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TMI Blog2008 (1) TMI 515X X X X Extracts X X X X X X X X Extracts X X X X ..... mind afresh. 4. The AO erred in expecting evidence regarding the NRNR deposits. 5. The AO erred in not considering the additional evidence which was produced before the Tribunal and in observing that no fresh evidence is produced. 6. The AO erred in passing an ex parte order against the appellant which is not valid and not proper. 7. The AO has erred in not stating when the first notice of hearing was served. 8. The AO failed to appreciate that since the jurisdiction of the AO to whom the Tribunal had sent order the appellant would have difficulty in locating the new AO intimate the new address of the appellant. 9. The AO erred to appreciate that since the flat where the appellant was residing was attached by the Government authorities, it could not be expected that the appellant would continue to reside there. 10. The appellant craves leave to add or alter or amend anyone or more of the above grounds." 3. The brief facts, as have been revealed from the records and are relevant for disposal of this appeal are that the original assessment in this case was completed on 29th Oct., 1997 on an income of Rs. 1,98,43,062 and the matter had gone up to the stage of appeal b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed income determined by the AO may be deleted. 6. The learned Departmental Representative, on the other hand, has supported the order of the AO. 7. We have considered the rival submissions, facts and circumstances of the case as well as the Tribunal's order in this case. 7.1 It is noticed that so far as issue relating to protective addition in block assessment framed under s. 158BD r/w s. 158BB(1) read with order of Tribunal is concerned, the Tribunal had specifically held that there cannot be any addition, in such cases, on protective basis and the relevant part as contained in para Nos. 11 to 16 of its order dt. 20th Dec., 2000 reads as under: "11. We have carefully considered the rival submissions and have perused the order of the AO as well as all other documents to which our attention was drawn during the course of hearing. 12. The Tribunal vide its order dt. 20th Dec., 1999 in IT(SS) No. 403/Ahd/1996 in the case of Saroena Ibrahim Desai, against the assessment order for the block period made by the AO under s. 158BC has dismissed the appeal as no one attended on behalf of Shri Farsea I. Desai and also because the memorandum of appeal was invalid and contrary to la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the first appellate authority in the course of the appeal hearing, has to form a prima facie view that it is a case, where subject to what the assessee may have to say, he should initiate penalty proceedings so that the majesty of the law is upheld. He must reach a clear conclusion that a good ground exists, for launching penalty proceedings. It is this satisfaction which is the foundation of acting for imposition of penalty [Jiten Co. vs. STO (1977) 39 STC 308, 312 (Del)].' Satisfaction required under s. 158BD should precede the issue of a notice under s. 158BD to such other person. In other words, AO should reach a clear conclusion that the assets and income in question really belong to such other person, other than the person with respect to whom the search was made. Such satisfaction should not be embedded with an element of doubt or uncertainty or any kind of confusion about the ownership of such other person over the assets and income in question. 16. It may also be relevant here to refer to the judgment of Hon'ble Gujarat High Court in the case of Khandubhai Vasanji Desai Ors. vs. Dy. CIT (1998) 150 CTR (Guj) 577 : (1999) 236 ITR 73 (Guj) in which the constitution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was germane to the object of making block assessment of the undisclosed income of such other person who is now known as a person to whom that undisclosed income belongs.' It is amply clear from the aforesaid observations made by the Hon'ble High Court and a plain reading on the s. 158BD that before assuming jurisdiction under s. 158BD, the AO should be satisfied that some of the undisclosed assets/income found during the course of search or discovered as a result of post-search/investigation does not belong to the raided person but it belongs to some other person then the occasion arises to proceed against such other person. It is, therefore, clear that the AO in the present case, arrived at a satisfaction that the assets and income in question really belonged to the assessee and, therefore, the appellant has a right to explain the source of acquisition of all the assets belonging to her and the order passed by the Tribunal in the case of husband of the assessee cannot disentitle the assessee to explain the source of the assets belong to her and also to produce necessary evidence to establish that such assets were acquired out of her own income and funds." 8. So far as meri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ullion, jewellery, valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of this Act, or any expense, deduction or allowance claimed under this Act which is found to be false. 158BD. Undisclosed income of any other person-Where the AO is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under s. 132 or whose books of account or other documents or any assets were requisitioned under s. 132A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the AO having jurisdiction over such other person and that AO shall proceed under s. 158BC against such other person and the provisions of this Chapter shall apply accordingly. 9.1 From the provisions of s. 158B(b), it is quite clear that the undisclosed income has to be only when there exists any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, which would not have been d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder s. 132A of the Act, comes to a satisfaction that the documents, records, assessment (sic-assets), valuables, etc. found and seized during the search contains undisclosed income of a person other than the person searched, meaning thereby that such a satisfaction has to be a positive one and has to be duly recorded. 12. So far as present case is concerned, admittedly, the additions, except addition of Rs. 8,221.04 of the Act on undisclosed bank accounts have been made on protective basis which cannot be sustained in law and, therefore, we delete the same. 13. Coming to the second point, that fresh assessment order being contrary to the direction of the Tribunal is liable to be quashed, we are in agreement with the submission of the learned Authorised Representative because the Tribunal had directed the AO to make fresh assessment only for the purpose of making substantive additions and since the AO except the addition of Rs. 8,221.04 has made additions on protective basis, his order with respect to such addition has to be quashed on the (being) contrary to the directions of the Tribunal and is quashed. 14. Coming to the substantive addition of Rs. 8,221.04, the Authorised ..... X X X X Extracts X X X X X X X X Extracts X X X X
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