Income Tax Appellate Tribunal - Jaipur
Ambeshwar Grih Nirman Sahkari Samiti ... vs Deputy Commissioner Of Income Tax on 23 October, 2002
Equivalent citations: [2003]84ITD139(JP), (2003)78TTJ(JP)94
ORDER
B.R. Jain, A.M. September, 2001
1. This appeal has been preferred by the assessee and is arising from the order of The Dy. Cir(Asst.), Spl. Range-II, Jaipur, passed under Section 158BD/144 of the IT Act, 1961, for the block period 1st April, 1986, to 18th Sept., 1996, computing the income at Rs. 12,62,515.
2. The following grounds have been raised :
"1. "That the assessment has been completed without providing reasonable opportunity to the appellant thus passed in violation of the principles of natural justice the orders deserves to be held bad in law and illegal.
1.1 On the facts and in the circumstances of the case, the learned Dy. CIT (Asst.) has legally erred in invoking the provisions of Section 158BC of the IT Act, 1961, when no search was carried out at the business premises of the assessee.
1.2 On the facts and in the circumstances of the case, the learned AO has grossly erred in invoking provisions of Section 158BD of the Act.
1.3 That the subsequent proceedings initiated under Section 158BD are also bad in law as no notice was served on the assessee society or its office-bearers under Section 142(1) of the Act during the assessment proceedings.
1.4 The learned AO has further erred in referring the case for special audit under Section 142(2A) of Act when provision of Section 158BC were not applicable.
2. That the order passed by the learned AO under Section 158BD/144 being barred by the limitation of time provided under Section 158 (sic) for completion of assessment the resultant order as passed deserves to be struck down, 2.1. That the learned AO has further erred in making addition of Rs. 12,62,515 on wrong assumptions and presumptions on account of undisclosed income for the block period 1st April, 1986, to 18th Sept., 1996.
3. That the learned AO has erred in making additions on the basis of statements stated to have been recorded of Shri P.C. Kedia p/o Kedia & Co. and Shri Chandrakant Ruia office-bearer of some other society namely, Topkhana Desh Grin Nirman Society.
3.1. That the statements recorded of Sh. P.C. Kedia and Sh. Chandra Kant Ruia were used on the -back of the assessee as the assessee was not confronted with the said statements.
3.2. That the learned AO has erred in taking Patta transfer fees at Rs. 1,000 per plot, arbitrarily without any material on record.
3.3. That the learned AO has erred in making additions on account of compensation for accommodation/name-lending when no such material/records were ever found/seized in any search proceedings or otherwise.
4. The learned AO has erred in computing the income for the block period under Section 158BC when the order was passed under Section 158BD.
4.1. That the learned AO has grossly erred in taking undisclosed income on account of accommodation (name-lending) fee for asst. yr. 1987-88, 1988-89, 1989-90, 1990-91, 1991-92, 1992-93, 1993-94, 1994-95, 1995-96, 1996-97 & 1997-98 upto 18th Sept., 1986, at Rs. 10,000, 40,000, 70,000, 70,000, 10,000, 2,00,000 1,00,000, 80,000, 70,000, 60,000 and Rs. 50,000 respectively, without providing any basis for such additions.
4.2. That the learned AO has grossly erred in taking income on account of undisclosed earning from plot transfer for asst, yr. 1990-91, 1991-92, 1993-94, 1994-95, 1995-96 and 1996-97 at Rs. 10,000, 10,000, 60,000, 1,00,000, 90,000 and Rs. 1,50,000 without providing any basis for the same.
4.3. That the learned AO has further erred in adding the gross profit without allowing the deductions for general expenditure.
4.4. That the learned AO has legally erred in taxing the income of co-operative society when as per IT Act, 1961, income of the society is exempted from tax."
3. At the outset, the authorised representative for the appellant informed that the Tribunal has already decided identical matter on the similar facts and findings in the cases of Vikas Bhawan Sahkari Samiti Ltd. v. Dy. CIT in ITSSA No. 64/Jp/1998 dt. 20th April, 2001 and in Topkhana Desh Grih Nirman Sahkari Samiti Ltd. v. Dy. CIT in ITSSA No. 54/Jp/1998, dt, 24th May, 2001, where the assessment was made consequent to the same action on Shri P.C. Khedia and M/s Kedia & Co. and was completed under Section 158BD/144 by the same AO. It was, therefore, contended that the issues are fully covered by the said two decisions and the same needs to be followed in this case also and allow this appeal also.
4. Accordingly the learned Departmental Representative was asked to explain as to why prayer of the appellant should not be accepted and shown if the facts and findings are not identical with the said two decisions of the Tribunal. The case was, therefore, adjourned for hearing on 8th Aug., 2001.
5. The learned Departmental Representative contends that the whole case of the AO is based on the modus operandi admitted by Shri Prakash under Section 131 of the IT Act, 1961, on 13th Nov., 1986, which was consequent to the date of search on 18th Sept., 1996, on Shri P.C. Kedia and M/s Kedia & Co. where certain blank Pattas were found and seized. The employee's statement was also recorded but the same is not available and cannot be produced before the Tribunal. From the said blank Pattas, which were found, it cannot be said that no income has been earned by the assessee. At least some thing has been earned. What that earning could be by the appellant, cannot be said, it may be Rs. 10 or even Rs. 5. He further, contended that all the case laws relied upon by him in the case of Vikas Bhawan Sahkari Samiti Ltd. may also be considered in this case also which are on estimation of income as well as on the surrounding circumstances. It was, therefore, submitted by the learned Departmental Representative that the facts demand to bring some more clarity. Reality should also be brought on record. He, therefore, contended that either the addition may be confirmed or the addition may be set aside.
6. On the other hand, the learned authorised representative contends that as has already been pointed out by him in the beginning of the case that the appellant's case is identical and similar on facts with the two cases already decided by this Bench, copies of orders have been placed on record. Proceedings were initiated after the search of Shri P.C. Kedia and his group. There are no other documents except Pattas which were already available with the Department for taking decision in these two cases already decided by the Tribunal. These Pattas did not contain any details of undisclosed income. Statements referred by the learned Departmental Representative were recorded at the back of the assessee and copies of the statements of Shri P.C. Kedia and Chandra Kant Ruia were not given and as such the same could not have been used by the AO for estimating the income of the assessee for the block period. The notices under Section 158BD and 142(1) were never served upon the appellant and as such the assessment so made is bad in law and needs to be annulled. The AO made the assessment only on the basis of assumptions, presumptions, suspicion and hearsay. Huge income has been assessed for name-lending or transfer charges. No basis thereof has been given. Any income that accrued to the assessee were duly recorded in the audited accounts which were available with the AO. No specific instances have been quoted. The learned Departmental Representative has not been able to show as to how the case is not covered by the said two decisions of the Tribunal In fact the AO even used the same computer floppy in writing the assessment order in the case of the appellant. A reference was drawn to p. 2 para 6 of the impugned assessment order where the AO speaks of sending of notice to Vikas Bhawan Sahkari Samiti and not to the appellant. There has been no application of mind by the AO and the assessment has been made mechanically by using the same material which was available in respect of other two societies for which orders of the Tribunal have been relied by the assessee and without finding any earning of undisclosed income by the appellant. In view of the said submissions, it was, therefore, contended that the assessment has been framed by flouting the principles of natural justice and the same is bad in law and needs to be annulled. Besides this, on the aspect of service of notice on the society, a copy of letter is alleged to have been given to Mr. Kedia but the same was not sent to the address of the society. Mr. Kedia has no locus standi in the society. Shri O.P. Jain was not the office-bearer. There had been a re-election in the society, details placed at assessee's paper book, Vol. I. Even otherwise the income of the appellant was exempt by the principle of mutuality which aspect has not been denied by the AO as is borne out from para 7 of his order. The proceedings taken under Section 158BD were, in fact, wrong and not as per the spirit of law. No satisfaction has been recorded by the AO before taking any action under Section 158BD. Reliance has been placed on the decisions in the case of Ved Prakash Sanjay Kumar v. Asstt. CIT (1999) 107 Taxman 242 (Chd) and in the case of Parag Nivesh (P) Ltd. v. Dy. CIT and Ors. (1999) 108 Taxman 127 (Call The learned authorised representation further objected to the observations of the AO on the aspect of non-cooperation by the appellant. In fact, the AO himself has dropped the proceedings taken under Section 158BC. Under such circumstances it cannot be said that there has been a failure for audit of accounts under Section 142(2A) on the part of the appellant. The learned counsel has drawn a reference to para 7 of the assessment order, where the AO is stated to have alleged that the profits are being pocketed by the office bearers. From this it is clearly borne out that the profits were never earned by the appellant: Even otherwise income was exempt due to mutuality concept. The assessee's counsel maintains that it was a covered case.
7. On the other hand, the learned Departmental Representative contends that the assessee did not inform the changed address. Reliance was placed in the case of Addl. CIT v. Laxmi Agents Ltd. (1975) 101 ITR 441 (Guj). The assessee also did not inform of the change in office-bearers. Assessee has also not come forward for audit. It was, therefore, contended that no fault can be found in the assessment so made.
8. The Bench before treating the case as heard, asked the learned authorised representative as to whether the grounds of appeal bearing ground Nos. 1.3 and 2, which were not pressed on earlier hearing whether the assessee wants to reconsider its stand in the light of arguments advanced by both the parties.
To this the learned authorised representative stated that he does not give up his claim raised in these grounds in case the Tribunal is not satisfied that the issue is not covered in favour of the assessee.
9. Rival submissions have been heard in the light of case law relied upon by both the parties, material brought on record and reference drawn to two decisions taken by the Tribunal in the cases of (1) Vikas Bhawan Sahkari Samiti Ltd. and (2) Topkhana Desh Grih Nirman Sahkan Samiti Ltd. where issues were decided by both of us and also in the light of the relevant findings and facts contained therein. The learned Departmental Representative did not show that the facts and findings in both these decisions do not cover the issue nor could he show that there was any new material available with the AO in this case. We also find that the action in this case was initiated as a consequence of the same search on Shri P.C. Kedia and M/s Kedia & Co. and was based on the same material. No new facts or material has been brought on record by the AO nor any different finding has been given. We agree with the plea of the learned counsel for the appellant that the issue in all four corners fully covered by the said two decisions of the Tribunal and all the facts and findings are also identical. We also agree that no adverse view could have been drawn from the statements taken at the back of the appellant which were recorded after the completion of the search on Shri P.C. Kedia and M/s Kedia & Co. and not in connection with the searching of any undisclosed income of the appellant. Any modus operandi narrated by the learned Departmental Representative related to the business by Shri P.C. Kedia and not by the appellant. We, however, referred to the statement of Shri P.C. Kedia heavily being relied upon by the Revenue. This statement was recorded on 13th Nov., 1996 under Section 131 of the IT Act. It was started by Shri Kedia that the business in land was started with M/s Topkhana Desh Grih Nirman Sahkari Samiti Ltd. about 17 to 18 years back. The land was purchased from this society and developed by him. The society did not have any involvement or concern with the development expenses, yet it however gave blank Pattas signed by its office-bearers which were kept with him for use at the time of allotment and also for issuing duplicate/transfer or in case mutilation of the original for use of which no time is fixed. He also stated that it is not possible to relate any Patta so taken with any plot of land or scheme and this is the reason that there blank Pattas have been found on search from him. He has further stated that in certain cases Pattas were not issued because sale deeds were directly executed and in some cases where sale deeds were executed later, the Pattas have been taken blank. It has also been deposed that the procedure of executing sale deeds is the same in the case of various schemes relatable to Topkhana Desh Grih Nirman Samiti. He also stated that he has no knowledge or connection with two societies, namely, Ambeshwar Grih Nirman Sahkari Samiti Ltd., the appellant before us and Vikas Grih Nirman Sahkari Samiti in ITSSA No. 64/Jp/1998 where the assessment framed and the income estimated has been held to be without any basis or material in possession of the AO and the income estimated has been deleted by the Tribunal vide its order, dt. 20th April, 2001. It has been asserted by the Shri Kedia that he came in touch with Shri O.P. Jain, advocate about 6 to 7 years back but as no sale deeds or Pattas were prepared, he could not have any connection with the said society, which is an appellant before us. He, however, narrated certain schemes issued by these two societies and stated that since 1992 these societies had no connection or interest in any scheme. In his statement, it has been clarified that possession of the plot or Patta or sale deed is released only after receipt of full payment by him and in cases where full payment has not been received, the plots are held as his stock-in-trade for which blank Pattas remain lying with him. In his statement the said Shri Kedia nowhere stated that blank Pattas lying with him or found and seized from him have been issued by the appellant-society nor that they are relatable to any of the schemes of the appellant-society. Neither the AO nor the learned Departmental Representative brought oil record any such Patta which could be said to have been issued by the appellant-society. No specific instance has been shown or brought on record to prove that any undisclosed income has accrued or arisen or belongs to the appellant. No satisfaction is found to have been recorded before taking action under Section 158BD of the Act. In fact the learned Departmental Representative merely seeks to send back the case to the AO so as to bring more clarity and reality on record, which we find is too late at this stage and any lapses on the part of the AO cannot be allowed to be covered by sending the case back. Having found that the facts and findings are identical with the two decisions rendered by the Tribunal and no new facts having been brought on record and also that there has been no application of mind by the AO inasmuch as the same floppy as in these two other cases appears to have been used for framing the assessment except some minor changes, we do not find any justification in restoring the matter back to the AO as such an such an exercise will amount to mockery of judicial system and cause great prejudice to the assessee besides being contrary to the legal procedure laid down for redressal of grievances of the appellants. Moreso, when the rules of consistency also demand to take the same decision, we, therefore, hold that the facts and findings in this case are pan materia identical and more particularly confirm the same conclusions as arrived at in the case of Topkhana Desh Grih Nirman Society, Jaipur in ITSSA No. 54/Jp/1998, dt. 24th 2001, by holding as under :
"Rival submissions have been heard in the light of material available on record and the case laws relied upon by both the parties. We find that the facts and findings in this case are similar and identical to the facts and findings in ITSSA No. 64/Jp/l998 in the case of Vikas Bhawan Nirman Sahakan Samiti Ltd. Jaipur. The assessment in that case was also completed under Section 158BD/144, by the same AO. Under the similar set of facts and circumstances of the case, as in the case of the appellant before us, action under Section 132 of the IT Act was taken on 18th Sept., 1996, on Shri P.C. Kedia and M/s Kedia & Co., where certain blank Pattas of the society were found and seized. The Department could not bring any positive material to show that the documents so found and seized from the premises of Shri P.C. Kedia and M/s Kedia & Co. gave rise to any undiscldsed income within the meaning of provisions contained in Chapter XIV-B of the IT Act, 1961. In this case also, the AO has proceeded in completing the assessment merely on the basis of presumptions that the real profits get pocketed by the office-bearers and, in any event, if true profits were to be disclosed in the accounts, they would be shared by the members due to the principle of mutuality.
The AO has also observed that the society would have been paid suitable compensation for accommodating the scheme of other persons for lending its name for those schemes. While doing so, the AO has not brought any material on record to show that the assessee-society received any amount of income, which could be said to have been an undisclosed income belonging to the appellant and could be brought to tax in the hands of the appellant before making any estimation. We, therefore, hold that the assessment so framed by the AO and the income estimated is without any basis or material in the possession of the AO and the same is the result of mere suspicion. For such reasons and following the decisions of the Tribunal in the case of Vikas Bhawan Nirman Sahakari Samity Ltd. (supra), addition or estimation of income was not warranted under Chapter XIV-B of the IT Act. The same is, therefore, directed to be deleted. This disposes of all the grounds raised by the assessee, as the dispute relates to the estimation of income by the AO for which issue stands decided in favour of the assessee."
10. Accordingly we allow the appeal of the assessee.
DINESH K. AGARWAL, J.M.:
22nd Oct., 2001 I have carefully gone through the order proposed by the learned AM but I have not been able to persuade myself to concur with the conclusion reached in allowing the assessee's appeal. I wish to record my respectful dissent with regard to the findings arrived at by the learned AM.
2. After hearing the rival submissions of the parties, perusing the material available on record and the number of decisions relied upon by both the parties, I find that the AO, on the basis of several incriminating documents and papers pertaining to the assessee found during the course of search conducted on 18th Sept., 1996, and subsequent dates at the business premises and residence of Shri P.C. Kedia, including M/s Kedia & Co. Jaipur, has issued notice under Section 158BC(2). Later on, the AO found that since no authorisation under Section 132 was issued in the case of M/s Ambeshwar Grih Nirman Sahakari Samiti Ltd., Jaipur, therefore, the case of the society is not covered by the provisions of Section 158BC but at the same time the AO was of the view that in the light of the judgments of the apex Court reported in Isha Beevi and Ors. v. TRO (1975) 101 ITR 449 (SC) and Hukumchand Mills Ltd. v. State of MP and Anr. (1964) 52 ITR 583 (SC), from the facts of the case and the incriminating documents pertaining to M/s Ambeshwar Grih Nirman Sahakari Samiti Ltd. seized during the search from Shri P.C. Kedia, it is clear that the provisions of Section 158BD are clearly applicable in this case. Accordingly, the AO has issued notice under Section 158BD on 24th Dec., 1997, on the following address :
"M/s Ambeshwar Grih Nirman Samiti, Shop No. 1, Hathroi Market, Jaipur."
The copy of the said notice was also sent to Shri P.C. Kedia, C/o Kedia & Co. U.Co. Bank Building, Chandpole Bazar, Jaipur.
3. It was submitted by the learned authorised representative that no notice under Section 158BD was served on the assessee. He also filed an affidavit dt. 11th May, 2001, of Shri Rakesh Kumar Jain, president of the society, stating therein as below :
"That for the block assessment of the society by the learned Dy. CIT Special Range-2, Jaipur, the letter No. 678 dt. was not received by the assessee copy of the said letter was sent to Shri P.C. Kedia which was given by him to the assessee after assessment. No other notice under Section 158BD was received by the assessee. After receipt of the letter, dt. 24th Dec., 1997, from Shri P.C. Kedia it was found that the address of the assessee mentioned there was wrong. At that time the office of the assessee was at B-1, Gehlot Market near Ajmer Pulia, Ajmer Road, Jaipur at which address the said letter was not served."
4. However, I find that the address given in the said notice is the same, which was given by the assessee to the Tribunal vide its letter, dt. 17th Feb., 2001, asking for the supply of certified copy of the order of the Tribunal dt. 31st Jan., 2001, and the same address was also mentioned by the assessee in the challan of copying fees for Rs. 12 deposited on 22nd Feb., 2001. Since the notice was sent on the same address, which was mentioned by the assessee even on 17th Dec., 2001, therefore, in the absence of any contrary material, the affidavit filed by the assessee in this regard does not inspire any confidence. I find support from the judgment of. Hon'ble Calcutta High Court in the case of Amal Kumar Chakraborty v. CIT (1994) 207 ITR 376 (Cal), wherein at p. 390, the dictum 'falsus in uno falsus in omnibus" was held as a sound principle to apply in taxation. Accordingly, I do not find any merit in the contention of the learned authorised representative and the assessee and the same is, therefore, rejected.
5. As regards service of notice under Section 142(1), dt. 3rd April, 1998, which, accordingly to the AO, was served with great difficulty on Shri O.P. Jain, the office-bearer of the society, the learned authorised representative contends that at that time, Shri O.P. Jain was not office-bearer of the society. The election of the society took place on 22nd July, 1997, by the Government appointed Election Officer and as per results, Shri O.P. Jain was not the office-bearer and, therefore, the same cannot be effected on him. The learned authorised representative has also filed the copy of the list, dt. 22nd July, 1997, of the office-bearers of the society as a new evidence and also referred para 3 of the affidavit, supra, of Shri Rakesh Kumar Jain, president of the society, which reads as under :
"3. That no notice under Section 142(1) of the IT Act was received by the assessee before framing the assessment. The notice under Section 142(1), dt. 3rd April, 1998, mentioned in the assessment order was not served on the society or any of its office-bearers. As per election of the society held on 22nd July, 1997, Shri O.P. Jain was not the office-bearer of the society and any notice serviced on him is not valid. Copy of election result declared by Government appointed officer are on paper book and also forms part of this."
6. I am of the view that this plea of the assessee shall not vitiate the assessment in view of the fact that the assessee had not furnished the list of the new office-bearers to the AO, nor any intimation was brought on record of the retirement of said Shri O.P. Jain from the office of the society. This Bench of the Tribunal, in IT(SS)A No. 64/Jp/1998, dt. 20th April, 2001, in the case of Vikas Bhawan Nirman Sahakari Samitee Ltd. v. Dy. CIT (Asst), Special Range-2, Jaipur, has already rejected the similar plea of the assessee in that case. That being so, this plea of the assessee is also rejected.
7. Since Shri. Om Prakash Chauhan, secretary of the society has admitted that the plot transfer fee is approximately Rs. 1,000 for each plot and there were certain incriminating documents in the possession of the AO which could satisfy the AO to initiate proceedings under Section 158BD, therefore, the AO, in view of his satisfaction, which has also been shown in his letter, dt. 24th Dec., 1997, supra, was fully justified in taking action under Section 158BD of the Act.
8. As regards the learned authorised representative's plea that the same floppy as in the other cases, namely, Vikas Bhawan Nirman Sahakari Samittee Ltd. Jaipur, and Topkhnna Grih Nirman Society, Jaipur, appears to have been used for framing the assessment as the AO has mentioned in para 6 of the assessment order the name of Vikas Bhawan Grih Nirman Society for issuing notice under Section 158BD on 24th Dec., 1997, I find that it may be a typographical error as the notice under Section 158BD was actually issued to the assessee after due application of mind on 24th Dec., 1997, the copy of which was placed on record by assessee in its paper book on 6th Aug., 2001, at p. Nos. 2 to 4.
9. I also find that in this case there was a clear admission by the secretary of the society that the plot transfer fee is approximately Rs. 1,000 for each plot, which was not only a sufficient material but conclusive evidence about the undisclosed income, which has not been rebutted by the learned authorised representative, therefore, the facts of this case are different from the facts of the case of other two societies, namely, Vikas Bhawan Nirman Sahakari Samittee Ltd., Jaipur, and Topkhana Grih Nirman Society, Jaipur and, accordingly, the orders of this Bench in the case of Vikas Bhawan Nirman Sahakari Samittee Ltd., Jaipur in ITSSA No. 64/Jp/1998, dt. 20th April, 2001, and Topkhana Grih Nirman Society, Jaipur in ITSSA No. 54/Jp/1998, dt. 24th May, 2001, are distinguishable and not applicable to the facts of the present case.
10. However, while upholding the issuance of notice under Section 158BD and service of notice under Section 142(1) as valid in view of the decisions reported in C.G.G. Panicker v. CIT (1999) 237 ITR 443 (Ker) and Estate of Late Rangalal Jajodia v. CIT (1971) 79 ITR 505 (SO, I find merit in the plea of the learned authorised representative that the assessment has been completed without providing reasonable opportunity to the appellant. The learned Departmental Representative has also submitted that the fact demands to bring some more clarity and reality should also be brought on record, therefore, the assessment may be set aside to the file of the AO, which was not rebutted by the learned authorised representative, therefore, I am of the view that in the interest of justice, the assessment should be set aside to the AO, who will re-examine the matter afresh after providing sufficient opportunity of being heard to the assessee according to law. This view finds support from the following decisions :
(1) Tulsi Lal Manilal v. CIT (1985) 154 ITR 665 (Raj);
(2) CIT v. Manohar Glass Works (1998) 232 ITR 302 (All); and (3) V.D. Swami & Co. (P) Ltd. v. CIT (1984) 146 ITR 425 (Mad).
11. Accordingly, the ground Nos. 1, 1.1, 1.2, 1.3 and 1.4 are set aside.
12. Ground Nos. 2 to 4.4 are being decided as one ground for the sake of convenience.
13. I have carefully considered the rival submissions of the parties, perused the material available on record and the decisions relied upon by the learned authorised representative, I find that the learned authorised representative has not placed any material as to how the statement of Shri Om Prakash Chauhan, secretary of the society, in which he has admitted that plot transfer fee is approximately Rs. 1,000 for each plot, is not applicable. However, keeping in view that the assessment has been set aside, therefore, I set aside ground Nos. 2 to 4.4 also to the file of the AO for his fresh consideration after giving proper opportunity of being heard to the assessee.
14. In the result, the assessee's appeal is allowed for statistical purposes.
REFERENCE UNDER SECTION 255(4) OF THE IT ACT, 1961 B.R. JAIN, A.M.:
29th Oct., 2001 As there is a difference of opinion between the Members in the present appeal, the same is required to be resolved by one or more members of the Tribunal, as nominated by the Hon'ble President, ITAT, in terms of Section 255(4) of the Act. Accordingly the following questions of difference are referred :
1. Keeping in view the entirety of facts, circumstances, material various observations and findings, whether the case of the appellant is identical with the two 'decisions rendered by the Tribunal in the case of Topkhana Grih Nirman Society, Jaipur, in ITSSA No. 54/Jp/98 dt. 24th May, 2001, and Vikas Bhawan Nirman Sahakari Samittee Ltd., Jaipur, in ITSSA No. 64/Jp/98, and that the Tribunal ought to have taken the identical decision in this case or that the view of the learned JM that the matter should be set aside for re-examination afresh by the AO.
2. Whether, there was any material with the AO that can be said to have been found as a result of search from which it could be said that there was any undisclosed income within the meaning of Section 158B(b) of the Act so as to give a valid jurisdiction for completion of assessment under Section 158BD of the Act.
2. We direct the registry to place the matter before the Hon'ble President, ITAT.
DINESH K. AGARWAL, J.M.;
29th Oct., 2001 Following questions of difference are also referred in terms of Section 255(4) of the IT Act, 1961, for resolving the difference of opinion :
1. Whether, on the facts and in the circumstances of the case, the JM was right in holding that the affidavit filed by the assessee does not inspire any confidence and consequently the dictum 'falsus in uno falsus in omnibus", as held by the Hon'ble Calcutta High Court in (1994) 207 ITR 376 (Cal) at p. 390 is applicable in this case.
2. Whether, the JM was right in holding that in view of the confessional statement of Shri Om Prakash Chauhan, secretary of the society, which has not been rebutted by the assessee, there was a sufficient material with the AO that there was undisclosed income within the meaning of Section 158B(b) of the Act, so as to give valid jurisdiction to record his satisfaction in initiating proceedings under Section 158BD of the Act and making the assessment.
3. Whether, in view of the findings given by the JM that the earlier decisions of the Bench in the cases of Topkhana Grin Nirman Society, Jaipur, in ITSSA No. 54/Jp/1998 dt. 24th May, 2001, and Vikas Bhawan Nirman Sahkari Samittee Ltd. Jaipur, in ITSSA No. 64/Jp/1998, dt. 20th April, 2001, are distinguishable and not applicable to the facts of this case.
4. Whether, keeping in view the entirety of the facts and in the interest of justice, the JM was right in holding that the matter should be set aside for re-examination afresh by the AO.
R.M. MEHTA, VICE PRESIDENT (AS THIRD MEMBER) :
23rd Oct., 2002 This is a reference under Section 255(4) of the IT Act, 1961, pursuant to the difference of opinion between the learned Members constituting the Division Bench.
2. Coming to the point/points of difference both the learned Members have proposed their own set of questions, but before I come to these. I would like to summarize the relevant facts of the case and these are as under :
A search under Section 132 of the IT Act, 1961, was conducted on 18th Sept., 1996, as also on subsequent dates at the business and residential premises of one Shri P.C. Kedia and which included M/s Kedia & Co. Jaipur. During the course of the search several incriminating documents and papers including "those pertaining to the present assessee" were seized. According to the AO the seized documents revealed connivance between the assessee and Shri P.C. Kedia and his family members for purposes of violating the provisions of the Societies Act as also to defraud the Revenue. According to the AO there could be no better evidence than the blank Pattas and money receipts issued by the assessee to the Kedias and which in turn were seized from them
3. Notice under Section 158BC(2) was issued and served on 24th April, 1997, to the assessee, but no return was filed for the block period in question. The secretary of the society by means of a written communication, dt. 18th May, 1997, stated that the assessee was a co-operative society and its work was to provide land for housing on no profit no loss basis to its members and further land under various schemes had been acquired by the society and allotted to its members mainly prior to 1st April, 1987. It was the claim of the assessee that no search proceedings had been carried out at its premises.
4. After service of notice under Section 158BC, proceedings were initiated under Section 142(2A) for auditing of the books of accounts of the assessee by a chartered accountant appointed with the approval of the CIT. This was found to be necessary as according to the Department there was considerable intermingling of the accounts of the Kedia family with those of the society. A chartered accountant was appointed on 5th Sept., 1997, to audit the accounts and asked to submit the audit report within three months, but as per para 2 of the assessment order, no such report was filed and nor was any extension sought for preparing and filing the same.
5. The AO also referred to the "admission" of one Shri Om Prakash Chauhan, Secretary of the assessee-society to the effect that Shri P.C. Kedia had used the society for his transactions. According to the AO the said person had promised to file copies of the P&L a/c by 17th Dec., 1997, but he never turned up thereafter. Ultimately, the assessee filed a letter, dt. 24th Dec., 1997, wherein it was stated that no search had been carried out at the premises of the society and it was, therefore, not required to file any return under Section 158BC.
6. As per para. 4 of the assessment order, Shri. P.C. Kedia, by means of a communication, dt. 13th Dec., 1997, stated that papers seized during the search under Section 132 from various premises had reference to the assessee-society and he further submitted that acquisition of land and its subsequent sale to respective allottees had been handled on behalf of M/s Kedia & Co. Similar facts were admitted at the time of recording of his statement under Section 131 on 9th Dec., 1997, and as per the assessment order the statement of Shri Chauhan, who had been the secretary of the society was also recorded on the same date i.e., 9th Dec., 1997.
7. According to the AO provisions of Section 158BD were squarely applicable since "incriminating" documents of the assessee-society were seized during the course of the search at the business and residential premises of Shri P.C. Kedia. He accordingly issued another notice to the assessee to file its return of income 'as required under Section 158BD by 15th Jan., 1998. It appears there was no response to the said notice. A notice under Section 142(1), dt. 3rd April, 1998, was thereafter served on one Shri O.P. Jain, the then office-bearer of the society, but there was once again no response :
8. Vide para 7 of the assessment order the AO observed that in the case of another identically placed society in whose case too documents were seized from the possession of Shri P.C. Kedia, its office-bearer one Shri Chander Kant Ruia had stated that Shri P.C. Kedia cut plots on agricultural land in the name of the society and issued allotment letters and whenever there would be a resale of the plots, the society would earn transfer charges sometime @ Rs. 150 per plot. According to the AO the money charged by the societies for plot transfers was at a much higher rate and such income was not disclosed in the accounts presented before the co-operative department. It was the observation of the AO that the office-bearers of the society pocketed the "real profit" because if such profits were disclosed in the accounts, then they would have to be shared with the other members on grounds of mutuality.
9. As per the AO the examination of Shri Chauhan, the secretary of the society revealed that the plot transfer fee was approximately Rs. 1,000 per plot and further the society earned money by way of membership fee, plot transfer fee and other transactions. According to him the society had not co-operated in the assessment proceedings, neither got its accounts audited under Section 142(2A) and nor filed the return of income as required by law. Further, according to the AO no details had been provided with regard to the lands colonized, details of closing stock, etc. and the assessment, therefore, had to be completed to the best of his judgment and he subsequently proceeded to estimate the undisclosed income of the society on the basis of the material available on record. In the concluding para of the assessment order i.e., 9 the AO observed as under:
"As per the own admission of Shri P.C. Kedia, he has cut the scheme for Rameshwardham. A scheme of this society in the name of Vikas Bhawan Society. Vide letter, dt. 8th March ,1998, Shri P.C. Kedia has stated that as admitted by the assessee before the ADI wing as well as before your goodself the three societies namely........ the Ambeshwar Grin Nirman Sahakari Samiti were associated by M/s Kedia & Co...... to give effect to the land deals done by the said M/s Kedia & Co., the societies issued the Pattas and suitable compensation was paid for this accommodation.' As has been admitted. M/s Kedia & Co. has paid for the user of the society. Similarly, considering that only three of the schemes of the society were implemented by Shri P.C. Kedia, and the society has implemented several schemes (more than 22 in number). It is quite clear from the transactions of the society as seen from the records that land deals worth several lacs of rupees have been transacted in the various years. It is safe to assume that as in the case of Shri P.C. Kedia and Kedia & Co., the society would have been paid suitable compensation for accommodating the schemes of other persons. In view of the same, income earned by the society on this account (name-lending), and not reflected in its accounts is estimated for the various years as discussed below, depending upon the turnover and the transactions involved. It is also clear that in each assessment year the society while earning from plot resale at rates above Rs. 1,000 each has the only reflecting the sum of Rs. 150 per plot. No details of the purchases, stock and payments to creditors have been filed and no books of accounts have been produced for verification. Accordingly, the assessment of the society is completed for the different assessment years after making additions on account of undisclosed transfer fee and accommodation (name-lending) fee as per the discussion given below.
..... ....."
10. For the block period 1986-87 to 1996-97 upto the date of search i.e., 18th Sept., 1996, the AO proceeded to compute income from undisclosed sources at Rs. 12,62,515, but as noted "on protective basis".
11. Being aggrieved with the order passed by the AO the assessee filed an appeal to the Tribunal and the submissions, at the outset was that the various issues raised before the Tribunal were fully covered in favour of the assessee by two decisions of the Tribunal wherein the facts were absolutely identical. It was emphasized that the assessments in those two cases had also been made pursuant to the action on Shri P.C. Kedia and M/s Kedia & Co. The two decisions are Vikas Bhawan Sahkari Samiti Ltd. v. Dy. CIT in IT (SS) Appeal No. 64 (Jp) of 1998, dt. 20th April, 2001 and Topkhana Desh Grih Nirman Sahkari Samiti Ltd. v. Dy. CIT in IT (SS) Appeal No. 54 (Jp) of 1998 dt. 24th May, 2001. The plea of the learned counsel for the assessee was that the Tribunal be pleased to decide the present appeal in the light of the two aforesaid orders. As per para 4 of the order of the learned AM the Departmental Representative was asked to give his reaction to the aforesaid submissions and put on notice as to why the prayer of the assessee's counsel be not accepted in case the facts and findings recorded in the aforesaid orders were squarely applicable to the facts of the assessee's case.
12. It is noted from para 5 of the order of the learned AM that the submission on behalf of the Revenue was that blank Pattas were found and seized during the course of the search on 18th Sept., 1996, on Shri P.C. Kedia and M/s Kedia & Co. and the modus operandi had been admitted by Shri Prakash under Section 131 of the IT Act, 1961 on 13th Nov., 1986. The further submission was that the statement of the assessee's employee was recorded but the Departmental Representative expressed his inability to file the same before the Tribunal. Another submission was to the effect that the blank Pattas revealed that the assessee had earned some income. Reliance was placed on behalf of the Revenue on the same very decisions as relied upon in the case of Vikas Bhawan Sahkari Samiti Ltd. v. Dy. CIT (supra). The ultimate prayer made on behalf of the Revenue was that the addition made by the AO be confirmed or the same be set aside.
13. As against this the submission on behalf of the assessee was that the facts of the case were absolutely identical and similar to those already considered by the Tribunal in the cases decided aforesaid and it was highlighted that proceedings in all the cases were initiated after the search on Shri P.C. Kedia and his group. It was highlighted that other than the Pattas, no other documents were available with the Department for taking the requisite action and further the Pattas did not contain details of any undisclosed income.
14. It was further submitted before the Tribunal that the "statements" referred to by the learned Departmental Representative were recorded behind the back of the assessee and even copies of the statements of Shri P.C. Kedia and one Shri Chander Kant Ruia were not given and such statements, therefore, could not have been used by the AO for estimating the income of the assessee for the block period in question.
15. Another argument raised before the Tribunal was that notices under Sections 158BD and 142(1) were never served upon the assessee and the assessment so framed was, therefore, bad in law and required to be annulled. The further submissions were to the effect that the assessment had been made on assumptions, presumptions and suspicion and huge income had been assessed without any basis. Further, the income that accrued to the assessee was duly recorded in the audited accounts, which were available with the AO and no specific instances of omission had been quoted. On behalf of the assessee it was emphasized that the Department had not been able to show as to how the assessee's case was not covered by the two decisions of the Tribunal (supra).
16. It was also submitted before the Tribunal that the assessment orders in the various cases were identically worded and the same computer floppy had been utilised. It was pointed out that at p. 2, para 6 of the assessment order in appeal the AO made observations about the sending of a notice to another assessee, namely, Vikas Bhawan Sahkari Samiti Ltd., and not to the assessee. The plea, in other words, was that there had been no independent application of mind by the AO and the assessment had been made mechanically by using the same material, which was available in the cases of the other two societies. The further argument was to the effect that principles of natural justice had been flouted and even on this ground that order of assessment being bad in law needed to be annulled. The assessee also sought to highlight before the Tribunal that Mr. Kedia had no locus standi in the society and Shri O.P. Jain was not an office-bearer.
17. The further submissions on behalf of the assessee were to the effect that the income was otherwise exempt on grounds of mutuality and the proceedings taken under Section 158BD were in fact wrong and not as per the spirit of law. It was also, submitted before the Tribunal that the AO had not recorded any satisfaction before resorting to action under Section 158BD. The assessee's counsel also took exception to the observations of the AO about non-cooperation on the part of the assessee as also on the question of getting the accounts audited under Section 142(2A).
18. In support of the numerous arguments advanced, reliance was placed on the decision of the Chandigarh Bench of the Tribunal in the case of Ved Prakash Sanjay Kumar v. Asstt. CIT (1999) 107 Taxman 242 (Chd) (Mag) and in the case of Parag Nivesh (P) Ltd. v. Dy. CIT (1999) 108 Taxman 127 (Cal).
19. In reply the learned Departmental Representative placed reliance on the judgment of the Gujarat High Court in the case of Addl. CIT v. Laxmi Agents Ltd. (1975) 101 ITR 441 (Guj) and once again emphasized on the non-adherence to the requirement of getting an audit done as also highlighted the assessee's inaction in informing the change of address to the Department.
20. The learned AM, who wrote the initial order, expressed a view in para 9 of his order to the effect that the facts of the assessee's case were quite identical to those considered by the Tribunal in the two cited cases and that the Departmental Representative had not been able to show any distinguishing features. It was also noted as a fact by the learned AM that action in the case was initiated pursuant to the search on Shri P.C. Kedia and M/s Kedia & Co. this being the position in the two other cases as well and even the material was the same and that no new facts or material had been brought on record by the AO. He, therefore, agreed with the plea of the learned counsel for the assessee that the issue was fully covered by the two decisions of the Tribunal (supra) inasmuch as the facts and findings were absolutely identical.
21. The learned AM also accepted the argument of the learned counsel on the recording of statement and held that no adverse view could have been taken on the basis of the statements recorded behind the back of the assessee and after completion of the search on Shri P.C. Kedia and M/s Kedia and Co. According to the learned AM the "modus operandi" narrated by the learned Departmental Representative on behalf of the Revenue pertained to the business of Shri P.C. Kedia and not the assessee.
22. The learned AM at this stage referred to the statement of Shri P.C. Kedia recorded on 13th Nov., 1996, under Section 131 of the IT Act and which had been heavily relied upon by the Revenue. The factual aspects highlighted by Shri Kedia in his statement were adverted to by the learned AM and these can be summarized as under:
(i) That the business in land was started about 17 to 18 years back in M/s Topkhana Desh Grin Nirman Sahkari Samiti Ltd. and that land had been purchased, from the aforesaid society and developed by him;
(ii) The said society did not have any involvement or action with the development expenses, yet it gave blank Pattas signed by its office-bearers and which were kept by him for use at the time of allotment as also for issuing duplicate in case of mutation of the original;
(iii) It was not possible to relate any Patta with any plot of land or scheme and this was the reason why these blank Pattas had been found during the course of search on his premises;
(iv) In certain cases Pattas had not been issued because sale deeds were directly executed and in some cases where sale deeds had been executed later, the Pattas had been obtained blank;
(v) That the procedure of executing sale deeds was the same as prevailed in the various schemes relating to the Topkhana Desh Grih Nirman Sahkari Samiti Ltd.;
(vi) That he had no connection with two societies, namely, Ambeshwar Grih Nirman Sahkari Samiti Ltd., (the present assessee) and Vikas Grih Nirman Sahkari Samiti and in the latter case the assessment framed and the income estimated had been held to be without any basis or material and on these grounds relief had been allowed by the Tribunal vide its order, dt. 20th April, 2001.
(vii) That it had been asserted by Shri Kedia that he came in touch with Shri O.P. Jain, advocate, 6 to 7 years back, and since no sale deeds or Pattas were prepared, he did not have any connection with the assessee-society;
(viii) It had been clarified that possession of the plot or Patta or the sale deed was released only after receipt of full payment and in cases where full payment was not forthcoming, the plots were held as stock-in-trade for which the blank Pattas also remained lying with him; and
(ix) In his statement Shri Kedia had nowhere stated that blank Pattas lying with him or found and seized from him had been issued by the assessee-society or that they were relatable to any of the schemes of the said society.
23. The learned AM further observed that neither the AO nor the learned Departmental Representative appearing on behalf of the Revenue had brought on record any Patta, which could be said to have been issued by the assessee-society and no specific instance had been shown or brought on record to prove that any undisclosed income had accrued or arisen to the assessee-society. It was also noted as a fact by the learned AM that no satisfaction was found to have been recorded by the AO before resorting the action under Section 158BD of the Act. According to the learned AM the main submission of the learned Departmental Representative was to have the assessment restored back to the file of the AO for bringing more clarity on record, but which according to him was a little late at this stage and further lapses on the part of the AO could not be allowed to be covered by sending the case back. According to the learned AM the facts of the case were absolutely identical with the two decisions (supra) rendered by the Tribunal and inasmuch as no new facts had been brought on record there was no justification except the plea of the learned Departmental Representative for restoration of the matter back to the file of the AO. The learned AM also highlighted the "rule of consistency" to ultimately follow the decision of the Tribunal in the case of Topkhana Desh Grih Nirman Sahkari Samiti Ltd. in IT (SS) Appeal No. 54 (Jp) of 1998, dt. 24th May, 2001, proceeding to allow the assessee's appeal.
24. The learned JM, however, did not agree with the views expressed by the learned AM. According to him the AO had acted on the basis of "incriminating documents and papers" .pertaining to the assessee found during the course of search conducted on 18th Sept., 1996, and subsequent dates at the business and residential premises of Shri P.C. Kedia as also M/s Kedia & Co. Jaipur and had, therefore, issued notice under Section 158BC(2). However, . since no authorization under Section 132 had been issued in the case of the assessee the provisions, which were applicable were those of Section 158BD and the AO accordingly issued notice under the said section on 24th Dec., 1997, the address given being shop No. 1, Hathroi Market, Jaipur. Further, copy of the said notice was also sent to Shri P.C. Kedia. On the submission of the assessee's counsel that no notice under Section 158BD had been served and vis-a-vis the affidavit by Shri Rakesh Kumar Jain, the president of the society, the learned JM observed that the address given in the notice was the same as had been given to the Tribunal while applying for a certified copy of the order of the Tribunal, dt. 31st Jan., 2001, and the same address was also mentioned by the assessee in the challan of copying fee deposited on 22nd Feb., 2001. On the aforesaid facts the learned JM observed that the affidavit filed by the president of the society did not inspire any confidence. He placed reliance on the judgment of the Hon'ble Calcutta High Court in the case of Amal Kumar Chakraborty v. CIT (1994) 207 ITR 376 (Cal).
25. Coming to the issue of service of notice under Section 142(1), dt. 3rd April, 1998, the learned JM referred to the stand of the assessee about the change in the office-bearers and Shri O.P. Jain not being the office-bearer of the society at the relevant point of time. According to the learned JM this plea would not vitiate the assessment since the assessee had not furnished the list of the new officebearers to the AO arid nor had any intimation been placed on record about the retirement of Shri O.P. Jain as the office-bearer of the society. According to the learned JM a similar plea had been rejected by the Tribunal in the case of M/s Vikas Bhawan Nirman Sahkari Samiti Ltd., decided on 20th April, 2001, in IT (SS) Appeal No. 64 (Jp) of 1998.
26. The learned JM further noted that the secretary of the society, Shri Om Prakash Chauhan had admitted that the plot transfer fee was approximately Rs. 1,000 for each plot and on the question of a common floppy in the various cases as also the mention of the name of another society in the assessment order under appeal, the learned JM observed that "it may be a typographical error". Coming back to the statement of Shri Om Parkash Chauhan, the view of the learned JM was that this was not only sufficient material, but conclusive evidence about the undisclosed income and the facts of the present case were, therefore, different from the facts prevailing in the cases of the other two societies, namely, Vikas Bhawan Nirman Sahkari Samiti Ltd., Jaipur, and Topkhana Desh Grih Nirman Sahkari Samiti Ltd., Jaipur. He accordingly proceeded to distinguish the earlier two judgments finding them to be inapplicable to the facts of the present case.
27. On the basis of the aforesaid line of reasoning, the learned JM while upholding the issuance of notice under Section 158BD and treating the service of notice under Section 142 as valid in law proceeded to examine the plea on behalf of the-assessee about the assessment having been completed without providing reasonable opportunity and relating thereto the submission of the learned Departmental Representative that certain facts were required to be made clear and brought on record and, therefore, the assessment be set aside to the file of the AO and such a submission not being rebutted by the learned Departmental Representative. The learned JM accordingly proceeded to set aside the assessment to the file of the AO for re-examining the same afresh, after providing sufficient opportunity of being heard to the assessee.
28. As already observed by me, both the learned Members have proposed their own set of questions and coming to the order of the learned AM, the questions/points of difference are the following :
"1. Keeping in view the entirety of facts, circumstances, material, various observations and findings, whether the case of the appellant is identical with the two decisions rendered by the Tribunal in the case of Topkhana Grift Nirman Society, Jaipur in ITSSA No. 54(Jp)/98, dt. 24th May, 2001 and Vikas Bhawan Nirman Sahkari Samitee Ltd., Jaipur in ITSSA No. 64 (Jp)/98 and that the Tribunal ought to have taken the identical decision in this case or that the view of the learned JM that the matter should be set aside for re-examination afresh by the AO."
"2. Whether there was any material with the AO that can be said to have been found as a result of search from which it could be said that there was any undisclosed income within the meaning of Section 158B(b) of the Act so as to give a valid jurisdiction for completion of assessment under Section 158BD of the Act."
29. As against the aforesaid the learned JM has proposed 4 questions, which are as follows :
"1. Whether, on the facts and in the circumstances of the case, the JM was right in holding that the affidavit filed by the assessee does not inspire any confidence and consequently the dictum "falsus in uno falsus in omnibus", as held by the Hon'ble Calcutta High Court in (1994) 207 ITR 376 (Cal) at p. 390 is applicable in this case."
"2. Whether, the JM was right in holding that in view of the confessional statement of Shri Om Prakash Chauhan, secretary of the society, which has not been rebutted by the assessee, there was a sufficient material with the AO that there was undisclosed income within the meaning of Section l58B(b) of the Act, so as to give valid jurisdiction to record his satisfaction in initiating proceedings under Section 158BD of the Act and making the assessment."
"3. Whether, in view of the findings given by the JM that the earlier decisions of the Bench in the cases of Topkhana Grih Nirman Society, Jaipur in ITSSA No. 54 (Jp)/1998 dt. 24th May, 2001 and Vikas Bhawan Nirman Sahkari Samittee Ltd. Jaipur in ITSSA No. 64 (Jp)/1998, dt. 20th April, 2001, are distinguishable and not applicable to the facts of this case."
"4. Whether, keeping in view the entirety of the facts and in the interest of justice, the JM was right in holding that the matter should be set-aside for re-examination afresh by the AO."
30. I have minutely perused the questions proposed by the learned Members of the Division Bench and it is quite apparent that the areas of difference are as follows :
"1. Whether the facts existing in the present case are identical to those considered by the Tribunal in two other cases when the action of the AO in block' assessments came to be set at naught leading to consequential relief."
"2. Whether there was any material with the AO and such material having been found during the course of the search and on the basis of which it could be held that there was undisclosed income within the meaning of Section 158B(b)." and "3. Whether the facts and circumstances of the case necessitated a set aside of the assessment order asking the AO to re-examine the matter afresh."
31. The aforesaid points of difference emerge from a reading of the two questions proposed by the learned AM and question Nos. (2) to (4) proposed by the learned JM. As regards question No. (1) proposed by the learned JM, the learned AM has not expressed my opinion, so it cannot be said that there is any difference between the two of them.
32. Coming to the arguments of the parties on the points of difference, the learned counsel for the assessee reiterated the arguments advanced before the Division Bench, but highlighted for my consideration the following :
(i) Notices under Sections 158BD and 142(1) were never served on the assessee;
(ii) No documents of the society were found during the course of the search at the premises of Shri P.C. Kedia;
(iii) The assessment order in the present case was more or less identically worded as was the case of the other two assessees, whose matters had already been decided by the Tribunal, namely, Vikas Bhawan Nirman Sahkari Samiti Ltd; and Topkhana Grih Nirman Sahkari Samiti Ltd.
(iv) The statement of Shri O.P. Chauhan was recorded behind the back of the assessee and during the course of the hearing before the Division Bench, no copy of the said statement was filed on behalf of the Revenue;
(v) The entire receipt of transfer fee had been reflected in the accounts;
(vi) No material had been found during the course of the search to make any addition in the case of the assessee and that also on estimate based on surmises and conjectures;
(vii) The main issue in the present appeal was whether the same was to be decided in the light of the two judgments of the Tribunal (supra) in identically placed cases as was the view of the learned AM or the assessment was to be set aside and restored back to the file of the AO for giving a second innings as held by the learned JM;
(viii) The observation of the learned JM in para 7 of his order about "incriminating documents" having been found in respect of the assessee was not borne out by the record;
(ix) That the case of the present assessee was not different from the other two cases on the ground that the secretary of the assessee-society had admitted that the plot transfer fee was approximately Rs. 1,000 for each plot, but a similar, admission was there in the case of Topkhana Girh Nirman Sahkati Samiti Ltd. That although in the case of the other assessee, namely, Vikas Bhawan Nirman Sahkari Samiti, there was no such statement, but the additions had been deleted on the same ground viz., based on estimate and there being no material in the possession of the AO;
(x) That the statement of Shri Chauhan was recorded behind the back of the assessee and a copy thereof was not even placed before the Hon'ble Members constituting the Division Bench and under these circumstances the observation of the learned JM to the contrary was not appropriate;
(xi) That the P&L a/c and receipt and payment account of the assessee duly reflected the plot transfer fee and there was no material on record to show that anything over and above had been received;
(xii) The learned JM had doubted the affidavit of the president of the society, but it was a matter of record that the address mentioned in the assessment order was not the one where the alleged statutory notice had been sent and further the said alleged notice is dt. 24th Dec., 1997, and the order is dt. 30th April, 1998. Further, the said notice was returned unserved and this clearly showed that the AO was aware of the incorrect address in his record;
(xiii) During the course of the hearing before the Division Bench, the Department filed only a copy of the statement of Shri P.C. Kedia, dt. 13th Nov., 1996, -in which he had stated that he had no dealings or links with the assessee-society and these facts had been appropriately noted by the learned AM in his order;
(xiv) There was no justification for the learned JM to hold that the matter should be set aside for re-examination as this only provided a second innings to the AO to improve upon his case and which was not legally permissible; and
(xv) That the Tribunal was bound to follow the earlier two orders of the Tribunal on identical facts and this would be, in accordance with the rules of consistency, which had been laid down by the Hon'ble Courts.
33. In conclusion the learned counsel urged that the view taken by the learned AM be confirmed. In support of his arguments, he placed reliance on the following decisions :
(i) Sundarjas Kanyalal Bhatija and Ors. v. Collector, Thane (1990) 183 ITR 130 at 137 (SC);
(ii) Mehta Vegetables (P) Ltd. v. Union of India (1998) 234 ITR 425 at 430-431 (Raj);
(iii) S.I. Rooplal v. IT. Governor JT. 1999 (9) SC 597, 604-06 quoted at page No. 8072 of Chaturvedi & Pithisaria (5th Edn.);
(iv) CIT v. S. Devaraj (1969) 73 ITR 1 at 11 (Mad);
(v) CIT v. V.D. Swami & Co. (P) Ltd.;
(vi) CIT v. L.G. Ramamurthi and Ors. (1977) 110 ITR 453 at 462. 463 (Mad);
(vii) Super Spinning Mills Ltd. v. CIT (1993) 199 ITR 832 at 839 (Mad);
Also in (1999) 9 SCC 479 at 485 quoted at page No. 8072 of Chaturvedi & Pithisaria (5th Edn.);
(viii) CIT v. Meat Products of India Ltd. (1997) 224 ITR 1 (Ker);
(ix) CIT v. Rajendra Prasad Gupta (2001) 248 ITR 350 (Raj);
(x) 'Ashok Kumar Kataria v. Dy. CIT 27 Tax World 47 at 53 para 19, ITAT Jaipur;
(xi) Sandeep Loomba v. Asstt. CIT 26 Tax World 288 at 293 para 8, ITAT, Jaipur; and
(xii) Sona Builders v. Union of India and Ors. (2001) 252 ITR 197 (SC).
34. As regards the three decisions relied upon by the learned JM i.e., in the cases of V.D. Swami & Co. (P) Ltd. v. CIT (1984) 146 ITR 425 (Mad), CIT v. Manohar Glass Works (1998) 232 ITR 302 (All), and Tulsi Lal Manilal v. CIT (1985) 154 ITR 665 (Raj) the plea of the learned counsel was that these were distinguishable on facts and, therefore, not applicable.
35. The learned Departmental Representative, appearing on behalf of the Department, vehemently supported the view expressed by the learned JM. According to him, there was a close connection between the assessee-society and Shri P.O. Kedia. It was submitted that incriminating documents in the form of blank Pattas were found during the course of the search on Shri P.C. Kedia and his group and the fact that the assessee was receiving approximately Rs. 1,000 for every transfer effected was borne out by the statement of Shri Om Prakash Chauhan, secretary of the assessee-society recorded on 12th Dec., 1997. It was emphasized by the learned Departmental Representative that the distinguishing feature in the present case vis-a-vis the two orders already decided by the Tribunal was the statement of Shri Chauhan. As regards the plea made on behalf of the assessee about the recording of the statement behind the back of the assessee, the submission was that Shri Chauhan was the office-bearer of the society and his statement was in fact the assessee's own submissions. Without prejudice to the aforesaid the further submission was that if there was any "irregularity" in respect of the aforesaid, then it could be cured. In conclusion the learned Departmental Representative urged that the view taken by the learned JM be approved. In support of the aforesaid arguments, reliance was placed on the judgment of the Hon'ble Rajasthan High Court in the case of Tulsi Lal Manilal v. CIT (1985) (supra) and that of the Hon'ble Gauhati High Court in the case of Sonai River Tea Co. Ltd. v. CIT (1990) 182 ITR 162 (Gau).
36. In reply, the learned counsel referred to the alleged statement of Shri Chauhan emphasizing that during the block period i.e., beginning 1st April, 1986, to the date of the search viz., 8th Sept., 1996, Shri Chauhan was not an office-bearer and further the statement was recorded behind the back of the assessee and copy thereof was not provided to the assessee and even during the course of the hearing before the Division Bench, a copy was not filed. It was reiterated by the learned counsel that there was no basis for coming to the conclusion that transfer fee of Rs. 1,000 was received per transfer and only a lesser amount was entered in the books of accounts. A reference was also made to a letter dt. 13th Dec., 1997, from Shri P.C. Kedia to the AO and which found mention in the assessment order, but the learned counsel clarified that this letter did not pertain to the assessee, but was relevant to the assessment of Shri Kedia himself. The learned counsel also laid emphasis on the fact that a copy of the said letter was not filed during the course of the hearing before the Division Bench. In concluding his reply the learned counsel made a statement to the effect that the blank Pattas were not even produced before the Tribunal during the course of the hearing and other than such blank Pattas no other document or evidence had come in the hands of the Department to make an addition or to frame a block assessment.
37. I have examined the rival submissions and have also minutely perused the orders passed by the learned Members of the Division Bench. It is apparent that the learned JM has proceeded on technicalities such as the service of statutory notices and other correspondence addressed by the AO to the present assessee. The important aspect, in my opinion, in the present case is whether any incriminating material was found during the course of the search on Shri P.C. Kedia and his group and which could be linked to the present assessee indicating thereby some concealed income. The learned JM has set aside the assessment to be framed de novo on the mere asking on the part of the learned Departmental Representative whereas it must be appreciated that this is the case of a block assessment, which is to be framed under the newly introduced Chapter XIV-B and concealed income has to be determined on the basis of the material and other evidence found during the course of the search and unless facts and circumstances warrant the matter cannot be restored back for giving another innings to the Department to improve its case. This is what exactly has happened in this case when the stand of the assessee all along has been that the facts are absolutely identical to those recorded in the cases of Vikas Bhawan Grih Nirman Sahkari Samiti Ltd., Jaipur and Topkhana Grih Nirman Samiti Ltd., Jaipur and which have already been adjudicated upon in their favour by the Tribunal. During the course of the hearing before the Division Bench an opportunity in fact had been allowed to the Revenue to study the two orders of the Tribunal already passed and then to revert back to the Tribunal for the specific purpose of bringing forth distinguishing features. The learned AM, in my opinion, has rightly observed that there are no distinguishing features and even the three assessment orders, the two already decided and the one presently in appeal, are identically worded.
38. It is quite apparent that the proceedings in all the three cases arise out of the search on Shri P.C. Kedia and his group and the learned AM, after hearing both the parties, has noted as a fact that no incriminating document was found during the course of the search and he has quite aptly analyzed the facts emerging from the statement of Shri Kedia whereas the learned JM has referred to "incriminating material" without even a word as to what was this incriminating material. The Pattas which were found were blank and these were lying with Shri P.C. Kedia and no material has been brought on record to link these with the present assessee.
39. The so-called statement of Shri O.P. Chauhan was not placed before the Division Bench, but a copy was given to me during the course of the present hearing and I find that this is not a statement recorded, but observations made by the AO on the order-sheet. The learned counsel has contended before me that Shri Chauhan was not an office-bearer of the society during the block period and the order-sheet entry is dt. 12th Dec., 1997, which is outside the block period. This factual statement made by the learned counsel has not been rebutted by the learned Departmental Representative. Further as per the said order-sheet noting, Shri Chauhan has categorically stated that he came to occupy the position of secretary to the present assessee-society in 1997 and the plot transfer fee is mentioned between Rs. 500 to Rs. 1,000 per plot and this is not to be assumed at Rs. 1,000 per plot. I have already observed that the statement of Shri Chauhan was not recorded and the noting on the order-sheet contains at the bottom a signature in Hindi, which no doubt states Om Prakash Chauhan, but one really cannot say anything on the copy of the said order-sheet, which has been filed before me for the first time.
40. The learned AM, in my opinion, has rightly taken the view that no importance could be given to the said "statement" recorded behind the back of the assessee. It has also rightly been noted by him that the Pattas purported to have been found during the course of the search were not placed before the Tribunal and further the matter could not be sent back to the AO as prayed for by the learned Departmental Representative allowing them a second innings.
41. The learned JM has laid undue stress on the "statement" of Shri Om Prakash Chauhan to come to the conclusion that there were incriminating documents in respect of the assessee pursuant to the raid on Shri P.C. Kedia and his group, but it is an undisputed fact in the present case that there was no statement recorded of Shri Om Prakash Chauhan and it is only an order-sheet entry made by the AO and it categorically states that Shri Chauhan assumed the office of secretary somewhere in 1997, which as already observed by me is outside the block period. I have also observed that the so-called . statement of Shri Chauhan was not placed before the Division Bench and even Pattas found from the premises of Shri P.C. Kedia and his group were not placed before the Division Bench and nor before me during the present hearing. I really do not see as to what inference can be drawn against the assessee from the order-sheet entry or from blank Pattas bearing no names and which have not been placed on record by the Revenue.
42. In the final analysis. I concur with the view taken by the learned AM whereby he has opined that the points raised in the present appeal are squarely covered by the two orders of the Tribunal in the cases of Vikas Bhawan Grih Nirman Sahkari Samiti Ltd., Jaipur (supra) and Topkhana Grih Nirman Sahkari Samiti Ltd., Jaipur (supra), to which both the learned Members of the present dissenting Bench were parties. The matter may now be placed before the Division Bench for passing the orders in conformity with the majority opinion.