DEEPAK AGARWAL, MUMBAI V. ACIT CEN CIR-32, MUMBAI

ITA 8912/MUM/2010

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6608 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 19-12-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 21-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DEVENDRA MEHTA
• Keywords: Unexplained investment; Unexplained expenditure; Gift; Search and seizure; Loose papers; Document seized; Earning of tax free income; Retrospective amendment; Cost of acquisition; Fair market value; Corroborative evidences; Valuation report; Onus to prove; Documents seized; Reassessment proceedings
• Section: 143(3); 153A; 14A; 147; 131; 68; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ./I.T.A. NO.8912/M/2010 (AY: 2003 - 2004) ./I.T.A. NO. 8911 /M/2010 (AY: 2004 - 2005 ) ./I.T.A. NO. 8913 /M/2010 (AY: 2005 - 2006 ) C.O. NO.185/M/2013 (ARISING FROM ITA NO.4546/M/2011) (AY2006 - 07) SHRI DEEPAK AGARWAL, C/O. M/S. RAVI & DEV, 377 - B, FIRST FLOOR, JAGANNATH SHANKER SETH MARG, CHIRA BAZAR,MUMBAI 400 002. / VS. ACIT, CENTRAL CIRCLE - 32, MUMBAI. ./ PAN : AEJPA 0731 P ( / APPELLANT) .. ( / RESPONDENT ) ./I.T.A. NO.881/M/2011 (AY: 2003 - 2004) ./I.T.A. NO.882/M/2011 (AY: 2004 - 2005) ./I.T.A. NO.883/M/2011 (AY: 2005 - 2006) ./I.T.A. NO. 4546/M/2011 (AY: 2006 - 2007) ./I.T.A. NO.4548/M/2011 (AY: 2007 - 2008) ACIT, CENTRAL CIRCLE - 32, MUMBAI. / VS. SHRI DEEPAK AGARWAL, C/O. M/S. RAVI & DEV, 377 - B, FIRST FLOOR, JAGANNATH SHANKER SETH MARG, CHIRA BAZAR,MUMBAI 400 002. ( / APPELLANT) .. ( / RESPONDENT ) ./I.T.A. NO.4530/M/2011 (AY: 2006 - 2007) ./I.T.A. NO.4545/M/2011 (AY: 2007 - 2008) ACIT, CENTRAL CIRCLE - 32, MUMBAI. / VS. SHRI DEVESH AGARWAL, 701, A - 1, LOK BHARTI CHS LTD., MAROL MAROSHI ROAD, MAROL, ANDHERI (E), MUMBAI - 59. ( / APPELLANT) .. ( / RESPONDENT ) C.O.NO.184/M/2013 (ARISING FROM I.T.A. NO.4530/M/2011 ) (AY: 2006 - 2007) SHRI DEVESH AGARWAL, 701, A - 1, LOK BHARTI CHS LTD., MAROL MAROSHI ROAD, MAROL, ANDHERI (E), MUMBAI - 59. / VS. ACIT, CENTRAL CIRCLE - 32, MUMBAI. ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI DEVENDRA MEHTA / REVENUE BY : SHRI SANTOSH KUMAR , DR 2 / DATE OF HEARING : 28. 2.2013 / DATE OF PRONOUNCEMENT : 10.4 .2014 / O R D E R PER BENCH , AM: THERE ARE 12 APPEALS UNDER CONSIDERATION INVOLVING TWO ASSESSEES I.E., SHRI DEEPAK AGARWAL AND SHRI DEVESH KUMAR AGARWAL. OUT OF TWELVE APPEALS, 9 APPEALS ARE FILED WITH REGARD TO SHRI DEEPAK AGARWAL (3 APPEALS + 1 CROSS OBJECTION BY THE ASSESSEE AND 5 APPEALS BY THE REVENUE) AND 3 APP EALS RELATE TO SHRI DEVESH AGARWAL (2 APPEALS FILED BY THE REVENUE AND 1 CROSS OBJECTION BY THE ASSESSEE) . IN THE CASE OF SHRI DEEPAK AGARWAL, THERE ARE 3 SETS OF CROSS APPEALS I.E., FOR THE AYS 2003 - 04, 2004 - 05 & 2006 - 07 . SINCE, THE IS SUES RAISED IN ALL THESE APPEALS ARE IDENTICAL AS WELL AS CONNECTED, THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY ARE CLUBBED, HEARD COMBINEDLY AND DISPOSED OF IN THIS CONSOLIDATED ORDER. ASSESSEE WISE, A PPEAL WISE AND GROUND WISE ADJUDICATION IS GIVEN IN THE SUCCEEDING PARAGRAPHS. 1. APPEALS RELATING TO DEEPAK AGARWAL 2 . SINCE, THE ISSUES RAISED IN THE ASSESSEES APPEALS FOR THE AYS 2003 - 04 TO 2005 - 06 ARE IDENTICAL , THEREFORE FOR THE SAKE OF REFERENCE, WE SHALL TAKE UP THE GROUNDS FOR RAISED BY THE ASSESSEE FOR THE AY 2003 - 2004 IN THE CASE OF SHRI DEEPAK AGARWAL. IN THIS CASE VIDE ITA NO.8912/M/2010 , THE ASSESSEE FILED THE APPEAL AGAINST THE ORDER OF CIT (A) - 41, MUMBAI DATED 25.11.2010 AND THE GROUNDS RAISED THEREIN READ AS UNDER: ASSESSMENT ORDER U /S 143(3) R.W.S 153A OF THE INCOME TAX ACT, 1961 BEING BAD IN LAW AND BAD IN FACTS. 1.0 THE ORDER PASSED BY THE LD CIT (A) - 41, MUMBAI CONFIRMING THE ASSESSMENT ORDER U/S 143(3) R.W.S. 153A OF THE INCOME TAX ACT, 1961 IS BOTH BAD IN LAW AND BAD IN FACTS. 1.1 IN DOING SO, HE DID NOT APPRECIATE THAT NO ADDITION COULD HAVE BEEN MADE WHILE COMPLETING ASSESSMENT U/S 153A OF THE INCOME TAX ACT, 1961 IN CASE OF COMPLETED ASSESSMENTS IF NO UNDISCLOSED INCOME WAS DETERMINABLE FROM THE MATERIAL FOUND AS A RESULT OF SEARCH. ADDITION U/S 68 ON ACCOUNT OF UNEXPLA INED GIFTS RECEIVED FROM FAMILY MEMBERS OF SHRI B.R. AGARWAL, RS. 13,00,000/ - . 3 2.0. THE LD CIT (A) ERRED IN LAW AS WELL AS IN FACTS, IN CONFIRMING THE ADDITION U/S 68 OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF U NEXPLAINED GIFTS RECEIVED BY THE ASSESSEE DURING THE YEAR FROM THE FOLLOWING MEMBERS OF SHRI B.R. AGARWAL. NAME OF THE DONOR AMOUNT RS. SHRI ASHISH AGARWAL 7,00,000/ - SMT. PREETI AGARWAL 6,00,000/ - DISALLOWANCE U/S 14A: RS. 609/ - 3.0 THE LD CIT (A) ERRED IN DIRECTING THE ASSESSING OFFICER TO RECOMPUTED DISALLOWANCE U/S 14A ON THE BASIS OF JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING COMPANY LTD VS. DCIT (328 ITR 81) WITHOUT REALIZING THAT NO EXPENDITURE WHATSO EVER WAS INCURRED BY THE ASSESSEE AND CLAIMED AS A DEDUCTION WHILE COMPUTING HIS TOTAL INCOME. 3 . BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL. THE ASSESSEES INCOME CONSISTS OF CAPITAL GAINS AND INCOME FROM OTHER SOUR CES. ASSESSEE ORIGINALLY FILED THE RETURN OF INCOME ON 28.11.2003 DECLARING THE TOTAL INCOME OF RS.3,38,770/ - . A SEARCH AND SEIZURE ACTION WAS CARRIED OUT AT THE OFFICE AND RESIDENTIAL PREMISES OF THE ASSESSEE ON 3.1.2008. IN CONNECTION WITH THE SEARCH AC TION U/S 132 AND IN RESPONSE TO THE NOTICE U/S 153A, ASSESSEE FILED THE RETURN OF INCOME ON 4.9.2008 WITHOUT MAKING ANY CHANGE IN THE ORIGINAL RETURN. ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S 153A OF THE ACT AFTER DETERMINING THE ASSESSED INCOME AT RS.1, 02,76,782/ - . MATTER TRAVELLED TO THE FIRST APPELLATE AUTHORITY. 4 . DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY , AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE, CIT (A) CONFIRMED THE ABOVE ADDITIONS MADE BY THE AO. AGGRIEVED WITH T HE ABOVE DECISION OF THE CIT (A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAI SING THE ABOVE MENTIONED GROUND NO.1. 5 . DURING THE PROCEEDINGS BEFORE US, SHRI DEVENDRA MEHTA , LD COUNSEL FOR THE ASSESSEE RAISED THE ABOVE MENTIONED GROUNDS AND QUESTIONING THE ADDITIONS AND THE VALIDITY OF THE ASSESSMENT U/S 153A OF THE ACT. IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE SUBMITTED VARIOUS ARGUMENTS BEFORE US, WHICH ARE COMMON TO TH E ONES ALREADY MENTIONED IN DETAIL AND ADJUDICATED BY US IN CONNECTION WITH THE APPEALS FILED IN THE CASE OF SHRI GOVIND AGARWAL VS. ACIT VIDE ITA NOS. 3389/M/2011 (AY: 2002 - 2003) AND ITA NO. 3390/M/2011 (AY: 2004 - 2005) VIDE 4 ORDER DATED 10.01.2014. FOR THE SAKE OF COMPLETENESS OF THIS ORDER, RELEVANT PORTIONS OF THE SAID ORDER OF THE TRIBUNAL (SUPRA) ARE REPRODUCED HERE UNDER: 6. BEFORE THE TRIBUNAL: DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE CONTENTS OF THE RELEVANT ASSESSMENT ORDER PASSED U/S 153A R W S 143(3) OF THE ACT AND DEMONSTRATED THAT NO SEIZED MATERIAL WAS USED FOR MAKING THE ADDITIONS EITHER ON ACCOUNT OF INFLATED INVESTMENT OR ON ACCOUNT OF DISALLOWANCE U/S 14A OF THE ACT. FAIRLY REFERRING TO THE PROCEEDINGS DURING THE SEARCH ACTION, LD COUNSEL MENTIONED THAT IT IS THE VALUATION REPORT OF THE DVO WHICH WAS GA RNERED BY THE OFFICE OF THE DIT (INV) DURING THE SEARCH ACTION. THIS WAS THE ONLY MATERIAL COLLECTED BY THE REVENUE IN THE SEARCH, WHICH WAS AVAILABLE FOR THE AO BOTH FOR ISSUING THE NOTICE AS WELL AS FOR MAKING ADDITIONS. HE REASONED THAT THE VALUATION R EPORT CAN AS WELL BE OBTAINED DURING THE NORMAL ASSESSMENT OR REASSESSMENT PROCEEDINGS AND THERE IS NO NEED FOR INVOKING THE PROVISIONS OF SECTION 153A OF THE ACT IN THIS REGARD. 7. FURTHER, LD COUNSEL HAS TWO FOLD ARGUMENTS TO MAKE BEFORE US I.E., (I) C ONSIDERING THE FACT THAT NO INCRIMINATING MATERIAL WAS FOUND FROM THE ASSESSEES PREMISES DURING THE SEARCH ACTION, THE NOTICE U/S 153A WAS NOT REQUIRED TO BE ISSUED. EVEN IT IS ISSUED VALIDLY, NO ADDITION CAN BE MADE IN THE CASES OF COMPLETED ASSESSMENTS WITHOUT THE SUPPORT OF THE INCRIMINATING MATERIAL ISSUED OR ACQUIRED IN SEARCH ACTION U/S 132 / 132A OF THE ACT. IN THIS REGARD, LD COUNSEL RELIED ON THE RAJASTHAN HIGH COURT JUDGMENT IN THE CASE OF JAI STEEL (INDIA) LTD (SUPRA); COORDINATE BENCH DECISION S IN THE CASE OF PRATIBHA INDUSTRIES LTD (SUPRA) AND GURINDER SINGH BAWA (SUPRA) AND SPECIAL BENCH DECISION IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD VS. DCIT 2012 - TIOL - 391 - ITAT - MUM - SB. LD COUNSEL ARGUED IN RESPECT OF THE COMPLETED ASSESSMENT, SUCH A S THE PRESENT ONE, ASSESSMENT WILL BE MADE ONLY ON THE BASIS OF BOOKS OF ACCOUNTS OR OTHER DOCUMENTS NOT PRODUCED IN THE ORIGINAL ASSESSMENT BUT IN THE COURSE OF THE SEARCH AND UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF THE SEARCH. NONE OF THESE CONDITIONS ARE MET BY THE REVENUE BEFORE ISSUING OF THE NOTICE U/S 153A OF THE ACT OR BEFORE MAKING ADDITIONS. THEREFORE, AS PER THE LD COUNSEL, THE IMPUGNED NOTICE IS INVALID ONE AND ADDITIONS SHOULD BE DELETED. FAIRLY REFERRING TO THE DELHI HI GH COURT JUDGMENT IN THE CASE OF CIT VS. ANIL KUMAR BHATIA VIDE ITA NO.1626/2010, DATED 7.8.2012 (DEL.), LD COUNSEL MENTIONED THAT THIS ISSUE REGARDING THE ADDITION TO BE MADE IN A COMPLETED ASSESSMENT WHERE NO INCRIMINATING MATERIAL WAS FOUND, WAS LEFT OP EN. PARA 23 OF THE SAID JUDGMENT IS RELEVANT IN THIS REGARD. FURTHER, RELYING ON THE ORDER OF THE ITAT, JODHPUR IN THE CASE OF DINESH TABACCO INDUSTRIES VS. DCIT VIDE ITA NO.184 & 185/JU/2011 DATED 22.2.2013, LD COUNSEL REITERATED THAT THE NOTICE BECOMES INVALID WHEN THERE IS NO INCRIMINATING MATERIAL. SIMILAR VIEW WAS REPEATED BY THE LD COUNSEL BY RELYING ON THE DECISION OF THE ITAT, KOLKATA IN THE CASE OF LMJ INTERNATIONAL LTD VS. DCIT, 119 TTJ 214 (KOL). THE SAID DECISION OF THE OF ITAT KOLKATA (SUPR A) IS RELEVANT FOR THE PROPOSITION THAT WHERE NOTING INCRIMINATING WAS FOUND IN COURSE OF SEARCH RELATING TO ASSESSMENTS, ASSESSMENT FOR SUCH YEARS CANNOT BE DISTURBED. HE CULLED OUT MANY OTHER DECISIONS WHICH ARE AS UNDER. A) ANIL P KHIMANI VS. DCIT [2010 T IOL - 177 - ITAT - MUM] B) MEGHMANI ORGANICS LTD VS. DCIT [2010] 36 DTR 187 (AHD) C) SUNCITY ALLYS PVT. LTD. VS. ACIT [2009] 124 TTJ 674 (JODH) D) ACIT VS. PACL INDIA LTD [ITA NO.2637/ DEL/2010] E) SHRI DEEPEN A PAREKH VS. ACIT [ ITA NO.467/MUM/2011] F) MGF AUTOMOBILES LTD VS. ACIT [ ITA NO.4212 & 4213/DEL/2011] FURTHER, LD COUNSEL FILED A COPY OF THE ORDER OF THE TRIBUNAL IN THE CASE OF GOVIND AGARWAL HUF VS ACIT VIDE ITA NO.217/MUM/2011 (AY 2008 - 2009) WHICH IS A PART OF THE ASSESSEES GROUP AND WHERE NOTICE U/S 153C WAS ISSUE D. LD COUNSEL MENTIONED 5 THAT THE TRIBUNAL HAS UPHELD THE INVALIDITY OF SUCH NOTICE AND DELETED THE ADDITIONS MADE ON ACCOUNT OF GIFT EMANATED FROM THE BOOKS OF ACCOUNTS. (II) THE SECOND ASPECT OF HIS ARGUMENTS RELATES TO THE TREATMENT TO BE GIVEN TO THE DVOS REPORT, IF THE SAID REPORT CONSTITUTES ANY INCRIMINATING MATERIAL. MENTIONING THAT THE REVENUE DID NOT CONSIDER THE SAME AS A INCRIMINATING MATERIAL FOR THE PURPOSE OF ISSUANCE OF NOTICE U/S 153A OF THE ACT, LD COUNSEL MENTIONED THAT THE OFFICE OF DIT (INV) REFERRED THE IMPUGNED HOUSE PROPERTY (MANGALDEEP AT UDAIPUR) TO THE VALUATION CELL FOR IDENTIFYING THE MARKET VALUE OF THE PROPERTY, NOT THE COST OF ACQUISITION . (AARCH CONSULATANTS & VALUERS, MUMBAI) THE VALUERS SUBMITTED A REPORT ON 16.2.2008 D ETERMINING THE VALUE OF THE PROPERTY AT RS. 3,67,09,000/ - AS THE FAIR MARKET VALUE AS AGAINST THE DISCLOSED AMOUNT OF RS. 1.56 CRS BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS AS ON 31.3.2007. IT IS THE SUBMISSION OF THE ASSESSEE THAT SUCH REPORTS OF THE DVO IGNORED BY THE DIT OFFICE DURING THE SEARCH PROCEEDINGS CANNOT CONSTITUTE INCRIMINATING MATERIAL AND THE AO SHOULD NOT RELY ON SUCH REPORTS FOR ISSUANCE OF NOTICE U/S 153A OF THE ACT AND FOR MAKING ADDITIONS U/S 143(3) R.W.S 153A OF THE ACT. AS PER THE L D COUNSEL SUCH REPORTS ARE MERE ESTIMATES AND THE ADDITIONS ARE NOT SUSTAINABLE IN THE SEARCH ASSESSMENT. IN THIS REGARD, LD COUNSEL RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF ASSISTANT COMMISSIONER OF INCOME - TAX V. DHARIYA CONSTR UCTION CO, 328 ITR 515 WHICH IS RELEVANT FOR THE PROPOSITION THAT HAVING EXAMINED THE RECORDS, WE FIND IN THAT CASE DEPARTMENT SOUGHT REOPENING OF THE ASSESSMENT BASED ON THE OPINION GIVEN BY THE DVO. THE OPINION GIVEN BY THE DISTRICT VALUATION OFFICER I S NOT PER SE INFORMATION FOR THE PURPOSE OF REOPENING AN ASSESSMENT UNDER SECTION 147 OF THE INCOME - TAX ACT, 1961. AO HAS TO APPLY HIS MIND AND FORM A BELIEF THERE FROM. THE DEPARTMENT WAS NOT ENTITLED TO REOPEN THE CONCLUDED ASSESSMENT BASED ON SUCH DV OS REPORT. SUCH REPORTS ARE MERE AN OPINION OF THE VALUER, THE THIRD PARTY AND NEVER CAN BE EQUATED TO THE OPINION OF THE AO AND RELIED ON THE GUWAHATI HIGH COURT JUDGMENT IN THE CASE OF BHOLA NATH MAJUMDAR V. INCOME - TAX OFFICER 221 ITR 608 AND THE JUDGM ENT OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF BRIG. B. LALL V. WEALTH - TAX OFFICER 127 ITR 308 . IN THESE CASES, THE CONCEALMENT PROCEEDINGS WERE QUASHED ON THIS BASIS. REFERRING TO THE ANOTHER JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SURAJ DEVI, 328 ITR 604 AND IN THE CASE OF CIT VS. NAVEEN GERA [2011] 328 ITR 516, LD COUNSEL MENTIONED THAT THE ADDITIONS CANNOT BE MADE ON THE BASIS OF THE VALUATION REPORT OF THE DVO IN THE ABSENCE OF ANY INCRIMINATING MATERIAL. THE BURDEN VEST S ON THE REVENUE IN SUCH CAES. REFERRING TO THE FACTS OF THE PRESENT CASE, LD COUNSEL MENTIONED THAT THE ASSESSEE DISCLOSED INVESTMENT OF RS. 46,13,007/ - ON THE HOUSE AS ON 31.3.2002 WHEREAS THE AO CAME TO THE CONCLUSION THAT THE LAND VALUE OF RS. 14.8 L AKHS IS THE ONLY INVESTMENT ON THE HOUSE, NO CONSTRUCTION WAS UNDERTAKEN BY THIS DATE. AO CAME TO SUCH CONCLUSION FOR ASSESSEES FAILURE TO FURNISH THE SUPPORTING BILLS TO DEMONSTRATE THE FACT OF PART CONSTRUCTION OF THE IMPUGNED RESIDENTIAL PROPERTY. IT IS A CASE OF MERE PRESUMPTION AND THE ADDITIONS ARE UNSUSTAINABLE ON SUCH PRESUMPTION. AO HAS NO EVIDENCE TO INFER THAT THE ASSESSEES FIGURE OF RS. 46,13,007/ - IS BOGUS AND RS. 14.8 LAKHS IS THE ONLY INVESTMENT ON THE SAID PROPERTY. IN FACT, RS. 14.8 L AKHS IS THE COST OF THE LAND PLOTS ON WHICH THE HOUSE WAS CONSTRUCTED AND ASSESSEE SPENT THE BALANCE OF RS. 31,33,007/ - IN CONSTRUCTION OF THE HOUSE. THEREFORE, THE PROCEEDINGS INITIATED U/S 153A IS REQUIRED TO BE QUASHED AND THE ADDITION BASED ON THE SUR MISES OF THE AO SHOULD NOT BE SUSTAINED. 8. ON THE OTHER HAND, LD DR RELIED HEAVILY ON THE ORDER OF THE AO AND THE CIT (A). IN CONNECTION WITH THE LEGAL ISSUE REGARDING THE VALIDITY OF THE NOTICE U/S 153A OF THE ACT, LD DR FILED A COPY OF THE ORDER OF THE TRIBUNAL IN THE CASE OF SCOPE (P) LTD VS. DCIT [2013] 33 TAXMANN.COM 167 (MUMBAI TRIB.) DATED 20.3.2013 AND STATED THAT UNDER THE PROVISIONS OF SECTION 153A OF THE ACT, AO IS BOUND TO PROCEED FOR ALL THE 6 AYS IMMEDIATELY PRECEDING AY RELEVANT TO THE PREV IOUS YEAR IN WHICH SEARCH WAS CONDUCTED EVEN IF THERE IS NO INCRIMINATING MATERIAL TO INDICATE ANY UNDISCLOSED INCOME DURING THE ORIGINAL ASSESSMENT COMPLETED U/S 143(3) FOR ANY YEAR. THIS IS THE CASE WHERE REGULAR ASSESSMENT U/S 143(3) WAS COMPLETED ON 7 .11.2007 PRIOR TO THE DATE OF SEARCH ON 15.11.2007 AND THE ADDITION WAS MADE U/S 14A OF THE ACT AND NOT BASED ON 6 ANY SEIZED MATERIAL FOUND DURING THE SEARCH. THOUGH SUCH DISALLOWANCE WAS DELETED FOR OTHER REASONS BUT THE VALIDITY OF THE NOTICE WAS UPHELD IN THIS CASE. CIT - DR ALSO BROUGHT OUR ATTENTION TO THE JUDGMENT OF ANDHRA PRADESH HIGH COURT IN THE CASE OF GOPAL LAL BHADRUKA VS. DCIT [2012] 27 TAXMANN.COM 167 (AP) IN HIS FAVOUR. OF COURSE, THIS IS THE CASE WHERE ASSESSMENTS COMPLETED U/S 158BD OF THE ACT AND NOT U/S 153A AS IN THE PRESENT CASE. FURTHER, LD DR ALSO FILED THE JUDGMENT OF DELHI HIGH COURT IN THE CASE OF MADUGULA VENU VS. DIT [2013] 29 TAXMANN.COM 200 (DELHI), WHICH IS RELEVANT FOR THE PROPOSITION THAT THE NOTICE ISSUED U/S 153A CALLING UPON ASSESSEE TO FILE THE RETURNS FOR EARLIER 6 AYS CANNOT BE CHALLENGED ON THE GROUND THAT IT WOULD CAUSE CERTAIN DEGREE OF HARDSHIP TO ASSESSEE. LD DR HAS BROUGHT OUR ATTENTION TO PARA 7 OF THE SAID JUDGMENT OF THE DELHI HIGH COURT AND MENTIONED THAT T HE SECTION COUCHED IN MANDATORY LANGUAGE WHICH IMPLIES THAT ONCE THERE IS A SEARCH, THE AO HAS NO OPTION BUT TO CALL UPON THE ASSESSEE TO FILE THE RETURNS OF THE INCOME FOR THE EARLIER SIX ASSESSMENT YEARS. IT IS NOT MERELY THE UNDISCLOSED INCOME THAT WIL L BE BROUGHT TO TAX IN SUCH ASSESSMENTS, BUT THE TOTAL INCOME OF THE ASSESSEE, INCLUDING BOTH THE INCOME EARLIER DISCLOSED AND INCOME FOUND CONSEQUENT TO THE SEARCH, WOULD BE BROUGHT TO TAX. THE NORMAL PROVISIONS RELATING TO INQUIRY, AFFORDING OPPORTUNITY ETC., WHICH ARE PROVIDED FOR IN SECTIONS 142, 143 ETC ARE TO BE FOLLOWED BY THE ASSESSING OFFICER. OF COURSE, THE ABOVE EXPLANATION OF THE PROVISIONS DOES NOT REFER TO THE PRESENT DEBATE RELATING TO THE INCRIMINATING MATERIAL BASED ADDITIONS IN THE CA SES OF COMPLETED ASSESSMENTS. DECISION OF THE TRIBUNAL: 9. WE HAVE HEARD BOTH THE PARTIES ON THE LEGAL ISSUE RELATING TO THE SUSTAINABILITY OR VALIDITY OF THE ADDITIONS MADE IN THE ASSESSMENTS MADE U/S 153A READ WITH SECTION 143(3) OF THE ACT IN RESPECT OF COMPLETED ASSESSMENTS. 10. THE STAND OF THE REVENUE IS THAT THE FIRST PROVISO TO SECTION 153A EMPOWERS THE AO TO ISSUE NOTICE U/S 153A OF THE ACT IN RESPECT OF THE 6 AYS PRIOR TO THE ASSESSMENT YEAR IN WHICH THE SEARCH TOOK PLACE. THE RELEVANCE OF THE EXISTENCE OF INCRIMINATING MATERIAL IS NOT PROVIDED IN THE SAID PROVISIONS. AS PER THE REVENUE THERE SHOULD NOT BE ANY DIFFERENCE QUA THE COMPLETED ASSESSMENTS AND THE ABATED ASSESSMENTS FOR ALL SIX AYS IN SO FAR AS THE POWERS OF THE AO IS CONCERNED AND HE IS EMPOWERED TO ISSUE NOTICE U/S 153A AND MAKE ADDITIONS EITHER BASED IN THE INCRIMINATING MATERIAL OR OTHERWISE. 11. PER CONTRA, THE CASE OF THE ASSESSEE IS THAT THE AO MAY BE EMPOWERED TO ISSUE NOTICES FOR ALL THE SIX AYS IN VIEW OF THE CITED DECISI ONS IE JAI STEEL (INDIA) LTD (SUPRA), SCOPE (P) LTD (SUPRA) ETC. HOWEVER, IN CASE OF COMPLETED ASSESSMENTS, AO IS EMPOWERED TO MADE ADDITIONS ONLY BASED ON THE INCRIMINATING MATERIALS AND NOT OTHERWISE JAI STEEL (INDIA) LTD (SUPRA), LMJ INTERNATIONAL LTD (SUPRA) , GURINDER SINGH BAWA (SUPRA) ETC . FOR MAKING THE ROUTINE ADDITIONS, WHICH ARE NORMALLY DONE IN THE REGULAR ASSESSMENTS, THE COMPLETED ASSESSMENT NEED NOT BE DISTURBED BY INVOKING THE PROVISIONS OF SECTION 153A OF THE ACT IF NOT FOR REITERATING THE RETURNED OR ASSESSED INCOME AS THE CASE MAY BE. JUDGMENT IN THE CASE OF JAI STEEL (INDIA) LTD (SUPRA) SUPPORTS THE ABOVE LEGAL PROPOSITION. AS PER THE ASSESSEE, REGARDING THE CASES OF ABATED ASSESSMENTS, CONSIDERING THE SCHEME OF ASSESSMENTS U/S 153A, PER CONTRA, EVEN THE ROUTINE ADDITIONS ARE DONE IN THESE ASSESSMENTS. 