Trilok Singh Dhillon S/0 Surta Singhdhillon, 7A v. Respondent(Assessee

'^ HIGH COURT OF CHHATTISGARH AT BILASPUR TAX CASE No. 98 OF 2010 APPELLANT(Revenue) TRILOK SINGH DHILLON S/0 SURTA SINGHDHILLON, 7A/1, NEHRU NAGAR (E) BHILAI(CG) Vs RESPONDENT(Assessee) COMMISSIONER OF INCOME-TAX, RAIPUR And other connected matters Sd/-Dhirendra MishraJudge-1^-TO-2aTO~Sd/-R.N. ChandrakarJudge JUDGMENT FOR CONSIDERATION •^: Dhirendra Mishra HON'BLE SHRI R.N. CHANDRAKAR. J ou^^-c^e^'(T 1371072UTCT •f^ Sd/-Judge POST FOR JUDGMENT ON<50 OCTOBER. 201 Dhirendra Mishra 15./10/2010, ^. •^-y HIGH COURT OF CHHATTISGARH AT^ILASPUR TAX CASE No. 84 OF 2010 APPELLANTSHRI BHUPENDER SINGH,(Revenue)S/0 SHRI SWARAN SINGHSUPELA, BHILAI (C.G.)(Revenue)S/0 SHRI SWARAN SINGHSUPELA, BHILAI (C.G.) VsRESPONDENTCOMMISSIONER OF INCOME-TAX, RAIPUR(Assessee) TAXCASEN0.930F2010APPELLANTSHRI MANHARAN LAL VERMA,(Revenue)S/0 SHRI SHYAM LAL VERMASANTRA BADI, DURG (C.G.)(Revenue)S/0 SHRI SHYAM LAL VERMASANTRA BADI, DURG (C.G.)VsRESPONDENTCOMMISSIONER OF INCOME-TAX, RAIPUR(Assessee)(Assessee) TAX CASE No. 83 OF 2010 APPELLANTSHRIBHUPENDERSINGH,(Revenue)S/0 SHRISWARAN SINGHSUPELA, BHILAI (C.G.)(Revenue)S/0 SHRISWARAN SINGHSUPELA, BHILAI (C.G.)VsRESPONDENTCOMMISSIONER OF INCOME-TAX, RAIPUR RESPONDENT(Assessee) TAXCASEN0.810F2010APPELLANTSHRI BHUPENDER SINGH,(Revenue)S/0 SHRI SWARAN SINGHSUPELA, BHILAI (C.G.)VsRESPONDENTCOMMISSIONER OF INCOME-TAX, RAIPUR(Assessee) TAX CASE No. 82 OF 2010APPELLANTSHRIBHUPENDERSINGH,(Revenue)S/0 SHRI SWARAN SINGHSUPELA, BHILAI (C.G.)VsRESPONDENTCOMMISSIONER OF INCOME-TAX, RAIPUR(Assessee) TAX CASE N0.108 OF 2010APPELLANTSHRIHARISHCHANDMISHRA,S/0SHRI(Revenue)KISDHANLAL MISHRA, SANTRA BADI, DURG(CG)Vs. APPELLANT TAX CASE N0.124 OF 2010 TAXCASEN0.1220F2010 TAX CASE N0.163 OF 2010 TAX CASE N0.165 OF 2010 JUDGMENT (Delivered on^^October, 2010) Per Dhirendra Mishra, J: These tax appeals under Section 260A of the Income Tax Act,1961 preferred by assessee & cross objectors are being disposed of bythis common judgment as they are directed against the common orderdated 29March, 2010 passed by the Income Tax Appellate Tribunal,Bilaspur, Bench Bilaspur (in short "the Tribunal"), by which all theconnected appeals preferred by the revenue,assessee and crossobjectors have been disposed of. 02.With the consent of learned counsel for the parties, all theseappeals were heard for disposal at the admission stage. 03.For the purposes of this order, facts of Tax Case No.98/10, TrilokSinghDhillonVs.CommissionerofIncomeTax,pertainingtoassessment year 2005-06 and the substantial questions of law proposedin the Memo of Appeal, shall be referred until and unless specificreference is made to the other tax cases. 04.The appellant/assessee has preferred this appeal (Tax CaseNo.98/10) on the following substantial questions of law: "1.Whether survey u/s 133A can be conducted at Airport on aoutofaircraftinsteadofsearchu/s.Whether survey u/s 133A can be conducted at Airport on aoutofaircraftinsteadofsearchu/s.persongetting132(1)(B)(iia) exclusively provided for such circumstances andif not, whether the survey and all the subsequent proceedingswhich followed such survey are valid, specifically keeping inview the law laid down by the Hon'ble Supreme Court in the132(1)(B)(iia) exclusively provided for such circumstances andif not, whether the survey and all the subsequent proceedingswhich followed such survey are valid, specifically keeping inview the law laid down by the Hon'ble Supreme Court in the\case of Union of India Vs. Ajit Jain (2003) 260 ITR 80 (SC)? \ 2. 3. 4. 5. Whether in the facts and circumstances of the case, theassessment order was made on the basis of instructions anddictates of other authorities and if so whether such assessmentis not bad in law? \ 2. 3. 4. 5. Whether in the facts and circumstances of the case, theassessment order was made on the basis of instructions anddictates of other authorities and if so whether such assessmentis not bad in law? Whether the order of the Id. Tribunal is perverse with respect torestoring the issue of addition of Rs.24,85,000/- being cashfound in the possession of the appellant, particularly when thesources of the same were satisfactorily explained and whenthe addition was made without any corroborative material? Whether the order of the learned Appellate Tribunal, in thefacts and circumstances of the case, is perverse with respectto treating various persons as benamidars of Shri Trilok SinghDhillon, a co-partner, without disputing the genuineness of thefirm, which has advanced the money, without questioning thegenuineness of sources of the money advanced, when theborrowings were interest bearing, when the interest incomewasseparately assessedinthehandsof the firm/otherpartners,whentheotherpersonswerenottreatedasbenamidars of the other partners who stand on the same plankas the appeltant with respect to their capital contribution in thefirm and loaned to the appellant, when the Excise License wasissued by the Excise Department in the names of differentpersons, when the Excise Department certified the executionof licenseby themand when thosepersons owned thebusiness and offered the income to tax in their individualcapacity?Whether the ITAT is legally correct in confirming the addition ofRs.22,13,218/- madeu/s.68as unexplained cash credit,especially when the gift was received with the rider that if thesame was not recognized as gift for any reasons, the sameshallbereturnabletothedonor,whoseidentityandcreditworthiness and genuineness of the transaction weresubstantiated by the appellant? 05.Briefly stated, facts of the case are that on 24th August, 2004assessee was carrying Rs.24,85,000/- in cash white travelling from Mumbai to Raipurby flight.Information to this effect was received fromthe Investigation Wing of Bombay. hle was intercepted at Mana Airportand his statement was recorded at the Airport.Later on, survey underSection 133A of the Income Tax Act, 1961(in short "the Act") wasconducted in the business premises ofthe assessee. In his statement,the assessee admitted that the cash found in hisbrief case is his incomefrom undisclosed sources.Thereafter, survey was convertedintosearch and the cash was seized.However, assessee retracted hisstatement by filing an affidavit on 7th December, 2005 wherein he statedthathesurrenderedtheentireamount of Rs.24,85,000/-ashisunexplained income for the assessment year-2005-06 since he wascompelledby theincome tax authorities.His explanation that hewithdrew the above sum from his wife's cash balance from M/s CaroleBarter (P) Ltd. was disregarded. The assessee filed return of income for the assessmenf year2005-06on23rdNovember,2006showingtotalincomeofRs.28,94,020/-andagriculturalincomeofRs.85,000/-andtheassessment was completed on a total income of Rs.5,68,78,983/-. Thisassessment foltowed the assessment under Section153A for thepreceding[six][ assessment]years.[The][ AO][ also][ issued][ notice][ under]Section 153C read with Section 153A of the Act on 16.2.2005.Anobjection was raised by the assessee on the ground that the abovenotices were issued without requisite satisfaction and subsequently, theObjectionregardinglackof jurisdictionwasagitatedbeforetheCommissioner, Income Tax (Appeals) {in short "CIT(A)"} under Section144.However, assessee filed return of income under protest. The AO issued notices under Section 143(2) and142(1) and again issuedanother notice under Section 1 53A read with Section 1 53C on 4.9.2006.another notice under Section 1 53A read with Section 1 53C on 4.9.2006. issued notices under Section 143(2) and142(1) and again issuedanother notice under Section 1 53A read with Section 1 53C on 4.9.2006.another notice under Section 1 53A read with Section 1 53C on 4.9.2006. 06.The AO did not entertain explanation of the assessee throughaffidavit sworn on 7December, 2005 on the ground that it was offeredafter 16 months and from the statement of the notary, it is clear that theaffidavit is an afterthought. Contention of the assessee that there is nomaterial to show that the assessee earned undisclosed income, whichwas found during the course of search, it was held that the assesseewas engaged in liquor business in benami names, as detailed in theassessment order for the assessment year 1999-2000, which goes toshow that the assessee is making income from undisclosed sources.The stand of the assessee was inconsistent. The assessee was notaware about the place of availability of books of account of M/s CarolBarter (P) Ltd., ofwhich he is the principal Director. Accordingly, his explanation that the cash amount seized from himis cash balance which he had withdrawn from M/s Carol Barter (P) Ltd.in connection with purchase of some property at Mumbai, has beenrejected,andtheamountofRs.24,85,0007-wasassessedasundisclosedincomeoftheassessee.TheAObyreferencetoassessment order of the assessment year 1999-2000 rejected the claimof agricultural income of Rs.85,000/- and also assessed income of 35benamidars of Rs.4,72,31,3107-in the hands of the assessee onsubstantive basis.The expenditure of Rs.18,41,758/- being amount ofbills of Adarsh Service Station, Supela, Bhilai, seized during searchproceedingsissuedinthenameof differentpersons,hasbeenassessed in the hands of assessee as unexplained expenditure with a finding that the same was unexplained expenditure of the assesseethrough benamidars.Similarly, an amount of Rs.18,096/-, on the basisof details mentioned in three papers found from the room of ManojChelak, and Rs.22,13,218/- received by the assessee as gifts fromParminder Singh Bains ($25000) andShri Deepak Kumar ($26100)have been added under Section 68 as unexplained cash with anobservation that the assessee has failed to furnish confirmation or anyevidence regarding relation or creditworthiness ofthe donors. Depreciation of Rs. 1,22581/- claimed by the assessee on Qualisvehicle h^s also been rejected on the ground that looking to the natureof income, it cannot be said that the vehicle was used for the assessee'sbusinesspurpose.Accordingly,assessmentwascompletedatRs.5,68,78,983/- under Section 153A.It has been also directed tocharge interest under Section 234A, 234B & 234C and separate penaltyproceedings under Section 271 (1 )(c) of the Act. 07.The assessee preferred appeal against the above order of theAO.The CIT(A) rejected the objection of the assessee regardingconducting survey under Section 133Aon the person ofthe assessee atRaipur Airport and converting the survey into search under Section 132of the Act and contention of the assessee that assessment was notdone independently by the AO, but at the instructions and dictates ofother authorities.CIT(A), however, deleted addition of Rs.24,85,000/-which was seized from the assessee at Airport by acceptinghisexplanation in this regard and further deleted addition of Rs.85,000/-and directed the AO to treat the above incomeas agricultural income.The Commissioner also deleted the addition of Rs.4,72,31,310/-, which 07.The assessee preferred appeal against the above order of theAO.The CIT(A) rejected the objection of the assessee regardingconducting survey under Section 133Aon the person ofthe assessee atRaipur Airport and converting the survey into search under Section 132of the Act and contention of the assessee that assessment was notdone independently by the AO, but at the instructions and dictates ofother authorities.CIT(A), however, deleted addition of Rs.24,85,000/-which was seized from the assessee at Airport by acceptinghisexplanation in this regard and further deleted addition of Rs.85,000/-and directed the AO to treat the above incomeas agricultural income.The Commissioner also deleted the addition of Rs.4,72,31,310/-, which was added as undisclosed income allegedly earned in the names ofbenamidars.Referring to the reasons detailed in the appeal order forthe assessment year 2002-03, the addition has been deleted and theAO has been directed to assess income determined in the cases ofthose persons in their respective hands on substantive basis, as theincome has already been assessed in their hands on protective basis.The addition of Rs. 18,41,7587- on account of unexplained expenditureonfuelpurchase,hasbeen further deletedbyreferenceto thediscussions in the appeal order for the assessment year 2004-05.Theaddition of Rs.18,096/- made on accountof Supela Bar Collection on16.8.2004 has been further deteted on the ground that necessaryelements in respect of benami transaction have not been established.However, addition of Rs.22,13,218/- made on account of NRI gifts hasbeenconfirmed,anddisallowanceofdepreciationclaimedatRs.1,22,581/- has been set aside and the AO has been directed to allowthe depreciation after disallowing 1/5for personal purposes.08.Revenue, assessee as well as cross objectors (benamidars)preferred separate appeal against the order of the CIT(A) passed foreach assessment year, and the Tribunal has disposed of all the appealsby a common order in the following terms: (01)Rejecting the objection of the assessee and confirming theorder of both the forums below against the initiation of surveyunder Section 133A at the Airport, it was held that scope ofsurvey under Section 133A includes verification of cash withreference to books of account.Since the cash found with theperson of the assessee was to be verified with reference tobooks of account, survey wasconducted. The assessee wasaccompanied to his officeand when he could not satisfactorilyorder of both the forums below against the initiation of surveyunder Section 133A at the Airport, it was held that scope ofsurvey under Section 133A includes verification of cash withreference to books of account.Since the cash found with theperson of the assessee was to be verified with reference tobooks of account, survey wasconducted. The assessee wasaccompanied to his officeand when he could not satisfactorily explain the nature and possession of the cash found with him,survey was rightly converted into search. explain the nature and possession of the cash found with him,survey was rightly converted into search. (02)Consideringthe cross objection of the assessee with regard tovalidity of the notice under Section153C and subsequentassessment,ithasbeenobservedthattherewasnorequirement for recording of satisfaction that the documentsfound and seized reflected earning of any undisclosed income,as provision under Section153C and erstwhile provisionsunder Section158BD are differently worded.The seizedmaterial was received on 21.10.2005 and prior to this, the AOwas having enough evidence to record satisfaction and thesame is contained in order sheet and notice has been issuedafter application of mind. The subsequent notice was issued asa matter of abundant precaution and there is no bar for issuingsecond notice.Fresh notice under Section 153C supersedesthe earlier proceedings. Accordingly, finding of the AO, whichhas been subsequently confirmed by the CIT(A), has beenfurther confirmed.validity of the notice under Section153C and subsequentassessment,ithasbeenobservedthattherewasnorequirement for recording of satisfaction that the documentsfound and seized reflected earning of any undisclosed income,as provision under Section153C and erstwhile provisionsunder Section158BD are differently worded.The seizedmaterial was received on 21.10.2005 and prior to this, the AOwas having enough evidence to record satisfaction and thesame is contained in order sheet and notice has been issuedafter application of mind. The subsequent notice was issued asa matter of abundant precaution and there is no bar for issuingsecond notice.Fresh notice under Section 153C supersedesthe earlier proceedings. Accordingly, finding of the AO, whichhas been subsequently confirmed by the CIT(A), has beenfurther confirmed. (03)Rejecting the alternative stand of the assessee that paperswere found from the premises of Manharantal Verma, who hasbeen projected as excise consultant of all benamidars of TrilokSingh Dhillon, it has been held that all the assessees of TrilokSinghDhillongroupwerehisbenamidars,includingManharanlalVerma.ManharanlalVermawasone of histrusted employees for the past several years and he was alsohandling bank accounts of all benamidars and family memberof Trilok Singh Dhillon and no such consultancy activity wasdone by him. Accordingly, the Tribunal rejected the claim ofManharanlal Verma being excise consultant.were found from the premises of Manharantal Verma, who hasbeen projected as excise consultant of all benamidars of TrilokSingh Dhillon, it has been held that all the assessees of TrilokSinghDhillongroupwerehisbenamidars,includingManharanlalVerma.ManharanlalVermawasone of histrusted employees for the past several years and he was alsohandling bank accounts of all benamidars and family memberof Trilok Singh Dhillon and no such consultancy activity wasdone by him. Accordingly, the Tribunal rejected the claim ofManharanlal Verma being excise consultant. (04)Repellingtheargumentof theassesseethatprotectiveassessment is not permissible under Section 153C, it has beenheld that if the AO is of the opinion that income is assessablein the hands of some other person than the ostensible person,nothingprecludes himin doing so.However,in order tosafeguard the interest of Revenue, in the event of differentassessment is not permissible under Section 153C, it has beenheld that if the AO is of the opinion that income is assessablein the hands of some other person than the ostensible person,nothingprecludes himin doing so.However,in order tosafeguard the interest of Revenue, in the event of different view by the appellate authority,protective assessmentisjustified.Retiance is placed on the decision of the SupremeCourt inthe matter of Lalji Haridas Vs. ITO, reported in (1961)53 ITR 387. (05)After referring to the entire circumstances as emerging fromthe record, and after hearing rival submissions, findings offacthave been recorded in para-26 of the impugned order and ithas been finally hetd in para-33 thus: view by the appellate authority,protective assessmentisjustified.Retiance is placed on the decision of the SupremeCourt inthe matter of Lalji Haridas Vs. ITO, reported in (1961)53 ITR 387. (05)After referring to the entire circumstances as emerging fromthe record, and after hearing rival submissions, findings offacthave been recorded in para-26 of the impugned order and ithas been finally hetd in para-33 thus: "33. In view of the factual and legal discussion, we holdthat the money was indirectly invested by TrilokSingh Dhillon and fruit of business has gone back tohim as well. Therefore, the income computed in thePanchuram case was rightly held assessable only inthe hands of the said Shri Trilok Singh Dhillon onsubstantive basis. Similar issue has been raised bythe revenue on the point of benamidars of ShriTrilok Singh Dhillon, in case of different assesses.Facts and modes operandi being same, so followingthesamereasoning,weholdthatallotherassessees are also benamidars of Shri Trilok SinghDhillon. According, these liquor business income isalso directed to be assessed on substantive basis,in the hands of Shri Trilok Singh Dhillon. The AO isdirected accordingly." First substantial question of law - Whether survey u/s 133Acan beconducted at Airport on a person getting out ofaircraft instead ofsearchu/s. 132(1)(B)(iia) exclusively provided for such circumstances and ifnot, whether the survey and all the subsequent proceedings whichfollowed such sun/ey are valid, specifically keeping in view the law laiddown by the Hon'ble Supreme Court in the case of Union of India Vs.Ajlt Jain (2003) 260 ITR 80 (SC)? 9.Shri Rajeshwar Rao, learned counsel appearing for the assessee, argued that survey under Section 133A can be conducted at business premises. This aspect has been overlooked by all the forums below. Inthe instant case, the assessee was intercepted at Raipur Airport and hissignatures were obtained on authorization for survey under Section133A and thereafter, he was taken to his office at Bhilai where hissecond statement was recorded. The AO has admitted that survey wasconducted at Airport for the purposes of verification of the cash.However,no document accordinglegalsanctionunder which theassesseewasinterceptedat Airporthasbeenfiled,whichwasnecessary as per proviso to Section 133A(6), which mandates approvatof the Joint Director.No reason has been shown for avoiding actionunder Section 132(1)(B)(iia). Since the matter was not considered withinthe ambit of Section 132(1 )(c) at the initial stage white intercepting theassessee at Airport, resorting to the same provision subsequently aftersurvey was not called for as there was no change in circumstance.From the above fact, it is clear that survey at the Airport under Section133A is without jurisdiction and therefore, all other proceedings whichfollowed invalid survey are void, as held by the Supreme Court in thecase of Union oflndia Vs. AjitJain . The argument that validity of search cannot be decided by theTribunal has no force as the same was never advanced before theforums below. The assessee had raised this specific issue in his Memoof Appeal and the judgment cited by the Revenue is distinguishableinasmuch as the same relates to approval of assessment and not toacquisition of jurisdiction.It was alternatively submitted that no newmateriat was found during survey and there was no need for converting the survey into search subsequently after extensive survey because therequisite ingredients were not present. It was further argued that the material found during illegal searchmay be used in assessment proceedings under regular provisions, butnot under the special procedure for assessment of search cases underSections 153Ato 153D. The argument that validity of search cannot be decided by theTribunal has no force as the same was never advanced before theforums below. The assessee had raised this specific issue in his Memoof Appeal and the judgment cited by the Revenue is distinguishableinasmuch as the same relates to approval of assessment and not toacquisition of jurisdiction.It was alternatively submitted that no newmateriat was found during survey and there was no need for converting the survey into search subsequently after extensive survey because therequisite ingredients were not present. It was further argued that the material found during illegal searchmay be used in assessment proceedings under regular provisions, butnot under the special procedure for assessment of search cases underSections 153Ato 153D. 10.Shri Rajeev Shrivastava, learned counsel for the Revenue, wouldarguetf that no search or survey was conducted at the Airport. Onreceiving information in the morning of 24August, 2004 that theassessee was carrying cash while travelling by flight from Mumbai toRaipur, he was escorted from Airport to Dhillon complex where surveywas conducted and subsequently, the same was converted into search.His initial statement was recorded at the Airport. All the three forumsbelow have recorded a concurrent finding of fact with regard to legalityof search.It was further argued that validity of search cannot bequestioned in assessment proceedings. Reliance is placed on the decisions in the matters of CIT Vs.Paras Rice Mill2, M.B. Lal Vs. C17Q, and Gaya Prasad Pathak Vs.AC17A. It was further argued that the judgments relied upon by theappellants have been delivered by the Hon'ble Supreme Court anddifferent High Courts in a matter arising out of the writ proceedings andnot in a proceeding arising out of the assessment order. 2 (2009) 313 ITR 182 (Punjab & Haryana)3(2005) 279ITR 298 (Delhi) (2009) 313 ITR 182 (Punjab & Haryana)3(2005) 279ITR 298 (Delhi) (2007) 290 ITR 128 MP Finding. 11.In the assessment order, the AO has mentioned that on receipt ofinformation that the assessee was carrying cash, his statement wasrecorded at the Airport.Later on, survey under Section 133A wasconductedin the business premises of the assessee. The CIT(A)rejecting the argument of the assessee in this regard held that the scopeof survey under Section 133A includes verification of cash with respectto books of account.In this case, the cash found in the person of theappellant was to be verified with respect to books of account and for thispurpose, survey under Section 1 33A was carried out. The assessee wasaccompanied to his office and he could not satisfactorily explain thenature of possession of cash found with him along with evidences andaccordingly, survey was converted into search.In the impugned order,the Tribunal affirmed the above finding in appeal by the CIT(A). 12.The question for our consideration is - whether the questionstouching the validity of search conducted under Section 132 of the Actcan be agitated during block assessment proceedings or in an appealbefore the CIT(A) or before the Tribunal against the impugned order? 13.In the matter of Ajit Jain Vs. Union of India , in a writ petitionfiled by the assessee, issue before the High Court was validity ofauthorization issued by the Director, IT (Investigation) under Section132(1) of the IT Act and block assessment order passed u/s 158 BC onthe same date. The authorization under Section 132(1) by the Director,IT and assessment was challenged on the ground that there was noinformation on record on the basis whereof the Director, IT, could form the belief that the said recovered amount represented income which hadnot been or would not have been disclosed for the purposes of the Act,a condition precedent for exercise of power under Section 132(1) of theAct. 13.In the matter of Ajit Jain Vs. Union of India , in a writ petitionfiled by the assessee, issue before the High Court was validity ofauthorization issued by the Director, IT (Investigation) under Section132(1) of the IT Act and block assessment order passed u/s 158 BC onthe same date. The authorization under Section 132(1) by the Director,IT and assessment was challenged on the ground that there was noinformation on record on the basis whereof the Director, IT, could form the belief that the said recovered amount represented income which hadnot been or would not have been disclosed for the purposes of the Act,a condition precedent for exercise of power under Section 132(1) of theAct. Allowing the writ petition of the assessee, it was held that for thepurposes of exercise of powers under Section 132(1), the aythorizingofficer has to form the belief on the basis of receipt of information thatthe person is in possession of money etc., which represents undisclosedincome.Though sufficiency or otherwise of the information cannot beexamined by the Court in writ jurisdiction, the existence of informationand its relevance to the formation of the belief is open to judicial scrutinybecause it is the foundation of the condition precedent for exercise of aserious power of search of a private property or person, to preventviolation of privacy of a citizen.Therefore, for the purposes of Section132, there has to be a rational connection between the information ormaterial and the betief about undisclosed income. Hotding the search tobe without jurisdiction and void ab initio on the facts of the above case, itwas further held that provisions of Chapter XIV-B can also not beinvoked pursuant to the said search and consequently, the blockassessment order cannot be sustained. 14.The Revenue went up in appeal before the Hon'ble SupremeCourtand the Supreme Court affirmed the order of the High Court, videUnion of India Vs. Ajit Jain and another, (2003) 181 CTR (SC) 22 :(2003) 260 ITR 80 (SC) : (2003) 129 Taxman 74.Courtand the Supreme Court affirmed the order of the High Court, videUnion of India Vs. Ajit Jain and another, (2003) 181 CTR (SC) 22 :(2003) 260 ITR 80 (SC) : (2003) 129 Taxman 74. 15.Chapter XIV-B deals with special procedure for assessment ofsearchcases.Section158BCprovidesforprocedureforblocksearchcases.Section158BCprovidesforprocedureforblock assessment, whereas Section 158BD deals with undisclosed income ofany other person and Section 158BE prescribes time limit for completionof block assessment.Section158BE(1)(b) andExplanation2 arerelevant for the present purpose and the same may be extracted asunder: "158BE.Timelimitforcompletionofblockassessment. - (1) The order under section 158BC shallbe passed, - (a)xxxxxxxx xxxx (b)within two years from the end of the month inwhich the last of the authorizations for searchunder section 132 or for requisition undersection132A, as the case may be, was executedincases where a search is initiated or books ofaccount or other documents or any assets arerequisitioned on or after the1day of January,1997.which the last of the authorizations for searchunder section 132 or for requisition undersection132A, as the case may be, was executedincases where a search is initiated or books ofaccount or other documents or any assets arerequisitioned on or after the1day of January,1997. Explanation 2. For the removal of doubts, it is hereby ^declared that the authorization referred to in sub-section(1)shallbedeemedtohavebeenexecuted, -declared that the authorization referred to in sub-section(1)shallbedeemedtohavebeenexecuted, -(a)in the case of search, on the conclusion of searchas recordedin the last panchnama drawninrelation to any person in whose case the warrantof authorization has been issued;as recordedin the last panchnama drawninrelation to any person in whose case the warrantof authorization has been issued; Explanation 2. For the removal of doubts, it is hereby ^declared that the authorization referred to in sub-section(1)shallbedeemedtohavebeenexecuted, -declared that the authorization referred to in sub-section(1)shallbedeemedtohavebeenexecuted, -(a)in the case of search, on the conclusion of searchas recordedin the last panchnama drawninrelation to any person in whose case the warrantof authorization has been issued;as recordedin the last panchnama drawninrelation to any person in whose case the warrantof authorization has been issued; (b)in the case of requisition under section 132A, onthe actual receipt of the books of account or otherdocuments or assets by the Authorized Officer.the actual receipt of the books of account or otherdocuments or assets by the Authorized Officer. 16.The Division Bench of the Delhi High Court in the matter of M.B.Lal,considering the above deeming provisions contained in SectionLal,considering the above deeming provisions contained in Section 158BE, held that the vatidity of search proceedings cannot be examinedin appeal filed before the Tribunal against the block assessment andthe remedy lies underArticle 226 ofthe Constitution. 17.In Paras Rice , the Punjab & Haryana High Court following thedecision of the Delhi High Court in M.6. La/'s case, held that whilehearing an appeal against the order of assessment, the Tribunal cannotgo into the question of validity or otherwise of any administrativedecision for conducting search and seizure. 18.In the matter of GayaPrasac^,it hasbeenheld that thejurisdiction exercised by the statutory authority while hearing an appealcannot enter into the justifiability of an action under Section 132A.Whether the order passed by the CIT is without jurisdiction or notcannot be thesubject-matter of assessment as the same does not arisein course of assessment.Therefore, neither the AO nor the appellateauthority can dwetl upon the said facet.One may note with profit, itwould not be a jurisdictional fact within the parameters of assessmentproceeding or an appeal arising therefrom.It can only partake thenature and character of adjudicatory fact to the limited extent whethersuch search and seizure had taken place and what has been foundduring the search and seizure. The validity of search and seizure isneither jurisdictional fact nor adjudicatory fact and, therefore, the samecannot be dwelled upon or delved into in an appeal. Submission thattheTribunalhavingbeenconstitutedunderArticle323oftheConstitution can delve into, is an unacceptabte proposition in law,especially in the teeth ofthe provision contained under Section 253. 19.Shri Rajeshwara Rao, learned counsel for the assessee, placingreliance on the decision in the matter of Commissioner of IncomeTax. Vs. Smt. Chitra Dew" Son/6,argued that the question as towhether there existed any material at all, which constituted reason tobelieve, is a matter which can definitely be looked into by the Tribunal,as also by the Court, as the absence would vitiate the entire action. Hestressed upon the proviso to Section 133(A)(6) and argued that toproceed under sub-section (i) or (iii) to Section 133A, approval of theJoint Director is a condition precedent.However, the respondent hasnot filed copy of the order/legal sanction under which the assessee wasintercepted at Airport. 19.Shri Rajeshwara Rao, learned counsel for the assessee, placingreliance on the decision in the matter of Commissioner of IncomeTax. Vs. Smt. Chitra Dew" Son/6,argued that the question as towhether there existed any material at all, which constituted reason tobelieve, is a matter which can definitely be looked into by the Tribunal,as also by the Court, as the absence would vitiate the entire action. Hestressed upon the proviso to Section 133(A)(6) and argued that toproceed under sub-section (i) or (iii) to Section 133A, approval of theJoint Director is a condition precedent.However, the respondent hasnot filed copy of the order/legal sanction under which the assessee wasintercepted at Airport. 20.Considering the aforesaid submission of learned counsel for theassessee,theRevenuehasproducedtheentirerecordof theassessment proceedings, including appraisal report in a sealed cover.From perusal of the orders of the forums below, we find that on thebasis of search proceedings, notices under Section 153C read withSection 153A were issued to the assessee and thereafter, return wasfiled and assessment was completed and assessment order waspassed. The assessee participated in the assessment proceedings andassessment proceedings, including appraisal report in a sealed cover.From perusal of the orders of the forums below, we find that on thebasis of search proceedings, notices under Section 153C read withSection 153A were issued to the assessee and thereafter, return wasfiled and assessment was completed and assessment order waspassed. The assessee participated in the assessment proceedings anddidnot challenge the validity andlegality of search and seizureproceedings initiated against him by filing any writ petition in the HighCourt. Therefore, following the decisions of the High Courts, referred tohereinabove, we are ofthe opinion that itwas not open to the assesseetd question the legality and validity of search and seizure proceedingsduring assessment proceedings beforethe AO or in appeal before the/.proceedings initiated against him by filing any writ petition in the HighCourt. Therefore, following the decisions of the High Courts, referred tohereinabove, we are ofthe opinion that itwas not open to the assesseetd question the legality and validity of search and seizure proceedingsduring assessment proceedings beforethe AO or in appeal before the/. /6 (2008) 214 CTR (Raj) 118: (2009) 313 ITR 174 : (2008) 170 Taxman 164 : (2008) 1 DTR 98 CITor the Tribunal.Accordingly,wereject theobjectionof theassessee in this regard. Second substantial question of law - Whether in the facts andcircumstances of the case, the assessment order was made on thejbas/'s of instructions and dictates of other authohties and if so whethersuch assessment is not bad in law? /6 (2008) 214 CTR (Raj) 118: (2009) 313 ITR 174 : (2008) 170 Taxman 164 : (2008) 1 DTR 98 CITor the Tribunal.Accordingly,wereject theobjectionof theassessee in this regard. Second substantial question of law - Whether in the facts andcircumstances of the case, the assessment order was made on thejbas/'s of instructions and dictates of other authohties and if so whethersuch assessment is not bad in law? 21.Shri RajeshwaraRao advancing argument on this question,submitted that the above issue has not been decided by the Tribunal.Notice under Section 153C was issued on 16.2.2005 on the basis ofappraisal report. It clearly reveals that the AO was influenced by thedirections in appraisal report. The entire assessment has been made atthe dictates of other authorities and income of other persons has beentreatedasdepositsinthebankaccountsof theassesseeasundisclosed income, by ignoring the fact that predecessor of the AOcompleted assessment in the cases of Kamlesh Kumar Chandel andYuvrajManeasindependentpersonsandnotbenamidars.Thesuccessor AO has also completed assessment for the assessment year2006-07 in the case of Manoj Kumar Chelak as independent personwithout treating him as benamidar of the assessee.However, actionunder Section 153C and 153A has been taken only on the basis ofappraisal report at the dictates of other authorities.submitted that the above issue has not been decided by the Tribunal.Notice under Section 153C was issued on 16.2.2005 on the basis ofappraisal report. It clearly reveals that the AO was influenced by thedirections in appraisal report. The entire assessment has been made atthe dictates of other authorities and income of other persons has beentreatedasdepositsinthebankaccountsof theassesseeasundisclosed income, by ignoring the fact that predecessor of the AOcompleted assessment in the cases of Kamlesh Kumar Chandel andYuvrajManeasindependentpersonsandnotbenamidars.Thesuccessor AO has also completed assessment for the assessment year2006-07 in the case of Manoj Kumar Chelak as independent personwithout treating him as benamidar of the assessee.However, actionunder Section 153C and 153A has been taken only on the basis ofappraisal report at the dictates of other authorities. 22.On the other hand, Shri Rajeev Shrivastava, learned counselappearing for the Revenue, would argue that the AO has recorded acategoricalfindingbasedonevidenceavailableonrecord.Theassessee has not disputed the factuat findings in the assessment orderand there is no perversity in the order.The argument of the assesseein this regard is based on conjectures and surmises without anyappearing for the Revenue, would argue that the AO has recorded acategoricalfindingbasedonevidenceavailableonrecord.Theassessee has not disputed the factuat findings in the assessment orderand there is no perversity in the order.The argument of the assesseein this regard is based on conjectures and surmises without any 22.On the other hand, Shri Rajeev Shrivastava, learned counselappearing for the Revenue, would argue that the AO has recorded acategoricalfindingbasedonevidenceavailableonrecord.Theassessee has not disputed the factuat findings in the assessment orderand there is no perversity in the order.The argument of the assesseein this regard is based on conjectures and surmises without anyappearing for the Revenue, would argue that the AO has recorded acategoricalfindingbasedonevidenceavailableonrecord.Theassessee has not disputed the factuat findings in the assessment orderand there is no perversity in the order.The argument of the assesseein this regard is based on conjectures and surmises without any material or legal foundation.Reference to earlier order in the case ofKamlesh Chandel andothers is of no avail as the said persons filedtheir return on 31st March, 2004 for the relevant assessment year andthe assessment order was passed on 28March, 2006 whereas searchwas conducted on 24.8.2004 and Kamlesh replied to the notice underSection 153C on 24.2.2006 and assessment order was passed onKamlesh Chandel andothers is of no avail as the said persons filedtheir return on 31st March, 2004 for the relevant assessment year andthe assessment order was passed on 28March, 2006 whereas searchwas conducted on 24.8.2004 and Kamlesh replied to the notice underSection 153C on 24.2.2006 and assessment order was passed on28.12.2006.The notice under Section 153C was issued on 16.2.2005.In view of sub-section (1)(b) of Section 153A, the assessment orderpassed by the AO in the case of Kamlesh Chandel under Section143(3) is a nullity, without jurisdiction and void ab initio.In view of sub-section (1)(b) of Section 153A, the assessment orderpassed by the AO in the case of Kamlesh Chandel under Section143(3) is a nullity, without jurisdiction and void ab initio. Finding: 23.The objection of the assessee in this regard has been rejected bythe CIT(A) with an observation that after considering the facts andcircumstances of the case and the relevant record,1 am of the opinionthat the AO acted independently and there was no instructions, asallegedby the assessee.It appears that the appellant presumed thatthere might be some direction by the Investigation Wing in the appraisalreport to complete the assessment in a particular manner.Appraisalreport is a report furnishing brief discussion of the result of search andthe points required to be examined while completing the assessment.The discussion in the appraisal report is not a direction influencing theliberty of the AO.The AO is free to complete the assessment on thebasis of materialsavailableonrecordandonthebasis of theappellant's explanation.There is no such direction as alleged by theappellant in the instant case. The assessee, instead of referring to any specific para in theorder of assessment based on factuat findings, has imputed biasedapproach at the dictates of otherauthorities, which has been rejectedby the forums below after examination of the record. Thus, in ourconsidered opinion, the question raised by the assessee is a purequestion of fact that has already been answered by the forum belowagainst the assessee. Third substantial question of law[-]Whether the order of theId.Tribunal is perverse with respect to restohng the issue of addition ofRs.24,85,000/- being cash found in the possession of the appellant,particularly when the sources of the same were satisfactorily explainedand when the addition was made without any corroborative material? The assessee, instead of referring to any specific para in theorder of assessment based on factuat findings, has imputed biasedapproach at the dictates of otherauthorities, which has been rejectedby the forums below after examination of the record. Thus, in ourconsidered opinion, the question raised by the assessee is a purequestion of fact that has already been answered by the forum belowagainst the assessee. Third substantial question of law[-]Whether the order of theId.Tribunal is perverse with respect to restohng the issue of addition ofRs.24,85,000/- being cash found in the possession of the appellant,particularly when the sources of the same were satisfactorily explainedand when the addition was made without any corroborative material? 24.Addressing on the above issue, Shri Rao submitted that there isno disputeregarding availability of cash with the assessee.Thegenuineness of transaction was accepted in the case of M/s CarolBarter (P) Ltd in the assessment proceedings under Section 143(3) ofthe Act and the statement recorded during survey has no evidentiaryvalue. There was no corroboratory material available with the AO tosupport the addition. The Tribunal was not justified in setting aside theorder of the CIT(A), whereby addition was deleted, and restoring thematter to the AO to decide the same afresh. Finding: 25.We have perused the order of the AO as also that of CIT(A) inthis regard and we are of the opinion that restoration of the abovematter to the AO for fresh adjudication after affording opportunity ofhearing to the parties does not involve any substantial question of law. Fourth substantial question of law - Whether the order of the learnedAppellate Tribunal,in the facts and circumstances of the case,isperverse with respect to treating various persons as benamidars of ShriThlok Singh Dhillon, a co-partner, without disputing the genuineness ofthe firm,which has advanced the money,without questioning thegenuineness of sources of the money advanced, when the borrowingswereinterestbearing,whentheinterestincomewasseparatelyassessedin the hands of the firm/other partners,when the otherpersons were not treated as benamidars ofthe other partners who standon the same plank as the appellant withrespect to their capitalcontribution in the firm and loaned to the appellant, when the ExciseLicense was issued by the Excise Department in the names of differentpersons, when the Excise Department certified the execution of licenseby them and when those persons owned the business and offered theincome to tax in their individual capacity? Finding: 26.The AO, after considering the entire evidence available on recordandhavingelaborately detailedthe circumstancesteadingtoaninference that others were benamidars of Trilok Singh Dhillon, hasrecorded a finding of fact.The above finding of fact has been furtherconfirmed by the Tribunal in its detaited order. After closely examiningthe assessment order, the order of CIT(A) and the impugned order ofthe Tribunal in this regard, we are of the opinion that the finding of factarrived at by the Tribunal, which is a final Court of fact, is based onuncontroverted material available on record, which cannot be termedperverseandtherefore,nosuchsubstantialquestion of law,asproposed by the assessee, arises for adjudication by this Court. Fifth Substantial question oflaw - Whether the ITAT is legally correctinconfirmingtheadditionofRs.22,13,218/-madeu/s.68asunexplained cash credit, especially when the gift was received with therider that if the same was not recognized as gift for any reasons, the sameshallbereturnabletothedonor,whoseidentit