Sh. Prem Parkash, Ludhiana V. ACIT, Ludhiana

ITSSA 3/CHANDI/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7192 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 06-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 03-02-2020
• Assessment Year: misc
• Appeal Filed On: 10-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S PHANI KISHORE
• Keywords: Reopening of assessment; Gift; Income from undisclosed sources; Search and seizure; Document seized; Period of limitation; Additional evidence; Accommodation entries; Assessment record; Block assessment; Documents seized; Set aside; Capital Gains
• Section: 143(3); 205; 274; 251; 158BC; 73; 13; 158BFA; 158BD; 22; 147; 148; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B CHANDIGARH , ! '# $ % & '# , () BEFORE: SH. SANJAY GARG, JUDICIAL MEMBER & SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ IT(SS) NO.2/CHD/2016 BLOCK PERIOD : 01.04.1989 TO 24.06.1999 SMT. SHOBHA RANI LEGAL HEIR LATE SHRIPREMPARKASH, C/O M/S PARKASHKARYANA STORE, GILL ROAD, LUDHIANA. VERSUS THE ACIT, CIRCLE-V, LUDHIANA. ./ PAN NO: AAUPP3935H / APPELLANT / RESPONDENT ./ IT(SS) NO. 3/CHD/2016 BLOCK PERIOD : 01.04.1989 TO 24.06.1999 SHRIPREMPARKASH, PROP.M/S PARKASHKARYANA STORE, GILL ROAD, LUDHIANA. VERSUS THE ACIT, CIRCLE-V, LUDHIANA. ./ PAN NO: AAUPP3935H / APPELLANT / RESPONDENT / ASSESSEE BY : SHRI SUDHIR SEHGAL, ADVOCATE / REVENUE BY : SHRI G.S. PHANI KISHORE, CIT -DR ! '/ DATE OF HEARING : 03.02.2020 #$%&'( '/ DATE OF PRONOUNCEMENT : 06/08/2020 (*/ ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER: BOTH THE PRESENT APPEALSHAVE BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 28.03.2016 &31.03. 2016 OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, LUDHIAN A (IN SHORT REFERRED TO AS CIT(A)) U/S 250(6) OF THE INCO ME TAX ACT, ITSS -2&3/CHD/2016 PAGE 2 OF 25 1961 (HEREINAFTER REFERRED TO AS ACT) , AGAINST O RDER PASSED IN QUANTUM PROCEEDINGSU/S 158BC READ WITH 158BD OF THE ACT &PENALTY PROCEEDINGS U/S 158BFA OF THE ACT. 2. THE FACTS OF THE CASE ARETHAT THERE WAS A SEARCH U/S 132 AT THE BUSINESS PREMISES SH. SANJEEV GUPTA GROUP, W HICH INCLUDED M/S S.G. GLOBAL EXPORTS LTD., M/S S.G. CAP ITAL SERVICES LTD. AND ITS BROKERAGE CONCERN M/S S.G. & CO., LUDHIANA. FROM THE DOCUMENTS SEIZED DURING SUCH ACT ION IT WAS FOUND BY THE INVESTIGATION WING AND SUBSEQUENTL Y BY THE CENTRAL CIRCLE LUDHIANA THAT SH. SANJEEV GUPTA DIRE CTOR OF AFORESAID COMPANIES ALONGWITH ITS BROKERAGE CONCERN M/S S.G. & CO., IN COLLUSION WITH SOME OF THE BROKERS O F THE LUDHIANA STOCK EXCHANGE SUCH AS M/S PEE KAY KHANNA& CO., M/S PAWANPURI& CO AND M/S SINGHANIA& HAD INDUL GED IN MONEY LAUNDERING AND IN GIVING ENTRIES OF CAPITA L GAINS TOVARIOUS PERSONS. BASED ON THE AFORESAID INFORMATI ON NOTICE U/S 158 BC WAS ISSUED TO THE ASSESSEE ,IN RESPONSE TO WHICH HE FILED A RETURN DECLARING UNDISCLOSED INCOME OF R S. NIL. FROM THE PERUSAL OF ASSESSMENT RECORDS OF THE ASSE SSEE, THE AO NOTED THATTHE ASSESSEE HAD SHOWN CAPITAL GAI NS DURING THE AY 1998-99 ON ACCOUNT OFPURCHASE/SALE TRANSACTIONS OF SHARES OF M/S S.G. GLOBAL EXPORTS L TD. THE AO FURTHER NOTED THAT THE ASSESSEE HAD SHOWN PURCHA SE OF 62500 SHARES FOR RS. 97000AT THE RATE OF RS. 1.50-1 .55 PER ITSS -2&3/CHD/2016 PAGE 3 OF 25 SHARE ON 11.11.97 AND SOLD OFF SHARES ON 27.03.98FO R RS. 10,93,350/- @ RS. 17.50 PER SHARE. AND THE CAPITAL GAINS OF RS. 9,97,500/-THUS HAD BEEN SHOWN WHICH HAS BEEN US ED TO SET OFF AGAINST THE LOSS ON ACCOUNT OFSALE OF JEWEL LERY DECLARED UNDER THE VDIS. FURTHER FROM THE PERUSAL O F ASSESSMENT RECORDS, THE AO OBSERVED AS UNDER : A) THE PURCHASE OF SHARES HAS BEEN MADE THROUGH M/S S.G. & CO. ON11.11.1997 BUT THE PAYMENT IN RESPECT OF SUCH SHARES HAS BEEN MADE ONLY IN MARCH 1998. B) THE SALE OF SHARES HAS BEEN MADE THROUGH THE SAME BROKER 27.03.1998 TO PERSONS WHOSE IDENTITY AND WHOSE WHEREABOUTS ARE NOT KNOWN; THE SALE CONSIDERATION SHOWN TO HAVE BEEN REALIZED BY THE BROKER M/S S.G. & CO. WHICH IS HANDLED BY SH. SANJEEV GUPTA WHO IS THE DIRECTOR OF M/S S.G. GLOBALEXPORTS LTD. (IN COLLUSION) IN CASH AND SUBSEQUENTLY PASSED TO THE ASSESSEE THROUGH CHEQUE. C) THUS IT WAS SEEN THAT THE BROKER ALLOWED CREDIT T O THE ASSESSEE OF AS MUCH AS FOUR MONTHS WITHOUT ANY CHARGES, (BETWEEN PURCHASE AND PAYMENT). WHEREAS THE PAYMENT SHOULD BE MADE WITHIN FOUR DAYS AS PER NORMS AND PREVAILING PRACTICE. D) THE RATES OF COMPANY WERE NOT QUOTED IN ANY OF THE STOCK EXCHANGES AND IN ANY CASES DID NOT SWELL UPTORS. 17-18/-. THE PRICE RISE FROM RS. 1-3 TO RS. 17-18 WITHIN A SPAN OF 4 MONTHS WAS ABNORMAL ESPECIALLY KEEPING IN VIEW THE CREDENTIAL OF THE COMPANY M/S S. G. GLOBAL EXPORT LTD. 2.2 KEEPING IN VIEW THE ABOVE FACTS, THE AO WAS OF VIEW THAT THE ASSESSEE WAS REQUIRED TO EXPLAIN AND ESTABLISH THE GENUINENESS OF TRANSACTION. IN RESPONSETHEREOF THE ASSESSEE ITSS -2&3/CHD/2016 PAGE 4 OF 25 SUBMITTED THAT THE DEPARTMENT HAD NOT PROVIDED THE ASSESSEE'S INFORMATION AVAILABLE WITH THE DEPARTMEN T. IN LIGHT OF NUMEROUSOPPORTUNITY AFFORDED TO THE ASSESS EE THE OBJECTIONS RAISED BY THE ASSESSEE WAS IGNORED BY THE AO.THE AO OBSERVED THAT THE SALE TRA NSACTION DID NOT TAKE PLACE AND THE WHOLE ARRANGEMENT WAS ME RELY A PAPER TRANSACTION IN ORDER TO TAKE CAPITAL GAIN ENT RY AND TO INTRODUCE ONE'S OWN UNDISCLOSED MONEY BY THE APPELL ANT. THEREFORE, THE AO MADE ADDITION OF RS. 9,97,500/- O N ACCOUNT OF INCOME FROM UNDISCLOSED SOURCES.SUBSEQUE NTLY, THE AO OBSERVED THAT THE APPELLANT HAD PAID COMMISS ION @2% TO SH. SANJEEVGUPTA FOR OBTAINING THESE ENTRIES . ACCORDINGLY ADDITION OF RS. 19,950/-(@2% OF RS. 9,9 7,500/-) WAS ALSO MADE ON ACCOUNT OF COMMISSION PAID BY THE APPELLANT TO SH. SANJEEV GUPTA FROM HIS UNDISCLOSED SOURCES.THUS, TOTAL ADDITION OF UNDISCLOSED INCOME RS.10,17,450/-WAS ACCORDINGLY MADE IN ORDER PASSED U/S 158BD R.W.S 158BC OF THE ACT. 3. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT(A) WHERE THE ASSESSEE CHALLENGED THE ORDER PASSED RAIS ING BOTH LEGAL GROUNDS CHALLENGING THE ASSUMPTION OF JURISDI CTION BY THE AO U/S 158BD OF THE ACT AND ALSO ON THE MERITS OF T HE CASE. THE LD. CIT(A) DISMISSED ALL THE GROUNDS RAISED BY THE ASSESSEE ITSS -2&3/CHD/2016 PAGE 5 OF 25 AND UPHELD THE ORDER OF THE AO ,DISMISSING THE APP EAL FILED BY THE ASSESSEE. AGGRIEVED BY THE SAME, THE ASSESSEE HAS COME UP IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS : 1. THAT THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN OPENING THE CASE U/S 158BD OF THE INCOME TAX ACT, 1961. 2. THAT THE LEARNED CIT(A) HAS ERRED IN NOT CONSIDERIN G THAT THE ACTION OF THE ASSESSING OFFICER IN OPENING THE CASE U/S 158BD WAS BAD IN LAW AS CONDITIONS PRECEDENT FOR INVOKING THE PROVISIONS OF SECTION 158BD WERE NOT SATISFIED. 3. THAT THE LEARNED CIT(A) HAS ERRED IN NOT CONSIDERIN G THAT PROCEEDINGS U/S 158BD HAS BEEN INITIATED WITHOUT AN Y PROPER SATISFACTION AND WITHOUT HAVING ANY MATERIAL WHICH IS MANDATORY TO BE TRANSFERRED FROM THE ASSESSING OFFICER WHO HAS T HE JURISDICTION OVER THE SEARCHED PERSON. 4. FURTHER, IT IS SUBMITTED THAT THE LEARNED CIT(A) HA S ERRED IN NOT CONSIDERING THAT THE ASSESSEE HAD DISCLOSED TRA NSACTIONS IN RESPECT OF SALE AND PURCHASE OF SHARES IN HIS REGUL AR RETURN OF INCOME. AS SUCH, THE SAME TRANSACTIONS CANNOT BE TR EATED FOR THE PURPOSE OF CLAUSE (B) OF SECTION 158BD OF THE ACT. 5. FURTHER, IT IS SUBMITTED THAT THE LEARNED CIT(A) HA S ERRED IN NOT CONSIDERING THAT THE ASSESSEE HAD ALREADY SOLD THE SHARES AND HAD ALSO ALREADY REALIZED THE SALE PROCEEDS OF SHAR ES MUCH BEFORE THE SEARCH ON THE PARTY CONCERNED AND, THUS, THE FI NDINGS OF THE CIT (A) AGAINST SUCH BACK GROUND ARE NOT PROPER. 6. THAT IN VIEW OF LEGAL AND FACTUAL POSITION, THE LEA RNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.10,17,45 0/- MADE BY THE ASSESSING OFFICER BY INITIATING PROCEEDINGS U/S 158 BC R.W. SECTION 158BD AND 143(3) OF THE INCOME TAX ACT, 1961. 7. THAT THE DETAILED SUBMISSIONS FILED ALONG WITH CITA TION OF VARIOUS CASE LAWS, DURING THE COURSE OF HEARING BEF ORE LEARNED CIT(A) AND ALSO DURING THE COURSE OF ASSESSMENT PRO CEEDINGS HAS NOT BEEN CONSIDERED PROPERLY. 8. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEALBEFORE THE APPEAL IS FINALLY HEARD OR DISP OSED OFF. ITSS -2&3/CHD/2016 PAGE 6 OF 25 4. GROUND NOS. 1 AND 9 ARE GENERAL IN NATURE AND NE ED NO ADJUDICATION. 5. GROUND NOS. 2 & 3 ARE LEGAL GROUNDS CHALLENGING THE VALIDITY OF THE ASSESSMENT FRAMED U/S 158BD OF THE ACT. THE PRIMARY CONTENTION OF THE LD. COUNSEL FOR THE ASSES SEE RAISED IN THESE GROUNDS IS THAT FOR THE PURPOSE OF ASSUMING J URISDICTION TO FRAME ASSESSMENT U/S 158BD OF THE ACT, THE NECES SARY PRE- REQUISITES AS PER LAW ARE THE SATISFACTION OF THE A O OF THE PERSON SEARCHED TO THE EFFECT THAT THERE IS UNDISCL OSED INCOME BELONGING TO ANY OTHER PERSON AND HANDING OVER OF T HE INCRIMINATING MATERIAL BELONGING TO AO OF SUCH THIR D PERSON SO AS TO PROCEED AGAINST SUCH PERSON. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THERE WAS NEVER ANY MAT ERIAL IN THE POSSESSION OF THE AO OF THE SEARCHED PERSON REL ATING TO THE ASSESSEE AND IN THE ABSENCE OF THE SAME, THEREFORE, THERE COULD NOT HAVE BEEN ANY SATISFACTION BY THE AO OF THE SEA RCHED PERSON VIS--VIS ANY UNDISCLOSED INCOME OF THE ASSE SSEE UNEARTHED DURING SEARCH AND NO INCRIMINATING MATERI AL WAS PASSED TO THE AO OF THE ASSESSEE AND THEREFORE, THE ASSESSMENT FRAMED BY THE AO IN THE PRESENT CASE WAS WITHOUT AN Y VALID JURISDICTION. THE LD. COUNSEL FOR THE ASSESSEE POI NTED OUT THAT EVEN THE CIT(A) HAD ADMITTED TO THE FACT OF ABSENCE OF ANY INCRIMINATING MATERIAL RELATING TO THE ASSESSEE EIT HER WITH THE AO OF THE SEARCHED PERSON OR WITH THE AO OF THE ASS ESSEE. HE ITSS -2&3/CHD/2016 PAGE 7 OF 25 FURTHER DREW OUR ATTENTION TO THE COPY OF LETTER DA TED 31.05.2001 FROM THE AO OF THE SEARCHED PERSON I.E. DCIT, CENTRAL CIRCLE, LUDHIANA PLACED AT PAPER BOOK PAGE NO. 1 & 2 BEFORE US, POINTING OUT THEREFROM THAT IT CONTAINED ONLY INFORMATION AND OPINION OF THE AO OF THE SEARCHED P ERSON AND THERE WAS NO MENTION OF ANY INCRIMINATING MATERIAL RELATING TO THE ASSESSEE IN THE SAME SO AS TO BE SATISFIED THAT UNDISCLOSED INCOME RELATING TO THE ASSESSEE HAD BEEN FOUND DURI NG SEARCH. HE FURTHER DREW OUR ATTENTION TO THE COPY OF THE SA TISFACTION NOTE RECORDED BY THE AO OF THE ASSESSEE DATED 28.06 .2001 PLACED AT PAPER BOOK PAGE NO. 3 POINTING OUT THEREF ROM THAT THE AO OF THE ASSESSEE HAD RECORDED SATISFACTION FO R ASSUMING JURISDICTION TO FRAME ASSESSMENT U/S 158BD OF THE A CT SOLELY ON THE BASIS OF INFORMATION PASSED ON TO HIM BY THE AO OF THE SEARCHED PERSON AND SATISFACTION NOTE FINDS MENTION OF NO INCRIMINATING MATERIAL IN THE POSSESSION OF THE AO TO ARRIVE AT SUCH SATISFACTION OF BUT REST AS ARGUMENT. THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO A LETTER WRITTEN BY THE AO OF THE ASSESSEE TO THE AO OF THE SEARCHED PERSON I.E. DCIT, CENTRAL CIRCLE, LUDHIANA DATED 10.04.2003 I.E. MUCH AFTER RECORDING SATISFACTION FOR ASSUMING JURISDICTION U/ S 158BD I.E. ON 28.06.2001, ASKING FOR SUPPLY OF COPIES OF SEIZE D MATERIAL. THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, CONTEN DED THAT UNDISPUTEDLY THERE WAS NO INCRIMINATING MATERIAL PA SSED ON BY ITSS -2&3/CHD/2016 PAGE 8 OF 25 THE AO OF THE SEARCHED PERSON TO THE AO OF THE ASSE SSEE AND THEREFORE, THE ASSUMPTION OF JURISDICTION U/S 158BD OF THE ACT BY THE AO OF THE ASSESSEE WAS NOT AS PER LAW. HE F URTHER CONTENDED THAT EVEN THE ASSESSMENT WAS FRAMED WITHO UT ANY INCRIMINATING MATERIAL WITH THE AO. THE LD. COUNSEL FOR THE ASSESSEE RELIED ONVARIOUS CASE LAWS FOR THE PROPOSI TION THAT SATISFACTION AND HANDING OVER OF SEIZED MATERIAL BY THE AO OF THE SEARCHED PERSON OF THE AO OF THE THIRD PERSON I S MANDATORY. REFERENCE WAS MADE TO THE DECISION OF T HE APEX COURT IN THE CASE OF MANISH MAHESHWARI AS REPORTED IN 289 ITR 341 (S.C) IN THIS REGARD. FURTHER, THE LD. COUNSEL FOR THE ASSESSEE RELIED ON FOLLOWING CASE LAWS FOR THE PROP OSITION THAT THE AO OF THE THIRD PERSON HAS TO RECORD HIS INDEPE NDENT SATISFACTION BASED ON MATERIAL HANDED OVER TO HIM B Y THE AO OF THE SEARCHED PERSON IN ASSUMING JURISDICTION TO FRA ME ASSESSMENT U/S 158BD OF THE ACT : I) CIT VSMECHMEN IN ITA 44/45/50/53/54/56 OF 2011 (MADHYA PRADESH H.C.) ORDER DATED 10.07.2015. II) M/S PARSHWA CORPORATION JALDHARA APARTMENTS VS DCIT ITSS68 TO 73/AHD/2012 DATED 11.09.2015. 6. THE LD. DR ON THE OTHER HAND HEAVILY RELIED ON T HE FINDINGS OF LD. CIT(A) IN THIS REGARD. HE DREW OUR ATTENTION TO PARA 2.13 TO 2.17 OF THE ORDER AS UNDER : 2.13 I HAVE CAREFULLY CONSIDERED THE APPELLANT'S S UBMISSIONS. I HAVE ALSO GONE ROUGH THE ASSESSMENT RECORD. IT IS APPARENT FROM THE REAS ON RECORDED BY THE AO THAT THE INFORMATION RECEIVED BY THE AO FROM DIT, INVESTIGAT ION DELHI WAS SPECIFIC INFORMATION. ITSS -2&3/CHD/2016 PAGE 9 OF 25 THE INFORMATION REFERRED TO THE FACT OF ACCOMMODATI ON ENTRY THROUGH BANK CHEQUE. THE BANK ACCOUNT NUMBER AND THE NAME OF THE PERSON FROM WHOM THE AMOUNT WAS RECEIVED WAS ALSO SPECIFICALLY MENTIONED IN THE INFORMATION. AS SUCH THE INFORMATION WAS NOT AMBIGUOUS OR GENERAL, COMMUNICATION RECEIVED BY AN ASSESSING OFFICER FOR DISCHARGE OF HIS OFFICIAL DUTIES IS VALID INFORMATION FOR PROVISIONS OF SECTI ON 158BD OF THE ACT. RELIANCE IN THIS REGARD IS PLACED ON THE FOLLOWING CASE LAWS, ALTHOU GH SOME ARE RELATED TO PROCEEDING U/S 148 OF THE ACT BUT THE ISSUES ARE RELEVANT HERE ALS O IN THE CONTEXT OF ISSUE OF SATISFACTION OF AO:- RAJAT EXPORT IMPORT INDIA PVT. LTD. V. ITO (2012) 3 41 ITR 135 / 206 TAXMAN 50/75 DTR 108/252 CTR 307 (DELHI)(HIGH COURT ) ACCOMMODATION ENTRIES - REOPENING HELD VALID. (S. 1 48) THE COURT DISMISSED THE WRIT PETITION CHALLENGING THE REOPENING ON THE GROUND TH AT IN THEREASONS RECORDED THE ASSESSING OFFICER HAD REFERRED TO THE INVESTIGATION MADETHE DIRECTOR OF INCOME-TAX (INVESTIGATION), WHO WAS IN CHARGE OF THE INVESTMEN T INTO GROUPS THAT OPERATED AS ENTRY OPERATORS, IN THE VARIOUS BRANCHES OF BANKS TO INTR ODUCE UNACCOUNTED MONEY IN THE GUISE OF GIFTS, LOANS SHARE APPLICATION MONEY, ETC. AFTER REFERRING TO THE BROAD AND GENERAL MODUS OPERANDI ADOPTED BY THE ENTRY PROVIDERS, THE ASSESSING OFFICER SPECIFICALLY NOTICED FROM THE LIST OF ENTRIES GIVEN TO HIM BY TH E INVESTIGATION WING THAT ASSESSEE HAD TAKEN ACCOMMODATION ENTRY FROM S IN THE AMOUNT OF R S. 3 LAKHS. THE REASONS TO BELIEVE RECORDED IN WRITING BY THE ASSESSING OFFICER WERE D ETAILED AND SHOWED APPLICATION OF MIND .AT THE STAGE WHEN REASONS ARE RECORDED FOR RE OPENING THE ASSESSMENT, THE ASSESSING OFFICER IS NOT REQUIRED TO BUILD A FOOL P ROOF CASE FOR MAKING ADDITION TO THE ASSESSEE'S INCOME; ALL THAT IS REQUIRED TO DO AT TH AT STAGE IS TO FORM A PRIMA FACIE OPINION OR BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. ON TH E FACTS THE COURT UP HELD THE REOPENING OF ASSESSMENT AND DISMISSED THE WRIT PETI TION. (A. Y. 2004-05). (II) ACIT V. KISCO CASTING P. LTD. (2013) 152 TTJ 629 (CHD.) (TRIB.) WHERE THE INFORMATION IS FACTUAL AND NOT FALSE ONE AND THE SAME HAS MERELY BEEN COMMUNICATED TO THE ASSESSING OFFICER, HE WOULD BE WITHIN HIS STATUTORY RIGHT TO INVOKE THE PROVISIONS OF SECTION 147 R.W.S. 148.THE TRIBUN AL HELD THAT INFORMATION FROM THE INVESTIGATION WING BEING FACTUALLY CORRECT AND THE ASSESSEE FAILED TO REFUSE THE SAME IN ANY PROCEEDINGS UNDER THE ACT, THEN THE ASSESSING O FFICER HAS JURISDICTION UNDER SECTION 147 R.W.S. 148 OF THEACT AND THERE IS NO INFIRMITY AND ILLEGALITY IN ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT BY ASSESSING OFFICER. (A. Y 2006-07) (MI) SRINIVASAKHANDASARIUDYOGVS. ITO (ITAT, BANG) 56 ITD 146 (IV) ITO VS. PURUSHOTAM DAS BANGUR&ANR. (SC) 224 ITR 362 (V) ELPHINSTONE PICTURE PALACE VS. UNION OF INDIA &ANR (PAT) 74 ITR 1 15 (VI) H.A. NANJI&CO.VS. ITO (CAL) 120 ITR 593 (VII) SOHAN SINGH VS. CIT (DEL) 158 ITR 174 (VIII) RATTAN GUPTA VS. CIT (P&H) 234 ITR 220 ITSS -2&3/CHD/2016 PAGE 10 OF 25 SIMILARLY, INFORMATION RECEIVED FROM OTHER AGENCIES LIKE CIB, ENFORCEMENT DIRECTORATE OR FROM OTHER ASSESSING OFFICERS CONSTITUTE MATERIA L FOR REOPENING OF ASSESSMENT AND NOTICE ISSUED U/S 148 IN THESE CIRCUMSTANCES IS ALS O VALID RELIANCE IN THIS REGARD IS PLACED ON THE FOLLOWING DECISIONS:- III) 2.14 FURTHER RELIANCE IS PLACED ON THE DECISION O F JURISDICTIONAL HIGH COURT IN THE CASE OF F FEBRUARY 28, 2011 [2012] 20 TAXMANN.COM 774 (PUNJ. &HAR.)IN WHICH IT CONSIDERED AND HELD ASSESSING OFFICER CONSIDERING C ASE OF SEARCHED PERSONS, FOUND PRIMA FACIE MATERIAL TO PROCEED AGAINST ASSESSEE IT WAS SUFFICIENT SATISFACTION FOR PURPOSE OF SECTION 158BD. THE FACTS OF THE CASE ARE THAT; A SEARCH WAS CARRIED OUT AT THE RESIDENCE OF ONE 'A', WHO WAS DERIVING INCOME FROM COMMISSION FROM THE MONEY LENDING BUSINESS - DURING SEARCH A DIARY (BAHI) WAS SEIZED WHICH CONTAINED SOME ENTRIES - IN A STATEMENT RECORDED BY DEPARTMENT, 'A' ADMITTE D THAT WHILE DOING BUSINESS OF BROKER IN MONEY LENDING, THE LENDERS/BORROWERS CONTACTED HIM AS HE W OULD ARRANGE MEETINGS BETWEEN THEM - IF TRANSACTION MATURED, HE WOULD GET HIS COMMISSION AND IF HE GOT COMM ISSION, HE MADE ENTRIES IN DIARY THE ENTRIES IN THE DIARY SEIZED REPRESENTED COMMISS ION RECEIVED IN TRANSACTIONS BETWEEN PARTIES MENTIONED IN THE DIARY IN CODE FORM WHICH COULD BE IDENTIFIED. IN HIS CASE, BLOCK ASSESSMENT WAS COMPL ETED ON 21-5-2001 AND ON THE SAID DATE, AN OFFICE NOTE WAS APPENDED TO THE ASSESSMENT ORDER TO THE EFFECT THAT UNDISCLOSED INCOME OF PERSONS OTHER THAN SEARCHED PERSONS WAS D ISCLOSED. ACCORDINGLY, PROCEEDINGS UNDER SECTION 158BD, READ WITH SECTION 158BC WEREINITIATED AGAINST THE ASSESS ESWHO WAS IDENTIFIED AS HAVING LENT MONEY FROM UNDISCLOSE D SOURCES. THE ASSESSEE FILED ITS RETURN OF INCOME ON 30-12-2002 DECLARING UNDISCLOSE D INCOME AT NIL. HOWEVER,THE ASSESSING OFFICER ASSESSED THE UNDISCLOSED INCOME A T RS. 3 LACS RELYING UPON THE STATEMENT OF 'A' AND THE ENTRIES IN THE DIARY FOUND DURING SEARCH. ON APPEAL, THE COMMISSIONER (APPEALS) SET ASIDE THE ADDITION ON THE GROUND THAT EXCEPT THE DIARY AND THE STATEMENT OF 'A'. THERE WAS NO OT HER CORROBORATIVE EVIDENCE AND THE LENDERS/BORROWERS MENTIONED IN THE DIARY DENIED THE TRANSACTIONS RECORDED IN THE DIARY. ON APPEAL, THE TRIBUNAL HELD THAT (I) THE OFFICE NO TE DATED 21-5-2001 WHICH WAS APPENDED TO SECTION 158BC ORDER DID NOT CONSTITUTE A SATISFACTION NOTE WITHIN THE PARAMETER OF SECTION 158BD (LL) THE ASSTT. COMMISSI ONER CIRCLE, YAMUNA NAGAR OUGHT TO HAVE HANDED OVER THE SEIZED MATERIAL AND SATISFACTI ON NOTE IN ITO, WARD-1, YAMUNA NAGAR AND IT DOES NOT HAVE JURISDICTION TO PROCEED IN CASE OF ASSESSEE. (III) IT DID NOT TAKE INTO COGNIZANCE ADDITIONAL EVIDENCE, I.E., AN EXAMI NATION REPORT/OPINION OF LABORATORY OF THE GOVERNMENT EXAMINER OF QUESTIONED DOCUMENTS, RE GARDING THE DIARY OF BROKER AND AFFIDAVIT OF BROKER. ON REVENUE'S APPEAL: HELD ITSS -2&3/CHD/2016 PAGE 11 OF 25 IN THE INSTANT CASE, THE OFFICE NOTE CLEARLY INDICA TED THAT THERE WERE ENTRIES, WHICH MIGHT SHOW UNDISCLOSED INCOME OF PERSONS OTHER THAN SEARC HED PERSONS WHO WERE IDENTIFIABLE FROM THE DIARY. ACCORDINGLY, DUE COGNIZANCE WAS BEI NG TAKEN THEREOF FOR INITIATING PROCEEDINGS FOR BLOCK ASSESSMENT IN THOSE CASES. TH E SAME MEETS THE REQUIREMENT FOR PROCEEDING UNDER SECTION 158BD. IT IS CLEAR FROM TH E LANGUAGE OF SECTION 158BD THAT IF WHILE CONSIDERING THE CASE OF THE SEARCHED PERSONS, THE MATERIAL INDICATE UNDISCLOSED INCOME AT THE HANDS OF ANY OTHER PERSON, FURTHER AC TION COULD BE TAKEN AS STIPULATED THEREIN. IN THE INSTANT CASE, THE ASSESSING OFFICER CONSIDERING THE CASE OF THE SEARCHED PERSONS, FOUND PRIMA FACIE MATERIAL TO PROCEED AGAI NST PERSONS OTHER THAN THE SEARCHED PERSONS AND INITIATED PROCEEDINGS. THERE IS NO COMP ULSION TO READ ANY FURTHER REQUIREMENT THAN WHAT IS MENTIONED AS NECESSARY FOR ACTION UNDER SECTION 158BD. IT WAS NOT POSSIBLE TO HOLD THAT ANY FURTHER INVESTIGATION WAS REQUIRED TO BE CONDUCTED AT THAT STAGE. [PARA 91 IT WAS NOT DISPUTED THAT THE ASSISTANT COMMISSIONER HAD BEEN CONFERRED JURISDICTION TO MAKE ASSESSMENT IN THE CASE OF THE ASSESSEE ON 31-1 2-2001 PRIOR TO PASSING OF THE ORDER OF ASSESSMENT AND BEFORE RECORDING THE NOTE DATED 1 5-3-2002. THE SAID NOTE OBVIOUSLY WAS IN CONTINUATION OF EARLIER NOTE DATED 21-5-2001 . NOTICE ISSUED BY THE SAID AUTHORITY COULD NOT BE TREATED AS INVALID.[PARA 10] IN VIEW OF ABOVE, THE FINDING OF THE TRIBUNAL HAD T O BE SET ASIDE AND MATTER WAS REMANDED TO IT FOR FRESH DECISION THE QUESTION WAS ANSWERED ACCORDINGLY IN FAVOUROF THE REVENUE. [PARA 14] ACCORDINGLY, THIS APPEAL WAS ALLOWED, THE IMPUGNED ORDER OF THE TRIBUNAL WAS QUASHED AND THE MATTER WAS REMANDED TO THE TRIBUNAL FOR FRE SH DECISION IN ACCORDANCE WITH LAW. [PARA 16] IN THIS CASE HON'BLE JURISDICTIONAL HIGH COURT HAS ALSO CONSIDERED MANISH MAHESHWARIV. ASSTT. CIT [2007] 289 ITR 341 / 159 TA XMAN 258 (SC) AND OTHER DECISIONS AND THEREAFTER HAS DISTINGUISHED AND HELD THAT THE THE ASSESSING OFFICER CONSIDERING THE CASE OF THE SEARCHED PERSONS, FOUND PRIMA FACIE MATERIAL TO PROCEED AGAINST PERSONS OTHER THAN THE SEARCHED PERSONS AND INITIATED PROCEEDINGS. THERE IS NO COMPULSION TO READ ANY FURTHER REGUIREMENT THAN WHA T IS MENTIONED AS NECESSARY FOR ACTION UNDER SECTION 158BD. IT WAS NOT POSSIBLE TO HOLD THAT ANY FURTHER INVESTIGATION WAS REQUIRED TO BE CONDUCTED AT THAT STAGE. THE HON'BLECOURT HAS ALSO TAKEN COGNIZENCEOF JUDGME NT OF GUJARAT HIGH COURT IN RISHUL INDUSTRIES LTD. V. HARSH PRAKASH [2001] 251 ITR 608 /[2002] 120 TAXMAN 67 (GUJ.) TO THE EFFECT THAT SATISFACTION REFERRED TO UNDER SECTION 158 BD OF THE ACT IS REQUIRED TO BE PRIMA FACIE SATISFACTION TO SHOW THA T THERE WAS UNDISCLOSED INCOME OF A PERSONOTHER THAN THE SEARCHED PERSON. RELIABILITY O F THE MATERIAL FOUND WAS NOT REQUIRED TO BE GONE INTO AT THAT STAGE. THE SAID JU DGMENT WAS FOLLOWED IN PRIYA BLUE INDUSTRIES (P.) LTD. V. JT CIT [2001] 251 ITR 615 /12002] 120 TAXMAN 696 (GUJ.) 2.15 RECENTLY IN A LANDMARK DECISION HONBLE APEX C OURT IN THE CASE OF CIT VS. CALCUTTA KNITWEARS (SUPREME COURT) DATED APRIL 1, 2014 HAS D ECIDED THIS ISSUE THAT U/S 158BC/ 158BD, LAW ON HOW & WHEN 'SATISFACTION' HAS TO BE R ECORDED BY AO TO ATTAIN JURISDICTION OVER NON-SEARCHED PERSON EXPLAINED. TH E FACTS OF THE CASE ARE; A SEARCH U/S 132 WAS CARRIED OUT IN THE PREMISES OF THE BHATIA GROUP ON 05.02.2003 AND CERTAIN INCRIMINATING DOCUMENTS PERTAINING TO THE A SSESSEE FIRM WERE FOUND. THE ASSESSMENT ON THE BHATIA GROUP WAS COMPLETED ON 30. 03.2005. THEREAFTER, ON ITSS -2&3/CHD/2016 PAGE 12 OF 25 15.07.2005, THE AO RECORDED HIS 'SATISFACTION' THAT THE SEIZED PAPERS REVEALEDTHE UNDISCLOSED INCOME OF THE ASSESSEE AND THE SAID PAP ERS WERE PASSED ON TO THE AO OF THE ASSESSEE FOR MAKING AN ASSESSMENT U/S 158BC READ WI TH SEC.158BD. THE ASSESSEE ARGUED THAT THE PROCEEDINGS INITIATED AGAIN HIM WERE INVAL ID AS THE SAID 'SATISFACTION NOTE' WAS PREPARED AFTER THE PROCEEDINGS IN THE CASE OF THE S EARCHED PARTY WERE COMPLETED. THE AO AND CIT(A) REJECTED THE ASSESSEE'S CLAIM THOUGH THE TRIBUNAL AND THE HIGH COURT UPHELD IT. THE TRIBUNAL &HIGH COURT HELD THAT AS THE RECOR DING OF SATISFACTION BY THE AO AS CONTEMPLATED U/S 158BD WAS ON A DATE SUBSEQUENT TO THE FRAMING OFASSESSMENT U/S 158BC IN CASE OF THE SEARCHED PERSON, THAT IS, BEYO ND THE PERIOD PRESCRIBED U/S 158BE(1)(B), THE NOTICE ISSUED U/S 158BD WAS BELATE D AND CONSEQUENTLY THE ASSUMPTION OFJURISDICTION BY THE AO IN THE BLOCK ASSESSMENT WA S INVALID. ON APPEAL BY THE DEPARTMENT TO THE SUPREME COURT HELD BY THE SUPREME COURT ALLO WING THE APPEAL: ' (I) WHILE IT IS TRUE THAT BEFORE INITIATING PROCE EDINGS U/S 158BD. THE AO WHO HAS INITIATED PROCEEDINGS FOR COMPLETION OF THE ASSESSM ENTS U/S 158BC SHOULD BE SATISFIED, ON THE BASIS OF COGENT AND DEMONSTRATIVE MATERIAL, THAT THE SEIZED DOCUMENTS BELONG TO A PERSON OTHER THAN THE SEARCHE D PERSON, THE SAID SATISFACTION NOTE COULD BE PREPARED BY THE AO EITHER AT THE TIME OF INITIATING PROCEEDINGS FOR COMPLETION OF ASSESSMENT OF A SEARCHED PERSON U/S 1 58BC OR DURING THE STAGE OF THE ASSESSMENT PROCEEDINGS. IT DOES NOT MEAN THAT A FTER COMPLETION OF THE ASSESSMENT, THE AO CANNOT PREPARE THE SATISFACTION NOTE TO THE EFFECT THAT THERE EXISTS INCOME TAX BELONGING TO ANY PERSON OTHER THA N THE SEARCHED PERSON. THE LANGUAGE OF THE PROVISION IS CLEAR AND UNAMBIGUOUS. THE LEGISLATURE HAS NOT IMPOSED ANY EMBARGO ON THE AO IN RESPECT OF THE STA GE OF PROCEEDINGS DURING WHICH THE SATISFACTION IS TO BE REACHED AND RECORDE D IN RESPECT OF THE PERSON OTHER THAN THE SEARCHED PERSON. FURTHER, S. 158BE(2)(B) O NLY PROVIDES FOR THE PERIOD OF LIMITATION FOR COMPLETION OF BLOCK ASSESSMENT U/S 1 58BD 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 LIM ITATION FOR PREPARATION THE SATISFACTION NOTE U/S 158BD AND CONSEQUENT ISSUANCE OF NOTICE TO THE OTHER PERSON; (II) THE RESULT IS THAT FOR THE PURPOSE OFS. 158BD A SATISFACTION NOTE IS SINE QUA NON AND MUST BE PREPARED BY THE AO BEFORE HE TRANSMITS THE RECORDS TO THE OTHER AO WHO HAS JURISDICTION OVER SUCH OTHER PERSON. THE SA TISFACTION 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 PERS ON U/S 158BC OF THE ACT: (B) ALONG WITH THE ASSESSMENT PROCEEDINGS U/S 158BC OF THE ACT: AND (C) IMMEDIATELY AFTER THE ASSESSMENT PROCEEDINGS ARE COMPLETED U/S 158BC OF THE ACT OF THE SEARCHED PERSON.' 2.16 FURTHER, IT IS SEEN FROM THE REASON RECORDED B Y THE AO THAT THE AO APPLIED HIS MIND TO THIS INFORMATION BY VERIFYING THE ASSESSMENT REC ORD. MERELY BECAUSE THE AO HAS TAKEN THE ACTION U/S 158 BD AFTER RECEIVING THE INFORMATI ON FROM INVESTIGATION WING WHEREINTHEMODUSOPERENDI OF ACCOMMODATION ENTRIES HA S BEEN DISCUSSED IN DETAIL, IT DOES NOT IMPLY THAT THERE WAS NO APPLICATION OF MIN D BY THE AO. THE FACTS REMAINS THAT ALREADY THE ASSESSING OFFICER WHEN HE PASSED ON THE INFORMATION TO THE ASSESSING OFFICER CONCERNED IN THE CASE OF APPELLANT DATED 3M05/2001, HAD RECORDED ALL THE RELEVANT INFORMATION IN DETAIL CLEARLY BRINGING OUT THE MODU SOPERENDI OF THE PERSON WHERE THE SEARCH HAD TAKEN PLACEAND ITS RELEVANCE IN THE CASE OF APPELLANT. THEREFORE THE SATISFACTION OF AO IS BASED ON PROPER AND RELEVANT FACTS. ITSS -2&3/CHD/2016 PAGE 13 OF 25 THE FACT REMAINS THAT THE APPELLANT HAD RECEIVED A SHARE APPLICATION FROM ABOVE MENTIONED COMPANIES. THE FACT ALSO REMAINS THAT THE AO HAS RECEIVED CONCRETE INFORMATION FROM INVESTIGATION WING W.R.T TO ACCOMM ODATION ENTRIES RECEIVED IN CHEQUES BY APPELLANT IN LIEU OF CASH. IN THESE CIRCUMSTANCE S, THE AO WAS FULLY JUSTIFIED IN INITIATION THE PROCEEDINGS U/S 158 BD OF THE ACT. 2.17 I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER. IT IS EVIDENT FROM THE ASSESSMENT ORDER THAT THE SATISFACTION REQUIRED U/S 158BD WAS COMMUNICATED TO THE AO BY THE DCIT, CENTRAL CIRCLE-I, LUDHIANA. THEREFORE NON REC EIPT OF SEIZED MATERIAL CAN'T BE CONSTRUED AS SUFFICIENT REASON TO HOLD THAT SATISFA CTION OF AO WAS IMPROPER OR THERE WAS NO APPLICATION OF MIND. ACCORDINGLY, IN MY CONSIDER ED VIEW AND RELYING ON THE DECISIONS OF JURISDICTIONAL HIGH COURT AND APEX COURT, THERE IS NO LACUNA ON THE PART OF THE AO IN INVOKING THE PROVISIONS OF SECTION 158BD. THESE GRO UNDS OF APPEAL ARE THEREFORE DISMISSED. 7. REFERRING TO THE SAME LD. DR CONTENDED THAT THE AO OF THE SEARCHED PERSON HAD PASSED SPECIFIC INFORMATION MEN TIONING THE BANK ACCOUNT NUMBER AND THE NAME OF THE PERSON FROM WHOM THE AMOUNT WAS RECEIVED AND THIS SPECIFIC INFO RMATION WAS VALID FOR THE PROVISIONS OF SECTION 158BD OF TH E ACT. HE FURTHER POINTED OUT THAT THE REASONS RECORDED BY TH E AO OF THE ASSESSEE SHOW THAT HE HAD APPLIED HIS MIND TO THE I NFORMATION PASSED ON TO HIM AND THEREFORE, THE SATISFACTION RE CORDED BY HIM WAS BASED ON PROPER AND RELEVANT FACTS. THE LD . DR, THEREFORE, CONTENDED THAT NON RECEIPT OF SEIZED MAT ERIAL IN THESE CIRCUMSTANCES CANNOT BE CONSTRUED AS SUFFICIE NT REASON TO HOLD THAT SATISFACTION OF THE AO WAS IMPROPER OR THERE WAS NO APPLICATION OF MIND. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO CAREF ULLY GONE THROUGH THE ARGUMENTS REFERRED TO BEFORE US AS ALSO THE CASE LAWS. ITSS -2&3/CHD/2016 PAGE 14 OF 25 THE ISSUE TO BE ADJUDICATED IS WHETHER THE JURISDIC TION ASSUMED BY THE AO IN THE PRESENT CASE U/S 158BD OF THE ACT TO FRAME ASSESSMENT OF UNDISCLOSED INCOME OF THE BLOCK PERIOD AS PER SECTION 158BC OF THE ACT, WASAS PER LAW. IT IS RELEVANT TO POINT OUT THAT THE PROVISIONS REFERRED TO RELATE TO THE ASSESSMENT OF UNDISCLOSED INCOME OF BLOCK PERIOD, I N THE CASE OF SEARCH PROCEEDINGS CONDUCTED, ANDWHILE SECTION 1 58BC OF THE ACT RELATES TO THE MANNER IN WHICH UNDISCLOSED INCOME OF BLOCK PERIOD IS TO BE ASSESSED IN CASE OF PERSONS S EARCHED, SECTION 158BD GIVES POWER TO ASSESS THE UNDISCLOSED INCOME OF THE BLOCK PERIOD RELATING TO A PERSON WHO HAS NOT B EEN SEARCHED BUT RELATING TO WHOM INCRIMINATING MATERIA L IN RELATION TO HIS UNDISCLOSED INCOME IS FOUND DURING SEARCH PROCEEDINGS CONDUCTED ON OTHER PERSON. BRIEFLY PUT, THE PROVISIONS OF SECTION 158BD OF THE ACT GIVE POWER T O THE AOS TO ASSESS UNDISCLOSED INCOME OF THE BLOCK PERIOD OF PE RSONS NOT SUBJECTED TO SEARCH PROCEEDINGS IN THE LIKE MANNER AS THOSE WHO ARE SUBJECTED TO SEARCH PROCEEDINGS. IN THE PR ESENT CASE JURISDICTION HAS BEEN ASSUMED BY THE AO U/S 158BD O F THE ACT.THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESS EE IS THAT THE CONDITIONS OUTLINED IN SECTION 158BD OF THE ACT FOR ASSUMING JURISDICTION TO FRAME ASSESSMENT ON A PERS ON OTHER THAN SEARCHED PERSON HAVE NOT BEEN FULFILLED IN THE PRESENT CASE, MORE PARTICULARLY, THE CONDITIONS OF THE INCR IMINATING ITSS -2&3/CHD/2016 PAGE 15 OF 25 MATERIAL RELATING TO THE THIRD PERSON BEING HANDED OVER TO HIS AO BY THE AO OF THE SEARCHED PERSON. THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THIS CONDITION WHICH IS CLEARLY SPELT OUT IN SECTION 158BD OF THE ACT FOR THE PURPO SE OF THE AO ASSUMING JURISDICTION HAS NOT BEEN FULFILLED IN THE PRESENT CASE SINCE THE SEIZED MATERIAL RELATING TO THE ASSESSEE WAS NEVER HANDED OVER TO THE AO OF THE ASSESSEE BY THE AO OF THE SEARCHED PERSON. IN THIS REGARD, THE LD.COUNSEL FOR THE ASSESSEE HAS REFERRED TO THE COMMUNICATION OF THE AO OF THE SEARCHED PERSON, DCIT, CENTRAL CIRCLE, LUDHIANA,ADD RESSED TO THE DCIT-V, LUDHIANA, PASSING INFORMATION OBTAINED DURING SEARCH AT THE PREMISES OF S.S.GLOBALAND ASKING HIM TO TAKE NECESSARY ACTION, THE SATISFACTION RECORDED BY THE AO OF THE ASSESSEE FOR ASSUMING JURISDICTION U/S 158BD OF THE ACT ON THE BASIS OF THE AFORESAID INFORMATION AND THE LETT ER WRITTEN BY THE AO OF THE ASSESSEE DURING PENALTY PROCEEDINGS A SKING FOR THE SEIZED MATERIAL RELATING TO THE ASSESSEEFOR THE PURPOSE OF FRAMING THE ASSESSMENT U/S 158BC READ WITH SECTION 158BD OF THE ACT. THE LD.COUNSEL FOR THE ASSESSEE ALSO HASD RAWN OUR ATTENTION TO THE FINDING OF THE LD.CIT(A) ALSO IN THIS REGARD TO THE FACT THE NO SEIZED MATERIAL RELATING TO THE ASS ESSEE WAS PASSED ON BY THE AO OF THE ASSESSEE. 9. THE LD. DR, ON THE OTHER HAND, HAS RELIED UPON T HE ORDER OF THE AO STATING THAT SINCE SPECIFIC INFORMATION R ELATING TO THE ITSS -2&3/CHD/2016 PAGE 16 OF 25 ASSESSEE HAD BEEN PASSED ON TO THE AO, IT WAS SUFFI CIENT COMPLIANCE WITH THE CONDITION OUTLINED IN SECTION 1 58BD FOR THE PURPOSE THE AO ASSUMING JURISDICTION TO FRAME A SSESSMENT U/S 158BD OF THE ACT. 10. HAVING HEARD BOTH THE PARTIES WE HOLD THAT THE JURISDICTION ASSUMED IN THE PRESENT CASE U/S 158BD OF THE ACT WAS NOT AS PER LAW IN THE ABSENCE OF FULFILLMENT OF THE NECESSARY CONDITION OF HANDING OVER OF INCRIMINATIN G MATERIAL RELATING TO THE ASSESSEE BY THE AO OF THE SEARCHED PERSON TO THE AO OF THE ASSESSEE. THE PROVISIONS OF SECTION 158BD OF THE ACT ARE VERY CLEAR AND ARE AS UNDER: SECTION 158BD IN THE INCOME- TAX ACT, 1995 158BD. UNDISCLOSED INCOME OF ANY OTHER PERSON WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THAN THE PERSON WITH RESPECT T O WHOM SEARCH WAS MADE UNDER SECTION 132 OR WHOSE BOOKS OF ACCOUN T OR OTHER DOCUMENTS OR ANY ASSETS WERE REQUISITIONED UNDER SE CTION 132A, THEN, THE BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ASSE TS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESS ING OFFICER SHALL PROCEED AGAINST SUCH OTHER PERSON AND THE PROVISION S OF THIS CHAPTER SHALL APPLY ACCORDINGLY. 11. A BARE READING OF THE PROVISIONS OF THE ACT CLE ARLY BRING OUT THAT FOR THE ASSUMPTION OF JURISDICTION U/S 15 8BD OF THE ACT IT IS A NECESSARY PREREQUISITE FOR THE INCRIMIN ATING MATERIAL RELATING TO THE THIRD PERSON BEING HANDED OVER TO H IS AO BY THE AO OF THE SEARCHED PERSON,. THE SECTION CLEARLY ST ATES THE ITSS -2&3/CHD/2016 PAGE 17 OF 25 HANDING OVER OF ALL MATERIAL RELATING TO THE THIRD PERSON TO HIS AO AND ONLY THEREAFTER THE AO CAN PROCEED TO FRAME ASSESSMENT OF UNDISCLOSED INCOME RELATING TO THE BLOCK PERIOD ON SUCH THIRD PERSON. THE HONBLE APEX COURT HAS INTERPRET ED THE PROVISIONS OF SECTION U/S 158BD OF THE ACT IN THE C ASE OF MANISHMAHESHWARI (SUPRA) AS UNDER: 7. CONDITION PRECEDENT FOR INVOKING A BLOCK ASSES SMENT IS THAT A SEARCH HAS BEEN CONDUCTED UNDER S. 132, OR DOCUMENT S OR ASSETS HAVE BEEN REQUISITIONED UNDER S. 132A. THE SAID PROVISIO N WOULD APPLY IN THE CASE OF ANY PERSON IN RESPECT OF WHOM SEARCH HA S BEEN CARRIED OUT UNDER S. 132A OR DOCUMENTS OR ASSETS HAVE BEEN REQU ISITIONED UNDER S. 132A. SEC. 158BD, HOWEVER, PROVIDES FOR TAKING R ECOURSE TO A BLOCK ASSESSMENT IN TERMS OF S. 158BC IN RESPECT OF ANY O THER PERSON, THE CONDITIONS PRECEDENT WHEREFOR ARE : (I) SATISFACTIO N MUST BE RECORDED BY THE AO THAT ANY UNDISCLOSED INCOME BELONGS TO AN Y PERSON, OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MAD E UNDER S. 132 OF THE ACT; (II) THE BOOKS OF ACCOUNT OR OTHER DOCU MENTS OR ASSETS SEIZED OR REQUISITIONED HAD BEEN HANDED OVER TO THE AO HAV ING JURISDICTION OVER SUCH OTHER PERSON; AND (III) THE AO HAS PROCEE DED UNDER S. 158BC AGAINST SUCH OTHER PERSON. THE CONDITIONS PRECEDENT FOR INVOKING THE PROVISION S OF S. 158BD, THUS, ARE REQUIRED TO BE SATISFIED BEFORE THE PROVISIONS OF THE SAID CHAPTER ARE APPLIED IN RELATION TO ANY PERSON OTHER THAN TH E PERSON WHOSE PREMISES HAD BEEN SEARCHED OR WHOSE DOCUMENTS AND O THER ASSETS HAD BEEN REQUISITIONED UNDER S. 132A OF THE ACT. 8. A TAXING STATUTE, AS IS WELL-KNOWN, MUST BE CONS TRUED STRICTLY. IN SNEH ENTERPRISES VS. COMMR.OF CUSTOMS (2006) 7 SCC 714, IT WAS HELD : 'WHILE DEALING WITH A TAXING PROVISION, THE PRINCIP LE OF 'STRICT INTERPRETATION SHOULD BE APPLIED. THE COURT SHALL NOT INTERPRET THE STATUTORY PROVISION IN SUCH A MANNER WHICH WOULD CR EATE AN ADDITIONAL FISCAL BURDEN ON A PERSON. IT WOULD NEVE R BE DONE BY INVOKING THE PROVISIONS OF ANOTHER ACT, WHICH ARE N OT ATTRACTED. IT IS ALSO TRITE THAT WHILE TWO INTERPRETATIONS ARE POSSI BLE, THE COURT ORDINARILY WOULD INTERPRET THE PROVISIONS IN FAVOUR OF A TAXPAYER AND AGAINST THE REVENUE.' 9. YET AGAIN IN J. SRINIVASARAO VS. GOVT. OF A.P. & ANR. 2006 (13) SCALE 27, IT WAS HELD : ITSS -2&3/CHD/2016 PAGE 18 OF 25 'IN A CASE OF DOUBT OR DISPUTE, IT IS WELL-SETTLED, CONSTRUCTION HAS TO BE MADE IN FAVOUR OF THE TAXPAYER AND AGAINST THE REVE NUE.' 10. INISPAT INDUSTRIES LTD. VS. COMMR. OF CUSTOMS J T 2006 (12) SC 379 : 2006 (9) SCALE 652, THIS COURT OPINED : 'IN OUR OPINION IF THERE ARE TWO POSSIBLE INTERPRET ATIONS OF A RULE, ONE WHICH SUBSERVES THE OBJECT OF A PROVISION IN THE PA RENT STATUTE AND THE OTHER WHICH DOES NOT, WE HAVE TO ADOPT THE FORMER, BECAUSE ADOPTING THE LATTER WILL MAKE THE RULE ULTRA VIRES THE ACT.' 11. LAW IN THIS REGARD IS CLEAR AND EXPLICIT. THE O NLY QUESTION WHICH ARISES FOR OUR CONSIDERATION IS AS TO WHETHER THE N OTICE DT. 6TH FEB., 1996 SATISFIES THE REQUIREMENTS OF S. 158BD OF THE ACT. THE SAID NOTICE DOES NOT RECORD ANY SATISFACTION ON THE PART OF THE AO. DOCUMENTS AND OTHER ASSETS RECOVERED DURING SEARCH HAD NOT BEEN H ANDED OVER TO THE AO HAVING JURISDICTION IN THE MATTER. 12. NO PROCEEDING UNDER S. 158BC HAD BEEN INITIATED . THERE IS, THUS, A PATENT NON-APPLICATION OF MIND. A PRESCRIBED FORM H AD BEEN UTILIZED. EVEN THE STATUS OF THE ASSESSEE HAD NOT BEEN SPECIF IED. IT HAD ONLY BEEN MENTIONED THAT THE SEARCH WAS CONDUCTED IN THE MONTH OF NOVEMBER, 1995. NO OTHER INFORMATION HAD BEEN FURNI SHED. THE PROVISIONS CONTAINED IN CHAPTER XIV-B ARE DRASTIC I N NATURE. IT HAS DRACONIAN CONSEQUENCES. SUCH A PROCEEDING CAN BE IN ITIATED, IT WOULD BEAR REPETITION TO STATE, ONLY IF A RAID IS CONDUCT ED. WHEN THE PROVISIONS ARE ATTRACTED, LEGAL PRESUMPTIONS ARE RA ISED AGAINST THE ASSESSEE. THE BURDEN SHIFTS ON THE ASSESSEE. AUDITE D ACCOUNTS FOR A PERIOD OF TEN YEARS MAY HAVE TO BE REOPENED. 13. A LARGE NUMBER OF DECISIONS OF VARIOUS HIGH COU RTS HAVE BEEN CITED AT THE BAR. WE WOULD, AT THE OUTSET, REFER TO A DECISION OF THE GUJARAT HIGH COURT IN KHANDUBHAIVASANJI DESAI & ORS . VS. DY. CIT &ANR. (1998) 150 CTR (GUJ) 577 : (1999) 236 ITR 73 (GUJ). THEREIN, IT WAS CLEARLY HELD : 'THIS PROVISION INDICATES THAT WHERE THE AO WHO IS SEIZED OF THE MATTER AND HAS JURISDICTION OVER THE PERSON OTHER T HAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER S. 132 OR WHO SE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ANY ASSETS WERE REQUI SITIONED UNDER S. 132A, HE SHALL PROCEED AGAINST SUCH OTHER PERSON AS PER THE PROVISIONS OF CHAPTER XIV-B WHICH WOULD MEAN THAT O N SUCH SATISFACTION BEING REACHED THAT ANY UNDISCLOSED INC OME BELONGS TO SUCH OTHER PERSON, HE MUST PROCEED TO SERVE A NOTIC E TO SUCH OTHER PERSON AS PER THE PROVISIONS OF S. 158BC OF THE ACT . IF THE AO WHO IS SEIZED OF THE MATTER AGAINST THE RAIDED PERSON REAC HES SUCH SATISFACTION THAT ANY UNDISCLOSED INCOME BELONGS TO SUCH OTHER PERSON OVER WHOM HE HAS NO JURISDICTION, THEN, IN THAT EVE NT, HE HAS TO TRANSMIT THE MATERIAL TO THE AO HAVING JURISDICTION OVER SUCH OTHER PERSON AND IN SUCH CASES THE AO WHO HAS JURISDICTIO N WILL PROCEED AGAINST SUCH OTHER PERSON BY ISSUING THE REQUISITE NOTICE CONTEMPLATED BY S. 158BC OF THE ACT.' ITSS -2&3/CHD/2016 PAGE 19 OF 25 14. SIMILAR VIEW HAS BEEN TAKEN BY THE GUJARAT HIGH COURT IN RUSHIL INDUSTRIES LTD. VS. HARSH PRAKASH (2001) 166 CTR (G UJ) 300 : (2001) 251 ITR 608 (GUJ), PRIYA BLUE INDUSTRIES (P) LTD. V S. JT. CIT (2001) 166 CTR (GUJ) 306 : (2001) 251 ITR 615 (GUJ), PREMJIBHA I& SONS VS. JT. CIT (2001) 166 CTR (GUJ) 316 : (2001) 251 ITR 625 (GUJ) , AND BY KERALA HIGH COURT IN CIT VS. DEEP ARTS (2005) 194 CTR (KER ) 181 : (2005) 274 ITR 571 (KER), CIT VS. DON BOSCO CARD CENTRE (2006) 205 CTR (KER) 500 AND BY MADHYA PRADESH HIGH COURT IN CIT VS. SMT . MAYA CHOTRANI (2007) 288 ITR 175 (MP). 15. WE MAY, HOWEVER, NOTICE THAT MR. A.K. CHITALE, RELIED UPON A DECISION OF THE DELHI HIGH COURT IN CIT VS. PUSHPA RANI (2005) 193 CTR (DEL) 256, WHEREIN A DIVISION BENCH OF THE SAID COURT HELD : '.......THE TRIBUNAL ON THE MATERIAL PLACED BEFORE IT, ARRIVED AT A CONCLUSION THAT THERE WERE NO SEARCH WARRANTS IN TH E NAME OF THE ASSESSEES AND HENCE IT ACCEPTED THE CONTENTION OF T HE LEARNED COUNSEL THAT THE PROCEEDINGS INITIATED UNDER S. 158BC IN TH E CASES OF THE ASSESSES WERE AB INITIO VOID AND WITHOUT JURISDICTI ON. THE LEARNED COUNSEL FOR THE DEPARTMENT WAS UNABLE TO FURNISH AN Y CLARIFICATION AND STATED BEFORE THE TRIBUNAL THAT THE FACTS STATED BY THE ASSESSES REGARDING NON-ISSUANCE OF THE SEARCH WARRANTS IN TH E CASE OF THE TWO LADIES WERE CORRECT. IT IS IN VIEW OF THIS THAT THE TRIBUNAL HAS HELD THAT UNLESS A SEARCH WARRANT IS ISSUED, THE AO CANNOT IN VOKE THE PROVISIONS OF S. 158BC FOR INITIATION OF BLOCK ASSE SSMENT PROCEEDINGS UNDER CHAPTER XIV-B. HOWEVER, SO FAR AS THE BANK LO CKER IS CONCERNED, IT IS SUBMITTED THAT THE OFFICER WAS ARMED WITH THE SEARCH WARRANT AND, THEREFORE, WHATEVER THE PROPERTY WAS FOUND, NA MELY, JEWELLERY, MONEY AND BONDS, ETC., THE ASSESSES OUGHT TO HAVE A SSESSED AND THE TRIBUNAL OUGHT NOT TO HAVE INTERFERED WITH THE ORDE R MADE BY THE CIT(A).' WE ARE OF THE OPINION THAT THE SAID DECISION HAS NO APPLICATION IN THE INSTANT CASE. 16. AS THE AO HAS NOT RECORDED ITS SATISFACTION, WH ICH IS MANDATORY; NOR HAS IT TRANSFERRED THE CASE TO THE AO HAVING JU RISDICTION OVER THE MATTER, WE ARE OF THE OPINION THAT THE IMPUGNED JUD GMENTS OF THE HIGH COURT CANNOT BE SUSTAINED, WHICH ARE SET ASIDE ACCO RDINGLY. THE APPEALS ARE ALLOWED. HOWEVER, IN THE FACTS AND CIRC UMSTANCES OF THE CASE, THERE SHALL BE NO ORDER AS TO COSTS. 12. IT IS THEREFORE SETTLED LAW THAT FOR THE PURPOS E OF ASSUMING JURISDICTION U/S 158BD OF THE ACT ALL INCRIMINATING MATERIAL RELATING TO THE UNDISCLOSED INCOME OF THE THIRD PER SON HAS TO BE HANDED TO HIS AO BY THE AO OF THE SEARCHED PERSON. ITSS -2&3/CHD/2016 PAGE 20 OF 25 IN THE PRESENT CASE ALL MATERIAL ON RECORD ESTABLIS H THAT THE INCRIMINATING MATERIAL RELATING TO THE ASSESSEE WAS NEVER HANDED TO HIS AO. THE COMMUNICATION OF THE AO OF T HE SEARCHED PERSON, DCIT(CENTRAL), LUDHIANA, DATED 31. 5.2001, ADDRESSED TO THE ACIT, LUDHIANA, WE FIND, ONLY CON TAINS INFORMATION COLLECTED DURING SEARCH CONDUCTED ON M/ S S.G. GLOBAL EXPORTS LIMITED, MENTIONING THE FACT OF SEAR CH HAVING BEEN CONDUCTED AND CERTAIN DOCUMENTS, DIARIES, SHAR E CERTIFICATES AND BOOKS OF ACCOUNTS HAVING BEEN FOUN D FROM WHICH IT WAS CONCLUDED THAT THE PERSON SEARCHED WAS INDULGING IN THE ACTIVITY OF PROVIDING HAWALA ENTRIES OF LO NG TERM CAPITAL GAINS. THE COMMUNICATION OUTLINES THE MODUS OPERANDI OF PROVIDING THE ENTRY AND SUBSEQUENTLY LISTS THE P ERSON UNDER THE JURISDICTION OF THE ACIT WHO HAD ALSO BENEFITED OR ALSO AVAILED THESE HAWALA ENTRIES FROM THE ASSESSEE. T HUS THE ENTIRE COMMUNICATION FROM THE DCIT, CENTRAL CIRCLE, LUDHIANA I.E. THE AO OF THE SEARCHED PERSON TO THE ACIT, LUD HIANA CONTAINS ONLY GENERAL INFORMATION RELATING TO THE I NFORMATION COLLECTED DURING SEARCH AND OPINION OF THE AO OF TH E SEARCHED PERSON BASED ON THAT INFORMATION. THERE IS NO MENTI ON OF ANY SEIZED MATERIAL, RELATING TO THE PERSONS LISTED IN THE COMMUNICATION HAVING ALLEGEDLY AVAILED HAWALA ENTR IES OF LONG TERM CAPITAL GAINS, BEING HANDED OVER ALONGWIT H THE SAID COMMUNICATION. ITSS -2&3/CHD/2016 PAGE 21 OF 25 THE SATISFACTION RECORDED BY THE AO OF THE ASSESSEE FOR ASSUMING JURISDICTION U/S 158BD OF THE ACT, DATED 2 8.6.2001, PLACED AT PAPER BOOK PAGE NO.3 ALSO REVEALS THAT TH E SATISFACTION OF UNDISCLOSED INCOME OF THE ASSESSEE WAS RECORDED MERELY ON THE BASIS OF INFORMATION SUPPLIED BY THE AO OF THE SEARCHED PERSON AS REFERRED TO ABOVE. THIS SATISFA CTION NOTE ALSO DOES NOT REFER TO ANY INCRIMINATING MATERIAL F ORMING THE BASIS OF THE SATISFACTION OF THE AO BUT ON THE CONT RARY CATEGORICALLY MENTIONS THE SATISFACTION BEING ARRIV ED ON THE BASIS OF INFORMATION SUPPLIED BY THE DCIT, CENTRAL CIRCLE, LUDHIANA I.E. THE AO OF THE SEARCHED PERSON. FURTHER THE COMMUNICATION OF THE AO OF THE SEARCHED PERSON DATED 10.4.2003 ASKING FOR THE SEIZED MATERIAL RELA TING TO THE ASSESSEE ESTABLISHES THE FACT THAT EVEN AFTER RECOR DING OF SATISFACTION BY THE AO OF THE ASSESSEE ON 28-06-200 1 AND EVEN DURING ASSESSMENT PROCEEDINGS RIGHT UPTO 10.4.2003 THE AO WAS NOT IN THE POSSESSION OF SEIZED MATERIAL RELATI NG TO THE ASSESSEE. THE ASSESSMENT WAS SUBSEQUENTLY FRAMED O N 27.6.2003 I.E. ALMOST AFTER TWO MONTHS FROM THE DAT E OF THIS LETTER BUT THE LD. DR DESPITE VARIOUS OPPORTUNITIES PROVIDED DURING THE COURSE OF HEARING BEFORE US HAS BEEN UNA BLE TO DEMONSTRATE THAT THE SEIZED MATERIAL RELATING TO TH E ASSESSEE WAS HANDED OVER TO THE AO OF THE ASSESSEE BY THE AO OF THE SEARCHED PERSON. THE LD. DR IN RESPONSE TO THE DIRE CTION OF THE ITSS -2&3/CHD/2016 PAGE 22 OF 25 BENCH TO PRODUCE THE ASSESSMENTS RECORD RELATING TO THE ASSESSEE FOR ESTABLISHING THE AFORESAID FACT SUBMIT TED A LETTER BEFORE US STATING THAT THE RECORDS ARE NO LONGER TR ACEABLE. EVEN THE LD.CIT(A) HAS ,WE FIND,STATES THAT THE SU PPLY OF SPECIFIC INFORMATION RELATING TO THE ASSESSEE WAS S UFFICIENT FOR ASSUMING JURISDICTION U/S 158 BD OF THE ACT EVEN IN THE ABSENCE OF SEIZED MATERIAL RELATING TO THE ASSESSEE BEING PASSED ON. THUS IT IS AN UNCONTROVERTED FACT THAT SEIZED MATER IAL RELATING TO THE ASESSEE WAS NEVER HANDED OVER TO THE AO AS C ATEGORICALLY REQUIRED BY SECTION 158BD OF THE ACT. THE CONTENTION OF THE REVENUE THAT SPECIFIC INFORMA TION RELATING TO THE ACCOMMODATION ENTRY TAKEN BY THE AS SESSEE AS UNRAVELED DURING SEARCH CONDUCTED ON M/S S G GLOBAL EXPORTS WOULD SUFFICE COMPLIANCE WITH THE CONDITION OF HAND ING OVER SEIZED MATERIAL, WE HOLD ,IS NOT ACCEPTABLE. THE SP ECIFIC INFORMATION REFERRED TO BY THE LD.CIT(A) AT PARA 2. 13 OF HER ORDER REPRODUCED ABOVE IS REGARDING THE FACT OF ACC OMMODATION ENTRY THROUGH CHEQUE,THE BANK ACCOUNT NUMBER AND NA ME OF THE PERSON FROM WHOM THE AMOUNT WAS RECEIVED.FIRSTL Y THE FACT OF ACCOMMODATION ENTRY THROUGH CHEQUE IS NOT A SPEC IFIC INFORMATION BUT A CONCLUSION OF THE AO OF THE SEARC HED PERSON ON THE BASIS OF CERTAIN DOCUMENTS ETC FOUND DURING SEARCH ITSS -2&3/CHD/2016 PAGE 23 OF 25 PROCEEDINGS.IT IS THESE DOCUMENTS ETC RELATING TO T HE ASSESSEE WHICH OUGHT TO HAVE BEEN HANDED OVER TO HIS AO BY T HE AO OF THE SEARCHED PERSON ,AS PER SECTION 158BD OF THE AC T, SO AS TO ENABLE HIM TO ASSESS THE UNDISCLOSED INCOME OF THE ASSESSEE. IN THE ABSENCE OF THE BASIC DOCUMENTS EVIDENCING ACCOMMODATION ENTRY BEING PROVIDED TO THE ASSESSEE, THE BANK ACCOUNT NUMBER OR THE PERSON FROM WHOM ENTRY RECEIV ED CAN BE OF NO ASSISTANCE TO THE AO OF THE ASSESSEE FOR ASSE SSING THE UNDISCLOSED INCOME OF THE ASSESSEE. THEREFORE IN TH E PRESENT CASE EVEN SPECIFIC INFORMATION WAS NOT PASSED TO TH E AO OF THE ASSESSEE AS CONTENDED BY THE REVENUE AND THEREFORE THE CONTENTION THAT PASSING ON OF SPECIFIC INFORMATION CONSTITUTED OR WAS EQUIVALENT TO HANDING OVER SEIZED MATERIAL ,MERITS NO CONSIDERATION AND IS REJECTED. 13. IN THE LIGHT OF THE AFORESAID FACT AND CONSIDER ING THE MANDATE OF SECTION 158BD OF THE ACT AS INTERPRETED BY THE HON'BLE SUPREME COURT IN THE CASE OF MANISH MAHESHW ARI (SUPRA), THE ASSUMPTION OF JURISDICTION BY THE AO I N THE PRESENT CASE U/S 158BD OF THE ACT WE HOLD WAS NOT A S PER LAW. THE ASSESSMENT FRAMED AS A CONSEQUENCE THEREOF IS V OID AND ACCORDINGLY IS QUASHED.GROUND OF APPEAL NOS.1, 2 AN D 3 ARE ACCORDINGLY ALLOWED. ITSS -2&3/CHD/2016 PAGE 24 OF 25 14. GROUND OF APPEAL NOS.4 TO 6 RELATE TO THE MERIT S OF THE CASE, ON THE ADDITION MADE RELATING TO LONG TERM CA PITAL GAINS HOLDING THE SAME TO BE BOGUS AND MERELY A HAWALA E NTRY. SINCE WE HAVE HELD THE ASSESSMENT FRAMED IN THE ABO VE CASE TO BE WITHOUT JURISDICTION AND VOID, THE GROUND RELATI NG TO THE MERITS OF THE CASE ARE INFRUCTUOUS AND, THEREFORE, ARE NOT BEING ADJUDICATED BY US. 15. GROUND OF APPEAL NOS.7 AND 8 ARE GENERAL IN NAT URE AND NEED NO ADJUDICATION. 16. IN EFFECT THE APPEAL OF THE ASSESSEE IS ALLOWED IN THE ABOVE TERMS. IT(SS) NO.3/CHD/2016: 17. THE APPEAL FILED BY THE ASSESSEE IN ITSS/3/2016 IS AGAINST THE PENALTY LEVIED U/S 158BFA OF THE ACT ON THE UNDISCLOSED INCOME OF THE BLOCK PERIOD ASSESSED U/S 158BD READ WITH SECTION 158BC OF THE ACT. 18. SINCE WE HAVE HELD THE ORDER PASSED IN QUANTUM PROCEEDINGS IN THE CASE OF THE ASSESSEE TO BE WITHO UT JURISDICTION AND QUASHED THE SAME, THE PENALTY LEVI ED ALSO DOES NOT SURVIVE. 19. THE APPEAL OF THE ASSESSEE, THEREFORE, STANDS A LLOWED. ITSS -2&3/CHD/2016 PAGE 25 OF 25 20. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE S ARE ALLOWED. THESE APPEALS COULD NOT BE DECIDED EARLIER DUE TO NON-FUNCTIONING OF THE BENCH ON ACCOUNT OF CURFEW / LOCKDOWN IN THE WAKE OF COVID-19 PANDEMIC. ORDER PRONOUNCED ON 06/08/2020. SD/- SD/- ( ) ( $ % & '# ) (SANJAY GARG) (ANNAPURNA GUPTA) / JUDICIAL MEMBER () / ACCOUNTANT MEMBER POONAM/RATI $)*+,+' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. - / CIT 4. - ( )/ THE CIT(A) 5. +./0 , '0( , 123/4 / DR, ITAT, CHANDIGARH 6. /35! / GUARD FILE $) / BY ORDER, 6 / ASSISTANT REGISTRAR