9911796707
TMI Blog2016 (4) TMI 1469X X X X Extracts X X X X X X X X Extracts X X X X ..... e the AO having the jurisdiction over the assessee has recorded the satisfaction which is incorrect as per law. Taking the consistent views in the decisions of Hon'ble Supreme Court in the case of Manish Maheshwari [ 2007 (2) TMI 148 - SUPREME COURT] and Champakbhai Mohanbhai Patel [ 2014 (2) TMI 1168 - GUJARAT HIGH COURT] we reverse the orders of Authorities Below and this ground of assessee's appeal is allowed. - Hon'ble Judges Waseem Ahmed, Member (A) and S.S. Viswanethra Ravi, Member (J) For the Appellant : S.K. Tulsiyan, Advocate For the Respondents : Rajat Subhra Biswas, CIT-DR ORDER Waseem Ahmed, Member (A) 1. This appeal by the assessee is against the order of Commissioner of Income Tax (Appeals), Central-III, Kolkata dated 21.03.2013. Block assessment was framed by ACIT, CC-XXIV, Kolkata u/s. 158BD/144 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') vide his order dated 30.11.2006 for the block period from 01.04.1996 to 07.05.2002. Grounds raised by assessee are as under:- 1. The orders passed by the lower authorities are arbitrary, erroneous, without proper reasonings, invalid and bad in law, to the extent to which they are prejudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee transferred the fund to the group of UIC companies. It was also revealed that Mr. Sandip Kr. Singhee, the director of the assessee company acted as introducer in the opening of the aforesaid bank accounts. The aforesaid 4 persons were produced before the DDIT (Inv) (unit III) (4) by Mr. Sandip Kr. Singhee and their depositions were taken, but later these persons could not be traced in spite summons issued under section 131 of the Act and the summons were also not served at the given addresses. Accordingly the AO could not verify identity, genuineness and credit worthiness of the parties in relation to the aforesaid shares transaction, so he initiated proceedings under section 158BD against the assessee after recording the satisfaction note which is reproduced below:- A search and seizure operation was conducted in the UIC Group of cases on 7/5/2002. In the course of search in the corporate office of these Group share scripts worth Rs. 11,63,75,000/- issued by different companies by these Group were found. Out of these scripts it was found that a large number of shares have been allotted in the name of various companies controlled and managed by outsiders viz. Shri Rajesh. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 58BD of the Act has been issued. Accordingly the AO communicated the reasons for initiating proceedings u/s. 158BD of the Act to the assessee vide letter No. ACIT/CC-XXIV/158BD/2006-07/46 dated 04.05.2006 which is reproduced below. 1. A search seizure operation was conducted in the UIC Group of cases on 07/05/02. In course of search in the corporate office of UIC Group, huge share scripts allotted in your name was found and seized. In the course of post search inquiry launched in connection with ascertaining the source of the share capital it was gathered that a part of the fund had come from 4 (four) bank accounts i.e. A/c. No. 4886, 4914, 4933 4934 maintained with Federal Bank of India, Burra Bazar Branch, Kolkata and standing in the name of Shri Raiendra Kumar Surana, Shri Sunil Kr. Jain, Surrendra Kr. Hirwawat and Shri Shankarlal Godh respectively. 2. On further inquiry it was revealed that the aforesaid four persons deposited substantial cash in their respective bank accounts and these four persons were not traceable. Summons u/s. 131 of the I.T. Act, 1961 could not be served in their given addresses. It establishes that fictitious bank accounts were opened in the name of thos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia group companies. 8. Nature of transactions with date, party names and amount specifically to be mentioned. The AO also issued notice u/s. 131 of the Act for the personal appearance of the director. However the above required details were not furnished but the director of the company Mr. Sandip Kumar Signhee appeared on dated 14/11/2006 and his statement was recorded under section 131 of the Act which is reproduced below: 5. Name the persons who have invested in shares of the companies of which you are director? Did these four persons namely, Shankar Lal Godh; Surendra Kr. Hirauiat, Sunil Kr. Jam and Rajendra Kr. Surana invest in your company? A. Various corporates and individuals etc have invested in our company. However, we have sold our investments to these four persons and received money against sale of shares which are accounted for my our books of a/cs. Money received from these four persons have been invested in buying the shares of Rajesh Jajodia group companies and the UlC Group Companies. 6. Name the companies where your companies have made investment? A. We have made investment in various companies including Rajesh. Jajodia (Nos. 1-7) and the UIC group (Nos. B-11). 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived from various persons viz. Mohan Lal Agarwal and Mahendar Jajodia through Mr. Sandip Singhi with a direction to issue cheques in favour of companies managed by Sandip and Rajesh: I am a person having very low income. 5) How can you justify the source as given in reply to Q. No. 4? Same, answer for all:- I do not have any evidence to prove that the cash amount deposited in my above bank account has been received from them However it can be seen that cheques favouring Sandip or Rajesh companies have been issued and debited on the same dates on which cash deposited. I have not even filled cash deposit slips and cheques, these were prepared by other persons and brought to me for my signature. 7) Why cash deposits in your account should not be treated as your money? Same answer for all:- This is not my money and I am speaking the truth. It can be assessed by my financial status. 8) Why cash deposits should not be treated as unexplained and appropriate action is taken under the I.T. Act, 1961 to assess the escaped income? Same answer for all:- As stated earlier this is not my money and it is true . However after deposition, the aforesaid four persons were not traceable in spite of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffered by him is not, in the opinion of the AO, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. But in the instant case, it is an accepted position that the above amount has been received by the assessee company through account payee cheque against sale of investment and all the disclosure were made in the income tax return. 4.1 As per the provisions of section 158BD of the Act the materials found during search should have been handed over to the AO having jurisdiction over such other person to initiate the action in terms of the aforesaid section. But in the instant case no such procedure has been followed by the authorities. The share certificates found during the search were not handed over to the AO having jurisdiction over the assessee. However the Ld. CIT(A) after considering all the facts of the case disregarded the plea of the assessee by observing as under: I do not find any substance in the claim of the AIR that the shares might have been sold before the search took place in UIC Group but the evidence of the same having been subscribed to by the appellant before the date of search was found during the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resaid 4 persons were duly accounted for in the books of accounts and offered to tax. The proceeding under section 158BD doesn't apply as the assessee has no undisclosed income. The AO has made the addition on the basis of the statements recorded under section 132 of the Act of the aforesaid 4 persons were not made available for the purpose of cross examination. On the other hand, Ld. DR vehemently supported the orders of lower authorities. 6. From the aforesaid discussion we find that the AO has initiated and completed the assessment proceedings u/s. 158BD/144 of the Act on the basis of documents found at the time of search from the place of UIC group of companies where the search was conducted. However the assessee claimed that there was no undisclosed income of the assessee and the documents which were found at the time of search were duly disclosed in the books of accounts of the assessee and the income thereon was offered to tax. The assessee before us has challenged the validity of the proceedings under section 158BD of the Act on the ground that the in the instant case the satisfaction was to be recorded by the AO of the UIC group where the search was conducted but in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt has held that:- The condition precedent for invoking a block assessment is that a search has been conducted under section 132, or documents or assets have been requisitioned under section 132A the said provision would apply in the case of any person in respect of whom search has been carried out under section 132A or documents or assets have been requisitioned under section 132A section 158BD, however, provides for taking recourse to a block assessment in terms of section 158BC, in respect of any other person, the conditions precedent wherefore are; (i) satisfaction must be recorded by the Assessing Officer that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 of the Act; (ii) the books of account or other documents or assets seized or requisitioned had been handed over to the Assessing Officer having jurisdiction over such other person; and (iii) the Assessing Officer has proceed under section 158BC against such other person. The conditions precedent for invoking the provisions of section 158BD, thus, are required to be satisfied before the provisions of the said Chapter are applied in relation to any pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
