Sh. Ravinder Kumar Maheshwari, Hoshiarpur V. The ACIT, Jalandhar

ITSSA 1/ASR/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 3102 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-08-2015
• Assessment Year: misc
• Appeal Filed On: 20-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SSH R L CHHANALIA
• Keywords: Unexplained investment; Gift; Search and seizure; Opportunity of being heard; Question of law; Block assessment
• Section: 132

Judgement Text

ITA NOS.01 & 02(ASR)/2010 IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T(SS)A NO.1(ASR)/2010 BLOCK PERIOD:01/04/1996 TO 30/08/1996 SH. RAVINDER KUMAR MAHESHWARI, VS. ASSTT. COMMR. OF INCOME-TAX, HOSHIARPUR. CENTRAL CIRCLE-1, JALANDHAR. (APPELLANT) (RESPONDENT) I.T(SS)A NO.2(ASR)/2010 BLOCK PERIOD:01/04/1996 TO 30/08/1996 SH. VIJAY PARKASH MAHESHWARI, VS. ASSTT. COMMR. OF INCOME-TAX, HOSHIARPUR. CENTRAL CIRCLE-1, JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANTS BY: SH.SURINDER MAHAJAN, CA RESPONDENT BY:S/SH. R.L. CHHANALIA & TARSEM LAL, DR S DATE OF HEARING:21/11/2012 DATE OF PRONOUNCEMENT:29/11/2012 ORDER PER BENCH ; THESE TWO APPEALS OF TWO DIFFERENT ASSESSES ARISE FROM TWO DIFFERENT ORDERS OF ASSESSING OFFICER, EACH DATED 31.12.2009 FOR THE BLOCK PERIOD 01/04/1986 TO 30/08/1996. 2 2. IN ITA NO.01/ASR/2010, THE ASSESSEE HAS RAISED F OLLOWING GROUNDS OF APPEAL: 1. THAT THE IMPUGNED ORDER IS A NULLITY PER FORCE INASMUCH AS NO DEMAND NOTICE SPECIFYING THE SUM PAYABLE TOWARDS TA X, INTEREST OR ANY OTHER SUM, IN CONSEQUENCE OF THE SAID ORDER PASSED ON 31.12.2009, HAS BEEN SERVED ON THE ASSESSEE. 2. THAT WITHOUT PREJUDICE TO FIRST GROUND OF APPEAL , IF THE DEMAND NOTICE DATED 30.12.2009 SERVED ON ASSESSEE SPECIFYI NG A SUM OF RS.11,77,980/- AS PAYABLE, IS EITHER CLAIMED OR HEL D TO HAVE BEEN ISSUED IN CONSEQUENCE OF THE ORDER UNDER APPEA L, THEN THE SAID ORDER (PURPORTEDLY PASSED ON 30.12.2009), IS A GAIN VOID INASMUCH AS IN THAT SITUATION, IT IS CONTRARY TO TH E MANDATE OF SECTION 158BG, WHICH ENVISAGES PRIOR APPROVAL OF THE CIT AS A MANDATORY REQUIREMENT, WHEREAS THE SAID APPROVAL, AS ADMITTED AND CONFIRMED BY THE LD. AO ON LAST PAGE PARA 24 OF THE ORDER, WAS OBTAINED ONLY ON 31.12.2009. 3. THAT THE LD. AO WAS NOT JUSTIFIED IN SUBTLY IGNO RING THE ASSESSEES CONTENTION THAT THE IMPUGNED GIFTS ALREA DY, DISCLOSED BEFORE SEARCH, WERE NOT CAPABLE OF BEING ASSESSED A S UNDISCLOSED INCOME IN THE BLOCK PERIOD. 4. THAT THE LD. AO FELL INTO GRAVE ERROR IN HOLDING THAT THE GIFTS AMOUNTING TO RS.19,63,300/- RECEIVED DURING THE BLO CK PERIOD FROM REAL NON RESIDENT BROTHER, AS BOGUS AND IN TRE ATING THE SAME AS UNDISCLOSED INCOME, ENTIRELY OF THE ASSESSE E, IGNORING THE FACT ON RECORD, AS BROUGHT TO HIS NOTICE, THAT GIFTS OF RS.8,93,000/- WERE PERTAINING OF HUF OF ASSESSEE, A N INDEPENDENT ASSESSEE. 5. THAT WHILE HOLDING AS ABOVE, THE LD. AO, EVEN ON THIRD OCCASION, FAILED TO BRING ANY EVIDENCE ON RECORD TH AT THE AMOUNTS CREDITED IN THE NRE ACCOUNTS OF THE NON-RES IDENT BROTHER, HAD ANY NEXUS WITH THE ASSESSEE, SO AS TO HOLD THE SAME AS BOGUS. 3 6. THAT THE FRESH FINDINGS NOW GIVEN BY THE LD. AO IN HIS ORDER, BY MAKING ROVING ENQUIRING, ARE WITHOUT JURISDICTION I NASMUCH AS, HE WAS NOT EXERCISING HIS ORIGINAL JURISDICTION, B UT ONLY TO THE EXTENT DIRECTED BY THE ITAT IN ITS REMAND ORDER. 7. THAT THE CREDITS IN THE NRE ACCOUNT OF THE DONO R WERE ATTRIBUTABLE TO SOME OTHER NRE ACCOUNT, AS INFERRED BY THE D. AO IN PARA 16.2. FOR WANT OF ANY EVIDENCE BROUGHT O N RECORD, IS PER SE MALICIOUS AND UNFOUNDED. 8. THAT THE DONOR WAS NOT A MAN OF MEANS TO AFFORD THE ABOVE GIFTS, IS A FINDING DE HORS THE FACTS AND EVIDENCE PLACED ON RECORD. 9. THAT EVEN THE BENEFIT OF TELESCOPING, ALTERNATEL Y SOUGHT TO BE ALLOWED, AGAINST THE UNDISCLOSED INCOME ASSESSED IN THE HANDS OF FAMILY BUSINESS CONCERNS, HAS BEEN WRONGLY DENIE D ON HAZY AND OBTUSE LOGICS, OBLIVIOUS OF THE ITAT DIRECTIONS . 10. THAT THE ASSESSEE HAVING BEEN PUT INTO UNDUE LI TIGATION THIRD TIME, BY WAY OF AN ARBITRARY AND ILLEGAL ORDER, THE APPELLANTS SEEKS TO BE ALLOWED APPROPRIATE COST IN THE MATTER. 11. THAT THE ORDER UNDER APPEAL IS ENTIRELY AGAINST THE FACTS AND LAW AND DOES NOT DESERVE TO BE SUSTAINED. 3. IN ITA NO.02/ASR/2010, THE ASSESSEE HAS RAISED F OLLOWING GROUNDS OF APPEAL: 1. THAT THE IMPUGNED ORDER IS A NULLITY PER FORCE INASMUCH AS NO DEMAND NOTICE SPECIFYING THE SUM PAYABLE TOWARDS TA X, INTEREST OR ANY OTHER SUM, IN CONSEQUENCE OF THE SAID ORDER PASSED ON 31.12.2009, HAS BEEN SERVED ON THE ASSESSEE. 2. THAT WITHOUT PREJUDICE TO FIRST GROUND OF APPEAL , IF THE DEMAND NOTICE DATED 30.12.2009 SERVED ON ASSESSEE SPECIFYI NG A SUM OF RS.12,04,380/- AS PAYABLE, IS EITHER CLAIMED OR HEL D TO HAVE BEEN ISSUED IN CONSEQUENCE OF THE ORDER UNDER APPEA L, THEN THE 4 SAID ORDER (PURPORTEDLY PASSED ON 30.12.2009), IS A GAIN VOID INASMUCH AS IN THAT SITUATION, IT IS CONTRARY TO TH E MANDATE OF SECTION 158BG, WHICH ENVISAGES PRIOR APPROVAL OF THE CIT AS A MANDATORY REQUIREMENT, WHEREAS THE SAID APPROVAL, AS ADMITTED AND CONFIRMED BY THE LD. AO ON LAST PAGE PARA 24 OF THE ORDER, WAS OBTAINED ONLY ON 31.12.2009. 3. THAT THE LD. AO WAS NOT JUSTIFIED IN SUBTLY IGNO RING THE ASSESSEES CONTENTION THAT THE IMPUGNED GIFTS ALREA DY, DISCLOSED BEFORE SEARCH, WERE NOT CAPABLE OF BEING ASSESSED A S UNDISCLOSED INCOME IN THE BLOCK PERIOD. 4. THAT THE LD. AO FELL INTO GRAVE ERROR IN HOLDING THAT THE GIFTS AMOUNTING TO RS.20,07,300/- RECEIVED DURING THE BLO CK PERIOD FROM REAL NON RESIDENT BROTHER, AS BOGUS AND IN TRE ATING THE SAME AS UNDISCLOSED INCOME. 5. THAT WHILE HOLDING AS ABOVE, THE LD. AO, EVEN ON THIRD OCCASION, FAILED TO BRING ANY EVIDENCE ON RECORD TH AT THE AMOUNTS CREDITED IN THE NRE ACCOUNTS OF THE NON-RES IDENT BROTHER, HAD ANY NEXUS WITH THE ASSESSEE, SO AS TO HOLD THE SAME AS BOGUS. 6. THAT THE FRESH FINDINGS NOW GIVEN BY THE LD. AO IN HIS ORDER, BY MAKING ROVING ENQUIRING, ARE WITHOUT JURISDICTION I NASMUCH AS, HE WAS NOT EXERCISING HIS ORIGINAL JURISDICTION, B UT ONLY TO THE EXTENT DIRECTED BY THE ITAT IN ITS REMAND ORDER. 7. THAT THE CREDITS IN THE NRE ACCOUNT OF THE DONO R WERE ATTRIBUTABLE TO SOME OTHER NRE ACCOUNT, AS INFERRED BY THE D. AO IN PARA 16.2. FOR WANT OF ANY EVIDENCE BROUGHT O N RECORD, IS PER SE MALICIOUS AND UNFOUNDED. 8. THAT THE DONOR WAS NOT A MAN OF MEANS TO AFFORD THE ABOVE GIFTS, IS A FINDING DE HORS THE FACTS AND EVIDENCE PLACED ON RECORD. 9. THAT EVEN THE BENEFIT OF TELESCOPING, ALTERNATEL Y SOUGHT TO BE ALLOWED, AGAINST THE UNDISCLOSED INCOME ASSESSED IN THE HANDS OF FAMILY BUSINESS CONCERNS, HAS BEEN WRONGLY DENIE D ON HAZY AND OBTUSE LOGICS, OBLIVIOUS OF THE ITAT DIRECTIONS . 5 10. THAT THE ASSESSEE HAVING BEEN PUT INTO UNDUE LI TIGATION THIRD TIME, BY WAY OF AN ARBITRARY AND ILLEGAL ORDER, THE APPELLANTS SEEKS TO BE ALLOWED APPROPRIATE COST IN THE MATTER. 11. THAT THE ORDER UNDER APPEAL IS ENTIRELY AGAINST THE FACTS AND LAW AND DOES NOT DESERVE TO BE SUSTAINED. 4. THE FACTS BEING IDENTICAL IN BOTH THE APPEALS, WE ARE REPRODUCING THE FACTS AS EMANATING IN THE CASE OF SH. VIJAY PARKAS H MAHESHWARI VIDE ORDER OF AO AT PAGES 1 TO 3 AS UNDER: A SEARCH AND SEIZURE OPERATION U/S 132 OF THE INCO ME TAX ACT, 1961 WAS CONDUCTED AGAINST THE ASSESSEE ALONGWITH HIS TW O BROTHERS ON 30.08.1996 AT THEIR RESIDENTIAL AS WELL AS BUSINESS PREMISES OF THEIR FIVE FAMILY CONCERNS, HEREINAFTER CALLED AS MAHESH WARI GROUP: 2. IN PURSUANCE OF THIS SEARCH, SEIZURE OF ASSET, A S MENTIONED BELOW, WAS EFFECTED: SL.NO. DESCRIPTION OF ASSET FOUND ( IN RS) SEIZED (IN RS.) 1 CASH 8,04,350/- 6,00,000/- 2. JEWELLERY 19,05,762/- 10,79,559/- 3. OTHER ASSET (FDRS, SHARES, KVPS, IVPS ETC. 14,37,429/- 14,37,429/- FOLLOWING ARE THE CONCERNS OF THIS GROUP WHICH WERE COVERED UNDER SEARCH: A. M/S. MAHESHWARI ROSIN & TURPENTINE WORKS, HOSHIARPU R B. M/S. MAHESHWARI PAINT AND VANISH WORKS, HOSHIARPUR. C. M/S. MAHESHWARI ENTERPRISES, HOSHIARPUR. D. M/S. MAHESHWARI RESIN PRODUCTS, HOSHIARPUR. E. M/S. MAHESHWARI SYNTHETICS PVT. LTD. HOSHIARPUR. 6 3. THE BUSINESS ACTIVITIES OF ALL THESE CONCERNS WE RE INTERCONNECTED AND INTERMESHED AS THEY HAD COMMON W ORK PLACE AND BUSINESS PREMISES. THE GROUP IS OWNED, MANAGED AND RUN BY M/S. MAHESHWARI FAMILY HEAD BY SH. AMIN CHAND AND HIS TH REE SONS NAMELY, S/SH. VIJAY PARKASH, RAVINDER KUMAR AND SUB HASH CHANDER AND THEIR RESPECTIVE WIFES. 4. THE ASSESSEE, SH. VIJAY PARKASH MAHESHWARI IS A PARTNER IN THE FIRM M/S. MAHESHWARI ROSIN AND TURPENTIME WORKS, HA VING 25% STAKE. 5. IN RESPONSE TO THE NOTICE, ISSUED U/S 158BC OF T HE INCOME-TAX ACT, 1961, THE ASSESSEE FILED RETURN, DECLARING UND ISCLOSED INCOME FOR THE BLOCK PERIOD AT NIL. 6. ON DETAILED ANALYSIS OF THE SEIZED MATERIALS TA KING DUE ACCOUNT OF THE FEEDBACK SUBMISSIONS OF THE ASSESSEE, THE UN DISCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD WAS FIRST DETERM INED AT RS.21,56,912/- VIDE ASSESSMENT ORDER DATED 26.09.19 97. 6.1. THIS UNDISCLOSED INCOME COMPRISED OF THE FOLLO WINGS: A. RS.1,09,112/- BEING UNDISCLOSED INCOME SPENT FOR HOUSEHOLD EXPENSES. B. RS.40,500/- BEING UNEXPLAINED INVESTMENT IN SHAR ES. C. RS.20,07,300/- BEING BOGUS GIFT. 7. AGAINST THIS ORDER, THE ASSESSEE FILED APPEAL BEFOR E THE ITAT, AMRITSAR. THE LD. ITAT VIDE ITS ORDER DATED 04.12.2 000 ALLOWED RELIEF TO THE ASSESSEE BY DELETING THE ADDITION OF RS1,09,112/- AND REFERRING BACK THE ISSUES OF ADDITION OF RS.40,500/ - AND RS.20,07,300/- FOR FRESH CONSIDERATION BY THE AO. 8. THE DEPARTMENT BEING AGGRIEVED AGAINST THIS ORDER O F THE ITAT, AMRITSAR, CARRIED THE MATTER TO HONBLE P & H HIGH COURT ON 17.05.2001, THE VERDICT OF WHICH IS STILL AWAITED. VIDE THIS APPEAL, THE DEPARTMENT SOUGHT THE KIND OPINION OF HONBLE HIGH COURT ON THE FOLLOWING QUESTIONS OF LAW. A. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE TRIBUNAL WAS RIGHT IN LAW IN HOLDING THE GIFTS MADE BY SH. SURINDER KUMAR MAHESHWARI TO THE ASSESSEE AND H IS TWO 7 BROTHERS ALMOST IN EQUIVALENT AMOUNTS TO EACH TO BE GENUINE WITHOUT ADJUDICATING UPON THE CAPACITY OF THE DONOR ? B. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE TRIBUNAL WAS RIGHT IN LAW IN DIRECTING THE AO T O RECONSIDER THE GENUINENESS OF THE GIFTS WHEN THE AD DITION MADE BY TREATING THE GIFT AS NOT GENUINE IS JUSTIFI ED IN VIEW OF THE JUDGMENT OF THE HONBLE PUNJAB & HARYANA HIG H COURT IN THE CASE OF LAL CHAND KALRA VS. CIT 22 CTR 136 (P&H). C. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE TRIBUNAL WAS RIGHT IN LAW IN DIRECTING THAT IF ANY ADDITION IS SUSTAINED IN THE HANDS OF THE ASSESSEE, THE SAME SHOULD BE OFF SET WITH THE SURRENDER IN THE FIRM IN WHICH THE ASSESSE IS A PARTNER TO THE EXTENT OF HIS SHARE? D. WHETHER, ON THE FACTS AND IN HE CIRCUMSTANCES OF T HE CASE, THE TRIBUNAL WAS RIGHT IN LAW IN DELETING THE ADDIT ION OF RS. 20,07,300/- MADE ON ACCOUNT OF NRI GIFTS AND SIMULTANEOUSLY RESTORING THE ISSUE TO FILE OF A.O. WITH CERTAIN DIRECTIONS? 9. MEANWHILE, TO GIVE EFFECT TO THE FINDINGS OF LD . ITAT, AMRITSAR IN ITS ORDER DATED 04.12.2000, BLOCK ASSESSMENT WAS MADE FOR THE SECOND TIME ON 27.03.2002, DETERMING THE UNDISCLOSE D INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD UNDER CONSIDERATI ON AT RS. 20,07,300/- TREATING THE GIFT RECEIVED BY THE ASSES SEE AS ON-GENUINE. HOWEVER, THIS ADDITION WAS MADE ON PROTECTIVE BASIS . 10. BEING AGGRIEVED, THE ASSESSEE FILED APPEAL ONCE AGAIN, BEFORE LD. ITAT, AMRITSAR AGAINST THIS ORDER. 10.1. THE LD. ITAT, AMRITSAR VIDE ITS SECOND ORDER, IN THIS CASE DATED 16.03.2009 AGAIN SET ASIDE THE ISSUE OF GIFT TO THE FILE OF AO TO DECIDE THE SAME AFRESH. 11. THUS, THE CASE IS NOW BEFORE THE UNDERSIGNED FO R RE- DETERMINATION OF UNDISCLOSED INCOME FOR THE BLOCK P ERIOD FOR THE THIRD TIME IN COMPLIANCE TO THE ORDER OF THE LD. IT AT DATED 16.03.2009. 8 12. HOWEVER, BEFORE EMBARKING ON THE ASSESSMENT PRO PER, IT IS CLARIFIED THAT EMPHASIS THAT THE DETERMINATION OF U NDISCLOSED INCOME FOR THE BLOCK PERIOD UNDER CONSIDERATION IS BEING MADE ONLY TO GIVE EFFECT TO THE FINDINGS OF LD. ITAT, AMRITSA R AS HIGHLIGHTED IN ITS ORDER DATED 16.03.2009 WITHOUT PREJUDICE TO THE OUTCOME OF THE VERDICT, PENDING BEFORE HONBLE P & H HIGH COURT I N PURSUANCE OF THE APPEAL, MADE BY THE DEPARTMENT AGAINST THE FIRS T ORDER OF LD. ITAT DATED 04.12.2000. 5. THE AO AFTER ISSUING THE NOTICES TO BOTH THE PRE SENT ASSESSES ALONGWITH BROTHER OF THE ASSESSEE SH. SUBHASH CHAND ER AND TAKING INTO CONSIDERATION THE SUBMISSIONS OF THE ASSESSEE AND T HE DIRECTION OF THE ITAT, AMRITSAR BENCH VIDE PARA 23 OF HIS ORDER HELD THE A MOUNT OF RS.20,07,300/- AS GIFTS IN THE HANDS OF SH. VIJAY PARKASH AND RS.1 9,63,000/- AS BOGUS GIFTS IN THE HANDS OF SH. RAVINDER KUMAR MAHESHWARI. AND TREATED THE SAME AS ASSESSEES UNDISCLOSED INCOME FOR THE BLOCK PERIOD UNDER CONSIDERATION IN THE RESPECTIVE ORDERS OF BOTH THE ASSESSES. 6. THE LD. COUNSEL FOR THE ASSESSEE SH. SURINDER MA HAJAN, CA REPEATED THE ARGUMENTS, WHICH WERE MADE EARLIER BEFORE THE I TAT AND ALSO BEFORE THE AO IN THE PRESENT ASSESSMENT PROCEEDINGS. 7. THE LD. DR, ON THE OTHER HAND, SUBMITTED THE WRI TTEN SUBMISSIONS AND REPEATED THE ARGUMENTS WHICH WERE MADE BEFORE THE I TAT, IN THE FIRST ROUND, FOLLOWING WHICH THE ITAT HAS PASSED THE ORDER DATED 04.12.2000. 9 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. IT IS PERTINENT TO MENTION THE GROUNDS RAISE D BEFORE THE ITAT, AMRITSAR BENCH, IN THE FIRST ROUND AND ALSO THE FIN DINGS OF THE ITAT AMRITSAR BENCH VIDE PARA 6.7 AND PARA 7 IN ITS ORDE R DATED 04.12.2000 WHICH ARE REPRODUCED FOR THE SAKE OF CLARITY AS UNDER: 1. THAT THE IMPUGNED ORDER PASSED U/S 158BC IS NUL L AND VOID HAVING BEEN PASSED AFTER THE EXPIRY O THE PERI OD STIPULATED UNDER THE LAW. 2. THAT NO PROPER OPPORTUNITY OF BEING HEARD WAS GI VEN TO THE ASSESSEE. CONSEQUENTLY, THE ORDER OF THE AO BEI NG CONTRARY TO THE PRINCIPLES OF EQUITY AND NATURAL JU STICE IS NOT SUSTAINABLE IN THE EYES OF LAW. 3. THAT THE AO WAS NOT JUSTIFIED IN MAKING AN ADDIT ION OF RS.109112/- ON ACCOUNT OF ALLEGED UNDISCLOSED INCOM E SPENT ON HOUSEHOLD EXPENSES BY WRONGLY REJECTING TH E ASSESSEES EXPLANATION AND BY MAKING HIS OWN ESTIMA TE ON ERRONEOUS AND CONJECTURAL GROUNDS. BY ANY RECKON ING, THE ADDITION MADE IS HIGHLY EXCESSIVE. 4. THAT IN THE ABSENCE OF ANY MATERIAL FOUND DURING SEARCH PERTAINING TO HOUSEHOLD EXPENSES, THIS ISSUE WAS BE YOND THE PURVIEW OF PROCEEDINGS INITIATED U/S 158BD 5. THAT THE AO HAS ERRED IN MAKING AN ADDITION OF RS.40,500/- ON ACCOUNT OF ALLEGED UNDISCLOSED INVES TMENT IN SHARES ETC. BY WRONGLY DISBELIEVING THE AVAILABI LITY OF CASH IN THE HANDS OF THE ASSESSEE FOR THIS INVESTME NT. 6. THAT THE ADDITION OF RS.2007500/- MADE BY THE AO BY TREATING THE NRE GIFTS OF THE EQUAL AMOUNT RECEIVE D FROM ASSESSEES REAL BROTHER THROUGH PROPER BANKING CHAN NELS AS GENUINE IS ABSOLUTELY ILLEGAL AND UNWARRANTED. 10 7. THAT THE IMPUGNED GIFTS HAVING BEEN RECEIVED AN D DISCLOSED TO THE DEPARTMENT IN REGULARS RETURNS, WE RE BEYOND THE PURVIEW OF PROCEEDINGS INITIATED U/S 158 BB. THERE WAS NO MATERIAL TO DOUBT THE DEPOSITS IN NRE A/C. 8. THAT THE AO AFTER HAVING MADE HUGE ADDITIONS OF UNDISCLOSED INCOME IN THE HANDS OF THE FIRM IN WHIC H THE ASSESSEE IS A PARTNER, OUGHT TO HAVE GIVEN THE SET OFF OF THE NAME IN THE NAMES OF THE ASSESSEE AGAINST THE ALLEGED UNDISCLOSED INVESTMENTS/EXPENDITURE FOR WHICH SEPAR ATE ADDITIONS HAVE BEEN MADE THUS LEADING TO DOUBLE ADDITIONS. 6.7. WE HAVE HEARD BOTH THE PARTIES. THE FIRST F ACT REQUIRES A VERIFICATION THAT THE GIFTS WERE ALREADY ACCEPTED D URING THE ASSESSMENT PROCEEDINGS AND AS SUCH NO NEW INFORMATION WAS OBTAINED DURING THE SEARCH AND SEIZ URE OPERATIONS EXCEPT THE DOCUMENTS WHICH WERE AVAILABL E WITH THE ASSESSEE AND PRESENTED TO THE AO. WE DO NO T FIND ANY INFIRMITY IN A SITUATION WHERE THE SON KEE PS HIS PASS BOOKS IN THE SAFE CUSTODY OF HIS FATHER. THE OBSERVATIONS OF THE AO ARE NOT RELEVANT TO DOUBT TH E GENUINENESS WITH HIS FATHER OR BROTHER. WE ARE OF T HE OPINION THAT THE A.O. HAS ALSO MISUNDERSTOOD THE WH OLE SCHEME OF NRE A/C . IN NRI A/C THERE CANNOT BE ANY DEPOSIT MADE BY CASH OR IN FOREIGN CURRENCY IN INDI A WHICH IS PROHIBITED BY LAW. THE NRI A/C IS MAINTAI NED IN THE BANK WHERE DEPOSITS WILL COME FROM THE FOREI GN COUNTRY BY MONEY TRANSFER DRAFTS OR OTHER MODES. UN DER NO CIRCUMSTANCES THE CASH DEPOSITS CAN BE MADE OF FOREIGN CURRENCY IN SUCH NRI A/C. THE NRI A/C IS MAINTAINED IN THE NAME OF A PERSON WHO HOLDS SUCH ACCOUNT. IN THE CASE OF THE APPELLANT, THE PERSON WHO IS HOLDING THE ACCOUNT IS REAL BROTHER WHO IS WELL SET TLED IN USA. THERE MAY BE HUNDRED AND ONE REASONS AND OCCASIONS FOR A BROTHER TO HELP HIS OTHER BROTHERS WHO ARE WELL PLACED IN LIFE. WE DO NOT FIND ANY EVIDENCE TO SUPPORT AN ADDITION ON SURMISES AND CONJECTURES. T HIS IS 11 CLEAR CASE OF LACK OF PROPER OPPORTUNITY AND SUCH LACK OF OPPORTUNITY WAS RESULTED IN COLLECTION OF INCORRECT FACTS. THE APPELLANT HAS TAKEN STAND ON MERIT THAT NRI A/C IS MAINTAINED BY SH. SURINDER KUMAR MAHESHWARI AND DEPOSITS ARE MADE BY HIM FROM HIS ACCOUNT IN USA. T HE GIFTS HAVE COME FROM THE NRE ACCOUNT. ON MERIT THE APPELLANT SHOULD HAVE BEEN GRANTED APPROPRIATE OPPORTUNITY. THE SECOND STAND TAKEN BY THE APPELLAN T REQUIRES VERIFICATION. IN CASE THESE FACTS WERE MEN TIONED AND SUBMITTED TO THE AO BEFORE THE SEARCH AND SEIZU RE AND THEN ACCEPTED BY HIM THEN UNDER THE CIRCUMSTANC ES ADDITION CANNOT BE MADE. HOWEVER, WE REFER THE MATT ER TO THE FILE OF THE AO TO GRANT OPPORTUNITY OF BEING HE ARD AND DECIDE THE ISSUE AS PER LAW AND AS PER ABOVE DIRECT IONS. 7. THE LD. COUNSEL FOR THE APPELLANT HAS PLEADED T HAT IN CASE ANY ADDITION IS CONFIRMED OR MADE THE APPEL LANT SHOULD BE GIVEN BENEFIT OF SURRENDER OF ACCOUNTED M ONEY TO THE TUNE OF RS.40 LAKHS IN VARIOUS FIRMS AND COMPANIES. WE FIND NOT MERIT IN THIS SUBMISSION. TH E APPELLANT GROUP HAS NOT TAKEN BENEFIT OF SUCH SURRE NDER NOR HAS AO LINKED THIS SURRENDER WITH ANY OF THE UNDISCLOSED ASSET. IN CASE OF ANY ADDITION MADE AFT ER GIVING EFFECT TO THE ABOVE DIRECTIONS THE ADDITION SHOULD BE OFF-SETTED WITH THE SURRENDERED INCOME. 8. THE OTHER GROUNDS TAKEN BY THE APPELLANT ARE OF GENERAL NATURE AND CALL FOR NO COMMENTS. 9. IN THE RESULT, THE APPEAL OF THE APPELLANT IS P ARTLY ALLOWED. 9.1. ALSO, THE ORDER OF THE ITAT, AMRITSAR BENCH, D ATED 16.03.2009 IN THE SECOND ROUND IS REPRODUCED FOR THE SAKE OF CLARITY AS UNDER: 7. WE HAVE HEARD BOTH THE PARTIES AND HAVE PERUSED THE RELEVANT RECORD AVAILABLE WITH US. WE HAVE GONE THROUGH THE ORDERS PASSED 12 IN THE FIRMS CASE IN I.T.(SS)A. NOS.5, 6, 7, 8 & 9( ASR)/2002. WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE IN THE CASE OF THE PRESENT ASSESSEES/APPELLANTS (PARTNERS OF THE FIRMS ) IS INTER- CONNECTED WITH THE CASES OF THE FIRMS AND ANY DECIS ION TAKEN IN THE CASES OF THE FIRMS WOULD BE DIRECTLY AFFECTED ON TH E CASE OF THE ASSESSEES (THE PRESENT APPELLANTS). NO DOUBT THE A PPEALS FILED BY THE FIRM (MENTIONED ABOVE) AND THE PRESENT APPEALS ARE COMING TOGETHER ON THE BOARD BUT ON 7-7-2008 THE PRESENT A PPEALS HAVE BEEN ADJOURNED FOR FURTHER DATES BUT FINALLY CAME U P FOR HEARING BEFORE THIS BENCH ON TO-DAY, I.E., 16-3-2009. AFTE R HEARING BOTH THE PARTIES, WE ARE OF THE CONSIDERED OPINION THAT WHEN THE SUBSTANTIVE ADDITION MADE IN THE HANDS OF THE FIRMS HAS ALREADY BEEN SET-ASIDE TO THE A.O., THE PROTECTIVE ADDITION MADE IN THE HANDS OF THE ASSESSEES-PARTNERS SHOULD ALSO BE SET- ASIDE TO THE A.O. TO DECIDE THE ISSUE IN DISPUTE FRESH UNDER THE LAW KEEPING IN VIEW OF THE DECISION PASSED IN THE CASES OF THE FIRMS BE CAUSE THE ISSUE IN DISPUTE IN THE CASES OF THE PARTNERS (THE ASSESSEES /APPELLANTS) IS INTER-CONNECTED WITH THE ISSUE INVOLVED IN THE CASE S OF THE FIRMS. SO THEREFORE IN THE INTEREST OF JUSTICE, WE ARE SET TING ASIDE THE ISSUE IN DISPUTE TO THE A.O. TO DECIDE THE SAME FRESH UND ER THE LAW AFTER GIVING THE OPPORTUNITY TO THE ASSESSEES BUT KEEPING IN VIEW THE DECISION PASSED IN THE CASES OF THE FIRMS, MENTIONE D ABOVE. 8. IN THE RESULT, ALL THE APPEALS FILED BY THE ASSESSE ES ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH MARCH, 2009. 10. WE HAVE OBSERVED FROM THE GROUNDS OF APPEAL BE FORE US IN THE PRESENT APPEALS IN SPECIFIC GROUNDS 3 TO 10 IN BOTH THE APP EALS, WHICH ARE IDENTICALLY WORDED EXCEPT THE QUANTUM OF GIFTS. THE SAID GROUND S HAVE BEEN TAKEN BY THE ASSESSEE, IN THE FIRST ROUND, BEFORE THE ITAT, AMRITSAR BENCH, EITHER IN THE FROM OF GROUNDS OR IN THE FORM OR ARGUMENTS WHI CH HAVE BEEN DECIDED BY THE ITAT VIDE PARA 6.7 & 7 VIDE ITS ORDER DATED 04 .12.2000 WHICH HAS BEEN 13 REPRODUCED HEREINABOVE. IN THE FIRST ROUND THE ASSE SSES MATTER ON MERIT WAS REFERRED TO THE FILE OF THE AO TO GRANT OPPORTUNITY OF BEING HEARD AND TO DECIDE THE ISSUE WHETHER GIFTS HAVE COME FROM NRE A CCOUNT ON THE BASIS WHEN THERE WERE ARGUMENTS BEFORE THE ITAT IN THE FI RST ROUND THAT THERE WAS A LACK OF OPPORTUNITY TO THE ASSESSEE. ACCORDINGLY, THE OPPORTUNITY WAS GIVEN AND IN THE SECOND ROUND, THE ITAT VIDE ORDER DATED 16.03.2009 HAD OBJECTED TO THE ASSESSMENTS MADE BY THE AO BEING PROTECTIVE ASSESSMENTS WHICH SHOULD HAVE BEEN DONE ALONGWITH THE FIRM SINCE THE MATTER IS INTER- CONNECTED. ACCORDINGLY, THE AO IN THE PRESENT PROCE EDINGS AFTER CONSIDERING THE ASSESSMENT OF THE FIRM AND GIVING OPPORTUNITY T O THE ASSESSEE PASSED THE ORDER VIDE PARA 21.1 & 21.2 AT PAGES 7 & 8 WHICH FO R THE SAKE OF CLARITY IS REPRODUCED AS UNDER: 21.1 THE ASSESSEES SUBMISSION HAS BEEN DULY CONSI DERED VIS--VIS THE RECORDS AVAILABLE AT THIS END. IN THIS CONNECTI ON, IT MAY BE MENTIONED HERE THAT ASSESSMENT ORDER WAS PASSED ON 27.03.2002 KEEPING IN VIEW THE FINDINGS OF LD. ITAT, AMRITSAR IN ITS ORDER DATED 04.12.2000. THE ASSESSEE FILED APPEAL BEFORE THE SA ME TRIBUNAL AGAINST THIS ORDER DATED 27.03.2002 WHICH RESULTED IN ISSUA NCE OF FRESH ORDER ON 16.03.2009, NATURALLY IN SUPERCESSION OF EVERYTH ING ELSE IN THE SUBJECT, IN WHICH IT WAS OBSERVED THAT THE ISSUE OF GIFT BE DECIDED KEEPING IN VIEW THE DECISION PASSED IN THE CASE OF THE FAMILY FIRMS OF THE ASSESSEE. THUS THE FINDINGS CONTAINED IN LD. IT ATS ORDER DATED 04.12.2000 SHOULD HAVE NO BEARING ON THE PRESENT AS SESSMENT ORDER. 21.2. NOW COMING TO THE MERIT OF THE ASSESSEES SUB MISSION REGARDING BENEFIT OF TELESCOPY, IT MAY BE MENTIONED HERE THAT THE MATTER WOULD GET CLEAR IF THE SEQUENCE AND CHRONOLO GY OF EVENTS ARE METICULOUSLY FOLLOWED. HERE THE ASSESSEE FIRST RECE IVED SOME FUNDS IN 14 THE FORM OF ALLEGED GIFS. AFTER THIS, IN HIS OWN VE RSION, HE INVESTED THIS FUND OR A PORTION THEREOF THROUGH INTRODUCTION OF C APITAL IN HIS FAMILY FIRMS. NOW, THESE FIRMS ON USING THIS FUND, GENERAT ED INCOME, A PORTION OF WHICH MIGHT HAVE BEEN UNDISCLOSED IN AS MUCH AS THE SAME WERE NOT BROUGHT TO TAX. IT IS APPARENT FROM THE AB OVE MENTIONED SEQUENCES THAT THE GENUINENESS OF OTHERWISE OF THE ALLEGED GIFTS HAVE NOTHING TO DO WITH ITS END USE WHEN IT MAY OR MAY N OT HAVE GENERATED INCOME, WHICH MAY OR MAY NOT BE DISCLOSED AT THE H AND OF THE FIRMS. FOR THE SAKE OF ARGUMENT, IF IT IS PRESUMED THAT TH E GIFTS ARE PROVED NON-GENUINE BUT THE INCOME GENERATED AT THE HAND OF THE FIRM ON USING THIS FUND IS DULY DISCLOSED FOR TAX PURPOSE, EVE N TEN THIS ALLEGED GIFT WILL BE TREATED AS INCOME AT THE HAND OF THE RECIP IENT-INDIVIDUAL. ON THE SAME ANALOGY, THE SAME IS TRUE CONVERSELY. THAT IS TO SAY, DETERMINATION OF UNDISCLOSED INCOME AT THE HAND OF THE FIRMS IS ONE THING AND GENUINENESS OR OTHERWISE OF THE ALLEGED G IFS RECEIVED BY ITS PARTNERS IS TOTALLY DIFFERENT ONE. ONE HAS GOT NO R ELATIONSHIP WHATSOEVER WITH THE OTHER ONE. 10.1 THE AO VIDE PARA 8 WHICH HAS BEEN REPRODUCED H EREINABOVE HAS MENTIONED THAT THE DEPARTMENT IS IN APPEAL AGAINST THE FIRST ORDER OF THE ITAT FOR WHICH QUESTION OF LAW HAS BEEN FRAMED AND REPRODUCED IN THE ASSESSMENT ORDER, IS REPRODUCED HEREINABOVE. 10.2 IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND IN VIEW OF OUR ORDER OF ITAT, AMRITSAR BENCH, IN BOTH THE ASSESSES I.E. SH. VIJAY PARKASH MAHESHWARI IN ITA NO.38/ASR/1997 DATED 04.12.2000 A ND IN THE CASE OF RAVINDER KUMAR MAHESHWARI, WHICH IS ALSO DATED 04.1 2.2000 IN ITA NO.36/ASR/1997, WE ARE OF THE VIEW THAT SINCE THE I SSUES RAISED BEFORE THE ITAT IN THE FIRST ROUND ARE ALSO THE ISSUES BEFORE US IN THE THIRD ROUND AND 15 MATTER HAS ALREADY BEEN DECIDED BY THE ITAT VIDE IT S ORDER DATED 04.12.2000 IN THE CASE OF SH. VIJAY PARKASH MAHESHWARI AND SH. RAVINDER KUMAR MAHESHWARI, WHICH RELEVANT PARAS HAVE BEEN REPRODUC ED HEREINABOVE, WHERE THE GIFTS RECEIVED BY BOTH THE ASSESSES HAVE BEEN T REATED AS GENUINE. THE RELEVANT DIRECTIONS OF THE ITAT IN THE SECOND ROUND VIDE ORDER DATED 16.03.2009 HAVE BEEN COMPLIED WITH BY THE PRESENT A O VIDE ORDER DATED 31.12.2009 (VIDE PARA 21.1 & 21.2 REPRODUCED HEREIN ABOVE). THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, ALL THE IS SUES HAVE ALREADY BEEN DECIDED BY THE ITAT IN THE FIRST ROUND WHERE ALL TH E GROUNDS OF THE ASSESSEE RAISED IN THE FIRST ROUND IN ORDER DATED 04.12.2000 AND ALSO BEFORE US DECIDED IN FAVOUR OF THE ASSESSEE WHICH ARE SUBJECT MATTER BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT EXCEPT THE OPPORTUNITY WHICH W AS TO BE GIVEN TO THE ASSESSEE HAD BEEN GIVEN IN THE FIRST ROUND AND IN T HE PRESENT ROUND. THE NECESSARY DIRECTIONS HAVE BEEN COMPLIED WITH BY TH E AO IN BOTH THE ROUNDS. THEREFORE WE DO NOT COMMENT UPON OUR APPEAL ORDER D ATED 04.12.2000 AND DATED 16.03.2009 EXCEPT THE OPPORTUNITIES TO BE GI VEN BY THE AO HAVE BEEN COMPLIED WITH BY THE AO AND ACCORDINGLY ALL THE GRO UNDS RAISED BEFORE US WHICH HAVE ALREADY BEEN ALLOWED BY THE ITAT IN THE RESPECTIVE ORDERS MENTIONED HEREINABOVE ARE ALLOWED, AS IT IS AND OUR ORDER DATED 04.12.2000 IS APPLICABLE IN THE PRESENT CASE EXCEPT THE DIREC TIONS WHICH HAVE BEEN GIVEN 16 BY THE ITAT IN BOTH THE ORDERS HAVE BEEN COMPLIED W ITH BY THE AO IN BOTH ROUNDS , AS MENTIONED HEREINABOVE AND WE CANNOT COMMENT OR AMEND OUR ORDER IN VIEW OF THE MATTER IS SUB-JUDICE BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT, AS MENTIONED BY THE AO IN THE PRESENT ROUND VIDE PARA 8 OF HIS ORDER MENTIONED HEREINABOVE. THU S, THE GROUNDS NO. 3 TO 10 IN ITA NOS.1 & 2(ASR)/2010 IN BOTH THE ASSESSEES ARE ALLOWED. 12. AS REGARDS GROUNDS NO. 1 & 2 WITH REGARD TO DEM AND NOTICE , THESE GROUNDS WERE NOT BEFORE THE ITAT IN THE FIRST AND SECOND NOR WERE DIRECTED BY ITAT IN BOTH THE ROUNDS TO BE DECIDED BY THE AO . ALSO THESE GROUNDS HAVE NOT BEEN PRAYED TO BE ADMITTED AS ADDITIONAL G ROUNDS BEFORE US. THEREFORE, WE ARE NOT ADMITTING THESE GROUNDS AND A CCORDINGLY NO DECISION IS BEING MADE. 13. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE S IN ITA NO. 01 (ASR)/2010 & ITA NO.02(ASR)/2010 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29TH NOVEMBER, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 29TH NOVEMBER, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: 2. THE 3. THE CIT(A) 17 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.