M/s. J. B. Construction,, Ahmedabad v. The C.I.T., Cent. Circle-1,, Ahmedabad

ITSSA 73/AHD/2004 | misc
Pronouncement Date: 23-04-2010 | Result: Dismissed

Appeal Details

RSA Number 7320516 RSA 2004
Bench Ahmedabad
Appeal Number ITSSA 73/AHD/2004
Duration Of Justice 6 year(s) 1 month(s) 8 day(s)
Appellant M/s. J. B. Construction,, Ahmedabad
Respondent The C.I.T., Cent. Circle-1,, Ahmedabad
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 23-04-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 23-04-2010
Date Of Final Hearing 12-04-2010
Next Hearing Date 12-04-2010
Assessment Year misc
Appeal Filed On 15-03-2004
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE S/SHRI BHAVNESH SAINI JM AND D.C.AGRAWAL A M 1. M/S PADMAVATI CORPORATION RIDDHI SIDDHI BUNGALOW OPP. JODHPUR POLICE CHOWKY NR. SATYAGRAH CHHAVANI AHMEDABAD & 2. M/S J.B. CONSTRUCTION A-1 REVATI APARTMENTS SATELLITE ROAD AHMEDABAD. V/S . CIT CEN.CIR.1 AHMEDABAD. (APPELLANTS) .. (RESPONDENT) APPELLANTS BY :- SHRI S. N. SOPARKAR SR. ADVOCATE RESPONDENT BY:- SHRI SATISH KUMAR GUPTA CIT DR O R D E R PER D.C. AGRAWAL ACCOUNTANT MEMBER. THESE ARE TWO APPEALS FILED BY TWO RELATED ASSESSEE S INVOLVING COMMON ISSUES HENCE THEY ARE TAKEN UP TOGETHER FO R THE SAKE OF CONVENIENCE. BOTH THE ASSESSEES HAVE FILED THE APPE ALS AGAINST THE ORDER OF LD. CIT IN CANCELING THE ASSESSMENT ORDERS AND D IRECTING THE AO TO MAKE FRESH ORDERS AS PER HIS OBSERVATIONS IN HIS O RDER U/S 263. 2. THE FACTS OF THE CASES ARE THAT BOTH THE ASSESSE ES BELONG TO KANSARA GROUP WHERE SEARCH AND SEIZURE OPERATION WAS CARRIE D OUT ON 8.12.1998. 1. IT(SS)A NO.72/AHD/2004 2. IT(SS)A NO.73/AHD/2004 BLOCK PERIOD :1.4.1988 TO 8.12.1998 2 DURING THE COURSE OF SEARCH CERTAIN DOCUMENTS BELON GING TO THESE TWO ASSESSEES WERE ALSO SEIZED. PROCEEDINGS UNDER SECTI ON 158 BD WERE INITIATED AND FINALLY ORDER UNDER SECTION 158BD/158 BC WAS PASSED BY THE AO ON 31.10.2002. IN THE CASE OF M/S PADMAVATI CORP ORATION ASSESSMENT WAS COMPLETED ON AN INCOME OF RS.58 08 000/- WHICH WAS SUBSTANTIALLY REDUCED AFTER GIVING EFFECT TO THE ORDER OF LD. CIT (A). 3. SUBSEQUENTLY LD. CIT CALLED FOR THE RECORD OF TH E CASE EXAMINED IT AND FOUND THAT AO HAS NOT CONSIDERED THE DOCUMENT L ISTED AT PAGE 20 OF ANNEXURE-A4 SEIZED FROM THE RESIDENCE OF SHRI VIJAY B. KANSARA ON 8.12.1998. THIS DOCUMENT FOUND WAS IN THE NATURE OF TRIAL BALANCE OF THE ASSESSEE AS ON 31.3.1997. LD. CIT ISSUED A SHOW CAU SE NOTICE TO THE ASSESSEE AND POINTED OUT PART OF THE CONTENTS OF DO CUMENT NO.20 OF ANNEXURE-A4 AND FURTHER POINTED OUT THAT SUCH CONTE NTS HAD NOT BEEN TAKEN INTO ACCOUNT BY THE AO IN FRAMING THE ASSESSM ENT ON 31.10.2002. THE RELEVANT PORTION OF THE SHOW CAUSE NOTICE IS AS UNDER :- 2. I HAVE CALLED FOR AND EXAMINED THE RECORD OF TH E PROCEEDINGS WITH REGARD TO THE AFORESAID ASSESSMENT AND FIND THAT TH E AO WHILE PASSING THE ORDER OF THE BLOCK ASSESSMENT AS ABOVE HAD NOT CON SIDERED THE DOCUMENT LISTED AT PAGE NO.20 OF ANNEXURE A4 SEIZED FROM THE RESIDENCE OF SHRI VIJAY B KANSARA ON 8.12.1998. THE AFORESAID DOCUMEN T (COPY ENCLOSED) IS IN THE NATURE OF YOUR TRIAL BALANCE AS ON 31.03. 97. A COMPARISON OF THE AFORESAID SEIZED DOCUMENT WITH THE BALANCE SHEET FI LED BY YOU ALONG WITH THE RETURN OF INCOME FOR ASST. YEAR 1997-98 (YEAR E NDING 31.03.197) SHOWS THAT THE AMOUNTS MENTIONED IN THE FORMER AS R ECEIVED FROM THE BUYERS OF THE FLATS/TENEMENTS ARE MUCH MORE THAN TH E AMOUNTS SHOWN AS HAVING BEEN RECEIVED FROM THE AFORE SAID PERSONS IN THE LATTER DOCUMENT (THE BALANCE SHEET). BY WAY OF ILLUSTRATION THE CO MPARISON IN RESPECT OF THE FOLLOWING PERSONS BRINGS OUT THE AFORESAID POSI TION. 3 SL. NO. NAME OF THE BUYER OF FLATS/TENEMENTS CREDIT BALANCE AS PER BALANCE SHEET AS ON 31.03.1997 FILED WITH THE RETURN CREDIT BALANCE AS PER THE SEIZED DOCUMENT (PAGE 20 OF ANNEXURE) 1. KISHORE PUROHIT & GITA PUROHIT 9 00 000 17 71 000 2. BHARAT V. SHAH & RESHMI B. SHAH 6 30 000 5 01 000 3. PUSPABEN D. SHAH 17 00 000 36 00 000 4. R.B. SHAH 8 75 000 14 60 000 5. LABU M. THAKKAR 3 75 000 (LMT)23 41 000 6. K.B. ANARATJIWALA 10 11 000 (KBA)24 11 000 7. SANAT J. SHAH 8 27 000 19 81 000 8. SHIVAM C. LULLA 8 21 295 18 55 000 9. KUNDANBEN A DESAI 13 00 000 (KAD)36 01 000 10. D. SINGH SISODIYA 2 35 000 7 50 000 11. VICTORBHAI 9 00 000 24 10 000 12. DEEPAK SHAH 5 01 000 23 05 000 13. SHUSILA S. MEHTA 7 06 001 22 26 200 14. NAYANA S. PARIKH 9 66 101 10 66 101 15. DINESH J. PRAJAPATI 8 00 000 15 00 000 16. GIRISH BHATT 7 41 000 8 95 000 17. JAYDEEP SHAH 8 25 000 23 01 000 2.2 IN THE CASE OF M/S J.B. CONSTRUCTION THE BALAN CE SHEET AS ON 31.02.97 SHOWS DEBIT BALANCE OF RS.6 92 780/- WHER EAS THE SEIZED DOCUMENT (TRIAL BALANCE) SHOWS CREDIT BALANCE OF RS .32 58 000/- AS ON THE AFORESAID DATE. 2.3 THE AFORESAID DOCUMENT ALSO REFLECTS EXPENSES O N CONSTRUCTION OF THE PROJECT WHICH DO NOT TALLY WITH THE EXPENSES RE FLECTED IN YOUR REGULAR BOOKS OF ACCOUNTS. 2.4 THE TOTAL OF THE TRIAL BALANCE (THE SEIZED DOCU MENT) IS RS.5 12 06 492/- AS AGAINST THE TOTAL OF THE BALANC E SHEET (AS ON 31.03.1997) OF RS.2 06 58 762/-. 2.5 IF THE ASSESSING OFFICER HAD TAKEN INTO ACCOUNT THE CONTENTS OF THE AFORESAID SEIZED DOCUMENT WHILE MAKING THE ASSESSME NT U/S 158BC R.W.S. 158BD IN YOUR CASE HE WOULD HAVE BEEN ABLE TO DETE RMINE THE UNDISCLOSED INCOME EARNED BY YOU BASED ON THE ENTR IES MADE THEREIN. HIS FAILURE IN TAKING INTO ACCOUNT THE AFORESAID DO CUMENT WHILE MAKING THE ORDER OF ASSESSMENT U/S 158BC R.W.S. 158BD OF T HE INCOME-TAX ACT HAS MADE THE SAID ORDER ERRONEOUS AS ALSO PREJUDICI AL TO THE INTERESTS OF THE REVENUE. 4 4. IN RESPONSE TO THIS ASSESSEE FURNISHED HIS REPLI ES WHICH ARE SUMMARISED BY LD. CIT IN HIS ORDER AS UNDER :- 4. IN ITS WRITTEN REPLIES DATED 9.1.2004 AND 13.1. 2004 TO THE SHOW CAUSE NOTICE THE ASSESSEE HAS RAISED THE FOLLOWING CONTENTIONS NAMELY - (I) THE ASSESSEE WAS ONLY THE DEVELOPER OF THE PROPERTY OF KAPILVASTU CO.OP. HOUSING SOCIETY AND WAS NEITHER T HE OWNER OF THE LAND NOR OF THE SUPER STRUCTURE THEREO N. (II) THE MEMBERS OF THE AFORESAID CO-OPERATIVE HOUSING SOCIETY WERE FULLY AWARE OF THE COST OF DEVELOPMENT AS THEY COLLECTIVELY AS SOCIETY WERE REAL OWNERS OF THE PROPERTY AND WOULD THEREFORE NOT PERMIT ANYONE TO SIPHON OFF ANY MONEY FROM THEIR OWN CONTRIBUTION. (III) THE AFORESAID DOCUMENT (PAGE NO.2 ANNEXURE A/4) SEIZED FROM THE RESIDENCE OF SHRI VIJAY B. KANSARA WAS NOT IN THE NATURE OF TRIAL BALANCE. (IV) THE ASSESSEE ONLY ACTED AS A CONDUIT TO RECEIVE MON EYS BEING MEMBERS CONTRIBUTIONS TOWARDS THE COST OF CONSTRUCTION AND PASSED ON THE SAME TO THE CO-OPER ATIVE HOUSING SOCIETY WHICH WAS THE OWNER OF THE LAND AS ALSO OF THE SUPER STRUCTURE. (V) THE AFORESAID SEIZED DOCUMENT WAS CLOSELY SCRUTINIZ ED BY THE AO DURING THE ASSESSMENT PROCEEDINGS BUT WAS PLACED ASIDE BY HIM BEING IRRELEVANT. (VI) THE TOTALS ON THE DEBIT SIDE AND ON THE CREDIT SIDE OF THE DOCUMENT DID NOT TALLY AND HENCE THIS DOCUMENT WAS NOT IN THE NATURE OF A TRIAL BALANCE. (VII) THE ENTRY REGARDING LAND OF RS.72 LACS APPEARED ON THE CREDIT SIDE OF THE SEIZED DOCUMENT WHICH ALSO PROVE D THAT THIS COULD NOT BE CONSIDERED AS A DOCUMENT IN THE N ATURE OF TRIAL BALANCE OF THE ASSESSEE. IN VIEW OF THE ABOVE IT WAS REPRESENTED THAT DIREC TIONS TO ENHANCE THE ASSESSMENT ALREADY MADE IN THE CASE OF THE ASSESSEE ON THE BASIS OF THE AFORESAID SEIZED DOCUMENT SHOULD NOT BE ISSUED U/S 263 OF THE ACT. 5 THE LD. CIT EXAMINED THE REPLY OF THE ASSESSEE AND HELD THAT (I) ASSESSEE HAS ACTED AS BUILDER AND DEVELOPER OF THE PROPERTY OF THE N.T.C.. IT WAS ALSO BOOKING AND SELLING FLATS A ND COLLECTING ON MONEY FROM THE BUYERS. THE DOCUMENTS REFLECTED AMOUNT RECEIVED FROM THE PERSONS WHO BOOKED AND BOUGHT THE FLATS OVER AND ABOVE THE CONSIDERATION MENTIONED IN THE REGULA R BOOKS OF ACCOUNT. (II) PAGE 20 OF ANNEXURE A4 SHOWS CLOSING BALANCE OF VAR IOUS ACCOUNTS AS ON 31.3.97. THEY SHOWED CLOSING BALANCE OF EXPENDITURE PARTNERS ACCOUNT AND CREDITORS ACCOUNT . THE TOTAL OF THE TWO SIDES TALLIED AT RS.5 12 06 492/-. (III) FLATS WERE BOOKED AND SOLD ON THE BASIS OF MARKET V ALUE AND NOT ON THE BASIS OF COST OF CONSTRUCTION. THE AMOUNT OF CLOSING BALANCE OF THE CREDITORS APPEARING IN THE SEIZED DO CUMENTS ARE MORE THAN WHAT IS MENTIONED IN THE REGULAR BALANCE SHEET AS ON 31.3.97. (IV) THERE ARE COMPLIMENTARY ENTRIES IN THE ACCOUNT OF J .B. CONSTRUCTION RS.72 00 000/- COULD REPRESENT THE PAY MENT DUE FROM THE ASSESSEE TO THE OWNER OF THE LAND WHEREAS IN THE CASE OF M/S J. B. CONSTRUCTION A SISTER CONCERN OF THE ASSESSEE THERE IS ALSO AN ENTRY OF RS.72 00 000/- FOUND RECORDED O N ANOTHER PIECE OF DOCUMENT NOS.18 & 19 OF ANNEXURE A4 BEING FOR LAND ON THE DEBIT SIDE. (V) THE AO FAILED TO CONSIDER ABOVE DOCUMENTS THUS ACCORDING TO THE LD. CIT OF THESE ITEMS REQUIR E EXAMINATION BY THE AO. HE FINALLY HELD AS UNDER :- 6. IN VIEW OF THE ABOVE IT IS EVIDENT THAT THE AF ORESAID SEIZED DOCUMENT CONTAINED ENTRIES WHICH REFLECTED THE TRUE STATE OF AFFAIRS OF THE BUSINESS OF THE ASSESSEE AS ON 31.3.97. IF THE AO H AD TAKEN INTO ACCOUNT THE CONTENTS OF THE AFORESAID SEIZED DOCUMENT WHILE MAKING THE ASSESSMENT U/S 158BC R.W.S 158BD OF THE ACT IN THE CASE OF THE ASSESSEE HE WOULD HAVE DETERMINED THE CORRECT UNDISCLOSED IN COME EARNED BY IT (THE ASSESSEE) BASED ON THE ENTRIES MADE THEREIN. HIS FAILURE IN TAKING INTO ACCOUNT THE AFORESAID DOCUMENT WHILE MAKING TH E ORDER OF 6 ASSESSMENT FOR THE BLOCK PERIOD HAS MADE THE SAID O RDER ERRONEOUS AS ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE NCE IN THE EXERCISE OF THE POWERS VESTED IN ME U/S 263 OF THE ACT I DIREC T THE AO TO CONSIDER THE AFORESAID SEIZED DOCUMENT AND ENHANCE THE ASSESSMEN T MADE IN THE CASE OF THE ASSESSEE ON THE BASIS OF THE ENTRIES MADE I N THE SAID DOCUMENTS. 5. AGAINST THIS ASSESSEE RAISED FOLLOWING GROUNDS: - (1) THE LEARNED COMMISSIONER OF INCOME TAX CENTRAL - I AHMEDABAD (HEREINAFTER REFERRED TO AS CIT) HAS GRIEVOUSLY ERR ED IN LAW IN INVOKING THE PROVISIONS OF SECTION 263 MERELY ON THE GROUND THAT LOOSE PAGE:20 OF ANNEXURE. A/4 SEIZED FROM THE RESIDENCE OF SHRI VIJ AY B. KANSARA ALLEGED TO BE 'IN THE NATURE OF TRIAL BALANCE' WAS NOT CONS IDERED BY THE ASSESSING OFFICER WHILE MAKING THE ASSESSMENT U/S 1 58 BC R.W S. 15B BD. (2) THE LEARNED CIT HAS GRIEVOUSLY ERRED IN LAW A ND ON FACTS IN HOLDING THAT THE ASSESSING OFFICER DID NOT TAKE COGNIZANCE OF THE LOOSE PAGE:20 OF ANNEXURE : A/4 WHICH IN FACT WAS CLOSELY SCRUTINIZE D PRIOR TO THE ISSUE OF NOTICE U/S. 142(1) BY THE ASSESSING OFFICER THE SU M AND SUBSTANCE OF THE SAID LOOSE PAGE IS CLEARLY REFLECTED IN THE NOTICE U/S. 142(1) DT.9-4-2001 (3) THE LEARNED CIT HAS GRIEVOUSLY ERRED IN LAW A ND ON FACTS IN HOLDING BY WAY OF HIS OWN SURMISES AND CONJECTURES THAT THE LOOSE PAGE20 (ANNEXURE; A/4) IS THE 'TRIAL BALANCE' WITHOUT THER E BEING THE RELEVANT BOOKS OF ACCOUNTS ALTHOUGH THE SAID LOOSE PAGE:20 I S NEITHER IN THE NATURE OF TRIAL BALANCE NOR A TRAIL BALANCE DRAWN FROM BOO KS OF ACCOUNT AND HAS THUS FAILED TO DISCHARGE THE ONUS RESTING ON HI M AS 'ONUS LIES ON THE PERSON WHO ALLEGES' WHICH IS THE SETTLED LAW OF TH E LAND. (4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE T HE IMPUGNED ORDER U/S 263 DESERVE TO THE QUASHED AND THEREFORE THE APPELL ANT FIRM HUMBLY PRAYS THE HONOURABLE TRIBUNAL TO QUASH THE ORDER U/ S. 263 AS THE LEARNED CIT HAS ASSUMED JURISDICTION ON HIS OWN CONJECTURES AND SURMISES WHICH IS CONTRARY TO THE FACTS AND SETTLED LAW. (5) THE APPELLANT FIRM CRAVES LEAVE TO ADD TO AL TER AMEND MODIFY SUBSTITUTE CHANGE ANY OF THE GROUNDS AS AND WHEN T HE OCCASION MAY ARISE. 7 6. IN ADDITION TO THIS AN ADDITIONAL GROUND WAS ALSO RAISED AS UNDER :- (1) THE REVISIONAL PROCEEDINGS INITIATED BY LD. CIT UND ER SECTION 263 ARE BAD ILLEGAL AND VOID AB INITIO SINCE ORDER S OF ASSESSMENTS PASSED UNDER CHAPTER XIV-B COULD NOT BE SUBJECTED TO REVISION. THE REGISIONAL ORDER PASSED BY LD. CIT IN BLOCK ASSESSMENT IS WITHOUT JURISDICTION AGAINST T HE PROVISIONS OF LAW THAT DESERVES TO BE QUASHED. 7. IN RESPECT OF ADDITIONAL GROUND LD. AR ARGUED TH AT IN VIEW OF THE DECISION OF HON. SUPREME COURT IN NATIONAL THERMAL POWER CORPORATIONS CASE 229 ITR 383 (SC) SUCH GROUND CAN BE RAISED. HE SUBMITTED THAT HON. GUJARAT HIGH COURT IN CARGO CLE ARING AGENCY (GUJARAT) VS. JT.CIT [2008] 307 ITR 0001 (GUJ) THE AO DOES NOT HAVE ANY JURISDICTION TO REOPEN A BLOCK ASSESSMENT OR FOR IS SUING NOTICE UNDER SECTION 148. CHAPTER XIV-B IS A COMPLETE CODE IN IT SELF IN RESPECT OF PROCEDURE FOR BLOCK ASSESSMENT AND IF ACTION UNDER SECTION 148 IS NOT PERMITTED THEN ACTION UNDER SECTION 263 ALSO CANNOT BE PERMITTED. THE LD. AR REFERRED TO PARA 34 FROM THAT JUDGMENT AS UNDER :- THE PROVISIONS OF CHAPTER XIV-B OF THE ACT MORE PA RTICULARLY SECTION 158BG OF THE ACT PROVIDES FOR A SITUATION WHERE AN ORDER OF ASSESSMENT FOR THE BLOCK PERIOD SHALL BE PASSED WITHOUT THE PR EVIOUS APPROVAL OF EITHER THE COMMISSIONER OR DIRECTOR AS THE CASE MA Y BE IN RESPECT OF SEARCH CASES. IN OTHER WORDS NOT ONLY COULD THE AS SESSING OFFICER NOT BE AN OFFICER BELOW THE RANK OF AN ASSISTANT COMMISSIO NER ETC. BUT THE ORDER OF ASSESSMENT FRAMED IS SCRUTINISED BY THE HI GHEST OFFICER IN THE HIERARCHY TO ENSURE THAT : (1) NO UNDISCLOSED INCOM E ESCAPES ASSESSMENT AND (2) THERE IS NO HIGH PITCHED ASSESSMENT ONLY F OR THE SAKE OF MAKING AN ASSESSMENT. IT WOULD NOT BE OPEN TO THE REVENUE TO CONTEND THAT DESPITE MATERIAL BEING AVAILABLE ON RECORD THE SAME ESCAPED SCRUTINY AT THE HANDS OF TWO OFFICERS ONE OF THEM BEING A SUPE RIOR OFFICER IN THE HIERARCHY. ON THE BASIS OF ABOVE OBSERVATION OF THE HON. GUJAR AT HIGH COURT LD. AR EMPHASIZED THAT ONCE ASSESSMENT UNDER CHAPTER XIVB IS A COMPLETE CODE 8 IN ITSELF THEN NO OTHER PROVISIONS OF THE ACT WOULD BE APPLICABLE AND THEREFORE ASSESSMENT COULD NOT BE REVISED UNDER SE CTION 263. 8. LD. AR ALSO SUBMITTED THAT ONCE ASSESSMENT UNDER SECTION 158BC IS PASSED AFTER APPROVAL OF THE COMMISSIONER THEN H E COULD NOT HAVE NOW TURNAROUND AND SAY THAT ORDER OF AO IS ERRONEOUS OR PREJUDICIAL. HE REFERRED TO THE OBSERVATIONS OF HON. GUJARAT HIGH C OURT IN CARGO CLEARING AGENCY (GUJARAT) VS. JT.CIT (SUPRA) WHEREI N THE HON. COURT REFERRED TO THE RELEVANT PROVISIONS OF CHAPTER XIVB WHEREIN APPROVAL FROM THE COMMISSIONER OR DIRECTOR HAD TO BE TAKEN. IN THIS REGARD HE REFERRED TO THE HEAD NOTES FROM THAT JUDGMENT AS RE PRODUCED IN PARA 7 ABOVE. 9. AGAINST THIS LD. DR SUBMITTED THAT ADDITIONAL G ROUND AT THIS STAGE CANNOT BE ALLOWED TO BE RAISED PARTICULARLY WHEN TH ERE IS NO LEGAL MERIT IN THE GROUND. IT IS TAKEN ONLY FOR THE SAKE OF RESTOR ING THE MATTER BACK TO THE CIT. THE PROVISO A TO SECTION 158BG PROVIDES APPROV AL OF COMMISSIONER OR DIRECTOR ONLY IN RESPECT OF SEARCH CARRIED OUT UPTO 1 ST JANUARY 1997. THUS NO APPROVAL OF THE COMMISSIONER WOULD BE REQUIRED FOR ASSESSMENT U/S 158BC IN RESPECT OF SEARCH CARRI ED OUT AFTER 1 ST JANUARY 1997. THE PRESENT SEARCH WAS CARRIED OUT O N 8.12.1998. THEREFORE THIS PROVISION WOULD NOT BE APPLICABLE ON THE FACTS OF PRESENT CASE. THE LD. DR SUBMITTED THAT NOTWITHSTANDING T HE POWER OF THE COMMISSIONER UNDER SECTION 263 IS INDEPENDENT AND A NY ORDER PASSED BY THE OFFICER SUBORDINATE TO THE COMMISSIONER LIKE ITO ACIT/JCIT/ADDL.CIT COULD BE REVISED BY HIM. TH E POWERS UNDER SECTION 263 ARE INDEPENDENT OF THE POWERS OF APPROV AL. APPROVAL DOES NOT REQUIRE FOLLOWING THE PRINCIPLE OF NATURAL JUSTICE AND THEREFORE IT IS NOT EQUIVALENT OF FRAMING ASSESSMENT. IT CANNOT BE SAID THAT IT IS THE 9 COMMISSIONER WHO FRAMED THE ASSESSMENT AND THEREFO RE HE COULD NOT REVISED HIS OWN ORDER. THE ONLY REQUIREMENT FOR REV ISION UNDER SECTION 263 IS THAT ORDER OF AO SHOULD BE ERRONEOUS AND PRE JUDICIAL TO THE INTERESTS OF REVENUE AND IF AN ORDER UNDER SECTION 158BC IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE THEN SUCH OR DER CAN BE REVISED BY LD. CIT BY EXERCISING HIS POWER UNDER SECTION 263. 10. LD. DR REFERRED TO THE DECISION OF HON. ALLAHAB AD HIGH COURT IN CIT VS. V.P. AGARWAL (1993) 68 TAXMAN 236 (ALL) WHE REIN ASSESSMENT COULD BE RESTORED TO THE AO FOR FURTHER EXAMINATION 11. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND CAR EFULLY PERUSING THE MATERIAL ON RECORD WE ARE OF THE VIEW THAT THE ADD ITIONAL GROUND RAISED BY THE LD. AR CANNOT BE ALLOWED TO BE ADMITTED. IT IS BECAUSE IN OUR CONSIDERED VIEW IT IS ONLY ACADEMIC AS THE LAW IS W ELL SETTLED ON THE ISSUE. THE POWER UNDER SECTION 263 CAN BE EXERCISED IN RES PECT OF ANY ORDER PASSED BY ANY ASSESSING AUTHORITY OR ANY OFFICER JU NIOR IN RANK TO THE COMMISSIONER AND WORKING UNDER HIS JURISDICTION. FU RTHER UNDER SECTION 263 THE COMMISSIONER IS EMPOWERED TO CALL AND EXAM INE THE RECORD OF ANY PROCEEDINGS UNDER THE ACT. THE EXPRESSION IN P ROCEEDINGS UNDER THE ACT IS NOT CONFINED TO ASSESSMENT PROCEEDINGS CARR IED UNDER SECTION 143(3). THEY WOULD ALSO RELATE TO BLOCK ASSESSMENT PROCEEDINGS AS CHAPTER XIVB IS A PART OF I.T.ACT. IT IS CLEAR FROM THE LANGUAGE OF SECTION 263(1) THAT POWER OF THE COMMISSIONER EXTENDS NOT O NLY TO THE ASSESSMENT ORDER UNDER SECTION 143(3) OR 143(3)/147 BUT IT ALSO EXTENDS TO ALL OR ANY ORDER PASSED BY AO IF THE COMMISSIONER C ONSIDERS THAT SUCH ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL T O THE INTEREST OF REVENUE. WE DERIVE SUPPORT FROM THE DECISION OF HON. MADRAS HIGH COURT IN CIT 10 VS. MADRAS PALAYAKAT CO. (P) LTD. (1069) 74 ITR 642 (MAD) AND CIT VS. CHRISTIAN MICA INDUSTRIES LTD. (1979) 120 ITR 627 ( CAL). 12. THE OBSERVATION OF HON. GUJARAT HIGH COURT IN C ARGO CLEARING AGENCY (GUJARAT) (SUPRA) HAS NOT AT ALL REVERSED TH E POSITION OF LAW SETTLED SO FAR. WHEN IT IS OBSERVED THAT PROCEEDINGS UNDER CHAPTER XIVB IS A COMPLETE CODE IN ITSELF IT COULD ONLY MEAN THAT FOR THE PURPOSE OF FRAMING ASSESSMENT OF CONCEALED INCOME DETECTED ON THE BASI S OF EVIDENCE FOUND AS A RESULT OF SEARCH THE PROVISIONS IN CHAPTER XIV B ALONE ARE TO BE INVOKED. EXCEPT WHERE IT IS NOT SO PROVIDED IN CHAP TER XIVB THEN RECOURSE TO OTHER PROVISIONS OF THE ACT CAN BE TAKE N UP VIRTUE OF SECTION 158BH. THEREFORE WHEN IT IS PROVIDED IN CHAPTER XI VB THAT NO ASSISTANCE FROM ANY OTHER PROVISIONS OF THE ACT IS TO BE TAKEN IT ONLY MEANS THAT WHEN PROVISIONS IN CHAPTER XIVB FOR MAKI NG BLOCK ASSESSMENT ARE EXPRESSLY PROVIDED IN RESPECT OF CER TAIN MATTER THEN OTHER PROVISIONS OF THE ACT IN RESPECT OF THOSE MATTERS A RE NOT REQUIRED TO BE APPLIED. THUS PROCEDURE FOR FRAMING BLOCK ASSESSMEN T IN RESPECT OF UNDISCLOSED INCOME DISCOVERED AS A RESULT OF SEARCH AS LAID DOWN IN CHAPTER XIVB IS SACROSANCT IN RESPECT OF MATTERS PR OVIDED THEREIN AND THEREFORE CALLED A COMPLETE CODE IN ITSELF BUT IN RESPECT OF THOSE MATTERS ONLY. IT IS NOT A CASE OF THE ASSESSEE THAT PROVISI ONS RELATING TO COLLECTION/RECOVERY OF TAXES WHICH IS NOT A PART OF CHAPTER XIVB CANNOT BE INVOKED. FURTHER WHEREVER APPLICABLE DEDUCTIONS UNDER CHAPTER VIA CAN ALSO BE ALLOWED WHILE MAKING BLOCK ASSESSMENT. THEREFORE TO SAY THAT BLOCK ASSESSMENT ORDER UNDER SECTION 158BC IS PROTECTED FROM SECTION 263 WILL NOT BE A CORRECT LEGAL PROPOSITION . EVEN SECTION 158 BH ITSELF PROVIDES THAT OTHER PROVISIONS OF THE ACT SH ALL BE APPLIED TO ASSESSMENT MADE UNDER THIS CHAPTER. THEREFORE ASSE SSMENTS FRAMED UNDER CHAPTER XIVB ARE ALSO SUBJECT TO OTHER PROVISIONS I NCLUDING SECTION 263. 11 IF WE ACCEPT THE ARGUMENT OF LD. AR THAT NO OTHER PROVISIONS OF THE ACT ARE APPLICABLE BECAUSE ASSESSMENT UNDER CHAPTER XIV B IS A COMPLETE CODE IN ITSELF THEN OTHER PROVISIONS RELATING TO A PPEAL REVISION UNDER SECTION 264 OR PENALTY CONTAINED IN CHAPTER XXI COU LD NOT BE INVOKED. THIS PROPOSITION HAS TO BE OUT-RIGHTLY REJECTED AS IT WILL MAKE THE MACHINERY FOR LEVY AND COLLECTION OF TAXES AND IMPA RTING JUSTICE UNWORKABLE BOTH FOR ASSESSEE AS WELL AS FOR THE REV ENUE. 13. IN VIEW OF THIS WE HOLD THAT BLOCK ASSESSMENT O RDER COMES WITHIN THE JURISDICTION OF CIT UNDER SECTION 263. THERE IS NO MERIT IN THE ADDITIONAL GROUND RAISED BY THE LD. AR. IT IS REJEC TED IN LIMINE. 14. NOW WE COME TO THE GROUND TAKEN IN THE APPEAL A GAINST THE ORDER OF LD. CIT. IT WAS SUBMITTED BY LD. AR THAT THE LD. AO HAD CONSIDERED DOCUMENT NO.21 OF ANNEXURE A4 AS MENTIONED BY HIM I N PARA 4.3 OF THE BLOCK ASSESSMENT ORDER. ONCE IT IS SO THEN IT IS QU ITE ILLOGICAL TO SAY THAT HE WOULD HAVE NOT CONSIDERED DOCUMENT NO.20 ENCLOSE D ALSO IN THE SAME ANNEXURE. ACCORDINGLY LD. CIT WAS NOT CORRECT IN HO LDING THAT DOCUMENT NO.20 WAS NOT CONSIDERED BY THE AO. 15. SECONDLY DOCUMENT NO.20 IS ONLY A ROUGH PAPER A ND NO INFERENCE CAN BE DRAWN OF ANY SIGNIFICANCE. THERE IS NO INDIC ATION THAT THIS DOCUMENT PERTAINED TO THE ASSESSEE. IN FACT IT IS A DUMB DOCUMENT AND COULD NOT BE RELIED UPON EVEN IF CONSIDERED. 16. THIRDLY THE AO HAS TAKEN ONE OF THE POSSIBLE V IEWS THEREFORE HIS ORDER COULD NOT BE REVISED TO SUBSTITUTE THE VIEW T AKEN BY THE LD. CIT. HE REFERRED TO THE FOLLOWING JUDGMENTS - 12 - MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 243 IT R 83 (SC) -CIT VS. ARVIND JWELLERS (2003) 259 ITR 502 (GUJ) -303 ITR 69 -RAYLON SILK MILLS VS. CIT (1996) 221 ITR 155 (GUJ ) -309 ITR 167 -CIT VS. GIRISH CHAUDHARY (2007)163 TAXMAN 608 (DEL ) FOR THE PROPOSITION THAT MERE ABSENCE OF DISCUSSIO N IN THE ORDER WILL NOT MAKE IT ERRONEOUS OR IF ANY POSSIBLE VIEW HAS BEEN TAKEN BY THE AO THEN HIS ORDER CANNOT BE HELD TO BE ERRONEOUS. 17. THE LD. AR HOWEVER FAIRLY CLARIFIED THAT THER E IS NO REFERENCE OF DOCUMENT NO.20 OF ANNEXURE A4 EITHER IN THE LETTER ISSUED BY THE AO DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS O R IN THE REPLY FILED BY THE ASSESSEE DURING THAT COURSE OR IN THE ASSESSMEN T ORDER FRAMED BY THE AO. 18. AGAINST THIS LD. DR SUBMITTED THAT ORDER PASSE D BY AO WAS ERRONEOUS BECAUSE ENQUIRY ON THE DOCUMENT FOUND IN THE SEARCH AND AS DISCUSSED BY LD. CIT WAS NOT CARRIED OUT BY THE A O. 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW NOT CARRYING OUT NECESSARY ENQUIRIES WHICH ARE ENTRUSTED BY THE LAW ON THE AO WOULD MAKE HIS ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. WE DERIVE SUPPORT FROM THE DECISION OF HON. MADRAS HIGH COURT IN THE CASE OF K.A. RAMASWAMY CHETTIAR VS. CIT (1996) 220 ITR 657 (MAD ). FURTHER IT HAS BEEN HELD BY HON. ALLAHABAD HIGH COURT IN CIT VS. S HRI BHAGWANDAS (2005) 272 ITR 367(ALL) THAT WHERE AN ORDER IS PASS ED WITHOUT 13 APPLICATION OF MIND IT WILL FALL UNDER THE EXPRESSI ON ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 20. IN JAGDISH KUMAR GULATI VS. CIT (2004) 269 ITR 71 (ALL) HON. ALLAHABAD HIGH COURT TOOK THE SAME VIEW. 21. IN CIT VS. GABRIAL INDIA LTD. (1993) 203 ITR 10 8 (BOM) HON. BOMBAY HIGH COURT HELD THAT WHERE THERE IS A MATERI AL BEFORE THE CIT THAT AO HAS NOT APPLIED HIS MIND OR ENQUIRIES ARE N OT CARRIED OUT THE ORDER CAN BE SET ASIDE AND IF THERE IS NO SUCH MATE RIAL AND AO IS ASKED SIMPLY TO RE-EXAMINE THE MATTER THEN IT WILL NOT B E PERMISSIBLE. 22. THE VIEW THAT FAILURE TO MAKE AN ENQUIRY WILL M AKE AN ORDER ERRONEOUS HAS ALSO BEEN SUPPORTED BY THE DECISION I N RAMPYARI DEVI SARAOGI VS. CIT (1968) 67 ITR 84 (SC). IN GEE VEE E NTERPRISES VS. ADDL. CIT (1995) 99 ITR 375 (DEL) IT IS HELD THAT ITS INC UMBENT ON THE ITO TO FURTHER INVESTIGATE THE FACTS STATED IN THE RETURN. THIS CAN BE FURTHER EXTENDED TO THE PROPOSITION THAT ITO IS REQUIRED TO CARRY OUT ENQUIRIES ON THE BASIS OF DOCUMENTS FOUND IN THE SEARCH. IN OTHE R WORDS HE IS REQUIRED TO APPLY HIS MIND WHETHER CONTENTS OF THE DOCUMENTS WOULD RESULT IN UNDISCLOSED INCOME OR NOT. 23. FROM A PLAIN READING OF SECTION 263 IT IS CLEAR THAT POWER OF CIT TO INITIATE PROCEEDINGS UNDER 263 CAN BE EXERCISED ONL Y IF CIRCUMSTANCES SPECIFIED THEREIN EXIST. THEY ARE - -(1) THE ORDER MUST BE AN ERRONEOUS ONE; -(2) SECONDLY BECAUSE OF BEING ERRONEOUS ORDER THE ORDER MUST BE PREJUDICIAL TO THE INTERESTS OF REVENUE. 14 THE EXPRESSION ERRONEOUS HAS NOT BEEN DEFINED IN TH E ACT HOWEVER IN GENERAL PARLANCE OF LAW IT MEANS INVOLVING AN ERROR OR DEVIATING FROM LAW. ERRONEOUS ASSESSMENT REFERS TO AN ASSESSMENT THAT D EVIATES FROM LAW AND HENCE INVALID. ERROR IS A DEFECT AND IF ALLOWED TO PERPETUATE THEN IT WILL CAUSE PREJUDICE TO THE REVENUE IN MANDATORY TERMS A S WELL AS ADMINISTRATIVELY. IT COULD SET A BAD PRECEDENCE IF ERRORS PERPETUATED IN THE ORDER OF AO ARE NOT ALLOWED TO BE RECTIFIED. T O ENQUIRE INTO THE DOCUMENTS SEIZED IN THE SEARCH IS THE DUTY CAST ON THE AO BY THE ACT. SECTION 158 BB REFERS TO UNDISCLOSED INCOME ASA GGREGATE OF THE TOTAL INCOME COMPUTED ON THE BASIS OF EVID ENCE FOUND AS A RESULT OF SEARCH. THEN THE DUTY IS CAST ON THE AO TO EXAMINE ALL THE EVIDENCE FOUND AS A RESULT OF THE SEARCH A PPLY HIS MIND AND COME TO A CONCLUSION WHETHER THEY REPRESENT UNDISCLOSED INCOME OF THE ASSESSEE. IF THE RECORDS EXAMINED BY THE LD. CIT DI D NOT INDICATE THAT AO HAS APPLIED HIS MIND ON CERTAIN PIECE OF EVIDENCE F OUND AS A RESULT OF SEARCH THEN IT WOULD BE AN ERROR IN LAW AND ALSO IT WILL BE PREJUDICIAL BECAUSE PERPETUATING AN ERROR IS ALWAYS PREJUDICIAL TO THE ADMINISTRATION OF REVENUE. SUCH AN ORDER PASSED UNDER SECTION 158B C WITHOUT EXAMINING MATERIAL SEIZED IN THE SEARCH COULD BE TE RMED AS ERRONEOUS BECAUSE IF IT WOULD HAVE BEEN EXAMINED AND SUBSEQUE NT MATERIAL COLLECTED AND WHICH ARE RELATABLE TO SUCH DOCUMENT THEN IT COULD RESULT IN STRENGTHENING THE VIEW THAT THE DOCUMENT REPRESENTE D UNDISCLOSED INCOME OF THE ASSESSEE. 24. IT IS UNDISPUTED FACT THAT DOCUMENT NO.20 OF AN NEXURE A4 WAS NEITHER REFERRED TO BY THE AO IN ENQUIRY LETTER ISS UED BY HIM TO THE ASSESSEE NOR IN ANY REPLY FILED BY THE ASSESSEE TO THE AO AND NOR EVEN IN THE ASSESSMENT ORDER. THE DOCUMENT NO.20 AS NOTED B Y THE LD. CIT IS IN THE FORM OF TRIAL BALANCE REFLECTING FINAL ACCOUNT OF VARIOUS PARTIES 15 CREDITORS AND ASSETS. THE ARGUMENT OF LD. AR THAT L EFT HAND SIDE INDICATED LOAN WHICH IS ONLY AN ASSET AND SHOULD HAVE BEEN ON THE RIGHT HAND SIDE HAS NO FORCE BECAUSE THE DOCUMENT NEEDED TO BE EXAM INED TO SHOW WHETHER LEFT HAND SIDE INDICATED DEBIT BALANCE OR R IGHT HAND SIDE INDICATED DEBIT BALANCE. IT DEPENDS UPON THE PRACTICE FOLLOWE D BY THE PARTIES. EVEN IF LAND IS MENTIONED ON THE CREDIT SIDE IF REQUIRE D TO BE EXAMINED WHETHER THIS PURCHASE OF LAND WAS A CREDIT OR IT RELATED TO ANY OTHER TRANSACTION FOUND RECORDED IN THE SEIZED DOCUMENT OR REGULAR BO OKS OF ACCOUNTS. LD. CIT HAS NOT GIVEN ANY FINDING AS TO THE NATURE OF T HE ENTRIES IN THE DOCUMENT NO.20 BUT HAS CONFINED HIS ORDER TO THE LI MITED ISSUE THAT AO DID NOT APPLY HIS MIND ON THIS DOCUMENT AND THEREF ORE THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. WE UPHOLD HIS ORDER ON THIS POINT IN THE LIGHT OF SEVERAL DECISIONS ON THE POINT SOME OF WHICH HAVE BEEN REFERRED TO ABOVE (SUPRA). 25. AS A RESULT WE CONFIRM THE ORDER OF LD. CIT AN D DISMISS THE APPEAL IT(SS) A NO.73/AHD/2004 26. IN THE CASE OF J.B. CONSTRUCTION THE FACTS ARE SIMILAR AS IN THE CASE OF M/S PADMAVATI CORPORATION EXCEPT THAT LD. CIT REFERRED TO DOCUMENT NOS.18 & 19 OF ANNEXURE A4 SEIZED FROM THE RESIDENC E OF SHRI VIJAY B. KANSARA ON 8.12.1998 WHICH WAS NOT CONSIDERED BY TH E AO WHILE FRAMING THE ASSESSMENT. THESE TWO DOCUMENTS REPRESE NT TRIAL BALANCE OF VARIOUS PARTIES AS MENTIONED BY LD. CIT ON PAGE 2 O F HIS ORDER. THE FACTS AND LEGAL ARGUMENTS RELATING TO CHALLENGING THE ORD ER UNDER SECTION 263 ARE THE SAME. THE ADDITIONAL GROUND RAISED IN THIS CASE IS ALSO THE SAME. THE ARGUMENTS OF THE PARTIES ARE ALSO THE SAME. 16 27. FOR THE REASONS DISCUSSED BY US IN THE CASE OF PADMAVATI CORPORATION WE REJECT THE ADDITIONAL GROUND UPHOL D THE ORDER OF LD. CIT AND DISMISS THE APPEAL FILED BY THE ASSESSEE. 28. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE S ARE DISMISSED. SD/- SD/- (BHAVNESH SAINI) (D.C.AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD DATED : 23/4/2010 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD ORDER PRONOUNCED IN OPEN COURT ON 23/4/2010