Moti Panjabi (HUF), Pune V. Asst. comm. of Income-tax, Pune

ITA 1474/PUN/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9825 (ITAT-PUNE)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 22-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH VERMA; ANN KAPTHUAMA
• Keywords: Search and seizure; Loose papers; Share purchase agreement; Opportunity of being heard; Principle of natural justice; Accommodation entries; Block assessment; Sham transactions; Reason to believe; Documents seized; Reassessment proceedings
• Section: 153A; 147; 148; 132; 15; 139

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER SL. NO. ITA NO. A.Y. NAME OF THE APPELLANT RESPONDENT 1 ITA NO. 1474/PN/2011 2003-04 SRI MOTI PANJABI,HUF SHAH KHANDELWAL JAIN & ASSOCIATES CHARTERED ACCOUNTANTS LEVEL 3, BUSINESS BAY, PLOT NO. 84, WELLESLEY ROAD, NEAR RTO, PUNE 411 001 PAN NO.AABHM 6995D ACIT, CENTRAL CIRCLE 2(1), PMT BUILDING, SWARGATE, PUNE 2 ITA NO. 1475/PN/2011 2003-04 SRI SUNDER PANJABI, HUF SHAH KHANDELWAL JAIN & ASSOCIATES CHARTERED ACCOUNTANTS LEVEL 3, BUSINESS BAY, PLOT NO. 84, WELLESLEY ROAD, NEAR RTO, PUNE 411 001 PAN NO. AAEHS 9830A ACIT, CENTRAL CIRCLE 2(1), PMT BUILDING, SWARGATE, PUNE 3 ITA NO. 1476/PN/2011 2002-03 SRI MANOJ PANJABI, SHAH KHANDELWAL JAIN & ASSOCIATES CHARTERED ACCOUNTANTS LEVEL 3, BUSINESS BAY, PLOT NO. 84, WELLESLEY ROAD, NEAR RTO, PUNE 411 001 PAN NO. AALPP 3775B ACIT, CENTRAL CIRCLE 2(1), PMT BUILDING, SWARGATE, PUNE 4 ITA NO. 1477/PN/2011 2003-04 -DO- -DO- 5 ITA NO. 1478/PN/2011 2003-04 SRI RAM PANJABI, HUF SHAH KHANDELWAL JAIN & ASSOCIATES CHARTERED ACCOUNTANTS LEVEL 3, BUSINESS BAY, PLOT NO. 84, WELLESLEY ROAD, NEAR RTO, PUNE 411 001 PAN NO. AABHP 7122F ACIT, CENTRAL CIRCLE 2(1), PMT BUILDING, SWARGATE, PUNE 6 ITA NO. 1479/PN/2011 2003-04 SRI GOVIND PANJABI, HUF SHAH KHANDELWAL JAIN & ASSOCIATES CHARTERED ACCOUNTANTS LEVEL 3, BUSINESS BAY, PLOT NO. 84, WELLESLEY ROAD, NEAR RTO, PUNE 411 001 PAN NO. AACHG 2007H ACIT, CENTRAL CIRCLE 2(1), PMT BUILDING, SWARGATE, PUNE ASSESSEE BY : SRI NEELESH KHANDELWAL DEPARTMENT BY : SRI MUKESH VERMA & MS. ANN KAPTH UAMA DATE OF HEARING : 19-11-2012 DATE OF PRONOUNCEMENT : 21-11-2012 ORDER PER BENCH : ALL THE ABOVE APPEALS FILED BY THE RESPECTIVE ASSES SEES ARE DIRECTED AGAINST THE SEPARATE ORDERS DATED 28-09-2011 OF THE LEARNED CIT(A), CENTRAL, PUNE RELATING TO DIFFERENT ASSESSMENT YEARS AS MENTIONED ABOVE. SINCE COMMON GROUNDS ARE 2 INVOLVED IN ALL THESE APPEALS, THEREFORE, THESE WER E HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON. ITA NO.1474/PN/2011 (MOTI PANJABI) (A.Y. 2003-04) : 2. FACTS OF THE CASE, IN BRIEF, ARE THAT A SEARCH A ND SEIZURE OPERATION WAS CONDUCTED IN THE ASSESSEES GROUP OF CASES ON 17-03 -2006. DURING THE COURSE OF SEARCH ACTION, DOCUMENTS, BOOKS, LOOSE PAPERS ETC. WERE SEIZED FROM THE RESIDENTIAL AND BUSINESS PREMISES OF THE VARIOUS ASSESSEES. TH E AO THEREAFTER ISSUED NOTICE U/S.153A(A) DATED 16-01-2007 TO THE ASSESSEE. SUBS EQUENTLY, NOTICE U/S.142(1) DATED 11-09-2007 WAS ALSO ISSUED TO THE ASSESSEE. THEREAFTER, THE AO NOTED THAT THERE WAS NO WARRANT ISSUED IN THE NAME OF THE ASSE SSEE. THEREFORE, AFTER RECORDING THE FOLLOWING REASONS THE AO INITIATED PROCEEDINGS U/S.148 OF THE INCOME TAX ACT : THE ASSESSEE HAS ENTERED INTO SHAM TRANSACTION IN M/S. DATABASE FINANCE LTD. AND MEDIA MATRIX LTD. TO BOOK BOGUS LONG TERM CAPITAL G AIN OF RS.11.33 LAKHS. KEY PERSONS OF THE GROUP SHRI MOTI PANJABI AND SHRI RAM UDHARAM PANJABI HAVE ADMITTED ADDITIONAL INCOME IN THE HANDS OF THE ENTIRE GROUP IN THIS REG ARD. THE ASSESSMENTS U/S.153A OF THESE PERSONS WERE COMPLETED ON 31-12-2007 AND TRANSACTIO NS IN THE SHARES DONE BY THE ASSESSEE WERE FOUND BOGUS AND ADDITIONS WERE MADE A CCORDINGLY. HENCE, I HAVE REASON TO BELIEVE THAT TAXABLE INCOME OF RS.2,26,794/- HAS ESCAPED ASSESSMENT. ISSUE NOTICE U/S.147. 3. THE ASSESSEE VIDE ITS SUBMISSION DATED 10-12-200 9 RAISED OBJECTIONS ON PROCEEDINGS U/S.148. HOWEVER, THE AO REJECTED SUCH OBJECTIONS AND PROCEEDED TO COMPLETE THE ASSESSMENT. THE AO NOTED THAT THE ASS ESSEE HAS ENTERED INTO SHAM TRANSACTIONS WHICH WAS DISCLOSED AS CAPITAL GAIN. HE DISCUSSED THE EVIDENCES CONTAINED IN THE SEIZED MATERIALS AND OTHER EVIDENC ES WITH THE ASSESSEE FROM TIME TO TIME AND GAVE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. HE PROVIDED THE COPIES OF THE SEIZED MATERIAL, STATEMENTS AND OTHER RELEVANT INFORMATION/EVIDENCES GATHERED DURING THE COURSE OF SEARCH. THEREAFTER, HE REFERRED TO THE STATEMENT DATED 19-11-2007 RECORDED FROM SHRI MOTI PANJABI WHO WAS THE KEY PERSON AND WHO TOOK ALL INVESTMENT RELATED AND FINANCIAL DECISIONS IN RESPECT OF HIMSELF AND ALL THE 3 FAMILY MEMBERS. THE AO ALSO OBTAINED INFORMATION F ROM THE COMPANIES WHOSE SHARES HAVE BEEN TRADED BY THE ASSESSEE, OBTAINED I NFORMATION FROM THE VARIOUS STOCK EXCHANGES AND BROKERS. CONSIDERING THE FACT THAT ALTHOUGH THE ASSESSEE GROUP HAD ADMITTED ADDITIONAL INCOME AT THE TIME OF SEARCH WHICH WAS IN LINE WITH THE EVIDENCES GATHERED DURING THE COURSE OF SEARCH BUT SUBSEQUENTLY RETRACTED BY NOT INCLUDING IN THE TOTAL INCOME, THE AO CAME TO T HE CONCLUSION THAT THE TRANSACTIONS INVOLVING PURCHASE AND SALE OF SHARES ARE SHAM AND LONG TERM CAPITAL GAINS REFLECTED IN THE RETURNS ARE NOT GENUINE. HE , THEREFORE, TREATED THE ENTIRE SALE PROCEEDS RECEIVED ON ACCOUNT OF SAID SALE TRANSACTI ONS AS UNDISCLOSED INCOME. THE AO FURTHER CAME TO THE CONCLUSION THAT THE EVIDENCE S GATHERED CLEARLY SHOW THAT BOGUS CONTRACT NOTES/BILLS WERE ISSUED BY THE BROKE RS AND ACCOMMODATION ENTRIES PROVIDED FOR THE PURPOSE OF BENEFITTING THE ASSESSE E BY BOOKING LONG TERM CAPITAL GAINS. HE, THEREFORE, ADDED AN AMOUNT OF RS.73,762 /- BEING COMMISSION ON BROKERAGE @6%. THE AO ACCORDINGLY DETERMINED THE T OTAL INCOME AT RS.13,03,130/-. 4. BEFORE THE CIT(A) THE ASSESSEE CHALLENGED THE VA LIDITY OF THE RE-OPENING. IT WAS SUBMITTED THAT THE PROPER COURSE OF ACTION BEFO RE THE AO COULD HAVE BEEN ISSUE OF NOTICE U/S.153C AND NOT NOTICE U/S.148. I T WAS SUBMITTED THAT THE NAME OF THE ASSESSEE WAS NOT APPEARING IN THE SEARCH WARRAN T. HOWEVER, THE AO HAD INITIATED PROCEEDINGS U/S.153A IN CASE OF THE ASSES SEE. THE CASE OF THE ASSESSEE WAS CENTRALISED POST SEARCH WHICH HAS HAPPENED ONLY BECAUSE OF THE SEARCH ACTION. IT WAS SUBMITTED THAT DURING THE SEARCH ACTION ALL PAPERS PERTAINING TO THE CAPITAL GAINS TRANSACTION HAVE BEEN FOUND AND SEIZED BY THE DEPARTMENT. THE ASSESSEE ENCLOSED SAMPLE COPIES OF THE SEIZED MATERIAL PERTA INING TO THE ASSESSEE FOR PERUSAL OF THE LEARNED CIT(A). IT WAS SUBMITTED THAT THE C ONTRACT NOTES/SHARE CERTIFICATES, DEMAT STATEMENTS ETC. PERTAINING TO THE SHARE TRAN SACTIONS HAVE BEEN FOUND AND SEIZED DURING THE SEARCH ACTION. THEREFORE, THE CO MMENT OF THE AO THAT THERE WERE 4 NO INCRIMINATING DOCUMENTS FOUND OR SEIZED OF THE A SSESSEE IS PATENTLY WRONG AND FALSE. THE DECISION OF THE AMRITSAR BENCH OF THE T RIBUNAL IN THE CASE OF ITO VS. ARUN KUMAR KAPOOR WAS RELIED UPON BY THE ASSESSEE , ACCORDING TO WHICH RE- ASSESSMENT U/S.147 ON THE BASIS OF INCRIMINATING MA TERIAL AGAINST THE ASSESSEE FOUND IN SEARCH OF THIRD PARTY AND FORWARDED TO THE AO OF ASSESSEE BY THE SEARCH OFFICER WAS ILLEGAL, VOID AB-INITIO AND IN SUCH SIT UATION ASSESSMENT COULD BE MADE ONLY U/S.153C WHICH SPECIFICALLY OUSTED THE APPLICA TION OF SECTIONS 147 AND 148. 5. SO FAR AS THE MERIT OF THE CASE IS CONCERNED IT WAS SUBMITTED THAT THE SUBMISSION MADE IN THE LEAD CASE SHRI MOTI PANJABI IS APPLICABLE TO THE FACTS OF THE PRESENT CASE. 6. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LEARNED CIT(A) CALLED FOR A REMAND REPORT FROM THE AO. AFTER CONSIDERING THE REMAND REPORT AND THE REPLY OF THE ASSESSEE HE DISMISSED THE LEGAL GROUND AS WELL AS THE GROUND ON MERIT OF THE CASE. 7. SO FAR AS THE LEGAL GROUND CHALLENGING THE VALID ITY OF NOTICE ISSUED U/S.148 THE LEARNED CIT(A) DISCUSSED THE ISSUE AND DISMISSE D THE GROUND BY HOLDING AS UNDER : 3.4 I HAVE GONE THROUGH THE GROUNDS OF APPEAL, SUB MISSION OF THE APPELLANT THEREON, REPORT OF THE AO, COMMENTS OF THE APPELLANT ON THE REPORT OF THE AO AND OTHER MATERIAL AVAILABLE ON RECORD. INITIATION OF ACTION UNDER SE CTION 153C REQUIRES SATISFACTION OF THE AO TO THE EFFECT THAT MATERIAL FOUND DURING THE COU RSE OF SEARCH AND SEIZURE OPERATION AT THE PREMISES OF AN ASSESSEE BELONGS OR BELONG TO SO ME OTHER PERSON(S) AS SUB-SECTION 1 OF SEC.153C STATES THAT WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOO KS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER T HAN THE PERSON REFERRED TO IN SECTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASS ETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDI CTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH O THER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. THE APPELLANT HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SHOW THE SATISFACTION OF THE AO OF THE PERSONS SEAR CHED TO THE EFFECT THAT THE ASSETS AND DOCUMENTS BELONG TO THE APPELLANT. UNDER THE CIRCU MSTANCES, PROVISIONS OF SEC.153C CANNOT BE APPLIED IN THE CASE OF THE APPELLANT. AS THE AO HAD A REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, IN ITIATION OF HIS ACTION U/S.147 OF I.T. ACT CANNOT BE FAULTED WITH. THE APPELLANTS SUBMIS SION THAT PROVISIONS OF SEC.153C AND 158BD ARE SIMILAR AND THEREFORE, THE RATIO OF THE J UDGMENT IN 289 ITR 341 IS APPLICABLE IN THE CASE OF THE APPELLANT, IS ALSO NOT CORRECT. PROVISIONS OF SEC.153C AND 158BD ARE 5 NOT SIMILAR. THIS HAS BEEN HELD IN VARIOUS JUDICIA L RULINGS, INCLUDING IN THE CASE OF VIJAYBHAI N. CHANDRANI VS. ACIT (2010) 231 CTR (GUJ ) 474, (2011) 333 ITR 436, (2010) 38 DTR 225. IN THIS CASE, HONBLE GUJARAT H IGH COURT HAS HELD THAT THERE IS A DISTINCTION BETWEEN THE TWO PROVISIONS. THE RELEVA NT PORTION OF THE JUDGMENT IS REPRODUCED BELOW : 12. ON A PLAIN READING OF THE AFORESAID PROVISIONS IT IS APPARENT THAT SS.153A, 153B AND 153C LAY DOWN A SCHEME FOR ASSESSMENT IN CASE O F SEARCH AND REQUISITION. SEC.153A DEALS WITH PROCEDURE FOR ISSUANCE OF NOTICE AND ASS ESSMENT OR REASSESSMENT IN CASE OF THE PERSON WHERE A SEARCH IS INITIATED UNDER S.132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ASSETS ARE REQUISITIONED UNDER S.132A AFTER THE 31 ST DAY OF MAY, 2003. SEC. 153B LAYS DOWN THE TIME LIMIT FOR COMPLETION OF ASSESSMENT UN DER S.153A. SEC.153C WHICH IS SIMILARLY WORDED TO S.158BD OF THE ACT, PROVIDES TH AT WHERE THE AO IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO SUCH OTHER PERSON OTHER THAN THE PERSON REFERRED TO IN S.153A HE SHALL PROCEED AGAIN ST EACH SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INC OME OF SUCH OTHER PERSON. HOWEVER, THERE IS A DISTINCTION BETWEEN THE TWO PROVISIONS I N AS MUCH AS UNDER S.153C NOTICE CAN BE ISSUED ONLY WHERE THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITION ED BELONG TO SUCH OTHER PERSON, WHEREAS UNDER S.158BD IF THE AO IS SATISFIED THAT A NY UNDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER S.132 OR WHOSE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASSETS WERE REQUISITIONED UNDER 132A, HE SHALL PROCEED AGAINST SUCH OTHER PERSON UNDER S.158 BC. 8. SO FAR AS THE MERIT OF THE CASE IS CONCERNED THE LEARNED CIT(A) FOLLOWING HIS ORDER IN THE CASE OF MOTI PANJABI FOR A.Y. 2003-03 HELD THAT THE AO IS JUSTIFIED IN TREATING THE SALE PROCEEDS AND THE COMMISSION IN RE SPECT OF SHARES (OTHER THAN SHARES OF MEDIA MATRIX LTD.) AS UNDISCLOSED INCOME OF THE ASSESSEE. 8.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE C ASE AND AS PER PROVISIONS OF THE ACT IT BE HELD THAT, THE PROCEEDINGS INITIATED U/S.147 BY ISSUE OF NOTICE U/S.148 IS WITHOUT JURISDICTION AND CONTRARY TO THE PROVISIONS AND SCHEME OF THE ACT, UNWARRANTED, UNJUSTIFIED, AND CONTRARY TO THE FACT PREVAILING IN THE CASE AND PROVISIONS OF LAW. THE ORDER PASSED IN CONTRAVENTI ON TO THE PROVISIONS MAY BE DECLARED INVALID AB-INITIO AND IS SET ASIDE. IT MA Y FURTHER BE HELD THAT THE CIT(A) HAD ERRED IN CONFIRMING THE ORDER PASSED BY THE AO. THE APPELLANT BE GRANTED JUST AND PROPER RELIEF AS PER PROVISIONS OF LAW AND FACTS PREVAILING IN THE CASE. 2. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CAS E AND AS PER PROVISIONS OF THE ACT IT BE HELD THAT, THE AO SHOULD FIRST OUGHT TO HAVE DECIDED THE OBJECTIONS RAISED BY THE APPELLANT BY PASSING THE SUITABLE ORDER FOR INI TIATION OF PROCEEDINGS IN TERMS OF PROVISIONS OF SEC.147. IT BE HELD THAT THE ORDE R PASSED BY THE AO WITHOUT DEALING WITH THE OBJECTIONS RAISED IN RESPECT OF TH E REASONS RECORDED FOR THE REASSESSMENT PROCEEDINGS IS CONTRARY TO THE PROVISI ONS OF THE ACT AND ORDER SO PASSED BE HELD AS INVALID AND BE SET-ASIDE. THE AP PELLANT BE GRANTED JUST AND PROPER RELIEF AS PER PROVISIONS OF LAW AND FACTS PR EVAILING IN THE CASE. 3. WITHOUT PREJUDICE TO GROUND NO. 1&2 AND IN THE A LTERNATIVE ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PRO VISIONS OF LAW IT BE HELD THAT THE ADDITION OF RS.13,03,130/- ON ACCOUNT OF ALLEGE D FICTITIOUS SALES OF SHARES AND 6 FICTITIOUS CAPITAL GAINS INCLUSIVE OF BROKERAGE AND COMMISSION AT 6% IS IMAGINARY, UNWARRANTED, UNJUSTIFIED AND CONTRARY TO THE FACTS PREVAILING IN THE CASE AND PROVISIONS OF LAW. IT FURTHER BE HELD THAT ADDITIO N MADE IN VIOLATION OF RULES OF NATURAL JUSTICE IS NOT TENABLE IN LAW. THE ADDITIO N MADE BY THE AO IN THIS RESPECT BE DETECTED. THE APPELLANT BE GRANTED JUST AND PRO PER RELIEF AS PER PROVISIONS OF LAW AND FACTS PREVAILING IN THE CASE. 4. THE APPELLANT BE GRANTED ALL CONSEQUENTIAL RELIE F AS RESULT OF DECISION IN THE APPEAL. 5. THE APPELLANT PRAYS TO BE ALLOWED TO ADD, AMEND, MODIFY, RECTIFY, DELETE, RAISE ANY GROUNDS OF APPEAL AT THE TIME OF HEARING. 9. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE THE TRIBUNAL REFERRED TO PAGE NO.15 OF THE PAPER BOOK A ND DREW THE ATTENTION OF THE BENCH TO THE NOTICE DATED 16-01-2007 FOR A.Y. 2003- 04 ISSUED U/S.153A(A) OF THE INCOME TAX ACT. REFERRING TO THE COPY OF THE ASSES SMENT ORDER HE SUBMITTED THAT IN THE VERY FIRST PARAGRAPH ITSELF THE AO HAS DROPP ED SUCH NOTICE AND AFTER MORE THAN A YEAR OF COMPLETION OF SEARCH ASSESSMENT HAD ISSUED NOTICE U/S.148 DATED 13- 01-2008 WHICH IS NOTHING BUT A BACK DOOR ENTRY. TH E LEARNED COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO PROVISI ONS OF SECTION 153C WHICH READS AS UNDER : 153C. [(1)] NOTWITHSTANDING ANYTHING CONTAINED IN SECTIO N 139 , SECTION 147 , SECTION 148 , SECTION 149 , SECTION 151 AND SECTION 153 , WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER T HAN THE PERSON REFERRED TO IN SECTION 153A , THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SE IZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE SU CH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A :] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . 9.1 HE SUBMITTED THAT IN THE INSTANT CASE IT WAS BR OUGHT TO THE NOTICE OF THE LEARNED CIT(A) THAT SEARCH HAS TAKEN PLACE IN CASE OF THE ASSESSEE AND DOCUMENTS WERE SEIZED PERTAINING TO THE TRANSACTIONS OF THE A SSESSEE. THE SEARCH WAS CONDUCTED WITHOUT ISSUE OF THE SEARCH WARRANT IN TH E NAME OF THE ASSESSEE. YET THE UNAUTHORISED SEARCH WAS CONDUCTED BY THE DEPARTMENT AL AUTHORITY AND CERTAIN DOCUMENTS WERE SEIZED IN THE COURSE OF SUCH UNAUTHO RISED SEARCH. REFERRING TO 7 PAGE NO.16 OF THE PAPER BOOK, WHICH IS THE LETTER A DDRESSED TO THE AO ON 29-08- 2007, THE LEARNED COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO CLAUSE (1) OF THE SAID LETTER WHICH READS AS UNDER : 1. CONTRACT NOTES/BILLS : PLEASE FIND ENCLOSED THE CONTRACT NOTES FOR PURCHAS ES AS WELL AS SALE OF SHARES IN RESPECT OF EACH TRANSACTION EXCEPT FOR THE DOCUMENTS OF MED IA MATRIX PVT. LTD. WHICH ARE SEIZED DURING THE SEARCH ACTION BY THE DEPARTMENT. THE DE TAILS OF SEIZURE ARE PARTY NO.4D BUNDLE NO.13. 9.2 REFERRING TO THE DECISION OF THE AMRITSAR BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. ARUN KUMAR KAPOOR REPORTED IN 140 TTJ 24 9 HE SUBMITTED THAT UNDER SIMILAR FACTS AND CIRCUMSTANCES THE TRIBUNAL HAD DI SMISSED THE APPEAL FILED BY THE REVENUE WHEREIN THE LEARNED CIT(A) HAD QUASHED THE RE-ASSESSMENT PROCEEDINGS ON THE GROUND THAT THE PROCEEDINGS INITIATED BY THE AO U/S.148 ARE ILLEGAL AND VOID AB- INITIO AS THE ORDER OUGHT TO HAVE BEEN PASSED U/S.1 53C OF THE ACT. REFERRING TO CBDT CIRCULAR NO. 07/2003 WHICH HAS BEEN REPRODUCED BY THE TRIBUNAL AT PARA 6 OF THE ORDER THE LEARNED COUNSEL FOR THE ASSESSEE D REW THE ATTENTION OF THE BENCH TO THE FOLLOWING WHEREIN THE CIRCULAR HAS EXPLAINED TH E PROVISIONS OF SECTION 153C. THE NEW S.153C PROVIDES THAT WHERE AN AO IS SATISF IED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOO KS OF ACCOUNT OF DOCUMENTS SEIZED OR REQUISITIONED BELONG OR BELONGS TO A PERSON OTHER T HAN THE PERSON REFERRED TO IN S.153A, THEN THE BOOKS OF ACCOUNT, OR DOCUMENTS OR ASSETS S EIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE AO HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT AO SHALL PROCEED AGAINST SUCH OTHER PERSON AND ISSUE SUCH OTHER PERS ON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF S.153A. HE ACCORDINGLY SUBMITTED THAT SINCE INCRIMINATING D OCUMENTS WERE FOUND AND SEIZED BY THE DEPARTMENT DURING THE COURSE OF SEARC H, THEREFORE, THE PROPER COURSE OF ACTION SHOULD HAVE BEEN ISSUE OF NOTICE U/S.153C AND NOT U/S.148. THEREFORE, IN VIEW OF THE DECISION CITED ABOVE, THE RE-ASSESSMENT PROCEEDINGS INITIATED BY THE AO AND UPHELD BY THE CIT(A) SHOULD BE CANCELLED. 10. SO FAR AS THE MERIT OF THE CASE IS CONCERNED TH E LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT UNDER IDENTICAL FACTS AND C IRCUMSTANCES THE TRIBUNAL VIDE 8 CONSOLIDATED ORDER IN ITA NO.659/PN/2011 AND CONNEC TED APPEALS DATED 31-10- 2012 HAS RESTORED THE ISSUE TO THE FILE OF THE AO W ITH CERTAIN DIRECTIONS. THEREFORE, HE HAS NO OBJECTION IF THE MATTER IS RESTORED TO TH E FILE OF THE AO WITH THE SAID DIRECTIONS. 11. THE LEARNED DR ON THE OTHER HAND STRONGLY SUPPO RTED THE ORDER OF THE CIT(A). HE SUBMITTED THAT ONLY ENTRIES WERE FOUND AND NO DOCUMENTS/RECORDS/BOOKS OF ACCOUNT WERE FOUND, THER EFORE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE ISSUE OF NOTICE U/S.148 I S THE PROPER SECTION. HE SUBMITTED THAT THE LEARNED COUNSEL FOR THE ASSESSEE HAS MIS-UNDERSTOOD THAT ENTRIES ARE SIMILAR TO RECORDS. HE ACCORDINGLY SUBMITTED T HAT THE ORDER OF THE LEARNED CIT(A) UPHOLDING THE VALIDITY OF THE RE-ASSESSMENT PROCEEDINGS SHOULD BE UPHELD. 11.1 SO FAR AS THE MERIT OF THE CASE IS CONCERNED H E SUBMITTED THAT THE TRIBUNAL HAS TAKEN A VIEW AND RESTORED THE ISSUE TO THE FILE OF THE AO WITH CERTAIN DIRECTIONS. THEREFORE, HE HAS NO OBJECTION IF THE MATTER IS RES TORED TO THE FILE OF THE AO WITH THE SAME DIRECTIONS. 12. THE LEARNED COUNSEL FOR THE ASSESSEE IN HIS REJ OINDER REFERRED TO THE REPLY GIVEN BY THE ASSESSEE IN RESPONSE TO THE COMMENTS O F THE AO WHICH IS APPEARING AT PAGE NO.6 OF THE ORDER OF THE CIT(A). REFERRING TO CLAUSE (3) OF THE SAID REPLY HE DREW THE ATTENTION OF THE BENCH TO THE FOLLOWING WH ICH READS AS UNDER : 3. DURING THE SEARCH ACTION ALL PAPERS PERTAINING TO THE CAPITAL GAINS TRANSACTION HAVE BEEN FOUND AND SEIZED BY THE DEPARTMENT. WE A RE ENCLOSING SAMPLE COPIES OF THE SEIZED MATERIAL PERTAINING TO THE APPELLANT FOR YOU R READY REFERENCE. IT MAY BE NOTED THAT THE CONTRACT NOTES, SHARE CERTIFICATES, DEMAT STATE MENTS ETC. PERTAINING TO THE SHARE TRANSACTION HAVE BEEN FOUND AND SEIZED DURING THE S EARCH ACTION. THE COMMENT OF THE AO THAT THERE WERE NO INCRIMINATING DOCUMENTS FOUND OR SEIZED OF THE APPELLANT IS PATENTLY WRONG AND FALSE. HE ACCORDINGLY SUBMITTED THAT THE ARGUMENTS ADVANCE D BY THE LEARNED DR ARE NOT CORRECT AND THEREFORE THE PROPER COURSE OF ACTION F OR THE DEPARTMENT SHOULD HAVE BEEN ISSUE OF NOTICE U/S.153C AND NOT NOTICE U/S.14 8. 9 13. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE DECISION CIT ED BY THE LEARNED COUNSEL FOR THE ASSESSEE. FROM THE VARIOUS REPLIES GIVEN BY THE AS SESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS APPEAL PROCEEDING S WE FIND CERTAIN DOCUMENTS WERE FOUND AND SEIZED BY THE DEPARTMENT FROM THE RE SIDENTIAL PREMISES OF THE ASSESSEE. 14. WE FIND THE AO AT PARA 3.2 OF THE ASSESSMENT OR DER HAS OBSERVED AS UNDER : 3.2 IN THE COURSE OF SEARCH OPERATIONS, CERTAIN EV IDENCES WERE SEIZED/IMPOUNDED WHICH GO TO SHOW THAT THE LONG TERM CAPITAL GAINS B OOKED FOR VARIOUS ASSESSMENT YEARS ARE NOT GENUINE AND THE SAME ARE BASED ON FICTITIOU S DOCUMENTS CREATED. EVIDENCES GATHERED FROM STOCK EXCHANGES AND BROKERS ARE ALSO IN LINE WITH THE EVIDENCES EMANATING FROM THE MATERIAL SEIZED/IMPOUNDED. IN THE COURSE OF SEARCH OPERATION AND ASSESSMENT PROCEEDINGS, CERTAIN STATEMENTS, CLEARLY BRINGING O UT CRUCIAL EVIDENCES GOING AGAINST THE FACT OF PURCHASE AND SALE OF SHARE TRANSACTIONS, WE RE RECORDED FROM THE KEY PERSON, I.E. SHRI MOTI U. PANJABI AND OTHER FAMILY MEMBERS. SIMILARLY, WE FIND THE AO AT PARA 4.4 OF THE ORDER HAS OBSERVED AS UNDER : 4.4 THE STATEMENT OF DENIAL FROM THE BROKERS AND O THER EVIDENCES SEIZED DURING THE COURSE OF SEARCH OPERATION CONDUCTED ON 30-03-2006, 5 CDS CONTAINING THE BACKUP OF LAPTOPS FOUND IN THE RESIDENCE OF SHRI RAM UDHARAM PUNJABI WERE SEIZED. THESE CDS SHOW THAT ASSESSEE HAS HIMSELF CREATED THE ENTIRE C ORRESPONDENCE BETWEEN THE BROKER AND HIMSELF INCLUDING THE CONTRACT NOTES WERE PLACED BE FORE THE ASSESSEE, IN THE COURSE OF SEARCH OPERATION, FOR EXPLANATION. FACED WITH THE EVIDENCES, AVAILABLE IN THE MATERIAL SEIZED FROM THE PREMISES OF THE ASSESSEE GROUP, AND THOSE GATHERED FROM THE BROKERS, SHRI MOTI PUNJABI STATED THAT THE TRANSACTIONS WERE ENTE RED INTO IN GOOD FAITH. SAYING SO, HE ADMITTED THE ADDITIONAL INCOME OF RS.1,57,31,579/-. IN VIEW OF THE ABOVE OBSERVATIONS OF THE AO AND REP LY OF THE ASSESSEE TO AO AS WELL AS CIT(A) WHICH HAS BEEN REPRODUCED AT PARA 9. 1 AND 12 OF THE IMPUGNED ORDERS WE FIND CERTAIN DOCUMENTS/MATERIALS PERTAINI NG TO THE ASSESSEE WERE SEIZED DURING THE COURSE OF THE SEARCH IN ASSESSEES GROUP OF CASES. THEREFORE, THE SUBMISSION OF THE LEARNED DR THAT NO INCRIMINATING MATERIALS WERE FOUND AND ONLY CERTAIN ENTRIES WERE FOUND IS NOT CORRECT. UNDER T HESE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE CONSIDERED OPINION THAT THE PROPER COURSE OF ACTION AVAILABLE BEFORE THE AO WAS NOTICE U/S.153C AND NOT 148. 10 15. WE FIND THE AMRITSAR BENCH OF THE TRIBUNAL IN T HE CASE OF ITO VS. ARUN KUMAR KAPOOR (SUPRA) WHILE DECIDING THE CASE UNDER SIMILAR FACTS AND CIRCUMSTANCES HAS OBSERVED AS UNDER : 8. ON A PERUSAL OF THE ABOVE PROVISIONS, IT WOULD BE CLEAR THAT THE PROVISIONS OF SECTION 153C OF THE ACT WERE APPLICABLE, WHICH SUPERSEDES T HE APPLICABILITY OF PROVISIONS OF SECTIONS 147 AND 148 OF THE ACT. AS WE HAVE ALREADY NOTED HEREINABOVE THAT THE DOCUMENTS WERE SEIZED DURING THE SEARCH UNDER SECTI ON 132 OF THE ACT AND THE SAME WAS SENT TO THE ASSESSEE'S A.O. AT AMRITSAR BY THE OFFI CER AT DELHI. IN OUR VIEW, THE LEARNED CIT(A) HAS CORRECTLY OBSERVED THAT ONLY THE PROVISI ONS IN WHICH ANY ASSESSMENT COULD BE MADE AGAINST THE ASSESSEE IN THE INCOME TAX ACT WAS SECTION 153C READ WITH SECTION 153 OF THE ACT. IT IS ALSO APPARENT FROM THE RECORD THA T THE OFFICER AT DELHI HAS MENTIONED IN HIS LETTER THAT THE NECESSARY ACTION MAY BE TAKEN A S PER LAW UNDER SECTION 153C/148 OF THE ACT. HENCE, NOTICE ISSUED UNDER SECTION 148 OF THE ACT AND PROCEEDINGS UNDER SECTION 147 OF THE ACT BY THE AO ARE ILLEGAL AND VOID AB IN ITIO. IN VIEW OF THE PROVISIONS OF SECTION 153C OF THE ACT, SECTION 147/148 STAND OUSTED. IN T HE INSTANT CASE, THE PROCEDURE LAID DOWN UNDER SECTION 153C HAS NOT BEEN FOLLOWED BY TH E A.O. AND, THEREFORE, ASSESSMENT HAS BECOME INVALID. WE ALSO OBSERVE THAT THE CIT(A) WAS JUSTIFIED IN FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI VS. ACIT AND ANOTHER, REPORTED IN (2007) 289 ITR 341, WHEREI N IT HAS BEEN HELD THAT IF THE PROCEDURE LAID DOWN IN SECTION 158BD IS NOT FOLLOWE D, BLOCK ASSESSMENT PROCEEDINGS WOULD BE ILLEGAL. THE CIT(A) HAS CORRECTLY OBSERVED THAT THE PROVISIONS OF SECTION 153C ARE EXACTLY SIMILAR TO THE PROVISIONS OF SECTION 15 8BD OF THE ACT IN BLOCK ASSESSMENT PROCEEDINGS. THUS, CONSIDERING THE ENTIRE FACTS AND THE CIRCUMSTANCES OF THE PRESENT CASE, WE HOLD THAT THE CIT(A) WAS FULLY JUSTIFIED IN QUAS HING THE REASSESSMENT ORDER. WE ALSO DO NOT FIND ANY MERIT IN THE SUBMISSIONS OF THE LEA RNED DR THAT DURING THE COURSE OF SEARCH, IT WAS FOUND AT PREMISES OF M/S.TODAY HOMES & INFRASTRUCTURE PVT. LTD. PERTAINING TO M/S.P.R. INFRASTRUCTURE LTD. AND NOT THE ASSESSEE. IN THIS REGARD, WE MAY POINT OUT THAT THE CONTENTION RAISED BY THE LEARNED D.R. IS FACTUALLY INCORRECT AND CONTRARY TO THE AVAILABLE RECORDS OF SEIZED DOCUMEN TS SPECIFICALLY MENTIONED IN THE ASSESSMENT ORDER DATED 30-12-2008. IN VIEW OF THE A BOVE FACTUAL DISCUSSION, WE DO NOT FIND ANY MERIT AND SUBSTANCE IN THE CONTENTION OF T HE LEARNED D.R. THEREFORE, WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE GROUND NOS. 1 TO 4 OF THE APPEAL. 9. SINCE WE HAVE UPHELD THE ORDER OF THE CIT(A) IN QUASHING THE REASSESSMENT ORDER AND, THEREFORE, WE DO NOT THINK IT NECESSARY TO GO INTO THE MERITS OF THE CASE. 16. RESPECTFULLY FOLLOWING THE DECISION CITED (SUPR A) WE HOLD THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE RE-ASSESS MENT PROCEEDINGS INITIATED U/S.147/148 OF THE INCOME TAX ACT. WE ACCORDINGLY QUASH THE RE-ASSESSMENT PROCEEDINGS INITIATED U/S.147/148 BY THE AO AND UPH ELD BY THE CIT(A). THE LEGAL GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWE D. 17. SINCE THE ASSESSEE SUCCEEDS ON THIS LEGAL GROUN D WE ARE NOT DECIDING THE ISSUE ON MERIT WHICH BECOMES ACADEMIC. 18. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 11 ITA NOS. 1475/PN/2011 (SUNDER PANJABI) (A.Y. 2003-0 4) : ITA NOS. 1476/PN/2011 & 1477/PN/2011 (MANOJ PANJABI ) (A.Y. 2002-03 & 2003-04) : ITA NOS. 1478/PN/2011 (RAM PANJABI) (A.Y. 2003-04 ) : ITA NOS. 1479/PN/2011 (GOVIND PANJABI) (A.Y. 2003-0 4 ) : 19. AFTER HEARING BOTH THE SIDES, WE FIND THE GROUN DS OF APPEAL RAISED BY THE RESPECTIVE ASSESSEES ARE IDENTICAL TO THE GROUNDS R AISED IN ITA NO.1474/PN/2011. WE HAVE ALREADY DECIDED THE LEGAL GROUND AND QUASHE D THE RE-ASSESSMENT PROCEEDINGS INITIATED BY THE AO. FOLLOWING THE SAM E REASONS, THE RE-ASSESSMENT PROCEEDINGS INITIATED BY THE AO IN THE ABOVE APPEAL S ARE QUASHED. 20. IN THE RESULT, ALL THE APPEAL FILED BY THE RESP ECTIVE ASSESSEES ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 21 ST DAY OF NOVEMBER 2012 SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: THE 21 ST NOVEMBER 2012 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A), CENTRAL, PUNE 4. THE D.R, A PUNE BENCH 5. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE