Appeal details
Counselvise Citation
[2012] 124 COUNSELVISE.COM (IT) 7516 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
9 year(s) 2 month(s) 24 day(s)
Appellant
Respondent
Appeal Type
Income Tax (Search & Seizure) Appeal
Pronouncement Date
13-04-2012
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
H
Next Hearing Date
20-10-2011
Assessment Year
misc
Appeal Filed On
20-01-2003
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: H NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.(SS)17/DEL/2003 BLOCK PERIOD : AY. 1987-88 TO A.Y. 1997-98 DEEPAK JAIN D-1-A, GREEN PARK, NEW DELHI. VS. ACIT (INV) CIRCLE 15(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: VED JAIN, RANO JAIN CAS RESPONDENT BY: MRS. REENA S. PURI, CIT DR ORDER PER A.D. JAIN, JM: THIS IS ASSESSEES APPEAL AGAINST THE ORDER DATED 27.9.2002 PASSED BY LD. CIT(A) XI, NEW DELHI. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] HAS E RRED, BOTH ON FACTS AND IN LAW, IN CONFIRMING THE ADDITION OF RS. 45,33,500/- TO THE TOTAL INCOME OF THE APPELLANT IN THE ASSTT. YEAR 1997-98 ON ACCOUNT OF ALLEGED CASH PAYMENT TO SHRI S.K. SETHI AND THE ADDITION REQUIRES TO BE DELETED IN TOTO AS THE SAME IS BASELESS, ILLEGAL AND WITHOUT ANY BASIS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] HAS E RRED, BOTH ON FACTS AND IN LAW, IN CONFIRMING THE ADDITION OF RS. 40,00,000/- IT(SS) NO. 17/DEL/03 2 TO THE TOTAL INCOME OF THE APPELLANT IN THE ASSTT. YEAR 1996-97 ON ACCOUNT OF ALLEGED CASH PAYMENT TO SHRI PRAKASH AND THE ADDITION REQUIRES TO BE DELETED AS THE SAME IS BASELESS, ILL EGAL AND WITHOUT ANY BASIS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE MATTER UN DER THIS APPEAL, IT IS PRAYED THAT THE CONTENTION OF THE APPELLANT M AY PLEASE BE ACCEPTED, NECESSARY RELIEF MAY PLEASE BE GRANTED BY DELETING THE ADDITION CONFIRMED BY THE LEARNED CIT(A) AND QUASHI NG THE ORDER OF THE LEARNED CIT(A). 3. THE ASSESSEE HAS, FURTHER , TAKEN THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE BLOCK ASSESSMENT ORDER PASSED IS NULL AND VOID AND LIABLE TO BE DECLARED SO, AS THE SAME HAS BEEN PASSED IN CONSEQU ENCE OF A SEARCH AUTHORIZED BY THE ADDL. DIERCTOR (INV.) RO HTAK WHO DOES NOT HAVE THE POWER TO ISSUE THE SEARCH WARRANT AND TO CARRY OUT THE SEARCH. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITIONAL MADE IN THE CASE OF THE APPELLANT BEING NOT BASED O N THE SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH C ARRIED OUT ON THE APPELLANT, THE SAME CANNOT BE A SUBJECT MATT ER OF BLOCK ASSESSMENT UNDER SECTION 158BC OF THE ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE BLOCK ASSESSMENT ORDER PASSED BY THE AO IS NULL AND VOID AS THE BLOCK PERIOD TAKEN AND CONSIDERED TILL 24 TH FEBRUARY, 1997 IS NOT IN ACCORDANCE WITH THE PROVISIONS OF LAW AND TH E NOTICE ISSUED UNDER SECTION 158BC IN CONSEQUENCE TO THE BL OCK ASSESSMENT ORDER PASSED ALSO DOES NOT MENTION THE B LOCK PERIOD NOR THE STATUS FOR WHICH THE PROCEEDINGS HAV E BEEN INITIATED. 4. OUT OF ABOVE THREE ADDITIONAL GROUNDS OF APPEAL, VIDE ORDER DATED 3.1.2008, THE ADDITIONAL GROUND NOS 2 & 3 WERE ADMI TTED. IT(SS) NO. 17/DEL/03 3 5. BEFORE US, TO BEGIN WITH, THE PARTIES HAVE ADDRE SSED ARGUMENTS ON ADDITIONAL GROUND NO. 2 RAISED BY THE ASSESSEE. 6. AS PER ADDITIONAL GROUND NO. 2, SINCE THE ASSESS EES CASE WAS NOT BASED ON SEIZED MATERIAL FOUND DURING THE SEARCH, I T CANNOT BE MADE SUBJECT MATTER OF BLOCK ASSESSMENT U/S 158BC OF INC OME TAX ACT. 7. IN THIS REGARD, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE AO MADE THE FOLLOWING ADDITIONS AS PER THE COMP UTATION OF UNDISCLOSED INCOME, AT PAGE 8 OF THE ASSTT. ORDER : - 1. A.Y. 1996-97 A. ADDITION ON ACCOUNT OF PAYMENT MADE TO SHRI PRAKASH AS DISCUSSED IN PARA-5 4,00,000/- 4,00,000/- 2. A.Y 1997-98 A. ADDITION ON ACCOUNT OF CASH PAYMENT TO SHRI S.K. SETHI AS DISCUSSED IN PARA-4 45,33,500/- 45,33,500/- TOTAL 49,33,500/- 8. DRAWING OUR ATTENTION TO PAGES 1 TO 10 OF ASESSE ES PAPER BOOK, THE LD COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE PANCHNAMAS ISSUED WERE REGARDING LOCKER ONLY ; THAT THE SEARCH WAS CO NDUCTED ON THE BASIS OF A SEARCH WARRANT, THOUGH, THE LOCKER WAS IN THE JOI NT NAMES OF THE ASSESSEES MOTHER, SMT. TRISHLA JAIN AND THE ASSESS EE, SHRI DEEPAK JAIN ; THAT THE SEARCH WARRANT THUS BEING IN THE JOINT NA MES, NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE AS AN INDIVIDU AL, AS HELD BY THE IT(SS) NO. 17/DEL/03 4 HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS . VANDANA VERMA AND BY THE LUCKNOW BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. GURU CHARAN SINGH. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHE R CONTENDED THAT SINCE THE PANCHNAMA WAS REGARDING LOCKER ONLY, THERE WAS NO SEARCH ON THE ASSESSEE ; THAT NO ADDITION WAS MADE REGARDING THE LOCKER ; THAT HENCE, THE ADDITION MADE DID NOT EMANATE FROM THE SEARCH A ND THE AO HAS MADE ADDITION IN THE BLOCK ASSTT. U/S 158 BC OF THE ACT BEYOND THE MATERIAL FOUND IN THE CASE OF THE ASSESSEE. RELIANCE HAS BEE N SOUGHT TO BE PLACED ON THE FOLLOWING CASE LAWS :- 1. CIT VS. PUSHPA RANI, 289 ITR 328 (DEL.) (COPY PL ACED ON RECORD) 2. THE DECISION DATED 10.8.2008 OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF KALPANA MINDA IT(SS) NO. 529/DEL/2007 (COPY PLACED ON RECORD) 3. MANVINDER BAWA VS. DCIT 9 DTR (DEL) (TRIB) 372 ( COPY PLCED ON RECORD) 4. DCIT VS. SMT. KAMLESH KHANNA 91 TTJ 633 (AGRA) (COPY PLACED ON RECORD) 9. LD. DR , ON THE OTHER HAND, HAS CONTENDED THAT T HE SEARCH WAS CONDUCTED ON THE ASSESSEES LOCKER ; THAT STATEMENT OF LAKSHMI CHAND WAS RECORDED ; THEREAFTER, ANOTHER SEARCH WARRANT W AS ISSUED ON THE STATEMENT OF MOHINDER KUMAR JAIN, FATHER OF THE ASS ESSEE ; THAT A SEARCH WAS CONDUCTED AT THE RESIDENCE OF MOHINDER KUMAR JA IN; THAT IN HIS STATEMENT, SHRI MOHINDER KUMAR JAIN STATED THAT THE LAND HAD BEEN PURCHASED BY HIS SON, SHRI DEEPAK JAIN, THE ASSESSE E, AND HE WAS MERELY ASSISTING HIS SON IN FINALISING THE DEED ; THAT SHR I DEEPAK JAIN HAD ALSO ADMITTED THAT THE TRANSACTION PERTAINED TO HIM ; TH AT THEREAFTER, THE LOCKER IT(SS) NO. 17/DEL/03 5 WAS FOUND AND THE LOCKER, BELONGING TO THE ASSESSEE S MOTHER AND THE ASSESSEE, WAS SEARCHED ; AND THAT AS SUCH, THE PROV ISIONS OF SECTION 158BC OF THE ACT WERE RIGHTLY INVOKED, THE LD. DR H AS PLACED RELIANCE ON REENA AGGARWAL , 110 ITD, 421 (AGRA). 10. THE ISSUE IS AS TO WHETHER THE ASSESSEE IS CORR ECT IN CONTENDING THAT THE AO HAS MADE ADDITION IN THE BLOCK ASSESSMENT WA S NOT BASED ON MATERIAL FOUND IN THE CASE OF ASSESSEE AND SO THE A DDITIONS ARE LIABLE TO BE DELETED, AS THEY CANNOT BE THE SAID TO BE SUBJEC T MATTER OF BLOCK ASSESSMENT U/S 158BC OF THE ACT. 11. IN THE CASE OF CIT VS PUSHPA RANI (SUPRA), TH E FINDINGS OF THE TRIBUNAL THAT THE AO COULD NOT INVOKE THE PROVISION S OF SECTION 158BC OF THE ACT FOR INITIATION OF BLOCK ASSESSMENT PROCEEDI NGS, AS THERE WERE NO SEARCH WARRANTS IN THE NAMES OF THE ASSESSEE AND FO UND THAT NO ADDITION WHATSOEVER HAD BEEN MADE ON THE BASIS OF ASSETS FOU ND IN THE RESPECTIVE LOCKERS WHICH WERE BEING OPERATED BY EACH ONE OF TH E ASSESSEE WERE UPHELD BY THE HONBLE HIGH COURT. 12. IN THE CASE OF KALPANA MINDA (SUPRA), IT HAS , INTER-ALIA, BEEN HELD THAT THE PROVISIONS OF SECTION 158BD OF THE ACT ARE CLEAR THAT IF THIRD PARTY INCRIMINATING EVIDENCE IS FOUND IN THE COURSE OF S EARCH OF A PERSON, THE AO OF THE SEARCHED PERSON HAS TO RECORD A SATISFACT ION THAT ANY INCOME IT(SS) NO. 17/DEL/03 6 RECORDED THEREIN BELONGS TO A THIRD PERSON AND THER EAFTER SEND THE REQUISITE MATERIAL TO THE AO OF THE THIRD PERSON. 13. IN MANVINDER BAWA VS. DCIT (SUPRA), IT WAS HELD THAT SINCE THERE WAS NO MATERIAL FOUND FROM THE POSSESSION OF THE AS SESSEE, REVEALING PAYMENT OF INTEREST OUT OF UNDISCLOSED SOURCES, NO ADDITION COULD BE MADE IN THE BLOCK ASSESSMENT OF THE ASSESSEE ON THE BASI S OF ENTRIES RECORDED BY THE THIRD PARTY, THERE BEING NEITHER ANY CORROBO RATIVE EVIDENCE, NOR THE PROCEDURE PRESCRIBED U/S 158BD HAVING BEEN UNDE RGONE. 14. IN DCIT VS. SMT. KAMLESH KHANNA ( SUPRA), IT WAS HELD THAT NO INCRIMINATING DOCUMENTS HAVING BEEN FOUND DURING TH E SEARCH IN BLOCK ASSESSMENT, THE AO HAD NO JURISDICTION EVEN TO ISSU E NOTICE U/S 158BC OF THE ACT. 15. IN THE PRESENT CASE, UNDISPUTEDLY, THE SEARCH W AS CONDUCTED ON THE BASIS OF SEARCH WARRANT FOR LOCKER IN THE JOINT NAM ES OF SMT. TRISHLA JAIN, THE MOTHER OF THE ASSESSEE AND SHRI DEEPAK JAIN, TH E ASSESSEE. APPROPOS THE BANK LOCKER, NO ADDITION WAS MADE ON THE BASIS OF THE ASSETS FOUND THEREIN. NO INCRIMINATING DOCUMENTS WERE FOUND DUR ING THE SEARCH. NOT ONLY THIS , DESPITE SPECIFIC REQUEST MADE BY THE AS SESSEE IN THIS REGARD, THE ASSESSEE WAS NOT ALLOWED CROSS EXAMINATION OF T HE PARTIES WHOSE IT(SS) NO. 17/DEL/03 7 MATERIAL / STATEMENT WAS SOUGHT TO BE UTILIZED BY T HE AO FOR MAKING THE ADDITION TO THE INCOME OF ASSESSEE, THEREBY VIOLATI NG THE NATURAL JUSTICE JUSTICE PRINCIPAL OF AUDI ALTEREM PARTEM. 16. THE ABOVE FACTS, IN OUR CONSIDERED OPINION, SQU ARELY ATTRACT THE APPLICABILITY OF THE AFORESAID DECISIONS TO THE PRE SENT CASE AND WE DO NOT FIND SUBSTANCE IN THE CONTENTION ON BEHALF OF THE D EPARTMENT THAT THE NOTICE U/S 158BC OF THE ACT WAS PROPERLY ISSUED. RE LIANCE BY THE DEPARTMENT ON RANI AGGARWAL VS ACIT (SUPRA) IS AL SO OF NO ASSISTANCE TO IT. THEREIN , THE DISTINGUISHING FEATURE IS THAT TH E LOCKER SEARCHED WAS IN THE NAME OF THE ASSESSEE. IN THE CASE IN HAND, HOWE VER, THE LOCKER SEARCHED WAS IN THE JOINT NAMES OF THE ASSESSEES M OTHER AND THE ASSESSEE AND THE ASSESSEES WAS THE SECOND NAME WIT H REGARD THERETO. 17. FURTHER, THE PANCHNAMAS , COPIES WHEREOF ARE AT PAGES 1 TO 10 OF THE ASSESSEES PAPER BOOK, ARE WITH REGARD TO THE L OCKER ONLY. HENCE, THERE WAS NO SEARCH ON THE ASSESSEE. MOREOVER, OF A LL THE ADDITIONS MADE, NO ADDITION MADE PERTAINS TO THE LOCKER. AS SUCH, T HE ASSESSEE IS CORRECT IN CONTENDING THAT THE ADDITION DOES NOT EMANATE FR OM THE SEARCH CONDUCTED. THIS SQUARELY PUTS THE ASSESSEES CASE WITHIN THE RATIO OF PUSHPA RANI (SUPRA). IT(SS) NO. 17/DEL/03 8 18. THEN, NO INCRIMINATING DOCUMENTS HAVING BEEN FO UND DURING THE SEARCH, KAMLESH KHANNA (SUPRA) IS SQUARELY IS ATT RACTED, AS PER WHICH, THE AO DID NOT HAVE JURISDICTION EVEN TO ISSUE NOTI CE U/S 158BC OF THE ACT. 19. FURTHER STILL, THE PROCEDURE PRESCRIBED U/S 158 BD WAS NEVER RESORTED TO AND THERE WAS NO CORROBORATIVE EVIDENCE AGAINST THE ASSESSEE, NOR WAS ANY MATERIAL FOUND IN THE POSSESSION OF THE ASSESSE E. THUS MANVINDER BAWA VS. DCIT (SUPRA) AND KALPANA MINDA(SUPRA) CLEARLY COME INTO PLAY. 20. IN VIEW OF THE ABOVE, WE FIND THE GRIEVANCE OF THE ASSESSEE BY WAY OF ADDITIONAL GROUND OF APPEAL NO. 2 TO BE JUSTIFIE D. THIS GROUND IS, ACCORDINGLY , ACCEPTED AND WE HOLD THAT THE PROVISI ONS OF SECTION 158 BC OF THE ACT HAVE WRONGLY BEEN INVOKED IN THE PRESENT CASE. THE NOTICE U/S 158BC TO THE ASSESSEE IS, IN ACCORDANCE WITH THE PR ECEDING DISCUSSION, HELD TO BE UNSUSTAINABLE IN LAW AND IT IS, THEREFOR E ,CANCELLED. 21. SINCE THE PROCEEDINGS U/S 158BC PER SE HAS BEEN CANCELLED AS ABOVE, NOTHING ELSE SURVIVES. THIS BEING A JURISDIC TIONAL ISSUE GOING TO THE VERY ROOT OF THE MATTER, THE REST OF THE GROUNDS RA ISED BY THE ASSESSEE WERE NOT ARGUED BEFORE US. IT(SS) NO. 17/DEL/03 9 22. IN VIEW OF THE ABOVE, THE PROCEEDINGS U/S 158BC OF THE ACT HAVING THEMSELVES BEING CANCELLED , NOTHING ELSE SURVIVES FOR ADJUDICATION. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED, AS INDICATED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH APRIL, 2012. SD/- SD/- [SHAMIM YAHYA] [A.D. JAIN] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13.4.2012 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT
