TMI Blog2017 (11) TMI 1203X X X X Extracts X X X X X X X X Extracts X X X X ..... acts of the present case, undisputedly, the Assessing Officer in the course of assessment proceedings of the searched person viz Ms. Hoor C. Jhurani, has recorded a satisfaction for initiation of proceedings under section 158BD of the Act in case of the assessee. It is also evident from the facts on record, before issuance of notice under section 158BD of the Act to the assessee, the Assessing Officer has recorded satisfaction under the said provision. Notably, assessment proceedings of both persons were continuing simultaneously before the Assessing Officer. Therefore the conditions of section 158BD stands satisfied. Therefore, the additional ground No. 1, raised by the assessee must fail Addition made on the basis of the credit entries in the bank account - Held that:- When the Assessing Officer is making addition only on the basis of a bank account then both credit and debit entries have to be considered and the assessee deserves an opportunity to explain debit and credit entries. It appears from the order of the learned Commissioner (Appeals) that the assessee has contended that the debit entries appearing in the bank account represent expenditures incurred by the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T [1998] 229 ITR 383 (SC) ; (ii) Jute Corporation of India Ltd. v. CIT [1991] 187 ITR 688 (SC) ; and (iii) Ahmedabad Electricity Co. Ltd. v. CIT [1993] 199 ITR 351 (Bom). 4. The learned Departmental representative vehemently opposing admission of additional grounds submitted, the legal issue raised in the additional ground was not raised in the first round of litigation before the appellate authorities. He submitted, the Tribunal while remitting the matter back to the Assessing Officer had directed to consider the issues raised in the earlier appeal. He, therefore submitted, this issue cannot be raised in the second round of litigation. The learned Departmental representative submitted, the additional ground involves both legal and factual issues which require verification of record. He submitted, whether satisfaction with regard to the assessee was recorded in the case of Ms. Hoor C. Jhurani, has to be examined after verifying the record of the said person. Therefore, it cannot be said that all facts relating to the issue raised in the additional grounds are available on record. 5. We have considered the submissions of the parties on the issue of admission of additiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative submitted, before initiating proceeding under section 158BD of the Act, satisfaction has to be recorded at two stages, firstly by the Assessing Officer of the searched person before handing over the books of account, materials, etc. to the Assessing Officer of the other person and secondly, satisfaction has to be recorded by the Assessing Officer having jurisdiction over the other person, before issuing the notice under section 158BD of the Act. The learned authorised representative submitted, the aforesaid conditions under section 158BD of the Act have to be strictly complied with even if the Assessing Officer of both the searched person and the other person is the same. He submitted, though, in the case of the assessee, the Assessing Officer might have recorded a satisfaction before issuance of notice under section 158BD of the Act, however, no such satisfaction has been recorded in the case of the searched person. Therefore, the learned authorised representative submitted, the assessment proceedings initiated under section 158BD of the Act in the case of the assessee is invalid. In support of his contention, the learned authorised representative relied upon the following d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... context, he drew our attention to the assessment order passed under section 158BC of the Act in the case of the searched person Ms. Hoor C. Jhurani, wherein the Assessing Officer has recorded satisfaction for initiation of proceedings under section 158BD of the Act in the case of the present assessee. He also drew our attention to the order-sheet entry in the case of Ms. Hoor C. Jhurani, wherein the Assessing Officer has recorded satisfaction under section 158BD of the Act. He, therefore, submitted that the validity of proceedings initiated under section 158BD of the Act cannot be challenged. In support of his contention, the learned Departmental representative relied upon the decision of the hon'ble Supreme Court in case of CIT v. Calcutta Knitwears [2014] 362 ITR 673 (SC). 8. We have heard the rival contentions and perused the material on record in the light of the decisions relied upon. The issue arising for consideration in this additional ground, precisely is, in the absence of satisfaction recorded, whether assessment under section 158BD of the Act can be made ? It is the specific contention of the learned authorised representative that the Assessing Officer has not r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d funds were arranged by him, the source of funds deposited in the accounts of these concerns appear to be the undisclosed income of the assessee. However, the fact that Shri Nirmal Jhurani is an identifiable person and is being assessed to tax by the undersigned cannot be ignored. Proceedings under section 158BD have already been initiated in his case. However, in order to protect interest of revenue, the amounts deposited in the bank accounts of these two concerns (which remain unexplained) is being added in the case of the assessee on protective basis. 9. Further, before issuance of notice under section 158BD of the Act in the case of the assessee, the Assessing Officer has recorded satisfaction on 29th August, 2000. Thus, from the aforesaid facts, it is very much evident that the Assessing Officer while in session of assessment proceedings of the searched person viz. Ms. Hoor C. Jhurani, has recorded a satisfaction in terms of section 158BD of the Act that part of the seized document relates to a person other than the searched person requiring initiation of proceedings under section 158BD of the Act. In the case of Calcutta Knitwears (supra) the hon'ble Supreme Court h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings under section 158BD of the Act were initiated against the assessee. In the course of assessment proceedings, since, the assessee did not respond to the statutory notices issued on several occasions, the Assessing Officer completed the assessment under section 158BD read with section 144 of the Act vide order dated July 15, 2002 making addition of ₹ 3,50,52,020. The assessee challenged the addition made before the learned Commissioner (Appeals). However, the learned Commissioner (Appeals) dismissed assessee's appeal. Against the order of the learned Commissioner (Appeals), the assessee preferred appeal before the Tribunal. The Tribunal, while disposing of the assessee's appeal along with the appeal of Ms. Hoor C. Jhurani restored the matter back to the file of the Assessing Officer for de novo adjudication. In the fresh assessment proceedings, in pursuance to the directions of the Tribunal the assessee again failed to respond to any of the statutory notices issued by the Assessing Officer, therefore, the Assessing Officer was compelled to complete the assessment ex parte under section 144 read with section 158BD of the Act repeating the addition made in the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 158BD of the Act. Thus, from the aforesaid facts, it becomes clear that the assessee was totally non-co-operative before the Assessing Officer during the original assessment as well as de novo assessment in pursuance of the directions of the Tribunal. If the assessee remains non-co-operative there is no other option left with the Assessing Officer but to complete the assessment ex parte on the basis of material available on record. That being the case, the Assessing Officer cannot be blamed for repeating the addition made in the original assessment. However, from the facts on record, it is evident that the pass books/bank accounts and other seized material like cheque books, pay-in-slips on the basis of which addition was made by the Assessing Officer were found and seized from Ms. Hoor C. Jhurani, though, they were in the name of the proprietary concern standing in the name of the assessee. It is also evident that before the first appellate authority the assessee has taken a stand that those bank accounts and other documents were in control of Ms. Hoor C. Jhurani, and the assessee has no control over them. It is also a fact on record that the Assessing Officer has made additions b ..... 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