Deputy Commissioner Of Income Tax (Assessment) Special Rangebhilai District Durg Chhattisgarh v. Surendra Kumar Jain (Dead) Through Legal Heirs

HIGH COURT OF CHHATTISGARH, BILASPUR Judgment reserved on 04-07-2024 Judgment delivered on 18-07-2024 ITA No. 6 of 2005 1.Deputy Commissioner of Income Tax (Assessment) Special RangeBhilai District Durg Chhattisgarh. ---- Appellant Versus 1.Surendra Kumar Jain (Dead) Through Legal Heirs 1)Smt. Poonam Jain (Wife) W/o Lt. S.K. Jain, Aged About 70Years R/o House No. B-5, Maharani Bagh, Sriniwaspuri S.O.South Delhi, New Delhi- 65 2)Ms. Geetika Jain (Daughter) D/o Lt. S.K. Jain, Aged About45 Years R/o House No. B-5, Maharani Bagh, Sriniwaspuri, S.O.South Delhi, New Delhi- 65 ---- Respondent ITA No. 7 of 2005 1.Deputy Commissioner of Income Tax (Assessment) Special RangeBhilai District Durg Chhattisgarh Versus ---- Appellant 1.Surendra Kumar Jain (Dead) Through Legal Heirs 1)Smt. Poonam Jain (Wife) W/o Lt. S.K. Jain, Aged About 70Years R/o House No. B-5, Maharani Bagh, Sriniwaspuri S.O.South Delhi, New Delhi- 65 2)Ms. Geetika Jain (Daughter) D/o Lt. S.K. Jain, Aged About45 Years R/o House No. B-5, Maharani Bagh, Sriniwaspuri, S.O.South Delhi, New Delhi- 65 ---- Respondent ITA No. 8 of 2005 1.Deputy Commissioner of Income Tax (Assessment) Special RangeBhilai District Durg ChhattisgarhBhilai District Durg Chhattisgarh 1.Surendra Kumar Jain (Dead) Through Legal Heirs 1)Smt. Poonam Jain (Wife) W/o Lt. S.K. Jain, Aged About 70Years R/o House No. B-5, Maharani Bagh, Sriniwaspuri S.O.South Delhi, New Delhi- 65 2)Ms. Geetika Jain (Daughter) D/o Lt. S.K. Jain, Aged About45 Years R/o House No. B-5, Maharani Bagh, Sriniwaspuri, S.O.South Delhi, New Delhi- 65 ---- Respondent ITA No. 9 of 2005 1.Deputy Commissioner of Income Tax (Assessment) Special RangeBhilai District Durg ChhattisgarhBhilai District Durg Chhattisgarh ---- Appellant Versus 1.Surendra Kumar Jain (Dead) Through Legal Heirs 1)Smt. Poonam Jain (Wife) W/o Lt. S.K. Jain, Aged About 70Years R/o House No. B-5, Maharani Bagh, Sriniwaspuri S.O.South Delhi, New Delhi- 65 2)Ms. Geetika Jain (Daughter) D/o Lt. S.K. Jain, Aged About45 Years R/o House No. B-5, Maharani Bagh, Sriniwaspuri, S.O.South Delhi, New Delhi- 65 ---- Respondent TAXC No. 28 of 2010 1.Deputy Commissioner of Income Tax (Assessment) Special RangeBhilai, District Drug Chhattisgarh. Bhilai, District Drug Chhattisgarh. Versus 1.Surendra Kumar Jain (Dead) Through Legal Heirs ---- Appellant 1)Smt. Poonam Jain (Wife) W/o Lt. S.K. Jain, Aged About 70Years R/o House No. B-5, Maharani Bagh, Sriniwaspuri S.O.South Delhi, New Delhi- 65 2)Ms. Geetika Jain (Daughter) D/o Lt. S.K. Jain, Aged About45 Years R/o House No. B-5, Maharani Bagh, Sriniwaspuri, S.O.South Delhi, New Delhi- 65 ---- Respondents For Appellant (Revenue)Mr. Ramakant Mishra, Dy. Solicitor General with Mr. Rishabh Dev Singh, MsJyoti Singh and Ms Shweta Rai, AdvocatesGeneral with Mr. Rishabh Dev Singh, MsJyoti Singh and Ms Shweta Rai, Advocates For Respondent (Assessee)Mr. Ajay Vohra, Sr. Advocate (through Video Conferencing) with Mr. Vaibhav Shukla, Ms Astha Shukla, Mr. Himanshu Yadu, Mr. Rohit Jain, Mr. Aniket D. Agrawal and Mr. Abhishek SinghviAdvocatesVideo Conferencing) with Mr. Vaibhav Shukla, Ms Astha Shukla, Mr. Himanshu Yadu, Mr. Rohit Jain, Mr. Aniket D. Agrawal and Mr. Abhishek SinghviAdvocates Hon'ble Mr. Justice Goutam Bhaduri &Hon'ble Mr. Justice Sanjay Kumar Jaiswal CAV Judgment Per Goutam Bhaduri, J. ---- Respondents For Appellant (Revenue)Mr. Ramakant Mishra, Dy. Solicitor General with Mr. Rishabh Dev Singh, MsJyoti Singh and Ms Shweta Rai, AdvocatesGeneral with Mr. Rishabh Dev Singh, MsJyoti Singh and Ms Shweta Rai, Advocates For Respondent (Assessee)Mr. Ajay Vohra, Sr. Advocate (through Video Conferencing) with Mr. Vaibhav Shukla, Ms Astha Shukla, Mr. Himanshu Yadu, Mr. Rohit Jain, Mr. Aniket D. Agrawal and Mr. Abhishek SinghviAdvocatesVideo Conferencing) with Mr. Vaibhav Shukla, Ms Astha Shukla, Mr. Himanshu Yadu, Mr. Rohit Jain, Mr. Aniket D. Agrawal and Mr. Abhishek SinghviAdvocates Hon'ble Mr. Justice Goutam Bhaduri &Hon'ble Mr. Justice Sanjay Kumar Jaiswal CAV Judgment Per Goutam Bhaduri, J. 1.Five appeals filed by the assessee against the order passed by theCommissioner of Income Tax (Appeals) {for brevity ‘theCIT(A)’} before the Income Tax Appellate Tribunal, Nagpur (forbrevity ‘the ITAT’). Since common issue was involved, all theappeals were considered and decided by the ITAT by aconsolidated order dated 31-8-2004 by which the appealspreferred by the assessee were partly allowed whereas the appealpreferred by the Revenue was dismissed. Against the order passedby the ITAT, the Revenue preferred these appeals and the assesseehas preferred the cross appeal. Commissioner of Income Tax (Appeals) {for brevity ‘theCIT(A)’} before the Income Tax Appellate Tribunal, Nagpur (forbrevity ‘the ITAT’). Since common issue was involved, all theappeals were considered and decided by the ITAT by aconsolidated order dated 31-8-2004 by which the appealspreferred by the assessee were partly allowed whereas the appealpreferred by the Revenue was dismissed. Against the order passedby the ITAT, the Revenue preferred these appeals and the assesseehas preferred the cross appeal. 2.Since all the appeals are arising out of same order dated 31-8-2004passed by the ITAT they are being heard and decided together bythis common judgment along with cross-objection. passed by the ITAT they are being heard and decided together bythis common judgment along with cross-objection. 