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TMI Blog2012 (9) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... known as to what the Tribunal means when it says that neither the vendors of the properties have admitted to receiving any money over and above the stated consideration nor any extra ordinary cash was found in the course of the search - These are vital aspects which the Tribunal has omitted to take into consideration; on the contrary it took into consideration irrelevant material such as retractions, absence of any statements by the sellers of the properties that they received on-monies and the fact that there was no seizure of any “extra ordinary” cash during the search - the Tribunal erred in endorsing the order of the CIT (Appeals) deleting the addition of Rs.4,71,05,000/- made by the Assessing Officer for unexplained investment in KG Farms and Jyoti Farms - against assessee. Undisclosed capital gains on sale of land at Jaipur Highway - Held that:- The capital gains can arise only if property is sold within the meaning of Section 2 (47) of the Act. The assessee is still holding a part of the land for which no consideration has been received. Therefore, there is no sale of the property which can be said to give rise to any capital gain. Even the original cheques form part of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms and Jyoti Farms? (2) Whether the Income Tax Appellate Tribunal was right in confirming deletion of addition of Rs.19,35,769/- on account of undisclosed capital gains on sale of land at Jaipur Highway? (3) Whether the Income Tax Appellate Tribunal was right in upholding deletion of addition of Rs.2.30 lacs made by the Assessing Officer on account of unexplained commission paid to the broker in connection with the sale of KG Farms? (4) Whether the order passed by the Income Tax Appellate Tribunal is perverse? Mani Kakkar (1) Whether the Income Tax Appellate Tribunal was correct in deleting addition of Rs.2,27,80,000/- and Rs.2,50,000/- made on account of undisclosed capital gains and undisclosed brokerage paid by the respondent assessee? (2) Whether the order passed by the Income Tax Appellate Tribunal is perverse? In ITA No.948/2008, 707/2008 and 706/2008 (Asha Kedarnath Gupta, Rohit Kedarnath Gupta and Nitin Kedarnath Gupta respectively), no substantial questions of law have been framed because the assessment in these cases were made on protective basis. 3. The facts giving rise to the present appeals, shorn of irrelevant details, are these. A search was conduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m on the date of search where he had referred to the purchase of farm houses by his brother Kedarnath Gupta. There was no response from the Kedarnath Gupta to this. 5. Thereafter, the Assessing Officer would appear to have invited objections from Rajinder Gupta as to why he should not be treated as the agent of Kedarnath Gupta, who is hereinafter referred to as the assessee , under Section 163 of the Act. The basis for this proposal was (a) that Rajinder Gupta was operating the NRO account of the assessee from Citi Bank, New Delhi, (b) he was also involved in the purchase of the farm houses for the assessee in the names of the assessee‟s sons. Rajinder Gupta objected to the proposal to appoint him as the agent of the assessee, though he did not rebut the fact that he was power of attorney holder of the assessee and was also authorised to operate the assessee‟s bank account; nor did he deny the allegation that he was involved in the negotiations and payments for the transaction of purchase of the farm houses. These facts, coupled with the fact that Rajinder Gupta himself had admitted in the course of the sworn statement that he had withdrawn the cash found during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or his firm was not involved. The sale transaction was put through M/s. Ravinder Properties (Proprietor Ravinder Sharma) who had his office at Andheria Mor, New Delhi. According to the market information, the property was sold for Rs.3.10 crores. When the assessee had earlier asked Pandit Estates to search for a buyer for the property the price expected was in the range of Rs.3.25 crores. (d). Kedarnath Gupta and Rajinder Gupta purchased Jyoti Farm measuring 2.5 acres of land and built up area of 5000 Sq. ft. It was a double storied property purchased in August or September, 1995 for a total consideration of Rs.2.60 crores, from one M. K. Subba. Out of the total consideration an amount of Rs.26.10 lakhs was paid through cheque and the remaining amount of Rs.2.39 crores was paid in cash. No commission was received by Suraj Bhan Sharma in the transaction, but he was assured by the assessee that he will be duly compensated in the next deal, if any. A commission of Rs.2,60,000/- was, however, received from M. K. Subba. (e). Suraj Bhan Sharma confirmed in the statement that all the cash as well as cheque payment were made in his presence or in the presence of Dharam Pal Sharma, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arms for Rs.3.10 crores to one Darshan Kumar Khosla and that the document was registered with the office of the Sub-registrar, INA, New Delhi for Rs.40,00,000/-, with the remaining amount of Rs.2.70 crores being paid in cash to the seller, before the registration. He further stated that he had received his commission in the deal also in the same proportion i.e. Rs.80,000/- by cheque and Rs.2,30,000/- by cash from the buyer Darshan Kumar Khosla, who was also known as Kumar Sahib. Another important fact noticed by the Assessing Officer was that during the survey an envelope addressed to M/s. PTC Bearing Pvt. Ltd., No.2392, Gupta Manson, Shradhanand Marg, G. P. Road, Delhi 110006 was found. The envelope was sent by Pal India Shipping agency of Bombay. Ravinder Sharma, when asked to explain, stated that the received Rs.1,00,000/- in cash as his commission on one of the installments of the price, from Ravinder Gupta in the envelope in which the cash had been put in Rs.100/- and Rs.50/- notes. A rough plan of the farm house was also found in the same envelope. 9. The Assessing Officer, from the statements of the two brokers recorded on the date of the search and from the statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as shown in the registered documents and that Rajinder Gupta as well as the brokers have retracted from their statements given on the date of the search and in these circumstances there was no material or evidence to support the allegation that the assessee indulged in understatement of the investment in the farm houses and the sale price of KG Farm house. 12. The submissions of the assessee were rejected by the Assessing Officer in the following words: - The averments of the A.R. are considered carefully with reference to the material available on record. Abundant evidence in the form of the entries made in the register maintained by the brokers M/s Pandit Estates and the envelope carrying cash towards commission paid to another broker Sh. Ravinder Sharma was found from the respective premises on 27.8.1998. On the same day all the brokers have stated in detail the actual transactions that had taken place and corroborated then statements with the material found during search/ survey. The graphic descriptions given by the brokers in their sworn statements on the date of search lends lot of credence to the unadulterated statements given by the brokers on the date of search wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer estimated the total monthly expenses for maintenance of the two Farm house at Rs.40,000/- and computed the total expenditure at Rs.14,40,000/- for a period of 36 months and added the same as unexplained expenditure. An amount of Rs.2,30,000/- was also added on account of unexplained commission paid in cash to Ravinder Sharma at the time of sale of KG Farm. This was on the basis of the statement of Ravinder Sharma that he received commission of Rs.3,10,000/- from the assessee for brokering the sale of KG Farms out of which Rs.80,000/- was paid to him in cheque and the balance of Rs.2,30,000/- was paid to him in cash. 16. One more addition made by the Assessing Officer in the block assessment order passed in the assessee‟s case is the amount of Rs.19,35,769/- as undisclosed capital gains on sale of land at Jaipur Highway . The brief facts in connection with this addition may be noted. Pages 40 to 42 of the Annexure A-11 seized during the search consisted of three undated cheques of Rs.4,24,000/- each issued by M/s. Azaad Coach Pvt. Ltd. in favour of Mrs. Asha Kedarnath Gupta, the wife of the assessee. The seized material also consisted of four photocopies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for an apparent consideration of Rs.1,87,000/- in the joint names of himself and his wife. This land was purchased from Azaad Coach Pvt. Ltd. and the total purchase price was Rs.6,31,125/- including stamp duty of Rs.70,125/-. From the bank account of the assessee with Citi Bank, New Delhi, the Assessing Officer noted that the assessee received four cheques of Rs.4,25,000/- each and two cheques of Rs.3,25,000/- each in December, 1996 from Azaad Coach Pvt. Ltd. This totals to Rs.23,46,000/-. According to the assessee, he was to receive another three cheques of Rs.4,25,000/- each which did not materialise since the deal for the sale of the remaining land did not materialise. From these facts the Assessing Officer concluded that the land which was purchased by the assessee in 1994 from Azaad Coach Pvt. Ltd. was sold back to Azaad Coach Pvt. Ltd., but a part of the land could not be sold and the corresponding amount could not be realised. Since the assessee could not give any bifurcation of the cost of acquisition of Rs.6,31,125/-, the Assessing Officer bifurcated the cost of pro rata according to the consideration received. The assessee has received consideration of Rs.23,46,000/-, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of Rs.19,35,769/-, the findings of the CIT (Appeals) can be summarised as follows: the capital gains can arise only if property is sold within the meaning of Section 2 (47) of the Act. The assessee is still holding a part of the land for which no consideration has been received. Therefore, there is no sale of the property which can be said to give rise to any capital gain. Even the original cheques form part of the seized documents which shows that the transfer did not take place. Therefore, there is no question of any undisclosed capital gains. In this view of the matter the addition of Rs.19,35,769/- was deleted. 21. The addition of Rs.2,30,000/- on account of unexplained commission paid to the broker in connection with the sale of KG Farm was also deleted by the CIT (Appeals) consequent to his decision that the sale of KG Farms was made only for Rs.41,00,000/- and not for Rs.3,10,00,000/- as assessed by the Assessing Officer. Since the commission was payable at the rate of 2% of the sale price, the CIT (Appeals) held that the actual commission paid was only Rs.80,000/- which has been paid by cheque and there was no question of assessee paying any commission in cash. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 97-98 but the deal did not mature as the buyer i.e. Azad Coaches Pvt. Ltd. did not make the payments and the titles were therefore, not transferred. The assessee also submitted that the very fact that unpaid cheques were found during search showed that the payments had not been received by the assessee. We find that no material is available with the revenue to controvert the claim of the assessee. No inquiry had been made either from Azad Coaches Pvt. Ltd. or from any other person to substantiate the allegation of sale of land. There is no material to show that the land was transferred during the year and therefore, no capital gain could be charged. In the absence of any such material, capital gain cannot be charged to tax only on the basis of some unpaid cheques found during search or some amount deposited in the bank account. We see no infirmity in the order of CIT (A) deleting the additions and same is upheld. 24. As regards the addition of Rs.2,30,000/- for unexplained commission paid in cash to broker Rajinder Sharma, the Tribunal accepted the decision of the CIT (Appeals) that it was consequential to the deletion of the addition made for unexplained investment in KG Farms. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated that the land sold was agricultural land and reiterated that the total consideration was only Rs.18,70,000/- and not Rs.2.49 crores. The assessee again submitted in writing on 19.01.2005 that the reliance placed by the Assessing Officer on the statement of Suraj Bhan Sharma was unwarranted. These written submissions are reproduced at pages 6 and 7 of the assessment order dated 28.01.2005 passed by the Assessing Officer in the case of Mani Kakkar. The Assessing Officer, however, rejected the submissions of the assessee for the reasons given in the assessment order at pages 7 and 8 thereof and ultimately computed the capital gains on the basis that the actual sale consideration was Rs.2.49 crores as against Rs.18,70,000/- disclosed by the assessee. The ultimate addition came to Rs.2,27,80,000/- as undisclosed capital gains . 26. The assessee had denied payment of any commission for putting through the transaction which was not accepted by the Assessing Officer on the ground that the broker himself has admitted to have received commission of Rs.2,50,000/- in respect of the sale transaction. The amount was added in the block assessment as undisclosed brokerage. 27. These two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he noted that in the case of the buyer of the property, namely Kedarnath Gupta, the CIT (Appeals) has deleted the addition made for unexplained or undisclosed investment in the purchase of KG Farms. Eventually the CIT (Appeals) summarised his findings in the following words: - 5.23 I have considered the reasoning given by the AO and the submissions made by the Ld Counsel. the main reasoning of the AO in treating the sake (sic) consideration of the KG Farms at Rs.2,49,00,000/- against declared sale consideration of Rs.18,70,000/- is the statement of Sh. Suraj Bhan Sharma. The AO did not allow appellant any opportunity to cross-examine this person. I am in agreement with the submissions of Ld. Counsel that without allowing appellant such an opportunity no adverse view can be taken. Even the persons viz Sh. S B Sharma and Sh Dharma Pal Sharma have retracted from the statements given by them. Thus also no adverse view can be taken. The AO has also drawn adverse inference from the fact that the said sale deeds. I fail to understand as to how an adverse view can be drawn from not mentioning the built up portion on the land if no evidence of payment over and above the stated considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded by the Tribunal and the reasons given by it for deleting the three additions are without any merit and are arbitrary. It is pointed out that the Tribunal has predominantly relied upon the fact that the statements made by Rajinder Kumar Gupta, the brother of Kedarnath Gupta and the brokers were retracted. According to the learned Senior Standing Counsel, the retraction cannot be given any credence since it was done by the brokers in the year 2000, almost two years after the original statements were made at the time of the search. It is submitted that even in the case of Rajinder Kumar Gupta, though the statement was retracted within 15 to 20 days from the date on which it was recorded, it lacked conviction and the reasons given were flimsy. It is pointed out that stereotyped reasons were given by all of them for retracting their earlier statements, such as being under a confused state of mind because of the search proceedings or that they were unreasonably compelled or pressurised by the income tax authorities into giving the earlier statements. It is contended that the Tribunal ought to have taken note of the circumstantial evidence, surrounding circumstances and the preponder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sses who had retracted their earlier statements implicating the assessee. Mr. Sahni, on the basis of the above submissions, strongly contended that the order of the Tribunal was vitiated by perversity in as much as it failed to take into account the relevant material and evidence and the Tribunal has put on blinkers without probing the matter in the manner expected of a fact finding authority. The Tribunal, according to him, failed to take note of the normal course of human conduct and preponderance of probabilities and took a perverse view of the matter which should not be approved. 33. On behalf of the assessee Kedarnath Gupta, strong reliance was placed on the concurrent findings of the CIT (Appeals) and the Tribunal. It was asserted that the Tribunal has rightly taken note of the retractions and has attached proper weight to the fact that the earlier statements lacked corroboration. It is further contended that the investment made by the assessee in the two farm houses was supported by the report of registered valuer as well as by instances of sale of properties situated in the vicinity, a list of which was submitted by the assessee before the Assessing Officer. It is point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent material or evidence seized during the search and cannot be acted upon as if it is evidence unearthed during the search. It has been so held by a Division Bench of this Court in ITA Nos.276/2009, 302/2009 and 396/2009 on 29.11.2010. (f). All the findings recorded by the Tribunal are findings of fact which any authority, properly instructed in law, would have come to and therefore, they cannot be said to be perverse or arbitrary. On the basis of the aforesaid submissions, Mr. Sharma contended that the Tribunal has come to the correct conclusion and its order cannot be termed as arbitrary or perverse. 35. We may first take up the order of the Tribunal in the case of Kedarnath Gupta for examination. We have already quoted the relevant portions of the order in so far as they relate to the three substantial questions of law framed by us. The first and third questions are interconnected. It seems to us that the criticism of the findings of the Tribunal by the learned Senior Standing Counsel for the department, to the effect that they are arbitrary or perverse, must be upheld. The search was conducted in the premises of Rajinder Kumar Gupta who is the assessee‟s brother. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... below: - Q-4:- Who were perusal (sic.) at the time of registered of deed. Also intimate the names of sons who signed as witness in the registrar office? Ans:- The name of the persons who were present in the office of sub Registrar at the time of registration are (a) Dharam Pal Sharma, (b) W/o Shri Ashok Kakkar in whose name the property was existing (c) Shri Ahsok Kakkar (d) Myself. The signatures of witness were made by Shri Dharam Pal Sharma and advocate (name not remembered by me). 37. From the answer to question No.5 it is seen that he even knew the percentage and amount of commission which Pandit Estate charged on the transaction from Ashok Kakkar, husband of Mani Kakkar, who sold the property to the assessee. He stated that the normal rate of commission was 1% of the actual sale consideration and that in the transaction relating to the KG Farms, an amount of Rs.2,50,000/- was received from Ashok Kakkar . Thus, not only the normal rate of the commission charged by Pandit Estate was known to Suraj Bhan Sharma but he also quantified the same in respect of the transaction between Ashok Kakkar and Kedarnath Gupta and mentioned the same as Rs.2,50,000/- which matched the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g/Sept. 1995, for a total consideration of Rs.2.6 crore (Two Crore and Sixty lacs). The property was purchase (sic.) from Shri M.K.Subba. An amount of Rs.26.10 Lacs (Twenty six lacs and ten thousand) was paid through cheque and remaining amount of Rs.233.90 lacs (Rs. Two hundred thirty three lacs and ninety thousand only) was paid in cash. Q-11: Please give the address and telephone no. of Shri M. K. Subba? Ans: Shri M. K. Subba is residing at Mehrauli, Gurgaon Road near, opposite new Mangla puri, Mehrauli, New Delhi. Q-12: What is the amount of commission earned by M/s Pandit Estate on the aforesaid deal (i.e. Jyoti Farm house)? Ans: We did not receive any commission from guptas. They gave an assurance that we will be fully compensated in any next deal done from them. However, an amount of Rs.2.6 lacs (Rs. Two Lacs sixty thousand only) was taken from Shri M.K. Subba. Q-13: Is Jyoti Farm house deal was finalized? What was the token amount received by you and was the modality for balance payment? Ans: Rs.5 lacs in cash was paid at the time of deed in my presence and remaining amount was agreed to be paid in 2-3 months time. 40. He further stated that though all the cash pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g KG Farm for Rs.2.49 crores and Jyoti Farm for Rs.2.60 crores, he could not remember what he had stated earlier and stated that he had kept on doing what was told to him by the officers of the search party and that he did not have any knowledge of any cash being paid over and above the stated consideration for the two farm houses. He also denied having ever received any commission from Rajinder Gupta and denied being associated with Pandit Estate, though he admitted that Dharam Pal Sharma, who was associated with Pandit Estate was a distant relative. He stated that he only helped Pandit Estate in the documentation work occasionally, on request. These statements made on 10.03.2000 were followed by an affidavit dated 11.03.2000. 43. We have no doubt that the retraction is motivated by ulterior considerations and that whatever Suraj Bhan Sharma stated in the earlier statement made on 27.08.1998 discloses the correct facts. The reason given for retraction is flimsy as rightly pointed out on behalf of the Revenue. If there was any pressure from the officers conducting the search, there was nothing which prevented Suraj Bhan Sharma from taking up the matter with the higher officials w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statement are not relevant. This statement was, however, retracted by Rajinder Gupta in a letter (undated) alleged to have been written by him to the ADI (Investigation) Unit-II, New Delhi. Here again the reason given for the retraction is that the authorised officers unreasonably compelled him to indirectly admit that the consideration paid for the two farm houses which belong to his nephews (sons of Kedarnath Gupta), was much more then what was declared. Possibly in order to circumvent the embarrassing situation that Suraj Bhan and Ravinder Sharma had also mentioned the real consideration paid by the assessee for the two farm houses, Rajinder Gupta stated in the letter that it was the authorised officers of the search party who told him that those two brokers have admitted in their statements as to what the real consideration was and that they told him that it would be safe for him to corroborate their statements so as to get immunity against any penal action which may be taken against him in the event of the story of the brokers being proved correct. There is nothing on record to support this allegation of Rajinder Kumar Gupta. If he felt threatened by the authorised office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es back the Supreme Court held in the case of Gauri Prasad Bagaria v. CIT, (1961) 42 ITR 112 that the statement of a person constituted good material on which a finding can be based. In the present case the statements, as we have noticed, are fairly elaborate and corroborate each other in material particulars. There is no evidence of any threat or coercion from the officers of the search party and the allegation of the deponents to the contrary remains unsupported. They did not choose to complain against any high handed behavior of the authorised officers. It is also not known as to what the Tribunal means when it says that neither the vendors of the properties have admitted to receiving any money over and above the stated consideration nor any extra ordinary cash was found in the course of the search. It is common knowledge that both the buyer and seller of the real estate are interested in secrecy about the on-monies that pass between them in these transactions and it would not accord with the normal course of the human conduct or probabilities to expect a seller of the property to admit before the authorities to having received on-monies. It was not in the interest of either M. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch. The Tribunal overlooked that the statements made during the search were made spontaneously and contained complete details of the property deals. 49. The fact that the assessee was not afforded an opportunity to cross-examine the deponents is neither here nor there because as pointed out rightly on behalf of the Revenue, the witnesses of the Assessing Officer had turned hostile and had retracted their statements and also filed affidavits in support of the retractions. In other words, what a cross-examination would have brought out was achieved by the retractions and the affidavits and, therefore, it would be idle on the part of the assessee to complain of any violation of the rules of natural justice. It is a different matter that we have not accepted the retractions. 50. On the question of retractions, in Commissioner of Income-tax v. Lekh Raj Dhunna, (2012) 344 ITR 352 (P H) it was held by the Punjab Haryana High Court that where there is no explanation as to why the statement which was retracted in the course of the assessment proceedings was not withdrawn earlier, the Assessing Officer was justified in drawing the presumption against the assessee and in making the addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n confirming the deletion of the addition of Rs.19,35,769/- made on account of undisclosed capital gains on sale of land at Jaipur Highway. We have already discussed the relevant facts and extracted the conclusion of the Tribunal. It has been found by the Tribunal on the basis of material found during the search that a part of the land in Jaipur Highway, which was purchased in the financial year 1994-95, was sold in the financial year 1996-97 on which the assessee declared capital gains of Rs.1,57,098/-. The balance of the land was proposed to be sold in the financial year 1997-98 but the deal did not mature as the buyer Azaad Coaches Pvt. Ltd. did not make the payments as promised and the title to the land did not get transferred. The property continued to remain with the assessee. The unpaid cheques were found during the search which was indication enough that no payments were received by the assessee in respect of the land proposed to be sold. This evidence, as rightly found by the Tribunal, was not controverted by the Revenue on the basis of any other material or evidence. The Tribunal rightly observed that the Assessing Officer could have made inquiries from Azaad Coaches Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the lands. In that very order it was even observed that the statements of those two brokers have also not been confronted to the assessee. The CIT(A), thereafter, concluded that once addition made in the case of the purchaser, Shri Kedar Nath Gupta, has been deleted by the CIT(A) for the same very transaction involving the assessee as a seller no addition can be made in the case of the assessee. 7. Now, it is brought to the notice of the Tribunal by the learned AR for the assessee that the ITAT vide consolidated order passed in the case of the purchase, Shri Kedar Nath Gupta etc., has upheld the order of the CIT(A) regarding deletion of the addition in the case of the purchaser, Shri Kedar Nath Gupta, with regard to the investment in the purchase of the land in I.T.(SS) A. No. 298/Del/2003 [Block assessment period 1.4.1988 to 27.8.1998]. Further, that in view of the order (supra) of the Tribunal once addition in the case of the purchaser, involving the same transaction has been deleted by the CIT (A) and the same having been upheld by the Tribunal no addition can be made in the case of the seller for the same truncation (sic.). 8. Learned DR for the Revenue was fair enough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.2.49 crores for the sale of KG Farms and not merely Rs.18,70,000/- as shown in the sale documents. We have referred to those statements while dealing with the case of Kedarnath Gupta. We have also referred to the retractions and held that the retractions cannot be accepted as convincing. 58. Mr. Sharma‟s argument that the statements made under Section 132 (4) do not constitute material seized during the search does not take him further. Obviously, no material was seized from the assessee‟s premises for the simple reason that the assessee was not searched under Section 132. The search was carried out in the premises of Rajinder Kumar Gupta and the brokers. The assessment of the assessee, Mani Kakkar, was initiated as a consequence thereof, under Section 158BD of the Act. The sale documents were found during the search of the premises of Rajinder Gupta and they disclosed that the property was sold by the assessee. Accordingly, a satisfaction note was recorded and proceedings were initiated under Section 158BD against the assessee. There is no bar on the statements recorded under Section 132 (4) being used in the assessment of the assessee made under Section 158BD of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a was put to Mani Kakkar in the course of the block assessment proceedings for rebuttal. The statement of Suraj Bhan Sharma cannot be said to be unconnected to the material found during the search, namely, the registered sale deeds showing that the aggregate sale price of KG Farms was Rs.18,70,000/-. The provisions of Section 158BB (1) are thus satisfied in the sense that the statement of Suraj Bhan is relatable to the evidence found during the search. 60. The contention of Mr. Anoop Sharma that in the case of Kedarnath Gupta, a valuation report from registered valuer and comparable cases of property transactions in the nearby areas were furnished which would indicate that the price received by the assessee reflected the market price has already been dealt with by us while deciding the case of Kedarnath Gupta. These may be relevant pieces of evidence but are not clinching, more so in the light of the other evidence brought on record. 61. Mr. Sharma finally contended that the findings of Tribunal are findings of fact and the High Court which is seized of the appeal against the order of the Tribunal is bound by those findings as Section 260A of the Act permits of an examination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the Assessing Officer is a jurisdictional pre-condition for the assessment of the person under Section 158BD. Before the CIT (Appeals), it was contended by the assessee that there was no satisfaction note recorded by the Assessing Officer having jurisdiction over Kedarnath Gupta who was subjected to search. It was also pointed out that despite a specific request made to the Assessing Officer, the satisfaction note was not supplied to the assessee. It was pointed out that if there is no recorded satisfaction, the Assessing Officer did not have the jurisdiction to make an assessment under Section 158BD. Reliance was placed on the judgment of this Court in Amity Hotels Pvt. Ltd. v. CIT, (2005) 272 ITR 75 wherein it was held that the satisfaction has to be recorded by the Assessing Officer having jurisdiction over the person who was searched, before issuing any notice under Section 158BD of the Act. According to the assessee if no satisfaction was found recorded, the entire assessment proceedings made under Section 158BD would be without jurisdiction. These contentions were forwarded by the CIT (Appeals) to the Assessing Officer for a remand report. The Assessing Officer submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant has been recorded by DCIT, CC-6, March 02. In the second satisfaction in November 2002, the AO has issued u/s 158BD on the basis of reasons recorded by his predecessor. The issue that needs examination is whether the initial satisfaction can be said to be satisfaction within the meaning of sec. 158BD or not. A plain reading of this satisfaction indicates that the same was recorded for the purpose of centralization of the case of appellant and to investigate whether any capital gain has been declared by the appellant. Notice u/s 158BD of the Act was to be issued to the appellant. In the second satisfaction, the succeeding officer relied on this reason and issued the notice. In other words neither the first officer nor the second one ever recorded the satisfaction that any undisclosed income of the appellant has been detected as a result of search u/s 132 in the case of Sh. Kedar Gupta. I am also in agreement with the submissions of Ld. Counsel that notice u/s 158 BD was issued on 6.1.2003 which is much beyond the date of assessment in the case of Sh. Kedar Nath Gupta and decision of Hon ble Gujarat High Court in the case of Khandu Bhai Vasantji Desai (Supra) is thus applicab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended that the Revenue having failed to take any grounds of appeal before the Tribunal with regard to the jurisdictional aspect or to even urge before the Tribunal on this aspect after obtaining the leave of the Tribunal under Rule 11 of the Income Tax Appellate Tribunal Rules, 1963, was precluded from putting forth its submissions on merits before the High Court which would only be an academic exercise. He contended that the issue of jurisdiction to make an assessment under Section 158BD attained finality when the CIT (Appeals) decided the issue in favour of the assessee and no appeal was filed against that decision of the CIT (Appeals) before the Tribunal by the Revenue. He, therefore, contends that the entire appellate exercise before this Court, so far as Mani Kakkar is concerned is purely academic and infructuous. 66. The contention of Mr. Sharma cannot be resisted and must be given effect to. It is trite law that if the Assessing Officer does not have the jurisdiction to make an assessment, whatever decision he takes on the merits of the matter and all subsequent proceedings, including appellate proceedings, vis- -vis the merits of the matter are only an academic exerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the assessee cannot be precluded from raising the issue not only because it is an issue concerning jurisdiction to make the assessment, but also because the grounds raised by the Revenue before the Tribunal, which we have extracted earlier do not appear to us, on closer scrutiny, to be so wide as to cover the jurisdictional aspect of the case as well. In any case our observations made on 08.02.2012 were made at the time of admission of the appeal and while framing the substantial questions of law and constituted only a tentative view and cannot be said to be final and conclusive. In any case arguments were heard on that aspect. Moreover, the provisions of Order 41, Rule 22 of the Code of Civil Procedure, 1908 do not appear to permit the assessee to raise the legal contention by way of a cross appeal because that provision can apply only to a situation where there has been a finding against the respondent in the Court below. In the case before us there is no finding on the jurisdictional aspect by the Tribunal. Furthermore that issue having become final against the revenue after the order of CIT (Appeals), the stage for it to argue in favour of jurisdiction could have been an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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