Appeal details
Counselvise Citation
22520914 RSA 2010
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 3 month(s) 13 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
30-08-2013
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
DB
Next Hearing Date
22-08-2013
Assessment Year
2000-2001
Appeal Filed On
17-05-2010
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NOS.225 & 226(ASR)/2010 ASSESSMENT YEAR:2000-01 & 2001-02 PAN :AFYPS1646D SH.GURKIRPAL SINGH, VS. INCOME TAX OFFICER, PROP. M/S. SUPREME INDUSTRIES, WARD 1(1), DUSHERA GROUND, BASTI SHEIKH, JALANDHAR. JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.RAVISH SUD, ADVOCATE RESPONDENT BY:SH.MAHAVIR SINGH, SR. DR DATE OF HEARING: 22/08/2013 DATE OF PRONOUNCEMENT:30/08/2013 ORDER PER BENCH ; THESE TWO APPEALS OF THE ASSESSEE ARISE FROM TWO D IFFERENT ORDERS OF THE CIT(A), JALANDHAR, EACH DATED 18.03.2010 FOR THE ASSESSMENT YEARS 2000-01 & 2001-02. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN IT A NO.225(ASR)/2010 FOR THE A.Y. 2000-01: 1. THAT THE ORDER OF THE CIT(A) IS AGAINST THE LA W AND FACTS OF THE CASE. ITA NOS. 225 & 226(ASR)/2010 2 2. THAT THE CIT(A) HAD GRAVELY ERRED IN LAW IN FILING TO APPRECIATE THAT THE A.O. HAD WRONGLY ASSUMED JURISDICTION AND INITIATED PROCEEDINGS U/S 147 OF THE ACT IN THE HANDS OF THE ASSESSEE. 3. THAT THE CIT(A) HAD GRAVELY ERRED IN LAW IN FILING TO APPRECIATE THE FACTS OF THE CASE IN LIGHT OF THE SETTLED POSIT ION OF LAW AND THEREIN GROSSLY ERRED IN SUSTAINING THE ADDITION OF RS.4,05,000/- MADE BY THE A.O. IN THE HANDS OF THE ASSESSEE. 4. THAT THE LD. CIT(A) BRUSHING ASIDE THE MATERIAL AVA ILABLE ON RECORD AS WELL AS THE DULY SUBSTANTIATED SUBMISSION S OF THE ASSESSEE, THEREIN MOST ARBITRARILY DREW ADVERSE INF ERENCES IN THE HANDS OF THE ASSESSEE AND SUSTAINED THE ADDITION OF RS.4,05,000/- IN THE HANDS OF THE ASSESSEE. 5. THAT WITHOUT PREJUDICE TO THE AFORESAID EVEN OTHERW ISE THE CIT(A) GRAVELY ERRED IN LAW AND FACTS OF THE CASE AND FAILED TO APPRECIATE THAT NO ADDITION AS REGARDS THE IMPUGNED DEPOSIT AGGREGATING TO AN AMOUNT OF RS.4,05,000/- IN THE CU RRENT ACCOUNT OF THE ASSESSEES BANK ACCOUNT MADE BY THE A O U/S 69A OF THE ACT COULD NOT SUSTAINED IN THE EYES OF LAW. 6. THAT WITHOUT PREJUDICE TO THE AFORESAID EVEN OTHERW ISE THE CIT(A) MISCONCEIVED THE FACTS OF THE CASE AND FAIL ED TO APPRECIATE THAT EVEN IN LIGHT OF THE CONTENTIONS OF THE AO, THE ADDITION OF RS.4,05,000/- SO MADE BY THE LATTER CO ULD NOT BE SUSTAINED IN THE HANDS OF THE ASSESSEE AS SUCH. 7. THAT THE CIT(A) ACTING IN GROSS VIOLATION OF THE P RINCIPLES OF NATURAL JUSTICE AND PRINCIPLE OF EQUITY AND FAIRN ESS, HAD SUSTAINED THE ASSESSMENT FRAMED BY THE AO, NOT ON T HE BASIS OF ANY CONCRETE MATERIAL MADE AVAILABLE ON RECORD, BUT RATHER BY RESORTING TO MERE ASSUMPTIONS, PRESUMPTIONS AND SUR MISES. 8. ANY OTHER GROUND OF APPEAL AS MAY BE ALLOWED TO BE RAISED AT THE TIME OF HEARING OF THE APPEAL. 3. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN ITA NO.226(ASR)/2010 FOR THE A.Y. 2001-02: 1. THAT THE ORDER OF THE CIT(A) IS AGAINST THE LA W AND FACTS OF THE CASE. ITA NOS. 225 & 226(ASR)/2010 3 2 THAT THE CIT(A) HAD GRAVELY ERRED IN LAW IN FILING TO APPRECIATE THAT THE A.O. HAD WRONGLY ASSUMED JURISDICTION AND INITIATED PROCEEDINGS U/S 147 OF THE ACT IN THE HANDS OF THE ASSESSEE. 3 THAT THE CIT(A) HAD GRAVELY ERRED IN LAW IN FILING TO APPRECIATE THE FACTS OF THE CASE IN LIGHT OF THE SETTLED POSI TION OF LAW AND THEREIN GROSSLY ERRED IN SUSTAINING THE ADDITION O F RS.1,27,75,000/-MADE BY THE A.O. IN THE HANDS OF T HE ASSESSEE. 4 THAT THE LD. CIT(A) BRUSHING ASIDE THE MATERIAL AV AILABLE ON RECORD AS WELL AS THE DULY SUBSTANTIATED SUBMISSIO NS OF THE ASSESSEE, THEREIN MOST ARBITRARILY DREW ADVERSE IN FERENCES IN THE HANDS OF THE ASSESSEE AND SUSTAINED THE ADDITION O F RS.1,27,75,000/- IN THE HANDS OF THE ASSESSEE. 5 THAT WITHOUT PREJUDICE TO THE AFORESAID EVEN OTHER WISE THE CIT(A) GRAVELY ERRED IN LAW AND FACTS OF THE CASE AND FAILED TO APPRECIATE THAT NO ADDITION AS REGARDS THE IMPUGNE D DEPOSIT AGGREGATING TO AN AMOUNT OF RS.1,27,75,000/- IN TH E CURRENT ACCOUNT OF THE ASSESSEES BANK ACCOUNT MADE BY THE AO U/S 69A OF THE ACT COULD NOT SUSTAINED IN THE EYES OF LAW. 6 THAT WITHOUT PREJUDICE TO THE AFORESAID EVEN OTHER WISE THE CIT(A) MISCONCEIVED THE FACTS OF THE CASE AND FAI LED TO APPRECIATE THAT EVEN IN LIGHT OF THE CONTENTIONS O F THE AO, THE ADDITION OF RS.1,27,75,000/- SO MADE BY THE LATTE R COULD NOT BE SUSTAINED IN THE HANDS OF THE ASSESSEE AS SUCH. 7 THAT THE CIT(A) ACTING IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND PRINCIPLE OF EQUITY AND FAIR NESS, HAD SUSTAINED THE ASSESSMENT FRAMED BY THE AO, NOT ON THE BASIS OF ANY CONCRETE MATERIAL MADE AVAILABLE ON RECORD, BU T RATHER BY RESORTING TO MERE ASSUMPTIONS, PRESUMPTIONS AND SU RMISES. 8 ANY OTHER GROUND OF APPEAL AS MAY BE ALLOWED TO BE RAISED AT THE TIME OF HEARING OF THE APPEAL. 4. THE ASSESSEE HAS RAISED FOLLOWING ADDITIONAL GRO UNDS OF APPEAL IN BOTH THE YEARS, WHICH ARE REPRODUCED AS UNDER: ITA NOS. 225 & 226(ASR)/2010 4 1. THAT THE A.O. HAS GROSSLY ERRED IN LAW AND FAC TS OF THE CASE IN ASSUMING JURISDICTION AND FRAMING ASSESSMENT U/SS . 148/143(3) OF THE INCOME TAX ACT, 1961 WITHOUT OBTAINING THE SANCTION OF THE APPROPRIATE AUTHORITY AS CONTEMPLATED U/S 151 (2) WHILE ISSUING NOTICE U/S 148 OF THE ACT. 2. THAT THE A.O. HAS GRAVELY ERRED IN LAW AND FACT S OF THE CASE BY FRAMING ASSESSMENT U/SS. 148/143(3) OF THE INCOME TAX ACT, 1961 WITHOUT ISSUING A NOTICE U/S 143(2) OF THE A CT. 5. THE LD. COUNSEL FOR THE ASSESSEE, MR. RAVISH SUD , ADVOCATE SUBMITTED THAT THE GROUNDS OF APPEAL INVOLVED PURELY A QUESTI ON OF LAW ON THE BASIS OF FACTS AVAILABLE ON RECORD AND THEREFORE, IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT (1998) 229 ITR 383(SC), ADDITIONAL GROUNDS OF APPEA L BE ADMITTED FOR ADJUDICATION. 6. THE LD. JCIT(DR), MR. MAHAVIR SINGH, ON THE OTHE R HAND OBJECTED TO THE RAISING OF THE SAID GROUNDS SINCE THESE GROUNDS WERE NOT TAKEN AT THE COMMENCEMENT OF THE ASSESSMENT PROCEEDINGS. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE GROUNDS BEFORE US IN THE FORM OF ADDITIONAL GRO UNDS ARE LEGAL GROUNDS AND THEREFORE, THE SAME ARE ADMITTED IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT (SUPRA) FOR BOTH THE YEARS IN THE APPEALS BEFORE US . ITA NOS. 225 & 226(ASR)/2010 5 8. NOW, WE TAKE UP THE APPEAL OF THE ASSESSEE FOR T HE ASSESSMENT YEAR 2001-02 IN ITA NO.226(ASR)/2010 ON LEGAL GROUNDS A S WELL AS ON MERITS AND OUR DECISION HEREINBELOW SHALL BE IDENTICALLY A PPLICABLE IN THE ASSESSMENT YEAR 2000-01 IN THE PRESENT APPEAL BEFOR E US. SINCE THE FACTS IN BOTH THE YEARS I.E. 2001-02 & 2000-01 ARE IDENTICA L AND THEREFORE, OUR DECISION IN THE ASSESSMENT YEAR 2001-02 HEREINBELOW SHALL BE IDENTICALLY APPLICABLE IN THE LEGAL GROUNDS AS WELL AS ON MERI TS FOR THE ASSESSMENT YEAR 2000-01. 9. ITA NO.226(ASR)/2010 ASSESSMENT YEAR 2001-02 GROUNDS NO.1 & 8 ARE GENERAL IN NATURE AND THEREFOR E, DO NOT REQUIRE ANY ADJUDICATION. 10. THE BRIEF FACTS OF THE CASE ARE AS PER AOS ORD ER, WHICH FOR THE SAKE OF CONVENIENCE IS REPRODUCED AS UNDER: THE INCOME TAX PROCEEDINGS WERE INITIATED BY THE I SSUE OF NOTICE DATED 29.03.2007 U/S 148 READ WITH SECTION 1 47 SERVED UPON THE ASSESSEE ON 30.03.2007. THE ASSESSEE FILED RETU RN OF INCOME ON 10.12.2007 AT RS.48000/- UNDER THE HEAD INCOME FROM SALARY ONLY. AS THE PROCEEDINGS U/S 147 WERE INITIATED ON RECEIPT O F INFORMATION FROM THE ANTI SMUGGLING WING OF CUSTOMS DEPARTMENT, AMRI TSAR WHEREIN THEY HAVE COME TO THE CONCLUSION THAT A BENAMI FIRM IN THE NAME OF M/S. MEGHNA IMPEX WAS FLOATED BY ONE SH. SATBIR SIN GH AS ITS PROPRIETOR. A BANK A/C WAS ALSO OPENED (CURRENT A/ C NO. 681) IN THE NAME OF THE FIRM M/S. MEGHAM IMPEX WITH ORIENTAL BA NK OF COMMERCE, GARHA ROAD, JALANDHAR AND ALSO WITH STATE BANK OF BIKANER & JAIPUR, ADD BASTIAN, JALANDHAR. THE FIRM WAS OSTENSIBLY ENGAGED IN THE EXPORT OF HAND TOOLS AND AUTO PARTS. THE FIRM AVAILED DEPB BENEFITS IN A FRAUDULENT MANNER BY FORGING BAN K CERTIFICATE OF ITA NOS. 225 & 226(ASR)/2010 6 EXPORT AND REALIZATION. THE INQUIRIES CONDUCTED BY THE CUSTOMS DEPARTMENT REVEALED THAT THE EXPORT PROCEEDS WERE A RRANGED THROUGH HAWALA CHANNELS I.E. MONEY WAS CARRIED FROM INDIA T O DUBAI AND REMITTED BACK INTO THE BANK A/C OF M/S. MEGHNA IMPE X WITH ORIENTAL BANK OF COMMERCE, GARHA ROAD, JALANDHAR AS THE EXPO RT PROCEEDS. AS PER STATEMENT OF SH. SATBIR SINGH BEFORE THE AN TI SMUGGLING WING OF THE CUSTOMS DEPARTMENT, AMRITSAR SOME BANK CHEQU E BOOKS OF BOTH THE BANKS I.E. ORIENTAL BANK OF COMMERCE, GARH A ROAD, JALANDHAR AND STATE BANK OF BIKANER & JAIPUR, ADDA BASTIAN, JALANDHAR WERE GOT SIGNED FROM HIM BY SH. GUTRKIRPA L SINGH AND SH. ASHOK KUMAR OF ATM INTERNATIONAL JALANDHAR AS THE W HOLE SHOW WAS ARRANGED BY THE ASSESSEE ALONGWITH SH. ASHOK KUMAR OF ATM INTERNATIONAL. A PERUSAL OF CURRENT A/C NO.681 WITH ORIENTAL BANK OF COMMERCE, GARHA ROAD, JALANDHAR OF M/S. MEGHNA IMPE X (PLACED ON FILED) REVEALS THAT AN AMOUNT OF RS.1,27,75,000/- H AS COME INTO THE BANK A/C NO.328 OF M/S. SUPREME INDUSTRIES, JALANDH AR THROUGH CLEARING WITH STATE BANK OF BIKANER & JAIPUR, ADDA BASTIAN, JALANDHAR. THIS FIRM M/S. SUPREME INDUSTRIES, JALAN DHAR IS THE PROPRIETARY CONCERN OF SH. GURKIRPAL SINGH. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF SH. SATBIR SINGH, PROP M/S. MEGHNA IMPEX STATEMENT OF SH.SATBI R SINGH THE PROP. WAS ALSO RECORDED BY THE ITO III(2), JALANDHA R WHEREIN HE REITERATED THE FACTS REGARDING HIS SIGNING THE BLAN K CHEQUE BOOKS OF BOTH THE BANKS AND GIVING THESE CHEQUES TO THE ASSE SSEE AND HIS ASSOCIATE SH. ASHOK KUMAR WHO MANAGED THE SHOW. HE WAS SIMPLY A PAID EMPLOYEE OF THE OFFICE OF SH. PAVITAR SINGH CA . THE ITO III(2), JALANDHAR INTIMATED DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF MEGHNA IMPEX THAT MONEY HAD BEEN WITHDR AWN FROM THE BANK ACCOUNT OF MEGHNA IMPEX WITH ORIENTAL BANK OF COMMERECE AND TRANSFERRED TO BANK ACCOUNT NO.328 OF M/S. SUP REME INDUSTRIES. THE DETAIL OF THESE TRANSACTIONS IS GIVEN AS UNDER: S.NO. DATE OF DEBIT IN CURRENT A/C NO.681 (OBC OF MEGHNA IMPEX DATE OF CREDIT IN A/C NO.328 (SBB) OF SUPREME INDUSTRIES AMOUNT 1. 03.06.2000 03.06.2000 1,250,000 2. 07.06.2000 07./06.2000 1,300,000 3. 14.06.2000 14.06.2000 800,000 ITA NOS. 225 & 226(ASR)/2010 7 4. 17.06.2000 17.06.2000 1,400,000 5. 29.06.2000 29.06.2000 800,000 6. 11.07.2000 11.07.2000 500,000 7. 12.07.2000 12.07.2000 600,000 8. 18.07.2000 18.07.2000 400,000 9. 22.07.2000 22.07.2000 600.000 10. 03.08.2000 03.08.2000 1,150,000 11. 05.08.2000 05.08.2000 1,100,000 12. 10.08.2000 10.08.2000 13. 18.08.2000 18.08.2000 900,000 14. 28.08.2000 28.08.2000 575,000 TOTAL 12,775,000 DURING THE COURSE OF ASSESSMENT PROCEEDINGS SH. ASH WANI RNADEV,CA THE COUNSEL FOR THE ASSESSEE FILED LEGAL OBJECTIONS TO THE PROCEEDINGS U/S 147 AS UNDER: 1. THAT THE EXAMINATION OF REASONS RECORDED REVEALS TH AT INFERENCES HAVE BEEN DRAWN BASED ON THE INVESTIGATION MADE BY THE THIRD PARTY I.E. CUSTOMS AUTHORITY AND NO INDEPENDENT INQ UIRIES HAVE BEEN MADE BY THE INCOME TAX DEPARTMENT. 2. THAT EVEN AS PER THE INFORMATION FROM THE CUSTOMS A UTHORITY MEGHNA IMPEX WAS THE PROPRIETORY CONCERN OF SH.SATB IR SINGH AND NOT THE ASSESSEE. AS SUCH ASSESSMENT SHOULD HAVE BE EN FRAMED IN THE CASE OF SH. SATBIR SINGH AND NOT IN THE CASE OF THE ASSESSEE. 3. THAT THE REASONS HAVE BEEN RECORDED ON THE BASIS OF STATEMENT OF SH.ASHOK KUMAR AND ALSO OF THE STATEMENT OF SH. VIJ AY MADAN, CUSTOMS AGENT. LATER ON SH.ASHOK KUMAR & SH. VIJAY MADAN RETRACTED FROM THEIR STATEMENT BEFORE THE ACIT, CIR CLE-II, JALANDHAR. AS SUCH THE STATEMENT BEFORE THE CUSTOM S DEPARTMENT HAS NO EVIDENTIARY VALUE. 4. AS REGARDS THE TRANSFER OF FUNDS TO THE BANK ACCOUN T OF THE ASSESSEE AND SUBSEQUENT WITHDRAWALS THEREOF, THE ASSESSEE HA S ALREADY FILED THE COMPLAINT WITH THE POLICE STATION REGARDING THE THEFT OF HIS CHEQUE BOOKS OF M/S. SUPREME INDUSTRIES, BASTI SHEI KH, JALANDHAR WITH STATE BANK OF BIKANER & JAIPUR, ADDA BASTIAN, JALANDHAR. 5. THAT THE STOLEN CHEQUE BOOKS OF THE ASSESSEE WAS MI SUSED BY SOME BODY ELSE AND NOT THE ASSESSEE. 6. THAT EVEN AFTER THE PERIOD OF SIX YEARS THE CUSTOMS DEPARTMENT HAS NOT MADE ANY ASSESSMENT AGAINST THE ASSESSEE. ITA NOS. 225 & 226(ASR)/2010 8 7. THE DEPOSIT OF RS.1,27,75,000/- SHOULD BE ASSESSED IN THE HANDS OF PARTNERSHIP FIRM OR AOP AND NOT IN THE HAND OF THE ASSESSEE.\ THESE OBJECTIONS OF THE ASSESSEE WERE DISPOSED OFF BY THIS OFFICE AS UNDER: 1. IT IS INCORRECT TO SAY THAT THE PROCEEDINGS U/S 147 HAVE BEEN INITIATED MERELY ON THE BASIS OF INFORMATION FORM T HE CUSTOMS AUTHORITY . STATEMENT OF SH.SATBIR SINGH SO CALLED PROP. OF M/S. MEGHNA IMPEX WAS RECORDED ON 21.5.2002 BY THE ITO III(20, JALANDHAR. WHILE REPLYING TO Q.NO.8 SH.SATBIR SINGH SO CALLED PROP. OF M/S. MEGHNA IMPEX STATED THAT SH. GURKIRPAL SING H WAS ALSO DOING THE BUSINESS WITH SH. ASHOK KUMAR. SH. GURKIRPAL SI NGH ALSO GOT SIGNED SOME BLANK CHEQUE FROM ME OF STATE BANK OF B IKANER & JAIPUR AS HE WAS RUNNING HIS ACCOUNTS WITH HIS BANK. AGAIN IN ANSWER TO Q.NO.10 HE DEPOSED THAT BOTH SH. ASHOK KUMAR AND SH . GURKIRPAL SINGH WERE DOING WITHDRAWALS AND DEPOSITS IN THE S TATE BANK OF BIKANER & JAIPUR ACCOUNT. THEY CAN TELL ABOUT THE TRANSACTIONS IN THESE ACCOUNTS. STATEMENT OF SH.SATBIR SINGH SO CAL LED PROP. OF MEGHNA IMPEX WAS ALSO RECORDED BY THE INCOME TAX OF FICER, WARD III(2), JALANDHAR ON 31.5.2002 WHICH SH.SATBIR SING H ADMITTED THAT SH. ASHOK KUMAR OF ATM INTERNATIONAL AND SH.GURKIRP AL SINGH WERE CLOSE FRIENDS. THE ENTIRE TRANSACTIONS IN THE BANK ACCOUNT OF M/S. MEGHNA IMPEX (CA NO.681) WITH ORIENTAL BANK OF COMM ERCE, GARHA ROAD, JALANDHAR WERE MADE BY THESE TWO PERSONS. ON LY SH.GURKIRPAL SINGH & ASHOK KUMAR CAN TELL ABOUT THE SOURCE OF DE POSITS AND WITHDRAWALS IN THE BANK ACCOUNTS. 2. SH.SATBIR SINGH AS PER THE INQUIRIES AND FINDING S OF THE CUSTOMS DEPARTMENT AS WELL AS INCOME TAX DEPARTMENT WAS A POOR FELLOW TO ENGAGE IN THIS BIG BUSINESS. HE COULD NOT RUN ANY E XPORT BUSINESS. HE WAS SIMPLY A PAID EMPLOYEE OF SH.PAVITAR SINGH, CA IN WHOSE OFFICE THESE TWO PERSONS I.E. SH. ASHOK KUMAR & SH. GURKIR PAL SINGH MET HIM ( BEING THE CLIENTS OF SH.PAVITAR SINGH CA) AND ADVISED HIM TO OPEN A BANK ACCOUNT BECAUSE IT WAS NECESSARY TO GET IMPORT EXPORT LICENCE. HE AGREED TO OPEN A BANK ACCOUNT IN THE NA ME OF CONCERN AND SIGN THE DOCUMENTS AS ASKED BY THESE TWO PERSON S BECAUSE HE WAS CONVINCED BY SH. ASHOK KUMAR THAT HE WILL BE SENT A BROAD IN EUROPE SIDE AND THE ENTRIES IN ACCOUNT WILL BE BENEFICIAL TO GET VISA ETC. ITA NOS. 225 & 226(ASR)/2010 9 UNDER THESE CIRCUMSTANCES PROTECTIVE ASSET WAS MADE IN THE HANDS OF SH.SATBIR SIGH AND INQUIRIES WERE DIRECTED AGAINST THESE PERSONS WHO WERE REAL BENEFICIARIES AS SUCH THE PROCEEDINGS U/S 147. 3. ALTHOUGH SH. ASHOK KUMAR AND VIJAY MADAN, RETRAC TED FROM THEIR STATEMENTS YET ASSESSMENT HAS BEEN MADE IN TH E HANDS OF SH. ASHOK KUMAR C/O ATM INTERNATIONAL BY THE ACIT, CIR, .II, JALANDHAR. ALTHOUGH THE CIT(A) DELETED THE ADDITION YET THE RE VENUE HAS NOT ACCEPTED THE DECISION OF CIT(A). THE REVENUE IS BEF ORE THE HONBLE ITAT, AMRITSAR. 4 WHEN THE POLICE DEPARTMENT HAS NOT BEEN ABLE TO S OLVE THE PROBLEM OF THEFT OF CHEQUE BOOK OF SH.GURKIRPAL SIG H IN A LONG SPAN OF ABOUT 7 YEARS AND FIND OUT THE CULPRIT HOW CAN THE INCOME TAX DEPTT. CAN TAKE COGNIZANCE OF SUCH A COMPLAINT WHICH STILL AWAITS DECISION WHEN A PERIOD OF MORE THAN SIX YEARS HAS ELAPSED. 5. THE DEPARTMENT HAS NOT DEVICE LIKE METAL DETECTO R TO TRACE OUT THE CULPRIT I.E. THE ALLEGED MISUSER OF THE CHEQUE BOOK AND ASSESS THE INCOME IN HIS HANDS THE FUNDS HAVE TRAVELED FROM TH E BANK ACCOUNT OF M/S. MEGAN IMPEX WITH THE ORIENTAL BANK OF COMMERCE TO YOUR ACCOUNT WITH STATE BANK OF BIKANER & JAIPUR, JALAND HAR. AS SUCH YOU ARE ANSWERABLE TO EXPLAIN THE SOURCE OF THESE DEPOS ITS AMOUNTING TO RS.1,27,75,000/-. 6. IT STATES TO CUSTOMS DEPARTMENT. HENCE NO COMMEN TS. 7. THE SHARE OF BENEFIT/PROFIT ENJOYED BY SH. ASHO K KUMAR HAS BEEN ASSESSED IN HIS HANDS BY THE ACIT, CIR.II, JAL ANDHAR. THIS AMOUNT OF RS. 1,27,75,000/- HAS GONE INTO YOUR BANK A/C AND YOU ARE INDIVIDUALLY RESPONSIBLE TO EXPLAIN THE SAME. AS NO EXPLANATION REGARDING THIS DEPOSIT IN YOUR ACCOUNT HAS BEEN FUR NISHED BY YOU, IT IS TO BE ASSESSED IN YOUR HANDS AS YOUR INCOME IN YOU INDIVIDUAL CAPACITY. M/S. SUPREME INDS. IS YOUR PROPRIETORY CO NCERN. THERE IS NO QUESTION OF AOP/PARTNERSHIP FIRM. AS SUCH REASONS H AVE BEEN RECORDED WITH PROPER APPLICATION OF MIND. THE PROCEEDINGS U/S 147 HAD BEEN INITIATED VALIDL Y AS STATED SUPRA AND DURING THE COURSE OF ASSTT. PROCEEDINGS T HE ASSESSEE HAS NOT FURNISHED ANY SATISFACTORY REPLY TO THE SOURCE OF D EPOSITS IN HIS BANK ITA NOS. 225 & 226(ASR)/2010 10 A/C NO.328 WITH STATE BANK OF BIKANER & JAIPUR, ADD A BASTIAN, JALANDHAR AMOUNTING TO RS.1,27,75,000/- AND THE REA SON WHY THIS AMOUNT OF RS.1,27,75,000/- WAS TRANSFERRED BY M/S. MEGHNA IMPEX TO THE ACCOUNT OF THE ASSESSEE HAS NOT BEEN EXPLAINED. THE ASSESSEE DURING THE PROCEEDINGS STATED THAT HIS CHEQUE BOOKS WAS STOLEN AND HE HAD LODGED A COMPLAINT WITH THE POLICE STATION IN T HIS REGARD. THIS CONTENTION OF THE ASSESSEE IS NOT RELEVANT TO THE S OURCE OF CREDIT ENTRY OF RS.1,27,75,000/- IN HIS BANK ACCOUNT. IN THE ABS ENCE OF ANY SATISFACTORY REPLY FILED BY THE ASSESSEE DURING THE COURSE OF ASSTT. PROCEEDINGS REGARDING SOURCE OF DEPOSIT IN HIS BANK A/C WITH STATE BANK OF BIKANER & JAIPUR, ADDA BASTIAN, JALANDHAR, I HOLD THAT DEPOSIT OF RS.1,27,75,000/- DURING THE FINANCIAL YE AR 2000-01 RELEVANT TO ASSESSMENT YEAR 2001-02 AS MENTIONED SUPRA REPRE SENTS ASSESSEES INCOME FROM UNDISCLOSED SOURCES UNDER THE PROVISION S OF SECTION 69A OF I.T. ACT, 1961 AND IS ASSESSED AS SUCH. 11. BEFORE THE LD. CIT(A), THE ASSESSEE RAISED FOLL OWING TWO GROUNDS OF APPEAL WHICH ARE REPRODUCED HEREUNDER: 1. THAT THE ORDER OF LD. AO DATED 31.12.2007 IS A GAINST THE LAW & FACTS OF THE CASE. LD. A.O. WRONGLY ISSUED NOTIC E U/S 148. 2. THAT LD. A.O. HAS WRONGLY MADE AN ADDITION OF RS.1,27,75,000/- ON ACCOUNT OF DEPOSIT ON DIFFERE NT DATES IN CURRENT ACCOUNT OF M/S. MEGHAN IMPEX WITH STATE B ANK OF BIKANER & JAIPUR, BASTI ADD, JALANDHAR. 12. THE LD. CIT(A) VIDE PAGE 12 & 13 OF HIS ORDER IN PARA 2 & 2.1 REJECTED THE LEGAL GROUNDS, WHICH FOR THE SAKE OF C LARITY IS REPRODUCED AS UNDER: 2. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT CAREFULLY. PERUSAL OF THE ASSESSMENT RECORDS OF THE ASSESSEE AND THE REASON RECORDED FOR ISSUE OF NOTICE U/S 148 REVEAL THAT I NFORMATION WAS RECEIVED FROM THE COMMISSIONER OF CUSTOMS, AMRITSA R THAT M/S. MEGHNA IMPEX, 7 SEHDEV MARKET, JALANDHAR HAS CLAIM ED DEPB ITA NOS. 225 & 226(ASR)/2010 11 BENEFITS BY SHOWING EXPORTS OF TIMING/CRANK SHAFTS THOUGH ONLY HAND TOOLS HAD BEEN EXPORTED. FURTHER, EVEN THOUGH MONE Y WAS NOT ACTUALLY RECEIVED IN RESPECT OF SEVERAL EXPORT BILLS, BANK CERTIFICATES HAD BEEN FORGED TO SHOW REALIZATION TO CLAIM DEPB BENEFITS OF RS.1.85 CRORES, WHICH HAD BEEN SOLD TO OTHERS. IT WAS STATED THAT M/S. MEGHNA IMPEX HAD BEEN FLOATED IN THE NAME OF SH. SATBIR SINGH, AN EMPLOYEE OF SH. PAVITAR SINGH, CA BY SH. ASHOK KUMAR ALIAS LUCK OF M/S. ATM INTERNATIONAL. SH. GURKIRPAL SINGH OF M/S. SUPREME INDUSTRIES AND SH. PAVITAR SINGH, CA. IT WAS ALSO INFORMED THAT SH. S ATBIR SINGH HAD STATED BEFORE THE CUSTOMS AUTHORITIES THAT THE REA L BENEFICIARIES WERE SH. ASHOK KUMAR AND SH. GURKIRPAL SINGH. SUBSTANTI AL MONEY TO THE TUNE OF RS.1.08 CRORES WAS SAID TO HAVE BEEN TRANS FERRED FROM THE BANK ACCOUNT OF M/S. MEGHNA IMPEX TO THE BANK ACCO UNT OF M/S. SUPREME INDS. THIS WAS SAID TO HAVE BEEN MANAGED B Y OBTAINING BLANK SIGNED CHEQUES OF M/S. MEGHNA IMPEX FROM SH. SABIR SINGH AND WITHDRAWING MONEY FROM THE ACCOUNT OF M/S. MEGHNA IMPEX. SH. ASHOK KUMAR HAD STATED BEFORE THE CUSTOMS AUTHORIT IES THAT EXPORT PROCEEDS WERE ARRANGED THROUGH HAWALA CHANNELS FRO M INDIA TO DUBAI AND REMITTED BACK INTO THE ACCOUNT OF MEGHNA IMPEX AS EXPORT PROCEEDS. THE BILLS WERE OVER-INVOICED TO GET SUCH REMITTANCE BACK INTO INDIA. THE MONEY WAS WITHDRAWN FROM THE ACCOU NT OF M/S. MEGHNA IMPEX AND THESE WERE GIVEN TO THE HAWALA OP ERATOR IN INDIA. BASED ON THIS INFORMATION, THE AO FOUND THE BELIEF THAT THE MONEY TRANSFERRED FROM THE BANK ACCOUNT OF MEGHNA EXPORT TO THE BANK ACCOUNT OF SUPREME INDS. PROP. SH. GURRKIRPAL SING H REPRESENTED HIS INCOME WHICH HAD ESCAPED ASSESSMENT. 2.1. ON A CONSIDERATION OF THE REASONS RECORDED, I AM OF THE VIEW THAT THE AO HAD PRIMA FACIE MATERIAL TO BELIEVE TH AT INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT FOR THE RELEVANT A SSESSMENT YEARS. GROUND NO.1 OF APPEAL IS, THEREFORE, REJECTED. 13. AS REGARDS THE ADDITION OF RS.1,27,75,000/-, TH E LD. AR APPEARING ON BEHALF OF THE ASSESSEE FILED WRITTEN SUBMISSIONS WH ICH ARE REPRODUCED AT PAGES 4 TO 8 OF HIS ORDER IN PARA 1.5 WHICH WERE FO RWARDED TO THE A.O. FOR HIS COMMENTS AND THE A.O. SUBMITTED THE COMMENTS WH ICH ARE AVAILABLE IN ITA NOS. 225 & 226(ASR)/2010 12 PARA 1.6 AND THE COUNTER COMMENTS AND THE REJOINDER ETC. WHICH ARE AVAILABLE IN PARA 1.7 TO 1.9 OF CIT(A)S ORDER. THE LD. CIT(A ) ULTIMATELY VIDE PARAS 2.2 TO 2.9 REJECTED ALL THE PLEADINGS MADE BY THE A UTHORIZED REPRESENTATIVE APPEARING ON BEHALF OF THE ASSESSEE AND CONFIRMED T HE ACTION OF THE ASSESSING OFFICER AND DISMISSED THE GROUNDS OF APPE AL RAISED BEFORE HIM. 14. THE LD. COUNSEL FOR THE ASSESSEE, MR. RAVISH SU D, ADVOCATE, ARGUED WITH REGARD TO THE ADDITIONAL GROUND NO.1 THAT THE A.O. DOES NOT ASSUME JURISDICTION WITHOUT COMPLYING WITH THE STATUTORY REQUIREMENT OF OBTAINING THE APPROVAL/SANCTION OF THE APPROPRIATE AUTHORITY AS CONTEMPLATED U/S 151(2) OF THE ACT PRIOR TO THE ISSUE OF THE IMPUGNED NOTI CE U/S 148 OF THE ACT. IN THIS REGARD, HE RELIED UPON THE DECISION OF VARIOUS COURTS OF LAW. 14.1. AS REGARDS ADDITIONAL GROUND NO.2, THE LD. C OUNSEL FOR THE ASSESSEE, MR. RAVISH SUD, CA ARGUED THAT NO NOTICE U/S 143(2) OF THE ACT HAS BEEN ISSUED AND THE AO IS ERRED IN LAW IN FRAMING THE AS SESSMENT U/S 147/143(3). RELIANCE WAS PLACED ON THE DECISION OF HONBLE SUPR EME COURT IN THE CASE OF ACIT VS. HOTEL BLUE MOON (2010) 321 ITR 362 AND OTHER DECISIONS WHERE THE SAID DECISION OF HONBLE SUPREME COURT HA S BEEN FOLLOWED. ITA NOS. 225 & 226(ASR)/2010 13 15. THE LD. JCIT(DR), MR. MAHAVIR SINGH, ON THE OTH ER HAND, AT THE OUTSET PLACED REPORT OF THE A.O. AND THE PERMISSION /APPROVAL OF THE COMPETENT AUTHORITY TAKEN BEFORE RECORDING REASONS WHICH ARE DATED 29.03.2007. HE FURTHER ARGUED THAT THE LD. COUNSEL FOR THE ASSESSEE SHOULD AVOID TAKING SUCH GROUNDS WITHOUT CONSULTING THE RE CORD OF THE ASSESSMENT. 15.1 AS REGARDS GROUND NO.2, THE LD. DR ARGUED THAT THE ASSESSEE HAS NOT RAISED ANY OBJECTION WITH REGARD TO THE ISSUANCE OF NOTICE U/S 143(2) OF THE ACT AT THE COMMENCEMENT OF THE ASSESSMENT PROCEEDIN GS, SINCE THE JURISDICTION IS DETERMINABLE AT THE COMMENCEMENT OF THE PROCEEDINGS AND NOT AT THE CONCLUSION OF THE SAID PROCEEDINGS. HE RELIE D UPON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. RAM NARAIN BANSAL DATED 13 TH JULY, 2011 (2011) 202 TAXMAN 213 WHERE IT HAS BEEN DECIDED THAT THE ASSESSEE HAVING PARTICIPATED IN THE REASSESSMEN T PROCEEDINGS UPTO ITS CONCLUSION WITHOUT RAISING ANY OBJECTION ABOUT ISSU E AND SERVICE OF NOTICE U/S 143(2), THE LD. CIT(A) AND THE TRIBUNAL WERE NO T JUSTIFIED IN HOLDING ASSESSMENT INVALID ON THAT SCORE. IN THE PRESENT CA SE, THE ASSESSEE HAVING PARTICIPATED IN THE REASSESSMENT PROCEEDINGS WITHO UT RAISING ANY OBJECTION WITH REGARD TO NON-ISSUANCE OF NOTICE U/S 143(2) OF THE ACT AND THEREFORE, SUCH OBJECTION CANNOT BE RAISED BEFORE THE TRIBUNAL AND THE SAME IS LIABLE TO BE DISMISSED. ITA NOS. 225 & 226(ASR)/2010 14 16. WE HAVE HEARD THE RIVAL CONTENTIONS WITH REGARD TO THE LEGAL ISSUE AND PERUSED THE FACTS OF THE CASE. AS REGARDS THE ADDIT IONAL GROUND NO.1, THE GROUND TAKEN BY THE ASSESSEE WAS THAT NOTICE U/S 1 48 CANNOT BE ISSUED WITHOUT OBTAINING SANCTION OF THE APPROPRIATE AUTHO RITY AS CONTEMPLATED U/S 151(2) OF THE ACT. THE LD. DR HAS PLACED ON RECORD THE SAID SANCTION AND HAS STRONGLY OBJECTED TO THAT THE ASSESSEE SHOULD N OT TAKE SUCH GROUND WITHOUT CONSULTING THE ASSESSMENT RECORD. ON PERUSA L OF THE SANCTION TAKEN U/S 151(2) OF THE ACT BEFORE ISSUANCE OF NOTICE U/S 148, WE ARE OF THE VIEW THAT THE GROUND HAS BEEN TAKEN BY THE ASSESSEE WITH OUT CONSULTING THE ASSESSMENT RECORD, WHICH IN FACT, SHOULD NOT HAVE BEEN TAKEN. IN ANY CASE, THERE IS NO VIOLATION AS CONTEMPLATED U/S 151(2) OF THE ACT AND THE ADDITIONAL GROUND NO.1, SO RAISED IS DISMISSED. 17. AS REGARDS ADDITIONAL GROUND NO.2 , WHERE THE A SSESSEE HAS ALLEGED THAT THE A.O. HAS ERRED IN LAW AND FACTS OF THE CAS E BY FRAMING ASSESSMENT U/S 148/143(3) OF THE ACT WITHOUT ISSUING A NOTICE U/S 143(2) OF THE ACT. THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE DE CISION IN THE CASE OF ACIT VS. HOTEL BLUE MOON (201) 321 ITR 362 (SC) AND OTHE R DECISIONS IN THIS REGARD. 17.1. THE ASSESSEE THROUGH HIS COUNSEL SH. ASHWANI RNADEV,CA HAS ATTENDED THE ASSESSMENT PROCEEDINGS FROM TIME TO TI ME I.E. SINCE ITA NOS. 225 & 226(ASR)/2010 15 COMMENCEMENT TILL THE CONCLUSION OF THE ASSESSMENT PROCEEDINGS WHICH FACTS ARE AVAILABLE IN THE ASSESSMENT RECORD AND TH E ASSESSMENT ORDER REPRODUCED HEREINABOVE. 17.2 AS REGARDS THE ARGUMENTS OF THE LD. COUNSEL FO R THE ASSESSEE THAT REASSESSMENT IS NULLITY THAT THERE BEING A JURISDIC TIONAL DEFECT IN CONTINUATION OF PROCEEDINGS, WE ARE OF THE VIEW THAT THE WORD J URISDICTION DOES NOT HAVE A FIXED MEANING AND IN ONE SENSE IT MEANS AN ENTITL EMENT TO ENTER UPON THE ENQUIRY IN QUESTION AND IN WIDER SENSE IT IMPLIES R IGHT TO CONDUCT ENQUIRY INTO THE MATTER IN LAWFUL MANNER. 17.3 IN THE AFORESAID CONTEXT, THERE IS NO ARGUMENT ON BEHALF OF THE ASSESSEE AS TO WHAT NATURE OF CHALLENGE IS BEING MADE TO THE PROCEEDINGS I.E. ON THE ASSUMPTION OF JURISDICTION/ OR APPLICATION THEREOF AND FURTHER TO STATE THAT NO PLEADINGS HAVE BEEN RAISED OF WHATSOEVER KIND WHICH ADDRESSES THE POINT THAT THE AO DO NOT HAVE ANY RIGHT TO CONDUCT ENQUIR Y. 17.4. THE ANOTHER ISSUE WHICH LEADS TO BE CONSIDERE D IS THE CHALLENGE TO THE JURISDICTION IS DETERMINABLE AT THE COMMENCEMENT A ND NOT AT THE CONCLUSION OF THE PROCEEDINGS AND THIS ASPECT HAS BEEN VERY CL EARLY NOTICED BY THE HONBLE SUPREME COURT IN THE CASE OF M.L. SETHI VS. R.P. KAPUR REPORTED IN (1972) 2 SCC 427 IN PARA 12 AT PAGES 434 & 435 WHIC H FOR THE SAKE OF CONVENIENCE IS REPRODUCED AS UNDER: ITA NOS. 225 & 226(ASR)/2010 16 THE 'JURISDICTION' IS A VERBAL COAT OF MANY COLOUR S JURISDICTION ORIGINALLY SEEMS TO HAVE HAD THE MEANING WHICH LOR D REID ASCRIBED TO IT IN ANISMINIC LTD. V. FOREIGN COMPE NSATION OMISSION, NAMELY, THE ENTITLEMENT 'TO ENTER UPON THE ENQUIRY IN QUESTION'. IF THERE WAS AN ENTITLEMENT TO ENTER UPON AN ENQUIRY INTO THE QUESTION, BEEN ANY SUBSEQUENT ERROR COULD ONLY BE REGARDED A S AN ERROR WITHIN THE JURISDICTION. THE BEST KNOWN FORMULATION OF TH IS THEORY IS THAT MADE BY LORD DARMAN IN R. V. BOLTON. HE SAID THA T THE QUESTION OF JURISDICTION IS DETERMINABLE AT THE COMMENCEMENT , NOT AT THE CONCLUSION OF THE ENQUIRY. IN ANISMINIC LTD. CASE (SUPRA), LORD REID SAID: 'BUT THERE ARE MANY CASES WHERE, ALTHOUGH THE TRIB UNAL HAD JURISDICTION TO ENTER ON THE ENQUIRY IT HAS DONE O R FAILED TO DO SOMETHING IN THE COURSE OF THE ENQUIRY WHICH IS OF SUCH A NATURE THAT ITS DECISION IS A NULLITY. IT MAY HAVE GIVEN ITS DECISION IN BAD FAITH. IT MAY HAVE MADE A DECISION WHICH IT HAD NO POWER TO MAKE. IT MAY HAVE FAILED IN THE COURSE OF THE ENQUIRY TO COMPLY WITH THE REQUIREMENTS OF NATURAL JUSTICE. IT MAY IN PERFECT GOOD FAITH HAVE MISCONSTRUED THE PROVISIONS GIVING IT POWER TO AC T SO THAT IT FAILED TO DEAL WITH THE QUESTION REMITTED TO IT AND DECIDED SOME QUESTION WHICH WAS NOT REMITTED TO IT. IT MAY HAVE REFUSED TO TAK E INTO ACCOUNT SOMETHING WHICH IT WAS REQUIRED TO TAKE INTO ACCOU NT. OR IT MAY HAVE BASED ITS DECISION ON SOME MATTER WHICH, UND ER THE PROVISIONS SETTING IT UP, IT HAD NO RIGHT TO TAKE INTO ACCOUN T. I DO NOT INTEND THIS LIST TO BE EXHAUSTIVE.' IN THE SAME CASE, LORD PEARCE SAID 'LACK OF JURISDICTION MAY ARISE IN VARIOUS WAYS. T HERE MAY BE AN ABSENCE OF THOSE FORMALITIES OR. THINGS WHICH ARE CONDITIONS PRECEDENT TO THE TRIBUNAL HAVING ANY JURISDICTION TO EMBARK ON AN ,ENQUIRY. OR THE TRIBUNAL MAY AT THE END MAKE AN O RDER THAT IT HAS NO JURISDICTION TO MAKE. OR, IN THE INTERVENING STAGE WHILE ENGAGED ON A PROPER ENQUIRY, THE TRIBUNAL MAY DEPART FROM THE R ULES OF NATURAL JUSTICE; OR IT MAY ASK ITSELF THE WRONG QUESTIONS; OR IT MAY TAKE INTO ACCOUNT MATTERS WHICH IT WAS NOT DIRECTED TO TAKE INTO ACCOUNT. THEREBY IT WOULD STEP OUTSIDE ITS JURISD ICTION. IT WOULD TURN ITS INQUIRY INTO SOMETHING NOT DIRECTED BY PARLIA MENT AND FAIL TO MAKE THE INQUIRY WHICH THE PARLIAMENT DID DIRECT. ANY OF THESE THINGS WOULD CAUSE ITS PURPORTED DECISION TO BE A NULLITY .' ITA NOS. 225 & 226(ASR)/2010 17 THE DICTA OF THE MAJORITY OF THE HOUSE OF LORDS IN THE ABOVE CASE WOULD SHOW THE EXTENT TO WHICH `LACK' AND 'EXCESS ' OF JURISDICTION HAVE BEEN ASSIMILATED OR, IN OTHER WORDS, THE EXT ENT TO WHICH WE HAVE MOVED AWAY FROM THE TRADITIONAL CONCEPT OF 'J URISDICTION'. THE EFFECT OF THE DICTA IN THAT CASE IS TO REDUCE THE DIFFERENCE 'BETWEEN JURISDICTIONAL ERROR AND ERROR OF LAW WIT HIN JURISDICTION ALMOST TO VANISHING POINT. THE PRACTICAL EFFECT OF THE DECISION IS THAT ANY ERROR OF LAW CAN BE RECKONED AS JURISDICTIONAL . THIS COMES PERILOUSLY CLOSE TO SAYING THAT THERE IS JURISDICT ION IT THE DECISION IS RIGHT IN LAW BUT NONE IF IT IS WRONG. ALMOST ANY MISCONSTRUCTION OF A STATUTE CAN BE REPRESENTED AS 'BASING THEIR DECI SION ON A MATTER WITH WHICH THEY HAVE NO RIGHT TO DEAL', 'IM POSING AN UNWARRANTED CONDITION' OR 'ADDRESSING THEMSELVES T O A WRONG QUESTION'. THE MAJORITY OPINION IN THE, CASE LEAVE S A COURT OR TRIBUNAL WITH VIRTUALLY NO MARGIN OF LEGAL ERROR. WHETHER THERE IS EXCESS OF JURISDICTION OR MERELY ERROR WITHIN JURI SDICTION CAN BE DETERMINED ONLY BY CONSTRUING THE EMPOWERING STATU TE, WHICH WILL, GIVE LITTLE GUIDANCE. IT IS REALLY A QUESTION OF HOW MUCH LATITUDE THE COURT IS PREPARED TO ALLOW. IN THE END IT CAN ONLY BE A VALUE JUDGMENT (SEE H.W.R. WADE, 'CONSTITUTIONAL AND ADM INISTRATIVE ASPECTS OF THE ANISMANIC CASE', LAW QUARTERLY REV IEW, VOL. 85, 1969, P. 198). WHY IS IT THAT A WRONG DECISI ON ON A QUESTION OF LIMITATION OR RES JUDICATA 'WAS TREATED AS A JURIS DICTIONAL ERROR AND LIABLE TO BE INTERFERED WITH IN REVISION ? IT IS A IT DIFFICULT TO UNDERSTAND HOW AN ERRONEOUS DECISION ON A QUESTION OF LIMITATION OR RES JUDICATA WOULD OUST THE JURISDICTION OF THE CO URT IN THE PRIMITIVE SENSE OF THE TERM AND RENDER THE DECISION OR A DE CREE EMBODYING THE DECISION A NULLITY LIABLE TO COLLATERAL ATTACK . THE REASON CAN ONLY BE THAT THE ERROR OF LAW WAS CONSIDERED AS VI TAL BY THE COURT. AND THERE IS NO YARDSTICK TO DETERMINE THE MAGNITUDE O F THE ERROR OTHER THAN THE OPINION OF THE COURT. 17.5. THE AFORESAID PRINCIPLE OF LAW WITH GREATEST RESPECT WE ARE BOUND TO FOLLOW. 17.6. EVEN AS PER RECORDS BEFORE US, IT HAS BEEN NO TICED THAT THE ASSESSEE HAS BEEN DILIGENT IN PURSUING THE REMEDY AVAILABLE THR OUGH ATTENDING TO THE CASE ITA NOS. 225 & 226(ASR)/2010 18 PROCEEDINGS BEFORE THE AO AND IT IS A SETTLED LAW T HAT OBJECTION REGARDING JURISDICTION BE RAISED AT THE EARLIER POSSIBLE OPPO RTUNITY. THUS, THERE IS NO REASON FOR COMING FORWARD FOR THE ASSESSEE WAITING FOR SUCH LONG FOR RAISING SAID OBJECTION (LEGAL GROUND) AFTER COMPLETION OF R EASSESSMENT. ANOTHER ISSUE TO BE ADDRESSED IS THAT CHALLENGE IS NOT TO T HE CONTINUATION OF PROCEEDINGS BY THE A.O. WHEREAS THE PURPOSE OF ISSU ANCE NOTICE U/S 143(2) OF THE ACT CANNOT BE LOST SIGHT AND WE ARE SUPPORT ED BY THE PRINCIPLE OF LAW AS NOTICED IN THE CASE OF DHIRENDRA NATH GOARI ( IN CA NO.85 OF 1961), SUBAL CHANDRA NATH SAHA AND OTHERS ( IN CA NO.86 OF 1961) VS. SUDHIR CHANDRA GHOSH AND OTHERS (1964) 6 SCR 1001 : AIR 1964 SC 1300. IN PARA-7 WHERE THE DIFFERENCE BETWEEN A NULLITY AND AN IRREGULARITY HAS BEEN NOTICED, WHICH HAS BEEN EXTRACTED HEREINBELOW: EVEN THEN, THE QUESTION ARISES WHETHER AN ACT DONE IN BREACH OF THE MANDATORY PROVISION IS PER FORCE A NULLITY. IN AS HUTOSH SIKDAR V. BEHARI LAL KIRTANIA(1), MOOKERJEE, J., AFTER REFE RRING TO MACNAMARA ON 'NULLITY AND IRREGULAR TIES, OBSERVED : NO HARD AND FAST LINE CAN BE DRAWN BETWEEN A NULL ITY AND AN IRREGULARITY; BUT THIS MUCH IS CLEAR, THAT AN IRRE GULARITY IS A DEVIATION FROM A RULE OF LAW WHICH DOES NOT TAKE AWAY THE FOUNDATION OR AUTHORITY FOR THE PROCEEDING, OR APPLY TO ITS W HOLE OPERATION, WHEREAS A NULLITY IS A PROCEEDING THAT IS TAKEN WI THOUT ANY FOUNDATION FOR IT, OR IS SO ESSENTIALLY DEFECTIVE AS TO BE OF NO AVAIL OR EFFECT WHATEVER, OR IS VOID AND INCAPABLE OF BEING VALIDA TED.' WHETHER A PROVISION FALLS UNDER ONE CATEGORY OR TH E OTHER IS NOT EASY OF DISCERNMENT, BUT IN THE ULTIMATE ANALYSIS IT DE PENDS UPON THE NATURE, SCOPE AND OBJECT OF A PARTICULAR PROVISIO N. A WORKABLE TEST ITA NOS. 225 & 226(ASR)/2010 19 HAS BEEN LAID DOWN BY JUSTICE COLERIDGE IN HOLMES V. RUSSELL(2), WHICH READS: 'IT IS DIFFICULT SOMETIMES TO DISTING UISH BETWEEN AN IRREGULARITY AND A NULLITY; BUT THE SAFEST RULE TO DETERMINE WHAT IS AN IRREGULARITY AND WHAT IS A NULLITY IS TO SEE WHETH ER THE PARTY CAN WAIVE THE OBJECTION; IF HE CAN WAIVE IT, IT AMOUNTS TO A N IRREGULARITY; IF HE CANNOT, IT IS ANULLITY.' A WAIVER IS AN INTENTION AL RELINQUISHMENT OF A KNOWN RIGHT BUT OBVIOUSLY AN OBJECTION TO JURISDIC TION CANNOT BE WAIVED, FOR CONSENT CANNOT GIVE A COURT JURISDICTI ON WHERE THERE IS NONE. EVEN IF THERE IS INHERENT JURISDICTION, CER TAIN PROVISIONS CANNOT BE WAIVED. MAXWELL IN HIS BOOK 'ON THE (1) (1908) I.L.R. 35 CAL. 61, 72. (2) [1841] 9 DOWL. 487. 1012. INTERPRETATION OF STATUTES', 11TH EDN., AT P. 375, DESCRIBES THE RULE THUS: 'ANOTHER MAXIM WHICH SANCTIONS THE NON- OBSERVANCE OF A STATUTORY PROVISION IS THAT CUILIBET LICET RENUNTIARE JURI PRO SE INTRODUCTO. EVERYONE HAS A RIGHT TO WAIVE AND TO AGREE TO WAI VE THE ADVANTAGE OF A LAW OR RULE MADE SOLELY FOR THE BENEFIT AND PROTECTION OF THE INDIVIDUAL IN HIS PRIVATE CAPACITY, WHICH MAY BE D ISPENSED WITH WITHOUT INFRINGING ANY PUBLIC RIGHT OR PUBLIC POLI CY.' THE SAME RULE IS RESTATED IN 'CRAIES ON STATUTE LAW', 6TH EDN., AT P. 269, THUS : 'AS A GENERAL RULE, THE CONDITIONS IMPOSED BY STAT UTES WHICH AUTHORISE LEGAL PROCEEDINGS ARE TREATED AS BEING INDISPENSA BLE TO GIVING THE COURT JURISDICTION. BUT IF IT APPEARS THAT THE ST ATUTORY CONDITIONS WERE INSERTED BY THE LEGISLATURE SIMPLY FOR THE S ECURITY OR BENEFIT OF THE PARTIES TO THE ACTION THEMSELVES, AND THAT NO PUBLIC INTERESTS ARE INVOLVED, SUCH CONDITIONS WILL NOT BE CONSIDER ED AS INDISPENSABLE, AND EITHER PARTY MAY WAIVE THEM WIT HOUT AFFECTING THE JURISDICTION OF THE COURT.' 17.7 HAVING NOTICED MATERIAL FACTS, WE CONSIDER IT APPROPRIATE WITH GREAT RESPECT IN ACCORDANCE WITH THE PRINCIPLE OF LAW THA T AT THE MOST THE PRESENT KIND OF GRIEVANCE IS MERELY AN ERROR WITHIN JURISD ICTION, WHICH CAN BE DETERMINED ONLY BY CONSTRUING THE EMPOWERING STATU TE, WHICH WILL GIVE GUIDANCE ON THE SUBJECT AND IN THE PRESENT CASE. FU RTHER WE ARE SUPPORTED BY ITA NOS. 225 & 226(ASR)/2010 20 THE DECISION OF ACIT VS. HOTEL BLUE MOON DECIDED BY THE HONBLE SUPREME COURT REPORTED IN (2010) 321 ITR 362 DATED 2 ND FEB., 2010. THUS, THE PURPOSE IS TO GIVE OPPORTUNITY TO THE ASSESSEE FOR BRINGING TO THE KNOWLEDGE THE PROCEEDINGS BEING UNDERTAKEN IN ACCORDANCE WITH LAW WHICH TOO HAS BEEN DONE BY THE A.O. THE RELEVANT PART OF THE DECI SION IN THE CASE OF ACIT & ANR. VS. HOTEL BLUE MOON REPORTED IN (2010) 321 I TR 362 (SC) IN PARA 15 IS REPRODUCED AS UNDER: BUT S. 143(2) ITSELF BECOMES NECESSARY ONLY WHERE I T BECOMES NECESSARY TO CHECK THE RETURN, SO THAT WHE RE BLOCK RETURN CONFORMS TO THE UNDISCLOSED INCOME INFERRED BY THE AUTHORITIES, THERE IS NO REASON, W HY THE AUTHORITIES SHOULD ISSUE NOTICE UNDER S. 143(2 ). HOWEVER, IF AN ASSESSMENT IS TO BE COMPLETED UNDER S. 143(3) R/W S. 158BC, NOTICE UNDER S. 143(2) SHOULD BE ISSUED WITHIN ONE YEAR FROM THE DATE OF FILING OF BLOCK RETURN. OMISSION ON THE PART OF THE ASSESSIN G AUTHORITY TO ISSUE NOTICE UNDER S. 143(2) CANNOT B E A PROCEDURAL IRREGULARITY AND THE SAME IS NOT CURABL E AND, THEREFORE, THE REQUIREMENT OF NOTICE UNDER S. 143(2) CANNOT BE DISPENSED WITH. THE OTHER IMPORTA NT FEATURE THAT REQUIRES TO BE NOTICED IS THAT THE S. 158BC(B) SPECIFICALLY REFERS TO SOME OF THE PROVIS IONS OF THE ACT WHICH REQUIRES TO BE FOLLOWED BY THE AO WHILE COMPLETING THE BLOCK ASSESSMENTS UNDER CHAPT ER XIV-B OF THE ACT. THIS LEGISLATION IS BY INCORPORATION. THIS SECTION EVEN SPEAKS OF SUB- SECTIONS WHICH ARE TO BE FOLLOWED BY THE AO. HAD T HE INTENTION OF THE LEGISLATURE WAS TO EXCLUDE THE PROVISIONS OF CHAPTER XIV OF THE ACT, THE LEGISLAT URE WOULD HAVE OR COULD HAVE INDICATED THAT ALSO. A READING OF THE PROVISION WOULD CLEARLY INDICATE, I N OUR OPINION, IF THE AO, IF FOR ANY REASON, REPUDIA TES THE RETURN FILED BY THE ASSESSEE IN RESPONSE TO NO TICE UNDER S. 158BC(A), THE AO MUST NECESSARILY ISSUE NOTICE UNDER S. 143(2) OF THE ACT WITHIN THE TIME PRESCRIBED IN THE PROVISO TO S. 143(2) OF THE ACT. WHERE THE LEGISLATURE INTENDED TO EXCLUDE CERTAIN ITA NOS. 225 & 226(ASR)/2010 21 PROVISIONS FROM THE AMBIT OF S. 158BC(B) IT HAS DO NE SO SPECIFICALLY. THUS, WHEN S. 158BC(B) SPECIFICAL LY REFERS TO [SIC-S. 143(2)] APPLICABILITY OF THE PRO VISO THERETO CANNOT BE EXCLUDED. WE MAY ALSO NOTICE HER E ITSELF THAT THE CLARIFICATION GIVEN BY CBDT IN ITS CIRCULAR NO. 717. DT. 14TH AUG.. 1995, HAS A BINDI NG EFFECT ON THE DEPARTMENT, BUT NOT ON THE COURT. TH IS CIRCULAR CLARIFIES THE REQUIREMENT OF LAW IN RESPE CT OF SERVICE OF NOTICE UNDER SUB-S. (2) OF S. 143 OF THE ACT. ACCORDINGLY, WE CONCLUDE EVEN FOR THE PURPOSE OF CHAPTER XIV-B OF THE ACT. FOR THE DETERMINATION OF UNDISCLOSED INCOME FOR A BLOCK PERIOD UNDER THE PROVISIONS OF S. 158BC. THE PROVISIONS OF S. 142 A ND SUB-SS. (2) AND (3) OF S. 143 ARC APPLICABLE AND N O ASSESSMENT COULD BE MADE WITHOUT ISSUING NOTICE UN DER S. 143(2) OF THE ACT. HOWEVER, IT IS CONTENDED BY SRI SHEKHAR. LEARNED COUNSEL FOR THE DEPARTMENT THAT I N VIEW OF THE EXPRESSION 'SO FAR AS MAY BE' IN S. 153BC(B), THE ISSUE OF NOTICE IS NOT MANDATORY BUT OPTIONAL AND ARE TO BE APPLIED TO THE EXTENT PRACTICABLE. IN SUPPORT OF THAT CONTENTION, THE LEARNED COUNSEL HAS RELIED ON THE OBSERVATION MADE BY THIS COURT IN DR. PARTAP SINGH'S CASE (SUPRA). IN THIS CASE, THE COURT HAS OBSERVED THAT S. 37(2) PROVIDE S THAT 'THE PROVISIONS OF THE CODE RELATING TO SEARC HES, SHALL SO FAR AS MAY BE, APPLY TO SEARCHES DIRECTED UNDER S. 37(2). READING THE TWO SECTIONS TOGETHER IT MERELY MEANS THAT THE METHODOLOGY PRESCRIBED FOR CARRYING OUT THE SEARCH PROVIDED IN S. 165 HAS TO BE GENERALLY FOLLOWED. THE EXPRESSION 'SO FAR AS MAY BE' HAS ALWAYS BEEN CONSTRUED TO MEAN THAT THOSE PROVISIONS MAY BE GENERALLY FOLLOWED TO THE EXTENT POSSIBLE. THE LEARNED COUNSEL FOR THE RESPONDENT H AS BROUGHT TO OUR NOTICE THE OBSERVATIONS MADE BY THI S COURT IN THE CASE OF MAGANLAL V. JAISWAL INDUSTRIE S & ORS. [1989] 4 SCC 344, WHEREIN THIS COURT WHILE DEALING WITH THE SCOPE AND IMPORT OF THE EXPRESSIO N 'AS FAR AS PRACTICABLE' HAS STATED 'WITHOUT ANYTHI NG MORE THE EXPRESSION 'AS FAR AS POSSIBLE' WILL MEAN THAT THE MANNER PROVIDED IN THE CODE FOR ATTACHMEN T OR SALE OF PROPERTY IN EXECUTION OF A DECREE SHALL BE APPLICABLE IN ITS ENTIRETY EXCEPT SUCH PROVISION THEREIN WHICH MAY NOT BE PRACTICABLE TO BE APPLIED .' 18 WE MAY REFER TO THE JUDGMENT OF HONBLE JURISDIC TIONAL HIGH COURT OF PUNJAB & HARYANA WHICH IS BINDING IN NATURE TITLED AS CIT VS RAM NARAIN ITA NOS. 225 & 226(ASR)/2010 22 BANSAL REPORTED IN ITA NO.814 OF 2010 DATED 13 TH JULY, 213 REPORTED IN 202 TAXMAN 213 (PLACED ON RECORD) PERTAINING TO ASSESSM ENT YEAR 2002-03 WHEREIN THE QUESTION FALLING CONSIDERATION IS THE S AME AS RAISED BEFORE THIS BENCH IN THE PRESENT APPEAL, WHICH IS EXTRACTED HER EINBELOW: WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE TRIBUNAL WAS RIGHT IN LAW IN CONCURRI NG WITH THE FINDING OF CIT (A) IN HOLDING THE ASSESSMENT BAD IN LAW, MADE PURSUANT TO THE ISSUE OF NOTICE U/S 148 WITHOU T APPRECIATING THAT NO PREJUDICE WAS CAUSED TO THE ASSESSEE BY NON-ISS UANCE OF NOTICE U/S 143(2), PARTICULARLY, W HEN THE ASSESSEE WAS PARTICIPATING IN THE ASSESSMENT PROCEEDING WITHOUT OBJECTING TO THE ASSESSMENT PROCEEDIN GS ON THIS ACCOUNT AT THE ASSESSMENT STAGE? 19. THE HONBLE HIGH COURT NOTICING THE PROVISIONS OF LAW HAS ANSWERED THE QUESTION AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE WITH THE DIRECTION OF REMANDING THE MATTER TO THE TRIBUNAL F OR DECISION ON MERIT AFRESH IN ACCORDANCE WITH LAW. THE RELEVANT PORTION OF THE JUDGMENT OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. RAM NARAIN BANSAL (SUPRA) IS REPRODUCED HEREINBELOW FOR THE S AKE OF CONVENIENCE AS UNDER: 9. LEARNED COUNSEL FOR THE REVENUE SUBMITTED T HAT NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO THE AS SESSEE WHICH WAS DULY SERVED. IN PURSUANCE TO THE SAID NOTICE, THE ASSESSEE APPEARED BEFORE THE ASSESSING AUTHORITY AND PARTICIPATED IN THE RE-ASSESSMENT PROCEEDINGS ON 30.11.2007, 6.12.2007, 12.1 2.2007, 13.12.2007, 18.12.2007, 24.12.2007, 27.12.2007, 28.12.200 7 AND 31.12.2007 ITA NOS. 225 & 226(ASR)/2010 23 AND ALSO CROSS-EXAMINED THE WITNESSES WHO WERE SUMMONED AND THEIR STATEMENTS WERE RECORDED. THE COUNSEL DRE W SUPPORT FROM A JUDGMENT OF THE KERALA HIGH COURT IN K.J. THOMA S VS. CIT (2008) 301 ITR 301 TO SUBMIT THAT NON-SERVICE OF NOTICE UNDER SECTION 143 (2) OF THE ACT WAS NOT FATAL TO RE -ASSESSMENT PROCEEDINGS. REFERENCE WAS MADE TO SECTION 292 OF THE ACT AND A CCORDING TO THE COUNSEL THE SAID PROVISIONS WERE A PPLICABLE TO ALL PENDING PROCEEDINGS. RELIANCE WAS ALSO PLACED ON A JUDGMENT OF THIS COURT IN COMMISSIONER OF INCOME TAX, BATHINDA V. M/S PANCHVATI MOTORS (P) LTD. (ITA 292 OF 2008) DECID ED ON 3.5.2011. 10. WE FIND CONSIDERABLE FORCE I N THE SUBMISSION OF THE LEARNED COUNSEL. THE KERALA HIGH COURT IN K.J.THOMASS CASE (SUPRA), WHILE CONSIDERING SIMILAR ISSUE, HAD HELD AS UNDER: THE PROCEDURE UNDER S. 143(2) OF THE ACT IS TO ENSURE THAT AN ADVERSE ORDER IS IS SUED ONLY AFTER PROPER OPPORTUNITY IS GIVEN TO THE ASSESSEE. IN T HIS CASE, IT IS CONCEDED THAT THE ASSESSEE GOT OPPORT UNITY TO FILE REPLY AND DETAILED REPLY WAS IN FACT FILED AND REASSESSMENT NOTICE AND FINAL ORDER WERE ALSO ISS UED WITHIN THE TIME- LIMIT PRESCRIBED UNDER THE ACT. 11. FURTHER, THIS COURT IN M/S PANCH WATI MOTOR (P) LTD.S CASE (SUPRA) WHILE EXAMINING THE SCOPE OF SECTION 292 BBOF THE ACT AND ITS APPLICABILITY HAD NOTED AS UNDER: SECTION 292BB OF THE ACT WAS INSERT ED BY FINANCE ACT, 2008 W.E.F. 1.4.2008. IT READS THUS:- 292BB: WHERE AN ASSESSEE HAS APPEARED IN ANY PROCEEDING OR CO-OPERATED IN ANY I NQUIRY RELATING TO AN ASSESSMENT OR REASSESSMENT, IT SHALL BE DEEMED THAT ANY NOTICE UNDER ANY PROVISION OF THE ACT, WHIC H IS REQUIRED TO BE SERVED UPON HIM, HAS BEEN DULY SERVED U PON HIM IN TIME IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT A ND SUCH ASSESSEE SHALL BE PRECLUDED FROM TAKING ANY OBJECTION IN ANY PROCEEDING OR INQUIRY UNDER THIS ACT THAT THE NOTICE WA S A) NOT SERVED UPON HIM; OR ITA NOS. 225 & 226(ASR)/2010 24 B) NOT SERVED UPON HIM IN TI ME; OR C) SERVED UPON HIM IN AN IMP ROPER MANNER. PROVIDED THAT NOTHING CONTAINE D IN THIS SECTION SHALL APPLY WHERE THE ASSESSEE HAS RAISED SUCH OBJECTION BEFORE THE COMPLETION OF SUCH ASSESSMENT OR REASSESSMENT. A PRESUMPTION HAS BEEN R AISED UNDER THE SAID PROVISION RELATING TO SERVICE OF NOTI CE UPON THE ASSESSEE IN RESPECT OF ASSESSMENT OR REASSES SMENT PROCEEDINGS. ACCORDING TO THIS PROVISION, WHERE AN ASSESSEE APPEARS IN ANY PROCEEDINGS OR COOPERATES IN ANY ENQUIRY RELATING TO ASSESSMENT OR REASSESSMENT PROC EEDINGS, IT SHALL BE PRESUMED THAT THE ASSESSEE HAS BEEN VALIDLY SERVED AND IT SHALL NOT BE OPEN TO THE ASSE SSEE TO OBJECT THAT THE NOTICE WAS NOT SERVED UPON HIM OR WA S NOT SERVED IN TIME OR WAS SERVED UPON HIM IN AN IMPROPER MANNER. HOWEVER, AN EXCEPTION TO THE AFORESA ID PRESUMPTION HAS BEEN MADE IN A CASE WHERE SUCH OBJECTION HAS BEEN RAISED BEFORE COMPLETION OF ASSESSMENT OR REASSESSMENT. THE PROVISION HAS BEEN MADE EFFECTIVE FROM 1.4.2008 AND THEREFORE, SHAL L APPLY TO ALL PENDING PROCEEDINGS. THE CENTRAL BOARD OF DIRECT TAXES ISSUED THE CIRCULAR NO.1 OF 2009 DATED 27 MARCH, 2009 (2009) 310 ITR (ST.) 42 GIVING EXPLANATORY NOTES ON THE PROVISIONS RELATING TO DIRECT TAXES CONTAINED IN FINANCE ACT, 2008. CLAUSE 42.7 (AT PAGE 86 OF THE REPO RT) IS RELEVANT WHICH RELATES TO APPLICABILITY OF THIS PRO VISION AND READS THUS: 42.7 APPLICABILITY THIS AMENDMENT HAS ITA NOS. 225 & 226(ASR)/2010 25 BEEN MADE APPLICABLE WI TH EFFECT FROM 1ST APRIL, 2008. THIS MEANS THAT THE P ROVISION OF NEW-SECTION 292 SHALL APPLY IN ALL PROCEEDINGS WHICH ARE PENDING ON 1ST APRIL, 2008. 12. IT IS NOT DISPUTED THAT THE ASSESSEE HAD APPEARED BEFORE THE ASSESSING OFFICER ON VARIOUS DATES AND P ARTICIPATED IN THE RE- ASSESSMENT PROCEEDINGS BEFORE THE FINALIZATIO N AND NO OBJECTION REGARDING ISSUANCE AND SERVICE OF NOTICE UNDER SEC TION 143(2) OF THE ACT WAS RAISED BEFORE THE ASSESSING OFFICER. THE CIT(A) AND THE TRIBUNAL WERE, THUS, IN ERROR IN NULLI FYING THE RE-ASSESSMENT PROCEEDINGS AND DECLARING THE RE-ASSESSMENT ORDER TO BE INVALID. 13. IN VIEW OF THE ABOVE, THE SUBSTANTI AL QUESTION OF LAW IS ANSWERED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. CONSEQUENTLY, THE MATTER IS REMANDED TO THE TRI BUNAL FOR DECISION AFRESH ON MERITS IN ACCORDANCE WITH LAW. 20. ACCORDINGLY, UNDER THE AFORESAID FACTS AND CIRC UMSTANCES OF THE CASE AND THE DECISIONS OF THE HONBLE COURTS REFERRED TO HEREINABOVE, WE ARE BOUND TO FOLLOW THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. RAM NARAIN BANSAL (SUPRA), WHICH IS DIRECTLY ON THE QUESTION INVOLVED IN THE PRESENT CASE AND THE DECIS IONS AS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE ARE NOT DIRECTLY ON TH E ISSUE, DO NOT SUPPORT THE CASE OF THE ASSESSEE. THUS, IN VIEW OF THE ABOVE D ISCUSSIONS AND OUR FINDINGS HEREINABOVE, WE DISMISS ADDITIONAL GROUND NO.2 RAISED BY THE ASSESSEE. 21. AS REGARDS GROUND NO.2, THOUGH THE SAME HAS NOT BEEN ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE BUT ON THE FACTS AND C IRCUMSTANCES OF THE CASE, ITA NOS. 225 & 226(ASR)/2010 26 WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) IN PARA 2 & 2.1 WHO HAS RIGHTLY DISMISSED THE SAID GROUND WHICH HAS BEEN TAKEN BEF ORE THE LD. CIT(A) AS WELL. WE FIND NO INFIRMITY IN THE SAME. THUS, GROUN D NO.2 OF THE ASSESSEE IS DISMISSED. 22. AS REGARD GROUNDS ON MERIT I.E. GROUNDS NO. 2 T O 7, THE LD. COUNSEL FOR THE ASSESSEE ARGUED ON THE SAME LINES, AS SUBMITTED BEFORE THE LD. CIT(A) AND THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF BOTH THE AUTHORITIES BELOW. 23. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AS REGARDS THE FINDINGS OF THE A.O. THAT SOURCE OF DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE HAS NOT BEEN EXPLAINED, IT WAS SUBMITTED BEFORE THE LD. CIT(A) AS WELL AS BEFORE THE A.O. THAT THE SOU RCE OF DEPOSIT IN A/C NO.328 AS INQUIRED BY THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS CONCEDED BY THE A.O. THAT THE AMOUNTS TRANSF ERRED FROM A/C NO.681 OF MEGHNA IMPEX WAS OWNED BY SH. SATBIR SINGH AND, THEREFORE, THE SOURCE OF DEPOSIT IN A/C NO.328 OF THE ASSESSEE STANDS EXP LAINED AND NO ADVERSE INFERENCE IN THIS REGARD IS LIABLE TO BE DRAWN IN T HE HANDS OF THE PRESENT ASSESSEE.IT WAS SUBMITTED BY THE ASSESSEE WITH REGA RD TO THE DEPOSIT OF RS.1,27,75,000/- IN THE BANK ACCOUNT NO.328 WHICH I S TRANSFERRED FROM A/C NO.681 OF MEGHNA IMPEX, PROPRIETORY CONCERN OWNED BY SH. SATBIR SINGH AND THE ITA NOS. 225 & 226(ASR)/2010 27 EXPLANATION OF THE ASSESSEE WITH REGARD TO WHY SUC H AMOUNT TRANSFERRED TO THE ACCOUNT OF THE ASSESSEE, IT WAS SUBMITTED BEFOR E BOTH THE AUTHORITIES BELOW AS WELL AS BEFORE THE CUSTOMS AUTHORITIES AN D OTHER AUTHORITIES THAT THE CHEQUE BOOKS PERTAINING TO HIS A/C NO.328 WITH STATE BANK OF BIKANER & JAIPUR, ADDA BASTI, JALANDHAR WERE STOLEN AND THERE AFTER MISUSED BY SOME UNSCRUPULOUS ELEMENTS OF THE SOCIETY, FOR THE REASO NS BEST KNOWN TO THEM OF WHICH THE ASSESSEE MOST UNFORTUNATELY REMAINED IGNO RANT, BUT AS SOON AS HE LEARNT OF THE SAID THEFT AND MISUSE OF THE CHEQUE B OOKS, HE IMMEDIATELY LODGED A COMPLAINT WITH THE POLICE STATION, BRINGIN G THE ENTIRE FACTUAL POSITION ON RECORD OF THE SAID POLICE AUTHORITIES. IN THIS REGARD, IT WOULD BE VERY RELEVANT AND PERTINENT TO POINT OUT THAT THE A SSESSEE SUBSTANTIATING HIS BONAFIDES HAD DULY BROUGHT IT TO THE NOTICE OF THE VARIOUS AUTHORITIES BEFORE WHOM THE PROCEEDINGS HAD BEEN GOING ON, THAT THE SA ID MISUSING OF THE BANK ACCOUNT IN ITSELF STOOD SUBSTANTIATED FROM T HE VERY FACT THAT A PERUSAL OF THE WITHDRAWALS EFFECTED FROM THE SAID ACCOUN T, AS A RESULT STANDS GATHERED ON A PERUSAL OF THE CHEQUES VIDE WHICH W ITHDRAWALS HAD BEEN MADE FROM THE SAID BANK ACCOUNT OF THE ASSESSEE, IN ITSELF REVEALS THAT THERE WAS NOT EVEN A SOLITARY SITUATION, WHEREIN ANY WITHDRAWAL PERTAINING TO THE IMPUGNED AMOUNTS SO CREDITED TO T HE BANK A/C ON THE ASSESSEE WAS EVER CARRIED OUT BY THE ASSESSEE AND T HE SAID FACTUAL MATRIX HAD ITA NOS. 225 & 226(ASR)/2010 28 BEEN APPRECIATED BY THE OTHER SUCH AUTHORITIES BEFO RE WHOM THE PROCEEDINGS AS REGARDS THE AFORESAID ISSUE ARE GOING ON. THUS, TO BE BRIEF AND EXPLICIT, THE AFORESAID FACTS THEREIN ITSELF ESTABLISHES THE BO NAFIDES OF THE ASSESSEES CONTENTION THAT THE LATTER WAS NOT IN ANY WAY CONNE CTED BUT THROUGH OUT REMAINED UNAWARE OF SUCH MISUSE OF HIS BANK A/C BY CERTAIN THIRD PARTIES. THE AO ACTED MOST ARBITRARILY AND DESPITE APPRECIAT ING THAT THE SAID MEGHNA IMPEX WAS OWNED BY SH. SATBIR SINGH, WHEREIN THE LA TTER NOT ONLY HELD THE AFORESAID A/C NO.681 WITH A NATIONALISED BANK I.E. ORIENTAL BANK OF COMMERECE, JALANDHAR BUT RATHER WAS HOLDING ALL THE LICENCES AND REGISTRATIONS AS ARE REQUIRED FOR EFFECTING THE EX PORTS, WITH DIFFERENT DEPARTMENTS/GOVERNMENT AUTHORITIES AND HAD CONSISTE NTLY BEEN CARRYING OUT EXPORTS( AS HAD BEEN GATHERED BY THE ASSESSEE ON PERUSAL OF THE LATTER PERSONS BANK A/C AS IS SO AVAILABLE ON ASSESSMENT RECORD, REFLECTING CREDIT OF EXPORT SALE PROCEEDS IN THE SAID LATTER PERSONS B ANK A/C). THUS, THE APPROACH OF THE A.O. IN GOING BY THE IMPUGNED STATE MENT OF THE SAID SH.SATBIR SINGH WHEREIN THE LATTER, MERELY IN ORDER TO SAVE HIS SKIN HAD FALSELY IMPLICATED THE ASSESSEE, BY SAYING THAT HE HAD GIVEN SIGNED BLANK CHEQUES TO THE ASSESSEE. THE ACCEPTANCE OF THE SAI D STATEMENT OF THE SAID SH. SATBIR SINGH BY THE A.O. WHEREIN THE SAID PERSON IN ORDER TO SAVE HIMSELF HAD PLEADED THAT HE WAS POOR PERSON AND COULD NOT C ARRY OUT SUCH A BUSINESS, ITA NOS. 225 & 226(ASR)/2010 29 WITHOUT THERE BEING ANY EVIDENCE WHICH COULD GO TO SUBSTANTIATE THE LATTERS ASSERTIONS AND CONTENTIONS AND THEREIN GIVING HIM A CLEAN CHIT AND DRAWING OF ADVERSE INFERENCES N THE HANDS OF THE ASSESSEE, PRIMARILY ON THE BASIS OF THE STATEMENT OF SH. SATBIR SINGH, IS TOTALLY UNFAI R AND CANNOT BE SUSTAINED IN THE EYES OF LAW., SPECIFICALLY WHEN THE SAID SH. SA TBIR SINGH IS A PRIME ACCUSED BEFORE THE CUSTOM AUTHORITIES. THUS, FRAM ING OF SUBSTANTIVE ASSESSMENT IN THE HANDS OF THE ASSESSEE, BY PRESUM ING THAT IT WAS THE LATTER WHO WAS CARRYING ON THE BUSINESS AND THE SAID SH. S ATBIR SINGH WAS ONLY A BENAMIDAR IS AN ASSUMPTION OF THE AO , WHICH IS DE VOID AND BEREFT OF ANY FORCE, IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE, IN SUPPORT OF THE SAME, THE FINDINGS OF THE AO AT PAGE 3 OF THE ASSESSMENT ORDER, AS UNDER : SH.SATBIR SINGH AS PER THE ENQUIRIES AND FINDINGS O F THE CUSTOM DEPARTMENT AS WELL AS INCOME TAX DEPARTMENT WAS A POOR FELLOW TO ENGAGED IN THIS BIG BUSINESS. HE COULD NOT RUN ANY EXPORT BUSINESS. ARE CONTRARY TO THE MATERIAL AVAILABLE ON RECORD AND HAD WRONGLY BEEN INFERRED BY THE A.O. FOR THE REASON THAT AS POINTED OUT HEREINABOVE THE SAID SH.SATBIR SINGH HAD BEEN BOOKED BY THE CUSTOM AUTH ORITIES AND TILL DATE NEITHER ANY ORDER ACQUITTING HIM NOR ANY ORDER CON VICTING THE ASSESSEE HAD BEEN PASSED BY THE SAID CUSTOM AUTHORITIES. THUS, TO BE BRIEF AND EXPLICIT, THE INFORMATION FORWARDED BY THE CUSTOM AUTHORITIE S HAD NOT BEEN APPRECIATED IN ENTIRETY BY THE A.O. WHILE DRAWING A DVERSE INFERENCE IN THE ITA NOS. 225 & 226(ASR)/2010 30 HANDS OF THE PRESENT ASSESSEE. THAT WITHOUT PREJUDI CE TO THE FACT THAT THE SOURCE OF DEPOSIT IN THE BANK A/C OF THE ASSESSEE S TANDS DULY EXPLAINED TO BE OUT OF THE A/C NO.681 OF MEGHNA IMPEX, HOWEVER, EVE N OTHERWISE, AS STANDS REVEALED ON PERUSAL OF A/C NO.681 OF MEGHNA IMPEX T HE AMOUNTS AS STANDS CREDITED IN THE SAID A/C 681 ONLY REPRESENTS THE E XPORT SALE PROCEEDS. THUS, IN LIGHT OF THE AFORESAID FACTUAL POSITION, EVEN OT HERWISE NO ADVERSE INFERENCE, ON THE BASIS OF THE SOURCE OF THE SOURCE IS LIABLE TO BE DRAWN IN THE HANDS OF THE ASSESSEE. THOUGH NO ADMITTING AND WIT HOUT PREJUDICE TO THE AFORESAID, IT EVEN OTHERWISE BE SUBMITTED THAT IN L IGHT OF THE FINDINGS OF THE AO THAT ALL THE AMOUNTS CREDITED IN THE A/C 328 OF THE ASSESSEE STOOD WITHDRAWN ON THE SAME DATE, ADDITION OF THE ENTIRE AMOUNT COULD EVEN OTHERWISE, COULD NOT HAVE BEEN MADE IN THE HANDS OF THE ASSESSEE. THAT WITHOUT PREJUDICE TO THE AFORESAID CONTENTIONS, IT WAS FURTHER SUBMITTED THAT NO ADDITION COULD HAVE BEEN MADE IN THE HANDS OF TH E ASSESSEE U/S 69A OF THE ACT, AS REGARDS THE AMOUNTS AS STOOD DEPOSITED IN T HE A/C NO.328 OF THE ASSESSEE BECAUSE THE SAID SECTION IN LIGHT OF FACTS OF THE CASE IS NOT APPLICABLE TO THE CASE OF THE PRESENT ASSESSEE. THE SAID SECTI ON 69A READS AS UNDER: 69A UNEXPLAINED MONEY, ETC. WHERE IN ANY FINANCIAL YEAR THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE A RTICLE AND SUCH MONEY, BULLION, JEWELLERY OR VALUABLE ARTICLE IS NOT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY S OURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATU RE AND SOURCE OF ACQUISITION OF THE MONEY, BULLION, JEWELLERY OR OTHER VAL UABLE ARTICLE, OR THE ITA NOS. 225 & 226(ASR)/2010 31 EXPLANATION OFFERED BY HIM IS NOT, IN THE OPI NION OF THE [ASSESSING] OFFICER, SATISFACTORY, THE MONEY AND THE VALUE OF THE BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE MAY BE DEEMED TO BE THE INCO ME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. THUS, A BARE PERUSAL OF THE CLEARLY WORDED SECTION 69A REVEALS TAT THE SAID SECTION COMES INTO PLAY IN THE FOLLOWING SITUATION: 1) ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONE Y, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE. 2) THE VALUE OF SUCH MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE IS NOT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, BEING MAINTAINED BY THE ASSESSEE FOR ANY SOURCE OF INCO ME; AND 3) THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NA TURE AND SOURCE OF ACQUISITION OF THE SAID MONEY, BULLION, JEWELL ERY OR OTHER VALUABLE ARTICLE, OR THE EXPLANATION OFFERED BY H IM IS NOT, IN THE OPINION OF THE A.O. SATISFACTORY, IT IS ONLY THEN THAT THE MONEY AND THE VALUE OF THE BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE MAY BE DEEMED TO BE THE INCOME O F THE ASSESSEE FOR SUCH FINANCIAL YEAR, BY THE AO BY INVOKING TH E PROVISIONS OF SEC.69A OF THE ACT. SECTION 69. WHERE IN THE FINANCIAL YEAR IMMEDIATELY PRECEDING T HE ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMENTS WHICH ARE N OT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF THE INV ESTMENTS OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE [ASSESSING] O FFICER, SATISFACTORY, THE VALUE OF THE INVESTMENTS MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE OF SUCH FINANCIAL YEAR. SECTION 69B. WHERE IN ANY FINANCIAL YEAR THE ASSESSEE HAS MADE INVESTMENTS OR IS FOUND TO BE THE OWNER OF ANY BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE, AND THE [ASSESSING] OFFICER FINDS THAT THE AMOUNT EXPENDED ON MAKING SUCH INVESTMENTS OR IN ACQUIRING SUCH BULLION, JEWELLERY OR OTHER VALUABL E ARTICLE EXCEEDS THE AMOUNT RECORDED IN THIS BEHALF IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABO UT SUCH EXCESS AMOUNT OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE [ASSESSING] OFFICER, SATISFACTORY, THE EXCESS AMOUNT MAY BE DEEMED TO B E THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. ITA NOS. 225 & 226(ASR)/2010 32 THUS, IN THE LIGHT OF THE SETTLED POSITION OF LAW A S DISCUSSED HEREINABOVE, THE ADDITION OF RS.1,27,75,000/- SO MADE U/S 69A OF THE ACT, EVEN, OTHERWISE CANNOT BE SUSTAINED IN THE EYES OF LAW. 24. IN THE REMAND REPORT, THE AO VIDE PARA 1.6 HAS SUBMITTED THAT MEGHNA IMPEX IS DUMMY CONCERN FLOATED BY SH. GURKIR PAL SINGH, SH.ASHOK KUMAR AND SH. PAVITAR SINGH CA. BANK ACCOUNT WAS O PENED IN THE NAME OF SH. SATBIR SINGH AN EMPLOYEE OF THE C.A. AND BLANK CHEQUES WERE GO SIGNED FROM SH. SATBIR SINGH BY THESE PERSONS. FOR THE SAK E OF CONVENIENCE, WE REPRODUCE THE SAID REMAND REPORT IN PARA 1.6 OF CIT (A) AS UNDER: THE ASSTT. PROCEEDINGS WERE INITIATED ON THE BASIS OF INFORMATION FROM THE CUSTOMS DEPARTMENT AND SUBSEQUENTLY FROM THE ADDITIONAL CIT, RANGE-3, JALANDHAR THAT A DUMMY CONCERN IN TH E NAME OF M/S. MEGNA IMPEX WAS FLOATED BY S/SH.GURKIRPAL SINGH, A SHOK KUMAR AND SH. PAVITAR SINGH CA BANK ACCOUNT WAS OPENED I N THE NAME OF SH.SATBIR SINGH AN EMPLOYEE OF THE C.A. BANK CHEQU ES WERE GOT SIGNED FROM SH. SABIR SINGH BY THESE PERSONS SH.SA TBIR SINGH REVEALED BEFORE THE CUSTOMS DEPARTMENT THAT TIMIN G/CRANK SHAFTS WERE NEVER PROCURED AND THERE WAS NO QUESTION OF T HEIR EXPORT. FICTITIOUS BILLS WERE RAISED AND DEPBS OF RS.1.85 CRORES WERE AVAILED FRAUDULENTLY. THESE DEPBS WERE LATER ON CANCELLED AB INITIO VOID BY THE DGFT LUDHIANA. THE DEPBS FRAUDULENTLY OBTAINED WERE SOLD BY THE FIRM TO OTHERS FOR CONSIDERATION. THESE ILLEGA L FUNDS OF M/S. MEGNA IMPEX WERE TRANSFERRED TO CURRENT ACCOUNT OF M/S. SUPREME INDUSTRIES OF SH.GURKIRPAL SINGH ON THE STRENGTH OF BLANK SIGNED CHEQUES ALREADY OBTAINED FROM THE SO CALLED PROP. OF MEGNA IMPEX SH. SATBIR SINGH. AS SUCH THE NATURE OF THESE CRE DIT ENTRIES IN THE BANK A/C OF M/S. SUPREME INDUSTRIES IS UNDISCLOSE D/UNEXPLAINED. THE ASSESSEE WAS UNABLE TO EXPLAIN THE NATURE OF THESE CREDIT ENTRIES IN THE BANK ACCOUNT AT THE TIME OF ASST. PROCEEDIN GS. NO RETURN OF INCOME WAS FILED VOLUNTARILY. NO RETURN WAS FILED IN RESPONSE TO NOTICE U/S 142(1) ISSUED IN THE MONTH OF NOVEMBER , 2007. THE RETURN ITA NOS. 225 & 226(ASR)/2010 33 WAS FILED DECLARING INCOME FROM SALARY ONLY. NO BU SINESS INCOME WAS DECLARED WHATSOEVER. ASSESSMENT IN THE CASE OF SH. ASHOK KUMAR, THE CO-BENEFICIARY HAS ALREADY BEEN COMPLET ED BY THE ACIT, C-II, JALANDHAR. AS REGARDS THE CLAIM OF THE ASSESSEE REGARDING TH E LOSS OF CHEQUE BOOKS IT IS WORTHWHILE TO MENTION THAT IT M IGHT HAVE BEEN LOST AND STOLEN BY SOMEBODY BUT IT IS IRRELEVANT TO THE QUERRY OF THE A.O. REGARDING THE NATURE OF CREDIT ENTRIES IN THE BANK ACCOUNT. THE CHEQUE BOOKS MAY HAVE BEEN MISUSED BY SOME STEALER/THEIR FOR THE PURPOSE OF MAKING WITHDRAWALS FROM THE BANK ACCOUNT BUT THE Q UERRY OF THE A.O. IS REGARDING THE DEPOSITS IN THE BANK ACCOUNT I.E. NATURE OF CREDIT ENTRIES AND NOT DEBIT ENTRIES. THE CREDIT ENTRIES IN THE BANK ACCOUNT OF MEGNA I MPEX ARE OUT OF FRAUDULENT DEPBS WHICH WERE SOLD BY THE CONCERN TO OTHERS FOR CONSIDERATION AND LATER ON ALSO DECLARED AB INITIO VOID AND CANCELLED BY THE DIRECTOR GENERAL OF FOREIGN TRADE, LUDHAINA . 25. FROM THE PERUSAL OF THE REPORT OF THE A.O. IT I S EVIDENT THAT THE AO ACCEPTED THAT THE MEGHNA IMPEX WAS FLOATED BY THREE PERSONS I.E. SH.GURKIRPAL SINGH, SH. ASHOK KUMAR AND SH. PAVITAR SINGH,CA AND BANK ACCOUNT WAS OPENED IN THE NAME OF SH. SATBIR SINGH. IT IS ALSO ADMITTED IN THE REPORT THAT THE SAID BANK ACCOUNT MIGHT HAVE BE EN MISUSED BY SOME THIEF FOR THE PURPOSE OF MAKING WITHDRAWALS FROM BANK ACC OUNT. FURTHER, IT WAS ADMITTED THAT CREDIT ENTRIES IN THE BANK ACCOUNT OF MEGNA IMPEX ARE OUT OF FRAUDULENT DEPBS WHICH WERE SOLD BY THE CONCERN TO OTHERS FOR CONSIDERATION AND LATER ON ALSO DECLARED AB INITIO VOID AND CANCELLED BY THE DIRECTOR GENERAL OF FOREIGN TRADE, LUDHIANA. FROM T HE SAID REPORT, IT IS EVIDENT THAT ORIGINAL ACCOUNT OF M/S. MEGNA IMPEX IS THE ONE WHERE THE ITA NOS. 225 & 226(ASR)/2010 34 DEPOSITS WERE FRAUDULENT OR OTHERWISE TAKEN BUT NOT BY ONE PERSON BUT BY THREE PERSONS ALONGWITH SH. SATBIR SINGH. ON THE ST ATEMENT OF SH.SATBIR SINGH BEFORE THE CUSTOM AUTHORITIES, IT HAS BEEN AD MITTED THAT THE FIRM MEGNA IMPEX WAS FLOATED BY THE SAID PERSONS. THERE FORE, THE MONEY IN M/S. MEGNA IMPEX BELONGS TO THE ASSOCIATION OF THESE PER SONS. THE ASSESSEE HAS TIME AND AGAIN BEFORE THE A.O. AND BEFORE THE LD. C IT(A) WHICH IS PART OF THE ASSESSMENT ORDER AND THE ORDER OF THE LD. CIT(A) HA S SUBMITTED THAT SOME CHEQUE BOOKS HAVE BEEN STOLEN AND HAVE BEEN MISUSED BY SOME UNSCRUPULOUS ELEMENTS OF THE SOCIETY FOR THE REASON S BEST KNOWN TO THEM FOR WHICH THE ASSESSEE MOST UNFORTUNATELY IS IGNORANT AND AS SOON AS THE ASSESSEE LEARNT OF THE SAID THEFT AND MISUSE OF TH E CHEQUE BOOKS, HE IMMEDIATELY LODGED A COMPLAINT WITH THE POLICE AUT HORITIES WHICH IS A MATTER OF RECORD, WHICH FACT HAS BEEN BROUGHT TO T HE NOTICE OF THE VARIOUS AUTHORITIES BEFORE WHOM PROCEEDINGS HAVE BEEN GOING ON, FOR THE SAID MISUSE OF THE BANK ACCOUNT AND WITH REGARD TO THE DEPOSITS AND WITHDRAWALS, THE ASSESSEE HAS NOT FOUND THE SAID BANK ACCOUNT HA S BEEN EXPLAINED TIME AND AGAIN. THE AO ALSO ADMITTED IN THE REPORT THA T CHEQUE BOOKS MIGHT HAVE BEEN STOLEN BY SOME THIEF FOR MAKING SOME WITH DRAWALS FROM THE BANK ACCOUNT, WHICH IS AVAILABLE IN PARA 1.6 OF CIT(A)S ORDER. THE A.O. HAS NOT MADE ANY ENQUIRY, IN FACT, IN THIS REGARD WHETHER T HE AMOUNT BELONGS ITA NOS. 225 & 226(ASR)/2010 35 ACTUALLY TO THE ASSESSEE OR TO THREE PERSONS OR WHE THER INSPITE OF THE FACT, THE DISPUTED FRAUDULENT DEBPS WHICH HAVE BEEN DECLARED AB INITO VOID AND CANCELLED BY THE DIRECTOR GENERAL OF FOREIGN TRADE , LUDHIANA. WHETHER NO REAL BENEFIT HAS BEEN ACCRUED TO THE ASSESSEE OR TO THE ASSOCIATION OF SAID THREE PERSONS MENTIONED HEREINABOVE HAS NOT BEEN IN QUIRED INTO BY ANY OF THE AUTHORITIES BELOW. THE DECLARATION OF SH.SATBIR SINGH BY THE INCOME TAX AUTHORITIES A POOR PERSON FOR DECLARING MEGNA IMP EX A DUMMY CONCERN ON THE STATEMENT OF SH. SATBIR SINGH WITHOUT MAKING PR OPER ENQUIRY AND HOLDING RECEIPTS IN THE BANK ACCOUNT OF THE ASSESSE E AS UNEXPLAINED INCOME OF THE ASSESSEE IS AGAINST THE LAW. SUCH ERRONEOUS VIEWS CANNOT BE SUSTAINED IN THE EYES OF LAW. IT IS THE REAL INCOME WHICH HA S TO BE BROUGHT TO TAX. AS REGARDS DEPOSITS AND WITHDRAWALS OF THE ASSESSEE FO R WHICH THE ASSESSEE HAS SUBMITTED THAT THE SAID BANK ACCOUNT HAS BEEN MISUS ED FROM THE STOLEN CHEQUE BOOK. NO ADVERSE MATERIAL HAS BEEN BROUGHT O N RECORD BY ANY OF THE AUTHORITIES BELOW. AS REGARDS THE DEPOSITS IN THE S AID ACCOUNT WHICH ARE FROM THE ACCOUNT OF MEGHNA IMPEX WHICH ARE STATED TO HAV E BEEN OWNED BY THE THREE PERSONS THEN NO ASSESSMENT CAN BE MADE ON THE ASSESSEE, INITIALLY IGNORING THE THREE PERSONS AS ASSOCIATION OF PERSO NS. THIRDLY, WHEN THE SAID DEPBS WHICH ARE STATED TO HAVE BEEN PROCURED FRAUDU LENTLY FROM THE DIRECTOR GENERAL OF FOREIGN TRADE, LUDHIANA, WHO HA S DECLARED THAT THE SAID ITA NOS. 225 & 226(ASR)/2010 36 DEPBS ARE VOID AB INITIO AND HAS LEVIED PENALTY OF RS. 2 CRORE IS ALSO ON RECORD. IN THIS REGARD. 33 CONSIGNMENTS ISSUED BY THE ORIENTAL BANK OF COMMERCE AND REMITTANCE WAS NOT RECEIVED IN 28 CASE S AND THE BALANCE 5 CONSIGNMENTS WERE REMITTANCE, WHICH WERE REALIZED T HROUGH FORGERY AND SUBSTITUTION OF EXPORT DOCUMENTS. THE CONCERN M/S. MEGHNA IMPEX HAS AVAILED DEPBS BY GIVING MISLEADING DECLARATIONS AND ON THE BASIS OF FORGED BANK CERTIFICATE OF EXPORTS AND REALISATION BY SUBS TITUTING SHIPPING BILLS AND THE SAID DEPBS WITH REGARD TO THE FIVE CONSIGNMENT S WERE CANCELLED BY DIRECTOR GENERAL OF FOREIGN TRADE, LUDHIANA DECLARI NG THEM VOID AB INITIO AND PENALTY OF RS.2 CRORES WAS IMPOSED. THE SAID FA CTS ARE AS PER REPORT OF THE A.O. AVAILABLE IN PARA 1.8 OF CIT(A)S ORDER. 26. THEREFORE, THE IN FACTS AND CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN TAXING THE SAID DEPOSITS IN THE HA NDS OF THE ASSESSEE AND NO ADDITION OF RS.1,27,75,000/- IS REQUIRED TO BE MADE IN VIEW OF OUR FINDINGS HEREINABOVE AND THE SAME IS DIRECTED TO BE DELETED. 27. ALSO ON IDENTICAL FACTS, ASSESSMENT WAS MADE IN THE HANDS OF SH. ASHOK KUMAR ONE OF THE CO-OWNERS OF SAID M/S. MEGHN A IMPEX. AS STATED THE ADDITION OF 40% FROM THE WITHDRAWALS OF BANK ACCOUNT OF M/S. MEGHNA IMPEX, AS ESTIMATED INCOME BY THE AO, WAS ADDED. ITA NOS. 225 & 226(ASR)/2010 37 28. IT IS PERTINENT TO MENTIONED HERE THAT THE LD. CIT(A) HAS DELETED THE SAID ADDITION IN HIS ORDER IN APPEAL NO.140/04-05/ CIT(A)/JAL DATED 30.11.2004. IT HAS BEEN ARGUED AND PLEADED BY THE LD. DR THAT THE SAID ORDER IS IN APPEAL BEFORE THE ITAT, AMRITSAR BENCH, BUT N O REFERENCE OF THE SAME ORDER OR OF ITAT, AMRITSAR WAS PLACED ON RECORD BEF ORE US. THE LD. CIT(A) IN THE CASE OF SH. ASHOK KUMAR HAS HELD THAT NUMBER OF PERSONS APPEARED TO BE INVOLVED IN M/S. MEGHNA IMPEX INCLUDING M/S. SUPREME INDUSTRIES I.E. PROPRIETOR SH.BALBIR CHAND VERMA ETC. AND UNLE SS PROPER ENQUIRY WAS CONCLUDED, THE REAL NATURE OF TRANSACTIONS IN M/S. MEGHNA IMPEX AND ITS BENEFICIARIES COULD NOT BE DETERMINED. THEREFORE, IN THE ABSENCE OF ANY ADVERSE DECISION BROUGHT ON RECORD BY THE REVENUE F OR THE REPETITION PURPOSE, WE REVERSE THE ORDER OF THE LD. CIT(A) ON MERIT AND DIRECT THE A.O. TO DELETE THE ADDITION SO MADE. ACCORDINGLY, GROUND S NO. 2 TO 7 OF THE ASSESSEE ARE ALLOWED. 29. NOW, WE TAKE UP APPEAL OF THE ASSESSEE IN ITA N O.225(ASR)/2010 FOR THE ASSESSMENT YEAR 2000-01. THE LEGAL GROUNDS AS WELL AS ADDITIONAL GROUNDS OF APPEAL AND THE ISSUE ON MERIT IN OTHER GROUNDS, IN THE PRESENT APPEAL, ARE IDENTICAL TO THE FACTS IN ASSESSEES A PPEAL IN ITA NO.226(ASR)/2010 FOR THE A.Y. 2001-02 EXCEPT ADDITI ON SO MADE IN THE PRESENT APPEAL IS AMOUNTING TO RS.4,05,000/- IN PLA CE OF RS.1,27,75,000/- ITA NOS. 225 & 226(ASR)/2010 38 MADE IN THE ASSESSMENT YEAR 2001-02. ACCORDINGLY, OUR DECISION IN ITA NO.226(ASR)/2010 IS IDENTICALLY APPLICABLE IN THE P RESENT APPEAL I.E. IN ITA NO.225(ASR)/2010 AND ACCORDINGLY GROUND NO.2 AND AD DITIONAL GROUND 1 & 2 ARE DISMISSED AND GROUNDS NO. 3 TO 7 OF THE ASSES SEE ARE ALLOWED. GROUND NO.2 & 8 OF THE ASSESSEE ARE GENERAL IN NATURE, THE REFORE, DO NOT REQUIRE ANY ADJUDICATION. 30. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE IN ITA NOS. 225 & 226(ASR)/2010 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30TH AUGUST, 2013. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30TH AUGUST, 2013 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH.GURKIRPAL SINGH PROP. M/S. SUPREME INDUSTRIES, JALANDHAR. 2. THE ITO WARD 1(1), JALANDHAR. 3. THE CIT(A), JALANDHAR. 4. THE CIT, JALANDHAR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.
