Digvijay Chemicals Ltd. vs Assistant Commissioner of Income Tax

This is an appeal u/s 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, Delhi, dated August 31, 1999. The appeal was admitted on the following questions of law :

"1. Whether the authorised officer in the case of Bhagat Industrial Corporation and R.D. Bhagat having not handed over the books of account and other papers pertaining to the appellant to the Assessing Officer of the appellant in accordance with Section 132(9A) of the Income Tax Act, 1961, such books of account and documents could not be handed over to the Assessing Officer of the appellant u/s 158BD of the Act ?

Whether the Deputy Commissioner of Income Tax, Amritsar, had lawful satisfaction as mentioned in Section 158BD before handing over the books of account and documents to the Assessing Officer of the appellant ?

2A. Whether such satisfaction is legally required to be recorded in writing ?

2B. Whether before recording such satisfaction as is mentioned in Section 158BD, the concerned officer is required to afford an opportunity of hearing to the concerned party, and whether such opportunity having not been given to the appellant, the transfer of books of account and documents was unlawful ?

Whether the books of account and documents pertaining to the appellant were validly handed over to the Assessing Officer of the appellant ? If not, did the Assessing Officer of the appellant not require the jurisdiction to make an assessment on the appellant u/s 158BA of the Act ?

Whether the appellant having filed affidavits of concerned persons in support of its explanation and having produced those persons before the Assessing Officer for examination, if any, and the Assessing Officer having not examined or cross-examined them, the affidavits could be held to be unreliable ? If so or not, effect ?"

Heard learned counsel for the parties.

The facts of the case are that a search was conducted in the premises of Bhagat Industrial Corporation Ltd. and Mr. R. D. Bhagat on February 28, 1996. During the course of search and seizure certain documents relating to the appellant were also seized by the officer and handed over to the Income Tax Officer having jurisdiction over the appellant. On the basis of this material, the Assessing Officer issued a notice u/s 158BD read with Section 158BE(2) of the Income Tax Act requiring the assessee to furnish the return of its income. The appellant furnished nil Income Tax return but the Assessing Officer was not satisfied with the same and added several amounts to the income of the assessee. Aggrieved, the appellant filed an appeal to the Tribunal which was partly allowed. Hence, this second appeal.

Shri Dhruv Agarwal, learned counsel for the appellant, submitted that since the officer making the seizure had no jurisdiction over the appellant he had to hand over the material seized to the Assessing Officer having jurisdiction over the appellant within a period of 15 days to the seizure, and since the material was handed over after the expiry of the aforesaid period of 15 days it could not be taken into account by the Assessing Officer. We do not agree with this submission. The purpose of Section 132(9A) appears to be to help the Assessing Officer to make a speedy assessment, and this provision is not for the benefit of the assessee. Hence, even if the material was handed over beyond the period of 15 days it cannot be said that the said material cannot be looked into by the Assessing Officer.

As regards the second question, we are of the opinion that there was sufficient satisfaction by the Deputy Commissioner of Income Tax, Amrit-sar, for handing over the books of account and documents to the Assessing Officer of the appellant. This matter has been dealt with in paragraph 22 of the Tribunal''s order where it has been held that the Deputy Commissioner of Income Tax, Amritsar, was satisfied that the undisclosed income mentioned in the seized documents pertains to the appellant. We see no error in this finding. There is nothing in Section 158BD that this satisfaction must be recorded in writing. It may be noted that wherever the Income Tax Act required recording of reasons before reaching a satisfaction it has specifically provided to this effect, e.g., in Section 148(2).

As regards Section 158BD, we are of the opinion that there is no requirement to afford opportunity of hearing to a party before recording satisfaction u/s 158BD. After all, opportunity of hearing has to be given to the assessee before making the assessment, and hence it would be unreasonable to require another opportunity of hearing before recording satisfaction. Moreover, Section 158BD does not require giving of opportunity. This satisfaction is not a quasi-judicial order but an administrative order.

As regards the next ground we are of the opinion that the books of account and the documents pertaining to the appellant were validly handed over to the Assessing Officer, since the Assessing Officer has to make a correct assessment of the appellant''s income.

As regards the fourth question this has also to be answered against the assessee. It is not necessary that there must be always cross-examination of a witness before discarding his evidence. In paragraph 37 of its order, the Tribunal has observed that an addition of Rs. 27 lakhs on account of unexplained advance to Mini Exports found entered in the loose sheets, addition of Rs. 10 lakhs on account of unexplained payment of Rs. 10 lakhs in cash to Verma Tarafaq Instruments Pvt. Ltd. and the addition of Rs. 6,48,000 on account of estimated interest on the undisclosed advance of Rs. 27 lakhs detected from the loose sheets was not recorded in the books of account and it was undisclosed and unexplained advance. The explanation, affidavits, etc., filed by the assessee regarding this amount were not found acceptable. The Tribunal has relied in detail on the evidence in support of this finding.

These are the findings of fact and we cannot interfere with the same in this appeal.

Shri Dhruv Agarwal has relied on the decision of the Supreme Court in Commissioner of Income Tax, Orissa Vs. Orissa Corporation (P) Ltd., . In that case, the Tribunal had recorded a finding of fact that the cash credits were genuine and were explained. In the present case, the Tribunal, after detailed consideration of the evidence has recorded a finding of fact that the cash credits are unexplained. Hence, the above Supreme Court decision is distinguishable.

Hence, there is no merit in this appeal and it is dismissed.