TaxTMI 
TaxTMI 
2016 (6) TMI 207
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....t of sale of land situated at S.No.208, at Kalyani Nagar, Yerawada, Pune 411006. 3. Before ACIT, Central Circle-1(1), Pune, Shri Tayyab Habib Chotani had admitted that the transaction in the said seized documents are for the payments made by Shri Shirish C. Karia in cash as well as by cheque to him against the sale consideration of the said plot as per the terms of the sale agreement dated 18-10-1991 and 14-04-1992. Accordingly, the AO of Shri Tayyab Habib Chotani passed on the information to the AO of the assessee. On the basis of the information received, the AO of the assessee issued a notice u/s.158BD on 18-11-2003 to file return within 15 days of the said notice. The assessee, in response to the notice issued u/s.158BD, filed his return of income on 07-01-2004 declaring the total undisclosed income of NIL. 4. During the course of assessment proceedings the AO analysed the seized document Bundle No.1, Page No.18 which is a statement of account showing the account of Shri Tayyab Habib Chotani. The AO asked the assessee to explain the transactions noted on the said seized document. Initially, the assessee stated that the seized documents are not related to him at all. Subsequen....
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....sh was received from the assessee at various occasions directly or through the assesse's employees such as Mr. Nanda, Mr. Sagar etc. on some occasions. (vii) Sometimes the cash was paid by the assessee to other parties also on behalf of Shri Tayyab H. Chotani which are also appearing on the said paper. (viii) That he has still to receive Rs. 35 to 40 lacs which is over and above the payments already made by the assessee which are reflected on the said seized document, i.e. Party No.6, Bundle No.1, Page No.18. Thus, he accepted that he has received Rs. 50,39,695/- in cash and Rs. 40,29,508/- by cheques from the assessee." 5. However, the assessee did not attend before the AO but submitted that Shri Tayyab Habib Chotani does not have any credibility and his statement was recorded under threat and duress. The AO has not tried to find out the properties of Shri Tayyab Habib Chotani to attach against the tax liability. The AO has no right or authority to make any queries to him pertaining to any year before assessment Year 1998-99 according to section 158B of the I.T. Act. No witness attested statement by Shri Tayyab Habib Chotani. The assessee also wanted to cross examine Shri Tayya....
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....record, in particular the statement in which it is categorically mentioned at the end as under : "Whatever stated above is true and correct to the best of my know/edge and belief. The above statement is given without any coercion, threat, pressure etc." It is also noticed that the amount mentioned in the seized document for payment by cheque is also being confirmed by the appellant. It is further noticed that the amount of Rs. 50,74,695/- was considered for addition in the case of Shri Tayyab Chhotani in his Block assessment order dated 28.2.2003 for the same period, out of which the sum of amounts paid by the appellant in instalments of Rs. 25,000/- each for the period September, 1992 to June 1997 which worked out to Rs. 14,50,000/- was reduced; and a net addition of Rs. 36,24,695/- was made as undisclosed income in the case of Shri Tayyab Chhotani. Subsequently, it is seen from the appellate order passed by the CIT(A)-I, Pune dated 13.12.2004, that Shri Tayyab Chhotani has accepted this addition of Rs. 36,24,695/-. Therefore, considering the discussion made above at paras 4 to 6 of this order, the factual matrix regarding the transactions recorded on the seized documents, and ....
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....r issue - of notice u/s.158BD. Therefore, this ground of appeal is also not tenable in law and liable to be dismissed. 16. As already discussed above, in the written submission, issue of satisfaction u/s.158BD has also been raised but no such ground of appeal has been raised. Therefore, this contention is not found to be acceptable. Similarly, in the earlier submission and also submission dated 12.2.2010 it is contended that notice u/s.143(2) was issued beyond a period of one year from the date of filing of return. Again no such ground of appeal was raised by the appellant nor any additional ground has been filed. However, it is noticed that the then CIT(A), vide order sheet entry had asked the Assessing Officer to clarify this fact of issue of notice u/s.143(2) within the prescribed time limit. In response to this, the DCIT, Cir.2, Pune, by his letter dated 1.8.2006, forwarded by the AddI.CIT, Range-2, Pune vide letter dated 3.8.2006, has stated as under: "On verification of case records, it is seen that the assessee had filed block return on 7. 1.2004, whereas first notice u/s. 143(2) was issued on 12.7.2004, which was duly served on the assessee by RPAD on 21.7.2004 on the fo....
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....o have appreciated that a. The addition is made simply on presumptions and surmises without any concrete evidence that the assessee had made the said unaccounted payment to Shri Chhotani. b. The loose paper was found with Shri Chhotani and hence, the presumption u/s 132( 4A) was not applicable in the case of the assessee and accordingly, there was no reason to make the addition on the basis of the said loose paper. c. Simply because Shri Chhotani had accepted the receipt of the amount did not indicate that the assessee had actually made the payment and hence, the addition made on the basis of the statement of Shri Chhotani was not justified. d. No proper opportunity of cross examination was granted to the assessee and therefore, the addition made is not justified at all. 7] The learned CIT(A) has erred in confirming the addition without appreciating the correct facts of the case. 8] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal." 8. The assessee has also taken the following additional ground : "On facts and in law, The appellant submitted that the asst. completed u/s.158BD r.w.s.158BC is bad in law on the ground that the p....
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....t of Rs. 87,19,201.54 including cash as well as cheque. 2. The information covered in the case is passed on to you for necessary action in the case of Shri Shirish C. Karia who is assessed in your jurisdiction. Yours faithfully, Sd/- (K.N. BORA) Asst, Commissioner of Income-tax, (c), Circle-1(1), Pune Encl A/a. Copy submitted to : 1. The Addl. Commissioner of Income-tax, Range-1, Pune for kind information. 2. The Addl. Commissioner of Income-tax, Range-2, Pune for kind information." 13. The Ld. Counsel for the assessee drew the attention of the Bench to page 8 of the paper book which is the seized document from the residence of Shri Tayyab Habib Chotani wherein the cash payments made by the assessee to Shri Tayyab Habib Chotani are recorded. Referring to the said page the Ld. Counsel for the assessee submitted that the word "HHS" has not been deciphered by the revenue. The word "SCK" however, relates to the assessee. He submitted that the cheque amounts mentioned in the said paper tally with the cheques given by the assessee. However, the cash payments are denied by the assessee. 14. So far as the notice issued u/s.158BD is concerned he submitted that the copy of satisfa....
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....th the cheque amount paid by the assessee. Referring to the statement of Shri Tayyab Habib Chotani recorded on oath in response to summon u/s.131 of the Act, a copy of which is placed at pages 11 to 17 of the paper, the Ld. Counsel for the assessee drew the attention of the Bench to page 14 of the paper book and submitted that an amount of Rs. 10,40,000/- has been shown as adjusted against cost of Bungalow No.13 in the proposed Siddharth Estate. Referring to Question No.8 where Shri Tayyab Habib Chotani was asked regarding the receipt of Rs. 35 to 40 lakhs towards the sale of land at Survey No.208, Yerawada from Shri Shirish C. Karia the Ld. Counsel for the assessee drew our attention to the following reply : "A.No.8 I have given this statement to the Income Tax Authorities on 30/3/2001. The amount of Rs. 35 to 40 lakhs was computed on approx. basis as follows : Rs.10,40,000/- adjusted towards bunglow amount not initially agreed upon. Rs.3,00,000/- double entries in cash and cheque mentioned in Q.6 above. Rs.50,000/- double entries in cash and cheque mentioned in Q.6 above." 16. He accordingly submitted that an amount of Rs. 10,40,000/- which was adjusted towards the Bungalow ....
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....148. Therefore, we find merit in the submission of the Ld. Counsel for the assessee that the AO of the searched person himself is not sure as to under which provision of the Act, action should be taken. In our opinion, since the paper was found containing cash payments and cheque payments received by Shri Tayyab Habib Chotani from Shri Shirish C. Karia and Shri Tayyab Habib Chotani has admitted such unaccounted cash as his undisclosed income, therefore, there remains no undisclosed income belonging to any other person other than the searched person. Under these circumstances, the proper course of action here should have been notice u/s.148 and not notice u/s.158BD since the AO of the searched person himself is not sure as to how and under which provisions the notice should be issued. 20. We find the Hon'ble Supreme Court in the case of Manish Maheshwari Vs. ACIT reported in 289 ITR 348 has observed as under : "11. 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 ....