M/s Timblo Private Limited., Margao V. The Assistant Commissioner of Income Tax, Central Circle, Panaji., Panaji

ITSSA 86/PAN/2016

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3909 (ITAT-PANAJI)
• Duration Of Justice: 4 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 06-10-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 16-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRA BHAT JHA
• Assessee Lawyers: V CHANDRASEKHAR
• Keywords: Unexplained expenditure; Business income; Search and seizure; Reason to believe
• Section: 69C; 143(3); 133A; 153A; 13; 153; 22; 153C; 148; 132; 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI, BENCH PANAJI , , BEFORE SHRI LALIET KUMAR, JM AND DR. MITHA LAL MEENA, AM IT (SS) A NO S . 86 TO 89 /PA N/201 7 (AY: 20 0 6 - 20 0 7 , 2007 - 2008, 2008 - 09 & 2009 - 2010 ) M/S TIMBLO PVT. LTD., KADAR MANZIL, NEAR HARI MANDIR, MARGAO, GOA PAN : AABCT 1944 N VS ACIT, CENTRAL CIRCLE, PANAJI GOA ( / APPELLANT ) .. ( / RESPONDENT ) /ASS ESSEE BY : SHRI V. CHANDRASEKHAR, ADV. /REVENUE BY : SHRI PRABHAT JHA, CIT DR / DATE OF HEARING : 05 /1 0 /202 1 / DATE OF PRONOUNCEMENT : 06 /10 /202 1 / O R D E R PER BENCH : TH ESE FOUR APPEALS HAVE B EEN FILED BY THE ASSESSEE AGAINST THE SEPARATE ORDERS PASSED BY THE CIT(A) - 2, PANAJI, ALL DATED 30.08.2016 FOR THE ASSESSMENT YEARS 2006 - 2007, 2007 - 2008, 2009 - 2010 & 2010 - 2011, RESPECTIVELY. 2. SINCE THE ISSUE INVOLVED IN ALL THE APPEALS OF THE ASSESSEE AR E COMMON, EXCEPT DIFFERENT IN FIGURES , THEREFORE, ALL THE APPEALS WERE HEARD ALTOGETHER AND DECIDED BY THIS CONSOLIDATED ORDER. FIRST WE SHALL TAKE UP THE APPEALS FILED BY THE ASSESSEE IN IT(SS)A NO. 86 /PAN/201 6 FILED FOR THE ASSESSMENT YEAR 200 6 - 200 7 AND T HE GROUNDS MENTIONED THERE IN AS UNDER : - 1. THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME - TAX [APPEALS] - 2, GOA DATED 30/08/2016, IN SO FAR AS IT IS AGAINST THE APPELLANT IS OPPOSED TO LAW, EQUITY, WEIGHT OF EVIDENCE, PROBABILITIES AND T HE FACTS AND CIRCUMSTANCES IN THE APPELLANTS CASE. IT(SS)A NOS. 86 TO 89/PAN/2016 2 2. THE APPELLANT DENIES ITSELF LIABLE TO BE ASSESSED UNDER SECTION 143(3) R.W.S.153A OF THE ACT UNDER THE IMPUGNED ORDER ON THE GROUND THAT : - I. THE SEARCH INITIATED IN THE CASE OF THE APPELLANT IS IL LEGAL AND UL T RA VIRES THE PROVISIONS OF SECTION 132(1)[A], [B] & [C] OF THE ACT; II. THAT THE SEARCH IS CONDUCTED NOT ON THE BASIS OF ANY PRIOR INFORMATION OR MATERIAL INDUCING ANY BELIEF BUT PURELY ON THE SUSPICION AND THEREFORE, THE ACTION UNDER SECTION 132[2] IS BAD IN LAW [224 ITR 19 [SC]] AND CONSEQUENT ASSESSMENT UNDER SECTION 153A IS NULL AND VOID - AB - INITIO ON THE PARITY OF THE RATIO OF THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF AJIT J AIN, REPORTED IN 260 ITR 80. III. THAT THE APPELLANT CONTENDS THAT THE REVENUE HAS TO DISCHARGE ITS BURDEN OF PROVING THAT THERE IS A VALID INITIATION OF SEARCH UNDER SECTION 132[1][A], [B] & [C] OF THE ACT, ITS EXECUTION AND ITS COMPLETION IN ACCORDANCE WITH LAW TO RENDER THE PROCEEDINGS VALID AND TO ASSUME JURISDICTION TO MAKE AN ASSESSMENT UNDER SECTION 153A OF THE ACT. RELIANCE IS PLACED ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF C.RAMAIAH REDDY VS. ACIT REPORTED IN [2011] 61 DTR 82. IV. THAT THE APPELLANT CONTENDS THAT A VALID SE ARCH IS A SINE QUA NON FOR MAKING A VALID ASSESSMENT UNDER SECTION 153A OF THE ACT ON THE PARITY OF THE RATIO OF THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF AJIT JAIN, REPORTED IN 260 ITR 80. 3. THE LEARNED COMMISSION OF INCOME - TAX [APPEALS] FAI LED TO APPRECIATE THAT THE WARRANT OF AUTHORIZATION WHICH IS ALLEGED TO HAVE BEEN ISSUED TO SEARCH THE APPELLANT HAS NOT BEEN EXECUTED AND CONSEQUENTLY THE SUBSEQUENT ORDER OF ASSESSMENT PASSED UNDER SECTION 143(3) R.W.S. 153A OF THE ACT IS BAD IN LAW, UND ER THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR SUBSTITUTE ANY OF THE GROUNDS URGED ABOVE. 5. IN VIEW OF THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED IN THE INTEREST OF JUSTICE AND EQUITY. 3 . IN THIS REGARD, LD.AR OF THE ASSESSEE HAS DREW OUR ATTENTION TO PAPER BOOK PAGE NO.31, WHERE THE WARRANT FOR SEARCH WAS ISSUED BY THE DG(INV.) AGAINST THE TWO PERSON NAMELY, S MT. RADHA S. TIMBLO AND ALSO IT(SS)A NOS. 86 TO 89/PAN/2016 3 AGAINST M/S TIMBLO PVT. LTD.. THE LD.AR THEREAFTER DREW OUR ATTENTION TO THE PANCHANAMA PREPARED DURING THE COURSE OF SEARCH AND IT WAS SUBMITTED THAT THE NAME OF M/S TIMBLO PVT. LTD. IS CONSPICUOUSLY MISSING ON THE PANCHANAMA. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAS RAISED THIS LEGAL GROUND BEFORE THE LD. CIT(A), HOWEVER, THE LD. CIT(A) HAS NOT CONSIDERED THE LEGAL GROUND AND THE FINDINGS OF THE CIT(A) ARE AVAILABLE AT PARA 3.5 & 3.6 OF THE IMPUGNED ORDER. IT WAS SUBMITTED THAT SINCE THE NAME OF THE ASSESSEE WAS NOT MENTIONED IN THE PANCHANAMA, THEREFORE, NO SEARCH COULD BE SAID TO HAVE NOT TAKEN AGAINST THE ASSESSEE COMPANY, THEREFORE, THE ACTION U/S.153A OF THE ACT IS NOT MAINTAINABLE AGAINST THE ASSESSEE FIRM. IN SUPPORT OF THE CASE OF THE ASSESSEE, THE ASSESSEE HAD ALSO FILED WRITTEN SYNOPSIS , WHICH READS AS UNDER : - 1. IT IS SUBMITTED THAT IN THE APPEALS PREFERRED BY THE ASSESSEE FOR THE ABOVE MENTIONED A.Y'S THE ASSESSEE HAS CHALLENGED THE VERY INITIATION OF SEARCH CON DUCTED U/S. 132 OF THE ACT AS BAD IN LAW AND VOID - AB - INTO AND FURTHER THE ASSESSEE CONTENDS THAT THE WARRANT OF AUTHORIZATION DRAWN ON THE ASSESSEE HAS NOT BEEN PROPERLY EXECUTED AND CONSEQUENTLY THE IMPUGNED ORDERS PASSED BY THE LEARNED ASSESSING OFFICER REQUIRES TO BE CANCELLED: 2. IT IS SUBMITTED THAT DURING THE COURSE OF APPELLATE PROCEEDINGS THE LEARNED CIT [A] CALLED FOR THE REMAND REPORT OF THE LEARNED ASSESSING OFFICER AS REGARD TO THE QUESTION RAISED BY THE ASSESSEE ON THE VALIDITY OF SEARCH U/S. 132 OF THE ACT. THE LEARNED ASSESSING OFFICER SUBMITTED HIS REPORT DATED 29/01/2016 ALONG WITH ANNEXURES GIVING HIS COMMENTS ON THE ISSUES RAISED BY THE ASSESSEE IN THE APPELLATE PROCEEDINGS IN CONNECTION TO THE VALIDITY OF SEARCH U/S. 132 OF THE ACT. A C OPY OF THE SAID REPORT FURNISHED BY THE LEARNED ASSESSING OFFICER WAS PROVIDE TO THE ASSESSEE BY THE LEARNED CIT[A] [REF. PAGE 24 - 44 OF THE INDEX TO COMMON PAPER BOOK]. 3. IT IS SUBMITTED THAT FROM THE COPY OF WARRANT PRODUCED BY THE LEARNED ASSESSING O FFICER BEFORE THE LEARNED CIT[A], IT IS CLEAR THAT THE WARRANT OF AUTHORISATION HAS BEEN ISSUED ON TWO DISTINCT SEPARATE PERSONS, NAMELY SMT. RADHA TIMBLO A M/S TIMBLO PRIVATE LIMITED. [1] IT IS SUBMITTED AN ACTION OF SEARCH IS CONDUCTED AS PER THE PROVIS IONS OF SECTION 132 OF THE ACT. AS PER THE PROVISIONS OF SECTION 132 OF THE ACT IT CAN BE INITIATED ON ANY PERSON. IT(SS)A NOS. 86 TO 89/PAN/2016 4 [II] IT IS SUBMITTED THAT THE INCOME - TAX ACT DEFINES PERSON UNDER SECTION 2 [31] OF THE ACT. FOR THE SAKE OF READY REFERENCE THE SAME IS REP RODUCED: (31) 'PERSON' INCLUDES (I) AN INDIVIDUAL, (II) A HINDU UNDIVIDED FAMILY, (III) A COMPANY, (IV) A FIRM, (V) AN ASSOCIATION OF PERSONS OR A BODY OF INDIVIDUALS, WHETHER INCORPORATED OR NOT, (VI) A LOCAL AUTHORITY, AND (VII) EVERY ARTIFICIAL JURIDIC AL PERSON, NOT FALLING WITHIN ANY OF THE PRECEDING SUB - CLAUSES; [III] IT IS SUBMITTED THAT AS COULD BE SEEN FROM THE WARRANT OF AUTHORIZATION IT HAS BEEN ISSUED ON TWO DIFFERENT DISTINCT SEPARATE PERSONS I.E. SMT. RADHA S TIMBLO ET M/S TIMBLO PRIVATE LIMI TED, THEY BOTH ARE TWO DISTINCT ASSESSEES IN THE EYES OF LAW. [IV] THE ASSESSEE SUBMITS THAT ON A CURSORY PERUSAL OF THE SAID COPY OF THE WARRANT IT CAN BE OBSERVED THAT THE WARRANT BEARS THE SIGNATURE OF ONLY ONE PERSON I.E. SMT. RADHA S TIMBLO WHICH CON FIRMS THAT THE WARRANT ISSUED ON HER HAS BEEN EXECUTED ET A SEARCH UNDER SECTION 132 OF THE ACT HAS BEEN CONDUCTED ON THE SAID SMT. RADHA S TIMBLO AND NOT ON THE ASSESSEE COMPANY I.E. M/S. TIMBLO PRIVATE LIMITED. [V] IT IS FURTHER SUBMITTED THAT A SWORN STATEMENT OF MRS RADHA S. TIMBLO WAS RECORDED BY THE OFFICIAL OF THE DEPARTMENT I.E. THE DCIT, CC PANAJI UNDER SECTION 133A OF THE ACT ON 21/04/2010 [A COPY OF THE STATEMENT RECORDED DURING THE COURSE OF SURVEY U/S. 133A OF THE ACT IS PLACED AT PAGE 01 TO 04 OF THE COMMON PAPER BOOK]. THE RELEVANT PORTION OF THE STATEMENT RECORDED AT PAGE 4 OF THE SAID STATEMENT IS REPRODUCED HEREUNDER FOR THE READY REFERENCE: THE STATEMENT IS CONCLUDED TEMPORARILY SINCE THE SURVEY ACTION U/S.133 - A HAS BEEN CONVERTED INTO SEARCH AND SEIZURE ACTION 132 AS PER THE WARRANT OF AUTHORISATION ISSUED BY THE DIRECTOR OF INCOME TAX (INV) BANGALORE DATED 21 - 04 - 2010. THE WARRANT OF SEARCH HAS BEEN EXECUTED ON THE ASSESSEE MRS RADHA S. TIMBLO AT 6.50 PM ON 21 - 04 - 2010.' [EMPHASIS SUPPL IED] [VI] AS COULD BE SEEN FROM THE STATEMENT RECORDED WHICH IS REPRODUCED ABOVE IT IS EXPLICITLY CLEAR THAT THE WARRANT OF SEARCH HAS BEEN EXECUTED ONLY ON SMT. RADHA S TIMBLO AND NOT ON THE ASSESSEE I.E. TIMBLO PRIVATE LIMITED. [VII] IT IS SUBMITTED TH AT PANCHANAMS ARE DRAWN AS AND WHEN THE DEPARTMENT VISITED THE PREMISES. TOTALLY FIVE PANCHANAMS HAVE BEEN DRAWN. IT IS SUBMITTED THAT IN ALL THESE FIVE PANHANAMS DRAWN EACH OF THE PANACHANAMS IT IS RECORDED AS UNDER: A. PANCHANAMA DATED 21/04/2010 [STARTE D AT 6.50 PM AND TEMPORARILY CLOSED AT 2 - 40 AM ON 22/04/2010] A) WARRANT IN THE NAME OF : RADHA S. TIMBLO. B) WARRANT TO SEARCH (DETAILS & IT(SS)A NOS. 86 TO 89/PAN/2016 5 OWNERSHIP OF PLACE TO SEARCH) : TIMBLO PRIVATE LIMITED KADAR MANZIL, NEAR HARI MANDIR, MARGAO. [THE SAID COPY OF PANC HANAMA DRAWN ON 21/04/2010 ALONG WITH ANNEXURES IS PLACED AT PAGE 78 TO 86 OF THE COMMON PAPER BOOK] B. PANCHANAMA DATED 22/04/2010 [STARTED AT 12.45 PM AND TEMPORARILY CLOSED AT 7.30 PM ON 22 - 04 - 2010] A) WARRANT IN THE NAME OF : RADHA S. TIMBLO. B) WARRAN T TO SEARCH (DETAILS & OWNERSHIP OF PLACE TO SEARCH) : TIMBLO PRIVATE LIMITED KADAR MANZIL, NEAR HARI MANDIR, MARGAO. [THE SAID COPY OF PANCHANAMA DRAWN ON 22/04/2010 ALONG WITH ANNEXURES IS PLACED AT PAGE 70 TO 77 OF THE COMMON PAPER BOOK] C. PANCHANAMA DAT ED 27/04/2010 [STARTED AT 12.15 CONCLUDED/TEMPORARILY CLOSED AT 10.30 PM ON 27/04/010] A) WARRANT IN THE NAME OF : RADHA S. TIMBLO. B) WARRANT TO SEARCH (DETAILS & OWNERSHIP OF PLACE TO SEARCH) : TIMBLO PRIVATE LIMITED KADAR MANZIL, NEAR HARI MANDIR, MARGAO. [TH E SAID COPY OF PANCHANAMA DRAWN ON 27/04/2010 ALONG WITH ANNEXURES IS PLACED AT PAGE 56 TO 68 OF THE COMMON PAPER BOOK] [VIII) IT IS SUBMITTED THAT THE PANCHANAMAS AS MENTIONED ABOVE CLEARLY INDICATES THAT THE WARRANTIN THE NAME OF SMT. RADHA S TIMBLO AND THE PREMISES TO SEARCH IS M/S TIMBLO PRIVATE LIMITED. THUS, NO SEARCH HAS TAKEN PLACE IN THE CASE OF THE ASSESSEE I.E. M/S TIMBLO PRIVATE LIMITED, WHICH NECESSITATED TO ISSUE NOTICE UNDER SECTION153A OF THE ACT. [IX] IT IS CLEAR FROM THE RECORDS PRODUCED AS EXP LAINED ABOVE THAT THE WARRANT IS EXECUTED ONLY IN THE HANDS OF SMT. RADHA S TIMBLO AND THE PREMISES TO SEARCH IS M/S. TIMBLO PRIVATE LIMITED. WHEN NO WARRANT HAS BEEN EXECUTED ON THIS ASSESSEE I.E. M/S. TIMBLO PRIVATE LIMITED, NO NOTICE UNDER SECTION 153A OF THE ACT CAN BE ISSUED AND THE NOTICE ISSUED UNDER SECTION 153A OF THE ACT IS EXFACIE WITHOUT JURISDICTION. [X] IT IS ALSO RELEVANT TO POINT OUT THAT CLAUSE 6 OF THE PANCHANAMA WHICH READS AS FOLLOWS: '6. IN THE COURSE OF THE SEARCH, THE AUTHORISED OFFICER S HRI T.N.C. SRIDHAR, DDIT (INV) RECORDED THE STATEMENTS SMT. RADHA S. TIMBLO AT THE OFFICE OF TIMBLO PVT. LTD. KADAR MANZIL. NR HARI MANDIR, MARQOA OR /OATH IN OUR PRESENCE. NO COERCION, THREAT, INDUCEMENT, PROMISE OR OTHER UNDUE INFLUENCE WAS BROUGHT TO BE AR ON THE DEPONENT (S). THE STATEMENT WAS READ OVER TO THE DEPONENT WHO SIGNED THE IT(SS)A NOS. 86 TO 89/PAN/2016 6 STATEMENT IN TOKEN OF HAVING UNDERSTOOD IN CONTENTS AND OF AGREEING THAT IT HAS BEEN CORRECTLY RECORDED.' [XI] THE ABOVE UNDERLINED AND BOLD SENTENCES IS THE HAND WRITTEN WHICH C LEARLY INDICATES THE STATEMENT HAS BEEN RECORDED OF SMT. RADHA S TIMBLO AT THE OFFICE OF THE ASSESSEE I.E. M/S. TIMBLO PRIVATE LIMITED, WHICH CLEARLY FORTIFIES THE CONTENTION OF THE ASSESSEE THAT THE SEARCH UNDER SECTION 132 OF THE ACT IS NOT ON THE ASSESS EE, IT IS ONLY THE PREMISES OF THE ASSESSEE. THIS CONTENTION OF THE ASSESSEE FURTHER FORTIFIES AT A CURSORY LOOK AT CLAUSE (A) WARRANT IN THE CASE OF AND (B) WARRANT TO SEARCH THE PREMISES IN THE PANCHANAMA THAT THE ASSESSEE IS NOT THE SEARCHED PERSON ONLY THE PREMISES OF THE ASSESSEE WAS SEARCHED WHEREAS THE WARRANT WAS EXECUTED TO SEARCH SMT. RADHA S TIMBLO. [XII] THE WARRANT, HOWEVER, DOES NOT BEAR THE SIGNATURE OF ANY PERSON SIGNING THE SAME 'FOR AND ON BEHALF OF THE ASSESSEE I.E. M/S. TIMBLO PRIVATE LIMITED' . IN OTHER WORDS THE WARRANT ISSUED ON M/S TIMBLO PRIVATE LIMITED HAS NOT BEEN ACTED UPON OR EXECUTED TILL DATE AND THUS NO SEARCH U/S 132 OF THE ACT HAS BEEN CONDUCTED ON THE ASSESSEE I.E. M/S. TIMBLO PRIVATE LIMITED. AS MENTIONED IN THE EARLIER PARAGRAPH S SMT. RADHA S TIMBLO ST M/S TIMBLO PRIVATE LIMITED ARE TWO DIFFERENT DISTINCT SEPARATE PERSONS AS PER THE ACT, WHEREFORE, IN VIEW OF THE ABOVE THE ASSESSEE COMPANY HUMBLY PRAY AND SUBMIT THAT THERE IS NO SEARCH IN THE CASE OF THE ASSESSEE COMPANY I.E. M/S . TIMBLO PRIVATE LIMITED AND CONSEQUENTLY THE NOTICE ISSUED UNDER SECTION 153A OF THE ACT IS BAD IN LAW AND WITHOUT JURISDICTION AND FUTURE PROCEEDINGS ARE ALSO BAD IN LAW FOR WANT OF PROPER JURISDICTION AND THE IMPUGNED ORDERS PASSED BY THE LEARNED ASSESS ING OFFICER ON THE COMPANY, DESERVES TO BE CANCELLED. 4. WITHOUT PREJUDICE IF AT ALL ANY ASSESSMENT COULD BE MADE ON THE ASSESSEE COMPANY I.E. M/S. TIMBLO PRIVATE LIMITED IT OUGHT TO HAVE BEEN MADE UNDER SECTION 153 C OF THE ACT & NOT UNDER SECTION 153A OF THE ACT, AS HAS ERRONEOUSLY BEEN DONE IN THIS CASE, AFTER COMPLYING WITH THE MANDATORY CONDITIONS AND CONDITIONS PRECEDENT IN RESPECT THEREOF. 5. IT MAY ALSO BE NOTICED THAT NO PANCHANAMA HAS BEEN DRAWN IN THE NAME OF THIS ASSESSEE I.E. M/S. TIMBLO PRIVATE L IMITED & THIS ALSO PROVES THAT NO SEARCH WAS CONDUCTED ON THE ASSESSEE COMPANY. THE PANCHANAMAS DRAWN DURING THE IMPUGNED SEARCH PROCEEDINGS ARE DRAWN IN THE NAME OF SMT.RADHA TIMBLO WHICH PROVES THAT A SEARCH UNDER SECTION 132 WAS CONDUCTED ONLY ON SMT. RADHA TIMBLO, IN HER INDIVIDUAL CAPACITY & NOT ON M/S. TIMBLO PRIVATE LIMITED. 6. WITHOUT PREJUDICE, IT IS SUBMITTED THAT THE LEARNED ASSESSING OFFICER AT PARA 3 OF THE REMAND REPORT HAS SUBMITTED AS UNDER AS REGARD TO THE SATISFACTION OF THE LEARNED DIRECTOR OF INCOME - TAX [INV], BANGALORE FOR ISSUING WARRANT OF AUTHORIZATION ON 21/04/2010. THE SAME IS REPRODUCED HEREUNDER FOR IMMEDIATE REFERENCE: '3.0 THE WARRANT OF AUTHORISATION WAS SIGNED BY SHRI. P.R.DHAYAL, DIRECTOR OF INCOME TAX (INV), BANGALORE ON IT(SS)A NOS. 86 TO 89/PAN/2016 7 21.04 .2010. THE WARRANT IS GIVEN IN ANNEXURE - 1 . THE WARRANT SIGNING AUTHORITY SAID THAT 'INFORMATION HAS BEEN LAID BEFORE ME AND ON CONSIDERATION THEREOF I HAVE REASON TO BELIEVE THAT... ...IF A SUMMONS IS ISSUED TO 'SMT. RADHA TIMBLO AND M/S. TIMBLO PRIVATE LIMITED', HE WOULD NOT PRODUCE, OR CAUSE TO BE PRODUCED, SUCH BOOKS OF ACCOUNT OR OTHER DOCUMENTS AS REQUIRED BY SUCH SUMMONS OR NOTICE. 'SARVASHRI/SHRI/SHRIMATI. RADHA TIMBLO AND TIMBLO PRIVATE LTD ARE IN POSSESSION OF ANY MONEY, BULLION, JEWELLERY, OR O THER VALUABLE ARTICLE OF THING AND SUCH MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE REPRESENTS EITHER WHOLLY OR PARTLY INCOME OR PROPERTY WHICH HAS NOT BEEN, OR WOULD NOT BE DISCLOSED FOR THE PURPOSES OF INDIAN INCOME TAX, 1961. AND WHEREAS I HAVE REASON TO SUSPECT THAT SUCH BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING HAVE BEEN KEPT AND ARE TO BE FOUND IN KADAR MANZIL, NEAR HARI MANDIR, MARQAO. COA...' IT IS SUBMITTED THAT THE LEARNED ASSESSING OF FICER IN HIS REMAND REPORT HAS GIVEN THE SO CALLED SATISFACTION RECORDED FOR THE INITIATION OF SEARCH PROCEEDINGS UNDER SECTION 132 OF THE ACT FOR THE PURPOSES OF ISSUANCE OF WARRANT OF AUTHORIZATION BY THE HON'BLE DIRECTOR OF INCOME - TAX [INV], BANGALORE. AS COULD BE SEEN FROM THE SATISFACTION RECORDED WHICH IS REPRODUCED ABOVE IT IS NOTHING BUT ONLY THE CONTENTS IN FORM NO. 45, RULE 112, BEING THE WARRANT OF AUTHORISATION UNDER SECTION 132 OF THE INCOME - TAX ACT, 1961, AND RULE 112[1] OF THE OF THE INCOME - T AX RULES, 1962, THE SAME CANNOT BE CONSTRUED AS SATISFACTION. IF THE SAID EXTRACT ABOVE IS TO BE TREATED AS SATISFACTION THEN THE SAME IS NOT IN ACCORDANCE WITH LAW AND IS VERY GENERAL AND VAGUE. THE SAID SATISFACTION IS NOT REVEALING AS REGARD TO THE BASI S AND MATERIALS TO ARRIVE AT A SATISFACTION THAT THE ASSESSEE HAS INCOME WHICH IS NOT DISCLOSED. HENCE, THE SATISFACTION RECORDED FOR THE ISSUANCE OF A WARRANT UNDER NO STRETCH IS CONSIDERED AS SATISFACTION WARRANTING AN ACTION OF SEARCH UNDER SECTION 132 OF THE ACT WHICH IS NOT IN ACCORDANCE WITH LAW AND DOES NOT HAVE LEGS TO STAND THE TEST OF LAW. IT IS SUBMITTED THAT THE PROCESS FOR ARRIVING AT SATISFACTION HAS TO BE DISCERNIBLE FROM THE REASONS RECORDED FOR ISSUING WARRANT OF AUTHORIZATION. THE REASONS AND SATISFACTION SHOULD NOT BE VAGUE AND SHOULD BE DEFINITE AND SHOULD REVEAL THE BASIS FOR ARRIVING AT SUCH SATISFACTION THAT THE INGREDIENTS AND THE LEGAL REQUIREMENTS AS CONTEMPLATED UNDER SECTION 132 [1] [A], [B], [E] OF THE ACT HAS BEEN SATISFIED OR N OT. SINCE, THE SO CALLED SATISFACTION RECORDED BY THE HON'BLE DIRECTOR OF INCOME - TAX [INV], BANGALORE DOES NOT STAND THE TEST OF LAW SINCE THERE IS NO INFORMATION AS REGARD TO THE ALLEGATION THAT THERE IS AN ESCAPEMENT OF INCOME WHICH WARRANTS AN ACTION O F SEARCH UNDER SECTION 132 OF THE ACT ON THE ASSESSEE. IT IS SUBMITTED THAT SINCE THE LEARNED AUTHORITY HAS FAILED TO RECORD ANY SATISFACTION AND SO CALLED SATISFACTION RECORDED IS NO IT(SS)A NOS. 86 TO 89/PAN/2016 8 SATISFACTION AT ALL. THERE IS NOTHING IN THE SATISFACTION GIVEN TO EVEN REMOTELY INDICATE THAT THERE IS REASON TO BELIEVE AS ENVISAGED IN THE PROVISIONS OF SECTION 132 OF THE ACT. REASON TO BELIEVE HAS BEEN EXTENSIVELY INTERPRETED UNDER THE PROVISIONS OF SECTION 148 OF THE ACT AND THERE IS A CONSENSUS IN JUDICIAL DECISIONS THA T THE PROCESS OF REASONING SHOULD BE EXPLICIT. IN THE INSTANT CASE THE SO CALLED SATISFACTION IS NEITHER REASON TO BELIEVE, NOR REASON TO SUSPECT AND IT IS MERELY A REPRODUCTION OF WARRANT AND WHAT INFORMATION HAS LAID BEFORE THE HON'BLE DIRECTOR OF INCOME - TAX [INV], BANGALORE IS NOT DISCERNIBLE. THE ASSESSEE HAS BEEN A VERY CONSCIOUS ASSESSEE AND FINDING THAT THE BOOKS WILL NOT BE PRODUCED IS PATENTLY NOT CORRECT AND PERVERSE SINCE THE ASSESSEE IN THE EARLIER ASSESSMENT YEARS AND ALSO DURING THE EARLIER SE ARCH CONDUCTED UNDER SECTION 132 OF THE ACT HAD PRODUCED ALL THE DOCUMENTS AND BOOKS TO THE THEN LEARNED ASSESSING OFFICER. THUS, THE VERY FOUNDATION THAT THE BOOKS WILL NOT BE PRODUCED AS STATED IN THE SO CALLED SATISFACTION IS PERVERSE AND DEVOID OF FACT UAL POSITION AND CONTRARY TO THE EVIDENCE ON RECORD AND EXFACIE FALSE AS THE ASSESSEE HAS ALREADY PRODUCED THE BOOKS IN ITS EARLIER PROCEEDING BEFORE THE EXECUTION OF WARRANT. IT IS FURTHER BROUGHT TO THE KIND NOTICE OF THIS HON'BLE TRIBUNAL THAT THE SO CA LLED SATISFACTION DOES NOT EVEN INDICATE THAT FOR WHICH YEAR THE ASSESSEE FAILED TO PRODUCE THE BOOKS. IT IS SUBMITTED THAT THE LEARNED ASSESSING OFFICER IN THE REMAND REPORT HAS STATED THAT BASED ON THE FACTS PRESENT BEFORE HIM THAT THE ASSESSEE WOULD NOT PRODUCE THE BOOKS OF ACCOUNT IS A PERVERSE STATEMENT AS THE BOOKS BEEN PRODUCED BY THE ASSESSEE AS AND WHEN ASKED IN THE EARLIER PROCEEDINGS WITH THE DEPARTMENT. IT IS FURTHER SUBMITTED AND BROUGHT TO THIS HON'BLE TRIBUNAL'S KIND NOTICE THAT THE BOOKS OF ACCOUNTS HAVE NOT BEEN SEIZED WHICH IS EVIDENCED FROM PANCHANAMA FORTIFIES THE CONTENTION OF THE ASSESSEE THAT THE SAID SO CALLED SATISFACTION IS VOID OF MERITS AND NOT FACTUALLY CORRECT. WHEREFORE IT IS HUMBLY SUBMITTED THAT, THE SATISFACTION RECORDED IS NOT IN ACCORDANCE WITH LAW AND CONSEQUENT PROCEEDINGS ARE BAD IN LAW AND VOID AB INTIO. IT IS HUMBLY PRAYED THAT THE IMPUGNED ORDERS PASSED UNDER SECTION 143[3] R.W.S. 153A OF THE ACT IN THE CASE OF THE ASSESSEE IS BAD IN LAW AND VOID - AB - INTO. IT IS FURTHE R SUBMITTED THAT THE LEARNED ASSESSING OFFICER HAS TO RECORD HIS SATISFACTION AS REGARD TO THE INFERENCE OF LIABILITY BEFORE THE ISSUANCE OF NOTICE UNDER SECTION 153A, AS PER THE PARITY OF REASONING OF THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN TH E CASE OF CIT VS. IBC KNOWLEDGE PARK, REPORTED IN 385 ITR 346. THE RELEVANT PORTION OF THE DECISION OF THE HON'BLE COURT IS REPRODUCED HEREUNDER: (I) PARA 49 OF THE ORDER: 'ON A CONJOINT READING OF THE AFORESAID PROVISIONS, IT BECOMES CLEAR THAT A SEARCH C AN TAKE PLACE ONLY WHEN A CONCERNED OFFICER HAS INFORMATION AND REASON TO BELIEVE THAT ANY PERSON IS IN POSSESSION OF ANY VALUABLE ASSETS, WHICH HAS NOT BEEN OR WOULD NOT BE DISCLOSED UNDER THE ACT. IN SUCH A CASE, A SEARCH CAN TAKE PLACE. FOLLOWING THE SE ARCH, IF ANY BOOKS OF ACCOUNT, OTHER DOCUMENTS, ANY VALUABLE ASSETS IS OR ARE FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH, THEN THE BOOKS OF ACCOUNT OR IT(SS)A NOS. 86 TO 89/PAN/2016 9 OTHER DOCUMENTS OR VALUABLE ASSETS COULD BE SEIZED. UNDER SECTION 153A, T HE SATISFACTION REGARDING AN INFERENCE OF LIABILITY MUST BE RECORDED. THE ASSESSING OFFICER HAS TO ISSUE NOTICE TO THE ASSESSEE I.E., THE PERSON SEARCHED FOR THE PURPOSE OF ASSESSMENT OR RE - ASSESSMENT OF THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED. SECTION 153C AS ALREADY NOTED, DEALS WITH ASSESSMENT OF INCOME OF ANY OTHER PERSON, WHEN THE ASSESSING OFFICER IS SATISFIED THAT THE BOOKS OF ACCOUNT OR DOCUMEN TS OR VALUABLE ASSETS SEIZED OR REQUISITIONED HAVE A BEARING ON THE DETERMINATION OF THE TOTAL INCOME OF SUCH OTHER PERSON FOR THE RELEVANT ASSESSMENT YEAR OR YEARS REFERRED TO UNDER SUB - SECTION(1) OF SECTION 153A OF THE ACT. IN SUCH A CASE, THE ASSESSING OFFICER HAS TO ISSUE NOTICE TO ASSESS OR RE - ASSESS INCOME OF OTHER PERSON UNDER SECTION 153A OF THE ACT. THUS, THE FACT THAT SEARCH HAS BEEN CONDUCTED WOULD NOT JUSTIFY ISSUANCE OF NOTICE UNDER SECTION 153A. IF IT IS ONLY DURING A VALID SEARCH WHEN CERTAI N INCRIMINATING MATERIALS ARE DETECTED, NOTICE COULD BE ISSUED.' (II) PARA 50 OF THE ORDER: 'CHAPTER XIV - B WHICH DEALS WITH SPECIAL PROCEDURE FOR ASSESSMENT OF SEARCH CASES DEALS WITH UNDISCLOSED INCOME AS A RESULT OF SEARCH, THE COMPUTATION THEREOF AND S UCH OTHER PROVISIONS. UNDISCLOSED INCOME IS DEFINED RN CLAUSE (B) OF SECTION 153B. UNDISCLOSED INCOME INCLUDES MONEY, BULLION OR OTHER VALUABLE ASSETS. IT IS ONLY WHEN THE CONCERNED OFFICER HAS INFORMATION ABOUT THE SAME AND HAS REASON TO BETIEVE THAT THE SAID VALUABLE ASSETS HAS NOT BEEN OR WOULD NOT BE DISCLOSED WOULD GIVE JURISDICTION TO THE OFFICER AUTHORIZED TO CONDUCT A SEARCH OPERATION. THEREFORE, THE OBJECT AND PURPOSE OF A SEARCH IS TO DETECT UNDISCLOSED INCOME. AS DEFINED UNDER CLAUSE (B) OF SECTI ON 158B OF THE ACT, IT IS ONLY WHEN THE UNDISCLOSED INCOME IS DETECTED IN A SEARCH OPERATION THAT THERE WOULD BE ASSESSMENT OR RE - ASSESSMENT, UNDER THE PROVISIONS OF CHAPTER XIV - B OF THE ACT, OF THE PERSON WHO IS PRESUMED TO BE IN POSSESSION OF THE UNDISCL OSED INCOME ................................ . ' IN VIEW OF THE ABOVE, IT IS EVIDENT THAT THAT A VALID SEARCH IS SINE QUA NON FOR INITIATION OF PROCEEDINGS UNDER SECTION 153A OF THE ACT AND THE SATISFACTION REGARDING AN INFERENCE OF LIABILITY MUST BE RECORDED BEFORE THE ISSUANCE OF NOTICE UNDER SECTION 153A OF THE ACT, WHICH HAS NOT BEEN SATISFIED IN THE CASE INSTANT AND THUS THE IMPUGNED ORDERS OF ASSESSMENT PASSED BY THE LEARNED ASSESSING OFFICER UNDER SECTION 143[3] R.W.S. 153A OF THE ACT DO NOT STAND THE TEST OF LAW. 8. THE WARRANT ISSUED PARTAKES THE NATURE & CHARACTER OF A JOINT WARRANT & ANY ASSESSMENT PURSUANT TO A SEARCH CONDUCTED BASED ON THIS WARRANT HAS TO BE MADE ON AN AOP CONSISTING OF THE PERSONS WHOSE NAMES ARE MENTIONED IN THE WARRANT & THUS THE ENTIRE PROCEEDING IN THE CASE OF THIS ASSESSEE M/S. TIMBLO PRIVATE LIMITED IS BAD IN LAW, VOID AB INITIO. THIS CONTENTION IS STRONGLY IT(SS)A NOS. 86 TO 89/PAN/2016 10 URGED AS SECTION 292 CC WAS NOT PRESENT IN THE STATUTE ON THE DATE THE WARRANT WAS AUTHORISED, DESPITE THE FACT THAT THE SAID SECTION WAS INTRODUCED W.R.E .F 01/04/1976. 9. IN VIEW OF THE ABOVE SUBMISSIONS THE ASSESSEE HUMBLY PRAY BEFORE THIS HON'BLE TRIBUNAL TO HOLD THAT THE NOTICE ISSUED UNDER SECTION 153A OF THE ACT IN THE CASE OF THE ASSESSEE IS BAD IN LAW AND ILLEGAL AND CONSEQUENTLY THE ORDERS PASSED UNDE R SECTION 153A R.W.S. 143[3] OF THE ACT FOR THE ABOVE MENTIONED ASSESSMENT YEARS, ON AN ILLEGAL SEARCH WHICH WAS NOT EXECUTED ON THE ASSESSEE REQUIRES TO BE CANCELLED, FOR THE ADVANCEMENT OF SUBSTANTIAL CAUSE OF JUSTICE. 10. DEPARTMENT APPEAL IN ITA NO. 89/PNJ /2016 FOR AY. 2010 - 11: [I] IT IS SUBMITTED THAT THE DEPARTMENT HAS PREFERRED THE ABOVE REFERRED APPEAL BEFORE THIS HON'BLE TRIBUNAL CHALLENGING THE DELETION OF THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER UNDER SECTION 69C OF THE ACT AMOUNTING TO OF RS . 2,00,00,000/ - AND RS. 2,28,54,314/ - . IT IS SUBMITTED THAT THE REASONING AND FINDING GIVEN BY THE LEARNED CIT[A] IS JUST AND PROPER AND IT IS PRAYED THAT THE APPEAL OF THE DEPARTMENT MAY KINDLY BE DELETED IN THE INTEREST OF JUSTICE AND EQUITY. THE FINDING S OF THE LEARNED CIT [A] ARE AT PAGES 16 8T 17 AT PARAS 7.12 TO 7.14. [II] . IT IS SUBMITTED THAT THE DURING THE COURSE OF ALLEGED SEARCH CONDUCTED IN THE CASE OF THE ASSESSEE A DAIRY PERTAINING TO THE YEAR 2002 WAS SEIZED [A COPY OF THE SAID DAIRY IS PLACED AT PAGE 29 TO 33 OF THE PAPER BOOK]. IN THAT SAID DAIRY CERTAIN SCRIBBLING WERE MADE BY THE ASSESSEE AS REGARD TO CERTAIN EXPENDITURE INCURRED BY THE ASSESSEE. THE SAID ENTRY IN THE DAIRY SEIZED WAS CONFRONTED BY THE LEARNED ASSESSING OFFICER TO THE ASSESSEE THAT AS PER THE SAID SEIZED DAIRY A SUM OF RS. 6,22,64,000/ - PAYMENTS ARE APPEARING AND SOUGHT AN EXPLANATION. [III] . THE ASSESSEE DURING THE COURSE OF RECORDING OF STATEMENT UNDER 133A OF THE ACT ON 21/04/2014 AND ON STATEMENT RECORDED ON 01/06/2010 HAD EMPHA TICALLY STATED AND SUBMITTED THAT THE SUMMARY OF THE PAYMENTS MADE ARE PRIOR TO 1995. THE 11. ASSESSEE IN ITS RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2007 - 08 HAD OFFERED A SUM OF 2,28,54,314/ - AS UNEXPLAINED EXPENDITURE WHICH WAS NOT SUPPORTED WITH THE EVIDENCE, IN THE RETURN OF INCOME FILED IN THE FOLLOWING GROUP ENTITIES: M/S. TIMBLO PRIVATE LIMITED RS. 76,09,624/ - M/S. TIMBLO ENTERPRISES RS. 1,44,96,000/ - M/S. TIMBLO MINERALS [P] LTD., RS. 7.48.690/ - TOTAL AMOUNT RS. 2 ,28,54.314/ - [IV]. IT IS SUBMITTED THAT THE SEIZED DAIRY WHICH CONTAINS SCRIBBLING WHICH SUGGESTED PAYMENT MADE TO VARIOUS PEOPLE AGGREGATING TO RS. 6,22,64,000/ - . THE ASSESSEE HAD EXPLAINED THAT OUT OF THE SAID AMOUNT OF RS. 6,22,64,000/ - A SUM OF RS. 2 CRORE WHICH WAS SCRIBBLED AS 'LEGAL - 2CR' WAS NOT A PAYMENT AND THE SAME WAS ONLY AN ESTIMATE MADE BY IT(SS)A NOS. 86 TO 89/PAN/2016 11 THE ASSESSEE AS REGARD TO THE LIKELY EXPENDITURE THAT MIGHT BE INCURRING BY THE ASSESSEE IN THE FUTURE CONSIDERING VARIOUS LEGAL ISSUES THAT THE ASSESSEE WAS TO MEET IN ITS REGULAR BUSINESS ACTIVITY. THIS ASPECT WAS CLARIFIED BY THE ASSESSEE ON VARIOUS OCCASIONS BUT HOWEVER THE LEARNED ASSESSING OFFICER FAILED TO APPRECIATE THE SAME AND ERRONEOUSLY MADE THE ADDITION OF RS. 2 CRORES WHICH BEING AN ESTIMATIO N OUGHT NOT TO HAVE BEEN CONSIDERED BY THE LEARNED ASSESSING OFFICER. FURTHER, IF AT ALL ANY UNEXPLAINED EXPENDITURE TO BE CONSIDERED BY THE LEARNED ASSESSING OFFICER A SUM OF RS. 4,22,64,000/ - ALONE SHOULD HAVE BEEN CONSIDERED. TO THIS EFFECT THE ASSESSEE HAD ALSO FILED AN AFFIDAVIT EXPLAINING THESE FACTS, WHICH WAS NOT PROPERLY APPRECIATED BY THE LEARNED ASSESSING OFFICER. THE LEARNED ASSESSING OFFICER REJECTED THE EXPLANATION OFFERED BY THE ASSESSEE PURELY BASED ON SURMISES AND CONJECTURES AND HIS OWN IM AGINATION. [V]. IT IS SUBMITTED FURTHER THAT THE ASSESSEE HAD IN THE EARLIER YEAR I.E. FOR THE ASSESSMENT YEAR 2007 - 08 HAD DISCLOSED AND DECLARED A SUM OF RS. 76,09,624/ - IN M/S. TIMBLO PRIVATE LIMITED [PLEASE REFER PAGE NO. 66 OF THE PAPER BOOK 'UNDER TH E HEAD 'EXPENSES NOT CLAIMED' AND PAGE 88 AND PAGE 90 BEING NOTES TO ACCOUNTS AT ITEM 4] AND ANOTHER SUM OF RS. 7,48,690/ - WAS DECLARED IN THE HANDS OF M/S. TIMBLO MINERALS PRIVATE LIMITED [PLEASE REFER PAGE NO. 173 'UNDER SUNDRY EXPENSES ' AND PAGE 210 OF THE PAPER BOOK] AND FURTHER SUM OF RS. 1,44,96,000/ - WAS OFFERED IN THE HANDS OF TIMBLO ENTERPRISE AS WITHDRAWAL FROM CAPITAL ACCOUNT [PLEASE REFER PAGE NO. 171 G OF THE PAPER BOOK 'CAPITAL ACCOUNT']. THE SAID DISCLOSURE TO THE EXTENT OF RS. 2,28,54,314/ - WAS DECLARED BY THE ASSESSEE DURING THE EARLIER SEARCH AND SEIZURE OPERATION CONDUCTED ON THE ASSESSEE ON 15/11/2006, WHEREIN THE SEARCH PARTY HAD FOUND SHORTAGE OF CASH ON HAND TO THE EXTENT OF RS. 2,28,54,314/ - . THIS DEFICIT WAS RECONCILED AND WAS EXPLAI NED THAT THE SAID AMOUNT OF RS. 2,28,54,314/ - IN AGGREGATE HAVE BEEN OFFERED IN THE RESPECTIVE HANDS AS MENTIONED ABOVE IN THE RETURN OF INCOME FOR THE YEAR ENDED 31/03/2007 AND THE SAME HAS NOT BEEN CLAIMED BY THE ASSESSEE AS AN ALLOWABLE EXPENDITURE. [VI] . THE ASSESSEE CONSIDERING THESE FACTS AND TO AVOID PROTRACTED LITIGATION THE ASSESSEE OFFERED A SUM OF RS. 1,94,09,686/ - [ RS. 6,22,64,000/ - MINUS RS. 2,28,54,314/ - AND MINUS RS. 2 CRORE] AND THE SAME WAS OFFERED TO TAX BY THE ASSESSEE [PLEASE REFER PAGE NO . 62 OF THE PAPER BOOK UNDER THE HEAD 'UNEXPLAINED EXPENSES']. THE ASSESSEE FILED AN AFFIDAVIT DATED 11/12/2012 WHICH WAS CLARIFIED AS REGARD TO THE POSITION AND FACTS OF THE CASE, WHICH WAS NOT PROPERLY APPRECIATED BY THE LEARNED ASSESSING OFFICER [PLEASE REFER PAGE NO. 34 TO 37 OF THE PAPER BOOK]. [VII] THE VERY PRE CONDITION FOR THE PURPOSE OF INVOKING THE PROVISIONS OF SECTION 69C IS THAT THE ASSESSEE HAS TO FIRSTLY INCUR EXPENDITURE AND HAVING INCURRED THE SAME IS UNABLE TO OFFER PROPER IT(SS)A NOS. 86 TO 89/PAN/2016 12 FIT SATISFACTORY EXP LANATION ABOUT THE SOURCE FOR INCURRING SUCH EXPENDITURE ST IT IS ONLY THEN THAT THE PROVISIONS OF SECTION 69C OF THE ACT CAN BE INVOKED AND THE SAID EXPENDITURE CAN BE BROUGHT TO TAX AS INCOME UNDER THE PROVISIONS OF SECTION 69C OF THE ACT. [VIII] IT IS SUBMITT ED THAT THE PHRASEOLOGY IN SECTION 69C OF THE ACT GOES TO SHOW THAT BEFORE INVOKING THE PROVISIONS OF SECTION 69C OF THE ACT IT MUST BE CONCLUSIVELY ESTABLISHED BY EVIDENCE OR MATERIAL THAT THE AMOUNT IS ACTUALLY SPENT FIT THAT SUCH AMOUNT SPENT IS AN EXPE NDITURE INCURRED BY THE ASSESSEE AND THAT THE SOURCE FOR THE SAME IS NOT SATISFACTORILY PROVEN OR EXPLAINED. THUS, THE PRIMARY ONUS IS ON THE REVENUE. IN THE INSTANT CASE IT IS SUBMITTED THAT THE ASSESSEE HAS FROM THE VERY BEGINNING CONTENDING THAT THE SAI D AMOUNT OF RS. 2 CRORE MENTIONED IN THE SEIZED DAIRY IS ONLY AN ESTIMATE AND THE ASSESSEE HAS NOT INCURRED THE SAID EXPENDITURE. TO THIS EFFECT THE ASSESSEE HAD ALSO FILED AN AFFIDAVIT EXPLAINING THE SAME. [IX]. IN THE INSTANT CASE ALSO THE ASSESSEE DENI ES ITSELF THAT IT HAS NOT INCURRED ANY EXPENDITURE OF RS. 2 CRORE WHICH IS ONLY AN ESTIMATE, BUT CONSIDERED ERRONEOUSLY BY THE LEARNED ASSESSING OFFICER AS UNEXPLAINED EXPENDITURE. IT IS ALSO IMPORTANT TO NOTE THE FACT THAT THE SAID SEIZED DAIRY IS UNSIGNE D. FURTHER IT IS SUBMITTED THAT THE LEARNED ASSESSING OFFICER HAS NOT BROUGHT ANYTHING ON RECORD TO DEMONSTRATE THAT THE SAID ALLEGED EXPENDITURE OF RS. 2 CRORE HAS INDEED BEEN INCURRED BY THE ASSESSEE AND HAS NOT MADE ANY ENQUIRY AS REGARD TO THE VERACITY OF THE LOOSE AND DUMB PAPERS ON WHICH HE IS RELYING UPON. IN ALL CIRCUMSTANCES THE INFERENCE AND THE PRESUMPTION DRAWN BY THE LEARNED ASSESSING OFFICER IS TOTALLY NOT TENABLE IN LAW AND THE ADDITION OF RS. 2 CRORES REQUIRED DELETION WHICH THE LEARNED CIT[ A] HAS RIGHTLY DELETED THE SAID ADDITION MADE. [X] THE ASSESSEE PLACES RELIANCE ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. LUBTEC INDIA LTD., REPORTED IN 311 ITR 175. WHEREIN THE HON'BLE COURT HAS HELD THAT 'IT IS QUITE CLEAR TH AT WHAT IS POSTULATED IN SECTION 69C OF THE INCOME - TAX ACT, 1961 IS THAT FIRST OF ALL THE ASSESSEE MUST HAVE INCURRED THAT EXPENDITURE AND THEREAFTER, IF THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE SOURCE OF SUCH EXPENDITURE IS NOT FOUND SATISFACTORY BY THE ASSESSING OFFICER, THE AMOUNT MAY BE ADDED TO HIS INCOME. [XI] THE ASSESSEE FURTHER PLACES RELIANCE ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANIL BHALLA, REPORTED IN 322 ITR 191, WHEREIN THE HON'BLE COURT HAS HELD THA T IF THERE IS NO CORROBORATIVE EVIDENCE FOUND BY THE ASSESSING OFFICER AS REGARD TO THE EXPENDITURE INCURRED BY THE ASSESSEE THEN THE ADDITION UNDER SECTION 69C OF THE ACT IS NOT CORRECT. FURTHER THE HON'BLE COURT CONFIRMING THE ORDER OF THE CIT[A] AND TRI BUNAL HAS CONFIRMED THE FINDINGS THAT TO SUPPORT THE ADDITION ON ACCOUNT OF UNEXPLAINED EXPENDITURE ON THE BASIS OF JOTTINGS ON A LOOSE SHEET OF PAPER, IT IS NECESSARY TO ESTABLISH THAT THE NOTINGS REPRESENT UNACCOUNTED TRANSACTION, WITH THE HELP OF INDEPE NDENT CORROBORATIVE EVIDENCE. IN THIS CASE APART FROM THE NOTINGS, ON THE IT(SS)A NOS. 86 TO 89/PAN/2016 13 SAID PAPER, NO OTHER INDEPENDENT MATERIAL OR EVIDENCE HAS BEEN BROUGHT ON RECORD. [XII] IT IS FURTHER SUBMITTED THAT THE ASSESSEE HAD AFFIDAVIT FILED BY THE ASSESSEE CANNOT BE BRUSH ED ASIDE AND THE AFFIDAVIT FILED BY THE ASSESSEE HAS TO BE CONSIDERED AS A VALID PIECE OF EVIDENCE AND IT CANNOT BE DISCARDED. RELIANCE IS PLACED ON THE PARITY OF REASONING AND THE PRINCIPLE LAID DOWN IN THE DECISION OF THE HON'BLE APEX COURT M THE CASE ME HTA PARIKH & CO., VS. CIT, 30 ITR 181 AND ALSO ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF M/S. LUNAR DIAMONDS REPORTED IN 281 ITR [XIII] . THUS, THE ASSESSEE HUMBLY SUBMITS THAT THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER OF RS. 2 CROR E UNDER THE PROVISIONS OF SECTION 69C AS UNEXPLAINED EXPENDITURE IS NOT WARRANTED AND THE ADDITIONS MADE DESERVES TO BE DELETED FOR THE ADVANCEMENT OF SUBSTANTIAL CAUSE OF JUSTICE. [XIV] . IT IS FURTHER PRAYED THAT SINCE AN AMOUNT OF RS. 2,28,54,314/ - HAS BEEN OFFERED IN THE HANDS OF DIFFERENT ENTITIES OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2007 - 08 THE ADDITION OF THE SAME AMOUNT WHICH HAS SUFFERED TAX AND WHEREIN THE TAXES HAVING BEEN PAID AMOUNTS TO DOUBLE TAXATION. HENCE, THE LEARNED CIT[A] WAS JUSTIFIED IN DELETING THE ADDITION MADE AMOUNTING TO RS. 2,28,54,314/ - WHICH IS JUST AND PROPER. [XV] . IN VIEW OF THE ABOVE SUBMISSIONS THE ASSESSEE HUMBLY PRAY THAT THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER AMOUNTING TO RS. 4,22,64,000/ - AS UNEXPLAINED EXPENDITU RE UNDER SECTION 69C OF THE ACT, WHICH WAS RIGHTLY DELETED BY THE LEARNED CIT[A] REQUIRES TO BE CONFIRMED BY THIS HON'BLE TRIBUNAL AND DISMISS THE DEPARTMENT APPEAL FOR THE ADVANCEMENT OF SUBSTANTIAL CAUSE OF JUSTICE. 11. IN VIEW OF THE OVERALL SUBMISSION S MADE BY THE ASSESSEE ON THE LEGAL ISSUE FOR ALL THE A.Y'S I.E. 2006 - 07 TO 2010 - 11 AS WELL AS ON MERITS FOR THE A.Y. 2010 - 11, THE ASSESSEE HUMBLY PRAY BEFORE THIS HON'BLE TRIBUNAL TO ALLOW THE APPEALS OF THE ASSESSEE AND DISMISS THE APPEAL OF THE DEPARTME NT FOR THE A.Y. 2010 - 11 IN THE INTEREST OF JUSTICE AND EQUITY OR TO PASS ANY SUCH ORDERS AS THIS HON'BLE TRIBUNAL DEEM FIT AND PROPER IN THE INTEREST OF JUSTICE AND EQUITY. 4. ON THE OTHER HAND, LD. DR FOR THE REVENUE HAS DREW OUR ATTENTION AT PAGE 1 OF T HE PAPER BOOK, WHERE THE STATEMENT OF THE ASSESSEE WAS RECORDED DURING THE COURSE OF SURVEY ON 21.04.2010 WHICH READS AS UNDER : - IT(SS)A NOS. 86 TO 89/PAN/2016 14 THEREAFTER HE DREW OUR ATTENTION TO THE PAGE 5 OF THE PAPER BOOK WHERE THE STATEMENT OF SMT. RADHA S. TIMBLO WAS RECORDED DURING SEARCH AND IT WAS ANSWERED BY HER AS UNDER : - IT(SS)A NOS. 86 TO 89/PAN/2016 15 IT(SS)A NOS. 86 TO 89/PAN/2016 16 THE BASIS ON THE ABOVE STATEMENT, IT WAS SUBMITTED THAT SINCE THE SEARCH WAS CONDUCTED ON SMT. RADHA S. TIMBLO AND M/S TIMBLO PVT. LTD., MERELY NOT MENTIONING THE NAME OF THE ASSESSEE IN THE PANCHAN AMA IS NOT FATAL AS SMT. RADHA S. TIMBLO HERSELF HAD ACKNOWLEDGE THAT SHE IS THE MANAGING DIRECTOR OF M/S TIMBLO PVT. LTD.. IT WAS SUBMITTED THAT THE LEGAL GROUND RAISED BY THE ASSESSEE IS REQUIRED TO BE DISMISSED. 5. WE HAVE HEARD RIVAL CONTENTIONS OF TH E ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FROM THE PERUSAL OF THE STATEMENT RECORDED ON THE DATE OF THE SURVEY AND ALSO ON THE DATE OF SEARCH, IT IS ABUNDANTLY CLEAR THAT SMT. RADHA S. TIMBLO IS THE MANAGING DIRECTOR OF M/S TIMBLO PVT. LTD. ADMITTEDLY, THE SEARCH WARRANT WAS ISSUED AGAINST SMT. RADHA S. TIMBLO AND M/S TIMBLO PVT. LTD. IN OUR UNDERSTANDING SECTION 132(1) OF THE ACT CLEARLY STIPULATES ISSUANCE OF SEARCH WARRANT AGAINST WHOM THE SEARCH WAS CONDUCTED IN ACCORDANCE WITH LAW. IN TH E PRESENT CASE, THE SEARCH WAS CONDUCTED IN THE PREMISES OF THE ASSESSEE COMPANY WHICH IS DULY ADMITTED BY THE MANAGING DIRECTOR OF THE COMPANY AT THE TIME OF RECORDING OF HER STATEMENT. FURTHER FROM THE PAPER BOOK, WE ALSO FOUND THAT THE MANAGING DIRECTOR OF THE COMPANY DURING THE APPELLATE PROCEEDINGS FILED AN AFFIDAVIT AND IN THE AFFIDAVIT HE HAD STATED THAT SHE IS THE MANAGING DIRECTOR OF THE COMPANY AND THE DIARY WAS FOUND BELONGING TO THE ASSESSEE COMPANY. IN THE AFFIDAVIT, IT WAS MENTIONED AS UNDER : - AFFIDAVIT I, RADHA TIMBLO, WIFE OF LATE SATSH GURUDAS TIMBLO, AGED ABOUT 59 YEARS, NORMALLY RESIDING AT MARGAO GOA, PRESENTLY RESIDING AT BEHIND HOTEL MAJESTIC, PORVORIM BARDEZ, GOA, DO HEREBY SWEAR AND STATE ON OATH AS UNDER : IT(SS)A NOS. 86 TO 89/PAN/2016 17 I SAY THAT THE INCOME TAX AUTHORITIES CONDUCTED A SURVEY U/S 133A OF THE INCOME TAX ACT, WHICH WAS CONVERTED INTO SEARCH & SEIZURE OPERATION UNDER SECTION 132 OF THE INCOME TAX ACT 1961 ON THE PREMISES OF OUR COMPANY VIZ., TIMBLO PRIVATE LIMITED & MYSELF, ON THE 21 ST OF APRIL 2010 . IN ORDER TO PUT THE FACTS ON RECORD I SWEAR THIS AFFIDAVIT ON OATH AND STATE & SUBMIT AS UNDER: I AM ONE OF THE DIRECTORS OF M/S TIMBLO PRIVATE LIMITED, WITH ITS REGISTERED OFFICE AT KADAR MANZIL, P O BOX 34, OPP; HARI MANDIR, MARGAO GOA 403 601, (HERE IN AFTER REFERRED TO AS TPL') AND MANAGING DIRECTOR OF THE SAID COMPANY WITH 50% SHAREHOLDING IN THE SAID TPL. I FURTHER STATE THAT TPL IS ENTIRELY OWNED AND MANAGED BY ME & MY FAMILY MEMBERS. I AM ALSO ONE OF THE DIRECTORS OF M/S TIMBLO MINERALS PRIVATE LIMITED A COMPANY, HAVING ITS OFFICE AT KADAR MANZIL P O BOX 34 OPP: HARI MANDIR MARGAO GOA 403601 ( HEREINAFTER REFERRED TO AS TMPL'), WHICH IS ALSO ENTIRELY OWNED AND MANAGED BY ME & MY FAMILY MEMBERS. I SAY THAT TIMBLO ENTERPRISES IS A PROPRIETARY CONC ERN SOLELY OWNED BY ME. THE SAID TIMBLO ENTERPRISES IS HAVING ITS OFFICE AT KADAR MANZIL, P O BOX 34, OPP: HARI MANDIR, MARGAO GOA 403 601 (HEREIN AFTER REFERRED TO AS TE' FOR SHORT). THE SAID TE IS ENGAGED IN EXTRACTION, PROCESSING, TRADING & EXPORT OF MINE RAL ORE FOR LAST SEVERAL YEARS. AND THE BUSINESS INCOME FROM THE SAID TE IS OFFERED TO TAX BY ME IN MY INDIVIDUAL CAPACITY. THE SAID TE HAS BEEN CONVERTED INTO A PARTNERSHIP FIRM WITH EFFECT FROM 01.01.2011,BY INDUCTING MY CHILDREN AS PARTNERS, I BEING THE MANAGING PARTNER. I SAY THAT ALL THE ABOVE ENTITIES VIZ, TPL, TMPL, ME & TE (AS FIRM) ARE ASSESSED TO INCOME TAX BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, PANAJI, SECOND FLOOR, PUNDALIK NIWAS. RUA - DE - OUREM, PANAJI - GOA. I SAY & STA TE THAT DURING THE SEARCH ON THE 21.04.2010 THE SEARCH PARTY FOUND AND SEIZED A DIARY MARKED AS 'A/RT/8' INVENTORIED AS A BLACK 2002 DIARY. AND THE DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATIONS) PANAJI QUESTIONED ME ON THE CONTENTS OF THE SAID DIARY ON THE 10.06.2010. FIRST OF ALL I SAY AND SUBMIT THAT THE ENTRY OF VV 2CR...' IS NOT PAYMENT BUT A BUDGETED AMOUNT OR ESTIMATE OF LEGAL EXPENSES AS MENTIONED BY ME IN THE STATEMENT U/S 132(4) DATED 10.06.2012 BEFORE THE DY CIT(INV) AND ACCORDINGLY THE TOTAL AMOU NT SHALL BE READ AS RS,4,22,64,000/ - ONLY AND NOT AS RS,6,22,64,000/ - .IN THIS RESPECT I REPEAT AND REITERATE WHATEVER I HAVE STATED IN SAID STATEMENT U/S 132(4) DTD 10.06.2010 AS IF TRAVERSED IN TOTAL, AND IN REPLY I HAVE DECLARED/OFFERED FOR INCOME TAX RS , 1,94,09,686/ - AS 'UNEXPLAINED EXPENSES' FOR THE YEAR ENDED 31 - 03 - 2010 ( AY 2010 - 11) IN THE HANDS OF TIMBLO PRIVATE LIMITED. THE SAID AMOUNT WAS ARRIVED AT AS UNDER: IT(SS)A NOS. 86 TO 89/PAN/2016 18 TOTAL ENTRIES AMOUNTED TO AS ABOVE .. ..RS, 4,22,64,000/ - LESS: 1) AMOUNT CHARGED TO PR OFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31.03.2007 ( AY 2007 - 08) IN TPL AS 'UNSUPPORTED EXPENDITURE' AND NOT CLAIMED AS EXPENDITURE FOR IT PURPOSES. .. .......................... RS, 76,09,624/ - LESS: 2) AS WITHDRAWALS IN CAPITAL ACCOUNT IN TIMBLO ENTERPRISES FOR THE YEAR ENDED 31 - 03 - 2007 (AY 2007 - 08) AND NOT CLAIMEDAS ALLOWABLE EXPENDITURE FOR IT PURPOSES:.. .. RS, 1,44,96,000/ - LESS: 3) AMOUNT CHARGED TO PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31 - 03 - 2007 (AY 20&7 - 08) IN TMPL AND NOT CLAIMED AS ALLOWABLE EXPENDITURE FOR IT PURPOS ES:.. .. RS, 7,48,690/ - NET AMOUNT OFFERED AS 'UNEXPLAINED EXPENDITURE' RS, 1,94,09,686/ - I SAY AND SUBMIT THAT THERE HAS BEEN A SEARCH & SEIZURE OPERATION U/S 132 OF THE I T ACT ON THE PREMISES OF OUR GROUP OF COMPANIES & THE RESIDENTIAL PREMISES OF MYSE LF & OTHER FAMILY MEMBERS ON 15.11.2006 (HEREIN AFTER REFERRED TO AS THE SEARCH DATED 15.11.2006). ON THE DATE OF THE SAID SEARCH DATED 15.11.2006 THE SEARCH PARTY FOUND DEFICIT OF CASH ON HAND AS COMPARED TO THE BALANCE AS PER THE BOOKS OF ACCOUNTS. AFTER DUE RECONCILIATION OF THE ACTUAL BALANCE WITH THE BALANCE AS PER BOOKS OF ACCOUNTS, THE ABOVE AMOUNTS VIZ, RS,76,09,624/ - IN TPL, RS,7,48,690/ - IN TMPL & RS,1,44,96,000/ - IN TE (RS,2,28,54,314/ - IN AGGREGATE) WERE FOUND TO BE SHORT AND THE SAID SHORTAGE H AS BEEN ACCOUNTED AS EXPENSES UNSUPPORTED, IN THE ACCOUNTS FOR THE YEAR ENDED 31 - 03 - 2007, IN TPL & TMPL SAME HAS BEEN TREATED AS NOT BEING AN ALLOWABLE EXPENSE FOR INCOME TAX PURPOSES AND ACCORDINGLY ADDED BACK TO THE TAXABLE INCOME. AND IN TE (PROPRIETARY CONCERN) IT HAS BEEN SHOWN AS CAPITAL WITHDRAWAL BY ME. I SAY THAT ALL OF THE ABOVE SHORTAGE AMOUNTING TO RS 2,28,54,314/ - IN AGGREGATE, IS A RESULTING FIGURE AND IS ON ACCOUNT OF AND A PART OF THIS VERY UNEXPLAINED EXPENDITURE, WHICH HAS NOT BEEN ACCOUN TED, AND IS INCLUDED IN THE RS, 4,22,64,000/ - WHICH HAS BEEN SHOWN ABOVE. IT WILL BE NEXT TO IMPOSSIBLE TO SHOW A LINKAGE TO EACH OF EXPENDITURE WITH DATES OF THE AMOUNT PAID/SPENT, AND THEREFORE I SWEAR THIS AFFIDAVIT ON OATH TO SUBSTANTIATE MY STATEMENT AS TRUE, AND CORRECT . I SAY THAT STATEMENTS MADE HERE IN ABOVE ARE TRUE TO THE BEST OF MY KNOWLEDGE. SOLEMNLY AFFIRMED BY ME THIS 11TH DAY OF DECEMBER 2012 AT MARGAO, GOA SD/ - MARGAO GOA. RADHA. S. TTIMBLO 6. IN VIEW OF THE ABOVE, IT IS CLEAR THAT THE SEARCH WARRANT WAS CLEARLY ISSUED AGAINST THE ASSESSEE COMPANY AND, THEREFORE, THE ACTION ON THE IT(SS)A NOS. 86 TO 89/PAN/2016 19 PART OF THE REVENUE TO INITIATE THE SEARCH PROCEEDINGS AGAINST THE ASSESSEE COMPANY WAS IN ACCORDANCE WITH LAW. IN OUR VIEW, THE LD. CIT(A) HAS RIGHTLY REL IED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE MATTER OF MDLR RESORTS PVT. LTD VS. CIT 361 ITR 407 (DELHI), AND THEREFORE, WE DO NOT FIND ANY ERROR IN THE ORDER OF CIT(A) . 7. WITH REGARD TO THE SUBMISSION OF THE LD.AR THAT THE SEARCH WARRANT WAS REQUIRED TO BE RECEIVED BY SMT.RADHA S. TIMBLO IN HER INDIVIDUAL CAPACITY AS WELL AS IN THE CAPACITY OF MANAGING DIRECTOR AND ONLY ONE SIGNATURE APPEARS ON THE SEARCH WARRANT, WE ARE OF THE OPINION THAT IN THE COMPANIES ACT AND ALSO IN THE INCOME TAX ACT, THE MANAGING DIRECTOR OF THE COMPANY IS AN AUTHORISED OFFICER TO FILE THE PROCEEDING FOR AND ON BEHALF OF THE COMPANY AND IS ALSO ENTITLED TO RECEIVE THE DOCUMENT ON BEHALF OF THE COMPANY. ADMITTEDLY, IN HER STATEMENT, SMT. RADHA S. TIMBLO HAS CATEGORICAL LY MENTIONED THAT SHE IS MAKING STATEMENT IN HER INDIVIDUAL CAPACITY AND BEING THE MANAGING DIRECTOR OF M/S TIMBLO PVT. LTD.. ONCE THE MANAGING DIRECTOR OF THE COMPANY SAYS THAT THE SEARCH WAS CARRIED OUT IN THE PREMISES OF THE COMPANY, THE5REFORE, IT IS N OT OPTION FOR THE ASSESSEE TO TAKE DIAMETRICALLY OPPOSITE STAND STATING THAT NO SEARCH WAS CARRIED OUT IN THE PREMISES OF THE ASSESSEE COMPANY. WITH THE ABOVE OBSERVATIONS, WE FOUND THAT THE LEGAL GROUND RAISED BY THE ASSESSEE IN ALL THE APPEALS IS NOT MAI NTAINABLE. ACCORDINGLY, WE DISMISS ALL THE APPEALS OF THE ASSESSEE. IT(SS)A NOS. 86 TO 89/PAN/2016 20 8 . IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 / 10 / 2021. SD/ - SD/ - ( ) (DR. M ITHA LAL MEENA ) ( ) (LALIET KUMAR) / ACCOUNTANT MEMBER / JUDICIAL MEMBER /PANAJI ; DATED 06 /10 /202 1 PRAKASH KUMAR MISHRA, SR.P.S. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , /ITAT, PANAJI 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, PANJAJI 6. / GUARD FILE. //TRUE COPY//