12. WE HAVE HEARD THE PARTIES AND THEIR DIVERGENT STANDS ON THE LEGAL ISSUE AND THE VALIDITY OF THE INSTANT ASSESSMENT/REASSESSMENT WITH THE ROUTINE ADDITIONS U/S 68 AND SECTION 14A OF THE ACT BASED ON THE ACCOUNTED TRANSACTIONS. THE INSTANT CASE FOR THE AY 2002 - 03 DEALS WITH THE CASE OF DISTURBING THE COMPLETED ASSESSMENT. EARLIER THE ASSESSMENT WAS COMPLETED U/S 143(1) OF THE ACT. COMPLETENESS OF THE SUMMARY ASSESSMENT IS CONSIDERED AND HELD IN FAVOUR OF THE ASSESSEE VIDE MANY JUDGMENTS CITED ABOVE. IN THE ASSESSMENT U/S 153A, THE AO MADE (I ) ADDITION U/S 68 ON ACCOUNT OF ARTIFICIALLY INFLATED INVESTMENT IN HOUSE DULY DISCLOSED IN THE BALANCE SHEET OF THE ASSESSEE RS.31,33,070/ - ; AND (I I) DISALLOWANCE U/S 14A: RS. 23,31,469/ - . ADMITTEDLY, 7 THERE IS NO INCRIMINATING MATERIAL BEFORE THE AO TO SUPPORT THE ABOVE ADDITIONS. THE VALUATION REPORT, WHICH IS GARNERED BY THE AUTHORITIES CONSTITUTES MERE ESTIMATES AND THE PROVISIONS OF SECTION 132 I S NOT REQUIRED TO OBTAIN SUCH REPORT FROM THE DVO. AS SUCH, FOR MAKING AFORESAID ADDITIONS OF RS 31,33,070/ - , AO HAS NOT USED EVEN THE SAID VALUATION REPORT AND THE AO DISALLOWED WHAT IS REPORTED IN THE BOOKS. SIMILAR IS THE CASE WITH THE ADDITIONS U/S 14A OF THE ACT. THEREFORE, UNDISPUTEDLY, THE IMPUGNED QUANTUM ADDITIONS ARE MADE MERELY BASED ON THE ENTRIES IN THE ACCOUNTED BOOKS AND CERTAINLY NOT BASED ON EITHER THE UNACCOUNTED BOOKS OF ACCOUNTS OF THE ASSESSEE OR BOOKS NOT PRODUCED TO THE AO EARLIER OR THE INCRIMINATING MATERIAL GATHERED BY THE INVESTIGATION WING OF THE REVENUE. CONSIDERING THE LEGAL PROPOSITIONS PLACE BEFORE US BY THE ASSESSEES COUNSEL, WE ARE OF THE OPINION, SUCH ASSESSMENTS OR ADDITIONS ARE UNSUSTAINABLE IN LAW. 13. FOR THE SAKE COM PLETENESS OF THE ASSESSEE, WE INSERT HERE SOME OF THE EXTRACTS FROM RELEVANT JUDGMENTS AND THEY ARE: A. [2013 36 TAXMANN.COM 523 (RAJASTHAN) IN THE CASE OF JAI STEEL (INDIA) VS. ACIT - FROM HELD PORTION: .THE REQUIREMENT OF ASSESSMENT OR REASSESSMENT UNDER THE SAID SECTION HAS TO BE READ IN THE CONTEXT OF SECTIONS 132 OR 132A, INASMUCH AS, IN CASE NOTHING INCRIMINATING IS FOUND ON ACCOUNT OF SUCH SEARCH OR REQUISITION, THEN THE QUESTION OF REASSESSMENT OF THE CONCLUDED ASSESSMENTS DOES NOT ARISE , WHICH WOULD REQUIRE MORE REITERATION AND IT IS ONLY IN THE CONTEXT OF THE ABATED ASSESSMENT UNDER SECOND PROVISO WHICH IS REQUIRED TO BE ASSESSED. 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, IT IS APPARENT THAT: ( A ) THE ASSESSMENTS OR REASSESSMENTS, WHICH STANDS ABATED IN TERMS OF SECOND PROVISO TO SECTION 153A, THE ASSESSING OFFICER ACTS UNDER HIS ORIGINAL JURISDICTION, FOR WHICH, ASSESSMENTS HAVE TO BE MADE; ( B ) REGARDING OTHER CASES, THE ADDITION 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 MADE . .. THE ARGUMENT OF THE ASSESSEE THAT THE ASSESSING OFFICER IS ALSO FREE TO DISTURB INCOME, EXPENDITURE OR DEDUCTION DE HORS THE INCRIMINATING MATERIAL, WHILE MAKING ASSESSMENT UNDER SECTION 153A IS ALSO NOT BORNE OUT FROM THE SCHEME OF THE SAID PROVISION WHICH AS NOTICED ABOVE IS ESSENTIALLY IN CONTEXT OF SEARCH AND/OR REQUISITION. PARA 26 OF THE JUDGMENT: THE PLEA RAISED ON BEHALF OF THE ASSESSEE THAT AS THE FIRST PROVISO PROVIDES FOR ASSESSMENT OR REASSESSMENT OF THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASSESSMENT YEARS, IS MERELY READING THE SAID PROVISION IN ISOLATION AND N OT IN THE CONTEXT OF THE ENTIRE SECTION. THE WORDS 'ASSESS' OR 'REASSESS' HAVE BEEN USED AT MORE THAN ONE PLACE IN THE SECTION AND A HARMONIOUS CONSTRUCTION OF THE ENTIRE PROVISION WOULD LEAD TO AN IRRESISTIBLE CONCLUSION THAT THE WORD 'ASSESS' HAS BEEN US ED IN THE CONTEXT OF AN ABATED PROCEEDINGS AND REASSESS HAS BEEN USED FOR COMPLETED ASSESSMENT PROCEEDINGS, WHICH WOULD NOT ABATE AS THEY ARE NOT PENDING ON THE DATE OF INITIATION OF THE SEARCH OR MAKING OF REQUISITION AND WHICH WOULD ALSO NECESSARILY SUPP ORT THE INTERPRETATION THAT FOR THE COMPLETED ASSESSMENTS, THE SAME CAN BE TINKERED ONLY BASED ON THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS. B. [2012] 28 TAXMANN.COM 328 (MUMBAI TRIB.) IN THE CASE OF GURINDER SINGH BAVA VS. DCIT . WHETHER SINCE ASSESSMENT UNDER SECTION 153A WAS PASSED BY ASSESSING OFFICER ON BASIS OF MATERIAL AVAILABLE IN RETURN OF INCOME AND THERE WAS NO REFERENCE TO ANY INCRIMINATING MATERIAL FOUND DURING SEARCH AND SINCE NO ASSESSM ENT WAS ABATED, ASSESSMENT UNDER SECTION 153A WAS 8 TO BE QUASHED BEING MADE WITHOUT JURISDICTION AVAILABLE UNDER SECTION 153A - HELD, YES [PARA 6.2] [IN FAVOUR OF ASSESSEE] PARA 6.1 OF THE ORDER: THE SPECIAL BENCH IN THE CASE OF ALCARGO GLOBAL LOGISTICS LTD. ( SUPRA ), HAS HELD THAT PROVISIONS OF SECTION 153A COME INTO OPERATION IF A SEARCH OR REQUISITION IS INITIATED AFTER 31.5.2003 AND ON SATISFACTION OF THIS CONDITION, THE AO IS UNDER OBLIGATION TO ISSUE NOTICE TO THE PERSON REQUIRING HIM TO FURNISH THE RETURN OF INCOME FOR SIX YEARS IMMEDIATELY PRECEDING THE YEAR OF SEARCH. THE SPECIAL BENCH FURTHER HELD THAT IN CASE ASSESSMENT HAS ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION UNDER SECTION 153A FOR WHICH ASSESSMENT SHALL BE MA DE FOR EACH ASSESSMENT YEAR SEPARATELY. THUS IN CASE WHERE ASSESSMENT HAS ABATED THE AO CAN MAKE ADDITIONS IN THE ASSESSMENT, EVEN IF NO INCRIMINATING MATERIAL HAS BEEN FOUND. BUT IN OTHER CASES THE SPECIAL BENCH HELD THAT THE ASSESSMENT UNDER SECTION 153A CAN BE MADE ON THE BASIS OF INCRIMINATING MATERIAL WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS BOOKS OF ACCOUNT AND OTHER DOCUMENTS FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND UNDISCLOSED INCOME OR PROPERT Y DISCLOSED DURING THE COURSE OF SEARCH. IN THE PRESENT CASE, THE ASSESSMENT HAD BEEN COMPLETED UNDER SUMMARY SCHEME UNDER SECTION 143(1) AND TIME LIMIT FOR ISSUE OF NOTICE UNDER SECTION 143(2) HAD EXPIRED ON THE DATE OF SEARCH. THEREFORE, THERE WAS NO ASS ESSMENT PENDING IN THIS CASE AND IN SUCH A CASE THERE WAS NO QUESTION OF ABATEMENT. THEREFORE, ADDITION COULD BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING SEARCH. B. ALL CARGO GLOBAL LOGISTICS LTD. V. DEPUTY COMMISSIONER OF INCOME - TAX, CEN TRAL CIRCLE - 44 [2012] 23 TAXMANN.COM 103 (MUM.) (SB) PARA 58 OF SB DECISIONS: THUS, QUESTION NO.1 BEFORE US IS ANSWERED AS UNDER : ( A ) IN ASSESSMENTS THAT ARE ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON HIM U/S 153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARATELY ; ( B ) IN OTHER CASES , IN ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT U/S 153A WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL , WHICH IN T HE CONTEXT OF RELEVANT PROVISIONS MEANS - (I) BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT, AND (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH. 14. THUS, IN CASE OF THE COMPLETED ASSESSMENTS EITHER U/S 143(1) OR 143(3), THE ABOVE EXTRACTS ARE UNIFORM IN ADVOCATING AGAINST MAKING ADDITIONS IN ROUTINE MANNER IN THE ASSESSMENTS MADE U/S 153A OF THE ACT WHEN THERE IS NO INCRIMINATING MATERIAL GATHERED IN THE SEARC H ACTION. STATUTORY NOTICE U/S 153A OF THE ACT CAN ALSO BE ISSUED TO REITERATE THE RETURNED INCOME OR FOR MAKING ADDITIONS BASED ON THE INCRIMINATING MATERIAL OR UNPRODUCED BOOKS OF ACCOUNT. OTHERWISE, ADDITIONS MADE IN ROUTINE MATTER AS IN THE PRESENT AP PEAL ARE NOT SUSTAINABLE. FURTHER, FOR THE SAKE COMPLETENESS OF THE ORDER, WE HAVE PERUSED THE ORDERS/JUDGMENTS RELIED UPON BY LD DR FOR THE REVENUE AND FOUND THEY ARE D ISTINGUISHABLE ON FACTS FOR ONE REASON OR OTHER. TO START WITH, WE HAVE PERUSED THE JUDGMENT OF HONBLE HONBLE DELHI HIGH COURT IN THE CASE OF MADUGULA VENU (SUPRA) AND FIND THAT, THOUGH EXPLAINED THE PROVISIONS IN PLAIN LANGUAGE, IT DOES NOT DEALT WITH THE RELEVANCE OR FACTUM OF INCRIMINATING MATERIAL. FURTHER, THE JUDGMENT OF ANDHRA PRADESH HIGH COURT IN THE CASE OF GOPAL LAL BHADRUKA (SUPRA) IS NOT ON THE NOTICES ISSUED U/S 153A OF THE ACT AND THE SAME IS PRONOUNCED IN THE CONTEXT OF THE NOTICE U/S 153C OF THE ACT. FU RTHER, ALSO, THE COORDINATE BENCH DECISION IN THE CASE OF SCOPE (P) LTD (SUPRA) HAS GRANTED RELIEF TO THE ASSESSEE THOUGH THE NOTICE ISSUED U/S 153A OF THE ACT WAS UPHELD. HOWEVER, THIS ORDER HAS NOT CONSIDERED THE THEN EXISTING DECISION OF THE COORDINATE BENCH DECISION IN THE CASE OF PRATIBHA INDUSTRIES LTD (SUPRA) WHICH IS RELEVANT FOR THE PROPOSITION THAT THE COMPLETED ASSESSMENT MAY NOT BE DISTURBED IN THE ABSENCE OF ANY INCRIMINATING MATERIAL SPECIFIC TO THE ASSESSEE. IN FACT, ALL THESE JUDGMENTS TAK E SPIRIT FROM THE SPECIAL BENCH DECISION IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD (SUPRA), WHICH IS RELEVANT FOR THE PROPOSITION THAT THE ASSESSMENT U/S 153A WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL SUCH AS BOOKS OF ACCOUNTS, OTHER DOCUMENT S FOUND IN THE 9 SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF THE SEARCH. 15. WE ALSO FIND THAT THE CIT(A) MADE A REFERENCE TO THE INCRIMINATING MATERIAL, WHICH YIELDED DISCLOSU RE OF SOME UNDISCLOSED INCOME. BUT, ON PERUSAL OF THE DOCUMENTS, WE FIND THAT THE CIT(A) ENTERED INTO AN ERROR ZONE AND THE DISCLOSURE IS ONLY RS 5 CRORES IN THIS CASE AND THE SAME RELATES TO THE LANDS DEALS. IN PRINCIPLE THIS DISCLOSURE HAS NOTHING DO WIT H THE IMPUGNED ADDITIONS U/S 68 OR 14A OF THE ACT. IN THE INSTANT CASE, SPECIFIC TO THE ASSESSEE, NO INCRIMINATING MATERIAL WITH THE DETAILS WAS REFERRED EITHER IN THE ASSESSMENT ORDER OR IN THE ORDER OF THE CIT (A) FOR MAKING THE IMPUGNED ADDITIONS. AS PE R THE CITED JUDGMENT IN THE CASE OF JAI STEELS LTD, SUPRA, THE ASSESSMENT U/S 153A IS ONLY FOR REITERATION RATHER THAN MAKING ANY ADDITIONS IN A ROUTINE MANNER WITHOUT THE STRENGTH OF THE INCRIMINATING MATERIALS. SIMILAR VIEW WAS TAKEN UP BY THE ITAT, DELH I H BENCH, IN THE CASE OF V.K. FISCAL SERVICES P LTD VS. DCIT VIDE ITA NOS.5460 TO 5465/DEL/2012 ( WWW.ITATONLINE.ORG ). IN THIS REGARD, PARA 13 FROM THE SAID ORDER OF THE ITAT DELHI BENCH (SUPRA) IS RELEVANT AND TH E SAME READS AS UNDER: 13. APPLYING THE ABOVE CASE LAWS TO THE FACTS OF THE CASE, WE HAVE TO NECESSARILY QUASH THE ASSESSMENT PROCEEDINGS FOR AY 2004 - 2005, 2005 - 06, 2007 - 08, 2008 - 09 ON THE FOLLOWING GROUNDS. (A) NO BOOKS OF ACCOUNTS BELONGING TO THE ASSESSE WERE FOUND AND SEIZED IN THE PREMISES OF THE OTHER PERSON. WHAT WAS FOUND WAS IN THE HARD DISK WAS ONLY A CONFIRMATION OF ACCOUNT THAT AN ATTACHED ANNEXURES. SUCH DOCUMENTS CANNOT BE SAID TO BE BOOKS OF ACCOU NTS OR DOCUMENTS BELONGING TO THE ASSESSEE. (B) THE REVENUE HAS NOT PRODUCED THE RECORD OF THE SEARCHED PERSON TO DEMONSTRATE THAT SATISFACTION WAS RECORDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF M/S. GLOBAL REALITY VENTURES P. LTD. ON T HE DATE OF RECORDING OF SATISFACTION, FIRST NOTICE U/S 153(C) WAS ISSUED. THERE IS NO INDICATION WHATSOEVER, THAT THE ASSESSMENT PROCEEDINGS IN THE CASE OF GLOBAL REALITY VENTURES P. LTD WERE IN PROGRESS OR NOT, AT THE POINT OF TIME AND THAT THE AO DURING THE COURSE OF THAT PROCEEDINGS RECORDED THIS SATISFACTION. THE PROCEDURE CONTEMPLATED UNDER THE ACT WAS NOT FOLLOWED. (C) THE SATISFACTION IS RECORDED ON 23 RD JULY, 2010. THE RELEVANT AY WOULD BE 2011 - 12. THE SIX PRECEDING AYS RELEVANT TO THIS AY WOULD BE 2 005 - 06 / 2006 - 07 / 2007 - 08 / 2008 - 09 / 2010 - 11. THUS, THE NOTICE ISSUED U/S 153C FOR THE AY 2004 - 05 IS CLEARLY BARRED BY LIMITATION. (D) EVEN OTHERWISE, AS THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, THE AO SHOULD HAVE DROPPED THE PROCEEDINGS INITIATED U/S 153C OF THE ACT. (E) AS THERE IS NO DISPUTE THAT NO ASSESSMENT OR REASSESSMENT HAS ABATED IN THIS CASE FOR THE REASON, THAT THE DATE OF SEARCH, THE DATE OF SEARCH WHICH IN THE CASE ON HAND WOULD BE 25.3.2010, BY VIRTUE OF FIRST PROVISO TO SECTION 153C, I.E., THE DATE OF PASS ING AN ORDER U/S 127 TRANSFERRING THE CASES OF THE ASSESSEE TO THE PRESENT ASSESSING OFFICER NO ASSESSMENT OR REASSESSMENT WAS PENDING. WHEN NO ASSESSMENT HAS ABATED, THE QUESTION OF MAKING ANY ADDITION OR MAKING DISALLOWANCE WHICH ARE NOT BASED ON ONLY M ATERIAL FOUND DURING THE SEARCH IS BAD IN LAW. 16. IN THESE CIRCUMSTANCES, WE HAVE NO DOUBT ABOUT THE ABSENCE OF ANY SEIZED MATERIAL WHICH ARE INCRIMINATING IN NATURE TO BACK THE ADDITIONS U/S 68 OR 14A O THE ACT MADE IN THE ASSESSMENT MADE U/S 153A OF THE ACT FOR THE AY UNDER CONSIDERATION. REGARDING THE DVOS REPORT GATHERED DURING THE SEARCH ACTION, WE FIND THAT THE REPORT SUFFERS FROM CERTAIN DEFICIENCIES QUA COST OF CONSTRUCTION OF RESIDENTIAL PROPERTY AND THE LAND OBTAINED THERETO. THE SAID REPORT CONSTITUTES AN OPINION OF THE THIRD PARTY WHICH CANNOT BE USED BY THE AO FOR MAKING ADDITIONS AND SUCH ADDITIONS, IF ANY, CANNOT BE SUSTAINED LEGALLY. AS SUCH, WE FIND THAT THE AO HAS NOT USED THE SAID REPORT OF THE DVO ALSO FOR MAKING ADDITIONS OF RS. 3 1,33,007/ - , THE DIFFERENCE BETWEEN ACCOUNTED AMOUNT OF RS. 46,13,007/ - , CLAIMED AS THE AMOUNT SPENT ON CONSTRUCTION OF HOUSE AND ACQUISITION OF LAND AS ON 31.3.2002 MINUS RS. RS. 14.8 LAKHS, THE INVESTMENT MADE ON THE LAND PLOTS. AO MADE ADDITION FOR ASSE SSEES FAILURE TO PROVIDE EVIDENCES / BILLS IN SUPPORT OF THE CLAIM OF EXPENDITURE ON THE CONSTRUCTION. IT THE PRESUMPTION OF THE AO 10 THAT THE PLOTS SINCE ACQUIRED ONLY BY JULY 2001, THE ASSESSEE WOULD NOT HAVE SPEND RS. 31,33,007/ - BY 31.3.2002. THIS IS MERELY A PRESUMPTION RATHER CONCLUSION BASED ON ANY EVIDENCES. SUCH ADDITIONS ARE UNSUSTAINABLE IN LAW IN THE ASSESSMENTS MADE U/S 153A R.W.S 143(3) OF THE ACT. 17 . RAJASTHAN HIGH COURT JUDGMENT IN THE CASE OF JAI STEEL (INDIA) (SUPRA), VIDE PARA 18, IT IS CATEGORICALLY MENTIONED THAT THE REQUIREMENT OF ASSESSMENT OR REASSESSMENT UNDER THE SAID SECTION (153A) HAS TO BE READ IN THE CONTEXT OF SECTIONS 132 OR 132A OF T HE ACT, INASMUCH AS, IN CASE NOTHING INCRIMINATING IS FOUND ON ACCOUNT OF SEARCH OR REQUISITION, THEN THE QUESTION OF REASSESSMENT OF THE CONCLUDED ASSESSMENTS DOES NOT ARISE, WHICH WOULD MORE REITERATION.. THUS, THE JUDGMENT OF HONBLE HIGH COURT IN THE CASE OF JAI STEEL LTD, SUPRA AND ABOVE DECISIONS OF THE TRIBUNAL ARE CATEGORICAL IN CONCLUDING THAT, IN CASE OF THE CONCLUDED ASSESSMENTS LIKE THE PRESENT ONE, THE ADDITIONS ARE MADE ONLY BASED ON THE INCRIMINATING MATERIAL DISCOVERED DURING THE SEARC H ACTION. THE FACTS OF THE JAI STEEL LTD (SUPRA) ARE IDENTICAL TO THE PRESENT ONE IE AO MADE ADDITIONS BY REASSESSING U/S 153A ON THE COMPLETED ASSESSMENT U/S 143(1) OF THE ACT. THUS, CONSIDERING THE JUDGMENT IN THE CASE OF THE JAI STEEL LTD (SUPRA), THE A RGUMENTS ON THE LEGAL ISSUE RAISED BEFORE US STANDS COVERED. THEREFORE, CONSIDERING THE RAJASTHAN HIGH COURTS JUDGMENT IN THE CASE OF JAI STEELS LTD, SUPRA, WE HAVE NO DIFFICULTY IN (I) UPHOLDING THE ISSUE OF NOTICE U/S 153A OF THE ACT AND (2) IN DISAPPRO VING THE MAKING OF THE IMPUGNED ADDITIONS U/S 68 AND 14A OF THE ACT, WHICH ARE NOT BACKED BY THE INCRIMINATING MATERIALS. IN THE ABSENCE OF INCRIMINATING MATERIAL, THE ROLE OF THE AO IS ONLY TO REITERATE THE RETURNED INCOME FILED IN RESPONSE TO THE NOTICE U/S 153A OF THE ACT. ACCORDINGLY, IN SUBSTANCE, THE COMMON LEGAL ISSUE RAISED IN THE GROUNDS FOR BOTH THE APPEALS OF THE ASSESSEE (ITA NO 3389&3390/M/2011 ) IS ALLOWED. 18. REGARDING OTHER TWO GROUNDS ON THE MERITS OF THE ADDITIONS RAISED IN BOTH THE APPEA LS, CONSIDERING THE RELIEF GRANTED TO THE ASSESSEE ON THE LEGAL GROUND, WE FIND THE ADJUDICATION IS ONLY OF ACADEMIC IMPORTANCE. THEREFORE, WE DISMISS THE SAME ACADEMIC. 19. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED . 6 . FROM THE ABOVE, IT IS EVIDENT THAT THE ARGUMENTS RELATING TO THE VALIDITY OF THE NOTICE U/S 153 ARE DISAPPROVED. CONSEQUENTLY, WE CONFIRM THE VALIDITY OF THE NOTICE ISSUED U/S 153A OF THE ACT. HOWEVER, CONSIDERING THE JUDGMENT OF THE RAJASTHAN HIGH COURT JUDGMENT IN THE CASE OF JAI STEEL (INDIA) LTD AND OTHER ORDERS OF THE TRIBUNAL (SUPRA), WE ARE OF THE OPINION THAT THE ADDITIONS MADE BY THE AO IN THE ABSENCE OF ANY INCRIMINATING MATERIAL ARE NOT SUSTAINABLE. ACCORDINGLY, ADDITIONS ARE DELETED AND THE G ROUND NO.1 RAISED BY THE ASSESSEE IS ALLOWED . 7 . GROUND NO.2 RELATES TO THE ADDITION U/S 68 ON ACCOUNT OF UNEXPLAINED GIFTS RECEIVED BY THE ASESSEE . IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S. GOVI ND AGARWAL (HUF) VS. DCIT VIDE ITA NO.8917/M/2010 , DATED 16.5.2013, FOR THE AY 2005 - 06 AND READ OUT THE RELEVANT PARAS 6 & 7 OF THE SAID ORDER OF THE TRIBUNAL DATED 16.5.2013 (SUPRA) WHICH READ AS UNDER: 11 6. WE HAVE HEARD THE RIVAL CONTENTIONS ON THE PRELIMINARY ISSUE AS TO WHETHER THE ADDITION CAN BE MADE IN THE PRESENT CASE ONCE THE ASSESSMENT FOR THE ASSESSMENT YEAR 2005 06 HAS ATTAINED FINALITY AND NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH. ON A PERUSAL OF THE RECORDS AND THE FINDINGS OF THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS), WE FIND THAT THERE IS NO REFERENCE TO ANY SEIZED MATERIAL OR ANY INCRIMINATING DOCUMENTS SO AS TO SUGGEST THAT ADDITION MADE IN THE ASSESSMENT ORDER ARE BASED ON ANY INCRIMINATING MA TERIAL FOUND AT THE TIME OF SEARCH. ONCE THAT IS SO AND ALSO THAT THE ASSESSMENT FOR THE ASSESSMENT YEAR 2005 06 HAS ATTAINED FINALITY BEFORE THE DATE OF SEARCH, THEN NO ADDITION CAN BE MADE UNDER SECTION 153A. THE MUMBAI SPECIAL BENCH DECISION OF THE TRIB UNAL IN ALL CARGO GLOBAL LOGISTIC LTD. (SUPRA), AFTER ANALYZING THE RELEVANT PROVISIONS OF THE ACT, CAME TO THE FOLLOWING CONCLUSION AND RATIO: (A) IN ASSESSMENT THAT ARE ABATED, THE ASSESSING OFFICER RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDIC TION CONFERRED ON HIM UNDER SECTION 153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARATELY. (B) IN OTHER CASES, IN ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT UNDER SECTION 153A WILL BE MADE ON TH E BASIS OF INCRIMINATING MATERIAL WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH . 7. IN THIS CASE, THE QUESTION ANSWERED IN CLAUSE (B) WOULD BE APPLICABLE AS THE ADDITION IN THE ASSESSMENT ORDER PASSED UNDER SECTION 153A, CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH IN CASE WHE RE THE ASSESSMENT HAS ALREADY BEEN FINALIZED. THUS, IN THIS CASE, NO ADDITION CAN BE MADE OVER AND ABOVE THE RETURNED INCOME WHICH HAS BECOME FINAL PRIOR TO THE DATE OF SEARCH AND THERE IS NO MATERIAL FOUND AT THE TIME OF SEARCH. THE AFORESAID MUMBAI SPECI AL BENCH DECISION OF THE TRIBUNAL IN ALL CARGO GLOBAL LOGISTIC LTD. (SUPRA) HAS ALSO BEEN REAFFIRMED AND APPLIED BY THE CO ORDINATE BENCH IN GURINDER SINGH BAWA (SUPRA). THE RELEVANT OBSERVATION OF THE TRIBUNAL IS REPRODUCED HEREIN BELOW: 6. WE HAVE PERU SED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE RAISED IS REGARDING LEGAL VALIDITY OF ADDITION MADE BY AO UNDER SECTION 153A OF THE ACT. UNDER THE PROVISIONS OF SECTION 153A, IN ALL CASES, WHERE SEARCH IS CONDUCTED UNDER SECTION 132 OF THE ACT, AO IS EMPOWERED TO ASSESS OR REASSESS TOTAL INCOME OF SIX ASSESSMENT YEARS PRECEDING THE ASSESSMENT YEAR IN WHICH SEARCH WAS CONDUCTED. THE SECTION ALSO PROVIDES THAT ASSESSMENT OR REASSESSMENT RELATING TO ANY ASSESSMENT YEAR FALLING WITHI N PERIOD OF SIX ASSESSMENT YEAR IF PENDING ON THE DATE OF INITIATION OF SEARCH SHALL ABATE. THERE HAVE BEEN DIVERGENT VIEWS REGARDING SCOPE OF APPLICATION OF SECTION 153A IN CASES WHERE NO INCRIMINATING MATERIAL WAS FOUND INDICATING ANY UNDISCLOSED INCOME. SOME OF THE TRIBUNAL BENCHES HAD TAKEN THE VIEW THAT IN CASE NO INCRIMINATING MATERIAL WAS FOUND AO HAD NO JURISDICTION TO MAKE ASSESSMENT OR REASSESSMENT UNDER SECTION 153A WHILE SOME OTHER BENCHES HELD THAT JURISDICTION UNDER SECTION 153A WAS AUTOMATIC TO REASSESS SIX IMMEDIATE PRECEDING ASSESSMENT YEARS IRRESPECTIVE OF THE FACT WHETHER ANY INCRIMINATING MATERIAL WAS FOUND OR NOT. ANOTHER ASPECT ON WHICH THERE HAD BEEN DIVERGENT VIEWS WAS WHETHER EVEN IF AO HAD JURISDICTION UNDER SECTION 153A, ADDITION C AN BE MADE IN ASSESSMENT / REASSESSMENT ONLY WHEN SOME INCRIMINATING MATERIAL HAS BEEN FOUND. ALL THESE ASPECTS HAD BEEN REFERRED TO THE SPECIAL BENCH OF THE TRIBUNAL IN CASE OF ALCARGO GLOBAL LOGISTICS LTD. AND ORDER OF SPECIAL BENCH DATED 6.7.2012 HAS BE EN REFERRED. 6.1 THE SPECIAL BENCH IN THE CASE OF ALCARGO GLOBAL LOGISTICS LTD. (SUPRA), HAS HELD THAT PROVISIONS OF SECTION 153A COME INTO OPERATION IF A SEARCH OR REQUISITION IS INITIATED AFTER 31.5.2003 AND ON SATISFACTION OF THIS CONDITION, THE AO IS UNDER OBLIGATION TO ISSUE NOTICE TO THE PERSON REQUIRING HIM TO FURNISH THE RETURN OF INCOME FOR SIX YEARS IMMEDIATELY PRECEDING THE YEAR OF SEARCH. THE SPECIAL BENCH FURTHER HELD THAT IN CASE ASSESSMENT HAS ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION UNDER SECTION 153A FOR WHICH ASSESSMENT SHALL BE MADE FOR EACH ASSESSMENT YEAR SEPARATELY. THUS IN CASE WHERE ASSESSMENT HAS ABATED THE AO CAN MAKE ADDITIONS IN THE ASSESSMENT, EVEN IF NO INCRIMINATING MATERIAL HAS BEEN FOUND. BUT IN OTHER CASES THE SPECIAL BENCH HELD THAT THE ASSESSMENT UNDER SECTION 153A CAN BE MADE ON THE BASIS OF INCRIMINATING MATERIAL WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS BOOKS OF ACCOUNT AND OTHER DOCUMENTS FOUND IN THE COURSE OF SEARCH BUT NOT PRO DUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND UNDISCLOSED INCOME OR PROPERTY DISCLOSED DURING THE COURSE OF SEARCH. IN THE PRESENT CASE, THE ASSESSMENT HAD BEEN COMPLETED UNDER SUMMARY SCHEME UNDER SECTION 143(1) AND TIME LIMIT FOR ISSUE OF NOTICE UNDER S ECTION 143(2) HAD EXPIRED ON THE DATE OF SEARCH. THEREFORE, THERE WAS NO ASSESSMENT PENDING IN THIS CASE AND IN SUCH A CASE THERE WAS NO QUESTION OF ABATEMENT. THEREFORE, ADDITION COULD BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING SEARC H. 12 THUS, ON THE FACTS OF THE CASE, WE HOLD THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER WITH REGARD TO UNEXPLAINED GIFT OF RS. 10,00,000, MADE UNDER SECTION 68 AND DISALLOWANCE OF RS. 1,01,300 UNDER SECTION 14A, ARE BEYOND THE SCOPE OF SECTION 153A / 153C . CONSEQUENTLY, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND ON THE PRELIMINARY GROUND ITSELF, BOTH THE ADDITIONS ARE DELETED. THUS, THE ISSUES ARISING OUT OF THE GROUND ARE TREATED AS ALLOWED. 8 . CONSIDERING THE A BOVE SETTLED POSITION OF THE ISSUE, WE ARE OF THE OPINION THAT THE DISALLOWANCE MADE U/S 68 IS UNCALLED FOR AS THE SAME IS BEYOND THE SCOPE OF SECTION 153A / 153C OF THE ACT. NO INCRIMINATING MATERIAL IN SUPPORT OF THE ADDITIONS MADE U/S 68 OF THE ACT WAS BROUGHT TO OUR NOTICE BY THE REVENUE. THEREFORE, THE ADDITION MADE U/S 68 OF THE ACT IS DELETED AND THE GROUND NO.2 RAISED BY THE ASSESSEE IS ALLOWED . 9 . GROUND NO.3 RELATES TO THE DISALLOWANCE U/S 14A OF THE ACT. IN THIS REGARD, LD COUNSEL IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S. GOVIND AGARWAL (HUF) VS. DCIT VIDE ITA NO.8917/M/2010 , DATED 16.5.2013, FOR THE AY 2005 - 06 AND READ OUT THE RELEVANT PARAS 6 & 7 OF THE SAID ORDER OF THE TR IBUNAL DATED 16.5.2013 (SUPRA) WHICH READ AS UNDER: 6. WE HAVE HEARD THE RIVAL CONTENTIONS ON THE PRELIMINARY ISSUE AS TO WHETHER THE ADDITION CAN BE MADE IN THE PRESENT CASE ONCE THE ASSESSMENT FOR THE ASSESSMENT YEAR 2005 06 HAS ATTAINED FINALITY AND NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH. ON A PERUSAL OF THE RECORDS AND THE FINDINGS OF THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS), WE FIND THAT THERE IS NO REFERENCE TO ANY SEIZED MATERIAL OR ANY INCRIMINATING DOCU MENTS SO AS TO SUGGEST THAT ADDITION MADE IN THE ASSESSMENT ORDER ARE BASED ON ANY INCRIMINATING MATERIAL FOUND AT THE TIME OF SEARCH. ONCE THAT IS SO AND ALSO THAT THE ASSESSMENT FOR THE ASSESSMENT YEAR 2005 06 HAS ATTAINED FINALITY BEFORE THE DATE OF SEA RCH, THEN NO ADDITION CAN BE MADE UNDER SECTION 153A. THE MUMBAI SPECIAL BENCH DECISION OF THE TRIBUNAL IN ALL CARGO GLOBAL LOGISTIC LTD. (SUPRA), AFTER ANALYZING THE RELEVANT PROVISIONS OF THE ACT, CAME TO THE FOLLOWING CONCLUSION AND RATIO: (A) IN ASSE SSMENT THAT ARE ABATED, THE ASSESSING OFFICER RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON HIM UNDER SECTION 153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARATELY. (B) IN OTHER CASES, IN ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT UNDER SECTION 153A WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH . 7. IN THIS CASE, THE QUESTION ANSWERED IN CLAUSE (B) WOULD BE APPLICABLE AS THE ADDITION IN THE ASSESSMENT ORDER PASSED UNDER SECTION 153A , CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH IN CASE WHERE THE ASSESSMENT HAS ALREADY BEEN FINALIZED. THUS, IN THIS CASE, NO ADDITION CAN BE MADE OVER AND ABOVE THE RETURNED INCOME WHICH HAS BECOME FINAL PRIOR TO THE DATE OF SEARCH AND THERE IS NO MATERIAL FOUND AT THE TIME OF SEARCH. THE AFORESAID MUMBAI SPECIAL BENCH DECISION OF THE TRIBUNAL IN ALL CARGO GLOBAL LOGISTIC LTD. (SUPRA) HAS 13 ALSO BEEN REAFFIRMED AND APPLIED BY THE CO ORDINATE BENCH IN GURINDER SINGH B AWA (SUPRA). THE RELEVANT OBSERVATION OF THE TRIBUNAL IS REPRODUCED HEREIN BELOW: 6. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE RAISED IS REGARDING LEGAL VALIDITY OF ADDITION MADE BY AO UNDER SECTION 153A OF T HE ACT. UNDER THE PROVISIONS OF SECTION 153A, IN ALL CASES, WHERE SEARCH IS CONDUCTED UNDER SECTION 132 OF THE ACT, AO IS EMPOWERED TO ASSESS OR REASSESS TOTAL INCOME OF SIX ASSESSMENT YEARS PRECEDING THE ASSESSMENT YEAR IN WHICH SEARCH WAS CONDUCTED. THE SECTION ALSO PROVIDES THAT ASSESSMENT OR REASSESSMENT RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN PERIOD OF SIX ASSESSMENT YEAR IF PENDING ON THE DATE OF INITIATION OF SEARCH SHALL ABATE. THERE HAVE BEEN DIVERGENT VIEWS REGARDING SCOPE OF APPLICATION OF SECTION 153A IN CASES WHERE NO INCRIMINATING MATERIAL WAS FOUND INDICATING ANY UNDISCLOSED INCOME. SOME OF THE TRIBUNAL BENCHES HAD TAKEN THE VIEW THAT IN CASE NO INCRIMINATING MATERIAL WAS FOUND AO HAD NO JURISDICTION TO MAKE ASSESSMENT OR REASSESSMENT U NDER SECTION 153A WHILE SOME OTHER BENCHES HELD THAT JURISDICTION UNDER SECTION 153A WAS AUTOMATIC TO REASSESS SIX IMMEDIATE PRECEDING ASSESSMENT YEARS IRRESPECTIVE OF THE FACT WHETHER ANY INCRIMINATING MATERIAL WAS FOUND OR NOT. ANOTHER ASPECT ON WHICH TH ERE HAD BEEN DIVERGENT VIEWS WAS WHETHER EVEN IF AO HAD JURISDICTION UNDER SECTION 153A, ADDITION CAN BE MADE IN ASSESSMENT / REASSESSMENT ONLY WHEN SOME INCRIMINATING MATERIAL HAS BEEN FOUND. ALL THESE ASPECTS HAD BEEN REFERRED TO THE SPECIAL BENCH OF THE TRIBUNAL IN CASE OF ALCARGO GLOBAL LOGISTICS LTD. AND ORDER OF SPECIAL BENCH DATED 6.7.2012 HAS BEEN REFERRED. 6.1 THE SPECIAL BENCH IN THE CASE OF ALCARGO GLOBAL LOGISTICS LTD. (SUPRA), HAS HELD THAT PROVISIONS OF SECTION 153A COME INTO OPERATION IF A S EARCH OR REQUISITION IS INITIATED AFTER 31.5.2003 AND ON SATISFACTION OF THIS CONDITION, THE AO IS UNDER OBLIGATION TO ISSUE NOTICE TO THE PERSON REQUIRING HIM TO FURNISH THE RETURN OF INCOME FOR SIX YEARS IMMEDIATELY PRECEDING THE YEAR OF SEARCH. THE SPEC IAL BENCH FURTHER HELD THAT IN CASE ASSESSMENT HAS ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION UNDER SECTION 153A FOR WHICH ASSESSMENT SHALL BE MADE FOR EACH ASSESSMENT YEAR SEPARATELY. THUS IN CASE WHERE ASSESSMENT HAS ABATED THE AO CAN MAKE ADDITIONS IN THE ASSESSMENT, EVEN IF NO INCRIMINATING MATERIAL HAS BEEN FOUND. BUT IN OTHER CASES THE SPECIAL BENCH HELD THAT THE ASSESSMENT UNDER SECTION 153A CAN BE MADE ON THE BASIS OF INCRIMINATING MATERIAL WHICH IN THE CONTEXT OF RELEV ANT PROVISIONS MEANS BOOKS OF ACCOUNT AND OTHER DOCUMENTS FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND UNDISCLOSED INCOME OR PROPERTY DISCLOSED DURING THE COURSE OF SEARCH. IN THE PRESENT CASE, THE ASSESSMENT HAD BEEN COMPLETED UNDER SUMMARY SCHEME UNDER SECTION 143(1) AND TIME LIMIT FOR ISSUE OF NOTICE UNDER SECTION 143(2) HAD EXPIRED ON THE DATE OF SEARCH. THEREFORE, THERE WAS NO ASSESSMENT PENDING IN THIS CASE AND IN SUCH A CASE THERE WAS NO QUESTION OF ABATEMEN T. THEREFORE, ADDITION COULD BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING SEARCH. THUS, ON THE FACTS OF THE CASE, WE HOLD THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER WITH REGARD TO UNEXPLAINED GIFT OF RS. 10,00,000, MADE UNDER SEC TION 68 AND DISALLOWANCE OF RS. 1,01,300 UNDER SECTION 14A, ARE BEYOND THE SCOPE OF SECTION 153A / 153C. CONSEQUENTLY, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND ON THE PRELIMINARY GROUND ITSELF, BOTH THE ADDITIONS ARE DELETED. THUS, THE ISSUES ARISING OUT OF THE GROUND ARE TREATED AS ALLOWED. 10 . CONSIDERING THE ABOVE SETTLED POSITION OF THE ISSUE, WE ARE OF THE OPINION THAT THE DISALLOWANCE MADE U/S 14A IS UNCALLED FOR AS THE SAME IS BEYOND THE SCOPE OF SECTION 153A / 153C OF THE ACT. NO INCRIMINATING MATERIAL WAS BROUGHT TO OUR NOTICE BY THE REVENUE IN SUPPORT OF TH E ADDITIONS MADE U/S 14A OF THE ACT. THEREFORE, THE ADDITION MADE U/S 14A OF THE ACT IS DELETED AND THE GROUND NO.3 RAISED BY THE ASSESSEE IS ALLOWED . 11 . IN THE RESULT, 3 APPEAL S OF THE ASSESSEE FOR THE AYS 2003 - 04 TO 2005 - 06 ARE ALLOWED. 14 ./I.T.A. NO.881/M/2011 (AY: 2003 - 2004) (BY REVENUE) ./I.T.A. NO.882/M/2011 (AY: 2004 - 2005) (BY REVENUE) ./I.T.A. NO.883/M/2011 (AY: 2005 - 2006) (BY REVENUE) 12 . THESE THREE APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDER OF CIT (A) - 41, MUMBAI DATED 25.11.2010. SINCE, THE ISSUES RAISED IN THESE APPEALS FOR THE AYS 2003 - 04 TO 2005 - 06 ARE IDENTICAL, THEREFORE FOR THE SAKE OF REFERENCE, WE SHALL TAKE UP THE GROUNDS RAISED BY THE REVENUE FOR TH E AY 2003 - 2004 IN THE CASE OF SHRI DEEPAK AGARWAL AND THE GROUNDS RAISED THEREIN READ AS UNDER: I) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A) HAS ERRED IN ADMITTING AND ACCEPTING NEW ARGUMENT OF ASSESSEE DURING THE APPELLA TE PROCEEDINGS THAT THE TRANSACTION OF PURCHASE OF SHARES WERE OFF MARKET TRANSACTIONS WITHOUT PROVIDING ANY OPPORTUNITY TO THE AO. II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A) HAS ERRED IN TREATING THE PURCHASE AS WELL AS THE SALE TRANSACTIONS OF THE SHARES OF THE M/S. DATABASE FINANCIAL LTD AS GENUINE WITHOUT TAKING INTO ACCOUNT THE FOLLOWING FACTS. A. THE PURCHASE AS WELL AS SALE OF THE SAID SHARES WERE ADMITTED ON OATH U/S 131 DATED 3.1.2008 AND U/S 132(4) DATED 4.2.2008 ON THE BEHALF OF THE ASSESSEE, AS TO BE NON GENUINE AND TAX THERE UPON WAS ALSO PAID BY THE ASSESSEE. B. THE AUTHENTICITY OF THE DOCUMENTS RELATED TO PURCHASE AND SALE OF THE SAID SHARES IS NOT CONFIRMED BY THE BROKER OR ANY OTHER PARTY AND THESE VERY DOCUMENT S WERE ADMITTED TO BE CREATED FOR THE PURPOSE OF THE MANAGED CAPITAL GAIN BY THE ASSESSEE / ASESSEES REPRESENTATIVE U/S 131 AND 132(4) OF THE ACT. C. THE ASSESSEE HAD PURCHASED THE SAID SHARES ON PRICE BEFORE SPLIT EVEN AFTER THE SPLIT OF THE SHARES HAD TA KEN PLACE. D. THE SALE PRICE OF SHARES WERE MANIPULATED AND THE ACTIVITY OF THE COMPANY AND ITS BALANCE SHEET DOES NOT SHOW THAT THE SHARE OF FACE VALUE OF RS. 1 SHOULD BE SOLD AT AN AVERAGE PRICE OF RS. 78.44 . III) WHETHER THE LD CIT (A) HAS ERRED IN RELYIN G ON THE DECISION OF HONBLE JODHPUR TRIBUNAL IN THE CASE OF ACIT VS. CHANDRESH KUMAR MAHESWARI 120 TTJ 132 JDH AS THE FACTS ARE DISTINGUISHABLE? IV) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD CIT (A) WAS JUSTIFIED IN DELETING THE ADD ITION OF RS. 4,90,223/ - MADE ON ACCOUNT OF UNEXPLAINED EXPENSES INCURRED BY THE ASSESSE FOR ARRANGING THE BOGUS LONG TERM CAPITAL GAIN. V) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) WAS JUSTIFIED TO ACCEPT THE GENU INENESS OF THE QUESTIONABLE SHARE TRANSACTIONS WITHOUT TAKING INTO ACCOUNT THE RATIO DECIDENDI LAID DOWN IN THE CASE OF SOMNATH MAINI VS. CIT [2008] 306 ITR 414 (P &H) WHICH HAS UNDER SIMILAR FACTS AND CIRCUMSTANCES HELD THAT THE BURDEN TO PROVE THE GENUIN ENESS OF SUCH TRANSACTIONS WAS PRIMARILY ON THE ASSESSEE AND MERE LEADING OF EVIDENCE BY THE ASSESSEE THAT THE TRANSACTIONS WERE GENUINE CANNOT BE TREATED AS CONCLUSIVE. 13 . THE ISSUES RAISED BY THE REVENUE IN THIS APPEAL RELATES TO THE ADDITIONS MADE BY THE AO ON ACCOUNT OF SALE PROCEEDS ON SHARES OF DATABASE FINANCE LTD, WHICH ARE OTHERWISE ACCOUNTED IN THE BOOKS OF ACCOUNTS, TOWARDS UNEXPLAINED EXPENDITURE RELATING TO THE LONG TERM CAPITAL GAINS ON SALE OF THE SAME SHARES. NO INCRIMINATING 15 MATERIAL SUGGESTING THE BOGUS NATURE OF THE TRANSACTIONS IS BROUGHT TO OUR NOTICE BY THE REVENUE. CONSIDERING THE FACT THAT WE HAVE ALREADY DELETED THE ADDITIONS MADE BY THE AO IN THIS REGARD, WHILE ADJUDICATING THE APPEAL ITA NO.8912/M/2010 (AY 2003 - 04) IN THE ABOVE PARAGRAPHS OF THIS ORDER. SIMILAR ISSUE CONNECTED TO THE SALE PROCEEDS ON SHARES OF DATABASE FINANCE LTD CAME UP FOR DISCUSSION AND ADJUDICATION IN THE CASE OF NIKKI AGAR WAL VIDE I.T.A. NO.879/M/2011 (AY: 2003 - 2004) WHEREIN WE HELD THAT THERE IS NO CASE OF ADDITION IN THAT CASE. WE RELY ON THE JUDGMENT IN THE CASE OF JAI STEEL (INDIA) (SUPRA) TOO. THEREFORE, THE ADJUDICATION OF THESE GROUNDS BECOMES ACADEMIC . ACCORDINGLY , GROUNDS RAISED BY THE REVENUE ARE DISMISSED AS ACADEMIC. 1 4 . IN THE RESULT, APPEAL S OF THE REVENUE FOR THE AYS 2003 - 04 TO 2005 - 06 ARE DISMISSED . ./I.T.A. NO.4546/M/2011 (AY:2006 - 2007) (BY REVENUE) ./I.T.A. NO. 4548 /M/2011 (AY: 2007 - 2008 ) (BY REVENUE) (IN THE CASE OF DEEPAK AGARWAL) 15 . THESE TWO APPEAL S FILED BY THE REVENUE ON 6.6.2011 ARE AGAINST THE ORDER OF THE CIT (A) - 41, MUMBAI DATED 25.3.2011 FOR THE ASSESSMENT YEAR 2006 - 2007 AND 2007 - 2008. CONCERNED ASSESSMENTS WERE COMPLETED U/S 143(3) R.W.S 153A OF THE ACT. SINCE, THE GROUNDS RAISED BY THE REVENUE IN THESE TWO APPEALS ARE IDENTICAL AND THE ONLY DIFFERENCE IS IN FIGURES, THEREFORE, FOR THE SAKE OF REFERENCE, THE GROUNDS RAISED WITH REGARD TO AY 2006 - 07 ARE TAKEN FOR ADJUDICATION WHICH READ AS UNDER: I WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) IS JUSTIFIED IN HOLDING THAT THE ASSESSEE HAS NOT MADE ANY UNEXPLAINED INVESTMENTS IN ACQUIRING SHARES O F M/S. DUNSTON GOODS P. LTD. IN VIEW OF THE FOLLOWING FACTS: A. ALL COMPANIES ARE INVESTMENTS COMPANIES AND HENCE THE NET ASSET VALUE (NAV) IS THE APPROPRIATE METHOD FOR THE VALUATION OF SHARES. B. IT IS IMPOSSIBLE FOR ASSESE TO ACQUIRE SHARES OF M/S. DGPL AT RS . 5 PER SHARES AS PER AGREEMENT IN JUNE 2004 WHEN COMPANY ITSELF HAS ALLOTTED SHARES AT THE PREMIUM OF RS. 90 PER SHARE IN THE FY 2000 - 01, FY 2001 - 02, FY 2002 - 03, FY 2003 - 04 AND ALSO IN SUBSEQUENT FINANCIAL YEAR. C. THERE IS NO EVIDENCE TO ACCEPT THE CLAIM OF THE ASSESSEE THAT SOME OF THE INVESTMENTS MADE BY THE COMPANIES ARE DEAD INVESTMENTS AS NO PROVISIONS ARE MADE BY THE MANAGEMENT IN THE ACCOUNTS AND THERE IS NO DISCLOSURE MADE BY TAX AUDITOR IN THE NOTES OF ACCOUNTS ON THIS ISSUE. FURTHER, IT IS FOUND T HAT THESE COMPANIES HAVE REALIZED FULLY ALL THE INVESTMENTS WITHOUT ANY DIFFICULTY. 16 II WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) IS JUSTIFIED IN NOT CONFIRMING THE ADDITION OF RS. 1,38,30,250/ - WHEN PREPONDERANCE OF PROBABILITIES SHOW THAT ASSESSEE HAS MADE UNEXPLAINED INVESTMENTS AND THE DECISION OF THE SUPREME COURT IN THE CASE OF SMT. SUMATI DAYAL VS. CIT 80 TAXMAN 89 IS APPLICABLE IN THE FACTS OF THIS CASE. III WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) HAS ERRED IN DIRECTING THE AO TO RE - COMPUTE THE DISALLOWANCE U/S 14A BY ADOPTING REASONABLE BASIS FOR EFFECTING APPOINTMENT OF THE EXPENDITURE. IV WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW TH E CIT (A) ERRED IN HOLDING THAT PROVISIONS OF RULE 8D DOES NOT HAVE RETROSPECTIVE EFFECT BY FOLLOWING DECISION OF MUMBAI HIGH COURT IN THE CASE OF M/S. GODREJ AND BOYCE MANUFACTURING COMPANY. 16 . THE ISSU ES RAISED BY THE REVENUE IN GROUND NO. I & II OF T HIS APPEAL RELATES TO THE ADDITIONS MADE BY THE AO ON ACCOUNT OF UNDI SCLOSED INVESTMENT IN SHARES OF DUNSTAN GOODS PVT. LTD. AMOUNTING TO RS.1,38,30,250/ - WHICH ARE OTHERWISE ACCOUNTED IN THE BOOKS OF ACCOUNTS. NO INCRIMINATING MATERIAL SUGGESTING THE BOGU S NATURE OF THE TRANSACTIONS IS BROUGHT TO OUR NOTICE BY THE REVENUE. CONSIDERING THE SAME, THE CIT (A) DELETED THE ADDITION BY GIVING REASONS AND ALLOWED THE APPEAL OF THE ASSESSEE VIDE PARA 3.3 OF HIS ORDER. WE HAVE PERUSED THE SAID PARA 3.3 OF THE CIT (A)S ORDER AND THE RELEVANT PORTIONS OF THE SAID PARA READ AS UNDER: 3.3 I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SEIZED DOCUMENTS CAREFULLY, THE ARGUMENTS OF BOTH THE SIDES WERE ALSO CONSIDERED. IT IS OBSERVED THAT DURING THE COURSE OF SEARCH CERTAIN PAPERS WERE FOUND AND SEIZED WHICH SHOWS THAT THE ASSESSEE HAS PURCHASED THE SHARES OF THREE UNLISTED COMPANIES SUPRA AT A LOWER VALUE THAN THE FAIR MARKET VALUATION. HOWEVER, NO INCRIMINATING DOCUMENTS WAS SEIZED WHICH SHOWS THAT THE APPELL ANT AND THE FAMILY MEMBERS HAS PAID ANY AMOUNT OVER AND ABOVE WHICH IS SHOWN ON THESE LOOSE PAPERS AND IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE STATEMENT RECORDED U/S. 132(4) OF THE ASSESSEE AND THE FAMILY MEMBERS, IT WAS STATED THAT NO PAYMENT WAS MA DE OTHER THAN THE VALUE OF THESE SHARES SHOWN IN THE BOOKS OF ACCOUNTS. THE ASSESSEE HAS ADOPTED PROFIT EARNING/YIELD CAPITALIZATION METHOD IN THE VALUATION OF THESE S HARES. ON THE OTHER HAND, THE AO HAS ADOPTED THE NAV METHOD FOR VALUATION OF SHARES AND A CCORDINGLY THE DIFFERENCE COMPUTED WAS TREATED AS UNEXPLAINED INVESTMENT U/S. 69 OF THE INCOME TAX ACT. IN VIEW OF THESE FACTS, IT IS CLEAR THAT THERE IS NO DISPUTE THAT NO INCRIMINATING DOCUMENT WAS FOUND AND SEIZED DURING THE COURSE OF SEARCH WHICH PROVE S THAT THE ASSESSEE HAS MORE THAN THE PRICE ENTERED IN THE BOOKS OF ACCOUNTS. THE ADDITION WAS MADE ONLY ON THE BASIS OF METHOD REJECTED WHICH WAS APPLIED BY THE APPELLANT I.E. PROFIT EARNING AND YIELD CAPITALIZATION METHOD AND ADOPTED THE NAV METHOD BY TH E AO . NOW QUESTION ARISES WHETHER SECTION 69 OF THE INCOME TAX ACT IS APPLICABLE TO THE FACTS OF THESE CASES, FOR BETTER UNDERSTANDING PROVISIONS OF SECTION 69 IS REPRODUCED AS UNDER: WHERE IN THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMENTS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NA TURE AND SOURCE OF THE IN VESTMENTS OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE [ASSESSING] OFFICER, 17 SATISFACTORY, THE VALUE OF THE INVESTMENTS MAY BE DEEMED TO BE T HE INCOME OF THE ASSESSEE OF SUCH FINANCIAL YEAR . ON PLAIN READING OF THE PROVISION, IT IS CLEAR THAT TWO CONDITIONS GIVEN IN THIS SECTION ARE TO BE SATISFIED CUMULATIVELY I.E. THE ASSESSEE SHOULD HAVE MADE INVESTMENT WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNTS AND THE ASSESSEE OFFERS EITHER NO EXPLANATION ABOUT THE NATU RE AND SOURCE OF INVESTMENT OR EXPLANATION OFFERED IS NOT SATIS FACTORY IN THE OPINION OF THE AO. IN THE PRESENT CASE, THE ASSESSEE HAS MADE INVESTMENT IN THE PURCHASE OF SHARES AND RECORDED IN THE BOOKS OF ACCOUNTS. NO DOCUMENTARY EVIDENCE WAS FOUND AND SE IZED TO PROVE THAT THE ASSESSEE HAS MADE INVESTMENT OVER AND ABOVE WHAT IS REFLECTED IN THE BOOKS OF ACCOUNTS. IN SECTION 68 OF THE INCOME TAX ACT, THE RESPONSIBILITY IS ON THE ASSESSEE TO PROVE THE ONUS OF CREDIT ENTRIES IN THE BOOKS OF ACCOUNTS, HOWEVER, U/S. 69 THE ONUS SHIFTS TO THE REVENUE TO PROVE THAT THE ASSESSEE HAS MADE UNACCOUNTED INVESTMENT ON THE BASIS OF ANY DOCUMENTARY EVIDENCE. TO STRENGTHEN THIS VIEW, THE APPELLANT HAS RELIED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS . NAVEEN GERA 328 ITR 516 WHERE IT IS HELD THAT IN ABSENCE OF INCRIMINATING MATERIAL ACTUAL CONSIDERATION AS PER AGREEMENT IS TO BE ACCEPTED. IN CASE OF CIT VS. SMT. SURAJ DEVI 328 ITR 604, HONBLE HIGH COURT HAS HELD THAT PRIMARY BURDEN TO PROVE UNDER STA TEMENT OR CONCEALMENT OF INCOME IS ON THE REVENUE. HONBLE MUMBAI TRIBUNAL IN CASE OF DCIT VS. RAJGIR BUILDERS 70 LTD 226 HAS HELD WHERE INVESTMENTS MADE WAS FULLY SUPPORTED BY ENTRIES IN BOOKS OF ACCOUNTS AND THERE BEING NO EVIDENCE TO SHOW ANY UNDISCLOSE D INVESTMENT ADDITION MADE ON ESTIMATED BASIS IS NOT JUSTIFIABLE. IN VIEW OF THE FACTS OF THE CASE AND THE JUDICIAL DECISIONS OF HONBLE COURTS IT IS HELD THAT NO INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED WHICH PROVE THAT THE ASSESSEE HAS MADE ANY OTHE R PAYMENT OVER AND ABOVE EXCEPT THE AMOUNT SHOWN IN THE BOOKS OF ACCOUNTS. NO ADDITIO N CAN BE MADE U/S. 69 OF THE IN COME TAX ACT. SECONDLY, THE METHOD OF VALUATION OF SHARES ADOPTED BY THE APPELLANT I.E. PROFIT EARNING/YIELD CAPITALIZATION METHODS AND THE METHOD BY THE AO I.E. NAV METHOD; BOTH ARE RECOGNIZED BUT DEPENDS ON THE FACTS OF THE CASE ON WHICH PARTICULAR METHOD CAN BE APPLIED. FURTHER IT IS ALSO WELL ESTABLISHED FACT AND LAW THAT NO ADDITION CAN BE MADE ON THE BASIS OF COMPUTATION METHOD UNTIL AND UNLESS IT IS PROVED THAT ANY UNEXPLAINED INVESTMENT MADE BY THE ASSESSEE. IT IS ALSO NOTICED THAT THE FACTS OF THE PRESENT CASE ARE SQUARELY COVERED BY THE DECISION OF HONBL E MUMBAI TRIBUNAL IN CASE OF RUPEE FINANCE AND MANAGEMENT PVT. LTD. VS. A CIT 119 TTJ 643 SUPRA HAS RELIED UPON BY THE ASSESSEE WHERE IT IS HELD AS UN E THE UNDISPUTED FACTS IN THIS CASE ARE THAT THE ASSESSEE COMPANY HAS PURCHASED CERTAIN SHARES AT A PRICE WHICH IS BELOW THE MARKET VALUE. THERE IS NO DISPUTE OF THE FACT THAT THE PRICE PAID FOR THE SHARES BY THE ASSESSEE COMPANY WERE THE COST INCURRED BY THE PURCHASER. IT IS ALSO NOT DISPUTED THAT, ALL THESE INVESTMENTS WERE RECORDED IN THE BOOKS OF ACCOUNTS. UNDER SECTION 69 SUCH VALUE OF THE INVESTMENT MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR THE FINANCIAL YEAR, IF THEY ARE NOT RECORDED IN THE BOOKS OF ACCOUNTS. THUS, SEC. 69 IS NOT APPLICABLE IN THIS CASE. THE FIRST APPELLATE AUTHORITY POSSIBLY REALIZING THIS DIFFICULTY HAS CHOSEN TO INVOKE SEC.28(4) AND NOT TO GIVE A DECISIV E FINDING AS TO WHETHER SEC. 69 IS APPLICABLE OR NOT. IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE COMPANY HAS PAID A CERTAIN AMOUNT IN EXCESS OF WHAT IS RECORDED IN THE BOOKS OF ACCOUNT FOR THE PURCHASE OF THE SHARES. THERE IS NOT EVEN AN ALLEGATIO N, MUCH LESS ANY EVIDENCE, THAT THE APPARENT CONSIDERATION IS NOT THE REAL CONSIDERATION. THE ONLY GROUSE THE REVENUE AUTHORITY HAVE IS THAT THE ASSESSEE COMPANY HAS PURCHASED THE SHARES AT A PRICE WHICH IS MUCH LESSER THAN THE MARKET PRICE WHICH. THIS, AS ALREADY STATED 18 IS NOT A DISPUTED FACT. THUS, ON THESE FACTS, NO ADDITION IS SUSTAINABLE UNDER SECTION 69. IN TOTALITY OF THE FACTS AND CIRCUMSTANCES, IT IS HELD THAT THE SHARES WERE PURCHASED BY THE ASSESSEE AND FAMILY MEMBERS AT LOWER PRICE THAN THE FAI R MARKET VALUE. THE SAME PRICE WAS ENTERED IN THE BOOKS OF ACCOUNTS AND NO DOCUMENT EVEN IN THE SEARCH WAS FOUND AND SEIZED TO PROVE THAT ANY FURTHER PAYMENT WAS MADE OVER AND ABOVE THE PAYMENT SHOWN IN THE BOOKS OF ACCOUNTS. MERELY ON THE BASIS OF THE METHOD OF ACCOUNTING ADDITION CANNOT BE MADE UNLESS AND UNTIL IT IS PROVED THAT UNEXPLAINED INVESTMENT WAS MADE BASED ON SOME DOCUMENTARY EVIDENCE, MOREOVER, THE PROVISION OF SECTION 56(VIIA) WAS INSERTED BY THE FINANCE ACT, 201 0 W.E.F. 01.06.2010. THEREFORE, NO ADDITION CAN BE MADE UNDER THIS SECTION BECAUSE IT IS NOT APPLICABLE FROM RETROSPECTIVE EFFECT. THUS THE ADDITION MADE BY THE AO OF RS. 1,38,30,250/ - FOR AY 2006 - 07 AND RS. 86,21 ,800/ - FOR AY 2007 - 08 U/S. 69 OF THE INCOME TAX ACT IS DELETED. HENCE THE GROUND OF APPEAL IS ALLOWED. 17. CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE CIT (A) HAS RIGHTLY ADJUDICATED THE ISSUE UNDER CONSIDERATION BY GIVING REASONS FOR ALLOWING THE APPEAL OF THE ASSESSEE. THEREFORE, WE FI ND NO INFIRMITY IN THE ORDER OF THE CIT (A) AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROU ND NO. I & II RAISED BY THE REVENUE IN BOTH THE APPEALS ARE DISMISSED . 18 . THE ONLY ISSUE EMANATING FROM THE ABOVE GROUND NO. III AND IV IS THE DISALLO WANCE OF RS. 1,12,822/ - FOR THE AY 2006 - 07 AND RS. 4,096/ - FOR THE AY 2007 - 08 U/S 14A MADE BY THE AO. DURING THE FIRST APPELLATE PROCEEDINGS, CIT (A) DIRECTED THE AO TO RE - COMPUTE THE DISALLOWANCE MADE BY THE AO. AT THE OUTSET, SHRI DEVENDAR MEHTA, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE JUDGMENT OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. M/S. GODREJ AGROVET LTD VIDE INCOME TAX APPEAL NO. 934 OF 2011, DATED 8.1.2013 AND MENTIONED THAT THE IN VIEW OF THE ABOVE MENTIONED JUDGMENT, THE ITAT HAS TAKEN THE VIEW THAT THE DISALLOWANCE U/S 14A SHOULD BE RESTRICTED TO 2% OF THE DIVIDEND INCOME. LD COUNSEL ALSO RELIED ON VARIOUS DECISIONS OF THE ITAT, KOLKATA B ENCHES IN SUPPORT OF HIS CONTENTION. 19 . ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 20 . WE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE. IT IS A FACT THAT THE RELEVANT ASSESSMENT YEAR S I.E., 2006 - 07 AND 2007 - 0 8 UNDER CONSIDERATION ARE OUTSIDE THE SCOPE OF PROVISIONS OF RULE 8D. THE SAID PROVISIONS CANNOT BE TREAT ED AS APPLICABLE TO THE A.Y.2006 - 07 & 2007 - 08 UNDER CONSIDERATION WHEN THE SAME IS PRECLUDED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. 19 CO. LTD. VS. DCIT, REPORTED IN (2010) 328 ITR 81(BOM) . THE HONBLE BOMBAY HIGH COURT ALSO IN THE CASE OF CIT VS. M/S. GODREJ AGROVET LTD VIDE INCOME TAX APPEAL NO. 934 OF 2011, DATED 8.1.2013 , HAS HELD THAT PERCENTAGE OF THE EXEMPT INCOME CAN CONSTITUTE A REASONABLE ESTIMATE FOR MAKING DISALLOWANCE IN THE YEARS EARLIER TO THE ASSESSMENT YEAR 2008 - 09. THE RELEVANT PORTION OF THE SAID JUDGMENT OF THE BOMBAY HIGH COURT (SUPRA) READS AS UNDER: '4 . SO FAR AS QUESTION (B) IS CONCERNED, THE TRIBUNAL IN ITS IMPUGNED ORDER DATED 17.9.2010 WHILE APPLYING THE DECISION OF THIS COURT IN THE MATTER OF GODREJ (SUPRA) HAS DISALLOWED THE EXPENDITURE ONLY TO THE EXTENT OF 2% OF THE TOTAL EXEMPT INCOME EARNED BY THE RESPONDENT - ASSESSEE ON THE BASIS ITS ORDER DATED 27.2.2009 FOR THE ASSESSMENT YEAR 2002 - 2003 AND ORDER DATED 10.9.2009 FOR THE ASSESSMENT YEARS 2003 - 2004 AND 2004 - 2005 WHEREIN DISALLOWANCE WAS RESTRICTED TO 2% OF THE EXEMPT INCOME. FURTHER; THE TRIBUN AL HAS REMANDED THE MATTER TO THE AO TO VERIFY THE DISALLOWANCE CLAIMED AND RESTRICT THE DISALLOWANCE ONLY TO THE EXTENT TO 2% OF THE TOTAL EXEMPT INCOME. WE FIND NO FAULT WITH THE ORDER OF THE TRIBUNAL. ' 21 . CONSIDERING THE BINDING NATURE OF THE JUDGMENT AND THE OVERALL FACTUAL MATRIX OF THE PRESENT CASE, WE RESTRICT THE DISALLOWANCE TO 5% OF THE TOTAL EXEMPT INCOME . ACCORDINGLY, GROUND NO S .III AND IV RAISED BY THE REVENUE ARE PARTLY ALLOWED . 22 . IN TH E RESULT, APPEAL S OF THE REVENUE ARE PARTLY ALLOWED . C.O. NO.185/M/2013 (ARISING FROM ITA NO.4546/M/2011) (AY2006 - 07) (BY SHRI DEEPAK AGARWAL ) 23 . THIS CROSS OBJECTION FILED BY THE ASSESSEE ON 19.8.2013 AGAINST THE ORDER OF THE CIT (A) - 41, MUMBAI DATED 25.3.2011 FOR THE AY 2006 - 07. IN THIS CROSS OBJECTION THE ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THE LD ACIT ERRED IN LAW AND AS WELL AS IN THE FACTS IN MAKING ADDITION OF RS. 1,38,30,250/ - ON ACCOUNT OF UNDISCLOSED INVESTMENT IN SHARES OF DUNSTAN GOODS PVT. LTD IN THE ORDER PASSED U/S 153A IN THE ABSENCE OF ANY INCRIMINATING MATERIAL . 2. THE LD CIT (A) SHOULD HAVE ADJUDICATED THE PROCEEDINGS U/S 153A TO BE NULL AND VOID AS NO INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED IN THE COURSE OF SEARCH AND SEIZURE ACTION IN THE ASSESSEES CASE . 24 . AT THE OUTSET, SHRI DEVENDRA A. MEHTA, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION THAT THERE IS A DELAY OF 464 DAYS IN FILING THE CROSS OBJECTIONS BEFORE THE TRIBUNAL. IN THIS REGARD, LD COUNSEL BROUGHT OUR ATTENTION THE AFFIDAVIT DATED 3.1 0.2013 FILED BY HIM AND READ OUT THE RELEVANT CONTENTS OF THE SAME WHICH READ AS UNDER: 20 I) II) SHRI NAND KISHOR KATWANKAR IS OFFICE ASSISTANT WORKING IN MY OFFICE SINCE 1985. HE IS USUALLY ASSIGNED THE WORK OF SUBMITTING AND COLLECTING DOCUMENTS FROM TH E INCOME TAX DEPARTMENT OF VARIOUS CLIENTS. HE COLLECTED THE GROUNDS OF APPEAL OF SHRI DEEPAK AGARWAL FOR AY 2006 - 07. . III) USUALLY, THE DOCUMENTS COLLECTED FROM INCOME TAX DEPARTMENT ARE PLACED BEFORE ME FOR REVIEWS. HOWEVER, AS I WAS OUT OF TOWN, HE KEPT THE GROUNDS OF APPEAL IN RELEVANT FILE BUT INADVERTENTLY, DID NOT BRING IT TO MY NOTICE FOR FURTHER ACTION. IV) AS SOON AS THE FILE WAS PUT UP FOR BEFORE ME FOR PREPARATION OF WRITTEN SUBMISSION, I NOTICED THAT THE CROSS OBJECTION AGAINST THE REVENUES APPEAL WERE NOT PREPARED AND FILED BEFORE THE HONBLE TRIBUNAL. V) I REITERATE THAT THE ABOVE MISTAKE WAS A BONA FIDE MISTAKE AND AN INADVERTENT LAPSE ON OUR PART AND ASSESSEE SHOULD NOT BE ALLOWED TO SUFFER BECAUSE OF IT. 25 . IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF COLLECTOR, LAND ACQUISITION VS. MST. KATI JI & ORS [1987] 167 ITR 471; ANOTHER JUDGMENT OF THE APEX COURT IN THE CASE OF CONCOLD OF INDIA INSURANCE CO. LTD VS. SMT. NIRMALA DEVI, 118 ITR 507 AND SOME OTHER DECISIONS OF THE HONBLE HIGH COURTS OF WHICH ARE RELEVANT FOR THE PROPOSITION THAT THE DEL AY IN FILING OF APPEAL DUE TO LAPSE ON PART OF ASSESSEES COUNSEL WHO WAS LOOKING AFTER TAX MATTERS, IS A SUFFICIENT CAUSE FOR CONDONATION OF DELAY. 26 . ON THE OTHER HAND, LD DR VEHEMENTLY OPPOSED TO THE REASONS GIVEN BY THE ASSESSEE FOR CONDONATION OF D ELAY. IN THIS REGARD, LD DR RELIED ON CERTAIN DECISIONS IN GENERAL AND THE DECISION OF THE TRIBUNAL, WHEREIN ONE OF US (JM) IS A PARTY, IN THE CASE OF KUNAL SURANA. FURTHER, IT IS THE SUBMISSION OF THE LD DR THAT THE CROSS OBJECTION RAISED DO NOT QUESTIO N THE FINDING OF THE CIT (A) ON FACTS. THE REASONS GIVEN BY THE ASSESSEE FOR CONDONING THE DELAY ARE NOT SUBSTANTIATED. 27 . ON HEARING THE ABOVE SUBMISSIONS OF THE LD COUNSEL AS WELL AS THE LD DR ON THE CROSS OBJECTION, WE FIND THAT THE CROSS OBJECTION DOES NOT RELATE TO ANY OF THE FINDINGS OF THE CIT (A) ON MERITS. AS SEEN ABOVE, IT IS PURELY ON LEGAL ISSUE ON VALIDITY OF ADD ITION U/S 153A WITHOUT ANY INCRIMINATING MATERIAL. AS SUCH, THE MAIN GROUND AGITATED BY THE REVENUE IN THEIR APPEALS IS ALREADY DECIDED IN FAVOUR OF THE ASSESSEE. THEREFORE, THE ADMISSION AND ADJUDICATION OF THE LEGAL GROUND IS ACADEMIC IN NATURE. FURTH ER, WE FIND THAT THE REASONS GIVEN BY THE ASSESSEE FOR CONDONATION IS NOT SUPPORTED BY THE SUPPORTING EVIDENCES. EX CONSIQUENTI , WE 21 DISMISS THE CROSS OB JECTION AS NOT MAINTAINABLE WITHOUT GO ING INTO THE MERITS OF THE SAME GROUNDS. 28 . IN THE RESULT, CROSS OBJECTION OF THE ASSESSEE IS DISMISSED . 2. APPEALS RELATING TO DEVESH AGARWAL 29 . THERE ARE THREE APPEALS IN TOTO. ASSESSEE FILED THE CROSS OBJECTION FOR AY 2006 - 07. ./I.T.A. NO. 4530 /M/2011 (AY:2006 - 2007) (BY REVENUE) ./I.T.A. NO. 4545 /M/2011 (AY: 2007 - 2008 ) (BY REVENUE) 30 . THESE TWO APPEAL S FILED BY THE REVENUE ON 6.6.2011 ARE AGAINST THE ORDER OF THE CIT (A) - 41, MUMBAI DATED 25.3.2011 FOR THE ASSESSMENT YEAR 2006 - 2007 AND 2007 - 2008 IN THE CASE OF SHRI DEVESH AGARWAL . SINCE, THE GROUNDS RAISED BY THE REVENUE IN THESE TWO APPEALS ARE IDENTICAL AND THE ONLY DIFFERENCE IS IN FIGURES, THEREFORE, FOR THE SAKE OF REFERENCE, THE GROUNDS RAISED WITH REGARD TO AY 2006 - 07 ARE TAKEN FOR ADJUDICATION WHICH READ AS UNDER: I WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) IS JUSTIFIED IN HOLDING THAT THE ASSESSEE HAS NOT MADE ANY UNEXPLAINED INVESTMENTS IN ACQUIRING SHARES OF M/S. DUNSTON GOODS P. LTD. IN VIEW OF THE FOLLOWING FA CTS: A ALL COMPANIES ARE INVESTMENTS COMPANIES AND HENCE THE NET ASSET VALUE (NAV) IS THE APPROPRIATE METHOD FOR THE VALUATION OF SHARES. B IT IS IMPOSSIBLE FOR ASSES SE E TO ACQUIRE SHARES OF M/S. DGPL AT RS. 5 PER SHARES AS PER AGREEMENT IN JUNE 2004 WHEN COMPANY ITSELF HAS ALLOTTED SHARES AT THE PREMIUM OF RS. 90 PER SHARE IN THE FY 2000 - 01, FY 2001 - 02, FY 2002 - 03, FY 2003 - 04 AND ALSO IN SUBSEQUENT FINANCIAL YEAR. C THERE IS NO EVIDENCE TO ACCEPT THE CLAIM OF THE ASSESSEE THAT SOME OF THE INVESTMENTS MADE BY THE COMPANIES ARE DEAD INVESTMENTS AS NO PROVISIONS ARE MADE BY THE MANAGEMENT IN THE ACCOUNTS AND THERE IS NO DISCLOSURE MADE BY TAX AUDITOR IN THE NOTES OF ACCOUNTS ON THIS ISSUE. FURTHER, IT IS FOUND THAT THESE COMPANIES HAVE REALIZED FULLY ALL THE INVESTMENTS WITHOUT ANY DIFFICULTY. II WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) IS JUSTIFIED IN NOT CONFIRMING THE ADDITION OF RS. 2,37,89,500/ - WHEN PREPONDERANCE OF PROBABILITIES SHOW THAT ASSESSEE HAS MADE UN EXPLAINED INVESTMENTS AND THE DECISION OF THE SUPREME COURT IN THE CASE OF SMT. SUMATI DAYAL VS. CIT 80 TAXMAN 89 IS APPLICABLE IN THE FACTS OF THIS CASE. III WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) HAS ERRED IN DIRECTING THE AO TO RE - COMPUTE THE DISALLOWANCE U/S 14A BY ADOPTING REASONABLE BASIS FOR EFFECTING APPOINTMENT OF THE EXPENDITURE. IV WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT (A) ERRED IN HOLDING THAT PROVISIONS OF RULE 8D DOES NOT HAVE RETROSPECTIVE EFFECT BY FOLLOWING DECISION OF MUMBAI HIGH COURT IN THE CASE OF M/S. GODREJ AND BOYCE MANUFACTURING COMPANY. 22 31 . THE ISSUES RAISED BY THE REVENUE IN GROUND NO. I & II OF THIS APPEAL RELATES TO THE ADDITIONS MADE BY TH E AO ON ACCOUNT OF UNDISCLOSED INVESTMENT IN SHARES OF DUNSTAN GOODS PVT. LTD. AMOUNTING TO RS. 2,37,89,500/ - WHICH ARE OTHERWISE ACCOUNTED IN THE BOOKS OF ACCOUNTS. NO INCRIMINATING MATERIAL SUGGESTING THE BOGUS NATURE OF THE TRANSACTIONS IS BROUGHT TO OUR NOTICE BY THE REVENUE. CONSIDERING THE SAME, THE CIT (A) DELETED THE ADDITION BY GIVING REASONS AND ALLOWED THE APPEAL OF THE ASSESSEE VIDE PARA 3.3 OF HIS ORDER. WE HAVE PERUSED THE SAID PARA 3.3 OF THE CIT (A)S ORDER AND THE SAME IS ALREADY REPRODUCE D IN PARA 16 OF THIS ORDER. 32. CONSIDERING THE SAME , WE ARE OF THE OPINION THAT THE CIT (A) HAS RIGHTLY ADJUDICATED THE ISSUE UNDER CONSIDERATION BY GIVING REASONS FOR ALLOWING THE APPEAL OF THE ASSESSEE. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT (A) AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NO. I & II RAISED BY THE REVENUE IN BOTH THE APPEALS ARE DISMISSED . 33 . THE ONLY ISSUE EMANATING FROM THE ABOVE GROUND NO. III AND IV IS THE DISALLOWANCE OF RS. 64,330/ - FOR THE AY 2006 - 07 AND RS. 4, 6 09 / - FOR THE AY 2007 - 08 U/S 14A M ADE BY THE AO. DURING THE FIRST APPELLATE PROCEEDINGS, CIT (A) DIRECTED THE AO TO RE - COMPUTE THE DISALLOWANCE MADE BY THE AO. AT THE OUTSET, SHRI DEVENDAR MEHTA, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE JUDGMENT OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. M/S. GODREJ AGROVET LTD VIDE INCOME TAX APPEAL NO. 934 OF 2011, DATED 8.1.2013 AND MENTIONED THAT THE IN VIEW OF THE ABOVE MENTIONED JUDGMENT, THE ITAT HAS TAKEN THE VIEW THAT THE DISALLOWANCE U/S 14A SHOULD BE RESTRICTED TO 2% OF THE DIVIDEND INCOME. LD COUNSEL ALSO RELIED ON VARIOUS DECISIONS OF THE ITAT, KOLKATA BENCHES IN SUPPORT OF HIS CONTENTION. 34 . ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 35 . WE HEARD BOTH THE PARTIES AND PERUSED THE O RDERS OF THE REVENUE. IT IS A FACT THAT THE RELEVANT ASSESSMENT YEARS I.E., 2006 - 07 AND 2007 - 08 UNDER CONSIDERATION ARE OUTSIDE THE SCOPE OF PROVISIONS OF RULE 8D. THE SAID PROVISIONS CANNOT BE TREAT ED AS APPLICABLE TO THE A.Y.2006 - 07 & 2007 - 08 UNDER CONSI DERATION WHEN THE SAME IS PRECLUDED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. VS. DCIT, REPORTED IN (2010) 328 ITR 81(BOM) . THE HONBLE BOMBAY 23 HIGH COURT ALSO IN THE CASE OF CIT VS. M/S. GODREJ AGROVET LTD VIDE INCOME TA X APPEAL NO. 934 OF 2011, DATED 8.1.2013 , HAS HELD THAT PERCENTAGE OF THE EXEMPT INCOME CAN CONSTITUTE A REASONABLE ESTIMATE FOR MAKING DISALLOWANCE IN THE YEARS EARLIER TO THE ASSESSMENT YEAR 2008 - 09. THE RELEVANT PORTION OF THE SAID JUDGMENT OF THE BOMBA Y HIGH COURT (SUPRA) READS AS UNDER: '4. SO FAR AS QUESTION (B) IS CONCERNED, THE TRIBUNAL IN ITS IMPUGNED ORDER DATED 17.9.2010 WHILE APPLYING THE DECISION OF THIS COURT IN THE MATTER OF GODREJ (SUPRA) HAS DISALLOWED THE EXPENDITURE ONLY TO THE EXTENT OF 2% OF THE TOTAL EXEMPT INCOME EARNED BY THE RESPONDENT - ASSESSEE ON THE BASIS ITS ORDER DATED 27.2.2009 FOR THE ASSESSMENT YEAR 2002 - 2003 AND ORDER DATED 10.9.2009 FOR THE ASSESSMENT YEARS 2003 - 2004 AND 2004 - 2005 WHEREIN DISALLOWANCE WAS RESTRICTED TO 2% O F THE EXEMPT INCOME. FURTHER; THE TRIBUNAL HAS REMANDED THE MATTER TO THE AO TO VERIFY THE DISALLOWANCE CLAIMED AND RESTRICT THE DISALLOWANCE ONLY TO THE EXTENT TO 2% OF THE TOTAL EXEMPT INCOME. WE FIND NO FAULT WITH THE ORDER OF THE TRIBUNAL. ' 36. CONSID ERING THE BINDING NATURE OF THE JUDGMENT AND THE OVERALL FACTUAL MATRIX OF THE PRESENT CASE, WE RESTRICT THE DISALLOWANCE TO 5% OF THE TOTAL EXEMPT INCOME. ACCORDINGLY, GROUND NOS.III AND IV RAISED BY THE REVENUE ARE PARTLY ALLOWED . 37 . IN THE RESULT, APPEALS OF THE REVENUE ARE PARTLY ALLOWED. C.O.NO.184/M/2013 (ARISING FROM I.T.A. NO.4530/M/2011) (AY: 2006 - 2007) ( BY ASSESSEE) 3 8. THIS CROSS OBJECTION FILED BY THE ASSESSEE (SHRI DEVESH AGARWAL) ON 19.8.2013 AGAINST THE ORDER OF THE CIT (A) - 41, MUMBAI DATED 25.3.2011. IN THIS CROSS OBJECTION THE ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THE LD ACIT ERRED IN LAW AND AS WELL AS IN THE FACTS IN MAKING ADDITION OF RS. 2,37,89,500/ - ON ACCOUNT OF UNDISCLOSED INVESTMENT IN SHARES OF DUNSTAN GOODS PVT. LTD IN THE ORDER PASSED U/S 153A IN THE ABSENCE OF ANY INCRIMINATING MATERIAL . 2. THE LD CIT ( A) SHOULD HAVE ADJUDICATED THE PROCEEDINGS U/S 153A TO BE NULL AND VOID AS NO INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED IN THE COURSE OF SEARCH AND SEIZURE ACTION IN THE ASSESSEES CASE. 3 9. AT THE OUTSET, SHRI DEVENDRA A. MEHTA, LD COUNSEL FOR THE A SSESSEE BROUGHT OUR ATTENTION THAT THERE IS A DELAY OF 464 DAYS IN FILING THE CROSS OBJECTIONS BEFORE THE TRIBUNAL. IN THIS REGARD, LD COUNSEL BROUGHT OUR ATTENTION THE AFFIDAVIT DATED 3.10.2013 FILED BY HIM AND READ OUT THE RELEVANT CONTENTS OF THE SAME WHICH READ AS UNDER: I) 24 II) SHRI NAND KISHOR KATWANKAR IS OFFICE ASSISTANT WORKING IN MY OFFICE SINCE 1985. HE IS USUALLY ASSIGNED THE WORK OF SUBMITTING AND COLLECTING DOCUMENTS FROM THE INCOME TAX DEPARTMENT OF VARIOUS CLIENTS. HE COLLECTED THE GROUNDS OF APPEAL OF SHRI DEVESH AGARWAL FOR AY 2006 - 07. . III) USUALLY, THE DOCUMENTS COLLECTED FROM INCOME TAX DEPA RTMENT ARE PLACED BEFORE ME FOR REVIEWS. HOWEVER, AS I WAS OUT OF TOWN, HE KEPT THE GROUNDS OF APPEAL IN RELEVANT FILE BUT INADVERTENTLY, DID NOT BRING IT TO MY NOTICE FOR FURTHER ACTION. IV) AS SOON AS THE FILE WAS PUT UP FOR BEFORE ME FOR PREPARATION OF WRITTEN SUBMISSION, I NOTICED THAT THE CROSS OBJECTION AGAINST THE REVENUES APPEAL WERE NOT PREPARED AND FILED BEFORE THE HONBLE TRIBUNAL. V) I REITERATE THAT THE ABOVE MISTAKE WAS A BONA FIDE MISTAKE AND AN INADVERTENT LAPSE ON OUR PART AND ASSESSEE SH OULD NOT BE ALLOWED TO SUFFER BECAUSE OF IT. 40 . IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF COLLECTOR, LAND ACQUISITION VS. MST. KATIJI & ORS [1987] 167 ITR 471; ANOTHER JUDGMENT OF THE APEX COURT IN THE CASE OF CONCOLD OF INDIA INSURANCE CO. LTD VS. SMT. NIRMALA DEVI, 118 ITR 507 AND SOME OTHER DECISIONS OF THE HONBLE HIGH COURTS OF WHICH ARE RELEVANT FOR THE PROPOSITION THAT THE DELAY IN FILING OF APPEAL DUE TO LAPSE ON PART OF ASSESS EES COUNSEL WHO WAS LOOKING AFTER TAX MATTERS, IS A SUFFICIENT CAUSE FOR CONDONATION OF DELAY. 41 . ON THE OTHER HAND, LD DR VEHEMENTLY OPPOSED TO THE REASONS GIVEN BY THE ASSESSEE FOR CONDONATION OF DELAY. IN THIS REGARD, LD DR RELIED ON CERTAIN DECISI ONS IN GENERAL AND THE DECISION OF THE TRIBUNAL, WHEREIN ONE OF US (JM) IS A PARTY, IN THE CASE OF KUNAL SURANA. 42 . ON HEARING THE ABOVE SUBMISSIONS OF THE LD COUNSEL AS WELL AS THE LD DR ON THE CROSS OBJECTION, WE FIND THAT THE CROSS OBJECTION DOES NOT RELATE TO ANY OF THE FINDINGS OF THE CIT (A) ON MERITS. AS SEEN ABOVE, IT IS PURELY ON LEGAL ISSUE ON VALIDITY OF ADDITION U/S 153A WITHOUT ANY INCRIMINATING MATERIAL. AS SUCH, THE MAIN GROUND AGITATED BY THE REVENUE IN THEIR APPEALS IS ALREADY DECIDED I N FAVOUR OF THE ASSESSEE. THEREFORE, THE ADMISSION AND ADJUDICATION OF THE LEGAL GROUND IS ACADEMIC IN NATURE. FURTHER, WE FIND THAT THE REASONS GIVEN BY THE ASSESSEE FOR CONDONATION IS NOT SUPPORTED BY THE SUPPORTING EVIDENCES. EX CONSIQUENTI , WE DISMISS T HE CROSS OBJECTION AS NOT MAINTAINABLE WITHOUT GOING INTO THE MERITS OF THE SAME. 43 . IN THE RESULT, CROSS OBJECTION OF THE ASSESSEE IS DISMISSED . 25 44 . CONCLUSIVELY, IN THE CASE OF SHRI DEEPAK AGARWAL, ASSESSEES APPEALS FOR THE AYS 2003 - 04 TO 2005 - 06 ARE ALLOWED AND CROSS OBJECTIO N FOR THE AY 2006 - 07 IS DISMISSED AND REVENUES APPEALS FOR THE 2003 - 04 TO 2005 - 06 ARE DISMISSED AND APPEALS FOR THE AYS 2006 - 07 & 2007 - 08 ARE PARTLY ALLOWED. AS WELL, IN THE CASE OF SHRI DEVESH AGARWAL, ASSESSEES CROSS OBJECTION FOR THE AY 2006 - 07 IS DISMISSED AND REVENUES APPEALS FOR THE AYS 2006 - 07 & 2007 - 08 ARE PARTLY ALLOWED. ORDER PRON OUNCED IN THE OPEN COURT ON 10 TH APRIL , 2014. SD/ - SD/ - (SANJAY GARG) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 10 .4 .2013 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI