DCIT, Ernakulam V. M/s.Royal Cartons (P) Ltd, Ernakulam

ITA 472/COCH/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96709 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 29-10-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 19-07-2013
• Court: TRIBUNAL
• Department Lawyers: SHANTAM BOSE
• Assessee Lawyers: K P PAULSON
• Keywords: Unexplained cash credit; Search and seizure; Document seized; Opportunity of being heard; Difference of opinion; Block assessment; Documents seized; Reassessment proceedings
• Section: 143(3); 153A; 147; 148; 263; 132

Judgement Text

ITA NO.472/C/2013 & CO 37/C/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI B P JAIN, AM & GEORGE GEORGE.K, JM ITA NO.472/COCH/2013 (ASST YEAR 2005-06 ) & CROSS OBJECTION NO. 37/COCH/2013 THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, ERNAKULAM. M/S ROYAL CARTONS P LTD 22/318 CHAMPANOOR INDL. ESTATE ANGAMALY ERANAKULAM ( APPELLANT/RESPONDENT ) VS (RESPONDENT/CROSS OBJECTOR) PAN NO. AACCP 7836J ASSESSEE BY SHRI K P PAULSON ,CA REVENUE BY SHRI SHANTAM BOSE, CIT-DR DATE OF HEARING 16 TH SEPT 2015 DATE OF PRONOUNCEMENT 16 TH SEPT 2015 ORDER PER GEORGE GEORGE.K JM: SINCE THERE WAS A DIFFERENCE OF OPINION BETWEEN T HE TWO MEMBERS CONSTITUTING THE DIVISION BENCH OF ITAT, COCHIN, TH E MATTER WAS REFERRED TO THE THIRD MEMBER BY THE HONBLE PRESIDENT U/S. 255(4) O F THE ACT. THE LD. THIRD MEMBER HAS FRAMED FOLLOWING QUESTION AFTER THE CONS ENT OF BOTH THE PARTIES IN APPEAL:- ITA NO.472/C/2013 & CO 37/C/2013 2 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH CAN BE CONSIDERED AS INCRIMINATING MATERIAL TO INITIATE PROCEEDINGS U/S 153C OF THE AC T, EVEN THOUGH THE ASSESSMENT U/S 143(1) WAS COMPLETED AND ATTAINED FI NALITY BEFORE SATISFACTION WAS REACHED BY THE AO WHO INITIATED PR OCEEDINGS U/S 153C OF THE ACT. 2. IN THE EVENT OF PROCEEDINGS U/S 153C BEING VALID, W HETHER THE HONBLE ACCOUNTANT MEMBER WAS JUSTIFIED IN SETTING ASIDE TH E ORDER OF THE LD CIT(A) ON MERITS FOR RE-EXAMINATION. 2 THE HONBLE THIRD MEMBER HAS AGREED WITH THE VIEW TAKEN BY THE HONBLE JUDICIAL MEMBER IN RESPECT OF BOTH THE QUESTIONS RE FERRED ABOVE. ACCORDINGLY, AS PER THE MAJORITY VIEW, THE APPEAL FILED BY THE R EVENUE IS DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. 3. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF SEPT 2015 SD/- S D/- ( B P JAIN) (GEORGE GEORGE .K) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN: DATED 16 TH SEPT 2015 RAJ* ITA NO.472/C/2013 & CO 37/C/2013 3 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT, 5. DR 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN ITA NO.472/C/2013 & CO 37/C/2013 4 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI D. MANMOHAN, VICE PRESIDENT I.T.A NO. 472/COCH/2013 (ASSESSMENT YEAR 2005-06) DY.CIT, CENT.CIR.1 VS M/S ROYAL CARTONS (P) LTD ERNAKULAM 22/318, CHAMPANOOR INDUSTRIAL ESTATE ANGAMALY, ERNAKULAM PAN : AACCP7836J (APPELLANT) (RESPONDENT) C.O. NO.37/COCH/2013 (ARISING OUT OF I.T.A NO. 472/COCH/2013) (ASSESSMENT YEAR 2005-06) M/S ROYAL CARTONS (P) LTD VS DY.CIT, CENT.CIR.1 ANGAMALY, ERNAKULAM ERNAKULAM (CROSS OBJECTOR) (RESPONDENT) NOTE CONSEQUENT TO THE DIFFERENCE OF OPINION BETWEEN HO NBLE JUDICIAL MEMBER AS WELL AS HONBLE ACCOUNTANT MEMBER, IT WAS REQUESTED TO NOMINATE THIRD MEMBER TO RESOLVE THE POINTS OF REFE RENCE AND WHILE FORWARDING THE POINTS OF REFERENCE, THERE WAS NO UN ANIMITY AND SEPARATE QUESTIONS WERE FORWARDED TO THE HONBLE PRESIDENT. ITA NO.472/C/2013 & CO 37/C/2013 5 2. AT THE TIME OF HEARING, THE LD. A/R AND CIT D /R SUBMITTED THAT THE QUESTIONS DO NOT PROPERLY FOCUS THE POINTS IN DISPU TE. THEREFORE, THE PARTIES WERE DIRECTED TO REFRAME THE QUESTIONS WHIC H WOULD COVER THE ISSUES EMERGING OUT OF THE ORDERS PASSED BY THE HON BLE JM AND HONBLE AM. UPON VERIFYING THE REFRAMED QUESTIONS BASED ON THE MATERIAL AVAILABLE ON RECORD AND ALSO AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT THE FOLLOWING REFRAMED QUESTIONS WOULD BRING OUT THE POINTS OF DIFFERENCE APPROPRIATELY: 1) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH CAN BE CONSIDERED AS INCRIMINATING MATERIAL TO INITIATE PROCEEDINGS U/S. 153C OF THE ACT, EVEN THOUGH THE ASSESSMENT U/S. 143(1) WAS COMPLETE D AND ATTAINED FINALITY BEFORE SATISFACTION WAS REACHED B Y THE ASSESSING OFFICER WHO INITIATED PROCEEDINGS U/S. 1 53 C OF THE ACT. 2) IN THE EVENT OF PROCEEDINGS U/S. 153C BEING VALI D, WHETHER THE HONBLE. ACCOUNTANT MEMBER WAS JUSTIFIED IN SETTING ASIDE THE ORDER OF THE LD. CIT(A) ON MERITS FOR RE-EXAMINATION. 3. THE ABOVE TWO REFRAMED QUESTIONS ARE PUT T O THE PARTIES AND THEY HAVE ADMITTED THAT THE ABOVE QUESTIONS WOULD APPROP RIATELY COVER THE ISSUES IN DISPUTE, EMERGING OUT OF THE ORDERS PASSE D BY THE HONBLE JM AND HONBLE AM. SD/- (D.MANMOHAN) VICE-PRESIDENT PLACE: KOCHI DATED : 21 /08/2015 ITA NO.472/C/2013 & CO 37/C/2013 6 IN THE INCOME TAX APPELLATE TRIBUNAL THIRD MEMBER COCHIN BENCH, COCHIN BEFORE SHRI D.MANMOHAN, VICE PRE SIDENT I.T.A. NO.472/COCH/2013 ASSESSMENT YEAR : 2005-06 DY.CIT, CENT. CIR. 1 ERNAKULAM. VS. M/S. ROYAL CARTONS (P) LTD., 22/318, CHAMPANOOR INDUSTRIAL ESTATE, ANGAMALY, ERNAKULAM. [PAN: AACCP 7836J] (REVENUE -APPELLANT) (ASSESSEE-RESPONDEN T) C.O. NO. 37/COCH/2013 (ARSG. OUT OF I.T.A. NO.472/COCH/2013) ASSESSMENT YEAR : 2005-06 M/S. ROYAL CARTONS (P) LTD., 22/318, CHAMPANOOR INDUSTRIAL ESTATE, ANGAMALY, ERNAKULAM. [PAN: AACCP 7836J] VS. DY.CIT, CENT. CIR. 1 ERNAKULAM. (CROSS OBJECTOR) (REVENUE-RESPONDENT) REVENUE BY SHRI SHANTAM BOSE, CIT(DR) ASSESSEE BY SHRI K.P.PAULSON, CA DATE OF HEARING 2 1 /08/2015 O R D E R U/S. 255(4) OF THE INCOME TAX ACT,1961 ITA NO.472/C/2013 & CO 37/C/2013 7 PER D. MANMOHAN, VICE PRESIDENT: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFAC TURE OF CARTONS AND SALE THEREOF. SEARCH AND SEIZURE OPERATIONS WERE CARRIED OUT IN T HE PREMISES OF M/S. MATHA ETERPRISES LTD. ON 13-02-2007. ONE OF THE DIRECTORS OF THE ASSESSEE C OMPANY IS A PARTNER IN M/S. MATHA ENTERPRISES. DURING THE COURSE OF SEARCH, A BUNCH OF LOOSE SHEETS CONTAINING BALANCE SHEET, P&L ACCOUNT ETC. WERE FOUND WHICH PERTAINED TO THE ASSESSEE COMPANY, M/S. ROYAL CARTONS (P) LTD.. ACCORDING TO THE LD. COUNSEL FOR THE ASSESSE E, THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF THE ASSESSEE COMPANY, I.E., M/S. ROYAL C ARTONS (P) LTD. FOR THE PERIOD 01/04/2005 TO 31/03/2006 WERE FOUND WHICH WERE FORWARDED TO THE C ONCERNED ASSESSING OFFICER BY THE SEARCH TEAM. BASED ON THE BALANCE SHEET AND PROFIT AND LO SS ACCOUNT PERTAINING TO THE ASSESSMENT YEAR 2006-07, THE ASSESSING OFFICER ISSUED NOTICE U /S. 153A R.W.S. 153C OF THE ACT ON 12-02- 2008 CALLING UPON THE ASSESSEE TO FILE RETURN OF IN COME WITHIN 30 DAYS FROM THE DATE OF RECEIPT OF NOTICE. IN RESPONSE TO THE SAID NOTICE, THE ASS ESSEE FILED ITS RETURN OF INCOME DECLARING LOSS OF RS.2,65,510/-, WHICH WAS ORIGINALLY RETURNED. IT DESERVES TO BE NOTICED THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 27/03/2006 FOR THE AS SESSMENT YEAR 2005-06 AND THE SAME WAS PROCESSED U/S. 143(1) OF THE ACT AND INTIMATION DAT ED 16/02/2007 WAS FORWARDED TO THE ASSESSEE. IT IS NOT IN DISPUTE THAT THE RETURN WAS PROCESSED AFTER INITIATING THE SEARCH PROCEEDINGS IN THE CASE OF M/S. MATHA ENTERPRISES L TD. IT IS WELL-SETTLED THAT A RETURN PROCESSED U/S. 143(1) OF THE ACT CAN BE TAKEN UP FOR SCRUTINY BY ISSUING NOTICE U/S. 143(2) OF THE ACT WITHIN A PERIOD OF 12 MONTHS FROM THE DATE OF FILIN G OF RETURN OF INCOME. IN THIS CASE, NOTICE U/S. 143(2) COULD HAVE BEEN ISSUED ON OR BEFORE 31/ 03/2007. NO SUCH NOTICE HAVING BEEN ISSUED, THE PROCEEDINGS U/S. 143(1) OF THE ACT ATTA INED FINALITY. ITA NO.472/C/2013 & CO 37/C/2013 8 2. IN THIS CASE, THE JURISDICTION OF THE ASSESSEE W AS ORIGINALLY VESTED WITH ASSESSING OFFICER, WARD-1, ERNAKULAM W.E.F. 27/11/2007. IT WAS TRANSF ERRED TO CENTRAL CIRCLE-I, ERNAKULAM. ACCORDINGLY JURISDICTION, TO INITIATE THE PROCEEDIN GS U/S. 153C, WAS CONFERRED ON THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-I ONLY O N 27/11/2007; THEREAFTER SEIZED DOCUMENTS WERE TRANSFERRED TO DY.CIT. THE BALANCE SHEE T FOUND DURING THE COURSE OF SEARCH WAS FOR THE PERIOD 1.4.2005 TO 31.03.2006 WHICH IS RELEVANT FOR THE ASSESSMENT YEAR 2006-07. THEREFORE, ACCORDING TO THE ASSESSEE, NO INCRIMINAT ING MATERIAL PERTAINING TO PREVIOUS YEAR 2004-05 WAS FOUND DURING THE COURSE OF SEARCH SO AS TO ASSUME JURISDICTION U/S. 153C OF THE ACT. 3. THE ASSESSING OFFICER HOWEVER OBSERVED THAT AS PER THE BALANCE SHEET, AS ON 31/03/2005, FILED ALONGWITH THE RETURN OF INCOME BY THE ASSESSE E, UNSECURED CREDITORS DURING THE YEAR WERE TO THE TUNE OF RS.12,42,000/- AND THE ASSESSEE DID NOT FILE CONFIRMATION LETTERS OF THE SUNDRY CREDITORS. THEREFORE, THE ASSESSING OFFICER TREATE D THE SAME AS UNEXPLAINED CASH CREDITS AND COMPLETED THE ASSESSMENT U/S. 153C OF THE ACT. 4 AGGRIEVED THE ASSESSEE CONTENDED BEFORE THE LD. C IT(A) THAT SUFFICIENT OPPORTUNITY WAS NOT GIVEN BY THE ASSESSING OFFICER AND THEREFORE, T HE PROCEEDINGS WERE NOT VALID EITHER U/S. 153A OR 153C OF THE ACT. THE LD. COUNSEL ALSO CONTE NDED THAT EVEN THE ADDITIONS MADE BY THE ASSESSING OFFICER HAVE NO LEGS TO STAND. THE LD. C IT(A) CONSIDERED ALL THE ISSUES BUT CHOSE TO DELETE THE ADDITIONS ON MERITS. THEREFORE, THE REV ENUE PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND THE ASSESSEE-COMPANY, BY WAY OF CROSS OBJECTION S, CONTENDED THAT THE ASSESSING OFFICER ITA NO.472/C/2013 & CO 37/C/2013 9 MADE THE ADDITIONS U/S. 153C OF THE ACT WITHOUT OBT AINING ANY INCRIMINATING MATERIAL DURING THE COURSE OF SEARCH AND HE ERRED IN MAKING ADDITION ME RELY ON THE BASIS OF FIGURES AVAILABLE IN BALANCE SHEET FILED ALONGWITH THE RETURN. 5. THE APPEAL AND THE CROSS OBJECTIONS WERE HEARD B Y THE DIVISION BENCH. THE LD. JUDICIAL MEMBER OBSERVED THAT THE PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE, U/S. 153C OF THE ACT, BY TREATING THE ASSESSEE COMPANY AS A PERSON O THER THAN THE SEARCHED PERSON. IN SUCH AN EVENT, AS PER PROVISO TO SECTION 153C OF THE ACT, T HE DATE ON WHICH THE BOOKS OF ACCOUNT, DOCUMENTS ETC ARE FORWARDED AND RECEIVED BY THE ASS ESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON, SHALL BE THE RELEVANT DATE FOR CONSID ERATION AS TO WHETHER THE JURISDICTION WAS INVOKED PROPERLY OR NOT. IN OTHER WORDS, THAT DATE SHOULD BE DETERMINED AS THE DATE OF INITIATION OF SEARCH. IN THIS CASE, THE SEIZED DOC UMENTS WOULD HAVE BEEN HANDED OVER TO THE ASSESSING OFFICER ON OR AFTER 27/11/2007 BY WHICH D ATE ASSESSMENT PROCEEDINGS COMPLETED ON THE STRENGTH OF RETURN FILED ON 27/03/2006 ATTAINED FINALITY. SINCE ASSESSMENT PROCEEDINGS ATTAINED FINALITY, BY OPERATION OF LAW, THE SAME CA NNOT BE RE-OPENED BY INVOKING PROVISIONS OF SECTION 153C OF THE ACT. THE LD. JUDICIAL MEMBER EXTRACTED THE PROVISIONS OF SECTION 153C TO HIGHLIGHT THAT THE SAID SECTION COMES INTO PLAY ONL Y WHEN AN ASSESSMENT HAS TO BE MADE ON A PERSON, OTHER THAN A PERSON SEARCHED, SUBJECT TO FU LFILLING TWO CONDITIONS, I.E., (1) A FINDING THAT MONEY BULLION, JEWELLERY OR OTHER VALUABLES OR BOOK S OF ACCOUNT OR OTHER DOCUMENTS SEIZED BELONGS TO A PERSON OTHER THAN THE SEARCHED PERSON (2) THE SAME HAS TO BE HANDED OVER TO THE AO HAVING JURISDICTION OVER SUCH PERSON, OTHER THAN SEARCHED PERSON, FOR PROCEEDING FURTHER. THEREAFTER THE CONCERNED ASSESSING OFFICER HAS TO R ECORD SATISFACTION. AS PER THE PROVISO TO SECTION 153C, THE DATE OF INITIATION OF SEARCH PROC EEDINGS U/S. 132 IS THE DATE OF RECEIPT OF ITA NO.472/C/2013 & CO 37/C/2013 10 BOOKS OF ACCOUNT, ETC. BY THE ASSESSING OFFICER HAV ING JURISDICTION OVER SUCH OTHER PERSON. THE SAID PROVISO READS AS UNDER: PROVIDED THAT IN CASE OF SUCH OTHER PERSON, THE RE FERENCE TO THE DATE