Dr. Roop., Meerut v. ACIT, Meerut

CO 365/DEL/2009 | 2003-2004
Pronouncement Date: 01-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 36520123 RSA 2009
Assessee PAN ABPPR3723B
Bench Delhi
Appeal Number CO 365/DEL/2009
Duration Of Justice 1 year(s) 7 month(s) 26 day(s)
Appellant Dr. Roop., Meerut
Respondent ACIT, Meerut
Appeal Type Cross Objection
Pronouncement Date 01-07-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted E
Tribunal Order Date 01-07-2011
Date Of Final Hearing 27-06-2011
Next Hearing Date 27-06-2011
Assessment Year 2003-2004
Appeal Filed On 05-11-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER & SHRI B.C. MEENA ACCOUNTANT MEMBER ITA NOS. 3794 & 3795/DEL/2009 ASSESSMENT YEARS: 2003-04 & 2004-05 ACIT VS. DR. ROOP CENTRAL CIRCLE C/O ROOP NETRALAYA BLDG. MEERUT. SHIVAJI ROAD MEERUT. ABPPR3723B (APPELLANT) (RESPONDENT) & CROSS OBJECTION NOS. 365 & 366/DEL/09 (IN ITA NOS. 3794 & 3795/DEL/2009) ASSESSMENT YEARS: 2003-04 & 2004-05 DR. ROOP VS. ACIT C/O ROOP NETRALAYA BULDG. CENTRAL CIRCLE SHIVAJI ROAD MEERUT. MEERUT. ABPPR3723B (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. SHYAMA S. BANSIA CIT( DR) RESPONDENT BY : DR. ROOP ASSESSEE ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 2 ORDER PER BENCH THE ABOVE REFERRED APPEALS HAVE BEEN FILED BY THE R EVENUE AGAINST THE TWO SEPARATE ORDERS BOTH DATED 29.06.2 009 PASSED BY LD. CIT(A) IN THE MATTER OF AN ASSESSMENT MADE B Y THE ASSESSING OFFICER U/S 143(3)/153A OF THE INCOME TAX ACT 1961 FOR THE A.Y. 2003-04 & 2004-05 RESPECTIVELY. 2. THE ASSESSEE HAS FILED CROSS OBJECTION IN CONNEC TION WITH ABOVE TWO REFERRED APPEALS PERTAINING TO THE A.Y. 2 003-04 & 2004-05 RESPECTIVELY. 3. IN THIS CASE THE AO INITIATED ASSESSMENT PROCEE DINGS U/S 153A BY ISSUING A NOTICE U/S 153A ON 10.09.2007 FOR SIX ASSESSMENT YEARS FROM A.Y. 2000-01 TO 2005-06 AND A LSO FOR THE A.Y. 2006 & 2007. IN THESE APPEALS WE ARE ONLY CO NCERNED WITH THE APPEALS RELATING TO THE ASSESSMENT MADE BY THE AO FOR THE A.Y. 2003-04 & 2004-05. NO OTHER APPEALS EITHER B Y THE ASSESSEE OR BY THE REVENUE PERTAINING TO THE A.Y. 2000-01 2001-02 2002-03 2005-06 & 2006-07 ARE NOT PENDING BEFORE THE TRIBUNAL AS NO SUCH APPEAL HAS BEEN FILED EITHE R BY THE ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 3 ASSESSEE OR BY THE DEPARTMENT AS SO INFORMED BY BO TH THE PARTIES. 4. IN THE REVENUES APPEAL THE REVENUE HAS DISPUTE D ONLY THAT PART OF CIT(APPEALS) ORDER RELATING TO THE ADDITION S MADE BY THE AO ON ACCOUNT OF ALLEGED UNEXPLAINED GIFT CLAIMED T O HAVE BEEN RECEIVED BY THE ASSESSEE IN THE PERIODS RELEVANT TO THE A.Y. 2003-04 & 2004-05. 5. IN THE CROSS OBJECTION THE ASSESSEE HAS TAKEN T HE GROUNDS CHALLENGING THE VALIDITY OF SEARCH CONDUCTE D U/S 132 OF THE ACT AS WELL AS THE VALIDITY OF NOTICE ISSUED U/ S 153AOR VALIDITY OF ASSESSMENT MADE U/S 143(3)/153A OF THE ACT. 6. SINCE THE GROUNDS RAISED IN THE CROSS OBJECTION GOES TO THE ROOT OF AOS JURISDICTION TO MAKE ASSESSMENT U/ S 153A WE FIRST PROCEED TO TAKE UP THE CROSS OBJECTION FILED BY THE ASSESSEE. ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 4 7. NOW WE COME TO THE CROSS OBJECTIONS FILED BY TH E ASSESSEE IN BOTH THE ASSESSMENT YEARS I.E. A.Y. 200 3-04 & 2004-05. 8. IN BOTH THE ASSESSMENT YEARS THE ASSESSEE HAS T AKEN IDENTICAL AND SIMILAR GROUNDS IN THE CROSS OBJECTIO N WHICH ARE AS UNDER: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW LD. CIT(APPEALS) HAS ERRED IN NOT ANNULLING THE ASSESSMENT ORDER DATED 28.12.2007 BECAUSE 1.1 LD. AO ISSUED NOTICE U/S 153(A) DATED 10.09.07 WITHOUT APPLICATION OF MIND ASKING THE ASSESSEE TO FILE RETURN OF INCOME FOR YEARS 2000- 2001 TO 2006-2007 WITHOUT IDENTIFYING THE SEARCH BY ITS DATE OF CONDUCTION WITHOUT HAVING NECESSARY RECORDS BEFORE ISSUANCE OF SUCH NOTICE AND WITHOUT EXAMINING THE SEIZED MATERIAL. 1.2 LD. AO PROCEEDED WITH ASSESSMENT WITHOUT DISPOSING ASSESSEES OBJECTIONS REGARDING JURISDICTION AND ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 5 WITHOUT PROVIDING THE COPY OF ORDER OF COMPETENT AUTHORITY TRANSFERRING JURISDICTION TO HIS OFFICE BEFORE PROCEEDING WITH THE ASSESSMENT PROCEEDINGS. 1.3 LD. AO ERRED IN PROCEEDING WITH THE ASSESSMENT U/S 153(A) WITHOUT DISPOSING THE ASSESSES OBJECTION THAT THERE WAS NO VALID SEARCH ON THE ASSESSEE. 1.4 LD. AO ERRED IN PROCEEDING WITH THE ASSESSMENT U/S 153(A) DESPITE THERE BEING GROSS VIOLATION OF PROVISIONS OF LAW CBDT INSTRUCTIONS AND INCOME TAX MANUAL DURING SEARCH AND SEIZURE. 1.5 LD. AO PROCEEDED WITH ASSESSMENT WITHOUT PROVIDING COPY OF WARRANT AND SATISFACTION NOTE IN SPITE OF REPEATED REQUESTS BY THE ASSESSEE. 1.6 LD. AO PROCEEDED WITH THE ASSESSMENT WITHOUT PROVIDING COPY OF ALL SEIZED DOCUMENTS AND COPY OF DATA OF COMPUTER SEIZED. 1.7 LD. AO PROCEEDED WITH ASSESSMENT WITHOUT PROVIDING REASONS OF SEIZURE AND RETENTION OF DISCLOSED ASSETS ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 6 DESPITE REPEATED REQUESTS OF ASSESSEE. 1.8 LD.AO PROCEEDED WITH THE PROCEEDINGS DESPITE HIS IMPLICIT ACCEPTANCE THAT THE NOTICE WAS INVALID AND PROCEEDINGS WERE WITHOUT ANY LEGAL MERIT/INVALID/NULL AND VOID. 1.9 LD.AO PROCEEDED WITH THE PROCEEDINGS IN SPITE OF VIOLATION OF SEC(8A) AND SEC(9A) AND VIOLATION OF CBDT INSTRUCTION NO. 7 OF 2003 DATED 30.07.2003. 1.10 LD.AO PROCEEDED WITH THE PROCEEDINGS WITHOUT TAKING COGNIZANCE OF VARIOUS CASE-LAWS CITED BY THE ASSESSEE IN HIS FAVOUR WHICH NOT ONLY MAKES THE WHOLE PROCEEDING INVALID BUT ALSO AMOUNTS TO CONTEMPT OF SUPERIOR COURTS. 1.11LD. AO FRAMED ASSESSMENT U/S 143(3) WITHOUT ISSUING ANY NOTICE U/S 143(2) WHICH IS AGAINST LAW OF NATURAL JUSTICE. 1.12 LD. AO PASSED THE ORDER WITHOUT VALID APPROVAL OF ADDL. ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 7 COMMISSIONER OF INCOME TAX IN VIOLATION OF SEC. 153D. 2. THE GROUNDS OF OBJECTIONS AS HEREIN ABOVE ARE WITHOUT PREJUDICE TO EACH OTHER AND ARE TO BE CONSIDERED WITH SIMILAR GROUNDS RAISED DURING APPEAL TO LD. CIT AND ASSESSEE PRAYS LEAVE TO ADD ALTER AND/OR MODIFY ANY OF THE GROUNDS OF OBJECTION ON OR BEFORE THE DATE OF HEARING OF THE APPEAL. 9. THE GROUNDS WHEREBY THE ASSESSEE HAS OBJECTED BE FORE THE LD. CIT(A) THE PROCEEDINGS U/S 153A THE JURISD ICTION THERETO TRANSFER OF JURISDICTION IMPROPER ACTIONS UNDER TH E PROVISIONS OF SEC. 132 AND IMPROPER OPPORTUNITIES GRANTED TO HIM HAS BEEN DECIDED BY LD. CIT(A) IN IDENTICAL MANNER IN BOTH T HE ASSESSMENT YEARS NAMELY A.Y. 2003-04 & 2004-05 BY OBSERVING AND HOLDING AS UNDER: - 8. THESE ARE GENERALIZED GROUNDS WHEREIN THE ASSESSEE HAS OBJECTED PROCEEDINGS U/S 153A THE JURISDICTION THERETO TRANSFER OF JURISDICTION IMPROPER ACTIONS UNDER THE PROVISIONS OF SECTION 132 AND ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 8 IMPROPER OPPORTUNITIES GRANTED TO HIM. 8.1 THE MATTER HAS BEEN ELABORATIVELY DISCUSSED AND DEALT WITH VIDE GROUNDS OF APPEAL NO. 1 2 6 FOR THE A.Y. 2000-01 AND BEING FULLY COVERED THEREFORE NOT BEING SEPARATELY DEALT AND THE DECISION FRAMED FOR A.Y. 2000-01 IS RELIED UPON. 10. FROM THE SAID ORDER OF LD. CIT(A) IT IS FOUND THAT HE HAS DECIDED THESE ISSUES IN THE LIGHT OF HIS ORDER FOR THE A.Y. 2000- 01. WE THEREFORE FIND IT APPROPRIATE TO REFER TO CIT(APPEALS) ORDER FOR A.Y. 2000-01 ON THESE POINTS. THE ORDER OF LD. CIT(A) ON THESE POINTS IN THE A.Y. 2000-01 RUNS AS UNDER: - GROUNDS NO. 1 2 & 6 4. THESE ARE GENERALIZED GROUNDS WHEREIN THE ASSESSEE HAS OBJECTED PROCEEDINGS U/S 153A THE JURISDICTION THERETO TRANSFER OF JURISDICTION IMP ROPER ACTIONS UNDER THE PROVISIONS OF SEC. 132 AND IMPROPER OPPORTUNITIES GRANTED TO HIM. ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 9 4.1 THE ASSESSEE HAVE VEHEMENTLY DISPUTED THAT THE PROVISIONS OF SECTION 132 WERE NOT COMPLIED PRIOR TO SEARCH INFRINGEMENT IN THE PROVISIONS OF SEC. 132(8) ETC. AND ARGUED THAT SINCE THE SEARCH PROCEEDINGS ARE IMPROPER THE ASSESSMENT BEING IMPROPER IN NATURE BE ANNULLED. I HAVE GONE THROUGH THE SUBMISSIONS FORWARDED BY THE ASSESSEE AND DOCUMENTARY EVIDENCES ADDUCED BEFORE ME. IT WAS ALSO SUBMITTED THAT ON SIMILAR GROUNDS THE ASSESSEE HAS ALSO PREFERRED WRIT BEFORE ALLAHABAD HIGH COURT. THE WRIT SO FILED IS PENDING ADJUDICATION. KEEPING IN VIEW THE TOTALITY OF CIRCUMSTANCES FIRSTLY IT NOT WITHIN MY POWERS TO COMMENT UPON SEARCH PROCEEDINGS AND SECONDLY AS THE MATTER IS PENDING ADJUDICATION BY HONBLE HIGH COURT THEREFORE IT WILL BE PREMATURE TO COMMENT. 4.2 THE OTHER OBJECTION OF THE ASSESSEE IS THAT PRIOR TO FRAMING ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 10 ORDER TRANSFERRING JURISDICTION HE HAS NOT BEEN PROVIDED AN OPPORTUNITY TO REBUT. THE CASE OF ASSESSEE ALONG WITH OTHER ASSESSES IN THE GROUP TRANSFERRED TO A CENTRALIZED JURISDICTION WITHIN MEERUT CITY ONLY. THE CASES SO TRANSFERRED WERE FULLY WITHIN THE DOMAIN OF THE TRANSFERRING AUTHORITY. UNDER THE CIRCUMSTANCES THE ASSESSEE CAN HAVE NO CHOICE TO ASK FOR A PARTICULAR OFFICER OR A PARTICULAR PLACE FOR THE ASSESSMENT TO BE MADE WHEN POWER UNDER SECTION 127 IS TO BE EXERCISED. IT IS THUS WILL NOT BE REASONABLE TO HOLD THAT THE ORDER OF TRANSFER SUFFERS FROM ANY ARBITRARINESS. IN THE REMAND REPORT FORWARDED BY THE AO DURING THE REMAND PROCEEDINGS THE AO HAVE FORWARDED COPY OF A LETTER DATED 20.03.2006 TRANSFERRING JURISDICTION WHEREIN IT IS CATEGORICALLY MENTIONED THAT THE REASONS FOR ASSUMPTION OF JURISDICTION WERE COMMUNICATED. I ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 11 AGREE WITH AO THAT IT IS NOT THE DUTY OF THE AO TO FORWARD A COPY OF ORDER UNDER SECTION TO THE ASSESSEE; IT MAY BE PRESUMED THAT THE COPY THEREOF IS COMMUNICATED BY THE RESPECTIVE COMMISSIONER. THOUGH FOR SOME TIME ON ACCOUNT OF DEPARTMENTAL COMMUNICATION THE ASSESSEE RECEIVED NOTICES FROM EARLIER JURISDICTIONAL AO BUT THE SAME WILL NEITHER RENDER TRANSFER ORDER U/S 127 NOR ASSUMPTION OF JURISDICTIONAL U/S 153A BAD. 4.3 REGARDING THE OBJECTIONS OF THE APPELLANT THAT DOUBTS/OBJECTIONS OF ASSESSEE ABOUT THE PROPER JURISDICTION WERE NOT ADDRESSED BEFORE PROCEEDING WITH THE ASSESSMENT PROCEEDINGS. THOUGH IT WAS THE RESPONSIBILITY OF LD. CIT MEERUT BUT IN ABSENCE OF ANY SUCH COMMUNICATION THE AO COULD HAVE FURNISHED REASONS BUT IN MY VIEW NON FURNISHING THEREOF WILL NEITHER VITIATE JURISDICTION OR ASSESSMENT. THUS THE ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 12 ASSESSEES OBJECTIONS ARE DISMISSED AS UNMERITED. 4.4 ASSESSEES CONTENTION THAT NO NOTICE U/S 143(2) WAS ISSUED IS IRRELEVANT AS THIS CANNOT MAKE THE ASSESSMENT VOID ABINITO PARTICULARLY CONSIDERING THAT THE RETURN FILED BY THE ASSESSEE U/S 153A IS COMPULSORY SUBJECTED TO SCRUTINY AND THE CIRCUMSTANCES ISSUANCE OF THE NOTICE IS MERELY A FORMALITY. 11. BE IT NOTED HERE THAT NO APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE SAID PART OF LD. CIT(A)S ORDE R IN A.Y. 2000- 01 AND OTHER YEARS EXCEPT THE PRESENT CROSS OBJECTI ONS FILED IN A.Y. 2003-04 AND 2004-05. IN THIS CONNECTION THE ASSESSEE SUBMITTED THAT SINCE NO TAX WAS FOUND TO BE PAYABLE BY THE ASSESSEE IN OTHER YEARS IF HE FELT NO NECESSITY TO FILE APPEALS IN OTHER YEARS. 12. WE HAVE CONSIDERED THE RIVAL CONTENTION OF BOTH THE PARTIES AND HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE A UTHORITIES ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 13 BELOW. WE HAVE ALSO DELIBERATED UPON THE DECISIONS CITED BY BOTH THE PARTIES. 13. WE FIRST PROCEED TO DECIDE THE QUESTION CHALLEN GING THE LEGALITY AND VALIDITY OF SEARCH AND SEIZURE PROCEED INGS U/S 132 OF THE ACT. 14. IN THIS CASE IT HAS BEEN STATED BY THE AO THAT A SEARCH AND SEIZURE PROCEEDINGS U/S 132 OF THE ACT WAS CONDUCTE D IN THE CASE OF THE PRESENT ASSESSEE AND OTHER FAMILY MEMBE RS ON 27.10.2005 AT RESIDENTIAL PREMISES. THE AO HAS ALS O STATED THAT LAST OPERATION OF AUTHORIZATION IN THE PROCESS IN T HIS GROUP OF ASSESSEE WAS ON 14.11.2005. ON PERUSAL OF VARIOUS DOCUMENTS AND PAPERS FILED BY BOTH THE PARTIES BEFORE US WE FIND THAT A WARRANT OF AUTHORIZATION U/S 132 OF THE INCOME TAX ACT 1961 AND RULE 112 (1) OF THE INCOME TAX RULES 1962 WAS ISSU ED BY DIRECTOR OF INCOME TAX (INVESTIGATION) KANPUR VIDE ORDER DATED 18.10.2005 AUTHORIZING THE AUTHORIZED OFFICER TO CO NDUCT SEARCH AND SEIZURE AT THE RESIDENCE-CUM-CLINIC OF THE PRES ENT ASSESSEE I.E. DR. ROOP DR. SANGEETA THE PREMISES BEING SIT UATED AT OPP. ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 14 NAS COLLEGE E.K. ROAD MEERUT. ON THE STRENGTH OF AFORESAID WARRANT OF AUTHORIZATION DATED 18.10.2005 THE AUTH ORIZED OFFICER CONDUCTED THE SEARCH IN THE CASE OF PRESENT ASSESSE E DR. ROOP AND HIS WIFE DR. SANGEETA ON 27.10.2005 AND THEN P REPARED A PUNCHNAMA DATED 28.10.2005 WHICH IS PLACED AT PAGE S 10 TO19 OF THE SUPPLEMENTARY PAPER BOOK FILED BY THE ASSESS EE. COPY OF WARRANT OF AUTHORIZATION DATED 18.10.2005 IS PLACED AT PAGES 8 TO 9 OF THE SUPPLEMENTARY PAPER BOOK FILED BY THE ASSE SSEE. THE ASSESSEE HAS ALSO PRODUCED A COPY OF PUNCHNAMA DATE D 14.11.2005 PLACED AT PAGES NO. 20 TO 25 OF THE SUPP LEMENTARY PAPER BOOK FILED BY THE ASSESSEE. 15. IN RESPECT OF THE QUESTION AS TO WHETHER IT IS OPEN TO THE ASSESSEE TO QUESTION THE LEGALITY AND VALIDITY OF S EARCH AND SEIZURE PROCEEDINGS DURING THE ASSESSMENT PROCEEDIN GS BEFORE THE AO OR IN APPEAL BEFORE THE COMMISSIONER OR THE TRIBUNAL A REFERENCE MAY BE MADE TO THE FOLLOWING DECISIONS: - I) TRILOK SINGH DHILLON VS. CIT (2011) 332 ITR 185 (CHHATTISGARH). II) CIT VS. PARAS RICE MILLS (2009) 313 ITR 182 (PUNJAB & HARYANA). ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 15 III) GAYA PRASAD PATHAK VS. ASSTT. CIT (2007) 290 ITR 128 (MP). IV) LAL (M.B) VS. CIT (2005) 279 ITR 298 (DEL.). 16. THE DIVISION BENCH OF THE HONBLE DELHI HIGH CO URT IN THE MATTER OF M.B. LAL VS. CIT (2005) 279 ITR 298 HELD THAT THE VALIDITY OF SEARCH PROCEEDINGS CANNOT BE EXAMINED I N APPEAL FILED BEFORE THE TRIBUNAL AGAINST BLOCK ASSESSMENT AND THE REMEDY LIES UNDER ARTICLE 226 OF THE CONSTITUTION. 17. SIMILARLY IN THE CASE OF CIT VS. PARAS RICE MI LLS (2009) 313 ITR 182 (P&H) THE HONBLE PUNJAB & HARYANA HIG H COURT FOLLOWING THE DECISIONS OF HONBLE DELHI HIGH COURT IN THE M.B. LALS CASE (2005) 279 ITR 298 HELD THAT WHILE HEAR ING AN APPEAL AGAINST THE ORDER OF ASSESSMENT THE TRIBUNAL CANNO T GO INTO THE QUESTION OF VALIDITY OR OTHERWISE OF ANY ADMINISTRA TIVE DECISION FOR CONDUCTING SEARCH AND SEIZURE. 18. IN THE CASE OF GAYA PRASAD PATHAK (2007) 290 IT R 128 (MP) IT HAS BEEN HELD BY HONBLE MADHYA PRADESH HI GH COURT THAT THE JURISDICTION EXERCISED BY THE STATUTORY AU THORITY WHILE ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 16 HEARING AN APPEAL CANNOT ENTER INTO THE JUSTIFIABIL ITY OF AN ACTION U/S 132A OF THE ACT. 19. AFTER REFERRING THE DECISION OF DIVISION BENCH OF DELHI HIGH COURT IN THE CASE OF M.B. LAL (2005) 279 ITR 298 D ECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PARAS RICE MILLS (2009) 313 ITR 182 AND THE DECISION OF HONBL E MADHYA PRADESH HIGH COURT IN THE CASE OF GAYA PRASAD PATHA K (2007) 290 ITR 128 (MP) THE HONBLE CHHATTISGARH HIGH COU RT IN THE CASE OF TRILOK SINGH DHILLON VS. COMMISSIONER OF IN COME TAX (2011) 332 ITR185 HAS HELD THAT IT WAS NOT OPEN TO THE ASSESSEE TO QUESTION THE LEGALITY AND VALIDITY OF SEARCH AND SEIZURE PROCEEDINGS DURING ASSESSMENT PROCEEDINGS BEFORE TH E AO OR IN APPEAL BEFORE THE CIT OR THE TRIBUNAL. THE HONBLE CHHATTISGARH HIGH COURT THEREFORE REJECTED THE OBJECTION OF THE ASSESSEE IN THIS REGARD. 20. IN THE PRESENT CASE THE VALIDITY OF THE SEARCH CONDUCTED U/S132 IN QUESTION HAS BEEN CHALLENGED BY THE ASSES SEE BY WAY OF WRIT BEFORE THE HONBLE ALLAHABAD HIGH COURT AND IT HAS BEEN ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 17 INFORMED TO US THAT THE WRIT SO FILED BY THE ASSESS EE IS PENDING ADJUDICATION. 21. IN SUPPORT OF THE PROPOSITION THAT TRIBUNAL CAN NOT LOOK INTO THE VALIDITY OF THE SEARCH THE LD. DEPARTMENTAL RE PRESENTATIVE HAS PLACED UPON THE DECISION OF INCOME TAX APPELLAT E TRIBUNAL PUNE A BENCH IN THE CASE OF ASSTT. CIT VS. CHILKA VYANKATESH SIDRAM (2009) 124 TTJ 41 (PUNE). 22. THE ASSESSEE IN THE REPLY HAS SUBMITTED THAT AF ORESAID DECISION OF ITAT PUNE DOES NOT APPLY TO THE ASSESS EE WHEN HONBLE JURISDICTIONAL HIGH COURT OF ALLAHABAD HAS TAKEN A CONTRARY VIEW IN WRIT PETITION NO.406/1997 DATED 19 .05.1999 AND FOLLOWING THE SAME THIRD MEMBER OF ITAT ALLAHABAD BENCH B IN THE CASE OF DR. A.K. BANSAL VS. ASSTT. CIT (2000 ) 111 TAXMAN 178 (MAGAZINE) HAS DECIDED THE ISSUE BY HOLDING THA T AO AS WELL AS THE TRIBUNAL HAVE POWERS AND ARE DUTY BOUND TO D ECIDE THE VALIDITY OF SATISFACTION OF CONDITIONS OR EXISTENCE OF CIRCUMSTANCES SPECIFIED IN SEC. 132(1) (A) OR (B) OR (C). ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 18 23. IN THE CASE OF ASSTT. CIT VS. CHILKA VYANKATESH SIDRAM ITAT PUNE A BENCH HAS TAKEN A VIEW THAT TRIBUNA L CANNOT LOOK INTO THE VALIDITY OF SEARCH AFTER RELYING UPON THE FOLLOWING DECISIONS: - I) SPL. BENCH (OF THREE MEMBERS) OF INCOME TAX APPELLATE TRIBUNAL IN THE CASE OF C. RAMAIAH REDDY VS. ASSTT. CIT (2003) 87 ITD 439 (BANG.) (SB). II) LARGER BENCH OF THE TRIBUNAL (OF FIVE MEMBERS) IN THE CASE OF PROMAIN LTD. VS. DCIT (2005) 95 ITD 489 (DEL.) (SB). III) DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF MB. LAL VS. CIT (2005) 279 ITR 298 (DEL.). IV) DECISION OF HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF GAYA PRASAD PATHAK VS. ASSTT. CIT (2007) 290 ITR 128 (MP) 24. IN THE CASE OF ASTT. CIT VS. CHILKA VYANKATESH SIDRAM ITAT PUNE A BENCH HAS OBSERVED THAT THE VIEW OF THE SPL. BENCH OF THE TRIBUNAL IN THE CASE OF C. RAMAIAH RED DY VS. ASSTT. CIT (SUPRA) HAS BEEN APPROVED BY THE JUDGMEN T DELIVERED ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 19 BY THE HONBLE HONBLE DELHI HIGH COURT IN THE CASE OF MB. LAL VS. CIT (SUPRA). 25. IN THE CASE OF PROMAIN LTD. (SUPRA) THE LARGER BENCH OF FIVE MEMBERS OF THE TRIBUNAL HAS HELD THAT THE TRIB UNAL CANNOT EXAMINE THE VALIDITY OF SEARCH ACTION U/S 132 OF TH E ACT. IN THIS CASE THE SPL. BENCH WAS CONSTITUTED TO CONSIDER TH E QUESTION WHETHER THE INCOME TAX APPELLATE TRIBUNAL HAS POWER S TO ADJUDICATE UPON THE ISSUE RELATING TO THE VALIDITY OF THE SEARCH CONDUCTED U/S 132 WHILE DISPOSING THE APPEAL AGAINS T BLOCK ASSESSMENT. THIS SPL. BENCH WAS CONSTITUTED IN THE LIGHT OF CONTRARY DECISIONS RENDERED BY DIFFERENT BENCHES. IN A THIRD MEMBER DECISION IN THE CASE OF DR. A.K. BANSAL VS. ASSTT. CIT (2000) 73 ITD 49 THE ALLAHABAD BENCH OF ITAT HAS H ELD THAT AO AS WELL AS THE TRIBUNAL HAVE POWERS TO ADJUDICATE U PON THE MATTER REGARDING THE VALIDITY OF SEARCH U/S 132 ON THE GROUND OF NONE EXISTENCE OF ANY CIRCUMSTANCES/CONDITIONS ENUM ERATED IN CLAUSE (A) (B) & (C) OF SUB-SECTION(1) OF SEC. 132 . IT HAS ALSO BEEN MENTIONED BY THE SPL. BENCH IN THIS CASE OF PR OMAIN LTD. THAT IT WAS GIVEN TO UNDERSTAND TO THE MEMBERS OF T HE DIVISION ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 20 BENCH THAT THE OPERATION OF THE SAID ORDER OF THE A LLAHABAD BENCH HAS BEEN STAYED BY THE HONBLE ALLAHABAD HIGH COURT. ON THE OTHER HAND A CONTRARY VIEW WAS TAKEN BY THE DELHI BENCH OF ITAT IN THE CASE OF VIRENDER BHATIA VS. DCIT (20 01) 79 ITD 340 WHEREIN IT WAS HELD THAT THE POWERS OF THE AO AND THE TRIBUNAL WHILE DISPOSING OFF THE BLOCK ASSESSMENT A PPEAL ARE LIMITED AND THEY HAVE NO POWER TO GO INTO THE VALID ITY OF SEARCH. IN THIS BACKGROUND THE SPL. BENCH WAS CONSTITUTED BY HONBLE PRESIDENT CONSISTENT OF THREE MEMBERS TO DECIDE THE ABOVE REFERRED QUESTION IN THE CASE OF PROMAIN LTD. VS. D CIT. HOWEVER IN THE MEANTIME A DECISION OF THE SPL. BE NCH OF TRIBUNAL CONSISTING OF THREE MEMBERS IN THE CASE OF C. RAMAIAH REDDY VS. ASSTT. CIT (2003) 87 ITD 439 WAS PASSED AND THEREFORE THE HONBLE PRESIDENT RECONSTITUTED SPL. BENCH CONSISTING OF FIVE MEMBERS TO DECIDE THE SAID QUEST ION. AFTER CONSIDERING VARIOUS DECISIONS THE SPL. BENCH OF FI VE MEMBERS IN THE CASE OF PROMAIN LTD. VS. DCIT HAS TAKEN A VIEW THAT TRIBUNAL CANNOT ADJUDICATE UPON ISSUE RELATING TO VALIDITY O F SEARCH CONDUCTED U/S 132 WHILE DISPOSING OFF APPEAL AGAINS T BLOCK ASSESSMENT. IN PARA 56 OF THE ORDER THE SPL. BENC H HAS HELD ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 21 THAT CONTRARY VIEW TAKEN BY VARIOUS DIVISION BENCHE S OF THE ITAT STANDS OVERRULED. 26. IN THE LIGHT OF THE DECISION OF LARGER BENCH OF THE TRIBUNAL (OF FIVE MEMBERS) THE DECISION OF THIRD MEMBER OF INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH B IN THE CAS E OF DR. A.K. BANSAL VS. ASSTT. CIT SHALL HAVE NO APPLICATION. 27. IN THE CASE OF B.N. MISHRA PETITIONER FILED TH E WRIT PETITION BEFORE THE HONBEL ALLAHABAD HIGH COURT AND ALLAHAB AD HIGH COURT PASSED THE ORDER BY HOLDING THAT THE PETITION ER SHALL BE ENTITLED TO RAISE ALL THE OBJECTIONS WHICH HAVE BEE N RAISED IN THE WRIT PETITION AND THE RESPONDENT WAS DIRECTED TO DE CIDE THE CASE ON MERIT IN ACCORDANCE WITH LAW. IT IS THUS CLEAR THAT THE POWER TO DECIDE THE ISSUE BY THE DEPARTMENT EMANATED FROM THE DIRECTION OF THE HONBLE HIGH COURT PASSED IN THE W RIT PETITION FILED BY THE ASSESSEE. IN THE PRESENT CASE THE AS SESSEE HAS ALREADY FILED A WRIT PETITION BEFORE THE HONBLE HI GH COURT OF ALLAHABAD CHALLENGING THE VALIDITY OF SEARCH OPERAT ION OF ASSESSEE WHICH IS PENDING ADJUDICATION AND THEREF ORE IT IS NOT ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 22 WITHIN OUR JURISDICTION AT THIS STAGE TO DECIDE THI S ISSUE REGARDING THE VALIDITY OF SEARCH ACTION TAKEN U/S 132 OF THE ACT. 28. IN VIEW OF THE FOREGOING DISCUSSION THE GROUND S CHALLENGING THE VALIDITY OF SEARCH AND SEIZURE ACTI ON TAKEN U/S 132 OF THE ACT ARE REJECTED. 29. NOW WE SHALL COME TO THE VARIOUS GROUNDS CHALL ENGING THE VALIDITY OF NOTICE ISSUED U/S 153A ASSESSMENT PROC EEDINGS INITIATED U/S 153A AND ASSESSMENT ORDER MADE U/S 14 3(3)/153A OF THE ACT. 30. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. 31. ON THE QUESTION CHALLENGING THE VALIDITY OF ASS ESSMENT PROCEEDINGS INITIATED U/S 153A AND ASSESSMENT ORDER MADE BY THE CONCERNED AO U/S 153A THE ASSESSEE HAS MAINLY RAISED FOLLOWING POINTS: - I) THAT NOTICE ISSUED U/S 153A IS INVALID ON VARIO US COUNTS AS NARRATED IN THE GROUNDS BEFORE US. ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 23 II) THAT AO HAS ERRED IN MAKING ASSESSMENT U/S 153A IN THE HANDS OF THE ASSESSEE IN HIS INDIVIDUAL CAPACITY. III) THAT SEARCH WARRANT HAS BEEN ISSUED BY DIRECT OR OF INCOME TAX (INVESTIGATION) AND NOT BY THE DGIT (INVESTIGATION) AS SO PROVIDED UNDER INSTRUCTIONS NO. 7 OF 2003 DATED 30.07.2003 ISSUED BY THE BOARD. IV) THAT ASSESSMENT ORDER HAS BEEN PASSED BY THE AO WITHOUT VALID APPROVAL OF ADDL. COMMISSIONER OF INCOME TAX IN VIOLATION OF SEC. 153D OF THE ACT. V) THAT SINCE NO INCRIMINATING MATERIAL INDICATING ANY UNDISCLOSED INCOME OF THE ASSESSEE WAS FOUND IN THE SEARCH AGAINST THE ASSESSEE THE PROCEEDINGS INITIATED U/S 153A AGAINST THE ASSESSEE WERE INVALID AND WITHOUT JURISDICTION. VI) THAT NOTICE U/S 153A HAS BEEN ISSUED WITHOUT IDENTIFYING THE SEARCH BY ITS DATE OF CONDUCTION AND WITHOUT EXAMINING NECESSARY RECORDS OR SEIZED MATERIAL. VII) THAT AO PROCEEDED WITH THE ASSESSMENT PROCEEDINGS WITHOUT PROVIDING COPY OF ALL SEIZED DOCUMENTS AND COPY OF DATA OF COMPUTER SEIZED. ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 24 32. IN SUPPORT OF THE POINTS MENTIONED AT ITEM (II) AND (III) ABOVE THE ASSESSEE HAS MAINLY RELIED UPON THE FOLL OWING DECISIONS AND INSTRUCTIONS: - I) CIT VS. SMT. VANDANA VERMA 31 DTR 214 (ALLAHABAD HIGH COURT). II) CBDT INSTRUCTION NO. 7 OF 2003 DATED 30.07.2003 33. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTH ER HAND SUBMITTED THAT THE DECISION OF HONBLE ALLAHABAD HI GH COURT IN THE CASE OF CIT VS. SMT. VANDANA VERMA (SUPRA) HAS BEEN CONSIDERED BY THE INCOME TAX APPELLATE TRIBUNAL NE W DELHI BENCH H IN THE CASE OF SH. T.C. SOOD VS. ACIT IT (SS) NO. 40/DEL/2008 WHERE THE ASSESSMENT MADE IN THE INDIV IDUAL CAPACITY WAS HELD TO BE VALID. LD. DR FURTHER CONT ENDED THAT INSTRUCTION NO. 7 OF 2003 DATED 30.07.2003 WAS SUBS EQUENTLY MODIFIED BY CIRCULAR ISSUED ON 12.08.2005 WHEREBY T HE EARLIER INSTRUCTION DATED 07.03.2001 WAS RESTORED PROVIDING THAT THE DIT (INVESTIGATION) WILL OBTAIN ADMINISTRATIVE APPROVAL OF DGIT (INVESTIGATION) BEFORE A SEARCH WARRANT IS ISSUED A ND IT WAS NOT NECESSARY THAT SEARCH WARRANT IS TO BE ISSUED BY DG IT (INVESTIGATION) ONLY. ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 25 34. ON PERUSAL OF THE ORDER OF THE LD.CIT(A) WE FI ND THAT ALL THESE ISSUES HAVE NOT BEEN ADJUDICATED OR DECIDED B Y HIM. SINCE THESE ISSUES HAVE NOT BEEN DECIDED AND ADJUDI CATED BY THE LD. CIT(A) AND THESE ISSUES GOES TO THE ROOT OF THE MATTER WE FIND IT APPROPRIATE TO REMIT THESE ISSUES TO THE FI LE OF THE LD. CIT(A) FOR HIS DECISION. THE LD. CIT(A) SHALL PROV IDE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS WELL AS TO THE AO. LD. CIT(A) SHALL CONSIDER ALL THE FACTS AND CIRCUMS TANCES OF THE CASE CONTENTIONS AND CASES THAT MAY BE RAISED BY B OTH THE PARTIES BEFORE HIM. THE ASSESSEE SHALL BE AT LIBER TY TO RAISE ANY OTHER CONTENTIONS BEFORE THE LD. CIT(A) REGARDING V ALIDITY OF ASSESSMENT MADE U/S 153A OF THE ACT AS HE SO ADVISE D. 35. THE NEXT CONTENTION OF THE ASSESSEE IS THAT AO HAS ERRED IN FRAMING ASSESSMENT IN ABSENCE OF PROPER ORDER U/ S 127 OF THE INCOME TAX ACT 191. THE ASSESSEE HAS ALSO CONTEND ED THAT LD. AO HAS ERRED IN PROCESSING WITH THE ASSESSMENT WITH OUT DISPOSING ASSESSEES OBJECTIONS REGARDING JURISDICT ION AND WITHOUT PROVIDING THE COPY OF ORDER OF COMPETENT AU THORITY ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 26 TRANSFERRING JURISDICTION TO HIS OFFICE. THE ASSES SEE HAS SUBMITTED THAT THE COPY OF THE TRANSFER ORDER WAS N OT PROVIDED TO THE ASSESSEE BEFORE COMPLETION OF THE ASSESSMENT. HE FURTHER CONTENDED THAT THE OBJECTIONS RAISED BY THE ASSESSE E WERE NOT DISPOSED OFF BEFORE TRANSFER OF HIS CASE FROM ONE A O TO ANOTHER. HE FURTHER CONTENDED THAT TRANSFER ORDER MADE U/S 1 27 WAS INVALID IN AS MUCH AS THIS ORDER WAS NOT COMMUNICAT ED TO HIM BEFORE IT MADE EFFECTIVE. 36. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND INVITED OUR ATTENTION TO THE PROVISIONS OF SEC. 127 (3) OF THE ACT TO CONTEND THAT THERE WAS NO REQUIREMENT OF RECORDING REASONS AND PROVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSE E BEFORE THE ORDER OF TRANSFER OF ASSESSEES CASE FROM ONE AO TO ANOTHER AT THE SAME STATION IS PASSED. LD. DR HAS INVITED OUR ATTENTION TO THE COPY OF TRANSFER OF JURISDICTION DATED 20.03.20 0 PASSED BY LD. CIT MEERUT A COPY THEREOF IS PLACED IN THE PAPER- BOOK FILED BY THE LD. DR. ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 27 37. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS ON RECORD. 38. WE FIRST FIND IT APPROPRIATE TO TAKE NOTE OF TH E PROVISIONS CONTAINED IN SEC. 127 OF THE ACT WHICH READS AS UN DER: - 127. (1)THE GENERAL 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 TRANSFER ANY CASE FROM ONE OR MORE ASSESSING OFFICERS SUBORDINATE TO HIM (WHETHER WITH OR WITHOUT CONCURRENT JURISDICTION) TO ANY OTHER ASSESSING OFFICER OR ASSESSING OFFICERS (WHETHER WITH OR WITHOUT CONCURRENT JURISDICTION) ALSO SUBORDINATE TO HIM. (2)WHERE THE ASSESSING OFFICER OR ASSESSING OFFICERS FROM WHOM THE CASE IS TO BE TRANSFERRED AND THE ASSESSING OFFICER OR ASSESSING OFFICERS TO WHOM THE CASE IS TO BE TRANSFERRED ARE NOT SUBORDINATE TO THE ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 28 SAME DIRECTOR GENERAL OR CHIEF COMMISSIONER OR COMMISSIONER - (A) WHERE THE DIRECTORS GENERAL OR CHIEF COMMISSIONER OR COMMISSIONERS TO WHOM SUB ASSESSING OFFICERS ARE SUBORDINATE ARE IN AGREEMENT THEN THE DIRECTOR GENERAL OR CHIEF COMMISSIONER OR COMMISSIONER FROM WHOSE JURISDICTION THE CASE IS TO BE TRANSFERRED 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 PASS THE ORDER; (B)WHERE THE DIRECTORS GENERAL OR CHIEF COMMISSIONER OR COMMISSIONERS AFORESAID ARE NOT IN AGREEMENT THE ORDER TRANSFERRING THE CASE MAY SIMILARLY BE PASSED BY THE BOARD OR ANY SUCH DIRECTOR GENERAL OR CHIEF ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 29 COMMISSIONER OR COMMISSIONER AS THE BOARD MAY BY NOTIFICATION IN THE OFFICIAL GAZETTE AUTHORIZE IN THIS BEHALF. (3) NOTHING IN SUB-SECTION (1) OR SUB- SECTION (2) SHALL BE DEEMED TO REQUIRE ANY SUCH OPPORTUNITY TO BE GIVEN WHERE THE TRANSFER IS FROM ANY ASSESSING OFFICER OR ASSESSING OFFICERS (WHETHER WITH OR WITHOUT CONCURRENT JURISDICTION) TO ANY OTHER ASSESSING OFFICER OR ASSESSING OFFICERS (WHETHER WITH OR WITHOUT CONCURRENT JURISDICTION) AND THE OFFICES OF ALL SUCH OFFICERS ARE SITUATED IN THE SAME CITY LOCALITY OR PLACE. 39. ON PERUSAL OF THE PROVISIONS CONTAINED IN SECTI ON 127(3) WE FIND THAT NOTHING IN SUB-SECTION (1) OR SUB-SECT ION(2) OF SEC. 127 SHALL BE DEEMED TO REQUIRE ANY SUCH OPPORTUNITY TO BE GIVEN WHERE THE TRANSFER IS FROM ANY ASSESSING OFFICER OR ASSESSING OFFICERS (WHETHER WITH OR WITHOUT CONCURRENT JURISD ICTION) TO ANY OTHER ASSESSING OFFICER OR ASSESSING OFFICERS (WHET HER WITH OR WITHOUT CONCURRENT JURISDICTION) AND THE OFFICES OF ALL SUCH OFFICERS ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 30 ARE SITUATED IN THE SAME CITY LOCALITY OR PLACE. THEREFORE THE MANDATORY REQUIREMENT OF PROVIDING A REASONABLE OPP ORTUNITY OF BEING HEARD AND RECORDING REASONS FOR TRANSFERRING ANY CASE AS CONTEMPLATED U/S 127(1) OR 127(2) SHALL NOT BE APPL IED IN THE CASES WHERE THE TRANSFER IS FROM ANY ASSESSING OFFI CER TO ANY OTHER ASSESSING OFFICER HAVING OFFICES SITUATED IN THE SAME CITY OR LOCALITY OR PLACE. IN THE PRESENT CASE THE ASSESS EES OLD JURISDICTION WAS LYING WITH AO OF WARD 2(2) MEERUT AND WAS TRANSFERRED TO ACIT CENTRAL CIRCLE MEERUT. THE C ONCERNED TRANSFER ORDER HAS BEEN PASSED BY COMMISSIONER OF I NCOME TAX ON 20.03.2006 TO BE MADE EFFECTIVE FROM 1.4.2006. THE COPY OF THIS ORDER WAS DIRECTED TO BE PROVIDED TO ASSESSEE THROUGH ASSESSING OFFICER. SINCE NO OPPORTUNITY OF BEING H EARD AND CONSEQUENTLY RECORDING OF REASONS WAS REQUIRED U/S 127(3) NOT FURNISHING THE COPY OF TRANSFER ORDER TO THE ASSESS EE BEFORE THE AO EXERCISED HIS JURISDICTION OVER THE PRESENT ASSE SSEE UNDER THE STRENGTH OF TRANSFER ORDER CANNOT RENDER THE T RANSFER ORDER PASSED BY COMMISSIONER TO BE INVALID OR ILLEGAL. T HE ASSESSEE HAS NOT BEEN ABLE TO SHOW ANY PREJUDICE THAT HAVE B EEN CAUSED TO THE ASSESSEE BECAUSE OF NON-COMMUNICATION OF THE TRANSFER ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 31 ORDER TO HIM BEFORE THE ASSESSMENT PROCEEDINGS WERE TAKEN UP OR THE ASSESSMENT WAS MADE. 40. IN THE COURSE OF HEARING OF THIS APPEAL ASSESS EE HAS ALSO CONTENDED THAT EVEN AFTER THE TRANSFER ORDER WAS PA SSED BY THE LD. CIT THE EARLIER AO HAD EXERCISED JURISDICTION OVER HIS CASE. IN THIS RESPECT WE OBSERVE THAT THE JURISDICTION TO MAKE ASSESSMENT WHERE A CASE HAS BEEN TRANSFERRED FROM O NE ASSESSING OFFICER TO ANOTHER VESTS WITH THE OFFICER TO WHOM THE CASE HAS BEEN TRANSFERRED AND HE ALONE CAN MAKE TH E ASSESSMENT. THE FACT THAT THE AO HAVING JURISDICTI ON EARLIER HAD ALL ALONG BEEN MAKING THE ASSESSMENT AFTER THE TRAN SFER ORDER IS PASSED IS NOT MATERIAL SO AS TO RENDER THE ASSESSME NT ORDER PASSED BY THE AO TO WHOM THE CASE HAS BEEN VALIDLY TRANSFERRED TO BE INVALID. THE LD. CIT(A) HAS RIGHTLY HELD THA T THOUGH FOR SOMETIME ON ACCOUNT OF DEPARTMENTAL COMMUNICATION T HE ASSESSEE RECEIVED THE NOTICES FROM EARLIER JURISDIC TIONAL AO THAT WILL NEITHER RENDER TRANSFER ORDER U/S 127 NOR ASSU MING JURISDICTION BY THE UNDER SECTION 153A AS BAD. ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 32 41. IN SUPPORT OF THE CONTENTION THAT ORDER OF TRAN SFER IS REQUIRED TO BE COMMUNICATED TO THE AFFECTED PERSON BEFORE IT BECOMES EFFECTIVE THE ASSESSEE HAS RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF BACHHITTAL VS. STATE OF PUNJAB & ANOTHER AIR (1963) (SC) 395. WE HAVE GON E THROUGH THIS DECISION AND FIND THAT DECISION WAS RENDERED I N CONNECTION WITH DEPARTMENTAL ENQUIRY CONDUCTED AGAINST THE GOV ERNMENT SERVANT AND IT WAS RENDERED IN THE LIGHT OF THE PRO VISIONS CONTAINED IN ARTICLE 311(2) AND ARTICLE 166 OF CONS TITUTION OF INDIA. THIS DECISION SHALL NOT APPLY TO THE PRESEN T CASE IN AS MUCH AS SUB-SECTION (3) OF SEC. 127 HAS SPECIFICALL Y EXCLUDED THE OPERATION OR APPLICABILITY OF SUB-SECTION (1) OR SU B-SECTION (2) OF SEC. 127 IN THE CASES WHERE TRANSFER OF CASE IS MAD E FROM ONE OFFICER TO ANOTHER SITUATED IN THE SAME CITY LOCAL ITY OR PLACE. 42. OUR VIEW THAT NO OPPORTUNITY WAS REQUIRED TO BE GIVEN TO THE ASSESSEE AND CONSEQUENTLY OR NO REASONS WERE R EQUIRED TO BE RECORDED BEFORE THE CASE IS TRANSFERRED FROM ONE ASSESSING OFFICER TO ANOTHER SITUATED IN THE SAME CITY LOCAL ITY OR PLACE IS FORTIFIED BY THE FOLLOWING DECISIONS: - ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 33 I) KASHIRAM AGGARWALA VS. UNION OF INDIA (1965) 56 ITR 14 (SC) II) S.L. SINGHANIA VS. CIT (1992) 193 ITR 275 (DEL.) III) T.S. SUJATHA VS. UNION OF INDIA (1999) 238 ITR 599 (KER.) IV) POWER CONTROLS AND OTHERS VS. CIT (2000) 241 ITR 807 (DEL.) 43. IN THE CASE OF KASHIRAM AGGARWALA VS. UNION OF INDIA & ANOTHERS (1965) 56 ITR 14 THE HONBLE SUPREME COURT HELD THAT IN THE CASE WHERE THE INCOME TAX PROCEEDINGS AGAINS T THE ASSESSEE WAS TRANSFERRED FROM THE INCOME TAX OFFICE R OF WARD- 1 TO THE INCOME TAX OFFICER OF ANOTHER WARD IN THE SAME CITY WITHOUT RECORDING ANY REASONS THEREFORE THE ORDERS OF TRANSFER WERE PURELY ADMINISTRATIVE IN NATURE PASSED FOR CO NSIDERATIONS OF CONVENIENCE OF THE DEPARTMENT AND NO POSSIBLE PREJU DICE COULD BE INVOLVED IN THE TRANSFER AN UNDER THE PROVISO T O SEC. 127(1) (AS IT THEN STOOD) IT WAS NOT NECESSARY TO GIVE THE ASSESSEE AN OPPORTUNITY TO BE HEARD AND THERE WAS CONSEQUENTLY NO NEED TO RECORD REASONS FOR THE TRANSFER. IT WAS THUS HELD THAT THE ORDER FOR THE TRANSFER WAS NOT INVALID ON THE GROUND THAT THE BOARD HAS NOT RECORDED ITS REASONS IN DIRECTING THE TRANSFER OF THE CASE ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 34 PENDING AGAINST THE ASSESSEE FROM ONE INCOME TAX OF FICER TO ANOTHER IN THE SAME LOCALITY. 44. IN THE CASE OF S.L. SINGHANIA VS. CIT (1992) 19 3 ITR 275 (DEL.) THE HONBLE HIGH COURT HAS HELD THAT AN ORDE R TRANSFERRING THE CASE OF AN ASSESSEE FROM ONE ASSESSING OFFICER TO ANOTHER IN THE SAME FLOOR OF THE SAME BUILDING U/S 127(3) OF THE INCOME TAX ACT 1961 IS MERELY AN ADMINISTRATIVE ORDER; AND T HERE IS NO REQUIREMENT OF GIVING AN OPPORTUNITY TO THE ASSESSE E TO BE HEARD BEFORE EFFECTING THE TRANSFER; AND EVEN REASONS FOR ORDERING THE TRANSFER NEED NOT BE RECORDED NOR IS THERE ANY REQU IREMENT THAT THE REASONS BE GIVEN TO THE ASSESSEE. IN THIS DECI SION THE HONBLE DELHI HIGH COURT HAS APPLIED THE DECISIONS OF HONBLE SUPREME COURT IN THE CASE OF KASHIRAM AGGARWALA VS. UNION OF INDIA (1965) 56 ITR 14 (SC). 45. THE ASSESSEE HAS ALSO RELIED UPON THE DECISIONS OF HONBLE GAUHATI HIGH COURT IN THE CASE OF ANIL KUMAR KAUTHA RI VS. UNION OF INDIA (2010) 5 TAXMANN.COM. 95 (GAUH.). IN SUPP ORT OF THE CONTENTION THAT THE ASSESSEE SHOULD BE GIVEN A REAS ONABLE ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 35 OPPORTUNITY OF BEING HEARD AND SHOULD ALSO GIVE A R EASON BEFORE THE TRANSFER OF THE CASE IS MADE FROM ONE AO TO ANO THER. ON PERUSAL OF THIS DECISION WE FIND THAT IN THIS CASE THE CASE OF THE ASSESSEE WAS TRANSFERRED FROM GAUHATI TO NEW DELHI AND IN THE LIGHT OF THAT FACT THE HONBLE HIGH COURT CONSIDER ED THE PROVISIONS OF SEC. 127 (1) AND DECIDED THE CASES IN THAT CONTEXT. IN THAT CASE A DECISION OF HONBLE SUPREME COURT IN THE CASE OF KASHIRAM AGGARWALA VS. UNION OF INDIA (1965) 56 ITR 14 (SC) WAS CITED WHERE IT WAS HELD THAT ORDER OF TRANSFER WAS PURELY ADMINISTRATIVE IN NATURE PASSED FOR CONSIDERATION O F CONSIDERATION AND NO POSSIBLE PREJUDICE COULD BE INVOLVED IN THE TRANSFER AS UNDER THE PROVISO TO SEC. 127(1) IT WAS NOT NECESSA RY TO GIVE THE ASSESSEE AN OPPORTUNITY TO BE HEARD AND THERE WAS CONSEQUENTIALLY NO NEED TO RECORD REASONS FOR THE T RANSFER. THIS DECISION OF HONBLE SUPREME COURT RELIED UPON BY TH E REVENUE WAS DISTINGUISHED BY THE HONBLE HIGH COURT OF GAUH ATI BY OBSERVING THAT THIS DECISION IS NOT OF ANY ASSISTAN CE TO THE REVENUE IN THAT CASE SINCE THAT WAS A TRANSFER FROM THE ITO TO ANOTHER ITO IN THE SAME CITY OR AS STATED IN THE JUDGMENT ITSELF IN THE SAME LOCALITY AND THE PROVISO TO SEC. 127( 1) THEREFORE ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 36 APPLIED. IN OTHER WORDS THE HONBLE GAUHATI HIGH COURT HAS TAKEN A VIEW THAT THE REQUIREMENT OF PROVIDING OPPO RTUNITY OF BEING HEARD AND CONSEQUENTIALLY RECORDING REASONS F OR THE TRANSFER WAS NOT NECESSARY IN THE CASES WHERE THERE WAS A TRANSFER FROM THE ITO TO ANOTHER ITO IN THE SAME CI TY OR LOCALITY OR PLACE. THE RELEVANT OBSERVATIONS OF THE HONBLE HI GH COURT IN THIS REGARD ARE AS UNDER: - MR. SHARMA DREW OUR ATTENTION TO A DECISION OF THI S COURT IN KASHIRAM AGARWALLA VS. UNION OF INDIA (1965) 56 ITR 14 (SC): TC 69R. 660. IT IS SUBMITT ED THAT THIS COURT TOOK THE VIEW THAT ORDERS U/S 127(1 ) ARE HELD IN THAT DECISION TO BE PURELY ADMINISTRAT IVE IN NATURE PASSED FOR CONSIDERATION OF CONVENIENCE AND NO POSSIBLE PREJUDICE COULD BE INVOLVED IN THE TRANSFER. IT WAS ALSO HELD THEREIN THAT UNDER THE PROVISO TO S. 127(1) IT WAS NOT NECESSARY TO GIVE T HE APPELLANT AN OPPORTUNITY TO BE HEARD AND THERE WAS CONSEQUENTLY NO NEED TO RECORD REASONS FOR THE TRANSFER. THIS DECISION IS NOT OF ANY ASSISTANCE T O THE REVENUE IN THE PRESENT CASE SINCE THAT WAS A TRANSF ER FROM THE ITO TO ANOTHER ITO IN THE SAME CITY OR A S STATED IN THE JUDGMENT ITSELF IN THE SAME LOCALITY AND THE PROVISO TO SEC. 127(1) THEREFORE APPLIED. WHEN THE LAW REQUIRES REASONS TO BE RECORDED IN A PARTICULAR ORDER AFFECTING PREJUDICIALLY THE INTERE ST OF ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 37 ANY PERSON WHO CAN CHALLENGE THE ORDER IN COURT I T CEASES TO BE A MERE ADMINISTRATIVE ORDER AND THE VICE OF VIOLATION OF THE PRINCIPLES OF NATURAL JUST ICE ON ACCOUNT OF OMISSION TO COMMUNICATE THE REASONS IS NOT EXPIATED. 46. AS ALREADY OBSERVED ABOVE THE PRESENT CASE IS A CASE WHERE TRANSFER IS FROM ONE AO TO ANOTHER AO SITUATE D IN THE SAME LOCALITY OR CITY OR PLACE I.E. MEERUT AND THE PRESENT CASE IS COVERED BY THE PROVISION CONTAINED IN SEC. 127(3) O F THE ACT ANALOGOUS TO THE THEN PROVISO TO SEC. 127(1) OF THE ACT (AS IT THEN STOOD). IN THIS VIEW OF THE MATTER WE THEREFORE HOLD THAT HIS DECISION OF HONBLE GAUHATI HIGH COURT IS NOT OF AN Y ASSISTANCE TO THE ASSESSEE. 47. SIMILARLY THE DECISION OF HONBLE ALLAHABAD IN THE CASE OF VINAY KUMAR JASWAL AND OTHERS VS. CIT AND OTHER ASS ESSES REPORTED IN 222 ITR 568 WAS RENDERED IN CONNECTION WITH THE TRANSFER OF CASES FROM KANPUR U.P TO RAIPUR IN MP AND HONBLE ALLAHABAD HIGH COURT HAS CONSIDERED THE PROVISIONS CONTAINED IN SEC. 127 OF THE ACT WHERE IT HAS BEEN PROVIDED TO GIVE AN ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 38 OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE THE C ASE IS TRANSFERRED. 48. THE DECISION IN THE CASE OF SANJAY GUPTA VS. UN ION OF INDIA & OTHRS. WITH SMT. KIRAN GUPTA VS. UNION OF I NDIA & OTHRS. IN CIVIL MISC. (WRIT PETITION NO. 877/2010) AND CIV IL MISC. (WRIT PETITION NO. 876/2010) THE TRANSFER WAS MADE FROM KANPUR TO ALLAHABAD AND NOT TRANSFER OF THE CASE FROM ONE AO TO ANOTHER IN THE SAME CITY. IN THIS CASE THE HONBLE HIGH C OURT HAS CONSIDERED THE PROVISIONS CONTAINED IN SEC. 127(1) OF THE ACT WHICH IS NOT APPLICABLE TO THE PRESENT CASE BY VIRT UE OF THE PROVISIONS CONTAINED IN SEC. 127(3) OF THE ACT. TH EREFORE THIS DECISION RELIED UPON BY THE ASSESSEE IS OF NO ASSIS TANCE TO HIM. 49. IN THE LIGHT OF THE SPECIFIC PROVISIONS CONTAIN ED IN SEC. 127(3) AND DISCUSSION MADE ABOVE WE DO NOT FIND A NY BASIS TO RENDER THE TRANSFER ORDER TO BE INVALID OR WITHOUT JURISDICTION AND CONSEQUENTLY THE ASSESSMENT ORDER MADE BY THE AO T O WHOM CASE WAS VALIDLY TRANSFERRED IS WITHIN HIS JURISDI CTION ON THIS ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 39 COUNT. HENCE THE ASSESSEES OBJECTIONS IN THIS RE GARD ARE REJECTED. 50. FURTHER THE ASSESSEE HAS OBJECTED THAT THE ASS ESSING OFFICER HAS COMPLETED THE ASSESSMENT UNDER SEC. 153 A READ WITH SEC. 143(3) WITHOUT SERVING ANY VALID NOTICE U /S 143(2) OF THE ACT. THE ASSESSEE HAS FURTHER CONTENDED THAT THE N OTICES PURPORTEDLY ISSUED U/S 143(2) DO NOT CONFIRM TO THE REQUIREMENT OF VALID NOTICES AS CONTEMPLATED U/S 143(2) OF THE ACT. HE SUBMITTED THAT THE A.O. SHOULD HAVE ASSIGNED REASON S OF ENQUIRY IN THE NOTICE PURPORTEDLY ISSUED U/S 143(2) OF THE ACT. IN THIS CONNECTION THE ASSESSEE HAS RELIED UPON THE FOLLOW ING DECISIONS:- (1) CIT VS. RAJIV SHARMA (ITA NO.19 OF 2004) REPORT ED IN [2010] 5 TAXMANN.COM 101 (ALL.); (2) ACIT VS. G.M. INFRASTRUCTURE (2011) 49 TTR 151 (INDORE)(TRIB.) 51. THE ASSESSEE FURTHER CONTENDED THAT THE FACT TH AT NOTICE ISSUED BY THE AO U/S 143(2) WAS NOT A VALID NOTICE HAS BEEN ACCEPTED BY THE LEARNED CIT(A) BUT HE REJECTED THE ASSESSEES ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 40 GROUND BY OBSERVING THAT ISSUING OF NOTICE U/S 143( 2) IS JUST A FORMALITY. HE THEREFORE CONTENDED THAT THE CIT(A ) HAS ERRED IN HOLDING THAT ISSUING OF NOTICE U/S 143(2) IS JUST A FORMALITY. 52. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF BOT H THE PARTIES AND HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 53. THE LEARNED CIT(A) HAS DECIDED THIS POINT BY OB SERVING AND HOLDING AS UNDER:- 4.4 ASSESSEES CONTENTION THAT NO NOTICE U/S 143(2 ) WAS ISSUED IS IRRELEVANT AS THIS CANNOT MAKE THE ASSESSMENT VOID ABINITO PARTICULARLY CONSIDERING THAT THE RETURN FILED BY THE ASSESSEE U/S 153A IS COMPULSORY SUBJECTED TO SCRUTINY AND THE CIRCUMSTANCES ISSUANCE OF THE NOTICE IS MERELY A FORMALITY. 54. WE HAVE DELIBERATED UPON THE PROVISIONS OF LAW CONTAINED IN SECTION 143(2) WHICH READS AS UNDER:- 143(2) WHERE A RETURN HAS BEEN FURNISHED UNDER SECTION 139 OR IN RESPONSE TO A NOTICE UNDER SUB-SECTION (1) OF SECTION 142 THE ASSESSING OFFICER SHALL - (I) WHERE HE HAS REASON TO BELIEVE THAT ANY CLAIM OF LOSS EXEMPTION DEDUCTION ALLOWANCE OR ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 41 RELIEF MADE IN THE RETURN IS INADMISSIBLE SERVE ON THE ASSESSEE A NOTICE SPECIFYING PARTICULARS OF SUCH CLAIM OF LOSS EXEMPTION DEDUCTION ALLOWANCE OR RELIEF AND REQUIRE HIM ON A DATE TO BE SPECIFIED THEREIN TO PRODUCE OR CAUSE TO BE PRODUCED ANY EVIDENCE OR PARTICULARS SPECIFIED THEREIN OR ON WHICH THE ASSESSEE MAY RELY IN SUPPORT OF SUCH CLAIM: [PROVIDED THAT NO NOTICE UNDER THIS CLAUSE SHALL BE SERVED ON THE ASSESSEE ON OR AFTER THE 1 ST DAY OF JUNE 2003;] (II) NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE (I) IF HE CONSIDERS IT NECESSARY OR EXPEDIENT TO ENSURE THAT THE ASSESSEE HAS NOT UNDERSTATED THE INCOME OR HAS NOT COMPUTED EXCESSIVE LOSS OR HAS NOT UNDER-PAID THE TAX IN ANY MANNER SERVE ON THE ASSESSEE A NOTICE REQUIRING HIM ON A DATE TO BE SPECIFIED THEREIN EITHER TO ATTEND HIS OFFICE OR TO PRODUCE OR CAUSE TO BE PRODUCED ANY EVIDENCE ON WHICH THE ASSESSEE MAY RELY IN SUPPORT OF THE RETURN: [PROVIDED THAT NO NOTICE UNDER CLAUSE (II) SHALL BE SERVED ON THE ASSESSEE AFTER THE EXPIRY OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED.] 55. ON PERUSAL OF THE AFORESAID PROVISIONS OF SECTI ON 143(2) WE FIND THAT THE PROVISIONS CONTAINED IN CLAUSE (I) OF SUB-SECTION (2) OF SECTION 143 WAS APPLICABLE ONLY FOR THE PERI OD BEFORE 1 ST DAY OF JUNE 2003. UNDER THIS CLAUSE (I) IT WAS P ROVIDED THAT WHERE A RETURN HAS BEEN FURNISHED UNDER SEC. 139 O R IN ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 42 RESPONSE TO A NOTICE UNDER SUB-SECTION (1) OF SECTI ON 142 AND WHERE THE ASSESSING OFFICER HAS REASON TO BELIEVE T HAT ANY CLAIM OF LOSS EXEMPTION DEDUCTION ALLOWANCE OR RELIEF MADE IN THE RETURN IS INADMISSIBLE THE ASSESSING OFFICER SHALL SERVE ON THE ASSESSEE A NOTICE SPECIFYING PARTICULARS OF SUCH CL AIM OF LOSS EXEMPTION DEDUCTION ALLOWANCE OR RELIEF AND REQUI RING THE ASSESSEE ON A DATE TO BE SPECIFIED THEREIN TO PRO DUCE OR CAUSE TO BE PRODUCED ANY EVIDENCE OR PARTICULARS SPECIFI ED THEREIN OR ON WHICH THE ASSESSEE MAY RELY IN SUPPORT OF SUCH CLAIM. THIS CLAUSE (I) TO SEC. 143(2) WAS INSERTED BY THE FINAN CE ACT 2002 WITH EFFECT FROM 1.06.2002 WITH A VIEW TO MAKE A LI MITED PINPOINT ENQUIRY ON SPECIFIED CLAIMS OF LOSS EXEMPTION DED UCTION ALLOWANCE OR RELIEF AND PASS SUCH ORDER ON RESPONSE OF THE ASSESSEE WHILE RESERVING THE RIGHT OF THE AO TO CO NVERT SUCH PINPOINT LIMITED SCRUTINY PROCEEDINGS TO A REGULAR ONE BY ISSUING NOTICE UNDER SEC. 143(2)(II). THE AFORESAID NOTICE UNDER SEC. 143(2)(I) IS NO MORE PERMISSIBLE ON OR AFTER 1 ST JUNE 2003 AS IT HAS BEEN PROVIDED IN THE PROVISO INSERTED BY THE FI NANCE ACT 2003 W.E.F. 1.06.2003 THAT NO NOTICE U/S 143(2)(I) SHALL BE SERVED ON THE ASSESSEE ON OR AFTER 1 ST DAY OF JUNE 2003. FROM THIS IT IS ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 43 THUS CLEAR THAT NO NOTICE U/S 143(2)(I) IS REQUIRE D TO BE ISSUED ON OR AFTER 1 ST JUNE 2003 AS IT HAS BEEN DONE AWAY WITH BY INSERT ING THE PROVISO TO SECTION 143(2)(I) BY THE FINANCE ACT 2003 W.E.F. 1.06.2003. IN THE PRESENT CASE THE PROCEEDINGS U/ S 153A WERE INITIATED BY ISSUING THE NOTICE UNDER SEC. 153A ON 10.09.2007 AND IN RESPONSE TO WHICH THE ASSESSEE SUBMITTED TH E RETURN OF INCOME ON 25.09.2007. THEREFORE WITH REGARD TO TH E RETURN OF INCOME FILED BY THE ASSESSEE ON 25.09.2007 THE AO WAS NOT REQUIRED TO ISSUE NOTICE U/S 143(2)(I) ON THE ISSUE OF PINPOINTED SCRUTINY WHICH WAS IN FORCE BEFORE 1.06.2003. THE REFORE RELIANCE BY THE ASSESSEE ON THE PROVISIONS CONTAINE D IN CLAUSE (I) OF SEC. 143(2) TO TREAT THE NOTICE ISSUED U/S 143(2 ) BY THE A.O. IN THE PRESENT CASE TO BE INVALID IS MISPLACED. THERE FORE MERELY BECAUSE IN THE PURPORTED NOTICE ISSUED U/S 143(2) THE AO HAS NOT SPECIFIED REASONS REGARDING ANY CLAIM OF LOSS EXEMPTION DEDUCTION ALLOWANCE OR RELIEF MADE IN THE RETURN A S WAS REQUIRED U/S 143(2)(I) UPTO 31 ST MAY 2003 CANNOT SAID TO BE INVALID. THE VALIDITY OF THE PRESENT NOTICE ISSUED U/S 143(2) IS TO BE DECIDED IN THE LIGHT OF THE PROVISIONS CONTAINED IN SUB-CLAUSE (II) OF SEC. 143(2) OF THE ACT. CLAUSE (II) OF SEC. 143(2) PRO VIDES THAT ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 44 NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE (I) I F THE AO CONSIDERS IT NECESSARY OR EXPEDIENT TO ENSURE THAT THE ASSESSEE HAS NOT UNDERSTATED THE INCOME OR HAS NOT COMPUTED EXCESSIVE LOSS AND HAS NOT UNDER-PAID THE TAX IN ANY MANNER SERVE ON THE ASSESSEE A NOTICE REQUIRING HIM ON A DATE TO BE SP ECIFIED THEREIN EITHER TO ATTEND HIS OFFICE OR TO PRODUCE OR CAUSE TO BE PRODUCED ANY EVIDENCE ON WHICH THE ASSESSEE MAY RE LY IN SUPPORT OF THE RETURN. IN THE PROVISO TO SEC. 143( 2)(II) IT HAS BEEN FURTHER PROVIDED THAT NO NOTICE UNDER CLAUSE ( II) SHALL BE SERVED ON THE ASSESSEE AFTER THE EXPIRY OF SIX MONT HS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FU RNISHED. THE PRESENT PROVISO TO SECTION 143(2)(II) IS SUBSTITUTE D BY THE FINANCE ACT 2008 W.E.F. 1.04.2008. PRIOR TO ITS SUBSTITUT ION PROVISO TO SECTION 143(2)(II) AS AMENDED BY THE FINANCE ACT 2 003 W.E.F. 1.06.2003 PROVIDED THAT NO NOTICE UNDER CLAUSE (II ) SHALL BE SERVED ON THE ASSESSEE AFTER THE EXPIRY OF 12 MONTH S FROM THE END OF THE MONTH IN WHICH THE RETURN WAS FURNISHED. 56. IN THE PRESENT CASE WITH A VIEW TO ENABLE HIM TO FINALIZE THE ASSESSMENT PROCEEDINGS THE AO HAD ISSUED TWO SE PARATE ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 45 LETTERS DATED 7 TH NOVEMBER 2007 IN BOTH THE ASSESSMENT YEARS I.E. ASSESSMENT YEAR 2003-04 AND 2004-05 REQUIRING THE ASSESSEE TO FURNISH VARIOUS DETAILS AND EXPLANATION IN RESPECT OF SOURCE OF VARIOUS ASSETS AND TO PROVE WHETHER THEY WERE RECORDED IN REGULAR BOOKS OF ACCOUNTS IN THE RESPEC TIVE PERIOD. IN THIS NOTICE THE ASSESSEE WAS ASKED TO FURNISH C ASH FLOW STATEMENT ETC BANK STATEMENTS DETAILS OF MOVABLE AND IMMOVABLE PROPERTY SOURCE OF CASH FOUND AT THE TIM E OF SEARCH SOURCE OF JEWELLERY FOUND AT THE TIME OF SEARCH SO URCE OF VARIOUS FDRS FOUND DURING THE COURSE OF SEARCH PRODUCE THE DONORS ALONG WITH DOCUMENTARY EVIDENCES REGARDING THE IDEN TITY OF THE DONOR SOURCES OF INCOME ETC. SOURCES OF INVESTMEN T FOR PURCHASE OF PROPERTY AT NOIDA CONFIRMATION OF LOAN INVESTMENT MADE IN THE PROPERTY OF ROOP NETRAALAYA BUILDING E XPLAIN THE WRITING ON PAGES OF LOOSE PAPERS SEIZED AS PER ANNE XURE A-1 TO A-102 DETAILS OF HOUSEHOLD EXPENSES AND DETAILS OF BUSINESS AND PROFESSION ETC. IN THE ASSESSMENT YEAR 2003-04 . SIMILAR REQUISITIONS WERE MADE BY THE AO IN THE ASSESSMENT YEAR 2004- 05. ALONG WITH THIS LETTER DATED 7 TH NOVEMBER 2007 THE AO ANNEXED THE STATUTORY NOTICES U/S 143(2) AND 142(1) OF THE ACT. ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 46 THE AFORESAID LETTER DATED 7 TH NOVEMBER 2007 ALONG WITH NOTICE U/S 143(2) AND 142(1) ARE PLACED AT PAGES 60 TO 64 OF THE PAPER BOOK FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2003-04 AND AT PAGES 66 TO 69 OF THE PAPER BOOK FILED BY TH E ASSESSEE FOR THE ASSESSMENT YEAR 2004-05. IN REPLY TO THESE NOTICES THE ASSESSEE SUBMITTED A CONSOLIDATED REPLY DATED 16.11 .2007 WHICH IS PLACED AT PAGES 66 TO 75 OF THE PAPER BOOK FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2003-04 AND AT PAG ES 70 TO 79 OF THE PAPER BOOK FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2004-05. THE NOTICE ISSUED UNDER SEC. 143(2) IN ASSESSMENT YEAR 2003-04 WHICH IS IDENTICAL TO THAT ISSUED IN ASSESSMENT YEAR 2004-05 WITH A VARIATION OF ASSESSM ENT YEAR ONLY READS AS UNDER:- NOTICE UNDER SECTION 143(2) OF THE INCOME-TAX ACT 1961 PANO.ABPPR3723B OFFICE OF THE ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE MEERUT ROOM NO.10 AAYKAR BHAWAN BHAINSALI GROUND MEERUT. DATE 7 TH NOVEMBER 2007 TO DR. ROOP C/O ROOP NETRALAYA BUILDING ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 47 SHIVAJI ROAD MEERUT. SIR/MADAM THERE ARE CERTAIN POINTS IN CONNECTION WITH THE RETURN OF INCOME SUBMITTED BY YOU ON 25-09-07 FOR THE A.Y. 2003-2004 ON WHICH I WOULD LIKE SOME FURTHER INFORMATION. 2. YOU ARE HEREBY REQUIRED TO ATTEND MY OFFICE AT ROOM NO. 10 AAYKAR BHAWAN BHAINSALI GROUND MEERUT ON 16 TH NOVEMBER 2007 AT 11.30 A.M. EITHER IN PERSON OR BY A REPRESENTATIVE DULY AUTHORIZED IN WRITING IN THIS BEHALF OR PRODUCE OR CAUSE THERE TO BE PRODUCED AT THE SAID TIME ANY DOCUMENT ACCOUNT AND ANY OTHER EVIDENCE ON WHICH YOU MAY REPLY IN SUPPORT OF THE RETURN FILED BY YOU. SD/- (VIRENDER KUMAR) ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE MEERUT. 57. IN THE COURSE OF HEARING OF THESE APPEALS IT W AS STATED BY THE ASSESSEE THAT THOUGH THE AFORESAID NOTICES WERE RECEIVED BY THE ASSESSEE THE NOTICES DO NOT SATISFY THE REQUIR EMENT OF SECTION 143(2) OF THE ACT. WE HAVE GONE THROUGH TH E CONTENTS OF THE SAID NOTICE AND FIND THAT BY THIS NOTICE THE A SSESSEE WAS REQUIRED TO ATTEND THE AOS OFFICE ON 16 TH NOVEMBER 2007 EITHER IN PERSON OR BY A REPRESENTATIVE DULY AUTHORIZED IN WRITING THIS BEHALF OR PRODUCE OR CAUSE THERE TO BE PRODUCED AT THE SAID TIME ANY DOCUMENT ACCOUNT AND ANY OTHER EVIDENCE ON WHI CH THE ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 48 ASSESSEE MAY RELY IN SUPPORT OF THE RETURN FILED B Y HIM. THEREFORE IN THE LIGHT OF THE CONTENTS OF THE NOTI CE AND LETTER DATED 7-11-2007 WE ARE OF THE CONSIDERED OPINION T HAT THE NOTICE U/S 143(2) ISSUED BY THE AO ON 7.11.2007 SAT ISFIES THE CONDITIONS ENUMERATED IN SEC. 143(2)(II) OF THE ACT AND THEREFORE IT CANNOT BE SAID TO BE INVALID. 58. IN THE CASE OF CIT VS. RAJIV SHARMA [2010] 5 TA XMANN.COM 101 (ALL.) THE HONBLE ALLAHABAD HIGH COURT HAS HE LD AS UNDER:- 22. THE PROVISIONS CONTAINED IN SUB-SECTION (2) OF SECTION 143 OF THE ACT IS MANDATORY AND LEGISLATUR E TO THEIR WISDOM BY USING THE WORD `REASON TO BELIEVE HAD CAST A DUTY ON THE ASSESSING OFFICER TO APPLY MIND TO THE MATERIAL ON RECORD AND AFTER BEIN G SATISFIED WITH REGARD TO ESCAPED LIABILITY SHALL S ERVE NOTICE SPECIFYING PARTICULARS OF SUCH CLAIM. 23. IN VIEW OF THE ABOVE AFTER RECEIPT OF RETURN I N RESPONSE TO NOTICE UNDER SECTION 148 IT SHALL BE MANDATORY FOR THE ASSESSING OFFICER TO SERVE A NOTI CE UNDER SUB-SECTION (2) OF SECTION 143 ASSIGNING REASON THEREIN. 59. SINCE IN THE CASE BEFORE THE HONBLE HIGH COURT NO NOTICE U/S 143(2) WAS ISSUED AFTER RECEIPT OF FRESH RETURN SUBMITTED BY THE ASSESSEE IN RESPONSE TO NOTICE U/S 148 THE ENT IRE PROCEDURE ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 49 FOR ESCAPED ASSESSMENT WAS HELD TO BE INVALID. FRO M THIS DECISION IT IS THUS CLEAR THAT AFTER RECEIPT OF R ETURN FILED BY THE ASSESSEE THE AO SHOULD HAVE ISSUED NOTICE U/S 143( 2) OF THE ACT WITH A VIEW TO COMPLETE THE ASSESSMENT UNDER SE C. 143(3) OF THE ACT. THE HONBLE HIGH COURT HAS ALSO CONSIDERE D THE EXPRESSION REASON TO BELIEVE USED IN CLAUSE (I) O F SUB-SEC. (2) OF SECTION 143 AND THEN HELD THAT IT IS A DUTY OF T HE ASSESSING OFFICER TO APPLY HIS MIND TO THE MATERIAL ON RECORD AND AFTER BEING SATISFIED WITH REGARD TO ESCAPED LIABILITY HE SHAL L SERVE NOTICE SPECIFYING PARTICULARS OF SUCH CLAIM. IN THE PRES ENT CASE THE AO HAD ISSUED A DETAILED REQUISITION ON VARIOUS POINTS REQUIRING THE ASSESSEE TO FURNISH DETAILS AND EXPLANATION VIDE LE TTER DATED 7 TH NOVEMBER 2007 ALONG WITH A STATUTORY NOTICE ISSUED U/S 143(2) AND 142(1) OF THE ACT. AS ALREADY OBSERVED ABOVE THE PRESENT NOTICE ISSUED BY THE AO UNDER SECTION 143(2) IS WIT HIN THE MEANING OF CLAUSE (II) OF SUB-SEC. (2) OF SECTION 1 43 WHICH WAS IN FORCE AT THE RELEVANT TIME. IT IS FURTHER CLEAR TH AT PROVISIONS CONTAINED IN SECTION 143(2)(I) WERE NOT EFFECTIVE O N AND FROM 1.06.2003. IN THE LIGHT OF THE FACTS OF THE PRESEN T CASE WE THEREFORE HOLD THAT THIS DECISION OF HONBLE ALLAH ABAD HIGH COURT ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 50 IS OF NO ASSISTANCE TO THE ASSESSEE. IN THE PRESEN T CASE BEFORE US THE AO HAS SATISFIED THE CONDITIONS PROVIDED IN SEC. 143(2) OF THE ACT AND THEREFORE THE ASSESSMENT MADE UNDER SE C. 143(3)/153A IS NOT INVALID ON THIS COUNT. 60. IN THE CASE OF ACIT VS. G.M. INFRASTRUCTURE (20 11) 49 TTR 151 (INDORE)(TRIB.) THE TRIBUNAL HAS TAKEN A VIEW THAT COMPLIANCE OF THE PROVISIONS OF SEC. 143(2) CAN HAP PEN ONLY AFTER RECEIPT OF RETURN OR DOCUMENTS AS SPECIFIED U /S 142(1)(II) HENCE ISSUE OF NOTICE U/S 143(2) PRIOR TO SUCH STA GE DOES NOT SERVE ANY PURPOSE AND HENCE THE SAME IS REDUNDANT. THE TRIBUNAL FURTHER HELD THAT AS NO NOTICE U/S 143(2) WAS SERVED ON THE ASSESSEE AFTER THE FILING OF THE RETURN THE AS SESSMENT PROCEEDINGS ARE QUASHED AS NULL AND VOID. THIS DEC ISION GIVES NO ASSISTANCE TO THE ASSESSEES CASE INASMUCH AS IN THE PRESENT CASE THE AO HAS DULY ISSUED NOTICE U/S 143(2)(II) ON 7.11.2007 WITHIN THE PERIOD OF 12 MONTHS FROM THE END OF THE MONTH OF SEPTEMBER 2007 IN WHICH THE RETURN WAS FILED BY TH E ASSESSEE ON 25.09.2007 IN PURSUANCE TO THE NOTICE ISSUED BY THE AO U/S 153A ON 10.09.2007. THERE IS NO QUARREL AS TO THE PROPOSITION ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 51 THAT ISSUING NOTICE U/S 143(2) IS MANDATORY BEFORE COMPLETING THE ASSESSMENT U/S 143(3) READ WITH SECTION 153A OF THE ACT. IN THE PRESENT CASE THE NOTICE U/S 143(2) HAS BEEN ISSUED AND SERVED UPON THE ASSESSEE AFTER THE RETURN WAS FILED BY THE ASSESSEE AS STATED ABOVE. THEREFORE THE ASSESSMENT PROCEEDING S COMPLETED BY THE AO CANNOT BE CONSIDERED TO BE NULL AND VOID ON THIS COUNT. 61. IN THE LIGHT OF THE DISCUSSIONS MADE ABOVE WE THEREFORE HOLD THAT IT WAS MANDATORY ON THE PART OF THE AO TO ISSUE NOTICE U/S 143(2) OF THE ACT BEFORE PROCEEDING WITH THE AS SESSMENT TO BE COMPLETED UNDER SEC. 143(3) READ WITH SEC. 153A. WE FURTHER HOLD THAT IN THE PRESENT CASE THE AO HAS ACCORDING LY ISSUED VALID NOTICE UNDER SEC. 143(2) DATED 7.11.2007 WIT HIN ONE YEAR FROM THE END OF THE MONTH IN WHICH THE ASSESSEE FIL ED RETURN OF INCOME IN PURSUANCE TO THE NOTICE ISSUED U/S 153A O F THE ACT WHICH WAS DULY SERVED UPON THE ASSESSEE. THUS THE ASSESSEES OBJECTION IN THIS REGARD IS REJECTED. ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 52 62. IN THE RESULT THE CROSS OBJECTION FILED BY THE ASSESSEE IS PARTLY ALLOWED IN THE MANNER AS INDICATED ABOVE FOR A STATISTICAL PURPOSE. 63. NOW WE SHALL COME TO THE APPEALS FILED BY THE R EVENUE FOR BOTH THE ASSESSMENT YEARS 2003-04 AND 2004-05. ITA NO.3794/DEL/2009 ( ASSESSMENT YEAR : 2003-04) 64. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AG AINST THE ORDER OF THE CIT (APPEALS) MERRUT DATED 29.06.2009 . THE GROUNDS OF APPEAL READ AS UNDER :- 1. THAT THE ORDER OF THE CIT (A) IS PERVERSE IN AS MUCH AS THE INFERENCE DRAWN BY HIM AND THAT THE A.O. HIMSELF WAS SATISFIED ABOUT THE GENUINENESS OF GIFT IS INCORRECT AS THE A.O. IN HIS REMAND REPORT HAS NOT ACCEPTED THE GIFT AS GENUINE. 2. THAT THE CIT (A) ERRED IN LAW IN DELETING THE ADDITION ON ACCOUNT OF GIFT EVEN THROUGH THE CREDIT WORTHINESS OF THE DONOR WAS NOT PROVED. 3. THE CIT (A) FAILED TO APPRECIATE THAT IN CASE OF GIFTS THE ONUS LIED ON THE ASSESSEE TO PROVE NOT ON LY THE GENUINENESS OF GIFT BUT ALSO THE EXISTENCE OF L OVE & AFFECTION BETWEEN THE DONEE AND THE DONOR. ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 53 65. THE REVENUE HAS OBJECTED IN THE GROUNDS THAT TH E CIT (A)S OBSERVATIONS THAT ASSESSING OFFICER WAS SATISFIED A BOUT THE GENUINENESS OF GIFT IS INCORRECT AND THE ASSESSING OFFICER HAS NOT ACCEPTED THE GENUINENESS OF THE GIFTS IN THE REMAND REPORT SUBMITTED BY HIM. IT WAS ALSO PLEADED THAT IN THE GROUNDS THAT THE CREDITWORTHINESS OF THE DONOR WAS NOT PROVED AN D THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS LIES ON H IM TO PROVE NOT ONLY THE GENUINENESS OF THE GIFTS BUT ALSO THE LOVE AND AFFECTION BETWEEN THE DONEE AND THE DONOR. 66. CONSEQUENT TO THE INITIATION OF PROCEEDINGS U/S 132 ASSESSMENT WAS FINALIZED BY THE ASSESSING OFFICER W HERE THE INCOME WAS ASSESSED AT RS.29 55 529. CIT(A) DELETE D THE ADDITIONS OF RS.15 13 909/- MADE ON ACCOUNT OF DEPO SITS IN BANK ACCOUNT. OUT OF THESE DEPOSITS OF RS.15 13 909/- THE AMOUNT OF RS.7 50 000/- SHOWN AS TWO GIFTS RECEIVED ON 22.07. 2002 OF RS.4 00 000/- AND RS.3 50 000/- FROM LAXMI AGARWAL D/O RAM KUMAR AGARWAL R/OI-69 BRAHMPURI DELHI AND KASHO RAM GUPTA S/O SITA RAM GUPTA R/O 320 KUCHA GHASI RAM CHANDNI CHOWK DELHI-110 006 RESPECTIVELY. NO EXPL ANATION ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 54 WAS SUBMITTED BEFORE THE ASSESSING OFFICER. SINCE THE DOCUMENTS WERE SUBMITTED BEFORE THE CIT (A) THE RE MAND REPORT WAS CALLED FROM THE ASSESSING OFFICER. IN THE REMA ND REPORT THE ASSESSING OFFICER HAS MENTIONED THAT EXCEPT THE TWO CREDIT ENTRIES OF RS.4 00 000/- AND RS.3 50 000/- IN THE B ANK ACCOUNT THE OTHER ENTRIES HAVE BEEN VERIFIED AND NOTHING AD VERSE HAS BEEN FOUND. WITH REGARD TO THESE TWO ENTRIES PERTA INING TO GIFTS RECEIVED BY THE ASSESSEE THE ASSESSING OFFICER HAS OBSERVED THAT SINCE THE MATTER WAS NOT TAKEN UP IN THE ORIGI NAL ASSESSMENT PROCEEDINGS HENCE NO REPORT SUBMITTED ON THE ISSUE AND THE ISSUE WAS LEFT TO BE DECIDED BY THE CIT (A) ON MERI TS. 67. LEARNED DR SUBMITTED THAT THE CIT (A) HAS ADMIT TED DOCUMENTS HE HAS NOT EXAMINED THE SAME AND HE SIMP LY GRANTED THE RELIEF WITHOUT VERIFYING THE GENUINENES S OF TRANSACTIONS STATED IN THESE DOCUMENTS. CIT (A) AL SO FAILED TO APPRECIATE THAT WHEN AMOUNT SHOWN AS RECEIPT BY WAY OF GIFTS THE ONUS WAS ON THE ASSESSEE TO PROVE THE GENUINEN ESS OF THE TRANSACTION CREDITWORTHINESS OF THE DONORS OCCASI ON ON WHICH THE GIFTS WERE MADE RELATIONSHIP BETWEEN THE DONOR AND THE ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 55 DONEE AND EXISTENCE OF THE NATURAL LOVE AND AFFECTI ON. CIT (A) SIMPLY GRANTED RELIEF BY HOLDING THAT IN HIS OPINIO N THE DOCUMENTS ADDUCED WERE SUFFICIENT TO ESTABLISH THE INTENT AND CREDITWORTHINESS OF DONORS. HE ALSO ERRED BY HOLDI NG THAT GENUINENESS OF TRANSACTION CANNOT BE QUESTIONED FOR REASONS THE MATTER OF COMPLETED ASSESSMENT IN CASE OF DONORS D OCUMENTARY EVIDENCE I.E. GIFT DEED AND AFFIDAVITS ON RECORD AND TRANSACTION ARE IN BANK RECORD OF THE ASSESSEE. SHE SUBMITTED THAT CIT (A) HAS NOT VERIFIED THE VERACITY OF THE DOCUMENTS LIKE GIFT DEEDS AND AFFIDAVITS IN VIEW OF LAW LAID DOWN BY HON'BLE SUPR EME COURT IN THE CASE OF CIT VS. P. MOHANKALA (2007) 291 ITR 278 (SC). THEREFORE THE ORDER OF CIT (A) IS PERVERSE AND DES ERVES TO BE SET ASIDE. 68. ON THE OTHER HAND THE LEARNED ASSESSEE SUBMITT ED THAT BOTH TRANSACTIONS WERE REFLECTED IN THE CAPITAL ACC OUNT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE ENTRIES R EFLECTED IN THE BANK ACCOUNT HAS BEEN CONSIDERED WHILE MAKING T HE BALANCE SHEET FOR THE YEAR ENDING 31.3.2003 AND HE PRAYED T HAT THE ADDITION WAS RIGHTLY DELETED BY THE CIT (A) AS IT W AS MADE ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 56 CONTRARY TO THE FACTS AND MATERIAL AVAILABLE ON THE RECORD. HE FURTHER SUBMITTED THAT THE DOCUMENTS SUBMITTED WERE NOT CONTROVERTED BY THE ASSESSING OFFICER. NO ADDITION CAN BE MADE WITHOUT CORROBORATIVE EVIDENCE SEIZED DURING THE SE ARCH. WHEN IDENTITY AND CREDITWORTHINESS IS PROVED THE ONUS S HIFTS TO THE REVENUE. EVEN IF THE CREDITORS WERE NOT FOUND AT T HE ADDRESS OR THE ASSESSEE FAILS TO PRODUCE THE DONOR THEN ALSO NO ADDITION CAN BE MADE. HE ALSO SUBMITTED THAT IDENTITY AND C APACITY OF THE DONORS HAS BEEN PROVED. HENCE NO ADDITION CAN BE S USTAINED. THE ASSESSEE HAS PROVED THE CREDITWORTHINESS AND ID ENTITY. ONCE THE GIFT DEEDS AFFIDAVITS BANK STATEMENTS AN D I.T. DETAILS WERE FILED THUS WITHOUT EXAMINING THE DONORS ADD ITION CANNOT BE MADE ONLY ON THE BASIS OF SURMISES. IT IS THE B URDEN ON THE DEPARTMENT TO ESTABLISH FOR MAKING THE ADDITION AS INCOME FROM UNDISCLOSED SOURCES. HE PLEADED THAT WITHOUT CROSS EXAMINATION NO ADDITION CAN BE SUSTAINED. FOR ALL THESE PROPOSITIONS HE RELIED ON VARIOUS DECISIONS OF ITA T WHICH WERE SUBMITTED IN COMPILATION OF CASE LAWS (PAPER BOOK II). ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 57 69. AFTER HEARING BOTH THE SIDES WE FIND THAT WHER EVER THE MONEY HAS RECEIVED IN BANK ACCOUNT OF ASSESSEE BY W AY OF GIFTS THE ONUS IS ON THE ASSESSEE TO ESTABLISH THE IDENTI TY OF THE DONOR HIS CAPACITY TO MAKE THE GIFT AND ALSO TO ESTABLISH THAT AMOUNT SO RECEIVED WAS IN FACT A GIFT. THE GENUINENESS OF TH E GIFT TRANSACTION CANNOT BE DETERMINED WITHOUT LOOKING IN TO THE ASPECTS OF HUMAN PROBABILITIES RELATIONSHIP OF THE DONOR AND DONEE THE OCCASION FOR MAKING THE GIFT AND EXISTEN CE OF RECIPROCITY AND IF THE ASSESSEE FAILS TO ESTABLISH ANY OF THESE FACTS THE AMOUNT SHOWN SO RECEIVED CAN BE TREATED AS ASSESSEES INCOME FORM UNDISCLOSED SOURCES REPRESEN TING THE ASSESSEES OWN MONEY INTRODUCED IN THE GARB OF GIF T RECEIVED. THE CIT (A) GRANTED THE RELIEF ON THE BASIS OF DOCU MENTS FILED I.E. GIFT DEEDS AFFIDAVITS OF DONORS AND INCOME-T AX PARTICULARS OF THESE DONORS ALONG WITH WEALTH-TAX RETURN AND STATE MENT OF AFFAIRS. HE HAS SIMPLY STATED THAT THE DOCUMENTS A DDUCED BY THE ASSESSEE ARE SUFFICIENT TO ESTABLISH THE INTENT AND CREDITWORTHINESS OF DONORS AND THE GENUINENESS OF T HE TRANSACTION CANNOT QUESTIONED FOR THREE REASONS F IRSTLY THE MATTER OF COMPLETED ASSESSMENT IN THE CASE OF DONOR S; SECONDLY ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 58 THE DOCUMENTARY EVIDENCES FOR EXAMPLE GIFT DEED A ND AFFIDAVIT ON RECORD; AND FINALLY THE TRANSACTION IS ALREADY I N THE BANK ACCOUNT REFERRED BY THE ASSESSING OFFICER HIMSELF. HE ALSO STATED THAT KEEPING IN MIND THAT ADMISSION OF SUCH DOCUMENTS IS NOT OBJECTED BY THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS THE ADDITION IS DELETED. HE ALSO FAI LED TO VERIFY THE VERACITY OF DOCUMENTS AND EXAMINE THESE DOCUMENTS I N VIEW OF THE LAW LAID DOWN BY HON'BLE SUPREME COURT IN THE C ASE OF P. MOHANKALA CITED SUPRA. 70. AS STATED ABOVE IN THE CASE OF GIFTS TO PROVE THE GENUINENESS OF THE GIFTS THE HUMAN PROBABILITIES RELATIONSHIP OF DONOR AND DONEE OCCASION OF THE GIFT AND EXISTENCE OF RECIPROCITY HAS TO BE ESTABLISHED TO PROVE THE GENUINENESS OF T HE GIFT TRANSACTION. IT IS VERY INTERESTING THAT THE ASSES SING OFFICER MADE THE ADDITION OF WHOLE OF THE CREDITS OF THE BANK AC COUNT AS ASSESSEE HAS FAILED TO FILE EXPLANATION ABOUT THESE CREDITS. AS PER THE ENTRY-WISE DETAILS SUBMITTED BEFORE THE CIT (A) THE NAMES OF THE DONORS WERE NOT MENTIONED IN THE CHART . FURTHER IT IS NOTICED THAT VARIOUS DOCUMENTS SUBMITTED BEFORE CIT (A) ON ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 59 THE BASIS OF WHICH HE HAD GRANTED THE RELIEF WERE NOT INCLUDED IN PAPER BOOK FILED IN APPEAL NO.3794/DEL/2009 LATER ON QUERY RAISED BY THE BENCH THEN ASSESSEE SUBMITTED A COMP ILATION WHERE PAGES 33 TO 53 WERE RELIED ON TO PROVE THE GE NUINENESS OF THE GIFTS RECEIVED IN ASSESSMENT YEAR 2003-04. T HE DOCUMENTS RELIED UPON BY THE CIT (A) IN HIS ORDER I.E. GIFT DEEDS AFFIDAVITS FROM DONORS DONORS INCOME-TAX PARTICUL ARS RESPECTIVE ASSESSMENT ORDERS CONCLUDED ASSESSMENT OF DONORS AL ONG WITH THEIR WEALTH TAX RETURNS AND STATEMENT OF AFFAIRS HAVE NOT BEEN EXAMINED ANALYZED AND APPRECIATED BY PASSING A SPE AKING ORDER ON THE CONTENTS THEREOF. THE COPY OF AFFIDAV IT AND MEMORANDUM OF GIFTS WERE ATTACHED FOLDEDLY BETWEEN PAGE 32 AND 33. THESE ARE NOT NUMBERED. PAGE 33 TO 35 ARE COPY OF RETURNS FOR ASSESSMENT YEAR 2001-02 OF LAXMI AGARWA L. PAGE 36 AND 37 ARE COPY OF ASSESSMENT ORDER FOR ASSESSME NT YEAR 1999-2000 OF LAXMI AGARWAL. PAGE 38 & 39 ARE RETUR N OF WEALTH FOR ASSESSMENT YEAR 1999-2000. PAGE 40 IS COPY OF RATION CARD WHERE NAME OF LAXMI IS APPEARING. PAGE 41 IS COPY OF PAN CARD OF LAXMI AGARWAL. THESE DOCUMENTS CAN PROVE T HE IDENTITY OF THE DONOR BUT THESE WILL DEFINITELY NOT SUFFICIE NT TO PROVE THE ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 60 CREDITWORTHINESS AND GENUINENESS OF GIFT AMOUNT. S HE IS ASSESSED TO TAX THAT BY ITSELF WILL NOT PROVE THAT SHE WAS HAVING RS.4 00 000/- TO MAKE THE GIFT. NO DOCUMENT OR PRO OF SUBMITTED WHICH COULD ESTABLISH THAT SHE HAD MADE THE GIFT FR OM HER OWN KNOWN SOURCES. THE COMPLETED ASSESSMENT OF PAST YE ARS CAN ONLY ESTABLISH THAT SHE IS ASSESSED TO TAX IN PAST BUT IT WILL NOT DEFINITELY PROVE THAT SHE HAD MADE A GENUINE GIFT F ROM HER KNOWN SOURCE FOR NATURAL LOVE AND AFFECTION. THE RETURN OF INCOME AND HER STATEMENT OF ACCOUNTS FOR RELEVANT YEAR IN WHIC H THE GIFT WAS MADE HAVE NOT BEEN FILED BEFORE US. THE STATEMENT OF HER BANK ACCOUNT INDICATING THE TRANSACTION OF RS.4 00 000/- HAS ALSO NOT BEEN FILED. IN THE ABSENCE OF SUCH DOCUMENTARY EVI DENCE IN SUPPORT OF WHAT IS STATED IN THE AFFIDAVITS AND MEM ORANDUM OF GIFT CANNOT BE ACCEPTED AT FACE. THE SOURCE OF DON ATION IS NOT SUPPORTED BY DEBIT ENTRIES IN THE BANK ACCOUNT OF T HE DONOR. NO COPY OF BANK ACCOUNT OF LAXMI AGARWAL WAS SUBMITTE D. SHE STAYS IN BRAHMPURI DELHI AND D.D. WAS MADE SBBJ N EW ROHTAK ROAD NEW DELHI. IT IS NOT CLEAR HOW THE DE MAND DRAFT WAS PREPARED BY CASH OR BY DEBITING THE DONORS ACC OUNT. THE COPY OF MEMORANDUM OF GIFT FILED BEFORE US SHOWS TH AT IT WAS NOT ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 61 SIGNED BY DONEE. WHAT SORT OF NATURAL LOVE AFFECTI ON AND RELATIONSHIP BETWEEN THE DONOR AND DONEE EXISTED HA S NOT BEEN EXPLAINED. IN THE CASE OF KESHO RAM GUPTA ALSO TH E GIFT IS SHOWN BY DEMAND DRAFT. THE DRAFT OF LAXMI AGARWAL AND KESHO RAM GUPTA ARE IN SERIAL AND OBTAINED ON THE SAME DA Y FROM SAME BRANCH OF THE SAME BANK. PAGE 45 IS I.T. RETU RN ACKNOWLEDGEMENT FOR ASSESSMENT YEAR 2001-02 OF SHRI KESHO RAM GUPTA. PAGE 46 IS INTIMATION FOR ASSESSMENT YE AR 2000-01 OF KESHO RAM GUPTA. PAGE 47 48 & 49 ARE RELATED T O WEALTH TAX RETURN FOR ASSESSMENT YEAR 1999-2000 OF KESHOR RAM GUPTA. PAGE 50 IS COPY OF PAN. PAGES 51 & 52 ARE COPY OF RATION CARD. PAGE 53 IS STATEMENT OF AFFAIRS AS ON 31.3.2001. N O DETAILS OF INCOME TAX RETURN AND STATEMENT OF AFFAIRS WERE FIL ED FOR CURRENT YEAR IN WHICH GIFTS HAVE BEEN MADE. THESE DOCUMENT S BY THEMSELVES CAN ESTABLISH ONLY THE IDENTITY OF DONOR BUT THESE ARE NOT SUFFICIENT TO ESTABLISH CREDITWORTHINESS AND GE NUINENESS OF TRANSACTION OF GIFT. 71. THE CIT (A) HAS DELETED THE ADDITION WITHOUT EX AMINING ANALYZING AND VERIFYING THESE DOCUMENTS BY PASSING A SPEAKING ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 62 ORDER. THE DONORS WERE NOT PRODUCED BEFORE AUTHORI TIES BELOW EVEN AT ANY STAGE. KEEPING ALL THESE FACTS IN VIEW AND AFTER CAREFUL CONSIDERATION OF THE PLEADINGS MADE BY BOTH THE SIDES BEFORE US AND AFTER CONSIDERING ALL THE RELEVANT RE CORDS WE SET ASIDE THE ORDER OF THE CIT (A) TO BE DECIDED DE NOV O. CIT (A) SHALL DECIDE THE ISSUES AFTER PROVIDING AN OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE AS PER LAW. ITA NO.3795/DEL/2009 (ASSESSMENT YEAR : 2004-05) 72. THIS APPEAL FILED BY THE ASSESSEE ARISES OUT OF THE ORDER OF CIT (APPEALS) MEERUT DATED 29.06.2009. THE GROUND S OF APPEAL READ AS UNDER :- 1. THAT THE ORDER OF THE CIT (A) IS PERVERSE IN AS MUCH AS THE INFERENCE DRAWN BY HIM AND THAT THE A.O. HIMSELF WAS SATISFIED ABOUT THE GENUINENESS OF GIFT IS INCORRECT AS THE A.O. IN HIS REMAND REPORT ACCEPTED ONLY GIFT OF RS.8 LACS FROM MR. SANJEEV JUNEJA AS GENUINE. 2. THAT THE CIT (A) ERRED IN LAW IN DELETING THE ADDITION ON ACCOUNT OF GIFT EVEN THROUGH THE CREDIT WORTHINESS OF THE DONOR WAS NOT PROVED. 3. THE CIT (A) FAILED TO APPRECIATE THAT IN CASE OF GIFTS THE ONUS LIED ON THE ASSESSEE TO PROVE NOT ON LY THE GENUINENESS OF GIFT BUT ALSO THE EXISTENCE OF L OVE & AFFECTION BETWEEN THE DONEE AND THE DONOR. ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 63 73. IN THE APPEAL THE ISSUE INVOLVED REGARDING GIF T RECEIVED BY THE ASSESSEE. DURING THE YEAR THE ASSESSEE HAS SH OWN RECEIPT OF FOUR GIFTS AS FOLLOWING :- DATE NAME OF DONOR AMOUNT 06.04.2004 CAPT. SANJEEV JUNEJA RS. 8 00 000/- 06.12.2003 ANAND JAIN RS. 9 00 000/- 13.11.2003 BALBIR SINGH RS.10 00 000/- 29.07.2003 KIRODIMAL GOYAL RS.10 00 000/- 74. THE ASSESSING OFFICER MADE THE ADDITION BY HOLD ING AS UNDER :- DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAS RECEIVED GIFTS AS UNDER :- DATE NAME OF DONOR AMOUNT REMARKS 06-04- 2004 CAP. SANJEEV JUNEJA RS.8 00 000/- DONOR IS NOT PRODUCED IDENTITY CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTION IS ALSO NOT PROVED. RELATIONSHIP BETWEEN DONOR AND DONEE IS NOT ESTABLISHED OCCASION ON WHICH SUCH HUGE AMOUNT OF GIFT WAS GIVEN IS ALSO NOT SHOWN. FROM THE INQUIRIES CONDUCTED BY THIS OFFICE IT HAS COME TO THE NOTICE OF THIS OFFICE THAT SINCE LAST TWO YEARS THE DONOR IS OUT OF INDIA. HOWEVER ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 64 ASSESSEE IS CLAIMING THAT DONOR HAS APPEARED BEFORE INVESTIGATION WING. 06-12- 2003 ANAND JAIN RS.9 00 000/- DONOR IS NOT PRODUCED IDENTITY CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTION IS ALSO NOT PROVED. RELATIONSHIP BETWEEN DONOR AND DONEE IS NOT ESTABLISHED OCCASION ON WHICH SUCH HUGE AMOUNT OF GIFT WAS GIVEN IS ALSO NOT SHOWN. FROM THE INQUIRIES CONDUCTED BY THIS OFFICE IT HAS COME TO THE NOTICE OF THIS OFFICE THAT THE DONOR IS OUT OF INDIA. 13-11- 2003 BALBIR SINGH MUNICIPAL MARKET SONIPAT RS.10 00 000/- GIFT IS MADE IN THE NAME OF MASTER PARKHAYAT SON OF ASSESSEE. BANK ACCOUNT OF THE DONOR WAS FILED. ON LOCAL ENQUIRY IT WAS REVEALED THAT AT THE GIVEN ADDRESS NO SUCH PERSON IN THE NAME OF BALBIR SINGH WAS RESIDING AND GIVEN ADDRESS BELONGS TO SHRI VIMAL GARG. AT THE GIVEN ADDRESS A RESTAURANT WAS RUNNING AND THERE WAS NO PERSON EMPLOYED BY THIS NAME AT THE RESTAURANT. ASSESSEE FILED A COPY OF BANK ACCOUNT COPY OF ITR FOR EARLIER YEAR AND LOT RELATED TO YEAR UNDER CONSIDERATION FOR LATEST YEAR. FROM THE COMPARISON OF COPY OF BANK ACCOUNT FILED BY THE ASSESSEE AND COPY DIRECTLY OBTAINED FROM BANK BOTH ARE ALTOGETHER ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 65 DIFFERENT. FROM THE DOCUMENTS FILED BY ASSESSEE IT IS CLEARLY ESTABLISHED THAT DOCUMENT IS FABRICATED THE ASSESSEE CLAIMED THAT DONOR HAS MADE THE GIFT OUT OF COMPENSATION RECEIVED BY HIM. DONOR WAS RESIDING AT SONIPAT AND WAS MAINTAINING A BANK ACCOUNT AT FATEHPURI DELHI. COPY OF BANK ACCOUNT DIRECTLY OBTAINED FROM BANK WAS ALSO PROVIDED TO ASSESSEE FOR REBUTTAL BUT ASSESSEE HAS NOT SATISFIED THE REVENUE. 29-07- 2003 KIRODIMAL GOYAL R/O NZ- 161 MAIN MUBARAKPUR ROAD NITI VIHAR NAGLOI NEW DELHI. RS.10 00 000/- GIFT IS MADE IN THE NAME OF MASTER PARKHAYAT SON OF ASSESSEE. BANK ACCOUNT OF THE DONOR WAS FILED. ON LOCAL ENQUIRY IT WAS REVEALED THAT AT THE GIVEN ADDRESS NO SUCH PERSON IN THE NAME OF KIRODIMAL GOYAL WAS RESIDING AND GIVEN ADDRESS DOES NOT EXIST IN NITI VIHAR NANGLOI. THERE WAS NO PERSON NAMED KIRORIMAL GOYAL IN THE LOCALITY AND GIVEN ADDRESS WAS NON EXISTENT. FROM THE COMPARISON OF COPY OF BANK ACCOUNT FILED BY THE ASSESSEE AND COPY DIRECTLY OBTAINED FROM BANK BOTH ARE ALTOGETHER DIFFERENT. FROM THE DOCUMENTS FILED BY ASSESSEE IT IS CLEARLY ESTABLISHED THAT DOCUMENT IS FABRICATED. COPY OF BANK ACCOUNT ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 66 DIRECTLY OBTAINED FROM BANK WAS ALSO PROVIDED TO ASSESSEE FOR REBUTTAL BUT ASSESSEE HAS NOT SATISFIED THE REVENUE ASSESSEE BEFORE THE INVESTIGATION WING FILED THE CO PY OF AFFIDAVIT OF DONOR NAMELY SHRI ANAND JAN BALBIR SI NGH AND KIRODIMAL GOYAL AND FROM THE PERUSAL OF THE AFFIDAVITS IT IS NOTICED THAT ALL AFFIDAVITS WERE PREPARED AND NOTARIZED ON VERY SAME DATE I.E. 16-05- 2006 IT IS UNBELIEVABLE THAT 3 DIFFERENT DONORS OUT OF ONE IS RESIDING IN JAPAN ONE IS RESIDING IN HARYANA AND ONE IS RESIDI NG IN NANGOLI DELHI WERE AVAILABLE AT THE SAME TIME AND TOGETHER APPROACHED TO THE SAME NOTARY FOR PREPARING THE AFFIDAVIT. THIS I S NOTHING BUT A COOKED DOCUMENT TO PROVE THE GENUINENESS OF THE TRA NSACTION. BUT ASSESSEE IN THE ENTIRE PROCEEDINGS FAILED TO ES TABLISH RELATIONSHIP WITH THE DONOR. MERE FILING OF THE CON FIRMATION LETTER AND COPY OF BANK STATEMENT DO NOT DISCHARGE THE ONUS WH ICH IS CAST UPON THE ASSESSEE. ASSESSEE DID NOT PRODUCE THE DONOR WH ICH WAS SPECIFICALLY CALLED FOR VIDE QUARRY DATED 07-11-200 7 AND 27-11-2007. IT IS ALSO NOT PROVED FOR GIVING A HUGE SUM OF RS.3 7 00 000/- AS GIFT WHAT WAS THE OCCASION. IN THE ABOVE CIRCUMSTANCES F ACTUM OF THE GIFT ARE NOT ESTABLISHED HENCE ADDITION OF RS.37 00 000 /- IS MADE IN THE HANDS OF ASSESSEE. ADDITION OF GIFT IN THE NAME OF MINOR SON MASTER PARKHAYAT IS MADE IN THE HAND OF THE ASSESSEE IN VI EW OF THE FACT THAT INCOME OF THE ASSESSEE IS MORE GREATER THEN HI S WIFE DR. SANGEETA. 75. THE CIT (A) HAS DELETED THE ADDITION BY HOLDING AS UNDER :- 11.5 I HAVE CAREFULLY GONE THROUGH THE FACTS OF TH E CASE MATERIAL ON RECORD DOCUMENTS AND CONTENTIONS OF TH E ASSESSEE AND DECIDED CASES BY COURTS IN THE MATTER. UNDER THE CIRCUMSTANCES I RELUCTANTLY AGREE WITH THE APP ELLANT THAT AT NO STAGE AO HAS SHOWN HIS DISSATISFACTION ON ANY OF THE EVIDENCE ADDUCED BY THE APPELLANT NOR AO HAS BOTHE RED TO USE HIS POWERS TO PERSONALLY CROSS EXAMINE DONORS O R TO GET ANY INFORMATION EVEN FROM THEIR ASSESSING OFFICERS. IT IS SETTLED THAT WHERE THE IDENTITY OF THE THIRD PARTY AND HIS CAPACITY TO LEND IS ESTABLISHED BY THE ASSESSEE THE INITIAL BU RDEN LYING UPON ASSESSEE CAN BE SAID TO HAVE BEEN DISCHARGED. HOWEVER IN THIS CASE EVEN THE DONOR WAS PRODUCED BE FORE THE INVESTIGATING AUTHORITIES. UNDER THE CIRCUMSTANCES AND RELYING ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 67 UPON THE CASE OF CIT VS. P. MOHANKALA (2007) 291 IT R 278 (SC) AND OTHER DECISION BROUGHT TO MY NOTICE SINCE THE IDENTITY AND CREDITWORTHINESS OF DONOR WAS ESTABLIS HED THUS IT WAS NOT THEREAFTER FOR THE ASSESSEE TO EXPLAIN FU RTHER HOW OR IN WHAT CIRCUMSTANCES THE THIRD PARTY OBTAINED THE MONEY AND HOW OR WHY HE CAME TO MAKE A DEPOSIT OF THE SAME WI TH THE ASSESSEE. THE BURDEN WILL THEN SHIFT ON TO THE DEPA RTMENT TO SHOW WHY THE ASSESSEE'S CASE CANNOT BE ACCEPTED AND WHY IT MUST BE HELD THAT THE ENTRY THOUGH PURPORTING TO B E IN THE NAME OF THIRD PARTY STILL REPRESENTS THE INCOME OF THE ASSESSEE FROM A SUPPRESSED SOURCE. IN ORDER TO ARRI VE AT SUCH CONCLUSION HOWEVER THE DEPARTMENT HAS TO BE IN PO SSESSION OF SUFFICIENT AND ADEQUATE MATERIAL. SINCE NOTHING ON THE CONTRARY IS BROUGHT ON RECORD BY A.O. UNDER THE CIRCUMSTANCES AND CONSIDERING THE FACTS THE APPELL ANT CANNOT BE PENALIZED JUST FOR THE INABILITY TO PHYSICALLY P RODUCE DONORS WHEN AO HAS FAILED TO BRING ANY POSITIVE EVIDENCE C ONTRARY TO THE CLAIMS OF APPELLANT AND ALSO HAS NOT PRODUCED A NYTHING THAT RECEIPTS OF RS.37 00 000/- CLAIMED BY THE APPE LLANT AS GIFTS IS IN FACT CONCEALED INCOME OF THE APPELLANT. THE RATIO OF THE DECISION IN THE CASES OF P. MOHANKALA & ORS. (2 007) 291 ITR 278 (SC) DY. CIT VS. VIJAY PRAKASH (HUF) (2009 ) 120 TTJ 429 (ASR.) KANCHAN SINGH VS. CIT (2009) 221 CT R 456 (ALL) AND ON THE MATTER RELATING TO ONUS THE RELIAN CE OF THE ASSESSEE IS ON C.I.T. ORISSA CORPORATION PVT.LTD [1 986] 159 ITR 78 (SC) SUMATI DAYAL V. CIT-BANGALORE [1995] 2 14 ITR 801(SC) SMT.SONU AGARWAL V. ITO ITA NO. 698/LUC/ 08 JAN 23 2009 IS APPLIED. 11.6. IT IS THUS OBVIOUSLY NOT THE CASE OF THE A.O. THAT EITHER THE DOCUMENTS FURNISHED BY THE ASSESSEE WERE NOT SATISFACTORY OR OTHERWISE ANY DISCREPANCY WAS NOTICED OR THE GIFTS WERE NOT GENUI NE. FROM THE REMAND REPORT IT IS ALSO APPARENT THAT NEITHER ANY ADDITIONAL DOCUMENTS IN SUPPORT WERE REQUIRED BY A. O. NOR THE SAME THAT WERE PRODUCED WERE REJECTED PARTICULARLY WHEN HE WAS SPECIFICALLY ASKED TO DO SO BY THIS OFFICE VIDE LETTER DATED 15.10.2009. THUS I AM OF THE VIEW THAT UPON THE EX AMINATION OF THE DOCUMENTS THE A.O. HIMSELF IS SATISFIED ABO UT GENUINENESS OF THE TRANSACTION. THERE IS NOTHING ON RECORD FOUND DURING THE SEARCH OR OTHERWISE IS THE CASE OF THE A.O. THAT THE ASSESSEE IS EARNING INCOME NOT RETURNED TO TAX. NEITHER ANY UNDISCLOSED ASSET WAS FOUND NOR ANY UND ISCLOSED BANK ACCOUNT WAS NOTICED AND HENCE THE APPELLANT CA N NOT BE PENALIZED FOR ACTIONS OF OTHERS OR FAILURE TO TAKE ACTIONS UNDER SECTION 131 BY THE ASSESSING OFFICER. HENCE THE ADD ITION OF RS.37 00 000/- CONSTITUTING RS.10 00 000/- RECEIVED FROM MR. ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 68 BALBIR SING RS.9 00 000/- RECEIVED FROM MR. ANAND JAIN RS. 10 00 000/- FROM MR. K.M. GOEL RS.28 000/- AND RS.8 00 000/- RECEIVED FROM CAPT JUNEJA IS DELETED. 76. LEARNED DR SUBMITTED THAT THE ASSESSEE HAS RECE IVED THESE AMOUNTS IN HIS OR HIS MINORS BANK ACCOUNT. ASSESSEE CLAIMS THAT THESE WERE GIFTS RECEIVED FROM VARIOUS DONORS BUT ASSESSEE HAS FAILED TO PROVE THE IDENTITY CREDITWO RTHINESS OF DONORS AND GENUINENESS OF TRANSACTIONS. THE RELATIO NSHIP BETWEEN THE DONOR AND DONEE IS ALSO NOT ESTABLISHED . THE OCCASIONS ON WHICH SUCH HUGE GIFTS WERE RECEIVED WE RE ALSO NOT DECLARED. THE DONORS WERE NOT AVAILABLE AT THE ADD RESS GIVEN. THE COPY OF BANK ACCOUNT SUBMITTED BY THE ASSESSEE AND THE COPY OBTAINED DIRECTLY FROM THE BANK ARE NOT TALLYI NG. THIS FACT IS EVIDENT FROM COPY OF LETTER WRITTEN BY BANK PLACED AT PAGE 81 TO 83 OF PAPER BOOK SUBMITTED BY ASSESSEE IN ITA NO.3794/DEL/2009 FOR ASSESSMENT YEAR 2003-04. THE COPY OF BANK ACCOUNT OBTAINED FROM BANK OF BALBIR SINGH IS COMPLETELY DIFFERENT AND NOT REFLECTING ANY ENTRY WITH REGARD TO SUCH GIFT. THE DONOR WAS RESIDING IN SONEPAT BUT THE BANK ACCOUNT WAS MAINTAINED AT FATEHPURI DELHI. THE COPY OF BANK A CCOUNT WAS PROVIDED TO THE ASSESSEE BUT HE HAS FAILED TO REBUT OR RECONCILE. ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 69 CIT (A) DELETED THE ADDITION WITHOUT ANY VALID REAS ON. SIMILARLY IN THE CASE OF KIRODIMAL GOYAL NO PERSON IN THE NA ME OF KIRODIMAL GOYAL WAS STAYING AT NAGLOI AT THE GIVEN ADDRESS. IN THIS CASE ALSO THE COMPARISON OF THE COPY OF BANK ACCOUNT FILED BY THE ASSESSEE AND ONE OBTAINED FROM THE BANK DIRE CTLY WERE ALTOGETHER DIFFERENT. ASSESSEE HAD FAILED TO RECON CILE THE SAME. SHE SUBMITTED THAT THE BANK STATEMENTS FURNISHED BY ASSESSEE OF TWO DONORS WERE FABRICATED. THE COPIES OF THE B ANK ACCOUNTS OBTAINED DIRECTLY FROM THE BANK WERE PROVIDED TO AS SESSEE FOR REBUTTAL BUT HE HAD NOT DONE. THE CIT (A)S OBSERV ATION THAT ASSESSING OFFICER ADMITTED THE DOCUMENTS BUT REFRAI NED TO FORM AN OPINION AND REFERRED THE MATTER BACK TO HIS OFFI CE CANNOT BE MADE A BASIS FOR DELETING THE ADDITIONS. THE CIT ( A) SIMPLY ACCEPTED THE ASSERTION MADE BY THE ASSESSEE IN THE AFFIDAVITS OF THE DONORS. THE AFFIDAVITS FILED BY THREE DIFFERENT DONORS LOCATED AT DIFFERENT PLACES WERE OBTAINED FROM A COMMON NOT ARY ON 16.05.2006. HOW ALL THESE DONORS ASSEMBLED AT ONE PLACE TO OBTAIN THESE AFFIDAVITS NEEDS VERIFICATION. SHE PL EADED THAT THESE WERE NOTHING BUT COOKED DOCUMENTS MADE TO GIVE THE COLOUR OF GENUINENESS. THE ASSESSEE HAS FAILED TO ESTABLISH ANY GENUINE ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 70 RELATIONSHIP BETWEEN THE DONORS AND THE DONEES. TH E OCCASION IS ALSO NOT ESTABLISHED. EXISTENCE OF NATURAL LOVE AND AFFECTION WAS ALSO MISSING. THERE IS VARIATION IN COPY OF BA NK ACCOUNT FILED BY ASSESSEE AND OBTAINED FROM THE BANK. IN S UCH A SITUATION THE CIT (A)S ORDER IS PERVERSE AND DESE RVES TO BE SET ASIDE. 77. LEARNED AR SUBMITTED THAT THE CIT (A) HAS RIGHT LY DELETED THE ADDITION. THE REVENUE HAS FAILED TO DISPROVE T HE AFFIDAVITS SUBMITTED BY THE DONORS WHICH THE CIT (A) HAS RIGHT LY RELIED UPON. HE ALSO SUBMITTED THAT THE AFFIDAVITS CONFI RMATION OF GIFTS AND PARTICULARS OF BANK ACCOUNTS WERE SUBMITTED. TH E ASSESSEE HAS PROVED THE IDENTITY CREDITWORTHINESS AND GENUI NENESS OF TRANSACTIONS. HE ALSO PLEADED THAT SINCE THE ASSES SEE IS NOT MAINTAINING ANY BOOKS OF ACCOUNT THEREFORE NO ADD ITION CAN BE MADE U/S 68 OF THE INCOME-TAX ACT. THE DOCUMENTARY EVIDENCES SUBMITTED WERE NOT CONTROVERTED BY THE ASSESSING OF FICER. NO ADDITION CAN BE MADE WITHOUT ANY CORROBORATIVE EVID ENCES FOUND DURING THE SEARCH. IN THE CASE OF NRI THE BURDEN IS ON THE REVENUE TO PROVE THE SOURCE OF MONEY IN INDIA. HE ALSO ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 71 SUBMITTED THAT EVEN IN THE CASES WHERE THE CREDITO RS WERE NOT FOUND AT THE ADDRESS NO ADDITION CAN BE MADE. NO ADDITION CAN ALSO BE MADE FOR THE NON-PRODUCTION OF THE DONOR. THE ASSESSEE HAS SUBMITTED SUFFICIENT DOCUMENTARY EVIDENCES. TH E ASSESSING OFFICER HAS POWER TO ISSUE SUMMONS U/S 131 WHICH HE HAS NOT DONE. IN THE CASE OF NRI CONFIRMATION OF GIFT IS SUFFICIENT. THESE PERSONS WERE ASSESSED TO TAX WHICH IS SUFFICIENT TO PROVE THE CREDITWORTHINESS. THEREFORE THE ASSESSING OFFICER SHOULD NOT HAVE MADE THE ADDITION. THE ADDITION MADE WITHOUT EXAMINATION OF THE DONORS IS JUST BASED ON SURMISES. NO ADDITI ON CAN BE MADE ON THE STATEMENTS WITHOUT CROSS-EXAMINATION AN D IF MADE SAME CANNOT BE HELD VALID. IT IS ON THE DEPARTMENT TO PROVE THAT ASSESSEE HAS UNDISCLOSED SOURCE OF INCOME. FOR THE SE PROPOSITIONS HE RELIED ON VARIOUS DECISIONS WHICH HE HAS COMPILED IN PAPER BOOK FROM SL.NOS.1 TO 22. 78. WE HAVE HEARD BOTH THE PARTIES AT LENGTH CONSI DERED ALL THE RELEVANT MATERIAL ON RECORD AS WELL AS PLEADING S BEFORE US AND HAD ALSO GONE THROUGH THE CASE LAWS RELIED UPON . IN THE CASE OF GIFTS THE ADDITION CAN BE MADE IF THE GIFT S WERE FOUND ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 72 NON-GENUINE. THE ASSESSEE MAY NOT BE MAINTAINING A NY BOOKS OF ACCOUNT BUT THE AMOUNT WAS FOUND CREDITED IN HIS OR HIS MINOR CHILDS BANK ACCOUNT. THIS FACT IS UNDISPUTED. SE CTION 69A OF THE INCOME-TAX ACT PROVIDES THAT WHERE IN ANY FINANCIAL YEAR THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY BUL LION JEWELLERY OR OTHER VALUABLE ARTICLE AND SUCH MONEY BULLION JEWELLERY OR VALUABLE ARTICLE IS NOT RECORDED IN TH E BOOKS OF ACCOUNT IF ANY MAINTAINED BY HIM FOR ANY SOURCE O F INCOME AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF ACQUISITION OF THE MONEY BULLION JEWELLERY OR VALUABLE ARTICLE OR THE EXPLANATION OFFERED IN THE OPINION OF THE A SSESSING OFFICER IS NOT SATISFACTORY THE MONEY AND THE VALUE OF THE BULLION JEWELLERY OR OTHER VALUABLE ARTICLE MAY BE DEEMED T O BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. IN THE ASSESSEES CASE THE AMOUNT WAS DEPOSITED BY THE DO NEE IN THE BANK ACCOUNT THEREFORE THE OWNERSHIP OF THE MONEY DEPOSITED IN BANK ACCOUNTS PERTAINS TO THE ASSESSEE. THE ASS ESSEE HAS TO PROVE THE GENUINENESS OF THE ACQUISITION OF THE AMO UNTS. ASSESSEE CLAIMS THAT THESE WERE RECEIVED AS GIFTS. THUS ASSESSEE HAS TO PROVE THE IDENTITY OF DONOR CREDIT WORTHINESS AND ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 73 ALSO THE GENUINENESS OF TRANSACTIONS. IF ASSESSEE FAILS TO PROVE THE GENUINENESS OF THE GIFTS THE AMOUNT CAN BE ADD ED TO HIS INCOME. THE ADDITIONS MADE BY THE TAX AUTHORITIES UNDER A WRONG PROVISION OF INCOME-TAX ACT 1961 CANNOT ABSO LVE THE ASSESSEE FROM BEING TAXED UNDER THE CORRECT PROVISI ONS OF INCOME-TAX ACT 1961. THE TAX AUTHORITIES BELOW AR E DUTY BOUND TO TAX THE UNDISCLOSED INCOME OF THE ASSESSEE IF A NY UNDER THE PROVISIONS OF INCOME-TAX ACT 1961. SINCE THE ASSE SSEE HAS RECEIVED THE GIFT IN HIS BANK ACCOUNT THE ASSESSEE HAS TO ESTABLISH THE IDENTITY OF THE DONOR CAPACITY OF TH E DONOR TO MAKE THE GIFT AND MUST ALSO ESTABLISH THAT HE HAS RECEIV ED THESE AMOUNTS AS GENUINE GIFTS. THE GENUINENESS OF THE G IFTS CANNOT BE DETERMINED WITHOUT LOOKING INTO THE FACTS OF THE HUMAN PROBABILITIES RELATIONSHIP OF DONOR AND DONEE THE OCCASION OF MAKING GIFTS AND EXISTENCE OF RECIPROCITY IF ANY. IN CASE THE ASSESSEE FAILS TO ESTABLISH ANY ONE OF THE FACTS T HE AMOUNT RECEIVED BY THE ASSESSEE CAN BE TREATED AS INCOME O F THE ASSESSEE FROM UNDISCLOSED SOURCES REPRESENTING ASSE SSEES OWN MONEY INTRODUCED IN THE GARB OF A GIFT RECEIVE D SHOWN BY THE ASSESSEE. IN THIS CASE THE CIT (A) HAS SIMPLY RELIED ON THE ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 74 DOCUMENTS SUBMITTED. THE DISCREPANCY IN COPY OF BA NK ACCOUNT SUBMITTED AND COPY OF ACCOUNT DIRECTLY OBTAINED FRO M BANK HAVE NOT BEEN RECONCILED AND HAVE NOT BEEN TAKEN NOTE OF F BY CIT (A) EVEN THOUGH THE FACT HAS BEEN CLEARLY STATED BY ASS ESSING OFFICER IN HIS ASSESSMENT ORDER. WE HAVE ALSO OBSE RVED THAT THE ENTRY PERTAINING TO THE GIFT IS NOT FOUND TO BE REF LECTED IN THE BANK STATEMENT OBTAINED DIRECTLY FROM THE BANK. THE PAG ES 80 TO 82 OF PAPER BOOK SUBMITTED FOR ITA NO.3794/DEL/2009 FO R ASSESSMENT YEAR 2003-04 PERTAINS TO ASSESSMENT YEAR 2004- 05. THE CONCERNED BANKS HAVE CLEARLY STATED IN THE SE LETTERS THAT ENTRY IN COPY OF ACCOUNT SUBMITTED DO NOT TALL Y WITH THE ACCOUNTS MAINTAINED IN THE BANK. LEARNED CIT (A) H AS ALSO NOT CONSIDERED THE ASSESSING OFFICERS OBJECTION THAT I T WAS UNBELIEVABLE THAT THREE DIFFERENT DONORS STAYING AT DIFFERENCE PLACES HAD APPROACHED THE SAME NOTARY FOR PREPARING THE AFFIDAVITS ON THE SAME DATE. THE ASSESSEE HAS NOT PRODUCED ANY OF THESE THREE DONORS NAMELY ANAND JAIN BALB IR SINGH AND KIRODIMAL GOYAL TO ESTABLISH THEIR RELATION WITH TH E ASSESSEE AND EXISTENCE OF LOVE AND AFFECTION AND THE OCCASION ON WHICH THE ALLEGED GIFTS WERE MADE BY THE DONORS TO THE DONEE. WE WOULD ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 75 ALSO LIKE TO STATE THAT THE CIT (A) HAS CO-TERMINUS POWER AS OF ASSESSING OFFICER THEREFORE HE COULD HAVE DONE WH AT ASSESSING OFFICER HAD FAILED TO DO. CIT (A)S OBSERVATION TH AT ASSESSING OFFICER WAS SATISFIED ABOUT GENUINENESS OF TRANSACT ION IS ALSO AGAINST THE FACTS OF THE CASE. CONSIDERING ALL THE SE ASPECTS OF THE CASE WE ARE OF THE VIEW THAT IN THE INTEREST O F JUSTICE AND EQUITY THE MATTER NEEDS RE-ADJUDICATION AT THE LEV EL OF CIT (A) THEREFORE WE SET ASIDE THE ORDER OF CIT (A) WITH A DIRECTION TO DECIDE DE NOVO AFTER PROVIDING AN OPPORTUNITY OF BE ING HEARD TO THE ASSESSING OFFICER AS WELL AS TO THE ASSESSEE. THE MATTER SHALL REMAIN WIDE OPEN FOR CIT (A)S ADJUDICATION A S PER LAW. 79. THE REVENUE FILED A REVISED GROUND OF APPEAL AS FOLLOWS :- THAT THE ORDER OF THE CIT (A) IS PERVERSE IN ASMUCH AS NEITHER THERE IS ANY RELATIONSHIP NOR OCCASION FOR GIFT BETWEEN THE DONOR & DONEE IS PROVED/ESTABLISHED AS HAS BEEN CLEARLY MENTIONED BY THE ASSESSING OFFICER ON PAGE-2 OF HIS ASSESSMENT ORDER. EVEN CIT (APPEALS) ORDER IS ALSO SILENT ON THE ASPECT OF RELATIONSHIP OR OCCASION OF THE GIFT RECE IVED BY THE DONEE FROM THE DONOR SH. SANJEEV JUNEJA. THEREFORE THE GIFT OF RS.8.00 LACS BEING INVALID IS NOT ACCEPTABLE. CASE LAW IN THE CASE OF ITO VS. USHA AGGARWAL REPORTED IN (2010) 1 ITR (TRIB) 593 (DELH I) H-BENCH IS RELEVANT WHEREIN IT HAS BEEN HELD THAT RELATIONSHIP AND OCCASION BOTH HAVE TO BE CONSIDERED FOR JUSTIFICATION OF VALID GIFT. ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 76 80. WE HAVE HEARD BOTH THE SIDES ON THIS REVISED GR OUND OF APPEAL. IN THIS GROUND THE REVENUE HAS ALSO CHALL ENGED DELETION OF ADDITION IN RESPECT OF DONOR SHRI SANJEEV JUNEJ A WHO HAS MADE A GIFT OF RS.8 00 000/- TO THE ASSESSEE. THE DONOR WAS PRESENTED BEFORE THE ASSESSING OFFICER. THE ASSESS ING OFFICER HAS ACCEPTED THE GIFT FROM HIM AS A GENUINE IN HIS REMAND REPORT SUBMITTED TO THE CIT (A). THEREFORE WE DO NOT FIN D ANY MERIT IN THE REVISED GROUND OF APPEAL. WE DISMISS THE SAME AND THE ADDITION DELETED BY THE LEARNED CIT (A) IN RESPECT OF GIFT FROM SHRI SANJEEV JUNEJA IS UPHELD. 81. IN THE RESULT THE APPEALS OF THE REVENUE FOR A SSESSMENT YEAR 2003-04 IS ALLOWED AND FOR ASSESSMENT YEAR 200 4-05 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND CROSS OBJECTIONS FILED BY THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 1ST DAY OF JULY 2011. SD/- SD/- (B.C. MEENA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 1 ST DAY OF JULY 2011 TS ITA NOS. 3794 & 3795/D/09 & CO NOS. 365 & 366/D/200 9 77 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A) MEERUT. 5.CIT(ITAT) NEW DELHI. AR ITAT NEW DELHI.