M/s. Harmony Psychiatry Centre Pvt. Ltd., Noida v. DCIT, New Delhi

ITSSA 3/DEL/2012 | misc
Pronouncement Date: 07-10-2016 | Result: Partly Allowed

Appeal Details

RSA Number 320116 RSA 2012
Assessee PAN AAACH2935A
Bench Delhi
Appeal Number ITSSA 3/DEL/2012
Duration Of Justice 4 year(s) 8 month(s) 26 day(s)
Appellant M/s. Harmony Psychiatry Centre Pvt. Ltd., Noida
Respondent DCIT, New Delhi
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 07-10-2016
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted F
Tribunal Order Date 07-10-2016
Date Of Final Hearing 12-06-2017
Next Hearing Date 12-06-2017
Assessment Year misc
Appeal Filed On 11-01-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE : SHRI I.C. SUDHIR JUDICIAL MEMBER & SHRI L.P. SAHU ACCOUNTANT MEMBER IT (SS) A NO. 03/DEL./2012 BLOCK PERIOD : 01.04.1986 TO 11.07.1996 M/S. HARMONY PSYCHIATRY CENTRE PVT. LTD. VS. A.C.I.T. CENTRAL CIRCLE 23 E - 10 SECTOR - 15 NOIDA. NEW DELHI. (PAN: AAACH 2935A) (APPELLANT) (RESPONDENT) APPELLANT BY : SH. V.K. BINDAL C.A. RESPONDENT BY : SH. N.C. SWAIN CIT/DR DATE OF HEARING : 26.08.2016 DATE OF PRONOUNCEMENT : 07 .10.2016 ORDER PER L.P. SAHU ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. ACIT CENTRAL CIRCLE - 23 NEW DELHI DATED 12.12.2011 U/S. 158BC(C)/254 FOR THE BLOCK PERIOD 01.04.1986 TO 11.07.1996 ON THE FOLLOWING GROUNDS : 1. THE ASSESSING OFFICER ERRED IN LAW AND ON FACTS IN MAKING AN ADDITION OF RS. 7 48 388/ - BEING INTEREST ON NCD WITH CITIBANK IGNORING THE FACTS AND EVIDENCES PLACED ON RECORD THAT THE TRANSACTIONS REGARDING NCD WERE DULY RECORDED IN THE BOOKS OF ACCOUNT AND THE SAID INTEREST WAS DULY DECLARED AS INCOME IN THE REGULAR RETURN OF INCOME FILED BEFORE THE DUE DATE. THUS THE ADDITION SO MADE SHOULD BE DELET ED. 2. WITHOUT PREJUDICE TO THE ABOVE SUBMISSIONS IF THE ADDITION OF RS. 7 48 388 / - IS SUSTAINED IN THE BLOCK ASSESSMENT PERIOD THEN DIRECTIONS SHOULD BE ISSUED TO EXCLUDE THE INTEREST INCOME OF RS. 7 48 388/ - OFFERED IT (SS) A NO. 03 /DEL./201 2 2 FOR TAXATION IN THE REGULAR ASSESSM ENT AS THE SAME INCOME CANNOT BE TAXED TWICE. 3. THE ASSESSING OFFICER ERRED IN LAW AND ON FACTS IN MAKING AN ADDITION OF RS. 2 00 000/ - BEING RECEIVED BY THE ASSESSEE FROM THE BANK ACCOUNT OF M/S GANPATI INVESTMENTS CONSULTANTS PROPRIETORSHIP CONCERN OF MR. ANIL SANGHI OUT OF THE INCOME ALREADY TAXED IN THE HANDS OF MR. ANIL SANGHI WITHOUT RAISING ANY QUERY IN THIS REGARD AND WITHOUT APPRECIATING THE FACTS OF THE CASE. THUS THE ADDITION SO MADE SHOULD BE DELETED. 4. THE ASSESSING OFFICER ERRED IN LAW AND ON FACTS IN MAKING AN ADDITION OF RS. 5 00 000/ - ON ACCOUNT OF INVESTMENT MADE IN THE SHARES OF M/S PATLIPUTRA CREDIT AND SECURITIES LTD. IGNORING THE FACTS AND EVIDENCES PLACED ON RECORD TO SHOW THAT THE ASSESSEE HAS APPLIED ONLY FOR SHARES WORTH RS. 2 5 0 000/ - AND THE AMOUNT FOR THE SAME WAS PAID THROUGH HIS BANK ACCOUNT BY MR. ANIL SANGHI OUT OF THE INCOME ALREADY TAX ED IN HIS HANDS. THUS THE ADDITION SO MADE SHOULD BE DELETED. 2. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE OPERATION WAS COMPLETED ON THE ASSESSEE ON 20.09.1996 BASED ON SEARCH WARRANT DATED 11.07.2096 CO VERING THE BANK ACCOUNTS OF THE ASSESSEE. A FTER GIVING NOTICE U/S. 158BC OF THE IT ACT ASSESSMENT WAS COMPLETED AT UNDISCLOSED INCOME OF RS. 1 41 66 435 / - U/S. 158BC(C) O F THE ACT ON 30.09.1997 . IN APPEAL BEFORE ITAT THE SAID ASSESSMENT WAS HELD TO BE INVALID AND VOID AB INITIO VIDE ORDER DATED 17.03.2006 AS NO SEARCH WARRANT WAS PRODUCED BEFORE THE ITAT. THE REVENUE FILED APPEAL BEFORE THE HON BLE DELHI HIGH COURT AND P RODUCED THE REQUISITE WARRANT OF AUTHORIZATION AND THEREFORE THE HIGH COURT VIDE ITS ORDER DATED 31.10.2007 RESTORED THE APPEAL TO THE ITAT FOR DECISION AFRESH. IT (SS) A NO. 03 /DEL./201 2 3 THEREAFTER THE TRIBUNAL VIDE ITS ORDER DATED 30.04.2008 AGAIN QUASHED THE BLOCK ASSESSMENT H OLDING THAT THE WARRANT OF AUTHORIZATION SIGNED BY THE ADDITIONAL DIRECTOR OF INCOME - TAX WAS WITHOUT ANY AUTHORITY AND THE ASSESSMENT ORDER PASSED WAS BEYOND THE PERIOD OF LIMITATION . AGAIN THE DEPARTMENT WENT BEFORE THE HON BLE HIGH COURT WHO VIDE ORDER D ATED 30.11.2009 RESTORED THE MATTER TO ITAT HOLDING THAT THE WARRANT SIGNED BY ADDL. DIRECTOR OF INCOME TAX WAS NOT INVALID IN VIEW OF AMENDED PROVISIONS OF SECTION 132 OF THE ACT. THEREAFTER THE TRIBUNAL VIDE ORDER DATED 23.07.2010 RESTORED THE MATTER B ACK TO THE ASSESSING OFFICER TO DECIDE THE SAME IN VIEW OF THE OBSERVATIONS MADE BY TRIBUNAL IN APPEAL OF ASSESSEE S GROUP COMPANY M/S. PATILPUTRA CREDITS AND SECURITIES LTD. DECIDED VIDE ORDER DATED 17.03.2006 IN IT(SS)A NO. 372/DEL./97 AND DATED 31.03.20 09 IN IT(SS)A NO.10/DEL./2008 . IT IS AFTER THE SERIES OF THESE PROCEEDINGS MENTIONED ABOVE THE ASSESSING OFFICER HAS PASSED THE IMPUGNED ASSESSMENT U/S. 158BC OF THE ACT ON 12.12.2011 AFTER CONSIDERING VARIOUS OBSERVATIONS OF TRIBUNAL GIVEN IN ORDER S DAT ED 17.03.2006 AND 31.03.2009 OF M/S. PATILPUTRA CREDITS AND SECURITIES LTD. IT IS AGAINST THIS BLOCK ASSESSMENT THAT THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. IT (SS) A NO. 03 /DEL./201 2 4 3. THE FIRST ISSUE INVOLVED IN THIS APPEAL IS WITH RESPECT TO ADDITION OF 7 48 388/ - BEING INTEREST ON NCD WITH CITI BANK. THE CONTENTION OF THE ASSESSEE HAS BEEN THAT THE APPELLANT MADE INVESTMENT IN NCD WITH CITIBANK OF RS.1 19 33 564/ - ON 30.03.96 OUT OF RS.1 31 00 000/ - RECEIVED FROM ANIL SANGHI WHICH IS NOT THE UNDISCLOSED INCOME OF THE AS SESSEE AS THE SOURCE OF THE FUNDS STOOD EXPLAINED. THE APPELLANT RECEIVED THE AMOUNT OF RS.1 31 00 000/ - FROM ANIL SANGHI FROM THE CURRENT ACCOUNT NO. 612 WITH J&K BANK NOIDA OF HIS PROPRIETARY CONCERN M/S. ANIL SANGHI & ASSOCIATES. THE SAID AMOUNT WAS TR ANSFERRED BY ANIL SANGHI OUT OF HIS UNDISCLOSED INCOME OF RS.27 64 93 670/ - ALREADY DECLARED AND OFFERED BY HIM FOR TAXATION AND HAS ACCORDINGLY BEEN TAXED IN HIS HANDS. THEREFORE THE INTEREST INCOME EARNED BY THE ASSESSEE CANNOT BE TERMED AS UNDISCLOSED INCOME OF THE ASSESSEE. MOREOVER THIS INTEREST INCOME WAS RECORDED BY THE ASSESSEE/APPELLANT IN THE REGULAR BOOKS OF ACCOUNTS AND THE SAME HAS BEEN DECLARED IN REGULAR RETURN OF INCOME FILED BEFORE THE DUE DATE AND TAXED AS SUCH IN REGULAR ASSESSMENT DATE D 27.10.99 PASSED U/S. 143(3) OF THE ACT. THEREFORE THE SAME CANNOT BE ADDED TWICE IN THE PRESENT BLOCK ASSESSMENT IN THE HANDS OF ASSESSEE AS UNDISCLOSED INCOME. 4. THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. IT (SS) A NO. 03 /DEL./201 2 5 5. HAVING CONSIDERED THE RIVA L CONTENTIONS AND THE MATERIAL AVAILABLE ON RECORD WE FIND SUBSTANCE IN THE CONTENTIONS OF THE ASSESSEE. IT IS NOTABLE THAT THE SOURCE OF INVESTMENT ON WHICH THE INTEREST INCOME WAS EARNED STOOD EXPLAINED BY THE ASSESSEE AS NOTED ABOVE. IT IS ALSO BORN OU T ON RECORD THAT THE INTEREST INCOME EARNED BY THE ASSESSEE WAS DECLARED BY ASSESSEE IN REGULAR RETURN FOR A.Y. 1997 - 98 FILED BEFORE THE DUE DATE AND THE SAME HAS BEEN ACCEPTED IN REGULAR ASSESSMENT PASSED U/S. 143(3) OF THE ACT (COPY PLACED ON RECORD) . WE THEREFORE FIND NO GOOD REASON TO AGAIN BRING THE SAME INTEREST INCOME TO TAX IN THE IMPUGNED BLOCK ASSESSMENT AS UNDISCLOSED INCOME OF THE ASSESSEE. THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO JUSTIFY THE ADDITION OF RS.7 48 388/ - AS UNDISCLOSED IN COME OF ASSESSEE. ACCORDINGLY THIS ADDITION DESERVES TO BE DELETED. 6. REGARDING THE NEXT ADDITION OF RS.2 00 000/ - THE AO NOTICED THAT DEPOSITS OF RS.1.31 CRORES WERE FOUND CREDIT E D IN THE ACCOUNT OF ASSESSEE WITH C ITI B ANK WHICH WAS HELD TO BE UNEXPLA INED . THE ASSESSEE EXPLAINED THAT THIS AMOUNT WAS CREDITED TO THE ACCOUNT OF ASSESSEE FROM THE CURRENT ACCOUNT NO. 412349 - 008 OF M/S. GANPATI INVESTMENT CONSULTANTS THE PROPRIETARY CONCERN OF SH. ANIL SANGHI. THIS AMOUNT OF RS.1.31 CRORES WAS TRANSFERRED FROM THE IT (SS) A NO. 03 /DEL./201 2 6 CURRENT A/C NO. 612 OF M/S. ANIL SANGHI & ASSOCIATES (PROP. ANIL SANGHI) TO THE CURRENT ACCOUNT OF M/S. GANPATI INVESTMENT CONSULTANTS OUT OF WHICH RS.1 29 00 000/ - WAS TRANSFERRED OUT OF THE UNDISCLOSED AMOUNT OF RS.27 64 93 670/ DECLARED BY AN IL SANGHI AND RS.2 00 000/ - WAS FOUND DEPOSITED IN CASH IN THE ACCOUNT OF M/S. GANPATI INVESTMENT CONSULTANTS FROM WHERE TOTAL AMOUNT OF RS.1.31 CRORES WAS SAID TO HAVE BEEN TRANSFERRED TO THE ACCOUNT OF ASSESSEE. THE AO THEREFORE FOUND THAT THE AMOUNT OF RS.1 29 00 000/ - STOOD ALREADY TAXED IN THE HANDS OF SHRI ANIL SANGHI AND HENCE WAS NOT TREATED AS UNDISCLOSED INCOME OF ASSESSEE AS PER DIRECTIONS OF THE TRIBUNAL BUT ADDED THE BALANCE AMOUNT OF RS.2 00 000/ - TO THE INCOME OF ASSESSEE AS ITS UNDISCLOS ED INCOME FOR THE A.Y. 1996 - 97. 7. AFTER CONSIDERING THE OBSERVATIONS OF THE AO AND THE SUBMISSIONS OF THE LD. AR WHO REITERATED THE STAND TAKEN BEFORE THE AO WE FIND NO JUSTIFICATION TO INTERFERE WITH THE ADDITION OF RS.200000/ - MADE BY THE AO IN VIEW O F THE FACT THAT THIS AMOUNT HAVING BEEN DEPOSITED IN CASH STOOD UNEXPLAINED. UNDISPUTEDLY THIS AMOUNT WAS NOT TRANSFERRED BY ANIL SANGHI OUT OF ITS UNDISCLOSED INCOME OF RS.27 64 93 670/ - DECLARED FOR THE BLOCK PERIOD. WE THEREFORE FIND NO GOOD REASON T O DELETE THIS ADDITION. ACCORDINGLY THE ADDITION OF RS.2 00 000/ - DESERVES TO BE SUSTAINED. IT (SS) A NO. 03 /DEL./201 2 7 8. REGARDING THE NEXT ADDITION OF RS.5.00 LACS BEING UNACCOUNTED INVESTMENT IN SHARES THE AO NOTICED THAT THE ASSESSEE HAD PURCHASED 50 000 SHARES ON THE BASIS OF PAGES NOS. 36 & 85 OF ANNEXURE A - 13 SEIZED FROM THE RESIDENCE OF MR. ANIL SANGHI ON 01.11.1996 OUTSIDE THE BOOKS OF ACCOUNTS . 9. THE LD. AR OF THE ASSESSEE REITERATED THE FOLLOWING SUBMISSIONS MADE BEFORE THE AO : MR. ANIL SANGHI ONE OF THE DIRECTOR OF THE COMPANY INVESTED RS. 2 50 000/ - OUT OF HIS UNDISCLOSED INCOME OF RS. 27 64 93 670/ - IN THE NAME OF THE ASSESSEE COMPANY. A CONFIRMATION FROM HIM IN THIS REGARD IS ENCLOSED. THE AO ALLEGED THAT THE ASSESSEE HAS PURCHASED 50 000 SHARES ON THE OF BASIS PAGES NO. 36 & 85 OF ANNEXURE A - 13 SEIZED FROM THE RESIDENCE OF MR. ANIL SANGHI . PHOTOCOPIES OF THE SAID TWO SEIZED PAGES ARE ENCLOSED. ON PERUSAL OF THE SAME IT WOULD SEEN THAT ONE OF THE SAID PAGES IS A LIST OF SH ARES HELD BY BODIES CORPORATE WHERE ONLY THE NAMES OF COMPANIES ARE MENTIONED AND THEREFORE IT FOUND MENTION OF THE NAME THE ASSESSEE COMPANY AGAINST 25 000 SHARES AT S. NO. 14. THE OTHER LIST IS A GENERAL LIST OF SHARE HOLDERS CONTAINING NAME OF COMPANIE S AS WELL AS INDIVIDUALS WHERE THE NAME OF THE ASSESSEE COMPANY IS AGAIN MENTIONED AT S. NO. 5. THUS THESE TWO LISTS MENTION THE SAME 25 000 SHARES ALLOTTED TO THE ASSESSEE. ON PERUSAL OF THE SAID TWO LISTS IT WOULD ALSO BE SEEN THAT THE NAMES OF THE COMP ANIES IN ONE LIST ARE MENTIONED IN THE SECOND LIST WITH SAME NUMBER OF SHARES IN BOTH THE LISTS WHICH SUPPORTS THE CONTENTION OF THE ASSESSEE THAT ONE LIST MENTIONING THE 'HOLDING OF SHARES BY BODIES CORPORATE' IS PART OF THE SECOND LIST WHEREIN DETAILS OF ALL THE SHARE HOLDERS HAS BEEN MENTIONED . AS STATED ABOVE MR. ANIL SANGHI HAS INVESTED RS. 10.79 94 439/ - IN PATLIPUTRA CREDIT AND SECURITIES LTD AND THE FACT HAS BEEN ACCEPTED THE BLOCK ASSESSMENT ORDER DATED 28 - 12 - 2007. A COPY OF THE SAID ORDER IS IT (SS) A NO. 03 /DEL./201 2 8 ENC LOSED. THE INVESTMENT OF RS. 2 50 000 / - IN THE NAME OF THE ASSESSEE COMPANY IS A PART OF RS. 10 79 94 439 / - AND IS INCLUDED THEREIN. 10. THE ASSESSING OFFICER WAS NOT SATISFIED BY THE SUBMISSIONS OF THE ASSESSEE AND MADE THE ADDITION OF RS.5 00 000/ - OBSE RVING AS UNDER : THE SUBMISSIONS OF THE ASSESSEE HAVE BEEN DULY CONSIDERED. ON GOING THROUGH THE MATERIAL SEIZED FROM THE RESIDENCE OF SHRI ANIL SANGHI DURING THE COURSE OF SEARCH ON 01.11.1996 A LIST OF SHAREHOLDERS OF M/S PATLIPUTRA CREDIT & SECURITIES LTD WAS FOUND AND SEIZED AS ANNEXURE A - 13 PARTY 5 - 3. THE NAME OF THE ASSESSEE COMPANY FIGURES AT PAGE NOS. 35 & 85 OF THIS ANNEXURE. AS PER THESE DOCUMENTS THE ASSESSEE COMPANY HAD PURCHASED 50 000 (25 000 + 25 000) SHARES WORTH RS. 5 LACS OF M/S PATLIPUTRA CREDIT & SECURITIES LTD. HOWEVER NO SUCH INVESTMENT HAS BEEN SHOWN ON THE ASSETS SIDE OF THE BALANCE SHEET OF THE ASSESSEE COMPANY FILED WITH THE RETURN OF INCOME FOR THE BLOCK PERIOD. 5.2 IN ITS REPLY THE ASSESSEE HAS SUBMITTED THAT IT HAD PURCHASED SHARES OF M/S PATLIPURTA CREDIT & SECURITIES LTD ON BEHALF OF SHRI ANIL SANGHI AND PAYMENT FOR THESE SHARES WAS MADE DIRECTLY BY SHRI ANIL SANGHI VIDE CHEQUE DATED 30/03/1995 FROM HIS ACCOUNT NO. 612 WITH J&K BANK NOIDA. 5.3 THESE CONTENTIONS OF THE ASSESSEE CAN NOT BE ACCEPTED IN VIEW OF THE FOLLOWING FACTS - A) AS PER THE PROVISIONS OF SECTION 132(4A) OF THE ACT IF CERTAIN BOOKS OF ACCOUNT OR OTHER DOCUMENTS ARE FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH IT MAY BE PRESUMED THAT SUCH BOOKS OF ACCOUNT OR OTHER DOCUMENTS BELONG TO SUCH PERSON AND THE CONTENTS OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS ARE TRUE AND THAT SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS WHICH PURPORT TO BE IN THE HANDWRITIN G OF ANY PARTICULAR PERSON OR SIGNED BY ANY PARTICULAR PERSON MAY BE REASONABLY ASSUMED TO HAVE BEEN SIGNED BY OR TO BE IN THE HANDWRITING OF THAT PARTICULAR PERSON. ANNEXURE A - 13 PARTY S - 3 WAS FOUND AND SEIZED FROM THE RESIDENCE OF SHRI ANIL SANGHI AND T HE ENTRIES LISTED IN PARA 5.1 SUPRA ARE GIVEN BELOW THE NAME OF THE ASSESSEE COMPANY. HENCE IN VIEW OF THE PROVISIONS OF SECTION 132 (4A) OF THE ACT IT (SS) A NO. 03 /DEL./201 2 9 IT CAN BE REASONABLY ASSUMED THESE ENTRIES PERTAIN TO ASSESSEE COMPANY ONLY MORE SO BECAUSE MANY OF THEM A CTUALLY TALLY WITH THE ENTRIES IN THE BANK STATEMENTS OF THE COMPANY. B) THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY DOCUMENTARY EVIDENCE IN SUPPORT OF ITS CONTENTION THAT IT HAD INVESTED IN THE SHARES OF M/S PATTIPUTRA ON BEHALF OF SHRI ANIL SANGHI. F URTHER IN ITS REPLY THE ASSESSEE HAS MENTIONED ABOUT ONLY 25 000 SHARES OF RS. 2.5 LACS AS AGAINST 50 000 SHARES PER ANNEXURE A - 13. MOREOVER IN ITS REPLY THE ASSESSEE HAS NOT MENTIONED THE CHEQUE NO. VIDE WHICH PAYMENT FOR THE SHARES WAS PURPORTEDLY MAD E BY SHRI ANIL SANGHI FOR THE SHARES ALLEGEDLY PURCHASED BY IT ON BEHALF OF SHRI ANI L SANGHI. C) FURTHER IT IS SEEN THAT NO SUCH AMOUNT HAS BEEN DEBITED IN THE BANK ACCOUNT NO. 612 OF SHRI ANIL SANGHI IN J&K BANK NOIDA ON OR AROUND 30/03/1995. THE ONU S WAS ON THE ASSESSEE COMPANY TO SUBSTANTIATE ITS CONTENTION BY BRINGING EVIDENCE ON RECORD. BUT IT HAS FAILED TO DISCHARGE THE ONUS CAST ON IT. D) THE ASSESSEE HAS ALSO NOT EXPLAINED AS TO WHY IT HAD APPLIED FOR THE SHARES OF M/S PATLIPUTRA CREDIT & SECURITIES LTD ON BEHALF OF SHRI ANIL SANGHI INSTEAD OF SHRI ANIL SANGHI HIMSELF DIRECTLY APPLYING FOR THE SAID SHARES . 5.3.1 IN VIEW OF THE ABOVE FACTS THE CONTENTION OF THE ASSESSEE IS NOT ACCEPTED AND THE AMOUNT OF RS. 5 LACS INVESTED IN SHARES OF M/S PATLIPUTRA CREDIT & SECURITIES LTD BY IT IS HELD TO BE THE INVESTMENT MADE OUTSIDE THE BOOKS OF ACCOUNT FROM ITS UNDISCLOSED INCOME. SINCE THE ASSESSEE COULD NOT SUBSTANTIATE ITS CONTENTION THAT THE SHARES WERE PURCHASED ON 30 - 03 - 95 THE INVESTMENT IS BEING HELD TO HAVE BEEN MADE IN THE YEAR OF SEARCH I.E. FINANCIAL YEAR 1996 - 97 RELEVANT TO THE ASSESSMENT YEAR 1997 - 98. 5.4 IN VIEW OF THE DISCUSSION ABOVE AMOUNT OF RS.5 00 000/ - ON ACCOUNT OF INVESTMENT MADE BY IT IN THE SHARES OF M/S PATLIPUTRA C REDIT AND SECURITIES LIMITED OUTSIDE ITS BOOKS OF ACCOUNT IN THE ASSESSMENT YEAR 1997 - 98 IS ADDED TO THE ASSESSEE'S INCOME AS ITS UNDISCLOSED INCOME FOR THE BLOCK PERIOD. IT (SS) A NO. 03 /DEL./201 2 10 11. THE LD. AR OF THE ASSESSEE HAS ALSO TAKEN FOLLOWING ADDITIONAL GROUND BEFORE US WITH THE REQUEST THAT THE SAME BEING LEGAL IN NATURE BE ADMITTED FOR ADJUDICATION : THE ASSESSING OFFICER ERRED IN LAW AND ON FACTS IN MAKING AN ADDITION ON THE BASIS OF THE ANNEXURE A - 13 SEIZED FROM THE RESIDENCE OF MR. ANIL SANGHI DURING THE COURSE OF SEARCH CONDUCTED ON HIM ON 01.11.1996 WITHOUT RECORDING ANY SATISFACTION U/S. 158BD OF THE ACT AS THE SEARCH ON THE APPELLANT WAS COMPLETED ON 20.09.1996 AND THE SAID SEIZED ANNEXURE DID NOT RELATE TO THE MATERIAL SEIZED FROM THE APPELLANT. THUS THE AD DITION MADE WITHOUT COMPLYING WITH THE PRESCRIBED PROVISIONS OF THE LAW SHOULD BE DELETED. 12. THE LD. DR OBJECTED TO THE ADMISSION OF ADDITIONAL GROUND BECAUSE NO SUCH ISSUE WAS RAISED BEFORE THE LOWER AUTHORITY OR BEFORE THE TRIBUNAL IN EARLIER ROUNDS OF APPEAL PROCEEDINGS. 13. KEEPING IN VIEW THE NATURE OF ADDITIONAL GROUND BEING PURELY LEGAL AND THE RATIO LAID DOWN BY HON BLE SUPREME COURT IN THE CASE OF NTPC CO. LTD. VS. CIT 229 ITR 383 (SC) RELIED UPON BY THE ASSESSEE WE OBSERVE THAT SUCH LE GAL GROUNDS CAN BE TAKEN AT ANY STAGE OF PROCEEDINGS. WE THEREFORE ADMIT THIS GROUND FOR ADJUDICATION AND WE FIRST TAKE UP THIS LEGAL ASPECT OF THE CASE INVOLVED IN THIS ADDITIONAL GROUND FOR ADJUDICATION. IT (SS) A NO. 03 /DEL./201 2 11 14. THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE BLOCK PERIOD FOR WHICH THE IMPUGNED ASSESSMENT HAS BEEN MADE COMMENCES IN THE CASE OF ASSESSEE FROM 01.04.1986 AND COMES TO END ON THE DATE OF SURVEY COMPLETED ON ASSESSEE I.E. 20.09.1996. THEREFORE IN THE BLOCK ASSESSMENT ONLY THOSE MATERIALS COU LD BE UTILIZED AGAINST THE ASSESSEE WHICH WERE FOUND OR SEIZED UPTO THE DATE OF SEARCH. IN THE INSTANT CASE THE ASSESSING OFFICER HAS UTILIZED ANNEXURE - A - 13 WHICH WAS SEIZED ON A DIFFERENT SEARCH COMPLETED ON THE RESIDENCE OF SH. ANIL SANGHI ON 01.11.1996 WHICH DOES NOT FALL IN THE BLOCK PERIOD OF ASSESSEE I.E. 01.04.1986 TO 20.09.1996. IT WAS SUBMITTED THAT IF ANY MATERIAL DETECTED FROM THE PERSON OTHER THAN THE PERSON SEARCHED SUBSEQUENT TO THE END OF BLOCK PERIOD IS UTILIZED AGAINST THE ASSESSEE THE AO HAS TO FOLLOW THE PRESCRIBED PROVISIONS OF SECTION 158BD WHICH THE AO FAILED TO DO. THEREFORE WITHOUT RESORTING TO THE PROVISIONS OF SECTION 158BD THE AO WAS NOT JUSTIFIED IN DIRECTLY UTILIZING THE MATERIAL DETECTED SUBSEQUENT TO THE END OF BLOCK THAT TOO IN THE SEARCH COMPLETED AT THE RESIDENCE OF SH. ANIL SANGHI. THEREFORE ADDITIONS WHATSOEVER MADE ON THE BASIS OF ANNEXURE A - 13 ARE NOT SUSTAINABLE AT ALL. 15. THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. IT (SS) A NO. 03 /DEL./201 2 12 16. HAVING CONSIDERED THE RIVAL SUBMISSIONS WE FIND SUBSTANCE IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. IT IS NOT IN DISPUTE THAT THE ABOVE ADDITION MADE IN THE INSTANT CASE IS BASED ON ANNEXURE A - 13 SEIZED. IT IS ALSO NOT IN DISPUTE THAT THE SAID ANNEXURE WAS S EIZED IN THE SEARCH COMPLETED AT THE RESIDENTIAL PREMISES OF SH. ANIL SANGHI ON 01.11.1996. IT IS FURTHER BORN OUT ON RECORD THAT THE SEARCH PROCEEDINGS IN THE CASE OF ASSESSEE STOOD COMPLETED ON 20.09.1996. THE BLOCK PERIOD IN THE CASE OF ASSESSEE WAS THE REFORE UPTO 20.09.1996 WHICH CANNOT BE STRETCHED UPTO 01.11.1996. WE THEREFORE FIND THAT IN THE BLOCK ASSESSMENT ONLY THOSE MATERIALS COULD BE UTILIZED AGAINST THE ASSESSEE WHICH WERE FOUND OR SEIZED UPTO THE DATE OF SEARCH. WE FURTHER FIND SUBSTANCE IN THE CONTENTION OF ASSESSEE THAT IF ANY MATERIAL DETECTED FROM THE PERSON OTHER THAN THE PERSON SEARCHED SUBSEQUENT TO THE END OF BLOCK PERIOD IS UTILIZED AGAINST THE ASSESSEE THE AO HAS TO FOLLOW THE PROVISIONS OF SECTION 158BD WHICH THE AO FAILED TO DO IN THE PRESENT CASE. THE PROVISIONS OF SECTION 158BD READ AS UNDER : 158BD. WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY 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 . IT (SS) A NO. 03 /DEL./201 2 13 17. A BARE READING OF ABOVE PROVISIONS SHOWS THAT THE ASSESSING HAS TO RECORD A SATISFACTION TO THE EFFECT THAT ANY UNDISCLOSED INCOME DETECTED AT A PARTICULAR PREMISES UNDER SEARCH BELONGS TO ANY PERSON OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER SECTION 132 . IN THE PRESENT CASE THE RECORD NOWHERE SHOWS EXISTENCE OF ANY SUCH SATISFACTION. THEREFORE THIS BEING A LEGAL FLAW THE AO WAS NOT JUSTIFIED IN DIRECTLY UTILIZING THE MATERIAL DETECTED SUBSEQUENT TO THE END OF BLOCK PERIOD OF ASSESSEE THAT TOO IN THE SEARCH COMPLETED AT THE RESIDENCE OF SH. ANIL SANGHI AND HENCE ADDITION WHATSOEVER MADE ON THE BASIS OF ANNEXURE A - 13 IS NOT SUSTAINABLE AT A LL IN THE INSTANT CASE. WE THEREFORE DELETE TH IS ADDITION SOLELY ON THIS LEGAL ASPECT OF THE CASE AND THUS NEED NOT TO ENTER INTO MERITS OF ADDITIONS ON OTHER ASPECTS . 18. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07.10.2016 . SD/ - SD/ - ( I.C. SUDHIR ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07.10.2016 *AKS/ -