DCIT, New Delhi V. M/s. Green Age Consultants Pvt. Ltd., New Delhi

ITA 5957/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90908 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 12-03-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 06-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S GILL
• Assessee Lawyers: B K DHINGRA
• Keywords: Unexplained cash credit; Unexplained investment; Unexplained expenditure; Gift; Income from undisclosed sources; Search and seizure; Document seized; Principle of natural justice; Reasonable cause; Accommodation entries; Assessment record; Block assessment; Documents seized; Reassessment proceedings
• Section: 69C; 40A(3); 143(3); 153A; 133(6); 68; 69; 37; 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C : NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI C.M. GARG, JUDICIAL MEMBER ITA NO S . 5957 TO 5962 /DEL/2013 ASSESSMENT YEAR S : 2003 - 04 TO 2008 - 09 DCIT, VS. GREEN AGE CONSULTANTS P. LTD., CENTRAL CIRCLE - 21, (NOW KNOWN AS: DANDY NEW DELHI. AGENCIES PVT. LTD.) , B - 340, SECOND FLOOR, HARI NAGAR, NEW DELHI. AACCG5149H (APPELLANT) (RESPONDENT) & CROSS OBJECTION NOS. 323 TO 328 /DEL/2014 (IN ITA NOS. 5957 TO 5962 /DEL/2013) ASSESSMENT YEARS: 2003 - 04 TO 2008 - 09 GREEN AGE CONSULTANTS P. LTD., VS. DCIT, B - 340, SECOND FLOOR, HARI NAGAR, CENTRAL CIRCLE 21, NEW DELHI. NEW DELHI. AACCG5149H (APPELLANT) (RESPONDENT) APPELLANT BY : SH. R.I.S. GILL, CIT - DR RESPONDENT BY : SH. B.K. DHINGRA, CA DATE OF HEARING: 12.03.2015 DATE OF PRONOUNCEMENT: 2 9 . 0 4 . 2 0 1 5 ORDER PER BENCH THESE APPEALS FILED BY THE REVENUE AND CROSS OBJECTIONS FILED BY THE ASSESSEE HAVE BEEN PREFERRED AGAINST THE ORDER S OF THE 2 COMMISSIONER OF INCOME TAX (APPEALS) - II, NEW DELHI DATED 16/09/2013 IN APPEAL NO. 357 TO 362 /2010 - 11 FOR A.YS. 2003 - 04 TO 2008 - 09 RESPECTIVELY. THE APPEALS AND CROSS OBJECTIONS UNDER CONSIDERATION HAV E ARISEN FROM SIMILAR ORDER OF CIT(A) - II, DELHI. THEREFORE, WE HAVE CLUBBED THEM TOGETHER AND ADJUDICATING THEM BY THIS CONSOLIDATED ORDER. 2. BRIEFLY STATED THE FACTS GIVING RISE TO THESE APPEALS AND ASSESSEE S CROSS OBJECTIONS ARE THAT A SEARCH AND SE IZURE OPERATION U/S 132 OF THE INCOME TAX ACT, 1961 (THE ACT) WAS CARRIED OUT IN THE CASES OF SHRI B.K. DHINGRA, SMT. POONAM DHINGRA & M/S MADHUSUDAN BUILDCON PRIVATE LIMITED ON 20/10/2008. DURING THE COURSE OF SEARCH AND SEIZURE OPERATION CERTAIN DOCUMEN TS BELONGING TO THE PRESENT ASSESSEE WERE SEIZED AND ON THE BASIS OF THE SAME DOCUMENTS , SO FOUND BELONGING TO THE ASSESSEE COMPANY, PROCEEDINGS WERE INITIATED U/S 153C READ WITH SECTION 153A OF THE ACT. INITIALLY THE CASES WERE CENTRALIZED WITH ACIT, CEN TRAL CIRCLE - 17, U/S 127 OF THE ACT AND SUBSEQUENTLY TRANSFERRED TO CENTRAL CIRCLE - 21 BY ANOTHER ORDER U/S 127 OF THE ACT DATED 19/10/2010. A NOTICE U/S 153C OF THE ACT WAS ISSUED TO THE ASSESSEE COMPANY FOR FILING RETURN FOR A.Y. 2003 - 04 TO 2008 - 09 AND IN RESPONSE TO THE SAID NOTICE FILED RETURN FO R ALL SIX ASSESSMENT YEARS ON 11 /11/2010. THE AO DISPATCHED THE PUNCHNAMA, REASONS FOR ISSUING NOTICE U/S 153C OF THE ACT AND JURISDICTION ORDER DATED 19/ 10/2010 U/S 127 OF THE ACT ON 12 /11/2010 AS SOUGHT BY THE ASSESSEE. 3 3. THE AO REJECTED LEGAL CONTENTIONS OF THE ASSESSEE AND MADE ADDITIONS U/S 69C OF THE ACT PERTAINING TO UNEXPLAINED PURCHASES AND ALSO MADE DISALLOWANCE OF EXPENDITURE AS PER DISCUSSIONS IN THE RESPECTIVE ASSESSMENT ORDERS. 4. THE ASSESSEE PREFERRED AN APPEAL BEFORE CIT(A) WHICH WAS PARTLY DISMISSED ON LEGAL CONTENTIONS OF THE ASSESSEE BUT THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE ON MERITS DELETING THE ADDITIONS MADE BY THE AO. THE CIT(A) ALSO DIRECTED THE AO TO WORK OUT THE PEA K FROM THE ENTRIES IN THE CASH BOOK OF THE ASSESSEE FOR THE RELEVANT YEAR TO MAKE A SINGULAR ADDITION OF THE SAID PEAK AMOUNT AS UNEXPLAINED INVESTMENT/ EXPENDITURE /CASH CREDIT. NOW THE AGGRIEVED REVENUE IS BEFORE THIS TRIBUNAL AGAINST THE PART RELIEF GRAN TED BY THE CIT(A) DELETING ADDITIONS MADE UNDER THE ASSESSMENT ORDER PASSED U/S 143(3) READ WITH SECTION 153C OF THE ACT IN ALL SIX ASSESSMENT YEARS. THE ASSESSEE HAS ALSO PREFERRED CROSS OBJECTIONS CHALLENGING THE CONCLUSION OF THE CIT(A) IN NOT HOLDING THAT THE NOTICE ISSUED U/S 153C OF THE ACT AND ASSESSMENT ORDER PASSED U/S 153C/1 43(3) OF THE ACT ARE ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION. 5. THE ASSESSEE HAS ALSO CHALLENGED THAT THE CIT(A) HAS ERRED IN DIRECTING THE AO TO WORK OUT THE PEAK FRO M THE ENTRIES IN THE CASH BOOK OF THE ASSESSEE COMPANY FOR THE RELEVANT ASSESSMENT YEARS. IT IS ALSO RELEVANT TO MENTION THAT THE AO ALSO MADE AN ADDITION OF RS. 98,000 / - IN 4 A.Y. 2003 - 04 U/S 68 OF THE ACT ON ACCOUNT OF UNEXPLAINED CASH CREDIT IN REGARD TO SHARE CAPITAL BUT THIS ADDITION WAS ALSO DELETED BY THE CIT(A) AND THE REVENUE HAS ALSO RAISED GROUND NO. 3 IN ITS APPEAL FOR A.Y. 2003 - 04. 6 . CROSS OBJECTIONS OF THE ASSESSEE IN ALL SIX ASSESSMENT YEARS : IN THE BEGINNING OF THE ARGUMENTS THE LD. AR REQUESTED THAT THE CROSS OBJECTIONS OF THE ASSESSEE BEING LEGAL GROUNDS MAY BE ADJUDICATED FIRST AND THE LD. DR FAIRLY SUBMITTED THAT HE HAS NO OBJECTION IF LEGAL OBJECTIONS OF THE ASSESSEE ARE HEARD FIRST. HENCE, WE ARE FIRST TAKING UP CROSS OBJE CTIONS OF THE ASSESSEE FOR HEARING AND ADJUDICATION. ALTHOUGH THE ASSESSEE HAS TAKEN CROSS OBJECTIONS 1 TO 4 IN ALL SIX ASSESSMENT YEARS WHICH ARE SIMILARLY WORDED BUT EXCEPT MAIN CROSS OBJECTION NO. 1 OTHER CROSS OBJECTIONS ARE ARGUMENTATIVE AND SUPPORTI NG TO THE MAIN CROSS OBJECTION NO. 1WHICH READS AS UNDER: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISION OF LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE NOTICE ISSUED U/S 153C AND ASSESSMENT ORDER PASSED BY THE LD. AO U/S 153C/143(3) IS ILLEGAL, BAD IN LAW, TIME BARRED, WITHOUT JURISDICTION AND WRONG ON FACTS. THE ADDITIONS MADE ARE UNJUST, UNLAWFUL AND ARBITRARY AND ARE MADE AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 7 . WE HAVE HEARD ARGUMENT OF BOTH THE SIDES AND CAREF ULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD BEFORE US , INTER - ALIA, ASSESSMENT ORDER, IMPUGNED ORDER, ASSE SSEES PAPER BOOK SPREAD OVER 78 PAGES, SECOND PAPE R BOOK SPREAD ON MERITS OVER 164 PAGES AND CASE LAWS 5 PAPER BOOK SPREAD OVER 209 PAGES . THE LD. AR SUBMITTED THAT THE DOCUMENTS FOUND DURING THE SEARCH AND SEIZURE OPERATIONS AS MENTIONED IN THE SATISFACTION NOTE, RECORDED BY THE AO OF THE ASSESSEE (THE PERSON OTHER THAN THE PERSON SEARCHED), ON 30.09.2010 (PAPER BOOK - I PAGE 11) DO NOT BELONG TO THE ASSESSEE COMPANY AS THESE WERE THE PART OF WORKING PAPERS OF CHARTERED ACCOUNTANT OF THE ASSESSEE S COMPANY SHRI B.K. DHINGRA WHOSE OFFICE WAS SEARCHED ON 20/10/2008. THE LD. AR ALSO SUBMITTED THAT THE PROCEEDINGS HAVE BEEN INITIATED AND THE ASSESSMEN T HAS BEEN FRAMED IN NON - CONFIRMATION WITH THE STATUTORY PROVISIONS OF SECTION 143(3) READ WITH SECTION 153C OF THE ACT AND, THEREFORE, THE CIT(A) WAS NOT JUSTIFIED ON FACTS AND IN LAW IN CONFIRMING AND UPHOLDING THE ACTION OF THE AO AND REJECTING THE LEGA L CONTENTIONS OF THE ASSESSEE. 8 . THE LD. AR STRENUOUSLY CONTENDED THAT THE CIT(A) WAS NOT JUSTIFIED AND GROSSLY ERRED IN NOT CONSIDERING THE FACT THAT THE ASSESSMENT PROCEEDINGS FOR ALL SIX ASSESSMENT YEARS UNDER APPEAL WERE NOT PENDING ON THE DATE OF R ECORDING OF SATISF ACTION U/S 153C OF THE ACT (ON 3 0/09/2010) AND ACCORDINGLY, THE SAME DID NOT ABATE FOR THE PURPOSE OF INITIATION OF PROCEEDINGS U/S 153C OF THE ACT AND AS SUCH THE REASSESSMENT ORDER U/S 143(3) READ WITH SECTION 153C OF THE ACT BEING BAD IN LAW, ILLEGAL AND WITHOUT JURISDICTION DESERVES TO BE QUASHED. THE LD. AR VEHEMENTLY CONTENDED THAT THE CASE OF THE ASSESSEE IS SQUARELY 6 COVERED BY THE DECISION OF ITAT A BENCH IN THE CASE OF M/S AQUA GUARD MARKETING PVT. LTD. IN ITA NO. 4949/DEL/2013 AND ITA NOS. 5424 TO 5429/DEL/2013 FOR ASSESSMENT YEARS 2003 - 04 TO 2008 - 09. THE LD. AR ALSO POINTED OUT THAT IN THE SIMILAR SET OFF FACTS AND CIRCUMSTANCES ITAT C BENCH, DELHI IN ITA NO. 4197 TO 4202/DEL/2012 AND CO NO. 380 TO 385/DEL/2012, ACIT VS. IN LEY MARKETING PVT. LTD. HAVE ALREADY ADJUDICATED AND DISMISSED THE APPEAL OF THE ASSESSEE, VIDE ORDER DATED 14/11/2014 AND PRESENT CASE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THIS ORDER. 9 . THE LD. AR ALSO POINTED OUT THAT IN THE SIMILAR SET OFF FACTS AND CIRCUMSTANCES ITAT DELHI H BENCH IN THE CASE OF TANVEER COLLECTIONS PVT. LTD. VS. ACIT (2015) 168 TTJ 145 (DT) HAS CATEGORICALLY HELD THAT WHERE THE AO OF THE PERSONS SEARCHED DID NOT RECORD ANY SATISFACTION THAT SOME MONEY, BULLION, JEWELLERY OR BOOKS OF ACCOUNTS OR OTHER DOCUMENTS FOUND FROM THESE PERSONS BELONG TO ASSESSEE THEN INITIATION OF PROCEEDINGS U/S 153C OF THE ACT ON THE ASSESSEE WAS VOID ABINITIO . 10 . THE LD. DR FAIRLY ACCEPTED THAT THE FACTS AND CIRCUMSTA NCES IN THE CASES OF ACIT VS. IN LEY MARKETING (SUPRA) AND THE TANVEER COLLECTION P. LTD. VS. ACIT ARE SIMILAR. HOWEVER, THE LD. DR POINTED OUT THAT THE ORDERS OF THE TRIBUNAL HAVE NOT ATTAINED FINALITY. ON CAREFUL CONSIDERATION OF SUBMISSIONS, WE NOTE THAT ITAT DELHI IN THE CASE OF TANVEER COLLECTIONS PVT. LTD. HAS HELD AS UNDER: 7 12. LET US EXAMINE THE FACTS OF THE INSTANT CASE MORE ELABORATELY. IT IS SEEN THAT SOME SATISFACTION WAS RECORDED, A COPY OF WHICH IS AVAILABLE ON PAGE 4 OF THE PAPER BOOK, AS UNDER : - 'SATISFACTION N OTE FOR ISSUING NOTICE U/S 153C OF THE I.T. ACT, 1961 IN THE CASE OF M/S TANVEER COLLECTION PVT. LTD., RZ - 126, WEST SAGAR PUR, SHANKAR PARK, NEW DELHI, PAN: AACCT6679D FOR A.Y. 2003 - 04 TO 2008 - 09. 08.09.2010 IN THE CASE OF SH. B.K. DHINGRA, SMT. POONAM DH INGRA AND M/S MADHUSUDAN BUILDCON PVT. LTD., SEARCH & SEIZURE TOOK PLACE U/S 132 ON 20.10.2008. THE UNDERSIGNED IS THE JURISDICTIONAL AO OF THIS CASE. DURING THE COURSE OF SEARCH & SEIZURE DOCUMENTS/PAPERS AT PAGES 101 TO 132 OF ANNEXURE A - 30, PAGE 144 OF ANNEXURE 7 AND PAGES 33 TO 48 OF ANNEXURE 22 SEIZED BY PARTY R - 2, ARE FOUND TO BELONG TO M/S TANVEER COLLECTION PVT. LTD., RZ - 126, WEST SAGAR PUR, SHANKAR PARK, NEW DELHI. I HAVE EXAMINED THE ABOVE MENTIONED DOCUMENTS/PAPERS AND PROVISION OF SECTION 153C IS INVOKEABLE IN THIS CASE. AS THE UNDERSIGNED IS ALSO THE JURISDICTIONAL AO OF M/S TANVEER COLLECTION PVT. LTD., RZ - 126, WEST SAGAR PUR, SHANKAR PARK, NEW DELHI. THIS SATISFACTION NOTE IS RECORDED AND IS PLACED IN THE FILE BEFORE ISSUING NOTICE U/S 153C. 13. IT CAN BE SEEN FROM THE ASSESSMENT ORDER THAT NOTICE U/S 153C WAS ISSUED TO THE ASSESSEE BY THE ACIT, CENTRAL CIRCLE - 17 ON 08.09.2010, BEING THE SAME DATE ON WHICH THE ABOVE SATISFACTION WAS RECORDED. IT IS APPARENT THAT IT WAS : ' SATISFACTION NOTE F OR ISSUING NOTICE U/S 153C OF THE I.T. ACT, 1961 IN THE CASE OF M/S TANVEER COLLECTION PVT. LTD.' IT IS FURTHER NOTICEABLE FROM THE ABOVE THAT : 'THIS SATISFACTION NOTE IS RECORDED AND IS PLACED IN THE FILE BEFORE ISSUING NOTICE U/S 153C.' THE CONTENTS OF THE ABOVE SATISFACTION NOTE LEAVE NOTHING TO DOUBT THAT IT WAS RECORDED BY THE AO OF THE ASSESSEE BEFORE TAKING UP THE ASSESSMENT U/S 153C OF THE ACT PURSUANT TO THE SEARCH CONDUCTED ON SHRI B.K. DHINGRA, SMT. POONAM DHINGRA AND M/S MADHUSUDAN BUILDCON PV T. LTD. PAGES 5 - 7 OF THE PAPER BOOK ARE THE COPIES OF THE REPLY FURNISHED BY THE DY. COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE - 17, NEW DELHI TO SHRI B.K. DHINGRA, SMT. POONAM DHINGRA AND M/S MADHUSUDAN BUILDCON PVT. LTD., UNDER THE PROVISIONS OF RTI ACT, 2005. THE RELEVANT PART OF THE REPLY DATED 10.6.2013 GIVEN TO SH. B.K. DHINGRA, IS AS UNDER: - '2. FROM THE ASSESSMENT RECORDS OF SH. BHUPESH KUMAR DHINGRA, WHICH IS COVERED UNDER SECTION 153A, FOR THE ASST. YEARS FROM 2003 - 04 TO 2008 - 09 (BLOCK PERIOD) IT IS NOTICED THAT THERE IS NO 'SATISFACTION NOTE' AVAILABLE/RECORDED IN RESPECT OF OTHER ENTITIES.' 14. SIMILAR REPLIES HAVE BEEN GIVEN TO SMT. POONAM DHINGRA AND M/S MADHUSUDAN BUILDCON PVT. LTD. ON A CONSIDERATION OF THE ABOVE 8 REPLIES GIVEN BY THE DEPAR TMENT TO THE PERSONS SEARCHED, IT IS MANIFEST THAT THERE IS 'NO SATISFACTION NOTE AVAILABLE/RECORDED IN RESPECT OF OTHER ENTITIES'. ON A CONJOINT READING OF THE SATISFACTION NOTE AND REPLIES GIVEN BY THE DEPARTMENT TO THE PERSONS SEARCHED UNDER THE RTI ACT , IT CLEARLY EMERGES THAT NO SATISFACTION WAS RECORDED BY THE AO IN THE CASES OF THE PERSONS SEARCHED U/S 132(1) OF THE ACT (I.E. SHRI B.K. DHINGRA, SMT. POONAM DHINGRA AND M/S MADHUSUDAN BUILDCON PVT. LTD.) THAT SOME BOOKS OF ACCOUNT OR DOCUMENTS ETC. BEL ONGING TO THE ASSESSEE WERE FOUND WHICH WERE HANDED OVER TO THE AO OF THE 'OTHER PERSON' (I.E. THE ASSESSEE). THE SATISFACTION NOTE AS REPRODUCED ABOVE HAS BEEN PREPARED BY THE AO OF THE ASSESSEE. 15. THE LD. DR VEHEMENTLY ACCENTUATED ON THE POINT THAT SI NCE THE AO OF THE PERSONS SEARCHED AND THE ASSESSEE IS SAME, IT DOES NOT MAKE ANY DIFFERENCE WHETHER THE SATISFACTION IS RECORDED IN THE CASE OF THE PERSONS SEARCHED OR OTHER PERSON. SHE EMPHASIZED ON THE FACTUM OF RECORDING ITA NO.2421/DEL/2014 SATISFA CTION BY THE AO, WHICH CONDITION IN HER OPINION STOOD SATISFIED, BY VIRTUE OF IT HAVING BEEN RECORDED BY THE COMMON AO. 16. IN OUR CONSIDERED OPINION, THIS CONTENTION ADVANCED ON BEHALF OF THE REVENUE IS DEVOID OF MERIT. WE FAIL TO COMPREHEND AS TO HOW TH E REQUIREMENT OF RECORDING SATISFACTION BY THE AO OF THE PERSON SEARCHED PROVIDED BY THE STATUTE CAN BE SUBSTITUTED WITH ANYTHING ELSE. THERE IS AN UNDERLYING RATIONALE IN PROVIDING FOR RECORDING OF SUCH SATISFACTION BY THE AO OF THE PERSON SEARCHED. AS TH E MONEY, BULLION, JEWELLERY, BOOKS OF ACCOUNT OR DOCUMENTS ETC. ALWAYS COME TO THE POSSESSION OF THE AO OF THE PERSON SEARCHED WHO HAS TO FRAME ASSESSMENT, IT IS ONLY HE WHO CAN FIND OUT THAT WHICH OF SUCH DOCUMENTS ETC. DO NOT BELONG TO THE PERSON SEARCHE D AND ARE RELEVANT FOR THE ASSESSMENT OF THE OTHER PERSON. IT IS NOT AS IF ALL THE BOOKS OF ACCOUNT AND DOCUMENTS ETC. FOUND DURING THE COURSE OF A SEARCH ARE EVALUATED BY A SEPARATE AUTHORITY TO FIGURE OUT THAT WHICH OF THESE DOCUMENTS BELONG TO THE PERSO N SEARCHED AND TO THE OTHERS AND THUS HANDED OVER TO THE CONCERNED AOS OF THE PERSON SEARCHED AND OTHERS FOR MAKING ASSESSMENT. AS IT IS ONLY THE AO OF THE PERSON SEARCHED WHO CAN REACH A CONCLUSION THAT SOME OF THE DOCUMENTS ETC. DO NOT BELONG TO THE PERSON SEARCHED BUT TO SOME OTHER PERSON, THE LEGISLATURE HAS PROVIDED FOR RECORDING OF SUCH SATISFACTION BY THE AO OF THE PERSON SEARCHED. IT IS NOT PERMISSIBLE UNDER THE LAW TO REQUIRE THE AO OF THE OTHER PERSON TO RECORD SUCH SATISFACTION BY THE AO. 17. AS REGARDS THE OTHER ARGUMENT OF THE LD. DR THAT SINCE THE AO OF BOTH THE PERSONS SEAR CHED AND THE ASSESSEE IS THE SAME PERSON, HENCE 9 THE REQUIREMENT OF RECORDING SATISFACTION BY THE AO OF THE PERSONS SEARCHED SHOULD BE DEEMED TO HAVE BEEN FULFILLED WITH THE RECORDING OF SATISFACTION BY THE AO OF THE ASSESSEE. WE ARE AGAIN UNABLE TO APPRECI ATE THIS CONTENTION THAT THE COMMONNESS OF THE AO WOULD MAKE NO DIFFERENCE IN SO FAR AS THE RECORDING OF SATISFACTION IN THE CASE OF THE PERSONS SEARCHED IS CONCERNED. WHAT IS RELEVANT FOR THIS PURPOSE IS NOT THE IDENTITY OF THE PERSON ASSESSING BUT HIS PO SITION AND THE CAPACITY. WHEN THE LAW REQUIRES THE AO OF THE PERSON SEARCHED TO RECORD THE NECESSARY SATISFACTION, IT IS THE AO HAVING JURISDICTION OVER THE PERSON SEARCHED WHO IS OBLIGED TO RECORD SUCH SATISFACTION IN THE CAPACITY OF THAT AO AND THAT T OO IN THE CASE OF THE PERSON SEARCHED. THE MERE FACT THAT THE AO OF THE PERSON SEARCHED AND THE ASSESSEE IS THE SAME PERSON, DOES NOT, IN ANY MANNER, OBLITERATE THE REQUIREMENT OF LAW NECESSITATING THE RECORDING OF SATISFACTION IN THE CASE OF THE PERSON SE ARCHED THAT MONEY, BULLION, JEWELLERY, ETC., FOUND FROM THE PERSON SEARCHED BELONGS TO THE 'OTHER PERSON.' WHAT IS CRUCIAL TO NOTE IS CAPACITY OF THE AO AND NOT HIS IDENTITY. IN VIEW OF THE FACT THAT WHEN THE STATUTORY STIPULATION IS FOR RECORDING THE SATI SFACTION BY THE AO OF THE PERSON SEARCHED, THEN, IT CANNOT BE SUBSTITUTED WITH THE SATISFACTION OF THE AO OF THE 'OTHER PERSON.' THIS CONTENTION ALSO FAILS. 18. AT THIS STAGE, IT IS RELEVANT TO NOTE THAT THE LEGISLATURE HAS SUBSTITUTED THE LATTER PART OF SECTION 153C(1) BY THE FINANCE (NO.2) ACT, 2014 W.E.F. 1.10.2014. THE HITHERTO PART OF SUB - SECTION (1) : 'AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE NOTICE AND ASSESS OR REASSESS THE INCOME OF THE OTHER PERSON ..... ....REFERRED TO IN SUB - SECTION (1) OF SECTION 153A.' HAS BEEN SUBSTITUTED AS UNDER : - 'AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE NOTICE AND ASSESS OR REASSESS THE INCOME OF THE OTHER PERSON IN ACCORDANCE WITH THE P ROVISIONS OF SECTION 153A, IF, THAT ASSESSING OFFICER IS SATISFIED THAT THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED HAVE A BEARING ON THE DETERMINATION OF THE TOTAL INCOME OF SUCH OTHER PERSON FOR THE RELEVANT ASSESSMENT YEAR OR YEA RS REFERRED TO IN SUB - SECTION (1) OF SECTION.' 19. THE ABOVE SUBSTITUTION HAS THE EFFECT OF NOW MAKING IT MANDATORY FOR THE AO OF THE 'OTHER PERSON' ALSO TO RECORD SATISFACTION THAT THE BOOKS OF ACCOUNT OR DOCUMENTS, ETC., HAVE A BEARING ON THE DETERMINATION OF THE TOTAL INCOME OF SUCH 'OTHER PERSON' B EFORE EMBARKING UPON THE EXERCISE OF HIS ASSESSMENT OR REASSESSMENT. THEREFORE, NOW UNDER THE LAW, W.E.F. 1.10.2014 IT HAS BECOME OBLIGATORY NOT ONLY FOR THE AO OF THE PERSON SEARCHED TO RECORD 10 SATISFACTION BEFORE HANDING OVER BOOKS OF ACCOUNT OR DOCUMENTS , ETC., TO THE AO OF THE 'OTHER PERSON', BUT, SUCH AO OF THE 'OTHER PERSON' IS ALSO REQUIRED TO RECORD SATISFACTION THAT THE BOOKS OF ACCOUNT OR DOCUMENTS, ETC. HAVE A BEARING ON THE DETERMINATION OF THE TOTAL INCOME OF SUCH OTHER PERSON. IN THE PRE - SUB STITUTION ERA OF THE RELEVANT PART OF SUB - SECTION (1) OF SECTION 153C COVERING THE PERIOD UNDER CONSIDERATION, THE JURISDICTIONAL CONDITION REMAINS THAT THE SATISFACTION IS REQUIRED TO BE RECORDED BY AND IN THE CASE OF THE PERSON SEARCHED SO AS TO ENABLE T HE AO OF THE 'OTHER PERSON' TO START WITH THE PROCEEDINGS FOR MAKING ASSESSMENT OR REASSESSMENT. 20. THE LD. DR CONTENDED THAT RECORDING OF SATISFACTION BY THE AO OF THE ASSESSEE AT THE MOST CAN BE TREATED AS A TECHNICAL MISTAKE AND HENCE SHOULD NOT ECLIP SE THE ASSESSMENT. RELYING ON CERTAIN JUDGMENTS, THE LD. DR SUBMITTED THAT THE TECHNICALITIES CANNOT BE ALLOWED TO PREVAIL IN THE COURSE OF INDULGENCE OF JUSTICE. 21. WE AGREE IN PRINCIPLE THAT TECHNICALITIES CANNOT COME IN THE WAY OF DISPENSATION OF JUST ICE. HOWEVER, IT IS IMPORTANT TO NOTE THAT THE LACK OF JURISDICTION BY THE AO CANNOT BE PUT UNDER THE CARPET IN THE GUISE OF A TECHNICAL DEFECT. IT GOES WITHOUT SAYING THAT NO ASSESSMENT OR OTHER PROCEEDINGS CAN BE LAWFULLY TAKEN UP AND COMPLETED UNLESS TH E CONCERNED AUTHORITY HAS JURISDICTION TO DO SO. LACK OF JURISDICTION GOES TO THE VERY ROOT OF THE MATTER AND CUTS THE TREE OF ASSESSMENT IF THE FOUNDATION OF JURISDICTION IS MISSING. 22. THE LD. AR HAS BROUGHT TO OUR NOTICE TWO ORDERS PASSED BY THE DE LHI BENCHES OF THE TRIBUNAL, NAMELY, ACIT VS. INLAY MARKETING PVT. LTD. (ITA NO.4200/DEL/2012), ETC. AND DCIT VS. AAKASH AROGYA MANDIR PVT. LTD. (ITA NO.5437/DEL/2013), ETC., IN WHICH THE NOTICES AND THE CONSEQUENTIAL ASSESSMENTS U/S 153C, UNDER IDENTICAL CIRCUMSTANCES, HAVE BEEN QUASHED. THE LD. DR CONTENDED THAT THE ABOVE REFERRED TWO TRIBUNAL ORDERS ARE PER INCURIUM AND SHOULD NOT BE FOLLOWED. THE MAIN REASON FOR DECLARING THE TRIBUNAL ORDERS AS PER INCURIUM WAS THE NON - CONSIDERATION OF THE JUDGMENT OF T HE HON'BLE JURISDICTIONAL HIGH COURT IN JUDGMENT IN THE CASE OF SSP AVIATION LTD. VS. DCIT (2012) 346 ITR 177/207 TAXMAN 260/20 TAXMANN.COM 214 (DELHI) . 23. LET US EXAMINE THE CASE OF SSP AVIATION LTD. (SUPRA) FOR EVALUATING THE CONTENTION THAT THE INSTAN T ASSESSMENT BE DECLARED AS PER LAW. THE HON'BLE HIGH COURT IN THAT CASE HAS HELD THAT THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SEARCHED PERSON SHOULD BE SATISFIED THAT THE VALUABLE ARTICLE OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED DURING THE SEARC H BELONG TO A PERSON OTHER THAN THE SEARCHED PERSON AND THERE IS NO REQUIREMENT IN SECTION 153C(1) THAT THE ASSESSING OFFICER SHOULD ALSO BE SATISFIED THAT SUCH VALUABLE 11 ARTICLES OR BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO THE OTHER PERSON MUST CONCLU SIVELY REFLECT OR DISCLOSE ANY UNDISCLOSED INCOME. WE FIND THAT THERE IS NO SUCH CONTROVERSY BEFORE US AS WAS THERE BEFORE THE HON'BLE HIGH COURT. IT IS NOT THE CASE OF THE ASSESSEE BEFORE US IN THIS GROUND THAT THE DOCUMENTS ETC. FOUND FROM THE PERSONS SE ARCHED DID NOT POSITIVELY INDICATE THE EXISTENCE OF SOME INCOME IN THE HANDS OF THE ASSESSEE. THE ARGUMENT IS SIMPLY CONFINED TO NON - RECORDING OF SATISFACTION BY THE AO OF THE PERSONS SEARCHED. INSTEAD OF SUPPORTING THE DEPARTMENT'S CASE, WE FIND THAT THIS JUDGMENT STRENGTHENS THE ASSESASEE'S CASE BY MAKING IT CLEAR IN NO UNCERTAIN TERMS THAT THE AO OF THE PERSON SEARCHED IS OBLIGED TO RECORD THE SATISFACTION. THE RELEVANT OBSERVATIONS OF THE HON'BLE HIGH COURT CONTAINED IN PARA 15 MERIT REPRODUCTION AS UND ER: - 'IT NEEDS TO BE APPRECIATED THAT THE SATISFACTION THAT IS REQUIRED TO BE REACHED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SEARCHED PERSON IS THAT THE VALUABLE ARTICLE OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED DURING THE SEARCH BELONG TO A PERSON OTHER THAN THE SEARCHED PERSON. THERE IS NO REQUIREMENT IN SECTION 153C(1) THAT THE ASSESSING OFFICER SHOULD ALSO BE SATISFIED THAT SUCH VALUABLE ARTICLES OR BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO THE OTHER PERSON MUST BE SHOWN TO SHOW TO CONCL USIVELY REFLECT OR DISCLOSE ANY UNDISCLOSED INCOME.' 24. IT IS PRETTY CLEAR FROM THE ABOVE EXTRACTION THAT THE SATISFACTION AS REFERRED TO IT IN THIS CASE IS THAT OF THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SEARCHED PERSON. AS SUCH, WE ARE OF THE CONSIDERED OPINION THAT THIS JUDGMENT DOES NOT SUPPORT THE REVENUE'S CASE. RESULTANTLY, THE CHARACTERIZATION OF THE ABOVE TRIBUNAL ORDERS AS PER INCURIUM BY THE LD. DR, IS ABSOLUTELY WITHOUT ANY LEGALLY SUSTAINABLE BASIS. 25. EVEN OTHERWISE, THE JUDI CIAL DISCIPLINE REQUIRES A SUBSEQUENT BENCH TO THE FOLLOW AN EARLIER ORDER OF A CO - ORDINATE BENCH ON THE POINT. IT IS ONLY IF THE SUBSEQUENT BENCH FEELS ITSELF UNABLE TO CONCUR WITH THE VIEW TAKEN EARLIER THAT IT IS REQUIRED TO REFER THE CASE FOR CONSIDERA TION BY A SPECIAL BENCH. IN OUR CONSIDERED OPINION, THESE TWO ORDERS OF THE CO - ORDINATE BENCHES ARE PERFECTLY IN ACCORDANCE WITH LAW. 26. COMING BACK TO FACTS OF THE INSTANT CASE, IT IS PALPABLE THAT THE AO OF SHRI B.K. DHINGRA, SMT. POONAM DHINGRA AND M/ S MADHUSUDAN BUILDCON PVT. LTD., DID NOT RECORD ANY SATISFACTION THAT SOME MONEY, BULLION, JEWELLERY OR BOOKS OF ACCOUNTS OR OTHER DOCUMENTS FOUND FROM THESE PERSONS BELONGED TO THE ASSESSEE. THE ABSENCE OF SUCH SATISFACTION, IN OUR CONSIDERED OPINION, FAI LED TO CONFER ANY VALID AND ITA NO.2421/DEL/2014 LAWFUL JURISDICTION ON 12 THE AO OF THE ASSESSEE TO PROCEED WITH THE MATTER OF THE ASSESSMENT U/S 153C OF THE ACT. WE, ERGO, SET ASIDE THE INITIATION AND THE ENSUING ASSESSMENT ON THE ASSESSEE AS VOID AB INI TIO. 11 . WE FURTHER NOTE THAT IN THE SIMILAR SET OFF FACTS AND CIRCUMSTANCES ITAT DELHI IN THE CASE OF ACIT VS. IN LEY MARKETING (SUPRA) WHICH WAS AUTHORED BY ONE OF US (C.M.GARG, J.M.) HAS HELD AS UNDER: 20. WE FURTHER OBSERVE THAT IN THE CASES OF DSL PROPERTIES (P) LTD. (SUPRA), THE ITAT DELHI HELD THAT EVEN IF THE ASSESSING OFFICER OF THE PERSONS SEARCHED AND THE ASSESSING OFFICER OF THE SUCH OTHER PERSON OTHER THAN SEARCHED IS THE SAME, THEN THE ASSESSI NG OFFICER HAS TO FIRST RECORD THE SATISFACTION IN THE FILE OF THE PERSON SEARCHED, THEREAFTER, SUCH NOTE ALONG WITH THE SEIZED DOCUMENT/BOOKS OF ACCOUNTS IS TO BE PLACED IN THE FILE OF SUCH OTHER PERSON AND IN ABSENCE OF SUCH EXERCISE, INITIATION OF PROCE EDINGS UNDER SECTION 153C OF THE ACT ITSELF ARE INVALID. 21. IN VIEW OF FACTUAL MATRIX OF THE PRESENT CASE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO NEED TO GO WITH CONFLICTING DECISIONS ON THE LEGAL ISSUE AS THOUGH SECTION 153C OF THE ACT IS ANALO GOUS TO THE EARLIER PROVISIONS OF SECTION 158BD OF THE ACT BUT THERE IS A COMPLETE DEVIATION IN THE NEWLY INSERTED PROVISION OF SECTION 153C OF THE ACT INASMUCH AS WHILE SECTION 158BD OF THE ACT STIPULATES THAT FOR TRANSFER OF FILE ONLY WHEN THE ASSESSING OFFICER WHO CONDUCTED THE SEARCH OR WHO CALLED FOR BOOKS OF ACCOUNTS WAS SATISFIED THAT THE UNDISCLOSED INCOME FOUND THEREFROM BELONGS TO ANY PERSON OTHER THAN THE PERSON SEARCHED WHO HAS TO BE ASSESSED UNDER SECTION 158BD R/W SECTION 158BC OF THE ACT. WH ILE UNDER SECTION 153C OF THE ACT FOR TRANSFERRING THE MATERIAL OR EVIDE NCE COLLECTED DURING COURSE OF SEARCH TO THE ASSESSING OFFICER OF ASSESSEE OTHER THAN THE PERSON SEARCHED, WHAT IS REQUIRED IS THAT THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTI CLE OR THING OR BOOKS OF ACCOUNTS OR DOCUMENTS SEIZED IN THE COURSE OF SEARCH OF AN ASSESSEE BELONGED TO OR RELATED TO A PERSON OTHER THAN THE PERSON SEARCHED. IN SIMPLER WORDS UNLIKE SECTION 158BD OF THE ACT FOR TRANSFERRING A FILE UNDER SECTION 153C OF THE ACT, THERE IS NO NEED TO EXAMINE WHETHER THE MATERIAL, DOCUMENTS, BOOKS OF ACCOUNTS OR OTHER EVIDENCE SEIZED DURING THE COURSE OF SEARCH OF AN ASSESSEE REPRESENTS OR DISCLOSED UNDISCLOSED INCOME OF ANOTHER ASSESSEE. 13 22. IN THE DECISION OF THE HON BLE SUPREME COURT IN THE CASES OF CALCUTTA KNITWEARS (SUPRA), THE RATIO LAID DOWN IN THE CASE READS THUS: - 38. HAVING SAID THAT, LET US REVERT TO DISCUSSION OF SECTION 158BD OF THE ACT. THE SAID PROVISION IS A MACHINERY PROVISION AND INSERTED IN THE STATUTE BOOK FOR THE PURPOSE OF CARRYING OUT ASSESSMENTS OF A PERSON OTHER THAN THE SEARCHED PERSON UNDER SECTIONS 132 OR 132A OF THE ACT. UNDER SECTION 158BD OF THE ACT, IF AN OFFICER IS SATISFIED THAT THERE EXISTS ANY UNDISCLOSED INCOME WHICH MAY BELONG TO A OTH ER PERSON OTHER THAN THE SEARCHED PERSON UNDER SECTIONS 132 OR 132A OF THE ACT, AFTER RECORDING SUCH SATISFACTION, MAY TRANSMIT THE RECORDS/DOCUMENTS/CHITS/PAPERS ETC TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON. AFTER RECEIPT OF THE AFORESAID SATISFACTION AND UPON EXAMINATION OF THE SAID OTHER DOCUMENTS RELATING TO SUCH OTHER PERSON, THE JURISDICTIONAL ASSESSING OFFICER MAY PROCEED TO ISSUE A NOTICE FOR THE PURPOSE OF COMPLETION OF THE ASSESSMENTS UNDER SECTION 158BD OF THE ACT, THE OTHER PROVISIONS OF XIV - B SHALL APPLY. 39. THE OPENING WORDS OF SECTION 158BD OF THE ACT ARE THAT THE ASSESSING OFFICER MUST BE SATISFIED THAT 'UNDISCLOSED INCOME' BELONGS TO ANY OTHER PERSON OTHER THAN THE PERSON WITH RESPECT TO WHOM A SEARCH WAS MADE UNDER SECTION 132 OF THE ACT OR A REQUISITION OF BOOKS WERE MADE UNDER SECTION 132A OF THE ACT AND THEREAFTER, TRANSMIT THE RECORDS FOR ASSESSMENT OF SUCH OTHER PERSON. THEREFORE, THE SHORT QUESTION THAT FALLS FOR OUR CONSIDERATION AND DECISION IS AT WHAT STAGE OF THE PROCEEDINGS SHOULD THE SATISFACTION NOTE BE PREPARED BY THE ASSESSING OFFICER: WHETHER AT THE TIME OF INITIATING PROCEEDINGS UNDER SECTION 158BC FOR THE COMPLETION OF THE ASSESSMENTS OF THE SEARCHED PERSON UNDER SECTION 132 AND 132A OF THE ACT OR DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS UNDER SECTION 158BC OF THE ACT OR AFTER COMPLETION OF THE PROCEEDINGS UNDER SECTION 158BC OF THE ACT. 23. WE FURTHER NOTE THAT THE HON BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF PEPSICO INDIA HOLDINGS PVT. LTD. VS ACIT (SUPRA) AFTER CONSIDERING ITS OWN DECISION IN THE CASE OF PEPSI FOODS PVT. LTD. VS ACIT WP(C) NO. 415/2014 DATED 07.08.2014 AND THE PROVISIONS OF SECTION 153C, 132(4A)(I) AND 292 C(1)(I), IT HAS BEEN HELD THUS: - BEFORE WE EXAMINE THESE WRIT PETITIONS IN DETAIL IT WOULD BE PERTINENT TO POINT OUT THAT RECENTLY IN THE CASE OF PEPSI FOODS PVT. LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX, WP (C) 14 NO.415/2014 AND OTHER CONNECTED MATTERS, THIS COURT HAD OCCASION TO EXAMINE THE VERY PROVISIONS WHICH ARE UNDER CONSIDERATION IN THE MATTERS BEFORE US. IN THE JUDGEMENT DELIVERED ON 07.08.2014 IN THE CASE OF PEPSI FOODS PVT. LTD. (SUPRA), AFTER EXAMINING THE PROVISIONS OF SECTIONS 153C, 132(4A)(I) & 292C(1 )(I) OF THE SAID ACT, THIS COURT HAD OBSERVED AS UNDER: '6. ON A PLAIN READING OF SECTION 153C, IT IS EVIDENT THAT THE ASSESSING OFFICER OF THE SEARCHED PERSON MUST BE 'SATISFIED' THAT INTER ALIA ANY DOCUMENT SEIZED O R REQUISITIONED 'BELONGS TO' A PERSON OTHER THAN THE SEARCHED PERSON. IT IS ONLY THEN THAT THE ASSESSING OFFICER OF THE SEARCHED PERSON CAN HANDOVER SUCH DOCUMENT TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON (OTHER THAN THE SEARCHED PERSON). FURTHERMORE, IT IS ONLY AFTER SUCH HANDING OVER THAT THE ASSESSING OFFICER OF SUCH OTHER PERSON CAN ISSUE A NOTICE TO THAT PERSON AND ASSESS OR RE - ASSESS HIS INCOME IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. THEREFORE, BEFORE A NOTICE UNDE R SECTION 153C CAN BE ISSUED TWO STEPS HAVE TO BE TAKEN. THE FIRST STEP IS THAT THE ASSESSING OFFICER OF THE PERSON WHO IS SEARCHED MUST ARRIVE AT A CLEAR SATISFACTION THAT A DOCUMENT SEIZED FROM HIM DOES NOT BELONG TO HIM BUT TO SOME OTHER PERSON. THE SEC OND STEP IS - AFTER SUCH - SATISFACTION IS ARRIVED AT - THAT THE DOCUMENT IS HANDED OVER TO THE ASSESSING OFFICER OF THE PERSON TO WHOM THE SAID DOCUMENT 'BELONGS'. IN THE PRESENT CASES IT HAS BEEN URGED ON BEHALF OF THE PETITIONER THAT THE FIRST STEP ITSEL F HAS NOT BEEN FULFILLED. FOR THIS PURPOSE IT WOULD BE NECESSARY TO EXAMINE THE PROVISIONS OF PRESUMPTIONS AS INDICATED ABOVE. SECTION 132(4A)(I) CLEARLY STIPULATES THAT WHEN INTER ALIA ANY DOCUMENT IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN TH E COURSE OF A SEARCH IT MAY BE PRESUMED THAT SUCH DOCUMENT BELONGS TO SUCH PE RSON. IT IS SIMILARLY PROVIDED IN SECTION 292C(1 )(I). IN OTHER WORDS, WHENEVER A DOCUMENT IS FOUND FROM A PERSON WHO IS BEING SEARCHED THE NORMAL PRESUMPTION IS THAT THE SAID DO CUMENT BELONGS TO THAT PERSON. IT IS FOR THE ASSESSING OFFICER TO REBUT THAT PRESUMPTION AND. COME TO A CONCLUSION OR 'SATISFACTION' THAT THE DOCUMENT IN FACT BELONGS TO SOMEBODY ELSE. THERE MUST BE SOME COGENT MATERIAL AVAILABLE WITH THE ASSESSING OFFICER BEFORE HE/SHE ARRIVES AT THE SATISFACTION THAT THE SEIZED DOCUMENT DOES NOT BELONG TO THE SEARCHED PERSON BUT TO SOMEBODY ELSE. SURMISE AND CONJECTURE CANNOT TAKE THE PLACE OF 'SATISFACTION'. XXXX XXXX XXXX XXXX XXXX '11. IT IS EVIDENT FROM THE AB OVE SATISFACTION NOTE THAT APART FROM SAYING THAT THE DOCUMENTS BELONGED TO THE PETITIONER AND THAT THE 15 ASSESSING OFFICER IS SATISFIED THAT IT IS A FIT CASE FOR ISSUANCE OF A NOTICE UNDER SECTION 153C, THERE IS NOTHING WHICH WOULD INDICATE AS TO HOW THE PR ESUMPTIONS WHICH ARE TO BE NORMALLY RAISED AS INDICATED ABOVE, HAVE BEEN REBUTTED BY THE ASSESSING OFFICER. MERE USE OR MENTION OF THE WORD 'SATISFACTION' OR THE WORDS 'I AM SATISFIED' IN THE ORDER OR THE NOTE WOULD NOT MEET THE REQUIREMENT OF THE CONCEPT OF SATISFACTION AS USED IN SECTION 153C OF THE SAID ACT. THE SATISFACTION NOTE ITSELF MUST DISPLAY THE REASONS OR BASIS FOR THE CONCLUSION THAT THE ASSESSING OFFICER OF THE SEARCHED PERSON IS SATISFIED THAT THE SEIZED DOCUMENTS BELONG TO A PERSON OTHER THA N THE SEARCHED PERSON. WE ARE AFRAID, THAT GOING THROUGH THE CONTENTS OF THE SATISFACTION NOTE, WE ARE UNABLE TO DISCERN ANY 'SATISFACTION' OF THE KIND REQUIRED UNDER SECTION 153C OF THE SAID ACT.' 24. THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DSL PROPERTIES (P) LTD. VS DCIT IN OPERATIVE PARAS 15, 18 AND 21 (SUPRA) HAS HELD THUS: - HELD ACTION U/S 153C CAN BE TAKEN IN RESPECT OF ANY OTHER PERSON THAN PERSON SEARCHED IF AO OF PERSON SEARCHED IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS BELONG TO PERSON OTHER THAN PERSON SEARCHED. THEREFORE, RECORDING OF SATISFACTION BY AO OF PERSON SEARCHED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF AC COUNT OR DOCUMENTS SEIZED BELONG TO PERSON OTHER THAN PERSON SEARCHED IS A SINE QUA NON FOR INITIATING ACTION U/S 153C. IN S. 158BD, AO OF PERSON SEARCHED IS TO BE SATISFIED THAT ANY UNDISCLOSED INCOME BELONG TO ANY PERSON OTHER THAN PERSON SEARCHED, WHIL E, IN CASE OF S. 153C, AO OF PERSON SEARCHED IS TO BE SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS BELONG TO PERSON OTHER THAN PERSON SEARCHED. PERUSAL OF SATISFACTION NOTE SHOWS THAT PAPE R DOES NOT INDICATE IN WHOSE CASE THIS SATISFACTION WAS RECORDED AND WHO IS OFFICER RECORDING SATISFACTION. NEITHER NAME OF ASSESSEE OF AO WAS MENTIONED AND NO SEAL OF AO WAS THERE. AO RECORDED SATISFACTION IN CASE OF SUCH OTHER PERSON WHICH DOES NOT SATIS FY CONDITION OF ASSUMING JURISDICTION U/S, 153C. MOREOVER, NO ORIGINAL SATISFACTION NOTE IS AVAILABLE ON RECORD. PHOTOCOPY OF SATISFACTION NOTE PRODUCED BEFORE US DOES NOT BEAR NAME OF ANY ASSESSEE, NAME OF AO OR ANY SEAL OF AO. THEREFORE, SATISFACTION NOT E CANNOT BE SAID TO BE VALID SATISFACTION NOTE WITHIN MEANING OF S. 153C. LIKEWISE, AO ISSUED NOTICE U/S 153C FOR AY 2004 - 05 WHICH IS CLEARLY BARRED BY LIMITATION. THEREFORE, ISSUE OF NOTICE U/S 153C ISSUED BY REVENUE CANNOT BE SUSTAINED ON BOTH COUNTS, I. E., IT IS LEGALLY NOT VALID AS 16 CONDITIONS LAID DOWN U/S. 153C HAS NOT BEEN FULFILLED AND IT IS BARRED BY LIMITATION. THEREFORE, NOTICE ISSUED U/S 15AND CONSEQUENTLY, ASSESSMENT COMPLETED IN PURSUANCE TO SUCH NOTICE, IS ALSO QUASHED. APPEAL ALLOWED. 2 5. EVEN IF THE DECISIONS OF HON BLE SUPREME COURT IN THE CASES OF MANISH MAHEHSWARI (SUPRA), CALCUTTA KNITWEARS (SUPRA), DECISION OF HON BLE HIGH COURT OF DELHI IN THE CAS E OF PEPSICO HOLDINGS PVT. LTD. (SUPRA) AND DECISION OF ITAT DELHI IN THE CASE OF DSL PROPERTIES (SUPRA) ARE NOT THERE THEN ALSO IN CLOSE JUXTAPOSITION TO FACTS OF THE PRESENT CASE AS PER RTI REPLY BY THE DEPARTMENT DATED 10.6.2013(PAPER BOOK NO. 3OF THE ASSESSEE AT PAGES 13, 14 & 15), IT HAS BEEN STATED AND ANSWERED TO THE PRESENT ASSESSE E I.E. PERSON OTHER THAN PERSON SEARCHED, THE AO OF THE PERSON SEARCHED HAS ADMITTED THAT NO SATISFACTION NOTE IS AVAILABLE IN THEIR RECORD/FILES CONCERNING PERSON OTHER THAN THE PRESENT CASE. 26. THE SATISFACTION NOTE AVAILABLE ON PAPER BOOK NO. 2 OF THE ASSESSEE AT PAGE 51 CLEARLY REVEALS EX FACIE THAT THE SAME HAS BEEN RECORDED BY THE AO IN THE CAPACITY OF AO OF THE PERSON OTHER THAN PERSON SEARCHED., MEANING THEREBY ASSESSEE OF THE INSTANT APPEALS. IN THESE CIRCUMSTANCES, IT CAN SAFELY BE HELD THAT NO VALID SATISFACTION WAS RECORDED BY THE AO OF PERSON SEARCHED SO AS TO FULFILL REQUIREMENT OF VALID ASSUMPTION OF JURISDICTION U/S 153C OF THE ACT WHICH IS SINE QUA NON FOR VALIDLY ASSUMED JURISDICTION U/S 153A OF THE ACT. 27. REPLYING TO THE SPECIFIC QUERY OF THE BENCH, LD. DR FOUND HIMSELF UNABLE TO SUBMIT THE OUTCOME OF THE ASSESSMENT, PROCEEDINGS FOR AY 2009 - 10 RELEVANT TO PREVIOUS 2008 - 09, PERTAINING TO WHICH ALLEGED CHEQUE BOOK AS TERMED AS INCRIMINATING MATERIAL BY TH E DEPARTMENT, WAS RELATED. IN THIS SITUATION, WE CAN SAFELY PRESUME THAT NO REGULAR ASSESSMENT ORDER HAS BEEN PASSED TILL DATE FOR THE AY 2009 - 10 TO WHICH ONLY SEIZED MATERIAL I.E. CHEQUE BOOK PERTAINS TO. LD. DR HAS ALSO NOT DISPUTED THE FACT SUBMITTED BY THE ASSESSEE THAT THE DETAILS OF CHEQUE BOOK WERE DULY REFLECTED IN THE RETURN OF THE ASSESSEE FOR AY 2009 - 10. THEREFORE, IF THE AO OF THE PERSON OTHER THAN PERSON SEARCHED MIGHT HAVE GONE THROUGH THE RETURN OF THE ASSESSEE FOR AY 2009 - 10, WHICH WAS AD MITTEDLY FILED ON 30.09.2009, THEN HE COULD HAVE DRAWN A PROPER CONCLUSION ABOUT FURTHER ACTION OF THE PROCEEDINGS FOR AY 2009 - 10 BUT THIS EXERCISE WAS NOT CONDUCTED PRIOR TO ISSUANCE OF NOTICE U/S 153C OF THE ACT, ON 6.7.2010, HENCE, THE INITIATION OF PRO CEEDINGS AND ASSUMPTION OF JURISDICTION U/S 153C OF THE ACT GETS VITIATED ON ACCOUNT OF NON - RECORDING OF REQUIRED SATISFACTION BY THE AO OF THE 17 PERSON SEARCHED AND NON APPLICATION OF MIND BY THE AO OF THE PERSON OTHER THAN THE PERSON SEARCHED. 12 . TURNING TO THE FACTS OF THE PRESENT CASE, WE OBSERVE THAT THE SATIS FACTION NOTE AVAILABLE AT PAGE 11 OF ON THE PAPER BOOK OF THE ASSESSEE CLEARLY REVEALS EXFACIE THAT THE SAME HAS BEEN RECORDED BY THE AO IN THE CAPACITY OF THE AO OF THE PERSON OTHER THAN THE PERS ON SEARCHED, THUS, THE SATISFACTION NOTE HAS BEEN RECORDED BY THE AO OF THE ASSESSEE OF THE PRESENT CASES BUT NO SATISFACTION NOTE HAS BEEN RECORDED IN THE CASE OF PERSONS SEARCHED. THIS FACT IS ALSO APPARENT FROM THE RTI REPLY OF DCIT, NEW DELHI DATED 10 .6.2013, WHICH IS BEING ANNEXED TO THIS ORDER AS ANNEXURE - A, B & C. FROM PAPER BOOK PAGE 10 & 11 WE ALSO SEE THAT THE BASIS OF INITIATION OF PRESENT PROCEEDINGS U/S 153C OF THE ACT IS ONLY SATISFACTION NOTE WHICH WAS RECORDED IN THE FILE OF THE PERSON OTH ER THAN THE PERSON SEARCHED I.E. THE ASSESSEE. IN VIEW OF ABOVE FACTUM OF THE PRESENT CASE THE LEGAL CROSS OBJECTIONS OF THE ASSESSEE ALSO FIND SUPPORT FROM THE JUDGMENT OF HON BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF SSP AVIATION LTD. VS. DC IT, 346 ITR 177 (DEL.) , AS RELIED BY THE ASSESSEE, THAT SATISFACTION NOTE IS REQUIRED TO BE MADE IN THE CASE OF THE PERSON SEARCHED BY THE AO HAVING JURISDICTION OVER SEARCHED PERSON WHICH HAS NOT BEEN RECORDED IN THE PRESENT CASE BY THE AO OF PERSON SEARCHED I.E. SHRI B.K. DHINGRA & OTHERS AND AS PER RTI RE PLY DATED 8.12.2014 (PB PAGE 10 ) THE ONLY SATISFACTION HAS NOT BEEN RECORDED IN THE FILE OF OTHER PERSON VIZ. THE 18 ASSESSEE. IN VIEW OF ABOVE, IT CAN SAFELY BE HELD THAT NO VALID AND REQUIRED SATISFACTION NOTE WAS RECORDED BY THE AO OF THE PERSONS SEARCHED SO AS TO FULFILL TH E REQUIREMENTS OF VALID ASSUMPTION OF JURISDICTION U/S 153C OF THE ACT WHICH IS A SINEQUANON FOR VALIDLY ASSUMED JURISDICTION U/S 153C R.W.S. 153A OF THE ACT. 13 . WE MAY FURTHER POINT OUT THAT THE LD. DR COULD NOT CONTROVERT THIS CONTENTION OF THE LD. AR T HAT THE ASSESSEE COMPANY HAS FILED I TS RETURN FOR A.Y. 2009 - 10 ON 10 /09/2009 AND NO ASSESSMENT/SCRUTINY FOR A.Y. 2009 - 10 WAS DONE U/S 143(3) OF THE ACT BY THE RESPECTIVE AO, THE AO FOR PREVIOUS YEAR 2008 - 09 RELEVANT TO A.Y. 2009 - 10. THE LD. AR ALSO POINTE D OUT THAT AS PER REVENUE THE ONLY DOCUMENT WHICH WAS FOUND DURING THE COURSE OF SEARCH AND SEIZURE OPERATION ON S HRI B.K. DH INGRA AND OTHERS IS COUNTER FOILS OF THE CHEQUE BOOK (PAPER BOOK - I PAGES 16 TO 20) WHICH PERTAINS THE A.Y. 2009 - 10 FOR WHICH NO SCR UTINY ASSESSMENT WAS MADE U/S 143(3) OF THE ACT AS THE TRANSACTIONS REFLECTED FROM THE SAID CHEQUE BOOK WERE DULY RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE OF THE RELEVANT FINANCIAL YEAR/PREVIOUS YEAR, THEREFORE, NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH WHICH COULD IMPEACH THE BOOK RESULTS OF THE ASSESSEE COMPANY FOR THE ALL SIX ASSESSMENT YEARS UNDER CONSIDERATION IN PRESENT APPEALS . 14 . TURNING TO THE FACTS OF THE PRESENT CASE, UNDISPUTEDLY , THE AO OF THE PERSONS SEARCHED HAD NOT RE CORDED ANY SATISFACTION NOTE AND THE 19 ONLY SATISFACTION NOTE VIDE DATED 30.09.2010 AVAILABLE AT PAGE NO. 11 OF THE PAPER BOOK HAS BEEN RECORDED BY THE AO OF THE PERSON OTHER THAN PERSONS SEARCHED I.E. THE ASSESSEE, DOES NOT SATISFY THE CONDITIONS OF VALIDLY ASSUMING JURISDICTION U/S 153C OF THE ACT. THE PRESENT CASE IS SQUARELY COVERED BY THE DECISION OF HON BLE HIGH COURT IN THE CASE OF PEPSICO (SUPRA). THUS, ASSUMPTION OF JURISDICTION WAS NOT VALID, BAD IN LAW AND VOID AB INITIO . ACCORDINGLY, CROSS OBJECTIONS FROM 1 TO 4 OF THE ASSESSEE BEING LEGAL CONTENTIONS ARE HEREBY ALLOWED. CROSS OBJECTION NOS. 5 TO 12 OF THE ASSESSEE AND GROUND NO. 1 TO 3 IN A.Y. 2003 - 04 & GROUND NO. 1 & 2 OF THE REVENUE FOR A.Y. 2004 - 05 TO 2008 - 09 OF THE REVENUE . 15. THE LD. AR CONTENDED THAT THE ASSESSEE OR ITS DIRECTORS HAVE NO CONNECTION OR RELATION EITHER DIRECTLY OR INDIRECTLY WITH THAPAR GROUP AND THE ASSESSEE DID NOT CONDUCT ANY BUSINESS ACTIVITIES OR DEALINGS ON SALES OR PURCHASE WITH THAPUR GROUP . THE LD. AR FURT HER CONTENDED THAT THE ASSESSEE MADE SALES AND PURCHASES DURING ALL AYS WITH INDEPENDENT TAX PAYER CONCERNS/ENTITIES. THE LD. AR VEHEMENTLY CONTENDED THAT ALLEGATION OF THE AO THAT THE ASSESSEE IS A CAPITAL FORMING COMPANY HAS NO BASIS BECAUSE THE ASSESSE E COMPANY IS IN THE TEXTILE TRADING AND INCOME EARNED FROM SUCH BUSINESS WAS OFFERED TO TAX RIGHT FROM COMMENCEMENT OF BUSINESS TILL DATE. THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 20 16. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS FROM A SS ESSMENT ORDER PARA 4 AT PAGE 1 WE NOTE THAT THE AO HAS NOTED THAT THE ASSESSEE BELONGS TO THE THAPOR GROUP OF CASES BUT WE ARE UNABLE TO SEE ANY DETAILS OR EVIDE NCE OR BASIS TO SUPPORT THIS OBSERVATION FROM THE ASSESSMENT ORDER. IN THE SAME MANNER THE CIT (A) AT PARA 7.14 ALSO OBSERVED THAT THE ASSESSEE ALONG WITH THE OTHER COMPANIES ARE ALL IN HOUSE TO THAPAR DHINGRA GROUP BUT WE ARE UNABLE TO SEE ANY DETAILS OR EVIDENCE OR BASIS TO SUPPORT THIS OBSERVATION. IN THESE CIRCUMSTANCES WE ARE OF THE CONSID ERED VIEW THAT THE LD. DR COULD NOT CONTROVERT THE ABOVE CONTENTIONS OF THE ASSESSEE AND ABOVE CONTENTIONS OF THE AR REMAIN UNCONTROVERTED AND WE HOLD THAT THE SAID OBSERVATIONS OF THE AUTHORITIES BELOW ARE BASELESS AND WITHOUT ANY REASONABLE AND PLAUSIBLE BASIS AS THE REVENUE COULD NOT SUBSTANTIATE THIS FACT THAT THE ASSESSEE COMPANY OR ITS DIRECTORS HAVE ANY CONNECTION WITH THAPAR GROUP CLOSE LY BY OR EVEN REMOTELY. NOW WE PROCEED TO DEAL WITH OTHER ARGUMENTS AT BOTH THE SIDES. 1 7. WE NOTE THAT THE REVENUE HAS CHALLENGED DELETION OF THE ADDITIONS MADE BY THE AO ON ACCOUNT OF UNEXPLAINED PURCHASES U/S 69 C OF THE ACT AND ON ACCOUNT OF DISALLOWANCE OF EXPENSES IN ALL SIX ASSESSMENT YEARS AND THE REVENUE HAS ALSO DISPUTED THE DELETION OF ADDITION OF RS. 98,000 / - ON ACCOUNT OF CASH CAPITAL U/S 68 OF THE ACT FOR A.Y. 2003 - 04. IN THE SAME LINE , THE ASSESSEE HAS ALSO RAISED CROSS OBJECTIONS 21 SUPPORTING TO THE ACTION OF THE CIT(A) WHICH DELETED THE ADDITION BUT AT THE SAME TIME , THE ASSESSE E IN GROUND NO. 7(A) & (B) HAS CHALLENGED THE DIRECTIONS OF THE CIT(A) TO T HE AO , TO WORK OUT THE PEAK FROM THE ENTRIES IN THE CASH BOOK OF THE ASSESSEE COMPANY FOR THE RELEVANT ASSESSMENT YEAR AND TO MAKE A SINGULAR ADDITION OF THE SAID AMOUNT. THEREFORE , WE FIND IT JUST AND PROPER TO ADJUDICATE GROUNDS OF THE REVENUE AS WELL AS CROSS OBJECTIONS OF THE ASSESSEE ON THE MERITS TOGETHER BY THE SUBSEQUENT PART OF THIS ORDER. 18 . THE LD. DR SUBMITTED THAT THE AO AND THE CIT(A) HAVE HELD THAT THE PURCHASES, SALES AND EXPENSES MADE BY THE ASSESSEE DURING THE RELEVANT ASSESSMENT PERIOD ARE BOGUS AND UNVERIFIABLE BY NATURE. THEREFORE, THE AO WAS JUSTIFIED AND MAKING ADDITIONS IN REGARD TO UNEXPLAINED PURCHASES AND EXPENSES IN ALL ASSESSMENT YEARS. THE DR ALSO CONTENDED THAT THE AO WAS ALSO JUSTIFIED IN MAKING ADDITION U/S 68 OF THE ACT FOR A.Y. 2003 - 04 ON ACCOUNT OF CASH CAPITAL U/S 68 OF THE ACT. THE LD. DR FURTHER SUBMITTED THAT THE CIT(A) DELETED THE ADDITIONS MADE BY THE AO WITH A DIRECTION TO MAKE ADDITIO N ON THE BASIS OF PEAK ENTRY IN THE BOOKS OF ACCOUNTS FOR THE RELEVANT PERIOD AND TO MAKE A SINGULAR ADDITION OF THE AMOUNTS AR E NOT ACCEPTABLE BY THE REVENUE. THEREFORE, IMPUGNED ORDERS OF THE CIT(A) MAY BE SET ASIDE BY RESTORING THAT OF THE AO. 22 19 . REPL YING TO THE ABOVE, THE LD. AR SUBMITTED THAT WHEN THE BOOKS OF ACCOUNTS MAINTAINED B Y THE ASSESSEE COMPANY IN THE N ORMAL COURSE OF BUSINESS REFLECTS AMOUNTS OF PURCHASES, SALES, OPENING STOCK AND CLOSING STOCK WHICH WERE PRODUCED BEFORE THE AO AND NO DEFIC IENCY OR DEFECT WAS POINTED OUT THEN THE ONLY INFERENCE WHICH CAN BE DRAWN IS THAT THE BOOKS OF ACCOUNTS AND RESULTS ARE ACCEPTED BY THE AO. THE LD. AR ALSO SUBMITTED T HAT THE ASSESSEE CARRIED ON TRA D I NG OF TEXTILE AND FABRIC GOODS DURING THE RELEVANT PER IOD WHICH IS ALSO CONFIRMED BY THE SALES TAX ASSESSMENT ORDERS WHICH WAS ALSO FILED BEFORE THE AO ALONG WITH COPIES OF STOCK REGISTER, PARTY WISE SALES AND PURCHASES. THE LD. AR ALSO POINTED OUT THAT ALL THE DETAILS OF EXPENSES INCURRED DURING THE RELEVAN T PREVIOUS YEARS WERE ALSO SUBMITTED BEFORE THE AO AND NO DEFECT OR DEFICIENCY WAS POINTED OUT. THE LD. AR ALSO POINTED OUT THAT THE ASSESSEE SUBMITTED ALL DETAILS OF EXPENSES WITH REPLY DATED 19.11.2010 FOR ALL SIX ASSESSMENT YEARS AND THE AO REJECTED TH E SAME WITHOUT ANY CONSIDERATION (POINT 16 PAPER BOOK PAGE 25) . 20. FROM THE ASSESSMENT ORDER IT IS APPARENTLY SEEN THAT AO ISSUE D NOTICE AND QUESTIONNAIRE ON 12 .11.2010 (PAPER BOOK PAGE 23 TO 27) ASKING TO PRODUCE BOOKS OF ACCOUNTS, THE NATURE OF BUSINESS ACTIVITIES, THE NAMES AND ADDRESSES OF THE PARTIES WITH WHOM PURCHASE AND SALES TRANSACTIONS WERE MADE. THE AO ALSO ASKED TO SUBMIT LEDGER ACCOUNT, STOCK REGISTER MAINTAINED AND THE DETAILS OF E XPENSES ETC. WE ALSO 23 NOTE THAT THE ASSESSEE, REPLYING TO THE ABOVE QUERY OF THE A O, SUBMITTED VIDE REPLY DATED 23.11.2010 (PAPER BOOK PAGE 28 TO 3 6) ALONG WITH AUDIT REPORT, DETAILS OF NAMES, ADDRESSES AND PAN OF THE PARTIES FROM WHOM PURCHASES AND SALES OF TEXTILE GOODS HAVE BEEN MADE DURING THE PERIOD UNDER CONSIDERATION. FROM ASSESSMENT ORDER IT IS ALSO APPARENT THAT THE AO ISSUED NOTICES U/S 133(6) OF THE ACT AND MADE NECESSARY ENQUIRIES, WHICH HAVE BEEN DULY CONFIRMED BY SUCH PARTIES, WHO ARE ALSO IN COME TAX PAYEE ASSESSES AND THESE ENTITIES ALSO CONFIRMED THE TRANSACTIONS WHICH THE ASSESSEE EFFECTED DURING RELEVANT FINANCIAL PERIOD OR YEAR. UNDER ABOVE NOTED FACTS AND CIRCUMSTANCES THE CONCLUSION OF THE AO IS NOT SUSTAINABLE THAT ALL CASH PURCHASES ARE UNVERIFIABLE AND BOGUS. ON THE OTHER HAND, THE CIT(A) DELETED THE SAME. THE LD. AR, ON THIS ISSUE, HAS RELIED ON THE JUDGMENTS OF THE HON BLE HIGH COURT OF MADRAS IN THE CASES OF CIT VS. SHAKUNTLA DEVI KHETAN, 352 ITR 484 (MAD.) AND CIT VS. ANANDHA M ETAL CORPN., 273 ITR 262 (MAD.) AND RATIO OF THESE DECISIONS SUPPORT THE CONCLUSION OF THE CIT(A) . 21. ON THIS ISSUE WE RESPECTFULLY TAKE COGNIGENCE OF THE JUDGMENTS OF THE HON BLE JURISDICTIONAL HIGH COURT OF DELHI, DATED 10.1.2010 IN ITA NO. 608/2009, CI T VS. HARBIR SINGH AND THE JUDGMENT DATED 09/04/2010 IN ITA NO. 613/2010 IN THE CASE OF CIT VS. KAILASH JEWELLERY HOUSE , AS RELIED BY THE ASSESSEE , WHEREIN IT HAS BEEN HELD THUS : 24 3. THE COMMISSIONER OF INCOME TAX (APPEALS) HAD RETURNED A FINDING THAT TH E STOCK AND CASH FOUND AT THE TIME OF SEARCH HAD BEEN EXAMINED BY THE AO AND WAS COMPARED WITH THE STOCK AND CASH POSITION AS PER BOOKS. THE STOCK AND CASH POSITION AS PER THE BOOKS HAD BEEN ARRIVED AT AFTER THE EFFECT OF THE AFORESAID CASH SALES. THE ST OCK POSITION AS WELL AS THE CASH POSITION AS PER THE SAID BOOKS HAD BEEN ACCEPTED BY THE AO. THE COMMISSIONER OF INCOME TAX (APPEALS) ALSO NOTED THAT THE APPELLANT HAD FURNISHED THE COMPLETE SET OF BOOKS OF ACCOUNTS AND THE CASH BOOKS AND NO DISCREPANCY H AD BEEN POINTED OUT. THE AO HAD DOUBTED THE AFORESAID SALES AS BOGUS AND HAD MADE THE AFORESAID ADDITION. HOWEVER, THE COMMISSIONER OF INCOME TAX (APPEALS) AS WELL AS THE INCOME - TAX APPELLATE TRIBUNAL RETURNED FINDINGS OF FACT TO THE CONTRARY. 4. THE TR IBUNAL ALSO NOTED THAT THE DEPARTMENTAL REPRESENTATIVE COULD NOT CHALLENGE THE FACTUAL FINDING RECORDED BY THE COMMISSIONER OF INCOME - TAX (APPEALS). NOR COULD BE ADVANCE ANY SUBSTANTIVE ARGUMENT IN SUPPORT OF HIS APPEAL. THE TRIBUNAL ALSO OBSERVED THAT I T IS NOT IN DISPUTE THAT THE SUM OF RS. 24,58,400/ - WAS CREDITED IN THE SALE ACCOUNT AND HAD BEEN DULY INCLUDED IN THE PROFIT DISCLOSED BY THE ASSESSEE IN ITS RETURN. IT IS IN THESE CIRCUMSTANCES THAT THE TRIBUNAL OBSERVED THAT THE CASH SALES COULD NOT BE TREATED AS UNDISCLOSED INCOME AND NO ADDITION COULD BE MADE ONCE AGAIN IN RESPECT OF THE SAME. 22. THE LD. AR COULD NOT CONTROVERT THIS CONTENTION OF THE ASSESSEE THAT THE AO HAS NOT POINTED OUT ANY DEFICIENCY OR MISTAKE IN THE DETAILS OF MOUTH WISE SALES AND PURCHASES AFFECTED DURING THE RELEVANT PERIOD AND OPENING AND CLOSING STOCK HAS NOT BEEN DISTURBED OR DOUBTED, HENCE, NO ADDITION ON UNEXPLAINED PURCHASES CAN BE MADE U/S 69C OF THE ACT. 23. ON THE ISSUE OF ADDITION MADE BY THE AO AMOUNTING TO RS . 98,0 00/ - THE LD. DR POINTED OUT THAT BEFORE THE AO THE ASSESSEE DID NOT 25 PRODUCE ANY DETAILS EXCEPT GIVING THE NAMES OF SHAREHOLDERS BUT NO CONFIRMATION AND PAN WAS SUBMITTED THEREFORE, THE AO WAS CORRECT IN MAKING ADDITION U/S 68 OF THE ACT. THE LD. DR FURTHER CONTENDED THAT THE CIT(A) DELETED THE SAID ADDITION WITHOUT ANY BASIS, THEREFORE, IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO. THE LD. AR, PLACING RELIANCE ON THE SUBMISSIONS BEFOR E CIT(A) VIDE DATED 23.11.2010 (PAPER BOOK PAGE AT 33 POINT 26) POINTED OUT THAT THE A SSESSEE COMPANY HAS ALLOTTED 980 0 BONUS EQUITY SHARES OUT OF BROUGHT FORWARD SURPLUSES AND RESERVES TO THE EXISTING SHAREHOLDERS DURING FINANCIAL YEAR 2002 - 03 AND DETAILS OF BONUS ALLOTMENT WERE ALSO SUBMITTED BEFORE THE AO AND THE CIT(A) ALONG WITH SHARE CAPITAL ACCOUNTS WHICH CLEARLY SHOW THAT THERE WAS NO CASH TRANSACTION AND IT WAS CONTRA ENTRY ONLY. FROM VIGILANT READING OF THE ASSESSMENT ORDER AND IMPUGNED ORDER WE CLEARLY NOTE THAT THE AO MADE ADDITION ON ACCOUNT O F FAILURE OF THE ASSESSEE TO SUBMIT RELEVANT DETAILS SUCH AS CONFIRMATION & PAN ETC. AND THE RELEVANT ACCOUNTING ENTRIES WERE ALSO NOT CL ARIFIED DURING ASSESSMENT PROCEEDINGS. ON THE OTHER HAND, THE CIT(A) DELETED THE ADDITION AND IN VIEW OF ASSESSEE S EX PLANATION AND UNCONTROVERTED CONTRA ACCOUNTING ENTRIES WE ARE IN AGREEMENT WITH THE VIEW TAKEN BY THE CIT(A) THAT ADDITION U/S 68 OF THE ACT IS NOT SUSTAINABLE AND WE UPHELD THE SAME. 24. THE LD. AR ALSO DRAWN OUR ATTENTION TOWARDS ASSESSMENT ORDER PARA 4 AND SUBMITTED THAT THE AO PROCEEDED ON THE BASIS OF SURMISES 26 AND CONJECTURES WITHOUT HAVING ANY INCRIMINATING MATERIAL OR SUBSTANCE BY IMAGINING A MODUS OPERANDI AT HIS OWN WITHOUT ANY JUSTIFIED BASIS AND PRESUMING THAT THE ASSESSEE COMPANY ARE BASICALLY C APITAL FORMATION CONCERNED WHICH HAVE BUILD UP HUGE RESULTS AND SURPLUSES OVER THE YEARS WHICH DECLARED INVESTED IN THE STOCK OF TEXTILES. 25 . THE LD. AR ALSO POINTED OUT THAT THE REVENUE AUTHORITIES HAVE NO REASONABLE CAUSE OR VALID REASON TO DOUBT THE COMMERCIAL TRANSACTIONS CARRIED OUT BY THE ASSESSEE WHICH WERE DULY RECORDED IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. THE LD. AR VEHEMENTLY CONTENDED THAT THE REVENUE AUTHORITIES ARE NOT EMPOWERED TO MAKE A PURE GUESS WORK IN MAKING ASSESSMENT WITHOUT ANY REFERENCE TO ANY COGENT EVIDENCE OR MATERIAL AND THERE MUST BE SOME INCRIMINATING MATERIAL MORE THAN BASELESS SUSPICION TO SUPPORT ADDITIONS AND DISALLOWANCES IN THE ASSESSMENT ORDER U/S 143(3) OF THE ACT. THE LD. AR ALSO ALLEGED THAT THE SEI ZED MATERIAL BELONGING TO THE ASSESSEE IS THE COUNTER FOILS OF THE CHEQUE BOOK RELATED TO F.Y. 2008 - 09 PERTAINING TO A.Y. 2009 - 10 WHICH IN FACT WAS ADMITTED BY THE DEPARTMENT THAT THE SAME STOOD ENTERED IN THE AUDITED BOOKS OF ACCOUNTS FOR F.Y. 2008 - 09 REL EVANT TO A.Y. 2009 - 10 AND NO SCRUTINY ASSESSMENT FOR A.Y. 2009 - 10 HAS BEEN FRAMED. WE ALSO NOTE THAT THE LD. DR COULD NOT DEMOLISH THIS CONTENTION OF THE ASSESSEE THAT THE RETURN FOR A.Y. 2009 - 10 WAS 27 SUBMITTED ON 10 /09/2009 AND NO NOTICE OR INTIMATION FOR A SCRUTINY HAS BEEN RECEIVED BY THE ASSESSEE. 26 . THE LD. DR CONTENDED THAT THE AO RIGHTLY HELD THAT EXCEPT THE DECLARATION OF THE ASSESSEE THERE IS NO INDEPENDENT PROOF OF SALE/PURCHASE OF THE GOODS EXCEPT THE BANK TRANSACTIONS. THE LD. DR ALSO POINTED O UT THAT THE AO WAS CORRECT IN HOLDING THAT THE ASSESSEE HAS DECLARED ITS ENTIRE PURCHASES AS CASH PURCHASES WHICH WAS BOGUS AND WHEN THE ASSESSEE HAS ITSELF DECLARED SALES THEN THE SALES RIGHTLY HELD TO BE REPRESENT INCOME FROM UNDISCLOSED SOURCES U/S 68 O F THE ACT. THE LD. DR FURTHER POINTED OUT THAT THE AO RIGHTLY HELD THAT THE EXPENSES CLAIMED BY THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT WERE ALSO NOT VERIFIABLE, T HEREFORE, SUCH EXPENSES CANNOT BE ALLOWED. THE LD. DR FURTHER DRAWN OUR ATTENTION TOWAR DS ASSESSMENT ORDER OF A.Y. 2003 - 04 PARA 11AND SUBMITTED THAT THE ASSESSEE DID NOT PRODUCE ANY DETAIL ABOUT THE INCREASED SHARE CAPITAL EXCEPT GIV ING THE NAME OF SHAREHOLDERS, T HEREFORE, THE SAID AMOUNT WAS RIGHTLY HELD AS UNEXPLAINED CASH CREDITS U/S 68 O F THE ACT. 27 . THE LD. DR VEHEMENTLY CONTENDED THAT THE CIT(A) WAS NOT JUSTIFIED IN DELETING THESE ADDITIONS IN ALL SIX YEARS PERTAINING TO UNEXPLAINED PURCHASES U/S 69 C OF THE ACT AND ENTIRE AMOUNT OF EXPENDITURE IN ALL SIX ASSESSMENT YEARS AND ALSO DELET ING THE ADDITION OF RS. 98,0 00/ - ON ACCOUNT OF CASH CAPITAL U/S 68 OF THE ACT FOR A.Y. 2003 - 04. THE LD. DR 28 STRENEOUSLY CONTENDED THAT THE CIT(A) WAS NOT CORRECT IN DIRECTING THE AO TO WORK OUT THE PEAK FROM THE ENTRIES IN THE CASH BOOK OF THE ASSESSEE FOR THE RELEVANT YEAR AND TO MAKE A SINGULAR ADDITION OF SAID PEAK AMOUNT. THE LD. DR FINALLY PRAYED THAT THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO. 28. THE LD. AR REPLIED THAT THE AO PROCEEDED TO MAKE DISALLOWANCE AN ADDITION ON THE BASIS OF SURMISES, CONJECTURES AND HYPER TECHNICAL APPROACH WITHOUT POINTING OUT ANY DEFECTS OR DEFICIENCY IN THE BOOKS OF ACCOUNTS AND RESULTS OF THE AUDITED ACCOUNTS. THE LD. AR DRAWN OUR ATTENTION TOWARDS PARAGRAPH NO. 4, 5 & 6 OF THE ASSESSMENT ORDER AND SUBMITTED THAT THE AO ACTED WITH A PRE - DETERMINE SUBJECTIVE APPROACH WHICH CANNOT BE A BASIS OF MAKING VALID DISALLOWANCE AND ADDITIONS. THE LD. AR ALSO DRAWN OUR ATTE NTION TOWARDS PARAGRAPH NO. 7.14 OF THE IMPUGNED ORDER AND SUBMITTED THAT THE CIT(A) WAS RIGHT IN DELETING THE IMPUGNED ADDITIONS BUT THE CIT(A) DIRECTED THE AO TO WORK OUT PEAK FROM THE ENTRIES IN THE CASH BOOK OF THE ASSESSEE WITHOUT ANY REASON OR BASIS. THE LD. AR FURTHER POINTED OUT THAT THE CIT(A) HIMSELF WAS NOT SURE IN DIRECTING T HE AO AS TO WHERE THE WORK OUT PEAK AMOUNT HAS TO BE ADDED AND, TH EREFORE, THE CIT(A) HAS MADE A V AGUE DIRECTION TO THE AO FOR MAKING A SINGULAR ADDITION EITHER AS UNEXPLAINED INVESTMENT OR AS EXPENDITURE OR AS CASH CREDIT. THE LD. AR FURTHER POINTED OUT THAT NO INCRIMINATING MATERIAL EXCEPT COUNTER FILE OF CHEQUE BOOK PERTAINING TO 29 ASSESSMENT YEAR 2009 - 10 HAVE BEEN FOUND DURING THE SEARCH AND SEIZURE OPERATION ON 20/10/2008 AND THE ADDITIONS MADE BY THE AO ARE NOT BASED ON ANY INCRIMINATING MATERIAL AND THE ONLY INCRIMINATING MATERIAL WHICH PERTAINS TO A.Y. 2009 - 10 HAS BEEN RECORDED IN THE BOOKS OF ACCOUNTS AND RESULTS OF THE ASSESSEE IN THE RESPECTIVE ASSESSMENT YEAR 2009 - 10 AND, THEREFORE, THE ADDITIONS MA DE BY THE AO AND PEAK ADDITION AS DIRECTED BY THE CIT(A) IS NOT JUSTIFIED AND SUSTAINABLE . 29 . ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, WE NOTE THAT THE AO IN A.Y. 2003 - 04 HAS MADE ADDITIONS WITH FOLLOWING PRIMARY OBSERVATIONS: 4. THE ASSESSEE COMPANY BELONGS TO THE THAPAR GROUP OF CASES. ON E OF THE MAIN ALLEGATIONS AGAINST THE GROUP IS THAT SEVERAL CONCERNS HAVE BEEN FLOATED BY THE GROUP WITH DUMMY DIRECTORS AND SHAREHOLDERS. THERE CONCERNS ARE BASICALLY CAPITAL FORMATION CONCERNS WHICH HAVE BUILD UP HUGE RESERVES & SURPLUSES OVER THE YEARS . THESE RESERVE & SURPLUSES ARE DECLARED INVESTED IN STOCKS OF TEXTILES. AS AND WHEN CASH IS REQUIRED THE STOCKS ARE SOLD AND THE MONEYS ARE UTILISED FOR OTHER PURPOSES AS PER REQUIREMENT. 5. AGAINST THIS BACKGROUND, THE FACTS OF THE CASE ARE ANALYSED. UNDER THE PROVISIONS OF SECTION 153C THE EARLIEST ASSESSMENT YEAR OPEN FOR ASSESSMENT YEAR IS A.Y. 2003 - 04 (PREVIOUS YEAR 01.04.2002 TO 31.03.2003). IT IS NOTICED THAT THE COMPANY WAS INCORPORATED ON 22.12.1992 AND HAS BEEN FILLING ITS RETURNS WITH INCOME TAX REGULARLY. AS PER THE FACTS OF THE CASE THE ASSESSEE HAS DECLARED A CLOSING STOCK OF RS. 13,00,78,909/ - AS ON 31.03.2002, WHICH FORMS THE OPENING STOCK FOR THE PREVIOUS YEAR UNDER CONSIDERATION. 6. DURING THE CURRENT YEAR THE ASSESSEE HAS PURCHASED, TEXTILE GOODS OF RS. 29,12,584/ - AND HAS MADE SALES OF RS. 36,45,290/ - . THE ASSESSEE WAS DIRECTED TO PROVE ITS TRADING ACTIVITIES AND TO PRODUCE SALE TAX RECORDS. THE ASSESSEE HAS CLAIMED THAT SINCE IT DEALS WITH TAX FREE GOODS ONLY THERE IS NO NECESSIT Y FOR IT TO FILE 30 SALES TAX RETURNS. THUS, IT SEEMS THAT EXCEPT THE DECLARATION OF THE ASSESSEE, THERE IS NO INDEPENDENT PROOF OF SALE/PURCHASE OF THE GOODS EXCEPT THE BANK TRANSACTIONS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED T O GIVE BREAK UP OF CASH OR CHEQUE PURCHASES. IN RESPONSE THERETO A REPLY HAS BEEN FILED AND PLACED ON RECORD IN WHICH ASSESSEE HAS DECLARED ITS ENTIRE PURCHASE AS CASH PURCHASES OF RS. 29,12,584/ - . ASSESSEE COMPANY HAS ALSO STATED THAT IT DID NOT MAINTAI N ANY BANK ACCOUNT DURING THE YEAR AND THE ASSESSEE DEALS WITH TAX FREE GOODS ONLY THERE IS NO NECESSITY FOR IT TO FILE SALES TAX RETURN. 7. THE INQUIRES INDICATE THAT THE DIRECTORS/SHAREHOLDER IS NOT A MAN OF MEANS AND THE PREMISES AND THE PREMISES ARE NO T COMMERCIAL PREMISES. THE INVESTIGATION WING HAS ALSO REPORTED THAT NO EVIDENCE OF STOCK WAS FOUND FROM ANY OTHER PREMISES OF THE THAPAR HOMES GROUP. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS CLAIMED THAT THE ASSESSEE HAD A GODOWN AT KHASRA NO. 34/7, VILLAGE DERA MANDI, TEHSIL MEHRAULI, NEW DELHI. THE CLAIM IS NON - VERIFIABLE DUE TO LAPSE OF SO MANY YEARS. MOST OF THE CONCERNS OF THAPAR GROUP HAVE SOUGHT TO DECLARE THESE PREMISES AS THEIR GODOWN BUT NO SUCH CLAIM WAS MADE DURING SEARCH PROCEEDINGS. 8. IN THE CASE OF PRESENT ASSESSEE ALL THE PURCHASE S & SALES ARE IN CASH. THE ITEMS PURCHASES & SOLD ARE TEXTILE & FABRICS. THE NAME AND STYLE OF THE TEXTILES & FABRICS ARE DENIM, FABRICS K - III SUPER FINE (N), FABRIC (PS), FABRIC (PS) EMBROIDERY, FABRIC (PS) EXCEL, FABRICS, KASHMIRI FABRICS - I, KASHMIRI FABRICS - I(D) ETC. FROM THESE ITEMS IT CAN BE SEEN THAT THE ASSESSEE IS NOT DEALING IN BRANDED ITEMS. THERE IS NO NAME OF ANY COMPANY IN THESE PRODUCTS. SHAWLS ARE PURCHASED AND SOLD IN PIECES AND REST OTHER ITEMS ARE SOLD IN METERS. IT IS FURTHER SE EN THAT THE PURCHASES & SALES ARE WITHIN M/S THAPAR HOMES GROUP OF CASES. IN INVENTORIES OF FABRIC & TEXTILE GOODS SHOWN IN THE BALANCE SHEET THE CLOSING STOCK OF LAST YEAR STANDS AT RS. 13,00,78,909/ - . THIS YEAR THE FIGURE IS RS. 12,96,83,897/ - WHICH IS ALMOST THE SAME. THEREFORE, PURCHASES AND SALES ARE ONLY OUT OF CURRENT YEAR TRANSACTIONS WHICH ARE HELD UNVERIFIABLE AND BOGUS. IT IS HIGHLY IMPROBABLE THAT WITH A HUGE STOCK INVENTORY OF GOODS WHICH CHANGE IN FASHION AND TASTE THE ASSESSEE HAS TO MAKE SALES FROM FRESH PURCHASES ONLY. THE PREPONDERANCE OF PROBABILITY SUGGESTS THAT THE STOCKS ARE NOT GENUINE BUT SINCE THESE ARE DECLARED PRIOR TO 1.4.02, NO ACTION IS BEING TAKEN FOR NOW. 9. KEEPING IN VIEW THE FACTS OF THE CASE AND REPLY OF THE ASSES SEE, IT IS CRYSTAL CLEAR THAT ALL CASH PURCHASES ARE 31 UNVERIFIABLE AND HENCE A SUM OF RS. 29,12,584/ - IS DISALLOWED. (THE OPENING STOCK IS OF THE PERIOD BEFORE THE BLOCK PERIOD OF SECTION 153C). PENALTY PROCEEDINGS U/S 271(C) ARE BEING INITIATED FOR FURNI SHING INACCURATE PARTICULARS OF INCOME. SINCE, THE ENTIRE CASH PURCHASES OF RS. 29,12,584/ - ARE BOGUS AND ARE BROUGHT TO TAX AS UNACCOUNTED EXPENDITURE U/S 69C OF THE IT ACT, NO FURTHER ADDITION IS MADE U/S 40A(3) OF THE I.T. ACT SINCE THE ENTIRE AMOUNT OF CASH PURCHASES IS BROUGHT TO TAX. 10. AS THE PURCHASES HAVE BEEN HELD NOT GENUINE IT IS POSSIBLE THAT THE SALES ARE EQUALLY BOGUS OTHERWISE WHY WOULD THE COMPANY STILL CARRY OPENING STOCK OF RS. 13,00,78,909/ - AND CLOSING STOCK OF RS. 12,96,83,897/ - WHI CH INDICATES THAT THE SALES/PURCHASES WERE DECLARED OFFERED FROM CURRENT YEAR S PURCHASES ONLY. HOWEVER, SINCE THE ASSESSEE HAS ITSELF DECLARED SALES OF RS. 36,45,290/ - ON ITS INCOME, THE FIGURE IS NOT DISTURBED BUT THE SALES ARE HELD TO REPRESENT INCOME FROM UNDISCLOSED SOURCES U/S 68 ONLY. NO EXTRA ADDITION IS MADE IN THE PRESENT ORDER ON BOGUS SALES. IT IS ALSO HELD THAT THE ASSESSEE WAS NOT DOING ANY GENUINE BUSINESS AND WAS ONLY GIVING ACCOMMODATION ENTRIES TO OTHER PARTIES. 11. DURING THE YEAR THE ASSESSEE HAS INCREASED SHARE CAPITAL FROM 2000 TO 100000/ - . VIDE QUESTIONNAIRE DATED 12.11.2010 THE ASSESSEE WAS ASKED TO FILE DETAILS OF THE SHAREHOLDERS, THEIR PAN AND TO PRODUCE SHAREHOLDER REGISTER. THE ASSESSEE HAS NOT PRODUCED ANY DETAIL EXCEPT GIV ING THE NAME OF SHAREHOLDERS. NO CONFIRMATION ARE PRODUCED AND NO PAN ARE SUPPLIED. FURTHER THE COMPANY ADMITTEDLY HAD NO BANK ACCOUNT AND, THEREFORE, THE SHARE CAPITAL WAS RECEIVED IN CASH ONLY. AS THE IDENTITY AND GENUINENESS OF THE SHAREHOLDERS HAS N OT BEEN PROVED, THE AMOUNT OF RS. 98,000/ - IS HELD UNEXPLAINED CASH CREDIT U/S 68. 12. SIMILARLY, THE EXPENSES CLAIMED BY THE ASSESSEE COMPANY IN P&L A/C ARE ALSO UNVERIFIABLE AS SUCH 100% OF THE EXPENSES ARE DISALLOWED. PENALTY PROCEEDINGS U/S 271(C) ARE BEING INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 30 . FROM OPERATIVE PART OF THE IMPUGNED ORDER OF THE CIT(A) , WE NOTE THAT THE CIT(A) HAS DELETED THE IMPUGNED ADDITIONS MADE BY THE AO BUT HAS DIRECTED THE AO TO WORK OUT THE PEAK FROM THE ENTRIES IN THE CASH BOOK OF THE ASSESSEE WITH FOLLOWING OBSERVATIONS AND CONCLUSIONS: 32 7.13 . THESE FINDINGS ALSO LEAD TO THE I NESCAPABLE CONCLUSION THAT EH APPELLANT WAS ONE OF THE SEVERAL ENTITIES IN THE WHOLE SCHEME OF NETWORK OF COMPANIES, CREATED BY B.K. DHINGRA TO INFUSE UNACCOUNTED MONEY IN OTHER COMPANIES OF THE GROUP, THROUGH A WELL ORCHESTRATED ARRANGEMENT OF SEEMINGLY ACCOUNTED TRANSACTIONS, EMANATING FROM THEIR AUDITED FINANCIAL STATEMENTS/ BOOKS, BUT WHERE IN REALITY, THE ONLY ACTIVITY WAS OF BOOK BUILDING . IN THESE CIRCUMSTANCES, THE CLAIM OF AUDITED BOOKS NOTWITHSTANDING, THE BOOK RESULTS ARE REQUIRED TO BE REJECTED, SINCE THE NARRATION ARE ARTIFICIAL, SHAM AND NOT REFLECTIVE OF THE ACTUAL BUSINESS/COMMERCIAL TRANSACTIONS. 7.14 . THEREFORE, THE ACTION OF THE AO IN DISREGARDING THE PURCHASES , SALES , EXPENSES AND INCREASE IN SHARE CAPITAL , CLAIMED BY T HE APPELLANT, IS UPHELD. SINCE THE APPELLANT COMPANY ALONG WITH THE OTHER COMPANIES ARE ALL IN - HOUSE TO THE THAPAR - DHINGRA GROUP AND CREATURES OF B K DHINGRA, AND THERE IS A WIDESPREAD WEB OF INTER SE TRANSACTIONS AMONGST THEM, KEEPING THEIR SEPARATE JU RIDICAL IDENTITY IN MIND, THE ENDS OF JUSTICE WILL BE MET IF IN EACH CASE, ADDITION OF THE PEAK OF FINANCIAL TRANSACTION, AS WORKED OUT FROM THE RELEVANT CASH BOOK OF EACH ENTITY, IS MADE. INCIDENTALLY, THIS IS WHAT THE APPELLANT HAS ALSO PRAYED FOR BY PL EADING FOR TELESCOPING IN GROUND 16 OF ITS APPEAL. THEREFORE, THE ADDITION MADE BY THE AO NEEDS TO BE REVISITED. IT MAY BE MENTIONED THAT WHILE THE REJECTION OF THE BOOKS AND THE BOOK RESULTS BY THE AO IS CONFIRMED, RELIANCE IS BEING PLACED ON THE TRAN SACTIONS TRAVERSING THE CASH BOOK, IRRESPECTIVE OF THEIR NOTATIONS, SINCE AMONGST THE INFLOW AND OUTFLOW OF CASH, TAX PAYMENTS MADE BY THE APPELLANT ARE INDEPENDENT AND VERIFIABLE. CONSEQUENTLY, NO SEPARATE ADDITION IS REQUIRED TO BE MADE ON ACCOUNT OF PU RCHASES OR EXPENDITURE OR INCREASE IN SHARE CAPITAL. THE AO IS DIRECTED TO WORK OUT THE PEAK FROM THE ENTRIES IN THE CASH BOOK OF THE APPELLANT FOR THE RELEVANT YEAR AND MAKE A SINGULAR ADDITION OF THE SAID AMOUNT, AS UNEXPLAINED INVESTMENT/EXPENDITURE/CA SH CREDIT. AS A RESULT, GROUNDS 9, 10 & 17 OF THE APPEAL ARE DISMISSED AND GROUNDS 8,11, 12 & 16 OF THE APPEAL ARE PARTLY ALLOWED. 31 . IN VIEW OF ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE AO FIRSTLY MAKE UP HIS MIND FOR MAKING ADDITIONS AND NOTED SO ME GENERAL ALLEGATIONS IN PARAGRAPH NO. 4, 5 & 6 AND WITHOUT BRINGING OUT ANY 33 DEFICIENCY AND DEFECT IN THE AUDITED BOOKS AND RESULTS OF THE ASSESSEE PROCEEDED TO MAKE ADDITIONS IN PARAS 7 TO 12 (SUPRA) . THE CIT(A) DELETED THESE ADDITIONS BY HOLDING THAT THE ADDITIONS MADE BY THE AO NEEDS TO BE REVISITED. THE CIT(A) FURTHER HOLD THAT WHILE THE REJECTION OF BOOKS AND THE BOOK RESULTS BY THE AO IS CONFIRMED THEN THE RELIANCE IS BEING PLACED ON THE TRANSA CTIONS TRAVERSING THE CASH BOOK IRRESPECTIVE OF THEIR AMOUNTS . THE LD. CIT(A) FURTHER HELD THAT NO SEPARATE ADDITION IS REQUIRED TO BE MADE ON ACCOUNT OF PURCHASE OR EXPENDITURE IN SHARE CAPITAL AND DIRECTED THE AO TO WORK OUT PEAK FROM THE ENTRIES IN THE CASH BOOK OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEARS AND TO MAKE A SINGULAR ADDITION OF THE SAID AMOUNT. BUT THE CIT(A) HAS NOT GIVEN ANY SPECIFIC DIRECTION THAT THE AMOUNT OF PEAK HAS TO BE ADDED AS EITHER UNEXPLAINED INVESTMENT OR EXPENDITURE OR CASH CREDIT AND THE DIRECTION OF THE CIT(A) IS V AGUE AND NOT SUSTAINABLE. 32. UNDER ABOVE NOTED FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT THE AO PROCEEDED TO MAKE ADDITIONS WITH A PRE - DETERMINE MIND WITHOUT POINTING OUT ANY DEFECTS IN THE AUDITED BOOKS AND BOOK RESULTS OF THE ASSESSEE. IN THESE CASES THE PROCEEDINGS U/S 153C OF THE ACT WAS I NITIATED IN VIEW OF COUNTER FOILS OF THE CHEQUE BOOK BELONGING TO THE ASSESSEE WHICH WAS SEIZED DURING THE SEARCH AND SEIZURE OPERATION AND THE LD. DR HAS NOT DISPUTED THIS FACT THAT THE DETAILS AND ENTRIES OF SOLE INCRIMINATING MATERIAL I.E. COUNTERFOILS OF 34 CHEQUE BOOK WAS PERTAINING TO A.Y. 2009 - 10 AND THE LD. DR HAS NOT DISPUTED THE FACT THAT THE SAME STOOD ENTERED IN THE BOOKS OF ACCOUNTS AND AUD ITED BALANCE SHEET FOR A.Y. 2009 - 10 AND THE ASSESSEE HAS FILED ITS RETURN OF INCOME FOR A.Y. 2009 - 10 ON 10 /09/2009 AND IN ABSENCE OF ANY NOTICE, WE MAY SAFELY INFER THAT THE ASSESSMENT HAS BEEN FINALIZED IN THIS REGARD AND THERE IS NO SCRUTINY ASSESSMENT. 33. THE LD. AR SEEKING OUR ATTENTION TOWARDS THE JUDGMENT OF HON BLE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL (INDIA), JODHPUR VS. ACIT (2013) 259 CTR 281 (RAJ.) SUBMITTED THAT WHEN IT IS NOT OPEN FOR THE ASSESSEE TO SEEK DEDUCTION OR CLAIM EXPENDITU RE WHICH HAS NOT BEEN CLAIMED IN THE ORIGINAL ASSESSMENT, WHICH ASSESSMENT ALREADY STANDS COMPLETED, THEN IT IS ALSO NOT OPEN AND ALLOWABLE FOR THE REVENUE TO MAKE DISALLOWANCES OR ADDITIONS ON THE SAME DETAILS WITHOUT ANY INCRIMINATING MATERIALS ONLY BECAUSE ASSESSMENT U/S 153A OR SECTION 153A R/W 153C OF THE ACT, IN PURSUANCE OF SEARCH OR REQUISITION IS REQUIRED TO BE MADE. THE LD. DR SUPPORTED THE ACTION OF THE AO, HOWEVER, HE FAIRLY ACCEPTED THAT NO OTHER INCRIMINATING MATERIAL, EXCEPT CHEQUE COUNTERFOILS RELATED TO A.Y. 2009 - 10, WAS FOUND DURING SEARCH AND SEIZURE OPERATIONS ON 20.10.2008 UPON SHRI B.K. DHINGRA AND OTHERS. IN VIEW OF ABOVE CONTENTION OF THE ASSESSEE WE ARE INCLINED TO HOLD THAT THIS ISSUE OF ADDITION ON ACCOUNT OF UNEXPLAINED PURCHASE U/ S 69C OF THE ACT, DISALLOWANCE OF EXPENSES IN A.Y. 2003 - 04 TO 2008 - 09 I.E. 35 ALL SIX ASSESSMENT YEARS AND ADDITION MADE U/S 68 OF THE ACT PERTAINING TO CONTRA ENTRIES OF BONUS SHARES TREATING THE SAME AS CASH CAPITAL WITHOUT ANY INCRIMINATING MATERIALS IS NO T SUSTAINABLE AND THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE RESPECTFULLY FOLLOWING THE DECISION OF HON BLE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEELS (SUPRA), WHEREIN PARA 22, 23 & 27 EXPLICITLY PROVIDE SAID PREPOSITION AND THESE PARAS ARE BEING RESPECTFULLY REPRODUCED 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 O F THE ACT, IT IS APPARENT THAT: (A) THE ASSESSMENTS OR REASSESSMENTS, WHICH STAND ABATED IN TERMS OF II PROVISO TO SECTION 153A OF THE ACT, THE AO ACTS UNDER HIS ORIGINAL JURISDICTION, FOR WHICH, ASSESSMENTS, HAVE TO BE MADE; (B) REGARDING OTHER CASES, THE ADDITI ON TO THE INCOME 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 COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MA DE. THOUGH SUCH A CLAIM BY THE ASSESSEE FOR THE FIRST TIME UNDER SECTION 153A OF THE ACT IS NOT COMPLETED, THE CASE IN HAND, HAS TO BE CONSIDERED AT BEST SIMILAR TO A CASE WHERE IN SPITE OF A SEARCH AND/OR REQUISITION, NOTHING INCRIMINATING IS FOUND. IN SUCH A CASE THOUGH SECTION 153A OF THE ACT WOULD BE TRIGGERED AND ASSESSMENT OR REASSESSMENT TO ASCERTAIN THE TOTAL INCOME OF THE PERSON IS REQUIRED TO BE DONE, HOWEVER, THE SAME WOULD IN THAT CASE NOT RESULT IN ANY ADDITION AND THE ASSESSMENTS PASSED EARL IER MAY HAVE TO BE REITERATED. 23. THE RELIANCE PLACED BY THE COUNSEL FOR THE APPELLANT ON THE CASE OF ANIL KUMAR BHATIA (SUPRA) ALSO DOES NOT HELP THE CASE OF THE ASSESSEE. THE RELEVANT EXTRACT OF THE SAID JUDGMENT READS AS UNDER: 19. UNDER THE PROVIS IONS OF SEC. 153A, AS WE HAVE ALREADY NOTICED, THE AO IS BOUND TO ISSUE NOTICE TO 36 THE ASSESSEE TO FURNISH RETURNS FOR EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH THE SEARCH OR REQUISITION WAS MADE. ANOTHER SIGNIFICANT FEATURE OF THIS SECTION IS THAT THE AO 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 W HICH THE BLOC ASSESSMENT ROPED IN ONLY THE UNDISCLOSED INCOME AND THE REGULAR ASSESSMENT PROCEEDINGS WERE PRESERVED, RESULTING IN MULTIPLE ASSESSMENTS. UNDER SECTION 153A, HOWEVER, THE AO HAS BEEN GIVEN THE POWER TO ASSESS OR REASSESS THE TOTAL INCOME O F THE SIX ASSESSMENT YEARS IN QUESTION IN SEPARATE ASSESSMENT ORDERS. THIS MEANS THAT THERE CAN BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX ASSESSMENT YEARS, IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. 2 7. THE ALLAHABAD HIGH COURT IN SMT. SHAILA AGARWAL S (SUPRA) HAS HELD AS UNDER: 19. THE SECOND PROVISO TO SEC. 153A OF THE ACT, REFERS TO ABATEMENT OF THE PENDING ASSESSMENT OR REASSESSMENT PROCEEDINGS. THE WORD PENDING DOES NOT OPERATE ANY SUCH INT ERPRETATION, THAT WHEREVER THE APPEAL AGAINST SUCH ASSESSMENT OR REASSESSMENT IS PENDING, THE SAME ALONG WITH ASSESSMENT OR REASSESSMENT PROCEEDINGS IS LIABLE TO BE ABATED. THE PRINCIPLES OF INTERPRETATION OF TAXING STATUTES DO NOT PERMIT THE COURT TO INT ERPRET THE SECOND PROVISO TO SECTION 153A IN A MANNER THAT WHERE THE ASSESSMENT OR REASSESSMENT PROCEEDINGS ARE COMPLETE, AND THE MATTER IS PENDING IN APPEAL IN THE TRIBUNAL, THE ENTIRE PROCEEDINGS WILL ABATE. 20. THERE IS ANOTHER ASPECT TO THE MATTER, NA MELY THAT THE ABATEMENT OF ANY PROCEEDINGS HAS SERIOUS CAUSES AND EFFECT IN AS MUCH AS THE ABATEMENT OF THE PROCEEDINGS, TAKES AWAY ALL THE CONSEQUENCES THAT ARISE THEREAFTER. IN THE PRESENT CASE AFTER DEDUCTING BOGUS GIFTS IN THE REGULAR ASSESSMENT PROCE EDINGS, THE PROCEEDINGS FOR PENALTY WERE DRAWN U/S 271(1)(C) OF THE ACT. THE MATERIAL FOUND IN THE SEARCH MAY BE A GROUND FOR NOTICE AND ASSESSMENT 37 U/S 153A OF THE ACT BUT THAT WOULD NOT EFFACE OR TERMINATE ALL THE CONSEQUENCE, WHICH HAS ARISEN OUT OF THE REGULAR ASSESSMENT OR REASSESSMENT RESULTING INTO THE DEMAND OR PROCEEDINGS OF PENALTY (EMPHASIS SUPPLIED) THE SAID JUDGMENT WHICH ESSENTIALLY DEALS WITH SECOND PROVISO TO SECTION 153A OF THE ACT ALSO SUPPORTS THE CONCLUSION, WHICH WE HAVE REACHED HEREINBEFORE. 34. ON THE BASIS OF AFORESAID DISCUSSION AND DELIBERATIONS, WE REACH TO A LOGICAL AND FORTIFIED CONCLUSION THAT THE AO WAS NOT JUSTIFIED IN MAKING IMPUGNED DISALLOWANCES AND ADDITIONS PERTAINS TO UNEXPLAINED PURCHASES U/S 69C OF THE ACT AND DISALLOWANCE OF EXPENSES IN ALL SIX ASSESSMENT YEARS AND ADDITION U/S 68 OF THE ACT IN REGARD TO SHARE CAPITAL FOR A.Y. 2003 - 04 WITHOUT ANY JUSTIFIED BASIS AND THAT IS TOO WITHOUT ANY INCRIMINATING MATERIAL AND THUS, WE ARE INCLINED TO HOLD THAT THE CIT(A) WAS CORRECT IN DELETING THE SAME. 35. IN VIEW OF ABOVE, WE ARE INCLINED TO HOLD THAT THE AO MADE ADDITIONS WITHOUT ANY JUSTIFY BASIS AND INCRIMINATING MATERIAL WHICH WAS DELETED BY THE CIT(A). WE FURTH ER HOLD THAT THE CIT(A) MADE A V AGUE AND UNSUSTAINAB LE DIRECTIONS TO THE AO FOR MAKING ADDITIONS TO WORK OUT PEAK AMOUNT FROM THE ENTRIES IN THE CASH BOOK OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR AND MAKE A SINGULAR ADDITION WHICH IS ALSO NOT SUSTAINABLE. 36. FINALLY , WE ARE OF THE FIRM OPINION AND HOLD THAT THE ADDITIONS MADE BY THE AO IN ALL SIX ASSESSMENT YEARS PERTAINING TO UNEXPLAINED PURCHASE AND IN PURSUANT TO DISALLOWANCE OF ENTIRE AMOUNT OF EXPENSES 38 WERE NOT FOUND TO BE SUSTAINABLE BY THE CIT(A) AND WE HAVE NO REASON TO INTERFERE WITH THE PLAUSIBLE AND CORRECT CONCLUSION OF THE CIT(A) IN THIS REGARD AND THUS, WE UPHELD THE SAME . HOWEVER, THE CIT(A) WAS ALSO NOT JUSTIFIED IN DIRECTING THE AO TO WORK OUT PEAK AMOUN T FOR MAKING ADDITION WHICH IS V AGUE AND UNSUSTAINABLE AND WE ALSO DEMOLISH TH E SAME. WE ORDER ACCORDINGLY. 37. TO SUM UP , APPEALS OF THE REVENUE IN ALL SIX ASSESSMENT YEARS ARE DISMISSED AND CROSS OBJECTION NOS. 7(A) & (B) OF THE ASSESSEE ARE ALLOWED. 38. IN THE FINAL RESULT, APPEALS OF THE REVENUE ARE DISMISSED AND CROSS OBJECTIO NS OF THE ASSESSEE ARE ALLOWED AS INDICATED ABOVE. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 2 9 . 0 4 . 2 0 1 5 S D / - S D / - (S.V. MEHROTRA) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 9 . 0 4 . 2 0 1 5 *KAVITA, P.S. COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER ASSISTANT REGISTRAR 39 SL. NO. DESCRIPTION DATE 1. DATE OF DICTATION BY THE AUTHOR 29 .04.2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 29 .04.2015 3. DRAFT PLACED BEFORE THE SECOND MEMBER 2 9 . 0 4 . 2 0 1 5 4. DRAFT APPROVED BY THE SECOND MEMBER 2 9 . 0 4 . 2 0 1 5 5. DATE OF APPROVED ORDER COMES TO THE SR. PS 2 9 . 0 4 . 2 0 1 5 6. DATE OF PRONOUNCEMENT OF ORDER 2 9 . 0 4 . 2 0 1 5 7. DATE OF FILE SENT TO THE BENCH CLERK 2 9 . 0 4 . 2 0 1 5 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER