TMI Blog2008 (4) TMI 347X X X X Extracts X X X X X X X X Extracts X X X X ..... sfied that the material found during the course of search shows some undisclosed income belonging to such other person and after recording such satisfaction, he has to forward the relevant material to the AO having jurisdiction over such other person. In the present case, the information/material was received by the AO directly from the Investigation Wing of the Department who had conducted the search and it was not a case where the AO of the person searched had handed over the relevant information/material to the AO of the assessee. Moreover, as the said information was received by the AO directly from the Investigation Wing of the Department, there was no question of any satisfaction having been recorded by the AO having jurisdiction over the case of the person searched. The requisite conditions for proceeding against the assessee under s. 158BD thus were not satisfied in the present case and this being so it was not permissible for the AO to proceed against the assessee under s. 158BD on the basis of information received by him directly from the Investigation Wing of the IT Department. Following the case of Dang Co. (P) Ltd.[ 2005 (1) TMI 328 - ITAT DELHI-A] , We are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... file of the AO for the purpose of examining the stand specifically taken by the assessee. The impugned order of the learned CIT(A) on this issue is, therefore, set aside and the matter is restored to the file of the AO for the limited purpose of verifying as to whether the relevant cash credits represent the realisation of proceeds against sales which have already been included in the income of the assessee as claimed. If the claim of the assessee on this issue is found to be correct on verification, the AO shall delete the addition made on this issue and vice versa. Ground No. 4 of the assessee's appeal is accordingly treated as allowed for statistical purposes. Addition on excise duty not included in the closing stock - CIT(A) deleted the addition made by the AO on this issue instead of remanding the matter back to the AO with certain directions - HELD THAT:- In the decision in the case of CIT vs. Indo Nippon Chemicals Co. Ltd.[ 2003 (1) TMI 8 - SUPREME COURT] , held that whatever method is adopted for valuation of closing stock, the same has to be consistent with the accepted principles of accountancy and it has to be followed consistently. Following the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n percentage of commission. It was also noticed that the assessee company was one of such parties who had received five cheques from M/s Jain Bros. Co. from the current account No. 3197 maintained by the said concern with the Corporation Bank, Karol Bagh. The details of such cheques like cheque number, date. amount, etc. were also gathered by the AO. The said cheques were found to be signed by Mr. Padam Singh Jain as proprietor of M/s Jain Bros. Co. and in his statement recorded by the Department, he could not explain the source of the cash deposited in the bank accounts of the said concern with the Corporation Bank. This specific information pertaining to the case of the assessee was forwarded by Investigation Wing of the Department was received by the AO on the basis of which he formed a belief that there was escapement of the assessee's income. Accordingly, he initiated the reassessment proceedings for the year under consideration by issuing a notice under s. 148 after recording the reasons. The said notice issued on31st March, 2004, was sent to the assessee by the AO by speed post. As there was no response to the said notice on the part of the assessee, a notice under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of Rs. 11,73,000 on account of unpaid excise duty back to the AO for deciding the same afresh. The learned CIT(A) thus partly allowed the appeal of the assessee filed before him by his appellate order dt.20th March, 2006and still aggrieved by the same, the assessee has preferred this appeal before the Tribunal. 5. Ground No. 1 of the assessee's appeal is general seeking no specific decision from us. 6. In ground Nos. 2 and 3, the assessee has challenged the validity of assessment completed by the AO under s. 147. 7. The learned counsel for the assessee submitted before us that the proceedings under s. 148/147 were initiated by the AO in the present case on the basis of material found during the course of search conducted in the case of some other assessee. He contended that if the information/material found during the course of search was to be used by the AO against the assessee, the same could have been done by proceeding under s. 158 only and it was not permissible for the AO to proceed under s. 148. He contended that Chapter XIV-B is an independent code in itself and the material found during the course of search, can be used to proceed against the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Badri Vishal Aggarwal vs. Dy. CIT (2006) 105 TTJ (Del) 418, he contended that if other conditions are satisfied, assessment can be validly reopened on the basis of findings or outcome of search and seizure operation. He also placed reliance on another decision of the Delhi Bench of the Tribunal in the case of ITO vs. Smt. Gurinder Kaur (2006) 105 TTJ (Del) 198 : (2006) 102 ITD 189 (Del), wherein action under s. 148 was upheld on the basis of information received by the AO from the Asstt. Director of IT (Inv.). He contended that the conditions for proceeding under s. 158BD were not satisfied in the present case and since the said provisions were not applicable, the AO was fully justified in not invoking the same and instead in proceeding under s. 148/147. Reliance was also placed by him on the decision of the Delhi Bench of the Tribunal in the case of Dang Co. (P) Ltd. vs. Dy. CIT (2005) 93 TTJ (Del)(TM) 645 : (2005) 94 ITD 29 (Del)(TM) to point out that the scope of undisclosed income has been explained by the Tribunal in the said decision to show clearly that the same is different from escaped income . 9. We have considered the rival submissions and also pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the AO having jurisdiction over the case of the person searched. The requisite conditions for proceeding against the assessee under s. 158BD thus were not satisfied in the present case and this being so it was not permissible for the AO to proceed against the assessee under s. 158BD on the basis of information received by him directly from the Investigation Wing of the IT Department. As rightly contended by the learned Departmental Representative relying, inter alia, on the decision of the Delhi Bench of the Tribunal in the case of Dang Co. (P) Ltd., the scope of undisclosed income assessable under Chapter XIV-B is materially different from the scope of escaped income which can be brought to tax by having recourse to s. 148/147 by the AO and if the information received by the AO directly from the Investigation Wing of the Department was sufficient to entertain the belief about the escapement of income, he was duly empowered to proceed against the assessee under s. 148/147 to bring such escaped income to tax even on the basis of information gathered during the course of search conducted in the case of a third person as held by the Delhi Bench of the Tribunal in the case of Smt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. Moreover, as clearly mentioned by the AO in the assessment order and remained undisputed by the assessee, a further period of 30 days from the date of handing over the said notice on4th Feb., 2005, was also allowed by the AO to the assessee to file a return of income in response to the said notice. Having regard to all these aspects of the matter, we are of the view that not only the requirement of service of the notice under s. 148 upon the assessee was duly complied with by the AO, but even the intent and purpose of service of such notice were also duly served leaving the assessee with no grievance on this issue. There was thus no legal infirmity either in the issue of notice under s. 148 by the AO or even service thereof upon the assessee vitiating the reassessment proceedings initiated by the AO and, in our opinion, the learned CIT(A) was fully justified in upholding the validity of assessment completed by the AO in pursuance of the said initiation. His impugned order on this issue is, therefore, upheld dismissing ground Nos. 2 and 3 of the assessee's appeal. 12. Ground No. 4 relates to the addition of Rs. 18,76,087 made by the AO and confirmed by the learned CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, it is observed that the relevant cash credits appearing in the books of the assessee in the name of M/s Jain Bros. Co. aggregating to Rs. 18,76,087 were not satisfactorily explained by the assessee in terms of s. 68 and the onus in this regard thus was not duly discharged by it. However, as submitted on behalf of the assessee before the learned CIT(A) as well as before us, the said cash credits in fact represented realisation of its sale proceeds and since the corresponding sales were claimed to be included by it in the income declared in the return, the addition on account of realisation of the same amount again to the total income of the assessee would certainly amount to double addition. A perusal of the assessment order shows that this aspect of the matter was not specifically brought to the notice of the AO by the assessee. Before the learned CIT(A), specific plea to this effect, no doubt, was raised on behalf of the assessee. However, the impugned order of the learned CIT(A) shows that he has neither considered nor dealt with the said plea raised on behalf of the assessee. Keeping in view all these facts and circumstances of the case as borne out from record, we are of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eard the arguments of both the sides and also perused the relevant material on record. At the time of hearing before us, learned counsel for the assessee has contended that when the corresponding excise duty in respect of finished goods was neither paid by the assessee during the year under consideration nor deduction on account of such excise duty was admittedly claimed in that year, there was no question of including the amount of such duty in the value of closing stock for that year. According to him, the learned CIT(A), therefore, ought to have deleted the addition made by the AO on this issue instead of remanding the matter back to the AO with certain directions. In support of this contention, he has relied on the decision of the Hon'ble Supreme Court in the case of CIT vs. Indo Nippon Chemicals Co. Ltd. (2003) 182 CTR (SC) 291 : (2003) 261 ITR 275 (SC). A perusal of the said decision, however, shows that it was held by the Hon'ble apex Court in this context that whatever method is adopted for valuation of closing stock, the same has to be consistent with the accepted principles of accountancy and it has to be followed consistently. Keeping in view the ratio of this de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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