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COMMISSIONER OF INCOME TAX Vs. SANJAY GUPTA
June, 13th 2014
            IN THE HIGH COURT OF DELHI AT NEW DELHI

%                              Judgment delivered on: 23.05.2014
+       ITA No. 765/2010
SANJAY GUPTA                                            ..... Appellant
                                 versus
COMMISSIONER OF INCOME TAX                              ..... Respondent


                                  AND
+       ITA No. 321/2012
COMMISSIONER OF INCOME TAX                              ..... Appellant
                                 versus
SANJAY GUPTA                                            ..... Respondent

Advocates who appeared in this case:
For the Assessee     : Mr Anil Sharma.
For the Revenue      : Sh. Sanjeev Sabharwal, Sr. Standing Counsel
                       with Sh. Ruchir Bhatia, Jr. Standing Counsel on
                       behalf of the CIT.
CORAM:-
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE VIBHU BAKHRU

                              JUDGMENT
VIBHU BAKHRU, J

1.      ITA No.765/2010 is an appeal filed by one Sanjay Gupta (the
assessee) under Section 260A of the Income Tax Act, 1961 (hereinafter
referred to as `Act') challenging the order dated 30.04.2009 passed by the
Income Tax Appellate Tribunal (hereinafter referred to as `Tribunal') in
I.T.(SS) No.174/D/2006 whereby the Tribunal has upheld the assessment of




ITA No.765/2010 & 321/2012                                     Page 1 of 19
an amount of `1,14,54,077/- as undisclosed income of the petitioner, for the
block period-01.04.1996 to 21.03.2003, in proceedings initiated under
Section 158BC of the Act. ITA No.321/2012 is an appeal filed by the
Commissioner of Income Tax (Revenue) under Section 260A of the Act
challenging the order dated 23.12.2010 passed by the Tribunal whereby the
Tribunal has reduced the penalty imposed under Section 158BFA(2) of the
Act from `15,46,068/- to `1,28,568/-. Since the substratal controversy in
the two appeals relates to the proceedings under Chapter XIV-B of the Act,
the same have been taken up together.

ITA No.765/2010

2.      Brief stated, the relevant facts pertaining to ITA No.765/2010 are as
follows:-

2.1     The assessee derives commission income from purchase and sale of
properties and from the trading of transistor parts. The assessee also
worked/works as an informer for Directorate of Revenue Intelligence
(DRI). On 15.06.2001, the Central Bureau of Investigation (CBI) conducted
a search at different premises which belonged to the assessee and seized
cash amounting to `1,12,50,000/-. On 18.09.2001, the Director of Income
Tax (Investigation) issued a warrant of authorization under section 132A of
the Act to CBI to deliver the books of account, documents and the assets
seized by CBI during the search.

2.2     On 07.01.2002, the assessee filed a petition before the Special Judge,
New Delhi requesting for release of cash seized by the CBI amounting to
`1,14,54,477/- including an amount of `2,04,077/- which was stated to



ITA No.765/2010 & 321/2012                                        Page 2 of 19
belong to one Daya Singh. By an order dated 19.10.2002, M.L. Sahni,
Special Judge, New Delhi dismissed the said petition and directed the CBI
to transfer the seized amount to the Income Tax Department.

2.3     On 09.04.2002, the assessee filed a return of income for the
Assessment Year 2002-2003 declaring an income of `1,13,40,000/- which
includes an amount of `90 lakhs seized by the CBI.

2.4     On 21.03.2003, the warrant of authorization issued on 18.09.2001
was executed and the amount seized by CBI alongwith other books of
accounts and documents were received by the Revenue.

2.5     Thereafter, on 28.05.2003, the Assessing Officer issued a notice
under section 158BC of the Act requiring the assessee to file a return of
undisclosed income for the block period of 01.04.1996 to 21.03.2003. In
response to the aforesaid notice, the assessee filed a return declaring
undisclosed income of `90 lakhs. By an order dated 24.03.2005, the AO
completed the assessment under Section 158BC of the Act and determined
the entire amount of `1,14,54,077/-, seized under Section 132A of the Act,
as undisclosed income for the block period 01.04.1996 to 21.3.2003. Apart
from `90,00,000/- lakhs, the said amount included `22,50,000/- stated by
the assessee to be a part of the cash reward from DRI and also an amount of
`2,04,077/-        belonging   to   Daya   Singh.   The   Assessing    Officer
simultaneously completed the assessment for the assessment year 2002-
2003 and by an order dated 24.03.2005, determined `90,00,000/- as the
total income.




ITA No.765/2010 & 321/2012                                       Page 3 of 19
2.6     The assessee filed two separate appeals before the CIT(Appeals)
challenging the orders dated 24.03.2005 of the Assessing Officer. The CIT
(Appeals) by its separate orders dated 28.03.2006 dismissed the Appeal
No.112-2005-2006 and vide order dated 29.03.2006, CIT (Appeals)
dismissed Appeal No.111-2005-2006. The assessee challenged the order
dated 28.03.2006 and 29.03.2006 before the Tribunal. The Tribunal
dismissed both the appeals by a combined order dated 30.04.2009. The
assessee filed an application under section 254(2) of the Act for
rectification of the mistakes in the order dated 30.04.2009 and the same was
also dismissed on 22.01.2010. Aggrieved by the order dated 30.04.2009
passed in IT(SS) No.174/D/2006, the assessee has filed the present appeal
(ITA No. 765/2010).

2.7     This court, by an order dated 02.07.2010, framed the following
questions of law in ITA No.765/2010:-

        "1. Whether on the facts and circumstances of the case, the
            tribunal was justified in law to validly conclude that, block
            period was 1.4.1996 to 21.03.2003 despite the fact that
            Section 158BA of the Act specifically provides that block
            period ends on the date on which, requisition was made
            under Section 132A of the Act and as such, the correct
            block period was 1.4.1996 to 18.9.2001?

        2. Whether the tribunal was justified to uphold the
           determination of the undisclosed income of the appellant at
           Rs.1,14,54,077/- despite the fact that, block period on the
           facts of the case comprised of the period 1.4.1996 to
           18.9.2001 and not block period determined by the tribunal
           as 1.4.1996 to 21.03.2003?

        3. Whether the Income Tax Appellate Tribunal is correct in



ITA No.765/2010 & 321/2012                                        Page 4 of 19
             law in assessing the amount of Rs.22,50,000/- received by
             the appellant as cash reward from the Directorate of
             Revenue Intelligence (DRI) as the alleged undisclosed
             income for the block period ignoring the evidence on record
             and more particularly the letter no.DRIF50D/27/2006CI
             independently obtained by the C.I.T.(Appeals) and
             separately filed before the tribunal in the course of
             hearing?"

ITA No.321/2012




3.      ITA No.321/2012 is filed by the revenue impugning the decision of
the Tribunal to reduce the penalty imposed by 158BFA(2) of the Act. The
brief facts relevant to the said appeal are as follows:-

3.1     The AO, by an order dated 24.03.2005, completed the assessment
under Section 158BC of the Act and determined the entire amount of cash
found during the search by the CBI i.e. a sum of `1,14,54,077/- as
undisclosed income for the block period 01.04.1996 to 21.3.2003. In
pursuance thereof, the Assessing Officer initiated penalty proceedings
under Section 158BFA(2). The assessed undisclosed income in excess of
the income as declared by the assessee in its return filed in compliance of
Section 158BC of the Act, was computed at `24,54,077/- and the tax
thereon was computed at `15,46,068/-.

3.2     The assessing officer, by an order dated 11.09.2009, imposed a
penalty of `15,46,068/- computed at the rate of 100% of the tax on the
undisclosed income. Aggrieved by the penalty imposed, the assessee
challenged the same before CIT (Appeals), however, the said appeal was
dismissed by an order dated 26.03.2010. The assessee impugned the said




ITA No.765/2010 & 321/2012                                       Page 5 of 19
order dated 26.03.2010 before the Tribunal. By an order dated 23.12.2010,
the Tribunal partly allowed the said Appeal and reduced the penalty amount
from `15,46,068/- to `1,28,568/-. The Revenue has challenged the said
decision of the Tribunal in the present appeal.

Submissions

4.      The learned counsel for the assessee contended that the Block Period,
as defined under Section 158B of the Act, means the period comprising of
previous years relevant to six assessment years preceding the previous year
in which search under Section 132 of the Act was conducted or requisition
under Section 132A was made and also includes the period up to the date
when such requisition was made. It was submitted that the Tribunal erred,
while upholding that the block period ended on 21.03.2003, as the
requisition under section 132A of the Act was made on 18.09.2001 and
therefore, the block period must end on 18.09.2001. It is submitted that the
date of execution of warrant of authorization under Section 132A cannot be
held to be the date on which requisition under Section 132A was made. It is
submitted that, both in law and in fact, there is a difference between the
date on which requisition is made and the date on which the authorization
for requisition is executed under section 132A of the Act.

5.      The learned counsel for the assessee also contended that a sum of
`22,50,000/- could not be assessed as undisclosed income as the assessee
had declared the same as being a part of the cash rewards aggregating
`27,00,000/- received from the DRI. The learned counsel also drew our
attention to the affidavit filed by the assessee before the Assessing Officer



ITA No.765/2010 & 321/2012                                       Page 6 of 19
that indicated the details of the said cash rewards and a certificate issued by
Additional Director General confirming payment of a cash reward of
`8,00,000/- on 06.04.2000. It was submitted that in view of the said
documents, the conclusion of the Assessing Officer that the said sum was
unexplained income was perverse.

6.      The learned counsel for the Revenue submitted that the requisition
mentioned under Section 158B(a) of the Act relates to the date of the
execution of the authorization issued under Section 132A of the Act. It was
further submitted that, as per Explanation 2 to Section 158BE of the Act,
the requisition is deemed to have been executed on the actual receipt of the
books and accounts or other documents by the Authorized Officer. It was
submitted that, in the present case, the block period ended on 21.03.2003 as
the requisition under Section 132A of the Act was said to be complete on
21.03.2003 when the physical delivery of the amount seized by CBI and
other documents were handed over to the tax authorities enabling the
Assessing Officer to issue a notice under Section 158BC of the Act. It was
contended that, therefore, the Tribunal has rightly considered that the block
period ended on 21.03.2003.

7.      We have heard the learned counsel for the parties.

8.      In the present case, the principal controversy that requires to be
addressed is whether the period up to the date of execution of warrant of
authorization under Section 132A is to be included in the "Block Period" in
view of the Explanation 2 of Section 158BE of the Act. And, whether the
decision of the Tribunal in accepting the block period to be from




ITA No.765/2010 & 321/2012                                        Page 7 of 19
01.04.1996 to 21.3.2003 and upholding the assessment made by the
Assessing Officer for the said period, was correct.

9.      The Block Period has been defined under Section 158B of the Act
and the same is extracted as below:-

        "158B. Definitions.--In this Chapter, unless the context
        otherwise requires,-

        (a) "block period" means the period comprising previous years
        relevant to six assessment years preceding the previous year in
        which the search was conducted under section 132 or any
        requisition was made under section 132A and also includes the
        period up to the date of the commencement of such search or
        date of such requisition in the previous year in which the said
        search was conducted or requisition was made:

               Provided that where the search is initiated or the
        requisition is made before the 1st day of June, 2001, the
        provisions of this clause shall have effect as if for the words
        "six assessment years", the words "ten assessment years" had
        been substituted;

10.     A perusal of the aforesaid provision would show that, block period
has been defined to mean the period comprising previous years relevant to
the six assessment years preceding the previous year in which search under
Section 132 of the Act is conducted or requisition under Section 132A is
made. It also includes a part of the previous year till the date when the
search under section 132 of the Act is conducted or such requisition under
section 132A is made.

11.     In the present case, the Director of Income Tax (Investigation) issued
a warrant of authorization under section 132A of the Act, on 18.09.2001,




ITA No.765/2010 & 321/2012                                        Page 8 of 19
and the Income Tax Authorities received the books of accounts and other
documents on 21.03.2003. On 28.05.2003, the Assessing Officer issued a
notice to the assessee under Section 158BC of the Act to file a return of
undisclosed income for the block period of 01.04.1996 to 21.03.2003. In
response to the aforesaid notice, a return declaring undisclosed income was
filed by the assessee. Subsequently, by an order dated 24.03.2005, the
Assessing Officer completed the assessment under Section 158BC of the
Act. The moot question is whether the Block period should end on
18.09.2001 (i.e. the date of the requisition) or on 21.03.2003 (i.e. the date
on which the records were received)

12.     The learned counsel for the Revenue has relied upon the decision of
a Division Bench of the Allahabad High Court in Chandra Prakash
Aggarwal v. Assistant Commissioner of Income Tax: (2006) 287 ITR 172
(All), in support of his contention that the expression "any requisition
made" under Section 132A would mean the date on which the books of
accounts and assets were received by the Revenue. It is contended that
since the books of accounts and documents were received by the Revenue
on 21.03.2003 that would be the date on which the requisition can be stated
to have been made under Section 132A of the Act. According to the learned
counsel for the Revenue, the term of the "Block Period" would,
accordingly, extend from 01.04.1996 to 21.03.2003.

12.     The learned counsel for the Revenue has also referred to Explanation
2 to Section 158BE of the Act which clarifies the date on which the
authorizations for search or requisition can be stated to be executed.
Explanation 2 to Section 158BE clearly provides that in case of a



ITA No.765/2010 & 321/2012                                       Page 9 of 19
requisition under Section 132A, the same would be deemed to have been
executed on actual receipt of books of accounts and other documents or
assets by the authorized officer. According to the Revenue, the said
Explanation would be equally applicable for determining the date on which
requisition under Section 132A could be stated to have been made under
Section 158B(a) of the Act.


13.     In order to consider the aforesaid contentions, it would be necessary
to refer to provisions of Section 158BE(1) and Explanation 2 to Section
158BE of the Act. The same are reproduced below for ready reference:-

        "158BE. Time limit for completion of block assessment.-

        (1) The order under section 158BC shall be passed,-
        (a)      within one year from the end of the month in which the
                 last of the authorisations for search under section 132 or
                 for requisition under section 132A, as the case may be,
                 was executed in cases where a search is initiated or books
                 of account or other documents or any assets are
                 requisitioned after the 30th day of June, 1995, but before
                 the 1st day of January, 1997;

        (b)      within two years from the end of the month in which the
                 last of the authorisations for search under section 132 or
                 for requisition under section 132A, as the case may be,
                 was executed in cases where a search is initiated or books
                 of account or other documents or any assets are
                 requisitioned on or after the 1st day of January, 1997.

        xxxx                 xxxx   xxxx         xxxx         xxxx

        Explanation 2. -- For the removal of doubts, it is hereby
        declared that the authorisation referred to in sub-section (1)
        shall be deemed to have been executed,--


ITA No.765/2010 & 321/2012                                           Page 10 of 19
         (a)     in the case of search, on the conclusion of search as
                 recorded in the last panchnama drawn in relation to any
                 person in whose case the warrant of authorisation has
                 been issued;

        (b)      in the case of requisition under section 132A, on the
                 actual receipt of the books of account or other documents
                 or assets by the Authorised Officer."

14.     It is settled law that the words of a statute must be understood in the
natural, ordinary sense. Phrases and sentences must be construed according
to their grammatical meaning, unless construing the words of a statute as
per their ordinary meaning would lead to absurdity. The ordinary meaning
of words and expressions may also be discarded where it leads to
inconsistencies and repugnancies with the other provisions of the Act. In
such circumstances, the context of the statute may require that the words
and expressions be read in conformity with the context.

15.     The Oxford dictionary defines requisition as "The action or an act of
formally requiring or demanding that a duty etc. be performed; a written
demand of this nature." It is difficult to accept that making a requisition,
would be the same as receiving the articles that are requisitioned. Thus in
plain ordinary language, the expression "a requisition was made" cannot be
equated to receiving the articles that were requisitioned.

16.     The next aspect to be considered is whether the Explanation 2 to
Section 158BE could be read to support the interpretation of the definition
of "Block Period". At the outset, it would be relevant to note that the words
used in Section 158B(a) and Section 158BE(1) are different. Whereas,
Section 158B(a) refers to making of requisition, the specific words being:



ITA No.765/2010 & 321/2012                                         Page 11 of 19
"or any requisition was made under Section 132A ... or requisition was
made", Section 158BE(1) refers to execution of authorizations, the specific
words being: "authorizations ..... for requisition under Section 132A....
was executed". The Legislature has, thus, consciously used different
expressions in Section 158B(a) and Section 158BE. It is settled law that
where a statute uses different words, it would be presumed that the
Legislature intended the same to express different meanings. It, certainly,
cannot be presumed that the Legislature had consciously used different
expressions to mean the same thing. Moreover, a construction deriving
support from different phraseology in different sections of a statute may be
negated on considerations that it will lead to unreasonable or irrational
results.

17.     A Constitution Bench of the Supreme Court in the case of Member,
Board of Revenue v. Arthur Paul Benthall: AIR 1956 SC 35, has held as
under:-

        "If the intention of the legislature was that the expression
        `distinct matters' in Section 5 should be understood not in its
        popular sense but narrowly as meaning different categories in
        the Schedule, nothing would have been easier than to say so.
        When two words of different import are used in a statute in two
        consecutive provisions, it would be difficult to maintain that
        they are used in the same sense, and the conclusion must follow
        that the expression "distinct matters" in Section 5 and
        "descriptions" in Section 6 have different connotations."

18.     A Full Bench of Allahabad High Court in Raja Pande v. Sheopujan
Pande and others: AIR 1942 All 429 (FB) while considering the
provisions of the Provincial Insolvency Act held as under:-



ITA No.765/2010 & 321/2012                                      Page 12 of 19
        "In ordinary parlance the words "petition" and "application", no
        doubt, connote the same meaning, but when one finds that in a
        statute the Legislature has, in different sections, used the one or
        the other word, the conclusion is irresistible that the Legislature
        intended to use the one word in a sense different from the
        other."

19.     The Supreme Court in the case of Commissioner of Income Tax,
New Delhi v. East West Import and Export (P) Ltd., Jaipur : (1989) SCC
1 760, observed as under:-

        "There is abundant authority to support the stand of the counsel
        for the revenue that when the situation has been differently
        expressed the legislature must be taken to have intended to
        express a different intention."

20.     Following the rule of interpretation as applied by the courts in the
aforesaid decisions and on a plain reading of Section 158B(a) and
Explanation 2 to Section 158BE, one would have difficulty in accepting
that the expression "requisition was made" must be read to mean the same
as "authorizations for requisition was executed". Notwithstanding, our
reservations in reading two expressions in a given statute in the same
manner as pointed out above, it must be accepted that in given cases it may
be necessary to read different expression to convey the same meaning or to
depart from the natural meaning of the language. However, in order to do
so one must find the language of the statute to be ambiguous or the context
of the statute such that it compels an interpretation that departs from the
general rule. We therefore must examine whether there is any ambiguity in
the language of Section 158B(a) or whether the scheme of the statutory
provisions warrants reading the expression "requisition was made" to mean
when assets/books of accounts are received by the authorized officer.


ITA No.765/2010 & 321/2012                                          Page 13 of 19
21.     First of all, we must consider whether Explanation 2 to Section
158BE can be extended to interpret Section 158B(a) of the Act. In order to
do so, it would be necessary to examine the context in which the
Explanation has been introduced in the statute. The opening words of the
said Explanation indicate that the same has been introduced for the
purposes of creating a legal fiction. This is clear from the use of the words
"deemed to have been executed". The opening words of the said
Explanation also clearly indicate that the legal fiction has been introduced
for the purposes of removing any doubt with regard to the expression
"authorization which is referred to in Section 158BE(1)". It clearly implies
that the Legislature did not intend to extend this Explanation for
interpreting any other provision except as specifically indicated. It is also
settled law that the scope of legal fiction in a statute would be confined
only for the purposes for which it has been introduced. The Supreme Court
in the case of Vodafone International Holdings BV v. Union of India:
(2012) 6 SCC 613, has held as under:-

        "90. We have to give effect to the language of the section when
        it is unambiguous and admits of no doubt regarding its
        interpretation, particularly when a legal fiction is embedded in
        that section. A legal fiction has a limited scope. A legal fiction
        cannot be expanded by giving purposive interpretation
        particularly if the result of such interpretation is to transform
        the concept of chargeability ...... "

The Supreme Court further referred to its earlier decisions in
CIT v. Shakuntala: AIR 1966 SC 719 and Mancheri Puthusseri
Ahmed v. Kuthiravattam Estate Receiver: (1996) 6 SCC 185 and held as
under:-



ITA No.765/2010 & 321/2012                                         Page 14 of 19
        "399. Section 9 contains a "deeming provision" and in interpreting a
        provision creating a legal fiction, the court is to ascertain for what
        purpose the fiction is created, but in construing the fiction it is not to
        be extended beyond the purpose for which it is created, or beyond the
        language of section by which it is created."

22.     Keeping the aforesaid in view, we must also examine whether, in the
context of the scheme under Chapter XIV-B of the Act, the said
Explanation ought to be extended to interpret the meaning of "Block
Period" as defined under Section 158B(a) of the Act. In this regard, it
would be relevant to observe that the provision of Section 158BE(1) of the
Act relates to the period of limitation within which the order of block
assessment must be passed under Section 158BC of the Act. The purpose
of Section 158BE(1) of the Act is to specify sufficient time within which
the Assessing Officer is expected to complete the exercise of assessment
pursuant to the material that has been found against the assessee. The date
on which the Assessing Officer comes into possession of the assets and
books of accounts of the assessee, would be relevant for determining the
said period. An Assessing Officer cannot be expected to proceed and
conclude the exercise of assessment in absence of the requisite records,
documents and assets that form the basis on which the assessment
proceedings are to be conducted under Chapter XIVB of the Act. For the
purpose of determining the time frame for completion of the assessment
proceedings, the date on which the requisition under Section 132A is made,
would not be material and the time period must run from the date when the
Assessing Officer is in a position to proceed with the assessment
proceedings and conclude the same. The focus of Section 158BE(1) is







ITA No.765/2010 & 321/2012                                           Page 15 of 19
fixation of the time frame for completion of the assessment. This is, clearly,
not the focus of Section 158B(a).

23.     The substratal scheme of Chapter XIVB of the Act is to bring to tax
undisclosed income that is found consequent to search and seizure
operations. The underlying rationale is that where the assets/materials
found during the search operations, indicate that income for the past years
has not been disclosed and has escaped assessment, the same should be
assessed and brought to tax. It is obvious that this income, which is
represented or indicated by assets/materials that have been found, would
pertain to a period prior to the date of the search and seizure operations.
Thus, the relevant period during which this income is to be assessed would
be a period prior to the date of search. It is also apparent that the income,
that is, received/receivable after the date of search and seizure would not be
represented by the assets that are found during the search and seizure
operations and certainly, would not be assessable to tax as undisclosed
income for that period. There is, thus, good reason for the Block Period to
be defined as a period prior to the date of search or prior to the date when
the authorized officer finds reason to believe that the assets/materials
already found, represent undisclosed income. The Parliament in its wisdom
has, therefore, defined Block Period under Section 158B(a), to include the
period up to the date of commencement of the search under section 132 or
the date on which the requisition under Section 132A is made.

24.     Given the specific purpose of Explanation 2 to section 158BE, we
cannot accept the contention that the same must be extended to interpret the




ITA No.765/2010 & 321/2012                                       Page 16 of 19
meaning of "Block Period" as defined by clause of (a) of Section 158B of
the Act.

25.     In our view, the ordinary, natural meaning of the words used under
Section 158B(a) need not be departed from. There is, first of all, no
ambiguity in the language. Secondly, the definition of the expression
"Block Period" as understood by the plain language of Section 158B(a)
also conforms to the scheme of Chapter XIV-B of the Act. We, therefore,
find no reason to read the expression "requisition was made" to not mean
the date on which the authorized officer made the requisition but to mean
the date when he received the records/assets pursuant thereto.

26.     The decision of the Allahabad High Court in Chandra Prakash
Aggarwal (supra), is not in the context of the question that has been raised
in the present appeal. The question raised in that matter was with regard to
the jurisdiction of an Assessing Officer to issue a notice under Section 148
of the Act prior to the receipt of books of accounts/ assets of an assessee in
respect of whom a requisition under Section 132A had been made. We are
unable to concur with the view that requisition can be stated to be made
only when the records/assets are received.

27.     The counsel for the Revenue had also relied upon the judgment of
the Madras High Court in the case of Lakshmi Jewellary v. Deputy
Commissioner of Income Tax: (2001) 252 ITR 712, in support of his
contentions. In our view, the said decision has no application to the
question raised in the present case. The issue involved in that matter was
with regard to the length of the Block Period and whether the part of the



ITA No.765/2010 & 321/2012                                       Page 17 of 19
previous year prior to the date of search/requisition should be added to the
period of previous years relevant to the six assessment years preceding the
previous year in which the search was conducted or requisition was made.

28.      In view of the above discussions, first question as framed by this
court in the order dated 02.07.2010 must be answered in the negative and in
favour of the assessee.

29.     In view of our finding that the Block Period adopted by the
Assessing Officer was not in accordance with the provisions of the Act, the
assessment made by the Assessing Officer would also required to be
reviewed. We, accordingly, remand the matter to the Assessing Officer to
assess the income for the block Period 01.04.1995 to 18.09.2001.

30.     The third question framed by this Court is with respect to an amount
of `22,50,000/- stated to have been received by the appellant as cash
reward from the Directorate of Revenue Intelligence (DRI). The assessee
has filed an affidavit stating that he had received `27,00,000/- as cash
reward from DRI. The assessee had also produced a letter from the
Directorate of Revenue Intelligence stating that the assessee was the
recipient of cash rewards. The Assessing Officer has doubted the letter
from the DRI and also held that the assessee had failed to prove a co-
relation between the cash found and the cash rewards claimed by him. The
assessee has also asserted that the Assessing Officer had made independent
enquiries from the DRI. It is noticed that the assessee had given details of
the cash rewards received by him including the names of the officers who
had given the said cash rewards to the assessee. This, in our opinion, can be



ITA No.765/2010 & 321/2012                                       Page 18 of 19
easily be verified by the Assessing Officer by making enquiries with the
DRI. In our opinion, the affidavit filed by the assessee could not have been
rejected summarily without verifying the facts from the relevant authority.
The Assessing Officer would also have to determine whether the cash
seized by the CBI included any amount received by the assessee as cash
rewards as asserted by him. In this view, we consider it appropriate that the
matter be remanded to the Assessing Officer to consider this aspect of the
matter afresh.

31.     ITA 321/2012 is an appeal filed by the Revenue challenging the
rejection of penalty imposed by the Assessing Officer. The Tribunal has
concluded that the assessee was under a belief that the cash rewards
received by the assessee were not taxable. Accordingly, the Tribunal has
directed that the penalty on `22,50,000/- imposed by the Assessing Officer
be deleted. In view of our decision to remand the matter with respect to the
assessment of `22,50,000/- to the Assessing Officer, the question of levy
of any penalty on account of the said amount being treated as undisclosed
income is also remanded to the Assessing Officer without expressing any
opinion on the decision of the Tribunal.

32.     The appeals are disposed of in the above terms.



                                                    VIBHU BAKHRU, J



                                                  S. RAVINDRA BHAT, J
MAY 23, 2014/RK



ITA No.765/2010 & 321/2012                                       Page 19 of 19

 
 
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