Appeal details
Counselvise Citation
[2021] 107 COUNSELVISE.COM (IT) 3420 (ITAT-PANAJI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 year(s) 11 month(s)
Appellant
Respondent
Appeal Type
Income Tax (Search & Seizure) Appeal
Pronouncement Date
06-10-2021
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB
Next Hearing Date
04-10-2021
Assessment Year
2007-2008
Appeal Filed On
06-11-2015
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI, BENCH PANAJI , , BEFORE SHRI LALIET KUMAR, JM AND DR. MITHA LAL MEENA, AM IT (SS) A NO S . 17 TO 22 /P AN/201 5 (AY: 20 07 - 2008 TO 201 2 - 201 3 ) DCIT, CENTRAL CIRCLE, PUNDALIK NIWAS, RUA - DE - OUREM, PANAJI, GOA VS SMT. NATALINA VAZ, BUNGLOW NO.4, MODELS MERIDIAN, MARINE ROAD, CARANZALEM, PANAJI - GOA PAN : AAYPV 2385 F ( / APPELLANT ) .. ( / RESP ONDENT ) AND CROSS OBJECTION NOS.85 TO 90/PAN/2016 (AY: 2007 - 2008 TO 2012 - 2013) (ARISING OUT OF IT(SS)A NOS. 17 TO 22/PAN/2015) SMT. NATALINA VAZ, BUNGLOW NO.4, MODELS MERIDIAN, MARINE ROAD, CARANZALEM, PANAJI - GOA PAN : AAYPV 2385 F VS DCIT, CENTRAL CIRCL E, PUNDALIK NIWAS, RUA - DE - OUREM, PANAJI, GOA ( / APPELLANT ) .. ( / RESPONDENT ) AND IT(SS)A NOS.28 TO 33/PAN/2015 (AY: 2007 - 2008 TO 2012 - 2013) DCIT, CENTRAL CIRCLE, PUNDALIK NIWA V S, RUA - DE - OUREM, PANAJI, GOA VS SMT. VANDA AFONSO, H.NO.E - 374, TIVAI VADDO, GALANGUTE, BARDEZ, GOA PAN : A BOPA 3000 B ( / APPELLANT ) .. ( / RESPONDENT ) AND CROSS OBJECTION NOS. 96 TO 101 /PAN/2016 (AY: 2007 - 2008 TO 2012 - 2013) (ARISING OUT OF IT(SS)A NOS. 28 TO 33 /PAN/2015) SMT. VANDA AFONSO, H.NO.E - 374, TIVAI VADDO, GALANGUTE, BARDEZ, GOA PAN : ABOPA 3000 B VS DCIT, CENTRAL CIRCLE, PUNDALIK NIWAS, RUA - DE - OUREM, PANAJI, GOA ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI PRABHAT JHA, CIT DR /ASSESSEE BY : SHRI SHRINIVAS NAYAK, CA / DATE OF HEARING : 0 4 /1 0 /202 1 / DATE OF PRONOUNCEMENT : 06 /10 /202 1 ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 2 / O R D E R PER BENCH : TH IS ORDER SHALL GOVERN THE DISPOSAL OF TWELVE APPEALS FILED BY THE REVENUE FOR THE ASSESSMENT YEARS 2007 - 2008 TO 2 012 - 2013 AND TWELVE CROSS OBJECTIONS FILED BY THE ASSESSEE ARISING OUT OF THE ABOVE APPEALS FILED BY THE REVENUE. 2. FIRST WE SHALL TAKE UP THE APPEALS OF THE REVENUE IN IT(SS)A NOS.17 TO 22/PAN/0015 IN CASE OF THE ASSESSEE - SMT.NATALINA VAZ ALONG WITH THE CROSS OBJECTIONS (CO NOS.85 TO 90/PAN/2016) FILED BY THE ASSESSEE. FOR THE SAKE OF CONVENIENCE, THE FACTS AND GROUNDS MENTIONED IN THE APPEAL OF REVENUE IN IT(SS)A NO.17/PAN/2015 FOR A.Y.2007 - 2008 ARE TAKEN TO BE CONSIDERED, WHEREIN THE GROUNDS MENTIONED A S UNDER : - 1. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE I.T. ACT. 2. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ACCEPTING FRESH EVIDENCE AND NOT GIVING OPPORTUNITY TO THE ASSESSING OFFICER AS PER SUB - RULE (3) TO RULE 46A OF IT RULES, 1962 . 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. C IT(A) ERRED IN HOLDING THAT THE AMOUNT OF RS. 81,51,723/ - ADVANCED BY MODELS CONSTRUCTION PVT. LTD. TO THE FIRM M/S MODELS REAL ESTATE DEVELOPERS CANNOT BE TREATED AS DIVIDEND UNDER SECTION 2(22)(E) OF THE INCOME TAX ACT IN THE HANDS OF THE ASSESSEE IN SPI TE OF THE FACT THAT THE ASSESSEE WAS HAVING SHARE HOLDING EXCEEDING 10% OF THE VOTING POWER IN THE SAID COMPANY AND ALSO HAVE SUBSTANTIAL INTEREST IN THE SAID FIRM? 4. FOR THE ABOVE GROUNDS AND ANY ADDITIONAL GROUNDS THAT MAY BE AGITATED DURING THE COURS E OF THE HEARING IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) - 2, PANAJI MAY BE QUASHED AND THAT OF THE AO RESTORED. 3. THE ASSESSEE HAS ALSO RAISED THE FOLLOWING COMMON GROUNDS IN THE ALL THE CROSS OBJECTIONS, FOR THE SAKE OF CONVENIENCE THE GROUNDS RAIS ED IN ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 3 THE CROSS OBJECTION I.E. CO NO.85/PAN/2016 (AY: 2007 - 2008) HAVE BEEN TAKEN INTO CONSIDERATION FOR DECIDING THE ISSUE, WHICH READ AS UNDER : - 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX {APPEALS] IN SO FAR AS IT IS AGAINST THE RESPONDENT / CRO SS OBJECTOR ARE OPPOSED TO TAW, WEIGHT OF EVIDENCE, NATURAL JUSTICE, FACTS AND CIRCUMSTANCES OF THE CASE, 2. THE RESPONDENT / CROSS OBJECTOR DENIES HERSELF LIABLE TO BE ASSESSED UNDER SECTION 154 OF THE ACT UNDER THE IMPUGNED ORDER ON THE GROUNDS THAT: - I. THE PROCEEDING INITIATED U/S 154 IS VOID AB INITIO IN AS MUCH M IT IS ILLEGAL AND ULTRA VIRES THE PROVISIONS OF SECTION 154 OF THE ACT; II. THE MANDATORY CONDITION THAT A RECTIFICATION U/S 154 CAN BE RESORTED TO ONLY IN SUCH CASES WHERE THERE IS A MISTAKE APPARENT IN THE SAID ORDER DOES NOT EXIST IN ORDER GIVE NECESSARY JURISDICTION TO THE ASSESSING OFFICER TO INITIATE PROCEEDINGS U/S 154 OF THE ACT. III. THE INITIATION OF THE PROCEEDING U/S 154 OF THE ACT IS NOT ON THE BASIS OF ANY ORDER PASSED IN THE CASE OF THE RESPONDENT /CROSS OBJECTOR AND IN THE ABSENCE OF SUCH ORDER, WHICH IS SINE QUA NON FOR PROCEEDINGS TO BE INITIATED U/S 154, THE CONSEQUENT RECTIFICATION PASSED U/S 154 IS NULL AND VOID - AB - INITIO. 3. THE LEARNED COMMISSIONER OF INCOME - TAX [APPEALS] FAILED TO APPRECIATE THE FACT THAT THERE WAS NO. ORIGINAL ASSESSMENT PROCEEDING INITIATED AGAINST THE RESPONDENT /CROSS OBJECTOR AND CONSEQUENTLY NO ASSESSMENT ORDER WAS PASSED EITHER U/S 143(3) OR 143(3) R.W.S.147 OR 143(3) R.W.S. 153C AND NO NOTICE OF DEMAND U/S 156 WAS RAISED ON THE RESPONDENT /CROSS OBJECTOR AT ALL IN RESPECT OF THE IMPUGNED ASSESSMENT YEAR AND HENCE THERE WAS NO ORDER WHICH COULD RECTIFIED U/S 154. THERE BEING NO SUCH ORDER IN THE CASE OF THIS RESPONDENT /CROSS OBJECTOR, THE RECTIFICATION U/S 1 54 FAILS AS BEING NULL AND VOID, AB INITIO. 4. THE TEAMED COMMISSIONER OF INCOME [ APPEALS] FAILED TO APPRECIATE THAT THE ORDER OF RECTIFICATION PASSED BY THE LEARNED ASSESSING OFFICER IS BAD IN LAW AS THE MANDATORY CONDITIONS TO INVOKE THE JURISDICTION U/S. 1 54 OF THE INCOME - TAX ACT, 1961 DID NOT EXIST OR HAVING NOT BEEN COMPLIED WITH AND CONSEQUENTLY THE RECTIFICATION MADE IS BAD IN LAW FOR WANT OF REQUISITE JURISDICTION. 5 . WITHOUT PREJUDICE TO THE RIGHT TO SEEK WAIVER AS PER THE PARITY OF REASONING OF THE D ECISION OF THE HON'BLE APEX COURT IN THE CASE OF KARANVIR SINGH 349 ITR 692, THE RESPONDENT / CROSS OBJECTOR DENIES ITSELF LIABLE TO BE CHARGED TO INTEREST UNDER SECTION 234 A, 234 B & 234 C OF THE INCOME TAX ACT UNDER THE FACTS AND CIRCUMSTANCES OF THE CA SE. FURTHER THE LEVY OF INTEREST UNDER SECTION 234 A, 234 B ST 234 C OF THE ACT IS ALSO BAD IN LAW AS THE PERIOD, RATE, QUANTUM AND METHOD OF CALCULATION ADOPTED ON WHICH INTEREST IS LEVIED ARE ALL NOT DISCERNIBLE AND ARE WRONG ON THE FACTS OF THE CASE. ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 4 6. TH E RESPONDENT / CROSS OBJECTOR CRAVES LEAVE OF THIS HON'BLE TRIBUNAL, TO ADD, ALTER, DELETE OR SUBSTITUTE ANY OF THE GROUNDS URGED ABOVE. IN VIEW OF THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEATING OF THE CROSS OBJECTION, YOUR RESPONDENT / CROSS OBJECTOR HUMBLY PRAY THAT THE CROSS OBJECTION MAY BE ALLOWED IN THE INTEREST OF EQUITY AND JUSTICE. 4 . CONCISE FACTS OF THE CASE ARE THAT PETER VAZ AND EDGAR AFONSO WERE THE PARTNERS HOLDING 50% STAKE RESPECTIVELY IN THE PARTNERSHIP FIRM FUNCTIO NING UNDER THE NAME AND STYLE MODELS REAL ESTATE DEVELOPERS. THEY ALSO HELD EQUAL STAKE AS SHAREHOLDERS OF THE COMPANY MODELS CONSTRUCTIONS PRIVATE LIMITED. BOTH THE FIRM AS WELL AS THE COMPANY WERE ENGAGED IN THE BUSINESS OF REAL ESTATE, CONSTRUCTION A ND DEVELOPMENT. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN THE PREMISES ASSESSEE FIRM ON 31.01.2012 U/S.132 OF THE ACT IN PURSUANCE THEREOF, SEARCH NOTICES WERE ISSUED ON 30.07.2012 TO PETER VAZ AND EDGAR AFONSO CALLING UPON THEM TO FILE RETURNS OF IN COME FOR THE A.Y.2006 - 2007 TO 2011 - 2012. FOR THESE ASSESSMENT YEARS, THE ORIGINAL ASSESSMENT HAD ALREADY BEEN COMPLETED U/S.143(1) OF THE ACT. BOTH PETER VAZ AND EDGAR AFONSO RESPONDED TO THE NOTICES U/S.153C OF THE ACT SUBMITTING INTER ALIA THE RETURNS OR IGINAL FILED BY THEM U/S.139(1) OF THE ACT MAY BE TREATED AS RETURNS IN RESPONSE TO THE NOTICES U/S.153C OF THE ACT. 5 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, PETER VAZ AND EDGAR AFONSO WERE REQUIRED TO SHOW CAUSE AS TO WHY THE LOANS GIVEN BY THE SAI D COMPANY TO THE SAID FIRM SHOULD NOT BE TREATED AS DEEMED DIVIDEND IN THE HANDS OF PETER VAZ AND EDGAR AFONSO IN TERMS OF SECTION 2(22)(E) OF THE ACT. BOTH OF THEM FILED DETAILED RESPONSES SUBMITTING HOW ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 5 ACCORDING TO THEM, THE PROVISIONS OF SECTION 2(22 )(E) OF THE ACT WERE NOT AT ALL ATTRACTED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 6 . THE AO VIDE ASSESSMENT ORDER DATED 31.03.2014 HOWEVER, HELD THAT THE AMOUNTS REFLECTED IN THE BOOKS OF THE SAID FIRM AS PAYABLE TO THE COMPANY WERE LIKE LOANS AND ADV ANCES AND ACCORDINGLY, DIRECTED THAT THE SAME BE TREATED AS DEEMED DIVIDEND U/S.2(22)(E) OF THE ACT. THESE AMOUNTS WERE ADDED TO THE INCOME OF THE ASSESSEES PETER VAZ AND EDGAR AFONSO AND BROUGHT TO ADDITIONAL TAX. 7 . AGGRIEVED BY THE ASSESSMENT ORDER DATED 31.03.2014, THE ASSESSEES PETER VAZ AND EDGAR AFONSO APPEALED TO THE CIT(A). BY ORDER DATED 28.07.2015, THE CIT(A) ALLOWED THE APPEALS AND HELD THAT THE AMOUNTS REFLECTED IN THE BOOKS OF THE SAID FIRM COULD NOT NE TREATED AS DEEMED DIVIDEND U/S.2( 22)(E) OF THE ACT. ACCORDINGLY, THE ASSESSMENT ORDERS DATED 31.03.2014 MADE BY THE AO WERE SET ASIDE. 8 . AGGRIEVED THEREBY, THE REVENUE PREFERRED APPEAL BEFORE THE TRIBUNAL. DURING THE PENDENCY OF THE APPEALS, THE ASSESSES REQUESTED THE ACIT TO FURNISH THE M A COPY OF SATISFACTION FOR ISSUANCE OF NOTICE U/S.153C OF THE ACT. SUCH COPIES WERE FURNISHED TO THE ASSESSES ON 22.08.2016 OR THEREABOUTS. HOWEVER, THE DOCUMENTS WHICH WERE RELIED UPON BY THE ACIT WERE NOT FURNISHED TO THE ASSESSEE. THEREFORE, THE ASSES SES BY LETTERS DATED 25.08.2016 SOUGHT THE SAME. THERE WAS NO RESPONSES TO THESE LETTERS DATED 25.08.2016. THE ASSESSEE ALSO FILED CROSS OBJECTIONS BEFORE THE TRIBUNAL. THE TRIBUNAL BY A CONSOLIDATED ORDER DATED 02.12.2016 ALLOWED THE APPEALS FILED BY THE REVENUE BUT DISMISSED THE ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 6 CROSS OBJECTIONS OF THE ASSESSED BY REFUSING TO CONDONE THE DELAY OF 248 DAYS IN FILING OF THE SA ME . 9. FEELING AGGRIEVED, THE ASSESSEE PREFERRED APPEALS BEFORE THE HONBLE JURISDICTIONAL HIGH COURT AND THE HONBLE HIGH COURT R EMANDED THE MATTER BACK TO THE FILE OF ITAT FOR FRESH CONSIDERATION OF APPEALS FILED BY THE REVENUE AFTER PERMITTING THE ASSESSES TO RAISE THE ISSUE OF NON - COMPLIANCE WITH THE JURISDICTIONAL PARAMETERS OF SECTION 153C OF THE ACT. THE DIRECTION ISSUED BY T HE HONBLE HIGH COURT ARE AS UNDER : - 50. IN PARAGRAPH 27 OF THE IMPUGNED JUDGMENT AND ORDER MADE BY THE ITAT, THERE IS A REFERENCE TO THE ITAT SPECIFICALLY INQUIRING WITH THE DEPARTMENTAL REPRESENTATIVE TO PRODUCE THE SATISFACTION NOTE RECORDED BY THE ASS ESSING OFFICER OF THE PERSON SEARCHED. THE ORDER RECORDS THAT THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSMENT FILES ARE NOT IMMEDIATELY AVAILABLE, BUT IN THE EVENT, THE TRIBUNAL WAS PLEASED TO ADMIT THE CROSS - OBJECTIONS, THEN, THE SAME WILL B E PRODUCED AS THE FILES WERE SPLIT AND WERE AT THE OFFICE OF THE ASSESSING OFFICER AT CENTRAL CIRCLE AS ALSO THE ASSESSING OFFICER OF THE ASSESSEES. THE IMPUGNED ORDER OF THE ITAT ALSO REFERS TO VERIFICATION OF CERTAIN FACTS IN THE CONTEXT OF ACTION UNDER SECTION 153C OF THE IT ACT. 51. HAVING REGARD TO THE AFORESAID, WE AGREE WITH MS. LINHARES THAT THE MATTER WILL HAVE TO BE REMANDED TO THE ITAT FOR FRESH CONSIDERATION OF APPEALS INSTITUTED BY THE REVENUE AFTER PERMITTING THE ASSESSEES TO RAISE THE ISSUE OF NONCOMPLIANCE WITH THE JURISDICTIONAL PARAMETERS OF SECTION 153C OF THE IT ACT. 52. ACCORDINGLY, WE SET ASIDE THE IMPUGNED JUDGMENT AND ORDER IN SO FAR AS IT CONCERNS THE PRESENT ASSESSEES AND REMAND THE MATTERS TO THE ITAT WITH A DIRECTION TO PERMIT THE ASSESSEES TO RAISE THE ISSUE OF COMPLIANCE OR NONCOMPLIANCE WITH THE JURISDICTIONAL PARAMETERS NECESSARY TO INITIATE ACTION UNDER SECTION 153C OF THE IT ACT. AT THE SAME TIME, WE MAKE IT CLEAR THAT ALL CONTENTIONS OF ALL PARTIES, INCLUDING, OTHER CONT ENTIONS RAISED IN THESE APPEALS ARE EXPRESSLY KEPT OPEN AND MAY NOT BE DEEMED TO HAVE BEEN DECIDED BY US ONE WAY OR OTHER. THE ONLY REASON WE HAVE NOT ADVERTED TO THE OTHER ISSUES IS THAT IF THE JURISDICTIONAL ISSUE IS ULTIMATELY UPHELD BY THE ITAT, THEN I T MAY NOT BE NECESSARY TO DECIDE THE OTHER ISSUES. 53. THE PARTIES TO NOW APPEAR BEFORE THE ITAT ON 26TH APRIL 2021 AT 11.00 A.M. AND FILE AUTHENTICATED COPY OF THIS ORDER. WE REQUEST THE ITAT TO DISPOSE OF SUCH APPEALS AS EXPEDITIOUSLY AS POSSIBLE BY GRA NTING A FULL OPPORTUNITY TO BOTH THE ASSESSEES AS WELL AS THE REVENUE. ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 7 10 . NOW, THE ABOVE APPEALS HAVE BEEN LISTED FOR HEARING BEFORE US FOR DECIDING THE ISSUES AS PER THE DIRECTION OF THE HONBLE JURISDICTIONAL HIGH COURT, MENTIONED IN PARAGRAPH 52 SUPRA OF THE HIGH COURTS ORDER AND THE JURISDICTIONAL GROUNDS REPRODUCED HEREINABOVE. 11 . L D. DR FOR THE REVENUE HAD FILED CONSOLIDATED PAPER BOOK IN RESPECT OF MR. PETER VAZ AND IN THE PAPER BOOK IT HAS CATEGORICALLY BEEN MENTIONED THAT THERE IS NO SATISFACT ION NOTE ON THE RECORD OF THE AO OF SMT. NATALINA VAZ AND SMT. VAN DA AFONSO. THE SUBMISSION MADE BY THE CITDR, AS MENTIONED IN THE WRITTEN SUBMISSION DATED 01.09.2021 AS UNDER : - F.NO. DCIT/C - L(L)/PNJ/2021 - 22 DATE : 01.09.2021 TO, THE COMMISSIONER OF IN COME TAX(DR) ITAT PANAJI, GOA SIR, SUB: SUBMISSION OF RECORDS IN 153C CASES - FOR PRODUCING BEFORE THE ITAT PUNE - REG. REF.: 1. THE CIT(DR) PANAJI LETTER IN F.NO. INFO/CIT(DR)/ITAT/PNJ/2021 - 22, DT. 11.08.2021. 2. THIS OFFICE LETTER NO. MISC./DCIT - L(L)/PNJ/2 021 - 22 DTD. 17 - 08 - 2021 ******* KINDLY REFER TO THE ABOVE. I AM HERE TO SUBMIT THE CERTIFIED COPIES OF SEIZED DOCUMENTS RELIED ON BY THE ASSESSING OFFICER FOR INITIATION OF ASSESSMENT PROCEEDINGS U/S 153C FOR ASSESSMENT YEAR 2006 - 07 TO ASSESSMENT YEAR 2011 - 12 IN THE CASES MENTIONED BELOW. I MAY ALSO SUBMIT HERE THAT AS VERIFIED FROM ASSESSMENT RECORDS RECEIVED ON TRANSFER FROM DCIT CENTRAL CIRCLE - 1 PANAJI ON 13.07.2016 THAT THGRE ARE ONLY SINGLE ORDER SHEET MADE IN RESPE CT OF ALL THE ASSESSMENT YEARS INVOLVED IN THE CASE OF MR EDGAR BRAZ S NAME OF ASSESSEE A.Y. NAME OF ASSESSEE A.Y. 1 MR. EDGER BRAZAFONSO[ABC>PA3001A] 2006 - 07 MRS. VANDA AFONSO[ABC)PA3000B]. 2006 - 07 2 MR. EDGER BRAZAFONSO[ABOPA3001A] 2007 - 08 MRS. VANDA AFONSO[ABOPA 3000B]. 2007 - 08 3 MR. EDGER BRAZAFONSO[ABOPA3001A] 2008 - 09 MRS. VANDA AFONSO[ABC>PA3000B]. 2008 - 09 4 MR. EDGER BRAZAFONSO[ABC>PA3001A] 2009 - 10 MRS. VANDA AFONSO[ABOPA3C)OOB]. 2009 - 10 5 MR. EDGER BRAZAFONSO[ABOPA3001A] 2010 - 11 MRS. VANDA AFONSO[ABOPA3000 B], 2010 - 11 6 MR. EDGER BRAZAFONSO[ABOPA3001A] 2011 - 12 MRS. VANDA AFONSO[ABQPA3000B]. 2011 - 12 ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 8 AFONSO. SINCE THE ASSESSEE IS COVERED U/S 5A OF THE INCOME TAX ACT, 1961 THE PROCEEDINGS U/S 153C WERE ALSO INITIATED IN THE CASE OF HIS SPOUSE MRS. VANDA AFONSO FOR THE SAME ASSESSMENT Y EARS. FURTHER, NO SATISFACTION NOTES FROM THE ASSESSING OFFICER FOR FORWARDING OF INFORMATION IN THE CURRENT CASES FOR INITIATION OF PROCEEDINGS U/S 153C ARE AVAILABLE ON RECORDS. I AM FURNISHING HEREWITH THE CERTIFIED COPIES OF FOLLOWING DOCUMENTS FOR SUB MISSION BEFORE THE HON'BLE ITAT PUNE: 1. COPY OF THE ORDER SHEET IN THE CASE OF MR EDGAR B AFONSO FOR AY 2006 - 07 TO 2011 - 12. COPY OF THE SEIZED DOCUMENTS VIDE EXHIBIT NO. A/EBA/01 [THIS HAS BEEN INADVERTENTLY MENTIONED AS A/EBA/10 IN THE ORDER SHEET. HOWEVER, AS SEEN FROM SEIZURE ANNEXURE A/EBA DTD.31.01.2012 ITS ITEM 01 (COPY OF THE ANNEXURE IS ATTACHED FOR IMMEDIATE REFERENCE)] 3. COPY OF THE CASH SEIZURE PANCHANAMA DTD. 31.01.2012 IN SUPPORT OF CASH SEIZURE MENTIONED IN ORDER SHEET. IN THE LIGHT OF THE AB OVE, IT WAS SUBMITTED THAT THE APPEAL MAY BE DECIDED ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD AND ALSO ON THE BASIS OF THE LAW LAID DOWN BY THE HONBLE SUPREME COURT. 12 . PER CONTRA , LD. AR OF THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS WHICH READ A S UNDER : - 1. THE ASSSESSE HAD RAISED THE JURISDICTIONAL GROUND NO. 2 & 3 IN THE GROUNDS OF CROSS OBJECTIONS FILED WITH THE HON. ITAT, THE COPY OF THE GROUNDS OF APPEAL IS ENCLOSED. ANNEX - 1 2. AS PER THE PAPER - BOOK FILED BY THE DR; THERE IS NO SATISFACTIO N RECORDED IN THE FILE OF THE ASSESSEE AND ALSO NO SATISFACTION RECORDED IN THE FILE OF THE SEARCHED PERSON FOR ISSUE OF THE NOTICE U/S 153C OF THE INCOME TAX ACT'1961. 3. FURTHER, NO NOTICE WAS ISSUED U/S 153C OF THE INCOME TAX ACT'1961 ON THE ASSESEE. O NLY NOTICE U/S 154 OF THE IT ACT, HAS BEEN ISSUED AND RECTIFICATION HAS BEEN CARRIED OUT U/S 154 OF THE IT ACT. COPY OF THE NOTICE ENCLOSED. ANNEX - 2 4. NO ORDER U/S 153C HAS BEEN PASSED IN THE ASSESSES CASE BY THE DEPARTMENT. 5. THE 154 RECTIFICATION WAS DONE BY THE DEPARTMENT BY ISSUE OF NOTICE U/S.154 OF THE IT ACT, AND RECTIFIED THE INTIMATION ISSUED U/S.143(1) OF THE ACT. THE COPY OF THE INTIMATION AND THE RECTIFICATION ORDER IS ENCLOSED. ANNEX - 3. 6. FURTHER, AS PER THE SPOUSE IS COVERED U/S 5A OF THE INCOME TAX ACT'1961, THEY HAVE TO BE ASSESEED SEPARATELY BY ISSUING NECESSARY NOTICES AND THE SEPARATE ORDER HAS TO BE PASSED. WE RELY UPON THE DECIDED IN THE CASE OF ADDITIONAL COMMISSIONER OF INCOME TAXVSMR. & MRS. VALENTINO F. PINTO [TS - 5444 - HC - 1983(BO MBAY) - O], ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 9 (1983) 37 CTR 0201, (1984) 150 ITR 0408, (1983) 15 TAXMAN 0433 IN THE HIGH COURT OF BOMBAY WHERE IT WAS HELD THAT 'IN PURUSHOTAM GANGADHAR BHENDE'S CASE (SUPRA), ALTHOUGH THE INCOME BEING CONSIDERED WAS INCOME FROM HOUSE PROPERTY, THE PROVISIONS OF THE PORTUGUESE CIVIL CODE AS WELL AS ARTICLE II 92 OF THE COMMERCIAL CODE WERE CONSIDERED AND IT WAS OBSERVED THAT THE RESPECTIVE HALF SHARES OF THE HUSBAND AND WIFE IN THE INCOME FROM THE HOUSE PROPERTY, WHICH WAS THE PROPERTY OF THE COMMUNION OF THE H USBAND AND WIFE MARRIED ACCORDING TO THE CUSTOM OF GOA, SHOULD BE ASSESSED SEPARATELY IN EQUAL SHARES IN THE HANDS OF EACH OF THEM, AND NOT IN THE HANDS OF' THE BOI' OF THE COMMUNION OF HUSBAND AND WIFE. THIS RATIO WOULD SEEM TO APPLY TO ALL TYPES OF INCOM E AND CANNOT BE RESTRICTED TO HOUSE PROPERTY. IF THAT BE SO, THE TWO QUESTIONS REFERRED TO US CAN BE ANSWERED WITHOUT FURTHER ELABORATE DISCUSSION, EITHER FACTUAL OR LEGAL.' 7. AS SUCH THE ORDER PASSED BY AO U/S 154 OF THE INCOME TAX ACT'1961, WITHOUT FOL LOWING THE PROCEDURE AS LAID DOWN U/S 153C OR 147 OF THE IT ACT., IS BAD IN LAW AND DESERVES TO BE QUASHED. AS SUCH WE HUMBLY REQUEST YOUR HONOUR TO TAKE THE ABOVE SUBMISSION ON RECORD AND DISPOSAL OF THE APPEAL WHILE UPHOLDING NATURAL JUSTICE. FURTHER, THE LD. AR OF THE ASSESSEE DREW OUR ATTENTION TO PARAS 52 TO 55 OF THE ORDER OF THE HONBLE HIGH COURT IN ITA NOS.19 OF 2017 ALONG WITH OTHER CONNECTED APPEALS, WHEREBY THE HONBLE HIGH COURT HAD REMANDED BACK THE MATTER TO THE TRIBUNAL WITH THE DIRECTION TO DECIDE THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IN RESPECT TO SATISFACTION OF THE VARIOUS REQUIREMENTS OF SECTION 153C OF THE ACT. 13 . IT WAS ALSO SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT THE JURISDICTIONAL REQUIREMENT AS CONTEMPLATED U/S.153C OF THE ACT IS RECORDING OF SATISFACTION NOT ONLY BY THE AO OF THE PERSON SEARCHED BUT ALSO THE RECORDING OF SATISFACTION BY THE OTHER PERSON NAMELY THE ASSESSEE BEFORE US. IT WAS SUBMITTED THAT IN THE PRESENT CASE THERE IS NO SATISFACTION ON RECORD AVAILAB LE IN THE FILE OF THE AO, THEREFORE, REQUIREMENT OF SECTION 153C OF THE ACT ARE NOT FULFILLED AND, THUS, THE ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 10 ASSESSMENT ORDER PASSED IN THE CASE OF SMT. NATALINA VAZ AND SMT. VANDA AFONSO ARE REQUIRED TO BE QUASHED. 13 .1 NO SATISFACTION WAS RECORDED IN THE CASE OF THE ASSESSEE FOR INITIATION OF PROCEEDINGS U/S.153C OF THE ACT EITHER IN THE FILE OF THE ASSESSEE OR IN THE FILE OF THE SEARCHED PERSON. FURTHER, NO NOTICE U/S.153C OF THE ACT WAS ISSUED. IT WAS ALSO SUBMITTED THAT NO ORDER U/S.143(3) R.W.S.153C W AS PASSED BY THE ASSESSING OFFICER IN THE CASE OF THE ASSESSEE. IT WAS SUBMITTED BY THE LD. AR THAT A NOTICE U/S.154 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 11.11.2014 FOR CORRECTING THE MISTAKE AND IN THE NOTICE IT WAS PROPOSED TO MAKE THE ADDITION OF 50 % OF THE TOTAL ADDITION I.E. RS.2,70,47,803 IN THE HANDS OF THE ASSESSEE U/S.153C R.W.S.143(3) OF THE ACT. IT WAS SUBMITTED BY THE LD. AR THAT NO RECTIFICATION ORDER CAN BE PASSED U/S.153C R.W.S.143(3) OF THE ACT UNLESS THE ORIGINAL ORDER WAS PASSED U/S. 143(3) R.W.S.153C OF THE ACT. THE ASSESSEE HAD ALSO PRODUCED THE INTIMATION ISSUED U/S.143(1) OF THE ACT IN THE CASE OF THE ASSESSEE. THE ABOVE SAID FACTS HAVE NOT BEEN CONTROVERTED BY THE REVENUE BEFORE US. 14 . WE HAVE HEARD RIVAL CONTENTIONS OF THE PARTI ES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE RELEVANT PROVISIONS OF SECTION 153C OF THE ACT AS AVAILABLE ON THE STATUTE BOOK ON 01.04.2014 WAS AS UNDER : - 153C. ASSESSMENT OF INCOME OF ANY OTHER PERSON. - [ (1) ] NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONG S OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 11 TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON [ AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A , IF, THAT ASSESSING OFFICER IS SATISFIED THAT THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED HAVE A BEARING ON THE DETERMINATION OF THE TOTAL INCOME OF SUCH OTHER PERSON FOR THE RELEVANT ASSESSMENT YEAR OR YEARS REFERRED TO IN SUB - SECTION (1) OF SECTION 153A] : PROVIDED THAT IN CASE OF SUCH OTHER PE RSON, THE REFERENCE TO THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A IN THE SECOND PROVISO TO SUB - SECTION (1) OF SECTION 153A SHALL BE CONSTRUED AS REFERENCE TO THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON. [PROVIDED FURTHER THAT THE CENTRAL GOVERNMENT MAY BY RULES MADE BY IT AND PUBLISHED IN THE OFFICIAL GAZETTE, SPECIFY THE CLASS OR CLASSES O F CASES IN RESPECT OF SUCH OTHER PERSON, IN WHICH THE ASSESSING OFFICER SHALL NOT BE REQUIRED TO ISSUE NOTICE FOR ASSESSING OR REASSESSING THE TOTAL INCOME FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED OR REQUISITION IS MADE EXCEPT IN CASES WHERE ANY ASSESSMENT OR REASSESSMENT HAS ABATED.] [(2) WHERE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED AS REFERRED TO IN SUB - SECTION (1) HAS OR HAVE BEEN RECEIVED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AFTER THE DUE DATE FOR FURNISHING THE RETURN OF INCOME FOR THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED UNDER SECTION 132 OR REQUISITION IS MADE UNDER SECTION 1 32A AND IN RESPECT OF SUCH ASSESSMENT YEAR (A) NO RETURN OF INCOME HAS BEEN FURNISHED BY SUCH OTHER PERSON AND NO NOTICE UNDER SUB - SECTION (1) OF SECTION 142 HAS BEEN ISSUED TO HIM, OR (B) A RETURN OF INCOME HAS BEEN FURNISHED BY SUCH OTHER PERSON BUT NO NOTICE UNDER SUB - SECTION (2) OF SECTION 143 HAS BEEN SERVED AND LIMITATION OF SERVING THE NOTICE UNDER SUB - SECTION (2) OF SECTION 143 HAS EXPIRED, OR (C) ASSESSMENT OR REASSESSMENT, IF ANY, HAS BEEN MADE, BEFORE THE DATE OF RECEIVING THE BOOKS OF ACCOUNT O R DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON, SUCH ASSESSING OFFICER SHALL ISSUE THE NOTICE AND ASSESS OR REASSESS TOTAL INCOME OF SUCH OTHER PERSON OF SUCH ASSESSMENT YEAR IN THE MANNER PROVIDED IN SECTION 153A. ] ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 12 15. FROM THE PERUSAL OF THE SECTION 153C OF THE ACT, IT IS ABUNDANTLY CLEAR THAT THE AO OF THE SEARCHED PERSON WAS REQUIRED TO RECORD THE SATISFACTION THAT THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING SEIZED OR REQUISITIONED DURING THE SEARCH CONDUCTED U/S.132 OF THE ACT BELONGED TO A PERSON OTHER THAN THE PERSON REFERRED TO SECTION 153A OF THE ACT, THEN THE BOOKS OF ACCOUNTS OR DOCUMENT OR ASSET SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE AO HAVING JU RISDICTION OVER SUCH PERSON. IN OUR VIEW THE RECORDING SATISFACTION IS ESSENTIAL NOT ONLY BY THE AO OF THE PERSON SEARCHED U/S.153A OF THE ACT BUT ALSO U/S.153C OF THE ACT. IN THE ABSENCE OF RECORDING OF SATISFACTION BY ONE OF THEM OR EITHER OF THE TWO OR BOTH OF THEM, NO ADDITION CAN BE MADE U/S.153C AND THE ASSESSMENT ORDER PASSED BY THE AO U/S.153C OF THE ACT IS REQUIRED TO BE ANNULLED OR QUASHED. FOR THE ABOVE SAID PURPOSE, WE MAY FRUITFULLY RELY UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CAS E OF COMMISSIONER OF INCOME TAX V. CALCUTTA KNITWEARS (2014) 6 SCC 444 , W HEREIN THE HONBLE SUPREME COURT HAS LAID DOWN THE LAW IN THE FOLLOWING MANNER : - 18. IN ORDER TO RESOLVE THE CONTROVERSY, CERT AIN PROVISIONS OF THE ACT REQUIRE TO BE NOTICED BY US. 19. CHAPTER XIV - B OF THE ACT IS A SPECIAL PROVISION CARVED OUT BY THE LEGISLATURE FOR THE PURPOSE OF THE ASSESSMENTS IN CASES PERTAINING TO SECTIONS 132 AND 132A OF THE ACT. THE SAID CHAPTER WAS INTRODUCED BY THE FINANCE ACT , 1995 WITH EFFECT FROM 01.07.1995 AND COMPRISES SECTIONS 158B TO 158BH OF THE ACT. THE PROVISIONS UNDER THIS CHAPTER WERE MADE INAPPLICABLE IN CASE OF SEARCH INITIATED UNDER SECTION 132 OR SECTION 132A AFTER 31.05.2003 BY INTRODUCTION OF AN AMENDMENT TO THE CHAPTER AS SECTION 158BI VIDE THE FINANCE ACT , 2003 WITH EFFECT FROM 01.06.2003. THE LIS BEFORE US REQUIRES EXAMINATION OF THE PROVISIONS OF THE SAID CHAPTER, PARTICULARLY SECTION 158BD . ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 13 20. SECTION 158B OF THE ACT IS THE DICTIONARY CLAUSE. IT PROVIDES FOR THE DEFINITION OF BLOCK PERIOD AND UNDISCLOSED INCOME. FOR THE PURPOSE OF THIS CASE, A REFERENCE TO THE DEFINITION OF THE UNDISCLOSED INCOME AS PRO VIDED FOR IN SECTION 158B(B) IS NECESSARY AND, THEREFORE, IT IS NOTICED. THE SAME READS AS UNDER: UNDISCLOSED INCOME' INCLUDES ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY INC OME BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS, WHERE SUCH MONEY, BULLION, JEWELLERY, VALUABLE ARTICLE, THING, ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENT OR TRANSACTION REPRESENTS WHOLLY OR PARTLY INCOME OR PROPERTY WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSES OF THIS ACT [OR ANY EXPENSE, DEDUCTION OR ALLOWANCE CLAIMED UNDER THIS ACT WHICH IS FOUND TO BE FALSE]. 21. SECTIONS 158BC AND 158BD OF THE ACT ARE MACHINERY PROVISIONS. SECTION 158BC OF THE ACT PROVIDES THE PROCEDURE FOR BLOCK ASSESSMENT AND SECTION 158BD OF THE ACT PROVIDES FOR ASSESSMENTS IN THE CASE OF AN UNDISCLOSED INCOME OF ANY OTHER PERSON. THE SAID SECTIONS ARE RELEVANT FOR THE PURPOSE OF THIS CASE AND, THEREFORE, THEY ARE EXTRACTED. THEY READ AS UNDER: SECTION 158BC . PROCEDURE FOR BLOCK ASSESSMENT. WHERE ANY SEARCH HAS BEEN CONDUCTED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ASSETS ARE REQUISITIONED UN DER SECTION 132A , IN THE CASE OF ANY PERSON, THEN, - [(A) THE ASSESSING OFFICER SHALL, (I) IN RESPECT OF SEARCH INITIATED OR BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ANY ASSETS REQUISITIONED AFTER THE 30TH DAY OF JUNE, 1995 BUT BEFORE THE 1ST DAY OF JANUARY, 1997 SERVE A NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH WITHIN SUCH TIME NOT BEING LESS THAN FIFTEEN DAYS; (II) IN RESPECT OF SEARCH INITIATED OR BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ANY ASSETS RE QUISITIONED ON OR AFTER THE 1ST DAY OF JANUARY, 1997, SERVE A NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH WITHIN SUCH TIME NOT BEING LESS THAN FIFTEEN DAYS BUT NOT MORE THAN FORTY - FIVE DAYS, AS MAY BE SPECIFIED IN THE NOTICE A RETURN IN THE PRESCRIBED FORM AND VERIFIED IN THE SAME MANNER AS A RETURN UNDER CLAUSE (I) OF SUB - SECTION (1) OF SECTION 142 , SETTING FORTH HIS TOTAL INCOME INCLUDING THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD: PROVIDED THAT NO NOTICE UNDER SECTION 148 IS REQUIRED TO BE ISSUED FOR THE PURPOSE OF PROCEEDING UNDER THIS CHAPTER: PROVIDED FURTHER THAT A PERSON WHO HAS FURNISHED A RETURN UNDER THIS CLAUSE SHALL NOT BE ENTITLED TO FILE A REVISED RETURN;] ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 14 (B) THE ASSESSING OFFICER SHALL PROCEED TO DETERMINE THE UNDISCLOSED INCOME OF THE BLOCK PERIOD IN THE MANNER LAID DOWN IN SECTION 158BB AND THE PROVISIONS OF SECTION 142 , SUB - SECTIONS (2) AND (3) OF SECTION 143 [ SECTION 144 AND SECTION 145 ]SHALL, SO FAR AS MAY BE, APPLY; (C) THE ASSESSING OFFICER, ON DETERMINATION OF THE UNDISCLOSED INCOME OF THE BLOCK PERIOD IN ACCORDANCE WITH THIS CHAPTER, SHALL PASS AN ORDER OF ASSESSMENT AND DETERMINE THE TAX PAYABLE BY HIM ON THE BASIS OF SUCH ASSESSMENT; (D) THE ASSETS SEIZED UNDER SECTION 132 OR REQUISITIONED UNDER SECTION 132A SHALL BE DEALT WITH IN ACCORDANCE WITH THE PROVISIONS OF SECTION 132B .] *** *** *** SECTION 158BD . UNDISCLOSED INCOME OF ANY OTHER PERSON. WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY UNDISCLOSED IN COME BELONGS TO ANY PERSON, OTHER 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 REQUISITIONED UNDER SECTION 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 PROC EED [UNDER SECTION 158 BC] AGAINST SUCH OTHER PERSON AND THE PROVISIONS OF THIS CHAPTER SHALL APPLY ACCORDINGLY. 22. SECTION 158BC SPEAKS OF PROCEDURE FOR ASSESSMENT OF A PERSON SEARCHED UNDER SECTION 132 OF THE ACT OR BOOKS OF ACCOUNTS, OTHER DOCUMENTS OR ASSETS ARE REQUISITIONED UNDER SECTION 132A . THE LIMITATION FOR THE PURPOSE OF COMPLETION OF TH E BLOCK ASSESSMENTS FOR THE PURPOSE OF SECTION 158BC OF THE ACT IS AS PROVIDED UNDER SECTION 158BE(1)(A) OF THE ACT, THAT IS THE TIME LIMIT FOR COMPLE TION OF BLOCK ASSESSMENT. 23. SECTION 158BD OF THE ACT PROVIDES FOR UNDISCLOSED INCOME OF ANY OTHER PERSON. BEFORE WE PROCEED TO EXPLAIN THE SAID PROVISION, WE INTEND TO REMIND OURSELVES OF THE FIRST O R THE BASIC PRINCIPLES OF INTERPRETATION OF A FISCAL LEGISLATION. IT IS TIME AND AGAIN REITERATED THAT THE COURTS, WHILE INTERPRETING THE PROVISIONS OF A FISCAL LEGISLATION SHOULD NEITHER ADD NOR SUBTRACT A WORD FROM THE PROVISIONS OF INSTANT MEANING OF TH E SECTIONS. IT MAY BE MENTIONED THAT THE FOREMOST PRINCIPLE OF INTERPRETATION OF FISCAL STATUTES IN EVERY SYSTEM OF INTERPRETATION IS THE RULE OF STRICT INTERPRETATION WHICH PROVIDES THAT WHERE THE WORDS OF THE STATUTE ARE ABSOLUTELY CLEAR AND UNAMBIGUOUS, RECOURSE CANNOT BE HAD TO THE PRINCIPLES OF INTERPRETATION OTHER THAN THE LITERAL RULE (SWEDISH MATCH AB V. SECURITIES AND EXCHANGE BOARD, INDIA, AIR 2004 SC 4219, CIT V. AJAX PRODUCTS LTD. [1965] 55 ITR 741 (SC)). 24. WE MAY GAINFULLY REFER TO THE CAPE B RANDY SYNDICATE V. INLAND REVENUE COMMISSIONERS [1921] 1 KB 64 AT 71 WHICH INVOLVED THE ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 15 FINANCE (NO. 2) ACT 1915 WHICH IMPOSED EXCESS PROFITS DUTY ON TRADE OR BUSINESSES COMMENCED AFTER THE OUTBREAK OF THE FIRST WORLD WAR IN 1914. BY SUBJECTING THE LEGISLA TION TO A STRICT LITERAL INTERPRETATION, ROWLATT J. HELD THAT THE FINANCE (NO. 2) ACT 1915, IN ISOLATION, DID NOT APPLY TO BUSINESSES THAT COMMENCED AFTER THE OUTBREAK OF WAR IN 1914 AND OBSERVED AS FOLLOWS: THE PRINCIPLE IN FAVOUR OF A STRICT LITERAL A PPROACH SIMPLY MEANS THAT IN A TAXING ACT ONE HAS TO LOOK MERELY AT WHAT IS CLEARLY SAID. THERE IS NO ROOM FOR ANY INTENDMENT. THERE IS NO EQUITY ABOUT A TAX. THERE IS NO PRESUMPTION AS TO A TAX. NOTHING IS TO BE READ IN, NOTHING IS TO BE IMPLIED. ONE CA N ONLY LOOK FAIRLY AT THE LANGUAGE USED. 25. IN COMMISSIONER OF STAMP DUTIES (NSW) V. SIMPSON, (1917) 24 CLR 209 BARTON J., CITING VISCOUNT HALDANE IN LUMSDEN V INLAND REVENUE COMMISSIONERS, [1914] AC 877, STATED THE FOLLOWING: THE DUTY OF JUDGES IN CONS TRUING STATUTES IS TO ADHERE TO THE LITERAL CONSTRUCTION UNLESS THE CONTEXT RENDERS IT PLAIN THAT SUCH A CONSTRUCTION CANNOT BE PUT ON THE WORDS. THIS RULE IS ESPECIALLY IMPORTANT IN CASES OF STATUTES WHICH IMPOSE TAXATION. THE COURT IN SIMPSON CASE (SUPR A) SOUGHT TO DETERMINE WHETHER A DEED POLL CONSTITUTED A SETTLEMENT FOR THE PURPOSES OF SECTION 49 OF THE STAMP DUTIES ACT, 1898 (NSW). SECTION 3 WHICH DEFINED THE WORD SETTLEMENT AS MEANING ANY CONTR ACT OR AGREEMENT WAS EXAMINED. THE COURT BY ADOPTING A STRICT LITERAL APPROACH HELD THAT ONLY A CONTRACT OR AN AGREEMENT COULD CONSTITUTE A SETTLEMENT AND THAT SECTION 49 PROVIDING FOR DEED POLL WAS NOT APPLICABLE AND THEREFORE, THE TAXPAYER DID NOT HAVE TO PAY ANY STAMP DUTY. 26. LORD GRANWORTH IN GRUNDY V. PINNIGER, (1852) 1 LJ CH 405 HAS OBSERVED THAT: TO ADHERE AS CLOSELY AS POSSIBLE TO THE LITERAL MEANING OF THE WORDS USED, IS A CARDINAL RULE FROM WHICH IF WE DEPART WE LAUNCH INTO A SEA OF DIFFICULTIES WHICH IT IS NOT EASY TO FATHOM. THAT IS TO SAY, ONCE THE LITERAL RULE IS DEPARTED, THEN ANY NUMBER OF INTERPRETATIONS CAN BE PUT TO A STATUTORY PROVISION, EACH JUDGE HAVING A FREE PLAY TO PUT HIS OWN INTERPRETATION AS HE LIKES. THIS WOULD BE DESTRUCTIVE OF THE EDIFICE OF FISCAL LEGISLATIONS WHICH IMPOSE ECONOMIC DUTIES AND SANCTIONS. 27. IN TAXING STATUTES, EVEN IF THE LITERAL INTERPRETATION RESULTS IN HARDSHIP OR INCONVENIENCE, IT HAS TO BE FOLLOW ED (G.P. SINGH'S PRINCIPLES OF STATUTORY INTERPRETATIONS, 12TH ED, 2010, LEXIS NEXIS BUTTERWORTHS WADHWA NAGPUR; BENNION ON STATUTORY INTERPRETATION, 5TH ED., LEXIS NEXIS, P. 863; VEPA P. SARATHI, INTERPRETATION OF STATUTES, 5TH ED., EASTER BOOK COMPANY, CHAPTER VIII, TAXING STATUTES). THIS COURT IN CIT V. KESHAB CHANDRA MANDAL, AIR 1950 SC 265 HAS HELD THAT HARDSHIP OR INCONVENIENCE CANNOT ALTER THE MEANING OF THE LANGUAGE EMPLOYED BY THE LEGISLATURE IF SUCH ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 16 MEANING IS CLEAR AND APPARENT. HENCE DEPARTURE FROM THE LITERAL RULE SHOULD ONLY BE DONE IN VERY RARE CASES, AND ORDINARILY THERE SHOULD BE JUDICIAL RESTRAINT TO DO SO.( PANDIAN CHEMICALS LTD. V. C.I.T ., 2003(5) SCC 590, NARSIRUDDIN V. SITA RAM AGARW AL, AIR 2003 SC 1543, BHAIJI V. SUB - DIVISIONAL OFFICER, THANDLA, 2003(1) SCC 692, J.P. BANSAL V. STATE OF RAJASTHAN AND ANR., AIR 2003 SC 1405, STATE OF JHARKHAND AND ANR. V. GOVIND SINGH : JT 2004(10) SC 349, JINIA KEOTIN V. K.S. MANJHI, 2003 (1) SCC 730, SHIV SHAKTI CO - OPERATIVE HOUSING SOCIETY V. SWARAJ DEVELOPERS, AIR 2003 SC 2434, GRASIM INDUSTRIES LIMITED V. COLLECTOR OF CUSTOMS, 2002 (4) SCC 297 AND UNION OF INDIA V. HAMSOLI DEVI, 2002 (7) SCC 273) 28. THE AUSTRALIAN HIGH COURT IN FEDERAL COMMISSIONE R OF TAXATION V. WESTRADERS PTY LTD, (1980) 144 CLR 55 CONSIDERED THE SCOPE OF SECTION 36A OF THE INCOME TAX ASSESSMENT ACT, 1936(CTH), WHICH ON A LITERAL INTERPRETATION ALLOWED THE TAXPAYER TO MAKE A PROFIT AND STILL CLAIM A LOSS FOR TAX PURPOSES. THE COM MISSIONER ARGUED THE TAXPAYERS CONDUCT AMOUNTED TO A TAX AVOIDANCE SCHEME AND SHOULD THEREFORE BE DISALLOWED UNDER SECTION 260 OF THE INCOME TAX ASSESSMENT ACT, 1936(CTH). THE COURT HELD THAT UNDER A LITERAL INTERPRETATION SECTION 36A COULD APPLY TO ALLOW THE TAXPAYER TO CLAIM A LOSS. BARWICK CJ, SPEAKING FOR THE MAJORITY RELIED ON THE DECISION IN INLAND REVENUE COMMISSIONERS V. WESTMINSTER (DUKE), [1936] AC 1 WHICH ADVOCATED THE LITERAL APPROACH BE APPL IED WHEN INTERPRETING TAXATION LEGISLATION AND STATED THE FOLLOWING: IT IS FOR THE PARLIAMENT TO SPECIFY, AND TO DO SO, IN MY OPINION, AS FAR AS LANGUAGE WILL PERMIT, WITH UNAMBIGUOUS CLARITY, THE CIRCUMSTANCES WHICH WILL ATTRACT AN OBLIGATION ON THE PART OF THE CITIZEN TO PAY TAX. THE FUNCTION OF THE COURT IS TO INTERPRET AND APPLY THE LANGUAGE IN WHICH THE PARLIAMENT HAS SPECIFIED THOSE CIRCUMSTANCES. THE COURT IS TO DO SO BY DETERMINING THE MEANING OF THE WORDS EMPLOYED BY THE PARLIAMENT ACCORDING TO TH E INTENTION OF THE PARLIAMENT WHICH IS DISCOVERABLE FROM THE LANGUAGE USED BY THE PARLIAMENT. IT IS NOT FOR THE COURT TO MOULD OR TO ATTEMPT TO MOULD THE LANGUAGE OF THE STATUTE SO AS TO PRODUCE SOME RESULT WHICH IT MIGHT BE THOUGHT THE PARLIAMENT MAY HAVE INTENDED TO ACHIEVE, THOUGH NOT EXPRESSED IN THE ACTUAL LANGUAGE EMPLOYED 29. IN COOPER BROOKES (WOLLONGONG) PTY LTD V. FEDERAL COMMISSIONER OF TAXATION (1981) 147 CLR 297 IT IS HELD THAT IN A TAXING STATUTE IF THE LANGUAGE IS UNAMBIGUOUS, DEPARTING FROM THE LITERAL APPROACH MAY LEAD JUDGES TO PUT THEIR OWN IDEAS OF JUSTICE OR SOCIAL POLICY IN PLACE OF THE WORDS OF THE STATUTE. SIMILAR VIEW WAS ESPOUSED IN C & J CLARK LTD V. INLAND REVENUE COMMISSIONERS, [1975] 1 WLR 413 AND BP REFINERY (WESTERNPORT) PT Y LTD V. HASTINGS SHIRE, (1977) 180 CLR 266. 30. IN HEPPLES V. FCT, (1991) 173 CLR 492, THE HIGH COURT OF AUSTRALIA UNEQUIVOCALLY FAVOURED THE PRINCIPLE THAT TAXATION LEGISLATION SHOULD BE SUBJECT TO A STRICT LITERAL INTERPRETATION AND OPINED THAT SUCH AN APPROACH WAS SUPPORTED BY COMMON SENSE. ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 17 THEREIN, THE TAXPAYER, ON CEASING TO BE EMPLOYED, WAS PAID $40,000 BY HIS EMPLOYER IN EXCHANGE FOR THE TAXPAYER AGREEING THAT HE WOULD NOT CARRY ON OR BE INTERESTED IN CERTAIN BUSINESSES AND WOULD NOT DIVULGE ANY T RADE SECRETS. THE ISSUE BEFORE THE COURT WAS WHETHER OR NOT SUCH PAYMENT WOULD FORM PART OF THE TAXPAYERS ASSESSABLE INCOME FOR THE PURPOSES OF THE INCOME TAX ASSESSMENT ACT, 1936(CTH). IT WAS HELD THAT SINCE THE ACT DID NOT PROVIDE FOR SUCH PAYMENTS TO F ORM PART OF A TAXPAYERS ASSESSABLE INCOME, THE PAYMENT WOULD NOT BE ASSESSABLE. 31. THIS COURT IN TATA CONSULTANCY SERVICES V. STATE OF ANDHRA PRADESH HAS ASCRIBED PLAIN MEANING TO THE TERMS COMPUTER AND COMPUTER PROGRAMME IN A FISCAL STATUTE AND REITERAT ING THE PROPOSITION LAID DOWN IN INLAND REVENUE COMMISSIONER CASE (SUPRA), OBSERVED THAT A COURT SHOULD NOT BE OVER ZEALOUS IN SEARCHING AMBIGUITIES OR OBSCURITIES IN WORDS WHICH ARE PLAIN. 32. IN PRAKASH NATH KHANNA V. C.I.T., 2004 (9) SCC 686, THIS COURT HAS EXPLAINED THAT THE LANGUAGE EMPLOYED IN A STATUTE IS THE DETERMINATIVE FACTOR OF THE LEGISLATIVE INTENT. THE LEGISLATURE IS PRESUMED TO HAVE MADE NO MISTAKE. THE PRESUMPTION IS THAT IT INTENDED TO SAY WHAT IT HAS SAID. ASSUMING THERE IS A DEFECT OR AN OMISSION IN THE WORDS USED BY THE LEGISLATURE, THE COURT CANNOT CORRECT OR MAKE UP THE DEFICIENCY. WHERE THE LEGISLATIVE INTENT IS CLEAR FROM THE LANGUAGE, THE COURT SHOULD GIVE EFFECT TO IT ( DELHI FINAN CIAL CORPORATION V. RAJIV ANAND , 2004 (11) SCC 625; GOVERNMENT OF ANDHRA PRADESH V. ROAD ROLLERS OWNERS WELFARE ASSOCIATION , 2004(6) SCC 210). 33. IN B. PREMANAND AND ORS.V. MOHAN KOIKAL AND ORS.,(2011 )4 SCC 266 THIS COURT HAS OBSERVED AS FOLLOWS: 32. THE LITERAL RULE OF INTERPRETATION REALLY MEANS THAT THERE SHOULD BE NO INTERPRETATION. IN OTHER WORDS, WE SHOULD READ THE STATUTE AS IT IS, WITHOUT DISTORTING OR TWISTING ITS LANGUAGE. 33. WE MAY MENTION HERE THAT THE LITERAL RULE OF INTERPRETATION IS NOT ONLY FOLLOWED BY JUDGES AND LAWYERS, BUT IT IS ALSO FOLLOWED BY THE LAY MAN IN HIS ORDINARY LIFE. TO GIVE AN ILLUSTRATION, IF A PERSON SAYS 'THIS IS A PENCIL', THEN HE MEANS THAT IT IS A PENCIL; AND IT I S NOT THAT WHEN HE SAYS THAT THE OBJECT IS A PENCIL, HE MEANS THAT IT IS A HORSE, DONKEY OR AN ELEPHANT. IN OTHER WORDS, THE LITERAL RULE OF INTERPRETATION SIMPLY MEANS THAT WE MEAN WHAT WE SAY AND WE SAY WHAT WE MEAN. IF WE DO NOT FOLLOW THE LITERAL RULE OF INTERPRETATION, SOCIAL LIFE WILL BECOME IMPOSSIBLE, AND WE WILL NOT UNDERSTAND EACH OTHER. IF WE SAY THAT A CERTAIN OBJECT IS A BOOK, THEN WE MEAN IT IS A BOOK. IF WE SAY IT IS A BOOK, BUT WE MEAN IT IS A HORSE, TABLE OR AN ELEPHANT, THEN WE WILL NOT BE ABLE TO COMMUNICATE WITH EACH OTHER. LIFE WILL BECOME IMPOSSIBLE. HENCE, THE MEANING OF THE LITERAL RULE OF INTERPRETATION IS SIMPLY THAT WE MEAN WHAT WE SAY AND WE SAY WHAT WE MEAN. ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 18 34. THUS, THE LANGUAGE OF A TAXING STATUTE SHOULD ORDINARILY BE READ UN DERSTOOD IN THE SENSE IN WHICH IT IS HARMONIOUS WITH THE OBJECT OF THE STATUTE TO EFFECTUATE THE LEGISLATIVE ANIMATION. A TAXING STATUTE SHOULD BE STRICTLY CONSTRUED; COMMON SENSE APPROACH, EQUITY, LOGIC, ETHICS AND MORALITY HAVE NO ROLE TO PLAY. NOTHING I S TO BE READ IN, NOTHING IS TO BE IMPLIED; ONE CAN ONLY LOOK FAIRLY AT THE LANGUAGE USED AND NOTHING MORE AND NOTHING LESS. (J. SRINIVASA RAO V. GOVT. OF A.P. AND ANR. 2006(13) SCALE 27, RAJA JAGADAMBIKA PRATAP NARAIN SINGH V. C.B.D.T., [1975] 100 ITR 698( SC)) 35. IT IS ALSO TRITE THAT WHILE INTERPRETING A MACHINERY PROVISION, THE COURTS WOULD INTERPRET A PROVISION IN SUCH A WAY THAT IT WOULD GIVE MEANING TO THE CHARGING PROVISIONS AND THAT THE MACHINERY PROVISIONS ARE LIBERALLY CONSTRUED BY THE COURTS. IN MAHIM PATRAM PRIVATE LTD. V. UNION OF INDIA (UOI) AND ORS., (2007) 3 SCC 668 THIS COURT HAS OBSERVED THAT: 20. A TAXING STATUTE INDISPUTABLY IS TO BE STRICTLY CONSTRUED. [SEE J. SRINIVASA RAO V. GOVT. OF ANDHRA PRADESH AND ANR., 2006(13)SCALE 27 ]. IT IS, HOWEVER, ALSO WELL - SETTLED THAT THE MACHINERY PROVISIONS FOR CALCULATING THE TAX OR THE PROCEDURE FOR ITS CALCULATION ARE TO BE CONSTRUED BY ORDINARY RULE OF CONSTRUCTION. WHEREAS A LIABILITY HAS BEEN IMPOSED ON A DEALER BY THE CHARGING SECTION, IT IS WEL L - SETTLED THAT THE COURT WOULD CONSTRUE THE STATUTE IN SUCH A MANNER SO AS TO MAKE THE MACHINERY WORKABLE. 21. IN J. SRINIVASA RAO (SUPRA), THIS COURT NOTICED THE DECISIONS OF THIS COURT IN GURSAHAI SAIGAL V.COMMISSIONER OF INCOME - TAX, PUNJAB, [1963] 1 IT R 48(SC) AND ISPAT INDUSTRIES LTD. V. COMMISSIONER OF CUSTOMS, MUMBAI, 2006(202)ELT561(SC).IN GURSAHAI SAIGAL (SUPRA), THE QUESTION WHICH FELL FOR CONSIDERATION BEFORE THIS COURT WAS CONSTRUCTION OF THE MACHINERY PROVISIONS VIS - - VIS THE CHARGING PROVISION S. SCHEDULE APPENDED TO THE MOTOR VEHICLES ACT IS NOT MACHINERY PROVISION. IT IS A PART OF THE CHARGING PROVISION. BY GIVING A PLAIN MEANING TO THE SCHEDULE APPENDED TO THE ACT, THE MACHINERY PROVISION D OES NOT BECOME UNWORKABLE. IT DID NOT PREVENT THE CLEAR INTENTION OF THE LEGISLATURE FROM BEING DEFEATED. IT CAN BE GIVEN AN APPROPRIATE MEANING. 36. A REFERENCE TO THE OBSERVATIONS OF THIS COURT IN J.K. SYNTHETICS LIMITED AND BIRLA CEMENT WORKS AND ANOTH ER V. COMMERCIAL TAXES OFFICER AND ANOTHER,(1994) 4 SCC 276 WOULD BE APPOSITE: 13. IT IS WELL - KNOWN THAT WHEN A STATUTE LEVIES A TAX IT DOES SO BY INSERTING A CHARGING SECTION BY WHICH A LIABILITY IS CREATED OR FIXED AND THEN PROCEEDS TO PROVIDE THE MACH INERY TO MAKE THE LIABILITY EFFECTIVE. IT, THEREFORE, PROVIDES THE MACHINERY FOR THE ASSESSMENT OF THE LIABILITY ALREADY FIXED BY THE CHARGING SECTION, AND THEN PROVIDES THE MODE FOR THE RECOVERY AND COLLECTION OF TAX, INCLUDING ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 19 PENAL PROVISIONS MEANT TO D EAL WITH DEFAULTERS. ORDINARILY THE CHARGING SECTION WHICH FIXES THE LIABILITY IS STRICTLY CONSTRUED BUT THAT RULE OF STRICT CONSTRUCTION IS NOT EXTENDED TO THE MACHINERY PROVISIONS WHICH ARE CONSTRUED LIKE ANY OTHER STATUTE. THE MACHINERY PROVISIONS MUS T, NO DOUBT, BE SO CONSTRUED AS WOULD EFFECTUATE THE OBJECT AND PURPOSE OF THE STATUTE AND NOT DEFEAT THE SAME. (WHITNEY V. COMMISSIONERS OF INLAND REVENUE 1926 A C 37, CIT V. MAHALIRAM RAMJIDAS (1940) 8 ITR 442 , INDIAN UNITED MILLS LTD. V. COMMISSIONER OF EXCESS PROFITS TAX, BOMBAY, [1955] 27 ITR 20(SC) AND GURSAHAI SAIGAL V. CIT, PUNJAB, [1963] 1 ITR 48(SC). 37. IT IS THE DUTY OF THE COURT WHILE INTERPRETING THE MACHINERY PROVISIONS OF A TAXING STATU TE TO GIVE EFFECT TO ITS MANIFEST PURPOSE. WHEREVER THE INTENTION TO IMPOSE LIABILITY IS CLEAR, THE COURTS OUGHT NOT BE HESITANT IN ESPOUSING A COMMONSENSE INTERPRETATION TO THE MACHINERY PROVISIONS SO THAT THE CHARGE DOES NOT FAIL. THE MACHINERY PROVISION S MUST, NO DOUBT, BE SO CONSTRUED AS WOULD EFFECTUATE THE OBJECT AND PURPOSE OF THE STATUTE AND NOT DEFEAT THE SAME (WHITNEY V. COMMISSIONERS OF INLAND REVENUE 1926 A C 37 , CIT V. MAHALIRAM RAMJIDAS (1 940) 8 ITR 442, INDIAN UNITED MILLS LTD. V. COMMISSIONER OF EXCESS PROFITS TAX, BOMBAY [1955] 27 ITR 20(SC), AND GURSAHAI SAIGAL V. CIT, PUNJAB [1963] 1 ITR 48(SC); COMMISSIONER OF WEALTH TAX, MEERUT V. SHARVAN KUMAR SWARUP & SONS , (1994) 6 SCC 623; CIT V. NATIONAL TAJ TRADERS, (1980) 1 SCC 370; ASSOCIATED CEMENT COMPANY LTD. V. COMMERCIAL TAX OFFICER, KOTA AND ORS., (48) STC 466). FRANCIS BENNION IN BENNION ON STATUTORY INTERPRETATION, 5TH ED., LEXIS NE XIS IN SUPPORT OF THE AFORESAID PROPOSITION PUT FORTH AS AN ILLUSTRATION THAT SINCE CHARGE MADE BY THE LEGISLATOR IN PROCEDURAL PROVISIONS IS EXCEPTED TO BE FOR THE GENERAL BENEFIT OF LITIGANTS AND OTHERS, IT IS PRESUMED THAT IT APPLIES TO PENDING AS WELL AS FUTURE PROCEEDINGS. 38. HAVING SAID THAT, LET US REVERT TO DISCUSSION OF SECTION 158BD OF THE ACT. THE SAID PROVISION IS A MACHINERY PROVISION AND INSERTED IN THE STATUTE BOOK FOR THE PURPOSE OF CARRY ING OUT ASSESSMENTS OF A PERSON OTHER THAN THE SEARCHED PERSON UNDER SECTIONS 132 OR 132 A OF THE ACT . UNDER SECTION 158BD OF THE ACT, IF AN OFFICER IS SATISFIED THAT THERE EXISTS ANY UNDISCLOSED INCOME WHICH MAY BELONG TO A OTHER PERSON OTHER THAN THE SEARCHED PERSON UNDER SECTIONS 132 OR 132 A OF THE ACT , AFTER RECORDING SUCH SATISFACTION, MAY TRANSMIT THE RECORDS/DOCUMENTS/CHITS/PAPERS ETC TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON. AFTER RECEIPT OF THE AFORESAID SATISFA CTION AND UPON EXAMINATION OF THE SAID OTHER DOCUMENTS RELATING TO SUCH OTHER PERSON, THE JURISDICTIONAL ASSESSING OFFICER MAY PROCEED TO ISSUE A NOTICE FOR THE PURPOSE OF COMPLETION OF THE ASSESSMENTS UNDER SECTION 158BD OF THE ACT, THE OTHER PROVISIONS OF XIV - B SHALL APPLY. 39. THE OPENING WORDS OF SECTION 158BD OF THE ACT ARE THAT THE ASSESSING OFFICER MUST BE SATISFIED THAT UNDISCLOSED INCOME BELO NGS TO ANY OTHER PERSON OTHER THAN THE PERSON WITH RESPECT TO ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 20 WHOM A SEARCH WAS MADE UNDER SECTION 132 OF THE ACT OR A REQUISITION OF BOOKS WERE MADE UNDER SECTION 132A OF THE ACT AND THEREAFTER, TRANSMIT THE RECORDS FOR ASSESSMENT OF SUCH OTHER PERSON. THEREFORE, THE SHORT QUESTION THAT FALLS FOR OUR CONSIDERATION AND DECISION IS AT WHAT STAGE OF THE PROCEEDINGS SHOULD THE SATISFACTION NOTE BE PREPARED BY THE ASSESSING OFFICER: WHETHER AT THE TIME OF INITIATING PROCEEDINGS UNDER SECTION 158BC FOR THE COMPLETION OF THE ASSESSMENTS OF THE SEARCHED PERSON UNDER SECTION 132 AND 132A OF THE ACT OR DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS UNDER SECTION 158BC OF THE ACT OR AFTER COMPLETION OF THE PROCEEDINGS UNDER SECTION 158BC OF THE ACT. 40. THE TRIBUNAL AND THE HIGH COURT ARE OF THE OPINION THAT IT COULD ONLY BE PREPARED BY THE ASSESSING OFFICER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS UNDER SECTION 158BC OF THE ACT AND NOT AFTER THE COMPLETION OF THE SAID PROCEEDINGS. THE COURTS BELOW HAVE RELIED UPON THE LIMITATION PERIOD PROVIDED IN SECTION 158BE(2)(B) OF THE ACT IN RESPECT OF THE ASSESSMENT PROCEEDINGS INITIATED UNDER SECTION 158BD , I.E., TWO YEARS FROM THE END OF THE MONTH IN WHICH THE NOTICE UNDER CHAPTER XIV - B WAS SERVED ON SUCH OTHER PERSON IN RESPECT OF SEARCH INITIATED OR BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED ON OR AFTER 01.01.1997. WE WOULD EXAMINE WHETHER THE TRIBUNAL OR THE HIGH COURT ARE JUSTIFIED IN COMING TO THE AFORESAID CONCLUSION. 41. WE WOULD CERTAINLY SAY THAT BEFORE INITIATING PROCEEDINGS UNDER SECTION 158BD OF THE ACT, THE ASSESSING OFFICER WHO HAS INITIATED PROCEEDINGS FOR COMPLETION OF THE ASSESSMENTS UNDER SECTION 158BC OF THE ACT SHOULD BE SATISFIED THAT THERE IS AN UNDISCLOSED INCOME WHICH HAS BEEN TRACED OUT WHEN A PERSON WAS SEARCHED UNDER SECTION 132 OR THE BOOKS OF AC COUNTS WERE REQUISITIONED UNDER SECTION 132A OF THE ACT. THIS IS IN CONTRAST TO THE PROVISIONS OF SECTION 148 OF THE ACT WHERE RECORDING OF REASONS IN WRITING ARE A SINE QUA NON. UNDER SECTION 158BD THE EXISTENCE OF COGENT AND DEMONSTRATIVE MATERIAL IS GERMANE TO THE ASSESSING OFFICERS SATISFACTION IN CONCLUDING THAT THE SEIZED DOCUMENTS BELONG TO A PERSON OTHER THAN THE SEARCHED PERSON IS NECESSARY FOR INITIATION OF ACTION UNDER SECTION 158BD . THE BARE READING OF THE PROVISION INDICATES THAT THE SATISFACTION NOTE COULD BE PREPARED BY THE ASSESSING OFFICER EITHER AT THE TIME OF INITIATING PROCEEDINGS FOR COMPLETION OF ASSESSMENT OF A SEARCHED PERSON UNDER SECTION 158BC OF THE ACT OR DURING THE STAGE OF THE ASSESSMENT PROCEEDINGS. IT DOES NOT MEAN T HAT AFTER COMPLETION OF THE ASSESSMENT, THE ASSESSING OFFICER CANNOT PREPARE THE SATISFACTION NOTE TO THE EFFECT THAT THERE EXISTS INCOME TAX BELONGING TO ANY PERSON OTHER THAN THE SEARCHED PERSON IN RESPECT OF WHOM A SEARCH WAS MADE UNDER SECTION 132 OR REQUISITION OF BOOKS OF ACCOUNTS WERE MADE UNDER SECTION 132A OF THE ACT. THE LANGUAGE OF THE PROVISION IS CLEAR AND UNAMBIGUOUS. THE LEGISLATURE HAS N OT IMPOSED ANY EMBARGO ON THE ASSESSING OFFICER IN RESPECT OF THE STAGE OF PROCEEDINGS DURING WHICH THE SATISFACTION IS TO BE REACHED ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 21 AND RECORDED IN RESPECT OF THE PERSON OTHER THAN THE SEARCHED PERSON. 42. FURTHER, SECTION 158BE(2)(B) ONLY PROVIDES FOR THE PERIOD OF LIMITATION FOR COMPLETION OF BLOCK ASSESSMENT UNDER SECTION 158BD IN CASE OF THE PERSON OTHER THAN THE SEARCHED PERSON AS TWO YEARS FROM THE END OF THE MONTH IN WHICH THE NOTICE UNDER THIS CHAPTER WAS SERVED ON SUCH OTHER PERSON IN RESPECT OF SEARCH CARRIED ON AFTER 01.01.1997. THE SAID SECTION DOES NEITHER PROVIDES FOR NOR IMPOSES ANY RESTRICTIONS OR CONDITIONS ON THE PERIOD OF LIMITATION FOR PREPARATION THE SATISFACTION NOTE UNDER SECTION 158BD AND CONSEQUENT ISSUANCE OF NOTICE TO THE OTHER PERSON. 43. IN THE LEAD CASE, THE ASSESSING OFFICER HAD PREPARED A SATISFACTION NOTE ON 15.07.2005 THOUGH THE ASSESSMENT PROCEEDINGS IN THE CASE OF A SEARCHED PERSON, NAMELY, S.K. BHATIA WERE COMPLETED ON 30.03.2005. AS WE HAVE ALREADY NOTICED, THE TRIBUNAL AND THE HIGH COURT ARE OF THE OPINION THAT SINCE THE SATISFACTION NOTE WAS PREPARED AFTER THE PR OCEEDINGS WERE COMPLETED BY THE ASSESSING OFFICER UNDER SECTION 158BC OF THE ACT WHICH IS CONTRARY TO THE PROVISIONS OF SECTION 158BD READ WITH SECTION 158BE(2)(B) AND THEREFORE, HAVE DISMISSED THE CASE OF THE REVENUE. IN OUR CONSIDERED OPINION, THE REASONING OF THE LEARNED JUDGES OF THE HIGH COURT IS CONTRARY TO THE PLAIN AND SIMPLE LANGUAGE EMPLOYED BY THE LEGISLATURE UNDER SECTION 158BD OF THE ACT WHICH CLEARLY PROVIDES ADEQUATE FLEXIBILITY TO THE ASSESSING OFFICER FOR RECORDING THE SATISFACTION NOTE AFTER THE COMPLETION OF PROCEEDINGS IN RESPECT OF THE SEARCHED PERSON UNDER SECTION 158BC . FURTHER, THE INTERPRETATION PLACED BY THE COURTS BELOW BY READING INTO THE PLAIN LANGUAGE OF SECTION 158BE( 2)(B) SUCH AS TO EXTEND THE PERIOD OF LIMITATION TO RECORDING OF SATISFACTION NOTE WOULD RUN COUNTER TO THE AVOWED OBJECT OF INTRODUCTION OF CHAPTER TO PROVIDE FOR COST - EFFECTIVE, EFFICIENT AND EXPEDITIOUS COMPLETION OF SEARCH ASSESSMENTS AND AVOIDING OR REDUCING LONG DRAWN PROCEEDINGS. 44. IN THE RESULT, WE HOLD THAT FOR THE PURPOSE OF SECTION 158BD OF THE ACT A SATISFACTION NOTE IS SINE QUA NON AND MUST BE PREPARED BY THE ASSESSING OFFICER BEFORE HE T RANSMITS THE RECORDS TO THE OTHER ASSESSING OFFICER WHO HAS JURISDICTION OVER SUCH OTHER PERSON. THE SATISFACTION NOTE COULD BE PREPARED AT EITHER OF THE FOLLOWING STAGES: (A) AT THE TIME OF OR ALONG WITH THE INITIATION OF PROCEEDINGS AGAINST THE SEARCHED PERSON UNDER SECTION 158BC OF THE ACT; (B) ALONG WITH THE ASSESSMENT PROCEEDINGS UNDER SECTION 158BC OF THE ACT; AND (C) IMMEDIATELY AFTER THE ASSESSM ENT PROCEEDINGS ARE COMPLETED UNDER SECTION 158BC OF THE ACT OF THE SEARCHED PERSON. 16 . ON CAREFUL PERUSAL OF THE ABOVE OBSERVATIONS OF THE HONBLE SUPREME COURT AS WELL AS THE PROVISIONS OF SECTION 153 C OF THE ACT, IT IS ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 22 CLEAR THAT W HERE THE OFFICER UNDER SECTION 153C OF THE ACT , AFTER THE ASSESSMENT OF THE PERSON IN RESPECT WHOM SEARCH ACTION WAS CARRIED OUT IS COMPLETED, FINDS THAT THE SEIZED ARTICLES BELO NG TO SOME OTHER PERSON HAS TO FORWARD A SATIS FACTION NOTE TO THE ASSESSING OF FICER HAVING JURISDICTION TO ASSESS SUCH PERSON. THE SATISFACTION IN SUCH A CASE IS IN RESPECT OF THE MATERIAL AND DISCLOSURES OF THE PERSON WITH WHOM THE ARTICLES OR ASSETS ARE FOUND AND NOT IN RESPECT OF THE PERSON TO WHOM THEY BELONG . IN THIS REGARD RELIANCE CAN BE PLACED IN THE CASE OF SAVESH KUMAR ARWAL V. UNION OF INDIA, (2013) 353 ITR 26 (ALL). THE PROCEDURE TO BE ADOPTED FOR INITIATING PROCEEDINGS UNDER SECTION 153A AGAINST A PERSON WHO HAS NOT BEEN SEARCHED, HAS BEE N PRESCRIBED IN THE PROVISIONS OF SECTION 1 53C WHEREIN A SITUATION, THE ASSESSING OFFICER HAVING THE JURISDICTION OVER THE OTHER PERS ON IS DIFFERENT FROM THE ASSESSING OFFICER HAVING JURISDICTION OVER THE PERSON IN RESPECT OF WHOM THE SEARCH HAS BEEN CONDU CTED. BEFORE NOTICE CAN BE ISSUED UNDER SEC TION 153C, THE ASSESSING OFFICER HAS TO BE SATISFIED THAT UNDISCLOSED INCOME FOUND DURING SEARCH OPERATIONS BELONGS TO THE THIRD PERSON. A CLEAR AND PLAIN READING OF SECTION 153C LEAVES NO DOUBT THAT RECORDING OF SATISFACTION BY THE ASSESSING OFFICER OF THE PERSON SEARCHED IS MANDATORY AND IT HAS TO PRECEDE THE INITIATION OF PROCEEDINGS AGAINST THE OTHER PERSON (NOT SEARCHED) . I T IS THAT THE ADDITION MADE SOLELY ON THE BASIS OF THE PHOTOCOPY OF THE AGREEMENT BE TWEE N TWO OTHER PERSONS SEIZED DURING SEARCH OF THIRD PARTY HELD TO BE NOT JUSTIFIED . ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 23 17 . THE ASPECTS OF SATISFACTION NOTE, IF ANY, SHALL BE EXAMINED BY THE TRIBUNAL AND WHETHER THE SAME CAN BE TERMED SUFFICIENT COMPLIANCE OR NOT FOR THE ASSESSMENT TO BE INIT IATED OR TO BE MADE OR FINALIZED UNDER SECTION 153C. IT IS FURTHER OBSERVED AND DIRECTED THAT, THEREAFTER, IF NEED ARISES, THE TRIBUNAL MAY ALSO EXAMINE THE ASSESSMENT MADE ON THE MERITS FOR THE PURPOSE OF GROSS PROFIT OR FOR THE PURPOSE OF ADDITION IF ANY OR FOR THE PURPOSE OF LIABILITY TO PAY INTEREST IF ANY AFRESH IN ACCORDANCE WITH LAW. TO JUSTIFY THE INV O CATION OF SECTION 153C(1), THERE WAS NO MATERIAL WHATSOEVER PLACED ON RECORD BY THE DEPARTMENT BEFORE THE CIT (A) OR THE TRIBUNAL AGAINST THE ASSESSEE ON THE BASIS THAT THE DOCUMENT BELONGED TO HER. THUS, THERE WAS NOTHING TO CONTRADICT THE FINDING OF THE TRIBUNAL THAT THE DOCUMENT WHICH FORMED THE MAIN BASIS FOR INITIATION OF THE PROCEEDINGS UNDER SECTION 153C DID NOT BELONG TO THE ASSESSEE AND, HENCE, ONE OF THE PRINCIPAL CONDITIONS FOR ATTRACTING 153C HELD TO BE NOT FULFILLED. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX V. CALCUTTA KNI TWEARS (2014) 6 SCC 444 ALONG WITH THE OTHER DECISIONS AS CITED SUPRA , THE ASSESSMENT ORDER PASSED BY THE AO IS REQUIRED TO BE QUASHED ON THIS GROUND ALONE. THEREFORE, THE APPEAL FILED BY THE REVENUE IS REQUIRED TO BE DISMISSED. FURTHER AS RECODED HEREINA BOVE PARAGRAPH THAT 154 ORDER WAS PASSED BY THE ASSESSING OFFICER, THEREBY MAKING ADDITION IN THE HANDS OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 153C OF THE ACT. IN OUR VIEW, NO ORDER U/S.154 OF THE ACT CAN BE PASSED BY THE ASSESSING OFFICER T HEREBY MAKING FRESH ADDITION U/S.153C R.W.S.143(3) OF THE ACT AS THERE ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 24 WAS NO ORIGINAL ORDER U/S.153C R.W.S.143(3) OF THE ACT WAS PASSED BY THE AO. IN OUR VIEW, THE REVENUE CANNOT BE PERMITTED TO INVOKE THE PROVISION OF SECTION 154 OF THE ACT BY CURING ITS DEFECT OF NOT RECORDING THE SATISFACTION FOR INVOCATION OF SECTION 153C OF THE ACT, ISSUING THE NOTICE U/S.153C OF THE ACT AND PASSING THE ORDER U/S.153C OF THE ACT. THE REVENUE CANNOT DO INDIRECTLY WHAT IT CANNOT DO DIRECTLY, AS THERE WAS NO SATISFACTIO N RECORDED BY THE AO IN EITHER FILE OF THE ASSESSEE NOR ANY PROCEEDINGS WERE INITIATED U./S.153C OF THE ACT. THEREFORE, THE WHOLE ACTION OF THE REVENUE WAS AGAINST THE PROVISIONS OF LAW. 18 . WE MAY ALSO LIKE TO POINT OUT THAT THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF M/S SUPER MALLS PRIVATE LIMITED VS. PR.CIT, ORDER DATED 05.03.2020 WAS ON ITS OWN FACTS AS IS CLEAR FROM THE RECORDED FACTS MENTIONED IN THE ORDER TO BE FOLLOWING EFFECT 19 . FROM THE BARE READING OF THE ABOVE SAID FACTS, THE IS SUE BEFORE THE HONBLE SUPREME COURT WAS AS TO WHETHER THE SEPARATE SATISFACTION WAS REQUIRED TO BE RECORDED BY THE AO. IF THE AO OF THE PERSON SEARCHED U/S.153A OF THE ACT AND THE AO OF THE OTHER SEARCHED PERSON U/S.153C OF THE ACT HAPPENS TO BE SAME. THE HONBLE SUPREME COURT AFTER ANALYSING THE FACT HAD COME TO THE CONCLUSION THAT NO SEPARATE SATISFACTION WAS REQUIRED TO BE RECORDED. IN THE PRESENT CASE, ADMITTEDLY, THERE IS NO SATISFACTION ON RECORD EITHER ON THE FACT OF THE PERSON SEARCHED OR IN THE FI LE OF THE ASSESSEE BEFORE US, THEREFORE, THERE IS NO QUESTION OF RECORDING OF SATISFACTION BY ANY OF THE AUTHORITIES AND ACCORDINGLY THE JUDGMENT RELIED ON BY THE LD. DR ARE NOT APPLICABLE. JUST TO CONCLUDE BY SAYING THAT ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 25 IN THE ABSENCE OF RECORDING OF SAT ISFACTION, NO ASSESSMENT CAN BE MADE IN THE HANDS OF THE OTHER PERSON. IN THE LIGHT OF THE ABOVE, ALL THE APPEALS OF THE REVENUE ARE REQUIRED TO BE DISMISSED AND JURISDICTIONAL GROUNDS RAISED BY THE ASSESSEE IN THE CROSS OBJECTIONS ARE ALLOWED. AS WE HAVE ALLOWED THE CROSS OBJECTIONS RAISED BY THE ASSESSEE PERTAINING TO INVOKING THE SECTION 153C OF THE ACT AS WELL AS 154 OF THE ACT , WE DO NOT DEEM IT APPROPRIATE TO ADJUDICATE THE OTHER GROUNDS RAISED BY THE ASSESSEE AS WELL AS BY THE REVENUE. 20 . THUS, THE APPEALS OF THE REVENUE ARE DISMISSED AND THE CROSS OBJECTIONS OF THE ASSESSEE ARE ALLOWED. 21 . NOW, WE SHALL TAKE UP THE APPEALS IN THE CASE OF ASSESSEE SMT. VANDA AFONSO FILED IN IT(SS)A NOS.28 TO 33/PAN/2015 ALONG WITH CROSS OBJECTIONS NOS.96 TO 101/PA N/2016. 22 . SINCE THE ISSUE IN ALL THE APPEALS OF REVENUE AND CROSS OBJECTIONS ARE SIMILAR AND IDENTICAL, THEREFORE, THEY ARE HEARD ALTOGETHER AND DECIDED EN MASSE. FOR THE SAKE OF CONVENIENCE, WE SHALL TAKE INTO CONSIDERATION THE APPEAL OF THE REVENUE IN IT(SS)A NO.28/PAN/2015 FILED FOR THE ASSESSMENT YEAR 2007 - 2008, WHEREIN THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER : - 1. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCO UNT OF DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE I.T. ACT. 2. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ACCEPTING FRESH EVIDENCE AND NOT GIVING OPPORTUNITY TO THE ASSESSING OFFICER AS PER SUB - RULE (3) TO RULE 46A OF IT RULES, 1962 . 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE AMOUNT OF RS. 81,51,723/ - ADVANCED BY MODELS CONSTRUCTION PVT. LTD. TO THE FIRM M/ S ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 26 MODELS REAL ESTATE DEVELOPE RS CANNOT BE TREATED AS DIVIDEND UNDER SECTION 2(22)(E) OF THE INCOME TAX ACT IN THE HANDS OF THE ASSESSEE IN SPITE OF THE FACT THAT THE ASSESSEE WAS HAVING SHARE HOLDING EXCEEDING 10% OF THE VOTING POWER IN THE SAID COMPANY AND ALSO HAVE SUBSTANTIAL INTER EST IN THE SAID FIRM? 4. FOR THE ABOVE GROUNDS AND ANY ADDITIONAL GROUNDS THAT MAY BE AGITATED DURING THE COURSE OF THE HEARING IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) - 2, PANAJI MAY BE QUASHED AND THAT OF THE AO RESTORED . 23. THE ASSESSEE HAS ALSO RAISED THE FOLLOWING COMMON GROUNDS IN THE ALL THE CROSS OBJECTIONS, FOR THE SAKE OF CONVENIENCE THE GROUNDS RAISED IN THE CROSS OBJECTION I.E. CO NO. 96 /PAN/2016 (AY: 2007 - 2008) HAVE BEEN TAKEN INTO CONSIDERATION FOR DECIDING THE ISSUE, WHICH READ AS UNDE R : - 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX {APPEALS] IN SO FAR AS IT IS AGAINST THE RESPONDENT / CROSS OBJECTOR ARE OPPOSED TO TAW, WEIGHT OF EVIDENCE, NATURAL JUSTICE, FACTS AND CIRCUMSTANCES OF THE CASE, 2. THE RESPONDENT / CROSS OBJECTO R DENIES HERSELF LIABLE TO BE ASSESSED UNDER SECTION 154 OF THE ACT UNDER THE IMPUGNED ORDER ON THE GROUNDS THAT: - I. THE PROCEEDING INITIATED U/S 154 IS VOID AB INITIO IN AS MUCH M IT IS ILLEGAL AND ULTRA VIRES THE PROVISIONS OF SECTION 154 OF THE ACT; I I. THE MANDATORY CONDITION THAT A RECTIFICATION U/S 154 CAN BE RESORTED TO ONLY IN SUCH CASES WHERE THERE IS A MISTAKE APPARENT IN THE SAID ORDER DOES NOT EXIST IN ORDER GIVE NECESSARY JURISDICTION TO THE ASSESSING OFFICER TO INITIATE PROCEEDINGS U/S 154 O F THE ACT. III. THE INITIATION OF THE PROCEEDING U/S 154 OF THE ACT IS NOT ON THE BASIS OF ANY ORDER PASSED IN THE CASE OF THE RESPONDENT /CROSS OBJECTOR AND IN THE ABSENCE OF SUCH ORDER, WHICH IS SINE QUA NON FOR PROCEEDINGS TO BE INITIATED U/S 154, THE C ONSEQUENT RECTIFICATION PASSED U/S 154 IS NULL AND VOID - AB - INITIO. 3. THE LEARNED COMMISSIONER OF INCOME - TAX [APPEALS] FAILED TO APPRECIATE THE FACT THAT THERE WAS NO. ORIGINAL ASSESSMENT PROCEEDING INITIATED AGAINST THE RESPONDENT /CROSS OBJECTOR AND CO NSEQUENTLY NO ASSESSMENT ORDER WAS PASSED EITHER U/S 143(3) OR 143(3) R.W.S.147 OR 143(3) R.W.S. 153C AND NO NOTICE OF DEMAND U/S 156 WAS RAISED ON THE RESPONDENT /CROSS OBJECTOR AT ALL IN RESPECT OF THE IMPUGNED ASSESSMENT YEAR AND HENCE THERE WAS NO ORDE R WHICH COULD RECTIFIED U/S 154. THERE BEING NO SUCH ORDER IN THE CASE OF THIS RESPONDENT ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 27 /CROSS OBJECTOR, THE RECTIFICATION U/S 154 FAILS AS BEING NULL AND VOID, AB INITIO. 4. THE TEAMED COMMISSIONER OF INCOME [APPEALS] FAILED TO APPRECIATE THAT THE ORDE R OF RECTIFICATION PASSED BY THE LEARNED ASSESSING OFFICER IS BAD IN LAW AS THE MANDATORY CONDITIONS TO INVOKE THE JURISDICTION U/S. 154 OF THE INCOME - TAX ACT, 1961 DID NOT EXIST OR HAVING NOT BEEN COMPLIED WITH AND CONSEQUENTLY THE RECTIFICATION MADE IS B AD IN LAW FOR WANT OF REQUISITE JURISDICTION. 5. WITHOUT PREJUDICE TO THE RIGHT TO SEEK WAIVER AS PER THE PARITY OF REASONING OF THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF KARANVIR SINGH 349 ITR 692, THE RESPONDENT / CROSS OBJECTOR DENIES ITSELF L IABLE TO BE CHARGED TO INTEREST UNDER SECTION 234 A, 234 B & 234 C OF THE INCOME TAX ACT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. FURTHER THE LEVY OF INTEREST UNDER SECTION 234 A, 234 B ST 234 C OF THE ACT IS ALSO BAD IN LAW AS THE PERIOD, RATE, QUAN TUM AND METHOD OF CALCULATION ADOPTED ON WHICH INTEREST IS LEVIED ARE ALL NOT DISCERNIBLE AND ARE WRONG ON THE FACTS OF THE CASE. 6. THE RESPONDENT / CROSS OBJECTOR CRAVES LEAVE OF THIS HON'BLE TRIBUNAL, TO ADD, ALTER, DELETE OR SUBSTITUTE ANY OF THE GROUN DS URGED ABOVE. 7. IN VIEW OF THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEATING OF THE CROSS OBJECTION, YOUR RESPONDENT / CROSS OBJECTOR HUMBLY PRAY THAT THE CROSS OBJECTION MAY BE ALLOWED IN THE INTEREST OF EQUITY AND JUSTICE. 24 THE LD . DR RELIED UPON THE ORDER PASSED BY THE ASSESSING OFFICER AND IT WAS SUBMITTED THAT THERE IS NO SATISFACTION ON RECORD IN THE CASE OF SMT. VANDA AFONSO. 25 ON THE OTHER HAND, T HE ASSESSEE HAS FILED WRITTEN SUBMISSION ON 24.09.2021 CONSISTING AS UNDER : - 1. A SEARCH U/S 132(1) OF THE INCOME TAX WAS CONDUCTED ON M/S. MODELS CONSTRUCTION PVT. LTD., AND M/S. MODELS REAL ESTATE DEVELOPERS ON 31.01.2012 AND RESPONDENT BEING PART OF THE GROUP, THEIR PREMISES WAS ALSO SEARCHED. SUBSEQUENTLY THE ASSESSMENT OF THE SPOU SES OF THE RESPONDENT WAS COMPLETED U/S 153C OF THE INCOME TAX ACT1961. THE ASSESSEE IS COVERED U/S 5A OF THE INCOME TAX ACT1961. SUBSEQUENTLY THE AO PASSED ORDER U/S 154 OF THE IT ACT AND MADE ADDITION OF 50% OF THE INCOME OF THE SPOUSE, AGAINST WHICH T HE RESPONDENT FILED APPEAL WITH HON. CIT(A), WHICH WAS DECIDED IN FAVOUR OF THE RESPONDENT. FURTHER, THE DEPARTMENT FILED APPEAL WITH ITAT, WHICH WITHOUT CONSIDERING THE CROSS OBJECTIONS FILED BY THE RESPONDENT, WAS DECIDED IN FAVOUR OF THE DEPARTMENT. FUR THER, THE ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 28 RESPONDENT FILED APPEAL WITH THE HON. HIGH COURT, WHO AFTER HEARING HAS REFERRED THE CASE BACK TO ITAT FOR EXAMINING THE ISSUE OF COMPLIANCE OR NON - COMPLIANCE WITH THE JURISDICTIONAL PARAMETERS NECESSARY TO INITIATE ACTION UNDER SECTION 153C OF THE IT ACT. 2. HON. HIGH COURT HAS NOTED THE FOLLOWING IN THEIR ORDER WHILE REMANDING THE MATTER BACK TO THE HON. ITAT THEREFORE, UPON REMAND THE ITAT WILL HAVE TO PERMIT THE APPELLANTS/ASSESSES TO URGE THE AFORESAID ISSUES, TOGETHER WITH THE ISSUE RELATING TO COMPLIANCE WITH THE JURISDICTIONAL PARAMETERS BEFORE ANY ACTION UNDER SECTION 153C CAME TO BE INITIATED AGAINST THE SPOUSES OF THE APPELLANTS/ASSESSES. IN THIS CASE, THE ACTION AGAINST THE APPELLANTS/ASSESSES IS PREMISED ON THE LIABILITY OF THEIR SPOUS ES AND THE PROVISIONS OF SECTION 5A OF THE ACT, WHICH ARE PECULIAR TO THE STATE OF GOA. ACCORDINGLY, THE SUBSTANTIAL QUESTION OF LAW NO.4 AS ALSO THE ADDITION SUBSTANTIAL QUESTION OF LAW IS ANSWERED IN FAVOR OF THE APPELLANTS/ASSESSES. THE IMPUGNED JUDGEME NT AND ORDERS MADE BY THE ITAT ARE HEREBY SET ASIDE AND THE MATTERS ARE REMANDED TO THE ITAT FOR ADJUDICATION OF THE APPEALS INSTITUTED BY THE REVENUE, IN ACCORDANCE WITH LAW AND ON THEIR OWN MERITS. IN SUCH APPEALS, BY APPLYING OUR REASONING IN THE CONNEC TED APPEALS, EVEN THE PRESENT APPELLANTS/ASSESSES ARE TO BE PERMITTED TO RAISE THE AFORESAID JURISDICTIONAL ISSUE IN THE CONTEXT OF PROVISION OF SECTION 153C AND 154 OF THE IT ACT. ALL CONTENTIONS OF BOTH ARE EXPRESSLY KEPT OPEN. 3. IN THIS REGARD THE RESPON DENT HAD MADE APPLICATION TO THE REGISTRAR FOR OBTAINING THE COPIES OF THE SATISFACTION RECORDED IN THE RESPONDENT FILE AS WELL AS IN THE FILE OF THE PERSON SEARCHED U/S 132 OF THE IT ACT. IN REPLY TO WHICH THE DEPARTMENT HAS PROVIDED THE ORDER SHEET NOTIN GS IN THE CASE OF SHRI. PETER VAZ AND SHRI. EDGAR BRAZ AFONSO, IN RESPONDENT FILE THERE WAS NO SATISFACTION NOTED NOR THERE WAS NOTICE ISSUED U/S 153C OF THE IT ACT1961 IN THE CASE OF THE RESPONDENT. THE COPY OF THE ORDER SHEET NOTING ARE ENCLOSED AS PER ANNEX - 1 4. THE DEPARTMENT HAS MADE THE ADDITION U/S 154 OF THE INCOME TAX ACT1961, WITHOUT ISSUE OF ANY NOTICE U/S 153C OR PASSING OF THE ORDER U/S 153C R.W.S 143(3) OF THE IT ACT. IN THIS CONNECTION WE WISH TO MAKE FOLLOWING SUBMISSIONS FOR YOUR KIND CONSI DERATION. 5. WE NOTE THE RELEVANT PROVISION OF SECTION 5A OF THE INCOME TAX ACT1961 AS BELOW APPORTIONMENT OF INCOME BETWEEN SPOUSES GOVERNED BY PORTUGUESE CIVIL CODE. 5A. (1) WHERE THE HUSBAND AND WIFE ARE GOVERNED BY THE SYSTEM OF COMMUNITY OF PROPERTY (K NOWN UNDER THE PORTUGUESE CIVIL CODE OF 1860 AS 'COMMUNIAO DOS BENS') IN FORCE IN THE STATE OF GOA AND IN THE UNION TERRITORIES OF DADRA AND NAGAR HAVELI AND DAMAN AND DIU, THE INCOME OF THE HUSBAND AND OF THE WIFE UNDER ANY HEAD OF INCOME SHALL NOT BE ASS ESSED AS THAT OF SUCH COMMUNITY OF PROPERTY (WHETHER TREATED AS AN ASSOCIATION OF PERSONS OR A BODY OF INDIVIDUALS), BUT SUCH INCOME OF THE HUSBAND AND OF THE WIFE UNDER EACH HEAD OF INCOME (OTHER THAN UNDER THE HEAD 'SALARIES') SHALL BE APPORTIONED EQUALL Y BETWEEN THE HUSBAND AND THE WIFE AND THE INCOME SO APPORTIONED SHALL BE INCLUDED SEPARATELY IN THE TOTAL INCOME OF THE HUSBAND AND OF THE WIFE RESPECTIVELY, AND THE REMAINING PROVISIONS OF THIS ACT SHALL APPLY ACCORDINGLY. ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 29 (2) WHERE THE HUSBAND OR, AS TH E CASE MAY BE, THE WIFE GOVERNED BY THE AFORESAID SYSTEM OF COMMUNITY OF PROPERTY HAS ANY INCOME UNDER THE HEAD 'SALARIES', SUCH INCOME SHALL BE INCLUDED IN THE TOTAL INCOME OF THE SPOUSE WHO HAS ACTUALLY EARNED IT. 6. AS INTERPRETED BY THE TRIBUNAL AND ALSO BY THE JUDICIAL HIGH COURT THAT THE THE PROVISIONS OF S. 5A OF THE IT ACT ALSO MAKE IT VERY CLEAR THAT INCOME OF THE HUSBAND AND OF THE WIFE UNDER ANY HEAD OF INCOME SHALL NOT BE ASSESSED AS THAT OF SUCH COMMUNITY OF PROPERTY, BUT SUCH INCOME OF THE HUSB AND AND OF THE WIFE UNDER EACH HEAD OF INCOME, OTHER THAN UNDER THE HEAD 'SALARIES', SHALL BE APPORTIONED EQUALLY BETWEEN THE HUSBAND AND THE WIFE AND THE INCOME SO APPORTIONED SHALL BE INCLUDED SEPARATELY IN THE TOTAL INCOME OF THE HUSBAND AND OF THE WIFE RESPECTIVELY. THIS, THEREFORE, EMERGES THAT THE ASSESSMENT IS NOT TO BE MADE ON THE COMMUNION, BUT THE ASSESSMENT HAS TO BE MADE ON THE HUSBAND OR THE WIFE SEPARATELY. 7. FURTHER, WE LOOK AT THE PROVISION OF SECTION 154 OF THE INCOME TAX ACT1961 RECTIFICAT ION OF MISTAKE. 154. (1) WITH A VIEW TO RECTIFYING ANY MISTAKE APPARENT FROM THE RECORD AN INCOME - TAX AUTHORITY REFERRED TO IN SECTION 116 MAY, (A) AMEND ANY ORDE R PASSED BY IT UNDER THE PROVISIONS OF THIS ACT ; (B) AMEND ANY INTIMATION OR DEEMED INTIMATION UNDER SUB - SECTION (1) OF SECTION 143 ; ------------- ------------- A S NOTED ABOVE SECTION 154(1) OF THE INCOME TAX ACT1961 IS APPLICABLE ONLY WHEN THERE IS MISTAKE APPARENT FROM THE RECORDS. 8. IN THE ASSESSES CASE THE RETURN WAS FILED AND THE INTIMATION WAS ISSUED U/S 143(1) OF THE INCOME TAX ACT1961, WHICH HAS BEEN RECTI FIED BY THE AO BY PASSING THE ORDER U/S 154 OF THE IT ACT TO MAKE THE ADDITION OF 50% OF THE ADDITIONAL INCOME ASSESSED IN THE HANDS OF THE SPOUSE. IT IS WORTH TO NOTE THAT THERE WAS NO MISTAKES APPARENT FROM THE RECORDS / RETURN FILE BY THE ASSESSEE AS SU CH THERE WAS NO REQUIREMENT TO RECTIFY ANY ERROR. 9. THE LD AO HAS WILLFULLY PASSED ORDER U/S 154 OF THE IT ACT BY ADDING 50% OF THE ADDITIONAL INCOME ASSESSED IN THE HANDS OF THE SPOUSE, WHICH IS BAD IN LAW. 10. AS SUCH THE ASSESSMENT HAS TO BE MADE IN HUSB AND AND WIFE CASE SEPARATELY AND IT IS NOT THAT THE DEPARTMENT CAN INVOKE THE PROVISION OF 154 OF THE IT ACT, WHICH IS SQUARELY APPLICABLE WHEN THERE IS MISTAKE APPARENT FROM THE RECORDS AND NOT FOR MAKING ANY ASSESSMENT. 11. WE RELY UPON THE DECIDED IN THE C ASE OF ADDITIONAL COMMISSIONER OF INCOME TAX VS MR. & MRS. VALENTINO F. PINTO [TS - 5444 - HC - 1983(BOMBAY) - O], (1983) 37 CTR 0201, (1984) 150 ITR 0408, (1983) 15 TAXMAN 0433 IN THE HIGH COURT OF BOMBAY WHERE IT WAS HELD THAT IN PURUSHOTAM GANGADHAR BHENDE'S CA SE (SUPRA), ALTHOUGH THE INCOME BEING CONSIDERED WAS INCOME FROM HOUSE PROPERTY, THE PROVISIONS OF THE PORTUGUESE CIVIL CODE AS WELL AS ARTICLE II 92 OF THE COMMERCIAL CODE WERE CONSIDERED AND IT WAS ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 30 OBSERVED THAT THE RESPECTIVE HALF SHARES OF THE HUSBAND AND WIFE IN THE INCOME FROM THE HOUSE PROPERTY, WHICH WAS THE PROPERTY OF THE COMMUNION OF THE HUSBAND AND WIFE MARRIED ACCORDING TO THE CUSTOM OF GOA, SHOULD BE ASSESSED SEPARATELY IN EQUAL SHARES IN THE HANDS OF EACH OF THEM, AND NOT IN THE HANDS OF' THE BOI' OF THE COMMUNION OF HUSBAND AND WIFE. THIS RATIO WOULD SEEM TO APPLY TO ALL TYPES OF INCOME AND CANNOT BE RESTRICTED TO HOUSE PROPERTY. IF THAT BE SO, THE TWO QUESTIONS REFERRED TO US CAN BE ANSWERED WITHOUT FURTHER ELABORATE DISCUSSION, EITHER FACTU AL OR LEGAL. 12. WE ALSO RELY UPON THE DECISION OF HON. ITAT PANAJI BENCH IN THE CASE OF ANANT JANARDHAN THAKUR VS COMMISSIONER OF INCOME TAX [TS - 7026 - ITAT - 2013(PANAJI) - O] IN THE ITAT OF PANAJI IT WAS HELD THAT AS PER SECTION 5A OF THE INCOME TAX ACT THE HUS BAND AND WIFE ARE SEPARATELY ASSESSED. THEREFORE, THEY ARE SEPARATE ASSESSEES AND WHEN THEY ARE SEPARATE ASSESSEES, THEY ARE ENTITLED FOR DEDUCTION SEPARATELY. IN THE RESULT, WE ALLOW THE APPEAL OF THE ASSESSEES. 13. AS SUCH THE ORDER PASSED BY AO U/S 154 OF THE INCOME TAX ACT1961, WITHOUT FOLLOWING THE PROCEDURE AS LAID DOWN U/S 153C OR 147 OF THE IT ACT., IS BAD IN LAW AND DESERVES TO BE QUASHED. AS SUCH WE HUMBLY REQUEST YOUR HONOUR TO TAKE THE ABOVE SUBMISSION ON RECORD AND DISPOSAL OF THE APPEAL WHILE UPHOLDING NATURAL JUSTICE. 26 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS SUBMITTED BY THE LD. AR THAT FOR THE PURPOSE OF INVOKING JURISDICTION U/S.154 OF THE ACT THE EXISTENCE OF AN ORDER PASSED BY THE AO IS ESSENTIAL. SINCE THERE WAS NO ORDER PASSED BY THE AO U/S.153C OF THE ACT, THEREFORE, THERE WAS NO OCCASION TO ISSUE ANY RECTIFICATION ORDER U/S.154 OF THE ACT. 27 . WE HAVE HEARD RIVAL CONTENTIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FIRSTLY, IT IS A MATTER OF FACT TH AT NO NOTICE U/S.153C OF THE ACT WAS ISSUED BY THE AO TO THE ASSESSEE BEFORE US. FURTHER, NO ASSESSMENT ORDER WAS PASSED BY THE AO U/S.153C OF THE ACT. CONSEQUENTLY, THE ISSUANCE OF NOTICE AND RECTIFICATION ORDER BY THE AO U/S.154 OF THE ACT IMPUGNED BEFOR E US, WAS WITHOUT ANY BASIS AS THE EXISTENCE OF AN ORDER SOUGHT TO BE RECTIFIED IS REQUIRED TO BE THE FIRST CONDITION FOR INVOKING THE PROVISIONS OF SECTION 153C OF THE ACT. BESIDES ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 31 THAT THE ORDER U/S.154 OF THE ACT CAN BE PASSED BY THE AO TO RECTIFY ANY M ISTAKE APPARENT FROM THE RECORD IRRESPECTIVE OF AN ORDER IN EXISTENCE. SINCE THERE WAS NO ORDER IN EXISTENCE, THERE WAS NO OCCASION FOR THE AO TO RECTIFY ANY MISTAKE. THE PASSING OF THE RECTIFICATION ORDER, IN OUR VIEW, IS PREPOSTEROUS AND WITHOUT ANY JURI SDICTION AS THERE WAS NO ASSESSMENT ORDER U/S.153C OF THE ACT OR OTHERWISE. THEREFORE, THE ADDITION GROUND RAISED BY THE ASSESSEE IN THE CROSS OBJECTIONS IS REQUIRED TO BE ALLOWED ON THIS GROUND, HOWEVER , BESIDES THAT AS HELD BY US ABOVE IN THE CASE OF SMT . NATALINA VAZ, THE EXISTENCE OF SATISFACTION ON THE FILE OF THE ASSESSEE BEFORE US IS SINE QUA NON AND ADMITTEDLY THERE IS NO SATISFACTION ON RECORD BY THE AO OF THE ASSESSEE AND, THEREFORE, NO ORDER U/S.153C OF THE ACT CAN BE PASSED IN ABSENCE OF ANY SAT ISFACTION RECODED BY THE AO OF THE ASSESSEE. IN THE LIGHT OF THE ABOVE, WE ALLOW THE ADDITIONAL GROUND RAISED IN CROSS OBJECTIONS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEARS UNDER CONSIDERATION. THUS, ALL THE APPEALS OF THE REVENUE FOR THE ASSESSMENT YEARS 2007 - 2008 TO 2012 - 2013 ARE DISMISSED AND THE CROSS OBJECTIONS FILED BY THE ASSESSEES ARE ALLOWED. 28 . IN THE RESULT, ALL THE APPEALS OF THE REVENUE IN IT(SS)A NOS.17 TO 22/PAN/2015 AND IT(SS)A NOS.28 TO 33/PAN/2015 ARE DISMISSED, WHEREAS THE CROSS O BJECTIONS FILED BY THE ASSESSEE I.E. CO NOS.85 TO 90 & 96 TO 101/PAN/0016 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 / 10 / 2021. SD/ - SD/ - ( ) (DR. M ITHA LAL MEENA ) ( ) (LALIET KUMAR) / ACCOUNTANT MEMBER / JUDICIAL MEMBER /PANAJI ; DATED 06 /10 /202 1 PRAKASH KUMAR MISHRA, SR.P.S. ITA NOS 17 - 22/PAN/2016 A.W.THE CONNECTED APPEALS AND CROSS OBJECTIONS . 32 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , /ITAT, PANAJI 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, PANJAJI 6. / GUARD F ILE. //TRUE COPY//
