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TMI Blog2011 (7) TMI 966X X X X Extracts X X X X X X X X Extracts X X X X ..... essary procedures laid down under the Act in the case of the persons concerned. In the said order, certain substantive additions were made in the hands of the assessees, accordingly proceedings under section 158BD were initiated in the case of the assessees after following the procedure contemplated under the Act on March 31, 2005 and orders passed under that section on March 30, 2007. The assessee(s) thereafter preferred appeals before the learned Commissioner of Income-tax (Appeals), and those appeals were disposed of by the learned Commissioner of Income-tax (Appeals) after following prescribed procedure relating to them and he allowed the appeals of all the assessees except in the case of the assessee Smt. Veena Shah, where the appeal was allowed partly. 3. On going through the orders passed by the learned Commissioner of Income-tax (Appeals), it is seen that all the appeals filed by the assessees were allowed on the merits but he did not give relief on technical ground such as non-recording of satisfaction as required under the law, which was not communicated to the assessees. All the assessees have contended before the learned Commissioner of Income-tax (Appeals) that the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the date of passing assessment orders against such persons under section 158BC. While passing the assessment orders under section 158BC against searched persons, the Assessing Officer has decided all substantive and protective assessments without hearing the assessee(s) at least recording on the aspect of making protective assessment in the case of the assessee(s) in those years itself. The Assessing Officer was already predetermined of passing the orders of assessment. In support of his argument, learned counsel for the assessee(s) relied on the orders of various judicial forums. He contended that this is not a mistake which can be rectified under section 292BB. 5. The learned Departmental Representative on the other hand, regarding on this aspect, replied contending, inter alia, that in the order sheet recorded by the Assessing Officer, there is required satisfaction as made under section 158BD. Since the assessee(s) did not comply with the notices issued by the Assessing Officer, assessment orders were passed on the basis of records available with the Assessing Officer. The Assessing Officer has passed the impugned assessment orders by referring to the case of the assessee Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpressed or implied. In the present matter, for our consideration, the Assessing Officer has not completed the other part of the satisfaction extinguishing the legal right of the assessee. Only after the due communication of the satisfaction in the notice, the assessee has reasoned to explain his case on the material placed before him. In this view of the matter, this appears to be a fundamental right which cannot be denied to the assessee. Therefore, we are of the considered view that for want of recording of satisfaction and its communication to the assessee, the action taken by the Assessing Officer under section 158BD against the assessee is not justified. Accordingly, the cross-objections raised by the assessees in this regard are hereby allowed. 9. Now we will consider the appeal filed by the Revenue in I. T. A. No. 13/ Ran/2008 in the case of Shri Bhagwan Prasad, wherein the Revenue has raised the following grounds : (1) The assessee never filed any return of income despite having received notice under section 158BD on April 6, 2005. He also did not reply to the detailed questionnaire dated March 9, 2007 served on March 12, 2007 to explain the specific details on various s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents with the figures as per the balance-sheet claimed to have been filed before her. 10. During the course of hearing, learned Departmental Representative vehemently argued containing, inter alia, that the learned Commissioner of Income-tax (Appeals) has allowed the appeal of the assessee on the ground that the Assessing Officer has not seen the regular returns of the assessee filed with the Department in the regular course, wherein the amounts were found to be disclosed. He contended that the assessee has never filed returns before the Assessing Officer. The learned Commissioner of Income-tax (Appeals) has given relief to the assessee after verifying the returns of the assessee, which were not filed before the Assessing Officer and violated the provisions of rule 46A of the Income-tax Rules. 11. Contrary to this, the learned authorised representative for the assessee assailed the contention of the learned Departmental Representative contending that the assessee has given reply to each and every letter of the Assessing Officer and without communicating the reasons, the Assessing Officer proceeded to make assessment under section 158BD. There is no undisclosed income in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d document PP 4, pages 36 to 56 were the application for security money for Rs. 2,81,600 filed in the name of different persons that are processed by the Excise Department. But the treasury officer withheld the payments since the signature of the application did not tally with the signatures made by the claimant in persons before the treasury officer. Thus it was not clear as to who had invested the auction money thus prompting him to adopt the substantive as well as protective assessment and made a further addition of Rs. 2,81,600 on a similar basis. (3) The learned Commissioner of Income-tax (Appeals) has stated that the assessee had declared sums of Rs. 11,74,989 and Rs. 2,02,377 in his balance-sheet under the head 'Investment' with M/s. Dinesh Prasad and M/s. Sunil Kumar respectively and further writes that the Assessing Officer has not taken pain to examine all these things and he has made additions. This fact remains that the assessee had never filed any return of income or any balance-sheet before the Assessing Officer on the basis of which necessary enquiries and verifications could have been made. Thus the observation of the learned Commissioner of Income-tax (Appeals) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed an opportunity of being heard but he opted not to comply nor any written submission was filed. In the view of the matter, we are of the considered view that since the transactions made in the assessment year under appeal are found to have been disclosed in the return of income of the assessee already filed in the regular course, the addition made in this assessment order is not sustainable and accordingly, the learned Commissioner of Income-tax (Appeals) has rightly deleted the addition made by the Assessing Officer in the assessment order. Under these facts and circumstances of the case, we are of the considered view that the issue raised by the Department is devoid of merit and hence, dismissed. 17. In the appeal being IT (SS) A. No. 15/Ran/2008 filed by the Revenue in the case of Smt. Veena Shah, wherein the Revenue has raised the following grounds : (1) The assessee never filed any return of income despite having received notice under section 158BD on April 6, 2005. She also did not reply to the detailed questionnaire dated March 9, 2007 served on March 12, 2007 to explain the specific details on various seized document. The Assessing Officer observed on the basis of seize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... name in which cash deposits totalling to Rs. 17,20,970 (interest accrued at Rs. 15,593) were made. In addition, it appears that the assessee also received gifts totalling to Rs. 15,00,000 in support of which no clarification as to the name and address of the donors, their creditworthiness or genuineness of the transactions could be filed prompting the Assessing Officer to treat the gifts as bogus and make necessary additions. Such addition was made on the basis of statement recorded under section 131(1) of Shri Pramod Prasad on March 17, 2003 in the course of which he could not furnish any evidence or clarify the donors. (2) The learned Commissioner of Income-tax (Appeals) erred in deleting the addition of Rs. 17,20,970 made on protective basis by holding that the Assessing Officer made the substantive addition in the case of Shri Sunil Kumar Shah husband of the assessee in whose case the addition was deleted and as such the Assessing Officer should not have made the addition again on protective basis in the case of the assessee. By holding such opinion, the learned Commissioner of Income-tax (Appeals) overlooked the basic issue as to whom should the sources of deposits in the ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section is also incorrect since the Assessing Officer based his enquiry on seized documents. Since the seized documents did not name any other person it was for the assessee to explain the sources of deposit of auction money. The learned Commissioner of Income-tax (Appeals) has failed to appreciate this fact. 20. In the appeal being IT(SS)A. No. 18/Ran/2008 filed by the Revenue in the case of M/s. Jharkhand Liquor (P.) Ltd., wherein the Revenue has raised the following grounds : (1) The assessee never filed any return of income despite having received notice under section 158BD on April 6, 2005. The Assessing Officer observed from the seized document coded as PP 1 that a sum of Rs. 2,23,82,500 was invested/deposited with the assessee-company by Shri Pramod Prasad, one of the directors of the assessee-company. The assessee or his authorised representative never filed any clarification about the sources of deposit made with the assessee-company by its director. Hence, the Assessing Officer made the addition of the entire amount on a substantive basis in the hands of Shri Pramod Prasad and on a protective basis in the hands of the assessee-company. (2) Similarly further sums of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia, Manitant, Dhanbad in which she deposited sums totalling to Rs. 14,94,600 between the financial year 1996-97 and 2002-03. The assessee never chose to furnish any specific reply consequently the Assessing Officer basing on the seized document namely PP 3 made further enquiries in the course of which it was revealed that the assessee had indeed made the deposits in her bank account. Thus he made the addition of Rs. 14,94,600 on a protective basis in the case of the assessee while making substantive addition in the case of Shri Pramod Prasad as it was not clear whether the deposits owe its original to the income earned by the assessee of Shri Pramod Prasad. Similarly he also made addition on account of unexplained gifts totalling to Rs. 9,25,260 on the basis of the statement on oath of Shri Pramod Prasad under section 131. In the course of which Shri Pramod Prasad was quizzed about the materials relating to the gift transactions on which he gave evasive replies. The Assessing Officer treated the gifts as bogus having been received in the name of Smt. Namita Shah which were admitted by Shri Pramod Prasad to have actually benefited him. Thus the Assessing Officer substantive additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... money for lifting of liquor were made in the name of the licensee, i.e., Shri Kundan Prasad, proprietor, Country Liquor Shop, Katra but the return applications were found from the possession of Shri Pramod Prasad, the main person in the Pramod Prasad group of cases. Thus the Assessing Officer made the addition on a substantive basis in the case of Shri Pramod Prasad and on a protective basis in the case of the assessee in question. (2) He also found that the seized document No. PP-4, pages 36 to 56 were the application for refund of security money for Rs. 2,38,908 (consisting of a sum of Rs. 2,12,200) with the treasury officer and Rs. 26,708 with the Excise Department) filed in the name of different persons that are processed by the Excise Department. But the treasury officer withheld the payments since the signature on the applications did not tally with the signatures made by the claimants in persons before the treasury officer. Thus it was not clear as to who had invested the auction money thus prompting him to adopt the substantive as well as protective assessments and made a further addition of Rs. 2,38,908 on a similar basis. (3) The learned Commissioner of Income-tax (App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f liquor was made in the name of the licensee, i.e., Shri Nirala Prasad, proprietor, Country liquor shop, Angarpathra but the refund application was found from the possession of Shri Pramod Prasad, the main person in the Pramod Prasad group of cases. Thus the Assessing Officer made the addition on a substantive basis in the case of Shri Pramod Prasad and on a protective basis in the case of the assessee in question. (2) He also found that seized document No. PP-4, pages 36 to 56 were the application for refund of security money for Rs. 5,61,550 filed in the name of different persons that are processed by the Excise Department. But the treasury officer withheld the payments since the signature on the applications did not tally with the signatures made by the claimants in persons before the treasury officer. Thus it was not clear as to who had invested the auction money thus prompting him to adopt the substantive as well as protective assessments and made a further addition of Rs. 5,61,550 on a similar basis. (3) The learned Commissioner of Income-tax (Appeals) has stated that the assessee had declared sums of Rs. 11,91,190 and Rs. 5,61,550 in his balance-sheet under the head inves ..... X X X X Extracts X X X X X X X X Extracts X X X X
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