RAKESH S. PUNIA, MUMBAI V. ACIT CIR 20(2), NAVI MUMBAI

ITSSA 82/MUM/2009

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8358 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 19-05-2011
• Assessment Year: misc
• Appeal Filed On: 16-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B SENTHIL KUMAR
• Keywords: Search and seizure; Loose papers; Block assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER & SMT. ASHA VIJAYRAGHAVAN, JUDICIAL MEMBER. IT(SS)A.NO.82/MUM/2009. BLOCK PERIOD : 1-4-1995 TO 20-3-2002 RAKESH S. PUNIA, ASSTT. COMMISSIONER OF INCOME-TAX, FLAT NO. 1905&1906, VS. CIR. 20(2), MUMBAI. SILVER ARCH, NEAR LOKHANDWALA, ANDHERI (W), MUMBAI 400053. PAN AHNPP2594A. APPELLANT. RESPONDENT. IT(SS)A.NO.83/MUM/2009. BLOCK PERIOD : 1-4-1995 TO 20-3-2002 DINESH S. PUNIA, ASSTT. COMMISSIONER OF INCOME-TAX, 1205/06, WINDSOR TOWER, VS. CIR.20(2), MUMBAI. SHASTRI NAGAR, LOKHANDWALA, ANDHERI (W), MUMBAI 400 053. PAN AADPP8367L APPELLANT. RESPONDENT APPELLANT BY : SHRI DHARMESH SHAH. RESPONDENT BY : DR. B.SENTHILKUMAR. O R D E R PER P.M. JAGTAP, A.M. : THESE TWO APPEALS FILED BY THE TWO ASSESSEES BELO NGING TO A SAME GROUP AGAINST TWO SEPARATE ORDERS PASSED BY THE LEA RNED CIT(APPEALS)-XX DATED 2 IT(SS)A.NS.18&19/MUM/2009 BLOCK PERIOD:1-4-1995 TO 20-3-2002. 24-08-2009 INVOLVE SIMILAR ISSUES AND THE SAME, THE REFORE, HAVE BEEN HEARD TOGETHER AND ARE BEING DISPOSED OF BY A SINGLE COMP OSITE ORDER. 2. THE RELEVANT FACTS OF THE CASE GIVING RISE TO TH ESE APPEALS ARE THAT A SEARCH AND SEIZURE ACTION WAS CONDUCTED IN THE CASES OF RO SHANLAL AGARWAL AND HIS FAMILY MEMBERS AND GROUP CONCERNS ON 28-02-2002. SUBSEQUEN TLY ASSESSMENT FOR THE BLOCK PERIOD WAS FRAMED BY THE AO U/S 158BC ON 08-0 4-2004 IN THE CASE OF SHRI ROSHANLAL AGARWAL. THE AO WHO COMPLETED THE SAID AS SESSMENT IN THE CASE OF SHRI ROSHANLAL AGARWAL FORWARDED CERTAIN DOCUMENTS I.E. HUNDIS/RECEIPTS FOUND DURING THE COURSE OF SEARCH CONDUCTED IN THE CASE OF SHRI ROSHANLAL AGARWAL TO THE AO OF THE ASSESSEES IN THE PRESENT CASE AS, ACCORDING TO HIM, THE SAME BELONGED TO THESE ASSESSEES AND REFLECTED THEIR UNDISCLOSED INCOME. O N THE BASIS OF THE SAID DOCUMENTS, PROCEEDINGS U/S 158BC READ WITH SECTION 158BD WERE INITIATED BY THE AO IN THE CASE OF BOTH THE ASSESSEES AND IN THE ASS ESSMENTS COMPLETED FOR THE BLOCK PERIOD VIDE TWO SEPARATE ORDERS DATED 29-6-20 06, UNDISCLOSED INCOME OF THE ASSESSEES WAS COMPUTED BY THE AO AT RS.3 LAKHS IN T HE CASE OF SHRI RAKESH SHISHUPAL PUNIA AND AT RS.4 LAKHS IN THE CASE OF SH RI DINESH SHISHUPAL PUNIA REPRESENTING ADDITION MADE U/S 69D BEING THE REPAYM ENT IN CASH OF THE SUMS BORROWED ON HUNDIS. 3. AGAINST THE ORDERS PASSED BY THE AO U/S 158BC RE AD WITH SECTION 158BD, BOTH THE ASSESSEES PREFERRED THEIR APPEALS BEFORE T HE LEARNED CIT(APPEALS) CHALLENGING THEREIN THE VALIDITY OF THE SAID ASSESS MENTS AS WELL AS DISPUTING THE ADDITIONS MADE THEREIN U/S 69D. IT WAS CONTENDED ON BEHALF OF THE ASSESSEE BEFORE THE LEARNED CIT(APPEALS) THAT THE SATISFACTION AS R EQUIRED BY THE RELEVANT PROVISIONS OF THE ACT WAS NOT RECORDED BY THE AO HA VING JURISDICTION OVER THE CASE OF SHRI ROSHANLAL AGARWAL AND SINCE THIS JURISDICTI ONAL CONDITION WAS NOT SATISFIED, 3 IT(SS)A.NS.18&19/MUM/2009 BLOCK PERIOD:1-4-1995 TO 20-3-2002. THE INITIATION OF BLOCK ASSESSMENTS COMPLETED IN PU RSUANCE THEREOF WERE INVALID. THE LEARNED CIT(APPEALS) DID NOT FIND MERIT IN THIS CONTENTION RAISED ON BEHALF OF THE ASSESSEE KEEPING IN VIEW THE LETTER DATED 27-4- 2004 SENT TO THE AO HAVING JURISDICTION OVER THE CASES OF ASSESSEES, WHICH, AC CORDING TO HIM, CONTAINED THE REQUISITE SATISFACTION. THE LEARNED CIT(APPEALS) AL SO DID NOT FIND MERIT IN THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE CHALLENG ING THE ADDITIONS MADE U/S 69D AND REJECTING THE SAME, HE CONFIRMED THE SAID A DDITIONS. THE APPEALS FILED BY THE ASSESEES THUS WERE DISMISSED BY HE LEARNED CIT( APPEALS) AND AGGRIEVED BY THE SAME, THE ASSESSEES HAVE PREFERRED THESE APPEALS BE FORE THE TRIBUNAL. 4. IN GROUND NO.1 AND 2 OF THESE APPEALS, THE ASSES SEES HAVE RAISED A COMMON PRELIMINARY ISSUE CHALLENGING THE VALIDITY OF ASSES SMENTS MADE BY THE AO U/S 158BC READ WITH SECTION 158BD ON THE GROUND THAT TH E SAME WERE PASSED WITHOUT RECORDING SATISFACTION AS REQUIRED U/S 158BD. 5. WE HAVE HEARD THE ARGUMENTS OF THE LEARNED REPRE SENTATIVES OF BOTH THE SIDES ON THIS PRELIMINARY ISSUE AND ALSO PERUSED THE RELE VANT MATERIAL ON RECORD. AS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE LETTER SENT BY THE AO HAVING JURISDICTION OVER THE CASE OF SHRI ROSHANLAL AGARW AL CONTAINING HIS SATISFACTION TO THE AO HAVING JURISDICTION OVER THE CASES OF THE AS SESSEES WAS DATED 27-04-2004 WHEREAS BLOCK ASSESSMENT IN THE CASE OF SHRI ROSHAN LAL AGARWAL WAS FINALIZED BY THE SAID AO ON 08-04-2004. THE REQUISITE SATISFACTI ON THUS WAS RECORDED BY THE AO HAVING JURISDICTION OVER THE CASE OF SHRI ROSHANLAL AGARWAL ONLY AFTER COMPLETING THE BLOCK ASSESSMENT IN THE CASE OF THE SAID PERSON WHO WAS SUBJECTED TO A SEARCH AND SEIZURE ACTION. IN THE CASE OF MANOJ AGARWAL VS . DCIT 310 ITR (AT) 99 (DEL.)(SB), THE SPECIAL BENCH OF THIS TRIBUNAL HAS HELD THAT IF THE EXAMINATION OF MATERIAL FOUND DURING THE COURSE OF SEARCH SHOWS TH AT THE UNDISCLOSED INCOME 4 IT(SS)A.NS.18&19/MUM/2009 BLOCK PERIOD:1-4-1995 TO 20-3-2002. PERTAIN TO SOME OTHER PERSON, THE AO HAVING JURISDI CTION OVER THE CASE OF A SEARCHED PERSON HAS TO GIVE A FINDING TO THIS EFFEC T AND THEREUPON TRANSMIT THE RELATED SEIZED MATERIAL TO THE AO HAVING JURISDICTI ON OVER THE OTHER PERSON. IT WAS HELD THAT ALL THESE FINDINGS HAVE TO BE RECORDED AF TER A HONEST APPRECIATION OF THE SEIZED MATERIAL WITH AN OBJECTIVE MIND AND THERE HA S TO BE A RECORD REFLECTING SUCH FINDINGS ON THE BASIS OF WHICH ALONE THE AO CAN ASS UME JURISDICTION TO PROCEED AGAINST THE OTHER PERSON. IT WAS HELD THAT THE RECO RDING OF SUCH SATISFACTION THUS IS IMPLIEDLY TO BE DONE IN THE COURSE OF PROCEEDINGS U /S 158BC AS THE SATISFACTION HAS TO BE RECORDED ONLY BY THE AO MAKING A BLOCK ASSESS MENT IN THE CASE OF THE PERSON SEARCHED. IT WAS HELD THAT SUCH SATISFACTION CANNOT BE RECORDED BEYOND THE DATE OF BLOCK ASSESSMENT U/S 158BC AND SUCH DATE IS THE OUT ER LIMIT FOR RECORDING THE REQUIRED SATISFACTION. IT WAS HELD THAT IF NO SUCH SATISFACTION IS RECORDED IN THE COURSE OF THE PROCEEDINGS U/S 158BC, THEN ASSUMPTIO N OF JURISDICTION U/S 158BD IS NOT POSSIBLE. THE LEARNED DR HAS NOT DISPUTED THIS POSITION THAT THE LETTER DATED 27- 4-2004 CONTAINING THE SATISFACTION OF THE AO HAVING JURISDICTION OVER THE CASE OF SHRI ROSHANLAL AGARWAL RELIED UPON BY THE LEARNED C IT(APPEALS) IN HIS IMPUGNED ORDER WAS SENT TO THE AO HAVING JURISDICTION OVER T HE CASES OF THE ASSESSEES ONLY AFTER FINALIZING THE BLOCK ASSESSMENTS U/S 158BC IN THE CASE OF SHRI ROSHANLAL AGARWAL ON 8-4-2004. HE, HOWEVER, HAS CONTENDED THA T THE REQUISITE SATISFACTION WAS RECORDED BY THE SAID AO IN THE ASSESSMENT ORDER PASSED IN THE CASE OF SHRI ROSHANLAL AGARWAL ITSELF U/S 158BC AND THE JURISDI CTIONAL CONDITION THUS WAS SATISFIED AS PER THE DECISION OF SPECIAL BENCH OF I TAT IN THE CASE OF MANOJ AGARWAL (SUPRA). IT IS NO DOUBT TRUE THAT AS HELD B Y THE SPECIAL BENCH OF ITAT IN THE CASE OF MANOJ AGARWAL (SUPRA), THE SATISFACTION CAN BE FOUND IN THE ORDER PASSED U/S 158BC. THE QUESTION, HOWEVER, IS WHETHER THERE IS ANY THING IN THE SAID ORDER FROM WHICH SATISFACTION OF THE AO CAN BE INFE RRED. IN THIS REGARD, THE LEARNED 5 IT(SS)A.NS.18&19/MUM/2009 BLOCK PERIOD:1-4-1995 TO 20-3-2002. DR HAS MAINLY RELIED ON THE FOLLOWING OBSERVATIONS RECORDED BY THE AO IN THE ORDER PASSED U/S 158BC IN THE CASE OF SHRI ROSHANL AL AGARWAL : EXPLANATION OF THE ASSESSEE AND HIS FAMILY MEMBERS IN RESPECT OF TRANSACTIONS RECORDED ON VARIOUS LOOSE PAPERS IS EX AMINED AND FINDING IS GIVEN IN EACH CASE SEPARATELY. IN THE CASE OF THE A SSESSEE, AFTER EXAMINING THE BOOKS OF ACCOUNT, THE EXPLANATION AND SUBMISSIONS O F THE A.R. DISCLOSURE OF INCOME OF RS.44 LAKHS IN THE BLOCK RETURN IS FOUND IN ORDER. AFTER HAVING PERUSED CAREFULLY THE ABOVE OBSERVATIO NS AS WELL AS THE CONTENTS OF THE ENTIRE ASSESSMENT ORDER PASSED IN THE CASE OF SHRI ROSHANLAL AGARWAL U/S 158BC, WE ARE OF THE VIEW THAT THERE IS NOTHING SPECIFIC I N THE SAID ORDER FROM WHICH SATISFACTION OF THE AO CAN BE INFERRED ABOUT THE UN DISCLOSED INCOME OF THE ASSESSEES IN THE PRESENT CASE BEING REFLECTED IN TH E DOCUMENTS FOUND AND SEIZED FROM THE POSSESSION OF A SEARCHED PERSON. THERE IS NO FINDING TO THIS EFFECT IN THE ORDER PASSED U/S 158BC IN THE CASE OF A SEARCHED PE RSON WHICH SHOWS THE SATISFACTION OF THE AO PASSING THE SAID ORDER. WE, THEREFORE, HOLD THAT THE REQUISITE SATISFACTION WAS RECORDED BY THE AO HAVING JURISDIC TION OVER THE CASE OF A SEARCHED PERSON ONLY AFTER FINALIZING THE ASSESSMENT OF SEAR CHED PERSON U/S 158BC AND THE SAME WAS NOT SUFFICIENT FOR THE AO TO ASSUME JURISD ICTION U/S 158BD IN THE CASE OF THE PRESENT ASSESSEES AS HELD BY DELHI SPECIAL BENC H OF ITAT IN THE CASE OF MANOJ AGARWAL (SUPRA). RESPECTFULLY FOLLOWING THE SAID DE CISION OF ITAT, WE HOLD THAT THE SATISFACTION AS REQUIRED FOR PROCEEDING AGAINST THE ASSESSEES U/S 158BD THUS WAS NOT RECORDED AND IN THE ABSENCE OF SATISFACTION OF THIS JURISDICTIONAL CONDITION, THE ASSESSMENTS COMPLETED IN THE CASES OF THE ASSES SEES U/S 158BC READ WITH SECTION 158BD ARE LIABLE TO BE CANCELLED. WE ORDER ACCORDINGLY AND ALLOW GROUND NOS. 1 AND 2 OF THE ASSESSEES APPEALS. 6 IT(SS)A.NS.18&19/MUM/2009 BLOCK PERIOD:1-4-1995 TO 20-3-2002. 6. KEEPING IN VIEW OUR DECISION RENDERED ABOVE ON T HE PRELIMINARY ISSUE CANCELLING THE ASSESSMENTS MADE BY THE AO U/S 158BC READ WITH SECTION 158BD, GROUND NO. 3 RAISED BY THE ASSESSEE IN THESE APPEAL S DISPUTING THE ADDITIONS MADE THEREIN U/S 69D HAS BECOME ACADEMIC AND WE DO NOT D EEM IT NECESSARY OR EXPEDIENT TO ADJUDICATE UPON THE SAME. 7. IN THE RESULT, THE APPEALS OF THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED ON THIS 27 TH DAY OF MAY, 2011. SD/- SD/- (ASHA VIJAYRAGHAVAN) (P.M. JA GTAP) JUDICIAL MEMBER ACCO UNTANT MEMBER MUMBAI, DATED: 27 TH MAY, 2011. WAKODE COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, D-BENCH. (TRUE COPY) BY ORD ER ASSTT. R EGISTRAR, ITAT, MUMBAI BEN CHES, MUMBA I.