TMI Blog2001 (8) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 As per original asst. order dt. 17-12-1990." There was a search and seizure operation by the IT Department on 19th Oct., 1994, at the Chandigarh residence of Sh. Anil Aggarwal at House No. 81, Sector 28A. The business premises of M/s Modesto Polymers (P) Ltd. and other group cases of Gulmarg Hotel were also searched on the same day. During search, a small ledger, namely, mentioned as Annex. A-13 to the Panchnama, was seized from the premises 81/28A, 1/3rd of which belongs to Sh. Anil Aggarwal and in the remaining 2/3rd, S/Sh. Rajiv Aggarwal and Vikas Aggarwal, cousins of the assessee, were also residing. This house was also used by Sh. Mool Krishan as his residence as and when he used to come to Chandigarh and the gas connection installed in this house was also in the name of Sh. Mool Krishan as well as the telephone installed was in the name of Sh. Mool Krishan, father of Sh. Anil Aggarwal. In the seized ledger, there were several transactions relating to receipt and payment in the names of Sh. Anil Aggarwal and one Sh. Bhupinder Kumar. Total receipts on different dates in the ledger were to the extent of Rs. 41,54,644 and total payments were to the extent of Rs. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3rd March, 1998, requiring the assessee to explain entries in the seized small ledger vide Annex. A-13, Panchanama, dt. 19th Oct., 1994. The assessee filed a detailed reply dt. 16th March, 1998, and pleaded that the seized ledger recovered during search under s. 132 on 19th Oct., 1994, from H. No. 81/28A belongs to the HUF of Inder Sain Aggarwal Sons, of which the assessee is a member but the Karta is Sh. Mool Krishan Aggarwal, the assessee's father, and the said HUF has already made a disclosure of Rs. 70 lakhs under the VDIS-1997, which has been duly accepted by learned CIT vide certificate dt. 19th Jan., 1998. However, the assessee submitted to the AO that the information called for from the assessee has been forwarded to the HUF, Inder Sain Aggarwal Sons, for further necessary action and a prayer was made that the proceedings initiated against the assessee under s. 148 should be dropped as the entire payments mentioned in the seized ledger have been surrendered by the HUF, Inder Sain Aggarwal Sons, to whom that ledger belongs and that the declaration made by the said HUF has been accepted by learned CIT. Accordingly, the AO vide his order dt. 1st May, 1998, held that no f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o lead evidence to show that the documents seized did not belong to him, in view of the decision in the case of Pushkar Narain Sarraf vs. CIT (1990) 86 CTR (All) 110 : (1990) 183 ITR 388 (All). Learned CIT, however, did not find the explanation given by the assessee as satisfactory and he passed an order under s. 263 on 23rd March, 2001, holding that the order passed by the AO on 1st May, 1998, under s. 143(3)/147 for asst. yrs. 1987-88 to 1990-91 in the case of the assessee was erroneous and prejudicial to the interests of the Revenue as the same was not in accordance with the material available on record, the appraisal report prepared in the investigating wing of the Department who carried out search and seized the documents. He accordingly set aside the order of the AO and directed him to take appropriate action as per law, after giving due opportunity to the assessee. 2.3 The assessee is aggrieved and has filed appeal before the Tribunal taking the following specific grounds: "1. That the order under s. 263 passed by CIT is against law and facts on file inasmuch as assessment order dt. 1st May, 1998, was neither erroneous nor prejudicial to interests of Revenue and viewing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vour of him and his two cousins S/Sh. Rajiv Aggarwal and Vikas Aggarwal-1/3rd each by their grand father, Sh. Inder Sain Aggarwal. Sh. Anil Aggarwal started his first business venture independently as a director of the company, Modesto Polymers (P) Ltd., in the year 1987. It was submitted that consequent upon search under s. 132 on 19th Oct., 1994, at the assessee's residence at 81/28A, one small ledger, Annex. A-13, was noticed and seized from the house wherein the assessee along with his two cousins was residing and thereafter proceedings under s. 148 for asst. yrs. 1987-88 to 1990-91 were reopened in the case of the assessee, as entries in the said ledger pertained to the period relevant to asst. yrs. 1987-88 to 1990-91. It was submitted that 81/28A was jointly used as a winter resort by the members of the joint family styled as Inder Sain Aggarwal Sons, whose most of the members reside at Shimla. Sh. Mool Krishan, Karta of the HUF, used to stay in this house during his visits to Chandigarh. It was submitted that the seized ledger did not pertain to the assessee, Sh. Anil Aggarwal but to the HUF styled as Inder Sain Aggarwal Sons, of which Sh. Mool Krishan was Karta, althoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and as such there was no necessity of learned CIT taking recourse to action under s. 263. 3.1 It was pleaded that in the show-cause notice dt. 26th Feb., 2001, learned CIT termed the order dt. 1st May, 1998, as erroneous and prejudicial to the interests of the Revenue because: (i) the HUF who had made declaration in respect of entries in the seized ledger did not have the resources of such heavy investment; and (ii) the subject ledger having been found during search on 19th Oct., 1994, at 81/28A, wherein the assessee resided, the same pertained to the assessee. It was submitted that there was no mention of any appraisal report by the investigation wing of the Department which was subsequently relied upon by learned CIT while passing the impugned order under s. 263. Learned Authorized Representative pleaded that the HUF of Inder Sain Aggarwal Sons has been in existence since long and it has been enjoying income from rent, interest and running of taxis as disclosed to the Department in the returns filed. It also did some unaccounted business as recorded in the seized ledger and it is how it owned it, and made a declaration. It was submitted that the assessee-HUF has been a w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was presumption under s. 132(4A) that the ledger and the entries recorded therein belong to Sh. Anil Aggarwal because the assessee could neither identify Sh. Bhupender Singh nor produced him, as Sh. Bhupinder Singh was a fictitious name. It was submitted that merely because HUF, Inder Sain Aggarwal Sons has made the declaration, owning up the entries in the seized ledger will not debar the Departmental authorities to tax the income/investment recorded in the seized ledger in the hands of the assessee which the AO failed to do and as such learned CIT was perfectly justified in cancelling the order passed by the AO on 1st May, 1998, and his action deserves to be upheld. 4. We have considered the rival submissions and have also gone through the orders passed by the AO as well as learned CIT. The factual backdrop relating to cancellation of order passed by the AO under s. 147/143(3) for four asst. yrs. 1987-88 to 1990-91 is not in dispute and has been discussed in detail above. Learned CIT considered the order passed by the AO as erroneous and prejudicial to the interests of the Revenue and gave reasoning for doing so in the show-cause notice under s. 263, as under: (i) The HU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns raised in the appraisal report by the investigation wing either at the assessment stage or in the show-cause notice issued by learned CIT under s. 263, reliance of learned CIT on appraisal report of the investigation wing in the order passed under s. 263 was not at all justified in law. Even otherwise, the entries in the ledger having been owned by the HUF, Inder Sain Aggarwal Sons, who made the declaration under VDIS which declaration was accompanied by a detailed covering letter giving factual backdrop and the circumstances under which the declaration was being made to learned CIT who accepted the said declaration after going through the covering letter, and issued a certificate under s. 68(2) on 19th Jan., 1998, the very same CIT could not have cancelled the order passed by the AO under s. 147/143(3) for these years, which order was in accordance with the factum of declaration in the case of the HUF having been accepted by learned CIT himself. Since the order passed by the AO on 1st May, 1998, under s. 147/143(3) relating to all the four assessment years was in accordance with the order of the learned CIT passed under s. 68(2) of VDIS 1997 dt. 19th Jan., 1998, the same cann ..... X X X X Extracts X X X X X X X X Extracts X X X X
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