Anand Swaroop Khandelwal, Delhi V. DCIT, New Delhi

ITSSA 2/DEL/2010

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8523 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-10-2012
• Assessment Year: misc
• Appeal Filed On: 04-01-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS ANURADHA MISRA
• Assessee Lawyers: A K JAIN CAS
• Keywords: Unexplained investment; Document seized; Opportunity of being heard; Corroborative evidences; Procedural lapse; Block assessment; Documents seized
• Section: 40A(3); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO.02/DEL/2010 BLOCK ASSESSMENT PERIOD : 01.04.1988 TO 15.10.1998 ANAND SWAROOP KHANDELWAL, 1163-A, KUCHA MAHAJANI, CHANDNI CHOWK, DELHI. PAN : AAJPK4495Q VS. DCIT, CIRCLE 29(1), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN & SHRI A.K. JAIN, CAS REVENUE BY : MRS. ANURADHA MISRA, CIT, DR ORDER PER A.D. JAIN, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE FOR THE BLOCK ASSE SSMENT PERIOD 1.04.1998 TO 15.10.1998. THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASES A ND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 22,14,767/- AS MADE BY THE ASSESSING OFFICER IN RESPECT OF ALLEGED INVESTMENT OF THE ASSESSEE IN BUSINESS. IN THIS REGARD ALL OF HER OBSERVATIONS A RE WRONG AND AGAINST THE FACTS AND LAW. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASES AN D IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN CONFIRMING THE ADDITION OF RS.19,14,067/- AS MADE BY THE ASSESSING OFFICER TOWARDS ALLEGED SPECULATIVE INCOME EARNED BY THE ASSESSEE FROM FORWARD TRANSACTIONS ENTERED BY THE AS SESSEE SHRI SHREE RAM OF INDORE. IN THIS REGARD ALL OF HER OBSERVATIONS ARE WRONG AND AGAINST THE FACTS AND LAW. IT (SS) A NO.02/DEL/2010 2 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASES AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 15,500/- AS MADE BY TH E ASSESSING OFFICER TOWARDS ALLEGED UNEXPLAINED INVESTMENT OF THE ASSESSEE IN EKTA CO-OP. GROUP HOUSING SOCIETY LTD.. IN THIS REGA RD ALL OF HER OBSERVATIONS ARE WRONG AND AGAINST THE FACTS AND LAW. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASES AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 24,253/- TOWARDS ALLEGE D SPECULATIVE INCOME EARNED BY THE ASSESSEE FROM FORWA RD TRANSACTIONS. IN THIS REGARD ALL OF HER OBSERVATIONS AR E WRONG AND AGAINST THE FACTS AND LAW. 5. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEAL) HAS ERRED IN NOT ACCEPTING THE FINDINGS OF HON'BLE ITAT THA T THE ASSESSEE IS CARRYING ON THE BUSINESS AS BROKER ONLY AND CARRIED OUT VARIOUS TRANSACTIONS AS BAILEE OF GOODS AND AT NO POINT OF TIME PROPERTY IN GOODS PASSED TO HIM. THE ACTION OF ASSESSI NG OFFICER AND COMMISSIONER OF INCOME TAX (APPEAL) ARE AGAINST THE LAW AND NOT TENABLE. THEREFORE, THE ASSESSMENT ORDER IN QU ESTION SHALL BE QUASHED. 6. THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEAL) HAS ERRED IN CONFIRMING THE ASSESSMENT OF UNDISCLOSED INC OME OF RS.23,22,550/- AS AGAINST UNDISCLOSED INCOME OF RS.3 ,47,000/- DECLARED BY THE ASSESSEE. 7. THAT THE IMPUGNED ASSESSMENT ORDER DATED 21/12/20 06 U/S 158BC/254 IS BAD IN LAW AND AGAINST THE FACTS OF THE CA SE. THEREFORE, THE IMPUGNED ORDER BE QUASHED. 8. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASES A ND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN CONFIRMING LEVY OF INTEREST OF RS.1,88,100/- U/S 158BFA(1) OF IT ACT, 1961. 2. AS PER GROUND NO.1, THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF ` 22,14,767/- REPRESENTING ALLEGED INVESTMENT OF THE ASSESSEE IN BUSINESS. IN THE PRESENT ROUND OF LITIGATION, THE ASSESSING OFFICER MADE AN ADDITION OF ` 91,60,754 ON THE BASIS OF DOCUMENTS A- 7/29, TREATING THE ASSESSEE TO BE THE OWNER AND TRADER ON HIS OWN ACCOUNT FOR BULLION. THE LD. CIT (A) GAVE PARTIAL RELIEF TO THE ASSESSEE. THE ASSESSEE FILED APPEAL BEFORE THE ITAT. THE ITAT VI DE ORDER DATED 30.09.2005 HELD THAT THE ASSESSEE A STOCK BROKER AND THA T HE ACTED IN CARRYING OUT VARIOUS TRANSACTIONS AS BAILEE OF THE GO ODS AND THAT AT NO IT (SS) A NO.02/DEL/2010 3 POINT OF TIME HAD THE PROPERTY IN GOODS PASSED THROUGH HIM; AFTER RUMMAGE OF THE PREMISES OF THE ASSESSEE AND AFTER MAKING INQUIRIES ON THE BASIS OF MATERIAL FOUND AS A RESULT OF THE SEARC H, THE ASSESSING OFFICER COULD NOT BRING ON RECORD ANY MATERIAL TO P ROVE THAT THE TRANSACTIONS RECORDED IN THE DOCUMENTS SEIZED REPRESENTE D PURCHASE AND SALE OF GOODS IN WHICH THE ASSESSEE COULD BE SAID T O HAVE PROPRIETARY RIGHTS. IN PARA 25 OF THE ORDER, THE TR IBUNAL OBSERVED AS FOLLOWS:- 25. WE HAVE HEARD THE PARTIES WITH REFERENCE TO MATERI AL ON RECORD. THE ASSESSEE HAS MADE REFERENCE TO STATEMENT D ATED 2.11.1998 RECORDED ON OATH UNDER SECTION 131 OF THE A CT WHERE THE NATURE OF THE TRANSACTION RECORDED IN SUCH BALANCE S HEET HAVE BEEN EXPLAINED WITH REFERENCE TO ITS PAPER BOOK PAGE 1 24 AND 137 WHERE SUMMARY OF COMMISSION AND TRANSACTION AS B ROKER WITH VARIOUS PARTIES HAVE ALSO BEEN EXPLAINED. THE A SSESSEE ALSO CLAIMED THAT THE TRANSACTIONS MENTIONED IN THE BALANCE SHE ET INDICATED THE AMOUNT RECOVERABLE FROM PERSONS TO WHOM GOODS WERE SOLD AND AMOUNT PAYABLE TO PERSONS ON WHOSE BEH ALF GOODS WERE SOLD. THE ASSESSEE NOTED IT AS A BALANCE SHEET AS HE CONSIDERED IT MORAL DUTY BUT THE PAYMENT WAS FOR REMITTAN CE TO ACTUAL PERSON TO WHOM GOODS BELONGED. THE AO, HOWEVER , DID NOT EXAMINE EXPLANATION OF THE ASSESSEE IN THE RIGHT PERSPE CTIVE EVEN THOUGH ACCEPTED INCOME FROM VARIOUS TRANSACTIONS AS BROKERAGE INCOME. IT APPEARS TO US THAT WITHOUT MAKING P ROPER ENQUIRIES THE AO ACCEPTED THE DOCUMENTS IN PART WHICH W AS FAVOURABLE TO THE REVENUE AND DECLINE TO ACCEPT THE OTHER PART OF THE SAME DOCUMENT WHICH EXPLAINED THE CASE FAVOURABLE TO THE ASSESSEE. IT WAS NOT PERMISSIBLE IN LAW TO HAVE ACCEPT ED DOCUMENT PARTLY AND REJECTED THE OTHER PART. IT WILL MEET THE ENDS OF JUSTICE IF THIS MATTER IS SET ASIDE AND RESTORED BACK TO THE AO WITH A DIRECTION TO FIND OUT FROM THE ASSESSEE THE CORRE CT AMOUNT OF INVESTMENT THAT THE ASSESSEE CAN BE SAID TO HAVE BEEN MADE THROUGH THE TRANSACTIONS RECORDED IN THE SAID SEIZED PAP ERS INVENTORISED AS ANNEXURE A-7/79. ACCORDINGLY WE DIRE CT THE ASSESSING OFFICER TO ADJUDICATE THE ISSUE AFRESH AFTER TAKING EXPLANATION OF THE ASSESSEE AND BRING TO TAX THAT AMOUNT ALONE WHICH REMAINS UNEXPLAINED. HE SHALL TAKE DECISION I N ACCORDANCE WITH LAW AFTER AFFORDING REASONABLE OPPORTUNITY OF BE ING HEARD TO THE ASSESSEE. ' 3. IN THIS MANNER, THE MATTER WAS REMITTED BY THE TRI BUNAL TO THE ASSESSING OFFICER WITH A DIRECTION TO FIND OUT FROM THE ASSESSEE THE CORRECT AMOUNT OF INVESTMENT THAT THE ASSESSEE COULD BE SAID TO HAVE IT (SS) A NO.02/DEL/2010 4 MADE THROUGH THE TRANSACTIONS RECORDED IN THE SEIZED P APERS, I.E., ANNEXURE A-7/79. 4. THE ASSESSING OFFICER, PURSUANT TO THE AFORESAID TRIBU NAL ORDER, OBSERVED THAT THE DEPARTMENT HAD CHALLENGED THE FIND INGS OF THE TRIBUNAL BEFORE THE HONBLE HIGH COURT. ACCORDINGL Y, THE ASSESSING OFFICER MADE ADDITION OF ` 22,14,767/-, TREATING EACH ASSET AND LIABILITY TO BE THAT OF THE ASSESSEE. THE LD. CIT (A) CONFIRMED THE ASSESSMENT ORDER IN THIS REGARD BY OBSERVING AS FOLLOWS:- 4.1 ANNEXURE A-7/29 WAS ADMITTED BALANCE SHEET AS O N 06.08.1998. WHILE PASSING THE ORDER U/S 158BC FOR TH E FIRST TIME, THE ASSESSING OFFICER HAD CONSIDERED THE ENTIRE SUM OF RS.91,60,754/- APPEARING ON THE ASSET SIDE OF THE SAID BALANCE SHEET, AS UNDISCLOSED INCOME. WHILE GIVING EFFECT TO THE ORDER OF THE HONBLE ITAT, THE ASSESSING OFFICER RESTRICTED THE ADDITION TO RS.22,14,767/-, WHICH WAS THE DIFFERENCE BETWEEN THE A SSET AND THE LIABILITY SIDE OF THE BALANCE SHEET. 4.2 IT IS RELEVANT TO NOTE THAT WHILE PASSING THE APPELLATE ORDER, THE HONBLE ITAT HAD NOTED THAT IT APPEARED TO TH EM THAT THE ASSESSEE WAS CARRYING OUT VARIOUS TRANSACTIONS AS A BAILEE OF THE GOODS, WHICH OBSERVATION WAS APPLIED WHILE DEL ETING THE ADDITION MADE BY THE ASSESSING OFFICER U/S 40A(3). H OWEVER, WHILE ADJUDICATING ON THE ADDITION ARISING OUT OF ANNEX URE A- 7/29, THE HONBLE BENCH DID NOT REFER TO ITS EARLIER FI NDINGS AND INSTEAD SET ASIDE THE ORDER OF THE ASSESSING OFFICER WI TH A DIRECTION TO ADJUDICATE THE ISSUE AFRESH AFTER TAKING EXPLANATION OF THE ASSESSEE AND BRING TO TAX THAT AMOUNT ALONE WHICH REMAINS UNEXPLAINED. DURING THE PROCEEDINGS INITIA TED BY THE ASSESSING OFFICER TO GIVE EFFECT TO THE ORDER OF THE HON BLE ITAT, THE ASSESSEE REITERATED THE ARGUMENTS ADVANCED EARLIER I N THE 158BC PROCEEDINGS AND ALSO REFERRED TO THE FINDING O F THE HONBLE TRIBUNAL THAT HE WAS CARRYING ON VARIOUS TRANS ACTIONS AS BAILEE OF THE GOODS. IN ADDITION, THE ASSESSEE TOOK THE ALTERNATIVE PLEA THAT THE MAXIMUM ADDITION TOWARDS ALLEG ED UNEXPLAINED INVESTMENT AS PER THE SEIZED DOCUMENT A-7/ 29 COULD BE ONLY RS.22,14,767/-, THE DIFFERENCE BETWEEN THE ASSET AND THE LIABILITY SIDE OF THE BALANCE SHEET. SINCE THE ASSESSEE IDENTIFIED THE MAXIMUM ADDITION THAT COULD BE MADE AND D ID NOT RENDER ANY FURTHER EXPLANATION ABOUT THE IDENTITY OF THE DEBTORS AND THE CREDITORS REFLECTED IN THE BALANCE SHEET AND AL SO BECAUSE OF THE OBSERVATION OF THE HONBLE ITAT THAT THE S AID DOCUMENT (A-7/29) COULD NOT BE ACCEPTED IN PARTS, THE A SSESSING OFFICER RESTRICTED THE ADDITION TO RS.22,14,767. THAT TH E IT (SS) A NO.02/DEL/2010 5 OBSERVATION OF THE HONBLE TRIBUNAL, RELATING TO THE AS SESSEE ACTING AS A BAILEE OF GOODS, IS NOT APPLICABLE ON TH E POINT UNDER CONSIDERATION IS OBVIOUS FROM THE ORDER OF THE HONBLE TRIBUNAL ITSELF ONLY SOME ISSUES WERE ADJUDICATED BY REFEREN CE TO THAT OBSERVATION WHEREAS OTHERS WERE SET ASIDE TO BE DONE AF RESH BY THE ASSESSING OFFICER. MOREOVER, THE ARGUMENT OF THE APPELLANT THAT HE WAS A BAILEE WAS NOT ENOUGH WHILE CONSIDERIN G THE BALANCE SHEET AS ON 06.08.1998 THAT REFLECTED SUBSTANTIA L DEBTORS AND CREDITORS. BAILMENT IS A LEGAL RELATIONSHI P WHERE PHYSICAL POSSESSION OF PROPERTY IS TRANSFERRED FROM O NE PERSON (THE BAILOR) TO ANOTHER (THE BAILEE) WHO SUBSEQUENTL Y HOLDS POSSESSION OF THE PROPERTY, BUT THE OWNERSHIP IS RETAINE D WITH THE FIRST PERSON (THE BAILOR). THE BAILEE RECEIVE S THE PROPERTY THROUGH A CONTRACT FROM THE BAILOR AND IS COMMITTED TO CERTAIN DUTIES OF CARE TOWARDS THE PROPERTY WHILE IT REMAINS IN HIS POSSESSION. IN THE CASE AT HAND, WHILE THE ASSESSEE CL AIMED TO BE A BAILEE, HE FAILED TO DISCHARGE HIS BURDEN TO I DENTIFY THE BAILORS, THE TERMS AND CONDITIONS OF THE BAILMENT, ETC . SUCH THAT IN RESPECT OF THE DEBTORS AND CREDITORS APPEARING IN TH E ADMITTED BALANCE SHEET AS ON 06.08.1998, THE AMOUNTS REMAINED UNEXPLAINED. UNDER THE CIRCUMSTANCES, THE ASSESSING O FFICER WAS JUSTIFIED IN PRESUMING THAT THE CONTENTS OF THE BALAN CE SHEET REFLECTED IN ANNEXURE A-7/29 OF THE SEIZED DOCUMENTS WERE TRUE AND MAKING THE ADDITION OF THE NET WORTH AS UNDISCLOSED INCOME. IN VIEW OF THIS DISCUSSION, GROUND 1 OF THE APPEAL IS DISMISSED. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTEND ED THAT THE TRIBUNAL ORDER DATED 30.09.2005 (SUPRA) HAS SINCE BEEN CONFIRMED BY THE HONBLE HIGH COURT VIDE THEIR JUDGEMENT DATE D 08.09.2008 (COPY AT APB-II, PAGES 23-26); THAT THE ONLY REASON ST ATED BY THE ASSESSING OFFICER FOR MAKING THE ADDITION WAS THAT THE F INDINGS OF THE TRIBUNAL HAD NOT BEEN ACCEPTED BY THE DEPARTMENT AN D THE DEPARTMENT WAS IN APPEAL BEFORE THE HONBLE HIGH COU RT; THAT NOW, EVEN THE HIGH COURT HAS CONFIRMED THE FINDINGS RECORD ED BY THE TRIBUNAL AND SO, NO CASE REMAINS FOR THE ADDITION TO BE SUSTAINED; THAT FURTHER , THE ASSESSEES EXPLANATION WAS A PLAUSIBLE EXPL ANATION AND THE AUTHORITIES BELOW DID NOT FIND ANY FAULT THEREWI TH; THAT THE ASSESSING OFFICER ADDED THE AMOUNT OF ` 22,14,767/-, WHICH WAS THE DIFFERENCE BETWEEN THE ASSET SIDE AND THE LIABILITY SI DE OF THE ASSESSEES BALANCE SHEET; THAT THE ADDITION WAS MADE CONSI DERING THE ASSESSEE AS A TRADER AND NOT AS A BROKER, WHEREAS THE TR IBUNAL FOUND IT (SS) A NO.02/DEL/2010 6 THE ASSESSEE TO BE A BROKER RATHER THAN A TRADER AND T HIS FINDING OF FACT HAS BEEN CONFIRMED BY THE HONBLE HIGH COURT. 6. THE LD. DR, ON THE OTHER HAND, HAS STRONGLY RELIED ON THE IMPUGNED ORDER IN THIS REGARD. IT HAS BEEN CONTENDE D THAT AS NOTED BY THE LD. CIT (A), THE TRIBUNAL HAD OPINED THAT IT AP PEARED THAT THE ASSESSEE HAD BEEN CARRYING OUT VARIOUS TRANSACTIONS AS A BAILEE OF THE GOODS; THAT THIS OBSERVATION WAS MADE WHILE DELETING TH E ADDITION MADE BY THE ASSESSING OFFICER U/S 40A (3) OF THE ACT; TH AT HOWEVER, WHILE CONSIDERING THE ADDITION AT HAND, THE MATTER W AS SET ASIDE; THAT IN THE SET ASIDE PROCEEDINGS BEFORE THE ASSESSING OFFICER, THE ASSESSEE REITERATED HIS EARLIER ARGUMENTS IN THE PROCEEDINGS U/ S 158BC OF THE ACT AND PLACED RELIANCE ON THE TRIBUNAL DECISION; TH AT AS AN ALTERNATIVE PLEA, IT WAS CONTENDED THAT THE MAXIMUM ADDITION CO ULD ONLY BE ` 22,14,767/-, REPRESENTING THE DIFFERENCE BETWEEN TH E ASSETS SIDE AND THE LIABILITIES SIDE OF THE BALANCE SHEET; NO FURTHER EXPLANATION WAS OFFERED ABOUT THE IDENTITY OF THE DEBTORS AND THE CR EDITORS REFLECTED IN THE BALANCE SHEET; THAT THE ASSESSING OFFICER, ACCORDING LY, CORRECTLY RESTRICTED THE ADDITION TO ` 22,14,767/-; THAT THE OBSERVATIONS OF THE TRIBUNAL REGARDING THE ASSESSEE BEING A BAILEE OF THE G OODS IS NOT APPLICABLE TO THE ADDITION AT HAND; THAT MORE OVER, WHEREAS THE ASSESSEE CLAIMED TO BE A BAILEE, HE FAILED TO IDENTIFY THE BAILORS; THAT ALL THESE FACTS WERE DULY TAKEN INTO CONSIDERATION BY THE LD. CIT (A) AND THE ADDITION CORRECTLY MADE BY THE ASSESSING OFFICER WA S RIGHTLY CONFIRMED BY THE LD. CIT (A) BY PASSING A DETAILED SPE AKING ORDER IN THIS REGARD; AND THAT AS SUCH, THERE IS NO MERIT IN GRO UND NO.1 TAKEN BY THE ASSESSEE AND THE SAME BE REJECTED. 7. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MAT ERIAL AVAILABLE ON THE RECORD WITH REGARD TO GROUND NO.1. THE ASSESSING OFFICER, IT IS SEEN, MADE THE ADDITION FOR THE SOLE R EASON THAT THE FINDINGS RECORDED BY THE TRIBUNAL WHILE REMITTING TH E MATTER TO THE IT (SS) A NO.02/DEL/2010 7 ASSESSING OFFICER, HAD NOT BEEN ACCEPTED BY THE DEPARTM ENT AND WERE UNDER CHALLENGE BEFORE THE HONBLE HIGH COURT AT TH E HANDS OF THE DEPARTMENT. IN CONFIRMING THE ADDITION, THE LD. CI T (A) MADE ELABORATE REFERENCE TO THE FINDINGS RECORDED BY THE ITAT. HOW EVER, AS CORRECTLY CONTENDED ON BEHALF OF THE ASSESSEE, THE HONBLE HIGH C OURT HAS CONFIRMED THE FINDINGS RECORDED BY THE TRIBUNAL. IT WOULD BE APPROPRIATE TO REPRODUCE HEREUNDER THE OBSERVATIONS M ADE BY THEIR LORDSHIPS:- 3.5 THE TRIBUNAL WHILE DEALING WITH GROUND NO.2 NOTE D THAT EVEN WHILE THE ASSESSING OFFICER MADE OBSERVATIONS ON THE BASIS OF THE SEIZED DOCUMENTS THAT THE ASSESSEE WAS CARRYING O N TRADING ACTIVITY WHICH COULD NOT BE ASSOCIATED WITH HIS ACTIVITY AS A BROKER, IT HAD ACCEPTED THE COMMISSION INCOME WITH RE FERENCE TO TRANSACTIONS DECLARED AS UNDISCLOSED INCOME OF THE B LOCK PERIOD OF THE ASSESSEE. THE TRIBUNAL ALSO NOTED THAT THE STOCK OF BULLION TO WHICH REFERENCE HAS BEEN MADE BY THE ASSES SING OFFICER BASED ON THE SEIZED DOCUMENTS WAS NOT PHYSICAL LY FOUND WITH THE ASSESSEE. THE TRIBUNAL ALSO OBSERVED THAT THE ASSESSING OFFICER HAD NOT BROUGHT ON RECORD ANY POSI TIVE MATERIAL TO SHOW THAT THE TRANSACTIONS ON WHICH HE HAD ACC EPTED THE ASSESSEE AS HAVING EARNED COMMISSION WERE BILATE RAL TRANSACTIONS WHERE BOTH BUYERS AND SELLERS COULD BE TE RMED AS TWO DIFFERENT PERSONS. IT OBSERVED THAT THE ASSESSING OFF ICER WAS NOT ABLE TO SHOW THAT THE ASSESSEE HAD ENTERED INTO THE SAI D TRANSACTIONS AS AN AGENT OR THAT THE COMMISSION RECEIVED BY THE ASSESSEE REPRESENTED PROFITS FROM ACTIVITY OF SALE O R PURCHASE OF GOODS UNDERTAKEN BY THE ASSESSEE HIMSELF. THE TRIBUNAL, THUS CONCLUDED, THAT IT APPEARED TO IT THAT, THE ASSESSEE ACTED AS A BAILEE OF GOODS AND, AT NO POINT O F TIME, THE PROPERTY IN THE BULLION PASSED TO THE ASSESSEE. THIS CO NCLUSION, THE TRIBUNAL ARRIVED AT BASED ON THE FACT THAT THE ASSESSI NG OFFICER HAD NOT BEEN ABLE TO BRING ANY MATERIAL ON REC ORD TO ESTABLISH THAT THE ASSESSEE HAD RECEIVED POSSESSION OF THE BULLION AS AN ACTUAL BUYER OR THAT THE PROPERTY IN THE B ULLION HAD PASSED TO THE ASSESSEE. THE TRIBUNAL NOTED THAT AFTER THE ASSESSING OFFICER HAD ACCEPTED THE AGENCY COMMISSION IT WAS NOT PERMISSIBLE FOR THE ASSESSING OFFICER TO PRESUME THAT SUCH TRANSACTIONS WERE FROM PURCHASE OR SALE MADE BY THE AS SESSEE IN HIS OWN RIGHT. IN VIEW OF THE ABOVE, THE TRIBUNAL C ONCLUDED THAT THE APPELLANT HEREIN COULD NOT BRING ON RECORD ANY MATERIAL TO PROVE THAT THE TRANSACTIONS REFERRED TO IN THE DOCUMENT S SEIZED REPRESENTED THE PURCHASE AND SALE OF GOODS IN WHICH THE ASSESSEE HAD PROPRIETARY RIGHTS. IT (SS) A NO.02/DEL/2010 8 3.6 IN THESE CIRCUMSTANCES, THE TRIBUNAL ALLOWED GROUN D NO.2 RAISED IN THE APPEAL FILED BY THE ASSESSEE BEFORE IT. 3.7 WITH REFERENCE TO GROUND NO.8 THE TRIBUNAL NOTED TH E CONTENTION OF THE REVENUE THAT THE TRANSACTIONS REFLECTED IN THE SEIZED DOCUMENTS (ANNEXURES A-2 TO A-8) WERE TRADING TRANSACTIONS MADE IN CASH BY THE ASSESSEE AND HENCE, I N TERMS OF SECTION 40A(3) A DISALLOWANCE @ 20% OF THE AMOUNT O F TOTAL TRANSACTIONS AMOUNTING TO RS.108,08,36,839/- HAD BEEN M ADE, WHICH WERE, AS STATED ABOVE, QUANTIFIED AS RS.21,61,6 7,368. BRIEFLY, THE TRIBUNAL ALSO RECORDED AMONGST OTHERS, TH E FOLLOWING SUBMISSIONS OF THE ASSESSEE:- (I) THE PROVISIONS OF S ECTION 40A(3) COULD NOT BE TAKEN RESORT TO IN A BLOCK ASSESSME NT PROCEEDINGS CONDUCTED UNDER CHAPTER XIV-B OF THE ACT; (II) NO CLAIM IN RESPECT OF CASH PURCHASES AMOUNTING TO RS.108,08,36,839/- HAD EITHER BEEN MADE OR ALLOWED IN THE BLOCK ASSESSMENT AND, THEREFORE, THE QUESTION OF DISALL OWANCE DID NOT ARISE; (III) THE RESORT TO THE PROVISIONS OF SEC TION 40A(3) COULD ONLY BE TAKEN IN THE COURSE OF REGULAR ASSESSME NT; (IV) THERE WERE NO PURCHASES MADE AS ALLEGED OR AT ALL. BE ING A BROKER THE ASSESSEE ONLY RECEIVED A COMMISSION, THERE FORE, THE PROVISIONS OF SECTION 40A(3) DID NOT APPLY. 3.8 THE TRIBUNAL, AFTER NOTING THE SUBMISSIONS OF BOTH THE REVENUE AND THE APPELLANT, HELD THAT IN VIEW OF THE FINDINGS RETURNED IN RESPECT OF GROUND NO.2 OF THE APPEAL THAT THE SEIZED DOCUMENTS, BEI NG ANNEXURES A-2 TO A-8, DID NOT REFLECT PURCHASES IN WH ICH ASSESSEE HAD PROPRIETARY RIGHTS AND IT BEING UNDISPUTED THAT, IN RESPECT OF, SUCH TRANSACTIONS ASSESSEE HAD DECLARED CO MMISSION FROM AGENCY BUSINESS, WHICH HAD BEEN ACCEPTED AS UND ISCLOSED INCOME OF THE BLOCK PERIOD WITHOUT ANY ADVERSE COMMENTS THEREON, THERE WAS NO FACTUAL OR LEGAL JUSTIFICATION IN MAKING DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT. THE T RIBUNAL CATEGORICALLY STATED THAT IT WAS UNABLE TO ACCEPT THAT THE SE IZED DOCUMENTS ANNEXURES A-2 TO A-8 REPRESENTED PURCHASES M ADE BY THE ASSESSEE IN CASH. 4. HAVING HEARD THE LEARNED COUNSEL FOR THE REVENUE AS WELL AS THE ASSESSEE AND PERUSED THE RECORD OF THE CASE BELOW, WE ARE OF THE VIEW THAT THE ADDITION MADE BY THE ASSESSING OFFI CER BY TAKING RESORT TO SECTION 40A(3) OF THE ACT ON THE GROUND THAT THE ASSESSEE HAD MADE CASH PURCHASES TO THE TUNE OF RS. 108,08,36,839/- IS UNTENABLE. IT IS QUITE EVIDENT THAT TH E SAID SECTION IS SET INTO MOTION ONLY IF AN ASSESSEE INCURS AN EXPENDITURE IN CASH OF A SUM EXCEEDING RS.20,000/-. IN OTHER WORDS, THE SECTION PROHIBITS MAKING PAYMENTS TOWARDS EXPENDITURE IN CASH FOR A SUM EXCEEDING RS.20,000/-. IN THE EVENT OF AN ASSESSEE UNDERTAKING A PAYMENT OF AN EXPEN DITURE FOR A SUM EXCEEDING RS.20,000/- IN CASH, 20% OF SUC H EXPENDITURE CAN BE DISALLOWED. IN VIEW OF THE FINDING RETURNED BY THE TRIBUNAL THAT THE ASSESSING OFFICER COULD NOT PLA CE ANY MATERIAL ON RECORD TO SHOW THAT THE DOCUMENTS SO SEIZED IT (SS) A NO.02/DEL/2010 9 REPRESENTED PURCHASES MADE BY THE ASSESSEE IN CASH, THE PROVISIONS OF SECTION 40A(3) WILL NOT COME INTO PLAY. IF THAT BE SO, THEN THERE WAS NO QUESTION OF THE ASSESSING OFFICER MAKING AN ADDITION OF 20% OF THE ALLEGED EXPENDITURE INVOLVE D I.E., A SUM OF RS.21,61,67,368/-. 5. IN VIEW OF THE FINDINGS RETURNED BY THE AUTHORITIES BELOW WHICH INVOLVED APPRECIATION OF THE EVIDENCE PLACED B EFORE THEM, WE DO NOT FIND THAT THE APPEAL INVOLVES ANY SUBSTANTIAL Q UESTION OF LAW WHICH WOULD REQUIRE OUR CONSIDERATION. 6. IN VIEW OF THE DISCUSSION ABOVE, THE APPEAL IS DISMISSED. 8. FROM THE ABOVE, IT IS EVIDENT THAT THE ASSESSEE WAS A BAILEE OF THE GOODS AND WAS NOT HOLDING THEM ON HIS OWN ACCOUNT AS OWNER THEREOF. FURTHER, OUR ATTENTION WAS DRAWN BY THE LD . COUNSEL FOR THE ASSESSEE TO THE DETAILED REPLY DATED 06.07.2006 FILED B Y THE ASSESSEE BEFORE THE ASSESSING OFFICER. A COPY THEREOF IS AT APB- III PAGES 5-21. THE REPLY DATED 14.09.2006 IS AT APB-III, PAGES 22-31 . REPLY DATED 09.11.2006 IS AT APB PAGES 32-63. ALL THE CONCERNED DETAILS HAVE BEEN SUBMITTED ALONG WITH THESE REPLIES. IT REMAINED UNDIS PUTED THAT AS PER THESE DETAILS AND DOCUMENTS, THE TRANSACTIONS ENTERED I NTO BY THE ASSESSEE WERE ON ACCOUNT OF BROKERAGE, THE INCOME WHERE OF HAD ALSO BEEN ASSESSED. ALSO, AS AVAILABLE FROM THESE DOCUMENTS, TH ERE WAS NO INVESTMENT MADE IN THESE TRANSACTIONS. THIS BEING SO, OB VIOUSLY, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INCLUDING THE GOOD S, I.E., GOLD AND SILVER, AS PART OF THE ASSESSEES OWN STOCK. THE GRIEVANCE OF THE ASSESSEE IN THIS REGARD IS JUSTIFIED AND IS ACCEPTED AS SUC H. ACCORDINGLY, GROUND NO.1 IS ACCEPTED. 9. TURNING TO GROUND NO.2, IT STATES THAT THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF ` 19,14,067/- REPRESENTING ALLEGED SPECULATIVE INCOME EARNED BY THE ASSESSEE FROM FORWARD T RANSACTIONS ENTERED INTO BY THE ASSESSEE WITH ONE SHRI SHREE RAM OF INDORE. 10. IN THE ORIGINAL ASSESSMENT ORDER, AN ADDITION OF ` 19,14,067/- WAS MADE TOWARDS ALLEGED AMOUNT RECEIVABLE BY THE ASSESSEE FROM ONE IT (SS) A NO.02/DEL/2010 10 SHRI SHREE RAM OF INDORE TOWARDS ALLEGED SPECULATIVE INCOME EARNED BY THE ASSESSEE FROM HIM, BASED ON THE SEIZED ANNEXURE A- ` , PAGES 1- 3. THE ADDITION WAS CONFIRMED BY THE CIT (A). THE ITAT SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER, DIRECTING THE ASSESSING OFFICER TO ALLOW REASONABLE OPPORTUNITY TO THE ASSESSEE TO EXPLAIN HIS CASE. IN THE RE-ASSESSMENT PROCEEDINGS BEFORE THE ASSESSIN G OFFICER, THE ASSESSEE CONTENDED THAT AS PER THE FINDINGS OF THE I TAT, THE ASSESSEE WAS ONLY A BROKER AND PROFIT/LOSS EARNED ON SPECUL ATIVE BUSINESS WAS THE INCOME OF THE PRINCIPAL OF THE ASSESSEE; T HAT AS PER PAGES 1-3 OF THE SEIZED ANNEXURE A-1, THE ASSESSEE HAD EA RNED BROKERAGE INCOME OF ` 829.50 PER WEEK ON 553 SILVER BARS FOR THE WEEKS ENDED 09.05.1998 AND 16.05.1998; THAT THE TOTA L AMOUNT RECEIVABLE BY THE ASSESSEE FROM SHRI SHREE RAM WAS ON AC COUNT OF PRINCIPAL OF THE ASSESSEE; THAT THE BROKERAGE INCOME H AD ALREADY BEEN INCLUDED IN THE UNDISCLOSED INCOME AND ASSESSED AS SUCH B Y THE DEPARTMENT; THAT THE AMOUNT RECEIVED FROM SHRI SHRE E RAM COULD NOT BE RECOVERED FROM THE ASSESSEE; AND THAT EVEN OTHERWISE, THIS INCOME IF ALL, SHOULD HAVE BEEN INCLUDED IN THE SUBSEQUENT BA LANCE SHEET DATED 06.08.1998. THE ASSESSING OFFICER, HOWEVER, DID NOT ACCEPT THE AFORESAID CONTENTIONS OF THE ASSESSEE, HOLDING, AS IN THE CASE OF THE ISSUE IN GROUND NO.1, THAT THE DEPARTMENT HAD NOT ACC EPTED THE FINDINGS OF THE ITAT AND THAT THE SAME WERE UNDER CHA LLENGE BEFORE THE HONBLE HIGH COURT. THE ASSESSING OFFICER, THUS, MADE A DDITION OF ` 19,14,067/-. THE BENEFIT OF TELESCOPING WAS, HOWEVER , GIVEN AND THIS ADDITION WAS MERGED WITH THE ADDITION MADE IN GROUND NO.1. 11. THE LD. CIT (A) CONFIRMED THE ADDITION BY HOLDI NG AS FOLLOWS:- 5.2 IT IS RELEVANT TO NOTE THAT THE ASSESSEE MADE DIFFER ENT AND CONTRADICTORY CLAIMS BEFORE THE HONBLE ITAT AND THE AS SESSING OFFICER. BEFORE THE HONBLE TRIBUNAL, HE ARGUED THAT THE FORWARD TRANSACTION DID NOT MATURE AND WAS CANCELLED. HOWEVER, DURING THE SUBSEQUENT PROCEEDINGS INITIATED BY THE ASSESSING O FFICER TO GIVE EFFECT TO THE ORDER OF THE HONBLE ITAT, IT WAS CON TENDED IT (SS) A NO.02/DEL/2010 11 THAT SINCE SHRI RAM HAD REFUSED TO HONOUR HIS COMMITMEN T, THE AMOUNT MAY BE ALLOWED AS BAD DEBT. IN THE ABSENCE OF ANY EVIDENCE FROM THE ASSESSEE TO BACK THESE CLAIMS, THE AS SESSING OFFICER HELD THAT THE SUM OF RS.19,14,067, ADMITTED EAR LIER AS FORWARD TRANSACTION, WAS LIABLE FOR ADDITION AS UNDISC LOSED INCOME. HOWEVER, AS PER THE DIRECTION OF THE HONBLE ITAT, THE ASSESSING OFFICER CONSIDERED THE CLAIM OF THE ASSESSE E FOR TELESCOPING AND DID NOT MAKE ANY SEPARATE ADDITION ON TH IS ACCOUNT AS HE HAD ALREADY MADE THE ADDITION OF RS.22,1 4,767/- ON ACCOUNT OF THE BALANCE SHEET DATED 06.08.1998, APPE ARING AS ANNEXURE A-7/29. THE ARGUMENT OF THE APPELLANT, RELATI NG TO THE FINDING OF THE HONBLE TRIBUNAL HOLDING HIM TO BE A BAILEE OF GOODS, IS NOT APPLICABLE ON THE POINT UNDER CONSIDERATI ON FOR THE REASON THAT THE SAME IS OBVIOUS FROM THE ORDER OF THE HO NBLE TRIBUNAL ITSELF ONLY SOME ISSUES WERE ADJUDICATED BY REFERENCE TO THAT OBSERVATION WHEREAS OTHERS WERE SET ASIDE TO BE DONE AFRESH BY THE ASSESSING OFFICER. MOREOVER, THE ARGUM ENT OF THE APPELLANT THAT HE WAS A BAILEE WAS NOT ENOUGH AS IN TH E ABSENCE OF ANY SUPPORTING EVIDENCE LED BY THE ASSESSE E, THE ASSESSING OFFICER WAS JUSTIFIED IN PRESUMING THAT THE C ONTENTS OF THE ANNEXURE A-1/1 TO 3 OF THE SEIZED DOCUMENTS WERE TR UE. IN VIEW OF THE ABOVE DISCUSSION, THE ACTION OF THE ASSESSI NG OFFICER IS IN ORDER. 12. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT A S IN THE CASE OF THE ISSUE CONCERNING GROUND NO.1, THE ABSENCE O F THE TRIBUNAL WITH REGARD TO THE MATTER AT HAND ALSO STAND CONFIRME D BY THE HONBLE HIGH COURT AND THE ASSESSEE, THEREFORE, IS TO BE TREATED AS A BROKER AND NOT THE OWNER OF THE GOODS; THAT THE AMOUNT OF B ROKERAGE HAS ALSO BEEN CLEARLY STATED IN PAGES 1-3 OF THE SEIZED ANNEXUR E A-1 (COPY AT APB-I, PAGES 37-39); THAT THE DETAILED REPLY FILED B Y THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS WRONGLY IGNORED BY THE ASSESSING OFFICER; THAT AS SUCH, THE AUTHORITIES BELOW WERE WRON G IN TREATING THE TRANSACTION AS THAT OF THE ASSESSEE AND THE INCOME AS BELO NGING TO THE ASSESSEE. 13. THE LD. DR, ON THE OTHER HAND, HAS, AGAIN, PLACE D RELIANCE ON THE ORDER PASSED BY THE LD. CIT (A), CONTENDING THAT IT R EMAINS UNDISPUTED THAT THE ASSESSEE HAD TAKEN MUTUALLY CONTRADICTORY STAND BEFORE THE ASSESSING OFFICER AND THE ITAT. IT (SS) A NO.02/DEL/2010 12 14. WITH REGARD TO THIS ISSUE, IT IS SEEN THAT WHILE TH E ADDITION OF ` 19,14,067/- WAS MADE, THE BENEFIT OF TELESCOPING WAS G IVEN AND THIS ADDITION WAS MERGED WITH THE ADDITION MADE IN RESPEC T OF ALLEGED INVESTMENT OF THE ASSESSEE IN BUSINESS. THE EXPLANATION OF FERED BY THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER. BEF ORE THE TRIBUNAL, HE HAD CONTENDED THAT THE FORWARD TRANSAC TION DID NOT MATURE AND WAS CANCELLED. BEFORE THE ASSESSING OFFICER, HOWEVER, IN THE SUBSEQUENT PROCEEDINGS, HE CONTENDED THAT SHRI SHR EE RAM HAD REFUSED TO HONOUR HIS COMMITMENT AND SO, THE AMOUNT MA Y BE ALLOWED AS A BAD DEBT. THIS CONTENTION, HOWEVER, WAS NOT SUPPO RTED BY ANY EVIDENCE AND IT WAS THEREFORE, THAT THE ASSESSING OFFICE R MADE THE ADDITION. THE SAME WAS TELESCOPED AS ABOVE AND AS PER T HE DIRECTIONS OF THE TRIBUNAL, NO SEPARATE ADDITION ON THIS ACCOUN T WAS MADE. THESE FACTS HAVE RIGHTLY BEEN TAKEN INTO CONSIDERATION BY T HE LD. CIT (A) WHILE CONFIRMING THE ADDITION. 15. WE DO NOT FIND ANY REASON TO DIFFER WITH THE FIN DINGS OF FACT RECORDED BY THE LD. CIT (A). HENCE, GROUND NO.2 RA ISED BY THE ASSESSEE IS REJECTED. 16. APROPOS TO GROUND NO.3, IT STATES THAT THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF ` 15,500/- REPRESENTING THE ALLEGED UNEXPLAINED INVESTMENT BY THE ASSESSEE IN EKTA CO-OPERAT IVE GROUP HOUSING SOCIETY LTD. 17. THE ASSESSING OFFICER MADE ADDITION OF ` 60,500/- ON ACCOUNT OF ALLEGED INVESTMENT BY THE ASSESSEE IN EKTA CO-OPERATIVE GROUP HOUSING SOCIETY LTD. THE LD. CIT (A) CONFIRMED THE SAME. THE TRIBUNAL SET ASIDE THIS ADDITION BY OBSERVING AS FOLLOWS:- 39. WE HAVE HEARD THE PARTIES WITH REFERENCE TO MATERIA L ON RECORD. THE ASSESSEES EXPLANATION THAT THE BANK ACCOU NT FROM WHICH THE PAYMENT TO THE SOCIETY WERE MADE IS A DISCLOSE D ACCOUNT. THAT BEING SO, THE ADDITIONS COULD NOT HAVE B EEN IT (SS) A NO.02/DEL/2010 13 SUSTAINED AS UNDISCLOSED INCOME OF THE ASSESSEE UNLES S THE ASSESSING AUTHORITY WAS OF THE OPINION THAT THE INCOME R ECEIVED IN THE BANK ACCOUNT WERE NOT LIKELY TO BE DISCLOSED BY THE ASSESSEE. SINCE THE EXPLANATION OF THE ASSESSEE WAS C APABLE OF VERIFICATION, THE ASSESSING AUTHORITY OUGHT TO HAVE EXAMI NED THE SAME. THE A.O. HAS THUS COMMITTED A PROCEDURAL LAPSE IN NOT MAKING VERIFICATION OF THIS FACT. WE, THEREFORE, SET AS IDE THE ADDITION AND RESTORE THE MATTER BACK TO HIM FOR ADJUDICA TION OF DISPUTE IN THIS GROUND AFRESH. HE SHALL HOWEVER AFFO RD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE B EFORE TAKING A DECISION IN ACCORDANCE WITH LAW. 18. THE ASSESSING OFFICER WAS, THUS, DIRECTED BY THE ITAT TO RE- ADJUDICATE THE MATTER BY VERIFYING THE EXPLANATION OFFERED BY THE ASSESSEE, WHICH WAS TO THE EFFECT THAT THE BANK ACCOUNT FROM WHICH THE PAYMENT TO THE SOCIETY WAS MADE, WAS A DISCLOSED ACC OUNT AND SO, THE ADDITION COULD NOT BE SUSTAINED AS UNDISCLOSED INCO ME OF THE ASSESSEE. 19. IN THE SET ASIDE PROCEEDINGS, THE ASSESSING OFFICER C ONFIRMED THE ADDITION OF ` 15,500/-. THIS COMPRISED OF TWO PAYMENTS, THAT OF ` 500/- MADE BY THE ASSESSEE ON 15.07.1997 AND OF ` 15,000/- MADE BY THE ASSESSEE ON 09.08.1998. THE ASSESSEE HAD SUBMITTED BEFORE THE ASSESSING OFFICER THAT THESE AMOUNTS HAD BEEN PAID OUT O F CASH BALANCE AVAILABLE WITH HIM. THE ASSESSING OFFICER, HOW EVER, REFUSED TO ACCEPT SUCH EXPLANATION. THE LD. CIT (A) CONFIRMED THE ADDITION. 20. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTEN DED IN THIS REGARD THAT BOTH THE TAXING AUTHORITIES FAILED TO AP PRECIATE THE FACT THAT THE ASSESSEE HAD MADE A WITHDRAWAL OF ` 25,000/- ON 16.03.1998. OUR ATTENTION HAS BEEN DRAWN TO APB-I, PAGE 43, WHICH IS A COPY OF THE BANK ACCOUNT, SHOWING THE SAID WITHDRAWAL. IT HAS BEEN CONTENDED THAT THE AMOUNT OF ` 500/- WAS A SMALL AMOUNT PAID OUT OF THE MONEY AVAILABLE WITH THE ASSESSEE. IT (SS) A NO.02/DEL/2010 14 21. THE LD. DR, ON THE OTHER HAND, HAS RELIED ON TH E IMPUGNED ORDER IN THIS REGARD. IT HAS BEEN CONTENDED THAT UNDISPUTE DLY, THE ASSESSEE HAS REMAINED UNABLE TO DEMONSTRATE THE AVAILABILITY OF CASH IN HAND, WHICH FACT HAS BEEN DULY NOTED BY THE LD. CIT (A) WH ILE RIGHTLY CONFIRMING THE ADDITION MADE. 22. HAVING CONSIDERED THE RIVAL CONTENTIONS IN THE LI GHT OF THE MATERIAL ON RECORD, WE FIND THAT AS PER THE BANK STAT EMENT (SUPRA), THE ASSESSEE HAD MADE A WITHDRAWAL OF ` 25,000/- ON 16.03.1998. THE PAYMENT CAME ABOUT IN JULY, 1998. 23. IN VIEW OF THE ABOVE, THE GRIEVANCE OF THE ASSESSEE BY WAY OF GROUND NO.3 IS JUSTIFIED AND IS ACCEPTED AS SUCH. 24. GROUND NO.4 RAISED BY THE ASSESSEE STATES THAT THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF ` 24,253/- REPRESENTING ALLEGED SPECULATIVE INCOME EARNED BY THE ASSESSEE FROM FORWARD T RANSACTIONS. INITIALLY, THE ASSESSING OFFICER HAD MADE ADDITION OF ` 4,08,485/- ON THE BASIS OF SEIZED DOCUMENTS ANNEXURES A-2 TO A-8, BY TREAT ING THE TRANSACTIONS NOTED THEREIN TO BE THOSE OF THE ASSESSEE HIM SELF. THE TRIBUNAL SET ASIDE THIS ISSUE TO THE FILE OF THE ASSESSING O FFICER, ON THE BASIS OF ITS FINDING THAT THE ASSESSEE WAS A BROKER AND NOT A TRADER. THE TRIBUNAL OBSERVED, IN THIS REGARD, AS FOLLOWS:- 46. WE HAVE HEARD THE PARTIES WITH REFERENCE TO MATERIA L ON RECORD. THE ISSUE AS REGARDS INVESTMENT MADE BY THE ASSESSEE ON THE BASIS OF BALANCE SHEET AS ON 6.8.1998 FOUND AN D INVENTORISED AS ANNEXURE A-7/29 HAS ALREADY BEEN SET ASIDE AND RESTORED BACK TO THE A.O. IN GROUND NO.3 HEREINBEFORE. IN THAT VIEW OF THE MATTER THIS ISSUE IS ALSO RESTORED BACK TO THE A.O. FOR TAKING A DECISION AFRESH AND THE A.O. SHALL HAVE REGA RD TO THE ADDITION THAT HE MAY LIKE TO MAKE ON THE BASIS OF THAT DOC UMENT FOUND AS A RESULT OF SEARCH WHILE TAKING DECISION FOR THE SAID PAPER ALSO FOUND FROM HIM. THIS IS SO BECAUSE IF TH E A.O. IS SUSTAINING ADDITION ON THE BASIS OF INVESTMENT, A SEPA RATE IT (SS) A NO.02/DEL/2010 15 ADDITION FOR ESTIMATED INCOME FALLING WITHIN THAT INVES TMENT CANNOT BE ALLOWED TO BE SUSTAINED DUE TO DOCTRINE OF TELESCOPING. 25. IN THE SET ASIDE PROCEEDINGS, THE ASSESSING OFFICER AG AIN TREATED THESE TRANSACTIONS AS THOSE OF THE ASSESSEE, HOLDING THAT T HE DEPARTMENT WAS IN APPEAL AGAINST THE TRIBUNAL ORDER. HOWEVER, BENEFIT OF TELESCOPING TO THE EXTENT OF ` 3,84,232/- WAS GIVEN AND IT WAS THE BALANCE AMOUNT OF ` 24,253/-, WHICH WAS CONSIDERED AS THE ADDITIONAL INCOME OF THE ASSESSEE. THE LD. CIT (A) CON FIRMED THE ASSESSING OFFICERS ORDER. 26. THIS MATTER, IT IS SEEN, IS A DIRECT OFFSHOOT OF THE ISSUE CONCERNING GROUND NO.1. SINCE THE TRIBUNAL ORDER HAS BEEN CONF IRMED BY THE HONBLE HIGH COURT, THE ASSESSEE IS A BROKER AND BROKERA GE INCOME HAS ALREADY BEEN INCLUDED. THEREFORE, NO FURTHER INCOM E WAS REQUIRED TO BE CONSIDERED IN THE HANDS OF THE ASSESSEE WITH REGARD TO THESE TRANSACTIONS. ACCORDINGLY, GROUND NO.4 IS ACCEPTED. 27. GROUND NOS.5-7 ARE GENERAL. 28. AS PER GROUND NO.8, THE LD. CIT (A) HAS ERRED IN CONFIRMING THE LEVY OF INTEREST OF ` 1,88,100/-, U/S 158BFA (1) OF THE IT ACT. 29. IT IS SEEN THAT INTEREST U/S 158BFA (1) WAS CHARGED, STARTING FROM 22.11.1999, I.E., THE DAY WHEN THE NOTICE U/S 158BC OF THE ACT WAS ISSUED. NOW, AS POINTED OUT, THE SEIZED MATERIAL WAS MA DE AVAILABLE TO THE ASSESSEE ONLY ON 16.05.2000. IN THIS REGARD, THE ASSE SSMENT ORDER DATED 29.12.2000 (COPY AT APB-I, PAGE 57), STATES AS F OLLOWS:- IN RESPONSE TO NOTICE U/S 158BC OF THE IT ACT, 1961 DA TED 11.11.99, WHICH WAS SERVED UPON THE ASSESSEE ON 22.1 1.99 REQUIRING THE ASSESSEE TO FURNISH HIS RETURN OF INCOM E FOR THE IT (SS) A NO.02/DEL/2010 16 BLOCK PERIOD 1.4.88 TO 15.10.98 WITHIN 16 DAYS OF THE RECEIPT OF NOTICE, NO RETURN WAS FILED WITHIN THE STIPULATED PERIOD. ON 24.1.2000, A LETTER WAS RECEIVED FROM THE ASSESSEE AS KING FOR PHOTOCOPIES OF THE SEIZED MATERIAL IN ORDER TO PREPARE THE RETURN OF INCOME FOR THE BLOCK PERIOD. VIDE THIS LETTER, THE ASSESSEE ALSO REQUESTED FOR EXTENSION OF TIME FOR FILING RETURN OF BLOCK PERIOD. ON 6.4.2000, THE ASSESSEE WAS PROVIDED WITH THE PHOTOCOPIES OF THE PART SEIZED MATERIAL AND PHOTOCOPIES OF THE BALANCE OF THE SEIZED MATERIAL WERE PROVIDED ON 16.5. 2000. 30. NOW, ONCE THE SEIZED MATERIAL ITSELF WAS MADE AVAI LABLE, UNDISPUTEDLY, TO THE ASSESSEE ONLY ON 16.05.2000, THERE IS NO JUSTIFICATION IN CHARGING OF INTEREST U/S 158BFA (1) O F THE ACT FROM THE ASSESSEE, STARTING FROM NOVEMBER, 1999, UPTO MAY, 2000. IN BACHUBHAI S. ANTROLIA 288 ITR (AT) 57 (RAJ.), AS RI GHTLY POINTED OUT ON BEHALF OF THE ASSESSEE, IT HAS BEEN HELD THAT INTEREST U /S 158BFA (1) OF THE ACT CANNOT BE CHARGED TILL DATE WHEN THE XEROX COPIES OF THE SEIZED MATERIAL ARE PROVIDED TO THE ASSESSEE. 31. ACCORDINGLY, GROUND NO.8 IS ALSO ACCEPTED. 32. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PA RTLY ALLOWED, AS INDICATED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 19.10.20 12. SD/- SD/- [G.D. AGRAWAL] [A.D. JAIN] VICE PRESIDENT JUDICIAL MEMBER DATED, 19.10.2012. DK IT (SS) A NO.02/DEL/2010 17 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES