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J.C. malik, c/o rajiv saxena & co., (advocates and solicitors)318, pocket-d,mayur vihar-ii, delhi 11091 vS. acit, circle-28(1), new delhi
November, 21st 2014
                                           IT(SS)A. NO. 160/DEL/2006 & 24/DEL/2010


                     DELHI BENCH "D", NEW DELHI




                      B.P.: 1.4.90 TO 6.7.2000
JAGDISH       CHAND           VS.                      DEPUTY
MALIK,                                                 COMMISSIONER OF
PROP. M/S MADAN LAL                                    INCOME TAX,
KULDEEP KUMAR,                                         CENTRAL CIRCLE-1,
159-161,     KATRA                                     NEW DELHI
DELHI ­ 110 006
(APPELLANT)                                            (RESPONDENT)
                        IT(SS)A. No. 24/Del/2010
                        B.P.: 1.4.90 TO 6.7.2000
J.C. MALIK,                       VS.                  ACIT, CIRCLE-28(1),
C/O RAJIV SAXENA &                                     NEW DELHI
318, POCKET-D,
DELHI ­ 11091

         Assessee by                   :   Sh. Gautam Jain, CA & Piyush
                                           Kumar Kamal, Adv.
        Department by                  :   Ms. Shulekha Verma, CIT(DR)

                       Date of hearing       :    17.11.2014
                       Date of Order         :    20.11.2014


     These are the appeals filed by the Assessee emanate out of
separate Orders passed by the Ld. CIT(A), New Delhi             pertaining to
Block Period 1.4.1990 to 6.7.2000.
                                       IT(SS)A. NO. 160/DEL/2006 & 24/DEL/2010

2.   The ground raised in IT(SS)A No. 160/Del/2006 read as under:-

          "1. That the Ld. CIT(A), has grossly erred both in law and
          on facts in upholding the assessment framed by the DCIT
          by invoking the provisions of section 158BD read with
          section 158BC of I.T. Act.          In doing so he has
          misconstrued the provision of I.T. Act and has failed to
          appreciate that, as there was no evidence found as a
          result of search, for assuming that there was an
          "undisclosed income" which can be assessed under the
          provisions of Chapter XIVB of I.T. Act, the both initiation
          and framing of assessment was without jurisdiction.

          2. That the CIT(A) has, failed to appreciate that in any
          case the order passed by DCIT was without satisfying the
          mandatory requirements of the aforesaid chapter and
          also without fulfilling the precondition for making an
          order of assessment.

          3.That the   Ld. CIT(A) has further erred in failing to
          appreciate that the order of block assessment had been
          made without providing to the assessee a fair, proper
          and meaningful opportunity and the assumption that
          there has been an undisclosed income is based on wholly
          irrelevant arbitrary and unfounded considerations. The
          assessment so framed has been made in a highly
          arbitrary, whimsical and capricious manner.

          4. That the Ld. CIT(A) has failed to appreciate that such
          an undisclosed income has to be computed on the basis
          of evidence found as a result of search or requisition of
          books of account or documents and such other material
          or information as are available with the AO and therefore

                            IT(SS)A. NO. 160/DEL/2006 & 24/DEL/2010

such income which had been already processed cannot
be processed under the aforesaid chapter.

5. That the Ld. CIT(A) has grossly erred both in law and
on facts by arbitrarily brushing aside the contention of
assessee that no notice    u/s. 158BD was ever issued
before framing the impugned assessment. The finding
recorded   that assessment order clearly indicates that
notice u/s. 158BD issued on 31.7.2002 and same was
served on 16.8.2002 is contrary to the material available
on record and as such is bad in law. The finding such a
notice was served on the assessee is unsupported by any
evidence on record.

6. That the Ld. CIT(A) ought to have appreciated that
there was nothing to indicate that AO could have formed
an opinion and arrived at satisfaction that the assessee
had not disclosed its income. That the Ld. CIT(A) has
further erred in assuming that satisfaction was recorded
that too in writing which inspite of repeated requests
have not been made available to the assesseee.

7. That the Ld. CIT(A) has erred both in law and on facts
in upholding an aggregate addition of Rs. 25,12,076/- u/s.
69 of the I.T. Act being alleged commission              income
earned by calculating @0.5% on the amount of alleged
purchases made against Form ST-35 for block period
from concerns of JMD Group by failing to appreciate that
no such addition could have been sustained on the facts
of the instant case.

8. That the findings recorded that appellant has admitted
that such purchases are not genuine purchases and the

                                        IT(SS)A. NO. 160/DEL/2006 & 24/DEL/2010

          transactions were shown just to earn commission of 0.1%
          to 0.7% is highly insufficient to warrant such an addition
          which is otherwise not legally tenable and justified on the
          facts of the instant case.

          9. That the Ld. CIT(A) has erred in holding the charge of
          interest u/s. 158BFA is consequential in as much as no
          such interest was warranted on the facts of the instant

3.   The ground raised in IT(SS)A No. 24/Del/2010 read as under:-

          "1.   That Id. CIT (A) has erred in law as well as on facts
          in confirming the penalty u/s. 158BFA (2) of the IT Act
          1961 amounting to Rs. 15,07,246/-.

          2.    That the Ld. CIT (A) and ACIT have failed to
          appreciate that

          a)    it is barred by limitation as per clause (c) of sub
          section (3) of section 158 BFA itself.

          b) levy of penalty is not automatic merely because
          additional income has been assessed though appeal
          before ITAT is still pending to be disposed on quantum.

          c) penalty proceedings are independent and all the
          relevant material sought time and again was required to
          be supplied before levying penalty.

          d) legislature has provided the provision optional in order
          to look merits of each case while assessing officer has
          given no reason for imposing penalty on merits.

          3.    That both order u/s, 158BFA and order of CIT (A) are
                                      IT(SS)A. NO. 160/DEL/2006 & 24/DEL/2010

     a)   because no reasonable opportunity was provided to
     the appellant as per this provision either by ACIT or by
     CIT (A) despite application for adjournment was filed
     before him.

     b)   because no previous approval was obtained as
     provided both order and approval were of the same date
     and Ld. CIT CA) has ignored this facts.

     c)   because no satisfaction has been recorded either of
     the assessing officer or the additional commissioner of
     the Income tax which is mandatory for any penal

     d)   because tax has been calculated on estimated
     income what was never earned and penalty is not
     leviable when there is estimation of income.

3.   That Ld. CIT CA) and ACIT have also erred in law as well
as on facts and failed to appreciate that admission during
assessment        proceedings       was    made         under       forced
circumstances as was also explained and this reason was not
applicable for imposing any confirming penalty.

4.   That Ld. CITCA) and ACIT have also failed to appreciate
that there was no undisclosed income so as to levy penalty in
fact appellant has already declared more income and paid tax
on higher income while AO himself has merely estimated
income what was never earned during assessment.

     It is therefore prayed that penalty levied u/s. 158BFA be


                                         IT(SS)A. NO. 160/DEL/2006 & 24/DEL/2010

4.     The brief facts of the case are that in this case a search and
seizure operation u/s. 132 of the I.T. Act, 1961 was conducted in the
JMD group of cases on 6.7.2000.          During the course of block
assessment proceedings u/s. 158BC in the JMD group of cases, the
issue of sales made by JMD group to various parties against Form
ST-35 was examined and addition on account of commission was

5.     Against the order of the Assessing Officer, assessee appealed
before the Ld. CIT(A), who vide impugned order dated 2.3.2005
dismissed the appeal of the assessee.

6.     Against the aforesaid order dated 2.3.2005 passed by the Ld.
CIT(A), assessee appealed before us.

7.      Ld. Counsel of the assessee in support of his contention filed
a Paper Book containing      Pages 1 to 76 having Synopsis in Brief,
and copies of various orders of the Tribunal and other authorities
and    other   documentary    evidence    supporting       his    version      /
arguments. During the hearing Ld. Counsel of the assessee draw
our attention towards the assessment order dated 31.8.2004 passed
by the AO under section 158BD read with section 158BC of the I.T.
Act.   He also draw our attention to the facts of the case of the
assessee and mainly stated that the addition in dispute has been
made without any basis and evidence.        Therefore, the addition so
made is unsustainable. He further stated that the impugned order
of assessment is based on the contentions made in the case of M/s
Sajay Traders, Super Traders and M/s JMD Properties Pvt. Ltd. which
too had been made on the basis of the statement of the appellant
dated 19.10.2000 and not on any evidence found as a result of
search in the absence of any material found during               search and

                                         IT(SS)A. NO. 160/DEL/2006 & 24/DEL/2010

seizure on such a person addition is not sustainable in the eyes of
law. In support of his contentions, he cited the following cases laws:-

           -     CIT vs. Balaji Wire (P) Ltd. 304 ITR 393 (Del.)

           -     CIT vs. Bansal High Carbons (P) Ltd. 223 CTR 179

           -     CIT vs. Bluechip Construction Co. (P) Ltd. 213 CTR
                 530 (Del.)

           -     CIT vs. Sunil Bhala and Rajgul Creditnvest (P) Ltd.
                 238 CTR 18 (Del.)

           -     CIT vs. Ravi Kant Jain 250 ITR 141 (Del)

           -     CIT vs. Khushlal Chand Nirmal Kumar 263 ITR 77

           -     Morarjee Coguldas Spg co. Ltd. vs. DCIT 95 IRD 1
                 TM (Bom)

           -     CIT vs. Makhani and Tyagi (P) Ltd. 267 ITR 433.

7.1   He further stated that even otherwise, additions made in the
hands of M/s Sanjay Traders and M/s Super Traders stand deleted
by the Tribunal in the order dated 23.6.2006. He has filed the copy
of the same before us. He has read Para 7 of the aforesaid order
dated 23.6.2006.

7.2   On the other hand, Ld. Departmental Representative relied
upon the orders of the lower         authorities and controverted the
arguments advance by the Ld. Counsel of the assessee and she has
also filed two Paper Books in which she has attached various orders
of the Supreme Court of India, High Court and the Tribunal. She has
also filed a Statement of Jagdish Chander Malik dated 27.1.2000,

                                        IT(SS)A. NO. 160/DEL/2006 & 24/DEL/2010

19.10.2000, 27.11.2002, and 23.12.2002; Notice issued u/s. 158BD;
and reasons for issuing notice u/s. 158BD.       She mainly draw our
attention towards the order dated 23.6.2006 passed by the ITAT,
Delhi Bench `F', New Delhi in the case of DCIT vs. M/s Sanjay Traders
& Ors. in ITA No. 445&446/Del/2003 (BP: 1.4.90 to 6.7.2000) and
especially she also draw our attention towards Para 7 of the
aforesaid order and stated that assessee has not filed any
documentary evidence establishing that assessee has retracted his
earlier statement dated 19.10.2000. She requested that assessee
may be directed to file the copy of retraction of statement of Sh. JC
Malik dated 19.10.2010.     On asking from the Bench to the Ld.
Counsel of the Assessee to file a copy of a retraction of statement
dated 19.10.2000, he was unable to file the same and stated that
assessee is a poor person and could not pursue the matter in a
proper manner before the lower authorities. Therefore, some more
opportunity may be given to the assessee before the AO to
substantiate his claim.

8.      We have heard both the counsel and perused the records
especially the orders of the lower authorities, synopsis in brief filed
by the assessee's counsel and copies of judgments and Paper Books
filed   by the Ld. DR. We find that as per the arguments of both the
parties it an admitted fact that both the parties          reiterated and
relied on the contents of para 7 of the ITAT's order dated 23.6.2006
passed by the ITAT, Delhi Bench `F', New Delhi in the case of DCIT
vs. M/s Sanjay Traders & Ors. in ITA No. 445&446/Del/2003 (BP:
1.4.90 to 6.7.2000) which is reproduced hereunder for the sake of

                 "7. We have considered the rival submissions. It is
                 the AO who relied on the submissions of three
                 parties. Thus, three parties are witnesses of the
                        IT(SS)A. NO. 160/DEL/2006 & 24/DEL/2010

revenue rather than of the assessee. At no point of
itme, the assessee has made a statement that the
transactions are not genuine.         Since there is no
such statement by the assessee, the question of
retraction do not arise, it is settled principle of
natural justice that if statement of any person is
relied against any person, the copy of such
statement should be furnished to the person against
whom such statement is required to be used. The
affected also should be afforded an opportunity to
cross examine the person making such statement.
Since no enquiry with such other persons they have
retracted their earlier statement and having also
filed the affidavit in this regard, the assessee         was
not required to prove anything further.             The AO
cannot rely upon statement of his witnesses after
the same retracted. The AO has not proved that the
affidavits filed by these persons are incorrect. Thus,
after the retraction of the statements by              these
persons no evidence remains with the AO to hold
that the transactions by the assessee with these
three persons is not genuine and the assessee has
also paid unaccounted commission. It is also to be
noted that the present assessments are made u/s.
158BC. The undisclosed income can be computed
only on the basis of material found as a result of
search     and such other enquiry relating to such
material. During the course of search, no material
is found which suggests that the assessee has
incurred    unaccounted      expenditure by way of
commission for so called sales transactions. Thus,
                                         IT(SS)A. NO. 160/DEL/2006 & 24/DEL/2010

                 no part can be included in the computation as
                 undisclosed income for the block period."

8.1   It is an also admitted fact that assessee could not filed any
documentary evidence retracting his earlier statement                   dated
19.10.2000 in spite of asking from the Bench. Secondly, in the
present appeal the Ld. CIT(A)-III, New Delhi passed the impugned
order dated 2.3.2006 whereas in the case of M/s Sanjay Traders and
M/s Super Traders, Ld. First Appellate Authority has passed an order
favoring the assessee and        decided the issue in favor of the
assessee vide order dated 9.7.2003 against which the Revenue has
filed the appeal before the Tribunal and the Tribunal vide order
dated 23.6.2006 in the case of DCIT vs. M/s Sanjay Traders & Ors. in
ITA No. 445&446/Del/2003 (BP: 1.4.90 to 6.7.2000) has             dismissed
the aforesaid appeals filed by the Revenue.

8.2   As explained above, both the parties has read over the para 7
of the order of the Tribunal dated 23.6.2006 as aforesaid.               After
going through the orders passed by the Revenue Authorities
alongwith the documentary evidence filed by the parties, we are of
the view that both the parties mainly relied upon the order dated
23.6.2006 passed by the Coordinate Bench of the Tribunal Delhi
Bench `F ', New Delhi in the case of DCIT vs. M/s Sanjay Traders &
Ors. in ITA No. 445&446/Del/2003 (BP: 1.4.90 to 6.7.2000 and
emphasis on the retracing statement of the assessee. We are of the
view that documentary evidence filed by both the parties requires
thorough examination at the level of the Assessing Officer afresh
under the law.   Accordingly, in the interest of justice, the          issues
raised in this appeal are set aside to the file of the Assessing Officer
with the direction to decide the issue in dispute afresh after
considering the documentary evidence, as per law. Needless to add
that the assessee should be given adequate opportunity of being

                                        IT(SS)A. NO. 160/DEL/2006 & 24/DEL/2010

heard.     Hence, the IT(SS)A No. 160/Del/2006 stand allowed for
statistical purposes in the aforesaid manner.

IT(SS)A No. 24/Del/2010

10.   Since we have already set aside the assessment order to the
file of the Assessing Officer as aforesaid, the penalty imposed u/s.
158BFA(2) of the I.T. Act in this appeal has now become infructuous
and does not survive in the eyes of law. Hence, the same is
dismissed being infructuous. However, the Assessing Officer will be
at libery to initiate penalty proceedings, if any, in set aside the
assessment proceedings, as per law.

11.   In the result, the IT(SS)A No. 160/Del/2006 is allowed for
statistical purposes in the aforesaid manner and IT(SS)A No.
24/Del/2010 is dismissed being infructuous.

      Order pronounced in the Open Court        20-11-2014.

      Sd/-                                                  Sd/-

[T.S. KAPOOR]                                       [H.S. SIDHU]
ACCOUTANT MEMBER                                JUDICIAL MEMBER
Date 20/11/2014

Copy forwarded to: -

1.    Appellant -
2.    Respondent -
3.    CIT
4.    CIT (A)
5.    DR, ITAT
                           TRUE COPY

                                                     By Order,

                            Assistant Registrar, ITAT, Delhi Benches

     IT(SS)A. NO. 160/DEL/2006 & 24/DEL/2010

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