACING RELIANCE ON THE DECISION OF THE CO-ORDINATE BENCH IN YUNUS ZIA V. DCIT, CIRCLE 1(3) IN ITA NO.126 TO 130/BANG/2013 WHEREIN THE DECISION OF CIT V. S K ISPAT & POWER LTD., 398 ITR 584 AND ACIT V. PRATIBHA INDUST RIES LTD., 23 ITR (TRIB) 766 HOLDING THAT ASSESSMENT WILL NOT BE A PENDING ASSES SMENT WAS FOLLOWED. 28. AS FAR AS AY 2014-15 IS CONCERNED, THE LD. AR SUBMITTED THAT EVEN THOUGH THE TIME LIMIT FOR ISSUING A NOTICE U/S. 143 (2) DID NOT EXPIRE ON THE DATE OF SEARCH, EVEN THEN THE ASSESSMENT IS NON-PEN DING AND NON-ABATING. IT CAN BE SAID THAT ASSESSMENT IS PENDING ONLY IF N OTICE U/S. 143(2) IS ISSUED BEFORE THE DATE OF SEARCH. ATTENTION WAS IN VITED TO CBDT CIRCULAR ITA NOS.1211 TO 1217/BANG/2019 PAGE 16 OF 73 NO.549 DATED 31.10.1989 [182 ITR (ST.) 1] WHEREIN I T HAS BEEN CLARIFIED THAT WHEN AN ASSESSEE FILES A RETURN AND NO NOTICE U/S. 143(2) IS ISSUED, IT CAN BE TAKEN THAT HIS RETURN HAS BECOME FINAL. IN THIS REGARD, THE DECISION OF COORDINATE BENCH IN THE CASE OF YUNUS ZIA V. DCIT (SUPRA) WAS RELIED ON IN WHICH CASE FOR THE AY 2007-08 THE TIME LIMIT FOR IS SUING A NOTICE U/S. 143(2) WAS 30/9/2008 AND THE SEARCH TOOK PLACE ON 17.6.200 8. THE TRIBUNAL HELD THAT ASSESSMENT FOR AY 2007-08 IS NOT PENDING AND I T HAS NOT ABATED AND THE ADDITIONS WERE DELETED ON THE GROUND THAT THE A DDITIONS HAD NO CONNECTION WITH ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH. 29. IN VIEW OF THE ABOVE SUBMISSIONS, IT WAS PRAYED THAT THE ASSESSMENTS MADE U/S. 153A OF THE ACT FOR THE AYS 2 009-10 TO 2014-15 ARE WITHOUT JURISDICTION. 30. THE LD. DR PLACED RELIANCE ON THE DECISION OF CANARA HOUSING DEVELOPMENT CO. (SUPRA) AND SUBMITTED THAT U/S. 153A OF THE ACT, THE AO CAN TAKE NOTE OF THE INCOME DISCLOSED IN THE EAR LIER RETURN, ANY UNDISCLOSED INCOME FOUND DURING THE SEARCH AND ALSO ANY OTHER INCOME WHICH IS NOT DISCLOSED IN THE EARLIER RETURN OR WHI CH IS NOT UNEARTHED DURING THE SEARCH IN ORDER TO FIND OUT WHAT IS THE TOTAL INCOME OF EACH YEAR AND THEN PASS ASSESSMENT ORDER. ACCORDING TO THE LD. D R, WHERE SEARCH TOOK PLACE U/S. 132 IN THE CASE OF ANY ASSESSEE, THE ASS ESSMENT TO BE FRAMED U/S. 153A OF THE ACT. IN THE PRESENT CASE, THERE W AS A SEARCH U/S. 132 OF THE ACT ON 7.1.2015 IN THE GROUP COMPANIES OF ASSESSEE, EMBASSY PROPERTY DEVELOPMENT PVT. LTD., CONSEQUENTLY NOTICE U/S. 153 A WAS ISSUED ON 17.11.2015 TO THE ASSESSEE REQUIRING HIM TO FILE RE TURN OF INCOME WITHIN 30 DAYS FROM THE DATE OF RECEIPT OF NOTICE. THE AS SESSEE FILED A RETURN U/S. 153A ON 28.12.2015 RELATING TO THESE ASSESSMENT YEA RS AND THE ASSESSMENTS WERE FRAMED U/S. 153A R.W.S. 143(3) OF THE ACT. THE ASSESSMENTS WERE FRAMED FOR SIX ASSESSMENT YEARS AN D IT IS IMMATERIAL WHETHER THERE IS INCRIMINATING MATERIAL PERTAINING TO THOSE SIX ASSESSMENT ITA NOS.1211 TO 1217/BANG/2019 PAGE 17 OF 73 YEARS OR NOT IN VIEW OF THE BINDING DECISION OF THE KARNATAKA HIGH COURT IN CANARA HOUSING DEVELOPMENT CO. (SUPRA) . ACCORDING TO THE LD. DR, SECTION 153A CAN BE INVOKED WHERE THERE IS SEARCH, THOUGH T HERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE SEARCH. 31. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE ISSUE BEFORE US IS RELATING TO THE REASSESSMENT PROCEEDINGS U/S 153A OF THE ACT FOR THE AY 2009-10 TO AY 2012-13 AS THERE W AS A GROUND ON THIS ISSUE IN THESE ASSESSMENT YEARS ONLY. HOWEVER, THE AR ENLARGED HIS ARGUMENTS FOR AY 2013-14 AND AY 2014-15 WHICH WE DE CLINED TO ENTRAIN IT AS THERE IS NO GROUND OF APPEAL OR ADDITIONAL GROUN DS OF APPEAL RAISED BY THE ASSESSE ON THIS ISSUE IN THESE ASSESSMENT YEARS . THEREFORE, AS FAR AS THE QUESTION OF VALIDITY OF INITIATION OF REASSESSM ENT PROCEEDINGS U/ 153A IS CONCERNED IN AY 2009-10 TO AY 2012-13, WE WILL PROC EED AS FOLLOWS. 32. UNDER THE PROVISIONS OF SECTION 153A, THE ASSE SSING OFFICER IS BOUND TO ISSUE NOTICE TO THE ASSESSEE TO FURNISH RE TURNS FOR EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASSESSMENT Y EARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVI OUS YEAR IN WHICH THE SEARCH OR REQUISITION WAS MADE. ANOTHER SIGNIFICANT FEATURE OF THIS SECTION IS THAT THE ASSESSING OFFICER IS EMPOWERED TO ASSESS O R REASSESS THE 'TOTAL INCOME' OF THE AFORESAID YEARS. THIS IS A SIGNIFICA NT DEPARTURE FROM THE EARLIER BLOCK ASSESSMENT SCHEME IN WHICH THE BLOCK ASSESSME NT ROPED IN ONLY THE UNDISCLOSED INCOME AND THE REGULAR ASSESSM ENT PROCEEDINGS WERE PRESERVED, RESULTING IN MULTIPLE ASSESSMENTS. UNDER SECTION I53A, HOWEVER, THE ASSESSING OFFICER HAS BEEN GIVEN THE P OWER TO ASSESS OR REASSESS THE 'TOTAL INCOME' OF THE SIX ASSESSMENT Y EARS IN QUESTION IN SEPARATE ASSESSMENT ORDERS. THIS MEANS THAT THERE C AN BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX ASSE SSMENT YEARS, IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. ITA NOS.1211 TO 1217/BANG/2019 PAGE 18 OF 73 33. A QUESTION MAY ARISE AS TO HOW THIS IS SOUGH T TO BE ACHIEVED WHERE AN ASSESSMENT ORDER HAD ALREADY BEEN PASSED I N RESPECT OF ALL OR ANY OF THOSE SIX ASSESSMENT YEARS, EITHER UNDER SEC TION 143(1))(A) OR SECTION 143(3) OF THE ACT. IF SUCH AN ORDER IS ALRE ADY IN EXISTENCE, HAVING OBVIOUSLY BEEN PASSED PRIOR TO THE INITIATION OF TH E SEARCH /REQUISITION, THE ASSESSING OFFICER IS EMPOWERED TO REOPEN THOSE PROC EEDINGS AND REASSESS THE TOTAL INCOME, TAKING NOTE OF THE UNDIS CLOSED INCOME, IF ANY UNEARTHED DURING THE SEARCH. FOR THIS PURPOSE. TH E FETTERS IMPOSED UPON THE ASSESSING OFFICER BY THE STRICT PROCEDURE TO AS SUME JURISDICTION TO REOPEN THE ASSESSMENT UNDER SECTIONS 147 AND 148, H AVE BEEN REMOVED BY THE NON OBSTANTE CLAUSE WITH WHICH SUCH SECTION (1) OF SECTION 153A OPENS. THE TIME-LIMIT WITHIN WHICH THE NOTICE UNDER SECTION 148 CAN BE ISSUED AS PROVIDED IN SECTION 149 HAS ALSO BEEN MAD E INAPPLICABLE BY THE NON OBSTANTE CLAUSE. SECTION 151 WHICH REQUIRES S ANCTION TO BE OBTAINED BY THE ASSESSING OFFICER BY ISSUE OF NOTICE TO REOP EN THE ASSESSMENT UNDER SECTION 148 HAS ALSO BEEN EXCLUDED IN A CASE COVERED BY SECTION I53A. THE TIME-LIMIT PRESCRIBED FOR COMPLETION OF A N ASSESSMENT OR REASSESSMENT BY SECTION 153 HAS ALSO BEEN DONE AWAY WITH IN A CASE COVERED BY SECTION 153A. WITH ALL THE STOPS HAVING BEEN PULLED OUT THE ASSESSING OFFICER UNDER SECTION 153A HAS BEEN ENTRU STED WITH THE DUTY OF BRINGING TO TAX THE TOTAL INCOME OF AN ASSESSEE WHO SE CASE IS COVERED BY SECTION 153A, BY EVEN MAKING REASSESSMENTS WITHOUT ANY FETTERS, IF NEED BE. 34. NOW THERE CAN BE CASES WHERE AT THE TIME WHEN THE SEARCH IS INITIATED OR REQUISITION IS MADE, THE ASSESSMENT OR REASSESSMENT PROCEEDINGS RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF THE SIX ASSESSMENT YEARS MENTIONED ABOVE, MAY BE PENDIN G. IN SUCH A CASE, THE SECOND PROVISO TO SUB-SECTION (1) OF SECTION I5 3A SAYS THAT SUCH PROCEEDINGS 'SHALL ABATE'. THE REASON IS NOT FAR TO SEEK. UNDER SECTION ITA NOS.1211 TO 1217/BANG/2019 PAGE 19 OF 73 153A THERE IS NO ROOM FOR MULTIPLE ASSESSMENT ORDER S IN RESPECT OF ANY OF THE SIX ASSESSMENT YEARS UNDER CONSIDERATION. THAT IS BECAUSE THE ASSESSING OFFICER HAS TO DETERMINE NOT MERELY THE U NDISCLOSED INCOME OF THE ASSESSEE, BUT ALSO THE 'TOTAL INCOME' OF THE AS SESSEE IN WHOSE CASE A SEARCH OR REQUISITION HAS BEEN INITIATED. OBVIOUSLY THERE CANNOT BE SEVERAL ORDERS FOR THE SAME ASSESSMENT YEAR DETERMINING THE TOTAL INCOME OF THE ASSESSEE. IN ORDER TO ENSURE THIS STATE OF AFFAIRS NAMELY, THAT IN RESPECT OF THE SIX ASSESSMENT YEARS PRECEDING THE ASSESSMENT Y EAR RELEVANT TO THE YEAR IN WHICH THE SEARCH TOOK PLACE THERE IS ONLY O NE DETERMINATION OF THE TOTAL INCOME, IT HAS BEEN PROVIDED IN THE SECOND PR OVISO OF SUB-SECTION (1) OF SECTION 153A THAT ANY PROCEEDINGS FOR ASSESSMENT OR REASSESSMENT OF THE ASSESSEE WHICH ARE PENDING ON THE DATE OF INITI ATION OF THE SEARCH OR MAKING REQUISITION 'SHALL ABATE'. ONCE THOSE PROCEE DINGS ABATE, THE DECKS ARE CLEARED, FOR THE ASSESSING OFFICER TO PASS ASSE SSMENT ORDERS FOR EACH OF THOSE SIX YEARS DETERMINING THE TOTAL INCOME OF THE ASSESSEE WHICH WOULD INCLUDE BOTH THE INCOME DECLARED IN THE RETUR NS, IF ANY, FURNISHED BY THE ASSESSEE AS WELL AS THE UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH OR REQUISITION. THE POSITION THUS EMERGI NG IS THAT WHERE ASSESSMENT OR REASSESSMENT PROCEEDINGS ARE PENDING COMPLETION WHEN THE SEARCH IS INITIATED OR REQUISITION IS MADE, THE Y WILL ABATE MAKING WAY FOR THE ASSESSING OFFICER TO DETERMINE THE TOTAL INCOME OF THE ASSESSEE IN WHICH THE UNDISCLOSED INCOME WOULD ALSO BE INCLUDED , BUT IN CASES WHERE THE ASSESSMENT OR REASSESSMENT PROCEEDINGS HAVE ALR EADY BEEN COMPLETED AND ASSESSMENT ORDERS HAVE BEEN PASSED DE TERMINING THE ASSESSEE'S TOTAL INCOME AND SUCH ORDERS ARE SUBSIST ING AT THE TIME WHEN THE SEARCH OR THE REQUISITION IS MADE, THERE IS NO QUESTION OF ANY ABATEMENT SINCE NO PROCEEDINGS ARE PENDING, IN THIS LATTER SITUATION, THE ASSESSING OFFICER WILL REOPEN THE ASSESSMENTS OR RE ASSESSMENTS ALREADY MADE (WITHOUT HAVING THE NEED TO FOLLOW THE STRICT PROVISIONS OR COMPLYING WITH THE STRICT CONDITIONS OF SECTIONS 147, 148 AND 151 AND DETERMINE THE ITA NOS.1211 TO 1217/BANG/2019 PAGE 20 OF 73 TOTAL INCOME OF THE ASSESSEE. SUCH DETERMINATION IN THE ORDERS PASSED UNDER SECTION 153A IT WOULD BE SIMILAR TO THE ORDER S PASSED IN ANY REASSESSMENT, WHERE THE TOTAL INCOME DETERMINED IN THE ORIGINAL ASSESSMENT ORDER AND THE INCOME THAT ESCAPED ASSESS MENT ARE CLUBBED TOGETHER AND ASSESSED AS THE TOTAL INCOME. IN SUCH A CASE, TO REITERATE, THERE IS NO QUESTION OF ANY ABATEMENT OF THE EARLIER PROC EEDINGS FOR THE SIMPLE REASON THAT NO PROCEEDINGS FOR ASSESSMENT OR REASSE SSMENT WERE PENDING SINCE THEY HAD ALREADY CULMINATED IN ASSESSMENT OR REASSESSMENT ORDERS WHEN THE SEARCH WAS INITIATED OR THE REQUISITION WA S MADE. 35. THUS, IT IS CLEAR THAT ONCE A SEARCH/REQUISITIO N IS MADE U/S 132 OF THE IT ACT, THE ASSESSING OFFICER IS BOUND TO ISSUE NOT ICE U/S 153A TO THE ASSESSEE TO FURNISH THE RETURN FOR EACH ASSESSMENT YEARS FALLING WITHIN SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSME NT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH CONDUCTED OR REQU ISITION WAS MADE. CONSEQUENTLY, THE ASSESSING OFFICER IS EMPOWERED TO ASSESS OR REASSESS THE TOTAL INCOME OF ALL THESE SIX ASSESSMENT YEARS. 36. BEFORE US, NOW THE CONTENTION OF THE ASSESSEE F OR ASSESSMENT YEARS 2009-10 TO 2012-13 IS WITH REGARD TO INITIATION OF PROCEEDINGS U/S. 153A OF THE ACT, THOUGH THERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND SEIZURE ACTION CONDUCTED 7.1.2015. T HE AO HAS SIMPLY REFERRED TO THE DOCUMENTS SEIZED AND INVENTORISED A S A/JV01 PLACED AT PAPER BOOK PAGE NO. 78. THIS IS NOT A DOCUMENT SEIZ ED AS SUCH, IT IS A PRINTOUT TAKEN FROM THE COMPUTER. THE PANCHANAMA WH ICH IS PLACED AT PAGE 1 OF THE PAPER BOOK STATES VERY CLEARLY THAT NO DOC UMENTS WERE SEIZED. A PERUSAL OF THE DOCUMENT MARKED A/JV01 WOULD SHOW THAT THERE IS NOTHING INCRIMINATING THEREIN, IT DOES NOT SHOW ANY UNDISCL OSED INCOME OF THE APPELLANT. IT IS AN UN-SIGNED MERE DUMB DOCUMENT. H ENCE, THIS DOCUMENT CANNOT BE CONSIDERED AS INCRIMINATING IN NATURE. ITA NOS.1211 TO 1217/BANG/2019 PAGE 21 OF 73 37. FURTHER CONTENTION OF THE LD. AR IS THAT FOR TH ESE ASSESSMENT YEARS, ASSESSMENTS WERE NOT PENDING ON THE DATE OF SEARCH AND THE TIME FOR TO ISSUE NOTICE UNDER SECTION 143(2) WAS ALREADY LAPSE D AS BELOW AND IT IS TO BE CONSIDERED THAT THESE ASSESSMENTS WERE ALREADY R EACHED FINALITY ON THE DATE OF SEARCH AND NO SCRUTINY PROCEEDINGS ARE TO B E STARTED IN RESPECT OF NON-PENDING ASSESSMENTS WHERE THERE IS NO INCRIMINA TED MATERIAL FOUND DURING THE COURSE OF SEARCH ACTION U/S 132 OF THE A CT. AY 2009-10 AY 2010-11 AY 2011-12 AY 2012-13 DATE OF FILING OF RETURN U/S139(1) 30-09-2009 14-10-2010 (REVISED RETURN ON 18 - 02 - 2011) 29-09-2011 28-09-2012 AY 2009-10 AY 2010- 11 AY 2011-12 AY 2012-13 ASSESSMENT ORDER U/S 143(3) DATED : NO ASSESSMENT ORDER PASSED 27-12-2012 NO ASSESSMENT ORDER PASSED NO ASSESSMENT ORDER PASSED TIME LIMIT TO ISSUE 143(2) NOTICE 30-09-2010 30-09-2012 30-09-2013 30-09-2014 38. THEREFORE, ACCORDING TO THE LD. AR, ASSESSMENTS FOR THESE 4 YEARS WERE ALREADY COMPLETED AND WERE NOT PENDING ON THE DATE OF SEARCH. ACCORDING TO HIM, FRAMING ASSESSMENT U/S. 153A OF T HE ACT IN THE CASE OF COMPLETED ASSESSMENT CAN BE DONE ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR R EQUISITION ALL DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH ARE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE K NOWN IN THE COURSE OF ORIGINAL ASSESSMENT. IT IS ALSO SUBMITTED THAT IN THE CASE OF PENDING ASSESSMENTS, THE JURISDICTION TO MAKE ORIGINAL ASSE SSMENT AND ASSESSMENT U/S. 153A MERGES INTO ONE. ONLY ASSESSMENT SHALL B E MADE SEPARATELY FOR EACH ASSESSMENT YEAR ON THE BASIS FINDINGS OF SEARC H AND OTHER MATERIAL EXISTING OR BROUGHT ON RECORD BY THE AO. ITA NOS.1211 TO 1217/BANG/2019 PAGE 22 OF 73 39. IN THE CASE OF FIRST CATEGORY, WHERE THE ASSESS MENT IS NOT PENDING ON THE DATE OF INITIATION OF SEARCH OR MAKING REQUISIT ION, AS THE CASE MAY BE, THE ASSESSMENT U/S. 153A WOULD BE IN THE NATURE OF REAS SESSMENT. THUS, THE LEGISLATURE HAS CARVED OUT THE NATURE OF ASSESSMENT U/S 153A AS ASSESSMENT OR REASSESSMENT IN TWO DIFFERENT SITUATIONS. ACCOR DING TO THE LD. AR, FOR AYS 2009-10 TO 2012-13, WHEREIN ALREADY ASSESSMENT ORDE RS WERE PASSED U/S. 143(3) OR TIME LIMIT TO ISSUE NOTICE U/S 143(2) IS LAPSED, THE ASSESSMENT U/S. 153A OF THE ACT CAN BE FRAMED ONLY ON THE BASIS OF SEIZED INCRIMINATING MATERIAL. IN THESE ASSESSMENT YEARS, INITIATING PRO CEEDINGS U/S. 153A IS VALID, HOWEVER, THE AO CANNOT RESORT TO ROVING AND FISHING ENQUIRY TO FIND OUT WHETHER ANY INCOME HAS ESCAPED ASSESSMENT DURING TH E REASSESSMENT PROCEEDINGS WHEN THERE IS NO INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH ACTION U/S. 132 OF THE ACT. IN OTHER WORDS, WE ARE OF THE OPINION THAT AO WAS CORRECT IN LAW TO ISSUE NOTICES U/S 153A FOR THE YEARS UNDER CONSIDERATION, AS HE WAS BOUND TO PASS ASSESS MENT ORDERS IN RESPECT OF ALL THESE CONCERNED ASSESSMENT YEARS. HOWEVER, A DDITION IN THESE REASSESSMENT YEARS U/S 132 OF THE ACT. 40. THE LD. DR STRONGLY RELIED ON THE DECISION OF T HE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CANARA HOUSING DEVELOPMENT CO. (SUPRA) WHEREIN IT WAS HELD AS FOLLOWS:- AT THIS POINT, IT IS APPROPRIATE TO DRAW INFE RENCE FROM THE HONBLE KARNATAKA HIGH COURT JUDGMENT IN THE CASE O F CANARA HOUSING DEVELOPMENT CO. (SUPRA) . IN THAT CASE, THE ASSESSEE, WHICH WAS CARRYING ON REAL ESTATE BUSINESS FILED IT S RETURN FOR AY 2008-2009. HIS CASE WAS TAKEN UP UNDER SECTION 143( 3) OF THE ACT AND AN ORDER CAME TO BE PASSED ON 31ST DECEMBER, 20 10. SUBSEQUENTLY A SEARCH TOOK PLACE IN THE PREMISES OF THE ASSESSEE UNDER SECTION 132 OF THE ACT ON 12TH APRIL, 2011. T HE JUDGMENT NOTES 'IN THE COURSE OF SEARCH, INCRIMINATING MATER IAL LEADING TO UNDISCLOSED INCOME WAS SEIZED.' THE NOTICE WAS ISSU ED TO THE ASSESSEE UNDER SECTION 153A(1) OF THE ACT TO FILE R ETURN OF ITA NOS.1211 TO 1217/BANG/2019 PAGE 23 OF 73 INCOME ON 13TH JANUARY, 2012. EVEN WHILE THE RETURN WAS UNDER CONSIDERATION, THE CIT INITIATED PROCEEDINGS UNDER SECTION 263 OF THE ACT ON THE GROUND THAT THE ORDER PASSED ON 31ST DECEMBER, 2010 UNDER SECTION 143(3) OF THE ACT WAS PREJUDICIA L TO THE INTERESTS OF THE REVENUE. WHEN THE CIT NEGATED THE OBJECTIONS OF THE ASSESSEE TO THE SAID ORDER, THE ASSESSEE APPEAL ED TO THE ITAT. THE ITAT NEGATED THE PLEA OF THE ASSESSEE THAT BY V IRTUE OF THE PROCEEDINGS INITIATED UNDER SECTION 153A OF THE ACT , THE ASSESSMENT FOR SIX YEARS STOOD REOPENED AND IT IS F OR THE ASSESSING AUTHORITY TO PASS APPROPRIATE ORDER ON THE BASIS OF THE RETURN FILED UNDER SECTION 153A(1)(A) OF THE ACT. 41. IN THE HIGH COURT THE QUESTION WAS WHET HER THE CIT COULD INVOKE THE POWER UNDER SECTION 263 OF THE ACT ONCE THE PRO CEEDINGS UNDER SECTION 153A WAS INITIATED. THE HIGH COURT IN CANARA HOUSING DEVELOPMENT CO. (SUPRA) ANSWERED THE QUESTION IN THE NEGATIVE. IT REFERRED TO THE DECISION OF THIS COURT IN CIT V. ANIL KUMAR BHATIA (211TAXMAN 453 DELHI) AND CAME TO THE CONCLUSION THAT ONCE PROCEEDINGS ARE INITIATED UNDER SECTION 153A OF THE ACT THE LEGAL EFFECT WAS THAT EVEN WHERE AN ASSESSM ENT ORDER IS PASSED, IT WOULD STAND REOPENED. IN THE EYE OF LAW THERE WAS N O ORDER OF ASSESSMENT. IT MEANT THAT THE AO '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 UNDISCLOSED 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 INC OME' OF EACH YEAR AND THEN PASS THE ASSESSMENT ORDER. 42. IT IS IMPORTANT TO NOTE THAT CANARA HOUSING (SUPRA) WAS ALSO A CASE WHERE SOME MATERIAL WAS UNEARTHED DURING THE S EARCH. FURTHER, THE HIGH COURT WAS CLEAR THAT THE ADDITION TO THE INCOM E ALREADY DISCLOSED WOULD HAVE TO BE BASED ON SOME MATERIAL UNEARTHED DURING THE SEARCH. THIS IS CLEAR FROM THE OBSERVATION IN PARA 9 OF THE DECISIO N TO THE EFFECT: ' THE AO IS EMPOWERED TO REOPEN THOSE PROCEEDINGS AND REASSESS THE TOTAL ITA NOS.1211 TO 1217/BANG/2019 PAGE 24 OF 73 INCOME, TAKING NOTE OF THE UNDISCLOSED INCOME, IF A NY, UNEARTHED DURING THE SEARCH. ' IT WAS FURTHER OBSERVED THAT IN THE FACTS OF THAT CASE IF THE CIT HAD COME ACROSS ANY INCOME THAT THE AO HAD NOT TAKEN NO TE OF WHILE PASSING THE EARLIER ORDER, ' THE SAID MATERIAL CAN BE FURNISHED TO THE ASSESSING AUTHORITY ' WHO WILL TAKE NOTE OF IT WHILE DETERMINING TOTAL INCOME. 43. IN CIT VS. KABUL CHAWALA 380 ITR 573 ( DE LHI H.C) IT WAS HELD THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REAS SESSMENT CAN BE MADE. THE RELEVANT EXTRACT IS REPRODUCED BELOW:- THE LEGAL POSITION THAT EMERGES ON A PERUSAL OF SE CTION 153A AND SECTION 132 OF THE INCOME-TAX ACT, 196 IS AS UN DER : (I) ONCE A SEARCH TAKES PLACE UNDER SECTION 132, NOTICE UNDE R SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE P ERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX ASSE SSMENT YEARS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IN WHICH THE SEARCH TAKES PLACE. (I I) ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH ASSESSMENT YEARS WILL HAV E TO BE COMPUTED BY THE ASSESSING OFFICERS AS A FRESH EXERC ISE. (III) THE ASSESSING OFFICER WILL EXERCISE NORMAL ASSESSMENT P OWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT A SSESSMENT YEAR IN WHICH THE SEARCH TAKES PLACE. THE ASSESSING OFFI CER HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORD ERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX ASSESSMENT YEAR S 'IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE B ROUGHT TO TAX'. (IV) ALTHOUGH SECTION 153A DOES NOT SAY THA T ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FO UND IN THE COURSE OF THE SEARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE ASSESSING OFFICER WHICH CAN BE R ELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMEN T 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WI TH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UN DER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' (V) IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMEN T CAN BE ITA NOS.1211 TO 1217/BANG/2019 PAGE 25 OF 73 REITERATED AND THE ABATED ASSESSMENT OR REASSESSMEN T CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153A IS RELATABL E TO ABATED PROCEEDINGS ( I.E. , THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETE ASSESSMENT PROCEEDINGS. (VI) INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICT ION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SE CTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH ASSESSMENT YEAR ON THE BASIS OF THE FINDIN GS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE R ECORD OF THE ASSESSING OFFICER. (VII) COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE ASSESSING OFFICER WHILE MAKI NG THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR P ROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT P RODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE O F ORIGINAL ASSESSMENT. 44. IN THE ABOVE DECISIONS IT WAS FURTHER CONSIDERE D JUDGEMENT IN THE CASE OF FILATEX INDIA LTD. V. CIT-IV (49 TAXMANN.COM 465 (D ELHI) REFERENCE PB 1387 AND OBSERVED THAT ONE OF THE QUESTIONS FRAMED WAS WHETHER THE ITAT ERRED ON FACTS AND IN LAW IN NOT HOLDING THAT RE-COMPUTATION OF BOOK PROFIT, DE-HORS ANY MATERIAL FOUND DURING THE COURS E OF SEARCH, IN THE ORDER PASSED UNDER SECTION 153A OF THE ACT WAS WITHOUT JU RISDICTION, BEING OUTSIDE THE SCOPE OF PROCEEDINGS UNDER THAT SECTION ? THE FACTS OF THE CASE WERE THAT THERE WAS INCRIMINATING MATERIAL FOUND DU RING THE COURSE OF SEARCH CONDUCTED IN THE PREMISES OF THE ASSESSEE ON 18TH J ANUARY, 2006 AND SUBSEQUENT DATES. THIS INCLUDED A STATEMENT OF THE GENERAL MANAGER (MARKETING). ON THE BASIS OF THE SAID MATERIAL AND STATEMENT ADDITIONS WERE MADE TO THE DISCLOSED INCOME UNDER SECTION 115 JB A LTHOUGH NO MATERIAL WAS FOUND SPECIFIC TO SUCH ADDITION. THE COURT HELD THAT UNDER SECTION 153A 'THE ADDITIONS NEED NOT BE RESTRICTED OR LIMIT ED TO THE INCRIMINATING MATERIAL, WHICH WAS FOUND DURING THE COURSE OF SEAR CH.' CONSEQUENTLY EVEN IF NO INCRIMINATING MATERIAL WAS FOUND FOR THE ADDI TION UNDER SECTION 115JB OF THE ACT, SINCE THERE WAS SOME INCRIMINATING MATE RIAL FOUND WHICH WOULD ITA NOS.1211 TO 1217/BANG/2019 PAGE 26 OF 73 SUSTAIN ADDITIONS MADE AND SINCE THE 'TOTAL INCOME' HAD TO BE COMPUTED, THEY WERE SUSTAINED BY THE HIGH COURT. 45. IN FILATEX INDIA LTD. THE COURT SOUGHT TO EXPLAIN THE OBSERVATIONS IN CIT V. CHETAN DAS LACHMAN DAS (SUPRA) IN THE FOLLOWING MANNER:- IN CIT V. CHETAN DAS LACHMAN DAS [2012] 211 TAXMAN 61, IT WAS NOTICED THE INSERTION OF SECTION 153A BY FINANCE AC T, 2003, ITS PURPOSE AND OBJECT, AND THE EARLIER PROCEEDINGS FOR BLOCK ASSESSMENT UNDER CHAPTER XIVB, THE DIFFICULTIES AND THE LEGAL ISSUES WHICH HAD ARISEN ON THE DIFFERENCE BETWEEN R EGULAR ASSESSMENT AND BLOCK ASSESSMENT. IT IS IN THIS CONT EXT THAT IN THE CASE OF CHETAN DAS LACHMAN DAS (SUPRA), HAS OBSERVE D THAT SECTION 153A(L)(B) PROVIDES FOR ASSESSMENT OR RE-AS SESSMENT OF THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PR ECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH THE SEARCH TOOK PLACE. IT WAS EMPHASIZED THAT THERE IS NO COND ITION IN THIS SECTION THAT THE ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND DURING THE COURSE OF THE SEARCH OR O THER POST SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE ASSESSIN G OFFICER, RELATED TO THE EVIDENCE FOUND. SUBSEQUENT OBSERVATI ON TO THE EFFECT THAT THE ASSESSMENT UNDER SECTION 153A SHOULD NOT B E ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL, IS BASICALLY CLARIFICATORY THAT THE ASSESSMENT UNDER S ECTION 153A EMANATES AND STARTS ON THE FOUNDATION OF THE SEARCH , WHICH IS THE JURISDICTIONAL PRECONDITION. THE ADDITIONS CANNOT A ND SHOULD NOT BE ARBITRARY....' 46. THE ABOVE PASSAGE IN FILATEX INDIA LTD. (SUPRA) , PARAPHRASES INTER ALIA, THE FOLLOWING LINE IN CIT V. CHETAN DAS LACHMAN DAS (SUPRA) : 'THIS, HOWEVER, DOES NOT MEAN THAT THE ASSESSMENT U NDER SECTION 153A CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL'. HOWEVER, THE IMMEDIATELY NEXT LINE IN CIT V. CHETAN DAS LACHMAN DAS (SUPRA)READS: 'OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL....'. ITA NOS.1211 TO 1217/BANG/2019 PAGE 27 OF 73 47. THE DECISION OF THE RAJASTHAN HIGH COURT IN JAI STEEL (INDIA), JODHPUR V. ACIT (2013) 1 ITR-OL 371 (RAJ ) INVOLVED A CASE WHERE CERTAIN BOOKS OF ACCOUNTS AND OTHER DOCUMENTS THAT HAD NOT BEEN PROD UCED IN THE COURSE OF ORIGINAL ASSESSMENT WERE FOUND IN THE COURSE OF SEA RCH. IT WAS HELD WHERE UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY HAS BEEN FOUND AS A CONSEQUENCE OF THE SEARCH, THE SAME WOULD ALSO BE T AKEN INTO CONSIDERATION WHILE COMPUTING THE TOTAL INCOME UNDER SECTION 153A OF THE ACT. THE COURT THEN EXPLAINED AS UNDER:- 22. IN THE FIRM OPINION OF THIS COURT FROM A PLAI N READING OF THE PROVISION ALONG WITH THE PURPOSE AND PURPORT OF THE SAID PROVISION, WHICH IS INTRICATELY LINKED WITH SEARCH AND REQUISI TION UNDER SECTIONS 132 AND 132A OF THE ACT, IT IS APPARENT TH AT: (A) THE ASSESSMENTS OR REASSESSMENTS, WHICH STAND A BATED IN TERMS OF II PROVISO TO SECTION 153A OF THE ACT, THE AO AC TS UNDER HIS ORIGINAL JURISDICTION, FOR WHICH, ASSESSMENTS HAVE TO BE MADE; (B) REGARDING OTHER CASES, THE ADDITION TO THE INCO ME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL AND (C) IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE C OMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSM ENT OR REASSESSMENT CAN BE MADE.' 48. THE ARGUMENT OF THE REVENUE THAT THE AO WAS FRE E TO DISTURB INCOME DE HORS THE INCRIMINATING MATERIAL WHILE MAKING ASS ESSMENT UNDER SECTION 153A OF THE ACT WAS SPECIFICALLY REJECTED BY THE CO URT ON THE GROUND THAT IT WAS 'NOT BORNE OUT FROM THE SCHEME OF THE SAID PROV ISION' WHICH WAS IN THE CONTEXT OF SEARCH AND/OR REQUISITION. THE COURT ALS O EXPLAINED THE PURPORT OF THE WORDS 'ASSESS' AND 'REASSESS', WHICH HAVE BEEN FOUND AT MORE THAN ONE PLACE IN SECTION 153A OF THE ACT AS UNDER:- '26. THE PLEA RAISED ON BEHALF OF THE ASSESSEE THAT AS THE FIRST PROVISO PROVIDES FOR ASSESSMENT OR REASSESSMENT OF THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING W ITHIN THE SIX ASSESSMENT YEARS, IS MERELY READING THE SAID PROVIS ION IN ISOLATION ITA NOS.1211 TO 1217/BANG/2019 PAGE 28 OF 73 AND NOT IN THE CONTEXT OF THE ENTIRE SECTION. THE W ORDS 'ASSESS' OR 'REASSESS' HAVE BEEN USED AT MORE THAN ONE PLACE IN THE SECTION AND A HARMONIOUS CONSTRUCTION OF THE ENTIRE PROVISION W OULD LEAD TO AN IRRESISTIBLE CONCLUSION THAT THE WORD ASSESS HAS BE EN USED IN THE CONTEXT OF AN ABATED PROCEEDINGS AND REASSESS HAS B EEN USED FOR COMPLETED ASSESSMENT PROCEEDINGS, WHICH WOULD NOT A BATE AS THEY ARE NOT PENDING ON THE DATE OF INITIATION OF THE SE ARCH OR MAKING OF REQUISITION AND WHICH WOULD ALSO NECESSARILY SUPPOR T THE INTERPRETATION THAT FOR THE COMPLETED ASSESSMENTS, THE SAME CAN BE TINKERED ONLY BASED ON THE INCRIMINATING MATERIAL F OUND DURING THE COURSE OF REQUISITION OF DOCUMENTS. 49. IN CIT V. CONTINENTAL WAREHOUSING CORPORATION (NHAV A SHEVA) LTD. [2015] 58 TAXMANN.COM 78 (BOMBAY) THE QUESTION ADDRESSED BY THE BOMBAY HIGH COURT WAS WHETHER THE SCOPE OF ASSESSME NT UNDER SECTION 153A ENCOMPASSES ADDITIONS, NOT BASED ON ANY INCRIM INATING MATERIAL FOUND DURING THE COURSE OF SEARCH? IT WAS HELD THAT NO AD DITION COULD BE MADE IN RESPECT OF THE ASSESSMENTS THAT HAD BECOME FINAL IN THE EVENT NO INCRIMINATING MATERIAL WAS FOUND DURING SEARCH. THE BOMBAY HIGH COURT RELIED ON THE EARLIER DECISION IN CIT V. M/S. MURLI AGRO PRODUCTS LTD. (SUPRA) AND DISCUSSED THE SCOPE AND AMBIT OF THE PROCEEDING S FOR ASSESSMENT AND REASSESSMENT OF TOTAL INCOME UNDER SECTION 153A (1) OF THE ACT AND THE PROVISOS THERETO. ONE OF THE SPECIFIC PLEAS TAKEN B Y THE ASSESSEE WAS THAT IF NO INCRIMINATING MATERIAL WAS FOUND DURING THE C OURSE OF SEARCH IN RESPECT OF AN ISSUE THEN NO ADDITION IN RESPECT OF ANY ISSU E CAN BE MADE TO THE ASSESSMENT UNDER SECTIONS 153A AND 153C. IT WAS OBS ERVED THAT THE ASSESSMENT OR REASSESSMENT UNDER SECTION 153A ARISE S ONLY WHEN A SEARCH HAS BEEN INITIATED AND CONDUCTED AND, THEREFORE, 'S UCH AN ASSESSMENT HAS A VITAL LINK WITH THE INITIATION AND CONDUCT OF THE SEARCH.' THE COURT THEN REPRODUCED AND AFFIRMED THE DECISION OF THE SPECIAL BENCH OF THE ITAT IN ALL CARGO GLOBAL LOGISTICS LTD. V. DCIT [2012] 23 TAXMA NN.COM 103 (MUMBAI) (SB) AND ANSWERED THE QUESTION AS REGARDS THE SCOPE OF THE ASSESSMENT OF TOTAL INCOME AS UNDER:- ITA NOS.1211 TO 1217/BANG/2019 PAGE 29 OF 73 '53. ....WE ARE OF THE VIEW THAT FOR ANSWERING THIS QUESTION, GUIDANCE WILL HAVE TO BE SOUGHT FROM SECTION 132(1) . IF ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS RELEVANT TO THE ASSES SMENT HAD NOT BEEN PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND FOUND IN THE COURSE OF SEARCH IN OUR HUMBLE OPINION SUCH BOO KS OF ACCOUNT OR OTHER DOCUMENTS HAVE TO BE TAKEN INTO ACCOUNT WH ILE MAKING ASSESSMENT OR REASSESSMENT OF TOTAL INCOME UNDER TH E AFORESAID PROVISION. SIMILAR POSITION WILL OBTAIN IN A CASE W HERE UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY HAS BEEN FOUND AS A CONSEQUENCE OF SEARCH. IN OTHER WORDS, HARMONIOUS INTERPRETATIO N WILL PRODUCE THE FOLLOWING RESULTS: (A) INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, T HE JURISDICTION TO MAKE ORIGINAL ASSESSMENT AND ASSESSMENT U/S 153A MERGE INTO ONE AND ONLY ONE ASSESSMENT FOR EACH ASSESSMENT YEA R SHALL BE MADE SEPARATELY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO, (B) IN RESPECT OF NON-ABATED ASSESSMENTS, THE ASSES SMENT WILL BE MADE ON THE BASIS OF BOOKS OF ACCOUNT OR OTHER DOCU MENTS NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT BUT F OUND IN THE COURSE OF SEARCH, AND UNDISCLOSED INCOME OR UNDISCL OSED PROPERTY DISCOVERED IN THE COURSE OF SEARCH' 36. ULTIMATELY IN CONTINENTAL WAREHOUSING (SUPRA), THE BOMBAY HIGH COURT ANSWERED THE QUESTION FRAMED BY IT AS UN DER: 'A. IN ASSESSMENTS THAT ARE ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON H IM U/S 153AFOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARATELY; B. IN OTHER CASES, IN ADDITION TO THE INCOME THAT H AS ALREADY BEEN ASSESSED, THE ASSESSMENT U/S 153A WILL BE MADE ON T HE BASIS OF INCRIMINATING MATERIAL, WHICH IN THE CONTEXT OF REL EVANT PROVISIONS MEANS - (I) BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUN D IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINA L ASSESSMENT, AND (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH.' 50. THUS PROVISION OF SECTION 153A DEALS WITH SITUATIONS WHERE ASSESSMENT SHALL BE FRAMED IN CONNECTION WITH SEARC H U/S 132 OR REQUISITION ITA NOS.1211 TO 1217/BANG/2019 PAGE 30 OF 73 U/S 132A. AS PER THE SAID PROVISION, NOTWITHSTAN DING ANYTHING CONTAINED IN SECTION 139, 147, 148, 149, 151 AND 153 , IN THE CASE OF A PERSON WHERE SEARCH WAS INITIATED U/S 132 OR BOOKS OF ACCOUNT AR E REQUISITIONED U/S 132A, THE AO SHALL ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH WITHIN THE SAID PERIOD AS MAY BE MENTIONED IN THE NOTICE, THE RETURN OF INCOME OF EACH ASSESSMENT YEARS FALLING WITHIN SIX ASSESSMENT YEAR S REFERRING TO IN CLAUSE- (B). SUB-CLAUSE-(B) OF SECTION 153 A, EMPOWERS THE AO TO ASSESS OR REASSESS, THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATE TO PRECEDING ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH SEARCH IS CONDUCTED OR REQUISITION IS MADE. THE PROVISO PROVIDED TO SECTION 153A , HOWEVER MADE IT CLEAR THAT ASSESSMENT OR REASSESSMENT, IF ANY RE LATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YE ARS REFERRING TO IN THIS SUB- SECTION PENDING ON THE DATE OF INITIATION OF SEARCH U/S 132 OR MAKING OF THE REQUISITION U/S 132A AS THE CASE MAY BE SHALL ABATE . FROM THE READING OF ABOVE PROVISION, IT IS VERY CLEAR THAT ALTHOUGH THE LEGISLATURE SPECIFICALLY NOT MENTIONED ABOUT UNABATED ASSESSMENT, THE LEGISLATUR E CONSCIOUSLY PROVIDED FOR ABETMENT OF ASSESSMENT AS PER WHICH ANY PROCEED INGS IS PENDING IN RESPECT OF ANY OF SIX ASSESSMENT YEARS, THEN THE SA ME SHALL BE ABATE AND THE AO SHALL HAVE POWER TO ASSESS OR RE- ASSESS THE TOTAL INCOME OF THOSE YEARS. AS REGARDS TO OTHER YEARS WHICH ASSESSMENT H AVE ALREADY BEEN COMPLETED AND THE ASSESSMENT ORDERS DETERMINING THE TOTAL INCOME ARE SUBSISTING AT THE TIME OF SEARCH OR REQUISITION ARE MADE THE SCOPE OF ASSESSMENT U/S 153 A IS LIMITED TO REASSESS THE INC OME OF THE ASSESSEE ON THE BASIS OF INCRIMINATING MATERIAL FOUND AS A RESU LT OF SEARCH. HOWEVER, IT WONT DISENTITLE THE AO IN ISSUING THE NOTICE U/S. 153A OF THE ACT CONSEQUENT TO SEARCH ACTION U/S. 132 OF THE ACT. 51. THE SOLE REASON FOR CONDUCTING SEARCH IN THE CASE O F THE ASSESSEE IS INFORMATION RECEIVED FROM PRIOR TO SEARCH FROM THE FOREIGN TAX DIVISION, MINISTRY OF FINANCE BY MAKING REQUEST AS PER THE PR OFORMA OF REQUEST FOR ITA NOS.1211 TO 1217/BANG/2019 PAGE 31 OF 73 INFORMATION UNDER THE PROVISION OF TAX TREATIES PL ACED UNDER AT PAGE NO 538 ON PB. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ADDITIONS MADE BY THE AO IS MERELY BASED ON INFORMATION RECEIVED PRIOR TO SEARCH FROM THE FOREIGN TAX DIVISION, MINISTRY OF FINANCE BY MAKING REQUEST AS PER THE PROFORMA OF REQUEST FOR INFORMATION UNDER THE PROV ISION OF TAX TREATIES WHICH IS NOT FOUND AS A RESULT OF SEARCH OR REQUISI TION AND CONSEQUENTLY THE ADDITIONS MADE BY THE AO IN ASSESSMENT ORDER PASSED U/S 153 A OF THE ACT , CONSEQUENT TO SEARCH, IN ABSENCE OF ANY INCRIMINATI NG MATERIAL FOUND AS A RESULT OF SEARCH IS TO BE EXAMINED INDEPENDENTLY. 52. NOW THE CONTENTION OF THE LD. AR IS THAT WHEN T HERE WAS NO INCRIMINATING MATERIAL IN THESE ASSESSMENT YEARS, T HEN THERE IS NO JURISDICTION U/S. 153A OF THE ACT SO AS TO FRAME ASSESSMENT AND ASSESSMENT FRAMED FOR THESE ASSESSMENT YEARS HAVE TO BE QUASHED. WHEN WE READ SECTION 153A ALONG WITH VARIOUS JUDGMENTS CITED SUPRA, WE ARE OF THE OPINION THAT THE AO WAS CORRECT IN LAW IN ISSUING NOTICE U/S. 153A OF T HE ACT FOR ALL THESE ASSESSMENT YEARS I.E., 2009-10 TO 2012-13; AS HE WA S BOUND TO ISSUE NOTICE U/S. 153A OF THE ACT CONSEQUENT TO SEARCH ACTION U/ S. 132 OF THE ACT TO FURNISH A RETURN FOR EACH OF THESE ASSESSMENT YEARS. BEING SO, THE ASSESSMENT U/S. 153A COULD NOT BE QUASHED MERELY BECAUSE THERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE SEARCH ACTION U/S. 132 OF THE ACT TO SHOW THAT THE ASSESSEE HAS CONCEALED ANY PART OF HIS INCOME. ON CE SEARCH IS CONDUCTED U/S. 132 OF THE ACT, THE AO IS BOUND TO ISSUE NOTIC E U/S. 153A AND THEN HAS TO FRAME ASSESSMENT ORDER THEREAFTER. THEREFORE, T HE AO IS JUSTIFIED IN ISSUING NOTICE U/S. 153A OF THE ACT TO THE ASSESSEE IN THESE ASSESSMENT YEARS. FURTHER, THE ISSUE IS SQUARELY COVERED AGAIN ST THE ASSESSEE BY THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE O F CANARA HOUSING DEVELOPMENT CO. LTD. (SUPRA) WHEREIN IT WAS HELD AS UNDER:- ITA NOS.1211 TO 1217/BANG/2019 PAGE 32 OF 73 SECTION 153A STARTS WITH A NON OBSTANTE CLAUSE. TH E FETTERS IMPOSED UPON THE ASSESSING OFFICER BY THE STRICT PR OCEDURE TO ASSUME JURISDICTION TO REOPEN THE ASSESSMENT UNDER SECTIONS 147 AND 148, HAVE BEEN REMOVED BY THE NON OBSTANTE CLAU SE WITH WHICH SUB-SECTION (1) OF SECTION 153A OPENS. THE TIME-LIM IT WITHIN WHICH THE NOTICE UNDER SECTION 148 CAN BE ISSUED, AS PROV IDED IN SECTION 149 HAS ALSO BEEN MADE INAPPLICABLE BY THE NON OBST ANTE CLAUSE. SECTION 151 WHICH REQUIRES SANCTION TO BE OBTAINED BY THE ASSESSING OFFICER BEFORE ISSUE OF NOTICE TO REOPEN THE ASSESSMENT UNDER SECTION 148 HAS ALSO BEEN EXCLUDED IN A CASE COVERED BY SECTION 153A. THE TIME-LIMIT PRESCRIBED FOR COMPLET ION OF AN ASSESSMENT OR REASSESSMENT BY SECTION 153 HAS ALSO BEEN DONE AWAY WITH IN A CASE COVERED BY SECTION 153A. WITH A LL THE STOPS HAVING 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 153 A, BY EVEN MAKING REASSESSMENTS WITHOUT ANY FETTERS, IF NEED B E. THEREFORE, IT IS CLEAR EVEN IF AN ASSESSMENT ORDER IS PASSED U NDER SECTION 143(1) OR 143(3), THE ASSESSING OFFICER IS EMPOWERE D TO REOPEN THOSE PROCEEDINGS AND REASSESS THE TOTAL INCOME TAK ING NOTE OF THE UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SE ARCH. AFTER SUCH REOPENING OF THE ASSESSMENT, THE ASSESSING OFFICER IS EMPOWERED TO ASSESS OR REASSESS THE TOTAL INCOME OF THE AFORE SAID YEARS. THE CONDITION PRECEDENT FOR APPLICATION OF SECTION 153A IS THERE SHOULD BE A SEARCH UNDER SECTION 132. INITIATION OF PROCEE DINGS UNDER SECTION 153A IS NOT DEPENDENT ON ANY UNDISCLOSED IN COME BEING UNEARTHED DURING SUCH SEARCH. THE PROVISO TO THE AF ORESAID SECTION ITA NOS.1211 TO 1217/BANG/2019 PAGE 33 OF 73 MAKES IT CLEAR THE ASSESSING OFFICER SHALL ASSESS O R REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FAL LING 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 PROCEEDING SHALL ABATE. IF SU CH PROCEEDINGS ARE ALREADY CONCLUDED BY THE ASSESSING OFFICER BY I NITIATION OF PROCEEDINGS UNDER SECTION 153A, THE LEGAL EFFECT IS THE ASSESSMENT GETS REOPENED. THE BLOCK ASSESSMENT ROPED IN ONLY T HE UNDISCLOSED INCOME AND THE REGULAR ASSESSMENT PROCEEDINGS WERE PRESERVED, RESULTING IN MULTIPLE ASSESSMENTS. UNDER SECTION 1 53A, HOWEVER, THE ASSESSING OFFICER HAS BEEN GIVEN THE POWER TO A SSESS OR REASSESS THE 'TOTAL INCOME' OF THE SIX ASSESSMENT Y EARS IN QUESTION IN SEPARATE ASSESSMENT ORDERS. THE ASSESSING OFFICE R IS EMPOWERED TO REOPEN THOSE PROCEEDINGS AND REASSESS THE TOTAL INCOME, TAKING NOTE OF THE UNDISCLOSED INCOME, IF A NY, UNEARTHED DURING THE SEARCH. HE HAS BEEN ENTRUSTED WITH THE D UTY OF BRINGING TO TAX THE TOTAL INCOME OF AN ASSESSEE WHOSE CASE I S COVERED BY SECTION 153A, BY EVEN MAKING REASSESSMENTS WITHOUT ANY FETTERS. THIS MEANS THAT THERE CAN BE ONLY ONE ASSESSMENT OR DER IN RESPECT OF EACH OF THE SIX ASSESSMENT YEARS, IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. WHEN ONCE THE PROCEEDINGS ARE INITIATED UNDER SECTION 153A, T HE LEGAL EFFECT IS EVEN IN CASE WHERE THE ASSESSMENT ORDER IS PASSED I T STANDS REOPENED. IN THE EYE OF LAW THERE IS NO ORDER OF AS SESSMENT. RE OPENED MEANS TO DEAL WITH OR BEGIN WITH AGAIN. IT M EANS THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTA L INCOME OF SIX ITA NOS.1211 TO 1217/BANG/2019 PAGE 34 OF 73 ASSESSMENT YEARS. ONCE THE ASSESSMENT IS REOPENED , THE ASSESSING AUTHORITY CAN TAKE NOTE OF THE INCOME DISCLOSED IN THE EARLIER RETURN, ANY UNDISCLOSED INCOME FOUND DURING SEARCH 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 W HAT IS THE 'TOTAL INCOME' OF EACH YEAR AND THEN PASS THE ASSESSMENT O RDER. 53. HENCE WE ARE OF THE VIEW THAT THIS CONTENTION O F THE LEARNED COUNSEL FOR THE ASSESSEE CANNOT BE ACCEPTED. AS RIGHTLY CON TENDED BY THE DR, THERE IS NO REQUIREMENT FOR AN ASSESSMENT MADE UNDER SECT ION 153A OF THE ACT BEING BASED ON ANY MATERIAL SEIZED IN THE COURSE OF SEARCH. FURTHER UNDER THE SECOND PROVISO TO SECTION 153A PENDING ASSESSME NT OR RE-ASSESSMENT PROCEEDINGS IN RELATION TO ANY ASSESSMENT YEAR FALL ING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN SECTION 153A(B) OF THE ACT SHALL ABATE. THUS THE ASSESSING OFFICER GETS JURISDICTION FOR SI X YEARS ASSESSMENT YEARS REFERRED TO IN SECTION 153A(B) OF THE ACT FOR MAKIN G AN ASSESSMENT OR RE- ASSESSMENT. IT IS NOT THE COMPLAINT OF THE ASSESSEE THAT ANY INCOME, WHICH IS ALREADY SUBJECTED TO ASSESSMENT UNDER SECTION 14 3(3) OR UNDER SECTION 148 OF THE ACT COMPLETED PRIOR TO THE SEARCH IN RES PECT OF SIX ASSESSMENT YEARS REFERRED TO IN SECTION 153A(B) OF THE ACT AND IN THE SECOND PROVISO TO SECTION 153A, HAS ALSO BEEN INCLUDED IN THE ASSESSM ENT FRAMED UNDER SECTION 153A OF THE ACT. IN SUCH CIRCUMSTANCES THE PLEA OF THE ASSESSEE CANNOT BE ACCEPTED. 54. IN OUR CONSIDERED OPINION, AS PER CLAUSE (A) OF SUB SECTION (1) OF SECTION 153A, AT THE STAGE OF ISSUE OF NOTICE U/S 1 53A, THE ONLY REQUIREMENT IS TO ASK THE ASSESSEE TO FILE RETURN OF INCOME FOR RELEVANT SIX YEARS COVERED BY SECTION 153A AND AFTER FILING OF RETURN OF INC OME, THE ASSESSMENT TO BE MADE BY THE AO WILL BE ASSESSMENT OR REASSESSMEN T HAS TO BE ITA NOS.1211 TO 1217/BANG/2019 PAGE 35 OF 73 DETERMINED AFTERWARDS AND NOT AT THE TIME OF ISSUE OF NOTICE U/S 153A. IN THIS VIEW OF THE MATTER, WE FIND NO MERIT IN THIS TECHNI CAL OBJECTION RAISED BY THE ASSESSEE AND THE SAME IS REJECTED. 55. ACCORDINGLY, THE ACTION OF THE AO IN ISSUING N OTICE U/S. 153A IN THESE ASSESSMENT YEARS 2009-10 TO 2012-13 IS JUSTIFIED. THIS GROUND OF THE ASSESSEE IS THEREFORE DISMISSED. 56. THE NEXT COMMON GROUND FOR THE AYS 2009-10 TO 2 012-13 IS WHETHER THE STATUS OF ASSESSEE IS RESIDENT OR NON-RESIDENT. THE AO HAS HELD THAT THE ASSESSEE IS A RESIDENT ON THE FOLLOWING GROUNDS :- SOME PAGES OF THE COPY OF THE PASSPORT WERE NOT CL EAR AND THEREFORE, HE IS NOT ABLE TO ARRIVE AT A FACTUAL PO SITION WHETHER THE ASSESSEE WAS PRESENT IN INDIA FOR A PERIOD OF 182 D AYS OR MORE FOR THE RELEVANT PREVIOUS YEAR. THE ASSESSEE WAS EMPLOYED IN INDIA IN VARIOUS COM PANIES AND DRAWING SALARY. THEREFORE, THE APPELLANT HAD GONE ABROAD ONLY ON VISITS AND THE APPELLANT DID NOT LEAVE INDIA TO TAK E UP EMPLOYMENT OUTSIDE INDIA. HE ALSO HELD THAT THE APPELLANT DID NOT GO ABROAD WITH AN INTENTION TO LEAVE INDIA PERMANENTLY AND SETTLE ABROAD. THE APPELLANT HAS BEEN VISITING DUBAI FROM SINGAPOR E AND THEREFORE, THE APPELLANT DID NOT LEAVE INDIA FOR TH E PURPOSE OF EMPLOYMENT IN SINGAPORE. 57. AT THE OUTSET THE LD. AR SUBMITTED THE FINDINGS OF THE AO THAT THE ASSESSEE HAD NOT FURNISHED READABLE PHOTOCOPY OF TH E PASSPORT ARE NOT BORNE OUT OF THE FACTS. THE ASSESSEE VIDE HIS LETT ER DATED 23.12.2016 HAD ENCLOSED COLOUR XEROX OF PASSPORT COPIES AND WORKIN G OF STAY BASED ON THE ITA NOS.1211 TO 1217/BANG/2019 PAGE 36 OF 73 NUMBER OF DAYS. THEREFORE, THE ALLEGATION IN THE AS SESSMENT ORDER THAT THE APPELLANT HAD NOT FURNISHED CLEAR PHOTOCOPIES OF TH E PASSPORT IS NOT BORNE OUT OF THE RECORDS. THE PASSPORT COPIES IN PAGE NOS . 247 TO 324 OF THE PAPER BOOK WOULD ATTEST TO THIS FACT. 58. ACCORDING TO THE AO, THE ASSESSEE WAS PRESENT I N INDIA AS PER THE DETAILS BELOW:- FINANCIAL YEAR NO. OF DAYS 2008 - 09 174 2009-10 180 2010-11 181 2011 - 12 179 59. AS PER ASSESSEE, HE WAS IN INDIA AS PER THE DET AILS GIVEN BELOW:- FINANCIAL YEAR NO. OF DAYS 2008-09 145 2009 - 10 150 2010 - 11 160 2011 - 12 154 60. THE LD. AR SUBMITTED THAT IN PAGE 231 OF THE PAPER BOOK THESE DETAILS ARE FURNISHED. THE AO HAS INCLUDED THE DATES OF ARRIVAL IN INDIA ALSO AS BEING PRESENT IN INDIA. IN THIS CONNECTION AS HELD BY THE CO-ORDINATE BENCH IN MANOJ KUMAR REDDY VS ITO, (INTERNATIONAL T AXATION), 34 SOT 180, THE DATE OF ARRIVAL SHOULD BE EXCLUDED WHILE CALCUL ATING THE NUMBER OF DAYS PRESENT IN INDIA. IT WAS HELD THAT THE DATE OF ARRIVAL SHOULD BE EXCLUDE D. THE ABOVE DECISION OF THE TRIBUNAL HAS BEEN UPHELD BY T HE HON'BLE KARNATAKA HIGH COURT IN DIT VS MANOJ KUMAR REDDY NARE, 12 TAXMANN.COM 326. THE ASSESSEE WORKED OUT HIS PRESENCE IN INDIA DURING THE FY 2008-09 TO 2011- 12 AND FURNISHED THE DETAILS IN PAGE NOS. 238 TO 24 5 OF THE PAPER BOOK. THE ASSESSEE HAD NOT STAYED IN INDIA FOR ANY YEAR FOR A PERIOD OF MORE THAN 182 DAYS. ITA NOS.1211 TO 1217/BANG/2019 PAGE 37 OF 73 61. IT WAS FURTHER SUBMITTED THAT A PERUSAL OF THE SECTION 6 OF THE ACT WOULD SHOW THAT NORMALLY A PERSON WOULD NOT BE A RESIDENT IN INDIA IF HIS PRESENCE IN INDIA DURING THE PREVIOUS YEAR IS LESS THAN 182 DAYS. BUT SEC.6(L)(C) STATES THAT A PERSON SHALL BE DEEMED BE A RESIDENT IN INDI A IF HE IS PRESENT IN INDIA FOR A PERIOD OF 60 DAYS DURING THE PREVIOUS YEAR AN D ALSO PRESENT IN INDIA FOR A PERIOD OR PERIODS AMOUNTING IN ALL TO 365 DAYS OR MORE IN THE PREVIOUS 4 YEARS. BUT CLAUSES (A) AND (B) OF THE EXPLANATION B ELOW S.6(L)(C) PROVIDE AN EXCEPTION TO 60 DAYS RULE. UNDER CLAUSE (A) OF THE EXPLANATION, IF A PERSON LEAVES INDIA FOR EMPLOYMENT OUTSIDE INDIA IN ANY PR EVIOUS YEAR, '60 DAYS' SHALL BE SUBSTITUTED BY '182' DAYS. THEREFORE, IN T HE YEAR IN WHICH AN ASSESSEE LEAVES INDIA FOR EMPLOYMENT IF HE IS IN IN DIA FOR A PERIOD LESS THAN 182 DAYS HE WILL NOT BE A RESIDENT. 62. THE LD. AR SUBMITTED THAT T HE AO ACCEPTS THAT THE APPELLANT WAS PRESENT IN INDIA FOR THE ABOVE YEARS WAS LESS THAN 182 DAYS. BUT HE STAT ES THAT THE APPELLANT WAS EMPLOYED IN VARIOUS COMPANIE S IN INDIA, AND THEREFORE, HE HAD NOT LEFT INDIA FOR EMPLOYMENT OUT SIDE INDIA. IT IS SUBMITTED THAT THE EXPRESSION 'EMPLOYMENT OUTSIDE INDIA' IN C LAUSE (A) OF EXPLANATION BELOW S.6(L)(C) HAS NOT BEEN DEFINED. ALL IT MEANS IS THAT THE ASSESSEE HAS TO LEAVE INDIA TO TAKE UP AN EMPLOYMENT OUTSIDE IND IA THE FACT THAT AN ASSESSEE CONTINUES TO BE EMPLOYED IN INDIA IN SOME OTHER COMPANIES OR HE HAS SOME OTHER ECONOMIC INTEREST IN INDIA DOES NOT DETRACT FROM THE FACT THAT HE HAS LEFT INDIA FOR TAKING UP EMPLOYMENT OUTSIDE INDIA. 63. THE AO HAS RELIED ON THE DECISION OF THE ITAT I N SHRI KY. PATIL 33 ITD 714 . IT IS SUBMITTED THAT THE RELIANCE ON THIS DECISI ON IS MISPLACED. THE ASSESSEE THEREIN LEFT INDIA ON ACCOUNT OF THE WORK IN RELATION TO HIS INDIAN EMPLOYMENT. HIS EMPLOYER IN INDIA SENT HIM ABROAD F OR SHORT VISITS ON WORK. THE ASSESSEE MADE A CLAIM THAT HIS VISITS ABROAD WA S TO TAKE UP EMPLOYMENT OUTSIDE INDIA AND THEREFORE, CLAUSE (A) OF THE EXPL ANATION WOULD APPLY. THIS WAS NEGATIVED BY THE TRIBUNAL AND IT WAS HELD THAT HIS VISITS ABROAD WILL NOT ITA NOS.1211 TO 1217/BANG/2019 PAGE 38 OF 73 FALL WITHIN THE SCOPE OF 'FOR THE PURPOSE OF EMPLOY MENT OUTSIDE INDIA'. THE FACTS OF THE PRESENT CASE ARE TOTALLY DIFFERENT. TH E ASSESSEE HEREIN DID NOT LEAVE INDIA ON ACCOUNT OF THE WORK OF ANY OF THE IN DIAN COMPANIES IN WHICH HE IS EMPLOYED. HE LEFT INDIA IN SEPTEMBER 2008 TO TAKE UP EMPLOYMENT WITH EMBASSY GROUP INTERNATIONAL, SINGAPORE. HENCE, IT I S SUBMITTED THAT THE ASSESSEE LEFT INDIA ONLY FOR TAKING UP AN EMPLOYMEN T OUTSIDE INDIA AND CLAUSE OF THE EXPLANATION WOULD SQUARELY APPLY. FOR THIS PURPOSE, RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS FOR THE PROPO SITION THAT THE EXPRESSION 'EMPLOYMENT OUTSIDE INDIA' DOES NOT MEAN THAT AN AS SESSEE CANNOT CONTINUE TO BE AN EMPLOYEE OF SOME OTHER ENTI1Y IN INDIA DURING THAT PERIOD:- I) ABDUL RAZAK 337 ITR 350 II) BRITISH GAS INDIA PVT LTD 287 ITR 462 III) ZIALLUALL SHERIFF VS ACIT (INTERNATIONAL TAXATION) 316 ITR (AT) 92, 116 TTJ 76 64. IT IS SUBMITTED THAT THE AO HAS ALSO REJECTED T HE APPELLANT'S CASE ON THE GROUND THAT THE ASSESSEE DID NOT INTEND TO STAY PERMANENTLY OUTSIDE INDIA AND HE REFERS TO THE FACT THAT THE ASSESSEE WAS VISITING INDIA VERY OFTEN. IT IS SUBMITTED THAT THE ONLY CRITERIA FOR DECIDING THE RESIDENTIAL STATUS IS THE NUMBER OF DAYS PRESENT IN INDIA AND WHETHER A PERSO N LEFT INDIA FOR TAKING UP EMPLOYMENT OUTSIDE INDIA. WHETHER THE APPELLANT HAD AN INTENTION TO STAY PERMANENTLY OR OTHERWISE IS NOT A CRITERION TO BE F OLLOWED IN DECIDING THE RESIDENTIAL STATUS AS HELD IN THE FOLLOWING DECISIO NS:- I) ADDL. DIRECTOR OF INCOME TAX VS SUDHIR CHOUDHRIE 55 ITR (TRIB) 681 II) CIT VS SURESH NANDA, 375 ITR 172 65. AS PER AO, THE ASSESSEE HAD BEEN VISITING DUBAI FROM SINGAPORE QUITE OFTEN AND THEREFORE, HE HAS NOT GONE TO SINGA PORE TO TAKE UP ITA NOS.1211 TO 1217/BANG/2019 PAGE 39 OF 73 EMPLOYMENT. IT IS SUBMITTED THAT ASSESSEE WENT TO DUBAI ON HIS OFFICIAL WORK ONLY. EVEN OTHERWISE, ONCE THE APPELLANT LEAVES IND IA FOR THE PURPOSE OF TAKING UP EMPLOYMENT OUTSIDE INDIA, WHETHER HE STAY ED IN THE OTHER COUNTRY OR WAS TRAVELLING IS NOT A CRITERION TO DECIDE THE APPLICABILITY OF CLAUSE (A) OF THE EXPLANATION. THE ASSESSEE SUBMITS THAT ONCE THE TEST OF LEAVING INDIA FOR THE PURPOSE OF EMPLOYMENT OUTSIDE INDIA IS SATISFIE D, THE PERIOD OF 60 DAYS REFERRED IN S.6(1)(C) GETS SUBSTITUTED BY 182 DAYS AND THE ONLY RELEVANT ENQUIRY IS WHETHER THE APPELLANT IS PRESENT IN INDI A FOR 182 DAYS OR LESS DURING THE RELEVANT PREVIOUS YEAR. THERE IS NO NEED TO ENQ UIRE AS TO WHETHER THE APPELLANT FURTHER TRAVELLED TO ANY OTHER COUNTRY. T HESE ARE MATTERS THAT MAY BE RELEVANT FOR DECIDING THE TREATY APPLICABILITY. BUT THE APPELLANT HAS NOT CLAIMED ANY TREATY BENEFIT IN HIS RETURN. HE HAS ON LY CLAIMED THAT HE IS A NON- RESIDENT AND HE HAS TO BE ASSESSED ACCORDINGLY. HEN CE, THIS CONTENTION OF THE LEARNED ASSESSING OFFICER IS TO BE REJECTED. IN VIEW OF THE ABOVE SUBMISSIONS, IT IS PRAYED THAT THE HON'BLE TRIBUNAL BE PLEASE TO HOLD THAT THE APPELLANT IS A NON-RESIDENT FOR THE AYS 2009-10 TO 2012-13. 66. THE LD. DR SUBMITTED THAT THE AO WAS JUSTIFIED IN CHANGING THE STATUS FROM NON-RESIDENT TO RESIDENT. HE SUBMITTED THAT L OOKING AT THE BUSINESS AFFAIRS OF THE ASSESSEE IN INDIA AND THE NUMBER OF VISITS TO FOREIGN COUNTRIES AND INDIA, IT IS APPARENT THAT ASSESSEE WAS NOT VIS ITING INDIA, BUT HE WAS AN INDIAN RESIDENT AND FOR ALL PRACTICAL PURPOSES HE W AS VISITING ABROAD IN RELATION TO HIS BUSINESS AFFAIRS. EXPLANATION (B) TO SECTION 6(1) PROVIDES STAY OF LESS THAN 182 DAYS IN CASE OF A PERSON OF INDIAN ORIGIN WHO LEAVES OUTSIDE AND VISITS INDIA TO LOOK AFTER HIS INVESTMENTS. IN THIS CASE, THE ASSESSEE LIVING IN INDIA CARRIED OUT VARIOUS BUSINESS ACTIVITIES AN D VISITS OUTSIDE INDIA. THEREFORE, THE BENEFIT OF EXPLANATION (B) TO SECTIO N 6(1) HAS BEEN RIGHTY DENIED. THE ASSESSEE HAS BEEN CLAIMING STATUS OF N ON-RESIDENT WITHOUT DISCLOSING THE PROPER FACTS. THE LD. AR FURNISHED DETAILS OF HIS STAY OUTSIDE INDIA BEFORE THIS BENCH WHICH WAS PRODUCED BEFORE T HE AO HOWEVER NOT AT ITA NOS.1211 TO 1217/BANG/2019 PAGE 40 OF 73 ALL LEGIBLE. INSPITE OF REPEATED REQUESTS BY THE A O, ASSESSEE HAS FILED ILLEGIBLE COPIES OF HIS PASSPORT DETAILS SO AS TO S HOW HIS VISIT PARTICULARS TO INDIA AND ABROAD. HE SUBMITTED THAT THE MATERIAL OB TAINED DURING THE SEARCH ACTION WHICH SHOWS THAT ASSESSEE HAS BEEN CARRYING ON BUSINESS ACTIVITIES IN INDIA BY ACQUIRING VARIOUS PROPERTIES. BY LOOKIN G AT THE BUSINESS ACTIVITIES CARRIED ON BY THE ASSESSEE, IT CANNOT BE SAID TO BE A PERSON WHO BEING OUTSIDE INDIA COMES ON A VISIT TO INDIA IN THE PREV IOUS YEAR IN TERMS OF EXPLANATION (B) TO SECTION 6(1) OF THE ACT. ACCORD ING TO THE LD. DR, THE ASSESSEES PORTFOLIO SUGGESTS THAT HE IS ONE AMONGS T THE 50 RICHEST PERSONS IN INDIA AND HE IS ON BOARD OF DIRECTORS OF SO MANY COMPANIES IN INDIA AND CHAIRMAN & MD OF EMBASSY GROUP. IN INDIA HE IS A L EADING PROPERTY DEVELOPER AND BEING A PROMOTER, HE HAS DEVELOPED OV ER 55 MILLION SQ.FT. OF COMMERCIAL, RESIDENTIAL, INDUSTRIAL AND HOSPITALITY SPACES IN INDIA AND OVERSEAS. HIS BUSINESS OPERATIONS HAS BEEN SPREAD O VER BANGALORE, MUMBAI, DELHI NCR, CHENNAI, KOLKATA, HYDERABAD, PUN E, TRIVANDRUM, HOSUR AND INTERNATIONAL LEVELS AT SERBIA, MALAYSIA, ETC. THEREFORE, HE IS A RESIDENT OF INDIA AND GOES ABROAD FOR BUSINESS PURP OSES AND HIS CASE IS NOT COVERED BY CLAUSE (B) BUT THE SAME FALLS UNDER CLAU SE (C) OF SECTION 6(1) OF THE ACT. THEREFORE, THE STATUS OF ASSESSEE HAS BEE N RIGHTLY HELD AS RESIDENT WHICH SHOULD BE UPHELD. WITHOUT PREJUDICE TO THE A BOVE, THE LD. DR SUBMITTED THAT THE DOCUMENT WHAT HE HAS PRODUCED IN THE FORM OF CHART BEFORE THE TRIBUNAL SHOWING HIS VISIT TO INDIA AND ABROAD WAS NOT PRODUCED BEFORE THE AO INSPITE OF REPEATED REQUESTS AND THE COPY PRODUCED BEFORE THE AO WAS NOT LEGIBLE. HE SUBMITTED THAT AT BEST, THE ISSUE MAY BE REMITTED TO THE AO FOR FRESH CONSIDERATION TO DECIDE THE RES IDENTIAL STATUS OF THE ASSESSEE ON THE BASIS OF FRESH DOCUMENTS FILED NOW BEFORE THE TRIBUNAL. 67. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS A ND PERUSED THE MATERIAL ON RECORD. NOW THE QUESTION BEFORE US WHET HER THE ASSESSEE IS TO BE TREATED AS NON RESIDENT OR TO HOLD HIM AS RESIDE NT AS BEING INTERPRETED ITA NOS.1211 TO 1217/BANG/2019 PAGE 41 OF 73 BY THE AO. WHETHER THE DAYS OF STAY IN INDIA IS THE ONLY TEST FOR DETERMINING THE STATUS AS NON RESIDENT AND THE PROVISIONS AND B OARD CIRCULAR ARE CLEAR AND THIS BEING SO NO FURTHER INTERPRETATION IS REQU IRED. 68. IN OUR CONSIDERED OPINION THE CONTROVERSY IN Q UESTION STANDS ANSWERED BY HON'BLE KERALA HIGH COURT IN THE CASE O F ABDUL RAZAQ 337 ITR 350 (KER.), IN SIMILAR FACTS AND CIRCUMSTANCES BY F OLLOWING OBSERVATIONS: 'THERE IS NO CONTROVERSY ON FACTS INASMUCH AS THE A SSESSEE WAS IN INDIA FOR ONLY 177 DAYS IN THE PREVIOUS YEAR RELEVA NT FOR THE ASSESSMENT YEAR 1989-90, AND UNLESS IT IS ESTABLISH ED THAT EXPLANATION (A ) TO SUB-CLAUSE (C ) OF SECTION 6(L) OF THE ACT IS NOT AVAILABLE TO THE ASSESSEE, HE CANNOT BE TREATED AS A RESIDENT IN INDIA FOR THE PURPOSE OF ASSESSING HIS GLOBAL INCOME INCL UDING THE BUSINESS INCOME EARNED ABROAD DURING THE PREVIOUS Y EAR. OBVIOUSLY EXPLANATION (A ) IS AN EXCEPTION TO SECTION 6(L)(C) OF THE ACT, UNDER WHICH 60 DAYS RESIDENCE REFERRED TO IN C LAUSE (C) IS SUBSTITUTED TO 182 DAYS IF THE ASSESSEE WENT ABROAD IN THE PREVIOUS YEAR FOR THE PURPOSE OF EMPLOYMENT ADMITTEDLY, THE ASSESSEE WENT ABROAD ON 24- 9-1988 ONLY TO TAKE UP BUSINESS THERE . IF THE BUSINESS UNDERTAKEN AND CARRIED ON BY THE ASSESSEE IN THE PR EVIOUS YEAR ABROAD AMOUNTS TO EMPLOYMENT WITHIN THE MEANING OF EXPLANATION (A ) TO SECTION 6(1)(C) OF THE ACT, THEN THE ASSESSEE IS ENTITLED TO THE STATUS OF NON-RESIDENT DECLARED BY THE CIT (APPEALS ), WHICH IS CONFIRMED BY THE TRIBUNAL. 69. THE CONTENTION OF THE LEARNED DR IS THAT EMPLO YMENT NECESSARILY INVOLVES EMPLOYER-EMPLOYEE RELATIONSHIP WITH TERMS OF EMPLOYMENT AND ONLY UNDER AN EMPLOYER A PERSON CAN BE EMPLOYED. LEARNED COUNSEL APPEARING ITA NOS.1211 TO 1217/BANG/2019 PAGE 42 OF 73 FOR THE ASSESSEE, ON THE OTHER HAND, CONTENDED THAT EMPLOYMENT IN THE CONTEXT OF EXPLANATION (A) INCLUDES SELF-EMPLOYMENT , AND TAKING UP AND CONTINUE BUSINESS IS ALSO EMPLOYMENT FOR THE PURPOS E OF THE ABOVE EXPLANATION. 70. DURING HEARING, LEARNED DR HAS RELIED ON THE ME MORANDUM EXPLAINING THE PROVISIONS OF THE FINANCE BILL INTRO DUCING THE EXPLANATION, CONTAINED IN 134 ITR 137 (ST.) [PARA 35 OF THE FINA NCE BILL], WHICH READS AS FOLLOW:'-- '(III) LT IS PROPOSED TO PROVIDE THAT WHERE AN INDI VIDUAL WHO IS A CITIZEN OF INDIA LEAVES INDIA IN ANY YEAR FOR THE P URPOSES OF EMPLOYMENT OUTSIDE INDIA, HE WILL NOT BE TREATED AS RESIDENT IN INDIA IN THAT YEAR UNLESS HE HAS BEEN IN INDIA IN T HAT YEAR FOR 182 DAYS OR MORE. THE EFFECT OF THIS AMENDMENT WILL BE THAT THE 'TEST' OF RESIDENCE IN (C) ABOVE WILL STAND MODIFIED TO THIS EXTENT IN SUCH CASES.' 71. SIMILARLY THE CENTRAL BOARD OF DIRECT TAXES ISS UED CIRCULAR NO. 346, DATED 30-6-1982, WHICH READS AS FOLLOWS-' '7.3 WITH A VIEW TO AVOIDING HARDSHIP IN THE CASE O F INDIAN CITIZENS, WHO ARE EMPLOYED OR ENGAGED IN OTHER AVOCATIONS OUT SIDE INDIA, THE FINANCE ACT HAS MADE THE FOLLOWING MODIFICATIONS IN THE TESTS OF RESIDENCE IN INDIA:' (I)& (II) WHERE AN INDIVIDUAL WHO IS A CITIZEN OF INDIA LEAVES INDIA IN ANY YEAR FOR THE PURPOSES OF EMPLOYMENT OU TSIDE INDIA, HE WILL NOT BE TREATED AS RESIDENT IN INDIA IN THAT YEAR UNLESS HE ITA NOS.1211 TO 1217/BANG/2019 PAGE 43 OF 73 HAS BEEN IN INDIA IN THAT YEAR FOR 182 DAYS OR MORE . THE EFFECT OF THIS AMENDMENT WILL BE THAT THE TEST OF RESIDENCE I N (C) ABOVE WILL STAND MODIFIED TO THAT EXTENT IN SUCH CASES.' 72. WHAT IS CLEAR FROM THE ABOVE IS THAT NO TECHNIC AL MEANING IS INTENDED FOR THE WORD 'EMPLOYMENT' USED IN THE EXPLANATION. IN OUR VIEW, GOING ABROAD FOR THE PURPOSE OF EMPLOYMENT ONLY MEANS THAT THE V ISIT AND STAY ABROAD SHOULD NOT BE FOR OTHER PURPOSES SUCH AS A TOURIST, OR FOR MEDICAL TREATMENT OR FOR STUDIES OR THE LIKE. GOING ABROAD FOR THE PU RPOSE OF EMPLOYMENT THEREFORE MEANS GOING ABROAD TO TAKE UP EMPLOYMENT OR ANY AVOCATION AS REFERRED TO IN THE CIRCULAR, WHICH TAKES IN SELF-EM PLOYMENT LIKE BUSINESS OR PROFESSION. SO MUCH SO, IN OUR VIEW, TAKING UP OWN BUSINESS BY THE ASSESSEE ABROAD SATISFIES THE CONDITION OF GOING ABROAD FOR THE PURPOSE OF EMPLOYMENT COVERED BY EXPLANATION (A) TO SECTION 6(L)(C) OF THE ACT. FOR THE PURPOSE OF THE EXPLANATION, EMPLOYMENT INCLUDES SELF-EMPLOYMEN T LIKE BUSINESS OR PROFESSION TAKEN UP BY THE ASSESSEE ABROAD. 73. THE HON'BLE HIGH COURT IN THE CASE OF CIT V. ABDUL RAZAK [337 ITR 267 (KER)] HAS CONSIDERED THE PLAIN MEANING OF SECTION 6(L)(C) , THE BOARD CIRCULARS AND HELD THAT THE PURPOSE OF GOING ABROAD INCLUDES THE PURPOSE OF SEEKING BUSINESS IN FOREIGN COUNTRIES ALSO. THE GOI NG ABROAD FOR BUSINESS PURPOSES WILL INCLUDE SELF EMPLOYMENT, BUSINESS OR PROFESSION TAKEN UP BY THE ASSESSEE. IN OUR CONSIDERED VIEW, THESE FACTS C ANNOT BE CONSTRUED IN A MANNER TO PROJECT THAT IT IMPLIES CARRYING BUSINESS ACTIVITIES FROM INDIA. 74. IN VIEW OF FACTS, CIRCUMSTANCES, CASE LAWS AND CBDT CIRCULAR WE REACH TO FOLLOWING CONCLUSIONS:- (A) RESIDENTIAL STATUS IS ALWAYS DETERMINED FOR THE PRE VIOUS YEAR BECAUSE THE ASSESSEE HAS TO DETERMINE THE TOTAL INC OME OF THE PREVIOUS YEAR ONLY. IN OTHER WORDS, AS THE TAX IS O N THE INCOME OF ITA NOS.1211 TO 1217/BANG/2019 PAGE 44 OF 73 A PARTICULAR PREVIOUS YEAR, THE ENQUIRY AND DETERMI NATION OF THE RESIDENCE QUALIFICATION MUST CONFINE TO THE FACTS O BTAINING IN THAT PREVIOUS YEAR. (B) IF A PERSON IS RESIDENT IN INDIA IN A PREVIOUS YEAR IN RESPECT OF ANY SOURCE OF INCOME, HE SHALL BE DEEMED TO BE RESIDENT IN INDIA IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR I N RESPECT OF EACH OF HIS OTHER SOURCES OF INCOME. (C) RELEVANT PREVIOUS YEAR MEANS, THE PREVIOUS YEA R FOR WHICH RESIDENTIAL STATUS IS TO BE DETERMINED (D) IT IS NOT NECESSARY THAT THE STAY SHOULD BE FO R A CONTINUOUS PERIOD. (E) IT IS NOT NECESSARY THAT THE STAY SHOULD BE AT ONE PLACE IN INDIA. (F) A PERSON MAY BE RESIDENT OF MORE THAN ONE COUN TRY FOR ANY PREVIOUS YEAR. (G) CITIZENSHIP OF A COUNTRY AND RESIDENTIAL STATU S OF THAT COUNTRY ARE TWO SEPARATE CONCEPTS. A PERSON MAY BE AN INDIAN NATIONAL/CITIZEN BUT MAY NOT BE A RESIDENT IN INDIA AND VICE VERSA. (H) NO. OF DAYS OF STAY IN INDIA DETERMINES THE ST ATUS. (I) ASSESSEE CAN TAKE ANY VOCATION IN ANY OF THE C OUNTRIES. (J) DURING THESE YEARS ASSESSEE HAD FOR MORE GREAT ER BUSINESS ENGAGEMENTS ABROAD AS COMPARED TO INDIA. THEREFORE IT CANNOT BE ASSUMED THAT HE DID NOT COME FROM OUTSIDE OF IND IA. (K) THE EXPLANATION (B) TO SEC. 6, THE EXPLANATORY NOTES FOR THIS AMENDMENT AS CLARIFIED BY CBDT IN THIS BEHALF ALSO MAKE THE NO. OF DAYS PROVISION VERY CLEAR AND UNAMBIGUOUS AND LE AVES NO ROOM FOR INTERPRETATION. (L) EVEN FOR THE SAKE OF ARGUMENTS WE ACCEPT THE A OS INTERPRETATION IT LEADS TO ABSURD RESULT BY MAKING PRACTICALLY EVE RY NON-RESIDENT ITA NOS.1211 TO 1217/BANG/2019 PAGE 45 OF 73 AS A RESIDENT IN INDIA. THIS DOES NOT SEEM TO BE TH E LEGISLATIVE INTENT BEHIND THIS AMENDMENT AS THE MISCHIEF SOUGHT TO BE REDRESSED BY THIS AMENDMENT TO REDUCE THE HARDSHIP AND NOT TO INCREASE THE HARDSHIP BY UNSETTLING WHAT IS SETTLED . 75. WHEN THE LAW MANDATES THAT AN INDIAN CITIZEN CA N GO ABROAD FOR THE PURPOSE OF SEEKING EMPLOYMENT OR BUSINESS, THERE IS NO ROOM TO MISCONSTRUCTION TO ASSUME THAT ASSESSEES LARGER PRE SENCE/BUSINESS INVESTMENT/FAMILY TIES ARE IN INDIA THAN ABROAD. TH IS AMOUNTS TO A GUESS WORK CONTRARY TO SETTLED PROPOSITIONS. THEREFORE, W E ARE UNABLE TO AGREE WITH DEPARTMENT THAT ASSESSEE WAS NOT VISITING INDIA FRO M OUTSIDE INDIA. THERE IS NO RESTRICTION FOR NUMBER OF DAYS SPENT ABROAD. WHA T THE LAW MANDATES IS TO LOOK AT THE NUMBER OF DAYS STAYED IN INDIA. 76. SIMILAR VIEW HAS BEEN ADOPTED BY THE AUTHORITY OF ADVANCE RULINGS IN THE CASE OF DR. VIRENDRA KUMAR (308 ITR 28) AND CANORO RESOURCES (313 ITR 2). DEPARTMENTAL AUTHORITIES, EXCEPT FOR INTERP RETING THE WORDS IN THEIR OWN MANNER, HAVE NOT RELIED ON ANY CASE LAW ON THE ISSUE OF SECTION 6(L)(C) AND EXPLN. (B) SPECIFICALLY. THUS NO JUDGME NT CONTRARY TO HON'BLE KERALA HIGH COURT HAS BEEN CITED BY THE REVENUE. IT IS A TRITE LAW THAT IN INCOME TAX PROCEEDINGS THE WORDS SHALL BE GIVEN PLA IN AND ORDINARY MEANING AND INTERPRETATION SHOULD BE RESORTED ONLY WHEN THE MEANING IS AMBIGUOUS. WE ARE UNABLE TO SEE ANY AMBIGUITY IN THESE PROVISI ONS. HON'BLE KERALA HIGH COURT HAS HELD THAT FOR DETERMINING THE STATUS AS N ON RESIDENT IS TO BE DECIDED IN TERMS OF NO. OF DAYS OF STAY IN INDIA. T HIS BEING THE ONLY JUDGMENT AVAILABLE ON THIS ISSUE, IS BINDING AND IS TO BE RE SPECTFULLY FOLLOWED BY US. THE AAR JUDGMENT HAVE A PERSUASIVE VALUE AND THE DE CISIONS IN THE CASE OF DR. VIRENDRA KUMAR AND CANORO RESOURCES ALSO AAR HAS ADOPTED THE RATIO OF HON'BLE KERALA HIGH COURT JUDGMENT. THUS, THE TEST OF RESIDENCE WILL BE DETERMINED ON THE BASIS OF NUMBER OF DAYS OF STA Y IN INDIA AND NOT BY THE INTERPRETATION ADOPTED BY THE LOWER AUTHORITIES IN THIS CASE. IT HAS NOT BEEN ITA NOS.1211 TO 1217/BANG/2019 PAGE 46 OF 73 DISPUTED BY THE REVENUE THAT THE NUMBER OF DAYS OF THE STAY OF ASSESSEE IN INDIA ARE LESS THAN 182 DAYS AS SEEN FROM THE CHART APPEARING IN PARA 58 OR 59 OF THIS ORDER. IN THESE FACTS AND CIRCUMSTANCES THE ASSESSEE'S ARGUMENTS ON THIS ISSUE DESERVE TO BE UPHELD AND THE ISSUE NE ED NOT BE SET ASIDE TO AO FOR RE-EXAMINATION. 77. IN VIEW OF THE FACTS, CIRCUMSTANCES AND CASE LA WS CITED AND REFERRED ABOVE ON BEHALF OF THE ASSESSEE WE HOLD THAT THE DE TERMINATIVE TEST FOR THE STATUS OF NON RESIDENT BEING NUMBER OF DAYS OF STAY IN INDIA AND IN ASSESSEE'S CASE IN THESE FOUR YEARS, THE DAYS OF ST AY BEING LESS THAN 182 DAYS; EVEN AFTER CONSIDERING THE DAYS AS RECORDED BY THE AO IN HIS ORDER; THE STATUS TO BE APPLIED IN THIS CASE IS TO BE HELD AS NON RESIDENT AS CLAIMED BY ASSESSEE. THUS, THE ASSESSEE WILL BE LIABLE TO T AX ON INCOME ACCRUED IN INDIA ONLY. THE ASSESSEE'S GROUNDS IN THIS BEHALF A RE ALLOWED. 78. THE NEXT GROUND IN THE APPEALS FOR THE ASSESSME NT YEARS 2009-10 TO 2014-15 IS WITH REGARD TO THE FOLLOWING ADDITIONS U /S. 69C / 28(IV) OF THE ACT:- ASSESSMENT YEAR AMOUNT - RS. 2009-10 30,87,99,113 2010-11 22,65,95,837 2011-12 9,11,51,660 2012-13 5,77,24,891 2013-14 1,66,64,009 2014-15 15,32,71,818 2015-16 NIL 79. THE LD. AR SUBMITTED THAT RAL IS A COMPANY REGI STERED IN BAHAMAS WITH TWO SHAREHOLDERS. THOSE SHAREHOLDERS WERE SERA NGOON LTD AND SELETAR LTD. IT APPEARS THAT SOMETIME LATER THE WIFE OF THE APPELLANT, MRS. LINA VIRWANI BECAME THE SOLE SHAREHOLDER OF THIS COMPANY . THE COMPANY IS MANAGED BY A BOARD FROM SINGAPORE. THE AO SEEMS TO HAVE OBTAINED THE ITA NOS.1211 TO 1217/BANG/2019 PAGE 47 OF 73 INFORMATION FROM FOREIGN TAX DIVISION REGARDING RAL . BASICALLY, IT CONSISTED OF THE MEMORANDUM AND ARTICLES OF ASSOCIATION, THE FINANCIAL STATEMENTS, COPIES OF SOME BOARD RESOLUTIONS AND PROPOSAL FOR I NSURING THE LIFE OF THE APPELLANT BY M/S. MANU LIFE FINANCIAL. ALL THE ABOVE DOCUMENTS ARE PL ACED AT PAGES 538 TO 1038 OF PB. THE AO ALSO FOUND THAT RAL HAD PLEDGED ITS ASSETS IN RESPECT OF CERTAIN LOANS TAKEN BY THE APP ELLANT. THE AO ALSO FOUND THAT THERE WAS A NOTES TO ACCOUNTS REGARDING CONTIN GENT LIABILITY IN RESPECT OF THIS PLEDGE AS FOLLOWS:- THE COMPANY HAS ENTERED INTO THE PLEDGE AGREEMENTS WITH EFB, SINGAPORE BRANCH TO PLEDGE ITS ASSETS MAINTAINED WI TH THE BANK TO SECURE THE PAYMENT AND SATISFACTION OF ALL OUTSTANDING AND LIABILITIES WHETHER FUTURE OR PRESENT ACTUAL OR CON TINGENT INCURRED BY JITENDRA MOHANDAS VIRWANI, THE ULTIMATE BENEFICIARY OWNER OF THE COMPANY. 80. BASED ON THESE DOCUMENTS THE AO CAME TO A FINDING THAT THE APPELLANT IS A BENEFICIAL OWNER OF RAL. HE FOUND TH AT THE BANK ACCOUNTS STATEMENT OF RAL ARE NOT AVAILABLE ON RECORD AND THE BOARD RESOLUTIONS ARE THE ONLY DOCUMENTS WHICH REVEAL THE AMOUNT PAID TO SEVERAL PERSONS. THEREAFTER, HE CONCLUDES THAT ALL THE PAYMENTS MADE BY RAL TO VARIOUS PERSONS IS FOR THE BENEFIT OF THE APPELLANT AND THEREFORE, THE ABOVE SUMS HAVE TO BE ADDED U/S 28(IV) OF THE ACT OR U/S 69C O F THE ACT. 81. IT IS SUBMITTED THAT THE APPELLANT HAD CONSISTE NTLY DENIED BEFORE THE AO THAT HE IS IN ANY WAY CONNECTED WITH RAL. THE AO ON THE STATEMENT RECORDED ON VARIOUS DATES NOTES THAT THE APPELLANT HAS BEEN CLAIMING THAT RAL BELONGS TO HIS WIFE. HE ALSO NOTES THAT THE APP ELLANT HAS CATEGORICALLY STATED THAT HE DOES NOT OWN RAL. THE AO ASKED THE APPELLANT ABOUT CERTAIN TRANSACTIONS OF RAL. THE APPELLANT HAD CONSISTENTLY TOLD THE AO THAT HE IS NOT CONNECTED WITH RAL AND HE IS NOT AWARE OF SUCH TRANSACTIONS AND HE WILL NOT BE ABLE TO EXPLAIN THESE TRANSACTIONS. HOWEVER, THE AO COMES TO A ITA NOS.1211 TO 1217/BANG/2019 PAGE 48 OF 73 CONCLUSION THAT THE APPELLANT HAS BEEN STONEWALLING AND NOT COOPERATED WITH THE DEPARTMENT IN FURNISHING THE INFORMATION. 82. THE LD. AR SUBMITTED THAT THERE ARE CERTAIN FUN DAMENTAL PRINCIPLES GOVERNING THE ROLE OF EVIDENCES, ENQUIRY AND INVEST IGATION BY THE AO WHILE FRAMING AN ASSESSMENT UNDER THE INCOME TAX ACT. AO CANNOT ACT ON SUSPICION. HE HAS TO ESTABLISH A FACT WITH LEGAL AN D ACCEPTABLE EVIDENCE. NO ADDITION CAN BE MADE ON THE BASIS OF SURMISES AND C ONJECTURES. IN THIS CONNECTION, HE RELIED ON THE DECISION OF THE HON'BL E SUPREME COURT IN STATE OF KERALA VS M.M. MATHEW AND ANOTHER (1978) 4 SCC 65 WHEREIN IT WAS HELD THAT A STRONG SUSPICION FROM VERY STRANGE COINCIDEN CES AND GRAVE DOUBTS CANNOT TAKE THE PLACE OF LEGAL EVIDENCE. SUSPICI ON CAN ONLY BE A STARTING POINT OF ENQUIRY, NO CONCLUSION CAN BE DRAWN ON T HE BASIS OF A MERE SUSPICION. RELIANCE WAS ALSO PLACED ON THE DECISIO N OF THE HON'BLE GUJARAT HIGH COURT IN CIT VS BHANWARLAL SHARMA 214 TAXMANN 132 WHEREIN IT WAS HELD THAT,' YET, THIS QUESTION DO NOT CROSS THE REALM OF SUSPIC ION TO ENTER THE SPHERE OF PROOF, LET ALONE THE ARENA OF CONVINCING EVIDENCE'. 83. IN PCIT VS KRISHNADEVI 431 ITR 361 THE HON'BLE DELHI HIGH COURT HELD THAT THE RELIANCE OF ANY MATERIAL WITHOUT FURT HER CORROBORATIVE ON THE BASIS OF COGENT MATERIAL CANNOT JUSTIFY THE CONCLUS ION THE TRANSACTION IS BOGUS, SHAM ETC. IT WAS HELD THAT THE AO MUST DIG D EEP INTO THE ISSUE. IT WAS HELD THAT THE COURT HAS TO DECIDE AN ISSUE ON T HE BASIS OF EVIDENCE AND PROOF AND NOT ON SUSPICION ALONE. THE AO CANNOT REJ ECT EXPLANATION OFFERED BY AN ASSESSEE ARBITRARILY. RELYING ON DECISION OF ITAT IN AGSON GLOBAL P LTD VS ACIT 76 ITR(TRIB) 504, IT WAS SUBMITTED THAT THE TRIBUNAL OBSERVED THAT AN ASSESSING OFFICER IS NOT VESTED WITH UNFETTERED POWER TO REJECT ANY EXPLANATION AS BEING NOT TO HIS SATISFACTION MERELY ON THE BASIS OF SURMISES AND CONJECTURES. HE IS BOUND UNDER LAW TO ACT REASO NABLY AND JUSTLY WHILE FORMING ANY SATISFACTORY OPINION SURROUNDING THE EX PLANATION OFFERED BY THE TAXPAYER. HE CANNOT ACT UNREASONABLY AND CAPRICIOUS LY. IT IS WELL ESTABLISHED ITA NOS.1211 TO 1217/BANG/2019 PAGE 49 OF 73 THAT THE BURDEN OF PROOF REGARDING EXISTENCE OF A F ACT IS ON THE PERSON ALLEGING SUCH FACT. 84. THE LD. AR FURTHER SUBMITTED THAT IN PCIT VS KULWINDER SINGH 415 ITR 49 THE HON'BLE HIGH COURT APPROVED THE FINDING OF THE TRIBUNAL THAT THE BURDEN WAS ON THE DEPARTMENT TO PROVE UNDERSTATEMEN T OF SALE CONSIDERATION WHICH WAS NOT DISCHARGED AND THEREFOR E, THE ADDITION OF S.69B IS NOT JUSTIFIED. 85. IN CIT VS M. SWAMY 241 ITR 363 THE HON'BLE MADRAS HIGH COURT HELD THAT THE BURDEN OF SHOWING THAT THE ASSESSEE H AS UNDISCLOSED INCOME IS ON THE REVENUE. THAT BURDEN CANNOT BE SAI D TO BE DISCHARGED BY MERELY REFERRING TO THE STATEMENT GIVEN BY THE A SSESSEE TO THE THIRD PARTY IN CONNECTION WITH THE TRANSACTION WHICH WAS NOT DIRECTLY RELATED TO THE ASSESSMENT. IT IS IMPORTANT TO NOTE THAT THE HO N'BLE HIGH COURT HELD THAT A STATEMENT MADE BY AN ASSESSEE HIMSELF TO A T HIRD PARTY CANNOT BE THE BASIS FOR ANY ADDITION IN HIS LAX ASSESSMENT. I N THE PRESENT CASE, THE AO HAS RELIED ON THE STATEMENT OF A THIRD PARTY TO HOLD THAT THE APPELLANT IS THE OWNER OF RAL WITHOUT BRINING ANY CONCRETE AN D TANGIBLE MATERIAL TO PROVE THE SAME. THIS IS NOT PERMISSIBLE IN LAW. 86. IN CIT VS SUBRATA ROY 375 ITR 207 IT WAS HELD THAT THE PRIMARY BURDEN TO BRING TO TAX THE AMOUNTS ON THE GROUND TH E TRANSACTION IS A DEEMED DIVIDEND (WHEN IT IS NOT SO OTHERWISE) IS ON REVENUE. TO DISCHARGE THAT BURDEN, THE REVENUE CANNOT REST CONT ENT ON SURMISES AND ASSUMPTIONS; IT SHOULD PROVE THEM ON FACTS AND MATE RIALS ON RECORD. 87. IN BALDEV SINGH & CO VS CIT 384 ITR 91 , AT PAGE 101, THE HON'BLE COURT OBSERVED THAT THE ONUS IS TO PROVE A FACT IS ON THE PERSON ALLEGING SUCH FACT. ITA NOS.1211 TO 1217/BANG/2019 PAGE 50 OF 73 88. IN SUDIPTA GOSH VS DCIT 64 ITR(TRIB) 294 IT WAS HELD THAT THE BURDEN OF PROOF LIES ON THE DEPARTMENT TO PROVE THA T A PERSON HOLDS THE PROPERTY AS BENAMIDAR FOR THE ASSESSEE. 89. THE HON'BLE RAJASTHAN HIGH COURT IN CIT VS SMT. SUNITHA DHADDA 406 ITR 220 HELD THAT WHEN THE DEPARTMENT ALLEGES THE RECEIPT OF 'ON-MONEY' THE BURDEN OF PROOF IS ON IT TO PROVE THE FACT WITH ACCEPTABLE EVIDENCE. 90. THE LD. AR BRIEFLY REBUTTING EACH OF THE ADVERS E PRESUMPTIONS DRAWN BY THE AO, FIRSTLY SUBMITTED, THE AO REFERS TO THE PROPOSAL FOR THE INSURANCE ON THE LIFE OF THE APPELLANT BY M/S. RAL. RAL IS A PRIVATE COMPANY OWNED BY THE APPELLANT'S WIFE AND IT IS WELL WITHIN THE COMP ANY'S RIGHTS TO INSURE THE LIFE OF ANY PERSON IT WANTS. THE PROPOSAL FOR THE INSURA NCE IS PLACED AT PAGES 642 TO 658 OF THE PAPER BOOK. INVITING ATTENTION TO PAGE 642 OF PB, WHEREIN THE APPELLANT HAS BEEN SHOWN AS THE INSURED. IN PAG E 655 IN COLUMN 3 THE BENEFICIAL OWNER IS GIVEN AS KARADI TRUST AND THE B ENEFICIAL OWNERSHIP IS SHOWN AS 100%. STRANGELY IN PAGE 656, THE APPELLANT IS SHOWN AS THE BENEFICIAL OWNER HAVING 100% INTEREST. THIS IS APPA RENTLY CONTRADICTORY. MERELY RELYING ON THIS STATEMENT THAT THE APPELLANT HAS BEEN DECLARED AS 100% BENEFICIAL OWNER OF RAL, THE AO HAS COME TO A CONCLUSION THAT THE RAL IS OWNED BY THE APPELLANT. IN THIS CONNECTION IT IS SUBMITTED THAT WHEN THE APPELLANT DENIES THAT HE IS THE OWNER OR SHAREH OLDER OF RAL, THE DOCUMENTS REFERRED TO BY THE AO CAN AT WORST CREATE A SUSPICION IN HIS MIND THAT THE APPELLANT MIGHT BE THE OWNER. THEREFORE, H E IS REQUIRED TO MAKE FURTHER ENQUIRY BY EXAMINING THE OFFICIALS OF RAL A ND FIND OUT WHETHER THE APPELLANT IS THE REAL OWNER OR NOT AND ON WHAT BASI S THEY HAVE DISCLOSED THE APPELLANT AS THE OWNER. THE AO DID NOT MAKE ANY SUC H ENQUIRIES. MERELY ON THE BASIS OF THIS SUSPICION HE HAS COME TO A CONCLU SION THAT THE APPELLANT IS THE OWNER. IT IS SUBMITTED THAT THE AO HAS MERELY A CTED ON SUSPENSION. IT IS COMPLETELY CONTRARY TO THE PRINCIPLES LAID DOWN BY THE HON'BLE SUPREME COURT ITA NOS.1211 TO 1217/BANG/2019 PAGE 51 OF 73 IN M.M. MATHEW(4 SCC 65) AND DELHI HIGH COURT IN KRISHNA DEVI (431 ITR 361) AND MADRAS HIGH COURT IN M.SWAMY (241 ITR 360) . 91. THE LD. AR FURTHER STATED THAT IT IS ALSO IMPOR TANT TO NOTE THAT THE DIRECTOR OF THE COMPANY M/S RAL HAD WRITTEN A LETTE R DIRECTLY TO THE AO STATING THAT MRS. LINA VIRWANI IS THE SHAREHOLDER O F RAL (PAGE 83 PB). THE AO HAS SIMPLY REJECTED THIS LETTER ON THE GROUND TH AT THE LETTER DOES NOT GIVE THE HISTORY OF THE SHAREHOLDING AND THEREFORE, IT C ANNOT BE ACCEPTED. THE AO HAS SIMPLY REJECTED THIS LETTER MERELY ON SOME S USPICION. IF THE AO HAD WANTED FURTHER INFORMATION, HE COULD HAVE SENT A LE TTER TO M/S. GREENLAND LTD THE SOLE DIRECTOR OF RAL TO FURNISH THOSE DETAILS A ND COME TO A PROPER CONCLUSION. THE AO HAS UTTERLY FAILED TO DO SO. IN THIS CONNECTION HE RELIED ON THE DECISION OF THE TRIBUNAL IN AGSON GLOBAL PVT LTD VS ACIT 76 ITR (TRIB) 504 . IT IS SUBMITTED THAT THE AO HAS PRECISELY DONE WH AT THE TRIBUNAL IN 76 ITR (TRIB) 504 SAYS HE SHOULD NOT DO. 92. FURTHER, THE LD. AR SUBMITTED THAT ANOTHER EVID ENCE RELIED ON BY THE AO IS THE LIMITED AUTHORITY GIVEN TO THE APPELLANT BY RAL TO OPERATE THE BANK ACCOUNT (PAGES NO. 600 TO 602 OF THE PB). THIS IS A LIMITED AUTHORITY GIVEN BY THE COMPANY TO THE APPELLANT TO CARRY OUT INVESTMEN T MATTERS ONLY WITH NO POWERS TO WITHDRAW FUNDS FROM THE ACCOUNTS. THIS IS CLEAR FROM THE BOARD RESOLUTION PLACED AT PAGE 600 OF THE PAPER BOOK. TH E AO COMES TO CONCLUSION THAT THE APPELLANT IS THE OWNER OF RAL B ECAUSE AN AUTHORITY TO MAKE INVESTMENT IS GIVEN TO HIM. THIS IS A STRANGE CONCLUSION. IF THE APPELLANT IS THE OWNER, HE DOES NOT NEED AUTHORITY TO MAKE IN VESTMENTS. SECONDLY, EVEN THE LIMITED POWER IS TO MAKE INVESTMENT AND NO T TO WITHDRAW FUNDS. THIS ALSO INCONSISTENT THAT THE APPELLANT BEING THE OWNE R OF M/S. RAL. THEREFORE, THE RELIANCE ON THESE DOCUMENTS BY THE AO TO COME T O A CONCLUSION THAT THE APPELLANT IS THE OWNER OF RAL IS TOTALLY MIS- PLACE D AND THESE DOCUMENTS DO NOT SHOW ANYWHERE THAT THE APPELLANT IS THE OWNER O F RAL. ITA NOS.1211 TO 1217/BANG/2019 PAGE 52 OF 73 93. THE AO REFERRED TO A BOARD RESOLUTION OF RAL DA TED 19.01.2010 WHEREIN IT WAS NOTED THAT RAL HAS HYPOTHECATED ITS ASSETS IN FAVOUR OF EFG BANK SINGAPORE BRANCH IN RESPECT OF CREDIT FACILITI ES EXTENDED TO THE APPELLANT. HE ALSO NOTES THAT THE APPELLANT HAS BEE N DISCLOSED AS THE ULTIMATE BENEFICIAL OWNER OF THE COMPANY 'BORROWER' . THE BOARD NOTE IS PLACED AT PAGE 52 OF THE ASSESSMENT ORDER AS ANNEXU RE - 4. BASED ON THESE DOCUMENTS HE COMES TO A CONCLUSION THAT THE APPELLA NT IS THE OWNER OF RAL. THE APPELLANT REITERATES HAT HE HAS CONSISTENTLY DE NIED THAT HE IS THE OWNER OF RAL OR HE HOLDS ANY SHARE IN RAL. IT IS THE SUBM ISSION OF THE APPELLANT THAT RAL HAS WRONGLY DESCRIBED HIM AS THE OWNER. IT WAS SUBMITTED THAT AS STATED EARLIER, WHEN THE APPELLANT HAD DENIED THAT HE IS THE SHAREHOLDER OF RAL, IT IS INCUMBENT ON THE PART OF THE AO TO MAKE FURTHER ENQUIRIES AND FIND OUT WHETHER THE STATEMENT MADE BY RAL IS CORRECT OR NOT. HE SHOULD HAVE OBTAINED THE RELEVANT INFORMATION FROM VARIOUS STAT UTORY AUTHORITIES UNDER THE POWERS AVAILABLE TO THE GOVERNMENT OF INDIA TO SOLI CIT THE INFORMATION FROM FOREIGN GOVERNMENT AND FOREIGN GOVERNMENT DEPARTMEN TS. THE AO HAS FAILED TO DO SO. THE HON'BLE SUPREME COURT IN MATHEW'S CASE HAS CLEARLY HELD THAT SUSPENSION CANNOT TAKE THE PLACE OF LEGAL EVIDENCE. THE AO HAS NOT BROUGHT ON RECORD ANY ACCEPTABLE MATERIAL OR WHATSOEVER TO PROVE THAT THE APPELLANT IS A SHAREHOLDER OF RAL. THIS IS APART FROM THE FAC T THAT THE AO HAS WRONGLY REJECTED THE CONFIRMATION FURNISHED BY THE DIRECTOR OF THE COMPANY THAT MRS. LINA VIRWANI IS THE SHAREHOLDER OF RAL. THEREFORE, THE MATERIAL RELIED ON BY THE AO ARE AT BEST POINTER TO MAKE FURTHER ENQUIRY AND IT CANNOT BE HELD CONCLUSIVE. ANY CONCLUSION DRAWN ON THE BASIS OF SU CH DOCUMENTS WOULD BE PERVERSE AND IS LIABLE TO BE REJECTED. 94. THE LD. AR FURTHER SUBMITTED THAT THE AO HAS FA ILED TO DISCHARGE THE BURDEN CAST ON HIM TO PROVE THAT THE APPELLANT IS T HE SHAREHOLDER OF RAL. THE AO HAS UTTERLY FAILED TO BRING ON RECORD ANY TA NGIBLE AND ACCEPTABLE MATERIAL TO HOLD THAT THE APPELLANT IS THE SHAREHOL DER OF RAL OR IS THE ITA NOS.1211 TO 1217/BANG/2019 PAGE 53 OF 73 BENEFICIAL OWNER OF RAL. THE AO ALSO UNJUSTLY REJEC TED THE LETTER FURNISHED BY THE DIRECTOR OF RAL THAT THE APPELLANT IS NOT A SHAREHOLDER. THE AO HAVING FAILED TO MAKE FURTHER ENQUIRES TO ESTABLISH THAT T HE APPELLANT IS THE SHAREHOLDER OR BENEFICIAL OWNER OF RAL, COULD NOT H AVE HELD SO IN THE ASSESSMENT ORDER. HENCE, IT IS PRAYED THAT THIS FIN DING OF THE AO BE QUASHED AS PERVERSE. 95. FURTHER, IT WAS SUBMITTED THAT THE APPELLANT AN D M/S. RAL ARE DISTINCT PERSONS EVEN ASSUMING BUT WITHOUT ADMITTING THAT TH E APPELLANT IS THE BENEFICIAL OWNER OF RAL. ASSUMING BUT WITHOUT ADMIT TING THAT THE FINDING OF THE AO THAT THE APPELLANT IS THE BENEFICIAL OWNER/S HAREHOLDER OF RAL, IT CANNOT BE SAID THAT THE BUSINESS CARRIED ON BY RAL IS THE BUSINESS CARRIED ON BY THE APPELLANT. THERE IS NO DOUBT THAT RAL IS A SEPARATE LEGAL ENTITY, AND THE APPELLANT IS ALSO A SEPARATE LEGAL PERSON. THE HON'BLE SUPREME COURT IN BACHA F. GUZDAR VS CIT 27 ITR 1 HAS HELD THAT THE SHAREHOLDER AND THE COMPANY ARE TWO SEPARATE LEGAL ENTITIES AND THE BUSINESS CARRIED ON BY THE COMPANY CANNOT SAID TO BE A BUSINESS CARRIED ON BY THE SHAREHOLDER. HENCE, THE FINDING OF THE AO THAT THE APPELLANT WIL L BE TAXED IN RESPECT OF THE ACTIVITIES CARRIED OUT BY M/S. RAL IS TOTALLY UNTEN ABLE IN LAW. 96. WHILE DISCUSSING THE APPLICABILITY OF S.28(IV) OF THE ACT THE AO HAS HELD THAT THE BUSINESS OF RAL IS NOTHING BUT THE CO NDUCT OF THE BUSINESS OF SHRI. JITENDRA VIRWANI. THIS FINDING IS CONTRARY TO THE DECISION OF THE HON'BLE SUPREME COURT IN BACHA F. GUZDAR'S CASE. THE OBSER VATIONS INDIRECTLY SUGGEST THAT THE AO HAS LIFTED THE CORPORATE VEIL I N COMING TO THE ABOVE CONCLUSION. IT IS SUBMITTED THAT THE CORPORATE VEIL CANNOT BE LIFTED AT THE WHIMS AND FANCIES OF THE AO. THERE HAS TO BE COGENT AND COMPELLING REASONS AS TO WHY THE CORPORATE VEIL HAS TO BE LIFTED. IT CANN OT BE LIFTED FOR AN ASKING. IN THIS CONNECTION HE RELIED ON THE DECISION OF THE HO N'BLE ALLAHABAD HIGH COURT IN CIT VS SAHU INVESTMENT MUTUAL BENEFIT CO LTD 396 IT R 595 . THE HON'BLE COURT OBSERVED THAT THE DOCTRINE OF 'LIFTING OF COR PORATE VEIL' IS NOT TO BE ITA NOS.1211 TO 1217/BANG/2019 PAGE 54 OF 73 APPLIED AS A MATTER OF COURSE UNLESS THE RELEVANT F ACTS, CIRCUMSTANCES AND CONDITIONS EXIST. IT IS ADOPTED EXCEPTIONALLY WHENE VER AND WHEREVER, THE SITUATION WARRANTS. IT MEANS A DETAILED INVESTIGATI ON INTO THE FACTS AND AFFAIRS OF THE COMPANY TO FIND OUT WHETHER THE VEIL OF CORP ORATE PERSONALITY NEEDS TO BE LIFTED IN A PARTICULAR CASE. IT IS SUBMITTED THA T THE ASSESSING OFFICER HAS NOT CARRIED OUT THE REQUIRED INVESTIGATION TO JUSTIFY L IFTING OF CORPORATE VEIL. THE CIRCUMSTANCES MENTIONED IN THE ASSESSMENT ORDER DO NOT LEAD TO A CONCLUSION THAT THE CORPORATE VEIL SHOULD BE LIFTED . 97. ON THE QUANTIFICATION OF INCOME, THE AO CANDIDL Y ADMITS THAT THE BANK STATEMENTS OF RAL ARE NOT AVAILABLE AND THE BOARD RESOLUTIONS ARE THE ONLY DOCUMENTS WHICH REVEAL THE QUANTUM OF PAYMENTS MADE TO SEVERAL PERSONS. HE HAS WRONGLY PLACED THE BURDEN ON THE APPELLANT. THEREAFTER, HE COMES TO A CONCLUSION THAT AMOUNTS MENTIONED IN THE BOARD RE SOLUTIONS WHICH ARE AUTHORIZATION BY THE BOARD TO THE PERSON MANAGING R AL TO INCUR THE EXPENDITURE/PAYMENTS THE AO HAS NOT EVEN GIVEN A FI NDING THAT THESE PAYMENTS HAVE BEEN MADE SUBSEQUENTLY. IT IS SUBMITT ED THAT THIS FINDING THAT THE ENTIRE PAYMENTS MADE BY RAL IS FOR THE BENEFIT OF THE APPELLANT IS TOTALLY PERVERSE WITHOUT ANY LOGIC OR REASONING. IT IS SUBM ITTED THAT IT IS BEYOND BELIEF THAT A REASONABLE PERSON WOULD COME TO A CON CLUSION THAT ALL THE PAYMENTS MADE BY THE COMPANY IN THE COURSE OF CARRY ING ON ITS BUSINESS IS FOR THE BENEFIT OF ANOTHER INDIVIDUAL WITHOUT A SHR ED OF EVIDENCE. THEREFORE, THE RELIANCE BY THE AO ONLY ON THE BOARD RESOLUTION TO QUANTIFY THE ALLEGED BENEFIT RECEIVED BY THE APPELLANT IS LIABLE TO BE Q UASHED. 98. REGARDING THE APPLICABILITY OF S. 28(IV), THE A O HAS SIMPLY HELD THAT THE BUSINESS OF RAL IS NOTHING BUT THE CONDUCT OF B USINESS OF SHRI. JITENDRA VIRWANI AND THIS FINDING HAS ALREADY BEEN ASSAILED IN THE PRECEDING PARAGRAPHS. IT IS SUBMITTED THAT S.28(IV) OF THE A CT WHICH DEALS WITH PERQUISITE RECEIVED BY AN ASSESSEE TO BE INCOME FRO M PROFITS AND GAINS OF BUSINESS AND PROFESSION PRE-SUPPOSES THE CARRYING O N OF BUSINESS BY AN ITA NOS.1211 TO 1217/BANG/2019 PAGE 55 OF 73 ASSESSEE. A PERUSAL OF THE STATEMENT OF TOTAL INCOM E FOR VARIOUS YEARS PLACED AT PAGES 98 TO 130 OF THE PAPER BOOK WOULD SHOW THA T THE APPELLANT HAS DISCLOSED INCOME FROM BUSINESS. BUT EVEN A CURSORY GLANCE AT THE NATURE OF INCOME DISCLOSED WOULD SHOW THAT IT IS REMUNERATION AND INTEREST ON CAPITAL FROM PARTNERSHIP FIRMS ONLY. THERE IS NO INDEPENDEN T BUSINESS CARRIED ON BY THE APPELLANT. IT IS NOT THE CASE OF AO THAT THE A LLEGED PERQUISITES HAVE BEEN PROVIDED BY RAL ON BEHALF OF THESE FIRMS FOR THE BE NEFIT OF THE APPELLANT. THEREFORE, THE FUNDAMENTAL REQUIREMENT FOR INVOKING S.28(IV) OF THE ACT IS NOT SATISFIED AS THE APPELLANT IS NOT CARRYING ON ANY B USINESS AT ALL TO WHICH S.28(IV) WOULD APPLY. HENCE, INVOKING OF S.28(IV) T O TAX THE PAYMENTS MADE BY RAL TO THIRD PARTIES IS CLEARLY UNTENABLE IN LAW . 99. ON THE APPLICABILITY OF S.69C OF THE ACT, IT WA S SUBMITTED THAT THE AO HAS JUMPED TO A CONCLUSION AND NOT GIVEN ANY REASO NS AS TO HOW S. 69C IS ATTRACTED. S. 69C IS ATTRACTED WHEN THE FOLLOWING C ONDITIONS ARE SATISFIED:- (A) THE ASSESSEE HAS TO INCUR AN EXPENDITURE; (B) FOR WHICH HE OFFERED NO EXPLANATION FOR THE SOURCE OF EXPLANATION OR THE EXPLANATION OFFERED BY HIM IS UNSATISFACTORY. 100. IT IS CLEAR FROM THE ASSESSMENT ORDER THAT THE APPELLANT HAS NOT INCURRED THE EXPENDITURE. IT IS RAL WHICH HAD INCUR RED THE EXPENDITURE. THIS IS AN UNDISPUTED FACT. THE FUNDAMENTAL REQUIREMENT OF S.69C THAT AN ASSESSEE SHOULD HAVE INCURRED AN EXPENDITURE IS NOT SATISFIED AT ALL. EVEN ASSUMING THAT ALL THE AUTHORISATIONS FOR THE PAYMEN TS IN THE BOARD RESOLUTION HAVE BEEN PAID BY THE PERSON MANAGING RAL, IT IS CL EAR THE SOURCE OF SUCH EXPENDITURE IS THE FUNDS OF RAL. THEREFORE, THE SO URCE IS FULLY EXPLAINED AND S. 69C IS NOT ATTRACTED AT ALL. 101. THE LD. AR THUS SUBMITTED THE ADDITIONS MADE B Y THE AO ON THE BASIS OF BOARD RESOLUTIONS OF RAL IS NOT JUSTIFIED FOR TH E FOLLOWING REASONS:- ITA NOS.1211 TO 1217/BANG/2019 PAGE 56 OF 73 (A) THE LEARNED ASSESSING OFFICER HAS NOT DISCHARGED TH E BURDEN CAST ON HIM TO PROVE THAT THE APPELLANT IS THE SHAREHOLDER/BENEFICIAL OWNER OF RAL. (B) THE LEARNED ASSESSING OFFICER HAS MERELY ACTED ON A SUSPICION AND HAS NOT BROUGHT ON RECORD ANY LEGAL EVIDENCE TO PROVE THAT THE APPELLANT IS THE BENEFICIAL OWNER/SHAREHOLDER O F RAL. (C) THE ASSESSING OFFICER HAS FAILED TO CARRY OUT THE N ECESSARY ENQUIRIES AND INVESTIGATION TO PROVE THE ALLEGATION MADE BY HIM IN THE ASSESSMENT ORDER. (D) THE QUANTIFICATION OF THE ADDITION BASED SOLELY ON THE AMOUNTS MENTIONED IN THE BOARD RESOLUTION DEFIES LOGIC AND IS TOTALLY PERVERSE. (E) S.28(IV) OF THE ACT IS NOT APPLICABLE AS THE APPELL ANT IS NOT CARRYING ON ANY INDEPENDENT BUSINESS. (F) S.69C OF THE ACT IS NOT APPLICABLE FOR THE VERY SIM PLE REASON THAT THE APPELLANT HAS NOT INCURRED THE EXPENDITURE AND THE SOURCE FOR VARIOUS PAYMENTS IS THE FUNDS OF RAL. 102. HENCE, IT IS SUBMITTED THAT THE ADDITIONS MADE UNDER THIS HEAD FOR ALL THE YEARS MAY BE DELETED. 103. THE LD. DR SUBMITTED THAT ASSESSE HAS NOT GIVE N ANY CONVINCING ANSWER AS TO WHY HE SHOULD NOT BE HELD TO BE A BENE FICIARY AND EXPENSES/OUTFLOW OF FUNDS OF THE SAID COMPANY, TO T HE EXTENT INFORMATION IS AVAILABLE, BE NOT HELD AS UNEXPLAINED EXPENDITURE U /S 69C OF THE ACT. THE APPELLANT HAS NOT GIVEN THE DATE OF HIS MARRIAGE TO LINA VIRWANI, NOR HAS HE APPROVED THAT SHE WAS ALL ALONG THE OWNER OF RAL AN D DID NOT BECOME THE OWNER ONLY AFTER BECOMING MARRIED TO HIM AND BECOME ONE BY VIRTUE OF HER GETTING MARRIED TO HIM. THE APPELLANT HAS REFUSED T O COOPERATE IN THE MATTER AND HAS DESISTED FROM PROVIDING THE INFORMATION SOU GHT FOR BY THE AO FOR FEAR OF STANDING EXPOSED IN THE MATTER. IF HE HAD NOTHIN G TO HIDE AND IF HIS CLAIMS ARE INDEED TRUE, THERE IS NO REASON WHY HE SHOULD N OT BE FURNISHING THE REQUIRED INFORMATION. IT IS NOT A KNOWN AND ESTABLI SHED FACT THAT MANY RICH AND INFLUENTIAL BUSINESS MEN ARE STASHING MONEY ABR OAD IN TAX HAVENS AND ITA NOS.1211 TO 1217/BANG/2019 PAGE 57 OF 73 AFTER INTERVENTION OF THE HONBLE SUPREME COURT IN THE MATTER, ACTION HAS BEEN TAKEN BY INVESTIGATING AGENCIES TO BRING THEM TO BOOK. THE FACT THAT THIS APPELLANT HAS BEEN A BENEFICIARY, AS BROUGHT OUT BY THE AO IN THE ASSESSMENT ORDER, AS EARLY AS AY 2009-10 SHOWS THAT THE APPELLANT IS ALSO ONE AMONG THOSE MANY AGAINST THE LIKES OF WHOM THE SUPREME COURT WANTS ACTION TO BE TAKEN. THE CONCLUSION ARRIVED BY THE A O IS ONLY A NATURAL COROLLARY TO HIS FINDINGS AND EVIDENCE AVAILABLE ON RECORD AND THE INFERENCE THAT ONE DRAWS FROM THE CONDUCT AND COOPERATION OF THE ASSESSEE IN THE SAID MATTER. THEREFORE, ADDITION MADE IN THE HANDS OF A SSESSEE IS IN ORDER. 104. WE HAVE HEARD BOTH THE PARTIES AND PERUSED MAT ERIAL ON RECORD AND CASE LAW CITED BY THE PARTIES. THE AO ON THE BASIS OF MINUTES OF MEETING OF THE DIRECTORS OF RAL, DATED 17-07-2008 WHEREIN LIMI TED POWER OF ATTORNEY WAS GRANTED TO ASSESSE SHRI JITENDRA VIRWANI AND MR S. POLLY BYRNE TO OPERATE THE DEUTSCHE BANK BEARING ACCOUNT NO 801432 6 OF RAL HELD AT SINGAPORE BRANCH. THE ASSESSEES SIGNATURE ALSO APP EARS IN LIMITED LETTER OF AUTHORISATION SENT BY RAL TO SAID BANK. FURTHER, MINUTES OF MEETING OF DIRECTOR OF RAL LIMITED HELD ON 10-02-2009 WHEREIN RESOLUTION HAS BEEN PASSED TO APPLY FOR INSURANCE POLICY IN FAVOUR OF T HE PRESENT ASSESSE SHRI JITENDRA VIRWANI FOR AN AMOUNT OF USD 1,00,00,000 I S THE BASIC SUM ASSURED AND USD 20,85,000 IS THE PREMIUM AND THE MANUFACTUR ERS LIFE INSURANCE COMPANY IS THE INSURER. THERE WAS ANOTHER BOARD RES OLUTION BY RAL ON 10- 02-2009 WHEREIN APPLICATION FORM USED FOR APPLYING LIFE INSURANCE WAS APPROVED. IN THE APPLICATION FORM AT PAGE NO 14 IT WAS MENTIONED THAT SHRI JITENDRA MOHANDAS VIRWANI WAS MENTIONED AS HIS LIFE INSURED AGAINST THE OWNER OF THE POLICY, KARADI TRUST AGAINST THE BENEF ICIAL OWNER OF THE OWNER OF THE POLICY I.E., RAL. FURTHER IT WAS MENTIONED I N PAGE NO 15 OF THE APPLICATION FORM THAT SHRI JITENDRA MOHANDAS VIRWAN I AGAINST LIFE INSURED; RAL BEING HELD BY KARADI TRUST AGAINST OWNER OF T HE POLICY; JITENDRA MOHANDAS VIRWANI AGAINST GRANTOR OF SAID TRUST, JIT ENDRA MOHANDAS VIRWANI ITA NOS.1211 TO 1217/BANG/2019 PAGE 58 OF 73 AGAINST THE INDIVIDUAL WHO DIRECTLY OR INDIRECTLY O WNS 25% OR MORE OF THE CORPORATION WHICH OWNS THE CONTRACT (I.E LIFE INSUR ANCE POLICY). IN PAGE NO 17 OF THE FORM HE ALSO SIGNED IN PERSON FOR APPLYIN G FOR THE LIFE INSURANCE POLICY. THE MINUTES OF MEETING DATED 12-02-2009 ALS O CONFIRMED THE FACT AS IN RESOLUTION DATED 10-02-2009. IT ALSO MENTIONED T HAT RAL AGREED TO PAY PREMIUM IN THE FOLLOWING MANNER:- 1. FIRST YEAR USD 1,85,000 2. SECOND YEAR USD 1,00,000 3. THIRD YEAR USD 18,00,000 105. THE BOARD RESOLUTION OF RAL DATED 18-02-2009 W HEREIN IT WAS NOTED THAT RAL HAD LENT M/S DYNASTY BUSINESS PARKS SDN BH D (DBPSB) A SUM OF USD 10,00,000 ( USD 2,00,000 ON 30-10-2007 AND USD 8,00,000 ON 30-10- 2007). RAL RESOLVED TO DEMAND USD 11,13,736.26 FROM DBPSB AS PRINCIPAL AND INTEREST OUTSTANDING. ANNEXURE OF THE MINUTES O F THE MEETING CONTAINS A LETTER DATED 18-02-2009 ADDRESSED BY RAL TO DBPSB D EMANDING USD 11,13,736.36. MINUTES OF THE MEETING OF THE DIRECTO RS OF RAL DATED 31.08.2009 WHEREIN IT WAS NOTED THAT THE SECOND INS TALMENT OF THE MANULIFE POLICY TAKEN FOR JITENDRA MOHANDAS VIRWANI OF USD 1 6,35,000 IS DURE FOR PAYMENT AND IS BEING PAID OUT FOR RALS EFG BANK AC COUNT. MINUTES OF THE MEETING OF RAL DATED 19.01.2010 WHEREIN IT WAS NOTE D THAT USD 10,00,000 IS TO BE PAID TO MRS. BARKHA MAHATANI TO HER INDIAN BANK ACCOUNT, OVERSEAS BRANCH, BANGALORE. THE SAME IS REFLECTING AS CREDIT OF RS. 4,58,18,973 ( WHICH IS THE UNITED STATES DOLLAR 10,00,000 CONVERT ED IN INDIAN RUPEES) IN THE INDIAN ACCOUNT OF MRS. BARKHA MAHTANI ON 20.01. 2010. FURTHER ASSESSING OFFICER OBSERVED THAT OUT OF RS. 4.58 CRO RES BY RAL TO MRS. BARKHA MAHATNI, SHE TRANSFERRED A SUM OF RS.50,00,000 DIRE CTLY TO M/S EMBASSY PROPERTY DEVELOPMENT LIMITED AND RS. 4 CRORES TO M/ S PET PROPERTIES & CONSTRUCTIONS PRIVATE LIMITED WHICH IN TURN THE SAM E AMOUNT OF RS.4 CRORES TO M/S EMBASSY PROPERTIES DEVELOPMENT LIMITED ON TH E SAME DAY. ITA NOS.1211 TO 1217/BANG/2019 PAGE 59 OF 73 THEREFORE THE ASSESSING OFFICER IS OF THE OPINION T HAT THERE IS A DIRECT LINK BETWEEN RAL AND EMBASSY GROUP. 106. FURTHER THE ASSESSING OFFICER FOUND THAT THERE WAS A RESOLUTION DATED 19-01-2010 WHEREIN RAL EXECUTED PLEDGE OF ASSETS AS SECURITY IN FAVOUR OF EFG BANK, SINGAPORE BRANCH IN RESPECT OF CREDIT FAC ILITIES EXTENDING BY THE BANK TO THE PRESENT ASSESSE MR. JITENDRA VIRWANI. I N THIS SAID RESOLUTION IT WAS MENTIONED THAT RAL IS ENTERING INTO PLEDGE AGRE EMENTS WITH EFG BANK AG, IN SUBSTANTIALLY TO SECURE THE PAYMENT AND SATI SFACTION OF ALL THE OUTSTANDINGS AND LIABILITIES WHETHER FUTURE OR PRES ENT, ACTUAL OR CONTINGENT, INCURRED BY JITENDRA MOHANDAS VIRWANI, THE ULTIMATE BENEFICIAL OWNER OF THE COMPANY. 107. FURTHER THE ASSESSING OFFICER FOUND THAT THERE WAS A NOTES TO ACCOUNT REGARDING CONTINGENT LIABILITY IN RESPECT OF THIS P LEDGE. THE COMPANY HAS ENTERED INTO THE PLEDGE AGREEMENTS WITH EFB, SINGAP ORE BRANCH TO PLEDGE ITS ASSETS MAINTAINED WITH THE BANK TO SECURE THE P AYMENTS AND SATISFACTION OF ALL OUTSTANDING AND LIABILITIES WHETHER FUTURE O R PRESENT, ACTUAL OR CONTINGENT, INCURRED BY JITENDRA MOHANDAS VIRWANI, THE ULTIMATE BENEFICIAL OWNER OF THE COMPANY. 108. ON THE BASIS OF ABOVE DOCUMENTS THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE ASSESSE IS THE BENEFICIARY OWNE R OF RAL. HOWEVER IT WAS RECORDED BY AO THAT RAL BANK ACCOUNT STATEMENTS WER E NOT AVAILABLE ON RECORD AND ONLY THE BOARD RESOLUTIONS WHICH REVEAL THE AMOUNT PAID TO VARIOUS PERSONS. ACCORDING TO ASSESSING OFFICER VAR IOUS PAYMENTS MADE BY RAL TO VARIOUS PERSONS IS FOR BENEFIT OF THE ASSESS E AS SUCH ALL SUCH PAYMENTS CONSIDERED AS INCOME OF ASSESSE U/S 28(IV) \69C OF THE ACT. THE ASSESSING OFFICER CONFRONTED ALL ABOVE MENTIONED EV IDENCE TO THE ASSESSE DURING THE STATEMENT RECORDED U/S 131(1) ON 31-10-2 016, 01-11-2016, 02- 01-2016 AND 14-12-2016. THE ASSESSE CONSISTENTLY DE NIED THE FACTS BEFORE ITA NOS.1211 TO 1217/BANG/2019 PAGE 60 OF 73 THE AO THAT HE IS NOWHERE CONNECTED WITH RAL. IT WA S SUBMISSION OF ASSESSE THAT RAL BELONGS TO HIS ESTRANGED WIFE MRS. LINA V IRWANI. M/S RAL IS COMPANY REGISTERED IN BAHAMAS WITH TWO SHAREHOLDER. THOSE MENTIONED SHAREHOLDERS ARE SERANGOON LTD AND SELETAR LTD. HIS EX-WIFE MRS. LINA VIRWANI BECAME THE SOLE OWNER OF THIS COMPANY AFTER SOMETIME. THE COMPANY IS MANAGED BY A BOARD FROM SINGAPORE. IT WA S ALSO EXPLAINED BY THE ASSESSE TO AO THAT HE IS NOT AWARE OF ANY TRANS ACTIONS OF RAL AS SUCH HE CANNOT EXPLAIN THESE TRANSACTIONS. ACCORDING TO ASSESSING OFFICER ASSESSE HAS TO PRODUCE HIS EX-WIFE MRS. LINA VIRWANI FOR EN QUIRY AND EXAMINATION. THE ASSESSE CATEGORICALLY SAID NO TO THE QUESTION O F AO TO PRODUCE HIS EX- WIFE BEFORE AO FOR ENQUIRY OR EXAMINATION AS SHE IS NOT UNDER HIS CONTROL. HOWEVER ASSESSING OFFICER REQUIRE THE ASSESSE ON 02 -11-2016, TO DISCHARGE THE PRIMARY BURDEN THAT HE IS NOT THE BENEFICIAL OW NER OF RAL BY PRODUCING THE DOCUMENTARY EVIDENCE ON OR BEFORE 08-11-2016. T HE ASSESSE HAS ASKED FOR 30 DAYS TIME TO DO THE SAME. AS THERE WAS NO CO MMUNICATION FROM ASSESSE, THE ASSESSE STATEMENT WAS RECORDED BY AO O N 14-12-2016 ASKING FOR HIS RESPONSE. THE AOS QUESTION AND THE ASSESSE S RESPONSE IS AS FOLLOWS: Q. . IN RESPONSE TO THE QUESTION NO 87, YOU H AVE MENTIONED THAT YOU ARE WILLING TO DISCHARGE YOUR ONUS AND SUB STANTIATE YOUR CLAIM FOR WHICH YOU HAVE SOUGHT TIME OF ATLEAST 30 DAYS. MORE THAN 40 DAYS HAVE LAPSED SINCE THAT DATE. DO YOU HAVE AN Y DOCUMENTARY EVIDENCE TO SUBSTANTIATE YOUR CLAIM THAT YOUR WIFE MRS. LINA VIRWANI AND NOT YOU IS THE ULTIMATE BENEFICIAL OWNE R OF M/S ROMULUS ASSETS LIMITED? ANSWER: AS PER MY INFORMATION, A DOCUMENT FROM THE COMPANY MANAGING ROMULUS ASSETS LIMITED, HAS BEEN DISPATCHE D TO YOU DIRECTLY, ADDRESSING THE ISSUE. I AM NOT SURE OF TH E CONTENTS OF THE DOCUMENT. 109. ADVERTING TO THE FACTS OF THE ISSUE, IT IS THE ALLEGATION OF THE AO THAT THE INSURANCE ON THE LIFE OF THE APPELLANT BY M/S. RAL. RAL IS A PRIVATE COMPANY OWNED BY THE APPELLANT'S EX-WIFE AND IT IS WELL WITHIN THE COMPANY'S ITA NOS.1211 TO 1217/BANG/2019 PAGE 61 OF 73 RIGHTS TO INSURE THE LIFE OF ANY PERSON IT WANTS. I N THE APPLICATION FOR INSURANCE, THE ASSESSE HAS BEEN SHOWN AS THE INSURED. HOWEVER, IN CORPORATE AND TRUST CERTIFICATION PLACED AT IN PAPER BOOK PAGE N O. 655 IN COLUMN 3 THE BENEFICIAL OWNER IS MENTIONED AS KARADI TRUST AND THE BENEFICIAL OWNERSHIP IS SHOWN AS 100%. STRANGELY IN NEXT PAPER BOOK PAGE NO. 656, THE ASSESSEE IS SHOWN AS THE BENEFICIAL OWNER HAVING 100% INTERE ST. THIS IS APPARENTLY CONTRADICTORY. MERELY RELYING ON THIS STATEMENT THA T THE APPELLANT HAS BEEN DECLARED AS 100% BENEFICIAL OWNER OF RAL, THE AO HA S COME TO A CONCLUSION THAT THE RAL IS OWNED BY THE APPELLANT. THE ASSES SEE CONSISTENTLY DENIED THAT HE IS THE OWNER OR SHAREHOLDER OF RAL, THE DOC UMENTS REFERRED TO BY THE AO CAN AT WORST CREATE A SUSPICION IN HIS MIND THAT THE APPELLANT MIGHT BE THE OWNER. THEREFORE, HE IS REQUIRED TO MAKE FURTHE R ENQUIRY BY EXAMINING THE OFFICIALS OF RAL AND FIND OUT WHETHER THE APPEL LANT IS THE REAL OWNER OR NOT AND ON WHAT BASIS THEY HAVE DISCLOSED THE APPEL LANT AS THE OWNER. THE AO DID NOT MAKE ANY SUCH ENQUIRIES. MERELY ON THE B ASIS OF THIS SUSPICION HE HAS COME TO A CONCLUSION THAT THE APPELLANT IS T HE OWNER. IT IS COMPLETELY CONTRARY TO THE PRINCIPLES LAID DOWN BY THE HON'BLE SUPREME COURT IN M.M. MATHEW AND DELHI HIGH COURT IN KRISHNA DEVI AND MADRAS HIGH COURT IN M.SWAMY (CITED SUPRA) . 110. IT IS ALSO IMPORTANT TO NOTE THAT THE DIRECTO R OF THE COMPANY M/S RAL HAD WRITTEN A LETTER DIRECTLY TO THE AO STATING THA T MRS. LINA VIRWANI IS THE SHAREHOLDER OF RAL (PAGE 83 PB). THE AO HAS SIMPLY REJECTED THIS LETTER ON THE GROUND THAT THE LETTER DOES NOT GIVE THE HISTOR Y OF THE SHAREHOLDING AND THEREFORE, IT CANNOT BE ACCEPTED. THE AO HAS SIMP LY REJECTED THIS LETTER MERELY ON SOME SUSPICION. IF THE AO HAD WANTED FURT HER INFORMATION, HE COULD HAVE SENT A LETTER TO M/S. GREENLAND LTD THE SOLE DIRECTOR OF RAL TO FURNISH THOSE DETAILS AND COME TO A PROPER CONCLUSI ON. THE AO HAS UTTERLY FAILED TO DO SO. FURTHER, AANOTHER EVIDENCE RELIED ON BY THE AO IS THE LIMITED AUTHORITY GIVEN TO THE APPELLANT BY RAL TO OPERATE THE BANK ACCOUNT PLACED ITA NOS.1211 TO 1217/BANG/2019 PAGE 62 OF 73 AT PAPER BOOK PAGES NO. 600 TO 602. THIS IS A LIMI TED AUTHORITY GIVEN BY THE COMPANY TO THE APPELLANT TO CARRY OUT INVESTMENT MA TTERS ONLY WITH NO POWERS TO WITHDRAW FUNDS FROM THE ACCOUNTS. THIS IS CLEAR FROM THE BOARD RESOLUTION PLACED AT PAPER BOOK PAGE 600. THE AO CO MES TO CONCLUSION THAT THE APPELLANT IS THE OWNER OF RAL BECAUSE AN AUTHOR ITY TO MAKE INVESTMENT IS GIVEN TO HIM. THIS IS A STRANGE CONCLUSION. IF T HE APPELLANT IS THE OWNER, HE DOES NOT NEED AUTHORITY TO MAKE INVESTMENTS. SECOND LY, EVEN THE LIMITED POWER IS TO MAKE INVESTMENT AND NOT TO WITHDRAW FUN DS. THIS ALSO INCONSISTENT THAT THE APPELLANT BEING THE OWNER OF M/S. RAL. THEREFORE, THE RELIANCE ON THESE DOCUMENTS BY THE AO TO COME TO A CONCLUSION THAT THE APPELLANT IS THE OWNER OF RAL IS TOTALLY MIS- PLACE D AND THESE DOCUMENTS DO NOT SHOW ANYWHERE THAT THE APPELLANT IS THE OWNER O F RAL. 111. THE AO REFERRED TO A BOARD RESOLUTION OF RAL D ATED 19.01.2010 WHEREIN IT WAS NOTED THAT RAL HAS HYPOTHECATED ITS ASSETS IN FAVOUR OF EFG BANK SINGAPORE BRANCH IN RESPECT OF CREDIT FACILITI ES EXTENDED TO THE APPELLANT. HE ALSO NOTES THAT THE APPELLANT HAS BEE N DISCLOSED AS THE ULTIMATE BENEFICIAL OWNER OF THE COMPANY 'BORROWER' . THE BOARD NOTE IS PLACED AT PAGE 52 OF THE ASSESSMENT ORDER AS ANNEXU RE - 4. BASED ON THESE DOCUMENTS HE COMES TO A CONCLUSION THAT THE APPELLA NT IS THE OWNER OF RAL. THE APPELLANT HAS CONSISTENTLY DENIED THAT HE IS TH E OWNER OF RAL OR HE HOLDS ANY SHARE IN RAL. IT IS THE SUBMISSION OF THE APPEL LANT THAT RAL HAS WRONGLY DESCRIBED HIM AS THE OWNER. IN OUR OPINION WHEN TH E APPELLANT HAD DENIED THAT HE IS THE SHAREHOLDER OF RAL, IT IS DUTY ON TH E PART OF THE AO TO MAKE FURTHER ENQUIRIES AND FIND OUT WHETHER THE STATEMEN T MADE BY RAL IS CORRECT OR NOT. HE SHOULD HAVE OBTAINED THE RELEVANT INFORM ATION FROM VARIOUS STATUTORY AUTHORITIES UNDER THE POWERS AVAILABLE TO THE GOVERNMENT OF INDIA TO SOLICIT THE INFORMATION FROM FOREIGN GOVERNMENT AND FOREIGN GOVERNMENT DEPARTMENTS. THE AO HAS FAILED TO DO SO. THE HON'BL E SUPREME COURT IN MATHEW'S CASE CITED SUPRA HAS CLEARLY HELD THAT SUSPICION CANNOT TAKE THE ITA NOS.1211 TO 1217/BANG/2019 PAGE 63 OF 73 PLACE OF LEGAL EVIDENCE. THE AO HAS NOT BROUGHT ON RECORD ANY ACCEPTABLE MATERIAL OR WHATSOEVER TO PROVE THAT THE APPELLANT IS A SHAREHOLDER OF RAL. THIS IS APART FROM THE FACT THAT THE AO HAS WRONGLY REJECTED THE CONFIRMATION FURNISHED BY THE DIRECTOR OF THE COMPANY THAT MRS. LINA VIRWANI IS THE SHAREHOLDER OF RAL. THEREFORE, THE MATERIAL RELIED ON BY THE AO ARE AT BEST POINTER TO MAKE FURTHER ENQUIRY AND IT CANNOT BE HE LD CONCLUSIVE. ANY CONCLUSION DRAWN ON THE BASIS OF SUCH DOCUMENTS IS LIABLE TO BE REJECTED. 112. IN OUR OPINION , THE AO HAS FAILED TO DISCHARG E THE BURDEN CAST ON HIM TO PROVE THAT THE APPELLANT IS THE SHAREHOLDER OF R AL. THE AO HAS UTTERLY FAILED TO BRING ON RECORD ANY TANGIBLE AND ACCEPTAB LE MATERIAL TO HOLD THAT THE APPELLANT IS THE SHAREHOLDER OF RAL OR IS THE BENEF ICIAL OWNER OF RAL. THE AO ALSO UNJUSTLY REJECTED THE LETTER FURNISHED BY T HE DIRECTOR OF RAL THAT THE APPELLANT IS NOT A SHAREHOLDER. THE AO HAVING FAILE D TO MAKE FURTHER ENQUIRES TO ESTABLISH THAT THE APPELLANT IS THE SHAREHOLDER OR BENEFICIAL OWNER OF RAL, COULD NOT HAVE HELD SO IN THE ASSESSMENT ORDER. FUR THER, IN OUR OPINION THE APPELLANT AND M/S. RAL ARE DISTINCT PERSONS AND IT CANNOT BE SAID THAT THE BUSINESS CARRIED ON BY RAL IS THE BUSINESS CARRIED ON BY THE APPELLANT. THERE IS NO DOUBT THAT RAL IS A SEPARATE LEGAL ENTI TY, AND THE APPELLANT IS ALSO A SEPARATE LEGAL PERSON. THE HON'BLE SUPREME C OURT IN BACHA F. GUZDAR VS CIT 27 ITR 1 HAS HELD THAT THE SHAREHOLDER AND THE COMPANY ARE TWO SEPARATE LEGAL ENTITIES AND THE BUSINESS CARRIE D ON BY THE COMPANY CANNOT SAID TO BE A BUSINESS CARRIED ON BY THE SHAR EHOLDER. HENCE, THE FINDING OF THE AO THAT THE APPELLANT WILL BE TAXED IN RESPECT OF THE ACTIVITIES CARRIED OUT BY M/S. RAL IS TOTALLY UNTENABLE IN LAW . 113. FURTHER, WHILE DISCUSSING THE APPLICABILITY O F S.28(IV) OF THE ACT THE AO HAS HELD THAT THE BUSINESS OF RAL IS NOTHING BUT THE CONDUCT OF THE BUSINESS OF SHRI. JITENDRA VIRWANI. THIS FINDING IS CONTRARY TO THE DECISION OF THE HON'BLE SUPREME COURT IN BACHA F. GUZDAR'S CASE . THE OBSERVATIONS INDIRECTLY SUGGEST THAT THE AO HAS LIFTED THE CORPO RATE VEIL IN COMING TO THE ITA NOS.1211 TO 1217/BANG/2019 PAGE 64 OF 73 ABOVE CONCLUSION. IT IS SUBMITTED THAT THE CORPORAT E VEIL CANNOT BE LIFTED AT THE WHIMS AND FANCIES OF THE AO. THERE HAS TO BE COGENT AND COMPELLING REASONS AS TO WHY THE CORPORATE VEIL HAS TO BE LIFT ED. IT CANNOT BE LIFTED FOR AN ASKING. IN THIS CONNECTION HE RELIED ON THE DECISIO N OF THE HON'BLE ALLAHABAD HIGH COURT IN CIT VS SAHU INVESTMENT MUTUAL BENEFIT CO LTD 396 IT R 595 . THE HON'BLE COURT OBSERVED THAT THE DOCTRINE OF 'LI FTING OF CORPORATE VEIL' IS NOT TO BE APPLIED AS A MATTER OF COURSE UNLESS THE RELEVANT FACTS, CIRCUMSTANCES AND CONDITIONS EXIST. IT IS ADOPTED E XCEPTIONALLY WHENEVER AND WHEREVER, THE SITUATION WARRANTS. IT MEANS A DE TAILED INVESTIGATION INTO THE FACTS AND AFFAIRS OF THE COMPANY TO FIND OUT WH ETHER THE VEIL OF CORPORATE PERSONALITY NEEDS TO BE LIFTED IN A PARTICULAR CASE . IN OUR OPINION THE ASSESSING OFFICER HAS NOT CARRIED OUT THE REQUIRED INVESTIGATION TO JUSTIFY LIFTING OF CORPORATE VEIL. THE CIRCUMSTANCES MENTIONED IN T HE ASSESSMENT ORDER DO NOT LEAD TO A CONCLUSION THAT THE CORPORATE VEIL SH OULD BE LIFTED. 114. ON THE QUANTIFICATION OF INCOME, THE AO CANDID LY ADMITS THAT THE BANK STATEMENTS OF RAL ARE NOT AVAILABLE AND THE BOARD RESOLUTIONS ARE THE ONLY DOCUMENTS WHICH REVEAL THE QUANTUM OF PAYMENTS MADE TO SEVERAL PERSONS. HE HAS WRONGLY PLACED THE BURDEN ON THE APPELLANT. THEREAFTER, HE COMES TO A CONCLUSION THAT AMOUNTS MENTIONED IN THE BOARD RE SOLUTIONS WHICH ARE AUTHORIZATION BY THE BOARD TO THE PERSON MANAGING R AL TO INCUR THE EXPENDITURE/PAYMENTS THE AO HAS NOT EVEN GIVEN A FI NDING THAT THESE PAYMENTS HAVE BEEN MADE SUBSEQUENTLY. IN OUR OPINIO N, THIS FINDING THAT THE ENTIRE PAYMENTS MADE BY RAL IS FOR THE BENEFIT OF T HE APPELLANT IS TOTALLY PERVERSE WITHOUT ANY LOGIC OR REASONING. IT IS BEYO ND BELIEF THAT A REASONABLE PERSON WOULD COME TO A CONCLUSION THAT ALL THE PAYM ENTS MADE BY THE COMPANY IN THE COURSE OF CARRYING ON ITS BUSINESS I S FOR THE BENEFIT OF ANOTHER INDIVIDUAL WITHOUT A SHRED OF EVIDENCE. THEREFORE, THE RELIANCE BY THE AO ONLY ON THE BOARD RESOLUTION TO QUANTIFY THE ALLEGED BEN EFIT RECEIVED BY THE APPELLANT IS LIABLE TO BE QUASHED. ITA NOS.1211 TO 1217/BANG/2019 PAGE 65 OF 73 115. REGARDING THE APPLICABILITY OF S. 28(IV), THE AO HAS SIMPLY HELD THAT THE BUSINESS OF RAL IS NOTHING BUT THE CONDUCT OF B USINESS OF SHRI. JITENDRA VIRWANI AND THIS FINDING HAS ALREADY BEEN ASSAILED IN THE PRECEDING PARAGRAPHS. IN OUR OPINION, S.28(IV) OF THE ACT WHI CH DEALS WITH PERQUISITE RECEIVED BY AN ASSESSEE TO BE INCOME FROM PROFITS A ND GAINS OF BUSINESS AND PROFESSION PRE-SUPPOSES THE CARRYING ON OF BUSI NESS BY AN ASSESSEE. A PERUSAL OF THE STATEMENT OF TOTAL INCOME FOR VARIOU S YEARS PLACED AT PAGES 98 TO 130 OF THE PAPER BOOK WOULD SHOW THAT THE APP ELLANT HAS DISCLOSED INCOME FROM BUSINESS. BUT EVEN A CURSORY GLANCE AT THE NATURE OF INCOME DISCLOSED WOULD SHOW THAT IT IS REMUNERATION AND IN TEREST ON CAPITAL FROM PARTNERSHIP FIRMS ONLY. THERE IS NO INDEPENDENT BUS INESS CARRIED ON BY THE APPELLANT. IT IS NOT THE CASE OF AO THAT THE ALLEG ED PERQUISITES HAVE BEEN PROVIDED BY RAL ON BEHALF OF THESE FIRMS FOR THE BE NEFIT OF THE APPELLANT. THEREFORE, THE FUNDAMENTAL REQUIREMENT FOR INVOKING S.28(IV) OF THE ACT IS NOT SATISFIED AS THE APPELLANT IS NOT CARRYING ON ANY B USINESS AT ALL TO WHICH S.28(IV) WOULD APPLY. HENCE, INVOKING OF S.28(IV) T O TAX THE PAYMENTS MADE BY RAL TO THIRD PARTIES IS CLEARLY UNTENABLE IN LAW . 116. ON THE APPLICABILITY OF S.69C OF THE ACT, IN O UR OPINION, THE AO HAS JUMPED TO A CONCLUSION AND NOT GIVEN ANY REASONS A S TO HOW S. 69C IS ATTRACTED. S. 69C IS ATTRACTED WHEN THE FOLLOWING C ONDITIONS ARE SATISFIED:- (C) THE ASSESSEE HAS TO INCUR AN EXPENDITURE; (D) FOR WHICH HE OFFERED NO EXPLANATION FOR THE SOURCE OF EXPLANATION OR THE EXPLANATION OFFERED BY HIM IS UNSATISFACTORY. 117. IT IS CLEAR FROM THE ASSESSMENT ORDER THAT THE APPELLANT HAS NOT INCURRED THE EXPENDITURE. IT IS RAL WHICH HAD INCUR RED THE EXPENDITURE. THIS IS AN UNDISPUTED FACT. THE FUNDAMENTAL REQUIREMENT OF S.69C THAT AN ASSESSEE SHOULD HAVE INCURRED AN EXPENDITURE IS NOT SATISFIED AT ALL. EVEN ASSUMING THAT ALL THE AUTHORISATIONS FOR THE PAYMEN TS IN THE BOARD RESOLUTION ITA NOS.1211 TO 1217/BANG/2019 PAGE 66 OF 73 HAVE BEEN PAID BY THE PERSON MANAGING RAL, IT IS CL EAR THE SOURCE OF SUCH EXPENDITURE IS THE FUNDS OF RAL. THEREFORE, THE SO URCE IS FULLY EXPLAINED AND S. 69C IS NOT ATTRACTED AT ALL. 118. FURTHER, IT IS NOTICED FROM THE RECORD THAT TH E ASSESSEE HAS DENIED THAT HE IS THE BENEFICIAL OWNER OF RAL. IT WAS EXPLAINE D BY THE ASSESSEE THAT RAL IS AN INDEPENDENT COMPANY AND ITS BANK ACCOUNT IS OPERATED BY THE DIRECTOR OF THAT COMPANY ONLY. ACCORDING TO THE AO , THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT SATISFACTORY. ON A PERUSAL OF THE FACTS, WE FIND THAT THE EVIDENCE GATHERED BY THE AO IS NOT SUFFICIENT T O INDICATE THAT THE ASSESSEE IS THE BENEFICIAL OWNER OF RAL AND ITS BAN K ACCOUNT MAINTAINED BY RAL. THE AO WAS OF THE OPINION THAT THE ASSESSEES EX-WIFE, MS. LEENA VEERWANI BEING THE DIRECTOR OF THE COMPANY WAS NOT PRODUCED BY THE ASSESSEE FOR ENQUIRY BEFORE THE AO; THE ASSESSEE HA S TO OWN UP THE BANK ACCOUNT OF RAL AS BELONGING TO HIM. AS DISCUSSED E ARLIER, THE AO HAS TO BRING ON RECORD THAT THE ASSESSEE IS THE REAL OWNER OF THE SAID BANK ACCOUNT, WHICH THE AO FAILED TO DO SO. 119. FURTHER THE HONBLE SUPREME COURT IN THE CASE OF R.B. JODHA MAL KUTHIALA V. CIT, 1971 SCC 369, HAD EXPLAINED THE TERM OWNER WHICH IS AS FOLLOWS:- THE QUESTION IS WHO IS THE 'OWNER' REFERRED TO IN THIS SECTION? IS IT THE PERSON IN, WHOM THE PROPERTY VESTS OR IS IT HE WHO IS ENTITLED TO SOME BENEFICIAL INTEREST IN THE PROPERTY IT MUST BE REMEMBERED THAT S. 9 BRINGS TO TAX THE INCOME FROM PROPERTY AND NOT THE INTEREST OF A PERSON IN THE PROPERTY. A PROPERTY CANNOT HE OWNED BY TWO PERSONS, EACH ONE HAVING INDEPENDENT AND EXCLUSIVE RIGHT OVE R IT. HENCE FOR THE PURPOSE OF S. 9 , THE OWNER MUST HE THAT PERSON WHO CAN EXERCISE THE RIGHTS OF THE OWNER, NOT ON BEHALF OF THE OWNER BUT IN HIS OWN RIGHT. 17. ... IT IS NOT NECESSARY FOR OUR PRESENT PURPOSE TO EXAMINE WHAT THE WORD 'OWNER' MEANS IN DIFFERENT CONTEXTS. THE MEANING THAT WE GIVE TO THE WORD ' OWNER' IN S. 9 MUST NOT BE SUCH AS TO MAKE THAT PROVISION CAPABLE OF BEING MADE AN INSTRUMENT OF OP PRESSION, MUST BE IN CONSONANCE WITH THE PRINCIPLES UNDERLYING THE ACT. ITA NOS.1211 TO 1217/BANG/2019 PAGE 67 OF 73 120. FROM THE ABOVE DECISION OF THE COURT, IT IS CL EAR THAT TO HOLD THAT ASSESSEE IS BENEFICIAL OWNER OF BANK ACCOUNT OF RAL , THE REVENUE MUST PROVE THAT ASSESSEE IS OWNER OF ASSET OR VALUE ARTI CLES. UNLESS, THE REVENUE PROVES WITH NECESSARY MATERIAL THAT THE ASSET BELON GS TO THE ASSESSEE OR ASSESSEE IS BENEFICIAL OWNER OF SUCH ASSET, THEN TH E PROVISIONS OF SECTION CANNOT BE APPLIED AGAINST THE ASSESSEE. THIS CLEAR PROPOSITION IS FURTHER SUPPORTED BY THE JUDGMENT OF THE SUPREME COURT IN CWT V. ELLIS BRIDGE GYMKHANA, [1998] 1 SCC 384 . FURTHER, THE ONUS TO PROVE FULLY LIES ON THE DEPARTMENT. THE DEPARTMENT CANNOT BE ASKING THE AS SESSEE TO PROVE THE NEGATIVE. THE DEPARTMENT CANNOT FORCE IMPOSSIBLE B URDEN OF PROVING NEGATIVE ON THE ASSESSEE. THIS LEGAL PROPOSITION I S REITERATED IN THE CASE OF K.P. VARGHESE V. ITO, [1981] 4 SCC 137 WHEREIN IT WAS HELD THAT MOREOVER TO THROW THE BURDEN OF SHOWING THAT THERE IS NO UND ERSTATEMENT OF THE CONSIDERATION ON THE RESPONDENT WOULD BE ATTACHED A ND ALMOST IMPOSSIBLE BURDEN UPON HIM TO ESTABLISH THE NEGATIVE, NAMELY, THAT HE DID NOT RECEIVE ANY CONSIDERATION BEYOND THAT DECLARED BY HIM. THER EFORE, THE ADDITION MADE BY THE AO U/S. 69C OF THE ACT IS ONLY ON SUSPICION AND SURMISE MANNER, WITHOUT THERE BEING ANY MATERIAL TO PROVE THAT ASSE SSEE IS THE BENEFICIAL OWNER OF RAL OR HAVING FINANCIAL INTEREST IN THAT B ANK ACCOUNT. 121. FURTHER THE HONBLE SUPREME COURT JUDGMENT IN THE CASE OF VODAFONE (341 ITR 43) LAYS DOWN A CLEAR PROPOSITION THAT THE COMPANIES BE ING INCORPORATED ENTITIES UNDER THE RESPECTIVE LAW POSS ESS INDEPENDENT AND DISTINCT STATUS THAN THEIR SHARE HOLDER OR CONTRIBU TORIES. IN CASE OF STRUCTURED INVESTMENT TRANSACTIONS SHOULD NOT BE DISTURBED ON SUSPICIONS OR CASUAL CONSIDERATIONS. IN ASSESSEES CASE, THE COMPANY RA L IS DULY INCORPORATED IN RESPECTIVE LEGAL JURISDICTIONS. ALL OF THESE TR ANSACTIONS ARE BEING DISTURBED ON SURMISES AND CONJECTURES, ASSESSEE HAVING FURNIS HED PROPER EXPLANATION SUPPORTED WITH DOCUMENTS HAS DISCHARGED HIS BURDEN. IN THE INTEREST OF JUSTICE, THE ADDITIONS HAVE TO BE DELETED. ITA NOS.1211 TO 1217/BANG/2019 PAGE 68 OF 73 122. FURTHER, AT NO POINT OF TIME, THE AO BROUGHT O N RECORD OR REFERRED ANY SEIZED MATERIAL WHICH CAN BE SAID TO BE EITHER INCR IMINATING OR FOUND DURING THE COURSE OF SEARCH INDICATING UNDISCLOSED INCOME OF THE ASSESSEE. ON THE CONTRARY, THE AO HAS BASED HIS CONCLUSION ONLY ON T HE BASIS OF MATERIAL COLLECTED AFTER THE SEARCH ACTION. FURTHER, THE AS SESSMENT IN THE AYS 2009- 10 TO 2012-13 HAS ALREADY BEEN COMPLETED AND THE TI ME PERIOD TO ISSUE NOTICE U/S. 143(2) OF THE ACT HAS BEEN LAPSED AND T HERE HAS BEEN NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH TO SUSTAIN THE ADDITION MADE BY THE AO. 123. AS DISCUSSED EARLIER, THE COMPLETED ASSESSMENT CAN BE DISTURBED BY THE AO WHILE MAKING ASSESSMENT U/S. 153A OF THE ACT ONLY ON THE BASIS OF INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENT OR UNDISCLOSED INCOME OR PROPERTY DISCOVER ED IN THE COURSE OF SEARCH WHICH ARE NOT PRODUCED OR NOT MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. IN THE PRESENT CASES RELATING TO AYS 2 009-10 TO 2012-13, THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE COURS E OF SEARCH ACTION U/S. 132 OF THE ACT. ON THIS COUNT ALSO, THE ASSESSMENT FRA MED FOR AYS 2009-10 TO 2012-13 CANNOT BE SUSTAINED, THOUGH NOTICE ISSUED U /S. 153A OF THE ACT IS VALID. 124. FURTHER, THE HONBLE SUPREME COURT IN THE CASE OF DAULAT RAM RAWATMULL (87 ITR 349(SC) HAS HELD AS FOLLOWS:- A PERSON CAN STILL BE HELD TO BE THE OWNER OF A S UM OF MONEY EVEN THOUGH THE EXPLANATION FURNISHED BY HIM REGARDING T HE SOURCE OF THAT MONEY IS FOUND TO BE NOT CORRECT. FROM THE SI MPLE FAT THAT THE EXPLANATION REGARDING THE SOURCE OF MONEY FURNISHED BY A, IN WHOSE NAME THE MONEY IS LYING IN DEPOSIT, HAS BEEN FOUND TO BE FALSE, IT WOULD BE A REMOTE AND FAR-FETCHED CONCLUS ION TO HOLD THAT THE MONEY BELONGS TO B. THERE WOULD BE IN SUCH A C ASE NO DIRECT NEXUS BETWEEN THE FACTS FOUND AND THE CONCLUSION DR AWN THEREFROM. ITA NOS.1211 TO 1217/BANG/2019 PAGE 69 OF 73 125. IN OUR OPINION, THE ADDITIONS MADE BY THE AO O N THE BASIS OF BOARD RESOLUTIONS OF RAL IS NOT JUSTIFIED FOR THE FOLLOWI NG REASONS:- (A) THE ASSESSING OFFICER HAS NOT DISCHARGED THE BURDEN CAST ON HIM TO PROVE THAT THE APPELLANT IS THE SHAREHOLDER/ BENEFICIAL OWNER OF RAL. (B) THE ASSESSING OFFICER HAS MERELY ACTED ON A SUSPICI ON AND HAS NOT BROUGHT ON RECORD ANY LEGAL EVIDENCE TO PROVE T HAT THE APPELLANT IS THE BENEFICIAL OWNER/SHAREHOLDER OF RA L. (C) RAL IS DULY INCORPORATED IN RESPECTIVE LEGAL JURISD ICTION AND ASSESSEE HAS DISCHARGED HIS BURDEN BY FURNISHING PR OPER EXPLANATION WITH DOCUMENTS. (D) THE ASSESSING OFFICER HAS FAILED TO CARRY OUT THE N ECESSARY ENQUIRIES AND INVESTIGATION TO PROVE THE ALLEGATION MADE BY HIM IN THE ASSESSMENT ORDER. (E) THE QUANTIFICATION OF THE ADDITION BASED SOLELY ON THE AMOUNTS MENTIONED IN THE BOARD RESOLUTION DEFIES LOGIC AND IS TOTALLY PERVERSE. IT IS ALSO NOT KNOWN WHETHER THE AMOUNT MENTIONED IN THE BOARD RESOLUTION HAS BEEN SPENT FOR THE PURP OSE MENTIONED THEREIN. (F) S.28(IV) OF THE ACT IS NOT APPLICABLE AS THE APPELL ANT IS NOT CARRYING ON ANY INDEPENDENT BUSINESS. (G) S.69C OF THE ACT IS NOT APPLICABLE FOR THE VERY SIM PLE REASON THAT THE APPELLANT HAS NOT INCURRED THE EXPENDITURE AND THE SOURCE FOR VARIOUS PAYMENTS IS THE FUNDS OF RAL. (H) NO SEIZED MATERIAL TO SUSTAIN THE ADDITION. 126. ACCORDINGLY, THE ADDITIONS MADE UNDER THIS HEA D FOR ALL THE ASSESSMENT YEARS IS DELETED. 127. THE NEXT GROUND IN ITA NO.1216/B/19 FOR AY 201 4-15 IS REGARDING HOUSE WARMING EXPENSES. THE LD. AR SUBMITTED THAT THE ONLY GROUND ON WHICH THE AO HELD THAT THE HOUSEWARMING EXPENSES DE BITED IN THE BOOKS OF ITA NOS.1211 TO 1217/BANG/2019 PAGE 70 OF 73 EMBASSY KNOWLEDGE INFRASTRUCTURE PVT LTD SHOULD BE ADDED IN THE HANDS OF THE APPELLANT IS THAT IT IS A PERQUISITE U/S 28(IV) OF THE ACT. AS STATED EARLIER, THE SEIZED MATERIAL NJVO1 (PAGE 78) IS A DUMB DOCUM ENT, AND IT IS A MERE COMPUTER PRINT-OUT AND IT CANNOT BE RELIED ON. APAR T FROM THIS, THE AO NOTED THAT THE HOUSEWARMING EXPENSES ARE TO BE TREATED AS A PERSONAL EXPENSE OF THE APPELLANT ON THE GROUND THAT INVITATION SENT BY THE APPELLANT AND HIS FAMILY MEMBERS REFERS TO HOUSES AS 'MY HOUSE'. JUST BECAUS E THE APPELLANT USES THE EXPRESSION 'MY HOUSE' IT DOES NOT MEAN THAT THE HOUSEWARMING EXPENSES ARE FOR THE BENEFIT OF THE APPELLANT. IT I S AN UNDISPUTED FACT ACKNOWLEDGED BY THE AO ALSO THAT THE FARMHOUSE BELO NGS TO THE COMPANY EMBASSY KNOWLEDGE INFRASTRUCTURE PVT LTD AND THE EX PENSES HAVE BEEN ACCOUNTED IN THE COMPANY'S BOOKS. INCIDENTALLY, TO AVOID ANY CONTROVERSY, THE COMPANY HAS ALSO DISALLOWED SUCH EXPENDITURE WH ILE COMPUTING ITS TOTAL INCOME. IT IS SUBMITTED THAT SINCE THE OWNERSHIP OF THE FARMHOUSE IS WITH THE COMPANY, IT IS BUT NATURAL THAT THE EXPENSES WILL B E INCURRED BY THE COMPANY AND IT IS THE COMPANY'S OWN EXPENSE INCURRED BY IT. JUST BECAUSE THE APPELLANT IS STAYING IN THAT HOUSE IT DOES NOT MEAN THAT THE HOUSEWARMING EXPENSE ARE DEEMED TO BE THE EXPENSES INCURRED ON B EHALF OF THE APPELLANT THEREBY ATTRACTING S.28(IV) OF THE ACT. THE VARIOUS GUESTS WHO HAVE BEEN INVITED ARE BUSINESS ASSOCIATES OF THE EMBASSY GROU P AND THEY HAVE BEEN TAKEN TO VARIOUS PROJECTS OF THE GROUP. THEREFORE, THE EXPENSES HAVE BEEN LEGITIMATELY INCURRED BY THE COMPANY FOR ITS OWN PU RPOSE AND NOT FOR THE BENEFIT OF THE APPELLANT. IT IS REITERATED THAT JUS T BECAUSE THE APPELLANT STAYS IN THE PREMISES, HOUSEWARMING EXPENSES CANNOT BE SA ID TO BE FOR HIS PERSONAL BENEFIT. THEREFORE, THE PROVISIONS OF SECT ION 28(IV) OF THE ACT ARE NOT ATTRACTED. 128. THE LD. DR RELIED ON THE ORDER OF THE CIT(APPE ALS) AND SUBMITTED THAT THE ADDITION WAS MADE ON THE GROUND THAT THE COMPAN Y EMBASSY KNOWLEDGE INFRASTRUCTURE PROJECTS (P) LTD. IN WHICH ASSESSEE IS A DIRECTOR WAS HOLDING ITA NOS.1211 TO 1217/BANG/2019 PAGE 71 OF 73 90% STAKE IN THE COMPANY INCURRED A SUM OF RS.6,93, 63,441 AS HOUSE WARMING EXPENSES ON A FARM HOUSE PROPERTY OWNED BY IT WHICH WAS SHOWN AS GUEST HOUSE IN ITS BOOKS. IT IS AN ADMITTED FAC T THAT THE COMPANY DID NOT CLAIM THESE EXPENDITURE IN ITS RETURN AND DISALLOWE D THE SAME. THE AO RELIED ON THE HONBLE DELHI HIGH COURT DECISION AND CONCLU DED THAT THERE IS NO BAR IN LAW TO ADD A SUM AS INCOME WHEN THE SAME HAS ALR EADY BEEN DISALLOWED IN THE HANDS OF THE COMPANY. THE AO RIGHTLY CONCLU DED THAT EXPENDITURE IS PURELY PERSONAL IN NATURE. HOUSE WARMING IS DONE B Y INDIVIDUALS WHEN THEY BUILD A NEW HOME AND USE IT FOR RESIDENTIAL PURPOSE S. THE INVITATION CARD PRINTED FOR THE SAID PURPOSE ALSO SUPPORTS THE CONC LUSION THAT THE SAME IS FOR THE BENEFIT OF THE DIRECTOR, THE ASSESSEE. 129. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE HOUSEWARMING EXPENSES WHICH WAS RECORD ED IN THE BOOKS OF EMBASSY KNOWLEDGE INFRASTRUCTURE PRIVATE LIMITED IS TREATED AS PERQUISITES U/S 28(IV) OF THE ACT IN THE HANDS OF THE ASSESSE. THE REASON FOR TREATING IT AS PERQUISITES IN HANDS OF ASSESSE WAS THAT THE INVITA TION SENT BY ASSESSE AND HIS FAMILY MEMBERS REFER TO HOUSES AS MY HOUSE. H OWEVER, IT IS TO BE NOTED THAT THE FARMHOUSE SOLELY OWNED BY ABOVE EMBASSY KN OWLEDGE INFRASTRUCTURE PRIVATE LIMITED AND IT WAS APPEARING IN ITS BOOKS OF ACCOUNTS. ONCE THE FARMHOUSE IS OWNED BY THE ABOVE MENTIONED COMPANY, THE RELEVANT EXPENDITURE RELATING TO THAT FARM HOUSE TO BE RELATING TO THAT COMPANY ONLY. JUST BECAUSE THE NAME OF THE ASSESSE MENTIONED IN THE INVITATION AS HIS HOUSE OR HES STAYING IN THAT PRE MISES THAT CANNOT BE REASON TO TREAT THE EXPENDITURE INCURRED BY SAID COMPANY I N HANDS OF ASSESSE. THE ASSESSE BEING CHAIRMAN AND MANAGING DIRECTOR GOT AL LOTTED THAT FARMHOUSE FOR HIS STAY IN INDIA AND THAT CANNOT BE REASON TO TREAT THE HOUSEWARMING EXPENSES AS DEEMED INCOME OF THE ASSESSE AND BEING A CHAIRMAN OF THE COMPANY HE INVITED THE VARIOUS DIGNITARIES AND CUST OMERS OF THE COMPANY WHICH IS NOTHING BUT A SALES PROMOTION EXPENSES IN THE HANDS OF EMBASSY ITA NOS.1211 TO 1217/BANG/2019 PAGE 72 OF 73 KNOWLEDGE INFRASTRUCTURE PRIVATE LIMITED AND AT ANY STRETCH OF IMAGINATION IT COULD BE CONSIDERED AS INCOME FOR ASSESSE U/S 28(IV ) OF THE IT ACT. ACCORDINGLY THE ADDITION IS DELETED. 130. THE NEXT ISSUE IS REGARDING FARM MAINTENANCE C HARGES FOR THE AYS 2014-15 & 2015-16. THE AO HELD THAT THAT THE GUEST HOUSE MAINTENANCE CHARGES HAVE TO BE ADDED IN THE HANDS OF THE APPELL ANT FOR THE FOLLOWING REASONS:- (A) NOTES TO ACCOUNTS TO THE FINANCIALS OF THE COMPANY STATES THAT THE GOING CONCERN IS JUSTIFIED BECAUSE THE APP ELLANT HAS THE ABILITY AND WILLINGNESS TO PROVIDE THE NECESSAR Y LEVEL OF FINANCIAL SUPPORT TO ENABLE THE COMPANY TO OPERA TE AS A GOING CONCERN. (B) THE COMPANY HAS NOT MADE ANY DISCLOSURE REGARDING THE MAJOR ASSETS I.E., THE FARMHOUSE IN ITS FINANCIAL STATEMENTS. 131. THE LD. AR SUBMITTED THAT THE RELIANCE ON THE NOTES TO ACCOUNTS HAS NO RELEVANCE WHATSOEVER TO THE ISSUE. THE FACT THAT SEPARATE DISCLOSURE HAS NOT BEEN MADE REGARDING THE EXISTENCE OF FARMHO USE AS AN ASSETS IS ALSO NOT RELEVANT. THE AO HAS FAILED TO NOTE THAT THERE IS NO REQUIREMENT IN LAW TO MAKE A SEPARATE DISCLOSURE. STATUTORY AUDITOR OF THE COMPANY HAS NOT MADE ANY ADVERSE COM MENT ON THAT. THE GUESTHOUSE IS DISCLOSED AS A FIXED ASSET IN THE BALANCE SHEET OF THE COMPANY. THE AO HAS FAILED TO NOTE THE FUNDAMEN TAL POINT THAT IT IS THE COMPANY WHICH OWNS THE ASSET AND THEREFORE, IT IS ITS PRIMARY RESPONSIBILITY TO MAINTAIN THE ASSET I.E., THE GUES THOUSE. JUST BECAUSE THE APPELLANT IS STAYING IN THE GUESTHOUSE IT CANNOT BE SAID THAT THE GUESTHOUSE MAINTENANCE EXPENSES ARE FOR THE BENEFIT OF THE APP ELLANT. THEREFORE THE PROVISIONS OF S.28(IV) OF THE ACT ARE NOT APPLICABL E. 132. THE LD. DR RELIED ON THE ORDER OF CIT(APPEALS) . ITA NOS.1211 TO 1217/BANG/2019 PAGE 73 OF 73 133. AS DISCUSSED IN EARLIER PARA RELATING TO ISSUE OF HOUSEWARMING EXPENSES, THIS ADDITION IS DELETED IN BOTH ASSESSME NT YEARS. 134. IN THE RESULT, THE APPEALS BY THE ASSESSEE IN ITA NOS.1211 TO 1214/BANG/2019 ARE PARTLY ALLOWED AND THE APPEALS IN ITA NOS.1215 TO 1217/BANG/2019 ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF JULY, 2021. SD/- SD/- ( GEORGE GEORGE K. ) ( CHANDRA POOJARI ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 30 TH JULY, 2021. / DESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE