M/s. Grover Garments Pvt. Ltd., New Delhi v. DCIT, New Delhi

CO 347/DEL/2014 | 2003-2004
Pronouncement Date: 29-04-2015 | Result: Allowed

Appeal Details

RSA Number 34720123 RSA 2014
Assessee PAN AACCG8498F
Bench Delhi
Appeal Number CO 347/DEL/2014
Duration Of Justice 5 month(s) 4 day(s)
Appellant M/s. Grover Garments Pvt. Ltd., New Delhi
Respondent DCIT, New Delhi
Appeal Type Cross Objection
Pronouncement Date 29-04-2015
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 29-04-2015
Date Of Final Hearing 12-03-2015
Next Hearing Date 12-03-2015
Assessment Year 2003-2004
Appeal Filed On 24-11-2014
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C : NEW DELHI BEFORE SHRI S.V. MEHROTRA ACCOUNTANT MEMBER AND SHRI C.M. GARG JUDICIAL MEMBER ITA NO S . 6428 TO 6433 /DEL/2013 ASSESSMENT YEAR S : 2003 - 04 TO 2008 - 09 DCIT VS. GROVER GARMENTS P. LTD. CENTRAL CIRCLE - 21 RZ - F - 7 VIJAY ENCLAVE NEW DELHI. DWARKAPUR NEW DELHI. AACCG8498F (APPELLANT) (RESPONDENT) & CROSS OBJECTION NOS. 347 TO 352/DEL/2014 (IN ITA NOS. 6428 TO 6433/DEL/2013) ASSESSMENT YEARS: 2003 - 04 TO 2008 - 09 GROVER GARMENTS P. LTD. VS. DCIT RZ - F - 7 VIJAY ENCLAVE CENTRAL CIRCLE - 21 DWARKAPUR NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. R.I.S. GILL CIT - DR RESPONDENT BY : SH. B.K. DHINGRA CA DATE OF HEARING: 12.03.2015 DATE OF PRONOUNCEMENT: 29.04.2015 ORDER PER BENCH 2 THESE APPEALS FILED BY THE REVENUE AND CROSS OBJECTIONS FILED BY THE ASSESSEE HAVE BEEN PREFERRED AGAINST THE ORDER S OF THE COMMISSIONER OF INCOME TAX (APPEALS) - II NEW DELHI DATED 16/09/2013 IN APPEAL NO. 337 336 335 334 333 332/2010 - 11 FOR A.YS. 2003 - 04 TO 2008 - 09 RESPECTIVELY. THE APPEALS AND CROSS OBJECTIONS UNDER CONSIDERATION HAVE ARISEN FROM SIMILAR ORDER OF CIT(A) - II DELHI. THEREFORE WE HAVE CLUBBED THEM TOGETHER AND ADJUDICATING THEM BY THIS CONSOLIDATED ORDER. 2. BRIEFLY STATED THE FACTS GIVING RISE TO THESE APPEALS AND ASSESSEE S CROSS OBJECTIONS ARE THAT A SEARCH AND SEIZURE OPERATION U/S 132 OF T HE INCOME TAX ACT 1961 (THE ACT) WAS CARRIED OUT IN THE CASES OF SHRI B.K. DHINGRA SMT. POONAM DHINGRA & M/S MADHUSUDAN BUILDCON PRIVATE LIMITED ON 20/10/2008. DURING THE COURSE OF SEARCH AND SEIZURE OPERATION CERTAIN DOCUMENTS BELONGING TO THE PRESENT ASSESSEE WERE SEIZED AND ON THE BASIS OF THE SAME DOCUMENTS SO FOUND BELONGING TO THE ASSESSEE COMPANY PROCEEDINGS WERE INITIATED U/S 153C READ WITH SECTION 153A OF THE ACT. INITIALLY THE CASES WERE CENTRALIZED WITH ACIT CENTRAL CIRCLE - 17 U/S 127 OF T HE ACT AND SUBSEQUENTLY TRANSFERRED TO CENTRAL CIRCLE - 21 BY ANOTHER ORDER U/S 127 OF THE ACT DATED 19/10/2010. A NOTICE U/S 153C OF THE ACT WAS ISSUED TO THE ASSESSEE COMPANY FOR FILING RETURN FOR A.Y. 2003 - 04 TO 2008 - 09 AND IN RESPONSE TO THE SAID NOTICE FILED RETURN FOR ALL SIX ASSESSMENT YEARS ON 02/11/2010. THE AO 3 DISPATCHED THE PUNCHNAMA REASONS FOR ISSUING NOTICE U/S 153C OF THE ACT AND JURISDICTION ORDER DATED 19/10/2010 U/S 127 OF THE ACT ON 10/11/2010 AS SOUGHT BY THE ASSESSEE. 3. THE AO REJEC TED LEGAL CONTENTIONS OF THE ASSESSEE AND MADE ADDITIONS U/S 69C OF THE ACT PERTAINING TO UNEXPLAINED PURCHASES AND ALSO MADE DISALLOWANCE OF EXPENDITURE AS PER DISCUSSIONS IN THE RESPECTIVE ASSESSMENT ORDERS. 4. THE ASSESSEE PREFERRED AN APPEAL BEFORE CIT(A) WHICH WAS PARTLY DISMISSED ON LEGAL CONTENTIONS OF THE ASSESSEE BUT THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE ON MERITS DELETING THE ADDITIONS MADE BY THE AO. THE CIT(A) ALSO DIRECTED THE AO TO WORK OUT THE PEAK FROM THE ENTRIES IN THE C ASH BOOK OF THE ASSESSEE FOR THE RELEVANT YEAR TO MAKE A SINGULAR ADDITION OF THE SAID PEAK AMOUNT AS UNEXPLAINED INVESTMENT/ EXPENDITURE /CASH CREDIT. NOW THE AGGRIEVED REVENUE IS BEFORE THIS TRIBUNAL AGAINST THE PART RELIEF GRANTED BY THE CIT(A) DELETING ADDITIONS MADE UNDER THE ASSESSMENT ORDER PASSED U/S 143(3) READ WITH SECTION 153C OF THE ACT IN ALL SIX ASSESSMENT YEARS. THE ASSESSEE HAS ALSO PREFERRED CROSS OBJECTIONS CHALLENGING THE CONCLUSION OF THE CIT(A) IN NOT HOLDING THAT THE NOTICE ISSUED U/S 153C OF THE ACT AND ASSESSMENT ORDER PASSED U/S 153C/1 43(3) OF THE ACT ARE ILLEGAL BAD IN LAW AND WITHOUT JURISDICTION. 4 5. THE ASSESSEE HAS ALSO CHALLENGED THAT THE CIT(A) HAS ERRED IN DIRECTING THE AO TO WORK OUT THE PEAK FROM THE ENTRIES IN THE CASH BOOK OF THE ASSESSEE COMPANY FOR THE RELEVANT ASSESSMENT YEARS. IT IS ALSO RELEVANT TO MENTION THAT THE AO ALSO MADE AN ADDITI ON OF RS. 99 600/ - IN A.Y. 2003 - 04 U/S 68 OF THE ACT IN REGARD TO SHARE CAPITAL BUT THIS ADDITION WAS ALSO DELETED BY THE CIT(A) AND THE REVENUE HAS ALSO RAISED GROUND NO. 3 IN ITS APPEAL FOR A.Y. 2003 - 04. 6 . CROSS OBJECTIONS OF THE ASSESSEE IN ALL SIX ASS ESSMENT YEARS : IN THE BEGINNING OF THE ARGUMENTS THE LD. AR REQUESTED THAT THE CROSS OBJECTIONS OF THE ASSESSEE BEING LEGAL GROUNDS MAY BE ADJUDICATED FIRST AND THE LD. DR FAIRLY SUBMITTED THAT HE HAS NO OBJECTION IF LEGAL OBJECTIONS OF THE ASSESSEE ARE HE ARD FIRST. HENCE WE ARE FIRST TAKING UP CROSS OBJECTIONS OF THE ASSESSEE FOR HEARING AND ADJUDICATION. ALTHOUGH THE ASSESSEE HAS TAKEN CROSS OBJECTIONS 1 TO 4 IN ALL SIX ASSESSMENT YEARS WHICH ARE SIMILARLY WORDED BUT EXCEPT MAIN CROSS OBJECTION NO. 1 O THER CROSS OBJECTIONS ARE ARGUMENTATIVE AND SUPPORTING TO THE MAIN CROSS OBJECTION NO. 1WHICH READS AS UNDER: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISION OF LAW THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE NOTICE ISSUED U/S 153C AND ASSESSMENT ORDER PASSED BY THE LD. AO U/S 153C/143(3) IS ILLEGAL BAD IN LAW TIME BARRED WITHOUT JURISDICTION AND WRONG ON FACTS. THE ADDITIONS MADE ARE UNJUST UNLAWFUL AND ARBITRARY AND ARE MADE AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 5 7 . WE HAVE HEARD ARGUMENT OF BOTH THE SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD BEFORE US INTER - ALIA ASSESSMENT ORDER IMPUGNED ORDER ASSESSEES PAPER BOOK SPREAD OVER 64 PAGES SECOND PAPER BOOK SPREAD ON MERITS OVER 147 PAGES A ND CASE LAWS PAPER BOOK SPREAD OVER 209 PAGES . THE LD. AR SUBMITTED THAT THE DOCUMENTS FOUND DURING THE SEARCH AND SEIZURE OPERATIONS AS MENTIONED IN THE SATISFACTION NOTE RECORDED BY THE AO OF THE ASSESSEE (THE PERSON OTHER THAN THE PERSON SEARCHED) DO NOT BELONG TO THE ASSESSEE COMPANY AS THESE WERE THE PART OF WORKING PAPERS OF CHARTERED ACCOUNTANT OF THE ASSESSEE S COMPANY SHRI B.K. DHINGRA WHOSE OFFICE WAS SEARCHED ON 20/10/2008. THE LD. AR ALSO SUBMITTED THAT THE PROCEEDINGS HAVE BEEN INITIATED AN D THE ASSESSMENT HAS BEEN FRAMED IN NON - CONFIRMATION WITH THE STATUTORY PROVISIONS OF SECTION 143(3) READ WITH SECTION 153C OF THE ACT AND THEREFORE THE CIT(A) WAS NOT JUSTIFIED ON FACTS AND IN LAW IN CONFIRMING AND UPHOLDING THE ACTION OF THE AO AND REJ ECTING THE LEGAL CONTENTIONS OF THE ASSESSEE. 8 . THE LD. AR STRENUOUSLY CONTENDED THAT THE CIT(A) WAS NOT JUSTIFIED AND GROSSLY ERRED IN NOT CONSIDERING THE FACT THAT THE ASSESSMENT PROCEEDINGS FOR ALL SIX ASSESSMENT YEARS UNDER APPEAL WERE NOT PENDING O N THE DATE OF RECORDING OF SATISFACTION U/S 153C OF THE ACT (ON 10/09/2010) AND ACCORDINGLY THE SAME DID NOT ABATE FOR THE PURPOSE OF INITIATION OF PROCEEDINGS U/S 153C OF THE ACT AND AS SUCH THE 6 REASSESSMENT ORDER U/S 143(3) READ WITH SECTION 153C OF THE ACT BEING BAD IN LAW ILLEGAL AND WITHOUT JURISDICTION DESERVES TO BE QUASHED. THE LD. AR VEHEMENTLY CONTENDED THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF ITAT A BENCH IN THE CASE OF M/S AQUA GUARD MARKETING PVT. LTD. IN ITA NO . 4949/DEL/2013 AND ITA NOS. 5424 TO 5429/DEL/2013 FOR ASSESSMENT YEARS 2003 - 04 TO 2008 - 09. THE LD. AR ALSO POINTED OUT THAT IN THE SIMILAR SET OFF FACTS AND CIRCUMSTANCES ITAT C BENCH DELHI IN ITA NO. 4197 TO 4202/DEL/2012 AND CO NO. 380 TO 385/DEL/20 12 ACIT VS. IN LEY MARKETING PVT. LTD. HAVE ALREADY ADJUDICATED AND DISMISSED THE APPEAL OF THE ASSESSEE VIDE ORDER DATED 14/11/2014 AND PRESENT CASE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THIS ORDER. 9 . THE LD. AR ALSO POINTED OUT THAT IN THE S IMILAR SET OFF FACTS AND CIRCUMSTANCES ITAT DELHI H BENCH IN THE CASE OF TANVEER COLLECTIONS PVT. LTD. VS. ACIT (2015) 168 TTJ 145 (DT) HAS CATEGORICALLY HELD THAT WHERE THE AO OF THE PERSONS SEARCHED DID NOT RECORD ANY SATISFACTION THAT SOME MONEY BULL ION JEWELLERY OR BOOKS OF ACCOUNTS OR OTHER DOCUMENTS FOUND FROM THESE PERSONS BELONG TO ASSESSEE THEN INITIATION OF PROCEEDINGS U/S 153C OF THE ACT ON THE ASSESSEE WAS VOID ABINITIO . 10 . THE LD. DR FAIRLY ACCEPTED THAT THE FACTS AND CIRCUMSTA NCES IN THE CASES OF ACIT VS. IN LEY MARKETING (SUPRA) AND THE TANVEER COLLECTION P. LTD. VS. ACIT ARE SIMILAR. HOWEVER THE LD. DR POINTED OUT THAT THE 7 ORDERS OF THE TRIBUNAL HAVE NOT ATTAINED FINALITY. ON CAREFUL CONSIDERATION OF SUBMISSIONS WE NOTE THAT ITAT DELHI IN THE CASE OF TANVEER COLLECTIONS PVT. LTD. HAS HELD AS UNDER: 12. LET US EXAMINE THE FACTS OF THE INSTANT CASE MORE ELABORATELY. IT IS SEEN THAT SOME SATISFACTION WAS RECORDED A COPY OF WHICH IS AVAILABLE ON PAGE 4 OF THE PAPER BOOK AS UNDER : - 'SATISFACTION NOTE FOR ISSUING NOTICE U/S 153C OF THE I.T. ACT 1961 IN THE CASE OF M/S TANVEER COLLECTION PVT. LTD. RZ - 126 WEST SAGAR PUR SHANKAR PARK NEW DELHI PAN: AACCT6679D FOR A.Y. 2003 - 04 TO 2008 - 09. 08.09.2010 IN THE CASE OF SH. B.K. DHINGR A SMT. POONAM DHINGRA AND M/S MADHUSUDAN BUILDCON PVT. LTD. SEARCH & SEIZURE TOOK PLACE U/S 132 ON 20.10.2008. THE UNDERSIGNED IS THE JURISDICTIONAL AO OF THIS CASE. DURING THE COURSE OF SEARCH & SEIZURE DOCUMENTS/PAPERS AT PAGES 101 TO 132 OF ANNEXURE A - 30 PAGE 144 OF ANNEXURE 7 AND PAGES 33 TO 48 OF ANNEXURE 22 SEIZED BY PARTY R - 2 ARE FOUND TO BELONG TO M/S TANVEER COLLECTION PVT. LTD. RZ - 126 WEST SAGAR PUR SHANKAR PARK NEW DELHI. I HAVE EXAMINED THE ABOVE MENTIONED DOCUMENTS/PAPERS AND PROVISION OF SECTION 153C IS INVOKEABLE IN THIS CASE. AS THE UNDERSIGNED IS ALSO THE JURISDICTIONAL AO OF M/S TANVEER COLLECTION PVT. LTD. RZ - 126 WEST SAGAR PUR SHANKAR PARK NEW DELHI. THIS SATISFACTION NOTE IS RECORDED AND IS PLACED IN THE FILE BEFORE ISSUING NOTICE U/S 153C. 13. IT CAN BE SEEN FROM THE ASSESSMENT ORDER THAT NOTICE U/S 153C WAS ISSUED TO THE ASSESSEE BY THE ACIT CENTRAL CIRCLE - 17 ON 08.09.2010 BEING THE SAME DATE ON WHICH THE ABOVE SATISFACTION WAS RECORDED. IT IS APPARENT THAT IT WAS : ' SA TISFACTION NOTE FOR ISSUING NOTICE U/S 153C OF THE I.T. ACT 1961 IN THE CASE OF M/S TANVEER COLLECTION PVT. LTD.' IT IS FURTHER NOTICEABLE FROM THE ABOVE THAT : 'THIS SATISFACTION NOTE IS RECORDED AND IS PLACED IN THE FILE BEFORE ISSUING NOTICE U/S 153C.' THE CONTENTS OF THE ABOVE SATISFACTION NOTE LEAVE NOTHING TO DOUBT THAT IT WAS RECORDED BY THE AO OF THE ASSESSEE BEFORE TAKING UP THE ASSESSMENT U/S 153C OF THE ACT PURSUANT TO THE SEARCH CONDUCTED ON SHRI B.K. DHINGRA SMT. POONAM DHINGRA AND M/S MADHU SUDAN BUILDCON PVT. LTD. PAGES 5 - 7 OF THE PAPER BOOK ARE THE COPIES OF THE REPLY FURNISHED BY THE DY. COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE - 17 NEW DELHI TO SHRI B.K. DHINGRA SMT. POONAM DHINGRA AND M/S MADHUSUDAN BUILDCON PVT. LTD. UNDER THE PROVIS IONS OF RTI ACT 2005. THE RELEVANT PART OF THE REPLY DATED 10.6.2013 GIVEN TO SH. B.K. DHINGRA IS AS UNDER: - 8 '2. FROM THE ASSESSMENT RECORDS OF SH. BHUPESH KUMAR DHINGRA WHICH IS COVERED UNDER SECTION 153A FOR THE ASST. YEARS FROM 2003 - 04 TO 2008 - 09 ( BLOCK PERIOD) IT IS NOTICED THAT THERE IS NO 'SATISFACTION NOTE' AVAILABLE/RECORDED IN RESPECT OF OTHER ENTITIES.' 14. SIMILAR REPLIES HAVE BEEN GIVEN TO SMT. POONAM DHINGRA AND M/S MADHUSUDAN BUILDCON PVT. LTD. ON A CONSIDERATION OF THE ABOVE REPLIES G IVEN BY THE DEPARTMENT TO THE PERSONS SEARCHED IT IS MANIFEST THAT THERE IS 'NO SATISFACTION NOTE AVAILABLE/RECORDED IN RESPECT OF OTHER ENTITIES'. ON A CONJOINT READING OF THE SATISFACTION NOTE AND REPLIES GIVEN BY THE DEPARTMENT TO THE PERSONS SEARCHED UNDER THE RTI ACT IT CLEARLY EMERGES THAT NO SATISFACTION WAS RECORDED BY THE AO IN THE CASES OF THE PERSONS SEARCHED U/S 132(1) OF THE ACT (I.E. SHRI B.K. DHINGRA SMT. POONAM DHINGRA AND M/S MADHUSUDAN BUILDCON PVT. LTD.) THAT SOME BOOKS OF ACCOUNT OR D OCUMENTS ETC. BELONGING TO THE ASSESSEE WERE FOUND WHICH WERE HANDED OVER TO THE AO OF THE 'OTHER PERSON' (I.E. THE ASSESSEE). THE SATISFACTION NOTE AS REPRODUCED ABOVE HAS BEEN PREPARED BY THE AO OF THE ASSESSEE. 15. THE LD. DR VEHEMENTLY ACCENTUATED ON THE POINT THAT SINCE THE AO OF THE PERSONS SEARCHED AND THE ASSESSEE IS SAME IT DOES NOT MAKE ANY DIFFERENCE WHETHER THE SATISFACTION IS RECORDED IN THE CASE OF THE PERSONS SEARCHED OR OTHER PERSON. SHE EMPHASIZED ON THE FACTUM OF RECORDING ITA NO.2421 /DEL/2014 SATISFACTION BY THE AO WHICH CONDITION IN HER OPINION STOOD SATISFIED BY VIRTUE OF IT HAVING BEEN RECORDED BY THE COMMON AO. 16. IN OUR CONSIDERED OPINION THIS CONTENTION ADVANCED ON BEHALF OF THE REVENUE IS DEVOID OF MERIT. WE FAIL TO COMPRE HEND AS TO HOW THE REQUIREMENT OF RECORDING SATISFACTION BY THE AO OF THE PERSON SEARCHED PROVIDED BY THE STATUTE CAN BE SUBSTITUTED WITH ANYTHING ELSE. THERE IS AN UNDERLYING RATIONALE IN PROVIDING FOR RECORDING OF SUCH SATISFACTION BY THE AO OF THE PERSO N SEARCHED. AS THE MONEY BULLION JEWELLERY BOOKS OF ACCOUNT OR DOCUMENTS ETC. ALWAYS COME TO THE POSSESSION OF THE AO OF THE PERSON SEARCHED WHO HAS TO FRAME ASSESSMENT IT IS ONLY HE WHO CAN FIND OUT THAT WHICH OF SUCH DOCUMENTS ETC. DO NOT BELONG TO T HE PERSON SEARCHED AND ARE RELEVANT FOR THE ASSESSMENT OF THE OTHER PERSON. IT IS NOT AS IF ALL THE BOOKS OF ACCOUNT AND DOCUMENTS ETC. FOUND DURING THE COURSE OF A SEARCH ARE EVALUATED BY A SEPARATE AUTHORITY TO FIGURE OUT THAT WHICH OF THESE DOCUMENTS BE LONG TO THE PERSON SEARCHED AND TO THE OTHERS AND THUS HANDED OVER TO THE CONCERNED AOS OF THE PERSON SEARCHED AND OTHERS FOR MAKING ASSESSMENT. AS IT IS ONLY THE AO OF THE PERSON SEARCHED WHO CAN REACH A CONCLUSION THAT SOME OF THE DOCUMENTS ETC. DO NO T BELONG TO THE PERSON SEARCHED BUT TO SOME OTHER PERSON 9 THE LEGISLATURE HAS PROVIDED FOR RECORDING OF SUCH SATISFACTION BY THE AO OF THE PERSON SEARCHED. IT IS NOT PERMISSIBLE UNDER THE LAW TO REQUIRE THE AO OF THE OTHER PERSON TO RECORD SUCH SATISFACTIO N BY THE AO. 17. AS REGARDS THE OTHER ARGUMENT OF THE LD. DR THAT SINCE THE AO OF BOTH THE PERSONS SEARCHED AND THE ASSESSEE IS THE SAME PERSON HENCE THE REQUIREMENT OF RECORDING SATISFACTION BY THE AO OF THE PERSONS SEARCHED SHOULD BE DEEMED TO HAVE BEE N FULFILLED WITH THE RECORDING OF SATISFACTION BY THE AO OF THE ASSESSEE. WE ARE AGAIN UNABLE TO APPRECIATE THIS CONTENTION THAT THE COMMONNESS OF THE AO WOULD MAKE NO DIFFERENCE IN SO FAR AS THE RECORDING OF SATISFACTION IN THE CASE OF THE PERSONS SEARCHE D IS CONCERNED. WHAT IS RELEVANT FOR THIS PURPOSE IS NOT THE IDENTITY OF THE PERSON ASSESSING BUT HIS POSITION AND THE CAPACITY. WHEN THE LAW REQUIRES THE AO OF THE PERSON SEARCHED TO RECORD THE NECESSARY SATISFACTION IT IS THE AO HAVING JURISDICTION OVER THE PERSON SEARCHED WHO IS OBLIGED TO RECORD SUCH SATISFACTION IN THE CAPACITY OF THAT AO AND THAT TOO IN THE CASE OF THE PERSON SEARCHED. THE MERE FACT THAT THE AO OF THE PERSON SEARCHED AND THE ASSESSEE IS THE SAME PERSON DOES NOT IN ANY MANNER OBLITERATE THE REQUIREMENT OF LAW NECESSITATING THE RECORDING OF SATISFACTION IN THE CASE OF THE PERSON SEARCHED THAT MONEY BULLION JEWELLERY ETC. FOUND FROM THE PERSON SEARCHED BELONGS TO THE 'OTHER PERSON.' WHAT IS CRUCIAL TO NOTE IS CAPACITY OF THE AO AND NOT HIS IDENTITY. IN VIEW OF THE FACT THAT WHEN THE STATUTORY STIPULATION IS FOR RECORDING THE SATISFACTION BY THE AO OF THE PERSON SEARCHED THEN IT CANNOT BE SUBSTITUTED WITH THE SATISFACTION OF THE AO OF THE 'OTHER PER SON.' THIS CONTENTION ALSO FAILS. 18. AT THIS STAGE IT IS RELEVANT TO NOTE THAT THE LEGISLATURE HAS SUBSTITUTED THE LATTER PART OF SECTION 153C(1) BY THE FINANCE (NO.2) ACT 2014 W.E.F. 1.10.2014. THE HITHERTO PART OF SUB - SECTION (1) : 'AND THAT ASSESSIN G OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE NOTICE AND ASSESS OR REASSESS THE INCOME OF THE OTHER PERSON .........REFERRED TO IN SUB - SECTION (1) OF SECTION 153A.' HAS BEEN SUBSTITUTED AS UNDER : - 'AND THAT ASSESSING OFFICER SHALL P ROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE NOTICE AND ASSESS OR REASSESS THE INCOME OF THE OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A IF THAT ASSESSING OFFICER IS SATISFIED THAT THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED HAVE A BEARING ON THE DETERMINATION OF THE TOTAL INCOME OF SUCH OTHER PERSON FOR THE RELEVANT ASSESSMENT YEAR OR YEARS REFERRED TO IN SUB - SECTION (1) OF SECTION.' 10 19. THE ABOVE SUBSTITUTION HAS THE EFFECT OF NOW MAKING IT MANDATORY FOR TH E AO OF THE 'OTHER PERSON' ALSO TO RECORD SATISFACTION THAT THE BOOKS OF ACCOUNT OR DOCUMENTS ETC. HAVE A BEARING ON THE DETERMINATION OF THE TOTAL INCOME OF SUCH 'OTHER PERSON' BEFORE EMBARKING UPON THE EXERCISE OF HIS ASSESSMENT OR REASSESSMENT. THEREF ORE NOW UNDER THE LAW W.E.F. 1.10.2014 IT HAS BECOME OBLIGATORY NOT ONLY FOR THE AO OF THE PERSON SEARCHED TO RECORD SATISFACTION BEFORE HANDING OVER BOOKS OF ACCOUNT OR DOCUMENTS ETC. TO THE AO OF THE 'OTHER PERSON' BUT SUCH AO OF THE 'OTHER PERSON' IS ALSO REQUIRED TO RECORD SATISFACTION THAT THE BOOKS OF ACCOUNT OR DOCUMENTS ETC. HAVE A BEARING ON THE DETERMINATION OF THE TOTAL INCOME OF SUCH OTHER PERSON. IN THE PRE - SUBSTITUTION ERA OF THE RELEVANT PART OF SUB - SECTION (1) OF SECTION 153C COVER ING THE PERIOD UNDER CONSIDERATION THE JURISDICTIONAL CONDITION REMAINS THAT THE SATISFACTION IS REQUIRED TO BE RECORDED BY AND IN THE CASE OF THE PERSON SEARCHED SO AS TO ENABLE THE AO OF THE 'OTHER PERSON' TO START WITH THE PROCEEDINGS FOR MAKING ASSESS MENT OR REASSESSMENT. 20. THE LD. DR CONTENDED THAT RECORDING OF SATISFACTION BY THE AO OF THE ASSESSEE AT THE MOST CAN BE TREATED AS A TECHNICAL MISTAKE AND HENCE SHOULD NOT ECLIPSE THE ASSESSMENT. RELYING ON CERTAIN JUDGMENTS THE LD. DR SUBMITTED THAT THE TECHNICALITIES CANN OT BE ALLOWED TO PREVAIL IN THE COURSE OF INDULGENCE OF JUSTICE. 21. WE AGREE IN PRINCIPLE THAT TECHNICALITIES CANNOT COME IN THE WAY OF DISPENSATION OF JUSTICE. HOWEVER IT IS IMPORTANT TO NOTE THAT THE LACK OF JURISDICTION BY THE AO CANNOT BE PUT UNDER THE CARPET IN THE GUISE OF A TECHNICAL DEFECT. IT GOES WITHOUT SAYING THAT NO ASSESSMENT OR OTHER PROCEEDINGS CAN BE LAWFULLY TAKEN UP AND COMPLETED UNLESS THE CONCERNED AUTHORITY HAS JURISDICTION TO DO SO. LACK OF JURISDICTION GOES TO THE VERY ROOT OF THE MATTER AND CUTS THE TREE OF ASSESSMENT IF THE FOUNDATION OF JURISDICTION IS MISSING. 22. THE LD. AR HAS BROUGHT TO OUR NOTICE TWO ORDERS PASSED BY THE DELHI BENCHES OF THE TRIBUNAL NAMELY ACIT VS. INLAY MARKETING PVT. LTD. (ITA NO.4200/DEL/2012) ET C. AND DCIT VS. AAKASH AROGYA MANDIR PVT. LTD. (ITA NO.5437/DEL/2013) ETC. IN WHICH THE NOTICES AND THE CONSEQUENTIAL ASSESSMENTS U/S 153C UNDER IDENTICAL CIRCUMSTANCES HAVE BEEN QUASHED. THE LD. DR CONTENDED THAT THE ABOVE REFERRED TWO TRIBUNAL ORDERS ARE PER INCURIUM AND SHOULD NOT BE FOLLOWED. THE MAIN REASON FOR DECLARING THE TRIBUNAL ORDERS AS PER INCURIUM WAS THE NON - CONSIDERATION OF THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN JUDGMENT IN THE CASE OF SSP AVIATION LTD. VS. DCIT (2012) 346 ITR 177/207 TAXMAN 260/20 TAXMANN.COM 214 (DELHI) . 11 23. LET US EXAMINE THE CASE OF SSP AVIATION LTD. (SUPRA) FOR EVALUATING THE CONTENTION THAT THE INSTANT ASSESSMENT BE DECLARED AS PER LAW. THE HON'BLE HIGH COURT IN THAT CASE HAS HELD THAT THE ASSESSI NG OFFICER HAVING JURISDICTION OVER THE SEARCHED PERSON SHOULD BE SATISFIED THAT THE VALUABLE ARTICLE OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED DURING THE SEARCH BELONG TO A PERSON OTHER THAN THE SEARCHED PERSON AND THERE IS NO REQUIREMENT IN SECTION 153C(1) THAT THE ASSESSING OFFICER SHOULD ALSO BE SATISFIED THAT SUCH VALUABLE ARTICLES OR BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO THE OTHER PERSON MUST CONCLUSIVELY REFLECT OR DISCLOSE ANY UNDISCLOSED INCOME. WE FIND THAT THERE IS NO SUCH CONTROVERSY BEFOR E US AS WAS THERE BEFORE THE HON'BLE HIGH COURT. IT IS NOT THE CASE OF THE ASSESSEE BEFORE US IN THIS GROUND THAT THE DOCUMENTS ETC. FOUND FROM THE PERSONS SEARCHED DID NOT POSITIVELY INDICATE THE EXISTENCE OF SOME INCOME IN THE HANDS OF THE ASSESSEE. THE ARGUMENT IS SIMPLY CONFINED TO NON - RECORDING OF SATISFACTION BY THE AO OF THE PERSONS SEARCHED. INSTEAD OF SUPPORTING THE DEPARTMENT'S CASE WE FIND THAT THIS JUDGMENT STRENGTHENS THE ASSESASEE'S CASE BY MAKING IT CLEAR IN NO UNCERTAIN TERMS THAT THE AO OF THE PERSON SEARCHED IS OBLIGED TO RECORD THE SATISFACTION. THE RELEVANT OBSERVATIONS OF THE HON'BLE HIGH COURT CONTAINED IN PARA 15 MERIT REPRODUCTION AS UNDER: - 'IT NEEDS TO BE APPRECIATED THAT THE SATISFACTION THAT IS REQUIRED TO BE REACHED BY THE ASS ESSING OFFICER HAVING JURISDICTION OVER THE SEARCHED PERSON IS THAT THE VALUABLE ARTICLE OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED DURING THE SEARCH BELONG TO A PERSON OTHER THAN THE SEARCHED PERSON. THERE IS NO REQUIREMENT IN SECTION 153C(1) THAT THE ASSESS ING OFFICER SHOULD ALSO BE SATISFIED THAT SUCH VALUABLE ARTICLES OR BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO THE OTHER PERSON MUST BE SHOWN TO SHOW TO CONCLUSIVELY REFLECT OR DISCLOSE ANY UNDISCLOSED INCOME.' 24. IT IS PRETTY CLEAR FROM THE ABOVE EXT RACTION THAT THE SATISFACTION AS REFERRED TO IT IN THIS CASE IS THAT OF THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SEARCHED PERSON. AS SUCH WE ARE OF THE CONSIDERED OPINION THAT THIS JUDGMENT DOES NOT SUPPORT THE REVENUE'S CASE. RESULTANTLY THE C HARACTERIZATION OF THE ABOVE TRIBUNAL ORDERS AS PER INCURIUM BY THE LD. DR IS ABSOLUTELY WITHOUT ANY LEGALLY SUSTAINABLE BASIS. 25. EVEN OTHERWISE THE JUDICIAL DISCIPLINE REQUIRES A SUBSEQUENT BENCH TO THE FOLLOW AN EARLIER ORDER OF A CO - ORDINATE BENCH ON THE POINT. IT IS ONLY IF THE SUBSEQUENT BENCH FEELS ITSELF UNABLE TO CONCUR WITH THE VIEW TAKEN EARLIER THAT IT IS REQUIRED TO REFER THE CASE FOR CONSIDERATION BY A SPECIAL BENCH. IN OUR CONSIDERED OPINION THESE 12 TWO ORDERS OF THE CO - ORDINATE BENCHES AR E PERFECTLY IN ACCORDANCE WITH LAW. 26. COMING BACK TO FACTS OF THE INSTANT CASE IT IS PALPABLE THAT THE AO OF SHRI B.K. DHINGRA SMT. POONAM DHINGRA AND M/S MADHUSUDAN BUILDCON PVT. LTD. DID NOT RECORD ANY SATISFACTION THAT SOME MONEY BULLION JEWELLE RY OR BOOKS OF ACCOUNTS OR OTHER DOCUMENTS FOUND FROM THESE PERSONS BELONGED TO THE ASSESSEE. THE ABSENCE OF SUCH SATISFACTION IN OUR CONSIDERED OPINION FAILED TO CONFER ANY VALID AND ITA NO.2421/DEL/2014 LAWFUL JURISDICTION ON THE AO OF THE ASSESSEE TO PROCEED WITH THE MATTER OF THE ASSESSMENT U/S 153C OF THE ACT. WE ERGO SET ASIDE THE INITIATION AND THE ENSUING ASSESSMENT ON THE ASSESSEE AS VOID AB INITIO. 11 . WE FURTHER NOTE THAT IN THE SIMILAR SET OFF FACTS AND CIRCUMSTANCES ITAT DELHI IN THE CASE OF ACIT VS. IN LEY MARKETING (SUPRA) WHICH WAS AUTHORED BY ONE OF US (C.M.GARG J.M.) HAS HELD AS UNDER: 20. WE FURTHER OBSERVE THAT IN THE CASES OF DSL PROPERTIES (P) LTD. (SUPRA) THE ITAT DELHI HELD THAT EVEN IF THE ASSESSING OFFICER OF THE PERSO NS SEARCHED AND THE ASSESSING OFFICER OF THE SUCH OTHER PERSON OTHER THAN SEARCHED IS THE SAME THEN THE ASSESSING OFFICER HAS TO FIRST RECORD THE SATISFACTION IN THE FILE OF THE PERSON SEARCHED THEREAFTER SUCH NOTE ALONG WITH THE SEIZED DOCUMENT/BOOKS O F ACCOUNTS IS TO BE PLACED IN THE FILE OF SUCH OTHER PERSON AND IN ABSENCE OF SUCH EXERCISE INITIATION OF PROCEEDINGS UNDER SECTION 153C OF THE ACT ITSELF ARE INVALID. 21. IN VIEW OF FACTUAL MATRIX OF THE PRESENT CASE WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO NEED TO GO WITH CONFLICTING DECISIONS ON THE LEGAL ISSUE AS THOUGH SECTION 153C OF THE ACT IS ANALOGOUS TO THE EARLIER PROVISIONS OF SECTION 158BD OF THE ACT BUT THERE IS A COMPLETE DEVIATION IN THE NEWLY INSERTED PROVISION OF SECTION 153C OF THE ACT INASMUCH AS WHILE SECTION 158BD OF THE ACT STIPULATES THAT FOR TRANSFER OF FILE ONLY WHEN THE ASSESSING OFFICER WHO CONDUCTED THE SEARCH OR WHO CALLED FOR BOOKS OF ACCOUNTS WAS SATISFIED THAT THE UNDISCLOSED INCOME FOUND THEREFROM BELONGS TO ANY PE RSON OTHER THAN THE PERSON SEARCHED WHO HAS TO BE ASSESSED UNDER SECTION 158BD R/W SECTION 158BC OF THE ACT. WHILE UNDER SECTION 153C OF THE ACT FOR TRANSFERRING THE MATERIAL OR EVIDE NCE COLLECTED DURING COURSE OF SEARCH TO THE ASSESSING OFFICER OF ASSESS EE OTHER THAN THE PERSON SEARCHED WHAT IS REQUIRED IS THAT THE MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS 13 OF ACCOUNTS OR DOCUMENTS SEIZED IN THE COURSE OF SEARCH OF AN ASSESSEE BELONGED TO OR RELATED TO A PERSON OTHER THAN THE P ERSON SEARCHED. IN SIMPLER WORDS UNLIKE SECTION 158BD OF THE ACT FOR TRANSFERRING A FILE UNDER SECTION 153C OF THE ACT THERE IS NO NEED TO EXAMINE WHETHER THE MATERIAL DOCUMENTS BOOKS OF ACCOUNTS OR OTHER EVIDENCE SEIZED DURING THE COURSE OF SEARCH OF AN ASSESSEE REPRESENTS OR DISCLOSED UNDISCLOSED INCOME OF ANOTHER ASSESSEE. 22. IN THE DECISION OF THE HON BLE SUPREME COURT IN THE CASES OF CALCUTTA KNITWEARS (SUPRA) THE RATIO LAID DOWN IN THE CASE READS THUS: - 38. HAVING SAID THAT LET US REVERT TO DISCUSSION OF SECTION 158BD OF THE ACT. THE SAID PROVISION IS A MACHINERY PROVISION AND INSERTED IN THE STATUTE BOOK FOR THE PURPOSE OF CARRYING OUT ASSESSMENTS OF A PERSON OTHER THAN THE SEARCHED PERSON UNDER SECTIONS 132 OR 132A OF THE ACT. UNDER SECTION 158BD OF THE ACT IF AN OFFICER IS SATISFIED THAT THERE EXISTS ANY UNDISCLOSED INCOME WHICH MAY BELONG TO A OTHER PERSON OTHER THAN THE SEARCHED PERSON UNDER SECTIONS 132 OR 132A OF THE ACT AFTER RECORDING SUCH SATISFACTION MAY TRANSMIT THE RECORDS/DOCU MENTS/CHITS/PAPERS ETC TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON. AFTER RECEIPT OF THE AFORESAID SATISFACTION AND UPON EXAMINATION OF THE SAID OTHER DOCUMENTS RELATING TO SUCH OTHER PERSON THE JURISDICTIONAL ASSESSING OFFICER MAY PROCEED TO ISSUE A NOTICE FOR THE PURPOSE OF COMPLETION OF THE ASSESSMENTS UNDER SECTION 158BD OF THE ACT THE OTHER PROVISIONS OF XIV - B SHALL APPLY. 39. THE OPENING WORDS OF SECTION 158BD OF THE ACT ARE THAT THE ASSESSING OFFICER MUST BE SATISFIED THA T 'UNDISCLOSED INCOME' BELONGS TO ANY OTHER PERSON OTHER THAN THE PERSON WITH RESPECT TO WHOM A SEARCH WAS MADE UNDER SECTION 132 OF THE ACT OR A REQUISITION OF BOOKS WERE MADE UNDER SECTION 132A OF THE ACT AND THEREAFTER TRANSMIT THE RECORDS FOR ASSESSME NT OF SUCH OTHER PERSON. THEREFORE THE SHORT QUESTION THAT FALLS FOR OUR CONSIDERATION AND DECISION IS AT WHAT STAGE OF THE PROCEEDINGS SHOULD THE SATISFACTION NOTE BE PREPARED BY THE ASSESSING OFFICER: WHETHER AT THE TIME OF INITIATING PROCEEDINGS UNDER SECTION 158BC FOR THE COMPLETION OF THE ASSESSMENTS OF THE SEARCHED PERSON UNDER SECTION 132 AND 132A OF THE ACT OR DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS UNDER SECTION 158BC OF THE ACT OR AFTER COMPLETION OF THE PROCEEDINGS UNDER SE CTION 158BC OF THE ACT. 23. WE FURTHER NOTE THAT THE HON BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF PEPSICO INDIA HOLDINGS PVT. LTD. VS ACIT 14 (SUPRA) AFTER CONSIDERING ITS OWN DECISION IN THE CASE OF PEPSI FOODS PVT. LTD. VS ACIT WP(C) NO. 4 15/2014 DATED 07.08.2014 AND THE PROVISIONS OF SECTION 153C 132(4A)(I) AND 292 C(1)(I) IT HAS BEEN HELD THUS: - BEFORE WE EXAMINE THESE WRIT PETITIONS IN DETAIL IT WOULD BE PERTINENT TO POINT OUT THAT RECENTLY IN THE CASE OF PEPSI FOODS PVT. LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX WP (C) NO.415/2014 AND OTHER CONNECTED MATTERS THIS COURT HAD OCCASION TO E XAMINE THE VERY PROVISIONS WHICH ARE UNDER CONSIDERATION IN THE MATTERS BEFORE US. IN THE JUDGEMENT DELIVERED ON 07.08.2014 IN THE CASE OF PEPSI FOODS PVT. LTD. (SUPRA) AFTER EXAMINING THE PROVISIONS OF SECTIONS 153C 132(4A)(I) & 292C(1 )(I) OF THE SAID ACT THIS COURT HAD OBSERVED AS UNDER: '6. ON A PLAIN READING OF SECTION 153C IT IS EVIDENT THAT THE ASSESSING OFFICER OF THE SEARCHED PERSON MUST BE 'SATISFIED' THAT INTER ALIA ANY DOCUMENT SEIZED OR REQUISITIONED 'BELONGS TO' A PERSON OTHER THAN THE SEARCHED PERSON. IT IS ONLY THEN THAT THE ASSESSING OFFICER OF THE SEARCHED PERSON CAN HANDOVER SUCH DOCUMENT TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON (OTHER THAN THE SEARCHED PERSON). FURTHERMORE IT IS ONLY AFTER SUCH HANDING O VER THAT THE ASSESSING OFFICER OF SUCH OTHER PERSON CAN ISSUE A NOTICE TO THAT PERSON AND ASSESS OR RE - ASSESS HIS INCOME IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. THEREFORE BEFORE A NOTICE UNDER SECTION 153C CAN BE ISSUED TWO STEPS HAVE TO BE TAK EN. THE FIRST STEP IS THAT THE ASSESSING OFFICER OF THE PERSON WHO IS SEARCHED MUST ARRIVE AT A CLEAR SATISFACTION THAT A DOCUMENT SEIZED FROM HIM DOES NOT BELONG TO HIM BUT TO SOME OTHER PERSON. THE SECOND STEP IS - AFTER SUCH - SATISFACTION IS ARRIVED AT - THAT THE DOCUMENT IS HANDED OVER TO THE ASSESSING OFFICER OF THE PERSON TO WHOM THE SAID DOCUMENT 'BELONGS'. IN THE PRESENT CASES IT HAS BEEN URGED ON BEHALF OF THE PETITIONER THAT THE FIRST STEP ITSELF HAS NOT BEEN FULFILLED. FOR THIS PURPOSE IT WOULD B E NECESSARY TO EXAMINE THE PROVISIONS OF PRESUMPTIONS AS INDICATED ABOVE. SECTION 132(4A)(I) CLEARLY STIPULATES THAT WHEN INTER ALIA ANY DOCUMENT IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH IT MAY BE PRESUMED THAT SUCH DOC UMENT BELONGS TO SUCH PE RSON. IT IS SIMILARLY PROVIDED IN SECTION 292C(1 )(I). IN OTHER WORDS WHENEVER A DOCUMENT IS FOUND FROM A PERSON WHO IS BEING SEARCHED THE NORMAL PRESUMPTION IS THAT THE SAID DOCUMENT BELONGS TO THAT PERSON. IT IS FOR THE ASSESSIN G OFFICER TO REBUT THAT PRESUMPTION AND. COME TO A CONCLUSION OR 'SATISFACTION' THAT THE DOCUMENT IN FACT 15 BELONGS TO SOMEBODY ELSE. THERE MUST BE SOME COGENT MATERIAL AVAILABLE WITH THE ASSESSING OFFICER BEFORE HE/SHE ARRIVES AT THE SATISFACTION THAT THE S EIZED DOCUMENT DOES NOT BELONG TO THE SEARCHED PERSON BUT TO SOMEBODY ELSE. SURMISE AND CONJECTURE CANNOT TAKE THE PLACE OF 'SATISFACTION'. XXXX XXXX XXXX XXXX XXXX '11. IT IS EVIDENT FROM THE ABOVE SATISFACTION NOTE THAT APART FROM SAYING THAT THE DOCUMENTS BELONGED TO THE PETITIONER AND THAT THE ASSESSING OFFICER IS SATISFIED THAT IT IS A FIT CASE FOR ISSUANCE OF A NOTICE UNDER SECTION 153C THERE IS NOTHING WHICH WOULD INDICATE AS TO HOW THE PRESUMPTIONS WHICH ARE TO BE NORMALLY RAISED AS INDICAT ED ABOVE HAVE BEEN REBUTTED BY THE ASSESSING OFFICER. MERE USE OR MENTION OF THE WORD 'SATISFACTION' OR THE WORDS 'I AM SATISFIED' IN THE ORDER OR THE NOTE WOULD NOT MEET THE REQUIREMENT OF THE CONCEPT OF SATISFACTION AS USED IN SECTION 153C OF THE SAID A CT. THE SATISFACTION NOTE ITSELF MUST DISPLAY THE REASONS OR BASIS FOR THE CONCLUSION THAT THE ASSESSING OFFICER OF THE SEARCHED PERSON IS SATISFIED THAT THE SEIZED DOCUMENTS BELONG TO A PERSON OTHER THAN THE SEARCHED PERSON. WE ARE AFRAID THAT GOING THRO UGH THE CONTENTS OF THE SATISFACTION NOTE WE ARE UNABLE TO DISCERN ANY 'SATISFACTION' OF THE KIND REQUIRED UNDER SECTION 153C OF THE SAID ACT.' 24. THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DSL PROPERTIES (P) LTD. VS DCIT IN OPERATIVE PARAS 15 18 AND 21 (SUPRA) HAS HELD THUS: - HELD ACTION U/S 153C CAN BE TAKEN IN RESPECT OF ANY OTHER PERSON THAN PERSON SEARCHED IF AO OF PERSON SEARCHED IS SATISFIED THAT ANY MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT O R DOCUMENTS BELONG TO PERSON OTHER THAN PERSON SEARCHED. THEREFORE RECORDING OF SATISFACTION BY AO OF PERSON SEARCHED THAT ANY MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED BELONG TO PERSON OTHER THAN PERSON SEARCHED IS A SINE QUA NON FOR INITIATING ACTION U/S 153C. IN S. 158BD AO OF PERSON SEARCHED IS TO BE SATISFIED THAT ANY UNDISCLOSED INCOME BELONG TO ANY PERSON OTHER THAN PERSON SEARCHED WHILE IN CASE OF S. 153C AO OF PERSON SEARCHED IS TO BE SATISFIED THAT ANY MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS BELONG TO PERSON OTHER THAN PERSON SEARCHED. PERUSAL OF SATISFACTION NOTE SHOWS THAT PAPER DOES NOT INDICATE IN WHOSE CASE THIS SATISFACTION W AS RECORDED AND WHO IS OFFICER RECORDING SATISFACTION. NEITHER NAME OF ASSESSEE OF AO WAS MENTIONED AND NO SEAL OF AO WAS THERE. AO RECORDED SATISFACTION IN CASE OF SUCH OTHER PERSON WHICH DOES NOT SATISFY CONDITION OF ASSUMING 16 JURISDICTION U/S 153C. MORE OVER NO ORIGINAL SATISFACTION NOTE IS AVAILABLE ON RECORD. PHOTOCOPY OF SATISFACTION NOTE PRODUCED BEFORE US DOES NOT BEAR NAME OF ANY ASSESSEE NAME OF AO OR ANY SEAL OF AO. THEREFORE SATISFACTION NOTE CANNOT BE SAID TO BE VALID SATISFACTION NOTE WITHIN MEANING OF S. 153C. LIKEWISE AO ISSUED NOTICE U/S 153C FOR AY 2004 - 05 WHICH IS CLEARLY BARRED BY LIMITATION. THEREFORE ISSUE OF NOTICE U/S 153C ISSUED BY REVENUE CANNOT BE SUSTAINED ON BOTH COUNTS I.E. IT IS LEGALLY NOT VALID AS CONDITIONS LAID DOWN U /S. 153C HAS NOT BEEN FULFILLED AND IT IS BARRED BY LIMITATION. THEREFORE NOTICE ISSUED U/S 15AND CONSEQUENTLY ASSESSMENT COMPLETED IN PURSUANCE TO SUCH NOTICE IS ALSO QUASHED. APPEAL ALLOWED. 25. EVEN IF THE DECISIONS OF HON BLE SUPREME COURT IN THE CASES OF MANISH MAHEHSWARI (SUPRA) CALCUTTA KNITWEARS (SUPRA) DECISION OF HON BLE HIGH COURT OF DELHI IN THE CAS E OF PEPSICO HOLDINGS PVT. LTD. (SUPRA) AND DECISION OF ITAT DELHI IN THE CASE OF DSL PROPERTIES (SUPRA) ARE NOT THERE THEN ALSO IN CLOSE J UXTAPOSITION TO FACTS OF THE PRESENT CASE AS PER RTI REPLY BY THE DEPARTMENT DATED 10.6.2013(PAPER BOOK NO. 3OF THE ASSESSEE AT PAGES 13 14 & 15) IT HAS BEEN STATED AND ANSWERED TO THE PRESENT ASSESSEE I.E. PERSON OTHER THAN PERSON SEARCHED THE AO OF T HE PERSON SEARCHED HAS ADMITTED THAT NO SATISFACTION NOTE IS AVAILABLE IN THEIR RECORD/FILES CONCERNING PERSON OTHER THAN THE PRESENT CASE. 26. THE SATISFACTION NOTE AVAILABLE ON PAPER BOOK NO. 2 OF THE ASSESSEE AT PAGE 51 CLEARLY REVEALS EX FACIE THAT TH E SAME HAS BEEN RECORDED BY THE AO IN THE CAPACITY OF AO OF THE PERSON OTHER THAN PERSON SEARCHED. MEANING THEREBY ASSESSEE OF THE INSTANT APPEALS. IN THESE CIRCUMSTANCES IT CAN SAFELY BE HELD THAT NO VALID SATISFACTION WAS RECORDED BY THE AO OF PERSON SEARCHED SO AS TO FULFILL REQUIREMENT OF VALID ASSUMPTION OF JURISDICTION U/S 153C OF THE ACT WHICH IS SINE QUA NON FOR VALIDLY ASSUMED JURISDICTION U/S 153A OF THE ACT. 27. REPLYING TO THE SPECIFIC QUERY OF THE BENCH LD. DR FOUND HIMSELF UNABLE TO SUBMIT THE OUTCOME OF THE ASSESSMENT PROCEEDINGS FOR AY 2009 - 10 RELEVANT TO PREVIOUS 2008 - 09 PERTAINING TO WHICH ALLEGED CHEQUE BOOK AS TERMED AS INCRIMINATING MATERIAL BY TH E DEPARTMENT WAS RELATED. IN THIS SITUATION WE CAN SAFELY PRESUME THAT NO REGULAR ASSESSMENT ORDER HAS BEEN PASSED TILL DATE FOR THE AY 2009 - 10 TO WHICH ONLY SEIZED MATERIAL I.E. CHEQUE BOOK PERTAINS TO. LD. DR HAS ALSO NOT DISPUTED THE FACT SUBMITTED BY THE ASSESSEE THAT THE DETAILS OF CHEQUE BOOK WERE DULY REFLECTED IN THE RETURN OF THE ASSESSEE FOR AY 2009 - 10. THEREFORE IF 17 THE AO OF THE PERSON OTHER THAN PERSON SEARCHED MIGHT HAVE GONE THROUGH THE RETURN OF THE ASSESSEE FOR AY 2009 - 10 WHICH WAS AD MITTEDLY FILED ON 30.09.2009 THEN HE COULD HAVE DRAWN A PROPER CONCLUSION ABOUT FURTHER ACTION OF THE PROCEEDINGS FOR AY 2009 - 10 BUT THIS EXERCISE WAS NOT CONDUCTED PRIOR TO ISSUANCE OF NOTICE U/S 153C OF THE ACT ON 6.7.2010 HENCE THE INITIATION OF PRO CEEDINGS AND ASSUMPTION OF JURISDICTION U/S 153C OF THE ACT GETS VITIATED ON ACCOUNT OF NON - RECORDING OF REQUIRED SATISFACTION BY THE AO OF THE PERSON SEARCHED AND NON APPLICATION OF MIND BY THE AO OF THE PERSON OTHER THAN THE PERSON SEARCHED. 12 . TURNI NG TO THE FACTS OF THE PRESENT CASE WE OBSERVE THAT THE SATISFACTION NOTE AVAILABLE AT PAGE 5 ON THE PAPER BOOK OF THE ASSESSEE CLEARLY REVEALS EXFACIE THAT THE SAME HAS BEEN RECORDED BY THE AO IN THE CAPACITY OF THE AO OF THE PERSON OTHER THAN THE PERSON SEARCHED THUS THE SATISFACTION NOTE HAS BEEN RECORDED BY THE AO OF THE ASSESSEE OF THE PRESENT CASES BUT NO SATISFACTION NOTE HAS BEEN RECORDED IN THE CASE OF PERSONS SEARCHED. THIS FACT IS ALSO APPARENT FROM THE RTI REPLY OF DCIT NEW DELHI DATED 10.6 .2013 WHICH IS BEING ANNEXED TO THIS ORDER AS ANNEXURE - A B & C. FROM PAPER BOOK PAGE 4 & 5 WE ALSO SEE THAT THE BASIS OF INITIATION OF PRESENT PROCEEDINGS U/S 153C OF THE ACT IS ONLY SATISFACTION NOTE WHICH WAS RECORDED IN THE FILE OF THE PERSON OTHER T HAN THE PERSON SEARCHED I.E. THE ASSESSEE. IN VIEW OF ABOVE FACTUM OF THE PRESENT CASE THE LEGAL CROSS OBJECTIONS OF THE ASSESSEE ALSO FIND SUPPORT FROM THE JUDGMENT OF HON BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF SSP AVIATION LTD. VS. DCIT 346 ITR 177 (DEL.) AS RELIED 18 BY THE ASSESSEE THAT SATISFACTION NOTE IS REQUIRED TO BE MADE IN THE CASE OF THE PERSON SEARCHED BY THE AO HAVING JURISDICTION OVER SEARCHED PERSON WHICH HAS NOT BEEN RECORDED IN THE PRESENT CASE BY THE AO OF PERSON SEARCHED I.E. SHRI B.K. DHINGRA & OTHERS AND AS PER RTI REPLY DATED 8.12.2014 (PB PAGE 4 - 5) THE ONLY SATISFACTION HAS NOT BEEN RECORDED IN THE FILE OF OTHER PERSON VIZ. THE ASSESSEE. IN VIEW OF ABOVE IT CAN SAFELY BE HELD THAT NO VALID AND REQUIRED SATISFACTION N OTE WAS RECORDED BY THE AO OF THE PERSONS SEARCHED SO AS TO FULFILL THE REQUIREMENTS OF VALID ASSUMPTION OF JURISDICTION U/S 153C OF THE ACT WHICH IS A SINEQUANON FOR VALIDLY ASSUMED JURISDICTION U/S 153C R.W.S. 153A OF THE ACT. 13 . WE MAY FURTHER POINT OUT THAT THE LD. DR COULD NOT CONTROVERT THIS CONTENTION OF THE LD. AR THAT THE ASSESSEE COMPANY HAS FILED ITS RETURN FOR A.Y. 2009 - 10 ON 17/09/2009 AND NO ASSESSMENT/SCRUTINY FOR A.Y. 2009 - 10 WAS DONE U/S 143(3) OF THE ACT BY THE RESP ECTIVE AO THE AO FOR PREVIOUS YEAR 2008 - 09 RELEVANT TO A.Y. 2009 - 10. THE LD. AR ALSO POINTED OUT THAT AS PER REVENUE THE ONLY DOCUMENT WHICH WAS FOUND DURING THE COURSE OF SEARCH AND SEIZURE OPERATION ON S HRI B.K. DH INGRA AND OTHERS IS COUNTER FOILS OF T HE CHEQUE BOOK WHICH PERTAINS THE A.Y. 2009 - 10 FOR WHICH NO SCRUTINY ASSESSMENT WAS MADE U/S 143(3) OF THE ACT AS THE TRANSACTIONS REFLECTED FROM THE SAID CHEQUE BOOK WERE DULY RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE OF THE RELEVANT 19 FINANCIAL YEA R/PREVIOUS YEAR THEREFORE NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH WHICH COULD IMPEACH THE BOOK RESULTS OF THE ASSESSEE COMPANY FOR THE ALL SIX ASSESSMENT YEARS UNDER CONSIDERATION IN PRESENT APPEALS . 14 . TURNING TO THE FACTS OF THE PRESEN T CASE UNDISPUTEDLY THE AO OF THE PERSONS SEARCHED HAD NOT RECORDED ANY SATISFACTION NOTE AND THE ONLY SATISFACTION NOTE AVAILABLE AT PAGE NO. 5 OF THE PAPER BOOK HAS BEEN RECORDED BY THE AO OF THE PERSON OTHER THAN PERSONS SEARCHED I.E. THE ASSESSEE DO ES NOT SATISFY THE CONDITIONS OF VALIDLY ASSUMING JURISDICTION U/S 153C OF THE ACT. THE PRESENT CASE IS SQUARELY COVERED BY THE DECISION OF HON BLE HIGH COURT IN THE CASE OF PEPSICO (SUPRA). THUS ASSUMPTION OF JURISDICTION WAS NOT VALID BAD IN LAW AND V OID AB INITIO . ACCORDINGLY CROSS OBJECTIONS FROM 1 TO 4 OF THE ASSESSEE BEING LEGAL CONTENTIONS ARE HEREBY ALLOWED. CROSS OBJECTION NOS. 5 TO 12 OF THE ASSESSEE AND GROUND NO. 1 TO 3 IN A.Y. 2003 - 04 & GROUND NO. 1 & 2 OF THE REVENUE FOR A.Y. 2004 - 05 TO 2 008 - 09 OF THE REVENUE . 15. THE LD. AR CONTENDED THAT THE ASSESSEE OR ITS DIRECTORS HAVE NO CONNECTION OR RELATION EITHER DIRECTLY OR INDIRECTLY WITH THAPAR GROUP AND THE ASSESSEE DID NOT CONDUCT ANY BUSINESS ACTIVITIES OR DEALINGS ON SALES OR PURCHASE WITH THAPUR GROUP . THE LD. AR FURTHER CONTENDED THAT THE ASSESSEE MADE SALES AND PURCHASES DURING ALL AYS WITH 20 INDEPENDENT TAX PAYER CONCERNS/ENTITIES. THE LD. AR VEHEMENTLY CONTENDED THAT ALLEGATION OF THE AO THAT THE ASSESSEE IS A CAPITAL FORMING COMPANY HAS NO BASIS BECAUSE THE ASSESSEE COMPANY IS IN THE TEXTILE TRADING AND INCOME EARNED FROM SUCH BUSINESS WAS OFFERED TO TAX RIGHT FROM COMMENCEMENT OF BUSINESS TILL DATE. THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 16. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS FROM ASSESSMENT ORDER PARA 4 AT PAGE 2 WE NOTE THAT THE AO HAS NOTED THAT THE ASSESSEE BELONGS TO THE THAPOR GROUP OF CASES BUT WE ARE UNABLE TO SEE ANY DETAILS OR EVIDE NCE OR BASIS TO SUPPORT THIS OBSERVATION FROM THE ASSESSMENT ORDER. IN THE SAME MANNER THE CIT(A) AT PARA 7.15 ALSO OBSERVED THAT THE ASSESSEE ALONG WITH THE OTHER COMPANIES ARE ALL IN HOUSE TO THAPAR DHINGRA GROUP BUT WE ARE UNABLE TO SEE ANY DETAILS OR EVIDENCE OR BASIS TO SUPPORT THIS OBSERVATION. IN THESE CIRCUMSTANCES WE ARE OF THE CONSIDERED VIEW THAT THE LD. DR COULD NOT CONTROVERT THE ABOVE CONTENTIONS OF THE ASSESSEE AND ABOVE CONTENTIONS OF THE AR REMAIN UNCONTROVERTED AND WE HOLD THAT THE SAID OBSERVATIONS OF THE AUTHORITIES BELOW ARE BASELESS AND WITHOUT ANY REASONABLE AND PLA USIBLE BASIS AS THE REVENUE COULD NOT SUBSTANTIATE THIS FACT THAT THE ASSESSEE COMPANY OR ITS DIRECTORS HAVE ANY CONNECTION WITH THAPAR GROUP CLOSE LY BY OR EVEN REMOTELY. NOW WE PROCEED TO DEAL WITH OTHER ARGUMENTS AT BOTH THE SIDES. 21 17. WE NOTE THAT THE REVENUE HAS CHALLENGED DELETION OF THE ADDITIONS MADE BY THE AO ON ACCOUNT OF UNEXPLAINED PURCHASES U/S 69 C OF THE ACT AND ON ACCOUNT OF DISALLOWANCE OF EXPENSES IN ALL SIX ASSESSMENT YEARS AND THE REVENUE HAS ALSO DISPUTED THE DELETION OF ADDITION OF RS. 99 600/ - ON ACCOUNT OF CASH CAPITAL U/S 68 OF THE ACT FOR A.Y. 2003 - 04. IN THE SAME LINE THE ASSESSEE HAS ALSO RAISED CROSS OBJECTIONS SUPPORTING TO THE ACTION OF THE CIT(A) WHICH DELETED THE ADDITION BUT AT THE SAME TIME THE ASSESSEE IN GROUND NO. 7(A) & (B) HAS CHALLENGED THE DIRECTIONS OF THE CIT(A) TO T HE AO TO WORK OUT THE PEAK FROM THE ENTRIES IN THE CASH BOOK OF THE ASSESSEE COMPANY FOR THE RELEVANT ASSESSMENT YEAR AND TO MAKE A SINGULAR ADDITION OF THE SAID AMOUNT. THEREFORE WE FIND IT JUS T AND PROPER TO ADJUDICATE GROUNDS OF THE REVENUE AS WELL AS CROSS OBJECTIONS OF THE ASSESSEE ON THE MERITS TOGETHER BY THE SUBSEQUENT PART OF THIS ORDER. 18 . THE LD. DR SUBMITTED THAT THE AO AND THE CIT(A) HAVE HELD THAT THE PURCHASES SALES AND EXPENSES MADE BY THE ASSESSEE DURING THE RELEVANT ASSESSMENT PERIOD ARE BOGUS AND UNVERIFIABLE BY NATURE. THEREFORE THE AO WAS JUSTIFIED AND MAKING ADDITIONS IN REGARD TO UNEXPLAINED PURCHASES AND EXPENSES IN ALL ASSESSMENT YEARS. THE DR ALSO CONTENDED THAT THE AO WAS ALSO JUSTIFIED IN MAKING ADDITION U/S 68 OF THE ACT FOR A.Y. 2003 - 04 ON ACCOUNT OF CASH CAPITAL U/S 68 OF THE ACT. THE LD. DR FURTHER SUBMITTED THAT THE CIT(A) DELETED THE ADDITIONS MADE 22 BY THE AO WITH A DIRECTION TO MAKE ADDITION ON THE BASIS OF P EAK ENTRY IN THE BOOKS OF ACCOUNTS FOR THE RELEVANT PERIOD AND TO MAKE A SINGULAR ADDITION OF THE AMOUNTS AR E NOT ACCEPTABLE BY THE REVENUE. THEREFORE IMPUGNED ORDERS OF THE CIT(A) MAY BE SET ASIDE BY RESTORING THAT OF THE AO. 19 . REPLYING TO THE ABOVE THE LD. AR SUBMITTED THAT WHEN THE BOOKS OF ACCOUNTS MAINTAINED B Y THE ASSESSEE COMPANY IN THE N ORMAL COURSE OF BUSINESS REFLECTS AMOUNTS OF PURCHASES SALES OPENING STOCK AND CLOSING STOCK WHICH WERE PRODUCED BEFORE THE AO AND NO DEFICIENCY OR DEFECT WAS POINTED OUT THEN THE ONLY INFERENCE WHICH CAN BE DRAWN IS THAT THE BOOKS OF ACCOUNTS AND RESULT S ARE ACCEPTED BY THE AO. THE LD. AR ALSO SUBMITTED T HAT THE ASSESSEE CARRIED ON TRA D I NG OF TEXTILE AND FABRIC GOODS DURING THE RELEVANT PERIOD WHICH IS ALSO CONFIRMED BY THE SALES TAX ASSESSMENT ORDERS WHICH WAS ALSO FILED BEFORE THE AO ALONG WITH COPIES OF STOCK REGISTER PARTY WISE SALES AND PURCHASES. THE LD. AR ALSO POINTED OUT THAT ALL THE DETAILS OF EXPENSES INCURRED DURING THE RELEVANT PREVIOUS YEARS WERE ALSO SUBMITTED BEFORE THE AO AND NO DEFECT OR DEFICIENCY WAS POINTED OUT. THE LD. AR ALSO PO INTED OUT THAT THE ASSESSEE SUBMITTED ALL DETAILS OF EXPENSES WITH REPLY DATED 19.11.2010 FOR ALL SIX ASSESSMENT YEARS AND THE AO REJECTED THE SAME WITHOUT ANY CONSIDERATION (POINT 16 PAPER BOOK PAGE 25) . 23 20. FROM THE ASSESSMENT ORDER IT IS APPARENTLY SEEN THAT AO ISSUED NOTICE AND QUESTIONNAIRE ON 10.11.2010 ASKING TO PRODUCE BOOKS OF ACCOUNTS THE NATURE OF BUSINESS ACTIVITIES THE NAMES AND ADDRESSES OF THE PARTIES WITH WHOM PURCHASE AND SALES TRANSACTIONS WERE MADE. THE AO ALSO ASKED TO SUBMIT LEDGER A CCOUNT STOCK REGISTER MAINTAINED AND THE DETAILS OF EXPENSES ETC. WE ALSO NOTE THAT THE ASSESSEE REPLYING TO THE ABOVE QUERY OF THE AO SUBMITTED VIDE REPLY DATED 15.11.2010 (PAPER BOOK PAGE 21 TO 26) ALONG WITH AUDIT REPORT DETAILS OF NAMES ADDRESSES AND PAN OF THE PARTIES FROM WHOM PURCHASES AND SALES OF TEXTILE GOODS HAVE BEEN MADE DURING THE PERIOD UNDER CONSIDERATION. FROM ASSESSMENT ORDER IT IS ALSO APPARENT THAT THE AO ISSUED NOTICES U/S 133(6) OF THE ACT AND MADE NECESSARY ENQUIRIES WHICH HAV E BEEN DULY CONFIRMED BY SUCH PARTIES WHO ARE ALSO INCOME TAX PAYEE ASSESSES AND THESE ENTITIES ALSO CONFIRMED THE TRANSACTIONS WHICH THE ASSESSEE EFFECTED DURING RELEVANT FINANCIAL PERIOD OR YEAR. UNDER ABOVE NOTED FACTS AND CIRCUMSTANCES THE CONCLUSION OF THE AO IS NOT SUSTAINABLE THAT ALL CASH PURCHASES ARE UNVERIFIABLE AND BOGUS. ON THE OTHER HAND THE CIT(A) DELETED THE SAME. THE LD. AR ON THIS ISSUE HAS RELIED ON THE JUDGMENTS OF THE HON BLE HIGH COURT OF MADRAS IN THE CASES OF CIT VS. SHAKUNTLA DEVI KHETAN 352 ITR 484 (MAD.) AND CIT VS. ANANDHA METAL CORPN. 273 ITR 262 (MAD.) AND RATIO OF THESE DECISIONS SUPPORT THE CONCLUSION OF THE CIT(A) . 24 21. ON THIS ISSUE WE RESPECTFULLY TAKE COGNIGENCE OF THE JUDGMENTS OF THE HON BLE JURISDICTIONAL HIGH C OURT OF DELHI DATED 10.1.2010 IN ITA NO. 608/2009 CIT VS. HARBIR SINGH AND THE JUDGMENT DATED 09/04/2010 IN ITA NO. 613/2010 IN THE CASE OF CIT VS. KAILASH JEWELLERY HOUSE AS RELIED BY THE ASSESSEE WHEREIN IT HAS BEEN HELD THUS : 3. THE COMMISSIONER OF INCOME TAX (APPEALS) HAD RETURNED A FINDING THAT THE STOCK AND CASH FOUND AT THE TIME OF SEARCH HAD BEEN EXAMINED BY THE AO AND WAS COMPARED WITH THE STOCK AND CASH POSITION AS PER BOOKS. THE STOCK AND CASH POSITION AS PER THE BOOKS HAD BEEN ARRIVED AT AFTER THE EFFECT OF THE AFORESAID CASH SALES. THE STOCK POSITION AS WELL AS THE CASH POSITION AS PER THE SAID BOOKS HAD BEEN ACCEPTED BY THE AO. THE COMMISSIONER OF INCOME TAX (APPEALS) ALSO NOTED THAT THE APPELLANT HAD FURNISHED THE COMPLETE SET OF BOO KS OF ACCOUNTS AND THE CASH BOOKS AND NO DISCREPANCY HAD BEEN POINTED OUT. THE AO HAD DOUBTED THE AFORESAID SALES AS BOGUS AND HAD MADE THE AFORESAID ADDITION. HOWEVER THE COMMISSIONER OF INCOME TAX (APPEALS) AS WELL AS THE INCOME - TAX APPELLATE TRIBUNA L RETURNED FINDINGS OF FACT TO THE CONTRARY. 4. THE TRIBUNAL ALSO NOTED THAT THE DEPARTMENTAL REPRESENTATIVE COULD NOT CHALLENGE THE FACTUAL FINDING RECORDED BY THE COMMISSIONER OF INCOME - TAX (APPEALS). NOR COULD BE ADVANCE ANY SUBSTANTIVE ARGUMENT IN SUP PORT OF HIS APPEAL. THE TRIBUNAL ALSO OBSERVED THAT IT IS NOT IN DISPUTE THAT THE SUM OF RS. 24 58 400/ - WAS CREDITED IN THE SALE ACCOUNT AND HAD BEEN DULY INCLUDED IN THE PROFIT DISCLOSED BY THE ASSESSEE IN ITS RETURN. IT IS IN THESE CIRCUMSTANCES THAT THE TRIBUNAL OBSERVED THAT THE CASH SALES COULD NOT BE TREATED AS UNDISCLOSED INCOME AND NO ADDITION COULD BE MADE ONCE AGAIN IN RESPECT OF THE SAME. 22. THE LD. AR COULD NOT CONTROVERT THIS CONTENTION OF THE ASSESSEE THAT THE AO HAS NOT POINTED OUT ANY DEFICIENCY OR MISTAKE IN THE DETAILS OF MOUTH WISE SALES AND PURCHASES AFFECTED DURING THE RELEVANT PERIOD 25 AND OPENING AND CLOSING STOCK HAS NOT BEEN DISTURBED OR DOUBTED HENCE NO ADDITION ON UNEXPLAINED PURCHASES CAN BE MADE U/S 69C OF THE ACT. 23. ON T HE ISSUE OF ADDITION MADE BY THE AO AMOUNTING TO RS. 99 600/ - THE LD. DR POINTED OUT THAT BEFORE THE AO THE ASSESSEE DID NOT PRODUCE ANY DETAILS EXCEPT GIVING THE NAMES OF SHAREHOLDERS BUT NO CONFIRMATION AND PAN WAS SUBMITTED THEREFORE THE AO WAS CORRECT IN MAKING ADDITION U/S 68 OF THE ACT. THE LD. DR FURTHER CONTENDED THAT THE CIT(A) DELETED THE SAID ADDITION WITHOUT ANY BASIS THEREFORE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO. THE LD. AR PLACING RELIANCE ON THE SUBMISSIONS BEFOR E CIT(A) VIDE DATED 19.11.2010 (PAPER BOOK PAGE AT 26 POINT 26) POINTED OUT THAT THE ASSESSEE COMPANY HAS ALLOTTED 9960 BONUS SHARES OUT OF PROFITS AND RESERVES TO THE EXISTING SHAREHOLDERS DURING FINANCIAL YEAR 2002 - 03 AND DETAILS OF BONUS ALLOTMENT WERE ALSO SUBMITTED BEFORE THE AO AND THE CIT(A) ALONG WITH SHARE CAPITAL ACCOUNTS WHICH CLEARLY SHOW THAT THERE WAS NO CASH TRANSACTION AND IT WAS CONTRA ENTRY ONLY. FROM VIGILANT READING OF THE ASSESSMENT ORDER AND IMPUGNED ORDER WE CLEARLY NOTE THAT THE AO MADE ADDITION ON ACCOUNT OF FAILURE OF THE ASSESSEE TO SUBMIT RELEVANT DETAILS SUCH AS CONFIRMATION & PAN ETC. AND THE RELEVANT ACCOUNTING ENTRIES WERE ALSO NOT CL ARIFIED DURING ASSESSMENT PROCEEDINGS. ON THE OTHER HAND THE CIT(A) DELETED THE ADDITION AN D IN VIEW OF ASSESSEE S 26 EXPLANATION AND UNCONTROVERTED CONTRA ACCOUNTING ENTRIES WE ARE IN AGREEMENT WITH THE VIEW TAKEN BY THE CIT(A) THAT ADDITION U/S 68 OF THE ACT IS NOT SUSTAINABLE AND WE UPHELD THE SAME. 24. THE LD. AR ALSO DRAWN OUR ATTENTION TOWARD S ASSESSMENT ORDER PARA 4 AND SUBMITTED THAT THE AO PROCEEDED ON THE BASIS OF SURMISES AND CONJECTURES WITHOUT HAVING ANY INCRIMINATING MATERIAL OR SUBSTANCE BY IMAGINING A MODUS OPERANDI AT HIS OWN WITHOUT ANY JUSTIFIED BASIS AND PRESUMING THAT THE ASSESS EE COMPANY ARE BASICALLY CAPITAL FORMATION CONCERNED WHICH HAVE BUILD UP HUGE RESULTS AND SURPLUSES OVER THE YEARS WHICH DECLARED INVESTED IN THE STOCK OF TEXTILES. 25 . THE LD. AR ALSO POINTED OUT THAT THE REVENUE AUTHORITIES HAVE NO REASONABLE CAUSE OR VALID REASON TO DOUBT THE COMMERCIAL TRANSACTIONS CARRIED OUT BY THE ASSESSEE WHICH WERE DULY RECORDED IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. THE LD. AR VEHEMENTLY CONTENDED THAT THE REVENUE AUTHORITIES ARE NOT EMPOWERED TO MAKE A PURE GUESS WORK IN MAKING ASSESSMENT WITHOUT ANY REFERENCE TO ANY COGENT EVIDENCE OR MATERIAL AND THERE MUST BE SOME INCRIMINATING MATERIAL MORE THAN BASELESS SUSPICION TO SUPPORT ADDITIONS AND DISALLOWANCES IN THE ASSESSMENT ORDER U/S 143(3) OF THE ACT. THE LD. AR ALSO ALLEGED THAT THE SEIZED MATERIAL BELONGING TO THE ASSESSEE IS THE COUNTER FOILS OF THE CHEQUE BOOK RELATED TO F.Y. 2008 - 09 PERTAINING TO A.Y. 2009 - 10 WHICH IN FACT WAS ADMITTED BY THE DEPARTMENT THAT THE 27 SAME STOOD ENTERED IN THE AUDITED BOOKS OF ACCOUNTS FOR F.Y. 2008 - 09 RELEVANT TO A.Y. 2009 - 10 AND NO SCRUTINY ASSESSMENT FOR A.Y. 2009 - 10 HAS BEEN FRAMED. WE ALSO NOTE THAT THE LD. DR COULD NOT DEMOLISH THIS CONTENTION OF THE ASSESSEE THAT THE RETURN FOR A.Y. 2009 - 10 WAS SUBMITTED ON 17/09/2009 AN D NO NOTICE OR INTIMATION FOR A SCRUTINY HAS BEEN RECEIVED BY THE ASSESSEE. 26 . THE LD. DR CONTENDED THAT THE AO RIGHTLY HELD THAT EXCEPT THE DECLARATION OF THE ASSESSEE THERE IS NO INDEPENDENT PROOF OF SALE/PURCHASE OF THE GOODS EXCEPT THE BANK TRANSACTIO NS. THE LD. DR ALSO POINTED OUT THAT THE AO WAS CORRECT IN HOLDING THAT THE ASSESSEE HAS DECLARED ITS ENTIRE PURCHASES AS CASH PURCHASES WHICH WAS BOGUS AND WHEN THE ASSESSEE HAS ITSELF DECLARED SALES THEN THE SALES RIGHTLY HELD TO BE REPRESENT INCOME FROM UNDISCLOSED SOURCES U/S 68 OF THE ACT. THE LD. DR FURTHER POINTED OUT THAT THE AO RIGHTLY HELD THAT THE EXPENSES CLAIMED BY THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT WERE ALSO NOT VERIFIABLE T HEREFORE SUCH EXPENSES CANNOT BE ALLOWED. THE LD. DR FURT HER DRAWN OUR ATTENTION TOWARDS ASSESSMENT ORDER OF A.Y. 2003 - 04 PARA 11AND SUBMITTED THAT THE ASSESSEE DID NOT PRODUCE ANY DETAIL ABOUT THE INCREASED SHARE CAPITAL EXCEPT GIV ING THE NAME OF SHAREHOLDERS T HEREFORE THE SAID AMOUNT WAS RIGHTLY HELD AS UNEX PLAINED CASH CREDITS U/S 68 OF THE ACT. 28 27 . THE LD. DR VEHEMENTLY CONTENDED THAT THE CIT(A) WAS NOT JUSTIFIED IN DELETING THESE ADDITIONS IN ALL SIX YEARS PERTAINING TO UNEXPLAINED PURCHASES U/S 69 C OF THE ACT AND ENTIRE AMOUNT OF EXPENDITURE IN ALL SIX AS SESSMENT YEARS AND ALSO DELETING THE ADDITION OF RS. 99 600/ - ON ACCOUNT OF CASH CAPITAL U/S 68 OF THE ACT FOR A.Y. 2003 - 04. THE LD. DR STRENEOUSLY CONTENDED THAT THE CIT(A) WAS NOT CORRECT IN DIRECTING THE AO TO WORK OUT THE PEAK FROM THE ENTRIES IN THE CASH BOOK OF THE ASSESSEE FOR THE RELEVANT YEAR AND TO MAKE A SINGULAR ADDITION OF SAID PEAK AMOUNT. THE LD. DR FINALLY PRAYED THAT THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO. 28. THE LD. AR REPLIED THAT THE AO PROCEEDED TO MAKE DIS ALLOWANCE AN ADDITION ON THE BASIS OF SURMISES CONJECTURES AND HYPER TECHNICAL APPROACH WITHOUT POINTING OUT ANY DEFECTS OR DEFICIENCY IN THE BOOKS OF ACCOUNTS AND RESULTS OF THE AUDITED ACCOUNTS. THE LD. AR DRAWN OUR ATTENTION TOWARDS PARAGRAPH NO. 4 5 & 6 OF THE ASSESSMENT ORDER AND SUBMITTED THAT THE AO ACTED WITH A PRE - DETERMINE SUBJECTIVE APPROACH WHICH CANNOT BE A BASIS OF MAKING VALID DISALLOWANCE AND ADDITIONS. THE LD. AR ALSO DRAWN OUR ATTENTION TOWARDS PARAGRAPH NO. 7.15 OF THE IMPUGNED ORDER AND SUBMITTED THAT THE CIT(A) WAS RIGHT IN DELETING THE IMPUGNED ADDITIONS BUT THE CIT(A) DIRECTED THE AO TO WORK OUT PEAK FROM THE ENTRIES IN THE CASH BOOK OF THE ASSESSEE WITHOUT ANY REASON OR BASIS. THE LD. AR FURTHER POINTED OUT THAT THE CIT(A) HIMSEL F WAS NOT 29 SURE IN DIRECTING THE AO AS TO WHERE THE WORK OUT PEAK AMOUNT HAS TO BE ADDED AND TH EREFORE THE CIT(A) HAS MADE A V AGUE DIRECTION TO THE AO FOR MAKING A SINGULAR ADDITION EITHER AS UNEXPLAINED INVESTMENT OR AS EXPENDITURE OR AS CASH CREDIT. T HE LD. AR FURTHER POINTED OUT THAT NO INCRIMINATING MATERIAL EXCEPT COUNTER FILE OF CHEQUE BOOK PERTAINING TO ASSESSMENT YEAR 2009 - 10 HAVE BEEN FOUND DURING THE SEARCH AND SEIZURE OPERATION ON 20/10/2008 AND THE ADDITIONS MADE BY THE AO ARE NOT BASED ON AN Y INCRIMINATING MATERIAL AND THE ONLY INCRIMINATING MATERIAL WHICH PERTAINS TO A.Y. 2009 - 10 HAS BEEN RECORDED IN THE BOOKS OF ACCOUNTS AND RESULTS OF THE ASSESSEE IN THE RESPECTIVE ASSESSMENT YEAR 2009 - 10 AND THEREFORE THE ADDITIONS MA DE BY THE AO AND PE AK ADDITION AS DIRECTED BY THE CIT(A) IS NOT JUSTIFIED AND SUSTAINABLE . 29 . ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS WE NOTE THAT THE AO IN A.Y. 2003 - 04 HAS MADE ADDITIONS WITH FOLLOWING PRIMARY OBSERVATIONS: 4. THE ASSESSEE COMPANY BELONGS TO THE THAPAR GROUP OF CASES. ONE OF THE MAIN ALLEGATIONS AGAINST THE GROUP IS THAT SEVERAL CONCERNS HAVE BEEN FLOATED BY THE GROUP WITH DUMMY DIRECTORS AND SHAREHOLDERS. THERE CONCERNS ARE BASICALLY CAPITAL FORMATION CONCERNS WHICH HAVE BUILD UP HUGE RESERVES AND SURPLUSES OVER THE YEARS. THESE RESERVE & SURPLUSES ARE DECLARED INVESTED IN STOCKS OF TEXTILES. AS AND WHEN CASH IS REQUIRED THE STOCKS ARE SOLD AND THE MONEYS ARE UTILIZED FOR OTHER PURPOSES AS PER REQUIREMENT. 5. AGAINST THIS BACKGROUND THE FACT S OF THE CASE ARE ANALYSED. UNDER THE PROVISIONS OF SECTION 153C THE EARLIEST ASSESSMENT YEAR OPEN FOR A.Y. 2003 - 04 (PREVIOUS YEAR 01.04.2002 TO 31.03.2003). IT IS NOTICED THAT THE COMPANY WAS 30 INCORPORATED ON 05.08.1993 AND HAS BEEN FILING ITS RETURN WIT H INCOME TAX REGULARLY. AS PER THE FACTS OF THE CASE THE ASSESSEE HAS DECLARED A CLOSING STOCK OF RS. 12 05 41 280/ - AS ON 31.03.2002 WHICH FORMS THE OPENING STOCK FOR THE PREVIOUS YEAR UNDER CONSIDERATION. 6. THE INQUIRES INDICATE THAT THE DIRECTORS/SHAR EHOLDERS ARE NOT A MAN OF MEANS AND THE PREMISES AND THE PREMISES ARE NOT COMMERCIAL PREMISES. THE INVESTIGATION WING HAS ALSO REPORTED THAT NO EVIDENCE OF STOCK WAS FOUND FROM ANY OTHER PREMISES OF THE THAPAR HOMES GROUP. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS CLAIMED THAT THE ASSESSEE HAD A GODOWN AT KHASRA NO. 34/7 MANDI VALLEY VILLAGE TEHSIL MEHRAULI NEW DELHI - 110030 . THE CLAIM IS NON - VERIFIABLE DUE TO LAPSE OF SO MANY YEARS. MOST OF THE CONCERNS OF THAPAR GROUP HAVE SOUGHT TO DECLARE THIS PREMISES AS THEIR GODOWN BUT NO SUCH CLAIM WAS MADE DURING SEARCH PROCEEDINGS. 7. DURING THE CURRENT YEAR THE ASSESSEE HAS PURCHASED TEXTILE GOODS OF RS. 26 02 864/ - AND HAS MADE SALES OF RS. 32 51 426/ - . THE ASSESSEE WAS DIRECTED TO PROVE ITS TRADING ACTIVITIES AND TO PRODUCE SALE TAX RECORDS. THE ASSESSEE HAS CLAIMED THAT SINCE IT DEALS WITH TAX FREE GOODS ONLY THERE IS NO NECESSITY FOR IT TO FILE SALES TAX RETURNS. THUS IT SEEMS THAT EXCEPT THE DEC LARATION OF THE ASSESSEE THERE IS NO INDEPENDENT PROOF OF SALE/PURCHASE OF THE GOODS EXCEPT THE BANK TRANSACTIONS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO GIVE BREAK UP OF CASH OR CHEQUE PURCHASES. IN RESPONSE THERETO A REP LY HAS BEEN FILED AND PLACED ON RECORD IN WHICH ASSESSEE HAS DECLARED ITS ENTIRE PURCHASE AS CASH PURCHASES OF RS. 35 53 545/ - . ASSESSEE COMPANY HAS ALSO STATED THAT IT DID NOT MAINTAIN ANY BANK ACCOUNT DURING THE YEAR AND THE ASSESSEE DEALS WITH TAX FRE E GOODS ONLY THERE IS NO NECESSITY FOR IT TO FILE SALES TAX RETURN. THE PARTIES FROM WHOM PURCHASES ARE MADE ARE: 1) M/S POLE STAR FABRICS RS. 26 02 864/ - THE ABOVE IS ACTUALLY UNIT OF THAPAR GROUP COMPANIES AND THE UNIT IS MENTIONED IN CORRESPONDENCE TO HIDE THE TRUE PERSONS. THE ABOVE CONCERNS IS PART OF THE THAPAR GROUP OF COMPANIES HAVING SIMILAR MODUS OPERANDI. THIS HAS BEEN ASSESSED U/S 153C IN THE THIS CIRCLE AND IN THESE CASE ALSO THE BUSINESS TRANSACTIONS HAS BEEN HELD TO BE NO T GENUINE. 31 SIMILAR THE SALES ARE DECLARED TO HAVE BEEN MADE IN CASH TO CONCERNS OF THAPAR GROUP ONLY AND IN THEIR INDIVIDUAL CASES THE PURCHASES ARE HELD BOGUS U/S 153A/153C. 8. IN THE CASE OF PRESENT ASSESSEE ALL THE PURCHASES & SALES ARE IN CASH. THE I TEMS PURCHASED & SOLD ARE TEXTILE & FABRICS. THE NAME AND STYLE OF THE TEXTILES & FABRICS ARE DENIM FABRICS K - III SUPER FINE (N) FABRIC (PS) FABRIC (PS) EMBROIDERY FABRIC (PS) EXCEL FABRICS KASHMIRI FABRICS - I KASHMIRI FABRICS - I(D) ETC. FROM THES E ITEMS IT CAN BE SEEN THAT THE ASSESSEE IS NOT DEALING IN BRANDED ITEMS. THERE IS NO NAME OF ANY COMPANY IN THESE PRODUCTS. SHAWLS ARE PURCHASED AND SOLD IN PIECES AND REST OTHER ITEMS ARE SOLD IN METERS. IT IS FURTHER SEEN THAT THE PURCHASES & SALES A RE WITHIN M/S THAPAR HOMES GROUP OF CASES. IN INVENTORIES OF FABRIC & TEXTILE GOODS SHOWN IN THE BALANCE SHEET THE CLOSING STOCK OF LAST YEAR STANDS AT RS. 12 05 41 280/ - . THIS YEAR THE FIGURE IS RS. 12 02 60 068/ - WHICH IS ALMOST THE SAME. THEREFORE PURCHASES & SALES ARE ONLY OUT OF CURRENT YEAR TRANSACTIONS WHICH ARE HELD UNVERIFIABLE AND BOGUS. IT IS HIGHLY IMPROBABLE THAT WITH A HIGH STOCK INVENTORY OF GOODS WHICH CHANGE IN FASHION AND TASTE THE ASSESSEE HAS TO MAKE SALES FROM FRESH PURCHASES ON LY. THE PREPONDERANCE OF PROBABILITY SUGGEST THAT THE STOCKS ARE NOT GENUINE BUT SINCE THESE ARE DECLARED PRIOR TO 1.4.02 NO ACTION IS BEING TAKEN FOR NOW. 9. KEEPING IN VIEW THE FACTS OF THE CASE AND REPLY OF THE ASSESSEE IT IS CRYSTAL CLEAR THAT ALL C ASH PURCHASES ARE UNVERIFIABLE AND HENCE A SUM OF RS. 26 02 864/ - IS DISALLOWED. (THE OPENING STOCK IS OF THE PERIOD BEFORE THE BLOCK PERIOD OF SECTION 153C). PENALTY PROCEEDINGS U/S 271(C) ARE BEING INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INC OME. SINCE THE ENTIRE CASH PURCHASES OF RS. 26 02 864/ - ARE BOGUS AND ARE BROUGHT TO TAX AS UNACCOUNTED EXPENDITURE U/S 69C OF THE I T ACT NO FURTHER ADDITION IS MADE U/S 40A(3) OF THE I.T. ACT SINCE THE ENTIRE AMOUNT OF CASH PURCHASES IS BROUGHT TO TAX . 10. AS THE PURCHASES HAVE BEEN HELD NOT GENUINE IT IS POSSIBLE THAT THE SALES ARE EQUALLY BOGUS OTHERWISE WHY WOULD THE COMPANY STILL CARRY OPENING STOCK OF RS. 12 05 41 280/ - AND CLOSING STOCK OF RS. 12 02 60 068/ - WHICH INDICATES THAT THE SALES/PURCHASES WERE DECLARED OFFERED FROM CURRENT YEAR S PURCHASES ONLY. HOWEVER SINCE THE ASSESSEE HAS ITSELF DECLARED SALES OF RS. 32 51 426/ - ON ITS INCOME THE FIGURE IS NOT DISTURBED BUT THE SALES ARE HELD TO REPRESENT INCO ME FROM 32 UNDISCLOSED SOURCES U/S 68 ONLY. NO EXTRA ADDITION IS MADE IN THE PRESENT ORDER ON BOGUS SALES. IT IS ALSO HELD THAT THE ASSESSEE WAS NOT DOING ANY GENUINE BUSINESS AND WAS ONLY GIVING ACCOMMODATION ENTRIES TO OTHER PARTIES. 11. DURING THE YEAR T HE ASSESSEE HAS INCREASED SHARE CAPITAL FROM 400 TO 100000/ - . VIDE QUESTIONNAIRE DATED 12.11.2010 THE ASSESSEE WAS ASKED TO FILE DETAILS OF THE SHAREHOLDERS THEIR PAN AND TO PRODUCE SHAREHOLDER REGISTER. THE ASSESSEE HAS NOT PRODUCED ANY DETAIL EXCEPT G IVING THE NAME OF SHAREHOLDERS. NO CONFIRMATION ARE PRODUCED AND NO PAN ARE SUPPLIED. FURTHER THE COMPANY ADMITTEDLY HAD NO BANK ACCOUNT AND THEREFORE THE SHARE CAPITAL WAS RECEIVED IN CASH ONLY. AS THE IDENTITY AND GENUINENESS OF THE SHAREHOLDERS HAS NOT BEEN PROVED THE AMOUNT OF RS. 100000/ - IS HELD UNEXPLAINED CASH CREDIT U/S 68. 30 . FROM OPERATIVE PART OF THE IMPUGNED ORDER OF THE CIT(A) WE NOTE THAT THE CIT(A) HAS DELETED THE IMPUGNED ADDITIONS MADE BY THE AO BUT HAS DIRECTED THE AO TO WORK OUT THE PEAK FROM THE ENTRIES IN THE CASH BOOK OF THE ASSESSEE WITH FOLLOWING OBSERVATIONS AND CONCLUSIONS: 7.14. THESE FINDINGS ALSO LEAD TO THE INESCAPABLE CONCLUSION THAT EH APPELLANT WAS ONE OF THE SEVERAL ENTITIES IN THE WHOLE SCHEME OF NETWORK OF COMP ANIES CREATED BY B.K. DHINGRA TO INFUSE UNACCOUNTED MONEY IN OTHER COMPANIES OF THE GROUP THROUGH A WELL ORCHESTRATED ARRANGEMENT OF SEEMINGLY ACCOUNTED TRANSACTIONS EMANATING FROM THEIR AUDITED FINANCIAL STATEMENTS/ BOOKS BUT WHERE IN REALITY THE ONLY ACTIVITY WAS OF BOOK BUILDING . IN THESE CIRCUMSTANCES THE CLAIM OF AUDITED BOOKS NOTWITHSTANDING THE BOOK RESULTS ARE REQUIRED TO BE REJECTED SINCE THE NARRATION ARE ARTIFICIAL SHAM AND NOT REFLECTIVE OF THE ACTUAL BUSINESS/COMMERCIAL TRANSA CTIONS. 7.15. THEREFORE THE ACTION OF THE AO IN DISREGARDING THE PURCHASES SALES EXPENSES AND INCREASE IN SHARE CAPITAL CLAIMED BY THE APPELLANT IS UPHELD. SINCE THE APPELLANT COMPANY ALONG WITH THE OTHER COMPANIES ARE ALL IN - HOUSE TO THE THAPAR - DHINGRA GROUP AND CREATURES OF B K DHINGRA AND THERE IS A WIDESPREAD WEB OF INTER SE TRANSACTIONS AMONGST THEM KEEPING THEIR SEPARATE JURIDICAL IDENTITY IN MIND THE ENDS OF JUSTICE WILL BE MET IF IN EACH CASE ADDITION OF THE PEAK 33 OF FINANCIAL TRANSACTION AS WORKED OUT FROM THE RELEVANT CASH BOOK OF EACH ENTITY IS MADE. INCIDENTALLY THIS IS WHAT THE APPELLANT HAS ALSO PRAYED FOR BY PLEADING FOR TELESCOPING I N GROUND 16 OF ITS APPEAL. THEREFORE THE ADDITION MADE BY THE AO NEEDS TO BE REVISITED. IT MAY BE MENTIONED THAT WHILE THE REJECTION OF THE BOOKS AND THE BOOK RESULTS BY THE AO IS CONFIRMED RELIANCE IS BEING PLACED ON THE TRANSACTIONS TRAVERSING THE CA SH BOOK IRRESPECTIVE OF THEIR NOTATIONS SINCE AMONGST THE INFLOW AND OUTFLOW OF CASH TAX PAYMENTS MADE BY THE APPELLANT ARE INDEPENDENT AND VERIFIABLE. CONSEQUENTLY NO SEPARATE ADDITION IS REQUIRED TO BE MADE ON ACCOUNT OF PURCHASES OR EXPENDITURE OR INCREASE IN SHARE CAPITAL. THE AO IS DIRECTED TO WORK OUT THE PEAK FROM THE ENTRIES IN THE CASH BOOK OF THE APPELLANT FOR THE RELEVANT YEAR AND MAKE A SINGULAR ADDITION OF THE SAID AMOUNT AS UNEXPLAINED INVESTMENT/EXPENDITURE/CASH CREDIT. AS A RESULT G ROUNDS 9 10 & 17 OF THE APPEAL ARE DISMISSED AND GROUNDS 8 11 12 & 16 OF THE APPEAL ARE PARTLY ALLOWED. 31 . IN VIEW OF ABOVE WE ARE OF THE CONSIDERED VIEW THAT THE AO FIRSTLY MAKE UP HIS MIND FOR MAKING ADDITIONS AND NOTED SOME GENERAL ALLEGATIONS IN PARAGRAPH NO. 4 5 & 6 AND WITHOUT BRINGING OUT ANY DEFICIENCY AND DEFECT IN THE AUDITED BOOKS AND RESULTS OF THE ASSESSEE PROCEEDED TO MAKE ADDITIONS. THE CIT(A) DELETED THESE ADDITIONS BY HOLDING THAT THE ADDITIONS MADE BY THE AO NEEDS TO BE REVISITED. THE CIT(A) FURTHER HOLD THAT WHILE THE REJECTION OF BOOKS AND THE BOOK RESULTS BY THE AO IS CONFIRMED THEN THE RELIANCE IS BEING PLACED ON THE TRANSACTIONS TRAVERSING THE CASH BOOK IRRESPECTIVE OF THEIR AMOUNTS . THE LD. CIT(A) FURTHER HELD THAT NO SEPARA TE ADDITION IS REQUIRED TO BE MADE ON ACCOUNT OF PURCHASE OR EXPENDITURE IN SHARE CAPITAL AND DIRECTED THE AO TO WORK OUT PEAK FROM THE ENTRIES IN THE CASH BOOK OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEARS AND TO MAKE A SINGULAR ADDITION OF THE 34 SAID A MOUNT. BUT THE CIT(A) HAS NOT GIVEN ANY SPECIFIC DIRECTION THAT THE AMOUNT OF PEAK HAS TO BE ADDED AS EITHER UNEXPLAINED INVESTMENT OR EXPENDITURE OR CASH CREDIT AND THE DIRECTION OF THE CIT(A) IS V AGUE AND NOT SUSTAINABLE. 32. UNDER ABOVE NOTED FACTS A ND CIRCUMSTANCES WE ARE OF THE CONSIDERED VIEW THAT THE AO PROCEEDED TO MAKE ADDITIONS WITH A PRE - DETERMINE MIND WITHOUT POINTING OUT ANY DEFECTS IN THE AUDITED BOOKS AND BOOK RESULTS OF THE ASSESSEE. IN THESE CASES THE PROCEEDINGS U/S 153C OF THE ACT WA S I NITIATED IN VIEW OF COUNTER FOILS OF THE CHEQUE BOOK BELONGING TO THE ASSESSEE WHICH WAS SEIZED DURING THE SEARCH AND SEIZURE OPERATION AND THE LD. DR HAS NOT DISPUTED THIS FACT THAT THE DETAILS AND ENTRIES OF SOLE INCRIMINATING MATERIAL I.E. COUNTERFOI LS OF CHEQUE BOOK WAS PERTAINING TO A.Y. 2009 - 10 AND THE SAME STOOD ENTERED IN THE BOOKS OF ACCOUNTS AND AUDITED BALANCE SHEET FOR A.Y. 2009 - 10 AND THE ASSESSEE HAS FILED ITS RETURN OF INCOME FOR A.Y. 2009 - 10 ON 17/09/2009 AND IN ABSENCE OF ANY NOTICE WE MAY SAFELY INFER THAT THE ASSESSMENT HAS BEEN FINALIZED IN THIS REGARD AND THERE IS NO SCRUTINY ASSESSMENT. 33. THE LD. AR SEEKING OUR ATTENTION TOWARDS THE JUDGMENT OF HON BLE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL (INDIA) JODHPUR VS. ACIT (2013) 259 CTR 281 (RAJ.) SUBMITTED THAT WHEN IT IS NOT OPEN FOR THE ASSESSEE TO SEEK DEDUCTION OR CLAIM EXPENDITURE WHICH HAS NOT BEEN 35 CLAIMED IN THE ORIGINAL ASSESSMENT WHICH ASSESSMENT ALREADY STANDS COMPLETED THEN IT IS ALSO NOT OPEN AND ALLOWABLE FOR THE REVENUE TO MAKE DISALLOWANCES OR ADDITIONS ON THE SAME DETAILS WITHOUT ANY INCRIMINATING MATERIALS ONLY BECAUSE ASSESSMENT U/S 153A OR SECTION 153A R/W 153C OF THE ACT IN PURSUANCE OF SEARCH OR REQUISITION IS REQUIRED TO BE MADE. THE LD. DR SUPPORTED THE ACTION OF THE AO HOWEVER HE FAIRLY ACCEPTED THAT NO OTHER INCRIMINATING MATERIAL EXCEPT CHEQUE COUNTERFOILS RELATED TO A.Y. 2009 - 10 WAS FOUND DURING SEARCH AND SEIZURE OPERATIONS ON 20.10.2008 UPON SHRI B.K. DHINGRA AND OTHERS. IN VIEW OF ABOVE CONTE NTION OF THE ASSESSEE WE ARE INCLINED TO HOLD THAT THIS ISSUE OF ADDITION ON ACCOUNT OF UNEXPLAINED PURCHASE U/S 69C OF THE ACT DISALLOWANCE OF EXPENSES IN A.Y. 2003 - 04 TO 2008 - 09 I.E. ALL SIX ASSESSMENT YEARS AND ADDITION MADE U/S 68 OF THE ACT PERTAININ G TO CONTRA ENTRIES OF BONUS SHARES TREATING THE SAME AS CASH CAPITAL WITHOUT ANY INCRIMINATING MATERIALS IS NOT SUSTAINABLE AND THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE RESPECTFULLY FOLLOWING THE DECISION OF HON BLE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEELS (SUPRA) WHEREIN PARA 22 23 & 27 EXPLICITLY PROVIDE SAID PREPOSITION AND THESE PARAS ARE BEING RESPECTFULLY REPRODUCED AS UNDER: 22. IN THE FIRM OPINION OF THIS COURT FROM A PLAIN READING OF THE PROVISION ALONG WITH THE PURPOSE AND PURPO RT OF THE SAID PROVISION WHICH IS INTRICATELY LINKED WITH SEARCH AND REQUISITION UNDER SECTIONS 132 AND 132A OF THE ACT IT IS APPARENT THAT: 36 (A) THE ASSESSMENTS OR REASSESSMENTS WHICH STAND ABATED IN TERMS OF II PROVISO TO SECTION 153A OF THE ACT THE AO A CTS UNDER HIS ORIGINAL JURISDICTION FOR WHICH ASSESSMENTS HAVE TO BE MADE; (B) REGARDING OTHER CASES THE ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED THE ASSESSMENT WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL AND (C) IN ABSENCE OF ANY INCRIMINATING MATERIAL THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THOUGH SUCH A CLAIM BY THE ASSESSEE FOR THE FIRST TIME UNDER SECTION 153A OF THE ACT IS NOT COMPLETED THE CASE IN HAND HAS TO BE CON SIDERED AT BEST SIMILAR TO A CASE WHERE IN SPITE OF A SEARCH AND/OR REQUISITION NOTHING INCRIMINATING IS FOUND. IN SUCH A CASE THOUGH SECTION 153A OF THE ACT WOULD BE TRIGGERED AND ASSESSMENT OR REASSESSMENT TO ASCERTAIN THE TOTAL INCOME OF THE PERSON IS REQUIRED TO BE DONE HOWEVER THE SAME WOULD IN THAT CASE NOT RESULT IN ANY ADDITION AND THE ASSESSMENTS PASSED EARLIER MAY HAVE TO BE REITERATED. 23. THE RELIANCE PLACED BY THE COUNSEL FOR THE APPELLANT ON THE CASE OF ANIL KUMAR BHATIA (SUPRA) ALSO DOES NOT HELP THE CASE OF THE ASSESSEE. THE RELEVANT EXTRACT OF THE SAID JUDGMENT READS AS UNDER: 19. UNDER THE PROVISIONS OF SEC. 153A AS WE HAVE ALREADY NOTICED THE AO IS BOUND TO ISSUE NOTICE TO THE ASSESSEE TO FURNISH RETURNS FOR EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH OR REQUISITION WAS MADE. ANOTHER SIGNIFICANT FEATURE OF THIS SECTION IS THAT THE AO IS EMPOWERED TO ASSESS OR REASSESS THE TOTAL INCOME OF THE AFORESAID YEARS. THIS IS A SIGNIFICANT DEPARTURE FROM THE EARLIER BLOCK ASSESSMENT SCHEME IN WHICH THE BLOC ASSESSMENT ROPED IN ONLY THE UNDISCLOSED INCOME AND THE REGULAR ASSESSMENT PROCEEDINGS WERE PRESERVED RESULTING IN MULTIPLE ASSESSMENTS. UNDER SECTION 153A HOWEVER THE AO HAS BEEN GIVEN THE POWER TO ASSESS OR REASSESS THE TOTAL INCOME OF THE SIX ASSESSMENT YEARS IN QUESTION IN SEPARATE ASSESSMENT ORDERS. THIS MEANS THAT THERE CAN BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX 37 ASSESSMENT YEARS IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. 27. THE ALLAHABAD HIGH COURT IN SMT. SHAILA AGARWAL S (SUPRA) HAS HELD AS UNDER: 19. THE SECOND PROVISO TO SEC. 153A OF THE ACT REFERS TO ABATEMENT OF THE PENDING ASSESSMENT OR REASSESSMENT PROCEEDINGS. THE WORD PENDING DOES NOT OPERATE ANY SUCH INTERPRETATION THAT WHEREVER THE APPEAL AGAINST SUCH ASSESSMENT OR REASSESSMENT IS P ENDING THE SAME ALONG WITH ASSESSMENT OR REASSESSMENT PROCEEDINGS IS LIABLE TO BE ABATED. THE PRINCIPLES OF INTERPRETATION OF TAXING STATUTES DO NOT PERMIT THE COURT TO INTERPRET THE SECOND PROVISO TO SECTION 153A IN A MANNER THAT WHERE THE ASSESSMENT OR REASSESSMENT PROCEEDINGS ARE COMPLETE AND THE MATTER IS PENDING IN APPEAL IN THE TRIBUNAL THE ENTIRE PROCEEDINGS WILL ABATE. 20. THERE IS ANOTHER ASPECT TO THE MATTER NAMELY THAT THE ABATEMENT OF ANY PROCEEDINGS HAS SERIOUS CAUSES AND EFFECT IN AS MUC H AS THE ABATEMENT OF THE PROCEEDINGS TAKES AWAY ALL THE CONSEQUENCES THAT ARISE THEREAFTER. IN THE PRESENT CASE AFTER DEDUCTING BOGUS GIFTS IN THE REGULAR ASSESSMENT PROCEEDINGS THE PROCEEDINGS FOR PENALTY WERE DRAWN U/S 271(1)(C) OF THE ACT. THE MATE RIAL FOUND IN THE SEARCH MAY BE A GROUND FOR NOTICE AND ASSESSMENT U/S 153A OF THE ACT BUT THAT WOULD NOT EFFACE OR TERMINATE ALL THE CONSEQUENCE WHICH HAS ARISEN OUT OF THE REGULAR ASSESSMENT OR REASSESSMENT RESULTING INTO THE DEMAND OR PROCEEDINGS OF PE NALTY (EMPHASIS SUPPLIED) THE SAID JUDGMENT WHICH ESSENTIALLY DEALS WITH SECOND PROVISO TO SECTION 153A OF THE ACT ALSO SUPPORTS THE CONCLUSION WHICH WE HAVE REACHED HEREINBEFORE. 34. ON THE BASIS OF AFORESAID DISCUSSION AND DELIBERATIONS WE REACH TO A LOGICAL AND FORTIFIED CONCLUSION THAT THE AO WAS NOT JUSTIFIED IN MAKING IMPUGNED DISALLOWANCES AND ADDITIONS PERTAINS TO UNEXPLAINED PURCHASES U/S 69C OF THE ACT AND DISALLOWANCE OF EXPENSES IN ALL SIX ASSESSMENT YEARS AND ADDITION U/S 68 OF THE ACT IN RE GARD TO SHARE 38 CAPITAL FOR A.Y. 2003 - 04 WITHOUT ANY JUSTIFIED BASIS AND THAT IS TOO WITHOUT ANY INCRIMINATING MATERIAL AND THUS WE ARE INCLINED TO HOLD THAT THE CIT(A) WAS CORRECT IN DELETING THE SAME. 35. IN VIEW OF ABOVE WE ARE INCLINED TO HOLD THAT THE AO MADE ADDITIONS WITHOUT ANY JUSTIFY BASIS AND INCRIMINATING MATERIAL WHICH WAS DELETED BY THE CIT(A). WE FURTH ER HOLD THAT THE CIT(A) MADE A V AGUE AND UNSUSTAINABLE DIRECTIONS TO THE AO FOR MAKING ADDI TIONS TO WORK OUT PEAK AMOUNT FROM THE ENTRIES IN THE CASH BOOK OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR AND MAKE A SINGULAR ADDITION WHICH IS ALSO NOT SUSTAINABLE. 36. FINALLY WE ARE OF THE FIRM OPINION AND HOLD THAT THE ADDITIONS MADE BY THE AO IN ALL SIX ASSESSMENT YEARS PERTAINING TO UNEXPLAINED PURCHASE AND IN PURSUANT TO DISALLOWANCE OF ENTIRE AMOUNT OF EXPENSES WERE NOT FOUND TO BE SUSTAINABLE BY THE CIT(A) AND WE HAVE NO REASON TO INTERFERE WITH THE PLAUSIBLE AND CORRECT CONCLUSION OF THE C IT(A) IN THIS REGARD AND THUS WE UPHELD THE SAME . HOWEVER THE CIT(A) WAS ALSO NOT JUSTIFIED IN DIRECTING THE AO TO WORK OUT PEAK AMOUN T FOR MAKING ADDITION WHICH IS V AGUE AND UNSUSTAINABLE AND WE ALSO DEMOLISH THE SAME. WE ORDER ACCORDINGLY. 37. TO SUM UP APPEALS OF THE REVENUE IN ALL SIX ASSESSMENT YEARS ARE DISMISSED AND CROSS OBJECTION NOS. 7(A) & (B) OF THE ASSESSEE ARE ALLOWED. 39 38. IN THE FINAL RESULT APPEALS OF THE REVENUE ARE DISMISSED AND CROSS OBJECTIONS OF THE ASSESSEE ARE ALLOWED AS INDICAT ED ABOVE. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 2 9 / 0 4 / 2 0 1 5 S D / - S D / - (S.V. MEHROTRA) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 9 / 0 4 / 2 0 1 5 *KAVITA P.S. COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT NEW DELHI. TRUE COPY BY ORDER ASSISTANT REGISTRAR 40 SL. NO. DESCRIPTION DATE 1. DATE OF DICTATION BY THE AUTHOR 21.04.2015 TO 27 .04.2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 28 .04.2015 3. DRAFT PLACED BEFORE THE SECOND MEMBER 28.04.2015 4. DRAFT APPROVED BY THE SECOND MEMBER 28.04.2015 5. DATE OF APPROVED ORDER COMES TO THE SR. PS 29.04.2015 6. DATE OF PRONOUNCEMENT OF ORDER 29.04.2015 7. DATE OF FILE SENT TO THE BENCH CLERK 29.04.2015 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER