Income Tax Appellate Tribunal - Chandigarh
Subhash Chander Gupta, H.No. 1652 8 ... vs Ito Ward-3, Kurukshetra, Haryana on 7 April, 2025
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, 'B' CHANDIGARH
BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND
SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No. 765/CHD/2024
नधा रण वष / Assessment Year: 2011-12
Subhash Chander Gupta, The ITO,
House No. 1652 8, Vishnu Colony, Vs Ward 3,
Railway Road, Kurukshetra. Kurukshetra.
थायी लेखा सं./PAN NO: AAUPG0038Q
अपीलाथ /Appellant यथ /Respondent
आयकर अपील सं./ ITA No. 768/CHD/2024
नधा रण वष / Assessment Year: 2011-12
Subhash Chander Gupta, The JCIT,
House No. 1652 8, Vishnu Colony, Vs Kurukshetra.
Railway Road, Kurukshetra.
थायी लेखा सं./PAN NO: AAUPG0038Q
अपीलाथ /Appellant यथ /Respondent
Assessee by : Shri Sudhir Sehgal, Advocate and
Shri Abhinav Gupta, Advocate
Revenue by : Smt. Kusum Bansal, CIT, DR
Date of Hearing : 31.01.2025
Date of Pronouncement : 07.04.2025
HYBRID HEARING
ORDER
PER RAJ PAL YADAV, VP The pr e s e nt two ap pe al s ar e directed at the i n s t an c e of as s e s s e e a g ai ns t t he separate orders of l d . C om mi s s i o ne r of I nc o m e Ta x ( App e a l s) [ in s ho r t 't h e ITA No.765&768/CHD/2024 A.Y.2011-12 2 C I T ( A ) '] da t e d 28 . 0 6. 2 02 4 pa s s e d f o r as s e s s m e n t yea r 20 11 - 12.
2. W e fi r s t tak e I T A 76 5/ CH D / 202 4. I n t hi s a pp e a l, a s s e s s e e has t ak e n s i x g r o und s a l o ng w i t h s ub- g r ou nds . Th e r e f o r e, w e de e m i t a pp r op r i a te to t ak e no t e o f t he g r oun ds o f a p pe a l t a ke n by t he as s e s s e e w hi c h r e a d as und e r :
1. That the Ld. CIT(A) has erred in confirming the order of the Assessing Officer, both on the issue of the re-opening of the case u/s 148 and also confirming the addition of Rs .13 cr ore as made by the Ld. AO.
a.) That both the Ld. AO and the Ld. CITA) have failed to appreciate the contention of the assessee that the proceedings have wrongly been initiated u/s 148 and, if at all, the proceedings were liable to be initiated, the same could have been initiated only by issuance of notice u/s 153C and, thus, the assessment as fr amed by the AO u/s 148/143(3) deserves to be quashed.
b) That the Ld. CIT(A) has ignored the binding judgement of the Hon'ble Apex Court in the case of 'Vikram Sujit Kumar Bhatia' reported in, 453 ITR page 417 and that binding judgement have been ignored in a summary manner.
c) That the re-opening of the asses sment whether u/s 148 or 153C goes to the root of assumption of jurisdiction and since the very basis of the initiation of proceedings have wrongly been initiated u/s 148, the proceedings as initiated by issuance of notice u/s 148 deserves to be quashed.
d) That the same contention were r aised before the Ld. Assessing Officer as per objections to the reasons recor ded for proceedings u/s 148, as made by the appellate but the same have been dismissed without assigning any reasons.
2.a) Notwithstanding, the above said grounds of appeal has erred in confirming the action of the AO in re-opening the case u/s 148, just on the basis of "borrowed satisfaction" as per the report of the DCIT, Centre Circle Dehradun, without any independent application of mind and the s aid re-opening ITA No.765&768/CHD/2024 A.Y.2011-12 3 having been made on borrowed satisfaction, deserves to be quashed as per the binding judgement of 'Meenakshi Overseas' of Delhi High Court 395 ITR 677, & other s uch case laws.
b) That the Ld. AO and CIT(A) has gr ossly erred in re-opening the case u/s 148 without considering that the primary condition in the reasons so recorded by the Assessing Officer, about the "failure on the part of the assessee to disclose material facts" having not been recorded in the reasons and, as such, since that mandatory condition having not been complied with, the re-assessment proceedings as initiated 148, deserves to be quashed.
3. a.) Notwithstanding the above said ground of appeal, the Ld. CIT (A) has erred in making an addition of Rs. 13 crore on account of alleged 'undisclosed Income' on the basis of certain documents seized from the premises of the third party Ignoring, the submissions of the assessee that the said documents is undated neither in the handwriting of assessee and nor does not it bear signature of the assessee at all and neither searched person, namely Sh. Sanjay Bansal, had confirmed that the said alleged payment of Rs. 13 crore was made to the asses see.
b.) That reliance by the AO only on the statement of the accountant, Sh Sushil Kumar of Sh. Sanjay Bans al is not justified, since he is interested party as, FIR has been lodged by the Sh. Sanjay Bansal against Sh. Sushil Kumar, thus, no authenticity could be attached on the statement of the Sh. Sushil Kumar , being recorded at the back of the assessee, without affording any facility of cross examination, despite the written request of the assessee.
4. That the Ld. CIT(A) has failed to appreciate that no notice u/s 143(2) stipulated under the Act, prior to the completion of the assessment proceedings, which is sine qua non, once return of income has been filed thus , rendering the entire assess ment proceedings as null and void.
5. The Ld. CIT(A) has dismissed the appeal of the assessee on certain issues is against the facts and circumstances of the case, which are as under;
a.) That the finding of the CIT(A) in para 6.4 ,that cross examination could not be allowed due to paucity of time, since the assessment was getting barred by time. This is apparently incorrect observations as the assessee had made a request for cross-examination vide letter dated 26.11.2018 vide para 2.1 of the letter and repeated request was made by letter dated 26.12.2018.
ITA No.765&768/CHD/2024 A.Y.2011-12 4 b.) That the finding of the CIT(A) that Sh. Sushil Kumar Accountant of Sh. Sanjay Bansal was known to the assessee is totally misconceived, as appellate had no link or connection with the said Sh. Sushil Kumar as Sh. Sus hil Kumar had never worked with the appellate.
c.) That the finding of the CIT(A) in para 6.7 about the filing of the affidavit by Sh. Sanjay Bansal and accountant Sh. Sushil Kumar's retraction is concerned, this observation is totally incorrect as Sh. Sanjay Bansal has never stated that the amount have been paid to the appellate and regarding the other person namely Sh. Sushil Kumar, the appellate had/have no connection with him as he is totally s tranger, rather Sanjay Bansal have denied to made any such alleged payment, which is even recorded at Para No. 9.2 of Order U/s 153A of Searched person, namely Sanjay Bansal, relied upon by the Ld. AO in the present matter.
d.) That the CIT(A) has failed to appreciate that while framing the assessment of Sh. Sanjay Bansal (copy of the order filed before the CIT(A), Sh. Sanjay Bansal had never stated that he had paid any amount to the appellate.
e.) That the action is being challenged on facts & law while recording wr ong facts that the (person searched Sanjay Bansal) has admitted the payment to appellant which is in confor mity with the statement of 3 r d party (u/s 131) however the person searched has filed litigation against 3 r d party for such wrong statement dehors material facts containing material particulars to the case pr oceedings. f.) The written submission as filed before CIT(A) vide submission dated 21.08.2020, 29.12.2020,16.06.2023 along with paper book filed on 21.08.2020 have not been considered properly.
6. That the appellant craves to leave, add, or amend the grounds of appeal before the appeal is finally hear d or disposed of.
G R O U ND N O. 1
3. A pe r us a l o f t hi s g r o und al o ng w i t h t he s ub - g r o und s w o ul d r e v e al t ha t b a s i c al l y i s sue i nv o l v e d un de r t hi s f ol d o f gr i e v an c e i s , w he t he r i n t hi s c a s e a no ti c e oug ht t o h av e ITA No.765&768/CHD/2024 A.Y.2011-12 5 be e n i s s ue d u n de r Se c t i o n 1 53C b y AO or he ha s r i g ht l y i s s ue d un d e r S e c t i o n 1 48 o f th e I nc o m e T ax Ac t. I n o t he r w or ds , w he t he r t hi s a s s e s s m e nt o r d e r i s v o i d ab - i ni t io f or w a nt o f a n oti c e u nde r Se c t i on 1 53 C o f t he I nc o m e Tax Ac t .
4. The br i e f f a c t s o f t h e c a s e a r e th at a s s e s s e e i s an i n di vi d ual . H e w as a Tr us t e e i n a Trust na m e l y Sh r i K r i s hna E duc a t i on al Tr us t ( S KE T ) at Ku r uk s he t r a. Ac c o r di ng t o t he a s s e s s e e , t he M a na g e m e n t of t h e T r u s t w a s ha nd e d o v e r t o ano t he r te a m o f tr us t e e s h e ad e d b y Shr i Sa nj a y B ans a l . The s e ar c h has b e e n c a r r i e d o ut a t D e v Bh oo m i I ns t i t ut e o f T e c hno l o g y G r o up i n D e h r a doo n, Shr i Kr i s h na Educ a t i o na l Tr ust , Ra t an D e r a, K ur u ks he t r a a s w el l a s o n t he pr e m i s e s of Cha i r ma n S hr i Sa nj ay Ba ns al w h o h ap pe n s t o b e t he t r u s t e e o f t he Tr us t SK ET . T hi s s e a r c h w a s c a r r i e d o ut o n 2 6. 04 . 20 12 . A c c or di ng t o t he R e v e nue , d ur i ng t he c o ur s e o f s e a r c h c e r t a i n d o c um e n ts a nd l oo s e p ap e rs w e r e f o un d and s e i z e d. Co py o f a p ap e r f o und a t t he p re m i s e s ha s be e n pl a c e d at pa ge No . 43- 44 o f th e P ap e r Boo k w h os e Pho tos t a t c o p y r e ad as und e r :
ITA No.765&768/CHD/2024 A.Y.2011-12 6 ITA No.765&768/CHD/2024 A.Y.2011-12 7
5. The l d. AO ha s ta k e n no t e o f t he c o nt e nt s o f a bov e pa p e r in t he r e as o ns r e c or de d f or r e- o pe ni ng of t he a s s e s s m e nt w ho s e c o pi e s a v ail abl e on pa g e No . 15 of t he Pa p e r B ook . We d e e m i t a pp r op r i a t e to t a ke no t e o f t he s e r e as o ns w h i c h re a d as und e r :
1. As per the information received on transfer from ITO Ward-2, Kurukshetra which was received by him through JCIT, Range, Kurukshetra from Dy Commissioner of Income tax, Centre Circle, Dehradun vide file No. DCIT/CC/DDN/MISC/2015-16/5 dated 15.04.2015, a search under Section 132 of the I.T. Act 1961 had taken place on Dev Bhomi Institute of Technology Group on 26.4.2012 and its Chairman Sh. Sanjay Bansal R/o 32/4 EC Road, Dehradun and premises of Shri Krishna Educational Trust, Rattan Dera, Kurukshetra was also covered. During the course of search certain evidences were gathered and subsequently post search enquiries of investigation wing, certain facts emerged which indicated that Sh. Sanjay Bansal and his family members have taken over the management and control of M/S Shri Krishna Educational Trust, Rattan Dera, Kurukshetra by virtue of amended trust deed dated 14.10.2010 from outgoing trustees including the assessee Sh Subash Gupta of SKET. Documents seized from the premises of Shri Krishna Educational Trust, Rattan Dera, Kurukshetra during search revealed that Sh. Sanjay Bansal has made cash payment of about 35 crores to 40 crores to the outgoing trustees of this Trust for taking over the control and management of Shri Krishna Educational Trust, Rattan Dera, Kurukshetra. The seized documents proved that outgoing trustees have earned profit out of sale of trust which is in violation of the primary condition of availing exemption u/s 10(23)(C)(vi) of the I.T. Act, 1961.
2. Out of the above recipients of the money from sale of trust i.e. Sh. Krishna Education Trust, Sh. Subash Gupta, the Assessee had received the payment of Rs.13 Crores from Sh. Sanjay Bansal the detail of which can also be seen from seized documents seized during the course of search conducted on 26.04.2012.
3. On the receipt of the information from DCIT, Central Circle, Dehradun, the concerned seized documents (copy enclosed), the concerned seized documents were thoroughly analyzed and on careful observations following points were noticed:
a) This is a seized document which clearly mentions the name of Sh. Subash Gupta, the assessee on top of documents which clarifies that the documents ITA No.765&768/CHD/2024 A.Y.2011-12 8 pertain to the assessee only. This document gives the entire details of transactions/payments received by the Assessee. Further, this document also shows not only the amount paid in cash but also includes other payments such as made towards:
Total Payable 13,00,00,000/-
Amt. paid 12,51,66,666/-
Balance 48,33,334
Broker 13,00,000/-
Salary 12,00,000/- (Self A/c)
Staff Salary 60,000/-
Advocate 27,000/-
Fine received in SKP 1,33,332/-
(400000/9x3) 27,20,332/-
Net Balance 21,13,002/-
Bike splender M2007 40250/-
Honda city M2008 729500/-
Maruti Swift M2008 527161/-
Hundai Santro M-2008 351319/-
Arvind Jindal for TDS 442520/-
2812750/-
Less Dep 461694/-
(All vehicles) 2351056/-
Excess amount on S Gupta 238054/-
A thorough examination of the seized documents reveals that there is mention of Sh. Arvind Jindal, Advocate who was providing services of depositing TDS liability on behalf of trust and amount of Rs. 4,42,520/- is outstanding against his name as it was paid to him in advance. Further, there is also a reference to various entries such as:
Entry standings in the Balance Sheet as white amount:
1) Abhinav Gupta 17250/-
2) Arun Gupta 226056/-
3) Rama Gupta 675322/-
4) Subash Gupta 508110/-
5) Som Parkash 440259/-
6) Varun Gupta 418081/-
2285078
It is extremely pertinent to note that the above entries are clearly reflected in the balance sheet of Shree Krishna Education Trust which therefore, makes a safest assumption that the seized document is true/real/authentic as if, transactions in white are matching with balance sheet then the other notings also have to be correct and true in all true respect.
ITA No.765&768/CHD/2024 A.Y.2011-12 9
4. In addition to the above, it is also pertinent to note that during the course of scrutiny proceedings U/s 153A in the case of Sh. Sanjay Bansal, statement of Sh. Sushil Kumar, Accountant of Sh. Sanjay Bansal was recorded who categorically admitted in his statement that this particular document which was seized during search was a real/authentic document and that the same was in his handwriting written on the directions of Sh. Sanjay Bansal.
5. Further, the retired trustees who received payment on sale of the trust (SKIET) were also examined during search and it was found that Sh. Sushil Kumar in his statement had submitted that vehicles of the trust had been retained and used by the individual trustees for personal purposes and that is why different vehicles are mentioned under the name of each trustee in above documents. The above facts have been found to be correct. A perusal of the balance sheets of the trust for the period A.Y. 2008-09 to A.Y. 2011-12 shows all vehicles are mentioned in the seized papers. Moreover, one of the retired trustees Sh. Mool Chand Gupta in his statement recorded u/s131(1)(b) admitted to have used the vehicle Verna during his tenure in the trust. Even in the court case documents filed by Sh. Sanjay Bansal, the employees of the trust have alleged in their complaint that management of trust had bought luxury vehicles which were being utilized for personal use. This is evident from the details of vehicles purchased by the trust that all are luxury vehicles which could not have been used by the students or the teachers. Therefore, not only the above facts prove the authenticity of seized papers but also the misappropriation of assets of the trust for the personal benefits of the trustees. Further, the return of the Assessee was downloaded from the system and it is observed that the assessee has shown income of Rs.1,58,670/- in the IT Return filed for the A.Y. 2011-12. It is thus, clear that this income is not at all commensurate with the amount of money received by the Assessee on account of sale of trust of Rs. 13 Crores. Therefore, I am satisfied and have reason to believe that income to the extent of Rs. 13 crores has escaped assessment. Therefore, provisions of Clause(b) of Explanation 2 to Section 147 are applicable to the facts of this case.
In view of the above, Notice u/s 148 is required to be issued to bring to tax escaped income of Rs.13 crores for the assessment year 2011-12 as discussed above as well as any other income which comes to the notice during the assessment proceedings."
6. Th e l d . C o uns e l f or t he as s e s s e e ha s s ubm i t t e d t ha t a s p e r t he be l ie f o f t he A O , inf o r m at i on c o nt a i n e d i n t hi s do c um e nt pe r t ai ns t o t he as s e s s e e Shr i Sub h a s h G upt a, ITA No.765&768/CHD/2024 A.Y.2011-12 10 t he r e f o r e, h e har b o ur e d t he be l ie f t ha t i n c o m e h as e s c a pe d a s s e s s m e nt a nd a no t i c e un de r Se c t i o n 1 48 de s e r v e s t o be i s s ue d. Th e l d. Co uns e l f or t he assessee dr e w o ur a t t e nt i o n t o wa rd s S e c t i o n 1 5 3C o f t he I nc om e Ta x A c t a f t e r i t s a m e ndm e n t by Fi n anc e Ac t , 20 15 .
7. Th e ld. Co un s e l f or t he assessee w hi l e t ak i n g us t hr o ug h S e c t i o n 15 3C s ubm i t te d t ha t if cl aus e ( b) of s ub - c l aus e ( 1) i s be i ng p e r us e d, t he n i t c on t em p l a t e s t hat w h e r e t he AO i s s a t i s fi e d t ha t a ny bo o ks o f ac c oun t o r do c um e nt , s e i ze d o r r e qu i si ti one d , pe r t ai ns or pe r tai ns to o r a ny i nfo r m at i o n co nt a i ne d t he r e i n r e l a t e s t o a p e r s on o t he r t h an t h e p e r s on r e f e r r ed t o i n Se c t i o n 15 3A, t he n t he AO of t he searched pe r s o n w o ul d record hi s s a t i s f ac ti o n t ha t a c t i o n und e r S e c t i o n 15 3C i s r e qui r e d to be t a ke n ag a i ns t a ny o t he r p e r s on q ua hi m b o ok s of a c c o unt / do c um e n t s /i nf o r m a ti on un e a r t he d dur i n g t he c o ur s e o f s e a r c h. I n o t he r w o r ds , i f a ny i nf or m a t io n c o ul d be i n f e r r e d f r om a s e i z e d d o c um e n t, t he n a l s o n ot i ce un de r Se c t i o n 15 3C i s r e qui r e d t o b e i s s ue d. Th e l d . C o uns e l f o r t he a s s e s s e e f u r t he r r el i e d u pon t he j ud g e m e n t o f H on 'bl e ITA No.765&768/CHD/2024 A.Y.2011-12 11 Sup r e m e C o ur t i n t he c a s e o f Vi k r a m Suj i t Kum a r Bh at i a r e po r t e d i n 4 53 I TR 41 7. B ef or e t he Fi n an c e Ac t 2 01 5, Se c t i o n 15 3C c o nt e m p l a t e s t ha t w he r e AO i s s a t i s f i ed t ha t a ny m o ne y, b ul l io n, j e w el l er y or o t he r v a l ua bl e a r ti cl e s or t hi ng s or books of a c c o unt or do c um e nt s seized or r e qui s i ti o ne d BE LO NG S OR BE LO N G S T O a pe r s o n o t he r t ha n a p e r s o n r e f e r r e d t o i n Se c t i o n 15 3A. T h e e x pr e s s i o n 'be l o ng o r be l ong t o ' ha s b e e n f ur t he r a m pli fi e d i n t he Fi na nc e A c t 20 15 w he r e i n unde r s u b- c l a us e ( b ) of s ub - c l aus e ( 1) , t he L e g i s l a t ur e ha s us e d the e x pr e s s i on PE R T AI NS O R P ER T AI N S T O i n pl a c e o f BE LO NG S O R B E LO N G S TO . The l d . Couns e l f or t he a s s e s s e e ha s e m pha s i z e d t ha t H o n'b l e S upr e m e C o ur t i n t hi s j ud g em e n t ha s he l d t h at t hi s a m e nd m e n t w i ll b e ap pl i c a bl e w i th r e t r o s p e c t i v e ef fe c t . O n t he s t r e ng t h o f t hi s j udge m e nt , he s ub m i tt e d t ha t i ns t e a d o f a not i c e un de r S e c t i o n 14 8, t he l d . AO o ug ht t o h av e f ol lo w e d t he pr o c e dur e c o nt e m p l a t ed i n S e c t i o n 15 3C w hi c h i s a m an da t or y on e s inc e he f a i l ed t o f ol l o w t h i s p r o c e d ur e , t he r e fo r e as s e s s m e nt o r der i s no t s us t a i n ab l e . He f ur t he r r e li e d up o n t he f o ll ow i n g j u dg e m e nt s w hos e c o pi e s a r e pla c e d o n r e c o r d :
ITA No.765&768/CHD/2024 A.Y.2011-12 12
1. Judgment in the case of ITO vs. Vikram Sujit Kumar Bhatia as reported in [2023] 149 taxmann.com 123 (SC)
2. Judgment in the case of Rajat Subhra Chatterji vs. ACIT passed by ITAT, Delhi vide order dated 02.03.2016 in ITA No. 2430/Del/2015.
3. Judgment in the case of ITO vs. Shri Meer Hassan passed by ITAT Delhi Bench in ITA. No. 1571/Del/2015.
4. Judgment in the case of Pr. CIT vs. Phonenix Datatech Services passed by Delhi High Court 245 taxman 209 (Del) vide order dated 06.01.2017. 5 . Judgment in the case of ITO Amritsar vs. Arun Kumar Kapoor passed by ITAT, Amritsar ; Bench ITA No. 147(ASR)/2010.
8. The l d . C I T D R on t he o t he r ha nd c o nt e nd e d t ha t a pe r us a l of Se c t i on 15 3C w o ul d i ndi c a t e t hat w he r e t he e v i de nc e p e r t a i ni ng to as s e s s e e un e a r t h e d dur i n g the c o ur s e of search w hi c h may be a ny mo ne y, b ul l i on, j e w el l er y, o t he r v al ua bl e a r ti c l e s or t hi n g s seized or r e qui s i ti o ne d or a ny b oo k s o f a c c o unt o r do c u m e nt s s e i z e d o r r e q ui s i ti o ne d, t he n a c t i o n und e r S e c t i o n 1 53 ( C ) w as r e qui r e d t o be t a ke n but i f a n i n f o r m at i o n i s inf e rr e d f rom t he d oc u m e nt w h i c h m a y b elo ng t o t he as s e s s e e , t he n a c t i o n unde r Se c t i o n 1 48 i s t o b e c a r r i e d o ut .
9. W e ha v e c o ns i de r e d t he r i v al c on te nt i ons an d ha v e g o ne t h r o ug h t h e r e c o r d c a r ef ul l y. S e c t io n 153 ( C ) o f t he i n c o m e af t e r i ts a m e nd m e n t by Fi na nc e Ac t , 2 01 5 ha s a di r e c t b e a ri ng o n t he c o nt r o v e r s y, t h e r e f or e , w e d ee m i t ITA No.765&768/CHD/2024 A.Y.2011-12 13 a pp r o pr i at e t o t a ke no t e o f thi s Se c t i o n, whi c h r e a d as und e r :
153C. Assessment of income of any other person.--(1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,--
(a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or
(b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153-A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years referred to in sub-section (1) of section 153-A:
Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132-A in the second proviso to sub-section (1) of section 153-A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person:
Provided further that the Central Government may by rules made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years as referred to in sub-section (1) of section 153-A except in cases where any assessment or reassessment has abated.
(2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or ITA No.765&768/CHD/2024 A.Y.2011-12 14 requisition is made under section 132-A and in respect of such assessment year--
(a) no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 has been issued to him, or
(b) a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or
(c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153-A."
10 . A b ar e p e r us al o f t hi s Se c t i on w o ul d r e v e a l t ha t i t starts with a no n o b s t an t e c l aus e " no t w i t hs t and i n g a nyt hi ng c o nt a i ne d in Se c t i on" m e a ni ng t he r e b y t hi s Se c t i o n ha s an o v e r - r i di n g effect over o the r Se c t i o ns na m e l y; 1 39 , 14 7, 14 8, 149 etc. T hi s Se c t i on c o nt e m pl a t e s tha t w h e r e AO of th e s e ar c he d pe r s o n i s s a t i s f i e d t ha t ;
a) Any m on e y, bul li o n, j e w e l l e r y, o t he r v al uabl e a r ti c l e or t hi n g s e i z e d o r r e q uis i t io ne d b e l o ng t o or
b) Any bo o ks of ac c oun t , d o c um e n t seized or r e qui s i ti o ne d pe r t a i ns or pe r t ai ns to or an y i n f or m a tio n c o nt a i n e d t he r e i n re l a t e s t o a p e r s on o t he r t ha n t he pe r s on r e f e r r e d i n Se c t i on 15 3 A, t he n AO of t he s e a r c h e d p e r s o n w oul d r e c or d hi s s a t i s f ac ti o n a nd t r a ns m i t t ho se m a t e r i a l s t o t he AO of s uc h o t he r p e r s on q ua w ho m t he s e ITA No.765&768/CHD/2024 A.Y.2011-12 15 m a t e r i al s hav e be e n f o und dur i ng t he c ou r s e o f s e a r c h.
Pr i or t o Fi na nc e Ac t , 20 15 , thi s Se c t i o n w as n ot i n t he pr e s e n t s h ap e . I t has b e e n di v i d e d i n t w o c at e g o r i e s p os t 20 15 . T he f ir s t l i m b of Se c t i o n d e al s wi t h i t ems d i s c o v e r e d i n phys i c a l fo r m i . e . m o ne y, b ul l i o n, j ew e l l e r y a nd t he s e c o nd l i m b of Se c t i o n p r o v i de s i f a ny b oo k s o f a c co unt , do c um e nt s s e i z e d o r r e q ui s i ti one d p e r t a i n s o r pe r t a i ns to o r a ny i nf or m a ti on c o nt ai ne d t he r e i n p e r t a i n s t o a p e r s on o t he r t ha n t he pe r s o n c o v e r e d un de r Se c t i on 1 53 A, t he n pr o c e du r e c o nt e m pl at e d und e r S e c t i o n 1 53 C i s r e q ui r e d t o be f ol lo w e d. I n t he o l d Se c t i on , on l y s ub- c l aus e ( 1) w as a v ai l a bl e , ho w ev e r i n t he p o s t am e nd m e nt , t his s ub- c l aus e ( 1 ) ha s be e n d iv i de d i n (a ) a nd ( b) . U nd e r s ub - c la us e ( b ), t he s c op e o f t he Se c ti o n ha s b e e n a m pli fi e d. I t pr ovi de s t ha t a ny b oo k s of a c c o unt , do c um e nt s seized or r e qui s i ti o ne d pe r t a i ns or pe r ta i ns t o or a ny i nf or m a ti on c o nt a i ne d t he r e i n r e l at e s to a person o t he r t ha n t he pe r s o n r e f e r r e d i n Se c t i on 1 5 3 A, t he n a l s o no t i c e und e r Se c t i o n 1 53 C i s m a nda to r y.
ITA No.765&768/CHD/2024 A.Y.2011-12 16 11 . Be f or e e m bar k in g o n an e nq uir y f ur t he r , w e de e m i t a pp r o pr i at e to t ak e no t e of t he j u dg e m e n t of H on 'bl e Sup r e m e C o ur t i n t he c as e of I T O Vs Vi kr am Suj i t k umar B ha t i a r e por t e d i n 14 9 t ax m a n. c o m 1 23 . T he b as i c r e as on f or t a ki ng c o g ni z a nc e o f t hi s j ud g e m e nt at t hi s s t ag e i s t h e a s s e s s m e nt y e ar i nv ol v e d h e r e i n i s a s s e s s m e n t ye a r 20 11 - 12 a nd we ar e t a k i ng c og n i z a nc e o f Se c t i o n 1 53 C as a m e nd e d by Fi na nc e Ac t , 20 15 . In t hi s j udg e m e nt , H o n'b l e Sup r e m e C o ur t ha d an occasion to c o ns i d e r w h e t he r t hi s am e nd e d Se c t i o n w il l be a ppl i c ab l e with r e t r o s p e c t i v e e ffe c t o r no t . The que s t i o n f or m u l a t e d by t he H o n'b l e Supr e m e C ou r t i n t hi s jud g e m e nt r e a d as und e r :
" W he t he r am e ndm e nt br o ug ht t o S e c t io n 1 53C of t he I n c o m e T ax A c t , 1 96 1 v i de F i na nc e A c t , 201 5 w o ul d be a pp li c abl e t o s e a r c h c o nd uc t e d unde r Se c t i o n 1 32 o f t he I nc om e T a x Ac t , 1 96 1 be f o r e 0 1. 0 6. 2015 i. e . t h e d at e of a m e n dm e n t ?
11 . 1 T hi s q ue s t i on ha s be e n r e pl i e d ag a i n s t t h e as s e s s e e a nd i n f a v o ur o f t h e Re v e nue by t h e H o n'bl e Supr e m e C o ur t . Af t e r l ot o f di s c us s i o n, H o n'b l e S upr e m e C o ur t has pr o po und e d as und e r :
ITA No.765&768/CHD/2024 A.Y.2011-12 17 " 1 1 . In view of the above and for the reasons stated above, the impugned common judgment and order passed by the High Court is held to be unsustainable and the question, i.e.., "Whether the amendment brought to section 153C of the Income-tax Act, 1961 vide Finance Act, 2015 would be applicable to searches conducted under section 132 of the Act, 1961 before 1-
6-2015, i.e., the date of amendment?", is answered in favour of the Revenue and against the assessees and is answered accordingly. Therefore, it is observed and held that the amendment brought to section 153C of the Act, 1961 vide Finance Act, 2015 shall be applicable to searches conducted under section 132 of the Act, 1961 before 1-6-2015, i.e., the date of the amendment. The impugned common judgment and order passed by the High Court, therefore, deserves to be quashed and set aside and is accordingly quashed and set aside. However, as before the High Court respective assessment orders were challenged mainly on the aforesaid issue, which is now answered in favour of the Revenue as above, we reserve the liberty in favour of the respective assessees to challenge the assessment orders before CIT (A) on any other grounds which may be available and it is observed that if said appeals are preferred within four weeks from today, the same be considered in accordance with law and on their own merits, on any other grounds. Present appeals are accordingly allowed in terms of the above. However, in the facts and circumstances of the case, there shall be no order as to costs." 11 . 2 T h us , a c c o r di ng to this decision of t he H on 'bl e Sup r e m e C ou r t , t h i s p os t am e nde d Se c t i o n o f 1 53C w il l be a pp li c ab l e i n thi s as s e s s m e n t ye a r al s o. The as s e ss m e n t o r d e r i s da t e d 3 1. 12 . 20 18 i. e . af t e r t h e a m e nd m e nt c ar r i ed o ut i n Se c t io n 153 C by Fi n anc e Ac t , 20 15.
12 . We ha v e t a ke n c o g ni z an c e of t he al l e g e d seized m a t e r i al ( e x tr ac t e d s upr a) a s we l l as t he bel i ef f or m e d b y t he A O w h i l e re c or di ng t he r e a s o ns f or r e- ope ni ng o f t he a s s e s s m e nt . Ac c o r d i ng to the R e v e n ue , t hi s p ap er pe r t a i ns t o t he a s s e s s e e . T h e i n f o rm ati o n c o n ta i ned i n ITA No.765&768/CHD/2024 A.Y.2011-12 18 t hi s p a pe r is r e g a r di ng p a ym e nt of Rs.13 Cr to t he assessee. Th u s , t hi s al s o per t ai ns t o t he as s e s s e e. In s uc h s i t uat i o n, to o ur m i nd , t he AO oug h t to h av e i n i ti at e d t h e p r o c e e d i ng s und e r Se c t i o n 1 53C. I n o t her w or ds , AO o f the s e a r c he d p e r s on i. e . AO of Shr i S anj a y B an s al o r of t he Tr us t s ho ul d h av e r e c or de d s at i sf a c t i on t ha t i nf or m a ti on c o nt a i n e d i n t hi s l oo s e pa per pe r t ai ns t o t he as s e s s e e a nd a c t i on a g ai ns t t he as s e s s e e d e s e r v e s t o be t a k e n unde r Se c t i on 153 C b e c a us e i n c om e ha s e s c a pe d a s s e s s m e nt in the ha nds of t he assessee. Suc h s a t i s f ac ti o n o ug ht t o ha v e b e e n t r a ns m i t t e d t o t h e AO of t he a s s e s s e e a nd on l y t he r e a ft e r , a s s e s s m e n t c ou l d h ave be e n m a de . N o a c t io n und e r Se c t i o n 147 /1 48 c oul d be t a ke n a g ai ns t the a s s e s s e e b e c au s e Se c t i o n 153 C s t a r ts with a no n ob s t an te c l a us e na m e l y, n otw i t hs t and i n g a nyt hi ng c o nt a i ne d i n Se c t ion 13 9/ 147 . Thus , Se c t i on 14 7/ 14 8 h as no be a r i ng i f p ro c e e d i ng r e q ui r e d t o b e t a ke n a g ai ns t th e a s s e s s e e und e r S e c t i o n 15 3C o f t he I nc o m e Ta x A c t . Th e AO ha s f ai l ed t o fo l lo w t he m a nda t or y pr o c e du r e r e qui r e d to be fo l l o w e d , he nc e , as s e s s m e n t o r d e r i s no t s us t a i na bl e an d ac c o r d i ng l y, i s qua s hed . Fo r ITA No.765&768/CHD/2024 A.Y.2011-12 19 o ur ab o v e vi e w, w e ar e f or ti fi ed b y t he j udg e m e nt s r e l i e d up on by t h e l d . Co uns e l f or t he as s e s s e e a n d t ak e n n o te by us in pa r a g r ap h No . 7 of t hi s o r der . Th e Act c o nt e m pl a t e d a p r o c e du r e w hi ch i s r e qu i r e d t o be f o l l o w e d m a nd at or il y a nd w hi c h has no t b e e n f oll o w e d by t h e AO . G R O U ND N O. 3 ( a) & ( b) 13 . I n t he s e g r o und s , g r i e v a nc e of t he a s s e s s e e i s t ha t l d. C I T( A) h as er r e d in c o nfi rm ing the ad di t i on of R s. 13 C r or e s w hi c h was ad de d by the AO on a c c o unt of und i s c l o s e d i nco m e .
14 . The b r i e f f a c t s o f t he c a s e a r e t ha t as s e s s e e h a s f i l e d hi s o r i gi na l re t ur n of i nc o m e un de r Section 13 9( 1) de c l a ri ng t o t al inc o m e a t R s. 1 , 58 , 6 70/ - . The as s e ss e e w as e a r l i e r T r us t e e o f SK E T ( Sh r e e K r i s h na E duc a t i o n Tr us t ). H e w a s p r e -o c c u pi e d i n hi s wo r k a nd t he r e f or e , he has r e li nq ui s he d h i s r e s p on s i b il i tie s i n f a v o ur o f on e Sh r i Sa nj ay B a ns a l . A s e a r c h w a s c a r r i e d ou t u nde r Se c t i on 13 2 o f t he I nc om e T ax Ac t a t the pr e m i s e s o f Sh r i S anj a y B an s al a s w el l a s SK E T. D ur ing t h e c our s e o f s e ar ch, o ne l oo s e p ap e r w as f o und w hi c h ha s be e n r e pr o duc e d w h i l e ITA No.765&768/CHD/2024 A.Y.2011-12 20 t a ki ng no t e o f t he r e a s o ns r e c o r d e d b y t he AO f or r e- o pe n i ng ( p ag e No . 7, 8 an d 9 o f t hi s o r de r ) . O n t he s t r e ng t h o f t hi s pa p e r , AO ha r b ou r e d t he be l i e f t ha t Sh r i Sa nj ay B a ns a l ha s pa i d a s um o f R s . 1 3 C r to t he a s se s s e e a nd he nc e , t hi s a m o un t de s e r v e s t o b e a s s e s s e d i n t h e ha nd s of t he assessee. He, a c co r di ng ly, m a de t he a dd i ti on . T he b r i ef di s c us s i on m a de by t h e AO r e a d as und e r :
"7.2 Further, it is an admitted fact that the assessee had been a trustee in Shree Krishna Education Trust at Kurukshetra (here-in-after mentioned as SKET) together with other group of trustees; that during the year 2010- 11 the management of said trust was handed over to another team of trustees headed by aforesaid Shri Sanjay Bansal as its chairman; that subsequently, a search & seizure action under section 132 was carried at the residence of said Sanjay Bansal and his business premises in which the premises of SKET were also covered; that during search several incriminating documents were found and seized; that such documents also contained the documents written by one Shri Sushil Kumar accountant of Shri Sanjay Bansal; that Shri Sanjay Bansal as well as Shri Sushil Kumar accountant admitted to have written these documents in the handwriting of Shri Sushil Kumar accountant. These documents contained entries showing the Shri Sanjay Bansal as to have paid Rs. 13.00 crore to the assessee; and Shri Sushil Kumar accountant of Shri Sanjay Bansal confirmed that these seized documents contained the detail of settlement of account, inter alia, with the assessee. A copy of said seized document containing the information relating to the assessee is attached herewith.
7.3 A perusal of the seized document shows that it contain both type of entries i.e. the entries recorded in the books of account of the SKET and those not recorded anywhere. The sum totals and balance amount are the result of both type of the entries. The balance of accounted entries have been shown in the seized document under the head "Entry Standing in Balance Sheet as White Amt" in the different names appearing to be the name of the family members of the assessee. All these balance are also appearing in the audited balance sheet of the SKET placed on record. The outstanding balance in the assessee's own name also matched with the ITA No.765&768/CHD/2024 A.Y.2011-12 21 amount appearing in the statement of assets & liabilities filed during the course of assessment proceedings.' Therefore, there remains no doubt that the assessee had received Rs. 13.00 crores from Shri Sanjay Bansal out of which the amounts already receivable from the assessee have been adjusted and balance has been paid as per the document. 7.4 Further, Shri Sushil Kumar was an employee of Shri Sanjay Bansal and he has admitted to have prepared the document as desired by Shri Sanjay Bansal for settlement of account with the assessee. Therefore, Shri Sushil Kumar cannot said to be stranger in relation to the transaction found recorded in the documents. Had there been no such transaction, then how could said Shri Sushil Kumar be expected to have knowledge of all the element of said transactions for preparing the account of the assessee for settlement thereof. Thus, the circumstantial evidence in the form of seized document together with its corroboration with the deposition made by its writer Shri Sushil Kumar and further corroborated with the fact that accounted portion thereof is appearing in the SKET's audited balance sheet and in the statement of assets 85 liabilities filed by the assessee, is held to be a valid basis for initiation of assessment proceedings u/s 147-148.
8. After examining the case as above together with the information available on record and the replies filed on behalf of the assessee, I hold the afore said amount of Rs. 13.00 crores as to be the assessee's undisclosed income, which, in addition to normal tax liability thereon, also renders the assessee liable for penalty under section 271(l)(c).
9. Further, as the assessee is found to have accepted said amount of Rs. 13.00 crores otherwise than bank cheque, bank draft or other banking channel, therefore, I am satisfied that the assessee has also violated the provisions of section 269SS rendering him liable for penalty under section 27ID."
15 . App e al t o t he CI T( A) di d no t b ri ng an y r e li ef t o t he assessee.
15 . 1 W hi l e i m pug n i ng t he o r de r of t he R e v e nu e Aut ho r i t i e s bel o w, l d. Co un s e l f or t he a ss e s s e e ha s s ub m i tt e d t ha t t h i s do c um e n t w a s no t f o und f r o m t he po s s e s s i o n of th e as s e s s e e . I t w a s no t i n hi s han dw r i ti ng . It w as a do c um e nt a l l e ge dl y recovered f ro m t he ITA No.765&768/CHD/2024 A.Y.2011-12 22 pr e m i s e s of a t hi r d p e r s o n. I t c ann ot b e an i nc r i m i na t i ng do c um e nt q ua t he assessee b e c a us e as s e s s e e ha s no c o nt r ol o v e r a t hi r d p er s o n w ha t h e w r i t e s in hi s di a r y, l oo s e pa p e r , boo ks e t c . The r e w a s no par al le l e d s ea r c h c o nd uc t e d upo n t he a s s e s s e e . I t w a s s t a t ed b y t h e AO t ha t t h i s do c um e nt w as i n t he ha nd w r i ti ng of Shr i Sus h i l K um a r w ho ha pp e ne d t o be t he Ac c o un ta nt o f Sh r i S anj a y K um a r B ans al a t t he r e l e v an t t i m e . St a t eme nt o f Sh r i Sus h i l K um a r w as no t r e c or de d unde r S e c t i o n 1 32( 4) o f t he I n c o m e T ax Ac t . Thi s de c l a r a ti o n c a m e t o t h e no t i c e o f t he D e pa r t m e nt w he n hi s s t a t e m e nt w as r e c or de d dur i n g t he a s s e s s m e nt pr o c e e d i ng s of S hr i Sa nj a y B an s al . I t w as t a ke n u n de r Se c t i o n 1 31 of t he I nc o m e T a x Ac t a nd no t und e r Se c t i o n 1 32 ( 4 ) of t he I nc om e Ta x Ac t . The pr e s um pt i on of t r ut h i s bei ng at t a c he d t o a s t a t e m en t recorded und e r Se c t i on 1 32 ( 4 ) an d s uc h pr e s um pt i on c o ul d b i nd t he de p o ne nt w ho h as m a de s uc h de c l ar a t io n. I n a s t a te m e nt unde r S e c t i o n 1 32 ( 4 ), i t c an no t bi nd a t hi r d pe r s o n. T he a s s e s s e e h as r e pe a t e d l y r e que s te d f o r an o pp o r t uni t y to c r os s e xam i n e t he a l l e g e d w i t n e s s Shr i Sus h i l K um ar bu t A O di d no t g r a nt a n o pp o r t uni t y t o ITA No.765&768/CHD/2024 A.Y.2011-12 23 c r os s e x am i ne h i m . H e ha s g i v e n t he s t a t e m e n t a f t e r Shr i Sa nj ay Ba ns a l ha s r e g i s t e r e d a FI R a g ai ns t hi m o n ac c o un t o f so m e fi n anc i al i r r e g ul a ri ti e s i n t he I ns t i tu t i o n. T his f a c t h as be e n di s c l os e d b y Sh r i Sus h i l Kum a r i n his s t a t e m e n t av a i la bl e a t pa g e N o. 4 8 o f t h e Pa pe r B oo k. The AO hi m s e l f has a l so no t e xa m i ne d i nde p e nd e nt l y a ny of t hi s a s pe c t . H e h as no t e x am i ne d w h at i s t he s ou r ce o f f un ds o f R s . 1 3 C r or e s i n t he h a nd s of Shr i Sanj ay B a ns a l. N o a ddi t io n o n a c c o unt of une xp l ai n e d e x pend i t ur e w as m a d e i n t he hands of Shr i Sa nj a y Ba ns a l .
15 . 2 I n s u ppo r t of hi s c o nt e nt i on, l d. Co uns e l f or t he a s s e s s e e r e l i e d up on f ol l o wi ng j udg e m e nt s w ho s e c opi e s ha v e a l s o be e n p l a c e d. W e t a ke no t e o f fr om the I nd e x of t he Pa pe r Bo o k :
1. Judgment in the case of PCIT vs. DSG Papers (P.) Ltd. as reported in [2024] 161 taxmann.com 586 (Punjab & Haryana)
2. Judgment in the case of PCIT Vs. Kishore Kumar Mohapatra as reported in [2024] 162 taxmann.com 5(SC) on the issue of cross examination
3. Judgment in the case of PCIT Vs. Hadoti Punj Vikas Ltd. as reported in [2023] 157 taxmann.com 193 (SC) on the issue of cross examination
4. Judgment in the case of Andaman Timber Industries Vs. Commissioner of Central Excise as reported in (2015) 281 CTR 0241 (SC) on the issue of cross examination ITA No.765&768/CHD/2024 A.Y.2011-12 24 15 . 3 O n t he o t he r h and l d . D R r e l i e d upo n t he o rd e r s o f R e v e nue Aut h or i ti e s be l o w. He s ub m i t t e d t ha t fi n di n g o f t he CI T( A ) i s c at e g o r i c o n t hi s a s pe c t .
16 . W e h av e dul y c o ns i de r e d t he r i v al c o nt e nt i ons a nd g o ne t h r o ug h t he r e c o r d c ar e ful l y. W e ha v e ta ke n no t e o f t he f i ndi ng o f t he AO . W e w oul d a ppr e c i at e t he f i ndi ng o f t he CI T( A) i n the l a t e r pa r t of t h i s o r d er . Fi r s t l e t u s e v a l ua t e qua l ity of e v i de n c e p os s e s s e d by t he AO q ua t h e a s s e s s e e f o r m ak i ng a d di ti o n t o hi s i nc o m e. T he o nl y e v i de nc e po s s e s s e d b y t he AO is on e l oo s e s h e e t o f a pap e r w h os e c o nt e nt s a r e bei ng no t e d by u s w hi l e de a l i ng f i r s t f ol d of pr o po si ti o n at pag e 7 a nd 8 of t hi s o r d e r . T hi s pa g e i s ne i t he r i n t he h and w r i ti ng o f t he a s s e s s e e no r w as f o und f r o m hi s p r e m i s e s . I t is a d oc u m e nt f o und at t he pr e m i s e s of a thi r d p e r s on. The as s e s s e e h a d no c on t rol o v e r a ny o t he r p e r s o n, w h at the y w r i te i n t he i r ac co un t s a t t he i r of fi c e /r e si d e nc e . He ca nno t be c ha r g e d to an y l i a bi li ty o n t h e ba s i s of wr i t i ng m a de b y a t h i r d pe r s o n.
Th i s a s pe c t w as c o ns i de r e d b y t he H o n'bl e Su pr e m e C o ur t i n t he c a s e o f C BI Vs V. C. Shuk l a an d o t he r s (1 99 8) 3 SC C ITA No.765&768/CHD/2024 A.Y.2011-12 25 pa g e 41 0 wherein C BI s oug ht to pr o s e c ut e certain po l i ti c i a ns o n the ba s i s o f o ne D ia r y w ri t t e n by o ne 'Ja i n ' w h i c h w as k no w n a s 'J a i n H aw al a D ia r y'. Al l t he c ha r g e s w e r e qu as h e d by t he H o n'b l e Supr e m e C o ur t by ho l d i n g t ha t a person s ha l l no t b e m ad e a c c o unt a bl e f or t he w r i t i ng s m a d e b y a t hi r d p e rs on i n hi s no t i ng s . I t has c a m e o n t he r ec o r d t he p ap e r w a s i n t h e handw r i ti ng of o ne Shr i Sus h i l K um a r w ho s e s t at e m e nt w a s no t r e c o r d ed und e r Se c t i o n 1 32 ( 4 ), th e r e f ore , no pr e s um pt i o n of t r ut h can be at t a c he d to his s t at e m e nt . Even o t he r w i s e, pr e s um pt i on of t r ut h c a n b e d r a w n qua de po ne nt w ho made s uc h de c l a ra t io n. Q ua the t hi r d p e r s o n, no pr e s um pt i on of t r ut h c a n b e i nf e r r e d. H e ha s i m p ut e d t he s e a l l e g a t ions i n o r d e r t o s e t t l e c e r t ai n di s put e s w i t h hi s e r s t w hi l e e m pl o ye r i . e. Shr i Sa nj ay B ans a l . Thi s i s di s c e r ni bl e f r om h i s s t a t em e n t av ai l a bl e on pa g e No . 4 8 of t he Pa pe r B o ok. A FI R N o. 1 /8 /2 01 3 w as r e g i s t e r e d a g ai ns t hi m by t he e m pl o ye r f or e m be z zl e m ent o f f un ds . Th i s w i t ne s s wa s ne v e r pu t for c r o s s - ex am i nat i o n by t he AO i ns p i t e o f r epe at e d r e q ue s t s . At t hi s s t ag e , w e d e e m i t pe r t i ne nt t o ta ke no t e o f t he fol l o w i ng o b s e r v at i on s of t he ITA No.765&768/CHD/2024 A.Y.2011-12 26 H o n'b l e Sup r e m e C o ur t f r om t h e j udg e m e nt o f Andaman Timber Industries V CCE in Civil Appeal No. 4228 of 2006 dated 02.09.2015 has given following observation:
" According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable."
16 . 1 T he r e f o r e , AO w a s n ot i n p o ss e s s i on o f a ny m at e r i al w h i c h c an a ut ho r i z e him t o fi rm l y r eac h at a c o nc l us i on t ha t Shr i Sa nj ay B an s al ha s ma de p aym e nt o f R s . 13 Cr i n c a s h t o t he a s s e s s e e . T he A O i s s i m pl y h ar pi ng up o n t he s t a t e m e n t o f Ac c o unt a nt o f Shr i S anj a y Bans a l a g ai n s t w h om a FI R h as b e e n l o d g e d by hi s e m p lo ye r . If we e x c l u de t h at s t at e m e nt f ro m the e v i d e nc e o n t he b asi s of t he j ud g e m e n t o f Ho n'b l e Sup r e m e C o ur t i n t he c a s e o f Andaman Timber Industries V CCE as well as judgement of Hon'ble jurisdictional High Court in the case of PCIT Vs DSG Papers (P) Ltd. reported in 161 taxmann.com 586 (2024), ITA No.765&768/CHD/2024 A.Y.2011-12 27 then nothing will remain with the AO to draw such a conclusion. Therefore, this addition is not sustainable. We allow this ground of appeal and delete the addition. 17 . I n t he n e xt f o l d of g r i e v a nc e , a s s e s s e e h as pl e ad ed t ha t a l l e g e d r e- a s s e s s m e nt i s no t s us t a i nab l e be c a us e no no t i c e w as i s s ue d t o t he as s e s s e e u nde r Se c t i o n 14 3( 2) o f t he I nc om e Tax Ac t .
18 . T he br i e f f a c ts of t he c as e ar e t ha t a no ti ce und e r Se c t i o n 14 8 o f t he I nc om e Tax Ac t w a s s e r ve d upo n t he a s s e s s e e o n 31 . 03 . 20 18 . T he a s s e s s e e has r a i s e d o bj e c t i on a g ai ns t r e- o pe ni ng o f t he a s s es s m e nt . Si m ult a ne o usl y h e s ub m i tt e d t ha t r e t ur n f i l e d or ig i na ll y u nde r Se c t i o n 13 9( 1) i s t o be t r e a t e d a s f il e d i n r e s p on s e t o t he n o t i c e r e c e i v e d und e r S e c t i on 14 8. T he as s e s s e e a g ai n r e m i nd e d t h e AO t ha t h i s or i g i nal r e t ur n be t r e at e d a s f il e d i n r e spo ns e t o 14 8 n ot i c e . Cop i e s of th e s e r e pl i e s a r e a v ai la bl e o n p age N o . 8 a nd 21 o f t he Pa pe r Bo o k . O n r e c e i pt o f t hi s r e pl y, t he AO w as bo und t o i s s ue n ot i c e un d e r Se c t i o n 1 43( 2) b ut he ha s n ot i s s u e d any no t i c e . A n ar r a ti on i s b e i ng m a de in t he fi r s t p ag e of t he as s e s s m e nt o r der t ha t ITA No.765&768/CHD/2024 A.Y.2011-12 28 s ub s e q ue nt l y i nf or m a ti o n w a s ca l l e d fo r vi d e no t i c es und e r Se c t i o n 14 3| ( 2) a nd 14 2( 1) . B ut s p e c i f i c all y no no ti c e und e r Se c t i on 1 43 ( 2) w a s i s s ue d. Thus , a c c or di n g t o t h e l d . Co un s e l fo r t he as s e s s e e , t he a s s e s s m e nt or de r i s no t s us t a i n ab l e . I n s up po r t o f t he c o nt e n t i o n, he r e li e d up on f ol lo w i ng j ud g e m e nt s , w ho s e c o pi e s h av e a l s o be e n p l a c e d o n r e c or d :
i Hotel Blue Moon of Apex Court, 321 ITR 362 (2010)
ii) Latest SC-Laxmann Dass Khandelwal reported in (2019) 180 DTR 0313 (SC), (2019) 310 CTR 0008 (SC), (2019) 417 ITR 0325 (SC), (2019) 266 TAXMAN 0171 (SC).
iii) Shri Shiv Shankar Traders (2016) 383 ITR 448 (Del.) 18 . 1 Th e l d . C o uns e l f or th e a ss e s s e e f ur t h e r a pp r i s e d us t ha t t he a s s e s s e e ha s i ns pe c t e d th e r e c o r d a nd c o p y o f no t i c e w a s n o t fo und i n t he r e co r d.
18 . 2 T he l d . CI T D R , o n t he o t he r han d s ub m i t t e d t ha t s i nc e AO ha s m a d e a n o bs e r v a t i o n i n t h e a s s e s s m e nt o r d er t ha t no t i c e un d e r Se c t i o n 14 3( 2 ) w as i s s ue d up on t h e a s s e s s e e , t he r e f o r e , i t be c o ns t r ue d t h at s uc h n ot i c e m us t be i s s ue d u po n t h e a s s e s s e e .
19 . W e h av e d ul y c o ns i d e r e d r i v al c o nt e nt i o ns a nd g o ne t h r o ug h t he r e c o r d c a r e f ull y. The r e i s no di s put e wi t h ITA No.765&768/CHD/2024 A.Y.2011-12 29 r e g ar d t o t he f ac t t ha t a s s e s s e e h as f i l e d t wo ap pl i c a t io ns pl e a di ng th e r e i n t ha t o r i g i nal r e t u r n f i l e d unde r Se c t i on 13 9( 1) be t r e ate d as f il e d i n r e s p on s e t o not i c e r ec e i v e d und e r Se c t i o n 1 48 . I f Se c t i on 1 43 ( 2 ) i s be i ng p e r us e d, t he n it w il l reveal t ha t thi s Se c t i o n pr o v i de s fi r s t o pp o r t uni t y to an as s e s s e e w h at he wa nt s to say in s up po r t o f hi s r e t ur n. O nl y t he r e a f t e r AO w oul d c a rr y o ut i n v e s t i g a t io n . I n t he pr e s e nt c a s e , p hys i c a l c o p y o f t h e no t i c e has no t be e n b r o ug ht b e f o r e us by t he R e v e nue . In t he j ud g e m e n t o f Ho n'b l e Supr e m e C ou r t c i t e d b y t he a s s e s s e e a s w e l l a s of H o n'bl e D e l h i Hi g h C o ur t , i t has una ni m o us l y b e e n pr o po und e d t ha t be f or e t a ki ng a r e t ur n f or s c r ut i ny, a no t i c e un de r Se c t i on 14 3( 2) i s t he pr e- r e qui s i t e c o ndi ti o n a nd i f s uc h no t i c e w a s no t i s s ue d , t he n a s s e s s m e nt i s no t s us t a i na b l e. The r e fo r e , o n t hi s gr o und a l s o, a s s e s s m ent is n ot s u s t ai na bl e and ac c or di ng l y q uas he d.
20 . I n o t he r g r oun ds , as s e s s e e ha s r ai s e d p er i ph e r al a r g um e nt s i n s up po r t o f t he a bo v e t hr e e c e nt r a l poi nt s . Th e r e f o r e, i t i s no t n e c e s s a r y t o a d j ud i c a t e r e s t o f t h e ITA No.765&768/CHD/2024 A.Y.2011-12 30 i s s ue s s e pa r a t e l y. I n v i e w o f t he a bo v e t hr e e f ol d of c o nt e nt i o ns , w e ha v e t a ke n c ar e o f p e r i ph e r al ar g um e n t s a nd s ub- g r ou nds .
21 . I n t he r e s ul t , a ppe al of th e a ss e s s e e i s al lo w ed. I TA 768/ C H D /202 4 : A . Y. 20 11 - 12 22 . As f ar as I T A No . 7 68/ CH D/20 24 i s c o nc e r ne d, t h e a s s e s s e e i s i n a ppe al a g ai n s t t h e o r de r of l d. CI T( A ) da t ed 28 . 0 6. 2 02 4 pa ss e d f o r a s s e s s m e nt ye ar 2 01 1- 12 . T he l d. AO ha s i m po s e d a pe n al t y un de r S e c t i o n 27 1D o f t he I nc om e T ax Ac t o n ac c o un t o f a c c e p t an c e o f lo a n i n c a sh i n v i ol a ti o n of S e c t i o n 26 9S S of t he I nc om e T a x Ac t . T hi s pe nal t y ha s b e en c o nf i r m e d b y t he C I T( A). 23 . W i t h t he a s s i s t anc e o f l d. Re pr e s e nt a t i v e , w e h av e g o ne t hr o ug h t he r e c o r d c a r e ful l y. I f Se c t i o n 2 69 SS o f t h e I nc om e Ta x Ac t i s be i ng pe r us e d , t he n i t w o uld r e v ea l t ha t i t pr oh i bi t s a ny p e r s o n t o t a ke or a c c e p t f r om a ny o t he r pe r s o n any de po s i t o r l oa n o r any s pe c i f i e d s um ot he r th an by Ac c o unt P a ye e C he q ue / Ba nk D r af t or E l e c tr o ni c C l e a r i ng Sys t e m , t he n s uc h pe r s o n wi l l b e l i ab l e to p a y ITA No.765&768/CHD/2024 A.Y.2011-12 31 pe nal t y o f e q ua l a m oun t . Ac c o r di ng t o t he A O , a s s es s e e ha s a c c e p t e d a s um o f R s . 13 C r fr om Sh ri Sa nj ay Ba ns al i n c a s h, t h e r e f or e , he de s e r v e s t o b e v i s i t e d w i t h p e na l t y. To our m i nd , th i s pe na l t y is not s us t a i na bl e f or tw o r e as o ns :
a) W e hav e al r e ady de l e t e d t he a d d i t io n m a de t o t he to t al i nc o m e o f t he a s s e s s e e , t he r e f o r e, i t c anno t be c on s t r ue d t ha t a s s e s s e e h as a c c e pt e d a s um o f R s . 13 Cr i n c a s h.
b) Th i s w a s ne i t h e r l oa n no r d e po s i t s . T hi s a m o un t do e s no t fa l l w it hi n t he a m b i t o f S e c t io n 2 69 SS o f t he I nc om e Tax Ac t .
Th e r e f o r e, no p e na l t y is im po s a bl e on the assessee. Ac c o r di ng l y, t hi s ap pe al of t he a s s e s s e e i s a l l o w e d a nd bo t h o r d e r s a r e s e t a s i d e . T he as s e s s e e do e s no t d e s e r v e t o b e vi s i t e d wi th p e na l t y unde r Se c t i o n 2 71D of t he Ac t . 24 . I n th e r e s ul t , b o t h a p pe a ls o f t h e a s s e s s e e a r e a ll ow e d.
O r d e r pr on ou nc e d on 07 . 0 4. 202 5.
Sd/- Sd/-
(KRINWANT SAHAY) (RAJPAL YADAV)
ACCOUNTANT MEMBER VICE PRESIDENT
"Poonam"
ITA No.765&768/CHD/2024
A.Y.2011-12
32
आदेश क ितिलिप अ ेिषत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु / CIT
4. िवभागीय ितिनिध, आयकर अपीलीय आिधकरण, च डीगढ़/ DR, ITAT, CHANDIGARH
5. गाड फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar