The Acit 1 1 v. M S S K Jain

Page 1 Of 149 In The Income Tax Appellate Tribunal Indore Bench Indore Before Shri Joginder Singh Judicial Member And Shri V K Gupta Accountant Member Pan No Aaofs 1606 A I T Ss A Nos 210 To 216 Ind 2007 A Ys 1999 2000 To 2005 06 M S S K Jain Acit 3 5 3 6 Meera Complex Vs 1 1 Zone Ii M P Nagar Bhopal Bhopal Appellant Respondent Pan No Aaofs 1606 A I T Ss A Nos 1 To 7 Ind 2008 A Ys 1999 2000 To 2006 07 Acit M S S K Jain 1 1 Vs 3 5 3 6 Meera Complex Bhopal Zone Ii M P Nagar Bhopal Appellant Respondent Pan No Adgpj 8947 H I T Ss A Nos 28 To 31 Ind 2008 A Ys 2002 03 To 2005 06 Acit Smt Rekha Jain 1 1 Vs Dk 1 71 Danish Kunj Kolar Road Bhopal Bhopal Appellant Respondent Page 2 Of 149 Pan No Adgpj 8947 H I T Ss A Nos 32 33 Ind 2008 A Ys 2002 03 2005 06 Smt Rekha Jain Acit Dk 1 71 Danish Kunj Kolar Road Bhopal Vs 1 1 Bhopal Appellant Respondent Pan No Acwpj 0805 C I T Ss A Nos 34 To 39 Ind 2008 A Ys 1999 2000 To 2005 06 Shri G C Jain Acit Dk 1 71 Danish Kunj Kolar Road Bhopal Vs 1 1 Bhopal Appellant Respondent Pan No Adgpj 8945 G I T Ss A Nos 47 50 Ind 2008 A Ys 1999 2000 2002 03 Acit Shri Amarchand Jain 1 1 Bhopal Vs Dk 1 71 Danish Kunj Kolar Road Bhopal Appellant Respondent Pan No Acwpj 0804 D Page 3 Of 149 I T Ss A No 72 Ind 2008 A Ys 2005 06 Shri Vinod Kumar Jain Acit Dk 1 71 Danish Kunj Kolar Road Bhopal Vs 1 1 Bhopal Appellant Respondent Pan No Agapj 7716 Q I T Ss A No 73 Ind 2008 A Ys 2005 06 Shri Pramod Kumar Jain Acit Dk 1 71 Danish Kunj Kolar Road Bhopal Vs 1 1 Bhopal Appellant Respondent Pan No Afapj 6759 G I T Ss A No 74 Ind 2008 A Ys 2004 05 Shri Jitendra Kumar Jain Acit Dk 1 71 Danish Kunj Kolar Road Bhopal Vs 1 1 Bhopal Appellant Respondent Pan No Agapj 7716 Q Page 4 Of 149 Appellant By Shri H P Verma Adv And Shri Ashish Goyal C A Respondent By Shri K K Singh Cit Dr O R D E R Per V K Gupta A M This Bunch Of Appeals Belongs To The Connected Asse Ssees And Involves Common Issues Hence This Was Heard Toget Herly And This Is Being Disposed Of Through This Consolidated Order F Or The Sake Of Convenience 1 We Have Heard Both The Parties And Have Also Peruse D The Material Available On Record 2 Firstly We Shall Take Up The Assessees Appeals In I T A No 210 To 216 Ind 2007 For The Assessment Years 1999 2000 To 2005 06 3 The Assessee Has Raised Following Additional Ground S In Appeals No I T Ss A No 210 To 214 Ind 2007 1 On The Facts And In The Circumstances Of The Ca Se The Order U S 153 A R W Section 153 C Is Bad In Law Unte Nable Illegal Barred By Limitation Without Jurisdiction And Is Liable To Be Quashed 2 On The Facts And In The Circumstances Of The Case No Satisfaction As Required U S 153 C Was Recorded Page 5 Of 149 3 On The Facts And In The Circumstances Of The Case Conditions As Specified U S 153 C Have Not Been Complied In I T A No 216 Ind 2007 In Addition To These Addi Tional Grounds Following Additional Ground Has Also Been Raised 4 On The Facts And In The Circumstances Of The Ca Se The Ld Ao Could Not Initiate Proceedings U S 153 C For Relevant Assessment Year 4 The Learned Counsel For The Assessee Submitted That The Issues Raised In These Additional Grounds Were Purely Of L Egal Nature And No Inquiry Into The Facts Was Required As All The Evid Ences Were On Record Hence The Same Could Be Admitted The Learned Coun Sel Further Relied On Various Judicial Decisions In This Regard On A Que Ry From The Bench As To Why Such Additional Grounds Were Filed Now The Lea Rned Counsel Submitted That It Was Not An Intentional Lapse On T He Part Of The Assessee However There Was A Lapse On The Part Of The Earli Er Counsel To Understand The Intricacy Of This Legal Issue And Accordingly He Failed To Raise Such Grounds While Filing The Appeals He Further Conte Nded That The Affidavit Of The Partner Of The Assessee Firm Was Enclosed To This Effect He Further Contended That The Litigant Did Not Stand To Benefi T By Resorting To Delay And In Fact He Ran A Serious Risk He Further Sub Mitted That These Page 6 Of 149 Additional Grounds Were Raised To Challenge The Val Idity Of The Assessment Framed U S 153 A Of The Act In View Of The Fact Tha T When No Search Was Conducted At The Premises Of The Assessee No Asses Sment Under This Section Could Be Made And Also For The Reason That Even As Per The Satisfaction Note Recorded U S 153 C Of The Act Sei Zed Material Pertained Only To Assessment Years 2004 05 And 2005 06 Hence Assessment Of Other Years Could Not Be Reopened By Invoking The J Urisdiction U S 153 C Read With Section 153 A Of The Act In This Regard He Drew Our Attention To Copy Of The Satisfaction Note Placed At Page 355 Of The Paper Book He Further Contended That In Such Satisfaction Note Fi Nding Had Not Been Recorded By The Assessing Officer Assessing T He Persons In Whose Cases Search Was Conducted And Also There Was No Sa Tisfaction To The Effect That Notice U S 153 C Could Be Issued Hence The Assessments Framed For All Years Were Null And Void For This P Roposition He Placed Reliance On The Decision Of The Tribunal In The Cas E Acit Vs Rishi Construction 10 Itj 346 And Acit Vs Asnani Builde Rs And Developers Limited 10 Itj 618 He Further Contended That In T He Notices Issued By The Assessing Officer Requiring The Assessee To Fil E The Returns For Assessment Years 1999 2000 To 2005 06 Copy Placed At Page 141 144 147 150 153 159 Of The Paper Book No Mention O F Section 153 C Had Page 7 Of 149 Been Made Hence For This Reason Also The Jurisdi Ction By The Assessing Officer Was Not Correctly Assumed 5 The Ld Cit Dr On The Other Hand Contended That T He Documents Were Found During The Course Of Search W Hich Resulted Into Surrender Of Income To The Tune Of Rs 7 Lakhs In A Ssessment Year 2004 05 And Rs 50 000 In Assessment Year 2005 06 In The Course Of Such Proceedings In The Hands Of The Assessee Firm Henc E Existence Of Material Could Not Be Doubted And Therefore The R Elevant Contentions Of The Assessee Were Without Any Merit The Ld Cit Dr Further Contended That The Satisfaction Note As Required By Law Did E Xist Hence The A O Had Complied With The Requirements Of Law I E The A O Had Recorded A Finding Dealing With The Assessment Of A Person Wh Ere Search Was Conducted That The Document Income Belonged To Thir D Person And Such Satisfaction Was Recorded By The Assessing Officer Before Issue Of Notice U S 153 C Read With Section 153 A Of The Income Tax Act 1961 He Further Contended That Notice U S 153 C Read With Se Ction 153 A Had To Be Issued For Six Preceding Assessment Years And Not I N Respect Of Only Those Years In Respect Of Which Some Material Assets Were Found Because The Provisions Of Section 153 A 153 C Did Not Give Any Leeway Discretion To The A O In This Regard Nor It Was Contemplated Tha T Jurisdiction Under These Sections Was Restricted Only To The Years In Respect Of Which Some Page 8 Of 149 Documents Assets Were Found The Ld Cit Dr Therea Fter Contended That Provisions Of Section 143 2 Were To Be Applied Onl Y In Respect Of Grant Of Opportunity Of Hearing To The Assessee And Time Lim It For Service Of Notice U S 143 2 In The Course Of Normal Assessment Was Not Applicable In The Case Of Assessment To Be Made U S 153 C Read With S Ection 153 A He Further Contended That As Per The Provisions Of Sec Tion 139 4 The Assessee Could File Return For Assessment Year 05 0 6 Up To 31 3 2007 Whereas As Per The Provisions Of Sub Section 1 A Of Section 153 B The Assessment For Assessment Year 2005 06 Had To Be Co Mpleted By 31 St March 2007 And After The Insertion Of Second Prov Iso To This Section By December 2006 He Further Submitted That As Per No Rmal Provisions I E For Making An Assessment U S 143 3 Or 144 The Tim E Limit For Completing The Assessment For Assessment Year 2005 06 Was Dece Mber 2007 As Per The Provisions Of Section 153 1 Read With First Pr Oviso Thereto Thus The Legislature Had Provided A Shorter Duration For Com Pletion Of Search Assessment And If Requirement Of Service Of Notice U S 143 2 Within 12 Months From The End Of The Month In Which Such Retu Rn Was Filed Had To Be Observed Mandatorily Then There Would An Appare Nt Contradiction In The Provisions Of Law And Legislature Could Not Be Said To Be Un Aware Of Such Situation And Therefore In Section 153 A 1 A The Words So Far As May Be Had Been Used He Further Contended That If The Literal Page 9 Of 149 Construction Resulted Into An Unintended Absurd Re Sult Then It Had To Be Avoided For This Proposition He Placed Reliance O N The Decisions Of Honble Supreme Court As Reported In 156 Itr 323 An D 156 Itr 585 The Ld Cit Dr Also Contended That All Assessment Order S Were To Be Understood To Have Been Made U S 143 144 Of The Act Hence Merely For The Reason That Notice U S 153 C Had Been Issued Th E Assessment Could Not Be Held As Null And Void For This Proposition He Placed Reliance On The Following Judicial Decisions I 41 Itr 12 S C Ii 78 Itr 285 Mad Iii 229 Itr 126 Kar Iv 230 Itr 798 Ker 6 The Learned Counsel In The Rejoinder Contende D That It Was Not A Case Of An Inadvertent Act Rather It Was A Ca Se Of Conscious Assessment U S 153 A And The Scheme Of Act Was Clear As Regard To Different Assessment Procedure To Be Applied For Di Fferent Situations And Therefore The Assessment So Framed Could Not Be Co Nsidered As Passed U S 143 3 Of The Act Inspite Of The Fact That It Was Not Time Barred Assessment Under Both The Provisions He Further Co Ntended That The Provisions Of Section 153 A And 153 C Differed In Sco Pe I E Jurisdiction U S 153 A Was Based Upon The Action U S 132 Or 132 A And Provisions Of Page 10 Of 149 Section 153 C Had To Be Invoked On The Basis Of Mate Rial Found During The Course Of Search And Therefore Jurisdiction U S 1 53 C Could Be Invoked Only In Respect Of Such Assessment Years Where Som E Material Had Been Found He Further Contended That As Against The Blo Ck Assessment Scheme Wherein One Notice Was Required To Be Issued For Th E Entire Block Period As Per The New Scheme Notice U S 153 A Or 153 C Read With Section 153 A Had To Be Issued For Each Year And Income Of Each Y Ear Was To Be Assessed Separately As Per Normal Provisions Of Law I E At Normal Rates And Liable To Penalty Or Interest Also Which Fact Strongly S Upport The Claim Of The Assessee That Assessments In Respect Of Assessment Years Other Than 2004 05 2005 06 Were Null And Void The Ld Authorized Representative Also Contended That Absurdity Would Arise If Six Years W Ere Reopened Inspite Of Having No Material For All The Six Years And It Wou Ld Also Result Into Unbridled Powers In The Hands Of The Revenue Author Ities He Further Contended That If The Provisions Of Proviso To Sect Ion 153 C Were Taken Into Consideration Then In A Case Where Documents Or Assets Seized Were Handed Over To The A O Having Jurisdiction Over Th E Person Referred To In Section 153 C After A Time Gap Then Block Of Six Y Ears Would Be Different In His Case As Compared To The Block Of Assessment Years Of Searched Person On This Aspect The Ld Cit Dr Contended T Hat Such Block Would Not Be Different In Any Case As Such Proviso Had To Be Read With Reference Page 11 Of 149 To The Second Proviso To Sub Section 1 Of Sectio N 153 A Of Act And First Proviso Of Section 153 B 1 Which Extended The Time Limit For Completion Of Search Assessments In Such Situation 7 We Have Considered The Submissions Made By Both The Sides Material On Record And The Orders Of The Authoritie S Below 8 It Is Noted That Search Action Took Place On The Fa Mily Members And Other Concerns Of Jain Group It Is Also An Adm Itted Fact That No Search Action Has Taken Place In Respect Of The Assessee F Irm It Is Further Noted That Proceedings U S 153 C Have Been Initiated By T He Assessing Officer Of The Persons Searched Who Incidentally Happens T O Be The A O Of The Assessee Firm As Well In The Satisfaction Note Rec Orded By The Assessing Officer A Fact Has Been Mentioned That Undisclosed Income Material Found As A Course Of Search Proceedings Pertained O Nly To Assessment Year 2004 05 And 2005 06 Thereafter The A O Issued No Tices To The Assessee Firm Wherein Section 153 A Was Mentioned In This F Actual Ground We Have To See The Merits In The Case Of The Assessee For Admission Of Additional Ground It Has Now Become A Settled Posi Tion That Issues Of Legal Natures Which Do Not Require Any Fresh Inves Tigation Into The Facts Can Be Admitted At The Appellate Stage In The Ligh T Of This Principle We Find That These Legal Issues Were Not Raised By The Legal Counsel Of The Assessee At The Earlier Stages And For Which The As Sessee Cannot Be Page 12 Of 149 Punished Further The Issues Raised By The Assesse E Through These Additional Grounds Are In Connection With The Scope Of Newly Enacted Provisions Having Wide Importance Hence We Admit These Additional Grounds 9 In The Course Of Hearing The Learned Counsel Has R Aised The Issue That Notice Issued By The Assessing Officer Was U S 153 A Wherein Section 153 C Had Not Been Mentioned Hence The Proceedings Were Liable To Be Quashed Merely For This Defect In Our Opinion Suc H Arguments Have Got No Merit Because For Making An Assessment In Case Of Person Referred To In Section 153 C The Provisions Of Section 153 A Hav E To Be Applied Even Otherwise Such Technical Defects Are Covered Withi N The Scope Of Provisions Of Section 292 B Of The Act Accordingly We Dismiss Additional Ground No 2 Of The Assessee 10 Having Sated So Now We Shall Deal With The Core Issues Involved The Learned Counsel For The Assessee Has Vehemently Argued That Completed Assessments Could Be Reopened Under Section 153 C Only When Any Money Bullion Jewellery Or Other Valuabl E Article Or Thing Or Books Of Accounts Or Documents Seized Or Requisitio Ned Belong To A Person Other Than The Person Searched Under Section 153 A And Were Relatable To Such Completed Assessments To Put It Differently It Is The Case Of The Assessee That Under Section 153 C The As Sessments For All The Page 13 Of 149 Six Back Assessment Years Cannot Be Reopened Unless Some Material Document Is Found For All Such Years The Learned Cit Dr On The Other Hand Has Contended That Jurisdiction For All The Six Years Was Automatic Even If Seized Materials Pertained To Onl Y A Few Years In The Present Case It Is Evident That The Assessing Offi Cer Has Himself Noted That The Seized Documents Things Materials Pertain To Assessment Years 2004 05 And 2005 06 Only It Is Further Noted That Assessment In Case Of Person Covered U S 153 C Has To Be In Accordance Wit H The Provisions Of Section 153 A Thus This Situation Makes It Imperati Ve For Us To Look Into The Nitty Gritty Of The Provisions Of Section 153 A Which Come Into Play As A Consequence Of An Action By The Department U S 13 2 Or 132 A And To Look Into The History Of Search And Search Assessme Nt Provisions Remaining In Operation At Different Points Of Time 11 Originally Section 37 2 Of 1922 Act Gave Powers To Income Tax Authorities To Conduct The Search And Seizure O Perations Subsequently Section 132 Was Brought On Statute Un Der The Income Tax Act 1961 There Have Been Several Amendments In T He Search Provisions Over The Years Mostly Relating To Widening Of Scope And Streamlining Of The Procedure Of Search And Seizure Operations How Ever If We Look Into The Objectives Of The Provisions Of Section 132 Tw O Things Become Quite Clear The First Is That The Sole Objective Of Enac Ting These Special Page 14 Of 149 Provisions Was And Continues To Be Prevention Of Ev Asion Of Taxes And Such Provisions Are Generally Put Into Operation W Hen Action U S 131 Or 133 A Which Also Aim To Achieve The Same Objective May Not Give Desired Results The Second Is That Obvious Purpose Of Ame Nding The Section From Time To Time Was To Plug The Loopholes Discovered F Rom Time To Time Or Brought To Light With A View To Making Evasion Of Taxes More Difficult And Simultaneously To Comply More Or More With The Principles Of Natural Justice And Fundamental Rights As Per The Settled Judicial Position Section 132 Has Been Held To Have Intended To Achieve Two L Imited Objectives Viz I To Get Hold Of Evidence Having A Bearing On The Tax Liability Of A Person Which Such Person Is Seeking To Withhold From The A Ssessing Officer And Ii To Get Hold Of Assets Representing Income Beli Eved To Be Undisclosed Income And Applying So Much Of Them As May Be Neces Sary In Discharge Of The Existing And Anticipated Tax Liability Of Th E Person Concerned To Achieve The First Objective As Stated Above Follo Wing Situations Have Been Prescribed Under Section 132 1 A 132 1 B And 132 1 C Whereby Action U S 132 Can Be Directed Against Thre E Types Of Persons 1 Those Who Have Omitted Or Failed To Produce Books O R Documents As Required By Any Summons Or Notice Issu Ed To Them Page 15 Of 149 2 Those Who Whether So Summoned Or Not To Produce Documents Will Not Or Would Not Produce Books Of A Ccount Or Documents And 3 Those Who Are Believed To Be In Possession Of Money Bullion Jewellery Or Other Valuable Article Or Thi Ng Representing Either Wholly Or In Part Income Or Pr Operty Which Has Not Been Disclosed For Purposes Of Taxati On Or Would Not Be Disclosed For The Purposes Of Taxation 12 Thus What This Section Requires Is That The Docum Ent Things Etc Should Be Useful Or Relevant To The Proceedings Und Er The Act And Therefore A Sweeping Search Or Seizure Of Document S Or Things Irrespective Of Their Relevancy To Or Usefulness Fo R Some Proceedings Under The Income Tax Act Is Not Permitted Similarl Y Search Warrant Cannot Be Issued With A View To Make Roving And Fis Hing Enquiries The Honble Supreme Court In The Case Of Ito V Seth Br Others As Reported In 74 Itr 836 Made It Clear That Section 132 Did Not C Onfer Any Arbitrary Authority Upon The Revenue Officers It Was Also P Ointed Out That The Competent Authority Must Have In Consonance With I Nformation In His Possession Reason To Believe That Statutory Condit Ions For Exercise Of Powers To Order Search Existed It Was Also Held T Hat There Must Be Some Information On The Date Of Issuance Of Warrant To D Etermine The Page 16 Of 149 Satisfaction Of The Competent Authority The Honb Le Gujarat High Court In The Case Of Prabhubhai Vasatabhai Patel V Meena Rp As Reported In 226 Itr 781 Has Laid Down The Following Principles Relating To The Use And Relevance Of The Information In Possession Of T He Authority And Formation Of Opinion Therefrom A The Authority Must Be In Possession Of Information And Must Form Opinion That There Is Reason To Believe T Hat The Article Or Property Has Not Been Or Would Not B E Disclosed B The Information Must Exist Before The Opinion Is Formed C The Authorised Person Must Apply His Mind To The Information In His Possession And Form Opinion Whether There Is Reason To Believe Or Not The Opin Ion Must Be Formed On The Basis Of The Material Availab Le At That Time D The Opinion Must Be Based On The Material Which Is Available And It Should Not Be Formed On The Basis Of Extraneous Or Irrelevant Material E The Formation Of Opinion Must Have Rational Connection And Bearing To The Reasons For Such Page 17 Of 149 Opinion The Formation Of Opinion Should Be Based O N Application Of Mind And Be Bona Fide And Not Be Accentuated By Mala Fide Bias Or Based On Extraneo Us Or Irrelevant Material The Belief Must Be Bona Fid E And Cogently Supported F The Existence Or Otherwise Of The Condition Precede Nt Is Open To Judicial Scrutiny Courts Can Examine Whether The Authorised Person Had Material Before I T On Which He Could Form The Opinion Whether There Is Rational Connection Between The Information Possess Ed And The Opinion Formed G However The Court Will Not Sit In Appeal Over The Opinion Formed By The Authorised Person If The Authorised Person Had Information In His Possession And The Opinion Formed Is On The Basis Of Such Material The Court Will Not Examine Whether The Material Possessed Was Sufficient To Form An Opinio N The Court Cannot Also Go Into The Question Of Aptne Ss Or Sufficiency Of The Grounds Upon Which The Subjective Satisfaction Is Based Page 18 Of 149 H If The Belief Is Bona Fide And Is Cogently Supporte D The Court Will Not Interfere With Or Sit In Appeal Ove R It 13 Thus Another Principle That Emerges Is That There Must Be Reason To Believe With The Competent Authority Fo R Exercising Powers Under Section 132 Of The Act This Term Needs No Fu Rther Elaboration As It Is The Most Stringent Safeguard Used By The Legisla Ture To Prevent Arbitrary Use Of Not Only Such Sweeping Powers By The Revenue Authorities But In Other Provisions Of The Act Whereby The Finality Of Concluded Assessments Can Be Disturbed Thus In Nutshell The Operation Under Section 132 Pre Supposes Existence Of Some Undisclosed Income Or Th E Income Which Would Not Be Disclosed Hence This Cardinal Aspect Cannot Be Ignored In Spite Of The Fact That Different Assessment Procedu Res Have Been In Place In Respect Of Search Cases At Different Points Of Time Originally I E Prior To Block Assessment Procedure The Position Was That F Or Final Quantification Of Tax Liability The Procedure Was Governed By Sect Ion 147 Of 1961 Act Relating To Assessment Reassessment Of Income Whi Ch Had Escaped Assessment And Such Fact Of Escapement Came Into Th E Knowledge Of Department As A Consequence Of Action U S 132 Or 13 2 A Or Through The Normal Procedure Of Assessment Under Section 143 Of The Act It Was Also A Settled Judicial Position That The Estimation Of Undisclosed Income And Of The Anticipated Tax Liability Under Section 132 5 Was Only For The Page 19 Of 149 Purpose Of Determining The Extent Of Assets To Be R Etained And The Purpose Of Retention Being The Satisfaction Of Existing Or Anticipated Tax Liability To Put It Differently Order Passed Under Section 1 32 5 Was Not An Order Of Assessment Nor It Did Away With The Applicabilit Y Of Normal Procedure Prescribed Under The Statute For Assessment Or Reas Sessment Of Income And Similarly The Assessee Was Not Deprived Of Hi S Normal Rights Of Appeal Second Appeal And Reference To High Court Thus Before Block Assessment Procedure The Material Gathered In The Course Of Search Or Assets Found Therein Could Be Utilised For Determi Ning The Tax Liability Of The Person Searched Or Other Person As Per The Norm Al Assessment Re Assessment Procedure It Is Needless To Mention Th At Conditions Prescribed Under Section 147 Read With Sections 148 149 150 Etc Were Also Applicable Meaning Thereby That Completed Asse Ssments Could Be Reopened Only To The Extent Of Time Available For S Uch Reopening And Other Conditions Of Assessment Procedure As Provided Unde R Section 143 And Assumption Of Jurisdiction Under Section 147 Read W Ith Section 148 Were Also To Be Complied With 14 Thereafter By The Finance Act 1995 Block Assessm Ent Procedure Scheme Came Into Existence However The Cardinal Philosophy Remained The Same I E Determination Of Undisclosed Income In Addition To The Income Already Offered For Taxat Ion The Only Page 20 Of 149 Difference Was That Such Undisclosed Income Had To Be Assessed Separately From The Normal Income Offered By The As Sessee And Had To Be Charged At A Different Rate There Was Some Relaxa Tion In Regard To Penalty Now By The New Scheme Which Is Prevalent In The Present Cases The Original Assessment Scheme Has Been Revived Sub Ject To Certain Changes Such As Non Applicability Of Provisions Of Sections 139 147 148 149 151 And 153 While Assuming Jurisdiction Under Section 153 A Or 153 C Read With Section 153 A It Is Also Provided T Hat All Pending Assessments On The Date Of Initiation Of Search Or Requisition Shall Stand Abated So That Only One Assessment Is Made For One Assessment Year It Is However Important To Note That Appeal Proceedings E Tc In Respect Of Completed Assessment Of Any Year Falling Within The Period Of Six Back Assessment Years Shall Not Be Affected Which Is Ver Y Significant As This Provision Indicates That Concluded Assessments Woul D Not Be Demolished In Toto As Such Appeal Proceedings Are Continuation Of Original Assessment Proceedings And Thus Scope Of Provisions Of Secti On 153 A Is Required To Be Analyzed After Taking Into Consideration This Fa Ctor Also The Other Significant Feature Is That The Provisions Of Secti On 132 5 And 132 7 Are Not On The Statute Now Because The Legislature Has Intended To Shorten The Time Duration Of Completion Of Assessment In Search Cases And To Avoid Over Lapping Proceedings The Provisions Of Section 132 B In Respect Of Page 21 Of 149 Application Of Seized Or Requisitioned Assets Are E Ntirely Different From Section 132 5 132 7 The Jurisdiction Under Sect Ion 153 A Though Assumed By The Assessing Officer By Issuing Notice Thereunder Is Inherently Related To Search Initiated Under Sectio N 132 Or Books Of Account Other Documents Or Any Assets Requisitione D Under Section 132 A Of The Act Hence In Our Humble Opinion It Would Be Highly Inappropriate To Say That Existence Of Some Undiscl Osed Material Or Assets Or Documents Is Not At All A Consideration While Co Nferring The Jurisdiction To The Ao Under Section 153 A I E The Assessing Off Icer Can Disturb The Finality Of Concluded Assessments In Every Respect Without Any Material To Indicate Undisclosed Income Found During The Course Of Search If This View Is Taken Then It Would Give Unbridled Power To The Revenue Authorities To Disturb The Finality Of Concluded As Sessments Merely By Invoking The Provisions Of Section 132 Or 132 A And By Passing The Safeguards Provided Under Section 147 148 Of The Ac T As The Provisions Of Section 153 A And Or 153 C Override The Provisions Of Section 147 148 In Our View However It Cannot So Because The Action U S 132 Or 132 A Is Itself Based Upon The Existence Of Information Lead Ing To An Inference Of Undisclosed Income Represented By Assets Documents Etc And Therefore The Assumption Of Jurisdiction U S 153 A Is Not Poss Ible Where No Incriminating Materials Are Found During The Course Of Search Or In The Page 22 Of 149 Course Of Investigation Proceedings After The Searc H Thus The Proper View Would Be That Only Procedural Requirements Of Section 147 148 Relating To Recording Of Reasons And Approval By Hi Gher Authority Before Issue Of Notices Have Been Dispensed With In Additi On To Doing Away With The Requirement Of Satisfying The Conditions Like T Here Was A Failure On The Part Of Assessee To Make A Full True Disclosure O Riginally Thus In Sum Substance The Pre Condition Of Existence Of Some Incriminating Material Has Not Been Done Away Even Under 153 A 15 Further There Is Another Aspect Of The Matter Tha T An Assessee May Not Be In Existence In All The Six Years I E I T May Have Come Into Existence Only Three Years Back Or It Might Have Cl Osed Down In Between In Case Of Person Referred To In Section 153 C And Therefore Jurisdiction U S 153 A Cannot Be Exercised For All Six Years Mean Ing Thereby That The Word Shall Used In This Section Has Necessarily T O Be Read As May And This Provision Should Be Exercised In A Reasonable Manner In This Regard We May Also Point That It Is Also A Settled Princip Le That There Can Be Situations Where Word Shall Can Be Read As May And Vice Versa Hence In Our Opinion One Of The Limbs Of Section 153 A Is That It Fixes The Outer Limit For Reopening The Concluded Assessments And It Does Not Empower The Assessing Officer To Go Into The Areas Other Than The Areas In Respect Of Which Some Material Or Documents Or Asse Ts Have Been Found Page 23 Of 149 To Further Buttress Our View Point On The Aspect Th At Section 153 A Provides For An Outer Limit Up To Which Concluded A Ssessments Could Be Reopened And Does Not Give A Blanket Jurisdiction T O The Assessing Officer To Reopen The Cases Of Six Back Assessment Years Wi Thout Having Any Material We Can Envisage A Situation For A Moment That No Material Is Found During The Course Of Search Then What Purpos E Could Be Served By Reopening The Six Concluded Assessments Because In Such A Situation There Cannot Be An Intention Of The Legislature To Empower The Assessing Officer To Reopen Such Assessments Again And To Tak E A Different View On Concluded Matters Without Passing Through The Test Of Change Of Opinion Particularly When Under The Plain Scheme Of Act P Ower Of Review Has Not Been Conferred On Any Income Tax Authority To Put It Differently An Order Can Be Rectified U S 154 Or Assessment Or Rea Ssessment Can Be Done U S 147 Read With Section 148 Or Revision Can Be Do Ne U S 263 And Such Action Powers Are Entirely Different From The Power Of Review In This Regard We Further Of The Opinion That What Cannot Be Directly That Cannot Be Done Indirectly Hence Where Concluded Assessme Nt Cannot Be Reopened Revised Under Normal Provisions Of Section 147 Or 263 Provisions Of Section 153 A Cannot Be Put Into Opera Tion As Well Without Any Incriminating Material And Thus No Purpose Wou Ld Be Served By Reopening Six Back Completed Assessments In Such A Situation Therefore Page 24 Of 149 In Our Opinion Even U S 153 A Completed Assessment C An Be Reopened Only In Respect Of Such Years Where There Is Some Materi Al Indicating Undisclosed Income Thus In Our Opinion This Is Why The Legislature Has Further Provided That Notice Shall Be Issued For Ea Ch Year And Assessment Shall Also Be Completed For Each Year Separately 16 This View Is Further Supported By The Decision Of The Division Bench Of The Tribunal In The Case Of Lmj Internatio Nal Limited V Dcit As Reported In 22 Sot 315 Wherein The Tribunal Exam Ined The Provisions Of Sections 153 A To 153 C Of The Act In Detail And H Eld That The Items Of Regular Assessment Could Not Be Disturbed And The I Tems Of Income Expenditure Which Had Been Disclosed To The Department Were Outside The Purview Of Assessment Of Search Cases I N The Absence Of Any Incriminating Material Found To Suggest That Such C Laims Were Wrongly Allowed And Only Undisclosed Income Detected In The Case Of Searched Person Or Other Person Referred To In Section 153 C Can Be Added And Charged To Tax The Relevant Findings Of The Tribu Nal In The Said Case Are As Under 8 A Reading Of Section 153 A Reveals Apparent Contradiction In The First Proviso And The Second P Roviso The First Proviso Provides That The Assessment Or Reass Essment Shall Be Done By The Assessing Officer In Respect O F Each Page 25 Of 149 Assessment Year Falling Within Six Assessment Years Proceeding The Year Of Search The Second Proviso On The Other Hand Provides That The Assessment Reassessme Nt Pending On The Date Of Search Shall Abate In Other Words The Assessments Which Are Not Pending Shall Hold T He Field The Assessee Contends That The Concluded Assessment S Cannot Be Disturbed By The Assessing Officer And Ev En Under The New Scheme Only Undisclosed Income Detected In The Course Of Search Can Be Added And Charged To Tax T He Department On The Other Hand Vehemently Contends That Once A Search Is Conducted The Preceding Six Years Assessment Of The Searched Person And Any Other Per Son Whose Valuables And Or Books Or Documents Are Foun D During Search Are Ripped Open And The Assessment Reassessments Shall Be Framed Afresh 9 As The Issue Under Consideration Is New And No D Irect Legal Precedents Are Available On The Point We Tak E Aid From The Principles Of Statutory Interpretation And Also From A Judgment Of The Honble Jharkahnd High Court In The Case Of Abhay Kumar Shroff V Cit 2007 290 Itr 114 Whe Re The New Provisions Of Assessments Of Search Cases Have Fallen For Consideration Although In A Different Context 10 The Basic Principle Of Interpretation Of A Stat Ute Is That Where The Words Of A Statute Are Clear Plain Or Unambiguous The Courts Should Give Effect To That Meaning Irrespective Of Consequences As We Have Seen Above The Language Of Section 143 A Is Not Unambiguous And Is Not Page 26 Of 149 Susceptible To Only One Meaning In The Circumstanc Es The Principle Of Literal Construction Is Of No Help We Therefore Would Like To Take Recourse To Other Guiding Rules Like Rule Of Harmonious Construction Regard To Consequences Ru Les Relating To Provisos And The External Aids Like Contemporanea Expositio 11 One Of The Salutary Rule Is Rule Of Harmonious Construction According To This Rule A Statute Mus T Be Read As A Whole And One Provision Of The Act Should Be C Onstrued With Reference To Other Provisions In The Same Act So As To Make A Consistent Enactment Honble Supreme Court In The Case Of Raj Krushna Bose V Binod Kanungo Air 1954 Sc 202 At Page 203 Held That It Is The Duty Of The Cou Rts To Avoid Ahead On Clash Between Two Sections Of The Same A Ct And Whenever It Is Possible To Do So To Construe Provis Ions Which Appear To Conflict So That They Harmonise It Was F Urther Held By The Privy Council In Mohammad Sher Khan Air 1922 Pc 17 That The Provisions Of One Section Of A Statue C Annot Be Used To Defeat Those Of Another Unless It Is Impos Sible To Effect Reconciliation Between Them In King V Dominion Engineering Co Ltd Air 1947 P C 94 At Page 95 It Was Held That If Out Of Two Provis Os The Later Is Repugnant To The Earlier One The Later Prevails 12 The Meaning Of Assessment Reassessment Does Not Always Mean Taking Recourse To The Whole Producer L Aid Down In The Act For Computing The Tax Liability Th E Honble Page 27 Of 149 Superme Court In The Case Of C A Abraham Supra H As Held As Under The Expression Assessment As Has Often Been Said Is Used In The Income Tax Act With Different Connotations In Commissioner Of Income Tax V Khemchand Ramdas The Judicial Committee Of The Privy Council Observed One Of The Peculiarities Of Most Income Tax Acts Is That The Word Assessment Is Used As Meaning Sometimes The Computation Of Income Sometimes The Determination Of The Amount Of Tax Payable And Sometimes The Whole Procedure Laid Down In The Act Imposing Liability Upon The Taxpayer The Indian Income Tax Act Is No Exception In This Respect Further The Honble Supreme Court In The Case Of Parashuram Pottery Works Co Ltd Supra Has Held In The Context Of Reopening Of Assessments That Stale Issu Es Should Not Be Reiterated Beyond A Particular Stage And Lap Se Of Time Must Induce Repose In And Set At Rest Judicial And Quasi Controversies As It Must In Other Spheres Of Human Activity 13 In View Of The Above Discussions It Is Possibl E To Effect Reconciliation Of The Two Provisos Appended To Sect Ion 153 A By Restricting The Meaning Of The Term Assess Or R Eassess Appearing In The First Proviso After The Search I N Our Considered Opinion The Total Income Of The Assesse E Is To Be Page 28 Of 149 Recomputed On The Basis Of The Undisclosed Income Unearthed During Search And The Same Is To Be Added With The Regular Income Assessed Under Section 143 3 Or Computed Under Section 143 1 For Each Of The Six P Receding Assessment Years Where Any Prepaid Taxes Are There The Same Are Required To Be Given Credit For Computing The Further Tax Payable By The Assessee The Assessee I S Also Required To Pay Interest Under Sections 234 A And 23 4 B On The Tax Due On The Basis Of New Calculation Where Nothing Incriminating Is Found In The Course Of Search Rela Ting To Any Assessment Years The Assessments For Such Years Ca Nnot Be Disturbed In Our Considered View 14 The Construction That The Department Seeks To P Lace On The Impugned Provisions Would Lead To Serious Hards Hip Inconvenience Injustice Absurdity And Anomaly Su Ppose In The Course Of A Search Nothing Incriminating Was F Ound Does This Mean That An Honest Citizen Be Unduly Har Assed By Facing Automatic Reopening Of The Concluded Assessm Ents Merely Because There Was Search Action Against Him The Absurdity Of The Construction Get All The More Pronounced When Say No Incriminating Material Is F Ound Relating To The Other Person But The Material Fou Nd Indicates Disclosed Income Suppose Loan Confirmat Ion Relating To Loans Duly Disclosed In The Return Of I Ncome Of Mr A Are Found At The Time Of Search In The Premis Es Of Mr B Should The Assessments Of Mr A Be Reopened For A Ll The Six Page 29 Of 149 Preceding Years Merely Because Search Action Has Be En Initiated Against B Courts Have Held That In Selecting Out Of Different Interpretations The Courts Shall Adopt That Which Is Just Reasonable And Sensible Rather Than That Which Is N One Of Those Things The Following Words Of Max Radin Were Quoted With Approval In The Case Of Brij Gopal V State Of M P 1978 Mplj 70 Page 75 It Is True That The Consideration Of Consequences Of A Decision Has At All Times Been A Controlling Factor In The Judicial Process Those Courts Who Declare Vigorously That They Are Completely Indifferent To The Consequences Of What They Decide And Would Decide As They Do Though The Heaven Fell Merely Mean That They Do Not Believe That The Consequences Will Be Seriously Harmful If They Meant What They Said And Acted On It They Would Be Taking A Long Step Towards The Destruction Of Our Judicial System 15 We May Also Refer To Cbdt Circular No 7 Of 200 3 Dated 5 9 2003 263 Itr St 62 Explaining The Sco Pe And Effect Of New Assessment Procedures In Search Cases I E Sections 153 A To 153 C Para 65 5 Of The Said Circular Reads As Under 65 5 The Assessing Officer Shall Assess Or Reassess The Total Income Of Each Of These Six Page 30 Of 149 Assessment Years Assessment Or Reassessment If Any Relating To Any Assessment Year Falling Within The Period Of Six Assessment Years Pending On The Date Of Initiation Of The Search Under Section 132 Or Requisition Under Section 132 A As The Case May Be Shall Abate It Is Clarified That The Appeal Revision Or Rectification Proceeding Pending On The Date Of Initiation Of Search Under Section 132 Or Requisition Shall Not Abate Save As Otherwise Provided In The Proposed Section 153 A Section 153 B And Section 153 C All Other Provisions Of This Act Shall Apply To The Assessment Or Reassessment Made Under Section 153 A It Is Also Clarified That Assessment Or Reassessment Made Under Section 153 A Shall Be Subject To Interest Penalty And Prosecution If Applicable In The Assessment Or Reassessment Made In Respect Of An Assessment Year Under This Section The Tax Shall Be Chargeable At The Rate Or Rates As Applicable To Such Assessment Year A Reading Of The Above Mentioned Circular Clearly I Ndicates That The Appeal Revision Etc Arising Out Of Earli Er Assessments Shall Not Abate In Other Words There Is No Merger Of The Earlier Assessments With The Assessme Nts Done Under The New Scheme I E Section 153 A Or 153 C Page 31 Of 149 16 The Honble Jharkhand High Court In The Case Of Abhay Kumar Shroff Supra Has Held Recently That There Shall Be Assessment Of Undisclosed Income Of Six As Sessment Years Preceding That In Which Search Was Conducted Under The New Scheme Of Assessment Emphasis Supplied 17 The Ld Cit Dr Has Mainly Relied Upon The Liter Al Construction Of The Provision We Have Elaborately Dealt With The Issue And For The Reasons Stated Hereinbefore We Are Unable To Subscribe To This View The Ld Cit Dr H As Also Referred To The Provisions Of Sections 234 A And 234 B Wherein Section 153 A Has Been Inserted After New Sc Heme Of Search Assessments Was Brought In The Statute Book A Careful Perusal Of The Said Provisions Reveals That The Amendment Enables The Department To Levy Interest U Nder Sections 234 A And 234 B On The Undisclosed Income Unearthed During Search The Amendment Made In Sect Ions 234 A And 234 B Does Not Help The Case Of The Departm Ent The Ld Cit Dr Has Also Submitted That Section 153 A Requires Assessment Reassessment Of Total Income Which Means Total Amount Of Income Computed In The Manner Laid Down In The Act In Our Opinion The Manner Of Comp Utation Suggested By Us Is Not Inconsistent With The Provis Ions Of The Act The Ld Cit Dr Has Also Contended That Section 15 3 A Starts With Non Obstante Clause And Excludes Application O F Sections 147 And 148 Relating To Reopening Of Asses Sments We Agree With The Ld Dr But At The Same Time The Scheme Page 32 Of 149 Of The Act Is Very Clear The Regular Assessments Ar E Made In Terms Of Sections 139 142 And 143 Concluded Asses Sments Can Be Reopened As Per Sections 147 And 148 In Case The Assessing Officer Has Reasons To Belief That The Income Chargeable To Tax Has Escaped Assessment And The Pr Ovisions Of Sections 153 A To 153 C Can Be Resorted To For The Assessment Of Undisclosed Income In Search Cases A Ll The Three Procedures Of Assessment Operate In Different Fields And Have Different Purposes To Be Fulfilled Altoget Her 17 Further Our View That Only Undisclosed Income Can Be A Subject Matter Of Proceedings U S 153 A Or 153 C Read With Se Ction 153 Ais Duly Supported By The Decision Of Honble Jharkhand High Court In The Case Of Abhay Kumar Shroff Vs Cit As Reported In 290 Itr 1 14 18 Further There Can Be A Reverse Situation Also I E The Assessee May Make A New Claim For Deduction Or Allowance U S 153 A Where Admittedly The Regular Assessments Have Been Comple Ted On The Date Of Initiation Of Action Under Section 132 Or Requisiti On Made Under Section 132 A Can This Be Entertained Or Considered Under S Ection 153 A Because As Per The Second Proviso The Section 153 A Only Pen Ding Assessment Or Reassessment Shall Abate And Not All Proceedings Or Returns Filed Under Section 153 A 2 It Has Also Been Provided That Appe Al Proceedings Revision Proceedings Or Rectification Proceedings Which Are Continuation Page 33 Of 149 Of Assessment Or Reassessment Proceedings Shall No T Abate Meaning Thereby The Proceedings Which Are Supposed To Abate Are In Relation To Assessment Or Reassessment To Be Made By The Assess Ing Officer In Other Words Having Regard To The First And Second Provis O To Section 153 A The Assessments Which Are Not Pending Shall Hold The Field Further The Purpose Of Abatement Of Pending Assessment Is Only To Avoid Two Parallel Proceedings Of Assessment Of Particular Year Of The Same Person I E One As A Regular Assessment And Another As An Assessment U Nder Section 153 A Of The Act And It Is Not So Because The Whole Exercise Of Assessment Is To Be Made Afresh In Respect Of Completed Assessments Th Us A New Claim Of Deduction Or Allowance In Case Of Completed Assessm Ents On The Date Of Initiation Of Action Under Section 132 Or Requisiti On Made U S 132 A Cannot Be Made This Is Also So Because When The Assessing Officer Cannot Disturb The Finality Of Concluded Assessments Witho Ut Any Material And Assessments Under Section 153 A Are In Relation To D Etermination Of Undisclosed Income In Such Cases This View Is Furt Her Supported By The Decision Of The Tribunal In The Case Of Sun City Al Loys P Limited V Acit As Reported In 124 Ttj Page 674 Wherein The Tr Ibunal After Considering Various Judicial Decisions Including Th At The Honble Jharkhand High Court In The Case Of Abhay Kumar Shr Off V Cit As Reported In 290 Itr 114 Held As Under Page 34 Of 149 14 From The Reading Of S 153 A Of The Act It Is Evident That This Section Starts With Non Obstante Clause And Overrides Ss 139 147 148 149 151 An D 153 It Provides The Procedure For Assessment Where A Search Is Initiated Under S 132 Of The Act Or Book S Of Account Or Other Documents Or Any Assets Are Requisitioned Under S 132 A Of The Act This Sectio N Does Not Override The Provisions Contained Under S 143 Of The Act It Makes Imperative On The Part Of The Ao To Issue Notice To Such Person Requiring Him To Furnish Within Such Period As May Be Specified In The Notice Return Of Income In Respect Of Each Assessm Ent Year Falling Within Six Assessment Years Preceding The Assessment Year In Which The Search Was Conducted Under S 132 Or Requisition Was Made Under S 132 A O F The Act It Also Mandates To Assess Or Reassess The Total Income Of Six Assessment Years Immediately Preceding The Assessment Year Relevant To The Previ Ous Year In Which Such Search Is Conducted Or Requisiti On Is Made Even Though No Notice Is Required To Be Issued To Such Person Requiring Him To Furnish Retu Rn In Respect Of Assessment Year Relevant To The Previ Ous Year In Which Search Is Conducted Under S 132 Or Requisition Is Made Under S 132 A Of The Act S 15 3 B Prescribes Time Limit For Completion Of Assessment In Such Cases Also By Implication Return Of Income Fo R Such Period Need To Be Furnished Voluntarily By The Page 35 Of 149 Assessee In The Same Manner As Prescribed Under S 139 Of The Act Whereas By Mandate Of The Act The Returns For Six Assessment Years Immediately Preceding The Year In Which Action Under S 132 Has Been Taken Are To Be Furnished On Demand By The Assessing Authority The Return So Demanded Therefore Are Not Voluntary Returns 15 Considering The Submissions And Upon The Perusal Of Second Proviso Below S 153 A It Is Also Found Clearly Laid That The Assessment Or Reassessm Ent Referred To In S 153 A Of The Act That Are Pending On The Date Of Initiation Of Search Or Making Of Requisition Under S 132 A Shall Abate The Statute Does Not Say That The Assessment Or Reassessment That Ha S Already Been Made Before The Date As Aforesaid Shal L Also Abate It Is Also Not Correct That All The Proceedings Or Returns Filed Shall Also Abate In F Act The Assessing Authority Is The Custodian Of All Suc H Returns Including The Returns Relatable To Pending Assessments That Stand Abated Sub S 2 Of S 153 A Of The Act Mandates That If Any Proceedings Initiated Or Any Order Of Assessment Made Under Sub S 1 Relati Ng To Any Assessment Year Which Has Been Abated Under Second Proviso To S 153 A Shall Stand Revived From The Date Of Receipt Of The Order Of Such Annulment By The Cit This Goes To Show That The Assessing Autho Rity Cannot And Shall Not Destroy Such Returns From His Page 36 Of 149 Record Furthermore The Proceedings That Are Supposed To Be Abated Are In Relation To Assessment Or Reassessment To Be Made By The Officer Of Original Jurisdiction I E The Ao And Not All Other Proceed Ings Such As Appeal Revision Or Rectification Which Ar E Continuation Of Assessment Or Reassessment Proceedings As Is Evident From The Board In Its Circular No 7 Of 2003 Dt 5 Th Sept 2003 Reproduced Hereinbefore The Appellants Reference To Honble Apex Courts Judgment In The Case Of S Sankappa Ors Vs Ito 1968 68 Itr 760 Sc Is Also Relevan T To Understand The Concept Of Pending Assessment The Honble Apex Court While Defining Assessment Have Laid That The Word Assessment Is Used In The I T Act In A Number Of Provisions In A Comprehensive Sense And Includes All Proceedings Starting With T He Filing Of Return Or Issue Of Notice And Ending With Determination Of The Tax Payable By The Assessee I N This View The Assessment Proceedings Shall Be Understood To Have Commenced From The Date Of Filin G Of Return By An Assessee The Assessments That Shal L Have To Be Thus Considered Pending On The Date Of Initiation Of Action Under S 132 Shall Be I Where After Filing Of The Return Of Income In Accordance With Provisions Of S 139 Of The Act Th E Same Is Neither Processed Under S 143 1 A Nor A Notice Issue Under S 143 2 Of The Act Before The Page 37 Of 149 Expiry Of Limitation Period At The Time When Action Under S 132 Of The Act Has Been Initiated Ii Where A Notice Under S 143 2 Of The Act Has Been Issued But The Assessment By The Ao Has Not Be En Completed Within The Time Prescribed Under S 153 1 Of The Act 16 According To Mandate Of S 139 5 Of The Act The Assessee Has S Statutory Right To Revise Its Re Turns Of Income In The Manner Provided Therein An Assess Ee Filing Return In Response To Notice Under S 153 A Shall Also Be Eligible To Make New Claim Of Deduction Or Allowance In The Case Of Pending Assessments Where Time To Revise Returns Has Not Expired After The E Xpiry Of Time Available Under S 139 5 No Such New Claim Of Deduction Or Allowance Can Be Made In Such Returns 17 The Expression Assessment Or Reassessment Used In S 153 A Of The Act Connotes Determination O F Total Income Pursuant To Return Required To Be File D In The Case Of A Person Where A Search Is Initiated Un Der S 132 Or Requisition Is Made Under S 132 A Of The Act To Such Assessment Or Reassessment Made All Other Provisions Of This Act Shall Also Apply As Is Spell Ed Out In Expln I Below S 153 A Explanation Ii Furth Er Clarifies The Amount Of Tax Chargeable In An Assessment Or Reassessment In Respect Of An Assessment Under This Section It Is Thus Amply Cle Ar That The Expression Assessment Or Reassessment Page 38 Of 149 Used In This Section Have To Be Understood In The Context Of S 153 A Of The Act Alone The Word Assessment Is Used In A Number Of Provisions In A Comprehensive Sense And It Can Comprehend The Whole Procedure For Ascertaining And Imposing Liability Upon The Taxpayer And The Machinery For Enforcement Thereof The Concept Of Expression Assessment Used In The It Act At Different Place With Different Connotations Has Been Explained By The Honble Apex Court In C A Abraham Vs Ito 1961 41 Itr 425 Sc 429 The Meaning To Be Assigned To The Word Assessment Has To Be Understood In Each Section With Reference To The Context In Which It H As Been Used As Laid Down By The Honble Apex Court In A N Lakshman Shenoy Vs Ito 1958 34 Itr 275 Sc 291 Thus In S 153 A The Expression Signifies Merely Computation Of Undisclosed Income That Shall Form Part Of Total Income Within The Meaning Of S 2 45 Of The Act In Respect Of Each Of The Assessme Nt Falling Within Such Six Assessment Years That Is Required To Be Aggregated With The Income Already Assessed In Cases Of Completed Assessments More So When S 132 Of The Act Comprehends Action To Search Of A Person In Possession Of Undisclosed Income Or Property In Those Cases Where Assessments Are Pending At The Time Of Initiation Of Action Under S 132 The Computation Of Total Income Has To Be Done In A Page 39 Of 149 Normal Manner In Our Humble Opinion The Computation Of Total Income So Made Shall Meet The Requirement Of S 4 Of The Act 18 The Judgement Rendered By The Honble Jharkhand High Court In The Case Of Abhay Kumar Shroff Vs Cit 2007 210 Ctr Jharkhand 602 2007 290 Itr 124 Jharkhand Relied By The Appellants Also Clearly States That After 31 St May 2003 The Earlier Provision Of Block Assessment In The Case Of Search Initiated Shall Not Apply Instead The Provision That There Shall Be Assessment On Undisclosed Income Comprising Of Previous Years Relating To Six Assessment Years Preceding In Which Search Was Conducted Shall Apply This Supports Th E View We Have Entertained In The Earlier Para Havin G Regard To The Provisions Of S 139 5 Of The Act An D Since The Assessments Under S 153 A Are In Relation To Undisclosed Income It Is Precisely For This Reason That New Claim Of Deduction Or Allowance Cannot Be Made In The Completed Assessments It Is A Settled Princ Iple Of Law That What Cannot Be Done Directly Can Also N Ot Be Done Indirectly Reference May Be Had To The Judgements Rendered By Honble Allahabad High Court In Anupam Sushil Garg Vs Cit 2003 185 Ctr All 505 2004 265 Itr 474 All 19 There Is Another Reason For Not Agreeing With The Appellants Plea That The Assessment Or Page 40 Of 149 Reassessment Of Six Years Preceding To The Year In Which Search Is Initiated And The Assessment Year I N Which Search Is Initiated Contemplates Fresh Assessment Is That The Second Proviso Below S 153 A Of The Act Suspends Only The Pending Assessment Th E Word Abate Has Not Been Defined In The Act The Honble High Court In Abhay Kumar Shroff Vs Cit Supra Has Extracted The Dictionary Meaning Of The Said Word As Under According To Chambers Dictionary The Word Abate Means Demolition Or To Put An End To The Law Lexicon Defines The Word Abate Which Means To Throw Down Destroy Or Quash Or Nullify According To Blacks Law Dictionary The Word Abatement Means The Act Eliminating Or Nullifying Or Suspensions Or Defeat Of A Pending Action According To Advanced Law Lexicon By P Ramanathan Aiyar The Word Abate Means Diminish Or Take Away Or Put An End To Or Come To A Naught The Term Is Used In Usa To Describe The Cancellatio N In Whole Or In Part Of A Government Levy 20 Furthermore In Strouds Judicial Dictionary Fourth Edn Vol 4 At P 1975 It Is Stated As Unde R A Legal Proceeding Is Pending As Soon As Commenced And Until It Is Concluded I E So Long T He Long Having Original Cognizance Of It Can Make An Page 41 Of 149 Order On The Matters In Issue Or To Be Dealt With Therein The Passage From Strouds Judicial Dictionary Was Approved By The Honble Supreme Court In Asgarali Nazarali Vs State Of Bombay Air 1957 Sc 503 At P 509 Of The Report Justice Bhagwati Delivering The Judgment Of The Honble Supreme Court Set Out This Definition Of Pending Legal Proceeding And Then Observed Similar Are The Observations Of Jessel M R In In Re Clagetts Estate Fordham Vs Clagett 1982 20 Ch D 637 653 Ca What Is The Meaning Of The Word Pending In My Opinion It Includes Every Insolvency In Which Any Proceeding Can By Any Possibility Be Taken That I Think Is The Meaning Of The Word Pending A Cause Is Said To Be Pending In A Court Of Justice When An Y Proceeding Can Be Taken In It That Is The Test 21 Thus The Entire Overthrow Or Destruction Or Termination Of Pending Assessment Before The Assessing Authority Who Can Take Original Cognizanc E Is Only To Avoid Two Parallel Proceedings Of Assessment Of A Particular Year Of The Same Person I E One As Regular Assessment And Another As Assessment Under S 153 A Of The Act And Not That Th E Whole Exercise Of Assessment To Be Made Afresh In Respect Of Completed Assessments Page 42 Of 149 22 The Issuance Of Notice S 153 A For All The Six Assessment Years Also Does Not Entail Altogether A Fresh Exercise Of Making Fresh Assessment In Fact The Apparent And Logical Purpose Of Calling For Returns For All The Six Assessment Years Immediately Preceding The Year In Which Search Is Initiated Is To Dispense Wi Th The Requirement Of Recording Reasons For Reopening The Assessment And Also To Avoid Any Controversy As To The Correct Year Of Assessability Of Such Income Fallin G Within Such Six Assessment Years Necessarily The Undisclosed Income That Shall Form Part Of Total Income Would Be So Taken After Defraying For All Expenses That Are Incurred For Earning Such Income Be The Assessee Reference To The Principle Laid In Judgment Rendered By Apex High Court In Cit Vs Piara Singh 1980 17 Ctr Sc 111 1980 124 Itr 40 Sc Is Relevant 23 We Therefore Find Ourselves In Agreement With The Proposition Made By The Learned Departmental Representative That Rules Of Interpretation So Appl Ied Would Not Allow Making Of Fresh Claims As Such Principle Of Interpretation Laid By Honble Apex Co Urt In Poppatlal Shah Vs State Of Madras Air 1953 Sc 274 Reads As Under It Is A Settled Rule Of Construction That To Ascer Tain The Legislative Intent All The Constituent Parts O F A Statute Are To Be Taken Together And Each Word Page 43 Of 149 Phrase Or Sentence Is To Be Considered In The Ligh T Of The General Purpose And Object Of The Act Itself T He Title And Preamble Whatever Their Value Might Be A S Aids To The Construction Of A Statue Undoubtedly T Hrow Light On The Intent And Design Of The Legislature A Nd Indicate The Scope And Purpose Of The Legislation Itself 24 Viewed In This Manner And Considering The Scheme Of The Act It Is Apparent That S 234 B Of T He Act Also Mandates Only The Increase In Amount Of Interest Pursuant To Assessment Under S 153 A Of Th E Act Sec 240 Of The Act Does Not Entitle And Asses See To Claim Refund Of The Tax Paid In Excess Of The Ta X Chargeable On The Total Income Returned By The Assessee In Cases Where Assessments Have Already On E Year From The End Of The Relevant Assessment Year O R Before The Completion Of The Assessment Whichever I S Earlier Furthermore The Original Returns Filed Und Er S 139 Of The Act Are Relevant For Imposing Penalty In Such Cases This All Goes To Show That The Assessme Nt Or Reassessment Made Pursuant To Notice Under S 153 A Of The Act Are Not De Novo Assessments We Therefore Find No Merit In The Ground Raised In Ap Peal To Make A New Claim Of Deduction Or Allowance As Such Where Admittedly The Regular Assessments Are Shown As Completed Assessment On The Date Of Page 44 Of 149 Initiation Of Action Under S 132 Of The Act Such A Ground In All Appeals Stands Rejected 19 The Learned Cit Dr Has Also Argued That All The As Sessments Were To Be Construed As Made Under Section 143 And In This Regard He Has Placed Reliance Upon Several Decisions As Mentioned Hereinbefore However From A Perusal Of These Judicial Decisions And In View Of The Settled Position That The Term Assessment Has Got Varied Meanings I E It May Include Complete Assessment Procedure I E Cons Ideration Of Return Till The Realization Of Taxes And Penalty After Qu Antification Of Total Income And Tax Liability Or It May Include Some Of These Aspects It Is Further Noteworthy That Section 143 Of The Act Has Got Two Dimensions I E Firstly It Confers Jurisdiction On The Assessing O Fficer To Verify The Return Examine The Claims Of The Assessee And Quantify The Total Income In Accordance With The Provisions Of The Act And The S Econd Dimension Is Related With The Compliance Of Principles Of Natura L Justice By Affording An Adequate Opportunity Of Hearing To The Assessee To Substantiate Its Claim And To Satisfy The Requirements Of The Act T He First Aspect As Stated Above Is A Case Of Original Jurisdiction And Henc E Proceedings Under Section 147 Or 154 Of The Act Are Distinct In Scope And Nature From Section 143 In This Respect It Can Further Be Clarified T Hat Provisions Of Section Page 45 Of 149 147 Can Be Invoked Only In Case Of Certain Specific Situations Having A Limited Scope Whereas Under Section 143 3 Read Wit H Section 143 2 The Scope Of The Assessing Officers Power Is Much Wide R In Our View When An Assessment Is Made Under Section 147 Or Under Se Ction 153 A 153 C Or Erstwhile Section 158 Bc Or 158 Bd Only The Second D Imension Of Section 143 Comes Into Play Subject To The Exception Of Se Ction 153 A Or 153 C Read With Section 153 A Being Exercised In Case Of Abated Pending Assessments And For The Assessment Proceedings Of The Year Of Search Or Requisition Wherein The Scope Of Such Provisions W Ould Be Equivalent To The Total Scope Of Provisions Of Section 143 Of The Act As There Would Be Only One Assessment For Such Year S Thus In Our Opinion Provisions Of Section 153 A When Viewed In This Perspective Are A Combination Of Provisions Of Section 143 And Section 147 For Doing Assessment Or Re Assessment Of Total Income In Respect Of Cases Cove Red By Section 132 Or Section 132 And Operates In Respective Fields In Th E Manner As Narrated Here In Before Accordingly We Reject This Conten Tion Of The Revenue 20 The Ld Counsel Has Also Argued That Assessment For The Assessment Year Relevant To The Previous Year In Wh Ich Search Took Place Has To Be Made Under The Normal Provisions Of Law We Are Unable To Accept This Contention Of The Assessee For The Reas On That It Is A Case Of A Person Referred To In Section 153 C 1 Hence The Aspect Of Making An Page 46 Of 149 Assessment Reassessment U S 153 A Would Be Predomina Ntly Applicable Further The Provisions Of Section 153 C 2 Also Pro Vide For Assessment Of Previous Year In Which Search Took Place As Per The Provisions Of Section 153 C Read With Section 153 A Hence In Normal Situa Tion There Appears No Logic As To Why The Provisions Of Section 153 A Woul D Not Be Applicable For The Year Of Search In This Regard We Further Draw Support From The Order Of This Bench In The Case Of Sushil Kumar Jai N In I T Ss A No 54 Ind 2007 Order Dated 20th January 2010 Wherein This Issue Has Been Examined In Detail The Relevant Fin Dings Of The Tribunal In The Said Order Are Reproduced As Under For The S Ake Of Ready Reference Ix We Have Considered The Submissions Made By Both The Sides Material On Record And The Orders Of The Authorities Below X The Issues Which Require Adjudication By Us Can Be Summarized As Under I Whether Assessment For The Previous Year In Which Search Is Initiated U S 132 Or Requisition U S 132 A Is Made Has To Be Done In Accordance With The Provisio Ns Of Section 153 A 153 B Of The Act Ii If So Then Whether Time Limit For Service Of Notic E U S 143 2 Of The Act Shall Also Apply And How Such Tim E Limit Shall Be Determined Page 47 Of 149 Xi Before Proceeding Further We Consider It Relevant To Reproduce Relevant Provisions Of Section 153 A 153 B As Under 153 A 1 Notwithstanding Anything Contained In Section 139 Section 147 Section 148 Section 149 Section 151 And Section 153 In The Case Of A Person Where A Search Is Initiated Under Section 132 Or Books Of Account Other Documents Or Any Assets Are Requisitioned Under Section 132 A After The 31st Day Of May 2003 The Assessing Officer Shall A Issue Notice To Such Person Requiring Him To Furnish Within Such Period As May Be Specified In The Notice The Return Of Income In Respect Of Each Assessment Year Falling Within Six Assessment Years Referred To In Clause B In The Prescribed Form A Nd Verified In The Prescribed Manner And Setting Forth Such Other Particulars As May Be Prescribed And The Provisions Of This Act Shall So Far As May Be App Ly Accordingly As If Such Return Were A Return Require D To Be Furnished Under Section 139 B Assess Or Reassess The Total Income Of Six Assessment Years Immediately Preceding The Assessment Year Relevant To The Previous Year In Which Such Search Is Conducted Or Requisition Is Made Provided That The Assessing Officer Shall Assess Or Reassess The Total Income In Respect Of Each Assessment Year Falling Within Such Six Assessment Years Page 48 Of 149 Provided Further That Assessment Or Reassessment If Any Relating To Any Assessment Year Falling Within The Period Of Six Assessment Years Referred To In This 88 Sub Section Pending On The Date Of Initiation Of The Search Und Er Section 132 Or Making Of Requisition Under Section 132 A As The Case May Be Shall Abate 89 2 If Any Proceeding Initiated Or Any Order Of As Sessment Or Reassessment Made Under Sub Section 1 Has Been Annulled In Appeal Or Any Other Legal Proceeding T Hen Notwithstanding Anything Contained In Sub Section 1 Or Section 153 The Assessment Or Reassessment Relating To Any Assessment Year Which Has Abated Under The Second P Roviso To Sub Section 1 Shall Stand Revived With Effect From The Date Of Receipt Of The Order Of Such Annulment By T He Commissioner P Rovided That Such Revival Shall Cease To Have Effect If S Uch Order Of Annulment Is Set Aside Explanation For The Removal Of Doubts It Is Hereby Declared That I Save As Otherwise Provided In This Section Section 153 B And Section 153 C All Other Provisions Of This Act Shall Apply To The Assessment Made Under This Section Ii In An Assessment Or Reassessment Made In Respect Of An Assessment Year Under This Section T He Tax Shall Be Chargeable At The Rate Or Rates As Applicable To Such Assessment Year Time Limit For Completion Of Assessment Under Sec Tion 153 A 153 B 1 Notwithstanding Anything Contained In Section 153 The Assessing Officer Shall Make An Order Of Assessment Or Reassessment Page 49 Of 149 A In Respect Of Each Assessment Year Falling Within Six Assessment Years Referred To In Clause B Of 89 Sub Section 1 Of Section 153 A Within A Period Of Two Years From The End Of The Financial Year In Which The Last Of The Authorisations For Search Under Section 132 Or For Requisition Under Section 132 A Was Executed B In Respect Of The Assessment Year Relevant To The Previous Year In Which Search Is Conducted Under Section 132 Or Requisition Is Made Under Section 132 A Within A Period Of Two Years From The End Of The Financial Year In Which The Last Of The Authorisati Ons For Search Under Section 132 Or For Requisition Under Section 132 A Was Executed 12 If We Analyze The Provisions Of Section 153 A Ag Ain Then It Emerges That This Section Operates In The Following Fields 1 It Gives Jurisdiction To The A O To Issue Notice F Or Six Back Assessment Years And To Assess Or Re Assess To Tal Income Of Such Six Assessment Years 2 The A O Has To Assess Or Re Assess The Total Incom E In Respect Of Each Assessment Year Falling Within Such Six Assessment Years 3 The Pending Assessment Or Re Assessment Relating To Any Assessment Year Falling Within The Period Of Su Ch Six Assessment Years Shall Abate Page 50 Of 149 4 The Tax Is To Be Charged At The Rate Or Rates As Applicable To Specific Assessment Year Falling In S Uch Block 5 Save As Otherwise Provided In Section 153 A 153 B And Section 153 C All Other Provisions Of The Act S Hall Apply 6 No Time Limit Has Been Prescribed For Issue Of Noti Ce U S 153 A Nor Any Time Limit Has Been Prescribed For Filing Of Return In Pursuance To Notice Issued U S 153 A However Such Notice May Prescribe The Time Frame Within Which The Return Is Required To Be Furnished 7 The Return So Furnished Shall Be Treated As Were Required To Be Filed U S 139 8 The Provisions Of Section 143 Are Not Overridden 13 Thus There Can Be Three Situations For Making An Assessment U S 153 A I E Firstly The Reassessment Of All Completed Assessments Falling Under The Period Of Six Assessment Years Secondly There Could Be Pending Assessment Or Reassessment Of Any Assessment Year Falling In Such Period And In That Case Such Pending Assessment Shall Abate And Page 51 Of 149 The Assessee Would Be Required To File A Fresh Retu Rn U S 153 A And Assessment Or Re Assessment Of Such Year Shall Be Done U S 153 A Thirdly Assessment For The Year In Which Search Is Conducted Which Has Been Disputed In The Present Appeal As Far As First Two Aspects Are Concerned The Provisions Are Absolutely Clear However The Scope Of Operation Of The Provisions Of Section 153 A May Be Different In First Two Situations Because In The Case Of Completed Assessment Re Assessment The Re Assessment Would Be Limited In Scope Having Regard To The Fact That Jurisdiction U S 153 A In Su Ch Situation Is A Result Of An Action As Per The Provisions Of Section 132 And 132 A I E The Income Already Assessed Plus Undisclosed Income Undisclosed Assets Pertaining To A Specific Year Would Become The Total Income For Such Year In The Second Situation I E In The Case Of Proceedings In Relation To An Abated Assessment Th E Scope Of Provisions Of Section 153 A Would Be Little Wider In A Sense That There Has To Be One Assessmen T Page 52 Of 149 Re Assessment For Such Year And Therefore In Addition To The Undisclosed Income Assets The Othe R Claims Of The Assessee Which May Normally Fall Within The Scope Of Provisions Of Section 143 Section 143 Read With Section 144 Or Section 143 Read With Section 147 Would Also Be Covered Similarly The Scope Of Assessment U S 153 A For The Assessment Year Relevant To The Previous Year I N Which Search Took Place Or Requisition Was Made Would Be Wider I E It Would Also Cover The Matters Of Section 143 Of The Act Thus In Nut Shell Section 153 A Can Be Summarized As A Combination Of Section 143 Section 147 And Factually For Assessment Or Re Assessment Of Total Income In Respect Of Cases Covered By Section 132 Or Section 132 A 14 It Is Further Pertinent To Note That New Scheme Of Assessment In Respect Of Search Conducted After May 31 2003 Is Materially Different From Special Procedure Of Search Assessment Contained In Chapter Xiv B Which Was Abandoned As To Page 53 Of 149 Controversies Sprung Up Questioning Treatment Of Particular Income As Undisclosed And Whether There Was Any Material Found During The Course Of Search Relatable Thereto In This Background When We Read The Provisions Of Section 153 A It Is Noted That It Starts With A Non Obstante Clause Overriding The Provision Of Section 139 147 148 149 150 151 And 153 It Is Also Noted That Return U S 153 A Has To Be In Prescribed Form The Other Important Effect Of Provision Of Section 153 A 1 Is That It Gives A Jurisdiction To The A O To Initiate Assessment Proceedings By Issuing Notice Under This Section This Section Also Creates An Outer Limit Of The Six Back Assessment Years For Which An Assessment Reassessment Could Be Done Under This Section In Case Of Search Requisition Made U S 132 132 A However In Our View There Can Not Be A Mandatory Jurisdiction For Six Back Years Even For Those Entities Which Were Not In Existence In All Such Six Years And Which Is Also So Because Of The Fact That Jurisdiction U S 153 A Is For Assessment O R Page 54 Of 149 Reassessment Of Total Income Of Each Year Falling I N Such Period Thus Scope Of Section 153 A If Viewed In This Manner Cannot Be Interpreted To Mean That Assessment In Respect Of Previous Year In Which Search Was Conducted Or Requisition Was Made Cannot Be Made In Accordance With Provisions Of Section 153 A Read With Section 153 B Or 153 C As Contended By The Assessee It Is Further Noteworthy That Concept Of Broken Period In The Year Of Search Applicable For Block Assessment Is Not Present Under The New Scheme Hence The A O Has To Wait To Exercise The Assessment Powers After The Relevant Financial Year During Which Search Took Place And Such Procedure In Fact Provides An Opportunity To Assessee To Disclose Unexplained Assets Income In Such Return And Avoid Penalty It Is Also Pertinent To Mention Here That Notice U S 153 A Requiring The Assessee To File Return For Such Is Generally Not To Be Issued For The Previous Ye Ar Of Search Or Requisition Precisely For The Reason T Hat The Assessee Is Required To File Return For The Suc H Page 55 Of 149 Previous Year Of Search In Normal Course And In Case Of Failure Of The Assessee To Do So The A O Can Issue Notice U S 142 1 Of The Act To File The Return U S 139 4 15 Thus Absence Of Requirement Of Issue Of Notice U S 153 A For The Year Of Search In Our Opinion Does Not Result Into An Inference That Assessment Of Previous Year Of Search Is To Be Made As Per The Normal Provisions Of The Act Specially When State Of Provisions Of Section 153 A Is Not Different From Scope Of Provisions Of Section 143 For Making Assessment Of Total Income Of Such Year We May Further Add That In Case Any Notice U S 153 A Is Issued In Case Of Such Previous Year The Same Should Be Construed As Issued U S 142 1 As The Scope Object Of These Two Provisions On The Aspect Of Requiring The Assessee To File The Return Is Sam E Even Otherwise Under The New Scheme Total Income Has To Be Computed As Per The Normal Provisions Of The Act And Tax Interest And Penalty Also Is To Be Levied As Per The General Provisions Of Page 56 Of 149 The Act Applicable To Such Assessment Year Hence There Cannot Be Any Prejudice To The Assessee Merely Because An A O Proceeds To Make An Assessment In Case Of Year Of Search As Per The Provisions Of Section 153 A Read With Section 153 B Particularly When Time Limit Of Service Of Notice U S 143 2 Subject To Provisions Of Section 153 B Would Also Be Applicable Reasons On This Aspect Are Given Later In This Order 16 We Also Find That As Per Explanation I Time Limi T Prescribed U S 153 B For Completion Of Assessment U S 153 A Is To Override The Time Limit Provided For Completion Of Assessment U S 143 Or 144 In Section 153 Of The Act We Further Find That The Heading Of Section 153 B Is Time Limit For Completion Of Assessment U S 153 A It Is A Settled Principle Th At Heading Of A Particular Section Also Indicates Abou T Nature And Scope Of Such Provision And If Viewed In This Perspective Then It Would Again Be Clear That Assessment Of The Previous Year In Which Search Took Place Is Required To Be Completed As Page 57 Of 149 Per The Provisions Of Section 153 A Read With Section 153 B Of The Act In This Regard Memorandum Explaining The Finance Bill 2000 As Reported In 260 Itr St 219 221 Also Mentions That Provisions Of Section 153 A 153 B And 153 C Were Inserted To Provide For Assessment In The Case Of Search Or Making Requisition 17 The Learned Cit Dr Has Also Contended That As Against The Literal Construction The Construction Which Resulted Into Attainment Of The Objects Of Th E Act Has To Be Preferred In This Regard We Are O F The View That The Settled Position Of Law Is That I F There Is No Ambiguity Then Literal Construction Should Be Given Effect As Such Although Which May Result Into Hardship However In The Context Of Present Dispute In Our Humble Opinion The Provisions Of Law Do Not Appear So Clear Or Unambiguous As Is Evident From The Discussion Made Hereinbefore In This Regard We May Further Point Out That If The Assessees View That The Assessment For The Financial Year Wherein Such Page 58 Of 149 Search Under Section 132 Took Place Or Requisition Was Made Under Section 132 A Has To Be Completed As Per The Normal Provisions Of The Act Then Provisions Of Section 153 B 1 B Would Become Redundant Further There Would Also Arise A Possibility Of Such Assessment Being Treated As Tim E Barred U S 153 B 1 B Because As Per The Provisions Of Section 153 The Time Limit For Completion Of Assessment Under Section 143 3 Is More Than The Normal Time Limit Available To The Assessing Officer For Completing The Assessment Under Section 153 A Read With Section 153 B Of The Act Further If The Assessment Of Search Year Is To Be Completed Under Section 143 As Such Then There Appears No Reason As To Why Such Assessment Should Be Completed Within The Time Limit Prescribed Under Section 153 B 1 B And Not Within The Time Limit Prescribed Under Section 153 Accordingly We Agree With Ld Cit Dr That A Purposive And Harmonious Construction Of These Provisions Should Be Done Page 59 Of 149 18 Further The Provisions Of Section 153 C 2 Also Provide For Completion Of Assessment In Respect Of The Person Other Than The Person Referred To In Section 153 A In The Manner Provided In Section 153 A No Doubt The Provisions Of Section 153 C 2 Provide For Specific Situations Wherein The Assessment In Respect Of The Assessment Year Relating To The Previous Year In Which Search Is Conducted Under Section 132 Or Requisition Is Made Under Section 132 A Has To Be Made In The Manner Provided In Section 153 A However In Our Opinion Where Assessing Officer Having Jurisdiction Over Such Other Person Receives The Books Of Account Or Documents Etc Before The Due Date Of Furnishing The Return Of Income For Such Assessment Year Then Also The Assessment Would Be Completed In The Manner Provided Under Section 153 A Of The Act Because In That Case The Ao Can Assess Re Assess U S 153 C 1 In Routine Course We Are Accordingly Of The View That If Under Specifi C Circumstances As Provided U S 153 C 2 Assessment Page 60 Of 149 Of A Person Covered Under Section 153 C Has To Be Completed In The Manner Provided In Section 153 A Of The Act Then There Should Not Be Any No Doubt That The Assessment In Case Of A Searched Person Fo R The Year Of Search Has To Be Completed Under Section 153 A Read With Section 153 B Of The Act 19 In View Of The Above Discussion We Hold That The Ld Cit A Was Not Correct In Law In Holding That Assessment For The Previous Year In Which Search Took Place Or Requisition Was Made Had To Be Completed Under The Normal Provisions Of The Act 20 Now We Shall Deal With The Second Issue The Ld Departmental Representative Has Contended That Though The Notice U S 143 2 Was Required To Be Served However Time Limit Of 12 Months Was Not Applicable We Are Unable To Accept This Contention For The Reason That The Provisions Of Explanation I To Section 153 A Are Unambiguous And Which Provide That Save As Otherwise Provided In Section 153 A 153 B Or 153 C All Other Provisions Of This Act Shall Apply To The Assessment Made Under This Page 61 Of 149 Section It Is Further Noted That As Per The Provisions Of Section 153 A 1 A Of Income Tax Act 1961 The Assessing Officer Gets Jurisdiction By Issuing A Notice And As Per The Provisions Of Th Is Clause The Person Receiving Such Notice Is Require D To Furnish Return Of Income In Respect Of Such Six Assessment Years Within Such Period As May Be Specified In The Said Notice It Is Also Provided That The Provisions Of This Act Shall So Far As May Be Apply Accordingly As If Such Return Were A Return Required To Be Furnished Under Section 139 Of The Act Thus No Minimum Or Maximum Time Limit Has Been Prescribed Under Clause A Of Sub Section 1 Of Section 153 A For Issue Of Notice And Filling Of Return If This Legal Position Is Further Analy Zed Then In Our Humble Opinion The Time Limit Specified In Such Notice Would Be Equivalent To Time Limit Prescribed Under Section 139 1 Of The Act Meaning Thereby That If The Assessee Does Not File A Return In Response To Notice Issued Under Section 153 A Of The Act The Assessing Officer May Page 62 Of 149 Issue Notice Under Section 142 1 And In The Event Of The Assessee Does Not File Any Return Even Then The Ao May Complete The Assessment Under Section 153 A By Applying Provisions Of Section 144 Read With Section 143 2 Of The Act Accordingly In Our Opinion The Words So Far As May Be Used In Section 153 A 1 A Operate In A Different Field I E Cover The Stage Upto Filing Of Return And Consequences Of Non Filing Of Return And Provisions Of Explanation I Govern The Field Relating To Maping Of Assessment And Legal Consequences Thereof Thus We Do Not Find Any Merit In The Contention Of The Learned Cit Dr That The Time Limit Prescribed Under Section 143 2 For Service O F Notice Would Not Apply In This Regard We Are Further Of The View That The Contention Of The Learned Cit Dr That All Assessments Are To Be Considered As Completed Under Section 143 144 Only Is Not Correct In Law Because Section 143 Operates In Two Different Fields I E Firstly It G Ives Original Jurisdiction To The A O To Assess The Tot Al Page 63 Of 149 Income Of An Assessee As Per Provisions Of Law And Secondly It Requires That In Doing So The A O Sh All Follow The Principles Of Natural Justice By Giving Due Opportunity To The Assessee Before Completing The Assessment And Therefore When Reassessment Is Made U S 147 Then Only The Second Aspect Of The Provisions Of Section 143 Comes Into Play We Are Further Of The View That The Second Aspect As Mentioned Above Rather Makes It Obligatory On The Part Of The A O To Serve The Notice U S 143 2 Within The Time Limit Prescribed Thereunder As Ther E Is No Exemption From Such Requirement In Section 153 A 153 B And 153 C Of The Act We Are Further Of The View That The Provisions Of Explanation I To Section 153 A Are Materially Different From The Provisions Of Section 158 Bc B As In That Section The Words So Far As May Be Existed And Such Words Are Not Used By The Legislature In Such Explanation Having Stated So It Is Also Important To Note That In Case Of Block Assessment U S 158 Bc Inspite Of Having A Different Wordings Judicial Page 64 Of 149 Opinion Was That Notice U S 143 2 Was Required To Be Served In The Manner As Specified In Section 143 2 To Pass A Legal Valid Order U S 158 Bc In This Regard A Reference May Be Taken Of The Latest Decision Of The Honble Delhi High Court In The Case Of Cit Vs Pawan Gupta As Reported In 318 Itr 322 Thus Therefore In View Of The Provisions Of Section 153 A 153 B Which Are More Apparent In This Regard We Cannot Accept This Contention Of The Revenue The Learned Cit Dr Has Also Tried To Argue That There Would Arise Some Inconsistency Absurdity If Such Requirement Was Envisaged In Case Of Search Assessments In This Regard He Has Cited The Provisions Of Section 139 4 And Its Consequential Impact As Regards The Time Limitation We Are However Not Convinced With This Argument Of The Learned Cit Dr As Well For The Reason That As Per The Provisions Of Section 139 4 The Return Can Be Filed By An Assessee Befor E Expiry Of One Year From The End Of The Relevant Assessment Year Or Before The Completion Of Page 65 Of 149 Assessment Whichever Is Earlier Hence When The Time Limit For Completion Of Assessment As Per The Provisions Of Section 153 B Is Less Then Naturally The Assessee Can File Return Under Such Section Before Completion Of Such Assessment Only To Put It Differently The Extended Time Limit Under The Normal Circumstances Would Not Be Available To An Assessee In Whose Case Assessment Is To Be Completed Under Section 153 A 153 C Read With Section 153 B Of The Act Thus In Sum And Substance All Other Provisions Of The Act Save As Otherwise Provided In Sections 153 A 153 B And 153 C Have To Be Necessarily Applied And Therefore Time Limit Of Service Of Notice U S 143 2 Shall Also Apply Accordingly We Reject This Contention Of The Revenue 21 Now Other Aspect Involved Is That How Such Time Limit Shall Be Determined In The Present Case Notice U S 143 2 Has Been Issued On 6 3 2006 After Issue Of Notice U S 153 A Was Issued And In Response To Which The Assessee Vide Its Letter Date D Page 66 Of 149 12 11 2005 Has Stated That Return Of Income For Assessment Year 2004 05 Filed U S 139 Of The Income Tax Act 1961 Filed On 1 11 2004 Could Be Treated As Return Filed In Response To Notice U S 153 A Thus In Our Humble Opinion The Time Limit For Service Of Notice U S 143 2 Should Be Considered From The Date Of Said Letter Filed By Th E Assessee In Response To Notice Issued U S 153 A And Not From The 1 11 2004 When Return For A Y 2004 2005 Had Been Filed By The Assessee 22 We Further Add That The Time Period Of 12 Mont Hs For Service Of Notice Under Section 143 2 Of The A Ct Is The Outer Limit For Making An Assessment Under Sect Ion 143 3 As Such Or Under Section 143 3 Read With Section 147 Of The Act Hence Such Time Limit Has To Be Exercised In A Manner So As The Assessing Office R Can Complete The Assessment U S 153 A Or U S 53 C R W Section 153 A Within The Time Limit Prescribed Under Section 153 B B Of The Act To Put It Differently Time Limit Prescribed U S 143 2 For Service Of Notice Cannot Extend The Time Limit Page 67 Of 149 Prescribed For Completion Of Assessment Under Secti On 153 B 1 B Of The Act This Is Also So Because As Per Explanation I To Section 153 A The Time Limit Prescribed For Completion Of Assessment Proceedings U S 153 B 1 B Would Prevail Over The Limit Prescrib Ed As Per The Provisions Of Section 143 2 Of The Act Accordingly We Hold That Condition Of Time Limit F Or Service Of Notice U S 143 2 Shall Also Apply To Assessment Reassessment Proceedings Contemplated U S 153 A And It Would Start From The End Of The Mon Th In Which Return Is Filed In Response To Notice Issu Ed U S 153 A 142 1 And In Case No Such Notice Has Been Issued Then It Shall Be Construed From The End Of Month In Which Return Was Filed Thus Additional Ground Raised By The Assessee In I T A No 216 Ind 08 Challenging The Validity Of Assessment Of The Impug Ned Assessment Year Under Section 153 C Is Dismissed We Further Clarify That Impugned Order Is Otherwise Suffers With No Legal Infirmity 21 Thus In Conclusion We State That Firstly Th E Provisions Of Section 153 A Provide For Outer Limit Of Assessment Years Which Could Be Taken Up For Assessment Or Reassessment Under This Section Secondly In Page 68 Of 149 Case Of Concluded Assessments Items Represented By Material Found In The Course Of Search Can Only Be Considered Under Secti On 153 A And Thirdly In Case Of Assessment Or Reassessment Of Abated Ass Essment S And Assessment Of The Year Of Search The Scope Of Prov Isions Of Section 153 A 153 C Would Be At Par With The Provisions Of Se Ction 143 Accordingly We Reject The Contention Of The Re Venue That As A Consequence Of Action U S 132 Or 132 A Assessment O R Reassessment Of Six Back Assessment Years U S 153 A Has To Done Mandator Ily 22 Having Stated So When We Independently Look A T The Provisions Of Section 153 C It Becomes Apparently C Lear These Provisions Are Attracted Only In A Situation Where Some Assets Or Material Or Books Of Accounts Or Other Things Are Found Which Belong To Other Person And Only In That Situation The Proceedings Under Section 15 3 A Can Be Initiated Against Such Person Thus In Section 153 C Existenc E Of Some Material Or Documents Or Things Or Assets Is A Pre Requisite H Ence If The Interpretation Of Provisions Of Section 153 A As Mad E By Us Herein Before Is Ignored Even Then In Our Opinion Proceedings U S 153 C Can Be Initiated Only In Respect Of Such Year S In Respec T Of Which There Is Some Material And Total Income Of Such Year S Would Be Computed By Applying The Provisions Of Section 153 A In The Manner As Out Lined By Us In Paragraph 22 Hereinbefore The Other Requirement O F Section 153 C Is Page 69 Of 149 Regarding The Satisfaction To Be Recorded By The As Sessing Officer Of The Searched Person Which As Stated Earlier Exists In The Present Case Hence No Fault Can Be Attributed On The Part Of The Asses Sing Officer In This Regard 23 In View Of Above Discussion We Are Of The View Tha T Since The Material Pertains Only To The Assessment Years 2004 05 And 2005 06 Only These Years Assessments Could Be Reopened Under Se Ction 153 C Of The Act Hence We Quash The Assessment Proceedings Fo R A Yrs 1999 2000 To 2003 04 Consequently Assessment Of Such Years A Re Declared Null And Void Thus Additional Grounds No 1 And 3 Are Allow Ed 24 Since The Assessment For The Years Other Than Asses Sment Years 2004 05 And 2005 06 Have Been Quashed On The Basis Of Legal Issues Hence We Do Not Consider It Necessary To Express A Ny Opinion On The Merits Of The Issues Involved Therein Now The Rem Aining Appeals Are Nos 215 216 Ind 2007 Filed By The Assessee And I T A Nos 6 7 Ind 2008 Filed By The Revenue For Assessment Year S 2004 05 And 2005 06 The Grounds Raised In These Appeals Are Reprodu Ced As Under Grounds In I T A No 215 Ind 2007 1 That On The Facts And In The Circumstances Of The C Ase The Ld Cit Erred In Confirming The Invoking The Provisions Of Section 145 3 Of The Act By Rejecting The Books Of Account Without Accepting The Explanation Offered By The Appellant Page 70 Of 149 2 That On The Facts And In The Circumstances Of The Case The Ld Cit Erred In Confirming The Addition Of Rs 7 44 83 6 Out Of Total Addition Of Rs 1 08 82 309 By Estimating T He Net Profit 6 On Account Of Suppressed Net Profit Without Con Sidering The Explanation Offered By The Appellant And Without A Ccepting The Facts And Circumstances Of The Case 3 That On The Facts And In The Circumstances Of The C Ase The Ld Cit Erred In Confirming The Addition Of Rs 9 700 Out Of Total Addition Of Rs 7 09 700 On Account Of Unexplaine D Expenditure Without Considering The Explanation Off Ered By The Appellant And Without Accepting The Facts And Circu Mstances Of The Case 4 That Under The Circumstances Charging Of Interest U S 234 B Is Not Justified 5 That Under The Circumstances Initiation Of Penalt Y Proceedings U S 271 1 C Is Not Justified Grounds In I T A No 216 Ind 2007 1 That On The Facts And In The Circumstances Of The C Ase The Ld Cit Erred In Confirming The Invoking The Provisions Of Section 145 3 Of The Act By Rejecting The Books Of Account Without Accepting The Explanation Offered By The Appellant 2 That On The Facts And In The Circumstances Of The Case The Ld Cit Erred In Confirming The Addition Of Rs 35 61 9 39 Out Of Total Addition Of Rs 3 49 44 614 By Estimating The Net Profit 6 On The Work Done By Self And 4 On The Work Given On Sub Contract On Account Of Suppressed Net Profit Without Considering The Explanation Offered By The Appellan T And Without Accepting The Facts And Circumstances Of Th E Case 3 That Under The Circumstances Charging Of Interest U S 234 B Is Not Justified 4 That Under The Circumstances Initiation Of Penalt Y Proceedings U S 271 1 C Is Not Justified Page 71 Of 149 Grounds In I T A No 06 Ind 2008 On The Facts And In The Circumstances Of The Case The Ld Cit A Has Erred In 1 Deleting The Addition Of Rs 1 01 37 473 Made By The Assessing Officer By Applying Net Profit Rate O F 8 On Account Of Suppression Of Net Profit Out Of Total Addition Of Rs 1 08 82 309 2 Deleting The Addition Of Rs 1 14 00 615 Made By The Assessing Officer Treating The Sundry Creditors Shown In The Balance Sheet As Unexplained 3 Deleting The Disallowance Of Rs 1 20 000 Made By The Assessing Officer On Account Of Payment Of Salary To Smt Rekha Jain 4 Deleting The Disallowance Of Rs 7 00 000 Out Of Total Addition Of Rs 7 09 700 Made By The Assessing Officer For Unrecorded Expenditure 5 Deleting The Addition Of Rs 4 74 544 Made On Account Of Letting On Hire Of Plant And Machinery Grounds In I T A No 07 Ind 2008 On The Facts And In The Circumstances Of The Case The Ld Cit A Has Erred In 1 Deleting The Addition Of Rs 3 13 82 675 Made By The Assessing Officer By Applying Net Profit Rate O F 8 On Account Of Suppression Of Net Profit Out Of Total Addition Of Rs 3 49 44 614 2 Directing To Include Rs 1 00 15 487 Being The Amount Surrendered During The Search Operation For The Calculation Of Net Profit Page 72 Of 149 3 Deleting The Disallowance Of Rs 1 20 000 Made By The Assessing Officer On Account Of Payment Of Salary To Smt Rekha Jain 4 Deleting The Disallowance Of Rs 50 000 Made By The Assessing Officer For Unrecorded Expenditure 5 Deleting The Addition Of Rs 4 57 499 Made On Account Of Letting On Hire Of Plant And Machinery 25 The Ld Departmental Representative Had Stated That In All These Appeals Common Issues Were Involved And A O Had Pa Ssed A Consolidated Order For The Sake Of Convenience Hen Ce The Ld Cit Dr Argued On The Common Issues By Referring To Revenue S Appeal In I T A Nos 1 Ind 2008 For Assessment Year 1999 2000 Though The Assessment Proceedings For This Year Have Been Quas Hed On Legal Grounds However In View Of The Facts Stated Above We Woul D Dispose Of The Appeals For Assessment Year 2004 05 And 2005 06 On The Basis Of Arguments Made By Both The Sides On The Basis Of Pr Oceedings For Assessment Year 1999 2000 And Specific Arguments Ma De In These Years 26 In I T A No 01 Ind 2008 Ground No 1 Which Will Ta Ke Care Of Ground No 1 Ita No 06 Ind 2008 And 07 Ind 2008 Reads As Under On The Facts And In The Circumstances Of The Case The Ld Cit A Has Erred In Deleting The Addition Of Rs 9 09 592 Page 73 Of 149 Made By The Assessing Officer By Applying Net Profi T Rate Of 8 On Account Of Suppression Of Net Profit Out Of Total Addition Of Rs 18 27 965 27 The Facts In Brief Are That As A Consequence Of S Earch Action At The Residential Premises Of The Jain Family A Surv Ey U S 133 A Was Also Conducted At The Office Premises Of The Assessee Fi Rm The Action U S 153 C Was Taken Against Assessee Firm In View Of The Fac T That During The Course Of Search Seizure Action Certain Incriminating Do Cuments Unexplained Assets Were Found Which Belonged To The Assessee F Irm The A O Issued Notice U S 153 A In Response To Which The Assessee Firm Filed Returns For Assessment Year 1999 2000 To 2004 05 Declaring The Same Income As Shown In The Returns Filed U S 139 Except For Asses Sment Year 2001 02 Wherein Income Assessed U S 144 Was Shown The A O Issued Various Notices To The Assessee Firm In The Course Of Asses Sment Proceedings Which Mostly Remained Un Complied For The Reason Th At The Assessee Either Chose Not To Appear Or To File The Evasive V Ague Reply The A O Also Found That The Books Of Account Were Missing A Nd Whatever Computerized Cash Book Ledger Account Were Produce D That Revealed That Almost All The Payments To Suppliers Were Made In C Ash In Denomination Below Rs 20 000 The A O Further Found That At The Time Of Scrutiny Page 74 Of 149 Assessment For Assessment Year 2001 02 The Assesse E Had Stated That Bills And Vouchers Were Lying At Sites At Different Sites However Subsequently It Was Claimed That All Books Of Account And Such V Ouchers Bills Had Been Lost Due To Theft At The Business Premises Of The Assessee On 13 11 2004 And A Copy Of F I R Was Also Submitted To The Asse Ssing Officer The A O Thereafter Proceeded To Complete The Assessm Ent U S 144 On The Basis Of Impounded Books Of Account For The Assessm Ent Year 2001 02 The A O Also Examined The Books Of Account For The Post Search Period Of Assessment Year 2005 06 And On The Basis Of Thes E Efforts Observed That The Assessee Did Not Maintain Quantitative Details And Most Of The Payments Were Made In Cash Which Were Unverifiable Also He Further Held That Reasonability Of Labour Expenses And Cons Umption Of Material Vis Vis Contract Receipts Also Remained Unsubstan Tiated Thereafter He Noted That The Auditors Had Also Made Certain Obser Vations In Their Audit Report In The Impugned Assessment Years Which Main Ly Pertained To Confirmation Of Balances By The Respective Parties And Some Of The Muster Rolls Not Being Produced Before The Auditor The A O Also Found That There Were Some Deficiencies In Report Vis Vis Ac Tual Facts In Relation To The Payment Of Salaries Other Payments To Partners And Related Persons The A O Also Held That When The Books Of Account A Nd Record For Assessment Year 2005 06 Had Been Seized By The Depa Rtment Then How Page 75 Of 149 The Auditors Could Certify That They Had Carried Ou T The Audit As Per Books Of Account Maintained By The Assessee The A O Fur Ther Found Various Discrepancies Regarding Payment Of Labourers Based Upon The Statement Of Supervisor Of The Firm On The Basis Of These Enqui Ries Facts The A O Held That Audited Accounts Or Books Of Account To The E Xtent Available Did Not Reflect True State Of Affairs Of Assessees Busines S Hence He Rejected The Same By Invoking The Provisions Of Section 145 3 O F The Income Tax Act 1961 And Proceeded To Complete The Assessment U S 144 Of The Act The A O Reproduced The Chart Of Contract Receipts Net Profit Shown By The Assessee And Other Details For All The Impugned Ass Essment Years At Page 32 Of The Assessment Order Which For The Sake Of Ready Reference Is Reproduced As Under A Y Contract Receipts Net Profit Shown Salary To Partners Net Profit Before Salary Interest Net Profit Before Salary Alleged S Creditors 1999 2000 60639494 2873195 150000 3023195 4 99 4410314 2000 01 57440645 1561085 150000 1711085 2 98 200350 2001 02 111745428 3665172 150000 3815172 1 53 1676300 2002 03 19795484822 10663876 150000 10813876 5 46 9035683 2003 04 337427236 17008562 240000 17248562 5 11 12368801 2004 05 506873623 29427581 240000 29667581 5 85 26469416 2005 06 758073956 25461302 240000 25701302 3 39 3864696 Total 2030155204 88556686 1320000 89876686 4 43 58025560 Page 76 Of 149 28 The A O Thereafter Held That In Assessment Y Ear 2001 02 Net Profit Before Salary Was Assessed At Rs 71 34 090 And The Rate Of Net Profit Against The Contract Receipts Worked Out To 6 38 As Against 1 53 Originally Shown By The Assessee And Such Action Of A O Had Been Accepted By The Assessee By Not Preferring Any Appe Al Against Such Action The A O Also Held That The Assessee Had Surrendere D A Sum Of Rs 1 Crore In Assessment Year 2005 06 As Its Unclosed Income Hence The A O Held That These Facts Clearly Indicated That The Assesse E Was Suppressing Its True Net Profit The A O Thereafter Held If The Provi Sions Of Section 40 A 3 Were Also Applied In Respect Of Cash Payments Made In Excess Of Rs 20 000 Then The Effective Net Profit Rate Would Become Much More Than 15 The A O Also Recorded Statement Of Partners Wherein It Was Stated That About 30 Of The Contract Work Was Given To T He Sub Contractors After Retaining 50 Of The Margin The A O Also E Xamined The Tax Returns Of One Of The Sub Contractors Namely M S Vimal Tyagi Company Bhopal Who Had Declared Net Profit Before Salary And Interest To Partners 5 1 The A O Also Analyzed Trading Results Of Other Sub Contractors For Assessment Year 2005 06 With The Qu Antum Of Job Receipts The A O Also Found That Some Of The Sub Contractor S Were Actually Employees Of The Assessee And This Technique Was Ad Opted By The Assessee To Suppress Its Actual Profit Margin The A O Acc Ordingly Formed An Page 77 Of 149 Opinion That The Net Profit 8 Before Salary And Interest To Partners Would Be The Most Reasonable Accordingly He Worke D Out The Suppressed Net Profit Of The Assessee Firm And Made The Addition On This Basis In Different Years 29 Aggrieved By This The Assessee Carried The Matter Into Appeal Before The Ld Cit A Wherein The Assessee Challen Ged The A Os Action Of Invoking Provisions Of Section 145 3 For The Re Ason That The Books Of Account Were Duly Audited U S 44 Ab Of The Income Ta X Act 1961 And The Audit Report Had Been Attached With The Return Of I Ncome And Therefore Merely Because The Books Of Account Could Not Be Pr Oduced Due To Theft Just Few Days Before The Search The Assessees Boo K Results Could Not Be Rejected As Minor Mistakes Defects In Apportionment Of Profit Could Not Be A Proper Basis For Rejecting The Books Of Account The Assessee Also Submitted That In Assessment Year 2001 02 The Asse Ssee Could Not Produce The Bills Or Vouchers Due To The Fact That Those Were Lying At Different Sites And Mere Non Filing Of Appeal In Th At Year Would Not Mean That The Assessee Had Accepted That There Was Somet Hing Wrong It Was Also Contended That The Results Facts Of Assessment Year 2001 02 Could Not Be Applied For All Other Years In A Blanket Manner Without Noticing The Factual Difference In Each Year The Assessee Also Submitted The Details Of Various Sites Where The Works Were Being Carried O Ut By The Assessee And Page 78 Of 149 Also Submitted The Details Of Various Works Carried Out By The Assessee The Assessee Also Contended That These Sites Were At Remote Places The Assessee Thereafter Challenged The Estimation Of Net Profit 8 Mainly For The Reason That The Assessee Was Showing Higher Net Profit In Almost All The Impugned Years On The Higher Turnover The Assessee Also Submitted That Due To Assessees Work Being Carried Out At Remote Areas It Was Not Possible To Open The Bank Account At Each S Ite It Was Further Contended That The Payments Were Received From The Government At Bhopal Which Were Deposited In The Bank Account Ma Intained At Bhopal And Disbursed Therefrom Hence The Payments Were M Ostly Made In Cash It Was Also Contended That Even If The Books Were T O Be Rejected The A O Had To Estimate The Profit In A Judicious Manner An D On The Basis Of Some Material Reasons For This Proposition The Assesse E Also Relied On Various Judicial Decisions The Ld Cit A However Confi Rmed The Action Of A O As Regards The Rejection Of Books Of Account As In View Of The Ld Cit A There Were Enough Reasons For Rejecting Th E Books Of Account Thereafter The Ld Cit A Based Upon The Action O F The Assessee In Assessment Year 2001 02 In The Course Of Normal As Sessment For That Year Wherein The Assessee Had Accepted The Net Pro Fit Rate Of 6 38 Adopted By The Assessing Officer Worked Out The Ne T Profit Rate Of 6 5 Of The Gross Work Done By The Assessee In Assessmen T Year 1999 2000 The Page 79 Of 149 Ld Cit A Computed Suppressed Net Profit In Other Years By Taking A Net Profit Rate Before Salary And Interest To Partners Adopting At 6 5 Or 6 Accordingly He Gave A Part Relief Aggrieved By Th Is Both The Assessee And Revenue Are In Appeals Before Us 30 The Ld Cit Dr Submitted That Assessment For Assess Ment Year 2001 02 Had Been Completed Before Search U S 143 3 Wherein Books Of Account Vouchers Required By The Assessing Officer Were Not Produced The Ld Cit Dr Further Submitted That As A Result O F Investigation By The A O The Assessee Revised Original Return Wherein The Rate Of Net Profit Was Increased To 6 25 As Against 1 53 Originally Declared By The Assessee He Further Drew Our Attention To Page 12 Of The Assessment Order Regarding Fact Of Books Of Account Other Records An D Filing Of Fir By The Assessee On 14 11 2004 Barely 10 Days Before The Se Arch Which Also Reflected The Approach Of The Assessee To Hide The Material Facts From The Department He Further Contended That Various Discr Epancies Were Found By The Assessing Officer Which Resulted In To Such Estimation And The A O Had Not Applied Rate Of 8 On The Basis Of Pr Ovisions Of Section 44 Ad But On The Basis Of Such Discrepancies Hence His Action Was Liable To Be Confirmed The Ld Cit Dr In Support Of His C Laims Referred To Page 18 20 21 22 23 38 And 39 Of The Assessment Ord Er In Nut Shell He Relied On The Order Of The A O The Ld Cit Dr Also Referred To Rate Of Net Page 80 Of 149 Profit Rate Adopted By The Cit A In Various Years He Further Submitted That In Assessment Years 1999 2000 To 2001 02 Net Profit Rate Had Been Adopted By The Cit A At 6 5 And In Assessment Ye Ar 2002 03 To 2005 06 The Rate Of Net Profit Had Been Adopted By The Cit A At 6 He Further Pointed Out That In Assessment Year 2005 06 There Was An Issue Of Majority Of The Work Being Done At Sub Contract Bas Is Wherein The Rate Of Net Profit Had Been Adopted At 4 By The Cit A In Order To Finally Arrive At The Overall Net Profit Rate At 6 31 The Learned Counsel For The Assessee Mainly Reitera Ted The Submissions Made Before The Ld Cit A He Also Co Ntended That Audited Financial Statements Had Been Filed Alongwith The O Riginal Return Of Respective Assessment Years And It Was Not A Case T Hat The Books Of Account Vouchers Were Not Made Produced Deliberatel Y As The Search Took Place After 10 Days Of Theft And The Assessee Could Not Be In A Position To Anticipate That A Search Was Going To T Ake Place So That He Could Have Removed The Books Of Account Vouchers In This Manner He Also Referred To Page 233 Of The Paper Book Contain Ing Copy Of F I R Which Was Issued As Per The Procedure Of Code Of Cr Iminal Procedure Hence The Same Could Not Be Doubted He Particula Rly Emphasized On The Point That No Tangible Un Tangible Assets Were Found During The Course Of Search And Thereafter Hence The Impugned Addi Tion Was Not Justified Page 81 Of 149 32 The Ld Cit Dr In The Rejoinder Contended That I F The Audited Accounts Were Reflecting True And Correct State Of Affairs And Profit Then The Assessee Should Not Have Revised The Return For Assessment Year 2001 02 Hence These Contentions Of The Assessee Were N Ot Acceptable He Further Contended That The Audit Report By Itself Was Not Sufficient To Expect The Net Profit Gross Profit Particularly Wh En The Auditor Had Also Pointed Out Some Defects And In This Regard The Ld Cit Dr Referred To Page 26 Of The Assessment Order 33 We Have Considered The Submissions Made By Both The Sides Material On Record And Orders Of The Authorities Be Low 34 Before Deciding This Issue On Merits We Consider I T Necessary To State That Search Operations Took Place 23 11 2004 On The Connected Persons It Is Further Noteworthy That The Assessee Surrendered A Sum Of Rs 7 00 000 In A Y 2004 05 And Rs 50 000 On A Ccount Of Seized Material Indicating Unrecorded Expenditure And Rs 1 Crores In A Y 2005 06 On Account Of Sundry Creditors Thus Prima Ry Condition Of Existence Of Some Material For Invoking Provisions Of Section 153 C Is Satisfied The Return Of Income For A Y 2004 05 W As Filed By The Assessee On 1 11 04 Barely 23 Days Before The Sear Ch Hence The Same Is To Be Treated As A Case Of Abatement Of Pending As Sessment For The Reason That Time For Making An Assessment Under Section 14 3 Is Available And The Page 82 Of 149 Assessing Officer Of Both Searched Persons And Asse Ssee Being The Same Hence It Is Logical To Make An Assessment Under Se Ction 153 A Read With 153 C Especially When The Scope Of Such Assessment Proceedings Would Be No Different From The Scope Of Assessment Procee Dings Under Section 143 And There Being No Other Prejudice To The Inter Ests Of The Assessee Consequently We Hold That The Assessment For Asses Sment Year 2004 05 Is To Be Framed Under Section 153 A Read With Sectio N 153 C Further The Assessment For The Assessment Year 2005 06 Is Also To Be Made As Per The Provisions Of 153 A Read With Section 153 C In View O F Our Findings Given In Para 20 Of This Order 35 Now We Shall Decide The Various Issues Raised In T Hese Appeals On Merit It Is Noted That Books Of Account Have No T Been Produced As The Same Were Not Available Due To Theft It Is Also No Ted That Several Other Defects Have Been Found Including The Observations Of The Tax Auditor In Their Report Thus The Action Of The Ld Cit A I N Confirming The Rejection Of Books Of Account By The A O U S 145 3 Is Justified Now The Only Aspect Which Remains To Be Adjudicated Is That Whether There Is A Proper Basis With The Ao To Estimate The Net Profit 8 Before Salary And Interest To The Partners And Confirmation Of Th E Same By The Ld Cit A To 6 In This Regard It Is Noteworthy That Bo Th The Revenue Authorities Have Based Their Decision In Regard To Estimation Of Net Profit Page 83 Of 149 Rate On The Such Net Of Rate Profit Arrived In The Regular Assessment Proceedings For Assessment Year 2001 02 Wherein The Assessee Had Himself Revised The Return Of Income Declaring Net Profit Before Salary And Interest 6 25 Which Was Further Enhanced By The Ao To 6 38 And The Assessee Had Accepted Such Action In This Rega Rd It Is Further To Be Noted That Nature Of Business Activities And Modus Operandi Of The Assessee Has Also Remained The Same It Is Further Noteworthy That In Assessment Year 2004 05 And 2005 06 The Ld Cit A Has Also Given Due Credit To The Change In Facts And Circumstances By Adopting A Rate Of 6 As Against 6 5 Adopted In Assessment Year 1999 20 00 To 2001 02 We Further Find That The Assessing Officer Has Not Bro Ught Any Material On Record To Justify The Rate Of 8 For Computing Net Profit Before Salary And Interest To Partners Except Pointing Out Certain De Fects As Regard The Fact That Majority Of The Payment Had Been Made In Cash Is Concerned In Our Opinion That By Itself Cannot Be A Conclusive Fac Tor For Enhancing The Rate Of Net Profit In This Manner Particularly Whe N In The Line Of The Assessees Business Cash Payment Are A Business Ne Cessity We Are Further Of The View That The Provisions Of Section 44 Ad Are Not Applicable In View Of The Fact That Assessees Turnover Is Muc H Higher Than The Turnover Prescribed Therein Hence The Rate Of 8 Though The Ao Has Not Applied The Provisions Of Section 44 Ad Is Not Just Ified Having Regard To Page 84 Of 149 This Legal Position Even Thus Taking Into Conside Ration Entire Facts And Circumstances We Hold That The Order Of The Ld Ci T A Is Correct In Law Accordingly The Relevant Grounds In Revenues Appe Als For A Y 2004 05 And 2005 06 Are Dismissed Further Ground No 1 Of Assessees Appeals In I T A No 215 Ind 08 And 216 Ind 08 Is Also Dismisse D 36 Ground No 2 Reads As Under 2 On The Facts And In The Circumstances Of The Case The Ld Cit A Has Erred In Deleting The Addition Of Rs 4 4 10 314 Made By The Assessing Officer Treating The Sundry Creditors Shown In The Balance Sheet As Unexplained 37 The Facts In Brief Are That The A O In The Cours E Of Assessment Proceedings Found That Following Sundry Creditors W Ere Appearing In The Balance Sheet Of Respective Years Pertaining To Imp Ugned Assessment Years A Y Alleged Sundry Creditors As On 31 St March 1999 2000 4410314 2000 01 200350 2001 02 1676300 2002 03 9035683 2003 04 12368801 Page 85 Of 149 2004 05 26469416 2005 06 3864696 Total 58025560 38 The A O Based Upon The Statement Of Shri G C Ja In Partner Of The Assessee Firm Wherein Sum Of Rs 1 Crore Ha D Been Surrendered On Account Of Assessees Failure To File Vouchers Of S Undry Creditors For Verification In Assessment Year 2005 06 Formed An Opinion That Substantial Amount Shown As Sundry Creditors Were E Ither Not Genuine Or Had Already Been Paid In Cash The A O Thereafter Issued Various Questionnaires To The Assessee To Substantiate Such Balances Appearing Under The Head Sundry Creditors However The Asses See Did Not Submit The Confirmations Income Tax Details Copy Of Account Name And Address Etc And On This Basis The A O Treated Such Sundry Cre Ditors As Unexplained However The A O Audited Only The Book Of This Bal Ance Figure As Income Of The Assessee And Made Following Additions In Eac H Of The Impugned Assessment Years A Y Balancing Figure Disguised As S Creditors Addition 1999 2000 4410314 4410314 2000 01 200350 0 2001 02 1676300 0 Page 86 Of 149 2002 03 9035683 4625369 2003 04 12368801 3333118 2004 05 26469416 14100615 2005 06 3864696 0 39 Aggrieved By This The Assessee Carried The Matter Into Appeal Before The Ld Cit A Wherein The Assessee Submitt Ed The Details Of Sundry Creditors It Was Also Submitted That Such S Undry Creditors Were On Account Of Labour And Wages Vehicle Repairs And Ma Terial And Other Expenses The Assessee Also Submitted That These Cr Editors Were Genuine Creditors And Were Connected Inextricably With The Business Undertaken By The Assessee Hence Merely Because The Books Of Account Could Not Be Produced Alongwith The Vouchers The Creditors Coul D Not Be Presumed To Be Bogus It Was Also Contended That Having Regard To The Nature Volume Of Work Undertaken By The Assessee It Could Not At All Be Possible That There Would Not Be Any Creditors On The Date Of The Balance Sheet It Was Also Contended That The Payments To Such Creditors Had Been Made In The Next Years The Ld Cit A Considering The Facts Of Books Being Stolen And A Separate Addition Being Made For Suppressed N Et Profit Held That There Was No Justification For Making Addition On A Ccount Of Sundry Creditors It Was Also Held By Him That No Incrimin Ating Documents Were Found In The Course Of Search Which Could Have Ind Icated That Sundry Page 87 Of 149 Creditors Shown In The Balance Sheet Were Bogus Ac Cordingly He Deleted The Impugned Addition Aggrieved By This The Reven Ue Is In Appeal Before Us 40 The Ld Departmental Representative Narrated The Fa Cts And Placed Strong Reliance On The Order Of The A O The Ld Departmental Representative Further Submitted That The Addition Made On Account Of Suppression Of Profit Was Not Sufficient To Cover T He Addition Made By The Assessing Officer On Account Of Bogus Sundry Credit Ors He In Particular Referred To Assessment Year 2005 06 Wherein The Re Turned Income Plus Surrender Of Rs 1 Crore Made By The Assessee On Ac Count Of Bogus Sundry Creditors Was Below The Rate Of Net Profit Adopted By The Cit A 41 The Learned Counsel For The Assessee On The Other Hand Reiterated The Submissions Made Before The Ld Cit A And Also Placed Strong Reliance On The Order Of Ld Cit A 42 We Have Considered The Submissions Made By Both The Sides Material On Record And The Orders Of The Authoritie S Below 43 It Is Noted That In The Course Of Search Or Assessm Ent Proceedings Subsequent Thereto No Incriminating Material Or Do Cuments Have Been Found To Suggest That Such Creditors Were Bogus It Is Further Noted That Having Regard To The Volume Of Business Of The Asse Ssee And Nature Thereof The Existence Of Sundry Creditors As On Th E Date Of The Balance Page 88 Of 149 Sheet Cannot Be Ruled Out It Is Further Noted Tha T Payments To Sundry Creditors Have Also Been Made In The Subsequent Yea Rs Having Stated So We Find That The Addition In The Assessment Year 20 04 05 And Other Earlier Years Has Been Mainly Made Due To The Fact That The Assessee Surrendered A Sum Of Rs 1 Crores Out Of Sundry Creditors Of Th At Year Which In Our Opinion Cannot Be A Proper Basis To Make The Addit Ion Even Otherwise Such Sundry Creditors Represent The Business Expens Es Claimed By The Assessee And Once The Higher Rate Of Net Profit Is Adopted To Work Out The Trading Result Then Addition Under The Head Sund Ry Creditors Again Is Not Justified As The Same Would Amount To Double A Ddition In View Of Above Discussions And Facts Of The Case We Are Of The View That The Ld Cit A Has Rightly Deleted This Addition Thus Gr Ound No 2 Of The Revenues Appeal For A Y 2004 05 Is Also Dismissed 44 Ground Nos 3 4 Read As Under 3 On The Facts And In The Circumstances Of The Case The Ld Cit A Has Erred In Deleting The Disallowance Of Rs 50 000 Made By The Assessing Officer On Account O F Payment Of Salary To Smt Rekha Jain 4 On The Facts And In The Circumstances Of The Case The Ld Cit A Has Erred In Deleting The Disallowance Of Rs Page 89 Of 149 1 50 000 Made By The Assessing Officer On Account Of Payment Of Remuneration To The Partners 45 The Facts In Brief Are That The A O Examined The Partnership Deed Dated 25 6 1998 Wherein No Approval For Payme Nt To Partners Had Been Made This Partnership Deed Was Effective Up T O Assessment Year 2002 03 The A O Further Found That Thereafter A N Ew Partnership Deed Had Been Executed The A O Accordingly Examined The Payment Of Remuneration To Partners Out Of Assessment Year 199 9 2000 To Assessment Year 2002 03 The Details Of Such Disallowance Are As Under Remuneration From Firm A Y Shri Amarchand Jain Smt Rekha Jain Shri S K Jain Total 1999 2000 50000 50000 50000 150000 2000 01 50000 50000 50000 150000 2001 02 50000 50000 50000 150000 2002 03 50000 50000 50000 150000 Total 600000 46 Thereafter The A O Found That Smt Rekha Jain Was Not A Working Partner Hence He Disallowed The Remunerat Ion Paid To Her For This Reason Also However No Separate Addition Was Made In Assessment Year 1999 2000 To 2002 03 As The Same Had Already Been Disallowed As Stated Above Page 90 Of 149 47 Aggrieved By This The Assessee Carried The Matter Into Appeal Before The Ld Cit A Wherein It Was Contended Tha T The Remuneration Paid To Partners Was Duly Authorized By The Origin Al Partnership Deed Dated 1 4 1995 Which Was Mis Placed However It W As Produced Subsequently Hence Disallowance Made By The Asses Sing Officer Was Not Correct As Regards To The Status Of Smt Rekha Jain As A Working Partner It Was Submitted That The Statement Given By Her Du Ring The Course Of Search Was Under Pressure And Also Factually Misund Erstood By Her As She Thought That The Question Was Asked Regarding Detai Led Working Of The Firm Including Supervision At Sites However She W As Looking After The Business Affairs Of The Firm At The Head Office Onl Y Hence This Disallowance Was Also Not Correct The Ld Cit A Considering These Submissions Of The Assessee Deleted Both These Disa Llowances Aggrieved By This The Revenue Is In Appeal Before Us 48 The Ld Dr Narrated The Facts And Placed Reliance O N The Order Of The Ao The Ld Counsel For The Assessee On The Ot Her Hand Placed Strong Reliance On The Order Of The Ld Cit A 49 We Have Considered The Submissions Made By Both The Sides Material On Record And The Orders Of The Authoritie S Below 50 It Is Noted That The Findings Of The Ld Cit A Tha T Smt Rekha Jain Was Looking After The Business Affairs At The Head Office Of The Firm Page 91 Of 149 Only Have Remained Uncontroverted It Is Further N Oted That As Per The Revised Deed The Payment Of Remuneration To Her An D Other Partners Is Duly Also Authorized In This View Of The Matter W E Hold That The Order Of The Ld Cit A Is Correct In Law Hence We Confirm The Same Accordingly Ground No 3 Of Revenues Appeals For A Y 2004 05 And A Y 2005 06 Is Dismissed 51 Ground No 5 Reads As Under On The Facts And In The Circumstances Of The Case The Ld Cit A Has Erred In Deleting The Addition Of Rs 77 915 Made On Account Of Letting On Hire Of Plant And Machinery 52 The Facts In Brief Are That The A O Based Upon P Hysical Verification Of Plant And Machinery At Various Site S In The Course Of Search Found That Some Of The Plant And Machinery Shown In The Balance Sheet Was Not There Hence He Held That Such Plant And M Achinery Should Have Been Given On Hire In A Situation Where Such Plan T And Machinery Was Not Required For The Purpose Of The Assessees Cons Truction Activities Accordingly He Worked Out The Rental Income From H Iring Of Plant And Machinery For The Impugned Years As Under Estimation Of Rental Income From Hiring Of P M A Y P M Excluding Vehicles Annual Rate Of Return 10 Assuming The Rental Income Assuming That The P M Is Page 92 Of 149 Furniture And Fixtures Etc Entire P M Is Given On Hire Used 90 For Own Business 10 For Giving On Rent 1999 00 7791509 779151 77915 2000 01 10066947 1006695 100669 2001 02 23624788 2362479 236248 2002 03 17736570 1773657 177366 2003 04 39782010 3978201 397820 2004 05 47454390 4745439 457499 2005 06 45749889 4574989 457499 Total 1922061 53 On Appeal The Ld Cit A Deleted The Disallowa Nce As There Was No Basis Evidence To Make Such Addition Aggrie Ved By This The Revenue Is In Appeal Before Us 54 The Ld Dr Narrated The Facts And Placed Reliance O N The Order Of The Ao The Ld Counsel For The Assessee On The Ot Her Hand Placed Strong Reliance On The Order Of The Ld Cit A 55 We Have Considered The Submissions Made By Both The Sides Material On Record And The Orders Of The Authoritie S Below 56 It Is Noted That No Evidence Of Whatsoever Nature H As Been Found To Infer That Assessee Was Letting Out Its Plant An D Machinery On Hire And Income From Such Activity Had Not Been Recorded In The Books Of Account Thus In Our Opinion The Action Of The Ao Is In Th E Realm Of Suspicion Only And Therefore We Hold That The Ld Cit A Ha S Rightly Deleted The Page 93 Of 149 Impugned Addition Thus Ground No 5 Of The Revenu E For Both These Years Is Also Dismissed 57 In I T A No 06 Ind 2008 For The Assessment Year 2 005 06 A New Issue Of Deletion Of Disallowance Of Rs 7 Lakh S Out Of Total Addition Of Rs 7 09 700 Made By The Assessing Officer On Account Of Unrecorded Expenditure Is Involved 58 The Facts In Brief Are That During The Course O F Search The Statement Of Shri G C Jain Was Recorded And His C Larifications Were Sought On A Diary Found During The Course Of Search Wherein Transactions Of Expenses Relating To Various Sites Were Noted T He A O Held That During The Course Of Assessment Proceedings The As Sessee Failed To Give Any Satisfactory Reasons As To Why This Expenditure Should Not Be Treated As Its Undisclosed Income As Admitted By One Of The Partners During The Course Of Search Hence He Made An Addition Of Rs 7 009 700 In Assessment Year 2004 05 And Rs 50 000 In Assessm Ent Year 2005 06 As Admitted By The Assessee Himself Though The Actual Amount In That Year Was Rs 10 000 Aggrieved By This The Assessee C Arried The Matter Into Appeal Before The Ld Cit A Wherein It Was Submi Tted That As Against This Amount The Assessee Had Already Declared Rs 7 Lakhs Which Was Duly Offered In The Return Of Income Hence The Ad Dition Made By The Assessing Officer Was Not Justified At All The Ld Cit A To This Extent Page 94 Of 149 Deleted The Addition And Confirmed The Balance Amou Nt Of Rs 9 700 Aggrieved By This Both The Revenue And The Assesse E Are In Appeal Before Us 59 Both The Parties Reiterated Their Respective Stands After Narrating The Facts 60 We Have Considered The Submissions Made By Both The Sides Material On Record And Orders Of The Authorities Be Low As Far As Addition Of Rs 7 00 000 Is Concerned It Is Noted That Th Is Amount Has Already Been Offered As Income In The Hands Of Shri G C J Ain Hence The Ld Cit A In Our Opinion Has Rightly Deleted The Sam E As Regards The Balance Expenditure Of Rs 9 700 Is Concerned Th E Same Has Remained Unexplained Hence The Ld Cit A Has Rightly Conf Irmed The Same Accordingly Ground No 4 Of Revenues Appeal In I T A No 06 Ind 08 And Ground No 3 Of Assessees Appeal In I T A No 2 15 Ind 07 Are Dismissed 61 The Only Remaining Ground In Revenues Appeal I T A No 07 Ind 08 Is Ground No 2 Whereby The Rev Enue Is Aggrieved By The Decision Of The Ld Cit A In Holding That Amou Nt Of Rs 1 00 15 487 Surrendered By The Assessee In The Course Of Search Had To Be Included In Calculation Of Net Profit Page 95 Of 149 62 The Facts In Brief Are That The Assessee Surrende Red The Impugned Amount In The Return Of Income Filed For T He Year However The Ao Did Not Give Any Credit Of Income So Surrendere D By The Assessee By Computing The Quantum Of Addition By Applying Net P Rofit Rate Of 8 On The Gross Receipts I E The Ao Worked Out The Quant Um Of Addition At Rs 3 49 44 614 By Reducing The Book Profit From The Quantum Of Net Profit So Worked Out By The Assessee Aggrieved By This T He Assessee Preferred An Appeal Before The Ld Cit A Wherein It Was Con Tended That The Income Surrendered By The Assessee Should Have Been Considered While Calculating The Net Profit Ratio Which Would Be 4 71 On This Basis As Against 3 39 On The Basis Of Book Profit Shown In The Books The Ld Cit A Held That The Quantum Of Addition On Account Of Estimation Of Suppressed Net Profit Had To Be Worked Out After Ta King Into Consideration Such Surrender Made By The Assessee In The Return O F Income Because Surrender Was In Connection Of The Business Income Aggrieved By This The Revenue Is Before Us 63 The Ld Departmental Representative Placed Strong R Eliance On The Order Of The Ao Whereas The Ld Counsel For Th E Assessee Placed Strong Reliance On The Order Of The Ld Cit A 64 We Have Considered The Submissions Made By Both The Sides Material On Record And Orders Of The Authorities Be Low Page 96 Of 149 65 It Is Noted That Impugned Surrender Is Inextricably Linked With The Computation Of Business Income Hence After Es Timation Of Net Profit Ratio And Gross Quantum Of Net Profit The Net Addi Tion In Our Opinion Has To Be Made After Giving Credit Of Such Surrender T Hus We Hold That The Order Of The Ld Cit A Is Correct In Law Hence W E Dismiss This Ground Of The Revenue 66 In Assessees Appeals For The Assessment Year 2004 05 And 2005 06 Ground No 4 3 Is Related To Chargeability Of I Nterest Under Section 234 B Which Is Of Consequential Nature Hence No A Djudication Is Required Thereon Ground No 5 4 Of These Appeals Is Against The Initiation Of Penalty Proceedings Under Section 271 1 C Which Is Of Premature Nature Hence Dismissed 67 In The Result Revenues Appeal In I T A No 06 Ind 2008 And 07 Ind 2008 Are Dismissed The Assessees Appeals I N I T A Nos 215 216 Ind 2007 68 In Revenues Appeal In I T A No 28 Ind 2008 For Th E Assessment Year 2002 03 Ground No 1 Reads As Unde R On The Facts And In The Circumstances Of The Case The Ld Cit A Has Erred In Deleting The Addition Of Rs 88 053 Made By The Assessing Officer On Account Of Unexpla Ined Expenditure For Household Purposes Page 97 Of 149 69 The Facts In Brief Are That The A O Required The Assessee To Explain The Expenses Incurred For House Hold Expens Es Under Various Heads Most Of The Queries Made By The Assessing Of Ficer Remained Unexplained However At The Fag End Of The Assessm Ent Proceedings The Assessee Submitted That The Expenses Were Made Join Tly By Various Family Members The A O However Rejected The Claim Of S Hri Jitendra Jain Shri Vinod Kumar Jain And Shri Balchand Jain And Sh Ri Pramod Kumar Jain That During The Period Relevant To Assessment Year 1999 2000 To 2002 03 Their House Hold Expenses Were Jointly Met With Shri G C Jain And His Wife Smt Rekha Jain The A O Further Held That The Withdrawals Made By Shri G C Jain And His Wife Did Not Appear To Be Sufficient Even For Their Family Accordingly He Held That The Exp Enses Of Shri Vinod Kumar Jain Shri Balchand Jain And Shri Pramod Kuma R Jain Were To Be Considered In The Hands Of Their Father Shri Amar C Hand Jain For Assessment Years 1999 2000 To 2002 03 And In The Ca Se Of Shri Jitendra Kumar Jain These Were To Be Considered Up To Asses Sment Year 2003 04 Thereafter He Analyzed The Total Withdrawals Made By The Family Members In The Impugned Assessment Years And Found That These Were Not Sufficient Having Regard To The Status And Size Of The Family Accordingly He Worked Out The Estimated House Hold Expenditure And Made An Addition Of Rs 88 053 In The Hands Of Smt Rekha Jain On Substantive Page 98 Of 149 Basis And Made A Corresponding Protective Addition In The Hands Of Her Husband Shri Gyanchand Jain Aggrieved By This Th E Assessee Carried The Matter Into Appeal Before The Ld Cit A Wherein I T Was Submitted That The Assessee Family Had Already Shown Withdrawals O F Rs 1 24 866 Hence The Addition Made By The Assessing Officer W As Not Justified It Was Also Contended That No Incriminating Material W Ere Found During The Course Of Search To Indicate That House Hold Withdr Awals Shown By The Assessee Were Not Correct And Therefore Such Addi Tion Could Not Be Made For This Proposition The Assessee Relied On Variou S Judicial Decisions The Ld Cit A After Considering The Fact Of The Case A Nd For The Reason That Normally The Responsibility Of House Hold Expenditu Re Was Of The Husband And Not Of The Wife He Held That The Addition Was To Be Made On Substantive Basis In The Hands Of Assessees Husban D Shri G C Jain Only He Further Restricted The Quantum Of Addition To Rs 10 053 In His Hands And Deleted The Addition Made In The Hands Of The A Ssessee Aggrieved By This The Revenue Is In Appeal Before Us 70 The Ld Departmental Representative Narrated The F Acts And Placed Strong Reliance On The Order Of The A O The Learned Counsel For The Assessee Placed Strong Reliance On The Order Of The Cit A 71 We Have Considered The Submissions Made By Both The Sides Material On Record And The Orders Of The Authoritie S Below Page 99 Of 149 72 It Is Noted That The Assessee Is Also A Partner In The Firm M S S K Jain From Where She Has Also Got The Remunerati On Hence The Observations Of The Ld Cit A That The House Hold Expenditure Is Always The Responsibility Of The Husband Are Not Correct O N The Facts Of The Case We Are Further Of The View That The House Hold Expe Nditure Estimated By The Assessing Officer Appears To Be Reasonable Havi Ng Regard To The Family Size And Status Of The Assessee Family We A Re Further Of The View That Living Standard Of The Family As Actually Not Ed By The Revenue In Course Of Search Proceedings Would Constitute Evi Dence In The Facts Of The Case So As To Draw An Inference Of Low Househol D Withdrawals Accordingly We Hold That The Addition Of Rs 88 05 3 Is To Be Made On Substantive Basis In The Hands Of The Assessee Only Thus This Ground Of The Revenue Stands Allowed 73 Ground No 2 Reads As Under On The Facts And In The Circumstances Of The Case The Ld Cit A Has Erred In Deleting The Addition Of Rs 53 500 On Account Of Unexplained Deposits In Bank Accounts 74 The Facts In Brief Are That The A O Asked The A Ssessee To Furnish The Copy Of Statement Of Her Bank Accounts And To Explain The Source Of All The Credit Entries Therein The Asses See Submitted Copies Of Two Bank Accounts Wherein Cash Deposits On Differe Nt Dates Aggregating Page 100 Of 149 To Rs 53 500 Were Found The Assessee Explained The Same By Furnishing Statement Of Affairs Wherein Opening An D Closing Balance Of Such Bank Accounts Were Shown The A O However H Eld That Mere Furnishing Of Such Statement Of Affairs Was Not Suf Ficient To Prove The Nature And Source Of Such Credit Entries And Since The Assessee Did Not Furnish Any Explanation Regarding The Source Of Suc H Deposit Hence The A O Held That The Assessee Failed To Discharge Her Onus Accordingly He Treated Such Unexplained Cash Deposits As Income Of The Assessee Aggrieved By This The Assessee Carried The Matter Into Appeal Before The Ld Cit A Wherein It Was Submitted That The Asses See Was A Partner In Firm M S S K Jain Bhopal And She Had Deposited T He Sum Out Of Her Withdrawals From Such Firm And Submitted The Detail S Thereof The Ld Cit A Agreeing With This Contention Of The Assess Ee Held That Source Of Such Deposits Had Been Explained Hence Question O F Deposit Out Of Undisclosed Income Did Not Arise The Ld Cit A Ac Cordingly Deleted The Addition Aggrieved By This The Revenue Is In Appeal Before Us 75 The Ld Departmental Representative Besides Placi Ng Strong Reliance On The Order Of A O Submitted That It Was An Undisputed Fact That Books Of Account Of M S S K Jain Were Not Produced Hence How The Assessee Could Claim That Such Deposits Were Made O Ut Of Withdrawals By Her From That Firm He Further Referred To Relevant Pages Of Paper Book Page 101 Of 149 Wherein The Assessee Had Shown The Source Of Deposi Ts From Such Firm And It Was Also Contended That There Was Time Gap A Lso And Therefore Nexus Was Also Not Established It Was Also Contend Ed That The Ld Cit A Did Not Even Call Remand Report From The A O On Th Is New Claim Made By The Assessee During The Course Of Appellate Proceed Ings He Further Contended That Purpose Of Withdrawal Was Also Not K Nown 76 The Learned Counsel On The Other Hand Reiterated The Submissions Made Before The Ld Cit A And Also Pla Ced Strong Reliance On The Order Of The Cit A 77 We Have Considered The Submissions Made By Both Th E Sides Material On Record And The Orders Of The Authoritie S Below 78 It Is Noted That There Have Been Some Entries Of C Ash Deposits In Two Bank Accounts Of The Assessee The Assessee Has Claimed The Source Of Such Deposits As Withdrawals From Firm M S S K Jai N Wherein She Is One Of The Partners However No Books Of Account Or Ot Her External Evidence Exist To Support Such Claim Made By The Assessee W E Are Further Of The View That The A O Is Right In Holding That Stateme Nt Of Affairs Of A Particular Date Cannot Explain The Nature And Sourc E Of Such Deposits As For This Purpose The Cash Flow Statement And Funds Flow Statement In The Said Accounts Is Required Which Has Not Been Broug Ht On Record In This View Of The Matter We Hold That The Ld Cit A S O Rder Is Not Correct In Page 102 Of 149 Law And Therefore We Reverse The Same And Restore The Order Of The A O Thus This Ground Of The Revenue Stands Allowed 79 Ground No 3 Reads As Under On The Facts And In The Circumstances Of The Case The Ld Cit A Has Erred In Deleting The Addition Of Rs 9 70 523 Made By The Assessing Officer Towards Unexplained Investment In Construction Of The House Property 80 The Facts In Brief Are That The Assessee Constru Cted A House Property At Bhopal The Construction Area Was Appro Ximately 9240 Sq Ft And Land Appurtenant Thereto Admeasuring 10 224 Sq Ft Was Used As Garden The A O Observed That It Was Palatial Hous E With All Modern Facilities The A O Referred This Matter To D V O U S 142 A Of The Act And Also Required The Assessee To Give Yearwise Break U P Of Cost Of Construction With Source Thereof The Dvo Furnished His Report Vide Letter Dated 26 10 2006 Wherein He Arrived At The Cost Of Civil Construction At Rs 71 81 504 And Extra Items Wh Ich Were Not Included In The Said Valuation At Rs 30 84 224 Both Aggr Egating To Rs 1 02 65 728 The Dvo Gave A Margin Of Self Superv Ision 7 5 Thereon And Added The Cost Of Architectural Consult Ancy And Worked Out The Total Cost At Rs 97 71 865 The Dvo Also Gav E Year Wise Cost Of Construction The A O Compared The Same From The Y Ear Wise Page 103 Of 149 Expenditure Stated By The Assessee And Worked Out T He Total Difference At Rs 8 17 355 The A O Also Required The Assessee To Explain The Difference The Assessee Mainly Submitted That The Dvo Had Inspected The Property In 2006 07 Whereas The Construction H Ad Been Completed 2 Years Back The Assessee Also Stated That There Was Only A Nominal Difference Of 9 13 Between The Cost Of Constructi On Stated By The Assessee And Determined By The Dvo Hence Acceptab Le The A O However Held That There Were Several Items Which Had Not Been Included By The Dvo In Estimation Of Cost The Assessee Vide Its Letter Submitted That Items Worth Rs 27 67 178 Were Considered By The Dvo The A O However Held That Out Of Such Items Furniture And Fixture Worth Rs 8 56 800 Were In Connection With Large Number Of Movable Items Found In The Photography Done By The Department Which W As Not Covered By The Report Of The Dvo Similarly Some Other Items Were Also Found By The A O Accordingly He Reduced The Cost Of Const Ruction Of Rs 89 54 509 By This Sum Of Rs 27 67 178 And Work Ed Out The Cost Of Construction At Rs 61 87 331 And Compared This F Igure With The Cost Of Construction Estimated By Dvo And Worked Out Differ Ence At Rs 35 84 533 The A O Also Found That Additional It Ems Worth Rs 18 95 000 Were Also Found During The Course Of Ph Otography Done And Since The Year Of Investment Of Such Items Was Not Known Hence He Page 104 Of 149 Treated The Same As Unexplained Investment In Asses Sment Year 2005 06 Thus The A O Made A Total Addition Of Rs 54 79 5 33 In Different Assessment Years And In The Year Under Consideratio N Such Addition Was Quantified At Rs 9 70 536 The A O Also Held Tha T In Investment Of Rs 7 Lakhs In The Garden On The Plot Of Land Owned By Sh Ri G C Jain Had To Be Made In Assessees Hands On Protective Basis In Ass Essment Year 2005 06 Aggrieved By This The Assessee Carried The Matter Into Appeal Before The Ld Cit A Wherein The Assessee Submitted That The Total Investment In The Property Was To The Tune Of Rs 1 04 79 297 And T He Break Up Of The Same Had Also Been Given To The D V O The Details Of Th Is Sum Are As Under A Y Construction Cost Other Item Cost Total 2002 03 11 91 740 8 20 927 20 12 667 2003 04 56 04 979 2 75 096 58 80 075 2004 05 21 57 790 4 28 765 25 86 555 Total 89 54 509 15 24 788 1 04 79 297 81 The Assessee Further Submitted That Electrical App Liances Amounting To Rs 3 85 590 Were Considered By The Assessee As A Part Of Construction Cost Whereas The A O Had Taken The S Ame In The Category Of Other Items It Was Also Submitted That Similar Was The Case With Regard To Page 105 Of 149 Furniture And Fixture Of Rs 8 56 800 As The Cost Of Wood And Plywood Etc Used In The Construction Was Mentioned Under T He Head Furniture And Fixtures It Was Also Contended That The Cost Of Furniture And Fixtures As Per The Video C D Had Been Estimated By The A O At Rs 8 56 800 Without Even Mentioning Number And Quality Of Items Hence Such Estimation Was Also Not At All Justified The Asses See Further Submitted That In Fact The Difference Was Only Of 9 13 W Hich Was Within The Acceptable Range Of 15 Hence No Addition Was Ca Lled For The Ld Cit A Held That In The List Of Other Items As Take N By The Assessing Officer Most Of The Items Had Been Mentioned In Th E Chart Prepared By The Assessee The Ld Cit A Also Held That Dvo In His Report Had Very Well Considered The Cost Of Wood In The Constructio N Cost Only Hence The A O Was Not Justified In Making Further Addition O F Rs 8 56 800 On Account Of Furniture And Fixture That Too Without G Iving Description Of Such Furniture And Fixture He Also Held That Rebat E For Self Supervision Should Have Been More Than 7 5 As The Assessee He Rself Was A Civil Contractor Accordingly He Held That No Addition W As To Be Made On This Account Aggrieved By This The Revenue Is In Appea L Before Us 82 The Ld Cit Dr Narrated The Facts Drew Our Attent Ion To Relevant Pages Of Assessment Order He Further Cont Ended That Search Took Place In The Month Of November 2004 Whereas The A Ssessee Claimed To Page 106 Of 149 Have Completed The Construction In August 2004 Th E Ld Cit Dr Further Contended That As Per The Valuation Done By The Reg Istered Valuer Of The Assessee For Bank Authorities The Value Of Built U P Area Plus Additional Construction Was Roughly Rs 1 22 00 000 Hence The Valuation Of D V O And The Approach Of The A O Stood Justified He Further Contended That Cost Of Loan Was Further To Be Added He Also Submi Tted That On The One Hand The Assessee Stated The Cost Of Lawn At Rs 8 9 54 Lakhs Approximately And At One Place It Was Stated By Th E Assessee At Rs 1 04 Crores Hence The Assessee Was Not Coming Out With Correct Figures In This Regard He Referred To Page 139 Of The Paper B Ook Wherein The Assessee Had Stated The Cost Of Construction At Rs 89 54 Lakhs Approximately However When His Attention Was Draw N To Last Line Of First Para Of This Letter Wherein The Assessee Had Stated That In Addition To Such Cost The Assessee Had Also Invested Rs 21 56 538 For Plot Fridge T V A C Etc The Ld Citdr However Reiterate D His Earlier Submissions He Further Contended That Cost Of Wood Shown By The Assessee Under The Head Cost Of Construction Coul D Not By Any Stretch Of Imagination Be Construed As To Include The Cost Of Furniture And Fixtures Hence There Was A Flaw In The Order Of L D Cit A He Further Contended That Addition Of Rs 18 95 000 Was Also Liable To Be Sustained Page 107 Of 149 83 The Learned Counsel On The Other Hand Submitted That The Amount Of Rs 18 95 000 Estimated By The Assessin G Officer In Respect Of Wall Paintings Landscape Garden Etc Was Not Su Pported By Any Evidence Nor Any Material Was Found Which Could Be Correlated To This Year Hence The Same Was Not At All Justified The Learned Counsel Further Contended That Total Investment In Construc Tion Including Investment Of Rs 2 31 500 In Assessment Year 200 5 06 Stood At Rs 1 07 10 796 It Was Further Contended That The Dv O Had Adopted The C P W D Rates And If P W D Rates Local Rates Were Considered Then Reduction Of Minimum 10 Was To Be Given It Was Al So Contended That The Assessee Herself Was A Civil Contractor Hence Margin For Self Supervision Had To Be Given 10 And Not 7 5 I T Was Further Contended That Profit Margin Of Contractors Had To Be Taken At 8 At The Maximum And Therefore That Would Also Result Into Reduction In Cost Of Construction Adopted By The Dvo It Was Contended T Hat If All The Above Three Factors Were Taken Into Consideration Then The Difference In The Cost Disclosed By The Assessee And Cost Arrived At By Th E Dvo Plus A O Would Be Less Than 15 Hence The Value As Shown By The Assessee Was Liable To Be Accepted For Other Discrepancies He Further Placed Reliance On The Submissions Made Before The Ld Cit A The Learned Counsel Further Submitted That Other Items Had Already Been Include D In The Cost Disclosed Page 108 Of 149 By The Assessee Hence The Addition Made By The As Sessing Officer Amounted To The Double Addition Of The Same 84 We Have Considered The Submissions Made By Both Th E Sides Material On Record And The Orders Of The Authoritie S Below 85 It Is Noted That Assessee Owns A House Property At Bhopal Which Has Been Constructed Over A Period Of Number Of Yea Rs Falling In The Impugned Period It Is Further Noted That As Per Th E Initial Estimates Details Given By The Assessee The Cost Of Such Property Am Ounted To Rs 1 04 Crores Approximately The Assessee Also Made An Inv Estment Of Rs 2 31 500 In Assessment Year 2005 06 Which Result Ed Into The Cost Of Construction Being Increased To Rs 1 07 Crores App Roximately As Per The Valuation Of Dvo The Cost Of Construction Was 1 02 Crores Approximately Excluding The Extra Items As Considered By The Ao S Eparately The Valuation As Per The Assessee For Bank Purposes As Noted By The Ao From The Registered Valuers Report Is Roughly Rs 1 22 Crores The Other Facts Which Are Crucial Are That The Dvo Have Taken The C Pwd Rates To Arrive At The Cost Of Construction Where From A Reduction Of 10 To 15 Is Generally Given To Arrive At The Rate At Bhopal Be Cause Cpwd Rates Are Generally Adopted As Per The Rates Prevailing At De Lhi It Is Further To Be Noted That Assessee Is Herself A Contractor Hence A Margin For 10 On Account Of Self Supervision Should Be Given As Agai Nst 7 5 Given By The Page 109 Of 149 Dvo Similarly Having Regard To The Fact Of Assess Ees Line Of Business The Possibility Of Materials Being Purchased At Eco Nomic Price As Against A Normal Buyer Cannot Be Ruled Out Further The Ove R All Cost Of Construction Would Not Be Increased Substantially Even If Some Of The Items Are Extra Further The Documentary Evidences To Support Such Addition Have Not Been Brought On Record Finally If All The Factors Are Taken Into Consideration The Difference Between Th E Cost Of Construction As Disclosed By The Assessee And As Per The Departm Ents Estimate In Our View Cannot Be More Than 15 Which Is An Accepta Ble Range Accordingly We Hold That No Addition Is Warranted On Account Of Investment In The Construction Of The Said Property Thus This Ground Of Revenue Is Dismissed 86 In The Result Revenues Appeal In I T A No 28 Ind 2008 Stands Partly Allowed 87 Now We Shall Take Up The Revenues Appeal In I T A No 29 Ind 2008 For Assessment Year 2003 04 88 Ground No 1 Reads As Under On The Facts And In The Circumstances Of The Case The Ld Cit A Has Erred In Deleting The Addition Of Rs 880 53 Made By The Ao On Account Of Unexplained Expenditure For House Hold Purposes Page 110 Of 149 89 The Issue Raised In This Ground Is Identical To I Ssue Raised In Ground No 1 Of I T A No 28 Ind 2008 Hence Follow Ing The Same Reasons We Allow This Ground Of The Revenue 90 Ground No 2 Reads As Under On The Facts And In The Circumstances Of The Case The Ld Cit A Has Erred In Deleting The Addition Of Rs 8 94 200 On Account Of Unexplained Deposits In Bank Account 91 The Issue Raised In Ground No 2 Is Identical To Gr Ound No 2 Of Revenues Appeal In I T A No 28 Ind 2008 Hence F Ollowing The Same Reasons This Ground Of The Revenue Is Also Allowed 92 Ground No 3 Reads As Under On The Facts And In The Circumstances Of The Case The Ld Cit A Has Erred In Directing To Allow The Credit O F Rs 2 13 411 On Account Of Interest On Housing Loan T Hereby Deleting The Addition Of Rs 25 200 On Account Of Interest Of Housing Loan 93 The Facts In Brief Are That The A O Claimed A Loss Of Rs 2 13 411 Under The Head Income From House Proper Ty Which Mainly Comprised Of Interest On Loan In Respect Of Self Oc Cupied House The A O However Found That The House Of The Assessee Was N Ot Complete In The Year Under Consideration Hence Interest On Borrow Ed Capital Had To Be Page 111 Of 149 Allowed In Assessment Year 2005 06 And Four Succeed Ing Assessment Years Accordingly The Disallowed The Interest On Loan So Claimed By The Assessee And Determined The A L V Of Rented Proper Ty At Rs 25 200 Aggrieved By This The Assessee Carried The Matter Into Appeal Before The Ld Cit A Wherein It Was Contended That In Assess Ment Year 2003 04 The Assessee Had Claimed Interest On Rent Which Ha D Been Accepted By The Assessing Officer U S 143 1 And In The Course Of S Earch No Incriminating Material Or Contrary Facts Were Found As Regard To The Completion Of This Property In Assessment Year 2003 04 It Was Also Co Ntended That It Was A Huge Property Having Multiple Floors Hence The As Sessee Occupied The Part Of That And Started Repaying The Loan And The Refore The Property Was To Be Treated As Self Occupied In The Year Under Co Nsideration And Consequently Such Interest On Borrowed Capital Was Liable To Be Allowed As A Whole In The Year Under Consideration The Ld Cit A Held That The Assessee Was Residing In The Same House And A O Ha D Not Brought Any Material On Record To Show That It Was Not So He F Urther Held That Repayment Of Such Loan Indicated That Construction Had Been Completed Accordingly He Directed The A O To Give Credit Fo R The Entire Interest On Housing Loan Of Rs 2 13 411 As Claimed By The As Sessee Aggrieved By This The Revenue Is In Appeal Before Us Page 112 Of 149 94 The Ld Departmental Representative Submitted That Construction Was Not Complete As There Was No Evide Nce On Record Regarding Occupation Of The Said House Hence The A Os Action Was Perfectly Justified The Ld Cit Dr Further Contend Ed That Repayment Of Installment By Itself Was Not In Any Manner Prove D That The Assessee Had Occupied The House Hence This Logic Of The Ld Ci T A Was Not Correct 95 The Learned Counsel For The Assessee On The Other Hand Narrated The Facts And Placed Strong Reliance On Th E Order Of The Cit A 96 We Have Considered The Submissions Made By Both Th E Sides Material On Record And The Orders Of The Authoritie S Below 97 It Is Noted That The Assessee Claimed Deduction Of Interest On Borrowed Capital In Assessment Year 2003 04 Which Has Been Allowed By The Department It Is Further Noted That The Said P Roperty Consists Of Various Floors Hence The Assessees Claim That It Had Occupied Certain Portion Of The Said Property And Therefore It Con Stituted A Self Occupied Property Appears To Be Acceptable In This View Of The Matter We Hold That The Interest On Borrowed Capital Is Allowable In Th E Year Under Consideration As Claimed By The Assessee We Howev Er Do Not Subscribe To The View Of The Ld Cit A That The Repayment Of The Loan By The Assessee Would Indicate That The Such Property Had Been Occupied Page 113 Of 149 Because These Two Aspects Are Independent Of Each O Ther Thus This Ground Of Revenue Is Dismissed 98 Ground No 4 Reads As Under On The Facts And In The Circumstances Of The Case The Ld Cit A Has Erred In Deleting The Addition Of Rs 8 80 707 Made By The Assessing Officer Towards Unexplained Investment In Construction Of The House Property 99 The Issue Raised In Ground No 4 Is Identical To Is Sue Raised In Ground No 3 Of Revenues Appeal In I T A No 28 In D 2008 Hence Following The Same Reasons We Dismiss This Ground Of Revenue 100 Ground No 5 Reads As Under On The Facts And In The Circumstances Of The Case The Ld Cit A Has Erred In Deleting The Addition Of Rs 2 07 502 Made By The Assessing Officer Towards Unexplained P Ayment And Discrepancies In Capital Accounts 101 The Facts In Brief Are That The Assessee Filed A Capital Account Wherein Opening Balance Of House Loan Account As On 1 4 2002 Was Rs 17 24 774 And The Closing Balance In This Account Was Rs 24 37 696 Thus There Was An Increase Of Rs 7 12 922 The A O However Further Page 114 Of 149 Analyzed The Capital Account And Observed That Actu Al Increase In The Housing Loan Was Rs 9 20 424 Hence The Amount Of Rs 2 07 502 Had Been Repaid By The Assessee Out Of Its Undisclosed Sources Accordingly He Made An Addition Of Rs 2 07 502 Aggrieved By This The Assessee Carried The Matter Into Appeal Before The Ld Cit A Wherein It Was Contended That The Amount Had Been Paid By The Asse Ssee Out Of Withdrawals From M S S K Jain Hence No Addition Was Warranted The Ld Cit A After Accepting These Contentions Dele Ted The Addition So Made By The Assessing Officer Still Aggrieved The Revenue Is In Appeal Before Us 102 The Ld Departmental Representative Narrated That This Issue Was More Or Less Connected With The Other Issues Ra Ised In I T A No 28 Ind 2007 Wherein It Had Been Argued That There Was No Evidence Or Material On Record To Show The Withdrawal Of These Funds From M S S K Jain The Ld Cit Dr Further Placed Reliance On His Arguments Made In I T A No 28 Ind 2008 In Regard To Issue Of Unex Plained Deposits In The Bank 103 The Learned Counsel For The Assessee On The Other Hand Preferred To Rely On The Arguments Submissions Made Before The Ld Cit A And On The Order Of The Cit A In Addition To It He Also Referred Page 115 Of 149 To Pages 87 To 89 Of The Paper Book Wherein The Co Py Of M S S K Jains Account In The Books Of The Assessee Had Been Place D 104 We Have Considered The Submissions Made By Both Th E Sides Material On Record And The Orders Of The Authoritie S Below 105 In Sum And Substance The Issue Is Identical To Th E Issue Raised In Ground No 2 Of I T A No 28 Ind 2008 Hence Follow Ing The Same Reasons We Allow This Ground Of The Revenue 106 In The Result This Appeal Of The Revenue Is Partl Y Allowed 107 Now We Shall Take Up The Revenues Appeal In I T A No 30 Ind 2008 For The Assessment Year 2004 05 108 Ground No 1 Reads As Under On The Facts And In The Circumstances Of The Case The Ld Cit A Has Erred In Deleting The Addition Of Rs 83 937 Made By The Assessing Officer On Account Of Unexplained Expendi Ture For House Hold Purposes 109 The Issue Raised In This Ground Is Identical To T He Ground No 1 Raised In I T A No 28 Ind 2008 Hence Following The Same Reasons We Allow This Ground 110 Ground No 2 Reads As Under On The Facts And In The Circumstances Of The Cas E The Ld Cit A Has Erred In Deleting The Addition Of Rs 17 33 290 Made By The Page 116 Of 149 Assessing Officer Towards Unexplained Investment In Construction Of The House Property 111 The Issue Raised In This Ground Is Identical To Gr Ound No 3 Of I T A No 28 Ind 2008 Hence Following The Same Re Asons We Dismiss This Ground Of The Revenue 112 Ground Nos 3 4 Read As Under 3 On The Facts And In The Circumstances Of The C Ase The Ld Cit A Has Erred In Deleting The Addition Of Rs 3 72 248 On Account Of Unexplained Payment And Discrepancies In Capital Accounts Deleting The Addition Of Rs 21 000 On Account Of Unexplained Deposit In The Bank Account 113 The Issues Raised In Above Grounds No 3 Are Ident Ical To Issue Raised In Ground No 2 Of 28 Ind 2008 Hence Follow Ing The Same Reasons We Allow These Grounds 114 Ground No 5 Reads As Under On The Facts And In The Circumstances Of The Case The Ld Cit A Has Erred In Directing To Allow The Credit O F Rs 2 36 522 On Account Of Interest On Housing Page 117 Of 149 115 The Issue Raised In Ground No 5 Is Identical To I Ssue Raised In Ground No 3 Of I T A No 29 Ind 2008 Hence Follow Ing The Same Reasons We Dismiss This Ground Of The Revenue 116 Now We Shall Take Up The Appeal Of Revenue In I T A No 31 Ind 2008 For The Assessment Year 2005 06 117 Ground No 1 Reads As Under On The Facts And In The Circumstances Of The Case The Ld Cit A Has Erred In Deleting The Addition Of Rs 3 49 000 Made By The Assessing Officer On Account Of Unexplained Exp Enditure For House Hold Purposes 118 The Issue Raised In This Ground Is Identical To I Ssue Raised In Ground No 1 Raised In I T A No 28 Ind 2008 Hence Following The Same Reasons We Allow This Ground 119 Ground No 2 Reads As Under On The Facts And In The Circumstances Of The Case The Ld Cit A Has Erred In Deleting The Addition Of Rs 16 95 000 Out Of Total Addition Of Rs 18 95 000 Made By Th E Assessing Officer Towards Unexplained Investment In Construction Of The House Property 120 The Facts Relating To This Ground Have Already Bee N Narrated By Disposing Of Ground No 3 Of I T A No 28 Ind 2008 Hence Not Repeated Page 118 Of 149 It Was Also Contended That The Investment In Plot W Here The Garden Had Been Prepared The Cost Thereof Had Been Added In T He Hands Of Her Husband By A Sum Of Rs 7 Lakhs On Protective Basis And Therefore The Addition In The Hands Of The Assessee Amounted To D Ouble Addition The Ld Cit A Found That Though The Assessees Husband Shri G C Jain Had Shown A Sum Of Rs 2 94 936 In His Books Of Accou Nt However The Cost Of Wall Painting Modular Kitchen Did Not Find Place In The Books Of The Assessee Or In The Books Of Shri G C Jain Hence Some Addition Was Warranted The Ld Cit A Further Held That The Est Imate Made By The Assessing Officer Was On Higher Side He Thereafte R Bifurcated The Quantum Of Addition In The Hands Of Shri G C Jain And In The Hands Of The Assessee And Confirmed The Addition Of Rs 1 05 064 In The Hands Of Shri G C Jain And Sum Of Rs 2 Lakhs In The Hands Of The Assessee He Further Held That Addition Of Rs 11 95 000 Made In The Hands Was To Be Deleted As These Items Were Relevant In The Hands O F Shri G C Jain He Also Held That As Regard To Wall Painting And Kitch En The Value Of Which Was Estimated By The Assessing Officer At Rs 7 Lak Hs Should Be Rs 2 Lakhs Accordingly The Assessee Got Relief Of Rs 16 95 000 Aggrieved By This The Revenue Is In Appeal Before Us Page 119 Of 149 121 The Ld Dr Narrated The Facts And Placed Reliance O N The Order Of The Ao The Ld Counsel For The Assessee On The Ot Her Hand Placed Strong Reliance On The Order Of The Ld Cit A 122 We Have Considered The Submissions Made By Both Th E Sides Material On Record And The Orders Of The Authoritie S Below 123 It Is Noted That The Basis For Such Addition Is Mai Nly The Valuation Report Of Registered Valuer Prepared By T He Assessee For The Bank Purposes Wherein The Valuation Has Been Made On The Basis Of Market Value And Not The Actual Cost We Also Find That The Assessee Has Submitted Elaborate Reasons On Each Of The Items Be Fore The Ld Cit A To Show That The Estimate By The Assessing Officer Was Without Any Basis As The A O Had Not Pointed Out Item Wise Cost Of Pain Tings And No Of Paintings And In Respect Of Other Items There Was No Basis It Is Also Noted That The Assessees Husband Shri G C Jain Has Sho Wn An Expenditure Of Rs 2 94 000 In Respect Of Make Over And Construc Tion Of Garden In Financial Year 2004 05 These Findings Of The Ld C It A Have Remained Uncontroverted Before Us Hence We Dismiss This Gr Ound Of Revenue 124 In The Result The Revenues Appeal Is Partly Allow Ed 125 Now We Shall Take Up Assessees Appeal In I T A No 32 Ind 2008 For The Assessment Year 2002 03 126 Ground No 1 Reads As Under Page 120 Of 149 That On The Facts And In The Circumstances Of The Case The Ld Cit A Erred In Confirming The Addition Of Rs 2 20 000 Being The Entire Amount Of Short Term Lo An Received During The Year Without Accepting The Expl Anation Offered By The Assessee 127 The Facts In Brief Are That Ao Required The Asses See To Explain The Investment Made By The Assessee In Immovable Pr Operties During The Year Under Consideration The Assessee Submitted Th At She Had Taken Short Term Loans Of Rs 3 Lakhs However She Did Not Giv E The Necessary Details Such As Name Of The Persons Confirmations And Thei R Capacity Documents The Ao Accordingly Held That Such Loans Were Non Genuine Hence He Added The Same As The Income Of The Assessee The A Ssessee Being Aggrieved Carried The Matter Into Appeal Before The Ld Cit A Wherein It Was Contended That In The Statement Of Affairs File D Along With The Return Of Income The Assessee Had Declared An Unsecured L Oan Of Rs 3 Lakhs Which Comprised Of Opening Balance Of Rs 80 000 And Rs 2 20 000 Received During The Year It Was Further Submitted That Names And Address Of The Persons Were Given During The Course Of Sear Ch Assessment Proceedings And The Ao Had Not Brought Any Material On Record For Page 121 Of 149 Justifying Such Addition It Was Also Submitted Th At No Incriminating Material Documents Were Found During The Course Of Search Hence Addition Could Not Be Made The Ld Cit A However Confirmed The Action Of The Ao As Confirmations Were Filed Only B Efore Him That Too Without Identity Proof Of Lenders Pan Numbers And Source Of Their Income Hence Both Capacity And Identity Of The Le Nders Was Not Proved Still Aggrieved The Assessee Is In Appeal Before U S 128 The Ld Counsel For The Assessee Narrated The Facts And Reiterated The Submissions Made Before The Revenue Authorities 129 The Ld Dr On The Other Hand Placed Strong Relian Ce On The Order Of The Ld Cit A 130 It Is Noted That The Assessee Filed Statement Of Af Fairs Alongwith Return Of Income Prior To Search Which Has Been Ac Cepted U S 143 1 It Is Further Noted That No Incriminating Material Or Evi Dences Have Been Found In The Course Of Search Or In The Course Of Post Se Arch Investigation As Referred To Such Loans We Have Already Stated That U S 153 A The Scope In Respect Of Completed Assessment Is Limited And I N The Absence Of Any Material Found During The Course Of Search Such Ad Dition Cannot Be Made We Further Find That Ld Cit A Has Not Given Any F Inding On This Contention Raised By The Assessee Before Him Hence The Order Of Ld Cit A Cannot Be Considered As Covering All The Asp Ects Thus In The Page 122 Of 149 Background Of These Facts And Circumstances We Hol D That The Impugned Addition Cannot Be Made U S 153 A Accordingly We Delete The Same Thus This Ground Of The Assessee Stands Allowed 131 Ground No 2 Reads As Under That On The Facts And In The Circumstances Of The Case Charging Of Interest Of Rs 34 504 U S 234 B And Rs 9 967 U S 220 2 Is Not Justified 132 In This Ground The Issue Relating To Charging Of Interest U S 220 2 Was Not Pressed Hence This Part Of This Gr Ound Is Dismissed As Not Pressed The Other Issue In This Ground Is Regardin G Chargeability Of Interest U S 234 B Which Is Of Consequential Natur E Hence No Decision Is Required Thereon 133 Ground No 3 Is Regarding Initiation Of Penalty Pr Oceedings U S 271 1 C Is Of Premature Nature Hence Dismissed 134 In The Result The Assessees Appeal Stands Partly Allowed 135 Now We Shall Take Up Assessees Appeal In I T A N O 33 Ind 2008 For The Assessment Year 2005 06 136 Ground No 1 Reads As Under That On The Facts And In The Circumstances Of The Case The Ld Cit A Erred In Confirming The Addition Of Rs 2 00 000 Out Of Total Addition Of Rs 18 95 000 Being Page 123 Of 149 Investment In Construction Of House Without Accepti Ng The Explanation Offered By The Assessee That The Same I S Duly Reflected In The Statement Of Affairs Attached With The Return Of Income Filed For The Year And The Dvo Has Done T He Valuation In 2006 07 And There Is No Major Differen Ce In The Cost As Per Dvo And The Cost As Shown By The Assess Ee 137 The Issue Involved In This Ground Is Connected Wit H Ground No 2 Of Revenues Appeal In Ita No 31 Ind O 8 Hence Facts Not Repeated Both The Parties Have Reiterated Their Respective S Tand Following The Reasons Given Therein We Dismiss This Ground Of As Sessee 138 Ground No 2 Reads As Under That On The Facts And In The Circumstances Of The Case The Charging Of Interest Of Rs 5 355 U S 234 Rs 3 394 U S 234 C And Rs 8 749 U S 220 2 Is Not Justified 139 Ground No 2 Is Identical To Issue Raised In Ground No 2 Of Assessees Appeal In I T A No 32 Ind 08 Hence Fo Llowing The Same Reasons This Ground Is Dismissed 140 Ground No 3 Reads As Under That On The Facts And In The Circumstances Of The Case Initiation Of Penalty Proceedings U S 271 1 Is No T Justified Page 124 Of 149 141 This Ground Is Also Identical To Ground No 3 Of I T A No 32 Ind 08 We Dismiss This Ground For The Same Reas Ons 142 In The Result Assessees Appeal Stands Dismissed 143 Now We Shall Take Up Assessees Appeal In I T A N O 34 Ind 2008 For The Assessment Year 1999 2000 144 Ground No 1 Reads As Under That On The Facts And In The Circumstances Of The Case The Ld Cit A Erred In Confirming The Addition Of Rs 55 419 Out Of Total Additions Of Rs 97 178 On Account O F Low Withdrawals For Household Expenses Without Acceptin G The Explanation Offered By The Assessee And Without Con Sidering The Standard Of Living Size Of The Family It Is Further Submitted That During The Course Of S Earch No Incriminating Document Were Found Which Could Form The Basis For Making Addition For Withdrawals For House Hold Expenses Thus The Addition Made For Low House Hol D Withdrawal Is Purely Arbitrary Unjustified Withou T Any Basis And Thus Deserves Tobe Deleted 145 Since We Have Confirmed The Addition Made By The A Ssessing Officer In The Hands Of Smt Rekha Jain On Substant Ive Basis Hence There Page 125 Of 149 Remains No Basis For Making This Addition In The Ha Nds Of The Present Assessee Thus This Ground Of The Assessee Stands Allowed 146 Ground Nos 2 3 Read As Under 2 That On The Facts And In The Circumstances Of The Case The Ld Cit A Erred In Confirming Addition Of Rs 3 38 550 Out Of Total Addition Of Rs 6 51 500 On Account Of Unexplained Money Without Considering The Explan Ation Offered By The Assessee That The Said Amount Is Ope Ning Capital As On 01 04 1998 And Duly Reflected In The Statement Of Affairs Of The Assessee 3 That On The Facts And In The Circumstances Of Th E Case The Ld Cit A Erred In Confirming The Addition Of Rs 25000 The Entire Amount Of Short Term Loan Receiv Ed During The Year Without Accepting The Explanation 147 The Facts In Brief Are That The A O From The St Atement Of Affairs Filed By The Assessee Noted That The Assess Ee Had Shown Opening Balance Of Rs 6 51 100 And Against This Fixed As Sets At Rs 2 99 100 Had Been Shown In The Assets Side Alongwith Land At Jat Khedi Plus Cash In Hand The A O Required The Assessee To Furnish The Nature Of Opening Balances By Submitting Necessary Documentary Eviden Ces The Assessee Gave Certain Replies However The A O Held That T Hese Were Not Sufficient Page 126 Of 149 To Prove The Claims Of The Assessee And Onus Accor Dingly He Added The Said Opening Balance As Income Of The Assessee The A O Further Held That The Loan Of Rs 25 000 Allegedly Received By The Assessee In The Year Under Consideration Also Remained Unsubstantiated Hence He Also Added The Same Aggrieved By This The Assessee Carried T He Matter Into Appeal Before The Ld Cit A Wherein The Assessee Submitt Ed Cash Flow Statement For Various Earlier Years Resulting Into Accumulation Of Such Capital It Was Also Contended That The Assessee Wa S Employed As S D O With The Irrigation Department Wherefrom Several F Unds Had Been Received By The Assessee On Retirement It Was Also Contended That The Amount Of Opening Capital Generated Out Of Income O F The Earlier Years Could Not Be Added In The Year Under Consideration He Further Submitted Cash Flow Statement For The Year Under Consideratio N The Assessee Also Submitted That Opening Assets Amounted To Rs 3 38 550 And The Assessee Had Made A New Investment In The Purchase Of Land A T Jatkhedi For Rs 3 95 500 Which Had Been Made Out Of Current Year S Salary Plus New Loans To The Extent Only Rs 57 000 Hence The R Esultant Amount Was Rs 3 38 550 Could Only Be Added At The Most The Ld Cit A Confirmed The Addition To The Extent Of Rs 3 38 550 Becau Se The Investment Of Rs 3 95 550 Stood Explained Still Aggrieved The As Sessee Is In Appeal Before Us Page 127 Of 149 148 The Learned Counsel For The Assessee Drew Our Atte Ntion To Cash Flow Chart Wherein The Bifurcation Of Assets Had Be En Given From Earlier Years Hence He Contended That The Basis For Makin G This Addition Was Properly Explained He Further Placed Reliance On T He Written Submissions Made Before The Ld Cit A The Ld Cit Dr On The Other Hand Placed Strong Reliance On The Order Of Ld Cit A 149 We Have Considered The Submissions Made By Both Th E Sides Material On Record And The Orders Of The Authoritie S Below 150 It Is Noted That The Assessee Has Not Been Assesse D To Tax Regularly And Has Not Filed Statement Of Affairs Al Ongwith Return Of Income In Earlier Years Hence The Claims Of The Assessee Are Not Supported By The Tax Records In Addition To This No External Evide Nces To Support Such Claim Have Been Filed It Is Further Noted That The Re Is No Evidence As Regard To Loans And Sale Of Fixed Assets Thus In Our View The Ld Cit A Has Rightly Confirmed The Addition To This E Xtent As There Are Physical Assets In The Year Under Consideration Wh Ich Are Not Explained By The Opening Capital Thus This Ground Is Dismis Sed 151 Ground No 4 Reads As Under That On The Facts And In The Circumstances Of The Case Charging Of Interest Of Rs 1 25 505 U S 234 B An D Rs 25 916 U S 220 2 Is Not Justified Page 128 Of 149 152 The Issue Raised In Above Ground Is Identical To G Round No 2 Of I T A No 32 Ind 2008 Hence Following The Same Re Asons We Dismiss This Ground 153 Ground No 5 Reads As Under That On The Facts And In The Circumstances Of The Case Initiation Of Penalty Proceedings U S 271 1 C Is Not Justified 154 The Issue Raised In Ground No 5 Is Identical To Gr Ound No 3 Of I T A No 32 Ind 2008 Hence The Same Is Dismisse D Following The Same Reasons 155 In The Result The Assessees Appeal Is Partly Allo Wed 156 Now We Shall Take Up The Appeal Of The Assessee I N I T A No 35 Ind 2008 For The Assessment Year 2000 01 157 Ground No 1 Reads As Under That On The Facts And In The Circumstances Of The Case The Ld Cit A Erred In Confirming The Addition Of Rs 72 619 Out Of Total Additions Of Rs 1 38 919 On Account Of Low Withdrawals For Household Expenses Without Acceptin G The Explanation Offered By The Assessee And Without Con Sidering The Standard Of Living Size Of The Family Page 129 Of 149 It Is Further Submitted That During The Course Of S Earch No Incriminating Document Were Found Which Could Form The Basis For Making Addition For Withdrawals For House Hold Expenses Thus The Addition Made For Low House Hol D Withdrawal Is Purely Arbitrary Unjustified Withou T Any Basis And Thus Deserves To Be Deleted 158 The Issue Raised In Ground No 1 Is Identical To Th E Issue Raised In Ground No 1 Of I T A No 34 Ind 2008 Hence Allowe D For The Same Reasons 159 Ground No 2 Reads As Under That On The Facts And In The Circumstances Of The Case Charging Of Interest Of Rs 10 929 U S 234 B And R S 2 468 U S 220 2 Is Not Justified 160 The Issue Raised In This Ground Is Identical To Gr Ound No 4 Of I T A No 34 Ind 2008 Hence The Same Is Dismissed Following The Same Reasons 161 Ground No 3 Reads As Under That The On The Facts And In The Circumstances Of The Case Initiation Of Penalty Proceedings U S 271 1 C Is Not Justified Page 130 Of 149 162 The Issue Raised In This Ground Is Identical To Gr Ound No 5 Of I T A No 34 Ind 2008 Hence The Same Is Dismissed For The Same Reasons 163 In The Result This Appeal Stands Partly Allowed 164 Now We Shall Take Up Appeal In I T A No 36 Ind 2 008 For The Assessment Year 2001 02 165 Ground No 1 Reads As Under That On The Facts And In The Circumstances Of The Case The Ld Cit A Erred In Confirming The Addition Of Rs 67 461 Out Of Total Additions Of Rs 1 39 461 On Account Of Low Withdrawals For Household Expenses Without Acceptin G The Explanation Offered By The Assessee And Without Con Sidering The Standard Of Living Size Of The Family It Is Further Submitted That During The Course Of S Earch No Incriminating Document Were Found Which Could Form The Basis For Making Addition For Withdrawals For House Hold Expenses Thus The Addition Made For Low House Hol D Withdrawal Is Purely Arbitrary Unjustified Withou T Any Basis And Thus Deserves To Be Deleted Page 131 Of 149 166 The Issue Raised In Above Ground Is Identical To G Round No 1 Of I T A No 35 Ind 2008 Hence Following The Same Re Asons We Allow This Ground 167 Ground No 2 Reads As Under That On The Facts And In The Circumstances Of The Case Charging Of Interest Of Rs 59 673 U S 234 B And R S 15 089 U S 220 2 Is Not Justified 168 The Issue Raised In This Ground Is Identical To G Round No 5 Of I T A No 35 Ind 2008 Hence Dismissed For The Sam E Reasons 169 Ground No 3 Reads As Under That The On The Facts And In The Circumstances Of The Case Initiation Of Penalty Proceedings U S 271 1 C Is Not Justified 170 The Issue Raised In This Ground Is Identical To Gr Ound No 3 Of I T A No 35 Ind 2008 Hence The Same Is Dismissed For The Same Reasons 171 In The Result The Assessees Appeal Stands Partly Allowed 172 Now We Shall Take Up Assessees Appeal In I T A No 37 Ind 2008 For The Assessment Year 2002 03 173 Ground No 1 Reads As Under Page 132 Of 149 That On The Facts And In The Circumstances Of The Case The Ld Cit A Erred In Confirming The Addition Of Rs 10 053 Out Of Total Additions Of Rs 88 053 On Account O F Low Withdrawals For Household Expenses Without Acceptin G The Explanation Offered By The Assessee And Without Con Sidering The Standard Of Living Size Of The Family It Is Further Submitted That During The Course Of S Earch No Incriminating Document Were Found Which Could Form The Basis For Making Addition For Withdrawals For House Hold Expenses Thus The Addition Made For Low House Hol D Withdrawal Is Purely Arbitrary Unjustified Withou T Any Basis And Thus Deserves Tobe Deleted 174 The Issue Raised In Ground No 1 Is Identical To Th E Issue Raised In Ground No 1 Of I T A No 34 Ind 2008 Hence Allowe D For The Same Reasons 175 Ground No 2 Reads As Under That On The Facts And In The Circumstances Of The Case The Ld Cit A Erred In Confirming The Addition Of Rs 1 17 000 The Entire Amount Of Short Term Loan Received Durin G The Year Without Accepting The Explanation Offered By The As Sessee Page 133 Of 149 176 The Facts In Brief Are That Assessee Furnished St Atement Of Affairs As Required By The Ao The Ao Further Requi Red The Assessee To Substantiate Loan If Any Taken By The Assessee Du Ring The Year Under Consideration The Assessee Submitted That It Had T Aken Short Term Loan Of Rs 1 17 000 However Necessary Details Such As Name And Address Of The Persons And Their Capacity To Grant Such Loan The Assessee Though Submitted The Addresses And Names Of Such Persons However Did Not File Any Confirmations The Ao Noted That Most Of The Lo Ans Were Taken In Cash Below Rs 20 000 Hence In The Absence Of C Onfirmatory Letters The Ao Held That The Assessee Failed To Discharge Its O Nus Accordingly He Added A Sum Of Rs 1 17 000 Aggrieved By This T He Assessee Carried The Matter Into Appeal Before The Ld Cit A Wherein T He Assessee Submitted The Confirmatory Letters And Also Stated That Such Loans Had Been Shown In The Statement Of Affairs Filed Alongwith The Return Of Income In The Normal Course Hence In The Absence Of Any Incriminating Materials Found During The Course Of Search No Addition Could Be Made On This Account The Ld Cit A However Confirmed The Action Of The Ao For The Reason That Confirmatory Letters Filed Before Him Were Without Documentary Evidences To Substantiate The Genuineness Of Such T Ransactions Still Aggrieved The Assessee Is In Appeal Before Us Page 134 Of 149 177 The Ld Counsel For The Assessee Narrated The Facts And Reiterated The Facts Made Before The Revenue Authorities 178 The Ld Departmental Representative On The Other H And Placed Strong Reliance On The Orders Of The Revenue Author Ities 179 We Have Considered The Rival Submissions Material On Record And Orders Of The Authorities Below 180 It Is Noted That The Assessee Filed Statement O F Affairs Alongwith Return Of Income Prior To Search Which H As Been Accepted U S 143 1 It Is Further Noted That No Incriminating M Aterial Or Evidences Have Been Found In The Course Of Search Or In The C Ourse Of Post Search Investigation As Referred To Such Loans We Have Al Ready Stated That U S 153 A The Scope In Respect Of Completed Assessment Is Limited And In The Absence Of Any Material Found During The Course Of Search No Such Addition Can Be Made We Further Find That Ld Cit A Has Not Given Any Finding On This Contention Raised By The Assessee B Efore Him Hence The Order Of Ld Cit A Cannot Be Considered As Coverin G All The Aspects Thus In The Background Of These Facts And Circumst Ances We Hold That The Impugned Addition Cannot Be Made U S 153 A Ac Cordingly We Delete The Same Thus This Ground Of The Assessee Stands Allowed 181 Ground No 3 Reads As Under Page 135 Of 149 That On The Facts And In The Circumstances Of The Case Charging Of Interest Of Rs 3 337 U S 234 A Rs 2 0 524 U S 234 B And Rs 6 296 U S 220 2 Is Not Justified 182 The Issue Raised In Ground No 3 Is Identical To Gr Ound No 4 Of I T A No 34 Ind 2008 Hence The Same Is Dismissed 183 Ground No 4 Reads As Under That On The Facts And In The Circumstances Of The Case Initiation Of Penalty Proceedings U S 271 1 C Is N Ot Justified 184 Ground No 4 Is Identical To The Issue Raised In G Round No 5 Of I T A No 34 Ind 2008 Hence The Same Is Dismissed 185 In The Result This Appeal Of The Assessee Is Partl Y Allowed 186 Now We Shall Take Up The Appeal Of The Assessee In I T A No 38 Ind 2008 For The Assessment Year 2004 05 187 Ground No 1 Reads As Under That On The Facts And In The Circumstances Of The Case The Ld Cit A Erred In Confirming The Addition Of Rs 26 468 Out Of Total Additions Of Rs 1 10 468 On Account Of Low Withdrawals For Household Expenses Without Acceptin G The Explanation Offered By The Assessee And Without Con Sidering The Standard Of Living Size Of The Family Page 136 Of 149 It Is Further Submitted That During The Course Of S Earch No Incriminating Document Were Found Which Could Form The Basis For Making Addition For Withdrawals For House Hold Expenses Thus The Addition Made For Low House Hol D Withdrawal Is Purely Arbitrary Unjustified Withou T Any Basis And Thus Deserves To Be Deleted 188 The Issue Raised In Above Ground Is Identical To G Round No 1 Of I T A No 35 Ind 2008 Hence Following The Same Re Asons We Allow This Ground 189 Ground No 2 Reads As Under That On The Facts And In The Circumstances Of The C Ase Charging Of Interest Of Rs 1 012 U S 234 A Rs 5 534 U S 234 B And Rs 2 029 U S 220 2 Is Not Justified 190 The Issue Raised In This Ground Is Identical To Iss Ue Raised In Ground No 2 Raised In Ground No 35 Ind 2008 Henc E Dismissed On Similar Lines 191 Ground No 3 Reads As Under Page 137 Of 149 That The On The Facts And In The Circumstances Of The Case Initiation Of Penalty Proceedings U S 271 1 C Is Not Justified 192 The Issue Raised In This Ground Is Identical To Gr Ound No 3 Of I T A No 35 Ind 2008 Hence Dismissed For The Sam E Reasons 193 In The Result The Appeal Filed By The Assessee S Tands Partly Allowed 194 Now We Shall Take Up The Appeal Of The Assessee I N I T A No 39 Ind 2008 For The Assessment Year 2005 06 195 Ground No 1 Reads As Under That On The Facts And In The Circumstances Of The Case The Ld Cit A Erred In Confirming The Addition Of Rs 75 685 Out Of Total Additions Of Rs 3 49 000 On Account Of Low Withdrawals For Household Expenses Without Acceptin G The Explanation Offered By The Assessee And Without Con Sidering The Standard Of Living Size Of The Family It Is Further Submitted That During The Course Of S Earch No Incriminating Document Were Found Which Could Form The Basis For Making Addition For Withdrawals For House Hold Expenses Thus The Addition Made For Low House Hol D Page 138 Of 149 Withdrawal Is Purely Arbitrary Unjustified Withou T Any Basis And Thus Deserves To Be Deleted 196 The Issue Raised In Above Ground Is Identical To G Round No 1 Of I T A No 35 Ind 2008 Hence Following The Same Re Asons We Allow This Ground 197 Ground No 2 Reads As Under That On The Facts And In The Circumstances Of The Case Charging Of Interest Of Rs 8 656 U S 234 A Rs 2 0 124 U S 234 B Rs 2 132 U S 234 C And Rs 9 387 U S 220 2 Is Not Justified 198 Ground No 2 Is Identical To Issue Raised In Groun D No 2 Of Appeal In I T A No 35 Ind 2008 Hence Dismissed F Or The Same Reasons 199 Ground No 3 Reads As Under That The On The Facts And In The Circumstances Of The Case Initiation Of Penalty Proceedings U S 271 1 C Is Not Justified 200 The Issue Raised In This Ground Is Identical To G Round No 3 Of I T A No 35 Ind 2008 Hence Dismissed For The Sam E Reasons 201 Now We Shall Take Up The Assessees Appeal In I T A No 47 Ind 2008 For The Assessment Year 1999 2000 202 Ground No 1 Reads As Under Page 139 Of 149 On The Facts And In The Circumstances Of The Case The Ld Cit A Has Erred In Deleting The Addition Of Rs 1 81 998 Made On Substantive Basis By The Assessing Officer On Account Of Unexplained Expenditure For House Hold Purposes 203 The Issue Raised In This Ground Is Identical To Is Sue Raised In Different Appeals Of The Assessee Group Wherein We Have Upheld The Action Of A O In Making Substantive Addition Henc E This Ground Of The Revenue Is Allowed 204 Ground No 2 Reads As Under On The Facts And In The Circumstances Of The Case The Ld Cit A Has Erred In Deleting The Addition Of Rs 1 3 99 649 Made On Account Of Unexplained Money 205 The Facts In Brief Are That The Assessee Submitt Ed Statement Of Affairs Wherein Opening Capital Was Shown At Rs 13 99 649 Which The A O Found As Unexplained Hence Added The Same To The Total Income Of The Assessee On Appeal The Ld Cit A Found That The Assessee Had Filed Income Tax Return Regularly And Statement Of Affair S Were Also Attached Wherein Such Opening Balance Appeared Hence It Sh Ould Not Be Treated As Unexplained Or Un Substantiated Aggrieved By Th Is The Revenue Is In Appeal Before Us Page 140 Of 149 206 The Ld Dr Narrated The Facts And Placed Reliance On The Order Of The Ao The Ld Counsel For The Assessee On The Other Hand Placed Strong Reliance On The Order Of The Ld Cit A 207 On Due Consideration Of Facts And Circumstances Of The Case We Find That There Is No Merit In This Ground Of The R Evenue Because The Opening Balance Is Fully Substantiated With The Ass Essment Records Of The Assessee Thus This Ground Of The Revenue Is Dismi Ssed 208 In The Result The Appeal Filed By The Revenue Is Partly Allowed 209 Now We Shall Take Up Revenues Appeal In I T A No 50 Ind 2008 For The Assessment Year 2002 03 210 Ground No 1 Reads As Under On The Facts And In The Circumstances Of The Case The Ld Cit A Has Erred In Deleting The Addition Of R S 2 53 898 Made On Substantive Basis By The Assessi Ng Officer On Account Of Unexplained Expenditure For H Ouse Hold Purposes 211 This Ground Is Identical To Ground No 1 Of Revenu Es Appeal In I T A No 47 Ind 2008 Hence Following The Same Re Asons We Allow This Ground 212 Ground No 2 Reads As Under Page 141 Of 149 On The Facts And In The Circumstances Of The Case The Ld Cit A Has Erred In Deleting The Addition Of Rs 5 44 500 Made On Account Of Unexplained Money 213 The Facts In Brief Are That The Assessee Made An Investment Of Rs 5 44 500 In Purchase Of Land At Sarvdharam T He Source Of Such Investment Was Shown As Funds Generated From Loans Returned By The Persons To Whom Such Loans Had Been Given In Earlie R Years Out Of Withdrawals From M S S K Jain Amounting To Rs 71 500 And Out Of Loan Taken From Smt Rekha Jain The A O However Added As Unexplained Investment In The Hands Of The Assessee In This Process The A O Also Took Not Of Seized Documents Aggrieved B Y This The Assessee Carried The Matter Into Appeal Before The Ld Cit A Who After Considering The Submissions Of The Assessee That Th E Same Investment Had Been Made Out Of Loan Returned Back In The Year Und Er Consideration And Loan Taken From Smt Rekha Jain And Cash In Hand Av Ailable With The Assessee Aggrieved By This The Revenue Is In Appe Al Before Us 214 The Ld Dr Narrated The Facts And Placed Reliance On The Order Of The Ao The Ld Counsel For The Assessee On The Other Hand Placed Strong Reliance On The Order Of The Ld Cit A 215 We Find That The Assessee Has Shown The Source Of Such Investment Out Of Withdrawals From M S S K Jain W Hich Has Remained Page 142 Of 149 Un Substantiated As The Same Is Position In Other C Ases As Regards Two Other Sources The Findings Of The Ld Cit A Have Remained Uncontroverted Thus The Addition Of Rs 71 500 Is Sustained Accordingly This Ground Of The Revenue Is Partly A Llowed 216 In The Result The Appeal Filed By The Revenue Is Partly Allowed 217 Now We Shall Take Up Appeal Of The Assessee In I T A No 72 Ind 08 For The Assessment Year 2005 06 218 Ground No 1 Reads As Under That On The Facts And In The Circumstances Of The Case The Ld Cit A Erred In Confirming The Addition Of Rs 66 372 Out Of Total Additions Of Rs 1 65 726 On Account Of Low Withdrawals For Household Expenses Without Acceptin G The Explanation Offered By The Assessee And Without Con Sidering The Standard Of Living Size Of The Family It Is Further Submitted That During The Course Of S Earch No Incriminating Document Were Found Which Could Form The Basis For Making Addition For Withdrawals For House Hold Expenses Thus The Addition Made For Low House Hol D Withdrawal Is Purely Arbitrary Unjustified Withou T Any Basis And Thus Deserves To Be Deleted Page 143 Of 149 219 This Addition Was Made In The Hands Of The Assesse E On Substantive Basis And In The Hands Of The Assessee S Father Shri Amarchand Jain On Protective Basis The Ld Cit A On Appeal By The Assessee Reduced The Same To Rs 66 372 In View Of Withdrawals Worth Rs 1 01 354 Shown By The Assessees Father In Hi S Hands Aggrieved By This The Assessee Is In Appeal Before Us 220 The Learned Counsel For The Assessee Narrated The Facts And Reiterated The Submissions Made Before The Ld Cit A The Ld Departmental Representative On The Other Hand Pla Ced Strong Reliance On The Order Of The A O 221 On Due Consideration Of Facts And Circumstances Of The Case And Having Regard To The Fact Of Status Of The Assessee S Family As A Whole We Find No Infirmity In The Order Of The Ld Cit A In This Regard Hence We Dismiss This Ground Of The Assessee 222 Ground No 2 Reads As Under That On The Facts And In The Circumstances Of The Case Charging Of Interest Of Rs 10 869 U S 234 B Is No T Justified 223 The Issue Raised In This Ground Is Of Consequentia L Nature And Hence No Specific Decision Is Called Thereon 224 Ground No 3 Reads As Under Page 144 Of 149 That On The Facts And In The Circumstances Of The Case Initiation Of Penalty Proceedings U S 271 1 C Is Not Justified 225 This Ground Is Of Premature Nature Hence The Sam E Is Dismissed 226 In The Result The Assessees Appeal Is Dismissed 227 Now We Shall Take Up The Assessees Appeal In I T A No 73 Ind 2009 For The Assessment Year 2005 06 228 Ground No 1 Reads As Under That On The Facts And In The Circumstances Of The Case The Ld Cit A Erred In Not Accepting That The Notice I Ssued U S 153 Bc And The Assessment Completed U S 153 C Read Wi Th Section 153 A Is Invalid And Bad In Law Because Ther E Is No Basis For Issuing The Notice U S 153 C 229 The Learned Counsel For The Assessee Did Not Press This Ground Of Appeal Hence The Same Is Dismissed As Withdraw N 230 Ground No 2 Reads As Under That On The Facts And In The Circumstances Of The Case The Ld Cit A Erred In Not Confirming The Addition Of Rs 60 844 Out Of Total Additions Of Rs 1 38 844 O N Account Page 145 Of 149 Of Low Withdrawals For Household Expenses Without Accepting The Explanation Offered By The Assessee A Nd Without Considering The Standard Of Living Size Of The Family It Is Further Submitted That During The Course Of S Earch No Incriminating Document Were Found Which Could Form The Basis For Making Addition For Withdrawals For House Hold Expenses Thus The Addition Made For Low House Hol D Withdrawal Is Purely Arbitrary Unjustified Withou T Any Basis And Thus Deserves To Be Deleted 231 The Facts In Brief Are That The A O Has Made Add Ition In The Hands Of The Assessee On This Account On Substantiv E Basis And In The Hands Of The Assessees Father Shri Amarchand Jain On Protective Basis However In Other Appeals Of This Group We Have He Ld That Addition Made By The Assessing Officer On Substantive Basis And Q Uantum Thereof Had To Be Sustained Having Regard To The Status Of The Fa Mily And Other Factors Hence We Do Not Find Any Merit In This Ground Of T He Assessee Accordingly The Same Is Dismissed 232 Ground No 3 Reads As Under That On The Facts And In The Circumstances Of The Case Initiation Of Penalty Proceedings U S 271 1 C Is Not Justified Page 146 Of 149 233 The Issue Raised In This Ground Is Of Consequential Nature And Hence No Specific Decision Is Called Thereon 234 Ground No 4 Reads As Under That On The Facts And In The Circumstances Of The Case Initiation Of Penalty Proceedings U S 271 1 Is No T Justified 235 This Ground Is Of Premature Nature Hence The Same Is Dismissed 236 In The Result This Appeal Is Dismissed 237 Now We Shall Take Up The Assessees Appeal In I T A No 74 Ind 2008 For The Assessment Year 2004 05 238 Ground No 1 Reads As Under That On The Facts And In The Circumstances Of The Case The Ld Cit A Erred In Making Fresh Addition Of Rs 63 100 Being Estimated Profit 10 On Contract Receipts Of Rs 6 31 000 It Is Submitted That In The Assessment No Such Addition Was Made On This Account 239 The Facts In Brief Are That The A O Asked The A Ssessee To Submit The Details Of Contracts Executed By It In T He Previous Years Relevant To Assessment Year 2003 04 2004 05 And 2 005 06 He Further Found That There Were Several Deposits In The Bank Account Of The Assessee Which Exactly Matched With The Gross Contract Recei Pts Claimed To Have Page 147 Of 149 Received By The Assessee The Assessee Claimed The Source Of Such By Way Of Withdrawals From M S S K Jain However The A O Rejected This Claim Of The Assessee As No Evidence Was Brought On Recor D By The Assessee To Prove The Fact Of Withdrawals From That Firm The A O Made The Addition However Set Off The Same From Other Addition Made By Him In Respect Of Unexplained Cash Credits In The Bank Account Aggri Eved By This The Assessee Carried The Matter Into Appeal Before The Ld Cit A Wherein The Assessee Submitted The Details Of Bank Flow Stateme Nt Wherein The Receipts From M S S K Jain The Contract Receipts And House Hold Withdrawals Were Clearly Shown The Assessee Also S Ubmitted That The A O Was Not Justified In Making Addition Of Rs 6 31 000 Being The Amount Of Gross Receipts From Contract Work And It Was Also Submitted That If At All Any Addition Was To Be Made It Coul D Be Only Of Profit Earned Thereon The Ld Cit A Accordingly Treated 10 Of Such Receipts As Amount Of Profit And Directed The A O To Tax The S Ame The Ld Cit A However Deleted The Other Addition Of Unexplained Cash Credit Aggrieved By This The Revenue Is In Appeal Before Us 240 The Learned Counsel Narrated The Facts And Reitera Ted The Submissions Made Before The Ld Cit A Page 148 Of 149 241 The Ld Dr Narrated The Facts And Placed Reliance On The Order Of The Ao The Ld Counsel For The Assessee On The Other Hand Placed Strong Reliance On The Order Of The Ld Cit A 242 We Have Considered The Submissions Made By Both Th E Sides Material On Record And The Orders Of The Authoritie S Below 243 It Is Noted That The Assessee Himself Pleaded Befo Re The Ld Cit A To Adopt The Profit Of Such Gross Receipts A T Reasonable Profit We Further Find That It Is The Case Of Labour Contract Hence Estimation Of Profit 10 Of Gross Receipts Is Not Unjustified Accordingly We Dismiss This Ground Of The Assessee 244 Ground No 2 Reads As Under That On The Facts And In The Circumstances Of The Case Charging Of Interest Of Rs 62 281 U S 234 B Is No T Justified 245 The Issue Raised In This Ground Is Of Consequentia L Nature And Hence No Specific Decision Is Called Thereon 246 Ground No 3 Reads As Under That On The Facts And In The Circumstances Of The Case Initiation Of Penalty Proceedings U S 271 1 C Is Not Justified 247 This Ground Is Of Premature Nature Hence The S Ame Is Dismissed Page 149 Of 149 248 In The Result The Appeal Is Dismissed This Order Has Been Pronounced In The Open Court On 28 Th January 2010 Sd Sd Joginder Singh V K Gupta Judicial Member Accountant Member Dated 28 Th January 2010 Cpu 2022 1