Sh. Sanjay Singal HUF, Chandigarh V. DCIT, CC-1, Chandigarh

ITA 704/CHANDI/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0012 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-10-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 15-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Income from undisclosed sources; Search and seizure; Document seized; Principle of natural justice; Opportunity of cross examination; Earning of tax free income; Tangible material; Accommodation entries; Block assessment; Retraction; Reason to believe; Documents seized; Reassessment proceedings; Borrowed satisfaction; Set aside; Capital Gains
• Section: 69C; 143(3); 142(1); 153A; 143(1); 250; 143(2); 191; 264; 72; 13; 153; 158BD; 119; 22; 153C; 147; 131; 68; 148; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH A, CHANDIGARH .., !' '# $, % &' BEFORE: SHRI. N.K.SAINI, VP & SHRI , SANJAY GARG, J M ./ ITA NO. 702 TO 704/CHD/2018 / ASSESSMENT YEARS : 2011-12 TO 2013-14 SHRI SANJAY SINGHAL (HUF) 3-INDUSTRIAL AREA, PHASE-1 CHANDIGARH THE DCIT CENTRAL CIRCLE-1 CHANDIGARH ./ PAN NO: AAMHS8301N / APPELLANT / RESPONDENT ! ' / ASSESSEE BY : SHRI S.K. TULSIYAN, ADVOCATE SHRI ASHWANI KUMAR, C.A MS. ABHA AGGARWAL, C.A MS. BHOOMIJA VERMA, C.A SH. ADITYA KUMAR, CA # ! ' / REVENUE BY : SHRI. G.C. SRIVASTAVA, SPECIAL COUN SEL SMT. C. CHANDRAKANTA, CIT DR $ % ! &/ DATE OF HEARING : 04/02/2020 '()* ! &/ DATE OF PRONOUNCEMENT : 19/06/2020 &(/ ORDER PER BENCH: THESE THREE APPEALS BY THE ASSESSEE ARE DIRECTED AGAIN ST THE CONSOLIDATED ORDER OF THE LD. CIT(A)-3, GURGAON DT. 31/03/2018. 2. SINCE THE ISSUES INVOLVED ARE COMMON AND THE APPEALS WERE HEARD TOGETHER SO THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. AT THE FIRST INSTANCE WE WILL DEAL WITH THE APPEAL IN ITA NO. 702/CHD/2018 FOR THE A.Y. 2011-12. 4. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL. 1. THAT ORDER PASSED U/S 250(6) OF THE INCOME TAX ACT, 1961 BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-3, GURGAON IS AGAINST LAW AND FACTS ON TH E FILE IN AS MUCH AS HE WAS NOT JUSTIFIED TO 2 UPHOLD THE ACTION OF THE LD. ASSESSING OFFICER IN I NITIATING PROCEEDINGS U/S 148 OF THE INCOME TAX ACT, 1961. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-3 , GURGAON GRAVELY ERRED IN UPHOLDING THE ACTION OF THE LD. ASSESSING OFFICER IN MAKING AND A DDITION OF RS. 22,37,80,889/- REPRESENTING THE SALE PROCEEDS OF LISTED EQUITY SHARES HELD BY THE APPELL ANT FOR MORE THAN 12 MONTHS BY INVOKING THE PROVISIONS OF SEC. 68 OF THE ACT BY IGNORING THE RE LEVANT SPECIFIC FACTGS AND CIRCUMSTANCES OF THE CASE ANY BY RELYING ON EXTRANEOUS ARGUMENTS AND EVI DENCES, INCLUDING IN PARTICULAR, CIRCUMSTANTIAL EVIDENCE, WHICH HAS NO BEARING AND APPLICABILITY TO THE CASE. 3. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-3 , GURGAON WAS NOT JUSTIFIED TO UPHOLD THE ACTION OF THE LD. ASSESSING OFFICER IN TREATING THE TRANSACTIONS RELATING TO PURCHASE AND SALE OF EQUITY SHARES AS INGENUINE TRANSACTIONS. 4. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-3 , GURGAON FURTHER GRAVELY ERRED IN UPHOLDING THE ACTION OF THE LD. ASSESSING OFFICER IN MAKING A N ADDITION OF RS. 1,40,77,758/- ON ACCOUNT OF ALLEGED COMMISSION EXPENSES PAID BY THE APPELLANT F OR ARRANGING THE ALLEGED ENTRIES IN RESPECT OF LONG TERM CAPITAL GAINS BY INVOKING THE PROVISIONS OF SEC. 69C OF THE ACT ON SHEER PRESUMPTIVE BASIS. 5. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-3 , GURGAON WHILE ADJUDICATING THE APPEAL, HAS DISMISSED VARIOUS GROUNDS OF APPEAL RAISED BY THE A PPELLANT BY RELYING ON STATEMENTS OF VARIOUS PERSONS AND DATA WITHOUT AFFORDING ANY OPPORTUNITY TO CROSS EXAMINE SUCH PERSONS THEREBY IGNORING THE BASIC PRINCIPLES OF NATURAL JUSTICE DE SPITE THE FACT THAT A SPECIFIC GROUND WAS RAISED TO THIS EFFECT. 5. VIDE GROUND NO. 1 THE ASSESSEE CHALLENGED THE VALIDI TY OF INITIATION OF PROCEEDINGS UNDER SECTION 148 OF THE INCOME TAX ACT, 1 961 (HEREINAFTER REFERRED TO AS ACT). 6. THE FACTS RELATED TO THIS ISSUE AS EMERGING FROM THE ASSESSMENT ORDER DT. 29/12/2016 IN BRIEF ARE THAT A SEARCH AND SEIZURE OPERA TION UNDER SECTION 132(1) OF THE ACT WAS INITIATED BY THE DEPARTMENT ON 21/02/2014 AT THE BUSINESS AND RESIDENTIAL PREMISES OF BHUSHAN POWER & STEEL GROUP (BPSL) AL ONGWITH ITS DIRECTORS AND OTHER RELATED ENTITIES & PERSONS. DURING THE COURSE OF PRE SE ARCH / POST SEARCH ENQUIRIES, VARIOUS INCRIMINATING DOCUMENTS, PAPERS, BOOKS OF AC COUNTS ETC WERE FOUND AND SEIZED WHICH INDICATED THAT BOGUS LONG TERM CAPITAL GAIN (LTCG) , ACCOMMODATION ENTRIES IN THE CASE OF INDIVIDUALS OF BPSL GROUP AND ONE TIME ACCO MMODATION ENTRIES (OT) TOWARDS SHARE CAPITAL / SHARE PREMIUM IN THE CASE OF GROUP CONCERN WERE OBTAINED. DURING THE COURSE OF SEARCH AND SEIZURE ACTION ON 22/02 /2014 SHRI SANJAY SINGAL WAS CONFRONTED WITH THE VARIOUS INCRIMINATING EVIDENCE ALONGW ITH THE STATEMENT OF VARIOUS CONNECTED PERSONS, AND HIS STATEMENT UNDER SECTION 132(4) WAS RECORDED, HE DISCLOSED ADDITIONAL INCOME OF RS. 250 CRORES AGAIN HIS STATEMENT WAS RECORDED UNDER SECTION 3 132(4) OF THE ACT ON 06/03/2014 WHEREIN IN RESPONSE TO QUESTION NO. 2 HE STATED AS UNDER: Q. 2. ON YOUR STATEMENT RECODED U/S 132(4) OF TH E INCOME TAX ACT ON 22/02/2014, YOU SUBMITTED A LETTER DECLARING ADDITIONAL INCOME OF R S. 250 CRORES FOR THE ENTIRE GROUP. PLEASE GIVE THE PARTICULARS AND HEADS UNDER WHICH THIS ADD ITIONAL INCOME IS DISCLOSED. PLEASE ALSO GIVE THE MANNER IN WHICH THIS ADDITIONAL UNDISCLOSE D INCOME HAS BEEN DERIVED AND ALSO SUBSTANTIATE IT, HOW IT WAS DERIVED? ANS. YES, I HAVE DISCLOSED TOTAL OF RS. 250 CRORES AS ADDITIONAL INCOME FOR THE WHOLE GROUP OUT OF 250 CRORES DECLARED AS ADDITIONAL INCOME, I AM DISCLOSING AND GIVING PARTICULARS BY SUBMITTING A LETTER DATED 06/03/2014. IN THIS LETTE R, I AM DISCLOSING IN THE FOLLOWING FOR A.Y. 2011-12 & 2012-13:- 1. MRS. AARTI SINGAL 82.38 CRORES 2. MR. SANJAY SINGAL 55.57 CRORES 3. SANJAY SINGAL (HUF) 21.66 CRORES TOTAL 159.61 CRORES DETAILS OF THE BALANCE AMOUNT WILL BE SUBMITTED IN FEW TIME AFTER EXAMINING SEIZED MATERIAL. 6.1 THE A.O. POINTED OUT THAT IN THE DISCLOSURE LETTER D T. 06/03/2014 SHRI SANJAY SINGAL CATEGORICALLY STATED THAT THE AMOUNT OF SURRENDER OF RS . 159.61 CRORES WAS RELATED TO EXEMPT LTCG SHOWN BY HIM AND HIS FAMILY MEMBERS FROM SA LE OF SHARES OF M/S PARNNETA INDUSTRIES LTD. (PIL). 6.2 THE A.O. ISSUED THE NOTICE UNDER SECTION 153 A OF THE ACT DT. 29/01/2015 FOR THE A.Y. 2008-09 TO 2013-14, IN RESPONSE THE ASSESSEE FURNI SHED THE SUBMISSION ON 23/02/2015 IN WHICH SURRENDER INCOME HAD NOT BEEN REFLECTED IN THE RETURN OF INCOME OF THE ASSESSEE GROUP. THEREAFTER THE A.O. ISSUED NOTICE UN DER SECTION 143(2) OF THE ACT. THE A.O. MENTIONED THAT THE SEARCH FOLDER REVEALED THAT THE A SSESSEES NAME WAS NOT APPEARING ON WARRANT OF AUTHORIZATION, THEREFORE, HE HAD W RITTEN A LETTER DT. 13/10/2015 TO THE DDIT, FARIDABAD FOR CLARIFICATION. AS NOTHING WA S HEARD FROM THE DDIT-I FARIDABAD. THE A.O. AGAIN WROTE A LETTER DT. 31/12/2015 TO THE AD DL. CIT AND AFTER NORMAL DISCUSSION IT WAS STATED THAT THE NOTICE UNDER SECTION 153A IN THE CASE OF THE ASSESSEE TO BE DROPPED. ON 08/01/2016 A LETTER FOR SEEKING APPROVAL / PERMISSION FOR DROPPING THE PROCEEDINGS UNDER SECTION 153A WAS WRITTEN TO THE ADDL. CIT RANGE CENTRAL CHANDIGARH FOR DROPPING THE PROCEEDINGS UNDER SECTION 153A OF THE ACT AND THE APPROVAL FOR DROPPING THE PROCEEDINGS UNDER SECTION 1 53A OF THE ACT WAS RECEIVED FROM ADDL. CIT VIDE LETTER DT. 13/01/2016. THEREAFTE R, THE A.O. FROM THE ITRS OF THE ASSESSEE NOTICED THAT INCOME WAS CLAIMED EXEMPT FROM SALE OF SHARES OF VARIOUS LISTED COMPANIES FROM A.Y. 2011-12 TO 2014-15 AND IN THE STATE MENT RECORDED ON 06/03/2014 4 AND 19/03/2014 UNDER SECTION 132(4) OF THE ACT, SHRI SA NJAY SINGAL WAS NOT ABLE TO SATISFACTORILY REPLY THE QUESTION ASKED BY AUTHORIZED OFFICER AND FINALLY HE VOLUNTARILY SURRENDERED UNACCOUNTED INCOME OF RS. 250 CRORES WHICH INCLUDED AN AMOUNT OF RS. 159.61 CRORES OF LTCG EARNED THROUGH M/S PIL FOR THE A. Y. 2011-12 AND 2012-13 IN THE HAND OF SHRI SANJAY SINGAL (RS. 55.57 CRORES), SANJAY S INGHAL HUF (RS. 21.66 CRORES) AND SMT. AARTI SINGHAL (RS. 82.38 CRORES) RESPECTIVELY BU T NO FURTHER BIFURCATION FOR THE REMAINING AMOUNT HAD BEEN SUBMITTED BY HIM. THEREAFTER TH E A.O. RECORDED THE FOLLOWING REASONS FOR REOPENING THE ASSESSMENT UNDER SEC TION 147 READ WITH SECTION 148 OF THE ACT : 'A SEARCH & SEIZURE OPERATION U/S 132 OF THE IT. AC T 1961 WAS CONDUCTED IN THE 'BHUSHAN POWER & STEEL GROUP' OF CHANDIGARH (BPSL) BY THE FARIDABAD UNIT OF DIRECTORATE OF INVESTIGATION, CHANDIGARH ON 22.02.2014. 1.1. PRIOR/SUBSEQUENT TO THE ABOVE SEARCH AND SEIZURE OP ERATION VARIOUS SEARCH, SEIZURE AND SURVEY OPERATIONS WERE CONDUCTED ON NUM EROUS ENTRY OPERATORS AND THEIR BENEFICIARIES SITUATED ACROSS THE COUNTRY. ONE OF S UCH SEARCH & SEIZURE OPERATION U/S 132 OF THE IT. ACT 1961 WAS CONDUCTED BY THE DIRECTORAT E OF INVESTIGATION OF AHMADABAD IN THE CASE OF SH. SHRISH CHANDER SHAH (SCS) ON 09.04. 2013. FURTHER, ANOTHER SEARCH & SEIZURE OPERATION U/S 132 OF THE I. T. ACT 1961 WAS CONDUCT ED BY THE DIRECTORATE OF INVESTIGATION OF NEW DELHI IN THE CASE OF SH. R.K. KEDIA GROUP ALONG WITH 'BHUSHAN GROUP' OF NEW DELHI ON13/06/2014. VARIOUS INCRIMINATING DOCUMENTS AND H UGE AMOUNT OF INCRIMINATING SOFT DATA WAS FOUND AND SEIZED IMPOUNDED FORM THE DIFFER ENT PLACES CONNECTED TO THE PERSONS COVERED AND THE SWORN STATEMENTS OF THESE PERSONS WERE RECORDED. 1.2. THE CORRELATION OF THE SEIZED/IMPOUNDED DATA WITH T HE TRANSACTIONS OF LTCG MENTIONED IN THE RETURN OF INCOME OF THE ASSESSEE A ND THE SWORN STATEMENTS OF VARIOUS ENTRY OPERATORS PRIMA FACIE REVEALS THAT THE ASSESS EE HAS RECEIVED HUGE AMOUNT OF ACCOMMODATION ENTRIES IN THE GARB OF EXEMPT LONG TE RM CAPITAL GAINS (LTCG) FROM THE CARTEL OF COMPANIES MANAGED AND CONTROLLED BY SH. S HRISH CHANDER SHAH (SCS), SH. R.K. KEDIA AND THEIR VARIOUS ALLIES LOCATED ACROSS THE C OUNTRY. 2. FROM THE PERUSAL OF ITRS OF SH. SANJAY SINGAL HUF I T IS NOTICED THAT THE ASSESSEE HAS CLAIMED EXEMPT INCOME FROM SALE OF SHARES OF VARIOU S LISTED COMPANIES FROM A.Y. 2011-12 TO 2014-15. THOSE LISTED COMPANIES ARE 1) PRRANETA INDUSTRIES LTD 2) BLUE CIRCLE SERVICE LTD, 3) DB INTERNATIONAL STOCK BROKER LTD, 3) UNISIS SOF TWARE & HOLDING INDUSTRIES LTD, 4) GLOBAL INFRATECH LTD. FORMLY KNOWN AS ASIAN LAK CAPITAL & FINANCE LTD. 5) RUTRON INTERNATIONAL LTD. AND 6) GRANDAMA TRADING AGENCIES LTD. AS PER THE IN FORMATION GATHERED FROM THE ANALYSIS OF VARIOUS DOCUMENTS A TOTAL OF APPROXIMATELY RS. 1 44.02 CRORES EXEMPT LTCG HAS BEEN EARNED BY THE ASSESSEE THROUGH SH. R.K. KEDIA AND S IRISH CHANDRAKANT SHAH (SCS). THE DETAILS OF EXEMPT LTCG OF RS. 144.02 CRORES RELATED TO THE ASSESSEE ARE GIVEN IN TABLE BELOW:- FIGURES IN RS. EXEMPT LTCG EARNED BY M/S SANJAY SINGAL HUF, NAMES OF PENNY STOCK COMPANIES A.Y. 2011-12 A.Y. 2012-13 A.Y. 2013-14 A. Y. 2014-15 GRAND TOTAL PRRANETA INDUSTRIES LTD 21,65,80,899/- DB INTERNATIONAL 15,55,41,448/- BLUE CIRCLE 40,48.37,931/- UNISYS SOFTWARE & HOLDING LTD. 9,51,31,140/- GLOBAL INFRATECH LTD. FORMLY KNOWN AS ASIAN LAK CAPITAL 42,07,70,813/- 5 3. 2.1. THE EXEMPT LTCG ACCOMMODATION ENTRIES FROM THE ABOVE LISTED PAPERS COMPANIES WERE TAKEN THROUGH SH. R.K. KEDIA, AN ENTRY OPERATO R FROM DELHI. HE WAS SPECIFICALLY ASKED TO EXPLAIN HIS BUSINESS RELATION, STAKES AND HIS IN VOLVEMENT WITH THE ABOVE LISTED PAPER COMPANIES VIDE Q.NO. 11 OF HIS STATEMENT ON OATH U/ S 132(4) OF INCOME TAX ACT, ON 13.06.2014. IN REPLY TO THIS QUESTION SH. R.K. KEDI A GAVE COMPLETE DETAILS OF THESE COMPANIES LIKE STATUS OF COMPANY, NAME OF CONTROLLI NG PERSONS (OPERATORS), THEIR CONTACT NUMBERS ETC. AND CONFIRMED THAT ALL THE ABOVE COMPA NIES ARE MANAGED AND CONTROLLED BY VARIOUS ENTRY OPERATORS AND THESE ARE INVOLVED I N THE BUSINESS OF PROVIDING BOGUS ACCOMMODATION ENTRIES. THE ACCOUNTANT OF SH. R.K. K EDIA, SHRI MANISH ARORA WAS THE PERSON WHO MAINTAINED THE COMPLETE HARD AND SOFT RE CORDS OF THE TRANSACTIONS MADE THROUGH SH. R.K. KEDIA. DETAILED STATEMENTS WERE RE CORDED FOR EACH AND EVERY SEIZED DOCUMENTS. THE STATEMENTS OF SH. MANISH ARORA CONTI NUED FOR 25 DAYS AND HE GAVE FULL AND COMPLETE DETAILS OF THE BOGUS ACCOMMODATION ENT RIES PROVIDED BY SH. R.K. KEDIA TO VARIOUS BENEFICIARIES INCLUDING THE SINGALS OF BPSL GROUP. THUS, SH. R.K. KEDIA, AN ENTRY OPERATOR, HAS STATED ON OATH THAT THE VARIOUS LISTE D COMPANIES, WHOSE SHARES WERE SOLD TO PROVIDE EXEMPT LTCG ACCOMMODATION ENTRIES TO THE AS SESSEE ARE CONTROLLED AND MANAGED BY DIFFERENT ENTRY OPERATORS. THE NAMES OF THE LISTED PAPER COMPANIES ALONGWITH NAME OF THE ENTRY OPERATOR, CONTROLLING A ND MANAGING THE AFFAIRS OF SUCH COMPANIES ARE GIVEN IN TABLE BELOW: SR. NO. NAME OF THE COMPANY NAME OF ENTRY OPERATOR CONTROLLING AND MANAGING THE AFFAIRS OF THE COMPANY 1 PRANNETA INDUSTRIES LTD. SH. SHIRISH CHANDRAKANT SHAH (SCS) 2 DB INTERNATIONAL STOCK BROKR LTD. SH. S.N. DAGA 3 BLUE CIRCLE SERVICES LTD. SH. JAGDISH PRASHAD PUR OHIT 4 U NISYS SOFTWARE & HOLDING LTD. SH. JAGDISH PRASH AD PUROHIT 5 GLOBAL INFRATECH LTD. SH. JAGDISH PRASHAD PUROHIT 6 RUTRON INTERNATIONAL LTD. SH. ANIL AGGARWAL 7 GRANDAMA TRADING AGENCIES LTD. SH. SAWAN JAJU 2.2. THUS, FROM THE ABOVE DISCUSSION IT IS INFERRED THAT, SH. R.K. KEDIA HAS PLAYED KEY ROLE IN ARRANGING THE EXEMPT LTCG ACCOMMODATION ENTRIES FOR THE ASSESSEE FROM THE ABOVE NAMED COMPANIES. DURING THE POST SEARCH INVESTIGATI ON, VARIOUS INFORMATION RELATED TO THE ABOVE NAMED LISTED PAPER COMPANIES WAS COLLECTED WH ICH SHOWS THAT ALL THESE COMPANIES WERE PAPER COMPANIES, DOING NO ACTUAL BUS INESS AND WERE BEING USED FOR GIVING EXEMPT LTCG ACCOMMODATION ENTRIES BY VARIOUS ENTRY OPERATORS. S. NO PARTICULARS OF THE EVIDENCE FILE DESCRIPTION PATH IN CASE OF DIGITAL EVIDENCE HEREINAF TER REFERRED TO AS SEIZED /IMPOUNDED FROM 1. CHEQUE SHEETS FOR THE PERIOD 01.04.2009 TO 31.03.2012. FINAL ALL OT UP 310312.XLS F: \SHETTY\C \ DOCUME NTS AND SETTINGS\USER2\DESTO P 'OT ENTRIES SCS 2. ACCOUNT OFRK KEDIA IN THE BOOKS OF SHIRISH SHAH MAINTAINED IN MS EXCEL FORMAT (TILL 14.02.12) -KEDIA 2' SHEET IN MS EXCEL FILE ACL.XLS F:\PEN DRIVE BACK UP\REMOVABLE DISK\ BIPS BACKUP 14.02.12 'KEDIA 2 ' SHEET SCS 3. CHEQUE RECEIVED FROM SINGAL GROUP BY SCS 'CHEQUE RECEIVED FROM SINGALS ' CHEQUE RECEIVED FROM SINGALS GROUP BY SCS SCS 4 HARD AND SOFT DATA RKKEDIA, & FINANCE LTD. RUTRON INTERNATIONAL LTD. 9,57,38,651/- GRANDAMA TRADING AGENCIES LTD 5.16.94,004/- TOTAL 21,65,80,899/- 56,03,79,380/- 9,51,31,140/- 56,82,03,468/- 144,02,94,887/- 6 DELHI 5 EXCEL SHEETS PRAVEEN KUMAR AGARWAL, KOLKATA 6 EXCEL AND NOTEPAD SHEETS PRAVEEN KUMAR JAIN 3.1 ORAL EVIDENCE IN POSSESSSION OF THE DEPARTMENT:- DURING THE COURSE OF SEARCH AND SURVEY OPERATIONS C ONDUCTED BY DIRECTORATE OF INCOME TAX (INV), AHMADABAD ON 09/04/2013 STATEMENTS OF SH . SHIRISH CHANDER SHAH, HIS ASSOCIATES AND THE KEY EMPLOYEES WERE RECORDED. DUR ING THE COURSE OF THEIR STATEMENTS THEY WERE ASKED TO EXPLAIN ABOUT THE BUSINESS ACTIV ITIES OF SHIRISH CHANDER SHAH. THE FOLLOWING KEY EMPLOYEES AND ASSOCIATES WERE EXAMINE D DURING THE COURSE OF SEARCH AND SURVEY OPERATIONS:- 7 4. THE DETAILS OF THE PAYMENTS MADE BY THE ASSESSEE , FOR THE PURCHASE OF THE SHARES OF M/S. PRRANETA INDUSTRIES LIMITED (PIL) ARE AS FOLLO WS:- DATE NAME OF THE PERSON NO. OF SHARES AMOUNT 04.08.2009 SANJAY SINGAL HUF 32,00,000 72,00,000 4.1. IT TO STATE THAT DURING THE COURSE OF SEARCH AND SU RVEY AT THE OFFICE PREMISES OF SHRI SHIRISH CHANDER SHAH (SCS), BACKUP OF THE BOOKS OF ACCOUNT WAS TAKEN AND IN THAT AN EXCEL SHEET NAMED 'KEDIA 2' WAS ALSO IMPOUNDED IN T HE MS EXCEL FILE 'ACLXLS' IN THE BIPS FOLDER LOCATED AT THE PATHF:\PEN DRIVE BACK UP\REMO VABLE DISK\ BIPS BACKUP 14.02.12. IN THE 'KEDIA 2' SHEET DETAILS OF THE SHARES OF M/S. P IL SOLD BY THE BPSL FAMILY HAVE BEEN RECORDED UNDER THE HEADING 'NEW ACCOUNT'. THE ABOVE SHEET CONTAINS THE DETAILS OF CASH RECEIVED BY SCS FROM KEDIA (LE. SHRI R.K. KEDIA OF DELHI) ON BEHALF OF BHUSHAN GROUP AGAINST THE PAYOUT MADE ON THE PURCHASE OF SHARES. 4.2. FROM THE ANALYSIS OF THE TRADE DETAILS OF M/S PIL R ECEIVED FROM BSE AND ENQUIRIES CONDUCTED BY DEPARTMENT, IT IS OBSERVED THAT MAJORI TY OF THE SHARES OF M/S PIL HELD BY 'BPSL FAMILY WERE SOLD TO (COUNTER PARTIES) ENTITI ES CONTROLLED AND MANAGED BY SCS. SOME OF THESE ENTITIES ARE GIVEN BELOW: SR. NO. NAME OF THE COMPANY 1. AILISH TRADERS PVT. LTD. 2 AVANCE TECHNOLOGIES LTD 3. JESHNA MUILTLTRADE PVT. LTD. 4. KINITA REAL ESTATE PVT. LTD. 5. MIDWA Y TRADELINK PVT. LTD. 6 ADDO CONSTRUCTIONS PVT LTD 7 ADAMINA TRADERS PRIVATE LIMITED 8 ROHO REAL ESTATE PRIVATE LIMITED 9 MIDPOINT TRADELINK PVT. LTD. 10 ARISTO MEDIA AND ENTERTAINMENT PRIVATE LIMITED 11 GATEWAYINFRACON PRIVATE LIMITED 12 ADILA TRADERS PRIVATE LTD 13 MAHAN INDUSTRIES LTD 8 14 ETHAN CONSTRUCTIONS PRTVATE LIMITED 15 VAND R YARNS PRIVATE LIMITED 16 ABU AH REAL ESTATE PVT LTD 17 SHRIGANESH SPINNERS LTD 18 IND1VAR TRADERS PRIVATE LIMITED 19 ACACIO TRADELINK PVT LTD 20 RADFORD REAL ESTATE PRIVATE LIMITED 21 GAJPAL BUILDINFRA PRIVATE LIMITED 22 C AND K REALTORS PRIVATE LTD. 23 MAGAN MERCANTILE PVT LTD 4.3. THESE COMPANIES ARE INCLUDED IN THE LIST OF 21 2 COMPANIES WHICH HAVE BEEN ACCEPTED BY SCS IN STATEMENTS ON OATH TO HAVE BEEN MANAGED AND CONTROLLED BY HIM. FURTHER CORROBORATIVE SWORN AFFIDAVITS HAVE BEEN GI VEN BY SO CALLED DUMMY DIRECTORS OF THESE COMPANIES. 5. FURTHER, THE ANALYSIS OF THE TIME DIFFERENCE BETWEE N THE ORDER PLACED BY THE ASSESSEE AND THE TRADE EXECUTION HAS ALSO BEEN CARR IED OUT ON THE DATA RECEIVED FROM BSE. IT HAS BEEN FOUND THAT OUT OF THE TOTAL 3138 S HARE SALE TRANSACTIONS ENTERED INTO BY 'BPSL FAMILY', MENTIONED ABOVE, 48% OF THE TOTAL TR ADES WERE EXECUTED WITHIN ONE MINUTE OF THE ORDER PLACED IN THE EXCHANGE AND MORE THAN 7 1% ORDERS WERE EXECUTED WITHIN 5 MINUTES OF PLACING THE ORDERS ON THE EXCHANGE [THE TRADING DATA RECEIVED FROM BSE WAS ANALYZED FOR TIME DIFFERENCE OF PLACING OF THE ORDE R AND EXECUTION OF TRADE], 6. THE EVIDENCE AND STATEMENTS OF THE EMPLOYEES OF SIR ISH CHANDER SHAH (SCS) WERE CONFRONTED TO HIM DURING THE COURSE OF SEARCH AND I N THE POST SEARCH PROCEEDINGS, IN HIS STATEMENTS REFERRED TO ABOVE. IN THESE STATEMENTS H E HAS ADMITTED TO HAVE PROVIDED VARIOUS TYPES OF ACCOMMODATION ENTRIES AGAINST RECE IPT OF CASH FROM THE CLIENTS EITHER DIRECTLY OR THROUGH INTERMEDIARIES. HE HAS ALSO ADM ITTED TO BE ENGAGED IN SYNCHRONISED TRADING IN THE SHARES OF VARIOUS LISTED COMPANIES M ANAGED AND CONTROLLED BY HIM SO AS TO FACILITATE LTCG TO THE CLIENTS AGAINST RECEIPT OF C ASH FROM THEM. IN THESE STATEMENTS SHIRISH CHANDER SHAH (SCS) RECORDED UNDER SECTION 132(4) OF THE ACT HAS HIMSELF ADMITTED AND ACCEPTED THAT HE IS ENGAGED IN PROVIDING ACCOMMODAT ION ENTRIES AGAINST RECEIPT OF CASH. THE MODUS OPERANDI ACCOMMODATION ENTRIES INCL UDING EXEMPT LTCG OF HIS STATEMENT. THE MODUS OPEDANDI FOLLOWED ENTRIES OF L TCG, AS EXPLAINED BY HIM IN HIS STATEMENT IS SUMMARIZED HEREUNDER: THE PREFERENTIAL SHARES ARE ALLOTTED BY WAY OF PRIV ATE PLACEMENT BY THE LISTED COMPANIES CONTROLLED AND MANAGED BY HIM TO VARIOUS CLIENTS/BENEFICIARIES WHO APPROACH HIM FOR GETTING ACCOMMODATION ENTRY OF LONG TERM CAPITAL GAINS, IN CERTAIN CASES THE CLIENTS PURCHASE SHARES FROM THE COMPANIES UNDER HIS CONTROL ON BOLT AT LOW PRICES. THEREAFTER, THE PRICE OF SHARE OF THE LISTED COMPAN IES IS ARTIFICIALLY RAISED BY WAY OF PURCHASE AND SALE OF SHARES THROUGH THE WEB OF COMP ANIES. WHEN THE SHARE PRICES ARE RAISED TO HIGH LEVELS, TH E SHARES OF THESE CLIENTS ARE PURCHASED BY THE COMPANIES AND INDIVIDUALS UNDER HIS CONTROL ON BOLT USING THE CASH RECEIVED FROM THE CLIENTS THAT HAS BEEN LAYERED IN THE BUYER COMP ANY/INDIVIDUAL'S BANK ACCOUNT AFTER LAYERING THE FUNDS THROUGH THE GROUP COMPANIES. 6.1. A SEARCH AND SEIZURE ACTION WAS ALSO CARRIED O UT ON M/S PLL BY THE DIRECTORATE OF INCOME TAX (INV.), AHMADABAD ON 09.04.2013 AT THE R EGISTERED OFFICE AND THE RESIDENTIAL PREMISES OF THE MANAGING DIRECTOR OF M/S P1L SHRI O MPRAKASH ANANDILAL KHANDELWAL THIS SEARCH ACTION ESTABLISHED THAT M/S. P1L WAS ONLY A PAPER COMPANY WITHOUT ANY ACTIVITIES AND WAS BEING USED BY SCS FOR PROVIDING VARIOUS TYP ES OF ACCOMMODATION ENTRIES INCLUDING LTCG. THE STATEMENT OF MD, SHRI OMPRAKASH ANANDIALAL KHNADELWAL WAS RECORDED UNDER SECTION 132(4) OF THE ACT ON 30.05.2 013 AND 31.05.2013. HE IN HIS STATEMENT 9 HAS SPECIFICALLY MENTIONED THAT M/S. PIL HAS BEEN E NGAGED IN PROVIDING ACCOMMODATION ENTRIES. HE HAS ALSO STATED THAT THE SHARES OF PIL UNDER HIS CONTROL WERE TRANSFERRED TO VARIOUS COMPANIES AND PERSONS OFF-MARKET OR THROUGH STOCK EXCHANGE, AS DIRECTED BY SCS. HE HAS ALSO STATED THAT THE SAME WAS DONE SO AS TO PROVIDE AND FACILITATE EXEMPT LTCG USING THE SHARES OF M/S. PIL. ON EXAMINATION AND AN ALYSIS OF THE STATEMENTS OF SHRI OMPRAKASH ANANDILAL KHANDELWAL (OPK), SCS, REFERRED TO ABOVE, IT IS ESTABLISHED THAT SCS HAS USED THE SHARES OF M/S. PIL FOR PROVIDING LTCG ENTRIES AGAINST RECEIPT OF CASH FROM THE CLIENTS. THE MODUS OPERANDI AS STATED BY SCS, OPK I N THEIR STATEMENTS IS SUMMARIZED HEREUNDER :- * SCS APPROACHES PROMOTERS OF DEFUNCT LISTED COMPANIE S AND ENTERS INTO AN ARRANGEMENT WITH THEM TO USE THEIR COMPANIES FOR GI VING ACCOMMODATION ENTRIES. HE THEN APPOINTS DUMMY DIRECTORS IN SUCH COMPANIES AND OPEN S A BANK ACCOUNT OF SUCH COMPANIES IN MUMBAI WHICH IS OPERATED BY HIM. WITH REGARD TO PIL IT IS CLEAR FROM THE STATEMENT OF SCS AND OPK, DISCUSSED ABOVE. * TO HAVE EFFECTIVE CONTROL OVER THE SHARES OF THE PENNY STOCK COMPANIES, THE SHARE CAPITAL OF THESE PENNY STOCK COMPANIES IS STR UCTURED BY SCS BY ALLOTTING A LARGE NUMBER OF FRESH SHARES THROUGH PRIVATE PLACEMENT. T HE STRUCTURING OF SHARE CAPITAL INVOLVES TWO TYPES OF ALLOTMENT: B. MAJORITY OF THE SHARES ARE ALLOTTED A NUMBER OF PRIVATE COMPANIES WHICH TOO ARE UNDER CONTROL OF SCS. THE INVESTMENT IS MADE BY THE PRIVA TE LIMITED COMPANIES IN THE SHARES OF LISTED COMPANIES FOLLOWING TWO MODUS OPERANDI: * FIRSTLY, THE UNACCOUNTED CASH RECEIVED FROM CLIEN TS IS LAYERED INTO THE INVESTING PRIVATE COMPANY WHICH INVESTS IN THE SHARES OF THE LISTED COMPANY AND THE LISTED COMPANY IN TURN PROVIDES ACCOMMODATION ENTRY OF SHA RE CAPITAL / PREMIUM TO THE CLIENT FROM WHOM CASH WAS RECEIVED. * SECONDLY, AN ARTIFICIAL STRUCTURE OF SHARE CAPITA L OF THE LISTED COMPANY IS CREATED, WHEREIN, PRIVATE LIMITED COMPANY MANAGED BY SCS SUB SCRIBES TO THE SHARES OF THE LISTED COMPANY. THE LISTED COMPANY IN TURN ADVANCES THESE FUNDS TO ANOTHER PRIVATE LIMITED COMPANY MANAGED BY SCS. THIS MONEY SO RECEIVED BY T HE SECOND PRIVATE LIMITED COMPANY IS LAYERED IN THE WEB OF COMPANIES MANAGED BY SCS AND ANOTHER PRIVATE LIMITED COMPANY INVESTS IN THE SHARE CAPITAL OF THE LISTED COMPANY. IN THIS MANNER THE CYCLE OF LAYERING AND INCREASING THE SHARE CAPITAL OF THE LISTED COMPANY IS REPEATED SEVERAL TIMES. IN THIS WAY THE SHARE CAPITAL OF THE LISTED COMPANY IS ARTIFICIALLY STRUCTURED WITHOUT ACTUAL FLOW OF FUNDS INTO THE ENTITIES UNDE R THE CONTROL OF SCS. THEREAFTER, THE PRICES OF THESE SHARES WERE ARTIFIC IALLY RAISED THROUGH SYNCHRONIZED TRADING ON THE STOCK EXCHANGE AMONGST THE PRIVATE COMPANIES AND OTHER ENTITIES/PERSONS UNDER CONTROL OF SCS OR ASSOCIATED WITH HIM. AFTER LAPSE OF AROUND ONE YEAR TO EIGHTEEN MONTHS FROM THE ISSUE OF PREFERENCE SHARES, THE PERSONS IN TENDING TO GET LTCG ARE ALLOWED TO OFFLOAD THEIR HOLDING AT THE ARTIFICIALLY INFLATED PRICES AND THE PRIVATE COMPANIES UNDER CONTROL OF SCS BECOME COUNTER PARTIES TO SUCH TRADE S ON THE STOCK EXCHANGE. IN CASE OF PIL THE SHARE PRICE WAS JACKED UP FROM RS. 2.25/- P ER SHARE TO RS. 87.10 PER SHARE DURING A PERIOD APRIL 2009 TO MARCH 2011. A GRAPHICAL REPRES ENTATION OF THE SHARE PRICE MOVEMENT OF M/S. PIL IS AS UNDER: 7 THERE ARE PLETHORA OF OTHER EVIDENCES IN POSSESSION OF DEPARTMENT WHICH INDICATE THAT M/S. PRRANETA INDUSTRIES LIMITED IS A PAPER COMPANY WITHOUT ANY ACTIVITIES AND IS BEING USED SO AS TO PROVIDE VARIOUS TYPES OF ACCOMMODATIO N ENTRIES INCLUDING LTCG BY SCS. 10 7.1. VARIOUS OTHER EVIDENCES WERE ALSO GATHERED FRO M THE POSSESSION SH. PRAVEEN KUMAR JAIN (PINTU ALIAS CHINTAN, A MUMBAI BASED ENTRY OPE RATOR AND A CLOSE ALLAY OF SCS AND R.K. KEDIA) DURING A SEARCH AND SEIZURE OPERATION U/S 13 2 OF THE INCOME TAX ACT, 1961 CARRIED OUT BY THE DIRECTORATE OF INCOME TAX (INV.), MUMBAI . FROM THE ANALYSIS AND CROSS VERIFICATION OF THE DATA SEIZED FROM R.K KEDIA, SCS AND PRAVEEN KUMAR JAIN IT WAS GATHERED THAT THE ENTRIES MENTIONED IN THEIR ACCOUN TS WERE EXACTLY CROSS MATCHING. THUS, THE ENTRIES RECORDED IN THE ACCOUNTS MAINTAINED BY PINTU AND SEIZED IN AN INDEPENDENT SEARCH OPERATION CONDUCTED BY MUMBAI DIRECTORATE AR E INDEPENDENTLY CORRELATED WITH THE ENTRIES RECORDED IN THE EVIDENCE SEIZED / IMPOU NDED DURING THE COURSE OF SEARCH IN CASE OF SCS. 7.2 THE CORRELATION BETWEEN THE BOOKS OF ACCOUNTS A ND OTHER DOCUMENTS SEIZED IN THE CASE OF SHRI SHIRITISH CHANDER SHAH (SCS) INDEPENDE NTLY CORRELATE WITH EVIDENCE SEIZED IN THE CASE OF SHRI PRAVEEN KUMAR JAIN (ALIAS PINTU/CH INTAN) WHICH IS SUFFICIENT TO ESTABLISH THAT THE ENTRIES RECORDED IN THE EVIDENCE SEIZED ARE TRU E, CORRECT AND INDEPENDENTLY VERIFIABLE. 7.3 ANALYSIS OF BOOKS OF ACCOUNTS OFSIRISH CHANDRAKANT SHAH (SC S), PRAVEEN KUMAR JAM (PINTU ALIAS CHINTAN), R.K. KEDIA AND BANK ACCOUNTS OF BPS L WAS ALSO MADE AND THE ENTRIES RECORDED IN 'KEDIA2 SHEET' VIZ-A-VIZ PAYMENTS MADE FROM A/C 0131008700000327 IN PUNJAB NATIONAL BANK IN THE NAME OF M/S BHUSHAN POWER & ST EEL LTD. WERE CROSS VERIFIED. FROM THIS VERIFICATION/ANALYSIS, IT IS OBSERVED THAT THE TRAN SACTIONS RECORDED INKEDIA2 SHEET' ARE EXACTLY SAME AS RECORDED IN THE BANK STATEMENT OF A /C NO 0131008700000327, PNB OF M/S BPSL THUS, THIS FURTHER ESTABLISHES THAT THE TRANSA CTIONS RECORDED IN 'KEDIA2 SHEET' ARE AUTHENTIC AND THE ASSESSEE GROUP WAS INVOLVED IN RE CEIVING ACCOMMODATION ENTRIES. 7.4. FURTHER THE DOCUMENTS FOUND & SEIZED DURING THE SEA RCH ACTION ON SHRI R.K. KEDIA AND RELATED ENTITIES ON 13.06.2014 BY THE DIRECTORA TE OF INCOME TAX(LNV.), NEW DELHI ALSO CORROBORATE THE SAME FACTS. 7.5. FURTHER, ON THE DATE OF SEARCH ON BHUSHAN POWER & S TEEL GROUP I.E. ON 22.02.2014, ALL THE ABOVE FACTS, AND FINDINGS INCLUDING COMPLET E MODUS OPERANDI FOLLOWED BY SCS FOR GIVING ACCOMMODATION ENTRIES WERE CONFRONTED TO SHR I SANJAY SINGAL WHILE RECORDING HIS STATEMENT ON OATH U/S 132(4) DATED 06.03.2014 AND 1 9.03.2014 RESPECTIVELY. DURING THE COURSE OF THESE STATEMENTS DATED 06/19.03.2015 HE W AS NOT ABLE TO SATISFACTORILY REPLY THE QUESTIONS ASKED BY THE AUTHORIZED OFFICERS AND FINA LLY HE VOLUNTARILY SURRENDERED UNACCOUNTED INCOME OF RS. 250 U/S 132(4) IN THE WHO LE GROUP. THIS VOLUNTARILY SURRENDER OF UNACCOUNTED INCOME OF RS. 250 CRORES INCLUDED THE A MOUNT OF RS 159.61 CRORES OF LTCG EARNED THROUGH M/S PRRANEETA INDUSTRIES LTD. (PIL) FOR ASSESSMENT YEARS 2011-12 AND 2012- 13 IN THE HANDS OF SHRI SANJAY SINGHAL (RS. 55.57 C RORES), SANJAY SINGHAL IIUF (RS. 21.66 CRORES) AND SMT. AARTI SINGHAL (RS. 82.38 CRORES) RESPECTIV ELY BUT NO FURTHER BIFURCATION FOR THE REMAINING AMOUNT HAS BEEN SUBMITTED BY HIM THEREAFT ER. 8. CONSIDERING THE FACTS & CIRCUMSTANCES IT IS PRIM A FACIE NOTICED THAT THE INCOME ' CLAIMED AS EXEMPT UNDER HEAD LONG TERM CAPITAL GAIN (LTCG) FROM THE SALE OF SHARES OF M/S PRRANEETA INDUSTRIES LTD (PIL) IS NOT GENUINE. THEREFORE, THE LONG TERM CAPITAL GAIN OF RS. 21.65 CRORES CLAIMED TO HAVE BEEN EARNED THROUGH SA LE OF SHARES OF M/S PRRANEETA INDUSTRIES LTD. (PIL) HAS ESCAPED ASSESSMENT. MORE SO, COMMISSION PAID BY THE ASSESSEE @6.5% OF TOTAL SALES CONSIDERATION OF RS. 22.37 CRO RES, WHICH IS RS. 1.4 CRORE HAS ALSO ESCAPED ASSESSMENT, BEING THE AMOUNT OF COMMISSION PAID IN CASH FOR GETTING THE ACCOMMODATION ENTRIES, AS ADMITTED BY SH. R. K. KED IA ON THE BASIS OF EVIDENCES FOUND DURING THE COURSE OF SEARCH & SEIZURE OPERATION. (I) A.Y/ SR.NO (2) NAME OF TH E SCRIPT 2011-12 (3) TOTAL RECEIPTS AGAINST SALE OF SHARES (RS. IN CRORES) (4) LTCG SHOWN AS PER RETURN OF INCOME (RS. IN CRORES) (5) COMMISSION @ 6.5% OF CAPITAL GAIN (COL. NO. 4) (PAID IN CASH) (RS. IN CRORES) (6) TOTAL (CAPITAL GAIN + COMMISSION) (TOTAL OF COLUMN 3 & 5) 1 PRRANETA INDUSTRIES LTD. 22,37,80,899.24/- 21,65,80,899.24/- 1,40,77,758.43/ - 23,78,58,657.67/- 11 9. I HAVE GONE THROUGH THE COMPLETE RECORD AND PERU SED THE DETAILS AVAILABLE WITH THE DEPARTMENT AND I AM SATISFIED THAT THIS IS A FIT CA SE TO ISSUE NOTICE U/S 148 AS THE AMOUNT OF RS. 23,78,58,657.67 HAS NOT BEEN OFFERED FOR TAX. T HEREFORE, IN VIEW OF THE ABOVE, I HAVE REASON TO BELIEVE THAT THE AMOUNT OF RS. 23.78 CROR ES HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE INCOME TAX ACT, 1961. 6.3 IN RESPONSE TO THE ABOVE NOTICE THE ASSESSEE FILED I TS RETURN OF INCOME ON 05/04/2016 DECLARING TOTAL INCOME OF RS. 2,31,150/- AND REQUESTED FOR SUPPLY OF REASONS RECORDED UNDER SECTION 147 OF THE ACT WHICH WERE PROVI DED TO THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ON 15/09/2016. THE A.O. MENTIONED THAT AS THE ASSESSEE HAD NOT FILED ANY OBJECTION WITH RESPECT TO THE REASONS RE CORDED FOR REOPENING OF THE CASE THEREFORE THE PROCEDURES LAID DOWN BY THE HON'BLE S UPREME COURT IN THE CASE OF M/S GKN DRIVESHAFTS (INDIA) LTD. VS. INCOME TAX OFFI CER AND OTHER, APPEAL CIVIL NO. 7731 OF 2002 WERE NOT APPLICABLE IN THE CASE OF THE ASS ESSEE. ACCORDINGLY, THE A.O. FRAMED THE ASSESSMENT BY OBSERVING THAT THE TRANSACTION O F LTCG CLAIMED BY THE ASSESSEE AS EXEMPT WAS TO BE TREATED AS SHAM TRANSA CTION AND DESERVES TO BE ADDED AS INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT A LONGWITH THE UNACCOUNTED COMMISSION EXPENSES @ 6.5% OF THE TOTAL LTCG OF THE YEA R FOR ARRANGING THOSE ENTRIES. ACCORDINGLY, THE ADDITION OF RS. 23.78 CRORES WAS MADE FOR THE YEAR UNDER CONSIDERATION AS PER FOLLOWING DETAILS: TOTAL SALE PROCEEDS U/S 68 RS. 22,37,80,889/- 6.5% OF NET GAIN (LTCG) U/S 69C TOWARDS COMMISSION EXPENSES RS. 1,40,77,758/- TOTAL ADDITION TO THE RETURNED INCOME RS. 23,78,58,647 /- 7. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: (1) IT IS HUMBLY SUBMITTED THAT AS ON THE DATE OF SEARCH I.E. 21-02-2014, ASSESSMENT PROCEEDINGS FOR A/Y 2012-13 HAD ALREADY BEEN COMPLE TED VIDE ORDER NO CPC/1213/P4/1306877063 DATED 19/01/2014 PASSED U/S 143(1) OF THE ACT (COPY ENCLOSED) AND NO INCRIMINATING MATERIAL HAD BEEN FOUND DURING THE COURSE OF SEARCH WITH RESPECT TO THE YEAR UNDER APPEAL. (2) IN THIS CONNECTION, YOUR HONOUR'S ATTENTION IS INVITED TO THE PROVISIONS OF SECTION 153A OF THE ACT THE RELEVANT PARTS OF WHICH READ AS FOLLOWS ; - 153A. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SEC TION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, THE CASE OF A PERSON WHERE A SEARCH IS INITIATED 12 UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUME NTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31 ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL- (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNIS H WITHIN SUCH PERIOD AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF INCOME IN RE SPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE ( B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139; (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSME NT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR I N WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE: PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESS MENT YEAR: PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, I F ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS R EFERRED TO IN THIS [SUB SECTION] PENDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE. (3) IT IS IMPLICIT IN THE ABOVE PROVISIONS THAT WHE RE AN ASSESSMENT ORDER HAS ALREADY BEEN PASSED FOR A YEAR WITHIN THE RELEVANT SIX ASSESSMEN T YEARS, THEN THE ASSESSING OFFICER IS DUTY BOUND TO REOPEN THOSE PROCEEDINGS AND REASSESS THE TOTAL INCOME BUT BY TAKING NOTE OF THE UNDISCLOSED INCOME IF ANY, UNEARTHED DURING THE SEARCH. THE LEGISLATIVE INTENT BEHIND INCORPORATING THE SAID PROVISIONS INTO THE STATUTE BOOK WAS TO ESTABLISH A LIVE LINK/ UNDENIABLE NEXUS BETWEEN SOME INCRIMINATING MATERIA L/DOCUMENT ETC. FOUND/UNEARTHED/DISCOVERED IN THE COURSE OF SEARCH U/S 132 AND UNDISCLOSED INCOME ARISING THEREFROM. (4) IN THIS REGARD, IT IS HUMBLY AND RESPECTFULLY S UBMITTED THAT THE PROVISIONS OF LAW, AS ENSHRINED IN SECTION 153A OF THE ACT AND AS INTERPR ETED BY VARIOUS COURTS, INCLUDING THE DELHI HIGH COURT, AND JURISDICTIONAL INCOME TAX APP ELLATE TRIBUNAL, CHANDIGARH FROM TIME TO TIME, IN A NUMBER OF CASES CLEARLY LAY DOWN THAT ONLY THOSE ASSESSMENT PROCEEDINGS WHICH ARE PENDING BEFORE AN ASSESSING OFFICER ON TH E DATE OF INITIATION OF THE SEARCH SHALL ABATE AND MERGE INTO ASSESSMENT PROCEEDINGS INITIAT ED U/S 153A OF THE ACT UNDOUBTEDLY, IN SUCH CASES THE SCOPE OF ASSESSMENT IS WIDE OPEN AND WOULD COVER MATTERS REFLECTED IN THE ORIGINAL RETURN OF INCOME AND ALSO MATTERS REFL ECTED FROM THE MATERIAL SEIZED IN THE COURSE OF SEARCH U/S 132 OF THE ACT. (5) HOWEVER, IMPORTANTLY AND PERTINENTLY IT SHOULD BE NOTED THAT COMPLETED PROCEEDINGS WILL NOT MERGE WITH THE PROCEEDINGS INITIATED U/S 1 53A BUT WILL SURVIVE AND THEIR SANCTITY WILL , INVIOLABLY, HAVE TO BE RESPECTED UNLESS INDELIBLY V IOLATED BY ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH U/S 132 OF THE AC T TO PUT IT DIFFERENTLY COMPLETED PROCEEDINGS, WHETHER U/S 143(3) OR EVEN U/S 143(L)( A) OF THE ACT CAN BE INTERFERED WITH BY PROCEEDINGS U/S 153A ONLY ON THE BASIS OF SOME POSI TIVELY INCRIMINATING SEARCH MATERIAL FOUND DURING THE COURSE OF ACTION U/S 132 OF THE AC T. (6) IN VIEW OF THE SAME SINCE NO INCRIMINATING DOCU MENT PERTAINING TO THE YEAR UNDER APPEGL I.E A/Y2012-13 HAS BEEN FOUND DURING THE COU RSE OF SEARCH, IT IS SUBMITTED THAT NO CAUSE LIES FOR THE ISSUE OF THE SAID NOTICES BY RES ORT TO THE PROVISIONS OF SECTION 153A OF THE ACT AND ACCORDINGLY THE SAID NOTICES ARE VOID AB-IN ITIO RENDERING THEM INFRUCTUOUS. (7) IN THIS CONNECTION REFERENCE MAY ALSO BE MADE T O THE JUDGEMENT PASSED BY HON'BLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INC OME-TAX (CENTRAL) - III VS. KABUL CHAWLA [(2016) 380ITR 573 (DELHI)] WHEREIN IT HAS BEEN CLE ARLY HELD THAT COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY LD ASSESSING OFFICER WHIL E MAKING ASSESSMENT UNDER SECTION 153A ONLY ON BASIS OF SOME INCRIMINATING MATERIAL UNEART HED DURING COURSE OF SEARCH WHICH WAS NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN COURSE OF ORIGINAL ASSESSMENT. 13 WHILE DELIVERING THE AFORESAID JUDGEMENT THEIR LORD SHIPS HAVE ANALYZED THE PROVISIONS OF SECTION 153A AS FOLLOWING:- I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF T HE ACT, NOTICE UNDER SECTION 153A (1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN W HICH 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 HAV E TO BE COMPUTED 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 TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS, THERE WILL BE ONL Y 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 153A DOES NOT SAY THAT ADDITIO NS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE O F THE SEARCH, 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 RE LEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY, AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATE RIAL' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE CO MPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REAS SESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153A IS RELATABL E TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEAR CH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, T HE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UND ER SECTION 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 BROUGHT ON THE RECORD OF THE A.O. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUM ENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT P RODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT (8) SINCE IN THE INSTANT CASE SINCE NO INCRIMINATIN G DOCUMENTS/MATERIAL OR INFORMATION OF ANY SORT HAS BEEN UNEARTHED/DISCOVERED IN THE SEARC H OPERATION U/S 132A OF THE ACT THE COMPLETED ASSESSMENTS CANNOT BE INTERFERED WITH AND ACCORDINGLY THE ASSESSMENT ORDER IS BAD IN LAW VOID AND INFRUCTUOUS. IN THIS CONNECTION , YOUR HONOUR'S ATTENTION IS ALSO INVITED TO THE FOLLOWING DECIDED CASE LAWS: - > COMMISSIONER OF INCOME -TAX VS ANIL KUMAR BHATIA [( 2013) 352 ITR 493 (DELHI)]; > COMMISSIONER OF INCOME -TAX VS CHETAN DAS LACHMAN D AS [(2012) 254 CTR 392 (DEL)]; > SANJAY AGGARWAL VS DEPUTY COMMISSIONER OF INCOME -T AX, CENTRAL CIRCLE -5, NEW DELHI [(2014) 150ITD 692 (DELHI-TRIB)] > SMT RASHMI WADHWA VS. DCIT, CENTRAL CIRCLE-8, NEW D ELHI [ORDER DATED 18.01.2016 IN ITA NO. 5184/DEL/2014 PASSED BY THE HON'BLE ITAT DE LHI BENCH', NEW DELHI; 14 > M/S SIRIAGO PHARMA (P) LTD. VS. DCIT, CENTRAL CIRCL E-3, JAIPUR [ORDER DATED 13.01.2016 IN ITA NO. 1010/JPI/2013 PASSED BY THE HON'BLE ITAT JA IPUR BENCH, JAIPUR; > DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 23 V S. SH. HIMANSHU B. KANAKIA [ORDER DATED 18.01.2016 IN ITA NO. 3187/MUM/2014 PASSED BY THE HON'BLE ITAT 'H'BENCH ', MUMBAI. (9) IN PARTICULAR, IT MAY BE NOTED THAT THE JURISDI CTIONAL CHANDIGARH BENCH OF THE HON'BLE INCOME TAX APPELLATE TRIBUNAL IN THE CASE OF MALA B UILDERS (P) LTD VS AC1T, CENTRAL CIRCLE - II, CHANDIGARH VIDE ORDER DATED 23/08/2016 IN ITA N OS. 433 TO 437 OF 2014 HAS ALSO UNEQUIVOCALLY AFFIRMED THE ABOVE INTERPRETATION OF LAW. IT IS RESPECTFULLY PRAYED THAT THE ABOVE GROUND MAY KINDLY BE ADJUDICATED IN THE LIGHT OF THE SUBMISSIONS MADE ABOVE. 8. THE ASSESSEE ALSO SUBMITTED THE WRITTEN SUBMISSION O N THE MERITS OF THE CASE WHICH IS INCORPORATED AT PAGE NO. 124-155 OF THE IMPUGN ED ORDER, FOR THE COST OF REPETITION THE SAME IS NOT REPRODUCED HEREIN. HOWEVER THE LD. CIT(A) DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE WHO SUSTAINED THE ADDI TION MADE BY THE A.O. BY PASSING THE COMBINED IMPUGNED ORDER. 9. NOW THE ASSESSEE IS IN APPEAL AND HAS CHALLENGED THE V ALIDITY OF THE ISSUANCE OF INITIATION OF THE PROCEEDINGS UNDER SECTION 147 OF THE ACT BY ISSUING THE NOTICE U/S 148 OF THE ACT. 10. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT NO INC RIMINATING MATERIAL FOR THE PURPOSE OF SECTION 153A OF THE ACT WAS FOUND AT THE TIM E OF SEARCH ON THE GROUP TO WHICH THE ASSESSEE BELONGS, WHICH TOOK PLACE ON 21/02/20 14, THEREFORE THE PROCEEDINGS UNDER SECTION 153A OF THE ACT WERE DROPPED IN THE CASE OF THE ASSESSEE. HOWEVER, THE A.O. ISSUED THE NOTICE DT. 26/03/2016 FOR REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT R.W.S 148 OF THE ACT MERELY ON THE BORROWED SATISFACTION BY ENTIRELY RELYING ON UNVERIFIED 3 RD PARTY INFORMATION /MATERIAL/STATEMENTS WHICH HAD ALREADY LOST THE EVIDENTIARY VALUE ON WANT OF BEING MAT ERIAL UNDER SECTION 142(3) OF THE ACT AND HAVING NO PRESUMPTIVE EVIDENTIARY VALUE UNDER SEC TION 292 C OF THE ACT FOR THE LACK OF HAVING BEEN DISCOVERED DURING THE COURSE OF SE ARCH UNDER SECTION 132 OF THE ACT AND SUCH PRE EXISTING DEPARTMENTAL DATA THUS HAVING NO EVIDENTIARY VALUE COULD NOT HAVE BEEN UTILIZED AS LEGALLY ADMISSIBLE TANGIBLE M ATERIAL FOR RECORDING SATISFACTION IN AS MUCH AS THE AO ALSO KNEW THAT THE NOTICES UNDER SECT ION 131 OF THE ACT TO THE PERSONS FROM WHOM SUCH PRE EXISTING MATERIAL HAD BEEN F OUND, HAD NOT RESPONDED TO HIS SUMMONS, THEREFORE, THE SAID MATERIAL COULD NOT HAVE BEEN RELIED UPON FOR FASTENING ANY SUCH TAX LIABILITY EITHER IN THE HANDS OF THE INDIVID UAL ASSESSEES IN WHICH CASE THE 15 SEARCH WAS UNDERTAKEN OR IN THE CASE OF THE PRESENT ASSESS EE, AS SUCH THE AFORESAID MATERIAL WAS NOT INFORMATION OR EVIDENCE BASED ON WHICH THE AO COULD HAVE ARRIVED AT A BELIEF OF ESCAPEMENT OF INCOME SINCE THE SAME HA D NO LIVE LINK OR NEXUS WITH THE REASONS RECORDED AND ESCAPEMENT OF INCOME. 10.1 IT WAS SUBMITTED THAT THE BASIS AND FUNDAMENTAL REQUIREMENT TO INVOKE THE PROVISIONS OF SECTION 147 OF THE ACT FOR THE PURPOSE OF VALIDITY OF THE REOPENING ASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE IS THE EXIS TENCE OF A REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT . IT WAS CONTENDED THAT THE SCOPE AND AMBIT OF THE PHRASE REASON TO BELIEVE I S WELL SETTLED AND TRITE LAW WHEREIN VARIOUS DECISIONS INCLUDING THOSE OF THE HONBLE APEX COURT HAVE TIME AND AGAIN HELD THAT THE REASONS FOR THE FORMATION OF BELIEF M UST HAVE A RATIONALE CONNECTION WITH THE INFORMATION RECEIVED AND THERE MUST B E SOME DIRECT NEXUS OR LIVE LINK BETWEEN THE MATERIAL COMING TO THE NOTICE OF THE A.O . FOR THE FORMATION OF THE BELIEF THAT THERE HAS BEEN ESCAPEMENT OF INCOME OF THE ASSESSEE FROM ASSESSMENT IN THE PARTICULAR YEAR BECAUSE OF HIS FAILURE TO DISCLOS E FULLY AND TRULY MATERIAL FACTS. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: A) CALCUTTA DISCOUNT (1961) 41 ITR 191 (SC) B) ITO VS. LAKMANI MEWAL DAS, (1976) 103 ITR 437 (SC) C) SHEO NATH SINGH VS. AACIT, 972 SCR (1) 175 (SC) D) S. NARAYANAPPA AND ORS. VS. CIT, BANGALORE, AIR 1967 SC 523 10.2. IT WAS SUBMITTED THAT THE REASONS RECORDED FOR T HE RESORT TO THE REASSESSMENT PROCEEDINGS AND CONSEQUENT ISSUE OF THE NOTICE UNDER S ECTION 148 OF THE ACT IN THE INSTANT CASE WAS BASED SOLELY ON INFORMATION RECEIVED FR OM THE INVESTIGATION WING WHICH HAD NOT BEEN INDEPENDENTLY VERIFIED BY ANY DEGREE OF APPLICATION OF MIND OR CONDUCTING ANY SUCH ENQUIRIES BY THE AO WHO MERELY BY REL YING UPON THE INFORMATION PROVIDED BY THE DIT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS WITHOUT SUPPLEMENTING THE SAME TO ANY DEGREE BY APPLICATION OF M IND OR ANY INDEPENDENT ENQUIRIES OF HIS OWN HAS ONLY RELIED UPON A SUSPICION A S TO THE ESCAPEMENT OF INCOME AND THAT THE RELEVANT LEGAL PROVISIONS IN THIS REGARD SPE CIALLY CALL FOR A DEFINITE CONCLUSION AS TO THE REASON TO BELIEVE AS OPPOSED TO REASON TO SUSPECT. IT WAS REITERATED THAT IN THE ASSESSEES CASE THERE WAS ONLY A SUSPICION AS TO SOME INCOME 16 HAVING ESCAPED ASSESSMENT WHICH SUSPICION CANNOT BY ITSEL F SUSTAIN ANY ACTION UNDER SECTION 147 / 148 OF THE ACT. RELIANCE WAS PLACED ON T HE FOLLOWING CASE LAWS: * SIGNATURE HOTELS PVT. LTD. VS. ITO & ANR [(2012) 20 TAXMANN.COM 797 (DELHI)] (15) * CIT VS. SMT. PARAMJIT KAUR [(2009) 311 ITR 38 (P& H)] * SARTHAK SECURITIES CO. PVT. LTD. VS. ITO[(2020) 32 9 ITR 110(DELHI)];\ * CIT VS. SFIL STOCK BROKING LTD. [(2010) 325 ITR 28 5 (DELHI)]; * PR. CIT VS. G&G PHARMA INDIA LTD. [(2016) 384 ITR 147 (DELHI)] 10.3 IT WAS STATED THAT THE REASSESSMENT PROCEEDINGS IN ITIATED MERELY ON THE BASIS OF THE INFORMATION PROVIDED BY EXTERNAL SOURCE WITHOUT ANY INDEPENDENT APPLICATION OF MIND BY THE AO WERE VOID-AB-INITIO. THE RELIANCE WAS PL ACED ON THE FOLLOWING CASE LAWS: - ITO VS. M/S. SOFTLINE CREATIONS (P) LTD. (IN ITA NO . 744/DEI/2012) - CIT VS. GANGESHWARI METAL PVT. LTD. (2014) 264 CTR 277 (DEL HC) - M/S. KHATRI PROJECTS PVT. LTD. VS. ITO (I.T.A. NO. 4353/DEL/2016) - M/S. DEVANSH EXPORTS VS. ACIT (I.T.A. NO. 2178/KOL/ 2017) - MOTI ADHESIVE P. LTD. VS. ITO (ITA NO. 3133/DEL/20I 8) - CIT VS. OASIS HOSPITALITIES PVT. LTD. (2011) 333 IT R 119 (DEL HC) - CIT VS. FAIR INVEST LTD. (2013) 357 ITR 146 (DEL HC ) - SARTHAK SECURITIES CO. LTD. VS. ITO 329 ITR 110 (DE LHI HC) - DEEPARAJ HOSPITAL (P) LTD. VS. ITO, 41/AGRA/2017 DT . 01.06.2018 (AGRA TRIB) - ITO VS. RELIANCE CORPORATION (2017) 55 ITR 69 (SN) (MUM) (TRIB) - PCIT VS. RMG POLYVINYL (I) LTD. (2017) 83 TAXMANN.C OM 348 (DELHI HC) - PCIT VS. MEENAKSHI OVERSEAS (P) LTD. (2017) 82 TAXM ANN.COM 300 (DELHI HC) - GEE CEE CYCLE BALLS PVT. LTD. VS. ITO, ITA NO. 867/ DEL2013 DT. 30.10.2015 - CIT VS. GOEL SONGS GOLDEN ESTATE PVT. LTD. ITA NO. 212 2012 DT 11.04.2012 - CIT VS. VRINDAVAN FARMS |P) LTD. ITA NO. 71, 72, 85 DEL2015 DT. 12.08.2015 - DWARKA GEMS LTD. ITA NO. 71/ JP/2017 (ITAT JAIPUR) - NIRMALA AGARWAL VS. ACIT (ITA NO. 995 & 996 JP/2016 ) (ITAT JAIPUR) 10.4 IT WAS FURTHER STATED THAT THE ITAT DELHI BENCH IN THE CASE OF SHRI BRIJ BHUSHAN SINGAL & ORS VS. ACIT(ITA NOS. 1415-1417, 1479-1481, 1483-1484/DEL/2018) HAS HELD THAT THE DOCUMENTS SEIZED FROM THE PREMISES OF THIRD PARTIES CANNOT BE USED FOR MAKING ADDITION IN THE HANDS OF THE ASSESSEE WITHOUT THE ASSESSEE BEING GRANTED AN OPPORTUNITY OF CROSS EXAMINATION OF THOSE PARTIES AND TH AT THE PRESUMPTION UNDER SECTION 132(4A)/ 292C IS AVAILABLE ONLY IN THE CASE OF THE PERSON IN WHOSE POSSESSION AND CONTROL THE DOCUMENTS WERE FOUND AND NOT IN THE CASE OF THIRD PARTIES. ACCORDINGLY IT WAS SUBMITTED THAT THE MATERIAL WHICH W AS UNRELIABLE PIECE OF EVIDENCE AND BEREFT OF EVIDENTIARY VALUE AND THUS COULD NOT HAVE B EEN ENTRUSTED IN THE HANDS 17 OF THE LD. AO TO PROVIDE HIM JURISDICTION FOR REOPENING THE CONCLUDED ASSESSMENTS BY INVOKING THE PROVISIONS OF SECTION 147 OF THE ACT. 10.5 IT WAS ALSO STATED THAT THE DISCLOSURE WAS MADE UNDER SECTION 132(4) OF THE ACT AMOUNTING TO RS. 250 CRORES BY SHRI SANJAY SINGAL UNDE R DURESS AND THE SAME SHALL BE EVIDENT FROM THE FACT THAT BEREFT OF ANY SUCH INCRIMINATI NG MATERIAL SUCH AN ADMISSION WAS UNWARRANTED. IT WAS FURTHER SUBMITTED THAT SHRI SAN JAY SINGAL WAS EXAMINED FOR LONG HOURS AND THE SAID DISCLOSURE WAS MADE MERELY TO BUY P EACE WHICH WAS TOTALLY AGAINST THE CBDT CIRCULAR NO. F. NO. 286/2/2003-IT(INV.) DT. 10/03/2003 AND F. NO. 286/98/2013-IT DT. 18/12/2014 WHEREIN THE PROPOSITION THAT ASSESSMENT P URSUANT TO SEARCH OPERATION ARE REQUIRED TO BE BASED ON INCRIMINATING MATERIAL D ISCOVERED AS A RESULT OF SEARCH OPERATION IN THE CASE OF THE ASSESSEE AND THAT NO RELIANC E SHOULD BE PLACED ON CONFESSIONS / ADMISSIONS OF UNDISCLOSED INCOME OBTAINED IN THE COURSE OF SEARCH HAS BEEN SPELT OUT IN UNERRING TERMS BY THE CBDT. IT WAS ST ATED THAT THE CBDT HAS CATEGORICALLY NOTED SUCH CONFESSION, IF NOT BASED UPON C REDIBLE EVIDENCE ARE LATER RETRACTED BY THE CONCERNED ASSESSEE WHILE FILING RETURNS OF INCOME AND IN THESE CIRCUMSTANCES SUCH CONFESSIONS DURING THE COURSE OF SEA RCH AND SEIZURE AND SURVEY OPERATIONS DO SERVE ANY USEFUL PURPOSE OR HAVE ANY EV IDENTIARY VALUE, THEREFORE, THE OFFER OF ADDITIONAL INCOME OF RS. 250 CRORES AND SUBS EQUENT BIFURCATION THEREOF TO THE EXTENT OF RS. 159.61 CRORES MADE BY SHRI SANJAY SINGA L IN THE COURSE OF HIS STATEMENT RECORDED UNDER SECTION 132(4)(AND SUBSEQUENTLY WITHDRAWN WHILE FILING RETURNS IN RESPONSE TO NOTICE U/S 153A OF THE ACT DO NOT AS PER TH E CLEAR MANDATE OF THE CBDT, CONSTITUTE CREDIBLE EVIDENCE FOR THE PURPOSE OF REOPE NING / REAGITATING COMPLETED PROCEEDINGS. IT WAS SUBMITTED THAT THE SAID STATEME NT OF SHRI SANJAY SINGAL WAS ALSO WITHDRAWN BEFORE THE RECODING OF REASONS UNDER SECTION 147 OF THE ACT IN THE ASSESSEES CASE AND THAT THE DEPARTMENT HAD NOT POINTED OUT ANY INCRIMI NATING MATERIAL TO PROVE THAT SUCH WITHDRAWAL / RETRACTION WAS NOT VALID. THEREFOR E SUCH A STATEMENT BEING WITHDRAWN AND THUS NONEXISTENT ON THE DATE OF RECODING OF SATISFACTION UNDER SECTION 147 OF THE ACT, COULD NOT HAVE BEEN USED TO SAY THAT THE RE HAD BEEN ANY ESCAPEMENT OF INCOME WARRANTING THE NOTICE UNDER SECTION 148 OF THE AC T FOR THE YEARS UNDER CONSIDERATION. 10.6 IT WAS FURTHER SUBMITTED THAT THE LD. CIT(A) HAD M ADE THE CATEGORICAL FINDINGS THAT NOTHING INCRIMINATING MATERIAL BELONGING TO THE ASSESS EE WAS FOUND FROM THE 18 PREMISES OF THIRD PARTIES THEREFORE THE SAID THIRD PA RTY MATERIAL / EVIDENCE AS RELIED UPON BY THE DEPARTMENT FOR REOPENING THE ASSESSMENT, COULD NO T HAVE BEEN THE BASIS FOR FORMATION OF BELIEF THAT THE ASSESSEES INCOME HAD ESCAP ED ASSESSMENT AND THE SAME COULD NOT HAVE BEEN UTILIZED BY THE AO FOR THE PURPOSE OF REOPENING THE ASSESSMENT UNDER SECTION 148 OF THE ACT AFTER THE PROCEEDINGS UNDE R SECTION 153A OF THE ACT WERE DROPPED. IT WAS VEHEMENTLY ARGUED THAT THE REASONS RECO RDED BY THE AO FOR THE PURPOSE OF REOPENING THE ASSESSMENT UNDER SECTION 148 OF THE ACT WAS BASED SOLELY ON BORROWED SATISFACTION WITHOUT APPLICATION OF MIND BY T HE A.O. AND MOREOVER THE REASONS RECORDED BY THE AO WERE NOTHING BUT THE EXACT RE PLICA OF THE ASSESSMENT ORDER PASSED UNDER SECTION 153A OF THE ACT IN THE CASE OF SHRI SANJAY SINGHAL, AARTI SINGHAL, AND ANIKET SINGHAL, THEREFORE, THE REOPENING OF THE ASSESSMENT MERELY ON THE BASIS OF BORROWED SATISFACTION WAS INSUFFICIENT FOR THE PURPOSE OF SUSTAINING ANY SUCH ADDITION UNDER SECTION 148 OF THE ACT. THE LD. COUNSEL F OR THE ASSESSEE STATED THAT THE REASONS RECORDED FOR REOPENING THE ASSESSMENT UNDER SECTI ON 147 OF THE ACT WAS A REPRODUCTION OF THE ORDERS UNDER SECTION 153A IN THE CAS ES OF THE AFORESAID ASSESSEE. IN SUPPORT OF THE ABOVE, A CHART WAS FURNISHED WHICH READ A S UNDER: REASONS FOR REOPENING AS REPRODUCED IN SHRI SANJAY SINGAL (HUF) ORDER FOR A.Y. 2011-12 - PARA NO. & PAGE NO. CORRESPONDING PARA IN ASSESSMENT ORDER U/S 153A IN THE CASE OF SANJAY SINGHAL FOR A.Y. 2011-12 PARA 1.1, PG. 3 PARA 8, PG. 34 PARA 2.1, PG. 4 PARA 1.1, PG. 65, PARA 1.2, PG. 69 PARA 2.2, PG. 5 PARA 1.4, PG. 69 PARA 3.1, PG. 5 PARA 2. PG. 70 PARA 3.2, PG. 6 PARA 2.1, PG. 71 PARA 3.3. PG. 6 PG. 72 PARA 3.3.1, PG. 6 PARA 2.3, PG. 74 PARA 3.3.2. PG . 6 PARA 2.3.1, PG. 74 PARA 3.4, PG. 7 PARA 2.4, PG. 75 & PARAS 4.1 TO 4.2 2, PGS. 84-89 PARA 3.6, PG. 8 PARA 2.5, PG. 75 PARA 3.7, PG. 8 PARA 2.6, PG. 76 PARA 3.8, PG. 9 PARA 2.7, PG. 77 PARA 3.9, PG. 9 PARA 2.8, PG. 77 PARA 3.10, PG. 9 PARA 2.9, PG. 77 PARA 3.1!, PG. 9 PARA 2.10, PG. 78 PARA 3.12, PG. 10 PARA 2.1 L.PG. 78 PARA 3.13, PG. 10 PARA 2.11 (12 TH LINE ONWARDS), PG. 79 PARA 3.14, PG. 10 PARA 2.12, PG. 79 PARA 3.15, PG. 11 PARA 2.13, PG. 80 PARA 3.16, PG. 11 PARA 2.14, PG. 81 PARA 3.17, PG. 12 PARA 2.15 & 2.16, PG. 81 PARA 3.19, PG. 13 PARA 2.17, PG. 82 PARA 4.1 TO 4.9, PGS. 14-17 PARA 3 PG. 86 - ANNEXUR E TO THE 153A ORDER 19 (SCN) PARA 5, PG. 17 PARAS 4,4.1 TO 4.22 PGS. 83-89 PARA 6.1, PG. 18 PARA 5, PG. 89 PARA 6.2, PG. 18 PARA 5.1, PG. 90 PARA 6.3, PG. 19 PARA 5.2, PG. 90 PARA 6.4, PG. 20 PARA 5.3, PG. 91 PARA 7.1, PG. 20 PARA 6, PGS. 91-92 PARA 7.3, PG. 21 PARA 6.1, PG. 92 PARA 7.4, PG. 21 PARA 6.2 PG. 93 PARA 7.5, PG. 22 PARA 6.3, PG. 93 PARA 7.6, PG. 22 PARA 6.4 PG. 94 PARA 7.8, PG. 22 PARA 6.5, PG. 95 PARA 7.9, PG. 23 PARA 6.6, PG. 95 PARA 8, PG. 23 PARA 2.9, PG. 128 10.7 IT WAS EMPHASIZED THAT THE ASSESSMENT IN THE CASE OF THE ASSESSEE FOR THE A.Y. 2011-12 TO 2013-14 STOOD COMPLETED UNDER SECTION 143( 1) OF THE ACT AND THE TIME LIMIT FOR ISSUING NOTICES UNDER SECTION 143(2) OF THE ACT S TOOD EXPIRED AS ON THE DATE OF REOPENING OF THE ASSESSMENT AND THAT EVEN IF SCRUTINY ASSE SSMENTS UNDER SECTION 143(3) OF THE ACT WERE TO HAVE BEEN MADE, THE SAME WOULD NOT FU LFIL CRITERIA LAID DOWN UNDER SECTION 142(2) OF THE ACT SINCE THE AO HAD NOT CONDUCTED A NY SUCH INDEPENDENT ENQUIRY OF HIS OWN BUT HAD MERELY RELIED ON BORROWED SA TISFACTION, ON THE BASIS OF THIRD PARTY MATERIAL / STATEMENTS WHICH COULD IN NO MANNER BE TE RMED TO BE INCRIMINATING IN NATURE, EVEN FOR THE PURPOSE OF SECTION 153A OR 153(C ) OF THE ACT TO RENDER THE SAME SUFFICIENT FOR THE PURPOSE OF SECTION 148 OF THE ACT. T HEREFORE WHEN NONE OF THE SAID MATERIAL AND / OR STATEMENTS WERE INDEPENDENTLY EXAMINE D BY THE AO SO AS TO PUT SUCH MATERIAL TO THE ASSESSEE UNDER SECTION 142(3) OR FOR THAT TO EVEN TO SUSTAIN THE ADDITION UNDER SECTION 143(3) OF THE ACT THEN HOW THE SAME COULD HAVE BEEN UTILIZED FOR REOPENING THE ASSESSMENT UNDER SECTION 148 OF THE ACT IN THE ASSESSEES CASE. IT WAS SUBMITTED THAT WHAT COULD NOT HAVE BEEN DONE DIRECTLY WA S NOT PERMISSIBLE TO BE DONE OBLIQUELY, MEANING THEREBY, WHATEVER IS PROHIBITED BY LAW TO BE DONE COULD NOT HAVE BEEN LEGALLY EFFECTED BY AN INDIRECT AND CIRCUITOUS CO NTRIVANCE. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: * CIT VS. KALVINATOR OF INDIA LTD. (2002) 256 ITR 1 ( DEL)(FB) * WINDSON ELECTRONICS (P) LTD. & ANR. VS. UOI & ORS (20 04) 269 ITR 481 (CAL) * SMT. DURGABATI & SMT. NARMADABALA GUPTA VS. CIT, (1956) 30 ITR 101(PAT); * RAJA YADVENDRA DATT DUBE VS. STATE OF UTTAR PRADES H (1964) 54 ITR 506 (ALL) * BABUL LATH VS. ACIT (2002) 83 ITD 691 (MUM) 20 10.8 IT WAS FURTHER SUBMITTED THAT AS THE THIRD PARTY M ATERIAL HAD NO PRESUMPTIVE VALUE WITH RESPECT TO SECTION 292 C OF THE ACT THEN THE BURDEN O F PROOF LIES WITH THE DEPARTMENT WHICH HAD NOT BEEN DISCHARGED AND THUS THE SAID T HIRD PARTY DEPARTMENTAL MATERIAL / EVIDENCES/STATEMENTS FIRST HAV E TO BE PROVED TO HAVE SOME SORT OF LIVE CASUAL NEXUS WITH THE UNDISCLOSED INCOME OF THE ASSESSEE TO SUSTAIN THE ADDITION UNDER SECTION 148 OF THE ACT, ESPECIALLY WHEN T HE SCOPE OF WHAT CONSTITUTES A FULL AND TRUE DISCLOSURE OF MATERIAL FACTS IS ALS O WELL SETTLED LAW WHERE THE ASSESSEE IS ONLY REQUIRED TO DISCLOSE THE PRIMARY FACTS AND NOTHING MORE. IT WAS CONTENDED THAT THE AO WAS REQUIRED TO SHOW THAT THERE EXISTED A REASON TO BELIEVE (BASED ON CREDIBLE AND TANGIBLE MATERIAL) THAT THE ASSESSEE HAS FAILED TO FULL Y AND TRULY DISCLOSE THE PRIMARY FACTS REQUIRED FOR THE PURPOSES OF ASSESSING ITS CAS E AND SUCH REASON TO BELIEVE FOR THE PURPOSES OF REOPENING THE ASSESSMENT UNDER SECTION 147 O F THE ACT R.W.S 148 OF THE ACT CANNOT BE BASED ON SURMISES, CONJECTURES OR OCCASIONED BY A CHANGE IN OPINION BUT MUST BE BASED ON COGENT MATERIAL WHICH ESTABLISHES A LI VE CASUAL NEXUS BETWEEN THE INFORMATION AND INFERENCE SO DRAWN BY THE AO. RELIANCE WA S PLACED ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT-II VS . MULTIPLEX TRADING AND INDUSTRIAL CO. LTD. [2015] 63 TAXMANN.COM 170(DELHI). IT WAS CONTE NTED THAT THE REASONS RECORDED BY THE AO WERE NOT REASONABLE AND THE SAME WERE VAGUE I N NATURE TO ESTABLISH THAT THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT FOR R EOPENING THE ASSESSMENT UNDER SECTION 148 OF THE ACT. THEREFORE, THE REASSESSME NT PROCEEDINGS IN THE ASSESSEES CASE WERE BAD IN LAW, VOID AB-INITIO AND CONSEQUENT ADD ITION WERE UNWARRANTED, UNSUSTAINABLE AND DESERVES TO BE QUASHED. 11. IN HIS RIVAL SUBMISSION THE LD. STANDING COUNSEL ST RONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AND FURTHER SUBMITTED T HAT THE AO HAD THE INFORMATION THAT THE ASSESSEE HAD WRONGLY CLAIMED EXEMPT INCOME FRO M SALE OF SHARES OF VARIOUS LISTED COMPANIES AS SUCH THE INCOME ESCAPED THE ASSES SMENT. ACCORDINGLY NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED AND THE ASSESSEE DID NOT RAISED ANY OBJECTION. IT WAS FURTHER SUBMITTED THAT DURING THE SECOND SEARCH ON 13/06/2014 INCRIMINATING DOCUMENTS WERE FOUND FROM THE PREMISES OF SHRI R.K. K EDIA WHICH WERE NOT DOUBTED AND ESTABLISHED THAT ASSESSEES INCOME ESCAPED THE A SSESSMENT AND THUS DOCUMENTS / MATERIAL FOUND DURING THE COURSE OF SEARCH COULD HAVE BEEN USED FOR REOPENING THE ASSESSMENT UNDER SECTION 148 OF THE ACT. IT WAS FURTHER SUBMITTED THAT SHRI SANJAY SINGAL 21 IN HIS STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT OFFERED THE INCOME FOR TAXATION WHICH WAS LATER ON RETRACTED WITHOUT ANY REASO N, THEREFORE THE AO RIGHTLY HELD THAT THE INCOME OF THE ASSESSEE ESCAPED THE ASSESSMENT A ND WAS JUSTIFIED IN ISSUING THE NOTICES UNDER SECTION 148 OF THE ACT AS THE INCOME OF THE ASSESSEE ESCAPED THE ASSESSMENT. IT WAS ACCORDINGLY SUBMITTED THAT THE REAS SESSMENT FRAMED BY ISSUING THE NOTICES UNDER SECTION 147 R.W.S 148 OF THE ACT WAS FULL Y JUSTIFIED. 12. AS REGARDS TO THE DROPPING OF PROCEEDINGS UNDER S ECTION 153A OF THE ACT IN THE ASSESSEES CASE, IT WAS SUBMITTED THAT THE PROVISION OF SECTION 153A OF THE ACT COULD NOT BE INVOKED UNLESS DOCUMENTS SEIZED ETC. BELONGS TO A PERSON OTHER THAN THE PERSON SEARCHED. HOWEVER THE CASE OF AN ASSESSEE CAN BE REOPE NED UNDER SECTION 148 OF THE ACT, WHERE THE DOCUMENTS SEIZED IN THE CASE OF SEARCHED P ERSON I.E; OTHER THAN THE ASSESSEE GIVES RISE TO A REASONABLE INFERENCE OF ESC APEMENT OF INCOME IN THE HANDS OF THIRD PERSON I.E; THE ASSESSEE. THUS, THE INDEPENDENT POW ER AVAILABLE TO AO OF THE THIRD PERSON UNDER SECTION 147 OF THE ACT CANNOT BE ARTIFICIAL LY CURTAILED. IT WAS FURTHER SUBMITTED THAT FOR USURPING JURISDICTION UNDER SECTION 147 OF THE ACT THE DOCUMENTS / PAPERS FOUND IN THE COURSE OF SEARCH NEED NOT BELONG TO THE PERSON OTHER THAN THE PERSON SEARCHED AND MERE DEMONSTRABLE CONNECTION OR LIVE LINK TO SUCH THIRD PERSON REVEALING ESCAPEMENT OF INCOME IS ADEQUATE TO INVOKE THE REMEDY UNDER SECTION 147 OF THE ACT. IT WAS STATED THAT IN CONTRAST TO THE PROVI SION OF SECTION 153C OF THE ACT THE AO CAN INVOKE THE PROVISION OF SECTION 147 OF THE ACT IND EPENDENTLY ON ARRIVING AT A CONCLUSION OF ESCAPEMENT OF INCOME FOR A GIVEN ASSESSMENT YEAR REGARDLESS OF SATISFACTION OF THE AO OF SEARCHED PERSON AND THE TWO SE CTIONS I.E; 147 & 153 C OF THE ACT OPERATE QUITE DIFFERENTLY. AND THAT THE SCHEME OF T HE ACT DOES NOT SUGGEST THAT MERE SEARCH ACTION REVEALING INCRIMINATING MATERIAL AGAI NST THE PERSON OTHER THAN SEARCHED PERSON WOULD AUTOMATICALLY OUST THE POWER OF THE AO OVER THE ASSESSEE CONCERNED UNDER SECTION 147 OF THE ACT. THEREFORE THE ACT ION OF THE AO UNDER SECTION 147 OF THE ACT IN THE ASSESSEES CASE WAS WITHIN THE FO UR CORNERS OF LAW AND COULD NOT BE FAULTED. 13. IT WAS FURTHER STATED THAT IN THE ASSESSEES CAS E WHERE THE ONEROUS PROCEEDINGS UNDER SECTION 153C OF THE ACT HAS NOT BEEN INVOKED AND COU LD NOT POSSIBLY BE INVOKED, THERE WAS NO IMPEDIMENT OF INITIATING THE PROCEE DINGS UNDER SECTION 147 OF THE ACT BY THE AO. RELIANCE WAS PLACED ON THE DECISION O F THE ITAT, AHMEDABAD 22 BENCH B IN THE CASE OF SHAILESH S. PATEL VS. ITO, WARD -5, PALAMPUR REPORTED AT [2018] 97 TAXMANN.COM 570, COPY OF THE SAME WAS FURNISHED WHIC H IS PLACED ON RECORD. 14. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTI ES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS NOT IN DISPUTE THAT A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE ACT TOOK PLACE ON 21/02/2014 IN THE CASE OF BPSL GROUP TO WHICH THE ASSESSEE BELONGS. THE BA SIS FOR THE SEARCH WAS CERTAIN PRE EXISTING THIRD PARTY MATERIAL / STATEMENT. HOWEVE R, NO INCRIMINATING MATERIAL FOR THE PURPOSE OF SECTION 153A WAS FOUND. THE A.O. ISSUED THE NOTICED DT. 29/01/2015 UNDER SECTION 153A OF THE ACT TO THE ASSESSEE AND ALSO ISSUE D NOTICE UNDER SECTION 142(1) OF THE ACT DT. 12/08/2015 SEEKING DETAILS OF LTCG CLAIM IN ITR, LEDGER OF PURCHASER / SELLER IN THE BOOKS OF THE ASSESSEE(S) & CASH FLOW STATEMENT, TH E A.O. ALSO ISSUED SHOW CAUSE NOTICE DT. 20/10/2015 AND 09/11/2015. THEREAFTER THE A.O. SOUGHT APPROVAL FROM THE LD. ADDITIONAL CIT VIDE LETTER DT. 08/01/2016 FOR DROPPI NG THE PROCEEDINGS UNDER SECTION 153A OF THE ACT IN THE CASE OF THE ASSESSEE AND THE APPRO VAL WAS GRANTED ON 13/01/2016. ACCORDINGLY THE PROCEEDINGS UNDER SECTION 1 53A OF THE ACT IN THE CASE OF ASSESSEE WERE DROPPED BUT THE A.O. PROCEEDED TO ISS UE NOTICE UNDER SECTION 147 R.W.S 148 OF THE ACT FOR REOPENING THE ASSESSMENT BY ISSUING THE NOTICE DT. 26/03/2016 AND RECORDING THE REASONS WHICH ARE REPRODUCED IN PARA 3 AT P AGE NO. 3 TO 12 OF THE ASSESSMENT ORDER DT. 29/12/2016. 15. ON PERUSAL OF THE AFORESAID REASONS RECORDED IN T HE ASSESSMENT ORDER IT WOULD BE CLEAR THAT THE NOTICE UNDER SECTION 153A OF THE ACT DT. 2 9/01/2015 FOR THE A.Y. 2008-09 TO 2013-14 WAS ISSUED TO THE ASSESSEE WHO IN RESPONSE T O THE SAID NOTICE FILED THE SUBMISSIONS ON 23/02/2015. THEREAFTER NOTICE UNDER SECT ION 143(2) WAS ISSUED AND DULY SERVED UPON THE ASSESSEE ON 10/08/2015. IN THE PRESENT CA SE, THE A.O. NOTICED THAT THE NAME OF THE ASSESSEE WAS NOT APPEARING ON WARRANT OF AUTHO RIZATION, HE THEREFORE REQUEST TO THE ACIT TO DROP THE NOTICE ISSUED UNDER SEC TION 153A AND APPROVAL FOR DROPPING THE PROCEEDINGS WAS RECEIVED VIDE LETTER DT. 13/01/2016, ACCORDINGLY THE PROCEEDINGS UNDER SECTION 153A OF THE ACT WERE DROPPED . THE A.O. THEREAFTER INITIATED THE PROCEEDINGS UNDER SECTION 147 OF THE ACT AND ISSUE D THE NOTICE DT. 26/03/2016 TO THE ASSESSEE UNDER SECTION 148 OF THE ACT, ON THE BASIS THAT SEARCH AND SURVEY OPERATION WERE CONDUCTED ON NUMEROUS ENTRY OPERATORS AND THEIR BENEFICIARIES UNDER SECTION 132 OF THE ACT. THE A.O. ALSO MENTIONED THAT THE I NCOME TAX RETURNS OF THE 23 ASSESSEE REVEALED THAT THE ASSESSEE HAD CLAIMED EXEMPT INCOME FROM SALE OF SHARES OF VARIOUS LISTED COMPANIES WHICH SHOWS THAT ALL THE MATERIA L ON THE BASIS OF WHICH THE REOPENING UNDER SECTION 147 OF THE ACT WAS DONE, WAS ALRE ADY AVAILABLE ON THE RECORD, AS A.O. HIMSELF ADMITTED THAT THE ASSESSEE CLAIMED THE LTCG AS EXEMPT. THEREFORE AT THE MOST IF THE ADDITION WAS REQUIRED TO BE MADE THAT C OULD HAVE BEEN DONE IN THE REGULAR ASSESSMENT PARTICULARLY WHEN THE NOTICE UNDER SE CTION 143(2) HAD ALREADY BEEN ISSUED TO THE ASSESSEE. HOWEVER THE A.O. CHOSE TO ISSU E THE NOTICE UNDER SECTION 148 OF THE ACT ON THE BASIS OF THE INFORMATION RECEIVED FROM DI RECTORATE OF INVESTIGATION WING, AHMEDABAD & DELHI ETC. 15.1. ON THE ISSUE RELATING TO THE REOPENING UNDER SECTIO N 148 OF THE ACT ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING, THE HON'BLE DELHI HIGH COURT IN THE CASE OF PRINCIPLE COMMISSIONER OF INCOME TAX VS. G AND G PHARMA INDIA LTD. (SUPRA) HELD AS UNDER: THE BASIC REQUIREMENT OF LAW FOR REOPENING AN ASSES SMENT IS APPLICATION OF MIND BY THE ASSESSING OFFICER, TO THE MATERIALS PRODUCED PRIOR TO REOPENING THE ASSESSMENT, TO CONCLUDE THAT HE HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. UNLESS THAT BASIC JURISDICTIONAL REQUIREMENT IS SATISFIED A POS T MORTEM EXERCISE OF ANALYSING MATERIALS PRODUCED SUBSEQUENT TO THE REOPENING WILL NOT MAKE AN INHERENTLY DEFECTIVE REASSESSMENT ORDER VALID. IT HAS FURTHER BEEN HELD AS UNDER: THAT ONCE THE DATE ON WHICH THE SO-CALLED ACCOMMO DATION ENTRIES WERE PROVIDED WAS KNOWN, IT WOULD NOT HAVE BEEN DIFFICULT FOR THE ASS ESSING OFFICER, IF HE HAD IN FACT UNDERTAKEN THE EXERCISE. TO MAKE A REFERENCE TO THE MANNER IN WHICH THOSE VERY ENTRIES WERE PROVIDED IN THE ACCOUNTS OF THE ASSESSEE, WHIC H MUST HAVE BEEN TENDERED ALONG WITH THE RETURN, WHICH WAS FILED ON NOVEMBER 14,200 4 AND WAS PROCESSED UNDER SECTION 143(3) OF THE ACT. WITHOUT FORMING A PRIMA FACIE OP INION, ON THE BASIS OF SUCH MATERIAL, IT WAS NOT POSSIBLE FOR HIM TO HAVE SIMPLY CONCLUDED T HAT IT WAS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK BY WAY OF ACCOMMODATION ENTRIES. THE BASIC JURISDICTIONAL REQ UIREMENT WAS APPLICATION OF MIND BY THE ASSESSING OFFICER TO THE MATERIAL PRODUCED BEFO RE ISSUING THE NOTICE FOR REASSESSMENT. WITHOUT ANALYSING AND, FORMING A PRIMA FACIE OPINIO N ON THE BASIS OF MATERIAL PRODUCED, IT WAS NOT POSSIBLE FOR THE ASSESSING OFFICER TO CONCL UDE THAT HE HAD REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. 15.2 ON A SIMILAR ISSUE THE HON'BLE JURISDICTIONAL HIG H COURT IN THE CASE OF CIT VS. SMT. PARAMJIT KAUR (SUPRA) HAS HELD AS UNDER: THAT THE ASSESSING OFFICER HAD NOT EXAMINED THE IN FORMATION RECEIVED FROM THE SURVEY CIRCLE BEFORE RECORDING HIS OWN SATISFACTION OF ESC APED INCOME AND INITIATING REASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAD THUS ACTED O NLY ON THE BASIS OF SUSPICION AND IT COULD NOT BE SAID THAT IT WAS BASED ON BELIEF THAT THE INCOME CHARGEABLE TO TAX HAD ESCAPED INCOME. THE ASSESSING OFFICER HAD TO ACT ON THE BASIS OF 'REASONS TO BELIEVE' AND NOT ON 'REASONS TO SUSPECT'. THE TRIBUNAL RIGHTLY C ONCLUDED THAT THE ASSESSING OFFICER HAD FAILED TO INCORPORATE THE MATERIAL AND HIS SATISFAC TION FOR REOPENING THE ASSESSMENT AND 24 THEREFORE THE ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT FOR REASSESSMENT PROCEEDINGS WAS NOT VALID. 15.3 SIMILARLY, THE HON'BLE DELHI HIGH COURT IN CASE OF SARTHAK SECURITIES CO. P. LTD. VS. ITO (SUPRA) HELD AS UNDER: THAT THE FORMATION OF BELIEF WAS A CONDITION PRECE DENT AS REGARDS THE ESCAPEMENT OF THE TAX PERTAINING TO THE ASSESSMENT YEAR BY THE ASSESS ING OFFICER. THE ASSESSING OFFICER WAS REQUIRED TO FORM AN OPINION BEFORE HE PROCEEDED TO ISSUE A NOTICE. THE VALIDITY OF REASONS, WHICH WERE SUPPOSED TO SUSTAIN THE FORMATION OF AN OPINION, WAS CHALLENGEABLE. THE REASONS TO BELIEVE WERE REQUIRED TO BE RECORDED BY THE ASSESSING OFFICER. ONCE THE INGREDIENTS OF SECTION 147 WERE FULFILLED, THE ASSE SSING OFFICER WAS COMPETENT IN LAW TO INITIATE THE PROCEEDINGS UNDER SECTION 147. THE ASS ESSING OFFICER WAS AWARE OF THE EXISTENCE OF THE FOUR COMPANIES WITH WHOM THE ASSES SEE HAD ENTERED INTO TRANSACTION. BOTH THE ORDERS SHOWED THAT THE ASSESSING OFFICER W AS MADE AWARE OF THE SITUATION BY THE INVESTIGATION WING AND WAS NO MENTION THAT THESE CO MPANIES WERE FICTITIOUS COMPANIES. NEITHER THE REASONS IN THE INITIAL NOTICE NOR THE C OMMUNICATION PROVIDING REASONS REMOTELY INDICATED INDEPENDENT APPLICATION OF MIND. THOUGH C ONCLUSIVE PROOF WAS NOT GERMANE AT THIS STAGE THE FORMATION OF BELIEF MUST BE ON THE B ASE OR FOUNDATION OR PLATFORM OF PRUDENCE WHICH A REASONABLE PERSON WAS REQUIRED TO APPLY . FROM THE PERUSAL OF THE REASONS RECORDED AND THE ORDER OF REJECTION OBJECTI ONS, THE NAMES OF THE COMPANIES WERE AVAILABLE WITH THE AUTHORITY THEIR EXISTENCE WAS NO T DISPUTED. THE ASSESSEE IN ITS OBJECTIONS HAD STATED THAT THE COMPANIES HAD BANK ACCOUNTS AND PAYMENTS WERE MADE TO THE ASSESS EE THROUGH BANKING CHANNEL. THE IDENTITY OF THE COMPAN IES WAS NOT DISPUTED. UNDER THESE CIRCUMSTANCES, THE INITIATION OF PROCEEDINGS UNDER SECTION 147 AN D ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT WERE TO BE QUAS HED. 16 IN THE PRESENT CASE ALSO THE A.O. ACTED ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WINGS OF THE DEPARTMENT AND HAD NOT IND EPENDENTLY VERIFIED FROM THE RECORD AVAILABLE TO HIM IN THE FORM OF RETURN OF INCOM E FILED BY THE ASSESSEE. SO THERE WAS ONLY SUSPICION THAT SOME INCOME HAVING ESCAPED ASSES SMENT WHICH CANNOT BY ITSELF BE SUFFICIENT TO SUSTAIN THE ACTION UNDER SECTIO N 147 R.W.S 148 OF THE ACT. 16.1 IN THE INSTANT CASE THE A.O. MENTIONED THAT THE STATE MENT OF SHRI SANJAY SINGAL WAS RECORDED DURING THE COURSE OF SEARCH UNDER SECTION 132(4) OF THE ACT, A DISCLOSURE WAS MADE AMOUNTING TO RS. 250 CRORES AND SUBSEQUENTLY IN THE COURSE OF HIS ANOTHER STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT, BIF URCATION THEREOF TO THE EXTENT OF RS. 159.61 CRORES WAS MADE BY SHRI SANJAY SINGAL. L ATER ON THE SAID STATEMENT WAS WITHDRAWN WHILE FILING THE RETURNS IN RESPONSE TO THE NOTIC ES ISSUED UNDER SECTION 153A OF THE ACT THAT THE PROCEEDINGS IN ASSESSEES CASE WERE D ROPPED. IN THIS REGARD IT IS RELEVANT TO DISCUSS THE CBDT CIRCULAR NO. F. NO. 286/ 2/2003-IT(INV.) DT. 10/03/2003 AND F. NO. 286/98/2013-IT DT. 18/12/2014 WHICH CLEARLY STAT E THAT THE ASSESSMENT MADE PURSUANT TO SEARCH OPERATION ARE REQUIRED TO BE BASED ON THE INCRIMINATING MATERIAL DISCOVERED AS THE RESULT OF SEARCH OPERATION IN THE CAS E OF THE ASSESSEE AND THAT NO 25 RELIANCE SHOULD BE PLACED ON CONFESSIONS / ADMISSIONS OF UNDISCLOSED INCOME OBTAINED IN THE COURSE OF SEARCH, SINCE SUCH CONFESSION, IF NOT BAS ED UPON CREDIBLE EVIDENCES ARE LATER RETRACTED BY THE CONCERNED ASSESSEE WHILE F ILING THE RETURN OF INCOME AND IN THESE CIRCUMSTANCES SUCH CONFESSION DURING THE COURSE OF SEARCH AND SEIZURE / SURVEY OPERATION DO SERVE ANY USEFUL PURPOSE OR HAVE ANY EV IDENTIARY VALUE. IN THE PRESENT CASE THE STATEMENT UNDER SECTION 132(4) OF THE ACT BY S HRI SANJAY SINGAL WAS WITHDRAWN BEFORE RECORDING THE REASONS UNDER SECTION 147 OF THE A CT IN THE ASSESSEES CASE BY THE A.O. 16.2. IN THE INSTANT CASE THE REOPENING OF THE ASSESSME NT IN ASSESSEES CASE WAS BASED SOLELY ON THE BORROWED SATISFACTION WHICH IS CLEA R FROM THE REASONS RECORDED IN THE BODY OF THE ASSESSMENT ORDER BY THE A.O. WHEREIN THE FACTS RECORDED IN THE ASSESSMENT ORDERS PASSED UNDER SECTION 153A OF THE ACT IN THE CASES OF SHRI SANJAY SINGAL, SMT. AARTI SINGAL AND SHRI ANIKET SINGAL HAD BEEN MENTIONED WHICH IS CLEAR FROM THE DETAILS SUBMITTED BY THE ASSESSEE IN THE FORM OF THE CHART REPRODUCED IN THE FORMER PART OF THIS ORDER AT PAGE NOS. 18 AND 19. 17. FROM THE ABOVE SAID FACTS IT WOULD BE CLEAR THAT THE REOPENING IN THE ASSESSEES CASE BY THE A.O. WAS MERELY BASED ON THE BORROWED SATI SFACTION DRAWN FROM THE CASES OF SHRI SANJAY SINGAL, SMT. AARTI SINGAL, SHRI ANIKET SI NGAL WHICH WAS NOT SUFFICIENT FOR THE PURPOSES OF SUSTAINING ANY ADDITION MADE UNDER SECTION 147 R.W.S 148 OF THE ACT. IN THE INSTANT CASE THE A.O. IN THE REASONS RECORDED HAS MENTIO NED THAT THE SEARCH CONDUCTED ON NUMEROUS ENTRY OPERATORS AND THEIR BENEFICIAR IES REVEALED THAT THE ASSESSEE HAD RECEIVED HUGE AMOUNT OF ACCOMMODATION ENTRI ES IN THE GARB OF EXEMPT LTCG. THEREFORE, IF ANY ACTION WAS REQUIRED TO BE DONE ON THE BASIS OF CERTAIN DOCUMENTS FOUND FROM OTHER PERSONS DURING THE COURSE OF SEARCH THEN THE ASSESSMENT COULD HAVE BEEN FRAMED UNDER SECTION 153C OF THE ACT B UT NO SUCH ACTION WAS TAKEN IN ASSESSEES CASE RATHER THE ACTION WAS TAKEN INDIRECTL Y UNDER SECTION 147 R.W.S 148 OF THE ACT. ON A SIMILAR ISSUE, THEIR LORDSHIP OF THE HON'B LE DELHI HIGH COURT IN THE CASE OF CIT VS. KALVINATOR OF INDIA LTD. (SUPRA) OBSERVED AT PAGE NO. 15 THAT IT IS WELL SETTLED PRINCIPLE OF LAW THAT WHAT CANNOT BE DONE DIRECTLY CANNOT B E DONE INDIRECTLY. 26 17.1 SIMILARLY, THE HON'BLE GUJARAT HIGH COURT IN THE CA SE OF CARGO CLEANING AGENCY (GUJARAT) VS. JCIT (SUPRA)HELD AS UNDER: 'THE ENTIRE SCHEME FOR BRINGING TO TAX INCOME WHICH HAS ESCAPED ASSESSMENT UNDER SECTIONS 147 TO 153 OF THE ACT SPECIFICALLY R ELATES TO A SPECIFIC ASSESSMENT YEAR AND DIFFERENT TIME LIMITS ARE PROVIDED AT DIFFERENT STA GES WHICH ARE ALL INTERLINKED AND COMMENCE FROM THE END OF THE RELEVANT ASSESSMENT YE AR. THE DEFINITION OF 'ASSESSMENT YEAR' AS PROVIDED IN SECTION 2(9) OF THE ACT MEANS THE PERIOD OF 12 MONTHS COMMENCING ON THE FIRST DAY OF APRIL EVERY YEAR. THIS DEFINITI ON CANNOT BE MADE APPLICABLE TO THE TERM 'BLOCK PERIOD' WHICH HAS BEEN DEFINED BY SECTION 15 8B(A) OF THE ACT. ON A PLAIN READING THE CONCEPT OF BLOCK PERIOD COULD NOT TAKE WITHIN I TS FOLD THE MEANING OF AN ASSESS-YEAR. SIMILARLY, THE TERM 'ASSESSMENT YEAR' BY ITS VERY D EFINITION, COULD NOT BE READ TO MEAN 'BLOCK PERIOD'. THE ENTIRE SCHEME UNDER CHAPTER XIV OF THE ACT, MOR E PARTICULARLY FROM SECTIONS 147 TO 153 OF THE ACT, PERTAINING TO REASSESSMENT AND THE SPEC IAL PROCEDURE FOR ASSESSING THE UNDISCLOSED INCOME OF THE BLOCK PERIOD UNDER CHAPTE R-XIV-B OF THE ACT ARE NOT ONLY SEPARATE AND DISTINCT FROM EACH OTHER, BUT IF AN EF FORT IS MADE TO INCORPORATE THE SCHEME UNDER CHAPTER XIV OF THE ACT FOR THE PURPOSE OF ASS ESSMENT OF THE BLOCK PERIOD THERE IS A CONFLICT BETWEEN THE PROVISIONS WHICH BECOMES APPAR ENT ON A PLAIN READING. IN THE CIRCUMSTANCES, BY THE ESTABLISHED RULES OF INTERPRE TATION, UNLESS AND UNTIL A PLAIN READING OF THE TWO STREAMS OF ASSESSMENT PROCEDURE DOES NOT RE SULT IN THE PROCEDURES BEING INDEPENDENTLY WORKABLE, THE QUESTION OF RESOLVING T HE CONFLICT WOULD NOT ARISE. BUT IN THE LIGHT OF THE PROVISIONS OF SECTION 158BHOFTHE ACT, ONCE THERE IS A CONFLICT BETWEEN THE TWO STREAMS OF PROCEDURE THE PROVISIONS OF CHAPTER XIV- B OF THE ACT SHALL PREVAIL AND HAVE PRIMACY. ONCE ASSESSMENT HAS BEEN FRAMED UNDER SECT ION 158BA OF THE ACT IN RELATION TO UNDISCLOSED INCOME FOR THE BLOCK PERIOD AS A RESULT OF SEARCH THERE IS NO QUESTION OF THE ASSESSING OFFICER ISSUING NOTICE UNDER SECTION 148 OF THE ACT FOR REOPENING SUCH ASSESSMENT AS THE SAID CONCEPT IS REPUGNANT TO THE SPECIAL SCH EME OF ASSESSMENT OF UNDISCLOSED INCOME FOR THE BLOCK PERIOD. THE FIRST PROVISO UNDE R SECTION 158BC(A) OF THE ACT SPECIFICALLY PROVIDES THAT NO NOTICE UNDER SECTION 148 OF THE AC T IS REQUIRED TO BE ISSUED FOR THE PURPOSE OF PROCEEDINGS UNDER CHAPTER XIV-B. 17.2 ON A SIMILAR ISSUE THE COORDINATE BENCH OF ITAT D ELHI BENCH A IN THE CASE OF SHRI ADARSH AGGARWAL DELHI VS. ITO, WARD-61, DELHI IN ITA NO. 777/DELHI/19 FOR THE A.Y. 2010-11 VIDE ORDER DT. 14/01/2020 BY FOLLOWING THE DE CISIONS OF ITAT BENCH VISAKHAPATNAM IN THE CASE OF G. KOTESWAR RAO AND ITAT A MRITSAR BENCH IN THE CASE OF ITO VS. ARUN KUMAR KAPOOR (2011)140 TTJ 249 (ASR) HEL D IN PARA 8.2 & 8.3 AS UNDER: 8.2. SINCE SHRI NARESH SABHARWAL HAS RETRACTED FROM THE FACT OF TAKING ANY LOAN FROM ASSESSEE AND GENUINENESS OF THE AGREEMENT IS ITSELF IN DOUBT WHICH WAS FOUND DURING THE COURSE OF SEARCH AND IS NOT CORROBORATED BY ANY EVI DENCE OR MATERIAL ON RECORD, THEREFORE, SUCH PHOTO COPY OF THE AGREEMENT CANNOT BE RELIED UPON BY THE A.O. FOR THE PURPOSE OF INITIATING THE RE-ASSESSMENT PROCEEDINGS IN THE CASE OF THE ASSESSEE. IT IS AN ADMITTED FACT THAT IN THE PRESENT CASE THE AGREEMEN T IN QUESTION WAS FOUND DURING THE COURSE OF SEARCH IN THE CASE OF SHRI NARESH SABHARW AL AND PROCEEDINGS UNDER SECTION 153A HAVE BEEN INITIATED AGAINST HIM. THEREFORE, TH E AGREEMENT IN QUESTION HAVE BEEN TRANSFERRED BY A.O. OF THE PERSON SEARCHED TO THE A .O. OF THE ASSESSEE FOR THE PURPOSE OF TAKING REMEDIAL ACTION IN THE MATTER. IT IS WELL SE TTLED LAW THAT IN THE CASE OF ASSESSMENT MADE ON ASSESSEE CONSEQUENT TO THE SEARCH IN ANOTHE R CASE, A.O. IS BOUND TO ISSUE NOTICE UNDER SECTION 153C AND THEREAFTER PROCEED TO ASSESS THE INCOME UNDER SECTION 153C AND IF A.O. HAD PROCEEDED WITH RE-ASSESSMENT UNDER SECT ION 147/148 OF THE I.T. ACT AND PASSED THE ORDER UNDER SECTION 143(3)/148 OF THE I.T. ACT, THE SAME WOULD BE ILLEGAL AND ARBITRARY AND WITHOUT JURISDICTION. WE RELY UPON THE ORDER OF ITAT, VISAKHAPATNAM BENCH IN THE CASE 27 OF G. KOTESWARA RAO (SUPRA). IN THE CASE OF ITO VS. , ARUN KUMAR KAPOOR [2011] 140 TTJ 249 (ASR-ITAT) [PAPER BOOK AT PAGE71], THE ITAT, AMRITS AR BENCH HELD AS UNDER : ON A PERUSAL OF SECTION 153C, IT WOULD BE CLEAR TH AT THE PROVISIONS OF THIS SECTION ARE APPLICABLE WHICH SUPERSEDES THE APPLICABILITY OF PR OVISIONS OF SECTIONS 147 AND 148. IN THE INSTANT CASE, THE DOCUMENTS WERE SEIZED DURING THE SEARCH UNDER SECTION 132 AND THE SAME WERE SENT TO THE ASSESSING OFFICER OF THE ASSE SSEE AND, THUS, THE COMMISSIONER (APPEALS) HAS CORRECTLY OBSERVED THAT ONLY THE PROV ISION IN WHICH ANY ASSESSMENT COULD BE MADE AGAINST THE ASSESSEE WAS SECTION 153C, READ WI TH SECTION 153A. IT WAS ALSO APPARENT FROM THE RECORD THAT THE OFFICER IN THE CASE OF 'T' LTD. HAD MENTIONED IN HIS LETTER THAT THE NECESSARY ACTION MAY BE TAKEN AS PER LAW UNDER SECT ION 153C/148. HENCE, NOTICE ISSUED UNDER SECTION 148 AND PROCEEDINGS UNDER SECTION 147 BY THE ASSESSING OFFICER WERE ILLEGAL AND VOID AB INITIO. IN VIEW OF THE PROVISIONS OF SE CTION 153C, SECTION 147/148 STANDS OUSTED. IN THE INSTANT CASE, THE PROCEDURE LAID DOWN UNDER SECTION 153C HAS NOT BEEN FOLLOWED BY THE ASSESSING OFFICER AND, THEREFORE, ASSESSMENT HA S BECOME INVALID. THE COMMISSIONER (APPEALS) WAS JUSTIFIED IN FOLLOWING THE RATIO LAID DOWN BY THE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI V. ASSTT. CIT [2007] 289 ITR 341 / 159 TAXMAN 258 WHEREIN IT HAS BEEN HELD THAT IF THE PROCEDURE LAID DOWN IN SECTION 158 BD IS NOT FOLLOWED, BLOCK ASSESSMENT PROCEEDINGS WOULD BE ILLEGAL. THE COMMISSIONER (APP EALS) HAS CORRECTLY OBSERVED THAT THE PROVISIONS OF SECTION 153C ARE EXACTLY SIMILAR TO T HE PROVISIONS OF SECTION 158BD IN BLOCK ASSESSMENT PROCEEDINGS. THUS, CONSIDERING THE ENTIR E FACTS AND THE CIRCUMSTANCES OF THE CASE, THE COMMISSIONER (APPEALS) WAS FULLY JUSTIFIE D IN QUASHING THE REASSESSMENT ORDER. 8.3. THE OTHER DECISIONS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE ARE ON THE SAME PROPOSITION. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF ABOVE DECISIONS, IT IS CLEAR THAT LOAN AGREEMENT WAS FOUND DURING THE COUR SE OF SEARCH IN THE CASE OF SHRI NARESH SABHARWAL WHICH IS HANDED-OVER TO THE A.O. O F THE ASSESSEE AND ADDITION IS MADE ONLY ON THAT BASIS. THEREFORE, THERE WAS NO JUSTIFI CATION FOR THE A.O. TO HAVE BEEN INITIATED PROCEEDINGS UNDER SECTION 147/148 OF THE I.T. ACT. THE CORRECT COURSE OF ACTION WOULD HAVE BEEN TO PROCEED AGAINST THE ASSESSEE UNDER SECTION 153C OF THE I.T. ACT. THEREFORE, INITIATION OF RE-ASSESSMENT PROCEEDINGS UNDER SECTI ON 147/148 OF THE I.T. ACT IS WHOLLY INVALID, VOID AND BAD IN LAW. SINCE THE CORRECT PRO CEDURE HAVE NOT BEEN ADOPTED BY THE A.O. AND THERE IS NO JUSTIFICATION TO INITIATE THE RE-ASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE, WE SET ASIDE THE ORDERS OF THE AUTHORITIE S BELOW AND QUASH THE REOPENING OF THE ASSESSMENT. RESULTANTLY, ALL ADDITIONS STANDS DELET ED. 18. IN THE PRESENT CASE ALSO IF ANY MATERIAL WAS FOUND RELATING TO THE ASSESSEE DURING THE COURSE OF SEARCH ON THIRD PARTIES THEN THE CORRECT COU RSE OF ACTION WOULD HAVE BEEN TO PROCEED AGAINST THE ASSESSEE UNDER SECTION 153C OF THE ACT AND THERE WAS NO JUSTIFICATION FOR THE A.O. TO INITIATE THE PROCEEDINGS U NDER SECTION 147 R.W.S 148 OF THE ACT. SO RESPECTFULLY FOLLOWING THE AFORESAID REFERRE D TO ORDERS OF THE COORDINATE BENCHES OF ITAT, WE ARE OF THE VIEW THAT THERE WAS NO JU STIFICATION ON THE PART OF THE A.O. TO INITIATE THE REASSESSMENT PROCEEDINGS UNDER SEC TION 147 R.W.S 148 OF THE ACT AGAINST THE ASSESSEE. ACCORDINGLY THE SAID ORDER OF THE A.O. IS SET ASIDE AND QUASHED. 19. SINCE WE HAVE QUASHED THE ASSESSMENT ORDER DATED 2 9/12/2016 UNDER SECTION 147 R.W.S 148 OF THE ACT ON THE LEGAL GROUND RAISED BY THE ASSESSEE THEREFORE NO FINDINGS ARE GIVEN ON OTHER GROUND RAISED ON MERITS BY THE ASSESSE E. 28 20. THE FACTS IN OTHER A.YS I.E; THE A.Y. 2012-13 AND 2013-14 IN ITA NO. 703 & 704/CHD/2018 ARE SIMILAR AS WERE INVOLVED IN ITA NO. 702/CHD/2018 FOR THE A.Y. 2011-12, THEREFORE OUR FINDINGS GIVEN IN THE FORMER PART OF THIS OR DER SHALL APPLY MUTATIS MUTANDIS. 21. BEFORE PARTING, WE MAY ADD THAT THE ORDER COULD NOT BE PRONOUNCED EARLIER DUE TO NON FUNCTIONING OF THE BENCHES ON ACCOUNT OF CURFEW / L OCKDOWN IN THE WAKE OF COVID-19 PANDEMIC IN UT CHANDIGARH. IT IS ALSO RELEVANT TO P OINT OUT THAT IN SIMILAR CIRCUMSTANCES THE ITAT MUMBAI F BENCH IN ITA NO. 6103/MUM/2018 FOR THE A .Y. 2013-14 IN THE CASE OF JSW LIMITED VS. DCIT, CC-3(2), MUMBAI VIDE ORDER DT. 14/05/2020 OBS ERVED AS UNDER: 7. HOWEVER, BEFORE WE PART WITH THE MATTER, WE MUST DEAL WITH ONE PROCEDURAL ISSUE AS WELL. WHILE HEARING OF THESE APPEALS WAS C ONCLUDED ON 7TH JANUARY 2020, THIS ORDER THEREON IS BEING PRONOUNCED TODAY ON 14T H DAY OF MAY, 2020, MUCH AFTER THE EXPIRY OF 90 DAYS FROM THE DATE OF CONCLU SION OF HEARING. WE ARE ALSO ALIVE TO THE FACT THAT RULE 34(5) OF THE INCOME TAX APPELLATE TRIBUNAL RULES 1963, WHICH DEALS WITH PRONOUNCEMENT OF ORDERS, PROVIDES AS FOLLOWS: (5) THE PRONOUNCEMENT MAY BE IN ANY OF THE FOLLOWIN G MANNERS : (A) THE BENCH MAY PRONOUNCE THE ORDER IMMEDIATELY U PON THE CONCLUSION OF THE HEARING. (B) IN CASE WHERE THE ORDER IS NOT PRONOUNCED IMMED IATELY ON THE CONCLUSION OF THE HEARING, THE BENCH SHALL GIVE A DATE FOR PRONOU NCEMENT. (C) IN A CASE WHERE NO DATE OF PRONOUNCEMENT IS GIV EN BY THE BENCH, EVERY ENDEAVOUR SHALL BE MADE BY THE BENCH TO PRONOUNCE T HE ORDER WITHIN 60 DAYS FROM THE DATE ON WHICH THE HEARING OF THE CASE WAS CONCLUDED BUT, WHERE IT IS NOT PRACTICABLE SO TO DO ON THE GROUND OF EXCEPTION AL AND EXTRAORDINARY CIRCUMSTANCES OF THE CASE, THE BENCH SHALL FIX A FU TURE DAY FOR PRONOUNCEMENT OF THE ORDER, AND SUCH DATE SHALL NOT ORDINARILY (EMPHASIS SUPPLIED BY US NOW) BE A DAY BEYOND A FURTHER PERIOD OF 30 DAYS AND DUE NOTI CE OF THE DAY SO FIXED SHALL BE GIVEN ON THE NOTICE BOARD. 8. QUITE CLEARLY, ORDINARILY THE ORDER ON AN APPE AL SHOULD BE PRONOUNCED BY THE BENCH WITHIN NO MORE THAN 90 DAYS FROM THE DATE OF CONCLUDING THE HEARING. IT IS, HOWEVER, IMPORTANT TO NOTE THAT THE EXPRESSI ON ORDINARILY HAS BEEN USED IN THE SAID RULE ITSELF. THIS RULE WAS INSERTED AS A R ESULT OF DIRECTIONS OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHIVSAGAR VEG RESTAURANT VS ACIT [(2009) 317 ITR 433 (BOM)] WHEREIN THEIR LORDSHIPS HAD, INTER ALIA, DIRECTED T HAT WE, THEREFORE, DIRECT THE PRESIDENT OF THE APPELLATE TR IBUNAL TO FRAME AND LAY DOWN THE GUIDELINES IN THE SIMILAR LINES AS ARE LAID DOWN BY THE APEX COURT IN THE CASE OF ANIL RAI (SUPRA) AND TO ISSUE APPROPRIATE ADMINISTR ATIVE DIRECTIONS TO ALL THE BENCHES OF THE TRIBUNAL IN THAT BEHALF. WE HOPE AND TRUST THAT SUITABLE GUIDELINES SHALL BE FRAMED AND ISSUED BY THE PRESIDENT OF THE APPELLATE TRIBUNAL WITHIN SHORTEST REASONABLE TIME AND FOLLOWED STRICTLY BY A LL THE BENCHES OF THE TRIBUNAL. IN THE MEANWHILE ( EMPHASIS, BY UNDERLINING, SUPPLIED BY US NOW ), ALL THE REVISIONAL AND APPELLATE AUTHORITIES UNDER THE INCOME-TAX ACT ARE DIRECTED TO DECIDE MATTERS HEARD BY THEM WITHIN A PERIOD OF THREE MONT HS FROM THE DATE CASE IS CLOSED FOR JUDGMENT . IN THE RULED SO FRAMED, AS A RESULT OF THESE DIR ECTIONS, THE EXPRESSION ORDINARILY HAS BEEN INSERTED IN THE RE QUIREMENT TO PRONOUNCE THE 29 ORDER WITHIN A PERIOD OF 90 DAYS. THE QUESTION THEN ARISES WHETHER THE PASSING OF THIS ORDER, BEYOND NINETY DAYS, WAS NECESSITATED BY ANY EXTRAORDINARY CIRCUMSTANCES. 9. LET US IN THIS LIGHT REVERT TO THE PREVAILING SI TUATION IN THE COUNTRY. ON 24TH MARCH, 2020, HONBLE PRIME MINISTER OF INDIA TOOK THE BOLD STEP OF IMPOSING A NATIONWIDE LOCKDOWN, FOR 21 DAYS, TO PREVENT THE SPREAD OF COV ID 19 EPIDEMIC, AND THIS LOCKDOWN WAS EXTENDED FROM TIME TO TIME. AS A MATTE R OF FACT, EVEN BEFORE THIS FORMAL NATIONWIDE LOCKDOWN, THE FUNCTIONING OF THE INCOME TAX APPELLATE TRIBUNAL AT MUMBAI WAS SEVERELY RESTRICTED ON ACCOU NT OF LOCKDOWN BY THE MAHARASHTRA GOVERNMENT, AND ON ACCOUNT OF STRICT EN FORCEMENT OF HEALTH ADVISORIES WITH A VIEW OF CHECKING SPREAD OF COVID 19. THE EPIDEMIC SITUATION IN MUMBAI BEING GRAVE, THERE WAS NOT MUCH OF A RELAXAT ION IN SUBSEQUENT LOCKDOWNS ALSO. IN ANY CASE, THERE WAS UNPRECEDENTE D DISRUPTION OF JUDICIAL WOK ALL OVER THE COUNTRY. AS A MATTER OF FACT, IT HAS B EEN SUCH AN UNPRECEDENTED SITUATION, CAUSING DISRUPTION IN THE FUNCTIONING OF JUDICIAL MACHINERY, THAT HONBLE SUPREME COURT OF INDIA, IN AN UNPRECEDENTED ORDER I N THE HISTORY OF INDIA AND VIDE ORDER DATED 6.5.2020 READ WITH ORDER DATED 23. 3.2020, EXTENDED THE LIMITATION TO EXCLUDE NOT ONLY THIS LOCKDOWN PERIOD BUT ALSO A FEW MORE DAYS PRIOR TO, AND AFTER, THE LOCKDOWN BY OBSERVING THAT IN CASE THE LIMITATION HAS EXPIRED AFTER 15.03.2020 THEN THE PERIOD FROM 15.03.2020 TI LL THE DATE ON WHICH THE LOCKDOWN IS LIFTED IN THE JURISDICTIONAL AREA WHERE THE DISPUTE LIES OR WHERE THE CAUSE OF ACTION ARISES SHALL BE EXTENDED FOR A PERI OD OF 15 DAYS AFTER THE LIFTING OF LOCKDOWN . HONBLE BOMBAY HIGH COURT, IN AN ORDER DATED 15T H APRIL 2020, HAS, BESIDES EXTENDING THE VALIDITY OF ALL INTERIM ORDER S, HAS ALSO OBSERVED THAT, IT IS ALSO CLARIFIED THAT WHILE CALCULATING TIME FOR DISP OSAL OF MATTERS MADE TIME-BOUND BY THIS COURT, THE PERIOD FOR WHICH THE ORDER DATED 26TH MARCH 2020 CONTINUES TO OPERATE SHALL BE ADDED AND TIME SHALL STAND EXTENDE D ACCORDINGLY , AND ALSO OBSERVED THAT ARRANGEMENT CONTINUED BY AN ORDER DATED 26TH MARCH 2020 TILL 30TH APRIL 2020 SHALL CONTINUE FURTHER TILL 15TH JU NE 2020 . IT HAS BEEN AN UNPRECEDENTED SITUATION NOT ONLY IN INDIA BUT ALL O VER THE WORLD. GOVERNMENT OF INDIA HAS, VIDE NOTIFICATION DATED 19TH FEBRUARY 20 20, TAKEN THE STAND THAT, THE CORONAVIRUS SHOULD BE CONSIDERED A CASE OF NATURAL CALAMITY AND FMC (I.E. FORCE MAJEURE CLAUSE) MAYBE INVOKED, WHEREVER CONSIDERED APPROPRI ATE, FOLLOWING THE DUE PROCEDURE. THE TERM FORCE MAJEURE HAS BEEN DEFINED IN BLACKS LAW DICTIONARY, AS AN EVENT OR EFFECT THAT CAN BE NEITHER ANTICIPATED NOR CONTROLLED WHEN SUCH IS THE POSITION, AND IT IS OFFICIALLY SO NOTIFIED BY THE GOVERNMENT OF INDIA AND THE COVID-19 EPIDEMIC HAS BEEN NOTIFIED AS A DI SASTER UNDER THE NATIONAL DISASTER MANAGEMENT ACT, 2005, AND ALSO IN THE LIGH T OF THE DISCUSSIONS ABOVE, THE PERIOD DURING WHICH LOCKDOWN WAS IN FORCE CAN B E ANYTHING BUT AN ORDINARY PERIOD. 10. IN THE LIGHT OF THE ABOVE DISCUSSIONS, WE ARE O F THE CONSIDERED VIEW THAT RATHER THAN TAKING A PEDANTIC VIEW OF THE RULE REQUIRING P RONOUNCEMENT OF ORDERS WITHIN 90 DAYS, DISREGARDING THE IMPORTANT FACT THAT THE E NTIRE COUNTRY WAS IN LOCKDOWN, WE SHOULD COMPUTE THE PERIOD OF 90 DAYS BY EXCLUDIN G AT LEAST THE PERIOD DURING WHICH THE LOCKDOWN WAS IN FORCE. WE MUST FACTOR GRO UND REALITIES IN MIND WHILE INTERPRETING THE TIME LIMIT FOR THE PRONOUNCEMENT O F THE ORDER. LAW IS NOT BROODING OMNIPOTENCE IN THE SKY. IT IS A PRAGMATIC TOOL OF THE SOCIAL ORDER. THE TENETS OF LAW BEING ENACTED ON THE BASIS OF PRAGMAT ISM, AND THAT IS HOW THE LAW IS REQUIRED TO INTERPRETED. THE INTERPRETATION SO A SSIGNED BY US IS NOT ONLY IN CONSONANCE WITH THE LETTER AND SPIRIT OF RULE 34(5) BUT IS ALSO A PRAGMATIC 30 APPROACH AT A TIME WHEN A DISASTER, NOTIFIED UNDER THE DISASTER MANAGEMENT ACT 2005, IS CAUSING UNPRECEDENTED DISRUPTION IN TH E FUNCTIONING OF OUR JUSTICE DELIVERY SYSTEM. UNDOUBTEDLY, IN THE CASE OF OTTERS CLUB VS DIT [(2017) 392 ITR 244 (BOM)] , HONBLE BOMBAY HIGH COURT DID NOT APPROVE AN ORDE R BEING PASSED BY THE TRIBUNAL BEYOND A PERIOD OF 90 DAYS, BUT THEN I N THE PRESENT SITUATION HONBLE BOMBAY HIGH COURT ITSELF HAS, VIDE JUDGMENT DATED 1 5TH APRIL 2020, HELD THAT DIRECTED WHILE CALCULATING THE TIME FOR DISPOSAL OF MATTERS MADE TIME-BOUND BY THIS COURT, THE PERIOD FOR WHICH THE ORDER DATED 26 TH MARCH 2020 CONTINUES TO OPERATE SHALL BE ADDED AND TIME SHALL STAND EXTENDE D ACCORDINGLY . THE EXTRAORDINARY STEPS TAKEN SUO MOTU BY HONBLE JURIS DICTIONAL HIGH COURT AND HONBLE SUPREME COURT ALSO INDICATE THAT THIS PERIO D OF LOCKDOWN CANNOT BE TREATED AS AN ORDINARY PERIOD DURING WHICH THE NORM AL TIME LIMITS ARE TO REMAIN IN FORCE. IN OUR CONSIDERED VIEW, EVEN WITHOUT THE WOR DS ORDINARILY, IN THE LIGHT OF THE ABOVE ANALYSIS OF THE LEGAL POSITION, THE PERIO D DURING WHICH LOCKOUT WAS IN FORCE IS TO EXCLUDED FOR THE PURPOSE OF TIME LIMITS SET OUT IN RULE 34(5) OF THE APPELLATE TRIBUNAL RULES, 1963. VIEWED THUS, THE EX CEPTION, TO 90-DAY TIME-LIMIT FOR PRONOUNCEMENT OF ORDERS, INHERENT IN RULE 34(5)(C), WITH RESPECT TO THE PRONOUNCEMENT OF ORDERS WITHIN NINETY DAYS, CLEARLY COMES INTO PLAY IN THE PRESENT CASE. OF COURSE, THERE IS NO, AND THERE CANN OT BE ANY, BAR ON THE DISCRETION OF THE BENCHES TO REFIX THE MATTERS FOR CLARIFICATIONS BECAUSE OF CONSIDERABLE TIME LAG BETWEEN THE POINT OF TIME WHE N THE HEARING IS CONCLUDED AND THE POINT OF TIME WHEN THE ORDER THEREON IS BEI NG FINALIZED, BUT THEN, IN OUR CONSIDERED VIEW, NO SUCH EXERCISE WAS REQUIRED TO B E CARRIED OUT ON THE FACTS OF THIS CASE. 22. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED . (ORDER PRONOUNCED IN THE OPEN COURT ON 19/06/2020 ) SD/- SD/- '# $ .., (SANJAY GARG ) ( N.K. SAI NI) % &'/ JUDICIAL MEMBER / VICE PRESIDENT AG DATE: 19/06/2020 (+ ! ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. $ / / CIT 4. $ / ()/ THE CIT(A) 5. -23 4, & 4, 67839/ DR, ITAT, CHANDIGARH 6. 38 :%/ GUARD FILE