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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 ..... quired to complete the assessment procedures within a period of one year. Thus, as the provisions as they read do not allow any elaborate cross examination of witnesses by an assessee. These assets have to be taxed in the hands of the petitioner. To assess tax on the assets seized from the petitioner, there is no necessity for extending the petitioner the benefit of cross examination of witnesses. Also, no useful purpose would also be served at this distant point of time to summons witnesses to come for cross examination who allegedly gave statements against the petitioner for licenses issued when the petitioner was the Chairman, Managing Director of the Tamil Nadu Minerals Ltd. and this distant point of time. It will neither serve any useful purpose to the petitioner nor to the Income Tax Department. However, to the extent undisclosed income in the form of assets viz. cash, jewellery and valuable assets were recovered/seized from the petitioner and his associates, the petitioner is liable to pay tax. Therefore, notwithstanding failure on the part of the assessing officer extend the benefit of cross examination of persons who have given statements against the petitioner during inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rry 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 commission received by the assessee Annexure E(5 papers) 6. Details of donation to D.N.Trust received as Demand Drafts Annexure F(6 papers) 5. Aggrieved by the said order, the petitioner herein filed an appeal under Section 253 (1)(b) of the Income Tax Act, 1961 before the Income Tax Appellate Tribunal in IT (S&S) A. No. 54/Mds/1997 for the assessment years 1986-1987 to 1996-1997. An order came to be passed by the Tribunal on 29.10.2013 by partly allowing the appeal. 6. It is not relevant to delve into the aforesaid order authored by the Judicial Member. However what is curious from the preamble to the said order is that the Income Tax Department was not represented by any of the authorized representatives before the Tribunal and the order came to be passed based on written submissions filed. The cause title reads as under: IT (S&S) A. No. 54/Mds/1997 (Block Assessment years: 1986-1987 to 1996-1997) Shri A.N. Dyaneswaran, Chennai.: Appellant Asstt. Commissioner of Income-T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of the case, the Tribunal was right in holding that the case found in the assessee's office and residential premises was amounts given to the Tamil Nadu Basket Ball Association? 3. Whether in the facts and circumstances of the case, the Tribunal was right in treating the huge investments made in the names of the assessee's mother and son as not that of the assessee on the ground that since the mother had filed a declaration under KVSS and since the son is a bank officer who has an independent source of income? 4. Whether in the facts and circumstances of the case, the Tribunal was right in holding that the amounts in deposits in the name of Dr. Dharmambal Namasivayam Trust cannot be included in the hands of the assessee under Chapter XIV-B in the absence of clear evidence found as a result of search? 5. Whether in the facts and circumstances of the case, the Tribunal had enough material to hold, and was right in accepting the assessee's explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 before the Hon'ble Supreme Court. Though, the number of delay has not be explained in the counter filed by the respondent Income Tax Department, what is evident is that the SLP filed by the respondent Income Tax Department against the order dated 03.09.2007 of the Division Bench of this Court in TCA. No. 150 of 2004 was dismissed only on the ground of delay in filing the appeal by the Hon'ble Supreme Court vide its order dated 05.07.2013. 13. Pursuant to the dismissal of the SLP filed by the respondent Income Tax Department, notice dated 19.11.2013 was issued to the petitioner which has been impugned in this writ petition wherein the respondent Income Tax Department has stated that the an opportunity was being given to the petitioner to work out the modality for cross examination of about 29 persons who had given statement against the petitioner and the petitioner was to make his own arrangement for cross examining these persons at his convenience in differ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars 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 with the directions of this Court. It is submitted that even though there is no time limit prescribed in the order of the High Court remanding the case back to the 2nd respondent to complete the assessment, it should have commenced within a reasonable period of time. 17. The said proceedings should have been commenced and completed within a reasonable period and therefore the commencing under the proceedings long after the event by merely producing few witnesses for cross examination was in violation of principles of natural justice. 18. It is further submitted that the entire investigation was based on certain records allegedly evidencing receipt of Commission for giving mineral license to about 971 persons out of which only 23 were examined by the Department and therefore the assessment proposed was based on sampling and cannot be accepted. 19. The department had itself admitted the inability locate the scores of the persons from whom the petitioner had al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to redo the assessment in the light of directions as contained in the appellate order. The petitioner thereafter was called upon to appear before the Assessing Officer on several dates. Several notices had been issued during the period, ranging from 1970 to 1976. After a lapse of about 7 years, the respondent issued two notices dated January 18, 1983, and January 28, 1983, and then the petitioner filed the instant writ petition before this Court challenging the impugned notices mainly on the ground that after a considerable lapse of time, the respondent was not justified in having issued the said notices. In paragraph No. 19 of the writ petition, it is stated that at the relevant time, there was no limitation for making such assessment. However, learned counsel for the petitioner submits before us that when no limitation is prescribed, then the respondent should have made the assessment within a reasonable time. It is a well-settled principle of law that when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Assessing Officer for fresh consideration by its order dated 09.07.2001, after holding an enquiry regarding the entry in the trial balance of S.M.S. Gardens receiving ₹ 3,96,000 from one Periyaswamy towards sale of old furniture and fixtures at ₹ 3,96,000 and whether this amount was really given by the petitioner or Periyasamy. 26. It is submitted that there the impugned proceedings initiated by the respondent after a lapse of six years of the order could not be allowed to be continued and therefore the impugned order was quashed and the writ petition was allowed. Therefore, the Tribunal had remitted the case back to the Assessing Officer for fresh consideration, by its order dated 09.07.2001, after holding an enquiry regarding the entry in the trial balance of S.M.S. Gardens receiving ₹ 3,96,000 from one Periyaswamy towards sale of old furniture and fixtures at ₹ 3,96,000 and whether this amount was really given by the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Court in Nokia India Private Limited Vs. Deputy Commissioner of Income Tax in W.P. (C). No. 1773 of 2016 order dated 21.09.2017 wherein the Hon'ble Delhi High Court held as under: 23. The Court is also unable to agree with the contention that unless the entire assessment order is wholly set aside, the time limit for passing the fresh order under Section 153 (2A) would not bt attracted. There is no warrant for such an interpretation. The object behind introduction of sub-section (2A) was to prescribe a time limit for completing the assessment proceedings upon the original assessment being set aside or being cancelled in appeal. Clearly, the intention was not to restrict the applicability of subsection (2A) only to such cases where the 'entire' original assessment order is set aside. 25. In the present case, of the seven issues, the assessment in respect of five was set aside and the issues remanded for a fresh deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plementing 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 called upon the petitioner to participate in the proceedings. He therefore prays for dismissal of the present writ petition. 37. Heard the learned counsel for the petitioner and the learned counsel for the respondent. 38. The only question that arises in the present case is whether the delay in implementing the order dated 03.09.2007 of the Hon'ble Division Bench of this Court in T.C.A. No. 150 of 2004, after a lapse of six years, on 09.12.2013 can be construed as an unreasonable period and therefore whether the entire proceedings initiated by the respondent was to be quashed. 39. It is the case of the petitioner, that the period covered under the block Assessment order is for the year 1986-1987 to 1996-1997. Block Assessment order was passed on 31.01.1998. The said proceedings were initiated and which culminated in the order of the Hon'ble High Court on 03.09.2007. Therefore it was incriminating on the part of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad 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 petitioner while he was under incarceration in the central prison. The petitioner thereafter filed his return on 29.11.1996 admitting "nil" undisclosed income. 47. Under these circumstances, a notice dated 13.12.1996 was also issued under section 143(2) of the Income Tax Act, 1961. It was the defence of the petitioner that the cash that were recovered from his office and house belonged to the Tamil Nadu Basketball Association of which he was the president. 48. Records also indicate that the petitioner had attempted to stymie income tax proceedings by filing writ petitions and contempt proceedings. 49. The block assessment order dated 31.1.1997 was thereafter passed by the Assistant Commissioner of Income Tax which records several shenanigans of the petitioner. The petitioner therefore filed an appeal before the Income Tax Appellate Tribunal, at Chennai. 50. Be that as it may, as mentioned above, the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 applicant, the details of the mine, viz., the village, taluk and survey number, the nature of granite and extent. These were probably prepared by the staff who prepared papers for consideration of the High Level Committee or those who prepared the minutes of the meetings of the High Level Committee. Against most of the times, in a coded form some handwritten numbers with two decimal places have been recorded. These handwritten numbers are prima facie in the handwriting of Shri. Dyaneswaran. In fact, on some of the typed sheets where some columns are left blank, they are seen to have been filled up by him in his hand. The coded numbers in the last column in their list and the list referred to above at (b) cannot be just wished away as inconsequential or meaningless numbers as they have been totalled and certain calculations have also been made based on such numbers." 52. After discussion, the Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 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 conclusion that the coded figures are standing for lakhs and thousands. It is again not certain whether it is a receipt or payment. The Revenue was of the view that it stands for receipt. There is no corroborative evidence to hold that it is actually receipt. But, in this case, the Assessing Officer, in the assessment order, gave illustrations that the slips for the summary of the statements recorded from 23 applicants were seized from the assessee. But no opportunity was given to the assessee to confront the person concerned by way of cross-examining the applicants. There is no dispute that no opportunity was given to the assessee, even though there was a specific request made by the assessee. Hence, the statements taken are only from persons said to have made the payments and they do not establish that the figures mentioned in the seized papers are speaking nothing, nor was the assessee given an o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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, the assessee is neither denying nor admitting receipt of payments in connection with the issuance of licence for quarrying. It is established by the Revenue that some of the papers are prepared in the office of High Level Committee for the purpose of High Level Committee. At least the staff who are said to have prepared these papers should have examined to find out the truth of these papers. If the applicant says he paid money to the assessee, then it was very essential to give an opportunity to the assessee to confront the person who claimed to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 is humanly impossible to correlate. It is further stated in paragraph 3.61 as follows: "Otherwise if one were to concede the assessee's demand one should have gone about and examined the 1000 and odd parties, allowed opportunity of cross-examination to the assessee and based on results of such examination and cross-examination, re-examine all of them for completion of the exercise and add up such payments to arrive at the undisclosed income from this source. Anybody can imagine that such a procedure is not pragmatic and not rational. The slips of papers in parties handwriting giving denomination of the amounts, assessee's own letter-head showing in his own handwriting and identical details in a typed list where again such details tally in a number of instances and the meticulous way they were carefully preserved by the assessee cannot be brushed aside as inconsequenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 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 really the amounts have been paid or not is not mentioned. Even if we assume that the said amounts were paid, the details regarding the dates of payment are also not mentioned. Without considering the above aspects, the Assessing Officer made this addition without basis and justification. There ate procedural irregularities, defects and infirmities, which are as follows: (a) No opportunity was given to the assessee to cross-examine. (b) The Revenue obtained statements only from 23 applicants and left out 971 applicants who applied for licence. (c) In respect of 345 applicants, no dates are mentioned in the seized materials. The Assessing Officer, simply totalled the amounts and made an addition of ₹ 20,31,99,350 for the assessment year 1996-97. (d) The Assessing Officer himself stated that it is impossible to correlate and obtain statements from the licen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer 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 of the block. 56. An assessing officer is required to proceed to determine the undisclosed income for the block period in the manner laid down in section 158BB and the provisions of section 142, sub-sections (2) and (3) of section 143, 144 and 145 shall apply, so far as may apply. 57. The assets requisitioned under section 132 or seized under section 132A shall be dealt in accordance with the provisions of section 132B of the Income Tax Act, 1961 as it stood then. 58. Thus, the assets seized or retained from the petitioner were to be dealt in the following manner as per the provision as it stood then prior to it being substituted with effect from 1.6.2002 vide Finance Act, 2002:- 132B. Application of retained assets: (1.) The assets retained under sub-section (5) of section 132 may be dealt with in the following manner, namely:- (i) The amount of the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments. 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 account or other documents or assets position after the 30th day of June, 1995, but before the first day of January 1997. 60. In this case admittedly the assessment order who had been passed within the limitation prescribed by 31.1.1997 by the assessing officer. The assessing officer was not only required to issue notice within 15 days of such requisition/authorization but also required to complete the assessment procedures within a period of one year. Thus, as the provisions as they read do not allow any elaborate cross examination of witnesses by an assessee. 61. However, the Division Bench of this court has extended such a benefit to the petitioner and the appeal which was filed belatedly before the Honourable Supreme Court which came to be dismissed the year 2013 on account of delay. 62. Thus, the respondent Income Tax Department has been not only careless ..... X X X X Extracts X X X X X X X X Extracts X X X X
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