Commissioner of Income Tax and Another vs Nirankar Nath Mittal

The IT Appeal No. 47 of 2003 under s. 260A of the IT Act, 1961 (the Act) arises out of the judgment and order dt. 18th Sept., 2002 passed by the Tribunal in ITA No. 6001/Del/1996, relating to block period from 25th Aug., 1984 to 26th Oct., 1995. The connected IT Appeal No. 50 of 2012, under s. 260A of the Act arises out of the judgment and order dt. 10th June, 2002 passed by the Tribunal, ITA No. 6107/Del/1996 [reported as (2003) 84 ITD 391 ] relating to block period 1st April, 1985 to 14th Nov., 1995.

The IT Appeal No. 47 of 2003 was admitted on 20th July, 2007 on the following questions of law:

Whether on the facts and in the circumstances of the case, the Hon''ble Tribunal is legally correct in holding that two separate assessments should have been made in this case, one for the block period upto the date of search under s. 132 concluded on 20th Oct., 1995 and another for the block period ending on the date of requisition under s. 132A of the amount of Rs. 30 lacs from the custody of police authorities i.e., on 16th July, 1996?

Whether the Hon''ble Tribunal is legally correct in holding that the addition made under s. 69 of IT Act, 1961 for Rs. 30 lacs out of Rs. 1.03 crores looted from the assessee and Shri Davi Sarin as per information of the S.H.O., Thana Rakabganj, Agra was illegal and bad in law as the same was beyond the scope of the block assessment made in the case ?

Whether the Hon''ble Tribunal is legally correct in law and on facts in deleting the addition made under s. 69A of the IT Act, 1961 being undisclosed income admitted by the assessee during the course of the statement recorded under s. 132(4) of the IT Act, 1961 ?

Whether the Hon''ble Tribunal is legally correct in observing that the notice under s. 158BC of the IT Act was bad in law ?

The IT Appeal No. 50 of 2012 was admitted on 16th July, 2007 on the following questions of law:

(1) Whether on the facts and in the circumstances of the case, the Tribunal is legally correct in observing that notice under s. 158BC of IT Act, 1961 was bad in law and that warrant of authorisation under s. 132A of IT Act, 1961 remained unexecuted ?

(2) Whether in the circumstances of the case, the Tribunal is legally correct in holding that two separate assessments should have been made in the instant case for the block period upto date of search under s. 132(1) concluded on 14th Jan., 1995 and the order for the block period ending on requisition of the amount of Rs. 72.60 lakhs from the custody of police authorities i.e. on 16th Oct., 1996 ?

(3) Whether the Tribunal is legally correct in holding that the addition of Rs. 73 lakhs under s. 69A of IT Act, 1961 out of Rs. 1.03 crores looted from the assessee and Shri N.N. Mittal as per information of the S.H.O., Thana Rakabganj, Agra was illegal and bad in law as the same falls beyond the scope of block assessment ?

(4) Whether on the facts and in the circumstances of the case, the Tribunal is legally justified in deleting the addition of Rs. 42.60 lakhs and Rs. 30.40 lakhs as undisclosed income under s. 69A of IT Act, 1961 ?

(5) Whether in the circumstances of the case, the Tribunal is legally correct in deleting the addition of Rs. 5,00,000 made under s. 69A being unexplained investment of speculation business by estimate to earn profit of Rs. 1 crore as against Rs. 5,000 admitted by the assessee ?

(6) Whether the Tribunal is legally correct in directing the AO to allow deductions claimed under Chapters IV and VI-A of IT Act, 1961 which were allowed in regular assessments for the respective assessment years, while computing the undisclosed income under s. 158BB(1) for the block period 1st April, 1985 to 14th Jan., 1995?

(7) Whether the Tribunal is legally correct in directing the AO to delete the addition of Rs. 1,00,500 made under s. 145 r/w s. 55(2) of the IT Act, 1961 on account of goodwill received by the assessee on retirement from the firm M/s. Sarin Chemical Laboratory, Agra from the period asst. yr. 1993-94 which was added as undisclosed income for the asst. yr. 1993-94 ?

We have heard Shri Shambhu Chopra, learned counsel for the IT Department. Shri Rahul Agarwal appears for the respondent assessee in IT Appeal No. 47 of 2003. Shri Shakeel Ahmad appears for the respondent assessee in IT Appeal No. 50 of 2012.

Brief facts common to both the appeals as narrated in the order of the Tribunal in paras 2.1, 2.2, 2.3, 2.4, 2.5 and 2.6 in the case of Shri Nirankar Nath Mittal, the assessee, are quoted as below:

2.1 The assessee along with Shri Davi Sarin was traveling in a car No. UP-14-C-0040 on 8th Oct., 1995 and while driving on Agra Tundla road the car driver Shri Mata Prasad stopped it near Central Public School and then two unknown persons forced the assessee and Shri Sarin to handover whatever money they were carrying in the said car. As per FIR 415 of 1995 under s. 394 of IPC dt. 8th Oct., 1995 recorded at Thana Itmad-ud-daula in book No. 30534, it was claimed by the assessee that a sum of Rs. 2 lakhs was looted from them. On 31st Oct., 1995 both assessee and Shri Davi Sarin addressed communications to S.H.O. Itmaddaula, wherein, it was pointed out that on 8th Oct., 1995 actually the amount looted was about Rs. 1 crore, out of which Rs. 30 lakhs was claimed to be owned by the assessee and Rs. 70 lakhs was claimed by Davi Sarin to be his property. On the basis of the FIR lodged by Shri Mittal and information supplied to S.H.O. Itmaddaula, police authorities took action and recovered the amount aggregating to Rs. 72.60 lakhs from the alleged looters including Ashok Tyagi, Devendra Tyagi and Mukesh Tyagi. However, in the meantime the IT Department took search and seizure operation at the premises of the assessee on 26th Oct., 1995 and thereafter on the following day i.e., 27th Oct., 1995 warrant of authorisation under s. 132A was also issued in favour of the police authorities to handover the recovered amount of looting to the IT Department. Meanwhile the Department also moved a petition in the Court of Third Addl. District & Sessions Judge, Agra requesting to direct the police authorities to handover the recovered amount to IT Department. Vide order dt. 8th July, 1996 the Addl. District & Sessions Judge, Agra in Criminal Misc. Appln. No. 54 of 1995 under s. 394/ 411 IPC directed to handover the amount of Rs. 72 lakhs to the IT Department subject to an undertaking that the responsibility of safety and security of the amount and that the said amount shall not be disposed of without permission of the Court or that of any other Court superior than the said Court as the case may be and if directed by the said Court or any other competent Court the amount shall be produced as and when so required. Subsequently, a further clarification was also issued by the Hon''ble Court on 7th Jan., 1997 that the order dt. 8th July, 1996 is clear, yet for the convenience of the IT Department it was clarified that it has already been incorporated in the order dt. 8th July, 1996 that the amount of Rs. 72 lakhs handed over to the IT Department is an undisclosed income. In such situation, the IT Department is competent under the provision of IT Act to realise, collect and adjust as the case may be, the requisite income tax from the said amount and also at liberty to take up entire proceedings contemplated under the IT Act subject to the condition already imposed in the order dt. 8th July, 1996 under which the IT Department shall be duty-bound to produce in the Court the amount or any part or balance thereof as and when so ordered by the said Court or any superior Court keeping the condition contemplated in the order dt. 8th July, 1996.

2.2. From the perusal of the judgment of Third Addl. District & Sessions Judge, Agra in Criminal Misc. Appln. No. 64 of 1995 dt. 8th July, 1996, it is further observed that the alleged looters of the cash on 8th Oct., 1995 had also claimed that the amount seized by the police on various dates belong to them.

2.3. Further, in view of the direction issued by the Court of Third Addl. District & Sessions Judge, Agra dt. 8th July, 1996 the cash was actually handed over by the police authorities to the IT Department on 16th July, 1996. Meanwhile on 18th April, 1996 notice under s. 158BC was issued by the AO to the assessee.

2.4. It is pertinent to note that the assessee first lodged an FIR at Thana Itmaddaula that a sum of Rs. 2 lakhs was looted from him and his Companion Shri Davi Sarin on 8th Oct., 1995 while traveling in a car but later on vide letter dt. 31st Oct., 1995 addressed to S.H.O. Itmaddaula communicated that on 8th Oct., 1995 actual amount looted was about Rs. 1 crore out of which Rs. 30 lakhs claimed to be owned by the assessee and balance amount of Rs. 70 lakhs owned by Shri Davi Sarin. This claim of Rs. 30 lakhs owned by the assessee was repeatedly made In entire proceedings initiated under the IT Act, 1961 i.e., either in his statement recorded under s. 132(4) or under s. 131 or in his various communications made to different authorities or in return of Income filed in compliance to notice issued under s. 158BC of the Act.

2.5. It is also worthful to mention that looted amount of Rs. 72,60,000 in the aggregate was recovered by the police authorities from the possession of different persons. The assessee has filed two paper books during course of hearing before us wherein at p. 52 of the paper book there are details of such recovered amount which are as under:

2.6 From the above it may also be seen that the alleged looters Shri Ashok Kumar Tyagi, Mukesh Tyagi and Devendra Tyagi have claimed that amounts of Rs. 10,00,000, Rs. 17,00,000 and Rs. 37,00,000 respectively earned through their independent source of income and the Department has made substantive addition in their hands by passing separate assessment orders.

The assessee produced a police report from SHO, Rakabganj recording that during the course of investigation it came to the knowledge of the police that actual amount looted from the assessee and Shri Davi Sarin was Rs. 1.30 crores and not Rs. 2 lacs as claimed in the FIR. Out of this amount the police could recover only Rs. 72.60 lacs, which was claimed by the assessees on the basis of identification marks on the notes. The amount represented part recovery of the amount looted on 8th Oct., 1995. Since the matter was sub judice in the Court, no finding regarding ownership of the seized cash was given.

The assessment in respect of Shri Nirankar Nath Mittal--Assessee in IT Appeal No. 47 of 2003

In the assessment of Shri Nirankar Nath Mittal, the AO mentioned in the assessment orders that keeping in view the factual position a sum of Rs. 1.03 crores, which was looted from the assessee and his companion Shri Davi Sarin is required to be computed as their undisclosed income. As assessee had claimed Rs. 30 lacs from out of Rs. 72.60 lacs, the same was considered as his income while computing undisclosed income for the block period. Shri Davi Sarin claimed Rs. 70 lacs, which was considered while computing his undisclosed income for the block period.

A notice dt. 18th April, 1996 was issued under s. 158BC of the Act and served on Shri N.N. Mittal on 1st May, 1996 requiring him to file returns for the block period within 16 days from the date of service of notice. The assessee objected to the notice under s. 158BC for the reason that, when the requisition has not been made by issuing warrant of authorization under s. 132A to take possession of cash, the proceedings were premature. The AO vide his letter dt. 14th May, 1996 informed the assessee that the proceedings have been Initiated on the basis of warrant of authorization issued under s. 132(1) of the Act. The AO advised the assessee to file the return of income. The AO in his letter dt. 14th May, 1996 clarified that notice under s. 158BC was issued on the basis of warrant of authorization under s. 132(1) dt. 26th Oct., 1995. The assessee approached the CIT, Agra reiterating that the notice dt. 18th April, 1996 under s. 158BC is premature as the amount has not been so far requisitioned by the Department. The CIT informed the assessee by his letter dt. 24th May, 1996 that there was no infirmity in the notice under s. 158BC issued by AO nor the notice is premature. The assessee relying upon Circular No. 717, dt. 14th Aug., 1995 [(1995) 127 CTR (St) 21] issued by the CBDT, clarifying the meaning of block period, again requested the CIT, Agra to issue instructions to AO as the assessee is not required to file return of income until amount is requisitioned from the police authorities. Since the assessee did not receive any response from CIT, Agra to his letter dt. 3rd June, 1996, he filed return of income on 27th Aug., 1996 as follows:

In the footnote Shri N.N. Mittal noted that separate return for current year income of asst. yr. 1996-97 shall be filed on or before the due date as the accounts of the firm are under tax audit. In the computation of the income filed the assessee mentioned that the looted money of Rs. 30 lacs is subject to the note given in the separate sheet as per Annex. A. In this note he mentioned that notice under s. 158BC is bad in law on the grounds that the notice does not indicate the date of requisition, and has been issued without waiting for the execution of requisition under s. 132A, the proceedings are premature, and hence the block period has been shown to be ending on 31st March, 1996. The notice was also for upto financial year 1995-96.

The assessee revised the return on 11th Oct., 1996 disclosing undisclosed income as nil. Rs. 30 lacs earlier shown as income for the asst. yr. 1996-97 was not shown in the revised return.

The AO found that the non-declaration of Rs. 30 lacs in revised return was improper as the tax is leviable on the income and which is not depending upon its recovery or enjoyment. Shri N.N. Mittal, the assessee had admitted possession of Rs. 30 lacs in cash on 8th Oct., 1995 before the amount was looted by the robbers, which proved that the assessee had actually earned Rs. 30 lacs, and which was liable to tax in the block period. The AO also found that there was no evidence except the statement unsupported by evidence of the assessee that the amount of Rs. 30 lacs represents income from speculation in shares; there was no material about the nature and source of the income and therefore keeping in view the provisions of s. 132(4) of the Act, he added Rs. 30 lacs under s. 69A of the Act to the income of the assessee.

In appeal the Tribunal relying upon the discussions made in ITA No. 6107/Del/1996, Davi Sarin vs. Asstt. CIT (supra) held that in this case also two separate assessments should have been made, one for the block period upto the date of search under s. 132 concluded on 26th Oct., 1995, and another for the block period ending on requisition of the amount of Rs. 30 lacs from the custody of the police authorities on 16th July, 1996.

The Tribunal held that the assessment for the block period ending 31st Oct., 1996 covers the block period from 25th Aug., 1984 to 26th Oct., 1995. The amount of Rs. 30 lacs was requisitioned under s. 132A of the Act from the police authorities on 16th July, 1996 and therefore the addition of Rs. 30 lacs was outside the scope of block period.

The Tribunal having regard to the fact that though search and seizure action was carried out at the business as well as the residential premises of the assessee in which no document or any other evidence was found in regard to initial investment in speculation business, and in the statement dt. 23rd Sept., 1996 in which the assessee had deposed that he has not made any initial investment in speculation business held that there was no scope to add any amount purely on the basis of estimate and thus directed the deletion of the amount of Rs. 30 lacs, as also Rs. 2 lacs.

The Tribunal thereafter considered whether deductions under Chapter VI-A are to be given, if the entire income for all the years under the block period is taken at Rs. 41,34,587, relying upon the findings recorded in ITA No. 6105/Del/1996, Anil Sarin vs. Asstt. CIT and other appeals namely, Appeal No. 7/Del/1996, Smt. Bewla Sarin vs. Asstt. CIT; ITA No. 6106/Del/1996, R.N.S. Sarin vs. Asstt. CIT; ITA No. 8/Del/1996, Smt. Rani Sarin vs. Asstt. CIT and ITA No. 9/Del/1996, Smt. Abha Sarin vs. Asstt. CIT held that any deduction under Chapter VI-A due to the assessee in any previous year including in the block period will not form part of the undisclosed income for the block period. While computing income for the purposes of block assessment the assessee will be entitled for deduction and adjustment under Chapters IV and VI-A of the Act. The AO was accordingly directed to modify the order giving rise of to this appeal.

The assessment in respect of Shri Davi Sarin--Assessee in IT Appeal No. 50 of 2012

In the matter of assessment of Shri Davi Sarin, the AO considered total looted amount of Rs. 1.03 lacs, which is said to be looted from the assessee, and his accomplice Shri N.N. Mittal. The AO mentioned In the assessment order that without prejudice to the claim of Shri Ashok Tyagi, Devendra Tyagi and Mukesh Tyagi, a sum of Rs. 49 lacs looted out of Rs. 72.60 lacs seized by the police belong to them. The same amount was considered in the hands of the assessee, because the assessee had claimed that on the basis of identification marks on the note, the said amount represented the part recovery of the amount looted from him and Shri Mittal, when they were going in a car on 8th Oct., 1995. According to AO, since the matter is sub judice before the Hon''ble Court, no findings regarding ownership of seized cash are given in the assessment order. Substantive addition was made in the hands of Shri Devendra Tyagi, Ashok Tyagi and Mukesh Tyagi on the ground that they claimed before the Court that Rs. 37 lacs, Rs. 10 lacs and Rs. 17 lacs respectively were earned by them from their independent sources.

The warrant of authorisation to search the premises of the assessee was issued on 26th Oct., 1995. On the following date on 27th Oct., 1995 the warrant of authorisation for requisition of cash of looted money was issued to S.H.O., P.S. Itmaddaula, Agra requiring him to hand over money to IT Department. On 23rd Nov., 1995 the Asstt. Director of IT (Inv.) II, Agra made an application to the Addl. District Judge, Anti Dacoity Affected Area, Agra requesting him to issue necessary directions to handover the recovered cash of looted money to IT Department, to save interest of revenue in view of the provisions under s. 132A of the Act. Meanwhile notice under s. 158BC of the Act was issued on 18th Aug., 1996 by the AO requiring the assessee to furnish return of income within 16 days. The assessee by his letter dt. 12th May, 1996 objected to the notice for the reason that when requisition has not been made by issuing warrant of authorisation under s. 132A to take possession of cash, then unless the authority, who hold control/possession of the cash delivers the same to the IT authority, the proceedings initiated by the issue of notice under s. 158BC, are premature as the same can be issued only after receipt of the assets.

The CIT, Agra by letter dt. 4th June, 1996 informed the assessee that there is no defect in the notice under s. 158BC. Thereafter the return of income was filed under protest on 12th Aug., 1996 for the block period from 1st April, 1995 to 26th Oct., 1995, declaring undisclosed income at Rs. 52,60,900. The return was subsequently revised on 27th Sept., 1996, wherein total undisclosed Income was brought down to Rs. 10,00,900.

The AO merged both the proceedings initiated under ss. 132 and 132A in the assessment order dt. 31st Oct., 1996 under s. 158BC r/w s. 143(3) of the Act. The notice dt. 18th April, 1996 was issued without referring as to whether same has been issued under s. 132 or s. 132A.

The recovered amount of cash was handed over to the Department on 16th July, 1996 in pursuance to the order of Third Addl. District Judge, Agra dt. 8th July, 1996. In the judgment dt. 8th July, 1996 or in the clarificatory order dt. 7th Jan., 1997 the Court did not stay the proceedings under the IT Act and decided that the IT Department is competent to realise, collect and adjust against income tax demand from the amount handed over to the Department.

Shri Shambhu Chopra appearing for the Revenue submits that the Tribunal has erred in holding that two separate assessments should have been made in the case, one for the block period upto date of search under s. 132 concluded on 26th Oct., 1996, and another for the block period ending on the date of requisition under s. 132A of the amount recovered from the custody of the police authorities on 16th July, 1996. The Tribunal was not justified in deleting the addition under s. 69A by the AO. The assessee had admitted during the course of statement recorded under s. 132(4) of the Act, the undisclosed income. The Tribunal thus erred in interfering with the order of the AO.

Shri Shambhu Chopra relied upon Smt Jyothi Kumari No. 568, 10th Cross. Buddha Marga, Siddartha Layout, II Stage, Mysore Vs. Asst. Commissioner of Income Tax (INV) - Circle-2 No. 55/1. Shilpashree Vidhyaranya Complex, Vishveshwaranagar, Mysore-570 008, . In this case relating to the undisclosed income assessed to tax by AO under the provision of s. 158B of the Act represented by his wife, after his death, relating to block assessment, in respect of her undisclosed income, the assessee had claimed that the income assessed to tax is her own income, which had gone into contribution of acquiring an asset in respect of which contributions were made by late husband and wife. The Karnataka High Court held that s. 158BE prescribed time-limit for completion of block assessment in order to clear the demand which may arise regarding commencing of the date from which limitation is to be completed, an Explanation was added by Finance Act No. 2 of 1998 with retrospective effect from 1st July, 1995 in which expression used is ''last Panchnama'' and not ''last of the Panchnama'' therefore, there cannot be plurality of Panchnama in respect of authorization. The words ''last of the authorisation'' are used in the main section. In the Explanation the word used is ''Panchnama'' and not ''Panchnamas''. Starting point of the limitation is the end of the month in which last of the authorizations is executed as recorded in the last Panchnama. The authorised officer has discretion for the reasons to be recorded in writing to pass restraint order, in respect of articles, books and other material, which he could not take physical possession of by making an inventory and leaving them in the custody of the assessee. It is also open to him to pass prohibitory orders under sub-s. (3) not amounting to seizure, which will be enforced for 60 days for securing possession of the material/articles. The time-limit available cannot be extended by the restraint order. Once an order under s. 132(3) was passed, the limitation period commenced. The period of limitation starts on the date on which the last of the authorizations has been executed, and not when the authorised officer states that the search is finally concluded. The making of prohibitory order under s. 132(3) does not extend the starting point of the limitation.

On the other hand, Shri Rahul Agarwal and Shri Shakeel Ahmad submit that in the search and seizure operations under s. 132 nothing incriminating was found at the residential or business premises of the assessee. The block period related to the period when the search was carried out. They submitted that the cash was looted on 8th Oct., 1995. The search and seizure operations were carried out on 26th Oct, 1995. The assessment for the block period in respect of N.N. Mittal, assessee made on 31st Oct., 1996 to cover the block period from 25th Aug., 1984 to 26th Oct., 1995, when the search was carried out and in respect of Shri Davi Sarin from 1st April, 1985 to 14th Nov., 1995. The requisition was made by the warrant of authorization under s. 132A on the following day on 27th Oct., 1995 from SHO, Police Station Itmaddaula, Agra for requisitioning the cash of looted money. On 23rd Nov., 1995 the Asstt. Director (Inv.) made an application to the Addl. District Judge, Agra to issue necessary directions to police authorities to handover recovered cash to IT Department to save the interest of revenue. Meanwhile, notice under s. 158BC was issued by AO requiring the assessee to file return to which the assessees filed objections.

Shri Shakeel Ahmad submits that sub-s. (1) of s. 158BA of the Act uses the words ''are requisitioned''. The word ''requisition'' means taking of actual possession. Even where an assessment for block period has been made, regular assessment proceedings including the assessment under Chapter XIV are not barred as is clear from s. 158BB. The special procedure provided for making assessment of undisclosed income as a result of search is confined to the undisclosed material found therein and does not in any way affect the regular assessment under Chapter XIV in respect of income not discovered or relatable to the search under s. 132 or requisition of documents under s. 132A. Shri Shakeel Ahmad submits that the loot or recovery of cash cannot be equated as the amount recovered during search. During the search and seizure operations nothing was recovered. The notice under s. 158BC of the Act required the assessee for filing return of income for the block period. The notice under s. 158BC dt. 18th April, 1996 did not indicate, as found by the Tribunal, that it was issued with reference to the search conducted under s. 132 on 26th Oct., 1995, or with reference to the warrant of authorization under s. 132A on 27th Oct., 1995, for requisition of the amount. In the letter dt. 14th May, 1996 the AO clarified that notice under s. 158BC was issued on the basis of warrant of authorization under s. 132(1) dt. 26th Oct., 1995, The Tribunal rightly found that the assessment for the block period was not as a result of the requisition of the cash from the police. The cash was actually received after taking permission of the Court of the Addl. District Judge, which had correctly treated it as case property and had given it to the AO with certain conditions. In the circumstances the alleged undisclosed income of Rs. 30 lacs could not be treated to be pertaining to the period of block assessment and was directed by the Tribunal to be treated to be subject to regular assessment for the subsequent period.

Shri Shakeel Ahmad and Shri Rahul Agarwal have relied upon Chandra Prakash Agrawal Vs. Assistant Commissioner of Income Tax and Others, . In this case a search was conducted on 7th June, 2001 by the Director General, Central Excise, New Delhi, which prepared a Panchnama on 8th June, 2001. Certain documents were seized by the Central Excise Department, on the basis of which Dy. Director of IT (Inv.), Agra, initiated proceedings under s. 132A vide notice dt. 27th March. 2002. The petitioner was required and gave statement with regard to these documents, and submitted that papers seized by the Central Excise Department do not reflect his income, but still in order to purchase peace he offered a sum of Rs. 50 lacs in the proceedings under s. 132A of the Act in respect of the group of cases. The Dy. Director of IT (Inv.), Agra sent a requisition on 18th April, 2002 under s. 132A by which he requisitioned the seized material from the Central Excise Department. The assessee wrote a letter to IT Department to initiate proceedings under s. 158BC for completing assessment for the block period pursuant to surrender of Rs. 50 lacs. He was informed that since the original documents have not been made available to the IT Department, the notice for block assessment cannot be given. The Department instead of issuing proceedings under s. 158BC, initiated proceedings for reassessment under s. 148 of the Act in which assessee requested to treat the regular return already filed by him for the asst. yr. 2000-01 as the return filed by him in compliance with the notice under s. 148, and also requested for reasons for reopening the assessment.

This Court held that s, 132A(1) empowers various authorities to requisition books of accounts, documents or any assets either from the person to whom it belongs in case such authority has reason to believe that such person will produce or caused to produce such document or assets. Sub-s. (2) of s. 132A mandates the authority, which has custody of books of accounts or other documents to deliver them to the requisitioning officer and after these books of accounts or other documents or assets have been delivered, provisions of sub-ss. (4A) to (14) of ss. 132 and 132B shall mutatis mutandis apply. The requisition is complete only when the seized books of accounts and other documents have been delivered to the requisitioning authority.

This Court further held that Chapter XIV-B inserted w.e.f. 1st July, 1995 introduced a new scheme of assessment of undisclosed income, determined as a result of search, which is assessed separately as the income of designated period consisting of 10 previous years now reduced to 6 by the Finance Act, 2001 w.e.f. 1st June, 2001. This chapter provides for special procedure for assessment of the block period in respect of the undisclosed income, as a result of search conducted under s. 132 or requisition made under s. 132A of the Act. Sec. 158BA opening with non obstante clause mandates AO to assess the undisclosed income, where search has been initiated after 30th June, 1995 under s. 132 or books of accounts, or other documents or assets are requisitioned under s. 132A of the Act. The total undisclosed income relating to block period is assessed at fixed rate of 60 per cent, irrespective of the previous year or years to which such income relates. This assessment is an advantage (sic-in addition) to regular assessment and it shall not include the income assessed in any regular assessment. It will also not be included in the regular assessment of any previous year included in the block period. Sec. 158BB provides for determination of total income on the basis of evidence found as a result of search or requisition and is relatable to such evidence with certain specifications. Sec. 158BC provides for procedure for block assessment. Sec. 158BD deals with the assessment of undisclosed income and s. 158BE provides for time-limit for completion of such assessment. After discussing the effect of non obstante clause, this Court held relying on Raja Ram Kulwant Rai Vs. Assistant Commissioner of Income Tax, and B. Noorsingh Vs. Union of India and Others, that the special procedure under Chapter XIV-B shall be adopted in such case covered by the provisions, notwithstanding anything contained in any other provisions of the Act. Consequently, the income to be excluded in the block assessment is only such income which is directly evidenced by the material found during the search and does not include the income, which has been discovered on the basis of post-search enquiries made during the block assessment proceedings. This position, however, has changed after the amendment made by the Finance Act of 2002, after which the assessment of undisclosed income can only be based on evidence found in search and the material or information gathered in post-search enquiries made on the basis of evidence found in the search.

This Court, thereafter, observed the effect of the ''requisition'' and the use of word ''requisitioned'' under s. 158BA(1) which means the taking of actual possession. The Court held:

Having discussed the scheme of various provisions of Chapter XIV-B of the Act, we now come to the issue as to whether the provisions of the aforesaid chapter are attracted in the present case or not. The crucial words for the applicability of Chapter XIV-B of the Act are contained in sub-s. (1) of s. 158BA of the Act. It is applicable In cases where a search is initiated under s. 132 of the Act or books of account, other documents or any assets are requisitioned under s. 132A of the Act. It is not in dispute that in the present case no search under s. 132 has been conducted by the IT Department. The search, if any, was conducted on 7th/8th June, 2001 by the Central Excise Department. The IT Department had sent a requisition on 27th March, 2002 under s. 132A of the Act requisitioning the books of account and other documents seized by the Central Excise Department. The record of the proceeding dt. 18th April, 2002 show that the requisition was not fully executed as all the books of account and other documents had not been delivered to the requisitioning authority.

We have already referred to the scheme of s. 132A of the Act and have come to the conclusion that it deals with the power and procedure for requisitioning the books of account etc. and would be complete only when the requisitioned books of account and other documents have been delivered. Sub-s. (1) of s. 158BA of the Act uses the words ''are requisitioned''. The word ''requisition'' is not one of art and does not connote the same state of things in every particular case and its various meanings are determinable in specific instance by other facts.

Thus, one of the meanings which can be assigned to the word ''requisition'' is taking of actual possession of all the items.

We are fortified in our aforesaid view with the provisions made in s. 158BE of the Act, which provides for time-limit for completion of block assessment. It specifically provides for counting the limitation from the end of the month in which the last of the authorizations for search under s. 132 or for requisition under s. 132A of the Act was executed. Explanation 2 to s. 158BE of the Act clarifies that the authorization shall be deemed to have been executed in the case of a search, on the conclusion of search as recorded in the last Panchnama and in the case of requisition under s. 132A, on the actual receipt of the books of account or other documents or assets by the authorised officer. Thus, we are of the considered opinion that the provisions of Chapter XIV-B of the Act would come into play only when the books of account or other documents or assets are actually received by the AO pursuant to the requisition made under s. 132A of the Act.

Looking at it from another angle also, it is the only conclusion which one can arrive at. If the entire books of account and other documents which have been requisitioned under s. 132A by the authorised officer are not in the possession of the Department, the proceedings under Chapter XIV-B of the Act would be of no consequence as it does not speak of piecemeal block assessment. The block assessment has to be made for a composite period of 10 years or 6 years, as the case may be, In which the entire evidence collected as a result of the requisition under s. 132A of the Act and all other materials or information available with the AO relatable to such evidence have to be taken into consideration.

In view of the foregoing discussions, we are of the considered opinion that the proceedings initiated under s. 148 of the Act cannot be said to be without jurisdiction. However, we make it clear that in the proceedings for reassessment under s. 148 of the Act, material or evidence which is relatable to the documents for which the requisition has been sent under s. 132A cannot be taken into consideration.

We are in respectful agreement with the view taken by the Division Bench of this Court in Chandra Prakash Agrawal (supra).

Applying the ratio of the judgment in Chandra Prakash Agrawal (supra) to the present case, we find that the Tribunal did not commit any error in recording findings that since nothing was found in the search operations on 26th Oct., 1995 and that though the warrant of authorisation under s. 132A was issued on the following day on 27th Oct., 1995 the amount requisitioned was actually received after the permission of the Addl. District & Sessions Judge, Agra in Criminal Misc. Appln. No. 54 of 1995 under s. 394/ 411 IPC for handing over amount of Rs. 72 lacs to IT Department, with certain conditions. The requisitioned amount was actually received on 16th July, 1996 with the conditions imposed by the Addl. District & Sessions Judge that the IT Department will be duty-bound to produce in the Court the amount or any part or balance thereof when so ordered by the Court or any superior Court. The amount so received in pursuance to the warrant of authorisation under s. 132A could not be subjected to tax in the block assessment period under Chapter XIV-B.

The requisitioned amount, thus, could not be added under s. 69A of the Act in the block assessments of the assessees and to that effect notice under s. 158BC, including the amount, which was requisitioned and brought into the hands of the IT authorities beyond the period of block assessment, the notice under s. 158BC was bad in law.

The question Nos. 5, 6 and 7 in IT Appeal No. 50 of 2012, CIT vs. Shri Davi Sarin relate to deletion of Rs. 5 lacs made under s. 69A being unexplained investment of speculation business by estimate to earn profit of Rs. 1 crore as against Rs. 5,000 admitted by the assessee of directing AO to allow deduction claimed under Chapters IV and VI-A of the Act, which were allowed in regular assessment for respective assessment years while computing undisclosed income under s. 158BB(1) for the block period 1st April, 1985 to 14th Nov., 1995, and deletion of the addition of Rs. 1,00,500 made under s. 145 r/w s. 55(2) of the Act on account of goodwill received by the assessee on retirement from the firm M/s. Sarin Chemical Laboratory, Agra from the assessment order for 1993-94, which was added as undisclosed income for the asst. yr. 1993-94.

All the four questions namely, question Nos. 1, 2, 3 and 4, common in both the appeals as framed by tills Court are decided in favour of the respondent assessee and against the Revenue.

The question Nos. 5, 6 and 7 in IT Appeal No. 50 of 2012 are questions based on facts and the assessment made thereon by the Tribunal. These questions are not substantial questions of law to be decided by the High Court. The AO will make computation on these issues in the light of the observations made by the Tribunal. The income tax appeals are dismissed.