DCIT, Circle - 8, Kolkata, Kolkata V. M/s. Premier Road Carriers Ltd., Kolkata

ITA 960/KOL/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4109 (ITAT-KOLKATA)
• Duration Of Justice: 5 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 03-10-2016
• Assessment Year: 2000-2001
• Appeal Filed On: 30-06-2011
• Court: TRIBUNAL
• Department Lawyers: S S ALAM
• Keywords: Reopening of assessment; Unexplained cash credit; Bogus Share capital; Search and seizure; Validity of assessment; Accommodation entries; Block assessment; Revocable transfer; Reason to believe; Reassessment proceedings
• Section: 143(3); 147; 68; 148; 63

Judgement Text

ITA NO.960/KOL/2011-M/S. PREMIER ROAD CARRIERS LTD. A.Y.2000-01 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SHRI P.M.JAGTAP, AM & SRI N.V.VASUDEVAN, JM ] I.T.A NO. 960/KOL/2011 ASSESSMENT YEAR : 200 0-01 D.C.I.T., CIRCLE-8, -VS.- M/S. PREMIER RO AD CARRIERS LTD. KOLKATA KOLKATA [PAN : AABCR8968E] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI S.S.ALAM, ADDL. CIT FOR THE RESPONDENT : SHRI SALLONG YADEN, ADDL.CIT DATE OF HEARING : 23.11.2016. DATE OF PRONOUNCEMENT : 2.12.2016. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 25.3.2011 OF CIT(A)- VIII, KOLKATA RELATING TO AY 2000-01. 2. THEASSESSEE IS A COMPANY. IT IS ENGAGED IN THE BUSINESS OF TRANSPORTATION. THE ASSESSEE BELONGS TO BHANARAM GUPTA GROUP. SRI BHAN ARAM GUPTA IS THE MAIN PERSON OF THE GROUP AND THE CHAIRMAN OF THE ASSESSEE. 3. THERE WAS A SEARCH AND SEIZURE OPERATION CARRIE D OUT BY THE REVENUE U/S.132 OF THE INCOME TAX ACT, 1961(ACT) AT THE OFFICE PREMISES OF THE ASSESSEE AT 32, CHOWRINGHEE ROAD, OM TOWERS, KOLKATA AND 306 & 407, ASHIRBAD BU ILDING AHMEDABAD STREET, MUMBAI ON 14.9.2000. THERE WAS ALSO A SEARCH AND S EIZURE OPERATION CARRIED OUT BY THE REVENUE IN THE RESIDENTIAL PREMISES OF SRI BHAN ARAM GUPTA. IN THE COURSE OF SUCH SEARCH A EXERCISE BOOK MARKED BG/2 WAS FOUND AND SE IZED. ACCORDING TO THE REVENUE THE SAID SEIZED EXERCISE BOOK CONTAINED NOTING REGA RDING CASH PAYMENTS IN CONNECTION WITH SHARE CAPITAL TO THE TUNE OF RS.2 CRORES WHICH WERE SHOWN AS SHARE CAPITAL RECEIVED IN THE BOOKS OF THE ASSESSEE IN THE MONTH OF MARCH, 2000 IN THE NAME OF THE FOLLOWING PERSONS: ITA NO.960/KOL/2011-M/S. PREMIER ROAD CARRIERS LTD. A.Y.2000-01 2 DATE AMOUNT NAME OF THE COMPANY FROM WHICH RECE IVED 6.3.2000 20 LAKHS M/S.MEDHAWI TRADERS LTD. 6.3.2000 10 LAKHS -- DO 7.3.2000 25 LAKHS M/S.SURYAMUKHI MERCHANTS PVT.LT D. 7.3.2000 25 LAKHS -- DO-- 7.3.2000 20 LAKHS M/S.MEDHAWI TRADERS LTD. 8.3.2000 25 LAKHS M/S.POLY PRODUCTS PVT.LTD. 10.3.2000 50 LAKHS M/S.ESSKAY TELECOM LTD. 23.3.2000 11 LAKHS M/S.POLY PRODUCTS PVT.LTD. 27.3.2000 14 LAKHS --DO-- 4. IT IS THE CASE OF THE REVENUE THAT THE SEIZED E XERCISE BOOK CONTAINED ENTRIES EVIDENCING CASH BELONGING TO SRI BHANARAM GUPTA BEI NG GIVEN TO THE AUDITOR OF THE ASSESSEE COMPANY ONE SRI S.K.LAHOTY, WHO IN TURN GA VE THE SAME TO PERSONS WHO FOR A COMMISSION PROVIDE ENTRIES OF SHARE CAPITAL IN TH E NAME OF DIFFERENT PERSONS. THE RECEIPT OF SHARE CAPITAL OF RS.2 CRORES BY THE ASSE SSEE FROM THE AFORESAID COMPANIES WAS IN FACT NOTHING BUT UNACCOUNTED MONEY OF SRI BH ANARAM GUPTA WHICH WAS ROUTED IN THE FORM OF SHARE CAPITAL THROUGH CHEQUE THROUGH ENTRY OPERATORS. THE CASE OF THE REVENUE WAS THAT SRI. S.K.LAHOTY IN HIS STATEMENT R ECORDED U/S.131 OF THE ACT ADMITTED BEFORE THE DDIT. 5. IN THE ASSESSMENT ORDER DATED 30.9.2002 PASSED U/S.158BC READ WITH SEC.143(3) OF THE ACT, THE AO DREW THE FOLLOWING CONCLUSIONS AND ADDED A SUM OF RS.2 CRORES AS UNEXPLAINED CASH CREDIT ON A PROTECTIVE BASIS IN TH E HANDS OF THE ASSESSEE: IN VIEW OF THE ABOVE DISCUSSION IT IS VERY APPAREN T THAT CASH OF RS.2CRORES FOR PRIVATE PLACEMENT OF SHARES WAS PAID BY SRI BHANARAM GUPTA, CHAIRMAN OF THE ASSESSEE COMPANY, ALONG WITH 4 LAKHS AS EXPENSE FOR ACCOMMOD ATION ENTRIES AS DISCUSSED IN THE EARLIER PARAGRAPHS. HENCE, FROM THE NOTINGS IN EXER CISE BOOK BG/2, IT HAS BEEN HELP IN BLOCK ASSESSMENT IN: THE CASE OF SRI GUPTA ( ALSO A SSESSED IN THIS CIRCLE VIDE PAN-PX- 3853) THAT HE MADE CASH PAYMENTS OF RS. 2 CRORES 4 LAKHS AND ACCORDINGLY THE AMOUNT OF RS. 2 CRORE HAS BEEN ASSESSED - AS UNDISCLOSED INCO ME OF THE BLOCK PERIOD.IN THE HANDS OF SRI GUPTA ON ( SUBSTANTIVE BASIS AS U1S 132(4A) OF'THE LNCOME TAX ACT NORMAL PRESUMPTION IS THAT THE CONTAINS OF THE SAID EXERC ISE BOOK ARE TRUE AND BELONGS TO SRI BHANARAM GUPTA. ITA NO.960/KOL/2011-M/S. PREMIER ROAD CARRIERS LTD. A.Y.2000-01 3 HOWEVER, SINCE THE RECEIPT OF RS. 2 CRORES BY WAY O F PRIVATE PLACEMENT OF SHARES ARE FOUND NOT TO BE GENUINE TRANSACTIONS AND THE ULTIMA TE BENEFICIARY IS THIS ASSESSEE COMPANY, THE AMOUNT OF RS.2 CRORES IS TREATED AS UN EXPLAINED CREDITS IN THE BOOKS OF THE ASSESSEE COMPANY OF THE BLOCK PERIOD. 6. IN THE ASSESSMENT OF SRI BHANARAM GUPTA THE AO M ADE ADDITION OF RS.2 CRORES AS UNACCOUNTED CASH WHICH WAS LAUNDERED THROUGH THE BO OKS OF THE ASSESSEE UNDER THE GARB OF PRIVATE PLACEMENT OF EQUITY SHARES AND ANOT HER SUM OF RS.4,00,000 WAS ALSO ADDED IN HIS CASE AS COMMISSION PAID TO AGENTS FOR PROVIDING ENTRIES OF RECEIPT OF SHARE CAPITAL. 7. IN SO FAR AS THE ADDITION IN THE HANDS OF THE A SSESSEE OF RS.2 CRORES, THE ASSESSEE PREFERRED BEFORE CIT(A), WHO BY HIS ORDER 28.1.2005 HELD THAT A SUM OF RS.50 LAKHS EACH RECEIVED FROM M/S.POLY PRODUCTS (P) LTD., AND M/S.SURYAMUKHI MERCHANTS (P) LTD., AND CREDITED IN THE BOOKS OF THE ASSESSEE AS SHARE SUBSCRIPTION REMAINED UNEXPLAINED. IN COMING TO THIS CONCLUSION THE CIT( A) MAINLY PLACED RELIANCE ON THE STATEMENT OF ONE SRI RAJ DEO ROY. THE CIT(A) ALSO HELD THAT THE SUM OF RS.50 LAKHS EACH RECEIVED FROM M/S.POLY PRODUCTS (P) LTD., AND M/S.SURYAMUKHI MERCHANTS (P) LTD., AND CREDITED IN THE BOOKS OF THE ASSESSEE AS SHARE SUBSCRIPTION SHOULD BE ADDED IN THE HANDS OF THE ASSESSEE AND NOT IN THE HANDS O F SRI.BHANARAM GUPTA FOR THE FOLLOWING REASONS: CONSEQUENT UPON THIS FINDING, A QUESTION ARISES AS TO WHETHER ANY ADDITION CAN BE MADE IN THE HANDS OF THE APPELLANT COMPANY ON THE BASIS OF THE EVIDENCE BROUGHT ON RECORD. THE QUESTION HAS TO BE ANSWERED IN THE AFFIRMATIVE BECAUSE THE BENEFICIARY OF THE FICTITIOUS CREDITS IS THE APPELLANT ITSELF AND SINC E IT HAS NOT BEEN ESTABLISHED THAT THE UNACCOUNTED CASH PAYMENTS IN LIEU OF THE AFORESAID CHEQUE RECEIPTS TOTALLING RS. 1 CRORE WERE MADE BY SRI B.R.GUPTA OUT OF HIS PERSONAL UNDI SCLOSED INCOME. IT HAS BEEN HELD BY THE HON'BLE CALCUTTA HIGH COURT IN SEVERAL DECISION S GIVEN IN RECENT TIMES SUCH AS HINDUSTAN TEA TRADING CO. LTD. VS CIT, 263 ITR 289, RUBI TRADERS & EXPORTERS LTD. 263 ITR 300 ETC. THAT IT WAS THE RESPONSIBILITY OF THE ASSESSEE TO PROVE THE IDENTITY OF THE SUBSCRIBERS TO SHARE CAPITAL, THEIR CREDITWORTHINES S AND THE GENUINENESS OF THEIR TRANSACTIONS. IN THE PRESENT CASE THE APPELLANT SUC CEEDED IN PROVING THE IDENTITY OF THE INVESTORS IN THE CASE OF ALL THE FOUR SUBSCRIBING COMPANIES. IT IS NOT DISPUTED THAT THE APPELLANT HAD RECEIVED THE SUMS OF RS. 50 LAKHS EAC H BY ACCOUNT PAYEE CHEQUES FROM IDENTIFIABLE ENTITIES WHO WERE SEPARATELY ASSESSED AND HAD DECLARED THE IMPUGNED INVESTMENT IN THEIR BOOKS OF ACCOUNT. BUT IN THE CA SE OF M/S. POLY PRODUCTS (P) LTD. & M/S.SURYAMUKHI MERCHANTS (P) LTD., THE APPELLANT HA S FAILED TO DISCHARGE ITS ONUS OF PROVING THE CREDITWORTHINESS OF THE SUBSCRIBERS AND THE GENUINENESS OF THE TRANSACTIONS. ON THE CONTRARY THE EVIDENCE PLACED ON RECORD, SPEC IALLY THE CONFESSIONAL STATEMENT OF ITA NO.960/KOL/2011-M/S. PREMIER ROAD CARRIERS LTD. A.Y.2000-01 4 SRI RAJ DEO ROY, DIRECTOR, CLINCHES THE ISSUE IN FA VOUR OF REVENUE. HENCE I AM OF THE CONSIDERED THE VIEW THAT THE CREDITS OF RS. 50 LAKH S EACH IN THE NAME OF M/S. POLY PRODUCTS (P) LTD. & M/S. SURYAMUKHI MERCHANTS (P) L TD. REPRESENTED THE UNDISCLOSED INCOME OF THE APPELLANT COMPANY FOR THE BLOCK PERIO D. HENCE THE AO IS DIRECTED TO TAX THE SAME ON SUBSTANTIVE BASIS. 8. WITH REGARD TO THE REMAINING SUM OF RS.50 LAKHS EACH RECEIVED AS SHARE CAPITAL FROM M/S.ESSKAY TELECOM LTD. AND M/S.MEDHAWI TRADER S LTD., THE CIT(A) HELD THAT THE ASSESSEE HAD SATISFACTORILY EXPLAINED THE RECEI PT OF SHARE CAPITAL. THE FOLLOWING WERE THE CONCLUSIONS OF THE CIT(A) IN THIS REGARD: 9. ALTHOUGH THE NOTINGS CONTAINED IN BG-2 AND THE STATEMENT OF SHRI S.K. LAHOTY APPLIED TO ALL THE FOUR INSTANCES OF PRIVATE PLACEM ENT OF SHARES, THE ASSESSING OFFICER HAS FAILED TO BRING ON RECORD ADEQUATE EVIDENCE TO ESTABLISH THAT THE TWO OTHER INVESTMENT COMPANIES VIZ. ESSKAY TELECOM LTD. AND M /S MEDHAWI TRADERS LTD. HAD ALSO PROVIDED ACCOMMODATION ENTRIES TO M/S PREMIER ROAD CARRIERS LTD. ON THE CONTRARY, THE DIRECTORS OF THE TWO SAID COMPANIES A PPEARED PERSONALLY IN RESPONSE TO THE SUMMONS ISSUED BY THE ASSESSING OFFICER AND CONFIRM ED THE PURCHASE OF SHARES OF M/S PRC LTD. FOR A SUM OF RS.50 LAKHS EACH. MOREOVER, B OTH THE COMPANIES WERE ABLE TO EXPLAIN, THE SOURCES FROM WHICH THE IMPUGNED INVEST MENTS HAD BEEN MADE. THUS, IN THE CASE OF M/S ESSKAY TELECOM LTD. AND M/S MEDHAWI TRA DERS LTD., THE SPECIFIC SOURCES FROM WHICH PAYMENTS WERE RECEIVED BY THE SAID COMPA NIES PRIOR TO THE IMPUGNED INVESTMENT IN SHARES WERE IDENTIFIED AND THE NATURE OF SUCH RECEIPTS WAS ALSO EXPLAINED. FURTHERMORE, THE COPY OF ACCOUNT OF THE PARTIES FR OM WHOM THE FUNDS HAD BEEN RECEIVED, WERE ALSO FILED BEFORE THE ASSESSING OFFI CER. THUS, M/S ESSKAY TELECOM LTD. AND M/S MEDHAWI TRADERS LTD. SUCCEEDED IN EXPLAININ G THE SOURCE OF THE SOURCE OF THE FUNDS OUT OF WHICH THE APPLICATION MONEY OF RS.50. LAKHS WAS PAID TO M/S PRC LTD. IN THE FACE OF SUCH CONTRARY EVIDENCE PLACED ON RECORD , THE. ADVERSE FINDING OF THE ASSESSING OFFICER THAT THE PAYMENTS OF RS.50 LAKHS BY M/S. ESSKAY TELECOM LTD. AND M/S MEDHAWI TRADERS LTD. WERE MERELY ACCOMMODATION ENTRIES, BECOMES UNTENABLE. THEREFORE, NOTWITHSTANDING THE JOTTINGS IN THE SEIZ ED EXERCISE BOOK BG-2 REGARDING CASH PAYMENTS I AM INCLINED TO GRANT THE BENEFIT OF DOUB T TO THE APPELLANT IN RESPECT OF THE INVESTMENT OF RS.50 LAKHS EACH BY M/S ESSKAY TELEC OM LTD. AND M/S MEDHAWI TRADERS LTD.. AS THE ASSESSING OFFICER HAS FAILED TO ESTABL ISH BEYOND DOUBT THAT THE INVESTMENT BY M/S ESSKAY TELECOM LTD. AND M/S MEDHAWI TRADERS LTD. WERE ALSO IN THE NATURE OF ACCOMMODATION ENTRIES. I AM UNABLE TO UPHOLD THE AD VERSE FINDING OF THE ASSESSING OFFICER THAT UNACCOUNTED CASH OF RS. 50 LAKHS EACH WAS PAID BY SRI BHANA RAM GUPTA FOR ARRANGING THE INVESTMENTS MADE BY THE TWO AFORE SAID COMPANIES. IN CONSONANCE WITH THE ABOVE, I AM INCLINED TO HOLD THAT THE APPELLANT COMPANY HAS BEEN ABLE TO DISCHARGE ITS ONUS SATISFACTORILY WITH REGARD TO THE SHARE SU BSCRIPTION CREDITED IN THE NAME OF M/S. MEDHAWI TRADERS (P) LTD. & M/S. ESSKAY TELECOM (P) LTD. ACCORDINGLY, THE AO IS DIRECTED TO DELETE THE ADDITION OF RS. 1,00,00,000/ - MADE IN THIS REGARD. 9. IN THE ASSESSMENT OF SRI BHANARAM GUPTA AN ADDI TION OF RS.2 CRORES WAS MADE ON A SUBSTANTIVE BASIS. AGAINST THE SAID ASSESSMENT AN APPEAL WAS FILED BY SRI BHANARAM ITA NO.960/KOL/2011-M/S. PREMIER ROAD CARRIERS LTD. A.Y.2000-01 5 GUPTA. THE CIT(A) IN SUCH APPEAL DELETED THE ADDIT ION OF RS.2 CRORES MADE ON A SUBSTANTIVE BASIS IN THE HANDS OF SRI BHANARAM GUPT A, SINCE ADDITION OF RS.1 CRORES WAD CONFIRMED ON A SUBSTANTIVE BASIS IN THE HANDS O F THE ASSESSEE AND ANOTHER SUM OF RS.1 CRORES WAS HELD TO BE DULY AND SATISFACTORILY EXPLAINED BY THE ASSESSEE. AGAINST THE SAID ORDER OF CIT(A) DATED 28.1.2005, THE REVEN UE PREFERRED APPEAL BEFORE THE TRIBUNAL IN IT(SS)A.NO. 76/KOL.2005. 10. THE ASSESSEE AND REVENUE FILED APPEALS AGAINST THE ORDER OF THE CIT(A) WHEREBY ADDITION OF RS.1 CRORES WAS MADE SUBSTANTIVELY IN T HE HANDS OF THE ASSESSEE AND ADDITION OF RS.1 CRORES WAS DELETED BY THE CIT(A) I N APPEAL BEING IT(SS) A.NO.75/KOL/2005 AND IT(SS)A.NO.66/KOL/2005 RESPECT IVELY. THESE APPEALS AND THE APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CI T(A) DATED 28.1.2005 WERE HEARD TOGETHER BY THE TRIBUNAL AND A COMMON ORDER DATED 2 4.3.2006 WAS PASSED BY THE TRIBUNAL. 11. THE TRIBUNAL UPHELD THE ORDER OF THE CIT(A) DE LETING ADDITION OF RS.1 CRORES BEING RS.50 LAKHS EACH RECEIVED AS SHARE CAPITAL F ROM M/S.ESSKAY TELECOM LTD. AND M/S.MEDHAWI TRADERS LTD., AND ENDORSED THE CIT(A)S FINDING THAT THE ASSESSEE HAD SATISFACTORILY EXPLAINED THE RECEIPT OF SHARE CAPIT AL FROM THE AFORESAID TWO PARTIES. WITH REGARD TO THE RECEIPT OF A SUM OF RS.50 LAKHS EACH RECEIVED FROM M/S.POLY PRODUCTS (P) LTD., AND M/S.SURYAMUKHI MERCHANTS (P) LTD., AND CREDITED IN THE BOOKS OF THE ASSESSEE AS SHARE SUBSCRIPTION WHICH WAS TRE ATED BY THE CIT(A) AS UNEXPLAINED, THE TRIBUNAL HELD THAT THE SAME CANNOT BE SUSTAINED . THE TRIBUNAL FIRSTLY HELD THAT THE SAID ADDITION WAS MADE ON THE BASIS OF STATEMENT OF SHRI.RAJ DEO ROY AND THAT STATEMENT COULD NOT HAVE BEEN USED BY THE AO FOR TH E REASON THAT THE STATEMENT WAS RECORDED BY AN OFFICER WHO DID NOT HAVE AUTHORITY T O RECORD SUCH STATEMENT. THE FOLLOWING WERE THE CONCLUSIONS OF THE TRIBUNAL IN T HIS REGARD: 31.4 IN THIS CASE THE SEARCH WAS STARTED ON 11 14. 09.2000 AND CONTINUED TILL 01.11. 2000 AS PER ABOVE PROVISIONS OF SECTION 132(9A) AS IT ST OOD AT THE MATERIAL TIME, INVESTIGATION WING IS SUPPOSED TO HAND OVER THE ENTIRE SEIZED MA TERIAL OR EVIDENCE COLLECTED IN THE COURSE OF SEARCH OR AFTER SEARCH WITHIN A PERIOD OF 15 DAYS FROM THE DATE OF SEARCH. IT IMPLIES THAT THE 'INVESTIGATION WING' LOOSES ITS JU RISDICTION OVER THE CASE AFTER THE END OF THE PERIOD OF DAYS. IN THE PRESENT CASE, THE STATE MENT WAS RECORDED BY THE DY.DIT (LNV) ON 12.12.2000. THEREFORE, LEGALLY, THE STATEMENT RE CORDED BY DYDIT (LNV) ON 12.12.2000 HAS GOT NO LEG SANCTITY. FURTHER, WE FIN D THAT NEITHER THE ASSESSING OFFICER ITA NO.960/KOL/2011-M/S. PREMIER ROAD CARRIERS LTD. A.Y.2000-01 6 NOR THE LD. CIT(A) HAS EXAMINED SRI RAJ DEO ROY BEF ORE COMING TO THE ADVERSE CONCLUSION ON THIS GROUND ITSELF ORDER OF THE ASSES SING OFFICER IS NOT SUSTAINABLE UNDER THE LAW. AFTER ALL, THE ASSESSING OFFICER IS A QUAS I JUDICIAL AUTHORITY AND HE HAS TO DECIDE THE ISSUE HIMSELF. HE CANNOT ABROGATE HIS POWER AN D AUTHORITY IN FAVOUR OR ANYBODY ELSE WHATSOEVER SUPERIOR POSITION MAY BE IN THE HIERARCH Y OF INCOME TAX ACT AUTHORITIES. THUS, THE DECISION TAKEN MERELY ON THE BASIS OF ST ATEMENT RECORDED BY THE DDIT (JNV.) ALONE WITHOUT HAVING JURISDICTION OVER THE CASE, IS NOT LEGALLY SUSTAINABLE. 12. THE TRIBUNAL ALSO HELD THAT THE ADDITION IN QU ESTION WAS BEYOND THE SCOPE OF PROCEEDINGS U/S.158BC OF THE ACT AS THE RECEIPT OF SHARE CAPITAL BY THE ASSESSEE WAS DISCLOSED BY THE ASSESSEE IN THE REGULAR BOOKS OF A CCOUNT AND THE SAME WAS NOT FOUND ONLY AS A RESULT OF SEARCH. THE FOLLOWING WERE THE RELEVANT CONCLUSION OF THE TRIBUNAL IN THIS REGARD: 31.5 FURTHER, IT APPEARS THAT THE AUTHORITIES BELO W HAVE NOT BEEN ABLE TO UNDERSTAND THE SCOPE AND AMBIT OF BLOCK ASSESSMENT WHICH HAS B EEN EXPLAINED BY VARIOUS DECISIONS OF HONBLE HIGH COURTS AND I.T.A.T. BLOCK ASSESSMEN T IS MADE IN RESPECT OF UNDISCLOSED INCOME AND REGULAR ASSESSMENT IS MADE F OR DISCLOSED INCOME. THE STATUTE ITSELF PROVIDES 158BA THAT - 'EXPLANATION - FOR THE REMOVAL OF DOUBTS. IT IS HER EBY DECLARED THAT - (A)THE ASSESSMENT MADE UNDER THIS CHAPTER SHALL BE IN ADDITION TO THE REGULAR ASSESSMENT IN RESPECT OF EACH PREVIOUS YEAR INCLUDE D IN THE BLOCK PERIOD (B) THE TOTAL UNDISCLOSED INCOME RELATING TO THE BL OCK PERIOD SHALL NOT INCLUDE THE INCOME ASSESSED IN ANY REGULAR ASSESSMENT AS INCOM E OF SUCH BLOCK PERIOD: . (C) THE INCOME ASSESSED IN THIS CHAPTER SHALL NOT B E INCLUDED IN THE REGULAR ASSESSMENT OF ANY PREVIOUS YEAR INCLUDED IN THE BLOCK PERIOD' THEREFORE, THE AMOUNT OF RS. 1.00 CRORES APPEARING IN THE NAMES OF M/S. POLY PRODUCTS (P) LTD. AND M/S. SURYAMUKHI MERCHANTS (P) -LTD IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND RS.2.00 LAKHS ADDED U/S. 69C, EVEN IF PROVED TO BE UNEXPLAINED, CAN BE ASSESSED IN REGULAR ASSESSMENT BUT IN NO CIRCUMSTAN CES IT CAN BE ASSESSED IN BLOCK ASSESSMENT. RELIANCE IS PLACED ON THE DECISION OF C O-ORDINATE BENCH IN THE CASE OF DCIT V. M.L. DALMIA & CO. LTD. (2006 98 ITD 93 (KOL ) WHEREIN IT WAS HELD - 'IT WAS A BLOCK ASSESSMENT CASE AND ANY ADDITION WA S SUPPOSED TO BE MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF EVIDENCE/MATE RIAL FOUND AS A RESULT OF SEARCH. THE ACTION OF THE ASSESSING OFFICER IN TREATING THE AMALGAMATION RESERVE AND SHARE APPLICATION MONEY, WLUCH WERE SHOWN IN TILE REGULAR RETURN OF INCOME AS UNDISCLOSED' INCOME OF THE ASSESSEE WAS NOT JUSTIFIED. SECTION 1 58B(B) IS A CHARGING PROVISION AND THAT PROVISION OF CHAPTER XIV-B APPLIES ONLY TO THO SE INCOME WHICH CAN BE BROUGHT WITHIN THE DEFINITION OF UNDISCLOSED INCOME. THE ME THOD AS TO HOW UNDISCLOSED INCOME IS TO BE COMPUTED HAS BEEN GIVEN UNDER SECTION 158B B. THE COMPUTATION HAS TO BE ON THE BASIS OF BOOKS OF ACCOUNT OR DOCUMENTS OR MATER IAL FOUND AS U RESULT OF SEARCH. IT IS SETTLED LAW THAT THE COMPUTATION PROVISIONS CANN OT SUPERSEDE THE CHARGING PROVISIONS. IF SOME INCOME CANNOT BECOME UNDISCLOSE D INCOME WITHIN THE DEFINITION UNDER SECTION 58B(B), IT CANNOT BE BROUGHT TO TAX B Y WAY OF COMPUTATION UNDER SECTION 158BB THE COMPUTATION PROVISIONS ARE TO BE APPLIED SUBSEQUENT TO THE CHARGING ITA NO.960/KOL/2011-M/S. PREMIER ROAD CARRIERS LTD. A.Y.2000-01 7 PROVISIONS. CHAPTER XIV-B IS AN INDEPENDENT CODE. O BJECT OF THE SAID CHAPTER IS TO BRING TO TAX UNDISCLOSED INCOME WHICH THE ASSESSEE HAS EARNED DURING A BLOCK YEAR. AS TO HOW THIS INCOME IS TO BE COMPUTED, THE METHOD HAS BEEN GIVEN UNDER SECTION 158BB. THUS. EVERY INCOME WHICH CAN BE REGARDED TO BE UNDISCLOSED INCOME WITHIN THE DEFINITION GIVEN UNDER SECTION 158BB CAN BE BRO UGHT TO TAX UNDER THAT CHAPTER BY COMPUTING SUCH UNDISCLOSED INCOME ON THE BASIS OF E VIDENCE, MATERIAL OR RECORD FOUND AT THE TIME OF SEARCH. THUS, THE INCOME WHICH IS NOT BASED ON THE EVIDENCE OR MATERIAL FOUND AT THE TIME OF SEARCH, I.E. BASED ME RELY ON HYPOTHESIS, SURMISES, CONJECTURES OR ESTIMATE, CANNOT BE BROUGHT TO TAX U NDER THAT CHAPTER. THE INCOME WHICH IS NOT UNDISCLOSED, I.E INCOME HAS BEEN DULY DISCLOSED IN THE ASSESSEE' S BOOKS MAINTAINED IN THE REGULAR COURSE OF BUSINESS, CAN A LSO NOT BE BROUGHT TO TAX UNDER THAT CHAPTER. EVEN AN ASSET OR TRANSACTION, WHICH I S DULY ENTERED IN THE BOOKS MAINTAINED BY THE ASSESSEE REGULARLY AND DISCLOSED TO THE DEPARTMENT, CAN ALSO NOT BE REGARDED TO BE UNDISCLOSED INCOME. THE ASSESSMENT U NDER THAT CHAPTER SHALL BE IN ADDITION TO REGULAR ASSESSMENT AND INCOME ASSESSED WILL NOT BE INCLUDED IN REGULAR ASSESSMENT. ' 32. KEEPING IN VIEW THE RATIO OF THE ABOVE DECISION AND OUR DISCUSSIONS ABOVE, WE ARE OF THE VIEW THAT EVEN IF THE ASSESSEE HAS NOT BEEN ABL E TO EXPLAIN THE SOURCE OF SHARE APPLICATION MONEY, APPEARING IN THE NAMES OR M/S PO LY PRODUCTS (P) LTD. AND M/S. SURYAM MERCHANTS (P) LTD, THE SAME MAY BE ESCAPED I NCOME BUT IT CANNOT BE TREATED AS 'UNDISCLOSED INCOME OF THE ASSESSEE WHICH IS AKIN TO CONCEALED INCOME. THEREFORE, WE ARE UNABLE TO ENDORSE THE DECISION OF LD. CIT(A). T HE SAME IS REVERSED AND THE ASSESSEES APPEAL IS ALLOWED. 13. ACCORDING TO THE REVENUE THE OBSERVATIONS IN P ARAGRAPH 33 OF THE TRIBUNALS ORDER REFERRED TO IN THE EARLIER PARAGRAPH IS NOTHI NG BUT A FINDING THAT THERE WAS ESCAPEMENT OF INCOME TO THE TUNE OF RS.1 CRORE AND THAT THE SAME SHOULD BE BROUGHT TO TAX IN REASSESSMENT PROCEEDINGS U/S.148 OF THE ACT. ACCORDINGLY THE AO ISSUED A NOTICE U/S.148 OF THE ACT AND PASSED AN ORDER OF AS SESSMENT U/S.148 OF THE ACT DATED 26.12.2008 WHEREIN THE AO, AFTER REFERRING TO PARAG RAPH-33 OF THE TRIBUNALS ORDER, OBSERVED AS FOLLOWS: IT IS EVIDENT FROM THE FINDINGS GIVEN BY THE HONB LE ITAT THAT THE ISSUE IN QUESTION IS REQUIRED TO BE CONSIDERED AS INCOME ESCAPING ASSESS MENT. THEREFORE, INFORMATION AVAILABLE ON RECORD CLEARLY SHOWS THAT THE INCOME C HARGEABLE TO TAX TO THE EXTENT OF RS.2 CRORE IS CASH CREDIT IN THE BOOKS OF THE ASSESSE E AS PER SECTION 68 OF INCOME TAX ACT, 1961 WHICH HAS ESCAPED ASSESSMENT. SINCE, ALL THE T RANSACTIONS IN RESPECT OF THE AFORESAID CASH CREDIT OF RS.2 CRORE WERE MADE IN F. Y. 1999-2000 RELEVANT TO A.Y.2000- 01, THE SUM OF RS. 2 CRORE IS ADDED TO TOTAL INCOME OF ASSESSEE ON PROTECTIVE BASIS. 14. THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT( A) AGAINST THE ORDER OF THE AO. THE CIT(A) DELETED THE ADDITION MADE BY THE AO BY O BSERVING AS FOLLOWS: AS REGARD APPLICATION OF THE PROVISIONS OF SECTION 68 TO THE INSTANT CASE, IT IS OBSERVED FROM THE FACTS DISCUSSED ABOVE, THAT THE ASSESSEE H AD EXPLAINED THE SOURCES OF SUBSCRIPTION OF RS.2,00,00,000/- TO ITS SHARE CAPIT AL FROM FOUR CORPORATE ENTITIES AND, ITA NO.960/KOL/2011-M/S. PREMIER ROAD CARRIERS LTD. A.Y.2000-01 8 THOSE ENTITIES HAD CONFIRMED TO HAVE SUBSCRIBED TO THE SHARES OF THE ASSESSEE COMPANY OF THAT AMOUNT. ALL THE FOUR SUBSCRIBERS WERE REGULARL Y ASSESSED TO INCOME TAX AND THE AMOUNT OF SHARE SUBSCRIPTION HAD BEEN DULY DISCLOSE D BOTH BY THE RECIPIENT AS WELL AS THE SUBSCRIBERS IN THEIR RESPECTIVE BOOKS OF ACCOUN T AND IN THEIR FINAL ACCOUNTS FILED WITH THEIR RESPECTIVE RETURNS OF INCOME FOR THE RELEVANT ASSESSMENT YEAR. THE AMOUNT OF SHARE SUBSCRIPTION WAS RECEIVED BY THE ASSESSEE THR OUGH BANKING CHANNEL. THE SOURCES AMOUNT OF SUBSCRIPTION OF RS.2 CRORES TO THE SHARE CAPITAL OF THE ASSESSEE WERE NEITHER DISPUTED NOR DOUBTED BY THE A.O. THUS, THE ASSESSEE HAD FULFILLED ALL THE THREE CONDITIONS, VIZ., (A) IDENTITY .OF THE CREDITORS; ( B) GENUINENESSS OF THE TRANSACTIONS AND ( C) CREDITWORTHINESS OF THE CREDITORS. THEREFORE, TH E A.D. WAS NOT JUSTIFIED IN APPLYING THE PROVISIONS OF SECTION 68 TO THE INSTANT CASE ARID A DDING THE AMOUNT OF SHARE SUBSCRIPTION AS UNEXPLAINED CASH CREDIT. IN THE LIGHT OF THE ABOVE DISCUSSION, THE ADDITION OF RS.2 CRORES MADE BY THE A.O. IS DELETED. 15. AGGRIEVED BY THE ORDER OF THE CIT(A) THE REVEN UE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL RAISING THE FOLLOWING GROUNDS O F APPEAL. (1) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.2,00,00,000/- MADE BY T HE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE INC OME-TAX ACT, 1961. (2) THAT THE APPELLANT CRAVES LEAVE TO ADD AND/ OR MODIFY THE GROUND OF APPEAL AT THE TIME OF HEARING OF THE CASE. 16. THE ASSESSEE HAS FILED AN APPLICATION UNDER RU LE 27 OF THE INCOME TAX APPELLATE TRIBUNAL RULES, 1963(ITAT RULES), SEEKING TO RAISE THE FOLLOWING GROUNDS OF APPEAL CHALLENGING THE VALIDITY OF INITIATION OF REASSESSM ENT PROCEEDINGS U/S.147 OF THE ACT. I. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) ERRED IN CONFIRMING THE REOPENING OF ASSESSMENT U/S 147. II. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE ,THE ISSUANCE OF NOTICE U/S 148 AFTER A PERIOD OF 4 YEARS FROM THE END OF THE ASSESSMENT YE AR IS TIME BARRED WHEN THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL NECESSARY FOR THE ASSESSMENT NOR ANY ALLEGATION THERETO IN THE RE ASONS RECORDED AND THUS BAD IN LAW IS LIABLE TO BE QUASHED. III. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, 'REASONS TO BELIEVE' CLEARLY ESTABLISH THAT THE NOTICE HAS BEEN ISSUED ONLY ON THE BASIS O F THE OBSERVATION OF THE HON'BLE IT AT AND WITHOUT ANY INDEPENDENT SATISFACTION AND APPLIC ATION OF MIND BY THE ASSESSING OFFICER AND IS THUS LIABLE TO BE QUASHED. IV. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE REASSESSMENT PROCEEDINGS TO MAKE 'PROTECTIVE' ASSESSMENT IS BAD IN LAW AND LIAB LE TO BE QUASHED. WITHOUT PREJUDICE, THE LD. AO ERRED IN REOPENING ASSESSMENT FOR MAKING PROTECTIVE ASSESSMENT WITHOUT ANY ITA NO.960/KOL/2011-M/S. PREMIER ROAD CARRIERS LTD. A.Y.2000-01 9 SUBSTANTIVE ASSESSMENT BEING PENDING ON THE DATE OF ISSUING NOTICE U/S 148 AND AS SUCH THE REASSESSMENT ORDER IS BAD IN LAW & LIABLE TO BE QUASHED. V. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. AO ERRED IN REOPENING ASSESSMENT ON THE ISSUE WHICH HAS ALREADY BEEN ASSE SSED AS 'UNDISCLOSED INCOME' IN BLOCK ASSESSMENT AND CANNOT BE TREATED AS ESCAPED I NCOME FOR MAKING REASSESSMENT U/S 147 AND THUS THE REOPENING IS LIABLE TO BE QUASHED. VI. THAT THE ASSESSMENT ORDER PASSED U/S 147 R.W.S 143(3) IS TIME BARRED AND IS LIABLE TO BE QUASHED. VII. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, T O DELETE FROM OR SUBSTANTIATE THE ABOVE- GROUND OF APPEAL. 17. ON A PERUSAL OF THE GROUNDS OF APPEAL RAISED B Y THE ASSESSEE BEFORE THE CIT(A), WE FIND THAT IN GR.NO.1 RAISED BY THE ASSESSEE, THE RE IS A SPECIFIC CHALLENGED TO THE VALIDITY OF ASSESSMENT FRAMED U/S.147 OF THE ACT AS BAD IN LAW. THE CIT(A) DID NOT ADJUDICATE THE AFORESAID GROUND AND HENCE IT CAN BE SAID TO HAVE BEEN DECIDED AGAINST THE ASSESSEE. THE ASSESSEE IS THEREFORE ENTITLED T O AGITATE THE AFORESAID GROUNDS OF APPEAL IN TERMS OF RULE 27 OF THE ITAT RULES. 18. THE LEARNED DR SUBMITTED THAT AS FAR AS TH E MERITS OF THE ADDITION MADE U/S.68 OF THE ACT IS CONCERNED, THE DECISION OF THE TRIBUN AL RENDERED IN THE CASE OF SUBHLAKSHMI VANIJYA (P) LTD. AND OTHERS VS. CIT 155 ITD 1 (KOL) WOULD BE APPLICABLE AND FOLLOWING THE PRINCIPLES LAID DOWN I N THE AFORESAID DECISION, THE ADDITION MADE BY THE AO WAS JUSTIFIED AND HAS TO BE RESTORED. AS FAR AS THE VALIDITY OF INITIATION OF PROCEEDINGS U/S.148 OF THE ACT IS CON CERNED, THE LEARNED DR SUBMITTED THAT THE TRIBUNAL HAS IN PARA-32 OF ITS ORDER IN TH E APPEAL AGAINST THE ASSESSMENT IN BLOCK ASSESSMENT U/S.158BC HAD GIVEN A SPECIFIC DIR ECTION THAT THE EXPLANATION WITH REGARD TO THE RECEIPT OF SHARE CAPITAL COULD NOT BE SUBJECT MATTER OF ASSESSMENT U/S.158BC AND THAT IT WOULD CONSTITUTE ESCAPED INCO ME FOR WHICH THE OTHER OPTIONS OPNEN TO THE REVENUE UNDER THE ACT COULD BE RESORTE D TO. THEREFORE THE VALIDITY OF PROCEEDINGS U/S.148 OF THE ACT CANNOT BE QUESTIONED AS IT IS BASED ON THE DIRECTIONS OF THE TRIBUNAL. 19. THE LEARNED COUNSEL FOR THE ASSESSEE FIRST LY SUBMITTED THAT IN THE ASSESSMENT PROCEEDINGS U/S.158BC OF THE ACT, THE TRIBUNAL HAD DELETED THE ADDITION OF RS.2 CRORES ITA NO.960/KOL/2011-M/S. PREMIER ROAD CARRIERS LTD. A.Y.2000-01 10 IN THE HANDS OF THE ASSESSEE AS UNSUSTAINABLE. THE OBSERVATIONS OF THE TRIBUNAL IN PARAGRAPH 32 OF ITS ORDER WAS ONLY A PASSING OBSERV ATION WHICH CANNOT BE CONSTRUED AS ANY DIRECTION BY THE TRIBUNAL TO REOPEN THE ASSESSM ENT OF THE ASSESSEE FOR AY 2001- 02. HIS SUBMISSION WAS THAT SINCE THE ADDITIONS AL READY STOOD DELETED IN THE BLOCK ASSESSMENT PROCEEDINGS, THE ADDITIONS MADE IN THE P RESENT REASSESSMENT PROCEEDINGS WERE RIGHTLY HELD BY THE CIT(A) TO BE BAD IN LAW. HIS FURTHER SUBMISSION WAS THAT THE VERY INITIATION OF REASSESSMENT PROCEEDINGS U/S.147 OF THE ACT WAS NOT VALID IN LAW. IN THIS REGARD HE SUBMITTED THAT THE ASSESSMENT OF THE ASSESSEE WAS ORIGINALLY COMPLETED U/S.143(3) OF THE ACT FOR THE RELEVANT AY 2001-02. THIS WAS OVER AND ABOVE THE ASSESSMENT FOR THE BLOCK PERIOD U/S.158BC OF THE AC T. THE INITIATION OF REASSESSMENT PROCEEDINGS FOR AY 2001-02 WAS ADMITTEDLY BEYOND TH E PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. AS REQUIRED U NDER THE PROVISO TO SEC.147 OF THE ACT, REASSESSMENT IN SUCH CASES CAN BE ONLY FOR THE REASON THAT THERE WAS ESCAPEMENT OF INCOME DUE TO FAILURE OF THE ASSESSEE TO FULLY A ND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT OF TOTAL INCOME OF THE ASSESSEE FOR THAT YEAR. IT WAS POINTED OUT BY HIM THAT NEITHER IN THE REASONS RECORDED BY THE AO FOR INITIATING REASSESSMENT PROCEEDINGS NOR IN THE ORDER OF REASSESSMENT THE AO HAS HELD THAT THERE WAS ESCAPEMENT OF INCOME DUE TO THE FAILURE OF THE ASSE SSEE TO FULLY AND TRULY DISCLOSE MATERIAL FACTS NECESSARY FOR THE ASSESSMENT OF TOTA L INCOME OF THE ASSESSE FOR THAT YEAR. IN THIS REGARD HE PLACED RELIANCE ON SEVERA L DECISIONS. WE WILL MAKE A REFERENCE TO ONLY ONE SUCH DECISION WHICH IS IDENTI CAL TO THE FACTS OF THE PRESENT CASE VIZ., VISHWANATH PRASAD ASHOK KUMAR SARRAF VS. CIT 327 ITR 190 (ALL). 20. HIS NEXT SUBMISSION WAS THAT IN AN ASSESSM ENT U/S.147 OF THE ACT THERE CANNOT BE A PROTECTIVE ASSESSMENT AND SUCH PROTECTIVE ASSE SSMENT BY ITSELF WILL BE SUFFICIENT TO HOLD THAT THE PROCEEDINGS U/S.147 OF THE ACT ARE NOT VALIDLY INITIATED. IN THIS REGARD HE DREW OUR ATTENTION TO SEVERAL DECISIONS THE MAIN DECISION IN THIS REGARD BEING THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF DHFL VENTURE CAPITAL FUND VS. ITO 358 ITR 471 (BOM). APART FROM THE ABO VE HE RELIED ON THE FINDINGS OF THE TRIBUNAL IN THE APPEAL AGAINST BLOCK ASSESSMENT U/S.158BC OF THE ACT AND THAT OF ITA NO.960/KOL/2011-M/S. PREMIER ROAD CARRIERS LTD. A.Y.2000-01 11 THE CIT(A) IN SO FAR AS THE ADDITION ON ACCOUNT OF UNEXPLAINED SHARE CAPITAL IS CONCERNED. 21. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. THE JUSTIFICATION FOR INITIATION OF PROCEEDINGS U/S.147 OF THE ACT IS ONLY ON THE BASIS OF THE OBSERVATIONS OF THE TRIBUNAL CONTAINED IN PARAGRAPH 32 OF ITS ORDER, WHICH WE HAVE EXTRACTED IN THE EARLIER PART OF THIS ORDER. AS WE HAVE ALREADY SEEN THE CASE OF THE REVENUE IS THAT A SUM OF RS.2 CRORES RECEIVED BY TH E ASSESSEE TOWARDS SUBSCRIPTION TO ITS SHARE CAPITAL FROM 4 DIFFERENT COMPANIES @ RS.5 0 LAKHS EACH WAS IN FACT THE MONEY OF SRI BHANARAM GUPTA AND THEREFORE A PROTECTIVE AS SESSMENT OF RS.2 CRORES WAS MADE IN THE HANDS OF THE ASSESSEE AND SUBSTANTIVE ADDITI ON OF THE SAID SUM WAS MADE IN THE HANDS OF SRI BHANARAM GUPTA. THE CIT(A) HELD THAT A SUM OF RS.50 LAKHS EACH RECEIVED FROM M/S.POLY PRODUCTS (P) LTD., AND M/S.S URYAMUKHI MERCHANTS (P) LTD., AND CREDITED IN THE BOOKS OF THE ASSESSEE AS SHARE SUBSCRIPTION REMAINED UNEXPLAINED. THE CIT(A) ALSO HELD THAT THE SUM OF RS.50 LAKHS EA CH RECEIVED FROM M/S.POLY PRODUCTS (P) LTD., AND M/S.SURYAMUKHI MERCHANTS (P) LTD., AND CREDITED IN THE BOOKS OF THE ASSESSEE AS SHARE SUBSCRIPTION SHOULD BE ADD ED IN THE HANDS OF THE ASSESSEE AND NOT IN THE HANDS OF SRI.BHANARAM GUPTA. WITH REGARD TO THE REMAINING SUM OF RS.50 LAKHS EACH RECEIVED AS SHARE CAPITAL FROM M/S.ESSKA Y TELECOM LTD. AND M/S.MEDHAWI TRADERS LTD., THE CIT(A) HELD THAT THE ASSESSEE HAD SATISFACTORILY EXPLAINED THE RECEIPT OF SHARE CAPITAL. IN THE ASSESSMENT OF SRI BHANARA M GUPTA AN ADDITION OF RS.2 CRORES WAS MADE ON A SUBSTANTIVE BASIS. AGAINST THE SAID ASSESSMENT AN APPEAL WAS FILED BY SRI BHANARAM GUPTA. THE CIT(A) IN SUCH APPEAL DELE TED THE ADDITION OF RS.2 CRORES MADE ON A SUBSTANTIVE BASIS IN THE HANDS OF SRI BHA NARAM GUPTA, SINCE ADDITION OF RS.1 CRORES WAD CONFIRMED ON A SUBSTANTIVE BASIS IN THE HANDS OF THE ASSESSEE AND ANOTHER SUM OF RS.1 CRORES WAS HELD TO BE DULY AND SATISFACTORILY EXPLAINED BY THE ASSESSEE. THE TRIBUNAL UPHELD THE ORDER OF THE CIT (A) DELETING ADDITION OF RS.1 CRORES BEING RS.50 LAKHS EACH RECEIVED AS SHARE CA PITAL FROM M/S.ESSKAY TELECOM LTD. AND M/S.MEDHAWI TRADERS LTD., AND ENDORSED THE CIT( A)S FINDING THAT THE ASSESSEE HAD SATISFACTORILY EXPLAINED THE RECEIPT OF SHARE C APITAL FROM THE AFORESAID TWO PARTIES. WITH REGARD TO THE RECEIPT OF A SUM OF RS.50 LAKHS EACH RECEIVED FROM M/S.POLY ITA NO.960/KOL/2011-M/S. PREMIER ROAD CARRIERS LTD. A.Y.2000-01 12 PRODUCTS (P) LTD., AND M/S.SURYAMUKHI MERCHANTS (P) LTD., AND CREDITED IN THE BOOKS OF THE ASSESSEE AS SHARE SUBSCRIPTION WHICH WAS TRE ATED BY THE CIT(A) AS UNEXPLAINED, THE TRIBUNAL HELD THAT THE SAME CANNOT BE SUSTAINED . THE TRIBUNAL FIRSTLY HELD THAT THE SAID ADDITION WAS MADE ON THE BASIS OF STATEMENT OF SHRI.RAJ DEO ROY AND THAT STATEMENT COULD NOT HAVE BEEN USED BY THE AO FOR TH E REASON THAT THE STATEMENT WAS RECORDED BY AN OFFICER WHO DID NOT HAVE AUTHORITY T O RECORD SUCH STATEMENT. THEREAFTER THE TRIBUNAL HELD IN PARAGRAPH 32 OF ITS ORDER THAT THE ADDITION IN ANY EVENT CANNOT BE MADE IN PROCEEDINGS U/S.158BC OF THE ACT WHERE ONLY UNDISCLOSED INCOME DETECTED AS A RESULT CAN BE BROUGHT TO TAX AND SINC E THE RECEIPT OF SHARE CAPITAL BY THE ASSESSEE IS ALREADY DISCLOSED IN THE REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE, THE SAME CANNOT BE SUBJECT MATTER OF ADDITION IN PROCEE DINGS U/S.158BC OF THE ACT. THE OBSERVATIONS OF THE TRIBUNAL IN PARAGRAPH-32 OF ITS ORDER IN OUR VIEW CANNOT BE CONSTRUED AS A DIRECTION TO MAKE A REASSESSMENT U/S .147 OF THE ACT IN RESPECT OF THE SUM OF RS.1 CRORE COMPRISING OF RECEIPT OF SHARE CA PITAL OF RS.50 LAKHS EACH FROM M/S.POLY PRODUCTS (P) LTD. AND M/S.SURYAMUKHI MERCH ANTS (P) LTD. THE FINDINGS OF THE TRIBUNAL IN PARAGRAPH 31.4 IS THAT THE ADDITION OF RS.1 CRORE AS ABOVE IS BASED PURELY ON THE STATEMENT OF SRI RAJ DEO ROY WHICH WA S RECORDED BY AN OFFICER NOT HAVING AUTHORITY IN LAW TO RECORD SUCH STATEMENT AN D THEREFORE THERE CAN BE NO EVIDENTIARY VALUE ATTACHED TO SUCH STATEMENT. SINC E THE REASONS FOR INITIATING REASSESSMENT PROCEEDINGS U/S.147 OF THE ACT IS ONLY ON THE BASIS OF THE OBSERVATIONS OF THE TRIBUNAL IN PARAGRAPH-32 OF ITS ORDER, WHICH C ANNOT BY ANY STRETCH OF IMAGINATION BE TREATED AS A DIRECTION TO INITIATE REASSESSMENT PROCEEDINGS U/S.147 OF THE ACT AND SINCE THOSE OBSERVATIONS CANNOT ALSO GIVE ANY REASO N TO BELIEVE THAT INCOME OF THE ASSESSEE CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT B ECAUSE OF THE OBSERVATIONS OF THE TRIBUNAL IN PARAGRAPH 31.4 OF ITS ORDER, THE INITIA TION OF REASSESSMENT PROCEEDINGS U/S.147 OF THE ACT, IN OUR VIEW CANNOT BE SUSTAINED . THE SAME IS THEREFORE BAD IN LAW AND IS HEREBY QUASHED AND ANNULLED. 22. WE ALSO FIND SUBSTANCE IN GROUND (IV) RAISED B Y THE ASSESSEE IN ITS APPLICATION UNDER RULE 27 OF THE ITAT RULES. THE QUESTION RAIS ED THEREIN IS AS TO WHETHER THE ORDER OF REASSESSMENT IS BAD IN LAW FOR THE REASON THAT A PROTECTIVE ASSESSMENT HAS ITA NO.960/KOL/2011-M/S. PREMIER ROAD CARRIERS LTD. A.Y.2000-01 13 BEEN MADE IN PROCEEDINGS U/S.147 OF THE ACT. WE FI ND THAT IDENTICAL ISSUE HAD COME UP FOR CONSIDERATION BEFORE THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DHFL VENTURE CAPITAL FUND (SUPRA). THE FACTS OF THE CAS E BEFORE THE HONBLE BOMBAY HIGH COURT WAS THAT THE ASSESSEE, REGISTERED WITH SEBI A S A VENTURE CAPITAL FUND FILED A RETURN OF INCOME CLAIMING THE STATUS OF AN AOP. FO R AY 2008-09, THE ASSESSEE CLAIMED THAT THE CONTRIBUTIONS BY ITS INVESTORS IN TERMS OF THE TRUST DEED AND CONTRIBUTION AGREEMENTS CONSTITUTED REVOCABLE TRANS FERS UNDER THE PROVISIONS OF THE ACT AND HENCE, THE INCOME ACCRUING TO THE FUND WAS NOT LIABLE TO TAX IN THE HANDS OF THE ASSESSEE, BUT IN THE HANDS OF THE INVESTORS / C ONTRIBUTORS IN PROPORTION TO THEIR RESPECTIVE CONTRIBUTIONS. A SIMILAR NOTE WAS APPEN DED IN THE NOTES TO THE ACCOUNTS. THE AO HELD THAT THE CONTRIBUTORS TO THE SCHEME HAV E PRACTICALLY NO CONTROL OVER IT AND HENCE, THE PROVISIONS OF SECTIONS 61 AND 63 WER E NOT APPLICABLE. IN THE CIRCUMSTANCES, THE TOTAL INCOME WAS HELD TO BE EXIG IBLE TO TAX. IN APPEAL, THE COMMISSIONER (APPEALS) CAME TO THE CONCLUSION THAT THERE WAS A REVOCABLE TRANSFER WITHIN THE MEANING OF SECTIONS 61 TO 63 AND THE INC OME WHICH AROSE TO THE TRUST WAS TAXABLE IN THE HANDS OF THE CONTRIBUTORS AND NOT IN THE HANDS OF THE ASSESSEE. CONSEQUENTLY, IT WAS HELD THAT WHEN THE SHARE OF IN COME RECEIVED BY THE CONTRIBUTORS FROM THE FUND HAD BEEN INCLUDED IN THE TOTAL INCOME OF THE CONTRIBUTORS AND WAS OFFERED TO TAX BY THE CONTRIBUTORS, IT WAS NOT OPEN TO THE DEPARTMENT TO PROCEED TO TAX THE SAME INCOME AGAIN IN THE HANDS OF THE FUND. AGA INST THE ORDER OF THE CIT (A), THE REVENUE WAS IN APPEAL BEFORE THE TRIBUNAL. AT THAT POINT OF TIME, A NOTICE HAD BEEN ISSUED BY THE AO U/S 148 TO THE AOP OF THE CONTRIB UTORS OF M/S. DHFL VENTURE CAPITAL FUND AT THE ADDRESS OF THE ASSESSEE FOR RE OPENING THE ASSESSMENT. THE NOTICE U/S.148 OF THE ACT WAS CHALLENGED AS ONE ISSUED WIT HOUT BELIEF THAT CONTRIBUTORS INCOME HAS ESCAPED ASSESSMENT BECAUSE THE TRUST ASS ESSENT WAS STILL BEING PURSUED BY THE REVENUE IN AN APPEAL BEFORE THE TRIBUNAL. T HE HONBLE BOMBAY HIGH COURT HELD THAT THE ENTIRE EXERCISE WAS ONLY CONTINGENT O N A FUTURE EVENT AND A CONSEQUENCE THAT MAY ENSURE UPON THE DECISION OF THE TRIBUNAL, THAT AGAIN IF THE TRIBUNAL WERE TO HOLD AGAINST THE REVENUE. A REOPENING OF AN ASSESS MENT U/S 148 CANNOT BE JUSTIFIED ON SUCH A BASIS. THERE HAS TO BE A REASON TO BELIE VE THAT INCOME HAS ESCAPED ITA NO.960/KOL/2011-M/S. PREMIER ROAD CARRIERS LTD. A.Y.2000-01 14 ASSESSMENT. 'HAS ESCAPED ASSESSMENT' INDICATES AN EVENT WHICH HAS TAKEN PLACE. TAX LEGISLATION CANNOT BE REWRITTEN BY THE REVENUE OR T HE COURT BY SUBSTITUTING THE WORDS 'MAY ESCAPE ASSESSMENT' IN FUTURE. WRITING LEGISLAT ION IS A CONSTITUTIONAL FUNCTION ENTRUSTED TO THE LEGISLATURE. THE REASSESSMENT PRO CEEDINGS WERE HELD NOT PROPERLY INITIATED ON THE GROUND THAT THE JURISDICTIONAL REQ UIREMENT FOR REOPENING AN ASSESSMENT U/S 147 FOR AY 2008-09 HAS NOT BEEN FULFILLED. IN THE COURSE OF ITS DECISION HONBLE COURT ALSO HELD THAT THERE CANNOT BE A PROTECTIVE A SSESSMENT IN A REASSESSMENT. THE FOLLOWING WERE THE RELEVANT OBSERVATIONS, IN THIS R EGARD: 17. UNDOUBTEDLY AS COUNSEL APPEARING ON BEHALF OF THE REVENUE SUBMITS THE CONCEPT OF A PROTECTIVE ASSESSMENT IS WELL KNOWN TO THE LAW OF INCOME TAX IN INDIA. THE BASIS ON WHICH A PROTECTIVE ASSESSMENT I S CARRIED OUT IS SUMMED UP SUCCINCTLY IN SAMPATH AYENGAR'S LAW OF INCOME TAX ( 11TH EDITION, VOL. VI, PAGE 9724) : PROTECTIVE ASSESSMENT THE ASSESSING OFFICER MAY OFTEN HAVE TO ASSESS THE SAME INCOME IN MORE THAN ONE PLACE. SOME TIMES THEY MAY BE MADE BY DIFFERENT OFFICERS AS, FOR EXAMPLE, WHERE A N OFFICER ASSESSING A THINKS THAT CERTAIN INCOME BELONGS TO HIM BUT ANOTH ER OFFICER ASSESSING B IS OF THE OPINION THAT THE INCOME IS HIS. SOMETIMES THE SAME OFFICER MAY FIND THAT AN ASSESSEE BEFORE HIM IS RETURNING A PAR TICULAR INCOME BUT IS OF THE OPINION THAT IT SHOULD BE ASSESSED IN THE HANDS OF A FIRM OR A FAMILY AND NOT IN THE HANDS OF THE PERSON WHO RETURNED IT. IT HAS BEEN HELD THAT THE OFFICER MAY, WHEN IN DOUBT, CIT V. SHRI RAMCHAN DRAJI MAHARAJ KA BADA MANDIR (1988) 73 CTR (MP) 79 TO SAFEGUARD THE INTERESTS OF THE REVENUE ASSESS IT IN MORE THAN ONE HAND., LALJI HAR IDAS V. ITO (1961) 43 ITR 387 (SC) BUT THIS PROCEDURE CAN BE PERMITTED ONLY AT THE STAGE OF THE ASSESSMENT AS, AT HIGHER LEVELS, IT IS POSSIBLE FOR THE APPELLATE OR REVISIONAL AUTHORITY TO GIVE A CLEAR FINDING AS TO THE ASSESSEE WHO IS LIABLE TO BE SO ASSESSED LEAVING THE ONE WHO IS AGG RIEVED TO GET REDRESS BY APPROPRIATE PROCEEDINGS., SEE DAYABAI V. CIT (19 85) 154 ITR 248 (MP). IN ANY EVENT, IF , AT THE STAGE OF THE TRIBUN AL OR HIGH COURT IT IS FOUND THAT THE SAME INCOME IS ASSESSED IN BOTH PLAC ES, THE DEPARTMENT SHOULD PROVIDE RELIEF SUO MOTU TO ONE OF THEM, ITO V. BACHU LAL KAPOOR (1966) 60 ITR 74 (SC). THERE CAN BE PRECAUTIONARY A SSESSMENTS BUT NOT PROTECTIVE RECOVERY, CIT V. COCHIN CO PVT LTD (1976 ) 104 ITR 655 (KER.). BUT WHERE AN ASSESSMENT IS INTENDED TO BE P ROTECTIVE, IT SHOULD BE SO EXPRESSED, CIT V. KHALID MEHDI (1987) 165 ITR 685 (AP). 18. A PROTECTIVE ASSESSMENT AS THE LEARNED AUTHOR I NDICATES5 IS REGARDED AS BEING PROTECTIVE BECAUSE IT IS AN ASSESSMENT WHICH IS MADE EX ABUNDANTI ITA NO.960/KOL/2011-M/S. PREMIER ROAD CARRIERS LTD. A.Y.2000-01 15 CAUTELA WHERE THE DEPARTMENT HAS A DOUBT AS TO THE PERSON WHO IS OR WILL BE DEEMED TO BE IN RECEIPT OF THE INCOME. A DEPARTMEN TAL PRACTICE, WHICH HAS GAINED JUDICIAL RECOGNITION, HAS EMERGED WHERE IT A PPEARS TO THE ASSESSING OFFICER THAT INCOME HAS BEEN RECEIVED DURING THE RE LEVANT ASSESSMENT YEAR, BUT WHERE IT IS NOT CLEAR OR UNAMBIGUOUS AS TO WHO HAS RECEIVED THE INCOME. SUCH A PROTECTIVE ASSESSMENT IS CARRIED OUT IN ORDER TO EN SURE THAT INCOME MAY NOT ESCAPE TAXATION ALTOGETHER PARTICULARLY IN CASES WH ERE THE REVENUE HAS TO BE PROTECTED AGAINST THE BAR OF LIMITATION. BUT EQUALLY WHILE A PROTECTIVE ASSESSMENT IS PERMISSIBLE A PROTECTIVE RECOVERY IS NOT ALLOWED. HOWEVER, SUCH AN EXERCISE WHICH IS PERMISSIBLE IN THE CASE O F A REGULAR ASSESSMENT MUST NECESSARILY YIELD TO THE DISCIPLINE OF THE STA TUTE WHERE RECOURSE IS SOUGHT TO BE TAKEN TO THE PROVISIONS OF SECTION 148 . PROTECTIVE ASSESSMENTS HAVE EMERGED AS A MATTER OF DEPARTMENTAL PRACTICE W HICH HAS FOUND JUDICIAL RECOGNITION. ANY PRACTICE HAS TO NECESSARI LY YIELD TO THE RIGOUR OF A STATUTORY PROVISION. HENCE, WHEN RECOURSE IS SOUGHT TO BE TAKEN TO THE PROVISIONS OF SECTION 148, THERE HAS NECESSARILY TO BE THE FULFILLMENT OF THE JURISDICTIONAL REQUIREMENT THAT THE ASSESSING OFFIC ER MUST HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. TO ACCE PT THE CONTENTION OF THE REVENUE IN THE PRESENT CASE WOULD BE TO ALLOW A REOPENING OF AN ASSESSMENT UNDER SECTION 148 ON THE GROUND THAT THE ASSESSING OFFICER IS OF THE OPINION THAT A CONTINGENCY MAY ARISE IN FUTU RE RESULTING AN ESCAPEMENT OF INCOME. THAT WOULD, IN OUR VIEW, BE W HOLLY IMPERMISSIBLE AND WOULD AMOUNT TO A REWRITING OF THE STATUTORY PR OVISION. MOREOVER, THE RELIANCE WHICH IS SOUGHT TO BE PLACED ON THE PROVIS IONS OF EXPLANATION 2(A) TO SECTION 147 IS MISCONCEIVED. EXPLANATION 2 PROVIDES A DEEMING DEFINITION OF CASES WHERE INCOME CHARGEABLE TO TAX HAS ESCAPED AS SESSMENT AND CLAUSE (A) INCLUDES A CASE WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE ALTHOUGH HIS INCOME OR THE INCOME OF ANY OTHER PERS ON IN RESPECT OF WHICH HE IS ASSESSABLE EXCEEDS THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO TAX. AS THE REASONS WHICH HAVE BEEN DISCLOSED TO THE ASSESSEE W OULD INDICATE, THIS IS NOT A CASE WHERE AN ASSESSEE HAS NOT FILED A RETURN OF IN COME SIMPLICITOR. THE WHOLE BASIS OF THE REOPENING IS ON THE HYPOTHESIS THAT IF THE PROVISIONS OF SECTIONS 61 TO 63 ARE ATTRACTED AS HAS BEEN CLAIMED BY THE ASSE SSEE, AND THE INCOME OF RS.32.83 CRORES WHICH HAS BEEN CLAIMED BY THE ASSES SEE TO BE EXEMPT IS TREATED AS EXEMPT, IN THAT EVENT AN ALTERNATE BASIS FOR TAX ING THE INCOME IN THE HANDS OF THE AOP OF THE CONTRIBUTORIES IS SOUGHT TO BE SET U P. FOR THE REASONS ALREADY INDICATED, THE ENTIRE EXERCISE IS ONLY CONTINGENT O N A FUTURE EVENT AND A CONSEQUENCE THAT MAY ENURE UPON THE DECISION OF THE TRIBUNAL, THAT AGAIN IF THE TRIBUNAL WERE TO HOLD AGAINST THE REVENUE. A REOPEN ING OF AN ASSESSMENT UNDER SECTION 148 CANNOT BE JUSTIFIED ON SUCH A BAS IS. THERE HAS TO BE A REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. 'HAS ESCAPED ASSESSMENT' INDICATES AN EVENT WHICH HAS TAKEN PLACE. TAX LEGIS LATION CANNOT BE REWRITTEN BY THE REVENUE OR THE COURT BY SUBSTITUTING THE WORDS 'MAY ESCAPE ASSESSMENT' IN FUTURE. WRITING LEGISLATION IS A CONSTITUTIONAL FUN CTION ENTRUSTED TO THE LEGISLATURE. ITA NO.960/KOL/2011-M/S. PREMIER ROAD CARRIERS LTD. A.Y.2000-01 16 (EMPHASIS SUPPLIED) 23. IN THE LIGHT OF THE ABOVE DISCUSSION, WE HOLD THAT THE PROCEEDINGS U/S.147 OF THE ACT WERE NOT VALIDITY INITIATED IN THE PRESENT CASE AS THE CONDITION PRECEDENT FOR SUCH INITIATION IS ABSENT IN THE PRESENT CASE. WE THERE FORE ANNUL THE ORDER OF ASSESSMENT U/S.147 OF THE ACT. IN VIEW OF THE ABOVE CONCLUSIO N, WE DO NOT DEEM IT NECESSARY TO DEAL WITH THE GROUND OF APPEAL RAISED BY THE REVENU E IN ITS APPEAL. SUFFICE IT TO SAY THAT THE ISSUE RAISED BY THE REVENUE HAS ALREADY BE EN DECIDED BY THE TRIBUNAL IN THE APPEAL U/S.158BC OF THE ACT AND DECIDED IN FAVOUR O F THE ASSESSEE ON MERITS. WITH THESE OBSERVATIONS, WE DISMISS THE APPEAL OF THE RE VENUE. 24. IN THE RESULT APPEAL BY THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 2.12.2016 ORDER PRONOUNCED IN THE COURT ON 2.12.2016. SD/- SD/- [P.M.JAGTAP] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2.12.2016. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.M/S. PREMIER ROAD CARRIERS LTD., 32, J.L.NEHRU RO AD, KOLKATA-700071. 2. D.C.I.T., CIRCLE-8, KOLKATA. 3. CIT(A)-VIII, KOLKATA 4. C.I.T.-III, KO LKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSTT.REGISTRAR, KOLKATA BENCHES ITA NO.960/KOL/2011-M/S. PREMIER ROAD CARRIERS LTD. A.Y.2000-01 17