9911796707
TMI Blog2022 (5) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A)"),for Block Period 01/04/1988 to 23/08/1998, the appellate proceedings had arisen before learned CIT(A) from separate Block Period assessment order(s)all dated 30.05.2002 passed by learned Assessing Officer (hereinafter called "the AO") for Block Period 01.04.1988 to 23.08.1998, under Section 158BC(c) read with Section 158BD of the Income-tax Act,1961(hereinafter called " the Act")respectively, with respect to all these three assessee's . Since these three appeals involve similar issues and common grounds of appeal(s), these three appeals were heard together and are disposed off by this common appellate order. We have heard both the parties through physical hearing mode in Open Court. 2(a). First, we shall take up assessee's appeal in ITA No. 128/Alld/2017, for Block Period 01.04.1988 to 23.08.1998. The grounds of appeal raised by assessee in her appeal in ITA No. 128/Alld./2017, for Block Period 01.04.1988 to 23.08.1998 in memo of appeal filed with Income-Tax Appellate Tribunal, Allahabad Bench, Allahabad(hereinafter called " the tribunal"), reads as under:- "1. Because the learned CIT(A) had erred in fact and law to pass the impugned order dated 16.02.2017 confirmin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord. 7. Because the Ld. CIT(A) has erred in law and on facts in confirming the following additions made by the Ld. Assessing Officer:- S.No Particulars Amount (Rs.) 1 Addition u/s 68 in AY 19964997 10,000 2 Addition u/s 69 in AY 1998-1999 as unexplained investment. 31,725 3 Addition in AY 1998-1999 as undisclosed income from share trading. 30,200 4 Addition in AY 1998-1999 as undisclosed brokerage income. 16,000 5 Addition in AY 1998-1999 as undisclosed interest income. 6,210 6 Addition u/s 69 in AY 1997-1998 as unexplained investment. 5,02,000 7 Addition u/s 69 in AY 1997-1998 as investment from unexplained source. 2,04,500 8 Addition u/s 69 in AY 1995-1996 as investment from unexplained source. 10,000 9 Addition u/s 69 in AY 1995-1996 as unexplained investment 5,50,000 10 Addition u/s 68 in AY 1991-1992 94,902 Total 14,55,537 8. Because the Ld. CIT(A) has erred in law and on facts in accepting the findings of the learned Assessing officer to the effect that- "after examination of seized books of accounts and documents the Joint Commissioner of Income Tax (Assessment) Special Range, Allahabad was satisfied tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 143(2) was issued by the Ld. JCIT, even after the appellant had filed the Block return under protest in Form No. 2B, the appellant had duly appeared before the Assessing Officer (Id. JCIT) and there was not even a whisper, at any point of time, that the proceedings ( that had been going on before him) were the proceedings under section 158 BD ; i) even before filing the return on 16.08.2000, the counsel of the appellant had appeared in the other cases (in pursuance of which the satisfaction is stated to have been recorded on 26th April, 2000 ) and in case of the appellant itself, and there was not even slightest of inkling that the proceedings has been initiated under section 158 BD; and j) plethora of other material; which led to the inescapable conclusion that no satisfaction as such was recorded on 26th April, 2000 and /or could be so recorded, so as to hold that the Notice dated 05.05.2000 was the notice under section 158 BD. 10. Because, even after expiry of the time limit for passing the block assessment order under section 158 BC (under which notice had been issued by the Ld. JC1T) on 31.08.2000, the appellant was never informed that the proceedings had b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 05.05.2000 under section 158 BC) did not affect the jurisdiction to complete the block assessment order within a period of two years, from the end of the month in which Notice dated 05.05.2000 had been issued. 16. Because the notice under section 143(2) was mandatory in nature and non issuance of the same within a period of one year from the month in which return had been filed in Form 2B i.e. August 2000, had the effect of terminating the proceedings with the expiry of August 2001 and the proceedings that were kept alive by issuing various Notices thereafter, are bad in law. 17. Because none of the aforesaid items of addition fall within the definition of undisclosed income as envisaged in Section 158B(B) of the I.T.Act 1961. 18. Because in any case various additions, as are comprised in the impugned block assessment order, are vitiated in law as the same have been made without giving the appellant a due and effective opportunity of being heard. 19. Because source of each and every investment as had been made by the appellant stood fully explained and various additions as mentioned at serial nos. (a) to (j) are wholly erroneous and even inconsistent with the material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction and bad in law and, therefore, deserves to be quashed by this Hon'ble Court. The appellate order is also not sustainable for the reason that there is no application of mind by the Id. CIT(A) himself but simply relied upon the findings as recorded by the Assessing Officer on all the issues which is against the provisions of Section 250(6) of the I.T.Act,1961. 3. Because the time limit for completion of block assessment order was also liable to be held to have expired on 31.08.2000 itself and all the proceedings that have taken place thereafter (including completion of block assessment order dated 30.05.2002) is bad in law and accordingly deserves to be quashed by this Hon'ble Bench. 4. Because the view taken by the Id. CIT (A), to the effect that the proceedings had been initiated under section 158BD in consequence of the satisfaction recorded by the Id. JCIT on 26th April, 2000, is wholly unsustainable as the same is against the material and information on record and the law laid down by the Hon'ble Apex Court as well as jurisdictional High Court, accordingly, such an illegal order deserves to be set-aside." 2(c)The assessee has also further raised followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 158BC of the Act, as same is not based on any document/material found as a result of search, thus, the additions so made is beyond the scope of provisions of section 158BC and should have been deleted as such." 3. The brief facts of the case are that there was a search and seizure operations conducted by the Revenue under Section 132(1) of the 1961 Act, on 23rd August, 1998 at various residential premises in the following cases, detailed as hereunder: Residential premises i. Sri Surendra Prasad Agarwal, Sri Mahendra Prasad Agarwal 447,Malviya Nagar, Allahabad. ii Sri Manoj Kumar Agarwal, K.P. Kakkar Road, Allahabad. iii. Sri Mukesh Kumar Agarwal, K 104-HIG, Preetam Nagar, Allahabad ` iv. Sri Amar Nath Agarwal/ Sri Behari Lal Agarwal, Lakhpat Rai Road, Allahabad v. Sri Pramod Kumar Agarwal, Zero Road, Allahabad vi. Sri Mahabir Prasad Agarwal, Roashan Bagh, Allahabad 3.2 The search operations under the provisions of Section 132(1) of the 1961 Act were also conducted by Revenue at the places where above noted person(s) were carrying out their business activities. During the course of search operation conducted by Revenue u/s 132(1) of the 1961 Act, various books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to the certified copy of income-tax record, the AO requested assessee to furnish the Zerox copy of acknowledgement of receipt of the return of income filled by the assessee with the Revenue. The assessee on its part did not furnish return of income for the Block Period. Thereafter, the AO issued detailed notice and a notice under Section 142(1) on 25th July, 2000 to the assessee, which was claimed by Revenue to have been served on assessee, on 26th July, 2000. The AO vide aforesaid notice raised various queries and the assessee was asked to give replies on every issue so raised by AO in the aforesaid notice. Subsequently, on 3rd August, 2000 return of total income including undisclosed income, for the block period 01.04.1988 to 23.08.1998 was filed by the assessee in the prescribed form, showing total undisclosed income of the assessee for Block Period 01.04.1988 to 23.08.1998, at Rs. Nil. On 4th of August, 2000, the case of the assessee was partly heard by the AO, and the assessee vide letter dated 4th of August, 2000 raised objections to the proceedings so initiated by Revenue against the assessee. 3.4 . Thereafter, the case of the assessee was centralized by Revenue with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fts were given by the assessee. The assessee was also directed by AO to give replies to all the queries as were made vide order sheet entry dated 14th February, 2002. The case was adjourned by AO to 09th May, 2002 . Nobody attended on behalf of the assessee on 09th May, 2002.Thus, the AO was left with no option but to complete the assessment on the basis of seized materials available with the AO, material available on record, various statements recorded at the time of search. The AO observed that throughout the course of assessment proceedings, the assessee never attended though specific directions were issued by AO that personal appearance was desired. The AO on 10th May, 2002, issued Show Cause Notice(SCN) to the assessee which was claimed by Revenue to have been duly served on the assessee proposing that the undisclosed income for the Block Period is proposed to be assessed as per SCN. The case was fixed by AO for hearing on 17th May, 2002. The ld. Counsel for the assessee Shri Siddharth Pathak, Advocate attended on 17th May, 2002, wherein he filed letter dated 17th May, 2002 along-with copy of order of Hon'ble Allahabad High Court, dated 09th May, 2002 . From the perusal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition No. 1708 of 2002- M/s Agrawal Brothers and nine others, Vs AC1T (C.C.), Allahabad ---------------------------------------------------------------------------------------------------------------------- Dated : 28-5.2002 M/s Agrawal Bros., 174, Meerganj, Allahabad and 9 others had filed a combined writ before the Hon'ble High court of Allahabad vide civil Misc. writ petition No. 1708 of 2002. The above writ petition was decided by the Hon'ble High Court on 9.5.2002 and the orders are as under :- "Heard Sri Rajesh Kumar, Ld. Advocate for the petitionersand Sri S. Chopra. Ld. Standing counsel for the respondent. The question of limitation raised by the petitioners shall be decided as a preliminary one before passing any further order in the proceedings pending before the Respondents. The Respondents shall dispose off the case after hearing the Writ Petitioners recording reasons. The Writ Petition stands disposed off with the above observations. It is made clear that we have not adjudicated on merits and contentions raised in the Writ Petition.'' Sd/-C.J. Sd/- J. Dated : 09.05.2002 In view of the above directions of the Hon'ble High Court, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified in the notice a return in the prescribed form and verified In the same manner as a return under clause (i) of sub section (1) of section 142, setting forth his total income including the undisclosed income for the block period; Provided that no notice under section 148 Is required to be issued for the purpose of proceeding under this chapter.: Provided further that a persons who has furnished a return under this clause shall not be entitled to file a revised return; (b) the A.O shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158 BB and the provisions of section 142, sub sections (2) and (3) of section 143 and section 144 shall so far as may be, apply; (c)the A.O. on determination of the undisclosed income of the block period in accordance with this chapter, shall pass an order of assessment and determine the tax payable by him on the basis of such assessment; (d) the assets seized under section 132 or requisitioned under section 132A shall be retained to the extent necessary and the provisions of section 132B shall apply subject to such modifications as may be necessary and the reference to "regular assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wledgement receipt of returns filed by her. The assessee did not furnish the return for the block period. Thereafter detailed notice and notice under section 142(1) was issued and, subsequently on 16.8.2000 return for block period was filed showing total undisclosed income at NIL Thus it is clear that the proceedings were initiated u/s 158 BD of the l.T. Act on the basis of seized materials which were found and seized during the course of search initiated in the cases as noted above. Section 158BD of l.T. Act is very clear and it speaks that where the A.O is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under Section 132 or whose books of account or other documents or any asset were requisitioned u/s 132A then, such books of account or assets etc. shall be handed over to the A.O having jurisdiction over such other person and that A.O shall proceed against such other persons and the provisions of this chapter shall applied accordingly. Presently in these cases the jurisdiction vested with the same A.O namely Joint C.I.T., (Assessment) Special Range, Allahabad who had initiated proceedings u/s 158 BD of l.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly in support of the return: Provided that no notice under this sub section shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished.' So section 143 (2) mainly applies where return of income is filed u/s 139 or in response to a notice u/s 142(1). Presently in the cases under consideration notice was issued u/s 158 BC of l. T. Act (invoking section 158 BD of l. T. Act) for filing return of undisclosed income for the block period. Even the return of undisclosed income as was filed by the assessee was beyond the time limit as was provided by the A.O as was specified in the notice u/s 158 BC of I.T. Act. Apart from this, section 158 BC(b) of I.T. Act is again very specific that the provisions of section 142, sub section 2 and 3 of section 143 and section 144 shall, so far as may be, apply. So presently in this case there is no infringement of law by not issuing notice u/s 143 (2) within the period of 12 months from the end of the month in which the return of block income was filed. Notwithstanding, notice u/s 143(2) was issued in this case on 24.01.2002 and served on 06.02.2002. Further more, the above view gets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the merits of the issue in the assessment order dated 30.05.2002, are summarized hereunder: a) An addition of Rs. 10,000/- was made by the AO with respect to credit appearing in the name of Sri Ram Krishna Agarwal as the assessee could not demonstrate compliance of Section 68 of the 1961 Act. The AO asked assessee to produce Sri Ram Krishna Agarwal, but the assessee failed to produce him before the AO. The assessee also did not submit any reply with respect to the aforesaid credit of Rs. 10000 in the name of Shri Ram Krishna Agarwal, which led AO to invoke provision of Section 68 and make addition to the income of the assessee as undisclosed income for ay:1996-97 under Chapter XIVB of the 1961 Act, vide Block Period assessment order dated 30.05.2002. b) The AO made addition of Rs. 31,725/- being difference between the cost of property purchased by assessee at Malviya Nagar, Allahabad as is reflected in her Balance Sheet as at 31.03.1998, and the costs arrived at by the AO after considering the expenses on registration of aforesaid property as are recorded in the Seized material A-109,page 24 to 29, page 53 to 69, which as per AO is to be further enhanced by registration charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge 14 of seized annexure A-11, on these investments . The AO also observed that the assessee could not explain identity, creditworthiness and genuineness of the persons in whose name the investments were made. g) The AO made addition of Rs. 2,04,500/- to the income of the assessee as undisclosed income under Chapter XIVB of the 1961 Act for ay: 1997-98 by invoking provisions of Section 69 of the 1961 Act, as the assessee could not explain the sources of fixed deposit being unexplained deposits made by the assessee in the name of different persons, vide Block Period assessment order dated 30.05.2002. The AO noted that the assessee has received brokerage of Rs.10,225/- from Goel Financial AIDs INC, Allahabad for fixed deposits procured by assessee, but the assessee did not quantified the amount and the names of persons in whose name the fixed deposit were made as per page 17 of seized annexure A-11 . The AO also observed that the assessee did not give any reply on this issue, which led AO to make addition in the hands of the assessee to the tune of Rs. 2,04,500/- u/s 69 of the 1961 Act as undisclosed income for ay: 1997-98 by invoking Chapter XIVB of the 1961 Act. h) An addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s passed by Shri R. K. Jain on 28.09.2006, who has claimed to be holding charge of CIT(A), Allahabad, but as we see later in this order that he infact did not held the charge of CIT(A), Allahabad, on 28th September, 2006, when he passed the said appellate order . 4.2 Thereafter, at the behest of Revenue in a connected matter in the case of ITA No. 14 of 2008 titled Dr. Vinod Kumar Rai v. ITAT, Allahabad & others ii) ITA No. 476 of 2007 titled Sri Subhash Chandra Kesarwani v. ITAT, Allahabad (302 ITR 148), the Hon'ble Allahabad High Court passed judgment and order dated 14th March, 2008( reported in (2008) 302 ITR 148(All. HC) ) wherein Hon'ble Allahabad High Court observed that ld. CIT(A) namely Shri R.K.Jain who was holding charge of CIT(A), Allahabad was transferred to CIT, ITAT, Allahabad, by Ministry of Finance, Government of India, Department of Revenue, New Delhi, vide orders dated 31.05.2006. The said Shri R K Jain approached Hon'ble Central Administrative Tribunal(In short "CAT") . The Hon'ble Allahabad High Court observed that the said Shri R K Jain representation before Central Board of Direct Taxes(in Short " CBDT") submitted in pursuance of direction of Hon'ble CAT, wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the grievance of the assessee that notices under Section 143(2) was not issued within the prescribed time, the ld. CIT(A) observed that the notice u/s 158BC was issued on 05.05.2000 by AO requesting the assessee to file return of total income including undisclosed income for the Block Period 01.04.1988 to 23.08.1998 in prescribed form, within 16 days of service of notice. The assessee did not file the return of total income including undisclosed income for Block Period 01.04.1988 to 23.08.1998,within the stipulated time and the AO had initiated the assessment proceedings by issuance of notice u/s 142(1) of the 1961 Act, dated 25.07.2000. The assessee filed its return of total income including undisclosed income for block period 01.04.1988 to 23.08.1998, on 16.08.2000. The ld. CIT(A) observed that the assessee did not filed its return of total income including undisclosed income for block period within 16 days of service of notice nor any extension of time for filing of return of total income including undisclosed income for Block Period was sought nor extension of time for filing of return of total income including undisclosed income for Block Period was granted by the AO . The ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded by Department are placed on record which clearly reveals that no satisfaction note was prepared by Revenue (Placed at Page No. 9 to 12 of the paper book filed on 17th June, 2021).The Ld. CIT-DR submitted in rebuttal that Department has filed a reply of the AO, dated 23.12.2021, on 15th March, 2022 with tribunal that satisfaction notes is not traceable and the same is not readily available, while effort is still made to trace the same. The ld. CIT DR submitted that the matter is very old around 22 years as the satisfaction was recorded by the AO of the searched persons, on 26th April, 2000, which is discernible from this fact being recorded in the assessment order itself . The ld. CIT DR drew our attention to the assessment order, dated 30th May, 2002, wherein factum of recording of satisfaction note on 26.04.2000 is clearly stated, but however it is submitted by ld. CIT-DR that now after twenty two years when the assessee has asked for the satisfaction note to be produced, the same is not readily traceable / available in the file as the matter being very old. On being asked by the Bench, the Ld. Counsel for the assessee submitted that this ground of not recording of satisfactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Supreme Court in the case of ACIT v. Hotel Blue Moon(2010)321 ITR 362(SC). It was submitted that return of income for the block period was submitted on 03.08.2000, while notice u/s 143(2) was issued on 24.01.2002, which is clearly barred by limitation. The ld. Counsel for the assessee submitted that issue of limitation of issuance of notice u/s 143(2) was decided by AO, by passing order u/s 158BE, vide order dated 28.05.2002. The said order is placed in paper book filed with tribunal on 22.02.2021 with tribunal, at page number 16-19. 6.3 The ld. CIT DR pointed out that notice u/s 158BC was issued by AO on 05.05.2000, directing assessee to file return of income for block period, within 16 days of service of notice . The assessee did not file return of income for Block Period in the time provided in the notice. Notice u/s 142(1) was issued by AO on 25.07.2000. The assesse filed return of income for Block Period, on 03.08.2000. It was submitted that return of income for Block Period was not filed by assessee, in time. 6.4 The ld. Counsel for the assessee submitted that cryptic non speaking appellate order was passed by ld. CIT(A) . Reference was drawn to provisions of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the 1961 Act, in the case of the assessee vide his satisfaction note dated 26th April, 2000. Incidentally, the aforesaid Joint Commissioner of Incometax( Assessment), Special Range, Allahabad who was the AO of the persons searched by Revenue u/s 132(1) on 23.08.2008 as detailed above in the preceding para's of this order, was also the AO of the assessee.Thus, the AO of the persons searched by Revenue u/s 132(1) was also the AO of the assessee. The assessee was, however, not searched by Revenue. Notice dated 05.05.2000 under Section 158BC of the 1961 Act was issued by the AO viz. JCIT(Assessment), Special Range, Allahabad, to the assessee which was claimed by Revenue to have been served on the assessee, on 08th May, 2000, requesting assessee to file a true and correct return of total income including undisclosed income, for the Block Period ending on 23.08.1998, within 16 days of service of notice. The assessee did not filed the return of income for the block period 01.04.1988 to 23.08.1998 within 16 days as provided in the notice dated 5th May, 2000 issued by the AO under Section 158BC of the 1961 Act, but rather the assessee moved an application on 24th May, 2000 seeking exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undisclosed income for the Block Period 01.04.1988 to 23.08.1998 was not filed by assessee in time and hence the same was not a valid return of income, thus there was no requirement of issuance of notice u/s 143(2) of the 1961 Act. The assessee filed first appeal with ld. CIT(A), which was firstly allowed by Shri R K Jain claiming himself to be CIT(A), Allahabad, vide orders dated 28.09.2006.The Hon'ble Allahabad High Court in a connected matter in the case of Dr. Vinod Kumar Rai v.ITAT, Allahabad & Ors. in ITA no. 14 of 2008( 2008) 302 ITR 148(All. HC) (ii) ITA No. 476 of 2007, Shri Subhash Chandra Kesarwani v. ITAT, Allahabad, held that Shri R K Jain, ceased to hold office on 22.09.2006 or at least when order of CBDT dismissing his representation stood served on him on 25.09.2006. In the case of the assessee, the said appellate order was passed by Shri R K Jain, claiming to be CIT(A), Allahabad, on 28.09.2006, which is beyond the period when he ceased to hold charge of CIT(A), Allahabad,as held by Hon'ble Allahabad High Court in a connected matter(Refer to preceding para's 4.1 and 4.2 of this order which is not repeated to avoid duplication) . Later, the then CIT(A) ultimately d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s beyond the time limit provided under the 1961 Act, and hence the proceedings are bad in law liable to be quashed. f) That Shri R K Jain, the ld. CIT(A) passed an appellate order dated 28.09.2006 against the assessee quashing the Block Period assessment order framed against the assessee, and the appeal against the said appellate order was filed by Revenue with ITAT which was pending for adjudication, and hence the ld. CIT(A) was debarred from passing second appellate order dated 16.02.2017 u/s 250(6) of the 1961 Act. That the assessee was not made party to the judgment and order, dated 14.03.2008 passed by Hon'ble Allahabad High Court in the case of Dr. Vinod Kumar Rai v.ITAT, Allahabad & Ors. in ITA no. 14 of 2008( 2008) 302 ITR 148(All. HC) (ii) ITA No. 476 of 2007, Shri Subhash Chandra Kesarwani v. ITAT, Allahabad and hence the said judgment and order dated 14.03.2008 passed by Hon'ble Allahabad High Court is not binding on the assessee. g) That ld. CIT(A) passed a cryptic and non-speaking appellate order dated 16.02.2017, u/s 250(6) of the 1961 Act on the merits of the additions made by the AO, and hence the same is liable to be set aside and consequently the additions mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were requisitioned under section 132A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against such other person and the provisions of this Chapter shall apply accordingly." Reference is drawn to the judgment and orders of Hon'ble Supreme Court in the case of CIT v. Calcutta Knitwears, reported in (2014) 43 taxmann.com 115(SC), the relevant extract concerning satisfaction note are reproduced as hereunder: "39. The opening words of Section 158BD of the Act are that the assessing officer must be satisfied that "undisclosed income" belongs to any other person other than the person with respect to whom a search was made under Section 132 of the Act or a requisition of books were made under Section 132A of the Act and thereafter, transmit the records for assessment of such other person. Therefore, the short question that falls for our consideration and decision is at what stage of the proceedings should the satisfaction note be prepared by the assessing officer: whether at the time of initiating proceedings under Section 158B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itiation of proceedings against the searched person under Section 158BC of the Act; (b) along with the assessment proceedings under Section 158BC of the Act; and (c) immediately after the assessment proceedings are completed under Section 158BC of the Act of the searched person. 45. We are informed by Shri Santosh Krishan, who is appearing in seven of the appeals that the assessing officer had not recorded the satisfaction note as required under Section 158BD of the Act, therefore, the Tribunal and the High Court were justified in setting aside the orders of assessment and the orders passed by the first appellate authority. We do not intend to examine the aforesaid contention canvassed by the learned counsel since we are remanding the matters to the High Court for consideration of the individual cases herein in light of the observations made by us on the scope and possible interpretation of Section 158BD of the Act." These are two different things altogether, firstly that no satisfaction was recorded at all by the AO of the searched person that undisclosed income prima facie appearing from the seized material belonged to some other person and consequently no satisfaction note wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfied that the undisclosed income as was recorded in some of such seized books of accounts pertained to Smt. Asha Agarwal, (Individual), the assessee and he therefore recorded the reasons for initiating proceedings under Section 158BD of the I.T. Act, 1961 Act, in the case of the assessee vide his satisfaction note dated 26.04.2000." Thus, the assessment order was passed in the year 2002, wherein the factum of recording of satisfaction and preparation of satisfaction note in April, 2000 is clearly mentioned, we have no reasons to doubt that the AO being a Government Gazetted Officer will have any reasons to falsify the accounts. Reference is drawn to provisions of Section 11, 16 and 35 of Indian Evidence Act, 1872, which read as under: "11. When facts not otherwise relevant become relevant.--Facts not otherwise relevant are relevant-- (1) if they are inconsistent with any fact in issue or relevant fact; (2) if by themselves or in connection with other facts they make the existence or non-existence of any fact in issue or relevant fact highly probable or improbable. 16. Existence of course of business when relevant.--When there is a question whether a particular act was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he merits of the issue. There were 10 taxpayers (including assessee) in whose case the proceedings were initiated by the AO under Chapter XIV-B by invoking provisions of Section 158BD read with Section 158BC, although these ten assessee's were not searched by Revenue u/s 132(1) on 23.08.1998, as detailed hereunder, and the following ten assessee's approached Hon'ble Allahabad High Court by filing writ petition under Article 226 of the Constitution of India bearing number 1708 of 2002 in Agarwal Brothers & Ors. v. ACIT, Central Circle, Allahabad, on 09th May, 2002, raising question of limitation before Hon'ble High Court: 1. M/s Agarwal Brothers, 174, Meerganj, Allahabad, U.P.(Partnership firm) 2. Surendra Prasad Agarwal, HUF, 514/447, Malviya Nagar, Allahabad, U.P. 3. Mahabeer Prasad Agarwal, HUF, 77, Khuldabad, Allahabad, U.P. 4. Mahendra Kumar Agarwal, HUF, 514/447, Malviya Nagar, Allahabad, U.P. 5. Manoj Kumar Agarwal, HUFm, 514/447, Malviya Nagar, Allahabad, U.P. 6. Mukesh Kumar Agarwal, HUf, 193-B/151-A, Meerganj,Allahabad, U.P. 7. Lav Kush Agarwal, 14, Gariwan Tola, Allahabad, U.P. 8. Smt. Asha Agarwal, 514/447, Malviya Nagar, Allahabad, U.P. 9. Smt. Sadhna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings under section 158BD of the l. T. Act,1961 . In all these 10 cases of the petitioners vide his satisfaction note dated 26.04.2000. Notice under section 158BC of l.T. Act was, accordingly, issued on 5.5.2000 and was served, with the request to file a true and correct return of total income including undisclosed Income within 16 days of service of notice . The assessee moved application dated 01.06.2000 seeking copy of seized materials, copy of Income-tax records etc.In reply vide letter dated 12.06.2000 it was intimated to assessee that copy of seized material had already been provided and with regard to certified copy of Income-tax records he was requested to furnish zerox copy of acknowledgement receipt of returns filed by her. The assessee did not furnish the return for the block period. Thereafter detailed notice and notice under section 142(1) was issued and, subsequently on 16.8.2000 return for block period was filed showing total undisclosed income at NIL Thus it is clear that the proceedings were initiated u/s 158 BD of the l.T. Act on the basis of seized materials which were found and seized during the course of search initiated in the cases as noted above. Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... page 14, Seized Annexure A-11, page 17, Seized Annexure A-180, page 6. It is also pertinent to mention here that in the assessment order as well order passed u/s 158BE it is mentioned that the copies of seized material werr provided to the assessee. The assessee has not disputed or denied that copies of seized material were not furnished to it. One more important aspect is that the assessee is wife of Mr. Mahendra Prasad Agrawal. It is an admitted position that Mr. Mahendra Prasad Agrawal was searched by Revenue on 23.08.1998, u/s 132(1) of the 1961 Act. Incidentally the residence address of Mr. Mahabir Prasad Agrawal is 447, Malviya Nagar, which property is owned by the assessee, namely Mrs. Asha Agrawal, and the address of the assessee as emanating from the records is also 447, Malviya Nagar, Allahabad, U.P.. Even, address of Shri Surender Prasad Agrawal as emanating from records is 447, Malviya Nagar, Allahabad, U.P. The said residential premises 447, Malviya Nagar, Allahabad, U.P., was searched by Revenue. Once, all these aforesaid assessee's are residing together and are related to each other, there is a natural phenomenon as well strong possibility that incriminating materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the 1961 Act, there is nothing unusual about it, as the satisfaction note could have been recorded by AO in the files of the persons searched, or in a file specially created for the same. Thus, we reject the contentions of the assessee and hold that the satisfaction note was duly recorded by the AO of the person searched(who incidentally was also the AO of the assessee). Reference is also drawn to provisions of Section 11,16 and 35 of The Indian Evidence, 1872. We have also observed that the search was conducted by Revenue u/s 132(1), on 23.08.1998. The assessment in the case of searched persons were completed by Revenue, in the month of August, 2000 (please see AO letter No. F.No. ACIT/Circle-1/Alld/Mahendra Agarwal Group/2021-22/154, dated 23.12.2021 marked to The Ld. CIT-DR, ITAT, Allahabad, which letter is enclosed by ld. CIT-DR along with its letter dated 15.03.2022 marked to ITAT, Allahabad Bench, Allahabad, in the matter of the assessee in ITA no. 128/Alld/2017). Thus, the assessment in the case of searched persons were completed by the Revenue in the month of August, 2000, while satisfaction note in the case of the assessee was prepared by AO on 26th April, 2000, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount or other documents or any assets were requisitioned under section 132A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against such other person and the provisions of this Chapter shall apply accordingly." Thus, in the instant case, as we have already held in the preceding para of this order that the AO of the searched person (incidentally who also happens to be the AO of the assessee) has recorded satisfaction note dated 26.04.2000 wherein the AO based on seized material from the persons searched observed that the undisclosed income pertained to the assessee, we hold that in view of clear language and mandate of Section 158BD of the 1961 Act, there is no merit in the contention of the assessee that in the absence of warrant of authorisation, no block period assessment can be framed against the assessee within mandate of Chapter XIVB of the 1961 Act. We order accordingly. c)That no notice u/s 158BD of the 1961 Act was issued by AO. That notice dated 05.05.2000, u/s 158BC was issued without mentioning section 158BD i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y done by the AO. Infact this is an admitted position that Notice u/s 158BC, dated 05.05.2000 was issued by the AO, which was served on the assessee on 08th May, 2000, requesting assesse to prepare a true and correct return of total income including undisclosed income for the Block Period ending 23.08.1998, in prescribed form and be delivered to the office of AO within 16 days of service of notice u/s 158BC, dated 05.05.2000. Even, if it is accepted that provision of Section 158BD was not mentioned in the said notice, but still the proceedings cannot be held to bad in law, as the assesse was fully aware of the proceedings initiated against her under Chapter XIV-B to compute total income including undisclosed income, for the Block Period from 01.04.1988 to 23.08.1998, as she regularly participated in the proceedings before the AO. The assesse filed her return of income for Block Period of ten year of total income including undisclosed income in prescribed form, from assessment year 1989-99 to assessment year 1999-00(until date of search 23.08.1998)(placed in paper book filed on 22.02.2021/ page 9). The assessee also filed letter before the AO, dated 24.05.2000 (placed at paper book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... faction, based on incriminating material found and seized during the course of searches conducted by Revenue u/s 132(1) against the searched persons, on 23.08.1998 that undisclosed income as is discernable from the incriminating material seized from persons searched, prima facie belonged to the assessee, which led to the recording of satisfaction note by AO of the persons searched on, 26.04.2000. Incidentally AO of the persons searched was also the AO of the assessee. The recording of satisfaction note, dated 26.04.2000 led to invocation of proceedings against assessee under Chapter XIV-B and the AO issued to the assessee notice dated 05.05.2000 u/s 158BC of the 1961 Act. The said notice dated 05.05.2000 issued u/s 158BC was admittedly served on the assessee on 08th May, 2000. The AO requested assessee to file true and correct copy of return of total income including undisclosed income for the Block Period ended on 23.08.1998, in prescribed form in the office of AO within 16 days of service of notice . The assessee did not filed the return of total income including undisclosed income, for the block period 01.04.1988 to 23.08.1998 within 16 days of service of notice dated 5th May, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e scheme of block assessment introduced in Chapter XIVB to Finance Act, 1995 w.e.f. 1st July, 1995. As already mentioned in brief by us, Chapter XIVB of the Act which deals with block assessment lays down a special procedure for search cases. The main reason for adding these provisions in the Act was to curb tax evasion and expedite as well as simplify the assessments in such search cases. Undisclosed incomes have to be related in different years in which income was earned under block assessment. This is because in such cases, the "block period" is for previous years relevant to 10/6 assessment years and also the period of the current previous year up to the date of the search, i.e., from April 1, 2000, to January 17, 2001, in this case. The essence of this new procedure, therefore, is a separate single assessment of the "undisclosed income", detected as a result of search and this separate assessment has to be in addition to the normal assessment covering the same period. Therefore, a separate return covering the years of the block period is a pre-requisite for making block assessment. Under the said procedure, the Explanation is inserted in section 158BB, which is the computation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion as per the scheme of Chapter XIVB. In the first place, income referred to in Section 5 talks of total income of any 'previous year'. As per Section 2(34) of the Act, 'previous year' means previous year as defined in Section 3. Section 3 lays down that previous year means 'the financial year immediately preceding the assessment year'. Undisclosed income referred to in Chapter XIVB is not relateable to the previous year. On the contrary, it is for the block period which may be 6 years or 10 years, as the case may be. Consequently, as already mentioned, while analyzing the scheme of Chapter XIVB, such Chapter is a complete code in respect of assessments of 'undisclosed income'. Not only it defines what is undisclosed income, it also lays down the block period for which undisclosed income can be taxed. Further, it also lays down the procedure for taxing that income. It is very pertinent to note at this stage that for this purpose, specific provision in the form of Section 158BA(2) is inserted making it a charging section. Thus, a diagnostic of Chapter XIVB of the Act leads to irresistible conclusion that it contains all the provisions starting from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turn in the prescribed form and verified in the same manner as a return under clause (i) of sub-section (1) of section 142, setting forth his total income including the undisclosed income for the block period : Provided that no notice under section 148 is required to be issued for the purpose of proceeding under this Chapter : Provided further that a person who has furnished a return under this clause shall not be entitled to file a revised return;] (b) the Assessing Officer shall proceed to determine the undisclosed income of 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 and section 144 shall, so far as may be, apply; (c) the Assessing Officer, on determination of the undisclosed income of the block period in accordance with this Chapter, shall pass an order of assessment and determine the tax payable by him on the basis of such assessment; (d) the assets seized under section 132 or requisitioned under section 132A shall be retained to the extent necessary and the provisions of section 132B shall apply subject to such modifications as may be necessary and the references to regular asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal income including undisclosed income, beyond the period of forty five days, as permitted by Section 158BC of the 1961 Act, in respect of search initiated or books of account or other documents or any assets requisitioned on or after the 1st day of January, 1997. In the instant case, the AO allowed sixteen dates from the date of service of notice dated 05.05.2000 issued u/s 158BC of the 1961 Act. The AO rejected application filed by the assessee seeking extension of time for filing of return of total income including undisclosed income, for the Block Period ended on 23.08.1998. The power to condone the delay in filing of return of total income including undisclosed income for Block Period is vested with CBDT under the provision of Section 119 of the 1961 Act. Reference is drawn to judgment and order of Hon'ble Karnataka High Court in the case of CBDT v. Vasudev Adigas Fast Food Private Limited, reported in (2021) 128 taxmann.com 287(Kar.HC), wherein Hon'ble High Court held as under: "14. This Court has carefully gone through the order passed by the learned Single Judge, the material on record and heard the learned counsel for the parties at length. 15. In the considered opin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rary to the provisions of Section 119(2)(b). 18. In respect of Circular No. 9/2015 dated 9-6-2015 it can be safely gathered that it does not apply to the power of CBDT to condone the delay in filing the return of income under section 119(2)(b) of the Act. Section 119(1) of the Act empowers the CBDT to issue orders, instructions and directions to other income tax authorities as it may deem fit for the proper administration of the Act and the power available to the CBDT under section 119(2)(b) is a specific power provided to the CBDT to pass such orders in cases of genuine hardship. 19. The Circular issued by CBDT is binding on the authorities subordinate to it and cannot be binding on itself. Further, the authorities to whom Circular No. 9/2015 dated 9-6-2015 is issued and binding is specified in the said circular itself. A bare reading of Section 119(1) clearly shows that the circulars/orders/instructions are binding on other income tax authorities and that the same are not binding on the CBDT itself. However, despite the above settled position of law, the CBDT has relied on Circular No. 9/2015 dated 9-6-2015 and rejected the application of the respondent/assessee. 20. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Moon(supra) has no application, to the facts and circumstances of the case because in the instant case return of total income including undisclosed income for Block Period was not filed within the time prescribed by the AO for filing aforesaid return of income and infact it was filed even much beyond a maximum period of forty five days allowed by Section 158BC for filing of the return which is the upper most limit allowed by statute for filing Block Period Return of total income including undisclosed income, and the said return filed by the assessee, on 03rd August, 2000 is a non-est / invalid return of income . No extension of time for filing aforesaid return was sought by assessee from CBDT under the provisions of Section 119 of the 1961 Act.In the instant case before us, the AO has duly issued notice dated 05th July, 2000 u/s 142(1) of the 1961 Act before framing assessment and hence principles of natural justice stood duly complied with, before framing Block Period assessment, u/s 158BC(c) read with Section 158BD, vide orders dated 30th May, 2002, which assessment order does not suffer from the vice of illegality owing to non issuance of notice u/s 143(2) of the 1961 Act withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch is initiated or books of account or other documents or any assets are requisitioned after the 30th day of June, 1995, but before the 1st day of January, 1997; (b) within two years from the end of the month in which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed in cases where a search is initiated or books of account or other documents or any assets are requisitioned on or after the 1st day of January, 1997. (2) The period of limitation for completion of block assessment in the case of the other person referred to in section 158BD shall be (a) one year from the end of the month in which the notice under this Chapter was served on such other person in respect of search initiated or books of account or other documents or any assets requisitioned after the 30th day of June, 1995, but before the 1st day of January, 1997; and (b) two years from the end of the month in which the notice under this Chapter was served on such other person in respect of search initiated or books of account or other documents or any assets are requisitioned on or after the 1st day of January, 1997.] [Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... binding on the assessee. The assessment was framed by the AO for the Block Period 01.04.1988 to 23.08.1998 against the assessee, vide assessment order dated 30th May, 2002 passed u/s 158BC(c) read with Section 158BD of the 1961 Act. The assessee filed first appeal with ld. CIT(A). In the instant case before us, Shri R K Jain who claimed himself to be CIT(A) holding charge of Allahabad, passed the appellate order on 28.09.2006. The said Shri R K Jain who was earlier holding charge as CIT(A), Allahabad, was transferred to CIT, ITAT, Allahabad, by Ministry of Finance, Government of India, Department of Revenue, New Delhi, vide orders dated 31.05.2006.In one of the other matter, at the behest of Revenue, in the case of ITA No. 14 of 2008 titled Dr. Vinod Kumar Rai v. ITAT, Allahabad & others ii) ITA No. 476 of 2007 titled Sri Subhash Chandra Kesarwani v. ITAT, Allahabad (302 ITR 148), the Hon'ble Allahabad High Court passed judgment and order dated 14th March, 2008( reported in (2008) 302 ITR 148(All. HC) ), wherein Hon'ble Allahabad High Court observed that ld. CIT(A) namely Shri R.K.Jain who was holding charge of CIT(A), Allahabad was transferred to CIT, ITAT, Allahabad, by Ministry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder passed by Hon'ble Allahabad High Court is an order in rem as it concerns holding of Public Office illegally without any authority and is not merely an order in persona which is passed inter-se between the two parties, and hence it will be applicable on all appellate orders passed by the said Shri R K Jain purported to be as CIT(A), Allahabad, on or after the date specified by Hon'ble High Court in its judgment and order, post his vacation of office as CIT(A), Allahabad . This appellate order was passed by Shri R K Jain on 28.09.2006 which is covered by order of Hon'ble High Court specifying date of vacation of office as CIT(A), Allahabad by said Shri R K Jain and hence this appellate order dated 28.09.2006 is null and void. If the assessee wanted to agitate the order of Hon'ble Allahabad High Court, it could have approached Hon'ble Allahabad High Court or Hon'ble Apex Court, but to agitate the said issue before tribunal ( being a body lower in hierarchy to Hon'ble High Court) once the appellate order dated 28.09.2006 passed by Shri R K Jain is covered by the period declared by Hon'ble High Court when he was not holding the charge of CIT(A), Allahabad, is clearly a misuse and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of law. Reference is drawn to provisions of Section 250(6) of the 1961 Act. Even if the assessee does not give replies/explanations before ld. CIT(A), there are wide powers vested with ld. CIT(A) under the law to adjudicate first appeal arising from the assessment framed by the AO, which powers are co-terminus with the powers of the AO. Reference is drawn to the provisions of Section 250(4) and 251(1)(a) of the 1961 Act. The ld. CIT(A) is required to pass a reasoned and speaking order, while adjudicating first appeal, which should reflect his mind on the matter adjudicated by him with reasons, so that both the parties understand as to what weigh in the mind of ld. CIT(A) while adjudicating the matter. Moreover, the appellate order passed by ld. CIT(A) is amenable to appeal before tribunal, and for tribunal to arrive at its decision, it is important that reasoned and speaking order is passed by ld. CIT(A). Reference is drawn to the provisions of Section 250(6) of the 1961 Act. In the instant case before us, the assessee is equally responsible for its woes as the assessee did not give any reply before ld. CIT(A) on the merits of the additions so made by the AO to the income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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