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TMI Blog2021 (5) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner and his associates on 19/20.01.1996. Several incriminating documents were recovered and therefore based on the above such proceedings under Chapter XIVB of the Income Tax Act, 1961 were initiated. As per Section 158BC of the Income Tax Act, 1961 as it stood there the time limit for completion of block assessment was one year from the end of the month in which the last of the authorization of search under Section 132 or for requisition under authorization was made. 3. Under these circumstances, an Assessment order came to be passed on 31.01.1997 under Section 143(3) read with Section 158BC of the Income Tax Act, 1961. 4. A very detailed order was passed by the Assistant Commissioner of Income Tax, Chennai on 30.01.1997 for the block period 1986-1987 to 1996-1997 upto 20.01.1996 being the date of the search. The order placed reliance on the following:- List of Annexures 1. Granite Sample Papers Annexure A(11 papers) 2. Details of money received for grant of quarry lease Annexure B(80 papers) 3. Dr.Dharmambal Signature & Affidavit Annexure C(10 papers) 4. List of costly gadgets Annexure D(1 papers) 5. Copy of the seized material relating to secret commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lease forward the enclosed written submission of the Departmental Representatives before the Hon. Members, Income Tax Appellate Tribunal, 'A' Bench for favour of their orders." Rejecting the request of the Income Tax Department, the following observations:- "The case is treated as closed. The Department may file the reply if desire so on or before 18th June 2003 and after getting the copies the assessee if so desire a re-joinder within a week of getting his reply." 9. The Tribunal thereafter proceeded to pass an order dated 29.10.2003 and thereby granted substantial relief to the petitioner. 10. Aggrieved by the same, the respondent Income Tax Department filed the TCA. No. 150 of 2004 before the Division Bench of this Court under Section 260A of the Income Tax Act, 1961. The Division bench of this Court by its order dated 03.09.2007 framed the following substantial questions of law:- 1. Whether in the facts and circumstances of the case, the Tribunal had enough material to hold, as was right in deleting the additions made on account of money received by the assessee from persons seeking granite mining licenses from TAMIN? 2. Whether in the facts and circumstances o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting only on direct evidence to prove each addition, and in not accepting circumstantial evidence?. 11. The Division bench of this Court after hearing the substantial questions raised by the respondent Income Tax Department ultimately partly set aside the order of the Tribunal vide its order dated 03.09.2007 and remitted the case back with a direction to re-consider the matter afresh, keeping in view of the discussions made therein, and to pass orders after giving opportunity to the petitioner in accordance with law. The operative portion of the order dated 03.09.2007 of the Division Bench of this Court in TCA No. 150 of 2004 is reproduced below:- 6. To summarise:- Question No. 1-Remitted to the Assessing officer with observation. Questions No. 2 to 10-Answered in favour of the assessee. Question No. 11-As this question has become academic, it does not require consideration by this Court. Accordingly, the Tax Case is partly allowed, Consequently, T.C.M.P. No. 118 of 2005 is closed. No costs. 12. Aggrieved by the above order dated 03.09.2007 of the Division Bench of this Court in TCA No. 150 of 2004, the respondent Income Tax Department filed an appeal with a delay befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax Department and stated that the proceedings were been conducted in violation of principles of natural justice. By communication dated 11.12.2013 Deputy Commissioner of Income Tax informed the petitioner that the questioning the jurisdiction of the Deputy Commissioner of Income Tax, Central Circle II (4), Chennai was rejected as devoid of merits as a cross objection of proceedings were conducted in his capacity of the Assessing Officer as per the directions of the High Court and there were 3 persons who were present and are made available for the petitioner to commence his cross examination. The petitioner was therefore called upon to commence cross examination of these witnesses. 15. On receipt of the above communication dated 11.12.2013 the petitioner filed the present writ petition for the above relief. The case of the petitioner in the present writ petition is that though the respondent have recommenced the remand proceedings after a lapse of six years from 03.09.2007 from the date of disposal of the petitioner's Appeal in TCA. No. 150 of 2004 by this Court. 16. It is submitted that there was no reasonable excuse on the part of the respondent in delaying to comply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n provided that save as otherwise provided in a search conduct, all the other provision of the Acts were applied assessment made in chapter 14 of the Income Tax Act, i.e., (XIV) and therefore submits there should be a harmonious interpretation to the provisions of the Income Tax Act, 1961 in the context of remand order. The respondents should have completed the assessment proceedings within a period of 1 year. However the Department has taken about 6 years to implement the order of the High Court and that the delay is not excusable. 23. In this connection, learned senior counsel placed the reliance on the decision of the Allahabad High Court in the case of in the case of Manik Chand Burman Vs. Income-Tax Officer (1998) 229 ITR 90 which reads as under: 2. This is a classic example of the callousness and the lethargic attitude of the respondent. The facts are that the assessment came to be completed for the year 1949-50 on the petitioner on March 23, 1954. The petitioner, aggrieved by the said assessment order, went up in appeal. The Appellate Assistant commissioner of Income Tax by his order dated December 30, 1957, set aside the assessment order directing the Assessing Officer t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have been completed at any time in case an order in appeal for redoing the assessment was passed. 24. The learned senior counsel for the petitioner thereafter placed the reliance on the decision of the Kerala High Court in K. Iswara Bhat Vs. Commissioner of Agricultural Income-tax (2000) ITR 238 wherein Division Bench of this Court held that proceedings initiated were set aside with a direction to the assessing authority to assess the assessee in as HUF. Delay in initiating the proceedings was held unreasonable and irrational as order was passed after an inordinate delay. 25. The another decision of this Court in the case of M. Srinivasa Rao Vs. Assistant Commissioner of Income Tax (2007) 295 ITR 136 was invited which followed the decisions of the Hon'ble Supreme Court in Mohamad Kavi Mohamd Amin Vs. Fatmabal Ibrahim (1997) 6 SCC 71 wherein held as follows: It was held that time limit is not prescribed under Section 153(3) of the Act, the impugned proceedings initiated by the respondent after a lapse of six years cannot be allowed to continue, hence, the impugned order is quashed and the writ petition is allowed. The fact that the Tribunal had remitted the case back to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he suo motu power can be exercised at any time. It is trite that if no period of limitation has been prescribed, statutory authority must exercise its jurisdiction within a reasonable period. What, however, shall be the reasonable period would depend upon the nature of the statute, rights and liabilities thereunder and other relevant factors." 29. The learned senior counsel for the petitioner further drew attention to the decision of the Hon'ble Delhi High Court in Commissioner of Income-Tax Vs. NHK Japan Broadcasting Corporation (2008) 305 ITR 137 wherein it was held as follows: Whether the Income-tax Appellate Tribunal was correct in law in holding that the orders passed under Section 201(1) and 201(1A) of the Income-tax Act, 1961, are invalid and barred by time having been passed beyond a reasonable period? Filing of paper books is dispensed with. Since, the question arising in this appeal has arisen in a large number of other appeals, we have heard the matter in full and proceed to deliver the judgment rather than merely admitting the matter for taking it up in due course. 30. The learned counsel for the petitioner also placed a decision of the Hon'ble Delhi High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the search made under Section 132 of the Income Tax Act, though has evidentiary value and is relevant, such statement cannot, on a standalone basis, without reference to any other material discovered during search and seizure operations, empower an AO to frame the block assessment. 34. A reference was made to a decision of the Division Bench of the Andhra High Court in CIT Vs. Sri. Ramdas Motor Transport Ltd. (1999) 238 ITR 177 (AP), wherein it was held that a reading of the provision of Section 132(4) of the Act in the context of discovery of undisclosed income, where no documents or incriminating material is found, the powers under Section 132(4) of the Act cannot be invoked. 35. Defending the impugned order, the learned counsel for the respondent submits that the petitioner had participated in the proceedings initiated pursuant to remand order of the High Court. He submits that there was a reasonable excuse for not implementing the order of the High Court in as much as the respondent had preferred an appeal against the order of the High Court. 36. After the Hon'ble Supreme Court dismissed the SLP on 05.07.2013, the first communication was sent on 19.11.2013 and call ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u State Government Undertaking when a search was conducted under section 132 of the Income Tax Act, 1961 in various places of the petitioner and his associates on 19/20.1.1996. He was accused of having amassed wealth beyond his known source of income by receiving bribe while giving mining licence to various applicants. 44. During the search, several incriminating documents and evidence were recovered including unaccounted cash and jewellery. They were seized and recovered. Substantial cash is said to have been recovered from his residential house for a sum of Rs. 15.59 lakhs and Rs. 1.48 crore from his office room in TAMIN apart from several valuable goods in the form of jewellery and valuables which were not disclosed by him in any of the returns during any of the preceding assessment years. The petitioner was therefore remanded to judicial custody. 45. Under these circumstances, proceeding under section 158-BC read with Section 158-BB and other provisions of the Income Tax Act, 1961 was initiated against the petitioner for the block period between 1.4.1985 to 20.1.1996 as it stood then under Chapter XIV B of the Income Tax Act, 1961. 46. The said notice was served on the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... containing the name and at times, the address of the applicant, the location of the land for which mining licences is requested (details of such as the name of the village, taluk, district, survey number and extent of land). Some slips contain the quality of granite such as black, paradiso, kashmiri etc. and some slips contain certain denominations of money. (b) The second category of data is handwritten notes, prima facie, in the handwriting of Shri Dyaneswaran on his own letter heads and the letter heads of the TAMIN (confirmed to be his handwriting by the Govt. Examiner of questioned documents). Each of the entries contain details such as serial number, name of the applicant, name of the place, survey number and extent and the amount. Generally, this amount is shown in a coded form that too decimal places. Apparently, the whole number stood for lakhs and the decimals stood for thousands. Some of the entries have been rounded off and/or tick-marked. In respect of some others, another coded number is written below that, probably indicating the amount received or receivable. (c) The third set of documents are typed sheets with details of the name and brief address of the appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in which there is no mention of any of the assessee's alleged handwriting. The second category is written notes, which according to the Revenue, prima facie, by the assessee in his letter head or that of TAMIN, which is in the handwriting of the assessee, which fact had been confirmed by the handwriting expert. These papers contain coded numbers with two decimals which apparently stand for lakhs and thousands, according to the Revenue. In the same papers, another coded number is written below the first coded figures which, according to the Revenue, probably indicate the amount received or receivable and the third set of papers is said to be prepared by the staff who prepare such papers for the High Level Committee for its meeting. Again, in these papers there were coded handwritten number with decimals which again prima facie, according to the Revenue, is in the handwriting of the assessee. From the above, it is clear that regarding first set of papers, there is no claim even by the Revenue that it is written in the assessee's handwriting and only in some papers there is mention of some denominations of money. It is not clear how the Assessing Officer arrived at the conclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the seized material from the assessee's brief case, ultimately he agrees he made some payments in addition to this. Answering question No. 15, he says that he made the payment to the assessee about two months prior to the issuance of the licence. At the end, he expressed his regret for the mistake by not telling the truth first. We are unable to take this statement also at its face value. It is very difficult to attribute the payment to the assessee as for getting the quarry licence. The procedure followed is clear from the answer to question No. 4. The application was made to the District Collector who in turn forwarded it to the concerned Thasildar for inspection and to report to the Director of Mining and Geology for recommendation for issuance of licence. It is again to be seen that the assessee was never afforded an opportunity to confront the deponent. Revenue says that all the papers were subsequently given to the assessee. It is also the case of the Revenue that it is not relying on these statements. If he is not relying on these statements, then there is no meaning in taking statements and putting them on record. Further, in the absence of any cross-examination of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry or other valuable articles seized from the possession of the assessee shall be presumed to belong to the assessee if they are found in the possession or control of the assessee in the course of the search. A similar presumption may also be made as to the correctness of the contents of the books of account so seized. So also the signature and every other part of the books of account may be assumed to be in the handwriting of the person by whom it is purported to have been written'." 14. Further, in the absence of any cross-examination of the deponents by the assessee, none of these statements could be used against the assessee. Therefore, we are of the view that the Revenue's case that the seized materials speak voluminously for the collection of illegal receipt by the assessee, is not established. There is no corroborative evidence except the slips of papers seized. It is true that the assessee is neither denying or admitting receipt of payments in connection with the issuance of licence for quarrying. From a reading of the above, it is clear that the Assessing Officer had not given any opportunity to the assessee. In the assessment order, it is clearly stated that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts relied on by the Revenue is that, no opportunity was given by the Assessing Officer to the assessee to cross-examine the same. Taking into consideration all the above factors, we are of the view that the assessments were completed without giving proper opportunity to the assessee to cross-examine the applicants. In this case, the Assessing Officer has called only 23 persons and obtained the statements. The balance of the seized materials related to several applicants and the Assessing Officer did not make any attempt to correlate or verify or try to obtain the statements from the other applicants, as has been done for 23 cases. On the basis of the statements given by the 23 persons, the Assessing Officer presumed that whatever figures appearing in the seized material would represent the undisclosed income of the assessee. Also, it is seen that for the seized materials relating to 345 applicants, no dates have been mentioned. In respect of the same, the Assessing Officer totalled the amount and made the addition of Rs. 20,31,99,350 in the year of search, i.e., for the assessment year 1996-97. The said huge addition is made without verification from 345 persons. The fact whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 53. There were about 994 mining licenses issued by the petitioner as Chairman cum Managing Director of TAMIN. The Income Tax Department had obtained statements only from 23 persons to whom such mining license were issued and that even those 23 persons were not made available for cross examination. 54. From a reading of the above passages of the Division Bench of this court in Tax Case (Appeals) No. 150 of 2004, the reasoning is predicated on the assumption that the Income Tax Department is required to extend the benefit of cross examination of witnesses who gave statement against the petitioner to prove undisclosed income. 55. Under section 158BC of the Income Tax Act, 1961, in respect of search initiated or books of account of the documents or any other assets requisitioned after the date of June, 1995 before the first day of January, 1997, the assessing officer is required to serve a notice requiring them to furnish such time not being less than 15 days as may be specified in the notice, a return in the prescribed form and verified in the same manner as a return under clause (i) of subsection (1) of section 142, setting forth his total income including the undisclosed income o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery of the amount of liabilities aforesaid by any other mode laid down in this Act. (3) Any assets or proceeds thereof which remain after the liabilities referred to in clause (i) of sub-section (1) are discharged shall be forthwith made over or paid to the persons from whose custody the assets were seized. (4) (a) The Central Government shall pay simple interest at the rate of fifteen] per cent per annum on the amount by which the aggregate of money retained under section 132 and of the proceeds, if any, of the assets. (b) Such interest shall run from the date immediately following the expiry of the period of six months from the date of the order under sub-section (5) of section 132 to the date of the regular assessment or reassessment referred to in clause (i) of subsection (1) or, as the case may be, to the date of last of such assessments or reassessments. 59. As per section 158BE of the Income Tax Act, 1961, an order has to be passed within a period of one year from the end of the month in which the last of the authorisations for such under section 132 or requisition under Section 132A, as the case may be, was executed in case where a search is initiated or books of acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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