PRAKASH INDUSTRIES LTD., NEW DELHI V. ACIT, CC- 30, NEW DELHI

ITA 4068/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1276 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 26-03-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 19-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSHMA SINGH
• Assessee Lawyers: Not Found
• Keywords: Unexplained cash credit; Bogus Share capital; Unexplained investment; Unexplained expenditure; Depreciation; Income from undisclosed sources; Search and seizure; Document seized; Share purchase agreement; Principle of natural justice; Period of limitation; Accommodation entries; Block assessment; Tax effect; Time period of passing order; Retraction; Revised return; Documents seized; Reassessment proceedings; TDS; Set aside
• Section: 69C; 143(3); 133A; 153A; 143(1); 80IA; 143(2); 191; 139(1); 64; 113; 43; 48; 73; 72; 13; 153; 119; 22; 153C; 68; 132; 144; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHIBENCH FNEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER I .T.AS. NO.4039, 4040, 4041, 4042 & 4043/DEL/2017 ASSESSMENT YEARS: 2007-08, 2008-09, 2009-10, 2010-1 1, 2011-12 ACIT, CENTRAL CIRCLE-30, NEW DELHI. VS. M/S. PRAKASH INDUSTRIES LTD., 15 KM STONE, DELHI ROAD, HISAR, HARYANA. TAN/PAN: AABCP6765H (APPELLANT) (RESPONDENT) I .T.AS. NO.4064, 4065, 4066, 4067, 4068, 4069, 4070/ DEL/2017 ASSESSMENT YEARS: 2008-09, 2009-10, 2010-11, 2011-1 2, 2012- 13, 2013-14 & 2014-15 M/S. PRAKASH INDUSTRIES LTD., 5 KM STONE, DELHI ROAD, HISAR, HARYANA. VS. ACIT, CENTRAL CIRCLE-30, NEW DELHI. TAN/PAN: AABCP6765H (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI AJAY WADHWA, ADV. RESPONDENT BY: SHRI SUSHMA SINGH, CIT-D.R. DATE OF HEARING: 24 03 2021 DATE OF PRONOUNCEMENT: 18 06 2021 I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 2 O R D E R PER AMIT SHUKLA, JM: THE CAPTIONED APPEALS HAVE BEEN FILED BY THE ABOVE NAMED ASSESSEE AND THE REVENUE AGAINST SEPERATE ORDERS OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-30FOR ASSESSME NT MADE UNDER SECTION 153A/143(3) FOR THE ASSESSMENT YEARS 2007-0 8 TO AY 2014- 15. SINCE COMMON ISSUES ARE PERMEATING THROUGH ALL THE APPEALS ARISING OUT OF IDENTICAL SET OF FACTS PERTAINING TO THE SAME SEARCH, THEREFORE, SAME WERE HEARD TOGETHER AND ARE BEING D ISPOSED OFF BY WAY OF THIS CONSOLIDATED ORDER. 2. BOTH THE PARTIES HAD STATED THAT IF APPEAL FOR THE ASSESSMENT YEAR 2010-11 IS TAKEN INTO CONSIDERATION, I.E., IN ITA NO. 4066/DEL/2017 AND 4042/DEL/2017, THE SAME WILL COVE R MOST OF THE ISSUES IN ALL THE APPEALS. FOR THE SAKE OF READY REF ERENCE, THE GROUNDS OF APPEAL FOR VARIOUS YEARS ARE REPRODUCED HEREUNDER: 2.1 GROUNDS OF APPEAL RAISED BY THE REVENUE ARE REP RODUCED AS UNDER: ITA NO.4039/DEL/2017 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE A.O. TO DELETE THE ADDITION MADE U/S 68 OF THE I.T. ACT ON ACCOUNT OF UNEXPLAINED CASH CREDITS AMOUNTING TO RS. 16,36,62,120/-. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE A.O. TO DELETE THE I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 3 ADDITION OF RS. 8,18,311/- AS UNEXPLAINED EXPENDITU RE ON ACCOUNT OF BROKERAGE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAD ERRED IN LAW AND ON FACTS BY RELYING ON THE DEC ISION IN THE CASE OF SH. KABUL CHAWLA BY THE JURISDICTIONAL HIGH CO URT WHICH HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND SLP AGA INST THE SAME HAS BEEN FILED BEFORE HONBLE SUPREME COURT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAD ERRED IN LAW AND ON FACTS IN ARRIVING AT THE CON CLUSION THAT THE WORDS TOTAL INCOME AS USED IN SECTION 153A WOULD ON LY MEAN UNDISCLOSED INCOME DISCOVERED FROM SEIZED / INCRIMIN ATING MATERIAL. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAD ERRED IN LAW AND ON FACTS IN ADOPTING A RESTRIC TIVE AND PEDANTIC INTERPRETATION OF THE SCOPE OF ASSESSMENT U/S 153A OF THE ACT. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAD ERRED IN LAW AND ON FACTS IN ARRIVING AT THE CON CLUSION THAT THE WORDS TOTAL INCOME AS USED IN SECTION 153A WOULD ON LY MEAN INCOME UNEARTHED DURING SEARCH WHEN THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CANARA HOUSI NG DEVELOPMENT COMPANY VS. DCIT DATED 09.08.2014 HAS H ELD THAT TOTAL INCOME INCLUDES INCOME UNEARTHED DURING SEARCH AND ANY OTHER INCOME. 7. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 4 8. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, AL TER OR FORGO ANY GROUND(S) OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. ITA NO.4040/DEL/2017 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE A.O. TO DELETE THE ADDITION MADE U/S 68 OF THE I.T. ACT ON ACCOUNT OF UNEXPLAINED CASH CREDITS AMOUNTING TO RS. 20,36,62,120/-. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE A.O. TO DELETE THE ADDITION OF RS. 10,18,310/- AS UNEXPLAINED EXPENDIT URE ON ACCOUNT OF BROKERAGE. 3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD, CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE A.O. TO RESTRICT THE ADDITION OF RS. 1,28,70,018/- FOR UNACCOUNTED PROFI T @ 1% OF THE TOTAL PURCHASES OF SCRAP TO RS. 96,52,514/- WHICH IS 0.75% OF THE TOTAL PURCHASES OF SCRAP. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAD ERRED IN LAW AND ON FACTS BY RELYING ON THE DEC ISION IN THE CASE OF SH. KABUL CHAWLA BY THE JURISDICTIONAL HIGH CO URT WHICH HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND SLP AGA INST THE SAME HAS BEEN FILED BEFORE HONBLE SUPREME COURT. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAD ERRED IN LAW AND ON FACTS IN ARRIVING AT THE CON CLUSION THAT THE WORDS TOTAL INCOME AS USED IN SECTION 153A WOULD ON LY MEAN I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 5 UNDISCLOSED INCOME DISCOVERED FROM SEIZED / INCRIMIN ATING MATERIAL. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAD ERRED IN LAW AND ON FACTS IN ADOPTING A RESTRIC TIVE AND PEDANTIC INTERPRETATION OF THE SCOPE OF ASSESSMENT U/S 153A OF THE ACT. 7 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD.CIT(A) HAD ERRED IN LAW AND ON FACTS IN ARRIVING AT THE CON CLUSION THAT THE WORDS TOTAL INCOME AS USED IN SECTION 153A WOULD ON LY MEAN INCOME UNEARTHED DURING SEARCH WHEN THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CANARA HOUSI NG DEVELOPMENT COMPANY VS. DCIT DATED 09.08.2014 HAS H ELD THAT TOTAL INCOME INCLUDES INCOME UNEARTHED DURING SEARCH AND ANY OTHER INCOME. 8. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 9. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, A LTER OR FORGO ANY GROUND(S) OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. ITA NO.4041/DEL/2017 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE A.O TO DELETE THE ADDITION MADE U/S 68 OF THE I.T. ACT ON ACCOUNT OF UNEXPLAINED CASH CREDITS AMOUNTING TO RS 22,82,10,000/- ON PROTE CTIVE BASIS AND RS. 77,85,000/- ON SUBSTANTIVE BASIS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE A.O. TO DELETE THE I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 6 ADDITION OF RS. 11,79,975/- AS UNEXPLAINED EXPENDIT URE ON ACCOUNT OF BROKERAGE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAD ERRED IN LAW AND ON FACTS BY RELYING ON THE DEC ISION IN THE CASE OF SH. KABUL CHAWLA BY THE JURISDICTIONAL HIGH CO URT WHICH HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND SLP AGA INST THE SAME HAS BEEN FILED BEFORE HONBLE SUPREME COURT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAD ERRED IN LAW AND ON FACTS IN ARRIVING AT THE CON CLUSION THAT THE WORDS 'TOTAL INCOME' AS USED IN SECTION 153A WOULD O NLY MEAN UNDISCLOSED INCOME DISCOVERED FROM SEIZED / INCRIMIN ATING MATERIAL. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAD ERRED IN LAW AND ON FACTS IN ADOPTING A RESTRIC TIVE AND PEDANTIC INTERPRETATION OF THE SCOPE OF ASSESSMENT U/S 153A OF THE ACT. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAD ERRED IN LAW AND ON FACTS IN ARRIVING AT THE CON CLUSION THAT THE WORDS TOTAL INCOME AS USED IN SECTION 153A WOULD ON LY MEAN INCOME UNEARTHED DURING SEARCH WHEN THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CANARA HOUSI NG DEVELOPMENT COMPANY VS. DCIT DATED 09.08.2014 HAS H ELD THAT TOTAL INCOME INCLUDES INCOME UNEARTHED DURING SEARCH AND ANY OTHER INCOME. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE A.O. TO RESTRICT THE ADDITION OF RS. 2,27,06,450/- FOR UNACCOUNTED PROFI T @ 1% OF THE I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 7 TOTAL PURCHASES OF SCRAP TO RS. 1,70,29,838/- WHICH I S 0.75% OF THE TOTAL PURCHASES OF SCRAP. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE-A.O. TO RESTRICT THE ADDITION OF RS. 49,02,650/- FOR UNACCOUNTED INCOME ON PURCHASE OF BAZAAR/ KABAD @ 1% TO RS. 36,76,987/- WHICH IS @ 0.7 5%. 9. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE T O EACH OTHER. 10. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR FORGO ANY GROUND(S) OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. ITA NO.4042/DEL/2017 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS INDIRECTING THE A.O. TO DELETE THE ADDITION MADE U/S 68 OF THE I.T. ACT ON ACCOUNT OF UNEXPLAINED CASH CREDITS AMOUNTING TO RS. 21,17,69,200/- ON PROT ECTIVE BASIS AND RS. 20,40,70,800/- ON SUBSTANTIVE BASIS WITHOUT A PPRECIATING THE FACTS BROUGHT ON RECORD BY THE A.O. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE A O. TO DELETE THE ADDITION OF RS. 20,79,200/- AS UNEXPLAINED EXPENDIT URE ON ACCOUNT OF BROKERAGE WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE A.O. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE A.O. TO DELETE THE ADDITION OF RS. 23,99,260/- MADE ON THE BASIS OF ELE CTRONIC DATA SEIZED DURING THE SEARCH RELATING TO PURCHASE OF LAN D. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 8 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE A.O. TO DELETE THE ADDITION OF RS. 76,35,72,743/- MADE ON ACCOUNT OF S HIFTING OF TAXABLE PROFIT FROM STEEL DIVISION TO EXEMPTED PROFIT OF POWER DIVISION BY CHARGING HIGHER RATES OF POWER GENERATED. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE A.O. TO RESTRICT THE ADDITION OF RS. 1,39,28,065/- FOR UNACCOUNTED PROFI T @ 1% OF THE TOTAL PURCHASES OF SCRAP TO RS. 1,04,46,052/- WHICH I S 0.75% OF THE TOTAL PURCHASES OF SCRAP. 6. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE T O EACH OTHER. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, AL TER OR FORGO ANY GROUND(S) OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. ITA NO.4043/DEL/2017 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE A.O. TO DELETE THE ADDITION MADE U/S 68 OF THE I.T. ACT ON ACCOUNT OF UNEXPLAINED OASN CREDITS AMOUNTING TO RS. 15,81,65,000/- WITHOU T APPRECIATING THE FACTS BROUGHT ON RECORD BY THE A.O. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE A.O. TO DELETE THE ADDITION OF RS. 7,90,825/- AS UNEXPLAINED EXPENDITUR E ON ACCOUNT OF BROKERAGE WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 9 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE A.O. TO DELETE THE ADDITION OF RS. 4,46,600/- MADE ON THE BASIS OF ELEC TRONIC DATA SEIZED DURING THE SEARCH RELATING TO PURCHASE OF LAN D. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE A.O. TO DELETE THE ADDITION OF RS. 52,80,20,878/- MADE ON ACCOUNT OF S HIFTING OF TAXABLE PROFIT FROM STEEL DIVISION TO EXEMPTED PROFIT OF POWER DIVISION BY CHARGING HIGHER RATES OF POWER GENERATED. 5 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE A.O TO RESTRICT THE ADDITION OF RS. 41,68,654/- FOR UNACCOUNTED PROFIT @ 1% OF THE TOTAL PURCHASES OF SCRAP TO RS. 31,26,490/- WHICH IS 0.75% OF THE TOTAL PURCHASES OF SCRAP. 6 THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE T O EACH OTHER. 7 THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALT ER OR FORGO ANY GROUND(S) OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 2.2 GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE REP RODUCED AS UNDER: ITA NO.4064/DEL/2017 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD. CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING ADDITION OF RS 3,11,000/- U/S 69C MERELY ON THE BASIS I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 10 CERTAIN DOCUMENTS SEIZED DURING THE COURSE OF SEARC H AT THIRD PARTY BY HOLDING CONTENT OF SEIZED DOCUMENTS, ANNEXURE, A -2 AND A-6, AS TRUE, WHICH WERE LACK OF RELIABILITY SINCE THESE WERE UNSIGNED / UNDATED WITHOUT BRINGING ANY MATERIAL ON RECORD IN S UPPORT OF HIS CONTENTION. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD. CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING ADDITION OF RS 2,46,82,226/- BEING AVERAGE OF SEVEN DAYS SCRAP PURCHASES U/S 69C BY HOLDING THE OPINION OF THE AO AS JUSTIFIED, WHEREAS HE HIMSELF ACCEPTED THAT THE ADD ITION WERE MADE ON ESTIMATED BASIS ONLY. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCESOF THE APPELLANTS CASE, THE LD. CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING ADDITION TO THE EXTENT OF RS 96,52,514/- B Y ESTIMATING 0.75% UNRECORDED PROFIT ON SCRAP PURCHASE AS AGAINST 1% ESTIMATED BY THE AO WITHOUT THERE BEING ANY BASIS F OR THEIR ESTIMATION. 4. THAT ONTHEFACTS ANDIN THE CIRCUMSTANCESOF THE APPELLANTSCASE, THELD. CIT(A) HAS ERRED IN LAW IN CONFIRMING ADDITION OF RS 2,46,82,226/- U/S 69C AND RS. 96,52, 514/- BEING 0.75% UNRECORDED PROFIT ON SCARP PURCHASED ON ESTIMA TION BASIS IN SEARCH CASE U/S 132 OF THE ACT, EVEN WITHOUT BRINGIN G ANY COGENT MATERIAL ON RECORD. 5. THATONTHEFACTS ANDIN THE CIRCUMSTANCESOF THE APPELLANTSCASE, THELD. CIT(A) HAS ERRED BOTH ON FA CTS AND IN LAW IN CONFIRMING ESTIMATED ADDITION OF RS 2,46,82, 226/- U/S 69C I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 11 AND RS. 96,52,514/- BEING 0.75% UNRECORDED PROFIT ON SCARP PURCHASED EVEN THOUGH HE HIMSELF ACCEPTED. (A) THAT COPIES OF STATEMENTS, SEIZED DOCUMENTS AND ENQUIRY REPORT RECEIVED FROM INVESTIGATION WING OF INCOME TAX DEPT T. RELIED UPON BY THE AO, WERE NEVER CONFRONTED AND CROSS-EXAMINAT ION OF THE DEPONENT WERE ALSO NOT PROVIDED. ITA NO.4065/DEL/2017 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD. CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING ADDITION OF RS 4,19,250/- U/S 69C MERELY ON THE BASIS CERTAIN DOCUMENTS SEIZED DURING THE COURSE OF SEARC H AT THIRD PARTY BY HOLDING CONTENT OF SEIZED DOCUMENTS, ANNEXURE, A -2 AND A-6, AS TRUE, WHICH WERE LACK OF RELIABILITY SINCE THESE WERE UNSIGNED / UNDATED WITHOUT BRINGING ANY MATERIAL ON RECORD IN S UPPORT OF HIS CONTENTION. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD. CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING ADDITION OF RS 1,88,64,391/- BEING AVERAGE OF SEVEN DAYS SCRAP PURCHASES U/S 69C BY HOLDING THE OPINION OF THE AO AS JUSTIFIED, WHEREAS HE HIMSELF ACCEPTED THAT THE ADD ITION WERE MADE ON ESTIMATED BASIS ONLY. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD. CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING ADDITION TO THE EXTENT OF RS 1,70,29,838 /- BY ESTIMATING 0.75% UNRECORDED PROFIT ON SCRAP PURCHASE AS AGAINST 1% I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 12 ESTIMATED BY THE AO WITHOUT THERE BEING ANY BASIS F OR THEIR ESTIMATION. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD. CIT (A) HAS ERRED BOTH ON FACTS AND I N LAW IN CONFIRMING ADDITION TO THE EXTENT OF RS 36,76,987/- B Y ESTIMATING 0.75% UNACCOUNTED INCOME ON ALLEGED INVESTMENT IN BAZ AR/KABAD SCRAP AS AGAINST 1% ESTIMATED BY THE AO WITHOUT THE RE BEING ANY BASIS FOR THEIR ESTIMATION. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD. CIT(A) HAS ERRED IN LAW IN CONFIRMING ADDITION OF RS 1,88,64,391/- U/S 69C AND RS. 1,70,29,838/- AND RS. 36,76,987/- BEING 0.75% UNRECORDED PROFIT ON SCARP P URCHASED AND BAZAR/KABAD SCRAP ON ESTIMATION BASIS IN SEARCH CASE U/S 132 OF THE ACT, EVEN WITHOUT BRINGING ANY COGENT MA TERIAL ON RECORD. 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD. CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING ESTIMATED ADDITION OF RS 1,88,64,391/- U /S 69C AND RS. 1,70,29,838/- AND RS. 36,76,987/- BEING 0.75% U NRECORDED PROFIT ON SCARP PURCHASED AND BAZAR/KABAD SCRAP EVEN THOUGH HE HIMSELF ACCEPTED - (A) THAT COPIES OF STATEMENTS, SEIZED DOCUMENTS AN D ENQUIRY REPORT RECEIVED FROM INVESTIGATION WING OF INCOME TAX DEPTT. RELIED UPON BY THE AO, WERE NEVER CONFRONTED AND CROSS-EXA MINATION OF THE DEPONENT WERE ALSO NOT PROVIDED. (B) THAT UNREGISTERED DEALERS OF SCRAP, TRANSPORTER S, TRUCK OWNERS, SUPPLIERS HAVE RETRACTED FROM THEIR EARLIER S TATEMENTS I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 13 RELIED UPON BY AO DURING CROSS- EXAMINATION BEFORE T HE EXCISE DEPARTMENT. ITA NO.4066/DEL/2017 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD. CIT (A) HAS ERRED BOTH ON FACTS AND I N LAW IN CONFIRMING ADDITION OF RS 11,78,500/- U/S 69C MEREL Y ON THE BASIS CERTAIN DOCUMENTS SEIZED DURING THE COURSE OF SEARC H AT THIRD PARTY BY HOLDING CONTENT OF SEIZED DOCUMENTS, ANNEXURE, A -2 AND A-6, AS TRUE, WHICH WERE LACK OF RELIABILITY SINCE THESE WERE UNSIGNED / UNDATED WITHOUT BRINGING ANY MATERIAL ON RECORD IN S UPPORT OF HIS CONTENTION. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD. CIT (A) HAS ERRED BOTH ON FACTS AND I N LAW IN CONFIRMING ADDITION TO THE EXTENT OF RS 1,04,46,052 /- BY ESTIMATING 0.75% UNRECORDED PROFIT ON SCRAP PURCHASE AS AGAINST 1% ESTIMATED BY THE AO WITHOUT THERE BEING ANY BASIS F OR THEIR ESTIMATION. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD. CIT (A) HAS ERRED IN LAW IN CONFIRMING ADDITION OF RS. 1,04,46,052/- BEING 0.75% UNRECORDED PROFIT ON SCAR P PURCHASED ON ESTIMATION BASIS IN SEARCH CASE U/S 132 OF THE A CT, EVEN WITHOUT BRINGING ANY COGENT MATERIAL ON RECORD. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD. CIT (A) HAS ERRED BOTH ON FACTS AND I N LAW IN CONFIRMING ESTIMATED ADDITION OF RS. 1,04,46,052/- BE ING 0.75% I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 14 UNRECORDED PROFIT ON SCARP PURCHASED EVEN THOUGH HE HIMSELF ACCEPTED - (A) THAT COPIES OF STATEMENTS, SEIZED DOCUMENTS AN D ENQUIRY REPORT RECEIVED FROM INVESTIGATION WING OF INCOME TAX DEPTT. RELIED UPON BY THE AO, WERE NEVER CONFRONTED AND CROSS-EXA MINATION OF THE DEPONENT WERE ALSO NOT PROVIDED. (B) THAT UNREGISTERED DEALERS OF SCRAP, TRANSPORTER S, TRUCK OWNERS, SUPPLIERS HAVE RETRACTED FROM THEIR EARLIER S TATEMENTS RELIED UPON BY AO DURING CROSS- EXAMINATION BEFORE T HE EXCISE DEPARTMENT. ITA NO.4067/DEL/2017 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD. CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING ADDITION TO THE EXTENT OF RS 31,26,490/- B Y ESTIMATING 0.75% UNRECORDED PROFIT ON SCRAP PURCHASE AS AGAINST 1% ESTIMATED BY THE AO WITHOUT THERE BEING ANY BASIS F OR THEIR ESTIMATION. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD. CIT (A) HAS ERRED IN LAW IN CONFIRMING ADDITION OF RS. 31,26,490/- BEING 0.75% UNRECORDED PROFIT ON SCARP P URCHASED ON ESTIMATION BASIS IN SEARCH CASE U/S 132 OF THE ACT, EVEN WITHOUT BRINGING ANY COGENT MATERIAL ON RECORD. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD. CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING ESTIMATED ADDITION OF RS. 31,26,490/- BE ING 0.75% I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 15 UNRECORDED PROFIT ON SCARP PURCHASED EVEN THOUGH HE HIMSELF ACCEPTED - (A) THAT COPIES OF STATEMENTS, SEIZED DOCUMENTS AN D ENQUIRY REPORT RECEIVED FROM INVESTIGATION WING OF INCOME TAX DEPTT. RELIED UPON BY THE AO, WERE NEVER CONFRONTED AND CROSS-EXA MINATION OF THE DEPONENT WERE ALSO NOT PROVIDED. (B) THAT UNREGISTERED DEALERS OF SCRAP, TRANSPORTER S, TRUCK OWNERS, SUPPLIERS HAVE RETRACTED FROM THEIR EARLIER S TATEMENTS RELIED UPON BY AO DURING CROSS- EXAMINATION BEFORE T HE EXCISE DEPARTMENT. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALT ER ANY OF THE GROUNDS OF APPEAL. ITA NO.4068/DEL/2017 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD. CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING ADDITION TO THE EXTENT OF RS 15,22,408/- B Y ESTIMATING 0.75% UNRECORDED PROFIT ON SCRAP PURCHASE AS AGAINST 1% ESTIMATED BY THE AO WITHOUT THERE BEING ANY BASIS F OR THEIR ESTIMATION. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD. CIT (A) HAS ERRED IN LAW IN CONFIRMING ADDITION OF RS. 15,22,408/- BEING 0.75% UNRECORDED PROFIT ON SCARP P URCHASED ON ESTIMATION BASIS IN SEARCH CASE U/S 132 OF THE ACT, EVEN WITHOUT BRINGING ANY COGENT MATERIAL ON RECORD. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD. CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 16 CONFIRMING ESTIMATED ADDITION OF RS. 15,22,408/- BE ING 0.75% UNRECORDED PROFIT ON SCARP PURCHASED EVEN THOUGH HE HIMSELF ACCEPTED - (A) THAT COPIES OF STATEMENTS, SEIZED DOCUMENTS AN D ENQUIRY REPORT RECEIVED FROM INVESTIGATION WING OF INCOME TAX DEPTT. RELIED UPON BY THE AO, WERE NEVER CONFRONTED AND CROSS-EXA MINATION OF THE DEPONENT WERE ALSO NOT PROVIDED. (B) THAT UNREGISTERED DEALERS OF SCRAP, TRANSPORTER S, TRUCK OWNERS, SUPPLIERS HAVE RETRACTED FROM THEIR EARLIER S TATEMENTS RELIED UPON BY AO DURING CROSS- EXAMINATION BEFORE T HE EXCISE DEPARTMENT. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALT ER ANY OF THE GROUNDS OF APPEAL. ITA NO.4069/DEL/2017 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD. CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING ADDITION TO THE EXTENT OF RS 19,87,987/- B Y ESTIMATING 0.75% UNRECORDED PROFIT ON SCRAP PURCHASE AS AGAINST 1 % ESTIMATED BY THE AO WITHOUT THERE BEING ANY BASIS F OR THEIR ESTIMATION. 2. THAT ON THE FACTSAND IN THE CIRCUMSTANCES OF THE APPELLANTS CASE, THE LD. CIT(A) HAS ERRED IN LAW IN CONFIRMING ADDITION OF RS. 19,87,987/- BEING 0.75% UNRECORDED PROFIT ON SCARP P URCHASED ON ESTIMATION BASIS IN SEARCH CASE U/S. 132 OF THE ACT, EVEN WITHOUT BRINGING ANY COGENT MATERIAL ON RECORD. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 17 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD. CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING ESTIMATED ADDITION OF RS. 19,87,987/- BE ING 0.75% UNRECORDED PROFIT ON SCARP PURCHASED EVEN THOUGH HE HIMSELF ACCEPTED - (A) THAT COPIES OF STATEMENTS, SEIZED DOCUMENTS AN D ENQUIRY REPORT RECEIVED FROM INVESTIGATION WING OF INCOME TAX DEPTT. RELIED UPON BY THE AO, WERE NEVER CONFRONTED AND CROSS-EXA MINATION OF THE DEPONENT WERE ALSO NOT PROVIDED. (B) THAT UNREGISTERED DEALERS OF SCRAP, TRANSPORTER S, TRUCK OWNERS, SUPPLIERS HAVE RETRACTED FROM THEIR EARLIER S TATEMENTS RELIED UPON BY AO DURING CROSS- EXAMINATION BEFORE T HE EXCISE DEPARTMENT. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALT ER ANY OF THE GROUNDS OF APPEAL. ITA NO.4070/DEL/2017 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E APPELLANTS CASE,THE LD.CIT(A) HAS ERRED BOTH ON FA CTS AND IN LAW IN CONFIRMING ADDITION TO THE EXTENT OF RS 7,41,523/- BY ESTIMATING 0.75% UNRECORDED PROFIT ON SCRAP PURCHASE AS AGAINST 1 % ESTIMATED BY THE AO WITHOUT THERE BEING ANY BASIS F OR THEIR ESTIMATION. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD. CIT(A) HAS ERRED IN LAW IN CONFIRMING ADDITION OF RS. 7,41,523/- BEING 0.75% UNRECORDED PROFIT ON SCARP PU RCHASED ON I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 18 ESTIMATION BASIS IN SEARCH CASE U/S 132 OF THE ACT, EVEN WITHOUT BRINGING ANY COGENT MATERIAL ON RECORD. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD. CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING ESTIMATED ADDITION OF RS. 7,41,523/- BEI NG 0.75% UNRECORDED PROFIT ON SCARP PURCHASED EVEN THOUGH HE HIMSELF ACCEPTED - (A) THAT COPIES OF STATEMENTS, SEIZED DOCUMENTS AN D ENQUIRY REPORT RECEIVED FROM INVESTIGATION WING OF INCOME TAX DEPTT. RELIED UPON BY THE AO, WERE NEVER CONFRONTED AND CROSS-EXA MINATION OF THE DEPONENT WERE ALSO NOT PROVIDED. (B) THAT UNREGISTERED DEALERS OF SCRAP, TRANSPORTER S, TRUCK OWNERS, SUPPLIERS HAVE RETRACTED FROM THEIR EARLIER S TATEMENTS RELIED UPON BY AO DURING CROSS- EXAMINATION BEFORE T HE EXCISE DEPARTMENT. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALT ER ANY OF THE GROUNDS OF APPEAL. 3. FOR THE SAKE OF READY REFERENCE AND CONVENIENC E YEAR-WISE ADDITIONS ARE SUMMARIZED AS UNDER: NATURE OF ADDITION AY 07-08 APPEAL NO 4039 AY 2008- 09 APPEAL NO 4040 A ND 4064 AY2009-10 APPEAL NO 4041 AND 4065 AY 2010- 11 APPEAL NO 4042 AAD 4066 AY 2011- 12 APPEAL NO 4040 AND 4064 AY 2012- 13 APPEAL NO.406 8 AY 2013- 14 APPEAL NO 4069 AY 2014- 15 APP EAL NO407 0 TOTAL I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 19 SHARE APPLICATION MONEY (DEPARTMENTS APPEAL) 163662120 203662120 23,59,95,000/- (22,82,10,000/- ) PROTECTIVE 41,58,40,000 (22,17,69,200) PROTECTIVE 15,81,65,00 0 117,73,24,24 0 (44,99,79,200 ) PROTECTIVE UNEXPLAINED BROKERAGE @0.5% (DEPARTMENT'S APPEAL) 818311 1018310 11.79.975 20,79,300 7,90,825 5886621 SALARY PAID IN CASH U/S.69C (ASSESSEES APPEAL) 311,000 4,19,250 11,78,500 1908,750 INVESTMENT IN PURCHASE (ASSESSEES APPEAL) 24682226 18864,391 4,35,46,617 PURCHASE OF SCRAP (DEPARTMENT AND ASSESSES APPEAL 12870018 22706450 13928065 4168654 2029877 2650649 988697 59342410 UNACCOUNTED INVESTMENT (DEPARTMENT AND ASSESSEES APPEAL) 4902650 4902650 UNEXPLAINED EXPENDITURE IN PURCHASE OF LAND (DEPARTMENTS APPEAL) 2399260 446600 2845860 ( SHIFTING OF PROFIT FROM STEEL DIVISION (DEPARTMENTS APPEAL) 763572743 52802087 8 1291593621 TOTAL 164480431 24254367 4 284067716 1198997768 691591957 202987 7 265064 9 98869 7 2587350769 4. IN THE FIRST APPEAL, MOST OF THE ADDITIONS STO OD DELETED AND SOME OF THEM GOT CONFIRMED, THE SUMMARY OF WHICH ARE AS U NDER: I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 20 NATURE OF ADDITION AY 07-08 AY 2008- 09 AY 2009-10 AY 2010-11 AY 2011-12 AY 2012-13 AY 2013-14 AY 2014- 15 SHARE APPLICATION MONEY DELETED 16,36,62,120 DELETED 20,36,62,12 0 DELETED 23,59,95,000 DELETED 41,58,40,000 DELETED 15,81,65,000 UNEXPLAINED BROKERAGE @ 0.5% DELETED 818,311 DELETED 10,18,310 DELETED 11,79,975 DELETED 20,79,200 DELETED 7,90,825 SALARY PAID IN CASH U/S 69C CONFIRMED 311,000 CONFIRMED 4,19,250 CONFIRMED 11,78,500 INVESTMENT IN PURCHASE CONFIRMED 2,46,82,22 6 CONFIRMED 1,88,64,391 PURCHASE OF SCRAP OUT OF 1,28,70,01 8, CONFIRMED 0.75% RS. 96,52,514 AND DELETED 0.25% RS. 32,17,505 OUT OF 2,27,06,450 , CONFIRMED 0.75% RS. 1,70,29,838 AND DELETED 0.25% RS. 56,76,613 OUT OF 1,39,28,065 , CONFIRMED 0.75% RS. 104,46,052 AND DELETED 0.25% RS. 34,82,013 OUT OF 41,68,654, CONFIRMED 0.75% RS. 31,26,490 AND DELETED 0.25% RS. 10,42,1641 OUT OF 20,29,877, CONFIRMED 0.75% RS. 15,22,408 AND DELETED 0.25% RS. 507,469 OUT OF 26,50,649, CONFIRMED 0.75% RS. 19,87,987 AND DELETED 0.25% RS. 662,662 OUT OF 988,697, CONFIRMED 0.75% RS. 741,523 AND DELETED 0.25% RS. 247,174 UNACCOUNTED INVESTMENT OUT OF 49,02,650, CONFIRMED 0.75% RS. 36,76,987 AND DELETED 0.25% RS. 12,25,662 UNEXPLAINED EXPENDITURE IN DELETED 23,99,260 DELETED 446,600 I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 21 5. BESIDES THIS, THE LD. AR FOR THE ASSESSEE HAS ALSO FILED APPLICATION DATED 09.12.2020 REQUESTING FOR ADMISSI ON OF ADDITIONAL GROUNDS UNDER RULE 11 IN RESPECT OF ASSESSMENT YEAR 2007-08 TO 2011-12 WHICH READS AS UNDER: A PATENTLY OBVIOUS AND APPARENT ERROR OF LAW HAS TA KEN PLACE IN THE CAPTIONED ASSESSMENTS WHICH IS A JURISDICTIONAL ISSUE AND GOES INTO THE ROOT OF THE MATTER. 2. THE SEARCH UNDER SECTION 132(1) OF THE INCOME TA X ACT, 1961 (THE ACT) WAS CONDUCTED ON THE ASSESSEE ON 30.10.2012 (REFERRED TO AS FIRST SEARCH). THE ASS ESSMENT IN RESPECT OF THE PROCEEDINGS RELATING TO THE SAID SEARCH WAS TO GET TIME-BARRED ON 31.03.2015. HOWEVER, ON 27.03.2014, ANOTHER SEARCH WAS CONDUCTED ON THE ASSESSEE UNDER SECTION 132(1) OF THE ACT. THE LEARN ED ASSESSING OFFICER (REFERRED TO AS LD. AO) ISSUED NOTICE UNDER SECTION 153A OF THE ACT ON 27.06.2014 IN RESP ECT OF THE FIRST SEARCH, REQUIRING THE ASSESSEE TO FILE RE TURN OF INCOME IN RESPECT OF THE 6 PRECEDING ASSESSMENT YEA RS THAT IS AY 2007-08 TO 2012-13. NEEDLESS TO ADD, THE SAID NOTICE WAS ISSUED AFTER THE SECOND SEARCH WHICH AS STATED ABOVE TOOK PLACE ON 27.03.2014. ADMITTEDLY, THE LD. AO ALLOWED THE PROCEEDINGS INITIATED CONSEQUENT TO THE NOTICE UNDER SECTION 153A AFTER THE FIRST SEARCH TO LAPSE. 3. THE LD. AO HIMSELF MENTIONS THAT NO ACTION WAS T AKEN IN RESPECT OF THE NOTICES ISSUED UNDER SECTION 153A OF THE ACT IN RESPECT OF THE FIRST SEARCH. HE PROCEEDED TO MAK E AN ASSESSMENT IN RESPECT OF THE SEARCH CONDUCTED ON I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 22 27.03.2014 AND ALLOWED THAT THE PROCEEDINGS FOR THE FIRST SEARCH TO LAPSE. 4. CONSEQUENTLY, HE ASSESSED THE INCOME OF THE ASSE SSEE PURPORTEDLY BASED ON INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF THE FIRST SEARCH AS WELL AS TH E SECOND SEARCH IN THE ASSESSMENTS UNDER SECTION 153A IN CONSEQUENT TO THE SECOND SEARCH. THE ASSESSMENT FOR AY 2008-09 TO 2011-12 WAS COMPLETED ON 29.03.2016 AND FOR AY 2007-08 WAS COMPLETED ON 31.03.2015 AND IT MAY BE POINTED OUT THAT THE FIRST SEARCH DATED 30.10.20 12 WAS TO GET TIME-BARRED ON 31.03.2015. 5. IT IS THE CONTENTION OF THE ASSESSEE THAT AFTER THE SEARCH, THE ISSUANCE OF NOTICES FOR THE 6 PRECEDING ASSESSM ENT YEARS UNDER SECTION 153A IS A SINE-QUA-NON AND THE INCOME HAS TO BE ASSESSED/ REASSESSED CONSEQUENTLY. IN OTHER WORDS, AFTER THE SEARCH, THE ASSESSMENT FOR T HE 6 PRECEDING ASSESSMENT YEARS UNDER SECTION 153A HAS NECESSARILY TO TAKE PLACE AND THERE IS NO SCOPE FOR ANY ABATEMENT. THIS IS WHAT COMES OUT FROM THE BARE REA DING OF THE PROVISIONS OF SECTION 153A OF THE ACT. THIS IS ALSO BEEN HELD BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA(2015) (380 ITR 573) AND MANY OTHER DECISIONS WHICH FOLLOWED THEREAFTER. HENCE, T HE LD. AO HAD NO OPTION WHATSOEVER BUT TO MAKE AN ASSESSME NT FOR 6 ASSESSMENT YEARS PRECEDING THE DATE OF THE FI RST SEARCH AND HIS ACT OF HOLDING THE ASSESSMENT YEARS AS ABATED IS CONTRARY TO LAW AND THE ACTION IS TO BE S ET ASIDE. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 23 6. YOUR HONOURS WILL APPRECIATE THAT THIS IS A LEGA L ISSUE WHICH EMANATES FROM THE FACTS ON RECORD AND DOES NO T NEED ANY FORM OF ACTUAL DELIBERATION. HENCE IT IS M ANIFEST THAT THIS LEGAL GROUND WHICH IS GERMANE TO THE EXIS TENCE OF THE VERY ASSESSMENT MAY DESERVE TO BE RAISED. IF TH E ASSESSEE SUCCEEDS ON THIS GROUND, THEN THE MATERIAL IF ANY, FOUND DURING THE COURSE OF FIRST SEARCH CANNOT BE USED FOR MAKING THE ASSESSMENT CONSEQUENT TO THE SE COND SEARCH. 7. WITHOUT PREJUDICE THE AFORESAID, IT IS SUBMITTED THAT THE LEARNED COMMISSIONER OF INCOME TAX APPEALS-30 (REFE RRED TO AS LD. CIT(A)) HAS DELETED THE ADDITIONS MADE BASED ON THE MATERIAL FOUND DURING THE COURSE OF FIRST SEARC H BY HOLDING THAT THE SAME IS NOT TO BE INCRIMINATING IN NATURE AND THE ADDITIONAL GROUNDS SO RAISED SUPPORT THE OR DER OF THE LD. CIT(A) AND THEREFORE ARE PERMISSIBLE UNDER RULE 27 OF THE INCOME-TAX (APPELLATE TRIBUNAL) RULES, 1963. IT HAS BEEN HELDBY THE HONBLE DELHI HIGH COURT IN THE CASE OF SANJAY SAWHNEY VS. PCIT IT APPEAL NO. 834 OF 2019 (116 TAXMANN.COM 701) THAT ASSESSEE IS ENTITLED TO DEFEND ORDER OF THE LD. CIT (A) BEFORE THE APPELLAT E FORUM ON ALL GROUNDS, INCLUDING GROUND WHICH HAS BEEN HELD AGAINST HIM BY THE LOWER AUTHORITY THOUGH FINAL ORD ER IS IN ITS FAVOUR. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 24 IN VIEW OF AFORESAID DISCUSSION, THE FOLLOWING ADDI TIONAL GROUND IS SOUGHT TO BE RAISED: 1. THE LD. AO HAS ERRED IN LAW IN OMITTING TO MAKE AN ASSESSMENT IN RESPECT OF THE 6 PRECEDING YEARS CONSEQUENT TO THE SEARCH CONDUCTED ON 30.10.2012 IN SPITE OF THE MANDATORY PROVISIONS ENSHRINED IN SECT ION 153A OF THE ACT. 2. THE LD. AO HAS ERRED IN LAW IN MAKING USE OF THE EVIDENCE FOUND DURING THE COURSE OF FIRST SEARCH DA TED 30.10.2012 WHILE MAKING ASSESSMENT IN RESPECT OF TH E SEARCH CONDUCTED ON 27.03.2014. THIS IS CONTRARY TO THE SETTLED LEGAL POSITION WHEREIN, IN RESPECT OF COMPL ETED ASSESSMENTS, NO ADDITION CAN BE MADE UNLESS THE SEA RCH REVEALS INCRIMINATING DOCUMENTS LEADING TO DETERMIN ATION OF ESCAPED INCOME. HENCE WHILE MAKING AN ASSESSMENT CONSEQUENT TO THE SEARCH; THE LD. AO COULD NOT HAVE USED THE MATERIAL FOUND IN ANOTHER INDEPENDENT SEARCH. 6. IN THE CASE OF THE ASSESSEE, A SEARCH AND SE IZURE ACTION UNDER SECTION 132(1) OF THE ACT WAS CONDUCTED ON 30.10.2012 ON VARIOUS BUSINESS PREMISES OF M/S PRAKASH INDUSTRIES LTD. HO WEVER, BEFORE THE ISSUANCE OF NOTICES UNDER SECTION153A, ANOTHER SEARCH UNDER SECTION 132(1) OF THE ACT WAS CARRIED OUT ON 31.03.2014 AT THE BUSINESS PREMISES OF THE ASSESSEE. THUS, THERE WERE TWO SEARCHES CARRIED OUT IN THE CASE OF THE ASSESSEE WITHIN A SP AN OF TWO YEARS. INTERESTINGLY, THE LD. ASSESSING OFFICER ISSUED NOT ICES UNDER SECTION153A IN RELATION TO THE 1 ST SEARCH (I.E., ON 30.10.2012), ON I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 25 27.06.2014 WHICH WAS AFTER THE DATE OF SECOND SEARC H FOR THE ASSESSMENT YEARS 2007-08 TO 2012-13. HOWEVER, NO RE TURN OF INCOME WAS FILED IN RESPONSE TO THIS NOTICE. THEREA FTER, THE LD. AO ISSUED NOTICES ON 14.08.2014 UNDER SECTION 153A FOR A.Y. 2008-09 TO 2013-14 IN CONSEQUENCE TO THE 2 ND SEARCH. IN RESPONSE TO THIS NOTICE, RETURN WAS FILED ON 17.11.14. HOWEVER, THE LD. AO P ASSED A SINGLE ASSESSMENT ORDER FOR EACH YEAR FROM A.Y. 2008-09 TO 2013-14 UNDER SECTION 153A OF THE ACT BY CONSIDERING THE SECOND SE ARCH. THE ORDERS WERE PASSED AFTER LIMITATION PERIOD OF FIRST SEARCH BUT WITHIN LIMITATION PERIOD OF SECOND SEARCH.HE DID NOT MAKE ANY ASSESSMENT CONSEQUENT TO THE FIRST SEARCH AND ALLOWED IT TO LA PSE.HE HOWEVER PURPORTEDLY RELIED UPON MATERIAL OF BOTH THE SEARCH ES AND THE ENQUIRIES CONDUCTED DURING ASSESSMENT PROCEEDINGS U NDER SECTION 153A OF THE ACT. WHILE MAKING ASSESSMENT CONSEQUENT TO THE SECOND SEARCH, THE LD. AO PASSED ASSESSMENT ORDER UNDER SE CTION 153A FOR AY 2007-08 WITHIN THE LIMITATION PERIOD OF THE FIRS T SEARCH USING ONLY THE MATERIAL OF THE FIRST SEARCH AND THE ENQUIRIES CONDUCTED DURING ASSESSMENT PROCEEDINGS. THUS, NO ASSESSMENT ORDER W AS PASSED UNDER SECTION 153A/143(3) IN RELATION TO FIRST SEAR CH CONDUCTED ON 30.10.2012; AND THE ASSESSING OFFICER TOOK COGNIZAN CE ONLY OF THE SECOND SEARCH AND HAS PASSED THE IMPUGNED ASSESSMEN T ORDERS IN RELATION TO THE SECOND SEARCH. 7. IN SO FAR AS THE ASSESSMENT YEAR 2010-11 IS CONCERNE D, THE STATUS OF THE ASSESSMENT AS ON DATE OF SECOND SEARCH, I.E., 3 1.03.2014 WAS AS UNDER: I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 26 AY DATE OF FILING ORIGINAL RETURN DATE OF FILING REVISED RETURN DUE DATE OF ORDER UNDER SECTION 143(3) STATUS AS ON DATE OF SEARCH- 29.03.2014 2010-11 14.10.10 31.3.12 NOTICE UNDER 143(2) ISSUED BUT LAST DATE OF ASSESSMENT UNDER 143(3) WAS 31.12.12 AND NO ASSESSMENT WAS MADE UNDER SECTION 143(3) COMPLETED THE ADDITIONS MADE IN THIS YEAR ARE AS UNDER: NATURE OF ADDITION MADE BY THE LD. AO AMOUNT IN RS. ACTION OF LD. CIT(A) APPEAL BY SHARE APPLICATION MONEY/WARRANT APPLICATION MONEY UNDER SECTION 68 OF THE ACT 41,58,40,000 (22,17,69,200 PROTECTIVE) DELETED DEPARTMENT AND ADDITIONAL GROUND BY ASSESSEE UNEXPLAINED BROKERAGE @5% 20,79,200 DELETED DEPARTMENT AND ADDITIONAL GROUND BY ASSESSEE SALARY PAID IN CASH U/S 69C 11,78,500 CONFIRMED ASSESSEE AND ADDITIONAL GROUND BY ASSESSEE PURCHASE OF SCRAP @ 1% OF TURNOVER 1,39,28,065 CONFIRMED 0.75% RS. 104,46,052 AND DELETED 0.25% RS. 34,82,013 A SSESSEEAND DEPARTMENT SHIFTING OF PROFIT FROM STEEL DIVISION TO POWER DIVISION BY CHARGING HIGHER RATES OF POWER GENERATED BY POWER DIVISION 76,35,72,743 DELETED DEPARTMENT AND ADDITIONAL GROUND BY ASSESSEE UNEXPLAINED EXPENDITURE IN PURCHASE OF LAND 23,99,260 DELETED DEPARTMENT TOTAL 119,89,97,759 NAME OF SHAREHOLDER AMOUNT IN RS. AMARJOTI VANIJYA PRIVATE LTD. - WARRANT APPLICATION MONEY 41,58,40,000 TOTAL ADDITION 41,58,40,000 I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 27 8. BEFORE US, THE LD. AR FOR THE ASSESSEE, MR. A JAY WADHWA AFTER NARRATING THE RELEVANT FACTS AND THE BACKGROUND OF THE CASE STATED IN HIS WRITTEN SUBMISSIONS THAT, A COMBINED ASSESSMENT CANNOT BE MADE UNDER SECTION 153A OF THE ACT FOR THE TWO SEPA RATE SEARCHES. PROVISIONS OF SECTION 153A MANDATE AN ASSESSMENT IN RESPECT OF EACH OF THE 6 YEARS AND THEREFORE, ASSESSMENTS UNDER SEC TION 153A WERE TO BE MANDATORILY MADE IN RESPECT OF THE FIRST SEARC H ALSO BASED ON THE INCRIMINATING MATERIAL SEIZED, IF ANY. 9. THE CHART REPRESENTING THE MATERIAL USED IN RESPECT OF EACH ADDITION MADE IS REPRODUCED BELOW: ADDITION DESCRIPTION OF MATERIAL FOUND FOUND IN WHICH SEARCH PAGE NO. OF ASSESSMENT ORDER SHARE CAPITAL A1 - A14 COMPUTATION, INTIMATION U/S 143(1), BANK STATEMENT AND SCHEDULES OF BALANCE SHEET OF SHARE APPLICANTS A15-A25 CHEQUE BOOKS OF SHARE APPLICANTS ON WHICH AUTHORISED SIGNATORY HAS SIGNED ON BLANK CHEQUES FOUND IN FIRST SEARCH 2-4,30 REPRODUCED AT PAGE 2-4 SALARY PAID IN CASH U/S 69C A2 AND A6 CONTAINING DETAILS OF PROPOSED CASH PAGE 15,26 OF A2 AND PAGE 51,53 OF A6 FOR AY 2010-11 CONTAINING DETAILS OF PROPOSED CASH FOUND IN FIRST SEARCH FROM PREMISES OF ASSESSEE COMPANYS DIRECTOR, VIPUL AGGARWALS 36 SHIFTING OF PROFIT FROM STEEL DIVISION TO POWER DIVISION BY CHARGING HIGHER RATES OF POWER GENERATED BY POWER DIVISION A - 6 (PG 6,8,37) SHOWING POWER COST PER UNIT DATED 14.5.12 AND 20.08.12 @3.04 AND 2.09 PER UNIT RESPECTIVELY FOUND IN FIRST SEARCH PAGE 39 UNEXPLAINE D EXPENDITURE- PURCHASE OF ELECTRONIC DATA SEIZED AT CHAPA (PARTY BS-I) IN A SEIZED PENDRIVE ANNEXURE PDI-1/2)-SHOWING TABLE ABOUT LAND PURCHASES IN WHICH 2 FOUND IN SURVEY ON 30.10.12 38 OF ORDER PAGE 318-320, 867-868 OF PBK I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 28 LAND COLUMNS - COST AS PER PAPER AND ACTUAL AMOUNT PAID ARE MENTIONED 10. THE ASSESSEE CONTENDED THAT SECTION 153A IS A SPECIAL SCHEME OF ASSESSMENT OF INCOME IN CASE OF A SEARCHE D PERSON AND REPRODUCED THE RELEVANT PORTION OF SECTION 153A WHICH WE ARE ALSO REPRODUCING FOR THE SAKE OF CONVENIENCE. RELEVANT PORTION OF SECTION 153A IS REPRODUCED HERE UNDER: 153A. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SE CTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153 , IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OT HER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SEC TION 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTI CE, THE RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE ( B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANN ER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRES CRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN R EQUIRED TO BE FURNISHED UNDER SECTION 139; (B)ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSES SMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 29 TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUC TED OR REQUISITION IS MADE : PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS: PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, I F ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN THIS SECTION PE NDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CA SE MAY BE, SHALL ABATE. 11. THE LD. AR FOR THE ASSESSEE ARGUED THAT AS PE R THE SECTION, AS SOON AS THE SEARCH IS CONDUCTED, THE LD . AO IS DUTY BOUND TO PROCEED IN ACCORDANCE WITH THE PROVIS IONS OF SECTION 153A OF THE ACT. NOTICE UNDER SECTION 153A SHALL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQ UIRING HIM TO FILE RETURNS FOR SIX ASSESSMENT YEARS IMMEDI ATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE ASSESSM ENT YEAR IN WHICH THE SEARCH TAKES PLACE. THEREAFTER, THE LD . AO HAS TO DETERMINE THE TOTAL INCOME OF THE ASSESSEE IN WHOSE CASE A SEARCH OR REQUISITION HAS BEEN INITIATED IN RESPECT OF EACH OF THE 6 ASSESSMENT YEARS. THE INITIATION OF PROCEEDIN GS UNDER SECTION 153A IS MANDATORY FOR ALL THE ASSESSMENT YE ARS FALLING WITHIN THE SIXYEARS IMMEDIATELY PRECEDING THE ASSES SMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEA RCH OR REQUISITION WAS MADE. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 30 12. THE AR FOR THE ASSESSEE ALSO SUBMITTED THAT THE LD. AO HAD NO OPTION BUT TO MAKE SEPARATE ASSESSMENTS FOR BOTH THE SEARCHES AS THE MATERIAL FOUND FOR EACH SEARCH WAS TO BE USED BY MAKING CONSEQUENT ASSESSMENTS UNDER SECTION 153A OF THE ACT. 13. TO SUPPORT HIS CONTENTION THE AR ALSO RELIED ON THE FOLLOWING JUDGEMENTS: A. CIT V. ANIL KUMAR BHATIA [2013] 352 ITR 493 (DELHI) UNDER THE PROVISIONS OF SECTION 153A, THE ASSESSIN G OFFICER IS BOUND TO ISSUE NOTICE TO THEASSESSEE TO FURNISH RETURNS FOR EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASS ESSMENT YEARSIMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELE VANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH ORREQUISIT ION WAS MADE. ANOTHER IMPORTANT FEATURE OF THIS SECTION IS THAT THE ASSESSING OFFICER ISEMPOWERED TO ASSESS OR REASSESS THE TOTAL INCOME OF THE AFORESAID YEARS. THIS IS A SIGNIFICANTDEPARTURE FROM THE EARLIER BLOCK ASSESSM ENT SCHEME IN WHICH THE BLOCK ASSESSMENT ROPED INONLY T HE UNDISCLOSED INCOME AND THE REGULAR ASSESSMENT PROCEEDINGS WERE PRESERVED, RESULTINGIN MULTIPLE ASSESSMENTS. UNDER SECTION 153A, HOWEVER, THE ASSES SING OFFICER HAS THE POWER TOASSESS OR REASSESS THE TOT AL INCOME OF THE SIX ASSESSMENT YEARS IN QUESTION IN SEPARATEASSESSMENT ORDERS.THIS MEANS THAT THERE CAN BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OFTHE SIX I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 31 ASSESSMENT YEARS, IN WHICH BOTH THE DISCLOSED AND T HE UNDISCLOSED INCOME WOULD BEBROUGHT TO TAX. [PARA 19 ] . WITH ALL THE STOPS HAVING BEEN PULLED OUT, THE A SSESSING OFFICER UNDER SECTION 153A HAS BEENENTRUSTED WITH T HE DUTY OF BRINGING TO TAX THE TOTAL INCOME OF AN ASSESSEEWHOSE CASE IS COVEREDBY SECTION 153A, BY EV EN MAKING REASSESSMENTS WITHOUT ANY FETTERS, IF NEED B E. [PARA 20] B. HONBLE HIGH COURT OF DELHI IN THE CASE OF KABUL CHAWLA 380 ITR 573 HAS HELD THAT: ONCE A SEARCH TAKES PLACE UNDER SECTION 132, NOTIC E UNDER SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IN WHICH THE SEARCH TAKES PLACE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT A Y IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORD ERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 32 INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND TH E ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH ASSESS MENT YEAR ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE ASSESSING OFFICER. C. HONBLE HIGH COURT OF DELHI IN THE CASE OF MADUGULAVENU266CTR 373 HAS HELD THAT: SECTION 153A IS COUCHED IN MANDATORY LANGUAGE WHIC H IMPLIES THAT ONCE THERE IS A SEARCH, THE ASSESSING OFFICER HAS NO OPTION BUT TO CALL UPON THE ASSESSEE TO FILE THE RETURNS OF THE INCOME FOR THE EARLIER SIX ASSESSMEN T YEARS. IT IS NOT MERELY THE UNDISCLOSED INCOME THAT WILL B E BROUGHT TO TAX IN SUCH ASSESSMENTS, BUT THE TOTAL INCOME OF THE ASSESSEE, INCLUDING BOTH THE INCOME EARLIER DISCLOS ED AND INCOME FOUND CONSEQUENT TO THE SEARCH, WOULD BE BRO UGHT TO TAX. D. CANARA HOUSING DEVELOPMENT CO. V DCIT [2014]49 TAXMANN.COM 98 (KARNATAKA HIGH COURT) .WITH ALL THE STOPS HAVING BEEN PULLED OUT, THE A SSESSING OFFICER UNDER SECTION 153A HAS BEENENTRUSTED WITH T HE DUTY OF BRINGING TO TAX THE TOTAL INCOME OF AN ASSESSEE WHOSE CASE IS COVEREDBY SECTION 153A, BY EVEN MAKING REASSESSMENTS WITHOUT ANY FETTERS, IF NEED BE.THE C ONDITION I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 33 PRECEDENT FOR APPLICATION OF SECTION 153A IS THERE SHOULD BE A SEARCH UNDERSECTION 132. INITIATION OF PROCEEDING S UNDER SECTION 153A IS NOT DEPENDENT ON ANY UNDISCLOSEDINC OME BEING UNEARTHED DURING SUCH SEARCH.THE PROVISO TO T HE AFORESAID SECTION MAKES IT CLEARTHE ASSESSING OFFIC ER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF E ACH ASSESSMENTYEAR FALLING WITHIN SUCH SIX ASSESSMENT Y EARS. IF ANY ASSESSMENT PROCEEDINGS ARE PENDING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN THE A FORESAID SUB-SECTION ON THE DATE OFINITIATION OF THE SEARCH UNDER SECTION 132, THE SAID PROCEEDING SHALL ABATE. IF SU CH PROCEEDINGSARE ALREADY CONCLUDED BY THE ASSESSING O FFICER BY INITIATION OF PROCEEDINGS UNDER SECTION 153A,THE LEGAL EFFECT IS THE ASSESSMENT GETS REOPENED. THE BLOCK ASSESSMENT ROPED IN ONLY THEUNDISCLOSED INCOME AND THE REGULAR ASSESSMENT PROCEEDINGS WERE PRESERVED, RESU LTING INMULTIPLE ASSESSMENTS. UNDER SECTION 153A, HOWEVER, THE ASSESSING OFFICE R HAS BEEN GIVEN THE POWER TO ASSESS ORREASSESS THE TOTA L INCOME OF THE SIX ASSESSMENT YEARS IN QUESTION IN SEPARATE ASSESSMENT ORDERS. THE ASSESSING OFFICER I S EMPOWERED TO REOPEN THOSE PROCEEDINGS AND REASSESS THE TOTALINCOME, TAKING NOTE OF THE UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH.HE HAS BEENENTRUSTED WI TH THE DUTY OF BRINGING TO TAX THE TOTAL INCOME OF AN ASSESSEE WHOSE CASE IS COVEREDBY SECTION 153A, BY EVEN MAKIN G REASSESSMENTS WITHOUT ANY FETTERS. T HIS MEANS THAT THERE I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 34 CAN BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIXASSESSMENT YEARS, IN WHICH BOTH THE DISCLOSED AN D THE UNDISCLOSED INCOME WOULD BEBROUGHT TO TAX. WHEN ONC E THE PROCEEDINGS ARE INITIATED UNDER SECTION 153A, THE LEGALEFFECT IS EVEN IN CASE WHERE THE ASSESSMENT OR DERS IS PASSED IT STANDS REOPENED. IN THE EYE OF LAW THERE IS NO ORDER OF ASSESSMENT. REOPEN MEANS TO DEAL WITH OR B EGIN WITH AGAIN.IT MEANS THE ASSESSING OFFICER SHALL ASS ESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS. ON THE CONTRARY, IT IS EXPRESSLY PROVIDED UNDER S ECTION 153A THE ASSESSING OFFICER SHALLASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS WHICH MEANS THE SAID TOTALINCOME INCLUDES INCOME WHICH WAS RETURNED IN THE EARLIER RETURN, THE INCOME WHICH WASUNEARTHED D URING SEARCH AND INCOME WHICH IS NOT THE SUBJECT-MATTER O F AFORESAID TWOINCOME. E. HONBLE HIGH COURT OF BOMBAY IN THE CASE OF JSW STEEL LTD.422ITR 71 HAS HELD THAT: THE ASSESSING OFFICER IS MANDATED TO ISSUE NOTICE TO SUCH PERSON TO FURNISH RETURN OF INCOME IN RESPECT OF EA CH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED OR REQUI SITION IS MADE. SUCH RETURNS OF INCOME SHALL BE TREATED TO BE RETURNS OF INCOME FURNISHED UNDER SECTION 139. ONCE RETURNS ARE FURNISHED, INCOME IS TO BE ASSESSED OR RE-ASSESSED FOR THE I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 35 SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE.THU S, ONCE SECTION 153-A(1) IS INVOKED, ASSESSMENT FOR 6 ASSES SMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR IN WHICH SEARCH IS CONDUCTED OR REQUISITION IS MADE BECOMES OPEN TO ASSESSMENT OR RE-ASSESSMENT. TWO ASPECTS ARE CRUCIAL HERE. ONE IS USE OF THE EXPRESSION 'NOTWITHSTANDING ' IN SUB- SECTION (1); AND SECONDLY THAT RETURNS OF INCOME FI LED PURSUANT TO NOTICE UNDER SECTION 153-A (1)(A) WOULD BE CONSTRUED TO BE RETURNS UNDER SECTION 139. THE USE OF NON OBSTANTE CLAUSE IN SUB-SECTION (1) OF SECTION 153-A I.E., USE OF THE EXPRESSION 'NOTWITHSTANDING' IS INDICATIVE O F THE LEGISLATIVE INTENT THAT PROVISIONS OF SECTION 153-A (1) WOULD HAVE OVERRIDING EFFECT OVER THE PROVISIONS CONTAINE D IN SECTIONS 139, 147, 148, 149, 151 AND 153. F. PCIT V SAUMYA CONSTRUCTION (P.) LTD. 2016] 387 ITR 529 (GUJARAT) 15. ON A PLAIN READING OF SECTION 153A OF THE ACT, IT IS EVIDENT THAT THE TRIGGER POINT FOR EXERCISEOF POWER S THEREUNDER IS A SEARCH UNDER SECTION 132 OR A REQUI SITION UNDER SECTION 132A OF THEACT. ONCE A SEARCH OR REQU ISITION IS MADE, A MANDATE IS CAST UPON THE ASSESSING OFFIC ER TO ISSUENOTICE UNDER SECTION 153A OF THE ACT TO THE PE RSON, REQUIRING HIM TO FURNISH THE RETURN OFINCOME IN RES PECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 36 IMMEDIATELYPRECEDING THE ASSESSMENT YEAR RELEVANT T O THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTEDOR REQUISITION IS MADE AND ASSESS OR REASSESS THE SAME . SINCE THE ASSESSMENT UNDER SECTION153A OF THE ACT IS LINK ED WITH SEARCH AND REQUISITION UNDER SECTIONS 132 AND 132A OF THE ACT, ITIS EVIDENT THAT THE OBJECT OF THE SECTION IS TO BRING TO TAX THE UNDISCLOSED INCOME WHICH IS FOUNDDURING THE COURSE OF OR PURSUANT TO THE SEARCH OR REQUISITION. HOWEVER, INSTEAD OF THE EARLIERREGIME OF BLOCK ASSESSMENT WH EREBY, IT WAS ONLY THE UNDISCLOSED INCOME OF THE BLOCK PER IODTHAT WAS ASSESSED, SECTION 153A OF THE ACT SEEKS TO ASSE SSEE THE TOTAL INCOME FOR THE ASSESSMENTYEAR, WHICH IS C LEAR FROM THE FIRST PROVISO THERETO WHICH PROVIDES THAT THE ASSESSING OFFICER SHALLASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN S UCH SIXASSESSMENT YEARS. G. JAI STEEL (INDIA), JODHPUR V ACIT[2013] 259 CTR 281 (RAJASTHAN) A PLAIN READING OF THE PROVISION OF SECTION 153A WOULD REVEAL THAT IF A SEARCH OR REQUISITION IS INITIATED AFTER 31-5- 2003, THE ASSESSING OFFICER IS UNDER AN OBLIGATION TO ISSUE NOTICE TO SUCH PERSON, WHO HAS BEEN SUBJECTED TO SEARCH/REQUISITION TO FURNISH THE RETURN OF INCOME OF SIX YEARS IMMEDIATELY PRECEDING THE YEAR OF SEARCH. THE ASSESSING OFFICER IS THEN REQUIRED TO ASSESS OR REA SSESS TOTAL INCOME OF THE SAID SIX YEARS AND, OUT OF THE SIX YEARS, I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 37 IF ANY ASSESSMENT OR REASSESSMENT IS PENDING ON THE DATE OF INITIATION OF THE SEARCH, THE SAME WOULD ABATE I .E., PENDING PROCEEDINGS QUA THE SAID ASSESSMENT YEAR SH ALL NOT PROCEED THEREAFTER AND THE ASSESSMENT HAS TO BE MADE UNDER SECTION 153(1)(B) READ WITH THE FIRST PROVISO THEREUNDER. [PARA 15] BESIDES THIS, HE ALSO RELIED UPON VARIOUS JUDGMENTS OF THE TRIBUNAL. 14. THE SECOND LIMB OF ARGUMENT WAS THAT ASSESSME NT IN PURSUANCE OF FIRST SEARCH DID NOT ABATE DUE TO THE SUBSEQUENT SEARCH. THE LD. AR FOR THE ASSESSEE STATED THAT AS SOON AS A SEARCH TAKES PLACE, SECTION 153A COMES INTO PLAY AND A NOTI CE FOR 6 YEARS HAS TO BE NECESSARILY ISSUED AND ASSESSMENT/ RE-ASS ESSMENT FOR THOSE YEARS HAS TO BE MADE. THIS PROCESS HAS TO BE FOLLOWED TO CONSUMMATE AND PUT AT REST THE PROCEEDINGS CONSEQUE NT TO SEARCH WHICH HAVE RESULTED INTO ASSESSMENT. THERE IS NO SC OPE FOR NOT ISSUING NOTICES AND NOT MAKING ASSESSMENT ONCE A SE ARCH HAS TAKEN PLACE. THE LD. AR FOR THE ASSESSEE CONTENDED THAT T HE LD. AO CANNOT TAKE SHELTER UNDER A SUBSEQUENT SEARCH TO HOLD THAT THE FIRST SEARCH RELATED ASSESSMENTS HAVE ABATED AND THEREFORE NO NO TICE AND CONSEQUENT ASSESSMENTS HAVE TO BE MADE PURSUANT TO THE FIRST SEARCH. THIS INTERPRETATION WILL DEFEAT THE INTENT AND PURPOSE OF THE LEGISLATURE WHICH MANDATED THAT AFTER EVERY SEARCH, SIX PRECEDING YEARS ASSESSMENT BE MADE AND THE MATERIAL FOUND IN T HE SAID SEARCH BE USED FOR DETERMINING UNDISCLOSED INCOME, IF ANY. THE PROCESS OF ABATEMENT IS ONLY TO TACKLE PENDING ASSESSMENTS CON SEQUENT TO I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 38 RETURNS FILED UNDER SECTION 139(1) ON THE DATE OF S EARCH, IN RESPECT OF WHICH NOTICES UNDER SECTION 143(2) HAVE BEEN ISSUED OR THE TIME PERIOD FOR ISSUING THE SAID NOTICE HAS NOT EXPIRED. IT DOES NOT APPLY TO PENDING SEARCH RELATED ASSESSMENTS SO AS TO ABAT E THEM OR PREVENT THEM FROM BEING COMPLETED. HENCE, ONCE A SE ARCH HAS TAKEN PLACE, THE ASSESSING OFFICER WILL SIMPLY MAKE ASSESS MENTS UNDER SECTION 153A OF THE ACT AND NOT WAIT FOR ANOTHER SE ARCH TO TAKE PLACE SO THAT THE ASSESSMENT RELATING TO THE FIRST SEARCH DO NOT HAVE TO BE MADE. THE LD. AR STATED THAT THERE IS ANOTHER REASO N WHY THE SEARCH RELATED ASSESSMENT CANNOT ABATE. IT IS A SETTLED LA W THAT SEARCH RELATED MATERIAL CAN BE USED FOR ASSESSMENT CONSEQU ENT TO THAT SEARCH ALONE. THE SAID MATERIAL CANNOT BE USED IN T HE 2 ND , 3 RD OR 4 TH SEARCH AND SO THAT MAY TAKE PLACE IN THE FUTURE. HEN CE, EVEN SEARCH MATERIAL HAS TO MEET ITS NEMESIS IN THE CONSEQUENT ASSESSMENT PROCEEDINGS RELATING TO THAT SEARCH ALONE. THEREFOR E, THE SECOND PROVISO OF SECTION 153A ABATES ONLY THE PENDING ASSE SSMENTS WHICH SHALL BE MERGED WITH THE ASSESSMENT UNDER SECTION 1 53A OF THE ACT AS A RESULT OF SEARCH. 15. THE AR FOR THE ASSESSEE FURTHER STATED THAT NO RETURN WAS FILED CONSEQUENT TO THE FIRST SEARCH AND HENCE PROCEEDING S ARE NOT PENDING.HE THEN ELUCIDATED THE MEANING OF THE WORD PENDING USED IN PROVISO TO SECTION 153A OF THE ACT. THE MEANING OF THE WORD PENDING CAN BE INFERRED FROM SECTION 245A OF THE AC T.AS PER EXPLANATION (IIIA) TO SECTION 245A OF THE ACTA PRO CEEDING FOR ASSESSMENT OR REASSESSMENT FOR ANY OF THE ASSESSMENT YEARS, REFERRED TO IN CLAUSE (B) OF SUB-SECTION (1) OF SEC TION 153A IN CASE OF A I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 39 PERSON REFERRED TO IN SECTION 153A OR SECTION 153C, SHALL BE DEEMED TO HAVE COMMENCED ON THE DATE OF ISSUE OF NOTICE IN ITIATING SUCH PROCEEDING AND CONCLUDED ON THE DATE ON WHICH THE A SSESSMENT IS MADE. 16. THE AR THEN STATED THAT THE NOTICES OF ASSES SMENTS IN PURSUANCE OF THE FIRST SEARCH WERE ISSUED ONLY AFTER THE DATE OF SECOND SEARCH. THEREFORE IN THE VERY FIRST PLACE, ON THE DATE OF SECOND SEARCH, NO RETURN WAS FILED IN PURSUANCETO THE NOTI CE UNDER SECTION 153A RELATING TO THE FIRST SEARCH AND THEREFORE NO PROCEEDINGS WERE PENDING IN RESPECT OF THE FIRST SEARCH ON THE DATE OF SECOND SEARCH. HENCE IF NO PROCEEDINGS RELATING TO THE FIRST SEARC H WERE PENDING, THERE CAN BE NO ABATEMENT OF THE SAME. 17. THE AR FUTHER STATED THAT THE WORDS ASSESS OR REASSESS USED IN SECTION HAVE BEEN DEFINED IN THE CASE LAWS AND F ROM THE LANGUAGE, IT IS VERY CLEAR THAT THE WORD PENDING IS USED IN C ONTEXT OF ORIGINAL ASSESSMENTS AND ORIGINAL RETURNS AND NOT IN REGARD OF ASSESSMENTS UNDER SECTION 153A. SOME OF THE DECISIONS RELIED UP ON FOR THE PROPOSITIONS ARE BRIEFLY REFERRED HEREINUNDER: A. KABUL CHAWLA DELHI HC 380 ITR 573 IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSM ENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECT ION 153A IS RELATABLE TO ABATED PROCEEDINGS (I.E., THOSE PENDIN G ON THE DATE OF I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 40 SEARCH) AND THE WORD 'REASSESS' TO COMPLETE ASSESSM ENT PROCEEDINGS. B. DCIT V RAJLAXMI DENIM [2019] 71 ITR(T) 173 (JAIPUR - TRIB.) THE TERM ASSESS IN SECTION 153A IS USED IN RESPEC T OF THE ASSESSMENTS WHICH ARE PENDING AS ONTHE DATE OF SEAR CH AND GOT ABATED WHEREAS THE TERM REASSESS IS USED IN RESPECT OF THOSEASSESSMENT YEARS WHERE THE ASSESSMENT WAS ALREA DY COMPLETED AND WAS NOT PENDING AS ON THEDATE OF SEAR CH, THUS, ANY PROCEEDINGS OF ASSESSMENT OR REASSESSMENT FALLING WITHIN SIX YEARSPRIOR TO THE SEARCH OR ACQUISITION STOOD ABATED, AND TOTAL INCOME OF THE ASSESSEE WAS REQUIRED TOBE DETERMINED UNDER SECTION 153A AND NOT UNDER THE PROCEEDINGS UN DER SECTION 143(3) WHICHALREADY STOOD ABATED BY VIRTUE OF SEARCH . [PARA 6] C. ACIT V. PRATIBHA INDUSTRIES LTD. [2013] 23 ITR(T) 7 66 (MUMBAI) THUS IT IS A CASE OF VALID NOTICE UNDER SECTION 15 3A, WITH NO UNDISCLOSED INCOME TO BE CLUBBED WITH INCOME ORIGIN ALLY ASSESSED AND FINALIZED. D. SCOPE (P.) LTD. V DCIT [2013] 142 ITD 515 (MUMBAI) ONCE THE ASSESSING OFFICER HAS ISSUED NOTICE UNDER SECTION 153A INVITING THE RETURN OFINCOME, HE IS DUTY BOUND TO PR OCEED WITH THE REASSESSMENT PROCEEDINGS AND APART FROMTHE INCO ME ALREADY ASSESSED IN THE ORIGINAL ASSESSMENT COMPLETE D UNDER SECTION 143(3),HE CAN ASSESS THE TOTAL INCOME OF TH E ASSESSEE BY MAKING THE ADDITION ON ACCOUNT OFUNDISCLOSED INCO ME OR THE INCOME ESCAPED ASSESSMENT. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 41 E. CANARA HOUSING DEVELOPMENT CO. V DCIT [2014]49 TAXMANN.COM 98 (KARNATAKA HIGH COURT) IF ANY ASSESSMENT PROCEEDINGS ARE PENDING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN THE AFORESAID S UB-SECTION ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTI ON 132, THE SAID PROCEEDING SHALL ABATE. 18. THE NEXT ARGUMENT OF THE AR FOR THE ASSESSEE WAS THAT THE PROVISO TO THE SECTION CANNOT OVERRIDE ITS MAIN SEC TION WHICH PROVIDES FOR THE MANDATORY ASSESSMENT UNDER SECTION 153A OF THE ACT WHERE SEARCH HAS CONDUCTED. SECTION 153A IS A S PECIAL CODE OF ASSESSMENTS RELATING TO SEARCH AND SEIZURE WHICH OV ERRIDES THE OTHER ASSESSMENTS RELATED PROVISIONS OF SECTION 139, 147, 148, 149, 151 AND 153 OF THE ACT.HE FURTHER ARGUED THAT THE PROVI SO TO THE SECTION 153A CANNOT ABATE THE PROCEEDINGS RELATING TO SECTI ON 153A RENDERING THE SECTION INEFFECTIVE AND OTIOSE WHEN A SEARCH TAKES PLACE. THE PENDING ASSESSMENTS ON THE DATE OF SEARC H HAVE TO BE SEEN INTHE CONTEXT WHAT WAS PENDING IN TERMS OF ORI GINAL ASSESSMENTS I.E UNDER SECTION 143(2) OR 147 OF THE ACT.IT IS A CARDINAL RULE OF INTERPRETATION, THAT A PROVISO TO A PARTICULAR PROVISION OF A STATUTE ONLY EMBRACES THE FIELD THAT IS COVERED BY THE MAIN PROVISION TO WHICH IT HAS BEEN ENACTED AS A PR OVISO AND TO NO OTHER. A PROVISO IS SUBSIDIARY TO THE MAIN SECTION A ND IT MUST BE CONSTRUED IN THE LIGHT OF THE SECTION ITSELF. THE O BJECT OF THE PROVISO, AS IT HAS SO OFTEN BEEN STATED, IS TO CARVE OUT FRO M THE MAIN SECTION A CLASS OR CATEGORY TO WHICH THE MAIN SECTION DOES NOT APPLY. BUT IN CARVING OUT FROM THE MAIN SECTION ONE MUST ALWAYS B EAR IN MIND I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 42 WHAT IS THE CLASS REFERRED TO IN THE MAIN SECTION A ND MUST ALSO REMEMBER THAT THE CARVING OUT INTENDED BY THE PROVIS O IS FROM THE PARTICULAR CLASS DEALT WITH BY THE MAIN SECTION AND FROM NO OTHER CLASS.HENCE, THE PROVISO CANNOT RENDER THE ENTIRE M AIN SECTION INOPERATIVE. 19. THE AR OF THE ASSESSEE ALSO STATED THAT IN C ONSTRUING A PROVISO OF A SECTION, A SITUATION GIVING RISE TO ANOMALY AND ABSURDITY MUST BE AVOIDED.THE PROVISO TO THE SECTION HAS TO BE REA D SO AS NOT TO RESTRICT THE BENEFICIAL EFFECT OF THE MEANING OF TH E SECTION.IT HAS TO BE BORNE IN MIND THAT WHEN THE PROVISO IS CONFLICTING WITH THE MAIN SECTION IT SHOULD BE SO INTERPRETED THAT, IF POSSIB LE, EFFECT SHOULD BE GIVEN TO BOTH.THIS IS THE ESSENCE OF THE RULE OF 'H ARMONIOUS CONSTRUCTION'. AN INTERPRETATION WHICH REDUCES THE PROVISIONS OF THE SECTION AS A 'DEAD LETTER' OR USELESS LUMBER' IS N OT HARMONIOUS CONSTRUCTION. THE PROVISO IN THE ACT UNDER CONSIDER ATION IS A LIMITING PROVISION TO THE MAIN PROVISION AND NOT A SUBSTANTI VE PROVISION IN ITSELF.THE GENERAL RULE ABOUT THE INTERPRETATION OF A PROVISO IS THAT PROVISO IS NOT TO BE TAKEN ABSOLUTELY IN ITS STRICT LITERAL SENSE BUT IS OF NECESSITY LIMITED TO THE AMBITION OF THE SECTION WHI CH IT QUALIFIES.HENCE, THE PROVISO CANNOT BE READ TO MEAN THAT NO ASSESSMENT CONSEQUENT TO FIRST SEARCH WILL BE MADE IF IT IS PENDING ON THE DATE OF THE SECOND SEARCH. THIS WILL DEFEAT THE VERY INTENT AND PURPOSE OF THE SECTION WHICH MANDATES ASSESSMENT FO R 6 PRECEDING ASSESSMENT YEARS CONSEQUENT TO A SEARCH.THE PROVISO TO SECTION 153A CAN ONLY CARVE OUT THE EXCEPTION WHICH IS NOT T HE INTENTION OF THE MAIN ENACTMENT BUT CANNOT NULLIFY ITS MAIN SECTI ON I.E, THE I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 43 SECOND PROVISO CANNOT OVERRIDE SECTION 153A AND ABA TE THE MANDATORY ASSESSMENTS THAT HAVE TO BE MADE UNDER SEC TION 153A OF THE ACT. THEREFORE IF SECTION 153A PROVIDES FOR THE MANDATORY ASSESSMENT WHERE SEARCH HAS BEEN CONDUCTED, ITS PRO VISO CANNOT INVALIDATE WHAT THE MAIN SECTION DIRECTS BY ABATING THE ASSESSMENTS WHICH ARE PENDING UNDER SECTION 153 A OF THE ACT. THUS, THE PROVISO SHOULD BE READ IN SUCH A WAY WHICH SHOULD NOT NULLIFY THE EFFECT OF ITS MAIN SECTION B UT SHOULD BE READ ONLY TO ABATE THE ASSESSMENTS WHICH WERE ORIGI NALLY PENDING UNDER ANY OTHER SECTION OF THE ACT.THUS THE PROVISO TO THE MAIN SECTION CANNOT OVERRIDE THE SECTION AND ABATE THE MANDATORY ASSESSMENT PROCEEDINGS INITIATED UNDER SE CTION 153A OF THE ACT.SECTION 153A DOES NOT ABATE SECTION 153A ASSESSMENT. IF THAT INTERPRETATION IS ACCEPTED THEN WHAT CAN EVEN FOLLOW IS THAT TWO ASSESSMENTS CAN GET ABATED FOR THE SAME ASSESSMENT YEAR IF LETS SAYS TWO SEARCHES TAK ES PLACE WITHIN A MONTH WHICH IS AN ABSURD AND ILLOGICAL FAL LOUT OF THE INTERPRETATION MADE BY THE LD. AO. 19. THE AR THEN INTERPRETED THE SECTIONS AND THE WORD ASSESSMENT. HE STATED THAT THERE ARE THREE TYPES OF ASSESSMENTS: THE MARGINAL NOTE OF SECTION 143 IS ASSESSMENT THE MARGINAL NOTE OF SECTION 147 IS INCOME ESCAPIN G ASSESSMENT THE MARGINAL NOTE OF SECTION 153A IS ASSESSMENT IN CASE OF SEARCH OR REQUISITION I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 44 THE PROVISO TO SECTION 153A TALKS ABOUT ASSESSMENT AND REASSESSMENT AND NOT ASSESSMENT IN CASE OF SEARCH OR REQUISITION. 20. HE FURTHER CONTENDED THAT THE WORD SHALL I S USED IN SECTION 153A FOR BOTH, ISSUANCE OF NOTICE CONSEQUEN T TO SEARCH AND MANDATORY ASSESSMENTS THEREAFTER.IN FACT , THE WORD HAS BEEN USED AGAIN IN THE FIRST PROVISO EXPRE SSING A STRONG ASSERTION THAT ASSESSMENTS ARE TO BE MANDATO RILY MADE FOR EACH OF THE 6 YEARS ONCE A SEARCH TAKES PL ACE. THE WORD SHALL IS ALSO USED IN SECTION 143 WHICH MEANS THAT ASSESSMENTS UNDER SECTION 143(3) ARE MANDATORY AFTE R ISSUANCE OF NOTICE UNDER SECTION 143(2). HOWEVER, I N THE SECTION 147 INCOME ESCAPING ASSESSMENT THE WORD U SED IS MAY WHICH MEANS THAT THE AO MAY OR MAY NOT PASS A N ORDER. THEREFORE, WHENEVER A SEARCH TAKES PLACE UND ER SECTION 153A, ASSESSMENT FOR THE SIX PRECEDING YEARS, HAS T O TAKE PLACE. FROM A PLAIN READING OF THE SECOND PROVISO, IT CAN BE SEEN THAT THE SECOND PROVISO DOES NOT TALK OF SITUA TION WHERE ALL 6 YEARS ARE PENDING ON THE DATE OF SEARCH. IT T AKES INTO ACCOUNT WHERE SOME YEARS ARE PENDING AND SOME ARE COMPLETED. THEREFORE, THE SECOND PROVISO DOES NOT A PPLY TO A SITUATION WHERE THE FIRST SEARCH CAN BE TREATED TO BE PENDING IN TOTO IN RESPECT OF ALL 6 AYS. THE LD. AOS REASO N PERHAPS IS THAT ON THE DATE OF SECOND SEARCH, ALL 6 YEARS WERE DEEMED TO BE PENDING DUE TO THE FIRST SEARCH AND HENCE ARE TO ABATE. THE THIRD PROVISO ALSO GIVES POWER TO CENTRAL GOVERNMEN T TO MAKE I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 45 ASSESSMENT IN TERMS OF COMPLETED ASSESSMENTS AND NO T PENDING ASSESSMENTS. THIS SECTION ALSO TALKS OF PEN DING AND COMPLETED ASSESSMENT IN THE 6 YEAR PERIOD PRIOR TO SEARCH. IT DOES NOT EVEN VISUALIZE A SITUATION WHERE ALL 6 YEA RS ARE PENDING. 21. THE AR STATED THAT ON THE DATE OF SECOND SEAR CH, NO PROCEEDINGS CONSEQUENT TO FIRST SEARCH WERE PENDING AS NO NOTICE UNDER SECTION 153A HAD BEEN ISSUED AND THERE FORE, NO RETURN CONSEQUENT TO FIRST SEARCH WAS FILED. HENCE, ON THE DATE OF SECOND SEARCH, IF NO PROCEEDINGS RELATED TO FIRST SEARCH COULD BE SAID TO BE PENDING, QUITE OBVIOUSLY THEY C ANNOT BE ABATED. THEREFORE, IF THE SECOND SEARCH TOOK PLACE WITHIN LET SAY 3 MONTHS, ONLY THE ASSESSMENT UNDER SECTION 143 AND REASSESSMENT UNDER SECTION 147 SHALL ABATE.ASSESSME NTS UNDER SECTION 153A I.E, ASSESSMENT IN CASE OF SEAR CH OR REQUISITION SHALL NOT ABATE BY OPERATION OF SECTIO N 153A ITSELF. IN THE YEAR OF SEARCH, NO NOTICE HAS TO BE ISSUED U NDER SECTION 153A CONSEQUENT TO A SEARCH. HOWEVER IN THE 6 PRECE DING YEARS, NOTICE UNDER 153A HAS TO BE MANDATORILY ISSU ED. ON THE DATE OF THE SECOND SEARCH, SINCE NO NOTICE WAS ISSUED FOR ANY OF THE YEARS RELATING TO FIRST SEARCH AND THERE FORE NO RETURN WAS FILED, YEAR OF SEARCH WAS SAME AS THESE 6 PRECEEDING YEARS WHICH MEANS 6 YEARS BECOME YEAR OF SEARCH. EVERY YEAR IS EQUAL TO YEAR OF SEARCH. THIS INTERPR ETATION WOULD LEAD TO ABSURD RESULTS AND HENCE DESERVES TO BE ESCHEWED. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 46 22. THE NEXT LIMB OF THE ARGUMENT WAS THAT MATERI AL FOUND DURING THE FIRST SEARCH WAS NOT INCRIMINATING AND D OES NOT EVEN PERTAIN TO THE ASSESSMENT YEAR IN WHICH ADDITI ON IS MADE ANDEVEN OTHERWISE MOST OF THE DOCUMENTS RELIED UPON FOR MAKING ASSESSMENT PERTAINED TO THOSE FOUND DURI NG POST SEARCH. THE AR PLACED A CHART IN HIS SUBMISSIONS WH ICH IS REPRODUCED BELOW:- DESCRIPTION OF MATERIAL FOUND FOUND IN WHICH SEARCH PAGE NO. OF ASSESSMENT ORDER A1 - A14 COMPUTATION, INTIMATION U/S 143(1), BANK STATEMENT AND SCHEDULES OF BALANCE SHEET OF SHARE APPLICANTS A15-A25 CHEQUE BOOKS OF SHARE APPLICANTS ON WHICH AUTHORISED SIGNATORY HAS SIGNED ON BLANK CHEQUES FOUND IN FIRST SEARCH 2 - 4, 30 REPRODUCED AT PAGE 2-4 23. THE LD. AR FOR ASSESSEE STATED THAT MATERIAL FOUND DURING THE COURSE OF FIRST SEARCH CANNOT BE USED IN MAKING ASSESSMENTS IN PURSUANCE TO THE SECOND SEARCH. IF T HE DEPARTMENT HAS NOT MADE AN ASSESSMENT IN PURSUANCE TO THE FIRST SEARCH, MATERIAL FOUND DURING THE COURSE OF T HE SAID FIRST SEARCH CANNOT BE USED IN RESPECT OF THE ASSESSMENT YEARS RELATING TO AND IN CONSEQUENCE OF THE SECOND SEAR CH. ACCORDING HIM, MATERIAL FOUND DURING SEARCH DOES NO T EVEN PERTAIN TO THE IMPUGNED ASSESSMENT YEAR AND INFACT IN THE DESCRIPTION GIVEN BY THE LD. AO HIMSELF, AT PAGE 2 OF THE ORDER, ONLY A21 PERTAINS TO CHEQUE BOOK OF M/S AMAR JYOTI I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 47 VANIJYA PVT LTD IN RESPECT OF WHICH ADDITION HAS BE EN MADE AND REST ALL THE ANNEXURES PERTAIN TO CHEQUE BOOKS OF OTHER COMPANIES IN RESPECT OF WHICH NO ADDITION HAS BEEN MADE AND NO SHARE CAPITAL HAS BEEN RECEIVED FROM SUCH CO MPANIES DURING THE IMPUGNED YEAR. THE CHEQUE BOOK IS BLANK WITH SIGNATURES OF AUTHORISED SIGNATORIES AND QUITE OBVI OUSLY DOES NOT PERTAIN TO ANY SPECIFIC ASSESSMENT YEAR AND THE REFORE CANNOT BE USED FOR MAKING THE ADDITION IN AY 2010-1 1. THE SEIZED MATERIAL AVAILABLE WITH THE LD. AO HAS NO NE XUS WITH THE ASSESSMENTS IN WHICH ADDITION HAS BEEN MADE AND IS WHOLLY IRRELEVANT FOR THE PURPOSE OF ASSESSING THE INCOME OF THE ASSESSEE FOR THE YEAR IN QUESTION. ADMITTEDLY, THERE IS NO INCRIMINATING MATERIAL IN THE YEARS FOR WHICH ADDIT ION HAS BEEN MADE.THE LD. AR FURTHER STATED THAT THE DETAIL SHOWN BY THE LD. AO AT PAGE 3-4 OF THE ORDER SHOWS REFERENCE TO 5 ANNEXURES (A2, A4, A6, A8, A12) THAT ARE TRIAL BALA NCES, LEDGERS, JOURNALS, BANK BOOKS, CASH BOOK, BANK STAT EMENT, NOTICES, ASSESSMENT ORDER, ITR, COMPUTATION OF INCO ME, INTIMATION UNDER SECTION 143(1), AUDIT REPORT, BALA NCE SHEET, DIRECTORS REPORT, ACCOUNTING POLICIES, ANNUAL RETUR N, CERTIFICATE OF INCORPORATION, FORM 16A, FORM 5 AND FORM 66 PERTAINING TO SHARE CAPITAL, RETURN ON ALLOTMENT OF SHARES, F- 32 FILED WITH ROC, PAPERS RELATING TO CORRECTION OF PAN, DIVIDEND PAYMENT ADVICE, PORTFOLIO STATEMENT, COPY OF RESOLUTION, MEMORANDUM AND ARTICLES, MINUTES, STATE MENT OF HOLDINGS, MASTER REPORTS, ETC. PERTAINING TO INVEST OR COMPANIES IN RESPECT OF WHICH THE ADDITIONS HAVE BE EN I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 48 MADE.THE DESCRIPTION AT PAGE 3-4 OF THE ORDER ALSO MENTIONS THE ASSESSMENT YEAR TO WHICH THE DOCUMENT RELATES. ONLY THE FOLLOWING DOCUMENTS PERTAIN TO THE AY 2010-11. 24. HE THEN PLACED A CHART IN HIS SUBMISSIONS WHICH IS REPRODUCED BELOW: ANNEXURE PAGE NO. DESCRIPTION WHETHER INCRIMINATING A-6 37 COMPUTATION OF INCOME OF M/S AMARJYOTIVANIJAPVT. LTD. FOR AY 2010-11 NOT MANIFESTED A-6 69 STATEMENT OF BANK ACCOUNT IN SBI KAPASHERA OF AMARJYOTI VANIJYA PVT LTD. DATED 9-3-2010 NOT MANIFESTED A-6 74-77 INTIMATION U/S 143(1) OF THE IT ACT OF AMARJYOTI VANIJYA PVT LTD. FOR THE AY 2010-11 NOT MANIFESTED A-8 11 TO 12 COPY OF SCHEDULE OF BALANCE SHEET AS ON 31.3.2010 OF AMARJYOTI VANIJYA PVT LTD. NOT MANIFESTED 25. THE LD. AR RELIED UPON THE FOLLOWING CASE LA WS WHEREIN IT HAS BEEN HELD THAT SEIZED MATERIAL MUST HAVE A N EXUS TO THE ASSESSMENT YEAR IN WHICH ADDITION IS BEING MADE : A. CIT V. KABUL CHAWLA [2016] 380 ITR 573 (DELHI) ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITIONS SHOULD 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 ASSESSING OFFICER WHICH CAN BE RELATED TO THE EVIDENCE I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 49 FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEI ZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UN DER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' B. PRINCIPAL COMMISSIONER OF INCOME-TAX, CENTRAL -2, N EW DELHI V.MEETAGUTGUTIA [2017] 395 ITR 526 (DELHI) THE LEGAL POSITION, AS WILL BE DISCUSSED SHORTLY, IS T HAT THERE CAN BE NO ADDITION MADE FOR A PARTICULAR ASSESSMENT YEAR W ITHOUT THERE BEING AN INCRIMINATING MATERIAL QUA THAT ASSESSMENT YEAR W HICH WOULD JUSTIFY SUCH AN ADDITIONTHE COURT IS UNABLE TO ACCEP T THE SUBMISSIONS OF REVENUE THAT THERE WAS INCRIMINATING MATERIAL OTH ER THAN WHAT HAS BEEN DISCUSSED IN THE ORDERS OF THE ASSESSING OFFICE R, COMMISSIONER (APPEALS) AND THE TRIBUNAL FOR THE ASSESSMENT YEARS I N QUESTION[PARAS 38 & 39] IT WAS ALSO NOTED BY THE ASSESSING OFFICER - AND THIS HAS NOT BEEN DISPUTED BY THE ASSESSEE - THAT A SUM OF RS. 1.10 CR ORES WAS OFFERED BY THE ASSESSEE AS INCOME IN THE YEAR OF SEARCH. AL THOUGH IT WAS REPEATEDLY URGED BY THAT THE DOCUMENTS SEIZED AND F URNISHED BY PERTAINED TO THE ASSESSMENT YEARS OTHER THAN THE YE AR OF SEARCH, CLEARLY, NO SUCH QUESTION WAS PUT TO. IT SHOULD HAVE B EEN EASY FOR THE INVESTIGATING OFFICER TO ASK 'PA' OF THE PARTICULAR A SSESSMENT YEAR TO WHICH THE DOCUMENT RELATED TO. HOWEVER, THAT WAS NOT DONE.THEREFORE, ONLY THE STATEMENT MAKES A DISCLOSURE ABOUT THE EAR LIER UNDISCLOSED INCOME AND STATING THAT THE OFFER OF SUCH INCOME WA S BEING MADE 'TO BUY PEACE OF MIND'. THEREFORE, THE STATEMENT RECORD ED UNDER SECTION 133A CAN HARDLY BE SAID TO BE INCRIMINATING MATERIA L. [PARA 44] I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 50 IN THE CIRCUMSTANCES, IT IS NOT POSSIBLE TO ACCEPT THE PLEA OF THE REVENUE NOW MADE THAT THE SO-CALLED ADDITIONAL INCRIM INATING MATERIAL QUA EACH OF THE ASSESSMENT YEARS COULD NOT BE VERIF IED AND, THEREFORE, NOT DISCUSSED BY THE ASSESSING OFFICER BECAUSE THE ASSESSEE DID NOT PRODUCE ITS BOOKS OF ACCOUNT. IT APPEARS THAT THE R EVENUE DID HAVE ACCESS TO THE ENTIRE BOOKS OF ACCOUNT OF THE ASSESS EE WHICH WERE ALSO SHOWN TO HAVE ALSO BEEN MAINTAINED IN SOFT FORM ON THE COMPUTERS OF THE ASSESSEE WHICH WERE ALREADY SEIZED BY THE REVEN UE DURING SEARCH OPERATIONS. [PARA 46] IN THE REMAND PROCEEDINGS, THE ASSESSING OFFICER CO ULD NOT DISPUTE THE ABOVE INFORMATION. AS ALREADY NOTICED, THE ASSESSEE HAD BROUGHT WITH HERSELF ALL THE FRANCHISEE AGREEMENTS TO SUBSTANTIATE SUBMISSION MADE IN HER AFFIDAVIT. IT IS FOR THIS REASON THAT IN THE COMMISSIONER (APPEALS) FOR ASSESSMENT YEAR 2004-05, IT HELD: 'NO EVIDENCE TO DISPUTE THE AFFIRMATIONS IN THE AFFIDAVIT HAVE BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS'. THE ES TIMATED ADDITIONS WERE THEREFORE HELD TO BE UNSUSTAINABLE IN LAW AS THE Y WERE BASED ON A MISCONCEPTION AS TO THE FACTUAL POSITION WITH REGA RD TO THE NUMBER OF OUTLETS IN EXISTENCE DURING THE RELEVANT PREVIOUS YE AR AS WELL AS ON THE SUSPICION THAT THE ASSESSEE MUST HAVE EARNED UNDISCLO SED INCOME DURING THE YEAR UNDER APPEAL. IT HAS BEEN CATEGORICALL Y FOUND BY THE COMMISSIONER (APPEALS) ON FACTS THAT NO INCRIMINATI NG MATERIAL IN RELATION TO THE ASSESSMENT YEARS IN QUESTION I.E., 2 001-02 TO 2003-04 HAD BEEN BROUGHT ON RECORD WHICH COULD SUPPORT SUCH PRESUMPTION. [PARA 48] AS RIGHTLY POINTED OUT BY ASSESSEE THAT NOTHING WA S BROUGHT ON RECORD BY THE ASSESSING OFFICER TO SHOW THAT THERE WAS FAILURE ON PART I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 51 OF THE ASSESSEE TO MAKE A DISCLOSURE AS REGARDS THE FRANCHISEE INCOME IN ANY OF THE EARLIER YEARS. THE INCRIMINATING MATE RIAL HAD TO BE IN RELATION TO ANY INCOME THAT WAS NOT DISCLOSED IN TH E EARLIER RETURNS.THERE WAS NO SUCH INCRIMINATING MATERIAL TO SHOW THAT THERE WAS A FAILURE BY THE ASSESSEE TO DISCLOSE ANY FRANC HISEE INCOME FOR THOSE EARLIER YEARS. THE DISCLOSURE BY THE ASSESSEE O N ACCOUNT OF 'UNDISCLOSED FRANCHISEE COMMISSION' WAS RELEVANT ON LY FOR THE YEAR OF SEARCH AND NOT FOR THE EARLIER YEARS. [PARAS 49 & 5 0] SECTION 153A IS INDEED AN EXTREMELY POTENT POWER WHICH ENABLES THE REVENUE TO RE-OPEN AT LEAST SIX YEARS OF ASSESSMENTS EARLIER TO THE YEAR OF SEARCH. IT IS NOT TO BE EXERCISED LIGHTLY. IT IS ONLY IF DURING THE COURSE OF SEARCH UNDER SECTION 132 INCRIMINATING MATERIAL J USTIFYING THE RE- OPENING OF THE ASSESSMENTS FOR SIX PREVIOUS YEARS IS FOUND THAT THE INVOCATION OF SECTION 153A QUA EACH OF THE ASSESSMEN T YEARS WOULD BE JUSTIFIED. [PARAS 56 & 57] THE COURT IS OF THE VIEW THAT THE TRIBUNAL WAS JUSTIF IED IN HOLDING THAT THE INVOCATION OF SECTION 153A BY THE REVENUE FOR TH E ASSESSMENT YEARS 2000-01 TO 2003-04 WAS WITHOUT ANY LEGAL BASIS AS THERE WAS NO INCRIMINATING MATERIAL QUA EACH OF THOSE ASSESSME NT YEARS. [PARA 71] C. PRINCIPAL COMMISSIONER OF INCOME-TAX, DELHI-2 V. BE ST INFRASTRUCTURE (INDIA) (P.) LTD. [2017] 397 ITR 82 (DELHI) TURNING TO THE FACTS OF THE INSTANT CASE, IT REQUIRE S TO BE NOTED THAT THE STATEMENTS OF ONE OF THE DIRECTORS OF COMPANY, MADE IT PLAIN THAT THE SURRENDER MADE BY HIM WAS ONLY FOR THE ASSESSMENT Y EAR IN QUESTION AND NOT FOR EACH OF THE SIX ASSESSMENT YEARS PRECEDI NG THE YEAR OF I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 52 SEARCH. THEREFORE, IT COULD NOT BE SAID TO BE INCRIM INATING MATERIAL QUA EACH OF THE PRECEDING ASSESSMENT YEARS. [PARA 36] FOR ALL THE AFOREMENTIONED REASONS, THE TRIBUNAL WAS F ULLY JUSTIFIED IN CONCLUDING THAT THE ASSUMPTION OF JURISDICTION UNDER SECTION 153A QUA THE ASSESSEE WAS NOT JUSTIFIED IN LAW. [PARA 39] D. CIT V. LACHMAN DASS BHATIA [2012] 26 TAXMANN.COM 16 7 (DELHI) IT HAS ALSO BEEN RECORDED BY THE COMMISSIONER (APPE ALS), WHOSE DECISION HAS BEEN CONFIRMED BY THE TRIBUNAL, THAT THE DOCUMENTS UPON WHICH THE ASSESSING OFFICER PLACED RELIANCE RELATE TO A SUBSEQUENT PERIOD AND NOT TO THE YEARS UNDER CONSIDERATION. TH EY RELATE TO THE PERIOD FROM 1-11-2005 TO 18-11-2005. IT HAS THUS BEE N CONCURRENTLY FOUND BY THE COMMISSIONER (APPEALS) AND THE TRIBUNAL THAT EVEN IF AN ESTIMATE OF THE GROSS PROFITS HAS TO BE MADE, IT HA S TO BE BASED ON VALID MATERIAL WHICH WAS ABSENT IN THE PRESENT CASE AND THAT THERE WAS NO JUSTIFICATION FOR MAKING AN ADDITION FOR LOW GR OSS PROFITS ON PURE GUESSWORK. IN SUCH CIRCUMSTANCES, THE TRIBUNAL WAS RIGHT IN DEL ETING THE ADDITIONS MADE TO THE GROSS PROFIT DECLARED BY THE ASSESSEE.. [PARA 7] 26. WITH RESPECT TO THE SIGNED CHEQUE BOOKS FOUND DURING THE COURSE OF SEARCH, THE AR STATED AS UNDER: ' SIGNED CHEQUE BOOKS, PORTFOLIO STATEMENT, ITR, COMP UTATION OF INCOME AND AUDITED FINANCIALS OF PROMOTER COMPANIES FOUND AT ASSESSEES PREMISES ARE NOT INCRIMINATING. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 53 A) THE MATERIAL SEIZED BY THE DEPARTMENT RELATING TO T HE AY IN QUESTION IS THE COMPUTATION, INTIMATION U/S 143(1), BANK STATEMENT AND SCHEDULES OF BALANCE SHEET OF SHARE A PPLICANTS. ALL THESE STATUTORY DOCUMENTS ARE PUBLIC DOCUMENTS AND AVAILABLE IN PUBLIC DOMAIN AND ALREADY AVAILABLE WI TH THE DEPARTMENT. NONE OF THE DOCUMENTS SEIZED FROM THE P REMISE OF THE ASSESSEE IS OF SUCH NATURE WHICH IS NOT AVAILAB LE WITH THE DEPARTMENT. NO NEW INFORMATION WAS COMING OUT FROM THE SEIZED DOCUMENTS. B) SIGNED BLANK CHEQUE BOOKS, COMPUTATION, INTIMATION U/S 143(1), BANK STATEMENT AND SCHEDULES OF BALANCE SHE ET OF PROMOTER COMPANIES FOUND IN THE PREMISES OF THE SEA RCHED PERSON BELONGING TO SHAREHOLDER OF SEARCHED PERSON BY NO STRETCH OF IMAGINATION CONSTITUTE INCRIMINATING MAT ERIAL. THE DIRECTORS OF THE INVESTOR COMPANIES WERE THE EMPLOY EES OF THE ASSESSEE AND THE INVESTORS ARE THE PROMOTER GROUP C OMPANIES OF THE ASSESSEE. THEREFORE PRESENCE OF CHEQUE BOOKS AT THE PREMISES OF ASSESSEE WHERE DIRECTORS WERE SITTING I S NOT ILLEGAL AND CANNOT BE USED AGAINST THE ASSESSEE. C) THE ASSESSEE HAS ALREADY SUBMITTED BEFORE THE LD. A O THAT THESE DOCUMENTS BELONG TO THE PROMOTER GROUP COMPAN IES AND WERE LYING WITH THE ASSESSEE FOR FILING STATUTORY R ETURNS, PAYING TAXES, FEES AND STATUTORY DUES, FOR GENERAL ROUTINE WORK OF ROC, INCOME TAX AND RETURN FILING, ETC. THE ASSESSE E ALSO FILED NAME, ADDRESS OF REGISTERED OFFICE, PAN AND NAME OF DIRECTORS I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 54 OF PROMOTER GROUP COMPANIES AND STATED THAT ALL DIR ECTORS OF PROMOTER GROUP COMPANIES WERE UNDER EMPLOYMENT WITH ASSESSEE COMPANY REFER PAGE 244, 245, 247-251 OF PB K. 27. IN SUPPORT, THE LD. AR FOR ASSESSEE RELIED UP ON THE FOLLOWING CASE LAWS TO STRENGTHEN HIS ARGUMENTS THA T SEIZED DOCUMENTS MUST BE INCRIMINATING AND MUST RELATE TO THE IMPUGNED ASSESSMENT YEAR. A. M/S GOEL INTERNATIONAL PVT.VSDCIT, ITA NO. 1453/DEL./2013 M/S. GALAXY RICE INDUSTRIES PVT. LTD V DCIT ITA NO. 1452/DEL./2013 FURTHERMORE, THREE BLANK DOCUMENTS WERE FOUND WITH RESPECT TO THESE COMPANIES. THESE ARE BLANK SHARE TRANSFER FORMS, SPECIAL POWER OF ATTORNEY SIGNED BY THE AUTHORIZED SIGNATORIES AND BLANK RECEIPTS AGAINST THE SHARES. ALL THESE TH REE DOCUMENTS ARE ADMITTEDLY NON-EXECUTED AND DO NOT SH OW ANY TRANSACTIONS. HAD THERE BEEN ANY TRANSACTION RECORD ED ON BLANK SHARE TRANSFER FORMS, RECEIPTS REGARDING ANY MONEY OR TRANSFER IN FAVOUR OF ANY PERSON, IT WOULD HAVE MAD E THEM SUSPICIOUS. THE ENTRIES IN THOSE FORMS ARE NOT AT A LL MADE, BUT ARE MERELY BLANK.THEASSESSEE HAS GIVEN DETAILED EXP LANATION WHY THEY WERE FOUND AT THE PLACE OF ASSESSEE. THE A SSESSING OFFICER HAS NOT EXAMINED THE SIGNATORIES OF THESE D OCUMENTS TO ARRIVE AT THE TRUE NATURE OF THE TRANSACTIONS.THE A SSESSING OFFICER IS JUST MAKING AN ASSUMPTION THAT THESE ARE THE DOCUMENTS WHICH WOULD HAVE BEEN USED BY THE ASSESSE E FOR I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 55 TRANSFERRING THOSE SHARES IN THE NAME OF THE PROMOT ERS OR THEIR GROUP CONCERNS AT A PRICE WHICH IS FAR LESS THAN TH E PRICE OF SHARES ISSUED. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT EITHER SUCH SHARES ARE SUBSEQUENTLY TRANSFERRED AT LOWER PRICE, OR SUCH SHARES STOOD DISPOSED OF BY THE INVESTOR CO MPANIES. IN VIEW OF THIS, THE CASE OF THE REVENUE IS MERELY BAS ED ON ASSUMPTION AND SURMISES. 10. ACCORDING TO THE PROVISIONS OF SECTION 68 OF TH E ACT, ANY SUM FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, IF THE NATURE AND SOURCE O F SUCH SUM IS NOT EXPLAINED BY THE ASSESSEE TO THE SATISFACTIO N OF THE ASSESSING OFFICER THEN SUCH SUM CAN BE ADDED BY THE ASSESSING OFFICER TO THE INCOME OF THE ASSESSEE. TH EREFORE, PRIMA FACIE, IT PROVIDES THAT IF THE ASSESSEE HAS E XPLAINED THE NATURE AND SOURCE OF SUCH INCOME OR SUCH CREDIT BEF ORE THE ASSESSING OFFICER AND THE ASSESSING OFFICER DOES NO T CARRY OUT ADEQUATE VERIFICATION, OR EVEN AFTER VERIFICATION, NOTHING INCRIMINATING FEATURE TURNS OUT, THEN IT DOES NOT T HROW THE ONUS BACK ON THE ASSESSEE. B. M/S. GEE ISPATPVT. LTD., NEW DELHI VS ACIT4256- 4259/DEL/2014 AND M/S GEE ISPATPVT. LTD., V ACIT IT A NO. 5424,5425,5475,5476/DEL/2014 DURING THE COURSE OF SEARCH AT THE ASSESSEE'S PREMI SES BLANK SINGED SHARE TRANSFER FORMS OF SOME OF THE DESCRIPT COMPANIES, WHO WERE SHOWN AS INVESTORS IN THE SHARE CAPITAL OF THE ASSESSEE COMPANY WERE FOUND AND SEIZED AND THAT THE ACTION I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 56 U/S 132 OF THE ACT REVEALED THAT SHARES HELD BY NON DESCRIPT COMPANIES HAD BEEN TRANSFERRED TO THE DIRECTORS AND THEIR FAMILY MEMBERS AT MUCH LOWER PRICE. 24. IN THE PRESENT CASE, SINCE NO INCRIMINATING MA TERIAL WAS FOUND, THEREFORE, THE ADDITION MADE BY THE AO U/S 1 53A OF THE ACT WAS NOT JUSTIFIED. 26. A SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE JU RISDICTIONA L HIGH COURT IN THE CASE OF PR. CIT VS MEETAGUTGUTIA PROP. M/S FERNS 'N' PETALS (2017) 395 ITR 526 (SUPRA) WHEREIN IT HAS BEEN HELD AS UNDER: 'ANY AND EVERY DOCUMENT CANNOT BE AND IS NOT AN INC RIMINATING DOCUMENT. NO ADDITION CAN BE MADE FOR A PARTICULAR ASSESSMENT YEAR WITHOUT THERE BEING AN INCRIMINATIN G MATERIAL QUA THAT ASSESSMENT YEAR WHICH WOULD JUSTIFY SUCH A N ADDITION.' C. HONBLE HIGH COURT OF DELHI IN THE CASE OF RRJ SECU RITIES (380 ITR 612) HAS HELD THAT: FACTS: SEARCH WAS CONDUCTED ON 20.10.2008 CERTAIN DOCUME NTS BELONGING TO THE ASSESSEE COMPANY AND A COMPUTER HA RD DISK CONTAINING SOFT COPIES OF WORKING PAPERS, BALANCE SHEETS AND DATA FOR INCOME TAX FILINGS, WERE SEIZED DURING THE SEARCH - PHOTOCOPY OF A SINGLE SHEET OF 'RECORD SLIP' OF A CHEQUE BOOK PERTAINING TO A BANK ACCOUNT NO. 124002000001410 WITH CENTURION BANK OF PUNJAB LIMIT ED, TILAK NAGAR BRANCH, NEW DELHI. THE SAID RECORD SLIP - WHICH FORMED I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 57 A PART OF THE CHEQUE BOOK CONTAINED THREE ENTRIES PERTAINING TO CHEQUES ISSUED ON 11TH AUGUST, 2008, 27TH AUGUST, 2008 AND 10TH DECEMBER, 2008 RESPECTIVELY - HELD: IT IS NOT DISPUTED THAT THE SAID HARD DISK ALSO DID NOT CONTAIN ANY INCRIMINATING MATERIAL AS THE DATA ON THE HARD DISC ONLY SUPPORTED THE RETURN FILED BY THE ASSESSEE. INSOFAR AS THE DOCUMENTS REFERRED TO AS PAGES 126 T O 179 OF ANNEXURE A-34 IS CONCERNED, ADMITTEDLY, THE SAME ONLY CONSISTED OF A SINGLE PAGE OF THE RECORD SLIP OF A CHEQUE BOOK AND OTHER PAGES WERE BLANK. THE RECORD SLIP ONLY CONTAINED THREE ENTRIES REFLECTING ISSUE OF THREE C HEQUES ON 11TH AUGUST, 2008, 27TH AUGUST, 2008 AND 10TH DECEM BER, 2008 RESPECTIVELY. THUS, IT IS APPARENT THAT THE SA ID DOCUMENT HAD NO RELEVANCE FOR THE ASSESSMENT YEARS IN QUESTI ON I.E.AYS 2003-04 TO 2008-09. IN THE CIRCUMSTANCES, THE ISSUE TO BE ADDRESSED IS WHETHER PROCEEDINGS UNDER SECTION 153C OF THE ACT COULD BE INITIATED ON THE BASIS OF THIS DOCUMEN T. THE RECORD SLIP BELONGS TO THE ASSESSEE AND, THEREF ORE, THE ACTION OF THE AO OF THE SEARCHED PERSONS RECORDING THAT THE SAME BELONGS TO THE ASSESSEE CANNOT BE FAULTED. HOW EVER, THE QUESTION THEN ARISES IS WHETHER THE AO OF THE ASSES SEE WAS JUSTIFIED IN TAKING FURTHER STEPS FOR REASSESSING T HE INCOME OF THE ASSESSEE IN RESPECT OF THE ASSESSMENT YEARS FOR WHICH THE ASSESSMENTS WERE CONCLUDED AND IN RESPECT OF WHICH THE SEIZED DOCUMENT HAD NO BEARING. IN OUR VIEW, THE SA ME WOULD BE CLEARLY IMPERMISSIBLE AS THE SEIZED MATERIAL NOW AVAILABLE I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 58 WITH THE AO, ADMITTEDLY, HAD NO NEXUS WITH THOSE AS SESSMENTS AND WAS WHOLLY IRRELEVANT FOR THE PURPOSE OF ASSESS ING THE INCOME OF THE ASSESSEE FOR THE YEARS IN QUESTION. M ERELY BECAUSE A VALUABLE ARTICLE OR DOCUMENT BELONGING TO AN ASSESSEE IS SEIZED FROM THE POSSESSION OF A PERSON SEARCHED UNDER SECTION 132 OF THE ACT, DOES NOT MEAN THAT TH E CONCLUDED ASSESSMENTS OF THE ASSESSEE ARE NECESSARILY TO BE R E-OPENED UNDER SECTION 153C OF THE ACT. IN OUR VIEW, THE CON CLUDED ASSESSMENTS CANNOT BE INTERFERED WITH MECHANICALLY AND SOLELY FOR THE REASON THAT A DOCUMENT BELONGING TO THE ASS ESSEE, WHICH HAS NO BEARING ON THE ASSESSMENTS OF THE ASSE SSEE FOR THE YEARS PRECEDING THE SEARCH, WAS SEIZED FROM THE POSSESSION OF THE SEARCHED PERSONS. AS INDICATED ABOVE, IN THE PRESENT CASE, THE DOCUME NTS SEIZED HAD NO RELEVANCE OR BEARING ON THE INCOME OF THE AS SESSEE FOR THE RELEVANT ASSESSMENT YEARS AND COULD NOT POSSIBL Y REFLECT ANY UNDISCLOSED INCOME. THIS BEING THE UNDISPUTED POSITION, NO INVESTIGATION WAS NECESSARY. D. HONBLE HIGH COURT OF DELHI IN THE CASE OF INDEX SECURITIES PVT. LTD. (86 TAXMANN.COM 84) HELD: AS REGARDS THE SECOND JURISDICTIONAL REQUIREMENT VIZ., THAT THE SEIZED DOCUMENTS MUST BE INCRIMINATING AND MUST RELATE TO THE AYS WHOSE ASSESSMENTS ARE SOUGHT TO BE REOPENED, THE DECISION OF THE SUPREME COURT IN SINHGAD TECHNICAL EDUCATION SOCIETY (SUPRA) SETTLES THE ISSUE AND HOLDS THIS TO BE AN ESSENTIAL REQUIREMENT. THE DECISIONS OF THIS I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 59 COURT IN RRJ SECURITIES AND ARN INFRASTRUCTURE INDIA LTD. V. ASSTT. CIT [2017] 394 ITR 569/81 TAXMANN.COM 260 (DELHI) ALSO HOLD THAT IN ORDER TO JUSTIFY THE ASSUMPTION OF JURISDICTION UNDER SEC TION 153 C OF THE ACT THE DOCUMENTS SEIZED MUST BE INCRIMINATING AND MUST RELATE TO EACH OF THE AYS WHOSE ASSESSMENTS ARE SOUGHT TO BE REOPENED. SINCE THE SATISFACTION NOTE FORMS THE BASIS FOR INITIATING THE PROCEEDINGS UNDER SECTION 153 C OF THE ACT, IT IS FUTILE FOR MRMANCHAND A TO CONTEND THAT THIS REQUIREMENT NEED NOT BE MET FOR INITIATION OF TH E PROCEEDINGS BUT ONLY DURING THE SUBSEQUENT ASSESSMENT. IN THE PRESENT CASE, THE TWO SEIZED DOCUMENTS REFER RED TO IN THE SATISFACTION NOTE IN THE CASE OF EACH ASSESSEE ARE T HE TRIAL BALANCE AND BALANCE SHEET FOR A PERIOD OF FIVE MONTHS IN 2010. I N THE FIRST PLACE, THEY DO NOT RELATE TO THE AYS FOR WHICH THE ASSESSM ENTS WERE REOPENED IN THE CASE OF BOTH ASSESSEES. SECONDLY, THEY CANNOT BE SAID TO BE INCRIMINATING. EVEN FOR THE AY TO WHICH THEY RELATE D, I.E. AY 2011-12, THE AOFINALISED THE ASSESSMENT AT THE RETURNED INCO ME QUA EACH ASSESSEE WITHOUT MAKING ANY ADDITIONS ON THE BASIS OF THOSE DOCUMENTS. CONSEQUENTLY EVEN THE SECOND ESSENTIAL REQUIREMENT F OR ASSUMPTION OF JURISDICTION UNDER SECTION 153 C OF TH E ACT WAS NOT MET IN THE CASE OF THE TWO ASSESSEES. E. CIT V. BLUE LINES [2014] 50 TAXMANN.COM 425 (KARNATAKA) THE REASON GIVEN BY THE TRIBUNAL IS, THOUGH THERE WAS A SEIZURE AND THERE WERE MATERIALS SEIZED IN THE SEAR CH, THE SAID MATERIALS DID NOT REFLECT THE NAME OF THE ASSESSEE. MOST OF THE I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 60 CHEQUES WERE STALE AND SOME OTHER CHEQUES WERE BLAN K AND SOME OTHER CHEQUES WERE IN THE NAME OF THE THIRD PA RTIES. 3. IN THE FACTS OF THESE CASES, WE ARE OF THE VIEW THAT THE FINDING RECORDED BY THE TRIBUNAL ON THIS ASPECT CAN NOT BE FOUND FAULT WITH AND THEREFORE, WE ARE NOT GOING INTO THE LEGAL ISSUE REGARDING THE SCOPE OF PRESUMPTION, WHICH ARISES UN DER SECTION 147, READ WITH SECTION 143(3) AND IN FACT IN OTHER THREE APPEALS ALSO, SIMILAR FINDING WAS RECORDED BY THE TRIBUNAL. F. M/S. BRAHMAPUTRA FINLEASE (P) LTD. VERSUS DCIT, CENTRAL CIRCLE -17, NEW DELHI [ NO.- ITA NO. 3332/DEL/2017 59 . SEARCH PROCEEDING UNDER SECTION 132 OF THE ACT AT T HE PREMISES OF THE ASSESSEE, A SURVEY UNDER SECTION 13 3A OF THE ACT WAS ALSO CARRIED OUT AT THE PREMISES OF SH. M.L. AGGARWAL, CHARTERED ACCOUNTANT LOCATED AT N-5, AZADPUR, COMMERCIAL COMPLEX NEW DELHI AND DOCUMENTS INCLUDING BLANK SIGNED SHARE TRANSFER FORM, BLANK SIGNED MONEY RECEIPTS FOR TRANSFER OF SHARES, BLANK SIGNED POWER OF ATTORNEY, MEMORANDUM AND ARTICLES O F ASSOCIATION WITH SOME ROC PAPERS AND COPY OF BANK STATEMENTS ETC. IN RELATION TO ONE OF THE SHARE APPLICANTS, I.E., EDWARD SUPPLY P. LTD. WERE IMPOUN DED FROM HIS PREMISES. 4.9 NOW REGARDING THE SECOND CONDITION, THE LD. CI T(DR) HAS MENTIONED THAT DOCUMENTS IMPOUNDED FROM THE PREMISE S OF SH. M.L. AGGARWAL, CHARTERED ACCOUNTANT, DURING THE COU RSE OF I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 61 SURVEY PROCEEDING ARE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. WE DO NOT AGREE WITH THE CONTENTI ON OF THE LD. CIT (DR) THAT THESE MATERIALS LIKE BLANK SHARES TRA NSFER FORMS ETC COULD BE TERMED AS FOUND DURING THE COURSE OF SEARC H AT THE PREMISES OF THE ASSESSEE. THE SURVEY PROCEEDINGS CARRIED OUT AT THE PREMISES OF THE CHARTERED ACCOUNTANTS, ML AGGAR WAL ARE SEPARATE FROM THE SEARCH PROCEEDINGS CARRIED OUT AT THE PREMISES OF THE ASSESSEE. THERE IS NO CONCEPT OF GR OUP OF ASSESSEE IN INCOME-TAX ASSESSMENTS. EACH ASSESSEE I S TREATED SEPARATELY. ...FURTHER, THE ASSESSING OFFICER IN TH E IMPUGNED ORDER HAS NOT BROUGHT ON RECORD WHAT WAS INCRIMINAT ING IN THE SAID MATERIAL IMPOUNDED FROM THE PREMISES OF SH. M. L. AGRAWAL. IN VIEW OF OUR DISCUSSION, WE REJECT THE ABOVE CONT ENTIONS OF THE LD. CIT(DR) THAT ANY INCRIMINATING MATERIAL QUA THE ADDITION WAS FOUND DURING THE COURSE OF THE SEARCH ACTION UNDER SECTION 132 OF THE ACT. 4.11 WE FIND THAT THE ITEM NO. (I) CONTAINS RECORDI NG IN THE NAME OF SHRI SHYAMTREXIM&FINCOM PVT. LTD. THE ASSESSIN G OFFICER HAS NOWHERE BROUGHT ON RECORD HOW THE SAID RECORDIN G ON THE PAGE RELATES TO THE ADDITION IN QUESTION OF SHARE C APITAL. THE LD. CIT(DR) ALSO COULD NOT EXPLAIN AS HOW THE SAID RECO RDING WAS RELATED TO THE ADDITION IN QUESTION MADE IN RESPECT OF ALLEGED UNEXPLAINED SHARE CAPITAL. SHE ONLY STATED THAT SAI D RECORDING ON THE PAGE REFLECTED ACCOMMODATION ENTRY OBTAINED BY THE BRAHMAPUTRA GROUP AND BUT NO DOCUMENTARY EVIDENCE REGARDING THE CLAIM THAT THE DOCUMENT WAS INCRIMINA TING QUA THE ADDITION, ARE FILED. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 62 4.20 IN VIEW OF THE ABOVE FINDING, BOTH THE CONDITI ONS AS COMPLETED ASSESSMENT AND NO INCRIMINATING MATERIAL, HAVE BEEN SATISFIED IN THE CASE, THUS,NO ADDITION COULD HAVE BEEN MADE IN THE INSTANT ASSESSMENT YEAR IN VIEW OF THE FINDING OF THE HONBLE DELHI HIGH COURT IN THE CASE OFKABULCHA WLA (SUPRA). 28. HERE IN THIS CASE SINCE NO INCRIMINATING MATE RIAL WAS FOUND DURING THE COURSE OF SEARCH AND ASSESSMENT FOR ASSE SSMENT YEAR 2010-11 WAS COMPLETED AND GOT FINALLY CONCLUDED BEFO RE THE DATE OF SEARCH, THEREFORE ADDITION CANNOT BE MADE IN CASE O F COMPLETED ASSESSMENTS IN ABSENCE OF INCRIMINATING MATERIAL FO UND IN THAT SEARCH. NOW IT IS WELL SETTLED PROPOSITION THAT IN THE CASE OF COMPLETED ASSESSMENT ADDITION HAS TO BE RESTRICTED THE MATERIAL FOUND DURING THE COURSE OF SEARCH IN VIEW OF THE AF ORESAID JUDGMENTS CITED SUPRA, LIKE CIT VS. KABUL CHAWLA, REPORTED IN (2016) 380 ITR 573(DELHI), PCIT VS. MEETA GUTGUTIA AS REPORTED IN (2017) 395 ITR 526 (DELHI), PCIT VS. KURELE PAPER MILLS P. LTD. (2016) 380 ITR 571 (DELHI) AND FINALLY JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT V. SINGHAD TECHNICAL EDUCATION SOCIETY (2017) 397 ITR 344 (SC) . FURTHER, HONBLE DELHI HIGH COURT IN THE CASE OF PCIT VS. SMC POWER GENERATION LTD. (DELHI HC) IN ITA NO.406/2019 HAS OBSERVED AS UNDER: 7. AT THE OUTSET IT IS REQUIRED TO BE NOTICED THAT THE REVENUES APPEAL AGAINST THE DECISION OF THIS COURT IN KABUL CHAWLA (SUPRA) HAS BEEN DISMISSED BY THE SUPREME COURT ON ACCOUN T OF THE LOW TAX EFFECT. HOWEVER, LEARNED COUNSEL FO R THE REVENUE STATES THAT THERE ARE OTHER APPEALS OF THE REVENUE PENDING IN I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 63 THE SUPREME COURT QUESTIONING THE CORRECTNESS OF TH E SAID DECISION. NEVERTHELESS THE FACT REMAINS THAT THERE IS NO STAY OF THE OPERATION OF THE DECISION OF THIS COURT IN KABUL CHAWLA (SUPRA) AND IT CONTINUES TO HOLD THE FIELD. 8. LEARNED COUNSEL FOR THE REVENUE SUBMITTED THAT T HE OBSERVATIONS OF THE ITAT IN THE IMPUGNED ORDER THAT THERE WAS NO INCRIMINATING MATERIAL IN RESPECT OF THE SHARE CAPITAL AND THEREFORE THE ADDITION WAS UNJUSTIFIED, WAS NOT WAR RANTED. ACCORDING TO HER THIS WAS BEYOND THE JUDGMENT OF TH IS COURT IN KABUL CHAWLA (SUPRA). 9. THE FACT REMAINS THAT THE REVENUE ITSELF IS NOT DISPUTING THAT IN RESPECT OF THE SHARE CAPITAL NO INCRIMINATING DO CUMENTS WERE FOUND IN THE SEARCH PROCEEDINGS. THE COURTS ATTENT ION HAS BEEN DRAWN TO THE DECISION OF THE SUPREME COURT IN CIT V. SINGHAD TECHNICAL EDUCATION SOCIETY (2017) 397 ITR 344 (SC) WHERE IN THE CONTEXT OF SECTION 153C OF THE ACT IT WAS HELD THAT THE INCRIMINATING MATERIAL WHICH WAS SEIZED HA D TO PERTAIN TO THE AY IN QUESTION. IT IS FURTHER HELD THAT DOCU MENTS SEIZED HAD TO ESTABLISH A CO-RELATION DOCUMENTS WISE WITH THE ASSESSMENT YEARS FOR WHICH THE ADDITION WAS SOUGHT TO BE MADE. 10. THE REQUIREMENT THAT THE INCRIMINATING MATERIAL TO HAVE THE CO-RELATION TO THE PARTICULAR ADDITION SOUGHT TO BE MADE IS A LOGIC THAT WILL HOLD GOOD NOT ONLY FOR SECTION 153 C OF THE ACT BUT IN RELATION TO SECTION 153A OF THE ACT AS WELL. CONSEQUENTLY, THIS COURT DOES NOT FIND ANY ERROR HAVING BEEN COMM ITTED BY THE ITAT IN ACCEPTING THE PLEA OF THE ASSESSEE THAT THERE IS NO I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 64 INCRIMINATING DOCUMENT WHICH WAS SEIZED IN THE COUR SE OF SEARCH RELATING TO THE ADDITION SOUGHT TO BE MADE O N ACCOUNT OF THE SHARE CAPITAL. THEREFORE, THE JURISDICTIONAL RE QUIREMENT OF SECTION 153 A OF THE ACT WAS NOT SATISFIED. 28. THE NEXT LIMB OF ARGUMENT OF LD. AR FOR ASSES SEE WAS THAT THE ASSESSING OFFICER HAS RELIED UPON THE STATEMENTS OF THE FOLLOWING PERSONS FOR MAKING THE ADDITIONS; VED PRAKASH AGGARWAL (CHAIRMAN OF M/S PRAKASH INDUSTRIES), PAWAN GULERIA AND SUDHIR KUMAR BALI (DIRECTORS OF GROUP COMPANIES), S HIV SHANKAR BANKA AND BABU LAL BANKA (ALLEGED ENTRY OPERATORS), ASHOK AGGARWAL (MEDIATOR), MATBAR SINGH RAWAT (OLD DIRECTOR OF ASSOCIATE COMPANIES). 29. IN RESPECT OF THE STATEMENTS OF THE ABOVE ME NTIONED PERSONS, THE ARGUMENTS OF THE LD. AR FOR ASSESSEE ARE AS UND ER: A) STATEMENT OF VED PRAKASH AGGARWAL (CHAIRMAN OF ASSESSEE) RECORDED ON 31.10.12 REFERRED TO AT PAGE2, 10, 11, 13, 14, 16, 26, 27, 30, 31, 35 OF THE ORD ER AND ALSO AT PAGE 131-157 , 143, 149 OF THE PAPERBOOK WHEREIN HE STATED THAT CASH GENERATED BY ASSESSEE WAS HANDED OVER TO ENTRY OPERATOR WHO DEPO SITED THE CASH IN PAPER COMPANIES AND ROUTED TO ASSESSEE AS INVESTMENTS AND ALSO ADMITTED TO HAVE RECEIVED BROK ERAGE. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 65 VED PRAKASH AGGARWAL RETRACTED HIS STATEMENT IMMEDI ATELY BEFORE THE ADDITIONAL DIRECTOR OF INCOME-TAX VIDE L ETTER DATED 2.11.2012 AND 21.3.2013 ATTACHED AT PAGE 158- 162 AND 163-164 OF THE PAPERBOOK STATING THAT THE ADMISSION WAS BASED ON COERCION AND FORCE. THE SAME WAS ALSO STAT ED BEFORE THE LD. AO AT PAGE 12, 15, 16 OF THE ORDER AND PAGE 302- 303, 305 OF PBK AND THE LD. CIT AT PAGE 530, 531, 5 48, 612,615,616,618,619,628 WITHOUT PREJUDICE, MR. VP AGGARWAL IN HIS STATEMENT HAS STATED THAT THE AMOUNTS ARE TAXABLE IN THE YEAR IN WHICH THEY WERE INTRODUCED IN THE GROUP COMPANIES AND THE REFORE AS PER ANNEXURE A OF HIS STATEMENT, NO AMOUNT IS TA XABLE IN IMPUGNED AY (REFER PAGE 147-148 OF PAPERBOOK). THE LD. AO HAS RELIED ON HIS STATEMENT HOWEVER, THE LD. AO STATES THAT NO EVIDENCE IS GIVEN THAT THE MONEY IS NOT TAXABLE IN THE IMPUGNED AY. THE LD. AO THEREFORE ON LY RELIES ON PART OF THE STATEMENT AND DOES NOT BELIEVE OTHER PART OF IT TO BE TRUE. B) STATEMENT OF NEW DIRECTORS- PAWAN GULERIA AND SUDHIR KUMAR BALI REFERRED TO AT PAGE 11, 19-22, 27 , 30 OF THE ORDER AND ALSO AT PAGE 178-182 AND 183-18 7 OF THE PAPERBOOK STATEMENT OF PAWAN GULERIA (NEW DIRECTOR OF ANKIT NIVESH MANAGEMENT, AMARJYOTIVANIJA PVT LTD AND LOKPRIYA TRADING) ON 31.10.12 WHEREIN HE HAS STATED I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 66 THAT HE WAS COMMERCIAL MANAGER OF THE ASSESSEE COMP ANY AND DID NOT KNOW ANYTHING ABOUT THE ASSESSEE COMPAN Y AND WAS A DIRECTOR FOR NAME SAKE ONLY. STATEMENT OF SUDHIR KUMAR BALI (NEW DIRECTOR OF ANKITNIVESH MANAGEMENT AND LOKPRIYA TRADING) ON 30.10.12 WHEREIN HE STATED THAT HE WAS AGM (IT) OF ASSESSEE COMPANY AND DID NOT KNOW ANYTHING ABOUT TH E ASSESSEE COMPANY AND WAS A DIRECTOR FOR NAME SAKE O NLY. STATEMENTS AT BEST STATE THAT THE DIRECTORS WERE IG NORANT BUT THERE IS NOTHING STATED SUCH THAT CONCLUSION BE DRA WN THAT SHARE CAPITAL HAS BEEN RECEIVED THROUGH ACCOMMODATI ON ENTRY. C) STATEMENT OF SHIV SHANKAR BANKA AND BABU LAL BANKA REFERRED TO AT PAGE 11,18,19, 27, 29,30 OF TH E ORDER AND ALSO AT PAGE 176-177 AND 192-197 OF THE PAPERBOOK STATEMENT OF SHIV SHANKAR BANKA (ENTRY OPERATOR) ON 31.10.12 WHEREIN HE STATED THAT HE PROVIDED ACCOMMODATION ENTRY TO ASSESSEES GROUP COMPANIES THROUGH MR. ASHOK AGGARWAL AND HE CONTROLLED THE COMPANIES M/S SARVOTTAMCOMMODEAL PVT. LTD. AND M/ S SANSKRITI TIE UP PVT LTD. AND THEY WERE PAPER COMPA NIES SUBSEQUENTLY TAKEN OVER BY ASSESSEE COMPANY. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 67 STATEMENT OF BABU LAL BANKA ON 31.10.12 WHEREIN HE STATED THAT FUNDS PROVIDED BY ASSESSEE WERE CONVERT ED INTO ACCOMMODATION ENTRIES THROUGH PAPER COMPANIES THE STATEMENT OF SHIV SHANKAR BANKA WAS RETRACTED IMMEDIATELY BY HIM BEFORE THE ADDITIONAL DIRECTOR O F INCOME- TAX VIDE LETTER DATED 5.11.2012 ATTACHED AT PAGE 176-177 STATING THAT THE ADMISSION WAS FORCIBLY TAKEN. THE SAME WAS ALSO STATED BEFORE THE LD. AO AT PAGE 303 OF PBK AND ALSO REFERRED TO AT PAGE 12 OF THE ORDER AND BEFORE THE HONBLE CIT(A) AT PAGE 532,546,616 OF PBK D) AFFIDAVIT OF ASHOK AGGARWAL (MEDIATOR) ON 24.01.2013 REFERRED TO AT PAGE 11,15 OF THE ORDER IN WHICH HE STATEDTHAT HE INTRODUCED SH. PL GUPTA OF A SSESSEE COMPANY WITH ENTRY OPERATOR SHIV SHANKAR BANKA. THE AFFIDAVIT OF MR. ASHOK AGGARWAL WAS RETRACTED IMMEDIATELY BY HIM BEFORE THE ADDITIONAL DIRECTOR O F INCOME- TAX VIDE LETTER DATED 28.1.2013 AND 2.11.2012 ATTAC HED AT PAGE 169-171 OF THE PAPERBOOK . THE SAME WAS ALSO STATED BEFORE THE LD. AO AT PAGE 303 OF PBK AND ALSO REFERRED TO AT PAGE 12 OF THE ORDER AND BEFORE THE HONBLE CIT(A) AT PAGE 532, 546,616 OF PBK I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 68 E) STATEMENT OF MATBAR SINGH RAWAT ON 30.10.2012 REFERRED TO AT PAGE 22,23 OF THE ORDERAND ALSO AT P AGE 198-203 OF THE PAPERBOOK HIS RESPONSES ARE REGARDING COMPANIES NONE OF WHICH ARE THE INVESTOR COMPANIES IN THE IMPUGNED AY. THE LD. AO HELD THAT RETRACTION IS AN AFTERTHOUGHT HOWEVER, THE LD. AO HAS HELD THAT AO HELD THAT THE RETRACTION IS AN AFTERTHOUGHT AND HAS NOT CONSIDERE D THE RETRACTION AND PLACED RELIANCE ON THE STATEMENT OBT AINED UNDER THREAT BY THE DEPARTMENT. THE STATEMENTS GIVE N UNDER DURESS OR COERCION HAVE NO ADMISSIBILITY UNDE R THE LAW. THE STATEMENTS WERE TAKEN AT MIDNIGHT UNDER PRESSUR E AND COERCION. IT HAS BEEN HELD BY VARIOUS COURTS THAT I N NORMAL CIRCUMSTANCES, IT IS TOO MUCH TO GIVE ANY CREDIT TO THE STATEMENT RECORDED AT SUCH ODD HOURS AND SUCH STATE MENT CANNOT BE CONSIDERED TO BE A VOLUNTARY STATEMENT, I F IT IS SUBSEQUENTLY RETRACTED. THE STATEMENTS RELIED UPON BY THE LD. AO HAVE BEEN RETRACTED WITHIN A SPAN OF 2-3 DAY S AND THE RETRACTIONS WERE ALSO FILED BEFORE THE LD. AO A ND THE LD. CIT(A) REFER PAGE 302, 303, 305 OF PBK . IT IS TRITE THAT WHEN ASSESSEE HAS RETRACTED FROM DISCLOSURE MADE IN STATEMENT AND IF NO UNDISCLOSED INCOME WAS FOUND DU RING SEARCH, THE DEPARTMENT CANNOT MAKE ADDITIONS ON BAR E I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 69 SUSPICION AND PRESUMPTION AND SOLELY ON THE BASIS O F THE STATEMENT. CBDT INSTRUCTIONS STATE THAT CONFESSIONS ARE OFTEN RETRACTED BY FILING RETURNS OF INCOME AND THE FOCUS SHOULD BE ON COLLECTION OF EVIDENCE OF UNDISCLOSED INCOME AND NO ATTEMPT SHOULD BE MADE TO OBTAIN CONFESSION ONLY. A) CBDT INSTRUCTION F. NO. 286/2/2003-IT (INV. II), DATED 10-3-2003 INSTANCES HAVE COME TO THE NOTICE OF THE BOARD WHE RE ASSESSEES HAVE CLAIMED THAT THEY HAVE BEEN FORCED T O CONFESS THE UNDISCLOSED INCOME DURING THE COURSE OF THE SEARCH & SEIZURE AND SURVEY OPERATIONS. SUCH CONFES SIONS, IF NOT BASED UPON CREDIBLE EVIDENCE, ARE LATER RETR ACTED BY THE CONCERNED ASSESSEES WHILE FILING RETURNS OF INC OME. IN THESE CIRCUMSTANCES, SUCH CONFESSIONS DURING THE CO URSE OF SEARCH & SEIZURE AND SURVEY OPERATIONS DO NOT SERVE ANY USEFUL PURPOSE. IT IS, THEREFORE, ADVISED THAT THER E SHOULD BE FOCUS AND CONCENTRATION ON COLLECTION OF EVIDENCE O F INCOME WHICH LEADS TO INFORMATION ON WHAT HAS NOT BEEN DIS CLOSED OR IS NOT LIKELY TO BE DISCLOSED BEFORE THE INCOME- TAX DEPARTMENT. SIMILARLY, WHILE RECORDING STATEMENT DU RING THE COURSE OF SEARCH & SEIZURE AND SURVEY OPERATIONS NO ATTEMPT SHOULD BE MADE TO OBTAIN CONFESSION AS TO T HE I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 70 UNDISCLOSED INCOME. ANY ACTION ON THE CONTRARY SHAL L BE VIEWED ADVERSELY. FURTHER, IN RESPECT OF PENDING ASSESSMENT PROCEEDIN GS ALSO, ASSESSING OFFICERS SHOULD RELY UPON THE EVIDENCES/M ATERIALS GATHERED DURING THE COURSE OF SEARCH/SURVEY OPERATI ONS OR THEREAFTER WHILE FRAMING THE RELEVANT ASSESSMENT OR DERS. B) LETTER F.NO.286/98/2013-IT (INV.II)], DATED 18-12- 2014 INSTANCES/COMPLAINTS OF UNDUE INFLUENCE/COERCION H AVE COME TO NOTICE OF THE CBDT THAT SOME ASSESSEES WERE COERCED TO ADMIT UNDISCLOSED INCOME DURING SEARCHES/SURVEYS CONDUCTED BY THE DEPARTMENT. IT IS ALSO SEEN THAT M ANY SUCH ADMISSIONS ARE RETRACTED IN THE SUBSEQUENT PROCEEDI NGS SINCE THE SAME ARE NOT BACKED BY CREDIBLE EVIDENCE. SUCH ACTIONS DEFEAT THE VERY PURPOSE OF SEARCH/SURVEY OP ERATIONS AS THEY FAIL TO BRING THE UNDISCLOSED INCOME TO TAX IN A SUSTAINABLE MANNER LEAVE ALONE LEVY OF PENALTY OR L AUNCHING OF PROSECUTION. FURTHER, SUCH ACTIONS SHOW THE DEPARTMENT AS A WHOLE AND OFFICERS CONCERNED IN POOR LIGHT. 2. I AM FURTHER DIRECTED TO INVITE YOUR ATTENTION T O THE INSTRUCTIONS/GUIDELINES ISSUED BY CBDT FROM TIME TO TIME, AS REFERRED ABOVE, THROUGH WHICH THE BOARD HAS EMPHASI ZED UPON THE NEED TO FOCUS ON GATHERING EVIDENCES DURIN G SEARCH/SURVEY AND TO STRICTLY AVOID OBTAINING ADMIS SION OF UNDISCLOSED INCOME UNDER COERCION/UNDUE INFLUENCE. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 71 3. IN VIEW OF THE ABOVE, WHILE REITERATING THE AFOR ESAID GUIDELINES OF THE BOARD, I AM DIRECTED TO CONVEY TH AT ANY INSTANCE OF UNDUE INFLUENCE/COERCION IN THE RECORDI NG OF THE STATEMENT DURING SEARCH/SURVEY/OTHER PROCEEDING UND ER THE I.T.ACT,1961 AND/OR RECORDING A DISCLOSURE OF UNDIS CLOSED INCOME UNDER UNDUE PRESSURE/ COERCION SHALL BE VIEW ED BY THE BOARD ADVERSELY. 29. THE LD. AR STATED THAT STATEMENT IS SOMETHIN G WHICH IS CONSEQUENT TO THE SEARCH AND CANNOT BE RECKONED AS INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND ASSE SSMENTS THAT STOOD COMPLETED ON THE DATE OF SEARCH CANNOT BE MAD E ON THE BASIS OF STATEMENTS. IN SUPPORT, THE AR RELIED UPON THE J UDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF PCIT VS. BEST INFRASTRUCTURE (INDIA) PVT. LTD. IN ITA NO.13-22/20 17. IT WAS OBSERVED AS UNDER: 38. FIFTHLY, STATEMENTS RECORDED UNDER SECTION 132 (4) OF THE ACT OF THE ACT DO NOT BY THEMSELVES CONSTITUTE INCRIMINATING MATERIAL AS HAS BEEN EXPLAINED BY THI S COURT IN COMMISSIONER OF INCOME TAX V. HARJEEVAGGARWAL (S UPRA). LASTLY, AS ALREADY POINTED OUT HEREINBEFORE, THE FA CTS IN THE PRESENT CASE ARE DIFFERENT FROM THE FACTS IN SMT.DAYAWANTIGUPTA V. CIT (SUPRA) WHERE THE ADMISSI ON BY THE ASSESSEES THEMSELVES ON CRITICAL ASPECTS, OF FAILURE TO MAINTAIN ACCOUNTS AND ADMISSION THAT THE SEIZED DOCUMENTS REFLECTED TRANSACTIONS OF UNACCOUNTED SAL ES AND PURCHASES, IS NON-EXISTENT IN THE PRESENT CASE. IN THE I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 72 SAID CASE, THERE WAS A FACTUAL FINDING TO THE EFFEC T THAT THE ASSESSEES WERE HABITUAL OFFENDERS, INDULGING IN CLANDESTINE OPERATIONS WHEREAS THERE IS NOTHING IN THE PRESENT CASE, WHATSOEVER, TO SUGGEST THAT ANY STATE MENT MADE BY MR. ANU AGGARWAL OR MR.HARJEETSINGH CONTAIN ED ANY SUCH ADMISSION. 30. HE POINTED OUT THAT EARLIER THERE WAS A DECI SION OF HONBLE DELHI HIGH COURT IN THE CASE OF DAYAWANTI GUPTA VS. CIT REPORTED IN 390 ITR 396 WHEREBY THE HONBLE HIGH COURT HELD THAT ASSESSMENT UNDER SECTION 153A CAN BE MADE EVEN IF N O INCRIMINATING MATERIAL HAS BEEN FOUND DURING SEARCH AND THE STATEMENTS RECORDED DURING SEARCH CAN BE RELIED UPO N. HOWEVER, THE SAID JUDGMENT OF THE HONBLE HIGH COURT HAS BEEN ST AYED BY THE HONBLE SUPREME COURT IN APPEAL NO. 20559/2017 AND SLP HAS ALSO BEEN ADMITTED. 31. FOLLOWING THE PRINCIPLE OF HONBLE DELHI HIG H COURT IN THE CASE OF CIT VS. BEST INFRASTRUCTURE AND PCIT VS. MEETA G UTGUTIA, THIS TRIBUNAL IN VARIOUS JUDGMENTS HAS HELD THAT STATEME NT RECORDED DURING THE COURSE OF SEARCH PER SE WITHOUT ANY INCRI MINATING MATERIAL CANNOT BE THE BASIS FOR MAKING THE ADDITIO N SPECIFICALLY IN THE CASE OF UNABATED ASSESSMENT, I.E., WHERE ASSESS MENT STANDS CONCLUDED BEFORE THE DATE OF SEARCH. BESIDES, OTHER CATENA OF JUDGMENTS HAVE ALSO BEEN FILED WHICH ARE NOT BEEN I NCORPORATED. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 73 32. THE LD. AR SUBMITTED THAT IF AT ALL, ADDITION S ARE MADE ON THE BASIS INCRIMINATING DOCUMENTS, THEN THEY HAVE TO BE MADE ON THE BASIS OF DOCUMENTS FOUND DURING THE COURSE OF SECON D SEARCH IN RESPECT OF ASSESSMENTS MADE IN PURSUANCE OF THE SEC OND SEARCH. 33. THE CHART REPRESENTING THE MATERIAL USED IN R ESPECT OF EACH ADDITION MADE IS REPRODUCED BELOW: ADDITION DESCRIPTION OF MATERIAL FOUND FOUND IN WHICH SEARCH PAGE NO. OF ASSESSMENT ORDER SHARE CAPITAL A1 - A14 COMPUTATION, INTIMATION U/S 143(1), BANK STATEMENT AND SCHEDULES OF BALANCE SHEET OF SHARE APPLICANTS A15-A25 CHEQUE BOOKS OF SHARE APPLICANTS ON WHICH AUTHORISED SIGNATORY HAS SIGNED ON BLANK CHEQUES FOUND IN FIRST SEARCH 2 - 4,30 REPRODUCED AT PAGE 2-4 SALARY PAID IN CASH U/S 69C A2 AND A6 CONTAINING DETAILS OF PROPOSED CASH PAGE 15,26 OF A2 AND PAGE 51,53 OF A6 FOR AY 2010-11 CONTAINING DETAILS OF PROPOSED CASH FOUND IN FIRST SEARCH FROM PREMISES OF ASSESSEE COMPANYS DIRECTOR, VIPUL AGGARWALS 36 SHIFTING OF PROFIT FROM A-6 (PG 6,8,37) SHOWING POWER FOUND IN FIRST PAGE 39 I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 74 STEEL DIVISION TO POWER DIVISION BY CHARGING HIGHER RATES OF POWER GENERATED BY POWER DIVISION COST PER UNIT DATED 14.5.12 AND 20.08.12 @3.04 AND 2.09 PER UNIT RESPECTIVELY SEARCH UNEXPLAINED EXPENDITURE- PURCHASE OF LAND ELECTRONIC DATA SEIZED AT CHAPA (PARTY BS-I) IN A SEIZED PENDRIVE ANNEXURE PDI-1/2)- SHOWING TABLE ABOUT LAND PURCHASES IN WHICH 2 COLUMNS -COST AS PER PAPER AND ACTUAL AMOUNT PAID ARE MENTIONED FOUND IN SURVEY ON 30.10.12 38 OF ORDER PAGE 318- 320, 867- 868 OF PBK 34. LD. AR FURTHER SUBMITTED THAT ONCE THE ASSESS ING OFFICER HAS NOT PASSED ANY ASSESSMENT ORDER CONSEQUENT TO THE FI RST SEARCH WHEREIN SO CALLED INCRIMINATING MATERIAL OR DOCUMEN TS WERE FOUND, THEN THOSE INCRIMINATING DOCUMENTS AND MATERIAL LOS E THEIR SIGNIFICANCE BECAUSE IT WAS MANDATORY UPON THE ASSE SSING OFFICER TO PASS ASSESSMENT ORDER IN TERMS OF SECTION 153A IN C ONSEQENCE TO FIRST SEARCH. IF HE HAS NOT DONE SO, THEN ANYTHING F OUND DURING THE COURSE OF THAT SEARCH STANDS CONCLUDED AND WHAT IS TO BE SEEN IS WHETHER ANY INCRIMINATING DOCUMENT WAS FOUND OR NOT DURING THE COURSE OF SECOND SEARCH.ADMITTEDLY, HERE IN THIS CA SE, NOT AN IOTA OF ANY EVIDENCE OR INCRIMINATING DOCUMENT WAS FOUND DUR ING THE COURSE OF SECOND SEARCH. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 75 35. ON MERITS OF THE ADDITIONS, THE LD. AR HAS MA DE AN ELABORATE SUBMISSION, ORAL AS WELL BY WAY OF A WRITTEN SUBMISSI ON, WHICH WE SHALL DISCUSS AFTER ADJUDICATING THE LEGAL ISSUES R AISED BEFORE US. 36. BEFORE US, THE LD. CIT-DR FIRST OF ALL OBJECTE D FOR ADMISSION OF ADDITIONAL GROUNDS AND ALSO PLACED ON RECORD THE FO LLOWING LETTER OF THE ASSESSING OFFICER, THE SCAN COPY OF WHICH IS AS UNDER: I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 76 I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 77 I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 78 37. IN SO FAR AS THE LEGAL ISSUE RAISED BY THE L D. AR IS CONCERNED, LD. CIT-DR SUBMITTED THAT UNDISPUTEDLY DURING THE COURS E OF SEARCH CONDUCTED ON 30 TH OCTOBER, 2012 VARIOUS INCRIMINATING DOCUMENTS AND MATERIAL WERE FOUND. WHEN THE SECOND SEARCH TOO K PLACE, I.E., ON 31.03.2014, THE LD. ASSESSING OFFICER PROCEEDED TO MAKE THE ASSESSMENT UNDER SECTION 153A FOR PREVIOUS SIX ASSE SSMENT YEARS. AT THE TIME OF SECOND SEARCH, ALL THE ASSESSMENTS R ELATING TO THE FIRST I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 79 SEARCH WERE TREATED TO BE AS PENDING ASSESSMENT FOR THOSE ASSESSMENT YEARS, AND THEREFORE, THE ASSESSMENT UNDE R SECTION 153A RELATING TO THE FIRST SEARCH, I.E., 30.10.2012 GETS ABATED. ACCORDINGLY, ALL THE SEIZED DOCUMENTS AND MATERIAL FOR SUCH PEND ING ASSESSMENTS CAN BE UTILIZED FOR THE ASSESSMENTS WHICH WERE BEIN G FRAMED IN CONSEQUENCE TO THE SECOND SEARCH IN TERMS OF LANGUA GE OF SECTION 153A. SHE FURTHER SUBMITTED THAT THE ACT DOES NOT M AKE ANY DISTINCTION OF ASSESSMENTS WHICH ARE PASSED UNDER S ECTION 143(3) OR UNDER SECTION147 OR UNDER SECTION 153A. THE SECOND PROVISO TO SECTION 153A STATES THAT ASSESSMENT OR RE-ASSESSMEN T RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN PERIOD OF SIX ASS ESSMENT YEARS WHICH ARE PENDING ON THE DATE OF INITIATION OF SEAR CH GET ABATED. THE ASSESSMENT UNDER SECTION153A PURSUANT TO FIRST SEAR CH WERE PENDING, THEREFORE, THE SAME SHALL AUTOMATICALLY STA ND ABATED. SHE FURTHER POINTED OUT THAT THE ASSESSEE IN THE LETTER TO THE LD. ASSESSING OFFICER HAS ALSO STATED THE SAME POSITION THAT NOTICES ISSUED UNDER SECTION 153A IN RELATION TO FIRST SEAR CH SHOULD BE DROPPED AND ONLY ASSESSMENT IN CONSEQUENCE OF THE SE COND SEARCH SHOULD BE MADE. THERE CANNOT BE TWO ASSESSMENTS UND ER SECTION 153A FOR THE SAME ASSESSMENT YEARS WHICH ARE FALLIN G WITHIN PERIOD OF SIX ASSESSMENT YEARS WHICH HERE IN THIS CASE ARE MOSTLY OVERLAPPING AT LEAST FROM ASSESSMENT YEARS 2008-09 ONWARDS. DECISION 38. FIRST OF ALL, IN SO FAR AS ADMISSION OF ADDI TIONAL GROUNDS AS RAISED BY THE ASSESSEE, ARE CONCERNED, AS DISCUSSED ABOVE, WE FIND THAT SAME ARE PURELY LEGAL GROUNDS WHICH ARE ARISING OUT OF FACTS AND I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 80 MATERIAL ON RECORD AND APPARENT FROM THE IMPUGNED A SSESSMENT ORDER, WHICH IS EVIDENT FROM THE FOLLOWING PASSAGES IN THE ASSESSMENT ORDER WHICH REFERS TO SEIZED DOCUMENTS F OUND DURING FIRST SEARCH ON 30.10.2012, WHICH HAS BEEN CONTESTE D BY THE LD. COUNSEL OF THE ASSESSEE THAT SAME CANNOT BE USED IN ASSESSMENTS CONSEQUENT TO SECOND SEARCH ON 31.03.2014:- I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 81 I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 82 I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 83 39. THUS, BEING PURELY LEGAL GROUNDS ARISING OUT OF FACTS ALREADY ON RECORD AND ALSO EVIDENT FROM THE AFORESAID EXCER PTS OF THE ASSESSING OFFICER, WHICH DO NOT REQUIRE ANY INVESTIG ATION OF FACTS, THEREFORE, SAME ARE BEING ADMITTED FOR THE PURPOSE OF OUR ADJUDICATION. 40. THE RELEVANT FACTS QUA THE LEGAL ISSUE RAISE D HAS ALREADY BEEN DISCUSSED IN DETAIL AND ALSO THE DETAILED SUBMISSIO N MADE BY THE PARTIES AND THE JUDGMENTS RELIED UPON DURING THE CO URSE OF HEARING. TO PUT IT SUCCINCTLY, IN THE CASE OF THE ASSESSEE, THE FIRST SEARCH TOOK PLACE UNDER SECTION 132(1) ON 30.10.2012. PENDING T HE ISSUANCE OF NOTICE UNDER SECTION 153A AND THE TRIGGERING OF THE ASSESSMENT IN PURSUANCE OF SUCH NOTICES, ANOTHER SEARCH TOOK PLAC E ON 31.03.2014. AS STATED ABOVE THE NOTICES UNDER SECTI ON153A PERTAINING TO THE FIRST SEACH INITIATED ON 30.10.20 12 WAS ISSUED TO THE ASSESSEE ON 27.06.2014 IN RESPECT OF ASSESSMENT YEAR 2007-08 I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 84 TO 2012-13. HOWEVER, NO ASSESSMENT ORDERS IN RESPEC T OF THE FIRST SEARCH WERE PASSED FOR AY 2007-08 TO 2012-13. THE S ECOND SET OF NOTICES UNDER SECTION 153A WERE ISSUED ON 14.08.201 4 WHICH WERE IN PURSUANCE OF SECOND SEARCH DATED 31.03.2014. IN PURSUANCE TO THESE NOTICES, THE ASSESSEE HAD FILED ITS RETURN OF INCOME ON 27.11.2014. THE MAIN POINT FOR OUR CONSIDERATION WH ICH HAS BEEN RAISED BY THE PARTIES BEFORE US IS THAT:- FIRSTLY , WHETHER ANY INCRIMINATING MATERIAL OR DOCUMENTS FOUND DURING THE COURSE OF FIRST SEARCH CAN BE UTIL IZED WHILE FRAMING THE ASSESSMENTS IN PURSUANCE OF THE SECOND SEARCH?; SECONDLY , WHETHER IT WAS MANDATORY UPON THE ASSESSING OFFICER TO PASS ASSESSMENT ORDER IN TERMS OF SECTIO N 153A IN RELATION TO THE FIRST SEARCH DATED 30.10.2012?; THIRDLY , WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CAS E, CAN IT BE SAID THAT ASSESSMENTS IN RELATION TO FIRS T SEARCH WAS PENDING IN TERMS OF SECOND PROVISO TO SECTION 153A ON THE DATE OF SECOND SEARCH I.E., 31.03.2014?. 41. FIRST OF ALL, THE RELEVANT PORTION OF SECTI ON 153A AS APPLICABLE IN THE ASSESSMENT YEARS IMPUGNED BEFORE US IS REPRO DUCED BELOW:- 153A. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SE CTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153 , IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OT HER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SEC TION I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 85 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTI CE, THE RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE ( B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANN ER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRES CRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN R EQUIRED TO BE FURNISHED UNDER SECTION 139; (B)ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSES SMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUC TED OR REQUISITION IS MADE : PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS: PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, I F ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN THIS SECTION PE NDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CA SE MAY BE, SHALL ABATE. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 86 42. FROM THE PLAIN READING OF THE SAID PROVISION AND ALSO INTERPRETATION OF THIS SECTION BY HONBLE JURISDICTI ONAL HIGH COURT IN THE CASE OF CIT VS. ANIL KUMAR BHATIA, KABUL CHAWLA AND CATENA OF OTHER JUDGMENTS OF HONBLE HIGH COURTS AS INCORPORA TED ABOVE, FOLLOWING SEQUITTER CAN BE DEDUCED:- FIRSTLY , SECTION 153A IS A SPECIAL SCHEME OF ASSESSMENT OF INCOME IN CASE OF A SEARCHED PERSON. SECTION 153A S TARTS WITH A NON OBSTANTE CLAUSE AND IT STATES WHERE A SEARCH HA S BEEN INITIATED UNDER SECTION 132(1) OR BOOKS OF ACCOUNTS ANY OTHER DOCUMENTS OR ASSETS WHICH ARE REQUISITIONED UNDER S ECTION132A AFTER 31 ST MAY, 2003, THE ASSESSING OFFICER IS STATUTORILY BOUN D TO (AS THE SECTION MENTIONS SHALL): (A) ISSUE NOTICE TO THE ASSESSEE TO FURNISH RETURN OF INCOME OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YE ARS IMMEDITALEY PRECEDING ASSESSMENT YEAR IN WHICH SEARCH OR REQUISITIONED WAS MADE; (B) THE ASSESSING OFFICER IS MANDATORILY REQUIRED TO (I.E., SHALL) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSME NT YEARS IMMEDIATELY PRECEDING ASSESSMENT YEAR IN WHICH SEARC H WAS CONDUCTED OR REQUISITIONED WAS MADE, AND HAS TO PAS S SEPARATE ASSESSMENT ORDERS. SECONDLY , IN RESPECT OF SIX OF THE ASSESSMENT YEARS PRIOR TO THE YEAR OF SEARCH, THERE CAN BE ONE ASSESSMENT IN WHICH BOTH DISCLOSED AND UNDISCLOSED INCOME WOULD BE ASSESSED AND IT IS MANDATORY FOR THE ASSESSING OFFICER TO BRING IN TO T AX THE TOTAL INCOME OF ASSESSEE WHOSE CASE IS COVERED UNDER SECT ION 153A. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 87 THIRDLY , INITIATION OF PROCEEDINGS UNDER SECTION 153A IS N OT DEPENDENT ON ANY UNDISCLOSED INCOME BEING UNEARTHED DURING SUCH SEARCH, BECAUSE THE 1 ST PROVISO MAKES IT CLEAR THAT THE ASSESSING OFFICER IS BOUND (I.E., SHALL) ASSESS OR RE-ASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALL ING WITHIN SIX ASSESSMENT YEARS. FOURTHLY , THE 2 ND PROVISO CARVES OUT THE DISTINCTION BETWEEN PENDING ASSESSMENT AND ASSESSMENT WHICH HAS ATTAINE D FINALITY ON THE DATE OF SEARCH ANS CAN BE RECOKENED AS UNABA TED ASSESSMENT. LASTLY , IN SO FAR AS THE PENDING ASSESSMENTS ARE CONCERNE D, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND TH E RE- ASSESSMENT UNDER SECTION 153A MERGES INTO ONE AND O NLY ONE ASSESSMENT SHALL BE MADE. ASSESSMENTS WHICH ARE NOT ABATED OR ARE NOT PENDING ARE RECKONED AS COMPLETED ASSESSMEN TS. RE- ASSESSMENT CAN BE DONE ON ALL COMPLETED ASSESSMENTS BASED ON INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH INDICATING ANY UNDISCLOSED INCOME. IF NO INCRIMINATI NG MATERIAL IS FOUND QUA THE ASSESSMENT YEARS WHICH ARE CONCLUDED OR ARE UNABATED, THEN THE ORIGINAL ASSESSED INCOME SHALL B E TAKEN AS ASSESSED INCOME UNDER SECTION 153A. THE TERM ASSESS ED IN SECTION 153A IS USED IN RESPECT OF ASSESSMENTS WHIC H ARE PENDING ON THE DATE OF SEARCH AND GOT ABATED WHEREA S THE TERM RE-ASSESS IS USED IN RESPECT OF THOSE ASSESSMENT YE ARS WHOSE ASSESSMENT ALREADY STOOD COMPLETED AND WERE NOT PEN DING ON THE DATE OF SEARCH. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 88 43. THUS, THE LAW AS INTERPRETED BY THE HONBLE HIGH COURTS AS DISCUSSED ABOVE IS THAT, THERE IS NO OPTION FOR THE ASSESSING OFFICER NOT TO PASS ANY ASSESSMENT ORDER FOR SIX ASSESSMENT YEARS PRIOR TO THE YEAR OF SEARCH, IF THE SEARCH HAS BEEN CARRIED O UT UNDER SECTION 132 OR REQUISITION UNDER SECTION 132A. THERE CANNOT BE ANY WAIVER OF SUCH CONDITION OF NOT TO PASS ANY ORDER; OR IN A NOTHER WORDS, ASSESSING OFFICER CANNOT ACQUIESCE HIS STATUTORY DUT Y FOR PASSING THE ASSESSMENT ORDER IN TERMS OF SECTION 153A. EVEN IF THE SEARCH DOES NOT YIELD ANY INCRIMINATING MATERIAL OR ANY UNDISCLOS ED INCOME, THEN ALSO ASSESSING OFFICER HAS TO ASSESS THE TOTAL INCO ME OF SIX ASSESSMENT YEARS IN TERMS OF 1 ST AND 2 ND PROVISO TO SECTION 153A. 44. HERE IN THIS CASE, IN THE LETTER DATED 10.03. 2021 FILED BY THE LD. DR WHICH HAS ALSO BEEN INCORPORATED ABOVE, THE ASSE SSING OFFICER HIMSELF ADMITTED THAT NOTICE UNDER SECTION 153A WAS ISSUED ON 27.06.2014 IN TERMS OF 1 ST SEARCH CONDUCTED ON 30.10.2012, HOWEVER NO ASSESSMENT WAS COMPLETED FOR ALL ASSESSMENT YEARS PRIOR TO THE DATE OF SECOND SEARCH. THE ONLY ASSESSMENT ORDERS WH ICH HAVE BEEN PASSED FOR SIX ASSESSMENT YEARS WAS IN RELATION TO SECOND SEARCH CONDUCTED ON 31.03.2014 AND IN PURSUANCE OF NOTICE UNDER SECTION 153A ISSUED ON 14.08.2014 FOR THE ASSESSMENT YEARS 2008-09 TO 2013-14. THE ASSESSING OFFICER HAS FAILED TO CARRY O UT THE STATUTORY REQUIREMENT FOR FRAMING/COMPLETING ASSESSMENT OR RE ASSESSMENT OF TOTAL INCOME FOR SIX ASSESSMENT YEARS IN RESPECT OF THE FIRST SEARCH DATED 31.10.2012. IN SUCH A SITUATION, ALL THE ASSE SSMENTS WHICH WERE REQUIRED TO BE COMPLETED IN TERMS OF SECTION 1 53A QUA THE FIRST SEARCH STANDS OBLITERATED AND RETURN OF INCOME AND THE ASSESSED I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 89 INCOME RIGHT FROM THE ASSESSMENT YEARS 2007-08 TO 2 012-13 HAVE ATTAINED FINALITY. 45. THE SECOND CORE ISSUE INVOLVED BEFORE US IS, WHETHER ANY INCRIMINATING MATERIAL OR DOCUMENT FOUND DURING THE COURSE OF FIRST SEARCH CAN BE UTILIZED BY FRAMING THE ASSESSMENT IN PURSUANCE OF SECOND SEARCH. ADMITTEDLY, HERE IN THIS CASE WHILE FRAMING THE ASSESSMENT, LD. AO HAS REFERRED TO THE DOCUMENTS SE IZED DURING THE COURSE OF FIRST SEARCH I.E., 30.10.2012 AND NOTHING INCRIMINATING WHATSOEVER WAS FOUND DURING THE COURSE OF SECOND SE ARCH CARRIED ON 31.03.2014. THIS IS CLEAR AND ADMITTED POSITION NOT ONLY FROM THE IMPUGNED ORDERS BUT ALSO FROM THE MATERIAL PLACED O N RECORD, AS DISCUSSED IN THE FOREGOING PARAGRAPHS. ONCE, THE LD . ASSESSING OFFICER HAS NOT FULFILLED HIS STATUTORY DUTY FOR FRA MING THE ASSESSMENT UNDER SECTION 153A AS WAS MANDATORILY REQ UIRED BASED ON INCRIMINATING SEIZED MATERIAL, THEN ENTIRE SEIZE D MATERIAL AND DOCUMENT AND ANY INFERENCE DRAWN ON BASIS OF SUCH SE IZED MATERIAL FOR COMPUTING THE TOTAL INCOME OF SIX ASSESSMENT YEA RS PRIOR TO THE YEAR OF SEARCH GETS PERISHED AND IS FAIT-ACCOMPLI , BECAUSE OF THE CONSCIOUS DECISION OF THE LD. ASSESSING OFFICER NOT TO FRAME THE ASSESSMENT ORDER UNDER SECTION 153A AS PROVIDED IN THE STATUTE. THE THE SEIZED OR INCRIMINATING DOCUMENTS FOUND COULD H AVE ONLY USED FOR THE PURPOSE OF ASSESSMENT AND REASSESSMENT U/S 153A FOR THE STIPULATED 6 ASSESSMENT YEARS; AND IF NOT THEN ITS FATE END THERE. 46. IF ANOTHER SEARCH HAS TAKEN PLACE IN THE SUBS EQUENT PERIOD, THEN ANY MATERIAL OR DOCUMENT FOUND IN THAT SEARCH R ELATING TO ANY OF THE ASSESSMENT YEARS FORMS THE BASIS FOR ASSESSME NT / RE- I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 90 ASSESSMENT FALLING WITHIN THE PERIOD OF SIX YEARS AS CONTEMPLATED UNDER SECTION 153A. THE STATUTE ENVISAGES THAT IF T HERE ARE MULTIPLE SEARCHES SPREADING INTO DIFFERENT YEARS, THEN LD. AS SESSING OFFICER IS DUTY BOUND TO PASS THE ORDERS FOR THE SIX YEARS IN RE SPECT OF EVERY SEARCH. AS SOON AS SEARCH TAKES PLACE THE PROVISION OF SECTION 153A GETS TRIGGERED AND ALL THE LEGAL FORMALITIES OF ISS UANCE OF NOTICE FOR SIX YEARS HAVE TO BE NECESSARILY COMPLIED WITH AND ASSESS MENT/RE- ASSESSMENT FOR THOSE ASSESSMENT YEARS HAS TO BE MADE . IN OUR OPINION, ANY DOCUMENT OR MATERIAL FOUND IN ANY SEARCH HAS TO BE USED IN THE ASSESSMENT OR RE-ASSESSMENTS FALLING WI THIN THE PERIOD OF SIX YEARS RELATING TO THAT SEARCH ONLY AND PROCEDURE OF SECTION 153A HAS TO BE FOLLOWED. 47. ANOTHER MOOT QUESTION BEFORE US, WHICH HAS BE EN STRONGLY CONVASSED BY THE LD. CIT-DR AS WELL DISCERNIBLE FROM THE ACTION OF THE ASSESSING OFFICER IS THAT, ASSESSMENT UNDER SEC TION 153A IN RELATION TO THE FIRST SEARCH, WHETHER CAN BE SAID T O BE PENDING OR NOT IN TERMS OF SECOND PROVISO TO SECTION 153A ON THE D ATE OF SECOND SEARCH, I.E., 31.03.2014? THE REVENUES MAIN PLANK OF ARGUMENT IS THAT, ON THE DATE OF SECOND SEARCH, ASSESSMENTS COV ERED UNDER SECTION 153A IN PURSUANCE OF THE FIRST SEARCH WERE PENDING AND THEREFORE, GETS ABATED AND ASSESSING OFFICER HAS RI GHT TO ASSESS AND RE-ASSESS ALL THE ASSESSMENT YEARS FALLING WITHIN T HE PERIOD OF SIX YEARS OF THE FIRST SEARCH AND ALSO ASSESSMENT YEARS F ALLING WITHIN PERIOD OF SECOND SEARCH. SUCH AN INTERPRETATION IN OUR OPINION IS NOT TENABLE AS IT WOULD DEFEAT THE PURPOSE OF THE LEGIS LATURE AND THE LANGUAGE OF THE STATUTE, WHICH MANDATES THAT AFTER EVERY SEARCH, SIX PRECEDING YEARS ASSESSMENT HAS TO BE MADE AND THE MA TERIAL FOUND I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 91 IN SUCH SEARCH COULD BE USED FOR DETERMINING THE UN DISCLOSED INCOME, IF ANY. THE PROCESS OF ABATEMENT IS ONLY TO ADJUDICATE THE PENDING ASSESSMENT CONSEQUENT TO THE RETURN FILED U NDER SECTION 139 ON THE DATE OF SEARCH OR IN RESPECT OF WHICH NO TICES UNDER SECTION 143(2) HAVE BEEN ISSUED OR THE TIME FOR ISS UING SUCH NOTICES HAVE NOT EXPIRED. IT WOULD BE VERY DIFFICULT TO FATH OM THAT ASSESSMENT UNDER SECTION 153A WHICH WAS REQUIRED TO BE COMPLET ED WITHIN THE TIME FRAME PROVIDED UNDER THE STATUTE SHALL BE TREA TED AS ABATED ASSESSMENT ON THE GROUND THAT IT WAS PENDING ASSESS MENT. THE ASSESSING OFFICER HAD NO OPTION BUT TO MAKE THE ASS ESSMENT UNDER SECTION 153A IN RESPECT OF THE FIRST SEARCH AND WIL L NOT WAIT FOR ANOTHER SEARCH TO TAKE PLACE IN SUBSEQUENT PERIOD O F TIME SO THAT THE ASSESSMENT RELATING TO THE FIRST SEARCH DOES NOT HA S TO BE MADE. THIS IS MORE SO IF WE INTERPRET THE JUDGMENT AND THE PRI NCIPLE LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF KABUL CHAWLA, MEETA GUTGUTIA (SUPRA) AND OTHER CASES CITE D ABOVE. FROM THESE JUDGMENTS IT CAN BE CULLED OUT THAT SEARCH RE LATED MATERIAL CAN BE USED FOR ASSESSMENT CONSEQUENT TO THAT SEARCH AL ONE. THE SAID MATERIAL CANNOT BE USED IN THE 2ND, 3RD OR 4TH SEAR CH AND SO ON THAT MAY TAKE PLACE IN THE FUTURE. EVEN SEARCH MATERIAL H AS TO MEET ITS NEMESIS IN THE CONSEQUENT ASSESSMENT PROCEEDINGS RE LATING TO THAT SEARCH ALONE AND NOT KEPT IN LOCK AND KEY TO BE USED SUBSEQUENTLY IN SECOND SEARCH. OTHERWISE IT WILL CREATE IMMEASUR ABLE HARDSHIP TO THE ASSESSEE AND CERTAINLY LEGISLATURE DID NOT INTEN D TO KEEP ON EXTENDING THE PERIOD OF LIMITATION OF ASSESSMENT AN D FATE OF DETERMING THE UNDISCLOSED INCOME FOR PERPETUITY. IF THERE IS ANOTHER SEARCH THEN SAME PROCEDURE AND LIMITATION HAS TO BE FOLLOWED. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 92 48. IF WE TAKE THE FACTS AND CIRCUMSTANCES OF TH E INSTANT CASE, THEN; FIRSTLY, ASSESSING OFFICER SHOULD HAVE FRAMED THE A SSESSMENT UNDER SECTION 153A IN PURSUANCE OF THE FIRST SEARCH CONDU CTED ON 30.10.2012 FOR SIX ASSESSMENT YEARS PRIOR TO THE YEA R OF SEARCH WITHIN THE TIME ALLOWED IN THE STATUTE. SECONDLY, HE WAS REQUIRED TO ASSESS AND RE-ASSESSEE THE TOTAL INCOME OF ALL SIX ASSESSMENT YEARS FALLING UNDER SECTION 1 53A EITHER ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND DURING THE C OURSE OF SEARCH OR ASSESS THE INCOME ON THE BASIS OF RETURN OF INCO ME. EVEN IF THE FIRST SEARCH RELATED ASSESSMENTS WERE N OT MADE AND THE SECOND SEARCH TOOK PLACE AS IS THE CASE HERE, THEN ASSESSING OFFICER SHOULD HAVE FRAMED SEPARATE ASSESSMENT ORDERS FOR S IX YEARS IN RESPECT OF THE BOTH SEARCHES WITHIN THE TIME PROVID ED IN THE STATUTE. IN CASE THE ASSESSMENT YEARS ARE OVERLAPPING THEN Q UA THAT ASSESSMENT YEAR THE ASSESSED INCOME U/S 153A OF THA T YEAR AS DETERMINED IN THAT SEARCH, BECOMES THE ASSESSED INC OME U/S 153A OF THE SECOND SEARCH AND IF ANY INCRIMINATING MATERI AL IS UNEARTHED IN THE SECOND SEARCH THEN SAME CAN BE USED TO FURTH ER DETERMINE THE INCOME OF THE ASSESSEE. 49. THERE COULD BE ANOTHER ANGLE HERE IN THIS CAS E, WHILE INTERPRETING THE WORD PENDING ASSESSMENT AS USED IN SECOND PROVISO TO SECTION 153A. FIRSTLY, NO NOTICE UNDER S ECTION 153A WAS ISSUED IN PURSUANCE OF FIRST SEARCH BEFORE THE DATE OF SECOND SEARCH, I.E., 31.03.2014; AND ADMITTEDLY NO RETURN OF INCOME WAS FILED IN I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 93 PURSUANCE OF SUCH NOTICES UNDER SECTION 153A RELATI NG TO FIRST SEARCH. THUS, TECHNICALLY NO ASSESSMENT WAS PENDING. THE SIX ASSESSMENT YEARS AS ENVISAGED IN SECTION 153A READ WITH 1 ST AND 2 ND PROVISO HAVE TO BE TAKEN SEPARATELY AND IT HAS TO BE SEEN, WHETHER ANY OF THE ASSESSMENTS WERE PENDING ON THE DATE OF SEARCH FOR THE PURPOSE OF ABATEMENT. THE LIMITATION OF A PENDING A SSESSMENT HAS TO BE SEEN FROM THE DATE OF SEARCH WHICH WILL VARY FROM THE PERIOD OF SEARCH. IF IN A GIVEN CASE ONLY TWO ASSESSMENT YEARS ARE PENDING AND FOUR ASSESSMENT YEARS WERE CONCLUDED ASSESSMENT OR H AD ATTAINED FINALITY, THEN AGAIN IF THERE IS A SUBSEQUENT SEARC H TWO YEARS AFTER THE FIRST SEARCH, THEN THE DEFINITION OF PENDING AN D CONCLUDED ASSESSMENT WILL CHANGE. OTHERWISE THERE COULD BE A SITUATION WHERE ASSESSING OFFICER CAN OPEN SIX ASSESSMENT YEARS OF T HE EARLIER SEARCH AND ANOTHER 3-4 YEARS BETWEEN THE PERIOD OF FIRST S EARCH AND SECOND SEARCH. LIKE HERE IN THIS CASE, IF THE SAME INTERPR ETATION IS TO BE TAKEN THEN THERE WOULD BE NORE THAT SIX ASSESSMENT YEARS PRIOR TO THE YEAR OF SEARCH, I.E., STARTING FROM ASSESSMENT YEAR 2006-07 TO ASSESSMENT YEAR 2013-14. THUS, IN OUR OPINION AND O N THE FACTS AND CIRCUMSTANCES OF THE CASE, IT CANNOT BE HELD THAT A SSESSMENT UNDER SECTION 153A RELATING TO THE FIRST SEARCH CAN BE RE CKONED TO BE PENDING IN TERMS OF 2 ND PROVISO TO SECTION 153A ON THE DATE OF SECOND SEARCH I.E., 31.03.2014. 50. COMING TO THE ISSUE, WHETHER THE ADDITION IN THE IMPUGNED ASSESSMENT YEARS SPECIFICALLY FOR THOSE ASSESSMENT Y EARS WHICH WERE NOT PENDING ON DATE OF SECOND SEARCH, CAN BE SAID T O BE BASED ON ANY INCRIMINATING MATERIAL OR SEIZED DOCUMENT IN THE LIGHT OF I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 94 PRINCIPLE LAID DOWN BY THE HONBLE JURISDICTIONAL HI GH COURT AND OTHER HIGH COURT CITED SUPRA. AS CULLED OUT FROM TH E ASSESSMENT ORDERS AS WELL AS ARGUMENTS OF THE LD. AR, IT IS AN UNDISPUTED FACT THAT THE ADDITIONS WHICH HAVE BEEN MADE, FOR INSTAN CE, RELATING TO THE SHARE CAPITAL, SALARY PAID IN CASH, SHIFTING OF PROFIT, UNEXPLAINED EXPENDITURE ON PURCHASE OF LAND, ETC. WERE ALL BASE D ON DOCUMENTS FOUND DURING THE COURSE OF FIRST SEARCH AND THERE I S NO MATERIAL WHATSOEVER WHICH WAS UNEARTHED OR FOUND DURING THE COURSE OF SEARCH CONDUCTED ON 31.03.2014 WHICH IS THE BASE OF PRESENT ASSESSMENTS. HONBLE DELHI HIGH COURT IN THE CASE O F CIT VS. KABUL CHAWLA AS WELL AS IN THE CASE OF PCIT VS. MEETA GUT GUTIA (SUPRA) HAVE CLEARLY HELD THAT THERE CAN BE NO ADDITION FOR A PARTICULAR ASSESSMENT YEAR WITHOUT THERE BEING ANY INCRIMINATIN G MATERIAL QUA THAT ASSESSMENT YEAR WHICH COULD JUSTIFY SUCH AN ADD ITION. THE INCRIMINATING MATERIAL HAS TO BE IN RELATION TO ANY INCOME THAT WAS NOT DISCLOSED IN THE EARLIER RETURN AND IF THERE IS NO INCRIMINATING MATERIAL THEN NO ADDITION CAN BE MADE QUA THOSE ASS ESSMENT YEARS WHOSE ASSESSMENT WERE COMPLETED EARLIER. THERE IS N O CASE OF THE DEPARTMENT BEFORE US THAT THE SHARE CAPITAL OR THE OTHER ADDITIONS MADE WERE BASED ON MATERIAL FOUND DURING THE SECOND SEARCH. THIS HAS BEEN CLEARLY HELD BY THE HONBLE DELHI HIGH COUR T IN THE CASE OF PCIT VS. SMC POWER GENERATION LTD. (DELHI HC) IN IT A NO.406/2019, FOLLOWING THE PRINCIPLE OF HONBLE SUPREME COURT IN THE CASE OF CIT V. SINGHAD TECHNICAL EDUCATION SOCIETY ( SUPRA). HERE IN THIS CASE, ALL THE PROCEEDINGS RELATING TO THE FOLLOWING ASSESSMENT YEARS WERE COMPLETED AND, THER EFORE, CANNOT BE REOPENED IN THE ABSENCE OF ANY INCRIMINATING DOCUMEN TS FOUND I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 95 DURING THE COURSE OF THAT SEARCH. THE CHART OF COMP LETED AND PENDING ASSESSMENTS ON DATE OF SECOND SEARCH IN TER MS OF SECOND PROVISO TO SECTION 153A IS REPRODUCED AS UNDER: 51. WE NOW PROCEED TO EXAMINE EACH ADDITION IN O RDER TO SEE WHETHER THE SAME HAS BEEN MADE ON THE BASIS OF INCR IMINATING MATERIAL FOUND DURING THE COURSE OF FIRST SEARCH OR NOT, WHICH ARE RAISED VIDE, GROUND NOS. 1,2 OF ITA NO. 4039/D/2017 FOR AY 2007- 08, ITA NO. 4040/D/2017 AY 2008-09, ITA NO. 4041/D/ 2017 FOR AY 2009-10, ITA NO. 4042/D/2017 FOR AY 2010-11, ITA NO . 4043/D/2017 FOR AY 2011-12 OF THE DEPARTMENTS APPE AL ARE RELATING TO THE ADDITION IN RESPECT OF SHARE CAPITA L/SHARE APPLICATION MONEY. 52. WE FIND THAT MATERIAL FOUND DURING THE COURS E OF FIRST SEARCH HAS BEEN USED TO MAKE ADDITIONS IN THE ASSESSMENT C ONSEQUENT TO I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 96 SECOND SEARCH. THE FIRST AND THE MAIN ADDITION RELA TES TO UNEXPLAINED CREDIT IN RESPECT OF SHARE APPLICATION MONEY RECEIVED IN THE A.Y. 2007-08 TO 2011-12 AMOUNTING TO RS. 16,36, 62,120/-, RS. 20,36,62,120/-, RS. 23,59,95,000/-, RS. 41,58,40,00 0/- AND RS. 15,81,65,000/- RESPECTIVELY AND UNEXPLAINED EXPENDIT URE IN RESPECT OF BROKERAGE @ 0.5% ON SUCH UNEXPLAINED SHARE CAPIT AL AMOUNTING TO RS. 8,18,311/-, RS. 10,18,310/-, RS. 11,79,975/- , RS. 20,79,200/-, RS. 7,90,825/- FOR THE AY 2007-08 TO 2 011-12 RESPECTIVELY. THIS ADDITION HAS BEEN MADE ON THE BAS IS OF BLANK CHEQUE BOOKS OF THE INVESTOR COMPANIESFOUND IN THE PREMISES OF THE ASSESSEE DURING THE COURSE OF FIRST SEARCH. THIS HA S BEEN SO ADMITTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER ON PAGE NO. 2 AND PAGE NO. 30 AND THE RELEVANT PARA OF THE SAME IS RE PRODUCED BELOW:- AT THE TIME OF SEARCH DATED 30.10.2012 AT CORPORAT E OFFICE OF M/S PRAKASH INDUSTRIES LTD, SRIWANBIJWASAN, NEW DELHI, VA RIOUS INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED INCLUD ING ANNEXURE A-15 TO A-25 WHICH ARE CHEQUE BOOKS OF DIF FERENT COMPANIES WITH SIGNATURES OF AUTHORIZED SIGNATORIES ON THE BLANK CHEQUES. THE DETAILS OF SOME OF THESE INCRIMINATING DOCUMENTS ARE AS FOLLOWS: I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 97 PAGE NO. 30 OF THE ASSESSMENT ORDER C. FURTHER THE CHEQUE BOOK OF THIS JAMAKHARCHI COM PANY WAS SEIZED FROM THE OFFICE PREMISES OF PRAKASH GROUP INDI CATING THAT THIS COMPANY IS CONTROLLED BY PRAKASH GROUP. 53. THE ASSESSING OFFICER HAS FURTHER STATED THAT CONSEQUENT TO THE FIRST SEARCH, SOFT COPY OF THE WORKING PAPERS, BALAN CE SHEET, TRIAL BALANCES, JOURNAL, LEDGERS, TDS CERTIFICATES, BOARD RESOLUTIONS, INCOME TAX FILING RECORDS, SLIPS OF CHEQUE BOOKS ET C. OF DIFFERENT COMPANIES CONTROLLED BY THE MANAGEMENT OF M/S PRAKAS H INDUSTRIES WERE FOUND AND THEY CONSTITUTE INCRIMINATING MATERIA L AND THEREFORE, ADDITION TO SHARE APPLICATION MONEY HAS BEEN MADE. 54. WE HAVE PERUSED THE SUBMISSIONS OF THE ASSESS EE, SUBMISSIONS OF THE REVENUE AS WELL AS THE FACTS OF THE CASE AND FIND THAT THE MATERIAL IN RESPECT OF INVESTOR COMPANIES WERE ADMI TTEDLY FOUND DURING THE COURSE OF FIRST SEARCH AND THEREFORE, IT CANNOT BE USED AGAINST THE ASSESSEE FOR MAKING THE ADDITION IN THE ASSESSMENT I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 98 PROCEEDINGS CONSEQUENT TO THE SECOND SEARCH AND THE REFORE, THE VERY BASIS OF ADDITION ON ACCOUNT OF SHARE APPLICATION M ONEY DOES NOT SURVIVE. HENCE, THE ADDITION OF RS. RS. 16,36,62,12 0/- FOR THE AY 2007-08, RS. 20,36,62,120/- FOR THE AY 2008-09, RS. 23,59,95,000/- FOR THE AY 2009-10, RS. 41,58,40,000/- FOR THE AY 2 010-11 AND RS. 15,81,65,000/- FOR THE AY 2011-12 ON ACCOUNT OF SHA RE APPLICATION MONEY STANDS DELETED AND CONSEQUENTIAL ADDITION OF B ROKERAGE @.5% ON SUCH AMOUNT OF SHARE CAPITAL ALSO STANDS DELETED . 55. WITHOUT PREJUDICE, WE HAVE EXAMINED THE NATUR E OF THE MATERIAL FOUND AND WE FIND THAT THE SAME CANNOT BE SAID TO B E INCRIMINATING. THE HONBLE HIGH COURT OF DELHI IN THE CASES OF RRJ SECURITIES (380 ITR 612), AND INDEX SECURITIES PVT. LTD. (86 TAXMANN.COM 84) AND IN MANY OTHER DECISIONS HAVE HELD THAT BLANK SIG NED TRANSFER FORMS AND BLANK CHEQUE BOOKS DO NOT CONSTITUTE INCR IMINATING MATERIAL AND THEY DO NOT LEAD TO ANY INFERENCE OF ESC APEMENT OF INCOME AND THEREFORE, CANNOT UNDER ANY STRETCH OF IM AGINATION BE SAID TO BE INCRIMINATING DOCUMENTS. THEREFORE THE A DDITION IN RESPECT OF SHARE CAPITAL CANNOT BE MADE FOR THE COM PLETED ASSESSMENT YEARS I.E. AY 2007-08 TO 2011-12 IN ABSEN CE OF ANY INCRIMINATING MATERIAL FOUND IN SEARCH. 56. ON MERITS, IN RESPECT OF SHARE CAPITAL, THE L D. AR REPEATEDLY STATED THAT AS FAR AS POSSIBLE, ALL THE DOCUMENTARY EVIDENCES INCLUDING REGISTER OF MINUTES OF MEETING OF SHAREHO LDERS WERE PRODUCED FOR VERIFICATION AND THE COPIES OF THE SAM E WERE ALSO FILED. ALL THE DOCUMENTS ESTABLISHING THE GENUINENESS OF T HE TRANSACTION INCLUDING THE BANK STATEMENTS, BOARD RESOLUTIONS, C ERTIFICATE OF I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 99 CHARTERED ACCOUNTANTS ETC. ARE ATTACHED AT PAGE NO. 156-159, 173- 174, 183,187-189, 193, 206-228, 243, 252, 258, 259, 260-268, 292,850-866 OF THE ASSESSEES PAPER BOOK.THE ASSESS EE HAS ALSO CLAIMED TO HAVE FILED EVIDENCES RELATING TO THE SOU RCE OF THE SHARE APPLICATION MONEY. A LIST CONTAINING ALL THE EVIDEN CES FILED BY THE ASSESSEE ALONGWITH THE RELEVANT PAGE NUMBERS OF THE PAPER BOOK IS REPRODUCED HEREIN-UNDER:- DETAILS FILED IN RESPECT OF AMARJOTI VANIJA PVT. LTD. PAGE NO.S OF PAPERBOOK COMPANY MASTER DETAILS AS PER RECORDS OF REGISTRAR OF COMPANIES SHOWING REGISTRATION NO., DATE OF INCORPORATION, EMAIL, CIN AND LATEST PARTICULARS 156 COPY OF PAN CARD 157 ACKNOWLEDGEMENT OF INCOME TAX RETURNS FOR AY 2010-11 158 AUDITED FINANCIAL STATEMENTS FOR AY 2010-11 174-182 BANK STATEMENTS SHOWING PAYMENT TO ASSESSEE 159-173 BANK STATEMENT OF ASSESSEE COMPANY SHOWING THE INFLOW OF SHARE APPLICATION MONEY 193-243 COMMUNICATIONS BETWEEN ASSESSEE AND AMARJYOTI VANIJA PVT. LTD. REGARDING 100,00,000 SHARE WARRANTS @ 81 PER WARRANT TAKEN BY AMARJOTI VANIJA PVT. LTD. 187-188 APPROVAL FROM BSE FOR ISSUE OF EQUITY SHARES ARISIN G ON CONVERSION OF 1 CRORE WARRANTS UNDER GUIDELINES OF SEBI 183 CERTIFIED BY CA IN ACCORDANCE WITH SEBI GUIDELINES REGARDING PRICING OF 100,00,000 WARRANTS AT RS. 81/ - PER WARRANT CONVERTIBLE INTO SHARES 267-268 RESOLUTION AT MEETING OF BOARD OF DIRECTORS, NOTICE OF EOGM, RESOLUTION AT EOGM REGARDING 100,00,000 WARRANTS TO M/S AMARJOTI VANIJA PVT. LTD. AT 81/- PER SHARE WARRANT 260-266 WARRANT CERTIFICATE REGARDING 100,00,000 WARRANTS A T 81/- PER SHARE WARRANT ISSUED TO M/S AMARJOTI VANIJA PVT. LTD. 206 OF PBK OF AY 2009-10 CERTIFICATES OF COMPANY SECRETARY CONFIRMING THE RECEIPT OF SHARE/WARRANT APPLICATION MONEY FROM M/S AMARJOTI VANIJA PVT. LTD. AND COMPLIANCE OF ALLOTMENT OF SHARES AS PER SEBI GUIDELINES ON CONVERSION ON WARRANTS 207-209 OF PBK OF AY 2009-10 I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 100 CERTIFICATE OF CHARTERED ACCOUNTANT CERTIFYING THAT THE WARRANTS WERE ALLOTTED TO M/S AMARJOTI VANIJA PVT. LTD. WHICH IS NOT A PROMOTER, COMPANY HAS COMPLIED WITH ALL THE PROVISIONS OF SEBI GUIDELINES, COMPANY HAS RECEIVED SHARE/WARRANT APPLICATION MONEY AND LOCK IN PERIOD OF SHARES OF ONE YEAR FROM THE DATE OF ALLOTMENT. 210-215 OF PBK OF AY 2009-10 DETAIL OF ALLOTMENT OF 1 CRORE EQUITY SHARES OF FAC E VALUE OF RS. 10/- AT PREMIUM OF RS. 71/- PER SHARE ON CONVERSION OF WARRANTS ALONG WITH COPY OF SHARE CERTIFICATES. 218-220 OF PBK OF AY 2009-10 LETTER OF NSDL FOR CONVERSION OF SAID WARRANTS INTO EQUITY SHARES 221-223 OF PBK OF AY 2009-10 LETTER OF BSE AND NSE FOR LISTING OF 1 CRORE EQUITY SHARES ON CONVERSION OF WARRANTS 224-227 OF PBK OF AY 2009-10 LETTER OF CENTRAL DEPOSITORY SERVICES (INDIA) LIMIT ED FOR DE-MATERIALIZATION OF SAID SHARES. 228 OF PBK OF AY 2009-10 LEDGER ACCOUNT OF M/S. AMARJOTI VANIJYA PRIVATE LIMITED IN BOOKS OF ASSESSEE FOR AY 2009-10 AND 2010-11 189-192 DETAILED CHART SHOWING THE NAMES, ADDRESSES AND PAN OF THE PERSONS TO WHOM EQUITY SHARES/WARRANTS WERE ISSUED, NUMBER OF SHARES/ WARRANTS ISSUED, AMOUNT RECEIVED AGAINST SHARES/ WARRANTS DURING THE FINANCIAL YEAR, ETC 252, 258, 259, 292 SOURCE OF MAKING INVESTMENT DETAIL OF INVESTMENT SOLD BY AMARJOTI VANIJYA PVT LTD. IN AY 2010-11 850-866 57. ALL THESE EVIDENCES HAVE NEITHER BEEN REBUTTE D NOR HAS ANY INQUIRY LED TO ANY INFERENCE THAT THESE ARE MERE PAP ER WORK AND HAVE BEEN FOUND TO BE BOGUS. BASED ON THESE EVIDENCES LD . CIT (A) HAS DELETED THE ADDITIONS IN ALL THE YEARAS ON THIS SCOR E. UNDER THESE CIRCUMSTANCES, WE HAVE NO HESITATION IN HOLDING THA T BOTH IN LAW AND ON FACTS, THE ABOVE ADDITION IS NOT CORRECT AND DES ERVES TO BE DELETED AND CONSEQUENTLY THE APPELLANT GETS RELIEF OF RS. 16 ,36,62,120/- FOR THE AY 2007-08, RS. 20,36,62,120/- FOR THE AY 2008- 09, RS. 23,59,95,000/- FOR THE AY 2009-10, RS. 41,58,40,000 /- FOR THE AY 2010-11 AND RS. 15,81,65,000/- FOR THE AY 2011-12 O N ACCOUNT OF ADDITION OF SHARE CAPITAL ANDRS. 8,18,311/-, RS. 10 ,18,310/-, RS. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 101 11,79,975/-, RS. 20,79,200/-, RS. 7,90,825/- FOR TH E AY 2007-08 TO 2011-12 RESPECTIVELY ON ACCOUNT OF UNEXPLAINED EXPEN DITURE BEING BROKERAGE. 58. IN THE RESULT, THE APPEALS OF THE REVENUE ITA NO. 4039 TO 4043/D/2017 STAND DISMISSED. 59. GROUND NO. 1 OF APPELLANTS APPEAL NO. 4064 T O 4066/D/2017 FOR THE AY 2008-09 TO 2010-11 PERTAINING TO THE ADD ITION OF CASH SALARY UNDER SECTION 69C OF THE ACT 60. THE SECOND ADDITION MADE BY THE ASSESSING OFFI CER IS UNDER SECTION 69C OF THE ACT IN RESPECT OF SALARY PAID IN CASH OF RS. 3,11,000/- IN AY 2008-09, RS. 4,19,250/- IN AY 2009 -10 AND 11,78,500/- IN AY 2010-11. THE LD. AR FOR THE ASSES SEE CLEARLY STATED THAT EVIDENCE WHICH LED TO THE ADDITION I.E, A2 AND A6 CONTAINING DETAILS OF PROPOSED CASH PAGE 15, 6 OF A 2 AND PAGE 51,53 OF A6 FOR AY 2010-11 CONTAINING DETAILS OF PROPOSED CASH WAS ALSO FOUND DURING THE COURSE OF FIRST SEARCH AND THEREFO RE, CANNOT BE PUT TO USE FOR MAKING ASSESSMENT CONSEQUENT TO THE SECO ND SEARCH AND EVEN OTHERWISE, ACCORDING TO THE APPELLANT, THE DOC UMENT IS DUMB AS IT CLEARLY STATES THAT THE SALARY WAS ONLY PROPOSED AN D NEVER PAID. THE SCREENSHOT OF THE SAID DOCUMENTS IS REPRODUCED AS UNDER. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 102 61. APART FROM THE FACT THAT THESE DOCUMENTS WERE NOT SEIZED DURIN SECOND SEARCH AND OUR FINDING GIVEN IN RESPECT OF O THER ADDITIONS WILL APPLY MUTATIS MUTANDIS, IT HAS BEEN ARGUED THAT THES E WERE PURELY IN THE NATURE OF DUMP DOCUMENTS AND ASSESSEE HAS RE BUTTED THESE DOCUMENTS BEFORE THE AUTHORITIES BELOW. IN SUPPORT, THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT V. VED PRAKASH CHAUDHARY [2010] 3 TAXMANN.COM 785, HONBLE DELHI HI GH COURT IN THE CASE OF CIT V. S.M. AGARWAL [2007] 293 ITR 43 ( DELHI), CIT V. VIVEK AGGARWAL [2015] 56 TAXMANN.COM 7 (DELHI), CIT VS. ANIL BHATIA [2010] 322 ITR 191 (DELHI HC), CIT VS. ANIL BHALLA [2010] 322 ITR 191 (DELHI), GIRISH CHAUDHARY [2008] 296 ITR 619 (DELHI) , HONBLE BOMBAY HIGH COURT IN THE CASE OF MOHD. YUS UF & ANR. VS. D& ANR. AIR 1968 BOM 112 ETC, WERE RELIED UPON. LOK ING TO THE I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 103 NATURE OF DOCUMENTS, WE HAVE NO HESITATION IN HOLDI NG THAT BASED ON THESE DOCUMENTS THIS EXPENDITURE CANNOT BE ADDED AS INCOME FROM UNDISCLOSED SOURCES AND THEREFORE, NO ADDITION CAN BE MADE. 62. GROUND NO. 2, 3, 4, 5 OF ITA NO. 4064/D/2017 FOR AY 2008-09, GROUND NO. 2, 3, 4, 5, 6 OF ITA NO. 4065/D/2017 FO R AY 2009-10, GROUND NO. 2, 3, 4 OF ITA NO. 4066/D/2017 FOR THE A Y 2010-11 AND GROUND NO. 1, 2, 3 OF ITA NO. 4067 TO 4070 FOR THE AY 2011-12 TO 2014-15 OF APPELLANTS APPEAL AND GROUND NO. 3 OF I TA NO. 4040/D/2017 OF AY 2008-09, GROUND NO. 7 AND 8 OF IT A NO. 4041/D/2017 OF AY 2009-10, GROUND NO. 5 OF ITA NO. 4042 AND 4043/D/2017 OF AY 2010-11 AND 2011-12 OF DEPARTMENT S APPEAL ARE RELATING TO THE PURCHASE OF INVESTMENT AND PURC HASE OF SCRAP. FURTHER, THERE IS AN ADDITION OF RS. 2,46,82,226/- IN AY 2008-09, RS. 1,88,64,391/- IN A.Y. 2009-10 PERTAINING TO INVESTM ENT ON PURCHASE AND RS. 1,28,70,018/- IN AY 2008-09, RS. 2,27,06,45 0/- IN AY 2009- 10, RS. 1,39,28,065/- IN AY 2010-11, RS. 41,68,654/ - IN AY 2011- 12, RS. 20,29,877/- IN AY 2012-13, RS. 26,50,649/- IN AY 2013-14 AND RS. 9,88,697/- IN AY 2014-15 PERTAINING TO PURC HASE OF SCRAP AND AN ADDITION OF RS. 49,02,650/- ON ACCOUNT OF BO GUS PURCHASE. THESE ADDITIONS HAVE BEEN MADE ON THE BASIS OF GATE REGISTERS, DOCUMENTS FROM SCRAP DEALERS, BILTIES FROM TRANSPOR TERS, ETC. FOUND IN SEARCH CONDUCTED BY THE EXCISE DEPARTMENT. THERE IS NO REFERENCE TO ANY OTHER MATERIAL FOUND DURING THE SEARCH BY INCO ME-TAX DEPARTMENT ON THE ASSESSEE. THE ONLY REFERENCE AND B ASIS OF ADDITION WERE PROCEEDINGS INITIATED UNDER THE CENTRAL EXCISE ACT. THE LD. AR FOR ASSESSEE BROUGHT TO OUR NOTICE THE ORDER OF THE PRINCIPAL I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 104 COMMISSIONER, CENTRAL EXCISE DATED 19.06.2018 AND O RDER OF HONBLE CUSTOMS, EXCISE AND SERVICE APPELLATE TRIBU NAL DATED 27.03.2019 WHICH WAS RECEIVED AFTER THE ORDER OF LD . CIT (APPEAL). HENCE, THE ASSESSEE GOT NO OPPORTUNITY TO FILE THIS ORDER WHICH CLEARLY SHOWS THAT ALL THE ADDITIONS MADE BY THE ASSE SSING AUTHORITY OF EXCISE WERE DELETED BY THE PRINCIPAL COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, EXCISE AND SERVICE APPELLATE TRIBUNAL . 63. SINCE THE ENTIRE ADDITIONS MADE BY THE ASSESS ING OFFICE WERE BASED ON THE ADDITIONS MADE BY THE ADJUDICATING OFFI CER OF EXCISE AND THE SAID ADDITIONS WERE FINALLY DELETED BY THE PRINCIPAL COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, EXCISE AND SERVICE APPELLATE TRIBUNAL, THERE IS NO QUESTION OF THE SAM E ADDITION TO BE SUSTAINED. HENCE THIS ADDITION HAS ALSO BEEN DELET ED. 64. THE ASSESSEE HAD ALSO SOUGHT CROSS EXAMINATIO N OF THE VARIOUS PERSONS REFERRED TO IN EXCISE ORDER WHICH HAS NOT B EEN PROVIDED, THE ADDITION IS ALSO AGAINST THE PRINCIPLES OF NATURAL JUSTICE. ON THIS COUNT ALSO, THE ADDITION DESERVES TO BE DELETED. 65. THUS, WE HAVE NO HESITATION TO DELETE THIS AD DITION, THE APPELLANT GETS RELIEF OF RS. 2,46,82,226/- IN AY 20 08-09, RS. 1,88,64,391/- IN A.Y. 2009-10 IN RESPECT OF ADDITIO N RELATING TO INVESTMENT ON PURCHASE AND RS. 1,28,70,018/- IN AY 2008-09, RS. 2,27,06,450/- IN AY 2009-10, RS. 1,39,28,065/- IN A Y 2010-11, RS. 41,68,654/- IN AY 2011-12, RS. 20,29,877/- IN AY 20 12-13, RS. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 105 26,50,649/- IN AY 2013-14 AND RS. 9,88,697/- IN AY 2014-15 IN RESPECT OF ADDITION RELATING TO PURCHASE OF SCRAP A ND RS. 49,02,650 IN AY 2009-10 IN RESPECT OF UNACCOUNTED INVESTMENT. 66. GROUND NO. 3 OF ITA NO. 4042 AND 4043/D/2017 FORAY 2010- 11 AND 2011-12 OF DEPARTMENTS APPEAL RELATING TO T HE PAYMENT OF LAND AT CHHATTISGARH. ADDITION TO INCOME OF RS. 23 ,99,260/- IN AY 2010-11 AND RS. 4,46,600/- IN AY 2011-12 HAS BEEN M ADE ON ACCOUNT OF PAYMENT OF LAND AT CHHATTISGARH. THIS ADD ITION IS ALSO MADE ON THE BASIS OF EVIDENCE FOUND DURING THE COUR SE OF SURVEY ON 30.10.2012 AND THEREFORE, THIS EVIDENCE CANNOT BE U SED AGAINST THE ASSESSEE FOR MAKING ADDITION IN RESPECT OF THE THES E COMPLETED ASSESSMENT YEARS. 67. EVEN OTHERWISE, THERE IS NOTHING TO SHOW THAT THE PAYMENT WAS MADE OUTSIDE THE BOOKS OF ACCOUNT. THE LD. AR FOR T HE ASSESSEE ALSO STATED THAT THE TRANSACTION PERTAINING TO DIFFERENC E OF RS. 5,56,000 IS IN RESPECT OF PURCHASE OF LAND AND HAS BEEN DULY REC ORDED IN BOOKS AND THE TRANSACTION PERTAINING TO DIFFERENCE OF RS. 732,150 PERTAINS TO M/S PRAKASH THERMAL POWER LTD WHICH IS A GROUP C ONCERN OF THE ASSESSEE COMPANY AND THE AMOUNT IS DULY ACCOUNTED BY I T. THE LD. AR FOR THE ASSESSEE ALSO STATED THAT THELD. AO HAS INCORRECTLY TOTALLED THE ADDITION TO RS. 23,99,260 INSTEAD OF R S. 12,88,150. THEREFORE, THE ADDITION STANDS DELETED AND THE ASSE SSEE GETS RELIEF OF RS. 23,99,260 IN AY 2010-11 AND RS. 4,46,600/- IN A Y 2011-12. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 106 68. GROUND NO. 4 OF ITA NO. 4042 AND 4043/D/2017FOR AY 2010-11 AND 2011-12 OF DEPARTMENTS APPEAL ARE RELATING TO THE ADDITION ON ACCOUNT OF SHIFTING OF PROFITS. THE NEXT ADDITION P ERTAINS TO SHIFTING OF PROFITS FROM THE STEEL UNIT TO THE POWER UNIT. THIS ADDITION IS ALSO BASED ON MATERIAL FOUND IN THE FIRST SEARCH. ACCORD ING TO THE ASSESSING OFFICER, THE APPELLANT HAS CHARGED RS. 5 AS RATES FOR ACQUIRING POWER FROM ITS POWER UNIT THEREBY INCREASI NG THE PROFIT OF THE POWER UNIT WHICH IS EXEMPT UNDER SECTION 80-IA OF THE ACT AND DECREASING THE PROFIT OF THE STEEL UNIT. THE EVIDEN CE FOUND DURING THE COURSE OF FIRST SEARCH SHOWED COST OF POWER MANUFAC TURED BY THE POWER UNIT. CLEARLY, THERE IS NOTHING INCRIMINATING ABOUT IT. IT ONLY SHOWS THE COST OF THE MANUFACTURE OF PER UNIT OF PO WER AND THAT ALSO DOES NOT PERTAIN TO IMPUGNED ASSESSMENT YEARS. THE C OST OF PRODUCTION IS A MATTER OF FACT AND CANNOT BE SAID L EADING TO ANY INFERENCE OF ANY INCRIMINATING MATERIAL. 69. THE ASSESSEE HAS SHOWN WITH FACTS AND FIGURES THAT THE ENTIRE PROFIT OF THE POWER UNIT AND MANUFACTURING UNIT FIN DS PLACE AS BOOK PROFIT IN ITS PROFIT AND LOSS ACCOUNT ON WHICH IT H AD PAID MAT. HENCE THERE IS NO SHIFTING OF PROFIT. ON THE CONTR ARY, TAX HAS BEEN PAID ON THE ENTIRE PROFITS OF BOTH THE UNITS. THE L D. AR FOR THE ASSESSEE FURTHER CLAIMED THAT IF THE PROFIT OF THE STEEL UNIT IS TO BE INCREASED IT WOULD BE ENTITLED TO DEDUCTION UNDER S ECTION 80IA OF THE ACT AS THE SAID UNIT IS ALSO ELIGIBLE TO THE SAME B EING BACKWARD AREA. ON MERITS ALSO, THE ASSESSEE HAS ESTABLISHED THAT T HE PURCHASE OF POWER IS AT ARMS LENGTH AND HAS GIVEN THE RATES OF POWER OF VARIOUS AUTHORITIES INCLUDING THE INDIA ENERGY EXCHANGE. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 107 70. THE DETAIL WRITTEN SUBMISSIONS OF THE ASSESSEE ON THIS ISSUE ARE ALREADY REPRODUCED BELOW:- I. A COMBINED ASSESSMENT CANNOT BE MADE UNDER SECTION 153A OF THE ACT FOR THE TWO SEPARATE SEARCHES. PROV ISIONS OF SECTION 153A MANDATE AN ASSESSMENT IN RESPECT OF EA CH OF THE 6 YEARS AND THEREFORE, ASSESSMENTS UNDER SECTIO N 153A WERE TO BE MANDATORILY MADE IN RESPECT OF THE FIRST SEARCH ALSO BASED ON THE INCRIMINATING MATERIAL SEIZED, IF ANY II. ASSESSMENTS IN PURSUANCE OF THE FIRST SEARCH DO NOT ABATE DUE TO THE SUBSEQUENT SEARCH III. MATERIAL FOUND DURING THE FIRST SEARCH WAS NOT INCR IMINATING AND DOES NOT EVEN PERTAIN TO THE ASSESSMENT YEAR IN WHICH ADDITION IS MADE DESCRIPTION OF MATERIAL FOUND FOUND IN WHICH SEARCH PAGE NO. OF ASSESSMENT ORDER A-6 (PG 6,8,37) SHOWING POWER COST PER UNIT DATED 14.5.12 AND 20.08.12 @3.04 AND 2.09 PER UNIT RESPECTIVELY FOUND IN FIRST SEARCH PAGE 39 I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 108 1. MATERIAL FOUND DURING FIRST SEARCH CANNOT BE USED I N MAKING ASSESSMENTS IN PURSUANCE TO THE SECOND SEARCH A SINGLE ASSESSMENT ORDER HAS BEEN PASSED UNDER SEC TION 153A OF THE ACT BY CONSIDERING THE SECOND SEARCH. T HE ORDER IS PASSED AFTER THE LIMITATION PERIOD OF FIRST SEAR CH BUT WITHIN LIMITATION PERIOD OF SECOND SEARCH. THEREFOR E NO ASSESSMENT HAS BEEN MADE CONSEQUENT TO THE FIRST SE ARCH. HOWEVER MATERIAL OF THE FIRST SEARCH HAS BEEN USED FOR MAKING THE ADDITION. IF THE DEPARTMENT HAS NOT MADE AN ASSESSMENT IN PURSUANCE TO THE FIRST SEARCH, MATERI AL FOUND DURING THE COURSE OF THE SAID FIRST SEARCH CANNOT B E USED IN RESPECT OF THE ASSESSMENT YEARS RELATING TO AND IN CONSEQUENCE OF THE SECOND SEARCH. 2. SEIZED MATERIAL DOES NOT PERTAIN TO THE IMPUGNED AY A. THE SCREENSHOT OF THE DOCUMENT AT PAGE 39 OF ASSESSMENT ORDER SHOWING THE DATE AND COST OF POWER PER UNIT SHOWS THE COST OF RS. 3.04 PER UNIT ON 14.05.2012 AND THE COST OF 2.09 PER UNIT ON RS. 20.08.12. QUITE OBVIOUSLY, THE SEIZED DOCUMENT PERTAINS TO THE AY 2013-14 AND THEREFORE C ANNOT BE USED FOR MAKING THE ADDITION IN AY 2010-11. IT W OULD BE CLEARLY IMPERMISSIBLE AS THE SEIZED MATERIAL AVAILA BLE WITH THE AO HAS NO NEXUS WITH THE ASSESSMENTS IN WHICH ADDITION HAS BEEN MADE AND IS WHOLLY IRRELEVANT FOR THE PURPOSE OF ASSESSING THE INCOME OF THE ASSESSEE FOR THE I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 109 YEARS IN QUESTION. ADMITTEDLY, THERE IS NO SEIZED M ATERIAL IN THE YEARS FOR WHICH ADDITION HAS BEEN MADE. B. INFACT, THE LD. AO HAS HIMSELF STATED AT PAGE 39 TH AT AS PER THE ABOVE DOCUMENTS COST OF POWER PER UNIT IN FY 2 012-13 IS RS. 2.09 AND RS. 3.04 BUT AS PER BOOKS OF ACCOUN TS ASSESSEE COMPANY HAS CHARGED RS. 5 PER UNIT FROM ASSESSEES OWN STEEL DIVISION DURING THE YEAR. FROM THE ABOVE DOCUMENTS IT IS TRANSPIRED THAT ASSESSEE IS C HARGING HIGHER RATE FROM ITS OWN STEEL DIVISION TO REDUCE T AXABLE PROFIT OF STEEL DIVISION AND BY CLEARING EXEMPTION UNDER 80IA FOR POWER DIVISION. C. THEREFORE, IN THE ABSENCE OF ANY CO-RELATION BETWEE N THE DOCUMENT SEIZED AND THE ASSESSMENT YEARS UNDER APPE AL AND SPECIFIC INCRIMINATING INFORMATION OR DOCUMENT RELATABLE TO ASSESSEE FOR THE ASSESSMENT YEAR IN QUESTION, IM PUGNED ASSESSMENT U/S. 153A IS BAD IN LAW. THEREFORE, THE REQUIREMENT THAT THE DOCUMENT SHOULD RELATE TO THE ASSESSMENT YEAR SOUGHT TO BE REOPENED IS NOT FULFIL LED. IV. NO INCRIMINATING MATERIAL FOUND DURING THE COURSE O F SEARCH AND THEREFORE ASSESSMENTS IN PURSUANCE TO THE SEARC H CANNOT BE MADE SINCE AY 2010-11 WAS COMPLETED ASSESSMENT ON DATE OF SEARCH I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 110 V. TAX HAS BEEN PAID ON BOOK PROFITS AND ANY CHANGE IN SALE PRICE WILL NOT IMPACT THE BOOK PROFITS 1. THE ASSESSEE HAS PAID TAX OF RS. 42.81 CRORES ON BO OK PROFITS OF RS. 251.89 CRORES REFER PAGE 141-142 AND 507-508 OF PBK. 2. EVEN IF THE ALLEGATION OF THE LD. AO IS BELIEVED TO BE TRUE, EVEN THEN THERE WILL BE NO CHANGE IN THE TAX LIABIL ITY OF THE ASSESSEE. 3. THE BOOK PROFITS WILL REMAIN UNCHANGED AS THE PROFI T OF POWER DIVISION WILL REDUCE BUT PROFIT OF STEEL DIVI SION WILL INCREASE BY THE SAME AMOUNT. THE TAX LIABILITY AS P ER NORMAL PROVISIONS WOULD STILL BE LESS THAN TAX AS P ER MAT. 4. THE ASSESSEE SUBMITTED THE SAME BEFORE THE LD. AO A ND EVEN FILED THE COMPUTATION BEFORE AND AFTER CONSIDE RING THE ADDITION MADE BY THE LD. AO. HOWEVER THE LD. AO FAI LED TO CONSIDER THE SAME. 5. THE LD. CIT (A) HAS CONSIDERED THIS REPLY AND DELET ED THE ADDITION STATING THAT ASSESSEE HAS PAID TAX UNDER M AT AND NO DEMAND IS CREATED BY AO AFTER REDUCING DEDUCTION UNDER 80IA OF ACT HENCE NO TAX BENEFIT IS ACHIEVED BY THE ASSESSEE. VI. EXPLANATION GIVEN BY ASSESSEE I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 111 AY GROSS POWER PRODUCTION IN UNITS BY POWER DIVISION CAPTIVE CONSUMPTI ON BY POWER DIVISION NET POWER AVAILABLE SOLD BY POWER TO STEEL AVG RATE PU AT WHICH POWER SOLD BY POWER TO STEEL DIVISION AVER AGE RATE IEX PEAK RATE IEX POWER SOLD BY POWER DIVISION TO CSEB / OTHERS THROUGH STATE ELECTRICIT Y BOARD QUANTITY OF POWER PURCHASED BY STEEL FROM CSEB AVG RATE PU AT WHICH POWER PURCHASE D BY STEEL DIVISION FROM CSEB AY 10- 11 689,338,905 92,797,699 596,541,206 5 5.07 10.98 0 70,408,032 3.72 1. THE ADDITION WAS MADE ON THE DIFFERENCE IN PRICE CH ARGED BY POWER DIVISION FROM STEEL DIVISION AS PER THE BO OKS OF ACCOUNTS AND THE AVERAGE RATE AT WHICH POWER WAS PURCHASED BY STEEL DIVISION FROM CHATTISGARH STATE ELECTRICITY BOARD (CSEB). 2. PRICE CHARGED FOR POWER WAS IN CONSONANCE WITH RATE CHARGED BY CSEB AND RATES THAT PREVAILED IN INDIA E NERGY EXCHANGE (IEX) WHICH IS A STATUTORY BODY THAT DET ERMINES AND PUBLISHES THE CONTEMPORARY RATES OF POWER IN TH E COUNTRY ON BASIS OF DEMAND AND SUPPLY. 3. THE LD. AO FAILED TO CONSIDER THE REASONS AND EXPLA NATION GIVEN BY THE ASSESSEE FOR CHARGING HIGHER PRICE FRO M STEEL DIVISION. IF STEEL DIVISION WOULD HAVE PURCHASED PO WER FROM CSEB OR THE MARKET, IT WOULD HAVE PAID A HIGHER PRI CE. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 112 AVERAGE RATE OF POWER PURCHASED BY STEEL DIVISION F ROM CSEB WAS 3.72 PER UNIT FOR AY 2010-11. THE ASSESSEE ALSO EXPLAINED THAT THE STEEL DIVISION REQUIRED CONTINUO US UNINTERRUPTED SUPPLY OF POWER FROM ITS OWN POWER DI VISION AND WAS READY TO PAY NOMINAL HIGHER PRICE IN COMPAR ISON TO CSEB AS NON AVAILABILITY OF POWER WOULD HAVE RESULT ED IN FREQUENT SHUTDOWNS AND HUGE PRODUCTION LOSS. THEREF ORE, IT COULD NOT DEPEND ON CSEB AS THERE WAS FREQUENT TRIP PING IN SUPPLY OF POWER FROM THE GRID. 4. THE ASSESSEE FURNISHED THE FOLLOWING TO ESTABLISH GENUINENESS: DETAILS OF COST OF GENERATION OF POWER REFER PAGE 511 DETAILS OF SALES MADE BY THE POWER DIVISION OF THE ASSESSEE COMPANY TO OTHER DIVISIONS OF THE COMPANY AND TO OP EN MARKET REFER PAGE 512 COPY OF ORDER PASSED BY CHATTISGARH STATE ELECTRICI TY REGULATORY COMMISSION FIXING RATE FOR PURCHASE OF P OWER BY STATE OF CHATTISGARH REFER PAGE 390-410 LETTER OF INTENT FOR SALE OF POWER BY ASSESSEE TO O UTSIDE PARTIES- REFER PAGE 411-417 AVERAGE RATE OF POWER AS PER INDIA ENERGY EXCHANGE COPY OF RATES AS PER IEX - REFER PAGE 418-425 AVERAGE RATE OF POWER PURCHASED BY STEEL DIVISION F ROM CSEB MONTH WISE DETAILS OF POWER PURCHASED FROM CSEB ALO NG WITH BILLS -REFER PAGE 426-506 I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 113 5. THE LD. AO ABSOLUTELY IGNORED THE REPLY FILED BY TH E ASSESSEE AND MADE THE ADDITION. A. A.T. KEARNEY INDIA (P.) LTD. V. ACIT [2014] 35 ITR( T) 100 (DELHI - TRIB.) NOW AS REGARDS (II) ABOVE, THE MAJOR THRUST OF ARGUMENTS HAS BEEN ON IT. THIS INGREDIENT PROVIDES COURSE OF BUSINESS BETWEEN THE ASSESSEE AND SUCH OTHER CLOSELY CONNECT ED PERSON SHOULD BE SO ARRANGED THAT IT PRODUCES MORE THAN THE ORDINARY PROFITS TO THE ASSESSEE CARRYING ON ELIGIB LE BUSINESS. A BARE READING OF THE RELEVANT PART OF THE PROVISIO N INDICATES THAT IN ORDER TO INVOKE THIS PROVISION, IT IS OF UT MOST IMPORTANCE ON THE PART OF THE ASSESSING OFFICER TO FIRST DEMONSTRATE THAT THE TRANSACTIONS BETWEEN THE ASSES SEE AND THE OTHER RELATED PERSON WERE 'ARRANGED' WITH A VIE W TO PRODUCE MORE PROFIT TO THE ASSESSEE CARRYING ON ELI GIBLE BUSINESS.[PARA 8.3] SUB-SECTION (10) IS A DEEMING PROVISION AND IT MUST BE STRICTLY CONSTRUED, THE ASSESSING OFFICER MUST SHOW AT THE FIRST INSTANCE THAT THE COURSE OF BUSINESS BETWEEN THESE CLOSELY CONNECTED PERSONS WAS ARRANGED SO AS TO PRO DUCE MORE THAN ORDINARY PROFITS IN THE HANDS OF A PERSON CARRYING ON THE ELIGIBLE BUSINESS. SUCH A POSITION HAS TO BE NECESSARILY PROVED. THERE CAN BE NO INFERENCE AS TO THE FULFILMENT OF SUCH A CONDITION. THUS, IT IS VIVID T HAT UNLESS SUCH 'ARRANGEMENT' OR MANIPULATION IS SHOWN TO EXIS T, THERE I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 114 CAN BE NO QUESTION OF DISCARDING THE DECLARED ACTUA L PROFIT AND SUBSTITUTING IT WITH A REASONABLE PROFIT. IT IS MANIFEST THAT THERE ARE TWO COMPONENTS OF THIS. FIRST IS THE 'ARRANGEMENT' BETWEEN THE RELATED PARTIES AND SECON D, SUCH ARRANGEMENT SHOULD LEAD TO HIGHER PROFIT. HIGH PROF IT MUST NECESSARILY BE THE CONSEQUENCE OF SUCH AN ARRANGEME NT. TO PUT IT SIMPLY, IF SUCH AN 'ARRANGEMENT' IS A CAUSE, THE HIGHER PROFIT IS ITS 'EFFECT'. IT IS WELL KNOWN THAT HIGHE R OR LOWER PROFIT OF A BUSINESS CAN BE AS A RESULT OF THE CUMULATIVE EFFECT OF SEVERAL FACTORS. TO CITE AN EXAMPLE, IF ONE PERSON SUCCEEDS IN CUTTI NG DOWN ITS COSTS WITHOUT AFFECTING THE QUALITY OF OUTPUT, HE WILL NATURALLY EARN MORE PROFIT THAN OTHERS IN THE SAME LINE OF BUSINESS. SIMILARLY, ECONOMIES OF SCALE ALSO AFFECT THE PROFIT. IN THE LIKE MANNER, THE EXTENT OF ADMINISTRATIVE, M ARKETING AND SELLING EXPENSES ALSO HAS A BEARING ON THE OVER ALL PROFIT OF A BUSINESS. OTHER FACTORS FOR THE INCREASE IN TH E PROFITS MAY BE ECONOMICAL PURCHASES OR COSTLY SALES. IF A BUSINESSMAN MANAGES TO MAKE ECONOMICAL PURCHASES FR OM THE MARKET, HE WILL NATURALLY EARN MORE PROFIT. ON THE OTHER HAND, IF THE PURCHASES ARE NOT ACTUALLY ECONOMICAL, BUT BECAUSE OF THE CLOSE CONNECTION WITH THE SELLER, TH E ARRANGEMENT IS SUCH SO AS TO SHOW LOW PURCHASE PRIC E IN THE ACCOUNTS OF THE PERSON CARRYING ON ELIGIBLE BUSINES S, THE APPARENT PROFIT WILL STILL BE HIGH. THOUGH IN BOTH SUCH CASES, THE PROFIT OF THE ELIGIBLE BUSINESS HAS SHOT UP, BU T IN THE FIRST INSTANCE, IT IS HIGHER DUE TO EFFICIENCIES AND IN T HE SECOND, IT I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 115 IS HIGHER DUE TO 'ARRANGEMENT'. SIMILARLY, IF A BUS INESSMAN MANAGES TO MAKE SALES IN THE MARKET AT A HIGHER PRI CE BECAUSE OF ITS EFFECTIVE SELLING TECHNIQUES, HE WIL L EARN MORE PROFIT. ON THE OTHER HAND, IF THE SALES ARE NOT AT HIGH PRICE BECAUSE OF THE EFFECTIVE MARKETING STRATEGY, BUT BE CAUSE OF THE CLOSE CONNECTION WITH THE BUYER, THE ARRANGEMEN T IS SUCH SO AS TO SHOW HIGHER SALE PRICE IN THE ACCOUNTS OF THE PERSON CARRYING ON ELIGIBLE BUSINESS, THE PROFIT WILL STIL L BE HIGH. THOUGH IN BOTH THE CASES THE PROFIT OF THE ELIGIBLE BUSINESS WILL BE HIGHER, BUT IN THE FIRST INSTANCE IT WILL B E HIGHER DUE TO BETTER MARKETING STRATEGY AND IN THE SECOND, IT WIL L BE HIGHER DUE TO 'ARRANGEMENT'. WHAT IS RELEVANT FOR INVOKING SUB- SECTION (10) IS THE PREVALENCE OF THE SECOND SITUAT ION ABOVE WHERE THE HIGHER PROFIT HAS RESULTED DUE TO 'ARRANG EMENT' BETWEEN THE ASSESSEE AND ITS CLOSELY CONNECTED PERS ON AND NOT THE FIRST, WHERE THE HIGHER PROFIT RESULTED DUE TO THE ASSESSEE'S EFFECTIVELY MANAGING THE BUSINESS . THUS, IT IS EVIDENT THAT THOUGH IN BOTH THE SITUATI ONS, THE PROFIT IS HIGHER, BUT RECOURSE TO SUB-SECTION (10) CAN BE TAKEN ONLY IN THE CASE OF 'ARRANGEMENT' BETWEEN THE ASSES SEE AND THE CLOSELY CONNECTED PERSON. IN OTHER WORDS, THE M ERE HIGHER PROFIT OF THE PERSON CARRYING ON THE ELIGIBLE BUSIN ESS IS NO CRITERIA TO PRESS INTO SERVICE THIS PROVISION, UNLE SS THE 'ARRANGEMENT' IS PROVED IN THE FIRST INSTANCE. THE 'ARRANGEMENT' NEEDS TO BE SPECIFICALLY PROVED BY TH E ASSESSING OFFICER BY SHOWING THAT THE ASSESSEE INTENTIONALLY MADE PURCHASES AT A RELATIVELY LOWER RATE I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 116 FROM THE CLOSELY CONNECTED PERSON VIS--VIS THAT AVAILABLE IN THE MARKET FOR THE SAME PRODUCTS OR TH E ASSESSEE MADE SALES TO THE CLOSELY CONNECTED PERSON AT A RELATIVELY HIGHER RATE VIS--VIS THE PREVAILING M ARKET PRICE OF THE SIMILAR PRODUCTS ETC. OR THAT THE ASSE SSEE HAVING ELIGIBLE INCOME BOOKED RELATIVELY LESS EXPEN SES OR SHOWED RELATIVELY MORE INCOME ON OTHER COUNTS IN TRANSACTIONS WITH CLOSELY CONNECTED PERSON. IT IS ONLY WHEN THE EXISTENCE OF' 'ARRANGEMENT' IS PROVED IN T HIS MANNER THAT THE PROVISIONS OF SUB-SECTION (10) CAN BE EMPL OYED TO REDUCE THE EXTRAORDINARY PROFITS RESULTING FROM SUC H LOWER PAYMENTS OR EXCESS RECOVERIES TO/FROM THE RELATED P ERSON. TO PUT IT SIMPLY, THE HIGHER PROFIT SHOWN BY THE ELIGI BLE ASSESSEE IS THE END POINT OF THE EXERCISE TO BE UNDERTAKEN B Y THE ASSESSING OFFICER IN THIS REGARD, STARTING WITH EXP RESSLY SHOWING AS TO HOW THE TRANSACTIONS WERE SPECIFICALL Y ARRANGED TO PRODUCE MORE THAN ORDINARY PROFITS TO T HE ASSESSEE CARRYING ON THE ELIGIBLE BUSINESS. THE MERE HIGHER PROFIT EARNED BY SUCH ELIGIBLE ASSESSEE CAN BE NO REASON TO CONCLUDE THAT THE ASSESSEE TRANSACTED IN SUCH AN 'ARRANGED' MANNER WITH ITS RELATED PERSONS SO AS TO PRODUCE MORE PROFITS TO IT.THEREFORE, THE HIG HER PROFIT SHOULD BE THE 'EFFECT' OF SUCH AN 'ARRANGEME NT' AND CANNOT BE A SUBSTITUTE OF SUCH 'ARRANGEMENT' IT SELF, WHICH IS A 'CAUSE', FOR INVOKING SUB-SECTION (10) O F SECTION 80-IA.[PARA 8.5] I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 117 IT CAN BE SEEN FROM THE FACTS OF THE INSTANT CASE THAT THE ASSESSING OFFICER HAS SIMPLY TREATED HIGH PROFI T EARNED BY THE ASSESSEE AS A REASON TO SUMMON SUB- SECTION (10), WITHOUT EVEN REMOTELY DEMONSTRATING T HE EXISTENCE OF ANY 'ARRANGEMENT' BETWEEN THE ASSESSEE AND ITS AES AIMED AT PRODUCING EXTRAORDINARY PROFIT S IN THE HANDS OF THE ASSESSEE. THE CONCLUSION DRAWN BY THE AUTHORITIES BELOW IN SUCH CIRCUMSTANCES CANNOT BE E X CONSEQUENTI SUSTAINED.[PARA 8.6] B. ADDITIONAL COMMISSIONER OF INCOME-TAX, RANGE-9, PUN E V. KALA GENSET (P.) LTD. [2015] 57 TAXMANN.COM 328 (PUNE - TRIB.) 6.8 THE ASSESSING OFFICER HAS INVOKED SUB-SECTION (10) OF SECTION 80IA. IN THIS REGARD, THE STAND OF THE ASSE SSEE IS THAT SUB-SECTION (10) IS NOT APPLICABLE SINCE IT IS APPL ICABLE TO THE TRANSACTIONS BETWEEN THE ASSESSEE AND THIRD PERSON. IN THIS CASE BEFORE US, THE TRANSACTIONS ARE BETWEEN THE TW O UNITS OF THE ASSESSEE AND IF AT ALL, ANY PROVISION IS TO BE APPLIED I.E. SUB-SECTION (8) OF SECTION 80IA. AS PER THE SAID SE CTION, IF ANY GOODS ARE TRANSFERRED TO AN ELIGIBLE BUSINESS FROM OTHER BUSINESS AND THE CONSIDERATION OF THE GOODS TRANSFE RRED DOES NOT CORRESPOND TO THE MARKET VALUE THEN THE ASSESSI NG OFFICER HAS THE POWER TO RE-COMPUTE THE PRICE AND DISALLOW THE DEDUCTION. FOR APPLYING THE PROVISIONS OF SUB-SECTI ON (8), THE ASSESSING OFFICER CAN MAKE DISALLOWANCE ON CONCRETE BASIS AND NOT ON PRESUMPTIONS AND SURMISES. THE ASSESSING I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 118 OFFICER HAS NOT BEEN ABLE TO POINT OUT THAT THE MAR KET VALUE OF THE CANOPIES SOLD BY CHAKAN UNIT TO SILVAS SA UNIT WAS MUCH HIGHER. THE ASSESSEE HAS CLARIFIED THAT THE CANOPIES SOLD TO KIRLOSKAR WERE NOT COMPARABLE TO T HE CANOPIES SOLD TO SILVASSA UNIT. SECONDLY, HE HAS CO NSIDERED AN INDIRECT BENEFIT OF RS. 10,000/- FOR THE CANOPIE S IN RESPECT OF WHICH NO COMPARABLE PRICE HAS BEEN CITED. THUS, THIS ADDITION IS NOT JUSTIFIED AND METHOD ADOPTED BY THE ASSESSING OFFICER IS NOT CORRECT AND THE ADDITION I N QUESTION IS ON PRESUMPTIONS AND SURMISES . THE LOWER AUTHORITIES HAVE NOT PROPERLY APPRECIATED THE FACTS. THEY HAVE NOT P ROPERLY CONSIDERED THE VARIOUS CONTENTIONS RAISED ON BEHALF OF ASSESSEE FOR HIGHER NET PROFIT MARGIN IN SILVASSA U NIT. THE ASSESSEE HAS GIVEN DETAILED CHARTS GIVEN BASIS OF A LLOCATION OF COMMON EXPENSES TO BOTH THE UNITS. IN RESPECT OF COMMON EXPENSES, THE ASSESSEE HAS ALLOCATED MOST OF THE EX PENSES ON TURNOVER BASIS. 6. NOTHING CONTRARY HAS BEEN BROUGHT TO OUR KNOWLED GE ON BEHALF OF REVENUE. FACTS BEING SIMILAR, SO FOLLOWIN G THE SAME REASONING, WE HOLD THAT THERE IS NO CONCRETE EVIDEN CE THAT THE ASSESSEE HAS SHIFTED THE PROFIT OF CHAKAN UNIT TO S ILVASSA UNIT AT SUCH A MAGNITURE AND HENCE, THE ADDITION SU STAINED BY CIT(A) COULD NOT BE SUSTAINED, AS SUCH, AT THE S AME TIME, THE OBJECTION OF REVENUE AUTHORITIES ON THIS POINT CANNOT BE REJECTED AS IN TOTO.TAKING INTO ALL THE FACTS AND C IRCUMSTANCES IN TO CONSIDERATION, THE DEDUCTION OF CLAIM U/S.80I B(5)(I) IS I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 119 RESTRICTED TO 15% AS AGAINST DONE BY THE CIT(A). AS A RESULT, THIS ISSUE IS PARTLY ALLOWED. VII. ADDITION MADE ON ASSUMPTIONS AND SURMISES 1. THE LD. AO HAS COMPARED THE REVENUE, PROFIT AND GP RATIO OF POWER DIVISION WITH STEEL DIVISION (GP OF POWER WAS MUCH HIGHER) AND STATED THAT THERE HAS BEEN CONSISTENT I NCREASE IN PROFITS OF POWER WHEREAS PROFITS OF STEEL HAVE BEEN REDUCING 2. HE HAS MADE THE ADDITION ON ASSUMPTIONS AND SURMISE S BY REFERRING TO DIFFERENCE IN TURNOVER, EXPENSES AND G ROSS PROFIT RATE OF POWER AND STEEL DIVISION. A. DELHI HIGH COURT IN CASE OF PRINCIPAL COMMISSIONER OF INCOME-TAX V. CINCOM SYSTEMS INDIA (P.) LTD. [2019] 103 TAXMANN.COM 161 (DELHI) THE FINDINGS OF THE TRIBUNAL ARE UNCHALLENGEABLE. THE ASSESSING OFFICER WAS UNABLE TO POINT OUT ANY DEFEC TS, DEFICIENCIES OR WRONG ENTRY IN THE BOOKS OF ACCOUNT FOR THE EXEMPT AND NON-EXEMPT UNIT. THE ACT DOES NOT PROHIB IT AN ASSESSEE FROM HAVING NON-STPI UNIT AND STPI UNIT. T HIS IS NOT THE CASE AND THE ALLEGATION MADE BY THE REVENUE. IT IS ALSO NOT THE CASE AND ALLEGATION OF THE REVENUE THAT THE BUSINESS OR ORDERS UNDERTAKEN BY THE NON-STPI UNIT WERE TRAN SFERRED TO THE STPI UNIT. THE TWO LINES OF BUSINESS WERE SE PARATE. THE FINDING THAT THE TWO LINES OF BUSINESS WERE SEP ARATE HAS I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 120 NOT BEEN QUESTIONED. EXPENDITURE DECLARED AND DISCL OSED AS INCURRED FOR NON-EXEMPT UNIT COULD NOT BE TREATED A ND TRANSPOSED AS EXPENDITURE INCURRED ON EXEMPT UNIT, ON ASSUMPTIONS AND SURMISES BY REFERRING TO DIFFERENCE IN TURNOVER, EXPENSES AND NET PROFIT RATE OF EXEMPT AN D NON- EXEMPT UNITS.THIS CANNOT JUSTIFY THE ASSESSING OFFI CER'S DIRECTION TO SHIFT 90 PER CENT OF THE EXPENDITURE F ROM THE NON- EXEMPT UNIT AND TREAT IT AS EXPENDITURE OF THE EXEM PT UNIT, THEREBY REDUCING THE PROFIT IN THE STPI UNIT. INFERENCE AND DEDUCTION SOLELY BASED AND PREDICATED ON NET PROFIT RATE IS NOTHING BUT A SURMISE AND CONJECTURE. UNDER SECTION 144 OF THE ACT, BOOK RESULTS CANNOT BE REJE CTED ONLY ON THE GROUND OF DECREASE OR DIFFERENCE IN GROSS PR OFIT RATE COMPARED TO OTHER YEARS OR ANOTHER ASSESSEE. NEITHER CAN THE BOOK RESULTS BE REJECTED FOR THE REASON THAT GR OSS OR NET PROFIT RATES IN THE TWO LINES OF BUSINESS AR E DIFFERENT. THE DIFFERENCE CAN BE THE STARTING POINT OF INVESTIGATION AND VERIFICATION BUT NOT THE ESSENCE TO REJECT THE BOOK RESULTS AND MAKE BEST JUDGMENT ASSESSMENT. [PA RA 7] B. CIT V. SCHMETZ INDIA (P.) LTD. [2012] 26 TAXMANN.CO M 336 (BOM.) 8. SO FAR AS QUESTIONS (A) & (B) ARE CONCERNED, WE FIND THAT THE TRIBUNAL HAS CONSIDERED THE ENTIRE EVIDENCE AND ON FACTS COME TO THE CONCLUSION THAT THE PROFITS EARNED BY K ANDLA DIVISION OF THE RESPONDENT-ASSESSEE IS NOT ABNORMAL LY HIGH DUE TO ANY ARRANGEMENT BETWEEN THE RESPONDENT-ASSES SEE I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 121 AND ITS GERMAN PRINCIPAL. THE TRIBUNAL CORRECTLY HELD THAT EXTRAORDINARY PROFITS CANNOT LEAD TO THE CONCLUSION THAT THIS IS AN ARRANGEMENT BETWEEN THE PARTIES. THIS WOULD PENALIZE EFFICIENT FUNCTIONING. FURTHER, THE AUTHORITIES HAVE ALSO RECORDED A FINDING THAT T HE INDUSTRIAL SEWING MACHINE NEEDLES IMPORTED AND TRAD ED BY THE MUMBAI DIVISION ARE DIFFERENT FROM THOSE MANUFA CTURED & EXPORTED BY THE KANDLA DIVISION. CONSEQUENTLY, THIS ALSO NEGATIVES ANY ARRANGEMENT BETWEEN THE PARTIES TO SH OW EXTRAORDINARY PROFITS IN RESPECT OF ITS KANDLA DIVI SION SO AS TO CLAIM DEDUCTION UNDER SECTION 10A OF THE ACT. THESE ARE FINDINGS ONE OF FACT. THE APPELLANT-REVENUE HAVE NO T BEEN ABLE TO SHOW THAT THE FINDINGS ARE PERVERSE OR ARBI TRARY. IN THE CIRCUMSTANCES, QUESTIONS (A) AND (B) AS FORMULA TED BY THE APPELLANT/REVENUE DO NOT RAISE SUBSTANTIAL QUESTION S OF LAW IN THE PRESENT FACTS AND ARE THEREFORE DISMISSED. C. AQUILA SOFTWARE SERVICES HYDERABAD (P.) LTD. V. DEP UTY COMMISSIONER OF INCOME-TAX, CIRCLE-10 (2), HYDERABAD[2015] 42 ITR(T) 630 (HYDERABAD - TRIB.) ON PLAIN READING OF THE AFORESAID PROVISION, IT IS CLEAR THAT AS PER THE SAID PROVISION THREE CONDITIONS HAVE TO BE FULFILLED. FIRSTLY, THERE MUST BE CLOSE CONNECTION BETWEEN ASS ESSEE CARRYING ON THE ELIGIBLE BUSINESS AND THE OTHER PER SON. SECONDLY, THE BUSINESS BETWEEN ASSESSEE AND SUCH OT HER CLOSELY CONNECTED PERSON SHOULD BE SO ARRANGED THAT BUSINESS TRANSACTED BETWEEN THEM PRODUCES MORE THAN THE I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 122 ORDINARY PROFITS TO ASSESSEE CARRYING ON ELIGIBLE B USINESS. IF AO IS SATISFIED WITH THE AFORESAID TWO CONDITIONS, THEN, AS PER THE THIRD CONDITION, HE MAY TAKE THE AMOUNT OF PROFITS AS MAY BE REASONABLY DEEMED TO HAVE BEEN DERIVED FROM TRANSACTIONS OF SUCH BUSINESS IN COMPUTING PROFITS OF SUCH ELIGIBLE BUSINESS FOR THE PURPOSE OF DEDUCTION UNDE R THE SAID SECTION. CONSIDERING THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE AFORESAID STATUTORY PROVISIONS, IT IS TO BE SEEN THAT THE FIRST CONDITION IS FULFILLED AS ASSESSEE AND ITS AE ARE RELATED PARTIES. HOWEVER, AS FAR AS THE SECOND CONDITION I. E. EXISTENCE OF ARRANGEMENT BETWEEN ASSESSEE AND ITS R ELATED PARTY BY WHICH THESE TRANSACTIONS SO ARRANGED HAS T O PRODUCE MORE THAN THE ORDINARY PROFITS IN THE HANDS OF ASSESSEE, WHETHER HAS BEEN FULFILLED OR NOT NEEDS T O BE EXAMINED. ON PERUSAL OF THE ASSESSMENT ORDER, IT IS VERY MUCH EVIDENT THAT ONLY RELYING UPON TP DOCUMENT OF ASSESSEE WHEREIN IT IS STATED THAT AVERAGE PROFIT MARGIN OF COMPARABLE COMPANY IS 15% AS AGAINST 50% OF ASSESSEE, AO HAS CONCLUDED THAT PROFIT EARNED BY ASSESSEE IS NOT AT ARM'S LENGTH. AO HAS NOT GIVEN A CONCLUSIVE FINDING AS TO WHETHER EARNING OF SUCH EXCESS PROFIT IS AS A RESULT OF BUSINESS ARRANGEMEN T BETWEEN THE PARTIES EVEN, LD. CIT(A) HAS ALSO NOT GIVEN ANY FACTUAL FIN DING ON THE ISSUE TO CONCLUSIVELY PROVE THAT ASSESSEE AND ITS R ELATED PARTY HAS ARRANGED THEIR BUSINESS AFFAIRS IN SUCH A MANNER THAT IT WILL RESULT IN MORE THAN REASONABLE PROFIT TO ASSESSEE. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 123 MERELY RELYING UPON THE FACT THAT IN THE TP DOCUMENTATION THE AVERAGE MARGIN OF COMPARABLE COMPANIES ARE 15% WHERE AS THE ASSESSEE HAS SHOWN PROFIT AT 50%, THE DEPARTMENTAL AUTHORITIES HAVE REDUCED THE DEDUCTION CLAIMED U/S 10A BY RESTRICTIN G THE PROFIT FROM THE ELIGIBLE BUSINESS OF ASSESSEE T O 20% OF THE TURNOVER. IN OUR VIEW, THE DEPARTMENT HAVING NOT FULFILLED THE CONDITIONS OF SECTION 80IA(10), DISALLOWANCE IN THE PRESENT CASE IS NOT JUSTIFIED . AT THE COST OF REPETITION, IT NEEDS TO BE STATED THAT ONLY RELYING UPON TP DOCUMENTATION, AO HAS INFERRED THAT THE PROFIT E ARNED BY ASSESSEE AT 50% IS MORE THAN THE ARM'S LENGTH PROFI T. HOWEVER, WITHOUT BRINGING MATERIAL ON RECORD THAT T HE PROFIT EARNED BY ASSESSEE AT 50% IS NOT THE PROFIT ORDINAR ILY EARNED IN SIMILAR LINE OF BUSINESS, IT CANNOT BE SAID THAT IT IS NOT AT ARM'S LENGTH. MOREOVER, EXCESS PROFIT MAY BE DUE TO VARIOUS REASONS. THEREFORE, WITHOUT ANALYSING THOSE FACTORS , IT CANNOT BE SAID THAT ONLY BECAUSE AVERAGE PROFIT EARNED BY COMPARABLES IS 15%, THE PROFIT EARNED BY ASSESSEE A T 50% IS NOT REASONABLE. THE CHENNAI BENCH OF THE TRIBUNAL I N CASE OF TWEEZMEN INDIA (P.) LTD. V. ADDL. CIT [2010] 133 TT J 308 WHILE CONSIDERING SIMILAR ISSUE HELD THAT THE PROVI SIONS OF SECTION 80IA(10) DO NOT GIVE ARBITRARY POWER TO AO TO FIX THE PROFITS OF ASSESSEE. AO HAS TO SPECIFY AS TO WHY HE FEELS THAT PROFITS OF ASSESSEE ARE BEING SHOWN AT HIGHER FIGUR E. AO HAS TO FURTHER SHOW AS TO HOW HE HAS COMPUTED ORDINARY PROFITS WHICH HE DEEMS TO BE PROFIT WHICH ASSESSEE MIGHT BE I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 124 REASONABLY EXPECTED TO GENERATE. THE BENCH HELD THA T AO WOULD BE EXPECTED TO USE A COMPARABLE CASE TO DETER MINE THE POSSIBLE ORDINARY PROFIT WHICH ASSESSEE COULD BE EX PECTED TO GENERATE FROM HIS BUSINESS. IN THE ABSENCE OF ANY O THER SUBSTANTIAL EVIDENCE WITH HIM, WHEN USING A COMPARA BLE, ASSESSEE'S OWN PAST AND FUTURE PERFORMANCE WOULD OBVIOUSLY BE THE BEST COMPARABLE. COMPARING ASSESSE E'S MODUS OPERANDI OF CONDUCTING ITS BUSINESS WITH ANOT HER WHEN THE SAME ARE NOT OF EQUAL TERMS WOULD BE A TRA VESTY OF JUSTICE IN SO FAR AS THE FINANCIAL CHARGES. THE USE OF PLANT & MACHINERY, DEPRECIATION THEREON, THE LOCATION WHICH WOULD AFFECT THE COST OF TRANSPORTATION AS ALSO THE COST OF LABOUR, COST OF POWER AND FUEL WOULD HAVE TO BE SEEN. EXAMINING THE FACTS OF THE PRESENT CASE IN THE LIGH T OF THE DECISIONS REFERRED TO HEREINABOVE, IT IS NOTICED TH AT IN THE PRESENT CASE ALSO AO HAS SIMPLY RELIED ON THE TP ST UDY REPORT OF ASSESSEE TO CONCLUDE THAT THE PROFIT EARN ED BY ASSESSEE CANNOT BE CONSIDERED TO BE REASONABLE PROF IT EARNED FROM ELIGIBLE BUSINESS AND ON THAT BASIS HAS DISALLOWED PART OF THE DEDUCTION U/S 10A. THEREFORE , SINCE AO HAS NOT CONCLUSIVELY PROVED THE FACT THAT THERE IS AN ARRANGEMENT BETWEEN ASSESSEE AND ITS AE BY WHICH TH E TRANSACTIONS WERE SO ARRANGED AS TO PRODUCE MORE TH AN THE ORDINARY PROFITS IN THE HANDS OF ASSESSEE, DISALLOW ANCE OF PART DEDUCTION CLAIMED BY APPLYING THE PROVISIONS O F SECTION 80IA(10), IN OUR VIEW IS NOT JUSTIFIED. SINCE LD. C IT(A) UPHELD THE DISALLOWANCE WITHOUT EXAMINING THE AFORESAID AS PECT, I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 125 ORDER OF LD. CIT(A) DESERVES TO BE SET ASIDE. THE C ONDITIONS OF SECTION 80IA(1) HAVING NOT BEEN FULLY COMPLIED BY A O, DISALLOWANCE OF DEDUCTION CLAIMED U/S 80IA(10), IN OUR VIEW IS NOT JUSTIFIED. ACCORDINGLY, WE DELETE THE ADDITI ON MADE BY AO IN THIS REGARD. 71. FIRST OF ALL, IT IS SEEN THAT, T AX HAS BEEN PAID ON BOOK PROFITS AND ANY CHANGE IN SALE PRICE WILL NOT IMPACT THE BO OK PROFITS. THE ASSESSEE HAS PAID TAX OF RS. 42.81 CRORES ON BO OK PROFITS OF RS. 251.89 CRORES. EVEN IF THE ALLEGATION OF THE LD. AO IS BELIEVED TO BE TRUE, EVEN THEN THERE WILL BE NO CHA NGE IN THE TAX LIABILITY OF THE ASSESSEE. THE BOOK PROFITS WIL L REMAIN UNCHANGED AS THE PROFIT OF POWER DIVISION WILL REDU CE BUT PROFIT OF STEEL DIVISION WILL INCREASE BY THE SAME AMOUNT. THE TAX LIABILITY AS PER NORMAL PROVISIONS WOULD STILL BE LESS THAN TAX AS PER MAT. THE ASSESSEE SUBMITTED THE SAME BEF ORE THE LD. AO AND EVEN FILED THE COMPUTATION BEFORE AND AF TER CONSIDERING THE ADDITION MADE BY THE LD. AO. HOWEVE R THE LD. AO FAILED TO CONSIDER THE SAME. THE LD. CIT (A) HAS CONSIDERED THIS REPLY AND DELETED THE ADDITION STAT ING THAT ASSESSEE HAS PAID TAX UNDER MAT AND NO DEMAND IS CR EATED BY AO AFTER REDUCING DEDUCTION UNDER 80IA OF ACT HE NCE NO TAX BENEFIT IS ACHIEVED BY THE ASSESSEE. THE FACTS AND SUBMISSION GIVEN ABOVE CLEARLY PROVES THAT THERE IS NO INSTANCE TO SHOW ANY SHIFTING OF PROFIT AND THEREFORE, WE DELETE THIS ADDITION. THE ASSESSEE GETS RELIEF OF RS. 76,35,72,743 AND RS. 52 ,80,20,878 IN THE AY 2010-11 AND AY 2011-12 ON THIS ISSUE. I.T.AS. NO.4039, 4040, 4041, 4042, 4043, 4064, 4065 , 4066, 4067, 4068, 4069, 4070/DEL/2017 126 IN THE RESULT ALL THE APPEALS OF THE REVENUE ARE DI SMISSED AND ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JUNE, 2021 SD/ - SD/ - [B.R.R. KUMAR] [AMIT SHUKLA] [ACCOUNTANT MEMBER] JUDICIAL MEMBER DATED: 18/06/2021 PKK: