M/s. J Jay TV Pvt. Ltd., CHENNAI V. ACIT, CHENNAI

ITA 1379/CHNY/2008

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8028 (ITAT-CHENNAI)
• Duration Of Justice: 8 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 27-10-2016
• Assessment Year: 1997-1998
• Appeal Filed On: 23-06-2008
• Court: TRIBUNAL
• Department Lawyers: T R SENTHIL KUMAR SR
• Assessee Lawyers: G SEETHARAMAN
• Keywords: Unexplained cash credit; Business income; Income from undisclosed sources; Document seized; Opportunity of being heard; Principle of natural justice; Additional evidence; Corroborative evidences; Procedural lapse; Documents seized; Reassessment proceedings
• Section: 142(1); 234B; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , . ' # , $ #% BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER . /ITA NOS.1379 & 519/MDS/2008 / ASSESSMENT YEARS : 1997-98 & 1995-96 M/S. J JAY TV PVT. LTD ., C/O S. VENKATRAM & CO., CHARTERED ACCOUNTANTS, 218, T.T.K.ROAD, CHENNAI - 18. PAN AAACJ9410C ( /APPELLANT) V. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-II-4, CHENNAI 34. RESPONDENT) / APPELLANT BY : SHRI G. SEETHARAMAN, CA / RESPONDENT BY: SHRI T.R.SENTHIL KUMAR, SR. STANDING COUNSEL ! / DATE OF HEARING : 27.10.2016 '# ! / DATE OF PRONOUNCEMENT : 20.01.2017 & / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED A GAINST DIFFERENT ORDERS OF THE COMMISSIONER OF INCOME-TAX( APPEALS)-I, CHENNAI FOR THE ASSESSMENT YEARS 1995-96 AND 1997- 98. - - ITA 519 & 1379/08 2 FIRST WE TAKE THE APPEAL NO.1379/MDS/2008: 2. THE ONLY GROUND RAISED BY THE ASSESSEE IN THIS A PPEAL IS WITH REGARD TO SUSTENANCE OF ADDITION OF 5,00,000/- RECEIVED FROM EXCELLENT 2 PUBLICITIES AS UNDISCLOSED INCOME . 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMP ANY IS ENGAGED IN THE BUSINESS OF TELECASTING OF T.V. PROG RAMMES THROUGH SATELLITE. NO RETURN OF INCOME FOR THE A.Y . 1997-98 WAS FILED BY THE ASSESSEE WITHIN THE DUE DATE STIPULATE D U/S.139(1) OF THE ACT. HENCE, THE A.O ISSUED A NOTICE U/S.142(1) OF THE ACT ON 18.12.1997, REQUIRING THE ASSESSEE TO FILE A RETURN . NO RETURN WAS, HOWEVER, FILED EVEN BELATEDLY WITHIN THE TIME LIMIT PROVIDED U/S.139(4) OF THE ACT. SINCE THE AO HAD REASONS TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX FOR THE RELEVANT ASSES SMENT YEAR HAD ESCAPED ASSESSMENT, HE HAD ISSUED A NOTICE U/S. 148 ON 7.2.2000 WHICH STOOD DULY SERVED ON THE ASSESSEE ON 12.2.2000. AS THERE WAS NO COMPLIANCE IN RESPONSE TO THE NOTIC E U/S.148 OF THE ACT, SEVERAL REMINDERS WERE ISSUED BY THE AO RE QUIRING ATTENDANCE COMPLIANCE FROM ASSESSEES SIDE. ON 29. 10.2001, THE ASSESSEES AUTHORIZED REPRESENTATIVE HAD ATTEND ED BEFORE - - ITA 519 & 1379/08 3 THE AO AND PROMISED TO FILE THE RETURN BY 10.11.200 1 AND ACCORDINGLY, THE CASE WAS ADJOURNED BY THE AO TILL 16.11.2001. AGAIN, THERE WAS NON-COMPLIANCE ON 16.11.2001. VID E LETTER DATED 28.12.2001, THE ASSESSEES REPRESENTATIVE HAD INTIMATED THE THEN CIT, CENTRAL-II THAT IN VIEW OF THE RELEVA NT BOOKS OF ACCOUNTS AND OTHER RECORDS BEING SEIZED BY THE ENFO RCEMENT DIRECTORATE AND DUE TO THE CLOSURE OF THE ASSESSEE S BUSINESS ACTIVITY, THE ASSESSEE WAS NOT ABLE TO FINALIZE ITS ACCOUNT AND HAS REQUESTED THE ENFORCEMENT DIRECTORATE TO FURNISH CO PIES OF THE SEIZED RECORDS SO AS TO ENABLE THE ASSESSEE TO PREP ARE ITS ACCOUNTS AND SUBSEQUENTLY FILE THE RETURN OF INCOME . IN THAT LETTER, THE ASSESSEES AUTHORIZED REPRESENTATIVE HA D ALSO REQUESTED THE CIT, CENTRAL-II TO DIRECT THE AO TO G RANT ADJOURNMENT OF HEARING TILL 15.2.2002. MEANWHILE, THE ASSESSEES C.A HAD APPEARED BEFORE THE A.O ON 18.01 .2002 AND WAS REQUESTED BY THE AO TO OBTAIN COPIES OF THE SEI ZED RECORDS FROM THE ENFORCEMENT DIRECTORATE AT THE EARLIEST. THE AO, THEREAFTER, AGAIN ISSUED A NOTICE U/S.142(1) OF THE ACT ON 21.01.2002, FIXING THE HEARING ON 29.1.2002. SINCE THE PREPARATION OF THE RETURN OF INCOME WAS STATED TO B E IN PROGRESS - - ITA 519 & 1379/08 4 AND THE COPIES OF THE DOCUMENTS WERE YET TO BE OBTA INED FROM THE ENFORCEMENT DIRECTORATE, THE AO HAD ISSUED ANOT HER NOTICE U/S.142(1) ON 5.2.2002, REQUIRING THE ASSESSEES CO MPLIANCE ON 19.2.2002. THIS NOTICE, HOWEVER, FAILED TO EVOKE R ESPONSE FROM THE ASSESSEE. HOWEVER, ON 20.2.2002, THE ASSESSEE S REPRESENTATIVE HAD ATTENDED AND SUBMITTED COPIES OF PASS BOOKS PERTAINING TO THE ASSESSEES TWO BANK ACCOUNTS. IN HIS LETTER DATED 27.2.2002 ACCOMPANIED BY ANOTHER NOTICE U/S.1 42(1) OF THE ACT, THE AO HAD REFERRED TO THE PERSISTENT NON- COMPLIANCE ON THE PART OF THE ASSESSEE AND HAD DIRECTED IT TO ATT END THE HEARING ON 11.3.2002 IN ORDER TO EXPLAIN THE VARIOUS CREDIT S APPEARING IN THE BANK STATEMENTS. AS USUAL, THERE WAS AGAIN NON -COMPLIANCE ON THE APPOINTED DATE. HOWEVER, ON 15.03.2002 THE ASSESSEE HAD FILED A RETURN DECLARING A NET LOSS OF 45,73,744/- WHICH WAS ACCOMPANIED BY A COVERING LETTER WHEREIN IT WAS CON TENDED THAT SINCE THE PREVIOUS RECORDS WERE NOT REPORTEDLY AVAI LABLE, FINAL ACCOUNTS COULD NOT BE PREPARED BY THE ASSESSEE AND ENCLOSED ALONG WITH THE RETURN. IN THE SAID LETTER IT WAS A LSO POINTED OUT BY THE ASSESSEE THAT IT WAS THE NORMAL PRACTICE FOLLOW ED BY THE ASSESSEE TO ALLOW CREDIT OF 30 DAYS TO THE CUSTOMER S FOR THE - - ITA 519 & 1379/08 5 PURPOSE OF COLLECTION OF ADVERTISEMENT CHARGES AND THAT IN CONSONANCE WITH THE SAID PRACTICE COLLECTIONS MADE UPTO JUNE, 1996 STOOD ACCOUNTED FOR IN THE A.Y. 1996-97, WHERE AS THE COLLECTIONS MADE THEREAFTER WERE TAKEN INTO ACCOUNT FOR COMPUTING INCOME FOR THIS A.Y. SINCE, NO OTHER EXP LANATION WAS FORTHCOMING FROM THE ASSESSEE NOR THE SOURCE OF THE DEPOSITS IN THE ASSESSEES BANK ACCOUNT WAS EXPLAINED BY ANYBOD Y, THE A.O. PROCEEDED TO COMPLETE THE ASSESSMENT ON AN EX PARTE BASIS ON 28.3.2002 U/S.144/147 OF THE ACT ON A TOTA L INCOME OF 5 LAKHS, AS A RESULT OF WHICH AN ADDITIONAL DEMAND OF 6,12,750/- WAS RAISED AGAINST THE ASSESSEE WHICH IN CLUDED INTEREST LEVIED U/S.234A AND 234B OF THE ACT AND SU RCHARGE LEVIED IN ACCORDANCE WITH THE PREVALENT RATE. PENA LTY PROCEEDINGS U/S.271(1)(B) AND 271(1)(C) OF THE ACT WERE ALSO SEPARATELY INITIATED BY THE AO AND THE AO HAS MADE THE FOLLOWING ADDITIONS/DISALLOWANCES: A) CASH DEPOSIT IN THE ASSESSEES BANK ACCOUNT AMOU NTING 5 LAKHS WAS TREATED AS THE ASSESSEES UNDISCLOSED INCOME FOR THE YEAR IN ABSENCE OF ANY EXPLANATION F OR THE SOURCE OF THE DEPOSIT. - - ITA 519 & 1379/08 6 B) THE BUSINESS LOSS AMOUNTING TO 45,73,744/- DECLARED IN THE RETURN WAS DISALLOWED BY THE AO IN ABSENCE OF T HE CORROBORATE EVIDENCES IN SUPPORT OF THE CLAIMED LOS S. AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(APPEALS), WHO CONFIRMED THE FINDING OF THE A.O. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. A.R. SUBMITTED THAT THE DISPUTE IN THIS APPEAL IS IN RESPECT OF ADDITION OF 5 LAKHS BEING THE AMOUNT RECEIVED FROM EXCELLENT 2 PUBLICITIES AS UNDISCLOSED INCOME. HE SUBMITTED THAT EXCELLENT 2 PUBLICITIES HAD PAID THE ASSESSEE , A SUM OF 5 LAKHS IN RESPECT OF ADVERTISEMENT ON BEHALF OF THEI R CLIENTS. IN PROOF THEREOF, THE ASSESSEE HAS FILED THEIR CONFIRM ATORY LETTER DATED 18.11.2004. THE LD. AR, FURTHER SUBMITTED TH AT NEITHER THE GENUINENESS OF THE LETTER NOR THEIR HAVING ACTED AS ADVERTISING AGENTS HAD BEEN DISPUTED IN THE REMAND REPORT DATED 14.5.2007. ACCORDING TO THE LD. AR, THE AO THOUGHT THAT THE CUSTOMERS FROM WHOM THEY HAD COLLECTED VIZ. M/S. UN IQUE COMMUNICATIONS AND (II) M/S. TARA CREATIONS ARE NOT TRACEABLE. - - ITA 519 & 1379/08 7 4.1 IN THIS CONNECTION, THE LD. AR SUBMITTED THAT T HE ONUS ON THE ASSESSEE IS ONLY TO PROVE THE SOURCE AND NOT TH E SOURCE OF SOURCE. THEREFORE, THE OMISSION, IF SO, TO PROVE T HE SOURCE OF SOURCE CANNOT BE A REASON FOR ADDITION TO THE ASSES SEES INCOME AND HE SUBMITTED THAT IN ANY CASE A PRAGMATIC APPRO ACH SHOULD BE TAKEN IN THE MATTER. (I) THE MATTER RELATES TO A PERIOD OF MORE THAN 11 YEARS; II) THE ASSESSEE COMPANY ITSELF IS DEFUNCT; III) THEREFORE, IT IS NOT POSSIBLE TO SAY WHETHER I TS OLD CUSTOMERS WOULD BE EXISTING; IV) EVEN IF THEY EXIST, THEY WOULD BE EXISTING IN T HE SAME PLACE; V) EVEN IF THEY BE SO, IT IS TOO MUCH TO EXPECT OF THEM TO CO- OPERATE WITH THE ASSESSEE. THEREFORE, THE LD. AR SUBMITTED THAT THE AO IS TOTA LLY ARTIFICIAL IN HIS APPROACH AND HE RELIED ON THE FOLLOWING DECISIO NS: 1) S.HASTIMAL VS. CIT (49 ITR 273) 2) TOLARAM DAGA VS. CIT (59 ITR 632) 3) CIT VS. DAULAT RAM RAWATMULL (87 ITR 349) 4.2 THE LD. AR, ALSO SUBMITTED WITHOUT PREJUDICE TO THE ABOVE THAT THE ASSESSEE HAD FILED THE PROFIT AND LOSS ACC OUNT DISCLOSING A TURNOVER OF 5,41,645/- AND A NET LOSS OF 45,73,744/-. IF FOR - - ITA 519 & 1379/08 8 ANY REASON, THE EXPLANATION REGARDING 5 LAKHS COULD NOT BE ACCEPTED, THIS SHOULD BE SET OFF AGAINST THE LOSS O F 45,73,744/-. THE LD. AR, FURTHER SUBMITTED THAT IN ANY CASE, THE ASSESSMENT HAS BEEN COMPLETED U/S.144, SUCH AN ORDER CAN BE MA DE IN THE EVENT OF THE ASSESSEE NOT SUBMITTING ITS RETURN U /S.139 OF THE ACT OR HAVING FAILED TO COMPLY WITH THE NOTICE U/S. 142(1) OR U/S.143(2) OF THE ACT. THE RETURN FILED HAS BEEN A CTED UPON AND HAS NOT BEEN CONSIDERED INVALID. NO NOTICE U/S.143 (2) HAS BEEN ISSUED. ACCORDING TO THE LD. AR, AS PER NOTICE U/S .142(1), THE AO CAN ASK THE ASSESSEE TO PRODUCE ANY DOCUMENT WHIC H HAS BEEN IN ITS POSSESSION. OMISSION TO FILE THE PART ICULARS CANNOT BE CONSIDERED AS NON-COMPLIANCE WITH SEC.142(1) OF THE ACT. THEREFORE, THE LD. AR SUBMITTED THAT THE ASSESSMENT IS VOID AB INITIO. 5. ON THE OTHER HAND, THE LD. DR, SUBMITTED THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND A CR EDIT OF 5 LAKHS ON 26.6.96 IN THE ASSESSEES CURRENT ACCOUNT C A 015934 WITH STATE BANK OF MYSORE, T. NAGAR BRANCH. WHEN A SKED TO EXPLAIN, THE ASSESSEE MERELY STATED THAT THE DEPOSI T REPRESENTED REALIZATION FROM THE EARLIER YEARS SUNDRY DEBTORS. THIS WAS - - ITA 519 & 1379/08 9 FOUND TO BE A VAGUE AND UNACCEPTABLE EXPLANATION. THIS WAS ALSO NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE. TH E AO THEREFORE TREATED THE SUM OF 5 LAKHS AS INCOME FROM UNDISCLOSED SOURCES. BEFORE THE CIT(A), THE ASSESS EE GAVE DETAILS OF TWO PARTIES FROM WHOM THE REALIZATIONS H AD BEEN MADE. THE ASSESSEE CONTENDED THAT SUFFICIENT OPPOR TUNITY WAS NOT GIVEN BY THE AO TO FURNISH THE REQUISITE EVIDEN CES. THE CONFIRMATION DATED 18.11.2004 FROM EXCELLENT 2 PUBL ICITIES WAS FURNISHED. 5.1 THE LD. DR, SUBMITTED THAT SINCE THE CONFIRMATI ON WAS ADDITIONAL EVIDENCE FILED BEFORE THE CIT(APPEALS), A REPORT WAS CALLED FOR FROM THE A.O. THE AO IN HIS REPORT HAS POINTED OUT THAT THOUGH EXCELLENT 2 PUBLICITIES CLAIMED TO HAVE COLLECTED CASH FROM THE TWO PARTIES IN RESPECT OF SERVICES RE NDERED BY THE ASSESSEE ABOUT 8 YEARS AGO, IT HAS NOT FURNISHED AN Y DOCUMENTARY EVIDENCE IN THE FORM OF COPIES OF ACCOU NTS MAINTAINED IN RESPECT OF THE TWO CONCERNS. THE LD. DR, FURTHER SUBMITTED THAT SUMMONS WERE ISSUED ON 09.01.2005 TO THE CONCERNS M/S. TARA CREATIONS AND M/S. UNIQUE COMMUN ICATIONS. THESE WERE RETURNED UNSERVED AND IT WAS NOT ASCER TAINABLE - - ITA 519 & 1379/08 10 WHETHER IN THE BOOKS OF ACCOUNTS OF EXCELLENT 2 PUB LICITIES, ANY ACCOUNTS IN THE NAME OF M/S. TARA CREATIONS AND M/S . UNIQUE COMMUNICATIONS EXISTED. IN THE ABSENCE OF CLEAR EV IDENCE NO CREDENCE COULD BE GIVEN TO THE ASSESSEES NEW CLAIM . BEFORE THE CIT(APPEALS), THE ASSESSEE CONTENDED THAT MEREL Y BECAUSE THE PARTIES WERE NOT AVAILABLE AT THEIR GIVEN ADDRE SSES NO ADVERSE INFERENCE OUGHT TO BE DRAWN AGAINST THE ASS ESSEE. THEREFORE, HE SUBMITTED THAT THE CIT(APPEALS) REJEC TED THE ASSESSEES CONTENTIONS ON THE GROUNDS (I) IN THE CO NFIRMATION GIVEN BY EXCELLENT 2 PUBLICITIES, THERE IS NO MENTI ON AS TO THE SPECIFIC SERVICE RENDERED BY THE ASSESSEE COMPANY T O THE AFORESAID TWO CONCERNS. (II) COPIES OF ACCOUNTS OF THE TWO CONCERNS APPEARING IN THE BOOKS OF EXCELLENT 2 PUBL ICITIES HAVE NOT BEEN FURNISHED. III) THE AFORESAID PARTIES COUL D NOT BE TRACED IN THE ADDRESSES GIVEN. IT WAS THE DUTY OF THE ASS ESSEE TO FURNISH THE PRESENT ADDRESSES OF THE SAID TWO CONCE RNS TO ENABLE THE DEPARTMENT TO VERIFY THE ASSESSEES CLAIM. IT WAS NOT AN IMPOSSIBLE TASK. (IV) THE IDENTITY OF THE SAID TWO CONCERNS HAS NOT BEEN ESTABLISHED. ACCORDING TO THE LD. DR, NE ITHER IN THE GROUNDS OF APPEAL NOR IN THE WRITTEN SUBMISSIONS, T HE ASSESSEE - - ITA 519 & 1379/08 11 HAS GIVEN ANY MATERIAL TO REBUT THE CONCLUSION RAIS ED BY THE CIT(APPEALS). THE LD. DR SUBMITTED THAT THE ASSESS EE HAS NOT DISCHARGED THE INITIAL ONUS CAST ON THE ASSESSEE TO PROVE ITS CLAIM OF RECEIPT OF MONIES FROM THE SAID PARTIES AN D THE ASSESSEE CANNOT TAKE ADVANTAGE OF THE LAPSE OF TIME. ACCORD ING TO THE LD. DR, THE ONUS OF PROOF TO EXPLAIN THE SOURCE OF INVE STMENT IS ON THE ASSESSEE U/S.68/69 OF THE ACT AND HE RELIED ON THE DECISION OF THE SUPREME COURT REPORTED IN 214 ITR 801 AND TH E CALCUTTA HIGH COURT REPORTED IN 208 ITR 465. THE LD. DR, RE LIED ON THE ORDER OF THE CIT(APPEALS). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IN THIS CASE, THERE WAS A DEPOSIT OF ` 5 LAKHS IN THE CURRENT ACCOUNT OF THE ASSESSEE WITH STATE BANK OF MYSORE, T.NAGAR, CHENNAI ON 26.06.1996. THE A.O CALLED FOR EXPLANATION REGARDING SOURCE OF CREDIT. THE ASSESS EE SUBMITTED BEFORE THE LOWER AUTHORITIES THAT IT WAS A REALIZAT ION OF DEBTORS RELATING TO EARLIER YEARS. THE ASSESSEE EXPLAINED BEFORE THE AO THIS AMOUNT HAS BEEN RECEIVED FROM EXCELLENT 2 PUBL ICITIES, WHO IN TURN COLLECTED THE SAID AMOUNT FROM FOLLOWING TW O COMPANIES. - - ITA 519 & 1379/08 12 DATE OF COLLECTION NAME OF COMPANY AMOUNT IN INR 22.06.1996 TARA CREATIONS RS.3/- LAKHS 23.06.1996 UNIQUE COMMUNICATIONS RS.2/- LAKHS TOTAL RS.5/- LAKHS THE ASSESSEE ALSO FILED CONFIRMATION FROM EXCELLEN T 2 PUBLICITIES VIDE LETTER DATED 18.11.2014 WHEREIN CONFIRMED THAT THEY HAD ARREAR ADVERTISEMENT CHARGES FOR TELECAST IN THE AS SESSEES CHANNEL. THIS WAS NOT ACCEPTED BY THE AO IN THE REM AND PROCEEDINGS CALLED BY THE LD.CIT(A) VIDE HIS REMAN D REPORT DATED 14.05.2007. ACCORDING TO AO, EXCELLENT 2 PUB LICITIES CLAIMED TO HAVE COLLECTED CASH FROM ABOVE NAMED TWO PARTIES, IN CONNECTION WITH THE SERVICES RENDERED BY THE ASSESS EE BOUT EIGHT YEARS BACK, IT HAS NOT FURNISHED ANY DOCUMENT ARY EVIDENCE IN THE FORM OF COPIES OF ACCOUNTS MAINTAINED IN RES PECT OF TWO CONCERNS. IN ORDER TO ASCERTAIN VERACITY OF THE CL AIM OF EXCELLENT 2 PUBLICITIES, THE AO ISSUED SUMMONS ON 09.01.2005 TO THE AFORESAID TWO CONCERNS. BOTH THE SUMMONS ISSUED TO THE ABOVE PARTIES WERE RETURNED AS UN-SERVED. ACCORDING TO THE AO, ASSESSEE USED THE NAME OF EXCELLENT 2 PUBLICITIES A S A CONDUIT TO EXPLAIN THE CASH DEPOSIT IN BANK ACCOUNT. THE AO DOUBTED THE VERY EXISTENCE OF THE ABOVE TWO PARTIES. AS SUCH, H E HAS NOT - - ITA 519 & 1379/08 13 GIVEN ANY CREDENCE TO THE CONFIRMATION GIVEN BY EXC ELLENT 2 PUBLICITIES. FURTHER, IDENTITY OF TARA CREATIONS A ND UNIQUE COMMUNICATION HAS NOT BEEN ESTABLISHED BY THE ASSES SEE AND NOTICE SERVED TO THEM WAS RETURNED AS UN-SERVED. IN THE NORMAL COURSE, ANY DEPOSITS MADE IN THE BANK ACCOUNT THAT IT IS A DUTY OF THE ASSESSEE TO EXPLAIN THE SOURCE OF DEPOSITS. TH E ASSESSEES PLEA THAT ASSESSEE RENDERED SERVICES TO THESE TWO P ARTIES IN EARLIER YEARS AND THE AMOUNTS RECEIVED FROM THEM TH ROUGH EXCELLENT 2 PUBLICITIES. HOWEVER, THE ASSESSEE HAD NOT PLACED CONTEMPORANEOUS EVIDENCE. REGARDING THIS, ASSESSEE TOOK A PLEA THAT THE ASSESSMENT WAS COMPLETED IN THIS CAS E U/S.144 OF THE ACT, THE ISSUE IS RELATING TO A PERIOD MORE THA N 11 YEARS AND IT IS NOT POSSIBLE TO SAY WHETHER THESE PARTIES ARE EXIST OR NOT? EVEN IF THEY EXIST, THEY WOULD BE EXISTING IN SOME OTHER PLACES AND IT IS TOO DIFFICULT TO EXPECT TO PLACE NECESSAR Y EVIDENCE TO SUPPORT THE CLAIM OF ASSESSEE. IN OUR OPINION, THES E ARGUMENTS HAVE NO MERITS. THE ASSESSEE IS A DUTY BOUND TO PL ACE NECESSARY EVIDENCE TO ITS ACTUAL AMOUNT OUTSTANDING FROM THESE PARTIES IN EARLIER YEARS AND THE SAID AMOUNT HAS BE EN RECEIVED IN ASSESSMENT YEAR UNDER CONSIDERATION THROUGH EXCELLE NT 2 - - ITA 519 & 1379/08 14 PUBLICITIES. TO THIS EFFECT, THE ASSESSEE REQUIRED TO FILE SUPPORTING EVIDENCE. SINCE THE ASSESSMENT IS COMPLE TED EX PARTE U/S.144 OF THE ACT, IN THE INTEREST OF JUSTICE, WE ARE OF THE OPINION THAT IT IS APPROPRIATE TO GIVE ONE MORE OPP ORTUNITY OF HEARING TO THE ASSESSEE TO PLACE NECESSARY EVIDENCE TO SHOW THAT THE AMOUNT IN REALITY IS CALCULATED FROM THOS E TWO PARTIES THROUGH EXCELLENT 2 PUBLICITIES. IF THE ASSESSEE I S ABLE TO PROVE THE SAME, THOUGH THERE IS NO CONFIRMATION FROM THE ABOVE TWO PARTIES, THE ASSESSEES CLAIM TO BE ALLOWED. ACCOR DINGLY, THIS APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 7. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO.519/MDS/2008 ARE AS FOLLOWS : 1. THE CIT(APPEALS) ERRED, BOTH IN LAW AND ON THE FACTS OF THE CASE, IN DISMISSING THE APPEAL ON THE GROUND THAT (I) IT WAS TIME BARRED, (II) HOLDING THAT THE ASSES SMENT WAS NOT BARRED BY LIMITATION AND (III) SUSTAINING T HE ADDITIONS OF 9,09,81,425/-. 2. HE SHOULD HAVE APPRECIATED THAT THE APPEAL HAD BEEN HEARD ON SEVERAL OCCASIONS INCLUDING ON 16.5.2007, 30.11.2007 AND 10.12.2007 AND, AT NO POINT OF THE HEARING, ANY DOUBT WAS RAISED REG. ADMISSIBILITY OF THE APPEAL. 3. THE APPELLANT SUBMITS THAT THE FACT THAT THE AP PEAL HAD BEEN HEARD ON SEVERAL OCCASIONS, WITHOUT THE - - ITA 519 & 1379/08 15 QUESTION OF LIMITATION BEING RAISED, WOULD INDICATE THAT THE APPEAL HAD BEEN ADMITTED. 4. NOTWITHSTANDING THIS, THE CIT(APPEALS) ERRED IN HOLDING THAT IT WAS BARRED BY LIMITATION. 5. HE OVERLOOKED THAT THE ALLEGED SERVICE OF NOTIC E ON 13.4.2006 WAS ON SOMEONE, WHO WAS NOT AUTHORIZED TO RECEIVE AND THAT THE APPELLANT HAD RECEIVED COPY OF THE ORDER MUCH LATER. 6. EVEN OTHERWISE, HE SHOULD HAVE HELD THAT THE LA ST DAY FOR FILING THE APPEAL WAS 13.5.2006 (I.E. 17 DAYS I N APRIL 2006 AND 13 DAYS IN MAY 2006) AND 13 TH AND 14 TH MAY, 2006 BEING HOLIDAYS (I.E. SATURDAY AND SUNDAY), THE LAST DAY FOR FILING THE APPEAL WAS 15.5.2006 ON WHICH DA TE, THE APPEAL HAS BEEN FILED. 7. THE APPELLANT, THEREFORE, SUBMITS THAT THERE WA S NO DELAY IN FILING THE APPEAL AND EVEN OTHERWISE, THE CIT(APPEALS) SHOULD HAVE CONDONED THE DELAY BECAUSE THE ASSESSEE WAS NOT GIVEN ANY OPPORTUNITY OF EXPLA INING THE DELAY, IF ANY 8. THE CIT(APPEALS) ERRED IN HOLDING THAT THE ASSESSMENT WAS NOT BARRED BY LIMITATION. 9. HE SHOULD HAVE APPRECIATED THAT THE ORDER HAD B EEN RECEIVED ON OR BEFORE 12.1.1999 AND, THEREFORE, THE ASSESSMENT HAD BECOME BARRED BY LIMITATION ON 31.3.2000. 10. HE ERRED IN INTERPRETING THE APPELLATE ORDER O F THE CIT(APPEALS) AND HOLDING THAT THE PROVISIONS OF SEC.153(3) WOULD APPLY. 11. HE SHOULD HAVE APPRECIATED THAT EVEN THE A.O. DID NOT PROCEED THAT IT WAS A DIRECTION GIVEN BY THE CIT(APPEALS). - - ITA 519 & 1379/08 16 12. IN ANY CASE, A PERUSAL OF THE ORDER OF THE CIT(APPEALS) WOULD INDICATE THAT HE HAD MERELY SET ASIDE THE ORDER AND HAD NOT GIVEN ANY DIRECTION, EVEN TO REDO THE ASSESSMENT AND, THEREFORE, THE A.O. HAD NO POWE R EVEN TO REDO THE ASSESSMENT. 13. THE CIT (APPEALS) ALSO ERRED IN MAKING HUGE ADDITIONS ON THE BASIS OF THE DETAILS AND MATERIALS , WHICH WERE NOT AVAILABLE BOTH WITH THE APPELLANT AND WITH THE A.O. 14. HE OVERLOOKED THAT THE ADDITIONS HAVE BEEN MAD E ON THE BASIS OF HEARSAY AND OPPOSED TO PRINCIPLES O F NATURAL JUSTICE. 15. THE APPELLANT, THEREFORE, PRAYS THAT IT MAY BE HELD THAT (I) THE APPEAL FILED BEFORE THE CIT(APPEALS) W AS NOT BARRED BY LIMITATION, (II) THAT THE REDONE ASSESSME NT WAS BARRED BY LIMITATION AND (III) THAT THE ADDITIONS W ERE NOT JUSTIFIED EVEN ON MERITS. 7.1 THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS THAT THE ASSESSMENT WAS COMPLETED WITHOUT ISSUING MANDATORY NOTICE U/S.143(2) OF AS SUCH, ASSESSMENT IS BAD IN LAW. THE LD.A.R ALSO PRAYED THAT THIS ADDITIONAL GROUND TO BE ADMIT TED SINCE IT IS A LEGAL GROUND. 8. THE LD.A.R SUBMITTED THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME ON 24.03.98, IN RESPONSE TO A NOTI CE U/S.142(1) OF THE ACT AND THE A.O. HELD THAT IT WAS AN INVALID RETURN AND COMPLETED THE ASSESSMENT U/S.144 OF THE ACT ON 30.3 .98. ON - - ITA 519 & 1379/08 17 APPEAL, THE CIT (A) HAD SET ASIDE THE ASSESSMENT OR DER VIDE HIS ORDER DATED 21.12.1998 AND ALSO HELD THAT THE RETUR N OF INCOME FILED WAS A VALID ONE. HE HAD NOT GIVEN ANY DIRECTI ON TO REDO THE ASSESSMENT (TO BE REFERRED TO AS FIRST APPELLATE OR DER). ACCORDING TO LD.A.R, BY A PETITION DATED 12.01.1999 , THE ASSESSEE REQUESTED AO TO AMEND THE SAID ORDER, AND THE AO AMENDED THROUGH HIS ORDER DT .05.02.1999. THE AO A LSO BY ANOTHER PETITION DATED 05.03.1999 - REQUESTED THE C IT (APPEALS) THAT THE RETURN OF INCOME FILED SHOULD BE TREATED A S A INVALID ONE. THE CIT (A), BY HIS ORDER DATED 16.03.99 REITE RATED HIS FINDING THAT THE RETURN FILED WAS A VALID ONE. HENC E, THE LD.A.R PLEADED THAT THESE ORDERS HAD BECOME FINAL AND, CON SEQUENTLY, THE RETURN ORIGINALLY FILED WAS HELD TO BE A VALID RETURN. THE LD.A.R SUBMITTED THE PARTICULARS OF THE DATES OF (I) FILIN G THE RETURN (II) COMPLETION OF ORIGINAL ASSESSMENT, ETC. ARE SET OUT BELOW:- (I) FILING THE RETURN OF INCOME 24.03.98 (II) ORIGINAL ASSESSMENT U/S.144 30.03.98 (III) CIT (A)-I SETTING ASIDE THE ASSESSMENT 21.12 .98 (IV) RECEIPT OF THE ORDER OF CIT(A) BY CIT (ADMN.) 05.02.99 (V) MISC. PETITION BY AO REQUESTING THE RETURN MIGHT BE TREATED VALID 05.03.99 - - ITA 519 & 1379/08 18 (VI) CIT (APPEALS) REJECTING THE REQUEST OF A.O. 16.03.99 (VII) RECEIPT OF THE SAID ORDER OF CIT(A)-I BY CIT (ADMN.) BEFORE 20.09.04 (VIII) THE ASSESSMENT ORDER UNDER APPEAL 30.03.06 8.1 FURTHER, LD.A.R SUBMITTED THAT THIS APPEAL IS AGAINST THE ASSESSMENT ORDER DATED 30.03.2006 MADE IN PURSUANCE OF THE FIRST APPELLATE ORDER, SETTING ASIDE THE ASSESSMENT . ACCORDING TO THE LD.A.R, THE ASSEESSEE HAD SUBMITTED BEFORE T HE LOWER AUTHORITIES THAT : (I) IT HAD NEITHER RECEIVED THE COPIES OF THE MISC. PETITIONS NOR ORDER OF THE CIT(A) - EXCEPT THE ORDER DATED 21.12.98 AND, THERE FORE, THESE PETITIONS WERE NONEST IN LAW. (II) EVEN OTHERWISE, THE CIT (A) SUBSEQUENT TO PAS SING THE ORDER - HAS POWERS ONLY TO RECTIFY U/S.154 OF THE ACT AND, THER EFORE, HIS ORDERS DATED 5.2.99 AND 16.3.99 CAN ONLY BE CONSIDERED AS ORDERS U/S.154 AND WOULD GET MERGED WITH THE ORIGINAL ORDER DATED 30.1 2.98. (III) U/S.153(2A), NO ASSESSMENT CAN BE MADE IN THI S CASE AFTER 31.3.2000, AS THE PERIOD OF ONE YEAR REFERRED TO IN THAT SECTI ON FAILS ON 31.3.2000 EXPIRED. (IV) THE CIT (A) HAD NOT GIVEN ANY DIRECTION IN THE ORIGINAL ORDER TO REDO THE ASSESSMENT AND, THEREFORE, THE AO HAS NO POWER WHATSOEVER TO REDO THE ASSESSMENTS. (V) THOUGH THE RETURN OF INCOME HAS BEEN HELD TO BE A VALID ONE, NO NOTICE U/S.143(2) WAS ISSUED DESPITE APPELLANTS RE QUEST AND NO ASSESSMENT U/S.143(3) COULD BE MADE. THEREFORE, THE ASSESSMENT IS NULL AND VOID. - - ITA 519 & 1379/08 19 8.2 FURTHER, THE LD.A.R SUBMITTED SUBMISSIONS THA T THE ENTIRE ASSESSMENT ORDER WAS BASED ON CERTAIN MATERIALS SAI D TO HAVE BEEN SEIZED BY THE OFFICERS OF THE ENFORCEMENT DIRE CTORATE, TO WHICH THE APPELLANT HAD NO ACCESS AND, IT HAD REQUE STED THE AO TO GET THESE DOCUMENTS TO ENABLE IT TO VERIFY AND THEY WERE NOT EVEN SHOWN THE DOCUMENTS AND, THEREFORE, THE PRINCI PLES OF NATURAL JUSTICE HAD BEEN VIOLATED AND THE ASSESSMEN T IS NOT VALID. HENCE, THE ASSESSEE WAS NOT SURE WHETHER EVEN THE A.O. HAD PERSONALLY SEEN THE PAPERS SEIZED BY ENFORCEMENT DI RECTORATE. ACCORDING TO LD. A.R, ON APPEAL, CIT (A) SEEMS TO H AVE AGREED WITH THE APPELLANT (STATING THAT THE ASSESSMENT WAS TIME BARRED IN THE LIGHT OF SEC.153(2A)) BUT HELD THAT THE CIT( A) HAD IN HIS FIRST APPELLATE ORDER NOT EITHER SET-ASIDE OR CANCE LLED THE ORIGINAL ASSESSMENT AS A WHOLE BUT, HAD ONLY ISSUED DIRECTIO NS TO THE AO TO RE-ADJUDICATE THE ISSUES RELATING TO THE SUBSTAN TIVE ADDITIONS. HENCE, THE LD.A.R ARGUED THAT THE PROVISIONS OF SEC .153(3) ALONE WAS APPLICABLE AND THE RE-ASSESSMENT COULD HAVE BEE N DONE WITHOUT ANY TIME LIMIT. THE LD.A.R PUT FORTH HIS A RGUMENTS - - ITA 519 & 1379/08 20 REGARDING LD.CIT(A) FINDINGS ARE CONTAINED IN PARA 4.3.2 OF HIS ORDER AS FOLLOWS: I. AS THE RE-ASSESSMENT PROCEEDING WAS INITIATED I N ORDER TO CARRY OUT THE SPECIFIC DIRECTIONS OF THE CIT(A) IN HIS ORDER DATED 21.12.1998 AND SUBSEQUENT AMENDMENT ORDERS THERE WAS NO LEGAL REQUIREMENT ON THE PART OF THE AO TO ISSUE A NOTICE U/S.143(2) BEFORE PROCEEDING TO FINALISE THE REASSESSMENT ORD ER. II. THE REASSESSMENT ORDER HAD CLEARLY MENTIONED TH AT VARIOUS INCRIMINATING DOCUMENTS WERE SEIZED BY THE. ENFORCEM ENT DIRECTORATE OFFICIALS FROM THE PREMISES OF THE APPE LLANT AND THAT THE APPELLANT COMPANY WAS NOT PRIVY TO THE RECORDS WHIC H WERE SEIZED BY THE ENFORCEMENT DIRECTORATE FROM ITS OWN PREMISES AND THE ADDITIONS WERE SUSTAINED ON MERITS. 8.3 THE LD. AR SUBMITTED THAT HAVING HELD THAT THE PROVISION OF SEC.153(2A) IS NOT APPLICABLE, THE CIT(A) SHOULD HA VE ALLOWED THE APPEAL. ACCORDING TO THE LD. AR, THE CIT(APPEA LS) HAD NO POWER TO TRAVEL ON A GROUND, WHICH WAS NOT THE SUBJ ECT MATTER OF APPEAL. FURTHER, THE LD. AR, SUBMITTED THAT THE CI T(APPEALS) ERRED IN HOLDING THE PROVISIONS OF SEC.153(3) ARE A PPLICABLE TO THIS CASE, PARTICULARLY WHEN THE CIT(A) HAD ORIGINA LLY HELD THAT IT WAS A VALID RETURN AND NORMAL PROCEDURAL ASPECTS OF ASSESSMENT SHOULD HAVE BEEN GONE INTO AND NO SPECIFIC FINDING OR DIRECTION - - ITA 519 & 1379/08 21 HAVE BEEN GIVEN. ACCORDING TO HIM, AS THE ASSESSME NT HAS BEEN COMPLETED U/S.143(3), WHICH FINDING HAS BEEN A CCEPTED BY THE CIT(A), THE ASSESSMENT SHOULD BE HELD NULL AND VOID AS NO NOTICE U/S.143(2) OF THE ACT WAS ISSUED. THEREFORE , THE LD. AR, SUBMITTED THAT ON MERITS AND WITHOUT PREJUDICE TO L EGAL SUBMISSIONS, THE SEIZED RECORDS WERE NOT AVAILABLE TO THE ASSESSEE AND THE ASSESSEE IS NOT SURE, WHETHER, IT WAS AVAILABLE TO THE OFFICER, THE ASSESSMENT SHOULD BE CONSIDERED TO HAVE BEEN COMPLETED IN VIOLATION OF PRINCIPLES OF NATURA L JUSTICE AND, THE ASSESSEE SHOULD HAVE BEEN GIVEN AN OPPORTUNITY. 8.4 FURTHER, THE LD. AR, RELIED ON THE ORDER OF TH E TRIBUNAL IN THE CASE OF M/S. JAYA PUBLICATIONS REPORTED IN 123 ITD 54(CHENNAI), WHEREIN IT WAS HELD AS FOLLOWS: THE CIT (APPEALS) HAS SET ASIDE THE ASSESSMENT ME ANS THAT HE ANNULLED THE ASSESSMENT, SINCE HE HAS NOT G IVEN ANY DIRECTION TO RE-DO THE ASSESSMENT. AS SUCH, THE ASSESSING OFFICER HAS NO JURISDICTION TO PASS ANY F URTHER ORDER. HE IS DUTY BOUND TO FOLLOW THE DIRECTION OF THE CIT (APPEALS) AND HE CANNOT SIT OVER THE ORDER OF THE C IT (APPEALS), WHO IS A SUPERIOR AUTHORITY. THE REMEDY LIES WITH THE DEPARTMENT AND HE HAS TO FILE AN APPEAL AG AINST THE ORDER OF THE CIT (APPEALS) IF THEY HAVE ANY - - ITA 519 & 1379/08 22 GRIEVANCE. IN THE PRESENT CASE, INSTEAD OF FILING T HE APPEAL IN TIME AGAINST THE CIT (APPEALS) ORDER, THE ASSESSING OFFICER MADE A FRESH ASSESSMENT WITHOUT JURISDICTION WHICH IS AGAINST THE LAW ON THE FACTS OF THE CASE AND NOT SUSTAINABLE IN THE EYE OF LAW. FURTHER, LD.A.R THE JUDGMENT OF THE HONBLE CALCUTT A HIGH COURT IN THE CASE OF FU SHEEN TANNERY V. ITO [2003] 262 ITR 456 9. THE LD. DR SUBMITTED THAT THE ORIGINAL ASSESSMEN T ORDER PASSED U/S.144 OF THE ACT VIDE ORDER DATED 30.03.19 98 AND DETERMINED THE INCOME OF THE ASSESSEE 9,09,81,425/-. THE ASSESSEE HAS PREFERRED AN APPEAL AGAINST THE ABOVE ORDER BEFORE THE CIT(APPEALS). IN HIS ORDER DATED 21.12. 1998 AFTER CONSIDERING ALL THE SUBMISSIONS OF THE ASSESSEE, TH E CIT(APPEALS) HAS STATED AS FOLLOWS : SO I DIRECT THE AO TO TREAT THE RETURN A S FILED IN RESPONSE TO NOTICE U/S.142(1). THE AO MADE THE ADDITIONS OF 1,43,00,000/- AS UNEXPLAINED CASH CREDIT, 1,50,87,790/- BEING DEPOSITS IN THE BANK NOT EXPLA INED PROPERLY AND 43,40,455/- TOWARDS INVESTMENT ON IMPORT OF EQUIPMENTS. OBVIOUSLY THE APPELLANT COULD NOT E XPLAIN THE FACT WITH REGARD TO THE ABOVE ITEMS. A GREAT I NJUSTICE WILL BE DONE IF APPELLANT IS NOT GIVEN AN OPPORTUNI TY OF BEING HEARD TO EXPLAIN THE ABOVE FIGURES. SO ON TH ESE - - ITA 519 & 1379/08 23 THREE ISSUES, AND WITH REGARD TO THE ESTIMATE OF IN COME AT 20,00,000/- I SET ASIDE THE ASSESSMENT. THE AO MADE THE ADDITIONS OF 61,70,000/-, 2,24,00,000/-, 2,65,000/- AND 17,650/- ON A PROTECTIVE MANNER 9.1 THE LD. DR, FURTHER SUBMITTED THAT ON THE APPLI CATION DATED 12.1.1999 MADE BY THE THEN AO, CIT(APPEALS) HAS PAS SED CORRIGENDUM DATED 5.2.1999 TO THE APPELLATE ORDER D ATED 21.12.1998, IN WHICH THE CIT(APPEALS) HAS STATED AS : THE ASSESSING OFFICER BY HIS LETTER DT. 12.1.1999 HAD BROUGHT TO MY NOTICE THAT THERE IS AN ERROR IN THE ABOVE NARRATION, IN AS MUCH AS THE ADDITION OF 61,70,000/- WAS NOT MADE IN A PROTECTIVE MANNER, BUT IN A SUBSTANTIVE MANNER. I FIND IT TO BE A FACT. FOR A LL OTHER SUBSTANTIVE ADDITIONS, I HAVE SET ASIDE THE ISSUES FOR RECONSIDERATION BY THE ASSESSING OFFICER. THEREFOR E, THIS ITEM OF 61,70,000/- WILL COME IN THAT CATEGORY OF RECONSIDERATION AND NOT IN THE CATEGORY OF PROTECTI VE ASSESSMENT 9.2 ON 05.03.1999 THE THEN AO HAS FILED ANOTHER MISCELLANEOUS PETITION BEFORE CIT(APPEALS), PRAYING FOR AN AMENDMENT TO THE APPELLATE ORDER AS BELOW : IN THE SAID ORDER, IN PAGE NUMBER 8 HAS HELD THAT IT IS SEEN THAT THE AO WENT THROUGH THE STATEMENTS ACCOMPANYING THE RETURN AND MADE ADDITIONS BY FINDING OUT THE ITEMS IN THE STATEMENTS. HE COULD HAVE TAKEN THE COGNIZANCE OF FILING OF THE RETURN. SO I DIRECT THE AO TO TREAT THE RETURN AS FILED IN RESPONSE TO NOTICE - - ITA 519 & 1379/08 24 U/S 142(1). I HAVE BEEN DIRECTED TO MAKE THIS PET ITION BEFORE YOU THAT THE ABOVE SAID RETURN FILED BY THE ASSESSEE ON 25.3.1998 IS BEYOND THE STATUTORY PERIO D ALLOWED U/S 139(4) OF THE INCOME-TAX ACT, 1961 AND IT IS TO BE HELD AS INVALID. 9.3 THE ABOVE PETITION WAS CONSIDERED BY THE CIT(A PPEALS), WHO HAS PASSED THE ORDER IN ITA NO.14/1998-99 DT. 1 6.03.1999 ON THE ABOVE PETITION. HOWEVER, THE ORDER DISPOSIN G THE PETITION DATED 5.3.1999 WAS RECEIVED BY THE CIT, CENTRAL-II ON 20.09.2004. 9.4 ACCORDING TO THE LD. DR, AS PER THE ORDER OF T HE CIT(APPEALS), THE CASE WAS POSTED FOR HEARINGS ON V ARIOUS DATES I.E. 30.09.2004, 17.11.2004, 24.01.2005, 21.02.2005 , 10.3.2005, 30.9.2005, 21.10.2005, 07.11.2005 AND 12.12.2005. AS DIRECTED BY THE CIT(APPEALS), DETAILED QUESTIONAIRE WAS ISSU ED VIDE LETTER DATED 21.10.2005 REQUESTING THE EXPLANATION OF THE ASSESSEE ON VARIOUS POINTS, WHICH WERE SET ASIDE. IN RESPONSE TO THE HEARING NOTICES, THE AUTHORIZED REPRESENTATIVE OF THE ASSES SEE HAS ALSO FILED LETTERS DATED 29.11.2004, 28.01.2005, 03.02.2 005, 19.10.2005, 05.11.2005 AND 06.12.2005. THE MAIN CO NTENTIONS - - ITA 519 & 1379/08 25 OF THE ASSESSEE DURING THE COURSE OF COMPLETION OF SET ASIDE PROCEEDINGS AND THE FINDINGS ON THE SAME ARE AS UND ER : (A). THE ASSESSEES AR HAS STATED THAT THE CIT(A) HAS IN HIS ORDER DT. 21.12.1998 HAS DIRECTED TO TREAT T HE RETURN FILED AS THE RETURN FILED IN PURSUANCE OF NOTICE IS SUED U/S.142(1). THEREFORE, WHAT HAS BEEN FILED IS THE VALID RETURN. NO NOTICE U/S 143(2) HAS BEEN ISSUED AND I N THE ABSENCE OF SUCH NOTICE IT WAS CLAIMED THAT THE ASSESSMENT CANNOT BE MADE. ON THIS ISSUE, IT IS BROUGHT TO THE NOTICE OF THE ASSESSEE IN THE LETTER DT. 21.10.2005 THAT THE CIT( A) HAS NOT GIVEN ANY DIRECTIONS ON THIS ISSUE. THE PRESEN T REASSESSMENT PROCEEDINGS ARE CONSEQUENT TO THE SPECIFIC DIRECTIONS OF THE CIT(A), WHO HAS SET ASID E THE SUBSTANTIVE ADDITIONS AND DIRECTED TO RECONSIDER ON LY THOSE ISSUES. (B) THE ASSESSEES AR HAS STATED THAT THE CIT(A) IN HIS ORDER, HAS SET ASIDE THE ADDITIONS IN HIS ORDER DT. 21.12.1998 AND NO DIRECTIONS TO REDO THE ASSESSMENT WAS GIVEN. THEREFORE, IT WAS CLAIMED THAT IN THE A BSENCE OF ANY DIRECTION, REASSESSMENT CANNOT BE DONE. ON THIS CONTENTION, IT IS ALSO BROUGHT TO THE ATTENTION OF THE ASSESSEE, THE CORRIGENDUM DT. 05.02.1999 TO THE APPELLATE ORDER DT. 21.12.1998 PASSED BY THE CIT(A) IN WHICH IT WAS CLEARLY STATED THAT THE SUBSTANTIVE AD DITIONS ARE SET ASIDE FOR RECONSIDERATION BY THE ASSESSING OFFICER. THE DIRECTIONS OF THE CIT(A) IS ALREADY REPRODUCED IN PARA NO.4, MOREOVER, THE INTENTION O F THE CIT(A) IN THE ORIGINAL ORDER DT. 21.12.1998 IS ALSO VERY CLEAR THAT THE ADDITIONS WERE SET ASIDE ONLY FOR GI VING MORE OPPORTUNITIES TO THE ASSESSEE. (C) THE ASSESSEES AR HAS STATED THAT SINCE THE OR DER OF THE CIT(A) WAS PASSED ON 21.12.1998, THE TIME AVAIL ABLE FOR MAKING AN ASSESSMENT U/S 153(2A) LAPSES ON - - ITA 519 & 1379/08 26 313.2000, THEREFORE, THE ASSESSMENT IS BARRED BY LIMITATION OF TIME. 9.5 ACCORDING TO THE LD. DR THE FIRST ORDER OF THE CIT( APPEALS) DATED 21.12.1998 HAS GOT MERGED WITH THE ORDER PASS ED BY CIT(A) ON 16.3.1999 WITH REFERENCE TO THE MISC. PET ITION FILED BY THE AO. HENCE, THE ARGUMENT OF THE ASSESSEES CO UNSEL HAS NO MERIT. 9.6 REGARDING WHETHER THE ASSESSMENT ORDER WAS SET ASIDE BY CIT(A) WITH OR WITHOUT DIRECTION TO RE-DO THE AS SESSMENT, THE LD. DR SUBMITTED THAT, THE CIT(A) VIDE ORDER DATED 21.12.1998 HAS OBSERVED AS FOLLOWS : . .. THE AO MADE THE ADDITIONS OF 1,43,00,000 AS UNEXPLAINED CASH CREDIT, 1,50,87,790 BEING DEPOSITS IN THE BANK NOT EXPLAINED PROPERLY AND 43,40,455 TOWARDS INVESTMENT ON IMPORT OF EQUIPMENTS. OBVIOUSLY THE APPELLANT COULD NOT EXPLAIN THE FACT WITH REGARD TO THE ABOVE ITEMS. A GREAT INJUSTICE WILL BE DONE IF THE APPELLANT IS NO T GIVEN AN OPPORTUNITY OF BEING HEARD TO EXPLAIN THE ABOVE FIGURES. SO ON THESE THREE ISSUES AND WITH REGARD TO THE ESTIMATE OF INCOME AT 20,00,000, I SET ASIDE THE ASSESSMENT. THE ASSESSMENT IS PARTLY SET ASIDE, THE APPEAL IS PARTLY ALLOWED. - - ITA 519 & 1379/08 27 9.7 FURTHER, IN THE PAPER BOOK FILED BY THE DEPARTM ENT BEFORE THIS TRIBUNAL, THE CIT(A)S CORRIGENDUM ORDER DATED 5.2.1999 READS AS FOLLOWS : FOR ALL OTHER SUBSTANTIVE ADDITIONS, I HAVE SE T ASIDE THE ISSUES FOR RECONSIDERATION BY THE ASSESSI NG OFFICER. SO, THIS ITEM OF 61,70,000 WILL COME IN THAT CATEGORY OF RECONSIDERATION AND SET IN THE CATEGORY OF PROTECTIVE ASSESSMENT. SO WITH REGARD TO THE ITEM OF 61,70,000, IT IS NO SET ASIDE. THE ASSESSING OFFI CER WILL COME TO HIS CONCLUSION AFTER PROPER VERIFICATI ON. 9.8 IN VIEW OF THE ABOVE, THE LD. DR SUBMITTED THAT THE SUBMISSIONS OF THE ASSESSEE ARE UNTENABLE. ACCORD ING TO HIM, THE CIT(A) CLEARLY SET ASIDE THE ADDITIONS, AS GREA T INJUSTICE WILL BE DONE IF THE ASSESSEE IS NOT GIVEN AN OPPORTUNITY OF BEING HEARD TO EXPLAIN THE ABOVE ADDITIONS AND THE ORIGIN AL ASSESSMENT ORDER MADE WAS BEST JUDGMENT ASSESSMENT U/S.144 OF THE ACT, TREATING THAT NO RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S.142(1) OF THE ACT. HOWEVER, THE AO HAS EXTRACT ED THE ABOVE CIT(A) ORDERS IN HIS ASSESSMENT ORDER, HENCE THE AB OVE GROUNDS ARE NOT CORRECT AND THE ASSESSMENT ORDER IS A VALID ORDER AS PER LAW AFTER PROVIDING OPPORTUNITY TO THE ASSESSEE. - - ITA 519 & 1379/08 28 9.9 ACCORDING TO THE LD. DR, RELIANCE PLACED BY TH E ASSESSEE ON THE JUDGMENT OF CALCUTTA HIGH COURT IN THE CASE OF FU SHEEN TANNERY V. ITO (262 ITR 456) IS NOT APPLICABLE TO T HE PRESENT CASE, SINCE IN THAT CASE ASSESSMENT WAS SET ASIDE W ITHOUT ANY DIRECTION TO REDO THE ASSESSMENT. WHEREAS, IN THE PRESENT CASE IN HAND, THE CIT(A) SET ASIDE THE ADDITIONS WITH OB SERVATION AS GREAT INJUSTICE WILL BE DONE IF THE ASSESSEE IS NOT GIVEN AN OPPORTUNITY OF BEING HEARD TO EXPLAIN THE ABOVE ADD ITIONS AND CIT(A) VIDE HIS CORRIGENDUM ORDER DATED 05.02.1999 HELD THAT FOR ALL OTHER SUBSTANTIVE ADDITIONS, I HAVE SET AS IDE THE ISSUES FOR RECONSIDERATION BY THE ASSESSING OFFICER . THUS, THE CIT(A) SET ASIDE THE ASSESSMENT WITH DIRECTION TO RECONSIDER THE ISSUE AFRESH AFTER PROVIDING OPPORTU NITY TO THE ASSESSEE, THEREFORE, THE QUESTION OF ANNULMENT DOES NOT ARISE IN THIS CASE. FURTHER, THE LD. DR SUBMITTED THAT AS SPECIFIC DIRE CTION GIVEN BY THE CIT(A), PROVISION SUB-SEC.(3) OF SEC.153 SQUARE LY APPLICABLE TO THE FACTS OF THIS CASE AND THERE IS NO TIME LIMI T TO COMPLETE SUCH ASSESSMENT. - - ITA 519 & 1379/08 29 9.9.1 REGARDING ADDITIONS, THE LD. DR, SUBMITTED TH AT THE ADDITIONS MADE BY THE AO ARE ON PROTECTIVE AND SUBS TANTIVE BASIS. HOWEVER, THE AO ISSUED A DETAILED QUESTIONN AIRE DATED 21.10.2005 AND VARIOUS DETAILS WERE CALLED FOR FROM THE ASSESSEE. FURTHER, THE AO VIDE LETTER DATED 5.12. 2005, PROVIDED VARIOUS SEIZED DOCUMENTS TO THE ASSESSEE AND CALLED FOR ITS OBJECTION. THE ASSESSEE HAS NOT REPLIED TO THE ADD ITION OF ESTIMATION OF BUSINESS INCOME. ON ADVANCE OUT OF U NACCOUNTED INCOME OF 61.7 LAKHS, THE ASSESSEE ADMITTED THAT IT IS SCRAP OF PAPER AND IT CANNOT OFFER ANY COMMENT ON THE BASIS OF A COPY OF A PIECE OF PAPER. THE ASSESSEE HAS ALSO NOT REPLIE D TO THE ADDITION OF CASH CREDIT OF 1.43 CRORES. FURTHER, THE ASSESSEE HAS NOT REPLIED TO THE ADDITION ON IMPORT OF EQUIPM ENTS OF 43.3 LAKHS AND DEPOSITS IN INDIAN BANK OF 1.5 CRORES. THEREFORE, THE AO OBSERVED THAT IN VIEW OF THE FOREGOING THE ASSES SEE HAS CHOSEN NOT TO FURNISH ANY EVIDENCE/REBUTTAL TO ANY OF THE POINTS RAISED, THEREBY NOT DISCHARGING THE ONUS CAST ON IT TO SUBSTANTIATE ITS CLAIM. ACCORDING TO THE LD. DR, T HE ASSESSEE DID NOT BRING IN ANY EVIDENCE AGAINST THE INFORMATION N OR COULD REFUTE ANY FINDINGS AS TO THE FACTS. THEREFORE, INFORMATI ON ON - - ITA 519 & 1379/08 30 INVESTMENTS/ASSETS IS FOUND TO BE CORRECT. HENCE, THE LD. DR SUBMITTED THAT AS PER DIRECTIONS OF THE CIT(A) AFTE R PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD AND CAREFULLY C ONSIDERING THE SUBMISSIONS AND BASED ON THE MATERIAL AVAILABLE ON RECORD, THE TOTAL UNDISCLOSED INCOME OF THE ASSESSEE IS ARR IVED. THEREFORE, THE LD. DR, PLEADED THAT SINCE THE ASSES SEE HAS FAILED TO MAKE OUT A CASE EVEN AFTER THE SET ASIDE ASSESSM ENT U/S.144 OF THE ACT AND NO EVIDENCES WERE PRODUCED BY THE AS SESSEE DURING THE DENOVA ASSESSMENT, THE PRESENT ASSESSMEN T DOES NOT CALL FOR ANY INTERFERENCE BOTH ON LAW AND FACTS OF THE CASE. 9.9.2 REGARDING ADDITIONAL GROUND, THE LD.D.R SUBM ITTED THAT EVEN IF THERE IS ANY DEFICIENCY IN NON-ISSUING OF N OTICE U/S.143(2) OF THE ACT, WHICH IS ONLY A PROCEDURAL IRREGULARITY AND IT COULD BE CURED, IT DOES NOT MAKE ASSESSMENT ORDER NULL AND VOID. NULLITY IS WHERE THERE IS A VOID ACT OR AN ACT HAVING NO LE GAL FORCE OR VALIDITY. IN THE PRESENT CASE, THOUGH THE AO NOT IS SUED NOTICE U/S.143(2) OF THE ACT IN A PRESCRIBED FORMAT, HE HA S GIVEN ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE AND THERE IS FAILURE ON THE PART OF THE ASSESSEE TO REPRESENT TH E CASE PROPERLY - - ITA 519 & 1379/08 31 BEFORE THE AO. THERE IS NO FAILURE ON THE PART OF THE AO SO AS TO MAKE ASSESSMENT ORDER NULL AND VOID. IF THERE IS AN Y DEFECTS IN ISSUANCE OF NOTICE U/S.143(2) OF THE ACT, LD.D.R SU BMITTED THAT PROVISIONS OF THE SECTION 292BB OF THE ACT CAME INT O SERVICE OF THE REVENUE. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE FOR ASSESSMENT YEAR 1995-96 FILED NO RETURN OF INCOME AND NOTICE U/S.142(1) DATED 08.01. 1996 WAS ISSUED TO THE ASSESSEE BY ACIT, CENTRAL CIRCLE-IV, CHENNAI. AS PER THIS NOTICE, THE ASSESSEE CALLED TO FILE RETUR N OF INCOME ON OR BEFORE 24.01.1996. THERE WAS NO RESPONSE TO THIS N OTICE. VIDE LETTER DATED 27.01.1996, THE AUTHORISED REPRESENTAT IVE OF ASSESSEE SHRI N.V.BALAJI,C.A FILED A LETTER REQUEST ING A MONTH TIME TO FILE FULL AND CORRECT RETURN OF INCOME FOR ASSESSMENT YEAR 1995-96. THIS WAS SAID TO BE NOT FULFILLED BY THE ASSESSEE. SUBSEQUENTLY, A LETTER WAS ISSUED BY THE AO, NAMELY ACIT, CENTRAL CIRCLE II(5) ON 06.11.1996 INTIMATING THE ASSESSEE CHANGE IN JURISDICTION. AGAIN ON 27.08.1997 ANOTHE R LETTER WAS ISSUED BY THE THEN ACIT, CENTRAL CIRCLE-II(4), CHEN NAI AND THE NOTICE U/S.142(1) REQUESTING THE ASSESSEE TO FILE R ETURN OF - - ITA 519 & 1379/08 32 INCOME. AGAIN ANOTHER NOTICE U/S.142(1) WAS ISSUED ON 01.10.1997 AND THERE WAS NO RESPONSE FROM THE ABOVE MENTIONED LETTER AND THEN ACIT, CENTRAL CIRCLE II( 4), CHENNAI ISSUED ANOTHER LETTER DATED 20.03.1998 ENCLOSING D RAFT ASSESSMENT ORDER. IN THE MEANTIME, THE MANAGING DI RECTOR OF ASSESSEE SHRI V.BASKARAN FILED RETURN OF INCOME AD MITTING NIL INCOME. THE RETURN WAS TREATED BY THE AO AS INVALI D RETURN VIDE HIS ORDER SHEET ENTRY. FINALLY THE ASSESSMENT ORDE R WAS PASSED U/S.144 OF THE ACT ON 30.03.1998 DECLARING THE INCO ME OF ASSESSEE AT ` 9,09,81,425/-. 10.1. THE ASSESSEE HAS PREFERRED AN APPEAL AGAINST THE ABOVE ORDER BEFORE CIT(A). IN HIS ORDER DATED 21.12.1998 AFTER CONSIDERING ALL THE SUBMISSIONS OF THE ASSESSEE, TH E CIT(A) HAS STATED SO I DIRECT THE AO TO TREAT THE RETURN AS FILED IN RESPONSE TO NOTICE U/S.142(1). THE AO MADE THE ADDITIONS OF RS.1,43,00,000/- AS UNEXPLAINED CASH CREDIT, RS.1,5 0,87,790/- BEING DEPOSITS IN THE BANK NOT EXPLAINED PROPERLY A ND RS.43,40,455/- TOWARDS INVESTMENT ON IMPORT OF EQUI PMENTS. OBVIOUSLY THE APPELLANT COULD NOT EXPLAIN THE FACTS WITH REGARD TO THE ABOVE ITEMS. A GREAT INJUSTICE WILL BE DONE IF APPELLANT IS NOT GIVEN AN OPPORTUNITY OF BEING HEARD TO EXPLAIN THE ABOVE - - ITA 519 & 1379/08 33 FIGURES. SO ON THESE THREE ISUSES, AND WITH REGARD TO THE ESTIMATE OF INCOME AT RS.20,00,000, I SET ASIDE THE ASSESSMENT . 10.2 ON THE APPLICATION DT.12.1.1999 MADE BY THE T HEN AO,CIT(A) HAS PASSED CORRIGENDUM DT.5.2.1999 TO THE APPELLATE ORDER DT.21.12.1998, IN WHICH THE CIT(A) HAS STATED AS THE AO BY HIS LETTER DT.12.1.1999 HAD BROUGHT TO M Y NOTICE THAT THERE IS AN ERROR IN THE ABOVE NARRATION, IN A S MUCH AS THE ADDITION OF RS.61,70,000/- WAS NOT MADE IN A PROTEC TIVE MANNER, BUT IN A SUBSTANTIVE MANNER. I FIND IT TO B E A FACT. FOR ALL OTHER SUBSTANTIVE ADDITIONS, I HAVE SET ASIDE T HE ISSUES FOR RECONSIDERATION BY THE AO. THEREFORE, THIS ITEM OF RS.61,70,000 WILL COME IN THAT CATEGORY OF RECONSID ERATION AND NOT IN THE CATEGORY OF PROTECTIVE ASSESSMENT . 10.3 THEN ON 5.3.1999 THE THEN AO HAS FILED ANOTHE R MISCELLANEOUS PETITION BEFORE CIT(A), PRAYING FOR A N AMENDMENT TO THE APPELLATE ORDER AS BELOW: IN THE SAID ORDER, IN PAGE NO.8 HAS HELD THAT IT IS SEEN THAT THE AO WENT THROUGH THE STATEMENTS ACCOMPANYING THE RETURN - - ITA 519 & 1379/08 34 AND MADE ADDITIONS BY FINDING OUT THE ITEMS IN THE STATEMENTS. HE COULD HAVE TAKEN THE COGNIZANCE OF FILING OF THE RETURN. SO I DIRECT THE AO TO TREAT THE RETURN AS FILED IN RESPO NSE TO NOTICE U/S.142(1). I HAVE BEEN DIRECTED TO MAKE THIS PETIT ION BEFORE YOU THAT THE ABOVE SAID RETURN FILED BY THE ASSESSE E ON 25.03.1998 IS BEYOND THE STATUTORY PERIOD ALLOWED U /S.139(4) OF THE INCOME TAX ACT, 1961 AND IT IS TO BE HELD AS IN VALID. 10.4 THE ABOVE PETITION WAS CONSIDERED BY CIT(A) W HO HAS PASSED THE ORDER IN ITA NO.14/1998-99 DATED 16.03.1 999 ON THE ABOVE PETITION. HOWEVER, THE ORDER DISPOSING TH E PETITION DATED 05.03.1999 WAS RECEIVED BY THE CIT, CENTRAL-I I ON 20.09.2004. AS PER THE ORDER OF CIT(A) DATED 21.12 .1998, THE RETURN OF INCOME FILED BY ASSESSEE ON 24.3.1998 IS A VALID RETURN OF INCOME. 10.5 AS PER THE ORDERS OF CIT(A), THE CASE WAS PO STED FOR HEARING ON VARIOUS DATES I.E. 30.09.2004, 17.11.200 4, 24.01.2005, 21.02.2005, 10.03.2005, 30.09.2005, 21. 10.2005, 07.11.2005 AND 12.12.2005. AS DIRECTED BY THE CIT( A), DETAILED QUESTIONNAIRE WAS ISSUED VIDE LETTER DT.21 .10.2005 REQUESTING THE EXPLANATION OF THE ASSESSEE ON VARIO US POINTS. - - ITA 519 & 1379/08 35 10.6 NOW, THE CONTENTION OF LD.A.R IS THAT THE A SSESSMENT WAS COMPLETED IN THIS CASE WITHOUT ISSUANCE OF NOT ICE U/S.143(2) OF THE ACT, WHICH IS MANDATORY IN NATURE FOR THE PURPOSE OF COMPLETING ASSESSMENT . ADMITTEDLY, THE RE IS NO DISPUTE THAT NO NOTICE U/S.143(2) WAS ISSUED TO THE ASSESSEE AND WITHOUT ISSUING NOTICE U/S.143(2) OF THE ACT, T HE CASE WAS POSTED FOR HEARING ON VARIOUS OCCASION MENTIONED IN EARLIER PARA, ASSESSMENT WAS COMPLETED. 10.7 ADMITTEDLY, THE ISSUE RELATING TO NON ISSUE OF NOTICE U/S.143(2) OF THE ACT WAS FIRST TIME RAISED BEFORE THIS TRIBUNAL AND THE CIT(A) HAS NO OCCASION TO CONSIDER THIS GRO UND. IN OUR OPINION, IT IS APPROPRIATE TO REMIT THIS GROUND FOR THE DECISION OF CIT(A) AND THEREAFTER TO DECIDE THE OTHER ISSUE RAI SED BY THE ASSESSEE AFRESH, IF REQUIRED. ACCORDINGLY, PLACING RELIANCE ON THE JUDGEMENT OF SUPREME COURT IN THE CASE OF NATIO NAL THERMAL POWER CO. LTD. VS. CIT REPORTED IN [1998] 2 29 ITR 383 (SC), WE ADMIT THE ADDITIONAL GROUND AND RE MIT THE SAME TO THE FILE OF CIT(A) FOR HIS CONSIDERATION. A T THIS STAGE, - - ITA 519 & 1379/08 36 WE REFRAIN FROM GOING INTO OTHER GROUNDS RAISED BY THE ASSESSEE BEFORE US AT THIS LEVEL. 11. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE PART LY ALLOWED STATISTICAL PURPOSES. ORDER PRONOUNCED ON 20.01.2017 AT CHE NNAI. SD/- SD/- ( $% & ) ( ' ( ) $ ) *%+,-,./01,2345,.62,+778,293 : ;< /JUDICIAL MEMBER ! ;<=>>70.?,.?@A1BA2 ': /CHENNAI, C; /DATED, THE 20 TH JANUARY, 2017. K S SUNDARAM ;D EFGF /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. H3 /CIT(A) 4. H /CIT 5. FIJ K /DR 6. JLM /GF.