AMRIT HOMES PRIVATE LIMITED,BHOPAL V. ACIT (CENTRAL)-II, BHOPAL

ITSSA 3/IND/2024

AI Insights

The case involves Amrit Homes Pvt. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals) confirming additions made by the AO based on documents and a statement seized during separate search and seizure operations. The Tribunal examined whether the additions were justified based on the seized documents (Excel sheets) and the statement of a third party (Shri Dileep Gupta). The Tribunal found that the documents were not properly certified as per Section 65B of the Indian Evidence Act, making them inadmissible as evidence. Furthermore, the assessee was not provided an opportunity to cross-examine the witness or to contest the evidence, leading to a violation of natural justice.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 470537 (ITAT-INDORE)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-09-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 19-02-2024
• Other Referred Cases: M/s Andaman Timber Industries v. CIT, CIT vs. SMC Share Brokers Ltd., Prakash Chand Nahta v. CIT, ACIT vs. Shree Nakoda Construction Company, Anwar PV v. B.K. Basheer, Arjun Pandit Rao Khotkar v. Kailash Kushanrao Gorantyal, ACIT vs. Anand Jaikumar Jain
• Laws Referred To: Income Tax Act, 1961, Indian Evidence Act, 1872
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM KUMAR YADAV
• Assessee Lawyers: HITESH CHIMNANI
• Keywords: Set aside; Reassessment proceedings; Income from undisclosed sources; Rule of consistency; Document seized; Documents seized; Tax effect; Principle of natural justice; Search and seizure; Block assessment; Tangible material
• Section: 250; 153; 132; 153A; 22; 13; 153C; 20

Judgement Text

"IT(SS)ANo.03 &04/Ind/2024 Amrit Homes Pvt. Ltd. Page 1 of 23 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER IT(SS)A No.03 & 04/Ind/2024 (Assessment Year: 2015-16 & 2016-17) Amrit Homes Private Limited 17, Zone-II, MP Nagar, Bhopal Vs. ACIT-Central –II Bhopal (Appellant / Assessee) (Respondent/Revenue ) PAN: AADCA0756H Appellant by Shri Hitesh Chimnani & Ms. Komal Kataria, ARs Revenue by Shri Ram Kumar Yadav, AR Date of Hearing 26.09.2024 Date of Pronouncement 25.10.2024 O R D E R Per Bench : These two appeals by Assessee are directed against the composite order dated 16.01.2024 of the Commissioner of Income Tax (Appeal)- 3 Bhopal, for A.Y.2015-16 & 2016-17 respectively. The department also filed a cross appeal IT(SS)ANo.31/Ind/2024 which was dismissed due to low tax effect vide order dated 26.09.2024. IT(SS)ANo.03 &04/Ind/2024 Amrit Homes Pvt. Ltd. Page 2 of 23 2. The assesse has raised common grounds in these appeals except the quantum of addition. The grounds raised for A.Y.201516 are reproduced as under: “1. That on the facts and in the circumstances of the case and in law, the impugned order passed under 153A r.w.s.143(3) of the Income Tax Act, 1961 is erroneous and without jurisdiction. 2. That on the facts and in the circumstances of the case and in law, the impugned order passed by the Ld. AO under section 153A r.w.s 143(3) of the Income Tax Act, 1961 dated 30.07.2021 is non-est as the same was passed without any document identification number (DIN) as mandated by Circular No. 19/2019 dated 14.08.2019 and thus the said order deserves to be quashed. 3. That on the facts and circumstances of the case and in law the Hon'ble CIT-(A) erred in confirming the erroneous addition of Rs. 13973400/- by the Ld. AO without properly appreciating the facts of the case and submissions made before him. 4. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition without giving the assessee company an adequate opportunity for cross-examination, which violates principles of natural justice. 5. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs. 13973400/- made by the Ld. AO to the income of the appellant company based on alleged incriminating worksheets contained in a laptop seized from a third party Shri Dileep Kumar Gupta without allowing any opportunity for cross- examination despite a specific request for the same. 6. Without prejudice to the above, it is contended that the Learned Assessing Officer (Ld. AO) erred in the levying tax as per Section 115BBE of the Income Tax Act when the Ld. AO himself posited that the alleged amounts in question represent undisclosed receipts emanating from a construction project which is in fact the business of the assessee. IT(SS)ANo.03 &04/Ind/2024 Amrit Homes Pvt. Ltd. Page 3 of 23 7 The appellant seeks to leave, add, alter, amend, abandon or substitute any of the above grounds during the hearing of the appeal.” 3. There was search and seizure action u/s 132(1) of the Act on 16.05.2018 in case of Asnani Group. The assesse company is also covered under the said search. In the assessment framed u/s 153A of the Act the AO made inter alia two additions on the basis of LPS1 & 2 on account of cash receipt for sale and booking of residential unit & statement of Shri Dileep Gupta and second addition was based on LPS-5 to 7. On appeal the CIT(A) has deleted the addition made by the AO on the basis of LPS 5 to 7 being not related to the assessment years under consideration but confirm the addition based on LPS -1 & 2 which is an MS Excel Sheet taken from laptop of Shri Dileep Gupta seized during the course of search and seizure action in case of DG Homes & Reality Pvt. Ltd. carried on 12.01.2018 against which the assesse has filed these appeals. 4. Thus, the solitary common issue arises in these two appeals of the assesse is regarding the addition sustained by the CIT(A) based on the seized documents marked as LPS-1 & 2. 4.1 Before the tribunal Ld. AR of the assesse has submitted that the alleged seized document is a MS Excel Sheets taken from laptop of Shri Dileep Gupta during the course of search and seizure action dated 12.01.2018 in case of DG Homes & Realty Pvt. Ltd. Therefore, the said document was neither found or seized during the course of search and seizure action in the case of the assessee and hence, the same cannot be considered as an incriminating IT(SS)ANo.03 &04/Ind/2024 Amrit Homes Pvt. Ltd. Page 4 of 23 material for the purpose of assessment u/s 153A of the Act. Ld. AR has further submitted that the statement of Shri Dileep Gupta was recorded by DDIT Investigation on 26.04.2018 which has been relied by the AO for making the addition however, the assesse was neither supplied the seized documents and copy of the statement of Shri Dileep Gupta nor given an opportunity to cross examine Shri Dileep Gupta. Thus, the assesse was not even confronted with the alleged incriminating documents seized from 3rd party during a separate search and seizure action which is in violation of principles of natural justice. Even otherwise the Allegation in the statement of Shri Dileep Gupta was only to the extent that he has collected cash from the customers for sale and booking of the residential units in project Pebble Bay and the same was handed over to the directors of the assessee company as well as M/s Amrit Colonizers Pvt. Ltd. He has relied upon the judgment of Hon’ble Supreme Court in case of M/s Andaman Timber Industries v. CIT (2015) 281 CTR 241 (SC) as well as judgment of Hon’ble Delhi High Court in case of CIT vs. SMC Share Brokers Ltd. 159 Taxman 306. Ld. AR has also relied the judgment of Hon’ble jurisdictional High Court in case of Prakash Chand Nahta v. CIT 170 taxman 520 and submitted that without allowing the assesse to cross examined the witness, the addition made on the basis of the said statement is not sustainable and liable to be deleted. 4.2 Ld. AR has further submitted that even the alleged seized document was seized from the possession of the third party and in a separate search and seizure operation cannot be relied upon for IT(SS)ANo.03 &04/Ind/2024 Amrit Homes Pvt. Ltd. Page 5 of 23 making addition when the assesse was not confronted with the seized documents as well as statements of Shri Dileep Gupta. In support of his contention he has relied upon the decision of this Tribunal in case of ACIT vs. Shree Nakoda Construction Company in ITANo.48/Ind/2021. Ld. AR has also questioned the admissibility of the said seized documents being excel sheet taken from laptop of Shri Dileep Gupta during a separate and distinct search and seizure action on the ground that the said evidence can be proved only in accordance with the procedure prescribed under section 65A and 65B of the Act Indian Evidence Act 1872. The evidence relating to electronic record as per the provisions of section 65B(4) cannot be accepted as an evidence unless a certificate in this respect is not produced. Since it is a secondary electronic evidence and therefore, it is mandatory to be certified as per provisions of section 65B(4) of the Act. In support of his contention he has relied upon the judgment of Hon’ble Supreme Court in case of Anwar PV v. B.K. Basheer (2014) 10SCC 473 as well as the judgment in case of Arjun Pandit Rao Khotkar v. Kailash Kushanrao Gorantyal (2020) 7 SCC 1. Ld. AR has also relied upon the decision of Mumbai Benches of the Tribunal in case of ACIT v. Anand Jaikumar Jain 147 taxmann.com 125. Thus, he has submitted that the addition sustained by the CIT(A) is liable to be deleted. 5. On the other hand, ld. DR has relied upon the orders of the authorities below and submitted that the seized documents LPS-1 & 2 contains various entries of cash receipt from the customers for IT(SS)ANo.03 &04/Ind/2024 Amrit Homes Pvt. Ltd. Page 6 of 23 sale and booking of the residential units in the project Pebble Bay. In the statement Shri Dileep Gupta has explained that he was working as marketing agent of assesse as well as M/s Amrit Colonizers Pvt. Ltd. and collected the cash which was handed over to the directors /key person of these companies. 6. We have considered the rival submissions as well as relevant material on record. The assesse company is engaged in the business of builders and developers. The assesse company along with Amrit Colonizers Pvt. Ltd. entered into joint venture agreement with M/s Asnani Builders & Developers Ltd. for development and sale of residential project namely Pebble Bay. The issue before us is confined only to the addition made by the AO on the basis of seized documents marked as LPS 1 & 2 being Excel Sheet taken from Laptop of Shri Dileep Gupta seized during the course of search and seizure action dated 12.01.2018 carried out in case of M/s D.G Homes & Realty Pvt. Ltd. Though the assesse was also subjected to search and seizure action u/s 132(1) but the same was carried out on 16.05.2018. Therefore, these are two separate and distinct search and seizure actions; one dated 16.05.2018 in case of the assesse and another dated 12.01.2018 in case of Shri Dileep Gupta and M/s DG Homes & Realty Pvt. Ltd. The addition made by the AO which was confirmed by the CIT(A) is undisputedly based on the said seized documents marked as LPS-1 & 2 as well as statement of Shri Dileep Gupta not related to the search and seizure action carried in the case of assesse can not be considered as an incriminating material for the purpose of framing assessment u/s IT(SS)ANo.03 &04/Ind/2024 Amrit Homes Pvt. Ltd. Page 7 of 23 153A of the Act for A.Ys which were not pending on the date of initiation of search and seizure action dated 16.05.2018. The AO has given details of the return of income filed by the assesse for A.Ys.2015- 16 & 2016-17 as under: A.Y. Date of filing of return u/s 139(1) Total income (in Rs.) Date of filing of return u/s 153A Total income declared in Return u/s 153A (in Rs.) Additional income offered (in Rs.) 2015-16 30.9.2015 1,28,95,520/- 13.02.2020 1,28,95,520 Nil 2016-17 16.10.2016 96,31,060/- 13.02.2020 96,31,060/- Nil 2017-18 30.03.2018 1,34,15,840/- 13.02.2020 1,34,15,840/- Nil 2018-19 29.03.2019 72,92,580/- 13.02.2020 72,92,580 Nil 2019-20 23.07.2020 18,66,530 NA NA NA 6.1Thus both these assessment years were not pending as on the date of search i.e. 16.04.2018 and consequently these are unabated assessments. LPS 1 & 2 are undisputedly neither found nor seized during the course of search and seizure operation in the case of the assesse but the same was taken from Laptap of Shri Dileep Gupta during the search and seizure dated 12.01.2018 in his case as well as M/s DG Homes & Reality Pvt. Ltd. Therefore, the said seized IT(SS)ANo.03 &04/Ind/2024 Amrit Homes Pvt. Ltd. Page 8 of 23 documents cannot be used for the purpose of framing assessment u/s 153A of the Act and that too for the assessment years which were not pending on the date of search and consequently not got abated by virtue of search and seizure action. At the most the said seized material could have been a basis for initiation of proceedings u/s 153C of the Act if it discloses an undisclosed income in the hands of the assesse. At this stage it is relevant to refer the judgment of Hon’ble Supreme Court in case of Pr. CIT, Central-3 v. Abhisar Buildwell (P.) Ltd. as reported in [2023] 454 ITR 212 (SC) wherein it has been held that no addition can be made in absence of any incriminating material found and seized during the course of search and seizure action for assessment years which are nonabated by virtue of search. The Hon’ble Supreme Court has considered this issue in case as under: “9. While considering the issue involved, one has to consider the object and purpose of insertion of Section 153A in the Act, 1961 and when there shall be a block assessment under Section 153A of the Act, 1961. 9.1 That prior to insertion of Section 153A in the statute, the relevant provision for block assessment was under Section 158BA of the Act, 1961. The erstwhile scheme of block assessment under Section 158BA envisaged assessment of ‘undisclosed income’ for two reasons, firstly that there were two parallel assessments envisaged under the erstwhile regime, i.e., (i) block assessment under section 158BA to assess the ‘undisclosed income’ and (ii) regular assessment in accordance with the provisions of the Act to make assessment qua income other than undisclosed income. Secondly, that the ‘undisclosed income’ was chargeable to tax at a special rate of 60% under section 113 whereas income other than ‘undisclosed income’ was required to be assessed under regular assessment procedure and was taxable at normal rate. Therefore, section 153A came to be inserted and brought on the statute. Under Section 153A regime, the intention of the legislation was to do away with the scheme of two parallel assessments and tax the ‘undisclosed’ income too at the normal rate of tax as against any special rate. Thus, IT(SS)ANo.03 &04/Ind/2024 Amrit Homes Pvt. Ltd. Page 9 of 23 after introduction of Section 153A and in case of search, there shall be block assessment for six years. Search assessments/block assessments under Section 153A are triggered by conducting of a valid search under Section 132 of the Act, 1961. The very purpose of search, which is a prerequisite/trigger for invoking the provisions of sections 153A/153C is detection of undisclosed income by undertaking extraordinary power of search and seizure, i.e., the income which cannot be detected in ordinary course of regular assessment. Thus, the foundation for making search assessments under Sections 153A/153C can be said to be the existence of incriminating material showing undisclosed income detected as a result of search. 10. On a plain reading of Section 153A of the Act, 1961, it is evident that once search or requisition is made, a mandate is cast upon the AO to issue notice under Section 153 of the Act to the person, requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and assess or reassess the same. Section 153A of the Act reads as under: “153A. Assessment in case of search or requisition - (1) Notwithstanding anything contained in Section 139, Section 147, Section 148, Section 149, Section 151 and Section 153, in the case of a person where a search is initiated under Section 132 or books of account, other documents or any assets are requisitioned under Section 132-A after the 31st day of May, 2003, the Assessing Officer shall— (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under Section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under Section 132 or making of requisition under Section 132- A, as the case may be, shall abate. (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in IT(SS)ANo.03 &04/Ind/2024 Amrit Homes Pvt. Ltd. Page 10 of 23 sub-section (1) or Section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to subsection (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside Explanation.—For the removal of doubts, it is hereby declared that,— (i) save as otherwise provided in this section, Section 153- B and Section 153- C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year.” 11. As per the provisions of Section 153A, in case of a search under Section 132 or requisition under Section 132A, the AO gets the jurisdiction to assess or reassess the ‘total income’ in respect of each assessment year falling within six assessment years. However, it is required to be noted that as per the second proviso to Section 153A, the assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under Section 132 or making of requisition under Section 132A, as the case may be, shall abate. As per sub-section (2) of Section 153A, if any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to subsection (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner. Therefore, the intention of the legislation seems to be that in case of search only the pending assessment/reassessment proceedings shall abate and the AO would assume the jurisdiction to assess or reassess the ‘total income’ for the entire six years period/block assessment period. The intention does not seem to be to re-open the completed/unabated assessments, unless any incriminating material is found with respect to concerned assessment year falling within last six years preceding the search. Therefore, on true interpretation of Section 153A of the Act, 1961, in case of a search under Section 132 or requisition under Section 132A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment IT(SS)ANo.03 &04/Ind/2024 Amrit Homes Pvt. Ltd. Page 11 of 23 proceedings under sections 147/48 of the Act, subject to fulfilment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy. 12.If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under Section 153A of the Act is linked with the search and requisition under Sections 132 and 132A of the Act. The object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the AO would assume the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/unabated assessment. As per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction with respect to such abated assessments. It does not provide that all completed/unabated assessments shall abate. If the submission on behalf of the Revenue is accepted, in that case, second proviso to section 153A and subsection (2) of Section 153A would be redundant and/or rewriting the said provisions, which is not permissible under the law. 11. For the reasons stated hereinabove, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material. 12. In view of the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii) all pending assessments/reassessments shall stand abated; IT(SS)ANo.03 &04/Ind/2024 Amrit Homes Pvt. Ltd. Page 12 of 23 iii.in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv.in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re- opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs. Accordingly, the addition made by the AO and sustained by the CIT(A) on the basis of the alleged LPS 1 & 2 is not sustainable and liable to be deleted on this ground alone. 6.2 Further it is also undisputed fact that the AO has not confronted the alleged LPS 1 & 2 as well as the statement of Shri Dileep Gupta to the assesse and therefore, the assesse was not even given opportunity to put up its defense as well as cross examine Shri Dileep Guptat whose statement has been relied upon by the AO while making addition in question. Once the alleged incriminating material LPS 1 & 2 is not found and seized during the course of search and seizure of the assesse but was seized during the course of separate and distinct search and seizure operation of third person then making addition on the basis of the alleged documents as well as statement of third party without giving opportunity IT(SS)ANo.03 &04/Ind/2024 Amrit Homes Pvt. Ltd. Page 13 of 23 to the assessee to cross examine the witness as well as to put up its defence, is not sustainable in law. The AO has not brought any material on record to show that the documents were either confronted to the assesse during the search proceedings of the assesse or during the assessment proceedings. The Hon’ble Supreme Court in case of Andaman Timber Industries vs. Commissioner of Central Excise 62 taxman 3 has held in para 6 & 7 as under: \"6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. 7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for IT(SS)ANo.03 &04/Ind/2024 Amrit Homes Pvt. Ltd. Page 14 of 23 the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions.\" 6.3 Accordingly addition made by the AO in violation of principle of natural justice is not sustainable and liable to be deleted on this ground alone. 7. The third objection raised by the assesse is regarding inadmissibility of the said Excel Sheet taken from laptop of Shri Dileep Gupta in contravention of provisions of section 65B(4) of the Indian Evidence Act as evidence. An identical issue has been considered by us in case of M/s Asnani Builders & Developers Ltd. in ITANo.11 to 14/Ind/2014 vide even dated order in para 6.6 & 6.7 as under: “6.6 The Ld. AR has also raised a strong objection against the admissibility of excel sheet as an evidence in view of Section 65B of the Evidence Act which requires that the evidence in the form of electronic record can only be used in the proceedings if a certificate u/s 65B(4) of the Evidence Act is produced. In the case in hand the department has not disputed that no such certificate has been taken or available with the A.O in respect of the excel sheet marked as LPS-1. The CIT(A) has only made a reference to the judgment of Hon’ble Supreme Court in case of Chuharmal vs. CIT 172 ITR 250 wherein it was observed that the rules of evidence act do not apply strictly to proceedings under the Income Tax Act but that was only in respect of the admissibility of the evidence without undergoing the process of proving it as strictly as per the Evidence Act but not regarding the procedure to collect digital evidence in compliance of the provisions of Evidence Act. The safeguard u/s 65B is provided to avoid any manipulation or loosing the contents in the process of collecting the electronic record. The Visakhapatnam Bench of this IT(SS)ANo.03 &04/Ind/2024 Amrit Homes Pvt. Ltd. Page 15 of 23 Tribunal in case of Polisetty Somasundaram reported in 153 taxmann.comn 591 relied upon the by the Ld. AR of the assessee as held in para 39 to 46 as under: “39. We have heard both the parties and perused the material available on record and the orders of the Ld. Revenue Authorities on this issue as well as the submissions made by the Ld. AR and the Ld. CIT-DR. The CBDT has issued an Investigation Manual for the purpose of collecting Digital Evidence in the cases of search and seizure. In para 2.6.3 of the said Manual, the CBDT has advised that the procedure has to be in consonance with the provisions of section 65B of the Indian Evidence Act. For reference sake, we extract below the relevant para 2.6.3 of the Manual: \"2.6.3 Under Indian Evidence Act there are several references to documents and records and entries in books of account and their recognition as evidence. By way of the THE SECOND SCHEDULE to the Information Technology Act Amendments to the Indian Evidence Act have been brought in so as to, incorporate reference to Electronic Records along with the document giving recognition to the electronic records as evidence. Further, special provisions as to evidence relating to electronic record have been inserted in the Indian Evidence Act, 1872 in the form of section 65A & 65B, after section 65. These provisions are very important. They govern the integrity of the electronic record as evidence, as well as, the process for creating electronic record. Importantly, they impart faithful output of computer the same evidentiary value as original without further proof or production of original. Accordingly, while handling any digital evidence, the procedure has to be in consonance of these provisions.\" 40. Further, we find that section 65B(2) of the Indian Evidence Act clearly specifies the following conditions with respect to obtaining of Digital Evidence both for primary and secondary evidences. The relevant extract of section 65B(2), (3) and (4) are as follows: \"(2) The conditions referred to in sub-section (1) in respect of a computer output shall be the following, namely: (a) the computer output containing the information was produced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over 181 that period by the person having lawful control over the use of the computer; (b) during the said period, information of the kind contained in the electronic record or of the kind from which the information so contained IT(SS)ANo.03 &04/Ind/2024 Amrit Homes Pvt. Ltd. Page 16 of 23 is derived was regularly fed into the computer in the ordinary course of the said activities; (c) throughout the material part of the said period, the computer was operating properly or, if not, then in respect of any period in which it was not operating properly or was out of operation during that part of the period, was not such as to affect the electronic record or the accuracy of its contents; and (d) the information contained in the electronic record reproduces or is derived from such information fed into the computer in the ordinary course of the said activities. (3) Where over any period, the function of storing or processing information for the purposes of any activities regularly carried on over that period as mentioned in clause (a) of sub-section (2) was regularly performed by computers, whether- (a) by a combination of computers operating over that period; or (b) by different computers operating in succession over that period; or (c) by different combinations of computers operating in succession over that period; or (d) in any other manner involving the successive operation over that period, in whatever order, of one or more computers and one or more combinations of computers, all the computers used for that purpose during that period shall be treated for the purposes of this section as constituting a single computer; and references in this section to a computer shall be construed accordingly. (4) In any proceedings where it is desired to give a statement in evidence by virtue of this section, a certificate doing any of the following things, that is to say, - (a) identifying the electronic record containing the statement and describing the manner in which it was produced; (b) giving such particulars of any device involved in the production of that electronic record as may be appropriate for the purpose of showing that the electronic record was produced by a computer; (c) dealing with any of the matters to which the conditions mentioned in sub-section (2) relate, IT(SS)ANo.03 &04/Ind/2024 Amrit Homes Pvt. Ltd. Page 17 of 23 and purporting to be signed by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities (whichever is appropriate) shall be evidence of any matter stated in the certificate; and for the purposes of this sub-section it shall be sufficient for a matter to be stated to the best of the knowledge and belief of the person stating it.\" 41. We find from the written submissions of the Ld. AR that the provisions of section 65B(2)(d) as extracted above was not followed by the Revenue. The Revenue failed to identify the primary system giving particulars of the device involved in the production of the data was produced by a computer. 42. Further, we have also considered the cases referred to by the Ld. AR. In the case of Vetrivel Mineral (supra) the Hon'ble Madras High Court has observed as under: \"24. As contended by the writ petitioners, when the entire assessment has been framed only on the basis of the so-called electronic record which are said to be copies of Excel Sheet, Excel work note book etc., non-compliance of section 65(B) of the Indian Evidence Act renders the document inadmissible in the eye of law as held by the Supreme Court in the judgment Anvar P.V. case (supra). ''14. Any documentary evidence by way of an electronic record under the Evidence Act, in view of sections 59 and 65A, can be proved only in accordance with the procedure prescribed under section 65B. Section 65B deals with the admissibility of the electronic record. The purpose of these provisions is to sanctify secondary evidence in electronic form, generated by a computer. It may be noted that the section starts with a non obstante clause. Thus, notwithstanding anything contained in the Evidence Act, any information contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer shall be deemed to be a document only if the conditions mentioned under sub-section (2) are satisfied, without further proof or production of the original. The very admissibility of such a document, i.e., electronic record which is called as computer output, depends on the satisfaction of the four conditions under section 65B(2). Following are the specified conditions under section 65B(2) of the Evidence Act: The electronic record containing the information should have been produced by the computer during the period over which the same was regularly used to store or process information for the purpose of any activity regularly carried on over that period by the person having lawful control over the use of that computer; (i) The information of the kind contained in electronic record or of the kind from which the information is derived was regularly fed into the IT(SS)ANo.03 &04/Ind/2024 Amrit Homes Pvt. Ltd. Page 18 of 23 computer in the ordinary course of the said activity ; (ii) During the material part of the said period, the computer was operating properly and that even if it was not operating properly for some time, the break or breaks had not affected either the record or the accuracy of its contents; and (iii) The information contained in the record should be a reproduction or derivation from the information fed into the computer in the ordinary course of the said activity. 15. Under section 65B(4) of the Evidence Act, if it is desired to give a statement in any proceedings pertaining to an electronic record, it is permissible provided the following conditions are satisfied: (a) There must be a certificate which identifies the electronic record containing the statement; (b) The certificate must describe the manner in which the electronic record was produced; (c) The certificate must furnish the particulars of the device involved in the production of that record; (d) The certificate must deal with the applicable conditions mentioned under section 65B(2) of the Evidence Act; and (e) The certificate must be signed by a person occupying a responsible official position in relation to the operation of the relevant device. 16. It is further clarified that the person need only to state in the certificate that the same is to the best of his knowledge and belief. Most importantly, such a certificate must accompany the electronic record like computer printout, Compact Disc (CD), Video Compact Disc (VCD), pen drive, etc., pertaining to which a statement is sought to be given in evidence, when the same is produced in evidence. All these safeguards are taken to ensure the source and authenticity, which are the two hallmarks pertaining to electronic record sought to be used as evidence. Electronic records being more susceptible to tampering, alteration, transposition, excision, etc. without such safeguards, the whole trial based on proof of electronic records can lead to travesty of justice. 17. Only if the electronic record is duly produced in terms of section 65B of the Evidence Act, the question would arise as to the genuineness thereof and in that situation, resort can be made to section 45A opinion of examiner of electronic evidence. 18. The Evidence Act does not contemplate or permit the proof of an electronic record by oral evidence if requirements under section 65B of the Evidence Act are not complied with, as the law now stands in India.'' IT(SS)ANo.03 &04/Ind/2024 Amrit Homes Pvt. Ltd. Page 19 of 23 43. In the case of Anvar P.V (supra), the Hon'ble Supreme Court held their observations vide Paras 14, 15, 16, 17 & 18 to state that non-compliance of section 65(B) of the Indian Evidence Act renders the document inadmissible in the eye of law. Relying on the same ratio laid down by the Hon'ble Apex Court, the Hon'ble Madras High Court delivered its judgment in the case of Vetrivel Mineral (supra) vide para 24 of its order which is extracted herein above. Therefore, in our opinion there is no need to repeat the finding of the Hon'ble Supreme Court in the case of Anvar P.V. again for reference. 44. Now coming to the decision of the Hon'ble Supreme Court in the case of Arjun Pandit Rao Khotkar (supra) the Hon'ble Apex Court has observed as under: \"30. Coming back to Section 65B of the Indian Evidence Act, sub-section (1) needs to be analysed. The sub-section begins with a non-obstante clause, and then goes on to mention information contained in an electronic record produced by a computer, which is, by a deeming fiction, then made a \"document\". This deeming fiction only takes effect if the further conditions mentioned in the Section are satisfied in relation to both the information and the computer in question; and if such conditions are met, the \"document\" shall then be admissible in any proceedings. The words \"…without further proof or production of the original…\" make it clear that once the deeming fiction is given effect by the fulfilment of the conditions mentioned in the Section, the \"deemed document\" now becomes admissible in evidence without further proof or production of the original as evidence of any contents of the original, or of any fact stated therein of which direct evidence would be admissible. 31. The non obstante clause in sub-section (1) makes it clear that when it comes to information contained in an electronic record, admissibility and proof thereof must follow the drill of section 65B, which is a special provision in this behalf - sections 62 to 65 being irrelevant for this purpose. However, section 65B(1) clearly differentiates between the \"original\" document - which would be the original \"electronic record\" contained in the \"computer\" in which the original information is first stored - and the computer output containing such information, which then may be treated as evidence of the contents of the \"original\" document. All this necessarily shows that section 65B differentiates between the original information contained in the \"computer\" itself and copies made therefrom - the former being primary evidence, and the latter being secondary evidence. 32. Quite obviously, the requisite certificate in sub-section (4) is unnecessary if the original document itself is produced. This can be done by the owner of a laptop computer, a computer tablet or even a mobile phone, by stepping into the witness box and proving that the concerned device, on which the original information is first stored, is owned and/or IT(SS)ANo.03 &04/Ind/2024 Amrit Homes Pvt. Ltd. Page 20 of 23 operated by him. In cases where \"the computer\", as defined, happens to be a part of a \"computer system\" or \"computer network\" (as defined in the Information Technology Act, 2000) and it becomes impossible to physically bring such network or system to the Court, then the only means of proving information contained in such electronic record can be in accordance with section 65B(1), together with the requisite certificate under section 65B(4).This being the case, it is necessary to clarify what is contained in the last sentence in paragraph 24 of Anvar P.V. (supra) which reads as \"…if an electronic record as such is used as primary evidence under section 62 of the Evidence Act…\". This may more appropriately be read without the words \"under section 62 of the Evidence Act,…\". With this minor clarification, the law stated in paragraph 24 of Anvar P.V. (supra) does not need to be revisited. 45. On careful perusal of the case laws cited above, we are of the considered view that the Revenue Authorities should mandatorily and scrupulously follow the conditions laid down under section 65B(2) and (4) of the Indian Evidence Act to render any documents to be valid in the eyes of law. In the instant case, the investigation agency obtained a Certificate about the details of the pen drive and the person in whose custody it was seized. Except these details nothing was there in the Certificate and also the said Certificate was not completely filled up by the Ld. Revenue Authorities. Further, from the Certificate obtained under Indian Evidence Act which is placed in Page-11 of Paper Book-2, we find force in the arguments of the Ld. AR that it is not as per the conditions laid down u/s. 65B of the Indian Evidence Act. For the sake of reference, the Certificate is reproduced here in below: IT(SS)ANo.03 &04/Ind/2024 Amrit Homes Pvt. Ltd. Page 21 of 23 46. After considering the decisions of the Hon'ble Supreme Court in the case of Anvar P.V (supra); Arjun Pandit Rao Khotkar (supra) and the judgment of the Hon'ble Madras High Court in the case of Vetrivel Mineral (supra) as well as on perusal of the facts and circumstances of the case, we are of the considered we that the four conditions stipulated in section 65B(2) i.e., (a) to (d) along with section 65B(4) were not followed while obtaining the Certificate u/s. 65B of the Indian Evidence Act 1872 in the case of the assessee which are to be followed mandatorily. Therefore, we have no hesitation to hold that this Certificate is not a valid Certificate as prescribed under the Indian Evidence Act 1872 and hence cannot be enforced. Therefore, the Certificate obtained in the case of the assessee cannot be regarded as a legally valid certificate u/s. 65B of the Indian IT(SS)ANo.03 &04/Ind/2024 Amrit Homes Pvt. Ltd. Page 22 of 23 Evidence Act and the same has no recognition in the eyes of law. The information contained in the seized pendrive is could not be considered as admissible evidence as per the provisions of section 65B of Indian Evidence Act. Therefore, we are of the considered view that such inadmissible seized material is not sustainable in the eyes of law. Thus, the assessment order passed in the case of the assessee on 31-3-2022 is not a valid assessment order in the eyes of law and it deserves to be set aside.” 6.7 Therefore, the said seized document in the shape of excel sheet taken from the laptop of Shri Dileep Kumar Gupta cannot be considered as an admissible evidence in the absence of the procedure followed as required u/s 65B(4) of the Evidence Act.. In view of the facts discussed above we are of the considered view that the A.O has recorded the satisfaction to initiate the proceedings u/s 153C of the Act only on the presumption that the assessee has earned unaccounted income in the shape of cash receipt on sale of residential units and not on the basis of any tangible material reveal any undisclosed income of the assessee on this account. Accordingly we hold that the initiation proceedings u/s 153C of the Act are bad in law and without jurisdiction.” 7.1 Further the Mumbai Benches of the Tribunal in case of ACIT v. Anand Jaikumar Jainkumar Jain (supra) has also considered an identical issue in para 24 as under: “24. Further, it is brought to our notice by the Ld AR that the Hon'ble Supreme Court in the case of Arjun Panditrao Khotkar v. Kailash Khushanrao Gorantyal And Ors (Civil Appeal Nos 20825-20826 of 2017) dated 14.07.2020 has analyzed the provisions of 65B of The Indian Evidence Act, 1872 with regard to admissibility of electronic evidence. The ITA NOs. 3820, 3821, 3822 & 3233/MUM/2019 Shri Anand Jaikumar Jain Hon'ble Supreme Court held that certificate under Section 65B (4) of The Indian Evidence Act, 1872 is a condition precedent to the admissibility of evidence by way of electronic record as S. 65B (4) of The Indian Evidence Act, 1872 is a mandatory. In view of the same, it was submitted that the pen drive (an electronic record), being relied upon by the department, is not admissible as evidence as certificate u/s 65B (4) has not been produced. It was submitted, the data retrieved from the pendrive have been relied upon without any such certificate. This action of the AO is completely improper, more particularly so when Dalmia Group have disputed the contents of the pen-drive. Further reliance is placed upon the IT(SS)ANo.03 &04/Ind/2024 Amrit Homes Pvt. Ltd. Page 23 of 23 decision of Mumbai Bench of the Tribunal in the case of Simtools P. Ltd. v. DOT in ITA No. 1574/Mum/2020 dated 09.02.2022 wherein following the above referred decision of the Supreme Court, it was held that the electronic data cannot be relied upon in the absence of requisite certificate.” 7.2 Accordingly in the absence of any contrary precedence to maintain the rule of consistency we hold that the addition made by the AO on the basis of the said documents is not sustainable and liable to be deleted. In view of the above discussion the addition made by the AO based on the LPS 1 & 2 is not sustainable in law on the reasons as discussed above which are mutually exclusive and hence, addition made for A.Y. 2015-16 & 2016-17 are deleted. 8. In the result, both appeals of the assesse are allowed. Order pronounced in the open court on 25.10.2024. Sd/- Sd/- (B.M. BIYANI) (VIJAY PAL RAO) Accountant Member Judicial Member Indore,_ 25.10.2024 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative UE COPY (6) Guard File By order Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore "