9911796707
TMI Blog2013 (7) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... had been validly served on the appellant or his authorized representative for AY 2001- 02, in accordance with the provisions of Section 282 of the Income tax Act, 1961,the reassessment proceedings are invalid, void and without jurisdiction. 3) That the orders passed by the CIT(A) are against law and facts on the file in as much as CIT(A) was not justified to reject the contention of the appellant that for AY's 2001-no notices u/s 143(2) of the Income-tax Act, 1961 have been served on the appellant within the statutory time period of twelve months, these assessment are thus null and void ab-initio. B. On merits of additions for all years:- (4) That the CIT(A) erred in law and on facts in holding that the alleged Pen Drive had evidentiary value in as much as the same was a illegal, fabricated and a product of false storey spun by the Punjab Police by ignoring that: (i) Specific and clear cut findings of the Trial court that the Pen drive has no evidentiary value; (ii) Contradictory and inconsistent statements and actions of the Vigilance Bureau before the judicial authorities; (iii) Submissions made on behalf of the appellant denying the recovery of the pen drive and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer in adding back a sum of Rs. 9,21,200/- (equivalent to US $ 20,000) on the ground that he appellant had allegedly made an unaccounted payment of US $ 20,000 to Mr. Park Young Tae of South Koreea by treating the same a alleged unexplained expenditure. 1.3. Revenue's appeal in A.Y. 2002-03 raises following sole effective ground: "On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 25,35,220/- made by the Assessing officer on account of difference in amount of sale consideration of the property sold by the assessee and valuation report." 2. Brief facts leading to the controversy and about recovery of alleged pen drive by Punjab Police; passing on of that information to Income Tax Department and consequent proceedings are mentioned in the reasons recorded for reopening and other facts mentioned in assessment order for A.Y. 2001-02 for the sake of brevity and clarity they are reproduced hereunder: "Sh, Cheten.Gupte S/o Late Sh. Ram Lal C/o Jagat Theatre, Chandigarh filed return of income for the Asstt. Year 2001-02 with Income Tax Range-2, Chandigarh on return receipt number 008847 on 11 October 2001 at an income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... established law that any books of account, other documents or other valuable articles or things found in the possession or control of any person, it may be presumed that such books of account, other document or other valuable article or things belong to such person and that the contents of such books of account, other documents are true. The primary onus to establish the identity, genuineness and creditworthiness of the above said creditors is upon the assessee. In view of the aforesaid reasons, I have reason to believe that a sum of Rs. 40,49,77,905/- on account of credits, Rs. 7,35,49,141/- on account of interest paid and R.s. 84,86,363/- on. account of interest payable has been under assessed i.e. escaped assessment within the mean of section 147(b) of the Income Tax Act, 1961." Subsequently, the jurisdiction over the assessee was transferred to ACIT, Central Circle-5, New Delhi u/s 127 vide order F.No.CIT-I/CHD/2008-09/1572 by CIT-I, Chandigarh. On 28.11.2008 letter was issued to assessee for furnishing of return. However none attended. On 12.12.2008 a letter was received in dak in which assessee contested the issue of notice u/s 148. Subsequently, assessee was given a show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re that service of all the notices pertaining to the assessee group is effected at the address C/o Kiran Cineme, Sector-22, Chandigarh. Different employees of Kiran Cinema have been receiving these notices. Even in the case Smt. Vandana Gupta, assessee's daughter, service of notices has been effected at the address C/o Kiran Cinema, Sector-22, Chandigarh. And in this case else different employees have received the notices issued by this office and all the notices have properly been complied with and assessment made thereto has been accepted by the assessee. Even in other group case of M/s Jagtumal Kundan Lal, C/o Jagat Theatre, Sec. 17, Chandigarh service of notices has been effected at Kiran Cinema, Sector-22, Chandigarh. In this case also, different employees of Kiren Theatre have received the notices on behalf of assessee and proper compliance has been made by the assessee and assessment framed has been accepted by the assessee. In view of the above fact, it is amply clear that notice u/s 148 of the income tax in respect of Sh.Chetan Gupta has been received by a responsible employee of Kiran Cinema and there is no ground for contesting the service of notice by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quirements as per section 282(1) of the Income Tax Act, 1961. It is a settled proposition of law that any illegality or infirmity in complying with the provisions of section 282 resulting in non-service of the notice divests the AO from jurisdiction to reassess. Such non compliance is fatal to the legality of the re-assessment and renders it invalid. Lower authorities reliance on section 292B claiming it to be curative for this defect has been held by the court to be untenable. In this connection the assessee derives judicial support from the following judgments:- - CIT v Hotline International Pvt. Ltd 296 ITR 333 (Del). - CIT vs Shital Prasad Kharag Prasad [(2006) 280 ITR 541 (All)]; - Laxmi Narain Anand Prakash vs. CST [(1980) 46 STC 71 (All) (FB); (1980) UPTC 125]; - Bhagwan Devi Saraogi v. ITO [(1979) 118 ITR 906 (Cal)]; - Madan Lal Agarwal v. CIT [ (1983) 144 ITR 745 (All)]; - CIT vs Mintu Kalita [(2002) 253 ITR 334 (Gauhati)]; - Upadhyaya (R. K.) v. Shanabhai P. Patel [ (1987)] 166 ITR 163 (SC)] 3.1. In assessees case for AY 2001-02, the notice u/s 148 is claimed to be issued by the A.O. on 28.03.2008, there is no evidence of its service on the assessee. Depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and legal position, it is clear that mandatory requirements for proper assumption of jurisdiction u/s 148 by a valid service of notice u/s 148 on the assessee has not been fulfilled by the AO. Consequently as per the mandates of Jurisdictional High Court the impugned reassessment is illegal; without jurisdiction and liable to be cancelled. II. Non Service of notice u/s 143(2): 3.4. It is further pleaded that the impugned reassessment has been made by the A.O. even without serving notice u/s 143(2) of the Act also which again is a mandatory requirement before making any assessment u/s 143(3)/147 of the Act. In the present case the assessing officer proceeded to complete the reassessment, after rejecting repeated and persistent objections of the assessee about non service of notices u/s 148 & 143(2). It is trite law that the A.O. is under mandatory legal obligation to issue notice u/s 143(2) of the Act within 12 Months from the date of filing of the return and thereafter proceed with the inquiries for completion of assessment. Non issue of 143(2) notice within the stipulated period would make the consequent assessment invalid. Reliance is placed on: - CIT Vs. Hotline Internati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proper, therefore the reasons be quashed. IV. Merits of the additions: a. Evidentiary value of Pen Drive and it's print outs: (i) The evidentiary value of alleged Pen Drive has been further has been turned down by the court of Special Judge, Ludhiana vide order dated 12.06.2007 (placed on pages 354 to 360 of paper book) wherein while releasing the assessee on bail the Hon'ble. Court categorically held that "the entries of Pen Drive are without any basis and has no legal value". The evidentiary value of alleged Pen Drive has been negated by the Ld. Court observing that "the data revealed from the Pen Drive is not corroborated by any other evidence". (ii) The impugned assessment orders have been made by the learned AO only on the basis of this pen drive without corroboration and various other binding legal considerations. The learned AO has not carried out any independent investigation to verify such entries from third parties or independent sources. The exercise to make the huge and unjustified additions in all these years without cross verification, examining the contentions of assessee and only believing on police version and their fabricated evidence is highly arbi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Officer v. Jayaraman [(1987) 168 ITR 757 (Mad)]; - Keshavlal Punjaram v. Commissioner of Income-tax [(1983) 141 ITR 466 (Guj)]; - Commissioner of Income-tax Vs Thobhandas Jivanlal Gajjar [(1977) 109 ITR 296 (Guj)]. 3.6. The alleged recovery of the pen drive from the assessee is a false story fabricated by the police to frame the assessee. A bare reference to the panchnama dated 20.5.2007 (placed on 297 to 303 of paper book), prepared at the residential house of the assessee at 21, Maharani Bagh, New Delhi and at office 118, Ansal Bhavan 16, K.G. Marg, New Delhi would reveal that the same two witnesses have been used by the police to set up the façade of recovery at two distant places namely Maharani Bagh and K .G Marg in Delhi. Besides, they are not independent witnesses of the respective locality by V.B. The seizure memo of the pen drive by V.B. shows that the date of execution as 20.5.2007 whereas the statements of the two witnesses namely Shri Rakesh Kumar and Shri Gurcharan Singh ,DSP narrating the alleged story of seizure is dated 19.5.2007.i.e. one day in advance of the alleged search and seizure of pen drive. Thus the police search & recovery of pen drive itse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng with its report to the Magistrate having jurisdiction. Thereafter such seized property becomes the custodia legis of the court and the same cannot be transferred or appropriated except under the order of the court. In the instant case the VB had already tampered with alleged the pen drive and taken printouts before handing over the data to the court in blatant violation of principles of natural justice and section 457 of the Cr.PC. Therefore the alleged pen drive, its print outs have no sanctity or value as reliable evidence under income-tax Act. VI. Violation of Information Technology Act, 2000 Indian Evidence Act, 1872: 3.10. Annexure II of the Information Technology Act, 2000 contains amendments made in the Indian Evidence Act, 1872 for legal recognition of electronic documentation as well as security thereof and access thereto. Sections 65A and 65B were inserted into the Indian Evidence Act, 1872 relating to admissibility of computer generated evidence. By virtue of the provisions of Section 65A, the contents of electronic records may be proved in evidence by the parties in accordance with the provisions of Section 65B. Sub-clause 1 of Section 65B stipulates that any infor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while preparing the CD from the pen drive thus accessing the electronic record in violation of section 16 and section29 of the I.T. Act, 2000 as well as section 65B of the Evidence Act. For creating a "bit image copy" of the suspect hard disk (pen drive in the instant case). It is essential that a hash code is created for the "original" being copied so that the original can be preserved and not tempered with. Clone can then be subjected to analysis. Hard Drive Duplication Technology has normally the facility that a report is generated along with the hash code which can be jointly authenticated by the system owner and the investigator to avoid any disputes .on the integrity of data transfer. 3.14. The procedure followed as per the own version of the VB in the present case is a total infringement of relevant laws, negation of accepted norms and code of practices as laid down in the Evidence Act and the I.T. Act, 2000.The so called printouts are therefore unreliable and do not constitute admissible evidence in the eyes of law .The assessment made by the AO on the foundation of such non est material is devoid of any merit on legal and factual perspective and deserves to be quashed. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m" for management or administration, the credits cannot be treated as income of the assessee. 3.16. The Ld Assessing Officer for AY 2001-02 vide letter dated 22-12- 2008 (pages 197 -200 of the Paper Book) provided the Appellant with a computation of the manner in which the figures of Rs. 43,69,45,655/-, which is simply a summation of the credit entries in the various accounts and no effort was made to arrive at the 'Peak Balance' to which the addition, if any, was to be limited in the interest of fair play, equity and justice. Similar letters were issued for other years. 3.17. In response, detailed replies were filed wherein serious flaws and discrepancies in the working of the proposed additions were pointed out (reliance is placed at Pages 201 - 213 of the Paper Book). A peak balance statement comprising day to day position with regard to debits and credits in the various ledger accounts was prepared which gives a day-wise position of the balances as a whole of all the accounts for the current year's transactions by ignoring the opening balances (pages 214 -245 of the Paper Book). Specific merits of additions: AY- 2001-02: 3.18. With regard to the proposed additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the debit side of the respective accounts wherever reflected and not considered by the Ld Assessing Officer aggregates to Rs. 27,44,40,888/-. ( pages 207 to 212 of Paper Book) 3.22. The pen drive is one single piece of evidence, if the same is to be treated as correct logically all the entries mentioned therein including debits and credits are to be considered correct and given due effect as they flow from the same evidence. An evidence cannot be held to be part true and part false, more so when the assessee is furnishing convincing reasons in support his contentions. In many of the accounts as per the details provided to the assessee, there are opening debit balances also, when any amount has been received out of the opening debit balances during the year, the same is to be considered as funds available with the assessee which can be used for the credit in other accounts. However, the same have been conveniently ignored by assessing officer by paying no heed to explanation. To determine the exact cash introduced during the year, such debit opening balances which are received during the year have to be reduced from the credit balances, which also has not been done by the Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /-) Undisclosed income for AY 2001-02 : NIL Ld AO or CIT(A) have not offered any adverse comments on such working furnished by the assessee. 3.25. From the perusal of above, it is evident that there is negative inflow and no fresh introduction of any undisclosed credit balance during the year in the print outs; rather the opening debit balances have been used for the role over. In the absence of any fresh introduction of cash or credit, no addition as undisclosed income is exigible to income tax in A.Y. 2001-02 in the given facts and circumstances of the case for any alleged introduction of undisclosed income. 3.26. On same facts, circumstances, methodology and contentions for A.Ys. 2002-03 and 2003-04 the correct working of peak shall be as under: A.Y. 2002-03:- 3.27. In this year also AO added all the entries as undisclosed income at Rs. 42,01,86,595/-, it contained various mistakes. (i) The credits alleged to be introduced in various accounts of print outs have been taken as unexplained income. However Debit amounts in the various accounts which represents the utilization thereof and debited in the respective accounts i.e. the payment made has income back to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt. The said entries are in no way unexplained credits as there are against just transfer entries to P&L A/c. 3.31. Opening balance -- in most of the accounts, opening credit balance has been ignored which being part and parcel of same seized material alleged pen drive and print outs are to necessarily considered in the previous and subsequent year as the case may be. However, in many instances, opening credit and debit balances also have been added in computation of undisclosed income and treated as credit entries for the year. The said opening balance has to be reduced for calculating peak credit as a solitary principle of accountancy and fair estimate. 3.32. It is pleaded that in order to determine the peak balances the pen drive and print out being one material no selective approach can be applied by picking single account and seeing it in isolation; all the accounts are to be tabulated and considered together on a global basis. Only after carrying out this realistic exercise the peak balance, if any, is to be considered as undisclosed income introduced outside the books of accounts. This is necessary as once a person introduces money by financing a person and out of the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 8,08,26,928/- an item wise analysis of the various entries was furnished to the Ld Assessing Officer (pages 241-242 of the paper book) as follows:- Alleged credits as per working 8,08,26,928 Less: Mistakes to be corrected 2. Credit balance reutilize 2,13,67,355 3. Opening credit balance and reutilized 1,38,14,351 4. Opening Debit balance 1,10,495 5. Contra entries 10,00,000 3,62,92,201 (Refer page 242 of the Paper Book) 4,45,34,727 3.37. On the same earlier pattern, the Credit introduced in various accounts has been taken as unexplained income. AO has given no credit for reutilization of funds; Opening Debit Balance; Contra entries etc. and the addition has been made at an arbitrary figure. 3.38. After taking into account the corrected entries at Rs. 4,45,34,727/-, assessee furnished details about peak working of the undisclosed income at Rs. 46,16,387/- as on 28.8.2002. The details thereof were furnished before AO and CIT(A) and are placed at PB 243 to 279 (page255). Thus for AY 2003-04 the peak undisclosed income can be worked at Rs. 46,16,387/-. The undisclosed income from AY 2002-03 i.e. Rs. 36,89,310/- being also available with the assessee and pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be placed completely on the availability of a previously earned undisclosed income. A number of circumstances of vital significance may point to the conclusion that the cash deficit or cash credit cannot reasonably be related to the amount covered by the intangible addition but must be regarded as pointing to the receipt of undisclosed income earned during the assessment year under consideration. It is open to the revenue to rely on all the circumstances pointing to that conclusion. What these several circumstances can be is difficult to enumerate and indeed, from the nature of the enquiry, it is almost impossible to do so. In the end, they must be such as can lead to the firm conclusion that the assessee has concealed the particulars of his income or has deliberately furnished inaccurate particulars. It is needless to reiterate that in a penalty proceeding the burden remains on the revenue of proving the existence of material leading to that conclusion" (ii) CIT v. K. S. M. Guruswamy Nadar and Sons (1984) 149 ITR 127 (Mad.) "But in this case in addition to the bogus cash credit there is an addition towards suppression of profit. In such a case as this, when there are two addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r impounded reflected only the borrowings of the assessee. These borrowings were utilised by the assessee for acquiring the assets found during the search. Unfortunately, most of the borrowings were not supported by proper confirmation. Apprehending the situation that the creditors would be reluctant to come forward, the assessee had made a declaration to that effect. The declaration made by the firm covered an amount of Rs. 18,00,416. Besides, the two partners had declared Rs. 6,50,000 on account of chit fund and unrecorded advances. After giving complete details of the borrowings and reconciling the same with reference to other assets, the assessee proposed that in the case of the firm, addition to the tune of Rs. 19,39,888 might be retained over and above the sum added in partners' cases as per their declarations in respect of their contribution in chit funds. It would be contrary to the canons of law to tax the same amount twice, i.e. , as borrowings and as cost of assets. The borrowings were utilised to acquire the assets. Once the contention of the assessee, that the amount as reflected in the 'seized paper' represented borrowings of the assessee, was accepted, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal sustained the addition only to the extent of peak credit of Rs. 48,000. 3. In DB IT Ref. No. 1/1998 the Assessing Officer added a sum of Rs. 50,000 as income from undisclosed sources as interest income. It was found that a sum of Rs. 50,000 was advanced to one M/s. Ramrakh Poonamchand on 9th March, 1980, and 17th March, 1980, by the assessee. The addition was confirmed by the CIT(A). It is significant to notice at this stage that Dy. CIT(A) by order, dated 4th Nov., 1992, deleted the addition of Rs. 50,000 for the assessment year 1980-81. In view of this fact, the Tribunal deleted the addition of Rs. 6,720, the same being consequential to the main addition of Rs. 50,000. 4. Having considered the facts of both the cases, we are satisfied that no referable question arises from the order of the Tribunal. Both the reference applications being DB IT Ref. No. 43/1998 and DB IT Ref. No. 1/1998 are rejected. 3.40. Apropos addition of Rs. 9,21,200/- on account of payment of US $ 20,000 in South Korea, in AY 2007-08the ld. Counsel contends that: (1) The Appellant is not aware of any transaction of USD 20,000/- and the basis of the said allegation and source and evidence of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings. In criminal proceedings there may be any issue contested by the assessee, but in income tax proceedings the pen drive having been found from the possession of the assessee, it becomes an admissible evidence for investigation by AO. The fact that many entries tally with the business concerns of the assessee itself indicates that the pen drive belonged to the assessee. There is no issue of presumption u/s 292C as the contents of the pen drive have connection with the transactions of his concerns, bank accounts and financial dealings. Therefore the AO has properly recorded his satisfaction about income escaping assessment as the reasons recorded have live nexus with the contents mentioned in the pen drive and its print outs. Therefore the reasons are valid and issue of notice u/s 148 thereon is perfectly justified. (ii) Apropos the service of notice u/s 148 on the assessee for AY 2001-02 ld DR referred to the assessment record, remand report and letters received from the field about the service of notices u/s 148 and 143(2) which are as under: During the course of the appellate proceedings assessee has raised various issues. 1. The assessee has raised the issue that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and such assessee shall be precluded from taking any objection in any proceedings or inquiry under this Act that the notice was - (a) not served upon him: or (b) not served upon him in time: or (c) served upon him in an improper manner: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment. 3. Assessee has raised the issue with regard to validity of the approval granted u/s 151 by the Addl. Commissioner of Income Tax. A copy of the approval letter is annexed alongwith a remand report for your kind perusal. 4. The assessee has made details submission that the addition has not been done correctly. The contention of the assessee was looked at in detail during the course of assessment proceedings also and very little merit was found in it. In the assessment order Ld. A.O. has discussed in detail the working of peak credit and has point vise rejected the contentions of the assessee. The detailed working of peak credit has already been given in the assessment order and thus the addition heeds to be sustained on this account. In this regard, in order to authenticat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y which was withdrawn had been redeposited. The utilization of the money withdrawn has not been established beyond doubt. It is a common knowledge that withdrawal takes places with certain purposes and therefore, purpose is a vital ingredient to establish the claim of the appellant. In view of this benefit of peak and self withdrawal cannot be given. Concerning cash receipts against opening debit balance the assertion of the appellant is not accepted as the appellant has not furnished any linking evidence that the amount shown as credit in the accounts was received out of debit opening balances in the respective accounts in various persons/ parties account. The appellant had denied maintaining other persons account therefore the benefit of opening debit balances cannot be given unless it owned up the contents as true. CIT (A)'s findings: "Page 7 (d) The contention of the assessee to give credit for credit debit, could not be accepted since the assessee had denied from the beginning that he was maintaining the accounts of other persons and so the benefit of peak credit could not be given to the assessee. Assessee has not produced the confirmation from the persons that their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asons to come to a reasonable belief that income has escaped assessment in all the impugned years. (ii) Whether service of notice u/s 148 is a mandatory condition for assumption of jurisdiction by AO u/s 147 read with sec 148 to frame a valid reassessment for A.Y. 2001-02. (iii) Whether there is a proper service of notice u/s 148 in terms of sec 288(1) on the assessee for AY 2001-02 and if not so the effect thereof on the reassessment proceedings. Whether sec 292B cures such non service. (iv) Whether there is non service of notice u/s 143(2) also on the assessee for AY 2001-02 and the effect thereof. (v) Whether the alleged pen drive and its printouts are admissible evidence in income tax proceedings and can be used to make appropriate additions on the assessee. (vi) Whether the benefits of peak credit, set off or telescoping and the extent to which it can be given to the assessee in the facts and circumstances of the case. (vii) The above issues are to be examined on the basis of facts, circumstances and judicial precedents. 6.1. Coming to the first question set out by us above, it is apparent that many of the transactions recorded in the alleged pen drive belong to v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Code of Civil Procedure referred to above, wherever it is practicable, the service has to be effected on defendant in person or on his agent. Admittedly, in the present case, notice under section 148 of the Act was not tendered to the assessee nor the same was refused at all by the assessee. It is an admitted case of the revenue that when the officials of the Income-tax Department went to serve the notice under section 148 for the assessment year 1995-96, the security guard informed them that the company was closed for Holi festival holidays. The security guard by no stretch of imagination can be said to be the agent of the assessee and admittedly no notice was tendered either to the assessee or his agent nor the same was refused either by the assessee or his agent. 23. Under order V, rule 17 of the Code of Civil Procedure, the affixation can be done only when the assessee or his agent refuses to sign the acknowledgement or could not be found. Here, in the present case, no effort was made by the Income-tax Department to serve the notice upon the assessee, since the company of the assessee was closed due to Holi festival holidays, and admittedly no effort was made by the Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorized to complete the assessment ex parte under section 144. Clause (b) of section 158BC, by referring to sections 143(2) and (3) would appear to imply that the provisions of section 143(1) are excluded but section 143(2) itself becomes necessary only where it becomes necessary to check the return, so that where block return conforms to the undisclosed income inferred by the authorities, there is no reason why the authorities should issue a notice under section 143(2). However, if an assessment is to be completed under section 143(3), read with section 158BC, notice under section 143(2) should be issued within one year from the date of filing of block return. Omission on the part of the assessing authority to issue notice under section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of a notice under section 143(2) cannot be dispensed with. The other important feature that is required to be noticed is that the section 158BC(b ) specifically refers to some of the provisions of the Act which are required to be followed by the Assessing Officer while completing the block assessment under Chapter XIV-B. This legislation is by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson working for the group entities of assessees family and this amounts to a proper service on assessee. These facts are admitted by the department which are evidenced by the remand report and field correspondence mentioned above. 6.7. Assessee's contention that Said Ved Prakash is neither his employee nor his authorized agent, remains uncontroverted. Merely because he appeared in some other group entities will not detract the fact that notice was not served on assessee. During the course of reassessment AO was intimated about non service of notices u/s 148 and 143(2) but AO failed to take cognizance of assessee's intimation and objections. From the assessment record, remand reports, field correspondence and oral contentions, department could not demonstrate before us that notice u/s 148 was served on the assessee for A.Y. 2001-02. In view of these facts and circumstances and keeping in view the binding decisions of Hon'ble Delhi High Court in Hotline International and Hon'ble Supreme Court in the case of Hotel Blue Moon (supra) we are left with no choice but to respectfully follow them and hold that in the absence of a valid service of notice u/s 148 on the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as owned by the assessee and on top of that proper adjustments of peak credit emerging from the pen drive is being refused to be worked by the department. That apart the other logical claims of set off, role over, correction of mistakes and credit of opening balances which are emerging from the same contents i.e. print outs of pen drive is not being allowed to assessee. The assessment of undisclosed income is thus arbitrary and patently against the settled judicial propositions and departments own way of working in other survey, search or reassessment cases in which such principles are routinely applied. 6.13. We have heard both the parties on these issues at length most of the arguments are contained in the written submissions filed before lower authorities, which are mentioned above in brief. From AO's remand reports and observations contained in the orders ld. AO and CIT(A), the details furnished by assessee are as under: (i) Assessee filed details about each and every entry on day to day basis, these details are placed on paper book of respective year. (ii) From the details a summary of mistakes, opening balances (debit or credit as the case may be), contra entries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tart with the theory of the department that assessee is acting as a manager or administrator of funds for 148 other persons. Though some names are given however no inference are drawn by authorities below. Therefore, we leave this issue here. More so they become third parties to the proceedings and any observations are undesirable and may impinge on principles of natural justice. The departmental theory of assessee being a fund manager for others is supported by the fact that assessee filed complete day to day details and entry by entry details of contents of print outs available with the department. They all are part of the paper books. They were submitted before Assessing officer and CIT(A). Remand report was submitted by AO on CIT(A)'s initiative. 6.19. From the explanation of the entries and departmental theory, it emerges that assessee was working as the fund manger or administrator for others. While dealing with the issue this fact is to be kept in reckoning. 6.20. Presumption u/s 292C will not be applicable in this case as admittedly there was no search proceedings under income tax act on the assessee. A statutory presumption can be raised against assessee when the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other presumption statutory or otherwise which may be raised in the context of the facts of this case. In our considered view assessee has discharged it's onus in explaining these entries by filing the details before AO, CIT(A) and in remand proceedings. Assessee has pushed the ball in the court of department by demonstrating from the details of entries that he manages the funds for others. In the course thereof he requests for necessary working of peak credit, correction of mistakes, contra entries and considering the claims of available opening balances. The claim of opening balances is made as the data recovered pertains to three years and assessees fund managing activities span to three years. Despite assessees diligence in filing all the details the authorities below fail to consider the assessee's objections and workings. In our considered view the facts and circumstances of the case and departmental theory warrant application of peak theory, telescoping, correction of mistakes and taking cognizance of journal/contra entries. In our view ratio of decisions in the cases of - Anantharam Veerasinghaiah & Co. (supra); K.S.M. Guruswamy Nadar & Sons (supra); Singhal Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me other agency Assessing officer has made the addition without giving opportunity to cross examine Mr. Young. This clearly violates the principles of natural justice embodied in the maxim "audi alteram partem". We find merit in the argument of ld. Counsel. The impugned addition cannot be made in the hands of the assessee unless proper opportunity to defend himself against the allegation including the cross-examination of Mr. Young and the result of proceedings before the E.D. authorities are to be considered. This ground is set side restored back to the file of assessing officer to decide the same afresh in accordance with law. 9. Apropos the revenue's appeal for A.Y. 2002-03, regarding the properties sold by the assessee, the sale consideration has been received by the assessee through a registered sale deed. There is no allegation about violation of any circle rate or comparative sale instance. The purchaser of the property has not been examined so as to raise any doubt about any on money received by the assessee. In our view when a property is sold by a registered document, the addition cannot be made purely on the basis of a valuation report which is only in the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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