The ACIT, 1 (2), v. M/si Mech & Fab Industris,

ITSSA 206/IND/2008 | 2004-2005
Pronouncement Date: 29-12-2010 | Result: Dismissed

Appeal Details

RSA Number 20622716 RSA 2008
Assessee PAN AAFFM1355H
Bench Indore
Appeal Number ITSSA 206/IND/2008
Duration Of Justice 2 year(s) 3 month(s)
Appellant The ACIT, 1 (2),
Respondent M/si Mech & Fab Industris,
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 29-12-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 29-12-2010
Date Of Final Hearing 21-09-2010
Next Hearing Date 21-09-2010
Assessment Year 2004-2005
Appeal Filed On 29-09-2008
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI R.C.SHARMA ACCOUNTANT MEMBER PAN NO. : AAFFM1355H I.T(SS).A.NOS.182 TO 188/IND/2008 A.YS. : 2000-01 TO 2006-07 ACIT 1(2) M/S. MECHMEN 11-C INDUSTRIAL AREA BHOPAL VS GOVINDPURA BHOPAL (APPELLANT) (RESPONDENT) C.O.NO.126/IND/2008 (ARISING OUT OF I.T(SS).A.NOS.185/IND/2010) A.YS. : 2003-04 M/S. MECHMEN 11-C INDUSTRIAL AREA ACIT 1(2) GOVINDPURA VS BHOPAL BHOP AL (CROSS OBJECTOR) (RESPONDENT) PAN NO. : AAFFM1702J I.T(SS).A.NOS.202 TO 208/IND/2008 A.YS. : 2000-01 TO 2006-07 ACIT 1(2) M/S. MECH & FAB INDUSTRIES BHOPAL VS 17 - B D - SECTOR INDUSTRIAL AREA GOVINDPURA BHOPAL. (APPELLANT) (RESP ONDENT) 2 DEPARTMENT BY : SHRI K.K.SINGH CIT DR RESPONDENT BY : SHRI H.P.VERMA ADV. AND SHRI ASHISH GOYAL C.A. O R D E R PER JOGINDER SINGH JM THESE ARE THE APPEALS FILED BY THE DEPARTMENT AGAINST THE ORDER OF CIT(A) FOR THE ASSESSMENT YEAR S 2000-01 TO 2006-07 AND CROSS OBJECTIONS ARE FILED B Y THE ASSESSEE FOR THE ASSESSMENT YEARS 2002-03 TO 2006-0 7. 2. AS ALL THE APPEALS PERTAIN TO THE SAME GROUP OF ASSESSES AND SIMILAR GROUNDS HAVE BEEN TAKEN IN THE SE APEALS THESE WERE HEARD TOGETHER AND NOW DECIDED BY THIS CONSOLIDATED ORDER. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. 4. FACTS IN BRIEF ARE THAT THERE WAS A SEARCH AT THE RESIDENCE OF DIRECTORS/PARTNERS OF THE ASSESSEE COMPANY/FIRM ON 16.9.2005. HOWEVER THERE WAS NO SEARCH AT THE ASSESSEES BUSINESS PREMISES. SURVEY WAS CONDUCTED U/S 133-A AT THE ASSESSEES BUSINESS PREMISES. THEREAFTER NOTICE U/S 153C WAS ISSUED AN D 3 THE ASSESSEE FILED RETURN OF INCOME ACCORDINGLY THEREAFTER ASSESSMENTS WERE FRAMED U/S 153C. THE ASSESSEE HAS CHALLENGED THE LEGALITY OF THE ASSESSMENT MADE U/S. 153C/143(3) OF THE IT ACT FOR ALL THE ASSESSMENT YEARS ON THE PLEA THAT NO SATISFACTI ON WAS RECORDED BY THE ASSESSING OFFICER OF SEARCHED PERSON. IN AN APPEAL FILED BEFORE CIT(A) ATTENTION WAS INVITED TO THE PROVISIONS OF SEC. 153C WHICH READS AS UNDER:- 1 . NOTWITHSTANDING ANYTHING CONTAINED IN SEC. 139 SEC.147 SEC.148 SEC.149 SEC. 151 AND SEC. 153 WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SEC. 153A THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SEC. 153A]. [PROVIDED THAT IN CASE OF SUCH OTHER PERSON THE REFERENCE TO THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SEC. 132A IN THE SECOND PROVISIO TO SECTION 153A SHALL BE CONSTRUED AS REFERENCE TO THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON ] . 4 5. AS PER LD. AR PERUSAL OF THE ABOVE SECTION REQU IRE THAT A. THE ASSESSING OFFICER MAKING THE ASSESSMENT OF THE SEARCHED PERSON HAS TO SATISFY HIMSELF THAT SOME MATERIAL (INCRIMINATING) OUT OF THE SEIZED MATERIAL BELONGS TO SOME PERSON OTHER THAN THE SEARCHED PERSON ; B. THEN THE ASSESSING OFFICER MAKING THE ASSESSMENT OF THE SEARCHED PERSON HAS TO HAND OVER THE SAID INCRIMINATING MATERIAL BELONGING TO SOME PERSON OTHER THAN THE SEARCHED PERSON TO THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SAID OTHER PERSON; C. THEN THE ASSESSING OFFICER HAVING JURISDICTION OVER THE PERSON OTHER THAN THE SEARCHED PERSON SHALL ISSUE A NOTICE U/S. 153C TO SUCH OTHER PERSON AND ASSESS HIS INCOME AND IF THE ASSESSING OFFICER HAS JURISDICTION OVER THE SEARCHED PERSON AND OTHER THAN SEARCHED PERSON AS WELL THEN HE SHALL ISSUED THE NOTICE U/S. 153C AFTER RECORDING A SATISFACTION ON THE MATTER STATED IN PARA-A ABOVE. 6. IT WAS FURTHER CONTENDED THAT THE PROVISIONS O F SEC. 153C ARE IDENTICAL WITH THE PROVISIONS OF SEC . 158BD WHICH READ AS UNDER:- WHERE THE ASSESSING OFFICER IS SATISFIED THAT A NY UNDISCLOSED INCOME BELONGS TO ANY PERSON OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER SECTION 132 OR WHOSE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ANY ASSETS WERE REQUISITIONED UNDER SECTION 132A THEN THE BOOKS OF ACCOUNT OTHER DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED [UNDER SECTION 158BC] AGAINST SUCH OTHER PERSON AND THE PROVISIONS OF THIS CHAPTER SHALL APPLY ACCORDINGLY . 5 7. LD. AR FURTHER SUBMITTED BEFORE THE CIT(A) THAT THE PROVISIONS OF SEC.158BD PROVIDE THAT THE ASSESSING OFFICER MAKING THE ASSESSMENT OF THE SEARCHED PERSO N HAS TO SATISFY HIMSELF THAT SOME UNDISCLOSED INCOME FOUND BY HIM BELONGS TO SOME PERSON OTHER THAN THE SEARCHED PERSON AND THEN THE ASSESSING OFFICER HAVI NG JURISDICTION OVER SUCH OTHER PERSON (ON RECEIPT OF RECORD FROM THE ASSESSING OFFICER OF THE SEARCHED PERSON) HAS TO ISSUE THE NOTICE U/S. 158BD AND HAS TO ASSESS THE UNDISCLOSED INCOME OF SUCH OTHER PERSON. THE PROVISIONS OF SEC. 158BD WERE MINUTELY EXAMINED BY THE HONOURABLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI VS ITAT AS REPORTED ON (2007) 208 CTR 97 S.C. THE COPY OF THE SAID DECISION WAS ALSO PLACED ON RECORD WHICH WAS FOLLOWED IN THE SAME SPIRIT BY D ELHI COURT IN THE CASE OF NEW DELHI AUTO FINANCE (P) LTD VS CIT AS REPORTED ON (2008) 300 ITR 83 DELHI. AS PER LD. AR IT MAY BE SEEN THAT THE APEX COURT HAS LAID OWN THAT THE ASSESSING OFFICER MAKING THE ASSESSMENT OF THE SEARCHED PERSON HAS TO RECORD IN WRITING THE SPE CIFIC OBJECTIVE SATISFACTION (AND IT IS MANDATORY) THA T THE 6 UNDISCLOSED INCOME FOUND BY HIM ON THE BASIS OF SEI ZED MATERIAL BELONGS TO SOME PERSON OTHER THAN THE SEARCHED PERSON. SINCE THE PROVISIONS OF SEC. 153C ARE PARA MATERIA WITH THE PROVISIONS OF SEC. 158BD WIT H REGARD TO REQUIREMENT OF SATISFACTION THE LAW L AID DOWN BY THE S.C. IN THE CASE OF MANISH MAHESHWARI SHALL APPLY WITH FULL FORCE FOR INITIATION OF PROC EEDINGS U/S. 153C. FURTHER CONTENTION OF LD. AR WAS THAT TH E WORD SATISFIED ALSO APPEARS IN THE PROVISION RELA TING LEVY OF PENALTY U/S. 271(1) . HERE ALSO THE HONOURA BLE SUPREME COURT AS EARLY AS IN THE YEAR 1962 DECI DED IN THE CASE OF CIT VS S.G . ANGIDI CHETTIER AS REPO RTED ON (1962) 44 ITR 739 AND LATER ON IN THE YEAR197 2 IN THE CASE OF D.M. MANSARI VS CIT AS REPORTED ON (197 2) 86 ITR 557 THAT THERE SHOULD BE PROPER APPLICATI ON OF MIND AND RECORDING OF SATISFACTION BEFORE INITIATIO N OF PENALTY PROCEEDINGS AND THIS DECISION IS BEING CONSISTENTLY FOLLOWED BY THE COURTS AS EVIDENT FROM DELHI HIGH COURT DECISION IN THE CASE OF BHAWANT FINANCE CO. LTD VS CIT AS REPORTED ON (2006) 280 ITR 412 DELHI . NOW TO OVERCOME THE ABOVE SAID SETTLED LEGAL POSI TION THE INCOME TAX ACT HAS BEEN AMENDED BY FRESH 7 PROVISIONS AS SEC. 271(1)(1B) THROUGH THE FINANCE ACT 2008 WHICH IS INTENDED TO PROVIDE THAT THE RECOR DING OF DIRECTION TO INITIATE THE PENALTY PROCEEDINGS S HALL BE DEEMED TO CONSTITUTE THE SATISFACTION OF THE ASSESS ING OFFICER. NEVERTHELESS SATISFACTION IS MANDATORY. 8. AS PER LD. AR IN VIEW OF ABOVE DISCUSSION IT IS QUITE EVIDENT THAT RECORDING OF SATISFACTION BEFORE ISSU E OF NOTICE U/S. 153C IS MANDATORY AND NO SUCH SATISFAC TION HAS BEEN SAID TO HAVE BEEN RECORDED BY THE ASSESSI NG OFFICER IN THE CASE OF ANY SEARCHED PERSONS THAT TH ERE IS SOME INCRIMINATING MATERIAL AND ITS BELONGS TO THE ASSESSEE. INFACT THE PERUSAL OF THE ASSESSMENT ORD ER WILL CLEARLY REFLECT THAT NO INCRIMINATING MATERIAL WORTH THE NAME BELONGING TO THE ASSESSEE WAS FOUND DURIN G THE COURSE OF SEARCH. IN THE OPENING PARAGRAPH OF THE ASSESSMENT ORDER THE LD. ASSESSING OFFICER HAS OBS ERVED THAT DURING THE COURSE OF SEARCH (AT THE RESIDENCE OF SHRI MAHESH AGARWAL) THE INCRIMINATING MATERIAL RELATING TO THE ASSESSEE I.E. FDRS IN THE NAME OF CHIRCHIND HYDRO POWER WERE FOUND . ON PERUSAL OF TH E PANCHNAMA IN THE CASE OF MAHESH AGRAWAL WHO IS A DIRECTOR OF THE COMPANY AND AGAINST WHOM THE SEARCH 8 PROCEEDINGS WERE CONDUCTED IT MAY BE SEEN THAT N O SUCH FDR WAS SEIZED. EVEN IF OTHERWISE HELD THERE WAS AN FDR OF RS. 25 00 000/- WHICH WAS MADE FROM THE BANK A/C OF THE ASSESSEE FROM THE CENTURION BANK A FTER OBTAINING THE LOAN FROM M/S. GWALIOR TANK & VESSELS (IN SHORT GTV). AS EVIDENT FROM THE COPY OF THE BANK A/C AND THE COPY OF A/C OF THE ASSESSEE IN THE BOOKS O F M/S. GTV. 9. ON THE ABOVE FACTS AS PER LD. AR IT MAY BE SEEN THAT THERE WAS NO INCRIMINATING MATERIAL BELON GING TO THE ASSESSEE WHICH WAS FOUND DURING THE COURSE OF SEARCH AT THE PREMISES OF THE DIRECTORS WHICH SA TISFIED OR COULD HAVE SATISFIED THE ASSESSING OFFICER OR AN Y PRUDENT COMMON MAN THAT THE SAID MATERIAL IS INCRIMINATING AND THAT IT BELONGS TO THE ASSESSE E AND THAT IT REFLECTS THE ESCAPED INCOME OF THE ASSESSE E . THE APEX COURT IN THE DECISION CITED SUPRA HAS LAI D DOWN THAT THE SEARCHED PERSON HAS TO BE CONFRONTED WITH THE SEIZED MATERIAL AND WHEN THE SEARCHED PE RSON DENIES THAT THE SEIZED MATERIAL BELONGS TO HIM THEN OPPORTUNITY HAS TO BE GIVEN TO THE OTHER PERSON AND THE ASSESSING OFFICER HAS TO SATISFY THAT THE SEIZED MA TERIAL 9 BELONGS TO SOME PARTICULAR PERSON OTHER THAN THE SEARCHED PERSON AND HE HAS TO RECORD HIS SATISFACTI ON BEFORE PROCEEDINGS U/S. 153C AGAINST SUCH OTHER PERSON. AS PER LEARNED AR NO SUCH SATISFACTION HAS BEEN RECORDED BEFORE INITIATION OF THE PROCEEDINGS AND EVEN ON PERUSAL OF THE ASSESSMENT ORDER DOES NOT GI VE ANY INKLING ABOUT ANY SUCH INCRIMINATING DOCUMENTS BELONGING TO THE ASSESSEE FOUND DURING THE COURSE O F SEARCH AT THE PREMISES OF THE DIRECTORS. THE ORDER OF CIT(A) JABALPUR IN THE CASE OF THE FIRM HOTEL SO NAM AND SMART BAR SAGAR IN APPEAL NO. J/CIT(A)- 1/ACIT/SAGAR/ 116 TO 122/ 06-07 WAS ALSO PLACED BEFORE HIM. THE FACTS OF THE SAID CASE ARE IDENTICA L WITH THE ASSESSEE THAT THERE WAS A SEARCH AGAINST ITS PARTNERS AND THERE WAS SURVEY AGAINST THE FIRM EXCE PT THAT IN THE SAID CASE THE ASSESSING OFFICER HAD RE CORDED A SATISFACTION WITHOUT APPLICATION OF MIND WHICH H AD NO BASIS. THE OPERATING PARA-6.1 OF THE SAID ORDER REA DS AS UNDER:- I HAVE CAREFULLY CONSIDERED THE FACTS ON RECORD AND THE SUBMISSIONS MADE BY THE RIVAL PARTIES. FIRST OF ALL IT IS NOTED THAT THE 10 SECTION 153C EFFECTS THE SUBSTANTIVE RIGHTS OF A PERSON IN SO FAR AS A PERSON WHO HAS NOT BEEN SEARCHED IS MADE TO FACE THE HARSH CONSEQUENCES OF REOPENING OF SIX YEARS CASES. THIS SECTION THUS CAN NOT BE GIVEN A LIBERAL INTERPRETATION SINCE IF IT IS SO DONE THEN THE PROCEEDINGS UNDER THIS SECTION CAN BE INITIATED AGAINST A PERSON- NOT-SEARCHED MERELY ON THE GROUND THAT SOME ACCOUNT OR EVEN A BANK STATEMENT OF THE PERSON HAS BEEN FOUND IN A SEARCH ACTION. IF IN SUCH A CASE INVOKING OF SECTION 153C IS HELD TO BE JUSTIFIED THEN THIS SECTION CAN BECOME A READY TOOL FOR REOPENING SIX YEAR CASES ON ANY PRETEXT OF A PERSON WHO HAD SOME DEALING WITH THE PERSON-SEARCHED. THE LD. A. R. HAS ARGUED THAT BEFORE INVOKING SECTION 153C THERE HAS TO BE SOME MATERIAL ON RECORD TO COME OUT OF THE PRESUMPTION OF SEC. 292C AND WHICH IS POSSIBLE ONLY AFTER CONFRONTING THE IMPUGNED MATERIAL TO THE PERSON-SEARCHED. BUT NO SUCH FINDING OF PRESUMPTION NOT BEING APPLICABLE HAS BEEN GIVEN BEFORE INVOKING SECTION 153C. I FIND SOME MERIT IN THIS CLAIM. FURTHER I ALSO FIND THAT THE SATISFACTIONS RECORDED IN MARCH 2006 FOR ALL THE SEVEN YEARS WERE WITHOUT APPLICATION OF MIND AS IS EVIDENT FROM THE FACT THAT IN ALL THE OTHER 12 CASES INVOLVING ABOUT 40 ASSESSMENTS THE ASSESSING OFFICER HAS RECORDED IDENTICAL STEREO TYPE SATISFACTIONS BY STATING THAT DURING SEARCH ACTIONS CARRIED OUT IN DECEMBER 2003 IN THE CASES OF SANTOSH KUMAR SAHU AND OTHERS INCRIMINATING DOCUMENTS PERTAINING TO EACH OF THE YEARS WERE FOUND AND SEIZED WHEREAS THE FACT IS THAT IN SOME OF THE YEARS OF SOME OF THOSE CONCERNS WERE NOT IN EXISTENCE. HOWEVER THESE FACTS BY THEMSELVES COULD NOT BE REGARDED TO BE A SUFFICIENT GROUND TO HOLD THE INVOKING OF SECTION 153C WAS ILLEGAL. IT IS BECAUSE OF THE REASON THAT ON A 11 PLAIN READING OF SEC. 153C IT DOES NOT TRANSPIRE THAT RECORDING OF A SATISFACTION IS A MUST. BUT AT THE SAME TIME IT IS ALSO TO HOLD THAT IT DOES NOT MEAN THAT REQUIRED SATISFACTION COULD BE HIGHLY SUBJECTIVE NOT OPEN TO SCRUTINY BY THE APPELLATE AUTHORITIES. THE MINIMUM REQUIREMENT TO JUSTIFY THE INVOKING OF SEC. 153C IS THAT AT LEAST IT SHOULD BE POSSIBLE TO GATHER A SATISFACTION- THERE SHOULD BE SOME SEIZED RECORD PERTAINING TO THE ASSESSEE WHICH HAD BEEN FOUND IN A SEARCH ACTION. FURTHER THE SAME SHOULD HAVE ALSO BEEN CONFRONTED TO THE ASSESSEE. BUT DURING THE ASSESSMENT PROCEEDINGS NO SEIZED RECORD PERTAINING TO THE ASSESSEE WAS CONFRONTED TO HIM. WHAT WAS CONFRONTED WERE THE DOCUMENTS IMPOUNDED DURING THE SURVEY ACTION CONDUCTED AT ITS OFFICE. IN VIEW OF THESE FACTS IT IS HELD THAT THE INVOKING OF SECTION 153C AGAINST THE ASSESSEE WAS BAD IN LAW. THE PROCEEDINGS SO INITIATED THEREFORE IS HELD TO BE VOID AB-INITIO AND ALL THE ASSESSMENTS THEREFORE ARE DECLARED AB- INITIO NULL & VOID. 10. AS PER LD. AR THERE IS ABSOLUTELY NO INCRIMINA TING MATERIAL BELONGING TO THE ASSESSEE FOUND DURING THE COURSE OF SEARCH AT THE PREMISES OF THE SEARCHED P ERSON AND THERE IS NO SATISFACTION OR EVEN THE BASIS FOR SATISFACTION TO ISSUE A NOTICE U/S. 153C AND NO SATISFACTION IS RECORDED BY THE ASSESSING OFFICER BEFORE THE ISSUE OF NOTICE U/S. 153C AND THEREFORE THE NO TICE ISSUED U/S.153C IS ILLEGAL INVALID AND UNTENABLE- IN LAW AND THEREFORE IT IS REQUESTED THAT THE ASSESSM ENT 12 MADE ON THE BASIS OF SUCH ILLEGAL NOTICE BE KINDL Y QUASHED. 11. FURTHER SUBMISSION OF ASSESSEE BEFORE THE CIT(A ) WAS THAT THE ASSESSEE FILED THE RETURN INCOMPLIANCE TO NOTICE U/S. 153C ON 01-06-2006 . HOWEVER THE LD. ASSESSING OFFICER ISSUED A FORMAL NOTICE U/S. 143(2 ) EARLIER ON 13-06-2006 BUT DID NOT TAKE ANY ACTION F OR ABOUT A YEAR. HOWEVER WHEN HE ISSUED A SECOND NOT ICE U/S. 143(2) ALONGWITH QUESTIONNAIRE ON 31-08-2007 THE ASSESSEE FILED THE DETAILED REPLY WITH NECESSARY ANNEXURE TO ALL THE QUESTIONS AS APPEARING IN THE QUESTIONNAIRE AND THE LD. ASSESSING OFFICER DID NOT RAISE ANY FURTHER QUERIES AT ANY POINT OF TIME DURING TH E ASSESSMENT PROCEEDINGS. THE LD. ASSESSING OFFICER H AS MADE A MENTION ABOUT FILING OF THE DELAYED RETURNS BY SOME OTHER PERSONS OF THE GROUP. BUT IT HAS NO CONC ERN WITH THE ASSESSEE .THE LD. ASSESSING OFFICER ALSO OBSERVED THAT THE BALANCE SHEET FOR ASSESSMENT YEA R 01-02 TO 2005-06 WERE NOT FILED BY THE ASSESSEE AL ONG WITH THE RETURN. HOWEVER HE INTENTIONALLY OMITTED TO MENTION THAT ALL THE BALANCE SHEET WERE FILED DURI NG THE ASSESSMENT PROCEEDINGS AND THEY WERE ALREADY ON 13 RECORD WITH THE RETURNS FILED U/S. 139(1) . IT WILL ALSO BE WORTH WHILE TO SEE THAT ALL THE ADDITIONS IN ALL TH E ASSESSMENT YEARS HAVE BEEN MADE BY THE ASSESSING OFFICER ON THE BASIS OF THE BALANCE SHEET AVAILABLE BEFORE HIM. HOWEVER THE LD. ASSESSING OFFICER MADE THE ADDITIONS WITHOUT GIVING ANY OPPORTUNITY AND WITHOU T INVITING ANY OBJECTIONS FROM THE ASSESSEE. THE ORDE R HAS BEEN PASSED BY THE ASSESSING OFFICER WITHOUT PROVID ING ADEQUATE OPPORTUNITY TO THE ASSESSEE AND IS AGAINS T THE PRINCIPLES OF NATURAL JUSTICE. IT WAS REQUESTED TO THE CIT(A) THAT THE ORDER PASSED U/S. 153C/143(3) BE KINDLY HELD AS ILLEGAL AND THE SAME BE KINDLY QUASH ED. 12. BY THE IMPUGNED ORDER THE LD. CIT(A) ANNULLED THE ASSESSMENT ON THE GROUND OF NO SATISFACTION HAVING BEEN RECORDED WHILE ISSUING NOT ICE U/S 153C AND FRAMING AST U/S 153C READ WITH SECTION 153A WHICH SECTION IS IN PARI MATERIA WITH THE PROVISIONS OF SECTION 158BD. THERE IS NO DISPUTE TO THE WELL SETTLED LEGAL PROPOSITION THAT RECORDING OF SATISFACTION BEFORE ISSUE OF NOTICE U/S 153C IS MANDATORY AND IN CASE OF FAILURE OF THE ASSESSING O FFICER TO RECORD SUCH SATISFACTION IN THE CASE OF SEARCHED 14 PERSON SHOWING THAT THESE ARE INCRIMINATING MATERIA LS AND BELONGED TO THE ASSESSEE WILL RENDER THE ASSESS MENT SO FRAMED AS NULLITY. IN TERMS OF DECISION OF HON'B LE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI (SUPRA) THE SEARCHED PERSON HAS TO BE CONFRONTED W ITH THE SEIZED MATERIAL AND WHEN THE SEARCHED PERSON DE NY THAT SEIZED MATERIAL BELONGED TO HIM THEN OPPORTUN ITY HAS TO BE GIVEN TO THE OTHER PERSON AND THE AO HAS TO SATISFY THAT THE SEIZED MATERIAL BELONGS TO SOME PARTICULAR PERSON OTHER THAN THE SEARCHED PERSON AN D HE HAS TO RECORD HIS SATISFACTION BEFORE PROCEEDING S U/S 153C AGAINST SUCH OTHER PERSON. IN THE INSTANT CASE BEFORE US NO SUCH SATISFACTION WAS RECORDED BEFORE INITIATION OF PROCEEDINGS AND EVEN THE ASSESSMENT O RDER SO FRAMED DOES NOT GIVE ANY INKLING ABOUT ANY SUCH INCRIMINATING DOCUMENTS BELONGING TO THE ASSESSEE A S FOUND DURING COURSE OF SEARCH AT THE PREMISES OF TH E PARTNERS. ON THE BASIS OF THIS LEGAL GROUND THE LD . CIT(A) ANNULLED THE ASSESSMENT AFTER HAVING THE FOLLOWING OBSERVATIONS :- I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE WRITTEN AND ORAL SUBMISSIONS OF THE AR. IN A NUTSHELL THE AR HAS STATED THAT THE 15 ASSESSMENT IS ILLEGAL BECAUSE IT IS MADE IN THE WRONG STATUS BECAUSE IT IS MADE WITHOUT RECORDING THE SATISFACTION AND BECAUSE IT IS MADE WITHOUT HAVING ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH IN SUPPORT OF THE CLAIM HE HAS RELIED UPON THE VARIOUS COURT DECISIONS ARE AS UNDER :- 1. MANISH MAHESHWARI VS. I.T.A.T. AS REPORTED IN (2007) 208 CTR 97 S. C. 2. NEW DELHI AUTO FINANCE (P) LIMITED VS. CIT (2008) 300 ITR 83 (DEL) 3. CIT VS. S. G. ANGIDI CHETTIAR (1962) 44 ITR 739 (S.C.) 4. D.M. MANSARI VS. CIT (1972) 86 ITR 557. 5. BHAWANI FINANCE CO. LTD (2006) 280 ITR 412 (DEL) IN THIS CONTEXT IT MAY BE NOTED THAT THE ASSESSMENT RECORDS AND SEARCH MATERIAL HAVE BEEN OBTAINED FROM THE AO AND PERUSED THE SAME. THE ISSUES RAISED BY THE AR ARE DISCUSSED AS BELOW : 1. FIRST OF ALL IT IS NOTED THAT THE CONTENTION OF THE AR IS CORRECT TO THE EXTENT THAT THE APPELLANT IS A PUBLIC LIMITED COMPANY AND NOT AN INDIVIDUAL AS MENTIONED BY THE ASSESSING OFFICER IN HIS ORDER. HOWEVER I DO NOT AGREE WITH THE AR THAT SIMPLY BECAUSE OF THE SAID REASON THE ORDER PASSED BY THE ASSESSING OFFICER IS ILLEGAL. PRIMA FACIE IT APPEARS THAT IT IS A CLERICAL MISTAKE AND THEREFORE THE ASSESSMENT CANNOT BE INVALIDATED IN VIEW OF THE PROVISIONS OF SECTION 292B OF THE INCOME-TAX ACT 1961. HOWEVER THE AO IS DIRECTED TO ADOPT THE CORRECT STATUS OF THE APPELLANT. 16 2. & C. REGARDING THE RECORDING OF SATISFACTION AND ABSENCE OF INCRIMINATING DOCUMENTS THE RECORDS CALLED FOR FROM THE AO HAVE BEEN VERIFIED. ON VERIFICATION IT IS FOUND THAT NO SATISFACTION HAS BEEN RECORDED BY THE ASSESSING OFFICER BEFORE THE ISSUE OF NOTICE U/S 153C. I ALSO HAVE GONE THROUGH THE MATERIAL SEIZED FROM THE RESIDENCE OF SHRI MAHESH AGRAWAL. THE SEIZED PAPERS ARE NAMED AS LPS-1 TO LPS-4 LPS-5 LPS-8 LPS-13 AND LPS- 15 AS INCRIMINATING DOCUMENTS. I MINUTELY EXAMINED EACH AND EVERY PAPER AND I FIND THAT NONE OF THESE PAPERS ARE INCRIMINATING. THESE PAPERS ARE DISCUSSED BELOW : DOCUMENTS MY OBSERVATION LPS - 1 TO LPS - 4 P1-71 IN ALL FOUR SETS REGISTERED PURCHASED DEEDS OF FLAT AT MUMBAI WHICH HAVE BEEN PURCHASED BY THE DIRECTOR SHRI MAHESH AGRAWAL. LPS - 5 P1-44 MOU BETWEEN APPELLANT AND HIS OTHER ASSOCIATE M/S. ARUN EXCELLO WHICH IS NOT INCRIMINATING AT ALL. LPS - 8 P1-34 CHART AND COPIES OF THE BILLS IN THE NAME OF TECHNO PHARMA EXPORTS RAISED BY THE APPELLANT WHICH ARE APPEARING IN THE REGULAR BOOKS OF ACCOUNT OF THE APPELLANT. LPS - 13 A. AGENCY AGREEMENT BETWEEN TPF & GTV B. COPIES OF CHEQUES AND COVERING LETTER FROM GTV CHENNAI & BHOPAL AS INTERNAL CORRESPONDENCE. C. COPIES OF FORM 8 & 13 FILED 17 BEFORE ROC. D. CORRESPONDENCE BETWEEN GTV AND TPF & NHDC REGARDING COMPLETION OF WORK. E. COPY OF LOAN SANCTION TO OTHER PARTY. F. ROUGH RECONCILIATION PAPERS OF GTV FIGURES APPEARING IN THE BOOKS OF ACCOUNT. G. ROUGH SHEET SHOWING TAX LIABILITY OF MAHESH AGRAWAL. H. STATEMENT OF ASSETS LIABILITIES AND MAHESH VEENA AND DINESH AGRAWAL AS ON 27.3.2002. LPS - 15 PROPOSAL BETWEEN MAHESH & DINESH AGRAWAL GROUP FOR TRANSFER OF SHARES IN THE COMPANIES AND FIRMS. FROM THE ABOVE CHART I HAVE NO HESITATION TO HOLD THAT THESE PAPERS ARE NOT INCRIMINATING AND THAT MOT OF THEM DO NOT BELONG TO THE APPELLANT. I ALSO FIND THAT NO ADDITION OR EVEN OBSERVATION HAS BEEN MADE BY THE ASSESSING OFFICER IN ANY OF THE ORDERS RIGHT FROM ASSESSMENT YEARS 2000-01 TO 2006-07 IN CONNECTION WITH ANY MATERIAL FOUND DURING THE COURSE OF SEARCH. WHEN NO INCRIMINATING MATERIAL RELATING TO THE ASSESSEE HAS BEEN FOUND FROM THE SEARCHED PERSON NO ACTION U/S 153C CAN BE INITIATED AGAINST THE ASSESSEE. IN THESE CIRCUMSTANCES IT APPEARS THAT THE REQUIREMENTS OF SECTION 153C ARE NOT FULFILLED AS CLAIMED BY THE AR. THE AR 18 HAS HEAVILY RELIED UPON THE HON'BLE SUPREME COURT DECISION IN THE CASE OF MANISH MAHESHWARI. THE SAID DECISION HAS BEEN RENDERED IN RELATION TO THE PROVISIONS OF SECTION 158BD WHICH ARE IDENTICAL TO THE PROVISIONS OF SECTION 153C AS PER DETAILED SUBMISSIONS OF THE AR. I DO FIND THAT WITH REGARD TO SATISFACTION BOTH THE SECTIONS ARE IDENTICAL AND IT SHOULD BE MANDATORY TO RECORD THE SATISFACTION BEFORE THE ISSUE OF NOTICE U/S 153C IF IT IS NECESSARY TO RECORD THE SATISFACTION BEFORE THE ISSUE OF NOTICE U/S 158BD. IN THIS CONNECTION I HAVE ALSO SEEN THE APPELLATE ORDER OF MY LD. COLLEAGUE CIT(A)-I JABALPUR IN THE CASE OF M/S. HOTEL SONAM & SMART BAR SAGAR DATED 22.11.2007 IN APPEAL NO. ACIT- SAGAR/116 TO 122 WHICH HAS BEEN PASSED ON THE FACTS IDENTICAL WITH THE FACTS OF THE ASSESSEE. IN THE SAID CASE ALSO THERE WAS A SEARCH AGAINST THE PARTNERS AND SURVEY IN THE CASE OF THE FIRM AND NO INCRIMINATING MATERIAL AND SURVEY IN THE CASE OF THE FIRM AND NO INCRIMINATING MATERIAL BELONGING TO THE FIRM WAS FOUND FROM THE PREMISES OF THE PARTNERS WHERE THE SEARCH WAS CONDUCTED. I AM SATISFIED THAT ON PLAIN READING OF SECTION 153C IT MAY NOT BE NECESSARY TO RECORD THE SATISFACTION BUT AT LEAST THERE SHOULD BE SOME MATERIAL TO GIVE SATISFACTION TO THE AO THAT SOME INCRIMINATING MATERIAL INDICATING SOME INCOME HAS BEEN FOUND IN THE SEARCH ACTION. IN THE INSTANT CASE NO INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE HAS BEEN FOUND IN THE SEARCH. IN FACT THERE WAS NO MATERIAL FOUND DURING THE COURSE OF SEARCH WHICH COULD HAVE SATISFIED THE AO TO ISSUE THE NOTICE U/S 153C AND NO SATISFACTION HAS BEEN 19 RECORDED. IT MAY BE APPRECIATED THAT THE NOTICE U/S 153C IS BASED ON THE MATERIAL SEIZED IN THE SEARCH AND NOT IN THE SURVEY PROCEEDINGS. NO DOUBT THERE ARE CERTAIN INCRIMINATING DOCUMENTS FOUND DURING THE SURVEY PROCEEDINGS BUT THE NOTICE U/S 153C CANNOT BE ISSUED ON THE BASIS OF THE SAME. IN VIEW OF THESE FACTS I HOLD THAT THE INVOKING OF SECTION 153C AGAINST THE ASSESSEE WAS BAD IN LAW AND THE NOTICE ISSUED U/S 153C WAS ILLEGAL. THE PROCEEDINGS U/S 153C IS AB INITIO NULL AND VOID. THE ASSESSMENT MADE IN CONSEQUENCE TO SUCH NOTICE U/S 153C FOR ALL THE ASSESSMENT YEARS ARE HEREBY QUASHED AND ACCORDINGLY THE GROUND NO.1 OF THE APPEAL IS ALLOWED. 13. VARIOUS ADDITIONS MADE ON MERIT WERE PARTLY DELETED BY THE LEARNED CIT(A) AFTER HAVING THE FOLL OWING OBSERVATIONS WHICH HAVE BEEN DEALT WITH IN TERMS OF ITA NOS. AS UNDER :- 14. ITA NO. 182/IND/08 SO FAR AS THE GROUND RELATING TO REJECTION OF BOOK S OF ACCOUNTS IS CONCERNED THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) MADE THE FOLLOWING OBSERVATIONS :- I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE AR. I FIND FORCE IN THE SUBMISSI ONS OF THE ASSESSEE WHICH ARE SUPPORTED BY THE ABOVESAID COURT DECISIONS. I AGREE WITH THE AR THAT A/C BOOKS OF TH E ASSESSEE SHOULD NOT BE REJECTED WITHOUT ANY BASIS. HOWEVER I AM OF THE OPINION THAT THERE IS SOME MATERIAL AND THEN THE AD DITIONS RELATING TO SAID MATERIAL MAY BE MADE IN THE HANDS OF THE 20 ASSESSEE. IN THE RESULT THE GROUND OF THE APPEAL IS PARTLY ALLOWED. 15. THE ADDITION OF RS. 99 23 043/- MADE BY THE ASSESSI NG OFFICER ON ACCOUNT OF UNEXPLAINED PURCHASES U/S 69C OF THE ACT WAS DELETED BY THE LEARNED COMMISSIONER OF INCOMETAX (A PPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS :- I HAVE GONE THROUGH THE ASSMT . ORDER AS WELL AS THE WRITTEN SUBMISSIONS OF THE APPELLANT. I FIND T HAT THE ASSESSING OFFICER HAS TREATED THE PURCHASES MADE FR OM THE SRD STEEL (P) LTD. AS BOGUS. HE ALSO TREATED 1 /4 TH PORTION OF OTHER PURCHASES ALSO AS BOGUS FOR ALL TH E ASST. YEARS AS INDICATED IN THE CHART ABOVE. HE HAS GIVEN THE REASON THAT EVEN AFTER A NOTICE U/S 131 T O M/S SRD STEEL NOBODY ATTENDED ON THEIR BEHALF AND THE OTHER PARTIES I.E. KATHURIA TRADE COMPANY AND TIRUPATHY STEEL TRADERS ALSO DID NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 133(6) AND THEREFORE HE DISALLOWED ALL THE PURCHASES MADE FROM SRD STEEL AN D ALSO DISALLOWED 1/4 TH PORTION OF OTHER PURCHASES AS IN LINE WITH OTHER FIRMS OF THE CONCERNS OF THE GROUP. I HAVE SEEN THE COPY OF THE NOTICE ISSUED U/S 131 ON 23.11.2007 TO SRD STEEL WHICH IS SAID TO HAVE BEEN SENT BY THE AO CALLING FOR CONFIRMATION OF THE SALES MAD E BY HIM. I AM OF THE OPINION THAT SIMPLY BECAUSE SOME PERSON DOES NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 131 OR U/S 133(6) NO ADVERSE INFERENCE CAN BE DRAWN SIMPLY FOR HIS NON ATTENDANCE. IN THE GIVEN FACTS AND CIRCUMSTANCES I AM FORTIFIED BY THE DECISION OF TH E HONOURABLE SUPREME COURT IN THE CASE OF ANEES AHEMAD & SONS VS. CIT AS REPORTED IN (2008) 297 ITR 441 SC. THE AR HAS FILED THE COPIES OF ACCOUNT OF ALL THE SUPPLIERS IN THE ASSMT. YEAR 2000-01 BEFORE ME AS A SAMPLE WHICH WERE ALSO AVAILABLE BEFORE THE ASSESSI NG OFFICER. I FIN THAT ALL THE PAYMENTS ARE MADE THROU GH CHEQUES AND THE MATERIAL HAS BEEN RECEIVED THROUGH TRANSPORT LRS. THE ASSESSEE PRODUCES EXCISABLE ITE MS AND CLAIMS CENVAT CREDITS. THE CHARGE OF THE ASSESS ING OFFICER THAT THE CHEQUE PAYMENTS MADE TO THE SUPPLI ERS ARE RECEIVED BACK IN CASH HAS NO BASIS AND HE HAS N OT 21 POINTED OUT ANY DEFECTS IN THE ACCOUNT BOOKS AND HA S MADE HUGE DISALLOWANCE FROM PURCHASES ON VERY FLIMS Y GROUNDS AND THEREFORE THESE DISALLOWANCE CANNOT B E SUSTAINED. ACCORDINGLY THE APPELLANT GETS THE REL IEF OF RS.99 23 043/- IN THE ASMT. YEAR 2000-01 RS. 80 73 129/- IN THE ASMT. YEAR 2001-02 RS. 37 45 73 9/- IN THE ASMT. YEAR 2002-03 RS. 50 45 344/- IN THE A SMT. YEAR 2003-04 RS. 1 15 61 918/- IN THE ASMT. YEAR 2 004- 05 RS. 95 66 324/- IN THE ASMT. YEAR 2005-06 AND R S. 1 04 16 240/- IN THE ASMT. YEAR 2006-07. ACCORDING LY GROUND NO. 5 & 6 FOR ASSMT. YEAR 2003-04 AND GROUND NO. 4 & 5 FOR ALL OTHER ASSMT. YEARS ARE ALLOWED. 16. THE ADDITION OF RS. 2 60 146/- MADE BY THE ASSE SSING OFFICER U/S 69C OF THE ACT ON ACCOUNT OF BOGUS FABRICATION EXPENSES PURCHASES WAS DELETED BY THE LEARNED COMMISSIONER O F INCOMETAX (APPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS : - ON PERUSAL OF THE ABOVE SAID SECTIONS IT MAY BE SEEN THAT THE ADDITIONS U/S 69C CAN BE MADE WHEN IT IS FOUND BY THE ASSESSING OFFICER THAT THE APPELLANT H AS INCURRED THE EXPENDITURE AND HE IS UNABLE TO EXPLAI N THE SOURCE OF SUCH EXPENDITURE. IN THE INSTANT CASE T HE ASSESSING OFFICER HAS NOT FOUND ANY EXPENDITURE WHI CH CAN BE SAID TO BE UNEXPLAINED. IN FACT THE APPELL ANT HAS SHOWN THE EXPENDITURE IN THE FORM OF FABRICATIO N EXPENSES AND THE LD. ASSESSING OFFICER IS OF THE OP INION THAT THE APPELLANT HAS NOT INCURRED THE EXPENDITURE ON FABRICATION. ON THE ABOVE FACTS IT MAY BE SEEN TH AT THE PROVISIONS OF SEC. 69C OF THE IT ACT ARE NOT ATTRAC TED. ON PERUSAL OF THE ASSESSMENT ORDER FOR ALL THE ASSESSMENT YEARS AND THE DETAILED SUBMISSIONS OF TH E AR I FIND THAT THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE OF 1/5 TH OF THE FABRICATION EXPENSES IN A VERY CASUAL MANNER. IN THE ASSESSMENT YEAR 2000-01 HE SIMPLY STATES THAT 1/5 TH OF THE FABRICATION EXPENSES ARE BOGUS. IN OTHER ASSMT. YEARS HE STATES THAT HE IS MAKING THE DISALLOWANCE ON THE BASIS THE REASON GIVEN BY H IM IN THE ASSMT. YEAR 2000-01. I HAVE SEEN THAT THE APPELLANT HAS MAINTAINED THE REGULAR BOOKS OF ACCOU NTS WHICH HAVE BEEN DULY AUDITED. WHENEVER THE APPELLA NT 22 MADE THE PAYMENT TO THE FABRICATORS PROPER DEDUCTIO NS OF TDS HAS BEEN MADE AND SUBSTANTIAL PAYMENTS TO TH E FABRICATORS ARE MADE THROUGH THE CHEQUE. ON THESE FACTS IT IS VERY DIFFICULT TO MAINTAIN THE DISALLO WANCE MADE BY THE ASSESSING OFFICER IN ALL THE ASSMT. YEA RS AND ACCORDINGLY THE DISALLOWANCE FOR ALL THE ASSMT . YEARS ARE REMOVED. IN THE RESULT APPELLANT GETS T HE RELIEF OF RS. 2 60 146/- IN THE ASSMT. YEAR 2000-01 RS.1 44 293/- IN THE ASSMT. YEAR 2001-02 RS. 1 40 415/- IN THE ASSMT. YEAR 2002-03 RS. 4 56 898/- IN THE A SSMT. YEAR 2003-04 RS.7 24 223/- IN THE ASSMT. YEAR 2004 - 05 RS. 11 07 451/- IN THE ASSMT. YEAR 2005-06 AND RS. 6 59 164/- IN THE ASSMT. YEAR 2006-07. IN THE RESU LT GROUND NO. 6 FOR ALL ASSMT. YEARS ARE ALLOWED. 17. ITA NO. 183/IND/08 THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) QU ASHED THE ASSESSMENT PROCEEDINGS INITIATED BY THE 153C OF THE ACT WITH THE FOLLOWING OBSERVATIONS :- I HAVE CAREFULLY CONSIDERED THE FACTS ON RECORD A ND THE SUBMISSIONS MADE BY THE RIVAL PARTIES. FIRST OF AL L IT IS NOTED THAT THE SECTION 153C AFFECTS THE SUBSTANTIVE RIGHT S OF A PERSON IN SO FAR AS A PERSON WHO HAS NOT BEEN SEARCHED IS MADE YTO FACE THE HARSH CONSEQUENCES OF REOPENING OF SIX YEA RS CASES. THIS SECTION THUS CANNOT BE GIVEN A LIBERAL INTERPR ETATION SINCE IF IT IS SO DONE THEN THE PROCEEDINGS UNDER THIS S ECTION CAN BE INITIATED AGAINST A PERSON NOT SEARCHED MERELY ON T HE GROUND THAT SOME ACCOUNT OR EVEN A BANK STATEMENT OF THE P ERSON HAS BEEN FOUND IN A SEARCH ACTION. IF IN SUCH A CASE I NVOKING OF SECTION 153C IS HELD TO BE JUSTIFIED THEN THIS SEC TION CAN BECOME A READY TOOK FOR REOPENING SIX YEAR CASES ON ANY PRETEXT OF A PERSON WHO HAD SOME DEALING WITH THE PERSON SEARCHED. THE LD. AR HAS ARGUED THAT BEFORE INVOKIN G SECTION 153C THERE HAS TO BE SOME MATERIAL ON RECORD TO COM E OUT OF THE PRESUMPTION OF SEC. 292C AND WHICH IS POSSIBLE ONLY AFTER CONFRONTING THE IMPUGNED MATERIAL TO THE PERSON SEA RCHED. BUT NO SUCH FINDING OF PRESUMPTION NOT BEING APPLICABLE HAS BEEN GIVEN BEFORE INVOKING SECTION 153C. I FIND SOME ME RIT IN THIS CLAIM. FURTHER I ALSO FIND THAT THE SATISFACTIONS RECORDED IN MARCH 2006 FOR ALL THE SEVEN YEARS WERE WITHOUT AP PLICATION 23 OF MIND AS IS EVIDENT FROM THE FACT THAT IN ALL THE OTHER 12 CASES INVOLVING ABOUT 40 ASSESSMENTS THE ASSESSING OFFICER HAS RECORDED IDENTICAL STEREO TYPE SATISFACTION BY STATING THAT DURING SEARCH ACTIONS CARRIED OUT IN DECEMBER 2003 IN THE CASES OF SANTOSH KUMAR SAHU AND OTHERS INCRIMINATIN G DOCUMENTS PERTAINING TO EACH OF THE YEARS WERE FOUN D AND SEIZED WHEREAS THE FACT IS THAT IN SOME OF THE YEAR S OF SOME OF THOSE CONCERNS WERE NOT IN EXISTENCE. HOWEVER THE SE FACTS BY THEMSELVES COULD NOT BE REGARDED TO BE A SUFFICIENT GROUND TO HOLD THE INVOKING OF SECTION 153C WAS ILLEGAL. IT IS BECAUSAE OF THE REASON THAT ON A PLAIN READING OF SEC. 153C IT DOES NOT TRANSPIRE THAT RECORDING OF A SATISFACTION IS A MUS T. BUT AT THE SAME TIME IT IS ALSO TO HOLD THAT IT DOES NOT MEAN THAT REQUIRED SATISFACTION COULD BE HIGHLY SUBJECTIVE NOT OPEN TO SECURITY BY THE APPELLATE AUTHORITIES. THE MINIMUM REQUIREMENT TO JUSTIFY THE INVOKING OF SECT. 153C IS THAT AT LEASAT IT SHO ULD BE POSSIBLE TO GATHER A SATISFACTION THERE SHOULD BE SOME EIZED RECORD PERTAINING TO THE ASSESSEE WHICH HAD BEEN FO UND IN A SEARCH ACTION. FURTHER THE SAME SHOULD HAVE ALSO B EEN CONFRONTED TO THE ASSESSEE. BUT DURING THE ASSESSM ENT PROCEEDINGS NO SEIZED RECORD PERTAINING TO THE ASSE SSEE WAS CONFRONTED TO HIM. WHAT WERE CONFRONTED WERE THE O CUMENTS IMPOUNDED DURING THE SURVEY ACTION CONDUCTED AT ITS OFFICE. IN VIEW OF THESE FACTS IT IS HELD THAT THE INVOKING O F SECTION 153C AGAINST THE ASSESSEE WAS BAD IN LAW. THE PROCEEDING S SO INITIATED THEREFORE ARE HELD TO BE VOID AB INITIO AND ALL THE ASSESSMENTS THEREFORE ARE DECLARED AB INITIO NULL AND VOID. AS PER THE AR IT MAY BE APPRECIATED THAT THERE IS ABSOLUTELY NO INCRIMINATING MATERIAL BELONGING TO THE APPELLAN T FOUND DURING THE COURSE OF SEARCH AT THE PREMISES OF THE SEARCHED PERSON AND THERE IS NO SATISFACTION OR EVEN THE BAS IS FOR SATISFACTION TO ISSUE A NOTICE U/S 153C AND NO SATI SFACTION IS RECORDED BY THE ASSESSING OFFICER BEFORE THE ISSUE OF NOTICE U/S 153C AND THEREFORE THE NOTICE ISSUED U/S 153C IS ILLEGAL INVALID AND UNTENABLE- IN LAW AND THEREFORE IT I S REQUESTED THAT THE ASSESSMENTS MADE ON THE BASIS SUCH ILLEGAL NOTICE BE KINDLY QUASHED. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE AR. IN A NUTSHELL THE A R HAS STATED THAT THE NOTICE U/S 153C IS ISSUED WITHOUT RECORDIN G THE SATISFACTION BEFORE THE ISSUE OF NOTICE AND THSAT N O INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE WA S FOUND DURING THE SEARCH OF ANY PERSON OR PREMISES. IN SU PPORT OF HIS CLAIM HE HAS RELIED UPON THE FOLLOWING DECISIONS :- 24 (I) MANISH MAHESHWARI VS. ITAT AS REPORTED ON (2007) 208 CTR 97 S.C. (II) NEW DELHI AUTO FINANCE (P) LTD. VS. AS REPORTED ON (2008) 300 ITR 83 DELHI. (III) CIT VS. S.G. ANGIDI CHETTIAR AS REPORTED ON (1962) 44 ITR 739 S.C. (IV) D.M. MANSARI VS. CIT AS REPORTEDON (1972) 86 ITR 55 7. (V) BHAWANT FINANCE CO. LTD. VS. CIT AS REPORTED ON (2006) 280 ITR 412 DELHI. I HAVE CALLED FOR THE COMPLETE RECORD OF THE APPELL ANT AS WELL AS THE SEARCHED PERSONS. I FIND THAT NO SATISFACTI ON HAS BEEN RECORDED BY THE ASSESSING OFFICER BEFORE THE ISSUE OF NOTICE U/S 153C. I HAVE ALSO GONE THROUGH THE MATERIAL SEIZED FROM THE RESIDENCE OF SHRI DINESH AGRAWAL PRODUCED BEFORE M E BY THE AR. THE SEIZED PAPERS ARE NAMED AS LPS-1 AND THEY CONTAIN 34 PAGES. I MINUTELY EXAMINED EACH AND EVERY PAPER AND I FIND THAT NONE OF THESE PAPERS BELONG TO THE ASSESS EE AND CAN BE SAID TO BELONG TO THE ASSESSEE. I ALSO FIND THA T NO ADDITION OR EVEN OBSERVATIONS HAS BEEN MADE BY THE ASSESSING OFFICER IN ANY OF THE ORDER RIGHT FROM ASSMT. YEAR 2000-01 TO 2006-07 IN CONNECTION WITH ANY MATERIAL FOUND DURING THE CO URSE OF SEARCH. WHEN NO MATERIAL RELATING TO THE ASSESSEE HAS BEEN FOUND FROM THE SEARCHED PERSON NO ACTION U/S 153C C AN BE INITIATED AGAINST THE ASSESSEE. IN THESE CIRCUMSTA NCES IT APPEARS THAT THE REQUIREMENTS OF SECTION 153C ARE N OT FULFILLED AS CLAIMED BY THE AR. THE AR HAS HEAVILY RELIED UP ON THE HONBLE SUPREME COURT DECISION IN THE CASE OF MANIS H MAHESHWARI. THE SAID DECISION HAS BEEN RENDERED IN RELATION TO THE PROVISIONS OF SECTION 158BD WHICH ARE IDENT ICAL TO THE PROVISIONS OF SECTION 153C AS PER DETAILED SUBMISSI ONS OF THE ASSESSEE. I DO NOT FIND THAT WITH REGARD TO SATISF ACTION BOTH THE SECTIONS ARE IDENTICAL AND IT SHOULD BE MANDATORY T O RECORD THE SATISFACTION BEFORE THE ISSUE OF NOTICE U/S 153 C IF IT IS NECESSARY TO RECORD THE SATISFACTION BEFORE THE ISS UE OF NOTICE U/S 158BD. IN THIS CONNECTION I HAVE ALSO SEEN THE APPELLATE ORDER OF MY LD. COLLEAGUE CIT(A)-1 JABALPUR IN THE CASE OF M/S HOTEL SONAM & SMART BAR SAGAR ON 22.11.2007 IN APPEAL NO . ACIT-SAGAR/116 TO 122 WHICH HAS BEEN PASSED ON THE FACTS IDENTICAL WITH THE FACTS OF THE ASSESSEE. IN THE S AID CASE ALSO THERE WAS A SEARCH AGAINST THE PARTNERS AND SURVEY IN THE CASE 25 OF THE FIRM AND NO MATERIAL BELONGING TO THE FIRM W AS FOUND FROM THE PREMISES OF THE PARTNERS WHERE THE SEARCH WAS CONDUCTED. I AM SATISFIED THAT ON PLAIN READING OF SECTION 153C IT MAY NOT BE NECESSARY TO RECORD THE SATISFA CTION BUT AT LEAST THERE SHOULD BE SOME MATERIAL TO GIVE SATISFA CTION TO THE ASSESSING OFFICER THAT SOME INCRIMINATING MATERIAL INDICATING SOME INCOME HAS BEEN FOUND IN THE SEARCH ACTION. I N THE INSTANT CASE NO MATERIAL BELONGING TO THE ASSESSEE HAS BEEN FOUND IN THE SEARCH. IN FACT THERE WAS NO MATERIA L WHICH COULD HAVE SATISFIED THE ASSESSING OFFICER TO ISSUE THE NOTICE U/S 153C AND NO SATISFACTION HAS BEEN RECORDED. IN VIEW OF THESE FACTS I HOLD THAT THE INVOKING OF SECTION 15 3C AGAINST THE ASSESSEE WAS BAD IN LAW AND THE NOTICE ISSUED U /S 153C WAS ILLEGAL. THE PROCEEDINGS U/S 153C IS AB-INITIO NULL AND VOID. THE ASSESSMENT MADE IN CONSEQUENCE TO THE ILL EGAL NOTICE U/S 153C FOR ALL THE ASSMT. YEARS ARE HEREBY QUASHED AND ACCORDINGLY THE GROUND NO. 1 OF THE APPEAL IS ALLOWED. 18. THE ADDITION OF RS. 80 73 129/- MADE BY THE ASSESSI NG OFFICER ON ACCOUNT OF UNEXPLAINED PURCHASES U/S 69C OF THE ACT WAS DELETED BY THE LEARNED COMMISSIONER OF INCOMETAX (A PPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS :- I HAVE GONE THROUGH THE ASSMT . ORDER AS WELL AS THE WRITTEN SUBMISSIONS OF THE APPELLANT. I FIND T HAT THE ASSESSING OFFICER HAS TREATED THE PURCHASES MADE FR OM THE SRD STEEL (P) LTD. AS BOGUS. HE ALSO TREATED 1 /4 TH PORTION OF OTHER PURCHASES ALSO AS BOGUS FOR ALL TH E ASST. YEARS AS INDICATED IN THE CHART ABOVE. HE HAS GIVEN THE REASON THAT EVEN AFTER A NOTICE U/S 131 T O M/S SRD STEEL NOBODY ATTENDED ON THEIR BEHALF AND THE OTHER PARTIES I.E. KATHURIA TRADE COMPANY AND TIRUPATHY STEEL TRADERS ALSO DID NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 133(6) AND THEREFORE HE DISALLOWED ALL THE PURCHASES MADE FROM SRD STEEL AN D ALSO DISALLOWED 1/4 TH PORTION OF OTHER PURCHASES AS IN LINE WITH OTHER FIRMS OF THE CONCERNS OF THE GROUP. I HAVE SEEN THE COPY OF THE NOTICE ISSUED U/S 131 ON 23.11.2007 TO SRD STEEL WHICH IS SAID TO HAVE BEEN SENT BY THE AO CALLING FOR CONFIRMATION OF THE SALES MAD E BY HIM. I AM OF THE OPINION THAT SIMPLY BECAUSE SOME 26 PERSON DOES NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 131 OR U/S 133(6) NO ADVERSE INFERENCE CAN BE DRAWN SIMPLY FOR HIS NON ATTENDANCE. IN THE GIVEN FACTS AND CIRCUMSTANCES I AM FORTIFIED BY THE DECISION OF TH E HONOURABLE SUPREME COURT IN THE CASE OF ANEES AHEMAD & SONS VS. CIT AS REPORTED IN (2008) 297 ITR 441 SC. THE AR HAS FILED THE COPIES OF ACCOUNT OF ALL THE SUPPLIERS IN THE ASSMT. YEAR 2000-01 BEFORE ME AS A SAMPLE WHICH WERE ALSO AVAILABLE BEFORE THE ASSESSI NG OFFICER. I FIN THAT ALL THE PAYMENTS ARE MADE THROU GH CHEQUES AND THE MATERIAL HAS BEEN RECEIVED THROUGH TRANSPORT LRS. THE ASSESSEE PRODUCES EXCISABLE ITE MS AND CLAIMS CENVAT CREDITS. THE CHARGE OF THE ASSESS ING OFFICER THAT THE CHEQUE PAYMENTS MADE TO THE SUPPLI ERS ARE RECEIVED BACK IN CASH HAS NO BASIS AND HE HAS N OT POINTED OUT ANY DEFECTS IN THE ACCOUNT BOOKS AND HA S MADE HUGE DISALLOWANCE FROM PURCHASES ON VERY FLIMS Y GROUNDS AND THEREFORE THESE DISALLOWANCE CANNOT B E SUSTAINED. ACCORDINGLY THE APPELLANT GETS THE REL IEF OF RS.99 23 043/- IN THE ASMT. YEAR 2000-01 RS. 80 73 129/- IN THE ASMT. YEAR 2001-02 RS. 37 45 73 9/- IN THE ASMT. YEAR 2002-03 RS. 50 45 344/- IN THE A SMT. YEAR 2003-04 RS. 1 15 61 918/- IN THE ASMT. YEAR 2 004- 05 RS. 95 66 324/- IN THE ASMT. YEAR 2005-06 AND R S. 1 04 16 240/- IN THE ASMT. YEAR 2006-07. ACCORDING LY GROUND NO. 5 & 6 FOR ASSMT. YEAR 2003-04 AND GROUND NO. 4 & 5 FOR ALL OTHER ASSMT. YEARS ARE ALLOWED. 19. THE ADDITION OF RS. 1 44 293/- MADE BY THE ASSE SSING OFFICER U/S 69C OF THE ACT ON ACCOUNT OF BOGUS FABRICATION EXPENSES PURCHASES WAS DELETED BY THE LEARNED COMMISSIONER O F INCOMETAX (APPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS : - ON PERUSAL OF THE ABOVE SAID SECTIONS IT MAY BE SEEN THAT THE ADDITIONS U/S 69C CAN BE MADE WHEN IT IS FOUND BY THE ASSESSING OFFICER THAT THE APPELLANT H AS INCURRED THE EXPENDITURE AND HE IS UNABLE TO EXPLAI N THE SOURCE OF SUCH EXPENDITURE. IN THE INSTANT CASE T HE ASSESSING OFFICER HAS NOT FOUND ANY EXPENDITURE WHI CH CAN BE SAID TO BE UNEXPLAINED. IN FACT THE APPELL ANT HAS SHOWN THE EXPENDITURE IN THE FORM OF FABRICATIO N 27 EXPENSES AND THE LD. ASSESSING OFFICER IS OF THE OP INION THAT THE APPELLANT HAS NOT INCURRED THE EXPENDITURE ON FABRICATION. ON THE ABOVE FACTS IT MAY BE SEEN TH AT THE PROVISIONS OF SEC. 69C OF THE IT ACT ARE NOT ATTRAC TED. ON PERUSAL OF THE ASSESSMENT ORDER FOR ALL THE ASSESSMENT YEARS AND THE DETAILED SUBMISSIONS OF TH E AR I FIND THAT THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE OF 1/5 TH OF THE FABRICATION EXPENSES IN A VERY CASUAL MANNER. IN THE ASSESSMENT YEAR 2000-01 HE SIMPLY STATES THAT 1/5 TH OF THE FABRICATION EXPENSES ARE BOGUS. IN OTHER ASSMT. YEARS HE STATES THAT HE IS MAKING THE DISALLOWANCE ON THE BASIS THE REASON GIVEN BY H IM IN THE ASSMT. YEAR 2000-01. I HAVE SEEN THAT THE APPELLANT HAS MAINTAINED THE REGULAR BOOKS OF ACCOU NTS WHICH HAVE BEEN DULY AUDITED. WHENEVER THE APPELLA NT MADE THE PAYMENT TO THE FABRICATORS PROPER DEDUCTIO NS OF TDS HAS BEEN MADE AND SUBSTANTIAL PAYMENTS TO TH E FABRICATORS ARE MADE THROUGH THE CHEQUE. ON THESE FACTS IT IS VERY DIFFICULT TO MAINTAIN THE DISALLO WANCE MADE BY THE ASSESSING OFFICER IN ALL THE ASSMT. YEA RS AND ACCORDINGLY THE DISALLOWANCE FOR ALL THE ASSMT . YEARS ARE REMOVED. IN THE RESULT APPELLANT GETS T HE RELIEF OF RS. 2 60 146/- IN THE ASSMT. YEAR 2000-01 RS.1 44 293/- IN THE ASSMT. YEAR 2001-02 RS. 1 40 415/- IN THE ASSMT. YEAR 2002-03 RS. 4 56 898/- IN THE A SSMT. YEAR 2003-04 RS.7 24 223/- IN THE ASSMT. YEAR 2004 - 05 RS. 11 07 451/- IN THE ASSMT. YEAR 2005-06 AND RS. 6 59 164/- IN THE ASSMT. YEAR 2006-07. IN THE RESU LT GROUND NO. 6 FOR ALL ASSMT. YEARS ARE ALLOWED. 20. ITA NO. 184/IND/08 THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) QU ASHED THE ASSESSMENT PROCEEDINGS INITIATED BY THE 153C OF THE ACT WITH THE FOLLOWING OBSERVATIONS :- I HAVE CAREFULLY CONSIDERED THE FACTS ON RECORD A ND THE SUBMISSIONS MADE BY THE RIVAL PARTIES. FIRST OF AL L IT IS NOTED THAT THE SECTION 153C AFFECTS THE SUBSTANTIVE RIGHT S OF A PERSON IN SO FAR AS A PERSON WHO HAS NOT BEEN SEARCHED IS MADE YTO FACE THE HARSH CONSEQUENCES OF REOPENING OF SIX YEA RS CASES. 28 THIS SECTION THUS CANNOT BE GIVEN A LIBERAL INTERPR ETATION SINCE IF IT IS SO DONE THEN THE PROCEEDINGS UNDER THIS S ECTION CAN BE INITIATED AGAINST A PERSON NOT SEARCHED MERELY ON T HE GROUND THAT SOME ACCOUNT OR EVEN A BANK STATEMENT OF THE P ERSON HAS BEEN FOUND IN A SEARCH ACTION. IF IN SUCH A CASE I NVOKING OF SECTION 153C IS HELD TO BE JUSTIFIED THEN THIS SEC TION CAN BECOME A READY TOOK FOR REOPENING SIX YEAR CASES ON ANY PRETEXT OF A PERSON WHO HAD SOME DEALING WITH THE PERSON SEARCHED. THE LD. AR HAS ARGUED THAT BEFORE INVOKIN G SECTION 153C THERE HAS TO BE SOME MATERIAL ON RECORD TO COM E OUT OF THE PRESUMPTION OF SEC. 292C AND WHICH IS POSSIBLE ONLY AFTER CONFRONTING THE IMPUGNED MATERIAL TO THE PERSON SEA RCHED. BUT NO SUCH FINDING OF PRESUMPTION NOT BEING APPLICABLE HAS BEEN GIVEN BEFORE INVOKING SECTION 153C. I FIND SOME ME RIT IN THIS CLAIM. FURTHER I ALSO FIND THAT THE SATISFACTIONS RECORDED IN MARCH 2006 FOR ALL THE SEVEN YEARS WERE WITHOUT AP PLICATION OF MIND AS IS EVIDENT FROM THE FACT THAT IN ALL THE OTHER 12 CASES INVOLVING ABOUT 40 ASSESSMENTS THE ASSESSING OFFICER HAS RECORDED IDENTICAL STEREO TYPE SATISFACTION BY STATING THAT DURING SEARCH ACTIONS CARRIED OUT IN DECEMBER 2003 IN THE CASES OF SANTOSH KUMAR SAHU AND OTHERS INCRIMINATIN G DOCUMENTS PERTAINING TO EACH OF THE YEARS WERE FOUN D AND SEIZED WHEREAS THE FACT IS THAT IN SOME OF THE YEAR S OF SOME OF THOSE CONCERNS WERE NOT IN EXISTENCE. HOWEVER THE SE FACTS BY THEMSELVES COULD NOT BE REGARDED TO BE A SUFFICIENT GROUND TO HOLD THE INVOKING OF SECTION 153C WAS ILLEGAL. IT IS BECAUSAE OF THE REASON THAT ON A PLAIN READING OF SEC. 153C IT DOES NOT TRANSPIRE THAT RECORDING OF A SATISFACTION IS A MUS T. BUT AT THE SAME TIME IT IS ALSO TO HOLD THAT IT DOES NOT MEAN THAT REQUIRED SATISFACTION COULD BE HIGHLY SUBJECTIVE NOT OPEN TO SECURITY BY THE APPELLATE AUTHORITIES. THE MINIMUM REQUIREMENT TO JUSTIFY THE INVOKING OF SECT. 153C IS THAT AT LEASAT IT SHO ULD BE POSSIBLE TO GATHER A SATISFACTION THERE SHOULD BE SOME EIZED RECORD PERTAINING TO THE ASSESSEE WHICH HAD BEEN FO UND IN A SEARCH ACTION. FURTHER THE SAME SHOULD HAVE ALSO B EEN CONFRONTED TO THE ASSESSEE. BUT DURING THE ASSESSM ENT PROCEEDINGS NO SEIZED RECORD PERTAINING TO THE ASSE SSEE WAS CONFRONTED TO HIM. WHAT WERE CONFRONTED WERE THE O CUMENTS IMPOUNDED DURING THE SURVEY ACTION CONDUCTED AT ITS OFFICE. IN VIEW OF THESE FACTS IT IS HELD THAT THE INVOKING O F SECTION 153C AGAINST THE ASSESSEE WAS BAD IN LAW. THE PROCEEDING S SO INITIATED THEREFORE ARE HELD TO BE VOID AB INITIO AND ALL THE ASSESSMENTS THEREFORE ARE DECLARED AB INITIO NULL AND VOID. 29 AS PER THE AR IT MAY BE APPRECIATED THAT THERE IS ABSOLUTELY NO INCRIMINATING MATERIAL BELONGING TO THE APPELLAN T FOUND DURING THE COURSE OF SEARCH AT THE PREMISES OF THE SEARCHED PERSON AND THERE IS NO SATISFACTION OR EVEN THE BAS IS FOR SATISFACTION TO ISSUE A NOTICE U/S 153C AND NO SATI SFACTION IS RECORDED BY THE ASSESSING OFFICER BEFORE THE ISSUE OF NOTICE U/S 153C AND THEREFORE THE NOTICE ISSUED U/S 153C IS ILLEGAL INVALID AND UNTENABLE- IN LAW AND THEREFORE IT I S REQUESTED THAT THE ASSESSMENTS MADE ON THE BASIS SUCH ILLEGAL NOTICE BE KINDLY QUASHED. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE AR. IN A NUTSHELL THE A R HAS STATED THAT THE NOTICE U/S 153C IS ISSUED WITHOUT RECORDIN G THE SATISFACTION BEFORE THE ISSUE OF NOTICE AND THSAT N O INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE WA S FOUND DURING THE SEARCH OF ANY PERSON OR PREMISES. IN SU PPORT OF HIS CLAIM HE HAS RELIED UPON THE FOLLOWING DECISIONS :- (VI) MANISH MAHESHWARI VS. ITAT AS REPORTED ON (2007) 208 CTR 97 S.C. (VII) NEW DELHI AUTO FINANCE (P) LTD. VS. AS REPORTED ON (2008) 300 ITR 83 DELHI. (VIII) CIT VS. S.G. ANGIDI CHETTIAR AS REPORTED ON (1962) 44 ITR 739 S.C. (IX) D.M. MANSARI VS. CIT AS REPORTEDON (1972) 86 ITR 55 7. (X) BHAWANT FINANCE CO. LTD. VS. CIT AS REPORTED ON (2006) 280 ITR 412 DELHI. I HAVE CALLED FOR THE COMPLETE RECORD OF THE APPELL ANT AS WELL AS THE SEARCHED PERSONS. I FIND THAT NO SATISFACTI ON HAS BEEN RECORDED BY THE ASSESSING OFFICER BEFORE THE ISSUE OF NOTICE U/S 153C. I HAVE ALSO GONE THROUGH THE MATERIAL SEIZED FROM THE RESIDENCE OF SHRI DINESH AGRAWAL PRODUCED BEFORE M E BY THE AR. THE SEIZED PAPERS ARE NAMED AS LPS-1 AND THEY CONTAIN 34 PAGES. I MINUTELY EXAMINED EACH AND EVERY PAPER AND I FIND THAT NONE OF THESE PAPERS BELONG TO THE ASSESS EE AND CAN BE SAID TO BELONG TO THE ASSESSEE. I ALSO FIND THA T NO ADDITION OR EVEN OBSERVATIONS HAS BEEN MADE BY THE ASSESSING OFFICER IN ANY OF THE ORDER RIGHT FROM ASSMT. YEAR 2000-01 TO 2006-07 IN CONNECTION WITH ANY MATERIAL FOUND DURING THE CO URSE OF SEARCH. WHEN NO MATERIAL RELATING TO THE ASSESSEE HAS BEEN FOUND FROM THE SEARCHED PERSON NO ACTION U/S 153C C AN BE INITIATED AGAINST THE ASSESSEE. IN THESE CIRCUMSTA NCES IT APPEARS THAT THE REQUIREMENTS OF SECTION 153C ARE N OT FULFILLED AS CLAIMED BY THE AR. THE AR HAS HEAVILY RELIED UP ON THE 30 HONBLE SUPREME COURT DECISION IN THE CASE OF MANIS H MAHESHWARI. THE SAID DECISION HAS BEEN RENDERED IN RELATION TO THE PROVISIONS OF SECTION 158BD WHICH ARE IDENT ICAL TO THE PROVISIONS OF SECTION 153C AS PER DETAILED SUBMISSI ONS OF THE ASSESSEE. I DO NOT FIND THAT WITH REGARD TO SATISF ACTION BOTH THE SECTIONS ARE IDENTICAL AND IT SHOULD BE MANDATORY T O RECORD THE SATISFACTION BEFORE THE ISSUE OF NOTICE U/S 153 C IF IT IS NECESSARY TO RECORD THE SATISFACTION BEFORE THE ISS UE OF NOTICE U/S 158BD. IN THIS CONNECTION I HAVE ALSO SEEN THE APPELLATE ORDER OF MY LD. COLLEAGUE CIT(A)-1 JABALPUR IN THE CASE OF M/S HOTEL SONAM & SMART BAR SAGAR ON 22.11.2007 IN APPEAL NO . ACIT-SAGAR/116 TO 122 WHICH HAS BEEN PASSED ON THE FACTS IDENTICAL WITH THE FACTS OF THE ASSESSEE. IN THE S AID CASE ALSO THERE WAS A SEARCH AGAINST THE PARTNERS AND SURVEY IN THE CASE OF THE FIRM AND NO MATERIAL BELONGING TO THE FIRM W AS FOUND FROM THE PREMISES OF THE PARTNERS WHERE THE SEARCH WAS CONDUCTED. I AM SATISFIED THAT ON PLAIN READING OF SECTION 153C IT MAY NOT BE NECESSARY TO RECORD THE SATISFA CTION BUT AT LEAST THERE SHOULD BE SOME MATERIAL TO GIVE SATISFA CTION TO THE ASSESSING OFFICER THAT SOME INCRIMINATING MATERIAL INDICATING SOME INCOME HAS BEEN FOUND IN THE SEARCH ACTION. I N THE INSTANT CASE NO MATERIAL BELONGING TO THE ASSESSEE HAS BEEN FOUND IN THE SEARCH. IN FACT THERE WAS NO MATERIA L WHICH COULD HAVE SATISFIED THE ASSESSING OFFICER TO ISSUE THE NOTICE U/S 153C AND NO SATISFACTION HAS BEEN RECORDED. IN VIEW OF THESE FACTS I HOLD THAT THE INVOKING OF SECTION 15 3C AGAINST THE ASSESSEE WAS BAD IN LAW AND THE NOTICE ISSUED U /S 153C WAS ILLEGAL. THE PROCEEDINGS U/S 153C IS AB-INITIO NULL AND VOID. THE ASSESSMENT MADE IN CONSEQUENCE TO THE ILL EGAL NOTICE U/S 153C FOR ALL THE ASSMT. YEARS ARE HEREBY QUASHED AND ACCORDINGLY THE GROUND NO. 1 OF THE APPEAL IS ALLOWED. 21. SO FAR AS THE GROUND RELATING TO REJECTION OF B OOKS OF ACCOUNTS IS CONCERNED THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) MADE THE FOLLOWING OBSERVATIONS :- I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE AR. I FIND FORCE IN THE SUBMISSI ONS OF THE ASSESSEE WHICH ARE SUPPORTED BY THE ABOVESAID COURT DECISIONS. I AGREE WITH THE AR THAT A/C BOOKS OF TH E ASSESSEE 31 SHOULD NOT BE REJECTED WITHOUT ANY BASIS. HOWEVER I AM OF THE OPINION THAT THERE IS SOME MATERIAL AND THEN THE AD DITIONS RELATING TO SAID MATERIAL MAY BE MADE IN THE HANDS OF THE ASSESSEE. IN THE RESULT THE GROUND OF THE APPEAL IS PARTLY ALLOWED. 22. THE ADDITION OF RS. 37 45 739/- MADE BY THE ASSESSI NG OFFICER ON ACCOUNT OF UNEXPLAINED PURCHASES U/S 69C OF THE ACT WAS DELETED BY THE LEARNED COMMISSIONER OF INCOMETAX (A PPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS :- I HAVE GONE THROUGH THE ASSMT . ORDER AS WELL AS THE WRITTEN SUBMISSIONS OF THE APPELLANT. I FIND T HAT THE ASSESSING OFFICER HAS TREATED THE PURCHASES MADE FR OM THE SRD STEEL (P) LTD. AS BOGUS. HE ALSO TREATED 1 /4 TH PORTION OF OTHER PURCHASES ALSO AS BOGUS FOR ALL TH E ASST. YEARS AS INDICATED IN THE CHART ABOVE. HE HAS GIVEN THE REASON THAT EVEN AFTER A NOTICE U/S 131 T O M/S SRD STEEL NOBODY ATTENDED ON THEIR BEHALF AND THE OTHER PARTIES I.E. KATHURIA TRADE COMPANY AND TIRUPATHY STEEL TRADERS ALSO DID NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 133(6) AND THEREFORE HE DISALLOWED ALL THE PURCHASES MADE FROM SRD STEEL AN D ALSO DISALLOWED 1/4 TH PORTION OF OTHER PURCHASES AS IN LINE WITH OTHER FIRMS OF THE CONCERNS OF THE GROUP. I HAVE SEEN THE COPY OF THE NOTICE ISSUED U/S 131 ON 23.11.2007 TO SRD STEEL WHICH IS SAID TO HAVE BEEN SENT BY THE AO CALLING FOR CONFIRMATION OF THE SALES MAD E BY HIM. I AM OF THE OPINION THAT SIMPLY BECAUSE SOME PERSON DOES NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 131 OR U/S 133(6) NO ADVERSE INFERENCE CAN BE DRAWN SIMPLY FOR HIS NON ATTENDANCE. IN THE GIVEN FACTS AND CIRCUMSTANCES I AM FORTIFIED BY THE DECISION OF TH E HONOURABLE SUPREME COURT IN THE CASE OF ANEES AHEMAD & SONS VS. CIT AS REPORTED IN (2008) 297 ITR 441 SC. THE AR HAS FILED THE COPIES OF ACCOUNT OF ALL THE SUPPLIERS IN THE ASSMT. YEAR 2000-01 BEFORE ME AS A SAMPLE WHICH WERE ALSO AVAILABLE BEFORE THE ASSESSI NG OFFICER. I FIN THAT ALL THE PAYMENTS ARE MADE THROU GH CHEQUES AND THE MATERIAL HAS BEEN RECEIVED THROUGH TRANSPORT LRS. THE ASSESSEE PRODUCES EXCISABLE ITE MS 32 AND CLAIMS CENVAT CREDITS. THE CHARGE OF THE ASSESS ING OFFICER THAT THE CHEQUE PAYMENTS MADE TO THE SUPPLI ERS ARE RECEIVED BACK IN CASH HAS NO BASIS AND HE HAS N OT POINTED OUT ANY DEFECTS IN THE ACCOUNT BOOKS AND HA S MADE HUGE DISALLOWANCE FROM PURCHASES ON VERY FLIMS Y GROUNDS AND THEREFORE THESE DISALLOWANCE CANNOT B E SUSTAINED. ACCORDINGLY THE APPELLANT GETS THE REL IEF OF RS.99 23 043/- IN THE ASMT. YEAR 2000-01 RS. 80 73 129/- IN THE ASMT. YEAR 2001-02 RS. 37 45 73 9/- IN THE ASMT. YEAR 2002-03 RS. 50 45 344/- IN THE A SMT. YEAR 2003-04 RS. 1 15 61 918/- IN THE ASMT. YEAR 2 004- 05 RS. 95 66 324/- IN THE ASMT. YEAR 2005-06 AND R S. 1 04 16 240/- IN THE ASMT. YEAR 2006-07. ACCORDING LY GROUND NO. 5 & 6 FOR ASSMT. YEAR 2003-04 AND GROUND NO. 4 & 5 FOR ALL OTHER ASSMT. YEARS ARE ALLOWED. 23. THE ADDITION OF RS. 1 40 415/- MADE BY THE ASSE SSING OFFICER U/S 69C OF THE ACT ON ACCOUNT OF BOGUS FABRICATION EXPENSES PURCHASES WAS DELETED BY THE LEARNED COMMISSIONER O F INCOMETAX (APPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS : - ON PERUSAL OF THE ABOVE SAID SECTIONS IT MAY BE SEEN THAT THE ADDITIONS U/S 69C CAN BE MADE WHEN IT IS FOUND BY THE ASSESSING OFFICER THAT THE APPELLANT H AS INCURRED THE EXPENDITURE AND HE IS UNABLE TO EXPLAI N THE SOURCE OF SUCH EXPENDITURE. IN THE INSTANT CASE T HE ASSESSING OFFICER HAS NOT FOUND ANY EXPENDITURE WHI CH CAN BE SAID TO BE UNEXPLAINED. IN FACT THE APPELL ANT HAS SHOWN THE EXPENDITURE IN THE FORM OF FABRICATIO N EXPENSES AND THE LD. ASSESSING OFFICER IS OF THE OP INION THAT THE APPELLANT HAS NOT INCURRED THE EXPENDITURE ON FABRICATION. ON THE ABOVE FACTS IT MAY BE SEEN TH AT THE PROVISIONS OF SEC. 69C OF THE IT ACT ARE NOT ATTRAC TED. ON PERUSAL OF THE ASSESSMENT ORDER FOR ALL THE ASSESSMENT YEARS AND THE DETAILED SUBMISSIONS OF TH E AR I FIND THAT THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE OF 1/5 TH OF THE FABRICATION EXPENSES IN A VERY CASUAL MANNER. IN THE ASSESSMENT YEAR 2000-01 HE SIMPLY STATES THAT 1/5 TH OF THE FABRICATION EXPENSES ARE BOGUS. IN OTHER ASSMT. YEARS HE STATES THAT HE IS MAKING 33 THE DISALLOWANCE ON THE BASIS THE REASON GIVEN BY H IM IN THE ASSMT. YEAR 2000-01. I HAVE SEEN THAT THE APPELLANT HAS MAINTAINED THE REGULAR BOOKS OF ACCOU NTS WHICH HAVE BEEN DULY AUDITED. WHENEVER THE APPELLA NT MADE THE PAYMENT TO THE FABRICATORS PROPER DEDUCTIO NS OF TDS HAS BEEN MADE AND SUBSTANTIAL PAYMENTS TO TH E FABRICATORS ARE MADE THROUGH THE CHEQUE. ON THESE FACTS IT IS VERY DIFFICULT TO MAINTAIN THE DISALLO WANCE MADE BY THE ASSESSING OFFICER IN ALL THE ASSMT. YEA RS AND ACCORDINGLY THE DISALLOWANCE FOR ALL THE ASSMT . YEARS ARE REMOVED. IN THE RESULT APPELLANT GETS T HE RELIEF OF RS. 2 60 146/- IN THE ASSMT. YEAR 2000-01 RS.1 44 293/- IN THE ASSMT. YEAR 2001-02 RS. 1 40 415/- IN THE ASSMT. YEAR 2002-03 RS. 4 56 898/- IN THE A SSMT. YEAR 2003-04 RS.7 24 223/- IN THE ASSMT. YEAR 2004 - 05 RS. 11 07 451/- IN THE ASSMT. YEAR 2005-06 AND RS. 6 59 164/- IN THE ASSMT. YEAR 2006-07. IN THE RESU LT GROUND NO. 6 FOR ALL ASSMT. YEARS ARE ALLOWED. 24. ITA NO. 185/IND/08 THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) QU ASHED THE ASSESSMENT PROCEEDINGS INITIATED BY THE 153C OF THE ACT WITH THE FOLLOWING OBSERVATIONS :- I HAVE CAREFULLY CONSIDERED THE FACTS ON RECORD A ND THE SUBMISSIONS MADE BY THE RIVAL PARTIES. FIRST OF AL L IT IS NOTED THAT THE SECTION 153C AFFECTS THE SUBSTANTIVE RIGHT S OF A PERSON IN SO FAR AS A PERSON WHO HAS NOT BEEN SEARCHED IS MADE YTO FACE THE HARSH CONSEQUENCES OF REOPENING OF SIX YEA RS CASES. THIS SECTION THUS CANNOT BE GIVEN A LIBERAL INTERPR ETATION SINCE IF IT IS SO DONE THEN THE PROCEEDINGS UNDER THIS S ECTION CAN BE INITIATED AGAINST A PERSON NOT SEARCHED MERELY ON T HE GROUND THAT SOME ACCOUNT OR EVEN A BANK STATEMENT OF THE P ERSON HAS BEEN FOUND IN A SEARCH ACTION. IF IN SUCH A CASE I NVOKING OF SECTION 153C IS HELD TO BE JUSTIFIED THEN THIS SEC TION CAN BECOME A READY TOOK FOR REOPENING SIX YEAR CASES ON ANY PRETEXT OF A PERSON WHO HAD SOME DEALING WITH THE PERSON SEARCHED. THE LD. AR HAS ARGUED THAT BEFORE INVOKIN G SECTION 153C THERE HAS TO BE SOME MATERIAL ON RECORD TO COM E OUT OF THE PRESUMPTION OF SEC. 292C AND WHICH IS POSSIBLE ONLY AFTER CONFRONTING THE IMPUGNED MATERIAL TO THE PERSON SEA RCHED. BUT 34 NO SUCH FINDING OF PRESUMPTION NOT BEING APPLICABLE HAS BEEN GIVEN BEFORE INVOKING SECTION 153C. I FIND SOME ME RIT IN THIS CLAIM. FURTHER I ALSO FIND THAT THE SATISFACTIONS RECORDED IN MARCH 2006 FOR ALL THE SEVEN YEARS WERE WITHOUT AP PLICATION OF MIND AS IS EVIDENT FROM THE FACT THAT IN ALL THE OTHER 12 CASES INVOLVING ABOUT 40 ASSESSMENTS THE ASSESSING OFFICER HAS RECORDED IDENTICAL STEREO TYPE SATISFACTION BY STATING THAT DURING SEARCH ACTIONS CARRIED OUT IN DECEMBER 2003 IN THE CASES OF SANTOSH KUMAR SAHU AND OTHERS INCRIMINATIN G DOCUMENTS PERTAINING TO EACH OF THE YEARS WERE FOUN D AND SEIZED WHEREAS THE FACT IS THAT IN SOME OF THE YEAR S OF SOME OF THOSE CONCERNS WERE NOT IN EXISTENCE. HOWEVER THE SE FACTS BY THEMSELVES COULD NOT BE REGARDED TO BE A SUFFICIENT GROUND TO HOLD THE INVOKING OF SECTION 153C WAS ILLEGAL. IT IS BECAUSAE OF THE REASON THAT ON A PLAIN READING OF SEC. 153C IT DOES NOT TRANSPIRE THAT RECORDING OF A SATISFACTION IS A MUS T. BUT AT THE SAME TIME IT IS ALSO TO HOLD THAT IT DOES NOT MEAN THAT REQUIRED SATISFACTION COULD BE HIGHLY SUBJECTIVE NOT OPEN TO SECURITY BY THE APPELLATE AUTHORITIES. THE MINIMUM REQUIREMENT TO JUSTIFY THE INVOKING OF SECT. 153C IS THAT AT LEASAT IT SHO ULD BE POSSIBLE TO GATHER A SATISFACTION THERE SHOULD BE SOME EIZED RECORD PERTAINING TO THE ASSESSEE WHICH HAD BEEN FO UND IN A SEARCH ACTION. FURTHER THE SAME SHOULD HAVE ALSO B EEN CONFRONTED TO THE ASSESSEE. BUT DURING THE ASSESSM ENT PROCEEDINGS NO SEIZED RECORD PERTAINING TO THE ASSE SSEE WAS CONFRONTED TO HIM. WHAT WERE CONFRONTED WERE THE O CUMENTS IMPOUNDED DURING THE SURVEY ACTION CONDUCTED AT ITS OFFICE. IN VIEW OF THESE FACTS IT IS HELD THAT THE INVOKING O F SECTION 153C AGAINST THE ASSESSEE WAS BAD IN LAW. THE PROCEEDING S SO INITIATED THEREFORE ARE HELD TO BE VOID AB INITIO AND ALL THE ASSESSMENTS THEREFORE ARE DECLARED AB INITIO NULL AND VOID. AS PER THE AR IT MAY BE APPRECIATED THAT THERE IS ABSOLUTELY NO INCRIMINATING MATERIAL BELONGING TO THE APPELLAN T FOUND DURING THE COURSE OF SEARCH AT THE PREMISES OF THE SEARCHED PERSON AND THERE IS NO SATISFACTION OR EVEN THE BAS IS FOR SATISFACTION TO ISSUE A NOTICE U/S 153C AND NO SATI SFACTION IS RECORDED BY THE ASSESSING OFFICER BEFORE THE ISSUE OF NOTICE U/S 153C AND THEREFORE THE NOTICE ISSUED U/S 153C IS ILLEGAL INVALID AND UNTENABLE- IN LAW AND THEREFORE IT I S REQUESTED THAT THE ASSESSMENTS MADE ON THE BASIS SUCH ILLEGAL NOTICE BE KINDLY QUASHED. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE AR. IN A NUTSHELL THE A R HAS STATED THAT THE NOTICE U/S 153C IS ISSUED WITHOUT RECORDIN G THE 35 SATISFACTION BEFORE THE ISSUE OF NOTICE AND THSAT N O INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE WA S FOUND DURING THE SEARCH OF ANY PERSON OR PREMISES. IN SU PPORT OF HIS CLAIM HE HAS RELIED UPON THE FOLLOWING DECISIONS :- (XI) MANISH MAHESHWARI VS. ITAT AS REPORTED ON (2007) 208 CTR 97 S.C. (XII) NEW DELHI AUTO FINANCE (P) LTD. VS. AS REPORTED ON (2008) 300 ITR 83 DELHI. (XIII) CIT VS. S.G. ANGIDI CHETTIAR AS REPORTED ON (1962) 44 ITR 739 S.C. (XIV) D.M. MANSARI VS. CIT AS REPORTEDON (1972) 86 ITR 55 7. (XV) BHAWANT FINANCE CO. LTD. VS. CIT AS REPORTED ON (2006) 280 ITR 412 DELHI. I HAVE CALLED FOR THE COMPLETE RECORD OF THE APPELL ANT AS WELL AS THE SEARCHED PERSONS. I FIND THAT NO SATISFACTI ON HAS BEEN RECORDED BY THE ASSESSING OFFICER BEFORE THE ISSUE OF NOTICE U/S 153C. I HAVE ALSO GONE THROUGH THE MATERIAL SEIZED FROM THE RESIDENCE OF SHRI DINESH AGRAWAL PRODUCED BEFORE M E BY THE AR. THE SEIZED PAPERS ARE NAMED AS LPS-1 AND THEY CONTAIN 34 PAGES. I MINUTELY EXAMINED EACH AND EVERY PAPER AND I FIND THAT NONE OF THESE PAPERS BELONG TO THE ASSESS EE AND CAN BE SAID TO BELONG TO THE ASSESSEE. I ALSO FIND THA T NO ADDITION OR EVEN OBSERVATIONS HAS BEEN MADE BY THE ASSESSING OFFICER IN ANY OF THE ORDER RIGHT FROM ASSMT. YEAR 2000-01 TO 2006-07 IN CONNECTION WITH ANY MATERIAL FOUND DURING THE CO URSE OF SEARCH. WHEN NO MATERIAL RELATING TO THE ASSESSEE HAS BEEN FOUND FROM THE SEARCHED PERSON NO ACTION U/S 153C C AN BE INITIATED AGAINST THE ASSESSEE. IN THESE CIRCUMSTA NCES IT APPEARS THAT THE REQUIREMENTS OF SECTION 153C ARE N OT FULFILLED AS CLAIMED BY THE AR. THE AR HAS HEAVILY RELIED UP ON THE HONBLE SUPREME COURT DECISION IN THE CASE OF MANIS H MAHESHWARI. THE SAID DECISION HAS BEEN RENDERED IN RELATION TO THE PROVISIONS OF SECTION 158BD WHICH ARE IDENT ICAL TO THE PROVISIONS OF SECTION 153C AS PER DETAILED SUBMISSI ONS OF THE ASSESSEE. I DO NOT FIND THAT WITH REGARD TO SATISF ACTION BOTH THE SECTIONS ARE IDENTICAL AND IT SHOULD BE MANDATORY T O RECORD THE SATISFACTION BEFORE THE ISSUE OF NOTICE U/S 153 C IF IT IS NECESSARY TO RECORD THE SATISFACTION BEFORE THE ISS UE OF NOTICE U/S 158BD. IN THIS CONNECTION I HAVE ALSO SEEN THE APPELLATE ORDER OF MY LD. COLLEAGUE CIT(A)-1 JABALPUR IN THE CASE OF M/S HOTEL 36 SONAM & SMART BAR SAGAR ON 22.11.2007 IN APPEAL NO . ACIT-SAGAR/116 TO 122 WHICH HAS BEEN PASSED ON THE FACTS IDENTICAL WITH THE FACTS OF THE ASSESSEE. IN THE S AID CASE ALSO THERE WAS A SEARCH AGAINST THE PARTNERS AND SURVEY IN THE CASE OF THE FIRM AND NO MATERIAL BELONGING TO THE FIRM W AS FOUND FROM THE PREMISES OF THE PARTNERS WHERE THE SEARCH WAS CONDUCTED. I AM SATISFIED THAT ON PLAIN READING OF SECTION 153C IT MAY NOT BE NECESSARY TO RECORD THE SATISFA CTION BUT AT LEAST THERE SHOULD BE SOME MATERIAL TO GIVE SATISFA CTION TO THE ASSESSING OFFICER THAT SOME INCRIMINATING MATERIAL INDICATING SOME INCOME HAS BEEN FOUND IN THE SEARCH ACTION. I N THE INSTANT CASE NO MATERIAL BELONGING TO THE ASSESSEE HAS BEEN FOUND IN THE SEARCH. IN FACT THERE WAS NO MATERIA L WHICH COULD HAVE SATISFIED THE ASSESSING OFFICER TO ISSUE THE NOTICE U/S 153C AND NO SATISFACTION HAS BEEN RECORDED. IN VIEW OF THESE FACTS I HOLD THAT THE INVOKING OF SECTION 15 3C AGAINST THE ASSESSEE WAS BAD IN LAW AND THE NOTICE ISSUED U /S 153C WAS ILLEGAL. THE PROCEEDINGS U/S 153C IS AB-INITIO NULL AND VOID. THE ASSESSMENT MADE IN CONSEQUENCE TO THE ILL EGAL NOTICE U/S 153C FOR ALL THE ASSMT. YEARS ARE HEREBY QUASHED AND ACCORDINGLY THE GROUND NO. 1 OF THE APPEAL IS ALLOWED. 25. SO FAR AS THE GROUND RELATING TO REJECTION OF B OOKS OF ACCOUNTS IS CONCERNED THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) MADE THE FOLLOWING OBSERVATIONS :- I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE AR. I FIND FORCE IN THE SUBMISSI ONS OF THE ASSESSEE WHICH ARE SUPPORTED BY THE ABOVESAID COURT DECISIONS. I AGREE WITH THE AR THAT A/C BOOKS OF TH E ASSESSEE SHOULD NOT BE REJECTED WITHOUT ANY BASIS. HOWEVER I AM OF THE OPINION THAT THERE IS SOME MATERIAL AND THEN THE AD DITIONS RELATING TO SAID MATERIAL MAY BE MADE IN THE HANDS OF THE ASSESSEE. IN THE RESULT THE GROUND OF THE APPEAL IS PARTLY ALLOWED. 26. THE ADDITION OF RS. 8 61 254/- WAS DELETED BY THE L EARNED COMMISSIONER OF INCOMETAX (APPEALS) OUT OF THE TOT AL ADDITION OF 37 RS.9 73 541/- MADE BY THE ASSESSING OFFICER ON ACCO UNT OF UNDISCLOSED SALES WITH THE FOLLOWING OBSERVATIONS :- I HAVE GONE THROUGH THE ASSESSMENT ORDER AS WELL AS THE SUBMISSIONS OF THE APPELLANT. DURING T HE COURSE OF SURVEY AT THE PREMISES OF THE APPELLANT UNSIGNED DRAFT COPY OF THE PROFIT AND LOSS ACCOUNT FOR THE FINANCIAL YEAR ENDED ON 31.3.2003 WAS FOUND WHI CH REFLECTED THE ALES AT RS. 2 93 20 720/-WHILE THE FI NAL ACCOUNTS REFLECTED THE SALES OF RS. 2 83 47 179/- A ND UNDOUBTEDLY THERE IS THE DIFFERENCE OF RS.9 73 541/ -. I AGREE WITH THE AR THAT THE CORRECT SALES ARE ONLY O F RS.2 83 47 179/- WHICH HAVE BEEN WORKED OUT AFTER REMOVING THE MISTAKE. SOME OF THE MISTAKES HAVE BE EN SPECIFICALLY POINTED OUT BY THE AR IN HIS SUBMISSIO NS. IT LEAVES THE DIFFERENCE OF RS. 1 12 287/-. THE AR C OULD NOT GIVE ANY EXPLANATION EVEN BEFORE ME FOR THE SAI D DIFFERENCE OF RS.1 12 287/- AND THEREFORE I DO NO T HAVE ANY ALTERNATIVE BUT TO SUSTAIN THE ADDITION OF RS.1 12 287/-. THE APPELLANT GETS A RELIEF OF RS.8 61 254/-. THE RESULT GROUND OF APPEAL NO. 4 FO R ASSMT. YEAR 2003-04 IS PARTLY ALLOWED. 27. THE ADDITION OF RS. 50 45 344/- (INADVERTENTLY TAKEN AT RS.15 77 577/- IN COMPUTATION OF INCOME) MADE BY TH E ASSESSING OFFICER U/S 69C OF THE ACT ON ACCOUNT OF UNEXPLAINE D PURCHASES WAS DELETED BY THE LEARNED COMMISSIONER OF INCOMETAX (A PPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS :- ON PERUSAL OF THE ABOVE SAID SECTIONS IT MAY BE SEEN THAT THE ADDITIONS U/S 69C CAN BE MADE WHEN IT IS FOUND BY THE ASSESSING OFFICER THAT THE APPELLANT H AS INCURRED THE EXPENDITURE AND HE IS UNABLE TO EXPLAI N THE SOURCE OF SUCH EXPENDITURE. IN THE INSTANT CASE T HE ASSESSING OFFICER HAS NOT FOUND ANY EXPENDITURE WHI CH CAN BE SAID TO BE UNEXPLAINED. IN FACT THE APPELL ANT HAS SHOWN THE EXPENDITURE IN THE FORM OF FABRICATIO N EXPENSES AND THE LD. ASSESSING OFFICER IS OF THE OP INION THAT THE APPELLANT HAS NOT INCURRED THE EXPENDITURE ON 38 FABRICATION. ON THE ABOVE FACTS IT MAY BE SEEN TH AT THE PROVISIONS OF SEC. 69C OF THE IT ACT ARE NOT ATTRAC TED TO THE FACTS OF THE APPELLANT. I HAVE GONE THROUGH THE ASSMT . ORDER AS WELL AS THE WRITTEN SUBMISSIONS OF THE APPELLANT. I FIND T HAT THE ASSESSING OFFICER HAS TREATED THE PURCHASES MADE FR OM THE SRD STEEL (P) LTD. AS BOGUS. HE ALSO TREATED 1 /4 TH PORTION OF OTHER PURCHASES ALSO AS BOGUS FOR ALL TH E ASST. YEARS AS INDICATED IN THE CHART ABOVE. HE HAS GIVEN THE REASON THAT EVEN AFTER A NOTICE U/S 131 T O M/S SRD STEEL NOBODY ATTENDED ON THEIR BEHALF AND THE OTHER PARTIES I.E. KATHURIA TRADE COMPANY AND TIRUPATHY STEEL TRADERS ALSO DID NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 133(6) AND THEREFORE HE DISALLOWED ALL THE PURCHASES MADE FROM SRD STEEL AN D ALSO DISALLOWED 1/4 TH PORTION OF OTHER PURCHASES AS IN LINE WITH OTHER FIRMS OF THE CONCERNS OF THE GROUP. I HAVE SEEN THE COPY OF THE NOTICE ISSUED U/S 131 ON 23.11.2007 TO SRD STEEL WHICH IS SAID TO HAVE BEEN SENT BY THE AO CALLING FOR CONFIRMATION OF THE SALES MAD E BY HIM. I AM OF THE OPINION THAT SIMPLY BECAUSE SOME PERSON DOES NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 131 OR U/S 133(6) NO ADVERSE INFERENCE CAN BE DRAWN SIMPLY FOR HIS NON ATTENDANCE. IN THE GIVEN FACTS AND CIRCUMSTANCES I AM FORTIFIED BY THE DECISION OF TH E HONOURABLE SUPREME COURT IN THE CASE OF ANEES AHEMAD & SONS VS. CIT AS REPORTED IN (2008) 297 ITR 441 SC. THE AR HAS FILED THE COPIES OF ACCOUNT OF ALL THE SUPPLIERS IN THE ASSMT. YEAR 2000-01 BEFORE ME AS A SAMPLE WHICH WERE ALSO AVAILABLE BEFORE THE ASSESSI NG OFFICER. I FIN THAT ALL THE PAYMENTS ARE MADE THROU GH CHEQUES AND THE MATERIAL HAS BEEN RECEIVED THROUGH TRANSPORT LRS. THE ASSESSEE PRODUCES EXCISABLE ITE MS AND CLAIMS CENVAT CREDITS. THE CHARGE OF THE ASSESS ING OFFICER THAT THE CHEQUE PAYMENTS MADE TO THE SUPPLI ERS ARE RECEIVED BACK IN CASH HAS NO BASIS AND HE HAS N OT POINTED OUT ANY DEFECTS IN THE ACCOUNT BOOKS AND HA S MADE HUGE DISALLOWANCE FROM PURCHASES ON VERY FLIMS Y GROUNDS AND THEREFORE THESE DISALLOWANCE CANNOT B E SUSTAINED. ACCORDINGLY THE APPELLANT GETS THE REL IEF OF RS.99 23 043/- IN THE ASMT. YEAR 2000-01 RS. 80 73 129/- IN THE ASMT. YEAR 2001-02 RS. 37 45 73 9/- IN THE ASMT. YEAR 2002-03 RS. 50 45 344/- IN THE A SMT. 39 YEAR 2003-04 RS. 1 15 61 918/- IN THE ASMT. YEAR 2 004- 05 RS. 95 66 324/- IN THE ASMT. YEAR 2005-06 AND R S. 1 04 16 240/- IN THE ASMT. YEAR 2006-07. ACCORDING LY GROUND NO. 5 & 6 FOR ASSMT. YEAR 2003-04 AND GROUND NO. 4 & 5 FOR ALL OTHER ASSMT. YEARS ARE ALLOWED. 28. THE ADDITION OF RS. 4 56 898/- (INADVERTENTLY T AKEN AT RS.2 28 449/- IN COMPUTATION OF INCOME) MADE BY THE ASSESSING OFFICER U/S 69C OF THE ACT ON ACCOUNT OF BOGUS FABR ICATION EXPENSES WAS DELETED BY THE LEARNED COMMISSIONER OF INCOMETA X (APPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS :- ON PERUSAL OF THE ABOVE SAID SECTIONS IT MAY BE SEEN THAT THE ADDITIONS U/S 69C CAN BE MADE WHEN IT IS FOUND BY THE ASSESSING OFFICER THAT THE APPELLANT H AS INCURRED THE EXPENDITURE AND HE IS UNABLE TO EXPLAI N THE SOURCE OF SUCH EXPENDITURE. IN THE INSTANT CASE T HE ASSESSING OFFICER HAS NOT FOUND ANY EXPENDITURE WHI CH CAN BE SAID TO BE UNEXPLAINED. IN FACT THE APPELL ANT HAS SHOWN THE EXPENDITURE IN THE FORM OF FABRICATIO N EXPENSES AND THE LD. ASSESSING OFFICER IS OF THE OP INION THAT THE APPELLANT HAS NOT INCURRED THE EXPENDITURE ON FABRICATION. ON THE ABOVE FACTS IT MAY BE SEEN TH AT THE PROVISIONS OF SEC. 69C OF THE IT ACT ARE NOT ATTRAC TED. ON PERUSAL OF THE ASSESSMENT ORDER FOR ALL THE ASSESSMENT YEARS AND THE DETAILED SUBMISSIONS OF TH E AR I FIND THAT THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE OF 1/5 TH OF THE FABRICATION EXPENSES IN A VERY CASUAL MANNER. IN THE ASSESSMENT YEAR 2000-01 HE SIMPLY STATES THAT 1/5 TH OF THE FABRICATION EXPENSES ARE BOGUS. IN OTHER ASSMT. YEARS HE STATES THAT HE IS MAKING THE DISALLOWANCE ON THE BASIS THE REASON GIVEN BY H IM IN THE ASSMT. YEAR 2000-01. I HAVE SEEN THAT THE APPELLANT HAS MAINTAINED THE REGULAR BOOKS OF ACCOU NTS WHICH HAVE BEEN DULY AUDITED. WHENEVER THE APPELLA NT MADE THE PAYMENT TO THE FABRICATORS PROPER DEDUCTIO NS OF TDS HAS BEEN MADE AND SUBSTANTIAL PAYMENTS TO TH E FABRICATORS ARE MADE THROUGH THE CHEQUE. ON THESE FACTS IT IS VERY DIFFICULT TO MAINTAIN THE DISALLO WANCE 40 MADE BY THE ASSESSING OFFICER IN ALL THE ASSMT. YEA RS AND ACCORDINGLY THE DISALLOWANCE FOR ALL THE ASSMT . YEARS ARE REMOVED. IN THE RESULT APPELLANT GETS T HE RELIEF OF RS. 2 60 146/- IN THE ASSMT. YEAR 2000-01 RS.1 44 293/- IN THE ASSMT. YEAR 2001-02 RS. 1 40 415/- IN THE ASSMT. YEAR 2002-03 RS. 4 56 898/- IN THE A SSMT. YEAR 2003-04 RS.7 24 223/- IN THE ASSMT. YEAR 2004 - 05 RS. 11 07 451/- IN THE ASSMT. YEAR 2005-06 AND RS. 6 59 164/- IN THE ASSMT. YEAR 2006-07. IN THE RESU LT GROUND NO. 6 FOR ALL ASSMT. YEARS ARE ALLOWED. 29. ITA NO. 186/IND/08 THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) QU ASHED THE ASSESSMENT PROCEEDINGS INITIATED BY THE 153C OF THE ACT WITH THE FOLLOWING OBSERVATIONS :- I HAVE CAREFULLY CONSIDERED THE FACTS ON RECORD A ND THE SUBMISSIONS MADE BY THE RIVAL PARTIES. FIRST OF AL L IT IS NOTED THAT THE SECTION 153C AFFECTS THE SUBSTANTIVE RIGHT S OF A PERSON IN SO FAR AS A PERSON WHO HAS NOT BEEN SEARCHED IS MADE YTO FACE THE HARSH CONSEQUENCES OF REOPENING OF SIX YEA RS CASES. THIS SECTION THUS CANNOT BE GIVEN A LIBERAL INTERPR ETATION SINCE IF IT IS SO DONE THEN THE PROCEEDINGS UNDER THIS S ECTION CAN BE INITIATED AGAINST A PERSON NOT SEARCHED MERELY ON T HE GROUND THAT SOME ACCOUNT OR EVEN A BANK STATEMENT OF THE P ERSON HAS BEEN FOUND IN A SEARCH ACTION. IF IN SUCH A CASE I NVOKING OF SECTION 153C IS HELD TO BE JUSTIFIED THEN THIS SEC TION CAN BECOME A READY TOOK FOR REOPENING SIX YEAR CASES ON ANY PRETEXT OF A PERSON WHO HAD SOME DEALING WITH THE PERSON SEARCHED. THE LD. AR HAS ARGUED THAT BEFORE INVOKIN G SECTION 153C THERE HAS TO BE SOME MATERIAL ON RECORD TO COM E OUT OF THE PRESUMPTION OF SEC. 292C AND WHICH IS POSSIBLE ONLY AFTER CONFRONTING THE IMPUGNED MATERIAL TO THE PERSON SEA RCHED. BUT NO SUCH FINDING OF PRESUMPTION NOT BEING APPLICABLE HAS BEEN GIVEN BEFORE INVOKING SECTION 153C. I FIND SOME ME RIT IN THIS CLAIM. FURTHER I ALSO FIND THAT THE SATISFACTIONS RECORDED IN MARCH 2006 FOR ALL THE SEVEN YEARS WERE WITHOUT AP PLICATION OF MIND AS IS EVIDENT FROM THE FACT THAT IN ALL THE OTHER 12 CASES INVOLVING ABOUT 40 ASSESSMENTS THE ASSESSING OFFICER HAS RECORDED IDENTICAL STEREO TYPE SATISFACTION BY STATING THAT DURING SEARCH ACTIONS CARRIED OUT IN DECEMBER 2003 IN THE 41 CASES OF SANTOSH KUMAR SAHU AND OTHERS INCRIMINATIN G DOCUMENTS PERTAINING TO EACH OF THE YEARS WERE FOUN D AND SEIZED WHEREAS THE FACT IS THAT IN SOME OF THE YEAR S OF SOME OF THOSE CONCERNS WERE NOT IN EXISTENCE. HOWEVER THE SE FACTS BY THEMSELVES COULD NOT BE REGARDED TO BE A SUFFICIENT GROUND TO HOLD THE INVOKING OF SECTION 153C WAS ILLEGAL. IT IS BECAUSAE OF THE REASON THAT ON A PLAIN READING OF SEC. 153C IT DOES NOT TRANSPIRE THAT RECORDING OF A SATISFACTION IS A MUS T. BUT AT THE SAME TIME IT IS ALSO TO HOLD THAT IT DOES NOT MEAN THAT REQUIRED SATISFACTION COULD BE HIGHLY SUBJECTIVE NOT OPEN TO SECURITY BY THE APPELLATE AUTHORITIES. THE MINIMUM REQUIREMENT TO JUSTIFY THE INVOKING OF SECT. 153C IS THAT AT LEASAT IT SHO ULD BE POSSIBLE TO GATHER A SATISFACTION THERE SHOULD BE SOME EIZED RECORD PERTAINING TO THE ASSESSEE WHICH HAD BEEN FO UND IN A SEARCH ACTION. FURTHER THE SAME SHOULD HAVE ALSO B EEN CONFRONTED TO THE ASSESSEE. BUT DURING THE ASSESSM ENT PROCEEDINGS NO SEIZED RECORD PERTAINING TO THE ASSE SSEE WAS CONFRONTED TO HIM. WHAT WERE CONFRONTED WERE THE O CUMENTS IMPOUNDED DURING THE SURVEY ACTION CONDUCTED AT ITS OFFICE. IN VIEW OF THESE FACTS IT IS HELD THAT THE INVOKING O F SECTION 153C AGAINST THE ASSESSEE WAS BAD IN LAW. THE PROCEEDING S SO INITIATED THEREFORE ARE HELD TO BE VOID AB INITIO AND ALL THE ASSESSMENTS THEREFORE ARE DECLARED AB INITIO NULL AND VOID. AS PER THE AR IT MAY BE APPRECIATED THAT THERE IS ABSOLUTELY NO INCRIMINATING MATERIAL BELONGING TO THE APPELLAN T FOUND DURING THE COURSE OF SEARCH AT THE PREMISES OF THE SEARCHED PERSON AND THERE IS NO SATISFACTION OR EVEN THE BAS IS FOR SATISFACTION TO ISSUE A NOTICE U/S 153C AND NO SATI SFACTION IS RECORDED BY THE ASSESSING OFFICER BEFORE THE ISSUE OF NOTICE U/S 153C AND THEREFORE THE NOTICE ISSUED U/S 153C IS ILLEGAL INVALID AND UNTENABLE- IN LAW AND THEREFORE IT I S REQUESTED THAT THE ASSESSMENTS MADE ON THE BASIS SUCH ILLEGAL NOTICE BE KINDLY QUASHED. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE AR. IN A NUTSHELL THE A R HAS STATED THAT THE NOTICE U/S 153C IS ISSUED WITHOUT RECORDIN G THE SATISFACTION BEFORE THE ISSUE OF NOTICE AND THSAT N O INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE WA S FOUND DURING THE SEARCH OF ANY PERSON OR PREMISES. IN SU PPORT OF HIS CLAIM HE HAS RELIED UPON THE FOLLOWING DECISIONS :- (XVI) MANISH MAHESHWARI VS. ITAT AS REPORTED ON (2007) 208 CTR 97 S.C. 42 (XVII) NEW DELHI AUTO FINANCE (P) LTD. VS. AS REPORTED ON (2008) 300 ITR 83 DELHI. (XVIII) CIT VS. S.G. ANGIDI CHETTIAR AS REPORTED ON (1962) 44 ITR 739 S.C. (XIX) D.M. MANSARI VS. CIT AS REPORTEDON (1972) 86 ITR 55 7. (XX) BHAWANT FINANCE CO. LTD. VS. CIT AS REPORTED ON (2006) 280 ITR 412 DELHI. I HAVE CALLED FOR THE COMPLETE RECORD OF THE APPELL ANT AS WELL AS THE SEARCHED PERSONS. I FIND THAT NO SATISFACTI ON HAS BEEN RECORDED BY THE ASSESSING OFFICER BEFORE THE ISSUE OF NOTICE U/S 153C. I HAVE ALSO GONE THROUGH THE MATERIAL SEIZED FROM THE RESIDENCE OF SHRI DINESH AGRAWAL PRODUCED BEFORE M E BY THE AR. THE SEIZED PAPERS ARE NAMED AS LPS-1 AND THEY CONTAIN 34 PAGES. I MINUTELY EXAMINED EACH AND EVERY PAPER AND I FIND THAT NONE OF THESE PAPERS BELONG TO THE ASSESS EE AND CAN BE SAID TO BELONG TO THE ASSESSEE. I ALSO FIND THA T NO ADDITION OR EVEN OBSERVATIONS HAS BEEN MADE BY THE ASSESSING OFFICER IN ANY OF THE ORDER RIGHT FROM ASSMT. YEAR 2000-01 TO 2006-07 IN CONNECTION WITH ANY MATERIAL FOUND DURING THE CO URSE OF SEARCH. WHEN NO MATERIAL RELATING TO THE ASSESSEE HAS BEEN FOUND FROM THE SEARCHED PERSON NO ACTION U/S 153C C AN BE INITIATED AGAINST THE ASSESSEE. IN THESE CIRCUMSTA NCES IT APPEARS THAT THE REQUIREMENTS OF SECTION 153C ARE N OT FULFILLED AS CLAIMED BY THE AR. THE AR HAS HEAVILY RELIED UP ON THE HONBLE SUPREME COURT DECISION IN THE CASE OF MANIS H MAHESHWARI. THE SAID DECISION HAS BEEN RENDERED IN RELATION TO THE PROVISIONS OF SECTION 158BD WHICH ARE IDENT ICAL TO THE PROVISIONS OF SECTION 153C AS PER DETAILED SUBMISSI ONS OF THE ASSESSEE. I DO NOT FIND THAT WITH REGARD TO SATISF ACTION BOTH THE SECTIONS ARE IDENTICAL AND IT SHOULD BE MANDATORY T O RECORD THE SATISFACTION BEFORE THE ISSUE OF NOTICE U/S 153 C IF IT IS NECESSARY TO RECORD THE SATISFACTION BEFORE THE ISS UE OF NOTICE U/S 158BD. IN THIS CONNECTION I HAVE ALSO SEEN THE APPELLATE ORDER OF MY LD. COLLEAGUE CIT(A)-1 JABALPUR IN THE CASE OF M/S HOTEL SONAM & SMART BAR SAGAR ON 22.11.2007 IN APPEAL NO . ACIT-SAGAR/116 TO 122 WHICH HAS BEEN PASSED ON THE FACTS IDENTICAL WITH THE FACTS OF THE ASSESSEE. IN THE S AID CASE ALSO THERE WAS A SEARCH AGAINST THE PARTNERS AND SURVEY IN THE CASE OF THE FIRM AND NO MATERIAL BELONGING TO THE FIRM W AS FOUND FROM THE PREMISES OF THE PARTNERS WHERE THE SEARCH WAS CONDUCTED. I AM SATISFIED THAT ON PLAIN READING OF SECTION 43 153C IT MAY NOT BE NECESSARY TO RECORD THE SATISFA CTION BUT AT LEAST THERE SHOULD BE SOME MATERIAL TO GIVE SATISFA CTION TO THE ASSESSING OFFICER THAT SOME INCRIMINATING MATERIAL INDICATING SOME INCOME HAS BEEN FOUND IN THE SEARCH ACTION. I N THE INSTANT CASE NO MATERIAL BELONGING TO THE ASSESSEE HAS BEEN FOUND IN THE SEARCH. IN FACT THERE WAS NO MATERIA L WHICH COULD HAVE SATISFIED THE ASSESSING OFFICER TO ISSUE THE NOTICE U/S 153C AND NO SATISFACTION HAS BEEN RECORDED. IN VIEW OF THESE FACTS I HOLD THAT THE INVOKING OF SECTION 15 3C AGAINST THE ASSESSEE WAS BAD IN LAW AND THE NOTICE ISSUED U /S 153C WAS ILLEGAL. THE PROCEEDINGS U/S 153C IS AB-INITIO NULL AND VOID. THE ASSESSMENT MADE IN CONSEQUENCE TO THE ILL EGAL NOTICE U/S 153C FOR ALL THE ASSMT. YEARS ARE HEREBY QUASHED AND ACCORDINGLY THE GROUND NO. 1 OF THE APPEAL IS ALLOWED. 30. SO FAR AS THE GROUND RELATING TO REJECTION OF B OOKS OF ACCOUNTS IS CONCERNED THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) MADE THE FOLLOWING OBSERVATIONS :- I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE AR. I FIND FORCE IN THE SUBMISSI ONS OF THE ASSESSEE WHICH ARE SUPPORTED BY THE ABOVESAID COURT DECISIONS. I AGREE WITH THE AR THAT A/C BOOKS OF TH E ASSESSEE SHOULD NOT BE REJECTED WITHOUT ANY BASIS. HOWEVER I AM OF THE OPINION THAT THERE IS SOME MATERIAL AND THEN THE AD DITIONS RELATING TO SAID MATERIAL MAY BE MADE IN THE HANDS OF THE ASSESSEE. IN THE RESULT THE GROUND OF THE APPEAL IS PARTLY ALLOWED. 31. THE ADDITION OF RS. 1 15 61 918/- MADE BY THE ASSES SING OFFICER ON ACCOUNT OF UNEXPLAINED PURCHASES U/S 69C OF THE ACT WAS DELETED BY THE LEARNED COMMISSIONER OF INCOMETAX (A PPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS :- I HAVE GONE THROUGH THE ASSMT . ORDER AS WELL AS THE WRITTEN SUBMISSIONS OF THE APPELLANT. I FIND T HAT THE ASSESSING OFFICER HAS TREATED THE PURCHASES MADE FR OM THE SRD STEEL (P) LTD. AS BOGUS. HE ALSO TREATED 1 /4 TH PORTION OF OTHER PURCHASES ALSO AS BOGUS FOR ALL TH E 44 ASST. YEARS AS INDICATED IN THE CHART ABOVE. HE HAS GIVEN THE REASON THAT EVEN AFTER A NOTICE U/S 131 T O M/S SRD STEEL NOBODY ATTENDED ON THEIR BEHALF AND THE OTHER PARTIES I.E. KATHURIA TRADE COMPANY AND TIRUPATHY STEEL TRADERS ALSO DID NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 133(6) AND THEREFORE HE DISALLOWED ALL THE PURCHASES MADE FROM SRD STEEL AN D ALSO DISALLOWED 1/4 TH PORTION OF OTHER PURCHASES AS IN LINE WITH OTHER FIRMS OF THE CONCERNS OF THE GROUP. I HAVE SEEN THE COPY OF THE NOTICE ISSUED U/S 131 ON 23.11.2007 TO SRD STEEL WHICH IS SAID TO HAVE BEEN SENT BY THE AO CALLING FOR CONFIRMATION OF THE SALES MAD E BY HIM. I AM OF THE OPINION THAT SIMPLY BECAUSE SOME PERSON DOES NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 131 OR U/S 133(6) NO ADVERSE INFERENCE CAN BE DRAWN SIMPLY FOR HIS NON ATTENDANCE. IN THE GIVEN FACTS AND CIRCUMSTANCES I AM FORTIFIED BY THE DECISION OF TH E HONOURABLE SUPREME COURT IN THE CASE OF ANEES AHEMAD & SONS VS. CIT AS REPORTED IN (2008) 297 ITR 441 SC. THE AR HAS FILED THE COPIES OF ACCOUNT OF ALL THE SUPPLIERS IN THE ASSMT. YEAR 2000-01 BEFORE ME AS A SAMPLE WHICH WERE ALSO AVAILABLE BEFORE THE ASSESSI NG OFFICER. I FIN THAT ALL THE PAYMENTS ARE MADE THROU GH CHEQUES AND THE MATERIAL HAS BEEN RECEIVED THROUGH TRANSPORT LRS. THE ASSESSEE PRODUCES EXCISABLE ITE MS AND CLAIMS CENVAT CREDITS. THE CHARGE OF THE ASSESS ING OFFICER THAT THE CHEQUE PAYMENTS MADE TO THE SUPPLI ERS ARE RECEIVED BACK IN CASH HAS NO BASIS AND HE HAS N OT POINTED OUT ANY DEFECTS IN THE ACCOUNT BOOKS AND HA S MADE HUGE DISALLOWANCE FROM PURCHASES ON VERY FLIMS Y GROUNDS AND THEREFORE THESE DISALLOWANCE CANNOT B E SUSTAINED. ACCORDINGLY THE APPELLANT GETS THE REL IEF OF RS.99 23 043/- IN THE ASMT. YEAR 2000-01 RS. 80 73 129/- IN THE ASMT. YEAR 2001-02 RS. 37 45 73 9/- IN THE ASMT. YEAR 2002-03 RS. 50 45 344/- IN THE A SMT. YEAR 2003-04 RS. 1 15 61 918/- IN THE ASMT. YEAR 2 004- 05 RS. 95 66 324/- IN THE ASMT. YEAR 2005-06 AND R S. 1 04 16 240/- IN THE ASMT. YEAR 2006-07. ACCORDING LY GROUND NO. 5 & 6 FOR ASSMT. YEAR 2003-04 AND GROUND NO. 4 & 5 FOR ALL OTHER ASSMT. YEARS ARE ALLOWED. 32. THE ADDITION OF RS. 7 24 223/- MADE BY THE ASSE SSING OFFICER U/S 69C OF THE ACT ON ACCOUNT OF BOGUS FABRICATION EXPENSES 45 PURCHASES WAS DELETED BY THE LEARNED COMMISSIONER O F INCOMETAX (APPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS : - ON PERUSAL OF THE ABOVE SAID SECTIONS IT MAY BE SEEN THAT THE ADDITIONS U/S 69C CAN BE MADE WHEN IT IS FOUND BY THE ASSESSING OFFICER THAT THE APPELLANT H AS INCURRED THE EXPENDITURE AND HE IS UNABLE TO EXPLAI N THE SOURCE OF SUCH EXPENDITURE. IN THE INSTANT CASE T HE ASSESSING OFFICER HAS NOT FOUND ANY EXPENDITURE WHI CH CAN BE SAID TO BE UNEXPLAINED. IN FACT THE APPELL ANT HAS SHOWN THE EXPENDITURE IN THE FORM OF FABRICATIO N EXPENSES AND THE LD. ASSESSING OFFICER IS OF THE OP INION THAT THE APPELLANT HAS NOT INCURRED THE EXPENDITURE ON FABRICATION. ON THE ABOVE FACTS IT MAY BE SEEN TH AT THE PROVISIONS OF SEC. 69C OF THE IT ACT ARE NOT ATTRAC TED. ON PERUSAL OF THE ASSESSMENT ORDER FOR ALL THE ASSESSMENT YEARS AND THE DETAILED SUBMISSIONS OF TH E AR I FIND THAT THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE OF 1/5 TH OF THE FABRICATION EXPENSES IN A VERY CASUAL MANNER. IN THE ASSESSMENT YEAR 2000-01 HE SIMPLY STATES THAT 1/5 TH OF THE FABRICATION EXPENSES ARE BOGUS. IN OTHER ASSMT. YEARS HE STATES THAT HE IS MAKING THE DISALLOWANCE ON THE BASIS THE REASON GIVEN BY H IM IN THE ASSMT. YEAR 2000-01. I HAVE SEEN THAT THE APPELLANT HAS MAINTAINED THE REGULAR BOOKS OF ACCOU NTS WHICH HAVE BEEN DULY AUDITED. WHENEVER THE APPELLA NT MADE THE PAYMENT TO THE FABRICATORS PROPER DEDUCTIO NS OF TDS HAS BEEN MADE AND SUBSTANTIAL PAYMENTS TO TH E FABRICATORS ARE MADE THROUGH THE CHEQUE. ON THESE FACTS IT IS VERY DIFFICULT TO MAINTAIN THE DISALLO WANCE MADE BY THE ASSESSING OFFICER IN ALL THE ASSMT. YEA RS AND ACCORDINGLY THE DISALLOWANCE FOR ALL THE ASSMT . YEARS ARE REMOVED. IN THE RESULT APPELLANT GETS T HE RELIEF OF RS. 2 60 146/- IN THE ASSMT. YEAR 2000-01 RS.1 44 293/- IN THE ASSMT. YEAR 2001-02 RS. 1 40 415/- IN THE ASSMT. YEAR 2002-03 RS. 4 56 898/- IN THE A SSMT. YEAR 2003-04 RS.7 24 223/- IN THE ASSMT. YEAR 2004 - 05 RS. 11 07 451/- IN THE ASSMT. YEAR 2005-06 AND RS. 6 59 164/- IN THE ASSMT. YEAR 2006-07. IN THE RESU LT GROUND NO. 6 FOR ALL ASSMT. YEARS ARE ALLOWED. 33. ITA NO. 187/I ND/2008 46 THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) QU ASHED THE ASSESSMENT PROCEEDINGS INITIATED BY THE 153C OF THE ACT WITH THE FOLLOWING OBSERVATIONS :- I HAVE CAREFULLY CONSIDERED THE FACTS ON RECORD A ND THE SUBMISSIONS MADE BY THE RIVAL PARTIES. FIRST OF AL L IT IS NOTED THAT THE SECTION 153C AFFECTS THE SUBSTANTIVE RIGHT S OF A PERSON IN SO FAR AS A PERSON WHO HAS NOT BEEN SEARCHED IS MADE YTO FACE THE HARSH CONSEQUENCES OF REOPENING OF SIX YEA RS CASES. THIS SECTION THUS CANNOT BE GIVEN A LIBERAL INTERPR ETATION SINCE IF IT IS SO DONE THEN THE PROCEEDINGS UNDER THIS S ECTION CAN BE INITIATED AGAINST A PERSON NOT SEARCHED MERELY ON T HE GROUND THAT SOME ACCOUNT OR EVEN A BANK STATEMENT OF THE P ERSON HAS BEEN FOUND IN A SEARCH ACTION. IF IN SUCH A CASE I NVOKING OF SECTION 153C IS HELD TO BE JUSTIFIED THEN THIS SEC TION CAN BECOME A READY TOOK FOR REOPENING SIX YEAR CASES ON ANY PRETEXT OF A PERSON WHO HAD SOME DEALING WITH THE PERSON SEARCHED. THE LD. AR HAS ARGUED THAT BEFORE INVOKIN G SECTION 153C THERE HAS TO BE SOME MATERIAL ON RECORD TO COM E OUT OF THE PRESUMPTION OF SEC. 292C AND WHICH IS POSSIBLE ONLY AFTER CONFRONTING THE IMPUGNED MATERIAL TO THE PERSON SEA RCHED. BUT NO SUCH FINDING OF PRESUMPTION NOT BEING APPLICABLE HAS BEEN GIVEN BEFORE INVOKING SECTION 153C. I FIND SOME ME RIT IN THIS CLAIM. FURTHER I ALSO FIND THAT THE SATISFACTIONS RECORDED IN MARCH 2006 FOR ALL THE SEVEN YEARS WERE WITHOUT AP PLICATION OF MIND AS IS EVIDENT FROM THE FACT THAT IN ALL THE OTHER 12 CASES INVOLVING ABOUT 40 ASSESSMENTS THE ASSESSING OFFICER HAS RECORDED IDENTICAL STEREO TYPE SATISFACTION BY STATING THAT DURING SEARCH ACTIONS CARRIED OUT IN DECEMBER 2003 IN THE CASES OF SANTOSH KUMAR SAHU AND OTHERS INCRIMINATIN G DOCUMENTS PERTAINING TO EACH OF THE YEARS WERE FOUN D AND SEIZED WHEREAS THE FACT IS THAT IN SOME OF THE YEAR S OF SOME OF THOSE CONCERNS WERE NOT IN EXISTENCE. HOWEVER THE SE FACTS BY THEMSELVES COULD NOT BE REGARDED TO BE A SUFFICIENT GROUND TO HOLD THE INVOKING OF SECTION 153C WAS ILLEGAL. IT IS BECAUSAE OF THE REASON THAT ON A PLAIN READING OF SEC. 153C IT DOES NOT TRANSPIRE THAT RECORDING OF A SATISFACTION IS A MUS T. BUT AT THE SAME TIME IT IS ALSO TO HOLD THAT IT DOES NOT MEAN THAT REQUIRED SATISFACTION COULD BE HIGHLY SUBJECTIVE NOT OPEN TO SECURITY BY THE APPELLATE AUTHORITIES. THE MINIMUM REQUIREMENT TO JUSTIFY THE INVOKING OF SECT. 153C IS THAT AT LEASAT IT SHO ULD BE 47 POSSIBLE TO GATHER A SATISFACTION THERE SHOULD BE SOME EIZED RECORD PERTAINING TO THE ASSESSEE WHICH HAD BEEN FO UND IN A SEARCH ACTION. FURTHER THE SAME SHOULD HAVE ALSO B EEN CONFRONTED TO THE ASSESSEE. BUT DURING THE ASSESSM ENT PROCEEDINGS NO SEIZED RECORD PERTAINING TO THE ASSE SSEE WAS CONFRONTED TO HIM. WHAT WERE CONFRONTED WERE THE O CUMENTS IMPOUNDED DURING THE SURVEY ACTION CONDUCTED AT ITS OFFICE. IN VIEW OF THESE FACTS IT IS HELD THAT THE INVOKING O F SECTION 153C AGAINST THE ASSESSEE WAS BAD IN LAW. THE PROCEEDING S SO INITIATED THEREFORE ARE HELD TO BE VOID AB INITIO AND ALL THE ASSESSMENTS THEREFORE ARE DECLARED AB INITIO NULL AND VOID. AS PER THE AR IT MAY BE APPRECIATED THAT THERE IS ABSOLUTELY NO INCRIMINATING MATERIAL BELONGING TO THE APPELLAN T FOUND DURING THE COURSE OF SEARCH AT THE PREMISES OF THE SEARCHED PERSON AND THERE IS NO SATISFACTION OR EVEN THE BAS IS FOR SATISFACTION TO ISSUE A NOTICE U/S 153C AND NO SATI SFACTION IS RECORDED BY THE ASSESSING OFFICER BEFORE THE ISSUE OF NOTICE U/S 153C AND THEREFORE THE NOTICE ISSUED U/S 153C IS ILLEGAL INVALID AND UNTENABLE- IN LAW AND THEREFORE IT I S REQUESTED THAT THE ASSESSMENTS MADE ON THE BASIS SUCH ILLEGAL NOTICE BE KINDLY QUASHED. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE AR. IN A NUTSHELL THE A R HAS STATED THAT THE NOTICE U/S 153C IS ISSUED WITHOUT RECORDIN G THE SATISFACTION BEFORE THE ISSUE OF NOTICE AND THSAT N O INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE WA S FOUND DURING THE SEARCH OF ANY PERSON OR PREMISES. IN SU PPORT OF HIS CLAIM HE HAS RELIED UPON THE FOLLOWING DECISIONS :- (XXI) MANISH MAHESHWARI VS. ITAT AS REPORTED ON (2007) 208 CTR 97 S.C. (XXII) NEW DELHI AUTO FINANCE (P) LTD. VS. AS REPORTED ON (2008) 300 ITR 83 DELHI. (XXIII) CIT VS. S.G. ANGIDI CHETTIAR AS REPORTED ON (1962) 44 ITR 739 S.C. (XXIV) D.M. MANSARI VS. CIT AS REPORTEDON (1972) 86 ITR 55 7. (XXV) BHAWANT FINANCE CO. LTD. VS. CIT AS REPORTED ON (2006) 280 ITR 412 DELHI. I HAVE CALLED FOR THE COMPLETE RECORD OF THE APPELL ANT AS WELL AS THE SEARCHED PERSONS. I FIND THAT NO SATISFACTI ON HAS BEEN RECORDED BY THE ASSESSING OFFICER BEFORE THE ISSUE OF NOTICE U/S 153C. I HAVE ALSO GONE THROUGH THE MATERIAL SEIZED FROM THE RESIDENCE OF SHRI DINESH AGRAWAL PRODUCED BEFORE M E BY THE 48 AR. THE SEIZED PAPERS ARE NAMED AS LPS-1 AND THEY CONTAIN 34 PAGES. I MINUTELY EXAMINED EACH AND EVERY PAPER AND I FIND THAT NONE OF THESE PAPERS BELONG TO THE ASSESS EE AND CAN BE SAID TO BELONG TO THE ASSESSEE. I ALSO FIND THA T NO ADDITION OR EVEN OBSERVATIONS HAS BEEN MADE BY THE ASSESSING OFFICER IN ANY OF THE ORDER RIGHT FROM ASSMT. YEAR 2000-01 TO 2006-07 IN CONNECTION WITH ANY MATERIAL FOUND DURING THE CO URSE OF SEARCH. WHEN NO MATERIAL RELATING TO THE ASSESSEE HAS BEEN FOUND FROM THE SEARCHED PERSON NO ACTION U/S 153C C AN BE INITIATED AGAINST THE ASSESSEE. IN THESE CIRCUMSTA NCES IT APPEARS THAT THE REQUIREMENTS OF SECTION 153C ARE N OT FULFILLED AS CLAIMED BY THE AR. THE AR HAS HEAVILY RELIED UP ON THE HONBLE SUPREME COURT DECISION IN THE CASE OF MANIS H MAHESHWARI. THE SAID DECISION HAS BEEN RENDERED IN RELATION TO THE PROVISIONS OF SECTION 158BD WHICH ARE IDENT ICAL TO THE PROVISIONS OF SECTION 153C AS PER DETAILED SUBMISSI ONS OF THE ASSESSEE. I DO NOT FIND THAT WITH REGARD TO SATISF ACTION BOTH THE SECTIONS ARE IDENTICAL AND IT SHOULD BE MANDATORY T O RECORD THE SATISFACTION BEFORE THE ISSUE OF NOTICE U/S 153 C IF IT IS NECESSARY TO RECORD THE SATISFACTION BEFORE THE ISS UE OF NOTICE U/S 158BD. IN THIS CONNECTION I HAVE ALSO SEEN THE APPELLATE ORDER OF MY LD. COLLEAGUE CIT(A)-1 JABALPUR IN THE CASE OF M/S HOTEL SONAM & SMART BAR SAGAR ON 22.11.2007 IN APPEAL NO . ACIT-SAGAR/116 TO 122 WHICH HAS BEEN PASSED ON THE FACTS IDENTICAL WITH THE FACTS OF THE ASSESSEE. IN THE S AID CASE ALSO THERE WAS A SEARCH AGAINST THE PARTNERS AND SURVEY IN THE CASE OF THE FIRM AND NO MATERIAL BELONGING TO THE FIRM W AS FOUND FROM THE PREMISES OF THE PARTNERS WHERE THE SEARCH WAS CONDUCTED. I AM SATISFIED THAT ON PLAIN READING OF SECTION 153C IT MAY NOT BE NECESSARY TO RECORD THE SATISFA CTION BUT AT LEAST THERE SHOULD BE SOME MATERIAL TO GIVE SATISFA CTION TO THE ASSESSING OFFICER THAT SOME INCRIMINATING MATERIAL INDICATING SOME INCOME HAS BEEN FOUND IN THE SEARCH ACTION. I N THE INSTANT CASE NO MATERIAL BELONGING TO THE ASSESSEE HAS BEEN FOUND IN THE SEARCH. IN FACT THERE WAS NO MATERIA L WHICH COULD HAVE SATISFIED THE ASSESSING OFFICER TO ISSUE THE NOTICE U/S 153C AND NO SATISFACTION HAS BEEN RECORDED. IN VIEW OF THESE FACTS I HOLD THAT THE INVOKING OF SECTION 15 3C AGAINST THE ASSESSEE WAS BAD IN LAW AND THE NOTICE ISSUED U /S 153C WAS ILLEGAL. THE PROCEEDINGS U/S 153C IS AB-INITIO NULL AND VOID. THE ASSESSMENT MADE IN CONSEQUENCE TO THE ILL EGAL 49 NOTICE U/S 153C FOR ALL THE ASSMT. YEARS ARE HEREBY QUASHED AND ACCORDINGLY THE GROUND NO. 1 OF THE APPEAL IS ALLOWED. 34. SO FAR AS THE GROUND RELATING TO REJECTION OF B OOKS OF ACCOUNTS IS CONCERNED THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) MADE THE FOLLOWING OBSERVATIONS :- I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE AR. I FIND FORCE IN THE SUBMISSI ONS OF THE ASSESSEE WHICH ARE SUPPORTED BY THE ABOVESAID COURT DECISIONS. I AGREE WITH THE AR THAT A/C BOOKS OF TH E ASSESSEE SHOULD NOT BE REJECTED WITHOUT ANY BASIS. HOWEVER I AM OF THE OPINION THAT THERE IS SOME MATERIAL AND THEN THE AD DITIONS RELATING TO SAID MATERIAL MAY BE MADE IN THE HANDS OF THE ASSESSEE. IN THE RESULT THE GROUND OF THE APPEAL IS PARTLY ALLOWED. 35. THE ADDITION OF RS. 95 66 324/- MADE BY THE ASSESSI NG OFFICER ON ACCOUNT OF UNEXPLAINED PURCHASES U/S 69C OF THE ACT WAS DELETED BY THE LEARNED COMMISSIONER OF INCOMETAX (A PPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS :- I HAVE GONE THROUGH THE ASSMT . ORDER AS WELL AS THE WRITTEN SUBMISSIONS OF THE APPELLANT. I FIND T HAT THE ASSESSING OFFICER HAS TREATED THE PURCHASES MADE FR OM THE SRD STEEL (P) LTD. AS BOGUS. HE ALSO TREATED 1 /4 TH PORTION OF OTHER PURCHASES ALSO AS BOGUS FOR ALL TH E ASST. YEARS AS INDICATED IN THE CHART ABOVE. HE HAS GIVEN THE REASON THAT EVEN AFTER A NOTICE U/S 131 T O M/S SRD STEEL NOBODY ATTENDED ON THEIR BEHALF AND THE OTHER PARTIES I.E. KATHURIA TRADE COMPANY AND TIRUPATHY STEEL TRADERS ALSO DID NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 133(6) AND THEREFORE HE DISALLOWED ALL THE PURCHASES MADE FROM SRD STEEL AN D ALSO DISALLOWED 1/4 TH PORTION OF OTHER PURCHASES AS IN LINE WITH OTHER FIRMS OF THE CONCERNS OF THE GROUP. I HAVE SEEN THE COPY OF THE NOTICE ISSUED U/S 131 ON 23.11.2007 TO SRD STEEL WHICH IS SAID TO HAVE BEEN SENT BY THE AO CALLING FOR CONFIRMATION OF THE SALES MAD E BY 50 HIM. I AM OF THE OPINION THAT SIMPLY BECAUSE SOME PERSON DOES NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 131 OR U/S 133(6) NO ADVERSE INFERENCE CAN BE DRAWN SIMPLY FOR HIS NON ATTENDANCE. IN THE GIVEN FACTS AND CIRCUMSTANCES I AM FORTIFIED BY THE DECISION OF TH E HONOURABLE SUPREME COURT IN THE CASE OF ANEES AHEMAD & SONS VS. CIT AS REPORTED IN (2008) 297 ITR 441 SC. THE AR HAS FILED THE COPIES OF ACCOUNT OF ALL THE SUPPLIERS IN THE ASSMT. YEAR 2000-01 BEFORE ME AS A SAMPLE WHICH WERE ALSO AVAILABLE BEFORE THE ASSESSI NG OFFICER. I FIN THAT ALL THE PAYMENTS ARE MADE THROU GH CHEQUES AND THE MATERIAL HAS BEEN RECEIVED THROUGH TRANSPORT LRS. THE ASSESSEE PRODUCES EXCISABLE ITE MS AND CLAIMS CENVAT CREDITS. THE CHARGE OF THE ASSESS ING OFFICER THAT THE CHEQUE PAYMENTS MADE TO THE SUPPLI ERS ARE RECEIVED BACK IN CASH HAS NO BASIS AND HE HAS N OT POINTED OUT ANY DEFECTS IN THE ACCOUNT BOOKS AND HA S MADE HUGE DISALLOWANCE FROM PURCHASES ON VERY FLIMS Y GROUNDS AND THEREFORE THESE DISALLOWANCE CANNOT B E SUSTAINED. ACCORDINGLY THE APPELLANT GETS THE REL IEF OF RS.99 23 043/- IN THE ASMT. YEAR 2000-01 RS. 80 73 129/- IN THE ASMT. YEAR 2001-02 RS. 37 45 73 9/- IN THE ASMT. YEAR 2002-03 RS. 50 45 344/- IN THE A SMT. YEAR 2003-04 RS. 1 15 61 918/- IN THE ASMT. YEAR 2 004- 05 RS. 95 66 324/- IN THE ASMT. YEAR 2005-06 AND R S. 1 04 16 240/- IN THE ASMT. YEAR 2006-07. ACCORDING LY GROUND NO. 5 & 6 FOR ASSMT. YEAR 2003-04 AND GROUND NO. 4 & 5 FOR ALL OTHER ASSMT. YEARS ARE ALLOWED. 36. THE ADDITION OF RS. 11 07 451/- MADE BY THE ASS ESSING OFFICER U/S 69C OF THE ACT ON ACCOUNT OF BOGUS FABRICATION EXPENSES WAS DELETED BY THE LEARNED COMMISSIONER OF INCOMETAX (A PPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS :- THE APPELLANT RECEIVED THE QUESTIONNAIRE DATED 31.08.2007 ON 12.09.2007. IN QUESTION NO. 6 OF THE SAID QUESTIONNAIRE THE APPELLANT WAS ASKED TO GIVE THE JUSTIFICATION FOR THE FABRICATION EXPENSES AND THE APPELLANT WAS ASKED TO ADDUCE THE EVIDENCE TO PROVE THE GENUINENESS AND JUSTIFICATION ABOUT THESE FABRICATION EXPENSES THE APPELLANT FILED THE REPLY ON 51 12.10.2007 AND FILED THE COPY OF A/C OF FABRICATION EXPENSES AND COPIES OF SOME OF THE SAMPLE BILLS. TH E APPELLANT ALSO PRODUCED THE CASH BOOK LEDGER AND B ANK A/C BEFORE THE ASSESSING OFFICER. AFTER PRODUCING ALL THE MATERIAL FILED BEFORE THE ASSESSING OFFICER TH E A0PPELLANT GOT AN IMPRESSION THAT THE ASSESSING OFF ICER IS SATISFIED WITH THE SAME AS THE ASSESSING OFFICER NEVER OPENED HIS MIND THAT HE HAD ANY DOUBT ABOUT THE GENUINENESS OF FABRICATION EXPENSES. IN THE CASE O F M/S MECH & FAB INDUSTRIES THE ASSESSING OFFICER HASA REFERRED TO FOUR FABRICATORS WHO DID NOT COMPLY WIT H THE NOTICE U/S 133(6) ISSUED TO THEM. IN FACT THESE P ARTIES WERE NOT THE FABRICATORS OF M/S MECH & FAB INDUSTR IES AT ALL AND ACCORDINGLY THE DISALLOWANCE FOR ALL THE ASSMT. YEARS ARE REMOVED. IN THE RESULT APPELLANT GETS THE RELIEF OF RS. 2 60 146/- IN THE ASSMT. YEAR 200 0-01 RS.1 44 293/- IN THE ASSMT. YEAR 2001-02 RS. 1 40 415/- IN THE ASSMT. YEAR 2002-03 RS. 4 56 898/- IN THE A SSMT. YEAR 2003-04 RS.7 24 223/- IN THE ASSMT. YEAR 2004 - 05 RS. 11 07 451/- IN THE ASSMT. YEAR 2005-06 AND RS. 6 59 164/- IN THE ASSMT. YEAR 2006-07. IN THE RESU LT GROUND NO. 6 FOR ALL ASSMT. YEARS ARE ALLOWED. 37. ITA NO. 188/I ND/2008 THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) QU ASHED THE ASSESSMENT PROCEEDINGS INITIATED BY THE 153C OF THE ACT WITH THE FOLLOWING OBSERVATIONS :- I HAVE CAREFULLY CONSIDERED THE FACTS ON RECORD A ND THE SUBMISSIONS MADE BY THE RIVAL PARTIES. FIRST OF AL L IT IS NOTED THAT THE SECTION 153C AFFECTS THE SUBSTANTIVE RIGHT S OF A PERSON IN SO FAR AS A PERSON WHO HAS NOT BEEN SEARCHED IS MADE YTO FACE THE HARSH CONSEQUENCES OF REOPENING OF SIX YEA RS CASES. THIS SECTION THUS CANNOT BE GIVEN A LIBERAL INTERPR ETATION SINCE IF IT IS SO DONE THEN THE PROCEEDINGS UNDER THIS S ECTION CAN BE INITIATED AGAINST A PERSON NOT SEARCHED MERELY ON T HE GROUND THAT SOME ACCOUNT OR EVEN A BANK STATEMENT OF THE P ERSON HAS BEEN FOUND IN A SEARCH ACTION. IF IN SUCH A CASE I NVOKING OF SECTION 153C IS HELD TO BE JUSTIFIED THEN THIS SEC TION CAN BECOME A READY TOOK FOR REOPENING SIX YEAR CASES ON ANY PRETEXT OF A PERSON WHO HAD SOME DEALING WITH THE PERSON 52 SEARCHED. THE LD. AR HAS ARGUED THAT BEFORE INVOKIN G SECTION 153C THERE HAS TO BE SOME MATERIAL ON RECORD TO COM E OUT OF THE PRESUMPTION OF SEC. 292C AND WHICH IS POSSIBLE ONLY AFTER CONFRONTING THE IMPUGNED MATERIAL TO THE PERSON SEA RCHED. BUT NO SUCH FINDING OF PRESUMPTION NOT BEING APPLICABLE HAS BEEN GIVEN BEFORE INVOKING SECTION 153C. I FIND SOME ME RIT IN THIS CLAIM. FURTHER I ALSO FIND THAT THE SATISFACTIONS RECORDED IN MARCH 2006 FOR ALL THE SEVEN YEARS WERE WITHOUT AP PLICATION OF MIND AS IS EVIDENT FROM THE FACT THAT IN ALL THE OTHER 12 CASES INVOLVING ABOUT 40 ASSESSMENTS THE ASSESSING OFFICER HAS RECORDED IDENTICAL STEREO TYPE SATISFACTION BY STATING THAT DURING SEARCH ACTIONS CARRIED OUT IN DECEMBER 2003 IN THE CASES OF SANTOSH KUMAR SAHU AND OTHERS INCRIMINATIN G DOCUMENTS PERTAINING TO EACH OF THE YEARS WERE FOUN D AND SEIZED WHEREAS THE FACT IS THAT IN SOME OF THE YEAR S OF SOME OF THOSE CONCERNS WERE NOT IN EXISTENCE. HOWEVER THE SE FACTS BY THEMSELVES COULD NOT BE REGARDED TO BE A SUFFICIENT GROUND TO HOLD THE INVOKING OF SECTION 153C WAS ILLEGAL. IT IS BECAUSAE OF THE REASON THAT ON A PLAIN READING OF SEC. 153C IT DOES NOT TRANSPIRE THAT RECORDING OF A SATISFACTION IS A MUS T. BUT AT THE SAME TIME IT IS ALSO TO HOLD THAT IT DOES NOT MEAN THAT REQUIRED SATISFACTION COULD BE HIGHLY SUBJECTIVE NOT OPEN TO SECURITY BY THE APPELLATE AUTHORITIES. THE MINIMUM REQUIREMENT TO JUSTIFY THE INVOKING OF SECT. 153C IS THAT AT LEASAT IT SHO ULD BE POSSIBLE TO GATHER A SATISFACTION THERE SHOULD BE SOME EIZED RECORD PERTAINING TO THE ASSESSEE WHICH HAD BEEN FO UND IN A SEARCH ACTION. FURTHER THE SAME SHOULD HAVE ALSO B EEN CONFRONTED TO THE ASSESSEE. BUT DURING THE ASSESSM ENT PROCEEDINGS NO SEIZED RECORD PERTAINING TO THE ASSE SSEE WAS CONFRONTED TO HIM. WHAT WERE CONFRONTED WERE THE O CUMENTS IMPOUNDED DURING THE SURVEY ACTION CONDUCTED AT ITS OFFICE. IN VIEW OF THESE FACTS IT IS HELD THAT THE INVOKING O F SECTION 153C AGAINST THE ASSESSEE WAS BAD IN LAW. THE PROCEEDING S SO INITIATED THEREFORE ARE HELD TO BE VOID AB INITIO AND ALL THE ASSESSMENTS THEREFORE ARE DECLARED AB INITIO NULL AND VOID. AS PER THE AR IT MAY BE APPRECIATED THAT THERE IS ABSOLUTELY NO INCRIMINATING MATERIAL BELONGING TO THE APPELLAN T FOUND DURING THE COURSE OF SEARCH AT THE PREMISES OF THE SEARCHED PERSON AND THERE IS NO SATISFACTION OR EVEN THE BAS IS FOR SATISFACTION TO ISSUE A NOTICE U/S 153C AND NO SATI SFACTION IS RECORDED BY THE ASSESSING OFFICER BEFORE THE ISSUE OF NOTICE U/S 153C AND THEREFORE THE NOTICE ISSUED U/S 153C IS ILLEGAL INVALID AND UNTENABLE- IN LAW AND THEREFORE IT I S REQUESTED 53 THAT THE ASSESSMENTS MADE ON THE BASIS SUCH ILLEGAL NOTICE BE KINDLY QUASHED. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE AR. IN A NUTSHELL THE A R HAS STATED THAT THE NOTICE U/S 153C IS ISSUED WITHOUT RECORDIN G THE SATISFACTION BEFORE THE ISSUE OF NOTICE AND THSAT N O INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE WA S FOUND DURING THE SEARCH OF ANY PERSON OR PREMISES. IN SU PPORT OF HIS CLAIM HE HAS RELIED UPON THE FOLLOWING DECISIONS :- (XXVI) MANISH MAHESHWARI VS. ITAT AS REPORTED ON (2007) 208 CTR 97 S.C. (XXVII) NEW DELHI AUTO FINANCE (P) LTD. VS. AS REPORTED ON (2008) 300 ITR 83 DELHI. (XXVIII) CIT VS. S.G. ANGIDI CHETTIAR AS REPORTED ON (1962) 44 ITR 739 S.C. (XXIX) D.M. MANSARI VS. CIT AS REPORTEDON (1972) 86 ITR 55 7. (XXX) BHAWANT FINANCE CO. LTD. VS. CIT AS REPORTED ON (2006) 280 ITR 412 DELHI. I HAVE CALLED FOR THE COMPLETE RECORD OF THE APPELL ANT AS WELL AS THE SEARCHED PERSONS. I FIND THAT NO SATISFACTI ON HAS BEEN RECORDED BY THE ASSESSING OFFICER BEFORE THE ISSUE OF NOTICE U/S 153C. I HAVE ALSO GONE THROUGH THE MATERIAL SEIZED FROM THE RESIDENCE OF SHRI DINESH AGRAWAL PRODUCED BEFORE M E BY THE AR. THE SEIZED PAPERS ARE NAMED AS LPS-1 AND THEY CONTAIN 34 PAGES. I MINUTELY EXAMINED EACH AND EVERY PAPER AND I FIND THAT NONE OF THESE PAPERS BELONG TO THE ASSESS EE AND CAN BE SAID TO BELONG TO THE ASSESSEE. I ALSO FIND THA T NO ADDITION OR EVEN OBSERVATIONS HAS BEEN MADE BY THE ASSESSING OFFICER IN ANY OF THE ORDER RIGHT FROM ASSMT. YEAR 2000-01 TO 2006-07 IN CONNECTION WITH ANY MATERIAL FOUND DURING THE CO URSE OF SEARCH. WHEN NO MATERIAL RELATING TO THE ASSESSEE HAS BEEN FOUND FROM THE SEARCHED PERSON NO ACTION U/S 153C C AN BE INITIATED AGAINST THE ASSESSEE. IN THESE CIRCUMSTA NCES IT APPEARS THAT THE REQUIREMENTS OF SECTION 153C ARE N OT FULFILLED AS CLAIMED BY THE AR. THE AR HAS HEAVILY RELIED UP ON THE HONBLE SUPREME COURT DECISION IN THE CASE OF MANIS H MAHESHWARI. THE SAID DECISION HAS BEEN RENDERED IN RELATION TO THE PROVISIONS OF SECTION 158BD WHICH ARE IDENT ICAL TO THE PROVISIONS OF SECTION 153C AS PER DETAILED SUBMISSI ONS OF THE ASSESSEE. I DO NOT FIND THAT WITH REGARD TO SATISF ACTION BOTH THE SECTIONS ARE IDENTICAL AND IT SHOULD BE MANDATORY T O RECORD THE SATISFACTION BEFORE THE ISSUE OF NOTICE U/S 153 C IF IT IS 54 NECESSARY TO RECORD THE SATISFACTION BEFORE THE ISS UE OF NOTICE U/S 158BD. IN THIS CONNECTION I HAVE ALSO SEEN THE APPELLATE ORDER OF MY LD. COLLEAGUE CIT(A)-1 JABALPUR IN THE CASE OF M/S HOTEL SONAM & SMART BAR SAGAR ON 22.11.2007 IN APPEAL NO . ACIT-SAGAR/116 TO 122 WHICH HAS BEEN PASSED ON THE FACTS IDENTICAL WITH THE FACTS OF THE ASSESSEE. IN THE S AID CASE ALSO THERE WAS A SEARCH AGAINST THE PARTNERS AND SURVEY IN THE CASE OF THE FIRM AND NO MATERIAL BELONGING TO THE FIRM W AS FOUND FROM THE PREMISES OF THE PARTNERS WHERE THE SEARCH WAS CONDUCTED. I AM SATISFIED THAT ON PLAIN READING OF SECTION 153C IT MAY NOT BE NECESSARY TO RECORD THE SATISFA CTION BUT AT LEAST THERE SHOULD BE SOME MATERIAL TO GIVE SATISFA CTION TO THE ASSESSING OFFICER THAT SOME INCRIMINATING MATERIAL INDICATING SOME INCOME HAS BEEN FOUND IN THE SEARCH ACTION. I N THE INSTANT CASE NO MATERIAL BELONGING TO THE ASSESSEE HAS BEEN FOUND IN THE SEARCH. IN FACT THERE WAS NO MATERIA L WHICH COULD HAVE SATISFIED THE ASSESSING OFFICER TO ISSUE THE NOTICE U/S 153C AND NO SATISFACTION HAS BEEN RECORDED. IN VIEW OF THESE FACTS I HOLD THAT THE INVOKING OF SECTION 15 3C AGAINST THE ASSESSEE WAS BAD IN LAW AND THE NOTICE ISSUED U /S 153C WAS ILLEGAL. THE PROCEEDINGS U/S 153C IS AB-INITIO NULL AND VOID. THE ASSESSMENT MADE IN CONSEQUENCE TO THE ILL EGAL NOTICE U/S 153C FOR ALL THE ASSMT. YEARS ARE HEREBY QUASHED AND ACCORDINGLY THE GROUND NO. 1 OF THE APPEAL IS ALLOWED. 38. SO FAR AS THE GROUND RELATING TO REJECTION OF B OOKS OF ACCOUNTS IS CONCERNED THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) MADE THE FOLLOWING OBSERVATIONS :- I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE AR. I FIND FORCE IN THE SUBMISSI ONS OF THE ASSESSEE WHICH ARE SUPPORTED BY THE ABOVESAID COURT DECISIONS. I AGREE WITH THE AR THAT A/C BOOKS OF TH E ASSESSEE SHOULD NOT BE REJECTED WITHOUT ANY BASIS. HOWEVER I AM OF THE OPINION THAT THERE IS SOME MATERIAL AND THEN THE AD DITIONS RELATING TO SAID MATERIAL MAY BE MADE IN THE HANDS OF THE ASSESSEE. IN THE RESULT THE GROUND OF THE APPEAL IS PARTLY ALLOWED. 55 39. THE ADDITION OF RS. 1 04 16 240/- MADE BY THE ASSES SING OFFICER ON ACCOUNT OF UNEXPLAINED PURCHASES U/S 69C OF THE ACT WAS DELETED BY THE LEARNED COMMISSIONER OF INCOMETAX (A PPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS :- I HAVE GONE THROUGH THE ASSMT . ORDER AS WELL AS THE WRITTEN SUBMISSIONS OF THE APPELLANT. I FIND T HAT THE ASSESSING OFFICER HAS TREATED THE PURCHASES MADE FR OM THE SRD STEEL (P) LTD. AS BOGUS. HE ALSO TREATED 1 /4 TH PORTION OF OTHER PURCHASES ALSO AS BOGUS FOR ALL TH E ASST. YEARS AS INDICATED IN THE CHART ABOVE. HE HAS GIVEN THE REASON THAT EVEN AFTER A NOTICE U/S 131 T O M/S SRD STEEL NOBODY ATTENDED ON THEIR BEHALF AND THE OTHER PARTIES I.E. KATHURIA TRADE COMPANY AND TIRUPATHY STEEL TRADERS ALSO DID NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 133(6) AND THEREFORE HE DISALLOWED ALL THE PURCHASES MADE FROM SRD STEEL AN D ALSO DISALLOWED 1/4 TH PORTION OF OTHER PURCHASES AS IN LINE WITH OTHER FIRMS OF THE CONCERNS OF THE GROUP. I HAVE SEEN THE COPY OF THE NOTICE ISSUED U/S 131 ON 23.11.2007 TO SRD STEEL WHICH IS SAID TO HAVE BEEN SENT BY THE AO CALLING FOR CONFIRMATION OF THE SALES MAD E BY HIM. I AM OF THE OPINION THAT SIMPLY BECAUSE SOME PERSON DOES NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 131 OR U/S 133(6) NO ADVERSE INFERENCE CAN BE DRAWN SIMPLY FOR HIS NON ATTENDANCE. IN THE GIVEN FACTS AND CIRCUMSTANCES I AM FORTIFIED BY THE DECISION OF TH E HONOURABLE SUPREME COURT IN THE CASE OF ANEES AHEMAD & SONS VS. CIT AS REPORTED IN (2008) 297 ITR 441 SC. THE AR HAS FILED THE COPIES OF ACCOUNT OF ALL THE SUPPLIERS IN THE ASSMT. YEAR 2000-01 BEFORE ME AS A SAMPLE WHICH WERE ALSO AVAILABLE BEFORE THE ASSESSI NG OFFICER. I FIN THAT ALL THE PAYMENTS ARE MADE THROU GH CHEQUES AND THE MATERIAL HAS BEEN RECEIVED THROUGH TRANSPORT LRS. THE ASSESSEE PRODUCES EXCISABLE ITE MS AND CLAIMS CENVAT CREDITS. THE CHARGE OF THE ASSESS ING OFFICER THAT THE CHEQUE PAYMENTS MADE TO THE SUPPLI ERS ARE RECEIVED BACK IN CASH HAS NO BASIS AND HE HAS N OT POINTED OUT ANY DEFECTS IN THE ACCOUNT BOOKS AND HA S MADE HUGE DISALLOWANCE FROM PURCHASES ON VERY FLIMS Y GROUNDS AND THEREFORE THESE DISALLOWANCE CANNOT B E 56 SUSTAINED. ACCORDINGLY THE APPELLANT GETS THE REL IEF OF RS.99 23 043/- IN THE ASMT. YEAR 2000-01 RS. 80 73 129/- IN THE ASMT. YEAR 2001-02 RS. 37 45 73 9/- IN THE ASMT. YEAR 2002-03 RS. 50 45 344/- IN THE A SMT. YEAR 2003-04 RS. 1 15 61 918/- IN THE ASMT. YEAR 2 004- 05 RS. 95 66 324/- IN THE ASMT. YEAR 2005-06 AND R S. 1 04 16 240/- IN THE ASMT. YEAR 2006-07. ACCORDING LY GROUND NO. 5 & 6 FOR ASSMT. YEAR 2003-04 AND GROUND NO. 4 & 5 FOR ALL OTHER ASSMT. YEARS ARE ALLOWED. 40. THE ADDITION OF RS. 6 59 164/- MADE BY THE ASSE SSING OFFICER U/S 69 OF THE ACT ON ACCOUNT OF BOGUS FABRICATION E XPENSES PURCHASES WAS DELETED BY THE LEARNED COMMISSIONER OF INCOMETA X (APPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS :- ON PERUSAL OF THE ABOVE SAID SECTIONS IT MAY BE SEEN THAT THE ADDITIONS U/S 69C CAN BE MADE WHEN IT IS FOUND BY THE ASSESSING OFFICER THAT THE APPELLANT H AS INCURRED THE EXPENDITURE AND HE IS UNABLE TO EXPLAI N THE SOURCE OF SUCH EXPENDITURE. IN THE INSTANT CASE T HE ASSESSING OFFICER HAS NOT FOUND ANY EXPENDITURE WHI CH CAN BE SAID TO BE UNEXPLAINED. IN FACT THE APPELL ANT HAS SHOWN THE EXPENDITURE IN THE FORM OF FABRICATIO N EXPENSES AND THE LD. ASSESSING OFFICER IS OF THE OP INION THAT THE APPELLANT HAS NOT INCURRED THE EXPENDITURE ON FABRICATION. ON THE ABOVE FACTS IT MAY BE SEEN TH AT THE PROVISIONS OF SEC. 69C OF THE IT ACT ARE NOT ATTRAC TED. ON PERUSAL OF THE ASSESSMENT ORDER FOR ALL THE ASSESSMENT YEARS AND THE DETAILED SUBMISSIONS OF TH E AR I FIND THAT THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE OF 1/5 TH OF THE FABRICATION EXPENSES IN A VERY CASUAL MANNER. IN THE ASSESSMENT YEAR 2000-01 HE SIMPLY STATES THAT 1/5 TH OF THE FABRICATION EXPENSES ARE BOGUS. IN OTHER ASSMT. YEARS HE STATES THAT HE IS MAKING THE DISALLOWANCE ON THE BASIS THE REASON GIVEN BY H IM IN THE ASSMT. YEAR 2000-01. I HAVE SEEN THAT THE APPELLANT HAS MAINTAINED THE REGULAR BOOKS OF ACCOU NTS WHICH HAVE BEEN DULY AUDITED. WHENEVER THE APPELLA NT MADE THE PAYMENT TO THE FABRICATORS PROPER DEDUCTIO NS OF TDS HAS BEEN MADE AND SUBSTANTIAL PAYMENTS TO TH E FABRICATORS ARE MADE THROUGH THE CHEQUE. ON THESE 57 FACTS IT IS VERY DIFFICULT TO MAINTAIN THE DISALLO WANCE MADE BY THE ASSESSING OFFICER IN ALL THE ASSMT. YEA RS AND ACCORDINGLY THE DISALLOWANCE FOR ALL THE ASSMT . YEARS ARE REMOVED. IN THE RESULT APPELLANT GETS T HE RELIEF OF RS. 2 60 146/- IN THE ASSMT. YEAR 2000-01 RS.1 44 293/- IN THE ASSMT. YEAR 2001-02 RS. 1 40 415/- IN THE ASSMT. YEAR 2002-03 RS. 4 56 898/- IN THE A SSMT. YEAR 2003-04 RS.7 24 223/- IN THE ASSMT. YEAR 2004 - 05 RS. 11 07 451/- IN THE ASSMT. YEAR 2005-06 AND RS. 6 59 164/- IN THE ASSMT. YEAR 2006-07. IN THE RESU LT GROUND NO. 6 FOR ALL ASSMT. YEARS ARE ALLOWED. 41. ITA NO. 202/I ND/2008 THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCO UNT OF UNEXPLAINED BOGUS PURCHASES AMOUNTING TO RS. 1 44 3 5 300/- WAS DELETED BY THE LEARNED COMMISSIONER OF INCOMETAX (A PPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS :- I HAVE GONE THROUGH THE ASSMT . ORDER AS WELL AS THE WRITTEN SUBMISSIONS OF THE APPELLANT. I FIND T HAT THE ASSESSING OFFICER HAS TREATED THE PURCHASES MADE FR OM THE SRD STEEL (P) LTD. AS BOGUS. HE ALSO TREATED 1 /4 TH PORTION OF OTHER PURCHASES ALSO AS BOGUS FOR ALL TH E ASST. YEARS AS INDICATED IN THE CHART ABOVE. HE HAS GIVEN THE REASON THAT EVEN AFTER A NOTICE U/S 131 T O M/S SRD STEEL NOBODY ATTENDED ON THEIR BEHALF AND THE OTHER PARTIES I.E. KATHURIA TRADE COMPANY AND TIRUPATHY STEEL TRADERS ALSO DID NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 133(6) AND THEREFORE HE DISALLOWED ALL THE PURCHASES MADE FROM SRD STEEL AN D ALSO DISALLOWED 1/4 TH PORTION OF OTHER PURCHASES AS IN LINE WITH OTHER FIRMS OF THE CONCERNS OF THE GROUP. I HAVE SEEN THE COPY OF THE NOTICE ISSUED U/S 131 ON 23.11.2007 TO SRD STEEL WHICH IS SAID TO HAVE BEEN SENT BY THE AO CALLING FOR CONFIRMATION OF THE SALES MAD E BY HIM. I AM OF THE OPINION THAT SIMPLY BECAUSE SOME PERSON DOES NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 131 OR U/S 133(6) NO ADVERSE INFERENCE CAN BE DRAWN SIMPLY FOR HIS NON ATTENDANCE. IN THE GIVEN FACTS AND CIRCUMSTANCES I AM FORTIFIED BY THE DECISION OF TH E 58 HONOURABLE SUPREME COURT IN THE CASE OF ANEES AHEMAD & SONS VS. CIT AS REPORTED IN (2008) 297 ITR 441 SC. THE AR HAS FILED THE COPIES OF ACCOUNT OF ALL THE SUPPLIERS IN THE ASSMT. YEAR 2000-01 BEFORE ME AS A SAMPLE WHICH WERE ALSO AVAILABLE BEFORE THE ASSESSI NG OFFICER. I FIN THAT ALL THE PAYMENTS ARE MADE THROU GH CHEQUES AND THE MATERIAL HAS BEEN RECEIVED THROUGH TRANSPORT LRS. THE ASSESSEE PRODUCES EXCISABLE ITE MS AND CLAIMS CENVAT CREDITS. THE CHARGE OF THE ASSESS ING OFFICER THAT THE CHEQUE PAYMENTS MADE TO THE SUPPLI ERS ARE RECEIVED BACK IN CASH HAS NO BASIS AND HE HAS N OT POINTED OUT ANY DEFECTS IN THE ACCOUNT BOOKS AND HA S MADE HUGE DISALLOWANCE FROM PURCHASES ON VERY FLIMS Y GROUNDS AND THEREFORE THESE DISALLOWANCE CANNOT B E SUSTAINED. ACCORDINGLY THE APPELLANT GETS THE REL IEF OF RS.1 44 35 348/- IN THE ASMT. YEAR 2000-01 RS. 54 50 311/- IN THE ASMT. YEAR 2001-02 RS. 41 89 50 9/- IN THE ASMT. YEAR 2002-03 RS. 50 71 321/- IN THE A SMT. YEAR 2003-04 RS. 86 76 720/- IN THE ASMT. YEAR 200 4- 05 RS. 1 34 29 335/- IN THE ASMT. YEAR 2005-06 AND RS. 1 85 35 284/- IN THE ASMT. YEAR 2006-07. ACCORDING LY GROUND NO. 4 FOR ALL OTHER ASSMT. YEARS ARE ALLOWED . 42. THE ADDITION OF RS. 2 88 660/- MADE BY THE ASSE SSING OFFICER U/S 69C OF THE ACT ON ACCOUNT OF UNEXPLAINED BOGUS FABRICATION EXPENSES WAS DELETED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS : - ON PERUSAL OF THE ABOVE SAID SECTIONS IT MAY BE SEEN THAT THE ADDITIONS U/S 69C CAN BE MADE WHEN IT IS FOUND BY THE ASSESSING OFFICER THAT THE APPELLANT H AS INCURRED THE EXPENDITURE AND HE IS UNABLE TO EXPLAI N THE SOURCE OF SUCH EXPENDITURE. IN THE INSTANT CASE T HE ASSESSING OFFICER HAS NOT FOUND ANY EXPENDITURE WHI CH CAN BE SAID TO BE UNEXPLAINED. IN FACT THE APPELL ANT HAS SHOWN THE EXPENDITURE IN THE FORM OF FABRICATIO N EXPENSES AND THE LD. ASSESSING OFFICER IS OF THE OP INION THAT THE APPELLANT HAS NOT INCURRED THE EXPENDITURE ON FABRICATION. ON THE ABOVE FACTS IT MAY BE SEEN TH AT THE PROVISIONS OF SEC. 69C OF THE IT ACT ARE NOT ATTRAC TED. 59 AFTER PERUSAL OF THE ASSESSMENT ORDER FOR ALL THE ASSESSMENT YEARS AND THE DETAILED SUBMISSIONS OF TH E AR I FIND THAT THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE OF 1/5 TH OF THE FABRICATION EXPENSES IN A VERY CASUAL MANNER. IN ALL THE ASSMT. YEARS HE STAT ES THAT HE IS MAKING THE DISALLOWANCE ON THE BASIS THE REASONS GIVEN BY HIM IN THE ASSMT. YEAR 2000-01 IN THE ORDER FOR THE ASST. YEAR 2000-01 HE STATED THAT HE SENT THE NOTICES TO SOME OF THE FABRICATORS BUT NOTICES SENT TO THE FOLLOWING FABRICATORS WERE RECEIVED BACK WITHOU T SERVICE. THESE FABRICATORS ARE AS UNDER :- 1. M/S R.A. FABRICATORS 2. SHREE BALAJI FABRICATORS 3. D.D. FABRICATORS 4. ALAK INDUSTRIES. THE ASSESSEE HAS FILED THE COPIES OF ACCOUNT OF ALL THE FABRICATORS BEFORE THE ASSESSING OFFICER AND HAS AL SO PRODUCED THE SAME BEFORE ME THE COPIES OF ACCOUNTS FOR THE A.Y. 2000-01 ARE FILED BEFORE ME AND ARE ON REC ORD. I FIND THAT THE ABOVE SAID FABRICATORS HAVE NEVER W ORKED FOR THE ASSESSEE AS EVIDENT FROM RECORD AVAILABLE B EFORE THE ASSESSING OFFICER. I HAVE SEEN THAT THE APPELL ANT HAS MAINTAINED THE REGULAR BOOKS OF ACCOUNTS WHICH HAVE BEEN DULY AUDITED. WHENEVER THE APPELLANT MAD E THE PAYMENT TO THE FABRICATORS PROPER DEDUCTIONS OF TDS HAS BEEN MADE AND SUBSTANTIAL PAYMENTS TO THE FABRICATORS ARE MADE THROUGH THE CHEQUE. ON THESE FACTS IT IS VERY DIFFICULT TO MAINTAIN THE DISALLO WANCE OF THE 1/5 TH OF THE FABRICATION EXPENSES ASMADE BY THE ASSESSING OFFICER IN ALL THE ASSMT. YEARS AND ACCORDINGLY THE DISALLOWANCE FOR ALL THE ASSMT. YE ARS ARE REMOVED. IN THE RESULT APPELLANT GETS THE REL IEF OF RS. 2 88 660/- IN THE ASSMT. YEAR 2000-01 RS. 84 2 28/- IN THE ASSMT. YEAR 2001-02 RS. 2 18 832/- IN THE A SSMT. YEAR 2002-03 RS. 4 38 626/- IN THE ASSMT. YEAR 200 3- 04 RS. 9 17 836/- IN THE ASSMT. YEAR 2004-05 RS. 12 32 726/- IN THE ASSMT. YEAR 2005-06 AND RS. 20 24 982/- IN THE ASSMT. YEAR 2006-07. IN THE RES ULT GROUND NO. 5 FOR ALL ASSMT. YEARS ARE ALLOWED. 43. ITA NO. 203/I ND/2008 60 THE ADDITION OF RS. 54 50 311/- MADE BY THE ASSESSI NG OFFICER U/S 69C OF THE ACT ON ACCOUNT OF UNEXPLAINED BOGUS PURCHASES WAS DELETED BY THE LEARNED COMMISSIONER OF INCOMETAX (A PPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS :- I HAVE GONE THROUGH THE ASSMT . ORDER AS WELL AS THE WRITTEN SUBMISSIONS OF THE APPELLANT. I FIND THAT THE ASSESSING OFFICER HAS TREATED THE PURCHASES MADE FR OM THE SRD STEEL (P) LTD. AS BOGUS. HE ALSO TREATED 1/4 TH PORTION OF OTHER PURCHASES ALSO AS BOGUS FOR ALL THE ASST. YEA RS AS INDICATED IN THE CHART ABOVE. HE HAS GIVEN THE REAS ON THAT EVEN AFTER A NOTICE U/S 131 TO M/S SRD STEEL NOBODY ATTENDED ON THEIR BEHALF AND THE OTHER PARTIES I.E. KATHURIA TRADE COMPANY AND TIRUPATHY STEEL TRADERS ALSO DID NOT AT TEND IN COMPLIANCE TO THE NOTICE U/S 133(6) AND THEREFORE HE DISALLOWED ALL THE PURCHASES MADE FROM SRD STEEL AN D ALSO DISALLOWED 1/4 TH PORTION OF OTHER PURCHASES AS IN LINE WITH OTHER FIRMS OF THE CONCERNS OF THE GROUP. I HAVE S EEN THE COPY OF THE NOTICE ISSUED U/S 131 ON 23.11.2007 TO SRD STEEL WHICH IS SAID TO HAVE BEEN SENT BY THE AO CALLING F OR CONFIRMATION OF THE SALES MADE BY HIM. I AM OF THE OPINION THAT SIMPLY BECAUSE SOME PERSON DOES NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 131 OR U/S 133(6) NO A DVERSE INFERENCE CAN BE DRAWN SIMPLY FOR HIS NON ATTENDANC E. IN THE GIVEN FACTS AND CIRCUMSTANCES I AM FORTIFIED BY TH E DECISION OF THE HONOURABLE SUPREME COURT IN THE CASE OF ANEE S AHEMAD & SONS VS. CIT AS REPORTED IN (2008) 297 ITR 441 SC. THE AR HAS FILED THE COPIES OF ACCOUNT OF ALL THE SUPPLIERS IN THE ASSMT. YEAR 2000-01 BEFORE ME AS A SAMPLE WHICH WERE ALSO AVAILABLE BEFORE THE ASSESSING OFFI CER. I FIN THAT ALL THE PAYMENTS ARE MADE THROUGH CHEQUES AND THE MATERIAL HAS BEEN RECEIVED THROUGH TRANSPORT LRS. THE ASSESSEE PRODUCES EXCISABLE ITEMS AND CLAIMS CENVAT CREDITS. THE CHARGE OF THE ASSESSING OFFICER THAT THE CHEQUE PAYMENTS MADE TO THE SUPPLIERS ARE RECEIVED BACK IN CASH HAS NO BASIS AND HE HAS NOT POINTED OUT ANY DEFECTS IN THE ACCOUNT BOOKS AND HAS MADE HUGE DISALLOWANCE FROM PURCHASES ON VERY FLIMSY GROUNDS AND THEREFORE TH ESE DISALLOWANCE CANNOT BE SUSTAINED. ACCORDINGLY THE APPELLANT GETS THE RELIEF OF RS.1 44 35 348/- IN TH E ASMT. YEAR 2000-01 RS. 54 50 311/- IN THE ASMT. YEAR 2001-02 RS. 61 41 89 509/- IN THE ASMT. YEAR 2002-03 RS. 50 71 32 1/- IN THE ASMT. YEAR 2003-04 RS. 86 76 720/- IN THE ASMT. YE AR 2004- 05 RS. 1 34 29 335/- IN THE ASMT. YEAR 2005-06 AND RS. 1 85 35 284/- IN THE ASMT. YEAR 2006-07. ACCORDING LY GROUND NO. 4 FOR ALL OTHER ASSMT. YEARS ARE ALLOWED . 44. THE ADDITION OF RS. 84 228/- MADE BY THE ASSESS ING OFFICER U/S 69C OF THE ACT ON ACCOUNT OF UNEXPLAINED BOGUS FABRICATION EXPENSES WAS DELETED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS : - ON PERUSAL OF THE ABOVE SAID SECTIONS IT MAY BE SEEN THAT THE ADDITIONS U/S 69C CAN BE MADE WHEN IT IS FOUND BY THE ASSESSING OFFICER THAT THE APPELLANT H AS INCURRED THE EXPENDITURE AND HE IS UNABLE TO EXPLAI N THE SOURCE OF SUCH EXPENDITURE. IN THE INSTANT CASE T HE ASSESSING OFFICER HAS NOT FOUND ANY EXPENDITURE WHI CH CAN BE SAID TO BE UNEXPLAINED. IN FACT THE APPELL ANT HAS SHOWN THE EXPENDITURE IN THE FORM OF FABRICATIO N EXPENSES AND THE LD. ASSESSING OFFICER IS OF THE OP INION THAT THE APPELLANT HAS NOT INCURRED THE EXPENDITURE ON FABRICATION. ON THE ABOVE FACTS IT MAY BE SEEN TH AT THE PROVISIONS OF SEC. 69C OF THE IT ACT ARE NOT ATTRAC TED. AFTER PERUSAL OF THE ASSESSMENT ORDER FOR ALL THE ASSESSMENT YEARS AND THE DETAILED SUBMISSIONS OF TH E AR I FIND THAT THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE OF 1/5 TH OF THE FABRICATION EXPENSES IN A VERY CASUAL MANNER. IN ALL THE ASSMT. YEARS HE STAT ES THAT HE IS MAKING THE DISALLOWANCE ON THE BASIS THE REASONS GIVEN BY HIM IN THE ASSMT. YEAR 2000-01 IN THE ORDER FOR THE ASST. YEAR 2000-01 HE STATED THAT HE SENT THE NOTICES TO SOME OF THE FABRICATORS BUT NOTICES SENT TO THE FOLLOWING FABRICATORS WERE RECEIVED BACK WITHOU T SERVICE. THESE FABRICATORS ARE AS UNDER :- 5. M/S R.A. FABRICATORS 6. SHREE BALAJI FABRICATORS 7. D.D. FABRICATORS 8. ALAK INDUSTRIES. 62 THE ASSESSEE HAS FILED THE COPIES OF ACCOUNT OF ALL THE FABRICATORS BEFORE THE ASSESSING OFFICER AND HAS AL SO PRODUCED THE SAME BEFORE ME THE COPIES OF ACCOUNTS FOR THE A.Y. 2000-01 ARE FILED BEFORE ME AND ARE ON REC ORD. I FIND THAT THE ABOVE SAID FABRICATORS HAVE NEVER W ORKED FOR THE ASSESSEE AS EVIDENT FROM RECORD AVAILABLE B EFORE THE ASSESSING OFFICER. I HAVE SEEN THAT THE APPELL ANT HAS MAINTAINED THE REGULAR BOOKS OF ACCOUNTS WHICH HAVE BEEN DULY AUDITED. WHENEVER THE APPELLANT MAD E THE PAYMENT TO THE FABRICATORS PROPER DEDUCTIONS OF TDS HAS BEEN MADE AND SUBSTANTIAL PAYMENTS TO THE FABRICATORS ARE MADE THROUGH THE CHEQUE. ON THESE FACTS IT IS VERY DIFFICULT TO MAINTAIN THE DISALLO WANCE OF THE 1/5 TH OF THE FABRICATION EXPENSES ASMADE BY THE ASSESSING OFFICER IN ALL THE ASSMT. YEARS AND ACCORDINGLY THE DISALLOWANCE FOR ALL THE ASSMT. YE ARS ARE REMOVED. IN THE RESULT APPELLANT GETS THE REL IEF OF RS. 2 88 660/- IN THE ASSMT. YEAR 2000-01 RS. 84 2 28/- IN THE ASSMT. YEAR 2001-02 RS. 2 18 832/- IN THE A SSMT. YEAR 2002-03 RS. 4 38 626/- IN THE ASSMT. YEAR 200 3- 04 RS. 9 17 836/- IN THE ASSMT. YEAR 2004-05 RS. 12 32 726/- IN THE ASSMT. YEAR 2005-06 AND RS. 20 24 982/- IN THE ASSMT. YEAR 2006-07. IN THE RES ULT GROUND NO. 5 FOR ALL ASSMT. YEARS ARE ALLOWED. 45. ITA NO. 204/I ND/2008 THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCO UNT OF UNEXPLAINED BOGUS PURCHASES AMOUNTING TO RS. 41 89 479/- WAS DELETED BY THE LEARNED COMMISSIONER OF INCOMETAX (A PPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS :- I HAVE GONE THROUGH THE ASSMT . ORDER AS WELL AS THE WRITTEN SUBMISSIONS OF THE APPELLANT. I FIND T HAT THE ASSESSING OFFICER HAS TREATED THE PURCHASES MADE FR OM THE SRD STEEL (P) LTD. AS BOGUS. HE ALSO TREATED 1 /4 TH PORTION OF OTHER PURCHASES ALSO AS BOGUS FOR ALL TH E ASST. YEARS AS INDICATED IN THE CHART ABOVE. HE HAS GIVEN THE REASON THAT EVEN AFTER A NOTICE U/S 131 T O M/S SRD STEEL NOBODY ATTENDED ON THEIR BEHALF AND THE OTHER PARTIES I.E. KATHURIA TRADE COMPANY AND 63 TIRUPATHY STEEL TRADERS ALSO DID NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 133(6) AND THEREFORE HE DISALLOWED ALL THE PURCHASES MADE FROM SRD STEEL AN D ALSO DISALLOWED 1/4 TH PORTION OF OTHER PURCHASES AS IN LINE WITH OTHER FIRMS OF THE CONCERNS OF THE GROUP. I HAVE SEEN THE COPY OF THE NOTICE ISSUED U/S 131 ON 23.11.2007 TO SRD STEEL WHICH IS SAID TO HAVE BEEN SENT BY THE AO CALLING FOR CONFIRMATION OF THE SALES MAD E BY HIM. I AM OF THE OPINION THAT SIMPLY BECAUSE SOME PERSON DOES NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 131 OR U/S 133(6) NO ADVERSE INFERENCE CAN BE DRAWN SIMPLY FOR HIS NON ATTENDANCE. IN THE GIVEN FACTS AND CIRCUMSTANCES I AM FORTIFIED BY THE DECISION OF TH E HONOURABLE SUPREME COURT IN THE CASE OF ANEES AHEMAD & SONS VS. CIT AS REPORTED IN (2008) 297 ITR 441 SC. THE AR HAS FILED THE COPIES OF ACCOUNT OF ALL THE SUPPLIERS IN THE ASSMT. YEAR 2000-01 BEFORE ME AS A SAMPLE WHICH WERE ALSO AVAILABLE BEFORE THE ASSESSI NG OFFICER. I FIND THAT ALL THE PAYMENTS ARE MADE THRO UGH CHEQUES AND THE MATERIAL HAS BEEN RECEIVED THROUGH TRANSPORT LRS. THE ASSESSEE PRODUCES EXCISABLE ITE MS AND CLAIMS CENVAT CREDITS. THE CHARGE OF THE ASSESS ING OFFICER THAT THE CHEQUE PAYMENTS MADE TO THE SUPPLI ERS ARE RECEIVED BACK IN CASH HAS NO BASIS AND HE HAS N OT POINTED OUT ANY DEFECTS IN THE ACCOUNT BOOKS AND HA S MADE HUGE DISALLOWANCE FROM PURCHASES ON VERY FLIMS Y GROUNDS AND THEREFORE THESE DISALLOWANCE CANNOT B E SUSTAINED. ACCORDINGLY THE APPELLANT GETS THE REL IEF OF RS.1 44 35 348/- IN THE ASMT. YEAR 2000-01 RS. 54 50 311/- IN THE ASMT. YEAR 2001-02 RS. 41 89 50 9/- IN THE ASMT. YEAR 2002-03 RS. 50 71 321/- IN THE A SMT. YEAR 2003-04 RS. 86 76 720/- IN THE ASMT. YEAR 200 4- 05 RS. 1 34 29 335/- IN THE ASMT. YEAR 2005-06 AND RS. 1 85 35 284/- IN THE ASMT. YEAR 2006-07. ACCORDING LY GROUND NO. 4 FOR ALL OTHER ASSMT. YEARS ARE ALLOWED . 46. THE ADDITION OF RS. 2 18 832/- MADE BY THE ASSE SSING OFFICER U/S 69C OF THE ACT ON ACCOUNT OF UNEXPLAINED BOGUS FABRICATION EXPENSES WAS DELETED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS : - 64 ON PERUSAL OF THE ABOVE SAID SECTIONS IT MAY BE SEEN THAT THE ADDITIONS U/S 69C CAN BE MADE WHEN IT IS FOUND BY THE ASSESSING OFFICER THAT THE APPELLANT H AS INCURRED THE EXPENDITURE AND HE IS UNABLE TO EXPLAI N THE SOURCE OF SUCH EXPENDITURE. IN THE INSTANT CASE T HE ASSESSING OFFICER HAS NOT FOUND ANY EXPENDITURE WHI CH CAN BE SAID TO BE UNEXPLAINED. IN FACT THE APPELL ANT HAS SHOWN THE EXPENDITURE IN THE FORM OF FABRICATIO N EXPENSES AND THE LD. ASSESSING OFFICER IS OF THE OP INION THAT THE APPELLANT HAS NOT INCURRED THE EXPENDITURE ON FABRICATION. ON THE ABOVE FACTS IT MAY BE SEEN TH AT THE PROVISIONS OF SEC. 69C OF THE IT ACT ARE NOT ATTRAC TED. ON PERUSAL OF THE ASSESSMENT ORDER FOR ALL THE ASSESSMENT YEARS AND THE DETAILED SUBMISSIONS OF TH E AR I FIND THAT THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE OF 1/5 TH OF THE FABRICATION EXPENSES IN A VERY CASUAL MANNER. IN ALL THE ASSMT. YEARS HE STAT ES THAT HE IS MAKING THE DISALLOWANCE ON THE BASIS THE REASONS GIVEN BY HIM IN THE ASSMT. YEAR 2000-01 IN THE ORDER FOR THE ASST. YEAR 2000-01 HE STATED THAT HE SENT THE NOTICES TO SOME OF THE FABRICATORS BUT NOTICES SENT TO THE FOLLOWING FABRICATORS WERE RECEIVED BACK WITHOU T SERVICE. THESE FABRICATORS ARE AS UNDER :- 9. M/S R.A. FABRICATORS 10. SHREE BALAJI FABRICATORS 11. D.D. FABRICATORS 12. ALAK INDUSTRIES. THE ASSESSEE HAS FILED THE COPIES OF ACCOUNT OF ALL THE FABRICATORS BEFORE THE ASSESSING OFFICER AND HAS AL SO PRODUCED THE SAME BEFORE ME THE COPIES OF ACCOUNTS FOR THE A.Y. 2000-01 ARE FILED BEFORE ME AND ARE ON REC ORD. I FIND THAT THE ABOVE SAID FABRICATORS HAVE NEVER W ORKED FOR THE ASSESSEE AS EVIDENT FROM RECORD AVAILABLE B EFORE THE ASSESSING OFFICER. I HAVE SEEN THAT THE APPELL ANT HAS MAINTAINED THE REGULAR BOOKS OF ACCOUNTS WHICH HAVE BEEN DULY AUDITED. WHENEVER THE APPELLANT MAD E THE PAYMENT TO THE FABRICATORS PROPER DEDUCTIONS OF TDS HAS BEEN MADE AND SUBSTANTIAL PAYMENTS TO THE FABRICATORS ARE MADE THROUGH THE CHEQUE. ON THESE FACTS IT IS VERY DIFFICULT TO MAINTAIN THE DISALLO WANCE OF THE 1/5 TH OF THE FABRICATION EXPENSES ASMADE BY THE 65 ASSESSING OFFICER IN ALL THE ASSMT. YEARS AND ACCORDINGLY THE DISALLOWANCE FOR ALL THE ASSMT. YE ARS ARE REMOVED. IN THE RESULT APPELLANT GETS THE REL IEF OF RS. 2 88 660/- IN THE ASSMT. YEAR 2000-01 RS. 84 2 28/- IN THE ASSMT. YEAR 2001-02 RS. 2 18 832/- IN THE A SSMT. YEAR 2002-03 RS. 4 38 626/- IN THE ASSMT. YEAR 200 3- 04 RS. 9 17 836/- IN THE ASSMT. YEAR 2004-05 RS. 12 32 726/- IN THE ASSMT. YEAR 2005-06 AND RS. 20 24 982/- IN THE ASSMT. YEAR 2006-07. IN THE RES ULT GROUND NO. 5 FOR ALL ASSMT. YEARS ARE ALLOWED. 47. ITA NO. 205/I ND/2008 THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCO UNT OF UNEXPLAINED BOGUS PURCHASES U/S 69C OF THE ACT AMOU NTING TO RS. 50 71 320/- WAS DELETED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS : - I HAVE GONE THROUGH THE ASSMT . ORDER AS WELL AS THE WRITTEN SUBMISSIONS OF THE APPELLANT. I FIND T HAT THE ASSESSING OFFICER HAS TREATED THE PURCHASES MADE FR OM THE SRD STEEL (P) LTD. AS BOGUS. HE ALSO TREATED 1 /4 TH PORTION OF OTHER PURCHASES ALSO AS BOGUS FOR ALL TH E ASST. YEARS AS INDICATED IN THE CHART ABOVE. HE HAS GIVEN THE REASON THAT EVEN AFTER A NOTICE U/S 131 T O M/S SRD STEEL NOBODY ATTENDED ON THEIR BEHALF AND THE OTHER PARTIES I.E. KATHURIA TRADE COMPANY AND TIRUPATHY STEEL TRADERS ALSO DID NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 133(6) AND THEREFORE HE DISALLOWED ALL THE PURCHASES MADE FROM SRD STEEL AN D ALSO DISALLOWED 1/4 TH PORTION OF OTHER PURCHASES AS IN LINE WITH OTHER FIRMS OF THE CONCERNS OF THE GROUP. I HAVE SEEN THE COPY OF THE NOTICE ISSUED U/S 131 ON 23.11.2007 TO SRD STEEL WHICH IS SAID TO HAVE BEEN SENT BY THE AO CALLING FOR CONFIRMATION OF THE SALES MAD E BY HIM. I AM OF THE OPINION THAT SIMPLY BECAUSE SOME PERSON DOES NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 131 OR U/S 133(6) NO ADVERSE INFERENCE CAN BE DRAWN SIMPLY FOR HIS NON ATTENDANCE. IN THE GIVEN FACTS AND CIRCUMSTANCES I AM FORTIFIED BY THE DECISION OF TH E HONOURABLE SUPREME COURT IN THE CASE OF ANEES 66 AHEMAD & SONS VS. CIT AS REPORTED IN (2008) 297 ITR 441 SC. THE AR HAS FILED THE COPIES OF ACCOUNT OF ALL THE SUPPLIERS IN THE ASSMT. YEAR 2000-01 BEFORE ME AS A SAMPLE WHICH WERE ALSO AVAILABLE BEFORE THE ASSESSI NG OFFICER. I FIND THAT ALL THE PAYMENTS ARE MADE THRO UGH CHEQUES AND THE MATERIAL HAS BEEN RECEIVED THROUGH TRANSPORT LRS. THE ASSESSEE PRODUCES EXCISABLE ITE MS AND CLAIMS CENVAT CREDITS. THE CHARGE OF THE ASSESS ING OFFICER THAT THE CHEQUE PAYMENTS MADE TO THE SUPPLI ERS ARE RECEIVED BACK IN CASH HAS NO BASIS AND HE HAS N OT POINTED OUT ANY DEFECTS IN THE ACCOUNT BOOKS AND HA S MADE HUGE DISALLOWANCE FROM PURCHASES ON VERY FLIMS Y GROUNDS AND THEREFORE THESE DISALLOWANCE CANNOT B E SUSTAINED. ACCORDINGLY THE APPELLANT GETS THE REL IEF OF RS.1 44 35 348/- IN THE ASMT. YEAR 2000-01 RS. 54 50 311/- IN THE ASMT. YEAR 2001-02 RS. 41 89 50 9/- IN THE ASMT. YEAR 2002-03 RS. 50 71 321/- IN THE A SMT. YEAR 2003-04 RS. 86 76 720/- IN THE ASMT. YEAR 200 4- 05 RS. 1 34 29 335/- IN THE ASMT. YEAR 2005-06 AND RS. 1 85 35 284/- IN THE ASMT. YEAR 2006-07. ACCORDING LY GROUND NO. 4 FOR ALL OTHER ASSMT. YEARS ARE ALLOWED . 48. THE ADDITION OF RS. 4 38 626/- MADE BY THE A SSESSING OFFICER U/S 69C OF THE ACT ON ACCOUNT OF UNEXPLAINED BOGUS FABRICATION EXPENSES WAS DELETED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS : - ON PERUSAL OF THE ABOVE SAID SECTIONS IT MAY BE SEEN THAT THE ADDITIONS U/S 69C CAN BE MADE WHEN IT IS FOUND BY THE ASSESSING OFFICER THAT THE APPELLANT H AS INCURRED THE EXPENDITURE AND HE IS UNABLE TO EXPLAI N THE SOURCE OF SUCH EXPENDITURE. IN THE INSTANT CASE T HE ASSESSING OFFICER HAS NOT FOUND ANY EXPENDITURE WHI CH CAN BE SAID TO BE UNEXPLAINED. IN FACT THE APPELL ANT HAS SHOWN THE EXPENDITURE IN THE FORM OF FABRICATIO N EXPENSES AND THE LD. ASSESSING OFFICER IS OF THE OP INION THAT THE APPELLANT HAS NOT INCURRED THE EXPENDITURE ON FABRICATION. ON THE ABOVE FACTS IT MAY BE SEEN TH AT THE PROVISIONS OF SEC. 69C OF THE IT ACT ARE NOT ATTRAC TED. 67 AFTER PERUSAL OF THE ASSESSMENT ORDER FOR ALL THE ASSESSMENT YEARS AND THE DETAILED SUBMISSIONS OF TH E AR I FIND THAT THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE OF 1/5 TH OF THE FABRICATION EXPENSES IN A VERY CASUAL MANNER. IN ALL THE ASSMT. YEARS HE STAT ES THAT HE IS MAKING THE DISALLOWANCE ON THE BASIS THE REASONS GIVEN BY HIM IN THE ASSMT. YEAR 2000-01 IN THE ORDER FOR THE ASST. YEAR 2000-01 HE STATED THAT HE SENT THE NOTICES TO SOME OF THE FABRICATORS BUT NOTICES SENT TO THE FOLLOWING FABRICATORS WERE RECEIVED BACK WITHOU T SERVICE. THESE FABRICATORS ARE AS UNDER :- 13. M/S R.A. FABRICATORS 14. SHREE BALAJI FABRICATORS 15. D.D. FABRICATORS 16. ALAK INDUSTRIES. THE ASSESSEE HAS FILED THE COPIES OF ACCOUNT OF ALL THE FABRICATORS BEFORE THE ASSESSING OFFICER AND HAS AL SO PRODUCED THE SAME BEFORE ME THE COPIES OF ACCOUNTS FOR THE A.Y. 2000-01 ARE FILED BEFORE ME AND ARE ON REC ORD. I FIND THAT THE ABOVE SAID FABRICATORS HAVE NEVER W ORKED FOR THE ASSESSEE AS EVIDENT FROM RECORD AVAILABLE B EFORE THE ASSESSING OFFICER. I HAVE SEEN THAT THE APPELL ANT HAS MAINTAINED THE REGULAR BOOKS OF ACCOUNTS WHICH HAVE BEEN DULY AUDITED. WHENEVER THE APPELLANT MAD E THE PAYMENT TO THE FABRICATORS PROPER DEDUCTIONS OF TDS HAS BEEN MADE AND SUBSTANTIAL PAYMENTS TO THE FABRICATORS ARE MADE THROUGH THE CHEQUE. ON THESE FACTS IT IS VERY DIFFICULT TO MAINTAIN THE DISALLO WANCE OF THE 1/5 TH OF THE FABRICATION EXPENSES ASMADE BY THE ASSESSING OFFICER IN ALL THE ASSMT. YEARS AND ACCORDINGLY THE DISALLOWANCE FOR ALL THE ASSMT. YE ARS ARE REMOVED. IN THE RESULT APPELLANT GETS THE REL IEF OF RS. 2 88 660/- IN THE ASSMT. YEAR 2000-01 RS. 84 2 28/- IN THE ASSMT. YEAR 2001-02 RS. 2 18 832/- IN THE A SSMT. YEAR 2002-03 RS. 4 38 626/- IN THE ASSMT. YEAR 200 3- 04 RS. 9 17 836/- IN THE ASSMT. YEAR 2004-05 RS. 12 32 726/- IN THE ASSMT. YEAR 2005-06 AND RS. 20 24 982/- IN THE ASSMT. YEAR 2006-07. IN THE RES ULT GROUND NO. 5 FOR ALL ASSMT. YEARS ARE ALLOWED. 49. ITA NO. 206/I ND/2008 68 THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCO UNT OF UNEXPLAINED BOGUS PURCHASES U/S 69C OF THE ACT AMOU NTING TO RS. 86 76 720/- WAS DELETED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS : - I HAVE GONE THROUGH THE ASSMT . ORDER AS WELL AS THE WRITTEN SUBMISSIONS OF THE APPELLANT. I FIND T HAT THE ASSESSING OFFICER HAS TREATED THE PURCHASES MADE FR OM THE SRD STEEL (P) LTD. AS BOGUS. HE ALSO TREATED 1 /4 TH PORTION OF OTHER PURCHASES ALSO AS BOGUS FOR ALL TH E ASST. YEARS AS INDICATED IN THE CHART ABOVE. HE HAS GIVEN THE REASON THAT EVEN AFTER A NOTICE U/S 131 T O M/S SRD STEEL NOBODY ATTENDED ON THEIR BEHALF AND THE OTHER PARTIES I.E. KATHURIA TRADE COMPANY AND TIRUPATHY STEEL TRADERS ALSO DID NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 133(6) AND THEREFORE HE DISALLOWED ALL THE PURCHASES MADE FROM SRD STEEL AN D ALSO DISALLOWED 1/4 TH PORTION OF OTHER PURCHASES AS IN LINE WITH OTHER FIRMS OF THE CONCERNS OF THE GROUP. I HAVE SEEN THE COPY OF THE NOTICE ISSUED U/S 131 ON 23.11.2007 TO SRD STEEL WHICH IS SAID TO HAVE BEEN SENT BY THE AO CALLING FOR CONFIRMATION OF THE SALES MAD E BY HIM. I AM OF THE OPINION THAT SIMPLY BECAUSE SOME PERSON DOES NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 131 OR U/S 133(6) NO ADVERSE INFERENCE CAN BE DRAWN SIMPLY FOR HIS NON ATTENDANCE. IN THE GIVEN FACTS AND CIRCUMSTANCES I AM FORTIFIED BY THE DECISION OF TH E HONOURABLE SUPREME COURT IN THE CASE OF ANEES AHEMAD & SONS VS. CIT AS REPORTED IN (2008) 297 ITR 441 SC. THE AR HAS FILED THE COPIES OF ACCOUNT OF ALL THE SUPPLIERS IN THE ASSMT. YEAR 2000-01 BEFORE ME AS A SAMPLE WHICH WERE ALSO AVAILABLE BEFORE THE ASSESSI NG OFFICER. I FIND THAT ALL THE PAYMENTS ARE MADE THRO UGH CHEQUES AND THE MATERIAL HAS BEEN RECEIVED THROUGH TRANSPORT LRS. THE ASSESSEE PRODUCES EXCISABLE ITE MS AND CLAIMS CENVAT CREDITS. THE CHARGE OF THE ASSESS ING OFFICER THAT THE CHEQUE PAYMENTS MADE TO THE SUPPLI ERS ARE RECEIVED BACK IN CASH HAS NO BASIS AND HE HAS N OT POINTED OUT ANY DEFECTS IN THE ACCOUNT BOOKS AND HA S MADE HUGE DISALLOWANCE FROM PURCHASES ON VERY FLIMS Y GROUNDS AND THEREFORE THESE DISALLOWANCE CANNOT B E 69 SUSTAINED. ACCORDINGLY THE APPELLANT GETS THE REL IEF OF RS.1 44 35 348/- IN THE ASMT. YEAR 2000-01 RS. 54 50 311/- IN THE ASMT. YEAR 2001-02 RS. 41 89 50 9/- IN THE ASMT. YEAR 2002-03 RS. 50 71 321/- IN THE A SMT. YEAR 2003-04 RS. 86 76 720/- IN THE ASMT. YEAR 200 4- 05 RS. 1 34 29 335/- IN THE ASMT. YEAR 2005-06 AND RS. 1 85 35 284/- IN THE ASMT. YEAR 2006-07. ACCORDING LY GROUND NO. 4 FOR ALL OTHER ASSMT. YEARS ARE ALLOWED . 50. THE ADDITION OF RS. 9 17 836/- MADE BY THE A SSESSING OFFICER U/S 69C OF THE ACT ON ACCOUNT OF UNEXPLAINED BOGUS FABRICATION EXPENSES WAS DELETED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS : - ON PERUSAL OF THE ABOVE SAID SECTIONS IT MAY BE SEEN THAT THE ADDITIONS U/S 69C CAN BE MADE WHEN IT IS FOUND BY THE ASSESSING OFFICER THAT THE APPELLANT H AS INCURRED THE EXPENDITURE AND HE IS UNABLE TO EXPLAI N THE SOURCE OF SUCH EXPENDITURE. IN THE INSTANT CASE T HE ASSESSING OFFICER HAS NOT FOUND ANY EXPENDITURE WHI CH CAN BE SAID TO BE UNEXPLAINED. IN FACT THE APPELL ANT HAS SHOWN THE EXPENDITURE IN THE FORM OF FABRICATIO N EXPENSES AND THE LD. ASSESSING OFFICER IS OF THE OP INION THAT THE APPELLANT HAS NOT INCURRED THE EXPENDITURE ON FABRICATION. ON THE ABOVE FACTS IT MAY BE SEEN TH AT THE PROVISIONS OF SEC. 69C OF THE IT ACT ARE NOT ATTRAC TED. AFTER PERUSAL OF THE ASSESSMENT ORDER FOR ALL THE ASSESSMENT YEARS AND THE DETAILED SUBMISSIONS OF TH E AR I FIND THAT THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE OF 1/5 TH OF THE FABRICATION EXPENSES IN A VERY CASUAL MANNER. IN ALL THE ASSMT. YEARS HE STAT ES THAT HE IS MAKING THE DISALLOWANCE ON THE BASIS THE REASONS GIVEN BY HIM IN THE ASSMT. YEAR 2000-01 IN THE ORDER FOR THE ASST. YEAR 2000-01 HE STATED THAT HE SENT THE NOTICES TO SOME OF THE FABRICATORS BUT NOTICES SENT TO THE FOLLOWING FABRICATORS WERE RECEIVED BACK WITHOU T SERVICE. THESE FABRICATORS ARE AS UNDER :- 17. M/S R.A. FABRICATORS 18. SHREE BALAJI FABRICATORS 70 19. D.D. FABRICATORS 20. ALAK INDUSTRIES. THE ASSESSEE HAS FILED THE COPIES OF ACCOUNT OF ALL THE FABRICATORS BEFORE THE ASSESSING OFFICER AND HAS AL SO PRODUCED THE SAME BEFORE ME THE COPIES OF ACCOUNTS FOR THE A.Y. 2000-01 ARE FILED BEFORE ME AND ARE ON REC ORD. I FIND THAT THE ABOVE SAID FABRICATORS HAVE NEVER W ORKED FOR THE ASSESSEE AS EVIDENT FROM RECORD AVAILABLE B EFORE THE ASSESSING OFFICER. I HAVE SEEN THAT THE APPELL ANT HAS MAINTAINED THE REGULAR BOOKS OF ACCOUNTS WHICH HAVE BEEN DULY AUDITED. WHENEVER THE APPELLANT MAD E THE PAYMENT TO THE FABRICATORS PROPER DEDUCTIONS OF TDS HAS BEEN MADE AND SUBSTANTIAL PAYMENTS TO THE FABRICATORS ARE MADE THROUGH THE CHEQUE. ON THESE FACTS IT IS VERY DIFFICULT TO MAINTAIN THE DISALLO WANCE OF THE 1/5 TH OF THE FABRICATION EXPENSES ASMADE BY THE ASSESSING OFFICER IN ALL THE ASSMT. YEARS AND ACCORDINGLY THE DISALLOWANCE FOR ALL THE ASSMT. YE ARS ARE REMOVED. IN THE RESULT APPELLANT GETS THE REL IEF OF RS. 2 88 660/- IN THE ASSMT. YEAR 2000-01 RS. 84 2 28/- IN THE ASSMT. YEAR 2001-02 RS. 2 18 832/- IN THE A SSMT. YEAR 2002-03 RS. 4 38 626/- IN THE ASSMT. YEAR 200 3- 04 RS. 9 17 836/- IN THE ASSMT. YEAR 2004-05 RS. 12 32 726/- IN THE ASSMT. YEAR 2005-06 AND RS. 20 24 982/- IN THE ASSMT. YEAR 2006-07. IN THE RES ULT GROUND NO. 5 FOR ALL ASSMT. YEARS ARE ALLOWED. 51. ITA NO. 207/I ND/2008 THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCO UNT OF UNEXPLAINED BOGUS PURCHASES U/S 69C OF THE ACT AMOU NTING TO RS. 1 34 29 335/- WAS DELETED BY THE LEARNED COMMISSION ER OF INCOMETAX (APPEALS) AFTER MAKING THE FOLLOWING OBSE RVATIONS :- I HAVE GONE THROUGH THE ASSMT . ORDER AS WELL AS THE WRITTEN SUBMISSIONS OF THE APPELLANT. I FIND T HAT THE ASSESSING OFFICER HAS TREATED THE PURCHASES MADE FR OM THE SRD STEEL (P) LTD. AS BOGUS. HE ALSO TREATED 1 /4 TH PORTION OF OTHER PURCHASES ALSO AS BOGUS FOR ALL TH E ASST. YEARS AS INDICATED IN THE CHART ABOVE. HE HAS 71 GIVEN THE REASON THAT EVEN AFTER A NOTICE U/S 131 T O M/S SRD STEEL NOBODY ATTENDED ON THEIR BEHALF AND THE OTHER PARTIES I.E. KATHURIA TRADE COMPANY AND TIRUPATHY STEEL TRADERS ALSO DID NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 133(6) AND THEREFORE HE DISALLOWED ALL THE PURCHASES MADE FROM SRD STEEL AN D ALSO DISALLOWED 1/4 TH PORTION OF OTHER PURCHASES AS IN LINE WITH OTHER FIRMS OF THE CONCERNS OF THE GROUP. I HAVE SEEN THE COPY OF THE NOTICE ISSUED U/S 131 ON 23.11.2007 TO SRD STEEL WHICH IS SAID TO HAVE BEEN SENT BY THE AO CALLING FOR CONFIRMATION OF THE SALES MAD E BY HIM. I AM OF THE OPINION THAT SIMPLY BECAUSE SOME PERSON DOES NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 131 OR U/S 133(6) NO ADVERSE INFERENCE CAN BE DRAWN SIMPLY FOR HIS NON ATTENDANCE. IN THE GIVEN FACTS AND CIRCUMSTANCES I AM FORTIFIED BY THE DECISION OF TH E HONOURABLE SUPREME COURT IN THE CASE OF ANEES AHEMAD & SONS VS. CIT AS REPORTED IN (2008) 297 ITR 441 SC. THE AR HAS FILED THE COPIES OF ACCOUNT OF ALL THE SUPPLIERS IN THE ASSMT. YEAR 2000-01 BEFORE ME AS A SAMPLE WHICH WERE ALSO AVAILABLE BEFORE THE ASSESSI NG OFFICER. I FIND THAT ALL THE PAYMENTS ARE MADE THRO UGH CHEQUES AND THE MATERIAL HAS BEEN RECEIVED THROUGH TRANSPORT LRS. THE ASSESSEE PRODUCES EXCISABLE ITE MS AND CLAIMS CENVAT CREDITS. THE CHARGE OF THE ASSESS ING OFFICER THAT THE CHEQUE PAYMENTS MADE TO THE SUPPLI ERS ARE RECEIVED BACK IN CASH HAS NO BASIS AND HE HAS N OT POINTED OUT ANY DEFECTS IN THE ACCOUNT BOOKS AND HA S MADE HUGE DISALLOWANCE FROM PURCHASES ON VERY FLIMS Y GROUNDS AND THEREFORE THESE DISALLOWANCE CANNOT B E SUSTAINED. ACCORDINGLY THE APPELLANT GETS THE REL IEF OF RS.1 44 35 348/- IN THE ASMT. YEAR 2000-01 RS. 54 50 311/- IN THE ASMT. YEAR 2001-02 RS. 41 89 50 9/- IN THE ASMT. YEAR 2002-03 RS. 50 71 321/- IN THE A SMT. YEAR 2003-04 RS. 86 76 720/- IN THE ASMT. YEAR 200 4- 05 RS. 1 34 29 335/- IN THE ASMT. YEAR 2005-06 AND RS. 1 85 35 284/- IN THE ASMT. YEAR 2006-07. ACCORDING LY GROUND NO. 4 FOR ALL OTHER ASSMT. YEARS ARE ALLOWED . 52. THE ADDITION OF RS. 12 32 726/- MADE BY THE ASS ESSING OFFICER U/S 69C OF THE ACT ON ACCOUNT OF UNEXPLAINED BOGUS FABRICATION 72 EXPENSES WAS DELETED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS : - ON PERUSAL OF THE ABOVE SAID SECTIONS IT MAY BE SEEN THAT THE ADDITIONS U/S 69C CAN BE MADE WHEN IT IS FOUND BY THE ASSESSING OFFICER THAT THE APPELLANT H AS INCURRED THE EXPENDITURE AND HE IS UNABLE TO EXPLAI N THE SOURCE OF SUCH EXPENDITURE. IN THE INSTANT CASE T HE ASSESSING OFFICER HAS NOT FOUND ANY EXPENDITURE WHI CH CAN BE SAID TO BE UNEXPLAINED. IN FACT THE APPELL ANT HAS SHOWN THE EXPENDITURE IN THE FORM OF FABRICATIO N EXPENSES AND THE LD. ASSESSING OFFICER IS OF THE OP INION THAT THE APPELLANT HAS NOT INCURRED THE EXPENDITURE ON FABRICATION. ON THE ABOVE FACTS IT MAY BE SEEN TH AT THE PROVISIONS OF SEC. 69C OF THE IT ACT ARE NOT ATTRAC TED. AFTER PERUSAL OF THE ASSESSMENT ORDER FOR ALL THE ASSESSMENT YEARS AND THE DETAILED SUBMISSIONS OF TH E AR I FIND THAT THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE OF 1/5 TH OF THE FABRICATION EXPENSES IN A VERY CASUAL MANNER. IN ALL THE ASSMT. YEARS HE STAT ES THAT HE IS MAKING THE DISALLOWANCE ON THE BASIS THE REASONS GIVEN BY HIM IN THE ASSMT. YEAR 2000-01 IN THE ORDER FOR THE ASST. YEAR 2000-01 HE STATED THAT HE SENT THE NOTICES TO SOME OF THE FABRICATORS BUT NOTICES SENT TO THE FOLLOWING FABRICATORS WERE RECEIVED BACK WITHOU T SERVICE. THESE FABRICATORS ARE AS UNDER :- 21. M/S R.A. FABRICATORS 22. SHREE BALAJI FABRICATORS 23. D.D. FABRICATORS 24. ALAK INDUSTRIES. THE ASSESSEE HAS FILED THE COPIES OF ACCOUNT OF ALL THE FABRICATORS BEFORE THE ASSESSING OFFICER AND HAS AL SO PRODUCED THE SAME BEFORE ME THE COPIES OF ACCOUNTS FOR THE A.Y. 2000-01 ARE FILED BEFORE ME AND ARE ON REC ORD. I FIND THAT THE ABOVE SAID FABRICATORS HAVE NEVER W ORKED FOR THE ASSESSEE AS EVIDENT FROM RECORD AVAILABLE B EFORE THE ASSESSING OFFICER. I HAVE SEEN THAT THE APPELL ANT HAS MAINTAINED THE REGULAR BOOKS OF ACCOUNTS WHICH HAVE BEEN DULY AUDITED. WHENEVER THE APPELLANT MAD E THE PAYMENT TO THE FABRICATORS PROPER DEDUCTIONS OF TDS HAS BEEN MADE AND SUBSTANTIAL PAYMENTS TO THE 73 FABRICATORS ARE MADE THROUGH THE CHEQUE. ON THESE FACTS IT IS VERY DIFFICULT TO MAINTAIN THE DISALLO WANCE OF THE 1/5 TH OF THE FABRICATION EXPENSES ASMADE BY THE ASSESSING OFFICER IN ALL THE ASSMT. YEARS AND ACCORDINGLY THE DISALLOWANCE FOR ALL THE ASSMT. YE ARS ARE REMOVED. IN THE RESULT APPELLANT GETS THE REL IEF OF RS. 2 88 660/- IN THE ASSMT. YEAR 2000-01 RS. 84 2 28/- IN THE ASSMT. YEAR 2001-02 RS. 2 18 832/- IN THE A SSMT. YEAR 2002-03 RS. 4 38 626/- IN THE ASSMT. YEAR 200 3- 04 RS. 9 17 836/- IN THE ASSMT. YEAR 2004-05 RS. 12 32 726/- IN THE ASSMT. YEAR 2005-06 AND RS. 20 24 982/- IN THE ASSMT. YEAR 2006-07. IN THE RES ULT GROUND NO. 5 FOR ALL ASSMT. YEARS ARE ALLOWED. 53. ITA NO. 208/I ND/2008 THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCO UNT OF UNEXPLAINED BOGUS PURCHASES U/S 69C OF THE ACT AMOU NTING TO RS. 1 85 35 284/- WAS DELETED BY THE LEARNED COMMISSION ER OF INCOMETAX (APPEALS) AFTER MAKING THE FOLLOWING OBSE RVATIONS :- I HAVE GONE THROUGH THE ASSMT . ORDER AS WELL AS THE WRITTEN SUBMISSIONS OF THE APPELLANT. I FIND T HAT THE ASSESSING OFFICER HAS TREATED THE PURCHASES MADE FR OM THE SRD STEEL (P) LTD. AS BOGUS. HE ALSO TREATED 1 /4 TH PORTION OF OTHER PURCHASES ALSO AS BOGUS FOR ALL TH E ASST. YEARS AS INDICATED IN THE CHART ABOVE. HE HAS GIVEN THE REASON THAT EVEN AFTER A NOTICE U/S 131 T O M/S SRD STEEL NOBODY ATTENDED ON THEIR BEHALF AND THE OTHER PARTIES I.E. KATHURIA TRADE COMPANY AND TIRUPATHY STEEL TRADERS ALSO DID NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 133(6) AND THEREFORE HE DISALLOWED ALL THE PURCHASES MADE FROM SRD STEEL AN D ALSO DISALLOWED 1/4 TH PORTION OF OTHER PURCHASES AS IN LINE WITH OTHER FIRMS OF THE CONCERNS OF THE GROUP. I HAVE SEEN THE COPY OF THE NOTICE ISSUED U/S 131 ON 23.11.2007 TO SRD STEEL WHICH IS SAID TO HAVE BEEN SENT BY THE AO CALLING FOR CONFIRMATION OF THE SALES MAD E BY HIM. I AM OF THE OPINION THAT SIMPLY BECAUSE SOME PERSON DOES NOT ATTEND IN COMPLIANCE TO THE NOTICE U/S 131 OR U/S 133(6) NO ADVERSE INFERENCE CAN BE DRAWN 74 SIMPLY FOR HIS NON ATTENDANCE. IN THE GIVEN FACTS AND CIRCUMSTANCES I AM FORTIFIED BY THE DECISION OF TH E HONOURABLE SUPREME COURT IN THE CASE OF ANEES AHEMAD & SONS VS. CIT AS REPORTED IN (2008) 297 ITR 441 SC. THE AR HAS FILED THE COPIES OF ACCOUNT OF ALL THE SUPPLIERS IN THE ASSMT. YEAR 2000-01 BEFORE ME AS A SAMPLE WHICH WERE ALSO AVAILABLE BEFORE THE ASSESSI NG OFFICER. I FIND THAT ALL THE PAYMENTS ARE MADE THRO UGH CHEQUES AND THE MATERIAL HAS BEEN RECEIVED THROUGH TRANSPORT LRS. THE ASSESSEE PRODUCES EXCISABLE ITE MS AND CLAIMS CENVAT CREDITS. THE CHARGE OF THE ASSESS ING OFFICER THAT THE CHEQUE PAYMENTS MADE TO THE SUPPLI ERS ARE RECEIVED BACK IN CASH HAS NO BASIS AND HE HAS N OT POINTED OUT ANY DEFECTS IN THE ACCOUNT BOOKS AND HA S MADE HUGE DISALLOWANCE FROM PURCHASES ON VERY FLIMS Y GROUNDS AND THEREFORE THESE DISALLOWANCE CANNOT B E SUSTAINED. ACCORDINGLY THE APPELLANT GETS THE REL IEF OF RS.1 44 35 348/- IN THE ASMT. YEAR 2000-01 RS. 54 50 311/- IN THE ASMT. YEAR 2001-02 RS. 41 89 50 9/- IN THE ASMT. YEAR 2002-03 RS. 50 71 321/- IN THE A SMT. YEAR 2003-04 RS. 86 76 720/- IN THE ASMT. YEAR 200 4- 05 RS. 1 34 29 335/- IN THE ASMT. YEAR 2005-06 AND RS. 1 85 35 284/- IN THE ASMT. YEAR 2006-07. ACCORDING LY GROUND NO. 4 FOR ALL OTHER ASSMT. YEARS ARE ALLOWED . 54. THE ADDITION OF RS. 20 24 982/- MADE BY THE ASS ESSING OFFICER U/S 69C OF THE ACT ON ACCOUNT OF UNEXPLAINED BOGUS FABRICATION EXPENSES WAS DELETED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AFTER MAKING THE FOLLOWING OBSERVATIONS : - ON PERUSAL OF THE ABOVE SAID SECTIONS IT MAY BE SEEN THAT THE ADDITIONS U/S 69C CAN BE MADE WHEN IT IS FOUND BY THE ASSESSING OFFICER THAT THE APPELLANT H AS INCURRED THE EXPENDITURE AND HE IS UNABLE TO EXPLAI N THE SOURCE OF SUCH EXPENDITURE. IN THE INSTANT CASE T HE ASSESSING OFFICER HAS NOT FOUND ANY EXPENDITURE WHI CH CAN BE SAID TO BE UNEXPLAINED. IN FACT THE APPELL ANT HAS SHOWN THE EXPENDITURE IN THE FORM OF FABRICATIO N EXPENSES AND THE LD. ASSESSING OFFICER IS OF THE OP INION THAT THE APPELLANT HAS NOT INCURRED THE EXPENDITURE ON 75 FABRICATION. ON THE ABOVE FACTS IT MAY BE SEEN TH AT THE PROVISIONS OF SEC. 69C OF THE IT ACT ARE NOT ATTRAC TED. AFTER PERUSAL OF THE ASSESSMENT ORDER FOR ALL THE ASSESSMENT YEARS AND THE DETAILED SUBMISSIONS OF TH E AR I FIND THAT THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE OF 1/5 TH OF THE FABRICATION EXPENSES IN A VERY CASUAL MANNER. IN ALL THE ASSMT. YEARS HE STAT ES THAT HE IS MAKING THE DISALLOWANCE ON THE BASIS THE REASONS GIVEN BY HIM IN THE ASSMT. YEAR 2000-01 IN THE ORDER FOR THE ASST. YEAR 2000-01 HE STATED THAT HE SENT THE NOTICES TO SOME OF THE FABRICATORS BUT NOTICES SENT TO THE FOLLOWING FABRICATORS WERE RECEIVED BACK WITHOU T SERVICE. THESE FABRICATORS ARE AS UNDER :- 25. M/S R.A. FABRICATORS 26. SHREE BALAJI FABRICATORS 27. D.D. FABRICATORS 28. ALAK INDUSTRIES. THE ASSESSEE HAS FILED THE COPIES OF ACCOUNT OF ALL THE FABRICATORS BEFORE THE ASSESSING OFFICER AND HAS AL SO PRODUCED THE SAME BEFORE ME THE COPIES OF ACCOUNTS FOR THE A.Y. 2000-01 ARE FILED BEFORE ME AND ARE ON REC ORD. I FIND THAT THE ABOVE SAID FABRICATORS HAVE NEVER W ORKED FOR THE ASSESSEE AS EVIDENT FROM RECORD AVAILABLE B EFORE THE ASSESSING OFFICER. I HAVE SEEN THAT THE APPELL ANT HAS MAINTAINED THE REGULAR BOOKS OF ACCOUNTS WHICH HAVE BEEN DULY AUDITED. WHENEVER THE APPELLANT MAD E THE PAYMENT TO THE FABRICATORS PROPER DEDUCTIONS OF TDS HAS BEEN MADE AND SUBSTANTIAL PAYMENTS TO THE FABRICATORS ARE MADE THROUGH THE CHEQUE. ON THESE FACTS IT IS VERY DIFFICULT TO MAINTAIN THE DISALLO WANCE OF THE 1/5 TH OF THE FABRICATION EXPENSES ASMADE BY THE ASSESSING OFFICER IN ALL THE ASSMT. YEARS AND ACCORDINGLY THE DISALLOWANCE FOR ALL THE ASSMT. YE ARS ARE REMOVED. IN THE RESULT APPELLANT GETS THE REL IEF OF RS. 2 88 660/- IN THE ASSMT. YEAR 2000-01 RS. 84 2 28/- IN THE ASSMT. YEAR 2001-02 RS. 2 18 832/- IN THE A SSMT. YEAR 2002-03 RS. 4 38 626/- IN THE ASSMT. YEAR 200 3- 04 RS. 9 17 836/- IN THE ASSMT. YEAR 2004-05 RS. 12 32 726/- IN THE ASSMT. YEAR 2005-06 AND RS. 20 24 982/- IN THE ASSMT. YEAR 2006-07. IN THE RES ULT GROUND NO. 5 FOR ALL ASSMT. YEARS ARE ALLOWED. 76 55. THE ADDITION OF RS. 20 00 000/- MADE BY THE ASS ESSING OFFICER ON ACCOUNT OF EXCESS STOCK WAS DELETED BY THE LEARN ED COMMISSIONER OF INCOMETAX (APPEALS) AFTER MAKING THE FOLLOWING O BSERVATIONS :- I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSIONS OF THE AR. I HAVE ALSO PERUSED THE COPY OF THE INVENTORY PREPARED AT THE TIME OF SURVEY. TO M Y SURPRISE NO VALUE HAS BEEN GIVEN AGAINST THE ARTICLES FOUND AT THE TIME OF SURVEY. HOW THE ASSESSING OFFICER CAME TO THE C ONCLUSION THAT THERE IS EXCESS STOCK IS NOT KNOWN. AS CLAIME D BY THE AR THE APPELLANT HAS TO MAINTAIN VARIOUS REGISTERS AS PER REQUIREMENTS OF EXCISE LAWS AND THE STOCK FROM YEAR TO YEAR HAS BEEN VALUED ON THE BASIS OF PHYSICAL VERIFICATI ON. NO DEFECTS IN THE PROCESS OF VALUATION HAVE EVER BEEN FOUND EARLIER. I DO NOT FIND ANY REASON TO SUSTAIN THE A DDITION OF RS.20 00 000/- TOWARDS THE EXCESS STOCK. ACCORDING LY THE APPELLANT GETS THE RELIEF OF RS.20 00 000/-. IN TH E RESULT GROUND NO. 6 FOR ASSMT. YEAR 2006-07 IS ALLOWED. 56. VARIOUS ADDITIONS MADE ON MERIT WERE PARTLY DELETED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AGAINST WHICH REVENUE IS IN APPEAL BEFORE US AND THE ASSESSEE HAS ALSO FILED CROSS OBJECTION AGA INST THE SAME. 57. WE HAVE CONSIDERED THE RIVAL CONTENTIONS CA REFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FIN D FROM RECORD THAT THE SEARCH WAS CARRIED OUT AT THE RESIDENTIAL PREMI SES OF DIRECTORS/PARTNERS OF THESE CONCERNS AND NOT AT THE PREMISES OF THESE CONCERNS. AFTER THE SEARCH WAS CARRIED OUT AT THE R ESIDENCE OF DIRECTORS/PARTNERS OF THESE ASSOCIATE CONCERNS ASS ESSMENT WAS 77 FRAMED IN RESPECT OF THESE CONCERNS U/S 153C OF THE ACT ON THE PLEA THAT INCRIMINATING MATERIAL WAS FOUND DURING THE CO URSE OF SEARCH AT THE RESIDENCE OF PARTNERS/DIRECTORS. THE ISSUE WITH REGARD VALIDITY OF ASSESSMENTS FRAMED U/S 153C OF THE ACT WAS ELABORAT ELY EXAMINED BY THE COORDINATE BENCH IN THE CASE OF M/S CHIRCHIN D HYDRO POWER LIMITED; IT(SS) A NO. 171. 172 AND 174/IND/2008 AND ALSO M/S GWALIOR TANKS & VESSELS LIMITED; IT(SS) A NO. 175 TO 181/IND/2008. FOLLOWING WAS THE OBSERVATION AND CO NCLUSION OF THE BENCH :- 78. WE HAVE CONSIDERED THE RIVAL CONTENTIONS CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND DELIBERATED ON THE CASE LAWS REFERRED BY THE LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS AND BY THE RESPECTIVE COUNSELS DURING THE COURSE OF HEARING BEFORE US. FROM THE RECORD WE FIND THAT THE SEARCH WAS CARRIED OUT AT THE RESIDENTIAL PREMISES OF DIRECTORS/PARTNERS OF THESE CONCERNS AND NOT AT THE PREMISES OF THESE CONCERNS. AFTER THE SEARCH WAS CARRIED OUT AT THE RESIDENCE OF DIRECTORS/PARTNERS OF THESE ASSOCIATE CONCERNS ASSESSMENT WAS FRAMED IN RESPECT OF THESE CONCERNS U/S 153C OF THE ACT ON THE PLEA THAT INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AT THE RESIDENCE OF PARTNERS/DIRECTORS. THE ASSUMPTION OF POWER BY THE ASSESSING OFFICER U/S 153C OF THE ACT FOR FRAMING THE ASSESSMENT IS SUBJECT TO THE CONDITION THAT THE ASSESSING OFFICER ASSESSING THE SEARCH PARTY IS SATISFIED THAT THE JEWELLERY OR OTHER VALUABLE ARTICLES OR THINGS OR BOOKS OF ACCOUNTS OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED PERTAIN TO SOME PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A 78 THEN THE BOOKS OF ACCOUNTS OR THE DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER BY THE ASSESSING OFFICER OF SEARCHED PERSON TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT THE ASSESSING OFFICER SHALL PROCEED AGAINST EACH OF SUCH PERSONS AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A OF THE ACT. THE OPENING WORD OF SECTION 153C SPEAKS THAT NOT- WITH-STANDING ANYTHING CONTAINED IN SECTIONS 139 147 148 149 151 AND 153 WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY JEWELLERY OR BOOKS OF ACCOUNTS OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A MEANING THEREBY THE ASSESSING OFFICER IS TO RECORD A SATISFACTION TO THE EFFECT THAT SUCH JEWELLERY OR DOCUMENT SO SEIZED DOES NOT BELONG TO THE SEARCHED PERSON BUT TO SOME OTHER PERSON REFERRED TO IN SECTION 153A OF THE ACT. THUS THE PRE-REQUISITE OF SECTION 153C IS THAT THE ASSESSING OFFICER MAKING THE ASSESSMENT OF THE SEARCHED PERSON HAS TO SATISFY HIMSELF THAT SOME MATERIAL FOUND DURING THE COURSE OF SEARCH AND SEIZURE BELONGS TO SOME PERSON OTHER THAN THE SEARCHED PERSON. THEN THE ASSESSING OFFICER MAKING THE ASSESSMENT OF SEARCHED PERSON HAS TO HAND-OVER THE SAID INCRIMINATING MATERIAL BELONGING TO SOME PERSON OTHER THAN THE SEARCHED PERSON TO THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SAID OTHER PERSON. THEREAFTER THE ASSESSING OFFICER HAVING THE JURISDICTION OVER THE PERSON OTHER THAN THE SEARCHED PERSON SHALL ISSUE A NOTICE U/S 153C TO SUCH OTHER PERSON AND ASSESS HIS INCOME IN TERMS OF THE PROVISIONS OF SECTION 153A OF THE ACT. THUS THE NOTICE U/S 153C OF THE ACT IS TO BE ISSUED ONLY AFTER RECORDING OF SATISFACTION. THE ASSUMPTION OF JUSRISDICTION TO ISSUE NOTICE AND FRAME ASSESSMENT UNDER SECTION 153C 79 READ WITH SECTION 153A IS ACQUIRED BY THE ASSESSING OFFICER ONLY AFTER HAVING BEEN SATISFIED AND SUCH SATISFACTION IS RECORDED IN WRITING. THESE PROVISIONS OF SECTION 153C ARE IN PARI MATERIA WITH THE PROVISIONS OF SECTION 158BD WHICH PROVIDES THAT THE ASSESSING OFFICER MAKING THE ASSESSMENT OF THE SEARCHED PERSON HAS TO SATISFY HIMSELF THAT SOME UNDISCLOSED INCOME FOUND BY HIM BELONGS TO SOME PERSON OTHER THAN THE SEARCHED PERSON AND THEN HE OR THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AFTER RECEIPT OF RECORD FROM THE ASSESSING OFFICER OF THE SEARCHED PERSON HAS TO ISSUE NOTICE U/S 158BD OF THE ACT AND HAS TO ASSESS INCOME OF SUCH OTHER PERSON. THE PROVISIONS OF SECTION 158BD OF THE ACT WERE EXAMINED IN DETAIL BY THE HONBLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI; 208 CTR 97. THE SAID HONBLE SUPREME COURT DECISION WAS FOLLOWED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF NEW DELHI AUTO FINANCE LIMITED; 300 ITR 83. THE HONBLE SUPREME COURT HAS LAID DOWN A PROPOSITION THAT THE ASSESSING OFFICER MAKING THE ASSESSMENT OF THE SEARCHED PERSON HAS TO NECESSARILY RECORD IN WRITING THE SPECIFIC OBJECTIVE SATISFACTION WHICH IS MANDATORY TO THE EFFECT THAT THE UNDISCLOSED INCOME FOUND BY HIM ON THE BASIS OF SEIZED MATERIAL BELONGS TO SOME PERSON OTHER THAN THE SEARCHED PERSON. INSOFAR AS THE PROVISIONS OF SECTION 153C OF THE ACT ARE IN PARI MATERIA WITH THE PROVISIONS OF SECTION 158BD OF THE ACT WITH REGARD TO THE REQUIREMENTS OF RECORDING NECESSARY SATISFACTION BY THE ASSESSING OFFICER OF SEARCHED PERSON THE LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI (SUPRA) SHALL APPLY WITH FULL FORCE IN CASE OF INITIATION OF PROCEEDINGS U/S 153C. THE ASSUMPTION OF JURISDICTION AND FRAMING OF ASSESSMENT BY THE ASSESSING OFFICER U/S 153C WITHOUT RECORDING SUCH SATISFACTION IS VOID AB INITIO. APPLYING THE PROPOSITION OF LAW LAID 80 DOWN BY THE HONBLE SUPREME COURT AS DISCUSSED ABOVE IT IS QUITE EVIDENT THAT RECORDING OF SATISFACTION BEFORE ISSUE OF NOTICE U/S 153C IS MANDATORY AND IN CASE WHERE NO SUCH SATISFACTION HAS BEEN RECORDED BY THE ASSESSING OFFICER IN THE CASE OF SEARCHED PERSON TO THE EFFECT THAT SOME INCRIMINATING MATERIAL SO FOUND BELONGS TO SOME OTHER PERSON THE ASSESSMENT FRAMED U/S 153C WILL BE LIABLE TO BE QUASHED. HOWEVER DETAILED FINDING HAS BEEN RECORDED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AFTER EXAMINING THE ASSESSMENT RECORDS OF THE CONCERNED PERSON/PARTIES TO THE EFFECT THAT NO SATISFACTION HAS BEEN RECORDED BY THE ASSESSING OFFICER OF THE SEARCHED PERSON. THIS FINDING OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS NOT BEEN CONTROVERTED BY THE DEPARTMENT BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY APPLYING THIS PROPOSTION OF LAW THE ASSUMPTION OF JURISDICTION AND FRAMING OF ASSESSMENT IN THE INSTANT CASES BY THE ASSESSING OFFICER U/S 153C WERE BAD IN LAW. 79. IT WAS ARGUED BY SHRI K.K. SINGH THE LEARNED CIT DR THAT SATISFACTION NOTE AS STIPULATED U/S 153C OF THE ACT IS TO BE SEEN IN THE CONTEXT OF SATISFACTION NOTE PREPARED BY THE ADIT IN THE FORM OF APPRAISAL NOTE AFTER THE SEARCH IS OVER. HE PLACED ON RECORD A COPY OF THE APPRAISAL NOTE WHICH IS PREPARED BY THE ADIT AFTER THE SEARCH WAS OVER WHEREIN DETAILS OF SEARCH HAVING BEEN CARRIED OUT ALONG WITH THE SURVEY CARRIED OUT ON THE SAME FAMILY MEMBERS OF THE GROUP WERE DULY MENTIONED ALONG WITH ASSERTION FOR ISSUE OF NOTICE U/S 153C IN CASES OF ASSESSEE NOT COVERED BY SEARCH BUT WHERE ONLY SURVEY ACTION HAS BEEN UNDERTAKEN. IT WAS CONTENDED BY THE LEARNED CIT DR THAT WHENEVER A SEARCH IS BEING 81 PLANNED ON THE BASIS OF DETAILED INFORMATION COLLECTED BY THE DEPARTMENT AND AFTER DUE APPLICATION OF MIND STRATEGIES ARE FINALIZED IN RESPECT OF PLACES/PERSONS/CONCERNS WHERE SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT IS TO BE UNDERTAKEN AS WELL AS THE PLACES/PERSONS/CONCERNS WHERE ACTION U/S 133A OF THE ACT WILL SERVE THE PURPOSE. THE WHOLE ACTION OF SEARCH AND SURVEY IS PLANNED AT A TIME AND THE DEPARTMENT ALSO KEEPS IN MIND THAT THERE SHOULD NOT BE ANY HARASSMENT TO THE PERSONS/CONCERNS FALLING IN THE SAME GROUP WHO ARE NOT SO IMPORTANT BUT ARE VERY MUCH RELEVANT AND ASSOCIATED WITH THE ASSESSEE WHICH NECESSITATED SIMULTANEOUS SURVEY AT THEIR PREMISES SO THAT NOTHING IS LEFT OUT. OUR ATTENTION WAS DRAWN TO VARIOUS LISTS PREPARED AS A PART OF APPRAISAL NOTE DULY MENTIONING THE NAMES OF THE PERSONS ALONG WITH THEIR ADDRESSES DATE OF SEARCH WHO ARE APPEARING IN THE WARRANT OF AUTHORIZATION U/S 132. A LIST WAS ALSO PREPARED TO SHOW THE PREMISES WHEREIN SURVEY WAS UNDERTAKEN U/S 133A OF THE ACT. IN THE APPRAISAL NOTE A LIST WAS ALSO GIVEN WHERE ACTION U/S 153C OF THE ACT WAS INTENDED TO BE INITIATED. AS PER THE LEARNED CIT DR SUCH LIST COMPRISES OF THE PERSONS OTHER THAN THE PERSON AT WHOSE PREMISES SEARCH IS BEING CARRIED OUT IN RESPECT OF THE DOCUMENTS FOUND AT SUCH PLACES WHICH PERTAIN TO THE PERSON OTHER THAN PERSON AGAINST WHOM ACTION U/S 132 WAS UNDERTAKEN. AS PER THE LEARNED CIT DR IT IS NOT ONLY THE OFFICER FRAMING THE ASSESSMENT SHOULD BE CONSIDERED AS ASSESSING OFFICER FOR RECORDING SATISFACTION BUT THE OTHER OFFICERS INVOLVED IN THE SEARCH AND SURVEY LIKE ADIT/DDIT SHOULD ALSO BE 82 CONSIDERED. OUR ATTENTION WAS ALSO DRAWN TO THE PROVISIONS OF SUB-SECTION (7A) OF SECTION 2 DEFINING THE ASSESSING OFFICER TO MEAN ASSISTANT COMMISSIONER DEPUTY COMMISSIONER ASSISTANT DIRECTOR DEPUTY DIRECTOR OR THE ITO WHO IS VESTED WITH THE RELEVANT JURISDICTION BY VIRTUE OF DIRECTIONS OR ORDERS ISSUED UNDER SUB-SECTION (1) OR SUB-SECTION (2) OF SECTION 120 OR ANY OTHER PROVISION OF THIS ACT AND THE ADDITIONAL COMMISSIONER OR THE ADDITIONAL DIRECTOR OR JOINT COMMISSIONER OR JOINT DIRECTOR WHO IS DIRECTED UNDER CLAUSE (B) OF SUB-SECTION (4) OF THAT SECTION TO EXERCISE OR PERFORM ALL OR ANY OF THE POWERS AND FUNCTIONS CONFERRED ON OR ASSIGNED TO AN ASSESSING OFFICER. AS PER THE LEARNED CIT DR UNDER THE NEW SCHEME OF SECTION 153A/C THERE IS NO NEED TO FIND OUT UNDISCLOSED INCOME BUT THE ASSESSMENT IS MADE AFTER THE SEARCH IS CARRIED OUT TO ASSESS OR REASSESS THE INCOME OF THE ASSESSEE FOR THE IMMEDIATELY PRECEDING SIX ASSESSMENT YEARS AND THE CURRENT ASSESSMENT YEAR FALLING UPTO THE DATE OF SEARCH. HE FURTHER CONTENDED THAT UNDER THE OLD SCHEME OF SECTION 158BC/158BD OF THE ACT THE DEPARTMENT WAS TO ASSESS THE UNDISCLOSED INCOME ON THE BASIS INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF SEARCH WHEREAS UNDER THE NEW SCHEME OF SECTION 153A/153C WHERE A SEARCH IS INITIATED U/S 132 OR BOOKS OF ACCOUNTS OR OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED U/S 132A THEN THE DEPARTMENT HAS TO ASSESS OR REASSESS THE TOTAL INCOME OF SUCH ASSESSEE FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. ACCORDINGLY IT WAS 83 PLEADED THAT JUDICIAL COGNIZANCE GIVEN TO THE LANGUAGE OF SECTION 158BD IN CASE OF MANISH MAHESHWARI BY THE HONBLE SUPREME COURT INSOFAR AS RECORDING OF NECESSARY SATISFACTION IS CONCERNED SHOULD NOT BE TAKEN WHILE INTERPRETING SECTION 153C OF THE INCOME TAX ACT UNDER THE NEW SCHEME OF FRAMING ASSESSMENT IN SEARCH CASES. AS PER THE LEARNED CIT- DR IN THE NEW SCHEME OF THE ACT APPRAISAL REPORT AMOUNTS TO SATISFACTION BY THE ASSESSING OFFICER FOR ISSUING A NOTICE U/S 153C OF THE ACT. 80. ON THE OTHER HAND IN REPLY TO THE LEARNED CIT DR'S CONTENTIONS IT WAS ARGUED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT EVEN UNDER THE NEW SCHEME OF ASSESSMENT U/S 153C OF THE ACT SATISFACTION IS TO BE NECESSARILY RECORDED BY THE ASSESSING OFFICER OF THE SEARCHED PERSON INDICATING THE DOCUMENTS SEIZED OR REQUISITIONED WHICH BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A OF THE ACT. HE INVITED OUR ATTENTION TO THE PRECISE LANGUAGE USED IN SECTION 153C OF THE ACT WHICH CATEGORICALLY REQUIRES THE ASSESSING OFFICERS SATISFACTION TO THE EFFECT THAT VALUABLES SEIZED DOCUMENTS FOUND DURING THE COURSE OF SEARCH WHICH BELONG TO A PERSON OTHER THAN A PERSON SEARCHED AND THE PROCEDURE OF HANDING OVER OF THESE DOCUMENTS/VALUABLES ETC. TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THEREAFTER OBLIGATION OF THE ASSESSING OFFICER OF SUCH OTHER PERSON TO PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND THEREAFTER TO ASSESS OR REASSESS THE INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A OF THE ACT. AS PER THE LEARNED 84 COUNSEL FOR THE ASSESSEE COPY OF SUCH SATISFACTION NOTE SHOULD BE GIVEN TO THE ASSESSEE WHEREAS THE APPRAISAL NOTE AS REFERRED BY THE LEARNED CIT DR IS A CONFIDENTIAL DOCUMENT PREPARED BY THE DEPARTMENT FOR THEIR INTERNAL USE AND COPY OF WHICH IS NOT HANDED OVER TO THE ASSESSEE. SUCH APPRAISAL REPORT IS A SECRET DOCUMENT PREPARED BY THE DEPARTMENT AND WHICH IS NOT OPEN TO THE ASSESSEE THEREFORE CANNOT BE TREATED AT PAR WITH THE SATISFACTION NOTE AS CONTEMPLATED U/S 153C OF THE ACT WITH REGARD TO THE DOCUMENTS SEIZED DURING THE PROCEEDINGS U/S 132 WHICH IS ALLEGED TO BE BELONGING TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A OF THE ACT. RELIANCE WAS ALSO PLACED ON THE PROPOSITION LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI; 289 ITR 341(SUPRA) AND G.K. DRIVE SHAFT; 259 ITR 19 AND THE DECISION OF THE JURISDICTIONAL TRIBUNAL IN THE CASE OF RISHI CONSTRUCTION; 10 ITJ 346 AND ASNANI BUILDERS; 10 ITJ 618. 81. WE HAVE DELIBERATED UPON THE CONTENTIONS OF THE LEARNED CIT DR SHRI K.K. SINGH AND LEARNED COUNSEL FOR THE ASSESSEE SHRI H.P. VERMA WITH REGARD TO INTERPRETATION OF RECORDING OF SATISFACTION WHILE ASSUMING JURISDICTION U/S 153C OF THE ACT. EVEN IN THE NEW SCHEME OF FRAMING OF ASSESSMENT IN CASE OF SEARCH CASES THE LEGISLATURE HAS CLEARLY STIPULATED THE REQUIREMENT FOR RECORDING OF SATISFACTION WHILE ASSUMING JURISDICTION TO ISSUE NOTICE AND FRAME ASSESSMENT U/S 153C OF THE ACT WHICH REQUIRES THAT SATISFACTION TO BE RECORDED WITH REFERENCE TO THE DOCUMENTS AND OTHER MATERIALS FOUND DURING THE COURSE OF SEARCH BELONGING TO A PERSON OTHER THAN THE SEARCHED PERSON. PRIMA FACIE 85 ASSESSING OFFICER OF SEARCHED PERSON SHOULD FORM AN OPINION WITH REGARD TO ANY DOCUMENT VALUABLE ETC. AS FOUND DURING THE COURSE OF SEARCH THAT SUCH DOCUMENT WHICH IS DECLINED BY THE SEARCHED PERSON ACTUALLY BELONGS TO SOME OTHER PERSON AGAINST WHOM PROCEEDINGS U/S 153C ARE REQUIRED TO PUT INTO OPERATION. AFTER SUCH RECORDING OF SATISFACTION THE DOCUMENTS SO SEIZED SHOULD BE HANDED OVER TO THE ASSESSING OFFICER OF SUCH OTHER PERSON. THE LEGAL REQUIREMENT OF RECORDING OF SUCH SATISFACTION CANNOT BE SUBSTITUTED BY APPRAISAL NOTE WHICH IS PREPARED BY THE SEARCH PARTY AFTER COMPLETION OF SEARCH INSOFAR AS SUCH APPRAISAL NOTE IS A SECRET DOCUMENT PREPARED BY THE DEPARTMENT FOR THEIR INTERNAL USE CONTENTS OF WHICH ARE NOT CONVEYED TO THE ASSESSEE NOR ITS COPY IS SUPPLIED TO THE ASSESSEE EVEN ON MAKING A WRITTEN REQUEST. THE APPRAISAL NOTE SO PREPARED BY THE DEPARTMENT IS MEANT TO MONITOR AFTER THE SEARCH PROCEEDINGS ARE OVER SO AS TO ENSURE EXHAUSTIVE ASSESSMENT OF ALL SEARCHED PERSON WITH RESPECT TO THEIR CORRECT INCOME AND TO PLAN A STRATEGY FOR FURTHER DEEP INQUIRY AND INVESTIGATION OF DOCUMENTS FOUND DURING THE COURSE OF SEARCH. SINCE COPY OF SUCH APPRAISAL NOTE IS NOT SUPPLIED TO THE ASSESSEE IT CANNOT BE TAKEN AT PAR WITH THE REQUIREMENT OF RECORDING OF SATISFACTION NOTE AS STIPULATED U/S 153C OF THE ACT WHICH IS A MANDATORY REQUIREMENT. WHAT IS THE LEGISLATIVE INTENT OF SUCH SATISFACTION AND IN WHAT MANNER IT SHOULD BE RECORDED HAS BEEN DEALT WITH IN THE JUDICIAL PRONOUNCEMENTS IN THE CASES OF MANISH MAHEHWARI AND G.K. 86 DRIVE SHAFT BY THE HONBLE SUPREME COURT. ACCORDINGLY WE ARE NOT INCLINED TO AGREE WITH THE PROPOSITION THAT THE APPRAISAL NOTE PREPARED BY THE DEPARTMENT SHOULD BE TREATED AS A SATISFACTION NOTE AS REQUIRED TO BE RECORDED IN TERMS OF SECTION 153C OF THE ACT SO AS TO EMPOWER THE ASSESSING OFFICER TO ASSUME JURISDICTION TO ISSUE NOTICE AND THEREAFTER FRAME ASSESSMENT U/S 153A READ WITH SECTION 143(3) OF THE ACT. 82. IN VIEW OF THE ABOVE DISCUSSION WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WHO HAS QUASHED THE ASSESSMENT FRAMED U/S 153C OF THE ACT. FURTHER THE DETAILED FINDING RECORDED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WITH RESPECT TO RECORDING OF SATISFACTION HAS NOT BEEN CONTROVERTED BY THE DEPARTMENT BY BRINGING ANY POSITIVE MATERIAL ON RECORD. WE THEREFORE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) QUASHING THE ASSESSMENTS FRAMED U/S 153C OF THE ACT IN THE CASES OF ALL THESE ASSESSES. 58. THE FACTS AND CIRCUMSTANCES IN THE INSTANT APPE ALS BEFORE US ARE PARA MATERIA TO THE FACTS AND CIRCUMSTANCES DEA LT WITH BY THE COORDINATE BENCH IN THE CASES MENTIONED HEREINABOVE . WE RESPECTFULLY FOLLOW THE CONCLUSION OF THE COORDINAT E BENCH WITH RESPECT TO LEGALITY OF FRAMING OF ASSESSMENT U/S 15 3C OF THE ACT. IN THE RESULT THE GROUND TAKEN BY THE REVENUE CHALLEN GING THE ORDER OF 87 THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WHE REIN HE HAS QUASHED THE ORDER PASSED U/S 153C/143(3) OF THE ACT ARE HEREBY DISMISSED IN THE CASES OF ALL THE APPEALS BEFORE US . 59. IN THE CROSS OBJECTIONS FILED BY THE ASSESSEE GROUNDS HAVE BEEN TAKEN AGAINST PARTIALLY CONFIRMING SOME OF THE ADDITIONS/DISALLOWANCE OF EXPENSES ETC. BY THE LEA RNED COMMISSIONER OF INCOMETAX (APPEALS). AS WE HAVE AL READY UPHELD THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IN ENTIRETY EVEN FOR THE ADDITIONS/DISALLOWANCE SUSTA INED BY HIM ON MERITS NOTHING WAS BROUGHT BY THE LEARNED COUNSEL FOR THE ASSESSEE TO OUR NOTICE TO PERSUADE US TO DEVIATE FROM THESE FINDINGS OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ACCOR DINGLY ALL THE GROUNDS TAKEN IN THE CROSS OBJECTION ARE ALSO DISMI SSED IN TERMS OF THE FINDINGS RECORDED BY THE LEARNED COMMISSIONER O F INCOME TAX (APPEALS). ADDITIONAL GROUND WAS TAKEN BY THE ASSE SSEE TO THE EFFECT THAT SINCE NO ADVERSE MATERIAL WAS FOUND DURING THE COURSE OF SEARCH U/S 132 OF THE ACT IN RESPECT OF THE ADDITIONS MADE BY THE ASSESSING OFFICER OR OTHERWISE THEREFORE THE ASSESSMENT IS BAD IN LAW AND UNJUSTIFIED. AS WE HAVE ALREADY CONFIRMED THE ORDE R OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN ANNULLING T HE ASSESSMENT ITSELF FRAMED U/S 153C OF THE ACT WE DO NOT SEE AN Y VALID REASON IN 88 THE TECHNICAL GROUND RAISED BY THE ASSESSEE IN THE FORM OF ADDITIONAL GROUND. THE SAME IS THEREFORE DISMISSED IN LIMINE . 60. IN THE RESULT ALL THE APPEALS OF THE REVENUE AND CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 29 TH DECEMBER 2010. SD/ SD/- ( R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29 TH DECEMBER 2010. COPY TO : APPELLANT/RESPONDENT/CIT/CIT(A)/DR DN/