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TMI Blog2005 (11) TMI 195X X X X Extracts X X X X X X X X Extracts X X X X ..... of Assessing Officer for adjudication afresh?" I have received the following proposed question under section 255(4) of the Income-tax Act, 1961 in ITA No. 206/Del./2002: "Whether on the facts and findings, issue being identical and covered by various Tribunal Orders arising from the same search and in the light of material on record, the learned Accountant Member is justified in deleting the addition on account of investment in share capital of Rs. 21,63,070 made as undisclosed income of the block period of the appellant or that the learned Judicial Member is justified in restoring the issue back to the file of Assessing Officer for adjudication afresh?" After a perusal of the same I would like to suggest that the following questions would better bring out the points of difference to be referred to the Hon'ble President which may be referred to the Third Member: "Q.1. Whether in view of the facts and material on record referred to by the D.R. in his arguments, which was not rebutted by the A.R. and admittedly has not been considered in the other orders of the Tribunal, on which reliance has been placed by the assessee, is the action of J.M. justified i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the factum of arguments based on material addressed by the revenue which has not been considered by other orders should be ignored especially since this aspect was not challenged on behalf of the assessee or should the Tribunal consider arguments of both the sides with even hand?" B.R. Jain, Accountant Member 1. Briefly the facts are that the appellant is a private limited company having allotted share capital of Rs. 49,93,070. Regular books of account have been maintained. Statutory records as required under the Companies Act have also been maintained. Shares were allotted in different years for which share certificates were issued and return of allotment has also been filed with the Registrar of Companies, Delhi and Haryana. Return of income has also been filed from year to year and regular assessments have been framed and disclosed results stood accepted. 2. On 19-4-1996 an action under section 132 was taken at the business premises of Shri Alok Agarwal, a Chartered Accountant in practise. Certain documents relating to the appellant-company were found and seized. These documents are in respect of sale of shares by the shareholders e.g., blank signed share transfer for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various judicial pronouncements. Impugned order and entire material brought on record has been perused. As a consequence of the same search similar facts and documents were taken into possession of the revenue authorities in the cases of certain other companies namely Real Overseas Pvt. Ltd., M/s. Makhani & Tyagi Pvt. Ltd., Indradhan Agro Products Ltd., Akriti Media Pvt. Ltd. and Garg Polymers Pvt. Ltd. Proceedings under section 158BD were initiated and share capital under the identical facts and circumstances was treated as non-genuine by invoking provision of section 68 of the Act and the same was also assessed as undisclosed income of the block period. These assessees preferred appeal before various benches of the Tribunal and after examining the judicial pronouncements vis-à-vis the material on record, the Tribunal came to the conclusion that the share capital is genuine and the same cannot be treated as undisclosed income in block period. Copies of all these orders are placed on record as Annexures A to E to the written synopsis filed before us. The ld. Departmental Representative present in the proceedings admits that facts, circumstances and issue are identical and ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d enquiry by issuing of summons it was incumbent upon him to bring the proceedings to logical conclusion. If he wanted the presence of shareholders, the same should have been enforced by virtue of powers vested in him and not merely by closing his own enquiry and asking the assessee to produce these persons which was not under the control of the appellant. Since nothing adverse regarding investment in shares had come in possession of the Assessing Officer nor did he find any contradiction or infirmity in the sworn statements in the shape of affidavits procured by the Assessing Officer himself the assessee cannot be expected to perform what factually was not in the scope of his duty. Once the initial onus that lay upon the appellant had been discharged by the appellant the burden lay upon the revenue to verify and examine the correctness of material before making any addition. Without doing so or without bringing any positive material to controvert the correctness of such material, the addition could not be made as unexplained credit. Such a view stands fortified by the decision of Apex Courtin CIT v. Orissa Corpn. (P.) Ltd. [1986] 159 ITR 782. 7. That apart the presumption as give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... risdiction under Chapter XIV-B. Accordingly, section 158BA of the Act had no application to the facts of the case. This view stands fortified by the decision of the jurisdictional High Court in CIT v. Ravi Kant Jain [2001] 250 ITR 141 (Delhi). 8. The perusal of the order also reveals that the income has been treated as undisclosed of the block period without finding as to when the investment in shares had factually taken place. It is admitted position of law that a cash credit which remains unexplained can be assessed in the year in which amount is originated. Authority on this can be read in CIT v. Om Prakash Mahajan & Sons [1985] 152 ITR 583 (Delhi). The scheme of block assessment which in itself is a separate code requires separate computation of total income of each previous year comprised in the block period. This has also not been done by the Assessing Officer, who appears to have been casual in his approach and making the addition without any basis or relevant material on record. When the company is incorporated with share capital which was raised in different previous years for Rs. 49,93,070 for which shares were also allotted and issued to the shareholders and accepted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. Shares cannot be issued in the name of non-existing persons. Applying the aforesaid settled legal position to the facts of the instant case, we find that the impugned addition made by the Assessing Officer is in any case liable to be deleted in the facts of the instant case. It is not disputed by the revenue that the identity of the shareholders is established and they have filed confirmation letters which have in fact, been found at the premises of Shri Alok Agarwal, as mentioned by the Assessing Officer in the assessment order itself. On this short ground alone, the ratio of Delhi High Court decisions clinches the issue against the revenue. The addition of the share capital made by the Assessing Officer in the block assessment is, therefore, liable to be deleted." 10. The identical issue also came up for our consideration is in the case of Real Overseas (P.) Ltd. v. Dy. CIT [IT (SS) Appeal No. 266 (Delhi) of 2001, dated 29-8-2003] where one of us the ld. J.M. who has authored the judgment deleted the addition by observing in paragraphs 20 and 21 of our order as under: "Having heard the rival submissions and perused the material placed on our files, we are of the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ltd. [1985] 156 ITR 835, 850. 12. In the result, the addition of Rs. 21,63,070 as undisclosed income is deleted. 13. The assessee did not argue specifically ground Nos. 1 and 2, the same are, therefore, dismissed. 14. In the result, assessee's appeal stands partly allowed. Per Diva Singh, Judicial Member. 1. I have gone through the proposed order and after a careful perusal of the same, I regret that I am unable to concur with the reasoning and conclusion of my esteemed colleague. Accordingly, after due discussion with my learned Brother, I propose to write my separate order for the reasons given hereinafter. 2. I would propose at the outset to refer to the specific reason discussed with my esteemed colleague for writing my separate order. The learned DR in the course of the hearings before us confronted with the orders of the Tribunal wherein in the case of different companies additions had been made as a result of the action under section 132 of the Income-tax Act on 19-4-1996 on the business premises of Shri Alok Aggarwal, CA hereinafter referred to as the searched person had in sheer helplessness and misery submitted that documents have been found in the course of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned order and the submissions made before the Bench. A prayer was made that all the parts should be seen together in the complete picture. 5. It is on account of the aforesaid background that after serious deliberation and consideration and due discussion with my esteemed colleague, my separate order has been written. 6. At the outset, it may be pertinent to refer to the order in the case of Real Overseas (P.) Ltd. v. Dy. CIT [IT (SS) Appeal No. 266 (Delhi) of 2001, dated 29-8-2003], this very Bench of which I was the author, therein allowed the appeal of the assessee. It may be necessary to refer to the facts as appreciated by us by reproducing paragraphs 3 to 5 of the said order. They read as under:- "3. The relevant facts of the case are that a search and seizure operation under section 132(1) was carried on the official and residential premises of Shri Alok Aggarwal. From the said premises bearing Nos. 245, 234 and 224, Anarkali Bazar, Jhandewalan, New Delhi, incriminating documents pertaining to the present assessee were seized. The Assessing Officer of Shri Alok Aggarwal completed the assessment under section 158BC in his case. He found that undisclosed income arisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said order, it was contended on behalf of the assessee that the present appeal filed by the assessee is fully covered by the said order of the Tribunal in its favour. It was pointed out that the addition in the case of Makhni & Tyagi (P.) Ltd had been based on the same search which took place on Shri Alok Aggarwal, the CA of the assessee. Referring to the said order, it was contended that even there, the entire share capital worth Rs. 30 lakhs odd has been treated as 'income from undisclosed sources' of the assessee. Special attention was invited to paragraph 2.1 of the same so as to point out that there was a search on the business and residential premises of Shri Alok Aggarwal, practicing CA on19-4-1996during which certain documents/incomplete statutory records of various companies including the assessee-company were seized from his custody. The said paragraph was pointed out so as to contend that the issue in the present appeal is fully covered by the said order. Referring to the same, it was submitted that the block assessment order in the case of the Chartered Accountant, Shri Alok Aggarwal was set aside by the Tribunal. As a result of it additions on identical lines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are capital, he could have issued notice under section 147/148 of the Act but, there is no reason or basis for him to proceed in making the addition made in the block assessment in the manner made. Referring to the synopsis filed at page 127, it was contended that the assessee-company was incorporated on 2-5-1988 and has been maintaining its account books in the normal course of its business of financing and dealing in shares. It was argued that the position of the filing of the returns from the assessment years 1989-90 till 1996-97 had already been referred to. Thus, it was contended that once the entire share capital has been disclosed to the department by the assessee in its recorded books of account maintained by the assessee prior to the date of search on 19-4-1996 under section 132 against Shri Alok Aggarwal, the provisions of Chapter XIV-B could not be invoked against the assessee since the fact is not in dispute that the share capital was recorded in the account books maintained by the assessee on the basis of which it stood assessed in regular assessment proceedings year after year right up to 1996-97 assessment year." 9. The submissions in response to the arguments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case, the Assessing Officer could not have made additions in block assessment and in case he was of the view that the documents accompanying the returns of the assessee have not been considered in the regular assessments, then he could have reopened the same in 147/148 proceedings. It may be pertinent to reproduce the view taken by the jurisdictional High Court on the scope of the assessments made under Chapter XIV-B. Their Lordships have held that the block assessment under Chapter XIV-B is not intended to be a substitute for regular assessment. Accordingly, in the face of the evidence that the evidence relied upon by the assessee and the case law considered by the Tribunal and taking note of the fact that no distinguishing fact, circumstance or contrary view was brought to our notice, we are of the view that the grounds challenging the addition on merit deserve to be allowed." 11. At this juncture, it may also be relevant to consider the order of the Tribunal in the case of Makhni & Tyagi v. Dy. CIT [IT(SS) No. 204 (Delhi) of 2002, dated 21-7-2003] wherein the arguments advanced on behalf of the revenue were as under:- "3. The ld. DRs relied on the assessment orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.1 Even on merits of the case also the assessee should succeed because in response to notices under section 131 of the Income-tax Act, all the shareholders had confirmed in writing their investment in the share capital of the assessee and had duly given their PAN/GIR No. and other relevant particulars under which they were assessed to tax. No adverse inference could be drawn against the assessee if in response to summons under section 131 of the Income-tax Act, none of the shareholders had appeared before the Assessing Officer though each one of them sent their confirmations to him. If the Assessing Officer felt that their examination was necessary, he could have enforced their attendance as held by Allahabad High Court in 49 ITR 561 and 651. The onus that the share capital of the assessee-company represented its undisclosed income under Chapter XIV-B of the I.T. Act was certainly on the Assessing Officer which had not at all been discharged. On other hand, necessary documentary evidence was placed on record to prove the identity of all the shareholders including furnishing of their GIR/PAN numbers and filing of other documentary evidence in the form of ration cards etc. which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son or taken care of professionally as per the assessee's version by the searched person, blank but signed share transfer forms, bills, receipts, etc. had been found from the premises of the searched person and the shareholders no doubt identifiable give the same reason. When each and every individual case has been considered by different benches, then, necessarily, they have confined themselves to the facts of that case and had not the ld. DR made his impassioned submissions then probably the present appeal would have followed the same course. However, once in an attempt to shake the judicial consciousness, the facts vis-a-vis the impugned orders are addressed, then we are faced with a scenario entirely different from the one appreciated by this very Bench in the case of Real Overseas (P.) Ltd. In the circumstances, the facts as argued need due consideration and the alarm sounded by the learned DR cannot be wished away. 14. Being of the view that the issue cannot be decided by wearing blinkers, the full scape of the picture which emerges has to be taken cognizance of and dealt with and merely blindly disposing the issue holding it as covered in the peculiar facts as are emerg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eizure made of these documents, the response of the assessee which has been reproduced in the impugned order may be referred to again:- "Some of the shareholders' who were in dire need of money were getting restless due to company's failure to pay any dividend, approached the directors for assistance in selling shares in the assessee-company, advance receipts and blank transfer forms were given by them to Shri Alok Aggarwal, C.A. for using them as and when he could find any prospective buyer for shares. As and when the transaction materialized, the payment had to be received only through crossed cheques/drafts and the relevant number of cheque and other particulars would have been filled in the blank receipts. There was no question of any cash having been received or paid at any time. It may further be stated that the documents were lying with Shri Alok Aggarwal, C.A. as he is professional consultant to the company and his opinion is normally taken in all such matters so as to maintain strict compliance with the provisions of the Companies Act. It may also be brought to your kind notice that this mode of signing of advance receipts and return of original documents is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to examine the genuineness and after considering the explanation, he observed at page 8:- "There is no dispute that the amounts were purportedly received by the assessee from different shareholders. What is disputed is that were they really genuine investment of shareholders or just entries which in fact represent the income of the assessee-company routed through shareholders. This raises the question whether the apparent can be considered as the real. As laid down by the Hon'ble Supreme Court, the apparent must be considered the real until it is shown that there are reasons to believe that the apparent is not the real and the taxing authorities are entitled to look into the surrounding circumstances to find out the reality and matter has to be considered by applying the test of Human Probabilities 214 ITR 801, Sumati Dayal v. CIT (SC) and 82 ITR 540, CIT v. Durga Prasad More (SC). In the case of the assessee, the surrounding circumstances discussed above leads one to the conclusion that the share application money in respect of the persons mentioned above is not genuine investment." 21. On account of these facts, an amount of Rs. 21,63,000 was added as bogus shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be given to it. Before parting, it may also be pertinent to state that from a perusal of the proposed order, it is seen that in the fresh assessment completed on 30th March, 2001, in the case of the searched person the addition again had been made on a protective basis. Accordingly, I am of the view that in the circumstances, it would be appropriate to restore the issue back to the file of the Assessing officer with the direction to decide the same in accordance with law by way of a speaking order after giving the assessee an opportunity of being heard. 25. In the result, the appeal filed by the assessee is allowed for statistical purposes. ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 Per B.R. Jain, Accountant Member. - THIRD MEMBER ORDER 1. In this case the appeal filed by the assessee on 19-6-2002 against the order under section 158BD dated 31-5-2002 for the block period 1-4-1986 to 19-4-1996 made by Dy. CIT, Circle 4(1), New Delhi was heard by Income-tax Appellate Tribunal, Delhi Bench 'B' on 7-1-2004. As there has been a difference in opinion between the Members of the aforesaid Bench, Hon'ble President, ITAT has nominated me as a Third Member for hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me. It may further be stated that the documents were lying with Shri Alok Aggarwal, C.A. as he is professional consultant to the company and his opinion is normally taken in all such matters so as to maintain strict compliance with the provisions of the Companies Act. It may also be brought to your kind notice that this mode of signing of advance receipts and return of original documents is a prevalent practice followed for claiming refund of deposits or receipts of any payment from Central or State Government, DDA and other Housing Corporations etc. The advance receipts are not valid till cheques/drafts Nos. are entered in them at the time of actual payment." The Assessing Officer considered the submissions made by the assessee and the confirmations submitted by the shareholders. Examination of the bank pass books of shareholders revealed that in every case there was a deposit of an equivalent amount just before the date of withdrawal of share money from the bank account for application of shares of the assessee-company. The learned Assessing Officer, therefore, held that though the identity and capacity of the shareholders indicating their income-tax particulars and bank ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances in the case of the assessee led to the conclusion that the share application money in respect of documents found and seized did not represent genuine investments. He, therefore, made an addition of Rs. 21,63,070 on account of bogus share capital under the provisions of section 68 as per the details given in the impugned order under section 158BD. 4. Aggrieved by the aforesaid order under section 158BD, the assessee filed appeal before the Tribunal that was heard in Bench "B" on 7-1-2004. Thereafter Hon'ble Accountant Member made an order of the Bench in writing and forwarded the same to Hon'ble Judicial Member for counter signature. He noted that as a consequence of the same search similar facts and documents were taken into possession of the revenue authorities in the cases of certain other companies, viz., Real Overseas Pvt. Ltd., M/s. Makhni & Tyagi Pvt. Ltd., Indradhan Agro Products Ltd., Akriti Media Pvt. Ltd. and Garg Polymers Pvt. Ltd. Proceedings under section 158BD were similarly initiated in their cases and under the identical facts and circumstances share capital was treated as non-genuine by invoking provisions of section 68 of the Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their attendance by virtue of powers vested in Assessing Officer. He could not require the assessee to produce those persons who were not under the control of the assessee-company. Once the initial onus that lay upon the assessee had been discharged, the burden lay upon the revenue to verify and examine the correctness of material. The Hon'ble Accountant Member found that stand fortified by the decision of the Hon'ble Supreme Court in CIT v. Orissa Corpn. (P.) Ltd. [1986] 159 ITR 782. 6. The learned Accountant Member found that presumption under section 132(4A) of the Act was in favour of the assessee. The circumstances under which the share certificates were lying with Shri Alok Aggarwal also stood explained and no infirmity was found in the explanation of the assessee. Apparently, the investment in shares was of all such persons who had become shareholders and the Assessing Officer without bringing any material erred in saying that the apparent was not real. That burden was on revenue as held by the Apex Courtin CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349. The assessment was made by the learned Assessing Officer on the basis of suspicion. A suspicion howsoever strong ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Godavari Corpn. Ltd. [1985] 156 ITR 835. 9. The Hon'ble Judicial Member found herself unable to concur with the reasoning and conclusion of Hon'ble Accountant Member. She made her separate order dated 26-3-2004. She pointed out that during the course of hearing of the appeal in the present instant case, the learned DR was confronted with the orders of the Tribunal in the case of different companies where similar additions made had been deleted. The learned D.R. in sheer helplessness with misery writ large on his face, attempted to point out how in the case of all the companies floated or served as a professional consultant by the searched person, all the shareholders at the same point of time came to be under circumstances where they were in dire need of money. The valiant attempt was made by him to point out as to how all the shareholders who were in dire need of money could sign blank share transfer forms, sale bills, cash receipts, affidavits etc. at the same time in identical manner. The learned DR pointed out that the surrounding circumstances and the probabilities had-not been considered by the Tribunal in the earlier orders. A prayer was made that all the parts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stinguishing fact or circumstance. The learned DR did not point out any distinguishing facts or circumstances and, in fact conceded that the facts more or less are identical As such, the issue is covered by the said order. It was fairly conceded that the additions in identical circumstances have been made in the case of Makhni & Tyagi Pvt. Ltd but for the record, reliance was placed upon the impugned order." The Hon'ble Judicial Member pointed out that on the basis of these submissions and material placed on record, the Tribunal found that identical issue had been considered by Makhni & Tyagi (P.) Ltd., wherein reliance had been placed on the judgment of jurisdictional High Court in the case of Ravi Kant Jain; CIT v. Steller Investment Ltd. and Sophia Finance Ltd. On that basis it was held that the Assessing Officer could not have made addition in the block assessment order and if he was of the view that the documents had not been considered in the regular assessments, he could have reopened the same under section 147/148 proceedings. 11. Hon'ble Judicial Member pointed out that in the case of Makhni & Tyagi (P.) Ltd. also the revenue had raised only the following ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present assessee would have followed the same course. However, in the present appeal the Hon'ble Judicial Member found herself faced with a scenario entirely different from the one appreciated by that very Bench in the case of Real Overseas (P.) Ltd. The learned Judicial Member thereafter observed:- "In the circumstances, the facts as argued need due consideration and the alarm sounded by the learned DR cannot be wished away. 14. Being of the view that the issue cannot be decided by wearing blinkers, the full scape of the picture which emerges has to be taken cognizance of and dealt with and merely blindly disposing the issue holding it as covered in the peculiar facts as are emerging from the impugned order will to my mind in the circumstances be not appropriate as once a judicial consciousness has been stirred, then it must be taken to its logical conclusion." 12. The learned Judicial Member also took note of the observations of the Assessing Officer that in the shareholders' bank pass books, it was found that funds had been deposited of an equivalent amount just before the date of withdrawal of the share money from the respective bank accounts, in a majori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent for further necessary action as envisaged under section 255(4) of the Income-tax Act, 1961:- "Whether on the facts and findings, issue being identical and covered by various Tribunal orders arising from the same search and in the light of material on record, the ld. Accountant Member is justified in deleting the addition on account of investment in share capital of Rs. 21,63,070 made as undisclosed income of the block period of the appellant or that the ld. Judicial Member is justified in restoring the issue back to the file of Assessing Officer for adjudication afresh?" On receipt of the aforesaid proposed question from the Hon'ble Accountant Member, the Hon'ble Judicial Member suggested the following questions to bring out the point of difference to be referred to the Hon'ble President for further action:- "Q.1. Whether in view of the facts and material on record referred to by the DR in his arguments, which was not rebutted by the A.R. and admittedly has not been considered in the other orders of the Tribunal, on which reliance has been placed by the assessee, is the action of J.M. justified in restoring the issue for necessary verification to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, which has not been considered by other orders should be ignored especially since this aspect was not challenged on behalf of the assessee or should the Tribunal consider arguments of both the sides with even hand?" 15. Hon'ble President has nominated me to consider and express my opinion on the points of difference in opinion, as stated by the Hon'ble Accountant Member and by the Hon'ble Judicial Member in relation to the present appeal. 16. During the course of hearing before me Shri O.P. Sapra, the learned counsel for the assessee argued that the dispute in this appeal stands concluded by the judgment of Hon'ble Delhi High Court in the case of CIT v. Makhni & Tyagi (P.) Ltd [2004] 267 ITR 433. He pointed out that that judgment relates to the very search in relation to which the order under section 158BD was made in the case of the assessee before me. The learned counsel pointed out that earlier there was judgment of Hon'ble Delhi High Court in the case of CIT v. Steller Investment Ltd. [1991] 192 ITR 287. According to that judgment under no circumstances the amount of share capital may be regarded as undisclosed income of the company. That judgment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the Hon'ble Accountant Member considerable reliance was placed on the judgment of jurisdictional High Court in the case of CIT v. Ravi Kant Jain [2001] 250 ITR 141 (Delhi) and the decision of ITAT : Mumbai in the case of Sunder Agencies v. Dy. CIT [1997] 63 ITD 245. According to those judgments the material for arriving at the finding of undisclosed income was required to be found during the course of search itself. If the search did not yield any evidence as to undisclosed income, the Assessing Officer was precluded from assessment of undisclosed income in the block assessment proceedings under section 158BC/158BD. On that aspect also there was no difference of opinion and, therefore, the matter stood concluded by the findings recorded by the Hon'ble Accountant Member. 18. The learned counsel argued that there was lot of overlapping in the questions framed by the Hon'ble Judicial Member. Those questions were more of academic interest than any real controversy arising on the facts and in the circumstances of the case. The allegations contained in those questions that the arguments of the learned DR had not been considered in the order made by the Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found during the course of search proceedings at the premises of Shri Alok Aggarwal were not ordinary facts. Share certificates in original, blank signed transfer deeds, blank signed cash receipts and even blank signed affidavits were found en masse in respect of most of the shareholders and not in respect of one company alone but about half a dozen companies. It was not correct to say that the department was acting on inadequate material. The inferences drawn by the revenue were based on strong facts that spoke for themselves. The inferences drawn by the learned Assessing Officer were self-evident on the basis of discovery of material as a result of the search. The burden cast upon the assessee was very heavy as to why all the shareholders should en masse sign these blank documents and deposit them with the Chartered Accountant? The learned DR referred to the letter of the assessee dated 28-5-2002 addressed to the Assessing Officer and placed at pages 6 to 12 of the assessee's paper book. According to the assessee, the papers found were advance receipts for sale of shares. This explanation was not substantiated by pointing at even a single prospective buyer of those shares. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of natural justice applied not only to the assessee but to revenue also. Hon'ble Judicial Member approached the matter equalizing both the assessee and the revenue. The learned DR argued that apart from some documentation which could as well be part of a design, the assessee had not brought on record full facts. In this case the alleged shareholders filed returns of income only to get the elevated status of being an assessee. The fact of the matter was that most of them had filed the returns of income below taxable limit. Returns of income filed, PAN numbers applied and all those things were mere-exercise of make believe than any thing in substance. In many cases the balance-sheet of the shareholders did not reflect the shares of the assessee-company. The learned DR referred to assessee's paper book page 31 as an illustration of that point. 22. The learned DR argued that the abundant facts found during the course of search constituted the focal point of the order of the Hon'ble Judicial Member and, therefore, it cannot be said that she had disregarded the judgment of Hon'ble Jurisdictional High Court in the case of Ravi Kant Jain or the findings of the Tribunal in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer and the same have been referred to me, so that they may be decided according to the opinion of the majority. The task before me is to identify the points of difference of opinion as emerging from the respective references. I find that (here are two limbs of the single question referred to by Hon'ble Accountant Member, viz-,(1) issue is identical and covered by various Tribunal orders in the cases arising from the same search, and (2) the material on record. From various questions referred to, Hon'ble Judicial Member has raised the issue whether the Tribunal is required to decide the matter afresh if facts and material on record and arguments based on such material not considered by the earlier orders of the Tribunal are raised before the subsequent Bench. Further, Hon'ble Judicial Member has raised the question of the significance of surrounding circumstances and human probabilities. Hon'ble Judicial Member has stated also that the arguments of revenue, not being arguments of the assessee, have not been given due consideration in the order of the Hon'ble Accountant Member. 25. On analyzing the points of reference by both Hon'ble Accountant Member and Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofits and the transactions of sale and purchase of shares and securities amounted to profits of business and so liable to be taxed?" The Hon'ble Supreme Court has answered the question in the following words:- "The second question is wholly unsubstantial. There is no such thing as res judicata in income-tax matters. The Appellate Tribunal has placed in a tabulated form the activities of the appellant showing the buying and selling and the magnitude of holdings and it cannot be said, therefore, that it was not open to the Appellate Tribunal to give the finding that it did." 29. In the case of Dwarkadas Kesardeo Morarka v. CIT [1962] 44 ITR 529, the Hon'ble' Supreme Court have observed as under:- "In the matter of assessment of income-tax, each year's assessment is complete and the decision arrived at in a previous year on materials before the taxing authorities cannot be regarded as binding in the assessment for the subsequent years. The Tribunal is not shown to have omitted to consider the material facts. The decision of the Tribunal was on a question of fact and no question of law arose which could be directed to be referred under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal, which I have already recapitulated earlier, it is clear that the Tribunal has felt coerced by its earlier decision on the question regarding the nature of the gifts. There, I must say, the Tribunal was not well instructed in law, for, it is well-settled that the fact that in the earlier proceedings the Tribunal took a different view of the gifts was not a conclusive circumstance, the decision of the Tribunal reached in those proceedings did not and could not, in law, operate as res judicata. Reference in this connection may be made to a decision of the Supreme Court in the case of CIT v. Brij Lal Lohia. Decisions may be multiplied but the principle of law is so well-settled that I do not see any necessity for it. I have thus no hesitation in answering the first question as reframed in the negative as it must be held that the Tribunal was not correct in coming to the conclusion that the gifts were inchoate and incomplete only on the ground that this question was concluded by the Tribunal's previous order in relation to the assessment year 1954-55." 33. In the case of Surjidevi Kunjilal Jaipuria Charitable Trust v. CIT [1978] 114 ITR 685 (All.), the Tribunal decided t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T [1962] 44 ITR 529 and CIT v. Brij Lal Lohia and Mahabir Prasad Khemka [1972] 84 ITR 273." 35. The Hon'ble Madras High Court have in the case of CIT v. T.G. Ramamurthi [1977] 110 ITR 453, however, took somewhat contrary view without noticing any of the aforesaid judgments of Hon'ble Supreme Court and held as under:- "It is worthwhile emphasising that if a Bench of a Tribunal on the identical facts is allowed to come to a conclusion directly opposed to the conclusion reached by another Bench of the Tribunal on an earlier occasion, that will be destructive of the institutional integrity itself. That is the reason why in a High Court, if a single Judge takes a view different from the one taken by another Judge on a question of law, he does not finally pronounce his view and the matter is referred to a Division Bench. Similarly, if a Division Bench differs from the view taken by another Division Bench, it does not express disagreement and pronounce its different views, but has the matter posted before a Full Bench for considering the question. If that is the position even with regard to a question of law, the position will be a fortiori with regard to a question o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal for the assessment year 1968-69 for the assessment year 1967-68." 37. The Madras judgment in the case of L.G. Ramamurthi is considered by Hon'ble Rajasthan High Court also in the case of CIT v. Manaklal Porwal [1986] 160 ITR 243. In that case the following question of law has been referred for the opinion of the High Court:- "Whether, in the circumstances of the case, the Income-tax Appellate Tribunal, Bombay Bench 'B', Bombay, was justified in law in departing from the previous finding of the Income-tax Appellate Tribunal, Delhi Bench 'C', New Delhi, dated 14-10-1963, that the firm of M/s. Manaklal Porwal of Udaipur was not a genuine firm and as such was not entitled to registration under the Indian Income-tax Act, 1922?" 38. It was strongly contended on behalf of the revenue that it was not open to the subsequent Bench to take a different view of the matter and if different views were taken that would create chaos and uncertainty. Strong reliance was placed on Madras High Court judgment. Reliance on behalf of the assessee was placed on the judgment in M.M. Ipoh v. CIT [1968] 67 ITR 106 (SC). Hon'ble High Court referred to the Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue does not challenge the decision of the Tribunal in an earlier year, it does not preclude it from doing so in a later year." 41. In the case of CIT v. Bharat Saw Mill [1992] 198 ITR 553, the Hon'ble Orissa High Court disapproved the approach of the Tribunal of deciding the case on the basis that two interpretations being possible, the interpretation that is favourable to the assessee should be adopted and held as under:- "We find from the order of the Tribunal that it did not decide the case on merits and only noticing the cleavage of judicial opinion, decided in favour of the assessee. In our view, the Tribunal should decide the case on merits taking into consideration diverse views and arrive at decision on its own. Without answering the question referred to us, we direct disposal of the appeal on merits by the Tribunal." 42. In the case of CIT v. Mohanlal Ranchhodas [1993] 203 ITR 304 (Guj.), the Hon'ble High Court laid down that a subsequent Bench should consider in a subsequent appeal any new issue that was not considered while arriving at the earlier decision. The Hon'ble High Court observed:- "The Tribunal has, however, recorded in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e instant case. We are not, therefore, inclined to accept the contention that the assessment in the earlier years operates as res judicata or that it precludes the assessee from raising the plea as done in the instant case." 44. In the case of CIT v. Brigadier B.D. Khurana [1996] 217 ITR 381, Hon'ble Allahabad High Court specifically considered whether the Tribunal is bound to follow the decision of another Bench. The following question was referred to them:- "Whether, on the facts and in the circumstances of the case, the learned Member of the Income-tax Appellate Tribunal who decided the appeals presently under consideration, was bound to follow the decision of another Bench of the Income-tax Appellate Tribunal on a similar point?" The Hon'ble High Court answered the question in the following words:- "So question Nos. 1 and 3 are decided in the affirmative in favour of the assessee and in respect of question No. 2 it is held that as a matter of prudence the Income-tax Appellate Tribunal is to take into notice and consider the decision given by another Bench of the Income-tax Appellate Tribunal though that may not be entirely binding upon the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income-tax Act." 47. In the case of Sayaji Iron & Engg. Co. v. CIT [2002] 253 ITR 749, Hon'ble Gujarat High Court expressed their respectful agreement with the view expressed by Hon'ble Madras High Court in the case of L.G. Ramamurthi that if a Bench of the Tribunal wants to take an opinion different from the one taken by an earlier Bench, the matter should be referred to the Full Bench of the Tribunal. 48. In the case of Agrawal Warehousing & Leasing Ltd. v. CIT [2002] 257 ITR 235 (MP), have also favoured the constitution of a larger Bench, following the aforesaid judgment of Hon'ble Gujarat High Court in the case of Sayaji Iron & Engg.Co. 49. I have in the foregoing paragraphs briefly enumerated the judgments of Hon'ble High Courts and Supreme Court where they are directly concerned with the question of the nature and scope of one decision of the ITAT as a precedent on subsequent Bench of the Tribunal deciding the similar issue. There is unanimity and direct authority of Hon'ble Supreme Court in more than one judgments that in Income-tax matters the decision of one Bench of the Tribunal does not constitute a binding precedent on subsequent Bench of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ah & Co. v. CIT/CEPT [1956] 30 ITR 618 lays down comprehensive guideline. In that case Hiralal A. Shah used to be assessed in the status of an HUF. It was claimed that there was disruption of Hindu Undivided Family on16-4-1938and thereafter a partnership firm was constituted. The department did not recognize the disruption and held the view that disruption took place only on 13-10-1943 when the minor son of Hiralal attained majority. The Tribunal by its order dated 29-1-1952 held that the disruption of the family took place as on 16-4-1938. For assessment year 1941-42 the department made the assessment holding that Hiralal represented the HUF in the firm. As a result of the acceptance of the disruption of the HUF on an earlier date, the Tribunal held that Mr. Hira Lal was only minor's trustee. For assessment years 1942-43, 1943-44 and 1944-45, the Tribunal went into the question in much greater detail and held that Hira Lal was a partner in his own right. Thereafter at the instance of the assessee, the following question was referred to Hon'ble Bombay High Court for their opinion:- "Whether in the circumstances of the case the Tribunal was justified in law in departi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bound by the earlier decision or the right to revise the earlier decision. Hon'ble Bombay High Court have declared the legal position in this regard in the following words:- "... it seems to us that the mere fact that the second Tribunal may look upon the decision of the first Tribunal as erroneous in law would not justify it in coming to a contrary conclusion or reversing the finding of the first Tribunal. Nor are we satisfied that in order to enable the second Tribunal to depart from the finding of the first Tribunal it is essential that there must be some fresh facts which must be placed before the second Tribunal which were not placed before the first Tribunal. If the first Tribunal failed to take into consideration material facts, facts which had a considerable bearing upon the ultimate decision, and if the second Tribunal was satisfied that the decision was arrived at because of the failure to take into consideration those material facts and that if these material facts had been taken into consideration the decision would have been different, then the second Tribunal would be in the same position to revise the earlier decision as if fresh facts had been placed befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while deciding a case the first Tribunal did not have a particular material before it or did not take into consideration particular facts and if the second Tribunal is satisfied that if those material facts had been taken into consideration, the decision of the first Tribunal would have been different, it would justify the second Tribunal in not adhering to the decision of the first Tribunal. On applying this legal principle I find that Hon'ble Judicial Member came to the conclusion that the facts of the case of the assessee could not be viewed in isolation when it became known that there were a large number of companies similarly placed. She found that it was too much of a coincidence that in the case of all the companies floated by the searched person, all the shareholders at the same point of time were in need of dire funds and all of them approached the searched person and left signed blank documents. In other words according to the Hon'ble Judicial Member once it was realized that in the peculiar facts and circumstances of the case the assessee was not alone but was one of many, the whole complexion of the facts and circumstances of the case became altogether differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 132(4A). 53. As to the assessment or otherwise of income in relation to unexplained or bogus share capital, the matter was first referred to Hon'ble Delhi High Court in the case of CIT v. Steller Investment Ltd. [1991] 192 ITR 287. In that case the subscribed capital of the assessee had been increased. The Assessing Officer accepted the increase in the subscribed capital. Thereafter the CIT came to the conclusion that the Assessing Officer did not carry out a detailed investigation. There was prevalence of device of converting black money into white by issue of shares with the help of formation of an investment company. The CIT, therefore, set aside the assessment order and directed the Assessing Officer to make enquiries with regard to the genuineness of the subscribers of the share capital. The Tribunal reversed this decision of the CIT and on a reference being made by the revenue, the Hon'ble Delhi High Court observed as under:- "It is evident that even if it be assumed that the subscribers to the increased share capital were not genuine, nevertheless, under no circumstances, can the amount of share capital be regarded as undisclosed income of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e matter was referred to the Full Bench of the Hon'ble High Court. After hearing detailed arguments of the parties the Hon'ble Full Bench of the High Court held the following on the applicability of the provisions of section 68:- "If the amount credited is a capital receipt then it cannot be taxed but it is for the Income-tax Officer to be satisfied that the true nature of the receipt is that of capital. Merely because the company chooses to show the receipt of the money as capital, it does not preclude the Income-tax Officer from going into the question whether this is actually so. Section 68 would clearly empower him to do so. Where, therefore, the assessee represents that it has issued shares on the receipt of share application money then the amount so received would be credited in the books of account of the company. The Income-tax Officer would be entitled to enquire, and it would indeed be his duty to do so, whether the alleged shareholders do in fact exist or not. If the shareholders exist then, possibly, no further enquiry need be made. But if the Income-tax Officer finds that the alleged shareholders do not exist then, in effect, it would mean that there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment of Hon'ble Delhi High Court in the case of Steller Investment Ltd. came before by Hon'ble Supreme Court and the Hon'ble Apex Court made the following order in CIT v. Steller Investment Ltd. [2001] 251 ITR 263:- "We have read the question which the High Court answered against the revenue. We are in agreement with the High Court. Plainly, the Tribunal came to a conclusion on facts and no interference is called for. The appeal is dismissed. No order as to costs." The fact of the fate of civil appeal filed by revenue in the case of Steller Investment Ltd. at the hands of Hon'ble Apex Court has been considered at length by Hon'ble Calcutta High Court in the case of Hindustan Tea Trading Co. Ltd. v. CIT [2003] 263 ITR 289. It was argued before the Hon'ble High Court that the judgment of the Full Bench of the Hon'ble Delhi High Court in the case of Sophia Finance Ltd. was no longer a good law because the earlier judgment of the Division Bench in the case of Steller Investment Ltd. had been affirmed by theApex Court. Hon'ble Calcutta High Court came to the conclusion that while doing soHon'ble Apex Courthad not laid down any proposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Steller Investment Ltd., the Hon'ble Supreme Court had not discussed the question involved having regard to the law. Accordingly, dismissal of the SLP had no binding effect under Article 141 of the Constitution and as such the Full Bench decision in Sophia Finance Ltd.'s case overruling Steller Investment Ltd.'s case continued to be good law. The Hon'ble High Court reiterated the provisions of section 68 also and held that the directions had been rightly given to the Assessing Officer to undertake investigation in order to establish the creditworthiness of the subscriber and genuineness of the transaction. Thereafter the matter once again came before the Hon'ble High Court in the case of CIT v. Nivedan Vanijya Niyojan Ltd. [2003] 263 ITR 623 (Cal.). Following the earlier two judgments reported in 263 ITR, the Hon'ble Calcutta High Court upheld the applicability of section 68 of the Act. 58. In the case of CIT v. Antarctica Investment (P.) Ltd. [2003] 179 CTR (Delhi) 526, Hon'ble Delhi High Court held that the only question for consideration is whether the finding of the Tribunal accepting share capital as genuine is without any evidence or m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plausible in the given facts of the case. 61. In the case of CIT v. Lanco Industries Ltd. [2000] 242 ITR 357 (AP), during the course of a search the directors of the company admitted that a sum of Rs. 74.2 lakhs was undisclosed income representing investments made by them in the names of their friends and relatives. The Tribunal deleted the addition made by the Assessing Officer in the hands of the company on the grounds that no proper enquiries had been made by the Assessing Officer and that in any case the information regarding the contributions of shareholders by friends and relatives of the directors could not be said to be an information based on an entry in the documents or material unearthed at the time of the search. Hon'ble High Court while expressing its reservations in accepting the Tribunal's view observed as under:- "But, this is a matter of appreciation of evidence and we do not think that a substantial question of law arises on that account. Moreover, we fail to see how merely by reason of unsatisfactory explanation relating to the source of investment by the shareholders, the money invested on shares should be treated as income of the assessee. If th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue under section 260A against the order of the Tribunal, Hon'ble Delhi High Court held as follows:- "This Court is of the opinion that when documentary evidence was placed on record to prove the identity of all the shareholders including their PAN/GIR numbers and filing of other documentary evidence in the form of ration card, etc., which had neither been controverted nor disproved by the Assessing Officer, then no interference is called for. It may be noted that as pointed out by a Full Bench of this Court in CIT v. Sophia Finance Ltd. [1994] 205 ITR 98 'if the shareholders exist then, possibly, no further enquiry need be made'. If still in the opinion of the Assessing Officer it was necessary to enquire further, then, it was for him to issue coercive process to see that the shareholders are before him and they arc questioned about the investment. In the case of CIT v. Precision Finance (P.) Ltd. [1994] 208 ITR 465, the High Court of Calcutta was required to examine the question from a different angle as in that case the enquiry of the Income-tax Officer revealed that either the assessee was not traceable or there was no such file and accordingly the first i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... device of converting black money into white by issuing shares with the help of formation of an investment company, and that the Assessing Officer did not make any enquiries with regard to the genuineness of the subscribers to the share capital. While confirming the decision of the Appellate Tribunal, the Division Bench held as under: 'It is evident that even if it be assumed that the subscribers to the increased share capital were not genuine, nevertheless, under no circumstances, can the amount of share capital be regarded as undisclosed income of the assessee. It may be that there are some bogus shareholders in whose names shares had been issued and the money may have been provided by some other persons. If the assessment of the persons who are alleged to have really advanced the money is sought to be reopened, that would have made some sense but we fail to understand as to how this amount of increased share capital can be assessed in the hands of the company itself. In our opinion, no question of law arises and the petition is, therefore, dismissed.' The aforesaid decision in the case of Steller Investment Ltd. [1991] 192 ITR 287 (Delhi) was challenged by the reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has to be in the form of Memorandum of appeal precisely stating therein the substantial question of law involved. Sub-section (3) provides that where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question and the appeal shall thereafter as provided in sub-section (4) be heard on the question so formulated and at the time of hearing the respondent is also permitted to argue on the appeal that the case does not involve such question without taking away or to abridge the power of the High Court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it. Sub-section (5) of this section further provides that the High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit. From these provisions, it is clear that an appeal lies to the High Court only where a substantial question of law is involved. In an appeal filed by the party, when the High Court dismisses the same by stating that no substantial question of law arises, it cannot, in our opin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industries Ltd. also Hon'ble Andhra Pradesh High Court held that no substantial question of law had arisen on that account. In the case of Makhni & Tyagi (P.) Ltd., the Hon'ble High Court was pleased to dismiss the appeal filed by the revenue as, "No substantial question of law arises in this matter." The same is stated in the judgment of Hon'ble Delhi High Court in the case of Achal Investment Ltd., "It is in view of this, the question framed need not be answered." In my opinion it would be quite unreasonable to hold that the Tribunal as well as Income-tax authorities are precluded from going into the question of genuineness of shareholding by any of the judgments enumerated by me in this behalf. While it may be that in the course of some of the judgments above enumerated, there are some observations that in the case of a company the share capital cannot be seen as representing income that may be assessed in the hands of the company itself, such observations have been made as a matter of appreciation of evidence and not as a proposition of law because in the ultimate analyses all the courts have only held that what the Tribunal decided is a questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n make assessment of only that undisclosed income which has a direct nexus with the search proceedings in the case of the assessee. Reference in this respect may be made to the judgments in N.R. Paper & Board Ltd. v. Dy. CIT [1998] 234 ITR 733 (Guj.); CIT v. Shambhulal C. Bachkaniwala [2000] 245 ITR 488 (Guj.); CIT v. Vinod Danchand Ghodawat [2001] 247 ITR 448 (Bom.); CIT v. Dr. M.K.E. Memon [2001] 248 ITR 310 (Bom.); CIT v. Rajendra Prasad Gupta [2001] 248 ITR 350 (Raj.); Bhagwati Prasad Kadia v. CIT [2001] 248 ITR 562 (Cal.); CIT v. Smt. Usha Tripathi [2001] 249 ITR 47 (All.); CIT v. Ravi Kant Jain [2001] 250 ITR 141 (Delhi); CIT v. Vikram A. Doshi [2002] 256 ITR 129 (Bom.) and so on. The contention of the learned counsel for the assessee before me is that during the course of the search proceedings, the Assessing Officer did not find any material/evidence to suggest that the share capital of the assessee-company in fact represented the undisclosed income of the assessee-company. The documents found/seized during the course of search proceedings were share certificates, share transfer forms, sale bills, cash receipts, affidavits etc. There was a legal presumption under section 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fidavits. This is the material found during the course of the search. This is the material on which the revenue's case of bogus share capital is based that the Hon'ble Judicial Member has found acceptable. It cannot, therefore, be said that the undisclosed income sought to be assessed in the impugned order under section 158BC is not 'as a result of search'. In my humble opinion, it is not necessary that during the course of the search foolproof material/evidence indicating undisclosed income should be found. That is not the true interpretation of the judgment of the Hon'ble jurisdictional High Court in the case of Ravi Kant Jain. As long as during the course of the search certain material/evidence that may lead to a legitimate enquiry into the genuineness of the transaction alleged by an assessee and undisclosed income is detected as a result of such legitimate enquiry during the course of proceedings under section 158BC it would amount to income computed, "on the basis of evidence found as a result of search or requisition of books of account or other documents and such other materials or information as are available with the Assessing Officer and relatabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e back to the file of the Assessing Officer for adjudication afresh. To put the matter in short, the issue is whether the Hon'ble Accountant Member is justified in accepting the assessee's explanation relating to blank but signed share transfer forms, sale bills, cash receipts and affidavits along with original share certificates relating to the assessee-company found and seized from the office of Shri Alok Aggarwal, Chartered Accountant or the Hon'ble Judicial Member is justified in restoring the matter back to the Assessing Officer for further enquiries. In substance the case of revenue is based on the nature of these documents and presence thereof at the premises of Shri Alok Aggarwal and the assessee's inability to satisfactorily explain those documents and to substantiate that explanation. The assessee explained that some of the shareholders, who were in dire need of money, were getting restless due to company's failure to pay any dividend approached the directors for assistance in selling shares in the assessee-company. For that purpose advance receipts and blank transfer forms were given by them to Shri Alok Aggarwal, so that the same may be handy when th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of the same Members and of which the Hon'ble Judicial Member is the author. The Hon'ble Judicial Member has, however, found it difficult to follow her own order in the case of Real Overseas (P.) Ltd. in the instant case. That is primarily because in that case as well as all other cases decided by the Tribunal, as above-mentioned, the facts of the case of each assessee had been considered in isolation without consciously looking at the totality of the picture emerging from the fact that none of these companies were alone but they were part of a crowd of similarly planned companies. The Hon'ble Judicial Member has sought to distinguish the orders of the Tribunal including her own order on this basis. For that purpose she has quoted at length from the Tribunal's orders in the case of Real Overseas (P.) Ltd. and Makhni & Tvagi (P.) Ltd. The Hon'ble Judicial Member has given her reasons to distinguish the facts of this case from other decisions of the Tribunal including the decision in the case of Real Overseas (P.) Ltd. in the following words:- "13. In the said facts and circumstances, coming back to the impugned order and taking note of the serious submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer should take into consideration such 'evidence' as the assessee may produce and such other 'evidence' as Assessing Officer may require on specified points and after taking into account all relevant 'material' which he has gathered, the Assessing Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment. It is striking that the sub-section employs 'evidence' for assessee and 'material' for the Assessing Officer. 70. In the case of Addl CIT v. Jay Engg. Works Ltd. [1978] 113 ITR 389, Hon'bleDelhiHigh Court have explained this distinction in the following words:- "The Income-tax Officer and certain other authority functioning under the Income-tax Act have a dual character. They are both agencies of investigation made into the incomes of assesses and they are also quasi-judicial authorities assessing the liabilities of the assessees to payment of income-tax. Under section 142(2) of the Act the Income-tax Officer may make such enquiry as he considers necessary for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ural justice. As pointed out by Hon'ble Supreme Court in the case of CIT v. Simon Carves Ltd. [1976] 105 ITR 212, it is not as if the Assessing Officer should exercise his powers only in a manner beneficial to the revenue and adverse to the assessee. He should arrive at his decision in judicial spirit on the basis of sound reasoning. He may not act on suspicion or conjectures or pure guess. Reference in this respect may be made to the judgments in the case of Dhakeshwari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 (SC); Omar Salay Mohamed Sait v. CIT [1959] 37 ITR 151 (SC); Umacharan Shaw & Bros. v. CIT [1959] 37 ITR 271 (SC) and a host of High Courts judgments thereafter. In this view of the matter I am unable to subscribe to the view of the Hon'ble Accountant Member that after filing the affidavits confirming investment in purchase of shares of assessee-company, bank pass books etc., the assessee had discharged its onus and once the assessee had discharged its onus his burden went away for ever. The judgment of Hon'ble Supreme Court in the case of Arumugham v. Sundarambal [1999] 4 SCC 350 is not applicable to income-tax assessment proceedings. It is also not correct to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect of the circumstances pointed out to the Tribunal, but, on the other hand, a plain reading of the judgment of the Tribunal makes it clear that the Tribunal has, in fact, taken into account the cumulative effect of the circumstances on record before the Tribunal. It is not necessary for the Tribunal to state in its judgment specifically or in express words that it has taken into account the cumulative effect of the circumstances or has considered the totality of facts, as if that were a magic formula; if the judgment of the Tribunal shows that it has, in fact, done so, there is no reason to interfere with the decision of the Tribunal." 74. In the case of Newton Chikli Collieries Ltd. v. CIT [1962] 44 ITR 495 at page 499, the Hon'ble Supreme Court have observed that if the explanation of the assessee for discrepancies are not accepted, it cannot be said that the authorities have acted on no material at all. 75. On consideration of the matter I am of the view that Hon'ble Judicial Member has correctly relied upon the judgment of Hon'ble Supreme Court in the case of Sumati Dayal v. CIT [1995] 214 ITR 801. In that case the assessee was carrying on business as a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s so, ignores the reality. The transaction about purchase of winning ticket takes place in secret and direct evidence about such purchase would be rarely available. An inference about such a purchase has to be drawn on the basis of the circumstances available on the record. Having regard to the conduct of the appellant as disclosed in her sworn statement as well as other material on the record an inference could reasonably be drawn that the winning tickets were purchased by the appellant after the event. We are, therefore, unable to agree with the view of the Chairman in his dissenting opinion. In our opinion, the majority opinion after-considering the surrounding circumstances and applying the test of human probabilities has rightly concluded that the appellant's claim about the amount being her winnings from races is not genuine. It cannot be said that the explanation offered by the appellant in respect of the said amounts has been rejected unreasonably and that the finding that the said amounts are income of the appellant from other sources is not based on evidence." 76. In the instant case share certificates issued by the assessee to as many as 50 shareholders have be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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