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

ITSSA 9/MUM/2009

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9106 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-06-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 22-01-2010
• Assessment Year: misc
• Appeal Filed On: 22-01-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HEMANT J LAL
• Assessee Lawyers: K SHIVARAM
• Keywords: Income from undisclosed sources; Search and seizure; Principle of natural justice; Block assessment; Retraction
• Section: 132

Judgement Text

IT(SS)A NO.8 & 9/MUM/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI P M JAGTAP AM & SHRI R S PADVEKAR, JM IT(SS)A NO. 8/MUM/2009 (BLOCK PERIOD 1987-88 TO 1997-98 ) MR SHRI SURESH BABU G MALGE BABU GANPAT MALGE 1 SONAL APARTMENTS OPP: JOSHIWADA CHARI, THANE (W) MUMBAI 400 037 VS THE ASST COMMR OF INCOME TAX 19(3), MUMBAI (APPELLANT) (RESPONDENT) PAN AJTPM6883H IT(SS)A NO. 9/MUM/2009 (BLOCK PERIOD 1987-88 TO 1997-98 ) MRS SUSHILA SURESH MALGE 1 SONAL APARTMENTS OPP: JOSHIWADA CHARI, THANE (W) MUMBAI 400 037 VS THE ASST COMMR OF INCOME TAX 19(3), MUMBAI (APPELLANT) (RESPONDENT) PAN AJTPM6884A ASSESSEE BY: SHRI K SHIVARAM REVENUE BY: SHRI HEMANT J LAL O R D E R PER R S PADVEKAR: 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. THOUGH, THE APPEALS AR E IN RESPECT OF TWO DIFFERENCE ASSESSEES BUT AS THE FACTS ARE IDENTICAL ; THE ASSESSMENT PASSED BY IT(SS)A NO.8 & 9/MUM/2009 2 THE A.O ARE ALSO INTERLINKED WITH EACH OTHER AND HE NCE, BOTH THESE APPEALS ARE DISPOSED OFF BY THIS COMMON ORDER. 2 THE APPEAL IN IT(SS)A 8/MUM/2009 IN WHICH THE ASS ESSEE HAS TAKEN THE FOLLOWING GROUNDS: 1 . PRINCIPLE OF NATURAL JUSTICE VIOLATED: 1.1 THE LD ACIT ERRED IN NOT FOLLOWING THE DIRECTIO N OF THE HON ITAT PASSED VIDE ORDER DT 11.1.2008 WHEREIN SPECIFIC DIR ECTION WAS GIVEN TO PROVIDE COPY OF STATEMENT AND EVIDENCE TO THE AS SESSEE, THEREFORE, THE ORDER PASSED BY THE A.O IS BAD IN LAW LIABLE TO BE DISMISSED. 1.2 THE LD ACIT ERRED IN MAKING THE ADDITION OF RS. 1.50 CRORES UNDISCLOSED INCOME OF THE ASSESSEE WITHOUT PROVIDIN G THE COPY OF THE STATEMENT RECORDED U/S 132(4) DATED 14.7.1996 AND C OPIES OF PAPERS/DOCUMENT/STATEMENTS SEIZED FROM THE ASSESSEE , IN SPITE OF REQUEST MADE IN WRITING IN THE ASSESSMENT PROCEEDIN GS. 2. RETRACTION OF STATEMENTS: 2.1 THE LD ACIT ERRED IN MAKING THE ADDITION OF RS. 1.50 CRORES MERELY BASED ON STATEMENT RECORDED U/S 132(4) DATED 14.7.1996 WHICH WAS SUBSEQUENT RETRACTED AND CLARIFIED ON 17. 7.1996 BY THE ASSESSEE. 2.2 THE LD ACIT ACTION IS CONTRARY TO THE CBDT INST RUCTION NO.286/2/2003 IT(INV.) DT 10.3.2003. 3. ADDITION OF RS. 1.50 CRORES: 3.1 THE LD ACIT ERRED IN ESTIMATING UNDISCLOSED INC OME OF RS. 1.50 CRORES IGNORING THE DETAILS AND EXPLANATION FILED B Y THE ASSESSEE IN RESPECT OF BANK CREDIT ENTRIES AND CONFIRMATION OF LOANS OF VARIOUS PARTIES. 4. TREATING SMT SUSHILA MALGE(WIFE) AS BENAMIDAR. IT(SS)A NO.8 & 9/MUM/2009 3 4.1 THE LD ACIT ERRED IN TREATING THE ASSESSEES WI FE SMT SUSHILA MALGE AS BENAMIDAR AND ASSESSING THE INCOME SHOWN I N THE HAND OF WIFE AS INCOME F THE ASSESSEE. 4.2 THE LD ACIT FAILED TO APPRECIATE THAT SMT SUSHI LA MALGE IS ASSESSED TO TAX SINCE LAST MORE THAN 10 YEARS, MERE LY BECAUSE THE HUSBAND IS LOOKING INTO THE AFFAIRS OF THE BUSINESS OF THE WIFE IT CANNOT BE CONCLUDED THAT WIFE IS BENAMIDAR WITHOUT ANY MATERIAL ON RECORD. 2.1 IN IT(SS)A NO.9/MUM/2009, THE ASSESSEE HAS TAKE N THE FOLLOWING GROUNDS: 1. THE LD ACIT ERRED IN NOT FOLLOWING THE DIRECTIO N OF THE HON ITAT PASSED VIDE ORDER DATED 11.1.2008 WHEREIN SPECIFIC DIRECTION WAS GIVEN TO PROVIDE COPY OF STATEMENT AND EVIDENCE TO THE ASSESSEE, THEREFORE, THE ORDER PASSED BY THE A.O IS BAD IN LA W LIABLE TO BE DISMISSED. 2 THE LD ACIT FAILED TO APPRECIATE THAT NO ASSESSME NT CAN BE MADE ON PROTECTIVE BASIS IN THE BLOCK ASSESSMENT SCHEME THEREFORE THE ASSESSMENT ORDER IS BAD IN LAW. 3 THE LD ACIT ERRED IN TREATING THE ASSESSEE AS BEN AMIDAR OF SHRI SURESH MALGE WITHOUT APPRECIATING THAT THE 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 CARRIED ON AT THE BUSINESS AND RESIDENTIAL PREMISES OF THESE TWO ASSESSEES ON 13.7 .1996. SMT SUSHILA SURESH MALGE IS THE SPOUSE OF SHRI SURESH BABU G MA LGE. FURTHER, SURVEY ACTION U/S 133(A) WAS ALSO CARRIED OUT IN THEIR BUS INESS PREMISES ON 13.7.1996 AND 17.7.1996. IN CONSEQUENCE OF THE SEA RCH OPERATIONS, NOTICES IT(SS)A NO.8 & 9/MUM/2009 4 U/S 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 FIL E THE BLOCK RETURNS, BUT WERE REGULARLY ATTENDING BEFORE THE A.O AND FINALLY ON 30.7.1997, THE ASSESSEES FILED THEIR BLOCK RETURNS DECLARING THE UNDISCLOSED INCOME AT RS.9,32,740/- AND RS. 5,54,380/- IN RESPECT OF SHRI SURESH BABU G MALGE AND SMT SUSHILA SURESH MALGE RESPECTIVELY. THE A.O HAS GIVEN THE DETAILS IN RESPECT OF THEIR BUSINESS ACTIVITIES IN PARA 18 TO 22 OF THE ASSESSMENT ORDER. 3.2 IT WAS ALLEGED THAT THE ASSESSEE HAD MADE HUGE INVESTMENTS IN THE BUILDING CONSTRUCTIONS AND ALSO IN THE FILM INDUSTR Y. DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS, STATEMENT OF SHRI S URESH BABU G MALGE WAS RECORDED ON 14.7.1996 U/S 132(4) OF THE ACT. TH E REFERENCE OF THE SAID STATEMENT IS MADE IN PARA 43 OF THE ORIGINAL ASSESS MENT. THE A.O HAS NOTED THAT SHRI SURESH BABU G MALGE, IN THE STATE MENT GIVEN U/S 132(4) OF THE ACT, HAS OFFERED RS. 50 LACS FOR HIMSELF AND RS . 1 CRORE ON BEHALF OF HIS WIFE SMT SUSHILA SURESH MALGE AS THEIR UNDISCLOSED INCOME. THE A.O HAS REPRODUCED 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 BASI S OF DOCUMENTS DO YOU WANT TO ADMIT A CONCEALMENT OF INCOME AND EV ASION OF TAX FOR THE PERIOD RELEVANT TO THE CURRENT ASSESSMENT YEAR AND LAST FEW YEARS BY YOU AND YOUR WIFE. DO YOU WANT TO OFFER AN Y ADDITIONAL INCOME IN RESPECT OF YOURSELF AND YOUR WIFE VOLUNTA RILY 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; HOWEVER, CONSIDERING ALL THE FACTS AN D CIRCUMSTANCES OF THE CASE, I AM OFFERING RS. 50 LAKHS FOR MYSELF AND RS. 1 CRORE IN MY WIFES CASE WITHOUT COERCION, WITHOUT TORTURE, WE W ILL PAY THE TAXES IN DUE COURSE AND WE SHALL NOT RETRACT THE OFFER UNDER ANY CONDITION. I KEEP MY OPTION OPEN IF ANYTHING ON HIGHER SIDE, I S HALL OFFER MY IT(SS)A NO.8 & 9/MUM/2009 5 ADDITION INCOME IN RESPECT OF MYSELF AND WIFE AND P AY 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 BHAWAN, THE ASS ESSEE MODIFIED HIS STATEMENT/DECLARATION WHICH WAS GIVEN ON 14.7.1996 BY TAKING CONTENTION THAT IN RESPECT OF THE OFFER OF THE UNDISCLOSED INC OME, THE SAME SHOULD BE MODIFIED TO THE EXTENT OF THE EVIDENCE FOUND DURING THE COURSE OF SEARCH OPERATION. THE A.O HAS ALSO NOTED THAT THE ASSESSEE WROTE A LETTER DATED 30.7.96 TO THE ADIT (INV), HEAD QTRS CLARIFYING THA T HIS EARLIER LETTER DATED 17.7.96 WAS NOT A RETRACTION BUT ONLY A CLARIFICATI ON. THE A.O HAS ALSO PRODUCED THE PART OF THE LETTER IN THE ASSESSMENT O RDER. FINALLY, THE A.O PASSED THE ASSESSMENT ORDER BY DETERMINING THE TOTA L UNDISCLOSED INCOME OF THE ASSESSEE AT RS. 1.50 CRORES AND THE SAME WAS TR EATED AS THE INCOME OF SHRI SURESH BABU G MALGE AND SUBSTANTIVE ASSESSMEN T WAS MADE IN HIS HAND AND IN THE CASE OF SMT SUSHILA SURESH MALGE, S HE WAS TREATED AS BENAMIDAR OF SURESH BABU G MALGE AND WAS ASSESSED ACCORDINGLY. THE OPERATIVE PART OF THE ASSESSMENT ORDER READS AS UND ER: 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 AS RECEIPTS FOR THE PAYMENT AND ADVANC3ES RECEIVED THE PROFIT AND LOSS ACCOUNT AS W ELL AS THE BALANCE SHEET FILED FOR THE BLOCK PERIOD HAVE BEEN REJECTED AS NOT BEING A TRUE AND COMPLETE REFLECTION OF THE BUSINESS ACTIVITIES OF THE ASSESSEE. FURTHER, THE BANK DEPOSITS AND WITHDRAWALS BOTH BY CASH AS WELL AS CHEQUE CANNOT BE VERIFIED BECAUSE OF WANT OF BOOKS OF ACCOUNTS, SPECIALLY THE DAILY CASH BOOK. THUS, THE UNDISCLOSE D INCOME CANNOT BE ESTIMATED FROM THE P&L ACCOUNT FILED AND THEREFO RE, THE UNACCOUNTED INCOME OF 9,32,740/- SHOWN BY SHRI SURE SH MALGE AND OF RS. 5,54,380 SHOWN BY SMT SUSHILA MALGE CANNOT B E ACCEPTED. LOOKING INTO THE TOTALITY OF FACTS AND CIRCUMSTANC ES OF THE CASE I.E. THE NATURE OF THE BUSINESS AND VOLUME OF TURNOVER IN TH E CONSTRUCTION IT(SS)A NO.8 & 9/MUM/2009 6 ACTIVITY, LAND DEVELOPMENT, FILM PRODUCTION, FILM D ISTRIBUTION ETC., THE AMOUNT SURRENDERED BY THE ASSESSEE OF RS. 1.50 CROR E APPEARS TO BE A VERY FAIR ESTIMATE OF HIS OWN UNACCOUNTED INCOME, W HICH 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. THIS UNACCOU NTED INCOME INCLUDES THE UNDISCLOSED INCOME OF RS. 9,32,240/- SHOWN BY S HRI SURESH MALGE IN HIS BLOCK RETURN AS WELL AS THE UNDISCLOSED INCO ME OF RS. 5,54,380 SHOWN BY SMT SUSHILA MALGE IN HER BLOCK RETURN, WHI CH HAS ALREADY DISCUSSED ABOVE IS STATED TO BE A BENAMI OF SHRI SU RESH MALGE. THE TOTAL UNDISCLOSED INCOME AS DISCUSSED ABOVE IS RS. 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 OFFERE D BY THE ASSESSEE ON 14.7.96 IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT. 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 ASSESSEES BEFORE THE TRIBUNAL WAS THAT THE STATEMENT RECORDED BY THE SEARCH PARTY WAS NOT SUPPLIED TO THE ASSESSEE DESPITE THEIR REPEATED REQUESTS AND TH E A.O MADE THE ADDITION RELYING ON THE SAID STATEMENT. THE TRIBUNAL SET AS IDE THE ORDERS OF THE A.O IN BOTH THESE CASES AND RESTORED THE MATTER TO HIS FILE WITH THE DIRECTION TO RE-FRAME ASSESSMENT DE-NOVO AFTER SUPPLYING THE COP Y 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 TRIBUNAL DATED 1 1.1.2008 IS AS UNDER: 2. DURING THE COURSE OF HEARING OF THE APPEAL, THE LD COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION THE STATEMENT OF THE ASSESSEE SHRI SURESH BABU GANPAT MALGE WAS RECORDED DURING THE CO URSE OF THE SEARCH AND ON THE BASIS OF WHICH, THE ASSESSING OFF ICER HAD ESTIMATED A LUMPSUM INCOME OF RS. 1,50,00,000/- IN THE HANDS OF SURESH BABU GANPAT MALGE, THE HUSBAND OF THE OTHER ASSESSEE SMT IT(SS)A NO.8 & 9/MUM/2009 7 SUSHILA SURESH MALGE WITHOUT TAKING INTO ACCOUNT TH E FACT THAT VOLUNTARY DISCLOSURE MADE BY THE ASSESSEE, WAS LATE R ON RETRACTED. THE ASSESSING OFFICER HAS ALSO MADE AN ADDITION IN THE HANDS OF OTHER ASSESSEE SMT SUSHILA SURESH MALGE ON PROTECTI VE BASIS, ON THE BASIS OF THE STATEMENT OF HIS HUSBAND SHRI SURESH B ABU GANPAT MALGE. THE LD COUNSEL FOR THE ASSESSEE FURTHER INVI TED OUR ATTENTION TO THE FACT THAT THE STATEMENTS RECORDED BY THE SEARCH PARTY, WERE NOT SUPPLIED TO THE ASSESSEE DESPITE HIS REPEATED REQUE STS AND THE ASSESSING OFFICER MADE ADDITION RELYING UPON THE SA ME. EVEN TILL DATE, THE COPIES OF THE STATEMENTS WERE NOT SUPPLIE D. THE LD COUNSEL FOR THE ASSESSEE HAS FURTHER SUBMITTED THAT IN THE LIGHT OF THESE FACTS, THE MATTER SHOULD BE REMANDED BACK TO THE FILE OF T HE ASSESSING OFFICER WITH A DIRECTION TO SUPPLY THE COPY OF THE STATEMENT OF SRI SURESH BABY MALGE OR OTHER STATEMENT ON WHICH ASSES SING OFFICER INTEND TO RELY. 3. THIS PROPOSITION WAS NOT OBJECTED TO BY THE LD D R. 4. SINCE BOTH THE PARTIES HAVE AGGRIEVED FOR RESTOR ATION OF THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR RE-ADJUDIC ATION OF THE IMPUGNED ISSUES AFRESH, WE SET ASIDE THE ORDER OF THE ASSESS ING OFFICER IN BOTH THE CASES 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 OFFICER INTEND TO RELY FOR MAKING AN ADDITION AND AFTER AFFORDING AN OPPORTUNITY OF B EING HEARD TO THE ASSESSEE IN THE INTEREST OF JUSTICE 5 THE A.O PASSED THE FRESH ASSESSMENT ORDER U/S 158 BC (C) R.W.S 254 OF THE ACT ON 26.12.2008 AND AGAIN DETERMINED THE TOTA L UNDISCLOSED INCOME AT RS. 1.50 CRORES. THE OPERATIVE PART OF THE ORDER IS AS UNDER; 36. LOOKING INTO THE TOTALITY OF FACTS AND CIRCUMS TANCES OF THE CASE I.E. THE NATURE OF THE BUSINESS AND VOLUME OF TURNOVER, IN THE CONSTRUCTION ACTIVITY, LAND DEVELOPMENT, FILM PRODUCTION, FILM D ISTRIBUTION ETC., THE AMOUNT SURRENDERED BY THE ASSESSEE OF RS. 1.50 CROR E APPEARS TO BE A VERY FAIR ESTIMATE OF HIS OWN UNACCOUNTED INCOME, W HICH HE HAS ARRIVED AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES O F HIS BUSINESS. 37. HENCE, THE UNDISCLOSED INCOME OF THE ASSESSEE A S PER THE ABOVE DISCUSSION IS TAKEN AT RS. 1.50 CRORE. THIS UNACCOU NTED INCOME INCLUDES THE UNDISCLOSED INCOME OF RS. 9,32,740/- SHOWN BY S HRI SURESH MALGE IN HIS BLOCK RETURN AS WELL AS THE UNDISCLOSED INCO ME OF RS. 5,54,880/- IT(SS)A NO.8 & 9/MUM/2009 8 SHOWN BY SMT SUSHILA MALGE IN HER BLOCK RETURN WHIC H HAS ALREADY DISCUSSED ABOVE IS STATED TO BE A BENAMI OF SHRI SU RESH MALGE. 6 BEING AGGRIEVED BY THE ASSESSMENT ORDERS PASSED B Y THE A.O ON 26.12.2008, BOTH THESE ASSESSEES ARE IN APPEAL BEFO RE US. 7 WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIE S AND ALSO PERUSED THE RECORDS AVAILABLE BEFORE US. THE LD COUNSEL OF THE ASSESSEE VEHEMENTLY ARGUED THAT THE SECOND ROUND ASSESSMENT ORDER PASSE D BY THE A.O IS NOTHING BUT IT IS REPRINT OF THE FIRST ASSESSMENT O RDER DATED 31.7.1997. THE LD COUNSEL OF THE ASSESSEE VEHEMENTLY ASSAILED THE APPROACH OF THE A.O FOR NOT FURNISHING THE COPY OF THE STATEMENT RECORDED O N 14.7.1996. THE LD COUNSEL OF THE ASSESSEE REFERRED TO THE OPERATIVE P ART OF THE ASSESSMENT ORDER AND ARGUED THAT IN SPITE OF REPEATED REQUESTS , THE A.O DID NOT FURNISH THE COPY OF THE ALLEGED STATEMENT RECORDED U/S 132( 4), TO THE ASSESSEE IN WHICH AS PER THE A.O. THE ASSESSEE AGREED TO OFFER THE ALLEGED UNDISCLOSED INCOME OF RS. 1.50 CRORES. THE LD COUNSEL OF THE A SSESSEE REFERRED TO THE COPY OF THE LETTER ADDRESSED TO THE ADIT(INV) CIR.1 9(3), MUMBAI DATED 12.12.2008, COPY OF WHICH IS PLACED AT PAGE 292 OF THE PAPER BOOK AND SUBMITTED THAT IN THE SECOND ROUND OF THE ASSESSMEN T PROCEEDINGS, SPECIFIC REQUEST WAS MADE TO THE A.O FOR SUPPLYING THE COPY OF THE STATEMENT RECORDED ON OATH U/S 132(4) OF THE ACT ON 13 & 14TH JULY 1996. 7.1 IT IS ARGUED THAT THE A.O, CONVENIENTLY DISREGA RDED THE REQUEST OF THE ASSESSEE AND MERELY GIVEN THE STATEMENT RECORDED ON 25.7.96 IN DELHI. THE LD COUNSEL OF THE ASSESSEE TOOK US TO THE OPERATIVE PART OF THE 1 ST ROUND AND 2 ND ROUND OF THE ASSESSMENT ORDERS AND ARGUED THAT TH E A.O HAS RELIED ON THE ALLEGED OFFER MADE BY THE ASSESSEE IN THE STATE MENT GIVEN U/S 132(4) DURING THE COURSE OF SEARCH AND SEIZER OPERATIONS O N 14.7.96. IT IS FURTHER ARGUED THAT THE TRIBUNAL HAS GIVEN A SPECIFIC DIREC TION TO THE A.O FOR IT(SS)A NO.8 & 9/MUM/2009 9 FURNISHING THE COPY OF THE STATEMENT, IF THE A.O DE SIRED TO RELY ON THE SAME. IT IS FURTHER ARGUED THAT IN SPITE OF THE SPECIFIC DIRECTIONS OF THE TRIBUNAL, THE A.O DID NOT BOTHER TO COMPLY WITH THE SAME AND IT I S A SERIOUS ACT OF JUDICIAL INDISCIPLINE. THE LD COUNSEL OF THE ASSESSEE RELIE D ON THE FOLLOWING PRECEDENTS: (I) BANK OF BARODA V. H.C. SHRIVATSAVA( 256 ITR 385 ) (II) NICCO CORPORATION LTD. V. CIT (251 ITR 791) (III) AGRAWAL WAREHOUSING AND LEASING LTD. V. CIT (257 IT R 235) 7.2 HE FURTHER PLEADED THAT THERE IS A GROSS VIOLAT ION OF PRINCIPLES OF NATURAL JUSTICE AND HENCE, THE ASSESSMENT ORDER PAS SED BY THE A.O DATED 26.12.2008 DESERVES TO THE QUASHED. FOR THE SAID PROPOSITION, HE RELIED ON THE FOLLOWING PRECEDENTS: (I) KISHINCHAND CHELLARAM V. CIT (125 ITR 713) (II) CIT VS RAJESH KUMAR (306 ITR 27) (III) IN THE CASE OF CIT VS M/S KUKREJA DEV CORPON IN ITA NO.4892/MUM/09 DT 29.7.2005 WE HAVE ALSO HEARD THE LD DR. 8 IN THE BACKGROUND OF THE ABOVE FACTS OF THESE CAS ES, IT IS SEEN THAT IN THE FIRST ROUND OF APPEAL, THE TRIBUNAL HAS GIVEN S PECIFIC DIRECTIONS TO THE A.O WHILE SETTING ASIDE THE ASSESSMENT ORDERS FOR S UPPLYING THE COPIES OF THE STATEMENTS AND EVIDENCES ON WHICH THE A.O INTENDED TO RELY FOR MAKING THE ADDITIONS. THE A.O DID NOT GIVE FULL EFFECT TO THE ORDER OF THE TRIBUNAL AND PASSED THE FRESH ASSESSMENT ORDER DATED 26.12.2008 AND AGAIN DETERMINED THE UNDISCLOSED INCOME OF THE ASSESEEES AT RS. 1.50 CRORES. 9 ADMITTEDLY, THE DETERMINATION OF THE 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 OPERATI ONS; THOUGH LENGTHY IT(SS)A NO.8 & 9/MUM/2009 10 DISCUSSION HAS BEEN MADE BY THE A.O IN RESPECT OF T HE BUSINESS AFFAIRS AND THEIR INVESTMENTS OF BOTH THESE ASSESSEES. 9.1 IN PARA 31, THE A.O HAS REFERRED TO THE STATEME NT OF SHRI SURESH BABU G MALGE RECORDED U/S 132(4) OF THE ACT ON 14.7.96 I N WHICH SHRI SURESH BABU G MALGE ALLEGEDLY AGREED TO SURRENDER RS. 1.50 CRORES AS UNDISCLOSED INCOME/CONCEALED INCOME. THE A.O HAS FURTHER DISCUS SED THE ASSESSEES LETTER DATED 17.7.96, WHICH WAS ADDRESSED TO DDIT ( INV) HEAD QTRS., MUMBAI AND ALSO LETTER DATED 30.7.96, WHICH WAS ADDRESSED TO THE ADIT(INV) HEAD QTRS. 9.2 IN PARA 32 OF THE ASSESSMENT ORDER REPRODUCING THE PART OF THE ASSESSEES LETTER DATED 30.7.96. IN PARA 33, THE A. O HAS OBSERVED THAT AFTER CONSIDERING THE SAID CORRESPONDENCE, IT IS CLEAR TH AT THE ASSESSEE HAS NOT RETRACTED HIS SURRENDER. THE A.O HAS FURTHER DISCUS SED THE SANCTITY OF THE STATEMENT GIVEN DURING THE COURSE OF SEARCH AND IT S BINDING NATURE IN PARA 34 OF THE ORDER. 9.3 FINALLY, IN PARA 36 OF THE ASSESSMENT ORDER, TH E A.O MADE REFERENCE TO THE ALLEGED SURRENDER/OFFER MADE BY THE ASSESSEE OF RS. 1.50 CRORES AND ACCEPTED THE SAME BY STATING THAT THE AMOUNT SURREN DERED BY THE ASSESSEE OF RS. 1.50 CRORES APPEARS TO BE FROM A VERY FAIR E STIMATE OF HIS OWN UNACCOUNTED INCOME. 10 IN SUM AND SUBSTANCE, THE A.O RELIED ON THE ALLE GED OFFER MADE BY THE ASSESSEE IN THE STATEMENT GIVEN U/S 132(4) ON 14.7. 1996. AS PER THE RECORDS BEFORE US, THE ASSESSEE HAS FILED AN APPLIC ATION DATED 12.12.2008 (PAGE 292 OF THE PAPER BOOK) TO THE A.O. MAKING REQ UEST FOR FURNISHING COPY OF THE STATEMENT BUT THE A.O SAT ON SAID APPLICATIO N AND DID NOT GIVE THE COPY OF THE SAME TO THE ASSESSEE. IN OUR OPINION, THE CONDUCT AND ATTITUDE OF THE A.O IS SERIOUSLY CONCERNED FOR US AS IT IS V IOLATION OF JUDICIAL DISCIPLINE. IT IS WELL SETTLED PRINCIPLE THAT THE ORDERS OF THE TRIBUNAL ARE IT(SS)A NO.8 & 9/MUM/2009 11 BINDING ON THE ALL TAX AUTHORITIES AND BY GIVING DU E RESPECT, EVERY TAX AUTHORITY IS BOUND TO MAKE PROPER COMPLIANCE OF TH E ALL DIRECTIONS. WE FIND THAT WHEN IN CLEAR TERMS, THE TRIBUNAL DIRECTE D THE A.O TO FURNISH COPY OF THE STATEMENT AND OTHER EVIDENCES, IF HE INTENDE D TO RELY, BUT IN HIS BUREAUCRATIC ATTITUDE, THE A.O, DISREGARDED THE DIR ECTIONS OF THE TRIBUNAL AND PREFERRED TO GO IN HIS OWN WAY. WE ARE OF THE OPINION THAT SUITABLE COST MUST BE AWARDED TO THE ASSESSEE FOR THE SUFFERING; AS ADMITTEDLY AGAIN THE ASSESSEE HAS TO GO BEFORE THE A.O AND WASTE HIS TIM E. THOUGH THE LD COUNSEL PLEADED THAT AS THERE IS A GROSS VIOLATION OF PRINCIPLE OF NATURAL JUSTICE, HENCE, THE ENTIRE ASSESSMENT MAY BE QUASHE D. BUT WE ARE UNABLE TO ACCEPT THE SAID PLEA. IT IS WELL SETTLED PRINCIPLE THAT THERE IS DIFFERENCE BETWEEN IRREGULARITY AND ILLEGALITY. IF THERE IS AN IRREGULARITY, THEN IN THE CASE OF VIOLATION OF PRINCIPLE OF NATURAL JUSTICE THE SA ME CAN BE CURED AND THE ASSESSEE CAN BE COMPENSATED BY AWARDING THE COST. A CCORDINGLY, WE SET ASIDE THE ORDER OF THE A.O IN BOTH THESE CASES AND RESTORE THE MATTER BACK TO HIS FILE IN A CLEAR DIRECTION TO FRAME THE ASSESSME NT DE-NOVO AFTER SUPPLYING THE COPIES OF THE STATEMENTS OF SHRI SURESH BABU G MALGE AND SMT SUSHILA SURESH MALGE RECORDED ON 13 AND 14 TH JULY 1996 U/S 132(4) OF THE ACT, IF THE A.O IS INTENDING TO RELY ON THE SAID STATEMENTS FOR DETERMINING UNDISCLOSED/CONCEAL INCOME OF THE ASSESSEES. 11 AS WE HAVE ALREADY OBSERVED THAT THE CONDUCT OF THE A.O IS AGAINST THE WELL SETTLED NORMS OF JUDICIAL DISCIPLINE FOR NOT F URNISHING THE STATEMENTS DATED 13 & 14 TH JULY 1996 TO THE ASSESSEES RECORDED U/S 132(4) OF THE ACT AND THEREBY CONSCIOUSLY REFUSING TO COMPLY TO SPECI FIC DIRECTIONS OF THE TRIBUNAL; WE, THEREFORE, LEVY COST OF RS. 5000/- UP ON THE A.O AND THE A.O SHOULD PAY THE SAME TO THE ASSESSEE WITHIN ONE MONT H FROM THE DATE OF RECEIPT OF THIS ORDER. WE FURTHER DIRECT THAT THE A MOUNT OF COST SHOULD BE RECOVERED FROM THE CONCERNED A.O. WHO HAS PASSED TH E ASSESSMENT ORDER DT 26/12/2008 WHICH IS SUBJECT MATTER OF THESE APPE ALS. 12. IN THE RESULT, THE APPEALS FILED BY BOTH THE AS SESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. IT(SS)A NO.8 & 9/MUM/2009 12 ORDER PRONOUNCED ON THE 18 TH , DAY OF JUNE 2010. SD/- SD/- (P M JAGTAP ) ACCOUNTANT MEMBER (R S PADVEKAR ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 18 TH JUNE 2010 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI