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TMI Blog2005 (11) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... ertificates in original. Shri Alok Agarwal renders consultancy services. 3. In block assessment framed under s. 158BC of the Act of Shri Alok Agarwal, the person searched, his AO. Dy. CIT, Special Range-3,New Delhitreated the share capital of Rs. 19,58,070 as his undisclosed income. This assessment was framed on31st May, 1997. This assessment stood set aside by the Tribunal and in the fresh assessment completed on30th March, 2001of the searched person addition has again been made on protective basis. 4. Proceedings in the case of the appellant were initiated under s. 158BD r/w s. 158BC of the Act on21st May, 2001with the allegation that most of the persons in whose names the share capital has been introduced are non-existent. Return of income for block period disclosing nil income has been filed. The appellant was required to file complete list of shareholders of the company. The AO on his own issued summons under s. 131 to various shareholders. The summons were served and replies have been received confirming their investment in purchase of shares by way of being an affidavit inter alia filing the proof of their residences with copy of ration card, copies of IT returns and ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account payee cheques and recording of all the entries in respect of share issue stand disclosed in the regular books of account is not in dispute. The IT return drawn on the basis of such accounts stood accepted in the regular assessment of the appellant. The return for allotment of shares had been filed with the office of Registrar of Companies and all the persons in whose names' shares were allotted had become legally the shareholders of the appellant company. Details of such shareholding with complete particulars as to the identity, capacity and genuineness of the shareholding and their confirmations/affidavits had been placed on record. The AO himself had initiated enquiry by issuance of summons under s. 131 of the IT Act on all such shareholders. These were duly served and complied with by the shareholders. The shareholders in the enquiry proceedings by the AO had filed affidavits confirming investment in purchase of shares of appellant company as their own investment. This investment was duly disclosed by them in their respective IT returns, copies of which were also placed on record along with assessment orders wherever available. Bank pass books were also produced. Receip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found and seized did not reveal any investment outside books by the appellant nor any enquiry resulted into any contrary finding. The appellant was found to have received the share money through account payee cheques and shares allotted and share certificates also stood issued and found with a third party incidentally a consultant by profession. The circumstances under which these certificates were lying with the consultants also stood explained and no infirmity is found in the explanation of the appellant. The AO did not reject the explanation of the assessee. Apparently the investment in shares was of all such persons who had become shareholders and holding the same as their own investment which was duly disclosed and also stood accepted in their individual IT return. The AO without bringing any material is found to have erred in saying that the apparent is not real. For alleging so, the burden was on Revenue. This has not been discharged. Such a principle is found laid by the apex Court in CIT vs. Daulat Ram Rawat Mull 1972 CTR (SC) 411 : (1973) 87 ITR 349 (SC). We also find that without there being any material or basis in possession of the AO, the documents which were found in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the share capital of Rs. 21,63,070 as bogus or genuineness of which not proved. The AO is speaking two different things in the same tongue without discharging his burden which in law lay upon him after the genuineness of investment in shares stood admitted by each of the shareholders. Having regard to the totality of facts and the findings as arrived at for the genuineness of transaction of shares having been proved by the appellant and for lack of positive material, evidence or information as envisaged under Chapter XIV-B such an addition cannot be allowed to sustain. 9. The Tribunal in IT(SS)A No. 284/Del/2001 dt.18th Aug., 2003in the case of Indradhan Agro Products Ltd. vs. Dy. CIT [reported at (2004) 89 TTJ (Del) 158Ed.] while dealing with the addition under s. 68 of the Act as undisclosed income on the ground of genuineness has held as under: "We may look at the entire issue from another angle, namely the impact of provisions of s. 68 in the context of block assessment proceedings. The AO has taken resort to the provisions of s. 68 and held that the assessee failed to discharge the onus of proving the genuineness of share capital has been concluded by the two decisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relying upon the jurisdictional decision of the High Court in the case of CIT vs. Ravi Kant Jain (2001) 167 CTR (Del) 566 : (2001) 250 ITR 141 (Del) and Gujarat High Court in the case of N.R. Paper Board Ltd. vs. Dy. CIT (1998) 146 CTR (Guj) 612 : (1998) 234 ITR 733 (Guj) amongst others has deleted the additions. The Tribunal has also considered the decision of the Delhi High Court in the case of CIT vs. Steller Investment (2000) 164 CTR (SC) 287 : (2001) 251 ITR 263 (SC) and Supreme Court in the case of CIT vs. Sophia Finance Ltd. (1993) 113 CTR (Del)(FB) 472 : (1994) 205 ITR 98 (Del). We have even taken ourselves through various pages of the paper books and observed that the assessee has regularly been filing his returns. The replies of the assessee before the AO in the block assessment proceedings and the submissions with regard to Inspector's report, past assessments of the assessee have also been taken into consideration. After duly considering the entire plethora of arguments and evidences, we are of the view that in the facts of the case, the AO could not have made additions in block assessment and in case he was of the view that the documents accompanying the returns of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... searched person, had in sheer helplessness and misery submitted that documents have been found in the course of the search from the premises of the searched person and admittedly amongst them are blank transfer forms where the part to whom they are to be transferred have been left as blank, however signatures of the alleged shareholders are there. The irony of deleting additions in the hands of the chartered accountant as well as in the hands of the companies despite a seizure of documents was questioned by the learned Departmental Representative. The helplessness experienced in the situation where despite seizure of documents found in the search resulting in the end where Revenue is left standing helplessly was expressed by him. The learned Departmental Representative in sheer helplessness with misery writ large on his face attempted to paint out the irony that how in the case of all the companies floated as Benami or served as a professional consultant by the searched person, all the shareholders at the point of time came to be under circumstances where they were in dire need of money. This paper work and these facts in tae face of documents found in the course of search, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents pertaining to the present assessee were seized. The AO of Shri Alok Aggarwal completed the assessment under s. 158BC in his case. He found that undisclosed income arising out of those incriminating documents related to the assessee. As such, the seized documents books of account were handed over to the AO of M/s Real Overseas (P) Ltd., the assessee here. Accordingly, in this background, the assessment was framed in the hands of the assessee. 4. Notice under s. 158BD r/w s. 158BC was issued to the assessee on 21st Aug., 2000 in response to which, return for the block period 1987-88 to 1996-97 and 1997-98 (part period 1st April, 1996 to 19th April, 1996) was filed on 24th Aug., 2001 under protest as per the statement of facts placed before us. 5. The AO was of the view that the assessee is engaged in the activities of giving accommodating entries and looking at the documents seized, he was of the view that the shareholders of the assessee-company are Benami and have in fact signed blank receipts, blank sale bills, blank share transfer forms and also confirmatory affidavits which form part of the seized material in Annex. A-38 and A-97 of Panchnama dt.24th April, 1996/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered accountant. Shri Alok Aggarwal, was set aside by the Tribunal. As a result of it, additions on identical lines were made in the case of Makhani Tyagi (P) Ltd. It was further argued that the income added in the block assessment already stands disclosed in the regular assessments of the assessee. Inviting attention to p. 123, it was stated that the assessee has been filing its return from 1989-90 which was filed on 29th Dec., 1989, i.e., much before the date of the search which was conducted on the official and residential premises of Shri Alok Aggarwal only on 19th April, 1996. Paper book p. 120 was also referred to in support of the contention that the return for 1990-91 was filed on31st Dec., 1990. Similarly, it was submitted that the returns for 1992-93, 1994-95, 1995-96 and 1996-97 have been filed by the assessee. In support of the above claim, our attention was invited to p. 101 which is the intimation under s. 143(1)(a) in the case of the assessee for 1994-95 which was issued on 28th Feb., 1995, i.e., much before the date of the search on Mr. Alok Aggarwal, the chartered accountant of the assessee. Page 102 was referred to in support of the said claim so as to highlight ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital 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 upto asst. yr. 1996-97." 9. The submissions in response to the arguments which have been reproduced above as well as various other arguments on facts were responded to by the learned Departmental Representative Shri Ujagar Singh in the following manner: "18. Learned Departmental Representative, in reply, with respect to the jurisdiction placed reliance on the documents placed before the Bench and the observation in the assessment order so as to contend that the jurisdiction of the AO was neither barred by limitation nor otherwise. 19. With respect to the additions made, reliance was placed upon the block assessment order though nothing was stated to controvert the submission of the assessee that the issue is fully covered vide order dt.21st July, 2003in IT(SS) No. 204/Del/2002 in the case of Makhani Tyagi (P) Ltd. It was specifically put to him that whether he would like to point out any distinguishing fact or circumstance. Learned Departmental Representative did not point out any distinguishing fact or circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant to consider the order of the Tribunal in the case of Makhani Tyagi vs. Dy. CIT in IT(SS)A No. 204/Del/2002 wherein the arguments advanced on behalf of the Revenue were as under: "3. The learned Departmental Representatives relied on the assessment order and submitted that the share capital appears to be bogus because none of the shareholders having appeared before the AO under s. 131 of the IT Act, the same had not been proved to be genuine. He, therefore, submitted that no interference was called for in the block assessment order as passed by the AO." 12. Considering this, the issue was decided as under: "4. We have perused various documents placed before us in the form of paper book and have given our thoughtful consideration to the facts of this case. The facts stated by the learned counsel for the assessee have neither been controverted nor disproved by the learned Departmental Representatives. Admittedly, the entire share capital stood disclosed to the Department as having been entered in the regular account books maintained by the assessee-company prior to the date of search on19th April, 1996under s. 132 against Shri Alok Aggarwal as per details given by the AO h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, 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 had neither been controverted nor disproved by the AO. All the shareholders had subscribed share capital by account payee cheques/drafts-a fact also controverted or disproved by the AO. There was no justification on the part of the AO to ignore the confirmation letters as had been received by him directly in response to summons under s. 131 of the IT Act from various shareholders. It was held by the jurisdictional Delhi High Court in. the case of CIT vs. Steller Investment Ltd. (1991) 99 CTR (Del) 40 : (1991) 192 ITR 287 (Del) that "even if it be assumed that the subscribers to the increased share capital were not genuine, under no circumstance, could the amount of share capital be regarded as undisclosed income of the appellant". This judgment was affirmed by Supreme Court in CIT vs. Steller Investment Ltd. (2000) 164 CTR (SC) 287 : (2001) 251 ITR 263 (SC). Jurisdictional Delhi High Court (Full Bench) in the case of CIT vs. Sophia Finance Ltd. (1993) 113 CT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts as argued need due consideration and the alarm sounded by the learned Departmental Representative cannot be wished away. 14. Being of the view that the issue cannot be decided by wearing blinkers, the full scope 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. Accordingly, in the circumstances, reference may be made to p. 2 of the assessment order which is under challenge. Since this is a period in which a direct appeal was coming to the Tribunal wherein in para 2 of the said page, the AO observes as under: "During the course, of the search proceedings incriminating documents in the form of blank but signed share transfer forms, sale bills, receipts, affidavits and share certificates relating to M/s NPAR Drugs (P) Ltd. were seized from 245, Anarkali Bazar, Delhi, which is the office of Sh. Alok Aggarwal. These documents are signed by the shareholders of the company. The ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere lying with Shri Alok Aggarwal, chartered accountant 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 deposit or receipts of any payment from Central or State Governments, 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. 19. As though this was not enough, the AO observes that in each of these cases on a perusal of the blank pass book of the shareholder, it revealed 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 majority of the shareholders". He fairly observes that although the identity and capacity for investment has been furnished by all the shareholders, however, the genuineness of the transaction is not proved: "I have considered the submission made by the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC) and CIT vs. Durga Prasad More 1973 CTR (SC) 500 : (1971) 82 ITR 540 (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 share capital in the hands of the assessee-company. 22. It may be pertinent to briefly observe that their Lordships in the cases of CIT vs. Steller Investment (1991) 99 CTR (Del) 40 : (1991) 192 ITR 287 (Del) and CIT vs. Sophia Investment Ltd. (1993) 113 CTR (Del)(FB) 472 : (1994) 205 ITR 98 (Del)(FB) have considered the aspect of genuineness in the context of the identity of the shareholder. The Hon'ble Supreme Court has endorsed the judgment of Delhi High Court in the case of CIT vs. Steller Investment (2000) 164 CTR (SC) 287 : (2001) 251 ITR 263 (SC). 23. Accordingly, after having considered the entire peculiar facts and circumstances which have not been addressed or considered by us in the case of Real Overseas and also in the other identical cases, namely, Makhani Tyagi which had been relied upon before us and othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difference of opinion between the Members of the Bench we state the following points of difference and refer the same to the Hon'ble President for further necessary action as envisaged under s. 255(4) of the IT 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 learned AM 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 JM is justified in restoring the issue back to the file of AO for adjudication afresh? SMT. DIVA SINGH, J.M.: 25th May, 2004 I have received the following proposed question under s. 255(4) of the IT 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 AM 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 JM is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g circumstances, relied upon by the AO in terms of the decisions in Sumati Dayal vs. CIT (1995) 125 CTR (SC) 124 : (1995) 214 ITR 801 (SC) and CIT vs. Durga Prasad More 1973 CTR (SC) 500 : (1971) 82 ITR 540 (SC), is the action of the JM justified in restoring for verification of facts to address the arguments advanced by the Revenue or is the learned AM justified in ignoring the decision relied upon by the AO as well as the arguments of the Revenue and coming to a conclusion only on the basis of the arguments advanced by the assessee? Q.6. Whether, where 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? S.C. TIWARI, A.M. (AS THIRD MEMBER): 30th November, 2005 In this case the appeal filed by the assessee on19th June, 2002against the order under s. 158BD, dt.31st May, 2002for the block period1st April, 1986to19th April, 1996made by Dy. CIT, Circle 4(1),New Delhi, was heard by Tribunal, Delhi Bench "B", on7th Jan., 2004. As there has been a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, chartered accountant 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 Governments, DDA and other Housing Corporations, etc. The advance receipts are not valid till cheques/drafts numbers are entered in them at the time of actual payment." The AO considered the submissions made by the assessee and the confirmations submitted by the shareholders. Examination of the bank passbooks 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 AO, therefore, held that though the iden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR (SC) 500 : (1971) 82 ITR 540 (SC) and Sumati Dayal vs. CIT (1995) 125 CTR (SC) 124 : (1995) 214 ITR 801 (SC). He held that the surrounding circumstances 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 s. 68 as per the details given in the impugned order under s. 158BD. 4. Aggrieved by the aforesaid order under s. 158BD, the assessee filed appeal before the Tribunal that was heard in Bench "B" on7th Jan., 2004. Thereafter Hon'ble AM made an order of the Bench in writing and forwarded the same to Hon'ble JM 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 (P) Ltd., M/s Makhani Tyagi (P) Ltd., Indradhan Agro Products Ltd., Akriti Media (P) Ltd. and Garg Polymers (P) Ltd. Proceedings under s. 158BD were similarly initiated in their cases and under the identical facts and circumstances share capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uire 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 AM found that stand fortified by the decision of the Hon'ble Supreme Court in CIT vs. Orissa Corporation (P) Ltd. (1986) 52 CTR (SC) 138 : (1986) 159 ITR 78 (SC). 6. The learned AM found that presumption under s. 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 AO without bringing any material erred in saying that the apparent was not real. That burden was on Revenue as held by the apex Court in CIT vs. Daulatram Rawatmull 1972 CTR (SC) 411 : (1973) 87 ITR 349 (SC). The assessment was made by the learned AO on the basis of suspicion. A suspicion howsoever strong could not take the place of evidence, as laid down by the apex Court in Umacharan Shaw Bros. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JM found herself unable to concur with the reasoning and conclusion of Hon'ble AM. She made her separate order dt.26th March, 2004. She pointed out that during the course of hearing of the appeal in the present instant case, the learned Departmental Representative was confronted with the orders of the Tribunal in the case of different companies where similar additions made had been deleted. The learned Departmental Representative 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 paint 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 Departmental Representative painted 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 should be seen toget ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to point out any distinguishing fact or circumstance. The learned Departmental Representative did not point out any distinguishing fact 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 (P) Ltd. but for the record, reliance was placed upon the impugned order." The Hon'ble JM 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 Pvt. Ltd., wherein reliance had been placed on the judgment of jurisdictional High Court in the case of CIT vs. Ravi Kant Jain; CIT vs. Steller Investment and CIT vs. Sophia Finance Ltd. On that basis it was held that the AO 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 s. 147/148 proceedings. 11. Hon'ble JM pointed out that in the case of Makhni Tyagi (P) Ltd. vs. Dy CIT also the Revenue had raised only the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee would have followed the same course. However, in the present appeal the Hon'ble JM found herself faced with a scenario entirely different from the one appreciated by that very Bench in the case of Real Overseas. The learned JM thereafter observed: "In the circumstances, the facts as argued need due consideration and the alarm sounded by the learned Departmental Representative cannot be wished away. 14. Being of the view that the issue cannot be decided by wearing blinkers, the full scope 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 JM also took note of the observations of the AO that in the shareholders' bank passbooks, 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 majority of the shareholders. For that reason and that signed blank docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record, the learned AM 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 JM is justified in restoring the issue back to the file of AO for adjudication afresh?" On receipt of the aforesaid proposed question from the Hon'ble AM, the Hon'ble JM suggested the following questions to bring out the point of difference to be referred to the Hon'ble President for further action: "Q1. Whether, in view of the facts and material on record referred to by the Departmental Representative in his arguments, which was not rebutted by the Authorised Representative 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 JM justified in restoring the issue for necessary verification to the AO or is the learned AM justified in not considering those facts, material on record and the arguments of the Departmental Representative and deleting the addition. Q2. Whether the purpose of an appeal filed before the Tribunal is to dispose the issue as covered once it is so argued by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Hon'ble JM 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 vs. Makhni Tyagi (P) Ltd. (2004) 187 CTR (Del) 550 : (2004) 267 ITR 433 (Del). He pointed out that that judgment relates to the very search in relation to which the order under s. 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 vs. Steller Investment Ltd. (1991) 99 CTR (Del) 40 : (1991) 192 ITR 287 (Del). According to that judgment under no circumstances the amount of share capital may be regarded as undisclosed income of the company. That judgment of Hon'ble Delhi High Court has also been affirmed by Hon'ble Supreme Court by their judgment reported in CIT vs. Steller Investment Ltd. Besides, the Full Bench of the Hon'ble Delhi High Court had held in the case of CIT vs. Sophia Finance that in any case where the shareholders are identified then possibly no further enquiry is required. Hence looked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proceedings under s. 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 AM. 18. The learned counsel argued that there was lot of overlapping in the questions framed by the Hon'ble JM. 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 Departmental Representative had not been considered in the order made by the Hon'ble AM were not correct. In the order written by Hon'ble AM there were references to the arguments of the learned Departmental Representative at various places. The AM had recorded, "The learned Departmental Representative present in the proceedings admits that facts, circumstances and issues are identical and has not shown any new or distinguishing findings of the AO." In other words the learned Departmental Representative himself accepted that the facts of the case in the present appeal were identical to appeals in various other cases already decided by the Tribunal and that there were no distinguishable facts. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h. 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 Departmental Representative referred to the letter of the assessee dt.28th May, 2002addressed to the AO and placed at pp. 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. How could every shareholder of several companies comprehensively sign all the blank documents even when there was no prospective buyer in sight. Those facts pointed out that there was no genuine shareholders and mere name lenders who had already signed blank documents for the safety of the assessee to whom the money actually belonged. The learned Departmental Representative argued that the distinguishing feature noticed by the Hon'ble JM in the instant case was that while in the case of each of the assessee-company the Tribunal viewed facts of the case in isolation, in the case of the assessee on account of perseverance of the learned Departmental Represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in substance. In many cases the balance-sheets of the shareholders did not reflect the shares of the assessee-company. The learned Departmental Representative referred to assessee's paper book p. 31 as an illustration of that point. 22. The learned Departmental Representative argued that the abundant facts found during the course of search constituted the focal point of the order of the Hon'ble JM 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 the case of Sunder Agencies. As to the presumption raised in s. 132(4A), the correct legal position was that such presumption was for the purpose of conducting search proceedings only and could not be raised by either side during the course of assessment proceedings. The learned Departmental Representative argued that orders of the Tribunal in the cases of other assessee-companies relating to the same search, as also the judgment of Hon'ble Delhi High Court in the case of Makhni Tyagi were distinguishable because in each of those cases facts of the assessees were viewed in isolation; whereas in the instant case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subsequent Bench. Further, Hon'ble JM has raised the question of the significance of surrounding circumstances and human probabilities. Hon'ble JM 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 AM. 25. On analyzing the points of reference by both Hon'ble AM and Hon'ble JM, I find that the first and foremost issue before me is the force and impact of the earlier orders of the Tribunal in the appeal before me. 26. While considering the question of the binding nature of the order of one Bench of the Tribunal on another Bench, it is very important to bear in mind the difference between High Courts and Tribunal. Tribunal is not a formal source of law in the sense Hon'ble High Courts are in accordance with Art. 141 of the Constitution ofIndia. Secondly, Tribunal is not a Court of record. The orders passed by various Benches of the Tribunal by and large go unpublished and only minuscule number of orders are published in journals etc. and, thus, available to public at large. Thirdly, Tribunal is the final fact-finding authority. Fourthly, while before High Courts once a judgment i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rities 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 s. 66(2) of the IT Act." 30. In the case of M.M. Ipoh Ors. vs. CIT (1968) 67 ITR 106 (SC), the Hon'ble Supreme Court once again reiterated: "The doctrine of res judicata does not apply so as to make a decision on a question of fact or law in a proceeding for assessment in one year binding in another year. The assessment and the facts found are conclusive only in the year of assessment: the findings on questions of fact may be good and cogent evidence in subsequent years, when the same question falls to be determined in another year," 31. In the case of CIT vs. Brij Lal Lohia Mahabir Prasad Khemka 1974 CTR (SC) 167 : (1972) 84 ITR 273 (SC), Tribunal decided for asst. yrs. 1945-46 and 1946-47 that the gifts in question were not genuine gifts. The High Court did not interfere with the finding of the Tribunal on the basis that it was a finding of fact. When the matter was brought to Hon'ble Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 asst. yr. 1954-55." 33. In the case of Surjidevi Kunjilal-Jaipuria Charitable Trust vs. CIT (1978) 114 ITR 685 (All), the Tribunal decided the appeal simply following the earlier decision. Hon'ble Allahabad High Court, therefore, considered it necessary to direct the Tribunal to rehear the appeal in the following words: "The position is that there is no finding by the Tribunal on the merits of the matter, specially on the two objects which were the subject-matter of concession on the previous occasion. Learned counsel for the trust argues that each of the objects is an object of public charity which is covered by the relevant clause in the IT Act of 1961, entitling the trust to exemption. Since the Tribunal has not recorded any finding on the merits of the matter, we are unable to decide the question of law as it has been framed. In our opinion, the Tribunal should have proceeded to record the findings on merits and not merely followed its earlier decision. We have no option but to direct the Tribunal to rehear the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Fuller 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 of fact. If the Tribunal in the present case wanted to take an opinion different from the one taken by the earlier Bench, it should have placed the matter before the President of the Tribunal so that he could have referred the case to a Full Bench of the Tribunal. consisting of three or more members for which there is provision in the Act itself." 36. In the case of Namdang Tea Co. Ltd. vs. CIT (1982) 138 ITR 326 (Cal) Hon'bleCalcuttaHigh Court distinguished the aforesaid judgments of Hon'ble Madras High Court in the case of L.G. Ramamurthi and pronounced the legal position in the following words: "Much reliance has been placed on behalf of the appellant on the assessment for the subsequent year, that is to say, for the year relevant to the asst. yr. 1968-69. The CIT has pointed out certain differences between these two years. In our opinion, as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken, 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 reported in (1968) 67 ITR 106 (SC). Hon'ble High Court referred to the Supreme Court judgments reported in New Jehangir Vakil Mills Co. Ltd. vs. CIT (1963) 49 ITR 137 (SC) and 1974 CTR (SC) 167 : (1972) 84 ITR 273 (SC) and some other judgments and thereafter held: "It is not useful to multiply the authorities. It may be taken as an established rule of law that the decisions rendered in earlier proceedings under the IT Act do not operate as res judicata in connection with the subsequent assessment years nor the question of estoppel arises. The decision rendered is a decision for that particular year. So far as the present case is concerned, we need not be guided by the broader proposition propounded, for, it may be stated that the Tribunal, Bombay Bench "B", has not proceeded to determine the question solely on the basis of that evidence which had already been considered in connection with the assessments of previous two years up to the stage of the High Court." 39. In the case of Ambika Prasad Sonar vs. CIT (1987) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 para 7 of its judgment a finding that the surplus arising out of Arvind Mills and Atul Products shares should be treated as capital gains as has been rightly held by the ITO. Based on this finding of the Tribunal in the earlier appeal, it was contended before the Tribunal by the Revenue that the subsequent appeals against the order of the AAC were not maintainable because this ground was already concluded by the Tribunal in its earlier order in IT Appeals Nos. 225 and 226/Ahd of 1970-71. The Tribunal, while dealing with the said preliminary objection, rightly found that, while deciding the earlier appeals, the Tribunal has not actually gone into the question of conversion of investment shares into stock-in-trade for ready share business." 43. In the case of CIT vs. Kalpetta Estates Ltd. (1994) 122 CTR (Ker) 410 : (1995) 211 ITR 635 (Ker), question No.2 referred for the opinion of Hon'ble High Court read as under: "2. Whether, on the facts and in the circumstances of the case, is not the order of the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t may not be entirely binding upon the Tribunal." 45. There is unanimity in the judgments of High Courts and the apex Court inIndiathat the decision of one Bench of the Tribunal carries no binding force on another Bench of equal strength -in another appeal on similar issues or facts. Hon'ble Madras High Court too, have not said so in their judgment in the case of L.G. Ramamurthi Ors. and held only that if a Bench wanted to take a opinion different from the one taken by the earlier Bench, it should place the matter before the President of the Tribunal for reference to a Full Bench of the Tribunal. This view of Hon'ble Madras High Court has been reiterated by some other High Courts as well. 46. In the case of CIT vs. Goodlass Nerolac Paints Ltd. (1990) 90 CTR (Bom) 184 (1991) 188 ITR 1 (Bom), the Hon'ble Bombay High Court have given the same advice in the following words: "Before parting with this question, we consider it desirable to mention that the Tribunal is a final judge of facts. The High Court, in reference, does not interfere with the findings of fact unless such a finding is perverse or is such that no reasonable person can come to such a finding. This will be so ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constitute a binding precedent on subsequent Bench of the Tribunal deciding upon the same or similar issues or facts. There is, however, a strong undercurrent in judicial thinking that where there is only difference of opinion on the same facts and the same aspects, the subsequent Bench ought not to proceed to decide the matter on its own contrary to the earlier decision and should refer the matter to the President of the Tribunal for constitution of a larger Bench. At the same time there is plethora of authority that a subsequent Bench can draw different conclusion if there is adequate justification to depart from the earlier view, e.g. where subsequently new or more facts come to light. (1961) 41 ITR 685 (SC); 1974 CTR (SC) 167: (1972) 84 ITR 273 (SC); (1982) 138 ITR 326 (Cal); (1986) 57 CTR (Raj) 249 : (1986) 160 ITR 243 (Raj), etc. or if the earlier bench omitted to consider certain material aspects (1961) 41 ITR 685 (SC); (1962) 44 ITR 529 (SC); (1993) 203 ITR 304 (Guj); (1991) 122 CTR (Ker) 410 : (1995) 211 ITR 635 (Ker). In the case of CIT vs. Kalpetta Estates Ltd., Hon'ble Kerala High Court have further stated that the Tribunal is entitled to take a different view of the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Bombay High Court referred to the judgment in the case of IRC vs. Sleath 17 Tax Cases 149 at 163. "The assessment is final and conclusive between the parties only in relation to the assessment for the particular year for which it is made. No doubt, a decision reached in one year would be a cogent factor in the determination of a similar point in a following year, but I cannot think that it is to be treated as an estoppel binding upon the same party for all years." Hon'ble High Court found that the principle that each assessment is a different assessment year is not merely helpful to the IT authorities but it is equally helpful to the assessee. Shri N.A. Palkhiwala, the eminent counsel for the assessee argued that the Tribunal stood on a different footing from an IT authority not bound by an earlier decision. Reliance was placed by him on a large number of authorities including the statement of the law with regard to 'res judicata' appearing in Halsbury, Vol. 13, p. 449. Hon'ble Bombay High Court held the view that the cases mentioned in Halsbury are cases of a Tribunal dealing with a specific issue which is not likely to arise again. The principle should not have application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st Tribunal may take into consideration all the facts, still its decision may be so erroneous as to justify the subsequent Tribunal in not adhering to that decision. In a case like this, which indeed must be an extreme case, it could be said that the decision of the first Tribunal was a perverse, decision, and if the decision of the first Tribunal was either arbitrary or perverse it would justify the second Tribunal in departing from the decision arrived at by the first Tribunal. Therefore, in our opinion, an earlier decision on the same question cannot be reopened if that decision is not arbitrary or perverse, if it had been arrived at after due inquiry, if no fresh facts are placed before the Tribunal giving the later decision and if the Tribunal giving the earlier decision has, taken into consideration all material evidence. We should also like to sound a note of warning, especially with regard to a Tribunal like the Appellate Tribunal, that it should be extremely slow to depart from a finding given by an earlier Tribunal. Even though the principle of res judicata may not apply, even though there may be no estoppel by record, it is very desirable that there should be finality an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emerges once all these cases are considered as pieces of a large mosaic. In other words, what the learned AM considered to be the strength of the case of the assessee, precisely the same has been considered by the learned JM, to be the weakness in the case of the assessee. According to the learned JM by valiant efforts made, the learned Departmental Representative could change the entire complexion of the case as compared to the cases earlier decided by the Tribunal including herself. It is needless to say that in such circumstances the case before her fell in the category of exceptions carved out by the series of judgments of Hon'ble Supreme Court and of various High Courts discussed by me at length from para 28 onwards. In my opinion, the learned AM (sic-JM) was entitled to take a different view of the matter when an altogether different case was presented before her. 52. The second limb of the question framed by the Hon'ble AM relates to "material on record". The learned counsel for the assessee has raised two important preliminary issues in this context. First, he argues that from the judgment of Hon'ble Supreme Court in the case of Steller Investment Ltd. and the judgment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , dismissed." 54. The matter thereafter came before Full Bench of the Hon'ble Delhi High Court in the case of CIT vs. Sophia Finance Ltd. The assessee in that case was incorporated on27th April, 1983. The assessee disclosed paid-up capital of Rs. 20 lakhs. During the course of assessment proceedings the assessee furnished necessary details and confirmation. The AO made an assessment order accepting the return filed by the assessee. Thereafter the CIT issued a notice under s. 263. He held that it was the duty of the AO to enquire into the genuineness of the shareholders because in a large number of similar cases enquiries had revealed that either the shareholders did not exist at the addresses given or they were mere name lenders. The learned CIT, therefore, set aside the assessment order and directed the AO to make farther enquiries. On assessee's appeal the Tribunal took note of its decision in the case of Standard Cylinders (P) Ltd. vs. ITO (1988) 24 ITD 504 (Del), in which it was held that a company cannot seek information from the shareholders regarding the sources of the investment in the shares. The Tribunal came to the conclusion that the fact that the company was incorpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In other words, the truthfulness of the assertion of the assessee regarding the nature and the source of the credit in its books of account can be gone into by the ITO. In the case of CIT vs. Steller Investment Ltd. (1991) 99 CTR (Del) 40 : (1991) 192 ITR 287 (Del), the ITO had accepted the increased subscribed share capital. Sec. 68 of the Act was not referred to and the observations in the said judgment cannot mean that the ITO cannot or should not go into the question as to whether the alleged shareholders actually existed or not. If the shareholders are identified and it is established that they have invested money in the purchase of shares, then the amount received by the company would be regarded as a capital receipt and to that extent the observations in the case of Steller Investment Ltd., are correct but if, on the other hand, the assessee offers no explanation at all or the explanation offered is not satisfactory then the provisions of s. 68 may be invoked. In the latter case section 68, being a substantive section, empowers the ITO to treat such a sum as income of the assessee which is liable to be taxed in the previous year in which the entry is made in the books of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pex Court had dealt with and was in agreement with the High Court on conclusion of facts. Therefore, it cannot be said that the Supreme Court answered the ratio laid down as sought to be propounded by the Delhi High Court in CIT vs. Steller Investment Ltd. (1991) 99 CTR (Del) 40 : (1991) 192 ITR 287 (Del). A decision becomes binding as a precedent only when the Court decides a particular question of law or lays down the ratio through conscious adjudication. Agreement with the finding of fact without adverting to the ratio laid down does not create a precedent. In order to support this view, we may refer to the decisions in Municipal Corporation of Delhi vs. Gurnam Kaur AIR 1989 SC 38; Gangadharan vs. Janardhana Mallan AIR 1996 SC 2127 and Director of Settlements vs. M.R. Apparao (2002) 4 SCC 638, 650. We are, therefore, unable to agree with the contention of Mr. Pal that the decision in CIT vs. Sophia Finance Ltd. (1993) 113 CTR (Del)(FB) 472 : (1994) 205 ITR 98 (Del)(FB) is no longer good law." Hon'ble Calcutta High Court thereafter considered a large number of judgments relating to the provisions of s. 68 and arrived at a view similar to Sophia Finance Ltd., the Hon'ble Calcutt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 per cent shareholding was by the Dalmia Group of companies. There was allegation against one of the shareholder company, viz., Golden Investment (Sikkim) (P) Ltd. that it was a bogus company and being used by big industrialists for laundering of their black money. On these facts the learned CIT(A) held that there was no justification for assessing the share capital contributed bySikkimcompany in the assessment of Gujarat Heavy Chemicals Ltd. On Revenue's appeal the Tribunal found that while the Department's enquiries pointed to a person to whom such income might belong, yet it was attempting to take the income in the hands of the assessee-company. On reference to Hon'ble Gujarat High Court, the Hon'ble High Court held that the appeal involved question of appreciation of evidence only. 60. In the case of CIT vs. Down Town Hospital (P) Ltd. (2004) 267 ITR 439 (Gau), the following question No.2 was presented to Hon'ble High Court for admission in Revenue appeal under s. 260A of the Act: "2. Whether, on the facts and in the circumstances of the case, is not the decision of the Tribunal in directing deletion of the addition made under s. 68 of the IT Act, 1961, placing reliance on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. We, therefore, see no ground to admit this appeal as no substantial question of law arises for consideration. The income-tax appeal is dismissed." 62. There are two recent judgments of Hon'ble Delhi High Court viz., CIT vs. Makhni Tyagi (P) Ltd. and CIT vs. Achal Investment Ltd. (2004) 187 CTR (Del) 475 : (2004) 268 ITR 211 (Del). According to the learned counsel for the assessee, the judgment in the case of Makhni Tyagi Pvt. Ltd. is an authority to the proposition that in the case of a company no addition can be made in relation to its share capital. The assessee in that case is one among many companies in relation to which the identical material was seized during the course of the same search as in the present case. The Tribunal, as we have already noted, decided the matter in favour of the assessee on the ground that the share capital stood recorded in the account books maintained by the assessee which were seized during the search and stood considered because income-tax case of the assessee had also been completed before the date of the search. All the shareholders had confirmed in writing their investment in the share capital of the assessee and all had given their PA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .' In the backdrop of this finding on facts, we find that no substantial question of law arises in this matter and hence the appeal is dismissed." 63. In the case of CIT vs. Achal Investment Ltd., the AO completed the assessment under s. 143(3) and accepted the assessee's claim of having received share application money. The learned CIT, however, held that the AO did not verify the genuineness of the confirmation letters and set aside the assessment order directing him to carry out the exercise as indicated in the order under s. 263. The Tribunal following the decision of Delhi Tribunal in the case of Steller Investment Ltd. decided the appeal in favour of the assessee. The Revenue thereafter moved the High Court under s. 256(2) and thereupon the Hon'ble Delhi High Court have pronounced the following judgment: "We are not required to examine the matter in detail as we are of the opinion that the Tribunal has allowed the appeal of the assessee following its judgment delivered in CIT vs. Steller Investment Ltd. (2000) 164 CTR (SC) 287 which was the subject-matter of a reference entitled in CIT vs. Steller Investment Ltd. (1991) 99 CTR (Del) 40 : (1991) 192 ITR 287 (Del) decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., the Hon'ble High Court considered the Full Bench judgment in the case of Sophia Finance Ltd. and found that no substantial question of law had arisen and, therefore, the Revenue's appeal was dismissed. In the case of Achal Investment Ltd., the Hon'ble Delhi High Court held the view that the question framed need not be answered. Thus, in both the cases the Hon'ble High Court have not made any declaration of law. This position emerges clearly because in both cases the Hon'ble High Court held that there was no question of law. Hence the position remains the same as explained by Hon'ble Calcutta High Court in the case of Hindustan Tea Trading Co. Ltd. vs. CIT in relation to the Supreme Court pronouncement in the case of Steller Investment Ltd. The same reasoning would apply in relation to the verdict of Hon'ble Delhi High Court in these two cases. 65. In the case of Nirma Industries Ltd. vs. Asstt. CIT (2005) 95 TTJ (Ahd)(SB) 867 : (2005) 95 ITD 199 (Ahd)(SB), the Hon'ble Special Bench after closely analyzing the provisions of s. 260A, held as under: "From the above, it is dear that under sub-s. (1) an appeal shall lie to the High Court from every order passed in appeal by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of fact. It should be borne in mind that in the case of CIT vs. Steller Investment Ltd., the Revenue's petition has been dismissed with the remark, "No question of law arises". When the Hon'ble High Court themselves have observed that no question of law has arisen from the order of the Tribunal, it is hard to see as to how that judgment may be considered to have made a declaration of law on the subject. In the case of Sophia Finance Ltd., Hon'ble High Court have held that it would be open to the AO to go into the question as to whether the amount credited as share capital is indeed share capital of that company. The Hon'ble Delhi High Court have further held that it would be the duty of the AO to enquire whether the alleged shareholders do in fact exist or not. If the alleged shareholders do not exist, then, in effect it would mean that there is no valid issuance of share capital. In the decision reported in the case of CIT vs. Steller Investment Ltd., Hon'ble Supreme Court reiterated, "Plainly, the Tribunal came to a conclusion on facts and no interference is called for." It is held by Hon'ble Delhi High Court in the case of Antarctica Investment (P) Ltd. also that a finding of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar view has been held by the Hon'ble Third Member in the case of Asstt. CIT vs. Modern Cement Industries Ltd. (2005) 95 TTJ (Ahd)(TM) 341 :(2004) 90 ITD 170 (Ahd)(TM). I therefore, do not see any force in the preliminary objection of the learned counsel for the assessee in the present appeal because here the learned AO has called in question the very issuance of the share capital itself. 67. The second aspect raised by the learned counsel for the assessee is whether these amounts can be made part of the undisclosed income of the assessee within the meaning of the provisions of s. 158BC. He has raised the plea of presumption under s. 132(4A) also. It is true that while making an order under s. 158BC, the AO does not have the same jurisdiction that he has while assessing the income of an assessee under the general provisions of the Act. An order under s. 158BC can be made only in respect of that undisclosed income which the AO detects as a result of search. It is not correct position in law that while completing an order under s. 158BC, the AO can make assessment of the entire undisclosed income that comes to his notice during the course of proceedings under s. 158BC. He can make a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be said that in the order of the Hon'ble JM no basis have been found in the material/evidence found during the course of the search. The case of the assessee is that these were the documents made in the ordinary course of the business of the assessee and supported by the books of account of the assessee and, therefore, it cannot be said that there is any discovery or detection during the course of the search. According to the contention or the Revenue, the discovery itself of all these documents, coupled with blank signed transfer forms and blank signed affidavits indicated that the assessee had merely fabricated a bogus claim of share application money as credited in the assessee's books of account. On consideration of the matter I do not see that the order of the Hon'ble JM suffers for want of jurisdiction within the provisions of s. 158BC. At the outset, it may be stated that it is not true that all the material found during the course of the search had already been disclosed in the return of income/the assessment proceedings of the assessee-company. The assessee nowhere disclosed or produced blank signed share transfer forms, blank receipts of sale proceeds of shares and blank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Allahabad High Court in Pushkar Narain Sarraf vs. CIT (1990) 86 CTR (All) 110 : (1990) 183 ITR 388 (All); by Hon'ble Gujarat High Court in Mansukhlal Nanjibhai Patel vs. Dy. CIT (2001) 170 CTR (Guj) 25 : (2001) 251 ITR 341 (Guj); by Hon'ble Rajasthan High Court in Man Mohan Gupta vs. Asstt. CIT (2004) 189 CTR (Raj) 331 : (2005) 274 ITR 179 (Raj). Hon'ble Karnataka High Court have in the case of CIT vs. P.R. Metrani (HUF) (2001) 169 CTR (Kar) 149 : (2001) 251 ITR 244 (Kar) held that in relation to assessment proceedings it raises a rebuttable presumption only. I, therefore, hold that there is no assistance to the assessee by virtue of the provisions of s. 132(4A). I, therefore, do not see force in the second objection either of the learned counsel for the assessee. 68. I now proceed to consider the second limb of the question referred to by the Hon'ble AM, i.e., whether in the light of material on record the learned AM 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 JM is justified in restoring the issue back to the file of the AO for adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not much discussion, however, in the order of the Hon'ble AM as to how blank but signed share transfer forms, sale bills, cash receipts and affidavits along with original share certificates themselves from such a large number of persons could be found at the premises of Shri Alok Aggarwal. For that, the learned AM has relied upon the earlier orders of the Tribunal in the cases of the various companies relating to the same search under s. 132 where similarly blank signed sale bills, share transfer forms, cash receipts and affidavits along with share certificates in large scale were found with Shri Alok Aggarwal. He has relied upon the orders of the Tribunal on identical facts in the cases of Real Overseas (P) Ltd.; Makhni Tyagi (P) Ltd.; Indradhan Agro Products Ltd.; Akriti Media (P) Ltd. and Garg Polymers (P) Ltd. It is pointed out that the decision of the Tribunal in the case of Real Overseas (P) Ltd. has been rendered by the Bench comprising of the same members and of which the Hon'ble JM is the author. The Hon'ble JM 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." 69. While on the question of "material" I find it is of crucial importance to bear in mind the fundamental distinction between income-tax assessment proceedings and the proceedings before a Court. It is settled position that the proceedings before the AO are not a "suit" between the contesting parties, as held by the Hon'ble Supreme Court in the case of S.S Gadgil vs. Lal Co. (1964) 53 ITR 231 (SC). Accordingly the proceedings before the AO are not strictly judicial proceedings. This aspect is in-built in the statutory provisions of s. 143(3) itself. According to the sub-section, the AO should take into consideration such "evidence' as the assessee may produce and such other "evidence" as AO may require on specified points and after taking into account all relevant "material" which he has gathered, the AO shall, by an order in writing, make an assessment of the total income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. vs. CIT (1964) 52 ITR 231 (Assam); Devidas Madho Prasad vs. CIT (1967) 63 ITR 356 (All); Motipur Zamindari Co. (P) Ltd. vs. Agril. ITO (1972) 83 ITR 778 (Pat); State Bank ofPatialavs.Unionof India Ors. (1973) 91 ITR 630 (P H); J.S. Parkar vs. V.B. Palekar Ors. (1974) 94 ITR 616 (Bom); Mriganka Mohan Sur vs. CIT (1979) 120 ITR 529 (Cal) and CIT vs.East IndiaLamp Components (1981) 21 CTR (Cal) 278 : (1981) 129 ITR 426 (Cal). What is necessary is that the AO should have material upon which to base the assessment. Such material may be distinguishable from evidence both direct and circumstantial. The only requirement is that the AO should act having regard to the principles of natural justice. As pointed out by Hon'ble Supreme Court in the case of CIT vs. Simon Carves Ltd. 1976 CTR (SC) 418 : (1976) 105 ITR 212 (SC), it is not as if the AO 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Sree Meenakshi Mills has been followed by Hon'ble Bombay High Court in the case of Gordhandas Hargovandas vs. CIT (1979) 12 CTR (Bom) 19 : (1980) 126 ITR 560 (Bom) and by Hon'ble Rajasthan High Court in the case of Hemandass Dhanrajmal vs. CIT (1981) 132 ITR 369 (Raj) and by Hon'ble Supreme Court once again in the case of Sir Shadilal Sugar General Mills Ltd. vs. CIT (1987) 64 CTR (SC) 199: (1987) 168 ITR 705 (SC) and so on. 73. In the case of CIT vs. Karam Chand Thapar Bros. (P) Ltd. (1989) 76 CTR (SC) 36 : (1989) 176 ITR 535 (SC), the Hon'ble Supreme Court have observed: "It is true that the Tribunal has not stated in terms that it has considered the cumulative effect 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of winning tickets is not an usual practice but is very much of an unusual practice" ignores the prevalent malpractice that was noticed by the Direct Taxes Enquiry Committee and the recommendations made by the said Committee which led to the amendment of the Act by the Finance Act of 1972, whereby the exemption from tax that was available in respect of winnings from lotteries, crossword puzzles, races, etc., was withdrawn. Similarly, the observation by the chairman that if it is alleged that these tickets were obtained through fraudulent means, it is upon the alleged to prove that it is so, ignores the reality. The transaction about purchase of winning ticket takes place in secret arid 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n restoring the matter back to the file of the AO for decision afresh. As to the questions 2, 3, 4 and 6 referred to by Hon'ble JM, the th01st of the questions is whether while deciding an appeal the Tribunal should attach due importance to the contentions of the Revenue as well as the assessee. The answer to these questions is self-evident that the Tribunal while deciding an appeal has to accord a treatment of equality between the assessee and the Revenue. However, the fact that Hon'ble JM has repeatedly referred to these questions makes me pause for a moment as apparently the Hon'ble JM gathered the impression that while deciding an appeal the Tribunal should attach more importance to the arguments of the assessee than the arguments of Revenue. In my humble opinion, such an impression is totally incorrect. While deciding an appeal the Tribunal as an appellate body has to decide issues before it objectively on merits irrespective of the fact whether the decision goes in favour of the assessee or in favour of Revenue, as both deserve equal treatment. 78. The matter will now go before the regular Bench for deciding the appeal in accordance with the opinion of the majority. - - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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