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Shri Shirish C. Karia Versus DCIT, Circle-2, Pune

2016 (6) TMI 207 - ITAT PUNE

Validity of notice / proceedings u/s.158BD - recording of the satisfaction by the AO - AO of the searched person himself is not sure as to under which provision of the Act, action should be taken - Held that:- In the instant case, the paper was seized from the place of Shri Tayyab Habib Chotani during the course of search which contain the amounts received in cash by him. He has already admitted such cash as his undisclosed income, a fact recorded by the CIT(A) and not disputed by the Revenue. F .....

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d Shri Tayyab Habib Chotani has admitted such unaccounted cash as his undisclosed income, therefore, there remains no undisclosed income belonging to any other person other than the searched person. Under these circumstances, the proper course of action here should have been notice u/s.148 and not notice u/s.158BD since the AO of the searched person himself is not sure as to how and under which provisions the notice should be issued.

Thus as Shri Tayyab Habib Chotani has already admit .....

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016 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM Assessee : Shri Nikhil Pathak Revenue : Shri Hitendra Ninawe ORDER PER R.K.PANDA, AM : This appeal filed by the assessee is directed against the order dated 24-02-2010 of the CIT(A)-II, Pune relating to the block period 1991-92 to 2001-02. 2. Facts of the case, in brief, are that the assessee is the proprietor of M/s. Siddharth Builders engaged in the business of building and developing houses on open land. A search and seizure action u/s.132 .....

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otani in respect of sale of land situated at S.No.208, at Kalyani Nagar, Yerawada, Pune 411006. 3. Before ACIT, Central Circle-1(1), Pune, Shri Tayyab Habib Chotani had admitted that the transaction in the said seized documents are for the payments made by Shri Shirish C. Karia in cash as well as by cheque to him against the sale consideration of the said plot as per the terms of the sale agreement dated 18-10-1991 and 14-04-1992. Accordingly, the AO of Shri Tayyab Habib Chotani passed on the in .....

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Shri Tayyab Habib Chotani. The AO asked the assessee to explain the transactions noted on the said seized document. Initially, the assessee stated that the seized documents are not related to him at all. Subsequently, the AO issued another letter to the assessee to explain the transactions as his name and contents of the sale agreement made between the assessee and Shri Tayyab Habib Chotani are reflected in the said document. The assessee thereafter explained that the said document has two parts .....

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es not belong to him and subsequently admitted only a part of the transactions reflected on the said seized paper, i.e. only the cheque portion, the AO in order to justify the correctness of the claim of the assessee summoned Shri Tayyab Habib Chotani and recorded his statement u/s.131 of the I.T. Act. He also issued a letter summoning the assessee asking him to appear before him and explain on the admission made by Shri Tayyab Habib Chotani wherein he has categorically admitted the following fa .....

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e.(Rs.53,79,695/- ₹ 35,000/-) in cash from the assessee as mentioned in the said paper. Since there are duplication of two entries of ₹ 3 lacs and ₹ 50,000/- cash well as by cheque payments. (iv) He also received the payments of ₹ 40,29,506/- by cheque from the assessee as also mentioned on the said paper. (v) The cash payments were made by the assessee from September, 1992 to December, 1993, i.e. 16 months @ ₹ 25,000/- per month works out to ₹ 4 lacs and ther .....

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lacs which is over and above the payments already made by the assessee which are reflected on the said seized document, i.e. Party No.6, Bundle No.1, Page No.18. Thus, he accepted that he has received ₹ 50,39,695/- in cash and ₹ 40,29,508/- by cheques from the assessee. 5. However, the assessee did not attend before the AO but submitted that Shri Tayyab Habib Chotani does not have any credibility and his statement was recorded under threat and duress. The AO has not tried to find ou .....

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cross examine Shri Tayyab Habib Chotani for which the date was fixed for 21-11-2005 at 10.30 a.m. Although Shri Tayyab Habib Chotani appeared before the AO and was kept waiting till evening however the assessee did not turn up but a letter was filed on behalf of the assessee asking for further date for cross examination. It was also made a condition that the department should issue summon to other persons named by him for cross examination. In view of the above tactics adopted by the assessee, .....

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as rejected by the CIT. In view of the above and in view of the reasonings given at para 7 of the assessment order the AO held that cash payment made by the assessee to the tune of ₹ 50,39,695/- is the undisclosed income of the assessee for the block period 1990-91 to 2000-01. 6. In appeal the assessee challenged the validity of the notice issued u/s.158BD as well as the addition made by the AO to the tune of ₹ 50,39,695/- for the block period. However, the CIT(A) also rejected the a .....

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o confirmed the same in the statement recorded u/s.131 on 9.11.2005 by the Assessing Officer. The contention of the appellant that the statement was recorded under threat and coercion cannot be accepted, since it is not established from the facts available on record, in particular the statement in which it is categorically mentioned at the end as under : "Whatever stated above is true and correct to the best of my know/edge and belief. The above statement is given without any coercion, thre .....

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ut to ₹ 14,50,000/- was reduced; and a net addition of ₹ 36,24,695/- was made as undisclosed income in the case of Shri Tayyab Chhotani. Subsequently, it is seen from the appellate order passed by the CIT(A)-I, Pune dated 13.12.2004, that Shri Tayyab Chhotani has accepted this addition of ₹ 36,24,695/-. Therefore, considering the discussion made above at paras 4 to 6 of this order, the factual matrix regarding the transactions recorded on the seized documents, and the discussio .....

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the Appropriate Authority, in which no objection has been given for transfer of the property based on the apparent consideration mentioned in the agreement, is in a different context altogether. It is clearly mentioned in this certificate dated 24.12.1991 submitted by the appellant in the appellate proceedings as under : This no objection certificate is issued without prejudice to any income tax proceedings pending or contemplated under any other provisions of the I.T. Act, 1961. Therefore, thi .....

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hich is regarding reasonable opportunity to cross examine Shri Tayyab Chhotani, the opportunity of cross examination was granted but not availed by the appellant; for which the Assessing Officer's finding on page 5 and 6 of the assessment order has been reproduced above at para '7.2.Having gone through the observations of the Assessing Officer, I do not find any substance in the appellant's claim that no opportunity was granted to cross examine Shri Tayyab Chhotani and therefore, thi .....

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ssed. 16. As already discussed above, in the written submission, issue of satisfaction u/s.158BD has also been raised but no such ground of appeal has been raised. Therefore, this contention is not found to be acceptable. Similarly, in the earlier submission and also submission dated 12.2.2010 it is contended that notice u/s.143(2) was issued beyond a period of one year from the date of filing of return. Again no such ground of appeal was raised by the appellant nor any additional ground has bee .....

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issued on 12.7.2004, which was duly served on the assessee by RPAD on 21.7.2004 on the following address (which is the address given in the block return) : M/s. Siddharth Builders A-1, Siddharth Court, Siddharth Palace, Pune-1 A copy of the notice u/s.143(2) dated 12.7.2004 along with postal acknowledgement is enclosed herewith for ready reference. In view of the above facts, it is submitted that notice u/s.143(2) was issued and served within the stipulated time. Thus, the ground raised by the a .....

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the CIT(A) the assessee is in appeal before us with the following grounds : The following grounds are taken without prejudice to each other- On facts and in law, 1. The asst. order passed u/s.158BD r.w.s.158BC is barred by limitation since the notice issued u/s.158BD was time barred. 2. The asst. order passed u/s.158BD r.w.s.158BC is null and void on the ground that no proper satisfaction has been recorded as required by law. 3] The learned CIT(A) erred in confirming the addition made of ₹ .....

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payment for purchase of land. c. Proper opportunity of cross examination of Shri Chhotani was provided to the assessee and hence, the addition was made after following the principles of natural justice. 5] The learned CIT(A) failed to appreciate that the assessee had not made any unaccounted payment to Shri Tayyab Chhotani for purchase of land and hence, the question of making any addition of ₹ 50,39,695/- simply does not arise. 6] The learned CIT(A) ought to have appreciated that a. The a .....

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ually made the payment and hence, the addition made on the basis of the statement of Shri Chhotani was not justified. d. No proper opportunity of cross examination was granted to the assessee and therefore, the addition made is not justified at all. 7] The learned CIT(A) has erred in confirming the addition without appreciating the correct facts of the case. 8] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal. 8. The assessee has also taken the followi .....

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should be admitted. 10. After hearing both the sides and in view of the decisions of Hon ble Supreme Court in the case of NTPC Ltd. reported in 229 ITR 383, Jute Corporation of India Ltd. reported in 187 ITR 688 and the decision of Hon ble Bombay High Court in the case of Ahmedabad Electricity Company reported in 199 ITR 351 the additional ground raised by the assessee being legal in nature is admitted for adjudication. 11. So far as the ground of appeal No.1 is concerned the Ld. Counsel for the .....

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tion note of the ACIT, Central Circle-1(1), Pune who is the AO of Shri Tayyab Habib Chotani to the ACIT, Circle-2, Pune who is the AO of the present assessee and which reads as under : No.Pn/ACIT/Cen.Cir.1(1)/Chotani/2002-03 Office of the Asst. Commissioner of Income-tax, Cent.Cit.1(1), Pune Dt.31.3.2003 To The Asst. Commissioner of Income-tax, Cir.2, Pune. Sir, Sub : Action under sec.158BD/148 of the Income-tax Act, 1961 - Information - Reg. During the course of block assessment proceedings in .....

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Sr.No.18, Bundle No.1, shows the payment of ₹ 87,19,201.54 including cash as well as cheque. 2. The information covered in the case is passed on to you for necessary action in the case of Shri Shirish C. Karia who is assessed in your jurisdiction. Yours faithfully, Sd/- (K.N. BORA) Asst, Commissioner of Income-tax, (c), Circle-1(1), Pune Encl A/a. Copy submitted to : 1. The Addl. Commissioner of Income-tax, Range-1, Pune for kind information. 2. The Addl. Commissioner of Income-tax, Range .....

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mounts mentioned in the said paper tally with the cheques given by the assessee. However, the cash payments are denied by the assessee. 14. So far as the notice issued u/s.158BD is concerned he submitted that the copy of satisfaction note shows that the AO of Shri Tayyab Habib Chotani has written the satisfaction note and sent it to the AO of the assessee. Referring to the provisions of section 158BD he drew the attention of the Bench to the provisions of section 158BD which reads as under : Und .....

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ficer shall proceed [under section 158BC] against such other person and the provisions of this Chapter shall apply accordingly. He submitted that a plain reading of the above section shows that for issue of notice u/s.158BD the AO of Shri Tayyab Habib Chotani should be satisfied that there is undisclosed income of Shri Shirish C. Karia recorded in the seized documents. The AO of Shri Tayyab Habib Chotani should thereafter transfer the books of account or documents or assets seized belonging to S .....

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AO of Shri Tayyab Habib Chotani is not sure as to whether the notice has to be issued in the case of Shri Shirish C. Karia u/s.158BD or u/s.148. He submitted that in the present case the notice could have been issued only u/s.148 and not u/s.158BD since the seized paper indicates the undisclosed income of Shri Tayyab Habib Chotani. He accordingly submitted that the entire 158BD proceedings should be held as void ab-initio. 15. So far as the merit of the case is concerned, the Ld. Counsel for the .....

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s adjusted against cost of Bungalow No.13 in the proposed Siddharth Estate. Referring to Question No.8 where Shri Tayyab Habib Chotani was asked regarding the receipt of ₹ 35 to 40 lakhs towards the sale of land at Survey No.208, Yerawada from Shri Shirish C. Karia the Ld. Counsel for the assessee drew our attention to the following reply : A.No.8 I have given this statement to the Income Tax Authorities on 30/3/2001. The amount of ₹ 35 to 40 lakhs was computed on approx. basis as fo .....

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the order of the CIT(A). He submitted that since the paper containing the cash payments made by the assessee was found from the place of Shri Tayyab Habib Chotani during the course of search, the AO of Shri Tayyab Habib Chotani had forwarded satisfaction note to the AO of Shri Shirish C. Karia. Therefore, the 158BD notice issued by the AO of Shri Shirish C. Karia is perfectly valid. 18. So far as the merit of the case is concerned he submitted that the Ld.CIT(A) has given justifiable reasons for .....

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l arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. The first issue to be decided in the impugned grounds is regarding the validity of 158BD proceedings. It is the case of the Ld. Counsel for the assessee that a notice u/s.158BD can be issued if the AO of the searched person is satisfied that any undisclosed income belongs to any person other than the searche .....

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s his undisclosed income, a fact recorded by the CIT(A) and not disputed by the Revenue. Further, the satisfaction note sent by the AO of Shri Tayyab Habib Chotani to the AO of Shirish C. Karis speaks of action to be taken u/s.158BD/148. Therefore, we find merit in the submission of the Ld. Counsel for the assessee that the AO of the searched person himself is not sure as to under which provision of the Act, action should be taken. In our opinion, since the paper was found containing cash paymen .....

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he notice should be issued. 20. We find the Hon ble Supreme Court in the case of Manish Maheshwari Vs. ACIT reported in 289 ITR 348 has observed as under : 11. The condition precedent for invoking a block assessment is that a search has been conducted under section 132, or documents or assets have been requisitioned under section 132A. The said provision would apply in the case of any person in respect of whom search has been carried out under section 132A or documents or assets have been requis .....

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