Sh. Ajay Kumar Gupta,, Chandigarh v. ACIT,, Chandigarh

CO 27/CHANDI/2008 | misc
Pronouncement Date: 30-04-2014 | Result: Dismissed

Appeal Details

RSA Number 2721523 RSA 2008
Assessee PAN ABGPG3698B
Bench Chandigarh
Appeal Number CO 27/CHANDI/2008
Duration Of Justice 5 year(s) 8 month(s) 16 day(s)
Appellant Sh. Ajay Kumar Gupta,, Chandigarh
Respondent ACIT,, Chandigarh
Appeal Type Cross Objection
Pronouncement Date 30-04-2014
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 30-04-2014
Date Of Final Hearing 11-02-2014
Next Hearing Date 11-02-2014
Assessment Year misc
Appeal Filed On 13-08-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA JUDICIAL MEMBER ITA NO.660/CHD/2008 ASSESSMENT YEAR : 2004-05 THE A.C.I.T. VS. SH.AJAY KUMAR GUPTA CENTRAL CIRCLE-II # 3007 SECTOR 19D CHANDIGARH. CHANDIGARH. PAN: ABGPG 3698B AND C.O.NO.27/CHD/2008 ARISING OUT OF ITA NO.660/CHD/2008 ASSESSMENT YEAR : 2004-05 SH.AJAY KUMAR GUPTA VS. THE A.C.I.T. # 3007 SECTOR 19D CENTRAL CIRCLE-II CHANDIGARH. CHANDIGARH. PAN: ABGPG 3698B ITA NO.661/CHD/2008 ASSESSMENT YEAR : 2004-05 THE A.C.I.T. VS. SH.VIJAY KUMAR GUPTA CENTRAL CIRCLE-II # 3007 SECTOR 19D CHANDIGARH. CHANDIGARH. PAN: ABGPG 3697Q AND C.O.NO.28/CHD/2008 ARISING OUT OF ITA NO.661/CHD/2008 ASSESSMENT YEAR : 2004-05 SH.VJAY KUMAR GUPTA VS. THE A.C.I.T. # 3007 SECTOR 19D CENTRAL CIRCLE-II CHANDIGARH. CHANDIGARH. PAN: ABGPG 3697 Q 2 ITA NO.662/CHD/2008 ASSESSMENT YEAR : 2004-05 THE A.C.I.T. VS. SH.ASHWANI KUMAR GUPTA CENTRAL CIRCLE-II # 3007 SECTOR 19D CHANDIGARH. CHANDIGARH. PAN: ABLPG 9219P AND C.O.NO.29/CHD/2008 ARISING OUT OF ITA NO.662/CHD/2008 ASSESSMENT YEAR : 2004-05 SH.ASHWANI KUMAR GUPTA VS. THE A.C.I.T. # 3007 SECTOR 19D CENTRAL CIRCLE-II CHANDIGARH. CHANDIGARH. PAN: ABLPG 9219P AND ITA NO.663/CHD/2008 ASSESSMENT YEAR : 2004-05 THE A.C.I.T. VS. M/S VALCO INDUSTRIES LTD. CENTRAL CIRCLE-II # 3007 SECTOR 19D CHANDIGARH. CHANDIGARH. PAN: AAACV 5195J AND C.O.NO.30/CHD/2008 ARISING OUT OF ITA NO.663/CHD/2008 ASSESSMENT YEAR : 2004-05 M/S VALCO INDUSTRIES LTD. VS. THE A.C.I.T. # 3007 SECTOR 19D CENTRAL CIRCLE-II CHANDIGARH. CHANDIGARH. PAN: AAACV 5195J (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ASHWANI GUPTA (PARTNER) DEPARTMENT BY : S/SHRI MANJIT SINGH & DR.AMARVEER SINGH DR 3 DATE OF HEARING : 13.02.2014 & 20.02.2014 DATE OF PRONOUNCEMENT : 30.04.2014 O R D E R PER SUSHMA CHOWLA J.M. : THIS BUNCH OF APPEALS FILED BY THE REVENUE ARE AGA INST SEPARATE ORDERS OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-I LUDHIANA DATED 28.04.2008 AND 18.04.2008 RELATING TO ASSESSMENT YE AR 2004-05 AGAINST THE ORDER PASSED UNDER SECTION 153A R.W.S. 143(3) O F THE INCOME TAX ACT 1961 (IN SHORT THE ACT). THE ASSESSEE HAS F ILED CROSS OBJECTIONS AGAINST THE APPEAL FILED BY THE REVENUE. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN I TA NO.660 /CHD/2008 READ AS UNDER: 1. THE LD. CTT(A) HAS ERRED BOTH IN LAW AND ON FACTS OF THE CASE IN DELETING AN ADDITION OF RS. 25 LACS MADE BY THE A.O. U/S 69B OF THE I.T.ACT 1961 ON ACCOUNT OF UNEXPLAINED INVESTMENTS MADE IN THE PURCHASE OF IMMOVABLE PROPERTY (PLOT). 2. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS OF THE CA SE IN DELETING AN ADDITION OF RS. 28 LACS MADE BY THE A.O. U/S 69B OF THE I.T.ACT 1961 ON ACCOUNT OF UNEXPLAINED INVESTMENTS MADE IN THE PURCHASE OF HOUSE PROPERTY. 3. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL ON OR BEFORE THE APPEAL IS HEARD AND DISPOSED OFF. 4. IT IS PRAYED THAT THE ORDER OF THE COMMISSIONER OF INCOME -TAX (APPEALS) BE SET ASIDE AND THAT OF A.O RESTORED. 3. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL IN C.O. NO.27 /CHD/2008 WHICH READ AS UNDER: 1. THE LD. AO ERRED BOTH IN LAW AND ON FACTS OF THE CA SE IN SELF - CLOTHING WITH JURISDICTION IN QUITE DISREGARD TO TH E ASSESSES OBJECTIONS IN WRITING WITHIN 30 DAYS AND WITHOUT F OLLOWING THE MANDATORY PROCEDURE AS IN SECTION 124(4) OF THE OF THE ACT' MAKING ENTIRE PROCEEDINGS AND THE ALLEGED ASSESSMEN T ILLEGAL NULL & VOID IN THE LAW. 2. THE LD. AO ERRED BOTH IN LAW AND ON FACTS OF THE CA SE IN ISSUING 4 NOTICES U/S 153 A PRIOR TO HANDING OVER & TAKING O VER OF THE MATERIAL FROM THE AUTHORIZED OFFICER OF THE ALLEGED SEARCH OR SURVEY IN DISREGARD TO THE PROVISIONS OF THE LAW AS IN SECTION 153A SEC. 133A & SEC. 132(9) OF THE ACT'. AND IN C ONTRADICTION TO PROVISIONS U/S 132 (4A) OF THE ACT'. AND ALSO WHEN IN THE ALLEGED NOTICE U/S 153A NO DETAILS OR REASONS OF ANY SUCH S URVEY OR OF THE SEARCH WERE MENTIONED. 3. THE LD. AO ERRED BOTH IN LAW AND ON FACTS OF THE CA SE IN MAKING UNILATERAL ADDITIONS AND THE ALLEGED ASSESSMENT WIT HOUT FOLLOWING THE PROCEDURE U/S 153 C OF THE ACT' AND DESPITE TH E FACT THAT NO PANCHNAMA WAS DRAWN IN THE NAME OF ASSESSES AND ON FACTS MADE PREMATURE ALLEGED ASSESSMENT U/S 153A OF THE ACT'. 4. THE LD. AO ERRED BOTH IN LAW AND ON FACTS OF THE CA SE IN MAKING UNDISCLOSED ADDITIONS WITHOUT DETAILS OR THE ASSESS MENT ORDER MERELY BY WAY OF DEMAND NOTICE IN FORM 7 U/S 156 O F THE ACT'. AND THERE IS NOTHING TO SHOW WHETHER THE ALLEGED AO HAD EVER PREPARED AN ASSESSMENT ORDER WITHIN THE PERIOD OF L IMITATIONS AND AVOIDED TO SUPPLY EVEN SUBSEQUENTLY THE ORIGINA L OR THE CERTIFIED COPIES OF ALLEGED ORDERS ON WRITTEN DEMAN D OF THE ASSESSES OR THE ASSESSMENT ORDER BEEN PREPARED LATE R ON BY WAY OF BACK CALCULATIONS AND KEPT IN THE FILES. 5. THE LD. AO ERRED BOTH IN LAW AND ON FACTS OF THE CA SE IN MAKING VARIOUS ADDITIONS IN THE CASE OF ASSESSES MERELY ON THE BASIS OF IMAGINATIONS OR WRONG PRESUMPTIONS IN DISREGARD TO ANY EVIDENCE OR MATERIAL AVAILABLE FROM THE PARTICULAR SEARCH OR THE SURVEY AND WITHOUT ANY EFFORTS OF INDEPENDENT ENQUIRY OR MAKIN G AVAILABLE OF ANY MATERIAL FROM A THIRD SOURCE FOR CONFRONTING BY THE ASSESSEE. 6. THAT THE LD. AO ERRED BOTH IN LAW AND ON FACTS OF THE CASE AS FAILED TO CALL AND CONSIDER THE RETURNS ALREADY FILED WITH THE JUR ISDICTIONAL AO BEFORE MAKING ASSESSMENT/REASSESSMENT AS THAT RECORD WAS NEVER TRANSFERRED FROM THE EARLIER JURISDICTIONAL AO. 7. THAT THE LD. AO ERRED BOTH IN LAW AND ON FACTS O F THE CASE AS FAILED TO APPRECIATE SEC 153A DOESN'T DEMONSTRATES THE MODE O F ASSESSMENT BY BEST ASSESSMENT I.E. THE GUESS WORK U/S 144 WHICH DON'T ACCOMMODATE THE ASSESSMENT U/S 153A WHICH RESULTS INTO BAD ASSESSMENT. 8. THAT THE LD. AO ERRED BOTH IN LAW AND ON FACTS O F THE CASE AS IN ALL THREE CASES OF SH. AJAY KUMAR GUPTA SH. VIJAY KUMAR GUPT A & IN CASE OF SH. ASHWANI KUMAR GUPTA IN PARA 9.4 OF ORDER HE MENTION ED ' ------ 25 00 000/- IS ASSESSED SUBSTANTIVELY IN THE HAND O F ASSESSEE SH. AJAY KUMAR GUPTA -------'. WHICH SHOWS THE FINE MECHANICAL WOR K OF CUT AND PASTE IN A SEARCH ASSESSMENT CASE WITHOUT APPLICATION OF MIND WHAT TO CALL OF LEAST APPLICATION OF MIND. 9. THAT THE LD. AO ERRED BOTH IN LAW AND ON FACTS O F THE CASE AS NO LOOSE SLIP BEARING DETAILS OF INVESTED OR EXPENDITURE OTH ER THAN WHAT HAS BEEN RECORDED IN THE BOOKS OR REGISTERED SALE DEED WAS F OUND OR ANY SUCH AGREEMENT EXECUTED BETWEEN THE SETTER AND THE BUYER S WHICH WAS FOUND TO BE IN VARIANCE FROM THE ENTRIES IN THE BOOKS OR REGIST RATION SALE DEED. 10. THAT THE LD. AO ERRED BOTH IN LAW AND ON FACTS OF THE CASE AS DRAWN THE INFERENCE MERELY ON THE GROUND OF VAGUE OBSERVATION S I.E. THE UNCONFIRMED UN-CONFRONTED UNSIGNED UNEXECUTED UNPROVED EVIDE NCE THERE IS NO STATEMENT 5 OF SELLER ON ANY SCORE AND WHEN THE SALE REGISTRAT ION ON HIS BEHALF WAS MADE BY HIS SPECIAL ATTORNEY HOLDER THEN THE ALLEGED AO ON WHAT GROUNDS CAN DISTINGUISH THAT THE SELLER HAS RECEIVED MORE AMOUN T THAN WHAT IS SHOWN IN THE REGISTERED DOCUMENT AND WRONGLY ADOPTED UNSUSTA INABLE PROCEDURE IN THE LAW MUCH LESS TO SAY THE ACTION OF MAKING ANY ADDI TION U/S 68 OR SEC. 69 OF THE ACT' IN ASSUMED CONSEQUENCES OF SEC. 132 OF THE ACT. 11. THAT THE LD. AO ERRED BOTH IN LAW AND ON FACTS OF THE CASE AS FAILED TO CONDUCTED AY INDEPENDENT ENQUIRY RELATING TO THE VA LUE OF THE PROPERLY PURCHASED OR HAD REFERRED THE MATTER TO THE VALUAT ION OFFICER PROMPTLY TO AVOID CONTROVERSY OF A FUTURE DATE. 12. THAT THE LD. AO ERRED BOTH IN LAW AND ON FACTS OF THE CASE IN PROCEEDING WITH UNRELIABLE MATERIAL AS NO OFFICER OTHER THAN T HE AUTHORIZED OFFICER OF THE SEARCH CAN HOLD AND HANDOVER THE SEIZED MATERIAL TO THE ASSESSING OFFICER IN EXERCISE OF SEC 132 (9). 13. THAT THE LD. AO ERRED BOTH IN LAW AND ON FACTS OF THE CASE AS DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ALLEGED ASSESS ING OFFICER NEVER AFFORDED THE ASSESSEE THE OPPORTUNITY TO EXAMINE THE THIRD P ERSON ON WHOS VERSION THE AO SAID TO HAVE ATTEMPTED TO PRESUME OR MAKE PROTE CTIVE ADDITIONS OF INCOME IN THE CASE OF ALL ASSESSEES. 14. THAT THE RESPONDENT CRAVES LEAVE TO AMEND ALTE R OR ADD TO THE ABOVE GROUNDS OF CROSS-APPEAL BEFORE THE APPEAL AND THE CROSS-APPEAL IS HEARD AND DISPOSED OFF. 15. IT IS PRAYED THAT THE ENTIRE RECORDS OF ASSESSM ENT RELATING TO THE IMPUGNED ORDER ALONG WITH THE RELEVANT RELATED RECORDS MAY K INDLY BE SUMMONED. 16. IT IS PRAYED THAT THE BASIC ASSESSMENT ORDER MA Y KINDLY BE ANNULLED AND QUASHED AND THE APPEAL NO.660/CHD/08 FILED BY THE APPELLANT MAY KINDLY BE DISMISSED WITH HEAVY COST. 4. THIS BUNCH OF APPEALS OF THE REVENUE AND CROSS O BJECTIONS FILED BY THREE DIFFERENT ASSESSEES WHO ARE DIRECTORS OF M/S VOLCO INDUSTRIES LTD. ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 5. THE REVENUE IN ITA NO. 663/CHD/2008 HAS RAISED F OLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS O F THE CASE IN DELETING AN ADDITION OF RS. 75 LACS MADE BY THE A.O. U/S 69B ON ACCOUNT OF UNEXPLAINED INVESTMENT IN IMMOVEABLE PROPERTY (PLOT). 2. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS O F THE CASE IN DELETING AN ADDITION OF RS. 50 LACS MADE BY THE A.O. U/S 68 ON ACCOUNT OF UNEXPLAINED UNSECURED LOANS. 3. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACT S OF THE CASE IN DELETING AN ADDITION OF RS. 29 LACS MADE BY THE A.O. U/S 69B ON ACCOUNT OF UNEXPLAINED INVESTMENT MADE IN PURCHASE OF LAND. 6 4. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROU NDS OF APPEAL ON OR BEFORE THE APPEAL IS HEARD AND DISPOSED OFF. 5. IT IS PRAYED THAT THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) BE SET ASIDE AND THAT OF A.O RESTORED. 6. IN CROSS OBJECTIONS THE ASSESSEE IN C.O. NO. 30 /CHD/2008 HAS RAISED FOLLOWING GROUNDS: 1. . THE LD. CIT -1 CHANDIGARH ERRED BOTH IN LAW AND ON FACTS OF THE CASE IN TRANSFERRING THE JURISDICTION OF THE AO U/S 127 OF THE ACT' WITHOUT HIS OWN JURISDICTION AND WITHOUT ASSIGNING MANDATORY REASONS FOR SUCH ACTION DESPITE OBJECTIONS OF THE ASSESSES AND DESPITE PRIOR KNOWLEDGE OF (I) HIS ORDER DT: 07/03 /05 AND (II) COMPLIANCE TO HIS ORDER ON 19/5/05 BY WHICH THE JU RISDICTION WITH COMPLETE RECORD OF THE ASSESSES WAS ALREADY TRANSFE RRED TO ACIR CIRCLE 4 (1) CIT-2 CHANDIGARH THE ACTION OF CIT - 1 AS ON 24/6/05 U/S 127 OF THE ACT WAS WITHOUT POWER AND AUTHORITY. 2. THE LD. AO ERRED BOTH IN LAW AND ON FACTS OF THE CA SE IN SELF - CLOTHING WITH JURISDICTION IN QUITE DISREGARD TO TH E ASSESSES OBJECTIONS IN WRITING WITHIN 30 DAYS AND WITHOUT F OLLOWING THE MANDATORY PROCEDURE AS IN SECTION 124(4) OF THE OF THE ACT' MAKING ENTIRE PROCEEDINGS AND THE ALLEGED ASSESSMEN T ILLEGAL NULL & VOID IN THE LAW. 3. THE LD. AO ERRED BOTH IN LAW AND ON FACTS OF THE CA SE BY CONDUCTING PROCEEDINGS U/S 153A OF THE ACT' IN THE CASE OF SURVEY U/S 133 A OF THE ACT' AND WHEREAS NO STATEMENT U/S 132 OF THE ACT' WAS ON RECORD OF THE DEPARTMENT. 4. THE LD. AO ERRED BOTH IN LAW AND ON FACTS OF THE CA SE IN ISSUING NOTICES U/S 153A PRIOR TO HANDING OVER & TAKING OV ER OF THE MATERIAL FROM THE AUTHORIZED OFFICER OF THE ALLEGED SEARCH OR SURVEY IN DISREGARD TO THE PROVISIONS OF THE LAW AS IN SECTION 153A SEC. 133A & SEC. 132(9) OF THE ACT'. AND ALSO WHEN IN THE ALLEGED NOTICE U/S 153A NO DETAILS OR REASONS OF AN Y SUCH SURVEY OR OF THE SEARCH WERE MENTIONED. 5. THE LD. AO ERRED BOTH IN LAW AND ON FACTS OF THE CA SE IN MAKING ADDITIONS IN THE CASE OF ASSESSES IGNORING THE DET AILS IN RETURNS AND AUDITED BALANCE SHEET AND BANK STATEMENTS ALREA DY FILED AND AS AVAILABLE ON THE RECORD OF THE DEPARTMENT. 6. THE LD. A.O. ERRED IN LAW AND ON FACTS OF THE CA SE BY ASSUMING THE COMPANY M/S VISHNU ASSOCIATES LTD. WHOSE NAME WAS CHANGED AS M/S VALCO INDUSTRIES LTD. AS TWO DIFFERENT COMPANIES. 7. THE LD. AO ERRED BOTH IN LAW AND ON FACTS OF THE CA SE IN MAKING UNDISCLOSED ADDITIONS WITHOUT DETAILS OR THE ASSESS MENT ORDER MERELY BY WAY OF DEMAND NOTICE IN FORM 7 U/S 156 O F THE ACT'. AND THERE IS NOTHING TO SHOW WHETHER THE ALLEGED AO HAD EVER PREPARED AN ASSESSMENT ORDER WITHIN THE PERIOD OF L IMITATIONS AND AVOIDED TO SUPPLY EVEN SUBSEQUENTLY THE ORIGINA L OR THE 7 CERTIFIED COPIES OF ALLEGED ORDERS ON WRITTEN DEMAN D OF THE ASSESSES OR THE ASSESSMENT ORDER BEEN PREPARED LATE R ON BY WAY OF BACK CALCULATIONS AND KEPT IN THE FILES. 8. THAT LD. AO'S ERRED BOTH IN LAW AND ON FACTS TO ACT WHEN THE RECORDS OF THE ASSESSES WAS NEVER BEEN TRANSFERRED TO HIM UNDER INTIMATION TO THE ASSESSES AND IF NOT THE ENTIRE R ECORD AT LEAST THE RECORDS OF RETURNS AND CONNECTED PAPERS RELATING TO THE ASSESSMENT YEARS IN QUESTION. THE MODE OF ASSESSMEN T BY BEST ASSESSMENT PROCEDURE I.E. THE GUESS WORK U/S 144 DO N'T ACCOMMODATE THE ASSESSMENT U/S 153A ASSESSMENT IS MADE U/S 144 IN GIVEN CIRCUMSTANCES FROM ACTION U/S 132 OF THE A CT WOULD OTHERWISE RESULTS INTO BAD. 9. THAT LD. AO'S ERRED BOTH IN LAW AND ON FACTS AS THE RE WERE NO REASONS TO BELIEVE FOR ISSUING THE SEARCH OR SURVEY WARRANT AS TO WHEN THE SEARCH WARRANTS WERE ALLEGED TO BE AGAINST ONE SELLER AND ONE MEDIATOR AND THREE BUYERS OUT OF TOTAL FOUR BUYERS OF SAID TO BE ALL OF A COMMON DEAL AND WHEN THE BUYER OF FOURTH PART WAS LEFT OUT AND NOT SEARCHED OR SURVEYED CANNOT BE HELD AS THE REASONS TO BELIEVE. AND TO APPLY DIFFERENT VALUE IN EACH CASE. 10. .THAT LD. AO'S ERRED BOTH IN LAW AND ON FACTS A S IT IS NOT THE CASE OF ANY LOOSE SLIP BEARING DETAILS OF INVESTED OR EXPENDITURE OTH ER THAN WHAT HAS BEEN RECORDED IN THE BOOKS OR REGISTERED SALE DEED WAS FOUND OR A NY SUCH AGREEMENT EXECUTED BETWEEN THE SETTER AND THE BUYERS HAS BEEN FOUND DU RING THE ACTION U/S 133A OR 132. THE AO DRAWN THE INFERENCE MERELY ON THE GROUND OF VAGUE OBSERVATIONS I.E. THE UNCONFIRMED UN-CONFRONTED UNSIGNED UNEXECUTED U NPROVED EVIDENCE AND ADOPTED UNSUSTAINABLE PROCEDURE IN THE LAW MUCH LE SS TO SAY THE ACTION OF MAKING ANY ADDITION U/S 68 OR SEC. 69 OF THE ACT' IN ASSUM ED CONSEQUENCES OF SEC. 132 OF THE ACT. THAT THE REVENUE FAILED TO DISCHARGE THE B URDEN OF PROVING THE ACTUAL CONSIDERATION OTHER THAT WHAT WAS IN THE BOOKS TO M AKE ADDITION U/S 68 OR SEC. 69 OF THE ACT'. 11. THAT LD. AO'S ERRED BOTH IN LAW AND ON FACTS AS THE AO FAILED TO CONDUCTED AY INDEPENDENT ENQUIRY OF THE VALUE OF THE PROPERTY . 12. THAT THE RESPONDENT CRAVES LEAVE TO AMEND AL TER OR ADD TO THE ABOVE GROUNDS OF CROSS- APPEAL BEFORE THE APPEAL AND THE CROSS-APPEAL IS HEARD AND DISPOSED OFF. 7. BOTH THE APPEAL FILED BY THE REVENUE AND THE CRO SS OBJECTIONS FILED BY THE ASSESSEE COMPANY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIE NCE ALONG WITH THE APPEALS FILED BY THE REVENUE AND CROSS OBJECTIONS F ILED BY THE RESPECTIVE DIRECTORS OF THE COMPANY. ITA-663/CHD/2008 (A.Y. 2004-05) :: REVENUES APPEAL (M/S VALCO INDUSTRIES LTD. 5. THE BRIEF FACTS OF THE CASE ARE THAT SEARCH & SE IZURE OPERATIONS WERE CARRIED OUT ON 03.09.2004. THE ASSESSEE FILED RETURN OF INCOME 8 DECLARING TOTAL INCOME OF RS. 80 87 602/- ON 02.12. 2004. THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 153 OF THE ACT DATED 6.10.2005 REQUIRING THE ASSESSEE TO FILE RETURN OF INCOME WIT HIN ONE MONTH OF THE SERVICE OF THE NOTICE. THE ASSESSEE VIDE LETTER DA TED 14.11.2005 SUBMITTED BY POST ON 16.11.2005 QUOTED VARIOUS CAS E-LAWS BOTH PROCEDURAL AND SUBJECTIVE TO POINT OUT THAT THE PR OCEEDINGS AND THE NOTICE ISSUED IN THE CASE WERE NON-SPEAKING WITHOU T ANY REASON AND THUS NONEST AND INVALID. THE ASSESSEE HOWEVER MADE NO REFERENCE TO THE INCOME TAX ACT AND THE ASSESSING OFFICER OBSERVED T HAT THE INCOME TAX LAW WAS SPECIALIZED LAW AND CODIFIED LAW WHICH OVER -RIDED OTHER LAWS. IN RESPONSE TO NOTICE ISSUED UNDER SECTION 142(1) OF T HE ACT DATED 04.07.2006 THE ASSESSEE BY LETTER DATED 05.08.200 6 MADE SIMILAR SUBMISSIONS AND ALSO CHALLENGED THE JURISDICTION OF THE ASSESSING OFFICER CENTRAL CIRCLE CHANDIGARH. THE ASSESSING OFFICER VIDE OFFICE LETTER DATED 17/31.07.2006 SUPPLIED THE COPY OF ORD ER OF COMMISSIONER OF INCOME TAX CHANDIGARH DATED 30.05.2005 TRANSFER RING THE JURISDICTION OF THE ASSESSEE TO CENTRAL CIRCLE CH ANDIGARH. DESPITE THE SAME THE ASSESSEE DID NOT MAKE ANY COMPLIANCE TO T HE REQUISITIONS ISSUED UNDER SECTION 142(1) OF THE ACT. THE ASSESSE E IN RESPONSE TO ANOTHER COMMUNICATION DATED 20.09.2006 ALSO CHALLEN GED THE PROCEEDINGS AND THE BASIS OF JURISDICTION. SIMILAR PROCEEDING S CONTINUED AND THE ASSESSEE FAILED TO FURNISH ANY INFORMATION EXCEPT R AISING VARIOUS ISSUES ABOUT JURISDICTION AND THE ASSESSING OFFICER WAS LE FT WITH NO OPTION BUT TO COMPLETE THE ASSESSMENT TO THE BEST OF HIS JUDGE MENT ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING O FFICER NOTED THAT THE ASSESSEE HAD PURCHASED 23% SHARE OF PLOT NO. 70 I NDUSTRIAL AREA PHASE-I CHANDIGARH FROM SHRI R.K.OHRI. THE SA LE WAS MADE THROUGH 9 INTERMEDIARY M/S SHARVILLA ESTATES PVT. LTD. THE AS SESSING OFFICER FURTHER NOTED THAT SHRI AJAY KUMAR GUPTA SHRI VIJA Y KUMAR GUPTA AND SHRI ASHWINI KUMAR GUPTA WERE THE DIRECTORS OF THE ASSESSEE COMPANY. AN AGREEMENT FOR SALE OF 23% SHARE IN THE SAID PROP ERTY WAS SIGNED BETWEEN SHRI R.K.OHRI AND SHRI ANIL DUBEY AS DIREC TOR OF M/S SHARVILLA ESTATES PVT. LTD. ON 01.04.2003. THE ORIGINAL AGREE MENT WAS SEIZED FROM THE RESIDENCE OF SHRI R.K.OHRI AND WAS AVAILABLE AT PAGES 73 TO 76 OF ANNEXURE A-1 OF PREMISES NO. 342 SECTOR 9 CHANDIGA RH. AS PER THE SAID AGREEMENT TOTAL SALE PRICE PAID WAS RS. 1.45 CR AN D THE AMOUNT WAS PAID THROUGH CHEQUES FROM THE BANK ACCOUNT OF M/S SHARVI LLA ESTATES PVT. LTD. THE CHEQUE-WISE DETAILS ARE REPRODUCED BY ASSESSING OFFICER AT PAGE 3 OF THE ASSESSMENT ORDER. THE GENERAL POWER OF ATTOR NEY WAS GIVEN BY SHRI R.K.OHRI TO SHRI ASHWINI KUMAR GUPTA AND SHRI VIJAY KUMAR GUPTA WHICH IN-TURN WAS REGISTERED ON 01.04.2003 WHICH WA S ALSO SEIZED AND IS PLACED AT PAGES 53 TO 55 OF ANNEXURE A-1. THE SPEC IAL POWER OF ATTORNEY WHICH WAS GIVEN BY SHRI R.K.OHRI TO SHRI A NIL DUBEY AND WHICH AGAIN WAS REGISTERED ON 01.04.2003 WAS SEIZED AND IS PLACED AT PAGES 56 AND 57 OF ANNEXURE A-1. IN GENERAL POWER OF ATTORNEY AND THE SPECIAL POWER OF ATTORNEY THE WITNESSES WERE SHRI P.K.DASS AND SHRI AJAY SINGH. THE SALE DEED WAS REGISTERED BETWEEN SH RI VISHNU ASSOCIATES LTD. THROUGH SHRI AJAY KUMAR GUPTA AND S HRI R.K.OHRI THROUGH ASHWANI KUMAR GUPTA AS PER THE SALE DEED S EIZED AND AVAILABLE AT PAGES 87 TO 94 OF ANNEXURE A-1. AS PER THE SAID REGISTERED DEED THE SALE CONSIDERATION WAS MENTIONED AT RS. 70 LACS AND THE AMOUNT HAD BEEN CREDITED TO THE BANK OF INDIA SECTOR 32 CHANDIGAR H ACCOUNT OF M/S SHARVILLA ESTATES PVT. LTD. 6. DURING THE COURSE OF SEARCH STATEMENT OF SHRI R .K.OHRI WAS RECORDED ON 03.07.2004 IN WHICH HE ADMITTED THAT HE HAD SOLD HIS 50% 10 SHARE IN PLOT NO. 70 INDUSTRIAL AREA PHASE-I CAN DIGARH THROUGH SHRI MUKESH MITTAL WHO WAS HIS LAWYER AND ATTORNEY. TH E AGGREGATE AMOUNT OF SALE CONSIDERATION WAS FIXED AT RS. 2.35 CR FOR WHICH AGREEMENT WAS DONE IN LATE 2002 AND EARLY 2003. IT WAS ADMITTED BY SHRI R.K.OHRI THAT THE POWER OF ATTORNEY AND THE SALE DOCUMENTS WERE E XECUTED WITH TWO SEPARATE PARTIES OUT OF WHICH ONE WAS THE GROUP OF INDIVIDUALS AND THE SECOND WAS PRIVATE LIMITED COMPANY. HE FURTHER ADM ITTED TO HAVE EXECUTED AGREEMENT TO SELL FOR CONSIDERATION OF RS. 1.45 CR FOR 23% SHARE IN THE SAID PROPERTY AND ON THE SAME DAY HE ADMITTED TO HAVE GIVEN A GENERAL POWER OF ATTORNEY OF 23% SHARE TO S HRI ASHWINI KUMAR GUPTA AND SHRI VIJAY KUMAR GUPTA AND SPECIAL POWER OF ATTORNEY TO SHRI AJAY KUMAR GUPTA. THE ASSESSING OFFICER VIDE PARA 8.5 THUS HELD THAT M/S VISHNU ASSOCIATES LTD. PURCHASED 23% OF SH ARE OF PLOT FOR RS. 1.45 CR FROM SHRI R.K.OHRI THROUGH M/S SHARVILLA ES TATES PVT. LTD. BUT THE SALE DEED WAS REGISTERED ONLY FOR RS. 70 LACS A ND THE DIRECTORS PAID ON MONEY OF RS. 75 LACS. THE AGREEMENT TO SELL FOR RS. 1.45 CR WAS FOUND FROM THE POSSESSION OF THE SELLER DURING THE COURSE OF SEARCH AND SINCE THE DOCUMENT HAD EVIDENTIARY VALUE IN THE CAS E OF THE SELLER AS PER THE ASSESSING OFFICER IT HAD SAME EVIDENTIARY VALU E IN THE CASE OF THE PURCHASER ALSO. THE STATEMENT OF SHRI ASHWINI KUMA R ONE OF THE DIRECTORS OF M/S VISHNU ASSOCIATES LTD. WAS RECORDE D ON 30.09.2004 IN WHICH HE STATED THAT NO PROPERTY DEALER OR AGENT WA S INVOLVED IN THE DEAL AND THEY HAD MADE DIRECT DEALS WITH THE SELLER. HE FURTHER ADMITS THAT HE DOES NOT REMEMBER THE NAME OF THE SELLER AND THE DE ALS WERE AS PER THE SALE DEED. HE FURTHER STATED THAT THE DEAL WAS NEGOTIATED WITH ONE MR. OHRI RESIDENT OF SECTOR 9/5 NOW I DO NOT REMEMBER HIS FULL NAME AND ADDRESS....... HE WAS FURTHER CONFRONTED ABOUT THE DETAILS OF TH E PROPERTY IN VIEW OF THE VARIOUS DOCUMENTS AND IT WA S PUT TO HIM THAT SHRI R.K.OHRI HAD AGREED TO SELL 23% SHARE IN THE SAID P ROPERTY FOR A SALE 11 PRICE OF RS. 1.45 CR TO M/S SHARVILLA ESTATES PVT. LTD. IN REPLY IT WAS SUBMITTED BY SHRI ASHWINI GUPTA THAT HE DID NOT KNO W ANYTHING ABOUT SAID AGREEMENT TO SELL AS IT WAS NOT FOUND FROM HIS POSSESSION OR PREMISES. HE WAS ALSO CONFRONTED WITH THE HAND WRI TTEN PAPER FOUND FROM THE RESIDENCE OF SHRI R.K.OHRI WHICH CONTAINED THE DETAILS OF PAYMENT IN RESPECT OF INDUSTRIAL PLOT NO. 70. IN R EPLY IT WAS SUBMITTED BY HIM THAT IT WAS NOT FOUND FROM HIS POSSESSION AN D IT WAS NOT A RECEIPT AND WAS NOT IN HIS KNOWLEDGE. THE ASSESSING OFFICE R IN VIEW OF THE STATEMENT OF SHRI R.K.OHRI SHRI ANIL DUBEY SHRI A SHWINI GUPTA AND AGREEMENT TO SELL CONCLUDED VIDE PARA 9.3 AS UNDER : 9.3 FROM THE ABOVE STATEMENTS OF SH. R.K. OHRI SH. ANIL DUBEY ASHWANI KUMAR GUPTA AND AGREEMENT TO SELL THE ONLY INESCAP ABLE CONCLUSION IS AS UNDER : I. SH. R.K. OHRI HAS RECEIVED THE PAYMENT OF RS. 1 .45 CRORES FOR THE SALE OF 23% SHARE AS PER AGREEMENT TO SELL FOUND AND SEIZED FROM THE RESIDENCE OF SH. R.K. OHRI THE SELLER OF THE PROPERTY IN QUESTI ON AND WHICH HAS TO BE TAKEN AS TRUE IN WHOLE AS PER THE PROVISIONS OF SECTION 1 32(4A) OF L.T.ACT 1961. II. SH. ANIL DUBEY HAS VERY MEAGER SOURCES OF INCOM E. HE LIVES IN A SEMI-SLUM AREA AND DOES NOT HAVE ANY KNOWLEDGE ABOUT THE WORK ING OF THE COMPANY I.E. M/S SEPL; THE COMPANY WAS USED ONLY AS AN INTERMEDI ARY FOR THIS DEAL; III. THE PAYMENTS HAVE BEEN MADE FROM THE ACCOUNT O F SEPL WITH BOI SEC. 32 CHD. AND ON THE CHEQUES NARESH KR. SHARMA HAS SIGNED AS DIRECTOR OF SEPL (REFER PAGES 5 TO 9 43 TO 47 OF ANNEXURE A-L/ 342 SEC. 9 CHD.) SH. NARESH KR. SHARMA R/O 454 SEC. 20- A CHANDIGARH WAS WORKING AS A SMALL TIME MUNSHI IN THE DISTT. COURTS AND WAS HAVING VER Y MEAGER INCOME. IV. THE DATES AND PERIOD DURING WHICH THE AMOUNT OF RS. 70 LACS HAS BEEN PAID BY THE ASSESSEE AND THE PAYMENTS HAVE BEEN MAD E TO SH. R.K. OHRI CLEARLY SHOWS THAT NEGOTIATIONS FOR THE PURCHASE OF THE PROPERTY HAD STARTED IN DECEMBER 2002 AND THE ENTIRE EXERCISE OF INTROD UCING SHRI ANIL DUBEY AS DIRECTOR OF M/S SHARVILLA ESTATES PVT. LTD. AS PURC HASER IS TO CONCEAL THE REAL CONSIDERATION AMOUNT. V. THAT THE PURCHASERS INCLUDING SHRI ASHWANI KUMAR GUPTA DOES NOT WANT TO ANSWER THE QUESTIONS IN A STRAIGHTFORWARD MANNER EVEN WHEN HE HAS BEEN CONFRONTED WITH THE RELEVANT DOCUMENTS. HIS REPLIES ARE EVASIVE VAGUE AND DO NOT SEEM TO BE TRUE IN THE LIGHT OF THE OVERWHEL MING EVIDENCE. VI. THE PROPERTY HAS ACTUALLY BEEN PURCHASED FO R RS. 1.45 CRORES BUT IT HAS BEEN REGISTERED FOR RS. 70 LACS ONLY. ALL THE ACTIV ITIES RELATING TO THE TRANSFER OF PROPERTY AND THE AGREEMENT TO SELL AND SALE DEED HAVE BEEN COMPLETED DURING JUST TWO DAYS I.E. 01.04.03 & 02.04.03 RESPE CTIVELY. VII. ON-MONEY TO THE TUNE OF RS. 75 LACS IS INVOLVE D IN THIS PROPERTY. THIS AMOUNT IS THE CASH AMOUNT WHICH BY APPLYING THE PR INCIPLE OF LIFTING THE CORPORATE VEIL HAS BEEN PAID BY THE DIRECTORS TO T HE SELLERS. 12 7. THE ASSESSING OFFICER HELD THAT IN THE CIRCUMSTA NCES THE PRINCIPLE OF LIFTING THE CORPORATE VEIL HAS TO BE APPLIED AS ASSESSEE HAD FAILED TO EXPLAIN THE NATURE AND SOURCE OF RS. 1.45 CR. 8. THE ASSESSING OFFICER HELD THAT THE CONSIDERATIO N OF RS. 70 LACS SHOWN IN THE SALE DEED WAS TO BE CONSIDERED IN THE HANDS OF THE ASSESSEE COMPANY AND ON ACCOUNT OF THE PAYMENT OF ON MONEY O F RS. 75 LACS PROTECTIVE ADDITIONS WERE MADE IN THE HANDS OF THE ASSESSEE COMPANY AND SUBSTANTIVE ADDITIONS WERE MADE TO THE EXTENT OF 1/ 3 RD EACH IN THE HANDS OF THREE DIRECTORS OF THE ASSESSEE COMPANY. 9. THE ASSESSING OFFICER FURTHER NOTED THAT THERE W AS NO EXPLANATION OF THE SUM OF RS. 74 LACS I.E. RS.70 LACS INCLUDING RS. 4 LACS OVERHEAD EXPENSES SHOWN IN THE SALE DEED BUT THE SAME WAS SH OWN IN THE AUDITED BALANCE SHEET. ON THE OTHER HAND THERE WAS INCREA SE OF RS. 50 LACS IN THE UNSECURED LOANS FOR WHICH NO EXPLANATION OR CRE DIT WORTHINESS OF THE AMOUNT PROVIDERS WAS OFFERED BY THE ASSESSEE DESPI TE SPECIFIC QUESTIONS RAISED TO THE EXTENT AND SUM OF RS. 50 LACS WAS THU S ASSESSED AS DEEMED INCOME UNDER SECTION 68 OF THE ACT. THE COMMISSION ER OF INCOME TAX (APPEALS) NOTED THAT SUM OF RS. 50 LACS WAS GIVEN B Y THE DIRECTORS THROUGH ACCOUNT PAYEE CHEQUES AND HENCE THE SAME C OULD NOT BE CONSIDERED AS UNEXPLAINED INCOME AND NO ADDITION WA S WARRANTED UNDER SECTION 68 OF THE ACT. THE COMMISSIONER OF INCOME T AX (APPEALS) THUS DELETED THE ADDITION OF RS. 50 LACS MADE BY THE ASS ESSING OFFICER. 10. FURTHER ADDITION WAS MADE WITH REGARD TO THE NA TURE AND SOURCE OF PAYMENT OF RS. 22 LACS MADE FOR PURCHASE OF LAND IN VILLAGE KATHA. THE SAID SUM OF RS. 22 LACS WAS ASSESSED AS DEEMED INCO ME UNDER SECTION 69B OF THE ACT. 13 11. IN RESPECT OF ADDITION OF RS. 75 LACS MADE ON P ROTECTIVE BASIS THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT SHRI R.K.OHRI THE SELLER OF THE PROPERTY IN QUESTION DID RECEIVE RS.1 .45 CR FOR THE SALE OF THE RELEVANT PORTION WHICH PAYMENT WAS MADE BY M/S SHARVILLA ESTATES PVT. LTD. TO SHRI R.K.OHRI FROM ITS BANK ACCOUNT. HOWEVER THERE WAS NO MERIT IN DRAWING ADVERSE INFERENCE AGAINST THE ASSE SSEE ON THE BASIS OF THE STATEMENT OF SHRI R.K.OHRI. THE ASSESSEE CONTE NDS TO HAVE PAID ONLY RS. 70 LACS IN RESPECT OF THE SAID PROPERTY AND RS. 80 LACS APPROXIMATELY WAS THE FAIR MARKET VALUE OF THE MACHINERY IN THE S AID PROPERTY WHICH WAS RETAINED BY M/S SHARVILLA ESTATES PVT. LTD. THE ASSESSEE HAD FILED COPY OF AGREEMENT TO SELL DATED 23.12.2002 BEFORE T HE COMMISSIONER OF INCOME TAX (APPEALS) IN WHICH THE SAID FACT WAS REF LECTED. 12. THE COMMISSIONER OF INCOME TAX (APPEALS) HELD T HAT IN THE ABSENCE OF ANY CATEGORIC STATEMENT FROM M/S SHARVIL LA ESTATES PVT. LTD. THAT THE ASSESSEE HAD PAID RS. 75 LACS OVER AND AB OVE RS. 70 LACS CLAIMED TO BE PAID BY IT NO ADVERSE INFERENCE COUL D BE DRAWN AGAINST THE ASSESSEE. THE COMMISSIONER OF INCOME TAX (APPEALS) FURTHER HELD THAT NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSES SEE OR ITS DIRECTORS FOR NOT EXPLAINING THE CREDITS OF RS. 80 LACS IN TH E BANK ACCOUNT OF M/S SHARVILLA ESTATES PVT. LTD. AS THE SAID SUM WAS PAI D FOR THE PURCHASE OF THE MACHINERY WHICH IN-TURN WAS NOT PURCHASED BY TH E ASSESSEE. 13. IN RESPECT OF THE LAST ADDITION OF RS. 22 LACS THE EXPLANATION OF THE ASSESSEE WAS THAT THE SAME WAS CONSTRUCTED BY SHRI ASHWINI GUPTA AND THE AMOUNTS WERE REFLECTED IN THE ADDITION TO LAND ACCOUNT. ONCE THE SAME IS REFLECTED IN THE BALANCE SHEET OF THE ASSES SEE AS PER THE COMMISSIONER OF INCOME TAX (APPEALS) THE SOURCES O F THE SAME WERE TO BE CONSIDERED TO HAVE BEEN EXPLAINED AND THE ADDITI ON OF RS. 22 LACS WAS THUS DELETED BY COMMISSIONER OF INCOME TAX (APPEAL S). 14 14. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF T HE COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITIONS. THE ASSESSEE HAS FILED CROSS OBJECTIONS AGAINST THE JURISDICTION OF THE AS SESSING OFFICER IN COMPLETING THE ASSESSMENT. 15. IN APPEAL FILED BY THE REVENUE LD. DR FOR THE REVENUE POINTED OUT THAT THE ASSESSEE FAILED TO APPEAR BEFORE THE ASSES SING OFFICER AND EVEN THE EVIDENCE FILED BEFORE THE COMMISSIONER OF INCOM E TAX (APPEALS) WAS NOT CONFRONTED TO THE ASSESSING OFFICER AND IN THE ABSENCE OF ANY REMAND REPORT THERE WAS NO MERIT IN DELETING ADDITION OF RS. 75 LACS WHICH WAS MADE ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESS EE. RELIANCE IN THIS REGARD WAS PLACED UPON THE DECISION OF DELHI HIGH C OURT IN CIT VS MANISH BUILD WELL (P) LTD. 245 CTR 397 (DEL). IT W AS FURTHER POINTED OUT BY THE LD. DR FOR THE REVENUE THAT THE COMMISSI ONER OF INCOME TAX (APPEALS) HAD TAKEN COGNIZANCE OF AGREEMENT TO SELL WHICH IS FURNISHED AS ADDITIONAL EVIDENCE MARKED AS ANNEXURE-A AND THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ACCEPTED THE SAME WITHOUT ADMITTING THE ADDITIONAL EVIDENCE OR WITHOUT CALLING ANY REMAND R EPORT. 16. IN RESPECT OF THE OTHER TWO GROUNDS OF APPEAL R AISED BY THE REVENUE I.E. AGAINST THE DELETION OF ADDITIONS OF RS. 50 LA CS AND RS. 22 LACS RELIANCE WAS PLACED UPON THE ORDER OF THE ASSESSING OFFICER. 17. THE APPEAL PROCEEDINGS WERE CONDUCTED BY ONE OF THE DIRECTORS SHRI ASHWINI GUPTA AND HE APPEARED ON BEHALF OF THE ASSESSEE COMPANY AS THEIR AUTHORIZED REPRESENTATIVE. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT NO SEARCH WAS CARRIED OUT IN THE CASE OF T HE ASSESSEE AND IT WAS A CASE OF SURVEY ONLY. OUR ATTENTION WAS DRAWN TO PAGE 41 OF THE PAPER BOOK WHEREIN IN PARA 1 THE NAMES OF SHRI AJAY GUPT A AND SHRI ASHWINI GUPTA WERE MENTIONED. THE LD. AR FOR THE ASSESSEE FURTHER POINTED OUT 15 THAT THE ASSESSING OFFICER IN PARA 7 HAS ADMITTED T HAT SURVEY WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 03.09. 2004. IT WAS STRESSED BY THE LD. AR FOR THE ASSESSEE THAT THE PANCHNAMA W AS THOUGH PREPARED IN THE NAME OF SHRI AJAY KUMAR GUPTA AND SHRI ASHWI NI GUPTA PLACED AT PAGE 59 OF THE PAPER BOOK BUT THE ASSESSEE WAS NOT FOUND AT THE SAID ADDRESS. THE LD. AR FOR THE ASSESSEE POINTED OUT T HAT M/S VISHNU ASSOCIATES LTD. W.E.F. 31.10.2003 BECAME M/S VALCO INDUSTRIES LTD. AND THE CHANGE IN THE NAME WAS INTIMATED TO THE ASSESSI NG OFFICER AS PER THE COMMUNICATION FILED AT PAGE 253 OF THE PAPER BOOK. FURTHER THE ADDRESS OF THE ASSESSEE WAS ALSO TRANSFERRED FROM THE RESID ENTIAL ADDRESS TO THE COMMERCIAL PLACE AND THE SAME WAS INTIMATED TO THE ASSESSING OFFICER. 18. IT WAS FURTHER POINTED OUT BY THE LD. AR FOR TH E ASSESSEE THAT THE TRANSFER ORDERS SHOULD HAVE BEEN PASSED BY COMMISSI ONER OF INCOME TAX-II AND NOT COMMISSIONER OF INCOME TAX-I. OUR A TTENTION WAS DRAWN TO THE TRANSFER ORDERS PLACED AT PAGE 105 OF THE PA PER BOOK AND THE LETTER DATED 19.05.2005 PLACED AT PAGE 108 OF THE PAPER BO OK UNDER WHICH THE RECORDS WERE TRANSFERRED ON 07.03.2005. THE LD. AR FOR THE ASSESSEE STRESSED THAT CIRCLE-7(1) WAS UNDER COMMISSIONER OF INCOME TAX-II CHANDIGARH AND HENCE TRANSFER ORDERS SHOULD HAVE B EEN PASSED BY THE COMMISSIONER OF INCOME TAX-II. THE LD. AR FOR THE ASSESSEE FURTHER STRESSED THAT THE DEPARTMENT ON THE DATE OF SEARCH HAD THE KNOWLEDGE THAT THE ASSESSEE COMPANY WAS NOT AVAILABLE AT THE ADDRESS AND THEN ALSO PANCHNAMA WAS ISSUED AT THAT ADDRESS AND SINCE THE CASES HAVE BEEN TRANSFERRED TO COMMISSIONER OF INCOME TAX-II THE C OMMISSIONER OF INCOME TAX-I COULD NOT ISSUE THE AUTHORIZATION TO S EARCH. REFERRING TO SECTION 120 OF THE INCOME TAX ACT IT WAS POINTED OU T THAT SO NO. 732 DATED 31.07.2001 DEALT WITH THE JURISDICTION. 16 19. OUR ATTENTION WAS FURTHER DRAWN TO THE COMMUNIC ATION WITH THE ASSESSING OFFICER PLACED AT PAGE 441 AND 442 OF THE PAPER BOOK AND ALSO AT 371 376 AND 440 WHEREIN OBJECTIONS WERE RAISED AGAINST THE JURISDICTION OF THE ASSESSING OFFICER. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE DEPARTMENT ON THE DATE OF SEA RCH HAD THE KNOWLEDGE THAT THE COMPANY WAS NOT EXISTENT ON THE ADDRESS ON WHICH THE WARRANT WAS ISSUED AS THE ASSESSEE HAD CHANGED ITS ADDRESS. SINCE THE CASES HAD BEEN TRANSFERRED TO CIT-II THE CIT-I COULD NOT ISS UE THE NOTICE. THE ASSESSEE FURTHER RAISED THE PLEA OF INVOKING OF JUR ISDICTION UNDER SECTION 120 AND 127 OF THE ACT AND IT WAS VEHEMENTLY STATED BY HIM THAT THE ORDER DOES NOT SAY WHAT WAS THE CAUSE OF TRANSFER A ND AS THE TRANSFER ORDER WAS ISSUED BY A NON-JURISDICTIONAL AUTHORITY THE SAME WAS INVALID. 20. ANOTHER PLEA RAISED BY THE LD. AR FOR THE ASSES SEE WAS THAT THE ACTION ON THE ASSESSEE COMPANY WAS UNDER SURVEY WHE REIN THE STATEMENT WAS ALSO RECORDED UNDER SECTION 133A OF THE ACT CO PY OF WHICH IS PLACED AT PAGES 216 TO 250 OF THE PAPER BOOK. FURT HER IT WAS POINTED OUT THAT THE BOOKS WERE IMPOUNDED UNDER THE SURVEY PROCEEDINGS AS PER THE DOCUMENTS PLACED AT PAGE 251 OF THE ACT. THE L D. AR FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE COMPANY WAS NOT PRESENT AT THE ADDRESS ON WHICH SEARCH WARRANT WAS ISSUED AND ALSO SIMULTANEOUSLY SURVEY WAS CONDUCTED UPON THE ASSESSEE AND HENCE TH E PROCEEDINGS INITIATED UNDER SECTION 153A OF THE ACT WERE INVALI D. 21. ANOTHER ASPECT RAISED BY THE LD. AR FOR THE ASS ESSEE WAS THAT THE DOCUMENT OF THE SALE DEED REFLECTS THAT THE PROPERT Y IS REGISTERED IN THE NAME OF THE COMPANY AND THE SALE CONSIDERATION HAS BEEN SHOWN AS RS. 70 LACS. IT WAS FURTHER POINTED OUT BY THE LD. AR FOR THE ASSESSEE AS NO FAULT HAD BEEN FOUND BY THE ASSESSING OFFICER IN TH E AUDITED BALANCE SHEET AND AS NO ON-MONEY TRANSACTION IS ADMITTED AG AINST THE ASSESSEE 17 THERE IS NO MERIT IN ANY ADDITION ON THIS ACCOUNT I N THE HANDS OF THE ASSESSEE. IN THE CASE OF SHRI YOGESH GUPTA IT WAS POINTED OUT THAT THERE WAS NO FINDING OF PAYMENT OF ANY ON-MONEY. THE LD. AR FOR THE ASSESSEE FURTHER POINTED OUT THAT THE ARGUMENTS RAISED IN TH E CASE OF SHRI AJAY GUPTA BE ADOPTED FOR ADJUDICATING THE PRESENT CASE OF THE ASSESSEE COMPANY. 22. ANOTHER CONTENTION RAISED BY THE ASSESSEE WAS T HAT THIS IS NOT THE CASE WHERE THE PROPERTY AS SUCH WAS UNDISCLOSED AS THE SAME HAD BEEN SHOWN IN THE BALANCE SHEET OF THE ASSESSEE AND CONS EQUENTLY NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE UNDER SECT ION 158BC OF THE ACT. ANOTHER PLEA RAISED BY THE ASSESSEE WAS THAT THE STATEMENT OF SHRI ASHWINI KUMAR GUPTA WAS RECORDED ON THE DATE OF SUR VEY COPY OF WHICH IS PLACED AT PAGES 764 ONWARDS AND IN REPLY TO QUES TION NO. 38 IT WAS POINTED OUT THAT THE AGREEMENT TO SELL WAS NOT FOUN D FROM THE POSSESSION OF THE ASSESSEE AND EVEN THE GENERAL POWER OF ATTOR NEY WAS NOT ON BEHALF OF THE ASSESSEE. AT PAGE 781 I.E. DURING TH E COURSE OF RECORDING OF STATEMENT THE PAPER DEPICTING CASH OF RS. 99.56 LACS WAS SHOWN TO THE ASSESSEE. THE LD. DR FOR THE REVENUE AT THIS INSTA NCE POINTED OUT THAT THE HAND-WRITTEN STATEMENT WHICH WAS FILED BY THE R EVENUE AS ADDITIONAL EVIDENCE WAS CONFRONTED TO THE ASSESSEE AND HENCE WAS NOT ADDITIONAL EVIDENCE. 23. THE LAST PLEA RAISED BY THE ASSESSEE WAS THAT T HERE WAS NO EVIDENCE WITH THE DEPARTMENT VIS--VIS THE MARKET VALUE OF T HE PROPERTY AND STATEMENTS OF SHRI ANIL DUBEY AND SHRI R.K.OHRI COU LD NOT BE USED AGAINST THE ASSESSEE. 24. THE LD. AR FOR THE ASSESSEE IN CONCLUSION POIN TED OUT THAT THE DISCREPANCY OF RS. 75 LACS AS REFERRED TO IN THE AS SESSMENT ORDER WAS NOT 18 ON ACCOUNT OF THE ASSESSEE BUT WAS IN RESPECT OF TH E TRANSACTION OF M/S SHARVILLA ESTATES PVT. LTD. AND STATEMENT OF SHRI R .K.OHRI AND M/S SHARVILLA ESTATES PVT. LTD. RECORDED BY THE SEARCH TEAM MAKES IT CLEAR THAT THE PERSON BEHIND THE DEAL WAS SHRI MUKESH MIT TAL AND IF HE WAS THE LINK THEN ADDITION WAS TO BE MADE IN HIS HANDS WHE REAS NO SUCH ADDITION WAS MADE IN HIS HANDS. THE LD. AR FOR THE ASSESSEE IN CONCLUSION STATED THAT THERE WAS NO JUSTIFICATION FOR THE ADDITION ON ACCOUNT OF LOOSE SLIPS AND AS THE REGISTERED SALE DEED WAS SACROSANCT NO ADDITION COULD BE MADE ON THE BASIS OF THE SAID LOOSE SLIPS. 25. THE LD. DR FOR THE REVENUE IN REJOINDER POINTE D OUT THAT THERE WAS EVIDENCE THAT THE HEAD OFFICE OF THE ASSESSEE WAS S ITUATED AT THE RESIDENTIAL ADDRESS OF ITS DIRECTOR AND THERE WAS I NFORMATION THAT CERTAIN DOCUMENTS RELATING TO THE ASSESSEE COMPANY WERE AT THAT ADDRESS AND HENCE THE SEARCH. 26. THE LEARNED D.R. FOR THE REVENUE POINTED OUT TH AT THE ASSESSMENT ORDER RELATING TO ASSESSMENT YEAR 2003-04 DATED 27. 01.2005 WAS ISSUED BY CIRCLE 3(1) CHANDIGARH AT THE SAID ADDRESS OF TH E ASSESSEE. THE WARRANT WAS VALID AS THE SEARCH WAS ON HIS EARLIER ADDRESS WHERE IN PAST THE OFFICE OF THE ASSESSEE WAS SITUATED. OUR ATTEN TION WAS FURTHER DRAWN TO THE SALE DEED DATED 02.04.2003 IN WHICH THE TRAN SACTION WAS WITH M/S VISHNU ASSOCIATES LTD. AT THE SAME ADDRESS. 27. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE CHANGE IN THE NAME OF COMPANY DOES NOT DISSOLVE THE COMPANY AND DOES N OT EXTINCT THE COMPANY AS EVEN PAN NUMBER ISSUED IN BOTH THE NAMES WERE SAME. FURTHER IT WAS STRESSED BY THE LD. DR FOR THE REVE NUE THAT WARRANT ISSUED IN OLD NAME I.E. M/S VISHNU ASSOCIATES LTD. WAS THU S VALID. IN RESPECT OF THE JURISDICTION OF THE ASSESSING OFFICER IN PAS SING THE ASSESSMENT 19 THE LD. DR FOR THE REVENUE POINTED OUT THAT THESE C OULD NOT BE THE SUBJECT MATTER OF APPEAL BEFORE THE TRIBUNAL. 28. IN RESPECT OF OTHER TWO ADDITIONS DELETED BY TH E COMMISSIONER OF INCOME TAX (APPEALS) THE LD. AR FOR THE ASSESSEE P OINTED OUT THAT THE TRANSACTIONS WERE ALREADY REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THERE WAS NO MERIT IN THE SAID ADDITIO N IN THE HANDS OF THE ASSESSEE WHILE COMPLETING THE ASSESSMENT UNDER SECT ION 158BC OF THE ACT. 29. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON T HE ORDER OF THE ASSESSING OFFICER. ITA NO.660/CHD/2008 :: REVENUES APPEAL(SHRI AJAY K UMAR GUPTA) 30. THE BRIEF FACTS IN THE PRESENT APPEAL FILED BY REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE ARE IDENTICAL TO TH E FACTS IN ITA NO.663/CHD/2008. THE ONLY DIFFERENCE IS THAT THE A DDITION OF RS.75 LACS WAS MADE IN THE HANDS OF THE COMPANY I.E. M/S VOLCO INDUSTRIES LTD. ON PROTECTIVE BASIS AND WAS MADE ON SUBSTANTIVE BASIS IN THE HANDS OF THREE DIRECTORS I.E. S/SHRI AJAY KUMAR GUPTA ASHWANI KUM AR GUPTA AND VIJAY KUMAR GUPTA. THE REVENUE IS IN APPEAL AGAINS T THE DELETION OF SAID ADDITION OFRS.25 LACS BY THE CIT (APPEALS) IN EACH OF THE THREE CASES. 31. ANOTHER ISSUE RAISED BY THE REVENUE IS AGAINST DELETION OF ADDITION OF RS.28 LACS IN EACH OF THE HANDS. THE SAID ADDIT ION WAS MADE IN THE HANDS OF THREE ASSESSEES ON ACCOUNT OF THE ALLEGED INVESTMENT IN HOUSE NO.164 SECTOR 27 CHANDIGARH. THE SALE CONSIDERAT ION SHOWN IN THE REGISTERED SALE DEED WAS RS.48 LACS BUT IN THE COMP UTER PRINTOUT FOUND FROM THE COMPUTER OF SHRI MUKESH MITTAL THE SALE CO NSIDERATION WAS RS.75 LACS. AS PER THE AGREEMENT TO SELL THE AMOU NT OF CONSIDERATION 20 WAS SHOWN AT RS.75 LACS WHEREAS AS PER THE SALE DE ED REGISTERED ON 20.2.2004 THE SALE CONSIDERATION WAS RS.48 LACS. 32. THE ASSESSING OFFICER PLACED RELIANCE ON THE DE FINITIONS OF DOCUMENT AS DEFINED UNDER SECTION 2(22AA) OF THE AC T AND ALSO UPON THE FACT THAT THE SAID PROPERTY WAS MORTGAGED FOR RAISI NG LOANS. SUM OF RS.75 LACS WAS PAID BY THE BANK AGAINST THE SAID MO RTGAGE OUT OF WHICH SUM OF RS.27 LACS WAS PAID IN CASH ON 27.1.2004 WHI CH MATCHES WITH THE MONTH MENTIONED IN THE DRAFT AGREEMENT TO SELL FOUN D FROM THE COMPUTER OF SHRI MUKESH MITTAL. THE ASSESSEE WAS ASKED TO E XPLAIN THE SOURCE OF THE SAID SUM OF RS.25 LACS FOR PURCHASE OF THE SAID PROPERTY. THE ASSESSEE IN THE COMPUTATION OF INCOME DECLARED THAT HE HAD INVESTED SUM OF RS.17 LACS IN THE PURCHASE OF THE SAID RESIDENTI AL HOUSE NO.164 SECTOR 27 CHANDIGARH JOINTLY WITH S/SHRI ASHWANI K UMAR GUPTA AND VIJAY KUMAR GUPTA DURING THE YEAR BUT NO EVIDENCE R EGARDING THE NATURE AND SOURCE OF THE SAID INVESTMENT WAS FURNISHED. T HE ASSESSING OFFICER NOTED THAT THE INVESTMENT OF RS.17 LACS INCLUDED OV ER HEAD EXPENSES AND AS NOEXPLANATION REGARDING THE INVESTMENT OF RS.28 LACS I.E. 1/3 RD SHARE OF RS.75 LACS PLUS RS.3 LACS IS EQUAL TO RS.78 LACS WAS FURNISHED BY THE ASSESSEE THE SAME WAS ASSESSED AS DEEMED INCOME UN DER SECTION 69B OF THE ACT. 33. THE CIT (APPEALS) NOTED THAT 1/3 RD SHARE OF TOTAL INVESTMENT OF RS.78 LACS COMES TO RS.26 LACS WHEREAS THE ADDITIO N WAS MADE OF RS.28 LACS. THE CIT (APPEALS) FURTHER OBSERVED THAT RS.1 7 LACS EACH WAS SHOWN TO HAVE BEEN PAID BY THE THREE CO-OWNERS FROM THEIR RESPECTIVE BANK ACCOUNTS AND HENCE THE SAME WAS OBVIOUSLY PAID FROM EXPLAINED SOURCE OF THE INCOME OF THE SAID PERSONS. THEREFOR E THERE WAS NO QUESTION OF CONSIDERING THE INVESTMENT TO THE EXTEN T OF RS.51 LACS TO BE UNEXPLAINED. IN RESPECT OF THE BALANCE AMOUNT OF R S.27 LACS THE CIT 21 (APPEALS) OBSERVED THAT BOTH THE ASSESSEE AND THE S ELLER OF THE PROPERTY HAD STATED THAT NO SUCH AMOUNT WAS EITHER PAID OR R ECEIVED ON ACCOUNT OF THIS TRANSACTION AND NO ADDITION ON ACCOUNT OF ON M ONEY COULD BE MADE ON THE BASIS OF SUSPICION THAT SAID ON MONEY DOES P ASS IN PROPERTY TRANSACTION. THE CIT (APPEALS) HELD THAT THOUGH TH E MENTION OF RS.75 LACS IN THE AGREEMENT TO SELL DOES RAISE A STRONG S USPICION THAT ON MONEY OF RS.27 LACS HAD PASSED IN SAID TRANSACTION. HOWE VER IN THE ABSENCE OF ANY CONCRETE EVIDENCE NO SUCH INFERENCE COULD BE DR AWN AND THERE WAS NO MERIT IN THE SAID ADDITION. IN RESPECT OF CASH DEPOSIT OF RS.27 LACS IN THE BANK ACCOUNT FOR GETTING THE RELEASE OF MORTGAG ED PROPERTY THE CIT (APPEALS) NOTED THAT THE SELLER HAD CATEGORICALLY R EFUSED TO HAVE RECEIVED THE SAID AMOUNT FROM THE ASSESSEE AND THER E WAS NO GROUND FOR TAKING ANY ADVERSE VIEW AGAINST THE ASSESSEE. FUR THER IN THE HANDS MR.SETIA AND HIS WIFE THE SALE CONSIDERATION OF THE PROPERTY HAD BEEN TAKEN TO RS.48 LACS ONLY AND IN VIEW THEREOF THERE WAS NO JUSTIFICATION IN CONSIDERING THE SALE CONSIDERATION AT RS.75 LAC S IN THE HANDS OF THE ASSESSEE. 34. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF T HE CIT (APPEALS) AND HAS FILED APPLICATION FOR ADMISSION OF ADDITION AL EVIDENCE. THE LEARNED D.R. FOR THE REVENUE AT THE OUTSET POINTED OUT THAT THE APPLICATION FOR ADMISSION OF ADDITIONAL GROUND HAD BEEN FILED ON 17.12.2008. PAGE NO.1 OF THE ADDITIONAL EVIDENCE W AS IN RESPECT OF THE DOCUMENT SEIZED DURING THE COURSE OF SEARCH AT THE PREMISES OF SHRI R.K.OHRI AND CONTAINED THE TERMS OF PAYMENT FOR RP 120 AND IND 70. IT WAS POINTED OUT BY THE LEARNED D.R. FOR THE REVENUE THAT THE SAID DOCUMENT WAS CONFRONTED TO THE ASSESSEE DURING THE COURSE OF RECORDING THE STATEMENT AND HENCE WAS NOT ACTUALLY IN THE FOR M OF ADDITIONAL EVIDENCE. IN RESPECT OF SECOND DOCUMENT PLACED AT PAGES 2 TO 5 OF THE 22 SAID PAPER BOOK OF ADDITIONAL EVIDENCE THE LEARNED D.R. FOR THE REVENUE STATED THAT THE SAME WAS GPA EXECUTED BY SHRI R.K O HRI IN FAVOUR OF M/S SHARVILLA ESTATES PVT. LTD. (SEPL) AND AT SR.NO .3 SPA BY SHRI R.K. OHRI IN FAVOUR OF SHRI AJAY KUMAR GUPTA DATED 1.4.2 003 PLACED AT PAGES 6 TO 8 OF THE PAPER BOOK AND ANOTHER GPA ISSUED BY SHRI R.K.OHRI IN FAVOUR OF SHRI RAJESH GUPTA AND SHRI YOGESH GUPTA D ATED 1.4.2003 PLACED AT PAGES 9 TO 12 OF THE PAPER BOOK. THE LEA RNED D.R. FOR THE REVENUE POINTED OUT THAT THE DOCUMENTS AT SR.NOS.2 AND 3 WERE RELEVANT TO THE PROPERTY TRANSACTION WERE TO BE CONSIDERED. THE DOCUMENTS AT PAGES 9 TO 12 WERE RELEVANT TO OTHER GROUP CASES. IN RESPECT OF SR.NO.5 THE LEARNED D.R. FOR THE REVENUE POINTED OUT THAT T HE SAME WERE THE REPLIES TO THE NOTICE UNDER SECTION 142(1) OF THE A CT BY SHRI R.K.OHRI PLACED AT PAGES 13 TO 18 OF THE PAPER BOOK WHICH W AS PROCURED AT LATER STAGE HAD REFERENCE VALUE. THE DOCUMENT AT SR.NO.6 WAS NOT PRESSED FOR ADMISSION AND THE SAME WAS DISMISSED. THE DOCUMENT S AT SR.NO.7 AND 8 AT PAGES 20 TO 33 OF THE PAPER BOOK WERE PORTION OF THE APPRAISAL REPORT SUBMITTED BY THE INVESTIGATION TEAM WHICH AS PER TH E LEARNED D.R. FOR THE REVENUE WERE PART OF THE ARGUMENTS OF THE DEPARTMEN T. THE NEXT DOCUMENT AT SR.NO.9 WAS NOTICE ISSUED UNDER SECTION 142(1) OF THE ACT DATED 20.10.2006 IN THE CASE OF SHRI ASHWANI KUMAR GUPTA PLACED AT PAGES 34 TO 38 OF THE PAPER BOOK WHICH ADMITTEDLY WAS PART OF THE ASSESSMENT RECORD. THE LAST DOCUMENT AT SR.NO.10 W AS SALE DEED OF HOUSE NO.164 SECTOR 27 CHANDIGARH PLACED AT PAGES 39 TO 55 OF THE PAPER BOOK WHICH HAS BEEN DISCUSSED BY THE ASSESSIN G OFFICER IN PARA NO.10 AT PAGE 8 OF THE ASSESSMENT ORDER. 35. THE PLEADINGS OF THE CASE WERE MADE BY SHRI ASH WANI KUMAR GUPTA WHO WAS ONE OF THE ASSESSEE BEFORE US AND HE SUBMIT TED THAT HE HAS ALSO FILED POA OF HIS BROTHERS IN HIS FAVOUR AND ALSO OF THE COMPANY IN HIS 23 FAVOUR AND HE IS TAKEN ON RECORD AS THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE/S. 36. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT T HAT THE DEPARTMENT HAVE ALSO FILED AN APPLICATION FOR ADMISSION OF ADD ITIONAL EVIDENCE DATED 2.1.2009 TO WHICH THE LEARNED D.R. FOR THE REVENUE POINTED OUT THAT THE SAME WAS NOT PRESSED. IN RESPECT OF OTHER APPLICA TION FILED ON 17.12.2008 THE LEARNED A.R. FOR THE ASSESSEE POINTE D OUT THAT THE DOCUMENT PLACED AT SR.NO.1 WAS NOT FOUND FROM THE P OSSESSION OF THE ASSESSEE AND THUS WAS NOT RELEVANT. IN ANY CASE TH E ASSESSING OFFICER IN THE CASE OF THE ASSESSEE TALKS OF SALE CONSIDERATIO N OF RS.2.35 CRORES WHEREAS THE AFORESAID DOCUMENT TALKS OF RS.2.25 CRO RES. SR.NO.2 WAS CLAIMED TO BE NOT RELATABLE TO THE ASSESSEE AND SR. NO.3 WAS ADMITTEDLY RELATABLE TO THE ASSESSEE. IN RESPECT OF SR.NO.5 I .E. REPLY TO THE NOTICE UNDER SECTION 142(1) OF THE ACT BY SHRI R.K.OHRI T HE LEARNED A.R. FOR THE ASSESSEE POINTED OUT THAT THE SAME HAD TO BE VE RIFIED WHETHER THESE DOCUMENTS WERE ON RECORD AND IN CASE IT WAS IT SHO ULD HAVE BEEN CONFRONTED TO THE ASSESSEE. THE LEARNED A.R. FOR T HE ASSESSEE IN RESPECT OF SR.NO.9 AND 10 STATED THAT THESE TWO WERE THE MA TTER OF FACT. 37. THE LEARNED A.R. FOR THE ASSESSEE FURTHER RAISE D OBJECTION TO THE APPLICATION FILED BY THE LEARNED D.R. FOR THE REVEN UE ALONGWITH THE DOCUMENTS TO BE ADMITTED AS ADDITIONAL EVIDENCE AS ACCORDING TO HIM THE APPLICATION WAS NOT SIGNED BY PROPER OFFICER AND TH ERE WAS NO STAGE FOR FILING THE SAID APPLICATION AS IT WAS FILED BEFORE COMMENCEMENT OF HEARING. FURTHER ALL THE DOCUMENTS WERE PROVED TO BE ADDITIONAL EVIDENCE. 38. THE LEARNED D.R. FOR THE REVENUE POINTED OUT TH AT THE DOCUMENT AT SR.1 WAS FOUND FROM THE RESIDENCE OF SHRI R.K.OHRI AND THE SAME WAS 24 CONFRONTED TO SHRI R.K.OHRI DURING THE SEARCH PROCE EDINGS AT HIS PREMISES AND HE ACCEPTED THE SAME. THE LEARNED D. R. FOR THE REVENUE POINTED OUT THAT THE RELEVANT QUESTION NOS.10 AND 1 5 UNDER WHICH SHRI R.K.OHRI ADMITTED THAT IT HAD RECEIVED RS.2.35 CROR ES THROUGH CHEQUE FROM M/S SEPL I.E. RS.1.45 CRORES FOR ONE TRANSACTI ON AND RS.90 LACS FOR OTHER TRANSACTION. THE VOLCO GROUP OF COMPANY HAD PURCHASED 23% SHARE IN THE SAID PROPERTY FOR RS.70 LACS AND 27% S HARE IN THE SAID PROPERTY WAS PURCHASED BY SHRI YOGESH GUPTA AND OTH ER FOR RS.90 LACS. 39. IT WAS POINTED OUT BY THE LEARNED A.R. FOR THE ASSESSEE THAT ON THE DATE OF SIGNING THE AGREEMENT TO SELL I.E. ON 1.4.2 003 SHRI R.K.OHRI EXECUTED A JOINT POWER OF ATTORNEY IN FAVOUR OF SHR I ASHWANI KUMAR GUPTA AND SHRI AJAY KUMAR GUPTA WHICH IS PLACED AT PAGE 4 OF THE PAPER BOOK FILED BY THE DEPARTMENT. FURTHER THE ADVANCE OF RS.5 LACS HAD BEEN PAID BY THE ASSESSEE IN DECEMBER 2002 WHICH IN TURN WAS ADVANCED TO SHRI R.K OHRI. 40. IT WAS FURTHER POINTED OUT BY THE LEARNED D.R. FOR THE REVENUE THAT IN REPLY TO QUESTION 29 SHRI R.K.OHRI HAD STATED TH AT AS PER THE DIRECTION OF SHRI MUKESH MITTAL HE HAD ISSUED GPAS AND SPAS. HE ADMITTED TO HAVE RECEIVED SUM OF RS.2.35 CRORES BY CHEQUE AGAIN ST THE SALE OF HIS SHARE IN THE PROPERTY I.E. 50% IN THE SAID PROPERTY . THE LEARNED D.R. FOR THE REVENUE POINTED OUT THAT THE ASSESSEE FAILE D TO APPEAR BEFORE THE ASSESSING OFFICER DESPITE SEVERAL OPPORTUNITIES HAV ING BEEN GIVEN BY THE ASSESSING OFFICER. SEARCH PROCEEDINGS WERE CARRIED OUT AT THE RESIDENTIAL PREMISES OF THE ASSESSEE ON 3.9.2004 AN D THE STATEMENT OF SHRI ASHWANI KUMAR GUPTA WAS RECORDED DURING THE CO URSE OF SEARCH AND AS PER QUESTION NO.40 THE DOCUMENT PLACED AT SR.NO. 1 OF THE PAPER BOOK FOR ADDITIONAL EVIDENCE WAS CONFRONTED TO THE ASSE SSEE. THE ASSESSING OFFICER HAS REFERRED TO THE SAME IN PARA 8.9 OF THE ASSESSMENT ORDER AND 25 HAS FURTHER CONCLUDED AGAINST THE ASSESSEE IN PARAS 9.3 AND 9.4 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER HAD MADE S UBSTANTIVE ADDITION IN THE HANDS OF THE THREE DIRECTORS AND PROTECTIVE ADDITION IN THE HANDS OF M/S VOLCO INDUSTRIES LTD. WHEREAS THE CIT (APPE ALS) DELETED FIRST PROTECTIVE ADDITION AND THEREAFTER DELETED SUBSTANT IVE ADDITION. THE LEARNED D.R. FOR THE REVENUE POINTED OUT THAT THE C IT (APPEALS) HAD ERRED IN DELETING THE SAID ADDITION AS NECESSARY IN FORMATION WAS NOT FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AND TH E MATTER IN ALL FAIRNESS SHOULD HAVE BEEN SENT BACK TO THE ASSESSIN G OFFICER AND THE DOCUMENTS IN TOTALITY SHOULD HAVE BEEN CONSIDERED B Y THE ASSESSING OFFICER FOR ADJUDICATING THE ISSUE. IT WAS STRESSE D BY THE CIT (APPEALS) THAT NO COGNIZANCE OF THE SAID AGREEMENT TO SELL CA N BE TAKEN. 41. IN RESPECT OF THE MERITS OF THE CASE AND JURISD ICTION OF THE ASSESSING OFFICER WHICH IS RAISED BY THE ASSESSEE V IDE HIS CROSS OBJECTION THE LEARNED A.R. FOR THE ASSESSEE HAD MA DE COMPREHENSIVE ARGUMENTS. THE FIRST OBJECTION RAISED BY THE ASSES SEE WAS THAT NO SEARCH WAS CONDUCTED UPON SHRI AJAY KUMAR GUPTA AS HE WAS NOT PRESENT AT THE SEARCH PREMISES AND THEREFORE PROVISION OF SECTION 153C OF THE ACT SHOULD HAVE BEEN APPLIED. THE LEARNED D.R. FOR THE REVENUE AT THE INSTANCE OF THE BENCH POINTED OUT THAT THE PERUSAL OF PANCHNAMA PLACED AT PAGE 59 OF THE PAPER BOOK FILED BY THE ASSESSEE WHICH IS DATED 3/4 SEPTEMBER 2004 IS IN THE NAME OF SHRI AJAY KUMAR G UPTA ALONGWITH OTHERS. 42. THE LEARNED A.R. FOR THE ASSESSEE FURTHER STRES SED THAT THE SOURCE OF RS.2.45 CRORES BEING THE SALE CONSIDERATION HAS NO LEGS TO STAND AS NO DOCUMENT WAS FOUND DURING THE COURSE OF SEARCH TO S HOW THAT THERE WAS ANY REALITY IN THE SAME. THE LEARNED A.R. FOR THE ASSESSEE DURING THE COURSE OF HEARING FILED AN AGREEMENT TO SELL WHICH IS MARKED AS A 26 WHICH TALKS OF SALE OF LAND BUILDING AND PLANT & M ACHINERY WHICH ADMITTEDLY WAS NOT FOUND DURING THE COURSE OF SEARC H AND WAS ALSO NOT PRODUCED BEFORE THE ASSESSING OFFICER BY THE ASSESS EE TO PLEAD ITS CASE. 43. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT T HAT THOUGH ADDITION OF RS.75 LACS HAD BEEN MADE BY THE ASSESSING OFFICE R BUT THERE WAS NO BASIS IN THE SAID ADDITION AS NO DOCUMENT TO SHOW T HAT ANY ON MONEY OF RS.75 LACS HAD BEEN PAID WAS FOUND DURING THE COUR SE OF SEARCH. FURTHER THE ASSESSING OFFICER HAS FAILED TO SHOW HO W THIS ON MONEY COULD BE ADDED IN THE HANDS OF THREE DIRECTORS AS T HE COMPANY CONSTITUTED OF SEVEN DIRECTORS AT THE RELEVANT TIME SO WHY ADDITION WAS MADE IN HANDS OF THREE DIRECTORS ONLY. NO INDEPEND ENT ENQUIRY WS MADE BY THE ASSESSING OFFICER REGARDING MARKET PRICE OF THE PROPERTY ON THE DATE OF SALE AND IN THE ABSENCE OF THE SAME SALE V ALUE AS IN THE REGISTERED DOCUMENT COULD NOT BE IGNORED. IT WAS V EHEMENTLY STATED BY THE LEARNED A.R. FOR THE ASSESSEE THAT THE STATEMEN T OF SHRI R.K.OHRI HAD NO RELEVANCE TO HIS CASE AS TRANSACTION IN SALE BY SHRI R.K.OHRI WAS WITH M/S SEPL WHO IN TURN SOLD THE PROPERTY TO THE ASSE SSEE. THE ASSESSEE FURTHER ADMITTED THAT NO RETURN OF INCOME HAD BEEN FILED BY THE ASSESSEE. HOWEVER A LETTER WAS LATER FILED TO THE ASSESSING OFFICER WHICH SHOULD BE CONSIDERED AS OBJECTION TO THE JURISDICTION OF THE ASSESSING OFFICER. 44. THE LEARNED A.R. FOR THE ASSESSEE FURTHER STATE D THAT NO STATEMENT OF SHRI AJAY KUMAR GUPTA WAS RECORDED BUT THE STAT EMENT RECORDED OF SHRI ASHWANI KUMAR GUPTA WAS USED FOR MAKING THE AS SESSMENT WHO ADMITTEDLY WAS THE BROTHER OF SHRI AJAY KUMAR GUPTA AND WAS DIRECTOR OF THE COMPANY. ANOTHER OBJECTION RAISED BY THE L EARNED A.R. FOR THE ASSESSEE WAS THAT THE SAID PROPERTY HAD BEEN PURCHA SED BY THE COMPANY OF WHICH THE BROTHERS WERE THE DIRECTORS. SO NO I NFERENCE COULD BE DRAWN BY THE ASSESSING OFFICER AGAINST THE ASSESSEE . IT WAS ADMITTED BY 27 THE LEARNED A.R. FOR THE ASSESSEE THAT THE GPA WAS ISSUED BY SHRI R.K.OHRI IN THE NAME OF SHRI ASHWANI KUMAR GUPTA BU T IT WAS STRESSED BY HIM THAT THERE WAS NO CONNECTION WITH SHRI R.K.O HRI OR SHRI ANIL DUBEY WHOSE STATEMENT WAS RELIED UPON BY THE ASSES SING OFFICER. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT THAT THE ENTIRE TRANSACTIONS OF SHRI R.K.OHRI WAS WITH SHRI MUKESH MITTAL AND M/S S EPL LTD. WHO WERE NOT CONNECTED WITH THE ASSESSEE AND CHEQUES AND CAS H COMPONENTS IF ANY PAID TO SHRI R.K.OHRI WAS MADE BY THE SAID CON CERN AND NOT BY THE ASSESSEE. OUR ATTENTION WAS DRAWN TO SALE DEED A T PAGE 12 OF THE PAPER BOOK FILED BY THE LEARNED D.R. FOR THE REVENUE WHER EIN AT PAGE 15 ALL THE DETAILS OF PAYMENT ARE INCORPORATED UNDER WHICH M/S VOLCO INDUSTRIES LTD. HAD PAID RS.70 LACS FOR PURCHASE OF 23% SHARE IN THE PROPERTY. THE AGREEMENT TO SELL BETWEEN SHRI R.K. OHRI AND M/S SEPL WAS DATED 1.4.2003 AND THE ASSESSEE HAD PAID RS.5 L ACS IN DECEMBER 2002 AND RS.50 LACS ON 10.2.2003 AND IT WAS PUT TO THE ASSESSEE THAT HOW THE ASSESSEE COULD GIVE ADVANCE OF RS.55 LACS BEFOR E SIGNING OF THE AGREEMENT TO SELL BETWEEN SHRI R.K.OHRI AND M/S SEP L FROM WHOM IN TURN THE ASSESSEE CLAIMED TO HAVE PURCHASED THE PRO PERTY. THE LEARNED A.R. FOR THE ASSESSEE REFERRED TO THE AGREEMENT TO SELL MARKED AS ANNEXURE A WHICH IS DATED 23.12.2002 AND IT WAS P OINTED OUT THAT THE SECOND AGREEMENT TO SELL WAS NOT THE CORRECT ONE. IT WAS STRESSED BY THE LEARNED A.R. FOR THE ASSESSEE THAT ON BOTH THE AGRE EMENTS TO SELL NO NAMES OF THE ASSESSEE APPEARS AND COPIES OF THE DOC UMENTS WERE RECEIVED ONLY IN THE COURSE OF HEARING. THE ASSESSEE HAD F ILED THREE VOLUMES OF PAPER BOOK BUT HAS REFERRED ONLY PAGE 459 AND NO OT HER PAGE HAS BEEN REFERRED TO BY THE ASSESSEE IN HIS PAPER BOOK. FU RTHER THE ASSESSEE PLACED RELIANCE ON THE DECISION OF HON'BLE ALLAHABA D HIGH COURT IN CHANDRA PRAKASH AGRAWAL VS. ACIT & OTHERS [287 ITR 172 (ALL)]. 28 45. IN RESPECT OF THE GROUND OF APPEAL NO.2 THE ASS ESSEE SUBMITTED THAT THE SAME ARGUMENTS AS IN THE CASE OF SHRI SURINDER MOHAN MITTAL HUF BE ADOPTED. THE DOCUMENTS FOUND FROM THE COMPUTER OF SHRI MUKESH MITTAL HAD NO SIGNATURE AND THE SAME COULD NOT BE R ELIED UPON TO MAKE THE AFORESAID ADDITION. 46. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. BEFORE ADJUDICATING THE ISSUE RAISED IN THE PRESENT BUNCH OF APPEALS WE WOULD LIKE TO REFER TO CERTAIN FACTS OF THE CASE. THE CAPTIONED APPEALS IS IN RELATION TO THE PROPERTY NO.70 INDUSTRIAL AREA PHASE-1 CHANDIGARH. THE SAID PROPERTY WAS JOINTLY OWNED BY SHRI R.K.OHR I S/O LATE SHRI DWARKA NATH AND SMT.ERA OHRI DAUGHTER-IN-LAW OF SHR I DWARKA NATH AND HER TWO DAUGHTERS. THERE WERE CERTAIN LITIGATIONS BETWEEN THE TWO PARTIES ON ACCOUNT OF PROPERTY DISPUTE VIS--VIS PR OPERTY NO.70 INDUSTRIAL AREA PHASE-1 CHANDIGARH AND HOUSE NO.3 42 SECTOR 9-D CHANDIGARH. THE CASES REGARDING SETTLEMENT OF ESTA TE OF LATE SHRI DWARKA NATH WERE PENDING IN CIVIL COURT AND BEFORE THE DECISION OF THE CIVIL SUIT ONE ADVOCATE SHRI MUKESH MITTAL WHO WA S HANDLING THE PROPERTY LITIGATION APPROACHED SHRI R.K.OHRI AND AS KED IN OCTOBER 2002 WHETHER HE WAS INTERESTED IN OUT OF COURT SETTLEMEN T. SHRI R.K.OHRI SETTLED THE DEAL AS PER WHICH OTHER PARTIES WERE TO SURRENDER THEIR RIGHT IN ANOTHER PROPERTY I.E. HOUSE NO.342 SECTOR 9-D CHANDIGARH FOR CERTAIN CONSIDERATION. IN ORDER TO TAKE COMPLETE O WNERSHIP OF HOUSE NO.342 SECTOR 9 CHANDIGARH HE INFORMED SHRI MUKE SH MITTAL THAT HE HAD TO SELL HIS SHARE IN PLOT NO.70 INDUSTRIAL ARE A PHASE-1 CHANDIGARH TO THE EXTENT OF 50% SHARE. SHRI MUKESH MITTAL THR OUGH ENTITY NAMED M/S SHARVILA ESTATES PVT. LTD. ENTERED INTO AN AGRE EMENT WITH SHRI R.K OHRI FOR SALE OF HIS SHARE IN PLOT NO.70 INDUS TRIAL AREA PHASE-1 CHANDIGARH FOR TOTAL CONSIDERATION OF RS.2.25 CRORE S. 29 47. SIMULTANEOUSLY SHRI MUKESH MITTAL NEGOTIATED WI TH SMT.ERA OHRI IN 2001 FOR PURCHASE OF HER SHARE ALONGWITH THE SHA RE OF HER DAUGHTERS IN THE SAID PROPERTY IN INDUSTRIAL AREA CHANDIGARH FO R TOTAL CONSIDERATION OF RS.3.20 CRORES. ON 18.6.2001 ADVANCE PAYMENT OF RS .30 LACS WAS GIVEN TO THEM. THE SAID AGREEMENT TO SELL WAS ALSO EXEC UTED BETWEEN SMT.ERA OHRI AND HER TWO DAUGHTERS ON ONE SIDE AND MRS.ALKA MITTAL W/O SHRI MUKESH MITTAL DIRECTOR OF M/S SEPL ON THE OTHER S IDE. THE SAID PROPERTY THEREAFTER WAS FINALLY SOLD TO FOUR GROUPS OF PERSONS NAMAELY; 1. M/S VALCO INDUSTRIES LTD. (FORMERLY M/S VISHNU A SSOCIATES LTD.) 184 INDL. AREA PHASE-I CHANDIGARH (RESIDENCE OF THE DIRECTORS NAMELY SH.ASHWANI KR. GUPTA AJAY KR. GUPTA AND VIJ AY KR. GUPTA IS H.NO.3007 SECTOR 19-D CHANDIGARH) (23% SHARE OF P LOT WHOSE TOTAL SIZE IS AROUND 20000 SQ.YDS.) 2. SH. RAJESH GUPTA SMT NEELAM GUPTA W/O RAJESH GUPT A. SH. YOGESH GUPTA SMT. VEENU GUPTA W/O SH. YO GESH GUPTA ALL RESIDENTS OF H.NO.1216 SECTOR 19-B CHANDIGARH (27% SHARE OF PLOT). 3. SH. NARINDER MOHAN MITTAL HUF SH. SURINDER MOHAN MITTAL HUF SH. JATINDER MOHAN MITTAL HUF THROUGH ABOVE THREE KARTA S WHO ARE ALL BROTHERS AND RESIDENTS OF H.NO.389 SECTOR 30 CHAN DIGARH (27% SHARE OF PLOT). 4. SH. VIVEK MOHAN MITTAL SH. ARVIND MITAL BROTHER O F VIVEK MOHAN MITTAL SMT. AMITA MITTAL W/O SH. VIVEK MOHAN MITTAL SMT.VASUNDHRA MITTAL W/O SH. ARVIND MITTAL RESIDEN T OF H.NO. 123 SECTOR 21-A CHANDIGARH AND H.NO.3158 SECTOR 21-D CHANDI GARH (23% SHARE OF PLOT). 48. THE 50% SHARE OF SMT.ERA OHRI AND HER DAUGHTERS WAS PURCHASED BY SHRI MUKESH MITTAL BY WAY OF GPA SPA AND WILL FROM THE SELLERS. AN AGREEMENT TO SELL WAS SIGNED BETWEEN SMT.ERA OHRI HER DAUGHTERS AND SMT.ALKA MITTAL AS DIRECTOR OF M/S SEPL DATED 18.6. 2001 FOR TOTAL CONSIDERATION OF RS.3.20 CRORES AGAINST WHICH EARN EST MONEY OF RS.30 LACS WAS PAID BY WAY OF CHEQUES. ANOTHER AGREEMENT TO SELL WAS SIGNED ON 31.1.2002 UNDER WHICH REMAINING PAYMENTS OF RS.2 .90 CRORES WERE MADE FROM THE SAME ACCOUNT OF M/S SEPL FROM WHICH E ARNEST MONEY WAS PAID. ON THE SAME DATE GPA WAS REGISTERED IN THE N AME OF SMT.ALKA MITTAL AND HER BROTHER SHRI RAJIV AGGARWAL. 30 THE SPA WAS REGISTERED IN THE NAME OF SHRI MUKESH M ITTAL AND SHRI VIVEK MOHAN MITTAL COUSIN OF SHRI MUKESH MITTAL BO TH SHOWN AS RESIDENTS OF 1526 SECTOR 18-D CHANDIGARH. THE WI LL WAS REGISTERED IN FAVOUR OF SMT.ALKA MITTAL. SHRI VIVEK MOHAN MITTAL & OTHERS PURCHASED 23% SHARE OF THE SAID PROPERTY FOR RS.80 LACS AND S HRI NARINDER MOHAN MITTAL HUF & OTHERS PURCHASED 27% SHARE OF THE SAI D PROPERTY FOR ANOTHER RS.50 LACS. THE SHARE OF SMT.ERA OHRI WAS PURCHASED BY S/SHRI SURINDER MITTAL JITENDER MOHAN MITTAL HUF AND NARI NDER MOHAN MITTAL HUF IN JOINT FROM SHRI MUKESH MITTAL FOR RS.50 LACS . THE BALANCE 23% SHARE IN THE SAID PROPERTY BELONGING TO THE SHARE O F SMT.ERA OHRI AND HER DAUGHTERS WAS PURCHASED FOR RS.80 LACS VIDE SEPARAT E SALE DEED. 49. THE 50% SHARE OF THE SAID PLOT OWNED BY SHRI R. K.OHRI WAS SOLD VIDE SEPARATE DOCUMENTS. 23% SHARE IN THE SAID PRO PERTY WAS AGREED TO BE SOLD TO M/S SEPL BY SHRI R.K.OHRI WHO IN TURN C LAIMED TO HAVE SOLD TO M/S VISHNU ASSOCIATES LTD.(NOW VALCO INDUSTRIES LTD.). S/SHRI ASHWANI KUMAR GUPTA AJAY KUMAR GUPTA AND VIJAY KUM AR GUPTA. THE AGREEMENT TO SELL BETWEEN SHRI R.K .OHRI AND SHRI A NIL DUBEY AS DIRECTORS OF M/S SEPL FOR 23% OF THE PROPERTY EXECU TED ON 1.4.2003. THE ORIGINAL AGREEMENT TO SELL WAS SEIZED FROM THE RESIDENCE SHRI R.K.OHRI AND WAS MARKED AS PAGES 73 TO 76 OF ANNEXU RE-A/342 SECTOR 9 CHANDIGARH. AS PER THE SAID AGREEMENT TOTAL SA LE PRICE PAID TO SHRI R.K OHRI WAS RS.1.45 CRORES. ON THE DATE OF EXECUT ION OF SALE I.E. 1.4.2003 GPA WAS GIVEN BY SHRI R.K.OHRI TO SHRI ASH WANI KUMAR GUPTA AND VIJAY KUMAR GUPTA AND THE WITNESSES WERE S/SHRI P.K.DASS AND AJAY SINGH. THE SPA WAS GIVEN BY SHRI R.K.OHRI TO SHRI ANIL DUBEY WHICH WAS ALSO REGISTERED ON 1.4.2003. IN RESPECT OF TH E SAID 23% SHARE OF THE SAID PROPERTY SALE DEED WAS REGISTERED BETWEEN M/S VISHNU ASSOCIATES LTD. THROUGH SHRI AJAY KUMAR GUPTA DIRECTOR AND SH RI R.K.OHRI THROUGH 31 GPA SHRI ASHWANI KUMAR GUPTA ON 2.4.2003. IN THE SAID SALE DEED THE SALE CONSIDERATION HAS BEEN SHOWN AS RS.70 LACS AND THE AMOUNT WAS PAID BY WAY OF THREE DIFFERENT CHEDQUES I.E. RS.5 LACS V IDE CHEQUE DATED 23.12.2002 RS.50 LACS VIDE CHEQUE DATED 10.2.2003 AND RS.15 LACS VIDE VHEQUE DATED 2.4.2003. 50. THE BALANCE 27% SHARE OF THE SAID PLOT WAS SOLD BY SHRI R.K.OHRI TO FOUR PERSONS NAMELY S/SHRI RAJESH GUPTA YOGESH GUPTA SMT.NEELAM GUPTA W/O SHRI RAJESH GUPTA AND SMT.VEENA GUPTA W/O SHRI YOGESH GUPTA ALL RESIDENTS OF HOUSE NO.12 SECTOR 19B CH ANDIGARH. THE AGREEMENT TO SELL WAS SIGNED BETWEEN SHRI R K.OHRI AND ALL THE FOUR PURCHASERS ON 1.4.2003 FOR SALE CONSIDERATION OF RS .90 LACS. THE ASSESSEE PAID RS.1 LAC BY DIFFERENT FOUR CHEQUES EA CH DATED 23.12.2002 AND THEN PAID RS.21.50 LACS BY FOUR DIFFERENT CHEQU ES EACH DATED 1.5.2003. THE SPA WAS GIVEN BY SHRI R.K.OHRI TO SH RI ANUP GUPTA S/O SHRI RAJESH GUPTA ON 1.4.2003. THE GPA WAS GIVEN BY SHRI R.K.OHRI TO ALL THE FOUR PERSONS ON 1.4.2003 AND THE SALE DEED WAS REGISTERED ON 2.4.2003 BETWEEN SHRI R.K.OHRI THROUGH SHRI ANUP GU PTA GPA I.E. SON OF ONE OF THE PURCHASER AND ALL THE FOUR PURCHASERS . 51. THE INCOME TAX DEPARTMENT RECEIVED CERTAIN INFO RMATION THAT THE PURCHASE CONSIDERATION OF THESE TRANSACTIONS WERE G ROSSLY UNDERSTATED. SEARCH AND SEIZURE PROCEEDINGS UNDER SECTION 132 OF THE ACT WERE TAKEN AGAINST S/SHRI R.K.OHRI NARINDER MOHAN MITTAL GROU P VISHNU ASSOCIATES LTD. AND SHRI RAJESH GUPTA GROUP ALONGWI TH SEARCH AGAINST SHRI MUKESH MITTAL AND OTHERS. DURING THE SEARCH O PERATIONS PAPER WRITTEN IN HAND BY SHRI R.K.OHRI WERE FOUND AND AS PER THE SAID PAPER TOTAL SALE CONSIDERATION FOR SALE OF PLOT NO.70 IN DUSTRIAL AREA PHASE-1 CHANDIGARH TO THE EXTENT OF 50% SHARE WAS RS.3 24 5 6 000/- WHICH WAS SPLITTED IN CASH/DD OF RS.2.25 CRORES AND CASH OF R S.99.56 LACS. THIS 32 PAPER FURTHER CONTAINED THE DETAILS OF PAYMENT TO S MT.ERA OHRI AND OTHERS FOR PURCHASE OF HOUSE NO.342 SECTOR 9 CHAN DIGARH AND RS.65 LACS WERE TO BE PAID BY CHEQUE/DD AND RS.80 LACS WE RE TO BE PAID BY CASH. THE STATEMENT OF SHRI R.K.OHRI WAS RECORDED ON THE DATE OF SEARCH I.E. 3.9.2004 AND HE ADMITTED THAT THE SAID PAPER W AS IN HIS HAND WRITING BUT ONLY ACCEPTED THE ENTRIES REGARDING CHEQUE/DD A S CORRECT AND DISOWNED ENTRIES RELATING TO CASH. AS PER SEARCH I NVESTIGATION THE SAID DOCUMENTS SEIZED FROM THE POSSESSION OF SHRI R.K.OH RI SHOWED THAT 50% SHARE OF SHRI R.K.OHRI WAS AGREED TO BE PURCHASED B Y M/S SEPL FOR RS.3.24 CRORES. ON THE OTHER HAND SMT.ERA OHRI AN D HER DAUGHTERS SOLD 50% SHARE IN THE SAID PROPERTY FOR TOTAL CONSIDERAT ION OF RS.3.20 CRORES BY CHEQUE. AS AGAINST THE PURCHASE CONSIDERATION O F RS.6 44 56 000/- THE SHARE OF SALE CONSIDERATION PAID TO SMT.ERA OHR I WAS RS.3.20 CRORES AND TO SHRI R.K.OHRI WAS RS.3 24 56 000/- BY M/S S EPL. THE DECLARED SALE CONSIDERATION BY DIFFERENT PARTIES AGAINST THE PURCHASE OF RESPECTIVE SHARES IN THE SAID PROPERTY TOTALED TO RS.2.90 CROR ES ONLY THE BREAK UP OF WHICH WAS AS UNDER: SHARE OF ERA OHRI & HER DAUGHTERS I) 23% SHARE HAS BEEN PURCHASED BY SH. VIVEK MOHAN MITTAL ARVIND MITTAL SMT. AMITA MITTAL W/O SH. VIVEK MOHAN MITTAL AND VASUNDRA MIT TAL W/O ARVIND MITTAL R/O 123 SEC-21A CHANDIGARH FOR DECLARED CONSIDERATI ON OF RS. 80 LACS . II) 27% BY SH. NARINDER MOHAN MITTAL SURINDER MOHA N MITTAL JATINDER MOHAN MITTAL R/O 389 SEC-30 CHANDIGARH FOR DECLARED CONSIDERATION OF RS. 50 LACS. SHARE OF R.K. OHRI I) 23% SHARE HAS BEEN PURCHASED BY M/S VISHNU ASSOC IATES LTD NOW VALCO INDUSTRIES 3007 SEC-19D CHANDIGARH FOR DECLARED CONSIDERATION OF R S. 70 LACS. II) 27% PURCHASED BY SH. RAJESH GUPTA YOGESH GUPTA NEELAM GUPTA W/O RAJESH GUPTA VEENU GUPTA W/O YOGESH GUPTA R/O 1216 SEC-19B FOR DECLARED CONSIDERATION OF RS. 90 LACS. 52. THE CASE OF THE REVENUE WAS THAT THE PURCHASE C ONSIDERATION BETWEEN THE PARTIES WAS RS.6.44 CRORES. HOWEVER T HE ADMITTED 33 CONSIDERATION BY THE SELLERS I.E. SHRI R.K.OHRI AND SMT.ERA OHRI FOR THE SAID PLOT WAS RS.5.45 CRORES I.E. RS.3.20 CRORES BY SMT.ERA OHRI AND RS.2.25 CRORES BY SHRI R.K.OHRI AS AGAINST THE DECL ARED SALE CONSIDERATION OF THE SAID PLOT OF RS.2.90 CRORES TO ULTIMATE BUYERS. 53. THE FIRST ASPECT OF THE ISSUE RAISED BEFORE US IS IN RELATION TO THE ADDITIONAL EVIDENCE FILED BY THE REVENUE VIDE APPLI CATION UNDER RULE 18(4) OF THE INCOME TAX APPELLATE RULES. THE SO CA LLED ADDITIONAL EVIDENCE FILED BY THE REVENUE CONSISTS OF TERMS OF PAYMENT FOR RP120 AND IND70 IN THE HAND WRITING SHRI R.K.OHRI WHICH F OUND FROM HIS POSSESSION AT HIS RESIDENCE. THE OBJECTION OF TH E LEARNED A.R. FOR THE ASSESSEE AGAINST THE ADMISSION OF THE SAID ADMISSIO N THAT IT IS NOT FOUND FROM HIS POSSESSION BUT THE SAID DOCUMENT WAS CONFR ONTED TO SHRI ASHWANI KUMAR GUPTA DURING THE COURSE OF RECORDING OF HIS STATEMENT AND THE SAME ONCE BEING CONFRONTED TO THE RESPECTIV E PARTIES CANNOT BE CALLED AN ADDITIONAL EVIDENCE AND MERITS TO BE ADMI TTED. THE DOCUMENT AT SR.NO.2 GPA EXECUTED BY SHRI R.K.OHRI IN FAVOUR OF M/S SEPL HAD ALSO BEEN REFERRED TO BY THE ASSESSING OFFICER UNDE R PARA 8.2 OF THE ASSESSMENT ORDER AS SIMILAR GPA HAD BEEN EXECUTED I N FAVOUR OF SHRI ASHWANI KUMAR GUPTA ALSO AND HENCE THE SAME IS NOT IN THE FORM OF ADDITIONAL EVIDENCE THOUGH SO CALLED. THE NEXT DOC UMENT IS SPA ISSUED BY SHRI R.K.OHRI IN FAVOUR OF SHRI AJAY GUPTA WHO I S ONE OF THE DIRECTOR OF M/S VALCO INDUSTRIES LTD. AND THE SAID DOCUMENT EVEN IF IT IS ADDITIONAL EVIDENCE NEEDS TO BE ADMITTED AS IT RELA TES TO THE TRANSACTION. SIMILAR GPA HAD BEEN ISSUED IN FAVOUR OF SHRI RAJES H GUPTA AND SHRI YOGESH GUPTA BY SHRI R.K.OHRI ON 1.4.2003 WHICH IS NOT RELEVANT TO THE PRESENT ASSESSEE BUT IS RELEVANT TO OTHER GROUP CAS ES. THE NEXT DOCUMENTS I.E. REPLY TO NOTICE UNDER SECTION 142(1) OF THE ACT DATED 20.11.2006 BY SHRI R.K.OHRI IS THE DOCUMENT PROCURE D BY THE 34 DEPARTMENT ON A LATER DATE FROM THE ASSESSING OFFIC ER OF SHRI R.K.OHRI IN WHICH HE ADMITS THAT HE HAD SOLD 50% SHARE IN HI S PROPERTY. THE LEARNED D.R. FOR THE REVENUE POINTED OUT THAT THIS WAS ONLY A REFERENCE MATERIAL. THE DOCUMENT AT SR.NO.6 IS NOT PRESSED FOR ADMISSION AND HENCE THE SAME IS DISMISSED. THE DOCUMENTS AT SR.N OS. 7 AND 8 ARE PART OF APPRAISAL REPORT AND AS PER THE LEARNED D.R. FOR THE REVENUE THESE ARE PART OF THE ARGUMENTS OF THE DEPARTMENT. HOWEVER WE FIND NO MERIT IN THE SAID DOCUMENT AND THE SAID DOCUMENTS AT SR.NOS. 7 AND 8 ARE NOT ADMITTED AS ADDITIONAL EVIDENCE. THE DOCUMENT AT SR.NO.9 IS ADMITTEDLY NOTICE ISSUED BY THE DEPARTMENT UNDER SECTION 142(1 ) OF THE ACT IN THE CASE OF SHRI ASHWANI KUMAR GUPTA WHICH IS PART OF R ECORD AND IS TO BE CONSIDERED FOR ADJUDICATING THE ISSUE. THE LAST DO CUMENT AT SR.NO.10 IS SALE DEED OF HOUSE NO.164 SECTOR 27 CHANDIGARH WH ICH HAS BEEN CONSIDERED BY THE ASSESSING OFFICER IN THE CASE OF SHRI AJAY GUPTA UNDER PARA 10 AT PAGE 8 OF THE ASSESSMENT ORDER AND THE S AME IS TAKEN ON RECORD. THE LEARNED A.R. FOR THE ASSESSEE IN ANY CASE HAS STATED THAT BOTH THE DOCUMENTS AT SR.NO.9 AND 10 WERE MATTER OF FACT AND WERE TO BE CONSIDERED. THE LEARNED A.R. FOR THE ASSESSEE HAD ALSO OBJECTED TO ADMISSION OF THE WRITTEN NOTE ACCOMPANYING THE ADDI TIONAL EVIDENCE BEING NOT SIGNED BY PROPER PERSON HAS NOT MERIT AS THE SAME AT BEST CAN BE TAKEN WRITTEN ARGUMENTS AND THE SAME ARE ADMITTE D. 54. THE REVENUE HAS ALSO FILED ON RECORD THE STATEM ENT OF SHRI R.K.OHRI RECORDED DURING THE COURSE OF SEARCH AT HI S RESIDENCE ON 3.9.2004. FURTHER STATEMENT OF SHRI ANIL DUBEY REC ORDED ON OATH UNDER SECTION 131 OF THE ACT ON 18.10.2004 HAS ALSO BEEN FILED ON RECORD BY THE LEARNED D.R. FOR THE REVENUE. PAPER BOOK HAD ALSO BEEN FILED BY THE REVENUE WHICH CONSISTED OF SPA IN RESPECT OF SHRI A NIL DUBEY DATED 1.4.2003 GPA OF SHRI R.K.OHRI IN FAVOUR OF SHRI AS HWANI KUMAR GUPTA 35 AND SHRI VIJAY GUPTA DATED 1.4.2003 AND AN AGREEMEN T TO SALE BY SHRI R.K.OHRI WITH M/S SEPL DATED 1.4.2003. FURTHER SAL E DEED OF 23% SHARE WITH M/S VISHNU ASSOCIATES LTD. HAD BEEN FILED ALON GWITH SALE DEED OF HOUSE NO.164 SECTOR 27 CHANDIGARH. THE ASSESSEE HAS FILED VOLUMINOUS PAPER BOOK BUT AS POINTED OUT BY US IN T HE PARAS HEREINABOVE ONLY PAGE 459 HAS BEEN REFERRED TO BY THE ASSESSEE AND NO OTHER PAGE HAS BEEN REFERRED TO BY THE LEARNED A.R. FOR THE ASSESS EE. 55. SHRI R.K.OHRI IN ORDER TO SELL HIS SHARE IN THE PROPERTY HAD ENTERED INTO AN AGREEMENT WITH M/S SHARVILLA ESTATES LTD. O N 1.4.2003 WHICH IS AT PAGES 8 TO 11 OF THE PAPER BOOK FILED BY THE REV ENUE. THE LEARNED A.R. FOR THE ASSESSEE ON THE OTHER HAND HAD FILED AN AGREEMENT TO SELL EXECUTED ON 23.12.2002 BY SHRI R.K.OHRI WITH M/S SE PL WHICH IS MARKED AS ANNEXURE-A IN WHICH THE TOTAL CONSIDERATI ON IS MENTIONED AT RS.1.45 CRORES. WE MAKE A REFERENCE TO VARIOUS COV ENANTS IN THE TWO DIFFERENT AGREEMENTS TO SELL IN ORDER TO UNDERSTAND THE TERMS AGREED UPON BETWEEN THE PARTIES AND ALSO TO UNDERSTAND WHICH OF THE AGREEMENTS IS ACTUALLY EXECUTED BETWEEN THE PARTIES. ADMITTEDLY THE AGREEMENT TO SELL FILED BY THE ASSESSEE WHICH IS MARKED AS ANNEXURE-A WAS FILED BEFORE THE CIT (APPEALS) AND EVEN BEFORE US DURING THE COU RSE OF HEARING SEPARATELY AND NOT AS PART OF VOLUMINOUS PAPER BOOK . THE SAID AGREEMENT TO SELL IS EXECUTED BETWEEN SHRI R.K.OHRI AND M/S SEPL FOR CONSIDERATION OF RS.1.45 CRORES. ONLY A PHOTOCOPY OF THE SAID AGREEMENT HAS BEEN FILED AND THE ORIGINAL AGREEMENT TO SELL HAS NOT BEEN PRODUCED BY THE ASSESSEE. EVEN THE BACK SIDE OF T HE STAMP PAPERS HAS NOT BEEN PHOTOCOPIED AND FILED BEFORE US. THE SAID AGREEMENT MARKED AS ANNEXURE-A WAS FILED BEFORE THE CIT (APPEALS) WHO H AS ADJUDICATED THE ISSUE AFTER MAKING REFERENCE TO THE SAME BUT WITHO UT CALLING FOR ANY REMAND REPORT IN RESPECT OF THE SAID ADDITIONAL EVI DENCE. ANOTHER 36 ASPECT TO BE KEPT IN MIND IS THAT SHRI R.K.OHRI HAD ISSUED RESPECTIVE SPAS AND GPAS IN FAVOUR OF DIFFERENT PERSONS ON 1.4 .2003 AND NO SUCH SPA AND GPA WAS ISSUED ON 23.12.2002 I.E. AS PER TH E AGREEMENT TO SELL MARKED AS ANNEXURE-A. 56. THE CONCISE TERMS OF AGREEMENT BETWEEN SHRI R.K .OHRI AND M/S SEPL VIDE AGREEMENT TO SELL DATED 1.4.2003 PLACED A T PAGES 8 TO 11 OF THE PAPER BOOK FILED BY THE REVENUE WERE AS UNDER : A) SHRI R.K.OHRI AGREED TO SELL 23% PORTION OF TOTA L OF 50% SHARE IN THE SAID PROPERTY ALONGWITH EXISTING BUILD ING CONSTRUCTED THEREUPON. B) THE FRONT PORTION OF THE SAID PLOT ALONGWITH BUI LDING WAS IN POSSESSION OF TENANT I.E. STATE BANK OF INDIA AND T HE REMAINING PORTION OF THE PLOT AS WELL AS THE EXISTI NG BUILDING ERECTED THEREOF WERE LYING VACANT AND SALE WAS OF B ACK PORTION. C) THE SELLER ADMITTED THAT THERE WAS DISPUTE WITH HIS BROTHERS AND SISTERS PENDING IN THE CIVIL COURTS AND SOME AM OUNT HAD TO BE PAID TO THEM. D) THE SELLER FURTHER ACKNOWLEDGED THAT HE HAD AGRE ED TO SELL 23% SHARE IN THE PORTION OF PLOT I.E. PORTION BEHIN D THE TENANTED PORTION WITH PASSAGE FOR ENTRY FROM THE MA IN GATE VIDE AGREEMENT TO SELL DATED 23.12.2002. E) IN THE SALE DEED THE ASSESSEE ACKNOWLEDGED RECEI PT OF RS.1.45 CRORES AS THE SALE PRICE OF HIS 23% SHARE IN THE PL OT AND THE MODE OF PAYMENT WAS AS UNDER: F) THE SELLER ACKNOWLEDGED THAT AFTER RECEIVING SAL E CONSIDERATION HE HAD EXECUTED GPA AND SPA AND HAD A LSO HANDED OVER PHYSICAL AND VACANT POSSESSION OF THE A REA OF THE PLOT TO THE PURCHASER OF THE PLOT. 37 G) THE PURCHASER WAS AT LIBERTY TO GET THE SALE EFF ECTED IN ITS OWN NAME OR IN THE NAME OF THE NOMINEE. H) THE ORIGINAL SALE DEEDS WERE HANDED OVER TO THE PURCHASER. I) THE EXPENSES OF THE STAMP AND REGISTRATION CHARG ES WERE TO BE BORNE BY THE PURCHASER ONLY. J) THERE WAS A CLAUSE AGAINST NON ENCASHMENT OF POS T DATED CHEUQES AND CANCELLATION OF TERMS OF AGREEMENT. 57. AFTER THE EXECUTION OF AGREEMENT TO SELL DATED 1.4.2003 ON 2.4.2003 THE SALE DEED IN RESPECT OF 23% SHARE IN T HE SAID PROPERTY WAS EXECUTED BY SHRI R.K.OHRI THROUGH GPA SHRI ASHWANI KUMAR GUPTA S/O LATE SHRI VISHNU KUMAR GUPTA IN FAVOUR OF M/S VISHN U ASSOCIATES LTD. THROUGH ITS DIRECTOR SHRI AJAY KUMAR GUPTA S/O LATE SHRI VISHNU KUMAR GUPPTA BOTH AT HOUSE NO.3307 SECTOR 19D CHANDIGA RH. THE TOTAL SALE CONSIDERATION OF 23% SHARE IN THE SAID PLOT WAS FIX ED AT RS.70 LACS OUT OF WHICH SUM OF RS.5 LACS WAS PAID THROUGH CHEQUE O N 23.12.2002 RS.50 LACS VIDE CHEQUE DATED 10.2.2003 AND RS.15 LACS THR OUGH CHEQUE DATED 2.4.2003. VIDE CLAUSE 2 OF THE SAID AGREEMENT IT WAS ACKNOWLEDGED THAT THE VENDOR HAD ALREADY HANDED OVER PHYSICAL AND VAC ANT POSSESSION OF THE PORTION OF THE SAID PLOT TO THE VENDEE. THE E XPENSES OF SALE DEED WERE BORNE BY THE VENDEE. BESIDES OTHER TERMS AND CONDITIONS AGREED UPON BETWEEN THE PARTIES IT WAS ALSO ACKNOWLEDGED THAT THE VENDOR HAD OBTAINED NOC FROM THE ESTATE OFFICER CHANDIGARH WH ICH WAS VALID UP TO 15.5.2003. THIS DOCUMENT WAS REGISTERED ON 2.4.200 3 AND IS PLACED AT PAGES 12 TO 20 OF THE PAPER BOOK FILED BY THE DEPAR TMENT. THE PERUSAL OF THE SAID SALE DEED REFLECTS THAT THE PAYMENT FOR PURCHASE OF THE SAID 23% SHARE IN THE PROPERTY WAS MADE BY THE ASSESSEE PRIOR TO EXECUTING ANY AGREEMENT WITH ANY PERSON. THE ASSESSEE CLAIMS TO HAVE PAID RS.5 38 LACS ON 23.12.2002. RS.50 LACS VIDE CHEQUE DATED 1 0.2.2003 AND ONLY BALANCE SUM OF RS. 15 LACS WAS PAID THROUGH CHEQUE DATED 2.4.2003. 58. THE REVENUE HAD ALSO PLACED ON RECORD COPY OF G PA ISSUED BY SHRI R.K.OHRI IN FAVOUR OF SHRI ASHWANI KUMAR GUPTA AND SHRI VIJAY KUMAR GUPTA DATED 1.4.2003 WHICH IS PLACED AT PAGES 4 TO 7 OF THE PAPER BOOK FILED BY THE REVENUE IN WHICH POWERS HAD BEEN GIVEN TO EXECUTE SALE DEED IN ADDITION TO VARIOUS OTHER POWERS. THE SPA WAS EXECUTED BY SHRI R.K.OHRI IN FAVOUR OF SHRI ANIL DUBEY IN WHICH HE W AS GIVEN CERTAIN LIMITED POWERS IN RESPECT OF THE SAID TRANSACTION. THE COPY OF THE SAID SPA IS PALCED AT PAGES 1 TO 3 OF THE PAPER BOOK FIL ED BY THE REVENUE. SHRI R.K.OHRI ALSO ISSUED GPA IN FAVOUR OF SHRI RAJ ESH KUMAR S/O SHRI KANGAN LAL DIRECTOR OF SEPL WHICH WAS FILED AS AN ADDITIONAL EVIDENCE AND THE SPA IN FAVOUR OF SHRI AJAY KUMAR GUPTA TO DO CERTAIN ACTS WHICH WAS ALSO FILED BY THE DEPARTMENT AS ADDITIONA L EVIDENCE. ANOTHER GPA WAS ISSUED IN FAVOUR OF SHRI RAJESH GUPTA AND F AMILY MEMBERS WHO HAVE PURCHASED BALANCE 27% SHARE FROM SHRI R.K.OHRI . THE SAID GPAS ARE DATED 1.4.2003. IN ALL THE DOCUMENTS I.E. GPA AND SPA EXECUTED BY SHRI R.K.OHRI THE WITNESSES WERE THE SAME I.E. SHRI P.K.DASS ADVOCATE AND SHRI AJAY SINGH R/O DADU MAJRA COLONY CHANDIGA RH. IN THE AGREEMENT TO SELL DATED 1.4.2003 THE SECOND WITNESS IS THE SAME I.E. SHRI AJAY SINGH. IN THE SALE DEED EXECUTED ON 2.4.2003 BOTH THE WITNESSES ARE SAME I.E. S/SHRI P.K.DASS ADVOCATE AND AJAY SI NGH. 59. THE ASSESSEE ON THE OTHER HAND PLACED RELIANC E ON AN AGREEMENT TO SALE DATED 23.12.2002 WHICH IS PLACED AS AN ANNEXUR E-A IN THE APPEAL FOLDER IN WHICH HE POINTS OUT THAT THE VALUE OF THE PLOT AND STRUCTURE WAS FIXED AT RS.70 LACS AND VALUE OF MATERIAL AND MACHI NERY WAS FIXED AT RS.75 LACS TOTALING RS.1.45 CRORES. THE SAID AGREE MENT TO SELL FILED BY THE ASSESSEE HAS NO EVIDENTIARY VALUE AS FIRST THE ORIGINAL OF THE SAID 39 AGREEMENT HAS NOT BEEN FILED ON RECORD NOR PRODUCED AND THE ASSESSEE HAD NOT EVEN FILED THE SAID AGREEMENT TO SELL BEFOR E THE ASSESSING OFFICER AND EVEN MADE ANY SUBMISSION IN THIS REGARD BEFORE THE ASSESSING OFFICER. FURTHER THE SO CALLED AGREEMENT TO SELL WAS NOT FOUND DURING THE COURSE OF SEARCH FROM THE PREMISES OF SH RI R.K.OHRI. THE ASSESSEE FILED COPY OF THE AGREEMENT TO SELL AS ADD ITIONAL EVIDENCE BEFORE THE CIT (APPEALS) WHO HAS ADMITTED THE SAME AND ADJUDICATED THE ISSUE PLACING EVIDENCE ON THE SAME BUT WITHOUT FOL LOWING THE PROCEDURE LAID DOWN IN RULE 46A OF THE INCOME TAX RULES. THE PROVISIONS OF RULE 46A OF IT RULES CLEARLY PROVIDE THAT BEFORE ADMITTI NG ANY ADDITIONAL EVIDENCE THE COMMISSIONER OF INCOME TAX (APPEALS) MUST COME TO A FINDING THAT THE CONDITIONS PRESCRIBED IN RULE 46A HAVE BEEN SATISFIED. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS M ANISH BUILDWELL PVT. LTD. IN 245 CTR (P&H) 397 HAD LAID DOWN THAT T HE CONDITIONS PRESCRIBED IN RULE 46A MUST BE SHOWN TO EXIST BEFOR E ADDITIONAL EVIDENCE IS ADMITTED AND EVERY PROCEDURAL REQUIREMENT MENTIONED IN THE RULE HAS TO BE STRICTLY COMPLIED WITH SO THAT T HE RULE IS MEANINGFULLY EXERCISED AND NOT EXERCISED IN A ROUTINE OR CURSORY MANNER. THE HON'BLE HIGH COURT FURTHER HELD THAT WHERE THE COMM ISSIONER OF INCOME TAX (APPEALS) WITHOUT BEING PROMPTED BY THE ASSESSE E WHILE DEALING WITH THE APPEAL CONSIDERED IT FIT TO CAUSE OR MAKE FURTHER ENQUIRY BY VIRTUE OF POWERS UNDER SECTION 250(4) OF THE ACT T HEN THE REQUIREMENTS OF RULE 46A NEED NOT TO BE FOLLOWED BUT WHERE THE A SSESSEE INVOKES RULE 46A THEN IT IS INCUMBENT UPON THE COMMISSIONER OF INCOME TAX (APPEALS) TO COMPLY WITH THE REQUIREMENTS OF THE RU LE STRICTLY. THE AGREEMENT TO SELL MARKED AS ANNEXURE-A FILED BY THE ASSESSEE DOES NOT INSPIRE CONFIDENCE AND CANNOT BE RELIED UPON AS THE ASSESSEE HAD FAILED TO BRING ON RECORD ANY EVIDENCE TO PROVE ITS VERACI TY. 40 60. THE CLAIM OF THE ASSESSEE BEFORE US WAS THAT IT HAD PURCHASED THE SAID PROPERTY FOR TOTAL CONSIDERATION OF RS.70 LACS WHICH HAD BEEN DECLARED IN HIS ACCOUNT AND HENCE NO ADDITION IS WA RRANTED IN THE HANDS OF THE ASSESSEE PURSUANT TO SEARCH PROCEEDINGS CARR IED OUT IN THE CASE OF THE ASSESSEE. THE CASE OF THE REVENUE ON THE OTHE R HAND IS THAT M/S VISHNU ASSOCIATES LTD. NOW M/S VALCO INDUSTRIES LTD . HAD PURCHASED THE SAID PORTION OF PLOT FROM SHRI R.K.OHRI BY USING TH E NAME OF M/S SEPL WHO IS INTERMEDIARY. THE SEQUENCE OF EVENTS AND F UND FLOW RELATING TO THE TRANSACTION HAVE TO BE CONSIDERED FOR ADJUDICAT ING THE ISSUE RAISED IN THE PRESENT SET OF APPEALS. 61. DURING THE COURSE OF SEARCH AND SEIZURE OPERATI ON CARRIED OUT AT THE RESIDENTIAL PREMISES OF SHRI R.K.OHRI ON 3/4.9.2003 AN AGREEMENT TO SELL EXECUTED BY SHRI R.K.OHRI WITH M/S SEPL DATED 1.4.2 003 WAS FOUND. THE COPY OF THE SAID AGREEMENT TO SELL IS PLACED AT PAGES 8 TO 11 OF THE PAPER BOOK. AS REFERRED BY US IN THE PARAS HEREINA BOVE THE SAID AGREEMENT WAS EXECUTED BY SHRI R.K.OHRI IN FAVOUR O F M/S SEPL THROUGH HIS DIRECTOR SHRI ANIL DUBEY FOR TOTAL CONSIDERATIO N OF RS.1.45 CRORES. THE SAID DOCUMENT TALKS OF THE PAYMENT RECEIVED PRI OR TO THE DATE OF EXECUTION OF THE AGREEMENT TO SELL AND CERTAIN PAYM ENTS RECEIVED BY WAY OF POST-DATED CHEQUES DATED 1.5.2003. A SUM OF RS .71 LACS WAS RECEIVED BY SELLELR SHRI R.K.OHRI UP TO 15.2.2003 A ND BALANCE SUM OF RS.74 LACS WAS RECEIVED BY WAY OF POST-DATED CHEQUE S. IN THE SAID AGREEMENT THOUGH THERE IS A REFERENCE TO AN AGREEME NT TO SELL DATED 23.12.2002 BUT THE COPY OF THE SAID AGREEMENT WAS N OT FOUND DURING THE COURSE OF SEARCH NOR ANY COPY WAS PRODUCED BEFORE THE ASSESSING OFFICER. THE RECITALS OF THE AGREEMENT OF SALE DAT ED 1.4.2003 TALKS OF FRONT PORTION OF THE SAID PLOT ALONGWITH EXISTING B UILDING BEING IN POSSESSION OF TENANT I.E. STATE BANK OF INDIA AND R EMAINING PORTION OF 41 THE PLOT ALONGWITH BUILDING ERECTED THEREUPON WAS C LAIMED TO BE LYING VACANT AND WAS IN EXCLUSIVE POSSESSION OF THE SELLE R. THE SELLER WAS INTERESTED IN SELLING THE BACK PORTION AS HE HAD TO SETTLE THE DISPUTE PENDING WITH HIS BROTHERS AND SISTER IN THE CIVIL C OURTS CHANDIGARH. THE SELLER SHRI R.K.OHRI SPECIFIED IN THE AGREEMENT TO SELL THAT HE AFTER RECEIVING FULL AND FINAL SALE CONSIDERATION HAD EXE CUTED GPA AND SPA WHICH WERE IRREVOCABLE AND HAD ALSO HANDED OVER THE PHYSICAL AND VACANT POSSESSION OF THE PROPERTY. IT WAS ALSO AGREED VID E CLAUSE-7 OF THE SAID AGREEMENT TO SELL THAT IN CASE THE POST-DATED CHEQU ES ISSUED BY THE PURCHASER IN FAVOUR OF THE SELLER BOUNCES THE ENTI RE AMOUNT PAID BY THE PURCHASER TO THE SELLER SHALL STAND FORFEITED AND T HE AGREEMENT WOULD BECOME NULL AND VOID. IT IS FURTHER AGREED BETWEEN THE PARTIES THAT THE POSSESSION OF THE PROPERTY ALREADY GIVEN WOULD BE R EVOKED AND TAKEN BACK. IN CASE THE CHEQUES ARE WITHHELD FOR PRESENT ATION BECAUSE OF ANY WRITTEN REQUEST OF THE PURCHASER THEN THE PURCHASE R WAS LIABLE TO PAY TO THE SELLER INTEREST @ 12% W.E.F. 1.4.2003 TILL THE DATE OF ENCASHMENT OF POST-DATED CHEQUES. 62. THE AGREEMENT TO SELL EXECUTED BETWEEN SHRI R.K .OHRI AND INTERMEDIARY M/S SEPL IS DATED 1.4.2003 AND IT TALK S ABOUT HIS 23% SHARE IN THE INDUSTRIAL PLOT NO.70 INDUSTRIAL AREA PHASE-1 CHANDIGARH BEING SOLD ALONGWITH EXISTING BUILDING CONSTRUCTED THEREUPON. THE SELLER SHRI R.K.OHRI HAD AGREED TO SELL BACK PORTION OF TH E PROPERTY ALONGWITH CONSTRUCTED BUILDING THEREUPON TO THE SELLER FOR CO NSIDERATION OF RS.1.45 CRORES AND AGAINST WHICH HAD RECEIVED CERTAIN PAYME NTS BY WAY OF POST- DATED CHEUQES. THE TERMS AND CONDITIONS OF THE SAI D AGREEMENT FURTHER PROVIDED THAT IN CASE OF NON-ENCASHMENT OF ANY OF T HE POST-DATED CHEQUES THE ENTIRE AMOUNT PAID TILL DATE WOULD STA ND FORFEITED AND THE PURCHASER WOULD HAND OVER THE POSSESSION OF THE PRO PERTY AS THE 42 AGREEMENT WOULD BECOME NULL AND VOID. THE SAID CL AUSE DOES NOT MAKE ANY REFERENCE TO RETURN OF ANY MACHINERY. THE SAID AGREEMENT HAVING BEEN FOUND FROM THE POSSESSION OF THE SELLER SHRI R .K.OHRI DURING THE COURSE OF SEARCH PROCEEDINGS AT HIS PREMISES AND HA VING BEEN ADMITTED BY HIM IS THE CONCLUSIVE PROOF OF SALE OF 23% SHARE OF THE PROPERTY BY SHRI R.K.OHRI. IT MAY BE MENTIONED HERE THAT AS P ER CLAUSE-7 OF THE SAID AGREEMENT TO SELL IN CASE AGREEMENT IS TERMIN ATED THEN THE MONEY ALREADY RECEIVED BY THE SELLER WOULD BE FORFEITED A ND THE POSSESSION OF THE PROPERTY HANDED OVER BACK TO THE SELLER. THA T THE SAID AGREEMENT TO SELL DOES NOT TALK OF ANY MACHINERY BUT ONLY REFER TO RETURN OF POSSESSION OF PLOT OF LAND BEHIND PORTION OCCUPIED BY THE TEN ANT AND BUILDING CONSTRUCTED THEREUPON. THE DIFFERENT COVENANTS OF THE AGREEMENT TO SELL EXECUTED ON 1.4.2003 DO NOT MAKE MENTION OF ANY PLA NT AND MACHINERY. IN CASE THERE IS TRUTH IN THE PLEA OF THE ASSESSEE THAT THE SAID SALE CONSIDERATION OF RS.1.45 CRORES CONSISTED OF VALUE OF MACHINERY ALSO THEN THERE WOULD HAVE BEEN RECITAL OF RETURN OF PLA NT & MACHINERY WHICH IS MISSING IN THE SAID AGREEMENT TO SELL. IT CANNO T BE CASE OF SELLER THAT HE RECEIVES BACK THE PROPERTY ON TERMINATION OF AGR EEMENT BUT DOES NOT RECEIVE BACK THE MACHINERY WHICH HAD SUBSTANTIAL V ALUE AS PER THE CASE PUT UP BY THE ASSESSEE BEFORE US. IN THE ABSENCE O F SAME WE FIND NO MERIT IN THE CLAIM OF THE ASSESSEE IN THIS REGARD A ND HENCE THE SAME IS DISMISSED. 63. ANOTHER ASPECT OF THE TRANSACTION IS THAT ON 1. 4.2003 SHRI R.K.OHRI EXECUTED SPA IN FAVOUR OF S/SHRI ASHWANI KUMAR GUPT A AND ANIL DUBEY AND GPA IN FAVOUR OF SHRI VIJAY KUMAR GUPTA COPIES WHICH ARE PLACED IN THE PAPER BOOK FILED BY THE DEPARTMENT AT PAGES 1 TO 7. THE ASSESSING OFFICER MADE ENQUIRIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND IT WAS FOUND THAT SHRI ANIL DUBEY O NE OF THE DIRECTORS 43 M/S SEPL WAS A PERSON OF SMALL MEANS AND HE HAD NO KNOWLEDGE ABOUT THE WORKING OF THE COMPANY. THE GPA WAS EXECUTED I N FAVOUR OF S/SHRI ASHWANI KUMAR GUPTA AND VIJAY KUMAR GUPTA WHO WERE THE ULTIMATE BUYERS I.E. THE COMPANY IN WHICH THEY WERE THE DIRE CTORS PURCHASED THE SAID 23% SHARE. 64. THE SALE DEED IN RESPECT OF 23% SHARE IN FAVOUR OF M/S VISHNU ESTATES LTD. WAS EXECUTED ON 2.4.2003 UNDER WHICH S HRI R.K.OHRI THROUGH GPA HOLDER SHRI ASHWANI KUMAR GUPTA REGISTE RED ON 1.4.2003 SOLD THE PROPERTY IN FAVOUR OF M/S VISHNU ASSOCIATE S LTD. THROUGH HIS DIRECTOR SHRI AJAY KUMAR GUPTA. THE COPY OF THE SA ID SALE DEED IS PLACED AT PAGES 12 TO 20 OF THE PAPER BOOK FILED BY THE REVENUE. AS PER THE COVENANTS OF THE SALE DEED IT WAS AGREED UPON T HAT 23% SHARE IN THE SAID PROPERTY WOULD BE SOLD TO M/S VALCO INDUSTRIES LTD. FOR TOTAL CONSIDERATION OF RS.70 LACS. THE PURCHASER I.E. M/ S VALCO INDUSTRIES LTD. HAD PRIOR TO SIGNING THE SALE DEED MADE PAYME NT TO THE EXTENT OF RS.55 LACS OUT OF TOTAL CONSIDERATION OF RS.70 LACS I.E. RS.5 LACS THROUGH CHEQUE DATED 23.12.2002 AND RS.50 LACS THROUGH CHEQ UE DATED 10.2.2003. THE BALANCE CONSIDERATION OF RS.15 LACS WAS PAID VI DE CHEQUE DATED 2.4.2003. THE PHYSICAL POSSESSION OF THE PROPERTY WAS HANDED OVER AS PER RECITALS OF THE SALE DEED BEFORE THE EXECUTION OF THE SAID SALE DEED. THIS ESTABLISHES THE CASE OF THE ASSESSING OFFICER THAT THE ASSESSEE WAS INVOLVED IN THE TRANSACTION OF PURCHASE OF THE PROP ERTY PRIOR TO THE SIGNING OF THE SALE DEED AS THE SALE CONSIDERATION WAS PAID IN ADVANCE WITHOUT EXECUTING ANY DOCUMENT. 65. IN THE STATEMENT RECORDED DURING THE COURSE OF SEARCH ON 3.4.2003 SHRI R.K.OHRI ADMITTED THAT HE HAD SOLD HIS SHARE I N THE PROPERTY NO.70 INDUSTRIAL AREA PHASE-1 CHANDIGARH THROUGH SHRI M UKESH MITTAL FOR SALE CONSIDERATION OF RS.2.35 CRORES BY WAY OF ACCO UNT PAYEE CHEQUES 44 AND BANK DRAFTS. IT WAS FURTHER STATED BY SHRI R.K .OHRI THAT THE POWER OF ATTORNEY AND THE SALE DOCUMENTS WERE EXECUTED WITH TWO SEPARATE PARTIES IN WHICH ONE OF THEM WAS A GROUP OF INDIVIDUAL AND OTHER WAS BUSINESS CONCERN OF PRIVATE COMPANY LIMITED. SHRI R.K.OHRI ADMITTED THAT THE ORIGINAL AGREEMENT TO SELL WAS AVAILABLE AT PAGE NO S.73 TO 76 OF ANNEXURE-A-I OF SEIZED DOCUMENTS WHICH WAS FOR CONS IDERATION OF RS.1.45 CRORES. IT WAS FURTHER ADMITTED THAT ON T HE SAME DATE HE GAVE GPA OF 23% SHARE TO SHRI ASHWANI KUMAR GUPTA AND SH RI VIJAY KUMAR GUPTA. THIS FURTHER STRENGTHENS THE POINT THAT M/S VALCO INDUSTRIES LTD. WAS INVOLVED IN THE TRANSACTION WITH SHRI R.K.OHRI WHO IN ADDITION TO RECEIVING PART CONSIDERATION HAD ALSO EXECUTED GPA IN FAVOUR OF THE CONCERNED PERSON. 66. THE STATEMENT OF SHRI ASHWANI KUMAR GUPTA DIRE CTOR OF M/S VISHNU ESTATES LTD. WAS ALSO RECORDED ON 3.9.2004 I N WHICH HE CLAIMED THAT NO PROPERTY DEALER OR AGENT WAS INVOLVED IN TH E DEAL AND DIRECT DEAL WAS MADE WITH THE SELLER. HOWEVER HE STATED THAT HE DID NOT REMEMBER THE NAME OF SELLER. HE WAS CONFRONTED WITH THE AGR EEMENT OF SALE DATED 1.4.2003 OF PROPERTY FOR SUM OF RS.1.45 CRORES TO W HICH HE REPLIED THAT HE HAD NO KNOWLEDGE OF THE SAME AND IT WAS NOT FOUN D FROM HIS PREMISES OR POSSESSION. FURTHER HE WAS ALSO CONFRONTED WITH THE HAND WRITTEN PAPER WHICH WAS FOUND FROM THE RESIDENCE OF SHRI R. K.OHRI WHICH CONTAINED DETAILS OF PAYMENT IN RESPECT OF THE PLOT NO.70 INDUSTRIAL AREA PHASE-1 CHANDIGARH AND HIS REPLY WAS THE SAM E THAT HE HAD NO KNOWLEDGE OF THE TRANSACTION SHOWN IN THE PAPER. FURTHER THE SAID PAPER WAS NOT FOUND FROM HIS POSSESSION OR PREMISES. BUT IN THE STATEMENT RECORDED ON 3.9.2004 HE ADMITTED THAT HE DOES NOT R EMEMBER THE NAME OF THE SELLER AND THE DEAL WAS AS PER THE SALE DEED. HOWEVER HE STATED THAT THE DEAL WAS NEGOTIATED WITH ONE SHRI R.K.OHRI R/O SECTOR 9/5 NOW I DO 45 NOT REMEMBER HIS FULL NAME AND ADDRESS .. HE FURTHER CLAIMED THAT THE PAYMENTS WERE MADE IN THE ACCOUNT OF M/S SEPL AND N O PAYMENT WAS MADE BY HIM TO SHRI R.K.OHRI. HOWEVER THE DATES A ND PERIODS DURING WHICH THE AMOUNTS OF RS.70 LACS HAD BEEN PAID BY TH E ASSESSEE AND THE PAYMENTS HAVE BEEN MADE TO SHRI R.K.OHRI CLEARLY RE FLECT THAT NEGOTIATION FOR PURCHASE OF THE PROPERTY HAD STARTE D IN DECEMBER 2002 AND THE PAYMENTS TO SHRI R.K.OHRI WERE MADE BY M/S SEPL OUT OF PAYMENTS RECEIVED FROM M/S VALCO INDUSTRIES LTD. T HE ENTIRE EXERCISE CLEARLY ESTABLISHES THE CASE OF THE ASSESSING OFFIC ER THAT SHRI ANIL DUBEY WAS INTRODUCED AS DIRECTOR OF M/S SEPL AS PUR CHASER IN ORDER TO CONCEAL THE REAL CONSIDERATION AMOUNT. FURTHER THE CHEQUES FOR PAYMENT TO SHRI R.K.OHRI WERE SIGNED BY ONE SHRI NARESH KUM AR SHARMA WHO HAS ALSO SIGNED AS DIRECTOR OF M/S SEPL (AS IS CLEA R FROM THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH I.E. PAGES 4 TO 9 AND 43 TO 47 OF ANNEXURE-1/342 SECTOR 9 CHANDIGARH). THE ASSESS ING OFFICER DURING THE ASSESSMENT PROCEEDINGS INVESTIGATED AND FOUND T HAT SHRI NARESH KUMAR SHARMA R/O HOUSE NO.454 SECTOR 28 CHANDIGA RH WAS WORKING AS SMALL TIME MUNSHI IN DISTRICT COURTS AND WAS HAVIN G MEAGER INCOME. THIS PROVES THE STAND OF THE ASSESSING OFFICER THAT M/S SEPL WAS MERELY A FAADE TO COVER UP THE REAL TRANSACTION BETWEEN S HRI R.K.OHRI AND THE ASSESSEE. 67. IN THE ABOVE SAID FACTS AND CIRCUMSTANCES ELABO RATE EXERCISE HAD BEEN CARRIED OUT BY THE ASSESSING OFFICER TO COLLEC T INFORMATION AND ALSO TO RECORD THE STATEMENT OF VARIOUS CONNECTED PERSON S TO COME TO THE CONCLUSION THAT THE SHARE IN THE PROPERTY HAD BEEN PURCHASED FOR RS.1.45 CROROES AGAINST THE REGISTERED VALUE OF RS.70 LACS. 68. THE STATEMENT OF SHRI ANIL DUBEY WHO HAS SIGNED AS DIRECTOR OF M/S SEPL WAS RECORDED ON 18.10.2004 AND WHEN HE WAS CONFRONTED WITH 46 THE AGREEMENT TO SELL HE STATED THAT HE DOES NOT KN OW ANYTHING ABOUT THE AGREEMENT AS HE WAS INSTRUCTED BY SHRI VIVEK MOHAN MITTAL TO GO TO THE HOUSE OF SHRI R.K.OHRI. HE STATED THAT HE HAD NOT MADE ANY TALK TO SHRI R.K.OHRI AS HE HAD VERY MEAGER INCOME AND COULD NOT THINK TO PURCHASE ANY SUCH PROPERTY. HE FURTHER STATED THAT HE HAD P UT SIGNATURE ON ALL THE PAPERS OF SHRI VIVEK MOHAN MITTAL AND FAMILY. 69. ALL THE ABOVE DOCUMENTS AND SEQUENCES OF EVENTS HAVE CLEARLY BEEN CREATED FOR SELF SERVING PURPOSES. IN OUR OPINION SAME CANNOT BE RELIED UPON AND IN THIS REGARD WE WOULD REFER TO FAMOUS D ECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. DURGA PRASAD MORE 82 ITR 540 CIT V. DURGA PRASAD MORE 82 ITR 540 (SC) WHEREI N IT WAS HELD THAT IT IS TRUE THAT APPARENT MUST CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT APPARENT IS NOT REAL BUT THEN THE TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WH ILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEIR LORDSHIPS HAVE FURTHER OBSERVED THAT SCIENCE HAS NOT YET INVENTED ANY INSTRUMENT TO T EST THE RELIABILITY OF THE EVIDENCE PLACED BEFORE A COURT O R A TRIBUNAL. THEREFORE THE COURTS AND TRIBUNALS HAVE TO JUDGE T HE EVIDENCE BEFORE THEM BY APPLYING THE TEST OF HUMAN PROBABILITIES . 70. EXAMINED IN THE LIGHT OF THE PROPOSITION LAID D OWN BY THE HON'BLE APEX COURT IN CIT VS. DURGA PRASAD MORE (SUPRA) TH E TRANSACTION ENTERED INTO BY THE ASSESSEE HAS TO BE SEEN IN THE PERSPECTIVE OF THE TOTAL EVENTS. THE CASE OF THE ASSESSEE IS THAT IT HAD PU RCHASED THE SAID ASSETS AT THE DECLARED VALUE OF RS.70 LACS AND WAS NOT AW ARE OF THE AGREEMENT TO SELL DATED 1.4.2003 EXECUTED FOR RS.1.45 CRORES FOR THE SAID PROPERTY. ANOTHER PLEA RAISED BY THE ASSESSEE WAS THAT THE AG REEMENT TO SELL MARKED AS ANNEXURE A DATED 23.12.2002 TALKS ABOUT THE MACHINERY WHICH WAS NOT PURCHASED BY THE ASSESSEE AND HENCE T HE SALE VALUE 47 DECLARED BY THE ASSESSEE WAS CORRECT. AS OBSERVED EARLIER THIS AGREEMENT TO SELL WAS NEVER FOUND DURING SEARCH OF THE PREMIS ES OF SHRI R.K.OHRI AND THE SAME WAS NOT PRODUCED BEFORE THE ASSESSING OFFICER HENCE THE SAME HAS NO EVIDENTIARY VALUE. THE CIT (APPEALS) H AS WRONGLY RELIED ON THE SAID DOCUMENT WITHOUT COMPLYING WITH THE PROCED URE LAID DOWN IN RULE 46A AS ELABORATED BY THE HON'BLE PUNJAB & HARY ANA HIGH COURT IN CIT VS. MANISH BUILDWELL PVT. LTD. (SUPRA). TAKING INTO CONSIDERATION THE FACTS AND CIRCUMSTANCES OF THE CASE AND VARIOUS DOCUMENTS EXECUTED IN RELATION TO THE SALE OF 23% SHARE IN THE SAID PR OPERTY WHERE THE ASSESSEE HAD ENTERED INTO CIRCUITOUS TRANSACTION TO TRANSFER THE PROPERTY FROM THE SELLER TO THE PURCHASER THEN WE ARE OF TH E VIEW THAT THE MODUS OPERANDI ADOPTED BY THE ASSESSEE IN INTRODUCING M/S SEPL AS AN INTERMEDIARY BUYER WAS WITH THE INTENTION TO CAMOUF LAGE THE REAL DEAL BETWEEN ORIGINAL SELLER TO THE PURCHASER/ ULTIMATE BUYER OF THE PROPERTY. THE ORIGINAL OWNER OF THE PROPERTY SHRI R.K.OHRI HA D EXECUTED THE AGREEMENT TO SELL ON 1.4.2003 WHICH ADMITTEDLY WAS FOUND IN HIS POSSESSION AND WAS SEIZED BY THE INVESTIGATION TEAM . ON THE SAME DATE IN RESPECT OF 23% OF THE SAID PROPERTY SHRI R.K.OHR I EXECUTED THE GPA IN FAVOUR OF SHRI ASHWANI KUMAR GUPTA AND SHRI VIJA Y KUMAR GUPTA ON 1.4.2003. THE SALE DEED WAS EXECUTED ON 2.4.2003 B Y SHRI ASHWANI KUMAR GUPTA DIRECTOR OF M/S VISHNU ASSOCIATES LTD. AS GPA OF SHRI R.K.OHRI IN FAVOUR OF THE COMPANY OF WHICH HE IS TH E DIRECTOR I.E. M/S VISHNU ASSOCIATES LTD. THROUGH HIS DIRECTOR SHRI AJ AY KUMAR GUPTA WHO IS THE BROTHER OF SHRI ASHWANI KUMAR GUPTA. HOWEVER THE SALE CONSIDERATION FOR 23% SHARE IN THE PROPERTY IN THE AGREEMENT TO SELL WAS RS.1.45 CRORES AND IN THE SALE DEED WAS RS.70 LACS ONLY. THE ASSESSEE CLAIMED THAT IT HAD PURCHASED THE SAID PROPERTY FRO M M/S SEPL WHO IN TURN HAD PURCHASED THE SAME FROM SHRI R.K.OHRI AND HE HAD NOT DIRECTLY PURCHASED FROM SHRI R.K.OHRI. WE FIND NO MERIT IN THE SAID PLEA OF THE 48 ASSESSEE. UNDOUBTEDLY THE AGREEMENT TO SELL WAS E XECUTED BETWEEN SHRI R.K.OHRI AND M/S SEPL ON 1.4.20203 EVIDENCING THE P AYMENTS MADE AGAINST THE SALE CONSIDERATION PRIOR TO 1.4.2003. FURTHER SALE DEED EXECUTED BETWEEN M/S SEPL AND M/S VALCO INDUSTRIES LTD. WAS DATED 2.4.2003 EVIDENCING PAYMENTS TOTALING RS.55 LACS O UT OF TOTAL CONSIDERATION OF RS.70 LACS HAVING BEEN MADE PRIOR TO THE DATE OF EXECUTION OF THE SALE DEED. THE DOCUMENT OF SALE D EED WAS EXECUTED AND REGISTERED BY SHRI ASHWANI KUMAR GUPTA WHO IS ONE OF THE DIRECTORS OF M/S VALCO INDUSTRIES LTD. THE GPA IN HIS FAVOUR BY SHRI R.K.OHRI WAS MADE ON 1.4.2003. THE SALE CONSIDERATION PAID TO S HRI R.K.OHRI WAS BY WAY OF ISSUE OF CHEQUES THROUGH ACCOUNT OF M/S SEPL AND M/S VALCO INDUSTRIES LTD. HAD ALSO MADE THE PAYMENTS IN THE A CCOUNT OF M/S SEPL. IN CASE WE ACCEPT THE CONTENTION OF THE ASSESSEE TH AT M/S VALCO INDUSTRIES LTD. I.E. THE ASSESSEE CAME INTO PICTURE ONLY ON 1/2.4.2003 THEN HOW PAYMENTS AGAINST SALE CONSIDERATIONS WERE MADE BY M/S VALCO INDUSTRIES LTD. IN DECEMBER 2002. THIS CLEARLY SH OWS THAT THE M/S SEPL WAS JUST USED AS INTERMEDIARY TO CAMOUFLAGE TH E TRANSACTION OF SALE OF 23% SHARE IN THE PROPERTY BETWEEN SHRI R.K.OHRI AND M/S VALCO INDUSTRIES LTD. I.E. THE ASSESSEE. IN THE ENTIRET Y OF THE FACTS AND CIRCUMSTANCES WHERE 23% SHARE IN THE PROPERTY HAD BEEN AGREED TO BE SOLD FOR RS.1.45 CRORES AND WAS ULTIMATELY SOLD THR OUGH REGISTERED SALE DEED FOR RS.70 LACS CLEARLY ESTABLISHES THE STAND O F THE ASSESSING OFFICER THAT ON MONEY HAD BEEN PAID IN THE SAID TRANSACTION BY M/S VALCO INDUSTRIES LTD. IN ORDER TO MEET THE PRICE OF RS.1. 45 CRORES. WE FIND NO MERIT IN THE DIFFERENT PLEAS OF THE LEARNED A.R. FO R THE ASSESSEE BEFORE US AS THE SAME ARE CONTRARY TO EACH OTHER. IN THE COU RSE OF STATEMENT RECORDED DURING THE SEARCH PROCEEDINGS HE HAD STATE D THAT NO PROPERTY DEALER WAS INVOLVED IN THE DEAL. HOWEVER THE DATE S AND PERIOD DURING WHICH THE SUM OF RS.70 LACS HAD BEEN PAID BY M/S VI SHNU ASSOCIATES 49 LTD. AND PAYMENTS HAVE BEEN MADE TO SHRI R.K.OHRI C LEARLY REFLECT THAT THE NEGOTIATIONS FOR THE PURCHASE OF THE PROPERTY W ERE MADE IN DECEMBER 2002 AND THAT SHRI ANIL DUBEY WAS INTRODU CED AS DIRECTOR OF M/S SEPL WITH WHOM TRANSACTION WAS CARRIED OUT IN O RDER TO PUT A SCREEN ON THE REAL PICTURE. THE WHOLE TRANSACTION LEADS T O CONCRETE CONCLUSION THAT THE PROPERTY HAD BEEN PURCHASED BY M/S VOLCO I NDUSTRIES LTD. FOR A SUM OF RS.1.45 CRORES AS AGAINST ITS CLAIM OF RS.70 LACS THROUGH CIRCUITOUS TRANSACTIONS. 71. IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT C ASE IT IS A FIT CASE TO RAISE CORPORATE VEIL IN ORDER TO DETERMINE THE NAT URE OF TRANSACTION. THE COMPANY M/S SEPL HAS BEEN USED AS INTERMEDIARY THRO UGH DIRECTOR WHO HAD MEAGER SOURCE OF INCOME AND ONE OF THE DIRECTOR S IN THE SAID COMPANY WAS THE WIFE OF THE ADVOCATE WHO WAS LOOKIN G AFTER THE CIVIL DISPUTES OF SHRI R.K.OHRI. THOUGH NO ADDITION HAS BEEN MADE IN THE HANDS OF SHRI MUKESH MITTAL OR IN THE HANDS OF M/S SEPL OR ONE OF ITS DIRECTOR SMT.ALKA MITTAL W/O SHRI MUKESH MITTAL BU T THAT ITSELF WOULD NOT SUPPORT THE CASE OF THE ASSESSEE THAT IN THE AB SENCE OF THE SAME NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE . WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HON'BLE SUPREME COU RT IN CIT VS. SRI MEENAKSHI MILLS LTD. & OTHERS 63 ITR 609 (SC) THE H ON'BLE SUPREME COURT IN CIT VS. SRI MEENAKSHI MILLS LTD. & OTHERS (SUPRA) HOLDING THAT THE COURT HAS POWER TO DISREGARD THE CORPORATE ENTI TY IF IT IS USED FOR TAX EVASION OR TO CIRCUMVENT TAX OBLIGATION HELD AS UNDER : IT IS WELL ESTABLISHED THAT IN A MATTER OF THIS DE SCRIPTION THE INCOME-TAX AUTHORITIES ARE ENTITLED TO PIERCE THE V EIL OF CORPORATE ENTITY AND TO LOOK AT THE REALITY OF THE TRANSACTIO N. IT IS TRUE THAT FROM THE JURISTIC POINT OF VIEW THE COMPANY IS A LE GAL PERSONALITY ENTIRELY DISTINCT FROM ITS MEMBERS AND THE COMPANY IS CAPABLE OF ENJOYING RIGHTS AND BEING SUBJECTED TO DUTIES WHICH ARE NOT THE SAME AS THOSE ENJOYED OR BORNE BY ITS MEMBERS. BUT IN CERTAIN EXCEPTIONAL CASES THE COURT IS ENTITLED TO LIFT THE VEIL OF CORPORATE ENTITY AND TO PAY REGARD TO THE ECONOMIC REALITIES BEHIND THE LEGAL 50 FAADE. FOR EXAMPLE THE COURT HAS POWER TO DISREG ARD HE CORPORATE ENTITY IF IT IS USED FOR TAX EVASION OR T O CIRCUMVENT TAX OBLIGATION. 72. IN THE FACTS OF THE PRESENT CASE WE HAVE FOUND THAT THE ASSESSEE HAD USED CIRCUITOUS TRANSACTIONS IN ORDER TO COMPLE TE THE TRANSACTION OF PURCHASE OF 23% SHARE IN THE PROPERTY FROM SHRI R.K .OHRI TO ITSELF. 73. THE PLEA OF THE ASSESSEE BEFORE US WAS THAT THE INITIAL AGREEMENT BETWEEN SHRI R.K.OHRI AND M/S SEPL FOR TOTAL CONSID ERATION OF RS.1.45 CRORES ALSO INCLUDED THE COST OF MACHINERY AT RS.75 LACS WHICH IN TURN HAD NOT BEEN PURCHASED BY THE ASSESSEE M/S VALCO IN DUSTRIES LTD. AND HENCE THE SALE CONSIDERATION AGREED TO BETWEEN THE PARTIES WAS ONLY RS.70 LACS I.E. THE COST OF THE PLOT AND BUILDING A ND THE MACHINERY WAS WITHHELD BY M/S SEPL. THIS WAS THE PLEA RAISED BY THE ASSESSEE BEFORE US. HOWEVER WE FIND NO MERIT IN THE SAID PLEA OF THE ASSESSEE AS THE TERMINATION CLAUSE IN THE ORIGINAL AGREEMENT TO SEL L EXECUTED BETWEEN SHRI R.K.OHRI AND M/S SEPL FOR NON-ENCASHMENT OF CH EQUES TALKS OF HANDING BACK OF THE POSSESSION OF THE PROPERTY AND DOES NOT TALK ABOUT HANDING OVER BACK MACHINERY WHATSOEVER. AS HELD BY US IN THE PARAS HEREINABOVE THE SAID AGREEMENT TO SELL MARKED AS A NNEXURE-A PRODUCED BY THE ASSESSEE BEFORE THE CIT (APPEALS) FOR THE FI RST TIME IS JUST AN AFTER THOUGHT AND CANNOT BE RELIED UPON. WE FIND NO MERIT IN THE ORDER OF THE CIT (APPEALS) IN ALLOWING RELIEF TO THE ASSE SSEE BY PLACING RELIANCE ON SUCH AGREEMENT TO SELL VERACITY OF WHI CH HAS NOT BEEN ESTABLISHED. 74. RELIANCE OF THE LEARNED A.R. FOR THE ASSESSEE O N THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT OF INDIA IN SURAJ LAMP INDUSTRIES PVT. LTD. VS. STATE OF HARYANA REPORTED IN 2011-TIOL-101 -SC-MISC IN RESPECT OF SCOPE OF AGREEMENT ITSELF WORKS AGAINST THE ASSESSEE AS THE ASSESSEE HAS ALSO BUILT ITS CASE ON THE AGREEMENT T O SELL MARKED AS 51 ANNEXURE-A AS BEING THE ORIGINAL AGREEMENT IN WHICH THE SALE PRICE OF THE LAND WAS FIXED AT RS.70 LACS AND SALE VALUE OF MACHINERY WAS FIXED AT RS.75 LACS. IN VIEW OF THE SEQUENCE OF EVENTS AND THE DOCUMENTS EXECUTED IN RELATION TO THE SALE OF 23% SHARE OF TH E PROPERTY WE HOLD THAT THE SAID PROPERTY WAS PURCHASED BY THE ASSESSE E M/S VALCO INDUSTRIES LTD. FOR A CONSIDERATION OF RS.1.45 CROR ES AGAINST WHICH IT HAD SHOWN SALE PRICE OF RS.70 LACS ONLY AND THE BAL ANCE ON MONEY OF RS.75 LACS IS TO BE ASSESSED IN THE HANDS OF M/S V ALCO INDUSTRIES LTD. ON SUBSTANTIVE BASIS AS INCOME FROM UN-DISCLOSED SOURC ES IN VIEW OF THE CORPORATE ENTITY BEING A SEPARATE ENTITY HAVING PUR CHASED THE SAID ASSETS. IN VIEW OF OUR HOLDING THAT THE ADDITION OF RS.75 L ACS IS TO BE MADE IN THE HANDS OF THE COMPANY M/S VALCO INDUSTRIES LTD. NO SEPARATE ADDITION IS MERITED IN THE HANDS OF THREE DIRECTORS S/SHRI A JAY KUMAR GUPTA ASHWANI KUMAR GUPTA AND VIJAY KUMAR GUPTA. THE GRO UND OF APPEAL NO.1 RAISED BY THE REVENUE IN ITA NO.663/CHD/2008 I S ALLOWED AND GROUND OF APPEAL NO.1 RAISED BY THE REVENUE IN ITA NOS.660 TO 662/CHD/2008 IS DISMISSED. 75. THE GROUND NO.2 RAISED BY THE REVENUE IS AGAINS T THE DELETION OF ADDITION OF RS.28 LACS MADE UNDER SECTION 69B OF TH E ACT ON ACCOUNT OF UNEXPLAINED INVESTMENT MADE IN THE PURCHASE OF HOUS E NO.164 SECTOR 27 CHANDIGARH. 76. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE ALONGWITH HIS BROTHERS S/SHRI ASHWANI KUMAR GUPTA AND VIJAY K UMAR GUPTA PURCHASED HOUSE NO.164 SECTOR 27 CHANDIGARH VIDE SALE DEED REGISTERED ON 10.2.2004 FOR TOTAL CONSIDERATION OF RS.48 LACS. THE SAID PROPERTY WAS PURCHASED FROM SHRI SHANTI LAL SETIA. DURING THE COURSE OF SEARCH AND SEIZURE OPERATION AT THE PREMISES OF SHR I MUKESH MITTAL A PRINTOUT OF AGREEMENT TO SELL FROM THE COMPUTER OF SHRI MUKESH MITTAL 52 REFLECTED THE CONSIDERATION OF RS.75 LACS AS AGAINS T SALE CONSIDERATION MENTIONED IN THE SALE DEED AT RS.48 LACS. THE ASSE SSING OFFICER NOTED THAT AS PER THE AGREEMENT TO SELL CONSIDERATION WAS RS.75 LACS WHEREAS AS PER SALE DEED THE CONSIDERATION WAS RS.48 LACS A ND CAME TO THE CONCLUSION THAT THE CONCEALMENT OF INCOME IN THIS P ROPERTY TRANSACTION WAS TO THE TUNE OF RS.27 LACS. REFERENCE WAS MADE TO SECTION 2(22AA) OF THE ACT DEFINING THE DOCUMENTS AND ALSO TO SECTI ON 2(1)(F) OF THE INFORMATION TECHNOLOGY AND ALSO THE INFORMATION GAT HERED FROM CHIEF MANAGER UNION BANK OF INDIA SECTOR 17B CHANDIGAR H. THE ASSESSING OFFICER ON INVESTIGATION FOUND THAT SHRI SHANTI LAL SETIA HAS MORTGAGED THE PROPERTY FOR RAISING THE LOAN AND SUM OF RS.75 LACS WAS PAID TO THE BANK OUT OF WHICH RS.27 LACS WAS PAID IN CASH ON 27 .1.2004. THE AGREEMENT TO SELL WAS EXECUTED IN THE MONTH OF JANU ARY AND AS PER THE ASSESSING OFFICER THE SAME REPRESENTED UNDISCLOSED PORTION OF THE CONSIDERATION. THE ASSESSEE WAS ASKED TO EXPLAIN T HE SOURCE OF RS.75 LACS IN THE PURCHASE OF PROPERTY WITH EVIDENCE. TH E ASSESSEE ON THE OTHER HAND IN THE COMPUTATION OF INCOME HAD DECLAR ED THAT HE HAD INVESTED SUM OF RS.17 LACS FOR PURCHASE OF RESIDENT IAL HOUSE IN SECTOR 27 CHANDIGARH JOINTLY WITH S/SHRI ASHWANI K UMAR GUPTA AND VIJAY KUMAR GUPTA DURING THE YEAR BUT AS THE ASSESS EE HAD FAILED TO FURNISH ANY EVIDENCE REGARDING THE NATURE AND SOURC E OF THIS INVESTMENT EITHER IN THE RETURN OF INCOME OR IN THE COURSE OF PROCEEDINGS THE ASSESSING OFFICER HELD THAT 1/5 TH SHARE IN THE TOTAL INCOME I.E. RS.75 LACS PLUS OTHER OVER HEAD EXPENSES OF RS.3 LACS EQUAL TO RS.78 LACS WAS THE SHARE OF THE ASSESSEE AND THUS SUM OF RS.28 LACS WA S ADDED AS DEEMED INCOME UNDER SECTION 69B OF THE ACT. 77. THE CIT (APPEALS) NOTED THAT THE TOTAL INVESTME NT WORKED OUT BY THE ASSESSING OFFICER WAS RS.78 LACS AND 1/3 RD OF THE SAME COMES TO 53 RS.26 LCAS WHEREAS ADDITION OF RS.28 LACS HAD BEEN MADE. THE CIT (APPEALS) FURTHER NOTED THAT THE ASSESSING OFFICER HIMSELF HAD MENTIONED THAT RS.48 LACS WAS DECLARED AS CONSIDERA TION IN THE PROPERTY IN QUESTION AND THE SOURCE OF THE SAID RS.48 LACS P LUS RS.3 LACS WAS THAT RS.17 LACS HAVE BEEN PAID BY THE ASSESSEE S/SHRI A SHWANI KUMAR GUPTA AND VIJAY KUMAR GUPTA EACH. AS THE SAID AMOUNT WAS PAID FROM THE RESPECTIVE BANK ACCOUNTS OF THE SAID PERSONS THE C IT (APPEALS) WAS OF THE VIEW THAT THE SAID OBVIOUSLY WAS PAID FROM THE EXPLAINED SOURCES OF THE PERSONS AND DULY REFLECTED IN THE RELEVANT DOCU MENTS. THUS AS PER THE CIT (APPEALS) THERE WAS NO QUESTION OF CONSIDER ING THE INVESTMENT OF RS.51 LACS TO BE UNEXPLAINED INVESTMENT. IN RE SPECT OF THE BALANCE SUM OF RS.27 LACS THE CIT (APPEALS) NOTED THAT BOT H THE ASSESSEE AND THE SELLER OF THE PROPERTY HAD STATED THAT NO SUCH AMOUNT WAS EITHER PAID OR RECEIVED ON ACCOUNT OF THE SAID TRANSACTION. TH E CIT (APPEALS) HELD THAT THE ADDITION FOR SUCH ON MONEY COULD NOT BE MA DE ON THE BASIS OF SUSPICION AND ON THE BASIS THAT SUCH ON MONEY DOES PASS IN SIMILAR MANNER. IN THE ABSENCE OF ANY CONCRETE EVIDENCE TH E CIT (APPEALS) HELD THAT NO ADDITION WAS WARRANTED ON THE BASIS OF SUSP ICION. THE CIT (APPEALS) FURTHER NOTED THAT SHRI SHANTI LAL SETIA AND HIS WIFE HAD CATEGORICALLY REFUSED TO HAVE RECEIVED THE AMOUNT F ROM THE ASSESSEE OR HIS BROTHERS AND THE SOURCES OF THE CASH DEPOSITED IN THE UNION BANK OF INDIA WAS EXPLAINED BY HIM AND HENCE THERE WAS NO G ROUND FOR TAKING ADVERSE VIEW AGAINST THE ASSESSEE. FURTHER IN THE HANDS OF SHRI SHANTI LAL SETIA AND HIS WIFE THE SALE CONSIDERATION OF TH E PROPERTY HAD BEEN CONSIDERED AT RS.48 LACS ONLY AND IN VIEW THEREOF THERE WAS NO JUSTIFICATION FOR TAKING CONTRARY STAND IN THE HAND S OF THE ASSESSEE ON THE BASIS OF THE COMPUTER PRINTOUT OF AGREEMENT TO SELL FOUND IN THE POSSESSION OF SHRI MUKESH MITTAL. THUS ADDITION OF RS.28 LACS WAS DELETED. 54 78. BOTH THE AUTHORIZED REPRESENTATIVES PUT FORWARD THEIR CONTENTIONS. 79. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION TO THE INVESTMENT IN HOUSE NO.164 SECTOR 27 CHANDIGARH. THE ASSESSEE ALONGWITH HIS TWO BROTHERS S/SHRI ASHWANI KUMAR GUPTA AND VIJAY KUMAR GUPTA HAD MADE INVESTMENT IN THE PURCHASE OF THE SAID PROPERTY. T HE SAID DEED WAS REGISTERED ON 10.2.2004 AND THE TOTAL CONSIDERATION IN THE SALE DEED WAS RS.48 LACS. DURING THE COURSE OF SEARCH AND SEIZUR E OPERATION AT THE PREMISES OF SHRI MUKESH MITTAL A PRINTOUT OF AGREE MENT TO SELL WAS TAKEN IN WHICH THE CONSIDERATION WAS MENTIONED AT R S.75 LACS. AS THE ASSESSEE FAILED TO EXPLAIN THE SOURCES OF INVESTMEN T BOTH THE DECLARED AND UN-DECLARED BEFORE THE ASSESSING OFFICER BECAU SE OF NON FILING OF ANY INFORMATION BEFORE THE ASSESSING OFFICER THE A SSESSING OFFICER TREATED THE INVESTMENT OF RS.75 LACS PLUS OVER HEAD EXPENSES OF RS.3 LACS AS UNEXPLAINED AND MADE ADDITION OF RS.28 LACS EACH IN THE HANDS OF THREE CO-OWNERS. THE CIT (APPEALS) IN THE FIRST IN STANCE NOTED THAT 1/3 RD SHARE OF RS.78 LACS WAS RS.27 LACS AND NOT RS.28 LA CS. THE CIT (APPEALS) FURTHER OBSERVED THAT THE SALE CONSIDERAT ION DECLARED IN THE SALE DEED I.E. RS.48 LACS WAS OUT OF THE DECLARED S OURCES OF THE ASSESSEE AND ADDITION TO THAT EFFECT WAS DELETED BY THE CIT (APPEALS). WE FIND NO MERIT IN THE SAID STAND OF THE CIT (APPEALS) WHE RE THE ASSESSEE HAD FAILED TO FURNISH BASIC EVIDENCE OF THE SOURCE OF I NVESTMENT IN HOUSE NO.164 SECTOR 27 CHANDIGARH MERELY BECAUSE ASSESS EE HAD DECLARED THAT IT HAD INVESTED IN THE PURCHASE OF THE SAID PR OPERTY IN THE COMPUTATION OF INCOME FILED ALONGWITH THE RETURN OF INCOME DOES NOT DISCHARGE THE ONUS UPON THE ASSESSEE TO EXPLAIN WIT H EVIDENCE THE SOURCE OF INVESTMENT IN THE SAID PROPERTY. WE REVERSE THE FINDING OF THE CIT (APPEALS) IN THIS REGARD. HOWEVER IN THE INTERES T OF JUSTICE WE DEEM IT 55 FIT TO SEND THIS ISSUE BACK TO THE FILE OF THE ASSE SSING OFFICER WHO SHALL ADJUDICATE THE ISSUE IN ACCORDANCE WITH LAW. THE A SSESSEE IS DIRECTED TO DISCHARGE HIS ONUS WITH EVIDENCE OF SOURCES OF INVE STMENT IN THE SAID PROPERTY. REASONABLE OPPORTUNITY OF HEARING SHALL BE AFFORDED TO THE ASSESSEE BY THE ASSESSING OFFICER AND THE ISSUE BE DECIDED IN ACCORDANCE WITH LAW. 80. THE SECOND ASPECT OF THE ISSUE IS THE CONSIDERA TION TO BE ADOPTED IN THE HANDS OF THE ASSESSEE. THE ASSESSEE AS PER THE SALE DEED HAD DECLARED TOTAL SALE CONSIDERATION AT RS.48 LACS. H OWEVER AS PER THE COMPUTER PRINTOUT FOUND FROM THE COMPUTER OF SHRI M UKESH MITTAL THE AGREEMENT TO SELL REFLECTS SALE CONSIDERATION AT RS .75 LACS. THE SAID PROPERTY WAS PURCHASED FROM ONE SHRI SHANTI LAL SET IA AND HIS WIFE WHOSE STATEMENTS WERE RECORDED AND THEY CATEGORICAL LY REFUSED THAT THEY HAD RECEIVED ANY AMOUNT OTHER THAN DECLARED SALE CO NSIDERATION IN THE REGISTERED SALE DEED. FURTHER THE INCOME FROM CAP ITAL GAINS IN THE HANDS OF SHRI SHANTI LAL SETIA AND HIS WIFE WAS COMPUTED BY ADOPTING SALE CONSIDERATION AT RS.48 LACS. IN VIEW THEREOF NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE ON THE BASIS OF THE A LLEGED AGREEMENT TO SALE WHICH IS A COMPUTER PRINTOUT AND IS NOT EVEN S IGNED BY ANY OF THE PARTIES. THE ONUS IS UPON THE ASSESSEE TO EXPLAIN THE SOURCE OF INVESTMENT TO THE EXTENT OF RS.48 LACS I.E. THE SAL E PRICE AND RS.3 LACS I.E. THE OVER HEAD EXPENSES. THE GROUND OF APPEAL NO.2 RAISED BY THE REVENUE IS THUS PARTLY ALLOWED. 81. IN ITA NO.663/CHD/2008 THE REVENUE HAS RAISED T WO MORE GROUNDS OF APPEAL. THE GROUND NO. 2 RAISED BY THE REVENUE IN ITA 663/CHD/2008 IS AGAINST THE DELETION OF ADDITION OF RS. 70 LACS MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE ACT. THE SAID ADDI TION WAS MADE IN THE HANDS OF THE ASSESSEE AS THERE WAS AN INCREASE OF R S. 50 LACS IN THE 56 UNSECURED LOAN ACCOUNT DURING THE YEAR UNDER CONSID ERATION. AS PER THE ASSESSING OFFICER AS THE ASSESSEE HAD FAILED TO GI VE ANY EXPLANATION IN REGARD THERETO OR PROVE THE CREDIT WORTHINESS OF TH E SAID CREDITORS HAVING NOT BEEN FILED BY THE ASSESSEE THE ADDITION UNDER SECTION 68 OF THE ACT WAS MADE AT RS. 50 LACS. IT MAY BE BROUGHT ON RECO RD THAT THE ASSESSEE FAILED TO FURNISH ANY EXPLANATION BEFORE THE ASSESS ING OFFICER IN RESPECT OF VARIOUS ISSUES EXCEPT TO CHALLENGE THE JURISDICT ION OF THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. 82. BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) THE PLEA OF THE ASSESSEE WAS THAT THE DIRECTORS OF THE ASSESSEE HAD INVESTED SUM OF RS. 50 LACS BY WAY UNSECURED DEPOSIT IN THE SAID COMPAN Y OUT OF WITHDRAWAL FROM THEIR BANK ACCOUNT WITH STATE BANK OF INDIA C HANDIGARH. THE ASSESSEE FURNISHED A PHOTO COPY OF THE BANK ACCOUNT BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSI ONER OF INCOME TAX (APPEALS) NOTED THAT THE DIRECTORS OF THE ASSES SEE COMPANY HAD BROUGHT IN THE MONEY THROUGH ACCOUNT PAYEE CHEQUES AND HENCE THE SAID AMOUNT COULD NOT BE CONSIDERED TO BE UNSECURED AS F AR AS THE PROVISIONS OF SECTION 68 OF THE ACT ARE CONCERNED. SUCH NAMES OF THE DIRECTORS WERE REFLECTED IN THE DETAIL OF AMOUNTS RECEIVED FROM VA RIOUS DIRECTORS IN THE LIST OF UNSECURED LOAN FURNISHED ALONGWITH THE RETU RN OF INCOME. THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT NO A DDITION WAS WARRANTED UNDER SECTION 68 OF THE ACT. 83. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAD ADJUDICATED THE ISSUE AFTE R REFERRING TO THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE WHICH HAS NOT BEEN CONFRONTED TO THE ASSESSING OFFICER AND THE SAID DETAIL OF ADD ITION WAS INCORRECT AS THE PROVISIONS OF RULE 46A OF THE IT RULES HAVE NOT BEEN FOLLOWED. 57 84. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ADDITION IN THE HANDS OF THE ASSESSEE WAS MADE ON A CCOUNT OF INTRODUCTION OF RS. 50 LACS IN THE UNSECURED LOAN A CCOUNT OF THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSIDERATION. THE O PENING BALANCE OF THE UNSECURED LOAN WAS RS. 41 67 561/- AND THE CLOS ING BALANCE OF THE UNSECURED LOANS AT THE CLOSE OF THE YEAR WAS RS. 91 67 561/-. THE ASSESSEE FAILED TO FURNISH ANY INFORMATION BEFORE T HE ASSESSING OFFICER RESULTING IN ADDITION OF RS. 50 LACS UNDER SECTION 68 OF THE ACT. HOWEVER BEFORE THE COMMISSIONER OF INCOME TAX (APP EALS) IT CLAIMED THAT THE SAID SUM OF RS. 50 LACS WAS CONTRIBUTED BY THE DIRECTORS THROUGH ACCOUNT PAYEE CHEQUES OUT OF THEIR PERSONAL BANK AC COUNTS. THE COMMISSIONER OF INCOME TAX (APPEALS) IN VIEW OF TH E SAME DELETED THE ADDITION OF RS. 50 LACS. WE FIND NO MERIT IN THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WHERE THE ADDI TIONAL EVIDENCE PRODUCED BY THE ASSESSEE HAS NOT BEEN CONFRONTED TO THE ASSESSING OFFICER BEFORE ADJUDICATING THE ISSUE BY PLACING RE LIANCE ON THE SAID ADDITIONAL EVIDENCE. 85. THE PROVISIONS OF RULE 46A OF IT RULES CLEARLY PROVIDE THAT BEFORE ADMITTING ANY ADDITIONAL EVIDENCE THE COMMISSIONER OF INCOME TAX (APPEALS) MUST COME TO A FINDING THAT THE CONDITION S PRESCRIBED IN RULE 46A HAVE BEEN SATISFIED. THE HON'BLE PUNJAB & HARY ANA HIGH COURT IN CIT VS MANISH BUILDWELL PVT. LTD. IN 245 CTR (P&H) 397 HAD LAID DOWN THAT THE CONDITIONS PRESCRIBED IN RULE 46A MUST BE SHOWN TO EXIST BEFORE ADDITIONAL EVIDENCE IS ADMITTED AND EVERY PROCEDURAL REQUIREMENT MENTIONED IN THE RULE HAS TO BE STRICTLY COMPLIED W ITH SO THAT THE RULE IS MEANINGFULLY EXERCISED AND NOT EXERCISED IN A ROUTI NE OR CURSORY MANNER. THE HON'BLE HIGH COURT FURTHER HELD THAT WHERE TH E COMMISSIONER OF INCOME TAX (APPEALS) WITHOUT BEING PROMPTED BY THE 58 ASSESSEE WHILE DEALING WITH THE APPEAL CONSIDERED I T FIT TO CAUSE OR MAKE FURTHER ENQUIRY BY VIRTUE OF POWERS UNDER SECTION 2 50(4) OF THE ACT THEN THE REQUIREMENTS OF RULE 46A NEED NOT TO BE FOLLOWE D BUT WHERE THE ASSESSEE INVOKES RULE 46A THEN IT IS INCUMBENT UPO N THE COMMISSIONER OF INCOME TAX (APPEALS) TO COMPLY WITH THE REQUIREM ENTS OF THE RULE STRICTLY. 86. THE SECOND ASPECT OF THE ISSUE IS THAT UNDER TH E PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT THE ASSESSEE WHO IS IN RECEIPT OF LOANS IN ORDER TO EXPLAIN THE NATURE OF THE ENTRY HAS TO IDENTIFY THE CREDITOR EXPLAIN THE CAPACITY OF THE CREDITOR AND JUSTIFY THE GENUINENESS OF THE LOAN. IN THE FACTS OF THE PRESENT CASE MER ELY BECAUSE THE ENTRIES HAVE BEEN RECEIVED THROUGH ACCOUNT PAYEE CHEQUE DO ES NOT ESTABLISH THE THREE CONDITIONS PRESCRIBED UNDER SECTION 68 OF THE ACT. HOWEVER IN THE INTEREST OF JUSTICE WE DEEM IT FIT TO RESTORE THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER WHO SHALL AFTER AFFORDING REASONA BLE OPPORTUNITY OF HEARING TO THE ASSESSEE DECIDE THE ISSUE IN ACCORD ANCE WITH LAW. THE GROUND NO. 2 RAISED BY THE REVENUE IN ITA NO. 663/C HD/2008 IS THUS ALLOWED FOR STATISTICAL PURPOSES. 87. THE ISSUE IN GROUND NO. 3 RAISED BY THE REVENUE IS AGAINST DELETION OF RS. 22 LACS MADE BY THE ASSESSING OFFICER UNDER SECTION 69B OF THE ACT. THE ASSESSEE DURING THE YEAR HAD MADE AN INVE STMENT IN THE PURCHASE OF LAND AT VILLAGE KATHA. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE IN THE BALANCE-SHEET HAD DECLARED INVE STMENT IN LAND AND ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF THE SA ME. IN THE ABSENCE OF ANY EVIDENCE HAVING BEEN FILED BY THE ASSESSEE THE ASSESSING OFFICER ASSESSED RS. 22 LACS AS DEEMED INCOME OF THE ASSESS EE UNDER SECTION 69B OF THE ACT. THE COMMISSIONER OF INCOME TAX (APPEAL S) OBSERVED THAT FOR MAKING THE ADDITION THE ASSESSING OFFICER HAD R EFERRED TO THE AUDITED 59 BALANCE-SHEET OF THE ASSESSEE AND IT IS NOT UNDERST ANDABLE AS TO HOW THE INVESTMENT OF RS. 22 LACS WAS CONSIDERED TO BE UNEX PLAINED INVESTMENT OF THE ASSESSEE. THE COMMISSIONER OF INCOME TAX (A PPEALS) FURTHER OBSERVED THAT ONCE THE INVESTMENT IS REFLECTED IN T HE BALANCE-SHEET OF THE ASSESSEE THE SOURCES OF THE SAME HAVE TO BE CONSID ERED TO HAVE BEEN EXPLAINED AND WHERE NO ADVERSE INFERENCE HAD BEEN D RAWN ABOUT THE SOURCES OF FUNDS FOR SUCH INVESTMENT THERE WERE NO BASIS FOR MAKING ADDITION AND THE SAME WAS DELETED BY THE COMMISSION ER OF INCOME TAX (APPEALS). THE REVENUE IS IN APPEAL AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 88. THE LEARNED D.R. FOR THE REVENUE HAS FAILED TO CONTROVERT THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) WH ERE THE ASSESSEE HAS DECLARED THE SAID PROPERTY AS PART OF HIS ASSET S AND IN THE ABSENCE OF ANY ADVERSE INFERENCE BEING DRAWN AGAINST THE SOURC ES OF FUNDS THERE WAS NO MERIT IN THE AFORESAID ADDITION OF RS. 22 LA CS. ACCORDINGLY WE CONFIRM THE ORDER OF COMMISSIONER OF INCOME TAX (AP PEALS) AND DISMISS GROUND NO. 3 RAISED BY THE REVENUE. ITA NOS.661 & 662/CHD/2008:: REVENUES APPEALS(S/SH RI VIJAY KUMAR GUPTA & ASHWANI KUMAR GUPTA 89. IN ITA NOS.661 & 662/CHD/2008 THE GROUNDS OF AP PEAL RAISED BY THE REVENUE ARE IDENTICAL TO THE GROUNDS OF APPEAL RAISED IN ITA NO.660/CHD/2008 AND OUR DECISION IN ITA NO.660/CHD/ 2008 WOULD APPLY MUTATIS MUTANDIS TO THE GROUNDS OF APPEAL RAISED IN ITA NOS.661 & 662/CHD/2008. 60 CROSS OBJECTIONS ::C.O.NO.27 & C.O.NO.30/CHD/2008 (SHRI AJAY KUMAR GUPTA & M/S VALCO INDUSTRIES LTD.) 90. THE LD. AR FOR THE ASSESSEE HAS FURNISHED BRIEF GROUNDS OF CROSS OBJECTION NUMBERING 16. AT THE OUTSET IT WAS PUT TO THE LD. AR FOR THE ASSESSEE THAT MANY OF THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ARGUMENTATIVE AND CANNOT BE ADJUDICATED UPON AS GRO UNDS OF APPEAL. THE LD. AR FOR THE ASSESSEE FAIRLY ADMITTED THAT MANY O F THE GROUNDS OF APPEAL RAISED IN THE CROSS OBJECTIONS ARE ARGUMENTA TIVE IN NATURE AND ARE IN SUPPORT OF BASIC ISSUE RAISED IN THE CASE I.E. A GAINST THE INVOKING OF JURISDICTION BY THE ASSESSING OFFICER. AFTER GOING THROUGH THE CROSS OBJECTIONS RAISED BY THE ASSESSEE AND AS ADMITTED BY LD. AR FOR THE ASSESSEE WE FIND THAT THE GROUND NOS. 8 TO 13 ARE ARGUMENTATIVE IN NATURE AND ARE AN EXTENSION OF THE BASIC ISSUE RAIS ED VIDE GROUND NOS. 1 & 2 AS REPRODUCED ABOVE. 91. THE ISSUE RAISED VIDE GROUND NOS. 3 4 6 AND 7 WERE CONFRONTED TO THE ASSESSEE AND IT TRANSPIRED THAT ISSUE AS RAISED VIDE GROUND NOS. 3 4 6 & 7 WERE NOT RAISED BEFORE THE COMMISSIONER OF IN COME TAX (APPEALS) AND HENCE THE SAME ARE NOT MAINTAINABLE. THE LD. AR FOR THE ASSESSEE FAIRLY CONCEDED THAT THE SAID ISSUES WERE NOT RAISE D IN THE FIRST ROUND OF APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEA LS). 92. VIDE GROUND NO. 3 IN THE CROSS OBJECTIONS THE ASSESSEE IS AGGRIEVED THAT THE ORDER HAS BEEN ALLEGEDLY PASSED UNDER SECTION 153A OF THE ACT WHEREAS THE SAME SHOULD HAVE BEEN PASSED UN DER SECTION 153C OF THE ACT. SINCE THE ASSESSEE HAD FAILED TO RAISE TH E PRESENT ISSUE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AND IN THE ABSENCE OF ANY 61 ADMISSION OF THE ASSESSEE THE SAID GROUND NOS. 3 4 6 AND 7 OF THE CROSS OBJECTION ARE DISMISSED. 93. THE GROUND NOS. 5 14 TO 16 ARE GENERAL IN NATU RE AND THE SAME ARE DISMISSED. 94. THE ISSUE RAISED VIDE GROUND NO. 1 IS AGAINST T HE INVOKING OF JURISDICTION BY THE ASSESSING OFFICER IN PASSING TH E ASSESSMENT WITHOUT FOLLOWING THE PROCEDURE LAID DOWN IN SECTION 124(4) AND 127 OF THE ACT AND CONSEQUENTLY THE ASSESSMENT MADE BEING ILLEGAL NULL AND VOID IN LAW. 95. THE ISSUE VIDE GROUND NO. 2 RAISED BY THE ASSES SEE IS AGAINST THE ISSUANCE OF NOTICE UNDER SECTION 153A OF THE ACT PR IOR TO HANDING OVER AND TAKING OVER OF THE MATERIAL FROM THE AUTHORIZED OFFICER OF THE ALLEGED SEARCH OR SURVEY. 96. THE BRIEF FACTS OF THE CASE ARE THAT PURSUANT T O SEARCH & SEIZURE OPERATION CARRIED OUT ON 03.09.2004 THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 153A OF THE ACT ON 06.10.2005 REQUISI TIONING THE ASSESSEE TO FILE THE RETURN OF INCOME WITHIN ONE MONTH OF SE RVICE OF NOTICE. THE ASSESSEE CLAIMS THAT IT CHALLENGED THE JURISDICTION OF THE ASSESSING OFFICER CENTRAL CIRCLE CHANDIGARH. VARIOUS REPRE SENTATIONS WERE MADE BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS C HALLENGING THE JURISDICTION OF THE ASSESSING OFFICER AND ALSO INVO KING OF PROVISIONS OF SECTION 153A OF THE ACT AND NO REPLY ON MERITS WAS FILED BY THE ASSESSEE DESPITE SEVERAL QUESTIONNAIRES ISSUED TO THE ASSESS EE. THEREAFTER THE ASSESSING OFFICER MADE ASSESSMENT UNDER SECTION 153 A R.W.S. 143(3) OF THE ACT. THE LD. AR FOR THE ASSESSEE POINTED OUT T HAT NO SEARCH WAS CARRIED OUT ON AJAY KUMAR GUPTA AS HE WAS NOT PRESE NT AT THE SEARCHED PREMISES ON THE DATE OF SEARCH. HE FURTHER SUBMITT ED THAT IN SUCH 62 CIRCUMSTANCES PROCEEDINGS SHOULD HAVE BEEN COMPLET ED UNDER SECTION 153C OF THE ACT AND NOT UNDER SECTION 153A OF THE A CT. THE LD. AR FOR THE ASSESSEE WAS ASKED TO SHOW THE PANCHNAMA WHICH IS FILED AT PAGE 59 OF THE PAPER BOOK FILED BY THE ASSESSEE IN WHICH TH E NAME OF SHRI AJAY KUMAR GUPTA IS MENTIONED AS THE PERSON SEARCHED ON 3/4.9.2004. 97. OUR ATTENTION WAS FURTHER DRAWN TO THE COMMUNIC ATION TO THE ASSESSING OFFICER PLACED AT PAGE 459 OF THE PAPER B OOK WHICH AS PER THE LD. AR FOR THE ASSESSEE SHOULD BE CONSTRUED AS OBJE CTION TO INVOKING OF JURISDICTION BY THE ASSESSING OFFICER. IT WAS FURT HER POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT NO STATEMENT OF SHRI A JAY KUMAR GUPTA WAS RECORDED DURING THE COURSE OF SEARCH AND ONLY STATE MENT OF SHRI ASHWANI KUMAR GUPTA WAS RECORDED AND WAS USED FOR MAKING TH E ASSESSMENT IN THE HANDS OF THE THREE PERSONS AND HENCE THE CROSS OBJECTION. THE LD. AR FOR THE ASSESSEE HOWEVER FAIRLY ADMITTED THAT S HRI ASHWANI KUMAR GUPTA WAS THE BROTHER OF SHRI AJAY KUMAR GUPTA AND BOTH OF THEM WERE THE DIRECTORS OF THE COMPANY NOW KNOWN AS M/S VALCO INDUSTRIES LTD. 98. ANOTHER CONTENTION RAISED BY THE LD. AR FOR THE ASSESSEE WAS THAT THE PROVISIONS OF SECTION 153A ORIGINATED FROM SECT ION 132 OF THE ACT AND SECTION 153A PROVIDES FOR ASSESSMENT ONLY ON TH E BASIS OF FINDINGS BASED ON MATERIAL WITH VALID REPORTS SUPPLIED BY AU THORIZED OFFICER AND UPON PROPER AND VALID INVESTIGATIONS. THE ASSESS EE QUESTIONED THE DETAILS OF REASONS AND OCCASIONS TO INITIATE THE NO TICES UNDER SECTION 142(1)/143(2) OF THE ACT BY THE SAID COMMUNICATION. 99. THE LD. DR FOR THE REVENUE IN REPLY POINTED OUT THAT THE ASSESSEE ITSELF AT PAGES 105 AND 106 OF THE PAPER BOOK HAS E NCLOSED THE COPY OF ORDER PASSED UNDER SECTION 127 OF THE INCOME TAX AC T UNDER WHICH THE CIT-I CHANDIGARH HAD TRANSFERRED THE JURISDICTION O F THE ASSESSEE SHRI 63 AJAY KUMAR GUPTA FROM RANGE-III CHANDIGARH TO DCIT CENTRAL CIRCLE CHANDIGARH VIDE ORDER DATED 30.05.2005. IT WAS POI NTED OUT BY THE LD. DR FOR THE REVENUE THAT THERE WAS VALID JURISDICTIO N WITH THE ASSESSING OFFICER TO PASS HIS ORDERS UNDER SECTION 153A READ WITH SECTION 143(3) OF THE ACT. 100. IT WAS FURTHER POINTED OUT BY THE LD. DR FOR T HE REVENUE THAT THE QUESTION OF JURISDICTION IS NOT APPEALABLE AND THER E IS NO MERIT IN THE GROUNDS OF CROSS OBJECTION RAISED BY THE ASSESSEE I N THIS REGARD. 101. THE LD. DR FOR THE REVENUE STATED THAT FURTHER THE ASSESSEE HAS RAISED ANOTHER GROUND AGAINST THE ISSUE OF NOTICE U NDER SECTION 153A OF THE ACT AFTER A VALID SEARCH. THE SAID NOTICE ISSU ED UNDER SECTION 153A OF THE ACT BY THE CONCERNED ASSESSING OFFICER HAS B EEN VALIDLY ISSUED AFTER THE CONCLUSION OF SEARCH & SEIZURE PROCEEDING S UPON THE ASSESSEE AND THE SAME CANNOT BE THUS QUESTIONED BY THE ASSE SSEE. THE LD. DR FOR THE REVENUE FURTHER STATED THAT UNDER THE PROVISION S OF SECTION 124(3) OF THE ACT NO PERSON IS ENTITLED TO QUESTION THE JURI SDICTION OF ASSESSING OFFICER AS VESTING OF JURISDICTION IN THE CONCERNED ASSESSING OFFICER IS AUTOMATIC UNDER THE PROVISIONS OF THE ACT. 102. IN THE CROSS OBJECTION FILED IN ITA NO. 663/CH D/2008 IN THE CASE OF M/S VALCO INDUSTRIES LTD. THE LD. AR FOR THE AS SESSEE POINTED OUT THAT THOUGH THE GROUNDS OF CROSS OBJECTIONS ARE IDENTICA L TO THE GROUNDS RAISED IN THE CASE OF SHRI AJAY KUMAR GUPTA AND OTH ERS BUT THE FACTS OF THE CASE WERE SLIGHTLY DIFFERENT. IT WAS POINTED O UT BY THE LD. AR FOR THE ASSESSEE THAT NO SEARCH WAS CARRIED OUT IN THE CASE OF M/S VALCO INDUSTRIES LTD. AND ONLY SURVEY WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE. THE LD. AR FOR THE ASSESSEE DREW OUR ATT ENTION TO THE INFORMATION RECEIVED UNDER RIGHT TO INFORMATION ACT I.E. ANNEXURE-I IN 64 WHICH IT IS MENTIONED THAT THE SEARCH WARRANT WAS I SSUED IN THE NAMES OF S/SHRI AJAY KUMAR GUPTA ASHWANI KUMAR GUPTA AND VI JAY KUMAR GUPTA AND EVEN THE NAMES OF THE SAID PERSONS ARE MENTIONE D IN THE PANCHNAMA OF THE PREMISES SEARCHED BY THE INVESTIGATION TEAM. HOWEVER AT S.NO. 7 I.E. IN THE CASE OF M/S VALCO INDUSTRIES LTD. IT HAS BEEN REPORTED THAT SURVEY UNDER SECTION 133A OF THE ACT WAS CONDUCTED ON 03.09.2004 AND NO MATERIAL WAS SEIZED/IMPOUNDED. THE SAID ANNEXUR E-1 DOES NOT TALK OF ANY SEARCH UPON THE ASSESSEE. OUR ATTENTION WAS TH EN DRAWN TO PARA 7 OF THE ASSESSMENT ORDER IN WHICH THE ASSESSING OFFICER ALSO ACKNOWLEDGED THAT SURVEY WAS CONDUCTED UPON M/S VISHNU ASSOCIATE S LTD. ON 03.09.2004. THE LD. AR FOR THE ASSESSEE THEN REFER RED TO THE PANCHNAMA PLACED AT PAGE 59 OF THE PAPER BOOK WHICH WAS IN TH E NAME OF S/SHRI AJAY KUMAR GUPTA ASHWANI KUMAR GUPTA M/S VISHNU AS SOCIATES LTD VIJAY KUMAR GUPTA AND THE PREMISES SEARCHED WERE HO USE NO. 3007 SECTOR 19D CHANDIGARH. THE LD. AR FOR THE ASSESSE E SUBMITTED THAT AS ON 31.10.2003 THE NAME OF THE COMPANY M/S VISHNU A SSOCIATES LTD. WAS CHANGED TO M/S VALCO INDUSTRIES LTD. AND THE NECESS ARY INCORPORATION CERTIFICATE WAS ISSUED BY THE REGISTRAR OF COMPANIE S WHICH IS PLACED AT PAGE 114 OF THE PAPER BOOK. THE LD. AR FOR THE ASS ESSEE FURTHER POINTED OUT THAT IN THE APPLICATION FILED FOR ALLOTMENT OF TAX DEDUCTION ACCOUNT NUMBER UNDER SECTION 203A OF THE ACT THE ASSESSEE HAD INFORMED THE ASSESSING OFFICER(TDS) REGARDING THE CHANGE IN THE NAME OF THE COMPANY COPY OF WHICH IS PLACED AT PAGES 115 AND 1 16 OF THE PAPER BOOK. IN THE SAID COMMUNICATION THE ADDRESS HAS B EEN MENTIONED AS SCO NO. 37 SECTOR 26 MANI MAJRA CHANDIGARH. IT WAS FAIRLY POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT ORIGINALLY THE ADDRESS OF THE COMPANY WAS AT HOUSE NO. 3007 SECTOR 19D CHANDIGA RH BUT THE SAME WAS CHANGED TO SECTOR 26 MANI MAJRA CHANDIGARH AN D CONSEQUENTLY THE JURISDICTION OF THE ASSESSEE ALSO STANDS CHANGED. ORIGINALLY THE ASSESSEE 65 WAS UNDER THE JURISDICTION OF COMMISSIONER OF INCOM E TAX-I BUT BECAUSE OF THE CHANGE IN ADDRESS THE JURISDICTION WAS UNDE R COMMISSIONER OF INCOME TAX-II. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE TRANSFER ORDERS PASSED ON 30.05.2005 BY COMMISSIONER OF INCO ME TAX-I CHANDIGARH WERE WITHOUT JURISDICTION AS THE SAME SH OULD HAVE BEEN PASSED BY COMMISSIONER OF INCOME TAX-II CHANDIGARH. IN THIS REGARD THE LD. AR FOR THE ASSESSEE POINTED OUT THAT ON 19. 05.2005 NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED TO THE ASSESSE E FOR ASSESSMENT YEAR 2003-04 BY THE ACIT CIRCLE 3(1) CHANDIGARH BUT TH E JURISDICTION OF THE ASSESSEE WAS WITH CIRCLE 4(1) WHICH IN-TURN IS UNDE R THE JURISDICTION OF COMMISSIONER OF INCOME TAX-II CHANDIGARH AND HENCE THE TRANSFER ORDERS IN THE CASE OF M/S VALCO INDUSTRIES LTD. COU LD NOT BE PASSED BY THE COMMISSIONER OF INCOME TAX-1 CHANDIGARH. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT VARIOUS COMMUNICATIONS WE RE MADE TO THE ASSESSING OFFICER RAISING OBJECTIONS VIS--VIS THE JURISDICTION OF THE ASSESSING OFFICER VIDE LETTERS PLACED AT PAGES 371 376 440 AND 441 AND ALSO OBJECTIONS WERE FILED BEFORE THE COMMISSIONER OF INCOME TAX- 1 COPY OF WHICH IS PLACED AT PAGE 104 OF THE PAPER BOOK. THE LD. AR FOR THE ASSESSEE FAIRLY SUBMITTED THAT THE ASSESSING OF FICER AT PAGES 4 & 5 HAS DEALT WITH ALL THE SAID ISSUES. HOWEVER IT WA S STRESSED BY HIM THAT THE INCOME TAX DEPARTMENT ON THE DATE OF SEARCH HA D THE KNOWLEDGE THAT THE COMPANY WAS NOT PRESENT ON THE GIVEN ADDRE SS AND WHEN OUR CASES HAD BEEN TRANSFERRED TO CIT-II. THE COMMISSIONER OF INCOME TAX-I CHANDIGARH WRONGLY ISSUED THE NOTICE TRANSFER RING THE JURISDICTION. REFERENCE WAS MADE TO THE PROVISIONS OF SECTION 120 AND 127 OF THE ACT AND IT WAS POINTED OUT BY THE LD. AR FOR THE ASSESS EE THAT THE ORDER TRANSFERRING THE CASE OF THE ASSESSEE DOES NOT TALK OF THE CAUSE OF TRANSFER OF THE CASE OF THE ASSESSEE. THE LD. AR F OR THE ASSESSEE SUBMITTED THAT THE ORDER BEING ISSUED BY NON-JURISD ICTIONAL AUTHORITY WAS 66 INVALID AND FURTHER THE ACTION ON THE COMPANY WAS U NDER SURVEY AND ALSO AS THE COMPANY WAS NOT PRESENT AT THE ADDRESS ON WH ICH SEARCH WARRANT WAS ISSUED AND ALSO BECAUSE SURVEY WAS CONDUCTED UP ON THE ASSESSEE THE PROCEEDINGS INITIATED UNDER SECTION 153A OF THE ACT WERE INVALID. 103. THE LD. DR FOR THE REVENUE IN REPLY POINTED OU T THAT PERUSAL OF PAGE 110 OF THE PAPER BOOK FILED BY THE ASSESSEE WO ULD REFLECT THAT THE ASSESSMENT ORDER DATED 17.01.2005 WAS ISSUED BY CIR CLE 3(1) CHANDIGARH RELATING TO ASSESSMENT YEAR 2003-04 AT T HE HOME ADDRESS OF THE ASSESSEE I.E. HOUSE NO. 3007 SECTOR 9D CHANDI GARH. THE SAID ADDRESS OF THE COMPANY AND THE WARRANT ISSUED AGAIN ST THE COMPANY WAS VALID AS SEARCH ON HIS EARLIER ADDRESS WAS DIRECTED TO BE CARRIED ON I.E. THE ADDRESS WHERE IN PAST THE OFFICE OF THE COMPANY WAS SITUATED AND THERE WAS ASSUMPTION THAT DOCUMENTS RELATING TO THE TRANSACTIONS WOULD BE AVAILABLE AT THE SAID ADDRESS. THE LD. DR FOR T HE REVENUE FURTHER POINTED OUT THAT THE SALE DEED DATED 02.04.2003 WAS ALSO REGISTERED IN THE NAME OF M/S VISHNU ASSOCIATES LTD. AT HOUSE NO. 3007 SECTOR 19D CHANDIGARH. HE FURTHER STRESSED THAT THE CHANGE IN THE NAME OF THE COMPANY DOES NOT DISSOLVE THE COMPANY AND DOES NOT EXTINCT THE COMPANY AS THE PAN NUMBER OF THE COMPANY REMAINS TH E SAME AND THE WARRANT ISSUED IN THE OLD NAME OF THE COMPANY WAS T HUS VALID. HE REFERRED TO THE PROVISIONS OF SECTION 23(3) OF THE COMPANIES ACT AND POINTED OUT THAT THE SAID SECTION RECOGNIZES THE CH ANGE IN NAME OF THE COMPANY BUT DOES NOT DISSOLVE THE COMPANY. IN RESP ECT OF THE JURISDICTION OF ASSESSING OFFICER IN PASSING THE OR DER UNDER SECTION 153A READ WITH SECTION 143(3) OF THE ACT THE LD. DR FOR THE REVENUE POINTED OUT THAT THE CHALLENGE TO JURISDICTION WAS NOT THE SUBJECT MATTER OF APPEAL BEFORE THE TRIBUNAL. 67 104. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. IN THE FIRST INSTANCE WE SHALL ADJUDICATE THE ISSUE RAISE D AGAINST THE INVOKING OF JURISDICTION BY THE ASSESSING OFFICER IN THE CAS ES OF S/SHRI AJAY KUMAR GUPTA ASHWANI KUMAR GUPTA AND VIJAY KUMAR GU PTA. SEARCH & SEIZURE OPERATION AT THE RESIDENTIAL PREMISES OF TH E ASSESSEE I.E. HOUSE NO. 3007 SECTOR 19D CHANDIGARH WERE CARRIED OUT O N 03.09.2004. THE COPY OF THE PANCHNAMA IS PLACED AT PAGES 59 AND 60 OF THE PAPER BOOK IN WHICH IT IS STATED THAT THE WARRANT IS ISSUED IN TH E CASE OF S/SHRI AJAY KUMAR GUPTA ASHWANI KUMAR GUPTA M/S VISHNU ASSOCI ATES VIJAY KUMAR GUPTA. THE WARRANT WAS ISSUED TO SEARCH THE HOUSE NO. 3007 SECTOR 19D CHANDIGARH WHICH IS ADMITTEDLY THE RESI DENTIAL ADDRESS OF ALL THE THREE BROTHERS I.E. ASSESSEES BEFORE US. F URTHER SEARCH OF THE LOCKER NO. 10 STATE BANK OF INDIA INDUSTRIAL AREA PHASE-I CHANDIGARH BELONGING TO SHRI ASHWANI KUMAR GUPTA WAS CARRIED O UT ON 4.9.2004 AND 13.09.2004 AND THE COPIES OF PANCHNAMA ARE PLACED A T PAGES 61 AND 62 OF THE PAPER BOOK FILED BY THE ASSESSEE. SIMILARLY L OCKER NO.87 STATE BANK OF INDIA INDUSTRIAL AREA PHASE-I CHANDIGARH BELONGING TO SHRI VIJAY KUMAR GUPTA SMT. SUMAN GUPTA AND SMT. ROSHAN DEVI WAS ALSO SEARCHED ON 04.09.2004 AND 05.10.2004 AND THE COPIE S OF THE PANCHNAMA ARE PLACED AT PAGES 67 AND 68 OF THE PAPER BOOK. AN OTHER LOCKER NO. 55 STATE BANK OF INDIA INDUSTRIAL AREA PHASE-I CHAND IGARH BELONGING TO S/SHRI ASHWANI KUMAR GUPTA AJAY KUMAR GUPTA AND VI JAY KUMR GUPTA WAS SEARCHED ON 04.09.2004 AND 13.09.2004 AND COPIE S OF THE PANCHNAMA ARE PLACED AT PAGES 73 AND 74 OF THE PAPER BOOK. T HE LOCKER NO. 62 STATE BANK OF INDIA INDUSTRIAL AREA PHASE-I CHAND IGARH BELONGING TO SHRI AJAY KUMAR GUPTA AND SMT. RAJNI GUPTA WAS ALSO SEARCHED ON 13.09.2004 19.09.2004 AND 05.10.2004 AND THE COPIE S OF THE PANCHNAMA ARE PLACED AT PAGES 79-81 OF THE PAPER BOOK. ANOTH ER LOCKER IN STATE BANK OF INDIA BELONGING TO SHRI ASHWANI KUMAR GUPTA WAS SEARCHED ON 68 04.09.2004 AND 13.09.2004 AND THE COPIES OF THE PAN CHNAMA ARE PLACED AT PAGES 86-87 OF THE PAPER BOOK FILED BY THE ASSES SEE. PURSUANT TO THE SEARCH THE COMMISSIONER OF INCOME TAX-1 CHANDIGAR H VIDE ORDER DATED 30.05.2005 IN EXERCISE OF POWERS CONFERRED UNDER SE CTION 127(1) READ WITH SUB-SECTION (3) OF SECTION 127 THE INCOME TAX ACT TRANSFERRED THE CASES OF THE ASSESSEE FROM RANGE III CHANDIGARH TO THE COMMISSIONER OF INCOME TAX CENTRAL CIRCLE CHANDIGARH. THE SAID O RDER DATED 30.05.2005 IS PLACED AT PAGES 92-93 OF THE PAPER BO OK. THE LIST AT SR.NO. 4 TALKS OF TRANSFER OF CASES OF M/S VALCO IN DUSTRIES LTD. EARLIER KNOWN AS M/S VISHNU ASSOCIATES LTD. AT SR.NO. 5 O F SHRI ASHWANI KUMAR GUPTA AT SR.NO. 6 OF SHRI VIJAY KUMAR GUPTA AND AT SR.NO. 7 OF SHRI AJAY KUMAR GUPTA. AFTER THE SEARCH AT THE PRE MISES OF THE ASSESSEE ALONGWITH THE SEARCH AT THE PREMISES OF VARIOUS OTH ER PERSONS AS MENTIONED IN THE ORDER DATED 30.05.2005 WHO IN-TUR N WERE LINKED TO THE SALE AND PURCHASE OF THE PROPERTY NUMBERING 18 THE JURISDICTION OF THE CASES WAS TRANSFERRED FROM RANGE-III CHANDIGARH TO THE COMMISSIONER OF INCOME TAX CENTRAL CIRCLE CHANDIGARH. 105. SURVEY UNDER SECTION 133A OF THE ACT WAS ALSO CARRIED OUT AT SCO 37 SECTOR 26 CHANDIGARH I.E. THE PREMISES OF M/S VISHNU ASSOCIATES LTD. ON 03.09.2004 AND SEALS WERE PLACED UPON THE C PU FOUND IN THE PREMISES WHICH WERE THEN BROKEN ON 09.09.2004 AND T HE COPY OF THE PANCHNAMAS ARE PLACED AT PAGES 99 TO 101 OF THE PAP ER BOOK FILED BY THE ASSESSEE. THE ASSESSEE HAS ALSO PLACED ON RECORD T HE COPY OF THE ORDER DATED 30.05.2005 TRANSFERRING THE JURISDICTION TO C ENTRAL CIRCLE CHANDIGARH AT PAGES 105 AND 106 OF THE PAPER BOOK W HICH IS COPY OF THE EARLIER DOCUMENT REFERRED TO BY US FILED AT PAGES 9 2 AND 93 OF THE PAPER BOOK. THE ASSESSEE AT PAGE 102 HAS PLACED THE SEA RCH RESULTS AT THE NATIONAL WEBSITE OF THE INCOME TAX DEPARTMENT UNDER WHICH THE 69 JURISDICTION OF CIT CHANDIGARH-I IS STATED TO BE S ECTOR 1 TO 25 INDUSTRIAL AREA PHASE-I PHASE-II CHANDIGARH AND M ANI MAJRA. 106. THE FIRST ISSUE RAISED BY THE ASSESSEE IN THE CASE OF SHRI AJAY KUMAR GUPTA IS THAT THE SEARCH WAS CARRIED ON AT TH E RESIDENTIAL ADDRESS OF THE PERSON BUT THE SAID PERSON WAS NOT AVAILABLE ON THE DATE OF SEARCH AND CONSEQUENTLY THE SEARCH INITIATED IN THE CASE WAS NOT VALID AND FURTHER THE NOTICE ISSUED UNDER SECTION 153A OF THE ACT WAS INCORRECT. THE SAID OBJECTION WAS RAISED ONLY IN THE CASE OF S HRI AJAY KUMAR GUPTA AND NOT IN THE CASE OF SHRI ASHWANI KUMAR GUPTA AND SHRI VIJAY KUMAR GUPTA. IT MAY BE PLACED ON RECORD THAT THE STATEME NT OF SHRI ASHWANI KUMAR GUPTA WAS RECORDED ON THE DATE OF SEARCH I.E. 03.09.2004 AND IN THE ABSENCE OF ANY OBJECTIONS RAISED BY THE LD. AR FOR THE ASSESSEE IT IS PRESUMED THAT SHRI VIJAY KUMAR GUPTA WAS AVAILABLE AT THE PREMISES ON THE DATE OF SEARCH. IN ANY CASE THERE IS NO REQUI REMENT THAT THE PERSON SEARCHED SHOULD BE PRESENT IN THE SEARCHED PREMISES . 107. COMING TO THE PROVISIONS OF SECTION 132(1) 13 2(1A) OF THE INCOME TAX ACT WHICH READS AS UNDER : 132. (1) WHERE THE [DIRECTOR GENERAL OR DIRECTOR] OR TH E [CHIEF COMMISSIONER OR COMMISSIONER] [ OR ADDITIONAL DIRECTOR OR ADDITIONAL COMMISSIONER ] [ OR JOINT DIRECTOR OR JOINT COMMISSIONER ] IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION HAS REASON TO BELIEVE THAT (A) ANY PERSON TO WHOM A SUMMONS UNDER SUB-SECTION (1) OF SECTION 37 OF THE INDIAN INCOME-TAX ACT 1922 (11 OF 1922) OR UNDER SUB-SECTION (1) OF SECTION 131 OF THIS ACT OR A NOTICE UNDER SUB-SECTION (4) OF SECTION 22 OF THE INDIAN INCOME-TAX ACT 1922 OR UNDER SUB-SECTION (1) OF S ECTION 142 OF THIS ACT WAS ISSUED TO PRODUCE OR CAUSE TO BE PRODUCED ANY BOO KS OF ACCOUNT OR OTHER DOCUMENTS HAS OMITTED OR FAILED TO PRODUCE OR CAUS E TO BE PRODUCED SUCH BOOKS OF ACCOUNT OR OTHER DOCUMENTS AS REQUIRED BY SUCH SUMMONS OR NOTICE OR (B) ANY PERSON TO WHOM A SUMMONS OR NOTICE AS AFOR ESAID HAS BEEN OR MIGHT BE ISSUED WILL NOT OR WOULD NOT PRODUCE OR CAUSE TO BE PRODUCED ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS WHICH WILL BE USEFUL FOR OR RELEVANT TO ANY PROCEEDING UNDER THE INDIAN INCOME-TAX ACT 1922 (1 1 OF 1922) OR UNDER THIS ACT OR (C) ANY PERSON IS IN POSSESSION OF ANY MONEY BULL ION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND SUCH MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING REPRESENTS EITHER WHOLLY OR PARTLY INCOME OR PROPERTY [WHICH 70 HAS NOT BEEN OR WOULD NOT BE DISCLOSED] FOR THE P URPOSES OF THE INDIAN INCOME-TAX ACT 1922 (11 OF 1922) OR THIS ACT (HER EINAFTER IN THIS SECTION REFERRED TO AS THE UNDISCLOSED INCOME OR PROPERTY) [THEN (A) THE [DIRECTOR GENERAL OR DIRECTOR] OR THE [CH IEF COMMISSIONER OR COMMISSIONER] AS THE CASE MAY BE MAY AUTHORISE AN Y [ ADDITIONAL DIRECTOR OR ADDITIONAL COMMISSIONER OR ] 95 [JOINT DIRECTOR] [JOINT COMMISSIONER] [ASSISTANT DIRECTOR [OR DEPUTY DIRECTOR]] [ASSISTA NT COMMISSIONER 98 [OR DEPUTY COMMISSIONER] OR INCOME-TAX OFFICER]. (B) SUCH [ADDITIONAL DIRECTOR OR ADDITIONAL COMMISS IONER OR] [JOINT DIRECTOR] OR [JOINT COMMISSIONER] AS THE CASE MAY BE MAY AUTHO RISE ANY [ASSISTANT DIRECTOR [OR DEPUTY DIRECTOR]] [ASSISTANT COMMISSIONER [OR DEPU TY COMMISSIONER]OR INCOME-TAX OFFICER] (THE OFFICER SO AUTHORISED IN ALL CASES BEING HEREI NAFTER REFERRED TO AS THE AUTHORISED OFFICER) TO] (I) ENTER AND SEARCH ANY [BUILDING PLACE VESSEL VEHICLE OR AIRCRAFT] WHERE HE HAS REASON TO SUSPECT THAT SUCH BOOKS OF ACCOUNT OTHER DOCUMENTS MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING ARE KE PT; (II) BREAK OPEN THE LOCK OF ANY DOOR BOX LOCKER SAFE ALMIRAH OR OTHER RECEPTACLE FOR EXERCISING THE POWERS CONFERRED BY CLAUSE (I) WHERE THE KEYS THEREOF ARE NOT AVAILABLE; [(IIA) SEARCH ANY PERSON WHO HAS GOT OUT OF OR IS ABOUT TO GET INTO OR IS IN THE BUILDING PLACE VESSEL VEHICLE OR AIRCRAFT IF THE AUTHORIS ED OFFICER HAS REASON TO SUSPECT THAT SUCH PERSON HAS SECRETED ABOUT HIS PERSON ANY SUCH BOOKS OF ACCOUNT OTHER DOCUMENTS MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING;] [(IIB) REQUIRE ANY PERSON WHO IS FOUND TO BE IN POS SESSION OR CONTROL OF ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE FORM O F ELECTRONIC RECORD AS DEFINED IN CLAUSE (T) OF SUB-SECTION (1) OF SECTION 2 OF THE I NFORMATION TECHNOLOGY ACT 2000 (21 OF 2000) TO AFFORD THE AUTHORISED OFFICER THE NECESSA RY FACILITY TO INSPECT SUCH BOOKS OF ACCOUNT OR OTHER DOCUMENTS;] (III) SEIZE ANY SUCH BOOKS OF ACCOUNT OTHER DOCUM ENTS MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND AS A RESULT O F SUCH SEARCH: [ PROVIDED THAT BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING BEING STOCK-IN- TRADE OF THE BUSINESS FOUND AS A RESULT OF SUCH SE ARCH SHALL NOT BE SEIZED BUT THE AUTHORISED OFFICER SHALL MAKE A NOTE OR INVENTORY O F SUCH STOCK-IN-TRADE OF THE BUSINESS;] (IV) PLACE MARKS OF IDENTIFICATION ON ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR MAKE OR CAUSE TO BE MADE EXTRACTS OR COPIES THEREFROM; (V) MAKE A NOTE OR AN INVENTORY OF ANY SUCH MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING : [ PROVIDED THAT WHERE ANY BUILDING PLACE VESSEL VEHICLE OR AIRCRAFT REFERRED TO IN CLAUSE (I) IS WITHIN THE AREA OF JURISDICTION OF AN Y [CHIEF COMMISSIONER OR COMMISSIONER] BUT SUCH [CHIEF COMMISSIONER OR COMM ISSIONER] HAS NO JURISDICTION OVER THE PERSON REFERRED TO IN CLAUSE (A) OR CLAUSE (B) OR CLAUSE (C) THEN NOTWITHSTANDING ANYTHING CONTAINED IN SECTION IT S HALL BE COMPETENT FOR HIM TO EXERCISE THE POWERS UNDER THIS SUB-SECTION IN ALL CASES WHER E HE HAS REASON TO BELIEVE THAT ANY DELAY IN GETTING THE AUTHORISATION FROM THE [CHIEF COMMISSIONER OR COMMISSIONER] 71 HAVING JURISDICTION OVER SUCH PERSON MAY BE PREJUDI CIAL TO THE INTERESTS OF THE REVENUE :] [ PROVIDED FURTHER THAT WHERE IT IS NOT POSSIBLE OR PRACTICABLE TO TA KE PHYSICAL POSSESSION OF ANY VALUABLE ARTICLE OR THING AND REM OVE IT TO A SAFE PLACE DUE TO ITS VOLUME WEIGHT OR OTHER PHYSICAL CHARACTERISTICS OR DUE TO ITS BEING OF A DANGEROUS NATURE THE AUTHORISED OFFICER MAY SERVE AN ORDER O N THE OWNER OR THE PERSON WHO IS IN IMMEDIATE POSSESSION OR CONTROL THEREOF THAT HE SHA LL NOT REMOVE PART WITH OR OTHERWISE DEAL WITH IT EXCEPT WITH THE PREVIOUS PERMISSION O F SUCH AUTHORISED OFFICER AND SUCH ACTION OF THE AUTHORISED OFFICER SHALL BE DEEMED TO BE SEIZURE OF SUCH VALUABLE ARTICLE OR THING UNDER CLAUSE (III):] [ PROVIDED ALSO THAT NOTHING CONTAINED IN THE SECOND PROVISO SHALL APPLY IN CASE OF ANY VALUABLE ARTICLE OR THING BEING STOCK-IN-TRADE OF THE BUSINESS:] [ PROVIDED ALSO THAT NO AUTHORISATION SHALL BE ISSUED BY THE ADDITI ONAL DIRECTOR OR ADDITIONAL COMMISSIONER OR JOINT DIRECTOR OR JOINT COMMISSIONER ON OR AFTER THE 1ST DAY OF OCTOBER 2009 UNLESS HE HAS BEEN EMPOWERED B Y THE BOARD TO DO SO.] [(1A) WHERE ANY [CHIEF COMMISSIONER OR COMMISSIONER ] IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION HAS REASON TO SUSPEC T THAT ANY BOOKS OF ACCOUNT OTHER DOCUMENTS MONEY BULLION JEWELLERY OR OTHER VALUA BLE ARTICLE OR THING IN RESPECT OF WHICH AN OFFICER HAS BEEN AUTHORISED BY THE [DIRECT OR GENERAL OR DIRECTOR] OR ANY OTHER [CHIEF COMMISSIONER OR COMMISSIONER] OR [ADDI TIONAL DIRECTOR OR ADDITIONAL COMMISSIONER] [OR JOINT DIRECTOR OR JOINT COMMISSIO NER] TO TAKE ACTION UNDER CLAUSES (I) TO (V) OF SUB-SECTION (1) ARE OR IS KEPT IN ANY BUILDING PLACE VESSEL VEHICLE OR AIRCRAFT NOT MENTIONED IN THE AUTHORISATION UNDER S UB-SECTION (1) SUCH [CHIEF COMMISSIONER OR COMMISSIONER] MAY NOTWITHSTANDING ANYTHING CONTAINED IN SECTION AUTHORISE THE SAID OFFICER TO TAKE ACTION UNDER ANY OF THE CLAUSES AFORESAID IN RESPECT OF SUCH BUILDING PLACE VESSEL VEHICLE OR AIRCRAFT.] 108. READING THE PROVISIONS OF SECTION 132(1) OF TH E INCOME TAX ACT IT IS CLEAR THAT THE AUTHORITIES IN CONSEQUENCE OF TH E INFORMATION IN HIS POSSESSION WHERE HAD REASON TO BELIEVE THAT THE PE RSON HAS OR WOULD VIOLATE THE CONDITIONS LAID DOWN IN CLAUSES (A) TO (C) UNDER SECTION 132(1) OF THE ACT THEN THE OFFICER SO AUTHORIZED I N ALL CASES WOULD BE ENTITLED TO ENTER AND SEARCH ANY BUILDING PLACE V ESSEL VEHICLE OR AIRCRAFT WHERE HE HAS REASON TO SUSPECT THAT SUCH B OOKS OF ACCOUNT OTHER DOCUMENTS MONEY BULLION JEWELLERY OR OTHER VALUA BLE ARTICLE OR THING ARE KEPT. HE IS ALSO AUTHORIZED TO BREAK-OPEN THE L OCK OF ANY DOOR BOX LOCKER SAFE ALMIRAH ETC. FOR EXERCISING THE POWER S AS CONFERRED BY CLAUSE (I) WHERE KEYS THEREOF WERE NOT AVAILABLE. ANOTHER POWER ENSHRINED ON THE AUTHORIZED OFFICER IS TO SEARCH AN Y PERSON WHO HAS GOT 72 OUT OR IS ABOUT TO GET INTO ANY OR IS IN ANY BUILDI NG PLACE VESSEL VEHICLE OR AIRCRAFT WHERE THE AUTHORIZED OFFICER H AS REASON TO SUSPECT THAT SUCH PERSON HAS SECRETED UPON HIS PERSON ANY S UCH BOOKS OF ACCOUNT OTHER DOCUMENTS MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING ETC. 109. ANOTHER AUTHORITY GIVEN TO THE AUTHORIZED OFFI CER IS WITH REGARD TO THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE FORM OF ELECTRONIC RECORD AND HE IS AUTHORIZED UNDER THE AC T TO INSPECT SUCH BOOKS OF ACCOUNT OR OTHER DOCUMENTS AS PER CLAUSE ( IIB) TO SECTION 132(1) OF THE ACT. AN AUTHORIZED OFFICER IS EMPOWERED TO SEIZE ANY SUCH BOOKS OF ACCOUNT OTHER DOCUMENTS MONEY BULLION JEWELL ERY OR OTHER VALUABLE ARTICLE OR THING FOUND AS A RESULT OF SUCH SEARCH. WHERE SUCH BULLION JEWELLERY ARTICLE OR OTHER VALUABLE ARTICLE OR THI NG IS THE STOCK-IN- TRADE OF THE BUSINESS FOUND AS A RESULT OF SEARCH THEN S UCH ARTICLES WOULD NOT BE SEIZED BY THE AUTHORIZED OFFICER BUT HE SHALL M AKE A NOTE OF THE INVENTORY OF SUCH STOCK-IN-TRADE OF THE BUSINESS. HE IS ALSO AUTHORIZED TO MAKE A NOTE OR ANY INVENTORY OF ANY MONEY BULLI ON JEWELLERY OR OTHER VALUABLE ARTICLE FOUND AND ALSO PLACE MARKS O F IDENTIFICATION ON ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS. 110. THE PROVISO UNDER SECTION 132(1) OF THE ACT PR OVIDES THAT WHERE ANY BUILDING PLACE VESSEL VEHICLE OR AIRCRAFT RE FERRED TO IN CLAUSE (I) IS WITHIN THE AREA OF JURISDICTION OF ANY CHIEF COMMIS SIONER OR COMMISSIONER BUT SUCH CHIEF COMMISSIONER OR COMMISS IONER HAS NO JURISDICTION OVER SUCH PERSON REFERRED TO IN CLAUSE (A) (B) OR (C) THEN NOT-WITHSTANDING ANYTHING CONTAINED IN SECTION 120 THEN SUCH CHIEF COMMISSIONER OR COMMISSIONER HAVING NO JURISDICTION SHALL BE COMPETENT TO EXERCISE THE POWERS UNDER THIS SUB-SEC TION IN ALL CASES WHERE HE HAS REASON TO BELIEVE THAT ANY DELAY IN GE TTING THE 73 AUTHORIZATION FROM THE CHIEF COMMISSIONER OR COMMIS SIONER HAVING JURISDICTION OVER SUCH PERSON MAY BE PREJUDICIAL TO THE INTEREST OF REVENUE. 111. IN VIEW OF THE PROVISIONS OF SECTION 132(1) OF THE ACT IT IS CLEAR THAT THE SEARCH & SEIZURE OPERATION AGAINST ANY PER SON CAN BE CARRIED OUT BY ANY AUTHORIZED OFFICER WHERE HE HAS INFORMATION IN HIS POSSESSION AND HAS REASON TO BELIEVE THAT THE ASSESSEE WOULD NOT C OMPLY WITH THE CONDITIONS IN CLAUSE (A) (B) OR (C) OF SECTION 132 (1) THEN SUCH PERSON IS AUTHORIZED BY THE AUTHORITIES TO ENTER AND SEARCH A NY BUILDING PLACE VESSEL VEHICLE OR AIRCRAFT. THE POWER TO SEARCH H AS BEEN GIVEN NOT ONLY TO SEARCH ANY BUILDING OR PLACE BUT ALSO TO SEARCH ANY VESSEL VEHICLE OR AIRCRAFT WHERE THERE IS A REASON TO SUSPECT THAT SU CH BOOKS OF ACCOUNT OTHER DOCUMENTS MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING ARE KEPT BY SEARCHED PERSON. FURTHER POWER I S ALSO GIVEN TO SEARCH ANY PERSON WHO IS GETTING OUT OF OR ABOUT TO GET IN OR IS IN ANY BUILDING PLACE VESSEL VEHICLE OR AIRCRAFT. THUS THE SAID POWER TO SEARCH BY THE AUTHORIZED OFFICER IS WIDE AND IS NOT RESTRICTED TO THE KNOWN ADDRESS OF A PERSON TO BE SEARCHED. THE SEARCH IS CARRIED OUT I N ORDER TO DISCOVER SUCH BOOKS OF ACCOUNT OTHER DOCUMENTS MONEY BULL ION JEWELLERY OR OTHER VALUABLE ARTICLES KEPT BY THE ASSESSEE IN SUC H A PLACE WHERE THE SAME CAN BE FOUND. SUCH EXERCISE OF POWER IS THUS ON BOTH THE KNOWN OR UN-KNOWN ADDRESSES OF A PARTICULAR PERSON IN ORD ER TO CARRY OUT SEARCH TO DISCOVER THE BOOKS OF ACCOUNT DOCUMENTS OR OTHE R ARTICLES OR THINGS INCLUDING MONEY JEWELLERY ETC. BELONGING TO SUCH P ERSON/S. 112. FURTHER THE PROVISO UNDER SECTION 132(1) OF T HE ACT VERY CLEARLY LAYS DOWN THAT SUCH EXERCISE OF THE POWER TO SEARCH CAN BE CARRIED OUT BY ANY CHIEF COMMISSIONER OR COMMISSIONER WHETHER HAVI NG JURISDICTION OVER THE PERSON OR NOT BUT WITHIN HIS AREA OF JURIS DICTION WHERE SUCH 74 BUILDING PLACE VESSEL VEHICLE OR AIRCRAFT IS EXI STING. THE SAID POWER HAS BEEN GIVEN TO AUTHORIZE SEARCH TO ANY CHIEF COM MISSIONER OR COMMISSIONER NOT-WITHSTANDING ANYTHING CONTAINED IN SECTION 120 OF THE INCOME TAX ACT. 113. NOW COMING TO THE FACTS OF THE CASE OF SHRI AJ AY KUMAR GUPTA THE WARRANT OF SEARCH WAS IN THE NAME OF SHRI AJAY KUMA R GUPTA ALONGWITH SHRI ASHWANI KUMAR GUPTA M/S VISHNU ASSOCIATES LTD . AND SHRI VIJAY KUMAR GUPTA COPY OF WHICH IS PLACED AT PAGES 59 AN D 60 OF THE PAPER BOOK. THE SEARCH WAS CARRIED OUT ON 3 & 4 TH SEPTEMBER 2004 AT HOUSE NO. 3007 SECTOR 19D CHANDIGARH. MERELY BECAUSE O NE OF THE PERSONS SEARCHED WAS NOT PRESENT AT THE GIVEN TIME DOES NO T INVALIDATE THE SEARCH AS THE SEARCH PROCEEDINGS UNDER SECTION 132( 1) OF THE ACT ARE NOT PERSON SPECIFIC BUT PLACE SPECIFIC. THE WARRANT IN THE PRESENT CASE WAS ISSUED TO SEARCH HOUSE NO. 3007 SECTOR 9D CHANDIG ARH WHICH IN SOME- WAY WAS CONNECTED TO SHRI AJAY KUMAR GUPTA SHRI AS HWANI KUMAR GUPTA M/S VISHNU ASSOCIATES AND SHRI VIJAY KUMAR G UPTA. ADMITTEDLY THE THREE PERSONS SHRI AJAY KUMAR GUPTA SHRI ASHWA NI KUMAR AND SHRI VIJAY KUMAR GUPTA ARE BROTHERS AND WERE DIRECTORS O F M/S VISHNU ASSOCIATES LTD. AND WERE RESIDING AT THE SAID ADDRE SS. EVEN THE SAID COMPANY INITIALLY HAD ITS REGISTERED OFFICE AT HOU SE NO. 3007 SECTOR 19D CHANDIGARH. ONCE THE SEARCH IS IN RESPECT OF THE PREMISES AND NOT PERSON SPECIFIC THEN IN SUCH CASES IT CANNOT BE HE LD THAT BECAUSE ONE OF THE PERSON WAS NOT PRESENT AT THE GIVEN TIME OF SEA RCH CANNOT BE HELD TO HAVE NOT BEEN SEARCHED AS THERE IS NO REQUIREMENT O F PRESENCE. IN ANY CASE THE ASSESSEE HAD SOUGHT INFORMATION UNDER THE RIGHT TO INFORMATION ACT AND THE INFORMATION HAS BEEN SUPPLIED BY THE DE PARTMENT VIDE LETTER DATED 23.10.2007 WHICH IS PLACED AT PAGES 31 TO 54 OF THE PAPER BOOK ALONG WITH ANNEXURE A-1 WHEREIN VARIOUS PERSONS HAD APPLIED FOR 75 SIMILAR INFORMATION. THE DEPARTMENT IN REPLY HAD SUBMITTED THAT SEARCH WAS CARRIED OUT ON SHRI AJAY KUMAR GUPTA SHRI ASHW ANI KUMAR GUPTA M/S VISHNU ASSOCIATES AND SHRI VIJAY KUMAR GUPTA AS MENTIONED IN S.NO. 1 ON 03.09.2004 AND THE COPY OF PANCHNAMA HAS ALREADY BEEN RECEIVED BY THE ASSESSEE. FURTHER IT IS MENTIONED IN THE SAID ANNEXURE- 1 THAT SEARCH WARRANT UNDER SECTION 132 OF THE INCO ME TAX ACT FOR VARIOUS DATES TO SEARCH THE DIFFERENT LOCKERS IN TH E NAME OF DIFFERENT PERSONS AT S.NO. 2 TO 6 WERE ISSUED AND COPY OF THE PANCHNAMA HAS ALREADY BEEN RECEIVED BY THE ASSESSEE. IN THE SAID ANNEXURE IT IS ALSO MENTIONED THAT SURVEY UNDER SECTION 133A OF THE ACT WAS CARRIED UPON M/S VALCO INDUSTRIES LTD. AT SCO NO. 37 SECTOR 16 CHANDIGARH. SO IN THE SAID COMMUNICATION THERE ARE TWO SETS OF INFOR MATION ONE IN RESPECT OF THE SEARCH ON DIFFERENT PERSONS INCLUDING SHRI A JAY KUMAR GUPTA SHRI ASHWANI KUMAR GUPTA M/S VISHNU ASSOCIATES AND SHRI VIJAY KUMAR GUPTA AND DIFFERENT LOCKERS IN THE INDIVIDUAL NAME AND ALSO SURVEY ON THE OFFICE PREMISES OF M/S VALCO INDUSTRIES LTD. 114. IN THE FACTS AND CIRCUMSTANCES WE FIND NO MER IT IN THE PLEA OF THE ASSESSEE VIS--VIS SHRI AJAY KUMAR GUPTA. WE HOLD T HAT THE SEARCH CONDUCTED BY THE AUTHORIZED OFFICERS PURSUANT TO WA RRANT ISSUED IN THE NAMES OF SHRI AJAY KUMAR GUPTA SHRI ASHWANI KUMAR GUPTA M/S VISHNU ASSOCIATES AND SHRI VIJAY KUMAR GUPTA AT HOU SE NO. 3007 SECTOR 19D CHANDIGARH WAS VALIDLY CONDUCTED AND PA NCHNAMA TO THE EFFECT WAS ISSUED TO THE ASSESSEE COPY OF WHICH HA D BEEN RECEIVED BY THE ASSESSEE. PURSUANT TO THE SAID SEARCH PROCEEDI NGS UNDER SECTION 132 OF THE ACT ON DIFFERENT PERSONS THE ASSESSING OFFI CER UNDER SECTION 153A OF THE ACT IS AUTHORIZED TO ISSUE NOTICE REQUI SITIONING THE DIFFERENT ASSESSEES TO FURNISH THEIR INDIVIDUAL RETURNS OF IN COME AS SEARCH HAD BEEN CARRIED ON AT THEIR KNOWN ADDRESS ON FOUR DIFF ERENT PERSONS AS 76 MENTIONED IN THE PANCHNAMA DATED 3/4.09.2004 I.E. S /SHRI AJAY KUMAR GUPTA ASHWANI KUMAR GUPTA M/S VISHNU ASSOCIATES A ND VIJAY KUMAR GUPTA. WE FIND NO MERIT IN THE PLEA OF THE ASSESSEE THAT AS SHRI AJAY KUMAR GUPTA WAS NOT PRESENT AT THE GIVEN ADDRESS ON THE DATE OF SEARCH THEN THE PROCEEDINGS IN HIS CASE SHOULD HAVE BEEN I NITIATED UNDER SECTION 153A OF THE ACT. THE SAID PLEA OF THE ASSESSEE IS REJECTED AND WE UPHOLD THE PROCEEDINGS INITIATED UNDER SECTION 153A OF THE ACT IN THE HANDS OF S/SHRI AJAY KUMAR GUPTA ASHWANI KUMAR GUPTA AND S HRI VIJAY KUMAR GUPTA. 115. THE OTHER ISSUE RAISED BY THE ASSESSEE WAS REG ARDING INVOKING OF JURISDICTION BY THE CONCERNED ASSESSING OFFICER. T HE ASSESSEE IS AGGRIEVED BY THE ISSUE OF NOTICE UNDER SECTION 153A OF THE ACT BY THE ASSESSING OFFICER CENTRAL CIRCLE. 116. THE LD. DR FOR THE REVENUE POINTED OUT THAT TH E SAID JURISDICTION WAS VALIDLY TRANSFERRED FROM RANGE III CHANDIGARH TO THE DCIT CENTRAL CIRCLE CHANDIGARH BY AN ORDER PASSED UNDER SECTION 127(1) READ WITH SECTION 127(3) OF THE ACT DATED 30.05.2005 COPY OF WHICH IS PLACED BY THE ASSESSEE IN HIS PAPER BOOK AT PAGES 105 AND 106 . THE ASSESSEE HAD RAISED ONLY TWO OBJECTIONS IN VIEW OF THE PROVISION S OF SECTION 124(4) OF THE ACT AND 127 OF THE ACT. FOR UNDERSTANDING THE CORRECT PERSPECTIVE OF JURISDICTION LET US GO THROUGH THE RELEVANT PORTIO N OF THE PROVISIONS DEALING WITH THIS ISSUE : 120. (1) INCOME TAX AUTHORITIES SHALL EXERCISE ALL OR ANY OF THE POWERS AND PERFORM ALL OR ANY OF THE FUNCTIONS CONFERRED ON OR AS THE CASE MAY BE ASSIGNED TO SUCH AUTHORITIES BY OR UNDER THIS ACT IN ACCORDANCE WITH SUCH DIRECTIONS AS THE BOARD MAY ISSUE FOR THE EXERCISE OF THE POWERS AND PERFORMANCE OF THE FUNCTIONS BY ALL OR A NY OF THOSE AUTHORITIES. (2) THE DIRECTIONS OF THE BOARD UNDER SUB-SECTION(1 ) MAY AUTHORIZE ANY OTHER INCOME-TAX AUTHORITY TO ISSUE ORDERS IN WRITING FOR THE EXERCI SE OF THE POWERS AND PERFORMANCE OF THE FUNCTIONS BY ALL OR ANY OF THE OTHER INCOME-TAX AUT HORITIES WHO ARE SUBORDINATE TO IT. 77 (3)IN ISSUING THE DIRECTIONS OR ORDERS REFERRED TO IN SUB-SECTIONS(1) AND (2) THE BOARD OR OTHER INCOME TAX AUTHORITY AUTHORIZED BY IT MAY HAVE REGA RD TO ANY ONE OR MORE OF THE FOLLOWING CRITERIA NAMELY:- (A) TERRITORIAL AREA; (B) PERSONS OR CLASSES OF PERSONS; (C) INCOMES OR CLASSES OF INCOME; AND (D) CASES OR CLASSES IF CASES (4) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECT IONS(1) AND (2) THE BOARD MAY BY GENERAL OR SPECIAL ORDER AND SUBJECT TO SUCH CONDITIONS REST RICTIONS OR LIMITATIONS AS MAY BE SPECIFIED THEREIN - (A) AUTHORIZE ANY DIRECTOR GENERAL OR DIRECTOR TO PERFORM SUCH FUNCTIONS OF ANY OTHER INCOME-TAX AUTHORITY AS MAY BE ASSIGNED TO HIM BY T HE BOARD; (B) EMPOWER THE DIRECTOR GENERAL OR CHIEF COMMISSIO NER OR COMMISSIONER TO ISSUE ORDERS IN WRITING THAT THE POWERS AND FUNCTIONS CONFERRED ON OR AS THE CASE MAY BE ASSIGNED TO THE ASSESSING OFFICER BY OR UNDER THIS ACT IN RESPECT O F ANY SPECIFIED AREA OR PERSONS OR CLASSES OF PERSONS OR INCOMES OR CLASSES OF INCOME OR CASES OR CLASSES OF CASES SHALL BE EXERCISED OR PERFORMED BY A [JOINT] COMMISSIONER [OR A [JOINT] D IRECTOR] AND WHERE ANY ORDER IS MADE UNDER THIS CLAUSE REFERENCES IN ANY OTHER PROVISIO N OF THIS ACT OR IN ANY RULE MADE THEREUNDER TO THE ASSESSING OFFICER SHALL BE DEEMED TO BE REFE RENCES TO SUCH [JOINT ] COMMISSIONER [OR [JOINT]DIRECTOR] BY WHOM THE POWERS AND FUNCTIONS A RE TO BE EXERCISED OR PERFORMED UNDER SUCH ORDER AND ANY PROVISION OF THIS ACT REQUIRING APPROVAL OR SANCTION OF THE [JOINT] COMMISSIONER SHALL NOT APPLY. (5) THE DIRECTIONS AND ORDERS REFERRED TO IN SUB-SE CTIONS(1) AND (2) MAY WHEREVER CONSIDERED NECESSARY OR APPROPRIATE FOR THE PROPER MANAGEMENT OF THE WORK REQUIRE TWO OR MORE ASSESSING OFFICERS (WHETHER OR NOT OF THE SAME CLAS S) TO EXERCISE AND PERFORM CONCURRENTLY THE POWERS AND FUNCTIONS IN RESPECT OF ANY AREA OR PERS ONS OR CLASSES OF PERSONS OR INCOMES OR CLASSES OF INCOME OR CASES OR CLASSES OF CASES; AND WHERE SUCH POWERS AND FUNCTIONS ARE EXERCISED AND PERFORMED CONCURRENTLY BY THE ASSESSI NG OFFICERS OF DIFFERENT CLASSES ANY AUTHORITY LOWER IN RANK AMONGST THEM SHALL EXERCISE THE POWERS AND PERFORM THE FUNCTIONS AS ANY HIGHER AUTHORITY AMONGST THEM MAY DIRECT AND FURTHER REFERENCES IN ANY OTHER PROVISION OF THIS ACT OR IN ANY RULE MADE THEREUNDER TO THE A SSESSING OFFICER SHALL BE DEEMED TO BE REFERENCES TO SUCH HIGHER AUTHORITY AND ANY PROVISI ON OF THIS ACT REQUIRING APPROVAL OR SANCTION OF ANY SUCH AUTHORITY SHALL NOT APPLY. (6) NOTWITHSTANDING ANYTHING CONTAINED IN ANY DIREC TION OR ORDER ISSUED UNDER THIS SECTION OR IN SECTION 124 THE BOARD MAY BY NOTIFICATION IN T HE OFFICIAL GAZETTE DIRECT THAT FOR THE PURPOSE OF FURNISHING OF THE RETURN OF INCOME OR THE DOING OF ANY OTHER ACT OR THING UNDER THIS ACT OR ANY RULE MADE THEREUNDER BY ANY PERSON OR CLASS OF PERS ONS THE INCOME-TAX AUTHORITY EXERCISING AND PERFORMING THE POWERS AND FUNCTIONS IN RELATION TO THE SAID PERSON OR CLASS OF PERSONS SHALL BE SUCH AUTHORITY AS MAY BE SPECIFIED IN THE NOTIFI CATION.] [ JURISDICTION OF ASSESSING OFFICERS. 124. (1) WHERE BY VIRTUE OF ANY DIRECTION OR ORDER ISSUED UNDER SUB-SECTION(1) OR SUB-SECTION(2) OF SECTION 120 THE ASSESSING OFFICER HAS BEEN VEST ED WITH JURISDICTION OVER ANY AREA WITHIN THE LIMITS OF SUCH AREA HE SHALL HAVE JURISDICTION- (A) IN RESPECT OF ANY PERSON CARRYING ON A BUSINES S OR PROFESSION IF THE PLACE AT WHICH HE CARRIED ON HIS BUSINESS OR PROFESSION IS SITUATE WI THIN THE AREA OR WHERE HIS BUSINESS OR PROFESSION IS CARRIED ON IN MORE PLACES THAN ONE I F THE PRINCIPAL PLACE OF HIS BUSINESS OR PROFESSION IS SITUATE WITHIN THE AREA AND (B) IN RESPECT OF ANY OTHER PERSON RESIDING WITHIN THE AREA. (2) WHERE A QUESTION ARISES UNDER THIS SECTION AS T O WHETHER AN ASSESSING OFFICER HAS JURISDICTION TO ASSESS ANY PERSON THE QUESTION SHA LL BE DETERMINED BY THE DIRECTOR GENERAL OR THE CHIEF COMMISSIONER OR THE COMMISSIONER OR WHER E THE QUESTION IS ONE RELATING TO AREAS WITHIN THE JURISDICTION OF DIFFERENT DIRECTOR GENER ALS OR CHIEF COMMISSIONERS OR COMMISSIONERS BY THE DIRECTORS GENERAL OR CHIEF CO MMISSIONERS OR COMMISSIONERS 78 CONCERNED OR IF THEY ARE NOT IN AGREEMENT BY THE BOARD OR BY SUCH DIRECTOR GENERAL OR CHIEF COMMISSIONER OR COMMISSIONER AS THE BOARD MAY BY N OTIFICATION IN THE OFFICIAL GAZETTE SPECIFY. (3) NO PERSON SHALL BE ENTITLED TO CALL IN QUESTION THE JURISDICTION OF AN ASSESSING OFFICER- (A) WHERE HE HAS MADE A RETURN UNDER SUB-SECTION(1) OF SECTION 139 AFTER THE EXPIRY OF ONE MONTH FROM THE DATE ON WHICH HE WAS SERVED WITH A N OTICE UNDER SUB-SECTION (1) OF SECTION 142 OR SUB-SECTION (2) OF SECTION 143 OR AFTER THE COM PLETION OF THE ASSESSMENT WHICHEVER IS EARLIER; (B) WHERE HE HAS MADE NO SUCH RETURN AFTER THE EXP IRY OF THE TIME ALLOWED BY THE NOTICE UNDER SUB-SECTION(1) OF SECTION 142 OR UNDER SECTIO N 148 FOR THE MAKING OF THE RETURN OR BY THE NOTICE UNDER THE FIRST PROVISO TO SECTION 144 TO SH OW CAUSE WHEY THE ASSESSMENT SHOULD NOT BE COMPLETED TO THE BEST6 OF THE JUDGMENT OF THE ASSES SING OFFICER WHICHEVER IS EARLIER. (4)--------------------- (5)--------------------- 127. (1) THE DIRECTOR GENERA OR CHIEF COMMISSIONER OR COMMISSIONER MAY AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD IN THE MATTER WHEREVER IT IS POSSIBLE TO DO SO AND AFTER RECORDING HIS REASONS FOR DOING SO TRANS FER ANY CASE FROM ONE OR MORE ASSESSING OFFICERS SUBORDINATE TO HIM (WHETHER WITH OR WITHOU T CONCURRENT JURISDICTION) TO ANY OTHER ASSESSING OFFICER OR ASSESSING OFFICERS (WHETHER WI TH OR WITHOUT CONCURRENT JURISDICTION) ALSO SUBORDINATE TO HIM. (2) WHERE THE ASSESSING OFFICER OR ASSESSING OFFICE RS FROM WHOM THE CASE IS TO BE AND THE ASSESSING OFFICER OR ASSESSING OFFICERS TO WHOM THE CASE IS TO BE TRANSFERRED ARE NOT SUBORDINATE TO THE SAME DIRECTOR GENERAL OR CHIEF C OMMISSIONER OR COMMISSIONER - (A)------------------------ (B)------------------------ (3) NOTHING IN SUB-SECTION(1) OR SUB-SECTION(2) SHA LL BE DEEMED TO REQUIRE ANY SUCH OPPORTUNITY TO BE GIVEN WHERE THE TRANSFER IS FROM ANY ASSESSIN G OFFICER OR ASSESSING OFFICERS(WHETHER WITH OR WITHOUT CONCURRENT JURISDICTION) TO ANY OTHER AS SESSING OFFICER OR ASSESSING OFFICERS (WHETHER WITH OR WITHOUT CONCURRENT JURISDICTION) A ND THE OFFICES OF ALL SUCH OFFICERS ARE SITUATED IN THE SAME CITY LOCALITY OR PLACE. (4) THE TRANSFER OF A CASE UNDER SUB-SECTION(1) OR SUB-SECTION(2) MAY BE MADE AT ANY STAGE OF THE PROCEEDINGS AND SHALL NOT RENDER NECESSARY THE RE-ISSUE OF ANY NOTICE ALREADY ISSUED BY THE ASSESSING OFFICER OR ASSESSING OFFICERS FROM WHOM T HE CASE IS TRANSFERRED. 117. UNDER SECTION 124 OF THE ACT THE JURISDICTION OF A SSESSING OFFICERS HAVE BEEN PROVIDED WHERE IT IS LAID DOWN T HAT BY VIRTUE OF ANY DIRECTIONS OR ORDER ISSUED UNDER SUB-SECTION (1) OR SUB SECTION (2) OF SECTION 120 THE ASSESSING OFFICER HAS BEEN VESTED WITH JURISDICTION OVER ANY AREA OR WITHIN THE LIMITS OF SUCH AREA THEN HE SHALL HAVE JURISDICTION IN RESPECT OF ANY PERSON CARRYING ON THE BUSINESS O R PROFESSION WITHIN THE AREA AND WHERE HE IS CARRYING ON THE BUSINESS I N ONE OR MORE PLACES THEN IF THE PRINCIPAL PLACE OF BUSINESS IS SITUATED WITHIN THE SAID AREA AND IN RESPECT OF ANY PERSON RESIDING WITHIN THE AR EA. THE QUESTION OF 79 THE JURISDICTION TO ASSESS ANY PERSON BY ANY ASSESS ING OFFICER SHALL BE DETERMINED BY THE DIRECTOR GENERAL OR THE CHIEF COM MISSIONER OR THE COMMISSIONER AND WHERE THE ASSESSEE IS ONE RELATING TO AREAS WITHIN THE JURISDICTION OF DIFFERENT DIRECTOR GENERALS OR CHIE F COMMISSIONERS OR COMMISSIONERS THEN BY THE CONCERNED DIRECTOR GENER AL CHIEF COMMISSIONER OR COMMISSIONER AND IF THEY ARE NOT IN AGREEMENT THEN BY THE BOARD OR ANY PERSON NOMINATED BY BOARD. UNDER S UB-SECTION (3) TO SECTION 124 IT IS LAID DOWN THAT ANY ASSESSEE IS EN TITLED TO CALL QUESTION ON THE JURISDICTION OF ANY ASSESSING OFFICER WHERE HE HAS MADE THE RETURN OF INCOME OR WAS SERVED WITH ANY NOTICE UNDE R SECTION 142(1) OR 115WE(2) OR SECTION 143(2) OR AFTER COMPLETION OF A SSESSMENT WHICHEVER IS EARLIER AND IN CASE HE HAS NOT MADE AN Y RETURN OF INCOME THEN AFTER THE EXPIRY OF TIME ALLOWED UNDER THE RES PECTIVE SECTIONS FOR FILING THE RETURN OF INCOME OR THE REQUISITE INFORM ATION. SUB SECTION (4) TO SECTION 124 PROVIDES THAT WHERE AN ASSESSEE CALL S IN QUESTION THE JURISDICTION OF AN ASSESSING OFFICER THEN IF THE AS SESSING OFFICER IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM SHALL REFER THE MATTER FOR DETERMINATION UNDER SUB-SECTION (2) BEFORE THE ASSE SSMENT IS MADE. THE ASSESSEE HAS OBJECTED THAT THE ASSESSING OFFICER HA S NOT FOLLOWED THE PROCEDURE LAID DOWN UNDER SECTION 124(4) OF THE ACT . PERHAPS THE ASSESSEE IS REFERRING TO THE PROVISIONS OF SECTION 124(3) UNDER WHICH THE ASSESSEE WAS REQUIRED TO LODGE THE OBJECTIONS IF A NY REGARDING THE JURISDICTION OF THE ASSESSING OFFICER. THE SO CALL ED OBJECTION OF THE ASSESSEE PLACED AT PAGE 459 OF THE PAPER BOOK READS AS UNDER : NOVEMBER 14 2005 WITHOUT PREJUDICE THE ASSTT. COMMISSIONER OF INCOME TAX 80 CENTRAL CIRCLE SCO. 48-49 TOP FLOOR SECTOR 1 7-A CHANDIGARH. SUBJECT : NOTICES U/S 153A OF THE INCOME TAX ACT. 1 961-RE KIND ATT. HON'BLE SHREE V.K.CHOPRA. THE ASSTT. COMM ISSIONER OF INCOME TAX CENTRAL CIRCLE MINISTRY OF FINANCE GOVT. OF INDIA. IANDIG ARH. HONBLE SIR. 1. THIS IS WITH REGARD TO YOUR LETTERS CONTAINING S UBJECT NOTICES DATED 06.10.2005 DELIVERED BY HAND ON 18.10.2005 WE OFFER TO SUBMIT RESPECTFULLY AS UNDER IT IS IN VIW OF ALL THE RELEVANT & APPLICABLE VARIO US PROVISIONS OF LAW ACT & LAW RELATING TO FINANCE REVENUE COMMERCE V ARIOUS TAXATIONS UNDER DIFFERENT HEADS / CHAPTERS RULES ETC. CODE OF CRIMINAL PROCEDURE EVIDENCE ACT. LAW OF LIMITATIONS. RIGHT TO INFORMATION ACT. RIGHTS & REMEDIES AVAILABLE UNDER THE VARIOUS PROVI SIONS OF LAW AND CONSTITUTION OF INDIA. OTHER PROVISIONS OF LAW GUIDELINES NOTIFICATION'S INSTRUCTIONS PUBLIC NOTICES CIRCULARS PRACTICE PROCEDURE PRINCIPALS... IT IS IN VIEW OF THESE APPROPRIATE PROVISIONS OF LA W THAT THE SUBJECT NOTICES M YOUR LETTERS ARE SILENT AND NON-SPEAKING AS TO SAY THAT; WHY THESE NOTICES ARE ISSUED TO US WHAT .ARE THE DETAILS OF REASON'S AND THE OCCASION COSEQUENCIES TO INITIATE SUCH NOTICES BY THIS PUBLI C OFFICE THAT UNDER WHAT AUTHORITY OF LAW & PROCEDURE THE NOTICES CAME TO ARISE CONTAINING SUCH INSTRUCTIONS TO FILE AGAIN THE RETURN'S FOR MANY PREVIOUS YEARS IT IS ALSO SILENT THAT 'HOW AND WHEN' YOUR GOOD OF FICE ASUMED SUCH JURISDICTION TO ISSUE NOTICES U/S 153A OF THE ACT. AND THE EVIDENCE/ SUPPORTING DOCUMENT FACTS GIVING RISE TO 'HOW & WHEN' THE JURISDICTION IS ASUMED TO ISSUE THE NOTICE U'S 153A OF THE ACT IS UNSUPPORTED ALONGWIT H THE NOTICES. THAT BESIDES THE MISSING FACTS OF CAUSE OF ACTION I N THE NOTICES THERE IS NO MENTION OF THE LIMITATIONS AUT HORITIES IN THE LAW FOR ISSUASNCE OF SUCH NOTICES. WHILE ISSUING THE LETTERS CONTAINING SUCH NOTICES I .E. THE CLEAR ATTEMPT TO INITIATE SUCH PROVISIONS OF THE AC T. EVEN THE BASIC PRINCIPALS OF THE CODE OF CRIMINAL PROCEDURE AND OTHER PROVISIONS OF THE LAW HAS BEEN COMPLETE LY IGNORED. NOTICES HAVE BEEN ISSUED WITHOUT LICATION OF MIND THAT THERE IS ABSOLUTELY NO REASONS FOR ISSUE OF SU CH NOTICES. AND NOR THERE WERE ANY REASONS FOR SELF -EXCEEDING AND SELF-ADOPTION OF JURISDICTION ILLEGALLY BY MI SUSE OF PUBLIC MACHINERY. THAT IN VIEW OF THE AFOR ESAID PATENT DEFICIENCIES AS PER LAW AND FACTS THE NOTICES ISSU ED IN THE LETTERS BY YOUR OFFICE FAILS BEING ILLEG AL WITHOUT 81 JURISDICTION FACTS AND WITHOUT ANY CAUSE OF ACTION AS PER LAW AND OTHER GROUNDS ARE THUS VOID UNSU STAINABLE AND NON-EST IN EYES OF LAW. AND AS SUCH REPLY TO YOUR AFORESAID LETTERS AND NOTICES STANDS DISPOSED OFF ACCORDINGLY. 2. HOWEVER IRRESPECTIVE TO THE FACT THAT THE LETT ERS/NOTICES STANDS DISPOSED OFF WE KEEP OUR RIGHT RESERVE TO AGITATE & CLAIM AGAINST THE ISSUANCE OF THE ILLEGAL NOTICES BEFORE THE APPROPRIATE AUTHORITIES UNDER T HE LAW. ALL RIGHTS AVAILABLE IN THE LAW ARE RESERVED. 3. WE FURTHER TAKE THE OPPORTUNITY TO INFORM THAT BEING LAW ABIDING RESPECTABLE CITIZEN ARE FILING ALL REGULAR TAX RETURNS ON RECORDS BEFORE JURISDICTIONAL ASSESSIN G OFFICER SHOWING TRUE INCOME TO BEST OF INFORMATI ON AND ARE ALREADY FINAL. AT THE SAME TIME WE DEPRECATE THE PR ACTICE OF ARM TWISTING BY THE HIGHLY REPUTED PUBLIC OFFICE IN THE MANNER WE RECEIVED NOTICES FROM HIS EXCELLENCY SH. R.S. MEHTA THE ACIT 3(1) CHANDIGARH WITHOUT PROC EDURE AND AUTHORITY ON REGULAR YEARLY BASIS FOR SCRUTINY IN CASE OF VALCO INDUSTRIES LTD. AND REPORTED THE MA TTER OF MALAFIDE HARASSMENTS TO THE MINISTRY AND THE HON'BLE CHIEF COMMISSIONER IT CHANDIGARH FOR NECESSARY ACTION AGAINST THE SAID INDIVIDUAL FOR MISUSE OF PUBLIC MACHINERY AND PUBLIC OFFICE. IT IS LEARNT THAT AS PER PRACTICE IN THIS WORTHY CI RCLE THE CASES OF PARTIES WITH HIGH DEGREE OF CRIM INAL REVENUE OFFENCES ALONE ARE TRIED AND IF THAT IS THE FACT THEN KINDLY NOTE THAT WE REFUSE TO SIT AMONG THE CL ASS OF THOSE ESTABLISHED DEFAULTERS IN THE LAW. UNLESS USING TH E JURISDICTION IF AVAILABLE THE CAREFUL & PURE EXA MINATION OF GROUNDS FACTS/EVIDENCE VALID LEGAL REASONS AND CI RCUMSTANCES RECOMMENDS A STRONG CASE SUSTAINABLE I N THE EYES OF LAW ACT'S. PROVISIONS AND TRIAL: OTHERWI SE KINDLY NOTE THAT FOR ANY HARSH MALAFIDE FORC EFUL OR UNWARRANTED ATTEMPT AND FAILURE OF PROCEEDINGS IN LEGAL TEST WILL ENTITLE US TO BE RELIEVED. OR IF IT WERE PROVED TO SATISFACTION THAT THE PROCEEDINGS WERE LA WFUL WE ASSURE THE COOPERATION TO BEST PERMISSIBLE BY PROTECTING OUR LEGAL RIGHTS. JAI HIND THANKING YOU YOURS FAITHFULLY A.K.GUPTA FOR VALCO INDUSTRIES LTD. HO. SR-37 SECTOR-26 M.MARG CHANDIGARH COPY TO: CBDT 118. PERUSAL OF THE ABOVE SHOWS THAT ASSESSEE HAS N OT RAISED ANY SPECIFIC OBJECTION BUT REFERRED TO VARIOUS OTHER LA WS OTHER THAN THE INCOME TAX ACT. THE ASSESSING OFFICER SPECIFICALLY ASKED THE ASSESSEE TO REFER TO ONLY INCOME TAX LAW BECAUSE INCOME TAX IS A SPECIAL LAW AND THE PROVISIONS OF OTHER LAWS MAY NOT BE APPLICABLE. IN RESPONSE TO THIS QUERY THE ASSESSEE HAS REPEATED THE EARLIER REPLY. EVEN BEFORE US HE SAID THAT THE OBJECTION AGAINST JURISDICTION MAYBE TAKEN AS PER THE LETTER DATED 14.11.2005 ALREADY REPRODUCED HERE ABOVE. 82 119. THEREFORE IN OUR OPINION THE ASSESSEE HAS NO T RAISED ANY SPECIFIC OBJECTION AS REQUIRED UNDER SECTION 124(3) WITHIN T HE STIPULATED TIME OF 30 DAYS. THEREFORE THE ASSESSEE CANNOT AGITATE TH IS ISSUE LATER ON. WE MAY FURTHER POINT OUT THAT ASSESSEE IS CONTINUOUSLY STRESSING ON THE PROVISIONS OF SECTION 124(4). ROLE OF SECTION 124( 4) COMES INTO PLAY ONLY AFTER ASSESSEE HAS FILED HIS OBJECTIONS UNDER SECTION 124(3) OF THE ACT. 120. ANOTHER ASPECT OF THE ISSUE IS THAT ADMITTEDLY THE ASSESSEE WAS FILING ITS RETURN OF INCOME AT ITS RESIDENTIAL ADDR ESS AND HIS JURISDICTION WAS UNDER RANGE-III CHANDIGARH. FURTHER IN THE P RESENT CASE THE ASSESSEE HAD MADE SEVERAL REPRESENTATIONS BEFORE TH E ASSESSING OFFICER HOWEVER THE ASSESSEE IS AGGRIEVED BY NO ACTION TAKE N BY THE ASSESSING OFFICER. IN THE FACTS OF THE PRESENT CASE THE JURI SDICTION VESTED WITHIN DCIT CENTRAL CIRCLE CHANDIGARH BY AN ORDER PASSED BY THE COMMISSIONER OF INCOME TAX-I CHANDIGARH DATED 30.05 .2005 IN EXERCISE OF POWER UNDER SECTION 127(1) READ WITH SECTION 127 (3) OF THE ACT. UNDER SECTION 127(1) OR 127(2) THE DIRECTOR GENERAL OR D Y. COMMISSIONER OR COMMISSIONER MAY PROVIDE A REASONABLE OPPORTUNITY O F BEING HEARD BEFORE EXERCISING HIS JURISDICTION OF TRANSFERRING THE CASE FROM ONE ASSESSING OFFICER TO ANOTHER ASSESSING OFFICER. HO WEVER SUB SECTION (3) TO SECTION 127 OF THE ACT OVERRIDES THE PROVISI ONS IN SUB-SECTION (1) OR SUB-SECTION (2) TO PROVIDE THAT NO OPPORTUNITY W OULD BE GIVEN TO AN ASSESSEE BEFORE TRANSFER OF HIS CASE WHERE THE TRAN SFER IS FROM AN ASSESSING OFFICER TO ANY OTHER ASSESSING OFFICER AN D THE OFFICES OF ALL SUCH OFFICERS ARE SITUATED IN THE SAME CITY LOCALI TY OR PLACE. IN THE FACTS OF THE PRESENT CASE THE ASSESSEE WAS BEING ASSESSE D WITH RANGE-III CHANDIGARH WHICH IS WITHIN THE JURISDICTION OF THE CITY OF CHANDIGARH AND HIS CASES WERE BEING TRANSFERRED TO DCIT CENTR AL CIRCLE CHANDIGARH 83 WHICH IS AGAIN SITUATED IN THE SAME CITY BY AN ORDE R PASSED UNDER SECTION 127(3) OF THE ACT IN VIEW THEREOF WHERE THE TRANSF ER OF JURISDICTION WAS FROM RANGE-III CHANDIGARH TO DCIT CENTRAL CIRCLE CHANDIGARH. THERE WAS NO REQUIREMENT OF PROVIDING AN OPPORTUNITY OF H EARING TO THE ASSESSEE. ONCE THE ORDER UNDER SECTION 127(1) READ WITH SECTION 127(3) OF THE ACT HAS BEEN PASSED BY THE COMPETENT AUTHORI TY IN TRANSFERRING THE CASE WITHIN ITS JURISDICTION IN THE SAME CITY THEN THERE IS NO REQUIREMENT AS PER THE ACT TO PROVIDE ANY OPPORTUNITY OF HEARIN G TO THE ASSESSEE BEFORE MAKING SUCH TRANSFER. IN VIEW THEREOF WE F IND NO MERIT IN THE OBJECTIONS RAISED BY THE ASSESSEE IN THIS REGARD. 121. IN ANY CASE THE ISSUE OF TRANSFER OF JURISDIC TION IS NOT APPEALABLE AND THE REMEDY LIES ELSEWHERE AND THE ASSESSEE CAN AVAIL THE SAME IF ASSESSEE IS SO ADVISED. THE HON'BLE PUNJAB & HARYAN A HIGH COURT IN SMT. JASWINDER KAUR KOONER VS CIT IN 291 ITR 80 (P& H) HAD HELD AS UNDER : SCOPE OF ASSESSMENT PROCEEDINGS UNDER THE ACT IS CO NFINED TO DETERMINING THE INCOME OF THE ASSESSEE AND LIABILITY TO TAX. THE OF FICER TO WHOM JURISDICTION IS TRANSFERRED AND WHO DERIVES JURISDICTION FROM SUCH AN ORDER CANNOT QUESTION THE VALIDITY OF SUCH AN ORDER. IF THE ASSESSEE IS AGGRI EVED BY AN ORDER OF TRANSFER THE REMEDY OF THE ASSESSEE IS TO CHALLENGE SUCH AN ORDE R IN INDEPENDENT PROCEEDINGS EITHER BEFORE THE HIGHER ADMINISTRATIVE AUTHORITIES AS PER THE ACT OR IN ANY INDEPENDENT PROCEEDINGS BY WAY OF WRIT PETITION OR OTHERWISE. IF NO SUCH CHALLENGE IS MADE AT THE INITIAL STAGE THE ISSUE CANNOT BE R AISED IN APPEAL AGAINST THE ASSESSMENT ORDER. THE ASSESSEE HAVING NOT RAISED TH E OBJECTION AS TO THE JURISDICTION AT THE APPROPRIATE TIME BEFORE THE AO CANNOT BE PER MITTED TO TAKE UP THE ISSUE IN APPEAL. IN VIEW OF THE ABOVE NO SUBSTANTIAL QUESTI ON OF LAW ARISES. 122. WE FIND THAT ON SIMILAR ISSUE OF INVOKING OF J URISDICTION AND PROCEDURE LAID DOWN UNDER SECTION 124 OF THE ACT AR OSE BEFORE THE TRIBUNAL IN THE CASE OF PUNJAB URBAN DEVELOPMENT AU THORITY MOHALI (ITA NOS. 762/CHD/2007 ACIT VS PUNJAB URBAN DEVELOP MENT AUTHORITY MOHALI A.Y 2003-04 ITA NO. 759/CHD/2008 PUNJAB URB AN DEVELOPMENT AUTHORITY MOHALI VS ACIT A.Y. 2004-05 ITA 765/CH D/2008 DCIT VS 84 PUNJAB URBAN DEVELOPMENT AUTHORITY MOHALI A.Y. 200 4-05 AND OTHERS AND THE TRIBUNAL VIDE ORDER DATED 06.12.2013 HELD A S UNDER : 34 ONE MORE ASPECT WAS HOTLY CONTESTED BY BOTH THE PARTIES WHETHER THE LD. CIT(A) HAD POWER TO ADJUDICATE THE ISSUE REGARDING EXERCISE OF JURISDICTION. MAIN SUBMISSION OF THE D EPARTMENT IS THAT EVEN AFTER THE DECISION OF HON'BLE SUPREME COURT IN CASE OF NATIONAL THERMAL POWER CO. LTD. (SUPRA) THE ISSUE C OULD NOT BE RAISED BECAUSE MANY FACTS WERE INVOLVED AND ADDITIO NAL GROUND CAN BE RAISED IN RESPECT OF LEGAL ISSUES AND FOR W HICH THE FACTS WERE ALREADY ON RECORD. IN THIS REGARD SHE HAD FUR THER RELIED ON THE OBSERVATIONS OF HON'BLE PUNJAB & HARYANA HIGH C OURT IN CASE OF ARAVALI ENGINEERS P. LTD. VS. CIT (SUPRA). SHE ALSO CONTENDED THAT THERE WAS NO PROVISION IN SECTION 246A OF THE ACT TO CHALLENGE THE QUESTION OF JURISDICTION. IN THIS REGARD RELIA NCE WAS ALSO PLACED ON THE DECISION OF HON'BLE ALLAHABAD HIGH CO URT IN CASE OF CIT V. BRITISH INDIA COPRPORATION LTD. (SUPRA). 35 ON THE OTHER HAND THE LD. COUNSEL OF THE ASSE SSEE HAD MAINLY SUBMITTED THAT ONCE THE ISSUE GOES TO THE RO OT OF THE MATTER THEN THE SAME COULD BE RAISED BEFORE THE APPELLATE AUTHORITY. HE MAINLY RELIED ON THE DECISION OF WEST BENGAL STATE ELECTRICITY BOARD VS. DCIT (SUPRA) AND NATIONAL THERMAL POWER C O. LTD. (SUPRA). WE DO NOT FIND FORCE IN THE SUBMISSIONS O F THE LD. COUNSEL OF THE ASSESSEE. FIRST OF ALL WE ARE OF THE OPINIO N THAT IT IS A TRITE LAW THAT APPEAL IS A STATUTORY RIGHT AND NOT AN INH ERENT RIGHT. (REFERENCE MAY BE MADE TO SMT. GANGA BAI VS. VIJAY KUMAR AIR (1974) S.C 1126 1129 DARSHAN SINGH VS. RAM PAL S INGH (1992) SUPP (1) SCC 191 212 CIT VS. SYED JAFFER & SONS (1992) 194 ITR 645 649). THIS ISSUE CAME UP FOR CONSIDERATIO N OF HON'BLE ALLAHABAD HIGH COURT IN CASE OF CIT VS. BRITISH IND IA CORPORATION LTD.. IN THAT CASE THE ASSESSEE WAS HAVING TWO WO OLLEN MILLS LOCATED IN KANPUR (U.P) AND ANOTHER MILL IN GURDASP UR (PUNJAB). THE ASSESSEE FILED RETURN OF INCOME FOR ASSESSMENT YEAR 1994-95 WHICH WAS PROCESSED BY THE ASSESSING OFFICER CENTRA L CIRCLE (1) KANPUR (U.P). LATER ON NOTICES U/S 143(2) WERE ISS UE AND ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S. 144B OF THE ACT ON SEPT 7 1977 AFTER MAKING CERTAIN ADDITION. THE ASSESSE E CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) KANPUR. DU RING THE COURSE OF APPEAL PROCEEDINGS AN ADDITIONAL GROUND WITH REG ARD TO LACK OF JURISDICTION OF THE ASSESSING OFFICER BY CENTRAL CI RCLE (1) WAS ALSO RAISED BECAUSE ASSESSMENT FILED STOOD TRANSFERRED F ROM ITO CENTRAL CIRCLE 1 KANPUR TO INSPECTING ASSISTANT CO MMISSIONER RANGED KANPUR BY ORDER DATED JULY 1 1977. THERE FORE ACCORDING TO THE ASSESSEE THE ASSESSMENT ORDER WAS VOID AB-INITIO. THE APPELLATE AUTHORITY CONSIDERED THE APPEAL ON ME RITS AS WELL AS ON QUESTION OF JURISDICTION. THE APPEAL WAS ALLOWE D IN PART ON MERIT. HOWEVER THE QUESTION OF JURISDICTION WHICH WAS PERMITTED TO BE RAISED BY MEANS OF ADDITIONAL GROUND WAS REJ ECTED ON THE GROUND THAT QUESTION OF TERRITORIAL JURISDICTION OF THE ITO IS A MATTER ON WHICH THE DECISION RESTS WITH THE ADMINIS TRATION SIDE AND NOT WITH THE APPELLATE AUTHORITY FOR WHICH RELIANCE WAS PLACED ON RAJA BHAHADUR SETH TEOMAL VS. CIT 36 ITR 9 AND WA LLACE BROTHERS CO. LTD. 13 ITR 39. ON THESE FACTS HON'BL E HIGH COURT MADE FOLLOWING OBSERVATIONS AND HELD AS UNDER: 85 THE QUESTION OF JURISDICTION OF THE ASSESSING AUTHO RITY CANNOT BE DISPUTED AFTER THE COMPLETION OF THE ASSESSMENT PROCEEDINGS. ALTER NATIVELY IF SUCH A QUESTION ARISES THE QUESTION CAN BE ADDRESSED BY THE COMMISS IONER OR THE BOARD AS THE CASE MAY BE IN VIEW OF SUB-SECTION (4) OF SECTION 124 OF THE INCOME-TAX ACT 1961 AND THIS BY NECESSARY COROLLARY EXCLUDES THE JURISDICTION OF THE FIRST APPELLATE AUTHORITY OR THE COURT. AN APPEAL TO AN A PPELLATE AUTHORITY UNDER THE ACT LIES ON THE GROUNDS AS ENUMERATED IN SECTION 24 6 OF THE ACT. NONE OF ITS CLAUSES SHOWS THAT AN APPEAL ON THE QUESTION OF JUR ISDICTION OF THE ASSESSING AUTHORITY IS MAINTAINABLE. UNLESS SOME PREJUDICE IS CAUSED TO A PARTY BY A WRONG OR IRREGULAR EXERCISE OF JURISDICTION BY A COURT N O INTERFERENCE IN APPEAL OR REVISION IS LEGALLY PERMISSIBLE. HELD ALLOWING THE APPEAL THAT THE BURDEN WAS UPON THE ASSESSEE TO STATE SPECIFICALLY WHEN THE ORDER OF THE TRANSFER WAS REC EIVED BY IT WHICH IT FAILED TO DISCHARGE. THERE WAS NO PLEA EVEN IN THE ADDITIONAL GROUNDS OF APPEAL RAISED BEFORE THE FIRST APPELLATE AUTHORITY AND THERE WAS NO EVIDENCE THAT ANY PREJUDICE HAD BEEN CAUSED TO THE ASSESSEE BY THE ASSESSMENT O RDER HAVING BEEN PASSED BY THE INCOME-TAX OFFICER. THE INCOME-TAX OFFICER HAD THE JURISDICTION WHEN THE ASSESSMENT PROCEEDINGS COMMENCED AND A DRAFT ASSESS MENT ORDER WAS SUBMITTED TO THE INSPECTING ASSISTANT COMMISSIONER. SUBSEQUEN T CHANGE IN THE JURISDICTION IF ANY UNLESS BROUGHT TO THE NOTICE OF THE AUTHORIT Y CONCERNED WOULD NOT IN ANY MANNER VITIATE THE ASSESSMENT ORDER IN THE ABSENCE OF ANY OBJECTION WITH REGARD TO THE LACK OF JURISDICTION BY THE ASSESSEE. THE TR IBUNAL AT THE MOST SHOULD HAVE REMITTED THE MATTER BACK TO THE INSPECTING ASSISTAN T COMMISSIONER FOR COMPLETING THE ASSESSMENT. IT WAS NOT JUSTIFIED IN ANNULLING THE ASSESSMENT ORDER. THE ASSESSMENT ORDER WAS VALID. THE LD. COUNSEL OF THE ASSESSEE HAD CONTESTED THE A BOVE DECISION BY SUBMITTING THAT THE DECISION WAS WRONG BECAUSE THE ASSESSEE HAD NOT RAISED ANY OBJECTION FOR TRANSFER U/S 124(3)(A) . BUT IN THE PRESENT CASE THE ASSESSEE HAD NOT CHALLENGED BEFOR E THE LD. CIT(A) THE ISSUE OF TERRITORIAL JURISDICTION OF THE ASSESS ING OFFICER BUT HAS CHALLENGED THE ABSENCE OF ORDER U/S 127. WE HAVE A LREADY MADE DETAILED DISCUSSION REGARDING ORDER PASSED U/S 127 AS WELL AS SIGNIFICANCE OF RAISING THE OBJECTION BEFORE THE AS SESSING AUTHORITY AND THEREFORE WE DO NOT FIND ANY MERIT IN THIS CO NTENTION BUT COMBINED READING OF SECTIONS 120 124 & 127 CLEARL Y SHOW THAT THE ISSUE OF JURISDICTION IS ADMINISTRATIVE MATTER AND THE PURPOSE OF RAISING OBJECTION IS THAT THE ISSUE MAY BE SETTL ED AT THE THRESHOLD BY THE ADMINISTRATIVE AUTHORITIES AND THA T IS WHY THERE IS NO PROVISION FOR FILING THE APPEAL AGAINST THE ORDE R PASSED UNDER THESE SECTIONS. 123. ONE MORE CONTENTION WAS RAISED BY THE LD. AR F OR THE ASSESSEE THAT THE ORDER UNDER SECTION 127 OF THE ACT HAS BEEN PAS SED WITHOUT CALLING FOR ANY OBJECTION FROM THE ASSESSEE. SECTION 127(3 ) PROVIDED THAT OPPORTUNITY IS NOT REQUIRED TO BE GIVEN IF THE CASE S ARE REQUIRED TO BE TRANSFERRED WITHIN THE CITY. 86 124. IN ANY CASE AS PER SUB SECTION 5 OF SECTION 1 24 EVERY ASSESSING OFFICER HAS INHERENT JURISDICTION AND IF SUCH INHER ENT JURISDICTION IS EXERCISED THEN SAME CANNOT BE OBJECTED. IN THIS R EGARD WE WOULD LIKE TO REFER TO OBSERVATION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS SIRI PAUL OSWAL 293 ITR 273 (P&H) : PARA 16 - A DISTINCTION HAS TO BE MADE BETWEEN A S ITUATION WHEN THERE IS INHERENT LACK OF JURISDICTION AND A SITUATION WHERE JURISDIC TION IS IRREGULARLY ASSUMED AND PLEA OF WANT OF JURISDICTION CAN BE WAIVED BY A PARTY. IN THE LATTE R SITUATION THE QUESTION ARISES WHETHER PARTY WHO COULD WAIVE THE PLEA OF JURISDICTION RAISED SU CH A PLEA AND WHETHER SUCH A PARTY HAD BEEN PREJUDICED ON ACCOUNT OF ERRONEOUS ASSUMPTION OF JU RISDICTION. THE PRESENT CASE IN OUR VIEW FALLS IN THE SECOND CATEGORY. THE ASSESSEE PARTICIP ATED IN ASSESSMENT PROCEEDINGS BY THE ASSESSING OFFICER TO WHOM ASSESSMENT PROCEEDINGS UN DER THE INCOME-TAX ACT WERE TRANSFERRED AND WHO EXERCISED JURISDICTION TO ASSESS WEALTH-TAX ALSO WITH THE PARTICIPATION OF THE ASSESSEE WITHOUT ANY OBJECTION BY THE ASSESSEE. IF THE ASSES SEE HAD RAISED AN OBJECTION THE PROCEEDINGS COULD HAVE BEEN TRANSFERRED BACK TO THE CONCERNED W EALTH-TAX OFFICER. THE ASSESSING OFFICER HAVING PROCEEDED FURTHER AND ASSESSMENT HAVING BEEN FINALIZED PLEA OF LACK OF JURISDICTION COULD NOT BE RAISED FOR THE FIRST TIME IN APPEAL W ITHOUT SHOWING ERROR IN THE ORDER ON THE MERIT AND WITHOUT SHOWING ANY PREJUDICE TO THE ASSESSEE B Y EXERCISE OF JURISDICTION BY THE ASSESSING OFFICER. 125. IN THE CASE OF M/S VALCO INDUSTRIES LTD. AS P OINTED OUT BY US THE SEARCH WAS CARRIED OUT BY ISSUE OF WARRANT AND THER EAFTER THE PANCHNAMA IN THE NAME OF S/SHRI AJAY KUMAR GUPTA ASHWANI KUM AR GUPTA M/S VISHNU ASSOCIATES LTD. AND SHRI VIJAY KUMAR GUPTA A T HOUSE NO. 3007 SECTOR 9D CHANDIGARH WAS ISSUED. THE COPY OF THE P ANCHNAMA HAS BEEN FILED BY THE ASSESSEE AND IS AVAILABLE AT PAGE 59 A ND 60 OF THE PAPER BOOK. FURTHER INFORMATION WAS SOUGHT UNDER THE RIG HT TO INFORMATION ACT AND HAS BEEN REPORTED BY THE ACIT CENTRAL CIRC LE CHANDIGARH THAT SEARCH WAS CARRIED OUT AT PERSONS NAMED AT S.NO. 1 I.E. S/SHRI AJAY KUMAR GUPTA ASHWANI KUMAR GUPTA M/S VISHNU ASSOCI ATES LTD. AND SHRI VIJAY KUMAR GUPTA. IN THE SAID COMMUNICATION IT IS ALSO MENTIONED THAT SURVEY WAS CARRIED OUT AT THE PREMIS ES OF M/S VALCO INDUSTRIES LTD. AT SCO NO. 37 SECTOR 26 CHANDIGARH. BUT THAT IN NO WAY ESTABLISH THAT THE SEARCH WAS NOT CARRIED UPON M/S VALCO INDUSTRIES LTD. WHICH WAS PREVIOUSLY NAMED AS M/S VISHNU ASSOCIATES LTD. INITIALLY 87 REGISTERED OFFICE OF THE ASSESSEE WAS AT HOUSE NO. 3007 SECTOR 9 CHANDIGARH AND THE AUTHORIZATION WAS ISSUED TO SEAR CH THE SAID PREMISES UNDER THE PROVISIONS OF SECTION 132 OF THE ACT AND NO FAULT CAN BE FOUND WITH THE EXERCISE OF SEARCH CARRIED OUT AT THE SAID ADDRESS AND FURTHER BECAUSE SURVEY OPERATIONS WERE ALSO CARRIED OUT AT ANOTHER PREMISES OF THE ASSESSEE DOES NOT IN ANY WAY MAKE THE SEARCH C ARRIED OUT AT THE OLD REGISTERED OFFICE OF THE ASSESSEE AS INVALID. ANOT HER OBJECTION RAISED BY THE ASSESSEE IS THAT SEARCH IS CARRIED OUT AGAINST M/S VISHNU ASSOCIATES LTD. BUT THE NAME OF THE ASSESSEE HAD BEEN CHANGED TO M/S VALCO INDUSTRIES LTD. WE DO NOT FIND ANY MERIT IN THE CL AIM OF THE ASSESSEE IN THIS REGARD AND THE SAME IS REJECTED. 126. ANOTHER OBJECTION RAISED BY THE ASSESSEE AGAIN ST EXERCISE OF POWER BY THE COMMISSIONER OF INCOME TAX-I CHANDIGARH IS N OT CORRECT AS HE HAD NO JURISDICTION OVER THE ASSESSEE BECAUSE OF CH ANGE IN ADDRESS OF THE ASSESSEE. IN THE FIRST INSTANCE SUCH EXERCISE OF JURISDICTION BY THE COMMISSIONER OF INCOME TAX-I CHANDIGARH IS NOT AN APPEALABLE REMEDY AVAILABLE TO THE ASSESSEE. IN ANY CASE THE CASE O F THE ASSESSEE WAS WITHIN THE JURISDICTION OF COMMISSIONER OF INCOME T AX-I CHANDIGARH AND EVEN THE ASSESSMENT ORDER RELATING TO ASSESSMENT YE AR 2003-04 WAS PASSED IN 2005 BY ASSESSING OFFICER CIRCLE III(1) AND THE COMMISSIONER OF INCOME TAX-I HAS TRANSFERRED THE JURISDICTION FR OM RANGE-III CHANDIGARH TO THE CENTRAL CIRCLE CHANDIGARH OF M/S VALCO INDUSTRIES LTD. BY ORDER DATED 30.05.2005 AND WE FIND THAT THE SAID EXERCISE OF CHANGE OF JURISDICTION HAS BEEN CORRECTLY CARRIED O UT BY THE COMMISSIONER OF INCOME TAX-I AND NO FAULT CAN BE FO UND WITH THE SAME. 127. ADMITTEDLY IN THE CASE OF THE ASSESSEE THERE WAS A CHANGE IN THE ADDRESS BUT EARLIER THE ASSESSEE WAS FILING THE RE TURN OF INCOME AT THE OLD ADDRESS WHICH WAS WITHIN THE JURISDICTION OF RA NGE-III CHANDIGARH. 88 EVEN THE ASSESSMENT IN THE CASE WAS PASSED AS LATE AS JANUARY 2005 BY THE ACIT CIRCLE-III(1) WHICH IS UNDER THE JURISDIC TION OF COMMISSIONER OF INCOME TAX-I. IN THE ABSENCE OF ANY TRANSFER OF JURISDICTION IN THE CASE OF THE ASSESSEE MERELY BECAUSE THE ASSESSEE H AD CHANGED ITS PLACE OF BUSINESS DOES NOT TRANSFER THE JURISDICTION. I N ANY CASE THE JURISDICTION TO ASSESS CASES UPON WHOM SEARCH & SEI ZURE OPERATIONS HAVE BEEN CARRIED OUT INHERENTLY VESTS WITH ASSESSING OF FICER CENTRAL CIRCLE CHANDIGARH THEN TECHNICALITIES OF TRANSFERRING THE CASE FROM THE JURISDICTION OF COMMISSIONER OF INCOME TAX-I TO THE JURISDICTION OF COMMISSIONER OF INCOME TAX-II AND THEREAFTER TO CEN TRAL CIRCLE CHANDIGARH IS A MERE PROCEDURE AND NON-FOLLOWING OF SUCH PROCEDURE DOES NOT EFFECT THE JURISDICTION VESTED IN THE ASSE SSING OFFICER CENTRAL CIRCLE CHANDIGARH. THE PLEA OF THE ASSESSEE THAT THE ORDER OF TRANSFER CAN ONLY BE PASSED IF THERE IS A CAUSE OF ACTION HA S NO MERIT AS IN THE CASES OF SEARCH & SEIZURE OPERATION INHERENT JURIS DICTION IS WITH CENTRAL CIRCLE CHANDIGARH AND AFTER SUCH OPERATIONS UPON A NY PERSON/S THE CONCERNED COMMISSIONER HAS THE AUTHORITY TO TRANSFE R SUCH CASES BY EXERCISING THE JURISDICTION UNDER THE RESPECTIVE SE CTION OF THE ACT. THE ASSESSEE WAS BEING ASSESSED UNDER THE JURISDICTION OF COMMISSIONER OF INCOME TAX-I CHANDIGARH AND HE HAD THE AUTHORITY TO TRANSFER THE JURISDICTION FROM RANGE-III CHANDIGARH TO CENTRAL C IRCLE CHANDIGARH AND THE SAID ORDER HAVING BEEN PASSED BY COMMISSION ER OF INCOME TAX-I HAS BEEN VALIDLY EXERCISED AND ONCE THE JURISDICTIO N IS VESTED IN THE ASSESSING OFFICER BY A VALID TRANSFER ORDER THEN T HE ASSESSMENT PROCEEDINGS COMPLETED BY SUCH ASSESSING OFFICER HAV E BEEN CORRECTLY EXERCISED. REJECTING THE PLEA OF THE ASSESSEE WE UPHOLD THE ORDER OF ASSESSING OFFICER IN EXERCISING THE POWER TO ASSESS THE COMPANY UNDER SECTION 153A READ WITH SECTION 143(3) OF THE ACT. T HE GROUND NO. 1 & 2 89 RAISED BY THE ASSESSEE IN ALL THE CROSS OBJECTION N OS.27 & 30/CHD/2008 ARE THUS DISMISSED. C.O.NOS.28 & 29/CHD/2008 :: (SHRI ASHWANI KUMAR GUP TA & VIJAY KUMAR GUPTA) 128. THE GROUNDS RAISED IN C.O.NOS.28 & 29/CHD/2008 ARE IDENTICAL TO THE GROUNDS OF APPEAL RAISED IN C.O.NO.27 /CHD/2008 AND OUR DECISION IN C.O.NO.27 /CHD/2008 SHALL APPLY MUTATIS MUTANDIS TO BOTH THE GROUNDS OF APPEAL RAISED IN C.O.NOS.28 & 29/CHD/2008. 129. IN THE RESULT THE ALL THE APPEALS FILED BY TH E REVENUE IN ITA NOS.660 TO 663/CHD/2008 ARE PARTLY ALLOWED AND CROS S OBJECTIONS FILED BY THE ASSESSEE IN C.O.NOS.27 TO 30/CHD/2008 ARE DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF APRIL 2014. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 TH APRIL 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR ITAT CHANDIGARH