SUSHILA SURESH MALGE, MUMBAI V. ACIT 19(3), MUMBAI

ITSSA 5/MUM/2012

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8269 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 20-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: misc
• Appeal Filed On: 06-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B JAYA KUMAR
• Assessee Lawyers: DR K SHIVARAM
• Keywords: Income from undisclosed sources; Search and seizure; Opportunity of being heard; Principle of natural justice; Retraction; Documents seized
• Section: 132; 15

Judgement Text

IT(SS)A NOS 05 & 06 SUSHILA SURESH MALGE & SURESH B ABU GANPAT MALGE MUMBAI E-BENCH PAGE 1 OF 12 IN THE INCOME TAX APPELLATE TRIBUNAL 'E' BENCH, MUMBAI BEFORE SHRI D.K.AGARWAL, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER IT(SS)A NO.05/MUM/2012 (BLOCK PERIOD: 1987-88 TO 1997-98) SMT. SUSHILA SURESH MALGE, 1, SONAL APARTMENTS, ANNAJI SURENDER ROAD, OPP: JOSHIWAD, CHARAI, THANE(W) MUMBAI 400 037 PAN NO.AJTPM 6884 A (APPELLANT) VS. ACIT 19 (3) MUMBAI (RESPONDENT) IT(SS)A NO.06/MUM/2012 (BLOCK PERIOD: 1987-88 TO 1997-98) SHRI SURESH BABU GANPAT MALGE, 1, SONAL APARTMENTS, ANNAJI SURENDER ROAD, OPP: JOSHIWAD, CHARAI, THANE(W) MUMBAI 400 037 PAN NO.AJTPM 6883 H (APPELLANT) VS. ACIT 19 (3) MUMBAI (RESPONDENT) ASSESSEE BY: DR. K. SHIVARAM DEPARTMENT BY: SHRI B. JAYA KUMAR, DR DATE OF HEARING: 09/07/2012 DATE OF PRONOUNCEMENT: 20/07/2012 O R D E R PER B. RAMAKOTAIAH, A.M. THESE TWO APPEALS ARE ARISING OUT OF THE BLOCK ASSE SSMENTS FRAMED IN CONSEQUENCE OF THE SEARCH OPERATIONS U/S 132 OF THE ACT TOOK AGAINST THESE TWO ASSESSEES ON 13.7.1996. THOU GH, THE APPEALS ARE IN RESPECT OF TWO DIFFERENCE ASSESSEES BUT AS T HE FACTS ARE IDENTICAL; THE ASSESSMENT PASSED BY THE A.O ARE ALS O INTERLINKED WITH EACH OTHER AND HENCE, BOTH THESE APPEALS ARE D ISPOSED OFF BY THIS COMMON ORDER. IT(SS)A NOS 05 & 06 SUSHILA SURESH MALGE & SURESH B ABU GANPAT MALGE MUMBAI E-BENCH PAGE 2 OF 12 2. THE APPEAL IN IT(SS)A 05/MUM/2012 IN WHICH THE ASSE SSEE HAS TAKEN THE FOLLOWING GROUNDS: 1. THE LEARNED ASSTT.CIT ERRED IN PASSING THE ORDE R WITHOUT PROVIDING SUFFICIENT AND ADEQUATE OPPORTUNI TY OF HEARING TO ASSESSEE AS THE COPY OF STATEMENT RECORD ED WAS FURNISHED ONLY ON 22/12/2011, FURTHER VIDE NOTI CE DT. 19/12/2011 RECEIVED ON 22/12/2011, AO ASKED ASSESSEE TO FURNISH THE DETAILS ON 23/12/2011 THUS PROVIDING ONLY 1 DAY TIME. 2. THE LEARNED ASSTT.CIT ERRED IN PASSING THE ORDER DT. 30/12/2011 BY MERELY COPYING THE FINDINGS OF THE EA RLIER ORDERS DT. 31/7/1997 AND DT. 26/12/2008 WHICH WAS SET ASIDE BY ITAT TWICE FURTHER AO FAILED TO CONSID ER THE SUBMISSIONS AND DETAILS FILED ON 29/12/2011, THE SA ID FACTS SHOWS THAT THERE WAS NO INDEPENDENT APPLICATI ON OF MIND BY AO, THEREFORE ORDER IS BAD IN LAW. 3. THE LEARNED ASSTT.CIT (A) FAILED TO APPRECIATE T HAT NO ASSESSMENT CAN BE MADE ON PROTECTIVE BASIS IN THE B LOCK ASSESSMENT SCHEME, THEREFORE, THE ASSESSMENT ORDER IS BAD IN LAW. 4. THE LEARNED ASSTT. CIT (A) ERRED IN TREATING ASS ESSEE AS BENAMIDAR OF SHRI SURESH MALGE WITHOUT APPRECIATING THAT ASSESSEE HERSELF IS ASSESSED TO TAX SINCE LAST 10 YEARS. 3. THE FACTS WHICH REVEAL FROM THE RECORDS ARE THAT IN BOTH THESE CASES SEARCH AND SEIZURE OPERATION U/S132 WAS CARRI ED ON AT THE BUSINESS AND RESIDENTIAL PREMISES OF THESE TWO ASSE SSEES ON 13.7.1996. SMT SUSHILA SURESH MALGE IS THE SPOUSE O F SHRI SURESH BABU GANPAT MALGE. FURTHER, SURVEY ACTION U/S 133(A ) WAS ALSO CARRIED OUT IN THEIR BUSINESS PREMISES ON 13.7.1996 AND 17.7.1996. IN CONSEQUENCE OF THE SEARCH OPERATIONS, NOTICES UN DER SECTION 158BC WERE ISSUED TO THESE ASSESSEES REQUIRING THEM TO FILE THEIR RETURNS OF INCOME FOR THE BLOCK PERIOD FROM 1.4.199 6 TO 13.7.1996. 3.1 IT APPEARS THAT THE ASSESSEES TOOK TIME TO FILE THE BLOCK RETURNS, BUT WERE REGULARLY ATTENDING BEFORE THE A.O AND FIN ALLY ON 30.7.1997, THE ASSESSEES FILED THEIR BLOCK RETURNS DECLARING THE UNDISCLOSED INCOME AT RS.9,32,740/- AND RS. 5,54,38 0/- IN RESPECT OF SHRI SURESH BABU G MALGE AND SMT SUSHILA SURESH MALGE IT(SS)A NOS 05 & 06 SUSHILA SURESH MALGE & SURESH B ABU GANPAT MALGE MUMBAI E-BENCH PAGE 3 OF 12 RESPECTIVELY. THE A.O HAS GIVEN THE DETAILS IN RESP ECT OF THEIR BUSINESS ACTIVITIES IN PARA 18 TO 22 OF THE ASSESSM ENT ORDER. 3.2. IT WAS ALLEGED THAT THE ASSESSEE HAD MADE HUGE INVESTMENTS IN THE BUILDING CONSTRUCTIONS AND ALSO IN THE FILM IND USTRY. DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS, STATEMENT OF SHRI SURESH BABU G MALGE WAS RECORDED ON 14.7.1996 U/S 132(4) O F THE ACT. THE REFERENCE OF THE SAID STATEMENT IS MADE IN PARA 43 OF THE ORIGINAL ASSESSMENT. THE A.O HAS NOTED THAT SHRI SURESH BABU G MALGE, IN THE STATEMENT GIVEN U/S 132(4) OF THE ACT, HAS OFFE RED RS. 50 LACS FOR HIMSELF AND RS. 1 CRORE ON BEHALF OF HIS WIFE SMT S USHILA SURESH MALGE AS THEIR UNDISCLOSED INCOME. THE A.O HAS REPR ODUCED THE QUESTION NO.20 AND ITS ANSWER GIVEN BY SHRI SURESH BABU G MALGE WHICH IS AS UNDER: QUESTION NO.20 READS AS UNDER: IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE BASIS OF DOCUMENTS DO YOU WANT TO ADMIT A CONCEALMENT OF INCOME AND EVASION OF TAX FOR THE PERIOD RELEVANT T O THE CURRENT ASSESSMENT YEAR AND LAST FEW YEARS BY YOU A ND YOUR WIFE. DO YOU WANT TO OFFER ANY ADDITIONAL INCO ME IN RESPECT OF YOURSELF AND YOUR WIFE VOLUNTARILY AND PREPARED TO PAY THE TAXES ACCORDINGLY IN DUE COURSE . THE REPLY OF THE ASSESSEE WAS AS UNDER: I DO NOT KNOW EXACT POSITION. I ADMIT THAT THERE IS CONCEALMENT OF INCOME BY MYSELF AND MY WIFE OF EVASION OF TAXES. I DO NOT KNOW EXACT AMOUNT; HOWEV ER, CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OFFERING RS. 50 LAKHS FOR MYSELF AND RS. 1 CRO RE IN MY WIFES CASE WITHOUT COERCION, WITHOUT TORTURE, W E WILL PAY THE TAXES IN DUE COURSE AND WE SHALL NOT RETRAC T THE OFFER UNDER ANY CONDITION. I KEEP MY OPTION OPEN IF ANYTHING ON HIGHER SIDE, I SHALL OFFER MY ADDITION INCOME IN RESPECT OF MYSELF AND WIFE AND PAY TAXES ACCORDINGLY. 3.3 THE A.O HAS FURTHER NOTED THAT VIDE LETTER DATE D 17.7.1996 ADDRESSED TO THE DDI (INV), HEAD QTRS. AAYKAR BHAWA N, THE IT(SS)A NOS 05 & 06 SUSHILA SURESH MALGE & SURESH B ABU GANPAT MALGE MUMBAI E-BENCH PAGE 4 OF 12 ASSESSEE MODIFIED HIS STATEMENT/DECLARATION WHICH W AS GIVEN ON 14.7.1996 BY TAKING CONTENTION THAT IN RESPECT OF T HE OFFER OF THE UNDISCLOSED INCOME, THE SAME SHOULD BE MODIFIED TO THE EXTENT OF THE EVIDENCE FOUND DURING THE COURSE OF SEARCH OPER ATION. THE A.O HAS ALSO NOTED THAT THE ASSESSEE WROTE A LETTER DAT ED 30.7.96 TO THE ADIT (INV), HEAD QTRS. CLARIFYING THAT HIS EARLIER LETTER DATED 17.7.96 WAS NOT A RETRACTION BUT ONLY A CLARIFICATION. THE A.O HAS ALSO REPRODUCED THE PART OF THE LETTER IN THE ASSESSMENT ORDER. FINALLY, THE A.O PASSED THE ASSESSMENT ORDER BY DETERMINING THE TOTAL UNDISCLOSED INCOME OF THE ASSESSEE AT RS. 1.50 CROR ES AND THE SAME WAS TREATED AS THE INCOME OF SHRI SURESH BABU G MAL GE AND SUBSTANTIVE ASSESSMENT WAS MADE IN HIS HAND AND IN THE CASE OF SMT SUSHILA SURESH MALGE, SHE WAS TREATED AS BENAMI DAR OF SURESH BABU G MALGE AND WAS ASSESSED ACCORDINGLY. THE OPER ATIVE PART OF THE ASSESSMENT ORDER READS AS UNDER : AS ALREADY DISCUSSED IN THE ABOVE PARAS THE ASSESSE E IS NOT MAINTAINING ANY BOOKS OF ACCOUNTS, NOR DOES HE HAVE BILLS AND VOUCHERS FOR HIS EXPENSES, AS WELL A S RECEIPTS FOR THE PAYMENT AND ADVANC3ES RECEIVED THE PROFIT AND LOSS ACCOUNT AS WELL AS THE BALANCE SHEE T FILED FOR THE BLOCK PERIOD HAVE BEEN REJECTED AS NOT BEIN G A TRUE AND COMPLETE REFLECTION OF THE BUSINESS ACTIVI TIES OF THE ASSESSEE. FURTHER, THE BANK DEPOSITS AND WITHDRAWALS BOTH BY CASH AS WELL AS CHEQUE CANNOT BE VERIFIED BECAUSE O F WANT OF BOOKS OF ACCOUNTS, SPECIALLY THE DAILY CASH BOOK. THUS, THE UNDISCLOSED INCOME CANNOT BE ESTIMATED FR OM THE P&L ACCOUNT FILED AND THEREFORE, THE UNACCOUNTE D INCOME OF ` 9,32,740/- SHOWN BY SHRI SURESH MALGE AND OF ` 5,54,380 SHOWN BY SMT SUSHILA MALGE CANNOT BE ACCEPTED. LOOKING INTO THE TOTALITY OF FACTS AND CIRCUMSTANCE S OF THE CASE I.E. THE NATURE OF THE BUSINESS AND VOLUME OF TURNOVER IN THE CONSTRUCTION ACTIVITY, LAND DEVELOP MENT, FILM PRODUCTION, FILM DISTRIBUTION ETC., THE AMOUNT SURRENDERED BY THE ASSESSEE OF RS. 1.50 CRORE APPEA RS TO BE A VERY FAIR ESTIMATE OF HIS OWN UNACCOUNTED IT(SS)A NOS 05 & 06 SUSHILA SURESH MALGE & SURESH B ABU GANPAT MALGE MUMBAI E-BENCH PAGE 5 OF 12 INCOME, WHICH HE HAS ARRIVED AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF HIS BUSINESS. HENCE, THE UNDISCLOSED INCOME OF THE ASSESSEE AS PE R THE ABOVE DISCUSSION IS TAKEN AT RS. 1.50 CRORE. TH IS UNACCOUNTED INCOME INCLUDES THE UNDISCLOSED INCOME OF RS. 9,32,240/- SHOWN BY SHRI SURESH MALGE IN HIS BL OCK RETURN AS WELL AS THE UNDISCLOSED INCOME OF ` 5,54,380 SHOWN BY SMT SUSHILA MALGE IN HER BLOCK RETURN, WHI CH HAS ALREADY DISCUSSED ABOVE IS STATED TO BE A BENAM I OF SHRI SURESH MALGE. THE TOTAL UNDISCLOSED INCOME AS DISCUSSED ABOVE IS ` 1,50,00,000/-. 4. IN SUM AND SUBSTANCE, FINAL DETERMINATION OF THE UNDISCLOSED INCOME BY THE A.O WAS BASED ON THE INCOME ALLEGEDLY OFFERED BY THE ASSESSEE ON 14.7.96 IN THE STATEMENT RECORDED U/S 1 32(4) OF THE ACT. HOWEVER, THESE ORDERS HAD CHEQUERED HISTORY. 4.1 BOTH THESE ASSESSEES HAD CHALLENGED THE SAID AS SESSMENT ORDERS BEFORE THE TRIBUNAL BY WAY OF APPEALS BEING IT(SS)A NO.170 AND 171/MUM/1997. THE MAIN GRIEVANCE OF THE ASSESSE ES BEFORE THE TRIBUNAL WAS THAT THE STATEMENT RECORDED BY THE SEARCH PARTY WAS NOT SUPPLIED TO THE ASSESSEE DESPITE THEIR REPE ATED REQUESTS AND THE A.O MADE THE ADDITION RELYING ON THE SAID S TATEMENT. THE TRIBUNAL SET ASIDE THE ORDERS OF THE A.O IN BOTH TH ESE CASES AND RESTORED THE MATTER TO HIS FILE WITH THE DIRECTION TO REFRAME ASSESSMENT DE-NOVO AFTER SUPPLYING THE COPY OF THE STATEMENT AND THE EVIDENCES ON WHICH THE A.O INTENDED TO RELY FOR MAKING THE ADDITION. THE OPERATIVE PART OF THE ORDER OF THE TR IBUNAL DATED 11.1.2008 WAS AS UNDER: 2. DURING THE COURSE OF HEARING OF THE APPEAL, THE LD COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION THE STAT EMENT OF THE ASSESSEE SHRI SURESH BABU GANPAT MALGE WAS RECO RDED DURING THE COURSE OF THE SEARCH AND ON THE BASIS OF WHICH, THE ASSESSING OFFICER HAD ESTIMATED A LUMPSUM INCOME OF RS. 1,50,00,000/- IN THE HANDS OF SURESH BABU GANPAT MA LGE, THE HUSBAND OF THE OTHER ASSESSEE SMT SUSHILA SURES H MALGE WITHOUT TAKING INTO ACCOUNT THE FACT THAT VOLUNTARY DISCLOSURE IT(SS)A NOS 05 & 06 SUSHILA SURESH MALGE & SURESH B ABU GANPAT MALGE MUMBAI E-BENCH PAGE 6 OF 12 MADE BY THE ASSESSEE, WAS LATER ON RETRACTED.THE AS SESSING OFFICER HAS ALSO MADE AN ADDITION IN THE HANDS OF O THER ASSESSEE SMT SUSHILA SURESH MALGE ON PROTECTIVE BAS IS, ON THE BASIS OF THE STATEMENT OF HIS HUSBAND SHRI SURE SH BABU GANPAT MALGE. THE LD COUNSEL FOR THE ASSESSEE FURTH ER INVITED OUR ATTENTION TO THE FACT THAT THE STATEMENTS RECOR DED BY THE SEARCH PARTY, WERE NOT SUPPLIED TO THE ASSESSEE DES PITE HIS REPEATED REQUESTS AND THE ASSESSING OFFICER MADE AD DITION RELYING UPON THE SAME. EVEN TILL DATE, THE COPIES O F THE STATEMENTS WERE NOT SUPPLIED. THE LD COUNSEL FOR TH E ASSESSEE HAS FURTHER SUBMITTED THAT IN THE LIGHT OF THESE FACTS, THE MATTER SHOULD BE REMANDED BACK TO THE FI LE OF THE ASSESSING OFFICER WITH A DIRECTION TO SUPPLY THE CO PY OF THE STATEMENT OF SRI SURESH BABY MALGE OR OTHER STATEME NT ON WHICH ASSESSING OFFICER INTEND TO RELY. 3. THIS PROPOSITION WAS NOT OBJECTED TO BY THE LD DR. 4. SINCE BOTH THE PARTIES HAVE AGGRIEVED FOR RESTORATI ON OF THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR RE- ADJUDICATION OF THE IMPUGNED ISSUES AFRESH, WE SET ASIDE THE ORDER OF THE ASSESSING OFFICER IN BOTH THE CASE S AND RESTORE THE MATTER TO HIS FILE WITH A DIRECTION TO FRAME THE ASSESSMENT DE-NOVO AFTER SUPPLYING THE COPY OF THE STATEMENT AND THE EVIDENCE ON WHICH ASSESSING OFFIC ER INTEND TO RELY FOR MAKING AN ADDITION AND AFTER AFF ORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN TH E INTEREST OF JUSTICE 5. THE A.O PASSED THE FRESH ASSESSMENT ORDER U/S 15 8BC (C) R.W.S 254 OF THE ACT ON 26.12.2008 AND AGAIN DETERMINED T HE TOTAL UNDISCLOSED INCOME AT RS. 1.50 CRORES. THE OPERATIV E PART OF THE ORDER IS AS UNDER: 36. LOOKING INTO THE TOTALITY OF FACTS AND CIRCUMST ANCES OF THE CASE I.E. THE NATURE OF THE BUSINESS AND VOLUME OF TURNOVER, IN THE CONSTRUCTION ACTIVITY, LAND DEVELO PMENT, FILM PRODUCTION, FILM DISTRIBUTION ETC., THE AMOUNT SURR ENDERED BY THE ASSESSEE OF RS. 1.50 CRORE APPEARS TO BE A V ERY FAIR ESTIMATE OF HIS OWN UNACCOUNTED INCOME, WHICH HE HA S ARRIVED AFTER CONSIDERING ALL THE FACTS AND CIRCUMS TANCES OF HIS BUSINESS. 37. HENCE, THE UNDISCLOSED INCOME OF THE ASSESSEE A S PER THE ABOVE DISCUSSION IS TAKEN AT RS. 1.50 CRORE. TH IS UNACCOUNTED INCOME INCLUDES THE UNDISCLOSED INCOME OF RS. 9,32,740/- SHOWN BY SHRI SURESH MALGE IN HIS BLOCK RETURN AS WELL AS THE UNDISCLOSED INCOME OF RS. 5,54,880/- SHOWN IT(SS)A NOS 05 & 06 SUSHILA SURESH MALGE & SURESH B ABU GANPAT MALGE MUMBAI E-BENCH PAGE 7 OF 12 BY SMT SUSHILA MALGE IN HER BLOCK RETURN WHICH HAS ALREADY DISCUSSED ABOVE IS STATED TO BE A BENAMI OF SHRI SU RESH MALGE. 6. SINCE, THE DIRECTIONS OF ITAT WAS NOT FOLLOWED I N RE-ASSESSMENT PROCEEDINGS AND THE STATEMENT CRUCIAL FOR DECIDING THE ADDITION WAS NOT PROVIDED IN SPITE OF DIRECTIONS GIVEN, THE HON' BLE ITAT VIDE THE ORDERS IN IT(SS)A NOS. 8 & 9/MUM/2009 HAS RESTORED THE MATTER WITH CERTAIN OBSERVATIONS PARTICULARLY ABOUT THE GR OSS VIOLATION PRINCIPLES OF NATURAL JUSTICE AND LEVYING A COST OF ` 5000/- UPON AO, FOR COMPLETING IT DE NOVO . 6. CONSEQUENT TO THESE ORDERS OF THE ITAT, AO TOOK UPON THE ASSESSMENT AS LATE AS 22.12.2011, GAVE OPPORTUNITY TO REPLY BY POSTING THE CASE ON 23.12.2011 AND ALLOWED INSPECTI ON ON 26.12.2011 AND CONSIDERING THE LETTER DATED 29.12.2 011 FILED BY ASSESSEE WITHOUT MENTIONING THE SAME IN THE ORDER, REPEATED THE SAME ORDER AS PASSED ORIGINALLY WITH THE SAME CONCL USIONS TREATING ASSESSEE SHRI SURESH MALGE AS BENAMIDAR OF HIS WIFE SMT. SUSHILA MALGE AND ASSESSED THE INCOME ON THE BASIS OF STATE MENT UNDER SECTION 132(4) AT ` 1,50,00,000/-, EVEN THOUGH THE SAID STATEMENT WAS STANDS MODIFIED/WITHDRAWN. THEREFORE, ASSESSEE IS AGAIN IN APPEAL IN THE THIRD ROUND BEFORE US. 7. THE LEARNED COUNSEL REITERATED THE SAME SUBMISSI ONS MADE EARLIER BEFORE THE ITAT IN THE 2 ND ROUND THAT AO HAS NOT CONSIDERED THE CONTENTIONS AND REPEATED THE ADDITIONS WITHOUT APPLICATION OF MIND AND PLEADED FOR QUASHING THE ASSESSMENT ORDER. THE PLEA WAS ALREADY MADE EARLIER AND RECORDED BY THE ITAT VIDE ORDER NOS. IT(SS)A 8 & 9/MUM/2009 VIDE PARA 7.2. IT WAS HIS SU BMISSION THAT AO HAS NOT ONLY VIOLATED THE PRINCIPLES OF NATURAL JUSTICE BY NOT ALLOWING ASSESSEE ANY OPPORTUNITY TO REPLY, BUT ALS O REPEATED THE SAME ADDITIONS, WHICH WAS SUBJECT MATTER OF APPEAL TWICE WITHOUT EXAMINING THE ISSUE ON MERITS, EVEN THOUGH THE ASSE SSMENT WAS SET ASIDE DE NOVO FOR CONSIDERING THE EVIDENCE SEIZED AND ALSO FILED BY IT(SS)A NOS 05 & 06 SUSHILA SURESH MALGE & SURESH B ABU GANPAT MALGE MUMBAI E-BENCH PAGE 8 OF 12 ASSESSEE. HE REFERRED TO THE FINDING OF THE ITAT VI DE PARA 9 IN THE ABOVE REFERRED ORDER ADMITTEDLY, DETERMINATION OF UNDISCLOSED INCOME IS NOT BASED ON THE ANALYSIS OF THE EVIDENCE SEIZED IN THE FORM OF DOCUMENTS AND OTHER THINGS/ RECORDS DURING THE COURSE OF SEARCH OPERATIONS, THOUGH LENGTHY DISCUSSIONS HAS B EEN MADE BY AO IN RESPECT OF THE BUSINESS AFFAIRS AND INVESTMEN TS OF BOTH THESE ASSESSEES. IT WAS HIS CONTENTION THAT IF AO WERE T O MAKE ASSESSMENT, MERELY ON THE BASIS OF THE STATEMENT RE CORDED UNDER SECTION 132(4) WITHOUT CONSIDERING THE EVIDENCES ON RECORD, NO ADDITION CAN BE MADE AS THE STATEMENT WAS NOT SUPPO RTED BY ANY OTHER DOCUMENTS SEIZED OR INCRIMINATING MATERIAL. N OT ONLY THAT THE STATEMENT INDICATES DISCLOSURE OF ` 50.00 LAKHS IN THE HANDS OF ASSESSEE SHRI SURESH MALGE AND ` 1.00 CRORE IN THE HANDS OF THE WIFE FROM WHOM NO STATEMENT WAS RECORDED UNDER SECT ION 132(4), NO ADDITION CAN BE MADE OF ` 1,50,00,000/- AS SUBSTANTIVE ADDITION IN THE HANDS OF SHRI SURESH BABU MALGE, PROTECTIVE IN THE HANDS OF SMT. SUSHILA. EVEN ON MERITS, IT WAS SUBMITTED THAT ASSESSEE, SMT SUSHILA WAS ASSESSED ALREADY AND REFERRED TO PARA 5 .17 OF THE ASSESSMENT ORDER TO SUBMIT THAT EVEN AS EARLY AS AY 1991-92 SMT. SUSHILA WAS ASSESSED UNDER SECTION 143(3), THE FACT OF WHICH WAS ACCEPTED BY AO. THEREFORE, HOLDING HER AS BENAMIDAR IS NOT CORRECT. HE RELIED ON THE ORDERS OF THE HON'BLE DELHI HIGH C OURT IN THE CASE OF S.K. BAHADUR VS. UNION OF INDIA, 345 ITR 95 TO S UBMIT THAT THE ADDITION OF INCOME FROM ASSETS BELONGING TO THE WIF E OF ASSESSEE WAS NOT JUSTIFIED IN THE HANDS OF ASSESSEE. THE FIN DINGS GIVEN BY AO ARE NOT BASED ON EVIDENCE AND BUT ONLY ON PRESUMPTI ONS, SURMISES AND CONJECTURES, WHICH CANNOT BE UPHELD. THE BURDEN IS ON THE REVENUE TO PROVE THAT SMT. SUSHILA MALGE IS A BENAM IDAR OF HUSBAND AND THE BURDEN WAS NOT DISCHARGED. HE REFER RED THE COPY OF THE STATEMENT PLACED IN PAPER BOOK IN PAGE NO.35 TO SUBMIT THAT SHE OWNED UP HER BUSINESS AND INCOME. THEREFORE TRE ATING AS BENAMIDAR OF HUSBAND IS NOT CORRECT ON THE FACTS OF THE CASE. IT WAS HIS SUBMISSION THAT SINCE AO DID NOT PASS THE ASSES SMENT ON THE IT(SS)A NOS 05 & 06 SUSHILA SURESH MALGE & SURESH B ABU GANPAT MALGE MUMBAI E-BENCH PAGE 9 OF 12 BASIS OF RECORD AVAILABLE, INSPITE OF SETTING ASIDE TWICE WITH SPECIFIC DIRECTIONS, THE ORDER IS TO BE CONSIDERED BAD IN LA W AND SHOULD BE QUASHED. 8. THE LEARNED DR IN REPLY, HOWEVER, WHILE ADMITTIN G THAT DUE TO ADMINISTRATIVE REASONS THE ASSESSMENT WAS TAKEN UP AT THE FAG END OF THE PERIOD HOWEVER, SUBMITTED THAT AO HAS UTMOST RESPECT TO THE ORDERS OF THE ITAT AND AS DIRECTED BY THE ITAT COPY OF THE STATEMENT WAS GIVEN TO ASSESSEE AND ACCORDINGLY ORDER WAS PAS SED. HE RELIED ON THE FINDINGS / OBSERVATIONS IN THE ASSESSMENT OR DER THAT AO HAS LISTED OUT BY THE INVESTMENT MADE BY ASSESSEE FOR W HICH PROPER EXPLANATION WAS NOT GIVEN AND IN THE ABSENCE OF THE EXPLANATION, WAS BOUND TO COMPLETE THE ASSESSMENT ON THE BASIS O F THE STATEMENTS ALONE. 9. WE HAVE CONSIDERED THE ISSUE. WE MUST NOTE THAT IT IS VERY SAD THAT AO WITHOUT FOLLOWING THE PRINCIPLES OF NAT URAL JUSTICE AND INSPITE OF CLEAR FINDINGS OF THE ITAT IN THE ORDER DATED 18.06.2010 HAS REPEATED THE SAME ORDERS AS WAS DONE ORIGINALLY WAY BACK IN 1998. INSPITE OF LEVYING THE COST OF ` 5000/- ON AO, WHICH WE WERE INFORMED WAS PAID TO ASSESSEE, THERE IS NO CHANGE I N THE ATTITUDE OF THE REVENUE WITH REFERENCE TO ASSESSEES/ASSESSMENTS ARE CONCERNED. BY TAKING UP THE ASSESSMENT AT THE FAG E ND OF THE TIME BARRING PERIOD AND BY DENYING NATURAL JUSTICE AND N OT CONSIDERING THE EVIDENCE ON RECORD, ASSESSEES WERE FORCED TO FI LE APPEALS BEFORE THE ITAT UNNECESSARILY BY INCURRING HEAVY COST OF N OT ONLY APPEAL FEES BUT ALSO ENGAGING COUNSELS TO DEFEND THE CASE. THERE SHOULD BE AN END TO THIS SORRY STATE OF AFFAIRS. 9.1. WE HAVE CONSIDERED THE PLEA OF THE LEARNED COU NSEL THAT THE ORDER IS BAD IN LAW, HENCE TO BE QUASHED. WE COULD HAVE ACCEPTED THE PLEA BUT WHAT WE NOTICE IS THAT AO HAS ISSUED A SHOW CAUSE NOTICE DATED 22.12.2011 AFTER SUPPLY OF THE STATEME NT TO ASSESSEE WHICH WAS CONTESTED IN EARLIER TWO ROUNDS. WE FIND THAT THERE IS NO REPLY GIVEN TO THE PARTICULAR SHOW CAUSE NOTICE AND THERE IS NO IT(SS)A NOS 05 & 06 SUSHILA SURESH MALGE & SURESH B ABU GANPAT MALGE MUMBAI E-BENCH PAGE 10 OF 12 REFERENCE TO THE LETTERS FILED BY ASSESSEES EARLIER WHICH SHOULD HAVE BEEN CONSIDERED BY AO IN THE RE-ASSESSMENT PROCEEDI NGS. SINCE AO DID NOT HAVE MUCH TIME TO COMPLETE THE ASSESSMENT N OR ASSESSEE HAS PLACED ALL THE FACTS IN ITS CORRECT PERSPECTIVE BEFORE AO, WE ARE CONSTRAINED TO SET ASIDE THE MATTER AGAIN WITH CLEA R DIRECTIONS TO AO SO THAT HE COULD COMPLETE THE ASSESSMENT ACCORDING TO THE LAW AND FACTS. 9.2 AO SHOULD NOT RELY ON STATEMENT UNDER SECTION 1 32(4) ALONE FOR MAKING ADDITION IN THE ASSESSMENTS. THIS ISSUE WAS ALREADY CONSIDERED TWICE BY THE ITAT WHEN THE ORDERS WERE S ET ASIDE EARLIER. AS COPY OF THE STATEMENT WAS GIVEN TO THE ASSESSEES , AO IS DIRECTED TO COMPLETE THE ASSESSMENT ONLY ON THE BASIS OF INC RIMINATING MATERIAL IF ANY, AFTER CONSIDERING ASSESSEES EXPLA NATION WITH REFERENCE TO THE PAPERS SEIZED AND TRANSACTIONS/INV ESTMENTS FOUND BY THE DEPARTMENT. IN NO CASE AO SHOULD MAKE ASSESS MENT ONLY ON THE BASIS OF 132(4) STATEMENTS WHICH STANDS MODIFIE D/ WITHDRAWN, UNLESS THERE IS CORROBORATIVE EVIDENCE LINKING THE STATEMENT WITH THE UNDISCLOSED /UNEARTHED INCOMES. WE MAKE IT CLEA R THAT IN CASE AO REPEATS THE SAME ORDERS WITHOUT EXAMINING THE MA TERIAL ON RECORD, THE ORDERS WILL BE QUASHED WITHOUT ANY FURT HER CONSIDERATION. 9.3 AO SHOULD EXAMINE THE BOOKS OF ACCOUNT PL ACED ON RECORD VIS--VIS THE SEIZED MATERIAL, BANK STATEMENTS AND OTHER MATERIAL PLACED BY ASSESSEE, SO AS TO QUANTIFY ANY UNDISCLOS ED INCOME. 9.4 THERE IS ALREADY EVIDENCE ON RECORD THAT S MT. SUSHILA MALGE HAS BEEN FILING THE RETURNS MUCH BEFORE THE SEARCH AND THEY WERE SCRUTINY ASSESSMENTS IN HER CASE AS WELL. JUST BECA USE HER AFFAIRS ARE BEING LOOKED AFTER BY HER HUSBAND, IT DOES NOT MEAN THAT SHE IS BENAMI. IN CASE AO HAS TO HOLD THAT SHE IS BENAMI, IT SHOULD BE BASED ON EVIDENCE AND BURDEN IS ON THE REVENUE. UNL ESS THERE IS EVIDENCE, NO ADDITION SHOULD BE MADE IN THE HANDS O F SHRI SURESH MALGE ON MERE CONJECTURES, SURMISES AND PRESUMPTION S. THESE IT(SS)A NOS 05 & 06 SUSHILA SURESH MALGE & SURESH B ABU GANPAT MALGE MUMBAI E-BENCH PAGE 11 OF 12 ASPECTS SHOULD BE EXAMINED BY AO AND ONLY WHEN THER E IS CLEAR EVIDENCE/FINDINGS ADDITION OF INCOME OF SMT. SUSHIL A MALGE CAN BE MADE IN THE HANDS OF SHRI SURESH BABU, OTHERWISE TH EY SHOULD BE EXAMINED SEPARATELY/ INDEPENDENTLY WITHOUT GETTING PREJUDICED BY EARLIER ORDERS OF AO I.E. AO SHOULD DETERMINE THE U NDISCLOSED INCOME SEPARATELY IN RESPECTIVE HANDS. 9.5 FURTHER, ON THE FACTS OF THE CASE WE ORD ER COSTS TO BE PAID TO ASSESSEES. AO SHOULD PAY THE COST OF ` .20,000/- TO SHRI SURESH BABU MALGE FOR MAKING HIM COME AGAIN IN APPELLATE P ROCEEDINGS. THIS AMOUNT WAS FIXED KEEPING IN VIEW THAT ASSESSEE HAS PAID ` 10,000/- AS APPELLATE FEES. IN THE CASE OF SMT. SU SHILA MALGE, AO SHOULD PAY AN AMOUNT OF ` .15,000/- AS COST AS SHE HAS PAID AN AMOUNT OF ` .5,500/- AS APPELLATE FEES IN HER APPEAL. THESE AMO UNTS SHOULD BE PAID WITHIN TWO MONTHS FROM THE DATE OF T HE ORDER AND REVENUE IS FREE TO DECIDE WHETHER THESE AMOUNTS SHO ULD BE RECOVERED FROM THE OFFICER(S) CONCERNED. SINCE THE ORDERS ARE BEING APPROVED BY A SENIOR OFFICER IN THE RANK OF COMMISS IONER OF INCOME TAX, WE SINCERELY HOPE THAT THE CIT ALSO MONITORS T HESE ASSESSMENTS AND APPLIES HIS MIND WHILE GRANTING THE APPROVALS. 9.6 THE RE-ASSESSMENT PROCEEDINGS SHOULD BE STA RTED IMMEDIATELY WITHOUT ANY LOSS OF TIME SO THAT THERE ARE NO COMPLAINTS BY ASSESSEES THAT PRINCIPLES OF NATURAL JUSTICE HAVE NOT BEEN FULFILLED AND ASSESSEES ARE NOT BEEN GIVEN ENO UGH OPPORTUNITY. 9.7 ASSESSEES ARE ALSO DIRECTED TO CO-OPERATE WIT H AO AND FURNISH ALL THE DETAILS SO THAT EXAMINATION OF THE SEIZED M ATERIAL AND THE EXPLANATION OF ASSESSEE CAN BE CONSIDERED BY AO. AS SESSEES ARE ALSO REQUESTED TO REMIND AO/ CIT, IF NO ACTION WAS TAKEN BY AO AS DIRECTED ABOVE. 10. WITH THESE DIRECTIONS/OBSERVATIONS, THE ORDERS OF AO DATED 30.12.2011 ARE SET ASIDE TO DO AFRESH, AFTER CONSID ERING THE MATERIAL ON RECORD, MAKING FRESH ENQUIRIES IF REQUIRED AND G IVING DUE OPPORTUNITY TO ASSESSEES. WE AGAIN MAKE IT CLEAR TH AT ORDERS WILL BE IT(SS)A NOS 05 & 06 SUSHILA SURESH MALGE & SURESH B ABU GANPAT MALGE MUMBAI E-BENCH PAGE 12 OF 12 QUASHED IF AO REPEATS THE ADDITIONS IN THE SAME MAN NER, AS WAS DONE THRICE EARLIER. 11. IN THE RESULT BOTH THE APPEALS ARE CONSIDERED A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JULY, 2012. SD/- SD/- (D.K.AGARWAL) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 20 TH JULY, 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, E BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI