GREGORY & NICHOLAS, GOA v. ACIT CEN CIR 47, MUMBAI

ITSSA 24/MUM/2009 | misc
Pronouncement Date: 07-01-2011 | Result: Allowed

Appeal Details

RSA Number 2419916 RSA 2009
Assessee PAN AADFG2702Q
Bench Mumbai
Appeal Number ITSSA 24/MUM/2009
Duration Of Justice 1 year(s) 10 month(s) 13 day(s)
Appellant GREGORY & NICHOLAS, GOA
Respondent ACIT CEN CIR 47, MUMBAI
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 07-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 07-01-2011
Date Of Final Hearing 21-12-2010
Next Hearing Date 21-12-2010
Assessment Year misc
Appeal Filed On 23-02-2009
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI J. SUDHAKAR REDDY ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER. I.T.A. NO. 5102/MUM/2006. ASSESSMENT YEAR : 2002-03. AND IT(SS)A NO.24/MUM/2009 BLOCK PERIOD FROM 01-04-96 TO 18-02-2003. M/S GREGORY & NICHOLAS ASSTT. COMMISSIONER OF INCOME-TAX C/O MR. RAHUL SHAH VS. CENTRAL CIRCLE-47 CLUB CUBANA 83 MUMBAI. XIM WADDO ARPORA BARDEZ GOA. PAN AADFG2702Q APPELLANT. RESPOND ENT. APPELLANT BY : SHRI VIJAY MEHTA. RESPONDENT BY : SHRI PAVAN VED . O R D E R PER J. SUDHAKAR REDDY A.M. : BOTH THESE APPEALS ARE FILED BY THE ASSESSEE. ITA N O. 5102/MUM/2006 IS AN APPEAL AGAINST THE ORDER PASSED BY THE CIT(APPEALS) CENTRAL-III MUMBAI ON 05- 07-2006 AGAINST THE ORDER PASSED U/S 144 OF THE ACT BY THE AO ON 08-03-2005 FOR THE ASSESSMENT YEAR 2002-03. IT(SS)A NO.24/MUM/2009 IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(APPEALS) CENTRAL-III MUMBA I DATED 01-03-2007 IN AN 2 APPEAL AGAINST AN ORDER PASSED U/S 158BD READ WITH SECTION 158BC DATED 26-04- 2006 FOR THE BLOCK PERIOD 01-04-96 TO 18-02-2003. 2. THERE IS A DELAY OF 654 DAYS IN FILING OF THE APPEA L AGAINST THE ORDER OF THE CIT(APPEALS) DATED 01-03-2007 I.E. IN THE PROCEEDIN G U/S 158BD 3. AS THE ISSUES THAT ARISE IN BOTH THESE APPEALS A RE INTERCONNECTED FOR THE SAKE OF CONVENIENCE WE HEARD THEM TOGETHER AND DISPOSE OF THE SAME BY WAY OF THIS COMMON ORDER. 4. MR. VIJAY MEHTA LEARNED COUNSEL FOR THE ASSESSE E FIRST ARGUED THE ISSUE OF CONDONATION OF DELAY. HE TOOK THIS BENCH THROUGH TH E CONDONATION PETITION FILED BY THE ASSESSEE AS WELL AS THE AFFIDAVIT FILED BY HIM. HIS CASE IS THAT THE SAME AMOUNT HAS BEEN ASSESSED BOTH IN THE REGULAR ASSESSMENT AS WELL AS IN THE BLOCK ASSESSMENT AND HE WAS UNDER A BONAFIDE BELIEF THAT THE SINGLE APPEAL WOULD BE SUFFICIENT. HE FURTHER SUBMITS THAT THIS BELIEF AROSE OUT OF ADVIC E GIVEN TO HIM BY A LOCAL CHARTERED ACCOUNTANT AT GOA. LATER THIS MISTAKE WA S REALIZED AND THE APPEAL AGAINST THE BLOCK ASSESSMENT ORDER AS CONFIRMED BY THE CIT(APPEALS) WAS FILED WITH A PETITION FOR CONDONATION OF DELAY.. 5. MR. VIJAY MEHTA FURTHER FILED AN AFFIDAVIT GIVEN BY MR. GANESH M. DAIVAJNA CHARTERED ACCOUNTANT AND PARTNER OF M/S GANESH GANE SH DAIVAJNA & CO. GOA WHEREIN THE CHARTERED ACCOUNTANT STATED THAT IN VIE W OF THE FACT THAT THE SAME ADDITION WAS MADE TWICE AND AS AN APPEAL HAD ALREAD Y BEEN FILED AGAINST THE ORDER OF THE CIT(APPEALS) FOR THE ASSESSMENT YEAR 2002-03 HE ON HIS MISUNDERSTANDING OF LAW AND FACTS DID ADVISE THE ASSESSEE THAT ONLY ONE APPEAL NEED TO BE FILED IN THIS CASE. THE LEARNED COUNSEL ARGUED THAT THIS IS NOT A CASE WHERE THE ASSESSEE HAS NOT ACTED NOR A CASE OF INACTION AND IT IS A CASE W HERE THE ASSESSEE HAS BEEN CONTINUOUSLY PURSUING THE REMEDY AND IT TURNED OUT THAT THE ASSESSEE WRONGLY FAILED 3 TO PREFER AN APPEAL IN TIME AGAINST THE BLOCK ASSES SMENT ORDER AS CONFIRMED BY THE CIT(APPEALS) AND THAT TOO ON LEGAL ADVISE. HE SUBMI TTED THAT IN SUCH SITUATION THE APPEAL DELAY SHOULD BE CONDONED. HE RELIED ON THE F OLLOWING DECISIONS : I) COLLECTOR LAND ACQUISITION VS. MST. KATJI 1 67 ITR 471. II) PRIYANKA CHOPRA VS. ACIT ITA NO.4045/MUM/2009 AND ITA NO. 2019/MUM/2010 C-BENCH ORDER DATED 10 TH DEC. 2010. HE DREW OUR ATTENTION TO PAGE 17 AND SUBMITTED THAT UNDER SIMILAR FACTS AND CIRCUMSTANCES THE TRIBUNAL CONDONED THE DELAY OF 2 40 DAYS IN FILING THE APPEAL. HE ALSO REFERRED THE CASE LAWS CITED AT PAGES 12 AN D 13 OF THE ORDER AND RELIED ON THE SAME. HE ALSO RELIED ON CERTAIN OTHER DECISIONS BASED ON WHICH HE SUBMITS THAT THE DELAY HAS TO BE CONDONED. 6. MR. PAVAN VED LEARNED CIT-DR ON THE OTHER HAND STRONGLY OPPOSED THE CONTENTIONS OF THE ASSESSEE AND SUBMITTED THAT THIS IS NOT A FIT CASE FOR CONDONATION OF DELAY. HE FILED A COPY OF SECTION 1 OF THE INDIA N EVIDENCE ACT WHEREIN IT IS STATED THAT INDIAN EVIDENCE ACT 1872 DOES NOT APPL Y TO AFFIDAVITS PRESENTED TO ANY COURT OR OFFICER OR PROCEEDINGS BEFORE AN ARBITRATI ON. HE POINTED OUT THAT THE AFFIDAVITS IN QUESTION WERE NOT PROPERLY VERIFIED. HE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF A.K.K. NAMBIAR APPELLANT V. UNION OF INDIA AND ANOTHER RESPONDENTS AIR 1970 SUPREME CO URT 652 AND ARGUED THAT AFFIDAVITS WHICH ARE NOT PROPERLY VERIFIED CANNOT BE ADMITTED IN EVIDENCE. HE VEHEMENTLY CONTENDED THAT THE FACTS MENTIONED IN TH E AFFIDAVITS ARE NOT PROVED AND IN SUCH CIRCUMSTANCES NO CONDONATION CAN BE GRANTED . HE FURTHER PLEADED THAT IF THE TRIBUNAL WANTS TO ENTERTAIN THE AFFIDAVIT OF THE CH ARTERED ACCOUNTANT MR. GANESH M. DAIVAJNA THEN HE SHOULD BE GIVEN AN OPPORTUNITY TO CROSS EXAMINE THE PROFESSIONAL. 4 7. AFTER HEARING RIVAL CONTENTIONS ON THE ISSUE OF CONDONATION WE HOLD AS FOLLOWS. 8. THE ASSESSEE HAS BEEN AGITATING THIS ADDITION IN VARIOUS FORMS INCLUDING THE TRIBUNAL. THE CHARTERED ACCOUNTANT OF THE ASSESSEE MR. GANESH M. DAIVAJNA AT PARA 4 AND 5 OF HIS AFFIDAVIT STATED AS FOLLOWS : 4. I SAY THAT SINCE THE ADDITION IN BOTH THE ASSES SMENTS WAS CONFIRMED BYT LD. COMMISSIONER OF INCOME-TAX (APPEALS) VIDE ORDER DATED 05.07.2006 FOR A.Y. 2002-03 AND VIDE ORDER DATED 01.03.2007 FOR TH E BLOCK PERIOD I ADVISED THAT THE ADDITION CANNOT BE MADE AT TWO PLA CES. SINCE APPEAL IS ALREADY FILED BEFORE HONBLE ITAT AGAINST THE ORDER OF CIT(A) FOR A.Y. 2002-03 ON 27.09.2006 THERE WAS NO NEED TO FILE AN Y APPEAL AGAINST THE ORDER OF LD. CIT(A) IN RESPECT OF THE BLOCK PERIOD. 5. I SAY THAT THE SAID ADVICE WAS GIVEN BASED ON MY UNDERSTANDING OF THE LAW AND THE FACTS OF THE CASE. IN THE CONDONATION PETITION THE ASSESSE PLEADS THAT HE WAS UNDER A BONAFIDE BELIEF THAT THE SAME AMOUNT CANNOT BE ADDED TWICE IN TWO D IFFERENT ASSESSMENTS WHICH IS A DOUBLE ADDITION AND IN SUCH CIRCUMSTANCES UNDER AN ADVICE OF A PROFESSIONAL HE BELIEVED THAT THE SINGLE APPEAL WOULD SUFFICE. IN O UR HUMBLE OPINION THE DELAY CAUSED DUE TO WRONG LEGAL ADVICE GIVEN BY THE COUNS EL SHOULD BE CONDONED AS THE DELAY WAS DUE TO A REASONABLE CAUSE. THIS BENCH OF THE TRIBUNAL IN THE CASE OF PRIYANKA CHOPRA (SUPRA) AT PARA 20 21 AND 22 AT PA GES 13 TO 17 OBSERVED AS FOLLOWS : 20. AFTER CONSIDERING THE RIVAL CONTENTIONS AND THE RELEVANT MATERIAL WE FIND THAT THE ASSESSEE WAS AGITATING THE ISSUE OF INCLUSION OF RS.5 LAKHS AS PROFESSIONAL INCOME INS TEAD OF SHOWING AS LOAN IN THE PROCEEDINGS BEFORE THE AO ARISING FROM THE ORDER PASSED BY THE CIT UNDER SECTION 263. THE AO DID NOT ACCEPT THE CLAIM OF THE ASSESSEE WHILE PASSING TH E ASSESSMENT ORDER. SIMILARLY THE CIT(A) HAS ALSO DECLINED TO ACCEPT THE CLAIM OF THE ASSESSEE BY RELYING THE DECISION OF T HE HON. 5 SUPREME COURT IN THE CASE OF GOETZ(INDIA) LTD REPOR TED IN 2006 284 ITR 323(SC). WE FURTHER NOTE THAT DURING THE APPELLATE PROCEEDINGS BEFORE THE CIT(A) AGAINST THE ORDER P ASSED U/S 143(3) R.W.S 263 THE CIT(A) HAS ISSUED A DEMAND OR DER DATED 03.02.2009 FOR VERIFICATION OF THE CLAIM OF THE ASE SEEE REGARDING THE LOAN AMOUNT OF RS..5 LAKHS MISTAKENLY INCLUDED IN THE INCOME AS PROFESSIONAL INCOME. THE AO IN THE REMAND REPOR T DATED 04.03.2009 VERIFIED THE CLAIM AND FOUND AS VALID. THUS IT IS CLEAR THAT THE ASSESSEE WAS PURSUING THIS ISSUE IN THE ASSESSMENT PROCEEDINGS AND APPELLATE PROCEEDINGS ARISING FROM THE ORDER PASSED U/S 263 AND DID NOT RAISE THIS ISSUE BY FILI NG THE APPEAL AGAINST THE IMPUGNED ORDER ARISING FROM THE ORIGINA L ASSESSMENT ORDER. THE ASSESSEE HAS SUPPORTED HER EXPLANATION BY WAY OF FILING THE AFFIDAVIT AS WELL AS THE AFFIDAVIT OF SH RI ANIL SIKHARI CA. IT IS STATED IN THE AFFIDAVIT BY THE REPRE SENTATIVE THAT HE HAS ADVISED THE ASSESSEE TO FILE APPEAL ONLY AGAINS T THE ORDER ARISING FROM THE ORDER U/S 263 PROCEEDINGS AND RAIS E THIS ISSUE. THEREFORE THE ASSESSEE WAS NOT ADVISED TO FILE THE APPEAL AGAINST THE IMPUGNED ORDER ARISING FROM THE ORIGINAL ASSESS MENT ORDER. IT IS SETTLED LAW THAT WHILE DECIDING THE CONDONATION OF DELAY THE COURT SHOULD TAKE A LENIENT VIEW. THE MISTAKE ON T HE PART OF THE COUNSEL MAY IN CERTAIN CIRCUMSTANCES BE TAKEN INT O ACCOUNT IN DEALING IN DELAY. THERE IS NO GENERAL PROPOSITION THAT MISTAKE OF COUNSEL ITSELF IS ALWAYS A SUFFICIENT GROUND. IT IS ALWAYS A QUESTION WHETHER THE EXPLANATION AND REASONS FOR DE LAY WAS BONAFIDE OR WAS MERELY DEVISE TO COVER AN ULTERIOR PURPOSE SUCH AS LATCHES ON THE PART OF THE LITIGANT OR AN ATTE MPT TO SAVE LIMITATION IN AN UNDERHAND WAY. NO DOUBT THE ASSE SSEE HAS TO BELIEVE AND REPOSE FAITH IN THEIR REPRESENTATIVE/AD VOCATE AFTER HAVING PAID THE FEE AND GIVEN THE REQUISITE INSTRUC TIONS TO HIS/HER REPRESENTATIVE. A LITIGANT MAY BE JUSTIFIED IN BE LIEVING THAT HIS/HER REPRESENTATIVE WOULD DISCHARGE HIS PROFES SIONAL OBLIGATION. THEREFORE IN THE CASE WHERE IT IS BROU GHT ON RECORD THAT THE PARTY HAS DONE EVERYTHING IN ITS POWER WHI CH IS NECESSARY FOR LEGAL PROCEEDINGS THE COURT SHOULD B E LIBERAL IN CONSIDERING THE SUFFICIENT CAUSE AND SHOULD LIEN IN FAVOUR OF SUCH PARTY. HOWEVER THE LITIGANT DOES NOT STAND TO BENEFIT BY FILING AN APPEAL AT A BELATED STAGE. WHENEVER SU BSTANTIAL JUSTICE AND TECHNICAL CONSIDERATION ARE OPPOSED TO EACH OTHER CAUSE OF SUBSTANTIAL JUSTICE HAS TO BE PREFERRED. C OURT SHOULD 6 TAKE JUSTICE ORIENTED APPROACH WHILE DECIDING THE A PPLICATION FOR CONDONATION OF DELAY . IT DOES NOT MEAN A LITIGAN T HAS LICENSE TO APPROACH THE COURT AT ITS WILL. 21. IN THE CASE OF N BALAKRISHNAN V/S M KRISHNAMUR THY REPORTED IN (1998) 7 SCC 123 VIDE PARAGRAPHS 9 AND 13 HAVE HELD AS UNDER : 9. IT IS AXIOMATIC THAT CONDONATION OF DELAY IS A MATTER OF DISCRETION OF THE COURT SECTION 5 OF THE LIMITATION ACT DOES NOT SAY THAT SUCH DISCRETION CAN BE EXERCISED ONLY IF THE DELAY IS WITHIN A CERTAIN LIMIT. LENGTH OF DELAY IS NO MATTER ACCEPTABILITY OF THE EXPLANATION IS THE ONLY CRITER ION. SOMETIMES DELAY OF THE SHORTEST RANGE MAY BE UNCOND ONABLE DUE TO WANT OF ACCEPTABLE EXPLANATION WHEREAS IN CE RTAIN OTHER CASES DELAY OF VERY LONG RANGE CAN BE CONDONE D AS THE EXPLANATION THEREOF IS SATISFACTORY. ONCE THE COURT ACCEPTS THE EXPLANATION AS SUFFICIENT IT IS THE RESULT OF P OSITIVE EXERCISE OF DISCRETION AND NORMALLY THE SUPERIOR CO URT SHOULD NOT DISTURB SUCH FINDING MUCH LESS IN REVERSIONAL JURISDICTION UNLESS THE EXERCISE OF DISCRETION WAS ON WHOLE UNTENABLE GROUNDS OR ARBITRARY OR PERVERSE. BUT IT IS A DIFFERENT MATTER WHEN THE FIRST CUT REFUSES TO COND ONE THE DELAY. IN SUCH CASES THE SUPERIOR CUT WOULD BE FRE E TO CONSIDER THE CAUSE SHOWN FOR THE DELAY AFRESH AND I T IS OPEN TO SUCH SUPERIOR COURT TO COME TO ITS OWN FINDING E VEN UNTRAMMELED BY THE CONCLUSION OF THE LOWER COURT. 13. IT MUST BE REMEMBERED THAT IN EVERY CASE OF DEL AY THERE CAN BE SOME LAPSE ON THE PART OF THE LITIGANT CONCE RNED. THAT ALONE IS NOT ENOUGH TO TURN DOWN HIS PLEA AND TO SH UT THE DOOR AGAINST HIM. IF THE EXPLANATION DOES NOT SMACK OF MALA FIDES OR IT IS NOT PUT FORTH AS PART OF A DILATORY STRATEGY THE COURT MUST SHOW UTMOST CONSIDERATION TO THE SUITOR. BUT WHEN THERE IS REASONABLE GROUND TO THINK THAT THE DELAY WAS OCCASIONED BY THE PARTY DELIBERATELY TO GAIN TIME T HEN THE COURT SHOULD LEAN AGAINST ACCEPTANCE OF THE EXPLANA TION. WHILE CONDONING DELAY THE COULD SHOULD NOT FORGET T HE 7 OPPOSITE PARTY ALTOGETHER. IT MUST BE BORNE IN MIND THAT HE IS A LOOSER AND HE TOO WOULD HAVE INCURRED QUIET A LAR GE LITIGATION EXPENSES. IT WOULD BE A SALUTARY GUIDELI NE THAT WHEN COURTS CONDONE THE DELAY DUE TO LACHES ON THE PART OF THE APPLICANT THE COURT SHALL COMPENSATE THE OPPOSI TE PARTY FOR HIS LOSS. 22. FROM THE FACTS AND CIRCUMSTANCE OF THE CASE A S WELL AS FROM THE RECORD WE FIND THAT THE ASSESSEE HAS EXP LAINED SUFFICIENT AND REASONABLE CAUSE FOR NOT TAKING STEP S WITHIN THE TIME PRESCRIBED FOR FILING THE APPEAL. THEREFORE WE ARE OF THE CONSIDERED VIEW THAT THIS IS FIT CASE FOR CONDONATI ON OF DELAY PARTICULARLY WHEN THE ASSESSEE HAS ALREADY RAISED T HIS ISSUE IN ANOTHER APPEAL ARISING FROM THE PROCEEDINGS U/S 26 3. THEREFORE WE ARE SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE THAT THERE IS NO MALAFIDE OR WILLFUL MOTIVE ON THE PART OF THE ASSESSEE FOR NOT FILING THE APPEAL WITHIN THE TIME. ACCORDI NGLY THE DELAY IS CONDONED. THE PROPOSITIONS LAID DOWN BY THE TRIBUNAL APPLIES TO THE FACTS OF THIS CASE. 9. ON THE ISSUE OF CONDONATION OF DELAY WE FIND THA T RECENTLY THE HONBLE SUPREME COURT IN THE CASE OF IMPROVEMENT TRUST LUD HIYANA VS. UJAGAR SINGH AND OTHERS CIVIL APPEAL NO. 2395 OF 2008 JUDGMENT DAT ED 9 TH JUNE 2010 AT PARA 1 HELD AS FOLLOWS : WHILE CONSIDERING THE APPLICATION FOR CONDONATION OF DELAY NO STRAIGHT JACKET FORMULA IS PRESCRIBED TO COME TO A CONCLUSIO N IF SUFFICIENT AND GOOD GROUNDS HAVE BEEN MADE OUT OR NOT. EACH CASE HAS TO BE MADE FROM ITS FACTS AND THE CIRCUMSTANCES IN WHICH PARTY ACTS AND BEHAV ES. FROM THE CONDUCT BEHAVIOR AND ATTITUDE OF THE APPELLANT IT CANNOT BE SAID THAT IT HAS BEEN ABSOLUTELY CALLOUS AND NEGLIGENT IN PROSECUTING THE MATTER. THEREAFTER AT PARA 2 IT HELD AS FOLLOWS : AFTER ALL JUSTICE CAN BE DONE ONLY WHEN THE MATTE R IS FOUGHT ON MERITS AND IN ACCORDANCE WITH LAW RATHER THAN TO DISPOSE IT OF ON SUCH TECHNICALITIES AND THAT TOO AT THE THRESHOLD. 8 AT PARA 3 IT HELD AS FOLLOWS : IT IS PERTINENT TO POINT OUT THAT UNLESS MALAFIDE ARE WRIT LARGE ON THE CONDUCT OF THE PARTY GENERALLY AS A NORMAL RULE D ELAY SHOULD BE CONDONED. IN THE LEGAL ARENA AN ATTEMPT SHOULD ALSO BE MADE TO ALLOW THE MATTER TO BE CONTESTED ON MERIT RATHER THAN TO THROW IT ON SUCH TECHNICALITIES. 10. COMING TO THE SUBMISSIONS MADE BY THE LEARNED D R IT IS WELL SETTLED THAT THE PROVISIONS OF THE EVIDENCE ACT ARE NOT STRICTLY APP LICABLE TO THE PROCEEDINGS BEFORE THE TRIBUNAL. WHEN FACTS ARE STATED BY WAY OF AN AF FIDAVIT THEY CANNOT BE SUMMARILY DISMISSED. COMING TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF A.K.K. NAMBIAR IT WAS THE CASE OF INVESTI GATION RELATING TO A CRIMINAL CHARGE AGAINST THE GOVERNMENT SERVANT. THE AFFIDAVI T IN THAT CASE WAS FILED TO SUPPORT A PETITION WHEREIN ALLEGATIONS WERE MADE B Y THE PETITIONER AGAINST THE CHIEF MINISTER OF ANDHRA PRADEH AND OTHER PERSONS WHO WERE NOT MADE A PARTY. THE AFFIDAVIT FILED BY THE PETITIONER AND AFFIDAVIT S FILED IN ANSWER TO THE APPELLANTS PETITION WERE NOT VERIFIED. IN SUCH CIRCUMSTANCES THE HONBLE COURT HELD THAT THE REASONS FOR VERIFICATION OF AFFIDAVITS ARE TO ENABLE THE COURT TO FIND OUT WHICH FACTS CAN BE STATED TO BE PROVED ON THE AFFIDAVIT E VIDENCE OF RIVAL PARTIES. IT FURTHER OBSERVED THAT THE IMPORTANCE OF VERIFICATION IS TO TEST THE GENUINENESS AND AUTHENTICITY OF THE ALLEGATIONS AND ALSO MAKE THE D EPONENT RESPONSIBLE FOR THE ALLEGATIONS. UNDER THOSE CIRCUMSTANCES THE AFFIDAVI TS COULD NOT BE ADMITTED AS EVIDENCE. IN THE CASE ON HAND THE AFFIDAVITS WERE IN FACT EXECUTED BEFORE A NOTARY. THE AFFIDAVITS ARE FILED IN SUPPORT OF THE PETITIO N FOR CONDONATION OF DELAY. THE QUESTION OF ADMISSION OF A DOCUMENT AS AN EVIDENCE AS IN A CRIMINAL CASE DOES NOT ARISE IN PROCEEDING BEFORE TRIBUNAL. AS THE EVIDEN CE ACT DOES NOT STRICTLY APPLY TO INCOME-TAX PROCEEDINGS THESE AFFIDAVITS CANNOT BE IN OUR HUMBLE OPINION REJECTED. COMING TO THE CONTENTION OF THE REVENUE T HAT THEY SHOULD BE GIVEN AN 9 OPPORTUNITY TO CROSS EXAMINE THE PROFESSIONAL WHO G AVE AFFIDAVIT OF HAVING GIVEN A CERTAIN ADVICE WE FIND THAT NO COUNTER HAS BEEN FI LED BY THE REVENUE AGAINST THE PETITION FOR CONDONATION OF DELAY. IN SUCH CIRCUMST ANCES THE REQUEST FOR CROSS EXAMINATION AT THIS STAGE CANNOT BE GRANTED. THE CH ARTERED ACCOUNTANT IN THIS CASE HAS CATEGORICALLY STATED BY WAY OF AN AFFIDAVIT THA T IN HIS UNDERSTANDING OF THE LAW AT THAT POINT OF TIME HE DID ADVISE THAT ONLY ONE APPEAL NEED BE FILED AS THE ADDITION IS OF THE SAME ISSUE IN BOTH THE APPEALS . BASED ON THIS LEGAL ADVICE WE HOLD THAT THE ASSESSEE WAS UNDER A BONAFIDE BELIEF THAT HE NEED NOT FILE AN APPEAL AGAINST THE ORDER OF THE CIT(APPEALS) DATED 01-03-2 007. THUS THE DELAY. WE FIND THAT THE DELAY WAS NOT BECAUSE OF ANY MALAFIDE OR DELIBERATE INTENTION AND IN FACT THE ASSESSEE HAS BEEN PURSUING A LEGAL REMEDY IN OT HER PROCEEDINGS. THUS WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS EXPLAI NED THE DELAY BY GIVING SUFFICIENT AND REASONABLE EXPLANATION WHICH IS SUPP ORTED WITH EVIDENCE. 11. ON THESE FACTS AND CIRCUMSTANCES WE CONDONE TH E DELAY AND ADMIT THE APPEAL IN IT(SS)A.NO. 24/MUM/2009. 12. ITA NO. 5102/MUM/2006. MR. VIJAY MEHTA LEARNED COUNSEL FOR THE ASSESSEE TOOK UP THE APPEAL FOR THE ASSESSMENT YEAR 2002-03. HE SUBMITTED THAT THE VERY SAME ADDITION WAS MADE BY THE AO BOTH IN THE BLOCK ASSESSMENT AS WELL AS IN THE REGULAR ASSESSMENT. HE FILED A SHEET GIVING CHRONOLOGY OF EVENTS AND POINTED OUT THAT THE REGULAR ASSESSMENT ORDER U/S 144 WAS PASSED ON 18-03-2005 FOR THE ASSE SSMENT YEAR 2002-03 AND THAT THEREAFTER A NOTICE U/S 158BD WAS ISSUED ON 12-08-2 005 FOR THE REASON THAT THE ORIGINAL NOTICE DATED 20-04-2004 COULD NOT BE SERVE D. HE POINTED OUT THAT THE REGULAR ASSESSMENT ORDER WAS PASSED MUCH BEFORE THE PASSING OF THE ASSESSMENT ORDER IN THE BLOCK ASSESSMENT AND TOOK THIS BENCH T HROUGH THE SAME. REFERRING TO THE LAST PARAGRAPH OF THE ASSESSMENT ORDER DATED 18 -03-2005 HE SUBMITTED THAT THE 10 AO HAS LOOSELY USED THE WORD THAT THIS IS A PROTEC TIVE ASSESSMENT IN REALITY THOUGH IT IS NOT SO. HE CONTENDED THAT THE INCOME- TAX ACT 1961 DOES NOT PERMIT PROTECTIVE ASSESSMENTS AND IT IS ONLY THROUGH CERTA IN JUDGMENTS OF THE COURTS OF LAW THAT PROTECTIVE ASSESSMENTS ARE PERMITTED. HE P OINTED OUT THAT THE COURTS WHILE HOLDING THAT THE AO IS ENTITLED TO MAKE PROTECTIVE ASSESSMENT HAD LAID DOWN CERTAIN GUIDE LINES WHICH HAVE TO BE FOLLOWED. AS P ER THE LEARNED COUNSEL THE AO DOES NOT HAVE UNFETTERED POWERS TO DO PROTECTIVE A SSESSMENTS AND THE CONDITIONS LAID DOWN BY THE COURT HAVE TO BE FULFILLED BEFORE MAKING A PROTECTIVE ASSESSMENT. AS PER THE LEARNED COUNSEL THE PRE-REQUISITES FOR MAKING A PROTECTIVE ASSESSMENT ARE AS FOLLOWS: A) THE REASONS FOR MAKING A PROTECTIVE ASSESSMENT SHO ULD BE MENTIONED IN THE ORDER. B) THE ENTITY AND THE ASSESSMENT YEAR IN WHICH THE SUB STANTIVE ADDITION HAS BEEN MADE HAS TO BE MENTIONED IN THE PROTECTIVE AS SESSMENT ORDER.. C) THERE SHOULD BE A DECLARATION IN THE ASSESSMENT ORD ER AS WELL AS IN THE DEMAND NOTICE THAT THIS IS A PROTECTIVE ASSESSMENT AND IT SHOULD ALSO BE STATED THAT THE DEMAND ARISING OUT OF THE PROTECTI VE ASSESSMENT WILL NOT BE RECOVERED. D) A SUBSTANTIVE ASSESSMENT MUST NECESSARILY PRECEDE T HE PROTECTIVE ASSESSMENT. E) IN CASE OF A PROTECTIVE ASSESSMENT THERE SHOULD NO T BE ANY PENALTY PROCEEDINGS UNLESS A PROTECTIVE ASSESSMENT IS CONV ERTED INTO A SUBSTANTIVE ASSESSMENT. HE RELIED ON THE FOLLOWING CASE LAWS FOR THIS PROPO SITION : I) LALJI HARIDAS VS. ITO AND ANOTHER 43 ITR 387. II) DILIP KUMAR JAIN VS. ITO 5 ITD 552. III) ITO VS. MISS VASUDHA BAJORIA 40 ITD 414 (CAL.) IV) M.P. RAMCHANDRAN VS. DCIT 129 TTJ 190 AT PAGE 195. 11 HE VEHEMENTLY CONTENDED THAT THE ADDITION WAS IN FA CT MADE ON SUBSTANTIVE BASIS AS FOR THE ASSESSMENT YEAR 2002-03 TAX DEMAND WAS RAISED AND COERCIVE MEASURES HAD BEEN INITIATED AGAINST THE ASSESSEE FOR RECOVE RING THIS DEMAND IN THE REGULAR ASSESSMENT AND PENALTY HAS ALSO BEEN LEVIED U/S 271 (1)(C). HE FILED COPIES OF THE PROCEEDINGS OF THE AO TO PROVE HIS POINT. HE ALSO P OINTED OUT THAT THE SUBSTANTIVE ADDITION HAS NOT PRECEDED THE ADDITION U/S 144 AND ON THIS GROUND ALSO IT CANNOT BE STATED THAT THIS IS A PROTECTIVE ADDITION. HE CONTE NDED THAT MEAR MENTION THAT THIS IS A PROTECTIVE ADDITION DOES NOT DECIDE THE ISSUE. TH US HE SUBMITTED THAT THIS IS A SUBSTANTIVE ADDITION MADE U/S 143(3)/144 FOR THE AS SESSMENT YEAR 2002-03 AND THAT THIS IS NOT A PROTECTIVE ADDITION. 13. ON MERITS HE SUBMITTED THAT THE ADDITION IS BA SED ON CERTAIN STATEMENTS TAKEN FROM THIRD PARTIES AND THE ASSESSEE HAS NOT BEEN GIVEN AN OPPORTUNITY TO CROSS EXAMINE THOSE PERSON. THUS HE SUBMITS THAT TH E ADDITION IS BAD IN LAW. 14. THE LEARNED DR MR. PAVAN VED OPPOSED THE CONT ENTIONS OF THE ASSESSEE AND SUBMITTED THAT THE ASSESSEE HAS NOT RAISED THE ISSUE THAT THE ADDITION IN THE REGULAR ASSESSMENT IS NOT THE PROTECTIVE ASSESSMEN T BEFORE THE FIRST APPELLATE AUTHORITY. HE TOOK THIS BENCH THROUGH THE STATEMENT OF FACTS FILED BY THE ASSESSEE BEFORE THE CIT(APPEALS) AND SUBMITTED THAT NOWHERE IN THE STATEMENT OF FACTS THE ASSESSEE HAS RAISED THE CONTENTION THAT THIS IS NOT A PROTECTIVE ASSESSMENT. THUS AS PER THE LEARNED DR THE ISSUE IS RAISED FOR THE FIRS T TIME. FURTHER THE LEARNED DR SUBMITTED THAT NOTICE U/S 158BD WAS ORIGINALLY ISSU ED ON 20-04-2004 AND THAT IT COULD NOT BE SERVED AND THAT THE AO HAD ALWAYS AN INTENTION OF MAKING THE ADDITION IN THE BLOCK ASSESSMENT ORDER. THUS THE OR DER U/S 144 DATED 18-03-2005 BEING SUBSEQUENT TO THE ORIGINAL NOTICE U/S 158BD IS ONLY A PROTECTIVE ASSESSMENT ORDER. HE POINTED OUT THAT SATISFACTION WAS RECORDE D BY THE AO WHILE ISSUING NOTICE U/S 158BD AND THAT THE 143(3) ORDER WAS PASSED BECA USE IT WAS GETTING TIME BARRED. 12 HE VEHEMENTLY CONTENDED THAT THE ENTIRE ADDITION WA S MADE BASED ON A STATEMENT AND MATERIAL GATHERED FROM CERTAIN ADVERTISING AGEN CY AND THE AO HAS THE RIGHT TO MAKE AN ADDITION IN THE CORRECT HANDS. HE CONTENDED THAT JUST BECAUSE WRONGLY AN ADDITION HAS BEEN MADE U/S 144 THE ADDITION U/S 15 8BD CANNOT BE KNOCKED AWAY. IN SUM AND SUBSTANCE THE LEARNED DR ARGUES THAT THE ADDITION FOR THE ASSESSMENT YEAR 2002-03 WAS ONLY A PROTECTIVE ADDITION. HE FUR THER SUBMITS THAT THE SAME ADDITION CANNOT BE MADE AT TWO PLACES AND THAT THE DEPARTMENT IS DUTY BOUND TO DELETE THE ADDITION IN ONE OF THE ASSESSMENTS AND T HAT THE ASSESSEE MAY APPROACH APPROPRIATE AUTHORITY FOR RELIEF. ON MERITS HE SUB MITTED THAT THE ASSESSEE SHOULD BE PROVIDED WITH AN OPPORTUNITY TO CROSS EXAMINE THE P ERSON WHO HAS GIVEN A STATEMENT AGAINST HIM. ON A QUERY FROM THE BENCH T HE LEARNED DR HAS NOT CITED ANY CONTRARY CASE LAW ON THE ISSUE. 15. IN REPLY THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE ENTIRE ADDITION WAS BASED ON THE MATERIAL AND STATEMENT GA THERED UNDER SURVEY U/S 133A ON 26-03-2003 AS EVIDENT FROM THE ASSESSMENT ORDER. HE TOOK THIS BENCH THROUGH PAGES 2 AND 3 OF THE ASSESSMENT ORDER AND SUBMITTED THAT IT IS NOT A CASE WHERE THE ADDITION WAS MADE BASED ON ANY MATERIAL RECEIVED BY THE AO AS RESULT OF SEARCH IN THE CASE OF A THIRD PARTY. ON THE ISSUE NOT BEING R AISED BEFORE THE CIT(APPEALS) MR. VIJAY MEHTA SUBMITS THAT THE ASSESSEE IS ARGUIN G THAT THE ASSESSMENT FOR THE ASSESSMENT YEAR 2002-03 IS A SUBSTANTIVE ASSESSMENT AND HENCE THERE IS NO REASON FOR HIM TO STATE ANYTHING CONTRARY TO HIS STAND IN THE STATEMENT OF FACTS FOR THE ASSESSMENT YEAR 2002-03. HE POINTED OUT THAT IN AN APPEAL AGAINST THE BLOCK ASSESSMENT ORDER THIS ISSUE WAS AGITATED BEFORE TH E CIT(APPEALS) AND THE CIT(APPEALS) HAS DEALT WITH THE ISSUE AT PAGES 3 4 & PARAS 1.2 TO 1.4. THUS HE CONTENDS THAT THIS IS NOT A NEW ISSUE AT ALL. HE R EITERATED THAT THE PRE-CONDITIONS LAID DOWN BY THE VARIOUS COURTS HAVE NOT BEEN FOLLO WED BY THE AO WHILE STATING 13 THAT THE SAID ADDITION ASSESSMENT FOR THE ASSESSM ENT YEAR 2002-03 WAS A PROTECTIVE ASSESSMENT. 16. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERA TION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND A PERUSAL OF THE PAPE RS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE CASE LAWS CITE D WE HOLD AS FOLLOWS. 17. AT LAST PARA OF PAGE 2 OF THE ASSESSMENT ORDER THE AO STATES THAT A SURVEY ACTION U/S 133A WAS CARRIED ON ON THE ASSESSEE ON 2 6-03-2006 AND STATEMENT OF MR. DANIAL SHAH DIRECTOR OF THE ASSESSEE COMPANY U/S 131 OF THE ACT WAS RECORDED. IT IS FURTHER STATED THAT DURING THE SURV EY OPERATIONS THE ASSESSEE COMPANY COULD NOT PRODUCE ANY DOCUMENTARY EVIDENCE OR VIDEO CLIPS OF THE ADVERTISEMENTS. THEREAFTER IT IS STATED THAT ONE MR . DILIP CHHABRIA DIRECTOR OF SUNJEET ADVERTISING PVT. LT. HAD ADMITTED ON OATH DURING SEARCH OPERATION THAT ACCOMMODATION BILLS WERE ISSUED ON 5% COMMISSION. T HE AO MADE AN INDEPENDENT ENQUIRY ON 26-03-2003 WITH COMMERCIAL OFFICER DOORDARSHAN. THE DIRECTOR DOORDARSHAN VIDE LETTER DATED 02-04-2003 DENIED OF HAVING TELECAST ANY ADVERTISEMENT PERTAINING TO SUNJEET ADVERTISEMENT P VT. LTD. AT THE LAST PARA THE AO HELD AS FOLLOWS : THEREFORE IN VIEW OF THE ABOVE IT IS EVIDENT T HAT THE ASSESSEE COMPANY HAS BOOKED BOGUS BILLS OF ADVERTISEMENT THR OUGH M/S SINJEET ADVERTISING PVT. LTD. SO AS TO REDUCE ITS TAXABLE I NCOME. HENCE AN AMOUNT OF RS.80 73 120/- IS BEING ALLOWED AS BOGUS ADVERTI SEMENT EXPENDITURE AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE COMP ANY ON A PROTECTIVE BASIS. 18. A PERUSAL OF THIS ASSESSMENT ORDER DEMONSTRATES THAT THE AO HAS NOT FOLLOWED THE PRE-REQUISITES AND GUIDELINES LAID DOW N BY THE COURTS WHILE CALLING AN ASSESSMENT AS ONE WHICH IS DONE ON A PROTECTIVE BASIS. HE HAS MERELY STATED 14 THAT THIS IS A PROTECTIVE ASSESSMENT. NO MENTION IS MADE AS TO WHERE THE SUBSTANTIVE ASSESSMENT IS MADE. 19. FROM THE FACTS ON RECORD IT IS SEEN THAT THE N OTICE OF DEMAND ISSUED U/S 156 ON 18-03-2005 ALONG WITH ASSESSMENT ORDER PASSED U/ S 144 ON THAT DATE DOES NOT DISCLOSE THAT THE DEMAND HAS ARISEN FROM OUT OF A P ROTECTIVE ASSESSMENT AND HENCE WAS NOT TO BE ENFORCED. ON THE CONTRARY THE ASSISTA NT COMMISSIONER OF INCOME- TAX CENTRAL CIRCLE-47 VIDE HIS LETTER DATED 10-08- 2005 STATED THAT THIS IS A REGULAR DEMAND FOR THE ASSESSMENT YEAR 2002-03 AND HAS WARN ED THE ASSESSEE THAT IN CASE IT FAILS TO MAKE THE PAYMENT OF THE DEMAND IMMEDIATELY COERSIVE MEASURES WILL BE TAKEN TO RECOVER THE DUES. THEREAFTER COERCIVE MEAS URES WERE INITIATED AND THE ISSUE HAS BEEN REFERRED TO THE TAX RECOVERY OFFICER BY TREATING THE ASSESSEE AS A DEFAULTER. THE TAX RECOVERY OFFICER RANGE-2 PANJI HAD ISSUED A NOTICE OF DEMAND TO THE DEFAULTER IN FORM NO. 1 NOTICE NO. TR.1/06 -07/8-2 DATED 9 TH NOV. 2006 WHEREIN THE TAX RECOVERY OFFICER HAD INITIATED CORR OSIVE MEASURES. WE ALSO FIND THAT THE AO HAS PASSED A PENALTY ORDER U/S 271(1)(C ) ON 30-09-2005 LEVYING A PENALTY OF RS.28 82 100/-. IN THIS ORDER OF PENALTY THERE IS NO MENTION THAT THE ADDITION IN QUESTION WAS MADE ON A PROTECTIVE BASIS . IT IS ALSO SEEN THAT THE ORDER IN THE REGULAR ASSESSMENT WAS PASSED ON 18-03-2005 AND ORDER IN THE BLOCK ASSESSMENT WAS PASSED ON 26-04-2006 I.E. AFTER APPR OXIMATELY ONE YEAR ONE MONTH. A NOTICE U/S 158BD WAS ISSUED TO THE ASSESSEE ON 12 -08-2005 WHICH IS AFTER PASSING OF ORDER U/S 143(3) ON 18-03-2005. THE EARL IER NOTICE DATED 20-04-2004 WAS NOT SERVED ON THE ASSESSEE. IN THIS CASE THE AD DITION IN THE REGULAR ASSESSMENT HAS PRECEDED THE ADDITION ON THE SAME ISSUE IN THE BLOCK ASSESSMENT.` 20. WE NOW EXAMINE THE LEGAL POSITION. THE HONBLE SUPREME COURT IN THE CASE OF LALJI HARIDAS (SUPRA) AT PAGE 392 HELD AS FOLLOW S : 15 IN CASES WHERE IT APPEARS TO THE INCOME-TAX AUTHO RITIES THAT CERTAIN INCOME HAS BEEN RECEIVED DURING THE RELEVANT YEAR B UT IT IS NOT CLEAR WHO HAS RECEIVED THAT INCOME AND PRIMA FACIE IT APPEARS T HAT THE INCOME MAY HAVE BEEN RECEIVED EITHER BY A OR B OR BY BOTH TOGETHER IT WOULD BE OPEN TO THE RELEVANT INCOME-TAX AUTHORITIES TO DETERMINE THE SA ID QUESTION BY TAKING APPROPRIATE PROCEEDINGS BOTH AGAINST A & B. BY THIS JUDGMENT THE HONBLE SUPREME COURT PERMITT ED PROTECTIVE ASSESSMENT WHEN IN DOUBT. IN THE CASE OF DILIP KUMAR JAIN 5 ITD 552 THE TRI BUNAL AT PARA 9 STATED AS FOLLOWS : 9. THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT THE INCOME-TAX AUTHORITIES HAVE NO RIGHT TO CALL THE PRESENT ASSES SMENTS AS PROTECTIVE BECAUSE TILL THIS DATE THEY HAVE NOT STARTED ANY PR OCEEDINGS AGAINST THE ALLEGED REAL OWNER OF SUCH INCOME. IN MY OPINION T HE CONTENTION OF THE ASSESSEE HAS SUBSTANCE. NO DOUBT THE INCOME-TAX A UTHORITIES HAS THE RIGHT TO MAKE THE ASSESSMENTS ON PROTECTIVE BASIS BUT WHILE DOING SO THEY ARE SUPPOSED TO POINT OUT THE NAME OF THE REAL OWNER OF SUCH INCOME. AT LEAST SOME PROCEEDINGS SHOULD BE [COMMENCED] AGAINST SUCH ASSESSEE. UNDER THE CIRCUMSTANCES IN MY OPINION THE PRESENT ASSESSMEN T ORDERS CANNOT BE CALLED THE PROTECTIVE ASSESSMENTS. (EMPHASIS SUPPLIED) IN THE CASE OF M.P. RAMCHANDRAN VS. DCIT 129 TTJ 1 90 THE ITAT MUMBAI BENCH HELD AS FOLLOWS : IN ORDER TO GIVE A DIFFERENT COLOUR THE LD. DR C ONTENDED THAT THIS DISALLOWANCE WAS MADE ON PROTECTIVE BASIS ONLY AND HENCE CANNOT BE EQUATED WITH THE SUBSTANTIVE DISALLOWANCE. WE HAVE NOTED ABOVE ABOUT THE VALIDITY AND PRESUMPTION OF THE PROTECTIVE ASSESSME NT IN GENERAL. PROTECTIVE ASSESSMENT CANNOT BE INDEPENDENT OF SUBSTANTIVE ASS ESSMENT. THUS PROTECTIVE ASSESSMENT IS ALWAYS SUCCESSIVE TO THE S UBSTANTIVE ASSESSMENT. THERE MAY BE A SUBSTANTIVE ASSESSMENT WITHOUT ANY P ROTECTIVE ASSESSMENT BUT THERE CANNOT BE ANY PROTECTIVE ASSESSMENT WITHO UT THERE BEING A 16 SUBSTANTIVE ASSESSMENT. IN SIMPLE WORDS THERE HAS T O BE SOME SUBSTANTIVE ASSESSMENT/ADDITION FIRST WHICH ENABLES THE AO TO M AKE A PROTECTIVE ASSESSMENT/ADDITION. SUBSTANTIVE ADDITION/ASSESSMEN T IS MADE IN THE HANDS OF THE PERSON IN WHOSE HANDS THE AO PRIMA FACIE HOLDS THE OPINION THAT THE INCOME IS RIGHTLY TAXABLE. HAVING DONE SO AND WIT H A VIEW TO PROTECT THE INTEREST OF THE REVENUE IF THE AO IS NOT SURE THAT THE PERSON IN WHOSE HANDS HE HAD MADE THE SUBSTANTIVE ADDITION RIGHTLY HE EM BARKS UPON THE PROTECTIVE ASSESSMENT. THUS THE PROTECTIVE ASSESSMENT IS BASIC ALLY BASED ON THE DOUBT OF THE AO AS DISTINCT FROM HIS BELIEF WHICH IS THER E IS THE SUBSTANTIVE ASSESSMENT. 21. IN THE CASE OF SURESH K. JAJU (2010) 39 SOT 414 (MUM.) E-BENCH OF THE TRIBUNAL AT PAGE 532 TO 533 HELD AS FOLLOWS : THE ASSESSING OFFICER MADE THE FOLLOWING OBSERVAT IONS : AS THE ASSESSEE HAS ALREADY OFFERED THIS INCOME IN ASSESSMENT YEAR 2001-02 THE SAME IS ASSESSED IN THIS YEAR TO PROTE CT THE INTEREST OF THE REVENUE WHETHER THE ABOVE OBSERVATIONS ARE ENOUGH TO CONCLU DE THAT THE ASSESSMENT OF THE CAPITAL GAINS AS LONG-TERM CAPITAL GAIN IN A SSESSMENT YEAR 2001-02 BY THE ASSESSING OFFICER WAS ONLY A PROTECTIVE ASSESSM ENT? WE HAVE ALREADY SEEN THE RATIO LAID DOWN BY THE HONBLE SUPREME COU RT IN THE CASE OF LALJI HARIDAS (SUPRA) WHEREIN THE HONBLE SUPREME COURT WHILE RECOGNIZING THE CONCEPT OF PROTECTIVE ASSESSMENT HAS VERY CLEARLY L AID DOWN THAT THERE MUT BE AN EXHAUSTIVE ENQUIRY AND THE QUESTION AS TO WHO IS LIABLE TO PAY (IN THIS CASE WHICH YEAR THE CAPITAL GAIN IS TO BE ASSESSED AND WHETHER AS LONG-TERM CAPITAL GAIN IN ASSESSMENT YEAR 2001-02 OR SHORT TE RM CAPITAL GAIN IN ASSESSMENT YEAR 2000-01) SHOULD BE DETERMINED AFTER HEARING OBJECTIONS. HE SHOULD DETERMINE THE QUESTION IN THE CASE OF ONE PE RSON (IN THIS CASE OF THE OTHER PERSON (IN THIS CASE IN OTHER YEAR) IN WHOSE CASE ASSESSMENT HAS TO BE MADE PROTECTIVELY. THUS PROTECTIVE ASSESSMENT HAS TO BE DONE ONLY AFTER SUBSTANTIVE ASSESSMENT IS DONE. AN ASSESSMENT CAN BE CONSIDERED AS PROTECTIVE ONLY WHEN THERE IS SUBSTANTIVE ASSESSMEN T. THUS SUBSTANTIVE ASSESSMENT HAS TO PRECEDE PROTECTIVE ASSESSMENT. IN THE PRESENT CASE WE ARE OF THE VIEW THAT THE O BSERVATIONS OF THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT FOR A SSESSMENT YEAR 2001-02 WHICH WE HAVE EXTRACTED ABOVE CANNOT BE SAID TO BE AN EXPRESSION OF HIS 17 INTENTION TO MAKE A PROTECTIVE ASSESSMENT OF THE CA PITAL GAIN AS LONG-TERM CAPITAL GAIN. IT IS AN ASSESSMENT PURE AND SIMPLE. FIRSTLY THE WORDS USED BY THE ASSESSING OFFICER DO NOT EXPRESS HIS INTENTION THAT THE LONG-TERM CAPITAL GAIN IS BEING BROUGHT TO TAX BY WAY OF PROTECTIVE A SSESSMENT. SECONDLY THERE IS NO SUBSTANTIVE ASSESSMENT ALREADY MADE TRE ATING THE CAPITAL GAIN AS SHORT-TERM CAPITAL GAIN. THEREFORE THERE CAN BE NO PROTECTIVE ASSESSMENT. THIRDLY THERE HAS BEEN A DEMAND (WITHOUT ANY LIMIT ATION THAT IT SHOULD NOT BEEN RECOVERED) RAISED PURSUANT TO THE ABOVE ASSESS MENT WHICH ALSO SHOWS THAT THE SAID ASSESSMENT IS NOT A PROTECTIVE ASSESS MENT. THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF M.P. RA MCHANDRAN (SUPRA) CLEARLY APPLIES TO THE FACTS OF THE PRESENT CASE. (EMPHASIS OURS) IN THE CASE OF ITO VS. MRS. VASUDHA BALODIA THE C ALCUTTA D-BENCH OF THE TRIBUNAL HELD THAT LEVY OF PENALTY ON PROTECTIVE AS SESSMENT WAS NOT SUSTAINABLE AT ALL BECAUSE IT TENTAMOUNTED TO LEVY OF PROTECTIVE PENALTIES. IT HELD THAT UNDER THE PROVISIONS OF THE ACT PROTECTIVE PENALTIES CANNOT BE LEVIED. IN THE CASE OF CIT-PATIYALA-II VS. BEHARI LAL PYA RE LAL 141 ITR 32 THE HONBLE COURT HELD THAT UNDER THE LAW A PROTECTIVE ORDER OF ASSESSMENT CAN BE PASSED BUT NOT A PROTECTIVE ORDER OF PENALTY. THE CASE OF CIT VS. K. KESAVA REDDIAR 178 ITR 457 RELIED UPON BY THE ASSESSEE IS NOT RELEVANT TO THIS CASE AS IT DEALS W ITH EFFECT OF INITIATION OF REASSESSMENT PROCEEDINGS WHEN APPEAL IS PENDING BEF ORE THE TRIBUNAL. 22. FROM A PERUSAL OF ALL THE ABOVE CASE LAWS IT C AN BE GATHERED THAT IN A PROTECTIVE ASSESSMENT ORDER THE AO SHOULD GIVE REA SONS FOR MAKING A PROTECTIVE ADDITION/ASSESSMENT AND ALSO STATE WHERE THE SUBSTA NTIVE ADDITION/ASSESSMENT HAS BEEN MADE. THE DEMAND ARISING OUT OF A PROTECTIVE A SSESSMENT SHOULD NOT BE ENFORCED AND THIS FACT SHOULD BE MADE CLEAR IN THE ASSESSMENT ORDER AND DEMAND NOTICE.. IT HAS ALSO BEEN LAID DOWN THAT A SUBSTAN TIVE ASSESSMENT MUST PRECEDE A PROTECTIVE ASSESSMENT. PENALTIES CANNOT BE LEVIED U /S 271(1)(C) ON A PROTECTIVE 18 ASSESSMENT. IN THE CASE ON HAND THE SO CALLED SUBST ANTIVE ASSESSMENT HAS NOT PRECEDED THE SO CALLED PROTECTIVE ASSESSMENT MADE F OR THE ASSESSMENT YEAR 2002- 03. THE DEMANDS ARISING OUT OF THE PROTECTIVE ASSES SMENT WERE ENFORCED AND COERSIVE MEASURES WERE TAKEN AGAINST THE ASSESSEE. PENALTIES U/S 271(1)(C) WERE LEVIED. THERE IS NO MENTION ANYWHERE IN THE ASSESS MENT ORDER AS TO WHERE THE SUBSTANTIVE ASSESSMENT HAS BEEN MADE. THERE IS NO M ENTION IN THE DEMAND NOTICE OR IN THE PENALTY ORDER THAT THIS IS A PROTECTIVE A SSESSMENT. IN THE ASSESSMENT ORDER THE BASIS OF ADDITION IS A SURVEY CONDUCTED AND EVI DENCE GATHERED DURING THE COURSE OF SURVEY AS WELL AS INVESTIGATION DURING THE COURS E OF ASSESSMENT. ON THIS FACTUAL MATRIX WE HAVE TO NECESSARILY HOLD THAT THE ASSESS MENT FOR THE ASSESSMENT YEAR 2002-03 IS NOT A PROTECTIVE ASSESSMENT AS STATED BY THE AO IN HIS ORDER BUT IS ONLY A SUBSTANTIVE ASSESSMENT. THE ASSESSEE HAS TAKEN TH IS ARGUMENT BEFORE THE CIT(APPEALS) IN THE BLOCK ASSESSMENT PROCEEDINGS A ND HENCE IT IS NOT CORRECT TO ARGUE THAT THIS IS A NEW POINT RAISED FOR THE FIRST TIME. AS THE CLAIM OF THE ASSESSEE IS THAT THIS IS A SUBSTANTIVE ASSESSMENT THERE WAS NO REQUIREMENT FOR HIM TO AGITATE THIS POINT IN THE STATEMENT OF FACTS BEFORE THE CIT (APPEALS) DURING THE COURSE OF REGULAR ASSESSMENT. THE ARGUMENT OF THE LEARNED DR THAT THE AO HAS THE RIGHT TO MAKE THE ASSESSMENT IN THE RIGHT HANDS AND IN THE R IGHT PROCEEDINGS IS TRUE BUT IN THIS CASE AS THE ASSESSMENT ORDER IS BASED ON STAT EMENT MADE IN THE SURVEY AND ALSO ON INVESTIGATION IN THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2002- 03 WHERE A LETTER DATED 02-04-2003 WAS RECEIVED FR OM THE DIRECTOR DOORDERSHAN. THE ADDITION WAS NOT BASED SOLELY ON SEIZED MATERIA L. THUS EVEN ON MERITS IT CANNOT BE SAID THAT RIGHTFULLY THE ADDITION CANNOT BE MADE ON A SUBSTANTIVE BASIS DURING THE PROCEEDINGS U/S 143(3) FOR THE ASSESSMEN T YEAR 2002-03. THUS FOR ALL THESE REASONS WE UPHOLD THE ARGUMENTS OF THE ASSES SEE AND HOLD THAT THE ADDITION IN QUESTION WAS MADE ON A SUBSTANTIVE BASIS FOR THE ASSESSMENT YEAR 2002-03. 19 23. COMING TO THE MERITS OF THE CASE LAW MANDATES T HAT THE RIGHT TO CROSS EXAMINE HAS TO BE GIVEN TO THE ASSESSEE. THE LEARN ED DR WHILE SUBMITTING THAT HE HAS NO OBJECTION TO GRANT OF OPPORTUNITY FOR CROSS EXAMINATION HAS POINTED OUT THAT THE ASSESSEE HAD NOT SOUGHT FOR THE SAME DURING THE ASSESSMENT PROCEEDINGS. WE FIND THAT THE CROSS EXAMINATION WAS SOUGHT BY THE ASSESSEE BEFORE THE CIT(APPEALS) BUT WAS NOT GRANTED. 24. THOUGH THIS IS THE LEGAL POSITION MR. VIJAY ME HTA DURING THE COURSE OF HIS SUBMISSION HAS STATED THAT HE WOULD NOT DISPUTE TH E ADDITION IN THE REGULAR ASSESSMENT IF HIS PLEA OF DELETION IS ACCEPTED IN THE BLOCK ASSESSMENT PROCEEDINGS. THE LEARNED DR SUBMITTED THAT IT IS TRITE LAW THAT THE SAME AMOUNT CANNOT BE TAXED TWICE. HENCE IN VIEW OF THIS WE WOULD DECIDE THIS ISSUE AFTER EXAMINING THE CONTENTIONS OF BOTH THE PARTIES IN THE BLOCK ASSES SMENT PROCEEDINGS. 25. WE NOW TAKE IT(SS)A.NO. 24/MUM/2009. THE LEARNE D COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO SECTION 158BA SUB-SECTION (2) TO EXPLANATION (B) AND SUBMITTED THAT THE UNDISCLOSED INCOME RELEVANT TO BLOCK PERIOD CANNOT INCLUDE INCOME ASSESSED IN ANY REGULAR ASSE SSMENT. 26. HE PLEADS THAT THIS IS A WELL SETTLED POSITION OF LAW AND AS THIS AMOUNT HAS BEEN INCLUDED IN THE REGULAR ASSESSMENT FOR THE ASS ESSMENT YEAR 2002-03 THE SAME SHOULD BE DELETED FROM THE BLOCK ASSESSMENT. 27. THE LEARNED DR ON THE OTHER HAND DISPUTED THI S SUBMISSION AND SUBMITTED THAT AS LONG AS THE MATERIAL HAS BEEN FOUND AS A RE SULT OF SEARCH THE ADDITION CAN BE MADE IN THE BLOCK ASSESSMENT ORDER. 28. WE HAVE HEARD BOTH THE PARTIES. EXPLANATION (B) BELOW SUB-SECTION (2) OF SECTION 158BA READS AS FOLLOWS : 20 THE TOTAL UNDISCLOSED INCOME RELEVANT TO THE BLOC K PERIOD SHALL NOT INCLUDE THE INCOME ASSESSED IN ANY REGULAR ASSESSMENT AS IN COME OF SUCH BLOCK PERIOD. (EMPHASIS OURS) THE ARGUMENT OF THE ASSESSEE WAS REJECTED BY THE CI T(APPEALS) ON THE GROUND THAT THE ADDITION IN THE ASSESSMENT YEAR 2002-03 WAS MAD E ON A PROTECTIVE ASSESSMENT AND HENCE THE BAR IN EXPLANATION (B) TO SUB-SECTION (2) OF SECTION 58BA DOES NOT ARISE. AT PARA 1.4 AT PAGE 5 HE HELD AS FOLLOWS : 1.4 THEREFORE AS FACTS STAND TODAY THERE IS NO I LLEGALITY IN THE ASSESSMENT MADE U/S 158BD OF THE ACT. THE APPELLANT FIRM HAS R ELIED ON THE JUDGMENT OF THE KOLKATA HIGH COURT IN THE CASE OF CALTRADECO ST EEL SALES (P) LTD. & ORS. VS. DCIT (158 CTR 369) FOR THE PROPOSITION THAT IF ANY INCOME IS ASSESSED U/S 143(3) IT CANNOT BE ASSESSED UNDER CHAPTER XIV- B IN PURSUANCE OF THE NOTICE U/S 158BC. HOWEVER IN THAT CASE SUBSTANTIV E ADDITION WAS MADE U/S. 143(3) AND IN THE PRESENT CASE THE ADDITION HAS ONL Y BEEN MADE ON PROTECTIVE BASIS. THEREFORE THE FACT ARE CLEARLY DISTINGUISHA BLE IN THE TWO CASES. HENCE IT IS CLEAR THAT THE AO HAS RIGHTLY MADE THE ASSESS MENT U/S 158BD. THAT BEING SO THIS GROUND OF APPEAL IS DISMISSED. IN OUR OPINION ON A PLAIN READING OF CLAUSE (B) OF SUB-SECTION (2) OF SECTION 158BA IT IS CLEAR THAT ANY INCOME ASSESSED IN THE REGULAR ASSESSMENT CANNOT BE BROUGHT TO TAX ONCE AGAIN IN THE BLOCK ASSESSMENT. WE HAVE ALREADY HELD THAT THE ADDITION IN THE REGULAR ASSESSMENT CANNOT BE CALLED A PROTECTIVE ADDITION. WHEN ONCE AN AMOUNT IS ASSESSED IN A REGULAR ASSESSMENT U/S 143(3)/144 NO ADDITION CAN BE MADE OF THE SAME AMOUNT IN THE BLOCK ASSESSMENT. THUS WE AGREE WITH THE CONTENTION OF THE ASSESSEE AND DELETE THE ADDITION MADE ON THE ISSUE OF ACCOMMODATION BILLS OF ADVERTISEMENTS IN THE BLOC K ASSESSMENT. 29. IN THE RESULT THE APPEAL OF THE ASSESSEE IN IT (SS)A.NO. 24/MUM/2009 IS ALLOWED. 21 30. NOW COMING TO ITA NO. 5102/MUM/2006 WHICH IS A REGULAR ASSESSMENT FOR THE ASSESSMENT YEAR 2002-03 IN VIEW OF THE STATEME NT MADE BY THE ASSESSEES COUNSEL AT THE BAR WE CONFIRM THE ADDITION OF R.80 73 120/- IN THE REGULAR ASSESSMENT FOR THE ASSESSMENT YEAR 2002-03 AND DIS MISS THIS APPEAL. 31. IN THE RESULT IT(SS)A.NO. 24/MUM/2009 IS ALLOW ED AND ITA NO. 5102/MUM/2006 STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH JAN. 2011. SD/- SD/- (VIJAY PAL RAO) (J . SUDHAKAR REDDY) JUDICIAL MEMBER. ACCOUNTANT MEMBER MUMBAI DATED: 7 TH JAN. 2011. WAKODE COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR G-BENCH (TRUE COPY) BY ORDER ASSTT. REGISTRAR ITAT MUMBAI B ENCHES M UMBAI.