ACIT CC, V. Panchsheel Homes (P) Ltd,

ITA 4144/DEL/2007

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7152 (ITAT-DELHI)
• Duration Of Justice: 8 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 06-04-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 18-10-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SAROHA
• Assessee Lawyers: DIPANSHU AGGARWAL; SSH L M AGGARWAL
• Keywords: Unexplained expenditure; Search and seizure; Document seized; Right to appeal; Documents seized
• Section: 69C; 153A; 132

Judgement Text

ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 1 OF 30 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER & SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.-4144/DEL/2007 ( ASSESSMENT YEAR: 2003-04) ACIT CENTRAL CIRCLE, MEERUT. VS M/S PANCHSHEEL HOMES P. LTD. (DIRECTOR SH. ASHOK CHAUDHARY) 195-A, EAST MODEL TOWN, GHAZIABAD. AACCP6695F & CROSS OBJECTION NO.-83/DEL/2007 (IN ITA NO. 4144/DEL/2007) ( ASSESSMENT YEAR: 2003-04) M/S PANCHSHEEL HOMES P. LTD. (DIRECTOR SH. ASHOK CHAUDHARY) 195-A, EAST MODEL TOWN, GHAZIABAD. AACCP6695F VS ACIT CENTRAL CIRCLE, MEERUT. ASSESSEE BY S/SH. L.M. AGGARWAL & DIPANSHU AGGARWAL, CA REVENUE BY SH. A.K. SAROHA, CIT DR DATE OF HEARING 18.04.2016 DATE OF PRONOUNCEMENT 13.07.2016 ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 2 OF 30 ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER : THE APPEAL HAS BEEN PREFERRED BY THE DEPARTMENT A GAINST THE ORDER DATED 26.06.2007 PASSED BY THE LD. CIT (APPEA LS), MEERUT FOR AY 2003-04 WHEREAS THE CO HAS BEEN PREFERRED BY THE AS SESSEE. 2. THE FACTS, IN BRIEF, ARE THAT A SEARCH & SEIZUR E OPERATION U/S 132(1) OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT ON 07-10-2003 IN SUPER TECH CONSTRUCTION (P) LTD AT C1/9, GOKULPUR, SHAHAD ARA AND ITS HEAD OFFICE AND VARIOUS PROJECT OFFICES. DURING THE COURSE OF S EARCH AT THE RESIDENCE OF ONE SHRI R. K. ARORA, A COPY OF SALE DEED OF LAND (REGI STERED ON 18-01-2003) SITUATED AT VILLAGE PRAHLAD GARHI, GHAZIABAD, (AS P ER ANNEXURE B-2 OF THE PANCHNAMA HAVING AN AREA OF 194555.52 SQ MTS. ) WAS FOUND AND SEIZED AND BASED ON THIS ANNEXURE IT IS ALLEGED THAT M/S PANC HSHEEL HOMES (P) LTD. I.E. THE ASSESSEE HAVE SOLD THIS LAND FOR RS.4,06,70,000 / - TO M/S SUPER TECH CONSTRUCTION (P) LTD. IT HAS BEEN THE DEPARTMENTS CONTENTION THAT THESE DOCUMENTS ARE BELONGING TO THE COMPANY PANCHSHEEL H OMES (P) LTD. AND HENCE THE CASE WAS COVERED U/S 153C OF THE 1. T. AC T, 1961. ACCORDINGLY, NOTICE U/S 153A (A) OF THE INCOME TAX ACT, 1961 WAS ISSUED ON 27-07-05 TO FURNISH THE RETURNS OF INCOME IN RESPECT OF EACH YE AR FALLING WITHIN SIX ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 3 OF 30 ASSESSMENT YEARS REFERRED TO IN CLAUSE (B) SECTION 153A OF THE INCOME TAX ACT, L961. THE RELEVANT ASSESSMENT YEARS ARE FROM A . Y. 1998-99 TO 2003-04. 3. FOR THE YEAR UNDER CONSIDERATION, THE AO HAS OP INED THAT THE ASSESSEE COMPANY HAD SOLD THE LAND OF PROJECT I SIT UATED AT PRAHLAD GARHI, NEAR JUDGE COLONY, VAISHALI TO M/S SUPER TEC H CONSTRUCTIONS (P) LTD., SHAHDARA, DELHI ON 18.01.2003.THE SALE WAS RE GISTERED AT A SUM OF RS. 4,06,67,000/-. THE AO HAS REFERRED TO A DIARY W HICH WAS MARKED AS ANN. A-10 WHICH WAS FOUND AND SEIZED FROM THE RESID ENCE OF SHRI R. K. ARORA AS PER ENTRY RECORDED ON THE OVERLEAF OF PAGE NO. 14. IT WAS THE AOS CONTENTION THAT THE LAND WAS ACTUALLY SOLD FOR RS. 5,86,66,560/- AND THE COST OF STAMP DUTY OF RS. 40,67,000/- WAS ALSO PAID BY THE PURCHASER AND NOT BY THE VENDOR. THE AO HAS RECORDED IN THE A SSESSMENT ORDER THAT ONE SHRI JOGINDER PAL, A PROPERTY DEALER, ALSO ADMI TTED IN HIS STATEMENT RECORDED AT THE TIME OF THE SEARCH THAT THE LAND WA S ACTUALLY SOLD FOR RS. 5,84,00,000/-. THE AO FURTHER RECORDED THAT THE DIF FERENCE OF RS. 1,79,99,560/- (5,86,66,560/- RS. 4,06,67,000/-) AND AMOUNT OF STAMP DUTY OF RS. 40,67,000/- WERE NOT RECORDED IN THE BO OKS OF ACCOUNTS OF THE ASSESSEE COMPANY. THE AO FURTHER RECORDED THAT THE ASSESSEE VIDE DETAILED SUBMISSIONS DATED 18.01.2006 SUBMITTED THA T NO MONEY HAS ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 4 OF 30 BEEN TAKEN FROM M/S SUPER TECH CONSTRUCTIONS (P) LT D EXCEPT THROUGH ACCOUNT PAYEE CHEQUES. THE ASSESSEE COMPANY ALSO SU BMITTED VARIOUS DETAILS BEFORE THE ADI GHAZIABAD AND ALSO SUBMITTED AN AFFIDAVIT OF SHRI JOGINDER PAL. IT WAS FURTHER SUBMITTED BY THE ASSES SEE THAT THE ASSESSEE HAD NO CONTROL OVER THE FIGURES RECORDED IN THE OTH ERS ACCOUNTS BOOKS. THE ASSESSEE COMPANY ALSO SUBMITTED THAT AT THE TIM E OF SEARCH THAT NO SUCH ENTRY OR MONEY WAS REFLECTED IN THE BOOKS OF A CCOUNTS OF THE ASSESSEE COMPANY. IT WAS ALSO SUBMITTED BY THE ASSE SSEE BEFORE THE AO THAT THE DIRECTOR OF M/S SUPER TECH CONSTRUCTIONS ( P) LTD HAD IN FACT NEVER ADMITTED BEFORE THE ADI THAT THEY HAD PAID AN Y MONEY AND COST OF THE STAMP PAPERS TO THE ASSESSEE COMPANY. THUS, THE ASSESSEE COMPANY DENIED THE ENTRIES IN THE DIARY. IT WAS ALSO SUBMIT TED BEFORE THE AO THAT THE COST OF STAMP PAPER OF RS. 40,67,000/- AND REGI STER EXPENSES OF RS. 5,020/- WERE CORRECTLY DEBITED IN THE PROJECT I ACC OUNT. IT WAS SUBMITTED THAT THE COST OF STAMPS PURCHASED WAS MET THROUGH A DD OF RS. 40,67,000/- MADE FROM THE BANK ACCOUNT OF ORIENTAL BANK OF COMMERCE ON 02.01.2003 WHEREON RS. 500/- WERE ALSO PAID AS BANK CHARGES. THE DRAFT WAS GIVEN TO THE TREASURY FOR THE PURCHASE OF STAMP PAPERS OF RS. 40,67,000/- IN THE NAME OF THE ASSESSEE COMPANY AND NOT IN THE NAME OF M/S SUPER TECH CONSTRUCTIONS (P) LTD. AS EVIDENCE, THE ASSESSEE ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 5 OF 30 COMPANY SUBMITTED THE COPY OF THE SALE DEED AND COP Y OF THE BANK STATEMENT REFLECTING THE ENTRY FOR THE PURCHASE OF THE DD AND ALSO DEMONSTRATED BEFORE THE AO THAT THE SAID ENTRY WAS DULY REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY. HOWEVER, THE AO RELYING ON THE ENTRIES IN THE SEIZED DIARY AND THE STATEMENT O F SHRI JOGINDER PAL (WHICH WAS SUBSEQUENTLY RETRACTED) WENT ON TO CONCL UDE THAT M / S PANCHSHEEL HOMES (P) LTD HAD RECEIVED AN AMOUNT OF RS. 1,79,99,500/- IN CASH AND RS. 40,67,000/- FOR STAMP PAPERS FROM M/S SUPER TECH CONSTRUCTIONS (P) LTD. WHICH WERE NOT REFLECTED IN THE REGULAR BOOKS OF ACCOUNTS. HENCE ADDITION OF RS. 2,20,56,560/- (1,7 9,99,560 + 40,67,000) WAS MADE TO THE INCOME OF ASSESSEE COMPANY FOR AY 0 3-04. THE AO FURTHER OBSERVED THAT SINCE THE ACTUAL SALE CONSIDE RATION WAS RS. 5,86,66,560/- AND SINCE AS PER PAGE 20 ANNEXURE - A -3 OF PANCHNAMA DATED 10.10.2003 SEIZED FROM THE PREMISES OF SHRI JOGINDE R PAL, THE AMOUNT OF COMMISSION WAS MENTIONED AS RS. 6,00,000/- WHEREAS THE BOOKS REFLECTED THE COMMISSION PAID AT RS. 4,06,700/-, THE DIFFEREN CE OF RS. 1,93,300/- (6,00,000 - 4,06,700) WAS TO BE ADDED AS UNEXPLAINE D EXPENDITURE U/S 69C OF THE INCOME TAX ACT. 1961. 4. AGGRIEVED, THE ASSESESEE PREFERRED AN APPEAL BEF ORE THE FIRST ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 6 OF 30 APPELLATE AUTHORITY WHEREIN THE LEGAL ISSUE OF NON- SERVICE OF NOTICE U/S 143(2) OF THE ACT WAS RAISED ALONG WITH CHALLENGE T O 153C PROCEEDINGS. THE ADDITION WAS CHALLENGED ON MERITS AS WELL AS WELL. THE LD. CIT (A) HELD THAT ISSUANCE OF NOTICE U/S 143(2) WAS NOT A STATUTORY R EQUIREMENT FOR ASSESSMENT U/S 153A AND ACCORDINGLY DISMISSED THIS GROUND OF T HE ASSESSEE. THE LD. FIRST APPELLATE AUTHORITY ALSO DID NOT ACCEPT THE A SSESSEES ALTERNATE PLEA THAT THE BASIC REQUIREMENT TO ISSUE NOTICE U/S 153A READ WITH SECTION 153C WAS NOT MET. HE OPINED THAT SINCE THE SALE AGREEMEN TS SEIZED FROM THE RESIDENCE OF SHRI R.K. ARORA MENTIONED THE ASSESSEE S NAME, THE ISSUE OF NOTICE U/S 153A WAS VALID. HOWEVER, THE LD. CIT (A) WENT ON TO HOLD THAT THE MERE RECORDING OF A FIGURE IN SOME DIARY OR LOO SE PAPER WITHOUT ANY EVIDENCE PARTICULARLY IN THE ABSENCE OF NAME OF A P ARTICULAR PERSON COULD NOT BE HELD AGAINST THE SAID PARTICULAR PERSON OR PRESU MED TO BELONG TO THE SAID PERSON. HE REFERRED TO THE AFFIDAVITS FILED BY THE BROKER SHRI JOGINDER PAL AFFIRMING THAT NO UNDISCLOSED PAYMENT WAS MADE FROM THE PURCHASER TO THE SELLER I.E. THE ASSESSEE. HE ALSO GAVE WEIGHT TO TH E ASSESSEES SUBMISSION THAT SHRI R.K. ARORA WAS NOT ALLOWED TO BE CROSS-EXAMINE D BY THE ASSESSEE, ALTHOUGH THE ASSESSEE HAD SPECIFICALLY REQUESTED SO . THE ADDITIONS WERE FINALLY DELETED BY THE LD. CIT (A). ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 7 OF 30 5. NOW THE DEPARTMENT IS IN APPEAL BEFORE US WHILE THE ASSESSEE HAS PREFERRED TO FILE A CO. THE GROUNDS OF APPEAL RAISE D BY THE DEPARTMENT ARE AS UNDER: 1. THE LD. CIT (A), MEERUT HAS ERRED IN LAW AND ON FAC TS IN DELETING THE ADDITION OF RS. 2,20,56,560/- MADE ON ACCOUNT OF RE CEIPT OF MONEY IN SALE OF PROPERTY AS WELL AS MONEY RECEIVED FOR PAYMENT OF S TAMP DUTY. 2. THE LD. CIT (A) MEERUT, HAS ERRED IN LAW AND ON FAC TS IN DELETING THE ADDITION OF RS. 1,93,900/- MADE ON ACCOUNT OF BROKE RAGE. 3. IN DOING SO, THE LD. CIT(A), MEERUT HAS NOT APPRECI ATED THE FOLLOWING FACTS: I. THAT THE SALE CONSIDERATION OF RS. 5,86,66,560/- WA S FOUND RECORDED IN THE DIARY, MARKED ANNEX A-10, FOUND FROM THE RESIDE NCE OF SH. P.K. ARORA, M.D., OF THE PURCHASER COMPANY M/S SUPTERTEC H. THE FACT THAT THE ACTUAL SALE PRICE WAS RS. 5,86,66,560/- AS AGAINST RS. 4,06,67,000/- DECLARED IN THE SALE DEED, FINDS AMPLE SUPPORT FROM THE CASH FLOW STATEMENT FILED BY THE PURCHASER COMPANY DURING THE COURSE OF ASSESSMENT PROCEEDINGS. II. THAT SEARCH WAS ALSO CONDUCTED IN THE PREMISES OF T HE BROKER SH. JOGENDER PAL AND AS PER THE DOCUMENT RECOVERED, PLA CED AT PAGE 20 OF ANNEXURE MARKED A-3, THE DETAILS OF THE LAND WERE M ENTIONED AS UNDER: LAND COST RS. 5,84,00,000/- COMMISSION RS. 6,00,000/- REGISTER CHARGES RS. 41,00,000/- III. THE BROKER HAD, IN HIS STATEMENT RECOVERED ON 07.10 .2003, ALSO ADMITTED THAT THE TRANSACTION WAS ACTUALLY MADE FOR RS. 5,84 ,000/-. ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 8 OF 30 IV. THAT THE ACT OF RETRACTING ON HIS STATEMENT BY THE BROKER BY MEANS OF FILING AFFIDAVIT, HAD NO EVIDENTIARY VALUE BECAUSE HIS ADMISSION WAS BASED ON THE DOCUMENTS RECOVERED FROM HIS DURING TH E SEARCH IN HIS PREMISES WHEREAS THE AFFIDAVITS WERE SIMPLE DENIALS WITHOUT ANY CONCRETE BASIS. V. THAT THE DEPARTMENT HAD SUFFICIENT EVIDENCE, AS MEN TIONED ABOVE, FOR ADDING AS INCOME ON MONEY RECEIVED RS. 1,79,99,500/ - [RS. 5,86,66,560/- - RS. 4,06,67,000/-] TOWARDS UNDISCLOSED SALE CONSI DERATION AND RS. 40,67,000/- TOWARDS STAMP DUTY AND THE UNEXPLAINED EXPENDITURE ON COMMISSION PAID TO THE BROKER RS. 1,93,300/- (RS. 6 ,00,000/- - RS. 4,06,700/-) 4. THAT THE ORDER OF THE LD. CIT (A), MEERUT BEING ERR ONEOUS MAY BE SET ASIDE AND THAT OF THE AO BE RESTORED. 5. THAT THE APPELLANT CRAVES LEAVE TO AMEND ANYONE OR MORE OF THE GROUNDS OF APPEAL AS STATED ABOVE AS AND WHEN NEED FOR DOING S O MAY ARISE. 6. THE GROUNDS RAISED IN THE CO OF THE AS SESSEE ARE AS UNDER: 1. THAT THE LD. CIT(APPEALS) HAS ERRED BOTH ON FACTS A ND IN LAW IN NOT HOLDING THE ASSESSMENT AS FRAMED BY THE LD. AO AS A B INITIO VOID EVEN AFTER HOLDING THAT NO NOTICE U/S 143(2) OF THE I.T. ACT HAD BEEN ISSUED BY THE AO. THE FINDING THAT THERE IS NO REQUIREMEN T IN LAW TO ISSUE A NOTICE U/S 143(2) IN ORDER TO ASSUME A VALID JURISD ICTION TO MAKE AN ASSESSMENT U/S 153A OF THE I.T. ACT IS WHOLLY INCOR RECT AND IS CONTRARY TO THE PROVISIONS CONTAINED IN SECTION 153A OF THE ACT. THE LD. CIT (APPEALS) HAS OVERLOOKED THAT CLAUSE (I) OF EXPLANA TION TO SECTION ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 9 OF 30 153A OF THE ACT CLEARLY PROVIDES THAT ALL OTHER PR OVISIONS OF THIS ACT SHALL APPLY TO THE ASSESSMENT MADE UNDER THIS SECTI ON. 2. THAT THE LD. CIT(APPEALS) HAS ERRED BOTH ON FACTS A ND IN LAW IN UPHOLDING THE ASSESSMENT FRAMED U/S 153A R.W. SECTI ON 153C OF THE ACT EVEN AFTER HOLDING THAT DURING THE COURSE OF SE ARCH CONDUCTED ON M/S SUPER TECH, NOTHING PERTAINING TO THE ASSESSMEN T WAS SEIZED OR FOUND. THE LD. CIT(APPEALS) HAS FAILED TO APPRECIA TE THAT THE ASSESSMENT AS FRAMED IS AB-INITIO VOID AND WITHOUT JURISDICTION IN AS MUCH AS NO SATISFACTION, AS IS THE MANDATE U/S 153C OF THE ACT, HAD BEEN RECORDED AND FORWARDED BY THE AO OF THE SEARCH ED PARTY TO THE AO OF THE ASSESSEE, TO THE EFFECT THAT ANY MONEY, B ULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED DURING THE COURSE OF SEARCH CONDUCTED UPON HIS ASSESSEE, BELONGS OR BELONG TO THE ASSESSEE. IT IS, THEREFORE, PRAYED THAT THE ASSESSMENT AS FRA MED BY THE AO AND UPHELD BY THE LD. CIT (APPEALS) BE ANNULLED AS BAD IN LAW AND WITHOUT JURISDICTION AND THE CROSS OBJECTIONS BE ALLOWED. 7. AT THE OUTSET, THE LD. AR SUBMITTED THAT T HE ASSESSEES CO MAY BE TAKEN UP FIRST AS IT IS ON THE LEGAL GROUND AND THA T ITS OUTCOME WILL HAVE A BEARING ON THE DEPARTMENTS APPEAL. THE LD. CIT DR, HOWEVER, RAISED OBJECTION TO THE MAINTAINABILITY OF THE CO ITSELF. HENCE IT WAS DEEMED FIT TO HEAR THE ARGUMENTS OF BOTH THE SIDES ON THE MAINTAI NABILITY OF THE CO BEFORE ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 10 OF 30 PROCEEDING TO ADJUDICATE ON THE GROUNDS OF APPEAL/C O. THE LD. AR SUBMITTED THAT ALTHOUGH THE LD. CIT (A) HAD ALLOWED THE ASSESSEES APPEAL ON MERITS BUT GROUND NOS. 9 TO 11 ON THE ISSUE OF N OTICE U/S 143(2) AND GROUND NO. 12 ON THE ISSUE OF LEGALITY OF PROCEEDIN GS U/S 153C WERE REJECTED BY THE LD. CIT (A) AND HENCE THE CO WAS VE RY MUCH MAINTAINABLE. IT WAS SUBMITTED THAT THE GROUNDS AS RAISED IN THE CO ARE EQUALLY COVERED BY THE ORDER OF THE LD. CIT (A) AND HENCE THE STATUTOR Y RIGHT TO APPEAL U/S 253(1) WAS AVAILABLE TO THE ASSESSEE COMPANY. SINCE THE ASSESSEE COMPANYS APPEAL WAS ALLOWED ON MERITS OF THE CASE, THE COMPA NY HAD OPTED NOT TO FILE THE APPEAL ON THE REJECTED GROUNDS. HOWEVER, THE LE GAL RIGHT TO FILE THE APPEAL WAS VERY MUCH AVAILABLE U/S 253(1). SO, IT I S WRONG TO SAY THAT THE ASSESSEE DID NOT HAVE ANY RIGHT/SCOPE OF FILLING OF APPEAL U/S 253(1). RELIANCE WAS PLACED ON CIT TAMIL NADU VS. SUNDARAM CLAYTON LTD. 136 ITR 315 (MAD.). RELIANCE WAS FURTHER PLACED ON THE FOLLOWING CASES- -CIT VS. PURBANCHAL PARBAHAN GOSTHI (1998) 234 ITR 663 (GAUHATI HC). -NTPC CASE 229 ITR 383 (SC) -CIT VS NEW INDIA ASSURANCE CO. LTD. (1983) 141 IT R 367 -DCIT VS. SILVER LINE (DELHI ITAT) IN ITA NOS. 180 9, 1506, 1505, 1504/DEL/2013 ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 11 OF 30 -ASHIAN NEEDLES (P) LTD. VS CIT (DELHI HIGH COURT O RDER DATED 06/07/2012) 8. OPPOSING THE CO, THE LD. CIT DR SUBMITTED T HAT SINCE THE ASSESSEE HAD BEEN ALLOWED FULL RELIEF (ON MERITS), THERE IS NO CAUSE OF GRIEVANCE, THEREFORE, NO APPEAL CAN BE FILED U/S 253(1). THE C ROSS OBJECTION IS SUBSTITUTE FOR APPEAL AND ITS SCOPE CANNOT BE EXTEN DED BEYOND THE SCOPE OF APPEAL U/S 253(1) OF WHICH IT IS A SUBSTITUTE. R ELIANCE WAS PLACED BY THE LD. CIT DR ON THE FOLLOWING JUDICIAL RULINGS- -KANPUR INDUSTRIAL WORKS VS CIT (1966) 59 ITR 407 ( ALL HC) -MTNL VS TELECOM REGULATORY AUTHORITY OF INDIA AIR 2000 DELHI 208 -DCIT VS SANDIP M PATEL (2012) 22 TAXMANN.COM 288 ( AHMEDABAD TRIBUNAL) 9. WE HAVE HEARD THE RIVAL CONTENTIONS ON THE MAINTAIN ABILITY OF THE CO. UNDER SECTION 253(4) OF THE INCOME TAX ACT, 1961, T HE ASSESSEE IS ENTITLED TO FILE CROSS OBJECTION EVEN IF HE HAS NOT FILED AN APPEAL AGAINST THE ORDER OF CIT (A). SUB SECTION (4) OF SECTION 253 READS AS U NDER: (4) THE ASSESINGS OFFICER OR THE ASSESSEE, AS TH E CASE MAY BE, ON RECEIPT OF NOTICE THAT AN APPEAL AGAINST THE OR DER OF THE DEPUTY COMMISSIONER (APPEALS)OR, AS THE CASE MAY BE , THE ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 12 OF 30 COMMISSIONER (APPEALS) HAS BEEN PREFERRED UNDER SUB -SECTION (1) OR SUBSECTION (2) BY THE OTHER PARTY, MAY, NOTWITHS TANDING THAT HE MAY NOT HAVE APPEALED AGAINST SUCH ORDER OR ANY PAR T THEREOF; WITHIN THIRTY DAYS OF THE RECEIPT OF THE NOTICE, FI LE A MEMORANDUM OF CROSS-OBJECTIONS, VERIFIED IN THE PRESCRIBED MAN NER, AGAINST ANY PART OF THE ORDER OF THE DEPUTY COMMISSIONER (A PPEALS) OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS), AND SUCH MEMORANDUM SHALL BE DISPOSED OF BY THE APPELLATE TR IBUNAL AS IF IT WERE AN APPEAL PRESENTED WITHIN THE TIME SPECIFI ED IN SUB- SECTION (3). 10. A BARE READING OF THE PROVISIONS CONTAINED IN SUB SECTION (4) WOULD SHOW THAT THE RIGHT TO FILE A MEMORANDUM OF CROSS O BJECTIONS IS AN INDEPENDENT RIGHT GIVEN TO THE OPPOSITE PARTY IN AN APPEAL AND IT IS IN ADDITION TO THE INDEPENDENT RIGHT OF APPEAL, WHICH MAY OR MAY NOT BE EXERCISED BY THE ASSESSEE UNDER SUB SECTION (1) OR BY THE DEPARTMENT UNDER SUB SECTION (2) OF SECTION 253. IN A GIVEN CASE IT IS QUITE POSSIBLE THAT CERTAIN MATTERS MAY NOT BE AGITATED EITHER BY THE LD. COMMI SSIONER OR BY THE ASSESSEE BY WAY OF AN APPEAL, BUT IF ANY APPEAL IS FILED EITHER BY THE ASSESSEE OR THE ASSESSING OFFICER, THEN THE OPPOSITE PARTY M AY CONSIDER IT NECESSARY TO FILE A CROSS OBJECTION IN RESPECT OF SUCH MATTERS, WHICH WERE NOT FIT ORIGINALLY TO BE AGITATED BY WAY OF AN INDEPENDENT APPEAL AS H AS BEEN HELD BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. NEW INDIA ASSURANCE CO. LTD. (1983) 141 ITR 367 (BOM). THUS SUB SECTION (4) OF S ECTION 253 OF THE ACT CONFERS A RIGHT OF CROSS OBJECTION BOTH ON THE ASSE SSEE AND THE REVENUE. THE ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 13 OF 30 WORDS 'THE ASSESSING OFFICER OR THE ASSESSEE, AS THE CASE MAY BE, MAY, NOTWITHSTANDING THAT HE MAY NOT HAVE APPEALED AGAIN ST SUCH ORDER OR ANY PART THEREOF;..FILE A MEMORANDUM OF CROSS OBJECTIONSAGAINST ANY PART OF THE ORDER ' APPEARING IN SECTION 253(4) POSTULATE THAT IN RESPECT OF THE SAME ORDER OF THE APPELLATE AUTHORITY THERE MAY BE AN APPEAL BY THE ASSESSEE AS TO ONE PART AND AN APPEAL BY THE REVENUE AS TO THE OTHER WHERE THE ASSESSEE OR THE R EVENUE HAS PREFERRED AN APPEAL TO THE TRIBUNAL AGAINST THAT PART OF THE ORD ER OF THE APPELLATE AUTHORITY WHICH CONSISTS OF DECISIONS RECORDED AGAINST HIM, T HE OTHER PARTY IF HE HAD NOT ALREADY APPEALED, MAY FILE CROSS OBJECTIONS AGA INST THAT PART OF THE ORDER OF THE APPELLATE AUTHORITY, WHICH CONSISTS OF THE D ECISIONS WITH WHICH HE IS DISSATISFIED. THE APPEAL BY THE ASSESSEE OR THE REV ENUE MAY BE AGAINST ANY PARTS OF THE ORDER OF THE APPELLATE AUTHORITY WHICH ARE AGAINST HIM AND BY WHICH HE IS AGGRIEVED. IT IS, THEREFORE, IMPERATIVE THAT THERE MUST BE A DECISION OF THE APPELLATE AUTHORITY BY WHICH THE AS SESSEE OR REVENUE IS AGGRIEVED BEFORE HE CAN PREFER AN APPEAL AGAINST TH AT PART OF THE ORDER OF THE APPELLATE AUTHORITY CONTAINING SUCH DECISION. 11. FURTHER THE EXISTENCE OF EXPRESSION AGAINST ANY PART OF THE ORDER IN SECTION 254(3) OF IT ACT CLEARLY SUGGESTS THAT T HE CROSS OBJECTION CAN BE ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 14 OF 30 FILED ONLY IN CASES WHERE THE APPELLATE AUTHORITY H AS DECIDED AGAINST THE PARTY. FURTHER UNDER RULE 27 OF ITAT RULES, 1963 TH E RESPONDENT CAN SUPPORT THE ORDER OF CIT (A) IN CROSS OBJECTION ON THE BASI S OF ADVERSE FINDINGS OF CIT (A) AGAINST HIM. THIS MEANS THAT THERE HAS TO B E A DECISION OF THE CIT (A) ON THE ISSUE RAISED IN CROSS OBJECTION. 12. IN THE CASE OF INCOME-TAX OFFICER V FAGOOMA L LAKSHMI CHAND [1979] 118 ITR 766 (MAD) AGAINST THE ORDER OF THE AAC, WHI CH WAS PREJUDICIAL TO THE REVENUE, THE DEPARTMENT TOOK UP THE MATTER BEFO RE THE TRIBUNAL. AFTER THE FILING OF THE APPEAL, THE ASSESSEE TAKING ADVAN TAGE OF THE PROVISIONS IN SECTION 253(4) FILED A MEMORANDUM OF CROSS-OBJECTIO N AGAINST THE ENTIRE ORDER OF THE AAC. BOTH THE APPEAL AND THE MEMORANDU M OF CROSS-OBJECTION CAME UP FOR HEARING BEFORE THE TRIBUNAL. THE ASSESS EE WAS NOT PRESENT. THE TRIBUNAL DISPOSED OF THE REVENUES APPEAL AND, IN C ONSEQUENCE, DISMISSED THE CROSS-OBJECTION. THEREAFTER, THE ASSESSEE FILED AN APPLICATION BEFORE THE TRIBUNAL STATING THAT THERE WAS SUFFICIENT CAUSE FO R HIS NON-APPEARANCE WHEN HIS CROSS-OBJECTION WERE CALLED FOR HEARING, AND TH E TRIBUNAL MADE AN ORDER SETTING ASIDE THE DISMISSAL OF THE CROSS-OBJECTION. EFFECTUALLY, THEREFORE, THEY HAD SET ASIDE THE ORDER PASSED BY THEM EX-PARTE IN THE REVENUES APPEAL AS WELL. ON WRIT, THE SINGLE JUDGE DISMISSED IT AT THE ADMISSION STAGE ITSELF. ON ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 15 OF 30 WRIT APPEAL THE REVENUE CONTENDED THAT A MEMORANDUM OF CROSS-OBJECTION COULD ONLY BE AGAINST A PART OF THE ORDER OF THE AA C AND THAT AS, IN THE INSTANT CASE, THE APPEAL WAS DISPOSED OF EX PARTE BY THE TRIBUNAL, THE PROVISO TO RULE 24, WHICH CONTEMPLATES ONLY THE RESTORATION OF AN APPEAL, WHICH WAS DISMISSED FOR DEFAULT, AND THAT TOO FOR SUFFICIENT CAUSE, WOULD NOT APPLY. HONBLE MADRAS HIGH COURT HAS HELD THAT THE WORDS E MPLOYED UNDER SUB-S. (4) OF SEC. 253 OF THE I.T. ACT, 1961, WOULD SHOW T HAT SUCH MEMORANDUM OF CROSS- OBJECTION SHALL BE AGAINST ANY PART OF THE O RDER OF THE AAC. THE USE OF THE EXPRESSION 'ANY PART OF THE ORDER' IS CLEARLY INDICIA TO SHOW THAT IT COULD BE ALSO AGAINST THE ENTIRETY OF THE ORDER OF THE AAC IN SO FAR AS IT IS PREJUDICIAL TO THE CROSS-OBJECTOR. THEREFORE, THE C ONTENTION THAT THE MEMORANDUM OF CROSS OBJECTION FILED BY THE ASSESSEE , IN THE INSTANT CASE, WAS SAID TO BE AGAINST THE WHOLE OF THE ORDER OF TH E AAC, AND THAT BY ITSELF WAS SUFFICIENT TO REJECT THE SAME ON THE THRESHOLD, WAS NOT SUSTAINABLE. 13. IN THE CASE OF CIT V PURBANCHAL PARIBAHAN GO SHTI 234 ITR 663 (GAU) HONBLE HIGH COURT HAS HELD THAT SECTION 253 (4) OF THE INCOME-TAX ACT, 1961, READ WITH RULE 22 OF THE INCOME-TAX (APP ELLATE TRIBUNAL) RULES, 1963 PROVIDES THAT ANY PARTY AGGRIEVED AGAINST ORDE R OF APPELLATE AUTHORITY CAN FILE MEMORANDUM OF CROSS OBJECTION AGAINST ANY PART OF ORDER OF ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 16 OF 30 APPELLATE AUTHORITY AND CROSS-OBJECTION NEED NOT BE CONFINED TO POINTS TAKEN BY OPPOSITE PARTY IN MAIN APPEAL. 14. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. NEW INDIA ASSURANCE CO. LTD. 149 ITR 367 (BOM.) HELD AS UNDER : NOW, A BARE READING OF S. 253(4) OF THE IT ACT, 19 61, WILL SHOW THAT THE RIGHT TO FILE A MEMORANDUM OF CROSS-OBJECTIONS IS A N INDEPENDENT RIGHT GIVEN TO THE OPPOSITE PARTY IN AN APPEAL AND IT IS IN ADDITION TO THE INDEPENDENT RIGHT OF APPEAL WHICH MAY OR MAY NOT BE EXERCISED BY THE ASSESSEE UNDER S. 253(1) OR BY THE ITO AT THE INSTA NCE OF THE COMMISSIONER IN S. 253(2) OF THE ACT. IT IS NOT POS SIBLE FOR US TO READ ANY RESTRICTION IN SUB-S.(4) OF S. 253 WHICH HAS THE EF FECT OF RESTRICTING THIS RIGHT TO FILE A CROSS-OBJECTION. IN A GIVEN CASE, I T IS QUITE POSSIBLE THAT CERTAIN MATTERS MAY NOT BE AGITATED EITHER BY THE C OMMISSIONER OR THE ASSESSEE BY WAY OF AN APPEAL, BUT IF ANY APPEAL IS FILED EITHER BY THE ASSESSEE OR THE ITO, THEN THE OPPOSITE PARTY MIGHT CONSIDER IT NECESSARY TO FILE A CROSS-OBJECTION IN RESPECT OF SUCH MATTER S WHICH WERE NOT THOUGHT IT ORIGINALLY TO BE AGITATED BY WAY OF AN I NDEPENDENT APPEAL. IT IS COMMON EXPERIENCE THAT ORDERS UNDER THE IT ACT D ECIDE SEVERAL QUESTIONS OF CONTROVERSY BETWEEN THE REVENUE AND TH E ASSESSEE AND IF, IN A GIVEN CASE, EITHER THE ASSESSEE OR THE ITO CHOOSE S TO RESTRICT HIS APPEAL ONLY TO CERTAIN QUESTIONS OR FINDINGS, HAVIN G REGARD TO A POSITIVE RIGHT TO FILE A CROSS-OBJECTION, HE CAN, ON SECOND THOUGHTS, BE PERMITTED TO CHALLENGE THE FINDING WHICH WAS NOT ORIGINALLY C HALLENGED IN THE APPEAL PROVIDED, OF COURSE, THE CROSS-OBJECTION IS FILED IN THE MANNER ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 17 OF 30 PRESCRIBED BY LAW AND WITHIN THE LIMITATION PRESCRI BED BY LAW. 15. HENCE, IN THE LIGHT OF THE JUDICIAL PRECE DENTS AS DISCUSSED AFORESAID, WE ARE OF THE OPINION THAT THE CO OF THE ASSESSEE I S MAINTAINABLE AND HENCE WE PERMIT THE ASSESSEE TO PRESS ITS CO AND ALLOW IT TO ARGUE THE GROUNDS RAISED IN THE CO. 16. ARGUING ON THE GROUNDS OF THE CO, THE LD. AR ARGUED THAT THE ENTIRE PROCEEDINGS U/S 153A WERE VOID AS THE NOTICE U/S 143(2) WAS NEVER ISSUED/SERVED ON THE ASSESSEE PRIOR TO THE COMMENCE MENT OF THE PROCEEDINGS. IT WAS FURTHER SUBMITTED THAT THE ADI HAD RECORDED STATEMENTS OF THREE DIRECTORS SHRI ASHOK CHAUDHARY, SHRI S.C . GUPTA AND SHRI J.K. JAIN. HOWEVER, NO INCRIMINATING FACT ABOUT THE ASSE SSEE IS AVAILABLE IN THE STATEMENTS OF THESE THREE PERSONS. HE DREW ATTENTIO N TO PAGES 111-112 OF THE PAPER BOOK WHICH CONTAINS A COPY OF THE COMMUNI CATION DATED 08.06.2007 FROM THE LD. CIT (A) TO THE AO SEEKING C OMMENTS OF THE LATTER ON FOUR ISSUES VIZ: (I) WHY NO OPPORTUNITY WAS PROV IDED TO THE ASSESSEE TO CROSS EXAMINE THE MD OF M/S SUPER TECH CONSTRUCTION S (P) LTD. AND SHRI JOGINDER PAL? (II) HOW THE REVISED CASH-FLOW OF M/S SUPER TECH CONSTRUCTIONS (P) LTD. SHOWING CASH PAYMENT TO THE ASSESSEE WAS ACCEPTED WITHOUT CALLING FOR COMMENTS FROM THE ASSSESSEE? (I II)WHETHER THERE WAS ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 18 OF 30 ANY CONCLUSIVE EVIDENCE THAT THE ASSESSEE HAD RECEI VED A CASH PAYMENT OF RS. 2,20,67,000/- FROM M/S SUPER TECH CONSTRUCTIONS (P) LTD. ? AND (IV) WHETHER ANY ADDITION WAS MADE IN THE HANDS OF M/S S UPER TECH CONSTRUCTIONS (P) LTD. FOR THE CASH PAYMENT OF RS. 2,20,67,000/- MADE TO THE ASSESSEE? THE LD. AR SUBMITTED THAT THESE ISSUE S WERE NOT ADDRESSED BY THE AO IN THE REMAND REPORT. IT WAS FURTHER SUBMITT ED THAT THE AO HAD FRAMED THE ASSESSMENT ENTIRELY ON THE BASIS OF CASH FLOW STATEMENT OF M/S SUPER TECH CONSTRUCTIONS (P) LTD. FILED ON 28.11.20 05 WHEREAS THE NOTICE U/S 153C DATED 27.07.2005 WAS ISSUED ON THE BASIS O F THREE DOCUMENTS VIZ; THE DIARY OF SHRI R.K. ARORA, PAPER RELATING TO SHR I JOGINDER PAL AND THE SALE DEED. IT WAS SUBMITTED THAT THE DEPARTMENT HAS ALLEGED THAT THESE THREE DOCUMENTS BELONGED TO THE ASSESSEE COMPANY BUT WHIL E FRAMING THE ASSESSMENT THE ADDITIONS HAVE BEEN MADE ON THE BASI S OF THE REVISED CASH FLOW STATEMENT SUBMITTED BY M/S SUPER TECH CONSTRUC TIONS (P) LTD. THE LD. AR SUBMITTED THAT SHRI R. K. ARORA HAS NEVER SAID T HAT THE SEIZED DOCUMENTS DO NOT BELONG TO HIM BUT BELONG TO SOME O THER PERSON/THE ASSESSEE. IT WAS SUBMITTED THAT SECTION - 132(4A) P ROVIDES THAT WHERE ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS ARE FOUND IN TH E POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH, IT MAY BE PRESUMED THAT SUCH BOOKS OF ACCOUNT OR DOCUMENTS BELONG TO SUCH PERSON. IT W AS EMPHASIZED THAT ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 19 OF 30 SUCH SALE DEED AND AGREEMENT HAVE NEVER BEEN DISOWN ED BY THE SUPER TECH GROUP SO AS TO DRAW THE INFERENCE THAT THEY BELONGE D TO THE ASSESSEE. IT WAS SUBMITTED THAT A REGISTERED SALE DEED BELONGS TO TH E PURCHASER OF THE PROPERTY ALTHOUGH IT OBVIOUSLY 'RELATES TO' OR 'REF ERS TO' THE VENDOR. IT WAS SUBMITTED THAT SECTION 153C SPECIFIES THAT IF VALUA BLE OR BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO OTHER PERSONS ARE SEIZED THE N ACTION UNDER SECTION 153C CAN BE TAKEN AGAINST THAT PERSON WHILE IN THE INSTANT CASE THE SEIZED PAPER, DIARY AND THE SALE DEED AS SEIZED AT THE PRE MISES M/S SUPER TECH DOES NOT BELONG TO THE ASSESSEE. THEREFORE THE ASSE SSING OFFICER WAS NOT JUSTIFIED IN INITIATING THE ACTION U/S 153A R/W SEC TION - 153C OF THE INCOME TAX ACT, 1961. THE LD. AR RELIED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN PEPSI FOODS PVT. LTD. VS. ACIT IN WP( C) NO. 415 OF 2014 TO HIGHLIGHT THE DIFFERENCE BETWEEN THE TERMS BELONGS TO AND RELATES TO OR REFERS TO. THE LD. AR FURTHER RELIED ON ANOTHER DECISION OF THE HONBLE DELHI HIGH COURT IN COMMISSIONER OF INCOME TAX (CEN TRAL) - III VS KABUL CHAWLA IN ITA NOS. 707/2014, 709/2014 AND 713/2014 FOR THE PROPOSITION THAT THE ASSESSMENT CAN BE MADE ONLY ON THE BASIS O F INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. THE LD. AR ALSO SUBMITTED THAT THE SIMILAR ADDITION OF RS. 1,93,300/- ON ACCOUNT OF UN RECORDED BROKERAGE MADE IN THE CASE OF SHRI JOGINDER PAL WHICH WAS CON FIRMED BY THE LD. CIT ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 20 OF 30 (A) HAS BEEN DELETED BY THE ITAT VIDE ORDER IN ITA NO.: 3954/DEL/107 DATED 23.05.2008. 17. IN RESPONSE, THE LD. CIT DR SUBMITTED THAT THERE IS NO SPECIFIC PROVISION IN THE ACT REQUIRING THE ASSESSMENT MADE UNDER SECTION 153 A TO BE MADE ONLY AFTER THE ISSUE OF NOTICE UNDER SECTIO N 143(2). RELIANCE WAS PLACED ON (I) DECISION OF HONBLE DELHI HIGH COURT IN ASHOK CHADDHA V. INCOME-TAX OFFICER [2012] 20 TAXMANN.COM 387 (DELHI ), (II) DECISION OF ITAT LUCKNOW B BENCH, IN SHRI JEEVAN KUMAR AGARWA L VS. ACIT IN ITA NOS.346 TO 348/LKW/2013 ASSTT.YRS.:2001-02, 200 2-03 & 2005-06 FOR THE PROPOSITION. THE LD. DR FURTHER SUBMITTED THAT THERE IS NO SPECIFIC REQUIREMENT OF RECORDING SATISFACTION IN CONTRAST W ITH PROVISIONS OF SECTION 147. AS RULED BY HONBLE SUPREME COURT IN CASE OF K ESHAVJI RAVJI AND CO. 183 ITR 1, WHEN THERE IS NO AMBIGUITY IN STATUTORY LANGUAGE, RESORTING TO INTERPRETATIVE PROCESS TO UNFOLD THE LEGISLATIVE IN TENT BECOMES IMPERMISSIBLE. IT WAS SUBMITTED THAT THE HONBLE HIGH COURT OF KER ALA IN CASE OF DR. K M MEHBOOB VS. DCIT, 2012-TIOL-642-HC-KERALA-IT HELD T HAT THE SATISFACTION IS NOT REQUIRED TO BE RECORDED IN CASE OF SECTION 153C. IT WAS SUBMITTED THAT THE SATISFACTION NOTE HAS BEEN RECOR DED BY THE ASSTT. COMMISSIONER OF INCOME TAX, CC-MEERUT ON 27.07.2005 (A COPY OF THE SAME WAS SUBMITTED TO THE BENCH). IT WAS SUBMITTED THAT A PERUSAL OF SAID NOTE ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 21 OF 30 SHOWS THAT THE SAID NOTE IS WRITTEN IN THE CAPACITY OF THE AO OF THE PERSON IN WHOSE CASE SEARCH U/S 132 HAS BEEN CONDUCTED. INCID ENTALLY THE AO IS ALSO THE AO OF THE ASSESSEE AND HENCE, HE HAS SPECIFIED THE DOCUMENT BELONGING TO THE ASSESSEE AND CONCLUDED THAT CASE OF THE ASSE SSEE IS COVERED U/S 153C. THE LD. DR REFERRED TO A JUDGMENT OF THE HONBLE SU PREME COURT IN DEEPAK AGRO FOODS VS. STATE OF RAJASTHAN AND OTHERS 2008 TIOL- 134 SC- CT WHEREIN THE HONBLE APEX COURT HAS OPINED THAT ALL IRREGULAR OR ERRONEOUS OR EVEN ILLEGAL ORDERS CANNOT BE HELD TO BE NULL AND V OID AS THERE IS A FINE DISTINCTION BETWEEN ORDERS WHICH ARE NULL AND VOID AND ORDERS WHICH ARE IRREGULAR, WRONG OR ILLEGAL. WHERE AN AUTHORITY MAK ING ORDER LACKS INHERENT JURISDICTION, SUCH ORDER WOULD BE WITHOUT JURISDICT ION, NULL, NON EST AND VOID AB INITIO AS DEFECT OF JURISDICTION OF AN AUTHORITY GOES TO THE ROOT OF THE MATTER AND STRIKES AT ITS VERY AUTHORITY TO PASS AN Y ORDER AND SUCH A DEFECT CANNOT BE CURED EVEN BY CONSENT OF THE PARTIES. HOW EVER, EXERCISE OF JURISDICTION IN A WRONGFUL MANNER CANNOT RESULT IN A NULLITY - IT IS AN ILLEGALITY, CAPABLE OF BEING CURED IN A DULY CONSTI TUTED LEGAL PROCEEDINGS. IT WAS SUBMITTED THAT PROCEEDINGS FOR ASSESSMENT UNDER A FISCAL STATUTE ARE NOT IN THE NATURE OF JUDICIAL PROCEEDINGS, LIKE PROCEED INGS IN A SUIT INASMUCH AS THE ASSESSING OFFICER DOES NOT ADJUDICATE ON AN ISS UE BETWEEN AN ASSESSEE AND THE STATE AND, THEREFORE, THE LAW ON THE ISSUE LAID DOWN UNDER THE CIVIL LAW ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 22 OF 30 MAY NOT STRICTO SENSU APPLY TO ASSESSMENT PROCEEDINGS. THE LD. DR FURTHE R SUBMITTED THAT IN RAFIQUE BIBI (DEAD) BY LRS. VS. S AYED WALIUDDIN (DEAD) BY LRS. & ORS.2, EXPLAINING THE DISTINCTION BETWEEN 'NULL AND VOID DECREE' AND 'ILLEGAL DECREE', THE HONBLE APEX COURT HAS SA ID THAT A DECREE CAN BE SAID TO BE WITHOUT JURISDICTION, AND HENCE A NULLIT Y, IF THE COURT PASSING THE DECREE HAS USURPED A JURISDICTION WHICH IT DID NOT HAVE; A MERE WRONG EXERCISE OF JURISDICTION DOES NOT RESULT IN A NULLI TY. IT WAS ALSO SUBMITTED THAT LACK OF JURISDICTION IN THE COURT PASSING THE DECRE E MUST BE PATENT ON ITS FACE IN ORDER TO ENABLE THE EXECUTING COURT TO TAKE COGN IZANCE OF SUCH A NULLITY BASED ON WANT OF JURISDICTION AND THAT A DISTINCTIO N EXISTS BETWEEN A DECREE PASSED BY A COURT HAVING NO JURISDICTION AND CONSEQ UENTLY BEING A NULLITY AND NOT EXECUTABLE AND A DECREE OF THE COURT WHICH IS MERELY ILLEGAL OR NOT PASSED IN ACCORDANCE WITH THE PROCEDURE LAID DOWN B Y LAW. A DECREE SUFFERING FROM ILLEGALITY OR IRREGULARITY OF PROCED URE CANNOT BE TERMED IN- EXECUTABLE. 18. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. AS FAR AS THE ASSESSEES FIRST ARGUMENT REGARDING NON-ISSUE OF NOTICE U/S 143(2) PRIOR TO THE ASSUMPTION OF PROCEE DINGS U/S 153A ARE CONCERNED, IT IS OUR CONSIDERED OPINION THAT THE WO RDS 'SO FAR AS MAY BE' IN ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 23 OF 30 CLAUSE {A) OF SUB-SECTION (1) OF SECTION 153 A CANNOT BE INTE RPRETED THAT THE ISSUE OF NOTICE UNDER SECTION 143(2) IS MANDATORY I N CASE OF ASSESSMENT UNDER SECTION 153 A. THE USE OF THE WORDS 'SO FAR AS MAY BE' CANNOT BE STRETCHED TO THE EXTENT OF MANDATORY ISSUE OF NOTIC E UNDER SECTION 143(2). A SPECIFIC NOTICE IS REQUIRED TO BE ISSUED UNDER CLAU SE ( A ) OF SUB-SECTION (1) OF SECTION 153A CALLING UPON THE PERSONS SEARCHED OR R EQUISITIONED TO FILE RETURN. THEREFORE, NO FURTHER NOTICE UNDER SECTION 143(2) IS CONTEMPLATED FOR ASSESSMENT UNDER SECTION 153 A. THE HONBLE DELHI H IGH COURT IN ASHOK CHADDHA VS. ITO (SUPRA) HAS OPINED THAT SECTION 153A PROVIDES FOR THE PROCEDURE FOR ASSESSMENT IN CASE OF SEARCH OR REQUI SITION. SUB SECTION (1) STRATS WITH A NON-OBSTANTE CLAUSE STATING THAT IT W AS NOTWITHSTANDING ANYTHING CONTAINED IN SECTIONS 147,148 AND 149, ETC . CLAUSE (A) THEREOF PROVIDES FOR ISSUANCE OF NOTICE TO THE PERSON SEARC HED U/S 132 OR WHERE DOCUMENTS ETC. ARE REQUISITIONED U/S 132(A), TO FUR NISH A RETURN OF INCOME. THIS CLAUSE NOWHERE PRESCRIBES FOR ISSUANCE OF NOTI CE U/S 143(2). THE WORDS SO FAR AS MAY BE IN CLAUSE { A) OF SUB-SECTION (1) OF SECTION 153 A CANNOT BE INTERPRETED THAT THE ISSUE OF NOTICE UNDER SECTION 143(2) IS MANDATORY IN CASE OF ASSESSMENT UNDER SECTION 153 A. THE USE OF THE W ORDS 'SO FAR AS MAY BE' CANNOT BE STRETCHED TO THE EXTENT OF MANDATORY ISSU E OF NOTICE UNDER SECTION 143(2).AS IS NOTED, A SPECIFIC NOTICE IS REQUIRED T O BE ISSUED UNDER CLAUSE ( A ) ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 24 OF 30 OF SUB-SECTION (1) OF SECTION 153A CALLING UPON THE PERSONS SEARCHED OR REQUISITIONED TO FILE RETURN. THEREFORE, NO FURTHER NOTICE UNDER SECTION 143(2) IS CONTEMPLATED FOR ASSESSMENT UNDER SECTION 153 A. HENCE, WE CONCUR WITH THE SUBMISSIONS OF THE LD. CIT DR ON THIS ISSU E AND DISMISS GROUND NO. 1 OF THE ASSESSEES CO. 19. COMING TO THE SECOND GROUND IN THE ASSESSEES CO, IT IS THE ASSESSEES CONTENTION THAT THE SATISFACTION AS ENVISAGED IN SE CTION 153C THAT THE SEIZED DOCUMENTS BELONGED TO THE ASSESSEE IS MISSING AND T HEREFORE THE ENTIRE ASSESSMENT IS VOID AB INITIO . WE HAVE CAREFULLY PERUSED THE DOCUMENTS ON RECORD. WE HAVE GONE THROUGH THE STATEMENTS RECORDE D DURING THE TIME OF SEARCH AND ALSO THE SATISFACTION NOTE PREPARED BY T HE AO OF THE SEARCHED PARTY. AS FAR AS THE CONTENTION OF THE ASSESSEE THA T NO SATISFACTION NOTE WAS PREPARED AT ALL IS CONCERNED, WE DO NOT AGREE WITH THE SAME. SOME KIND OF SATISFACTION NOTE HAS IN FACT BEEN PREPARED AND IS AVAILABLE ON RECORD BUT THE ESSENTIAL QUESTION THAT HAS TO BE CONSIDERED IS WHE THER THE SATISFACTION NOTE MEETS THE REQUIREMENTS OF THE SECTION. FOR A READY REFERENCE, THE IMPUGNED SATISFACTION NOTE IS REPRODUCED AS UNDER: SEARCH & SEIZURE OPERATION U/S 132(1) OF THE INCOM E TAX ACT, 1961 WERE CARRIED OUT ON 07.10.2003 IN THE SUPER TECH CO NSTRUCTION (P) LTD., C-1/9, GOKUL PUR SHAHDARA, AND ITS HEAD OFFIC E AND VARIOUS PROJECT OFFICES. DURING THE COURSE OF SEARCH AT TH E RESIDENCE OF SHRI ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 25 OF 30 R.K. ARORA, AS PER ANN. B-2 OF THE PANCHNAMA COPY O F SALE DEED OF LAND SITUATED AT VILLAGE PRAHLAD GARHI, GHAZIABAD, AREA OF 194555.52 SQ. MTS WAS FOUND AND SEIZED BY WHICH M/S PANCHSHEEL HOMES P. LTD., HAVE SOLD FOR RS. 4,06,70,000/- TO M /S SUPER TECH CONSTRUCTION P. LTD. THE SALE DEED WAS REGISTERED ON 18.01.2003. COPIES OF SALE DEED BY WHICH THE AGRICULTURE LAND C OMPRISED IN THE ABOVE SAID PLOT WERE PURCHASED BY M/S PANCHSHEEL HO MES P. LTD. WERE ALSO FOUND AND SEIZED. SIMILARLY, COPIES OF A GREEMENT TO SALE OF THE AGRICULTURE LAND PURCHASED FROM VARIOUS VENDORS WERE FOUND AND SEIZED AS PER ANNEXURE B-25 SEIZED FROM THE RESIDEN CE OF SHRI R.K. ARORA. THESE DOCUMENTS ARE BELONGING TO THE COMPAN Y. HENCE, CASE OF M/S PANCHSHEEL HOMES P. LTD. IS COVERED U/S 153C OF THE I.T. ACT, 1961. ACCORDINGLY, ISSUE NOTICE U/S 153A (A) OF TH E INCOME TAX ACT, 1961 TO M/S PANCHSHEEL HOMES P. LTD. TO FILE THE RE TURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT REFERRED TO IN CLAUSE (B) OF SEC. 153(A) OF THE ACT, 1961. 20. A PERUSAL OF THE ABOVE SATISFACTION NO TE SHOWS THAT THE SAME JUST MENTIONS THAT DURING THE COURSE OF SEARCH AT THE PR EMISES OF M/S SUPER TECH CONSTRUCTION (P) LTD. , COPIES OF SALE DEED, PURCHA SE DEED, AGREEMENTS TO SALE ETC WERE FOUND AND THAT THESE DOCUMENTS BELONG TO THE COMPANY. THE SATISFACTION NOTE DOES NOT SPECIFICALLY MENTION E VEN THE NAME OF THE COMPANY TO WHICH IT IS ALLEGED TO BE BELONGING TO I .E. WHETHER TO THE ASSESSEE OR TO SUPER TECH CONSTRUCTION (P) LTD. EVEN ASSUMIN G THAT THE COMPANY REFERRED TO IS THE ASSESSEE, IT IS NOT SPECIFIED AS TO HOW THE AO HAS ARRIVED AT THAT SATISFACTION. IT IS AN UNDISPUTED FACT, A PPARENT FROM THE RECORDS, THAT M/S SUPER TECH CONSTRUCTION (P) LTD. HAS NEVER DENI ED THAT THE SEIZED DOCUMENTS BELONGED TO THEM. IT IS SETTLED LAW THAT WHENEVER A DOCUMENT IS ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 26 OF 30 FOUND FROM A PERSON WHO IS BEING SEARCHED, THE NORM AL PRESUMPTION IS THAT THE SAID DOCUMENT BELONGS TO THAT PERSON. SECTION 1 32(4A)(I) CLEARLY STIPULATES SO. THERE HAS BEEN NO STATEMENT/EVIDENCE ON RECORD WHICH WOULD INCRIMINATE THE ASSESSEE AND WOULD SERVE AS AN EVID ENCE TO PROVE THAT THE SEIZED DOCUMENTS BELONGED TO THE ASSESSEE. THERE WA S A STATEMENT OF SHRI JOGINDER SINGH WHICH COULD HAVE POSSIBLY LINKED THE ASSESSEE TO THE SEIZED DOCUMENTS BUT THE SAME WAS RETRACTED. THE AO HAS NO T BEEN ABLE TO BRING ANY COGENT MATERIAL ON RECORD TO PROVE THAT THE IMP UGNED DOCUMENTS BELONGED TO THE ASSESSEE SO AS TO ASSUME JURISDICTI ON U/S 153C OF THE ACT. IN OUR OPINION, A MERE STATEMENT THAT THE IMPUGNED DOC UMENTS BELONG TO THE ASSESSEE WOULD NOT DISCHARGE THE ONUS CAST UPON THE DEPARTMENT. IT IS VERY MUCH EVIDENT FROM THE SATISFACTION NOTE PRODUCED AB OVE THAT APART FROM SAYING THAT THE DOCUMENTS BELONGED TO THE ASSESSEE, THERE IS NOTHING THAT WOULD INDICATE AS TO HOW THE PRESUMPTION AS STIPULA TED IN SECTION 132(4A)(I) IS NEGATED. THE HONBLE DELHI HIGH COURT IN PEPSI F OODS PVT. LTD (SUPRA) HAS OPINED THAT THE SATISFACTION NOTE ITSELF MUST D ISPLAY THE REASONS OR BASIS FOR THE CONCLUSION THAT THE AO OF THE SEARCHED PERS ON IS SATISFIED THAT THE SEIZED DOCUMENTS BELONG TO A PERSON OTHER THAN THE SEARCHED PERSON. THE HONBLE DELHI HIGH COURT IN PEPSI FOODS PVT. LTD. ( SUPRA) OBSERVED AS UNDER: ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 27 OF 30 6. ON A PLAIN READING OF SECTION 153C, IT IS EVIDEN T THAT THE ASSESSING OFFICER OF THE SEARCHED PERSON MUST BE S ATISFIED THAT INTER ALIA ANY DOCUMENT SEIZED OR REQUISITIONED BELONGS TO A PERSON OTHER THAN THE SEARCHED PERSON. IT IS ONLY THEN THA T THE ASSESSING OFFICER OF THE SEARCHED PERSON CAN HANDOVER SUCH DO CUMENT TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTH ER PERSON (OTHER THAN THE SEARCHED PERSON). FURTHERMORE, IT IS ONLY AFTER SUCH HANDING OVER THAT THE ASSESSING OFFICER OF SUCH OTHER PERSO N CAN ISSUE A NOTICE TO THAT PERSON AND ASSESS OR REASSESS HIS INCOME IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. THEREFORE, BEFORE A NOTICE UNDER SECTION 153C CAN BE ISSUED TWO STEPS HAVE TO BE TAK EN. THE FIRST STEP IS THAT THE ASSESSING OFFICER OF THE PERSON WHO IS SEARCHED MUST ARRIVE AT A CLEAR SATISFACTION THAT A DOCUMENT SEIZ ED FROM HIM DOES NOT BELONG TO HIM BUT TO SOME OTHER PERSON. THE SEC OND STEP IS - AFTER SUCH SATISFACTION IS ARRIVED AT - THAT THE DOCUMENT IS HANDED OVER TO THE ASSESSING OFFICER OF THE PERSON TO WHOM THE SAI D DOCUMENT BELONGS. IN THE PRESENT CASES IT HAS BEEN URGED O N BEHALF OF THE PETITIONER THAT THE FIRST STEP ITSELF HAS NOT BEEN FULFILLED. FOR THIS PURPOSE IT WOULD BE NECESSARY TO EXAMINE THE PROVIS IONS OF PRESUMPTIONS AS INDICATED ABOVE. SECTION 132(4A)(I) CLEARLY STIPULATES THAT WHEN INTER ALIA ANY DOCUMENT IS FOU ND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE O F A SEARCH IT MAY BE PRESUMED THAT SUCH DOCUMENT BELONGS TO SUCH PERS ON. IT IS SIMILARLY PROVIDED IN SECTION 292C (1)(I). IN OTHER WORDS, WHENEVER A DOCUMENT IS FOUND FROM A PERSON WHO IS BEING SEARCH ED THE NORMAL PRESUMPTION IS THAT THE SAID DOCUMENT BELONGS TO TH AT PERSON. IT IS FOR ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 28 OF 30 THE ASSESSING OFFICER TO REBUT THAT PRESUMPTION AND COME TO A CONCLUSION OR SATISFACTION THAT THE DOCUMENT IN F ACT BELONGS TO SOMEBODY ELSE. THERE MUST BE SOME COGENT MATERIAL A VAILABLE WITH THE ASSESSING OFFICER BEFORE HE/SHE ARRIVES AT THE SATISFACTION THAT THE SEIZED DOCUMENT DOES NOT BELONG TO THE SEARCHED PER SON BUT TO SOMEBODY ELSE. SURMISE AND CONJECTURE CANNOT TAKE T HE PLACE OF SATISFACTION. XXXX XXXX XXXX XXXX XXXX 11. IT IS EVIDENT FROM THE ABOVE SATISFACTION NOTE THAT APART FROM SAYING THAT THE DOCUMENTS BELONGED TO THE PETITIONE R AND THAT THE ASSESSING OFFICER IS SATISFIED THAT IT IS A FIT CAS E FOR ISSUANCE OF A NOTICE UNDER SECTION 153C, THERE IS NOTHING WHICH W OULD INDICATE AS TO HOW THE PRESUMPTIONS WHICH ARE TO BE NORMALLY RA ISED AS INDICATED ABOVE, HAVE BEEN REBUTTED BY THE ASSESSING OFFICER. MERE USE OR MENTION OF THE WORD SATISFACTION OR THE WORDS I AM SATISFIED IN THE ORDER OR THE NOTE WOULD NOT MEET THE REQUIREMEN T OF THE CONCEPT OF SATISFACTION AS USED IN SECTION 153C OF THE SAID AC T. THE SATISFACTION NOTE ITSELF MUST DISPLAY THE REASONS OR BASIS FOR T HE CONCLUSION THAT THE ASSESSING OFFICER OF THE SEARCHED PERSON IS SAT ISFIED THAT THE SEIZED DOCUMENTS BELONG TO A PERSON OTHER THAN THE SEARCHED PERSON. WE ARE AFRAID, THAT GOING THROUGH THE CONTENTS OF T HE SATISFACTION NOTE, WE ARE UNABLE TO DISCERN ANY SATISFACTION O F THE KIND REQUIRED UNDER SECTION 153C OF THE SAID ACT. 21. THEREFORE, ON CONSIDERATION OF THE ENTIRE F ACTUAL MATRIX AS WELL AS ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 29 OF 30 DOCUMENTS ON RECORD, ESPECIALLY THE SATISFACTION N OTE AND THE JUDICIAL RULING OF THE HONBLE DELHI HIGH COURT IN PEPSI FOO DS PVT. LTD. (SUPRA), WE HOLD THAT THE CONCEPT OF SATISFACTION AS ENVISAGED IN SECTION 153C HAS NOT BEEN MET BY THE IMPUGNED SATISFACTION NOTE. THE AO HAS FAILED TO ESTABLISH IN CLEAR TERMS AS TO HOW THE SEIZED DOCUMENTS COULD BE SAID TO BE BELONGING TO THE ASSESSEE. THEREFORE, THE ENTIRE FOUNDATION O F PROCEEDINGS IS KNOCKED DOWN. WE HAVE NO ALTERNATIVE BUT TO HOLD THE ENTIRE IMPUGNED ASSESSMENT PROCEEDINGS FOR THE YEAR UNDER CONSIDERATION AS VOI D AB INITIO . WE SET ASIDE THE ORDER OF THE LD. CIT (A) AND QUASH THE IMPUGNED ASSESSMENT PROCEEDINGS. GROUND NO. 2 OF THE ASSESSEES CO IS A LLOWED. 22. IN VIEW OF OUR FINDINGS IN THE CO, THE DEPARTM ENTAL APPEAL BECOMES IN FRUCTUOUS AND IS ACCORDINGLY DISMISSED. 23. IN THE FINAL RESULT, THE CO OF THE ASSESSEE IS PARTLY ALLOWED WHEREAS THE APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 13/07/2016 SD/- SD/- (J.S. REDDY) (SUD HANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13/07/2016 *KAVITA ARORA COPY FORWARDED TO: ITA NO. 4144/D/07 & CO NO.83/D/07 M/S PANCHSHEEL HOMES P. LTD. PAGE 30 OF 30 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI