9911796707
TMI Blog1998 (3) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... ch as there was only one warrant of authorisation and not many and the warrant of authorisation was executed on 30-3-1996 and therefore the assessment ought to have been completed on or before 31-3-1997. 3. Without prejudice to the above, the learned ACIT erred in holding that the transactions entered into by the appellant of acquiring assets and leasing them to the customers as part of lease finance business are not genuine and such transactions were entered into solely with a view to claim depreciation at 100% and not out of commercial expediency and such claiming of depreciation resulted in undisclosed income liable to tax under Chapter XIV-B of the Income-tax Act, 1961 consequent to their detection during search on 30-3-1996. The finding is purely on suspicion and surmise, assumptions and presumptions, without any factual foundation and contrary to the evidence available even at the time of search and on improper appreciation of the evidence and thus the finding is vitiated and liable to be vacated especially, in view of the fact the appellant has filed sufficient evidence even after the search about the existence of the assets and genuineness of the transactions and the evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer had observed that the search within the meaning of section 132 of the Act of the business premises of the appellant-company was started on 30-3-1996 and concluded on 23-5-1996. Assessing Officer had indicated that the assessee was allowed hearing in the case on 9-12-1996, 17-4-1997 and 20-5-1997. Assessing Officer had indicated the block period for assessment as 1986-87 to 1996-97 with the period ending on 30-3-1996. Assessing Officer had also observed that the assessee was incorporated during the assessment year 1989-90. The observations of the Assessing Officer starting with the paragraph titled as 'Introduction' as contained in his order are briefly narrated hereunder. 3. Assessing Officer had stated that the assessee was served with the notice under section 158BC of the Act on 9-7-1996 and was allowed sixteen days to file the return for the block period 1986-87 to 1996-97. The assessee complied with the said notice and filed the return on 25-7-1996 showing loss of Rs. 21 lakhs. Assessing Officer had stated that the assessee had shown purchases from eleven parties assets like industrial gas cylinders, furnaces, centering sheets that were stated as purchased from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the above stated assets. The assessee had shown lease rentals from parties and had claimed depreciation at the rate of 100% on the assets industrial gas cylinders, furnaces, centering sheets. Assessing Officer goes on to observe that Mr. Mundewade, the Managing Director of the company in his statement that was recorded during the course of the search on 30-3-1996 had admitted that the company had entered into four lease transactions without verifying the actual existence of the assets and accordingly had offered to surrender the claim of depreciation. These four lease transactions were with (1) New Era Urban Amenities Ltd. for Rs. 102.18 lakhs; (2) Elcot Electro Ferrites for Rs. 158.00 lakhs; (3) Skyline Construction for Rs. 40.28 lakhs and (4) Gas Gas Enterprises for Rs. 41.18 lakhs and these aggregate to Rs. 341.98 lakhs. Assessing Officer had observed that this was retracted to subsequently and it was submitted by the assessee that the lease transactions with Blades India Pvt. Ltd. and Gas Gas Pvt. Ltd. were the only transactions where the existence of the assets were not verified before entering into the transactions. 5. The Assessing Officer gave a narration of the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is a collusive, fraudulent one entered in order to evade income-tax or reduce the incidence of tax; (b) there are no assets involved in the lease transactions and all that the supplier and lessee have done is to accommodate the lease transactions that are paper transactions; (c) all the documents like sale invoice, delivery note, lease agreement, installation certificates, etc., are nothing but make-believe things created/fabricated to suit their needs and (d) the lease rental deposit received by the lessor is nothing but his own money routed through lessor-supplier-lessee-lessor in the above collusive lease transactions. 7. The basis on which the Assessing Officer came to hold the above view as summarised by him in para 2 of his order are, (a) that the assessee has not produced the fresh confirmation letters or the suppliers/lessees for verification; (b) that the assessee at no given point of time has been contracted or dealt with the supplier directly and the assessee simply claims to have believed the documents furnished by the lessee (if claims to be innocent, which is not true); (c) the physical inspection and verification of the lessee's premises, where the assets are su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urfaces out. In other words, the net effect of all the above entries in the profit and loss account, i.e., total debits minus total credits in the profit and loss account represents the correct undisclosed income on account of these bogus lease transactions. 10. Assessing Officer in para 4 of his order had explained the basis for his above conclusion. He had stated that he had called upon the assessee to prove the genuineness of the lease transactions for which he wanted the assessee to produce (a) production of fresh confirmation letters from the so-called suppliers; (b) production of fresh confirmation letters from the so-called lessees and (c) the full particulars of the suppliers like their income-tax assessment, sales-tax numbers. He went on to observe that the assessee had not taken any steps in regard to the above. Assessing Officer therefore, had sent inquiry letters to the suppliers as well as the lessees calling upon them to furnish details of (a) whether they entered into any lease transaction with M/s. Kirloskar Investments and Finance Ltd., and whether any assets were received by them and put to use on account of their lease transactions with M/s. Kirloskar Investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Further, the so-called invoices are nothing but proforma invoices only". 13. Each of the eleven lease transactions have been extensively dealt with by Assessing Officer and these are brought out briefly hereunder: (i) New Era Urban Amenities (P.) Ltd. (Lessee): - The subject of lease is centering sheets that are entitled to 100% depreciation is stated as supplied by Vijaya Commercial House at a cost of Rs. 1,02,18,000 vide Invoice Nos. 384 to 386, dated 26-5-1993. Survey under section 133A of the Act was conducted on the lessee on 29-3-1996 and I showed that no asset existed in the business premises. The Managing Director, Mr. Taneja, denied receiving any assets either from the assessee or from the supplier Vijaya Commercial House. Mr. Chettiar, the Chairman of the lessee was also examined and he admitted that he is the proprietor of Vijaya Commercial House but denied of any sale of Centering Sheets by his proprietary concern to the assessee. He did admit that his proprietary concern had provided proforma invoices to the assessee and admitted of receiving loan from the assessee. The assessee was confronted with the above statements. The assessee submitted that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nic Marketing was a fictitious concern created by him and denied having received any asset either from the assessee or from Sonic Marketing. He admitted that 85% of the amount paid by the assessee to Sonic Marketing returned back to the assessee through his company as lease rental advance or deposit and that balance of 15% was the benefit enjoyed by him and others involved in the process. Assessing Officer had confronted the assessee with the statements so recorded and noted that the assessee vide its letter 23-5-1997 had stated that it had claimed loss from the said assets. Assessing Officer found the nature of the transaction, invoice, etc., was identical to New Era Urban Amenities P. Ltd. He noted that the assessee had shown lease rentals at Rs. 15,30,074 and had claimed depreciation at 100% of the cost. As the movements of funds from the assessee to the supplier through the lessee to the assessee back to the extent of 85% to 90%, and as concluded by him in New Era Urban Amenities P. Ltd., he held the undisclosed income at Rs. 64,70,326 by adjusting the depreciation claimed against the lease rental. (iii) Gas Gas Enterprises (P.) Ltd. (Lessee): - The item in issue is the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oskar Investments Finance Ltd., (4) We have no account of M/s. Kirloskar Investments and Finance Ltd. in our books". The submissions of both the supplier and the lessee was furnished to the assessee for its reply. In its reply the assessee insisted that the transaction was effected and in support had furnished the certificate dated 27-5-1996 of M/s. G.V. Sunder Co. who had carried out physical inspection of the said machinery at the business premises of the lessee. Assessing Officer concluded that because both the supplier and the lessee had denied the transaction, assessee must establish the transaction as genuine. Assessee could not obtain fresh confirmation from the supplier and the lessee. He accordingly concluded that this was not established by the assessee. The lease rental shown in the transaction was Rs. 14,23,314, and adjusting this amount with the depreciation claimed the net amount of Rs. 77,67,685 was treated as undisclosed income. (v) Aero Piston P. Ltd.: (vi) Omega Steel Industries (P.) Ltd. (Lessees): - The item that is covered by transaction No. v is Pit Type Furnace and in transaction No. vi is Flameless Furnace whose purchase values as claimed wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded that the evasive reply of M/s. Aero Pistons (P.) Ltd. should not be the basis for denial of the depreciation claim. On the transaction with M/s. Omega Steel Industries P. Ltd. it was submitted that it had not disputed the existence of the asset and that the transaction could be one of sale by the lessee and lease back to it and therefore, the assessee could not be denied the depreciation as claimed by it. Assessing Officer however was not impressed with these submissions because of the movements of the funds from the assessee to the supplier through the lessee to the assessee back to the extent of 85% to 90%. The lease rental shown in regard to the above for the period ending 31-3-1996 was Rs. 30,19,032 (Rs. 22,57,175 + Rs. 7,61,837). The net amount of Rs. 1,67,08,968 after adjustment of depreciation and the lease rental was stated to be the undisclosed income with regard to the above two transactions. (vii) (viii) Liquid Engineers (Lessee):- M/s. Pentagon Innovative Systems is stated to have supplied various types of Furnaces under cover of their invoice Nos.' 809 to 817 of July 1974 and 1001 to 1008 of 23-7-1995 for a value of Rs. 81,69,700 and Rs. 1,39,40,500, respecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of both the supplier and the lessee were furnished to the assessee and his reply was solicited. The reply by the assessee was that both parties having accepted about the transaction and that the transactions are fully supported by invoices, agreements, etc., but have different submissions that suited them. It was further contended that the submission of M/s. Liquid Engineers was only to avoid their tax liabilities. Assessing Officer was not impressed with the reply and held that ownership continued to remain with the lessee and accordingly, the lease rental of Rs. 30,83,651 was adjusted with the depreciation and the net amount of Rs. 1,90,26,549 was stated to be the undisclosed income. (ix) Wave Current Thermal Processes P. Ltd. (Lessee): - The supplier in this case is M/s. Civic Engineering Contractors who is stated as supplied Furnace under cover of invoice Nos.' 95 and 96 for a value of Rs. 1,02,00,000. In this case too assessee it is noted did not file any confirmation from both the supplier and the lessee. Assessing Officer noted that the movement of money from the assessee to the supplier and through the lessee to the extent of 85% to 90% was the same as in other tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eciation, the net amount of Rs. 31,25,878 was treated as the undisclosed income. (xi) Elcot Electro Ferrites P. Ltd. (Lessee). - Supplier in the instant transaction is M/s. Brilliant Engg. Works who it is claimed had supplied Furnace under cover of invoice dated 12-4-1993 of a value Rs. 1,58,00,000. Assessing Officer had noted that the assessee did not file fresh confirmation from the supplier. Assessing Officer also had noted that the notice sent to the supplier at the address furnished by the assessee came back unserved containing the remark 'not found'. Assessing Officer had noted that Lessee in its letter had stated that the assets under the lease were in their possession and is used by them. Assessee who was confronted with the non-service of the notice on the supplier and the letter from the lessee insisted that the transaction of lease having been confirmed by the lessee together with the asset being in their possession and duly supported by various documents, the transaction should be treated as genuine. Assessing Officer had noted that the reliance of the assessee is on the proforma invoice as given by the so-called supplier which when viewed from the similar movemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iance is placed upon the Supreme Court decision in the case of CIT v. Rai Bahadur Harditroy Motilal Chamaria [1967] 66 ITR 443." 16. Dr. Krishna had indicated in writing that he had no-objection for admission of the additional ground moved by the assessee. Mr. Venkatesan, however, strongly objected to the additional ground raised by the department. The issues involved in the additional ground of appeal as raised by the standing counsel for the department would be dealt with at the appropriate place. 17. The facts as brought out earlier clearly shows that consequent to the search carried at the business premises of the assessee there were no seizure of any money, bullion, jewellary but seizure of certain files and documents that related to the entries made in the books concerning depreciation on assets and income from lease transactions. The department had made block assessment for the block period ending with 31-3-1996 and had treated the depreciation claimed as resulting in suppression of true income which is treated as equivalent to 'undisclosed income'. It is, accordingly, become necessary to bring in the definition of the term 'undisclosed income' as defined in section 158B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the books. He contended that all the lessees and the suppliers are parties with which there was business transactions only and none of them are in any way related to the assessee either by holdings of shares by shareholders or directors or other interests. He pleaded that the assets that were leased out were acquired and were so reflected in the books and therefore, it is not the case of property acquired but not disclosed. He also contended that the income from the lease of the assets is also reflected. He contended that the claim of depreciation is peculiar to the income-tax proceedings only and is governed by the normal procedure of determination of income from business and ranks at par with other expenditure that may or may not be allowed in computing the income from business within the meaning of sections 28 to 43A of the Act. He contended that as on 30-3-1996 the day on which the search was conducted, no entry for depreciation was made in the books because it is usually an entry that is placed in the books towards the end of finalisation of the accounts for it does not involve any cash outgo. He contended that therefore the very basis of initiation of the block assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gas Gas Enterprises, Madras (Lessee) has introduced Mr. C. Radhakrishnan in July '94 at our office. I met him only once on 18-7-1994. I took Mr. C. Radhakrishnan to United Western Bank, Gandhinagar, Bangalore to give introducing him to open an account at the bank at Mr. Mundewadi Managing Director of M/s. Kirloskar Investments and Finance Ltd., Bangalore had given instructions to me to introduce Mr. C. Radhakrishnan to open the account United Western Bank, Gandhinagar, Bangalore on 18-7-1994. Accordingly I have introduced. Q 3. What was the conversation between you and Mr. C. Radhakrishnan and Mr. Venkatesan when they met you at your office on 18-7-1994? A 3. On 18-7-1994 agreement of lease for cylinders for around Rs. 41 lakhs was entered and signed by both of them before me, the copies of which are available with you, i.e., in the seized material. Q 4. Can you produce Mr. C. Radhakrishnan at our office? A 4. Since, I know him through Mr. Venkatesan I will contact Mr. Venkatesan and trace out Mr. C. Radhakrishnan and produce him before you on 22-4-1996. Q 5. In how many cases you have introduced the people to the bank to open accounts for entering into lease agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt-company and had returned the same which the assessee had accounted as lease rental deposit or advance. He further made reference to the terms of the lease agreement and submitted that though it prescribed schedule of payment of lease over a period the entire amount of the lease was collected in one instalment because, it was so routed back to the appellant-company and the lessee is totally made free of any further obligation insofar as the lease agreement is concerned. He insisted that this kind of lump sum receipt though he insisted it is not a receipt at all is never seen in any lease transactions because, if the lessee was in a position to pay to the extent of 85 per cent to 90 per cent of the value of the machine, he may as well end-up making 100 per cent payment. In the eleven cases noted by Assessing Officer invariably the 100 per cent of the value of the so-called asset was shown as moved from the bank account of the assessee to the supplier who after retaining 10 per cent to 15 per cent of it passed the balance of 90 per cent or 85 per cent as the case may be back to the assessee which the assessee had reflected in its books as advance lease rental or deposit towards l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der which undisclosed income detected as a result of search shall be assessed separately at a flat rate of 60 per cent". The memorandum explaining the provisions as was introduced read, "Searches conducted by the Income-tax Department are important means of unearthing black money. However, under the present scheme, valuable time is lost in trying to relate the undisclosed income to the different years. Tax evaders generally manage to divert the focus to procedural and legal issues and often invent new evidence to explain undisclosed income. By the time search related assessments are completed, the effect of the search is considerably diluted. Legal battles continue for many years to decide which income is assessable in which assessment year. No finality is reached and seized assets remain with the department for a long time. In order to make the procedure of assessment of search cases cost-effective, efficient and meaningful, it is proposed to introduce a new scheme of assessment of undisclosed income determined as a result of search under section 132 or requisition under section 132A. Under this scheme, the undisclosed income detected as a result of any search initiated, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the books or documents or transactions would be part of the undisclosed income. We are accordingly of the opinion that the block assessment procedure must be strictly adhered to as intended by the law makers to cover those search cases in which items that represent income based on the entries on the books of account, document, transactions that should have been disclosed as income but not disclosed as income and those items that represent some property the source of which is muffled by means of entries in the books of account, document and transactions and its source that represents some income that is not disclosed. The bare reading of the section as above in our opinion is not intended to cover search cases where the income is shown in the books of account, documents and transactions but certain deductions are claimed either wilfully or otherwise so that the income on which the tax is payable gets reduced. This in our opinion is the reasonable interpretation because, the claim of deduction is not represented by black-money, detection of which, searches are conducted for framing of the block assessment. 22a. The parties before us had placed extensive arguments touching the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been, or would not be, disclosed for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property), then, (A) the Director General or Director or the Chief Commissioner or Commissioner, as the case may be, may authorise any Deputy Director, Deputy Commissioner, Assistant Director, Assistant Commissioner or Income-tax Officer, or (B) such Deputy Director or Deputy Commissioner, as the case may be, may authorise any Assistant Director, Assistant Commissioner or Income-tax Officer, (the officer so authorised in all cases being hereinafter referred to as the authorised officer) to- (i) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such books of account, other document, money, bullion, jewellery or other valuable article or thing are kept; (ii) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (i) where the keys thereof are not available; (iia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h or otherwise deal with it except with the previous permission of such officer and such officer may take such steps as may be necessary for ensuring compliance with this sub-section. Explanation-For removal of doubts, it is hereby declared that serving of on order as aforesaid under this sub-section shall not deemed to be seizure of such books of account, other documents, money, bullion, jewellery or other valuable article or thing under clause (iii) of sub-section (1). 23. Dr. Krishna provided copy of search warrant issued on 30-3-1996 to the appellant and filed it on our records. He produced the original of the warrant which was examined. Mr. Venkatesan filed written submissions with reference to the search warrants. 24. The learned counsel Mr. Venkatesan, submitted that the business premises was searched on 30-3-1996 based on the warrant of search that was issued on 30-3-1996. He submitted that there were seizure of documents on that date combined with issue of prohibitory order under section 132(3) of the Act on the computer and on files that were in the premises. He submitted that the departmental official on the strength of the warrant issued on 30-3-1996 had been visi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch could be so treated if the search is carried to the following day to the date of start of the search proceeding. He pleaded that the date 8-4-1996 on which the Officials revisited the premises was after a gap of about 9 days from 30-3-1996, and again after a gap of 4 days, 33 days, 7 days and 8 days, they visited on 12-4-1996, 14-5-1996, 21-5-1996 and 29-5-1996 respectively. He contended that considering the gap between the dates, it should be held that the dates 8-4-1996 to 29-5-1996 do not represent dates of search conducted. 28. He pleaded that the warrant that authorised the search clearly gave the names of the officers who would carry out the search, other persons accompanying them, the names of panchas and the address where search was to be conducted. In the warrant dated 30-3-1996 that authorised the search indicated the names of the officers and it did not contain the name of Mr. Krishna Murthy, ADI. Mr. Krishna Murthy who was not so authorised by the warrant dated 30-3-1996 entered the premises of the assessee on 8-4-1996 and removed the prohibitory orders placed on the files and the computer by the search party on 30-3-1996 and when he left he had re-imposed the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it being of a dangerous nature'. Further, he also pleaded that the explanation added to section 132(3) by the Taxation Laws (Amendment) Act, 1987, had left clarified that issuing of prohibitory order does not amount to seizure. He, accordingly, contended that the search must be held to have concluded on 30-3-1996. 30. He insisted that because of the Explanation to section 132(3) of the Act, the prohibitory order not amounting to seizure and the officials having left the premises on 30-3-1996, without ceiling it, there is no doubt that the search had concluded on 30-3-1996. He pleaded that every time a search is to be made on any premises it must be backed by an authorisation or warrant. Because, only one warrant was issued on 30-3-1996 and on that date after carrying out seizure of documents, etc., the officials having left the premises, he contended that, it must be held that the on 8-4-1996 and subsequent dates were all visits that does not have the sanction of the Act to seize any documents or issue of any prohibitory order. He insisted that the files stated as seized on 21-5-1996 must be held as files handed over by the appellant-company. 31. He submitted the term "practica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the provisions of section 76 of the Criminal Procedure Code is very categorical on this point. He submitted that this also aptly clamps the issue in favour of the assessee to the effect that the search concluded on 30-3-1996. 33. He pleaded that the records that are not seized but covered by the prohibitory order must be held as examination of the records on their visits from 8-4-1996 to the business premises to which the assessee did not object which examination could have been conducted at their office as well by resorting to seizure on 30-3-1996. He submitted that visits made with a view to examine the records can never be equated with search and seizure. He submitted that examination of the various seized records for arriving at the undisclosed income is always a procedure that is followed from the time the search is carried out. He accordingly contended that what follows the search cannot be equated with the search. He pleaded strongly that the search had come to a close on 30-3-1996. 34. He further pleaded that because there was only one warrant that was issued dated 30-3-1996 and because it must be held to be the only one authorisation and further because it was e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded that items like files and the computer on which prohibitory order was issued, time and again, not being items that could be said to be not 'practicable to seize', the prohibitory order was bad. Further, the lifting of the restraint order and re-imposing it also shows that the authorities were not sure whether such items represented or had any relation to undisclosed income. He further pleaded because the Assessing Officer had proceeded on the basis that the search came to an end on 29-5-1996 by treating the search as in continuation from 30-3-1996, the Assessing Officer by this process had framed the assessment on 30-5-1997 and thus had extended the time limit for framing of the assessment which is one year as allowed by section 158BE of the Act. He, accordingly, insisted that the order passed on 30-5-1997 is bad in law because it was passed beyond the time allowed by the Act. 38. Dr. R.B. Krishna, the standing counsel for the department filed a paper book containing panchanama, statements recorded on various persons and copies of letters from the suppliers, lessees, banks and the assessee. Dr. Krishna for the convenience of the Bench had prepared a statement of chronology o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ient files and documents kept in the file rack kept in the Secretarial Department. The search continued on 21 -5-1996 from 9.40 AM and it was temporarily discontinued at 1.15 PM. On this day 22 more files were seized and there was no restraint order. The search continued on 29-5-1996 and it was finally concluded on that date. 41. Dr. Krishna submitted the warrant that was issued authorising the persons mentioned therein to enter into the premises of the assessee which also carried with it the power to seized material which the search party feels are relevant leading to the undisclosed income and to pass restraint orders on certain other items. The warrant provides the power to the search party to break open the door of any box, locker, safe, almirah and search such other person who is about to enter the business premises which are under search, place various marks of identification and is also required to prepare an inventory of all items that were seized such as money, bullion, jewellery or any other valuable article. He submitted that Mr. Krishnamurthy was one of the authorised officers to carry out the search based on the warrant of search issued on 30-3-1996 and on that basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds, the restraint order was issued, which prevented the assessee from tampering with it. It was out of the records that were covered by the restraint order on 21-5-1996, 22 files were seized. He submitted that the search proceedings that commenced on 30-3-1996 and continued till 29-5-1996, when the intervening periods of searches carried out with gaps, during which time restraint orders were passed, the search should be taken to have concluded on 29-5-1996. He submitted that the competent authority who had authorised the warrant by placing the authorised officers therein, and the authorised officers having executed it properly on 30-3-1996 and on other dates, though the warrant date remained to be 30-3-1996, it has to be treated as a warrant that was in continuation and effectively executed on various dates and finally on 29-5-1996. 44. Dr. Krishna submitted that the last of the authorisation for the search having been executed on 29-5-1996, the Assessing Officer who had to carry out the block period assessment would be allowed one year from the end of the month, namely, May 1996. According to section 158BE of the Act, this one year period would end on 31 -5-1997. He accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 30-5-1997 was well within the time and is, therefore, a valid order. 46. The word 'authorisation' means sanction or approval. This word in section 158BE of the Act used in plural 'authorisations' indicating that there could be more than one sanction or approval. This word is so used for determining the commencement of the period of limitation of framing of the assessment. The term used is the order under section 158BC shall be passed within one year from the end of the month in which the last of the authorisations for search under section 132 was executed. Considering that the word 'authorisations' is used in conjunction with the words last of the', this amplifies the word indicating that authorisation for search would include single or more than one or multiple sanction or approval. 47. The law makers had intentionally used the words 'last of the authorisations' and this intention in our view can be gathered from the provisions of section 132 of the Act that governs the search actions of the revenue department. Section 132(1) of the Act describes the circumstances that may require carrying out search of the premises. Search may be called for because it is felt that, (a) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed, the authorised official if believes that any delay in getting the authorisation may adversely affect the interest of the revenue, he can proceed to carry out the search action on such building, place, vessel, vehicle or aircraft. 49. The official authorised as above finds that it is not possible or practicable to take physical possession of any valuable article or thing and remove it a safe place because of its volume, weight or other physical characteristics or because it may be of dangerous nature, he may serve on the owner who is having possession or control thereof that he shall not remove it without the prior approval of such officer and such order shall have the effect of seizure of any books, documents, money, bullion, jewellery or other valuable article or thing. 50. A Chief Commissioner of Income-tax because of the information in his possession has reason to suspect that any books, documents, money, bullion, jewellery or other valuable article or thing for which the official has been authorised are kept in any building, place, vessel, vehicle or aircraft not mentioned in the authorisation, he can authorise such official to carry out all that he could do as brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne stretch and completed. Because the volume of the items searched is so large compared to the number of officials deputed, it may not be practicable to complete the search in one day and therefore, the officials temporarily stop the search by sealing the premises searched with their lock and seal. The search is started immediately in the following day and completed with the seizure of items that is carried by the party carrying out the search. When the party conducting the search leave the premises searched carrying seized items, it means that other items noted during the search but left behind in the premises are not seized material. 54. The question 'what is the life of the authorisation'?, is of importance. Authorisation may be prepared but it was decided not to act on it, in which case, it had died a natural death. Authorisation issued for a specific person and the officials act on it and perform what all they could do under section 132 of the Act including seizure of books, etc., the purpose of the authorisation is served. Therefore, it could be concluded that the life of the authorisation starts with its issue and ends with its implementation or action by the officials res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d quantum of undisclosed income that was believed to be existing, it cannot be taken to mean that the search is still continuing and it will end only when the person matches the expectations of the officials who initiated the search. This would lead to a situation that once a person is searched, his premises is continuously open for the officers to search despite the fact that the search party is unable to find item that represents undisclosed income. In order to make sure that the authorised officials who are empowered to initiate a search and the officials authorised to search strictly conform to the purpose for which search is permitted under the Act, the preamble provisions, namely, information on which a belief was formed that a person is in possession of books, etc., that show income or property that is not disclosed or that would not be disclosed, has been enacted. The explanation that is added to sub-section (3) of section 132 of the Act is clear to the effect that order restraining the person on whom such an order is served in removing, parting, or otherwise deal with it does not amount to seizure. This further goes to show that as soon as the search party seizes some item ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he official who is to initiate the search does not get that power from the Act after 30-3-1996 because of the foregoing reasons, and consequently he could not have authorised the search after 30-3-1996, and therefore, from 8-4-1996 onwards the actions of the officials based on the authorisation dated 30-3-1996 that was executed on 30-3-1996, could not be equated as search under the Act. We are therefore of the opinion that in the instant case the last of the authorisations was executed on 30-3-1996 and the one year time limit for the framing of the block period assessment starts from the end of the month, i.e., 31-3-1996 and ends with 31-3-1997. Accordingly we are of the opinion that the block period assessment framed on 30-5-1997 is barred by limitation and is therefore, bad in the eye of law and we quash it. 58. Before parting on this issue we may deal with some of the decisions that were relied upon. In Allahabad High Court in Sriram Jaiswal's case had considered the provisions of sections 132(3) and 132(5) of the Act. In this case consequent to the search, the officer concerned passed a restraint order on stocks of articles available in the premises. After about 2 months, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability was far in excess of the seized material, he passed an order retaining the entire assets including the assets that were covered by the restraint order, namely stock of woollen yarn and carpets. The assessee had challenged the order of the AO so made under section 132(5) of the Act with reference to the retention order passed in respect of stock of woollen yarn, carpets, etc. On the above facts, the Hon'ble High Court considering the provisions of section 132(3) of the Act read with the Explanation that was inserted by Direct Tax Laws (Amendment) Act, 1987, which was effective from 1-4-1989, held that the restraint order passed under section 132(3) of the Act does not amount to seizure or attachment. They further held that attaching such assets covered by the restraint order after the passing of the order under section 132(5) of the Act does not arise. They further held that the condition that is preceding to make a seizure or to pass a restraint order is a discovery of undisclosed assets during the search. They further held that no restraint order could be passed when the officer is in doubt of the asset having been disclosed or undisclosed. 60. In the case of Madras H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by considering the fact that from the order so framed only one appeal is provided that is directly to the Income-tax Appellate Tribunal (ITAT for short). He submitted that the provisions contained in Chapter XIVB of the Act are special provisions concerned with the search and seizure issues and this was why a separate assessment was provided for in regard to undisclosed income consequent to the search. 63. Mr. Venkatesan insisted that the assessment that is framed on undisclosed income is separate from the assessment of disclosed income as is made with reference to the other provisions of the Act. In regard to assessment of income not involving the search, appeal is provided to the first appellate authority, namely, the CIT(A) or the DCIT(A) as the case may be and there is a power of revising the order framed by the AO on satisfaction of the condition of the order being erroneous and prejudicial to the interests of revenue and the assessee also being allowed in filing a petition to the CIT for revising the order of assessment framed by the AO. 64. The assessment of undisclosed income being a special provision, the above manner of appeals, revision, etc., are accordingly not app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of hearing to the assessee would be going against the intentment of the law-makers. He submitted that the approval to be granted by the CIT could not be treated as an administrative approval because the assessee is about to be thrust with tax liability on certain items that are being treated as undisclosed income. He submitted that an approval granted by the CIT without granting hearing to the assessee is similar to a person being condemned without hearing him. Therefore, the principles of natural justice come into play in such circumstances and the CIT ought to grant a hearing to the assessee before he grants an approval. He submitted that in this case no such opportunity of hearing was allowed by the CIT. He also furnished a copy of the decision of the Chennai Bench of ITAT in Kirtilal Kalidas Co. v. Dy. CIT [IT Appeal Nos.'93 to 96 (Mad.) of 1997 dated 17-10-1997] where the identical issue of the power of CIT to grant approval of the block period assessment was considered and it was held that the CIT must give opportunity of hearing before granting his approval for the assessment. He submitted that his plea is strengthened by the above decision of the Tribunal. 67. Dr. Kri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tage of issuing the order that the approval of the CIT is required which is merely an administrative sanction. He submitted that this is aptly clear from the decision of the Bombay High Court in Dinshaw Darabshaw Shroff v. CIT [1943] 11 ITR 172 and the Lahore High Court decision in Lachhman Das Mehr Chand v. ITAT [1944] 12 ITR 432. He filed copies of the orders of the Supreme Court in State Bank of Patiala v. S.K. Sharma [1996] 3 SCC 364; State Bank of India v. S.S. Koshal [1994] 2 SCC 468 and Sultansingh v. State of Haryana [1996] 2 SCC 66 for the proposition that the Act does not contemplate any hearing to be granted by the CIT before granting of the approval to the assessment order framed by the AO. He drew our attention to the decision in Grindlays Bank Ltd. v. ITO [1980] 122 ITR 55/3 Taxman 38 (SC) and submitted that the said decision supports his point of view that all that the CIT could grant is approval, but the person to carry out the assessment remains the AO and it is he who has to grant the assessee an opportunity of hearing. For the same proposition, he placed reliance on the Supreme Court decision in Guduthur Bros. v. ITO [1960] 40 ITR 298, Karnataka High Court deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en directed by the provisions contained in section 158BC of the Act to allow opportunity to the assessee. Once this is availed of and the section 158BG of the Act only permits the CIT to grant approval to such an order passed by the AO so that the said order could be issued. In other words, CIT is merely introduced as an administrative head to monitor the progress of the assessment and has no role at all to play in the framing of it. The circular to which the learned counsel for the revenue relied upon in our opinion could not be held to have been after proper appreciation of the provisions of the said section. We are not in a position to appreciate the basis on which the Board chose to issue the circular especially when the section gives the authority to frame the assessment to AO and all that CIT could do is to grant approval so that the order could be issued. If as stated in the said circular the CIT could grant a hearing to the appellant because, he wants to use certain material against the assessee, in that event, the assessment that comes to be passed by AO and CIT which is in clear violation of the provision of section 158BG of the Act that allows the power of framing of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O in imposing the penalty. The court ruled that passing of the penalty order without obtaining the approval of the higher authority concerned was a procedural irregularity not involving the question of jurisdiction and the same can be cured. 74. The question of vested right of the assessee on the procedural matter of granting of approval was examined in Addl CWT v. Jamnalal Ramlal Kimtee [1983] 139 ITR 625/14 Taxman 359 by the Madhya Pradesh High Court and it was held that there could be no vested with reference to the procedural matter. The special leave petition against this decision has been refused which is reported in 75. We may also observe that the law makers wherever there might the need of enforcing the principles of natural justice, they had specifically stated so in the body of the section like they did in section 107 of the Act that read, "except in cases where a decision is given by the Board under sub-section (4) of section 107A, order shall be made by the Income-tax Officer under section 104 unless the previous approval of the Inspecting Assistant Commissioner has been obtained, and the Inspecting Assistant Commissioner shall not give his approval to any order p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment for the only reason that the premises was searched was wrong. Mr. Venkatesan filed an affidavit stating that several oral requests were made to the Assessing Officer for calling the party so that the assessee could cross-examine them but, the Assessing Officer refused the same. Assessing Officer had filed a counter affidavit stating that he does not recollect any oral request from the assessee for calling the persons who had adversely stated and went on to rely on a Supreme Court decision that the burden entirely lies on the assessee when it is stalking a claim of deduction of depreciation to prove it by evidences. 78. Mr. Venkatesan referred to the order he took a strong objection to the observations made by the Assessing Officer in para 1 under the caption 'introduction' with reference to the statement of the Managing Director that the lease transactions having been entered without verifying the actual existence of the assets concerned he has come forward to disclaim the depreciation. He pleaded that Assessing Officer should have reproduced the statement and it would have shown that all that Managing Director stated was that on their own accord they did not physica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r wherever he had noted that the submissions or statements recorded on parties were confronted to the assessee, it was mere confrontation of those statements or what was contained in those statements. At no point of time, the Assessing Officer allowed the assessee any opportunity of examining those parties. He submitted that in the assessment, whether it is the block assessment or the regular assessment that is framed by placing reliance on statements of certain persons, cannot be acted upon, unless the assessee is allowed an opportunity of examining the source of such information. 81. He pleaded that explaining the information confronted to the assessee at no point of time could bring in any satisfactory appreciation by the Assessing Officer. This is because the assessee is being pushed to prove the negative while the easier way is available, which is allowing the assessee to cross-examine the parties. He submitted that these parties had specifically stated that they had no dealings or they had dealings of a different understanding. Unless the assessee is in a position to put to them the various documents that had been executed by them and in a few cases it was a tripartite agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent statement is in direct contradiction to their earlier statement, the assessee not being allowed an opportunity to examine them, is now thrust with a liability which in certain cases is clearly a case of those parties avoiding tax liabilities on themselves. In such a situation and facts, the present order in the light of the Special Bench decision, deserves to be set aside or quashed as void ab initio. 83. Dr. Krishna took a strong objection to the said affidavit and filed a reply from the Assessing Officer who had clearly stated that he does not recollect any oral request having been made by the assessee or the authorised representative for examination of any of the parties like Arrow Piston, Omega Steel Industries and Engineering Industrial Services. The Assessing Officer, further had stated in his reply that he derives support from the decisions of the Supreme Court to the effect that when an assessee claims an expenditure, the burden of proving the expenditure clearly lies on the assessee. He further states that he had made available to the assessee all the materials that were used by him when he framed the assessment order. 84. Mr. Venkatesan submitted that it is necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hysical verification reports have also been made available. 86. Mr. Venkatesan submitted that it is necessary to appreciate between operating lease and a financial lease. He referred to the book on lease financing and hire purchase by IV Edition of 1996. He submitted that the present transactions are all financial lease. He submitted that the assessee enters into a financial agreement so as to fund the lessee so that he can acquire an asset which the assessee could earn lease income. The lessee identifies the supplier and produces the proforma invoice. The assessee on receipt of the above proceeds to approve the financing and in fact pays the supplier. He submitted that during the search that was conducted on the premises of the assessee, it is an accepted position by the appraisal reported himself that no valuable cash or jewellery was seized. The search party found the various files containing the lease agreements and other documents. The assessee has its own appraisers and based on such appraisal, the assessee had proceeded to provide the necessary fund. The assessee had made payment directly to the supplier and all such payments had been cleared through banking channels. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that according to the basics of law of evidence, the written evidences would have mere evidentiary value then oral evidence unless the oral evidence is supported by evidence in some manner which could prove the written agreements as sham. 88. He submitted that it is not the case of the department that any of the lessees or the suppliers are related to the assessee. Rather, it is a finding of the department that in few cases, lessees themselves have created the suppliers in paper. In such a situation, Mr. Venkatesan pleaded that the assessee should not be blamed. He referred to the newspaper reporting about Mr. Tyagaraja Chettiar, who had been declared as an oifender and the fraud committed by him. He submitted that Mr. Tyagaraja Chettair had not only played a fraud on the assessee, but on other financial institutions as well. He pleaded that the department is prepared to believe the submissions of those parties at the cost of the assessee literally arising that the assessee has got nothing to gain by claiming depreciation, because the assessee is providing the finance. He submitted that the assessee had agreed to provide finance in most of these cases only with a view to enh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Assessing Officer with regard to each of the transaction. He submitted that the confirmation was at the time when the lease was entered into or obtained from the various parties, namely the suppliers and the lessees. However, after the search was made on the assessee followed by searches on some of the parties, who were the parties with the assessee, some of them had turned half time only to escape the tax net of the department. Some of these parties had refused to furnish confirmation letters. Some of these parties have denied lease transactions. Some of these parties have stated that they intended to enter into lease transaction, but it did not finally happen. In one case, namely Pentagon Innovative Systems, it stated that the plant and machinery that was purchased from the assessee, was in fact purchases made by the assessee from Liquid Engineers and that the sales were not shown in the turnover of the supplier. He submitted that there is constructive transfer and deliver of the asset, when the lessee acknowledges the receipt of the asset. 91. Mr. Venkatesan referred to the various statements recorded on certain persons and submitted that at most of the time, the depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om them, why is it that it had not disclosed the sale and the profit on the sale of asset. The department did not do so but immediately jumped to the conclusion that the transactions of lease as shown by the assessee are sham transactions. He submitted that with a view to help the lessees and assist them in the finance dealings, the officer of the assessee may have to assist them in the opening of the account. When all the dealings of the bank are done at arms length and it is not the case of the department that all the accounts are operated by the assessee and it is in fact accepted by them that none of the accounts of the suppliers or the lessees are operated by the assessee. In such a situation, the conclusion of the department that the assessee had deliberately entered into sham transaction is clearly baseless. 92. Mr. Venkatesan then carried us through each of the transaction and submitted that all the evidences that are produced clearly show that the transactions are all genuine. He submitted that in the case of New Era Urban Amenities, the lessee and the supplier is one and the same, namely, Vijay Commercial House. Similarly, he drew our attention to each of the transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed to be confronted with the assessee. He submitted that these transactions could be based on one lump sum payment or payments made on quarterly, half-yearly or yearly basis. Merely because the lessees had paid the assessee in lump sum and are not required to make any further payment, it does not lead to the conclusion that, the transactions are sham. He submitted that finance is a very hot commodity and it has various burdens attached to it in the shape on interest, other- charges etc., and at times, it demands high rates of interest and other expenses. Considering the times of needs of such finance, if the parties to the agreement agreed to pay the amount in one lump sum, the assessee could not be stated to have entered into a sham transaction. 93. Mr. Venkatesan submitted that one of the items of undisclosed income is any income based on any entry in the books of account. He submitted that on 30-3-1996, the assessee had not passed any entry of depreciation. The entry for depreciation is passed much later than that date and perhaps as and when the accounts are finally prepared for being audited. He submitted that on this basis, the depreciation claimed by the assessee being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded that the lease rental shown by the assessee is not its income because it is the money that was belonging to the assessee and advanced to the parties, which had come back to it in the shape of lease rental advance or deposit. He had accordingly concluded that the transactions of lease and advances are sham because the returning of the money that was advanced by the assessee could not constitute income of the assessee. If that is to be treated so, then there is no undisclosed income at all because they themselves have set-off the lease rental shown by the assessee and depreciation claimed and are treating the difference of the amount of depreciation over and above the lease rental shown as undisclosed income. Therefore, it was a clear case of wrong application of the provisions of the block assessment and on this basis too, the assessment deserves to be quashed. 97. Dr. Krishna also placed on our records a letter from the Assessing Officer to the suppliers and to the lessees which was dated 30-4-1997 and had prepared a questionnaire which was uniform in all the cases. He conceded that the appellant was not provided with the questionnaire that was sent to the suppliers and lesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transaction. He pleaded that he is not in a position to show with evidence that are available on the records of the department which is sufficient evidence, both direct and circumstantial from which an adverse inference can be drawn against the assessee, because the assessee had in its exclusive possession certain materials which were all for cover up of the claim of false depreciation. He insisted that the assessee knew fully well that the depreciation which it was claiming was sham, which was exclusive to his knowledge and keeping and thus the department was able to establish by support of evidence that are both direct and circumstantial. He submitted that it was in this light that the Supreme Court in CIT v. Best Co. (P.) Ltd. [1966] 60 ITR 11 had held that adverse inference could be drawn where the assessee had suppressed the information. On the power of enhancement and its scope, he placed reliance on the Supreme Court decision in CIT v. Rai Bahadur Hardutroy Motilal Chamaria [1967] 66 ITR 443 and drew our attention to the observations as noted at page 449. He insisted that the Tribunal by having made the first appellate authority has an inbuilt power of revising the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled to depreciation at all. 101. He pleaded that one Mr. V.K. Srinivas, who was the Accountant and the Chief of the business development of the assessee was queried during the course of the search whose statement is placed on the file of statements at pages 20 to 26 and in this statement, the employee had categorically admitted that the various bank accounts were opened by his help by the various suppliers as well as the lessees, only for accommodating the movement of the cheques from the assessee to the supplier, from the supplier to the lessee and from the lessee to the assessee. In this movement what the assessee had received is about 88 per cent of the amount advanced. The various statements recorded of persons, namely the Managing Director of Brilliant Engineering Works, New Era Urban Amenities, Blades India Ltd. and Omega Steel Industries, all clearly go to show that these were all accommodation made to the assessee for which those persons had received some commission. In fact, the parties had categorically denied having had any kind of lease arrangement with the assessee and in a few of the cases, they have categorically stated that what was provided by them was only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the existence of the asset or the capacity of the supplier to meet the ends of the lessee. He submitted that a lessee may come forward for lease arrangement by identifying the supplier and invariably the assessee as a financier would verify the asset in question is less than Rs. 10 lakhs. The lessee Lords Finance Ind. Ltd. in its letter dated 16-5-1997 had stated that there was a proposal for a contract of Rs. 70.67 lakhs but was not completed. It further stated that they had not been leased any machinery and that they had not effected any turnover with the said plant and machinery. It also stated that because there was no advance lease rental or deposit and the explaining the source thereof does not arise and that they have no account in their books of the assessee. It is with reference to this machinery that the assessee had placed reliance on the certificate of inspection by a firm of Chartered Accountants who had certified to the existence of the machinery at the premises of the lessee. The next in the line is a category where the supplier Engineering Industrial Services denied the transaction that involved two different lessees but one of them Omega Steel Ind. (P.) L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,39,40,500 was not included in its sale turnover in 1994-95 and 1995-96 because their auditor had opined that "as on date there is no real intention on the part of M/s. Kirloskar Investments Finance Ltd. to deal in goods and the valuable consideration in full has not been made to flow against such transfer, the transfer is still in the status of gratuitous transfer for right to use. These lease transactions are in reality should be treated as loan transactions only". It accepted payment of Rs. 81,69,700 to Pentagon Innovative Systems from the assessee and the receipt of like amount from Pentagon Innovative Systems by it for the sale it had made earlier to the Pentagon Innovative Systems. It accepted that it had paid the assessee security deposit of Rs. 67 lakhs as agreed to in the lease agreement. It also stated that it had charged off lease payment to its profit and loss account of Rs. 8,27,375 each for 1994-95 and 1996-97 respectively and other than this, there will not be any other ledger account of M/s. Kirloskar Investments Finance Ltd. in its books. In regard to the other transaction involving Rs. 1.39 crores it made similar submissions and stated that it had charged o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e belong to one group. In the case of the former the supplier denied the transaction, the latter however accepted the transaction as concerning commission only. The third Venus Container Links and Gas Gas Enterprises were not traceable and hence the transaction is not confirmed or proved otherwise. In the fourth involving Udyamala Fabs and Lords Finance Ind. Ltd., Udyamala Fabs denied the transaction stating that it does work for BHEL only and the lessee also denied the transaction but accepted that there was a proposal. In the fifth, the supplier Engg. Ind. Services was not traceable as claimed by the said concern that Balasubramanian had been using the name of his concern but he is not connected with it. Omega Steel said that search was made at its premises and it had disclosed 12 per cent commission of the invoice value of Rs. 73.43 lakhs as its profit. Aero Pistons confirmed the lease transactions. In the sixth transaction involving Pentagon Innovative Systems and Liquid Engineers for supply of furnaces both parties confirmed the transaction of sale and purchase and the lease deposit and the amount of lease charged off to the profit and loss account. The seventh transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arved out by the Assessing Officer. In the ninth and the last transaction the lessee has confirmed the transaction and to the existence of the asset and therefore, it could not be held as sham. The provision of the copy of the statement or letters in our opinion is not sufficient opportunity when it is seen in the light of the assessment proceedings as shown in the order sheets. The dates on which hearing was allowed to the assessee are 9-12-1996,17-4-1997,20-5-1997,26-5-1997 and on 30-3-1997, it is stated that assessment completed. On 17-4-1997 it is stated that the case is adjourned to 23-4-1997 but it appears there was no hearing on that place because, there is no such indication on the order sheet. Five of the statements are recorded between March and April '96 but these it appears were not provided to the assessee almost till the stage when the Assessing Officer was about to start framing of the assessment order. All letters to suppliers and the lessees are dated 30-4-1997 and the three suppliers and five lessees replied by about the middle of May '97 and this hardly gave the assessee less than fifteen days to file its reply. The questionnaire that was forwarded to the suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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