Shri.B.H.Basha, Bangalore V. Deputy Commissioner of Income Tax, Bangalore

ITA 1375/BANG/2016

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2422 (ITAT-BANGALORE)
• Duration Of Justice: 5 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 02-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROUMVAN PAITE
• Assessee Lawyers: B S BALACHANDRA
• Keywords: Bogus purchase; Unexplained investment; Unexplained expenditure; Income from undisclosed sources; Principle of natural justice; Opportunity of cross examination; Question of law
• Section: 142(1); 153A; 37(1); 69A; 43; 13; 22; 131; 69; 37; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NOS.1375 TO 1378/BANG/2016 ASSESSMENT YEAR : 2008-09 TO 2011-12 SHRI B.H BASHA, PROP. M/S BAHAR FILMS, NO.18, 13 TH CROSS, JAYAMAHAL EXTENSION, BENGALURU-560 046. PAN AEBPB 0242 C VS. THE DY. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE-1(4), BENGALURU. APPELANT RESPONDENT APPELLANT BY : SHRI B.S BALACHANDRA, ADVOCATE RESPONDENT BY : SHRI ROUMVAN PAITE, CIT(DR) DATE OF HEARING : 01.10.2021 DATE OF PRONOUNCEMENT : 28.10.2021 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST DIFFERENT ORDERS OF THE CIT(A), BENGALURU FOR THE ASSESSMENT YEARS 2008-09 TO 2011-12. ITA NO.1375 TO 1378/BANG/2016 PAGE 2 OF 44 2. THERE WAS A SEARCH UNDER SECTION 132 OF THE INCO ME TAX ACT ON 30/08/2011 IN THE CASE OF THE ASSESSEE. CONSEQUENT TO SEARCH ACTION, NOTICE UNDER SECTION 1 53A OF THE INCOME-TAX ACT WAS ISSUED TO THE ASSESSEE AND ASSESSEE FILED RETURN OF INCOME ON 19/9/2011. NOTI CE WAS ISSUED ON 15/03/2012 AND SERVED TO THE ASSESSEE ON 20/03/2012. THE ASSESSEE FILED RETURN OF INCOME CONSEQUENT TO THIS NOTICES FOR ALL THESE ASSESSMENT YEARS ON 15/05/2012. THE ASSESSMENT ORDERS PASSED IN AL L THESE ASSESSMENT YEARS VIDE ORDER DATED 25/3/2014. IN THESE ASSESSMENT YEARS, IN ADDITION TO THE INCOME DECLARED BY THE ASSESSEE, THE ASSESSING OFFICER MAD E ADDITION TOWARDS UNEXPLAINED INVESTMENT ON THE BA SIS OF LOOSE SHEETS FOUND DURING THE COURSE OF SEARCH, WH ICH IS AS FOLLOWS:- ASSESSMENT YEAR RS. 2008-09 - 25 LAKHS 2009-10 - 25 LAKHS 2010-11 - 3.20 CRORES 2011-12 - 3,28,50,000/-. 3. ON APPEAL, CIT(A) CONFIRMED THE ADDITIONS MADE BY THE AO. AGAINST THIS, ASSESSEE IS IN APPEAL BEFOR E US. ITA NO.1375 TO 1378/BANG/2016 PAGE 3 OF 44 FIRST WE WILL TAKE UP COMMON GROUND RAISED IN ALL THESE APPEALS. 4. THE FIRST COMMON GROUND IN ALL THESE APPEALS IS WITH REGARD TO FRAMING OF ASSESSMENT WITHOUT ANY INCRIMINATING MATERIAL AND ISSUANCE OF NOTICE U/S 1 53A WITHOUT RECORDING SATISFACTION. AT THE TIME OF HEA RING, THIS GROUND IS NOT PRESSED, HENCE THE SAME IS DISMI SSED. ITA NO.1375/BANG/2016 (ASST. YEAR 2008-09) 5. THE GROUND IN THIS APPEAL IS WITH REGARD TO MAKI NG ADDITION UNDER SECTION 69A OF THE ACT, THOUGH THER E WAS NO FINDING THAT THE ASSESSEE WAS FOUND TO BE THE OW NER OF THE MONEY, AND BY IGNORING THE CASE LAWS CITED BY T HE ASSESSEE. ACCORDING TO THE ASSESSEE, THE PROVISION S OF SECTION 69A OF THE ACT IS NOT APPLICABLE BUT SECTI ON 69 IS APPLICABLE. FURTHER, THE AO NOT RECORDED ANY SATIS FACTION AS REQUIRED UNDER SECTION 69A OF THE ACT. 6. THE LD.DR RELIED ON THE ORDER OF THE LOWEST AUTHORITIES AND ALSO SUBMITTED THAT PRESUMPTION U/S 132(4A) IS A REBUTTABLE PRESUMPTION, THE ASSESSEE H EREIN HAS BEEN UNABLE TO REBUT THAT PRESUMPTION. HENCE, NO ITA NO.1375 TO 1378/BANG/2016 PAGE 4 OF 44 FAULT WITH THE CONCLUSION ARRIVED BY THE LOWER AUTH ORITIES. HE RELIED ON THE FOLLOWING JUDGMENTS :- 1) SURENDRA M KHANDHAR VS. ACIT REPORTED IN 224 CTR 409, BY THE HONBLE BOMBAY HIGH COURT 2) ITO VS. LEGAL HEIRS OF NAZMIN JAMAL 33 TAXMANN.C OM 208, THE HONBLE ITAT, MUMBAI 3) HAZARI LAL VS. CIT REPORTED IN 20 TAXMANN.COM 714 BY THE HONBLE PUNJAB & HARAYANA HIGH COURT 4) CIT VS. NARESH KUMAR AGARWALA, REPORTED IN 198 TAXMAN 194, THE HONBLE DELHI HIGH COURT. 7. FINALLY HE SUBMITTED THAT CONSIDERING THE SEIZED MATERIAL THERE WAS SUFFICIENT MATERIAL BEFORE AO WH O HAVE MADE ADDITIONAL U/S 69/69A OF THE ACT IN THESE ASST . YEARS AND THE SAME TO BE CONFIRMED. 8. IN THIS CASE, ADDITION MADE TOWARDS UNEXPLAINED INVESTMENT AND MENTIONING THE WRONG SECTION IS NOT FATAL, THOUGH SUCH ADDITION TO BE MADE UNDER SECTION 69 OF THE ACT BUT THE AO MENTIONED THE SAME AS SECTION 69A OF THE ACT. ACCORDINGLY, THIS GROUND OF APPEAL IS DI SMISSED. 9. NEXT GROUND IN THIS APPEAL IS THAT THE ASSESSEE PLACED RELIANCE ON THE LOOSE SHEET ENTRIES FOUND DURING TH E ITA NO.1375 TO 1378/BANG/2016 PAGE 5 OF 44 COURSE OF SEARCH ACTION. DURING THE COURSE OF SEAR CH, A FOLDER CONTAINING LOOSE SHEETS MARKED AS A/BHB/11 WAS SEIZED FROM THE ASSESSEES PREMISES AT NO.18, 13TH CROSS, JAYAMAHAL EXTENSION, BANGALORE. PAGE NO.10 OF THE F OLDER MARKED AS A/BHB/11 CONTAINS THE FOLLOWING INFORMATI ON, WHICH IS AS UNDER MARKED AS A/BHB/11: 10. THE TYPED COPY THE SAME IS AS FOLLOWS:- ITA NO.1375 TO 1378/BANG/2016 PAGE 6 OF 44 11. THE AO QUANTIFIED THE ADDITION IN THE ASSESSMEN T 2008-09 @ RS.25 LAKHS. ITA NO.1375 TO 1378/BANG/2016 PAGE 7 OF 44 12. NOW THE CONTENTION OF THE LD.AR IS THAT THE AO CONSIDERED THE ENTRY IN THE LOOSE SHEETS MARKED AS A/BHP/11 AT PAGE NO.10 AS SHRI VIJAY KUMAR - 24 LAK HS- 2/4 @ RS.25 LAKHS ADVANCED TO SHRI VIJAY KUMAR. ACCORDING TO LD.AR, THE AO RECORDED HIS STATEMENT UNDER SECTION 131 OF THE ACT ON 17/8/2011 IN QUESTION NUM BER 21 ON THIS ISSUE. QUESTION NUMBER 21 : 13. IN THIS CASE OF SHRI VIJAYAKUMAR, IT IS SEEN FR OM THE SEIZED MATERIAL A/BHP/11 AT PAGE NO. 10, THE AMOU NTS PAID ARE MENTIONED AND THEY DO NOT MATCH WITH THE FIGURES REFLECTED IN THE LEDGER PRODUCED BY THE AS SESSEE. AS PER THE SEIZED MATERIAL, THE FOLLOWING IS PAID TO SHRI VIJAY KUMAR: 2/4 25 ANS : SHRI VIJAY KUMAR IS A TELUGU DISTRIBUTOR AND HE HAD APPROACHED FOR FINANCE AND I DIDN'T FINANC E. I HAVE NOT DEALT WITH HIM AT ALL. 11.1 ACCORDING TO LD.AR, THE AMOUNT MENTIONED @ RS. 25 ON 2/4. THERE WAS NO FIGURE OF RS.25 LAKH, FOR DAT E 2 ND APRIL 2007. THE LD.AO INTERPRETED 25 AS RS.25 LA KHS AND 2/4 AS 2/4/2007, SO AS TO BRING IT TO TAX IN THE FI NANCE YEAR 2007-08 RELEVANT TO ASSESSMENT YEAR 2008-09, W HICH HE CANNOT DO SO WITHOUT ANY SUPPORTING MATERIAL TO ITA NO.1375 TO 1378/BANG/2016 PAGE 8 OF 44 SUGGEST THAT ASSESSEE ADVANCED SUM OF RUPEES 25 LAK HS TO SHRI VIJAYAKUMAR ON 2/4/07. THIS IS ONLY ON THE BAS IS OF IMAGINATION AND ADDITION WAS MADE WITHOUT ANY SUPPORTING DOCUMENT. 14. THE LD.DR SUBMITTED THAT THE ASSESSEE HAS NOT SATISFACTORILY EXPLAINED THE REASON FOR MAKING ENTR IES IN THE LOOSE SHEET AND ACTUALLY IT IS OUT OF THE BOOKS OF ACCOUNT. THE ASSESSEE ADVANCED MONEY AND THE SAME W AS BROUGHT TO TAX. FURTHER, IT WAS SUBMITTED THAT THE DOCUMENT WAS SEIZED FROM THE POSSESSION OF THE ASS ESSEE AND HE DID NOT DENY THE SAID DOCUMENT, HENCE THE AO PRESUMED THAT THE AMOUNT SHOWN IN DOCUMENTS WHICH HAS NOT REFLECTED IN THE ACCOUNTS MADE BY ASSESSEE WAS HIS INCOME BY WAY OF UNEXPLAINED INVESTMENT. HE REL IED ON THE ORDER OF THE CIT(A). 15.1 THE LD.DR ALSO RELIED ON THE FOLLOWING CASE LA WS:- 1. SURENDRA M.KHANDHAR VS ACIT REPORTED IN 224 CTR 409, BY THE HON'BLE BOMBAY HIGH COURT. 2. ITO VS LEGAL HEIRS OF NAZMIN JAMAL 33 TAXMANN.CO M 208, THE HON'BLE ITAT, MUM BA. 3. HAZARI LAL VS CIT REPORTED IN 20 TAXMANN.COM 714 BY THE HON'BLE PUNJAB & HARYANA HIGH COURT 4. CIT VS NARESH KUMAR AGARWALA, REPORTED IN 198 TAXMAN 194, THE HON'BLE DELHI HIGH COURT. ITA NO.1375 TO 1378/BANG/2016 PAGE 9 OF 44 15. WE HAVE HEARD BOTH THE PARTIES AND PERUSED MATERIAL ON RECORD. IN THE PRESENT CASE, THE BASIS FOR ADDITION IS ENTRY IN THE LOOSE SHEET, WHICH SHOWN A S 25/4/2007 TO SHRI VIJAYA KUMAR ON THE BASIS OF THIS ENTRY IN THE LOOSE SHEET MADE ADDITION UNDER SECTIO N 69A OF THE ACT. TO SUSTAIN THE ADDITION, THERE SHOULD BE POSITIVE MATERIAL AND MORE THAN ENTRY IN THE LOOSE SHEET WHICH IS MISSING IN THIS CASE. THE SEIZED MATERIA LS IN THE FORM OF LOOSE SHEET MARKED AS A/BHP/11 DOES NOT BA RE ANY SIGNATURE OF ANY PERSON. THE AO EXAMINED SHR I VIJAY KUMAR, WHO WAS SAID TO BE TAKEN LOAN FROM THE PRESENT ASSESSEE. IT IS VERY IMPORTANT TO EXAMINE THE PARTY AND THEREAFTER THE AO HAS TO GIVE AN OPPORTUN ITY OF CROSS EXAMINATION IN THIS REGARD. 16. THE SEIZED MATERIAL RELIED UPON BY THE AO ARE MERE LOOSE SHEET CONTAINING UN-SUBSTANTIATED JOTTINGS HA VING NO EVIDENTIARY VALUE UNLESS SUPPORTED BY THE CORROBORATIVE MATERIAL OR DOCUMENTS. FIRST OF ALL, TO COME TO THE CONCLUSION THAT THESE ARE FOOLPROOF DOCUMENT , THE DEPARTMENT SHOULD HAVE IN A POSITION TO HAVE REQUIS ITE MATERIAL TO SHOW THAT THE ASSESSEE HAS ACTUALLY ADV ANCED MONEY TO SHRI VIJAY KUMAR ON A PARTICULAR DATE. TH E AO MOSTLY RELYING ON THE ANSWER TO QUESTION NUMBER 21 TO ITA NO.1375 TO 1378/BANG/2016 PAGE 10 OF 44 THE STATEMENT RECORDED UNDER SECTION 131 OF THE ACT ON 17/8/2011. AS HELD BY THE DELHI HIGH COURT IN THE C ASE OF PCIT VS. BEST INFRASTRUCTURE INDIA PRIVATE LIMITE D 397 ITR 82 (DEL), WHEREIN, STATEMENT RECORDED UNDER SE CTION 132(4) DID NOT BY THEMSELVES SUBSTANTIATE INCREMENT ING MATERIAL ON THAT BASIS OF ASSUMPTION OF JURISDICTI ON UNDER SECTION 153A OF THE ACT AND CONSEQUENT ADDI TION MADE BY THE AO DOES NOT JUSTIFY. IN OUR OPINION, T HE STATEMENT RECORDED UNDER SECTION 132(4) DURING TH E COURSE OF SEARCH ACTION NOT ONLY HAS TO BE CONFRONT ED TO THE CONCERNED PARTIES BUT AN OPPORTUNITY TO CROSS EXAMINE THE PARTIES HAS ALSO TO BE GIVEN TO THE ASS ESSEE. IF IT WAS NOT PROVIDED, IT IS SUFFICIENT TO DISRE GARD SUCH STATEMENT. IN THE PRESENT CASE, THE SEIZED MATERIA L DID NOT CONTAIN THE NAME OF THE ASSESSEE OR SIGNATURE O F ANY PERSON, THEY ARE MERELY UNSUBSTANTIATED LOOSE SHEE T AS HELD BY TRIBUNAL IN THE CASE OF ACIT VS. LAYERS EXP ORTS PRIVATE LIMITED, 53 ITR (TRIB) 416 (MUM), WHEREIN, HELD THAT ADDITION CANNOT BE SUSTAINED MERELY ON THE BAS IS OF ROUGH NOTING MADE IN LOOSE SHEETS, UNLESS AO BRING S ON RECORDS SOME INDEPENDENT AND CORROBORATIVE MATERIAL TO PROVE IRREFUTABLY THAT THE SAID NOTING REVEALED UNACCOUNTED INCOME OR UNACCOUNTED INVESTMENTS OR UNACCOUNTED EXPENDITURE OF THE ASSESSEE. THE VERY ITA NO.1375 TO 1378/BANG/2016 PAGE 11 OF 44 PURPOSE OF SEARCH CONCLUDED UNDER SECTION 132 IS TO UNEARTH THE HIDDEN INCOME OR GET HOLD OF BOOKS OF ACCOUNT OR DOCUMENTS WHICH HAS NOT BEEN OR WILL NOT BE OTHERWISE PRODUCED BY THE ASSESSEE IN REGULAR COURS E ON ISSUE OF SUMMONS OR NOTICE. FOR THIS PURPOSE, WE PLACE RELIANCE ON THE FINDING OF THE COORDINATE BENCH IN THE CASE OF DEVRAJ URS EDUCATIONAL TRUST FOR BACKWARD CLASSES IN ITA NO.500 TO 506/BANG/2020 DATED 16/8/2021 WHEREIN HELD AS UNDER- THE CONTENTION OF THE LD. DR IS THAT THE DEPARTME NT RELIED UPON THE STATEMENT OF ASSESSEES OWN EMPLOYEE, WHO NEED NOT CROSS-EXAMINE ITS OWN EMPLOYEE AND THERE IS NO MIST AKE IN NOT PROVIDING OPPORTUNITY OF CROSS-EXAMINATION TO THE A SSESSEE. HOWEVER, WE ARE NOT IN AGREEMENT WITH THE CONTENTIO N OF THE LD. DR. THE RIGHT TO CROSS-EXAMINE IS NOT DEPENDENT UP ON THE ASSESSEES RELATIONSHIP WITH THE WITNESSES. THE RI GHT TO CROSS- EXAMINE DEPENDS UPON THE FACT THAT STATEMENT OF THE PARTY IS USED AGAINST THE ASSESSEE. THEREFORE THE MERE FACT THAT THE STATEMENT SOUGHT TO BE RELIED UPON BY THE AO IS THA T OF THE EMPLOYEE WOULD NOT DISENTITLE THE ASSESSEE TO CROSS -EXAMINE. THEREFORE, THE RATIO RELIED UPON BY THE ASSESSEE SQ UARELY APPLIES AND IT IS THE PREROGATIVE OF ASSESSEE WHETH ER IT WANTS TO CROSS-EXAMINE OR NOT. IT WAS HELD IN THE CASE OF S MT. MADHU GUPTA V. DCIT 2006 (2) TMI 496 - ITAT MUMBAI / [200 6] 8 SOT 691 (MUM.) THAT EVEN IF THE ASSESSEE WAS PROVID ED A COPY OF THE STATEMENT RECORDED BY THE REVENUE ON TH E SPUR OF THE MOMENT, THAT SHOULD NOT BE TREATED AS AN EFFECT IVE OPPORTUNITY GIVEN TO THE ASSESSEE. IN THAT CASE T HE TRIBUNAL RELIED UPON THE JUDGMENT OF THE HONBLE ALLAHABAD H IGH COURT IN THE CASE OF GARGI DIN JWALA PRASAD V. CIT [1974] 96 ITR 97 (ALL) WHEREIN IT WAS HELD THAT PERMISSION TO CROSS- EXAMINE WITNESS GIVEN, BUT NAMES OF THE WITNESSES AND SUBST ANCE OF THE STATEMENT MADE BY THEM NOT GIVEN IS NOT A PROPE R OPPORTUNITY AND ON THAT GROUND ASSESSMENT WAS VITIA TED BY THE PRINCIPLES OF NATURAL JUSTICE AS PERMISSION TO CROS S-EXAMINE ALL ITA NO.1375 TO 1378/BANG/2016 PAGE 12 OF 44 THE WITNESSES ARE ILLUSORY. FURTHER IN THE PRESEN T CASE, THESE SEIZED MATERIAL A/DUU/1 TO 4 THOUGH DID NOT CONTAIN THE NAME OF ASSESSEE OR SIGNATURE OF ANY PERSON, THEY ARE ME RELY UNSUBSTANTIATED LOOSE SHEETS. AS HELD BY THE TRIBU NAL IN THE CASE OF ACIT V. LAYERS EXPORTS P. LTD [2017] 53 ITR (TRIB) 416 (MUMBAI), ADDITION CANNOT BE SUSTAINED MERELY ON TH E BASIS OF ROUGH NOTING MADE ON FEW LOOSE SHEETS, UNLESS AO BR INGS ON RECORD SOME INDEPENDENT AND CORROBORATIVE MATERIAL TO PROVE IRREFUTABLY THAT THE SAID NOTING REVEALED UNACCOUNT ED INCOME OR UNACCOUNTED INVESTMENT OR UNACCOUNTED EXPENDITURE O F THE ASSESSEE. THE VERY PURPOSE OF SEARCH CONCLUDED U/S . 132 IS TO UNEARTH HIDDEN INCOME OR PROPERTY OR GET HOLD OF BO OKS OF ACCOUNT OR DOCUMENTS WHICH HAS NOT BEEN OR WILL NOT BE OTHERWISE PRODUCED BY THE ASSESSEE IN REGULAR COURS E ON ISSUE OF SUMMONS OR NOTICE. IN THE ASSESSEE'S CASE, AS ST ATED ABOVE, THE PURPORTED SEARCH ACTION DID NOT LEAD TO DISCOVE RY OF ANY UNACCOUNTED MONEY, BULLION, JEWELLERY OR OTHER VALU ABLE ARTICLE OR THING. FURTHER, NO BOOKS OF ACCOUNT REVEALING AN Y UNDISCLOSED TRANSACTIONS OF THE ASSESSEE WERE FOUND DURING THE COURSE OF SEARCH. THE ENTIRE ASSESSMENT ORDER R EVOLVES AROUND SCRIBBLING IN LOOSE SHEETS OF PAPERS SEIZED FROM PREMISES OF ANOTHER PERSON IN COURSE OF SEARCH ACTI ON ON SUCH OTHER PERSON. IT IS A FACT THAT THE SAID ROUGH LOOS E SHEETS OF PAPERS SCRIBBLED BY SOME ANONYMOUS PERSON AND SEIZE D IN COURSE OF SEARCH OF ANOTHER PERSON CANNOT BE TERMED AS 'DOCUMENTS' HAVING ANY EVIDENTIARY VALUE WITHIN THE MEANING OF SECTION 132 OR SECTION 132A OF THE ACT. THUS, THE E NTIRE ASSESSMENT U/S 153A OF THE ACT IN CASE OF THE ASSES SEE RESTS ON SHAKY AND INCORRECT FOUNDATION AND THUS DESERVES TO BE QUASHED. 17. THE TRIBUNAL IN THE CASE OF SRI Y. SIDDAIAH NA IDU, TIRUPATHI VS. ASST. COMMISSIONER OF INCOME-TAX 2015 (2) TMI 403 - ITAT HYDERABAD HELD THAT IT IS VERY MUCH CLEAR THAT FROM SUCH NOTINGS, IT CANNOT BE DEDUCED WHETHER THEY ARE RECEIPT OR PAYMENTS NOR IT CAN BE CONCLUDED WHETHER THEY ARE IN RELATION TO ANY PARTI CULAR ITA NO.1375 TO 1378/BANG/2016 PAGE 13 OF 44 TRANSACTION AS NO NAMES HAVE BEEN MENTIONED. IN THE SE CIRCUMSTANCES, NO ADDITION CAN BE MADE ON THE BASIS OF SUCH DOCUMENT. 19. IN CIT V. M/S KHOSLA ICE & GENERAL MILLS 2013 ( 1) TMI 451 - PUNJAB & HARYANA HIGH COURT, THE HONBLE COURT HELD THAT ASSESSEE RIGHTLY CONTENDED THAT THE IMPUGNED DOCUMENT WAS A NON-SPEAKING DOCUMENT INASMUCH AS IT DOES NOT CONTAIN ANY INTELLIGIBLE NA RRATION IN SUPPORT OF THE INFERENCE DRAWN BY THE ASSESSING OFFICER THAT IT REFLECTED SALES CARRIED OUT BY THE ASSESSEE OUTSIDE THE REGULAR BOOKS OF ACCOUNT. WHEN A DUMB DOCUMENT , IS TO BE MADE THE BASIS TO FASTEN TAX LIABILITY ON THE ASSESSEE, THE BURDEN IS ON THE REVENUE TO ESTABLISH WITH CORROBORATIVE EVIDENCE THAT THE NATURE OF ENTRIES CONTAINED THEREIN REFLECT INCOME AND ALSO THAT SUCH INCOME WAS IN THE CONTROL OF THE ASSESSEE. THUS, RE VENUE HAS TO ESTABLISH, WITH NECESSARY CORROBORATIVE EVID ENCE, THAT VARIOUS ENTRIES CONTAINED IN THE SEIZED DOCUME NT REFLECT SALES OF RICE AND BROKEN RICE EFFECTED BY T HE ASSESSEE. CONSIDERING THE ENTIRETY OF CIRCUMSTANCES , IN THE ABSENCE OF ANY MATERIAL TO SUPPORT THE NATURE A ND OWNERSHIP OF THE ENTRIES FOUND IN THE SEIZED DOCUME NT, NO ADDITION IS PERMISSIBLE IN THE HANDS OF THE ASSESSE E AS ITA NO.1375 TO 1378/BANG/2016 PAGE 14 OF 44 UNDISCLOSED INCOME BY MERELY ARITHMETICALLY TOTALLI NG VARIOUS FIGURES JOTTED DOWN ON SUCH DOCUMENT. 19. THE BANGALORE TRIBUNAL IN THE CASE OF KIRLOSKAR INVESTMENTS & FINANCE LTD. V. ASSISTANT COMMISSIONER OF INCOME-TAX [1998] 67 ITD 504 (BANG.) HELD THAT THE PROVISION OF THE COPY OF THE STATEMENT OR LETTERS IS NOT SUFFICIENT OPPORTUNITY. ORAL EVIDENCE OF PERSONS CONCERNED WITH THE TRANSACTION ARE IMPORTANT PIECE OF EVIDENCE AND BEFORE IT COULD REPLACE THE WRITTEN EVIDENCE, THE PARTY AGAINST WHOM SUCH ORAL EVIDENCE IS BEING USED MUST BE ALLOWED THE OPPORTUNITY OF EXAMINING THE PERSON BECAUSE, BOTH THE TYPES OF EVIDENCES NEED TO WEIGHED PROPERLY BEFORE REJECTING ONE FOR THE OTHER. 21. THE HONBLE SUPREME COURT IN COMMON CAUSE (A REGISTERED SOCIETY) V. UOI [2017] 394 ITR 220 (SC) OBSERVED WITH REGARD TO EVIDENTIARY VALUE THAT ENTRIES IN BOOKS OF ACCOUNT ARE NOT BY THEMSELVES SUFFICIENT TO CHARGE ANY PERSON WITH LIABILITY, THE REASON BEING THAT A MAN CANNOT BE ITA NO.1375 TO 1378/BANG/2016 PAGE 15 OF 44 ALLOWED TO MAKE EVIDENCE FOR HIMSELF BY WHAT HE CHOOSES TO WRITE IN HIS OWN BOOKS BEHIND THE BACK OF THE PARTIES. THERE MUST BE INDEPENDENT EVIDENCE OF THE TRANSACTION TO WHICH THE ENTRIES RELATE AND IN ABSENCE OF SUCH EVIDENCE NO RELIEF CAN BE GIVEN TO THE PARTY WHO RELIES UPON SUCH ENTRIES TO SUPPORT HIS CLAIM AGAINST ANOTHER. IN HIRA LAL V. RAM RAKHA THE HIGH COURT, WHILE NEGATIVING A CONTENTION THAT IT HAVING BEEN PROVED THAT THE BOOKS OF ACCOUNT WERE REGULARLY KEPT IN THE ORDINARY COURSE OF BUSINESS AND THAT, THEREFORE, AL L ENTRIES THEREIN SHOULD BE CONSIDERED TO BE RELEVANT AND TO HAVE BEEN PROVED, SAID THAT THE RULE AS LAID DOWN IN SECTION 34 OF THE ACT THAT ENTRIES IN THE BOOKS OF ACCOUNT REGULARLY KEPT IN THE COURSE OF BUSINESS ARE RELEVANT WHENEVER THEY REFER TO A MATTER IN WHICH THE COURT HAS TO ENQUIRE WAS SUBJECT TO THE SALIENT PROVISO THAT SUCH ENTRIES SHALL NOT ALONE BE SUFFICIENT EVIDENCE TO CHARGE AN Y PERSON WITH LIABILITY. IT IS NOT, THEREFORE, ENOUGH MERELY TO PROVE THAT THE BOOKS HAVE BEEN REGULARLY ITA NO.1375 TO 1378/BANG/2016 PAGE 16 OF 44 KEPT IN THE COURSE OF BUSINESS AND THE ENTRIES THEREIN ARE CORRECT. IT IS FURTHER INCUMBENT UPON THE PERSON RELYING UPON THOSE ENTRIES TO PROVE THAT THEY WERE IN ACCORDANCE WITH FACTS. IT IS APPARENT FROM THE AFORESAID DISCUSSION THAT LOOSE SHEETS OF PAPERS ARE WHOLLY IRRELEVANT AS EVIDENCE BEING NOT ADMISSIBLE UNDER SECTION 34 OF EVIDENCE ACT SO AS TO CONSTITUTE EVIDENCE WITH RESPECT TO THE TRANSACTIONS MENTIONED THEREIN BEING OF NO EVIDENTIARY VALUE. THE ENTIRE PROSECUTION BASED UPON SUCH ENTRIES WHICH LED TO THE INVESTIGATION WAS QUASHED BY THE COURT. THERE HAS TO BE SOME RELEVANT AND ADMISSIBLE EVIDENCE AND SOME COGENT REASON, WHICH IS PRIMA FACIE RELIABLE AND THAT TOO, SUPPORTED BY SOME OTHER CIRCUMSTANCES POINTING OUT THAT THE PARTICULAR THIRD PERSON AGAINST WHOM THE ALLEGATIONS HAVE BEEN LEVELLED WAS IN FACT INVOLVED IN THE MATTER OR HE HAS DONE SOME ACT DURING THAT PERIOD, WHICH MAY HAVE CO-RELATIONS WITH THE RANDOM ENTRIES. IN CASE WE DO NOT INSIST FOR ALL THESE, THE PROCESS OF LAW CAN BE ABUSED ITA NO.1375 TO 1378/BANG/2016 PAGE 17 OF 44 AGAINST ALL AND SUNDRY VERY EASILY TO ACHIEVE ULTERIOR GOALS AND THEN NO DEMOCRACY CAN SURVIVE IN CASE INVESTIGATIONS ARE LIGHTLY SET IN MOTION AGAINST IMPORTANT CONSTITUTIONAL FUNCTIONARIES ON THE BASIS OF FICTITIOUS ENTRIES, IN ABSENCE OF COGE NT AND ADMISSIBLE MATERIAL ON RECORD, LEST LIBERTY OF AN INDIVIDUAL BE COMPROMISED UNNECESSARILY. 22. THE DELHI TRIBUNAL IN VIJAY KUMAR AGGARWAL V. ACIT 2017 (5) TMI 1354 HELD THAT IT IS CLEAR THAT THE PRESUMPTION OF FACTS U/S 292C OF THE ACT IS NOT A MANDATORY OR COMPULSORY PRESUMPTION BUT A DISCRETIONARY PRESUMPTION. SINCE, THE WORD USED IN THE SAID SECTION IS MAY BE AND NOT SHALL. SECONDLY , SUCH A PRESUMPTION IS REBUTTABLE PRESUMPTION AND NOT A CONCLUSIVE PRESUMPTION BECAUSE IT IS A PRESUMPTION OF FACT NOT A PRESUMPTION OF LAW. IN THE PRESENT CASE, THE ASSESSEE FROM THE VERY BEGINNING STATED THAT THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH DID NOT BELONG TO HIM. THEREFORE, THE ADDITION MADE BY THE AO IS ONLY ON THE BASIS OF SURMISES AND CONJECTURE WITHOU T BRINGING ANY COGENT MATERIAL ON RECORD TO SUBSTANTI ATE THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF GO LD AND JEWELLERY AND THE AO HAD NOT BROUGHT ANY MATERIAL O N ITA NO.1375 TO 1378/BANG/2016 PAGE 18 OF 44 RECORD TO SUBSTANTIATE THAT THE DENIAL OF THE ASSES SEE WAS FALSE. 23. THE HONBLE SUPREME COURT IN ANDAMAN TIMBER INDUSTRIES V. COMMISSIONER OF CENTRAL EXCISE, 281 C TR 241 (SC) HELD AS FOLLOWS:- NOT ALLOWING THE ASSESSEE TO CROSS- EXAMINE THE WITNESS 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 ITA NO.1375 TO 1378/BANG/2016 PAGE 19 OF 44 AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH A N OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS N OT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. (PARA 6) APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STA TEMENTS OF THESE TWO WITNESSES AND WANTED TO DISCREDIT THEI R 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 W ERE, IN FACT, SOLD TO THE SAID DEALERS/WITNESSES AT THE PRI CE WHICH IS MENTIONED IN THE PRICE-LIST ITSELF COULD BE THE SUBJECT MATTER OF CROSS-EXAMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COU LD BE THE SUBJECT MATTER OF THE CROSS-EXAMINATION AND MAK E THE REMARKS AS MENTIONED ABOVE. (PARA 7) IF THE TESTIMONY OF THESE TWO WITNESSES IS DISCREDI TED, THERE WAS NO MATERIAL WITH THE DEPARTMENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEMENT OF TH E AFORESAID TWO WITNESSES WAS THE ONLY BASIS OF ISSUING THE SHO W- CAUSE NOTICE. (PARA 8) 24. THE DELHI TRIBUNAL IN THE CASE OF VEENA GUPTA V . ACIT IN ITA NO.5662/DEL/2018 DATED 27.11.2018 RELYI NG ON THE ABOVE JUDGMENT OF HONBLE SUPREME COURT IN T HE CASE OF ANDAMAN TIMBER INDUSTRIES (SUPRA) QUASHED T HE ASSESSMENT ORDER ON THE REASON OF NOT PROVIDING CRO SS- EXAMINATION OF WITNESSES WHOSE STATEMENTS WERE RECORDED. 25. THE HONBLE SUPREME COURT IN THE CASE OF MEHTA PARIKH & CO. V. CIT, 30 ITR 181 HELD AS UNDER:- ITA NO.1375 TO 1378/BANG/2016 PAGE 20 OF 44 IN THE INSTANT CASE A MERE CALCULATION OF THE NATU RE INDULGED IN BY THE ITO OR THE AAC WAS NOT ENOUGH, W ITHOUT ANY FURTHER SCRUTINY, TO DISLODGE THE POSITION TAKE N UP BY THE ASSESSEE, SUPPORTED AS IT WAS, BY THE ENTRIES I N THE CASH BOOK AND THE AFFIDAVITS PUT IN BY THE ASSESSEE BEFORE THE AAC. THE TRIBUNAL ALSO FELL INTO THE SAME ERROR. IT COUL D NOT NEGATIVE THE POSSIBILITY OF THE ASSESSEE BEING IN P OSSESSION OF A SUBSTANTIAL NUMBER OF THESE HIGH DENOMINATION CURRENCY NOTES. IT, HOWEVER, CONSIDERED THAT IT WAS IMPOSSIBLE FOR THE ASSESSEE TO HAVE HAD 61 SUCH NOT ES IN THE CASH BALANCE IN THEIR HANDS ON 12-1-1946, AND T HEN IT APPLIED A RULE OF THE THUMB TREATING 31 OUT OF SUCH 61 NOTES AS WITHIN THE BOUNDS OF POSSIBILITY, EXCLUDING 30 S UCH NOTES AS NOT COVERED BY THE EXPLANATION OF THE ASSE SSEE. THIS WAS PURE SURMISE AND HAD NO BASIS IN THE EVIDE NCE, WHICH WAS ON THE RECORD OF THE PROCEEDINGS. FACTS PROVED OR ADMITTED MAY PROVIDE TO SUPPORT FUR THER CONCLUSIONS TO BE DEDUCED FROM THEM, WHICH CONCLUSI ONS MAY THEMSELVES BE CONCLUSIONS OF FACT AND SUCH INFE RENCES FROM FACTS PROVED OR ADMITTED COULD BE MATTERS OF L AW. THE COURT WOULD BE ENTITLED TO INTERVENE IF IT APPEARS THAT THE FACT FINDING AUTHORITY HAS ACTED WITHOUT ANY EVIDEN CE OR UPON A VIEW OF THE FACTS, WHICH COULD NOT REASONABL Y BE ENTERTAINED OR THE FACTS FOUND ARE SUCH THAT NO PER SON ACTING JUDICIALLY AND PROPERLY INSTRUCTED AS TO THE RELEVANT LAW WOULD HAVE COME TO THE DETERMINATION IN QUESTIO N. THE HIGH COURT TREATED THIS FINDING OF THE TRIBUNAL AS A MERE FINDING OF FACT AND RECOGNISED THIS POSITION I N EFFECT BUT WENT WRONG IN APPLYING THE TRUE PRINCIPLES OF INTERFERENCE WITH SUCH FINDINGS OF FACT TO THE PRES ENT CASE. REALLY SPEAKING THE TRIBUNAL HAD NOT INDICATED UPON WHAT MATERIAL IT HELD THAT RS. 30,000 SHOULD BE TREATED AS SECRET PROFIT OR PROFITS FROM UNDISCLOSED SOURCES AND THE ORDER PASSED BY IT WAS BAD. THE ASSESSEE HAD FURNISHED A REASONABLE EXPLANATION FOR THE POSSESSION OF THE HI GH DENOMINATION NOTES OF THE FACE VALUE OF RS. 61,000 AND THERE WAS NO JUSTIFICATION FOR HAVING ACCEPTED IT I N PART AND DISCARDED IT IN RELATION TO A SUM OF RS. 30,000. ITA NO.1375 TO 1378/BANG/2016 PAGE 21 OF 44 THE HIGH COURT OUGHT TO HAVE HELD THAT THERE WERE N O MATERIALS TO JUSTIFY THE ASSESSMENT OF RS. 30,000 F ROM OUT OF THE SUM OF RS. 61,000, FOR INCOME-TAX AND EXCESS PROFITS TAX AND BUSINESS PROFITS TAX PURPOSES, REPRESENTING THE VALUE OF THE HIGH DENOMINATION NOTES WHICH WERE ENCASHED. 26. FURTHER THE HONBLE SUPREME COURT IN THE CASE OF CIT V. ODEON BUILDERS (P.) LTD., 418 ITR 315 (SC) H EAD- NOTE IS AS FOLLOWS:- SECTION 37(1) OF THE INCOME-TAX ACT, 1961 - BUSINE SS EXPENDITURE - ALLOWABILITY OF (BOGUS PURCHASE) - CE RTAIN PORTION OF PURCHASES MADE BY ASSESSEE WAS DISALLOWE D - COMMISSIONER (APPEALS) FOUND THAT ENTIRE DISALLOWAN CE WAS BASED ON THIRD PARTY INFORMATION GATHERED BY INVESTIGATION WING OF DEPARTMENT, WHICH HAD NOT BEE N INDEPENDENTLY SUBJECTED TO FURTHER VERIFICATION BY ASSESSING OFFICER AND HE HAD NOT PROVIDED COPY OF S UCH STATEMENTS TO APPELLANT, THUS, DENYING OPPORTUNITY OF CROSS EXAMINATION TO APPELLANT, WHO ON OTHER HAND, HAD PR IMA FACIE DISCHARGED INITIAL BURDEN OF SUBSTANTIATING P URCHASES THROUGH VARIOUS DOCUMENTATION INCLUDING PURCHASE BI LLS, TRANSPORTATION BILLS, CONFIRMED COPY OF ACCOUNTS AN D FACT OF PAYMENT THROUGH CHEQUES, VAT REGISTRATION OF SELLER S AND THEIR INCOME-TAX RETURN - HE HELD THAT PURCHASES MA DE BY APPELLANT WAS ACCEPTABLE AND DISALLOWANCE WAS TO BE DELETED - TRIBUNAL DISMISSED REVENUE'S APPEAL - HIG H COURT AFFIRMED JUDGMENTS OF COMMISSIONER (APPEALS) AND TRIBUNAL BEING CONCURRENT FACTUAL FINDINGS - WHETHE R NO SUBSTANTIAL QUESTION OF LAW AROSE FROM IMPUGNED ORD ER OF TRIBUNAL - HELD, YES [PARA 4] [IN FAVOUR OF ASSESSE E] 27. THE HONBLE HIGH COURT OF KARNATAKA IN KOTHARI METALS V. ITO, 377 ITR 581 (KARN) HELD AS UNDER:- HELD, ALLOWING THE APPEAL, THAT THE NON-FURNISHING THE REASONS FOR RE-OPENING AN ALREADY CONCLUDED ASSESSM ENT GOES TO THE VERY ROOT OF THE MATTER. SINCE SUCH RE ASONS HAD NOT BEEN FURNISHED TO THE APPELLANT, EVEN THOUGH A REQUEST ITA NO.1375 TO 1378/BANG/2016 PAGE 22 OF 44 FOR THEM HAD BEEN MADE, PROCEEDINGS FOR THE RE- ASSESSMENT COULD NOT HAVE BEEN TAKEN FURTHER ON THI S GROUND ALONE. BESIDES THIS, THE STATEMENT OF SOME OTHER PERSON WH ICH WAS RECORDED WAS THE BASIS OF REASSESSMENT AND THE ASSESSEE WAS ASKED TO EXPLAIN IT BUT THE STATEMENT WAS ITSELF NOT FURNISHED TO THE ASSESSEE. AS SUCH, BES IDES NON- FURNISHING OF THE REASONS FOR RE-OPENING THERE WAS ALSO A GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTIC E. THE REASSESSMENT WAS NOT VALID. 28. THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT V. EASTERN COMMERCIAL ENTERPRISES, 210 ITR 103 (CAL) HELD AS FOLLOWS:- 8. WE HAVE CONSIDERED THE CONTESTING CONTENTIONS OF THE PARTIES. IT IS TRUE THAT SHRI SUKLA HAS PROVED TO B E A SHIFTY PERSON AS A WITNESS. AT THE EARLIER STAGES, HE CLAI MED ALL HIS SALES TO BE GENUINE BUT BEFORE THE ASSESSING OF FICER IN THE CASE OF THE ASSESSEE, HE DISOWNED THE SALES SPECIFICALLY MADE TO THE ASSESSEE. THIS STATEMENT C AN AT THE WORST SHOW THAT SHRI SUKLA IS NOT A TRUSTWORTHY WITNESS AND LITTLE VALUE CAN BE ATTACHED TO WHAT HE STATED EITHER IN HIS AFFIDAVITS OR IN HIS EXAMINATION BY T HE ASSESSING OFFICER. HIS CONDUCT NEUTRALISES HIS VALU E AS A WITNESS. A MAN INDULGING IN DOUBLE-SPEAKING CANNOT BE SAID BY ANY MEANS A TRUTHFUL MAN AT ANY STAGE AND N O COURT CAN DECIDE ON WHICH OCCASION HE WAS TRUTHFUL. IF SHRI SUKLA IS NEUTRALISED AS A WITNESS WHAT REMAINS IS T HE ACCOUNTS, VOUCHERS, CHALLANS, BANK ACCOUNTS, ETC. B UT, WE WOULD OBSERVE HERE THAT WHICH WAY LIES THE TRUTH IN SHRI SUKLA'S DEPOSITIONS, COULD HAVE BEEN REVEALED ONLY IF HE WAS SUBJECTED TO A CROSS-EXAMINATION BY THE ASSESSE E. AS A MATTER OF FACT, THE RIGHT TO CROSS-EXAMINE A WITN ESS ADVERSE TO THE ASSESSEE IS AN INDISPENSABLE RIGHT A ND THE OPPORTUNITY OF SUCH CROSS-EXAMINATION IS ONE OF THE CORNER- STONES OF NATURAL JUSTICE. HERE SHRI SUKLA IS THE W ITNESS OF THE DEPARTMENT. THEREFORE, THE DEPARTMENT CANNOT CU T SHORT THE PROCESS OF TAKING ORAL EVIDENCE BY MERELY HAVIN G THE EXAMINATION-IN-CHIEF. IT IS THE NECESSARY REQUIREME NT OF THE ITA NO.1375 TO 1378/BANG/2016 PAGE 23 OF 44 PROCESS OF TAKING EVIDENCE THAT THE EXAMINATION-IN- CHIEF IS FOLLOWED BY CROSS-EXAMINATION AND RE-EXAMINATION, I F NECESSARY. 9. IT IS NOT JUST A QUESTION OF FORM OR A QUESTION OF GIVING AN ADVERSE PARTY ITS PRIVILEGE BUT A NECESSITY OF T HE PROCESS OF TESTING THE TRUTH OF ORAL EVIDENCE OF A WITNESS. WITHOUT THE TRUTH BEING TESTED NO ORAL EVIDENCE CAN BE ADMI SSIBLE EVIDENCE AND COULD NOT FORM THE BASIS OF ANY INFERE NCE AGAINST THE ADVERSE PARTIES. WE HAVE ALSO EXAMINED THE RECORDS AND WE FIND THAT THIS SHRI SUKLA WAS EXAMIN ED BY A NUMBER OF OFFICERS. THE ASSISTANT DIRECTOR OF INV ESTIGATION EXAMINED HIM ON AUGUST 4, 1987, AND IN REPLY TO QUE STION NO. 2 IN THAT DEPOSITION HE CONFIRMED THAT HE WAS A DEALER IN LUBRICATING OIL SINCE 1977. IN REPLY TO QUESTION NO. 3, HE CONFIRMED HAVING BEEN ASSESSED TO INCOME-TAX. AGAIN , IN REPLY TO QUESTION NO. 4, HE EXPLAINED THAT HE USED TO PURCHASE LUBRICATING OIL FROM DIFFERENT GARAGES AS WELL AS THROUGH VARIOUS BROKERS. SUCH LUBRICATING OIL WAS PROCESSED BY HIM IN HIS FACTORY FOR SALE. ALL PAYME NTS WERE RECEIVED BY HIM THROUGH ACCOUNT PAYEE CHEQUES. IN R EPLY TO QUESTION NO. 5, HE STATED THAT HE HAD SEVEN FULL-TI ME EMPLOYEES WHOSE NAMES ARE MENTIONED BY HIM. HE ALSO CLAIMED TO HAVE MAINTAINED BOOKS OF ACCOUNT LIKE SA LES BOOKS, PURCHASE BOOKS, CASH BOOKS AND SALE BILLS. I N REPLY TO QUESTION NO. 18, HE, ON HIS OWN, STATED THAT HIS BIG CUSTOMERS WERE THE RELIANCE OIL MILLS AND EASTERN COMMERCIAL ENTERPRISES, THE ASSESSEE, IN THE PRESEN T REFERENCE. AS FOR HIS CASH WITHDRAWALS, HE EXPLAINE D THAT HIS BUSINESS REQUIRED READY CASH FOR PURCHASE OF RA W MATERIALS WHICH EXPLAINED HIS LARGE DRAWINGS OF CAS H FROM THE BANK. LEARNED COUNSEL THEN CITED A HOST OF DECI SIONS TO BRING HOME THE POINT THAT NO EVIDENCE OR DOCUMENT C AN BE RELIED UPON UNLESS IT IS SHOWN TO THE ASSESSEE. KISHANCHAND CHELLARAM V. CIT. SIMILARLY, THE REQUIR EMENT OF CROSS-EXAMINATION AS THE REQUIREMENT OF THE RULE S OF NATURAL JUSTICE HAS BEEN UNDERLINED BY THE BOMBAY H IGH COURT IN VASANJI GHELA AND CO. V. CST [1977] 40 STC 544. IT IS TRITE LAW THAT CROSS-EXAMINATION IS THE SINE QUA NON OF DUE PROCESS OF TAKING EVIDENCE AND NO ADVERSE INFER ENCE CAN BE DRAWN AGAINST A PARTY UNLESS THE PARTY IS PU T ON NOTICE OF THE CASE MADE OUT AGAINST HIM. HE MUST BE ITA NO.1375 TO 1378/BANG/2016 PAGE 24 OF 44 SUPPLIED THE CONTENTS OF ALL SUCH EVIDENCE, BOTH OR AL AND DOCUMENTARY, SO THAT HE CAN PREPARE TO MEET THE CAS E AGAINST HIM. THIS NECESSARILY ALSO POSTULATES THAT HE SHOULD CROSS-EXAMINE THE WITNESS HOSTILE TO HIM. 10. IN ANY CASE, WE HAVE NOTHING TO RELY UPON TO COME TO A DECISION THIS WAY OR THE OTHER. THE FIRST THING I S THAT WHICH OF THE STATEMENTS OF SHRI SUKLA IS CORRECT, I S ANYBODY'S GUESS. THEREFORE, IT IS NECESSARY TO DELV E OUT THE TRUTH FROM HIM AND FOR THAT MATTER A CROSS-EXAMINAT ION IS NECESSARY. SECONDLY, IF THE STATEMENT OF SHRI SUKLA AS A WITNESS AGAINST THE ADVERSE PARTY, THE ASSESSEE, IS RELIED UPON AS TRUTHFUL, STILL REMAINS THE QUESTION OF EST IMATION OF THE PROFIT. THE ASSESSEE NO DOUBT HAS GIVEN A COMPA RATIVE INSTANCE OF GROSS PROFIT RATE BUT IT IS ALSO NECESS ARY FOR THE DEPARTMENT TO COME TO A FINDING AS TO THE NORM OF T HE GROSS PROFIT ON THE BASIS OF COMPARATIVE CASES. THEREFORE , IT IS THE DUTY OF THE ASSESSING OFFICER TO COUNTER THE COMPAR ATIVE STATEMENT CITED BY THE ASSESSEE BEFORE HE CAN HAVE THE OPTION TO ESTIMATE THE GROSS PROFIT. AGAIN, IT IS T HE COMPARATIVE INSTANCE THAT ALONE CAN BE THE FOUNDATI ON OF SUCH ESTIMATE IN CASE THE ACCOUNTS ARE REALLY FOUND TO BE UNRELIABLE AND REQUIRING TO BE REJECTED. THEREFORE, IN THE INTEREST OF JUSTICE FOR BOTH THE PARTIES, THE ASSES SEE AND THE REVENUE, IT IS NECESSARY FOR US TO DIRECT THE TRIBU NAL TO REMAND THE CASE TO THE ASSESSING OFFICER FOR RECONS IDERING THE WHOLE MATTER IN THE LIGHT OF THE OBSERVATIONS M ADE BY US IN THE FOREGOING AND REDO THE ASSESSMENT ACCORDI NGLY. ALL OPPORTUNITIES SHOULD BE GIVEN TO THE ASSESSEE I N ORDER TO LEAD ANY EVIDENCE THAT THE ASSESSEE MAY FEEL NECESS ARY TO REBUT THE CASE AGAINST HIM. AS A RESULT WE DECLINE TO ANSWER THE QUESTION. 29. IN THE PRESENT CASE, AS STATED ABOVE, THE PURPO RTED SEARCH ACTION DID NOT LEADTO DISCOVERY OF ANY UNACC OUNTED MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING. FURTHER, NO BOOKS OF ACCOUNTS OR ANY UNDISCLOSED TRANSACTION OF THE ASSESSEE WERE FOUND DURING THE C OURSE ITA NO.1375 TO 1378/BANG/2016 PAGE 25 OF 44 OF SEARCH. THE ENTIRE ASSESSMENT ORDER REVOLVE AROU ND SCRIBBLING IN LOOSE SHEET OF PAPER RECEIVED FROM AS SESSEE IN COURSE OF SUCH ACTION. IT IS THE FACT THAT THE S AID ROUGH LOOSE SHEET ON PAPER SCRIBBLED BY SOME ANONYMOUS PERSON SEIZED IN THE COURSE OF SEARCH CANNOT BE TER MED AS DOCUMENT HAVING ANY EVIDENTIARY VALUE WITHIN THE MEANING OF SEC. 132 OR SEC.132(A) OF THE ACT. THUS, ENTIRE ADDITION MADE AT RS.25 LAKHS IN THE CASE OF ASSES SEE IN THESE ASSESSMENT YEARS IS INCORRECT AND THUS TO BE DELETED. 30. IN OUR OPINION, THE LOOSE SHEET FOUND DURING TH E COURSE OF SEARCH ARE UNDATED AND DID NOT BARE THE SIGNATURE OF THE ASSESSEE OR ANY OTHER PERSON. HEN CE, THEY ARE NOT IN THE NATURE OF SELF SPEAKING DOCUME NTS HAVING NO EVIDENTIARY VALUE AND CANNOT BE TAKEN AS SOLE BASIS OF DETERMINATION OF UNDISCLOSED INCOME OF THE ASSESSEE. WHEN DOCUMENT LIKE LOOSE SHEETS OF PAPER ARE RECOVERED AND THE REVENUE WANTS TO MAKE USE OF IT, THE ONUS IS ON THE REVENUE TO COLLECT COGENT EVIDENCE TO CORROBORATE THE NOTING. THE REVENUE HAS FAILED TO CORROBORATE THE NOTING BY BRINGING SOME COGENT MATE RIAL ON RECORD TO PROVE CONCLUSIVELY THAT THE NOTING IN THE SEIZED PAPER REVELED THE UNACCOUNTED INCOME OF THE ITA NO.1375 TO 1378/BANG/2016 PAGE 26 OF 44 ASSESSEE. FURTHER, NO CIRCUMSTANTIAL EVIDENCE IN T HE FORM OF ANY UNACCOUNTED CASH, JEWELRY OR INVESTMENT OUT SIDE THE BOOKS OF ACCOUNT WAS FOUND IN THE COURSE OF SEA RCH ACTION IN THE CASE OF ASSESSEE. THUS, THE IMPUGNE D ADDITION WAS MADE BY THE AO ON GROSS RELIEF IN ADV OCATE MATERIAL OR RATHER NO SUFFICIENT MATERIAL AT ALL AN D AS SUCH NEITHER TO BE DELETED. WE ARE OF THE VIEW THA T AN ASSESSMENT CARRIED OUT IN PURSUANCE OF SUCH ACTION , NO ADDITION CAN BE MADE ON THE BASIS OF UN-CORROBORAT IVE NOTING AND SCRIBBLING ON LOOSE PAPER MADE BY UNIDEN TIFIED PERSON HAVING NO EVIDENTIARY VALUE, IS UNSUBSTANTIA TED AND IS BAD IN LAW. 31. THUS, WE ARE AGREEING WITH THE CONTENTION OF LD . AR THAT PLACING RELIANCE ON THE SEIZED MATERIAL IS NOT PROPER AND ALL THE ADDITIONS ON THE BASIS OF THE ABOVE ARE DELETED ON THE FOLLOWING REASONS :- 1) NO OPPORTUNITY TO CROSS-EXAMINE THE PERSONS WH OSE STATEMENTS HAVE BEEN RELIED UPON IS AFFORDED; 2) SOME OF THE STATEMENTS HAVE BEEN RECORDED UNDE R SECTION 131 BY THE BY THE REVENUE WHICH CANNOT BE RELIED UPON WITHOUT CONFRONTING TO THE SAME TO THE CONCERNED PARTIES SUBSEQUENT TO COMPLETION OF SEARC H; ITA NO.1375 TO 1378/BANG/2016 PAGE 27 OF 44 3) THE SEIZED MATERIAL ARE IN THE FORM OF VARIOUS LOOSE SHEETS, SCRIBBLING AND JOTTINGS HAVING NO SIGNATURE OR AUTHORIZATION FROM THE ASSESSEES SIDE. THESE ARE UNSUBSTANTIATED DOCUMENTS AND THERE IS NOTHING TO SUGGEST ANY UNDISCLOSED ASSETS OF ASSESSEE FOUND DURING THE COURSE OF SEARCH. MORE SO, SEARCH ACTI ON NOT RESULTED IN RECOVERY OF ANY UNDISCLOSED ASSETS IN THE FORM OF LANDED PROPERTY, BUILDING, INVESTMENTS, MONEY, BULLION, JEWELLERY OR ANY KIND OF MOVABLE OR IMMOVABLE ASSETS. 32. ACCORDINGLY, THE ADDITION MADE BY THE AO U/S 69 A OF THE ACT IS DELETED. ITA NO.1376/BANG/2016 (ASST. YEAR 2009-10) 33. IN THIS ASST. YEAR, THE ADDITION IS MADE @ RS. 25 LAKHS ON THE BASIS OF LOOSE SHEET U/S 69A OF THE AC T WHEREIN, THE ENTRY AS FOLLOWS IN SEIZED MATERIAL A/BHB/11 25 ANAND 25 IN THE SEIZED MATERIAL A/BHB/11 34. THE LD.AR SUBMITTED THAT AS PER THE LOOSE SHEET A/BHP/11, ITEM 13 SHOWS ANAND PRASANNA THEATER AND ITA NO.1375 TO 1378/BANG/2016 PAGE 28 OF 44 ALSO DATE IS NOT RECORDED IN THE LOOSE SHEET BUT AO TAKES DATE OF SHRI KC NAGARJ AS 25/3. ACCORDING TO THE L D.AR, THESE ADDITIONS OF RS. 25 LAKHS WAS UNEXPLAINED INVESTMENT AS PER AO TO ONE ANAND THEATER, BANGALOR E IS WRONG ADDITION SINCE A/BHB/11, THERE IS NO SUCH N AME CALLED ANAND THEATER, BANGALORE. ACCORDING TO ASSES SEE ONLY SUM OF RS.13,407/- WAS PAID ON 6/2/2009 AS PE R THE LEDGER EXTRACT. THIS ALSO CONFIMED BY THE ASSE SSEE IN HIS REPLY TO NOTICE U/S 142(1) DATED 24/1/2014 AND FIGURE MENTIONED IN SEIZED MATERIAL MARKED A/BHB/11 AT PA GE 10 ONLY INDICATE AMOUNT DUE TO HIM FROM ONE SHRI S. D ANAND OF PRASANNA THEATRE, WHICH IS REFLECTED IN TH E STATEMENT AND BOOKS OF ACCOUNT, THEREFORE, ADDITION CANNOT BE MADE ON THE BASIS OF SEIZED DOCUMENT. IT WAS SUBMITTED THAT THIS WAS STATED BY THE ASSESSEE AS A REPLY TO NOTICE ISSUED UNDER SECTION 142(1) OF THE ACT DATED 24/01/2014. ACCORDING TO THE ASSESSEE, THE ADDITI ON IS MADE ONLY ON THE PRESUMPTION BASIS AND IT CANNOT B E ALLOWED TO DO SO. 35. THE LD.DR RELIED ON THE ORDER OF THE CIT(A). 36. WE HAVE HEARD BOTH PARTIES AND PERUSED THE MATERIAL ON RECORD AND AS DISCUSSED IN EARLIER PARA S IN ITA NO.1375 TO 1378/BANG/2016 PAGE 29 OF 44 ITA NO.1375/BANG/2016 WITH REGARD TO DELETION OF ADDITION IN ASSESSMENT YEAR 2008-09, THIS ADDITION IS ALSO DELETED ON SIMILAR LINE. ITA NO.1377/BANG/2016 (ASSESSMENT YEAR 2010-11) 37. HERE, THE ASSESSEE CHALLENGES THE FOLLOWING AD DITION OF RS.3.2 CRORES AND AN ADDITION TOWARDS EXPENDITUR E OF RS.24,10,000/-. THE LD.AR SUBMITTED AS FOLLOWS: APTHA RAKSHAKA : 15 LAKHS 38. THE AO CONSIDERED THIS ENTRY @ RS.25 LAKHS ON THE BASIS OF LOOSE SHEET A/BHP/11 AT PAGE 10. HE SUBM ITTED THAT THERE WAS NO SUCH ENTRY IN THE LOOSE SHEET WIT H REGARD TO APTHA RAKSHAKA. THE SEIZED DOCUMENT MARK ED AS A3/BE/01 IS A LETTER FROM UDAY RAVI FILMS ACKNOWLEDGING RS.25 LAKHS FROM BAHARA UDAY RAVI FI LMS, WHICH IS A PROPRIETARY CONCERN OF BASHA. THE LD.A O RELIED ON THE LOOSE SHEET A/BHB/11 PAGED NO.10 WHER E THE ABOVE ENTRY IS NOT FINDING THE PLACE AT ALL. H E DREW OUR ATTENTION TO PAGE NOS. 33, 34 OF PAPER BOOK, WH EREIN ON 13/4/2011, UDAY RAVI FILMS PROPRIETOR WROTE A L ETTER THAT HE ACKNOWLEDGES THAT HE HAS RECEIVED RS.25 LAK HS ITA NO.1375 TO 1378/BANG/2016 PAGE 30 OF 44 AND BALANCE AMOUNT OF RS.25 LAKHS HE HAS TO PAY ON COMMENCEMENT OF SHOOTING. ON THE DAY OF PRODUCTIO N NO.2, THERE IS A REFERENCE OF RS.50,00,000/-. EVEN AS PER STATEMENT RECORDED BY THE DGIT, INVESTIGATION, THER E IS NO MENTION OF AMOUNT OF RS.15 LAKHS. 39. HENCE, THE ADDITION MADE BY AO OF RS.15 LAKHS IS PURELY BASED ON THE ASSUMPTION THAT AMOUNT OF RS.10 LAKHS WAS RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND ASSUMED THAT THE BALANCE HAS BEEN PAI D BY CASH, WHICH IS ALSO NOT STATED BY SHRI KRISHNA KUMA R. ACCORDING TO THE AR THERE WAS NO MENTION OF DATE AS SUCH ATTRIBUTING THIS AMOUNT TO THE ASSESSMENT YEAR UNDE R CONSIDERATION IS NOT PROPER. FURTHER, HE SUBMITTED THAT AS PER TYPED STATEMENT IN SL.NO.3, THE AO CONSIDERED APTHA RAKSHAKA @ RS.15 LAKHS RELATING TO THE ASSESSMENT Y EAR 2010-11 AND SL.NO 17 APTHA RAKSHAKA (24) TOTALING RS.39, WHEN BOTH ARE ADDED. BUT THE LOOSE SHEET MENTIONS ONLY RS.25 LAHKS AND SHRI KRISHNA KUMAR A LSO MENTIONED AS RS.25 LAKHS PAID TO BASHA VIDE LETTER DATED 13/04/2011. BUT THE AO ADDED RS.15 LAKHS ONLY ON ASSUMPTION OF ASSESSEE HAS RECEIVED BY CASH. HENCE, THIS ADDITION TO BE DELETED. ITA NO.1375 TO 1378/BANG/2016 PAGE 31 OF 44 BHADRA : 25 LAKHS 40. THE LD.AR SUBMITTED THAT THERE HAS NO MENTION O F THIS AMOUNT IN THE LOOSE SHEET. THE AO OBSERVED T HAT THE ASSESSEE HAS GIVEN 45 LAKHS TO SHRI N KUMAR, THE PRODUCER OF THE MOVIE. IN THE LEDGER ACCOUNT FILED DURING THE COURSE OF SEARCH, IT WAS OBSERVED THAT AN AMOUN T OF RS.20 LAKHS WAS SHOWN. THUS, THERE WAS A DIFFERENCE OF RS.25 LAKHS WITH THE AO WITHOUT PROOF, HE ASSUMED THAT IT WAS THE PAYMENT BY CASH. FURTHER, THE DATE MENT IONED IN THE ASSESSMENT ORDER WAS AS 08/2/2010 INSTEAD OF 08/12/2010 (AS PER LOOSE SHEET VIDE ITEM NO.3 - N K UMAR 45=00). THE AO WRONGLY ASSUMED THE DATE AS 08/12/2010 AND MADE ADDITION FOR THE ABOVE ASSESSME NT YEAR UNDER CONSIDERATION. THE SAME MAY BE DELETED. BHANU HASSAN : RS.25 LAKHS 41. IN THE LOOSE SHEET, THE DATE MENTIONED WAS 02/02/2010 BUT THERE WAS NO STATEMENT RECORDED FROM BHANU HASSAN UNDER SECTION 131 OF THE ACT AND ALSO NO LETTER WAS ISSUED FROM BHANU HASSAN TO SUBSTANTIATE THAT THE ASSESSEE IS EITHER GIVEN RS.35 OR TAKEN RS .35 LAKHS. THE AO CANNOT TAX THIS AMOUNT AS UNEXPLAINED INCOME WITHOUT HAVING ANY PROOF OF CASH TRANSACTION , HENCE ADDITION OF RS.30 LACKS CANNOT BE SUSTAINED. ITA NO.1375 TO 1378/BANG/2016 PAGE 32 OF 44 BASAVA REDDY : RS.95 42. AS PER THE LOOSE SHEET, IT WAS MENTIONED RS.95 ON 02/01/2010. IN ITEM NO.5 OF LOOSE SHEET A/BHB/11 I N PAGE NO.15 AND DOCUMENT APPENDED TO THE ASST. ORDER SHOWS ONLY 58.5. HOWEVER, AOS CONTENTION THAT ASS ESSEE IS GIVING SELF CONTRADICTORY STATEMENT IS WRONG WHE N AO MADE ADDITION OF RS.95 LAKHS BASED ON ASSUMPTION WITHOUT APPRECIATING THAT ASSESSEE FROM THE BEGINNI NG HAS STATED THAT ONLY RS.34.73 LAKHS HAS BEEN ADVANCED V IDE PARA 2 AND 3 OF THE ASST. ORDER. HENCE, THE ADDITI ON IS TO BE DELETED. ANAJI NAGARAJ: RS.65 LAKHS 43. AS PER ENTRY NO.9, IN THE SEIZED MATERIAL IT WA S MENTIONED AS NAGARAJ 1/1/10 65=00, THE AO TREATED THIS AS RS.65 LAKHS ADVANCED ON 01/01/2010 AND MADE ADDITION ON THIS COUNT. ACCORDING TO THE LD.AR, THE RE WAS NO SUPPORTING MATERIAL TO HOLD THAT THIS IS AN AMOU NT OF RS.65 LAKHS ADVANCED ON 01/01/2010, HENCE, ADDITIO N TO BE DELETED. ITA NO.1375 TO 1378/BANG/2016 PAGE 33 OF 44 PRASANNA THATERE : RS.65 LAKHS 44. AS PER LOOSE SHEET IN ITEM NO.8 SHOWS THAT PRAS ANNA DODDABALLAPURA ON 01/03/2010 - 65=00. THE AO PRESUMED THAT ASSESSEE ADVANCED RS.65 LAKHS TO PRASANNA THEATER, BANGALORE. THE ASSESSEE SUBMITTED THAT THE AMOUNT OF RS.11.05 LAKHS WAS DUE ON ACCOU NT OF EXHIBITING CERTAIN FILMS FROM PRASANNA TALKIES AT BANGALORE AND FIGURE MENTIONED IN THE SEIZED MATER IAL INDICATE THAT THE AMOUNT PROPOSED TO BE GIVEN FOR TAKING RIGHTS OF TELUGU PICTURE FOR DODDABALAPUR. SINCE TH E TRANSACTION DID NOT MATERIALIZE, NO PAYMENT HAS TO BE MADE BY THE ASSESSEE. THERE IS NO EVIDENCE TO SUGGE ST THAT THE ASSESSEE HAS ADVANCED MONEY TO THE PERSON, HENCE, THE SAME IS TO BE DELETED. SHANTA ENTERPRISES- RS.25 LAKHS 45. AS PER LOOSE THE AMOUNT MENTIONED BY AO IS ITEM NO.17-20 DATED 04/01/2020. THE AO HAS NOT PRODUCED ANY PROOF OF THE ASSESSEE HAVING RECEIVED THE AMOUN T AND ALSO AO NOT SOUGHT ANY EXPLANATION FROM THE ASSESSE E. THE AO HAS MADE THE ADDITION ON SURMISE AND ASSUMPTION. THE ARGUMENT OF THE AR THAT THERE IS N O FOOLPROOF EVIDENCE IN THIS REGARD. HENCE, THE ADDIT ION TO BE DELETED. ITA NO.1375 TO 1378/BANG/2016 PAGE 34 OF 44 46. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS ON RECORD. AS DISCUSSED IN EARLIER ASSE SSMENT YEAR 2008-09 IN ITA NO.1375/BANG/016, THE ADDITION IS DELETED ON SIMILAR LINE. 47. NOW COMING TO THE UNEXPLAINED EXPENDITURE OF RS.24.10 LAKHS, THE AO MADE ADDITION ON THE BASIS OF LOOSE SHEET MARKED AS PAGE-5 OF SEIZED MATERIAL A/ BE/6 SHOWS AS FOLLOWS:- ITA NO.1375 TO 1378/BANG/2016 PAGE 35 OF 44 48. ACCORDING TO AO, THERE WAS UNEXPLAINED EXPENDITURE OF RS.24.10 LAKHS AND SAME WAS BROUGHT TO TAX. 49. AS DISCUSSED EARLIER, THE ADDITION IS BASED ON UNSUBSTANTIATED LOOSE SHEETS AND ON THAT BASIS ADDI TION CANNOT BE MADE. ACCORDINGLY, THE ADDITION IS DELETE D. ADDITIONAL GROUND : ITA NO.1377/BAND/16 THE APPELLANT HAVING ADMITTED U/S132(4) A SUM OF R S.3.03 CRORE AS HIS INCOME AND THE SAME HAVING BEEN ACCEPT ED AND ASSESSED AS INCOME FROM OTHER SOURCES BY THE AO, TH E AO OUGHT TO HAVE GIVEN THE BENEFIT OF TELESCOPING OF A LLEGED CASH PAYMENTS AGAINST THIS ADMITTED INCOME, IN THE INTER EST OF JUSTICE. 50. THIS ADDITIONAL GROUND IS INFRUCTUOUS IN VIEW OF OUR FINDING IN THE MAIN GROUNDS IN THIS APPEAL. HENCE, THIS ADDITIONAL GROUND IS DISMISSED. ITA NO.1372/BANG/2016 (ASST. YEAR 2011-12) 51. IN THIS ASST. YEAR, THE AO MADE ADDITION OF RS.328.50 LAKHS AS UNEXPLAINED INVESTMENT AND ALSO NOT GIVEN DEDUCTION TOWARDS VOLUNTARY DISCLOSURE OF IN COME ITA NO.1375 TO 1378/BANG/2016 PAGE 36 OF 44 BY THE ASSESSEE HIMSELF . REGARDING THE ADDITION, THE AR SUBMITTED AS FOLLOWS:- KANTEERAVA : 45 LACKS 52 AS PER ITEM NOS.6 & 7 IN THE LOOSE SHEET, IT WAS MENTIONED AS RAMU KANTEERAVA 55.00 AND RAMU VEERA 20.00 AND DATE MENTIONED WAS 20/01 AND 14/09. THERE WAS NO MENTION OF FULL DATE. AS PER THE STATEMENT RECORDED FROM RAMU IT WAS STATED THAT HE HAS RECE IVED RS.105 LAKHS FROM THE ASSESSEE BUT NOT FROM KANTEE RAVA. RS.20 LAKHS BY CASH WAS RECEIVED ON 20/12/2010 AND RS.85 LAKHS WAS RECEIVED BY CHEQUE ON VARIOUS DATE S AND THE TOTAL WAS RS.105 LAKHS ADVANCED BY THE ASSESSEE TO KANTEERVA. THE AO COMPUTED AS RS.130 LAKHS SINCE 85 LAKHS WAS MENTIONED IN THE BOOKS OF ACCOUNT. HE CONSIDERED AN AMOUNT OF RS.45 LAKHS AS UNEXPLAINED ADVANCE GIVEN BY THE ASSESSEE WHICH IS TO BE DELETE D. DUSHTA : 1 CRORE 53. AS PER THE LOOSE SHEET IN ITEM NO.1, S.NARAYAN DUSHTA 22/02 - 100=00 WAS MENTIONED. THE AO CONSIDERED IT AN AMOUNT OF RS.100 LAKHS ADVANCE FO R THE ASST. YEAR 2011-12 AND MADE ADDITION. THERE WAS A L ETTER DATED 24/02/2011, WHEREIN S.NARAYAN HAS WRITTEN LET TER ITA NO.1375 TO 1378/BANG/2016 PAGE 37 OF 44 TO SECRETARY, KARNATAKA FILM CHAMBERS AND COMMERCE THAT NEGATIVE RIGHTS HOLDER OF THE PICTURE DUSHTA H AS BEEN GIVEN TO BAHAR FILMS AS DISTRIBUTOR BUT IN THIS LET TER, THERE IS NO MENTION OF MONEY TRANSACTION AND ALSO S.NARAY AN GIVEN A SWORN STATEMENT RECORDED U/S 131 OF THE IN COME- TAX ACT ON 19/08/2011 AND ANSWERED THE QUESTION NO 8 TO 13 AND HE HAS NOWHERE STATED THAT HE HAS RECEIVE D RS.1 CRORE FROM THE ASSESSEE. BUT HE HAS STATED THA T HE HAS RECEIVED FROM UDAY RS.65 LAKHS FOR COLLECTIONS RECEIVED FOR VEERA PARAMPARE AND RS.15 LAKHS FROM K.MANJU. HE HAS ALSO ANSWERED TO QUESTION NO.13 THA T HE HAS NOT TAKEN ANY FINANCE FROM BASHA OR ANYONE ELSE . HENCE, AR PRAYED THAT NO ADDITION TO BE SUSTAINED O N THIS COUNT. ADDURI - RS.67 LAKHS 54. AS PER LOOSE SHEET IN ENTRY NO.4, SHANKAR REDDY ADDURI 10/1/1/ = 95.00. ON THE BASIS OF THIS ENT RY, THE AO MADE ADDITION OF RS.60 LAKHS. THE AO ALSO PLACED RELIANCE ON UNSIGNED LETTER FROM KS SHANKAR TO BAH ARA FILMS SEEKING FINANCIAL ASSISTANCE OF RS.25 LAKHS O F KANNADA PICTURE ADDURI, WHICH IS MADE AT PAGE NO.2 3. AS PER THE LEDGER EXTRACT FURNISHED BY THE ASSESSEE , THE AO STATED THAT THE ASSESSEE HAS MADE THE PAYMENT OF ITA NO.1375 TO 1378/BANG/2016 PAGE 38 OF 44 RS.28 LAKHS ONLY BY CHEQUE AND THE ASSESSEE ALSO MENTIONED IN THE LEDGER EXTRACT THAT HE HAS ADVANC ED ONLY RS.3.50 CRORES TO THE PRODUCER OF ADDURI, A SU M MUCH MORE THAN THE AMOUNT MENTIONED IN THE SEIZED DOCUMENT. AS MENTIONED IN ASSESSMENT ORDER PAGE NO. 27, THE AO LINKED THE LETTER OF CMR PRODUCTION, WHEREIN THEY HAVE DIRECTED TO PAY 30 LAKHS DIRECTLY TO THE ASSE SSEE VIDE LETTER DATED 22/03/2011. THE AO OVERLOOKING T HE LEDGER EXTRACTS AND WITHOUT HAVING ANY PROOF OF CAS H TRANSACTION BETWEEN SHANKAR REDDY AND THE ASSESSEE, MADE ADDITION OF RS.16 LAKHS AND SAME HAS TO BE DEL ETED. MASS : RS.45 LAKHS 55. AS PER ITEM NO.2 A.GANESH MASS - 12/01/2011 65=00 AS MENTIONED IN THE SEIZED MATERIAL. VIDE LE TTER DATED 11/01/2011 WRITTEN BY A.GANESH TO THE SECRETA RY, KFCC THAT BAHAR FILMS HAS BEEN GIVEN NEGATIVE RIGHT HOLDER OF KANNADA FILM MASS. BUT NOWHERE THERE IS MENTION OF CASH TRANSACTION IN THE LETTER BUT ONLY THE LETTER GIVEN BY A.GANESH TO MAHESH KOTHARI TO PAY R S.23 LAKHS TO THE ASSESSEE. THE AO WRONGLY PRESUMED TH AT BALANCE RS.45 LAKHS HAS BEEN PAID BY CASH TO A.GANE SH WITHOUT HAVING ANY PROOF FOR CASH TRANSACTION. THER E WAS NO CONFIRMATION TO SWORN STATEMENT RECORDED IN THE CASE ITA NO.1375 TO 1378/BANG/2016 PAGE 39 OF 44 OF A.GANESH THAT ASSESSEE HAS GIVEN RS.45 LAKHS TO A.GANESH. HENCE, ADDITION TO BE DELETED. SANJU WEDS GEETHA RS.45 LAKHS : 56. THE AO IN PARA-2 OF THE ASSESSMENT ORDER AT PAG E 35 RECORDED THAT PAYMENT OF RS.120 LAKHS ARE MADE THRO UGH CHEQUE OF IDBI BANK (BANK OF MAHARASHTRA). DURING THE COURSE OF SEARCH, IN THE STATEMENT RECORDED ON OATH , THE ASSESSEE HIMSELF ADMITTED THAT HE HAS PAID RUPEES 45 LAKHS AND THIS HAS BEEN CONFIRMED BY THE RECIPIENT NAGASHEKAR, DIRECTOR OF THE MOVIE IN THE STATEMENT RECORDED ON OATH. THE AO WRONGLY PRESUMED THAT THE ASSESSEE IN STATEMENT OF OATH HAS ADMITTED THAT HE HAS PAID IN CASH, BUT NOWHERE ASSESSEE ADMITTED THAT HE WAS PAID BY CASH, BUT MOSTLY BY BEARER CHEQUE AS ACCOUN TED BY ASSESSEE IN HIS BOOKS OF ACCOUNT. MR.NAGASHEKAR ALSO NOT CONFIRMED AND ADMITTED THAT HE HAS TAKEN BY CAS H FROM THE ASSESSEE. THE AO MADE ADDITION ONLY ON ASSUMPTION AND ADDITION TO BE DELETED. CHINGARI: RS.26.5 LAKHS 57. AS PER LOOSE SHEET ITEM NO.5 MAHADESH - 200.00 DT.15/03/2011. AT PAGE NO.36 OF THE ASSESSMENT ORDE R ASSESSEES QUESTION NO. 3 AND ANSWER GIVEN BY MAHAD ESH ITA NO.1375 TO 1378/BANG/2016 PAGE 40 OF 44 IS THAT I HAVE TAKEN TOTAL OF RS.75 LAKHS FROM BASHA OUT O F WHICH RS.65 LAKHS HAVE BEEN PAID BY HIM THROUGH CHE QUE AND RS.15 LAKHS BY CASH . 58. MAHADESH ALSO SUBMITTED THAT RS.15 LAKHS BY CAS H IS TAKEN AFTER APRIL 2011 ON VARIOUS OCCASIONS AND CHEQUE PAYMENT RECEIVED RS.50 LAKHS IN MARCH & RS.1 0 LAKHS IN APRIL 2011, HENCE ADDITION OF RS.26.5 LAK HS TO BE DELETED. 59. WE HEARD BOTH THE PARTIES AND PERUSED THE MATER IAL ON RECORD. AS DISCUSSED IN ITA NO.1375/BANG/2016, W E DELETE THESE ADDITIONS ON SIMILAR LINES. 60. THE ASSESSEE RAISED THE FOLLOWING ADDITIONAL GR OUNDS IN THE ASST. YEAR 2011-12. THE APPELLANT HAVING ADMITTED U/S132(4) A SUM OF RS.3.03 CRORE AS HIS INCOME AND THE SAME HAVING BEEN ACCEPTED AND ASSESSED AS INCOME FROM OTHER SOURCES BY THE AO, THE AO OUGHT TO HAVE GIVEN THE BENEFIT OF TELESCOPING OF ALLEGED CASH PAYMENTS AGAINST THIS ADMITTED INCOME, IN THE INTEREST OF JUSTICE. 61. THE ASSESSEE FILED PETITION FOR ADMISSION OF ADDITIONAL GROUND STATING THAT IT DOES NOT INVOLVE ANY ITA NO.1375 TO 1378/BANG/2016 PAGE 41 OF 44 INVESTIGATION ON THE FACTS OTHERWISE THAN FOUND ON THE RECORDS OF THE DEPARTMENT AND IS A PURE QUESTION OF LAW AND GOES INTO THE VERY ROOT OF THE MATTER. HENCE, IT IS PRAYED THAT ADDITIONAL GROUND MAY BE ADMITTED FOR ADVANCEMENT OF SUBSTANTIAL CASE OF JUSTICE HAVING REGARDED TO THE RATIO LAID DOWN IN NATIONAL THERMAL POWER CO. LTD., VS. CIT (1998) 229 ITR 383 (SC) AND GUNDAT HUR THIMMAPPA AND SONS VS. CIT, MYSORE (1968) 70 ITR 70 (KAR). 62. WE HAVE HEARD BOTH THE PARTIES ON ADMISSION OF ABOVE ADDITIONAL GROUNDS. IN OUR OPINION, THESE AR E LEGAL ISSUED AND IT DOES NOT REQUIRE ANY INVESTIGATION O F FACTS WHICH ARE ALREADY ON RECORD. ACCORDINGLY BY PLACIN G RELIANCE ON THE JUDGMENT OF HONBLE SUPREME COURT I N THE CASE OF NATIONAL THERMAL POWER CO. LTD., CITED SUPR A, WE ADMIT THE ADDITIONAL GROUND FOR ADJUDICATION. 63. NOW COMING TO THE ISSUE RELATING TO NOT GIVING THE TELESCOPIC BENEFITS OF RS.3.03 CRORES THE AO GIVEN ONLY RS.1.33 CRORES. 64. IN THE PRESENT CASE, WE HAVE DELETED THE VARIOU S ADDITIONS IN ALL THESE ASSESSMENT YEARS, WHICH ARE BASED ITA NO.1375 TO 1378/BANG/2016 PAGE 42 OF 44 ON THE SEIZED MATERIAL MARKED AS A/BHB/11 AND NOT SUPPORTED BY ANY MATERIAL EVIDENCE. BEING SO, THE AMOUNT VOLUNTARILY OFFERED BY THE ASSESSEE IN HIS R ETURN OF INCOME AT RS.3,03,05,017/- IS TO BE TAXED AND AS SU CH THERE IS NO QUESTION OF GIVING ANY TELESCOPIC BENEF IT AND THE AO NOT AT ALL REQUIRED TO DEDUCT RS.1.35 CRORES FROM THE COMPUTATION OF INCOME IN ASSESSMENT YEAR 2011-1 2. HE HAS TO GO BY RETURN FILED BY THE ASSESSEE ON 26/11/2011 IN ACKNOWLEDGMENT NO.292359831260911 FOR THE ASST. YEAR 2011-12 WHILE PASSING THE GIVING EFFECT ORDER TO OUR FINDINGS IN THIS ORDER. THIS GROUND O F APPEAL IS DISMISSED ACCORDINGLY. 65. IN THE RESULT, ALL THE APPEALS FILED BY THE AS SESSEE ARE PARTLY ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH OCT, 2021 . SD/- SD/- (BEENA PILLAI) ( CHANDRA POOJARI) JUDICIAL MEMBER A CCOUNTANT MEMBER BANGALORE, DATED, 28 TH OCT , 2021 / VMS / ITA NO.1375 TO 1378/BANG/2016 PAGE 43 OF 44 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, B ANGALORE. ITA NO.1375 TO 1378/BANG/2016 PAGE 44 OF 44 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. ..