M/s. Mahalaxmi Developers, JODHPUR V. DCIT, JODHPUR

ITA 217/JODH/2014

• Counselvise Citation: 21723314 RSA 2014
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-08-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 07-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P MEENA
• Assessee Lawyers: DEEPAK ARORA
• Keywords: Unexplained cash credit; Business income; Search and seizure; Loose papers; Document seized; Opportunity of being heard; Principle of natural justice; Bonafide belief; Additional evidence; Question of law; Corroborative evidences; Block assessment; Onus to prove; Reason to believe; Documents seized
• Section: 143(3); 142(1); 153A; 234B; 132; 68

Judgement Text

IN THE INCOMETAX APPELLATE TRIBUNAL JODHPUR BENCH: J ODHPUR ( BEFORE SHRI H ARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER ) I.T.A. NO. 217 /JODH/2014 ( A . Y . 200 6 - 0 7) I.T.A NO. 218/JODH/2014 (A.Y. 2009 - 10) M/S. MAHALAXMI DEVELOPER S V S DCIT, G - 32, GANESHPURA, RATANADA, CENTRAL CIRCLE - 2, JODHPUR. JODHPUR. PAN NO. AAOFM1986D (APPELLANT) (RESPONDENT) I.T.A. NO. 281 /JODH/2014 ( A . Y . 200 6 - 0 7) I.T.A NO. 282/JODH/2014 (A. Y. 2008 - 09) I.T.A. NO. 283/JODH/2014 (A .Y. 2009 - 10) DCIT V S M/S. MAHALAXMI DEVELOPERS, CENTRAL CIRCLE - 2, G - 32, GANESHPURA, RATANADA, JODHPUR. JODHPUR. PAN NO. AAOFM1986D (APPELLANT) (RESPONDENT) ASSESSEE BY: - SHRI AMIT KOTHARI AND SHRI DEEPAK ARORA . DEPARTMENT BY : - SHRI O.P. MEENA - CIT - D.R. DATE OF HEARING : 12 /0 8 /201 4 DATE OF PRONOUNCEMENT : 28 /0 8 /2014 2 O R D E R P E R BENCH : THIS IS A BUNCH OF FIVE APPEALS COMPRISING OF CROSS APPEALS FOR ASSESSMENT YEARS 200 6 - 0 7 , 2008 - 09 AND 2009 - 10. I N ALL THESE APPEALS IDENTICAL ISSUES, ARISING FROM COMMON SET OF FACTS, ARE INVOLVED, AND WERE HEARD TOGETHER, THEREFORE, FOR THE SAKE OF CONVENIENCE WE ARE PROCEEDING TO DECIDE THEM BY THIS COMMON ORDER. ITA NO. 281 & 217/JU /2014 (A.Y. 2006 - 07) 2. THES E ARE CROSS APPEALS FILED AGAINST THE ORDER OF LD. CIT(A) DATED 28/02/2014. 2.1 BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT IN THE SEARCH CONDUCTED AT THE RESIDENCE OF SHRI PUNARAM JANGID, DISCUSSED AS ABOVE, CERTAIN INCRIMINATING EVIDENCE REGARDING A SSESSEE - FIRM WERE ALSO FOUND. CONSEQUENTLY, NOTICE U/S 153C OF THE ACT WAS ISSUED TO THE ASSESSEE WHO R ESPONDED BY FILING ITS ROI BY RETURN OF N I L INCOME ON 10/10/2011. 3 2.2 THE ASSESSEE - FIRM IS ENGAGED IN THE BUSINESS OF REALTORS AND ALSO DERIVED INCOME FROM RENT, BROKERAGE AND COMMISSION. THE ASSESSMENT WAS COMPLETED ON 29/12/2011 AT A TOTAL INCOME OF RS. 17,30,000/ - . THE A.O. HAS ADDED A SUM OF RS. 17,30,000/ - U/S 68 OF THE ACT. 2.3 THE LD. CIT(A) HAS SUSTAINED A SUM OF RS. 1,30,000/ - BY TREATING THE LOAN TO THAT EXTENT OUT OF TOTAL RS. 7,30,000/ - TAKEN FROM JAGDISH JANGID AS UNEXPLAINED. THE REST OF THE LOANS INCLUDING THAT OF RS. 5 LAKH FROM R.C. MEHTA (HUF) AND OF RS. 5 LAKHS FROM SMT. SUNIDHI MEHTA HAVE BEEN DELETED. THE ASSESSEE IS AGGRIEVED AGAIN ST THE SUSTAINED ADDITION OF RS. 1,30,000/ - AND THE REVENUE IS AGGRIEVED AGAINST THE DELETED ADDITION. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND S IN ITS APPEAL : - 1. THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDITION OF RS. 1,30,000 / - U/S. 68 IN RELAT ION TO UNSECURED LOAN TAKEN FROM JAGDISH JANGID. THE ADDITION SO SUSTAINED IS BAD IN LAW AND BAD ON FACTS. 2. THE INTEREST CHARGED U/S. 234B AND 234C IS BAD IN LAW AND BAD ON FACTS. 3. THE APPELLANT CRAVES LIBERTY TO ADD, AMEND, ALTER AND MODIFY ANY OF THE GROUND OF APPEAL ON OR BEFORE ITS HEARING BEFORE YOU HONOUR. 4 THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN APPEAL : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A), ALWAR HAS ERRED IN ACCEPTING ADDITIONAL EVIDENCE WHICH DES P ITE OPPORTUNIT I ES WERE NOT FILED DURING ASSESSMENT PROCEEDINGS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD. CIT(A), ALWAR HAS ERRED IN DELETING ADDITION OF RS. 16,00,000/ - OUT OF RS. 17,30,000/ - MA D E U/S. 68 OF THE I.T. ACT, 1961 WHEREAS THE GEN UINENESS OF TRANSACTION AND CREDITWORTHINESS NOT PROVED. 3. THE APPELLANT CRAVES THE RIGHT TO AMEND ALTER OR ADD TO ANY OF THE GROUNDS OF APPEAL GIVEN ABOVE. 2.4 WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ENTIRE RECORD INCLUDING THE PAPE R BOOK / WRITTEN SUBMISSIONS OF THE PARTIES. 2.5 WE HAVE FOUND THAT DURING THE YEAR THE ASSESSEE - FIRM HAS RECEIVED THREE UNSECURED LOANS, TOTALING TO RS. 17,30,000/ - (RS. 7,30,000/ - FROM JAGDISH JANGID, RS. 5 LAKH EACH FROM R.C. MEHTA (HUF) AND SMT. SUNI DHI MEHTA. IN THE ABSENCE OF ANY EXPLANATION, WHICH ACCORDING TO THE ASSESSEE WAS SOUGHT AT THE FAG END OF THE YEAR, THE A.O. HAS ADDED TOTAL AMOUNT OF RS. 17,30,000/ - U/S 68 OF THE ACT. 5 BEFORE LD. CIT(A), EVIDENCE UNDER RULE 46A WERE PRODUCED WHICH WERE S ENT TO A.O. WHO SUBMITTED HIS REPORT AFTER VERIFYING THOSE ADDITIONAL EVIDENCE. ON THE BASIS OF R.R. AND ITS REPLY BY THE ASSESSEE - FIRM, THE LD. CIT(A) HAS FOUND THE ENTIRE UNSECURED LOANS AS EXPLAINED EXCEPT FOR RS. 1,30,000/ - WHICH HAS BEEN SUSTAINED. 2.6 BEFORE US, BOTH THE PARTIES HAVE REITERATED THEIR ARGUMENTS WHICH WERE TAKEN BEFORE LD. CIT(A). IN FACT THE WRITTEN SUBMISSIONS OF THE ASSESSEE COVERS ALL THE THREE ASSESSMENT YEARS. THE R.R. OF THE A.O. ON THE WRITTEN SUBMISSIONS OF THE ASSESSEE, WHIC H COVERS A.YS. 2006 - 07, 2008 - 09 AND 2009 - 10, IS AS UNDER: - PARA 5: GROUND NO. 6.; ADDITION OF UNEXPLAINED CASH CREDITS: THE ASSESSEE HAS DISCUSSED THIS GROUND IN PARA 5 OF ITS PAPER BOOK FOR THE A.YS 2006 - 07, 2008 - 09 AND 2009 - 10. THE APPELLANT HAS MISREP RESENTED THE FACT THAT THE LAST QUERY LETTER WAS RECEIVED BY HIM IN LAST WEEK OF DECEMBER 2011. IN FACT, THE QUESTIONNAIRES ALONGWITH NOTICE U/S 142(1) WERE ISSUED ON 08/11/2011 AND THE COMPLIANCE WAS REQUIRED POINT WISE.. THUS, REASONABLE OPPORTUNITIES AN D SUFFICIENT TIME WAS GIVEN FOR COMPLIANCE. BUT AS EVIDENT FROM THE COMPLIANCE CHART, THE ASSESSEE HAS FAILED TO COMPLY WITH THE REQUIRED DETAILS, AND 6 NO PAPERS, CONFIRMATIONS ETC. OF THE CASH CREDITOR WAS SUBMITTED DURING THE ASSESSMENT PROCEEDINGS. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS SPECIFICALLY REQUIRED AS PER COL. 13 OF THE QUESTIONNAIRE DATED 08/11/2011 TO FILE THE CONFIRMATION WITH PROOFS REGARDING IDENTITY, GENUINENESS AND CREDITWORTHINESS IN RESPECT OF SAID UNSECURED LOAN S HOWN IN HIS BALANCE SHEET. BUT THE ASSESSEE HAD FAILED TO FURNISH ANY DETAILS/ PROOFS TO SUBSTANTIATE THIS ALLEGED TRANSACTION OF UNSECURED LOAN. THUS, THE ASSESSEE HAD FAILED TO FILE ANY CONFIRMATION AS WELL AS TO PROVE THE IDENTITY OF THE PERSON, CREDITW ORTHINESS OF THE BORROWER AND GENUINENESS OF THE TRANSACTIONS SHOWN AS UNSECURED LOANS AND AS SUCH THE SAME WAS TREATED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE I.T. ACT, 1961 AND WAS ADDED TO THE ASSESSEES TOTAL INCOME FOR THE YEAR UNDER CONSIDERATION. N EW CASH CREDITS: A.Y.S 2006 - 07.2008 - 09. & 2009 - 10 : DURING THE ASSESSMENT PROCEEDINGS, ON PERUSAL OF ACCOUNTS AND OTHER DETAILS IT WAS NOTICED THAT DURING THE AYS 2006 - 07 2008 - 09 AND 2009 - 10, ASSESSEE FIRM HAS SHOWN UNSECURED LOANS AGGREGATING TO RS. 17,30 ,000/ - , RS. 32,63,000/ - & RS. 30,12,000/ - RESPECTIVELY AS NEW CASH CREDIT IN THE YEAR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO FILE PROOF REGARDING IDENTITY, GENUINENESS AND CREDITWORTHINESS IN RESPECT OF UNSECURED LOAN SHOWN IN THE NAME OF VARIOUS PERSONS IN HIS BALANCE SHEET. BUT THE ASSESSEE HAS 7 FAILED FILE ANY DETAILS/ PROOFS TO SUBSTANTIATE THIS CLAIMED UNSECURED LOAN. EVEN THE ASSESSEE HAS SIMPLY FILED COMPUTER GENERATED ACCOUNT COPIES IN WHICH THERE ARE NO SIGNATURE, AD DRESS, PAN OF THE CASH CREDITOR. THE AO WHERE THEY WERE ASSESSED OR EVEN THE PAPER WERE NOT BEEN SIGNED BY THE ASSESSEE HIMSELF. THE ASSESSEE REMAINED COMPLETE SILENT REGARDING UNSECURED LOAN. THE ASSESSEE WAS REQUESTED THROUGH VARIOUS OPPORTUNITIES DURING THE ASSESSMENT PROCEEDINGS TO FILE THE C ONFIRMATION . HOWEVER, THE ASSESSEE HAD NOT FILED ANY CONFIRMATION OR ANY OTHER DETAILS OF THE PERSON, CONCERNED. HENCE, KEEPING IN VIEW THE ABOVE FACTS WAS HELD THAT THE ASSESSEE HAD FAILED TO PROVE THE I DENTITY OF THE PERSON, CREDITWORTHINESS OF THE GIVER AND GENUINENESS OF THE TRANSACTIONS SHOWN & CLAIMED AS UNSECURED LOANS FROM VARIOUS PERSONS AND AS SUCH THE SAME WAS TREATED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE I.T. ACT AND WAS ADDED TO THE TOTAL INCOME OF TH E ASSESSEE, IN THE ASSESSMENT ORDER FOR THE A.YS. 2006 - 07, 2008 - 09 & 2009 - 10 AS UNDER: - (A) A.Y. 2006 - 07 (I) SHRI JAGDISH JANGID RS. 7,30,000/ - (II) SHRI R C MEHTA HUF RS. 5,00,000/ - (III) SMT. SUNIDHI MEHTA RS. 5,00,000/ - TOTAL RS. 17,30,000/ - ( B ) A.Y. 2008 - 09 (I) SHRI ANIL CHANDEL RS. 5,13,000/ - (II) SHRI P. GYANCHAND RS. 20,00000/ - (III) SHRI HARCHAND RAM JANGID RS. 7,50,000/ - TOTAL RS. 32,63,000/ - (C) A.Y. 2009 - 10 (I) M/S CHANDRA AGRO FARMS PVT. RS. 7,30,000/ - (II) SHRI J P JANGID RS. 3,00,000/ - 8 VERIFICATION DURING THE REMAND PROCEEDINGS; HOWEVER, WITHOUT PREJUDICE TO THE ISSUE RELATING TO ADMISSIBILITY OF THE SAID ADDITIONAL EVIDENCES, AS DIRECTED, THE ASSESSEE WAS GRANTED REASONABLE OPPORTUNITIES BY THIS OFFICE DURING THE REMAND PROCEE DINGS TO SUBSTANTIATE ITS CLAIM BY PRODUCING REQUISITE SUPPORTING EVIDENCES, BOOKS OF ACCOUNTS, BANK ACCOUNT STATEMENTS ETC. SHRI DEEPAK ARORA, CA AND AR, HAS ATTENDED ON BEHALF OF THE ASSESSEE DURING THE REMAND PROCEEDINGS AND ATTENDED AND SUBMITTED ITS W RITTEN SUBMISSIONS MADE VIDE LETTERS DATED 03/01/2014 AND 15 /01/2014 ALONGWITH SUPPORTING EVIDENCES ETC. AS WELL AS SUBSEQUENT DATES. A COMPLETE SET OF THE SAID WRITTEN SUBMISSIONS RECEIVED IN THIS OFFICE CONTAINING ENCLOSURES/SUPPORTING EVIDENCES RELIED UPON BY THE ASSESSEE IS ENCLOSED HEREWITH FOR READY REFERENCE AND CONSIDERATION AT THE LEVEL OF YOUR HONOUR. THE NECESSARY RY REPORT IS SUBMITTED AS UNDER : (A) A.Y. 2006 - 07 : CONFIRMATION FILED AS PER PAGE OF PAPER BOOK: (I) SHRI JAGDISH JANGID - RS. 7,30 ,000/ - PAGE 35 OF PB CONFIRMATION (II) SHRI R C MEHTA HUF - RS. 5,00,000/ - PAGE 36 OF PB CONFIRMATION (III) SHRI SUKHRAM LEELA JANGID RS. 12,12,000/ - (IV) SHRI MOTI RAM RS. 8,00,000/ - TOTAL RS.30,12 ,000/ - 9 (III) SMT. SUNIDHI MEHTA - RS. 5,00,000/ - PAGE 37 OF PB CONFIRMATION DURING THE REMAND PROCEEDINGS THE ASSESSE E HAS SUBMITTED EVEN FURTHER ADDITIONAL EVIDENCES, WHICH WERE NOT SUBMITTED DURING THE APPELLATE PROCEEDINGS BEFORE YOUR HONOUR. HENCE THE SAME SHOULD NOT BE ADMITTED AS ADDITIONAL EVIDENCES. HOWEVER, THE SAME HAVE BEEN CONSIDERED ON MERIT AND THE COMMENTS ARE OFFERED ON MERIT AS UNDER : (1) SH. JAGDISH JANGID (PAN: AEIPJ 3870 M) - RS. 7.30.000/ - : - (I) A PHOTOCOPY OF THE DRIVING LICENSE OF SHRI JAGDISH JANGID IS SUBMITTED WHICH PROVES IDENTITY OF THE PERSON ONLY. THE ALLOTMENT OF PAN CAN ONLY PROVE THE EXISTENC E/ IDENTITY OF A PERSON ONL Y. (II) A PHOTOCOPY OF THE RETURN OF INCOME AND INCOME & EXPENDITURE A/C FILED BY SH. JAGDISH JANEID FOR A.Y. 2006 - 07 IS FILED WHICH SHOWS A MEAGRE INCOME OF RS. 1,15,360/ - . HOWEVER, NO ANY COPY OF BALANCE SHEET HAS BEEN SUBMITTED TO SUBSTANTIATE THE CLAIM THAT THE DEPOSIT OF RS. 7,30,000/ - WAS GIVEN TO THE APPELLANT FIRM. (III) A PHOTOCOPY OF THE SB A/C CLAIMED TO HAVE HELD BY SH. JAGDISH JANGID WITH BANK OF RAJASTHAN LTD.(NOW ICICI BANK) THE NAME OF THE A/C HOLDER, A/C NO. & BRANCH DETA ILS ARE NOT LEGIBLE AND HENCE THE SAID BANK A/C CANNOT BE TREATED AS A VALID PHOTOCOPY OF THE BANK A/C OF SH. JAGDISH JANGID. 10 (IV) HOWEVER, EVEN IF THE SAID PHOTOCOPY OF BANK A/C IS CONSIDERED IT MAY BE SEEN THAT A CHEQUE NO. 120491 DATED 07/12/2005 FOR RS. 6, 00,000/ - CLAIMED TO BE ISSUED TO THE APPELLANT FIRM IS REFLECTED IN THIS BUT THE SECOND CHEQUE OF RS. 1,30,000/ - IS NOT REFLECTED IN THIS BANK A/C. IT MAY ALSO BE SEEN THAT ON A SINGLE DAY I.E. 30/11/2005, CASH AMOUNTS AGGREGATING TO RS. 10,00, 000/ - (THROUG H 4 DIFFERENT ENTRIES OF RS. 3,00,000/ - + RS. 2,00,000/ - + RS. 3,00,000/ - RS. 2,00, 000/ - ), WERE DEPOSITED INTO THIS BANK A/C. THE SOURCES OF ANY OF THE SAID CASH DEPOSITS IS NEITHER GIVEN NOR SUBSTANTIATED IN ANY MANNER. THUS, THE SOURCES OF DEPOSITS INTO TH IS BANK A/C ARE NOT EXPLAINED NOR PROVED. IT IS ALSO NOT PROVED THAT THIS BANK A/C IS AN ACCOUNTED ONE OR UNDISCLOSED ONE AS PER INCOME TAX PURPOSES. (V) FROM THE DETAILS/EVIDENCES FILED SUCH AS A CONFIRMATION WITH PAN, THE IDENTITY OF THE CASH CREDITOR MAY BE ESTABLISHED. BUT FROM THE DETAILS FILED IT IS FROM NOWHERE ESTABLISHED THAT THE SAID CASH CREDITOR WAS IN SUCH A FINANCIAL CAPACITY/POSITION TO BORROW SUCH A HUGE SUM TO THE APPELLANT ON THE DATES OF TRANSACTION. FURTHER, FROM THE DETAILS FILED IT CANNO T BE INTERPRETED OR ESTABLISHED THAT THE SAID LOAN TRANS A CTION WAS A GENUINE ONE AS NO PROOFS SUCH AS COPY OF THE BALANCE SHEET SHOWING THE ASSESSEE AS A DEBTOR HAS BEEN FURNISHED EVEN DURING THE ENTIRE REMAND PROCEEDINGS. (VI) THE ASSESSEES CONTENTION THAT THE TRANSACTIONS WERE MADE THROUGH BANK A/C CHEQUES/ BANKING CHANNELS DOES NOT PROVE ACTUAL FACTS AND CANNOT BE ACCEPTED MERELY ON THIS GROUND IN 11 GENERALITIES, IN ABSENCE OF PRODUCTION OF ANY SUPPORTING, CORROBORATIVE EVIDENCES EVEN AT THE REMAND PROCEEDIN GS LEVEL. IN VIEW OF THE ABOVE, IT IS SUBMITTED THAT IN THIS CASE ONLY ONE OF THE PRIMARY CONDITIONS OUT OF THE THREE CONDITIONS SUCH AS (I) IDENTITY OF THE CASH CREDITOR ONLY HAS BEEN FULFILLED AND THE REMAINING TWO MAIN CONDITIONS SUCH AS. (II) GENUINENE SS OF TRANSACTION AND (III) CREDIT WORTHINESS OF THE CASH CREDITOR HAVE NOT BEEN FULFILLED. HENCE, THE SAID UNSECURED LOANS CANNOT BE TREATED AS GENUINE . (2) SHRI RAJENDRA CHAND MEHTA HUF (PAN : AADHR 6781 G) : RS. 5,0 0 , 00 0 / - : (I) DURING THE REMAND PROCEE DINGS, A PHOTOCOPY OF THE PAN CARD SUBMITTED WHICH SHOWS THE IDENTITY OR EXISTENCE OF THE CASH CREDITOR. THE ALLOTMENT OF PAN CAN ONLY PROVE THE EXISTENCE/IDENTITY OF A PERSON ONLY. (II) A PHOTOCOPY OF THE ICICI BANK A/C NO. 200210414401 HELD IN THE NAME OF SHRI RAJENDRA CHAND MEHT A HAS BEEN SUBMITTED. HOWEVER, FROM THE BANK A/C IT DOES NOT ESTABLISH THAT THE SAME IS HELD BY SH. R.C. MEHTA IN HUF CAPA CITY OR IN INDIVIDUAL CAPACITY. THUS, THE SAME CANNOT BE CONSIDERED AS ON A/C HELD BY THE HUF. (III) O N PERUSAL OF THE BANK A/C STATEMENT, IT IS SEEN THAT IMMEDIATELY PRIOR TO THE DEBIT ENTRY OF RS. 5,00,000/ - RELATING TO PRESENT CASH CREDIT, A DEPOSIT ENTRY OF RS. 5,00,000/ - ON 03/01/2006 HAS BEEN MADE. HOWEVER, THE SOURCES OF SAID DEPOSIT THROUGH SINGLE ENTRY OF RS. 5,00,000/ - IS NOT ESTABLISHED. HENCE, 12 THE SOURCES OF DEPOSIT CANNOT BE TREATED/CONSIDERED AS GENUINE/ACCOUNTED OR EXPLAINED. (IV) FROM THE DETAILS/EVIDENCES FILED SUCH AS A CONFIRMATION WITH PAN, THE IDENTITY OF THE CASH CREDITOR MAY BE ES TABLISHED. BUT FROM THE DETAILS FILED IT IS FROM NOWHERE ESTABLISHED THAT THE SAID CASH CREDITOR WAS IN SUCH A FINANCIAL CAPACITY/POSITION TO BORROW SUCH A HUGE SUM TO THE APPELLANT ON THE DATES OF TRANSACTION. FURTHER, FROM THE DETAILS FILED IT CANNOT BE INTERPRETED OR ESTABLISHED THAT THE SAID LOAN TRANSACTION WAS A GENUINE ONE AS NO PROOFS SUCH AS COPY OF THE BALANCE SHEET SHOWING THE ASSESSEE AS A DEBTOR HAS BEEN FURNISHED EVEN DURING THE ENTIRE REMAND PROCEEDINGS. (VII) THE ASSESSEES CONTENTION THAT THE TRANSACTIONS WERE MADE THROUGH BANK A/C CHEQUES/ BANKING CHANNELS DOES NOT PROVE ACTUAL FACTS AND CANNOT BE ACCEPTED MERELY ON THIS GROUND IN GENERALITIES, IN ABSENCE OF PRODUCTION OF ANY SUPPORTING, CORROBORATIVE EVIDENCES EVEN AT THE REMAND PROCEEDIN GS LEVEL. I T IS ALSO NOT PROVED THAT THIS B ANK A/C IS AN ACCOUNTED ONE OR A UNDISCLOSED ONE AS PER INCOME TAX PURPOSES. IN VIEW OF THE ABOVE, IT IS SUBMITTED THAT IN THIS CASE ONLY ONE OF THE PRIMARY CONDITIONS OUT OF THE THREE CONDITIONS SUCH AS FIT IDENT ITY OF THE CASH CREDITOR ONLY HAS BEEN FULFILLED AND THE REMAINING TWO MAIN CONDITIONS SUCH AS. (II) GENUINENESS OF TRANS A CTION AND (II I ) CREDIT WORTHINESS OF THE CASH CREDITOR HAVE 13 NOT BEEN FULFILLED. HENCE, THE SAID UNSECURED LOANS CANNOT BE TREATED AS G ENUINE. (3) MS. SUNIDHI MEHTA (PAN:ALGPM2195K I: RS. 5,00.000/ - ; (I) DURING THE REMAND PROCEEDINGS, PHOTOCOPIES OF THE INDIAN PASSPORT NO. G0487949 HAS BEEN SUBMITTED WHICH MAY PROVE THE IDENTITY OF THE PERSON. THE PAN OF THE ASSESSEE HAS BEEN GIVEN. THE AL LOTMENT OF PAN CAN ONLY PROVE THE EXISTENCE/ IDENTITY OF A PERSON ONLY. (II) DURING THE REMAND PROCEEDINGS, PHOTOCOPY OF SAVINGS BANK A/C PASSBOOK OF THE SB A/C NO. 2002101411554 HELD WITH THE BANK OF RAJASTHAN - LTD.,' (NOW ICICI BANK LTD.) LMC COLLEGE JODHPUR, BRANCH, HAS BEEN SUBMITTED WHICH SHOWS THAT THE BANK A/C IS HELD JOINTLY BY MISS SUNIDHI MEHTA AND SHRI RAJENDRA CHAND MEHTA (HER FATHER). ON PERUSAL OF THE SAID BANK PASS BOOK IT IS SEEN THAT ON 09/01/2006, THE BANK A/C BALANCE WAS JUST RS. 8,164.10 AND A SUM OF RS. 5,00,000/ - WAS DEPOSITED THROUGH TRANSFER ENTRY ON 10/01/2006, I.E. IMMEDIATELY PRIOR TO DEBIT ENTRY OF RS. 5,00,000/ - THROUGH CHEQUE NO. 610572 ISSUED TO THE APPELLANT, AND CLAIMED AS CASH CREDIT. THE SOURCES OF IMMEDIATE DEPOSIT ENTRY OF RS. 5,00,000/ - IN THIS A/C ARE NEITHER SUBMITTED NO ESTABLISHED, AND HENCE CANNOT BE TREATED AS GENUINE OR EXPLAINED TRANSACTION. (III) FROM THE DETAILS/EVIDENCES FILED SUCH AS A CONFIRMATION WITH PAN, PASSPORT ETC., THE IDENTITY OF THE CASH CREDITOR MAY BE 14 ESTABLISHED. BUT FROM THE DETAILS FILED IT IS FROM NOWHERE ESTABLISHED THAT THE SAID CASH CREDITOR WAS IN SUCH A FINANCIAL CAPACITY/POSITION TO BORROW SUCH A HUGE SUM TO THE APPELLANT ON THE DATES OF TRANSACTION. FURTHER, FROM THE DETAILS FILED IT CANNO T BE INTERPRETED OR ESTABLISHED THAT THE SAID LOAN TRANSACTION WAS A GENUINE ONE AS NO PROOFS SUCH AS COPY OF THE BALANCE SHEET SHOWING THE ASSESSEE AS A DEBTOR HAS BEEN FURNISHED EVEN DURING THE ENTIRE REMAND PROCEEDINGS. (III) THE ASSESSEES CONTENTION THAT THE TRANSACTIONS WERE MADE THROUGH BANK A/C CHEQUES/ BANKING CHANNELS DOES NOT PROVE ACTUAL FACTS AND CANNOT BE ACCEPTED MERELY ON THIS GROUND IN GENERALITIES, IN ABSENCE OF PRODUCTION OF ANY SUPPORTING, CORROBORATIVE EVIDENCES EVEN AT THE REMAND PROCEEDIN GS LEVEL. IT IS ALSO NOT PROVED THAT THIS BANK A/C IS AN ACCOUNTED ONE OR A UNDISCLOSED ONE AS PER INCOME TAX PURPOSES. IN VIEW OF THE ABOVE, IT IS SUBMITTED THAT IN THIS CASE ONLY ONE OF THE PRIMARY CONDITIONS OUT OF THE THREE CONDITIONS SUCH AS ( I ) IDENT ITY OF THE CASH CREDITOR ONLY HAS BEEN FULFILLED AND THE REMAINING TWO MAIN CONDITIONS SUCH AS. (II) GENUINENESS OF TRANSACTION AND (III) CREDIT WORTHINESS OF THE CASH CREDITOR HAVE NOT BEEN FULFILLED. HENCE, THE SAID UNSECURED LOANS CANNOT BE TREATED AS G ENUINE. THUS, THE A.O. WAS JUSTIFIED IN HIS ACTION TO TREAT THE AFORESAID CASH CREDIT OF A GGREGATING TO RS. 17,30,000/ - AS UNEXPLAINED CASH CREDIT U/S 68 OF THE I.T. ACT, 1961 FOR THE A.Y. 15 2006 - 07. THE SAME DESERVES TO BE CONFIRMED AS SUCH EVEN AFTER CONS IDERING THE O VERALL FACTS AND EVIDENCES SUBMITTED DURING (LIE REMAND PROCEEDINGS. THEREFORE, THIS MAY KI NDLY BE DECIDED AFTER CONSIDERING THE ABOVE FACTS AND SUBMISSION ON MERITS. VERIFICATION OF ADDITIONAL EVIDENCES PRODUCED: CONCLUSION : THE VERIFICAT ION WAS MADE ON THE BASIS OF THE CHEQUE NOS. MENTIONED IN THE CONFIRMATION LETTERS, COPIES OF BANK A/C STATEMENTS, COPIES OF SALE DEEDS ETC., FILED AS ADDITIONAL EVIDENCES. THUS, THE ENTRIES OF CHEQUE NOS. DEPOSITED INTO THE APPELLANTS BANK A/C ARE APPEAR ING BUT THE ASSESSEE HAS FAILED TO FURNISH DETAILS OF THE NAME OF THE BANK A/CS FROM WHERE THE CHEQUES WERE ISSUED BY CASH CREDITORS NOR ITS OWN ANY BANK A/C PAY - IN - SLIP TO PROVE THAT THE PARTICULAR CHEQUE NO. WAS RECEIVED FROM A PARTICULAR PERSON AND WAS DEPOSITED IN HIS NAME. THE PAY - IN - SLIPS ALSO COULD SHOW THE CORRESPONDING BANK A/C OF THE CASH CREDITOR. BUT NO ANY SUCH CORROBORATI V E EVIDENCES WERE PRODUCED DURING THE REMAND PROCEEDINGS. HENCE IN ABSENCE OF SUPPORTING EVIDENCES, IT CANNOT BE SAID THAT THE PARTICULAR CHEQUE CLAIMED AS DEPOSITED ON THE NAMES OF ABOVE PERSONS WERE ACTUALLY ISSUED BY THEM OR BY SOME OTHER PERSONS AND FURTHER THAT THEY WERE HAVING ANY SUCH BANK A/C FROM WHERE CHEQUES 'WE RE ISSUED. 16 FURTHER, IT IS NOT ESTABLISHED THAT WHAT WE RE THE SOURCES OF IMMEDIATE DEPOSITS IN THE CASH CREDITORS BANK A/C, AND ABOVE ALL AS TO WHETHER THE SAID BANK A/C WAS AN ACCOUNTED/ DISCLOSED OR AN UNDISCLOSED BANK A/C IN THE RETURNS OF INCOME OF THE CONCERNED PERSONS. THUS, THE TRANSACTION THROUGH BANK ING CHANNEL CANNOT ESTABLISH THAT THE SAID TRANSACTION WAS AN ACCOUNTED ONE, GENUINE ONE OR THE PERSON ISSUING CHEQUE WAS IN SUCH A FINANCIAL CAPACITY TO GIVE LOANS OF SUCH HUGE AMOUNTS. IN VIEW OF THE ABOVE, IT IS SUBMITTED THAT IN THIS CASE ONLY ONE OF T HE PRIMARY CONDITIONS OUT OF THE THREE CONDITIONS SUCH AS (I) IDENTITY OF THE CASH CREDITOR ONLY HAS BEEN FULFILLED AND THE REMAINING TWO MAIN CONDITIONS SUCH AS. (II) GENUINENESS OF TRANSACTION AND (III) CREDIT WORTHINESS OF THE CASH CREDITOR HAVE NOT BEE N FULFILLED. HENCE, THE SAID UNSECURED LOANS CANNOT BE TREATED AS GENUINE. RELIANCE IS ALSO PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS AND CASE LAWS : SECTION 68 (COMMON FOR ALL THE A.YS 2006 - 07.2008 - 09 AND 2009 - 10) : (I) PROVISION APPLIES TO ALL CREDIT ENTRIES - THE LANGUAGE OF SECTION 68 SHOWS THAT IT IS GENERAL IN NATURE AND APPLIES TO ALL CREDIT ENTRIES IN WHOMSOEVER NAME THEY MAY STAND, THAT IS, WHETHER IN THE NAME OF THE ASSESSEE OR A THIRD PARTY - GUMANI RAM SIRI RAM V. CIT [1975] 98 ITR 337 (PUNJ . & HAR.). 17 (II) AMOUNT CREDITED IN BUSINESS BOOKS CAN NORMALLY BE PRESUMED AS BUSINESS RECEIPT - WHEN AN AMOUNT IS CREDITED IN BUSINESS BOOKS, IT IS NOT AN UNREASONABLE INFERENCE TO DRAW THAT IT IS A RECEIPT FROM BUSINESS, IF THE EXPLANATION GIVEN BY THE ASS ESSEE AS TO HOW THE AMOUNTS CAME TO BE RECEIVED IS REJECTED BY ALL THE INCOME - TAX AUTHORITIES AS UNTENABLE - LAKHMICHAND BAIJNATH V. CIT [1959] 35 ITR 416 (SC). ( III ) BURDEN IS ON ASSESSEE TO PROVE SOURCE OF RECEIPT - THE LAW IS WELL SETTLED THAT THE ONUS OF PROVING THE SOURCE OF A SUM OF MONEY FOUND TO HAVE BEEN RECEIVED BY AN ASSESSEE IS ON HIM. WHERE THE NATURE AND SOURCE OF A RECEIPT, WHETHER IT BE OF MONEY OR OTHER PROPERTY, CANNOT BE SATISFACTORILY EXPLAINED BY THE ASSESSEE, IT IS OPEN TO THE REVENUE TO HOLD THAT IT IS THE INCOME OF THE ASSESSEE AND NO FURTHER BURDEN LIES ON THE REVENUE TO SHOW THAT THE INCOME IS FROM ANY PARTICULAR SOURCE - ROSHAN DI HATTI V. CIT [1977] 107 ITR 938 (SC)/ KALE KHAN MOHAMMAD HANI F V. CIT [1963] 50 ITR 1 (SC). (IV) I T IS FOR THE ASSESSEE TO PROVE THAT EVEN IF THE CASH CREDIT REPRESENTS INCOME, IT IS INCOME FR OM A SOU RC E WHICH HAS ALREADY BEEN TAXED - CIT V. DEVI PRASAD VISHWANATH PRASAD [1969] 72 ITR 1 94 (S C ). (IV) ONUS IS ON ASSESSEE TO DISCHARGE THAT CASH CREDITOR IS A M AN OF MEANS - THE ONUS IS ON THE ASSESSEE TO DISCHARGE THE ONUS THAT THE CASH CREDITOR IS A MAN OF MEANS TO ALLOW THE CASH CREDIT. THERE SHOULD BE IDENTIFICATION OF THE CREDITOR AND HE SHOULD BE A PERSON OF MEANS. WHEN THE CASH CREDITOR IS AN 18 INCOME - TAX AS SESSEE, IT CANNOT BE SAID THAT HE IS NOT A MAN OF MEANS - KAMAL MOTORS V. CIT [2003] 131 TAXMAN 155 (RAJ.). (V) EACH ENTRY MUST BE SEPARATELY EXPLAINED BY ASSESSEE - WHILE EXPLAINING THE VARIOUS CREDITS AND INVESTMENTS, IT IS POSSIBLE THAT THE ASSESSEE MAY BE SUCCESSFUL IN EXPLAINING SOME OF THEM, BUT THAT DOES NOT BY ITSELF MEAN THAT THE ENTIRE INVESTMENTS HAS TO BE CONSIDERED AS EXPLAINED. IT IS EACH AND INDIVIDUAL ENTRY ON WHICH THE MIND HAS TO BE APPLIED BY THE TAXING A U THORITY WHEN AN EXPLANATION IS OFF ERED BY THE ASSESSEE' - CIT V. R.S. RATHORE [1995] 212ITR 390 (RAJ.). THUS, THE A.O. WAS JUSTIFIED IN HIS ACTION TO TREAT THE AFORESAID CASH CREDIT OF RS. 45,00, 000/ - AS UNEXPLAINED CASH CREDIT U/S 68 OF THE I.T. ACT. 1961. THE SAME DESERVES TO BE CONFIRME D AS SUCH EVEN AFTER CONSIDERING THE OVERALL FACTS AND EVIDENCES SUBMITTED OR COLLECTED DURING THE REMAND PROCEEDINGS. THEREFORE, THIS ISSUE MAY KINDLY BE DECIDED AFTER CONSIDERING THE - ABOVE FACTS AND SUBMISSION ON MERITS. IN VIEW OF THE ABOVE DISCUSSION IT IS MOST HUMBLY SUBMITTED THAT THE A.O. WAS JUSTIFIED IN HIS ACTION TO TREAT THE AFORESAID CASH CREDITS AS UNEXPLAINED CASH CREDIT U/S 68 OF THE I.T. ACT, 1961 IN RESPECT OF ALL THE A.YS 2006 - 07, 2008 - 09 AND 2009 - 10. THE SAME DESERVES TO BE CONFIRMED AS SUCH EVEN AFTER CONSIDERING THE OVERALL FACTS AND EVIDENCES SUBMITTED DURING THE REMAND PROCEEDINGS. THEREFORE, THIS ISSUE MAY KINDLY BE DECIDED AFTER CONSIDERING THE ABOVE FACTS AND SUBMISSION ON MERITS . 19 2.7 THE ABOVE R.R. HAS BEEN REPLIED BY THE ASSESS EE - FIRM AS UNDER: - 1. NO MATERIAL HAD BEEN FOUND DURING THE SEARCH OR POST SEARCH INVESTIGATION THAT THE CASH CREDITORS WERE NOT GENUINE. IT IS SUBMITTED THAT THE RE - ASSESSMENT U/S 153A HAS TO BE CONFINED ONLY TO MATERIAL FOUND DURING THE COURSE OF SEARC H AND ITEMS OF ASSESSMENT WHICH HAD ACHIEVED FINALITY BY WAY OF ORIGINAL AS SESSMENT CANNOT BE DISTURBED. T HIS ISSUE HAS NOW BEEN DECIDED BY THE JURISDICTIONAL HONBLE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEELS (INDIA) V/S ACIT (2013) 259 CTR (RAJ.) 281 . THEREFORE THE VARIOUS ADDITIONS MADE NOT BASED ON ANY MATERIAL FOUND AS A CONSEQUENCE OF SEARCH. 2. THE APPELLANT HAD SUBMITTED THAT THE ADDITION MADE BY THE LEARNED AO FOR THE CASH CREDITORS MADE IN A.Y. 2006 - 07 WAS NOT JUSTIFIED. ALL PAYMENTS HAD BEEN RECEIVED BY CHEQUE, CONFIRMATION OF ALL THE CREDITORS HAD BEEN SUBMITTED, PAN NUMBER OF ALL THE CREDITORS WAS BEING ALSO SUBMITTED. 3. THE LEARNED AO IN HIS REMAND REPORT HAS MENTIONED THAT THE ASSESSEE HAS SUBMITTED EVEN FURTHER ADDITIONAL EVIDENCES, W HICH WERE NOT SUBMITTED DURING THE APPELLATE PROCEEDINGS BEFORE YOUR HONOUR AND THE SAME SHOULD NOT BE ADMITTED AS ADDITIONAL EVIDENCES. THE STATEMENT OF THE LEARNED AO IS NOT CORRECT. THE DOCUMENTS WHICH WERE SUBMITTED BEFORE THE LEARNED AO FOR THE REMAND REPORT HAS BEEN ALREADY BEEN FILED BEFORE YOUR HONOUR ALONG WITH LETTER DATED 22 ND JANUARY, 2014. 20 4. IN RELATION TO UNSECURED LOAN OF RS.730000/ - FROM JAGDISH JANGID WE HAD SUBMITTED THE COPY OF DRIVING LICENCE, BANK STATEMENT, COPY OF INCOME TAX RETURN AND COPY OF AGREEMENT TO SALE AND REGISTERED SALE DEED TO PROVE THE SOURCE FROM WHERE THE FUND WAS ADVANCED, TO PROVE THE IDENTITY, GENUINENESS AND CREDIT WORTHINESS OF THE CASH CREDITOR. A) REPLY TO PARA 1 (II) : THE LEARNED AO HAS RAISED THE OBJECTION T HAT COPY OF BALANCE SHEET WAS NOT SUBMITTED. IT IS SUBMITTED FOR YOUR KIND PERUSAL THAT IT IS NOT MANDATORY FOR AN INDIVIDUAL TO PREPARE HIS PERSONAL BALANCE SHEET AND TO FILE THE SAME ALONG WITH HIS INCOME TAX RETURN. JAGDISH JANGID IS AN INDIVIDUAL AND H E HAS NOT PREPARED HIS PERSONAL BALANCE SHEET, SO THE SAME WAS NOT SUBMITTED BEFORE THE LEARNED AO. EVEN IN THE CASE OF CORPORATE ASSESSEE ONLY THE SUMMARY DETAILS OF THE BALANCE SHEET IS TO BE FILED WITH THE INCOME TAX RETURN, THE PHYSICAL BALANCE SHEET I S NOT FILED ALONGWITH THE INCOME TAX RETURN. B) REPLY TO PARA 1 (III) : THE OTHER OBJECTION RAISED BY THE LEARNED AO THAT THE DETAILS OF NAME OF THE ACCOUNT HOLDER, A/C NO. AND BRANCH DETAILS IN THE PHOTOCOPY ARE NOT LEGIBLE, IT IS SUBMITTED FOR YOUR KIND CONSIDERATION THAT THE LEARNED AO DID NOT CONFRONTED US OR COULD HAVE DIRECTLY ENQUIRED FROM THE BANK ABOUT THE DETAILS WHICH WERE NOT LEGIBLE. WE HAD ALREADY SUBMITTED THE COPY OF BANK STATEMENT VIDE OUR LETTER DATED 22 ND JANUARY , 2014 BEFORE YOUR HONOR. 21 C) REPLY TO PARA 1 (IV) : THE NEXT OBJECTION RAISED BY THE LEARNED AO IS THAT THE NO SOURCE HAS BEEN SUBMITTED FOR THE CASH DEPOSITED IN BANK. IT IS SUBMITTED FOR YOUR KIND CONSIDERATION THAT WE HAD SUBMITTED THE COPY OF AGREEMENT TO SALE AND THE COPY OF REGISTERED SALE DEED VIDE LETTER DATED 29 TH JANUARY, 2014 TO PROVE THE SOURCE FROM WHERE JAGDISH JANGID HAD RECEIVED THE AMOUNT WHICH WAS DEPOSITED IN THE BANK. THE CHEQUE OF RS.600000/ - WAS ISSUED FROM THE PROCEEDS OF RS. 1000000/ - WHICH WERE DEPOSITED IN THE BANK AND IN RELATION TO RS.130000/ - THE BANK STATEMENT FROM WHICH THE CHEQUE WAS ISSUED COULD NOT BE TRACED AND SUBMITTED BEFORE YOUR HONOR. D ) REPLY TO PARA 1 (V) : BY SUBMITTING THE COPY OF AGREEMENT TO SALE AND THE REGISTERED SALE DEED IT IS CLEAR LY PROVED THE SOURCE FROM WHERE THE AMOUNT WAS ADVANCED AND THE SAME TO BE GENUINE. JAGDISH JANGID BEING AN INDIVIDUAL IS NOT REQUIRE D TO PREPARE AND SUBMIT HIS BALANCE SHEET. E ) REPLY TO PARA 1 (VI) : THE ASSESSEE HAD SUBMITTED THE COPY OF DRIVING LICE NCE, BANK STATEMENT, COPY OF INCOME TAX RETURN AND COPY OF AGREEMENT TO SALE AND REGISTERED SALE DEED TO PROVE THE SOURCE FROM WHERE THE FUND WAS ADVANCED, TO PROVE THE IDENTITY, GENUINENESS AND CREDIT WORTHINESS OF THE CASH CREDITOR. 5 . IN RELATION TO UNSECURED LOAN OF RS.500000/ - FROM R.C.MEHTA HUF WE HAD SUBMITTED THE COPY OF PAN CARD, BANK STATEMENT, COPY OF INCOME TAX RETURN, TO PROVE THE IDENTITY, GENUINENESS AND CREDIT WORTHINESS OF THE CASH CREDITOR. FURTHER 22 THE ACCOUNT HAS BEEN SQUARED UP ON 17. 05.2008 THE REPAYMENT OF LOAN WAS THROUGH ACCOUNT PAYEE CHEQUE. A. REPLY TO PARA 2(II) : THE OBJECTION RAISED BY THE LEARNED AO THAT LOOKING TO THE BANK A/C IT DOES NOT ESTABLISH THAT THE SAME IS HELD BY SHRI R.C.MEHTA IN HUF CAPACITY OR IN INDIVIDUAL CA PACITY. IT IS SUBMITTED FOR YOUR KIND PERUSAL THAT SHRI R.C.MEHTA IN THE CAPACITY OF KARTA OF SHRI R.C.MEHTA HUF HAS CERTIFIED THAT THE ACCOUNT IS IN THE NAME OF R.C.MEHTA HUF AND THE SAME SHOULD BE ACCEPTED, THE ACCOUNT CONFIRMATION WAS SIGNED AND ALSO BE ARS THE PAN OF HUF AND DETAIL OF PAYMENT MADE THROUGH CHEQUE PRESENT AT PAGE NO.36 OF THE PAPER BOOK. B. REPLY TO PARA 2(III) : THE LEARNED AO HAS POINTED OUT THAT A CHEQUE OF RS.500000/ - WAS ENTERED ON 03.01.2006 AND NOW THE PAYMENT HAS BEEN ISSUED TO T HE FIRM ON 25.01.2006. IT IS SUBMITTED FOR YOUR KIND CONSIDERATION THAT THERE IS GAP OF 22 DAYS. THE CASH CREDITOR IS FREE TO UTILIZE HIS FUNDS AS PER HIS CHOICE. IT HAS BEEN HELD IN NEMI CHAND KOTHARI VS CIT & ANOTHER 264 ITR 254 (GAUHATI) THAT IT IS NOT THE BUSINESS OF THE ASSESSEE TO FIND OUT WHETHER THE SOURCE OR SOURCES FROM WHICH THE CREDITOR HAD AGREED TO ADVANCE THE AMOUNTS WERE GENUINE OR NOT. 23 DY.CIT VS. ROHINI BUILDERS (2002) 256 ITR 360 (GUJ.) THE TRIBUNAL FOUND THAT THE ASSESSEE HAD DISCH ARGED THE INITIAL ONUS WHICH LAY ON IT IN TERMS OF SECTION 68 BY PROVIDING THE IDENTITY OF THE CREDITORS BY GIVING THEIR COMPLETE ADDRESSES, GIR NO./PAN AND THE COPIES OF ASSESSMENT ORDER WHEREVER READILY AVAILABLE, THAT IT HAD ALSO PROVED THE CAPACITY OF THE CREDITORS BY SHOWING THAT THE AMOUNT WERE RECEIVED BY THE ASSESSEE BY ACCOUNT PAYEE CHEQUE DRAWN FROM THE BANK ACCOUNT OF THE CREDITORS AND THE ASSESSEE WAS NOT EXPECTED TO PROVE THE GENUINENESS OF THE CASH DEPOSITED IN THE BANK ACCOUNTS OF THOSE CREDI TORS BECAUSE UNDER LAW ASSESSEE CAN BE ASKED TO PROVE THE SOURCE OF THE CREDITS IN ITS BOOKS OF ACCOUNTS BUT NOT THE SOURCE OF THE SOURCE. C) REPLY TO PARA 2 (IV) : THE LEARNED AO HAS RAISED THE OBJECTION THAT COPY OF BALANCE SHEET WAS NOT SUBMITTED. IT IS SUBMITTED FOR YOUR KIND PERUSAL THAT IT IS NOT MANDATORY FOR AN HUF TO PREPARE HIS PERSONAL BALANCE SHEET AND TO FILE THE SAME ALONG WITH HIS INCOME TAX RETURN. R.C.MEHTA HUF IS AN HUF AND HAS NOT PREPARED ITS PERSONAL BALANCE SHEET, SO THE SAME WAS NOT S UBMITTED BEFORE THE LEARNED AO. D) REPLY TO PARA 2(VII) THE NEXT OBJECTION OF THE LEARNED AO IS THAT THE BANK ACCOUNT IS WHETHER ACCOUNTED ONE OR UNDISCLOSED AS PER THE INCOME TAX PURPOSE. IT IS SUBMITTED FOR YOUR KIND PERUSAL THAT SHRI R.C.MEHTA IN THE C APACITY OF KARTA OF SHRI R.C.MEHTA 24 HUF HAS CERTIFIED THAT THE ACCOUNT IS IN THE NAME OF R.C.MEHTA HUF AND THE SAME SHOULD BE ACCEPTED. SINCE THE ACCOUNT CONFIRMATION HAS BEEN CERTIFIED AND THE SAME CONTAINS PAN, DETAIL OF BANK TRANSACTION, THE OBJECTION RA ISED BY THE LEARNED AO IS BASELESS, NOW A DAYS ALL THE BANKING TRANSACTIONS ARE UNDER THE VIGILANCE OF INCOME TAX DEPARTMENT, SO TO SAY THAT ANY BANK ACCOUNT IS UNDISCLOSED IS INCORRECT. 6 IN RELATION TO UNSECURED LOAN OF RS.500000/ - FROM SUNIDHI MEHTA WE HAD SUBMITTED THE COPY OF PASSPORT, BANK STATEMENT, COPY OF INCOME TAX RETURN, TO PROVE THE IDENTITY, GENUINENESS AND CREDIT WORTHINESS OF THE CASH CREDITOR. THE LOAN ACCOUNT WAS SQUARED UP BY REPAYMENT THROUGH ACCOUNT PAYEE CHEQUE IN F.Y.2008 - 09. A) REPL Y TO PARA 3(II) : THE LEARNED AO HAS POINTED OUT THAT A CHEQUE OF RS.500000/ - WAS ENTERED ON 09.01.2006 AND NOW THE PAYMENT HAS BEEN ISSUED TO THE FIRM ON 10.01.2006. THE PAYMENT WAS RECEIVED THROUGH CHEQUE AND IT WAS FURTHER ADVANCED TO THE FIRM THROUGH A CCOUNT PAYEE CHEQUE. THE CASH CREDITOR IS FREE TO UTILIZE HIS FUNDS AS PER HIS CHOICE. IT HAS BEEN HELD IN NEMI CHAND KOTHARI VS CIT & ANOTHER 264 ITR 254 (GAUHATI) THAT IT IS NOT THE BUSINESS OF THE ASSESSEE TO FIND OUT WHETHER THE SOURCE OR SOURCES FROM WHICH THE CREDITOR HAD AGREED TO ADVANCE THE AMOUNTS WERE GENUINE OR NOT. 25 DY.CIT VS. ROHINI BUILDERS (2002) 256 ITR 360 (GUJ.) THE TRIBUNAL FOUND THAT THE ASSESSEE HAD DISCHARGED THE INITIAL ONUS WHICH LAY ON IT IN TERMS OF SECTION 68 BY PROVIDING THE IDENTITY OF THE CREDITORS BY GIVING THEIR COMPLETE ADDRESSES, GIR NO./PAN AND THE COPIES OF ASSESSMENT ORDER WHEREVER READILY AVAILABLE, THAT IT HAD ALSO PROVED THE CAPACITY OF THE CREDITORS BY SHOWING THAT THE AMOUNT WERE RECEIVED BY THE ASSESSEE BY ACCO UNT PAYEE CHEQUE DRAWN FROM THE BANK ACCOUNT OF THE CREDITORS AND THE ASSESSEE WAS NOT EXPECTED TO PROVE THE GENUINENESS OF THE CASH DEPOSITED IN THE BANK ACCOUNTS OF THOSE CREDITORS BECAUSE UNDER LAW ASSESSEE CAN BE ASKED TO PROVE THE SOURCE OF THE CREDIT S IN ITS BOOKS OF ACCOUNTS BUT NOT THE SOURCE OF THE SOURCE. B) REPLY TO PARA 3 (III) : THE LEARNED AO HAS RAISED THE OBJECTION THAT COPY OF BALANCE SHEET WAS NOT SUBMITTED. IT IS SUBMITTED FOR YOUR KIND PERUSAL THAT THE COPY OF INCOME TAX RETURN WAS FIL ED VIDE LETTER DATED 29 TH JANUARY, 2014, IT IS NOT MANDATORY FOR AN INDIVIDUAL TO PREPARE HIS PERSONAL BALANCE SHEET AND TO FILE THE SAME ALONG WITH HIS INCOME TAX RETURN. SUN IDHI MEHTA IS AN INDIVIDUAL AND SHE HAS NOT PREPARED HER PERSONAL BALANCE SHEET, SO THE SAME WAS NOT SUBMITTED BEFORE THE LEARNED AO. EVEN IN THE CASE OF CORPORATE ASSESSEE ONLY THE SUMMARY DETAILS OF THE BALANCE SHEET IS TO BE F IL ED WITH THE INCOME TAX RETURN, THE PHYSICAL BALANCE SHEET IS NOT FILED ALONGWITH THE 26 INCOME TAX RETURN. C) REPLY TO PARA 3(IV) THE NEXT OBJECTION OF THE LEARNED AO IS THAT THE BANK ACCOUNT IS WHETHER ACCOUNTED ONE OR UNDISCLOSED AS PER THE INCOME TAX PURPOSE. IT IS SUBMITTED FOR YOUR KIND PERUSAL THAT SUNIDHI MEHTA HAD CERTIFIED THAT THE BANK ACCOUNT IS IN H ER NAME AND THE SAME SHOULD BE ACCEPTED. SINCE THE ACCOUNT CONFIRMATION HAS BEEN CERTIFIED AND THE SAME CONTAINS PAN, THE OBJECTION RAISED BY THE LEARNED AO IS BASELESS, NOW A DAYS ALL THE BANKING TRANSACTIONS ARE UNDER THE VIGILANCE OF INCOME TAX DEPARTME NT, SO TO SAY THAT ANY BANK ACCOUNT IS UNDISCLOSED IS INCORRECT. 7. THE MAIN OBJECTION OF THE ID. A.O. HAD BEEN THAT SOURCE OF SOURCE HAS NOT BEEN EXPLAINED, WHICH WAS IN FACT NEVER DEMANDED EVEN DURING THE REMAND PROCEEDINGS. THE PARTIES ARE REGULARLY AS SESSED TO TAX AND THEIR PAN ALONG WITH INCOME TAX RETURNS WERE DULY SUBMITTED. THE OBJECT OF THE CONFIRMATION IS THAT THE PARTY IS CONFIRMING THE SAME LOAN BEING GIVEN, AND ALSO THE GENUINENESS OF THE TRANSACTION. 8. WE ALSO REQUEST YOUR HONOUR THAT OUR DETAILED WRITTEN SUBMISSIONS MADE EARLIER MAY KINDLY BE CONSIDERED WHERE GROUND WISE SUBMISSIONS HAD BEEN MADE. 27 2. 8 THE FOLLOWING BRIEF SUBMISSIONS FILED BY THE LD. A.R. GIVES A PICTURE OF RELATED EVIDENCE FILED BY THE ASSESSEE - FIRM, WHICH IS AS UNDER: - GR.NO.1 : ADDITION U/S. 68 : RS. 1,30,000/ - FROM JAGDISH JANGID A.O. P. 2 PARA 6 CIT(A) P. 15 PARA 5.10 (1) DOCUMENTS SUBMITTED IN RELATION TO LOAN FROM JAGDISH JANGID : A. CONFIRMATION OF ACCOUNT STATEMENT P.B. 35 B. REGULAR ASSESSEE AND PAN SUBMITTED C. CO PY OF BANK STATEMENT P B 40 - 41 A. DRIVING LICENSE COPY PB 42 E. COPY OF I.T. RETURN FOR 2006 - 07 OF CREDITOR P.B. 43 - 45 F. IN RELATION TO SOURCE OF MONEY COPY OF SALE AGREEMENT FOR SALE OF PROPERTY BY JAGDISH JANGID (P.B. 63 - 77) G. RELIANCE ON JUDGMENT OF HO N'BLE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL INDIA V. ACIT REPORTED IN (2013) 259 CTR (RAJ) 281 DEFINING SCOPE OF ASSESSMENT U/S 153A TO BE CONFINED ONLY TO MATERIAL FOUND DURING SEARCH. NOTHING FOUND TO SUGGEST CREDIT WAS NOT GENUINE. H. RELY ON OTH ER DECISIONS AT P.B. 22 - 28. GR.NO.2 : INTEREST U/S. 234B AND 234 C THE APPELLANT PRAY FOR CONSEQUENTIAL RELIEF. 28 GR. NO. 3 : GENERAL IN NATURE. GROUND NO. 1 ADMISSION OF ADDITIONAL EVIDENCE. A. THE ID. A.O. IN THE QUERY LETTER DT. 23.12.11, WHICH WAS RECEIVED ON 25.12.11, REQUIRED COMPLIANCE ON 28.12.11. ON 29.12.11 THE ID A.O. PASSED THE ORDER. B. THE ADDITIONAL EVIDENCES SUBMITTED TO THE ID. CIT(A) WERE FORWARDED TO THE ID. A.O., WHO HAD EXAMINED THE DETAILS AND INFORMATION SUBMITTED FOR MORE THAN A YEAR. THE ADDITIONAL EVIDENCE WERE PROVIDED TO AO FROM CIT(A) VIDE LETTER DATED 5.2.13. REMAND REPORT WAS SUBMITTED ON 24.2.14. VARIOUS HEARINGS WERE CONDUCTED BY THE AO. C. NO INCRIMINATING MATERIAL WAS FOUND IN SEARCH, IT WAS THEREFORE THE PRIMARY ONUS O N THE AO TO PROVE BY EVIDENCE THAT THE CREDITS REPRESENTS INCOME. THE PURPOSE OF ASSESSMENT IS TO PROPERLY APPRECIATE THE FACTS, AND IF THE DETAILED FACTS WERE BEING MADE AVAILABLE THE SAME SHOULD NOT BE DENIED. D. THE ID. CIT(A) HAD VALIDLY ACCEPTED THE AD DITIONAL EVIDENCES, AND IN THIS REGARD RELIANCE IS PLACED ON FOLLOWING DECISIONS : JUTE CORPORATION OF INDIA LTD. VS. CIT. (1991) 187 ITR 688 (SC) CIT VS. KANPUR COAL SYNDICATE(1964) 53 ITR 225 (SC) CIT VS. PIONEER PRESS (P) LTD. (2001) 170 CTR (MAD) 152 29 CIT VS. K. RAVINDRANATHAN NAIR (2003) 184 CTR (KER) 46 : (2004) 265 ITR 217 (KER) CIT VS. SURETECH HOSPITAL & RESEARCH CENTRE LTD. (2007) 293 ITR 53 (BOM) CIT VS. PARIMAL KANTI CHANDA (2007) 291 ITR 77 (GAU) CIT VS. PODDAR SWADESH UDYOG (P) LTD. (2007) 295 ITR 252 (GAU) ACIT VS. VENKATESHWAR ISPAT (P) LTD. (2009) 319 ITR 393 (CHHATTISGARH) SMT. PRABHAVATI S. SHAH VS. CIT (1998) 231 ITR 1 (BOM) ITO VS. INDUSTRIAL ROADWAYS ITAT, MUMBAI 'K' BENCH (2007) 112 TTI (MUMBAI) 157 SURMUKH SINGH VS. ITO (2008) 115 TTJ (ASR) 852 ANMOL COLOURS INDIA (P) LTD. VS. ITO (2009) 121 TTJ (JP) 269 SHAHRUKH KHAN VS. DCIT (2007) 13 SOT 61 (MUMBAI) ITO VS. DWARKA PRASAD VS. ITO (1998) 60 TTJ (PAT)(TM) 292 GR.NO.2 : CASH CREDITS : RS. 16,10,000/ - A.O. P. 2 PARA 6 CIT(A) P. 15 PARA 5.10 (II) & (III) A. THE ORDER OF ID. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION. THE ONUS HAD BEEN DULY DISCHARGED. FURTHER NO INCRIMINATING MATERIAL FOUND DURING THE SEARCH. B. JAGDISH JANGID : THIS IS COMMON THE GROUND OF APPEAL BY THE ASSESSEE, AN D IN VIEW OF DETAILED FACTS SUBMITTED THE ADDITION DESERVED TO THE FULLY DELETED. THE SUBMISSIONS IN REGARD TO ASSESSEE APPEAL MAY KINDLY BE CONSIDERED IN RELATION TO 30 DEPARTMENT GROUND ALSO. C. R.C.MEHTA HUF : COPY OF PAN CARD P.B. 46 COPY OF BANK STATEMEN T P.B. 47 COPY OF INCOME TAX RETURN P. 61 ACCOUNT STATEMENT INDICATING REPAYMENT IN SUBSEQUENT YEARS P.B. 85. REGULAR ASSESSEE, AND ALL TRANSACTION THROUGH ACCOUNT PAYEE CHEQUES. D. SUNIDHI MEHTA : COPY OF PASSPORT P.B. 48 COPY OF BANK STATEMENT P. 49 - 58 COPY OF INCOME TAX RETURN P.B. 62 ACCOUNT STATEMENT INDICATING REPAYMENT OF LOAN P. 86. REGULAR INCOME TAX ASSESSEE AND NO INCRIMINATING MATERIAL FOUND DURING SEARCH. E. RELIANCE ON JUDGMENT OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL IND IA V. ACIT REPORTED IN (2013) 259 CTR (RAJ) 281 DEFINING SCOPE OF ASSESSMENT U/S 153A TO BE CONFINED ONLY TO MATERIAL FOUND DURING SEARCH. NOTHING FOUND TO SUGGEST CREDIT WAS NOT GENUINE. F. RELY ON OTHER DECISIONS AT P.B. 22 - 28. 2.9 THE ABOVE SUBMISSION STA NDS EXPLAINED AWAY BY THE LD. CIT(DR) BY RELYING ON THE A.O.S ORDER AND BY SPECIFICALLY SUBMITTING THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THESE LOANS IN TERMS OF SECTION 68 AS THE THREE REQUISITE INGREDIENTS HAVE NOT BEEN ESTABLISHED BY THE 31 ASSESSEE - FIRM. THEREFORE, HE HAS ASSERTED THAT THE ORDER OF LD. CIT(A) TO THE EXTENT HE HAS DELETED THE ADDITION NEEDS TO BE REVERSED BUT TO THE EXTENT HE HAS SUSTAINED NEEDS TO BE SUSTAINED BY US ALSO. 3. AFTER COGITATING THE ENTIRE RECORDS, WE HAVE FOUND THAT T HE EVIDENCE PRODUCED, AS DEPI C TED IN THE WRITTEN SUBMISSIONS OF THE LD. A.R. CLE A RLY ESTABLISHES AND PROVES THE IDENTITIES OF THE CASH CREDITORS AND ALSO THEIR CREDITWORTHINESS. THE TRANSACTION S ARE ALSO FOUND TO BE GENUINE. ACCORDINGLY, WE HOLD THAT ENTIR E UNSECURED LOAN TAKEN BY THE ASSESSEE - FIRM STAND EXPLAINED. NO ADDITION U/S 68 CAN BE MADE IN THE HANDS OF THE ASSESSEE IN ANY OF THESE YEARS. THEREFORE, WE HAVE TO ACCEPT ALL THE APPEALS OF THE ASSESSEE AND DISMISS THAT OF THE REVENUE. 4. IN ASSESSMENT YEAR 2008 - 09 THE FOLLOWING WRITTEN SUBMISSIONS EXPLAINS THE CASH CREDITS TAKEN AND THE RELATED EVIDENCE FILED TO PROVE THE SAME. THE APPELLANT MOS T HUMBLY AND RESPECTFULLY BEGS TO INVITE YOUR HONOURS KIND CONSIDERATION TOWARDS THE FOLLOWING FACTS AND S UBMISSIONS IN SUPPORT OF GROUNDS OF APPEAL ALREADY SUBMITTED BEFORE YOUR HONOUR : 32 1. GR. NO . 1 & 2 : VALIDITY OF SEARCH PROCEEDINGS AND PROCEEDINGS U/S I53C : I . I THESE GROUNDS RELATES TO INVALIDITY OF THE PROCEEDINGS OF SEARCH CONDUCTED U/S 132(1) AND ALSO THE INVALIDITY OF THE IMPUGNED ASSESSMENT MADE U/S 153C / 153A. 1 . 2 THE ID, AO ISSUED NOTICE U/S 153C TO THE ASSESSEE VIDE IETTER DT, 18.8.2010 FOR AY 2004 - 05 TO 2009 - 10, WHICH IS ENCLOSED IN THE PAPER BOOK. THE NOTICE SO ISSUED IS REPRODUCED HEREUNDER F OR YOUR HONOURS READY REFERENCE AND PERUSAL TO APPRECIATE THE REASONS ON WHICH SUCH ACTION HAD BEEN TAKEN: 'A SEARCH U/S 132 OF THE INCOME TAX ACT WAS CONDUCTED IN THE CASES OF SHRI MOHAN LAL JANGID, SHRI POONA RAM JANGID, SHRI MU RLI, D HAR SHARMA AND SHRI RAMLAI JANGID AND GROUP ON 1 5 .12.2009 AND 16.12.2009. WHEREAS I AM SATISFIED THAT MONEY / BULLION/ JEWELLERY/ OTHER VALUABLES ARTICLES OR THINGS AND / OR BOOK S OF ACCOUNT/ DOCUMENTS SEIZED B ELONGS TO YOU. THEREFORE YOUR INCOME OF SIX ASSESSMENT YEARS, IMME DIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO PREVIOUS YEAR IN WHICH THE SEARCH WAS CONDUCTED I.E. FROM A.Y. 2004 - 05 TO AY 2009 - 10, IS REQUIRED TO BE ASSESSE D /REASSESSED. YOU ARE, THEREFORE, REQUIRED TO FURNISH RETURN OF YOUR INCOME U/S 153C R.W.S. 153 A OF THE INCOME TAX ACT, 1961 FOR A.Y. 2004 - 05, BEING ONE OUT OF THE ABOVE SIX ASSESSMENT YEARS, IN RESPECT OF WHICH YOU ARE ASSESSABLE UNDER THE INCOME - TAX ACT, 1961. THE RETURN SHOULD BE FILED IN THE APPROPRIATE FORM AS PRESCRIBED IN RULE 12 OF THE 33 INCOM E - TAX RULES, 1962. IT SHOULD BE DULY VERIFIED AND SIGNED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 140 OF THE SAID ACT AND DELIVERED AT MY OFFICE AS MENTIONED ABOVE WITHIN THIRTY DAYS FROM THE SERVICE OF THIS NOTICE.' 1.3 THE PERUSAL OF ABOVE NOTICE R EVEAL THAT THE NOTICE HAS BEEN ISSUED ON THE BASIS OF SEARCH PROCEEDINGS IN THE CASE OF SH. MOHAN LA L JANGID, SH. PUNARAM JANGID, SH. MURLIDHAR SHARMA AND SH. RAM LA L JANGID. THE LD. AO HAS STATED THAT CERTAIN MONEY / BULLION / JEWELLERY / OTHE R VALUABLE A RTICLES OR THINGS/ B O O KS OF ACCOUNTS / DOCUMENTS BEEN SEIZED WHICH BELONGS TO THE ASSESSEE. THE ASSESSEE OBJECTED TO THE NOTICE SO ISSUED AND ALSO REQUESTED FOR SUPPLY OF SATISFACTION NOTE ON THE BASIS OF WHICH THE PROCEEDINGS U/S 153C WERE INITIATED IN TH E CASE OF THE APPELLANT BUT TILL DATE DESPITE BEST EFFECTS SUCH SATISFACTION NOTE HAS NOT BEEN SUPPLIED TO THE ASSESSEE. THE NOTICE ALSO DOES NOT SPEAK ABOUT ANY DOCUMENTS OR INCRIMINATING MATERIAL OR ANY ASSET FOUND IN DIFFERENT YEARS WHICH COULD GIVE A V ALID JURISDICTION . EVEN THE PERUSAL OF ASSESSMENT WOULD REVEAL THAT THERE IS NO SUCH MATERIAL FOUND OR SEIZED ON THE BASIS OF WHICH ANY ADVERSE INFERENCE HAS BEEN DRAWN IN THE ASSESSMENT. IT WILL ALSO BE WORTHWHILE TO MENTION THAT THE LD. AO ISSUED NOTICE FOR AY 2004 - 05 TO 2009 - 10 U/S 153C ON THE GROUND THAT THERE ARE SOME DOCUMENTS RELATED TO THESE YEARS, EVEN WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE ITSELF HAS COME INTO EXISTENCE ON 21.11.2002 AND THERE WAS NO ACTIVITY IN AY 2004 - 05 AND 2005 - 06. WH EN THE ASSESSEE SUBMITTED SUCH OBJECTION THE ASSESSMENT FOR 34 AY 2004 - 05 AND 2005 - 06 W ERE MADE AT NIL. THIS FURTHER SHOW S THE INCORRECTNESS AND THE CASUAL APPROACH IN WHICH THE NOTICE U/S 153C HAD BEEN ISSUED IN THE CASE OF THE APPELLANT. 1.4 THE LD. AO HOWE VER, DISCUSSED THIS ISSUE AT PAGE 2 AND REJECTED THE CONTENTION OF THE APPELLANT BY SIMPLY OBSERVING THAT PROCEEDINGS U/S 153C HAD BEEN INITIATED AFTER FOLLOWING PROPER PROCEDURE AND SATISFACTION HAVE BEEN RECORDED IN THE CASE OF SEARCHED PARTY. THE LD. AO GAVE NO FURTHER REASONS FOR REJECTION OF THE APPELLANT'S CONTENTION AND DID NOT SUPPLIED THE REASONS RECORDED IN THE CASE OF SEARCHED PARTY PRIOR TO ISSUE OF NOTICE U/S 153C NOR ANY DOCUMENTS WERE SUPPLIED TO THE ASSESSEE AT ANY STAGE OF THE PROCEEDING WH ICH WERE FOUND FROM THE POSSESSION OF SEARCHED PARTY AND RELATED TO THE ASSESSEE'S INCOME WHICH HAD NOT BEEN DISCLOSED IN THE RETURN. THE LD. AO IN A VERY CASUAL APPROACH REJECTED THE OBJECTION RAISED BY THE ASSESSEE. 1.5 IT IS RESPECTFULLY SUBMITTED TH AT THE PROCEEDINGS U/S 153C CAN BE INITIATED ONLY WHEN THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THINGS OR BOOKS OF ACCOUNTS OR DOCUMENTS BELONG TO THE OTHER PERSON, OTHER THAN THE SEARCHED PERSON, THEN HE MAY HANDOVER SUCH ASSETS OR DOCUMENT TO THE AO OF OTHER PERSON WHO WILL PROCEED AGAINST SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. YOUR HONOUR WILL APPRECIATE THAT THE SECTION 153A PROVIDES THAT THE NOTICE FOR SIX PRECEDIN G YEARS CAN BE ISSUED WHERE A SEARCH HAS BEEN INITIATED U/S 132, O R REQUISITION H A S BEEN INITIATED U/S 132A. 35 1.6 IT IS SUBMITTED THAT THE NOTICE U/S 153A CAN BE ISSUED ONLY WHERE THE ASSESSING OFFICER OF THE SEARCHED PERSON HAS A SATISFACTION THAT THERE IS A UNDISCLOSED INCOME /' ASSET WHICH HAS BEEN FOUND AS A CONSEQUENCE OF SEARCH AND THAT BELONGS TO OTHER PERSONS, IN SUCH SITUATION ONLY A SATISFACTION WOULD BE REQUIRED TO MADE TO INITIATE ACTION AGAINST OTHER PARTIES. IN EVERY TRANSACTION THERE WOULD A LWAYS BE TWO PARTIES WHETHER IT IS AN AGREEMENT FOR PURCHASE OR SALE OR EVEN FOR A PURCHASE/ SALE OF A MOVABLE OR IMMOVABLE ASSET. IF IT IS PRESUMED THAT WHEREVER ANY DOCUMENTS IS FOUND, IRRESPECTIVE OF THE FACT THAT THE SAME REPRESENTS DISCLOSED OR UNDISC LOSED INCOME AND ACTION IS BEING TAKEN THEN IT WOULD RESULT INTO A WASTEFUL AND LARGE LITIGATION WITHOUT ANY FRUITFUL PURPOSE AND SUCH CAN NEVER BE THE INTENTION OF THE LAW TO INITIATE PROCEEDINGS U/S 153C EVEN IF A TRANSACTION IS FULLY DISCLOSED. IF A HAR MONIOUS INTERPRETATION IS BEING MADE, SINCE THE PROVISIONS OF SECTION 132 / 132A ALREADY CONTAINS SUFFICIENT SAFEGUARDS WHERE SUCH ACTION IS BEING TAKEN, THE LEGISLATURE HAS NOT ONCE AGAIN PROVIDED THE SITUATION WHERE NOTICE U/S 153A / 153C CAN BE ISSUED. THE ACTION U/S 132 / 132A IS TAKEN ONLY WHEN THERE IS A SATISFACTION THAT THERE IS A CONCEALED INCOME OF THE ASSESSEE WHICH IS NOT BEEN DISCLOSED. THEREFORE, THE ISSUE OF NOTICE U/S 153A / 153C IS OFFSHOOT OF THE ACTION U/S 132 WHICH HAS A STRONG SATISFACT ION THAT THERE IS A CONCEALED INCOME BELONGING TO THE ASSESSEE. 1.7 IN THIS REGARD IT WILL BE USEFUL TO REFER TO THE FOLLOWING DECISIONS : 36 A. CIT V/S LATE .1. CHANDRASEKAR (HUF) (2011) 338 ITR 61 (MAD). 'SEARCH AND SEIZURE - ASSESSMENT UNDER S. 153C - VALIDITY - AO DID NOT HAVE THE BENEFIT OF SEIZED MATERIALS WHILE ISSUING NOTICE UNDER S. 153C, THERE WAS NO VALID ASSUMPTION OF JURISDICTION IN THE PROCEEDINGS - AS THE REVENUE DID NOT PRODUCE ANY MATERIAL TO SHOW THAT THE MATERIALS WERE AVAILABLE AT THE HANDS OF TH E AO AT THE TIME OF ISSUING NOTICE, IT RIGHTLY CAME TO THE CONCLUSION THAT THE ASSUMPT JURISDICTION GOES AGAINST THE VERY TENOR OF S. 153C.' B. SINGHAD TECHNICAL EDUCATION SOCIETY V/S ACIT. (2011) 57 DTR 241. SEARCH AND SEIZURE ASSESSMENT UNDER S. 153C ABSENCE OF INCRIMINATING MATERIAL WHERE NO ASSESSMENT YEAR SPECIFIC INCRIMINATING MATERIAL - WHERE NO ASSESSMENT YEAR SPECIFIC INCRIMINATING MATERIAL OR DOCUMENTS IS FOUND, ASSESSMENTS OF SUCH ASSESSMENT YEARS CANNOT BE DISTURBED BY INVOKING THE PROVIS IONS OF S. 153C - SEARCH AND SEIZURE OPERATION UNDER S. 132 WAS CARRIED OUT IN THE CASE OF N, PRESIDENT OF THE ASSESSEE - SOCIETY - AO ISSUED NOTICE UNDER S. 153C TO THE ASSESSEE AFTER RECORDING THE REASONS ON THE BASIS OF LOOSE PAPERS SEIZED FROM N AND EVEN TUALLY MADE ASSESSMENT BY DENYING EXEMPTION UNDER S. 11 - IMPUGNED REASONS MENTIONED BY THE AO ARE SILENT INSOFAR AS DISCOVERY OF ANY ASSESSMENT YEAR SPECIFIC INCRIMINATING INFORMATION RELATING TO THE ASSESSEE IS CONCERNED - SATISFACTION 37 NOTE RECORDED BY T HE AO IS VERY GENERAL ONE - REASONS RECORDED BY THE AO DID NOT CONTAIN ANYTHING INCRIMINATING FOR THE ASSESSMENT YEAR UPTO 2003 - 04 - THERE IS NO MENTION OF ANY DOCUMENT RELATABLE TO FOUR YEARS IN QUESTION AND THUS INCRIMINATING NATURE OF THE SAME IS OUT OF QUESTION - CONCLUDED ASSESSMENTS CANNOT BE DISTURBED MERELY FOR MAKING ROUTINE ADDITIONS - THEREFORE, ORDER PASSED BY THE AO UNDER S. 153C IS BAD IN LAW.' C. LMJ INTERNATIONAL LTD. V/S DCIT. (2008) 14 DTR 540 (KOL.) 'SEARCH AND SEIZURE - ASSESSMENT UNDER S . 153C - SCOPE - SEC. 153C STATES THAT THE ASSESSMENT OR REASSESSMENT OF INCOME OF SUCH OTHER PERSON SHALL BE MADE IN ACCORDANCE WITH THE PROVISIONS OF S. 153A - A READING OF S. 153A REVEALS APPARENT CONTRADICTION IN THE FIRST PROVISO AND THE SECOND PROVIS O APPENDED TO IT - APPLYING THE RULE OF HARMONIOUS CONSTRUCTION, THE TWO PROVISOS OF S. 153A RECONCILED BY RESTRICTING THE MEANING OF 'ASSESS OR REASSESS' APPEARING IN THE FIRST PROVISO - WHERE NOTHING INCRIMINATING IS FOUND IN THE COURSE OF SEARCH RELATIN G TO ANY ASSESSMENT YEARS, THE ASSESSMENTS FOR SUCH YEARS CANNOT BE DISTURBED CONSTRUCTION THAT THE DEPARTMENT SOUGHT TO PLACE ON THE IMPUGNED PROVISIONS WOULD LEAD TO SERIOUS HARDSHIP, INCONVENIENCE, INJUSTICE, ABSURDITY AND ANOMALY - ITEMS OF REGULAR ASS ESSMENT CANNOT BE ADDED BACK IN THE PROCEEDINGS UNDER S. 153C WHEN NO INCRIMINATING DOCUMENTS WERE FOUND IN RESPECT OF THE DISALLOWED AMOUNTS IN THE SEARCH PROCEEDINGS.' 38 D. FORT PROJECTS (P) LTD. V/S DCIT. (2011) 63 DTR (KOL.) (TRIB) 145. 'SEARCH AND SEIZURE - ASSESSMENT UNDER S. 153C - COMMUTATION OF UNDISCLOSED INCOME VIS - A - VIS PRESUMPTION UNDER S. 292C - CONSEQUENT TO SEARCH AND SEIZURE OPERATIONS ASSESSEE OFFERED ALLEGED RECEIPTS OF ON - MONEY OF RS. 9.02 CRORES AS PER SEIZED DOCUMENTS IN ITS RETURN OF INCO ME FOR ASST. YR. 2008 - 09 MADE AN ADDITION OF RS. 64,83,07,492 ON ACCOUNT OF ALLEGED 'ON MONEY' RECEIPTS OVER AND ABOVE NOTING OF RS. 9.02 CRORES IN RESPECT OF THREE OTHER PROJECTS - NOT JUSTIFIED - SINCE IT WAS PRESUMED THAT ASSESSEE WAS BOUND BY PRESUMPTI ON UNDER S. 292C IN RESPECT OF SEIZED PAPER, ADDITION ON ACCOUNT OF ALLEGED ON - MONEY COULD AT BEST BE LIMITED TO THE SEIZED MATERIALS - AO WAS NOT JUSTIFIED IN EXTRAPOLATING FEW STRAY NOTINGS IN RM/5 TO THE BALANCE FLATS IN THREE PROJECTS GIVEN THAT NO INC RIMINATING EVIDENCE PERTAINING THERETO WAS FOUND IN COURSE OF SEARCH - AS ASSESSEE HAD SUO MOTU OFFERED ENTIRE ON - MONEY IN ITS RETURN OF INCOME, NO FURTHER ADDITION ON THIS COUNT WAS WARRANTED - ON - MONEY WOULD FRUCTIFY INTO INCOME OR PAR TAKE THE CHARACTER OF INCOME ONL Y IN THE YEAR OF COMPLETION OF PROJECT IN ACCORDANCE WITH PROJECT COMPLETION METHOD OF ACCOUNTING FOLLOWED BY ASSESSEE - UNDISCLOSED INCOME, IF ANY, HAD TO BE COMPUTED IN ACCORDANCE WITH THE METHOD OF ACCOUNTING FOLLOWED BY ASSESSEE AND NOT IN THE YEAR OF RECEIPT IN ACCORDANCE WITH CASH SYSTEM OF ACCOUNTING - FURTHER, IN THE ABSENCE OF CONCLUSIVE EVIDENCE SUGGESTING RECEIPT OF ON MONEY BY ASSESSEE, PRICES AT WHICH FLATS WERE SOLD TO PURCHASERS VIDE DULY EXECUTED AGREEMENT CANNOT BE DOUBTED - SI NCE ASSESSMENTS FOR 39 SOME YEARS HAD ALREADY BEEN COMPLETED UNDER S. 143(3) BEFORE THE DATE OF SEARCH AND NOTHING INCRIMINATING WAS FOUND IN COURSE OF SEARCH OR SURVEY IN RESPECT OF RECEIPT OF ON - MONEY FOR THESE YEARS, COMPLETED ASSESSMENTS FOR THESE YEARS C OULD NOT BE DISTURBED AND NO ADDITION ON ACCOUNT OF ON MONEY COULD BE MADE.' E. SUSEE AUTO PLAZA (P) LTD. V/ ACIT. (2010) 3 ITR (TRIB) 166 (CHENNI) 'ASSESSMENT - ESTIMATION OF INCOME AND ADDITION ON ACCOUNT OF UNDISCLOSED INCOME - ASSESSEE - COMPANY ENGAGED IN PURCHASE AND SALE OF TWO WHEELERS - WITH A VIEW TO FACILITATE THE CUSTOMERS IN GETTING THESE VEHICLES REGISTERED WITH THE ROAD TRANSPORT OFFICER (RT)) SOME AMOUNT IS FOUND TO BE COLLECTED - ASSESSEE NOT DENYING THIS PRACTICE BUT DISPUTING THAT MORE THA N THE RECEIPT DECLARED AND ACCOUNTED FOR NO AMOUNT HAS BEEN POCKETED BY IT - NO INCRIMINATING DOCUMENT FOUND WHATEVER HAS BEEN FOUND AS EVIDENCE IS FOUND IN THE ASSESSE'S GROUP CASE WHICH MAINLY DEALS IN FOUR WHEELERS - NO EVIDENCE COLLECTED FROM ANY CUSTO MER O PROVE MORE THAN WHAT ASSESSEE NOT BEEN EITHER REJECTED OR FOUND DEFECTIVE - AMOUNT WHICH IS TAKEN IN TRUST FOR GETTING THE VEHICLE REGISTERED, ETC,, CANNOT BE A PART OF THE ASSESSEE'S BUSINESS - CONSEQUENTLY ANY ADDITION WHICH IS BASED ON STATEMENTS WHICH WERE NEVER CONFRONTED TO THE ASSESSEE CANNOT BE SUSTAINED IN THE EYES OF THE LAW.' 40 1.8 FURTHER THE PERUSAL OF ASSESSMENT ORDER FOR THE YEAR UNDER CONSIDERATION IT FURTHER REVEALED THAT THERE IS NO REFERENCE TO ANY SEIZED DOCUMENT OR ASSETS WHATSOE VER WHICH HAS BEEN REFERRED OR RELIED UPON BY THE LD. AO WHILE MAKING THE ASSESSMENT ORDER PURSUANT TO NOTICE ISSUED U/S 153C. THIS FURTHER SUPPORTS THE APPELLANT'S CONTENTION THAT THERE WAS NO VALID JURISDICTION TO SHOW NOTICE U/S 153C AND THE ENTIRE PROC EEDINGS THEREFORE, DESERVES TO BE DROPPED. 1.9 YOUR HONOUR'S KIND ATTENTION IS FURTHER INVITED TOWARDS THE NOTICE U/S 153C ISSUED IN THE CASE OF THE ASSESSEE. A PERUSAL OF THE SAID NOTICE WOULD REVEAL YOUR HONOUR THAT THE ID. AO HAD OBSERVED THAT A SEARCH OF THE INCOME TAX ACT WAS CONDUCTED IN THE CASE OF SH. MO HAN LAL JANGID, SHRI POONA RAM J ANGID AND SHRI MURLID HAR SHARMA AND RAMLAL JANGID AN D GROUP ON 15.12.2009 AND DURING THE SEARCH MONEY, BULLION , JEWELLERY OR OTHER VALUABLE ARTICLES OR THINGS AND BOO KS OF ACCOUNTS /DOCUMENTS BELONGING TO THE ASSESSEE HAS BEEN FOUND. THIS IS AN ENTIRELY AND ABSOLUTELY INCORRECT FACT, WHICH CANNOT GIVE ANY VALID JURISDICTION TO THE ID, AO. THE APPELLANT HAD ALL ALONG BEEN CONTENDING THAT THE SEARCH IN THE CASE OF THEIR GROUP HAD BEEN WRONGLY CONDUCTED UNDER A MISTAKEN BELIEF THAT THE SAME BELONGS TO JANGID GROUP. FURTHER THE NOTICE U/S 153C ALSO INDICATES THAT THE REVENUE HAD A INCORRECT BELIEF THAT THE APPELLANT ALSO BELONGS TO THE JANGID GROUP. THERE IS NO MONEY, BULLI ON, OR OTHER VALUABLE OR DOCUMENTS WHATSOEVER FOUND FROM THE POSSESSION OF SHRI MOHAN LA L JANGID, SHRI POONA RAM JANGID, OR RAMLAL JANGID, BELONGING TO THE ASSESSEE WHICH COULD JUSTIFY 41 THE ACTION OF THE ID. AO. SINCE THE NOTICE HAD BEEN ISSUED ON SUCH SATI SFACTION, THE ID. AO MAY BE DIRECTED TO ALTEAST SHOW ON WHICH DOCUMENTS, OR MONEY/ BULLION OR VALUABLE FOUND AT THE SEARCHES OF THE OTHER PARTY RELIANCE HAS BEEN SOUGHT TO INITIATED ACTION U/S 153C. THE CONTENTION OF THE APPELLANT THAT THERE IS NO MATERIAL FOUND FROM THE SEARCHES AT SUCH OTHER PARTIES IS EVIDENT FROM THE FACT THAT THERE IS NO SUCH ADDITION OR REFERENCE EVEN IN THE ASSESSMENT ORDER. THE CONTENTION THAT THERE IS NO SUCH MATERIAL HAD STOOD THE ACID TEST OF A DETAILED SCRUTIN Y AND THEREFORE THE PROCEEDINGS DESERVES TO BE Q UASHED. 1.10. YOUR FURTHER KIND ATTENTION IS INVITED TOWARDS THE FOLLOWING JUDGMENTS, WHICH SUPPORTS THE ASSESSEE'S PRAYER THAT ASSESSMENT MADE U/S 153C UNDER SUCH FACTS, IS PATENTLY WRONG AND VOID AB INITIO. I. MANISH MAHESHWARI V/S ACIT. (2007) 289 ITR 341 (SC). EXTRACTS FROM THE HEAD NOTE IS REPRODUCED HEREUNDER: 'BEFORE THE PROVISIONS OF SECTION 158 B D OF THE INCOME - TAX ACT, 1961, ARE INVOKED AGAINST A PERSON OTHER THAN THE PERSON WHOSE PREMISES HAVE BEEN SEARCHED UNDER SECTION 132 OR DOCUMENTS AND OTHER ASSETS HAVE BEEN REQUISITIONED UNDER SECTION 132A, THE CONDITIONS PRECEDENT HAVE TO BE SATISFIED. HELD ACCORDINGLY, THAT WHERE THE PREMISES OF A DIRECTOR OF A COMPANY AND HIS WIFE WERE SEARCHED UNDER SECTION 132 OF THE INCOME - TA X ACT, 1961, AND A BLOCK ASSESSMENT HAD TO BE DONE IN RELATION TO THE COMPANY, THE ASSESSING OFFICER HAD TO 42 (I) RECORD HIS SATISFACTION THAT ANY UNDISCLOSED INCOME BELONGED TO THE COMPANY, AND (II) HAND OVER THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS AND ASSETS SEIZED TO THE ASSESSING OFFICER HAVING JURISDICTION AGAINST THE COMPANY.' 11. V.B. GIR I V/S ACIT. (2009) 126 TTJ (JD.) 217. EXTRACTS FROM PARA 11 OF THE SAID JUDGMENT AT PAGE 225 IS REPRODUCED HEREUNDER: 'HAVING CONSIDERED THE MANDATORY PROVISIONS AS CONTAINE D UNDER S. 158BD OF IT ACT AN D AS CLARIFIED BY HON'BLE APEX COURT IN THE CASE OF MANISH MAHESHWARI VS. ASSTT. CIT & ANR. (SUPRA) IT IS EXPLICITLY CLEARLY THAT BEFORE PROCEEDING AGAINST ANY PERSON OTHER THAN THE SEARCHED PERSON UNDER S. 158BD OF I.T. ACT, T HE LAW REQUIRES THAT A SATISFACTION TO THE EFFECT THAT THE DOCUMENTS FOUND AS A RESULT OF SEARCH GIVE RISE TO UNDISCLOSED INCOME OF ANY OTHER PERSON OTHER THAN THE SEARCHED PERSON, IS REQUIRED TO BE REACHED IN THE CASE OF A PERSON SEARCHED UNDER S. 132 OF IT ACT. IN THE PRESENT CASE IN APPEAL, NO SUCH SATISFACTION IS FOUND REACHED OR RECORDED IN THE CASE OF SEARCHED PERSON ..... AS THE PROCEEDINGS OF INVOKING JURISDICTION UNDER S. 158BD OF THE I.T. ACT AS LAID DOWN IN THE CASE OF MANISH MAHESHWARI VS. ASST T. CIT & ANR. (SUPRA), ARE NOT SATISFIED, THE NOTICE SO ISSUED UNDER S. 158BD OF IT ACT ON THE STRENGTH OF WHICH ASSESSMENT OF UNDISCLOSED INCOME OF THE APPELLANT HAS BEEN MADE, IS HEREBY QUASHED. AS A RESULT ALL CONSEQUENCES THEREOF SHALL FOLLOW.' 43 II. MANOJ AGGARWA L V/S DCIT. (2008) 113 ITD 377 (DELHI) (SB). EXTRACTS FROM THE HEAD NOTE FROM PAGE 384 TO 385 IS REPRODUCED HEREUNDER: ' THE UNDISCLOSED INCOME FOUND ON SUCH EXAMINATION MAY BELONG TO THE PERSON SEARCHED OR IT MAY BELONG TO ANY OTHER PERSON NOT SEAR CHED. IN LATTER EVENT, SECTION 158BD PROVIDES THAT WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER SECTION 132 OR WHOSE BOOKS OF ACCOUNT OR OTHER DO CUMENTS OR ANY ASSETS WERE REQUISITIONED UNDER SECTION 132A, THE BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THE ASSESSING OFFICER SHALL PR OVIDED UNDER SECTION 158BC AGAINST SUCH OTHER PERSON AND THE PROVISIONS OF CHAPTER XIV - B SHALL APPLY ACCORDINGLY. THE PARAMETER FOR INITIATING ACTION UNDER SECTION 158BD AND THE FIRST AND FOREMOST REQUIREMENT IS THAT THE ASSESSING OFFICER MAKING THE BLOCK ASSESSMENT IN THE CASE OF THE PERSON SEARCHED HAS TO BE SATISFIED THAT THE UNDISCLOSED INCOME DETECTED BELONGS TO SOME PERSON OTHER THAN THE PERSON SEARCHED AND SO THE SECTION ITSELF CONTEMPLATES SATISFACTION ON THE PART OF THE ASSESSING OFFICER MAKING THE ASSESSMENT IN THE CASE OF THE PERSON SEARCHED. RECORDING OF SATISFACTION IS MANDATORY.' 44 III. ACIT V/S R.P. SINGH. (2007) 165 TAXMAN 147 (DELHI). EXTRACTS FROM THE HEAD NOTE IS REPRODUCED HEREUNDER: 'FOLLOWING THE RATIO OF THE DECISION OF THE SUPREME COURT IN MANISH MAHESHWARI V. ASSTT. CIT (2007) 289 ITR 341 / 159 TAXMAN 258 AND THE DECISION OF THE DELHI HIGH COURT IN AMITY HOTELS (P.) LTD. V. CIT (2005) 272 ITR 75/ 142 TAXMAN 160, THE GUJARAT HIGH C OURT IN NITIN P SHAH ALIAS MODI V. DY. CIT (2005) 276 ITR 411 /146 TAXMAN 536 AND OF CHANDIGARH BENCH OF ITAT IN ASSTT. CIT VS. KISHORE LAL BALWANT RAI (2007) 7 SOT 380, IT WAS MAKING COMPLIANCE OF THE PRE - REQUISITE CONDITION, I.E., RECORDING OF SATISFACTION COULD NOT BE LEGALLY JUSTIFIED. HENCE, ON THIS BASIS ITSELF THE ASSESSMENT WAS TO BE QUASHED. ACCORDINGLY, THE ASSESSMENT ORDER WAS QUASHED.' IV. JINDAL STAINLESS LTD. V/S ACIT. (2009) 122 TT J (DEL.) 902. EXTRACTS FROM THE PARA 45 AT PAGE 929 IS REPRODUCED HEREUNDER: ' WE FIND NO FORCE IN SUCH CONTENTION AS IF THE AS SESSMENT IS MADE UNDER S. 153C THEN ALSO THERE IS CERTAIN PROCEDURE PRESCRIBED UNDER THAT SECTION WHICH IS TO BE FOLLOWED BY THE REVENUE. IN THE CASE THE AO OF THE PERSON ON WHOM THE SEARCH IS CONDUCTED HAS TO SATISFY HIMSELF THAT THE VALUABLE ARTICLE OR B OOKS OF ACCOUNT OR DOCUMENTS SEIZED DURING THE COURSE OF SEARCH BELONG TO A PERSON OTHER THAN THE PERSON ON WHOM THE SEARCH IS MADE THEN THAT AO SHALL HAND OVER SUCH VALUABLE ARTICLE OR BOOKS OF ACCOUNT TO THE AO WHO HAS JURISDICTION OVER SUCH 45 OTHER PERSON AND NOTICE WILL BE ISSUED ACCORDINGLY UNDER S. 153C OF THE ACT. THERE IS NO MATERIAL ON RECORD TO SUGGEST THAT ANY EXERCISE WHICH HAS BEEN MENTIONED IN THE PROVISIONS OF S. 153C HAS BEEN ADOPTED. THERE IS NO FORCE IN THE ARGUMENT OF LEARNED DEPARTMENTAL R EPRESENTATIVE THAT SUCH ARGUMENT OF THE ASSESSEE IS ONLY TECHNICAL, THEREFORE, ASSESSMENT FRAMED ON THE ASSESSEE WITHOUT FOLLOWING THE PROCEDURE LAID DOWN IN S. 153C CANNOT BE HELD TO BE INVALID. THERE MAY BE A VALID SEARCH IN THE CASE OF SAID SHRI SANDEEP BANSAL BUT ASSESSMENT UNDER S. 153A COULD BE MADE ONLY IN HIS HANDS AND NOT IN THE CASE OF ASSESSEE UNLESS PROCEDURE LAID DOWN IN S. 153C IS FOLLOWED. SUCH DEFECT IN FRAMING THE ASSESSMENT IS A JURISDICTIONAL DEFECT WHICH CANNOT BE CURED AND ASSESSMENT HA S TO BE HELD TO BE INVALID BECAUSE THE AO DID NOT HAVE ANY JURISDICTION TO ASSESS THE ASSESSEE WITHOUT ADOPTING THE PROCEDURE LAID DOWN IN S. 153C AS THE SEARCH WAS NEITHER INITIATED NOR CONDUCTED IN THE CASE OF ASSESSEE.' V. RAGHUBIR SINGH GARG V/S ACIT. (20 09) 31 DTR (DEL) (TRIB) 439. EXTRACTS FROM THE HEAD NOTE IS REPRODUCED HEREUNDER: 'CONCLUSION: THERE WAS NO SATISFACTION NOTE OF THE AO ASSESSING THE SEARCHED PERSON MA AND SATISFACTION NOTE DT. 23RD JAN., 2003, MUCH AFTER THE COMPLETION OF ASSESSMENT OF M A, CANNOT BE REGARDED AS SATISFACTION NOTE AS AT THAT POINT OF TIME THE AO OF MA HAD BECOME FUNCTIONS OFFICO AND THEREFORE PROCEEDINGS UNDER S. 158BD IN THE CASE OF THE ASSESSEE WERE LIABLE TO BE QUASHED.' 46 VI. CIT V/S DAWN VIEW FARMS (P) LTD. (2009) 224 CTR ( DEL) 504. EXTRACTS FROM THE HEAD NOTE IS REPRODUCED HEREUNDER: 'CONCLUSION: NO SATISFACTION BY THE AO OF THE PERSON SEARCHED HAVING BEEN RECORDED TO THE EFFECT THAT UNDISCLOSED INCOME BELONGING TO ASSESSEE WAS FOUND DURING SEARCH AND NO MATERIAL RELATING T O SUCH UNDISCLOSED INCOME FOUND DURING SEARCH HAVING BEEN FORWARDED BY THE AO OF THE PERSON SEARCHED TO THE AO OF ASSESSEE, PROCEEDINGS UNDER S. 158BD R/W S. 158BC AGAINST ASSESSEE ON THE BASIS OF REPORT OF ADDL. DIRECTOR OF IT (INV.) WERE WITHOUT JURISDIC TION.' VII. ACIT V/S S.P. GOEL. (2004) 38 TAXMAN 275. EXTRACTS FROM THE HEAD NOTE IS REPRODUCED HEREUNDER: 'THE ANSWER IS IN NEGATIVE AND IN THE ABSENCE OF THE SATISFACTION IN THE HANDS OF THE PERSONS SEARCHED, THE PROCEEDINGS U/S 158BD CANNOT BE INITIATED AGA INST THE OTHER PERSON, I.E. THE ASSESSEE IN THE PRESENT CASE. THE ID. AR SHRI M. SINGHVI, C.A. HAS RIGHTLY RELIED UPON THE DECISION OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF MANISH MAHESHWARI V/S ACIT, (2007) 289 ITR 341 WHERE THE HON'BLE SUPREME CO URT OF INDIA HAS HELD THAT WHERE THE PREMISES OF A DIRECTOR OF A COMPANY AND HIS WIFE WERE SEARCHED U/S 132 OF THE IT. ACT, 1961, AND A BLOCK ASSESSMENT HAD TO BE DONE IN RELATION TO THE COMPANY, THE ASSESSING OFFICER HAD TO (I) RECORD HIS SATISFACTION THA T ANY UNDISCLOSED INCOME BELONGED TO THE COMPANY AND (II) HAND OVER THE BOOKS OF ACCOUNT 47 AND OTHER DOCUMENTS AND ASSETS SEIZED TO THE ASSESSING OFFICER HAVING JURISDICTION AGAINST THE COMPANY. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND FOLLOWIN G THE DECISION OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF MANISH MAHESHWARI VS. ACIT, SUPRA, THE INITIATION OF PROCEEDINGS U/S 58BD IS ILLEGAL AND THE ASSESSMENT MADE U/S 158BD READ WITH SECTION 158BC AND 143(3) IS HELD TO BE ILLEGAL. THUS THE ADDITI ONAL GROUND RAISED BY THE ASSESSEE IS ALLOWED.' VIII. LUNAWAT JAYANT MANIKLAL V/S DCIT. (2008) 297 ITR (AT) 155 (PUNE). EXTRACTS FROM THE HEAD NOTE IS REPRODUCED HEREUNDER: ' THE REVENUE COULD NOT ESTABLISH THAT THE ASSESSING OFFICER IN POSSESSION OF THE SEIZED MATERIAL HAD RECORDED HIS SATISFACTION AND THEREAFTER HANDED OVER ALL THE DOCUMENTS AND SEIZED MATERIAL TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON. THE CONCERNED ASSESSING OFFICER HAD ASSUMED THE JURISDICTION WHICH WAS NOT PROVIDE D IN THE STATUTE. THEREFORE THE ENTIRE PROCEEDINGS INITIATED UNDER SECTION 158BD WERE VOID AND AGAINST THE STATUTE.' IN VIEW OF THE AFORESAID FACTS AND JUDGMENTS, IT IS VERY HUMBLY PRAYED THAT THE ASSESSMENT MADE U/S 153C IN THE CASE OF THE APPELLANT COMP ANY MAY KINDLY BE DECLARED TO BE NULL AND VOID AB INITIO. 48 1.11 THE ENTIRE PROCEEDINGS OF SEARCH IN THE CASE OF ONE OF THE PARTNER APPEARS TO BE UNJUSTIFIED, AND HAD BEEN CARRIED OUT WITHOUT ANY VALID REASONS AND SATISFYING THE UNDERLYING CONDITIONS OF THE PROVISIONS OF SECTION 132. THE SEARCH IN THE CASE OF THE PARTNER APPEARS TO HAVE BEEN CONDUCTED BY WRONGLY PRESUMING THE APPELLANT TO BE PART OF OTHER ASSESSEE'S AGAINST WHICH ALSO SEARCHES WERE CONDUCTED. EVEN IN THE VARIOUS QUERY LETTER ISSUED BY THE ID. AO FROM TIME TO TIME, THERE IS REFERENCE TO OTHER ASSESSEE'S AGAINST WHOM THE SEARCHES WERE CONDUCTED AT THAT TIME, AND ASSESSEE HAD BEEN TIMES AND AGAIN ASKED TO SUBMIT REPLY IN RELATION TO SURRENDER OF INCOME MADE BY OTHER ASSESSEE. 1.8 THE APPELLANT VERY H URNBL Y BEGS TO INVITE YOUR HONOURS KIND ATTENTION TOWARDS FOLLOWING FURTHER JUDGMENTS OF HON'BLE JURISDICTIONAL HIGH COURT AND HON'BLE JURISDICTIONAL BENCH OF ITAT IN WHICH THE VALIDITY OF THE PROCEEDINGS OF SEARCH HAVE BEEN EXAMINED AND AFTER APPRECIATION OF THE FACTS, THE SEARCH WAS HELD TO BE INVALID. A. BADRI RAM CHOUDHARY V/S ACIT (2012) 67 DTR (JD.) 107. - THE PROCEEDINGS OF SEARCH U/S 132 A ND CONSEQUENT ORDERS U/S 153A WE RE HELD TO BE INVALID. B. BADRI RAM CHOUDHARY V/S ACIT (2012) 67 DTR (RAJ.) 83. - TH E HON'BLE HIGH COURT HELD THAT TRIBUNAL CAN DECIDE THE QUESTION RELATING TO VALIDITY OF SEARCH. 49 C. THE SLP FILED BY THE DEPARTMENT AGAINST THE DECISION OF HON'BLE RAJASTHAN HIGH COURT HAS BEEN RECENTLY DISMISSED BY HON'BLE SUPREME COURT. IN LIGHT OF ABOVE F ACTS ONLY THE ASSESSEE REQUEST FOR' SUPPLY OF COPIES OF SEARCH WARRANT, REASONS AUTHORIZING THE SEARCH WHICH HAVE BEEN DENIED. THE ASSESSEE HAS RAISED SUCH OBJECTIONS WHICH IS APPARENTLY JUSTIFIED AND TO CONTROVERT SUCH APPARENT FACTS THE LD. AO SHOULD AT LEAST PRODUCE SUCH DOCUMENTS FOR INSPECTION AND APPRECIATION BEFORE THE APPELLATE AUTHORITIES IF AT ALL SUCH DOCUMENTS COULD NOT HAVE BEEN SUPPLIED TO THE ASSESSEE TO MAKE OUT THE CASE THAT THE SEARCH WAS VALIDLY INITIATED. SINCE, THIS GOES TO THE ROOT OF THE MATTER AND APPARENTLY THE PROCEEDINGS WERE BEYOND PROPER JURISDICTION ALL FURTHER PROCEEDINGS DESERVES TO BE QUASHED. THE APPELLANT HAS RELIED UPON THE BINDING DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V/S SMT. CHITRA DEVI SONI REPORTED IN (2008) 313 ITR (RAJ) 174, AND SLP AGAINST SUCH ORDER HAS ALSO BEEN DISMISSED. IN VIEW OF SAID JUDGMENT THE APPELLANT HAS A RIGHT TO CHALLENGE THE VALIDITY OF SEARCH PROCEEDINGS BEFORE THE APPELLATE AUTHORITIES AND THE DEPARTMENT IS BOUND TO SUPPLY COPY OF REASONS RECORDED PRIOR TO ISSUE OF AUTHORIZATION OF SEARCH AND AT - LEAST PRODUCE THE SAME BEFORE THE APPELLANT AUTHORITIES. RELIANCE IS ALSO PLACED ON ANOTHER SUPREME COURT DECISION IN THE CASE OF GKN DRIVE SHAFT LTD. REPORTED IN 259 ITR 19 (SC) AND IN VIEW OF SUCH JUDGMENTS IT WAS REQUESTED THAT THE SAME ATL EAST DESERVES TO BE PRODUCED BEFORE THE APPELLATE AUTHORITIES. 50 1.13 THE VARIOUS ADDITIONS MADE IN THE IMPUGNED ORDER ARE OUTSIDE THE PURVIEW AND SCOPE OF SECTION 153A/ 153B. THE VARIOUS ADDITION MADE ARE CLEARLY BEYOND THE SCOPE OF SECTION 153A / 153B, AS NO INCRIMINATING DOCUMENTS WHATSOEVER WERE FOUND DURING SEARCH, WHICH CAN JUSTIFY ANY ADDITION IN THE DECLARED INCOME, WHICH HAD ALREADY BEEN ACCEPTED IN THE ORIGINAL ASSESSMENT MADE U/S 143(1)/ 143( 3). THE POINT RELATING TO ACCEPTANCE OF DECLARED RESULTS HAD BEEN FINALLY ACCEPTED AND THE SAID ISSUE HAD ACHIEVED FINALITY, WHICH CANNOT BE REVIEWED OR REEXAMINED IN AN ASSESSMENT / REASSESSMENT MADE U/S 153A. RELIANCE IS PLACED ON THE FOLLOWING JUDGMENTS : A. LMJ I NTERNATIONAL LTD. V/S DCIT 119 T TJ 214 (KOL.) B. SUNCITY ALLOYS PVT. LTD. V/S CIT 124 TTJ (JD) 674. C. MEGHMANI ORGANIES LTD. VS. DCIT 126 TTJ 255 (AHD.) D. ANIL KUMAR BHATIYA V/S ACIT (2010) 1 DTR (TRIB.) 484 (DEL.) E ANIL P. KHEMANI V/S DY. CIT IN ITA NO. 2855 TO 2860/ MUM./2008 DT. 23.2.2010. THE IMPUGNED ASSESSMENT ORDER MADE U/S 153A / 153C IS PATENTLY INVALID AND MAY KINDLY BE QUASHED IN VIEW OF THE AFORESAID JUDGMENTS. 2, GR. NO. 3 ; PRINCIPLE OF NATURAL JUSTICE. 2.1 THE ENTIRE ASSESSMENT ORDER H AS BEEN MADE WITHOUT 51 PROPERLY PROVIDING REASONABLE AND SUFFICIENT OPPORTUNITY OF HEARI NG TO THE APPELLANT. THE PERUSAL OF ORDER SHEET ENTRY OF THE VARIOUS YEARS IN THE CASE OF APPELLANT WOULD REVEAL CHAT THERE WERE PRACTICALLY NO PROPER HEARING MADE BY THE LD. AO AT THE TIME OF ASSESSMENT PROCEEDINGS. WHENEVER, THE DETAILS AND INFORMATION AS CALLED, WERE SUBMITTED THE LD. AO AFTER THROUGH THE CONTENTS SIMPLY ASKED THE OFFICE STAFF TO GIVE THE RECEIPT OF THE LETTER AND THE FACTS HAD BEEN NOT PROPERLY APPRECI ATED WHICH HAS RESULTED INTO GREAT INJUSTICE TO THE APPELLANT. THE APPELLANT HAD ALSO REQUESTED FOR SUPPLY OF COPY OF ORDER SHEET BUT THE SAME HAS NOT SUPPLIED TO THE ASSESSEE SO FAR IT IS THEREFORE, REQUESTED THAT THE ORIGINAL RECORDS MAY KINDLY BE CALLED FOR WHICH WILL CLEARLY INDICATE THAT NO OPPORTUNITY OF HEARING HAD BEEN GIVEN TO THE ASSESSEE. 2.2 THE VARIOUS QUERY LETTERS ISSUED IN THE FAG END IN THIS GROUP AND COMPLIANCE WAS SOUGHT IN A COUPLE OF DAYS. IT IS RESPECTFULLY SUBMITTED THAT THE SAME WAS JUS T DENIAL OF JUSTICE TO THE ASSESSEE, AND TO A DENIAL OF SUFFICIENT OPPORTUNITY TO PLACE HIS FACTS AND SUBMISSIONS. IT JUST AKIN TO PASSING OF A SENTENCE OF DEATH WITHOUT AFFORDING ANY OPPORTUNITY OF HEARING TO THE PERSON. THE OPPORTUNITY SO GRANTED NOW WAS JUST AN EYE WASH. 2.3 YOUR KIND ATTENTION IS INVITED TOWARDS THE FOLLOWING DECISIONS ON PRINCIPLES OF NATURAL JUSTICE, WHICH SUPPORTS THE CONTENTION OF THE ASSESSEE, THAT THERE HAS BEEN SERIOUS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE, AND NO PROPER AND SU FFICIENT OPPORTUNITY OF HEARING HAD BEEN PROVIDED, AND ANY SUCH ORDER 52 PASSED IN SUCH FACTS WOULD BE BAD IN LAW. A. SAHARA INDIA (FIRM) VS. CIT & ANR. (2008) 7 DTR 27 (CONSTITUTIONAL BENCH OF HON'BLE SUPREME COURT) 'HELD : THE UNDERLYING PRINCIPLE OF NATURAL J USTICE, EVOLVED UNDER THE COMMON LAW, IS TO CHECK ARBITRARY EXERCISE OF POWER BY THE STATE OR ITS FUNCTIONARIES. THEREFORE, THE PRINCIPLE IMPLIES A DUTY TO ACT FAIRLY, I.E. FAIR PLAY IN ACTION. IT IS TRITE THAT UNLESS A STATUTORY PROVISION EITHER SPECIFICA LLY OR BY NECESSARY IMPLICATION EXCLUDES THE APPLICATION OF PRINCIPLES OF NATURAL J JUSTICE , BECAUSE IN THAT EVENT TH E COURT WOULD NOT IGNORE THE LEGISLATIVE MANDATE, THE REQUIREMENT OF GIVING REASONABLE OPPORTUNITY OF BEING HEARD BEFORE AN ORDER IS MADE, I S GENERALLY READ INTO THE PROVISIONS OF A STATUTE, PARTICULARLY WHEN THE ORDER HAS ADVERSE CIVIL CONSEQUENCES FOR THE PARTY AFFECTED. THE PRINCIPLE WILL HOL D GOOD IRRESPECTIVE OF WHETHER THE POWER CONFERRED ON A STATUTORY BODY OR TRIBUNAL IS ADMINISTRATIVE OR QUASI JUDICIAL. HOWEVER, NO GENERAL RULE OF UNIVERSAL APPLICATION CAN BE LAID DOWN AS TO THE APPLICABILITY OF THE PRINCIPLE AUDI ALTERAM PARTEM, IN ADDITION TO THE LANGUAGE OF THE PROVISION. UNDOUBTEDLY, THERE CAN BE EXCEPTIONS TO THE SAID DOCTRINE. TH E QUESTION WHETHER THE PRINCIPLE HAS TO BE APPLIED OR NOT IS TO BE CONSIDERED BEARING IN MIND THE EXPRESS LANGUAGE AND THE BASIC SCHEME OF THE PROVISION CONFERRING THE POWER' THE NATURE OF THE POWER CONFERRED AND THE PURPOSE FOR WHICH THE POWER IS CONFERRE D AND THE FINAL EFFECT OF THE EXERCISE OF THE POWER. IT IS ONLY UPON A CONSIDERATION OF ALL THESE MATTERS THAT THE QUESTION OF APPLICATION OF THE SAID 53 PRINCIPLE CAN BE PROPERLY DETERMINED. - A. K. KRAIPAK & ORS. V S UNION OF INDIA & ORS. (1969) 2 SCC 262, IT O & ORS V/S MADNANI ENGINEERING WORKS LTD. (1979) 12 CTR (SC) 144 : (1979) 2 SCC 455, C.B. GAUTAM V/S UNION OF INDIA & ORS. (1992) 108 CTR (SC) 304 R/W (1993) 110 CTR (SC) 179 : (1993) 1 SCC 78, SWADESHI COTTON MILLS V/S UNION OF INDIA (1981) 1 SCC 664, CA NARA BANK V/S V. K AWASTHY (2005) 6 SCC AND OLGA TELIIS & ORS. BOMBAY MUNICIPAL CORPORATION &. ORS. (1985) 3 SCC 545 APPLIED. B. R.B. SHREERAM DURGA PRASAD & FATECHAND NURSING DAS (1989) 176 ITR 169 (SC) AT PAGE 174 'WE ARE DEFINITELY OF THE OPINION THAT ON THE RELEVANT DATE WHEN THE ORDER WAS PASSED THAT IS TO SAY, AUGUST 24, 1977, THE ORDER WAS A NULLITY BECAUSE IT WAS IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. SEE IN THIS CONNECTION, THE PRINCIPLES ENUNCIATED BY THIS COURT IN STATE OF ORISSA V/S. D R. (MISS) BINAPANI DEVI [1967] 2 SCR 625 AS ALSO THE OBSERVATIONS IN ADMINISTRATIVE LAW BY H.W.R VJADE, 5 TH EDITION, PAGES 310 - 311, THAT THE ACT, IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE OR A QUASI - JUDICIAL ACT IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE, IS VOID OR OF NO VALUE. IN RIDGE V. BALDWIN [1964] AC 40 AND ANISMINIC LTD. V. FOREIGN COMPENSATION COMMISSION [1969] 2 AC 147, THE HOUSE OF LORDS IN ENGLAND HAS MADE IT CLEAR THAT BREACH OF NATURAL JUSTICE NULLIFIES THE ORDER MADE IN BREA CH. IF THAT IS SO, THEN THE ORDER MADE IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE WAS OF NO VALUE.' 54 C. SONA BUILDERS V/S. UNION OF INDIA (2001) 170 CTR 180 (SC) AT PAGE 182 'THERE IS NO DOUBT IN OU R MINDS THAT ON BOTH COUNTS THERE HAS BEEN A GROSS BREA CH OF THE PRINCIPLES OF NATURAL JUSTICE BECAUSE ADEQUATE OPPORTUNITY TO MEET THE CASE MADE OUT IN THE NOTICE WAS NOT GIVEN TO THE APPELLANT. HAVING REGARD TO THE STATUTORY LIMIT WITHIN WHICH THE APPROPRIATE AUTHORITY HAS TO ACT AND HIS FAILURE TO ACT IN CO NFORMITY WITH THE PRINCIPLES OF NATURAL JUSTICE, WE DO NOT THINK WE CAN REMAND THE MATTER TO THE APPROPRIATE AUTHORITY. WE MUST SET HIS ORDER ASIDE.' D. C,B. GAUTAM V/S. UNION OF INDIA (1993) 199 ITR 530 ( S C) AT PAGE 554 'THE OBSERVANCE OF THE PRINCIPLES OF N ATURAL JUSTICE IS THE PRAGMATIC REQUIREMENT OF FAIR PLAY IN ACTION. IN OUR VIEW, THEREFORE THE REQUIREMENT OF ANY OPPORTUNITY TO SHOW CAUSE BEING GIVEN BEFORE AN ORDER FOR PURCHASE BY THE CENTRAL GOVERNMENT IS MADE BY AN APPROPRIATE AUTHORITY UNDER SECTION 269UD MUST BE READ INTO THE PROVISIONS OF CHAPTER XX - C. THERE IS NOTHING IN THE LANGUAGE OF SECTION 269UD OR ANY OTHER PROVISION IN THE SAID CHAPTER WHICH WOULD NEGATE SUCH AN OPPORTUNITY BEING GIVEN. MOREOVER, IF SUCH A REQUIREMENT WERE NOT READ INTO THE PROVISIONS OF THE SAID CHAPTER; THEY WOULD BE SERIOUSLY OPEN TO CHALLENGE ON THE GROUND OF VIOLATION OF THE PROVISIONS OF 55 ARTICLE 14 ON THE GROUND OF NON - COMPLIANCE WITH THE PRINCIPLES OF NATURAL JUSTICE.' E. H.L. TREHAN & OTHERS V/S. UNION OF INDIA (1989) 1 SCC 764 AT PAGE 766 'THE POST - DECISIONAL OPPORTUNITY OF HEARING DOES NOT SUBSERVE THE RULES OF NATURAL JUSTICE.' K.I. SHEPHARD AND OTHERS V/S, UNION OF INDIA AIR 1988 SC 686 AT PAGE 695 'IT IS COMMON EXPERIENCE THAT ONCE A DECISION HAS BEEN TAKEN, THERE IS A TENDENCY TO UPHOLD IT AND A REPRESENTATION MAY NOT REALLY YIELD ANY FRUITFUL PURPOSE.' F. COLONISERS V/S. ASSISTANT COMMISSIONER OF INCOME - TAX (1992) 41 ITR 57 (HYD.) (SPECIAL BENCH.) AT PAGE 58 'THE RULES OF NATURAL JUSTICE OPERATE AS IMPLIED MANDATORY REQUIREMENT, NON - OBSERVANCE OF WHICH AMOUNTS TO ARBITRARINESS AND DISCRIMINATION. THE PRINCIPLES OF NATURAL JUSTICE HAVE BEEN ELEVATED TO THE STATUS OF FUNDAMENTAL RIGHTS GUARANTEED IN THE CONSTITUTION AS IS EVIDENT FROM THE DECISION OF THE FULL BENCH OF T HE SUPREME COURT IN THE CASE OF UNION OF INDIA V. TULSIRAM P ATEL AIR 1985 SC 1416 AT P. 1460, HOLDING THAT THE PRINCIPLES OF NATURAL JUSTICE HAVE THUS COME TO BE RECOGNISED AS BEING A PART OF THE GUARANTEE CONTAINED IN ARTICLE 14 OF THE CONSTITUTION BECAUS E OF THE NEW AND DYNAMIC INTERPRETATION 56 GIVEN BY THE SUPREME COURT T THE CONCEPT OF EQUALITY WHICH IS THE SUBJECT MATTER OF THAT ARTICLE AND THAT VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BY A STATE ACTION IS A VIOLATION OF ARTICLE 14. IN FACT, THE PRINCI PLES OF NATURAL JUSTICE, IN THE REALM OF LIFE AND LIBERTY, WOULD IPSO FACTO EVEN BE READ INTO ARTICLE 21 BECAUSE ANY PROCEDURE WHICH AFFECTED LIFE OR LIBERTY HAD TO BE A JUST, FAIR AND REASONABLE PROCEDURE WHICH NECESSARILY MEANT THE OBSERVANCE OF THE PRIN CIPLES OF NATURAL JUSTICE. THAT IS WHY THESE PRINCIPLES HAVE BEEN CALLED AS PART OF THE UNIVERSAL LAW, AS PART OF THE RULE OF LAW AND HAVE ALSO BEEN TERMED AS FAIR PLAY IN ACTION. AUDI ALTERAM PARTEM IS ONE OF THE FUNDAMENTAL PRINCIPLES OF NATURAL JUSTICE. A QUASI JUDICIAL OR ADMINISTRATIVE RENDERED OR AN ORDER MADE IN VIOLATION OF THE RULE OF AUDI ALTERAM PARTEM IS NULL AND VOID AND THE ORDER MADE IN SUCH A CASE CAN BE STRUCK DOWN AS INVALID ON THAT SCORE ALONE - MANEKA GANDHI V. UNION OF INDIA AIR 1978 SC 597, GANGADHARAN PILLAI V. ACED [1980] 126 ITR 356 AT PP. 365 TO 367 (KER.J. IN OTHER WORDS, THE ORDER WHICH INFRINGES THE FUNDAMENTAL PRINCIPLE, PASSED IN VIOLATION OF AUDI ALTERAM PARTEM RULE, IS A NULLITY. WHEN A COMPETENT COURT OF AUTHORITY HOLDS SUCH AN ORDER AS INVALID OR SETS IT ASIDE, THE IMPUGNED ORDER BECOMES NULL AND VOID - NAWABKHAN ABBASKHAN X. STATE OF GUJARAT AIR 1974 SC 1471 AT P. 1479. IN THE LIGHT OF THESE DECISIONS, THE ADDITIONS MADE BY THE ASSESSING OFFICER IN VIOLATION OF THE PRINCIPL ES OF NATURAL JUSTICE HAD TO BE SET ASIDE AS VOID ....' 57 3. GR. NO. 4 ; APPROVAL U/S 153D BEING INVALID AND ALSO CONTRARY TO THE PROVISIONS OF LAW. 3.1 IT IS RESPECTFULLY SUBMITTED THAT THE PROVISIONS OF SECTION 153D REQUIRES THAT NO ORDER OF ASSESSMENT OR R EASSESSMENT U/S 153A SHALL BE PASSED WITHOUT PRIOR APPROVAL OF THE JOINT COMMISSIONER OF INCOME TAX. FOR THE SAKE OF READY REFERENCE THE RELEVANT SECTION 153D IS REPRODUCED HEREUNDER : 'NO ORDER OF ASSESSMENT OR REASSESSMENT SHALL BE PASSED BY AN ASSESSIN G OFFICER BELOW THE RANK OF JOINT COMMISSIONER IN RESPECT OF EACH ASSESSMENT YEAR REFERRED TO IN CLAUSE B OF SUB - SECTION (1) OF SECTION 153A OR THE ASSESSMENT YEAR REFERRED TO IN CLAUSE (B) OF SUB - SECTION 1 OF 153B, EXCEPT WITH THE PRIOR APPROVAL OF THE JO INT COMMISSIONER.' 3.2 IT IS SUBMITTED THAT WHEN ORIGINALLY NEW ASSESSMENT PROCEDURE OF SEARCH CASES WAS SUBSTITUTED BY FINANCE ACT 2003 THERE WAS NO PROVISION OF APPROV AL OF THE JOINT COMMISSIONER. H OWEVER, BY FINANCE ACT 2007 SECTION 153D WAS INCORPORATED P ROVIDING PRIOR APPROVAL OF THE JOINT COMMISSIONER BEFORE PASSING OF THE ORDER BY AO. THE BASIC OBJECTIVE WAS TO ENSURE APPRAISAL OF EVIDENCES AND QUALITY OF ASSESSMENT IN A BETTER AND OBJECTIVE MANNER AND THAT THERE ARE NO WASTEFUL LITIGATION. THE ASSESSME NT OF SEARCH INVOLVE COMPLICATED ISSUE AND REQUIRES APPRECIATION OF FACTS AND LAW. IT IS ONLY THEREFORE, THE LEGISLATURE HAS THOUGH IT FIT TO HAVE APPLICATION OF MIND BY A HIGHER AUTHORITY I.E. THE JOINT COMMISSIONER WHICH WILL ENSURE THAT THE ASSESSMENT O RDERS ARE FRAMED BY THE AO IN JUST AND FAIR 58 MANNER. 3.3 WITH THE INTRODUCTION OF SECTION 153D IT IS MANDATORY THAT THE AO SHOULD TAKE THE APPROVAL FROM THE JOINT COMMISSIONER BEFORE PASSING THE ORDER. THOUGH THE SEEKING OF SUCH APPROVAL IS A M ATTER OF INTERNA L MANAGEMENT BUT IF THE FACTS CLEARLY INDICATE THAT THE COMPLIANCE OF PROVISION HAVE BEEN DISREGARDED, IT IS A SERIOUS BREACH OF LAW. THE LEGISLATURE IN THEIR WISDOM HAD PROVIDED A PERIOD OF ALMOST TWO YEARS TO COMPLETE THE SEARCH RELATED ASSESSMENT BECAUS E IT WAS FELT THAT THE SAME MAY TAKEN A CONSIDERABLE TIME. BUT THE SEQUENCE OF EVENTS CLEARLY INDICATE THAT EVEN THE QUERY LETTER HAVE BEEN ISSUED IN THE FAG END OF DECEMBER AND COMPLIANCE WAS SOUGHT ON 28 TH OF DECEMBER IN MOST OF THE CASES AND ON THE SAME DATE IN MOST OF THE CASES THE APPROVAL HAD BEEN TAKEN WHICH CLEARLY INDICATE THAT THE APPROVAL IF ANY SOUGHT BY THE LD. AO WAS ONLY FOR THE NAME SAKE AND THE PROVISIONS OF SECTION 153D HAD BEEN VIOLATED. 3.4 IT IS RESPECTFULLY SUBMITTED THAT NORMALLY WHEN TH E APPROVAL IS GRANTED BY THE JOINT COMMISSIONER WHO IS ACTING AS A JUDICIAL AUTHORITY SHOULD GRANT AN OPPORTUNITY OF HEARING BEFORE THE APPROVAL. VARIOUS COURTS IN RELATIONS TO BLOCK ASSESSMENT HAVE HELD THAT SUCH OPPORTUNITY OF HEARING IS NOT NECESSARY BU T THERE ALSO SUCH OBSERVATION WAS MADE BECAUSE IT WAS FELT THAT ASSESSING OFFICER WOULD ALREADY PROVIDE AN OPPORTUNITY OF HEARING TO THE ASSESSEE ON THE ISSUES ON WHICH HE DISCUSSED WITH HIS SENIOR OFFICER AND THEREFORE, THERE WILL BE NO NECESSITY OF PROVI DING SEPARATE OPPORTUNITY BEFORE GRANTING SUCH APPROVAL. IN THE CASE OF THE ASSESSEE THERE HAS BEEN NO SUCH OPPORTUNITY 59 BEING GRANTED TO THE ASSESSEE AND THEREFORE, IN SUCH CIRCUMSTANCES THE ABSENCE OF PROVIDING OPPORTUNITY OF HEARING BY THE JOINT COMMISSI ONER HAS SERIOUSLY EFFECTED AND CAUSED PREJUDICE TO THE ASSESSEE AND SUCH ORDER IS THEREFORE, NOT IN CONSONANCE WITH THE PROVISIONS OF SECTION 153D. THE ORDER ON SUCH GROUND THEREFORE, DESERVES TO BE QUASHED. 3.5 THE LD. AO HAD BEEN CONDUCTING THE ASSESSMENT PROCEEDINGS IN THE CASE OF THE ASSESSEE WHEREIN THERE WERE ABOUT 50 ASSESSMENT PROCEEDINGS AND BESIDES THE CASES OF ASSESSEE THERE WERE OTHER SEARC H RELATED ASSESSMEN TS OF OTHER GROUPS WHERE ALSO MO RE THAN ABOUT 100 ASSESSMENT WERE BEING CONDUCTED. THE ASS ESSMENT PROCEEDINGS IN THE CASE OF THE ASSESSEE AND VARIOUS OTHER FAMILY MEMBERS WERE BEING CONTINUOUSLY FIXED FOR HEARING AND EVEN IN THE CASE OF THE ASSESSEE THE LAST HEARING WAS FIXED FOR 28.12.2011, AND THE ORDER WAS PASSED ON 29.12.2011 AFTER RECEIVIN G THE APPROVAL FROM JOINT COMMISSIONER OF INCOME TAX, CENTRAL RANGE JODHPUR ON 29.12.2011, AND THE CHARGE OF SUCH RANGE WAS WITH THE JCIT, UDAIPUR. 3.6 THE ASSESSMENT ORDER HAS BEEN PASSED ON 29 TH DECEMBER 2011 THAT MEANS IN ALL CASES THE APPROVAL WAS GRANTED JUST IN ONE DAY TELEPHONICALLY WITHOUT EVEN GOING THROUGH THE ASSESSMENT ORDER OR EXAMINATION OF THE FACTS. THE PURPOSE OF SECTION 153D HAS BEEN COMPLETELY DEFEATED AND THE APPROVAL SO GRANTED IN A MECHANICAL MANNER SO AS TO OVERCOME THE PERIOD OF LIMITATI ON IS JUST A NULLITY IN THE EYES OF LAW AND SUCH ORDERS DESERVES TO BE QUASHED AS BEING IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 60 3.7 THE APPELLANT ALSO PLACED RELIANCE ON THE FOLLOWING DECISION IN SUPPORT OF THE CONTENTION THAT GRANTING OF APPROVAL IS AN IMPORTANT ASPECT IN MAKING OF THE ORDER TO BE COMPLETE AND EFFECTIVE AND IF THERE IS NO FULFILLMENT OF REQUIREMENT OF LAW THE ORDER MADE CANNOT BE HAD TO BE JUSTIFIED. : I. CIT V/S ORIENTAL RUBBER WORKS (1984) 145 ITR 477 (S C) EXTRACTS FROM PAGE 483 : 'ON A PLAIN READING OF THE AFORESAID PROVISIONS IT WILL BE CLEAR THAT ORDINARILY THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS THAT MAY BE SEIZED UNDER AN AUTHORIZATION ISSUED UNDER SUB - S. (1) OF S. 132 CAN BE RETAINED BY THE AUTHORIZED OFFICER OR THE CONCERNED ITO FOR A PERIOD OF ONE HUNDRED AND EIGHTY DAYS FROM THE DATE OF SEIZURE, WHEREAFTER THE PERSON FROM WHOSE CUSTODY SUCH BOOKS OR DOCUMENTS HAVE BEEN SEIZED OR THE PERSON TO WHOM SUCH BOOKS OR DOCUMENTS BELONG BECOMES ENTITLED TO THE RETURN OF THE SAME UNLESS T HE REASONS FOR ANY EXTENDED RETENTION ARE RECORDED IN WRITING BY THE AUTHORIZED OFFICER/ THE CONCERNED ITO AND APPROVAL OF THE COMMISSIONER FOR SUCH RETENTION IS OBTAINED. IN OTHER WORDS, TWO CONDITIONS MUST BE FULFILLED BEFORE SUCH EXTENDED RETENTION BECO MES PERMISSIBLE IN LAW : (A) REASONS IN WRITING MUST BE RECORDED BY THE AUTHORIZED OFFICER OR THE CONCERNED ITO SEEKING THE COMMISSIONER'S APPROVAL, AND (B) OBTAINING OF THE COMMISSIONER'S APPROVAL FOR SUCH EXTENDED RETENTION WILL BECOME UNLAWFUL AND THE C ONCERNED PERSON (I.E., THE PERSON FROM WHOSE CUSTODY SUCH BOOKS OR DOCUMENTS HAVE BEEN SEIZED OR THE PERSON TO WHOM THOSE BELONG) ACQUIRES A RIGHT 61 TO THE RETURN OF THE SAME FORTHWITH. IT IS TRUE THAT SUB. S. (8) DOES NOT IN TERMS PROVIDE THAT THE COMMISSIO NER'S AP PROVAL OR THE RECORDED REASONS ON WHIC H IT MIGHT BE BASED SHOULD BE CONCERNED IS BOUND TO BE MATERIALLY PREJUDICED IN THE ENFORCEMENT OF HIS RIGHT TO HAVE SUCH BOOKS AND DOCUMENTS RETURNED TO HIM BY BEING KEPT IGNORANT ABOUT THE FACTUM OF FULFILLME NT OF EITHER OF THE CONDITIONS, IT IS OBLIGATORY UPON THE REVENUE TO COMMUNICATE THE COMMISSIONER'S APPROVAL AS ALSO IN RECORDED REASONS TO THE PERSON CONCERNED. IN THE ABSENCE OF SUCH COMMUNICATION THE COMMISSIONER'S DECISION ACCORDING HIS APPROVAL WILL N OT BECOME EFFECTIVE. II. FIROZ TIN FACTORY & ANR. V/S ACIT (2012) 71 DTR (BOM.) 185. 'THE AO MUST, IN THE FIRST INSTANCE HAVE REASON TO BELIEVE THAT: THE INTERESTS OF THE REVENUE WOULD BE DETRIMENTALLY AFFECTED BY ALLOWING A PERIOD OF 30 DAYS AS STIPUL ATED IN THE STATUTE. THE JT. CIT WHOSE APPROVAL IS SOUGHT BEFORE THE AO REDUCES THE PERIOD MUST SIMILARLY APPLY HIS MIND TO THE ISSUE OF DETRIMENT TO THE REVENUE. WHILE GRANTING HIS APPROVAL THE JT. CIT MUST RECORD REASONS. THOSE REASONS AS WELL AS THE APP ROVAL WHICH HAS BEEN GRANTED BY THE JT. CIT MUST BE MADE AVAILABLE TO THE ASSESSEE WHERE A COPY OF THE REASONS IS SOUGHT FROM THE AO.' 62 4. GR. NO. 5 : SCOPE OF ASSESSMENT MADE U/S 153A : 4.1 IT IS RESPECTFULLY SUBMITTED THAT THE SCOPE OF ASSESSMENT U/S 1 53A IS CONFINED ONLY TO THE MATERIAL FOUND AS A CONSEQUENCE OF SEARCH AND THE ITEMS OF ORIGINAL ASSESSMENT CANNOT BE DISTURBED UNLESS THERE IS SOME MATERIAL OR AS A CONSEQUENCE OF SEARCH CERTAIN EVIDENCE IS GATHERED BY THE LD. AO. THE PERUSAL OF THE PRESEN T ASSESSMENT ORDER WOULD REVEAL THAT THE ADDITION ARE PURELY ON ESTIMATE OR SUSPICION AND IS BASED ON. THE MATERIAL ALREADY EXISTING IN THE ORIGINAL RETURN, LIKE ADDITION FOR ESTIMATED HOUSE HOLD EXPENSES HAS BEEN MADE WHILE NOTHING HAS BEEN FOUND DURING T HE COURSE OF SEARCH PROCEEDINGS. FURTHER, IN SOME OF THE YEAR CAPITAL CONTRIBUTION MADE TO FIRM IN WHICH ASSESSEE IS A PARTNER HAS BEEN INCLUDED IN THE INCOME WHICH AGAIN WAS FULLY VERIFIABLE AND ALREADY EXISTED ON THE ORIGINAL RETURN. NO INCRIMINATING DOC UMENT HAS BEEN FOUND DURING THE COURSE OF SEARCH NOR THERE IS ANY EVIDENCE COLLECTED IN POST SEARCH INVESTIGATION TO SUGGEST ANY SUCH ADDITION. SOME OF THE CASH CREDITS / LOANS HAD BEEN ADDED WHICH AGAIN EXISTED IN THE ORIGINAL RETURN AND HAVE NO CONNECTIO N WHATSOEVER TO THE EVIDENCE OR MATERIAL RELATED TO SEARCH PROCEEDINGS. THE VARIOUS ADDITIONS THEREFORE, ARE BEYOND THE SCOPE OF ASSESSMENT PROCEEDINGS PROVIDED U/S 153A CONTAINING SPECIAL PROVISIONS RELATING TO SEARCH ASSESSMENT. THE ORDER THEREFORE, DESE RVES TO BE QUASHED ON SUCH GROUND ALSO. 63 5. GR. NO. 6 : ADDITION FOR UNEXPL AINED CASH CREDIT RS. 32 , 6 3,000/ - : THE ID. A.O. HAS FURTHER ERRED IN MAKING ADDITION OF RS. 17,30,000/ - ON ACCOUNT OF ALLEGED UNEXPLAINED CASH CREDIT FROM THREE PARTIES. THIS ISSUE HAS BEEN DISCUSSED BY ID. AO AT PAGE 2 PARA 6 OF THE ASSESSMENT ORDER. THE LD. AO HAS OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS RECEIVED FOLLOWING THREE UNSECURED LOANS AND SINCE NO DETAILS WAS SUBMITTED HE RESORTED TO THE ADDITION U/S 68. A) SOHAN CHANDEL [ANIL CHANDEL] 5,13,000/ - B) SHRI P. GYANCHAND 20,00,000/ - C) SHRI HARCHAND RAM JANGID 7,50,000/ - TOTAL 32,63,000/ - 5.3 ALL THE ABO VE THREE LOANS WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUES AND ALL THE PARTIES ARE REGULAR INCOME TAX ASSESSES. IT IS RESPECTFULLY SUBMITTED THAT ON ACCOUNT OF MULTIPLE PROCEEDINGS BEING GOING ON AND LARGE NUMBER OF ASSESSMENTS BEING TAKEN UP SIMULTANEOUSL Y IN LAST TWO MONTHS WHEN THE ASSESSMENTS WERE GETTING BARRED BY LIMITATION OF TIME VOLUMINOUS DETAILS AND INFORMATION WAS REQUIRED TO BE SUBMITTED BY TH E APPELLANT. YOUR HONOUR WILL OB SERVE THAT EVEN THE VARIOUS QUERY LETTERS ASKING FOR INFORMATION ETC. W ERE ISSUED 64 AT THE FAG END IN THE LAST WEEK OF DECEMBER AND HARD L Y A DAY OR TWO WAS ALLOWED TO SUBMIT THE REQUIRED INFORMATION. IN THE PRESENT CASE THE QUERY LETTER 23.12.2011 WAS RECEIVED IN THE LATE EVENING OF 25.12.2011 WHICH WAS A SUNDAY AND INFORMATION WAS CALLED FOR ON 28.12.2011. THERE WAS JUST TWO DAYS AVAILABLE WITH THE ASSESSEE TO SUBMIT THE REPLY TO A DETAILED QUERY LETTER ISSUED BY THE LD. AO. IN THE FIRST LETTER DT. 17 TH OCT. 2011 ALSO THE ACCOUNT COPIES OF ALL THE UNSECURED LOANS WERE ALSO DULY SUBMITTED AND THEREAFTER, THE QUERY WAS MADE ONLY AT THE FAG END OF THE PROCEEDING. THIS PREVENTED THE ASSESSEE FROM SUBMITTING REQUISITE DETAILS TO BE SATISFACTION OF THE LD. AO AND ASSESSEE HAD A BONAFIDE BELIEF THAT SINCE THE AMOUNT IS RECEIVED THROUGH AN ACCOUNT PAYEE CHEQUE FROM THE PARTIES WHO ARE REGULARLY ASSESSED TO TAX SHOULD BE ACCEPTED. 5.4 THE APPELLANT IS SUBMITTING HEREWITH ACCOUNT CONFIRMATION OF THE ABOVE PARTIES ALONG WITH THEIR RESPECTIVE PAN, ADDRESS OF THE PARTIES AND ALL ARE REGULARLY ASSESSED TO TAX. IT IS SUBMITTED THAT IN VIEW OF THE ABOVE CIRCUMSTANCES EXPLAINED EVEN IF THESE EVIDENCES ARE TREATED AS ADDITIONAL EVIDENCES IT IS REQUESTED THAT THE SAME MAY KINDLY BE ACCEPTED UNDER RULE 46A OF THE INCOME TAX RULE 1962. THE APPELLANT R EQUEST THAT THESE ARE ONLY SUPPORTIVE EVIDENCE WHICH THE LD. AO COULD VERY WELL HIMSELF ALSO ASCERTAIN AS THE POWERS OF LD. AO ARE MUCH WIDER AND HAVE A AUTHORITY UNDER THE LAW. THE ASSESSEE MAY SOMETIMES CANNOT COMPEL THE PARTIES TO GIVE THE REQUISITE DET AILS AND INFORMATION IMMEDIATELY BUT HAD THE LD. AO HAD EXERCISED HIS POWERS THOSE INFORMATION COULD HAVE BEEN EASILY OBTAINED. IT IS SUBMITTED THAT 65 THE ASSESSMENTS ARE NOT A TEST OF ASSESSEE ABILITY TO SUBMIT THE EVIDENCE OR DOCUMENTS BUT IS TO DETERMINE T HE TOTAL INCOME EARNED BY THE ASSESSEE. THE APPARENT FACT OF UNSECURED LOANS IS THAT THESE DOES NOT REPRESENT THE INCOME OF THE APPELLANT AND THEREFORE, BEFORE MAKING ANY SUCH ADDITION IT IS EQUALLY THE DUTY OF THE ASSESSING OFFICER ALSO TO PRIMA FACIE EX AMINE WHETHER SUCH DEPOSITS ARE IN THE NATURE OF INCOME. 5.5 YOUR KIND ATTENTION IS INVITED TOWARDS THE FOLLOWING JUDGMENTS WHICH SUPPORTS THE ASSESSEE'S CONTENTION THAT WHERE THE DEPOSITS HAS BEEN RECEIVED THROUGH ACCOUNT PAYEE CHEQUE AND THE SAME IS DUL Y CONFIRMED BY THE CASH CREDITOR NO ADDITION CAN BE MADE U/S 68 AND THE ONUS UPON THE ASSESSEE OF PROVING SUCH CASH CREDIT STANDS DISCHARGED. THE REVENUE HAS ALSO FAILED TO BRING ON RECORD ANY POSITIVE MATERIAL NOR ANY INCRIMINATING MATERIA! HAS BEEN FOUND DURING THE COURSE OF SEARCH TO SUGGEST THAT THE CASH CREDITS WERE NOT GENUINE. ( 1) ADD L . CIT VS. BAHRI BROS. P. LTD. (1985) 154 ITR 244 (PAT) AT PAGE 244 HELD, THAT THE ASSESSEE FILED DETAILS OF L OANS STATING THE NATURE AND THE MODE OF TRANSACTIONS. TH E CREDITORS GAVE THE AMOUNT IN QUESTION TO THE ASSESSEE BY ACCOUNT PAYEE CHEQUES WHICH WERE ENCASHED BY THE ASSESSEE THROUGH ITS OWN BANK. THE ASSESSEE HAD ALSO SUBMITTED A COPY OF THE CERTIFICATE OF THE BANK TO THE BANK. THE ASSESSEE HAD ALSO SUBMITTED A COPY OF THE CERTIFICATE OF THE BANK TO THE EFFECT THAT THE CHEQUES IN 66 QUESTION, GIVEN BY THE CREDITORS, WERE HONOURED IN FAVOUR OF THE ASSESSEE. EVEN THE BROKERAGE AMOUNT WA S ALSO PAID THROUGH CHEQUES. WHEN THE ASSESSEE DISCLOSED THE NAMES OF THE CREDITOR S AND THE NAMES OF THE BANKS ON WHICH THE CHEQUES WERE DRAWN, THE ASSESSEE DISCHARGED THE PRIMARY ONUS AND THE ASSESSEE NOT ONLY DISCLOSED THE IDENTIFY OF THE CREDITORS BUT ALSO THE SOU R CES OF INCOME . THEN THE ONUS SHIFTED ON THE DEPARTMENT TO VERIFY. THE CREDITORS WERE HAVING BANK ACCOUNTS. HENCE, THEY WERE KNOWN NOT ONLY TO THE BANK BUT THEY WERE INTRODUCED BY A THIRD PERSON TO THE BANK. IT COULD NOT BE SAID THAT THE CREDITORS WERE FICTITIOUS PERSONS. (II) CIT VS. RAM NARAIN GOEL (1997) 224 ITR 180 (P&H) THE TRIBUNAL FOUND THAT THE MONEYS HAD BEEN ADVANCED BY ACCO UNT PAYEE CHEQUE S, AND HAD BEEN TURNED BY THE ASSESSEE WITH INTEREST BY ACCOUNT PA Y EE CHEQ U E S, THAT COPIES OF BANK STATEMENTS HAD BEEN FILED, THAT THE CREDITORS HAD FILED CONFIRMATION LETTERS, HAD AP P E ARED BEFORE THE COMMISSIONER (APPEALS) AND ADMITTED HAVING ADVANCED MONEY TO THE ASSESSEE AND HAD FILED RETURNS OF THEIR INCOMES. THE TRIBUNAL, THEREFORE, TOOK THE VIEW THAT ALL THE CASH CREDITS STOOD DULY EXPLAINED BY SUFFICIENT EVIDENCE AND, THEREFORE, THERE WAS NO JUSTIFICATION FOR ANY ADDITION FOR ANY OF THE CASH CREDIT ENTRIES. THE ENTIRE ADDITION WAS THUS DELETED. ON AN APPLICATION TO DIRECT A REFERENCE : 67 HELD, DISMISSING THE APPLICATION, THAT NO QUESTION OF LAW AROSE FROM THE TRIBUNAL'S ORDER. TH E FINDING OF FACT GIVEN BY THE TRIBUNAL WAS BASED ON THE MATERIAL ON RECORD. THE TRIBUNAL CORRECT LY TOOK T HE VIEW THAT THE ASS ESS EE WAS NOT B O U ND TO P ROV E T HE SO UR CE OF THE LO ANS. SUS P ICION, HO WSOEVER STRONG, COULD NOT TAKE T HE P LA CE OF EVIDENC E OR P R OOF .' (III ) C I T VS. ORISSA CORPORATION P. LTD. (1986) 159 ITR 78 (SC) 'IN THE ACCOUNTS OF THE RESPONDENT, A PRIVATE COMPANY, FOR THE ACCOUNTING YEAR ENDING DECEMBER 31, 1961, RELEVANT TO THE ASSESSMENT YEAR 1962 - 63, THERE WERE THREE CASH CREDITS AGGREGATING TO RS.1,50,000. THE THREE AMOUNTS WERE SHOWN TO HAVE BEEN RECEIVED BY WAY OF EXPLANATION, THE RESPONDENT PRODUCED BEFORE THE INCOME - TAX OFFICER THE LETTER OF CONFIRMATION AND THE DISCHARGED HUNDIS AND GAVE PARTICULARS OF THOSE CREDITORS WHO WERE ASSESSEES AND WHOSE GENERAL INDEX NUMBERS WERE WITH THE DEPARTMENT. SINCE THE RESPONDENT, AFTER MAKING ATTEMPTS, COULD NOT PRODUCE THE PARTIES, THE INCOME - TAX OFFICER, ON ITS REQUEST, ISSUED SUMMONS UNDER S. 131 OF THE INCOME - TAX ACT, 1961, TO THE CREDITORS, WHICH HOW EVER WERE RETURNED UNSERVED WITH THE REMARK 'LEFT'. THE TRIBUNAL FURTHER FOUND THAT THE CREDITORS, WHILE BEING ASSESSED, HAD ADM ITT ED THAT THEY HAD ALLOW ED THEI R N AMES T O BE L ENT WITHOUT GIVIN G LOANS AND ALSO GAVE A FIST OF ASSE SSEES BUT THE RES PONDE NT 'S N A ME DID NOT FIGURE IN IT. THE INCOME - TAX OFFICER TREATED THE SUM OF RS. 1,50,000 AS UNEXPLAINED INCOME AND ADDED IT TO THE RESPONDENT'S INCOME AND THE INSPECTING ASSISTANT COMMISSION ER ALSO IMPOSED A PENALTY OF 68 RS. 50,000 UNDER S. 271(L)(C). BUT THE TRIBUN AL HELD THAT BECAUSE THE RESPONDENT COULD NOT PRODUCE THE PARTIES, IT DID NOT FOLLOW AUTOMATICALLY THAT AN ADVERSE INFERENCE SHOULD BE DRAWN THAT THE AMOUNT REPRESENTED UNDISCLOSED INCOME OF THE RESPONDENT AND THAT THE REVENUE WAS NOT JUSTIFIED IN DRAWING THE ADVERSE INFERENCE AND ADDING THE AMOUNTS OF THE CASH CREDITS TO THE INCOME OF THE RESPONDENT AND ALSO DELETED THE IMPOSITION OF PENALTY. BOTH THE TRIBUNAL AND THE HIGH COURT REJECTED THE APPLICATIONS OF THE DEPARTMENT FOR REFERENCE. ON APPEAL TO THE SU PREME COURT : HELD, THAT IN THIS CASE THE RESPONDENT H AD GIVEN THE N AMES AND ADDRESSES OF THE ALLEGED CREDITORS . IT WAS IN THE KNOWLEDGE OF THE REVENUE TH AT THE SAID CREDITORS WERE INCOME - TAX ASSESSEES. THEIR INDEX NUMBERS WERE IN THE FILE OF THE REVENUE. THE REVENUE, APART FROM ISSUING NOTICES UNDER S. 131 AT THE INSTANCE OF THE RESPONDENT, DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY WERE CREDITWORTHY. THERE WAS NO EFFORT MADE TO PURSUE THE SO - CALLED ALLEGED CREDITORS. IN THOSE CIRCUMSTANCES, THE RESPONDENT COULD NOT DO ANYTHING FURTHER. IN THE PREMISES, IF THE TRIBUNAL CAME TO THE CONCLUSION THAT THE RESPONDENT HAD DISCHARGED THE BURDEN THAT LAY ON IT, THEN IT CO ULD NOT BE SAID THAT SUCH A CONCLUSION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. IF THE CONCLUSION WAS BASED ON SOME EVIDENCE ON WHICH A CONCLUSION COULD BE ARRIVED AT, NO QUESTION OF LAW AS SUCH AROSE. THE HIGH COURT WAS RIGHT IN REFUSING TO S TATE A CASE. 69 (IV) TOLARAM DAGA VS. CIT (1966) 59 ITR 632 (ASSAM) WHERE, IN THE ACCOUNTS OF A FIRM, A DEPOSIT IS SHOWN TO HAVE BEEN MADE BY A THIRD PARTY, THE WIFE OF A PARTNER IN THE FIRM (THE ASSESSEE), WHO CLAIMS THE MONEY AS HERS AND THAT IT WAS SHE THAT MA DE THE DEPOSIT, AND THE GENUINENESS AND REG U L ARITY OF THE ACCOUNTS HAVE NOT BEEN C HALLENGE D, THE ACCOUNTS ARE RELEVANT AND ARE PRIMA FACIE PROOF OF T H E ENTRIES AND THE CORRECTNESS THEREOF UNDER S. 34 OF THE EVIDENCE ACT, AND THE ENTRY THEREIN IS PRIMA F ACIE PROOF THAT THE AMOUNT IN QUESTION WAS DEPOSIT STANDS. (V) NEMI CHAND KOTHARI VS. CIT & ANR. (2003) 264 ITR 254(GAU) A PERSON MAY HAVE FUNDS FROM ANY SOURCE AND AN ASSESSEE, ON SUCH INFORMATION RECEIVED, MAY TAKE LOAN FROM SUCH A PERSON. IT IS NOT THE BU SINESS OF THE ASSESSEE TO FIND OUT WHETHER THE SOURCE OR SOURCES FROM WHICH THE CREDITOR HAD AG REED TO ADVANCE THE AMOUNTS WERE GENUINE O R NOT. IF A CREDITOR HAS, BY ANY UNDISCLOSED SOURCE, A PARTICULAR AMOUNT OF MONEY IN THE BANK, THERE IS NO LIMITATION U NDER THE LAW ON THE PART OF THE ASSESSEE TO OBTAIN SUCH AMOUNT OF MONEY OR PART THEREOF FROM THE CREDITOR, BY WAY OF CHEQUE IN THE FORM OF LOAN AND IN SUCH A CASE, IF THE CREDITOR FAILS TO SATISFY AS TO HOW HE HAD ACTUALLY RECEIVED THE SAID AMOUNT; AND HAP PENED TO KEEP THE SAME IN THE BANK, THE SAID AMOUNT CANNOT BE TREATED AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCE. 70 IF S. 105 (OF THE EVIDENCE ACT) AND 68 HAVE TO SURVIVE TOGETHER, THE LOGICAL INTERPRETATION WILL BE THAT WHILE THE ASSESSEE HAS TO P ROVE ONLY HIS SPECIAL KNOWLEDGE, I.E., THE SOURCE FROM WHERE HE HAS RECEIVED THE CREDIT AND ONCE HE DISC L OSES THE SOURCE FROM WHICH HE HAS RECEIVED THE MONEY, HE MUST ALSO ESTABLISH THAT SO FAR AS HIS TRANSACTION WITH HIS CREDITOR IS CONCERNED, THE SAME IS GENUINE AND HIS CREDITOR HAD THE CREDITWORTHINESS TO ADVANCE THE LOAN, WHICH THE ASSESSEE HAD RECEIVED. WHEN THE ASSESSEE DISCHARGES THE BURDEN SO PLACED ON HIM, THE ONUS, THEN, SHIFTS TO THE ASSESSING OFFICER IF THE ASSESSING OFFICER WISHES TO ASSESS THE S AID LOAN AS THE INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCE, TO PROVE EITHER BY DIRECT EVIDENCE OR INDIRECT / CIRCUMSTANTIAL EVIDENCE THAT THE MONEY, WHICH THE ASSESSEE RECEIVED FROM THE CREDITOR ACTUALLY BELONGED TO, AND WAS OWNED BY, THE ASSESSEE HI MSELF . IF THERE IS DIRECT EVIDENCE TO SHOW THAT THE LOAN RECEIVED BY THE ASSESSEE ACTUALLY BELONGED TO THE ASSESSEE, THERE WILL BE NO DIFFICULTY IN ASSESSING SUCH AMOUNT AS THE INCOME OF ASSESSEE FROM UNDISCLOSED SOURCE; BUT IF THERE IS NO DIRECT EVIDENCE IN THIS REGARD, THEN, THE INDIRECT OR CIRCUMSTANTIAL EVIDENCE HAS TO BE CONCLUSIVE IN NATURE A ND MUST, IN SUCH CI RC UMSTANC ES, UNE RRI NG LY POINT TO THE ASSESSEE AS TH E PERSON FROM WHOM THE MONEY H AD ACTUALLY FL OWN TO THE HANDS O F T H E SU B - CR EDITOR AND, THEN, ROUTED THROUGH THE HANDS OF THE SUB - CREDITOR TO THE HANDS OF THE CREDITOR. FOR THIS PURPOSE, THE CIRCUMSTANTIAL EVIDENCE HAS TO BE NOT ONLY CONSISTENT WITH THE HYPOTHESIS THAT THE MONEY BELONGED TO THE ASSESSEE, BUT THAT THIS HYPOTHESIS MUST ALSO BE INCONS ISTENT WITH TH E HYPOTHESIS 71 THAT NONE OTHER THAN THE ASSESSEE OWNED THE SAID MO NEY . IF THE CONCLUSION BE THAT THE MONEY RECEIVED, AS LOAN, BY THE ASSESSEE MAY OR MA Y N OT BELO NG TO HIM OR IF THE P O SSIBIL ITY E XISTS THAT THE MONEY RECE I V ED , AS LOA N, BY TH E ASS ESSEE MAY NOT BELONG TO HIM , TH E N, IN NONE OF SU CH TWO C ASES, THE LO AN AMOUNT CAN BE CONCLUSI VELY TR EATED AS INCOME FRO M U NDISCLOSED SOURCE OF THE ASSE SSEE INASMUCH AS FOR ASSESSING THE MONEY AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCE, THERE MUST BE CL INCHING EV IDEN CE T O SH OW THA T T HE M ONEY A C TUALLY BELO NGED TO NONE BUT THE ASSESS EE HIM S ELF. I F NO SUCH CLI NC HING EVIDE NCE I S AVAIL A BLE, THE MONEY MAY BE TREATED AS THE INCOME FROM DISCLOSE D SOURCE OF THE CREDITOR OR OF THE SUB - CREDITO RS AS THE CA SE MAY BE . - ON CE THE ASSESSEE HAD ESTABLISHED D T HAT HE H AD R E CEIVED THE SAID AMOUNTS FROM T HE CREDITORS AFOREM ENT IONED BY WAY OF CH EQU ES F THE ASSESSEE MUST BE TAKEN TO HAVE PROVED THAT THE CREDITOR HAD THE CREDITWORTHINESS TO A DVANCE TH E LOANS. THEREAF TER THE BURDEN HA D SHIFTED TO T HE ASSE SSI NG OFFIC ER TO P ROVE THE CONT RA RY. ON MERE FAILURE ON THE PART OF THE CREDITORS TO SHOW THAT THEIR SUB - CREDITORS HAD CREDITWORTHINESS TO ADVANCE THE SAID LOAN AMOUNTS TO THE ASSESSEE, SUCH FAILURE, AS A COROLLARY, COULD NOT HAVE BEEN AND OUGHT NOT TO HAVE BEEN, UNDER THE LAW, TREATED AS THE INCOME FROM THE UNDISCLOSED SOURCES OF THE ASSESSEE HIMSELF, WHEN THERE WAS NEITHER DIRECT NOR CIRCUMSTANTIAL EVIDENCE ON RECORD THAT THE SAID LOAN AMOUNTS ACTUALLY BELONGED TO, OR WERE O WNED BY, 72 THE ASSESSEE. (VI) DY. CIT VS. ROHI NI BUILDERS (2002) 256 ITR 360 (GUJ) THE TRIBUNAL FOUND THAT THE ASSESSEE HAD DISCHAR GED TH E INITIAL ONUS W HICH LAY O N IT IN T ERMS OF S. 68 BY PROVING THE IDENTITY OF THE CREDITORS BY GIVING THEIR COMPLETE ADDR ESSES, GIR NUMBERS / PERMANENT ACCOUNT NUMBERS AND THE COPIES OF ASSESSMENT ORDERS WHEREVER READILY AVAILABLE, THAT IT HAD ALSO PROVED THE CAPACITY OF THE CREDITORS BY SHOWING THAT THE AMOUNTS WERE RECEIVED B Y THE A SSESS EE BY ACCOUNT PA YE E C HEQUE S DRAWN FR OM BANK ACCOUNTS OF THE CREDITORS AND THE ASSESSEE WAS NOT EXPE C TED TO PRO V E THE GENUINENESS OF THE C ASH DEPOSITED IN THE BANK ACCOUNTS OF THOSE CREDITORS BECAUSE UNDER LAW THE ASSESSEE CAN BE ASKED TO PROVE THE SOURCE OF THE CREDITS IN ITS BOOKS OF ACCOUN T BUT N OT THE S OURCE OF THE SOURCE. (VII) ADDL . CIT VS. HANUMAN AGARWAL (1985) 151 ITR 150 (PAT) HELD, THAT THE CONFESSION MADE BY THE CREDITOR WAS NOT MADE AVAILABLE TO THE ASSESSEE OR THE TRIBUNAL. THE ASSESSEE HAVING FURNISHED THE CORRECT NAME AND AD DRESS OF THE CREDITOR, HAVING GIVEN THE GIR NUMBER AND HAVING FILED THE CONFIRMATORY LETTER FROM THE CREDITOR, DID ALL THAT IT COULD DO AND THESE THREE MATERIALS SHOWED PRIMA FACIE NOT ONLY THE IDENTITY OF THE CREDITOR BUT ALSO THE GENUINENESS OF THE TRANS ACTION AND ALSO THE CAPACITY OF THE CREDITOR AND, AS SUCH, THE ASSESSEE COMPLETELY 73 DISCHARGED ITS INITIAL ONUS UNDER S. 68 OF THE IT ACT, 1961. THE REVENUE, ON ITS PART, DID NOT SUMMON THE CREDITOR UNDER S. 131 OF THE ACT. IT TOOK NO STEPS TO VERIFY THE ST ATEMENT OF THE ASSESSEE. THUS, AFTER THE ASSESSEE FILED THE CONFIRMATORY LETTER WITH THE CORRECT NAME AND ADDRESS OF THE CREDITOR AND THE GIR NUMBER AS WELL, THE ONUS IMMEDIATELY SHIFTED ON THE DEPARTMENT WHICH WAS NOT DISCHARGED BY THE DEPARTMENT IN THIS CASE. THE DELETION OF THE ADDITION OF RS.41,500 AND ALLOWANCE OF INTEREST ON IT BY THE TRIBUNAL WAS, THEREFORE, PROPER. PER SUSHIL KUMAR JHA : WHERE AN ASSESSEE GIVES THE CORRECT NAME, ADDRESS AND GIR NUMBER OF THE CREDITOR, HE HAS DISCHARGED HIS ONUS TO PROVE THE GENUINENESS OF CREDITS IN HIS ACCOUNTS AND UNLESS A NOTICE IN DUE FORM UNDER S. 131 OF THE ACT IS ISSUED BY THE REVENUE AUTHORITY TO TEST THE GENUINENESS OF THE TRANSACTION OR THE CAPACITY OF THE CREDITOR TO PAY, THE AMOUNTS CANNOT BE ASSESSED IN THE HANDS OF THE ASSESSEE. (VIII) CIT VS. HEERAL AL CHAGANLAL (2002) 257 ITR 281 (RAJ) HE L D : THAT THE QUESTION WHETHER RS. 10,000/ - WAS ADVANCED BY P TO THE ASSESSEE OR NOT, WAS BASICALLY A QUESTION OF FACT AND THE TRIBUNAL IS THE FINAL FACT FINDIN G BODY. IT HAD FOUND THAT THE IDENTITY OF THE CREDITOR HAD BEEN ESTABLISHED AND HE HAD CONFIRMED THE LOAN. HENCE, THE TRIBUNAL WAS JUSTIFIED IN DELETING THE CASH CREDIT OF RS. 10,000 IN THE NAME OF P AND INTEREST OF RS.900 THEREON. 74 (IX) CIT VS. SMT. P.K. N OORJAHAN (1999) 237 ITR 570 (SC) IN THE CORRESPONDING CLAUSE OF THE BILL WHICH WAS INTRODUCED IN PARLIAMENT, WHILE INSERTING S. 69 IN THE IT ACT, 1961, THE WORD 'SHALL' HAD BEEN USED BUT DURING THE COURSE OF CONSIDERATION OF THE BILL AND ON THE RECOMMENDA TION OF THE SELECT COMMITTEE, THE SAID WORD WAS SUBSTITUTED BY THE WORD 'MAY'. THIS CLEARLY INDICATES THAT THE INTENTION OF PARLIAMENT IN ENACTING S. 69 WAS TO CONFER A DISCRETION ON THE ITO IN THE MATTER OF TREATING THE SOURCE OF INVESTMENT WHICH HAS NOT BEEN SATISFACTORILY EXPLAINED BY THE ASSESSEE AS THE INCOME OF THE ASSESSEE AND THE INCOME - TAX OFFICER IS NOT OBLIGED TO TREAT SUCH SOURCE OF INVESTMENT AS INCOME IN EVERY CASE WHERE THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE NOT SATISFACTORY. THE QUESTION WHETHER THE SOURCE OF THE INVESTMENT SHOULD BE TREATED AS INCOME OR NOT UNDER S. 69 HAS TO BE CONSIDERED IN THE LIGHT OF THE FACTS OF EACH CASE. IN OTHER WORDS, A DISCRETION HAS BEEN CONFERRED ON THE ITO UNDER S. 69 OF THE ACT TO TREAT THE SOU RCE OF INVESTMENT AS THE INCOME OF THE ASSESSEE IF THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT FOUND SATISFACTORY AND THE SAID DISCRETION HAS TO BE EXERCISED KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PARTICULAR CASE. HELD, DISMISSING THE APPEAL , THAT IN THE INSTANT CASE, THE TRIBUNAL HAD HELD THAT THE DISCRETION HAD NOT BEEN PROPERLY EXERCISED BY THE ITO AND THE APPELLATE ASSISTANT COMMISSIONER TAKING INTO ACCOUNT THE CIRCUMSTANCES IN WHICH THE ASSESSEE WAS PLACED AND THE TRIBUNAL HAD FOUND THAT THE INVESTMENTS COULD 75 NOT BE TREATED AS INCOME OF THE ASSESSEE. THE HIGH COURT HAD AGREED WITH THE SAID VIEW OF THE TRIBUNAL. THERE WAS NO ERROR IN THE FINDING RECORDED BY THE TRIBUNAL. SEC. 69 COULD NOT BE INVOKED IN RESPECT OF THE INVESTMENT OF THE ASSE SSEE. (X) CIT V/S. HEERALA L CHAGANLAL TANK (2002) 176 CTR (RAJ) 495 CONCLUSION 'ONCE THE IDENTITY OF THE CREDITOR IS ESTABLISHED AND HE HAS CONFIRMED THAT HE HAD ADVANCED THE LOAN TO THE ASSESSEE THE FINDING OF THE TRIBUNAL ACCEPTING THE GENUINENESS OF THE LO AN AND DELETING THE ADDITION COULD NOT BE SAID TO BE' (XI) CIT V/S. MAKHNI AND TYAGI (P.) LTD. (2004) 267 ITR 433 'HELD, DISMISSING THE APPEAL, THAT WHEN DOCUMENTARY EVIDENCE WAS PLACED ON RECORD TO PROVE THE IDENTITY OF ALL THE SHAREHOLDERS INCLUDING THEIR P AN/GIR NUMBERS AND FILING OF OTHER DOCUMENTARY EVIDENCE IN THE FORM OF RATION CARD, ETC., WHICH HAD NEITHER BEEN CONTROVERTED NOR DISPROVED BY THE ASSESSING OFFICER, NO INTERFERENCE WAS CALLED FOR. THE TRIBUNAL WAS JUSTIFIED IN DELETING THE ADDITION.' 5.6 YOUR KIND ATTENTION IS INVITED TOWARDS FOLLOWING FURTHER DECISIONS OF HON'BLE RAJASTHAN HIGH COURT WHICH SUPPORTS THE ASSESSEE'S CONTENTION THAT THE BURDEN OF PROVING SOURCE OF SOURCE CANNOT BE CASTED UPON THE ASSESSEE: 76 (I) KANHAIYA LAI JANGID V/S ACIT (2008 ) 8 DTR 38 (RAJ.). (II) LABH CHAND BOHARA V/S ITO (2008) 8 DTR 44 (RAJ.). (III) LATE MANGIIAL AGARWAL V/S ACIT (2007) 208 CTR 159 (RAJ.). 6 . GR. NO. 7 : TELESCOPING EFFECT OF INCOME ALREADY SHOWN BY THE ASSESSEE AND ON ACCOUNT OF ADDITION MADE BY LD. A.O 6.1 IT U SUBMITTED THAT TELESCOPING EFFECT OF ADDITIONAL INCOME SURRENDERED BY THE ASSESSEE IN THE RETURNS FILED PURSUANT TO NOTICE U/S LB3A AND FOR THE ADDITIONS MADE BY THE LD. ASSESSING OFFICER MAY IN Y BE DIRECTED TO BE ALLOWED AGAINST OTHER ADDITIONS MADE IN THE ORDER ARE BAD IN LAW AND BAD ON FACTS AND DESERVES TO BE DELETED ON MERITS. 7. GR.NO.8 : PRAYER FOR COST : THE APPELLANT VERY HUMBLY PRAYS THAT ALL THE ADDITIONS MADE BY THE LD A.O. MAY KINDLY BE DELETED AND SUITABLE COST SHOULD BE AWARDED, AS ADDITIO NS OF EXTREMELY ARBITRARY NATURE HAVE BEEN MADE BY THE LD. A.O. IN APPARENT DISREGARD OF THE PROVISIONS OF LAW AND CATENA OF JUDGMENT CITED BEFORE HIM. 8. GROUND NO. 9 & 10 : THE A.O. MAY BE DIRECTED TO COMPUTE TAX AND INTEREST AND ALLOW FULL CREDIT OF PR EPAID TAXES AFTER NECESSARY VERIFICATION. 77 9. GROUND NO. 11 : INTEREST CHARGED U/S. 234A, 234B AND 234C MAY KINDLY BE DELETED AS THE SAME ARE PATENTLY INVALID AND MOST UNJUSTIFIED. 10. GROUND NO. 12 : THE A.O. HAS ALSO ERRED IN INITIATING PENALTY PROCEEDING S UNDER VARIOUS PROVISIONS OF LAW, WHICH MAY KINDLY BE QUASHED. 5. FOR A.Y. 2009 - 10 THE FOLLOWING CHART EXPLAINS THE CASH CREDITS : - A. SH. J.P. JANGID : (RS.3,00,000/ - ) ACCOUNT CONFIRMATION P.B. 39 PAN NUMBER AAJPJ6025D. REGULAR INCOME TAX ASSESSEE. A MOUNT RECEIVED THROUGH ACCOUNT PAYEE CHEQUE. B. MOTI RAM KULERIYA : (RS. 8,00,000/ - ) ACCOUNT CONFIRMATION P.B. 41 COPY OF EX - SERVICE MAN CARD P.B. 74 IN RELATION TO SOURCE OF MONEY COPY OF SALE DEED P.B. 75 - 83. THIS WAS TRADE ADVANCE AND NOT A LOAN, AND WAS BEING RECEIVED TOWARDS SALE OF AGRICULTURE LAND. C. RELIANCE ON JUDGMENT OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL INDIA V. ACIT REPORTED IN (2013) 259 CTR (RAJ) 281 DEFINING SCOPE OF ASSESSMENT U/S 153A TO BE CONFINED ONLY TO MATERIAL FOUND D URING SEARCH. NOTHING FOUND TO SUGGEST 78 CREDIT WAS NOT GENUINE D. RELY ON OTHER DECISIONS AT P.B. 21 - 28 6. OUR FINDING REGARD ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 46A GIVEN IN RESPECT OF TRUST WILL APPLY MUTATIS MUTANDIS TO THESE APPEALS ALSO. WITH S IMILAR REASONING WE HOLD THAT NO ADDITION U/S 68 CAN BE MADE IN A.Y. 2008 - 09, AND 2009 - 10 ALSO. THEREFORE, WE ORDER TO DELETE ENTIRE ADDITIONS MADE U/S 68 OF THE ACT IN ALL THESE THREE YEARS. 7 . RESULTANTLY, ALL THE APPEALS OF THE ASSESSEE STAND ALLOWED AND THAT OF THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE COURT ON 28 TH AUGUST , 2014. SD/ - SD/ - (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28 TH AUGUST , 2014 VL/ - 79 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT BY ORDER 4. THE CIT(A) 5. THE DR SENIOR PRIVATE SECRETARY ITAT, JODHPUR