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Shri Iqbal Ali Khan, Secretary, M/s Pahar Gunj Grah Nirman Sahakari Samiti Ltd., Shri Banwari Lal Vijay, President, M/s Pahar Gunj Grah Nirman Sahakari Samiti Ltd. Versus The Deputy Commissioner of Income Tax, Central Circle 2, Now Assistant Commissioner of Income Tax, Central Circle 2, Jaipur

Initiation of proceedings u/s 158BD without jurisdiction - Held that:- From the record, it seems that the finding arrived at by the CIT (Appeals) was not challenged. Assuming but without admitting, even if the same was challenged, the same was not reversed by the Tribunal in its order. In that view of the matter, in our view, unless the finding of the CIT (Appeals) was held to be bad in law and reversed by the Tribunal in appeal, the consequential order is erroneous and the same could not have b .....

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terial and was right in law in holding that the total income assessed in the hands of the society in the block return as well as regular return is to be assessed in the hands of Shri Khan and Shri Vijay at the ratio 51% and 49% respectively, since there was no notice served under section 158 BC, in that view of the matter also the assessee could not have been assessed under section 158BD of the Act. Decided in favour of the assessee and against the department. - D.B. Income Tax Appeal No. 46/200 .....

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ell as both President and Secretary. 2. Brief facts of the case are that search and seizure operations under section 132 of the Income Tax Act were carried out at the office premises of the appellant. It was a case where survey under Section 133A was converted into search. During the course of search various papers/ documents/ accounts etc. were found and seized and on examination of the same, certain undisclosed income belonging to the assessee was required to be taxed and, therefore, action un .....

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society in the block return as well as regular return. In the backdrop of this finding, the assessee cannot be said to be aggrieved by the order of Income Tax Appellate Tribunal. This appeal, therefore, does not deserve to be entertained and it is disposed of accordingly. 3.1 On the same day i.e. 15.02.2007, the same Bench has passed the following order in the case of the assessee also in Tax Appeal No.46/2005: During the course of motion hearing, the Senior Advocate for the assessee submitted t .....

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me Bench on 09.03.2007 has passed the following order: Pursuant to our order dated 15th February, 2007, the appellant has placed on record the copy of memo of appeal (ITSSA No.129/JP/2003) filed by the revenue. A perusal thereof shows that the revenue did not challenge in that appeal the finding of CIT (Appeals) with regard to proceedings u./s 158BD of the Income Tax Act, 1961. However, the counsel for the revenue contends that the question relating to addition of ₹ 60.00 lacs in the hands .....

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e to place on record the order of Assessing Officer dated 28th November, 2005 and the order of Appellate Authority dated 29th January, 2007. As prayed stand over to 10th May, 2007. 4. After considering all the materials on record the same Bench admitted the appeal of the appellants vide order dated 28.05.2007 and following substantial questions of law were framed: i) Whether the Tribunal had material and was right in law in holding that the total income assessed in the hands of the society in th .....

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and the appeal order dated 29th January, 2007, the correctness of the order passed by the Income Tax Appellate Tribunal on 21st October, 2004 should not be examined in the appeal? 5. Counsel for the appellants Mr. Ranka, senior counsel, has take us to the order or CIT (Appeals) wherein in para 5 and 6 it has been held as under: 5. I have carefully considered rival submissions. I find that the only income assessed in the hands of the appellant is 50% income computed by him in the case of M/s Paha .....

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he books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against such other person and the provisions of this Chapter shall apply accordingly . 6. From the perusal of the provisions of this section, it is clear that this section can be invoked when the AO is satisfied that the undisclosed income belongs to any person other than the person in respect of w .....

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stablished that any amount over and above recorded in the books of accounts were taken by the society in transactions relating to dealing in immovable properties. On this ground, the addition in the case of Samiti has been deleted by a detailed order in appeal No.425/01-02. Therefore, in view of these facts and circumstances of the case, the addition in the present case is also deleted. 6. Mr. Ranka, senior counsel, has raised the issue-wise submissions as follows: Issue No.1. 6.1. The issue as .....

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ds. On first ground, no doubt, the Tribunal has been pleased to refer two questions of law for opinion of this Court, but on second point no question has been referred and that part of the judgment of the Tribunal has attained finality. 14. It is high time where the Courts are to be very cautious, careful and considered that its valuable and precious time is not wasted or consumed in deciding the matters of academic nature. The decision given on these two questions either way will not have any b .....

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e assessee. 16. Their Lordships of the Hon'ble Supreme Court in the case of CIT v. Smt Anusuya Devi [1968]68ITR750(SC) observed that the High Court may only answer a question referred to it by the Tribunal. It is however not bound to answer a question merely because it is raised and referred. The High Court may decline to answer a question of fact or a question of law which is purely an academic or has no bearing on the dispute between the parties or, though referred by the Tribunal, does no .....

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order of the Tribunal, whether it is a question of law, or whether it is an academic, unnecessary or irrelevant. Power to reframe a question may be exercised by the Court to clarify some obscurity in the question referred, or to pinpoint the real issue between the taxpayer and the Department or for similar other reasons; it cannot be exercised for reopening an enquiry on questions of fact and law which is closed by the order of the Tribunal . 21. We are in agreement with the contention of Shri R .....

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ult of the case. 6.2. Therefore, he has submitted that in the last alternate, it is apparent that the finding is in the case of Co-operative Society and not independently in the hands of the appellants. The addition on merits was deleted by CIT (Appeals) and, hence, no reasonable opportunity was given by the Tribunal to the appellants to explain their position on view points on merits and material found on search. The society and the appellants are different persons and, therefore, it is violati .....

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led. On the basis of the society, addition was made protectively at the hands of the appellants at 50% on 30.01.2003. It is contended that the only material produced before the Assessing Officer was copy of partnership deed of B.R. Properties dated 07.05.1993 and another deed dated 03.02.1990. No activities, transactions, income, bank account, books of accounts or proof of existence of the firm were produced before the assessing officer. The assessing Officer itself gave up the sharing ratio in .....

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d as under: The Tribunal in appeal, however, rightly came to the conclusion that under the Income Tax Act, a registered firm is a taxable unit and if the Assessing Officer wanted to proceed under Chapter XIV-B of the Income Tax Act with regard to the undisclosed income of the partner for the purposes of making block assessment on the assessee-firm, then the Assessing Officer was required to invoke Section 158BD which has not been done in the present case and, therefore, the block assessment made .....

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that good grounds exist for income of the third person. Satisfaction has to be found on reasonableness and not capricious and not product of imagination or speculation. The satisfaction must reflect the rational connection with or relevant bearing between the material available and undisclosed income of the third person. The rational connection postulates and requires satisfaction of the Assessing Officer that the third person has undisclosed income on the basis of evidence and material before h .....

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relied upon the decision of Delhi High Court in the case of CIT Vs. Anupam Sweets- (2010) 321 ITR 485 (Del.) wherein it has been observed as under: In this behalf the Tribunal vide the impugned order noted that it is a settled legal position that, recording of satisfaction by the Assessing Officer, having jurisdiction of the searched person, that some undisclosed income belongs to a person other than a searched person, is mandatory before proceedings under Section 158BD can be initiated against .....

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de the assessment completed by him on the 28th September, 2001, already added on substantive basis the sum of ₹ 11.53 lakh to the assessment of the said M/s Chintpurni Constructions Pvt. Ltd., and from that action of the Assessing Officer it could be clearly inferred that the said Assessing Officer was satisfied that the investment did not belong to some other person. Therefore, the Tribunal came to the conclusion that the satisfaction, as mandated under Section 158BD of the said Act, was .....

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ment proceedings. The notice dated 26th October, 1998 issued to the assessed is as vague (if not more) than the notice issued in Manish Maheshwari. Such a vague notice, as held by the Supreme Court shows 'a patent non-application of mind.' It has been pointed out by the Supreme Court that the consequences arising out of invoking the provisions of Chapter XIV-B of the Act are drastic and draconian. The accounts of the assessed may be reopened for ten years and not only a legal presumption .....

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s submitted that this issue is at the behest of revenue and hence is of no effect. 10. Counsel for the respondent-revenue Mr. Jain and Mr. Singhi have contended that by substantive and protective assessment, the society has also been benefited and, thus, it is a camouflage. In that view of the matter, in view of the fact that the Tribunal has made protective assessment in case of society and these are very substantive, therefore, the appeals deserve to be dismissed. He has relied upon the Consti .....

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the appellant, Chhotalal. As ex parte order was passed against the appellant for the assessment year 1952-53, on March 30, 1957, by the Seventh Income-tax Officer, Ward G, Bombay, on the finding that the remittances in question constituted the income of the appellant from undisclosed business and other source during the assessment year. This ex parte order was challenged by the appellant by preferring an appeal before the Appellate Assistant Commissioner. The appellate authority allowed the app .....

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no jurisdiction to assess the appellant for the income in question, because he contends that even according to respondent No. 1 the said proposed assessment would be in the nature of a precautionary or protective assessment, and Mr. Nambiar's case is that this concept of a precautionary or protective assessment is not recognized by the Act and as such any attempt to levy such assessment would be illegal. In support of this argument Mr. Nambiar strongly relied on the finding recorded against .....

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court, and he contended that the respondent himself seems to concede that the assessment proposed to be made against the appellant is no more than precautionary. It is true that paragraph 3 of the statement avers that "steps are being taken against the appellant for taxation of income in his hands only as a precautionary measures against the eventuality of its being finally held that the income is not liable to be taxed in his brothers hands", and it was added that "the appellants .....

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r, and the respondents case appears to be that in such circumstances protective assessment have to be made so that the income may not escape taxation altogether. In other words, the respondents case clearly is that the notices issued against the two brothers by their respective Income-tax Officers are intended to determine who is responsible to pay tax for the income in question; now though Mr. Nambiar wanted to argue that protective or precautionary assessment of tax is not justified by any of .....

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ncome may have been received either by A or B or by both together, it would be open to the relevant income-tax authorities to determine the said question by taking appropriate proceedings both against A and B. That being so, we do not think that Mr. Nambiar would be justified in resisting the enquiry which is proposed to be held by respondent No. 1 in pursuance of the impugned notice issued by him against the appellant. Under these circumstances we do not propose to deal with the point of law so .....

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