DCIT, Circle - 2, Siliguri, Siliguri V. M/s. Unique Grower & Tea Planters (P) Ltd., Siliguri

ITSSA 17/KOL/2009

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 7856 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 21-05-2009
• Court: TRIBUNAL
• Department Lawyers: S K TULSIYAN
• Assessee Lawyers: D R SINDHAL
• Keywords: Income from undisclosed sources; Search and seizure; Block assessment
• Section: 142(1); 133A; 32; 147; 132; 11; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE , /AND , . ! . '# ) [BEFORE SRI MAHAVIR SINGH, JM & SHRI C. D. RAO, AM] ( #$ % $& ) ' / I.T(SS).A NOS.17/KOL/2009 # () *+/ BLOCK PERIOD: 1997-98 TO 2003-04 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S. UNIQU E GROWER & TEA PLANTERS PVT. LTD. CIRCLE-2, SILIGURI. (PAN-AAACU 6093 L) ( -. /APPELLANT ) (/0-./ RESPONDENT ) & ( #$ % $& ) ' / I.T(SS).A NOS.19/KOL/2009 # () *+/ BLOCK PERIOD: 1997-98 TO 2003-04 M/S. UNIQUE GROWER & TEA PLANTERS PVT. LTD. VS. D EPUTY COMMISSIONER OF INCOME-TAX, (PAN-AAACU 6093 L) CIRCLE-2, SILIGURI. (-. /APPELLANT ) (/0-./ RESPONDENT ) DATE OF HEARING: 18.11.2011 DATE OF PRONOUNCEMENT: 09.12.2011 FOR THE REVENUE: SHRI S. K. TULSIYAN FOR THE ASSESSEE: SHRI D. R. SINDHAL '1 / ORDER PER MAHAVIR SINGH, JM ( , , , , ) THESE CROSS-APPEAL BY ASSESSEE AND REVENUE ARE ARIS ING OUT OF ORDER OF CIT(A), SILIGURI IN APPEAL NO.104/CIT(A)/SLG/06-07 VIDE DATED 04.02. 2009. BLOCK ASSESSMENT WAS FRAMED BY DCIT, CIRCLE-2, SILIGURI U/S. 158BC R.W.S.158BD OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR BLOCK PERIOD 01.04.19 96 TO 27.08.2002 VIDE HIS BLOCK ASSESSMENT ORDER DATED 31.08.2006. 2. THE FIRST LEGAL ISSUE RAISED BY THE ASSESSEE IS AS REGARDS TO INITIATION OF PROCEEDINGS U/S. 158BD OF THE ACT. THE ISSUE IS THAT THE BANK ACCOUN T NO.1/191 MAINTAINED WITH BANK OF INDIA, ISLAMPUR WAS FOUND DURING THE COURSE OF SURVEY ON A SSESSEES PREMISES AND NOT DURING SEARCH CONDUCTED U/S. 132 OF THE ACT ON 27.08.2002 ON SHRI ARUN KR. AGARWAL OF AGARWAL GROUP OF CASES, HENCE THE SAME CANNOT BE USED FOR RECORDING SATISFACTION FOR INITIATION OF PROCEEDINGS U/S. 158BD FOR FRAMING BLOCK ASSESSMENT IN ASSESSEES CA SE. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO.1(A) TO (E): 2 IT(SS)A 19 & 17/K/2009 UNIQUE GROWER OF TEA PLANTERS (P) LTD. BLOCK PERIOD 1997-98 TO 2003-04 1) (A) THAT THE ACTION OF THE LD. ASSESSING OFFICE R IN HAVING INITIATED PROCEEDING UNDER SECTION 158BD OF THE I.T. ACT ON THE ALLEGED SATISF ACTION OF FINDING A DISCLOSED AND ACCOUNTED BANK ACCOUNT WITH BANK OF INDIA, ISLAMPUR , ACCOUNT NO.1/191 HOLDING THE SAME PRIMA FACIE NOT DISCLOSED IS ARBITRARY, UNCALL ED FOR AND BAD IN LAW BECAUSE SUCH A STATEMENT IS NEITHER A RECORDING OF SATISFACTION NO R DISCOVERY OF UNACCOUNTED INCOME OR UNDISCLOSED BOOKS OF ACCOUNTS AND ITS HANDING OVER TO THE AO, THE TWIN CONDITIONS REQUIRED FOR INITIATING PROCEEDING U/S.1S8BD OF THE I.T. ACT. (B) THAT THE LD. A.O. AND THE CIT(A) WERE FULLY AWA RE ON ACCOUNT OF IMPOUNDING OF BOOKS MARKED UGTP/1 TO UGTP/30 IN SURVEY CONDUCTED ON 27. 08.2002 THAT THE IMPUGNED BANK ACCOUNT WAS FULLY DISCLOSED AND ACCOUNTED AS PER TH E ANNUAL RETURN FILED WITH THE ROC BY THE APPELLANT COMPANY. (C) THAT THE A.O. IN THIS CASE HAVING COMPLETED THE ASSESSMENT FOR A.Y. 2002-03 ON 09.03.2006 WHERE THE AO ASSESSED THE AGRICULTURAL L OSS OF RS.6,03,023/-, HE WAS AWARE THAT THE ONLY INCOME APPELLANT COMPANY HAD WAS THAT BY WAY OF AGRICULTURAL INCOME, WHICH WAS NOT CHARGEABLE TO TAX UNDER THE INCOME TA X ACT, 1961, THE AO ERRED IN HAVING ISSUED THE NOTICE KNOWING FULLY WELL THAT THE APPEL LANT COMPANY HAD INCOME CHARGEABLE TO TAX UNDER THE INCOME TAX ACT, 1961 AND HENCE NO UNDISCLOSED INCOME. (D) THAT THE AO BEING FURTHER AWARE THAT A COMPANY HAVING ONLY AGRICULTURAL INCOME, WHICH IS NOT TAXABLE UNDER THE I.T. ACT WAS NOT REQ UIRED TO FILE ITS INCOME TAX RETURN PRIOR TO A.Y. 2001-02 WHEN AN AMENDMENT IN SECTION 139 MADE IT MANDATORY FOR ALL THE COMPANIES TO FURNISH THE I.T. RETURN, THE COMPANY T HUS HAVING AGRICULTURAL INCOME HAVING NOT FURNISHED I.T. RETURN PRIOR TO A.Y. 2001 -02 CANNOT BE FAULTED TO HAVE UNDISCLOSED INCOME. (E) THAT THE REOPENING PROCEEDING U/S.158BD INITIAT ED BY THE A.O. AND UPHOLDING OF SAME BY THE CIT(A) IS DIRECTLY IN CONFLICT WITH THE APEX COURT DECISION IN THE CASE MANISH MAHESHWARI VS. ACIT REPORTED IN 289 ITR 341. 3. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT A SEARCH AND SEIZURE OPERATION U/S. 132 OF THE ACT WAS CONDUCTED IN THE AGARWAL GROUP OF CA SES ON 27.08.2002 INCLUDING SHRI ARUN KR. AGARWAL. DURING THE COURSE OF SEARCH CERTAIN B OOKS OF ACCOUNT AND DOCUMENTS INCLUDING BANK ACCOUNTS WERE SEIZED AND FOUND. DURING THE COU RSE OF COMPLETION OF BLOCK ASSESSMENTS IN AGARWAL GROUP OF CASES I.E. IN THE CASE OF SHRI ARU N KR. AGARWAL THE ASSESSING OFFICER NOTICED THAT BANK ACCOUNT NO. 00-31-582070-001 MAINTAINED W ITH CENTURION BANK, SILIGURI IN THE NAME OF ASSESSEE UNIQUE GROWER & TEA PLANTERS (P) LTD FO UND DURING THE COURSE OF SEARCH AND IN VIEW OF THIS INITIATED PROCEEDINGS U/S. 158BD OF TH E ACT BY ISSUING NOTICE DATED 11.08.2004 CALLING FOR RETURN OF INCOME FOR THE BLOCK PERIOD 0 1.04.1996 TO 27.08.2002. THE ASSESSEE FILED ITS RETURN OF INCOME ON 02.08.2006 DISCLOSING UNDIS CLOSED INCOME AT NIL AND SCRUTINY OF THIS BLOCK RETURN WAS STARTED BY ISSUING NOTICES U/S. 14 3(2) AND 142(1) OF THE ACT, WHICH WERE SERVED. THE ASSESSING OFFICER NOTED THAT DURING THE COURSE OF SEARCH AND SEIZURE OPERATION A BANK ACCOUNT NO. 00-31-582070-001 MAINTAINED WITH C ENTURION BANK, SILIGURI IN THE NAME OF THE ASSESSEE WAS FOUND AND INVENTORISED. ON THE BA SIS OF THE TRANSACTIONS IN THIS BANK ACCOUNT, THE ASSESSING OFFICER MADE ADDITIONS FOR ASSESSMENT YEAR 2000-01. FURTHER, DURING SCRUTINY 3 IT(SS)A 19 & 17/K/2009 UNIQUE GROWER OF TEA PLANTERS (P) LTD. BLOCK PERIOD 1997-98 TO 2003-04 PROCEEDINGS, THE ASSESSING OFFICER ALSO NOTED THAT DURING SEARCH AND SEIZURE OPERATION BANK ACCOUNT NO. 1/191 AND CD-277 MAINTAINED WITH BANK O F INDIA, ISLAMPUR IN THE NAME OF THE ASSESSEE WERE FOUND AND INVENTORISED. WHEN REQUIRE D, THE ASSESSEE EXPLAINED THAT PARTICULARS ARE FOR THE SAME BANK ACCOUNT, WHICH IS EVIDENT FRO M BANK STATEMENT FOUND AND IMPOUNDED DURING THE COURSE OF SURVEY AND MARKED AS UGTP-12. BEFORE THE ASSESSING OFFICER ASSESSEE DID NOT RAISE ANY LEGAL SUBMISSION BUT BEFORE CIT(A ) ASSESSEE RAISED THIS LEGAL ISSUE BY RAISING ADDITIONAL GROUND WHICH WAS ADJUDICATED BY THE CIT( A) AND DECIDED AGAINST ASSESSEE BY UPHOLDING THE INITIATION OF PROCEEDINGS U/S. 158BD OF THE ACT AS UNDER: I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE LD. A.R AND THE COUNTER SUBMISSION OF THE LD. A.O. THE FINAL ARGUMENT OF THE LD. A.R. IS MAINLY BASED ON THE DECISION IN CASE OF MANISH MAHESHWARI V. ACIT(SUPRA). BUT THE F ACT OF THE CASE IS DIFFERENT. IN THAT CASE, THE HONBLE APEX COURT HAS CLEARLY MENTIONED THAT AS THE ASSESSING OFFICER HAS NOT RECORDED HIS SATISFACTION, WHICH IS MANDATORY N OR HAS BEEN TRANSFERRED THE CASE TO THE ASSESSING OFFICER HAVING JURISDICTION OVER THE MATTER, WE ARE OF THE OPINION THAT THE IMPUGNED JUDGMENTS OF THE HIGH COURT CANNOT BE SUST AINED, WHICH ARE SET ASIDE ACCORDINGLY. BUT IN THIS CASE, THE AO HAS RECORDED THE SATISFAC TION BEFORE ISSUING THE NOTICE. THE LD. AO HAS REPRODUCED THE COPY OF THE SAME IN H IS SUBMISSION. IN A NUMBER OF CASES IN CONNECTION WITH RECORDING REASONS U/S. 147 OF TH E ACT, THE COURTS HELD THAT THE EXISTENCE OF THE BELIEF CAN BE CHALLENGED BY THE AS SESSEE BUT NOT THE SUFFICIENCY OF THE REASONS FOR THE BELIEF. THE SUFFICIENCY OF THE GROU ND WHICH INDUCED THE AO TO ACT IS NOT A JUSTICIABLE ISSUE. A REFERENCE CAN BE INVITED TO CI T V. RAMAN & CO., (1986) 67 ITR 11 (SC), S. NARAYANNAPPA V. CIT (1967) 63 ITR 219 (SC) , MADHYA PRADESH INDUSTRIES LTD. V. ITO (1970) 77 ITR 268 (SC), CST V. BHAGWAN INDUS TRIES (P) LTD. (1973) 31 STC 293 (SC) ETC. SECONDLY, THE ARGUMENT OF THE AR THAT THE BANK ACC OUNT WHICH WERE PRIMA FACIE HELD UNDISCLOSED BY THE AO WAS ACTUALLY SHOWN NI TH E BOOKS OF ACCOUNT OF THE ASSESSEE WHICH WERE IMPOUNDED IS ALSO NOT CORRECT. THE AO HA S CATEGORICALLY MENTIONED THAT, FOR THAT PERIOD, THE ASSESSEE DID NOT FILE ANY RETURN. IT HAS BEEN HELD IN RUSHIL INDUSTRIES LTD. VS. HAR SH PRAKASH [251 ITR 608 (GUJ)] THAT THE EXPRESSION UNDISCLOSED INCOME HAD BEEN DEFIN ED TO INCLUDE INCOME BASED, ON AN ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPO SES OF THIS ACT. IN OUR CONSIDERED OPINION, THE DEFINITION OF UNDISCLOSED INCOME WOULD INCLUDE ANY ENTRIES IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS SHOWING CONCEALMENT OF THE REAL SOURCE OF INCOME AS ON THE PRESENT CASE HEREIN . THE KERALA HIGH COURT IN THE CASE OF K. P. MOHAMMED SAYYED SAFIYA MANZIL VS. CIT 273 ITR 338 (KER) HAS HELD THAT WHEN THE ASSESSEE H AD THUS FAILED TO TILE ANY RETURN, THERE WAS NO MERIT IN HIS CONTENTION THAT THE SAID AMOUNT SHOULD NOT BE TREATED AS UNDISCLOSED INCOME FOR THE YEAR 1996-97. THE DIFFERENT COURTS MAY HE CLEARED THAT WHEN NO R ETURN WAS FILED BY THE ASSESSEE CERTAIN ENTRIES EVEN IT RECORDED IN THE BO OKS OF ACCOUNTS CANNOT BE TREATED AS DISCLOSED TRANSACTIONS. 4 IT(SS)A 19 & 17/K/2009 UNIQUE GROWER OF TEA PLANTERS (P) LTD. BLOCK PERIOD 1997-98 TO 2003-04 THIRDLY, THE JURISDICTIONAL TRIBUNAL IN IT.(SS)A. NO. 99/KOL/2004 IN THE CASE OF ACIT. CC-XXLV KOLKATA VS SONE BHADRA ENTERPRISES, K OLKATA HELD THAT IF THE ASSESSING OFFICER HAVING JURISDICTION ON THE ORIGINAL ASSESSE E AGAINST WHOM THE SEARCH WAS CONDUCTED, NO SEPARATE SATISFACTION IS REQUIRED IF THE AO IS THE SAME FOR INITIATING PROCEEDINGS U/S. 158BD. THE ITAT HELD THE SATISFACTION AS REQUIRED UNDER SECTION 158BD I S CONTEMPLATED ONLY WHEN THE AO OF THE PERSONS SEARCHED IS DIFFERENT OTHER T HAN THE PERSONS RELATING TO WHOM THE MATERIAL WAS FOUND DURING THE SEARCH OF TH E SEARCHED PERSON. THIS IS CLEAR AS CAN BE SEEN FROM THE PROVISION ITSELF CONT AINED UNDER SECTION 158 BD OF THE I T ACT FROM THE FOREGOING PARTS OF THIS ORDER, IT WOULD BE EVIDENT THAT THE ASSESSEE HAD UNDISCLOSED INCOME WHICH WAS BROUGHT TO TAX. THE AO HAS ALSO HELD THESE HANK ACCOUNTS AS UNDISCLOSED. THEREFORE, THE SATISFACTIO N RECORDED AT PRIMA FACIE LEVEL IS FOUND TO BE CORRECT AT THE FINAL STAGE ALSO. IN VIE W OF THE ABOVE DISCUSSION, IT IS HELD THAT THE AO HAS RIGHTLY INITIATED THE PROCEEDINGS U/S. 1 58BD OF THE ACT. THIS GROUND IS THUS DECIDED AGAINST THE ASSESSEE. AGGRIEVED AGAINST THE ORDER OF CIT(A), UPHOLDING TH E INITIATION OF PROCEEDINGS U/S. 158BD OF THE ACT, ASSESSEE IS NOW IN APPEAL BEFORE US. 4. BEFORE US LD. COUNSEL FOR THE ASSESSEE ARGUED TH AT THE SATISFACTION RECORDED BY ASSESSING OFFICER VIDE ORDER SHEET ENTRY DATED 11.0 8.2004 IS PRIMA FACIE WITHOUT ANY BASIS FOR THE REASON THAT BANK ACCOUNT NO. 1/191 MAINTAINED W ITH UNION BANK OF INDIA, ISLAMPUR WAS NEVER FOUND DURING THE COURSE OF SEARCH IN THE PREM ISE OF ARUN KR. AGARWAL ON 27/08/2002 IN AGRAWAL GROUP OF CASES. HE STATED THAT THIS BANK A CCOUNT OF THE ASSESSEE COMPANY WERE IMPOUNDED DURING THE COURSE OF SURVEY U/S. 133A OF THE ACT IN THE CASE OF ASSESSEE ITSELF I.E. UNIQUE GROWER & TEA PLANTERS (P) LTD. THE LD. COUN SEL FOR THE ASSESSEE BEFORE US PRODUCED COPY OF PANCHNAMA DRAWN IN THE CASE OF SHRI ARUN KR . AGARWAL AND STATED THAT THIS PANCHNAMA DOES NOT SHOW ANY EVIDENCE THAT THIS BANK ACCOUNT WAS FOUND AND SEIZED DURING THE COURSE OF SEARCH IN AGARWAL GROUP OF CASES ON 27.08 .2002. THE LD. COUNSEL FOR THE ASSESSEE FILED COPY OF PANCHNAMA IN THE CASE OF SHRI ARUN KR . AGARWAL AT PAGES 81 TO 91 OF THE ASSESSEES PAPER BOOK. HE STATED THAT IT WAS ONLY A T THE SURVEY CONDUCTED AT THE ASSESSEES BUSINESS PREMISES THAT A FEW PAPERS RELATING TO THI S BANK ACCOUNT WAS FOUND AND INVENTORISED AS UGPT 12, WHICH ARE ATTACHED AT PAGES 76 TO 77 OF AS SESSEES PAPER BOOK. ON THE OTHER HAND, LD. CIT, DR SHRI D. R. SINDHAL SUPPORTED ORDERS OF LOWER AUTHORITIES AND STATED THAT NO DOUBT THE DOCUMENT WAS FOUND DURING THE COURSE OF SURVEY BUT THIS CAN BE USED FOR FRAMING BLOCK ASSESSMENT AS THERE WAS A SEARCH IN THE GROUP CASES . 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. IT IS AN ADMITTED FACT THAT THERE WAS SEARCH U/S. 1 32 OF THE ACT IN AGARWAL GROUP OF CASES AND ALSO SHRI ARUN KR. AGARWAL ON 27.08.2002, WHO WAS D IRECTOR OF ASSESSEE COMPANY I.E. UNIQUE 5 IT(SS)A 19 & 17/K/2009 UNIQUE GROWER OF TEA PLANTERS (P) LTD. BLOCK PERIOD 1997-98 TO 2003-04 GROWERS & TEA PLANTERS (P) LTD. IT IS ALSO A FACT THAT THE ASSESSING OFFICER RECORDED HIS SATISFACTION ON 11.8.2004 AND THE RELEVANT SATISFAC TION RECORDED IN THE ORDER SHEET ENTRY, WHICH READS AS UNDER: A SEARCH AND SEIZURE OPERATION WAS CONDUCTED AT TH E PREMISES OF ARUN KUMAR AGARWAL ON 27.08.2002. DURING THE SEARCH OPERATIONS BANK A CCOUNT OF THE ASSESSEE WITH UNION BANK OF INDIA, ISLAMPUR, ACCOUNT NO. 1/191 WAS FOUN D WHICH PRIMA FACIE APPEARS TO BE NOT DISCLOSED. ISSUED NOTICE U/S. 158BD CALLING FOR BLOCK PERIOD R ETURN. FROM THE ABOVE SATISFACTION RECORDED IT IS CLEAR TH AT, IT IS BASED ON BANK ACCOUNT OF ASSESSEE WITH UNION BANK OF INDIA, ISLAMPUR, ACCOUNT NO. 1/1 91 BUT THIS ACCOUNT WAS FOUND DURING THE COURSE OF SURVEY AS PER INVENTORY OF BOOKS OF ACCOU NT FOUND IN THE PREMISES OF UNIQUE GROWERS & TEA PLANTERS PVT. LTD. AND MARKED AS UGTP 1 TO UG TP 30, WHICH ARE ANNEXED AT PAGES 76 & 77 OF ASSESSEES PAPER BOOK. FROM THE AFORESAID SA TISFACTION RECORDED IT IS CLEAR THAT THE SAME IS NOT CORRECT AS THE ALLEGED BANK ACCOUNT OF ASSESSEE COMPANY WAS IMPOUNDED IN THE COURSE OF SURVEY AND AO HAS NOT MENTIONED THE IDENTIFICATION MARKED ON THE PAPERS ON THE BASIS OF WHICH THE ABOVE BANK ACCOUNT WAS DETECTED. IT IS ALSO CL EAR FROM PANCHNAMA IN THE CASE OF SHRI ARUN KR. AGARWAL, WHICH DOES NOT SHOW ANY EVIDENCE THAT THIS BANK ACCOUNT WAS DETECTED DURING THE COURSE OF SEARCH CONDUCTED IN THAT CASE ON 27.08.20 02 U/S. 132 OF THE ACT AND COPY OF PANCHNAMA IS ENCLOSED IN ASSESSEES PAPER BOOK AT P AGES 81 TO 91. WE FIND THAT IT WAS ONLY DURING THE COURSE OF SURVEY CONDUCTED AT ASSESSEES PREMISES THAT THIS BANK ACCOUNT WAS FOUND AND INVENTORISED AS UGTP 12. FROM THE ABOVE FACTS I T IS CLEAR THAT THE BANK ACCOUNT WITH UNION BANK OF INDIA, ISLAMPUR WAS NEVER FOUND DURING THE COURSE OF SEARCH RATHER IT WAS FOUND DURING THE COURSE OF SURVEY U/S. 133A OF THE ACT FROM THE PREMISES OF THE ASSESSEE. IN VIEW OF THESE FACTS, NOW, CAN THE PROVISIONS OF CHAPTER XIVB FOR FRAMING BLOCK ASSESSMENT U/S. 158BD OF THE ACT CAN BE APPLIED OR NOT. THE BASIS OF MAKING BLO CK ASSESSMENT UNDER CHAPTER XIVB IS SEARCH AND THE PROVISIONS OF SECTION 158BD OF THE ACT TRIE D TO EXTEND THE OPERATIONS OF THESE PROVISIONS TO A PERSON WHO IS NOT SEARCHED BUT THE ESSENTIAL INGREDIENTS OF SECTION 158BD OF THE ACT ARE AS UNDER: I) FOR INVOKING THE PROVISIONS OF SECTION 158BD OF THE ACT, THERE SHOULD BE MATERIAL FOUND AS A RESULT OF SEARCH RELATING TO THE OTHER P ERSON AGAINST WHOM THIS PROVISION IS TO BE INVOKED, II) THE MATERIAL SEIZED SHOULD NOT BE FROM NOTICEE BUT IT SHOULD BE FROM THE PERSON ON WHOM ACTION U/S. 132 OF THE ACT IS CARRIED OUT, III) THE AMOUNT TO BE TREATED AS UNDISCLOSED INCOME FOR THE PURPOSE OF THIS CHAPTER I.E. NON DISCLOSURE ON THE PART OF THE ASSESSEE SHOULD E XIST AND SAID NON DISCLOSURE SHOULD HAVE BEEN DEPICTED AS A RESULT OF SEARCH U/S . 132 OF THE ACT, 6 IT(SS)A 19 & 17/K/2009 UNIQUE GROWER OF TEA PLANTERS (P) LTD. BLOCK PERIOD 1997-98 TO 2003-04 IV) MERE NON FILING OF RETURNS OF INCOME CANNOT LEAD TO A CONCLUSION THAT THE BANK ACCOUNT WAS AN UNDISCLOSED BANK ACCOUNT ESPECIALLY WHEN THE BOOKS OF ACCOUNT WERE REGULARLY AUDITED AND WERE FILED WITH ROC. 6. FROM THE ABOVE FACTS, NOW WE HAVE TO EXAMINE WHE THER IN THE CASE OF THE ASSESSEE BANK ACCOUNT MAINTAINED WITH UNION BANK OF INDIA, ISLAMP UR, ACCOUNT NO. 1/191 FOUND DURING THE COURSE OF SURVEY FROM THE PREMISES OF THE ASSESSEE CAN BE USED FOR INITIATION OF BLOCK ASSESSMENT PROCEEDINGS U/S. 158BD OF THE ACT FOR FR AMING BLOCK ASSESSMENT AND RECORDING OF SATISFACTION. THE VERY BASIS FOR FRAMING BLOCK ASS ESSMENT UNDER CHAPTER XIVB IS SEARCH ITSELF AND PROVISIONS OF SECTION 158 BD WILL APPLY TO A PE RSON WHO IS NOT SEARCHED AND IT IS RATHER EXTENSION OF THE OPERATION OF THESE PROVISIONS BUT LEGISLATURE IN ITS WISDOM HAS FRAMED THE PROVISIONS OF SECTION 158BD AND THE ESSENTIAL INGRE DIENTS ARE (I) THE AO OF A PERSON SEARCHED SHOULD BE SATISFIED THAT UNDISCLOSED INCOME BELONGS TO OTHER PERSON OTHER THAN THE PERSON IN RESPECT OF WHOM SEARCH WAS CONDUCTED IS FOUND, (II) THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS OR ASSETS SEIZED BELONGS TO THAT OTHER PERSON AND S AME SHALL BE HANDED OVER TO THE AO OF THAT OTHER PERSON. THE EXISTENCE OF MATERIAL DURING SEA RCH U/S. 132 OF THE ACT I.E. FOUND AND SEIZED, IS SINE QUA NON FOR TAKING ACTION U/S. 158BD OF THE ACT. IN THE PRESENT CASE BEFORE US, FROM THE EXAMINATION OF RECORDS REVEALED THAT THE BANK ACCOU NT WAS FOUND DURING THE COURSE OF SURVEY FROM THE PREMISES OF THE ASSESSEE AND THIS WAS NEVE R FOUND DURING THE COURSE OF SEARCH ON AGARWAL GROUP OF CASES I.E. ARUN KR. AGARWAL. EVEN HONBLE SUPREME COURT IN THE CASE OF MANISH MAHESWARI VS. CIT (2007) 289 ITR 341, WHILE INTERPRETING THE PROVISIONS OF SECTION 158BD OF THE ACT HAS LAID DOWN THE RATIO AS UNDER: THE CONDITION PRECEDENT FOR INVOKING A BLOCK ASSES SMENT IS THAT A SEARCH HAS BEEN CONDUCTED UNDER SECTION 132, OR DOCUMENTS OR ASSETS HAVE BEEN REQUISITIONED UNDER SECTION 132A. THE SAID PROVISION WOULD APPLY IN THE CASE OF ANY PERSON IN RESPECT OF WHOM SEARCH HAS BEEN CARRIED OUT UNDER SECTION 132A OR DOCUMEN TS OR ASSETS HAVE BEEN REQUISITIONED UNDER SECTION 132A. SECTION 158BD, HOWEVER, PROVID ES FOR TAKING RECOURSE TO A BLOCK ASSESSMENT IN TERMS OF SECTION 158BC IN RESPECT OF ANY OTHER PERSON, THE CONDITIONS PRECEDENT WHEREFOR ARE : (I) SATISFACTION MUST BE R ECORDED BY THE ASSESSING OFFICER THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER TH AN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER SECTION 132 OF THE ACT ; (II) THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED HAD BEEN HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON ; AND (III) THE ASSESSING OFFICER HAS PROCEEDED UNDER SECTION 158BC AGAINST SUCH OTHER PERSON. THE CONDITIONS PRECEDENT FOR INVOKING THE PROVISION S OF SECTION 158BD, THUS, ARE REQUIRED TO BE SATISFIED BEFORE THE PROVISIONS OF THE SAID C HAPTER ARE APPLIED IN RELATION TO ANY PERSON OTHER THAN THE PERSON WHOSE PREMISES HAD BE EN SEARCHED OR WHOSE DOCUMENTS AND OTHER ASSETS HAD BEEN REQUISITIONED UNDER SECTION 1 32A OF THE ACT. 7 IT(SS)A 19 & 17/K/2009 UNIQUE GROWER OF TEA PLANTERS (P) LTD. BLOCK PERIOD 1997-98 TO 2003-04 A TAXING STATUTE, AS IS WELL-KNOWN, MUST BE CONSTRU ED STRICTLY. IN SNEH ENTERPRISES V. COMMISSIONER OF CUSTOMS [2006] 7 SCC 714, 721 ; [20 06] 7 RC 531, IT WAS HELD (PAGE 539) : WHILE DEALING WITH A TAXING PROVISION, THE PRINCIP LE OF STRICT INTERPRETATION SHOULD BE APPLIED. THE COURT SHALL NOT INTERPRET THE STATU TORY PROVISION IN SUCH A MANNER WHICH WOULD CREATE AN ADDITIONAL FISCAL BURDEN ON A PERSON. IT WOULD NEVER BE DONE BY INVOKING THE PROVISIONS OF ANOTHER ACT, WHICH A RE NOT ATTRACTED. IT IS ALSO TRITE THAT WHILE TWO INTERPRETATIONS ARE POSSIBLE, THE COURT O RDINARILY WOULD INTERPRET THE PROVISIONS IN FAVOUR OF A TAXPAYER AND AGAINST THE REVENUE. YET AGAIN IN J. SRINIVASA RAO V. GOVT. OF A. P. [20 06] 13 SCALE 27, IT WAS HELD : IN A CASE OF DOUBT OR DISPUTE, IT IS WELL-SETTLED, CONSTRUCTION HAS TO BE MADE IN FAVOUR OF THE TAXPAYER AND AGAINST THE REVENUE. IN ISPAT INDUSTRIES LTD. V. COMMISSIONER OF CUSTOMS [2006] 12 JT 379 ; [2006] 9 SCALE 652 ; [2006] 7 RC 546 THIS COURT OPINED (PAGE 559) : IN OUR OPINION IF THERE ARE TWO POSSIBLE INTERPRET ATIONS OF A RULE, ONE WHICH SUBSERVES THE OBJECT OF A PROVISION IN THE PARENT S TATUTE AND THE OTHER WHICH DOES NOT, WE HAVE TO ADOPT THE FORMER, BECAUSE ADOPTING THE LATTER WILL MAKE THE RULE ULTRA VIRES THE ACT. FURTHER HONBLE APEX COURT HAS ALSO CONSIDERED THE DECISION OF HONBLE GUJARAT HIGH COURT AND CONSIDERED AS UNDER: WE WOULD, AT THE OUTSET, REFER TO A DECISION OF TH E GUJARAT HIGH COURT IN KHANDUBHAI VASANJI DESAI V. DEPUTY CIT [1999] 236 ITR 73. THE REIN, IT WAS CLEARLY HELD (PAGE 85) THIS PROVISION INDICATES THAT WHERE THE ASSESSING OFFICER WHO IS SEIZED OF THE MATTER AND HAS JURISDICTION OVER THE PERSON OTH ER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER SECTION 132 OR WHOSE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ANY ASSETS WERE REQUI SITIONED UNDER SECTION 132A, HE SHALL PROCEED AGAINST SUCH OTHER PERSON A S PER THE PROVISIONS OF CHAPTER XIV-B WHICH WOULD MEAN THAT ON SUCH SATISF ACTION BEING REACHED THAT ANY UNDISCLOSED INCOME BELONGS TO SUCH OTHER PERSON, HE MUST PROCEED TO SERVE A NOTICE TO SUCH OTHER PERSON AS PER THE PRO VISIONS OF SECTION 158BC OF THE ACT. IF THE ASSESSING OFFICER WHO IS SEIZED OF THE MATTER AGAINST THE RAIDED PERSON REACHES SUCH SATISFACTION THAT ANY UNDISCLOS ED INCOME BELONGS TO SUCH OTHER PERSON OVER WHOM HE HAS NO JURISDICTION, THEN , IN THAT EVENT, HE HAS TO TRANSMIT THE MATERIAL TO THE ASSESSING OFFICER HAVI NG JURISDICTION OVER SUCH OTHER PERSON AND IN SUCH CASES THE ASSESSING OFFIC ER WHO HAS JURISDICTION WILL PROCEED AGAINST SUCH OTHER PERSON BY ISSUING THE R EQUISITE NOTICE CONTEMPLATED BY SECTION 158BC OF THE ACT. 7. IN VIEW OF THE ABOVE RATIO OF HONBLE APEX COURT IN THE CASE OF MANISH MAHESWARI, SUPRA AND OF HONBLE GUJARAT HIGH COURT IN THE CASE OF KHANDUBHAI VASANJI DESAI, SUPRA THE PROVISIONS OF SECTION 158BD OF THE ACT RELATES TO A SSESSMENT OF UNDISCLOSED INCOME OF ANY OTHER PERSON, OTHER THAN THE SEARCHED PERSON U/S. 1 32 OF THE ACT, THE AO OF THE SEARCHED PERSON IS SATISFIED THAT UNDISCLOSED INCOME BELONGS TO ANY OTHER PERSON OTHER THAN THE PERSON WITH 8 IT(SS)A 19 & 17/K/2009 UNIQUE GROWER OF TEA PLANTERS (P) LTD. BLOCK PERIOD 1997-98 TO 2003-04 RESPECT TO WHOM SEARCH WAS MADE OR WHOSE BOOKS OF A CCOUNT OR DOCUMENTS OR ANY ASSET WERE REQUISITIONED, THAN, THE BOOKS OF ACCOUNT, OTHER DO CUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE AO HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT AO WILL PROCEED U/S. 158BC R.W.S. 158BD OF THE ACT AND THE PROVISIONS OF THIS CHAPTER WILL APPLY ACCORDINGLY. IN THE PRESENT CASE NONE OF THE ABOVE CONDITIONS ARE FULFILLED OR APPLY REASON BEING THE BANK ACCOUNT OF THE ASSESSEE WAS FOUND DURING T HE COURSE OF SURVEY U/S. 133A OF THE ACT ON THE ASSESSEES PREMISES AND THAT CANNOT BE THE BASI S OF RECORDING OF SATISFACTION FOR INVOKING THE PROVISIONS OF SECTION 158BD OF THE ACT. ACCORDINGL Y, ASSESSEE SUCCEEDS ON THIS ISSUE AND WE REVERSE THE ORDER OF CIT(A). 8. SINCE WE HAVE ADJUDICATED THE JURISDICTIONAL ISS UE IN FAVOUR OF ASSESSEE AND NOTICE U/S. 158BD OF THE ACT IS QUASHED BEING ILLEGAL, WE NEED NOT TO ADJUDICATE ON MERITS. HENCE, THE APPEAL OF REVENUE IS ALSO DISMISSED. 9. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED AND THAT OF REVENUE IS DISMISSED. 10. ORDER PRONOUNCED IN OPEN COURT ON 09.12.2011. SD/- SD/- . ! . '# , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( !# !# !# !#) )) ) DATED : 9TH DECEMBER, 2011 23 (4$ 5 JD.(SR.P.S.) '1 6 / 7'*8- COPY OF THE ORDER FORWARDED TO: 1 . -. / APPELLANT M/S. UNIQUE GROWER OF TEA PLANTERS (P) LTD., RAMKRISHNA SAMITY BUILDING, 2 ND FLOOR, SEVOKE ROAD, SILIGURI 2 /0-. / RESPONDENT, DCIT, CIRCLE-2, SILIGURI. 3 . 1( ( )/ THE CIT(A), SILIGURI 4. 1( / CIT, SILIGURI 5 . ?@ /( / DR, KOLKATA BENCHES, KOLKATA 0 // TRUE COPY, '1(A/ BY ORDER, $ /ASSTT. REGISTRAR .