OF INITIATION OF THE SEARCH U/S. 132 OR MAKING OF REQUISITION U/S. 132 I N THE SECOND PROVISO TO SUB SECTION (1) OF SECTION 153A SHALL BE CONSTRUED AS REFERENCE TO THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY T HE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON. 6. THE LD. JUDICIAL MEMBER HAS ALSO RELIED UPON THE PROVISIONS OF SECTION 153A AND SECOND PROVISO THERETO WHICH PROVIDES FOR PROCEDURE FOR MA KING A BLOCK ASSESSMENT AND OBSERVED THAT ONLY SUCH ASSESSMENTS, WHICH ARE PENDING ON THE DAT E OF INITIATION OF PROCEEDINGS U/S. 132 OF THE ACT, SHALL NOT BE ABATED. IN OTHER WORDS, IF T HE ASSESSMENT IS COMPLETED OR TERMINATED BY OPERATION OF LAW ON THE BASIS OF THE RETURN OF INCO ME FILED IN THE REGULAR COURSE, THE ASSESSMENT PROCEEDINGS SHALL NOT BE ABATED. ON CONJOINT READI NG OF SECTION 153A AND 153C OF THE ACT AND THE FACTS OF THE CASE, THE LD. JUDICIAL MEMBER WAS OF THE VIEW THAT THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2005-06 CAN BE SAID TO HAVE BEE N TERMINATED BY OPERATION OF LAW AS ON 31/03/2007. IF THE ASSESSING OFFICER SEEKS TO INIT IATE PROCEEDINGS U/S. 153C OF THE ACT, HE HAS TO PROVE THAT THERE IS SOME INCRIMINATING MATERIAL FOR THE YEAR UNDER CONSIDERATION. IN FACT, BALANCE SHEET AS ON 31/03/2005 CLEARLY SHOWS THE PO SITION OF SUNDRY CREDITORS AND HENCE, IT IS DEEMED TO HAVE BEEN TAKEN INTO CONSIDERATION BY THE ASSESSING OFFICER AT THE TIME OF PROCESSING OF THE RETURN. IT IS ALSO NOT IN DISPUT E THAT THERE IS NO MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIONS FOR THE ASSESSMENT YEAR 2005-06. THE ASSESSING OFFICER, IN THE PROCEEDINGS U/S. 153C, MADE ADDITION ON THE BASIS O F THE BALANCE SHEET AS ON 31/03/2005 WHICH WAS FILED ALONGWITH THE RETURN OF INCOME AS O N 27/03/2006 ITSELF. IN SUCH CIRCUMSTANCES, THE LD. JM CONCLUDED THAT IN THE ABSENCE OF ANY INC RIMINATING MATERIAL FOUND DURING THE COURSE ITA NO.472/C/2013 & CO 37/C/2013 11 OF SEARCH, THE ASSESSING OFFICER CANNOT RE-OPEN THE ASSESSMENTS COMPLETED ON THE BASIS OF THE RETURN FILED BY THE ASSESSEE ON 27/03/2006 WHEREIN THE UNSECURED CREDITORS OF RS.12,42,000/- WAS DISCLOSED. HE, ACCORDINGLY, DELETED THE ADDITIO N ON THE GROUND OF LACK OF JURISDICTION TO INITIATE PROCEEDINGS U/S. 153C OF THE ACT. 7. THE LD. ACCOUNTANT MEMBER WAS HOWEVER OF THE OP INION THAT THE BUNCH OF LOOSE SHEETS CONTAINING BALANCE SHEET AND PROFIT AND LOSS ACCOUN T REVEALS THE INCOME OF THE ASSESSEE WHICH WOULD BE SUFFICIENT FOR THE ASSESSING OFFICER TO RE OPEN THE ASSESSMENTS U/S. 153C OF THE ACT. IN HIS OPINION, THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH IN THE PREMISES OF THE ASSESSEE, CAN BE TREATED AS INCRIMINATING MATERIAL. THE LD. AM ALSO EXTRACTED PROVISIONS OF SECTION 153A AND 153C OF THE ACT AND OBSERVED THAT PROVISO TO SE CTION 153A MANDATES ASSESSING OFFICER TO ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF E ACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS. THE PROVISO FURTHER MANDATES THA T ANY ASSESSMENT OR RE-ASSESSMENT IN RESPECT OF ANY OF THOSE SIX YEARS WHICH ARE PENDING SHALL NOT ABATE. IN HIS OPINION, A CAREFUL PERUSAL OF THE PROVISIONS SHOW THAT THE ASSESSMENTS HAVE TO BE COMPULSORILY MADE FOR ALL THE SIX YEARS AND NOWHERE IT IS MENTIONED THAT NO REGUL AR ASSESSMENT OR RE-ASSESSMENT CAN TAKE PLACE FOR ANY PARTICULAR YEAR IF THERE IS NO INCRIM INATING MATERIAL FOUND. IN THIS REGARD, HE RELIED ON THE DECISION OF THE SHYAM LATA KAUSHIK VS. ACIT (114 ITD 305) WHEREIN IT WAS HELD THAT THERE IS NO REQUIREMENT FOR AN ASSESSMENT MADE U/S. 153A TO BE BASED ON ANY MATERIAL SEIZED IN THE COURSE OF SEARCH. SIMILAR VIEW WAS TAKEN IN THE CASE OF SHIVNATH RAI HARNARAIN (INDIA) LTD. VS DCIT (117 TTJ 480). ITA NO.472/C/2013 & CO 37/C/2013 12 8. HE ALSO REFERRED TO THE DECISION OF THE JHA RKHAND HIGH COURT IN THE CASE OF ABHAY KUMAR SHROFF VS. CIT (290 ITR 114) WHEREIN THE COURT OBSE RVED THAT AS PER THE PROVISIONS OF SECTION 153A SINGLE ASSESSMENT OF UNDISCLOSED INCOME OF A BLOCK PERIOD, IN A CASE WHERE SEARCH IS CONDUCTED IS PERMISSIBLE. HE ALSO REFERRED TO A HO ST OF OTHER DECISIONS WHEREIN THE PROVISIONS OF SECTION 153A AND 153C WERE HIGHLIGHTED AND IN MO ST OF THE CASES, THE COURTS HELD THAT IRRESPECTIVE OF AVAILABILITY OF INCRIMINATING MATER IAL, BLOCK ASSESSMENT CAN BE MADE FOR ALL THE SIX YEARS AND ONLY THOSE PROCEEDINGS WHICH WERE COMPLET ED ON THE DATE OF SEARCH WOULD BE ABATED. HE WAS ALSO OF THE OPINION THAT THE ASSESS MENTS CAN BE REOPENED BY THE ASSESSING OFFICER EVEN IF THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. HE WAS ALSO OF THE OPINION THAT THE MATERIAL FOUND IN THE COURS E OF SEARCH IS SUFFICIENT TO INITIATE PROCEEDINGS U/S. 153C OF THE ACT. 9 . THEREAFTER, THE LD. ACCOUNTANT MEMBER CONSIDERED T HE LEGALITY OF THE ADDITIONS BY GOING THROUGH THE MATERIAL PLACED BEFORE THE CIT(A). IT MAY BE NOTICED THAT THE LD. JUDICIAL MEMBER HAVING QUASHED THE PROCEEDINGS, THERE WAS NO OCCASI ON FOR HIM TO CONSIDER THE ORDER OF THE CIT(A) ON MERITS. THE LD. ACCOUNTANT MEMBER NOTICE D THAT THE CIT(A) DELETED THE ADDITION OF RS. 2 LAKH RECEIVED FROM SHRI NELSON STATING THAT M R. NELSON HAD ENOUGH RESOURCES IN THE FORM OF AGRICULTURAL INCOME. THE LD. AM WAS OF THE OPIN ION THAT THE ASSESSEE HAVING PRODUCED DOCUMENTS FOR THE FIRST TIME BEFORE THE LD. CIT(A), THE ISSUE DESERVES TO BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. SIMILAR VIEW WAS TAKEN IN RESPECT OF OTHER ADDITIONS. 10. ON ACCOUNT OF DIFFERENCE OF OPINION BETWEEN THE LD. JUDICIAL MEMBER AND THE LD. ACCOUNTANT MEMBER, THE FOLLOWING POINTS OF DIFFEREN CE FRAMED AND FORWARDED TO THE HONBLE ITA NO.472/C/2013 & CO 37/C/2013 13 PRESIDENT U/S. 255(4) OF THE I.T. ACT WITH A REQUES T TO NOMINATE THIRD MEMBER TO RESOLVE THE ISSUES; AS PER LD. JM (1) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WHE N THE ASSESSEE FILED THE RETURN OF INCOME ON 27-03-2006 AND THE ASSESSMENT PROCEEDINGS ARE TERMINATED BY OPERATION OF LAW ON EXPIRY OF TIME LIMIT FOR ISSUING NOTICE U/S. 143(2) ON 31-03-2007 AND THE BOOKS OF ACCOUNT OF THE ASSESSEE RECEIVED BY THE ASSESSING O FFICER ON OR AFTER 27-11-2007, WHETHER THE ADDITION MADE BY THE ASSESSING OFFICER TO THE E XTENT OF RS.12,42,000/- WAS CORRECT ESPECIALLY WHEN COPY OF THE BALANCE SHEET SAID TO B E FOUND DURING THE COURSE OF SEARCH OPERATION WAS FILED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME ON 27/03/2006 ITSELF? (2) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IS IT PROPER FOR A JUDICIAL AUTHORITY/TRIBUNAL TO PLACE RELIANCE ON THE DECISION/JUDGMENT OF THE B ANGALORE BENCH OF THIS TRIBUNAL DATED 05/12/2014 IN NANDINI DELUXE VS. ACIT IN I.T.A. NOS . 446 TO 448/BANG/2013 (LD. AM REFERRED THE ORDER IN PARAGRAPH 4.10 OF HIS ORDER) ESPECIALLY WHEN THE PRESENT APPEAL ITSELF WAS HEARD ON 29/10/2014 ITSELF (TWO MONTHS BEFORE T HE ORDER OF THE BANGALORE BENCH) WITHOUT GIVING ANY OPPORTUNITY TO BOTH PARTIES? 11. THE LD. ACCOUNTANT MEMBER ON THE OTHER HAND WAS OF THE OPINION THAT THE QUESTIONS FRAMED BY THE LD. JUDICIAL MEMBER DO NOT APPROPRIAT ELY COVER THE ISSUES IN DISPUTE AND THEREFORE, HE FRAMED THE FOLLOWING QUESTIONS WHICH IN HIS OPINION, WOULD HELP IN PROPERLY ADJUDICATING ALL THE ISSUES: (1) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WHE THER THE ASSESSMENT FRAMED U/S. 153C R.W.S. 153A OF THE I.T. ACT COULD BE QUASHED, THOUGH THE DOCUMENT SEIZED DURING THE COURSE OF SEARCH ACTION U/S. 132 OF THE I.T. AC T AT THE BUSINESS PREMISES OF M/S. MATHA ENTERPRISES ON 13-02-2007 BELONGED TO THE PRE SENT ASSESSEE? ITA NO.472/C/2013 & CO 37/C/2013 14 (2) IF THE ANSWER TO QUESTION NO. (1) IS NO, THEN T HE ISSUE RELATING TO THE ADDITION OF RS.12,42,000/- IS REQUIRED TO BE EXAMINED BY THE AS SESSING OFFICER AFRESH, AS THERE WAS NO EVIDENCE PRODUCED BY THE ASSESSEE BEFORE HIM AT THE TIME OF ASSESSMENT. 12. SINCE THERE WAS NO UNANIMITY EVEN IN FRAMING OF THE QUESTIONS, THE BENCH DIRECTED BOTH THE PARTIES TO SUGGEST WHETHER ALL THE FOUR QUESTIO NS NEED TO BE ANSWERED OR WHETHER THEY NEED TO BE REFRAMED. 13. THE LD. A/R AND D/R SUBMITTED THAT THE ORDER OF THE BANGALORE BENCH OF THIS TRIBUNAL DATED 05/12/2014, IN NANDINI DELUXE VS. ACIT IN I.T .A. NOS. 446 TO 448/BANG/2013, WAS NOT FILED AT THE TIME OF THE PASSING OF THE ORDER BY TH E LD. JUDICIAL MEMBER, BUT THE LD. ACCOUNTANT MEMBER CHOSE TO INCORPORATE THE SAME IN HIS DISSENT ORDER, BUT SUCH FACTS CAN ALWAYS BE TAKEN INTO CONSIDERATION WHILE ADDRESSING THE MAIN ISSUES AND THERE IS NO NEED FOR A SEPARATE QUESTION TO BE FRAMED ON THAT ASPECT. 14. THE PARTIES HAVE SUGGESTED CERTAIN QUESTIONS WH ICH, ACCORDING TO THEM, WOULD BROADLY COVER THE POINTS OF DIFFERENCE. UPON VERIFYING THE REFRAMED QUESTIONS BASED ON THE MATERIAL AVAILABLE ON RECORD AND ALSO AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT THE FOLLOWING REFRAMED QUESTIONS W OULD BRING OUT THE POINTS OF DIFFERENCE APPROPRIATELY: ITA NO.472/C/2013 & CO 37/C/2013 15 1) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH CAN BE CONSIDERED AS IN CRIMINATING MATERIAL TO INITIATE PROCEEDINGS U/S. 153C OF THE ACT, EVEN THO UGH THE ASSESSMENT U/S. 143(1) WAS COMPLETED AND ATTAINED FINALITY BEFORE S ATISFACTION WAS REACHED BY THE ASSESSING OFFICER WHO INITIATED PROCEEDINGS U/S . 1 53 C OF THE ACT. 2) IN THE EVENT OF PROCEEDINGS U/S. 153C BEING VALI D, WHETHER THE HONBLE. ACCOUNTANT MEMBER WAS JUSTIFIED IN SETTING ASIDE TH E ORDER OF THE LD. CIT(A) ON MERITS FOR RE-EXAMINATION. 15. THE LD. DR SUBMITTED THAT THE ASSESSEE HAS NOT FURNISHED ANY EXPLANATION BEFORE THE ASSESSING OFFICER AND HENCE THE ASSESSING OFFICER W AS JUSTIFIED IN MAKING ADDITIONS. HE ALSO SUBMITTED THAT THE BALANCE SHEET AND THE PROFIT AND LOSS ACCOUNT PERTAIN TO THE PERIOD 01/04/2005 TO 31/03/2006 WHICH SHOWS THAT THE ASSES SEE HAD SUFFICIENT INCOME AND THEREFORE, THAT CAN BE TAKEN AS INCRIMINATING MATERIAL FOR THE PURPOSE OF INVOKING PROVISIONS OF SECTION 153C OF THE ACT. 16. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THE PROCEEDINGS INITIATED BY THE ASSESSING OFFICER ARE INVALID IN L AW SINCE THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. THE CONCERNED ASSESSM ENT YEAR WAS 2005-06. HE MAINLY CONTENDED THAT THE ASSESSMENT PROCEEDINGS FOR THE A SSESSMENT YEAR 2005-06 ARE TERMINATED BY THE OPERATION OF LAW ON EXPIRY OF TIME LIMIT FOR IS SUING NOTICE U/S. 143(2) ON 13-02-2007 WHEREAS THE LOOSE SHEETS CONTAINING BALANCE SHEET A ND PROFIT AND LOSS ACCOUNT, FOUND DURING THE COURSE OF SEARCH WAS RECEIVED BY THE ASSESSING OFFICER ON OR AFTER 27/11/2007. HE ALSO SUBMITTED THAT THE LD. ACCOUNTANT MEMBER COMMITTED AN ERROR IN LAW IN RELYING ON THE DECISION OF THE BANGALORE BENCH OF TRIBUNAL IN THE CASE OF N ANDINI DELUXE (CITED SUPRA) SINCE THE SAID ORDER WAS PRONOUNCED ON 05/12/2014 WHEREAS THE ASSE SSEES APPEAL WAS HEARD ON ITA NO.472/C/2013 & CO 37/C/2013 16 29/10/2014. THE LD. JUDICIAL MEMBER HAD PASSED THE DRAFT ORDER BEFORE THE DATE OF PRONOUNCEMENT OF THE ORDER BY THE BANGALORE BENCH A ND THUS THE SAME COULD NOT HAVE BEEN TAKEN INTO CONSIDERATION. IN SUCH AN EVENT, THE LD . AM, WHILE PASSING A DISSENT ORDER, WAS NOT JUSTIFIED IN REFERRING TO A LATER JUDGMENT THAT TOO WITHOUT GIVING OPPORTUNITY TO BOTH THE PARTIES AS WELL AS TO THE LD. JM. 17. HE ALSO SUBMITTED THAT DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS IN THE BUSINESS PREMISES OF M/S. MATHA ENTERPRISES LTD. MATERIAL PE RTAINING TO ASSESSMENT YEAR 2006-07 WAS FOUND AND IN THAT ASSESSMENT YEAR THE ASSESSING OFF ICER COMPLETED THE ASSESSMENT BY MAKING SOME ADDITIONS WITH REGARD TO THE ABOVE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET. BUT THE LD. CIT(A) OBSERVED THAT EVEN THOUGH THE SEIZED DO CUMENT MENTIONED IT AS FROM 01/04/2005 TO 31/12/2006, THE DATA PERTAINS TO THE PERIOD 01 /04/2006 TO 31/12/2006. 18. THE LD. COUNSEL SUBMITTED THAT FROM THE ORDER OF THE LD. CIT(A), FOR THE ASSESSMENT YEAR 2006-07, IT IS CLEAR THAT THE ASSESSEE HAD ACCOUNT ED FOR ALL THE TRANSACTIONS IN THE BOOKS OF ACCOUNT. SO, THE DOCUMENT SEIZED CANNOT BE TREATED AS AN INCRIMINATING MATERIAL. IN THE DOCUMENT SEIZED, THE VALUE OF OPENING AND CLOSING S TOCK ARE THE SAME, I.E., RS.5,19,998.60. THE ASSESSEE SUBMITTED THAT IN THE SOFTWARE, THE VA LUE OF THE STOCK HAS TO BE ENTERED MANUALLY AFTER MAKING PHYSICAL VALUATION OF CLOSING STOCK AS OTHERWISE THE OPENING STOCK VALUE WILL CONTINUE TO APPEAR AS CLOSING STOCK VALUE WHICH WIL L GIVE ABSURD PROFIT FIGURES. IT WAS ALSO SUBMITTED THAT THE MATERIAL FOUND DURING THE COURSE OF SEARCH CANNOT BE TREATED AS INCRIMINATING MATERIAL AND WRONG ASSUMPTION WAS DRA WN BY THE ASSESSING OFFICER. HE ALSO SUBMITTED THAT SATISFACTION WAS ALSO NOT ACTUALLY R ECORDED BY THE ASSESSING OFFICER. WHEN CALLED ITA NO.472/C/2013 & CO 37/C/2013 17 UPON TO PROVE HE SUBMITTED THAT THE SAME WAS NOT AV AILABLE READILY. THE LD. COUNSEL SUBMITTED THAT NO QUESTION WAS RAISED ON THIS ASPEC T BUT IT WAS NOTICED, DURING THE COURSE OF HEARING, THAT THE ASSESSING OFFICER INITIATED PROCE EDINGS U/S. 153C OF THE ACT WITHOUT GIVING PROPER REASONS. 19. HE STRONGLY RELIED ON THE ORDER OF THE CIT(A) F OR THE ASSESSMENT YEAR 2006-07 TO CONTEND THAT THE DEPARTMENT HAVING NOT PREFERRED AN Y APPEAL ON THE FINDINGS OF THE CIT(A), IT CANNOT NOW BE SAID THAT IT CAN BE TREATED AS INCRI MINATING MATERIAL FOR THE YEAR UNDER CONSIDERATION. THE ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE DISCLOSES THE TOTAL FIGURE OF SUNDRY CREDITORS AND THE ASSESSING OFFICER, WHILE F RAMING THE ASSESSMENT, HAD TAKEN NOTE OF THE SAME AND HENCE, IN THE ABSENCE OF SPECIFIC DOCUMENT FOUND DURING THE SEARCH AND SEIZURE PROCEEDINGS, THE ASSESSING OFFICER CANNOT MAKE ANY ADDITION IN THIS YEAR WHEREIN PROCEEDINGS HAVE ATTAINED FINALITY. IT WAS ALSO SUBMITTED THAT WHILE DRAFTING 153C OF THE ACT, THE LEGISLATURE DID NOT ENVISAGE THE SITUATION OF THIRD PARTY HAVIN G TO UNDERGO ASSESSMENT PROCEEDINGS IN SIX PREVIOUS YEARS, EVEN IF THERE IS NO MATERIAL TO IND ICATE UNDISCLOSED INCOME IN THE HANDS OF A THIRD PARTY. THEREFORE, IN SECTION 153C(1) OF THE ACT SUITABLE AMENDMENT WAS MADE BY THE FINANCE ACT, 2014 WHEREIN IT WAS CLARIFIED THAT THE PROCEEDINGS U/S. 153C CAN BE INITIATED ONLY IF THE ASSESSING OFFICER IS SATISFIED THAT THE BOOKS O F ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED HAVE A BEARING ON THE TOTAL INCOME OF THE ASSESSEE OF THE OTHER PERSON FOR THE RELEVANT ASSESSMENT YEAR. SINCE THE PROVISIONS WERE AMENDED TO ELIMINATE PRACTICAL DIFFICULTIES, THE SAME HAS TO BE CONSIDERED AS CLARIFICATORY IN NATUR E, I.E. IT HAS TO BE TREATED AS PROCEDURAL PROVISION AND CLARIFICATORY IN NATURE. ITA NO.472/C/2013 & CO 37/C/2013 18 20. THE LD. COUNSEL RELIED ON VARIOUS CASE LAW IN SUPPORT OF HIS CONTENTION THAT THE MATTER OF RECORDING OF SATISFACTION BY THE ASSESSING OFFICER IS A MATTER OF PROCEDURE AND WHEN THERE IS CHANGE IN THE PROCEDURE TO BE FOLLOWED BY THE ASSES SING OFFICER, IT CAN ONLY BE SAID TO HAVE BEEN DESIGNED TO ELIMINATE UNINTENDED CONSEQUENCES WHICH WERE CAUSING UNDUE HARDSHIP ON THE SUBJECTS. 21. THE LD. COUNSEL SUBMITTED THAT THE PROPOSITION OF THE LD. AM, THAT EVEN BALD DOCUMENTS, WHICH DO NOT HAVE ANY BEARING ON THE ASSESSMENT, WE RE ENOUGH TO TRIGGER THE PROVISIONS OF SECTION 153C OF THE ACT, IS FRAUGHT WITH ABSURDITY. IN THIS REGARD, HE REFERRED TO THE RELEVANT OBSERVATIONS OF ITAT, KOLKATA BENCH IN THE CASE OF TRISHUL HI-TECH INDUSTRIES (UNREPORTED DECISION). IN HIS OPINION, IF ANY UNDISCLOSED INCO ME IS NOT FOUND RELATING TO A PERSON, IN PRINCIPLE NO ACTION IS LIABLE TO BE TAKEN AGAINST H IM. 22. THE LD. COUNSEL RELIED ON THE ORDER PASSED BY T HE CO-ORDINATE BENCH IN THE CASE OF HOTEL ROYALE PARK VS. DCIT IN I.T.A. NOS. 601-603/C OCH/2013 & C.O. NOS. 01-03/COCH/2014 IN SUPPORT OF HIS CONTENTION THAT THE ASSESSING OFFICE R IS NOT JUSTIFIED IN ISSUING NOTICE U/S. 153C OF THE ACT FOR THIS ASSESSMENT YEAR, SINCE NO INCRIMIN ATING MATERIAL WAS FOUND, MORE PARTICULARLY WHEN ASSESSMENT ORDER HAS ATTAINED FINALITY. 23. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE RECORD. AT THE OUTSET, IT IS STATED THAT THE LD. ACCOUNTANT MEMBER HAS EXCEEDED HIS JURISDIC TION IN RELYING ON THE DECISION OF THE BANGALORE BENCH OF THE TRIBUNAL WHICH WAS PRONOUNCE D NOT ONLY AFTER THE DATE OF HEARING BUT ITA NO.472/C/2013 & CO 37/C/2013 19 ALSO AFTER THE ORDER WAS FORWARDED BY THE LD. JUDIC IAL MEMBER. THE APPEAL WAS HEARD ON 29/10/2014 AND SOON THEREAFTER THE LD. JUDICIAL MEM BER FORWARDED THE DRAFT ORDER TO THE LD. ACCOUNTANT MEMBER. THE LD. AM REFERRED TO THE ABOV E CASE LAW IN HIS DISSENT ORDER WHICH WAS NEITHER AVAILABLE AT THE TIME OF HEARING THE APPEAL NOR AT THE TIME WHEN THE LD. JM PLACED HIS PROPOSED ORDER BEFORE THE LD. AM. 24. I REFRAIN FROM MAKING ANY FURTHER COMMENT ON TH IS ASPECT SINCE THE ISSUE IS SQUARELY COVERED BY THE ORDER PASSED BY THE THIRD MEMBER IN THE CASE OF HOTEL ROYALE PARK VS. DCIT IN I.T.A. NOS. 601-603/COCH/2013 & C.O. NOS. 01-03/COC H/2014 WHEREIN THE BENCH RELIED UPON THE DECISION OF ITAT, KOLKATA BENCH IN THE CASE OF TRISHUL HI-TECH INDUSTRIES VS. DCIT (I.T.(SS)A. NOS. 84-86/KOL/2011). THE RELEVANT OBS ERVATIONS OF KOLKATA BENCH ARE EXTRACTED FOR IMMEDIATE REFERENCE: ' THE PROVISIONS OF S.153C OF THE ACT WAS AMENDED TO OBVIATE PRACTICAL DIFFICULTIES WHICH AROSE IN ITS INTERPRETATION FROM TIME TO TIME. THE AMEND MENT MADE BY FINANCE (NO.2) ACT, 2014 AS THE LEGISLATURE FOUND THAT DIFFERENT AUTHORITIES WE RE ASSIGNING DIFFERENT MEANINGS TO THE PROVISIONS. AS SUCH, A STATE OF AFFAIRS RESULTED I N AMBIGUITIES WHICH GAVE RISE TO CONFLICTING DECISIONS ON SUBJECT, THE LEGISLATURE IN ITS WISDOM THOUGHT IT PRUDENT TO CHANGE THE LANGUAGE THOROUGHLY EXPLICIT. IT SO HAPPENED FROM TIME TO T IME THAT DURING THE COURSE OF CONDUCTING A SEARCH AND SEIZURE OPERATION U/S. 132 OF THE ACT, M ONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS B ELONGING TO ANOTHER PERSON WERE SEIZED. ON ONE HAND, THE SEIZED MATERIALS WERE SENT TO THE ASSESSING AUTHORITY HAVING JURISDICTION OVER THE OTHER PERSON AND ON THE OTHER HAND, THE AS SESSING AUTHORITY RECEIVING SUCH SEIZED MATERIAL ACTS MECHANICALLY INITIATES PROCEEDINGS U/ S. 153C OF THE ACT WITHOUT ANY VERIFICATION. SUCH INTERPRETATION IS NEVER THE INTENDMENT OF THE LEGISLATURE. THE LEGISLATURE FOUND THAT MULTIPLICITY OF PROCEEDINGS RESULTED AND CONFUSION REIGNED SUPREME. IN ORDER TO ELIMINATE SUCH CONTRADICTORY SITUATIONS, IT WAS MADE CLEAR THAT TH E ASSESSING AUTHORITY WHILE RECEIVING SUCH SEIZED MATERIAL BELONGING TO THE OTHER PERSON SHALL BE SATISFIED THAT SUCH MATERIAL MUST BE OF INCRIMINATING NATURE. THUS, THE AMENDING ACT, IN FACT, EXPLAINED THE PROCEDURE TO DEAL WITH ITA NO.472/C/2013 & CO 37/C/2013 20 A SITUATION WHERE INCRIMINATING MATERIALS FOUND IN COURSE OF A SEARCH BELONGED TO A THIRD PERSON. THE PROVISION WAS AMENDED TO STOP UNINTEND ED CONSEQUENCES AND TO PREVENT UNDUE HARDSHIP ON THE THIRD PARTY WHO IS NOT BEING SEARCH ED. THE SCHEME THAT EVEN A PARTNERSHIP DEED OR A DISCLOSED BANK STATEMENT OR PROJECTED ST ATEMENT WAS ENOUGH TO ASSUME JURISDICTION U/S. 153C OF THE ACT WAS CURTAILED TO THE EXTENT OF INCRIMINATING MATERIALS FOUND. IN FACT A LOGICAL CONCLUSION WAS DRAWN TO THAT EFFE CT. IN FACT, THE INTERPRETATION OF THE EXISTING PROVISIONS WAS DEFEATING THE OBJECT AND PURPOSE OF THE ENACTMENT AND WAS LEADING TO INFRUCTUOUS LITIGATION WITHOUT ANY RHYME OR REASON. BY SUCH INTERPRETATION, THERE WERE TWO ASSESSMENT ORDERS STANDING ON THE SAME ISSUES RAISI NG IDENTICAL TAX DEMANDS FOR THE SAME ASSESSMENT YEARS WHICH IS AN ABSURD PROPOSITION. TH IS BASED ON THE MAXIM UT RES MAGIS VALEAT QUAM PAREAT. THE CONSTRUCTION WHICH WOULD RE DUCE THE LEGISLATURE TO A FUTILITY SHOULD BE AVOIDED; AN ALTERNATIVE THAT WILL INTRODUCE UNCE RTAINTY, FRICTION OR CONFUSION INTO THE WORKING OF THE SYSTEM SHOULD BE REJECTED. AN INTER PRETATION WHICH LEADS TO UNWORKABLE RESULTS AND BRINGS ABOUT ABSURDITY CANNOT BE ACCEPT ED. IN ANY CASE, SUCH A SITUATION WAS NEVER THE INTENTION OF THE LEGISLATURES. TO DO AWA Y WITH THIS JUDICIAL ERROR, THE ACT WAS AMENDED TO CURE THE OBVIOUS OMISSION AND TO CLARIFY THE INTENTION BEHIND THE ENACTMENT. 25. THEREFORE, IN THE LIGHT OF THE ABOVE DECISION , I AM OF THE FIRM VIEW THAT THE ORDER PASSED BY THE LD. JUDICIAL MEMBER IS IN ACCORDANCE WITH LA W. I, THEREFORE, ANSWER QUESTION NO. 1 ACCORDINGLY, I.E. IN THE ABSENCE OF ANY INCRIMINATI NG MATERIAL, TO INITIATE PROCEEDINGS U/S. 153C OF THE ACT, THE ASSESSING OFFICER IS NOT JUSTIFIED IN RE-OPENING THE ASSESSMENT FOR THE ASSESSMENT YEAR 2005-06 WHICH HAS ATTAINED FINALITY. 26. THE LD. ACCOUNTANT MEMBER WAS OF THE OPINION TH AT ANY DOCUMENT FOUND CAN BE TREATED AS INCRIMINATING MATERIAL. WITH DUE RESPECTS, I AM OF THE FIRM VIEW THAT SUCH DOCUMENT SHOULD REFLECT SOMETHING TO INDICATE THAT IN THE YEAR UNDE R CONSIDERATION, THE ASSESSEE HAS NOT DISCLOSED INCOME WHEREAS, IN THE INSTANT CASE, THE ASSESSEE HAS FILED ITS RETURN OF INCOME MUCH BEFORE THE DATE OF SEARCH AND ON THE STRENGTH OF TH E PROFIT AND LOSS ACCOUNT AND THE BALANCE SHEET FILED BEFORE THE ASSESSING OFFICER, THE RETUR N WAS PROCESSED U/S. 143(1) OF THE ACT. IN FACT, THERE WAS CLEAR FINDING BY THE LD. CIT(A) IN HIS ORDER, IN RESPECT OF ASSESSMENT YEAR 2006- ITA NO.472/C/2013 & CO 37/C/2013 21 07, WHEREIN IT WAS STATED THAT THERE WAS NO INCRIMI NATING DOCUMENT FOUND DURING THE COURSE OF SEARCH; THE REVENUE HAS NOT PREFERRED ANY APPEAL AG AINST THE ORDER OF THE CIT(A). UNDER THESE CIRCUMSTANCES, IT CANNOT BE SAID THAT THE SAME DOCU MENT CAN BE TREATED AS INCRIMINATING MATERIAL FOR THE ASSESSMENT YEAR UNDER CONSIDERATIO N. SINCE POINT NO. 1 IS DECIDED IN THE NEGATIVE, I.E. THE DOCUMENT FOUND CANNOT BE CONSIDE RED AS INCRIMINATING DOCUMENT, QUESTION NO. 2 DOES NOT REQUIRE ADJUDICATION AND THEREFORE, NEED NOT BE ANSWERED. 27. THE MATTER MAY NOW BE PLACED BEFORE THE DIVISION BENCH WHICH HAS TO DECIDE THE MATTER ACCORDING TO THE MAJORITY VIEW. SD/- (D.MANMOHAN) VICE PRESIDENT PLACE: KOCHI DATED: 8TH SEPTEMBER, 2015 GJ COPY TO: 1. M/S. ROYAL CARTONS (P) LTD., 22/318, CHAMPANOOR INDUSTRIAL ESTATE, ANGAMALY, ERNAKULAM. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL C IRCLE-1, ERNAKULAM. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS), KOCHI. 4. THE COMMISSIONER OF INCOME-TAX, CENTRAL, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COCHIN ITA NO.472/C/2013 & CO 37/C/2013 22 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI CHANDRA PO OJARI (AM) I.T.A NO. 472/COCH/2013 (ASSESSMENT YEAR 2005-06) DY.CIT, CENT.CIR.1 VS M/S ROYAL CARTONS (P) LTD ERNAKULAM 22/318, CHAMPANOOR INDUSTRIAL ESTATE ANGAMALY, ERNAKULAM PAN : AACCP7836J (APPELLANT) (RESPONDENT) C.O. NO.37/COCH/2013 (ARISING OUT OF I.T.A NO. 472/COCH/2013) (ASSESSMENT YEAR 2005-06) M/S ROYAL CARTONS (P) LTD VS DY.CIT, CENT.CIR.1 ANGAMALY, ERNAKULAM ERNAKULAM (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : SHRI M ANIL KUMAR, CIT ITA NO.472/C/2013 & CO 37/C/2013 23 ASSESSEE BY : SHRI K.P. PAULSON DATE OF HEARING : 29-10-2014 DATE OF PRONOUNCEMENT : -11-2014 O R D E R PER N.R.S. GANESAN (JM) THE REVENUE HAS FILED APPEAL AGAINST THE ORDER OF CIT(A)-I, KOCHI DATED 27-03-2013 FOR THE ASSESSMENT YEAR 2005-06. THE ASSESEE HAS FILED CROSS OBJECTION. THEREFORE, WE HEARD BOTH TH E APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE TOGETHER AN D DISPOSE OF THE SAME BY THIS COMMON ORDER. 2. SHRI K.P. PAULSON, THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT FOR THE ASSESSMENT YEAR 2005-06 THE ASSESSEE F ILED THE RETURN OF INCOME ON 27-03-2006 WHICH IS EVIDENT FROM THE INTI MATION ISSUED BY THE DEPARTMENT U/S 143(1) OF THE ACT, COPY OF WHICH IS AVAILABLE AT PAGE 7 OF THE PAPER BOOK. THE TIME LIMIT FOR ISSUING NOTICE U/S 143(3) EXPIRED ON 31- 03-2007. REFERRING TO THE ASSESSMENT ORDER THE LD. REPRESENTATIVE SUBMITTED THAT THERE WAS A SEARCH AT THE PREMISES O F M/S MATHA ENTERPRISES ON 13-02-2007. THE LD.REPRESENTATIVE C LARIFIED THAT NO SEARCH WAS CARRIED OUT IN THE PREMISES OF THE ASSESSEE. A CCORDING TO THE LD.REPRESENTATIVE, PROCEEDINGS WERE INITIATED AGAIN ST THE ASSESSEE U/S 153C OF THE ACT TREATING THE ASSESSEE AS A PERSON O THER THAN THE SEARCHED ITA NO.472/C/2013 & CO 37/C/2013 24 PERSON. REFERRING TO SECTION 153C OF THE ACT, MORE PARTICULARLY, PROVISO TO SECTION 153C, THE LD.REPRESENTATIVE SUBMITTED THAT IN CASE OF THE PERSON OTHER THAN THE SEARCHED PERSON, THE DATE ON WHICH T HE BOOKS OF ACCOUNT OR DOCUMENTS, ETC. IS RECEIVED BY THE ASSESSING OFFICE R HAVING JURISDICTION OVER THE PERSON OTHER THAN SEARCHED PERSON SHALL BE TREATED AS THE DATE OF INITIATION OF SEARCH. ACCORDING TO THE LD.REPRESEN TATIVE, THE JURISDICTION OF THE ASSESSEE VESTED WITH THE ASSESSING OFFICER, WAR D-1, ERNAKULAM. THE JURISDICTION WAS TRANSFERRED FROM WARD 1, ERNAKULAM TO CENTRAL CIR.(1), ERNAKULAM WITH EFFECT FROM 27-11-2007 BY THE ORDER OF THE COMMISSIONER OF INCOME-TAX. ACCORDINGLY, THE JURISDICTION TO AS SESS THE ASSESSEE U/S 153C WAS CONFERRED ON THE DY.CIT, CENT.CIR.1, ERNAK ULAM ONLY ON 27-11- 2007. ONLY AFTER TRANSFER OF JURISDICTION, THE SEI ZED DOCUMENT WAS HANDED OVER TO THE NEW OFFICER. THEREFORE, ACCORDING TO T HE LD.REPRESENTATIVE, THE SEIZED DOCUMENT COULD HAVE BEEN HANDED OVER ONLY ON OR AFTER 27-11- 2007 AND DEFINITELY NOT EARLIER TO THAT. THEREFORE , ACCORDING TO THE LD.REPRESENTATIVE, THE PROCEEDINGS ON THE BASIS OF THE RETURN FILED BY THE ASSESSEE ON 27-03-2006 WERE TERMINATED BY OPERATION OF LAW ON 31-03- 2007. THEREFORE, ACCORDING TO THE LD.REPRESENTATI VE, THE ASSESSMENT WHICH WAS COMPLETED ON THE BASIS OF THE REGULAR RET URN OF INCOME FILED CANNOT BE REOPENED IN VIEW OF THE SPECIFIC PROVISIO N CONTAINED IN SECTION 153A OF THE ACT. ITA NO.472/C/2013 & CO 37/C/2013 25 3. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT THE NOTICE REQUIRING THE ASSESSEE TO FILE THE RETURN OF INCOME U/S 153C R.W. S. 153A WAS ISSUED ONLY ON 12-02-2008. THEREFORE, THE COMPLETED PROCEEDING S CANNOT BE REOPENED. REFERRING TO THE ASSESSMENT ORDER, THE L D.REPRESENTATIVE SUBMITTED THAT NO MATERIAL WAS FOUND DURING THE COU RSE OF SEARCH OPERATION. THE ONLY MATERIAL RELIED UPON BY THE ASS ESSING OFFICER IS THE BALANCE-SHEET AS ON 31-03-2005 FILED ALONGWITH THE RETURN OF INCOME E. THE ASSESSEE HAS DISCLOSED THE UNSECURED CREDITORS IN THE BALANCE-SHEET FILED ALONGWITH THE RETURN OF INCOME FILED IN THE R EGULAR COURSE ON 27-03- 2006. THEREFORE, THE UNSECURED CREDITORS DECLARED IN THE BALANCE-SHEET WHICH WAS FILED ALONGWITH THE RETURN OF INCOME CANN OT BE TAKEN UP FOR ENQUIRY OR ADJUDICATION IN THE BLOCK ASSESSMENT U/S 153C UNLESS AND UNTIL THERE IS SOME SEARCH MATERIAL FOUND DURING THE COUR SE OF SEARCH OPERATION. REFERRING TO THE PROVISIONS OF SECTION 153C, THE LD .REPRESENTTIVE SUBMITTED THAT UNLESS, THE ASSESSING OFFICER SATISFIED THAT T HE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION BELONGED TO THE PERS ON OTHER THAN THE SEARCHED PERSON, VIZ. THE ASSESSEE, THERE CANNOT BE ANY INITIATION OF PROCEEDINGS U/S 153C OF THE ACT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. MOREOVER, THERE CANNOT BE ANY ADDIT ION IN THE ABSENCE OF ANY SEIZED MATERIAL FOR THE YEAR UNDER CONSIDERATIO N. THEREFORE, ACCORDING TO THE LD.REPRESENTATIVE, THE CIT(A) HAS RIGHTLY DE LETED THE ADDITION MADE BY THE ASSESSING OFFICER. THEREFORE, NO INTERFEREN CE IS CALLED FOR. ITA NO.472/C/2013 & CO 37/C/2013 26 4. ON THE CONTRARY, SHRI M ANIL KUMAR, THE LD.DR SU BMITTED THAT THERE WAS A SEARCH IN THE PREMISES OF MATHA ENTERPRISES O N 13-02-2007. DURING THE COURSE OF SEARCH OPERATION BUNCH OF LOOSE SHEET S CONTAINING BALANCE- SHEET, PROFIT & LOSS ACCOUNT, ETC. WAS FOUND WHICH REVEALS THE INCOME OF THE ASSESSEE. ON THE BASIS OF THE SEIZED DOCUMENT NOTICE WAS ISSUED U/S 153C ASKING THE ASSESSEE TO FILE THE RETURN OF INCO ME. IN RESPONSE THE ASSESSEE FILED THE RETURN OF INCOME DECLARING A LOS S OF RS.2,65,510.AS IT WAS ORIGINALLY DECLARED BEFORE THE DATE OF SEARCH. IN THE BALANCE-SHEET FILED ALONG WITH THE RETURN OF INCOME AS ON 31-03-2 005, THE ASSESSEE HAS DISCLOSED UNSECURED CREDITOR TO THE EXTENT OF RS.12 ,42,000. IN THE ABSENCE OF ANY CONFIRMATION OF THE LOAN CREDITORS A ND THE FAILURE OF THE ASSESSEE TO ESTABLISH THE CREDITWORTHINESS AND GENU INENESS OF THE TRANSACTION, THE ASSESSING OFFICER MADE ADDITION OF RS.12,42,000. HOWEVER, THE CIT(A) WITHOUT ANY JUSTIFIABLE REASON DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. ACCORDING TO THE LD .DR, THE ADDITION WAS MADE ON THE BASIS OF THE BALANCE-SHEET FILED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 153C OF THE ACT WHICH REA DS AS FOLLOWS: ITA NO.472/C/2013 & CO 37/C/2013 27 153C.(1) NOTWITHSTANDING ANYTHING CONTAINED IN SEC TION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELRY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS, SEIZED OR REQUISITIONED BELON GS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED T O IN SECTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASS ETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH O THER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSES S OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A: PROVIDED THAT IN CASE OF SUCH OTHER PERSON, THE REFERENCE TO THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A IN THE SECOND PRO VISO TO SUB- SECTION (1) OF SECTION 153A SHALL BE CONSTRUED AS R EFERENCE TO THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUM ENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFF ICER HAVING JURISDICTION OVER SUCH OTHER PERSON. (2) WHERE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS S EIZED OR REQUISITIONED AS REFERRED TO IN SUB-SECTION (1) HAS OR HAVE BEEN RECEIVED BY THE ASSESSING OFFICER HAVING JURIS DICTION OVER SUCH OTHER PERSON AFTER THE DUE DATE FOR FURNI SHING THE RETURN OF INCOME FOR THE ASSESSMENT YEAR RELEVANT T O THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED UNDER SE CTION 132 ITA NO.472/C/2013 & CO 37/C/2013 28 OR REQUISITION IS MADE UNDER SECTION 132A AND IN RE SPECT OF SUCH ASSESSMENT YEAR- (A) NO RETURN OF INCOME HAS BEEN FURNISHED BY SUCH OTHER PERSON AND NO NOTICE UNDER SUB-SECTION (1) O F SECTION 142 HAS BEEN ISSUED TO HIM, OR (B) A RETURN OF INCOME HAS BEEN FURNISHED BY SUCH OTHER PERSON BUT NO NOTICE UNDER SUB-SECTION (2) OF SECT ION 143 HAS BEEN SERVED AND LIMITATION OF SERVING TH E NOTICE UNDER SUB- SECTION (2) OF SECTION 143 HAS EXPIRED, OR (C) ASSESSMENT OR REASSESSMENT, IF ANY HAS BEEN MA DE, BEFORE THE DATE OF RECEIVING THE BOOKS OF ACCOUNT O R DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON, SUCH ASSESSING OFFICER SHALL ISSUE THE NOTICE AND ASSESS OR REASSESS TOTAL INCOME OF SUCH OTHER PERSON OF SUCH ASSESSMENT IN THE MANNER PROVIDED IN SECTION 153A. 6. SECTION 153C CLEARLY SAYS THAT IN RESPECT OF PER SON OTHER THAN SEARCHED, IF THE ASSESSING OFFICER IS SATISFIED THA T THE MONEY BULLION, JEWELLERY OR OTHER VALUABLES OR BOOKS OF ACCOUNT OR OTHER DOCUMENTS SEIZED BELONGS TO PERSON OTHER THAN THE SEARCHED PERSON RE FERRED TO IN SECTION 153A, THEN THE SAME SHALL BE HANDED OVER TO THE ASS ESSING OFFICER HAVING JURISDICTION OVER SUCH PERSON OTHER THAN SEARCHED P ERSON FOR PROCEEDING FURTHER. PROVISO TO SECTION 153C SAY THAT THE DA TE OF INITIATION OF SEARCH ITA NO.472/C/2013 & CO 37/C/2013 29 U/S 132 IN RESPECT OF PERSON OTHER THAN SEARCHED PE RSON IS THE DATE OF RECEIPT OF BOOKS OF ACCOUNT OR DOCUMENT SEIZED BY T HE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON. 7. WE HAVE ALSO GONE THROUGH THE PROVISIONS OF SECT ION 153A WHICH PROVIDES FOR PROCEDURE FOR MAKING BLOCK ASSESSMENT. SECOND PROVISO TO SECTION 153A CLEARLY SAYS THAT THE ASSESSMENT OR RE -ASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS PENDING ON THE DATE OF INITIATION OF SEARCH U /S 132 SHALL ABATE. IN OTHER WORDS, IF THE ASSESSMENT IS COMPLETED OR TERM INATED BY OPERATION OF LAW ON THE BASIS OF THE RETURN OF INCOME FILED IN T HE REGULAR COURSE, THE ASSESSMENT PROCEEDING SHALL NOT BE ABATED. THEREFO RE, IN RESPECT OF PENDING ASSESSMENT PROCEEDINGS ON THE DATE OF THE S EARCH, THE ASSESSMENT SHALL BE MADE ON THE BASIS OF THE SEIZED MATERIAL AND OTHER MATERIAL FOUND ON RECORD. HOWEVER, IN RESPECT OF T HE ASSESSMENT PROCEEDING WHICH IS NOT PENDING ON THE DATE OF SEAR CH HAS TO BE MADE ONLY ON THE BASIS OF THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. THE COMPLETED PROCEEDINGS ON THE DATE O F SEARCH CANNOT BE REOPENED BY THE ASSESSING OFFICER. IN THE CASE BEF ORE US, ADMITTEDLY, THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 27-03-20 06. THE PERIOD OF 12 MONTHS FOR ISSUING NOTICE U/S 143(2) EXPIRES ON 31- 03-2007. IT IS ALSO NOT DISPUTED THAT THE COMMISSIONER OF INCOME-TAX BY AN ORDER DATED 27-11- ITA NO.472/C/2013 & CO 37/C/2013 30 2007, IN EXERCISE OF HIS POWERS U/S 127(2) TRANSFER RED THE JURISDICTION FROM WARD.1, ERNAKULAM TO DYCIT / ACIT, CENTRAL CIRCLE.1 , ERNAKULAM. THEREFORE, THE ASSESSING OFFICER OF THE ASSESSEE, T HE DYCIT / ACIT CENTRAL CIRCLE, ERNAKULAM MIGHT HAVE RECEIVED THE RECORDS O N OR AFTER 27-11-2007 ONLY AND CERTAINLY NOT BEFORE THAT. THEREFORE, THE ASSESSMENT PROCEEDINGS ON THE BASIS OF THE RETURN OF INCOME FILED IN THE R EGULAR COURSE ON 27-03- 2006 GOT TERMINATED BY OPERATION OF LAW ON 31-03-20 07. IN OTHER WORDS, THE ASSESSMENT PROCEEDINGS ON THE BASIS OF THE RETU RN OF INCOME FILED ON 27-03-2006 IS NOT PENDING AS ON 27-11-2007 WHEN THE ASSESSING OFFICER IS SUPPOSED TO HAVE RECEIVED THE SEIZED DOCUMENT OF TH E ASSESSEE. HENCE, THE INCOME DISCLOSED IN THE RETURN FILED IN REGULAR COURSE ON 27-03-2006 ON THE BASIS OF THE BALANCE-SHEET AS ON 31-03-2005 CAN NOT BE DISTURBED BY THE ASSESSING OFFICER UNLESS THERE IS A SPECIFIC MA TERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. IN THIS CASE, IT IS NOT IN DISPUTE THAT THERE IS NO MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIO N FOR THE ASSESSMENT YEAR 2005-06. THE ASSESSING OFFICER MADE THE ADDIT ION ONLY ON THE BASIS OF THE BALANCE-SHEET AS ON 31-03-2005 WHICH WAS FIL ED BY THE ASSESSEE ORIGINALLY ALONGWITH THE RETURN OF INCOME FILED ON 27-03-2006 ITSELF. THEREFORE, EVEN IF THE COPY OF THE SAID DOCUMENT WA S FOUND ON THE DATE OF SEARCH STILL, THAT DOCUMENT CANNOT BE TREATED AS SE IZED MATERIAL. IN OTHER WORDS, THE COPY OF THE BALANCE-SHEET S ON 31-03-200 5 IS VERY MUCH AVAILABLE WITH THE REVENUE AUTHORITIES ALONG WITH T HE RETURN OF INCOME FILED ITA NO.472/C/2013 & CO 37/C/2013 31 ON 27-03-2006. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IN THE ABSENCE OF ANY MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION, THE ASSESSING OFFICER CANNOT REOPEN THE ASSESSMENT COMPLETED ON THE BASIS OF THE RETURN FILED BY THE ASSESSEE ON 27-03- 2006 WHEREIN THE UNSECURED CREDITORS OF RS.12,42,000 WAS DISCLOSED. HENCE, THE CIT(A) HAS RIGHTLY DELETED THE ADDITION. WE DO NOT FIND A NY INFIRMITY IN THE ORDER OF THE CIT(A). THE SAME IS UPHELD. 8. IN THE RESULT, THE CROSS OBJECTION OF THE ASSESS EE STANDS ALLOWED AND THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS _____NOV EMBER, 2014. SEPARATE ORDER SD/- (CHANDRA POOJARI) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : NOVEMBER, 2014 PK/- COPY TO: 1. DY.CIT, CENT.CIR.1, ERNAKULAM 2. M/S ROYAL CARTONS (P) LTD, 22/318, CHAMPANOOR, I NDUSTRIAL ESTATE, ANGAMALY, ERNAKULAM 3. THE COMMISSIONER OF INCOME-TAX, CENTRAL, KOCHI 4. THE COMMISSIONER OF INCOME-TAX(A)-I, KOCHI 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH ITA NO.472/C/2013 & CO 37/C/2013 32 IN THE CASE MIS. ROYAL CARTONS (P) LTD IN ITA NO.472/COCH/2013 (ASST YEAR 2005-06 ) & CROSS OBJECTION NO. 37/COCH/2013 PER CHANDRA POOJARI, A.M. I HAVE GONE THROUGH THE ORDER PROPOSED BY THE LD JM AND AFTER CAREFUL PERUSAL OF THE SAME, I AM UNABLE TO CONVINCE MYSELF WITH REGA RD TO THE CONCLUSION IN REACHED BY THE LD JM AND I PROCEED TO RECORD MY NOTE OF DISSENT AS FOLLOWS: 2. THE ASSESSEE FILED CROSS OBJECTION STATING THAT THE CLAIM OF ASSESSMENT U/S 153C IS BAD IN LAW AS THERE WAS NO INCRIMINATING MATERIAL RELAT ING TO THE ASSESSEE WAS FOUND DURING THE COURSE OF SEARCH. SINCE THE ASSESSMENT RELATI NG TO THE AY 2005-06 IS A COMPLETED ASSESSMENT AND SHALL NOT ABATE AND THEREFORE NO ADDITION U/S 153C SHOULD HAVE BEEN MADE. 3. IN THIS CASE, THERE WAS A SEARCH OPERATION U/S 132 OF THE I T ACT AT THE BUSINESS PREMISES OF M/S. MATHA ENTERPRISES ON 13.2.2007. DURI NG THE COURSE OF SEARCH, BUNCH OF LOOSE SHEETS CONTAINING BALANCE SHEET, P&L ACCOUNT ETC., WHICH REVEAL THE INCOME OF THE ASSESSEE WERE SEIZED. SUBSEQUENT TO THE SEARCH, NOTI CE U/S 153A R.W.S. 153C OF THE ACT DATED 12.2.2008 WAS ISSUED REQUIRING THE ASSESSE E TO FILE RETURN OF INCOME . THE SAID NOTICE WAS SERVED ON THE ASSESSEE ON 18.2.2008. IN RESP ONSE TO THE SAID NOTICE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.4.2008 DECLA RING A LOSS OF RS.2,65,510/- WHICH WAS ORIGINALLY RETURNED. THERE WAS AN UNSECURED CREDITO R IN THE BALANCE SHEET AS ON 31.3.2005 FILED WITH THE RETURN OF INCOME FOR WHICH THE AO CALLED FOR CONFIRMATION, WHICH WAS NOT FILED AND THE SAME WAS CONSIDERED AS UNEXPLAINED CREDIT. 3.1 THE LD AR NOW SUBMITTED BEFORE US THAT THE FRAMI NG OF ASSESSMENT U/S 153C R.W.S 153A/143(3) OF THE ACT IS BAD IN LAW. ACCORDING TO THE LD AR, SECTION 153C OF THE ACT ITA NO.472/C/2013 & CO 37/C/2013 33 CONFERS JURISDICTION, IF THE AO IS SATISFIED THAT DO CUMENT SEIZED BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SEC 153A, SO AS TO BE ABLE TO ASSESS THAT OTHER PERSON, THE DOCUMENT MUST HAVE PRIMA FACIE INCRIMINATING INFORMATION. THE DOCUMENT SEIZED MUST NOT ONLY A SPEAKING ONE BUT ALSO BE P RIMA FACIE INCRIMINATING ONE FOR ATTRACTING SEC.153C. 3.2 THE LD AR OF THE ASSESSEE SUBMITTED THAT UNLESS TH E AO IS SATISFIED THAT THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION BE LONG TO THE PERSON OTHER THAN THE SEARCHED PERSON, THERE CANNOT BE ANY INITIATION OF PROCE EDINGS U/S 153A OF THE ACT. HE SUBMITTED THAT AS ON DATE OF SEARCH ACTION, PROCEEDI NGS UNDER THE ACT ARE NOT PENDING AND WHEN THERE IS NO INCRIMINATING MATERIAL FOUND D URING THE COURSE OF SEARCH INDICATING UNDISCLOSED INCOME, NO ASSESSMENT U/S 153C C OULD BE FRAMED. 3.3 ON THE OTHER HAND, THE LD DR RELIED ON THE ORDER OF THE CIT(A) AND SUBMITTED THAT THERE IS NOTHING UNDER THE PROVISIONS OF SEC 153C TO IN FER THAT THE ASSESSMENT IS TO BE MADE ONLY ON THE BASIS OF SEIZED MATERIAL. THE ASSESSME NT WAS INTENDED TO BE MADE OF UNDISCLOSED INCOME ONLY ON THE BASIS OF SEARCH MATERIAL THEN THERE WAS NO NEED OF NEW PROVISIONS OF SEC. 153C OR 153A INSTEAD OF SEC 158 BC AND 158BD. HE RELIED ON THE FOLLOWING JUDGMENTS: I) SHIVNATH RAI HARNARAIN (INDIA) LTD VS DCIT 117 TTJ 48 0 II) SHYAM LATA KAUSHIK VS ACIOT 114 ITD 305 III) RAJAT TRADECOM INDIA 120 ITD 48 (IND)) 4. I HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SEC. 153A AND 153C WHICH READ AS UNDER: '153A. (1) NOTWITHSTANDING ANYTHING CONTAINED IN S. 139, S . 147, S. 148, S. 149, S . 151 AND S . 153, IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER S. 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER S. 132A AFTER THE 31ST MAY, 2003, THE AO SHALL- (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH WITHI N SUCH PERIOD, AS ITA NO.472/C/2013 & CO 37/C/2013 34 MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF INCOME IN R ESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS RE FERRED TO IN CL . (B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PART I CULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE , APP L Y ACCORDINGLY AS IF SUCH RETURN WERE A RETURN R EQU I RED TO BE FURNISHED UNDER S. 139; (B) ASSESS OR REASSESS THE TOTAL INCOME OF S I X ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS Y EAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE: PROVIDED THAT THE AO SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT Y EARS: PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, IF ANY , RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESS MENT YEARS REFERRED TO IN THIS SECTION PENDING ON THE DATE OF INITIATION OF THE SEAR CH UNDER S. 132 OR MAKING OF REQUISITION UNDER S . 132A, AS THE CASE MAY BE, SHALL ABATE. (2) IF ANY PROCEEDING INITIATED OR ANY ORDER OF ASSESS MENT OR REASSESSMENT MADE UNDER SUB - (1) HAS BEEN ANNULLED IN APPEAL OR ANY OTHER LEGAL PROCEED ING, THEN, NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SO (1) OR S. 153, THE ASSESSMENT OR REASSESSMENT RELATING TO ANY ASSESSMENT YEAR WHICH HAS AB ATED UNDER THE SECOND PROVISO TO SUB-SO (1), SHALL STAND REVIVED WITH EFFEC T FROM THE DATE OF RECEIPT OF THE ORDER OF SUCH ANNULMENT BY THE CIT : PROVIDED THAT SUCH REVIVAL SHALL CEASE TO HAVE EFFECT, IF SUCH ORDER OF ANNULMENT IS SET ASIDE.' '153C. (1) NOTWITHSTANDING ANYTHING CONTAINED IN S. 139, S . 147, S. 148, S. 149, S. 151 AND S.153, WHERE THE AO IS SATISFIED THA T ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE ORTHING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN S. 153A, THEN THE BOO KS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE AO HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT AO SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSO N IN ACCORDANCE WITH THE PROVISIONS OF S. 153A : PROVIDED THAT IN CASE OF SUCH OTHER PERSON, THE REFERENCE TO THE DATE OF INITIATION OF THE SEARCH UNDER S. 132 OR MAKING OF REQUIS ITION UNDER S. 132A IN THE SECOND PROVISO TO S . 153A SHALL BE CONSTRUED AS REFERENCE TO THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR ITA NO.472/C/2013 & CO 37/C/2013 35 REQUISITIONED BY THE AO HAVING JURISDICTION OVER SUCH O THER PERSON. (2) WHERE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZ ED OR REQUISITIONED AS REFERRED TO IN SUB-SO (1) HAS OR HAVE BEEN RECEIVED BY THE AO HAVING JURISDICTION OVER SUCH OTHER PERSON AFTER THE DUE DATE FOR FURNISHING THE RETURN OF INCOME FOR THE ASSESSMENT YEAR RELEVANT TO THE PREVIO US YEAR IN WHICH SEARCH IS CONDUCTED UNDER S. 132 OR REQUISITION IS MADE UNDER S. 132A AND IN RESPECT OF SUCH ASSESSMENT YEAR- (A) NO RETURN OF INCOME HAS BEEN FURNISHED BY SUCH OTHER PE RSON AND NO NOTICE UNDER SUB - SO (1) OF S. 142 HAS BEEN ISSUED TO HIM, OR (B) A RETURN OF INCOME HAS BEEN FURNISHED BY SUCH OTHER PE RSON BUT NO NOTICE UNDER SUB-SO (2)OF S. 143 HAS BEEN SERVED AND L IMITATION OF SERVING THE NOTICE UNDER SUB-SO (2) OF S . 143 HAS EXPIRED, OR (C) ASSESSMENT OR REASSESSMENT, IF ANY, HAS BEEN MADE, B EFORE THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY THE AO HAVING JURISDICTION OVER SUCH OTHE R PERSON, SUCH AO SHALL ISSUE THE NOTICE AND ASSESS OR REASSESS TOTAL INC OME OF SUCH OTHER PERSON OF SUCH ASSESSMENT YEAR IN THE MANNER PROVIDED IN S . 153A.' 4.1 A READING OF THE ABOVE MAKES IT CLEAR THAT S . 153C R/W S. 153A BRINGS INTO THE PURVIEW OF ASSESSMENT BOTH REGULAR AND UNDISCLOSED INC OME SUBSEQUENT TO ACTION UNDER S. 132 OR S. 132A UPON INVOCATION OF S. 153A OR S. 153C . THE PROVISO TO S. 153A CLEARLY MANDATES THE AO TO ASSESS OR REASSESS THE TOTA L INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS. THE NEXT PROVISO FURTHER MANDATES THAT ANY ASSESSMENT OR REASSESSMENT IN RESPECT O F ANY OF THOSE SIX YEARS WHICH ARE PENDING SHALL ABATE. HENCE, IT IS CLEAR THAT UND ER SUCH CIRCUMSTANCES, ASSESSMENT OR REASSESSMENT WILL BE DONE PURSUANT TO S. 153A OR S. 153C. IT WILL NOT BE CORRECT TO INTERPOLATE THAT NO REGULAR ASSESSMENT OR RE ASSESSMENT CAN TAKE PLACE UNDER THESE PROVISIONS. THERE IS NO REFERENCE TO INCRIMI NATING SEARCH MATERIALS AS IN EARLIER S. 158BB/158BC TO WHICH THE ASSESSMENT HAS TO B E CONFINED TO. 4.2 SEC. 153C ONLY MANDATES THAT WHERE THE AO IS SATIS FIED THAT THE MATERIAL, ITA NO.472/C/2013 & CO 37/C/2013 36 INCLUDING BOOKS OF ACCOUNTS OR DOCUMENTS SEIZED OR REQU ISITIONED BELONGS TO OTHER PERSON, THEN THOSE MATERIALS WILL BE HANDED OVER TO THE AO HAVING JURISDICTION OVER THE OTHER PERSON. ADM I TTEDLY, IN THIS CASE, BOOKS OF ACCOUNTS/DOCUMENTS PERTAINING TO ASSESSEE WERE SEIZED AND AO HAD RECORDE D SATISFACTION IN THIS REGARD AS MANDATED IN THE ACT . THE ASSESSMENT OF UNDISCLOSED INCOME IS VERY MUCH BASED UPON THE BOOKS OF ACCOUNTS/DOCUMENTS. THE SATISFAC TION ON THE PART OF AO IS NOT IN DISPUTE AS THE ASSESSEE IS CONTENDING THAT ASSE SSMENT MADE HAS TO BE WITH REFERENCE TO INCRIMINATING SEARCH MATERIALS. 4.3 THE DELHI BENCH OF THIS TRIBUNAL IN THE CASE OF MS S HYAM LATA KAUSHIK VS ACIT, (114 TTJ 940), IT WAS HELD THAT THERE IS NO REQUIREMENT FOR AN ASSESSMENT MADE U/S 153A TO BE BASED ON ANY MATERIAL SEIZED IN THE COURSE OF SE ARCH. AGAIN, THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF SHIVNATH RAI HARNARAIN INDIA LTD VS DCIT REPORTED IN 117 TTJ 480, IT WAS HELD THAT THE AO IS ENTITLED TO MAKE ASSES SMENT UNDER SPECIAL PROVISIONS EVEN IF NO MATERIAL IS FOUND DURING SEARCH. 4.4 THE HONBLE JHARKHAND HIGH COURT IN THE CASE OF ABHAY K UMAR SHROFF V. COMMISSIONER OF INCOME-TAX REPORTED IN 290 ITR 114 (J HARKHAND) HAS OBSERVED AS UNDER: FROM A READING OF THE PROVISIONS OF SECTION 153A, I T IS CLEAR THAT THIS PROVISION PROVIDES FOR A SINGLE ASSESSMENT OF UNDISCLOSED INCOM E OF A BLOCK PERIOD IN A CASE WHERE SEARCH IS CONDUCTED. IN OTHER WORDS, IN A CASE WHERE SEARCH IS CONDUCTED THERE SHALL BE A BLOCK ASSESSMENT FOR THE PER IOD COMPRISING PREVIOUS YEARS RELEVANT TO SIX ASSESSMENT YEARS PRECEDING THE P REVIOUS YEAR IN WHICH THE SEARCH WAS CONDUCTED AND ALSO INCLUDES THE PERIOD UP TO THE DATE OF COMMENCEMENT OF SUCH SEARCH. IN SUCH CASES, THE ASSESSING OFFICER SHALL ISSUE NOTICE TO THE ASSESSEE REQUIRING HIM TO FURNISH RETURN OF INCOME IN RESPECT OF THE SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESS MENT YEAR RELEVANT TO THE ITA NO.472/C/2013 & CO 37/C/2013 37 PREVIOUS YEAR IN WHICH THE SEARCH WAS CONDUCTED UNDER SEC TION 132 OR REQUISITION WAS MADE UNDER SECTION 132A. THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME OF EACH OF THESE SIX ASSESS MENT YEARS. 4.5 FURTHER, IN THE CASE OF HARVEY HEART HOSPITAL VS ACIT (130 TTJ 700), THE CHENNAI BENCH OF THIS TRIBUNAL HELD THAT; SEC. 153C R/W S. 153A BRINGS INTO THE PURVIEW OF ASSE SSMENT BOTH REGULAR AND UND I SCLOSED INCOME SUBSEQUENT TO ACTION UNDER S . 132 OR S. 132A UPON I NVOCATION OF S. 153A OR S. 153CTHE PROVISO TO S. 153A CLEARLY MANDATES THE AO TO ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT O F EACH ASSESSMENT YEAR FALL I NG WITHIN SI X ASSESSMENT YEARS . THE NEXT PROV I SO FURTHER MANDATES THAT ANY ASSESSMENT OR REASSESSMENT IN RESPECT OF ANY OF THOSE S I X YEARS WHICH ARE PENDING SHALL ABATE. HENCE, I T I S C L EAR THAT UNDER SUCH CIRCUMSTANCES , ASSESSMENT OR REASSESSMENT WILL BE DONE PURSUANT TO S. 153A OR S. 153C . IT WILL NOT BE CORRECT TO INTERPOLATE THAT NO REGULAR ASSESSME NT OR REASSESSMENT CAN TAKE PLACE UNDER THESE PROV I S I ONS. THERE I S NO REFERENCE TO I NCRIMINATING SEARCH MATERIALS AS I N EARL I ER S . 158BB/S. 158BC TO WHICH THE ASSESSMENT HAS TO BE CONFINED TO. SEE . 153C ONLY MANDATES THAT WHERE THE AO I S SATISFIED THAT THE MATERIAL, INCLUDING BOOKS OF ACCO UNTS OR DOCUMENTS SE I ZED OR REQUIS I T I ONED BELONGS TO OTHER PERSON, THEN THOSE MATERIALS WIL L BE HANDED OVER TO THE AO HAVING JUR I SDICTION OVER THE OTHER PERSON. ADMITTEDLY, IN THIS CASE, BOOKS OF ACCOUNTS/DOC UMENTS PE R TA I N I NG TO ASSESSEE W ERE SEIZED AND A O HAD RECORDED SATISFACTION I N THIS REGARD AS MANDATED IN THE ACT. THE ASSESSMENT OF UNDISCLOSED INCOME IS VERY MUCH BASED UPON THE BOOKS OF ACCOUNTS/DOCUMENTS . THE SATISFACTION O N THE PART OF AO IS NOT IN DISPUTE AS THE ASSESSEE IS CONTENDING T HAT ASSESSMENT MADE HAS TO BE WIT H REFERENCE TO INCRIMINATING SEARCH MATERIALS. 4.6 FURTHER, THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF GOPAL LAL BHADRUKA V. DEPUTY COMMISSIONER OF INCOME-TAX REPORT ED IN 346 ITR 106(AP) HELD THAT; BY VIRTUE OF SECTION 158BI OF THE ACT, THE VARIOUS P ROVISIONS OF CHAPTER XIV-B OF THE ACT ARE MADE INAPPLICABLE TO PROCEEDINGS UNDER SECT ION 153A/153C OF THE ACT. THE EFFECT OF THIS IS THAT WHILE THE PROVISIONS O F CHAPTER XIV-B OF THE ACT LIMIT THE INQUIRY BY THE ASSESSING OFFICER TO THOSE MATERIALS FOUND DURING THE SEARCH AND SEIZURE OPERATION, NO SUCH LIMITATION IS FOUND IN SO FAR AS SECTION 153A/153C OF THE ACT ARE CONCERNED. THEREFORE, IT FOLLOWS THAT FOR THE PURPOSES OF SECTION 153A/153C OF THE ACT THE ASSESSING OFFICER CAN TAKE I NTO CONSIDERATION MATERIAL OTHER THAN WHAT WAS AVAILABLE DURING THE SEARCH AND SEIZUR E OPERATION FOR MAKING AN ASSESSMENT OF THE UNDISCLOSED INCOME OF THE ASS ESSEE ITA NO.472/C/2013 & CO 37/C/2013 38 4.7 FURTHER, THE HONBLE DELHI HIGH COURT IN THE CASE OF SSP AVIATION LTD VS DCIT IN 252 CTR 291 OBSERVED THAT SEC, 153C MERELY ENABLE THE REVENUE AUTHORITIES TO INVESTIGATE INTO THE CONTENTS OF DOCUMENTS SEIZED WHICH B ELONGS TO A PERSON OTHER THAN A PERSON SEARCHED SO THAT IT CAN BE ASCERTAINED WHETHE R THE TRANSACTION OR THE INCOME EMBEDDED IN THE DOCUMENT HAS BEEN ACCOUNTED FOR IN T HE CASE OF THE APPROPRIATE PERSON. IT IS AIMED AT ENSURING THAT INCOME DOES NOT ESCAPE ASSESSMENT IN THE HANDS OF ANY OTHER PERSON MERELY BECAUSE HE HAS NOT BE EN SEARCHED U/S 132 OF THE ACT. IT IS ONLY THE FIRST STEP TO THE ENQUIRY WHIC H IS TO FOLLOW. THE AO HAVING JURISDICTION OVER THE PERSON AND THEREAFTER IT IS FOR THE AO HAVING JURISDICTION OVER THE OTHER PERSON TO FOLLOW THE PROCEDURE PRESCRIBED BY SEC TION 153A IN AN ATTEMPT TO ENSURE THAT THE INCOME REFLECTED BY THE DOCUMENT HAS BEEN ACCOUNTED FOR BY SUCH OTHER PERSON. IF HE IS SO SATISFIED AFTER OBTAINING TH E RETURN FROM SUCH OTHER PERSON FOR 6 ASSESSMENT YEARS, THE PROCEEDINGS WILL HAVE TO BE CLO SED. IF THE RETURN FILED BY OTHER PERSON FOR THE PERIOD OF 6 ASSESSMENT YEARS DOES NOT S HOW THAT THE INCOME REFLECTED IN THE DOCUMENT HAS BEEN ACCOUNTED FOR, ADDITIONS WILL BE AC CORDINGLY MADE AFTER FOLLOWING THE PROCEDURE PRESCRIBED BY LAW AND AFTER G IVING ADEQUATE OPPORTUNITY OF BEING HEARD TO SUCH OTHER PERSON. 4.8 THE HONBLE DELHI HIGH COURT IN THE CASE OF COMMISSI ONER OF INCOME-TAX V. ANIL KUMAR BHATIA REPORTED IN 352 ITR 493 (DEL) HELD THAT EVE N I F T H E ASSESS M E NT O RD E R H AS B EE N PASSE D I N R ES P E CT OF ON E OR A N Y OF T HE SI X RE L E VANT A S SES S M E NT Y E A R S, E ITHER UND E R SEC TI O N 14 3( 1 )(3) O R 143(3) O F T H E AC T PR I O R TO THE INI T IATION O F SE ARCH, TH E AO I S S T I L L E MPOW E RED TO R E OPEN THOSE P R OCEED IN GS U/S 1 53A OF T H E AC T WITH O U T A N Y F E T T ERS A N D REASS E S S T HE T O TAL I N COM E TAKIN G NOT E O F U NDI S CL O S E D I N C O M E , IF ANY, UN E ARTH E D D U RI N G ITA NO.472/C/2013 & CO 37/C/2013 39 T HE SEARC H . IN THE CASE, THE COURT D E A L T WITH A SITU A TI O N IN W H I C H S OM E INCRIM I NATI N G MAT E RIAL W AS F OUND IN RESPE C T O F A NO N- PE ND I NG ASSESSME N T . IN THAT SITUATION, T H E CO U RT H ELD T HAT SECT I O N 153A OF THE AC T APP L IES IF INC R I MI NA T ING MA T ER I A L I S F O U ND I N TH E CO UR S E OF SEA R C H EVEN IF ASSESSME NT S A R E CO M PLE T E D. NOW THE QU E STI O N A S TO W H E TH E R AN Y ASSESSMENT COULD BE MA D E IN RES P EC T OF COMP L ETED ASSESS M EN T S W H E N N O IN C R IMINAT I NG M A T E R IAL WA S FO U ND APPA R ENTL Y L E FT OPEN BY THE DELHI HIGH COURT. T HE OBSE R VAT I ON IN T H E J U DGM E N T APPEA R S TO I NDICAT E A DO U BT I N T H E M IND O F T H E H IGH C O URT AS T O WH E T H ER THE P R OCEE DIN GS U N D E R SE CT IO N 153 A . OF T H E AC T CAN S T IL L B E IN I TIAT ED. 4.9 I T I S I N THI S CO NT EX T TH A T THE D ECI S IO N OF THE H IG H CO U RT OF KARUATAK A IN T H E CASE OF CANARA 'HOUSING DE VE LOPM E NT C O ., VS DCIT IN ITA NO.38/2014 DT.25.7.2014, A SS UM E S S I G NIFI CA N CE W H E R E I T I S HELD THAT ON CE T H E ASS ES S M E NT I S RE O P E N E D, T H E A SSESS IN G OFFI CE R C AN TA K E N OT E OF T H E I NCOM E DI S CLO SE D IN TH E EA R L I E R R E T U R N, ANY UNDI S C L OS E D INCO M E FO U ND DU R ING T H E COUR SE O F SEA R C H A ND A L S O AN Y OT H E R IN CO M E WHI C H I S N O T DI SC L O S E D IN TH E EA RLIER RE T U RN OF I N COME OR W HI C H I S N O T UN E ART H ED I N THE C O UR SE OF SEA R CH UND E R S ECTI O N 1 3 2 O F TH E A C T , IN O RD E R TO F I ND OUT A ND DE T E RM INE WHA T IS T H E 'TO T A L I NCOME' OF EAC H YEA R A N D TH E N PAS S T H E ORD E R OF A S S E S S M E N T . 4.10 SAME VIEW HAS TAKEN BY THE BANGALORE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S NANDINI DELUXVS ACIT IN ITA NO. 446 448/BANG/2013 V IDE ORDER DTD 5 TH DEC 2014 WHEREIN IT HAS BEEN HELD AS UNDER: 6.3.1 WE HAVE HEARD THE RIVAL SUBMISSIONS AT LENGTH AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD, INCLUDING THE JUDIC IAL DECISIONS CITED. THE RELEVANT PORTIONS OF SECTION 153A OF THE ACT ARE EXTRA CTED HEREUNDER : 153A. ASSESSMENT IN CASE OF SEARCH OR REQUISITION.-( 1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147,SECTION 148, SECTION 149, ITA NO.472/C/2013 & CO 37/C/2013 40 SECTION 151 AND SECTION 153, IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNIS H WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REF ERRED TO IN CLAUSE (B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MA NNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND T HE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED 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 CONDUCTED OR REQUISITION IS MADE : PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR R EASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SI X ASSESSMENT YEARS: PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, IF ANY , RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESS MENT YEARS REFERRED TO IN THIS SUB-SECTION PENDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 13 2A, AS THE CASE MAY BE, SHALL ABATE. 6.3.2 A PERUSAL OF SECTION 153A OF THE ACT SHOWS THAT I T STARTS WITH A NON-OBSTANTE CLAUSE RELATING TO NORMAL ASSESSMENT PROCEDURE WHICH IS COVERED BY SECTIONS 139, 147, 148, 149, 151 AND 153 OF THE ACT IN RESPECT OF SEARCHES CARRIED OUT AFTER 31.5.2003. THESE SECTIONS, THE APPLICABILITY OF WHICH HAS BEEN EXCLUDED, RELATE TO RETURNS OF INCOME, ASSESSMENT AND REASSESSMENT PROVISIO NS. AS PER THE PROVISIONS OF SECTION 153A OF THE ACT, THE ASSESSING OFFICER IS BO UND TO ISSUE NOTICE TO THE ASSESSEE TO FURNISH RETURNS FOR EACH ASSESSMENT YEAR F ALLING WITHIN SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELE VANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH UNDER SECTION 132 OF THE ACT OR REQUISI TION UNDER SECTION 132A OF THE ACT, WAS MADE. AS HAS BEEN HELD BY THE HON' BLE DELHI HIGH COURT IN THE CASE OF ANIL KUMAR BHATIA (SUPRA), THERE IS NO DIS PUTE TO THE PROPOSITION THAT WHERE A SEARCH IS CARRIED OUT UNDER SECTION 132 OR A R EQUISITION UNDER SECTION 132A OF THE ACT, THE ASSESSING OFFICER SHALL ISSUE NOTIC E REQUIRING THE PERSON SEARCHED TO FURNISH HIS RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. THEREFORE, THE ASSESSING OFFICER GETS JURISDICTI ON FOR PASSING ORDERS UNDER SECTION 153A OF THE ACT, ONCE SEARCH ACTION IS INITIATE D, WHETHER OR NOT ANY INCRIMINATING MATERIAL IS FOUND DURING THE COURSE OF SE ARCH ACTION. 6.3.3 THE NEXT ISSUE IS THE SCOPE OF ASSESSMENT UNDER SE CTION 153A OF THE ACT. THE JURISDICTION TO ISSUE NOTICES UNDER SECTION 153A CANNOT BE EQUATED WITH THE SCOPE OF ASSESSMENT UNDER THIS SECTION. THIS HAS BEEN L UCIDLY EXPLAINED BY THE ORDER OF THE ITAT, MUMBAI IN THE CASE OF PRATIBHA INDUS TRIES LTD. (SUPRA) WHEREIN IT ITA NO.472/C/2013 & CO 37/C/2013 41 HAS BEEN OBSERVED THAT WHEN WE EXAMINE THE PROVISIONS OF SECTION 153A(1)(B) OF THE ACT, THE 2NDPROVISO THERETO AND THE JUDICIAL DECI SIONS CITED BEFORE US, THREE POSSIBLE CIRCUMSTANCES EMERGE ON THE DATE OF TH E INITIATION OF SEARCH UNDER SECTION 132(1) OF THE ACT. I)ASSESSMENT PROCEEDINGS ARE PENDING; II)PROCEEDINGS ARE NOT PENDING BUT SOME INCRIMINATING MA TERIAL IS FOUND IN THE COURSE OF SEARCH, INDICATING SOME INCOME AND / OR A SSETS NOT DISCLOSED IN THE RETURN OF INCOME; AND II)PROCEEDINGS ARE NOT PENDING AND NO INCRIMINATING MATERIA L IS FOUND IN THE COURSE OF SEARCH. 6.3.4 WHEN WE EXAMINE THE CASES COVERED UNDER THESE THRE E CIRCUMSTANCES, THE CASES COVERED UNDER (I) ABOVE, WHERE PROCEEDINGS ARE PENDING, IS ANSWERED BY THE ACT ITSELF; I.E. SINCE PROCEEDINGS ARE STILL PEND ING, ALL THOSE PENDING PROCEEDINGS ABATE AND THE ASSESSING OFFICER GETS A FRE E HAND TO MAKE THE ASSESSMENT. WHERE INCRIMINATING MATERIAL RELATING TO THE EARNING OF INCOME NOT DECLARED TO THE DEPARTMENT IS FOUND IN THE COURSE OF SEA RCH, THEN THERE IS NO DISPUTE AS TO THE JURISDICTION AS WELL AS THE SCOPE OF ASSESSMENT WHERE AN ASSESSMENT PROCEEDINGS FOR ANY ASSESSMENT YEAR IS PEN DING ON THE DATE OF SEARCH, THEN PROCEEDINGS RELATING TO THAT ASSESSMENT WILL ABATE ANDTHE SCOPE OF ASSESSMENT WILL BE WIDE ENOUGH TO INCLUDE ISSUES EMERGI NG FROM ABATED PROCEEDINGS AS WELL AS ISSUES EMERGING FROM SEIZED I NCRIMINATING MATERIAL. 6.3.5 THE CIRCUMSTANCE LAID OUT AT (II) ABOVE, HAS BEE N ANSWERED BY THE COURTS INTERPRETING THE 2NDPROVISO READ WITH SECTION 153(1)(B) OF THE ACT. THE HON'BLE DELHI HIGH COURT IN THE CASE OF ANIL KUMAR BHATIA (SUP RA) AT PARA 21 OF ITS ORDER HAS OBSERVED THAT :..... IN CASES WHERE THE ASSESSMENT O R REASSESSMENT PROCEEDINGS HAVE ALREADY BEEN COMPLETED AND ASSESSMENT ORDERS HAVE BEEN PASSED DETERMINING THE ASSESSEE'S TOTAL INCOME AND SUC H ORDERS ARE SUBSISTING AT THE TIME WHEN THE SEARCH OR THE REQUISITION IS MADE, THERE IS NO QUESTION OF ANY ABATEMENT SINCE NO PROCEEDINGS ARE PENDING. IN THIS LATT ER SITUATION,THE ASSESSING OFFICER WILL REOPEN THE ASSESSMENTS OR REASS ESSMENTS ALREADY MADE (WITHOUT HAVING THE NEED TO FOLLOW THE STRICT PROVISIONS OR COMPLYING WITH THE STRICT CONDITIONS OF SECTIONS 147, 148 AND 151) AND DETERMINE THE TOTAL INCOME OF THE ASSESSEE. SUCH DETERMINATION IN THE ORDERS PASSED UNDER SECTION 153A WOULD BE SIMILAR TO THE ORDERS PASSED IN ANY REASSESSMENT, WHERE THE TOTAL INCOME DETERMINED IN THE ORIGINAL ASSESSMENT ORDER AND THE INCO ME THAT ESCAPED ASSESSMENT ARE CLUBBED TOGETHER AND ASSESSED AS THE TOT AL INCOME. IN SUCH A CASE, TO REITERATE, THERE IS NO QUESTION OF ANY ABATEME NT OF THE EARLIER PROCEEDINGS FOR THE SIMPLE REASON THAT NO PROCEEDINGS FOR ASSESSMENT OR REASSESSMENT WERE PENDING SINCE THEY HAD ALREADY CULMINATE D IN ASSESSMENT OR REASSESSMENT ORDERS WHEN THE SEARCH WAS INITIATED OR THE REQUISITION WAS MADE. 6.3.6 THEREFORE, WHERE NO INCRIMINATING MATERIAL IS FOU ND IN THE SEARCH PROCEEDINGS RELATING TO ANY ASSESSMENT YEAR, THEN THE SCO PE OF ASSESSMENT WILL DEPEND ON WHETHER THE ORIGINAL ASSESSMENT IS PENDING OR CO MPLETED. WHERE THE ORIGINAL ASSESSMENT IN ANY ASSESSMENT YEAR IS PENDING ON T HE DATE OF SEARCH, THEN THE PROCEEDINGS RELATING TO THE PENDING ASSESSMENT SHAL L ABATE AND THE ITA NO.472/C/2013 & CO 37/C/2013 42 PROCEEDINGS INITIATED AS A RESULT OF SEARCH WILL BE CONTINUED. THE SCOPE OF THIS ASSESSMENT WOULD COVER ISSUES ARISING FROM THE PENDING A SSESSMENT AND THE FRESHLY INITIATED PROCEEDINGS WILL COVER ISSUES WHICH A RISE FROM THE SEARCH AND THE ORIGINALLY PENDING PROCEEDINGS ALSO. 6.3.7 THE THIRD CIRCUMSTANCE AT (III) ABOVE, I.E. WHE RE PROCEEDINGS ARE NOT PENDING AND NO INCRIMINATING MATERIAL IS FOUND IN THE COUR SE OF SEARCH; HAS BEEN LEFT UN-ANSWERED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF ANIL KUMAR BHATIA (SUPRA). IN THIS CASE, THE HON'BLE COURT HAS HELD THAT E VEN IF THE ASSESSMENT ORDER HAS BEEN PASSED IN RESPECT OF ONE OR ANY OF THE SIX RELEV ANT ASSESSMENT YEARS, EITHER UNDER SECTION 143(1)(A) OR 143(3) OF THE ACT PR IOR TO THE INITIATION OF SEARCH, THE ASSESSING OFFICER IS STILL EMPOWERED TO REOPEN THOS E PROCEEDINGS UNDER SECTION 153A OF THE ACT WITHOUT ANY FETTERS AND REASSESS THE TOTAL INCOME TAKING NOTE OF UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH. IT IS CLEAR THAT THE HON'BLE COURT DEALT WITH A SITUATION IN WHICH SOME INC RIMINATING MATERIAL WAS FOUND IN RESPECT OF A NON-PENDING ASSESSMENT. IT WAS IN T HIS BACKGROUND THAT THE HON'BLE COURT HELD THAT SECTION 153A OF THE ACT APPLI ES IF INCRIMINATING MATERIAL IS FOUND IN THE COURSE OF SEARCH EVEN IF ASSESSMENTS ARE C OMPLETED. THE QUESTION AS TO WHETHER ANY ADDITION CAN BE MADE IN RESPECT OF COM PLETED ASSESSMENTS WHEN NO INCRIMINATING MATERIAL WAS FOUND, WAS APPARENTLY L EFT OPEN. AT PARA 23 OF ITS ORDER, THE HON'BLE HIGH COURT HAS OBSERVED THAT 23. WE ARE NOT CONCERNED WITH A CASE WHERE NO INCRIMINAT ING MATERIAL WAS FOUND DURING THE SEARCH CONDUCTED UNDER SE CTION 132 OF THE ACT. WE, THEREFORE, EXPRESS NO OPINION AS TO WHETHER SECTION 153A CAN BE INVOKED EVEN IN SUCH A SITUATION. THAT QUESTION IS THEREFORE LEFT OPEN. THE ABOVE OBSERVATION APPEARS TO INDICATE A DOUBT IN T HE MIND OF THE HON'BLE HIGH COURT AS TO WHETHER THE PROCEEDINGS UNDER SECTION 153 A OF THE ACT CAN STILL BE INITIATED IF NO INCRIMINATING MATERIAL IS FOUND IN THE COURSE OF SEARCH. TO OUR MINDS, HAD IT BEEN AN OPEN AND SHUT CASE, I.E. ACQUIRING OF JURISDICTION UNDER SECTION 153A OF THE ACT DOES NOT DEPEND UPON RECOVERY A ND OF SEIZURE OF ANY INCRIMINATING MATERIAL, THE HON'BLE COURT WOULD NOT HAVE SO COMMENTED. 6.3.8 IT IS IN THIS CONTEXT THAT THE DECISION OF THE HON'B LE HIGH COURT OF KARNATAKA IN THE CASE OF CANARA HOUSING DEVELOPMENT CO. (SUPRA) ASSUMES SIGNIFICANCE. INTERPRETING THE DECISION OF THE HON'BLE HIGH COURT OF DE LHI IN THE CASE OF CIT V ANIL KUMAR BHATRA (SUPRA), THE HON'BLE HIGH COURT OF KARNATAKA HELD AS UNDER : 18. A PERUSAL OF SECTION 153A SHOWS THAT IT STARTS WI TH A NON OBSTANTE CLAUSE RELATING TO NORMAL ASSESSMENT PROCEDURE WHICH IS COVERED BY SECTIONS 139, 147, 148, 149, 151 AND 153 IN RESPECT OF SEARCHES MADE AFTER 31.5.2003. THESE SECTIONS, THE APPLICABILITY OF WHICH HAS BEEN EXCLUDED, RELATE TO RETURNS, ASSESSMENT AND REASSESSMENT PROVIS IONS. PRIOR TO THE INTRODUCTION OF THESE THREE SECTIONS, THERE WAS CHAPTER XIV-B OF THE ACT WHICH TOOK CARE OF THE ASSESSMENT TO BE MADE IN CASES OF SEARCH AND ITA NO.472/C/2013 & CO 37/C/2013 43 SEIZURE. SUCH AN ASSESSMENT WAS POPULARLY KNOWN AS BLOC K ASSESSMENT BECAUSE THE CHAPTER PROVIDED FOR A SINGLE ASSESSMENT TO BE MADE IN RESPECT OF A PERIOD OF A BLOCK OF TEN ASSESSMENT YEAR S PRIOR TO THE ASSESSMENT YEAR IN WHICH THE SEARCH WAS MADE. IN ADDITION TO THESE TEN ASSESSMENT YEARS, THE BROKEN PERIOD UP TO THE DATE ON WHICH THE SEARCH WAS CONDUCTED WAS ALSO INCLUDED IN WHAT WAS KNOWN AS BLO CK PERIOD. THOUGH A SINGLE ASSESSMENT ORDER WAS TO BE PASSED, THE U NDISCLOSED INCOME WAS TO BE ASSESSED IN THE DIFFERENT ASSESSMENT YE ARS TO WHICH IT RELATED. BUT ALL THIS HAD TO BE MADE IN A SINGLE AS SESSMENT ORDER. THE BLOCK ASSESSMENT SO MADE WAS INDEPENDENT OF AND IN ADDITION TO THE NORMAL ASSESSMENT PROCEEDINGS AS CLARIFIED BY THE EXPLANATIO N BELOW SECTION 158BA(2). AFTER THE INTRODUCTION OF THE GROUP OF SECTI ONS NAMELY, 153A TO 153C, THE SINGLE BLOCK ASSESSMENT CONCEPT WAS GIVEN A GO-BY. UNDER THE NEW SECTION 153A, IN A CASE WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR REQUISITION OF BOOKS OF ACCOUNT, DOCUMENTS OR ASSET S IS MADE UNDER SECTION 132A AFTER 31.5.2003, THE ASSESSING OFFICER I S OBLIGED TO ISSUE NOTICES CALLING UPON THE SEARCHED PERSON TO FURNISH RETU RNS FOR THE SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH WAS CONDUCTED OR RE QUISITION WAS MADE. THE OTHER DIFFERENCE IS THAT THERE IS NO BROKEN P ERIOD FROM THE FIRST DAY OF APRIL OF THE FINANCIAL YEAR IN WHICH THE SEARCH TOO K PLACE OR THE REQUISITION WAS MADE AND ENDING WITH THE DATE OF SEARCH/R EQUISITION. UNDER SECTION 153A AND THE NEW SCHEME PROVIDED FOR, THE AO IS REQUIRED TO EXERCISE THE NORMAL ASSESSMENT POWERS IN RESPECT OF THE PREVIOUS YEAR IN WHICH THE SEARCH TOOK PLACE. 19. UNDER THE PROVISIONS OF SECTION 153A, AS WE HAVE A LREADY NOTICED, THE ASSESSING OFFICER IS BOUND TO ISSUE NOTICE TO THE ASSES SEE TO FURNISH RETURNS FOR EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASSESS MENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH OR REQUISITION WAS MADE. ANOTHER SIGN IFICANT FEATURE OF THIS SECTION IS THAT THE ASSESSING OFFICER IS EMPOWERED TO ASSESS OR REASSESS THE 'TOTAL INCOME' OF THE AFORESAID YEARS. THIS IS A SIGNIFICANT DEPARTURE FROM THE EARLIER BLOCK ASSESSMENT SCHEME IN WHICH THE B LOCK ASSESSMENT ROPED IN ONLY THE UNDISCLOSED INCOME AND THE REGULAR ASS ESSMENT PROCEEDINGS WERE PRESERVED, RESULTING IN MULTIPLE AS SESSMENTS. UNDER SECTION 153A, HOWEVER, THE ASSESSING OFFICER HAS BEEN GIV EN THE POWER TO ASSESS OR REASSESS THE TOTAL INCOME OF THE SIX ASSE SSMENT YEARS IN QUESTION IN SEPARATE ASSESSMENT ORDERS. THIS MEANS T HAT THERE CAN BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX ASSES SMENT YEARS, IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOU LD BE BROUGHT TO TAX. 20. A QUESTION MAY ARISE AS TO HOW THIS IS SOUGHT TO BE ACHIEVED WHERE AN ASSESSMENT ORDER HAD ALREADY BEEN PASSED IN RESPECT OF ALL OR ANY OF THOSE SIX ASSESSMENT YEARS, EITHER UNDER SECTION 143(1) (A) OR SECTION 143(3) OF THE ACT. IF SUCH AN ORDER IS ALREADY IN EXIST ENCE, HAVING OBVIOUSLY BEEN PASSED PRIOR TO THE INITIATION OF THE SEARCH/REQUIS ITION, THE ASSESSING ITA NO.472/C/2013 & CO 37/C/2013 44 OFFICER IS EMPOWERED TO REOPEN THOSE PROCEEDINGS AND R EASSESS THE TOTAL INCOME, TAKING NOTE OF THE UNDISCLOSED INCOME, IF ANY, UN EARTHED DURING THE SEARCH. FOR THIS PURPOSE, THE FETTERS IMPOSED UPO N THE ASSESSING OFFICER BY THE STRICT PROCEDURE TO ASSUME JURISDICTI ON TO REOPEN THE ASSESSMENT UNDER SECTIONS 147 AND 148, HAVE BEEN REMO VED BY THE NON OBSTANTE CLAUSE WITH WHICH SUB SECTION (1) OF SECTION 1 53A OPENS. THE TIME-LIMIT WITHIN WHICH THE NOTICE UNDER SECTION 148 CAN BE ISSUED, AS PROVIDED IN SECTION 149 HAS ALSO BEEN MADE INAPPLICABLE BY THE NON OBSTANTE CLAUSE. SECTION 151 WHICH REQUIRES SANCTION TO B E OBTAINED BY THE ASSESSING OFFICER BY ISSUE OF NOTICE TO REOPEN THE ASSESSMENT UNDER SECTION 148 HAS ALSO BEEN EXCLUDED IN A CASE COVERED BY SECTION 153A. THE TIME-LIMIT PRESCRIBED FOR COMPLETION OF AN ASSESSM ENT OR REASSESSMENT BY SECTION153 HAS ALSO BEEN DONE AWAY WITH IN A CASE CO VERED BY SECTION 153A. WITH ALL THE STOPS HAVING BEEN PULLED OUT, THE ASSESSING OFFICER UNDER SECTION 153A HAS BEEN ENTRUSTED WITH THE DU TY OF BRINGING TO TAX THE TOTAL INCOME OF AN ASSESSEE WHOSE CASE IS COVER ED BY SECTION 153A, BY EVEN MAKING REASSESSMENTS WITHOUT ANY FETTERS, IF NEED BE. 10. SECTION 153A OF THE ACT STARTS WITH A NON OBSTANTE CL AUSE. THE FETTERS IMPOSED UPON THE ASSESSING OFFICER BY THE STRICT PROCE DURE TO ASSUME JURISDICTION TO REOPEN THE ASSESSMENT UNDER SECTIONS 14 7 AND 148, HAVE BEEN REMOVED BY THE NON OBSTANTE CLAUSE WITH WHICH SUB SECT ION (1) OF SECTION 153A OPENS. THE TIME-LIMIT WITHIN WHICH THE NOT ICE UNDER SECTION 148 CAN BE ISSUED, AS PROVIDED IN SECTION 149HAS ALSO B EEN MADE INAPPLICABLE BY THE NON OBSTANTE CLAUSE. SECTION 151 WHIC H REQUIRES SANCTION TO BE OBTAINED BY THE ASSESSING OFFICER BY I SSUE OF NOTICE TO REOPEN THE ASSESSMENT UNDER SECTION 148 HAS ALSO BEEN EX CLUDED IN A CASE COVERED BY SECTION 153A. THE TIME-LIMIT PRESCRIB ED FOR COMPLETION OF AN ASSESSMENT OR REASSESSMENT BY SECTION 153 HAS ALSO B EEN DONE AWAY WITH IN A CASE COVERED BY SECTION 153A. WITH ALL THE S TOPS HAVING BEEN PULLED OUT, THE ASSESSING OFFICER UNDER SECTION 153A HAS BEEN ENTRUSTED WITH THE DUTY OF BRINGING TO TAX THE TOTAL INCOME OF AN ASSESSEE WHOSE CASE IS COVERED BY SECTION 153A, BY EVEN MAKING REAS SESSMENTS WITHOUT ANY FETTERS, IF NEED BE. THEREFORE, IT IS CLEAR EVEN IF AN ASSESSMENT ORDER IS PASSED UNDER SECTION 143(1) OR 143(3) OF THE ACT, THE ASSESSING OFFICER IS EMPOWERED TO REOPEN THOSE PROCEEDINGS AND REASSESS THE T OTAL INCOME TAKING NOTE OF THE UNDISCLOSED INCOME, IF ANY, UNEARTHED D URING THE SEARCH. AFTER SUCH REOPENING OF THE ASSESSMENT, THE ASS ESSING OFFICER IS EMPOWERED TO ASSESS OR REASSESS THE TOTAL INCOME OF THE AFORESAID YEARS. THE CONDITION PRECEDENT FOR APPLICATION OF SECTION 153A IS THERE SHOULD BE A SEARCH UNDER SECTION 132. INITIATION OF PROCEEDINGS U NDER SECTION 153A IS NOT DEPENDENT ON ANY UNDISCLOSED INCOME BEING UNEARTHED D URING SUCH SEARCH. THE PROVISO TO THE AFORESAID SECTION MAKES IT CLEAR THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTA L INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS. IF ANY ASSESSMENT PROCEEDINGS ARE PENDING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN THE AFORESAID SUB-SECTION ON THE D ATE OF INITIATION OF THE SEARCH UNDER SECTION 132, THE SAID PROCEEDING SHALL ABATE. IF SUCH ITA NO.472/C/2013 & CO 37/C/2013 45 PROCEEDINGS ARE ALREADY CONCLUDED BY THE ASSESSING OF FICER BY INITIATION OF PROCEEDINGS UNDER SECTION 153A, THE LEGAL EFFECT I S THE ASSESSMENT GETS REOPENED. THE BLOCK ASSESSMENT ROPED IN ONLY THE UNDISCLOS ED INCOME AND THE REGULAR ASSESSMENT PROCEEDINGS WERE PRESERVED, RESULTING IN MULTIPLE ASSESSMENTS. UNDER SECTION 153A, HOWEVER, THE ASSESSING OFFICER HAS BEEN GIVEN THE POWER TO ASSESS OR REASSESS THE TOTA L INCOME OF THE SIX ASSESSMENT YEARS IN QUESTION IN SEPARATE ASSESSME NT ORDERS. THE ASSESSING OFFICER IS EMPOWERED TO REOPEN THOSE PROCE EDINGS AND REASSESS THE TOTAL INCOME, TAKING NOTE OF THE UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH. HE HAS BEEN ENTRUSTED WITH TH E DUTY OF BRINGING TO TAX THE TOTAL INCOME OF AN ASSESSEE WHOSE CAS E IS COVERED BY SECTION 153A, BY EVEN MAKING REASSESSMENTS WITHOUT ANY F ETTERS. THIS MEANS THAT THERE CAN BE ONLY ONE ASSESSMENT ORDER IN RESPE CT OF EACH OF THE SIX ASSESSMENT YEARS, IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. WHEN ONCE THE PROCEEDINGS ARE INITIATED UNDER SECTION 15 3A OF THE ACT, THE LEGAL EF FECT IS EVEN IN CASE WHERE THE ASSESSMENT ORDER IS PASSED IT STANDS REOPENED . IN THE EYE OF LAW THERE IS NO ORDER OF ASSESSMENT. RE-OPENED MEANS TO DEAL WITH OR BEGIN WITH AGAIN. IT MEANS THE ASSESSING OFFICER SHALL A SSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS. ONCE THE ASSESSM ENT IS REOPENED, THE ASSESSING AUTHORITY CAN TAKE NOTE OF THE INCOME DISCL OSED IN THE EARLIER RETURN, ANY UNDISCLOSED INCOME FOUND DURING SEA RCH OR AND ALSO ANY OTHER INCOME WHICH IS NOT DISCLOSED IN THE EARLIER R ETURN OR WHICH IS NOT UNEARTHED DURING THE SEARCH, IN ORDER TO FIND OUT WHAT IS THE TOTAL INCOME OF EACH YEAR AND THEN PASS THE ASSESSMENT ORDER. T HEREFORE, THE COMMISSIONER BY VIRTUE OF THE POWER CONFERRED UNDER SE CTION 263 OF THE ACT GETS NO JURISDICTION TO INITIATE PROCEEDINGS UNDER THE SAID PROVISION BECAUSE THE CONDITION PRECEDENT FOR INITIATING PROCEED INGS UNDER SECTION 263 IS ANY ORDER PASSED UNDER THE ACT BY THE ASSESSING O FFICER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE RE VENUE. ONCE THE ORDER PASSED BY THE ASSESSING OFFICER GETS REOPENED, THERE IS NO ORDER WHICH CAN BE SAID TO BE ERRONEOUS INSOFAR AS IT IS PREJUDIC IAL TO THE INTEREST OF THE REVENUE WHICH CONFERS JURISDICTION ON THE COMMISSIONER T O EXERCISE THE POWER OF THE JURISDICTION. 11. THE TRIBUNAL HAS PROCEEDED ON THE ASSUMPTION BY VI RTUE OF THE JUDGMENT OF THE SPECIAL BENCH OF THE MUMBAI, THE SCOPE OF ENQUIRY UNDER SECTION 153A IS TO BE CONFINED ONLY TO THE UNDISC LOSED INCOME UNEARTHED DURING SEARCH AND IF THERE IS ANY OTHER INCOME WHI CH IS NOT THE SUBJECT MATTER OF SEARCH, THE SAME CANNOT BE TAKEN INTO CONSIDERATION. THEREFORE, THE REVISIONAL AUTHORITY CAN EXERCISE THE PO WER UNDER SECTION 263. IN THE ENTIRE SCHEME OF 153A OF THE ACT, THERE IS NO PROHIBITION FOR THE ASSESSING AUTHORITY TO TAKE NOTE OF SUCH INCOME. ON THE CONTRARY, IT IS EXPRESSLY PROVIDED UNDER SECTION 153A OF THE ACT THE A SSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME OF SIX AS SESSMENT YEARS WHICH MEANS THE SAID TOTAL INCOME INCLUDES INCOME WHICH WAS R ETURNED IN THE EARLIER RETURN, THE INCOME WHICH WAS UNEARTHED DURING SEARCH AND INCOME WHICH IS NOT THE SUBJECT MATTER OF AFORESAID TWO INCOME. IF THE ITA NO.472/C/2013 & CO 37/C/2013 46 COMMISSIONER HAS COME ACROSS ANY INCOME THAT THE ASSESSIN G AUTHORITY HAS NOT TAKEN NOTE OF WHILE PASSING THE EARLIER ORDER, TH E SAID MATERIAL CAN BE FURNISHED TO THE ASSESSING AUTHORITY AND THE ASSESSI NG AUTHORITY SHALL TAKE NOTE OF THE SAID INCOME ALSO IN DETERMINING THE TO TAL INCOME OF THE ASSESSEE WHEN THE EARLIER PROCEEDINGS ARE REOPENED AND T HAT INCOME ALSO SHALL BECOME THE SUBJECT MATTER OF SAID PROCEEDI NGS. .... 6.3.9 RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF CANARA HOUSING DEVELOPMENT COMPANY (SUPRA ), WE HOLD THAT ONCE THE ASSESSMENT IS REOPENED, THE ASSESSING OFFICER C AN TAKE NOTE OF THE INCOME DISCLOSED IN THE EARLIER RETURN, ANY UNDISCLOSE D INCOME FOUND DURING THE COURSE OF SEARCH AND ALSO ANY OTHER INCOME WHICH IS NOT DI SCLOSED IN THE EARLIER RETURN OF INCOME OR WHICH IS NOT UNEARTHED IN THE COURSE OF SEARCH UNDER SECTION 132 OF THE ACT, IN ORDER TO FIND OUT AND DETERMINE WHAT I S THE TOTAL INCOME OF EACH YEAR AND THEN PASS THE ORDER OF ASSESSMENT. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE AT S.NOS. 2 TO 5 ARE ACCORDINGLY DIS MISSED FOR ALL FOUR ASSESSMENT YEARS 2005-06 TO 2008-09. 5. IN VIEW OF THE ABOVE DISCUSSION, I AM OF THE OPINIO N THAT SINCE THERE WAS A DOCUMENT FOUND IN THE CASE OF SEARCH ACTION WHICH BELONGS T O THE ASSESSEE AND ON THAT BASIS, NOTICE US 153A WAS ISSUED SO AS TO FRAME ASSESSMENT U/S 153C OF THE ACT AND THE CONDITIONS PRECEDENT FOR ISSUANCE OF NOTICE IS FUL FILLED ; THEREFORE, THE AO HAS TAKEN ACTION U/S 153C OF THE ACT, WHICH IS VALID. ACCORDINGL Y, THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. 6. NOW, COMING TO THE REVENUES APPEAL, IT IS WITH REGA RD TO DELETION OF ADDITION MADE BY THE AO. 7. THE FIRST ISSUE RELATES TO DELETION OF ADDITION OF RS. ONE LAKH RECEIVED FROM K. V. NELSON. 7.1 THE ASSESSEE RECEIVED THE FOLLOWING LOANS FROM MR. K. V. NELSON: ITA NO.472/C/2013 & CO 37/C/2013 47 I) RS. 50,000/- ON 18.8.2004 VIDE CHEQUE NO. 43422 OF NEDUBASSSSERY PANCHAYAT SERVICE CO-OP BANK. II) RS. 50,000/- RECEIVED ON 15.12.2004 VIDE CHEQUE NO .43428 OF NEDUBASSERRY PANCHAYAT SERVICE CO-OP BANK; AND ` III) RS. 1 LAC RECEIVED ON 5.1.2005 FROM SB 73139 21 OF DHANALAKSHMI BANK OUT OF RS. 2 LACS ADVANCED BY SHRI K. V. NELSON. 7.2 THE CIT(A) DELETED ADDITION OF RS. 2 LAKHS STATIN G THAT MR. NELSON HAD ENOUGH RESOURCES IN THE FORM OF AGRICULTURAL INCOME AGAINST WHICH THE DEPARTMENT CHALLENGED ONLY WITH REGARD TO THE DELETION OF RS. 1 LAKH. 8. THE CONTENTION OF THE LD DR IS THAT THE NOTING IN THE BANK PASS BOOK AGAINST RS. 1 LAKH PAID ON 4.1.2005 IS NOT LEGIBLE. IN OUR OPINION, T HE ARGUMENTS OF THE LD DR IS NOT HAVING MERIT. IT WAS CLARIFIED THAT IT WAS WRITTEN I N THE PASS BOOK AS CD 417 AND THE BENEFICIARY OF THE ACCOUNT CD 417 IS THE RESPONDENT I.E. ROYALE CARTONS P LTD. THE ASSESSEE ALSO FILED A COPY OF THE BANK PASS BOOK WHICH IS PLACED AT PAPER BOOK PGS. 106 & 107. 9. I HAVE CAREFULLY GONE THROUGH THE RECORDS AND THE SUBM ISSIONS MADE BY BOTH THE PARTIES. I FIND THAT BEFORE THE AO THE ASSESSEE HAS NOT FILED ANY DETAILS. THE ASSESSEE FIRST TIME PRODUCED THE ABOVE DOCUMENTS BEFORE THE C IT(A). THEREFORE, IN MY OPINION, THE ISSUE SHOULD BE REMITTED BACK TO THE FILE OF THE AO . ACCORDINGLY, THIS ISSUE IS REMITTED BACK TO THE AO WITH A DIRECTION TO EXAMINE THE DETAILS P RODUCED BY THE ASSESSEE BEFORE THE CIT(A) AND DECIDE THE ISSUE AFRESH IN ACCORD ANCE WITH LAW. 10. NEXT ISSUE RELATES TO DELETION OF RS. 5 LAKHS FR OM MR. JOHNSON ABRAHAM OUT OF RS. 6.90 LAKHS. ITA NO.472/C/2013 & CO 37/C/2013 48 10.1 THE ASSESSEE RECEIVED RS 6,90,000 FROM MR. JOHNSO N ABRAHAM DURING THE YEAR UNDER CONSIDERATION. MR. JOHNSON ABRAHAM ADVANCED RS. 5 LAKHS ON 22.3.2005 ON THE DATE IMMEDIATELY BEFORE THE ISSUE OF CHEQUE OF RS. 5 LAKHS; THERE IS A SIMILAR CREDIT IN THE BANK ACCOUNT OF THE CREDITORS, WHICH REMAINS UN-CLARIFIED . ACCORDING TO THE LD DR, THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF THE TRANSACT ION AND HENCE THE ADDITION HAS TO BE CONFIRMED. 10.2 ON THE OTHER HAND, THE LD AR OF THE ASSESSEE SUBM ITTED THAT THE AMOUNT OF RS. 5 LAKHS ADVANCED TO THE ASSESSEE VIDE CHEQUE NO.29688 63 ON 22.2.2005. THIS AMOUNT OF ADVANCED BY MR. JOHNSON ABRAHAM TO THE ASSESSEE AFTER RECEIVING BACK A LOAN, WHICH HE HAD ADVANCED TO HOTEL ANJALI PARK, KOTTAYAM. HE A LSO PLACED ON RECORD THE PROOF, WHICH IS PLACED AT 113 AND 114 OF THE PAPER BOOK. 11. I HAVE CAREFULLY GONE THROUGH THE RECORDS AND THE SUB MISSIONS MADE BY BOTH THE PARTIES. I FIND THAT BEFORE THE AO THE ASSESSEE HAS NO T FILED ANY DETAILS. THE ASSESSEE FIRST TIME PRODUCED THE ABOVE DOCUMENTS BEFORE THE C IT(A). THEREFORE, IN MY OPINION, THE ISSUE SHOULD BE REMITTED BACK TO THE FILE OF THE AO . ACCORDINGLY, THIS ISSUE IS REMITTED BACK TO THE AO WITH A DIRECTION TO EXAMINE THE DETAILS P RODUCED BY THE ASSESSEE BEFORE THE CIT(A) AND DECIDE THE ISSUE AFRESH IN ACCORD ANCE WITH LAW. 12. NEXT ISSUE IS WITH REGARD TO THE DELETION OF ADDI TION OF RS. 25,000/- OUT OF RS. 3,25,000/- ADVANCED BY MRS. IBY JONSHON. ITA NO.472/C/2013 & CO 37/C/2013 49 12.1 THE ASSESSEE RECEIVED RS RS.50,000/- FROM MRS. IBY JOHNSON DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. ACCORDING TO THE LD DR, THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF THE TRANSACTION AND HENCE THE ADDITION HAS TO BE CONFIRMED. 12.2 ON THE OTHER HAND, THE LD AR OF THE ASSESSEE SUBM ITTED THAT THE AMOUNT OF RS. 50,000/- VIDE CHEQUE NO.950781 WAS RECEIVED ON 17.8. 2004 FROM NRE SB ACCOUNT NO.20567 WITH FEDERAL BANK, THOTTAKATTUKAR VIDE REMITTA NCE SLIP NO.111155583. HE ALSO PLACED ON RECORD THE PROOF, WHICH IS PLACED AT PGS. 117 & 118 OF THE PAPER BOOK. 13. I HAVE CAREFULLY GONE THROUGH THE RECORDS AND THE SUB MISSIONS MADE BY BOTH THE PARTIES. I FIND THAT BEFORE THE AO THE ASSESSEE HAS NOT FILED ANY DETAILS. THE ASSESSEE FIRST TIME PRODUCED THE ABOVE DOCUMENTS BEFORE THE C IT(A). THEREFORE, IN MY OPINION, THE ISSUE SHOULD BE REMITTED BACK TO THE FILE OF THE AO . ACCORDINGLY, THIS ISSUE IS REMITTED BACK TO THE AO WITH A DIRECTION TO EXAMINE THE DETAILS P RODUCED BY THE ASSESSEE BEFORE THE CIT(A) AND DECIDE THE ISSUE AFRESH IN ACCORD ANCE WITH LAW. 14. NEXT ISSUE IS WITH REGARD TO THE DELETION OF ADDI TION OF RS. 2,37,000/- ADVANCED BY MRS. KUNJAMMA VARKEY AS LOAN. 14.1 ACCORDING TO THE LD DR, THE ASSESSEE FAILED TO P ROVE THE GENUINENESS OF THE TRANSACTION AND HENCE THE ADDITION HAS TO BE CONFIRMED. 14.2 ON THE OTHER HAND, THE LD AR OF THE ASSESSEE SUBM ITTED THAT THE AMOUNT OF RS. 2,37,000/- WAS ADVANCED BY MRS. KUNJAMMA VARKEY ON 5.1.2005 AND THE SAME WAS ITA NO.472/C/2013 & CO 37/C/2013 50 SHOWN AS AN OUTFLOW, A COPY OF WHICH IS PLACED ON RECORD AT PAGE 125 OF THE PAPER BOOK. IT WAS SUBMITTED THAT MRS. KUNJAMMA VARKEY HAS THE MAIN SOURCE OF INCOME AS RENT FROM HOTEL AND ALLIED TRADERS PVT LTD. HE ALS O PLACED ON RECORD THE PROOF, WHICH IS PLACED AT PG. 125 OF THE PAPER BOOK. 15. I HAVE CAREFULLY GONE THROUGH THE RECORDS AND THE SUB MISSIONS MADE BY BOTH THE PARTIES. I FIND THAT BEFORE THE AO THE ASSESSEE HAS NOT FILED ANY DETAILS. THE ASSESSEE FIRST TIME PRODUCED THE ABOVE DOCUMENTS BEFORE THE C IT(A). THEREFORE, IN MY OPINION, THE ISSUE SHOULD BE REMITTED BACK TO THE FILE OF THE AO . ACCORDINGLY, THIS ISSUE IS REMITTED BACK TO THE AO WITH A DIRECTION TO EXAMINE THE DETAILS P RODUCED BY THE ASSESSEE BEFORE THE CIT(A) AND DECIDE THE ISSUE AFRESH IN ACCORD ANCE WITH LAW. 16. NEXT ISSUE IS WITH REGARD TO THE DELETION OF ADDIT ION OF RS. 50,000/- ADVANCED BY MR. PAULSON P VARKEY. 16.1 ACCORDING TO THE LD DR, THE ASSESSEE FAILED TO P ROVE THE GENUINENESS OF THE TRANSACTION AND HENCE THE ADDITION HAS TO BE CONFIRMED. 16.2 ON THE OTHER HAND, THE LD AR OF THE ASSESSEE SUBM ITTED THAT THE AMOUNT OF RS. 50,000/- WAS ADVANCED BY MR. PAULSON P VARKEY VIDE CHEQUE NO.97611 OF SBI, ANGAMALY BRANCH ON 19.8.2004, WHICH WAS ADVANCED BY MR. PAULSON P VARKEY AFTER RECEIVING AN AMOUNT OF RS. 2.50 LAKHS TRANSFERRED FROM THE SB ACCOUNT OF HIS WIFE MRS. MEENA PAULSON ON 31.7.2004, A COPY OF WHICH IS PLACED ON RECORD AT PAGES 128 TO 130 OF THE PAPER BOOK. ITA NO.472/C/2013 & CO 37/C/2013 51 17. I HAVE CAREFULLY GONE THROUGH THE RECORDS AND THE SUB MISSIONS MADE BY BOTH THE PARTIES. I FIND THAT BEFORE THE AO THE ASSESSEE HAS NOT FILED ANY DETAILS. THE ASSESSEE FIRST TIME PRODUCED THE ABOVE DOCUMENTS BEFORE THE C IT(A). THEREFORE, IN MY OPINION, THE ISSUE SHOULD BE REMITTED BACK TO THE FILE OF THE AO . ACCORDINGLY, THIS ISSUE IS REMITTED BACK TO THE AO WITH A DIRECTION TO EXAMINE THE DETAILS P RODUCED BY THE ASSESSEE BEFORE THE CIT(A) AND DECIDE THE ISSUE AFRESH IN ACCORD ANCE WITH LAW. 18. NEXT ISSUE IS WITH REGARD TO THE DELETION OF ADDIT ION OF RS. 40,000/- ADVANCED BY M/S. POPULAR INDUSTRIES. 18.1 ACCORDING TO THE LD DR, THE ASSESSEE FAILED TO P ROVE THE GENUINENESS OF THE TRANSACTION AND HENCE THE ADDITION HAS TO BE CONFIRMED. 18.2 ON THE OTHER HAND, THE LD AR OF THE ASSESSEE SUBMITTE D THAT THE LOAN WAS GIVEN OUT OF THE CURRENT ACCOUNT OF THE PROPRIETARY CONCERN. O UT OF THE TOTAL LOAN AMOUNT, AN AMOUNT OF RS. 4,30,000/- WAS REPAID TO MR. PAULSON ON 8.2.2005 AND THE BALANCE AMOUNT OF RS. 40,000/- IS OUTSTANDING. THE ASSESSEE F ILED BEFORE THE CIT(A) THE RECEIPTS FROM M/S. POPULAR INDUSTRIES WHICH ARE PLACED AT PAGE S 135 TO 142 OF THE PAPER BOOK. 19. I HAVE CAREFULLY GONE THROUGH THE RECORDS AND THE SUB MISSIONS MADE BY BOTH THE PARTIES. I FIND THAT BEFORE THE AO THE ASSESSEE HAS NOT FILED ANY DETAILS. THE ASSESSEE FIRST TIME PRODUCED THE ABOVE DOCUMENTS BEFORE THE C IT(A). THEREFORE, IN MY OPINION, THE ISSUE SHOULD BE REMITTED BACK TO THE FILE OF THE AO . ACCORDINGLY, THIS ISSUE IS REMITTED ITA NO.472/C/2013 & CO 37/C/2013 52 BACK TO THE AO WITH A DIRECTION TO EXAMINE THE DETAILS P RODUCED BY THE ASSESSEE BEFORE THE CIT(A) AND DECIDE THE ISSUE AFRESH IN ACCORD ANCE WITH LAW. 20. THE LAST ISSUE RELATES TO LEVY OF INTEREST US 23 4B, WHICH IS MANDATORY IN NATURE AND THE AO IS DIRECTED TO ALLOW CONSEQUENTIAL RELIEF, IF ANY, IN ACCORDANCE WITH LAW. 21. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSE WHEREAS THE CO FILED BY THE ASSESSEE IS DISMIS SED. SD/- (N.R.S. GANESAN) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER COCHIN: DATED 29TH DEC 2014 RAJ*