ACIT, New Delhi V. M/s Brijwasi Impex Pvt. Ltd., Delhi

ITA 2714/DEL/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97796 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 03-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAILESH GUPTA
• Assessee Lawyers: RAVI JAIN
• Keywords: Bogus Share capital; Value adopted by valuation officer; Depreciation; Business expenditure; Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Opportunity of being heard; Valuation report; Validity of assessment; Assessment record; Block assessment; Condonation of delay; Revised return; Documents seized; Unabsorbed depreciation
• Section: 143(3); 153A; 234B; 115JB; 133(6); 147; 68; 263; 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A NEW DELHI) BEFORE SHRI I.C. SUDHIR AND SHRI INTURI RAMA RAO ITA NO. 2714/DEL/2010 ASSESSMENT YEAR: 2002-03 ASSISTANT CIT, VS. BRIJWASI IMPEX PVT. LTD., CENTRAL CIRCLE-12, 1170- KUCCHA MAHAJANI, NEW DELHI. CHANDNI CHOWK, DELHI-1100 06 (PAN: AABCB7530L) CROSS-OBJECTION NO.9/DEL/2013 ITA NO. 2714/DEL/2010 ASSESSMENT YEAR: 2002-03 BRIJWASI IMPEX PVT. LTD., VS. ASSISTANT CIT, 1170- KUCCHA MAHAJANI, CENTRAL CIRCLE-12, CHANDNI CHOWK, NEW DELHI. (PAN: AABCB7530L) (APPELLANT) (RESPONDENT) ITA NO. 362/DEL/2011 ASSESSMENT YEAR: 2004-05 DEPUTY CIT, VS. BRIJWASI IMPEX PVT. LTD., CENTRAL CIRCLE-12, 1170- KUCCHA MAHAJANI, NEW DELHI. CHANDNI CHOWK, DELHI-1100 06 (PAN: AABCB7530L) CROSS-OBJECTION NO.10/DEL/2013 ITA NO. 362/DEL/2011 ASSESSMENT YEAR: 2004-05 BRIJWASI IMPEX PVT. LTD., VS. ASSISTANT CIT, 1170- KUCCHA MAHAJANI, CENTRAL CIRCLE-12, CHANDNI CHOWK, NEW DELHI. (PAN: AABCB7530L) (APPELLANT) (RESPONDENT) 2 ITA NOS. 1183 & 1184/DEL/2011 ASSESSMENT YEARS: 2006-07 & 2007-08 BRIJWASI PVT. LTD., VS. ASSISTANT CIT, 1170-KUCHA MAHAJANI, CENTRAL CIRCLE 12, CHANDNI CHOWK, DELHI. NEW DELHI. (PAN: AABCB7530L) (APPELLANT) (RESPONDENT) ITA NO. 1305/DEL/2011 ASSESSMENT YEAR: 2006-07 DEPUTY CIT, VS. BRIJWASI PVT. LTD., CENTRAL CIRCLE-12, 1170-KUCHA MAHAJANI, NEW DELHI. CHANDNI CHOWK, DELHI. (PAN: AABCB7530L) (APPELLANT) (RESPONDENT) APPELLANT BY: S/SHRI SALIL AGGARWAL, ADV. & SAILESH GUPTA, CA RESPONDENT BY: SHRI RAVI JAIN, CIT( DR) DATE OF HEARING : 17 .09.2015 DATE OF PRONOUNCEMENT: 30 :10.2015 ORDER PER I.C. SUDHIR: JUDICIAL MEMBER IN THE ASSESSMENT YEAR 2002-03, THE REVENUE HAS QU ESTIONED FIRST APPELLATE ORDER WHEREBY THE LEARNED CIT(APPEALS) HA S DELETED THE ADDITION OF RS.1,24,15,000 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INCOME FROM UNDISCLOSED SOURCES IN THE ASSESSMENT FRAMED UNDER SEC. 153A READ WITH 143(3) OF THE INCOME-TAX ACT, 1961. THE ASSESSEE IN ITS CROSS OBJECTION HAS QUESTIONED THE VALIDITY OF ASSESSMENT FRAMED UNDER SEC. 153A READ WITH 3 SECTION 143(3) OF THE INCOME-TAX ACT, 1961 IN ABSEN CE OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND THE ORIGINAL ASSESSMENTS FRAMED UNDER SEC. 143(3) OF THE ACT WAS NOT ABATED ON THE DATE OF THE SEARCH. 2. SIMILARLY, IN THE ASSESSMENT YEARS 2004-05, THE PARTIES ARE IN APPEAL AND CROSS OBJECTION. IN THIS YEAR, THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER WHEREBY THE LEARNED CIT(APPEALS) HAS DELETED THE ADDITION OF RS.3,89,00,000 MADE BY THE ASSESSING OFFICER ON ACC OUNT OF UNVERIFIED SHARE CAPITAL AND SHARE PREMIUM MONEY. THE ASSESSEE IN ITS CROSS OBJECTION HAS QUESTIONED THE VALIDITY OF ASSESSMENT FRAMED UN DER SEC. 153A IN ABSENCE OF INCRIMINATING MATERIAL FOUND DURING THE COURSE O F SEARCH AND ABATEMENT OF ORIGINAL ASSESSMENT FRAMED UNDER SEC. 143(3) OF THE ACT. 3. THE FACTS IN BRIEF ARE THAT THE BUSINESS PREMISE S OF THE ASSESSEE WAS SUBJECTED TO SEARCH AND SEIZURE OPERATION UNDER SEC . 132 OF THE ACT ON 09.12.2005. NOTICE UNDER SEC. 153A WAS ISSUED AND I N RESPONSE ASSESSEE FILED RETURN OF INCOME DECLARING LOSS OF RS.12,111. IN THE ASSESSMENT, THE ASSESSING OFFICER NOTED THAT THE ASSESSEES SHARE C APITAL HAS INCREASED FROM RS.200 IN THE IMMEDIATE PRECEDING YEAR TO RS.1,24,1 5,000 DURING THE YEAR 2002-03 UNDER CONSIDERATION. THE ASSESSING OFFICER FOUND THE SUBMISSION OF THE ASSESSEE AS INSUFFICIENT AND ADDED THE AMOUNT O F RS.1,24,15,000 ON 4 ACCOUNT OF UNEXPLAINED SHARE CAPITAL. SIMILARLY, IN THE ASSESSMENT YEAR 2004- 05, THE ASSESSEE HAD FILED ITS RETURN OF INCOME IN RESPONSE TO THE NOTICE ISSUED UNDER SEC. 153A OF THE ACT. THE ASSESSING OF FICER NOTED THAT DURING THE YEAR, THE ASSESSEES SHARE CAPITAL HAS INCREASED FROM RS.1,24,15,200 IN THE IMMEDIATELY PRECEDING YEAR TO RS.2,01,95,200 DURING THE YEAR. HE NOTED FURTHER THAT ASSESSEE SHARE PREMIUM HAS INCREASED F ROM NIL IN THE IMMEDIATE PRECEDING YEAR TO RS.3,11,20,000 DURING THE YEAR. T HE ASSESSING OFFICER WAS NOT FULLY SATISFIED WITH THE EXPLANATION OF THE ASS ESSEE AND MADE ADDITION OF RS.77,80,000 ON ACCOUNT OF UNEXPLAINED SHARE CAPITA L AND RS.3,11,20,000 ON ACCOUNT OF SHARE PREMIUM MONEY AS INCOME FROM UNDIS CLOSED SOURCES. 4. BEFORE THE LEARNED CIT(APPEALS), THE ASSESSEE QU ESTIONED THE VALIDITY OF ASSESSMENTS FRAMED UNDER SEC. 153A READ WITH 143 (3) OF THE INCOME-TAX ACT, 1961 IN ABSENCE OF INCRIMINATING MATERIAL FOUN D DURING THE COURSE OF SEARCH AND IN ABSENCE OF ABATEMENT OF ASSESSMENT FR AMED UNDER SEC. 143(3) OF THE ACT. IN ASSESSMENT YEAR 2002-03, THE PLEA W AS RAISED BEFORE THE LEARNED CIT(APPEALS) VIDE SUBMISSION DATED 16.2.20 10. THE LEARNED CIT(APPEALS) CALLED ON REMAND REPORT THEREUPON FROM THE ASSESSING OFFICER. AGAIN ON REMAND REPORT FURNISHED BY THE AS SESSING OFFICER, THE ASSESSEE WAS CALLED TO FILE ITS REJOINDER. THE LEAR NED CIT(APPEALS) DID NOT 5 ALLOW THE CONTENTIONS. THE ASSESSEE THUS RAISED THE ISSUE IN ITS CROSS- OBJECTION AND THE REVENUE HAS ALSO RAISED ITS GRIEV ANCE VIDE GROUND NO. 5 OF THE APPEAL FOR THE ASSESSMENT YEAR 2002-03 THAT THE LEARNED CIT(APPEALS) HAS FAILED TO APPRECIATE THAT PROCEEDINGS UNDER SEC . 153A/153C OF THE ACT ARE FRESH PROCEEDINGS AND ORDER PASSED UNDER SEC. 1 43(3) BY EARLIER ASSESSING OFFICER IS NOT BINDING DURING SUCH FRESH PROCEEDINGS. LIKEWISE, IN THE ASSESSMENT YEAR 2004-05, THE LEARNED CIT(APPEAL S) HAS NOTED THE CONTENTIONS OF THE ASSESSEE ON THE QUESTION OF VAL IDITY OF ASSESSMENT UNDER SEC. 153A OF THE ACT IN ABSENCE OF INVESTIGATING MA TERIAL FOUND IN THE COURSE OF SEARCH IN PARA NO. (II) AT PAGE NO. 17 OF THE F IRST APPELLATE ORDER BUT HAS NOT GIVEN ANY FINDING ON IT. THUS, THE ASSESSEE HAS NOW RAISED GRIEVANCE IN ITS CROSS-OBJECTION. THE LEARNED CIT(APPEALS), HOW EVER, DELETED THE ABOVE STATED ADDITIONS QUESTIONED BEFORE HIM BEING SATISF IED WITH THE EXPLANATION OF THE ASSESSEE PERTAINING TO THOSE ADDITIONS. THUS , THE PARTIES ARE IN APPEALS AND CROSS-OBJECTIONS BEFORE US. IN THEIR APPEALS, T HE REVENUE HAS QUESTIONED THE RELIEF GIVEN BY THE LEARNED CIT(APPEALS) AND IN ITS CROSS OBJECTIONS, THE ASSESSEE HAS QUESTIONED THE VALIDITY OF ASSESSMENT FRAMED UNDER SEC. 153A OF THE ACT. 5. THE ASSESSEE HAS ALSO MOVED APPLICATIONS TO COND ONE THE DELAY IN FILING CROSS OBJECTIONS. IN THE ASSESSMENT YEAR 200 2-03, THERE IS DELAY OF 882 6 DAYS AND IN ASSESSMENT YEAR 2004-05, THE DELAY IS 6 79 DAYS IN FILING THE CROSS OBJECTIONS. THE REASONS SHOWN BY THE ASSESSEE IS THAT THE ASSESSEE HAD RAISED THE LEGAL GROUND BEFORE THE LEARNED CIT(APPE ALS) THAT ASSESSMENT MADE UNDER SEC. 153A IS BAD IN LAW AND WITHOUT JURI SDICTION BUT THE LEARNED CIT(APPEALS) DISMISSED THE APPEAL ON LEGAL GROUND A ND ALLOWED THE APPEAL ON OTHER GROUNDS. THEREAFTER, REVENUE FILED APPEAL BEFORE THE ITAT. AT THE TIME OF RECEIPT OF THE NOTICE OF THE DEPARTMENTAL A PPEALS, THE ASSESSEE HAS HANDED OVER THE SAME TO ONE SHRI S.P. AGGARWAL, FCA WHO HAD REPRESENTED BEFORE THE LEARNED CIT(A). THE ASSESSEE WAS NOT WEL L AWARE ABOUT THE TECHNICALITY OF THE INCOME-TAX PROVISIONS AND SO AS PER THE ADVICE GIVEN BY THE COUNSEL, HE DID NOT FILE CROSS OBJECTION BEFORE THE ITAT. ON 30.9.2011, ASSESSEE ENGAGED M/S. RAJIV SAXENA & CO., ADVOCATE AND SOLICITOR TO ARGUE THE APPEAL BEFORE THE ITAT. AFTER GOING THROUGH THE FACTS OF THE CASE, MR. RAJIV SAXENA FOUND SOME BASIC LEGAL ERROR FOR WHICH IT WAS FOUND NECESSARY TO INSPECT THE ASSESSMENTS AND SEARCH RECORD. THE A SSESSING OFFICER COULD NOT PROVIDE THE ORIGINAL ASSESSMENT RECORD AND THE TIME ALLOWED BY HIM WAS NOT SUFFICIENT TO INSPECT THE RECORD. IT WAS FOUND NECESSARY TO RAISE AND ARGUE GROUNDS TAKEN EARLIER AND OTHER RELEVANT GROU NDS BEFORE THE ITAT, HENCE, HE ADVISED TO FILE CROSS OBJECTION. DUE TO L ACK OF PROPER GUIDANCE, THE ASSESSEE COULD NOT FILE THE CROSS OBJECTION ON TIME . THE DELAY IN FILING THE 7 CROSS OBJECT WAS BECAUSE OF MISTAKE OF COUNSEL AND ALSO DUE TO DELAY IN PROVIDING INSPECTION OF RECORDS. THE ASSESSEE HAS SUBMITTED FURTHER THAT THE LEGAL GROUNDS WILL HAVE DIRECT BEARING ON THE VERY BASIS OF COMPLETING THE ASSESSMENT ITSELF WHICH IS BAD IN LAW. 6. THE LEARNED AR WHILE REITERATING THE CONTENTS OF THE APPLICATION ESPECIALLY THE REASONS SHOWN FOR THE DELAY IN FILIN G THE CROSS OBJECTIONS BY THE ASSESSEE, HAS PLACED RELIANCE ON THE DECISION OF MATA DEEN VS. A. NARAYANAN AIR 1970 S.C. 1953 HOLDING THAT THE MIS TAKE OF COUNSEL MAY IN CERTAIN CIRCUMSTANCES BE TAKEN INTO ACCOUNT IN COND ONING THE DELAY ALTHOUGH THERE IS NO GENERAL PROPOSITION THAT MISTAKE OF COU NSEL BY ITSELF IS ALWAYS A SUFFICIENT GROUND. IT IS ALWAYS A QUESTION WHETHER THE MISTAKE WAS BONA FIDE OR MERELY A DEVICE TO COVER AN ULTERIOR PURPOSE SUC H AS LATCHES ON THE PART OF THE LITIGANT OR AN ATTEMPT TO SAVE LIMITATION IN AN UNDER HAND WAY 7. THE LEARNED AR SUBMITTED FURTHER THAT EVEN OTHER WISE THE LEGAL ISSUE REGARDING THE VALIDITY OF ASSESSMENT FRAMED UNDER S EC. 153A IN ABSENCE OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH AND IN ABSENCE OF ABATEMENT OF ASSESSMENT ALREADY FRAMED UNDER SEC. 1 43(3) OF THE ACT ON THE DATE OF SEARCH CAN BE QUESTIONED UNDER RULE 27 OF T HE ITAT RULES, 1963 8 EVEN WITHOUT PREFERRING CROSS OBJECTIONS AGAINST TH E APPEAL FILED BY THE REVENUE. HE SUBMITTED THAT AS AN ABUNDANT PRECAUTIO N, THE ASSESSEE HAS MOVED THE SAID APPLICATION UNDER SEC. 27 OF THE ITA T RULES,1963 RAISING SIMILAR ISSUE AS RAISED IN THE CROSS OBJECTIONS. 8. THE LEARNED CIT(DR) OPPOSED THE ABOVE APPLICATIO NS WITH THIS SUBMISSION THAT THERE WAS INORDINATE DELAY IN THE F ILING OF THE CROSS OBJECTIONS AND THE ASSESSEE HAS FAILED TO EXPLAIN A NY BONA FIDE REASONS BEHIND THE SAID DELAY IN FILING THE CROSS OBJECTION S. 9. CONSIDERING THE ABOVE SUBMISSION, WE FIND THAT T HE ASSESSEE HAD BEEN ABLE TO ESTABLISH SUFFICIENT REASON FOR FILING THE CROSS OBJECTIONS LATE DUE TO MISTAKE ON THE PART OF HIS COUNSEL WHO HAD REPRESEN TED ITS CASE BEFORE THE LEARNED CIT(APPEALS). WE DO NOT SEE ANY ULTERIOR PU RPOSE ON THE PART OF THE ASSESSEE IN FILING THE CROSS OBJECTIONS LATE SINCE EVEN OTHERWISE THE ASSESSEE IS VERY MUCH ENTITLE UNDER RULE 27 OF THE ITAT RULE S, 1963 TO RAISE SIMILAR LEGAL ISSUES QUESTIONING THE VALIDITY OF FRAMING OF ASSESSMENT UNDER SEC. 153A OF THE ACT, IN ABSENCE OF INCRIMINATING MATERI AL FOUND DURING THE COURSE OF SEARCH AND IN ABSENCE OF ABATEMENT OF ASS ESSMENTS ALREADY FRAMED UNDER SEC. 143(3) OF THE ACT ON THE DATE OF SEARCH. AS DISCUSSED ABOVE ION 9 PARA NO. 4 OF THE ORDER THAT SIMILAR CONTENTIONS WE RE RAISED BEFORE THE LEARNED CIT(APPEALS); BUT HE HAS NOT DISPOSED OFF T HE MATTER BY PASSING AN SPEAKING ORDER. WE THUS ALLOW THE APPLICATIONS FOR CONDONATION OF DELAY IN FILING THE CROSS OBJECTIONS AGAINST THE APPEALS PRE FERRED BY THE REVENUE FOR THE ASSESSMENT YEARS 2002-03 AND 2004-05 BEFORE THE ITAT. 10. SINCE THE ISSUE RAISED IN THE CROSS OBJECTIONS IS LEGAL IN NATURE AND GOING TO THE ROOT OF THE MATTER WE PREFERRED TO DIS POSE IT FIRST. 11. IN SUPPORT OF THE OBJECTION RAISED IN THE CROSS OBJECTIONS, THE LEARNED AR SUBMITTED THAT IT IS AN ADMITTED FACT OF THE CAS E THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND ON THE DATE OF SEARCH THE ASSESSMENT UNDER SEC. 143(3) OF THE ACT WERE ALREAD Y FRAMED AND THE ISSUE OF SHARE CAPITAL RECEIVED FROM ALL THE SHAREHOLDER COMPANY WERE VERIFIED UNDER SEC. 133(6) OF THE ACT. THE LEARNED AR SUBMIT TED THAT IT IS NOW A WELL ESTABLISHED PROPOSITION OF LAW THAT IN ABSENCE OF I NCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND IN ABSENCE OF ABATEMENT OF ASSESSMENT ALREADY FRAMED ON THE DATE OF SEARCH, AN ADDITION C ANNOT BE MADE IN THE ASSESSMENT FRAMED UNDER SEC. 153A READ WITH SEC. 14 3(3) OF THE ACT. IN SUPPORT, HE PLACED RELIANCE ON THE FOLLOWING DECISI ONS: 10 I) CIT VS. KURELE PAPER MILLS P. LTD. ITA NO. 369 /2015 ORDER DATED 06.07.2015 OF THE JURISDICTIONAL HIGH COURT O F DELHI; II) DCIT VS. KURELE PAPER MILLS PVT. LTD. ITA NO. 3 761/DEL/2011 (A.Y. 2002-03) ORDER DATED 14.11.2014; III) RAJ KUMAR CHAWLA VS. ACIT ITA NO. 1682/DEL/2 013 & ORS. (ASSESSMENT YEARS 2004-05 & ORS) ORDER DATED 17.2 .2015. IV) JAI STEEL (INDIA) JODHPUR VS. ACIT 259 CTR 28 1 (RAJ.); & V ) SSP AVIATION LTD. VS. DCIT (2012)- 252 CTR (DE LHI) 291. VI ) ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT (2012 ) 18 ITR (TRIB.) 106 (MUMBAI) (S.B); VII ) CTI VS. CONTINENTAL WAREHOUSING CORPORATION ( NHAVA SHEVA) LTD. & ALL CARGO GLOBAL LOGISTICS LTD.- 374 ITR 645(BOM.) (2015) ; VIII) CIT VS. ANIL KUMAR BHATIA (2013) - 352 ITR 49 3 (DEL.); IX) CIT VS. KABUL CHAWLA- ITA NO. 707/2014 AND ORS. JUDGMENT DATED 28.2.2015( DELHI H.C. ). 12. LEARNED CIT(DR) ON THE OTHER HAND TRIED TO JUST IFY THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE. HE SUBMITTED THAT T HERE ARE CONFLICTING DECISIONS OF DIFFERENT HON'BLE HIGH COURTS ON THE I SSUE I.E. REGARDING VALIDITY OF ASSESSMENT FRAMED UNDER SEC. 153A OF TH E ACT. HE SUBMITTED THAT AFTER THE INTRODUCTION OF SECTIONS 153A TO 153C OF THE ACT, THE ASSESSING OFFICER IS OBLIGED TO ISSUE NOTICES CALLING FOR FIL ING OF RETURNS FOR SIX ASSESSMENT YEARS PRECEDING THE ASSESSMENT YEAR RELE VANT TO THE PREVIOUS YEAR IN WHICH SEARCH WAS CONDUCTED. PRIOR TO INTRODUCTIO N OF SEC. 153A, CHAPTER 11 XIVB OF THE ACT TO CARE OF ASSESSMENT TO BE MADE IN THE CASES OF SEARCH AND SEIZURE ALSO KNOWN AS BLOCK ASSESSMENTS. BLOCK ASSE SSMENT PROVIDED FOR A SINGLE ASSESSMENT TO BE MADE IN RESPECT OF A PERIOD OF A BLOCK OF TEN YEARS. THOUGH A SINGLE ASSESSMENT ORDER WAS REQUIRED TO BE MADE, THE UNDISCLOSED INCOME WAS TO BE ASSESSED IN THE DIFFERENT ASSESSME NT YEARS TO WHICH IT RELATED. THE BLOCK ASSESSMENT SO MADE WAS INDEPENDE NT AND IN ADDITION TO THE NORMAL ASSESSMENT (EXPLANATION BELOW SECTION 15 8BA(2) ). THE OTHER DIFFERENCE IS THAT THERE IS NO BROKEN PERIOD I.E. T ILL THE DATE OF SEARCH. UNDER SEC. 153A AND NEW SCHEME, THE ASSESSING OFFICER IS REQUIRED TO EXERCISED NORMAL ASSESSMENT POWER IN RESPECT OF PREVIOUS YEAR IN WHICH THE SEARCH TOOK PLACE. THE ANOTHER SIGNIFICANT FEATURE OF THIS SEC. IS THAT THE ASSESSING OFFICER IS EMPOWERED TO ASSESS OR REASSESS THE TOTA L INCOME OF THE PERIOD DEFINED IN THAT SECTION. IT IS A SIGNIFICANT DEPART URE FROM THE EARLIER BLOCK ASSESSMENT SCHEMES IN WHICH THE BLOCK ASSESSMENT RO PED IN ONLY THE UNDISCLOSED INCOME AND REGULAR ASSESSMENT PROCEEDIN GS WERE PRESERVED RESULTING IN MULTIPLE ASSESSMENTS. UNDER SEC. 153A, HOWEVER, THE ASSESSING OFFICER HAS BEEN GIVEN POWERS TO ASSESS OR REASSESS THE TOTAL INCOME OF THE SIX ASSESSMENT YEARS IN QUESTION IN SEPARATE ASSESS MENT ORDER. THIS MEANS THAT THERE CAN BE ONLY ONE ASSESSMENT ORDER IN RESP ECT OF EACH ASSESSMENT YEAR IN WHICH BOTH THE DISCLOSED AND UNDISCLOSED IN COME WOULD BE BROUGHT 12 TO TAX. EVEN IN CASES WHERE THE ASSESSMENT ORDER UN DER SEC. 143(3) HAS BEEN PASSED AND THE SEARCH HAS TAKEN PLACE, THEREAFTER, THE ASSESSING OFFICER HAS NO OPTION BUT TO UNDERTAKE THE ASSESSMENT OR REASSE SSMENT OF TOTAL INCOME IRRESPECTIVE OF ANY UNDISCLOSED INCOME UNEARTH DURI NG THE COURSE OF SEARCH. HE CONTENDED THAT THE NON-OBSTANTE CLAUSE WITH SECT ION 153(1) OPENS HAS ALSO REMOVED THE PROCEDURE OF REOPENING OF ASSERSSM ENT PROCEEDINGS UNDER SEC. 147 AND TIME LIMIT UNDER SEC. 148, HENCE, THE ONLY CONDITION PRECEDENT FOR APPLICATION OF SECTION 153A IS THAT THERE SHOUL D BE A SEARCH UNDER SEC. 132. INITIATION OF PROCEEDINGS UNDER SEC. 153A IS N OT DEPENDENT ON ANY UNDISCLOSED INCOME BEING UNEARTH DURING SUCH SEARCH . THERE IS NO CONDITION IN THIS SECTION THAT ADDITIONS SHOULD BE STRICTLY M ADE ON THE BASIS FO EVIDENCE FOUND DURING THE COURSE OF THE SEARCH OR OTHER POST -SEARCHED MATERIAL OR INFORMATION AVAILABLE WITH THE ASSESSING OFFICER RE LATED TO THE EVIDENCE FOUND. UNDER SEC. 153A OF THE ACT, THE ADDITIONS NE ED NOT BE RESTRICTED OR LIMITED TO THE INCRIMINATING MATERIAL WHICH WAS FOU ND DURING THE COURSE OF SEARCH. IT HAS TO BE THE ASSESSMENT OR REASSESSMENT OF TOTAL INCOME, SUBMITTED THE LEARNED CIT(DR). HE ALSO PLACED RELIA NCE ON THE FOLLOWING DECISIONS: I) FILATEX INDIA LTD. ITA NO. 269/2014 & CM NO. 1 0077/2014 DATED 14.7.2014 OF THE HON'BLE DELHI HIGH COURT; 13 II) CIT VS. CHETAN DASS LAXMAN DASS (2012) 254 CT R (DELHI) 392; III) CIT VS. ANIL KUMAR BHATIA (2012) 211 TAXMAN 453 (DELHI); IV) RAJ KUMAR ARORA ITA NO. 56/2011 DATED 11.7.20 14 OF HON'BLE ALLAHABAD HIGH COURT; V ) CANARA HOUSING DEV. CO. ITA NO. 38/2014 DATED 25.7.2014 OF HON'BLE KARNATAKA HIGH COURT; VI) APPORVA EXTRUSION PVT. LTD. ITA NO. 3308/DEL. /2010 (A.Y. 2002-03) DATED 09.10.2014; 13. THE LEARNED CIT(DR) ON THE OTHER HAND TRIED TO JUSTIFY THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT THE LEARNE D CIT(APPEALS) HAS DEALT WITH THE ISSUE AND HAS DENIED THE CONTENTION OF THE ASSESSEE THAT THE PROCEEDINGS UNDER SEC. 153A IS BAD IN LAW AND VOID. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS: I) FILATEX INDIA LTD. ITA NO.269/2014 (DELHI) J UDGMENT DATED 14.7.2014; II) CANARA HOUSING DEVELOPMENT COM. ITA NO. 38/ 2014 (KER. H.C.) JUDGMENT DATED 25.7.2014; III) CIT VS. ANIL KUMAR BHATIA (2012) 24 TAXMAN.C OM 98 (DELHI); IV) RAJ KUMAR ARORA ITA NO. 56/2011 (ALL.H.C) J UDGMENT DATED 11.7.2014; V ) APOORVA EXTRUSION PVT. LTD. ITA NO.3308/DEL/2 010 DATED 09.10.2014; & 14 VI ) CIT VS. CHETAN DASS LACHMAN DASS (2012) 254 CTR (DEL.) 392. 14. CONSIDERING THE ABOVE SUBMISSION, WE FIND IT AN UNDISPUTED FACT THAT IN THE PRESENT CASE DURING THE COURSE OF SEARCH PRO CEEDINGS, NO INCRIMINATING MATERIAL WAS FOUND AND ON THE DATE OF SEARCH, THE A SSESSMENT FRAMED UNDER SEC. 143(3) OF THE ACT WAS NOT ABATED. UNDER THESE FACTS, WE FIND THAT THE CONTENTION OF THE ASSESSEE THAT THE ASSESSMENTS FRA MED UNDER SEC. 153A READ WITH SEC. 143(3) OF THE INCOME-TAX ACT, 1961 IN THE ASSESSMENT YEARS UNDER CONSIDERATION I.E. ASSESSMENT YEARS 2002-03 AND 200 4-05 ARE VOID AB INITIO IS WELL SUPPORTED BY THE DECISIONS CITED BY THE LEA RNED AR HEREINABOVE. IN THE CASE OF DCIT VS. KURELE PAPER MILLS PVT. LTD. ( SUPRA), WHICH HAS NOW BEEN UPHELD BY THE HON'BLE JURISDICTIONAL DELHI HIG H COURT (SUPRA), THE ITAT HAS DEALT WITH AN IDENTICAL ISSUE IN DETAIL. T HE RELEVANT PARAGRAPHS THEREOF ARE BEING REPRODUCED HEREUNDER: 6.1 ABOVE SUBMISSIONS HAVE BEEN CONSIDERED AND THE DECISIONS RELIED UPON HAVE BEEN GONE THROUGH. WE FIND THAT TH E RELEVANT FACTS OF THE PRESENT CASE ARE THAT THE ASSESSEE AND ITS GROU P WERE SUBJECTED TO SEARCH OPERATIONS UNDER SEC. 132 OF THE ACT. THE AS SESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSES SEE REGARDING THE RECEIPT OF SHARE CAPITAL OF RS.89 LACS AND ADDED TH E AMOUNT UNDER SEC. 68 OF THE ACT TREATING THE CLAIMED SHARE CAPITAL AS BOGUS. THE SAME WAS QUESTIONED BEFORE THE LEARNED CIT(APPEALS) ON T HE MERITS OF THE 15 ADDITION AS WELL AS THE VALIDITY OF PROCEEDINGS INI TIATED UNDER SEC. 153A OF THE ACT ON SEVERAL BASIS. THE ASSESSEE SUCC EEDED IN ITS APPEAL BEFORE THE LEARNED CIT(APPEALS) AS THE LEARNED CIT( APPEALS) HAS HELD THE PROCEEDINGS INITIATED UNDER SEC. 153A OF T HE ACT IN ABSENCE OF INCRIMINATING MATERIAL FOUND DURING THE COURSE O F THE SEARCH AS INVALID. HE ALSO DELETED THE ADDITION OF RS. 89 LAC S AFTER DISCUSSING THE MERITS OF THE ADDITION. THESE ACTIONS OF THE LEARNE D CIT(APPEALS) HAS BEEN QUESTIONED BY THE REVENUE BEFORE US IN THE PR ESENT APPEAL ON THE ABOVE STATED GROUNDS. 7. HAVING GONE THROUGH THE ASSESSMENT ORDER AND THE MATERIAL MADE AVAILABLE ON RECORD, WE DO NOT FIND REFERENCE OF ANY INCRIMINATING MATERIAL RELEVANT TO THE ADDITION MAD E UNDER SEC. 68 OF THE ACT WHICH WAS FOUND DURING THE COURSE OF SEARCH PROCEEDINGS TO JUSTIFY THE INITIATION OF PROCEEDINGS UNDER SEC. 15 3A OF THE ACT AGAINST THE ASSESSEE AND THE ASSESSMENT MADE IN FURTHERANCE THERETO UNDER SEC. 153A READ WITH SECTION 143(3) OF THE ACT. THE FINDI NGS OF THE LEARNED CIT(APPEALS) IN THIS REGARD THAT NO INCRIMINATING M ATERIAL WAS FOUND DURING THE COURSE OF SEARCH WITH RESPECT TO THE COM PLETED ASSESSMENT HAS NOT BEEN REBUTTED BY THE REVENUE BEFORE THE IT AT NOR THE SUBMISSIONS OF THE ASSESSEE IN THIS REGARD MADE BEF ORE THE LEARNED CIT(APPEALS) AND REITERATED BEFORE THE ITAT HAS BEE N CONTROVERTED. THE SUBMISSIONS OF THE ASSESSEE REMAINED THAT NO IN CRIMINATING MATERIAL WHATSOEVER WAS FOUND DURING THE COURSE OF SEARCH OPERATION, ALL THE AFFAIRS OF THE ASSESSEE WERE FOUND TO BE IN ORDER, NO UNACCOUNTED ASSETS, INVESTMENT OR EXPENDITURE WAS F OUND, ALL THE RECORDS/DOCUMENTS WERE FOUND TO BE FULLY TALLYING W ITH BOOKS OF ACCOUNT AND OTHER RECORDS REGULARLY KEPT BY THE ASS ESSEE AND FOUND TO 16 BE SO DURING THE COURSE OF THE SEARCH AND THAT THIS WAS SO EVEN IN RELATION TO ISSUE OF SHARE CAPITAL TO VARIOUS PERSO NS IN RELATION TO WHICH HUGE ADDITION OF RS.89 LACS HAS BEEN MADE. BEING CO NVINCED WITH THIS CONTENTION OF THE ASSESSEE AND THAT DURING THE COUR SE OF SEARCH, NO ASSESSMENT WAS PENDING, THE LEARNED CIT(APPEALS) HA S HELD THE ASSESSMENT FRAMED UNDER SEC. 153A OF THE ACT AS INV ALID. WE FIND THAT AN IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF TH E ASSESSEE UNDER ALMOST SIMILAR FACTS AND CIRCUMSTANCES BY THE SPECI AL BENCH OF THE ITAT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA). IN PARA NO. 58 THEREOF, THE ISSUE HAS BEEN ANSWERED AS UNDE R: 58. THUS, QUESTION NO. 1 BEFORE US IS ANSWERED AS UNDER :- (A) IN ASSESSMENTS THAT ARE ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFE RRED ON HIM U/S 153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EA CH OF THE SIX ASSESSMENT YEAR SEPARATELY : (B) IN OTHER CASES, IN ADDITION TO THE INCOME THA T HAS ALREADY BEEN ASSESSED, THE ASSESSMENT U/S 153A WI LL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL, WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS (I) BOOKS OF A CCOUNT, OTHER DOCUMENTS, FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT, AND (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE CO URSE OF SEARCH. 8. THE ISSUE RAISED BEFORE THE SPECIAL BENCH WA S AS TO WHETHER SCOPE OF ASSESSMENT U/S 153A ENCOMPASSES ADDITIONS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH? 9. IN THE CASE OF KUSUM GUPTA (SUPRA) ALSO THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT AND TIME LIMIT FOR ISSUANCE OF NOTICE U/S 143(2) HAD EXPIRED ON THE DATE OF SEARCH AND IT WAS HELD 17 THAT NO ASSESSMENT WAS PENDING IN THAT CASE AND THU S THERE WAS NO QUESTION OF ABATEMENT OF ASSESSMENT. THEREFORE ADDI TION IN THE ASSESSMENT U/S 153A WOULD BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE SEARCH. THE DELHI BENCH OF THE TRIBUNAL IN ITS RECENT DECISION ON THE ISSUE IN THE CASE OF SHRI KABUL CHAWLA VS. ACIT, ITA NO. 783/D/2013 (ASSTT. Y EAR 2008- 09) AND OTHERS VIDE ORDER DATED 23.5.2014 HAS EXPRE SSED THE SIMILAR VIEW. IT HAS ALSO DISCUSSED THE DECISION OF HONBLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF ANIL KUMAR BHATIA ( SUPRA) WHILE DECIDING THE ISSUE. THE RELEVANT PARA NO. 8 & 9 IN THIS REGARD IS BEING REPRODUCED AS UNDER :- 8. WE ARE UNABLE TO ACCEPT THE CONTENTION ADVANCED ON BEHALF OF THE REVENUE FOR THE REASON THAT IF BOTH THE PEND ING AND COMPLETED ASSESSMENT WERE TO BE TAKEN ON SAME PEDES TAL, THEN THERE WAS NO NEED TO ENSHRINE SECOND PROVISO TO SEC . 153A( 1) PROVIDING THAT THE PENDING ASSESSMENTS WITHIN THE P ERIOD OF SIX ASSESSMENT YEARS SHALL ABATE. THE HON'BLE DELHI HIG H COURT IN THE CASE OF ANIL KUMAR BHATIA (SUPRA) DEALT WITH A SITUATION IN WHICH SOME INCRIMINATING MATERIAL WAS FOUND IN RESP ECT OF A NON-PENDING ASSESSMENT. IT WAS IN THAT BACKGROUND T HAT THE HON'BLE HIGH COURT HELD THAT SEC. 153A APPLIES IF I NCRIMINATING MATERIAL IS FOUND EVEN IF ASSESSMENTS ARE COMPLETED . THE QUESTION AS TO WHETHER ANY ADDITION CAN BE MADE IN RESPECT OF COMPLETED ASSESSMENTS WHEN NO INCRIMINATING MATERIA L WAS FOUND, WAS APPARENTLY LEFT OPEN. HOWEVER, WE FIND T HAT THERE ARE SUFFICIENT INDIRECT HINTS GIVEN BY THE HON 'BLE DELHI HIGH COURT IN THE CASE OF ANIL KUMAR BHATIA (SUPRA) ABOU T NOT MAKING OF ANY ADDITION IN RESPECT OF AN ASSESSMENT YEAR FOR WHICH THE ASSESSMENT IS ALREADY COMPLETED UNLESS SO ME INCRIMINATING MATERIAL IS FOUND DURING THE COURSE O F SEARCH. THIS CAN BE SEEN FROM THE . FOLLOWING OBSERVATIONS OF THE HON'BLE HIGH COURT :- 18 '20. A QUESTION MAY ARISE AS TO HOW THIS IS SOUGHT TO BE ACHIEVED WHERE AN ASSESSMENT ORDER HAD ALREADY BEEN PASSED IN RESPECT OF ALL OR ANY OF THOSE SIX ASSESSMENT YEARS, EITHER UNDER SECTION 143(1)(A) OR SECTION 143(3) OF THE ACT. IF SUCH AN ORDER IS ALREADY IN EXISTENCE, HAVING OBVIOUSLY BEEN PASSED PRIOR TO THE INITIATION OF THE SEARCH/REQUISITION, THE ASSESSING OFFICER IS EMPOWERED TO REOPEN THOSE PROCEEDINGS AND REASSESS THE TOTAL INCOME, TAKING NOTE OF THE UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH. 9. THE ABOVE EXTRACTED OBSERVATIONS OF THE HON'BL E HIGH COURT, WHICH ARE THOUGH OBITER DICTA, MAKE THE POIN T CLEAR THAT WHERE AN ASSESSMENT ORDER HAS ALREADY BEEN PASSED F OR A YEAR(S) WITHIN THE RELEVANT SIX ASSESSMENT YEARS, T HEN ALSO THE A.O IS DUTY BOUND TO REOPEN THOSE PROCEEDINGS AND R EASSESS THE TOTAL INCOME BUT BY 'TAKING NOTE OF THE UNDISCLOSED INCOME IF ANY, UNEARTHED DURING THE SEARCH'. THE EXPRESSION ' UNEARTHED DURING THE SEARCH' IS QUITE SIGNIFICANT TO DENOTE T HAT IN RESPECT OF COMPLETED OR NON-PENDING ASSESSMENTS, THE ASSESS ING OFFICER IS ALBEIT DUTY BOUND TO ASSESS OR REASSESS THE TOTA L INCOME BUT THERE IS A CAP ON THE SCOPE OF ADDITIONS IN SUCH AS SESSMENT, BEING THE ITEMS OF INCOME 'UNEARTHED DURING THE SEA RCH'. IN OTHER WORDS, THE DETERMINATION OF 'TOTAL INCOME' IN RESPECT OF THE ASSESSMENT YEARS FOR WHICH THE ASSESSMENTS ARE ALRE ADY COMPLETED ON THE DATE OF SEARCH, SHALL NOT BE INFLU ENCED BY THE ITEMS OF INCOME OTHER THAN THOSE BASED ON THE MATER IAL UNEARTHED DURING THE COURSE OF SEARCH. THERE IS NOT AND CANNOT BE ANY QUARREL OVER THE PROPOSITION THAT THE ASSESS ING OFFICER HAS NO OPTION BUT TO DETERMINE THE TOTAL INCOME OF THE ASSESSEE IN RESPECT OF THE RELEVANT SIX ASSESSMENT YEARS. HO WEVER, THE SCOPE OF SUCH DETERMINATION OF TOTAL INCOME IS DIFF ERENT IN RESPECT OF THE YEARS FOR WHICH THE ASSESSMENTS ARE PENDING VIS- VIS THE YEARS FOR WHICH ASSESSMENTS ARE NON-PENDING . IN RESPECT TO THE ASSESSMENT YEARS FOR WHICH THE ORIGINAL ASSE SSMENTS HAVE ALREADY BEEN COMPLETED ON THE DATE OF SEARCH, THE T OTAL INCOME SHALL BE DETERMINED BY RESTRICTING ADDITIONS ONLY T O THOSE WHICH FLOW FROM INCRIMINATING MATERIAL FOUND DURING THE C OURSE OF 19 SEARCH. IF NO INCRIMINATING MATERIAL IS FOUND IN RE SPECT OF SUCH COMPLETED ASSESSMENT, THEN THE TOTAL INCOME IN THE PROCEEDINGS U/S 153A SHALL BE COMPUTED BY CONSIDERING THE ORIGI NALLY DETERMINED INCOME. IF SOME INCRIMINATING MATERIAL I S FOUND IN RESPECT OF SUCH ASSESSMENT YEARS FOR WHICH THE ASSE SSMENT IS NOT PENDING, THEN THE 'TOTAL INCOME' WOULD BE DETERMINE D BY CONSIDERING THE ORIGINALLY DETERMINED INCOME PLUS I NCOME EMANATING FROM THE INCRIMINATING MATERIAL FOUND DUR ING THE COURSE OF SEARCH. IN THE OTHER SCENARIO OF THE ASSE SSMENTS PENDING ON THE DATE OF SEARCH WHICH WOULD ABATE IN TERMS OF SECOND PROVISO TO SEC. 153A( 1), THE TOTAL INCOME S HALL BE COMPUTED AFRESH UNINFLUENCED BY THE FACT WHETHER OR NOT THERE IS ANY INCRIMINATING MATERIAL. IN FACT, THIS IS THE POSITION WHICH FOLLOWS WHEN WE READ THE JUDGMENT OF THE HON'BLE DE LHI HIGH COURT IN ANIL KUMAR BHATIA (SUPRA) IN JUXTAPOSITION TO THE SPECIAL BENCH ORDER IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA). THE OTHER JUDGMENT RELIED BY THE LD. DR IN THE CASE OF MADUGULU VENU (SUPRA) ALSO TALKS ABOUT THE NEED FOR MAKING FRESH ASSESSMENT IN RESPECT OF THE ASSESSMEN T YEARS FOR WHICH THE ASSESSMENTS ARE NOT PENDING ON THE DATE O F SEARCH BUT DOES NOT SET OUT THE SCOPE OF SUCH ASSESSMENT, WHIC H IS THE ISSUE BEFORE USE. 10. WE, THUS, FIND THAT THE DECISION OF THE HONBLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF ANIL KR. BHATIA (SU PRA) SUPPORTS THE CASE OF THE ASSESSEE THAT IN ABSENCE OF INCRIMI NATING MATERIAL FOUND DURING THE COURSE OF SEARCH AN ADDITION U/S 1 53A OF THE ACT CANNOT BE MADE IN THE ASSESSMENT FRAMED THEREUNDER. THE DECISIONS RELIED UPON BY THE LD. CIT, DR IN THE CAS ES OF CANARA HOUSING DEVELOPMENT COMPANY VS. DCIT(SUPRA) OF HON BLE KARNATAKA HIGH COURT AND FILATEX INDIA P. LTD. VS. CIT(SUPRA) OF HONBLE DELHI HIGH COURT HAVING DISTINGUISHABLE FAC TS ARE NOT APPLICABLE IN THE PRESENT CASE. IN THE CASE OF FIL ATEX INDIA PVT. LTD. (SUPRA), THE QUESTION RAISED ON THE APPLICABIL ITY OF PROVISIONS 20 U/S 153A WAS AS UNDER : WHETHER THE TRIBUNAL ERRED ON FACTS AND IN LAW IN NOT HOLDING THAT RECOMPUTATION OF BOOK PR OFIT, DEHORS ANY MATERIAL FOUND DURING THE COURSE OF SEARCH IN THE O RDER PASSED U/S 153A OF THE ACT WAS WITHOUT JURISDICTION, BEING OUT SIDE THE SCOPE OF PROCEEDINGS UNDER THAT SECTION? THE OTHER QUES TION WAS, WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE TRIBUNAL ERRED IN LAW IN UPHOLDING THE ACTION OF THE AO IN D ENYING SET OFF, OF BOOK LOSS UNABSORBED DEPRECIATION RELATABLE TO E ARLIER ASSESSMENT YEAR IN TERMS OF CLAUSE (III) OF EXPLANA TION 1 TO SECTION 115JB OF THE ACT? THE RELEVANT FACTS OF THAT CASE NOTED IN PARA NO. 2 OF THE DECISION ARE THAT THE AO IN THE PROCEE DINGS U/S 153A OF THE ACT, HAD MADE SEVERAL ADDITIONS, RELYING UPO N THE INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARC H, WHICH WAS CONDUCTED ON 18.1.2006 AND SUBSEQUENT DATES. IN THI S PARAGRAPH OF THE DECISION IT HAS BEEN PERUSED FROM THE IMPUGNED ORDER OF THE TRIBUNAL THAT INCRIMINATING MATERIAL INCLUDING STAT EMENT OF SANJAY AGARWAL, GM (MARKETING) HAVE RESULTED IN ADDITIONS, WHICH HAVE BEEN UPHELD. THE HONBLE HIGH COURT HAS BEEN PLEAS ED TO NOTE IN THIS PARAGRAPH AS IT IS NOT THE CASE OF THE APPELL ANT ASSESSEE THAT INITIATION OF PROCEEDINGS U/S 153A WAS BAD OR UNWAR RANTED IN LAW AS NO INCRIMINATING MATERIAL WAS FOUND DURING THE S EARCH. THE CONTENTION RAISED BY THE APPELLANT ASSESSEE IS TH AT THE ADDITION, WHICH IS THE SUBJECT MATTER OF QUESTIONS NO. (II) A ND (III), WAS/IS NOT JUSTIFIED IN THE ASSESSMENT ORDER U/S 153, AS N O INCRIMINATING MATERIAL WAS FOUND CONCERNING THE ADDITION U/S 115J B OF THE ACT. THE HONBLE HIGH COURT HAS REJECTED THIS CONTENTION OF THE ASSESSEE WITH THIS FINDING THAT U/S 153A OF THE ACT , THE ADDITIONS 21 NEED NOT TO BE RESTRICTED OR LIMITED TO THE INCRIMI NATING MATERIAL, WHICH WAS FOUND DURING THE COURSE OF SEARCH. THUS, IT IS CLEAR FROM THE FACTS OF THIS CASE BEFORE THE HONBLE HIGH COURT THAT SEVERAL ADDITIONS RELYING UPON THE INCRIMINATING MA TERIAL FOUND IN THE COURSE OF SEARCH WERE MADE BY THE AO IN THE ASS ESSMENT PROCEEDINGS U/S 153A OF THE ACT AND ADDITION U/S 11 5JB WAS MADE BY THE AO IN ABSENCE OF INCRIMINATING MATERIAL CONC ERNING THIS ADDITION. THIS ADDITION WAS QUESTIONED BY THE ASSE SSEE ON THE BASIS THAT THERE WAS NO INCRIMINATING MATERIAL FOUN D CONCERNING THE ADDITION MADE IN THE ASSESSMENT U/S 153A OF THE ACT, WHICH HAS BEEN REJECTED BY THE HONBLE HIGH COURT WITH TH E ABOVE FINDING. IT WAS HELD BY THE HONBLE HIGH COURT THA T THERE CANNOT BE MULTIPLE ASSESSMENTS, ONCE SEC. 153A OF THE ACT IS APPLICABLE. SECTION 153A(1) POSTULATES ONE ASSESSMENT; PUTTING THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDIN G THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH SEARCH WAS CONDUCTED OR REQUISITION WAS MADE. 11. IN PARA NO. 3 OF THE JUDGMENT THE HONBLE DELHI HIGH COURT WHILE DISCUSSING THE CITED DECISIONS IN THE CASES C IT VS. CHETAN DAS (2012), 254 CTR (DEL) 292 AND CIT VS. ANIL KR. BHATIA (2012), 2010-11 TAXMAN 453 (DEL) CITED BY THE LD. A R OF THE ASSESSEE APPELLANT, HAS NOTED CERTAIN OBSERVATIONS MADE AND FINDINGS GIVEN BY THE HONBLE COURT THEREIN. THERE AFTER IN PARA NO. 4 OF THE JUDGMENT, THE HONBLE HIGH COURT HAS H ELD AS UNDER: THE FIRST QUESTION, WE NOTICE WAS NOT RAISED BY TH E APPELLANT BEFORE THE AO, CIT(A) AND BEFORE THE TRIBUNAL. THE APPELLANT CLAIMS THAT THE CONTENTION BEING LEGAL CAN BE RAISE D AT ANY STAGE. 22 WE HAVE EXAMINED SEC. 153A OF THE ACT AND FIND THAT THE SUBMISSION/ CONTENTION HAS NO MERIT. 11.1 WHEN WE PERUSE THE FACTS OF THE CASE IN THE CA SE OF FILATAX INDIA LTD. AND THE QUESTION RAISED THEREIN IT COMES OUT THAT IN THAT CASE ADMITTEDLY DURING THE COURSE OF SEARCH INCRIMI NATING MATERIAL INCLUDING STATEMENTS WERE FOUND AND RESULTED IN ADD ITIONS AND THE ADDITION MADE U/S 115JB OF THE ACT WAS NOT BASED UP ON ANY INCRIMINATING MATERIAL. THUS, THE QUESTION RAISED BEFORE THE HONBLE HIGH COURT WAS AS TO WHETHER THE TRIBUNAL H AS ERRED IN LAW IN NOT UPHOLDING THAT RECOMPUTATION OF BOOK PRO FIT, DEHORS ANY MATERIAL FOUND DURING THE COURSE OF SEARCH IN THE O RDER BASED U/S 153A OF THE ACT WAS WITHOUT JURISDICTION, BEING OUT SIDE THE SCOPE OF PROCEEDINGS UNDER THAT SECTION. THE HONBLE HIG H COURT AFTER DISCUSSING THE ISSUE IN DETAIL HAS BEEN PLEASED TO DECIDE THE QUESTION AGAINST THE ASSESSEE AND HAS UPHELD THE A DDITION MADE U/S 115JB OF THE ACT. THUS, HAVING DISTINGUISHABLE FACTS THIS CITED THE DECISION IN THE CASE OF FILATAX INDIA LTD. (SUP RA) IS NOT HELPFUL TO THE REVENUE. 11.2 SO FAR AS, THE DECISION OF HONBLE KARNATAKA H IGH COURT IN THE CASE OF CANARA HOUSING DEVELOPMENT COMPANY (SUP RA) RELIED UPON BY THE LD. CIT DR IS CONCERNED, THE ISSUE RAIS ED BEFORE THE HONBLE HIGH COURT WAS REGARDING VALIDITY OF REVISI ONAL ORDER PASSED U/S 263 OF THE ACT BY THE LD. CIT PARTLY UPH ELD BY THE TRIBUNAL AND DURING THAT COURSE THE HONBLE HIGH CO URT HAS ALSO BEEN PLEASED TO DISCUSS THE DECISION IN THE CASES O F CIT VS. ANIL KUMAR BHATIA (SUPRA) AND THE DECISION OF SPECIAL BE NCH OF THE TRIBUNAL IN THE CASE OF ALLCARGO HONBLE LOGISTICS LTD. (SUPRA). IT 23 HAS BEEN OBSERVED BY THE HONBLE HIGH COURT THAT TH E CONDITION PRECEDENT FOR APPLICATION OF SEC. 153A IS THAT THER E SHOULD BE A SEARCH U/S 132 AND INITIATION OF PROCEEDINGS U/S 15 3A IS NOT DEPENDENT ON ANY UNDISCLOSED INCOME BEING UNEARTH D URING THE SUCH SEARCH. THE HONBLE RAJASTHAN HIGH COURT IN T HE CASE OF JAI STEEL (SUPRA) HAS BEEN PLEASED TO HOLD THAT IF ANY BOOKS OF ACCOUNTS OR OTHER DOCUMENTS RELEVANT TO THE ASSESSM ENT HAD NOT BEEN PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND FOUND IN THE COURSE OF SEARCH, SUCH BOOKS OF ACCOUNTS OR OTH ER DOCUMENTS HAVE TO BE TAKEN INTO CONSIDERATION WHILE ASSESSING OR RE-ASSESSING THE TOTAL INCOME UNDER THE PROVISIONS OF SEC. 153A OF THE ACT. EVEN ANY UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY HAS BEEN FOUND AFTER THE CONCLUSIONS OF THE SEARCH, SAME WOU LD ALSO BE TAKEN INTO CONSIDERATION. THE REQUIREMENT OF ASSES SMENT OR RE- ASSESSMENT UNDER THE SAID SECTION HAS TO BE READ IN THE CONTEXT OF SECTIONS 132 OR 132A OF THE ACT, IN MUCH AS, IN CAS E NOTHING INCRIMINATING IS FOUND ON ACCOUNT OF SUCH SEARCH OR REQUISITION, THEN THE QUESTION OF RE-ASSESSMENT OF THE CONCLUDED ASSESSMENT DOES NOT ARISE, WHICH WOULD REQUIRE MORE REITERATIO N AND IT IS ONLY IN THE CONTEXT OF THE ABATED ASSESSMENT UNDER SECON D PROVISO WHICH IS REQUIRED TO BE ASSESSED. 12. IN THE CASE OF SSP AVIATION LTD. VS. DCIT (SUPR A) WHERE THE VALIDITY OF ASSESSMENT FRAMED U/S 153C WAS CHALLENG ED IT WAS HELD THAT IF THE AO IS SATISFIED THAT ANY MONEY, BULLION , JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED IN THE COURSE OF THE SEARCH BELONGS TO A PER SON OTHER THAN THE PERSON WHO WAS SEARCHED, THEN SUCH ASSETS OR BO OKS OF 24 ACCOUNTS OR DOCUMENTS SHALL BE HANDED OVER BY HIM T O THE AO HAVING JURISDICTION OVER SUCH OTHER PERSON. ONCE, THAT IS DONE, THE AO HAVING JURISDICTION OVER SUCH OTHER PERSON SHALL PROCEED AGAINST HIM FOR MAKING AN ASSESSMENT OR REASSESSMEN T OF HIS INCOME IN ACCORDANCE WITH THE PROVISIONS OF SEC. 15 3A. THE PETITIONER THEREIN WAS NOT SEARCHED U/S 132 OF THE ACT, HOWEVER, SOME DOCUMENTS BELONGING TO IT WERE FOUND DURING TH E SEARCH CARRIED OUT IN THE PREMISES OF PURI GROUP OF COMPAN IES. 13. WE, THUS, FIND THAT THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT AND HONBLE RAJASTHAN HIGH COURT IN THE ABOVE CITED AND DISCUSSED DECISIONS SUPPORTS THE CASE OF THE AS SESSEE THAT IN ABSENCE OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH NO ADDITION CAN BE MADE U/S 153A OF THE ACT WHERE THE ORIGINAL ASSESSMENT WAS ALREADY FRAMED ON THE DATE OF SEARCH. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CANARA HOUSING DEVELOPMENT COMPANY (SUPRA) HAS, HOWEVER, BEEN PLEA SED TO EXPRESS DIFFERENT VIEW HOWEVER, AS PER THE ESTABLI SHED PROPOSITION OF LAW, WE ARE BOUND TO FOLLOW THE DECISION OF HON BLE JURISDICTIONAL DELHI HIGH COURT AND SINCE, THE HON BLE KARNATAKA HIGH COURT AND THE HONBLE RAJASTHAN HIGH COUT HAVE EXPRESSED DIFFERENT VIEWS ON THE ISSUE, THE VIEW FAVOURABLE T O THE ASSESSEE IS TO BE FOLLOWED. WE, THUS, REITERATE THAT IN ABSENC E OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH NO ADDIT ION CAN BE MADE IN A CASE WHERE ORIGINAL ASSESSMENT WAS ALREAD Y FRAMED ON THE DATE WHEN SEARCH TOOK PLACE. 14. WE THUS FIND THAT THE FIRST APPELLATE ORDER ON THE ISSUE IS FULLY SUPPORTED BY THE ABOVE DISCUSSED DECISIONS RE LIED UPON BY 25 THE LEARNED AR ESPECIALLY WHEN IT IS UNDISPUTED FAC T OF THE PRESENT CASE THAT NO INCRIMINATING MATERIAL WAS FOUND DURIN G THE COURSE OF SEARCH AGAINST THE ASSESSEE AND ON THE DATE OF SEAR CH, NO ASSESSMENT BASED ON THE RETURN OF INCOME ORIGINALLY FILED WAS PENDING. WE, THUS, DO NOT FIND ANY REASON TO INTERF ERE WITH THE FIRST APPELLATE ORDER IN THIS REGARD. THE SAME IS UPHELD. THE GROUND NO.2 IS ACCORDINGLY REJECTED. 15. THE REMAINING GROUNDS QUESTIONING ACTION OF THE LEARNED CIT(APPEALS) IN DELETING THE ADDITION OF RS.89 LACS MADE BY THE ASSESSING OFFICER UNDER SEC. 68 OF THE ACT AND CHAR GING OF INTEREST OF INTEREST UNDER SEC. 234A AND 234B OF THE INCOME-TAX ACT, 1961 HAVE NOW BECOME ACADEMIC, HENCE, DO NOT NEED ADJUDICATIO N. 15. THE ABOVE DECISION OF THE ITAT HAS NOW BEEN UPH ELD BY THE HON'BLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT VS. KURELE PAPER MILL P. LTD. (SUPRA). AGAIN IN THE CASE OF CIT VS. KABUL CH AWLA (SUPRA), THE HONBLE JURISDICTIONAL HIGH COURT OF DELHI HAS BEEN PLEASED TO DISCUSS THE ISSUE IN DETAIL AND HAS BEEN PLEASED TO SUMMARIZE ITS FINDIN GS ON THE LEGAL POSITION OF THE APPLICATION OF SECTION 153A IN PARA NO. 37 OF T HE JUDGMENT REPRODUCED AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SEC. 132 OF THE ACT, NOTICE UNDER SEC. 153A(I) WILL HAVE TO BE MANDATORILY ISSU ED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX A.YS IMMEDIATELY 26 PRECEDING THE PREVIOUS YEAR RELEVANT TO THE A.Y. IN WHICH THE SEARCH TAKES PLACE. II. THE ASSESSMENTS AND REASSESSMENTS PENDING ON TH E DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH A.YS WILL HAVE TO BE COMPUTED BY THE A.OS AS A FRESH EXERCISE. III. THE A.O. WILL EXERCISE NORMAL ASSESSMENT POWER S IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT A.Y. IN WHIC H THE SEARCH TAKES PLACE. THE A.O. HAS THE POWER TO ASSESS AND REASSES S THE TOTAL INCOME OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WIL L BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX A.YS IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE B ROUGHT TO TAX. IV. ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITIO NS SHOULD NOT BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATIO N AVAILABLE WITH THE A.O. WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHOUT AN Y RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESS MENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE CO MPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSM ENT OR REASSESSMENT CAN BE MADE. THE WORD ASSESS IN SEC. 153A IS RELATABLE 27 TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DA TE OF SEARCH) AND THE WORD ASSESS TO COMPLETED ASSESSMENT PROCEEDIN GS. VI. IN SO FAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SEC, 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH A.Y. ON THE BASIS OF THE FINDINGS OF THE SEARC H AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE A .O. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH T HE A.O. WHILE MAKING THE ASSESSMENT UNDER SEC. 153A ONLY ON THE B ASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR P ROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT P RODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF OR IGINAL ASSESSMENT. 16. WE THUS FOLLOWING THE RATIOS LAID DOWN IN THE A BOVE CITED DECISIONS OF THE HON'BLE HIGH COURT BY THE LEARNED AR HOLD THAT THE ASSESSMENTS FRAMED UNDER SEC. 153A READ WITH SEC. 143(3) OF THE ACT, I N THE ASSESSMENT YEARS 2003-04 AND 2004-05 IN ABSENCE OF INCRIMINATING MAT ERIAL FOUND DURING THE COURSE OF SEARCH AND IN ABSENCE OF ABATEMENT OF ASS ESSMENT ALREADY FRAMED UNDER SEC. 143(3) OF THE ACT ON THE DATE OF SEARCH WAS VOID AB INITIO. WE ORDER ACCORDINGLY. THE ISSUE RAISED IN THE CROSS OB JECTION IS ACCORDINGLY 28 DECIDED IN FAVOUR OF THE ASSESSEE. THOSE OBJECTIONS ON THE ISSUE ARE ACCORDINGLY ALLOWED. 17. THE CROSS OBJECTIONS FILED BY THE ASSESSEE IN T HE ASSESSMENT YEARS 2002-03 AND 2004-5 ARE ACCORDINGLY ALLOWED WITH THI S FINDING THAT THE ASSESSMENTS IN QUESTION FRAMED UNDER SEC. 153A/143( 3) ARE VOID-AB-INITIO AND ARE ACCORDINGLY ALLOWED. 18. IN VIEW OF THE ABOVE FINDING ON THE VALIDITY OF ASSESSMENT ORDER FOR THE ASSESSMENT YEARS UNDER CONSIDERATION HOLDING TH E SAME AS VOID AB INITIO, THE APPEALS PREFERRED BY THE REVENUE JUSTIFYING THE ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNDISCLOSED INCOME WHICH HAVE BEEN DELETED BY THE LEARNED CIT(APPEALS) HAVE BECOME INF RUCTUOUS. THE GROUNDS OF THESE APPEALS QUESTIONING THE FIRST APPELLATE OR DER DELETING THE ADDITIONS IN QUESTION ARE ACCORDINGLY REJECTED. 19. IN RESULT, CROSS-OBJECTIONS FILED BY THE ASSESS EE ARE ALLOWED AND THE APPEALS PREFERRED BY THE REVENUE ARE DISMISSED. 29 20. ASSESSMENT YEAR: 2006-07 : PARTIES ARE IN CROSS-APPEALS AGAINST THE COMMON FIRST APPELLATE ORDER. ON SOME ISSUES, PART RELIEF HAS BEEN GIVEN BY THE LEARNED CIT(APPEALS). WE THUS PREFERRED TO D EAL WITH BOTH THE APPEALS SIMULTANEOUSLY. THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER ON THE FOLLOWING GROUNDS: 1. THE ORDER OF THE LEARNED CIT(APPEALS) IS NOT CORRE CT IN LAW AND FACTS. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN ALLOWING RELIEF ON ACCOUNT OF VARIOUS ADDITIONS WITHOUT AFFORDING ANY OPPORTUNITY TO THE ASSESSING OFFICER WHILE ADMITTING ADDITIONAL EVIDEN CE IN VIOLATION OF PROVISIONS OF RULE 46A OF THE INCOME-TAX RULES, 1962 . 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.74,68,116 TOWARDS UNDISCLOSED INCOME ON THE BASI S OF LOOSE PAPER (PAGE 3 OF A-17) SEIZED FROM PREMISES OF M/S. HARYANA CHAINS WHILE HOLDING THE TRIAL BALANCE SHOWING SUND RY DEBTORS, INCOME AND EXPENSES AS ON 06.12.2005 AS QUANTITATIV E DETAILS WHEREAS DEBTORS, INCOME AND EXPENSES ARE NEVER RECO RDED IN GRAMS AND WHEREAS INCOME MENTIONED IS CODED UNDISCLOSED I NCOME OF RS.97,50,140 SHOWN AS UNDISCLOSED INCOME. IN DOING SO, A.O. WAS NOT ALLOWED OPPORTUNITY TO BE HEARD. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF 30 RS.61,66,214 ON ACCOUNT OF UNEXPLAINED GOLD STOCK 9 787.06 GM FOUND DURING SEARCH AT THE PREMISES OF M/S. HARYANA CHAINS, A UNIT OF THE ASSESSEE COMPANY WHEREAS THERE WAS NO EVIDEN CE THAT GOLD CHAINS WERE MANUFACTURED FROM THE PURE GOLD SUPPLIE D BY THE ASSESSEE COMPANY EXCEPT 110 GM ON 06.12.20058. IN D OING SO, A.O. WAS NOT ALLOWED OPPORTUNITY TO BE HEARD WHILE ADMITTING ARGUMENTS. 5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.52,85,904 OUT OF ADDITION OF RS.68,08,000 TOWARD S UNDISCLOSED STOCK OF SILVER AT 16,400 KG ON WHILE RELYING ON VA LUATON OF THE SILVER STOCK AT RS.52,85,904 DISCLOSED IN THE BOOKS OF ACCOUNT WITHOUT GETTING THE FACTS VERIFIED AND WITHOUT ALLO WING OPPORTUNITY TO THE A.O. TO BE HEARD. 6. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.4,00,00,000 TOWARDS CASH DEPOSIT WHILE RELYING O N OPENING CASH BALANCE AS PER BOOKS OF ACCOUNT WITHOUT GETTING THE FACTS VERIFIED AND WITHOUT ALLOWING OPPORTUNITY TO THE A.O. TO BE PAID. 21. THE ASSESSEE ON THE OTHER HAND HAS IMPUGNED FIR ST APPELLATE ORDER ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LEARNED CIT(APPEALS) HAS FAILED TO APPRECIATE THAT THE ASSE SSMENT ORDER BY 31 THE ASSESSING OFFICER IS WITHOUT JURISDICTION, IN A S MUCH AS THAT THERE WAS NO SPECIFIC SEARCH WARRANT IN THE NAME OF THE ASSESSEE AND THAT THE SEARCH WARRANT WAS COMMON FOR MULTIPLE ASSESSEES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LEARNED CIT(APPEALS) HAS ERRED IN SUSTAINING THE ADDITION O F RS.15,22,096 IN THE VALUE OF THE SILVER ITEMS MADE BY THE ASSESS ING OFFICER ON THE BASIS OF DVO REPORT IGNORING THE EXPLANATION OF THE ASSESSEE AND THE REPORT OF REGISTERED VALUER. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LEARNED CIT(APPEALS) HAS ERRED IN SUSTAINING ADDITION OF RS .21.27,200 TOWARDS VALUE OF SILVER ITEMS BELONGING TO KARIGARS , CONSTRUING THAT THE PROVISION OF SEC. 292C ARE APPLICABLE, AND WITH OUT APPRECIATING THAT THE ASSESSING OFFICER HAS NOT MADE ANY QUERY F ROM THE RESPECTIVE KARIGARS. 4. LEARNED CIT(APPEALS) HAS FAILED TO APPRECIATE THAT THE PROVISIONS OF THE SEC. 292C CAN BE INVOKED IN CASES WHERE ASSE SSING OFFICER SUCCESSFULLY PROVE THAT THE EXPLANATION FURNISHED B Y THE ASSESSEE IS NOT CORRECT OR A CAMOUFLAGE. 5. LEARNED CIT(APPEALS) HAS FAILED TO APPRECIATE THAT THE LOSS OF RS.34,95,000 INCURRED BY THE ASSESSEE ON ACCOUNT OF ADVANCE PAID TOWARDS PURCHASE OF AGRICULTURAL LAND, WAS A REVENU E LOSS IN AS MUCH AS THAT THE ASSESSEE INITIATED INTO ESTABLISHM ENT OF REAL ESTATE BUSINESS BY PAYING SUCH ADVANCE FOR PURCHASE OF LAN D. 6. LEARNED CIT(APPEALS) HAS ERRED IN LIMITING THE BUSI NESS ACTIVITIES OF THE ASSESSEE TO TRADING IN BULLION AND JEWELRY O NLY AND IGNORING THE DECISION OF THE BOARD OF DIRECTORS OF THE COMPA NY TO ENTER IN REAL ESTATE BUSINESS BY PASSING RESOLUTION. 32 22. THE FACTS IN BRIEF ARE THAT ON THE BASIS OF MAT ERIAL FOUND DURING THE COURSE OF SEARCH AT THE PREMISES OF THE ASSESSEE, T HE ASSESSING OFFICER HAD MADE FOLLOWING ADDITIONS: S.NO. PARTICULARS AMOUNT (RS.) 1. ADDITION OF RS.74,68,116 IN RESPECT OF INCO ME OF 74,68,116 M/S. HARYANA CHAINS ON THE BASIS OF LOOSE PAPER . 2. ADDITION OF RS.61,66,254 IN RESPECT OF UNACCOUNT ED 61,66,254 STOCK OF JEWELLERY OF M/S. HARYANA CHAIN. 3. ADDITION OF RS.68,08,000 IN RESPECT OF UNACCOUNT ED 68,08,000 STOCK OF SILVER FOUND DURING THE COURSE OF SEARCH. 4. ADDITION OF RS.34,95,000 IN RESPECT OF LOSS IN P ROPERTY 34,95,000 BUSINESS. 5. ADDITION OF RS.4,00,00,000 ON ACCOUNT OF UNEXPLA INED 4,00,00,000 CASH DEPOSIT IN BANK. 6. OUT OF TELEPHONE EXPENSES, VEHICLE MAINTENANCE, 50,000 MISCELLANEOUS EXPENSES AND CONVEYANCE EXPENSES A SUM OF RS.50,000 IS DISALLOWED IN THE ABSENCE OF VOUCHERS AND FOR PERSONAL USE. 7. INCOME OF M/S. HARYANA CHAINS AS DECLARED BY THE ASSESSEE RS.22,82,024 LESS: ADDITIONAL INCOME DECLARED RS. 1,54,824 BY THE ASSESSEE. BALANCE VALUE OF SILVER CLAIMED AS 21,27,20 0 BELONGING TO KARIGARS. 33 TOTAL ADDITIONS TO DECLARED INCOME RS.6,61,14,570 23. GROUND NO.1 (REVENUE): IT IS GENERAL IN NATURE, HENCE, DOES NOT NEED SEPARATE ADJUDICATION. 24. GROUND NO.2 (REVENUE) : IN THIS GROUND, THE GRIEVANCE OF THE REVENUE IS THAT THE LEARNED CIT(APPEALS) HAS ADMITTED ADDIT IONAL EVIDENCE WITHOUT GIVING OPPORTUNITY TO THE ASSESSING OFFICER, HENCE, THERE IS VIOLATION OF THE PROVISIONS OF RULE 46A OF THE INCOME-TAX RULES, 196 2. 25. AT THE OUTSET OF HEARING, THE LEARNED AR SUBMIT TED THAT THE ASSESSEE HAD NOT MOVED ANY APPLICATION FOR ADMISSION OF ADDI TIONAL EVIDENCE BEFORE THE LEARNED CIT(APPEALS), HENCE, THERE IS NO QUESTI ON OF ANY VIOLATION OF PROVISIONS OF RULE 46A OF THE I.T. RULES AS IT HAS BEEN ALLEGED. 26. IN ABSENCE OF REBUTTAL OF ABOVE SUBMISSION OF T HE LEARNED AR, WE DO NOT FIND SUBSTANCE IN GROUND NO.2 PREFERRED BY THE REVENUE. THE SAME IS ACCORDINGLY REJECTED. 34 27. GROUND NO.3 (REVENUE) : THE RELEVANT FACTS ARE THAT ON THE BASIS OF PAGE NO. 3 OF ANNEXURE A-17, CONTAINING THE COMPUTE RIZED STATEMENT FOUND DURING THE COURSE OF SEARCH, THE ASSESSING OFFICER MADE ADDITION OF RS.97,50,140 ON ACCOUNT OF TRADING INCOME OF M/S HA RYANA CHAINS. THE CONTENTS OF THE SAID PAGE NO.3 OF ANNEXURE A-17 ARE BEING REPRODUCED HEREUNDER: TRIAL BALANCE FOR IN 99.5 TOUCH A S ON 06/12/2005 A.CODE TYPE NAME NAAM JAMA D AS-DEBTOR 13072.100 TE TE-TRADING EXPENSES 3321.870 TI TI-TRADING INCOME 9750.140 GROSS TOTAL 13072.100 13072.010 0.90 28. THE LEARNED CIT(APPEALS) HAS, HOWEVER, DELETED THE ADDITION TO THE EXTENT OF RS.74,68,116 SINCE THE ASSESSEE HAD ALREA DY SURRENDERED AN AMOUNT OF RS.22,82,024 ACCEPTING THE PART OF STOCK OF M/S. HARYANA CHAINS IN ITS HANDS. 35 29. IN SUPPORT OF THE GROUND, THE LEARNED CIT(DR) S UBMITTED THAT THE FIGURE 9750.140 WRITTEN ON THE SEIZED PAGE NO. 3 OF ANNEXURE A-17 WAS ACTUALLY RS.97,50,140 WRITTEN IN THE CODED FORM AND HENCE THE ASSESSING OFFICER WAS JUSTIFIED IN ADDING THE AMOUNT IN THE H ANDS OF THE ASSESSEE IN ABSENCE OF SATISFACTORY EXPLANATION GIVEN BY THE AS SESSEE IN THIS REGARD. 30. THE LEARNED AR ON THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW WITH THIS CONTENTION T HAT THERE WAS NO ANY CORROBORATING DOCUMENTS/EVIDENCE FOUND DURING THE C OURSE OF SEARCH INDICATING THAT THE SAID FIGURE REPRESENTED TRADING RESULT IN RUPEES. 31. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW, WE FIND SUBSTANCE IN THE CONTENTION OF THE LEARNED AR THAT THERE WAS NO ANY CORROBORATING DOCUMENTS/EVIDENCE FOUND DURING THE C OURSE OF SEARCH INDICATING THAT THE ABOVE SAID FIGURE (9750.140) FO UND WRITTEN ON THE SEIZED PAPER WAS REPRESENTING TRADING RESULTS IN RUPEES. T HE EXPLANATION OF THE ASSESSEE ON THE OTHER HAND REMAINED THAT THE SAID F IGURE REPRESENTED THE QUANTITY OF STOCK OF GOLD CHAINS OF M.S, HARYANA CH AINS. THE TOTAL VALUE OF GOLD CHAIN FOUND AT THE TIME OF SEARCH VALUED BY TH E DEPARTMENTAL VALUER AS 36 PER THE PUNCHNAMA WAS OF 9787.06 GRAMS. ACCORDING T O THE ASSESSEE, THE TOTAL WEIGHT OF GOLD CHAIN FOUND AT THE TIME OF SEA RCH WAS ALMOST TALLYING WITH THE FIGURE MENTIONED ON PAGE NO.3 ANNEXURE A -17 OF THE SEIZED DOCUMENTS. THE FIGURE 9750.140 CLEARLY INDICATED WE IGHT IN GRAMS AS USUALLY WRITTEN IN CASE OF JEWELRY ITEM. CONSIDERING ALL TH ESE MATERIAL FACTS ON THE ISSUE, THE LEARNED CIT(APPEALS) HAS GIVEN THE FOLLO WING FINDING: 5.4 I HAVE CONSIDERED RIVAL POSITION CAREFULLY. I HAVE ALSO PERUSED RELEVANT DOCUMENTS PRODUCED BEFORE ME. THE A.O. HAD MADE THE ABOVE ADDITION ON THE BASIS OF SEIZED DOCUMENTS PAG E -3 ANNEXURE-17 WHICH APPEARS AS UNDER: TRIAL BALANCE FOR IN 99.5 TOUCH A S ON 06/12/2005 A.CODE TYPE NAME NAAM JAMA D AS-DEBTOR 13072.100 TE TE-TRADING EXPENSES 3321.870 TI TI-TRADING INCOME 9750.140 GROSS TOTAL 13072.100 13072.010 0.90 THE A.O. HAD ADOPTED 9750.140 FROM THE ABOVE DOCU MENT AS RS.97,50,140 AND TREATED AS TRADING INCOME OF M/S. HARYANA CHAIN. HOWEVER, THE ASSESSING OFFICER HAS NOT GIVEN ANY BA SIS ON WHICH THE 37 SAID FIGURE OF 9750.140 CAN BE CONSTRUED AS RS.97,5 0,140. THERE IS NO MENTION OF ANY CORROBORATING DOCUMENTS/EVIDENCE FOU ND DURING THE COURSE OF SEARCH WHICH INDICATES THAT THE SAID FIGU RE REPRESENTS TRADING RESULTS IN RUPEES. ACCORDING TO THE APPELLANT, THE SAID FIGURE REPRESENTS THE QUANTITY OF STOCK OF GOLD CHAINS OF M/S. HARYAN A CHAINS. THE TOTAL VALUE OF GOLD CHAINS FOUND AT THE TIME OF SEARCH VA LUED BY DEPARTMENTAL VALUER AS PER THE PUNCHNAMA WAS OF 978 7.06 GRAMS. ACCORDING TO THE APPELLANT, THE TOTAL WEIGHT OF GOL D CHAINS FOUND AT THE TIME OF SEARCH IS ALMOST TALLIED WITH THE FIGUR E MENTIONED IN PAGE 3 ANNEXURE A-17 OF THE SEIZED DOCUMENTS. THE FIGURE 9 750.140 CLEARLY INDICATES WEIGHT IN GRAMS AS USUALLY WRITTEN IN CAS E OF JEWELRY ITEMS. THE FIGURE IN NO STRETCH OF IMAGINATION CAN BE CONC LUDED AS REPRESENTING AMOUNTS IN RUPEES. AFTER EXAMINATION O F THE COPY OF SEIZED DOCUMENTS AS REPRESENTED ABOVE AND ON THE FA CTS AND CIRCUMSTANCES OF THE CASE I TEND TO AGREE WITH THE CONTENTION OF THE APPELLANT THAT THE SAID FIGURE OF 9750.140 MAY REPR ESENT WEIGHT OF JEWELLERY OF M/S. HARYANA CHAINS BUT IN ANY CASE CA NNOT BE CONSTRUED AS REPRESENTING ANY AMOUNT IN RUPEES. THE A.O. HAD NOT GIVEN ANY REASON OR BASIS FOR TAKING THE SAID FIGURE AS REPRE SENTING RUPEES BUT THE APPELLANT HAD PRODUCED CIRCUMSTANTIAL EVIDENCE OF V ALUATION REPORT TO SUPPORT HIS ARGUMENT. IN VIEW OF THE ABOVE DISCUSSI ON, THE ADDITION MADE BY THE A.O. ON THIS ACCOUNT IS UNCALLED FOR AN THEREFORE, DIRECTED TO BE DELETED. THE A.O. HAD MADE THIS ADDITION ON PROTECTIVE BASIS TREATING THE M/S. HARYANA CHAINS AS PARTNERSHIP BETWEEN SH. VIJAY KUM AR AND SH. 38 SATISH ARORA. HOWEVER, NO DOCUMENTS PARTNERSHIP DEE D ETC. REGARDING PARTNERSHIP WAS FOUND AT THE TIME OF SEARCH. MOREOV ER, THE APPELLANT HAD SURRENDERED THE PART OF THE STOCK OF M/S. HARYA NA CHAINS IN THE HANDS OF THE APPELLANT, M/S. BRIJWASI IMPEX PVT. LT D. THE A.O. HAS ALSO REDUCED THE SAID SURRENDERED AMOUNT OF RS.22,8 2,024 FROM THE TOTAL ADDITION MADE ON THE BASIS OF SEIZED DOCUMENT S. THUS THE A.O. HAS INDIRECTLY ACCEPTED THE FACT THAT M/S. HARYANA CHAINS IS UNIT OF THE APPELLANT. IN VIEW OF THE ABOVE DISCUSSION IN MY CO NSIDERED OPINION M/S. HARYANA CHAINS IS UNIT OF M/S. BRIJWASI IMPEX PVT. LTD. AS CLAIMED BY THE APPELLANT AND THEREFORE, ANY THE INC OME OF THE M/S. HARYANA CHAINS SHOULD BE ASSESSED IN THE HANDS OF T HE APPELLANT SUBSTANTIVELY. THE A.O. IS DIRECTED ACCORDINGLY. 32. AS DISCUSSED ABOVE, THERE WAS NO BASIS BEFORE T HE ASSESSING OFFICER TO TREAT THE FIGURE 9750.140 FOUND WRITTEN ON THE SEIZED DOCUMENT MARKED AS PAGE NO. 3 TO ANNEXURE A-17 AS RS.97,50,140 IN A BSENCE OF ANY CORROBORATIVE MATERIAL/EVIDENCE. ON THE OTHER HAND, THE ASSESSEE WAS ABLE TO EXPLAIN THE FIGURE IN THE FORM OF WEIGHT IN GRAMS A S USUALLY WRITTEN IN CASE OF JEWELRY ITEM. WE ARE THUS OF THE VIEW THAT THE L EARNED CIT(APPEALS) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.97,50,140 MADE BY THE ASSESSING OFFICER WITH THIS OBSERVATION THAT THE ASSESSEE HAD ALREADY SURRENDERED AN AMOUNT OF RS.22,82,024 ON ACCOUNT OF PART OF THE ST OCK OF M/S. HARYANA CHAIN. WE ARE THUS NOT INCLINED TO INTERFERE WITH T HE FIRST APPELLATE ORDER IN 39 THIS REGARD. THE SAME IS UPHELD. THE GROUND NO.3 (R EVENUE) IS ACCORDINGLY REJECTED. 33. GROUND NO.4 (REVENUE) : THE ASSESSING OFFICER HAD MADE ADDITION OF RS.61,66,254 IN RESPECT OF STOCK OF GOLD CHAIN FOUN D FROM THE PREMISES OF M/S. HARYANA CHAINS. DURING THE COURSE OF SEARCH ON 9.12.2005 ON THE BUSINESS PREMISES OF M/S. HARYANA CHAINS, STOCK OF JEWELLERY WEIGHING 9181 GRAMS VALUED AT RS.61,66,254 WAS FOUND. SINCE THE ASSESSEE HIMSELF WAS CLAIMING M/S. HARYANA CHAIN, ITS UNIT, THE ASSE SSING OFFICER MADE THE ADDITION OF RS.61,66,254 AS INCOME OF THE ASSESSEE ON PROTECTIVE BASIS. THE LEARNED CIT(APPEALS), HOWEVER, HAS DELETED THE ADDI TION BEING SATISFIED WITH THE EXPLANATION FURNISHED BY THE ASSESSEE. 34. IN SUPPORT OF THE GROUND, THE LEARNED CIT(DR) H AS PLACED RELIANCE ON THE ASSESSMENT ORDER. THE LEARNED AR ON THE OTHER H AND HAS REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. 35. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW, WE FIND THAT THE LEARNED CIT(APPEALS) HAS DISCUSSED THE ISSUE IN DETAIL AND VIDE PARA NO. 6.4, HE HAS GIVEN FINDING ON THE ISSUE. THE CONTENT OF THE SAID PARA NO. 6.4 OF 40 THE FIRST APPELLATE ORDER IS BEING REPRODUCED HEREU NDER FOR A READY REFERENCE: 6.4 I HAVE GONE THROUGH THE OBSERVATIONS OF THE ASSESSING OFFICER AND ALSO CONSIDERED SUBMISSIONS M ADE BY THE APPELLANT AND HAVE ALSO CONSIDERED THE AMOUN T SURRENDERED BY IT AT RS. 22,82,024/-. THE ASSESSIN G OFFICER HAD MADE THE ADDITION OF RS. 6166254/- ON T HE BASIS OF STOCK FOUND DURING THE COURSE OF SEARCH IN THE PREMISES OF M/S HARYANA CHAINS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE APPELLANT HAD CLAIMED TH AT THE M/S HARYANA CHAINS IS A UNIT OF M/S BRIJWASI IM PEX P. LTD. HOWEVER, THE ASSESSING OFFICER DID NOT ACC EPT THE CONTENTION OF THE APPELLANT AND PROCEEDED TO MAKE T HE ADDITION ON PROTECTIVE BASIS. HOWEVER, THE APPELLA NT HAS EXPLAINED THAT THE STOCK OF GOLD CHAINS WEIGHTING 9787.06 GMS VALUED AT RS. 6166254/- WAS OUT OF 5000 GMS OF PURE GOLD HELD BY THE ASSESSEE COMPANY (M/S BRIJWASI IMPEX P. LTD.) IN THEIR REGULAR BOOKS OF A CCOUNTS. THE 5000 GMS OF PURE GOLD AVAILABLE IN THE REGULAR BOOKS OF ACCOUNTS OF M/S BRIJWASI IMPEX P. LTD. WAS NOT F OUND AT THE TIME OF SEARCH DUE TO THE FACT THAT THE PURE GOLD WERE ISSUED TO M/S HARYANA CHAINS, A UNIT OF M/S BRIJWASI IMPEX P. LTD., FOR MAKING GOLD CHAINS ETC. THOSE GOLD CHAINS MADE OUT OF THE ABOVE 5000 GMS OF PURE GOLD WERE FOUND DURING THE COURSE OF SEARCH AT THE PREMI SES OF M/S HARYANA CHAINS WHICH CAME TO 6165 GMS. THE 41 EVIDENCE OF ISSUANCE OF 110 GMS OF PURE GOLD TO M/S HARYANA CHAINS AS PER THE STOCK REGISTER AND THE BALANCE 4890 WAS CLAIMED TO HAVE BEEN ISSUED SUBSEQUENTLY. THE BALANCE 3016 GMS OF GOLD CHAINS VALUED AT RS. 2282024/- WERE FOUND WHICH WERE NOT ACCOUNTED FOR AND THEREFORE, THE SAME WAS SURRENDER ED BY THE APPELLANT AT THE TIME OF FILING OF RETURN OF INCOME. AS 5000 GMS OF PURE GOLD WERE AVAILABLE WITH THE APPELLANT IN THE REGULAR BOOKS OF ACCOUNTS AND WERE NOT FOUND AT THE PREMISES OF THE M/S BRIJWASI IMPEX P. LTD., AND THE EVIDENCE OF ISSUANCE OF PURE GOLD TO M/S HARYANA CHAINS IS AVAILABLE IN THE STOCK REGISTER, IT CAN REASONABLY BE CONCLUDED THAT THE GOLD CHAINS FOUND AT THE PREMISES OF M/S HARYANA CHAINS WERE OUT OF THE PURE GOLD ISSUED BY M/S BRIJWASI IMPEX P. LTD. SIN CE THE SAID PURE GOLD WERE ALREADY DISCLOSED IN THE REGULA R BOOKS OF ACCOUNTS NO FURTHER ADDITION ON ACCOUNT OF THE GOLD CHAINS MADE OUT OF THOSE DISCLOSED GOLD CAN BE MADE. HOWEVER, AT THE TIME OF SEARCH AND SEIZURE S OME EXCESS STOCK VALUED AT 2282024 WERE FOUND AT THE PREMISES OF M/S HARYANA CHAINS WHICH THE APPELLANT HAD ALREADY DISCLOSED AT THE TIME OF FILING OF ITS RETURN OF INCOME. THEREFORE, NO FURTHER ADDITION ON THIS ACC OUNT IS CALLED FOR. THEREFORE, THE ADDITION MADE ON THIS A CCOUNT IS DIRECTED TO BE DELETED. HOWEVER, AS HAS BEEN DISCUSSED ABOVE THE M/S HARYANA CHAINS IS AN UNIT O F 42 M/S BRIJWASI IMPEX P. LTD. AND, THEREFORE, THE INCO ME OF M/S HARYANA CHAINS SHOULD BE ASSESSED IN THE HANDS OF M/S BRIJAWASI IMPEX P. LTD. ONLY ON SUBSTANTIVE BAS IS. THE APPEAL OF THE APPELLANT ON THIS GROUND IS ALLOW ED AS ABOVE. 36. IN ABSENCE OF REBUTTAL OF FACTUAL FINDING GIVEN BY THE LEARNED CIT(APPEALS) ON THE ISSUE DISCUSSED HEREINABOVE, BY THE REVENUE, WE DO NOT FIND REASON TO INTERFERE WITH THE FIRST APPELLA TE ORDER DELETING THE ADDITION OF RS.61,66,254. OUT OF 5000 GRAMS OF PURE GOLD FOUND DURING THE COURSE OF SEARCH AT THE PREMISES OF M/S. HARYANA CH AIN WHICH CAME TO 6165 GRAMS, THE EVIDENCE OF ISSUANCE OF 110 GRAMS OF PUR E GOLD TO M/S. HARYANA CHIAN AS PER THE STOCK REGISTER AND THE BALANCE 489 0 GRAMS WAS CLAIMED TO HAVE BEEN ISSUED SUBSEQUENTLY. THE BALANCE 3016 GRA MS OF GOLD CHAINS VALUED AT RS.22,82,024 WERE FOUND, WHICH WAS NOT AC COUNTED FOR AND THEREFORE THE SAME WAS SURRENDERED BY THE ASSESSEE AT THE TIME OF FILING OF RETURN OF INCOME. AS 5,000 GRAMS OF PURE GOLD WERE AVAILABLE WITH THE ASSESSEE IN THE REGULAR BOOKS OF ACCOUNT AND WERE N OT FOUND AT THE PREMISES OF ASSESSEE AND THE EVIDENCE OF ISSUANCE OF PURE GO LD TO M/S. HARYANA CHAINS WAS AVAILABLE IN THE STOCK REGISTER, HENCE, THE LEARNED CIT(APPEALS) HAS RIGHTLY ACCEPTED THAT THE GOLD CHAINS FOUND AT THE PREMISES OF HARYANA 43 CHAIN WERE OUT OF THE PURE GOLD ISSUED BY THE ASSES SEE AND SINCE THE SAID PURE GOLD WERE ALREADY DISCLOSED IN THE REGULAR BOO KS OF ACCOUNT, NO FURTHER ADDITION ON ACCOUNT OF GOLD CHAINS MADE OUT OF THOS E DISCLOSED GOLD CAN BE MADE. THE FIRST APPELLATE ORDER ON THE ISSUE IS REA SONED ONE, HENCE, WE ARE NOT INCLINED TO INTERFERE THEREWITH. THE SAME IS UP HELD. GROUND NO.4 IS ACCORDINGLY REJECTED. GROUND NOS.5 (REVENUE) & GROUND NOS.2 TO 4 (ASSESSE E) : 37. ON ACCOUNT OF SILVER UTENSILS AND ARTICLES FOUN D DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDINGS AT THE BUSINESS PREM ISES OF THE ASSESSEE, THE ASSESSING OFFICER MADE ADDITION OF RS.68,08,000 ON THE BASIS OF VALUATION OF STOCK OF SILVER WEIGHING 16,400 KGS. DETERMINED BY THE VALUER OF THE DEPARTMENT (DVO). THE LEARNED CIT(APPEALS) HAS REST RICTED THE ADDITIONS TO THE EXTENT OF RS.15,22,096, HENCE, THE PARTIES A RE IN CROSS APPEALS. 38. IN SUPPORT OF THE GROUND OF THE APPEAL PREFERRE D BY THE REVENUE, THE LEARNED CIT(DR) HAS BASICALLY PLACED RELIANCE ON TH E ASSESSMENT ORDER. THE LEARNED AR ON THE OTHER HAND TRIED TO JUSTIFY THE R ELIEF GIVEN BY THE LEARNED CIT(APPEALS). HE CONTENDED THAT KEEPING IN VIEW THE FACTS OF THE CASE AS 44 WELL AS EXPLANATION OF THE ASSESSEE, THE LEARNED CI T(APPEALS) SHOULD HAVE DELETED THE ENTIRE ADDITION. 39. THE EXPLANATION OF THE ASSESSEE REMAINED THAT I T HAD DECLARED THE VALUE OF THE STOCK OF SILVER FOUND DURING THE COURS E OF SEARCH AT RS.21,27,200 WITH THE SUBMISSION THAT THE VALUE OF SILVER BELONG ED TO KARIGARS/SUPPLIERS. IT WAS SUBMITTED THAT STOCK OF SILVER UTENSILS AND ART ICLES TO THE TUNE OF 645.500 KGS. (CONVERTIBLE INTO PURE SILVER OF 516.400 KGS.) WAS FOUND AND VALUED AT RS.68,08,000 BY THE DVO. THE SAID STOCK WAS GOT REV ALUED BY THE ASSESSEE COMPANY ON 10.12.2005 BY A REGISTERED VALUER SHRI S .K. MEHRA AT RS.52,85,904. THE ASSESSEE HAD ACCOUNTED FOR THIS V ALUE IN ITS BOOKS OF ACCOUNT FOR THE YEAR ENDED 31.3.2006 BY DEBITING ST OCK OF SILVER ITEMS AND CREDITING THE SAID AMOUNT AS OTHER INCOME. THIS TRE ATMENT OF THE VALUE OF SILVER ITEM IN THE BOOKS OF ACCOUNT WAS EVIDENCED B Y THE COPY OF AUDITED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT FOR THE Y EAR ENDED ON 31.3.2006 MADE AVAILABLE AT PAGE NOS. 19 TO 32 OF THE PAPER B OOK. THE ASSESSEE ALSO SUBMITTED THAT SCHEDULE-K OF OTHER INCOME ANNEXED T O THE PROFIT AND LOSS ACCOUNT SHOWS THE AMOUNT RS.52,85,904 AS ADDITIONAL INCOME AND CORRESPONDING AMOUNT SHOWN IN SCHEDULE OF NOTES AT PARA H ATTACHED TO BALANCE SHEET GIVE DETAILS OF INVENTORY INCLUDING V ALUE OF SILVER ARTICLES AT 45 RS.52,85,904. ACCORDINGLY, THE VALUE OF SILVER ARTI CLES AT RS.52,85,904 WAS TAKEN AS INCOME AND THE SAME AMOUNT WAS ADDED AS VA LUE OF SILVER UTENSILS AND ARTICLES IN THE INVENTORY DISCLOSED AT RS.1,99, 94,997. IT WAS FURTHER EXPLAINED THAT THE SAID STOCK OF THE SILVER ITEM WA S SOLD FOR RS.57,06,425 IN ASSESSMENT YEAR 2007-08, THEREFORE, THE ADDITION ON ACCOUNT OF SILVER ARTICLES TO THE EXTENT OF RS.52,85,904 IS A DUPLICATE ADDITI ON AND DESERVES TO BE DELETED. 40. IT WAS POINTED OUT BY THE ASSESSEE THAT WHILE F ILING THE REVISED RETURN, IT HAD CLAIMED SILVER WORTH RS.21,27,200 BELONGING TO THE KARIGARS OUT OF THE SILVER FOUND AND CLAIMED THE SAME BY WAY OF DEDUCTI ON FROM THE VALUE OF GOLD CHAINS SURRENDERED IN THE REVISED RETURN. THE VALUE OF SILVER BELONGING TO KARIGARS WAS ARRIVED AT ON THE BASIS OF SEIZED L OOSE PAPERS DURING SEARCH. PHOTO COPIES OF THESE LOOSE PAPERS MADE AVAILABLE A T PAGE NOS. 59 TO 107 OF THE PAPER BOOK. THE ASSESSING OFFICER IGNORED BOTH THE CLAIMS OF THE ASSESSEE REGARDING RS.52,85,904 AND RS.21,27,200. T HE LEARNED CIT(APPEALS) HAS ALSO RESTRICTED THE RELIEF TO THE EXTENT OF RS.52,85,904 I.E. DISCLOSED VALUE OF SILVER ARTICLES IN ITS BALANCE S HEET AND PROFIT AND LOSS ACCOUNT. 46 41. THE LEARNED AR SUBMITTED THAT DISALLOWANCE ON A CCOUNT OF SILVER FROM KARIGARS AT RS.21,27,200 WAS MADE AS A RESULT OF NON-CONSIDERATION OF THE SAME BY THE ASSESSING OFFICER IN HIS ORDER ALTH OUGH HE HAD MADE REFERENCE ABOUT IT IN THE ASSESSMENT ORDER. THE ABO VE DISALLOWANCE RESULTED FROM NETTING OFF OF THE ADDITIONAL INCOME (RS.22,82 ,024 RS.21,27,200 ) OFFERED FOR TAXATION AT RS.1,54,824, I.E. INCOME DE CLARED IN REVISED RETURN. CONVERSELY, AMOUNT OF RS.21,27,200 PERTAINS TO VALU E OF SILVER CLAIMED TO HAVE BEEN BELONGING TO KARIGARS AND, THEREFORE, THE AMOUNT WAS CONSIDERED AS A LIABILITY DEDUCTIBLE FROM THE ADDITIONAL INCOM E. THE LEARNED AR SUBMITTED THAT THE CLAIM WAS MADE ON THE BASIS OF L OOSE PAPERS SEIZED DURING THE COURSE OF SEARCH AS PER ANNEXURE-13 CONTAINING PAGE NOS. 1 TO 32. IN THIS REGARD, HE REFERRED PAGE NOS. 59 TO 107 OF TH E PAPER BOOK , WHEREIN COPIES OF ANNEXURES ALONG WITH ITS SUMMARY HAS BEEN MADE AVAILABLE. THE LEARNED AR SUBMITTED THAT FROM THE SUMMARY OF THESE LEDGER ACCOUNTS OF KARIGARS ON PAGE NO. 59, IT MAY BE NOTED THAT THE T OTAL QUANTITY OF PURE SILVER RECEIVED IN EXCESS FROM THEM WAS 163.50 KGS. AND AM OUNTS DUE TO THEM AGAINST LABOUR CHARGES WAS RS.1,68,969. THE EXCESS SILVER 166.540 KGS. WAS VALUED @ RS.13,000 PER KG., THE PREVAILING RATES AT THAT TIME AND THE AMOUNT OF RS.21,27,200 WAS CONSIDERED DUE TO THEM IN ADDIT ION TO LABOUR CHARGES OF RS.1,68,969. HE SUBMITTED THAT SINCE THE ASSESSEE H AS ALREADY INCLUDED VALUE 47 OF SILVER AMOUNTING TO RS.52,85,902 IN THE BALANCE SHEET AND HAS CONSIDERED THE SAME AS INCOME, THE LIABILITY OF RS.21,27,200 P AYABLE TO KARIGARS TOWARDS SILVER BELONGING TO THEM IS DEDUCTIBLE. 42. THE LEARNED AR CONTENDED FURTHER THAT VALUATION OF EXCESS SILVER (FOUND DURING THE SEARCH) BY THE DVO AT RS.68,08,00 0 IS BASED ON 80% OF PURITY. THE DVO DID NOT SHOW NET WEIGHT OF SILVER O N SPECIFIC COLUMN THOUGH FINAL CONCLUSION DRAWN WAS AT 80%. THE REGIS TERED VALUER HAS, HOWEVER, VALUED THE SILVER AT RS.52,85,904 ALREADY DECLARED BY THE ASSESSEE AS ADDITIONAL INCOME SHOWING SILVER STOCK AND ADDIT IONAL INCOME. THE VALUE OF B-1 SILVER WHICH IS 60% PURE, WAS DELETED. 43. WE FIND THAT THE LEARNED CIT(APPEALS) HAS DEALT WITH THE ISSUE IN DETAIL AND HAS RECORDED HIS FINDING IN PARA NO. 7.5 OF THE FIRST APPELLATE ORDER, WHICH IS BEING REPRODUCED HEREUNDER: 7.5 I HAVE CONSIDERED THE OBSERVATION OF THE ASSE SSING OFFICER AND THE SUBMISSION OF THE APPELLANT CAREFUL LY. DURING THE COURSE OF SEARCH IN THE PREMISES OF THE APPELLANT SILVER UTENSILS AND ARTICLES WEIGHTING 64 5.500 GMS (PURE SILVER 516.400 KG), WERE FOUND. THE VALU E OF THE SILVER UTENSILS AND ARTICLES WERE VALUED BY THE DEPARTMENTAL VALUER AT RS. 6808000/-. HOWEVER, THE 48 REGISTERED VALUER ENGAGED BY THE APPELLANT HAVE VAL UED THE SAME AT RS. 5285904/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAD MA DE THE ADDITION OF ENTIRE VALUE OF RS. 6808000/- AS TH E ENTIRE STOCK WAS CONSIDERED TO BE UNACCOUNTED. THE ASSESS ING OFFICER HAD ALSO NOT ALLOWED THE CLAIM OF THE APPEL LANT THAT CERTAIN AMOUNT OF SILVER VALUED AT RS. 2127200 /- BELONG TO KARIGARS/SUPPLIERS. DURING THE APPELLATE PROCEEDINGS THE APPELLANT HAD STATED THAT THE REVAL UED AMOUNT OF SILVER AND ARTICLES AMOUNTING TO RS. 5285 904/- WERE ALREADY DISCLOSED IN FY ENDING ON 31.3.2006 (A Y 2006-07). THE EVIDENCE OF SAID DISCLOSURE IS EVIDE NT FROM THE P&L ACCOUNT AND BALANCE SHEET OF THE RETURN OF INCOME FILED. HOWEVER, THE ASSESSING OFFICER HAD N OT CONSIDERED THE ABOVE DISCLOSURE IN THE ASSESSMENT A ND PROCEEDED TO MAKE ADDITION OF THE ENTIRE AMOUNT AT THE VALUE OF RS. 6808000/- AS PER DVO. I HAVE PERUSED THE P&L ACCOUNT AND BALANCE SHEET AND OTHER DETAILS SUBMITTED AT THE TIME OF ASSESSMENT PROCEEDINGS AND THE APPELLATE PROCEEDINGS AND AFTER CONSIDERING THE SUBMISSION OF THE APPELLANT, I AM OF THE CONSIDERED OPINION THAT THE VALUE OF SILVER ITEMS WHICH IS ALR EADY BEEN DISCLOSED IN THE P&L ACCOUNT AND THE BALANCE S HEET SHOULD NOT BE AGAIN ADDED IN THE ASSESSMENT. HOWEV ER, THE VALUATION BY THE DVO CANNOT BE IGNORED AS NO DE FECTS HAVE BEEN SPECIFICALLY POINTED OUT IN THE VALUATION MADE 49 BY HIM. SINCE THE DVO IS AN EXPERT IN VALUATION OF SILVER ITEMS ETC. I HAVE NO ALTERNATIVE BUT TO ACCEPT THE VALUATION MADE BY THE DVO. HOWEVER, WHILE MAKING THE ADDITIO N THE AMOUNT OF VALUE ALREADY DISCLOSED AT RS. 528590 4/- SHOULD BE REDUCED FROM THIS ADDITION. THEREFORE, T OTAL ADDITION ON THIS ACCOUNT SHOULD BE MADE AT (RS. 680 8000 RS. 5285904) = RS. 1522096/-. THEREFORE, THE APP ELLANT GET RELIEF OF RS. 5285904/-. THE APPELLANT HAS ALS O CLAIMED THAT SILVER ITEMS VALUED AT RS. 2127200/- W ERE BELONG TO KARIGARS AND SUPPLIERS AND, THEREFORE, TH E SAME SHOULD BE REDUCED FROM THE TOTAL ADDITION ON UNACCO UNTED SILVER ITEMS. SINCE THESE ITEMS WERE FOUND AT THE PREMISES OF THE APPELLANT AT THE TIME OF SEARCH THE SE WERE TO BE CONSIDERED TO BE OF THE APPELLANT ON THE AS P ER SECTION 292C OF THE I.T. ACT, UNLESS THE ASSESSEE P ROVE OTHERWISE. HOWEVER, NO AUTHENTIC EVIDENCE ON THIS ACCOUNT COULD BE PRODUCED TO PROVE THAT THE ITEMS B ELONG TO THE KARIGAR SUPPLIERS DURING THE COURSE OF ASSES SMENT AS WELL AS APPELLATE PROCEEDINGS. THEREFORE, THIS CONTENTION OF THE APPELLANT HAS BEEN REJECTED. REL IEF ALLOWED AT RS. 5285904/-. 44. SO FAR AS DELETION OF THE ADDITION OF RS.52,85, 905 BY THE LEARNED CIT(APPEALS) IS CONCERNED, WE FIND THAT IT IS BASED ON JUSTIFIABLE REASON 50 NOTED BY HIM THAT THE VALUED AMOUNT OF SILVER AND A RTICLES AMOUNTING TO RS.52,85,905 WERE ALREADY DISCLOSED IN FINANCIAL YE AR ENDING ON 31.3.2006 ( ASSESSMENT YEAR 2006-07). IT WAS SUPPORTED WITH EVI DENCE AS THE AMOUNT WAS DISCLOSED IN THE PROFIT AND LOSS ACCOUNT AND BA LANCE SHEET OF THE RETURN OF INCOME FILED. WE THUS DO NOT FIND REASON TO INTE RFERE WITH THE FIRST APPELLATE ORDER SO FAR AS DELETION OF RS.52,85,904 IS CONCERNED. THE SAME IS UPHELD. THE GROUND NO. 5 OF THE APPEAL PREFERRED BY THE REVENUE IS THUS REJECTED. 45. SO FAR AS GROUND NOS. 2 AND 3 OF THE APPEAL OF THE ASSESSEE ARE CONCERNED, WE FIND THAT IN GROUND NO.2 ADDITIONS OF RS.15,22,096 ON ACCOUNT OF VALUE OF SILVER ITEM BASED ON DVO REPORT (GROUND NO.2) AND RS.21,27,200 MADE ON ACCOUNT OF VALUE OF SILVER ITE M BELONGING TO KARIGARS (GROUND NO. 3) HAVE ALSO BEEN DEALT WITH BY THE LEA RNED CIT(APPEALS) IN THE ABOVE FINDINGS. GROUND NO. 4 IS IN SUPPORT OF G ROUND NO.3 ONLY. THE LEARNED CIT(APPEALS) HAS UPHELD THE ADDITION OF RS. 21,27,200 BY DENYING THE CLAIM OF THE ASSESSEE THAT THE SILVER ITEM VALU ED AT RS.21,27,200 WERE BELONGED TO KARIGARS AND SUPPLIERS AND, THEREFORE, THE SAME SHOULD BE REDUCED FROM THE TOTAL ADDITION ON UNACCOUNTED SILV ER ITEMS. THE LEARNED CIT(APPEALS) HAS DENIED THE CLAIM ON THE BASIS THAT NO AUTHENTIC EVIDENCE IN 51 SUPPORT OF THE CLAIM THAT THE ITEMS WERE BELONGING TO THE KARIGARS AND SUPPLIERS WAS FILED. SINCE THE ASSESSEE COULD NOT I MPROVE ITS CASE EVEN BEFORE THE ITAT IN SUPPORT OF THIS CLAIM, WE DO NOT FIND REASON TO INTERFERE WITH THE FINDING OF THE LEARNED CIT(APPEALS) IN THI S REGARD. THE GROUND NOS. 3 AND 4 OF THE APPEAL OF THE ASSESSEE ARE ACCO RDINGLY REJECTED. 46. SO FAR AS THE ADDITION OF RS.15,22,096 ( GROUND NO.2 ) MADE ON ACCOUNT OF VALUATION OF SILVER ITEMS DETERMINED BY THE DVO IS CONCERNED, THE RELEVANT FACTS ARE THAT THE DVO HAD VALUED THE SILVER UTENSILS AND ARTICLES AT RS.68,08,000 WHICH WAS VALUED BY THE REGISTERED VALUER ENGAGED BY THE ASSESSEE AT RS.52,85,904. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, THE ASSESSING OFFICER ADDED THE ENTIRE VALUE OF RS.68,0 8,000 CONSIDERING THE SAME AS UNACCOUNTED. THE LEARNED CIT(APPEALS) DELET ED THE ADDITION OF RS.52,85,904 OUT OF THE ADDITION OF RS.68,08,000 AN D ADDED THE REMAINING AMOUNT OF RS.15,22,096. IN OTHER WORDS, THE DIFFERE NCE BETWEEN THE VALUE DETERMINED BY THE DVO AND THAT DETERMINED BY THE RE GISTERED VALUER HAS BEEN SUSTAINED BY THE LEARNED CIT(APPEALS). THIS AD DITION HAS BEEN OPPOSED BY THE ASSESSEE IN GROUND NO.2 OF ITS APPEA L. WE HAVE ALREADY DISCUSSED THEIR CONTENTIONS IN THIS REGARD, HEREINA BOVE, IN THE SUBMISSIONS OF THE LEARNED AR. THE MAIN CONTENTION OF THE ASSESSEE IN THIS REGARD REMAINED 52 THAT THE VALUATION OF THE REGISTERED VALUER AT RS.5 2,85,904 WAS DISCLOSED IN THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET AND H AS BEEN ACCEPTED BY THE LEARNED CIT(APPEALS). IT WAS CONTENDED THAT THE DVO HAS VALUED THE SILVER ITEMS ON THE BASIS OF ITS PURITY AT 80% WITHOUT SHO WING NET WEIGHT OF SILVER ON SPECIFIC COLUMN. THE VALUE OF THE DECLARED B-1 S ILVER WAS 60% PURE ONLY. IN OUR VIEW, THE AUTHORITIES BELOW HAVE NOT GIVEN R EASON AS TO WHY THEY HAVE GIVEN PREFERENCE OF THE VALUATION REPORT OF THE DVO OVER THE VALUATION REPORT FURNISHED BY THE REGISTERED VALUER ENGAGED B Y THE ASSESSEE. BESIDES, THE VALUE OF THE SILVER ARTICLES DETERMINED BY THE REGISTERED VALUER DISCLOSED IN THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET HA S BEEN ACCEPTED BY THE LEARNED CIT(APPEALS), HENCE, THERE WAS NO REASON FO R HIM TO SUSTAIN THE ADDITION OF RS.15,22,096 ON THE BASIS OF THE DIFFER ENCE BETWEEN THE VALUE DETERMINED BY THE DVO AND THAT DETERMINED BY THE RE GISTERED VALUER. WE THUS WHILE SETTING ASIDE FIRST APPELLATE ORDER IN T HIS REGARD DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.15,2 2,096. THE GROUND NO.2 OF THE APPEAL OF THE ASSESSEE IS ACCORDINGLY ALLOWE D. 47. GROUND NOS. 5 & 6 (ASSESSEE) : IT IS REGARDING THE DISALLOWANCE OF CLAIMED LOSS OF RS.34,95,000 BY THE AUTHORITIES BEL OW. THE ASSESSEE CLAIMED 53 THAT THE SAID LOSS WAS INCURRED TO THE ASSESSEE ON ACCOUNT OF ADVANCE PAID TOWARDS PURCHASE OF AGRICULTURAL LAND. 48. THE LEARNED AR CONTENDED THAT THE ASSESSEE HAD INITIATED FOR REAL ESTATE BUSINESS BY PAYING THE AMOUNT IN QUESTION AS ADVANCE FOR PURCHASE OF LAND BUT THE SAME COULD NOT BE MATERIALIZED AND IN RESULT THE ASSESSEE INCURRED THE LOSS. THE LOSS INCURRED WAS A REVENUE LOSS AND THUS IT SHOULD HAVE BEEN ALLOWED. 49. THE LEARNED DR ON THE OTHER HAND PLACED RELIANC E ON THE ORDERS OF THE AUTHORITIES BELOW. THE LEARNED CIT(APPEALS) HAS GIV EN HIS FINDING ON THE ISSUE IN PARA NO. 8.3 OF THE FIRST APPELLATE ORDER, REPRODUCED HEREUNDER: 8.3 I HAVE GONE THROUGH THE REASONING GIVEN BY THE ASSESSING OFFICER FOR MAKING THE ABOVE ADDITION AND THE SUBMISSIONS AND SUPPORTING DOCUMENTS SUBMITTED BY T HE APPELLANT. THE APPELLANT HAD DEBITED AN AMOUNT OF RS. 34,95,000/- IN THE P&L ACCOUNT UNDER THE HEAD LOSS IN PROPERTY BUSINESS. THE APPELLANT HAD MADE ADVANCES TO AGRICULTURIST FOR PURCHASE OF LAND WHICH WERE FORFI TTED BY THE SELLERS OF LAND FOR NOT FULFILLING THE COMMITME NT OF PAYMENTS OF THE BALANCE AMOUNT IN TIME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS THE APP ELLANT 54 PROCEEDINGS THE APPELLANT COULD NOT SUBSTANTIATE WH Y THE LOSS INCURRED IN THE PURCHASE OF LAND SHOULD BE ALL OWED AS BUSINESS EXPENSES OF THE APPELLANT. SALE AND PURCH ASE OF LAND IS NOT THE REGULAR BUSINESS OF THE ASSESSEE. THE ASSESSEE DEALS IN THE BUSINESS OF BULLION AND JEWEL LERY IN THE REGULAR COURSE OF BUSINESS. THE LOAN IS A CAPI TAL LOAN IN VIEW OF THE ABOVE DISCUSSION THE CLAIM OF THE AP PELLANT ON THIS GROUND IS DISMISSED. 50. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW, WE FIND THAT THE ASSESSEE HAD DEBITED A SUM OF RS.34,95,000 UNDE R THE HEAD LOSS IN PROPERTY BUSINESS IN PROFIT AND LOSS ACCOUNT. THE ASSESSEE WAS ASKED BY THE ASSESSING OFFICER TO FURNISH EVIDENCE IN SUPPORT AN D SINCE THE ASSESSEE FAILED TO FURNISH THE SAME, THE ASSESSING OFFICER D ISALLOWED THE CLAIM. THE CONTENTION OF THE ASSESSEE BEFORE THE ASSESSING OFF ICER WAS THAT THE AMOUNT PERTAINED TO ADVANCES GIVEN TO AGRICULTURISTS FOR P URCHASE OF LAND TO UNDERTAKE REAL ESTATE BUSINESS BUT THE AMOUNT WAS F ORFEITED BY THE SELLERS, SINCE THE ASSESSEE WAS NOT ABLE TO FULFILL ITS COMM ITMENT FOR PAYMENT OF BALANCE AMOUNT. THE ASSESSEE ENCLOSED LEDGER ACCOU NT AND COPY OF NOTICE OF LAWYER OF VENDORS IN SUPPORT OF THE CLAIM. UNDISPUT EDLY, THE ASSESSEE DEALS IN THE BUSINESS OF BULLION AND JEWELLERY IN THE REG ULAR COURSE OF BUSINESS AND THUS THE CLAIMED LOSS IN ABSENCE OF SUFFICIENT EVID ENCE IN SUPPORT, IN OUR 55 VIEW, HAS BEEN RIGHTLY DENIED BY THE AUTHORITIES BE LOW. THE SAME IS UPHELD. GROUND NOS. 5 AND 6 OF THE APPEAL OF THE ASSESSEE A RE ACCORDINGLY REJECTED. 51. GROUND NO.6(REVENUE) : IT IS REGARDING DELETION OF ADDITION OF RS.4 CRORES BY THE LEARNED CIT(APPEALS). THE ASSESSING O FFICER HAD MADE THIS ADDITION ON THE BASIS OF A PAY-IN-SLIP DATED 7.4. 2005 FOR THE CASH DEPOSIT OF RS.4 CRORES IN CASH IN BANK ACCOUNT WITH SBI, KALKA JI, NEW DELHI, FOUND DURING THE COURSE OF SEARCH. THE EXPLANATION GIVEN BY THE ASSESSEE IN THIS REGARD WAS NOT FOUND SATISFACTORY BY THE ASSESSING OFFICER AND HENCE HE ADDED THE AMOUNT IN THE TOTAL INCOME OF THE ASSESSE E. THE LEARNED CIT(APPEALS) HAS, HOWEVER, DELETED THE ADDITION. 52. IN SUPPORT OF THE GROUND, THE LEARNED DR HAS PL ACED RELIANCE ON THE ASSESSMENT ORDER. THE LEARNED AR ON THE OTHER HAND HAS REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. 53. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW, WE FIND THAT THE ADDITION OF RS. 4 CRORES WAS MADE BY THE ASSESS ING OFFICER ON THE BASIS OF PAY-IN-SLIP DATED 07.04.2005 FOUND DURING THE CO URSE OF SEARCH. IN THIS PAY-IN-SLIP, CASH OF RS.4 CRORES WAS SHOWN DEPOSIT ED IN THE BANK ACCOUNT WITH SBI, KALKAJI, NEW DELHI. THE ASSESSEE EXPLAINE D THE SOURCE OF THE SAID 56 DEPOSITS OUT OF CASH BALANCE AVAILABLE WITH IT AS P ER CASH BOOK. IN SUPPORT, THE ASSESSEE HAD FURNISHED PHOTOCOPY OF THE AUDITED BALANCE SHEET OF THE COMPANY FOR THE YEAR ENDED 31.3.2005. IN THE SCHEDU LE-6 ATTACHED TO THE BALANCE SHEET WAS SHOWN CASH BALANCE OF RS.4,40,02, 625 AS ON 31.3.2005. THE SAID CLOSING BALANCE WAS BROUGHT FORWARD AS OPE NING BALANCE ON 01.04.2005 IN THE FINANCIAL YEAR 01.04.2005 TO 31.3 .2006. PHOTO COPY OF CASH BOOK FOR ASSESSMENT YEAR 01.04.2005 TO 08.04.2 005 WAS ALSO FURNISHED. WITH THE HELP OF PHOTO COPIES OF CASH BOOK, THE ASS ESSEE TRIED TO EXPLAIN THAT OPENING CASH BALANCE OF RS.4,40,02,625 WAS BROUGHT FORWARD ON 01.04.2005 AND WAS CARRIED ON DAY TO DAY TO 07.04.2005. ON 07. 04.2005, THERE WAS OPENING BALANCE OF RS.4,79,45,415 OUT OF THE SAME T HE SAID AMOUNT OF RS. 4CRORES WAS DEPOSITED IN THE ACCOUNT OF THE ASSESSE E MAINTAINED WITH SBI, KALKA JI, NEW DELHI. COPY OF BANK STATEMENT IN RESP ECT OF ACCOUNTS WITH SBI, KALKAJI WAS ENCLOSED SHOWING THE DEPOSIT OF CA SH ON 07.04.2005. THE CASH DEPOSITED ON 07.04.2005 WAS WITHDRAWN ON 08.04 .2005 BY INWARD CLEARING/CHEQUE NO. 00981623 ISSUED BY THE ASSESSEE COMPANY IN FAVOUR OF STANDARD CHARTERED MUTUALLY FUND. THE CHEQUE WAS IS SUED FOR MAKING AN INVESTMENT FOR THE PURCHASE OF UNITS IN G.C. F.D. G RINDLAYS CASH FUND DAILY DIVIDEND. A COPY OF ACCOUNT STATEMENT WITH STANDARD CHARTERED BANK WAS ENCLOSED. AFTER VERIFYING THE ABOVE FACTS, THE LEA RNED CIT(APPEALS) HAS 57 DELETED THE ADDITION VIDE PARA NO.9.3 OF THE FIRST APPELLATE ORDER, REPRODUCED HEREIN UNDER: 9.3 DURING THE COURSE OF ASSESSMENT PROCEEDINGS T HE ASSESSING OFFICER HAD MADE THE ABOVE ADDITION ON TH E GROUND THAT ASSESSEE DID NOT FURNISH THE COPY OF AC COUNT OF STATE BANK OF INDIA AND DID NOT EXPLAIN THE SOUR CE OF CASH DEPOSIT OF RS. 4 CRORE ON 7.4.2005 IN THE ACCO UNT. DURING THE COURSE OF APPELLATE PROCEEDING THE APPEL LANT STATED THAT THE SOURCE OF SAID CASH DEPOSIT WAS OUT OF CASH BALANCE AVAILABLE IN THE CASH BOOK OF THE APPE LLANT. THE FACT WAS AVAILABLE WITH THE ASSESSING OFFICER A T THE TIME OF ASSESSMENT BUT WAS NOT APPRECIATED PROPERLY . COPIES OF THE RELEVANT CASH BOOK AND BALANCE SHEET ALONG WITH BANK STATEMENT WAS SUBMITTED DURING THE COURSE OF APPELLATE PROCEEDINGS. FROM THE REGULAR CASH BOOK OF THE APPELLANT IT IS APPARENT THAT THERE WAS CASH BALANC E OF RS. 43945415/- ON 7.4.2005 AND SUFFICIENT CASH BALA NCE HAVE BEEN CARRIED FORWARD FROM 31 ST MARCH, 2005. THE CASH DEPOSIT OF RS. 4 CRORE HAVE BEEN MADE OUT OF T HE CASH BALANCE AVAILABLE ON THAT DAY AS PER REGULAR B OOKS OF ACCOUNTS. THEREFORE, ADDITION MADE ON THIS ACCO UNT AS UNEXPLAINED CASH DEPOSIT IN THE BANK ACCOUNT IS NOT LEGALLY TENABLE AND, THEREFORE, THE SAME IS DIRECTE D TO BE DELETED. 58 54. AS DISCUSSED ABOVE, WE FIND THAT THE ASSESSEE W AS ABLE TO EXPLAIN THE SOURCE OF RS.4 CRORES SHOWN IN PAY-IN-SLIP DATED 7. 4.2005, HENCE, THE LEARNED CIT(APPEALS) WAS JUSTIFIED IN DELETING THE ADDITION. THE SAME IS UPHELD. GROUND NO. 6 (REVENUE) IS ACCORDINGLY REJEC TED. 55. THE APPEAL PREFERRED BY THE ASSESSEE IS PARTLY ALLOWED AND THAT PREFERRED BY THE REVENUE IS DISMISSED. 56. ITA NO.1184/DEL/2011 (A.Y. 2007-08) : THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORDER O N THE FOLLOWING GROUNDS: 1. THE ORDER OF LEARNED CIT(APPEALS) IS BAD IN LAW AN D ON FACTS. 2. LEARNED CIT(APPEALS) HAS ERRED IN SUSTAINING THE AD DITION OF RS.27,00,000 ALLEGED TO HAVE BEEN PAID TO M/S. BPTP LTD. IGNORING THE FACTUM SUBSTRATUM THAT THIS AMOUNT WAS IN FACT RECEIVABLE FROM M/S. BPTP AS BULK DISCOUNT ON BOOKING OF PLOTS. 3. LEARNED CIT(APPEALS) HAS FAILED TO APPRECIATE THAT THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO R EFUTE THE EXPLANATION OF THE ASSESSEE VIS--VIS BULK DISCOUNT . 4. LEARNED CIT(APPEALS) HAS FURTHER ERRED IN NOT APPRE CIATING THAT M/S. BPTP LTD. HAS CONFIRMED THE NATURE OF TRANSACT ION. 5. LEARNED CIT(APPEALS) HAS FURTHER FAILED TO APPRECIA TE THAT APART FROM SIMPLE LETTER OF THE ASSESSEE, WITHOUT ANY END ORSEMENT OF 59 RECIPIENT, THERE IS NOTHING ON RECORD TO ESTABLISH THAT ASSESSEE HAS IN FACT PAID RS.27,00,000 OUT OF HIS UNDISCLOSED INCOM E. 6. THE ORDER OF THE LEARNED CIT(APPEALS) WAS PASSED WI THOUT APPLICATION OF MIND IN AS MUCH AS THAT HE HAS THOUG H APPLAUDED THE CONTENTIONS OF THE ASSESSEE YET SUSTAINED THE ORDER OF THE ASSESSING OFFICER. 57. THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORD ER ON SEVERAL GROUNDS INVOLVING THE SOLE ISSUE REGARDING SUSTAINING OF TH E ADDITION OF RS.27 LACS ALLEGED TO HAVE BEEN PAID TO BPTP LTD. AS BULK DISC OUNT ON BOOKING OF PLOTS. 58. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVA NCED BY THE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW AND THE MATERIAL AVAILABLE ON RECORD. 59. THE RELEVANT FACTS ARE THAT DURING THE COURSE O F SEARCH AT THE PREMISES OF BPTP LTD., CONNAUGHT CIRCUS, NEW DELHI ON 15.211 .2007, A LETTER DATED 3.7.2007 BELONGING TO THE ASSESSEE WAS FOUND AND SE IZED. IN THE SAID LETTER, THE ASSESSEE HAD COMMUNICATED DETAILS OF SIX PLOTS BOOKED BY IT IN THE UPCOMING PROJECTS OF BPTP LTD. AS WELL AS PAYMENT M ADE AGAINST SUCH BOOKING IN CASH AND BY CHEQUES. THE PAYMENT AGGREGA TING TO RS.18 LACS WERE MADE THROUGH SIX CHEQUES DATED 17.4.2006 OF RS .3 LACS EACH BEARING 60 NOS. 125351 TO 125356 APART FROM AN AMOUNT OF RS.27 LACS PAID IN CASH. BPTP LTD. IN ITS BOOKS OF ACCOUNT HAD CLAIMED TO HA VE ALLOWED THE ABOVE AMOUNT OF RS.27 LACS AS SPECIAL DISCOUNT COMPRISI NG OF RS.4,50,000 AGAINST SIX PLOTS FOR BASIC PURCHASE PRICE OF RS.32 ,40,000 EACH. BTPO LTD. HAD SHOWN SPECIAL DISCOUNT RANGING FROM 0% TO 45. 65%. THE LEARNED CIT(APPEALS) HAS UPHELD THE ADDITION MERELY ON THE BASIS THAT SPECIAL DISCOUNT SHOWN RANGING FROM 0% TO 45.65% IS NOT A NORMAL PRACTICE IN THE LINE OF BUILDERS. HE HAS ALSO DOUBTED THE SEIZED MA TERIAL ON THE BASIS THAT THE SAME IS NOT GENUINE AND IS A DEVICE TO COVER UP THE CASH RECEIPTS WHICH HAVE NOT BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. WE DO NOT CONCUR WITH THE APPROACH OF THE AUTHORITIES BELOW AS THEY HAVE IGNO RED THE SEIZED MATERIAL AND ADDED RS.27 LACS MERELY ON THE BASIS THAT THE S PECIAL DISCOUNT RANGING FROM ZERO PERCENT TO 45.65% GIVEN BY THE BUILDER AG AINST THE BOOKING OF SIX PLOTS BY THE ASSESSEE IN THEIR VIEW WAS NOT INCONSO NANCE WITH THE NORMAL PRACTICE IN THE BUILDERS LINE. THE MATERIAL FOUND D URING THE COURSE OF SEARCH HAS GOT EVIDENTIARY VALUE AND THE SAME CANNOT BE IG NORED MERELY ON THE BASIS OF ASSUMPTION AND PRESUMPTION. WE THUS WHILE SETTING ASIDE THE ORDERS OF THE AUTHORITIES BELOW IN THIS REGARD DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.27 LACS MADE AND UPHELD BY THEM IGNORING THE SEIZED MATERIAL. THE RELATED GROUNDS INVOLVING THE ISSUE A RE THUS ALLOWED. 61 60. IN RESULT, THE APPEAL IS ALLOWED. 61. IN SUMMARY, THE CROSS OBJECTIONS PREFERRED BY T HE ASSESSEE FOR THE ASSESSMENT YEARS 2002-03 AND 2004-05 ARE ALLOWED, A PPEAL PREFERRED BY THE REVENUE FOR THE ASSESSMENT YEARS 2002-03 AND 2004- 05 ARE DISMISSED, THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2006- 07 IS DISMISSED AND THAT PREFERRED BY THE ASSESSEE FOR THAT ASSESSMENT YEAR IS PARTLY ALLOWED, AND APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2007 -08 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 .10.2015 SD/- SD/- ( INTURI RAMA RAO ) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 /10/2015 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR 62 DATE DRAFT DICTATED ON COMPUTER 19.10.2015 DRAFT PLACED BEFORE AUTHOR 19.10.2015 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 30.10.20 15 APPROVED DRAFT COMES TO THE SR.PS/PS 30.10.2015 KEPT FOR PRONOUNCEMENT ON 30.10.2015 FILE SENT TO THE BENCH CLERK 30.10.2015 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.