Skytone Capital Services Ltd., V. ACIT, Range II,

ITSSA 145/DEL/2007

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1198 (ITAT-DELHI)
• Duration Of Justice: 13 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 25-05-2017
• Assessment Year: misc
• Appeal Filed On: 19-07-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAKESH GUPTA
• Keywords: Unexplained investment; Search and seizure; Document seized; Block assessment; Documents seized
• Section: 69C; 143(3); 143(2); 158BC; 13; 158BD; 132

Judgement Text

IN TH E INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G : NEW DELHI (THROUGH VIRTUAL HEARING) BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER IT (SS) A NO. 145 /DEL/20 0 7 BLOCK ASSESSMENT PERIOD : 01.041986 TO 14.08.1996 M/S SKYTONE CAPITAL SERVICES LTD., B - 532, NEHRU GROUND, FARIDABAD. PAN: AAICS7755D VS ACIT, RANGE - 11, FARIDABAD. (APP ELL A NT ) (RESPONDENT) A SSESSEE BY : SHRI RAKESH GUPTA, ADVOCATE RE VENUE BY : SHRI H.K. CHOUDHARY, CIT, DR DATE OF HEARING : 28 . 0 6 . 20 2 1 DATE OF PRONOUNCEMENT : 08 . 0 7 . 20 2 1 ORDER PER R. K. PANDA, AM : TH IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 2 5 TH JUNE, 2007 PASSED U/S 158BD/143(3)/254 OF THE IT ACT, 1961 FOR THE BLOCK ASSESSMENT PERIOD 01.041986 TO 14.08.1996. 2. THIS IS THE SECOND ROUND OF LITIGATION BEFORE THE TRIBUNAL. VIDE IT(SS)A NO.108/DEL./1998, ORDER DATED 31 ST AUGUST, 2006, THE TRIBUNAL HAD RESTORED THE ISSUE TO THE FILE OF THE AO TO PASS A FRESH OR DER WITH CERTAIN DIRECTIONS. ITA NO. 145 /DEL/20 07 2 ACCORDINGLY, THE AO HAS PASSED THE ORDER ON 25 TH JUNE, 2007 AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT A SEARCH AND SEIZURE OPERATION U/S 132 OF THE IT ACT TOOK PLACE IN THE CASE OF M/S MANUFINLEASE LTD. GROUP OF CASES ON 14 TH AUGUST, 1996. THE ASSESSEE IS AN ASSOCIATE COMPANY OF M/S MANUFINLEASE LTD. DURING THE COURSE OF SEARCH OPERATIONS, DOCUMENTS RELATING TO THE ASSESSEE WERE ALSO FOUND AND SEIZED. ACCORDINGLY, PROCEEDINGS U/S 158BD WERE INITIATED ON 4 TH SEPTEMBER, 1997. IN RESPONSE TO TH E SAID N OTICE, THE ASSESSEE FILED RETURN FOR THE BLOCK PERIOD DECLARING NIL UNDISCLOSED INCOME. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTED THAT VARIOUS DOCUME NTS RELATING TO THE ASSESSEE WERE FOUND AND SEIZED DURING THE SEARCH OPERATION AT THE BUSINESS/RESIDENTIAL PREMISES OF M/S MANUFINLEASE LTD. AND ITS DIRECTORS. THE AO, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, CONFRONTED THE ABOVE SEIZED DOCUMENTS AND ASKED THE ASSESSEE TO EXPLAIN THE VARIOUS TRANSACTIONS CONTAINED THEREIN. IN ABSENCE OF ANY SATISFACTORY EXPLANATION GIVEN BY THE ASSESSEE, THE AO MADE VARIOUS ADDITIONS AND DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.39,62,616/ - . 5. AGGRIEVED WI TH SUCH ORDER OF THE AO , THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS: - 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. ASSESSING OFFICER HAS ERRED IN LAW & ON FACTS IN ASSUMING JURISDICTION OVER THE ITA NO. 145 /DEL/20 07 3 CASE OF THE APPELLANT U/S.158 BD OF THE ACT AND THAT TOO WITHOUT THERE BEING MANDATORY SATISFACTION UNDER THAT SECTION. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. ASSESSING OFFICER HAS ERRED IN LAW & ON FACTS IN ASSUMING J URISDICTION OVER THE CASE U/S 158BD AND ISSUING NOTICE UNDER THAT SECTION EVEN THOUGH NO SEIZED RECORDS WERE HANDED OVER TO HIM PRIOR TO THE ISSUE OF NOTICE U/S 158 BD DT. 4.9.97, AND MORE SO WHEN AO ISSUING NOTICE U/S 158 BD OR AO FRAMING THE IMPUGNED ASS ESSMENT ORDER DID NOT HAVE JURISDICTION OVER THE APPELLANT. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE NO NOTICE U/S. 158 BD WAS EVER SERVED UPON THE APPELLANT COMPANY, MORE SO AFTER FILING OF RETURN OF INCOME AND THEREFORE THE BLOCK ASSESSMENT FRAMED IS ILLEGAL AND VOID ABINITIO. 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND WITHOUT PREJUDICE TO ANY OTHER GROUND, NOTICE U/S.158BD COULD NOT HAVE BEEN ISSUED TO THE APPELLANT COMPANY AND THAT TOO AFTER AUGUST 199 7. 5. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. ACIT HAS ERRED IN LAW AND ON FACTS IN FRAMING ASSESSMENT WITHOUT ISSUING MANDATORY NOTICE UNDER SECTION 143 (2) IN ACCORDANCE WITH THE LAW. 6. THAT HAVING REGARD TO THE FACTS & CIR CUMSTANCES OF THE CASE LD. ACIT HAS ERRED IN LAW AND ON FACTS IN TREATING RS. 84584 (RS.9320, RS. 10000, RS. 15264, RS. 50000) UNDER THE HEADS INCOME TAX EXPENSES, FDR KANTA DEVI, CAPITAL A/C RRA AND CASH RECEIVED FROM RAJKUMAR JI IN DOCUMENT NO 2 AS UNDIS CLOSED INCOME OF THE ASSESSEE. 7. THAT HAVING REGARD TO THE FACTS & CIRCUMSTANCES OF THE CASE LD. ACIT HAS ERRED IN LAW AND ON FACTS IN TREATING RS. 3,50,060 UNDER THE HEAD ENTRY INCOME IN DOCUMENT NO 2. 8. THAT HAVING REGARD TO THE FACTS & CIRCUMSTANC ES OF THE CASE LD. ACIT HAS ERRED IN LAW AND ON FACTS IN TREATING RS. 6,00,000 UNDER THE HEAD SHARE APPLICATION IN DOCUMENT NO 2 AS UNDISCLOSED INCOME OF THE ASSESSEE. 9. THAT HAVING REGARD TO THE FACTS & CIRCUMSTANCES OF THE CASE LD. ACIT HAS ERRED IN LAW AND ON FACTS IN MAKING ADDITION OF RS. 473476 ON ACCOUNT OF EXCESS OF DEBIT BALANCES APPEARING IN VARIOUS PAGES OF DOCUMENT NO 2 SEIZED FROM RESIDENCE OF SH ANIL JINDAL OVER BALANCES APPEARING BOOKS OF ACCOUNTS VIDE PARA 8(III) PAGE 11 - 12 OF THE ASSESS MENT ORDER UNDER SECTION 69C OF THE ACT. 10. THAT HAVING REGARD TO THE FACTS & CIRCUMSTANCES OF THE CASE LD. ACIT HAS ERRED IN LAW AND ON FACTS IN MAKING AN ADDITION OF RS.363330/ - AS UNDISCLOSED ITA NO. 145 /DEL/20 07 4 INCOME ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN HO USING SOCIETY APPEARING IN DOCUMENT NO 2. 11. THAT HAVING REGARD TO THE FACTS & CIRCUMSTANCES OF THE CASE LD. ACIT HAS ERRED IN LAW AND ON FACTS IN MAKING AN ADDITION OF RS. 545500/ - AS UNDISCLOSED INCOME ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN PURCHASE OF PROPERTY AT NEW FRIENDS COLONY, NEW DELHI ON THE BASIS OF ALLEGED D.NO.2. 12. THAT HAVING REGARD TO THE FACTS & CIRCUMSTANCES OF THE CASE LD. ACIT HAS ERRED IN LAW AND ON FACTS IN MAKING AN ADDITION OF RS. 1300000/ - , ON ACCOUNT OF ALLEGED UN EXPLAINED INVESTMENT IN OFFICE A/C AS UNDISCLOSED INCOME ON THE BASIS OF ALLEGED D.NO.2. 13. THAT HAVING REGARD TO THE FACTS & CIRCUMSTANCES OF THE CASE LD. ACIT HAS ERRED IN LAW AND ON FACTS IN NOT GIVING THE CREDIT OF AN AMOUNT OF RS. 23,38,771 APPEAR ING IN NAME OF ASSESSEE IN DOCUMENT NO 35/11 SEIZED FROM MANU FINLEASE LTD. 14. THAT HAVING REGARD TO THE FACTS & CIRCUMSTANCES OF THE CASE LD. ACIT HAS ERRED IN LAW AND ON FACTS IN MAKING AN ADDITION ON ACCOUNT OF DOCUMENT 2 SEIZED FROM RESIDENCE OF SH . ANIL JINDAL. 15. THAT HAVING REGARD TO THE FACTS & CIRCUMSTANCES OF THE CASE LD. ACIT HAS ERRED IN LAW AND ON FACTS IN MAKING AN ADDITION OF RS. 37115/ - , ON ACCOUNT OF ALLEGED NEGATIVE CASH BALANCE AND ENTRIES APPEARING IN DOCUMENT NO. 27 SEIZED FROM. MANU FINLEASE LTD. 16. THAT HAVING REGARD TO THE FACTS & CIRCUMSTANCES OF THE CASE LD. ACIT HAS ERRED IN LAW AND ON FACTS IN MAKING AN ADDITION OF RS.430225/ - , ON ACCOUNT OF ALLEGED NEGATIVE CASH BALANCE AS PER DOCUMENT NO 3 SEIZED FROM SH ANIL JINDAL. 17. THAT HAVING REGARD TO THE FACTS & CIRCUMSTANCES OF THE CASE LD. ACIT HAS ERRED IN LAW AND ON FACTS IN MAKING AN ADDITION OF RS. 812950/ - , ON ACCOUNT OF ALLEGED TRANSACTIONS AS PER PAGE 2 OF DOCUMENT NO 1A, SEIZED FROM SH RAJ KUMAR AGARWAL. 18. THA T THE APPELLANT CRAVES THE LEAVE TO ADD, AMEND, MODIFY, DELETE ANY OF THE GROUND(S) OF APPEAL BEFORE OR AT THE TIME OF HEARING AND ALL GROUNDS ARE INDEPENDENT AND WITHOUT PREJUDICE TO EACH OTHER. 6. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY CHALLENGED TH E ORDER OF THE AO ON JURISDICTION ISSUE. HE SUBMITTED THAT THE JURISDICTION U/S 158BD AND THE ITA NO. 145 /DEL/20 07 5 JURISDICTIONAL CONDITIONS WERE NOT FULFILLED. THE LD. COUNSEL, AT THE OUTSET, DREW THE ATTENTION OF THE BENCH TO THE FOLLOWING PAGES OF THE PAPER BOOK WHICH ARE AS UNDER: - PB 4 - NOTICE U/S 158BD DATED 04.09.1997 BY ACIT COY. CIRCLE 3(9) DELHI. PB 319 - 320 - LETTER FROM AO OF SEARCHED PERSON TO AO OF ASSESSEE DATED 26.08.1997 ACIT, COY. CIRCLE 3(9) DELHI ASKING ACIT TO TAKE OVER THE BOOKS OF ACCOUNTS FOR THE PURP OSE OF SECTION 158BD. PB 321 - LETTER FROM AO OF SEARCHED PERSON DATED 26.02.1998 TO SHOW BOOKS WERE NOT HANDED OVER TILL THEN TO ACIT, INV CIRCLE, FBD. WHAT TO SAY PRIOR TO 4.9.1997 I.E. THE DATE ON WHICH JURISDICTION U/S 158BD WAS ASSUMED. PB 322 - LET TER FROM ACIT CIRCLE - I TO ACIT, INV CIRCLE, FBD DATED 24.08,1998 HANDING OVER BOOKS WHICH SHOWS THAT ON 4.9.1997 WHEN JURISDICTION U/S 158 BD WAS ASSUMED, BOOKS ETC. OF THIS ASSESSEE WERE NOT HANDED OVER TO THE ACIT VIZ. AO OF THIS ASSESSEE. PB 323 - LETT ER DATED 01.09.1998 ACKNOWLEDGING THE RECEIPT OF THE SEIZED MATERIAL WHICH SHOWS THAT ON 4.9.1997 WHEN JURISDICTION U/S 158 BD WAS ASSUMED, BOOKS ETC. OF THIS ASSESSEE WERE NOT HANDED OVER TO THE ACIT VIZ. AO OF THIS ASSESSEE. PB 262 - 284 - ASSESSMENT ORDE R DATED 29.09.1998 BY ACIT, INV CIRCLE FBD. PB 326 - LETTER FROM ACIT, INV CIRCLE, FBD DATED 31.08.1998 ASKING FOR MORE SEIZED RECORDS FROM AO OF THE SEARCHED PERSON WHICH SHOWS THAT ON 4.9.1997 WHEN JURISDICTION U/S 158 BD WAS ASSUMED, BOOKS ETC. OF THI S ASSESSEE WERE NOT HANDED OVER TO THE ACIT VIZ. AO OF THIS ASSESSEE. PB 327 - 328 - 332 - LETTER FROM AO OF SEARCHED PERSON DATED 01.09.1998 SUPPLYING TO ACIT, INV CIRCLE, FBD THE SEIZED MATERIAL WHICH SHOWS THAT ON 4.9.1997 WHEN JURISDICTION U/S 158 BD WAS ASSUMED, BOOKS ETC. OF THIS ASSESSEE WERE NOT HANDED OVER TO THE ACIT VIZ. AO OF THIS ASSESSEE. PB 333 - LETTER FROM AO TO ACIT, INV CIRCLE, FBD DATED 01.09.1998 ACKNOWLEDGING THE RECEIPT OF SEIZED MATERIAL FROM AO OF THE SEARCHED PERSON WHICH SHOWS THAT ON 4.9.1997 WHEN JURISDICTION U/S 158 BD WAS ASSUMED, BOOKS ETC. OF THIS ASSESSEE WERE NOT HANDED OVER TO THE ACIT VIZ. AO OF THIS ASSESSEE. PB 335 - LETTER DATED 18.09.1998 FROM ACIT, INV CIRCLE, FBD ASKING ADIT TO GIVE HIM THE SEIZED MATERIAL WHICH SHOW S THAT ON 4.9.1997 WHEN JURISDICTION ITA NO. 145 /DEL/20 07 6 U/S 158 BD WAS ASSUMED, BOOKS ETC. OF THIS ASSESSEE WERE NOT HANDED OVER TO THE ACIT VIZ. AO OF THIS ASSESSEE. PB 5 - 6 - ASSESSEE S LETTER RAISING THE ISSUE OF JURISDICTION BEING BAD IN LAW. PB 1 - 3 - ITAT IN FIRST ROUN D ORDER SAYS THAT ALL ISSUES INCLUDING LEGAL ARE OPEN. PB 91 - LETTER TO AO IN REMAND PROCEEDING SAYS THAT THERE ARE ERRORS IN NOTICE ISSUED U/S 158BD. 7. THE LD. COUNSEL FOR THE ASSESSEE, REFERRING TO THE FOLLOWING DECISIONS, SUBMITTED THAT IF THE SEIZ ED MATERIAL, ETC. WAS NOT HANDED OVER , THE 158BD JURISDICTIONAL CONDITIONS CANNOT BE SAID TO HAVE BEEN MET: - I) MANISH MAHESHWARI VS. ACIT, (2007) 289 ITR 0341 (SC); II) CIT VS. SUNIL BHALLA, (2011) 336 ITR 0550 (GUJ); III) CIT VS. DAWN VIEW FARMS, (2008) 15 DTR 0083 , (2009) 224 CTR 0504 (DEL); IV) SHORELINE HOTEL (P) LTD. VS. DCIT, (2008) 116 TTJ 0536 (MUM) 297 ITR 0155; V) LUNAWAT JAYANT MANIKLAL VS. DCIT, (2008) 112 ITD 0268 (PUNE); & VI) NITIN P. SHAH ALIAS MODI VS. DCIT, (2005) 276 ITR 0411 (GUJ) 8. THE LD. COUNSEL FOR TH E ASSESSEE, IN HIS SECOND PLANK OF ARGUMENT SUBMITTED THAT SATISFACTION MUST BE RECORDED BY THE OFFICER ISSUING NOTICE U/S 158BD AND NOT BY ANY OTHER OFFICER. REFERRING TO THE NOTICE ISSUED U/S 158BD DATED 4 TH SEPTEMBER, 1997 ISSUED BY THE ACIT, COMPANY CI RCLE 3(9), COPY OF WHICH IS PLACED AT PAGE 4 OF THE PAPER BOOK, H E SUBMITTED THAT THE SATISFACTION IN THE INSTANT CASE U/S 158BD HAS NOT BEEN RECORDED BY THE AO OF THE ASSESSEE . THEREFORE, THE PROCEEDINGS ARE ITA NO. 145 /DEL/20 07 7 NULL AND VOID. FOR THE ABOVE PROPOSITION, THE LD. COUNSEL REFERRED TO THE DECISION OF THE HON BLE CALCUTTA HIGH COURT IN THE CASE OF SUBHASH CHANDRA BHANIRAMKA VS. ACIT, (2010) 320 ITR 0349 (CAL) . 9. THE LD. COUNSEL SUBMITTED THAT THE NOTICE ISSUED U/S 158BD DATED 4.9.1997 NEITHER INDICAT ED ANY MATER IAL OR BASIS ON WHICH IT WAS ISSUED, NOR INDICAT ED THE PERSON IN WHOSE CASE SEARCH WAS CONDUCTED AND MATERIAL FOUND RELATING TO ASSESSEE, NOR INDICAT ED ANY SATISFACTION OF AO AS REQUIRED UNDER SECTION 158BD . THEREFORE, SUCH SATISFACTION IS VAGUE AND INVAL ID AND, THEREFORE, CANNOT FURNISH LEGAL FOUNDATION OF 158BD. REFERRING TO PAGE 4 OF THE PAPER BOOK, WHICH IS THE N OTICE ISSUED U/S 158BD DATED 04.09 . 997 BY THE ACIT C OY. CIRCLE 3(9) , HE SUBMITTED THAT THIS SHOWS THAT THERE IS NOTHING TO THE ABOVE EFFECT WH ICH C OURTS CONSIDER AS CONDITIONS PRECEDENT. FOR THE ABOVE PROPOSITION, THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. NITS SOFTWARE LTD., (2008) 8 DTR 0269 (DEL) AND THE DECISION OF THE HON BLE DELHI HIGH COURT REPORTED IN 299 ITR 83 (DEL) . 10. THE LD. COUNSEL FOR THE ASSESSEE IN HIS NEXT PLANK OF ARGUMENT SUBMITTED THAT NOTIC E U/S 143(2) WAS NOT ISSUED IN THIS CASE AFTER FILING OF R ETURN OF INCOME ON 14.9 .1 998. THE N OTICE U/S 143(2) WAS ISSUED ON 13.2.1998 AND, THUS , JURISDICTION ASSUMED BY THE AO TO PASS ASSESSMENT ORDER U/S 143(3) READ WITH SECTION 158BD/158BC COULD NOT BE VALIDLY ASSUMED . REFERRING TO PAGE 262 AND 263 OF THE PAPER BOOK, THE LD. COUNSEL SUBMITTED THAT THE O RIGINAL ASS ESSMENT ORDER DATED ITA NO. 145 /DEL/20 07 8 29.09.1998 PASSED IN THE FIRST ROUND SAYS THAT RETURN OF INCOME WAS FILED ON 14.09.1998 AND NOTICE 143(2) WAS ISSUED ON 13.09.1998. REFERRING TO THE FOLLOWING DECISIONS, HE SUBMITTED THAT SINCE NOTICE ISSUED U/S 143(2) WAS BARRED BY LI MITATION, THEREFORE, THE ENTIRE ASSESSMENT PROCEEDINGS HAS BECOME NULL AND VOID: - I) ACIT VS. HOTEL BLUE MOON, (2010) 321 ITR 0362 (SC) ; II) JYOTI PAT RAM VS. ITO, (2005) 96 TTJ 0947 (LKW) ; III) DIT VS. SOCIETY FOR WORLDWIDE, (2010) 323 ITR 0249 (DEL) ; IV) PR. CIT VS. JAI SHIV SHANKAR TRADERS, (2016) 383 ITR 0448 (DEL) ; V) SAPTHAGIRI FINANCE & INVESTMENTS VS. ITO, (2013) 90 DTR 0289 (MAD) ; & VI) TIKA RAM VS. ITO, ITA NO. 5961/2012, DATED 08.06.2017 (DEL) . 11. THE LD. COUNSEL FOR THE ASSESSEE, IN HIS NEXT PLANK OF ARGUMENTS, SUBM ITTED THAT THE ACIT, CO. CIRCLE, DELHI, WHO ISSUED NOTICE U/S 158BD DATED 4.9.1997 DID NOT HAVE JURISDICTION OVER THE ASSESSEE . FOR THE ABOVE PROPOSITION, HE REFERRED TO: (A) N OTICE U/S 158BD DATED 04.09.1997 , COPY OF WHICH IS PLACED AT PAGE 4 OF THE PAPER BO OK ISSUED BY AC IT COY. CIRCLE 3(9) DELHI; (B) RETURN OF INCOME OF THE ASSESSEE FOR AY 1996 - 97 FILED ON 18.03.1997 AT WARD 1, FARIDABAD WHICH WAS MUCH PRIOR TO THE DATE OF ISSUING NOTICE U/S 158BD DATED 4.9.1997 , COPY OF WHICH IS PLACED AT PAGES 10 - 12 OF THE PA PER BOOK; AND ITA NO. 145 /DEL/20 07 9 (C) REFERRING TO PAGE 92 OF THE PAPER BOOK, HE SUBMITTED THAT J URISDICTION WAS TRANSFERRED FROM ITO, WARD 1, FARIDABAD TO ACIT INV . CIRCLE, FARIDABAD BY CIT, ROHTAK WHICH ALSO SHOWS THAT ACIT, DELHI WAS NOT HAVING JURISDICTION. 12. IN HIS LAST PLANK OF ARGUMENT, THE LD. COUNSEL SUBMITTED THAT IF IT IS TAKEN THAT N OTICE U/S 158 B D WAS SERVED ON 03.09.1998, THEN NOTICE U/S 158BD AND ASSESSMENT IS BAD IN LAW IN VIEW OF SERIES OF DECISIONS WHICH SAY THAT NOTICE U/S 158BD CAN BE ISSUED WITHIN 6 - 8 MONT HS FROM THE CONCLUSION OF ASSESSMENT ORDER OF THE SEARCHED PERSON. HE SUBMITTED THAT IN THE INSTANT CASE, THE A SSESSMENT OF MANU FINLEASE LTD. WAS PASSED IN AUGUST 1997 WHEREAS THE NOTICE U/S 158BD IF ISSUED ON 03.09.1998 I.E. AFTER MORE THAN ONE YEAR PERI OD THEN SUCH NOTICE IS BARRED BY LIMITATION . FOR THE ABOVE PROPOSITION, HE RELIED ON THE FOLLOWING DECISIONS: - I) CIT VS. BHARAT BHUSHAN JAIN, (2015) 370 ITR 0695 (DEL) ; AND II) CIT VS. CALCUTTA KNITWEARS, (2014) 362 ITR 0673 (SC) 13. HE ACCORDINGLY SUBMITTED THAT THE ASSESSMENT PROCEEDINGS U/S 158BD ARE NOT VALID. 13.1 SO FAR AS THE MERIT OF THE CASE IS CONCERNED, THE LD. COUNSEL DREW THE ATTENTION OF THE BENCH TO THE WRITTEN SYNOPSIS AND DREW THE ATTENTION OF THE BENCH TO PAGES 11 - 16 OF THE SAME AND SUBMIT TED THAT EVERY ITEM HAS BEEN PROPERLY EXPLAINED BEFORE THE AO . H OWEVER, THE AO, IN UTTER DISREGARD TO THE EXPLANATION GIVEN BY THE ASSESSEE, HAS MADE THE ADDITION WHICH IS NOT IN ACCORDANCE WITH THE ITA NO. 145 /DEL/20 07 10 LAW. HE ACCORDINGLY SUBMITTED THAT LEGALLY, THE ASSESSME NT ORDER IS BAD IN LAW AND FACTUALLY THE ADDITION DESERVES TO BE DELETED. 14. THE LD. DR, ON THE OTHER HAND, HEAVILY SUPPORTED THE ORDER OF THE CIT(A). HE SUBMITTED THAT IN THE SECOND ROUND OF LITIGATION BEFORE THE AO, THE ASSESSEE HAS NOT RAISED THE JUR ISDICTIONAL ISSUE. THE AO, IN THE INSTANT CASE, HAS RECORDED THE SATISFACTION PROPERLY AND THE JURISDICTION WAS WITH THE OFFICER HAVING JURISDICTION OVER THE ASSESSEE. THEREFORE, THE ASSESSEE CANNOT CHALLENGE THE JURISDICTIONAL ISSUE NOW . HE , HOWEVER, C ONCEDED THAT THE SEIZED MATERIALS, ETC., WERE HANDED OVER TO THE AO AFTER ASSUMING JURISDICTION U/S 158BD. SO FAR AS THE MERIT OF THE CASE IS CONCERNED, THE LD. DR SUBMITTED THAT THE AO HAS GIVEN VALID REASONS WHILE MAKING THE ADDITION. THEREFORE, THE AD DITION MADE BY THE AO SHOULD BE UPHELD. 15. THE LD. COUNSEL, IN HIS REJOINDER, SUBMITTED THAT THE ASSESSEE HAS RAISED THE VALIDITY OF JURISDICTION BEFORE THE TRIBUNAL AND THE TRIBUNAL, WHILE RESTORING THE ISSUE TO THE FILE OF THE AO, HAS HELD THAT THE AS SESSEE WOULD BE ENTITLED TO RAISE ALL THE ISSUES INCLUDING THE ISSUE OF JURISDICTIONAL LIMITATION, ETC., OPEN TO HIM IN LAW. THEREFORE, THE LD. CIT, DR IS NOT CORRECT IN SAYING THAT THE ASSESSEE HAS NOT RAISED THE JURISDICTIONAL ISSUE BEFORE THE AO. THE AO SHOULD HAVE DECIDED THE ISSUE OF JURISDICTION IN THE SECOND ROUND OF LITIGATION BEFORE HIM IN THE LIGHT OF THE DIRECTION OF THE TRIBUNAL. 16 . WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE RECORD. WE FIND, DURING THE F IRST ROUND OF LITIGATION, THE ASSESSEE, APART FROM ITA NO. 145 /DEL/20 07 11 CHALLENGING THE ADDITION ON MERIT HAD ALSO CHALLENGED THE VALIDITY OF THE 158BD PROCEEDINGS FOR WHICH THE TRIBUNAL, WHILE RESTORING THE ISSUE TO THE FILE OF THE AO, HAD HELD THAT THE ASSESSEE WOULD BE ENTI TLED TO RAISE ALL THE ISSUES INCLUDING THE ISSUE OF JURISDICTION, LIMITATION, ETC. WE FIND, IN THE INSTANT CASE, NOTICE U/S 158BD DATED 4 TH SEPTEMBER, 1997 WAS ISSUED BY THE ACIT, CO. CIRCLE (9), COPY OF WHICH IS PLACED AT PAGE 4 OF THE PAPER BOOK. WE FI ND FROM THE LETTER FROM THE AO OF THE SEARCHED PERSON TO AO OF THE ASSESSEE DATED 26 TH AUGUST, 1997, IT WAS REQUESTED TO TAKE OVER THE BOOKS OF ACCOUNT FOR THE PURPOSE OF SECTION 158BD, COPY OF WHICH IS PLACED AT PAGES 319 - 320 OF THE PAPER BOOK. WE FIND, THE AO OF THE SEARCHED PERSON, VIDE LETTER DATED 26 TH FEBRUARY, 1998 TO THE ACIT, INV. WING, FARIDABAD, HAD HANDED OVER THE BOOKS OF ACCOUNTS PERTAINING TO THE ASSESSEE WHICH OTHERWISE SHOWS THAT PRIOR TO 04.09.1997, I.E., THE DATE ON WHICH JURISDICTION U/ S 158BD WAS ASSUMED, THE BOOKS OF ACCOUNT WERE NOT HANDED OVER TO THE ASSESSEE. THE COPY OF THE ABOVE IS PLACED AT PAGE 321 OF THE PAPER BOOK. SIMILARLY, A PERUSAL OF PAGE 322 OF THE PAPER BOOK SHOWS THAT VIDE LETTER DATED 24 TH AUGUST, 1998, THE ACIT, CI RCLE - 1 HAS HANDED OVER THE BOOKS TO ACIT, INV. CIRCLE, WHICH SHOWS THAT ON 4 TH SEPTEMBER, 1997 WHEN THE JURISDICTION U/S 158BD WAS ASSUMED, THE BOOKS, ETC., OF THE ASSESSEE WERE NOT HANDED OVER TO THE ACIT, I.E., AO OF THE ASSESSEE. FURTHER, A PERUSAL OF P AGE 323 OF THE PAPER BOOK SHOWS THAT THE ACIT, INV. CIRCLE, FARIDABAD, HAS ACKNOWLEDGED THE RECEIPT OF THE SEIZED MATERIAL IN THE CASE OF SKYTONE CAPITAL SERVICES LTD. , VIDE LETTER DATED 01.09.1998 WHICH AGAIN SHOWS THAT ON 04.09.1997 WHEN THE JURISDICTION U/S 158BD WAS ASSUMED , BOOKS, ETC., OF THE ASSESSEE WERE NOT ITA NO. 145 /DEL/20 07 12 HANDED OVER TO THE ACIT, I.E., THE AO OF THE ASSESSEE. IT HAS BEEN HELD IN VARIOUS DECISIONS THAT IF THE SEIZED MATERIAL, ETC., WAS NOT HANDED OVER, THE 158BD JURISDICTIONAL CONDITIONS CANNOT B E SAID TO HAVE BEEN MET. THE PROVISIONS OF SECTION 158BD READ AS UNDER: - UNDISCLOSED INCOME OF ANY OTHER PERSON. 158BD. WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER SECTION 132 OR WHOSE BOOKS OF ACCOUNT O R OTHER DOCUMENTS OR ANY ASSETS WERE REQUISITIONED UNDER SECTI ON 132A , THEN, THE BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED UNDER SECTION 158BC AGAINST SUCH OTHER PERSON AND THE PROVISIONS OF THIS CHAPTER SHALL APPLY ACCOR DINGLY. 17. WE FIND, THE HON BLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI VS. ACIT & ANR. REPORTED IN 289 ITR 341 HAS OBSERVED THAT BEFORE THE PROVISIONS OF SECTION 158BD OF THE IT ACT, 1961 ARE INVOKED AGAINST A PERSON OTHER THAN THE PERSON WHOSE PREMISES HAVE BEEN SEARCHED U/S 132 OR DOCUMENTS AND OTHER ASSETS HAVE BEEN REQUISITIONED U/S 132A, THE CONDITIONS PRECEDENT HAVE TO BE SATISFIED. ONE OF THE CONDITIONS IS THAT THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED HAVE TO BE HANDED OVER TO THE AO HAVING JURISDICTION ON SUCH OTHER PERSON AND, THEREAFTER ONLY THE AO HAS TO PROCEED U/S 158BD AGAINST SUCH PERSON. SIMILAR VIEW HAS BEEN TAKEN IN VARIOUS OTHER DECISIONS RELIED ON BY THE LD. COUNSEL. SINCE THE AO IN THE INSTA NT CASE HAS TAKEN RECOURSE TO SECTION 158BD BEFORE RECEIPT OF THE SEIZED MATERIAL, THEREFORE, THE 158BD JURISDICTIONAL CONDITIONS CANNOT BE SAID TO HAVE BEEN M ET . THEREFORE, THE ENTIRE PROCEEDINGS U/S ITA NO. 145 /DEL/20 07 13 158BD/143(3) ARE VITIATED AND , THEREFORE, SUCH 158BD P ROCEEDINGS WHICH ARE NOT IN ACCORDANCE WITH THE LAW ARE QUASHED. SINCE THE ASSESSEE SUCCEEDS ON THIS LEGAL GROUND, THE OTHER LEGAL GROUNDS INCLUDING THE MERIT OF THE CASE ARE NOT BEING ADJUDICATED BEING ACADEMIC IN NATURE. 18 . IN THE RESULT, THE AP PEAL FILED BY THE ASSESSEE IS ALLOWED . THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 08 .07 .20 21 . SD/ - SD/ - ( SUDHANSHU SRIVASTAVA ) ( R. K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 08 TH J ULY, 20 21 DK COPY FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI