Sri Dinesh Daliya, Hyderabad V. ADIT (Inv.), Unit -I(2), Hyderabad, Hyderabad

ITA 1781/HYD/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6396 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 25-07-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 26-11-2014
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: VIJAY N KALE
• Keywords: Unexplained investment; Business income; Income from undisclosed sources; Search and seizure; Principle of natural justice; Block assessment; Revised return; Documents seized
• Section: 133A; 153A; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO. 1781/HYD/2014 ASSESSMENT YEAR : 2004-05 DINESH DALIYA, HYDERABAD. VS. A.D.I.T. (INV), UNIT-I(2), HYDERABAD. PAN: AAZPD 4200 C APPELLANT RESPONDENT FOR ASSESSEE: SHRI VIJAY N KALE (AR) FOR REVENUE: SHRI K.J. RAO (D.R.) DATE OF HEARING: 25/07/2016 DATE OF PRONOUNCEMENT: 03/08/2016 O R D E R PER LALIET KUMAR, J.M. : THIS IS THE APPEAL FILED BY THE ASSESSEE ARIS ES AGAINST THE ORDER DATED 26/08/2014 PASSED BY THE LD. CIT(A)-6, HYDERABAD FOR THE A.Y. 2004-05. THE GROUNDS TAKEN BY THE ASSESSE E IN APPEAL ARE AS UNDER:- 1. THE ORDER OF THE LD. CIT(A) IS CONTRARY TO THE PRINCIPLES OF EQUITY AND NATURAL JUSTICE AND HENCE THE SAME IS LIABLE TO BE QUASHED. 2. THE LD. CIT(A) ERRED IN CONCLUDING THAT THE PROV ISIONS OF SEC. 153C ARE APPLICABLE TO THE APPELLANTS CASE I.T.A. NO. 1781/HYD/2016 DINESH DALIYA VS ADIT(INV.) :- 2 -: BASED ON SUBSEQUENT SURVEY AND DECLARATION OF INCOME BY APPELLANT. 3. THE LD. CIT(A) ERRED IN CONCLUDING ASSESSMENT PROCEEDINGS AS VALID IN SPITE OF SEVERAL DEFECTS IN NOTIFICATION U/S 153C AND IN SPITE OF THE ORDER OF ASSESSING OFFICER BEING SILENT ON SATISFACTION REQU IRED U/S 153C. 4. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 10,00,000/- BASED ON PRESUMPTIONS AND WHILE IGNORING ERRORS IN PROCEEDINGS U/S 153A. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF MARBLES. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 30/03/2005 DECLARING TOTAL INCOME OF RS. 2,57,412/-. THE ASSESSEE FILED RETURN OF INCOME IN FORM NO. 2D IN RE SPONSE TO THE NOTICE U/S 153C OF THE INCOME TAX ACT, 1961 (IN SH ORT THE ACT) READ WITH SECTION 153A OF THE ACT BEFORE THE DCIT, RANGE- 7, HYDERABAD DISCLOSING INCOME OF RS. 12,46,130/- O N 29 TH MAY, 2009. THE LD A.O. AFTER REPRODUCING THE STATEMENT RECO RDED IN PURSUANCE TO THE SURVEY U/S 133A OF THE ACT, HAS MADE TH E ADDITION OF RS. 20.00 LACS IN THE ORIGINAL RETURN OF INCOME AND THUS COMPUTED THE TOTAL INCOME FOR RS. 20,95,905/-. 3. AGAINST THE SAID ORDER, THE ASSESSEE FILED APPEAL B EFORE THE LD CIT(A). BEFORE THE LD CIT(A), ELABORATE SUBMISSION S WERE I.T.A. NO. 1781/HYD/2016 DINESH DALIYA VS ADIT(INV.) :- 3 -: MADE BY THE ASSESSEE RAISING THE ISSUE THAT THE SATISFACTI ON RECORDED BY THE LD. A.O. WAS NOT IN ACCORDANCE WITH L AW. FURTHER, IT WAS SUBMITTED THAT THE PROVISIONS OF SECTION 15 3 OF THE ACT ARE NOT ATTRACTED AS NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH CONNECTING THE ASSE SSEE WITH THE CONCEALMENT OF INCOME. THE LD CIT(A) HAS DEALT WIT H THE ISSUES IN PARAGRAPH NO. 5, WHICH IS AS UNDER:- 5.0 BEFORE GOING INTO THE MERITS OF ADDITIONS, THE OBJECTIONS RAISED BY THE ASSESSEE ON THE VALIDITY O F PROCEDURE AND PROCEEDINGS ARE BEING EXAMINED. ONE OF THE OBJECTION RAISED BY THE APPELLANT WAS THAT T HE ASSESSING OFFICER, BEING ADIT(INV) HAS NO JURISDICT ION OVER THE ASSESSEE TO PASS THE ASSESSMENT ORDER. IN THIS REGARD, IT IS PERTINENT TO NOTE THAT THE APPEL LANT HAS NOT RAISED SEPARATE GROUND ON THIS ISSUE. HOWEVER, ON FACTS, THE ASSESSING OFFICER (ADIT(INV) , UNT-I(2), HYDERABAD) WAS CONFERRED WITH JURISDICTIO N BY THE ADDL.CIT, CENTRAL RANGE-2, HYDERABAD VIDE HER ORDER DATED 09/12/2010. THOUGH, IT IS A FACT TH AT THE STATUS OF THE PROPRIETORY CONCERN WAS MENTIONED AS FIRM, APPARENTLY BY MISTAKE, WHICH WAS NOT QUESTIONED BY THE ASSESSEE AT THE TIME OF SCRUTINY PROCEEDINGS AND A RETURN OF INCOME INCLUDING REVISE D RETURN WAS FILED FOR A.Y. 2004-05. HAVING FAILED TO RAISE THE ISSUE AT THE TIME OF SCRUTINY PROCEEDINGS , AND THE OMISSION BEING A TECHNICAL ERROR, I AM OF T HE I.T.A. NO. 1781/HYD/2016 DINESH DALIYA VS ADIT(INV.) :- 4 -: CONSIDERED OPINION THAT THE SAID ERROR MAY NOT VITI ATE THE ASSESSMENT PROCEEDINGS. 5.1 REGARDING THE ISSUE OF VALIDITY OF ISSUE OF NOT ICE U/S 153C WITHOUT THERE BEING THE INCRIMINATING MATERIAL OR LIST OF DOCUMENTS AS LISTED U/S 153C, EXCEPT THE ENTRIES IN DIARIES, FOR WHICH THE APPELLANT RELIED ON JUDICIAL DECISIONS, IT CAN BE HELD THAT THE FACTS OF THE CASE UNDER REFERENCE ARE DISTINGUISHABLE, FOR THE REASON THAT, NOT ONLY SURVEY PROCEEDINGS HAVE TAKEN PLACE IN THIS CASE, BUT ALSO AN AMOUNT OF RS. 20,00,000/- WAS DECLARED AS UNDISCLOSED INCOME, BASED ON THE ENTRIES OF DIARIES, WHICH ACT WAS ALSO SUPPORTED BY REVISION OF RETURNS, INCORPORATING PAR T OF SUCH DECLARED AMOUNTS. IN THIS CONTEXT, IT IS RELEV ANT TO REFER TO THE SUBMISSIONS OF THE APPELLANT DATED 10/2/2014, WHEREIN IT WAS ACKNOWLEDGED THAT REVISED RETURN OF INCOME WAS FILED IN RESPONSE TO T HE NOTICE U/S 153C. BASED ON THESE FACTS OF THE CASE, I AM OF THE CONSIDERED OPINION THAT THERE IS NO STREN GTH IN THE ARGUMENT OF THE APPELLANT, AS SUCH, THE OBJECTION AND GROUND RAISED IN THIS REGARD, IS NOT MAINTAINABLE. ACCORDINGLY, NOW I PROCEED TO DECIDE ON THE ISSUE OF ADDITIONS MADE FOR A.Y. 2004-05 AND 2005-06, ON MERITS. SIMILARLY, THE LD. CIT(A) HAS ALSO DEALT WITH THE ISSUE OF ADDITION MADE FOR RS. 20.00 LACS BY THE LD A.O.. AFTER DISCUSS ING THE ENTIRE CASE, THE LD CIT(A) HAS RESTRICTED THE ADDITION TO RS. I.T.A. NO. 1781/HYD/2016 DINESH DALIYA VS ADIT(INV.) :- 5 -: 10.00 LACS IN LIEU OF RS. 20.00 LACS AS DONE BY THE LD A.O.. THE FINDING OF THE LD CIT(A) IS REPRODUCED HEREUNDER:- 6.5 THE ARGUMENT OF THE APPELLANT THAT THE ADDITIO N OF RS. 20,00,000/- WAS MADE MERELY ON THE BASIS OF THE STATEMENT RECORDED DURING THE SURVEY PROCEEDINGS, AND THE AMOUNTS PAID SHOULD BE TAKEN AS PURCHASES ON WHICH PROFITS ONLY CAN BE ARRIVED AND IN THE LIG HT OF THE FACT THAT THE ASSESSEE HAS ALREADY ACCEPTED THE PROFIT TO THE EXTENT OF RS. 10,00,000/- CONSTITUTIN G RATE OF PROFIT AT 50%, IS NOT ACCEPTABLE, BASED ON FACTS . THE FACT OF THE CASE IS THAT THE APPELLANT WAS IN THE BUSINESS OF MARBLE/GRANITE CARRIED IN THE NAME OF M/S SUGUNA MARBLES, A PROPRIETORY CONCERN, FOUND TO HAVE MADE PAYMENTS OF RS. 25,00,000/- ON VARIOUS DATES, DURING THE A.Y. 2004-05 AND RS. 1,00,000/- DURING THE A.Y. 2005-06, TO M/S MGPL AS PER THE ENTRIES MADE IN DIARY SEIZED DURING THE COURSE OF SEARCH PROCEEDINGS CONDUCTED IN THE CASE OF M/S MGPL GROUP ON 24/07/2008 AND AGAINST THE SAID PAYMENTS, RS. 5,00,000/- WAS SHOWN TO HAVE BEEN RECEIVED BACK BY THE APPELLANT, ON 29/08/2003. THIS RESULTED IN NET PAYMENT OF RS. 20,00,000/- LAKHS DURING THE F.Y. 2003-04 AND RS. 1,00,000/- DURING THE F.Y. 2004-05, FOR WHICH THE APPELLANT FAILED TO EXPLAIN THE SOURCES, WHICH RESULTED IN TREATING THE SAME AS UNACCOUNTED INCOME OF RS. 20,00,000/- FOR A.Y. 2004-05. THE ARGUMENT OF THE APPELLANT THAT TH E I.T.A. NO. 1781/HYD/2016 DINESH DALIYA VS ADIT(INV.) :- 6 -: AMOUNTS REPRESENT PURCHASES AND NO PROFIT OF 100% CAN BE MADE ON SUCH PURCHASES, IS NOT ACCEPTABLE FO R THE REASON THAT THE APPELLANT NEVER ESTABLISHED THA T THE AMOUNTS REPRESENTED PURCHASES AND WAS ALONE ENTITLED TO PROFITS ON TRADING. THERE IS NO INDICAT ION ON RECORD TO SHOW THAT THERE ARE ANY PURCHASES AGAINST SUCH PAYMENTS. FURTHER, THE APPELLANT FAILED TO EXPLAIN SUCH ANGLE, EVEN DURING THE APPELLATE PROCEEDINGS. IT IS ALSO A FACT THAT THE APPELLANT HIMSELF HAS OFFERED RS. 10,00,000/- AS ADDITIONAL INCOME, AS INCOME FROM OTHER SOURCES, WHILE FURNISHING THE REVISED RETURN OF INCOME. IT IS ALSO PERTINENT TO MENTION THAT, THE APPELLANT HAS NEITHE R EXPLAINED THAT HE WAS CAPABLE OF EARNING 50% OF PROFIT ON SUCH TRANSACTIONS, NOR SHOWN THE ADDITION AL INCOME AS INCOME FROM BUSINESS. THE ONUS WAS ON THE ASSESSEE TO PROVE THAT SUCH PAYMENTS REPRESENTED PURCHASES AND THE INCOME EARNED REPRESENTED HIS BUSINESS INCOME. THE HEAD OF INCOME UNDER WHICH THE ADDITIONAL INCOME OFFERED BY ASSESSEE ALSO INDICATE THAT IT WAS AN UNEXPLAINED INVESTMENT BUT NOT THE PROFITS EARNED ON UNACCOUNTE D PURCHASES/SALES MADE BY THE ASSESSEE. HENCE, THE ADDITION MADE BY THE ASSESSING OFFICER TREATING SUC H AMOUNTS AS UNEXPLAINED INVESTMENTS AND THEREBY AS UNACCOUNTED INCOME, IS JUSTIFIED. HOWEVER, HAVING ACCEPTED THE AMOUNT OF RS. 10,00,000/- IN THE REVIS ED RETURN OF INCOME, THE ADDITION STANDS RESTRICTED TO RS. 10,00,000/- BEING THE DIFFERENCE IN THE TOTAL I.T.A. NO. 1781/HYD/2016 DINESH DALIYA VS ADIT(INV.) :- 7 -: UNEXPLAINED INVESTMENTS MADE AND THE AMOUNTS OFFERED AS UNEXPLAINED INCOME/INVESTMENTS, UNDER THE HEAD INCOME FROM OTHER SOURCES. FURTHER, THE SAID ADDITION OF RS. 10,00,000/- IS ORDERED TO BE MADE TO THE REVISED RETURNED INCOME OF RS. 12,57,412/-, WHILE TREATING THE REVISED RETURN FILE D FOR A.Y. 2004-05. ACCORDINGLY, THE ADDITION OF RS. 20,00,000/- IS RESTRICTED TO RS. 10,00,000/- AND TH IS GROUND OF APPEAL TREATED AS PARTLY ALLOWED, FOR A.Y . 2004-05. LASTLY, THE LD CIT(A) HAS UPHELD THE RETURN OF INCOME F ILED BY THE ASSESSEE IN PURSUANCE TO THE NOTICE U/S 153C AND 1 53A OF THE ACT AND HELD AS UNDER:- 7.2 THE APPELLANTS SUBMISSION ON THE SUBJECT WAS THAT THE REVISED RETURN WAS FILED FOR A.Y. 2004-05 AND N OT FOR A.Y. 2005-06 AND THE AMOUNT OF PAYMENTS AS REFLECTED IN SEIZED MATERIAL, FOR THE YEAR UNDER REFERENCE WAS ONLY RS. 1,00,000/- AND NOT RS. 10,00,000/-, AS ADOPTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. 7.3 PERUSED THE SUBMISSIONS OF THE APPELLANT AND TH E FACTS OF THE CASE. AS BROUGHT OUT AND INDICATED IN THE EARLIER PART OF THIS COMMON ORDER FOR A.Y. 2005-06, IT WAS DETERMINED THAT THE REVISED RETURN OF INCOME WA S PERTAINING TO A.Y. 2004-05 AND IT WAS WRONGLY ADOPTED BY THE ASSESSING OFFICER FOR A.Y. 2005-06, I.T.A. NO. 1781/HYD/2016 DINESH DALIYA VS ADIT(INV.) :- 8 -: DUE TO INCORRECT ADOPTION OF TOTAL INCOME AS PER TH E ORIGINAL RETURNS OF INCOME, WHILE FURNISHING THE REVISED RETURN. HAVING ESTABLISHED THAT THE REVISED RETURN RELATES TO A.Y. 2004-05, THE ADDITION RESULT ING ON ACCOUNT OF ADOPTING OF THE REVISED INCOME, IN TH E ORDER U/S 153C FOR A.Y. 2005-06 IS FOUND TO BE UNSUSTAINABLE. HENCE, THE AMOUNT OF ADDITION OF RS. 10,00,000/- ON ACCOUNT OF ADOPTING THE REVISED RETURNED INCOME IS HELD TO BE INCORRECT/UNSUSTAINAB LE FOR A.Y. 2005-06. HOWEVER, FOR THE REASONS GIVEN IN THE ORDER FOR A.Y. 2004-05, THE AMOUNT OF RS. 1,00,000/- WAS PAID BY THE APPELLANT TO M/S MGPL, WHICH COULD NOT BE PROVED OR EXPLAINED AS AMOUNTS FOR PURCHASES, AND IS HELD TO BE THE UNEXPLAINED INVESTMENT/INCOME OF THE APPELLANT FOR THE YEAR UND ER REFERENCE. ACCORDINGLY, THE TOTAL INCOME OF THE ASSESSEE FOR THE YEAR UNDER REFERENCE, STAND MODIFI ED AT RS. 3,46,130/- (RS. 2,46,130/- + RS. 1,00,000/-) , AGAINST THE ADMITTED INCOME OF RS. 2,46,130/-, AS AGAINST RS. 12,46,130/- AS ADOPTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THE APPELLANT SUCCEEDS IN GETTING A PARTIAL RELIEF AND THIS GROUND OF APPEAL FOR A.Y. 2005-06 TREATED AS PARTLY ALLOWED. 4. THE LD DR HAS PRODUCED ORDERSHEET FOR SATISFACTION RECORDED IN THE NAME OF M/S SUGUNA MARBLES AND THE SATISFACTION RECORDED BY THE LD. DCIT WAS AS UNDER:- I.T.A. NO. 1781/HYD/2016 DINESH DALIYA VS ADIT(INV.) :- 9 -: SEARCH AND SEIZURE OPERATIONS WERE CONDUCTED IN CA SE OF M/S MIDWEST GRANITES PVT. LTD. GROUP ON 24/07/2008. THIS CASE IS NOTIFIED TO DCIT, CENTRAL CIRCLE-7, HY DERABAD. SEARCH OPERATIONS CONDUCTED IN THE GROUP INCLUDES T HE CASE SUGUNA MARBLES WHEREIN DOCUMENTS RELATING TO THE ASSESSEE WERE FOUND. AS SUCH THE CASE COMES UNDER SECTION 153C OF THE I.T. ACT. PLEASE PUT UP NOTICE U/S 153C CALLING FOR RETURNS OF INCOME FOR THE A.Y. 2003-04 TO 2008- 09. 5. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD A R OF THE ASSESSEE HAS RAISED GROUNDS MENTIONED HEREINABOVE AN D URGED THAT THE ADDITION OF RS. 10.00 LACS SUSTAINED BY THE LD C IT(A) WHEREBY THE RETURN OF INCOME OF RS. 12,46,130/- IS RE QUIRED TO BE MODIFIED AND THE ORIGINAL RETURN OF INCOME FILED B Y THE ASSESSEE FOR RS. 2,46,130/- IS REQUIRED TO BE UPHELD AFTER THE SCRUTINY ASSESSMENT. THE LD. AR AFTER GOING THROUGH TH E ORDERSHEET RECORDING THE SATISFACTION FOR ISSUANCE OF N OTICE U/S 153C OF THE ACT HAS SUBMITTED THAT NOTING/ORDERSHEET PROD UCED BY THE LD DR IS NOT A SATISFACTION AS CONTEMPLATED U/S 1 53C OF THE ACT, WHICH HAS BEEN DISCUSSED IN DETAIL AND DECID ED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF PEPSI FOODS P . LTD. VS. ACIT [2014] 52 TAXMANN.COM 220 (DELHI), HONBLE A.P . HIGH COURT IN THE CASE OF CIT VS M/S SHETTYS PHARMACEUTICALS & I.T.A. NO. 1781/HYD/2016 DINESH DALIYA VS ADIT(INV.) :- 10 -: BIOLOGICALS LTD. (2015) 57 TAXMANN.COM 283. BESIDES, THE LD AR HAS ALSO RELIED UPON VARIOUS OTHER JUDGMENTS. THE RE LEVANT PARAGRAPHS OF THE JUDGMENT RELIED UPON BY THE LD AR AS UNDER:- (I) THE HONBLE GUJARAT HIGH COURT IN THE CASE OF VIJAYBHAI N. CHADRANIVS. ACIT (2011) 333 ITR 0436 (II) THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VSGOPI APARTMENT (2014) 365 ITR 0411 (III) THE HONBLE DELHI HIGH COURT IN THE CASE OF P EPSI FOODS P. LTD. VS. ACIT [2014] 52 TAXMANN.COM 220 (DELHI) (IV) THE COORDINATE BENCH IN THE CASE OF SHETTYS PHARMACEUTICALS AND BIOLOGICAL LTD. VS DCIT [2014] 47 TAXMANN.COM 85 (HYDERABAD - TRIB.) (V) COMMISSIONER OF INCOME-TAX, III, HYDERABAD VS. SHET TYS PHARMACEUTICALS &BIOLOGICALS LTD.[2015] 57 TAXMANN.COM 282 (ANDHRA PRADESH). 6. ON THE BASIS OF THE ABOVE SAID CONTENTION AND JUDGME NTS, IT WAS SUBMITTED THAT THERE WAS NO APPLICATION OF MIND BY THE A.O. OF THE COMPANY SEARCHED AND ALSO BY THE LD. A.O. OF THE ASSESSEE AND THE A.O. HAS MECHANICALLY AND STEREO TYP E MANNER ISSUED THE NOTICES U/S 153C OF THE ACT. IT WAS FURTHER CONTENDED THAT THE LD. A.O. BEFORE ISSUING THE NOTICE U/S 153C MUST APPLY HIS MIND ON THE DOCUMENTS SEIZED AND RECORD HIS SATISFACTION IN UNEQUIVOCAL MANNERS THAT THE DOCUMENTS SEIZED BELONGS TO NONE OTHER THAN THE ASSESSEE. IN FACT, THE L D AR HAS SUBMITTED THAT THE SATISFACTION RECORDED BY THE LD. A.O. IS I.T.A. NO. 1781/HYD/2016 DINESH DALIYA VS ADIT(INV.) :- 11 -: SIMILAR TO THE SATISFACTION RECORDED IN CASE OF SHETTY PHARMACEUTICALS & BIOLOGICAL LTD. (SUPRA) WHEREIN TH E HONBLE JURISDICTIONAL HIGH COURT HAS UPHELD THE ORDER OF THE TRIBUNAL. THE TRIBUNAL IN THE SAID MATTER HAS QUASHED THE ASSESSMENT PROCEEDINGS BEING INITIATED WITHOUT RECORDI NG THE SATISFACTION IN ACCORDANCE WITH LAW. THE LD AR PRAYED FOR THE DISMISSAL OF THE ASSESSMENT PROCEEDINGS INITIATED PURS UANT TO THE NOTICE U/S 153C OF THE ACT IN THE LIGHT OF THE ORDER PASSED IN THE CASE OF SHETTY PHARMACEUTICALS & BIOLOGICAL LTD. (SUPRA). 7. ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT HE HAS PRODUCED ORDERSHEET FOR SATISFACTION RECORDED IN THE N AME OF M/S SUGUNA MARBLES. THE LD. DR HAS FURTHER SUBMITTED TH AT THOUGH THE ASSESSEE WAS ISSUED A NOTICE U/S 153C THRO UGH THE MANAGING PARTNER, SUGUNA MARBLES BUT THE FINAL ASSESS MENT WAS COMPLETED IN THE NAME OF THE ASSESSEE I.E. DINES H DALIYA. IT WAS SUBMITTED THAT IN THE ASSESSMENT ORDER, IT IS MENTION ED THAT SUGUNA MARBLES (A PROPRIETORSHIP OF DINESH DALIYA ). THE LD DR, HAS SUBMITTED THAT EVEN IF THE SUBMISSIONS OF THE ASS ESSEE ARE ACCEPTED IN RESPECT OF NON-RECORDING OF SATISFACT ION, THEN ALSO THE ASSESSEE SHALL NOT BE ENTITLED TO REFUND OF THE TAX I.T.A. NO. 1781/HYD/2016 DINESH DALIYA VS ADIT(INV.) :- 12 -: DEPOSITED PURSUANT TO THE NOTICE ISSUED U/S 153C OF THE ACT, IN VIEW OF BAR LAID DOWN IN SECTION 240 OF THE ACT. 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTI ES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD AND T HE JUDGMENTS CITED BEFORE US. RECENTLY, THIS BENCH IN THE MATTER OF ITA NO. 1056 TO 1061/HYD/2014 TITLED AS DEPUTY COMMISSIONER OF INCOME TAX VS. M/S VICTORIAN GRANITES PVT. LTD. HAS H ELD AS UNDER: 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD AND THE LAW CITED BEFORE US. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHETTY PHARMACEUTICALS & BIOLOGICAL LTD. (SUPRA) HAS CLEARLY HELD THAT THE RECORDING OF SATISFACTION BY THE A.O. IS PRECONDITION FOR INVOKING THE PROVISIONS AN D IS NOT A MERE FORMALITY BECAUSE THE RECORDING OF SATISFACTION POSTULATE THE APPLICATION OF MIND, CONSCIOUSLY AS TO THE DOCUMENTS SEIZED MUST BE BELONGING TO ANY OTHER PERSONS OTHER THAN THE PERSO NS REFERRED TO IN SECTION 153A OF THE ACT. SIMILARLY, THE HONBLE DELHI HIGH COURT IN THE CASE OF PEPSI FOODS P. LTD. VS. ACIT (SUPRA) HAS HELD THAT AS PER LAW, ONC E THE DOCUMENTS ARE SEIZED FROM THE PREMISES OF A PERSON THEN THE PRESUMPTION IS THAT THE DOCUMENTS/MATERIALS BELONG TO THE PERSONS SEARCHED, THEREFORE, IT IS FOR THE A.O. TO REBUT THE PRESUMPT ION WHICH ARE NORMAL TO BE RAISED IN FAVOUR OF THE PERS ONS SEARCHED BUT BELONGS TO ANY OTHER PERSON. THIS SATISFACTION MUST BE DISPLAYED FROM THE REASONS OR THE BASIS FOR CONCLUSION OF THE A.O. THAT THE DOCUMENTS SEARCHED BELONGS TO THE OTHER THAN THE SEARCHED PERSON. IF WE EXAMINE THE SATISFACTION/ORDER SHEET PRODUCED BEFORE US (REPRODUCED HEREINABOVE), THERE IS NO SATISFACTION IN I.T.A. NO. 1781/HYD/2016 DINESH DALIYA VS ADIT(INV.) :- 13 -: OUR VIEW. IT IS NOT REFLECTED FROM THE NOTE THAT TH E DOCUMENTS RECOVERED DO NOT BELONG TO THE M/S MIDWEST GRANITES P. LTD. BUT BELONGS TO THE ASSESSE E BEFORE US. IT IS ALSO NOT RECORDED AS TO WHICH DOCUMENTS PERTAINS TO THE ASSESSE ON THE BASIS OF WHICH THE ADDITIONS CAN BE MADE BY THE LD. A.O. IN VIEW THEREOF, THE SATISFACTION RECORDED BY THE A.O. IS LACKING IN MATERIAL PARTICULARS AND ONLY THE CRYPTI C MECHANICAL DIRECTION WAS ISSUED FOR ISSUANCE OF NOTICE U/S 153C OF THE ACT WITHOUT RECORDING OF PRO PER SATISFACTION. IRONICALLY, IN THE PRESENT NOTE, THE WORD SATISFACTION HAS ALSO NOT BEEN USED BY THE AO. THEREFORE, THERE IS NO QUESTION OF EVEN THE CRYPTIC OF MECHANICAL RECORDING OF SATISFACTION ALSO. IN THE L IGHT OF THE ABOVE, WE ARE LEFT WITH NO OTHER OPTION BUT TO ALLOW THE APPEAL OF THE ASSESSEE. CONSEQUENTLY THE ORDERS OF LD. CIT(A) ARE UPHELD. AS A RESULT THEREO F, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED AND THE APPEALS OF THE REVENUE ARE DISMISSED. SINCE WE ARE ALLOWING THE APPEALS OF THE ASSESSEE ON THE GROUND OF NON-RECORDING OF SATISFACTION IN ACCORDANCE WITH LA W, THEREFORE, WE HAVE NOT DEALT WITH THE APPEALS OF TH E REVENUE ON MERIT. 9. IF WE SEE THE SATISFACTION RECORDED IN THE ORDERSHEE T, IN THE PRESENT MATTER ALSO, THEN THE REASONING GIVEN BY US IN THE CASE OF M/S VICTORIAN GRANITES PVT. LTD. CAN EQUALLY BE APPLIED TO HOLD THAT THE SATISFACTION RECORDED BY THE AUTHORITY WAS NOT IN ACCORDANCE WITH LAW AND WAS WITHOUT APPLICATION OF MIN D. THEREFORE, BY APPLYING THE SAME REASONING OF M/S VIC TORIAN GRANITES PVT. LTD., WE HEREBY SET ASIDE THE PROCEEDINGS INITIATED AGAINST THE ASSESSEE U/S 153C OF THE ACT AS THERE WAS NO SATISFACTION IN THE EYES OF LAW. I.T.A. NO. 1781/HYD/2016 DINESH DALIYA VS ADIT(INV.) :- 14 -: 10. HAVING HELD THAT THE SATISFACTION RECORDED IN THE ORDERSHEET WAS NOT IN ACCORDANCE WITH LAW, NOW WE ARE REQUIRED TO ANSWER WHETHER THE ASSESSEE WILL BE ENTITLED TO REFUND OF THE TAX AMOUNT DEPOSITED BY THE ASSESSEE PURSUANT TO THE NOTI CE RECEIVED BY HIM U/S 153C OF THE ACT OR NOT. IT IS ADMITTED CASE THAT THE ASSESSEE RECEIVED THE NOTICES FOR FILING THE RETU RN OF INCOME FOR THE A.Y. 2003-04 TO 2009-10 U/S 153C OF THE ACT. THE ASSESSE FILED THE RETURN OF INCOME FOR AN AMOUNT O F RS. 12,57,412/- FOR THE A.Y. 2003-04 AND HAS ALSO DEPOS ITED THE TAX WITH THE DEPARTMENT. HOWEVER, THE A.O. INSTEAD OF ACCEPTI NG THE RETURN OF INCOME HAD MADE THE ADDITION OF RS. 20.00 LA CS WHICH WAS RESTRICTED TO AN AMOUNT OF RS. 10.00 BY THE LD. CIT( A). IN THE PROCEEDINGS BEFORE US, THE LD AR HAS SUBMITTED THA T EVEN THE ADDITION SUSTAINED BY THE LD CIT(A) IS REQUIRED TO B E DELETED AS THERE WAS NO SATISFACTION IN THE EYES OF LAW AND TH E AMOUNT OF ADDITION OF RS. 10.00 LACS ON ACCOUNT OF ADOPTIN G THE REVISED RETURN IN PURSUANT TO THE NOTICE U/S 148/153C OF THE ACT WAS INCORRECT/UNSUSTAINABLE. IN OUR VIEW, THE REVISED RETUR N OF RS. OF RS. 12,46,130/- WAS FILED BY THE ASSESSEE IN RESP ONSE TO THE NOTICES ISSUED BY THE A.O. UNDER THE PROVIONS OF THE A CT. THE LD CIT(A) HAS UPHELD THE ADDITION TO THE EXTENT OF RS. 10. 00 LACS BY I.T.A. NO. 1781/HYD/2016 DINESH DALIYA VS ADIT(INV.) :- 15 -: ACCEPTING THE REVISED RETURN FILED BY THE ASSESSEE. IN OUR VIEW, THE ASSESSEE HAS ADMITTED THE TAX LIABILITY BY FILING T HE REVISED RETURN AND NOW THEREFORE THE ASSESSEE CANNOT BE PERMITTED TO WITHDRAW THE ADMITTED TAX LIABILITY ACCEPTED BY HIM BY FILING THE REVISED RETURN OF INCOME. FURTHERMORE, THIS ISSUE IS NO MORE RES INTEGRA AS THE HONBLE APEX COURT IN ITS RECENT JUDGMENT IN THE CASE OF CIT VS. MICRO NOVA PHARMACEUTICAL (P.) LTD.*[2014] 43 TAXMANN.COM 379 (SC) HAS HELD THAT TAXES PAID PURSUA NT TO RETURN FILED IN BLOCK ASSESSMENT ARE NOT LIABLE TO BE R EFUNDED. THE HONBLE APEX COURT WHILE DECIDING THIS ISSUE IN THIS JUDGMENT HAS RELIED UPON THE EARLIER JUDGMENT OF THE SUPREME COURT IN THE CASE OF CIT VS. SHELLY PRODUCTS & ANR. (2 003) 181 CTR (SC) 564 : (2003) 261 ITR 367 (SC) WHEREIN IT H ELD AS UNDER 22. WE FIND CONSIDERABLE FORCE IN THE SUBMISSION OF THE REVENUE AND IT MUST BE UPHELD. WE HAVE EARLIER NOTICED THE SCHEME OF THE ACT. SEC. 4 OF THE ACT CREATES THE CHARGE, AND PROVIDES INTER ALIA FOR PAY MENT OF TAX IN ADVANCE OR DEDUCTION OF TAX AT SOURCE. TH E ACT PROVIDES FOR THE MANNER IN WHICH ADVANCE TAX IS TO BE PAID AND PENALISES ANY ASSESSEE WHO MAKES A DEFAULT OR DELAYS PAYMENT THEREOF. SIMILARLY, THE DEDUCTION OF TAX AT SOURCE IS ALSO PROVIDED FOR IN THE ACT AND F AILURE TO COMPLY WITH THE PROVISIONS ATTRACTS THE PENAL PROVISIONS AGAINST THE PERSON RESPONSIBLE FOR MAKIN G THE PAYMENT. IT IS, THEREFORE, QUITE APPARENT THAT THE ACT ITSELF PROVIDES FOR PAYMENT OF TAX IN THIS MANN ER BY THE ASSESSEE. THE ACT ALSO ENJOINS UPON THE ASSESSE E I.T.A. NO. 1781/HYD/2016 DINESH DALIYA VS ADIT(INV.) :- 16 -: THE DUTY TO FILE A RETURN OF INCOME DISCLOSING HIS TRUE INCOME. ON THE BASIS OF THE INCOME SO DISCLOSED, TH E ASSESSEE IS REQUIRED TO MAKE A SELF-ASSESSMENT AND TO COMPUTE THE TAX PAYABLE ON SUCH INCOME AND TO PAY THE SAME IN THE MANNER PROVIDED BY THE ACT. THUS, T HE FILING OF RETURN AND THE PAYMENT OF TAX THEREON COMPUTED AT THE PRESCRIBED RATES AMOUNTS TO AN ADMISSION OF TAX LIABILITY WHICH THE ASSESSEE ADMIT S TO HAVE INCURRED IN ACCORDANCE WITH THE PROVISIONS OF THE FINANCE ACT AND THE IT ACT. BOTH THE QUANTUM OF TAX PAYABLE AND ITS MODE OF RECOVERY ARE AUTHORIZED BY LAW. THE LIABILITY TO PAY INCOME-TAX CHARGEABLE UND ER S. 4(1) OF THE ACT THUS, DOES NOT DEPEND ON THE ASSESSMENT BEING MADE. AS SOON AS THE FINANCE ACT PRESCRIBES THE RATE OR RATES FOR ANY ASSESSMENT YEA R, THE LIABILITY TO PAY THE TAX ARISES. THE ASSESSEE I S HIMSELF REQUIRED TO COMPUTE HIS TOTAL INCOME AND PA Y THE INCOME-TAX THEREON WHICH INVOLVES A PROCESS OF SELF-ASSESSMENT. SINCE ALL THIS IS DONE UNDER AUTHO RITY OF LAW, THERE IS NO SCOPE FOR CONTENDING THAT ART. 265 IS VIOLATED. 23. WHAT THEN IS THE EFFECT OF THE FAILURE TO MAKE AN O RDER OF ASSESSMENT, AFTER THE EARLIER ASSESSMENT MADE IS SET ASIDE OR NULLIFIED IN APPROPRIATE PROCEEDINGS? IF THE ASSESSING AUTHORITY CANNOT MAKE A FRESH ASSESSMENT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT IT AMOUNT S TO DEEMED ACCEPTANCE OF THE RETURN OF INCOME FURNISHED BY THE ASSESSEE. IN SUCH A CASE THE ASSESSING AUTHO RITY IS DENUDED OF ITS AUTHORITY TO VERIFY THE CORRECTNE SS AND COMPLETENESS OF THE RETURN, WHICH AUTHORITY IT HAS WHILE FRAMING A REGULAR ASSESSMENT. IT MUST ACCEPT THE RETURN AS FURNISHED AND SHALL NOT IN ANY EVENT RAIS E A DEMAND FOR PAYMENT OF FURTHER TAXES. ACCEPTING THE INCOME AS DISCLOSED IN THE RETURN OF INCOME FURNISH ED BY THE ASSESSEE, IT MUST REFUND TO THE ASSESSEE ANY TAX PAID IN EXCESS OF THE LIABILITY INCURRED BY HIM ON THE BASIS OF INCOME DISCLOSED. EVEN IF THE TAX PAID IS FOUND TO BE LESS THAN THAT PAYABLE, NO FURTHER DEMAND CAN BE MADE FOR RECOVERY OF THE BALANCE AMOUNT SINCE A FRE SH ASSESSMENT IS BARRED. IN OTHER WORDS, THE TAX PAID BY THE ASSESSEE MUST BE ACCEPTED AS IT IS, AND IN THE EVENT OF THE TAX PAID BEING IN EXCESS OF THE TAX LI ABILITY DULY COMPUTED ON THE BASIS OF RETURN FURNISHED AND THE RATES APPLICABLE, THE EXCESS SHALL BE REFUNDED TO T HE I.T.A. NO. 1781/HYD/2016 DINESH DALIYA VS ADIT(INV.) :- 17 -: ASSESSEE, SINCE ITS RETENTION MAY OFFEND ART. 265 O F THE CONSTITUTION 11. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HONBLE SUPREME COURT, WE HOLD THAT THOUGH THE ASSESSMENT PROCEEDINGS U/S 153C ARE CANCELLED ON ACCOUNT OF LAC K OF SATISFACTION IN ACCORDANCE WITH LAW BUT THE ASSESSEE IS NOT ENTITLED TO REFUND OR ADJUSTMENT OF ANY AMOUNT DEPOSITED B Y HIM PURSUANT TO THE FILING OF THE RETURN OF INCOME I N RESPONSE TO THE NOTICE U/S 153C OF THE ACT, IN VIEW OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. MICRO NOVA PHARMACEUTICAL (P.) LTD. [2014] 43 TAXMANN.COM 379 (SC ). 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/08/2016 SD/- SD/- ( B. RAMAKOTAIAH ) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 03 RD AUGUST, 2016 *RANJAN COPY FORWARDED TO: 1. SHRI DINESH DALIYA, C/O- VIJAY N KALE, CHANTERED ACCOUNTANT, VIJAY NARAYAN & CO. H.NO. 5-4-776, STREET NO. 1, OPP G.PULLA REDDY SWEETS SHOP, ABIDS, HYDEABA D. 2. THE ADIT (INV), UNIT-1(2), HYDERABAD. I.T.A. NO. 1781/HYD/2016 DINESH DALIYA VS ADIT(INV.) :- 18 -: 3. THE CIT(APPEALS)-6, HYDERABAD 4. THE DIRECTOR OF INCOME TAX (INV.), HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.