3.In order to avoid repetition of facts and for the sake ofconvenience, the documents annexed in ITA No.6 of 2005 arebeing referred : convenience, the documents annexed in ITA No.6 of 2005 arebeing referred : 4.The facts of the case are that : a)The assessment year pertains to 1988-89, 1989-90, 1990-91,1991-92 and 1992-93. Initially Surendra Kumar Jain (sincedeceased) filed the aforesaid returns; the same were accepted;and intimations were issued under Section 143(1)(a) of theIncome Tax Act, 1961 (for brevity ‘the IT Act’).1991-92 and 1992-93. Initially Surendra Kumar Jain (sincedeceased) filed the aforesaid returns; the same were accepted;and intimations were issued under Section 143(1)(a) of theIncome Tax Act, 1961 (for brevity ‘the IT Act’). b)Original assessee derived income from salary as ManagingDirector of M/s Bhilai Engineering Corporation Limited,share profits from firm in which he is partner and othersources.Director of M/s Bhilai Engineering Corporation Limited,share profits from firm in which he is partner and othersources. b)Original assessee derived income from salary as ManagingDirector of M/s Bhilai Engineering Corporation Limited,share profits from firm in which he is partner and othersources.Director of M/s Bhilai Engineering Corporation Limited,share profits from firm in which he is partner and othersources. c)Search and seizure operations were carried out by the CentralBureau of Investigation (for brevity ‘the CBI’) on 3-5-1991at the residential premises of one J.K. Jain at Delhi, who wasan employee of M/s BEC Impex International Pvt. Ltd., inwhich the assessee was also a Director. During such searchoperation certain documents were found apart from Indiancurrency of ₹ 58.5 lacs and foreign currency were found. Itwas also found one Shambhudayan Sharma, HawalaOperator, who had allegedly channelized funds. Photocopiesof seized documents were handed over by the CBI to theIncome Tax Department in February, 1994 for enquiries andinvestigation. Subsequently, the remaining seized documentswere handed over by the CBI to the Directorate of IncomeTax (Investigation) {for brevity ‘the DIT (Inv.)’}, New Delhi,in the month of February, 1995, which was in response toBureau of Investigation (for brevity ‘the CBI’) on 3-5-1991at the residential premises of one J.K. Jain at Delhi, who wasan employee of M/s BEC Impex International Pvt. Ltd., inwhich the assessee was also a Director. During such searchoperation certain documents were found apart from Indiancurrency of ₹ 58.5 lacs and foreign currency were found. Itwas also found one Shambhudayan Sharma, HawalaOperator, who had allegedly channelized funds. Photocopiesof seized documents were handed over by the CBI to theIncome Tax Department in February, 1994 for enquiries andinvestigation. Subsequently, the remaining seized documentswere handed over by the CBI to the Directorate of IncomeTax (Investigation) {for brevity ‘the DIT (Inv.)’}, New Delhi,in the month of February, 1995, which was in response to d) e) f) ITA No.6 of 2005 & other connected matterswarrant of authorisation issued by the DIT (Inv.) underSection 132A of the IT Act. On 2-3-1995 statement of J.K.Jain was recorded by the DDIT (Inv.) under Section 131 ofthe IT Act. Letter sent by the DDIT (Inv.), Delhi, to theDCIT (Deputy Commissioner of Income Tax), SpecialRange, Bhilai, who is the Assessing Officer (for brevity ‘theAO’) for initiating reassessment proceedings. The relevantseized documents and set of papers were sent to theCommissioner of Income Tax (CIT), Jabalpur on 1-3-1995.The documents so received by the AO at Bhilai included onespiral bound diary, which was marked as MR-71/91. In thesaid diary certain receipts and disbursement of money wasfound to be recorded. Statement of J.K. Jain from whosepossession the said diary found was recorded by the CBI aswell as Additional DIT (Inv.), New Delhi and according tothe AO the said diary found in possession of J.K. Jainbelonged to the assessee S.K. Jain and was maintained as perdirection of the assessee. Subsequently, the directions were received from the higherauthorities. On the strength of the photocopies of aforesaiddocuments, notices were issued by the AO under Section 148of the IT Act for the assessment year 1988-89 to 1992-93.The proceeding under Section 143(3) read with Section 147of the IT Act were completed and following income wasassessed as under : g) h) Being aggrieved by the assessment order the assesseepreferred an appeal before the CIT(A) on various groundsincluding the validity of reassessment proceedings. TheCIT(A) after hearing the parties vide its order upheld theorder passed by the AO under Section 143(3) read withSection 147 of the IT Act for all the years underconsideration except allowing the relief to the assessee on theissue relating to the levy of interest under Section 139(8) andSection 217 of the A.Y. 1988-89. g) h) Being aggrieved by the assessment order the assesseepreferred an appeal before the CIT(A) on various groundsincluding the validity of reassessment proceedings. TheCIT(A) after hearing the parties vide its order upheld theorder passed by the AO under Section 143(3) read withSection 147 of the IT Act for all the years underconsideration except allowing the relief to the assessee on theissue relating to the levy of interest under Section 139(8) andSection 217 of the A.Y. 1988-89. Feeling aggrieved by the order of the CIT(A) the assesseepreferred appeal for the assessment year under considerationand the Revenue had also preferred cross appeal for AY1988-89 bearing ITA No.585/Nag/97. The ITAT after goingthe facts and material available on record held that theassessment was completed by the AO on the dictates ofhigher authorities without application of mind whereas theITAT also dismissed the contention of the assessee forinitiation of reassessment proceeding and held thatreassessment was not done by the AO as per the directions/dictates of the superior authority. Consequently, assessment 5. ITA No.6 of 2005 & other connected matters in the assessment years was annulled, however, reassessmentwas upheld. g)Against the order passed by the ITAT dated 31-8-2004 theRevenue has preferred the present appeals under Section 260-A of the IT Act wherein the following substantial question oflaw was framed by this Court on 13-12-2013 :Revenue has preferred the present appeals under Section 260-A of the IT Act wherein the following substantial question oflaw was framed by this Court on 13-12-2013 : i) Whether in the facts and circumstances ofthe case, the order of the Assessing Officercan be said to have been passed on thedictates/ directions of the superiorauthorities; ii)Even if it is taken that the order waspassed on the dictates/directions of thesuperior authorities, then whether the ordercould be set aside by the Tribunal as it hasbeen approved and validated by the order ofthe Commissioner of Income Tax (Appeals); iii)Whether the Tribunal, having upheldinitiation of reassessment proceedings, waslegally justified in not remanding the caseback to the Assessing Officer for framingfresh assessment. and; in respect of the cross-objection filed on behalf of the assessee on dated 8-7-2014 the following substantial questionof law was framed by this Court on 17-9-2014 : 1) Whether on the facts and circumstances ofthe case, the Tribunal erred in law inupholding initiation of reassessmentproceedings under Section 147/148 of theAct ? (i)Learned counsel appearing for the Revenue would submitthat though the finding has been recorded by the ITAT that theassessment was carried out at the direction/dictates of the higher ITA No.6 of 2005 & other connected matters authorities but perusal of the assessment folder; order sheet; andthe discussion it do not indicate the same. He would furthersubmit that in the Income Tax Department there are various wingswhich functions independently and at some times in consortiumwith others. He would submit that it is quite normal that theinformation would travel from wing to other by the officers thatcannot be lead to show that the AO was working under the dictatesof higher authorities. (ii)Learned counsel would submit that the AO being the partand parcel of the Income Tax Department has to take cognizanceof the material supplied by the assessee for verification during thecourse of scrutiny proceedings and in the instant case thereassessment proceeding was initiated on the instance of materialgathered which was collected by the CBI during the course ofsearch conducted by them in connection with transfer of money toIndia through Hawala, therefore, unless such information receivedat higher end or transmitted and coordination is maintained theDepartment cannot function and in the instant case the similarthings happened. (ii)Learned counsel would submit that the AO being the partand parcel of the Income Tax Department has to take cognizanceof the material supplied by the assessee for verification during thecourse of scrutiny proceedings and in the instant case thereassessment proceeding was initiated on the instance of materialgathered which was collected by the CBI during the course ofsearch conducted by them in connection with transfer of money toIndia through Hawala, therefore, unless such information receivedat higher end or transmitted and coordination is maintained theDepartment cannot function and in the instant case the similarthings happened. (iii)Learned counsel would also submit that the Supreme Courtin the matter of Vineet Narain & Others v Union of India &Another[1]had directed the Government agencies to fairly, properlyand fully investigate into every accusation against every person and all the agencies were directed to timely report to the Supreme1WP(Cri.) No.340-343 of 1993 (dated 30-1-1996) ITA No.6 of 2005 & other connected matters Court regarding the progress achieved in the matter ofinvestigation, therefore, the entire proceeding of the CBI and theIncome Tax Department was being monitored by the SupremeCourt. Under the circumstances the AO, who was takingcognizance of the development has to gather information and wasrequired to be in liasioning with the officers including higher one.Thus, the correspondence of coordination in between the officerswere made and no extraneous inference or apprehension isrequired to be drawn and the assessment cannot be said to becompleted on the direction/dictates of higher authorities. (iv)Learned counsel would submit that the conclusion reachedby the ITAT is based on the irrelevant considerations and inferencehas been drawn and on presumption the findings have beenrecorded. He would next submit that since the reassessmentproceeding was one of the action in connection with Hawalatransaction and parallel proceeding going on with other authoritiesas per the IT Act, as such, the parallel proceeding carried out bythe other officers of the Department cannot be linked with thereassessment proceedings. Consequently, the circumstances itselfwould show that there is no instance of any dictation to frame theassessment in a particular way. (v)Learned counsel would submit that even if it is found thatthe AO was acting on the dictates/directions of the superiorauthorities then the only course left to the ITAT was to remand ITA No.6 of 2005 & other connected matters back the case to the AO for conducting fresh assessment and thequestion regarding initiation of reassessment proceeding hasattained finality and the direction of reassessment cannot be saidto be as per the dictates of superior authorities. He would submitthat even if it is found that on the basis of various correspondence,which is produced by the ITAT the proper course could have beento consider the reassessment order of merits and after consideringthe material available on record, the ITAT should have passed theorder on merits before giving factual finding and alternativelyought to have remanded back the matter to the AO for conductingthe assessment afresh. He would also submit that in the instantcase since no explanation has been given by the assessee withrespect to the proposed addition, but on the contrary raisedobjection and avoided the reassessment proceedings from beingproceeded for framing of assessment. As such, the addition madeby the AO ought to have been upheld by the ITAT instead ofannulling the same. (vi)Learned counsel would submit that there is a differencebetween lack of jurisdiction and irregular exercise ofpower/jurisdiction by the AO. If the jurisdiction exercised by theAO was held to be proper, holding the reassessment proceedingsto be valid then by no stretch of imagination the order passed bythe AO can be annulled and the order could have been annulledonly on the ground when it lacks of jurisdiction. In the instantcase, admittedly, the AO had the entire jurisdiction, therefore, the ITA No.6 of 2005 & other connected mattersquestion of law is required to be answered in favour of theRevenue. (vii) To buttress his contention, learned counsel would placereliance upon the decision rendered by the Supreme Court in thematter of Omar Salay Mohamed Sait v Commissioner of IncomeTax[2], decision rendered by the High Court of Allahabad in thematter of S.K. Gupta & Co. v Income Tax & Anr.[3] and the HighCourt of Bombay in the matter of Commissioner of Income Tax vBharatkumar Modi & Ors.[4]and would submit that when thefinding of fact can be interfered when it is based on conjecturesand surmises or improper rejection of relevant evidence, is liableto be interfered with in reference jurisdiction. Further, the HighCourt of Allahabad in S.K. Gupta & Co. (supra) would submit thatwhen the AO had reason to believe under Section 147 that anyincome chargeable to tax and has escaped in any assessment yearhe may assess or reassess such income and AO should have thereason to believe and sub-section (2) of Section 148 provides thatbefore issuing a notice for an intended assessment/reassessmentunder Section 147, the AO shall record his reason for doing so andin the case at hand reasons have been recorded the same shouldnot have been interfered. (viii) Further reference is made to the decision to the decisionrendered by the High Court of Bombay in the matter ofBharatkumar Modi (supra) to submit that when the proper 2(1959) 37 ITR 151 (SC) 3(2001) 165 CTR (All) 565 = (2000) 246 ITR 560 (All) 4(2000) 164 CTR (Bom) 273 = (2000) 246 ITR 693 (Bom) = (2000) 113 TAXMAN 386 (Bom) ITA No.6 of 2005 & other connected mattersopportunity of hearing has been given to the assessee the entireannulment of assessment cannot be justified and even if certainwrong is committed the entirety of the assessment order cannot besaid to be annulled. Therefore, the question of law is required tobe answered in favour of the Revenue. Learned counsel wouldalso place reliance upon the decision rendered by the SupremeCourt in the matter of Commissioner of Police, Bombay vGordhandas Bhanji[5]. He would submit that under thecircumstances at the most the case required to be remanded back. (A)Learned counsel appearing for the assessee, ex-adverso,would submit the ITAT has passed its order after perusal of thedocuments annexed and material available on record, which onlyshows that reassessments were completed on the directions/dictates of the higher authorities, which is not permissible in law.He would submit that starting of reassessment was also at thedictates of higher officials, which could not have been done. It issettled proposition of law that the order of assessment must bepassed by the AO, based on its independent application of mind,uninfluenced by the directions/dictates by any other authority andan order passed on the dictates of any superior authority would bea null and void and non est. (B)Learned counsel would further submit that the ITAT haddirected to place on record the correspondence of the Revenue andwhen the same were produced the ITAT came to a conclusion that ITA No.6 of 2005 & other connected matters (B)Learned counsel would further submit that the ITAT haddirected to place on record the correspondence of the Revenue andwhen the same were produced the ITAT came to a conclusion that ITA No.6 of 2005 & other connected matters the proceedings relating to case of assessee were illegallyconducted and influenced by the higher authorities, who had nojurisdiction to do so under the law. Referring to various dates,learned counsel would submit that under Section 148 of the IT Actproceedings were initiated by the AO vide its order dated 30-3-1995 and it was only on the basis of part of seized documentswhich was considered relevant by the DDIT (Inv.) and in theaforesaid letter dated 20-3-1995, AO was also directed to startreassessment proceeding, therefore, there was no option left withthe AO. On the contrary, the AO, who is the quasi judicialauthority and is required to act independently and judiciously,could not have done so. (C)Learned counsel would submit that the return was filedunder protest in June, 1995 and the entire denial was made withrespect to any action or nexus with the seized documents.Thereafter, the Investigation Department at Delhi illegally usurpedthe power over the entire assessment proceedings to the completeexclusion of the AO, who was placed at Bhilai, Durg and it is theDelhi Investigation Department recorded various statements onwhich the reassessment was thought for and ordered. He wouldalso submit that in terms of Section 132A(3) read with Section132(9A) of the IT Act, the DDIT (Inv.) was the requisition officerand was required to transfer the documents requisitioned to theAO within the statutory period of 15 days and subsequent to it theauthority was seized to exercise its jurisdiction. ITA No.6 of 2005 & other connected matters(D)Reference is made to the decision rendered by the SupremeCourt in the matter of CIT v K.V. Krishnaswamy Naidu[6], tosubmit that the authorised officer, the Director (Inv.), was onlyconfined to carry out search and seizure, but was not the Income-Tax Officer who could pass an order under sub-section (5) ofSection 132 and could not retain the seized document beyond 15days. He could not have moved a proposal under sub-section (8)for further retention of documents beyond 180 days. Learnedcounsel would submit that since the only part and parcel ofdocuments were sent to the AO on 20-3-1995 though it wasreceived on 7-2-1995, the statutory period of 15 days had passed.He would submit that the DDIT (Inv.) forwarded the documentrequisitioned from the CBI under Section 132A much after expiryof statutory period of 15 days provided under Section 132(9A) ofthe IT Act and that too only part of the documents have beenforwarded and the DDIT (Inv.) got involved in the matter ofinvestigation, who had no jurisdiction. (E)Learned counsel would submit that during the period from6-6-1995 to December, 1995 the Investigation Department, Delhi,continued to illegally exercise jurisdiction over the entireassessment proceedings to complete exclusion of the AO. Hewould submit that during the period as has been reflected in theorder of the ITAT, the AO was not even involved in the assessmentproceeding, but was controlled by the Investigation Department at ITA No.6 of 2005 & other connected matters Delhi. He would submit that record of assessment proceedingbefore the AO from 5-2-1996 to 16-4-1996 were requisitioned andwas produced and the order sheet would show that each and everystage of assessment proceedings, the AO received instructions/directions from the Investigation Department at Delhi. Even forgrant of adjournment the instruction was sought for. Furtherreference is made to letter dated 30-1-1996 written by the AOaddressed to the CIT, Jabalpur, who is the administrative head ofthe AO to say that it is clearly been established that even thecross-examination was not allowed at the behest of the directionof the investigation agency at Delhi, therefore, the AO wascompletely working under the instructions of the higherauthorities. ITA No.6 of 2005 & other connected matters Delhi. He would submit that record of assessment proceedingbefore the AO from 5-2-1996 to 16-4-1996 were requisitioned andwas produced and the order sheet would show that each and everystage of assessment proceedings, the AO received instructions/directions from the Investigation Department at Delhi. Even forgrant of adjournment the instruction was sought for. Furtherreference is made to letter dated 30-1-1996 written by the AOaddressed to the CIT, Jabalpur, who is the administrative head ofthe AO to say that it is clearly been established that even thecross-examination was not allowed at the behest of the directionof the investigation agency at Delhi, therefore, the AO wascompletely working under the instructions of the higherauthorities. (F)Learned counsel would further submit that the letter dated20-3-1995 would show that selectively papers were sent by theInvestigation Department, Delhi, therefore, no independentapplication of mind by the AO was applied about relevancy ornon-relevancy of such paper. He would submit that at theinstructions of superior officers of the CIT (A), the reopening wasmade and even the reasons were worked out and the note sheetwould show, which is apparent from the order of the ITAT, that theAO did not form any opinion to reopen and the action ofreassessment was suggested. ITA No.6 of 2005 & other connected matters(G)Learned counsel would submit that as per Section 153A ofthe IT Act (as then prevailing was) the reassessment should havebeen completed within two years and in the instant case theassessment year 1988-89 to 1992-93 continuously and noticeunder Section 148 was issued on 30-3-1995 so the proceedings ofassessment further would be barred after March, 1997. Therefore,as on today this Court cannot lift the bar of limitation by orderingde novo reassessment afresh. He would submit that the Tribunalhaving held the initiation of reassessment was valid iscontradictory inasmuch as the original inception of reassessmentwas bad in law, therefore, this cannot cure the defect on behalf ofthe Revenue and accordingly question No.3 should be answered infavour of the assessee. (H)In support of his contention, learned counsel would placereliance upon the decisions rendered in the matters of VineetNarain (supra), Sirpur Paper Mill Ltd. v Commissioner ofWealth-Tax, Andhra Pradesh[7], The Purtabpur Company Ltd. vCane Commissioner of Bihar and Others[8], State of U.P. v.Maharaja Dharmander Prasad Singh[9], State of NCT & Anr. vSanjeev Bittoo[10], Jawahar Lal v Competent Authority, Range-II,New Delhi[11]Sheo Narain Jaiswal v ITO[12],Yashwant Talkies v 7(1970) 1 SCC 795 : (1970) 77 ITR 68AIR 1970 SC 18969(1989) 2 SCC 50510 AIR 2005 SC 20808AIR 1970 SC 18969(1989) 2 SCC 50510 AIR 2005 SC 2080 11 137 ITR 605 (Del) 12 ITO 176 ITR 352 CIT[13], CIT v T.R. Rajkumari[14], Rajputana Mining Agencies vITO[15], and Rajesh Jhaveri Stock Brokers (P) Ltd. v ACIT[16]. We have heard learned counsel appearing for the parties andperused the record. 7(1970) 1 SCC 795 : (1970) 77 ITR 68AIR 1970 SC 18969(1989) 2 SCC 50510 AIR 2005 SC 20808AIR 1970 SC 18969(1989) 2 SCC 50510 AIR 2005 SC 2080 11 137 ITR 605 (Del) 12 ITO 176 ITR 352 CIT[13], CIT v T.R. Rajkumari[14], Rajputana Mining Agencies vITO[15], and Rajesh Jhaveri Stock Brokers (P) Ltd. v ACIT[16]. We have heard learned counsel appearing for the parties andperused the record. The assessment was of the year 1988-89, 1989-90, 1990-91, 1991-92 and 1992-93. The return of the income was filed by theassessee and were accepted by the Revenue and the intimationwas issued under Section 143(1)(a) of the IT Act for the aforesaidyears. A different search and seizure operation was carried out bythe CBI on 3-5-1991 in the residential premises of J.K. Jain atNew Delhi, who was an employee of M/s BEC ImpexInternational Private Ltd., wherein S.K. Jain was one of theDirector. Some of the loose sheets and diary were seized by theCBI. The AO, who is at Bhilai, Chhattisgarh, initiated theproceedings under Section 148 vide notice dated 30-3-1995 forthe assessment years 1988-89 to 1992-93. In response to thenotice issued under Section 148 of the IT Act, fresh return underprotest were filed by the assessee on 6-6-1995. As has been thefact findings have been recorded that in between 6-6-1995 toDecember, 1995 the Investigation Department at Delhi issuednotice to the assessee and other persons and recorded theirstatements, which would show that they were in hold ofdocuments which were shared by the CBI. 13 157 ITR 103 14 96 ITR 78 15 118 ITR 58516 284 ITR 59316 284 ITR 593 9. ITA No.6 of 2005 & other connected matters Since the inception of case hinges upon the reassessment order thequestion of law, which is framed at the instance of the assesseewould have a substantial effect to the entire germane. Therefore,we would first go into whether the initial reassessment proceedingitself was proper or not. As would be evident after the initialassessment which carried out from 1988-89 to 1992-93 and wasaccepted all proceedings at a dormant stage. The reassessmenttriggered when the CBI search was made at others premises, notthe assessee and certain documents were found at the place of oneJ.K. Jain. This led to investigation and filing of charge sheet incriminal cases. Few of documents so seized during search andseizure by the CBI were later on handed over to the Income TaxDepartment at Delhi. The Revenue after receiving documents,thought about reassessment at the relevant time. The AO was atBhilai, not at New Delhi, so whether the AO had applied its mindindependently to reassess ? The correspondence which has beenreferred to by the ITAT in its order reflect that the Governmentagencies were under the impression that money has beenswindled, which led to criminal cases. All these state of affairsremained stagnant and the Income Tax Department did not put uphammer on it. Subsequently, a PIL was filed by a journalistVineet Narain after which the issue again caught fire and all issuescame to fore. 10.In respect of subsequent criminal cases so filed the entire issue ofcriminality and involvement of people was challenged and were 10.In respect of subsequent criminal cases so filed the entire issue ofcriminality and involvement of people was challenged and were ITA No.6 of 2005 & other connected mattersadjudicated upon. On one of such issue the Supreme Court in thematter of Central Bureau of Investigation v V.C. Shukla &Others[17] held that prosecution intended to prove the abetment ofJains’. Jains’ committing the offence does not arise in such case.Reference of the same is relevant in the instant case as the nucleusof all facts leads to a diary bearing MR 71/91 was deliberated.Therefore, prejudice cannot be drawn on the submission of theRevenue that the proceeds of crime as money was received and itcame to the hands of the assessee was not shown in theassessment. Such receipt of money was required to beindependently proved. Though we are not in hold to deliberate onsuch facts, but to understand the connectivity or gulf it would benecessary to do so to test the mind of the AO, as to whether suchreassessment order was independent by the AO at Bhilai or theinvestigation Department of Income Tax at Delhi had a dominoeffect. 11.The Supreme Court in the matter of Vineet Narain (supra), on thesame subject, reiterated thus at as paras 3 & 4 : 3) The facts and circumstances of the presentcase do indicate that it is of utmost publicimportance that this matter is examinedthoroughly by this Court to ensure that allgovernment agencies, entrusted with the duty todischarge their functions and obligations inaccordance with law, do so, bearing in mindconstantly the concept of equality enshrined in theConstitution and the basic tenet of rule of law:“Be you ever so high, the law is above you.”Investigation into every accusation made against ITA No.6 of 2005 & other connected matters each and every person on a reasonable basis,irrespective of the position and status of thatperson, must be conducted and completedexpeditiously. This is imperative to retain publicconfidence in the impartial working of thegovernment agencies. 4) In this proceeding we are not concerned withthe merits of the accusations or the individualsalleged to be involved, but only with theperformance of the legal duty by the governmentagencies to fairly, properly and fully investigateinto every such accusation against every person,and to take the logical final action in accordancewith law. 12.Reading of both the principles laid down by the Supreme Court, itis manifest that merits of the accusations would not give leverageto the authorities, but performance of the legal duty by theGovernment agencies to fairly, properly and fully investigate intoevery such accusation against every person, and to take the logicalfinal action in accordance with law. 13.Section 132A(3) of the IT Act would purport that where any booksof account, other documents or assets have been delivered to therequisitioning officer, the provisions of sub-sections (4-A) to (14)(both inclusive) of Section 132 and Section 132B shall, so far asmay be, apply as if such books of account, other documents orassets had been seized under sub-section (1) of Section 132 by therequisitioning officer from the custody of the person referred to inclause (a) or clause (b) or clause (c), as the case may be, of sub-section (1) of Section 132A and as if for the words "the authorisedofficer" occurring in any of the aforesaid sub-sections (4-A) to(14), the words "the requisitioning officer" were substituted. ITA No.6 of 2005 & other connected matters 14.Section 132(9A) of the IT Act speaks that where the authorisedofficer has no jurisdiction over the person referred i.e. assesseeherein all the goods seized shall be handed over by the authorisedofficer to the Assessing Officer having jurisdiction over suchperson within a period of fifteen days (as then prevailing was)from the date on which the last of the authorisations for searchwas executed. 15.For brevity Section 132(9A) of the IT Act (as then prevailing was) ITA No.6 of 2005 & other connected matters 14.Section 132(9A) of the IT Act speaks that where the authorisedofficer has no jurisdiction over the person referred i.e. assesseeherein all the goods seized shall be handed over by the authorisedofficer to the Assessing Officer having jurisdiction over suchperson within a period of fifteen days (as then prevailing was)from the date on which the last of the authorisations for searchwas executed. 15.For brevity Section 132(9A) of the IT Act (as then prevailing was) is reproduced hereunder : (9A) Where the authorised officer has nojurisdiction over the person referred to in clause(a) or clause (b) or clause (c) of sub-section (1),the books of account or other documents, or assetsseized under that sub-section shall be handed overby the authorised officer to the Assessing Officerhaving jurisdiction over such person within aperiod of fifteen days of such seizure andthereupon the powers exercisable by theauthorised officer under sub-section (8) or sub-section (9) shall be exercisable by such AssessingOfficer. 16.In the instant case certainly the Investigating Officer, who seized the goods on which the reassessment proceeded, did not share itwith the AO at Bhilai within a period of fifteen days. TheSupreme Court in the matter of K.V. Krishnaswamy Naidu (supra) held thus : Having heard the counsel for the parties and inview of the provisions of sub-section (9-A) ofSection 132 of the Income Tax Act, 1961, we arein agreement with the judgment of the High Courtreported as K.V. Krishnaswamy Naidu & Co. v.CIT [(1987) 166 ITR 244 (Mad)] that the ITA No.6 of 2005 & other connected matters Assistant Director of Inspection who was theauthorised officer for the purposes of carrying outsearch and seizure but was not the Income TaxOfficer who could pass an order under sub-section(5) of Section 132 could not retain the seizeddocuments etc. beyond 15 days and, therefore, hecould not moot a proposal under sub-section (8)for further retention of the documents beyond 180days. This appeal is accordingly dismissed withcosts. 17.The fact as has been shown in the order the part of the documents were sent to the AO on 20-3-1995 though it was received by himon 7-2-1995 i.e. beyond the statutory period of fifteen days andthe DDIT (Inv.) forwarded the documents requisitioned from theCBI under Section 132A much after expiry of statutory period offifteen days provided under Section 132(9A) and the part ofdocuments were sent, therefore, the very inception of theproceeding in its entirety appears to be under the control of theDDIT (Inv.). 18.In the cross objection filed by the assessee, the substantialquestion of law was framed by this Court on 17-9-2014 thatwhether the ITAT erred in law in upholding initiation ofreassessment proceeding under Section 147/148 of the IT Act ?question of law was framed by this Court on 17-9-2014 thatwhether the ITAT erred in law in upholding initiation ofreassessment proceeding under Section 147/148 of the IT Act ? 19.Perusal of the order of the ITAT would show that during the courseof hearing before the ITAT the correspondence between the AOand the higher authorities including the DDIT (Inv.), New Delhi,and CIT, Jabalpur, who was the administrative controller of theAO of Bhilai, prior to date of initiation of reassessmentproceeding were called for. The said proceeding was not providedof hearing before the ITAT the correspondence between the AOand the higher authorities including the DDIT (Inv.), New Delhi,and CIT, Jabalpur, who was the administrative controller of theAO of Bhilai, prior to date of initiation of reassessmentproceeding were called for. The said proceeding was not provided 20. ITA No.6 of 2005 & other connected matters to the assessee as it was claimed to be confidential, however,before the ITAT when the correspondence was placed they wereallowed to be inspected by the assessee. 20. ITA No.6 of 2005 & other connected matters to the assessee as it was claimed to be confidential, however,before the ITAT when the correspondence was placed they wereallowed to be inspected by the assessee. Perusal of the record and order would show that the documentsreceived by the AO from the DDIT (Inv.), New Delhi, includingthe documents seized from J.K. Jain, report of CBI, appraisalreport ADIT, New Delhi, was not provided to the assessee andaccording to the order of the ITAT, the department filed copies ofsuch entire material along with factual clarification in writing. The ITAT while formulating whether the AO acted independentlyor at the behest of his superiors or at the dictation/ direction isessentially a question of fact. The Supreme Court in the matter ofSirpur Paper Mill Ltd. (surpa) while dealing with Section 25 ofthe Wealth Tax Act (Corresponding to Section 264 of the Act) setaside the order passed by the Commissioner of Wealth Tax on theground that the CWT sought instructions from the Central Board.The Court held that the power conferred under Section 25 of theWealth Tax Act was not administrative power but quasi judicialpower and the Central Board could not give directions to CWT inexercise of such quasi judicial powers. In Sirpur Paper Mill Ltd.(supra) the Court held thus at paras 4, 11 & 12 : 4) Section 25 of the Wealth Tax Act providesinsofar as it is material : "(1) The Commissioner may, either of hisown motion or on application made by an ITA No.6 of 2005 & other connected matters assessee in this behalf, call for the record ofany proceeding under this Act in which anorder has been passed by any authoritysubordinate to him, and may make suchinquiry, or cause such inquiry to be made,and, subject to the provisions of this Act,pass such order thereon, not being orderprejudicial to the assessee, as theCommissioner thinks fit : The power conferred by Section 25 is notadministrative : it is quasi-judicial. The expression"may make such inquiry and pass such orderthereon" does not confer any absolute discretionon the Commissioner. In exercise of the power theCommissioner must bring to bear an unbiasedmind, consider impartially the objections raisedby the aggrieved party, and decide the disputeaccording to procedure consistent with theprinciples of natural justice : he cannot permit hisjudgment to be influenced by matters notdisclosed to the assessee, nor by dictation ofanother authority. Section 13 of the Wealth TaxAct provides that all officers and other personsemployed in the execution of this Act shallobserve and follow the orders, instructions anddirections of the Board. These instructions maycontrol the exercise of the power of the officers ofthe Department in matters administrative but notquasi-judicial. The proviso to Section 13 issomewhat obscure in its import. It enacts that noorders, instructions or directions shall be given bythe Board so as to interfere with the discretion ofthe Appellate Assistant Commissioner of WealthTax in the exercise of his appellate functions. Itdoes not, however, imply that the Board may giveany directions or instructions to the Wealth TaxOfficer or to the Commissioner in exercise of hisquasi-judicial function. Such an interpretationwould be plainly contrary to the scheme of the Actand the nature of the power conferred upon theauthorities invested with quasi-judicial power. 11) It is unnecessary to refer to any more entriesmade in the case sheet maintained by theCommissioner of Wealth Tax. From the inception ITA No.6 of 2005 & other connected matters 11) It is unnecessary to refer to any more entriesmade in the case sheet maintained by theCommissioner of Wealth Tax. From the inception ITA No.6 of 2005 & other connected matters of the proceedings the Commissioner of WealthTax put himself in communication with the Boardof Central Revenue and sought instructions fromthat authority as to how the revision applicationsfiled before him should be decided. He exercisedno independent judgment. The Commissioner alsorecorded that the case did not require a personalhearing but since the Director of the Companyhad made a personal request for an interview itwas "thought desirable" from "the point of viewof public relations to give an interview." Here alsothe Commissioner misconceived the nature andextent of his jurisdiction. 12) Counsel appearing on behalf of theCommissioner of Wealth Tax in these appeals hasnot attempted to support the order under appeal.We set aside the order passed by theCommissioner and direct that the revisionapplications be heard and disposed of according tolaw and uninfluenced by any instructions ordirections given by the Board of Revenue…. 22.The Court while such setting aside the order found that theCommissioner of Wealth Tax put himself in communication withthe Board of Central Revenue and sought instructions from thatauthority as to how the revision applications filed before himshould be decided and he exercised no independent judgment.This course of procedure adopted in such case was notappreciated. The Court held that while exercising the quasijudicial power he ca