High Court Of Allahabad
Gyanendra Kumar Jain vs. ACIT, Nazibabad
Section 158BD
Assessment year 1998-99
Tarun Agarwala And Dr. Satish Chandra, JJ.
Civil Misc. Writ Petition (Tax) Nos. 80,152
189,190,1017,1018 & 1019 Of 2006
August 27, 2014
ORDER
Tarun Agarwala, J. – In this group of petitions, the petitioner has prayed for the quashing of the notice dated 23.3.2005 issued under Section 158-BC read with Section 158-BD of the Income Tax Act (hereinafter referred to as the “Act”) directing the petitioner to file the correct return of the total income including the undisclosed income. The petitioner has also prayed for quashing of the reasons to believe dated 12.12.2005 on the basis of which action under Section 158-BC read with Section 158-BD of the Act has been initiated. Since all the writ petitions involve the same issue, for facility, the facts of Writ Petition (Tax) No.80 of 2006, Gyanendra Kumar Jain v. Asstt. CIT, are being taken into consideration.
2. The petitioner contends that he and his minor children filed declaration under the Voluntary Disclosure of Income Scheme (hereinafter referred to as “VDIS”) with regard to silver coins, silver utensils, gold sovereign and cash in his individual capacity and paid various sums of money as tax. The petitioner as well as his minor children also sold silver utensils and gold coins through one Bishan Chand Mukesh Kumar Saraf, Chandni Chowk, New Delhi. The sale proceeds were received through account payee cheques from Bishan Chand Mukesh Kumar. The said firm also issued a confirmation statement of such sale for the Financial Year 1997-98. For the assessment year 1998-99, the petitioner filed a return of Income Tax in his individual capacity showing his income at Rs.5,19,420/- plus Rs.70,000/- as an agriculture income. It is contended that the return was filed along with the copy of profit and loss account, balance sheet, TDS certificate and certificate of VDIS issued by the Commissioner of Income Tax, Bareilly. The said return was accepted by the Assistant Commissioner of Income Tax, Nazibabad, Bijnore under Section 143(1) (a) of the Act by issuance of an intimation slip dated 9.11.1998. Subsequently, the petitioner received the impugned notice dated 23.3.2005 under Section 158BC read with Section 158BD of the Act for the assessment year 1998-99. In response to the said notice, the petitioner filed an application seeking information, namely, as to whom the search warrant under Section 132 of the Act was issued and details of the documents seized during the search. The petitioner also asked for the reasons to believe. The petitioner contends that various replies were given by the authority, but the relevant information was not given and ultimately the reasons were supplied on 12.12.2005, which indicates that during the search conducted in the case of Sri Manoj Kumar Agarwal and his associate concern M/s Bishan Chand Mukesh Kumar, Delhi, it was found from the seized material and the inquiries done from the bank accounts of M/s Bishan Chand Mukesh Kumar that the said concern had not done any real business and had only provided bogus accommodation entries for purchase of jewellery on commission basis and that one such entry relating to the transaction by the petitioner for a sum of Rs.21,07,861/- was found when in fact no jewellery was sold by the petitioner and, consequently, the amount of Rs.21,07,861/- constitute the undisclosed income of the petitioner for the assessment year 1998-99 for which action under Section 158-BC read with Section 158-BD of the Act has been initiated.
3. On this basis, the present writ petition was filed contending that no search or seizure operation had taken place either at the residential or business premises of the petitioner nor any document was requisitioned under Section 132-A of the Act and, consequently, the notice issued under Section 158-BC read with Section 158-BD was wholly illegal and liable to be quashed. It was also contended that the search or seizure conducted at the premises of the firm M/s Bishan Chand Mukesh Kumar did not yield any useful material showing existence of undisclosed income and, consequently, the reasons to believe for issuing notice to the petitioner was not based on any tangible material. It was also contended that the notice issued to the petitioner was barred by limitation.
4. A supplementary rejoinder affidavit dated 23.3.2014 was filed alleging that a search was conducted at the residential and office premises of Manoj Agarwal and Bishan Chand Agarwal and Bamco Jewelers Private Limited and block assessment orders under Section 158-BC was completed against Manoj Agarwal, Bishan Chand Agarwal and Bamco Jewelers on 29.8.2000. It was further contended that satisfaction of the assessing officer of Manoj Agarwal was recorded on 19.12.2002 to initiate proceedings under Section 158-BD against M/s Bishan Chand Mukesh Kumar and that the assessment of M/s Bishan Chand Mukesh Kumar was completed on 31.12.2004 and thereafter the impugned notice dated 23.3.2005 was issued to the petitioner. It was contended that no satisfaction was recorded by the assessing officer to initiate proceedings against the petitioner.
5. In the light of these assertions, the Court has heard Sri Rakesh Ranjan Agarwal, the learned Senior Counsel assisted by Sri Suyash Agarwal and Sri Shambhu Chopra and Sri Govind Krishna for the respondent.
6. The learned senior counsel submitted that a search and seizure operation under Section 132 was only carried out at the business and residential premises of M/s Manoj Agarwal Bishan Chand Agarwal and M/s Bamco Jewellers Private Ltd. and that no search was carried out in the firm of M/s Bishan Chand Mukesh Kumar. It was also contended that based on the assessment order passed under Section 158-BD against M/s Bishan Chand Mukesh Kumar several documents were found against the petitioner which has led to the issuance of the impugned notice under Section 158-BD read with Section 158-BC, which notice is per-se illegal.
7. These assertions, as stated aforesaid, has now been made for the first time at the stage of hearing of the petition. Such assertions has not been made anywhere in the pleadings. On the other hand, the petitioner has admitted in paragraph 37 of the writ petition that the search and seizure operation was conducted at the premises of Bishan Chand Mukesh Kumar as well as in the supplementary affidavit dated 28.7.2008. Consequently, we are unable to accept the contention that no search was conducted under Section 132 of the Act in the firm M/s Bishan Chand Manoj Kumar. We also gave sufficient indication to the learned senior counsel that such assertions can only be considered, if it is brought on record by means of an amendment application, but, the learned counsel insisted in arguing the matter without bringing such facts on record.
8. This Court, by an earlier order of the Court, directed the Income Tax department to produce the record to show the satisfaction that has been recorded by the assessing authority. The original record was produced, which indicates the satisfaction of the authority in issuing the notice. The reason so recorded is, that during the course of search in the firm M/s Bishan Chand Mukesh Kumar, Delhi it was found that the said firm was providing bogus accommodation for purchase of jewellery on commission basis. One such entry related to the transaction conducted by the petitioner by receiving an amount of Rs.21,07,861/-from the firm M/s Bishan Chand Manoj Kumar towards the sale consideration of jewellery. According to the department, this amount constituted undisclosed income of the petitioner as the firm M/s Bishan Chand Mukesh Kumar was not doing any real business and was only providing bogus accommodation entries for the purchase of jewellery on commission basis. The fact, that the petitioner did not sell the jewellery to M/s Bishan Chand Manoj Kumar has not been disputed. In paragraphs 7, 8 and 9 of the writ petition, the petitioner has admitted that he and his minor children had sold silver utensils and gold coins to the firm M/s Bishan Chand Mukesh Kumar. In paragraph 13 of the writ petition, the petitioner has admitted that a statement of account was issued by the said firm to the petitioner.
9. In the light of the aforesaid admission and the satisfaction recorded, we do not find any error in the issuance of a notice under Section 158-BD read with Section 158-BC of the Act. The learned senior counsel has not made any attempt to argue on the grounds mentioned in the writ petition.
10. However, Section 158-BD of the Act clearly indicates that where the assessing officer is satisfied that any undisclosed income belongs to any person other than the person with respect to whom search was made under Section 132 of the Act, the assessing officer shall proceed under Section 158-BC of the Act against such other persons. Since an entry was found in the books maintained by the firm where the search was conducted which even the petitioner admits in his writ petition, the satisfaction of the assessing officer and the issuance of the notice seems to be perfectly correct, which requires no interference.
11. Consequently, for the reasons stated aforesaid, all the writ petitions fail and are dismissed.
[Citation : 371 ITR 244]
