MANOJ KUMAR JAIN,NEW DELHI vs. DCIT, GHAZIABAD

Present appeals have been filed by assessee against consolidated order dated 31/03/15, passed by Ld.CIT(A), & 3784/Del/2015 AYs:2009-10 & 2010-11 Sh. Manoj Kumar Jain vs. DCIT Ghaziabad for Assessment Years 2009-10 and 2010-11 on following grounds of appeal: Grounds:

Brief facts of the case are as under: Search under section 132 of the Income Tax Act, 1961 (the Act) was conducted on 11/10/10 in case of Shri Pankaj Sharma and Shri Ajay Sharma. There was information regarding cash going to be withdrawn from Account No.05732560002277 of M/s. A.K Traders with HDFC Bank, Ambedkar Road, Ghaziabad, source of which is & 3784/Del/2015 AYs:2009-10 & 2010-11 Sh. Manoj Kumar Jain vs. DCIT not explained in hands of Sh. Ajay Sharma, Proprietor of M/s. A.K Traders. When team visited bank premises it was found that a sum of Rs.2,78,00,000/-, was already transferred to another Account No.0674002190416097 with Punjab National Bank, Navyug Market, Ghaziabad, standing in name of M/s. Tushar Building Material Supplier, having address at Shop No. 3, Harish Chand Ka Bagh. Bank was accordingly requested to put balance of Rs.1,78,35,905/- standing in credit of M/s. A.K Traders with HDFC Bank, under restraint. Meanwhile team immediately visited Punjab National Bank and it was found that by that time entire amount of Rs.2,78,00,000/-, had been withdrawn in cash. Search team accordingly seized amount lying in HDFC bank in name of M/s. A.K Traders as on 11/10/10. 2.1. During examination of Sh. Ajay Sharma, statement were recorded and it was stated by him that he does not know about source of amounts credited to above account and destination of amounts debited as entire affairs were being looked after by Shri Pankaj Sharma, his brother-in-law, whose office address is 12, Navyug Market, Ghaziabad. Accordingly, survey under section 133A of the Act was conducted at 12, Navyug Market, Ghaziabad. It was found that said office was of Shri Manoj Kumar Jain (assessee before us), Proprietor of M/s Rishav Trading Co. and no business activities were found to be carried on at the premises. Subsequently on 13/10/10, residence Flat No. 306, Plot No.314, Madhav Kunj, Sector-2, Rajendra Nagar, Sahibabad, Ghaziabad of Sh. Ajay Sharma, Proprietor was also covered under search. During & 3784/Del/2015 AYs:2009-10 & 2010-11 Sh. Manoj Kumar Jain vs. DCIT examination under section 132 (4) on 13/10/10, Shri Pankaj Sharma stated that he was engaged in providing accommodation entries in garb of supply of steel and building material in name of various concerns and M/s A.K Traders is one of them. 2.2. Enquiries/surveys were conducted by Ld.AO (more particularly elaborated in assessment orders at page 2-13), from which it was unearthed that assessee was involved in business of entry providing. 2.3. It has been recorded by Ld.AO that no books of account have been maintained by assessee and documents have been found from premises of M/s Rishav Trading Company Proprietary Concern of assessee and M/s Tushar Building Material Supplier, Proprietary Concern of Shri Sanjay Thakur on 12/10/10 during survey conducted under section 133A of the Act. Ld.AO also recorded the documents were impounded under section 133A (3) during course of survey at office premises of M/s Rishav Trading Company containing incriminating materials and transactions recorded on these documents. It has also been recorded by Ld. AO that all these transactions have been made in cash. 2.4. In course of examination of Shri Pankaj Sharma and Sh. Ajay Sharma during search it has been stated that they have not carried out any business activity and have merely issued false bills to parties and returned amount which were received by RTGS or cheque, in cash after withdrawing cash from banks. They have also submitted that assessee had approached Shri Pankaj Sharma and advised him for work of providing accommodation entries and & 3784/Del/2015 AYs:2009-10 & 2010-11 Sh. Manoj Kumar Jain vs. DCIT Shri Pankaj Sharma used to sit in this office quite often and was doing work of providing accommodation entries. Sh. Pankaj Sharma also stated that assessee is engaged in same line of work on large- scale and is the king pin of accommodation entries. Accordingly, survey was conducted at office premises of assessee, where he was found absent and his accountant Sh. Ajay Saini was available, whose statement was recorded. It has also been recorded that no books of accounts (cash book, Ledger and other supporting documents) were found there. Ld. AO thus submitted that on the basis of search operation and post-search enquiries and survey under 133A in the premises of Rishav Trading Company and details of bank accounts of Shri Manoj Kumar Jain in the name of proprietorship firm it was established that assessee was also involved in business of entry providing. 2.5. Accordingly, notice under section 153C was issued for assessment years 2005-06 to 2010-11 on 18/09/12 followed by notice under section 142 (1) for filing of returns. Assessee in reply filed his income tax return for years under consideration on 17/01/13 and shown income of Rs.5,23,880/- from business and income from other sources for assessment year 2009-10 and sum of Rs.5,44,970/- was declared for assessment year 2010-11. Further notices under section 143 (2) along with questionnaire and notice under section 142 (1) were issued on 21/01/13. In response to the statutory notices authorised representative of assessee attended proceedings and was heard from time to time. & 3784/Del/2015 AYs:2009-10 & 2010-11 Sh. Manoj Kumar Jain vs. DCIT 2.6. Ld.AR objected to issuance of notice under section 153C of the Act on the ground that only survey under 133A was conducted on 12/10/10 in assessee’s case. He thus challenged validity of notice under section 153 C. Ld.AO rejected objection by recording that assessee’s case was selected under section 153C because search was conducted in the case of A.K Traders on 11/10/10 at bank premises of HDFC bank, and thereafter survey was conducted in case of assessee. 2.7. Ld. AO completed assessment by making addition of Rs.95,33,787/-being 3% of gross deposits, amounting to Rs.31,77,92,911/-for assessment year 2009-10, for assessment year 2010-11 gross deposit was Rs.30,55,14,198/- and addition @ 3% of such deposits being, Rs.91,65,426/-. 2.8. Ld.AO further added to total income of assessee on protective basis entire amount so deposited by treating it as unexplained addition for years under consideration.

Aggrieved by additions for assessment year 2009-10 and 2010- 11, made by Ld. AO, assessee preferred appeal before Ld. CIT (A). Ld.CIT (A) was of the opinion that only asset seized was cash from bank account of AK Traders and there is no satisfaction that any part of this money belong to assessee. He also observed that satisfaction merely mentions assessee is involved in providing accommodation entries as stated by Sh. Pankaj Sharma the person searched further. He thus held that A.O., wrongly assumed jurisdiction under section 153C, and proceedings were quashed holding it to be invalid. & 3784/Del/2015 AYs:2009-10 & 2010-11 Sh. Manoj Kumar Jain vs. DCIT

Ld.CIT (A) however directed Ld.AO to take action under section 147/148 of the Act. Ld.CIT (A) did not adjudicate issues on merits, as proceedings under section 153C were quashed by him.

Aggrieved by the directions of Ld.CIT (A), assessee preferred appeal before us. 6. In Ground No. 1-3, issues raised by assessee are summarised as under: (i) Ld.AR submitted that direction of Ld.CIT(A) to take action under section 147/148 of the Act, was not valid, when assessment order itself was quashed by Ld.CIT (A). It has been submitted that Ld.CIT (A) was not justified in issuing such directions, and exceeded his jurisdiction provided under section 250/251 of the Act. (ii) Assessee is also aggrieved with observations regarding other grounds on merits which has not been adjudicated by Ld.CIT (A) and were dismissed, since proceedings under section 153C were quashed. In support of contentions raised, Ld.AR placed reliance upon decisions of Co-Ordinate Bench of this Tribunal in case of Sh.Sanjay Thakur vs DCIT in for assessment year 2009-10 and 2010-11 dated 12/07/18 and decision of Sedco Overseas Ltd vs ITO in ITA No. 6636/Del/2013 for assessment year 2010-11 dated 18/07/18. 6.1. Ld.Sr.DR placed reliance upon order of Ld.CIT(A) and submitted that there is no such embargo under section 251 of the Act and Ld.CIT(A) was well within his jurisdiction to issue such direction. & 3784/Del/2015 AYs:2009-10 & 2010-11 Sh. Manoj Kumar Jain vs. DCIT

We have perused submissions advanced by both sides in light of records placed before us. 7.1. It is necessary to analyse section 251 of the Act in order to answer the issue in consideration. 7.2. Under section 251, appellate authority is entitled to either confirm, reduce, enhance or annul the assessment; he may set aside assessment and refer the case back to Assessing Officer for making fresh assessment, in accordance with directions given by him after making such further enquiry, as it may be necessary, and, Assessing Officer shall thereupon proceed to make such fresh assessment and determine where necessary, amount of tax payable on basis of such fresh assessment. Therefore, the Section, or more specifically the Clause stipulates confirmation, reduction, enhancement or annulment of assessment. The declaration of law is clear that power of First Appellate authority is co-terminous with that of Assessing Officer, and if that is so, no exception could be made to this view, as the Act does not place any restriction or limitation on exercise of appellate power by Ld.CIT(A). Even otherwise, appellate authority while hearing appeal against order of subordinate authority, has all powers, which original authority may have while deciding question before it, subject to restrictions or limitations, if any, prescribed by statutory provisions. In the absence of any statutory provisions, appellate authority is vested with all powers which subordinate authority may have in the matter. & 3784/Del/2015 AYs:2009-10 & 2010-11 Sh. Manoj Kumar Jain vs. DCIT 7.3. During course of hearing, this Bench brought to notice of Ld.AR decision of Hon’ble Delhi High Court dated 14/08/18 in WP (C) 5684/2017 and WP (C) 5717/17 in case of Ramesh Chander vs ACIT and Sanjay Chandra vs ACIT respectively, which considered identical issue wherein Ld. CIT (A) while dealing with appeals of M/s. Acorus Unitech Pvt. Ltd., was of opinion that additions were to be made in hands of Sh. Ramesh Chandra and Sh.Sanjay Chandra instead of M/s. Acorus Unitech Pvt. Ltd., subsequent to which notice under section 147 of the Act were issued to Sh. Ramesh Chandra and Sh.Sanjay Chandra, by Ld.AO. 7.4. Hon’ble Court while deciding validity of notice issued under section 147 to petitioners being Sh.Ramesh Chandra and Sh.Sanjay Chandra observed as under: “12. In the present case, there is nothing on record to indicate that before the CIT(A) concluded that the amounts were properly assessable in the hands of the present petitioner/assessee, any notice/opportunity of hearing was not afforded to them. It, however, urges that opportunity would be available before the final assessment of such amounts in the hands of the present assessee is completed.” Hon’ble Court is of the opinion that an opportunity is to be granted in respect of any directions to ld.AO by Ld.CIT(A) in his order, in respect of any assessee. 7.5. In the present facts of the case it is in assessee’s own case that Ld. CIT (A) recorded as under: “In such facts and circumstances of the case, I am of the considered opinion that, the action of the Assessing Officer in assuming jurisdiction u/s 153C is not valid. Proceedings u/s 153C are & 3784/Del/2015 AYs:2009-10 & 2010-11 Sh. Manoj Kumar Jain vs. DCIT therefore quashed. AO is however directed to take action u/s 147/148 of the I.T.Act, 1961.” 7.6. In the present case, there is nothing on record to indicate that Ld.CIT(A) concluded his order without affording proper opportunity to assessee of being heard. The direction has been issued in assessee’s own case/ We are of opinion that, in disposing of an appeal, Ld.CIT(A) may pass such order in appeal as he thinks fit. The words, ‘as he thinks fit’ means that powers of appellate authority under the Act are wide. 7.7. Looking from a different aspect, Ld.CIT(A) has such powers because Provisions of Sec.150, provides as under: Provision for cases where assessment is in pursuance of an order on appeal, etc. (1) Notwithstanding anything contained in section 149, the notice under section 148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision 1 or by a court in any proceeding under any other law]. (2) The provisions of sub- section (1) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that sub- section relates to an assessment year in respect of which an assessment, reassessment or recomputation could not have been made at the time the order which was the subject- matter of the appeal, reference or revision, as the case may be, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken.