Golf Technologies Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 5565/DEL/2012

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7877 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 13-06-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 02-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R S AHUJA
• Keywords: Bogus purchase; Search and seizure; Question of law; Block assessment
• Section: 143(3); 133A; 153A; 13; 153; 153C; 147; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO.5565/DEL/2012 ASSESSMENT YEAR: 2006-2007 GOLF TECHNOLOGIES PVT. LTD., GK HOUSE-187A, FLAT NO- 102, SANT NAGAR EAST OF KAILASH, NEW DELHI. VS. ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-II, NEW DELHI. TAN/PAN: AACCG4538J (APPELLANT) (RESPONDENT) I.T.A. NO.5566/DEL/2012 ASSESSMENT YEAR: 2007-2008 GOLF TECHNOLOGIES PVT. LTD., GK HOUSE-187A, FLAT NO- 102, SANT NAGAR EAST OF KAILASH, NEW DELHI. VS. ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-II, NEW DELHI. TAN/PAN: AACCG4538J (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI R.S. AHUJA, CA RESPONDENT BY: MS. SUNITA SINGH, CIT-DR DATE OF HEARING: 16 07 2020 DATE OF PRONOUNCEMENT: 27 08 2020 O R D E R PER AMIT SHUKLA, JUDICIAL MEMBER: THE AFORESAID APPEALS HAVE BEEN FILED BY THE ASSES SEE AGAINST SEPARATE IMPUGNED ORDERS OF EVEN DATE, 28.0 8.2012 FOR THE QUANTUM OF ASSESSMENT PASSED U/S.153A/143 ( 3) FOR I.T.A. NO.5565 & 5566/DEL/2012 2 THE ASSESSMENT YEARS 2006-07 AND 2007-08. BESIDES V ARIOUS GROUNDS TAKEN ON MERITS, ONE OF THE COMMON LEGAL GR OUND RAISED IN BOTH THE APPEALS ARE THAT ALL THE ADDITIO NS MADE BY THE ASSESSING OFFICER ADDITIONS MADE, FIRSTLY, ON A CCOUNT OF UNACCOUNTED PURCHASES; SECONDLY, ADDITION ON ACCOUN T OF UNDISCLOSED INCOME FROM PROFESSIONAL SERVICES; AND LASTLY, DISALLOWANCES OF PRELIMINARY EXPENSES ARE BEYOND TH E SCOPE OF ASSESSMENT U/S.153A, AS THESE ADDITIONS ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. 2. SINCE, SIMILAR ISSUES AND GROUNDS HAS BEEN RAISE D IN ASSESSMENT YEAR 2006-07 AND 2007-08 AND FACTS ARE IDENTICAL, THEREFORE, SAME WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. 3. THE FACTS IN BRIEF ARE THAT, A SEARCH AND SE IZURE ACTION WAS CARRIED OUT IN THE CASE OF THE ASSESSEE ON 24.0 9.2009. PRIOR TO THE DATE OF SEARCH, THE RETURN OF INCOME F ILED FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08 HAD ATTAINED F INALITY AND ASSESSMENT FOR THESE TWO ASSESSMENT YEARS WERE NOT PENDING AND HENCE SAME ARE RECKONED AS UNABATED ASSESSMENT IN TERMS OF 2 ND PROVISO TO SECTION 153A. ON A PERUSAL OF THE ASSESSMENT ORDER, IT IS SEEN THAT TH E ASSESSING OFFICER, FIRST OF ALL, ON PERUSAL OF BALANCE-SHEET NOTED THAT THERE ARE PRELIMINARY EXPENSES HAVE BEEN DEBITED AN D OBSERVED THAT THE ASSESSEE COMPANY SINCE INCORPORAT ION WAS CLAIMING DEDUCTION OF AN AMOUNT EQUAL TO 1/10 OF INCORPORATION EXPENSES U/S.35D WHICH WAS RS.123 PER YEAR. I.T.A. NO.5565 & 5566/DEL/2012 3 HE NOTED THAT THE ASSESSEE COMPANY HAS WRONGLY CLAI MED DEDUCTION OF RS. 12,508 INCLUDING THE AMOUNT OF EXP ENSES INCURRED DURING LATER YEARS WHICH IS NOT ALLOWABLE IN TERMS OF PROVISION OF SECTION 35D. ACCORDINGLY, HE HAS DISAL LOWED SUM OF RS.11,085 IN BOTH THE YEARS AND ADDED BACK TO TH E INCOME. 4. APART FROM THAT, THE ASSESSING OFFICER OBSERV ES THAT IN THE COURSE OF ASSESSMENT PROCEEDING THE ASSESSEE CO MPANY WAS REQUIRED TO FURNISH DETAILS OF PURCHASES MADE D URING THE RELEVANT YEAR AND IN THE ASSESSMENT YEAR 2006-07 TH E ASSESSEE HAS MADE PURCHASES OF RS.1,01,53,430/- FRO M M/S. JAY ENN, INFOTECH PVT. LTD., NEW DELHI; AND IN ASSE SSMENT YEAR 2007-08, IT HAS MADE PURCHASES FROM 8 PARTIES FOR SUMS AGGREGATING TO RS.6,61,13,490/- WHICH ARE BOGUS. TH E REASON FOR ARRIVING ON SUCH A CONCLUSION WAS THAT, DURING THE COURSE OF SEARCH PROCEEDINGS U/S.132, STATEMENT OF LT. COL ONEL, H.S. BEDI WHO WAS THE CMD OF THE TULIP GROUP WAS RECORDE D, IN WHICH HE HAS ADMITTED THAT THE GROUP COMPANIES WERE INVOLVED IN MAKING BOGUS PURCHASES FROM VARIOUS ENT ITIES AND HAS ALSO MADE A DECLARATION OF RS.75 CRORES ON ACCO UNT OF BOGUS PURCHASES MADE BY DIFFERENT GROUP COMPANIES M ADE IN THE ASSESSMENT YEAR 2009-10 AND THIS AMOUNT WAS SURRENDERED IN NAMES OF VARIOUS COMPANIES. ASSESSIN G OFFICER HAS ALSO NOTED THE RELEVANT EXTRACT OF THE STATEMEN T AND MENTIONED ABOUT THE INQUIRIES CONDUCED FOR THE PURC HASES DURING FINANCIAL YEARS 2007-08 AND 2008-09 RELEVANT TO ASSESSMENT YEARS 2009-10 AND 2010-11. HOWEVER, THER E IS NO IOTA OF ANY REFERENCE OR MATERIAL THAT ANYTHING INC RIMINATING I.T.A. NO.5565 & 5566/DEL/2012 4 WAS FOUND REGARDING PURCHASES QUA THE ASSESSMENT YE ARS 2006-07 AND 2007-08 NOR THERE IS ANY SUCH THING IN THE STATEMENT RECORDED U/S.132(4) AND IN THE SUBSEQUENT INQUIRY CONDUCTED THAT ANYTHING INCRIMINATING WAS FOUND REL ATING TO THESE ASSESSMENT YEARS. BASED ON INQUIRIES AND STAT EMENTS WHICH WERE RELEVANT FOR THE ASSESSMENT YEARS 2009-1 0 ONWARDS, ASSESSING OFFICER HAS MADE ADVERSE INFEREN CE IN THE ASSESSMENT YEAR 2006-07 AND 2007-08. 5. LD. CIT (A) HAS CONFIRMED THE ADDITION MAINLY ON THE GROUND THAT DURING THE COURSE OF STATEMENT, THE CMD HAS DECLARED RS.75 CRORES ON ACCOUNT OF BOGUS PURCHASES IN VARIOUS GROUP COMPANIES MADE FROM VARIOUS ENTITIES IN THE SUBSEQUENT ASSESSMENT YEARS AND THE ASSESSEE COMPAN Y ITSELF, IN THE ASSESSMENT YEAR 2009-10 HAS OFFERED BOGUS PURCHASES OF RS.21 CRORE IN ITS RETURN OF INCOME. 6. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT FROM A BARE PERUSAL OF THE ASSESSMENT ORDER AS WELL AS APPELLATE ORDER IT CAN BE SEEN THAT ALL THE OBSERVA TIONS AND REFERENCE OF THE STATEMENT HAVE BEEN MADE WHICH WER E RELEVANT FOR THE ASSESSMENT YEARS 2009-10 AND 2010- 11 AND THERE IS NO WHISPER ABOUT ANY INCRIMINATING MATERIA L OR DOCUMENTS FOUND DURING THE COURSE OF SEARCH THAT PU RCHASES MADE DURING THE YEAR FROM THE PARTIES ARE BOGUS. IT IS A WELL SETTLED LAW BY THE HONBLE JURISDICTIONAL HIGH COUR T IN THE CASE OF CIT VS. KABUL CHAWLA, 380 ITR 573 (DEL.), AND PCIT VS. MEETA GUTGUTIA, (2017) 325 ITR 526 , THAT WHERE THE I.T.A. NO.5565 & 5566/DEL/2012 5 ASSESSMENT HAS ATTAINED FINALITY BEFORE THE DATE OF SEARCH AND WHICH ARE NOT PENDING AT THE TIME OF SEARCH, THE AD DITION CAN BE MADE ON THE BASIS OF INCRIMINATING MATERIAL FOUN D DURING THE COURSE OF SEARCH QUA THAT ASSESSMENT YEAR. IF N O SUCH INCRIMINATING MATERIAL HAS BEEN FOUND THEN THE ADDI TIONS CANNOT BE MADE WITHIN THE SCOPE OF SECTION 153/143( 3). 7. ON THE OTHER HAND, LD. CIT-DR STRONGLY RELIED UP ON THE ORDER OF THE ASSESSING OFFICER AND LD. CIT(A) AND S UBMITTED THAT HERE IN THIS CASE NOT ONLY DURING THE COURSE O F STATEMENT U/S 132(4) RECORDED DURING THE COURSE OF SEARCH, TH E CMD OF THE GROUP COMPANY ADMITTED THAT HE HAS TAKEN ACCOMMODATION ENTRY OF BOGUS PURCHASES FROM VARIOUS ENTITIES, BUT SOME OF THE ENTITIES WERE FOUND TO BE NON EXISTENCE OR NOT HAVING BUSINESS. EVEN THOUGH THESE INQUIRIES AND STATEMENT RELATED TO SUBSEQUENT ASSESSMENT YEAR S, BUT EVEN FOR THESE ASSESSMENT YEARS THESE ARE TO RECKON ED AS INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH. THUS, THE ADDITIONS ON ACCOUNT OF BOGUS PURCHASES A RE WITHIN THE SCOPE AND AMBIT OF ASSESSMENT FRAMED U/S. 143(3 )/153A. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDERS AS WE LL AS MATERIAL REFERRED TO BEFORE US. AS STATED ABOVE, NO NE OF THESE ADDITIONS WHICH HAVE BEEN MADE ARE BASED ON ANY MAT ERIAL OR EVIDENCE FOUND DURING THE COURSE OF SEARCH RELEVANT FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08. NEITHER THERE IS ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH FOR I.T.A. NO.5565 & 5566/DEL/2012 6 PRELIMINARY EXPENSES OR FOR PAYMENT OF PROFESSION S ERVICES OR ALLEGED BOGUS PURCHASES. THE ASSESSING OFFICER HIMS ELF OBSERVED THAT ALL THESE ISSUES WERE RAISED DURING T HE COURSE OF ASSESSMENT PROCEEDINGS AND THERE IS NO SPECIFIC MATERIAL PERTAINING TO ASSESSMENT YEARS 2006-07 AND 2007-08. IN THE ENTIRE ASSESSMENT ORDER ESPECIALLY IN THE ASSESSMEN T ORDER FOR THE ASSESSMENT YEAR 2007-08, ASSESSING OFFICER HAS REFERRED TO THE STATEMENT OF CMD, WHEREIN HE HAS ADMITTED TH AT BOGUS PURCHASES WERE DEBITED DURING THE FINANCIAL YEAR 20 09-10 AND 2010-11 IN VARIOUS COMPANIES AND HE HAS ALSO MA DE SURRENDER OF RS.75 CRORES IN VARIOUS GROUP COMPANIE S ON ACCOUNT OF BOGUS PURCHASES. HE HAS ALSO REFERRED TO CERTAIN INQUIRY CONDUCTED SUBSEQUENTLY UPON THE ENTITIES FR OM WHERE THE GROUP COMPANIES HAVE MADE PURCHASES IN THE SUBS EQUENT YEARS WERE FOUND TO BE NON GENUINE. ONLY AN INFEREN CE HAS BEEN DRAWN BASED ON SUBSEQUENT INQUIRIES RELEVANT F OR THE ASSESSMENT YEARS 2009-10 AND 2010-11 IN THE IMPUGNE D ASSESSMENT YEAR, OTHERWISE THERE IS NO WHISPER OF A NY INCRIMINATING MATERIAL QUA THESE ASSESSMENT YEARS. IT IS A WELL SETTLED WITHIN THE JURISDICTION OF THE DELHI HI GH COURT THAT WHERE FOR ANY OF THE ASSESSMENT YEARS FALLING WITHIN 6 YEARS PRECEDING THE YEAR IN WHICH SEARCH TOOK PLACE , THE ASSESSMENTS WHICH ARE NOT PENDING OR HAD ATTAINED F INALITY BEFORE THE DATE OF SEARCH, THE ADDITIONS CAN BE MAD E ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING TH E COURSE OF SEARCH QUA THAT ASSESSMENT YEAR, I.E., THE MATERIAL SHOULD PERTAINED TO THAT ASSESSMENT YEAR. IF NO SUCH MATER IAL HAS I.T.A. NO.5565 & 5566/DEL/2012 7 BEEN FOUND PERTAINING TO ASSESSMENT YEARS 2006-07 A ND 2007-08, THEN NO SUCH ADDITIONS CAN BE ROPED IN THE ASSESSMENT YEAR FRAMED U/S.153A/143(3). THE RELEVAN T OBSERVATION AND THE PRINCIPLE REITERATED BY THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF MEETA GUTGUTIA (SUPRA) ARE REPRODUCED HEREUNDER: 53. AT THIS STAGE, IT IS ALSO TO BE NOTICED THAT AN ELABORATE ARGUMENT WAS MADE BY MR. MANCHANDA ON THE ASPECT OF THE SECURITY DEPOSIT S ACCEPTED BY THE ASSESSEE. THESE WERE OF TWO KINDS - ONE WAS OF REFUNDABLE SEC URITY DEPOSITS AND THE OTHER FOR NON-REFUNDABLE SECURITY DEPOSITS. AS FAR AS THE REF UNDABLE SECURITY DEPOSITS WERE CONCERNED, THE AO HIMSELF IN HIS REMAND REPORT ACCE PTED THEM AS HAVING BEEN DISCLOSED. THIS HAS BEEN NOTICED BY THE CIT(A) IN P ARA 7.2.1 OF HIS ORDER FOR AY 2004-05. AS REGARDS NON- REFUNDABLE SECURITY DEPOSI T, THE CIT(A) ACCEPTED THE AO S FINDINGS THAT TREATING THE SUM AS GOODWILL WRITT EN OFF ON DEFERRED BASIS WAS NOT CORRECT, HENCE THE ADDITION OF RS. 5,09,343 WAS HELD TO BE JUSTIFIED AND CORRECT. IT WAS DULY ACCOUNTED FOR UNDER LIABILITIES AND TRANSFERRED TO INCOME IN A PHASED MANNER. THIS WAS NOT DONE BY MANIPULATING THE ACCOU NT BOOKS OF THE ASSESSEE AS ALLEGED BY THE REVENUE. THIS WOULD HAVE BEEN EVIDEN T HAD THE RETURN BEEN PICKED UP FOR SCRUTINY UNDER SECTION 143(3) OF THE ACT. THIS, THEREFORE, WAS NOT MATERIAL WHIC H WAS SUBSEQUENTLY UNEARTHED DURING THE SEARCH WHICH WAS NOT ALREADY AVAILABLE TO THE AO. CONSEQUENTLY, THE ADDITIONS SOUGHT TO BE MA DE BY THE AO ON ACCOUNT OF SECURITY DEPOSITS WERE RIGHTLY DELETED BY THE CIT(A ). 54. FOR ALL OF THE AFOREMENTIONED REASONS QUESTION (II) FRAMED ABOVE IS ANSWERED IN THE AFFIRMATIVE I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. INVOCATION OF SECTION 153A FOR AYS 2000-01 TO 2003-04 55. ON THE LEGAL ASPECT OF INVOCATION OF SECTION 153A IN RELATION TO AYS 2000-01 TO 2003-04, THE CENTRAL PLANK OF THE REVENUES SUBMISSI ON IS THE DECISION OF THIS COURT IN DAYAWANTI GUPTA (SUPRA). BEFORE BEGINNING TO EXA MINE THE SAID DECISION, IT IS I.T.A. NO.5565 & 5566/DEL/2012 8 NECESSARY TO REVISIT THE LEGAL LANDSCAPE IN LIGHT O F THE ELABORATE ARGUMENTS ADVANCED BY THE REVENUE. 56. SECTION 153A OF THE ACT IS TITLED 'ASSESSMENT IN CASE OF SEARCH OR REQUISITION'. IT IS CONNECTED TO SECTION 132 WHICH DEALS WITH 'SEARCH AND SEIZURE'. BOTH THESE PROVISIONS, THEREFORE, HAVE TO BE READ TOGETHER. SE CTION 153A IS INDEED AN EXTREMELY POTENT POWER WHICH ENABLES THE REVENUE TO RE- OPEN AT LEAST SIX YEARS OF ASSESSMENTS EARLIER TO THE YEAR OF SEARCH. IT IS NO T TO BE EXERCISED LIGHTLY. IT IS ONLY IF DURING THE COURSE OF SEARCH UNDER SECTION 132 INCRIMINATING MATERIAL JUSTIFYING THE RE-OPENING OF THE ASSESSMENTS FOR SIX PREVIOUS YEAR S IS FOUND THAT THE INVOCATION OF SECTION 153A QUA EACH OF THE AYS WOULD BE JUSTIFIED. 57. THE QUESTION WHETHER UNEARTHING OF INCRIMINATIN G MATERIAL RELATING TO ANY ONE OF THE AYS COULD JUSTIFY THE RE-OPENING OF THE ASSE SSMENT FOR ALL THE EARLIER AYS WAS CONSIDERED BOTH IN CIT V. ANIL KUMAR BHATIA (SUPRA) AND CIT V. CHETAN DAS LACHMAN DAS (SUPRA). INCIDENTALLY, BOTH THESE DECISIONS WERE D ISCUSSED THREADBARE IN THE DECISION OF THIS COURT IN KABUL CHAWLA (SUPR A). AS FAR AS CIT V. ANIL KUMAR BHATIA (SUPRA) WAS CONCERNED, THE COURT IN PARAGRAPH 24 O F THAT DECISION NOTED THAT 'WE ARE NOT CONCERNED WITH A CASE WHERE NO INC RIMINATING MATERIAL WAS FOUND DURING THE SEARCH CONDUCTED UNDER SECTION 132 OF THE ACT. WE THEREFORE EXPRESS NO OPINION AS TO WHETHER SECTION 153A CAN BE INVOKED EVEN UNDER SUCH SITUATION'. THAT QUESTION WAS, THEREFORE, LEFT OPEN. AS FAR AS CIT V CHETAN DAS LACHMAN DAS (SUPRA) IS CONCERNED, IN PARA 11 OF THE DECISION IT WAS OBSERVED: '11. SECTION 153A (1) (B) PROVIDES FOR THE ASSESSME NT OR REASSESSMENT OF THE TOTAL INCOME OF THE SIX ASSESSMENT YEARS IMMEDIATELY PREC EDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH T OOK PLACE. TO REPEAT, THERE IS NO CONDITION IN THIS SECTION THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE ASSESSING OFFICER WH ICH CAN BE RELATED TO THE EVIDENCE FOUND. THIS, HOWEVER, DOES NOT MEAN THAT T HE ASSESSMENT UNDER SECTION 153A CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UN DER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' I.T.A. NO.5565 & 5566/DEL/2012 9 58. IN KABUL CHAWLA (SUPRA), THE COURT DISCUSSED TH E DECISION IN FILATEX INDIA LTD. V. CIT (SUPRA) AS WELL AS THE ABOVE TWO DECISIONS AND OBS ERVED AS UNDER: '31. WHAT DISTINGUISHES THE DECISIONS BOTH IN CIT V. CHETAN DAS LACHMAN DAS (SUPRA), AND FILATEX INDIA LTD. V. CIT-IV (SUPRA) IN THEIR APPLICATION TO THE PRESENT CASE IS THAT IN BOTH THE SAID CASES THERE WAS SOME MATERIAL UNEARTHED DURING THE SEARCH, WHEREAS IN THE PRESENT CASE THERE ADMITTEDL Y WAS NONE. SECONDLY, IT IS PLAIN FROM A CAREFUL READING OF THE SAID TWO DECISIONS TH AT THEY DO NOT HOLD THAT ADDITIONS CAN BE VALIDLY MADE TO INCOME FORMING THE SUBJECT M ATTER OF COMPLETED ASSESSMENTS PRIOR TO THE SEARCH EVEN IF NO INCRIMINATING MATERI AL WHATSOEVER WAS UNEARTHED DURING THE SEARCH. 32. RECENTLY BY ITS ORDER DATED 6TH JULY 2015 IN IT A NO. 369 OF 2015 (PR. COMMISSIONER OF INCOME TAX V. KURELE PAPER MILLS P. LTD.), THIS COURT DECLINED TO FRAME A QUESTION OF LAW IN A CASE WHERE, IN THE ABS ENCE OF ANY INCRIMINATING MATERIAL BEING FOUND DURING THE SEARCH UNDER SECTIO N 132 OF THE ACT, THE REVENUE SOUGHT TO JUSTIFY INITIATION OF PROCEEDINGS UNDER S ECTION 153A OF THE ACT AND MAKE AN ADDITION UNDER SECTION 68 OF THE ACT ON BOGUS SH ARE CAPITAL GAIN. THE ORDER OF THE CIT(A), AFFIRMED BY THE ITAT, DELETING THE ADDI TION, WAS NOT INTERFERED WITH.' 59. IN KABUL CHAWLA (SUPRA), THE COURT REFERRED TO THE DECISION OF THE RAJASTHAN HIGH COURT IN JAI STEEL (INDIA), JODHPUR V. ACIT (2 013) 36 TAXMAN 523 (RAJ). THE SAID PART OF THE DECISION IN KABUL CHAWLA (SUPRA) I N PARAS 33 AND 34 READS AS UNDER: '33. THE DECISION OF THE RAJASTHAN HIGH COURT IN JA I STEEL (INDIA), JODHPUR V. ACIT (SUPRA) INVOLVED A CASE WHERE CERTAIN BOOKS OF ACCO UNTS AND OTHER DOCUMENTS THAT HAD NOT BEEN PRODUCED IN THE COURSE OF ORIGINAL ASS ESSMENT WERE FOUND IN THE COURSE OF SEARCH. IT WAS HELD WHERE UNDISCLOSED INC OME OR UNDISCLOSED PROPERTY HAS BEEN FOUND AS A CONSEQUENCE OF THE SEARCH, THE SAME WOULD ALSO BE TAKEN INTO CONSIDERATION WHILE COMPUTING THE TOTAL INCOME UNDE R SECTION 153A OF THE ACT. THE COURT THEN EXPLAINED AS UNDER: '22. IN THE FIRM OPINION OF THIS COURT FROM A PLAIN READING OF THE PROVISION ALONG WITH THE PURPOSE AND PURPORT OF THE SAID PROVISION, WHICH IS INTRICATELY LINKED WITH SEARCH AND REQUISITION UNDER SECTIONS 132 AND 132A OF THE ACT, IT IS APPARENT THAT: I.T.A. NO.5565 & 5566/DEL/2012 10 (A) THE ASSESSMENTS OR REASSESSMENTS, WHICH STAND A BATED IN TERMS OF II PROVISO TO SECTION 153A OF THE ACT, THE AO ACTS UNDER HIS ORIG INAL JURISDICTION, FOR WHICH, ASSESSMENTS HAVE TO BE MADE; (B) REGARDING OTHER CASES, THE ADDITION TO THE INCO ME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL; AND (C) IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE C OMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMEN T CAN BE MADE.' 34. THE ARGUMENT OF THE REVENUE THAT THE AO WAS FRE E TO DISTURB INCOME DE HORS THE INCRIMINATING MATERIAL WHILE MAKING ASSESSMENT UNDE R SECTION 153A OF THE ACT WAS SPECIFICALLY REJECTED BY THE COURT ON THE GROUND TH AT IT WAS 'NOT BORNE OUT FROM THE SCHEME OF THE SAID PROVISION' WHICH WAS IN THE CONT EXT OF SEARCH AND/OR REQUISITION. THE COURT ALSO EXPLAINED THE PURPORT OF THE WORDS ' ASSESS' AND 'REASSESS', WHICH HAVE BEEN FOUND AT MORE THAN ONE PLACE IN SECTION 1 53A OF THE ACT AS UNDER: '26. THE PLEA RAISED ON BEHALF OF THE ASSESSEE THAT AS THE FIRST PROVISO PROVIDES FOR ASSESSMENT OR REASSESSMENT OF THE TOTAL INCOME IN R ESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASSESSMENT YEARS, IS MERELY READING THE SAID PROVISION IN ISOLATION AND NOT IN THE CONTEXT OF THE ENTIRE SECT ION. THE WORDS 'ASSESS' OR 'REASSESS'-HAVE BEEN USED AT MORE THAN ONE PLACE IN THE SECTION AND A HARMONIOUS CONSTRUCTION OF THE ENTIRE PROVISION WOULD LEAD TO AN IRRESISTIBLE CONCLUSION THAT THE WORD ASSESS HAS BEEN USED IN THE CONTEXT OF AN ABAT ED PROCEEDINGS AND REASSESS HAS BEEN USED FOR COMPLETED ASSESSMENT PROCEEDINGS, WHI CH WOULD NOT ABATE AS THEY ARE NOT PENDING ON THE DATE OF INITIATION OF THE SEARCH OR MAKING OF REQUISITION AND WHICH WOULD ALSO NECESSARILY SUPPORT THE INTERPRETA TION THAT FOR THE COMPLETED ASSESSMENTS, THE SAME CAN BE TINKERED ONLY BASED ON THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS.' 60. IN KABUL CHAWLA (SUPRA), THE COURT ALSO TOOK NO TE OF THE DECISION OF THE BOMBAY HIGH COURT IN COMMISSIONER OF INCOME TAX V. CONTINENTAL WAREHOUSI NG CORPORATION (NHAVA SHEVA) LTD . [2015] 58 TAXMANN.COM 78 (BOM) WHICH ACCEPTED THE PLEA THAT IF NO INCRIMINATING MATERIAL WAS FOUN D DURING THE COURSE OF SEARCH IN RESPECT OF AN ISSUE, THEN NO ADDITIONS IN RESPECT O F ANY ISSUE CAN BE MADE TO THE ASSESSMENT UNDER SECTION 153A AND 153C OF THE ACT. THE LEGAL POSITION WAS THEREAFTER SUMMARIZED IN KABUL CHAWLA (SUPRA) AS UN DER: I.T.A. NO.5565 & 5566/DEL/2012 11 '37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREM ENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF T HE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PER SON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVI OUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DA TE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPU TED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAK ES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AF OREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTH ER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITI ONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SE ARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOU SLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE CO MPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMEN T CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PR OCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMP LETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, T HE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTIO N 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUG HT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH B Y THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITIO N OF DOCUMENTS OR UNDISCLOSED I.T.A. NO.5565 & 5566/DEL/2012 12 INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEAR CH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE O F ORIGINAL ASSESSMENT.' 61. IT APPEARS THAT A NUMBER OF HIGH COURTS HAVE CO NCURRED WITH THE DECISION OF THIS COURT IN KABUL CHAWLA (SUPRA) BEGINNING WITH T HE GUJARAT HIGH COURT IN PRINCIPAL COMMISSIONER OF INCOME TAX V. SAUMYA CONS TRUCTION PVT. LTD . (SUPRA). THERE, A SEARCH AND SEIZURE OPERATION WAS CARRIED O UT ON 7TH OCTOBER, 2009 AND AN ASSESSMENT CAME TO BE FRAMED UNDER SECTION 143(3) R EAD WITH SECTION 153A(1)(B) IN DETERMINING THE TOTAL INCOME OF THE ASSESSEE OF RS. 14.5 CRORES AGAINST DECLARED INCOME OF RS. 3.44 CRORES. THE ITAT DELETED THE ADD ITIONS ON THE GROUND THAT IT WAS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURIN G THE COURSE OF THE SEARCH IN RESPECT OF AYS UNDER CONSIDERATION I.E., AY 2006-07 . THE GUJARAT HIGH COURT REFERRED TO THE DECISION IN KABUL CHAWLA (SUPRA), O F THE RAJASTHAN HIGH COURT IN JAI STEEL (INDIA), JODHPUR V. ACIT (SUPRA) AND ONE EARLIER DECISION OF THE GUJARAT HIGH COURT ITSELF. IT EXPLAINED IN PARA 15 AND 16 A S UNDER: '15. ON A PLAIN READING OF SECTION 153A OF THE ACT, IT IS EVIDENT THAT THE TRIGGER POINT FOR EXERCISE OF POWERS THEREUNDER IS A SEARCH UNDER SECTION 132 OR A REQUISITION UNDER SECTION 132A OF THE ACT. ONCE A S EARCH OR REQUISITION IS MADE, A MANDATE IS CAST UPON THE ASSESSING OFFICER TO ISSUE NOTICE UNDER SECTION 153A OF THE ACT TO THE PERSON, REQUIRING HIM TO FURNISH THE RET URN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE AND ASSESS OR REASSESS THE SAME . SINCE THE ASSESSMENT UNDER SECTION 153A OF THE ACT IS LINKED WITH SEARCH AND R EQUISITION UNDER SECTIONS 132 AND 132A OF THE ACT, IT IS EVIDENT THAT THE OBJECT OF T HE SECTION IS TO BRING TO TAX THE UNDISCLOSED INCOME WHICH IS FOUND DURING THE COURSE OF OR PURSUANT TO THE SEARCH OR REQUISITION. HOWEVER, INSTEAD OF THE EARLIER REGIME OF BLOCK ASSESSMENT WHEREBY, IT WAS ONLY THE UNDISCLOSED INCOME OF THE BLOCK PERIOD THAT WAS ASSESSED, SECTION 153A OF THE ACT SEEKS TO ASSESS THE TOTAL INCOME FO R THE ASSESSMENT YEAR, WHICH IS CLEAR FROM THE FIRST PROVISO THERETO WHICH PROVIDES THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF E ACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS. THE SECOND PROVISO MAKES THE INTENTION OF THE LEGISLATURE CLEAR AS THE SAME PROVIDES THAT ASSESSM ENT OR REASSESSMENT, IF ANY, RELATING TO THE SIX ASSESSMENT YEARS REFERRED TO IN THE SUB-SECTION PENDING ON THE I.T.A. NO.5565 & 5566/DEL/2012 13 DATE OF INITIATION OF SEARCH UNDER SECTION 132 OR R EQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE. SUB- SECTION (2) OF S ECTION 153A OF THE ACT PROVIDES THAT IF ANY PROCEEDING OR ANY ORDER OF ASSESSMENT O R REASSESSMENT MADE UNDER SUB- SECTION (1) IS ANNULLED IN APPEAL OR ANY OTHER LEGA L PROVISION, THEN THE ASSESSMENT OR REASSESSMENT RELATING TO ANY ASSESSMENT YEAR WHI CH HAD ABATED UNDER THE SECOND PROVISO WOULD STAND REVIVED. THE PROVISO THERETO SA YS THAT SUCH REVIVAL SHALL CEASE TO HAVE EFFECT IF SUCH ORDER OF ANNULMENT IS SET AS IDE. THUS, ANY PROCEEDING OF ASSESSMENT OR REASSESSMENT FALLING WITHIN THE SIX A SSESSMENT YEARS PRIOR TO THE SEARCH OR REQUISITION STANDS ABATED AND THE TOTAL I NCOME OF THE ASSESSEE IS REQUIRED TO BE DETERMINED UNDER SECTION 153A OF THE ACT. SIM ILARLY, SUB- SECTION (2) PROVIDES FOR REVIVAL OF ANY ASSESSMENT OR REASSESSMENT WHICH STOOD ABATED, IF ANY PROCEEDING OR ANY ORDER OF ASSESSMENT OR REASSESSMENT MADE UND ER SECTION 153A OF THE ACT IS ANNULLED IN APPEAL OR ANY OTHER PROCEEDING. 16. SECTION 153A BEARS THE HEADING 'ASSESSMENT IN C ASE OF SEARCH OR REQUISITION'. IT IS 'WELL SETTLED AS HELD BY THE SUPREME COURT IN A CATENA OF DECISIONS THAT THE HEADING OR THE SECTION CAN BE REGARDED AS A KEY TO THE INTERPRETATION OF THE OPERATIVE PORTION OF THE SECTION AND IF THERE IS NO AMBIGUITY IN THE LANGUAGE OR IF IT IS PLAIN AND CLEAR, THEN THE HEADING USED IN THE SE CTION STRENGTHENS THAT MEANING. FROM THE HEADING OF SECTION 153. THE INTENTION OF THE LEGISLATURE IS CLEAR, VIZ ., TO PROVIDE FOR ASSESSMENT IN CASE OF SEARCH AND REQUISITION. WHEN THE VERY PURPOSE OF THE PROVISION IS TO MAKE ASSESSMENT IN CASE OF SEARCH OR REQUISITION, IT GOE S WITHOUT SAYING THAT THE ASSESSMENT HAS TO HAVE RELATION TO THE SEARCH OR RE QUISITION, IN OTHER WORDS, THE ASSESSMENT SHOULD CONNECTED WITH SOMETHING ROUND DU RING THE SEARCH OR REQUISITION VIZ., INCRIMINATING MATERIAL WHICH REVE ALS UNDISCLOSED INCOME. THUS, WHILE IN VIEW OF THE MANDATE OF SUB-SECTION (1) OF SECTION 153A OF THE ACT, IN EVERY CASE WHERE THERE IS A SEARCH OR REQUISITION, THE AS SESSING OFFICER IS OBLIGED TO ISSUE NOTICE TO SUCH PERSON TO FURNISH RETURNS OF INCOME FOR THE SIX YEARS PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH THE SEARCH IS CONDUCTED OR REQUISITION IS MADE, ANY ADDITION' OR DISALLOWANCE CAN BE MADE ONLY ON THE BASIS OF MATERIAL COLLECTED DURING THE SEARCH OR REQUISITION , IN CASE NO INCRIMINATING MATERIAL IS FOUND, AS HELD BY THE RAJASTHAN HIGH CO URT IN THE CASE OF JAI STEEL (INDIA) V. ASST . CIT (SUPRA), THE EARLIER ASSESSMENT WOULD HAVE TO BE REITERATED, IN I.T.A. NO.5565 & 5566/DEL/2012 14 CASE WHERE PENDING ASSESSMENTS HAVE ABATED, THE ASS ESSING OFFICER CAN PASS ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS DETERMI NING THE TOTAL INCOME OF THE ASSESSEE WHICH WOULD INCLUDE INCOME DECLARED IN THE RETURNS, IF ANY, FURNISHED BY THE ASSESSEE AS WELL AS UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH OR REQUISITION. IN CASE WHERE A PENDING REASSESSMENT U NDER SECTION 147 OF THE ACT HAS ABATED, NEEDLESS TO STATE THAT THE SCOPE AND AMBIT OF THE ASSESSMENT WOULD INCLUDE ANY ORDER WHICH THE ASSESSING OFFICER COULD HAVE PA SSED UNDER SECTION 147 OF THE ACT AS WELL AS UNDER SECTION 153A OF THE ACT. XXX 19. ON BEHALF OF THE APPELLANT, IT HAS BEEN CONTEND ED THAT IF ANY INCRIMINATING MATERIAL IS FOUND, NOTWITHSTANDING THAT IN RELATION TO THE YEAR UNDER CONSIDERATION, NO INCRIMINATING MATERIAL IS FOUND, IT WOULD BE PER MISSIBLE TO MAKE ADDITIONS AND DISALLOWANCE IN RESPECT OF AN THE SIX ASSESSMENT YE ARS. IN THE OPINION OF THIS COURT, THE SAID CONTENTION DOES NOT MERIT ACCEPTANCE, INAS MUCH AS. THE ASSESSMENT IN RESPECT OF EACH OF THE SIX ASSESSMENT YEARS IS A SE PARATE AND DISTINCT ASSESSMENT. UNDER SECTION 153A OF THE ACT, ASSESSMENT HAS TO BE MADE IN RELATION TO THE SEARCH OR REQUISITION, NAMELY, IN RELATION TO MATERIAL DIS CLOSED DURING THE SEARCH OR REQUISITION. IF IN RELATION TO ANY ASSESSMENT YEAR, NO INCRIMINATING MATERIAL IS FOUND, NO ADDITION OR DISALLOWANCE CAN BE MADE IN R ELATION TO THAT ASSESSMENT YEAR IN EXERCISE OF POWERS UNDER SECTION 153A OF THE ACT AND THE EARLIER ASSESSMENT SHALL HAVE TO BE REITERATED. IN THIS REGARD, THIS COURT I S IN COMPLETE AGREEMENT WITH THE VIEW ADOPTED BY THE RAJASTHAN HIGH COURT IN THE CAS E OF JAI STEEL (INDIA) V. ASST . CIT (SUPRA). BESIDES, AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL FOR THE RESPONDENT, THE CONTROVERSY INVOLVED IN THE PRESENT CASE STANDS CONCLUDED BY THE DECISION OF THIS COURT IN THE CASE OF CIT V. JAYABE N RATILAL SORATHIA (SUPRA) WHEREIN IT HAS BEEN HELD THAT WHILE IT CANNOT BE DISPUTED T HAT CONSIDERING SECTION 153A OF THE ACT, THE ASSESSING OFFICER CAN REOPEN AND/OR AS SESS THE RETURN WITH RESPECT TO SIX PRECEDING YEARS ; HOWEVER, THERE MUST BE SOME I NCRIMINATING MATERIAL AVAILABLE WITH THE ASSESSING OFFICER WITH RESPECT TO THE SALE TRANSACTIONS IN THE PARTICULAR ASSESSMENT YEAR.' 62. SUBSEQUENTLY, IN PRINCIPAL COMMISSIONER OF INCOME TAX- 1 V. DEVANGI ALIAS RUPA (SUPRA), ANOTHER BENCH OF THE GUJARAT HIGH COU RT REITERATED THE ABOVE LEGAL POSITION FOLLOWING ITS EARLIER DECISION IN PRINCIPAL COMMISSIONER OF INCOME TAX V. I.T.A. NO.5565 & 5566/DEL/2012 15 SAUMYA CONSTRUCTION P. LTD . (SUPRA) AND OF THIS COURT IN KABUL CHAWLA (SUPRA) . AS FAR AS KARNATAKA HIGH COURT IS CONCERNED, IT HAS IN CIT V. IBC KNOWLEDGE PARK P. LTD . (SUPRA) FOLLOWED THE DECISION OF THIS COURT IN KA BUL CHAWLA (SUPRA) AND HELD THAT THERE HAD TO BE INCRIMINATING MATERIAL QUA EAC H OF THE AYS IN WHICH ADDITIONS WERE SOUGHT TO BE MADE PURSUANT TO SEARCH AND SEIZU RE OPERATION. THE CALCUTTA HIGH COURT IN CIT-2 V. SALASAR STOCK BROKING LTD . (SUPRA), TOO, FOLLOWED THE DECISION OF THIS COURT IN KABUL CHAWLA (SUPRA). IN CIT V. GURINDER SINGH BAWA (SUPRA), THE BOMBAY HIGH COURT HELD THAT: '6...ONCE AN ASSESSMENT HAS ATTAINED FINALITY FOR A PARTICULAR YEAR, I.E., IT IS NOT PENDING THEN THE SAME CANNOT BE SUBJECT TO TAX IN P ROCEEDINGS UNDER SECTION 153A OF THE ACT. THIS OF COURSE WOULD NOT APPLY IF INCRI MINATING MATERIALS ARE GATHERED IN THE COURSE OF SEARCH OR DURING PROCEEDINGS UNDER SE CTION 153A OF THE ACT WHICH ARE CONTRARY TO AND/OR NOT DISCLOSED DURING THE REGULAR ASSESSMENT PROCEEDINGS.' 63. EVEN THIS COURT HAS IN CIT V MAHESH KUMAR GUPTA (SUPRA) AND THE PR. COMMISSIONER OF INCOME TAX-9 V. RAM AVTAR VERMA (SUPRA) FOLLOWED THE DECISION IN KABUL CHAWLA (SUPRA). THE DECISION OF THIS COURT IN PR. COMMISSIONER OF INCOME TAX V. KURELE PAPER MILLS P. LTD. (SUPRA) WHICH WAS REFERRED TO IN KABUL CHAWLA (SUPRA) HAS BEEN AFFIRMED BY THE SUPREME COURT BY T HE DISMISSAL OF THE REVENUE'S SLP ON 7TH DECEMBER, 2015. THE DECISION IN DAYAWANTI GUPTA 64. THAT BRINGS US TO THE DECISION IN DAYAWANTI GUP TA (SUPRA). AS RIGHTLY POINTED OUT BY MR. KAUSHIK, LEARNED COUNSEL APPEARING FOR T HE RESPONDENT, THAT THERE ARE SEVERAL DISTINGUISHING FEATURES IN THAT CASE WHICH MAKES ITS RATIO INAPPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THE FIRST PLACE, THE ASSESSEES THERE WERE ENGAGED IN THE BUSINESS OF PAN MASALA AND GUTKHA ETC. THE ANSWERS GIVEN TO QUESTIONS POSED TO THE ASSESSEE IN THE COURSE OF SEARCH AND SURVEY PRO CEEDINGS IN THAT CASE BRING OUT THE POINTS OF DISTINCTION. IN THE FIRST PLACE, IT W AS STATED THAT THE STATEMENT RECORDED WAS UNDER SECTION 132(4) AND NOT UNDER SECTION 133A . IT WAS A STATEMENT BY THE ASSESSEE HIMSELF. IN RESPONSE TO QUESTION NO. 7 WHE THER ALL THE PURCHASES MADE BY THE FAMILY FIRMS, WERE ENTERED IN THE REGULAR BOOKS OF ACCOUNT, THE ANSWER WAS: I.T.A. NO.5565 & 5566/DEL/2012 16 'WE AND OUR FAMILY FIRMS NAMELY M/S ASSAM SUPARI TR ADERS AND M/S BALAJI PERFUMES GENERALLY TRY TO RECORD THE TRANSACTIONS M ADE IN RESPECT OF PURCHASE, MANUFACTURING AND SALES IN OUR REGULAR BOOKS OF ACC OUNTS BUT IT IS ALSO FACT THAT SOME TIME DUE TO SOME FACTORS LIKE INABILITY OF ACC OUNTANT, OUR BUSY SCHEDULE AND SOME FAMILY PROBLEMS, VARIOUS PURCHASES AND SALES O F SUPARI, GUTKA AND OTHER ITEMS DEALT BY OUR FIRMS IS NOT ENTERED AND SHOWN I N THE REGULAR BOOKS OF ACCOUNTS MAINTAINED BY OUR FIRMS.' 65. THEREFORE, THERE WAS A CLEAR ADMISSION BY THE A SSESSEES IN DAYAWANTI GUPTA (SUPRA) THERE THAT THEY WERE NOT MAINTAINING REGULA R BOOKS OF ACCOUNTS AND THE TRANSACTIONS WERE NOT RECORDED THEREIN. 66. FURTHER, IN ANSWER TO QUESTION NO. 11, THE ASSE SSEE IN DAYAWANTI GUPTA (SUPRA) WAS CONFRONTED WITH CERTAIN DOCUMENTS SEIZE D DURING THE SEARCH. THE ANSWER WAS CATEGORICAL AND READS THUS: 'ANS:- I HEREBY ADMIT THAT THESE PAPERS ALSO CONTEN D DETAILS OF VARIOUS TRANSACTIONS INCLUDE PURCHASE/ SALES/ MANUFACTURING TRADING OF G UTKHA, SUPARI MADE IN CASH OUTSIDE BOOKS OF ACCOUNTS AND THESE ARE ACTUALLY UN ACCOUNTED TRANSACTIONS MADE BY OUR TWO FIRMS NAMELY M/S ASOM TRADING AND M/S. BALA JI PERFUMES.' 67. BY CONTRAST, THERE IS NO SUCH STATEMENT IN THE PRESENT CASE WHICH CAN BE SAID TO CONSTITUTE AN ADMISSION BY THE ASSESSEE OF A FAILUR E TO RECORD ANY TRANSACTION IN THE ACCOUNTS OF THE ASSESSEE FOR THE AYS IN QUESTION. O N THE CONTRARY, THE ASSESSEE HEREIN STATED THAT, HE IS REGULARLY MAINTAINING THE BOOKS OF ACCOUNTS. THE DISCLOSURE MADE IN THE SUM OF RS. 1.10 CRORES WAS ONLY FOR THE YEAR OF SEARCH AND NOT FOR THE EARLIER YEARS. AS ALREADY NOTICED, THE BOOKS OF ACC OUNTS MAINTAINED BY THE ASSESSEE IN THE PRESENT CASE HAVE BEEN ACCEPTED BY THE AO. I N RESPONSE TO QUESTION NO. 16 POSED TO MR. PAWAN GADIA, HE STATED THAT THERE WAS NO POSSIBILITY OF MANIPULATION OF THE ACCOUNTS. IN DAYAWANTI GUPTA (SUPRA), BY CON TRAST, THERE WAS A CHART PREPARED CONFIRMING THAT THERE HAD BEEN A YEAR-WISE NON-RECORDING OF TRANSACTIONS. IN DAYAWANTI GUPTA (SUPRA), ON THE BASIS OF MATERIA L RECOVERED DURING SEARCH, THE ADDITIONS WHICH WERE MADE FOR ALL THE YEARS WHEREAS ADDITIONS IN THE PRESENT CASE WERE MADE BY THE AO ONLY FOR AY 2004-05 AND NOT ANY OF THE OTHER YEARS. EVEN THE I.T.A. NO.5565 & 5566/DEL/2012 17 ADDITIONS MADE FOR AYS 2004-05 WERE SUBSEQUENTLY DE LETED BY THE CIT(A), WHICH ORDER WAS AFFIRMED BY THE ITAT. EVEN THE REVENUE HA S CHALLENGED ONLY TWO OF SUCH DELETIONS IN ITA NO. 306/2017. 68. IN PARA 23 OF THE DECISION IN DAYAWANTI GUPTA ( SUPRA), IT WAS OBSERVED AS UNDER: '23. THIS COURT IS OF OPINION THAT THE ITAT'S FINDI NGS DO NOT REVEAL ANY FUNDAMENTAL ERROR, CALLING FOR CORRECTION. THE INFERENCES DRAWN IN RESPECT OF UNDECLARED INCOME WERE PREMISED ON THE MATERIALS FOUND AS WELL AS THE STATEMENTS RECORDED BY THE ASSESSEES. THESE ADDITIONS THEREFORE WERE NOT BASEL ESS. GIVEN THAT THE ASSESSING AUTHORITIES IN SUCH CASES HAVE TO DRAW INFERENCES, BECAUSE OF THE NATURE OF THE MATERIALS - SINCE THEY COULD BE SCANTY (AS ONE HABI TUALLY CONCEALING INCOME OR INDULGING IN CLANDESTINE OPERATIONS CAN HARDLY BE E XPECTED TO MAINTAIN METICULOUS BOOKS OR RECORDS FOR LONG AND IN ALL PROBABILITY BE ANXIOUS TO DO AWAY WITH SUCH EVIDENCE AT THE SHORTEST POSSIBILITY) THE ELEMENT O F GUESS WORK IS TO HAVE SOME REASONABLE NEXUS WITH THE STATEMENTS RECORDED AND D OCUMENTS SEIZED. IN TILLS CASE, THE DIFFERENCES OF OPINION BETWEEN THE CIT (A) ON T HE ONE HAND AND THE AO AND ITAT ON THE OTHER CANNOT BE THE SOLE BASIS FOR DISA GREEING WITH WHAT IS ESSENTIALLY A FACTUAL SURMISE THAT IS LOGICAL AND PLAUSIBLE. THES E FINDINGS DO NOT CALL FOR INTERFERENCE. THE SECOND QUESTION OF LAW IS ANSWERE D AGAIN IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE.' 69. WHAT WEIGHED WITH THE COURT IN THE ABOVE DECISI ON WAS THE 'HABITUAL CONCEALING OF INCOME AND INDULGING IN CLANDESTINE O PERATIONS' AND THAT A PERSON INDULGING IN SUCH ACTIVITIES 'CAN HARDLY BE ACCEPTE D TO MAINTAIN METICULOUS BOOKS OR RECORDS FOR LONG.' THESE FACTORS ARE ABSENT IN T HE PRESENT CASE. THERE WAS NO JUSTIFICATION AT ALL FOR THE AO TO PROCEED ON SURMI SES AND ESTIMATES WITHOUT THERE BEING ANY INCRIMINATING MATERIAL QUA THE AY FOR WHI CH HE SOUGHT TO MAKE ADDITIONS OF FRANCHISEE COMMISSION. 70. THE ABOVE DISTINGUISHING FACTORS IN DAYAWANTI G UPTA (SUPRA), THEREFORE, DO NOT DETRACT FROM THE SETTLED LEGAL POSITION IN KABUL CH AWLA (SUPRA) WHICH HAS BEEN I.T.A. NO.5565 & 5566/DEL/2012 18 FOLLOWED NOT ONLY BY THIS COURT IN ITS SUBSEQUENT D ECISIONS BUT ALSO BY SEVERAL OTHER HIGH COURTS. 71. FOR ALL OF THE AFOREMENTIONED REASONS, THE COUR T IS OF THE VIEW THAT THE ITAT WAS JUSTIFIED IN HOLDING THAT THE INVOCATION OF SECTION 153A BY THE REVENUE FOR THE AYS 2000-01 TO 2003-04 WAS WITHOUT ANY LEGAL BASIS AS THERE WAS NO INCRIMINATING MATERIAL QUA EACH OF THOSE AYS. CONCLUSION 72. TO CONCLUDE: (I) QUESTION (I) IS ANSWERED IN THE NEGATIVE I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. IT IS HELD THAT IN THE FACTS A ND CIRCUMSTANCES, THE REVENUE WAS NOT JUSTIFIED IN INVOKING SECTION 153A OF THE ACT AGAINST THE ASSESSEE IN RELATION TO AYS 2000-01 TO AYS 2003-04. (II) QUESTION (II) IS ANSWERED IN THE AFFIRMATIVE I .E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. IT IS HELD THAT WITH REFERENCE TO AY 2004-05, THE ITAT WAS CORRECT IN CONFIRMING THE ORDERS OF THE CIT (A) TO THE EXTENT IT DELETED THE ADDITIONS MADE BY THE AO TO THE TAXABLE INCOME OF THE ASSESSE E OF FRANCHISE COMMISSION IN THE SUM OF RS. 88 LAKHS AND RENT PAYMENT FOR THE SU M OF RS. 13.79 LAKHS. 9. THUS, RESPECTFULLY THE RATIO AND THE PRINCIPLE L AID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT, WE HOLD T HAT NONE OF THE ADDITIONS MADE BY THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT YEARS 2006-07 AND 2007-08 ARE BASED ON A NY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH PERTAINING TO THESE ASSESSMENT YEARS, AND THEREFORE , WE HOLD THAT THESE ADDITIONS ARE BEYOND THE SCOPE OF ASSESS MENT FRAMED U/S.153A/143(3). ON THIS LEGAL GROUND ALONE, THE ADDITIONS MADE BY THE ASSESSING OFFICER ARE DELETED . I.T.A. NO.5565 & 5566/DEL/2012 19 8. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH AUGUST, 2020 SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] [ACCOUNTANT MEMBER] JUDICIAL MEMBER DATED: 27/08/2020 PKK: