Naag Advertising & Marketing, Chennai v. DCIT, Kurnool

ITSSA 31/HYD/2009 | misc
Pronouncement Date: 17-02-2012 | Result: Allowed

Appeal Details

RSA Number 3122516 RSA 2009
Assessee PAN CTION1588A
Bench Hyderabad
Appeal Number ITSSA 31/HYD/2009
Duration Of Justice 3 year(s) 13 day(s)
Appellant Naag Advertising & Marketing, Chennai
Respondent DCIT, Kurnool
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 17-02-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 17-02-2012
Date Of Final Hearing 13-06-2011
Next Hearing Date 13-06-2011
Assessment Year misc
Appeal Filed On 04-02-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH HYDERABAD BEFORE SHRI CHANDRA POOJARI ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN JUDICIAL MEMBER IT(SS)A NO.31/HYD/2009 BLOCK PERIOD 1987-88 TO 4-7-1996 NAAG ADVERTISING & MARKETING ADONI. GIR NO. N-303 VS DCIT CIRCLE-1 KURNOOL. APPELLANT RESPONDENT IT(SS)A NO.32/HYD/2009 BLOCK ASSTT. PERIOD 1987-88 UP TO 4-7-1996 M/S. TREZER OIL AGRO TECH LTD. ADONI GIR NO. T-5 VS DCIT CIRCLE-1 KURNOOL. APPELLANT RESPONDENT APPELLANT BY: SHRI P. MURALI MOHAN RAO RESPONDENT BY: SMT. NIVEDITA BISWAS DATE OF HEARING: 19.01.2012 DATE OF PRONOUNCEMENT: 17.02.2012 ORDER PER CHANDRA POOJARI A.M. THESE TWO APPEALS PREFERRED BY TWO DIFFERENT ASSES SEES ARE DIRECTED AGAINST SEPARATE ORDERS BOTH DATED 23-12-2 008 PASSED BY THE DY. CIT CIR-1 KURNOOL PERTAINING TO THE BLOCK ASSESSMENT YEARS 1987-88 TO 1996-97 AND FOR THE PERIOD 1-4-96 TO 4-7-1996. 2. FIRST LET US DEAL WITH IT (SS)A NO.31/HYD/2009. B RIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM CARRYING ON BUSINESS FROM 17/4 BASAPURAM ROAD ADONI. IN RESP ECT OF ONE OF THE GROUP COMPANIES OF THE ASSESSEE VIZ. BHAGYALAK SHMI VEGETABLE PRODUCTS LTD. (FOR SHORT BVPL) A SEARCH WAS CONDUCTED ON 4-7-1996 UNDER SECTION 132 OF THE INCOME-TAX ACT 1961. AT IT(SS)A NOS.31 & 32/H/2009 M/S. NAAG ADVERTISING & MARKETING & M/S. TREZER OIL AGRO TECH LTD =========================== 2 THE TIME OF SEARCH THE ASSESSEE WAS ASSESSED TO TA X WITH THE ASSESSING OFFICER SITUATED AT ADONI. THE ASSESSEE HAD FILED THE RETURN OF INCOME FOR AND UP TO ASSESSMENT YEAR 1996 -97 ON 2-9- 1996 WITH THE ASSESSING OFFICER ADONI. THE ASSESS EE WAS ISSUED A NOTICE UNDER SECTION 158-BD OF THE ACT ON 6-1-1997 BY THE ACIT INVESTIGATION CIRCLE-4(1) HYDERABAD IN WHICH THERE WAS NO RECORDING OF SATISFACTION. THE BLOCK PERIOD NOTED AT THE TOP OF THE SAID NOTICE WAS 1987-88 TO 1997-98 WITHOUT REFERENC E TO WHETHER IT WAS FINANCIAL YEAR OR ASSESSMENT YEAR. IT IS CO NTENDED THAT THE TRANSFER AND VESTING OF JURISDICTION WITH THE THEN OFFICER WHO ISSUED THE NOTICE UNDER SECTION 158-BD WAS NOT KNOW N TO THE ASSESSEE UNTIL THE NOTICE WAS RECEIVED. IT IS ALSO NOT KNOWN AS TO WHAT SEIZED MATERIALS WERE FOUND AT THE TIME OF SEA RCH IN THE CASE OF BVPL WHICH BELONG TO THE ASSESSEE AND INDICATE TO UNDISCLOSED INCOME. IT IS ALSO NOT KNOWN AS TO WHEN THE SEIZED MATERIALS CONCERNING THE ASSESSEE IF ANY FOUND WERE TRANSFE RRED TO THE ASSESSING OFFICER WHO HAD JURISDICTION OVER THE ASS ESSEES CASE AT THE RELEVANT POINT OF TIME. THE ASSESSEE FILED RETU RN IN FORM-2B ON 10-3-1997 HAVING NO UNDISCLOSED INCOME FOR THE BLOC K PERIOD NOTED IN THE NOTICE UNDER SECTION 158BD OF THE ACT. THE BLOCK ASSESSMENT WAS COMPLETED BY THEN ASSESSING OFFICER ON 28-1-1998 UNDER SECTION 158BD READ WITH SECTION 143(3) OF THE IT ACT 1961. WITHOUT AFFORDING ADEQUATE AND PROPER OPPORTUNITY THE BOOKS HAVING BEEN IMPOUNDED DURING THE PROCEEDINGS THE T HEN ASSESSING OFFICER DETERMINED THE UNDISCLOSED INCOME AT RS.98 80 000/- COMPRISING OF FIVE ISSUES. AS PROVID ED IN THE ACT DURING THE RELEVANT PERIOD THE ASSESSEE PREFERRED AN APPEAL BEFORE THE TRIBUNAL HYDERABAD. BY A COMMON ORDER DATED 1 9-6-2007 THE TRIBUNAL SET ASIDE THE EARLIER ORDER OF BLOCK A SSESSMENT DIRECTING THE ASSESSING AUTHORITY TO MAKE FRESH ASS ESSMENT DE NOVO AFTER AFFORDING DUE OPPORTUNITY TO THE ASSESSEE. IN ACCORDANCE WITH THE AFORESAID DIRECTIONS OF THE TRI BUNAL THE IT(SS)A NOS.31 & 32/H/2009 M/S. NAAG ADVERTISING & MARKETING & M/S. TREZER OIL AGRO TECH LTD =========================== 3 ASSESSING OFFICER ISSUED A NOTICE FOR ASSESSMENT AN D COMPLETED THE ASSESSMENT UNDER SECTION 158-BD READ WITH SECTION 1 43(3) AND READ WITH SECTION 254 OF THE ACT ON 23-12-2008 WHI CH WAS RECEIVED BY THE ASSESSEE ON 5-1-2009. IN THE IMPUGN ED DE NOVO ASSESSMENT THE SAME ADDITIONS ON THE ISSUES FRAME D IN THE EARLIER ASSESSMENT ORDER HAVE BEEN CONFIRMED RESUL TING IN IDENTICAL DEMAND. 3. THE ISSUES AND THE ADDITIONS MADE IN THE IMPUGNED B LOCK ASSESSMENT ORDER ARE AS UNDER:- I) UNDISCLOSED INVESTMENT IN THE SHARE CAPITAL OF BVPL IN FICTITIOUS NAMES RS. 3 31 000 II) UNEXPLAINED CASH CREDIT BEING THE THE DIFFERENCE IN THE BALANCE OUT- STANDING AS PER THE BOOKS OF THE ACCOUNTS OF THE APPELLANT IN THE LEDGER ACCOUNT OF BVPL VIS-A-VIS THE APPELLANT ACCOUNT IN THE BOOKS OF BVPL RS.43 62 224 III) AMOUNT CREDITED IN THE BANK ACCOUNT RS.42 00 000 IV) UNDISCLOSED DIVIDENDS FROM BENAMI SHARES FOR FY 93-94 TO 1995-96 RS. 7 45 478 V) UNDISCLOSED DIVIDENDS FROM OWN SHARES FOR FY 95-96 & 1996-97 RS. 2 00 000 VI) RETURNED LOSS FOR AY 94-95 NOT CONSIDERED SEPARATELY RS. 13 50 0 == ========= TOTAL RS. 98 52 202 == ========= 4. AGGRIEVED AGAINST THE ORDER OF THE ASSESSING OFFICE R THE ASSESSEE IS IN APPEAL BEFORE US. IT(SS)A NOS.31 & 32/H/2009 M/S. NAAG ADVERTISING & MARKETING & M/S. TREZER OIL AGRO TECH LTD =========================== 4 5. THE UNDISCLOSED INCOME COMPUTED AS ABOVE IS WITHOUT REFERENCE TO ANY SEIZED MATERIAL. EXCEPTING TWO OF THE ISSUES I.E. I & IV OF PARA-3 ABOVE ALL THE OTHER ISSUES ARE DERI VED FROM THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. EVEN THE AFORESAID TWO ISSUES ARE OF SURMISE AND CONJUNCTURES. IT MAY BE SEEN FROM PARA-2 AS WELL AS THE OTHER PORTION OF THE ASSESSME NT ORDER THAT A VAGUE REFERENCE IS MADE TO CERTAIN ISSUES AND INFOR MATION RELATING TO THE ASSESSEE ALLEGED TO HAVE BEEN FOUND IN THE C OURSE OF SEARCH IN THE CASE OF BVPL. HOWEVER NO SPECIFIC REFERENCE OF ANY SEIZED MATERIAL IS NOTED IN THE ORDER NEITHER IT IS KNOWN WHETHER IF ANY MATERIAL WAS FOUND WHEN THEY WERE PASSED ON TO THE ASSESSING OFFICER HAVING JURISDICTION OVER THE ASSESSEE. IN THE INSTANT CASE THERE IS ONLY ONE REFERENCE IN PAGE 4 PARA 3.6 OF T HE IMPUGNED ORDER WHICH IS QUOTED HEREUNDER:- IN THE INSTANT CASE SEARCH WAS CONDUCTED ON 4-7-9 6 AND IN THE CASE OF BVPL ON 4-7-96 CERTAIN INFORMATI ON RELATING TO THE ASSESSEE WAS FOUND AND SRI T.G. SURYANARAYANA EXECUTIVE DIRECTOR OF BVPL IN HIS STATEMENT EXPLICITLY STATED THAT THE ASSESSEE-FIRM HAS INVESTED IN THE SHARES IN BVPL IN FICTITIOUS NAMES . ON RECEIPT OF THIS INFORMATION THE ASSESSING OFFIC ER IS SATISFIED THAT THERE IS UNDISCLOSED INCOME RELATING TO THE ASSESSEE AND A NOTICE ISSUED ACCORDINGLY UNDER SECTION 158BD IS IN ORDER. 6. THE FIRST INFERENCE FROM THE ABOVE NOTINGS THAT C ERTAIN INFORMATION RELATING TO THE ASSESSEE WAS FOUND IS N OT ONLY VAGUE BUT LACKS IN SUBSTANCE AND UNCORROBORATED. THE SECO ND INFERENCE THAT SRI T.G. SURYANARAYANA IN HIS STATEMENT EXPLI CITLY STATED ABOUT THE INVESTMENTS IN SHARES IN BVPL MADE BY THE ASSESSEE ALSO IS WITHOUT ANY REFERENCE AND CONTRARY TO FACTS AS NO SUCH STATEMENT FROM THE AVAILABLE RECORDS IS SEEN TO H AVE BEEN MADE DURING THE COURSE OF SEARCH. THESE TWO INFERENCES/ FINDINGS OF THE LEARNED ASSESSING OFFICER ARE THEREFORE ERRONEOUS ON FACTS. IT(SS)A NOS.31 & 32/H/2009 M/S. NAAG ADVERTISING & MARKETING & M/S. TREZER OIL AGRO TECH LTD =========================== 5 7. IT IS SUBMITTED THAT THE REVENUE HAVING NOT RECORDE D ITS SATISFACTION IN TERMS OF SECTION 158-BD HAD ERRED I N THE ISSUANCE OF THE NOTICE AND IN PROCEEDING FURTHER ON THE BASI S OF SAID NOTICE IN FRAMING THE BLOCK ASSESSMENT IN VIEW OF THE DEC ISION OF THE HONBLE APEX COURT IN THE CASE OF MANISH MAHESHWARI REPORTED IN (2007) 289 ITR 341 (SC) AND THE NOTICE UNDER SECTIO N 158-BD DATED 6-1-1997 HAVING BEEN ISSUED BY AN AUTHORITY W ITHOUT JURISDICTION OVER THE ASSESSEE AS WELL AS WITHOUT R EFERENCE TO ANY SEIZED MATERIAL IS BAD IN LAW AND UNTENABLE. THE B LOCK ASSESSMENT IS UNTENABLE AS IT IS MADE WITHOUT REFER ENCE TO THE SEIZED MATERIAL AND IS CONTRARY TO FACTS AND BASED ON CONJUNCTURES AND SURMISES. IT IS SUBMITTED THAT THE REVENUE GROS SLY ERRED IN MAKING INFERENCE AND RECORDING ILL-FOUNDED NOTINGS IN PARA 3.6 AT PAGE 4 OF THE IMPUGNED ORDER IN CONFIRMING THE VALI DITY OF ISSUE OF NOTICE UNDER SECTION 158BD OF THE ACT. 8. IT IS SUBMITTED THAT THE REVENUE AUTHORITIES ERRED IN CONFIRMING RS.3 31 000/- AS UNEXPLAINED INVESTMENT IN THE SHARES OF BVPL MADE WITHOUT REFERENCE TO ANY SEIZED MATERI AL AND ALSO FAILED TO APPRECIATE THAT THE ASSESSEE MADE PAYMENT FOR INVESTMENT ONLY TO THE EXTENT OF RS.32 21 500/-. I T IS SUBMITTED THAT THE ASSESSING AUTHORITY FAILED TO CONSIDER THA T THE ENTIRE INVESTMENT WERE FOUND TO HAVE FLOWED FROM THE ACCOU NT OF BVPL AS STATED BY THEM AND NOTED IN THE SPECIAL AUDIT REPOR T OF THE BVPL IN THEIR TAX PROCEEDINGS AND THEREFORE NO PORTION WHATSOEVER COULD HAVE BEEN ASSESSED AS FROM UNDISCLOSED SOURCE S PARTICULARLY IN THE CASE OF THE ASSESSEE IN THE ABS ENCE OF ANY CONCRETE EVIDENCE/MATERIAL OR FINDINGS AS A RESULT OF ENQUIRY. 9. IT IS SUBMITTED THAT REVENUE ERRED IN CONFIRMING AN ADDITION OF RS.43 62 224/- AS UNEXPLAINED CREDIT NOTING IT A S THE DIFFERENCE IN THE ACCOUNT OF BVPL IN THE BOOKS OF THE APPELLAN T WITH THAT OF IT(SS)A NOS.31 & 32/H/2009 M/S. NAAG ADVERTISING & MARKETING & M/S. TREZER OIL AGRO TECH LTD =========================== 6 THE ASSESSEE IN THE BOOKS OF BVPL. THE REVENUE AUT HORITIES GROSSLY ERRED IN TREATING THE RECONCILABLE DIFFEREN CE RECORDED IN THE BOOKS AS INCOME IN THE BLOCK ASSESSMENT AND FAILED TO APPRECIATE THE VARIOUS SUBMISSIONS OF THE ASSESSEE AND PARTICU LARLY THAT ENTRIES IN THE ACCOUNTS ARE THROUGH CHEQUES AND ON ACCOUNT OF JOURNAL ENTRIES. 10. IT IS FURTHER SUBMITTED THAT THE ASSESSING AUTHORI TY FAILED TO APPRECIATE THAT IT IS A NOTED AND ADMITTED FACT THA T THE BOOKS OF ACCOUNTS OF BVPL WERE NOT IN ORDER AND HAD TO BE RE FERRED FOR SPECIAL AUDIT UNDER SECTION 142(2A) AND THERE WAS I SSUES OF RECONCILIATION AND SQUARING UP OF BALANCES OF DEBTO RS AND CREDITORS IN THEIR ACCOUNTS WHOSE CASE WAS SETTLED IN THE IT SETTLEMENT COMMISSION ADMITTING THE ISSUE OF RECONC ILIATION AND THE SQUARING UP. 11. IT IS SUBMITTED THAT THE REVENUE AUTHORITIES ERRED IN CONFIRMING ADDITION OF RS.42.00 LAKHS BEING THE AGG REGATE OF THE AMOUNTS RECEIVED BY TWO CHEQUES IN THE ACCOUNT OF T G PRAHALAD SHETTY & SONS (TGPS) AND GROSSLY ERRED IN CONFIRMIN G THE ADDITIONS WHEN THE DETAILS OF THE CHEQUES AND THE S OURCE FROM WHERE THE AMOUNTS WERE RECEIVED WERE EXPLAINED AND NO CONTRARY FACTS WERE FOUND ON ENQUIRY OR IN THE PROCEEDINGS. 12. IT IS SUBMITTED THAT THE ASSESSING AUTHORITY FAILED TO APPRECIATE THE EVIDENCE PRODUCED IN RESPECT OF THE TWO CHEQUES DEPOSITED THAT WERE RECEIVED FROM OUT OF TERM LOAN DISBURSEMENT FROM APCOB TO THE ACCOUNT OF TGPS AND GROSSLY ERRED IN CONFIRMING THE ADDITION ON EXTRANEOUS AND ILL-FOUND ED GROUND AS MENTIONED IN PARA 6.3 OF THE IMPUGNED ORDER FAILIN G TO APPRECIATE THAT SUCH ADDITIONS CANNOT BE MADE IN BLOCK ASSESSM ENT IN THE ABSENCE OF ANYTHING FOUND CONTRARY TO THE FACTS STA TED. IT(SS)A NOS.31 & 32/H/2009 M/S. NAAG ADVERTISING & MARKETING & M/S. TREZER OIL AGRO TECH LTD =========================== 7 13. IT IS CONTENDED THAT THE ASSESSING AUTHORITY ERRED IN CONFIRMING RS.35 038/- FOR FINANCIAL YEAR 1993-94 RS.4 26 240/- FOR FINANCIAL YEAR 1994-95 AND RS.2 84 200/- FOR FI NANCIAL YEAR 1995-96 AGGREGATING TO RS.7 45 478/- AS UNDISCLOSED INCOME BEING DIVIDEND INCOME FROM BENAMI SHARES HELD IN BV PL. IT IS SUBMITTED THAT THE REVENUE GROSSLY ERRED IN NOTING THAT THE ASSESSEE HAD OWNED UP THE INVESTMENT IN THE BENAMI NAMES AND ACCORDINGLY AGREED FOR PROPOSAL TO TAX THE DIVIDEND INCOME FROM THESE SHARES AS NO SUCH STATEMENT OR ACCEPTANCE WAS MADE BY THE ASSESSEE IN RESPECT OF THIS ISSUE AND FURTHER FAILE D TO NOTE AND APPRECIATE THE SUBMISSIONS ON FACTS MADE BY THE ASS ESSEE IN PARA 3 OF THE WRITTEN SUBMISSIONS DATED 29-11-2008 WHER EIN IT WAS POINTED OUT THAT THE DIVIDENDS IN RESPECT OF THESE SHARES HELD BY THE INDIVIDUAL PROMOTERS WERE OFFERED BY THEM IN TH EIR REGULAR RETURNS THEY HAVING ACQUIRED THE SHARES THROUGH TG L POSHAK CORPORATION. IT IS SUBMITTED THAT THE REVENUE AU THORITIES ERRED IN CONFIRMING THE ADDITION OF RS.1 20 000/- FOR FINANC IAL YEAR 1995- 96 AND RS.80 000/- FOR THE ASSESSMENT YEAR 1996-97 BEING DIVIDEND FROM OWN SHARES HELD BY THE ASSESSEE WHICH WAS RECORDED IN THE BOOKS OF ACCOUNT. IT IS SUBMITTED THAT THE ASSESSING AUTHORITY FAILED TO APPRECIATE THAT THE D IVIDEND WAS RECEIVED MUCH BEFORE THE DATE OF SEARCH AND WERE DU LY RECORDED IN THE BOOKS AND PART OF THE GROSS RECEIPTS OF THE ASS ESSEE BASED ON WHICH THE PROFIT AND LOSS FROM ALL OPERATIONS OF TH E ASSESSEE WERE OFFERED TO TAX IN THE REGULAR RETURN WHICH WAS ALS O PROCESSED UNDER SECTION 143(1)(A) OF THE IT ACT. IT IS SUBMIT TED THAT THE ASSESSING AUTHORITY GROSSLY ERRED IN CONFIRMING THE ADDITION OF THE RETURNED INCOME REFERRING TO THE DATE OF SEARCH IN THE CASE OF BVPL WITHOUT REFERRING TO THE SERVICE OF NOTICE UN DER SECTION 158BD OF THE ACT ON THE ASSESSEE AND FURTHER ERRED IN ADDING THE RETURNED LOSS OF RS.13 500/- FOR ASSESSMENT YEAR 19 94-95 WITHOUT DEDUCTING THE SAME FROM THE TOTAL INCOME COMPUTED I N COLUMN (A) IT(SS)A NOS.31 & 32/H/2009 M/S. NAAG ADVERTISING & MARKETING & M/S. TREZER OIL AGRO TECH LTD =========================== 8 IN PARA 10.3 AT PAGE NO.15 OF THE IMPUGNED ORDER. IT IS SUBMITTED THAT THE ASSESSING AUTHORITY ERRED IN MAKING THE TO TAL OF COLUMN (C) IN PARA 10.3 AT PAGE 15 TAKING IT AS RS.2 11 09 0/- INSTEAD OF RS.2 52 390/- THIS MISTAKE BEING CONTINUED VERBATIM FROM THE EARLIER BLOCK ASSESSMENT. 14. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPRESE NTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 15. WE HAVE CONSIDERED THE SUBMISSIONS OF THE RIVAL PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THI S CASE THE SEARCH WAS IN THE CASE OF M/S. BHAGYALAKSHMI VEGETABLE PRO DUCTS LTD. PLOT NO. 206 2 ND FLOOR LUMBINI ENCLAVE PUNJAGUTTA HYDERABAD ON 4.7.1996. CONSEQUENT TO THE SEARCH CERTAIN INF ORMATION RELATING TO THE ASSESSEE WERE FOUND AND NOTICE U/S. 158BD DATED 6.1.1997 WAS ISSUED AND SERVED ON THE ASSESSEE ON 1 6.1.1997 CALLING FOR ASSESSEE TO FILE RETURN OF INCOME AS TH ERE WAS INFORMATION THAT THERE WAS UNDISCLOSED INCOME RELAT ING TO THE ASSESSEE AND THEREAFTER NOTICE U/S. 143(2) WERE ISS UED FROM TIME TO TIME. SUBSEQUENTLY THE ASSESSEE FILED RETURN OF INCOME IN PRESCRIBED FORM NO. 2B ON 10.3.1997. NOW THE ASSES SEE QUESTIONED THE VALIDITY OF ISSUE OF NOTICE U/S. 158 BD OF THE I.T. ACT. AS PER SECTION 158BD OF THE ACT WHERE ASSESS ING OFFICER IS SATISFIED THAT ANY UNDISCLOSED INCOME BELONGS TO AN Y PERSONS OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH W AS MADE UNDER SECTION 132 OR WHOSE BOOKS OF ACCOUNT OR OTHE R 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 ASSESS ING OFFICER SHALL PROCEED AGAINST SUCH OTHER PERSON AND THE PRO VISIONS OF THIS CHAPTER SHALL APPLY ACCORDINGLY. IT(SS)A NOS.31 & 32/H/2009 M/S. NAAG ADVERTISING & MARKETING & M/S. TREZER OIL AGRO TECH LTD =========================== 9 16. THE CONDITION PRECEDENT FOR INVOKING A BLOCK ASSESS MENT IS THAT A SEARCH HAS BEEN CONDUCTED UNDER SECTION 132 OR DOCUMENTS OR ASSETS HAVE BEEN REQUISITIONED U/S. 13 2A. THE SAID PROVISIONS SHOULD APPLY TO THE CASE OF ANY PERSON IN RESPECT OF WHOM SEARCH HAS BEEN CARRIED OUT UNDER SECTION 132A OR DOCUMENTS OR ASSETS HAVE BEEN REQUISITIONED U/S. 13 2A. SECTION 158BD HOWEVER PROVIDES FOR TAKING RECOURSE TO A B LOCK ASSESSMENT IN TERMS OF SECTION 158BC IN RESPECT OF ANY OTHER PERSON THE CONDITIONS PRECEDENT WHEREFORE ARE: I. SATISFACTION MUST BE RECORDED BY THE ASSESSING OFFI CER THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON OTHER THAN THE PERSON WITH RESPECT TO WHO0M SEARCH WAS MADE UNDER SECTION 132A OF THE ACT II. THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED HAD BEEN HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTH ER PERSON AND (III) THE ASSESSING OFFICER HAS PROCEED ED UNDER SECTION 158BC AGAINST SUCH OTHER PERSON. 17. THE CONDITIONS PRECEDENT FOR INVOKING THE PROVISION S OF SECTION 158BD THUS ARE REQUIRED TO BE SATISFIED B EFORE THE PROVISIONS OF THE SAID CHAPTER ARE APPLIED IN RELAT ION TO ANY PERSON OTHER THAN THE PERSON WHOSE PREMISES HAD BEEN SEARC HED OR WHOSE DOCUMENTS AND OTHER ASSETS HAD BEEN REQUISITI ONED UNDER SECTION 132A OF THE ACT. 18. THE ONLY QUESTION ARISES FOR CONSIDERATION IS AS TO WHETHER NOTICE DATED 6.1.1997 SATISFY THE REQUIREMENT OF SE CTION 158BD OF THE ACT. THE ASSESSEE HEREIN HAS BEEN FILING ITS R ETURN OF INCOME BEFORE THE INCOME TAX OFFICER ADONI AND THIS NOTI CE U/S. 158BD HAS BEEN ISSUED BY ACIT(INV) CIRCLE-4(1) HYDERABA D. THE ASSESSEE REPEATEDLY REQUESTED THE ASSESSING OFFICER I.E ACIT CIRCLE-1 AAYAKAR BHAVAN KURNOOL TO FURNISH THE CO PY OF IT(SS)A NOS.31 & 32/H/2009 M/S. NAAG ADVERTISING & MARKETING & M/S. TREZER OIL AGRO TECH LTD =========================== 10 MEMORANDUM OF RECORDING SATISFACTION IN THE CASE OF THE ASSESSEE. THIS IS EVIDENT FROM THE ASSESSEES LETTERS DATED 2 5.03.2009 24.06.2009 16/17.02.2010 AND 27.04.2010. HOWEVER NO COPY OF RECORDING SATISFACTION FOR ISSUING OF NOTICE U/S. 1 58BD WAS BROUGHT ON RECORD. ADMITTEDLY NOTICE U/S. 158BD D ATED 4.1.1997 WAS ISSUED BY ACIT (INV.) COMPANY CIRCLE-4(1) HYD ERABAD REQUIRING ASSESSEE TO FILE A RETURN OF INCOME FOR T HE BLOCK PERIOD. THE ASSESSMENT WAS COMPLETED BY DCIT CIRCLE-1 KUR NOOL (I/C). AS EVIDENT FROM THE RECORD THE ASSESSEE HAS BEEN AS SESSED BY THE INCOME TAX OFFICER ADONI. AS PER THE PROVISIONS O F SECTION 158BD OF THE ACT DOCUMENTS AND OTHER ASSETS REQUIRED DUR ING THE SEARCH TO BE HANDED OVER TO THE ASSESSING OFFICER HAVING J URISDICTION OVER THE ASSESSEE AND THERE SHOULD BE A RECORDING OF SAT ISFACTION BEFORE ISSUING NOTICE AND THEREAFTER ASSESSMENT IS TO BE C OMPLETED. IN THE PRESENT CASE THERE IS NO EVIDENCE REGARDING RE CORDING OF SATISFACTION BY THE ASSESSING OFFICER CONCERNED B EFORE ISSUING OF NOTICE U/S. 158BD OF THE ACT. BEING SO WE CANNOT HOLD THAT FRAMING OF BLOCK ASSESSMENT IS VALID. THIS VIEW OF OURS IS FORTIFIED BY THE JUDGEMENT OF SUPREME COURT IN THE CASE OF MA NISH MAHESHWARI VS. ACIT (289 ITR 341) (SC) WHEREIN HELD THAT BEFORE THE PROVISIONS OF SECTION 158BD OF THE INCOME-TAX A CT 1961 ARE INVOKED AGAINST A PERSON OTHER THAN THE PERSON WHOS E PREMISES HAVE BEEN SEARCHED UNDER SECTION 132 OR DOCUMENTS A ND OTHER ASSETS HAVE BEEN REQUISITIONED UNDER SECTION 132A THE CONDITIONS PRECEDENT HAVE TO BE SATISFIED. ACCORDINGLY WHERE THE PREMISES OF A DIRECTOR OF A COMPANY AND HIS WIFE WERE SEARCHED UNDER SECTION 132 OF THE INCOME-TAX ACT 1961 AND A BLOCK ASSESS MENT HAD TO BE DONE IN RELATION TO THE COMPANY THE ASSESSING O FFICER HAD TO (I) RECORD HIS SATISFACTION THAT ANY UNDISCLOSED INCOME BELONGED TO THE COMPANY AND (II) HAND OVER THE BOOKS OF ACCOUN T AND OTHER DOCUMENTS AND ASSETS SEIZED TO THE ASSESSING OFFICE R HAVING JURISDICTION AGAINST THE COMPANY. AS THE ASSESSING OFFICER HAS NOT IT(SS)A NOS.31 & 32/H/2009 M/S. NAAG ADVERTISING & MARKETING & M/S. TREZER OIL AGRO TECH LTD =========================== 11 RECORDED HIS SATISFACTION WHICH IS MANDATORY; NOR HAS HE TRANSFERRED THE CASE TO THE ASSESSING OFFICER HAVIN G JURISDICTION OVER THE MATTER THE ORDER OF THE ASSESSING OFFICER CANNOT BE SUSTAINED. 19. IN VIEW OF THE ABOVE DISCUSSION THE FRAMING OF ASS ESSMENT U/S. 158BD R.W.S. 143(3) IN THE CASE OF PRESENT IS BAD IN LAW. 20. WITHOUT PREJUDICE TO THE ABOVE ON MERIT ALSO WE A RE OF THE OPINION THAT IN THE CASE OF BLOCK ASSESSMENT IT SH OULD BE BASED ON EVIDENCE FOUND AS A RESULT OF SEARCH OR REQUISIT ION OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS AND SUCH OTHER MATERIAL OR INFORMATION AS ARE AVAILABLE WITH THE ASSESSING OFF ICER AND RELATABLE TO SUCH EVIDENCE. BEING SO WE HAVE TO S EE WHETHER THE BLOCK ASSESSMENT IS FRAMED IN ACCORDANCE WITH THE P ROVISIONS OF SECTION 158BB OF THE I.T. ACT WHICH PROVIDE FOR COM PUTATION OF UNDISCLOSED INCOME. 21. THE FIRST ARGUMENT OF THE LEARNED COUNSEL FOR THE A SSESSEE IS THAT THE ADDITIONS IN QUESTIONS I.E. UNEXPLAINED I NVESTMENT IN THE SHARE CAPITAL OF BVPL UNEXPLAINED CASH CREDIT BEIN G THE DIFFERENCE IN THE BALANCE OUTSTANDING AS PER THE BOOKS OF ACCO UNT OF THE ASSESSEE IN THE LEDGER ACCOUNT OF BVPL VIS--VIS TH E ASSESSEE ACCOUNT IN THE BOOKS OF BVPL DEPOSIT IN THE BANK A CCOUNT AND UNDISCLOSED DIVIDEND INCOME HAVE NO NEXUS OR CONNEC TION WITH THE MATERIAL DETECTED OR FOUND AS A RESULT OF SEARC H AND THESE CANNOT BE SUBJECT MATTER OF BLOCK ASSESSMENT UNDER SEC. 158BD R.W 158BC. ON A PERUSAL OF THE ASSESSMENT ORDER W E ARE OF THE OPINION THAT THE ADDITION IN THE CASE OF CASH CREDI T IS ON ACCOUNT OF DIFFERENCE IN THE CLOSING BALANCE IN THE ACCOUNT OF M/S. BVPL IN THE BOOKS OF ACCOUNT OF THE ASSESSEES REGULAR BOO KS OF ACCOUNT AND M/S. BVPL BOOKS OF ACCOUNT AT RS. 43 62 224.47 IS CONSIDERED AS UNEXPLAINED BY THE ASSESSING OFFICER. IN OUR IT(SS)A NOS.31 & 32/H/2009 M/S. NAAG ADVERTISING & MARKETING & M/S. TREZER OIL AGRO TECH LTD =========================== 12 OPINION THIS COULD BE ONLY TAKEN IN REGULAR ASSESS MENT AND NOT IN THE BLOCK ASSESSMENT. COMING TO THE ADDITION WITH REGARD TO AMOUNT CREDITED IN THE BANK ACCOUNT AT RS. 42 LAKHS THIS BANK ACCOUNT IS DISCLOSED ACCOUNT IN THE REGULAR BOOKS O F ACCOUNT AND IF ANY AMOUNT IS CREDITED IN THIS BANK ACCOUNT THE SA ME IS TO BE CONSIDERED IN THE REGULAR ASSESSMENT. COMING TO TH E TREATMENT OF DIVIDEND INCOME THE ASSESSING OFFICER IS OF THE OP INION THAT THE INVESTMENTS WERE MADE BY THE ASSESSEE AND DIVIDEND ON IT WAS NOT DECLARED BY THE ASSESSEE. HOWEVER THE ASSESSING O FFICER NOT BROUGHT ON RECORD THE EXACT SEIZED MATERIAL REFLECT ING THIS ADDITION. BEING SO IT IS NOT PROPER TO TREAT THE SAME AS UNDISCLOSED INCOME. THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SHOW THAT THE ADDITIONS IN Q UESTIONS WERE BASED ON ANY EVIDENCE FOUND DURING THE COURSE OF SE ARCH. 22. THE LAW ON THE ISSUE AS TO WHAT NATURE OF ADDITIONS CAN BE MADE IN A BLOCK ASSESSMENT UNDER CHAPTER XIVB IS FA IRLY SETTLED. IT HAS BEEN HELD BY VARIOUS COURTS THAT CHAPTER XIV B PRESCRIBED SPECIAL PROCEDURE FOR SEARCH CASES IS A SELF CONTA INED CODE AND 'UNDISCLOSED INCOME' AS DEFINED IN 158B(B) WOULD ON LY CONSIST OF ANY MONEY BULLION JEWELLERY OR OTHER VALUABLE ART ICLE OR THING OR ANY INCOME BASED ON ANY ENTRY IN THE BOOKS OF ACCOU NT OR OTHER DOCUMENTS ETC. WHICH REPRESENTS WHOLLY OR PARTLY I NCOME OR PROPERTY WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSES OF THE ACT. FINANCE ACT 2002 WITH EF FECT FROM 1-7- 1995 HAS INTRODUCED AN AMENDMENT TO INCLUDE ALSO A NY EXPENSES DEDUCTION OR ALLOWANCE CLAIMED UNDER THIS ACT WHICH IS FOUND TO BE FALSE. UNDER SEC.158BB THE PROCEDURE F OR COMPUTATION OF UNDISCLOSED INCOME FOR A BLOCK PERIO D IS GIVEN WHEREIN IT IS STATED THAT THE UNDISCLOSED INCOME SH ALL BE 'THE AGGREGATE OF THE TOTAL INCOME OF THE PREVIOUS YEAR FALLING WITHIN THE BLOCK PERIOD COMPUTED IN ACCORDANCE WITH THE PROVIS ION OF THIS IT(SS)A NOS.31 & 32/H/2009 M/S. NAAG ADVERTISING & MARKETING & M/S. TREZER OIL AGRO TECH LTD =========================== 13 ACT ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH ....' CLAUSES (C) (CA) AND (D) OF SEC. 158BB(1) READ AS FOLLOWS:- '158BB' (1) THE UNDISCLOSED INCOME OF THE BLOCK PERIOD SHALL BE THE AGGREGATE OF THE TOTAL INCOME O F THE PREVIOUS YEARS FALLING WITHIN THE BLOCK PERIOD COMPUTED! IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH OR REQUISITION OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS AND SUCH OTHER MATERIALS OR INFORMATION A S ARE AVAILABLE WITH THE ASSESSING OFFICER AND RELATA BLE TO SUCH EVIDENCE AS REDUCED BY THE AGGREGATE OF TH E TOTAL INCOME OR AS THE CASE MAY BE AS INCREASED B Y THE AGGREGATE OF THE LOSSES OF SUCH PREVIOUS YEARS DETERMINED -- (C) WHERE THE DUE DATE FOR FILING OF A RETURN OF INCOME HAS EXPIRED BUT NO RETURN OF INCOME HAS BEE N FILED -- (A) ON THE BASIS OF ENTRIES AS RECORDED IN THE BOOK S OF ACCOUNT AND OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE ON OR BEFORE THE DATE OF THE SEARCH O R REQUISITION WHERE SUCH ENTRIES RESULT IN COMPUTATIO N OF LOSS FOR ANY PREVIOUS YEAR FALLING IN THE BLOCK PERIOD OR; OR (B) ON THE BASIS OF ENTRIES AS RECORDED IN THE BOOK S OF ACCOUNT AND OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE ON OR BEFORE THE DATE OF THE SEARCH O R REQUISITION WHERE SUCH INCOME DOES NOT EXCEED THE MAXIMUM AMOUNT NOT CHARGEABLE TO TAX FOR ANY PREVIOUS YEAR FALLING IN THE BLOCK PERIOD. (CA) WHERE THE DUE DATE FOR FILING A RETURN OF INCO ME HAS EXPIRED BUT NO RETURN OF INCOME HAS BEEN FILED AS NIL IN CASES NOT FALLING UNDER CLAUSE (C); (D) WHERE THE PREVIOUS YEAR HAS NOT ENDED OR THE DA TE OF FILING THE RETURN OF INCOME UNDER SUB-SECTION (L )'OF SECTION 139 HAS NOT EXPIRED! ON THE BASIS OF ENTRIE S RELATING TO SUCH INCOME OR TRANSACTIONS AS RECORDED IN THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE ON OR BEFORE THE DA TE IT(SS)A NOS.31 & 32/H/2009 M/S. NAAG ADVERTISING & MARKETING & M/S. TREZER OIL AGRO TECH LTD =========================== 14 OF THE SEARCH OR REQUISITION RELATING TO SUCH PREVI OUS YEARS; 23. INTERPRETING THE AFORESAID PROVISIONS VARIOUS COURTS HAVE HELD AS FOLLOWS: CIT V. N.R. PAPERS AND BOARDS LTD. 248 ITR 526 (GA UHATI) (H:N) 'IF PRIOR TO THE DATE OF SEARCH THE ASSESSEE HAD DISCLOSED THE PARTICULARS OF INCOME OR EXPENDITURE EITHER IN THE RETURN OR IN THE BOOKS OF ACCOUNT OR IN THE COURSE OF PROCEEDINGS TO THE ASSESSING OFFICER OR WHERE TH E RETURN HAD NOT BECOME DUE THEY ARE DUTY RECORDED I N THE REGULAR BOOKS OF ACCOUNT THEN SUCH INCOME CANN OT BE TREATED AS UNDISCLOSED INCOME SO AS TO TAX A PER SON FT THE RATE OF SIXTY PER CENT. UNDER CHAPTER XIV. CIT V. N.R. PAPERS AND BOAR'DS LTD. 248 ITR 526 (G AUHAT;) (HN): - B OF THE INCOME-TAX ACT 1961. ' 'UNDER THE SCHEME OF THE PROVISIONS FOR BLOCK ASSESSMENT IT IS APPARENT THAT IT RELATED TO ASSESS MENT OF 'UNDISCLOSED INCOME' OF THE ASSESSEE EXCLUDING T HE INCOME SUBJECTED TO REGULAR ASSESSMENT IN PURSUANC E OF THE RETURNS FILED BY THE ASSESSEE FOR SUCH PERIO D. FROM A PERUSAL OF SECTION 158BB OF THE INCOME-TAX A CT 1961 IT IS CLEAR THAT THE RETURNS ARE REQUIRED TO BE FILED IN PURSUANCE OF A NOTICE UNDER SECTION 158BC(A) AND THE ASSESSMENT HAS TO BE FRAMED ON THAT BASIS IN TH E LIGHT OF MATERIAL THAT HAD COME INTO THE POSSESSION OF THE ASSESSING AUTHORITY DURING THE COURSE OF SEARCH WHICH WAS THE FOUNDATION OF PROCEEDINGS. THE CORRECTNESS OR OTHERWISE OF THE RETURNS FILED IN PURSUANCE OF THE NOTICE UNDER SECTION 158BC(A) HAS TO BE EXAMINED WITH REFERENCE TO THE MATERIAL IN THE POSSESSION OF THE ASSESSING AUTHORITY HAVING NEXUS TO ASSESSMENT OF 'UNDISCLOSED INCOME'. ' BHAGWATI PRASAD KEDIA V. CIT 248 ITR 562 (CALCUTTA ) (HN): 'THE EXPLANATION TO SECTION 158BA OF THE INCOME-TAX ACT 1961 MAKES IT CLEAR THAT THE LEGISLATURE THOU GHT IT FIT TO MAKE A DISTINCTION BETWEEN THE BLOCK ASSESS MENT AND THE REGULAR ASSESSMENT. IN THE CASE OF REGULA R ASSESSMENT THE ASSESSING OFFICER IS FREE TO EXAMIN E THE VERACITY OF THE RETURN AS WELL AS THE CLAIMS MA DE BY IT(SS)A NOS.31 & 32/H/2009 M/S. NAAG ADVERTISING & MARKETING & M/S. TREZER OIL AGRO TECH LTD =========================== 15 THE ASSESSEE WHEREAS THE UNDISCLOSED INCOME IS TAX ED BY WAY OF BLOCK ASSESSMENT AS A RESULT OF SEARCH AN D SEIZURE. THE LOGIC BEHIND THE TWO DIFFERENT MODES OF ASSESSMENT IS THAT CONCEALMENT OF INCOME AND CLAIMI NG DEDUCTION OR EXEMPTION IN RESPECT OF A DISCLOSED IN COME CANNOT BE TREATED AT PART. THE FORMER IS AN OFFENCE WHICH GOES TO THE ROOT OF THE MATTER AND THE OTHER IS ON THE BASIS OF THE CAUSES SHOWN BY THE ASSESSEE WHERE THE ASSESSING OFFICER IS FREE TO ACCEPT THE JUSTIFI CATION SHOWN OR REJECT THE SAME.' CIT V VIKRAM A. DOSHI 256 ITR 129 (BOM) (HN) 'BLOCK ASSESSMENT - UNDISCLOSED INCOME-UNDISCLOSED TRANSACTIONS ASSESSED IN BLOCK ASSESSMENT-TRIBUNAL FINDING TRANSACTIONS DISCLOSED IN RETURN WHICH WERE SUBJECT-MATTER OF REGULAR ASSESSMENTS-TRANSACTIONS IN QUESTION NOT TO BE CONSIDERED IN BLOCK ASSESSMENT - INCOME;-TAX ACT 1961 SS. 143 158B.' CIT V. SHAMLAL BALRAM GURBANI 249 ITR 501 (BOM) (H N): 'A SEARCH WAS CONDUCTED AT THE RESIDENTIAL PREMISES OF THE ASSESSEE ON MARCH 25 1996 AND A NOTICE UNDER SECTION 158BC OF THE INCOME-TAX ACT 1961 WAS ISSU ED; THE ASSESSEE DID NOT FILE THE RETURNS FOR THE YEARS 1993-94 1994-95 AND 1995-96. THE ASSESSING OFFICER TREATED THE INCOME OF THE THREE YEARS AS THE INCOME OF THE BLOCK PERIOD. ON APPEAL THE TRIBUNAL FOUND THA T THE ASSESSEE'S INCOME FROM INTEREST SALARY AND RENT WA S REFLECTED IN THE AUDITED BALANCE-SHEET OF THE RESPE CTIVE ASSESSMENT YEARS OF THE FIRM AND THEREFORE THE TRIBUNAL DELETED THE ADDITION.' ON APPEAL THE HON'BLE BOMBAY HIGH COURT DID NOT FIN D ANY REASON TO INTERFERE WITH THE FINDINGS OF FACTS RECORDED BY THE TRIBUNAL. IT WAS HELD: 'HELD DISMISSING THE APPEAL THAT THE CONCLUSION OF THE TRIBUNAL THAT THERE WAS NO REASON FOR TREATING THE SAID INCOME AS UNDISCLOSED INCOME FOR THE PURPOSES OF BL OCK ASSESSMENT WAS BASED ON FACTS. NO SUBSTANTIAL QUESTION OF LAW AROSE.' IT(SS)A NOS.31 & 32/H/2009 M/S. NAAG ADVERTISING & MARKETING & M/S. TREZER OIL AGRO TECH LTD =========================== 16 CIT V. VINOD DANCHAND GHODAWAT 247 ITR 448 (BOM) ( HN) 'WHERE THE VALUE OF THE GOLD AND SILVER ARTICLES. A ND JEWELLERY HAD BEEN DISCLOSED IN THE ASSESSEE'S WEAL TH- TAX RETURN WHICH WAS ACCEPTED BY THE DEPARTMENT: HELD THAT CHAPTER XIV-B OF THE INCOME-TAX ACT 1961 HAD NO APPLICATION TO THE FACTS OF THE CASE AND THE ADDITION MADE BY THE DEPARTMENT ON THE GROUND OF UNDISCLOSED INCOME WAS ERRONEOUS. DURING THE SEARCH IT WAS FOUND THAT THE ASSESSEE H AD CONSTRUCTED A BUNGALOW. IT WAS FOUND THAT THE ASSESSEE HAD INCURRED AN EXPENSE OF RS.4.16 LAKHS. THE ASSESSING OFFICER THEREAFTER REFERRED THE MAT TER TO THE DEPARTMENT VALUER WHO VALUED THE PROPERTY AT R S. 6. 66 LAKHS AND ACCORDINGLY THE DIFFERENCE HAD BEE N ADDED TO THE INCOME OF THE ASSESSEE AS UNDISCLOSED INCOME: HELD THAT THE ABOVE BASIS CLEARLY SHOWED THAT THE DEPARTMENT HAD NOT UNDERSTOOD THE SCOPE OF CHAPTER XIV-B OF THE ACT. THE ADDITION DID NOT FALL WITHIN THE CHAPTER XIV-B.' 24. EVEN IF IT IS PRESUMED THAT POST-SEARCH ENQUIRIES H AVE RESULTED IN DETECTION OF CERTAIN UNDISCLOSED INCOME THOUGH IT IS NOT RELATABLE TO THE EVIDENCE FOUND AS ON THE DATE OF SEARCH THEN ALSO MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF MORARJI GOKULDAS SPG. & WVG. CO. LTD. V. DCIT 95 ITD 1 (M UM) (TM) WHILE CONSIDERING AN IDENTICAL SITUATION HELD AS F OLLOWS:- '8. BLOCK PERIOD FOR WHICH THE ASSESSMENT IS TO BE MADE UNDER CHAPTER XIV-8 MEANS THE PERIOD COMPRISING PREVIOUS YEARS RELEVANT TO TEN ASSESSMEN T YEARS PRECEDING A PREVIOUS YEAR IN WHICH THE SEARCH WAS CONDUCTED UNDER SECTION 132 OR ANY REQUISITION WAS MADE UNDER SECTION 132A AND ALSO INCLUDES IN T HE PREVIOUS YEAR IN WHICH SUCH SEARCH WAS CONDUCTED OR REQUISITION MADE THE PERIOD UP TO THE DATE OF THE COMMENCEMENT OF SUCH SEARCH OFR AS THE CASE MAY BE THE DATE OF SUCH REQUISITION. THEREFORE THE ASSESS MENT FOR THE BLOCK PERIOD UNDER CHAPTER XIV-8 CAN BE MAD E OF THE UNDISCLOSED INCOME ONLY UP TO THE DATE OF COMMENCEMENT OF SEARCH OR THE DATE OF THE REQUISITI ON IT(SS)A NOS.31 & 32/H/2009 M/S. NAAG ADVERTISING & MARKETING & M/S. TREZER OIL AGRO TECH LTD =========================== 17 AND NOT OF THE PERIOD THEREAFTER. SECTION 1588A PROVIDES FOR ASSESSMENT OF UNDISCLOSED INCOME AS RESULT OF SEARCH FOR THE BLOCK PERIOD AND COMPUTATI ON OF INCOME AND THE COMPUTATION OF UNDISCLOSED INCOME FO R THE BLOCK PERIOD TO BE MADE AS PER THE PROVISIONS O F SECTION 158BE AND ASSESSMENT HAS ALSO TO BE MADE UNDER SECTION 158BC OF THE BLOCK PERIOD. THE 'UNDISCLOSED INCOME' FOR WHICH THE ASSESSMENT IS TO BE MADE IS DEFINED IN SECTION 158B(B) WHICH INCLUDE MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY INCOME BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS WHERE S UCH MONEY BULLION JEWELLERY VALUABLE ARTICLES THING S ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENT OR TRANSACTION REPRESENTS WHOLLY OR PARTLY INCOME OR PROPERTY WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSE OF THIS ACT AND AFTER THE AMENDMENT BY FINANCE ACT 2002 W.E.F. 1-7-1995 IT INCLUDES ALSO ANY EXPENSES DEDUCTION OR ALLOWANCE CLAIMED UNDER THIS ACT WHICH IS TO BE FOUND TO BE F ALSE. 25. SECTION 158BB PROVIDES FOR COMPUTATION OF UNDISCLOS ED INCOME TO BE THE AGGREGATE OF THE TOTAL INCOME OF T HE PREVIOUS YEAR FALLING WITHIN THE BLOCK PERIOD COMPUTED IN ACCORDA NCE WITH THE PROVISIONS OF THIS ACT ON THE BASIS OF EVIDENCE FO UND AS A RESULT OF SEARCH OR REQUISITION OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS AND SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABL E WITH THE ASSESSING OFFICER AND RELATABLE TO SUCH EVIDENCE AS REDUCED BY THE AGGREGATE OF THE LOSSES OF SUCH PREVIOUS YEARS DETE RMINED AND PROVIDED IN CLAUSES (A) TO (F) OF SECTION 158BB(1). WHAT IS CRUCIAL TO BE DETERMINED IS THAT THE UNDISCLOSED INCOME WHICH CAN BE ASSESSED UNDER CHAPTER XIV-B SHOULD BE THAT AMOUNT WHICH IS COMPUTED ON THE BASIS OF EVIDENCES FOUND AS A RESUL T OF SEARCH AND SUCH OTHER MATERIAL OR INFORMATION AS ARE AVAIL ABLE WITH THE ASSESSING OFFICER AND RELATABLE TO SUCH EVIDENCE. C ORE THING TO BE SEEN IS THE EVIDENCE FOUND WHICH WILL BE THE BASIS FOR MAKING THE ASSESSMENT. IF THERE IS NO EVIDENCE OR THE EVIDENCE HAS ALREADY COME ON RECORD OR HAS BEEN DISCLOSED BY THE ASSESSE E IN THE ASSESSMENT PROCEEDINGS THEN THAT EVIDENCE CANNOT B E SAID TO IT(SS)A NOS.31 & 32/H/2009 M/S. NAAG ADVERTISING & MARKETING & M/S. TREZER OIL AGRO TECH LTD =========================== 18 HAVE BEEN FOUND AS A RESULT OF SEARCH AND IN THAT C ASE THE MATERIAL OR INFORMATION AVAILABLE WITH THE ASSESSIN G OFFICER AND RELATABLE TO SUCH EVIDENCE COULD ALSO NOT HELP IN C OMPUTING UNDISCLOSED INCOME. THE SEARCH IN THIS CASE WAS UND ERTAKEN ON 4TH JUL 1996 AT THE OFFICE PREMISES OF M/S BHAGYAL AXMI VEGETABLE PRODUCTSS LTD. CERTAIN INCRIMINATED MATERIALS REL ATING TO THE ASSESSEE WERE FOUND AND SEIZED AT THE TIME OF SEAR CH BUT ENTRIES BASED ON THOSE DOCUMENTS WERE ALREADY FOUND RECORDE D IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE DEPARTMENT H AS NO DOUBT COLLECTED THE MATERIAL SUBSEQUENT TO RAID BUT THAT MAY NOT BE VERY MATERIAL AND RELEVANT FOR FRAMING THE ASSESSMENT UN DER CHAPTER XIV-B OF THE CASE BECAUSE OF THE MANDATE GIVEN UNDE R SECTION 158BB IT HAS TO BE THE INCOME COMPUTED ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH AND NOT OTHERWISE. IF ANY MATERIAL IS COLLECTED BY THE REVENUE AFTER THE SEARCH THAT MAY NOT GIVE AUTHORITY TO THE DEPARTMENT TO MAKE THE COMPUTATION OF UNDISCLOSED INCOME UNDER SECTION 158BB OR ASSESSMEN T UNDER SECTION 158BC OF THE ACT. REFERENCE IN THIS CONNE CTION MAY BE HAD TO THE DECISION OF JODHPUR BENCH OF TRIBUNAL IN THE CASE OF CHITRA DEVI V. ASST. CIT [2002] 72 ITJ 640 WHEREIN IT IS HELD THAT 'FURTHER THE ADDITION WAS MADE ON THE BASIS OF THE STATEMENTS OF THE ASSESSEE AND HER TWO SONS RECORDED DURING TILE SEARCH. THESE STATEMENTS THOUGH MAY CONSTITUTE INFORMATION AVAILA BLE WITH THE ASSESSING OFFICER THE SAME CAN BY NO STRETCH OF IM AGINATION BE TREATED TO BE RELATABLE TO 'SUCH EVIDENCE' I.E. TO THE EVIDENCE 'FOUND' AS A RESULT OF SEARCH INASMUCH AS THE STATEMENT R ECORDED DURING SEARCH WOULD NOT BE SAID TO BE AN EVIDENCE 'FOUND A S A RESULT OF SEARCH' THOUGH THE SAME MAY BE AN EVIDENCE 'OBTAINE D' DURING SEARCH - ACCORDINGLY IN VIEW OF THE PROVISION OF S ECTION 158BB(1) AS IT STANDS AMENDED W.E.F. 1ST JULY 1995 NO ADDIT ION ON THE BASIS OF STATEMENT RECORDED DURING THE SEARCH COUL D BE MADE IN THE BLOCK ASSESSMENT.' IT(SS)A NOS.31 & 32/H/2009 M/S. NAAG ADVERTISING & MARKETING & M/S. TREZER OIL AGRO TECH LTD =========================== 19 26. SIMILAR VIEW IS TAKEN BY THE INDORE BENCH OF THE TR IBUNAL IN THE CASE OF INDORE CONSTRUCTION (P.) LTD. V. ASST. CIT [1999] 71 ITD 128 WHEREIN IT WAS HELD THAT 'SUCH COMPUTATION SHOULD BE ON THE BASIS OF EVIDENC E FOUND AS A RESULT OF SEARCH OR REQUISITION OF BOOKS OF ACCOUNT OR DOCUMENTS AND SUCH OTHER MATERIAL OR INFORMATION AS ARE AVAILABLE WITH ASSESSING OFFICER . IT IS IMPORTANT TO NOTE THAT THE WORDS USED ARE 'SUCH OTHER MATERIALS'. THE LEGISLATURE HAS NOT USED WORDS 'ANY OTHER MATERIALS'. THE WORD 'SUCH' HAS BEEN DEFINED IN BLACK'S LAW DICTIONARY SIXTH EDITION AS UNDER: 'SUCH OF THAT KIND HAVING PARTICULAR QUALITY OR CHARACTER SPECIFIED. IDENTICAL WITH BEING THE SA ME AS WHAT HAS BEEN MENTIONED. ALIKE SIMILAR OF THE LI KE KIND. 'SUCH' REPRESENTS THE OBJECT AS ALREADY PARTICULARIZED' IN TERMS WHICH ARE NOT MENTIONED A ND IS DESCRIPTIVE AND RELATIVE WORD REFERRING TO THE LA ST ANTECEDENT' AGAIN THE WORD USED IN THE SECTION ARE 'AS ARE AVAILABLE' THE EXPRESSION 'AVAILABLE' HAS BEEN DEFI NED TO MEAN IN BLACK'S LAW DICTIONARY SIXTH EDITION AS 'PRESENT OR READY FOR IMMEDIATE USE'. ' 27. OBSERVATION GIVEN BY THE MUMBAI BENCH IN THE CASE O F HARAKHCHAND N. JAIN V. ASST. CIT [1998] 61 TTJ (MUM .) 223 ARE ALSO TO THIS EFFECT. IT WAS HELD THAT THE ASSESSING OFFICER CANNOT MAKE ROVING ENQUIRIES IN RESPECT OF ASSESSMENTS COM PLETED WITHOUT ANY INFORMATION OR MATERIAL IN POSSESSION D URING THE BLOCK PERIOD. 28. COMING TO THE UNDISCLOSED INCOME COMPUTED WE FIND THAT IT IS BASED ON ENTRIES PASSED BY THE ASESSEE IN THE CO URSE OF REGULAR MAINTENANCE OF ACCOUNTS AND THOSE ENTRIES HAVE NOT BEEN DESCRIBED AS INCRIMINATING MATERIAL BY THE DEPARTME NT. SEC.158BB(1)(D) IS VERY CLEAR ON THE MATTER. THUS THE ADDITION OF UNDISCLOSED INCOME HAS NECESSARILY TO BE AND THESE TRANSACTIONS IT(SS)A NOS.31 & 32/H/2009 M/S. NAAG ADVERTISING & MARKETING & M/S. TREZER OIL AGRO TECH LTD =========================== 20 CAN ONLY BE SUBJECT MATTER OF REGULAR ASSESSMENT BU T NOT OF A BLOCK ASSESSMENT. 29. ALL THE ADDITIONS IN THIS CASE ARE MADE BASED ON TH E ENTRIES IN THE REGULAR BOOKS OF ACCOUNT AS WELL AS THE MATE RIAL AND FINANCIAL STATEMENTS WHICH HAVE ALREADY BEEN DISCLO SED TO THE REVENUE AND NO ADDITIONS ARE BASED ON ANY EVIDENCE FOUND AS A RESULT OF SEARCH. THUS WE HAVE TO HOLD THAT THIS BLOCK ASSESSMENT IS BAD IN LAW AS NO UNDISCLOSED INCOME A S DEFINED IN CHAPTER XIVB WAS BROUGHT TO TAX. ALL THE ADDITIONS ARE BEYOND THE KEN CHAPTER XIVB. THUS WE UPHOLD THE CONTENTIO NS OF THE ASSESSEE AND DELETE ALL THE ADDITIONS. 30. THUS WE ALLOW ALL THE GROUNDS OF THE ASSESSEE FOR THE DETAILED REASONS STATE ABOVE. 31. NOW LET US DEAL WITH IT(SS)A NO. 32/HYD/2009. BRIE F FACTS OF THIS CASE ARE THAT THE ASSESSEE IS A COMPANY ENG AGED IN THE MANUFACTURE AND TRADING OF OILS AND OTHER RELATED P RODUCTS CARRYING ON BUSINESS FROM 17/3 BASAPURAM ROAD ADO NI. THE DIRECTOR WAS AUTHORISED BY THE BOARD OF THE COMPANY TO SIGN AND FILE THIS APPEAL AGAINST THE BLOCK ASSESSMENT ORDER . IT IS CONTENDED THAT THE ASSESSEE FILED THE RETURN OF INC OME UNDER SECTION 139(1) FOR ASSESSMENT YEAR 1996-97 ON 29-11 -1996 AND FOR ASSESSMENT YEAR 1997-98 ON 1-12-1997. IN THE CASE OF ONE OF THE ASSOCIATE CONCERNS NAMELY BAGYALAKSHMI VEGETABLE PR ODUCTS LIMITED (HEREINAFTER REFERRED TO AS BVPL) A SEARCH UNDER SECTION 132 OF THE IT ACT WAS CONDUCTED ON 4-7-1996. IT IS NOTED FROM THE ASSESSMENT ORDER THAT ON THE BASIS OF THE EVIDENCE FOUND AND THE INFORMATION RECEIVED DURING THE COURSE OF SEARCH A NOTICE UNDER SECTION 158BD OF THE IT ACT WAS ISSUED ON 24-05-19 97 ON THE ASSESSEE. THE RECORDING OF SATISFACTION OF THE ASSE SSING AUTHORITY IT(SS)A NOS.31 & 32/H/2009 M/S. NAAG ADVERTISING & MARKETING & M/S. TREZER OIL AGRO TECH LTD =========================== 21 WAS NOT NOTED IN THE SAID NOTICE UNDER SECTION 158B D WHICH WAS ISSUED BY THE LD. ACIT (INV.) CIRCLE-4(1) HYDERABAD . THE BLOCK PERIOD MENTIONED IN THE TOP OF THE SAID NOTICE IS 1 988-89 TO1997- 98 WITHOUT REFERENCE TO WHETHER IT IS FINANCIAL YEA R OR ASSESSMENT YEAR. THE TRANSFER AND VESTING OF JURISDICTION WIT H THE THEN ASSESSING OFFICER WHO ISSUED THE NOTICE UNDER SECT ION158BD AND ALSO THE DETAILS OF THE SEIZED MATERIAL FOUND AT TH E TIME OF SEARCH IN THE CASE OF BVPL HANDED OVER TO HIM IN TERMS OF SECTION 158BD ARE ALSO KNOWN TO THE ASSESSEE. IN RESPONSE TO THE AID NOTICE THE ASSESSEE FILED NIL RETURN IN FORM NO.2B. THE THEN A SSESSING OFFICER COMPLETED THE BLOCK ASSESSMENT ON 29-5-1998 UNDER S ECTION 158BD READ WITH SECTION 143(3) OF THE ACT BY DISALL OWING RS.9 37 500/- AND RS.16 40 625/- FOR THE ASSESSMENT YEAR 1996- 97 AND 1997-98 RESPECTIVELY ON ACCOUNT OF DISALLOWI NG DEPRECIATION CLAIM ON THE COST OF MACHINERY PURCHAS ED FROM BVPL WHICH WAS ALLEGED TO BE FICTITIOUS. IN TERMS OF SEC TION 253(1)(B) OF THE ACT THE ASSESSEE FILED AN APPEAL BEFORE THE TRI BUNAL AND BY A COMMON ORDER DATED 19-6-2007 THE TRIBUNAL SET ASID E THE EARLIER ASSESSMENT ORDER WITH A DIRECTION TO THE ASSESSING OFFICER TO REFRAME THE ASSESSMENT DE NOVO ACCORDING TO LAW AF TER AFFORDING DUE3 OPPORTUNITY TO THE ASSESSEE. IN CONSEQUENCE TO THE DIRECTIONS IN THE AFORESAID ORDER OF THE TRIBUNAL THE ASSESSING OFFICER PASSED AN ORDER ON 23-12-2008 UNDER SECTION 158BD READ WITH SECTION 143(3) READ WITH SECTION 254 OF THE IT ACT CONFIRMING THE SAME ADDITIONS OF RS.25 78 125/- AS MADE IN THE EARLIER ASSESSMENT ORDER IN RESPECT OF THE ONLY ISSUE I.E. DISALLOWANCE OF DEPRECIATION FOR ASSESSMENT YEARS 1996-97 AND 1977- 98. AGGRIEVED BY THE ASSESSMENT ORDER THE ASSESSEE PRE FERS AN APPEAL BEFORE THE TRIBUNAL. 32. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THA T THE ASSESSING AUTHORITY IS NOT JUSTIFIED IN PASSING TH E ORDER WITHOUT IT(SS)A NOS.31 & 32/H/2009 M/S. NAAG ADVERTISING & MARKETING & M/S. TREZER OIL AGRO TECH LTD =========================== 22 PROPER JURISDICTION IN TERMS OF SECTION 158-BD READ WITH SECTION 158-BC AND SECTION 124 AND 127 OF THE ACT AND THE R EVENUE HAVING NOT RECORDED ITS SATISFACTION IN TERMS OF SE CTION 158-BD HAD ERRED IN THE ISSUANCE OF THE NOTICE AND IN PROC EEDING FURTHER ON THE BASIS OF SAID NOTICE IN FRAMING THE BLOCK AS SESSMENT IN VIEW OF THE DECISION OF THE HONBLE APEX COURT IN T HE CASE OF MANISH MAHESHWARI REPORTED IN 289 ITR 341. IT IS SUBMITTED THAT THE NOTICE UNDER SECTION 158-BD DATED 20-5-199 7 HAVING BEEN ISSUED BY AN AUTHORITY WITHOUT JURISDICTION OV ER THE ASSESSEE AS WELL AS WITHOUT REFERENCE TO ANY SEIZED MATERIAL IS BAD IN LAW AND UNTENABLE. THE BLOCK ASSESSMENT MADE WITHOUT R EFERENCE TO THE SEIZED MATERIAL IS CONTRARY TO FACTS AND BASED ON CONJUNCTURES AND SURMISES AND HENCE UNTENABLE. IT IS SUBMITTED THAT THE ASSESSING OFFICER GROSSLY ERRED IN MAKING THE ADDIT IONS BY REFERENCE TO THE RECORDED ENTRIES IN THE BOOKS OF A CCOUNTS AND RELYING ON THE STATEMENT MADE BY A THIRD PERSON I.E . BVPL IN THEIR ASSESSMENT PROCEEDINGS AND FURTHER ERRED IN DISALLO WING RS.9 37 500/- ON ACCOUNT OF DEPRECIATION CLAIMED FO R ASSESSMENT YEAR 1996-97 IN THE REGULAR BOOKS OF ACCOUNT. IT IS SUBMITTED THAT THE ASSESSING OFFICER FAILED TO APPRECIATE THA T THE EXISTENCE OF MACHINERY WAS NOT IN QUESTION AND THEREFORE BASED ON THIRD PARTYS STATEMENT NO DISALLOWANCE OF DEPRECIATION O N THE ASSET PURCHASE COULD HAVE BEEN MADE ESPECIALLY IN THE BL OCK ASSESSMENT AND HE FURTHER ERRED IN DISALLOWING RS.1 6 40 625/- BEING DEPRECIATION FOR ASSESSMENT YEAR 1997-98 AND TAKING IT AS UNDISCLOSED INCOME WHILE RECORDING IN THE 1 ST PAGE OF THE ORDER THAT THE BLOCK ASSESSMENT ENDS ON 4-7-1996. IT IS FURTHER SUBMITTED THAT THE ASSESSING OFFICER FAILED TO APPR ECIATE THAT THE DEPRECIATION UNDER THE INCOME-TAX ACT IS DETERMINED AND ACCRUES ONLY ON THE LAST DAY OF THE FINANCIAL YEAR AND THAT ENTRIES IN RESPECT OF THE SAME ARE MADE ONLY UPON THE CONCLUSI ON OF THE YEAR END WHICH IN THE INSTANT CASE IN 31-3-1997 AND HEN CE AS ON 4-7- IT(SS)A NOS.31 & 32/H/2009 M/S. NAAG ADVERTISING & MARKETING & M/S. TREZER OIL AGRO TECH LTD =========================== 23 1996 IT CANNOT BE DISALLOWED. IT IS SUBMITTED THA T THE ASSESSING AUTHORITY FAILED TO APPRECIATE THAT AS NO ENTRIES I N THE BOOKS OF ACCOUNT WERE MADE IN RESPECT OF DEPRECIATION AS ON 4-7-1996 AND HENCE NO DISALLOWANCE OF THE SAME COULD HAVE BEEN M ADE BY INVOLVING THE PROVISIONS OF SECTION 158 BB(D) OF TH E ACT. 33. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPRESE NTATIVE RELIED ON THE ORDER OF THE ASSESSING AUTHORITY. 34. WE HAVE CONSIDERED THE SUBMISSIONS OF THE RIVAL PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. SINCE TH E FACTS AND CIRCUMSTANCES OF THE CASE RELATING TO ISSUE OF NOTI CE U/S 158 BD ARE SIMILAR TO THE FACTS CONSIDERED IN THE CASE OF M/S. NAAG ADVERTISING & MARKETING IN EARLIER PARAS OF THIS OR DER FOLLOWING THE ABOVE FINDINGS WE HOLD THAT ISSUE OF NOTICE U/S 1 58BD OF THE INCOME TAX ACT WITHOUT RECORDING THE SATISFACTION A S REQUIRED UNDER THIS SECTION IS BAD IN LAW. 35. WITHOUT PREJUDICE TO OUR ABOVE FINDINGS NOW WE TAK E UP THE ISSUE RELATING TO DISALLOWANCE OF DEPRECIATION ON P LANT AND MACHINERY. DURING THE COURSE OF SEARCH PROCEEDINGS IT WAS FOUND THAT THE ASSESSEE HAD PURCHASED CERTAIN MACHINERY FROM M/S BVPL WORTH RS. 75 LAKHS. THE MACHINERY WAS SUPPOSED LY FABRICATED BY M/S BVPL AND SOLD TO THE ASSESSEE COM PANY. HOWEVER DURING THE COURSE OF THE SEARCH PROCEEDING S IN THE CASE OF M/S BVPL IT WAS STATED BY EXECUTIVE DIRECTOR OF M/S BVPL IT WAS A MERE PAPER ENTRY WITHOUT ANY ACTUAL SALE FOL LOWED BY THE SUPPLY OF MACHINERY. ACCORDINGLY THE ASSESSING OFFI CER WITHDRAWN THE DEPRECIATION WHICH WORKED OUT AT RS. 25 78 125. 36. AFTER HEARING THE BOTH PARTIES ON THIS ISSUE WE AR E OF THE OPINION THAT THE RELATING TO DEPRECIATION CLAIMED B Y THE ASSESSEE IN REGULAR ASSESSMENTS I.E. A.Y 1996-97 AND 1997-98 C ANNOT BE IT(SS)A NOS.31 & 32/H/2009 M/S. NAAG ADVERTISING & MARKETING & M/S. TREZER OIL AGRO TECH LTD =========================== 24 DISTURBED AND WITHDRAWN IN THE BLOCK PERIOD TO TRE AT THE SAME AS UNDISCLOSED INCOME. THIS IS SO BECAUSE ALLOW ABIL ITY OF DEPRECIATION ON PLANT AND MACHINERY COULD ONLY B E THE SUBJECT MATTER OF REGULAR ASSESSMENT AS THIS IS REFLECTED IN REGULAR BOOKS OF ACCOUNTS AND OUR FINDINGS ELSEWHERE IN THIS O RDER WHILE ADJUDICATING THE APPEAL IN IT(SS)/31/H/2009 IS SUPP ORTS THIS VIEW. ACCORDINGLY THIS GROUND IN ASSESSEE APPEAL IS ALSO ALLOWED. 37. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEES AR E ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH FEBRUARY 2012. SD/- ASHA VIJAYA RAGHAVAN) SD/- (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 17 TH FEBRUARY 2012 COPY FORWARDED TO: 1. M/S. NAAG ADVERTISING & MARKETING 17/4 BASAPURAM ROAD ADONI-518 301. 2. M/S. NAAG ADVERTISING & MARKETING. C/O. SHRI R. VEN KATESH FCA M/S. ALLADI KRISHNAN & KUMAR CHARTERED ACCOUN TANTS OLD NO. 47 NEW NO. 53 5 TH STREET ADAYAR CHENNAI. 3. M/S. TREZER OIL AGRO TECH LTD. 17/3 BASAPURAM ROA D ADONI- 518 301. 4. M/S. TREZER OIL AGRO TECH LTD.. C/O. SHRI R. VENKAT ESH FCA M/S. ALLADI KRISHNAN & KUMAR CHARTERED ACCOUNTANTS OLD NO. 47 NEW NO. 53 5 TH STREET ADAYAR CHENNAI. 5. DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-1 KURNOO L. AP. 6. THE CIT(A) CONCERNED. 7. THE CIT CONCERNED 8. THE DR ITAT HYDERABAD JMR*/ TPRAO