M/s. UCIL LEASING LTD., MUMBAI V. DCIT Rg. 9(3), MUMBAI

ITSSA 653/MUM/2003

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8373 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 14-03-2011
• Assessment Year: misc
• Appeal Filed On: 10-09-2003
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS KUSUM INGLE
• Assessee Lawyers: DR K SHIVARAM; PARAS SAVLE
• Keywords: Unexplained investment; Unexplained expenditure; Document seized; Block assessment; Documents seized
• Section: 131; 263; 63; 15

Judgement Text

1 IT(SS)A 653/ /M/2003 M/S UCIL LE ASING LTD. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J BEFORE SHRI D. MANMOHAN, V.P. AND SHRI R.K. PANDA, A.M. IT(SS)A NO. 653/MUM/2003 BLOCK PERIOD 1.4.1990 TO 24.10.2000 M/S UCIL LEASING LTD. 304, CHARTERED HOUSE, DR. CAWASJI HORMASJI STREET, NEAR MARINE LINES CHURCH, MARINE LINES, MUMBAI 400 002. PAN AAACU4129P VS. COMMISSIONER OF INCOME TAX IX, R. NO. 612, INCOME TAX OFFICE, AAYAKAR BHAWAN, MUMBAI. APPELLANT RESPONDENT APPELLANT BY DR. K. SHIVARAM & MR. PARAS SAVLE RESPONDENT BY MRS. KUSUM INGLE ORDER PER R.K. PANDA A.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DTD. 9.7.2003 PASSED U/S 263 BY THE CIT- IX, MUMBAI RELATING TO B LOCK PERIOD 1.4.1990 TO 24.10.2000. 2. THIS APPEAL OF THE ASSESSEE WAS EARLIER DISMISSE D BY THE TRIBUNAL FOR NON-PROSECUTION. SUBSEQUENTLY, THE TRIBUNAL VIDE IT S ORDER DATED 21 ST DECEMBER, 2009 RECALLED THE ORDER FOR FRESH HEARING . HENCE, THIS IS A RECALLED MATTER. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE COMPANY IS ENGAGED IN THE BUSINESS OF INVESTMENT AND FINANCE. A SEARCH A ND SEIZURE OPERATION WAS 2 IT(SS)A 653/ /M/2003 M/S UCIL LE ASING LTD. CONDUCTED IN THE CASE OF THE ASSESSEE COMPANY ON 23 RD OCTOBER, 2000. IN RESPONSE TO NOTICE U/S 158BC OF THE ACT, THE ASSESS EE FILED BLOCK RETURN FOR THE PERIOD 1.4.1990 TO 31.3.2000 AND UPTO 24.10.2000 ON 15.1.2002 WITH NIL UNDISCLOSED INCOME. THE A.O. AFTER CONSIDERING T HE SEIZED MATERIAL PERTAINING TO THE ASSESSEE FOUND AND SEIZED AT THE TIME OF SEA RCH, PASSED THE ORDER DETERMINING NIL UNDISCLOSED INCOME. 3.1 SUBSEQUENTLY, THE CIT EXAMINED THE RECORDS AND NOTED THAT DURING THE COURSE OF SEARCH AN EXERCISE BOOK TITLED RELIANCE WAS SEIZED WHICH WAS INVENTORISED AT ANNEXURE A-1 OF THE PANCHNAMA DTD . 24.10.2002. IN THE UPPER PORTION OF EACH PAGE OF THIS EXERCISE BOOK RECEIPTS AND PAYMENTS THROUGH BANKING CHANNEL ARE RECORDED. SIMILARLY IN THE LOWE R PORTION ENTRIES OF CASH RECEIPTS AND PAYMENTS DRAWING CASH BALANCE ON EACH DAY ARE RECORDED. HE NOTED THAT THE BOOKS CONTAIN, INTER ALIA, ENTRIES O F PAYMENT OF ` 3,10,000/- ON 1.1.99 AND ` 2 LACS ON 5.3.99 TO UCIL THROUGH BANKING CHANNEL WHICH ARE RECORDED ON PAGE 2 AND PAGE 28 RESPECTIVELY. THES E TWO ENTRIES FIND PLACES IN THE LEDGER ACCOUNT OF ONE M/S SHREE SESHADRI PAPER PRODUCTS PVT. LTD. (M/S SESHADRI) IN THE REGULAR BOOKS OF THE ASSESSEE. TH E DATES AND THE AMOUNTS TALLY IN THE LEDGER ACCOUNT AND IN THE AFORESAID EN TRIES IN THE EXERCISE BOOK. THIS ESTABLISHES THAT UCIL STANDS FOR M/S UCIL LE ASING LTD. I.E THE ASSESSEE. THE LD. CIT NOTED THAT APART FROM THE AFORESAID TWO ENTRIES REGARDING TRANSACTIONS THROUGH BANKING CHANNEL, THERE ARE FOL LOWING FOUR ENTRIES IN THE AFORESAID EXERCISE BOOK MENTIONING THE NAME OF UCI L WHICH REPRESENT CASH TRANSACTIONS BEING RECORDED UNDER THE HEAD CASH. PAGE NO. DATE AMOUNT ( ` ) 4(OVERLEAF) 6.1.99 3,10,000/- 27 3.3.99 5,00,000/- 27 (OVERLEAF) 4.3.99 5,00,000 28 5.3.99 2,00,000/- 3 IT(SS)A 653/ /M/2003 M/S UCIL LE ASING LTD. TOTAL 15,10,000/- THUS, ACCORDING TO THE CIT, THE CASH TRANSACTIONS A RE UN-ACCOUNTED WHEREAS THE BANKING TRANSACTIONS ARE ACCOUNTED FOR. HE NOT ED THAT THERE ARE SIMILAR OTHER ENTRIES RELATING TO CASH TRANSACTIONS WHICH A RE NOT RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. HE ALSO OBSERVED THAT THE NAMES MENTIONED IN THE CASH TRANSACTIONS ARE NOT FICTITIOUS BUT POINT TO T HE SAME PARTIES WITH WHOM BANK TRANSACTIONS HAVE TAKEN PLACE. 3.2. THE CIT CONSIDERED THE CONTENTION OF THE ASSES SEE DURING THE COURSE OF PROCEEDINGS U/S 158 BC WHERE IT WAS CONTENDED THAT THAT THIS EXERCISE BOOK PERTAINS TO SHRI GHANSHYAM PASARI, THE BROTHER OF S HRI NARAYAN PASARI, THE DIRECTOR OF THE ASSESSEE COMPANY AND WAS FOUND AT T HE ASSESSEES PREMISES ON ACCOUNT OF THE PREMISES BEING SHARED. IN HIS STATEM ENT, SHRI GHANSHYAM PASARI, WHO IS A DIRECTOR OF M/S SHESHADRI, STATED THAT THIS EXERCISE BOOK BELONGED TO M/S SESHADRI AND IT WAS WRITTEN BY HIM FROM 29.12.98 TO 23.9.2000, RECORDING DAILY BANK TRANSACTIONS AND DA ILY CASH TRANSACTIONS AND BALANCE ON ROUGH BASIS. IN REGARD TO CASH TRANSACT IONS, HE CLEARLY STATED THAT THE RECEIPTS REPRESENTED RECOVERY OF UNACCOUNTED SA LE PROCEEDS AND THE PAYMENTS REPRESENTED UNACCOUNTED PAYMENTS TOWARDS P URCHASES AND EXPENSES, THE COMPANY BEING ENGAGED IN THE TRADE OF PAPER AND CARDBOARD. SHRI GHANSHYAM PASARI FURTHER STATED THAT THE NAMES OF PARTIES RELATING TO BANK TRANSACTIONS ARE REAL BUT THE NAMES OF PARTIES RELATING TO CASH TRANSACTIONS ARE FICTITIOUS. THUS, HE ADMITTED THE PAYMENT OF ` 5,10,000/- ( ` 3,10,000/- + 2,00,000/-) THROUGH BANKING CHANNEL TO THE ASSESSEE STATING THAT IT WAS TOWARDS REPAYMENT OF LOAN TAKEN FROM THE ASS ESSEE, BUT HE DENIED THE CASH RECEIPTS OF ` 15,10,000/- FROM THE ASSESSEE CONTENDING THAT THEY REPRESENTED RECOVERY OF UNACCOUNTED SALE PROCEEDS F ROM SUNDRY PARTIES. HE, HOWEVER, FAILED TO EXPLAIN WHY THE NAME OF UCIL WAS MENTIONED IN REGARD TO CASH TRANSACTIONS IN THE SAME MANNER AS IT WAS MENT IONED IN REGARD TO BANK TRANSACTIONS. IN VIEW OF THE ABOVE SUBMISSIONS, TH E A.O. INITIATED PROCEEDINGS 4 IT(SS)A 653/ /M/2003 M/S UCIL LE ASING LTD. U/S 158BD AGAINST M/S SESHADRI BUT DID NOT MAKE ANY ADDITION IN RESPECT OF THE AFORESAID CASH ENTRIES IN THE CASE OF THE ASSES SEE. ACCORDING TO THE CIT, THE A.O. HAD NOT MADE PROPER ENQUIRIES TO ASCERTAIN THE TRUE NATURE OF THE TRANSACTIONS RECORDED IN THE EXERCISE BOOK AND THE IDENTITY OF THE PERSONS INVOLVED THEREIN. HE, THEREFORE, INITIATED PROCEED INGS U/S 263 OF THE I.T. ACT. 4. IN RESPONSE TO NOTICE U/S 263, THE ASSESSEE RE ITERATED THE SAME SUBMISSIONS AS MADE BEFORE THE A.O. HOWEVER, THE C IT WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE OBSERVED THAT THE EXERCISE BOOK WAS FOUND FROM THE PREMISES OF THE ASSESSEE AND WRITTEN IN THE HANDWRITING OF THE BROTHER OF ONE OF THE DIRECTORS OF THE ASSESSEE COM PANY, THEREFORE, IT IS A VALID PIECE OF EVIDENCE U/S 132(4A) OF THE I.T. ACT. WHEN IT MENTIONED THE NAME UCIL, THE PRESUMPTION OF LAW IS THAT IT IS TRUE A ND NOT FICTITIOUS. THE ASSESSEE HAS NOT AT ALL REBUTTED THIS PRESUMPTION. THEREFORE , JUST AS THE BANK TRANSACTION BETWEEN M/S SESHADRI AND THE ASSESSEE E VIDENCED THAT THAT THE ASSESSEE RECEIVED AN AMOUNT OF ` 5,10,000/- THROUGH CHEQUES AGAINST THE LOAN GRANTED TO M/S SESHADRI, THE CASH TRANSACTIONS EVID ENCE THAT THE ASSESSEE PAID ` 15,10,000/- TO M/S SESHADRI IN CASH WHICH WAS NOT RECORDED EITHER IN THE BOOKS OF M/S SESHADRI OR IN THE BOOKS OF THE ASSESS EE. THEREFORE, THESE CASH TRANSACTIONS REPRESENTED UNDISCLOSED INCOME OF THE ASSESSEE WHICH WAS ASSESSABLE U/S 69/69C OF THE ACT BEING UNEXPLAINED INVESTMENT OR UNEXPLAINED EXPENDITURE. SINCE THE A.O. DID NOT ADD THIS AMOUNT AS UNDISCLOSED INCOME OF THE ASSESSEE PRESUMABLY ON TH E PREMISE THAT IT WAS ADMITTED AS UNDISCLOSED INCOME IN THE CASE OF M/S S ESHADRI WHERE ACTION U/S 158BD WAS INITIATED, THEREFORE, IT WAS OBVIOUSLY ER RONEOUS AS THE EFFECT OF UNACCOUNTED TRANSACTION HAS TO BE GIVEN AT BOTH THE END. ONE PARTY OF THE TRANSACTION CANNOT ABSOLVE THE OTHER BY OFFERING TH E INCOME GENERATED FROM THE TRANSACTION AT ITS END ALONE. IF ADDITION WAS CALL ED FOR IN THE HANDS OF M/S SESHADRI WHO RECEIVED UNACOUNTED CASH PAYMENTS, COR RESPONDING ADDITION WAS CALLED FOR IN THE HANDS OF THE ASSESSEE ALSO FOR MA KING UNACCOUNTED CASH 5 IT(SS)A 653/ /M/2003 M/S UCIL LE ASING LTD. PAYMENT WHICH REPRESENTED ITS UNDISCLOSED INCOME. HE, ACCORDINGLY HELD THAT THE ORDER PASSED U/S 158BC(C) WAS ERRONEOUS IN SO F AR AS IT WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. HE, ACCORDINGLY, MOD IFIED THE ORDER OF THE A.O. AND DIRECTED HIM TO ENHANCE THE ASSESSMENT U/S 158B C(C) BY ` 15,10,000/-. 5. AGGRIEVED BY SUCH ORDER OF THE CIT, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL CHALLENGING THE ORDER PASSED BY CIT U/S 2 63 OF THE ACT. 6. AT THE TIME OF FILING OF THIS APPEAL, THE ASSESS EE HAS PAID ONLY ` 500/- AS APPEAL FILING FEES. ON BEING QUESTIONED BY THE BEN CH, IT WAS ARGUED THAT IN VIEW OF THE DECISION OF AMRITSAR BENCH OF THE TRIBU NAL IN THE CASE OF KIRANJIT SINGH VS. ACIT, 101 TTJ (ASR) 424, THE FILING FEES FOR ORDER PASSED U/S 263 IS ` 500/-. WHEN IT WAS POINTED OUT THAT THE FILING FEE S FOR AN APPEAL FILED AGAINST THE ORDER U/S 263 SHOULD BE BASED ON THE ASSESSED I NCOME, THE LD. COUNSEL FOR THE ASSESSEE UNDERTOOK TO DEPOSIT THE DIFFERENTIAL AMOUNT BY 15.3.2011 I.E. THE NEXT DAY AND REQUESTED THE BENCH TO HEAR THE APPEAL . IN VIEW OF THE UNDERTAKING MADE BY THE LD. COUNSEL FOR THE ASSESSE E, THE APPEAL WAS TAKEN UP FOR HEARING. IT HAS TO BE MENTIONED THAT THE ASSES SEE PAID THE DIFFERENTIAL AMOUNT ON 15.3.2011 AND FILED THE COPY OF THE CHALL AN AS PROOF OF PAYMENT. 7. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO TH E COPY OF THE ASSESSMENT ORDER SUBMITTED THAT THE HEARING IN THIS CASE TOOK PLACE FOR AS MANY AS 10 TIMES. REFERRING TO PARA 3 OF THE ASSESSMENT ORDER, HE DREW THE ATTENTION OF THE BENCH WHERE THE A.O. HAS MENTIONED THAT VARIOUS DOC UMENTS WERE FOUND AND SEIZED AND OUT OF THE SEIZED MATERIAL, PAGE 3 (OVER LEAF) AND PAGE 28 OF ANNEXURE A-1, ANNEXURE A-2 WERE EXAMINED AND CONSIDERED BY H IM. HE SUBMITTED THAT THE A.O. ASKED SPECIFIC QUESTIONS TO THE ASSESSEE T O EXPLAIN THE CONTENTS OF THE SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH. REFERRING TO PAGE 7 OF THE PAPER BOOK, HE SUBMITTED THAT SHRI NARAYAN PASARI, DIRECTOR OF THE UCIL HAD GIVEN A STATEMENT WHICH WAS RECORDED U/S 131 OF THE ACT ON 6 TH MAY, 2002 BY 6 IT(SS)A 653/ /M/2003 M/S UCIL LE ASING LTD. THE A.O. REFERRING TO THE SAID STATEMENT, HE SUBM ITTED THAT VARIOUS QUESTIONS WERE ASKED TO THE DIRECTOR. 7.1. REFERRING TO Q. NO. 4 OF THE SAID STATEMENT, H E DREW THE ATTENTION OF THE BENCH TO THE QUERIES ASKED TO SHRI NARAYAN PASARI R EGARDING AN EXERCISE BOOK TITLED RELIANCE AT ANNEXURE A-1 OF THE PANCHNAMA. REFERRING TO Q NO. 5, HE DREW THE ATTENTION OF THE BENCH TO THE AMOUNT OF ` 15,10,000/- REPRESENTING THE CASH TRANSACTION AS PER ANNEXURE A-1 OF THE B OOK. REFERRING TO PAGE NO. 11 TO 16 OF THE PAPER BOOK, HE DREW THE ATTENTION O F THE BENCH TO THE STATEMENT OF SHRI GHANSHYAM PASARI, DIRECTOR OF M/S SHESHADR I, RECORDED U/S 131 OF THE ACT ON 24 TH JUNE, 2002. REFERRING TO PAGE NO. 14 OF THE PAPER BOOK, HE SUBMITTED THAT THE DIRECTOR WAS SPECIFICALLY ASKED QUERIES RELATING TO THE CASH ENTRIES FOUND IN THE SEIZED DOCUMENTS. REFERRING T O PAGE 17 & 18 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO THE LET TER ADDRESSED TO A.O. ON 24.9.2002 WHERE THE ASSESSEE HAD SUBMITTED THE DETA ILS OF THE CASH TRANSACTIONS AND IT WAS SUBMITTED THAT THE EXERCISE BOOK BELONGS TO M/S SHESHADRI PAPER PRODUCTS PVT. LTD. AND DOES NOT BEL ONG TO THE ASSESSEE. HE SUBMITTED THAT BASED ON THE VARIOUS REPLY GIVEN BY THE ASSESSEE AND THE STATEMENT RECORDED DURING THE COURSE OF SEARCH, THE A.O. AFTER DUE APPLICATION OF HIS MIND PASSED THE ORDER U/S 158BC(C) OF THE AC T. THEREFORE, THE CIT WAS NOT JUSTIFIED IN INITIATING PROCEEDINGS U/S 263 OF THE I.T. ACT. 7.2. REFERRING TO PAGE NO. 21 OF THE PAPER BOOK, H E DREW THE ATTENTION OF THE BENCH TO THE NOTICE U/S 263 OF THE ACT BY THE CIT IX. REFERRING TO PAGE NO. 22 TO 30, 37, 77 TO 78 OF THE PAPER BOOK, HE DREW T HE ATTENTION OF BENCH REGARDING THE VARIOUS REPLIES GIVEN BY THE ASSESSEE IN RESPONSE TO THE PROCEEDING U/S 263. REFERRING TO PAGE NO. 115 TO 12 6 OF THE PAPER BOOK, THE LD. COUNSEL DREW THE ATTENTION OF THE BENCH TO THE ORDE R PASSED U/S 158BD R.W.S. 158 BC OF THE ACT IN THE CASE OF M/S SHESHADRI PAP ER PRODUCTS PVT. LTD. WHERE AN AMOUNT OF ` 15,10,000/- HAS BEEN CONSIDERED AND ADDITION MADE. HE, 7 IT(SS)A 653/ /M/2003 M/S UCIL LE ASING LTD. HOWEVER, SUBMITTED THAT THE ADDITION MADE IN THE HA NDS OF M/S SEHSHADRI WAS DELETED BY THE CIT(A) -20 MUMBAI VIDE HIS ORDER DAT ED 19.4.2010 ON THE GROUND THAT NOTICE U/S 143(2) WAS SERVED FOR THE FI RST TIME BY WAY OF AN AFFIXTURE ON 26.04.2004 AFTER THE BLOCK RETURN WAS FILED ON 25.7.2002 AND THEREBY THE NOTICE WAS SERVED BEYOND THE PRESCRIBED PERIOD OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE BLOCK RETURN WAS FURNISHED AND THEREFORE THE BLOCK ASSESSMENT WAS CANCELLED. 7.3 HE SUBMITTED THAT ALL THE DETAILS WERE EXAMINE D BY THE A.O. AND THE STATEMENTS OF THE DIRECTORS WERE RECORDED, SPECIFIC QUESTIONS WERE ASKED RELATING TO CASH ENTRIES. THE A.O. AFTER DUE APPLIC ATION OF HIS MIND PASSED THE ORDER U/S 158BC(C) OF THE ACT AND ADDITION WAS MADE IN THE HANDS OF M/S SESHADRI. THEREFORE, THERE IS NO QUESTION OF ANY E RRONEOUS ORDER PASSED BY THE A.O. SO AS TO CALL IT PREJUDICIAL TO THE INTEREST O F THE REVENUE. THEREFORE, THE CIT WAS NOT JUSTIFIED IN INVOKING PROVISIONS OF SEC TION 263 OF THE ACT. 7.4. REFERRING TO THE DECISION OF HONBLE JURISDICT IONAL HIGH COURT IN THE CASE OF GRASIM INDUSTRIES LTD. VS. CIT [2010] 321 ITR 92 (BOM), HE SUBMITTED THAT WHERE THE A.O. HAS TAKEN A POSSIBLE VIEW, THE ORDER CANNOT BE SAID TO BE ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF REVENU E AND THE CIT CANNOT EXERCISE POWER UNDER SECTION 263 TO BRING THE SUM TO TAX. H E SUBMITTED THAT THE HONBLE JURISDICTIONAL HIGH COURT IN THE ABOVE CITE D DECISION HAS CONSIDERED THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT V. GABRIEL INDIA LTD., [1993] 203 ITR 108 (BOM), DECISIONS OF HONBL E SUPREME COURT IN THE CASE OF MAX INDIA LTD. [2007] 295 ITR 282 (SC) AND IN TH E CASE OF MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 83. 7.5. IN THE ALTERNATIVE CONTENTION, HE SUBMITTED TH AT SINCE THE CIT HAS NOT SET ASIDE THE MATTER AND HAS DIRECTLY MADE THE ADDITION , THEREFORE, THE SAME IS NOT 8 IT(SS)A 653/ /M/2003 M/S UCIL LE ASING LTD. PERMISSIBLE. FOR THIS PROPOSITION, HE RELIED ON TH E DECISION OF THE TRIBUNAL IN THE CASE OF BHARAT PETROLEUM CORPORATION LTD. VS. J CIT [2004] 3 SOT 44 (MUM). 7.6. IN HIS SECOND ALTERNATE CONTENTION, HE SUBMITT ED THAT SINCE THE ASSESSEE HAS PRODUCED COMPLETE BOOKS OF ACCOUNT, THE PROVISI ONS OF SECTION 68/69, 69(C) WILL NOT COME INTO PLAY, SINCE THE MATERIAL SEIZED DURING THE COURSE OF SEARCH CONTAINS THE HANDWRITING OF THIRD PARTY. 8. THE LD. D.R., ON THE OTHER HAND, WHILE SUPPORTIN G THE ORDER OF THE CIT SUBMITTED THAT THE ASSESSMENT ORDER IS A NON-SPEAKI NG ORDER. HE SUBMITTED THAT THE A.O. ONLY SAID THAT HE EXAMINED THE SEIZED DOCUMENTS BUT WHETHER HE HAS MADE ANY ENQUIRY ABOUT THE ASSESSEES SEIZED MA TERIAL REMAINS DOUBTFUL. NO QUERY WAS RAISED BY THE A.O. RELATING TO THE CAS H TRANSACTION OF ` 15,10,000/-. REFERRING TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RAM PYARI DEVI SAROGI VS. CIT REPORTED IN 67 ITR 82 AND SMT. TARA DEVI AGARWALA VS. CIT REPORTED IN 88 ITR 323, HE SUBMITT ED THAT WHERE NO PROPER ENQUIRY HAS BEEN MADE BY A.O., THE ORDER BECOMES ER RONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. IN THE INSTANT CASE, THE A.O. HAS NOT MADE ANY ENQUIRY. THEREFORE, THE VARIOUS DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE ARE NOT APPLICABLE TO THE FACTS OF THE PRE SENT CASE. HE SUBMITTED THAT THE CONTENTS OF THE SEIZED DOCUMENTS CANNOT BE ACCE PTED PARTLY. EITHER THE SAME HAS TO BE ACCEPTED IN FULL OR REJECTED IN FULL . HE SUBMITTED THAT WHEN THE BANK ENTRY AS PER THE SEIZED MATERIAL ARE FOUND IN THE BOOKS OF THE ASSESSEE AND ARE TREATED AS TRUE, THEN HOW THE CASH TRANSACT IONS BE TREATED AS NOT BELONGING TO THE ASSESSEE. REFERRING TO PAGE 4,5 & 6 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO THE NOTING OF THE SEI ZED DOCUMENTS WHICH CONTAINED CASH TRANSACTION AND BANK TRANSACTION. H E SUBMITTED THAT THERE IS NOTHING ON RECORD TO SHOW THAT THE A.O. HAS MADE AN Y ENQUIRY. ACCORDING TO LD. D.R., IF ONE PERSON HAS GIVEN, THE OTHER PERSON MUST HAVE RECEIVED THE PAYMENT, THEREFORE, THE ADDITION HAS TO BE MADE IN THE HANDS OF THE GIVER AS 9 IT(SS)A 653/ /M/2003 M/S UCIL LE ASING LTD. WELL AS THE RECEIVER. HE ALSO RELIED ON THE DECISI ON REPORTED IN 98 ITD 25, 103 ITD 389 AND 128 ITD 468. 8.1. AS REGARDS THE SUBMISSION OF LD. COUNSEL FOR T HE ASSESSEE THAT THE CIT SHOULD HAVE SET ASIDE THE MATTER AND SHOULD NOT HAV E DIRECTED THE A.O. TO MAKE THE ADDITION, HE SUBMITTED THAT IN VIEW OF PRO VISIONS OF SECTION 263(1) OF THE ACT, THE CIT HAS POWER TO PASS SUCH ORDER INCLU DING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT. 8.2. THE LD. COUNSEL FOR THE ASSESSEE, IN HIS REJOI NDER, SUBMITTED THAT THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUST RIAL CO. (SUPRA) HAS CONSIDERED THE DECISIONS IN THE CASE OF TARA DEVI A GARWALA (SUPRA) AND RAM PYARI DEVI SAROGI (SUPRA). HE SUBMITTED THAT THE AS SESSEE HAS NO AUTHORITY TO DICTATE AS TO HOW THE ORDER IS TO BE PASSED BY THE A.O. IT IS HIS PREROGATIVE. HE SUBMITTED THAT 10 HEARINGS HAVE TAKEN PLACE, SPECIF IC QUERY WAS MADE AND THE A.O. HAS APPLIED HIS MIND BEFORE PASSING THE ORDER. HE SUBMITTED THAT THE VARIOUS DECISIONS CITED BY THE LD. D.R. ARE NOT APP LICABLE TO THE FACTS OF THE PRESENT CASE. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE A.O. AND THE CIT AND THE PAPER BOOK FILED PN BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIO US CASE LAWS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT THAT DURING THE COU RSE OF SEARCH ON 23 RD OCTOBER, 2000 IN THE PREMISES OF THE ASSESSEE COMPA NY I.E UCIL AN EXERCISE BOOK TITLED RELIANCE WAS SEIZED WHICH WAS INVENTO RISED AT ANNEXURE A-1 OF THE PANCHNAMA DTD. 24.10.2002. THERE IS ALSO NO DIS PUTE TO THE FACT THAT IN THE UPPER PORTION OF EACH PAGE OF THIS EXERCISE BOOK EN TRIES REGARDING RECEIPTS AND PAYMENTS THROUGH BANKING CHANNEL ARE ENTERED AND IN THE LOWER PORTION OF EACH PAGE ENTRIES OF CASH RECEIPTS AND PAYMENTS SHO WING CASH BALANCE ON EACH DAY ARE RECORDED. THERE IS ALSO NO DISPUTE TO THE FACT THAT THE DATES AND THE 10 IT(SS)A 653/ /M/2003 M/S UCIL LE ASING LTD. AMOUNTS RELATING TO THE TRANSACTION THROUGH BANKING CHANNEL AMOUNTING TO ` 5,10,000/- ARE RECORDED IN THE LEDGER ACCOUNT OF M/ S SHREE SESHADRI PAPER PRODUCTS PVT. LTD. IN THE REGULAR BOOKS OF THE ASSE SSEE. HOWEVER, THE CASH TRANSACTION OF ` 15,10,000/- ENTERED ON 6 TH JANUARY, 1999 AT ` 3,10,000/- 3 RD MARCH, 1999 AT ` 5,00,000/- 4 TH MARCH, 1999 AT ` 5,00,000/- AND 5 TH MARCH, 1999 AT ` 2,00,000/- DO NOT APPEAR IN THE REGULAR BOOKS OF A CCOUNT OF ASSESSEE COMPANY. THERE IS ALSO NO DISPUTE TO THE FACT THAT THE A.O. DURING ASSESSMENT PROCEEDING HAS CONSIDERED THE NOTING IN THE ABOVE P AGES. THE RELEVANT PARA AT PAGE 1 OF THE ASSESSMENT ORDER IS AS UNDER:- DURING THE COURSE OF SEARCH IN THE OFFICE PREMISE O F THE ASSESSEE COMPANY, VARIOUS DOCUMENTS WERE FOUND AND SEIZED. OUT OF THE SEIZED MATERIAL, PAGES 3 (OVERLEAF) AND PAGE 28 OF ANNEXURE A-1, ANNEXURE A-2, A LOOSE PAPER FILE CONTAINING PAGES 1 TO 84, PAGES 1,2 AND 55 OF ANNEXURE A-3 AND CERTAIN CONTENTS OF THE CD MARKED AS ANNEXURE O PERTAINING ARE TO THE ASSESSEE. THE S EIZED MATERIAL PERTAINING TO THE ASSESSEE FOUND AND SEIZED AT THE TIME OF SEARCH HAVE BEEN EXAMINED. THE ASSESSEE ALSO PRODUCED HIS BOOKS OF ACCOUNTS FOR THE BLOCK PERIOD AND THE SAME HAVE BEE N EXAMINED. 9.1. WE FIND THE ASSESSEE VIDE LETTER DATED 24 TH SEPTEMBER, 2002 ADDRESSED TO THE A.O. AT PARA NO. 1 HAS SUBMITTED AS UNDER:- WE WOULD LIKE TO INFORM YOU THAT ANNEXURE A-1 SEIZE D ON 24.10.2000 IS NOT PERTAINING TO THE ASSESSEE COMPAN Y AND NO WAY CONNECTED WITH THE ASSESSEE COMPANY. THE SAID FACT HAS ALREADY BEEN EXPLAINED TO YOUR HONOUR VIDE STATEMENT RECORD ED OF SHRI NARAYAN PASARI ON 2.5.2002 AND FURTHER THE OWNERSHI P OF THE SAID BOOK IS ALREADY EXPLAINED VIDE STATEMENT OF SHRI GH ANSHYAM PASARI RECORDED ON 24.6.2002 WHEREIN IT HAS BEEN CLEARLY E XPLAINED THAT THE SAID BOOK BELONGS TO M/S SHESHADRI PAPER PRODUCTS P VT. LTD. IT IS AGAIN SUBMITTED BY YOUR ASSESSEE THAT THE SAID BOOK DOES NOT BELONG TO ASSESSEE COMPANY. 9.2. WE FIND THE A.O. AFTER CONSIDERING THE SUBMISS ION MADE BY THE ASSESSEE, STATEMENT OF SHRI NARAYAN PASARI RECORDED U/S 131 O N 2.5.2002 AND THE STATEMENT OF SHRI GHANSHYAM PASARI RECORDED U/S 131 ON 24.6.2002 HAS PASSED THE ORDER U/S 1158BC OF THE ACT. WE FURTHER FIND THE ADDITION U/S 158 11 IT(SS)A 653/ /M/2003 M/S UCIL LE ASING LTD. BD HAS BEEN MADE IN THE HANDS OF SHREE SESHADRI PAP ER PRODUCTS PVT. LTD. FROM THE ABOVE, WE ARE OF THE CONSIDERED OPINION TH AT THE A.O. AFTER DUE APPLICATION OF HIS MIND HAS PASSED THE ORDER U/S 15 8BC (C) OF THE ACT WHICH IS IN OUR OPINION IS A POSSIBLE VIEW. 9.3. IT HAS BEEN DECIDED IN VARIOUS DECISIONS THAT WHEN THE A.O. HAS TAKEN A POSSIBLE VIEW AND PASSED THE ASSESSMENT ORDER, THE CIT CANNOT INVOKE THE JURISDICTION U/S 263 OF THE ACT MERELY BECAUSE HE D OES NOT AGREE WITH THE VIEW TAKEN BY THE A.O. THE A.O. IN THE INSTANT CASE AFT ER CONSIDERING THE SUBMISSION OF THE ASSESSEE, THE STATEMENT OF DIRECT OR OF THE ASSESSEE COMPANY AS WELL AS BROTHER OF THE DIRECTOR AND AFTER CONSID ERING THE SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH HAS TAKEN A POSSI BLE VIEW AND COMPLETED THE ASSESSMENT U/S 158 BC(C). THEREFORE, THE ORDER CANN OT BE SAID TO BE ERRONEOUS. IT IS THE SETTLED PROPOSITION OF LAW THAT FOR ASSUM ING JURISDICTION U/S 263, THE TWIN CONDITIONS I.E. (I) THE ORDER MUST BE ERRONEOU S AND (II) IT MUST BE PREJUDICIAL TO THE INTERESTS OF REVENUE MUST BE SAT ISFIED. IF ONE IS ABSENT, THE CIT CANNOT ASSUME THE JURISDICTION U/S 263 OF THE A CT. IN THE INSTANT CASE, THE ORDER MAY BE PREJUDICIAL TO THE INTERESTS OF REVENU E SINCE THE AMOUNT OF ` 15,10,000/- HAS NOT BEEN ADDED TO THE INCOME OF THE ASSESSEE U/S 68/69(C) AS PER THE OPINION OF CIT. HOWEVER, THE SAME CANNOT B E HELD AS ERRONEOUS SINCE THE A.O. AFTER DUE APPLICATION OF HIS MIND ON THE B ASIS OF VARIOUS DETAILS FURNISHED BEFORE HIM AND AFTER CONSIDERING THE SEIZ ED MATERIAL AND STATEMENTS RECORDED FROM THE DIRECTOR AND BROTHER OF THE DIREC TOR HAS PASSED THE ORDER. THEREFORE, IN OUR OPINION, THE CIT WAS NOT JUSTIFIE D IN INITIATING PROCEEDING U/S 263. THE VARIOUS DECISIONS RELIED ON BY THE LD. D. R. ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE SINCE THERE IS PROPER ENQ UIRY MADE BY THE A.O. WHILE PASSING THE ORDER U/S 158 BC(C) OF THE ACT. IN THI S VIEW OF THE MATTER, WE SET ASIDE THE ORDER PASSED BY THE CIT U/S 263. THE GRO UNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 12 IT(SS)A 653/ /M/2003 M/S UCIL LE ASING LTD. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 18.5.2011. SD/- SD/- (D. MANMOHAN) (R.K. PANDA) VICE PRESIDENT ACCO UNTANT MEMBER MUMBAI, DATED 18 TH MAY, 2011. RK COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT -XI, MUMBAI 4. THE ADDL. CIT- RANGE 9(3), MUMBAI 5. THE DR BENCH, J 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI 13 IT(SS)A 653/ /M/2003 M/S UCIL LE ASING LTD. DATE INITIALS 1 DRAFT DICTATED ON 9.5.2011, SR. PS 2 DRAFT PLACED BEFORE THE AUTHOR 10.5.2011 SR. PS 3 DRAFT PLACED BEFORE THE SECOND MEMBER 4 APPROVED DRAFT COMES TO THE SR. PS SR. PS 5 KEPT FOR PRONOUNCEMENT ON SR. PS 6 FILE SENT TO THE BENCH CLERK SR. PS 7 DATE ON WHICH FILE GOES TO THE HEAD CLERK 8 DATE ON WHICH FILE GOES TO THE AR 9 DATE OF DISPATCH OF ORDER