M/s. Aadi Infra Developers, Ahmedabad V. The Income Tax Officer, Ward-5(2)(2), Ahmedabad

ITA 3286/AHD/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5486 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 07-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SHAH
• Keywords: Unexplained expenditure; Principle of natural justice; Opportunity of cross examination; Question of law; Tangible material; Onus to prove
• Section: 69C; 143(3); 260A; 69B; 69A; 69

Judgement Text

, ,L ,L,L ,L- -- -,E ,E,E ,E- -- -LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD LKOZJH OLHE VGEN] YS[KK LNL; ,OA EK/KQFERK JKW;] LKOZJH OLHE VGEN] YS[KK LNL; ,OA EK/KQFERK JKW;] LKOZJH OLHE VGEN] YS[KK LNL; ,OA EK/KQFERK JKW;] LKOZJH OLHE VGEN] YS[KK LNL; ,OA EK/KQFERK JKW;] U; KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SMT MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NO. 3286/AHD/2016 ( / ASSESSMENT YEAR : 2012-13) M/S. AADI INFRA DEVELOPERS, 207, TURQUOISE, NR. PANCHVATI FIVE ROADS, CROSSING, C.G. ROAD, AHMEDABAD. / VS. ITO, WARD 5(2)(2), AHMEDABAD. ./ ./ PAN/GIR NO. : AAPFA 2643 Q ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI JAIMIN SHAH, A.R. / RESPONDENT BY : SHRI DINESH SHAH, SR. D.R. / DATE OF HEARING 20/08/2018 ! / DATE OF PRONOUNCEMENT 01/11/2018 '# / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL)-5, AHMEDABAD [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)-5 /ITO WARD.5(2)(2)/36/2015-16 DATED 07-10-2016 ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE INCOM E TAX ACT, 1961(HERE-IN-AFTER REFERRED TO AS 'THE ACT') DATED 20-03-2015 RELEVANT TO ASSESSMENT YEAR (AY) 2012-13. ITA NO.3286/AHD/2016 ADI INFRA DEVELOPERS VS. ITO A .Y. 2012-13 - 2 - 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE A RE AS UNDER:- 1. THAT THE LD. CIT(A) HAS GRIEVOUSLY ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING AN ADDITIONS OF RS. 7,69,243/- MADE BY LD. A.O. U/S. 69C OF THE I.T. ACT 1961, EVE N THOUGH THE APPELLANT HAS NOT PAID ANY COMMISSION TO TEJAS V. S HAH. 2. NON SUPPLY OF COPY OF STATEMENT OF TEJAS V. SH AH ON THE BASIS OF WHICH ADDITIONS HAS BEEN MADE BY ID. A.O. AND CONFI RMED BY COMMISSIONER OF INCOME-TAX(A) EVEN THOUGH LETTER DA TED 1/9/2016 ADDRESSED TO THE LEARNED COMMISSIONER OF I NCOME- TAX(A) AND COPY ENDORSED TO LEARNED RANGE COMMISSIO NER OF INCOME-TAX, HOWEVER THERE WAS NO REPLY OF THE SAID APPLICATION TILL THE DATE OF HEARING OF APPEAL AND NO COPY WAS SUPPLIED TO THE APPELLANT AND ON UNWANTED PREMISES THIS GROUND OF T HE APPELLANT WAS DISMISSED WHICH IS AGAINST THE PRINCIPLE OF NAT URAL JUSTICE AND CONSIDERING THE SAME THIS GROUND OF THE APPELLA NT BE DECIDED ON MERITS. 3. ON PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT THE ADDITIONS CONFIRMED BY COMMISSIONER OF INCOME-T AX (APPEAL- 5) REQUIRES TO BE DELETED. 4. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY OF THE GROUNDS TILL THE APPEAL IS FINALLY HEARD AND DECIDE D. 3. THE SOLITARY ISSUE RAISED BY THE ASSESSEE IN THI S APPEAL IS THAT LD CIT(A) ERRED IN CONFIRMING THE ORDER OF AO BY SUSTA INING THE DISALLOWANCE OF RS.7,69,243/- U/S 69C OF THE ACT. 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM AND ENGAGED IN THE BUSINESS OF CONSTRUCTION. THERE WAS A SEARCH AND SURVEY OPERATION IN THE CASE OF M/S. TRICON CONSTRUCTION D ATED 05.12.2012. THUS, A STATEMENT OF THE PARTNER OF M/S. TRICON CON STRUCTION NAMELY SHRI TEJAS V. SHAH WAS RECORDED. AS PER THE ASSESSMENT, SHRI TEJAS V. SHAH PARTNER OF M/S. TRICON CONSTRUCTION RECEIVED A COMM ISSION OF ITA NO.3286/AHD/2016 ADI INFRA DEVELOPERS VS. ITO A .Y. 2012-13 - 3 - RS.7,69,243/- FROM THE ASSESSEE FOR SELLING THE PLO T BELONGING TO THE ASSESSEE. 4.1 THE AO DURING THE ASSESSMENT PROCEEDINGS OBSERV ED THAT THE ASSESSEE HAS NOT CLAIMED ANY EXPENDITURE FOR THE CO MMISSION OF RS.7,69,243/- IN ITS BOOKS OF ACCOUNTS ON ACCOUNT OF SALE OF PLOTS THROUGH TEJAS V. SHAH PARTNER OF TRICON CONSTRUCTION. ON QU ESTION BY THE AO, THE ASSESSEE CONTENTED THAT IT HAS NOT INCURRED/ PA ID ANY COMMISSION EITHER TO TRICON CONSTRUCTION OR TEJAS V. SHAH PART NER OF THE FIRM. 4.2 THE ASSESSEE FURTHER SUBMITTED THAT IT HAS RECE IVED ADVANCES FROM THE CERTAIN PARTIES AGAINST THE SALE OF PLOT BUT NO SALE DEED HAS BEEN REGISTERED TILL DATE. THE ASSESSEE FURTHER SUBMITTE D THAT THE GOVT. OF GUJARAT HAS BANNED THE CONSTRUCTION ON THE PLOTS HO LD BY IT. THUS, NO TRANSACTION OF SALE/ PURCHASE OF SUCH PLOTS IS CARR IED OUT. HOWEVER, THE AO DISAGREED WITH THE SUBMISSION OF TH E ASSESSEE AND HELD THAT THE MOMENT ADVANCED WAS RECEIVED BY IT FOR THE SALE OF PLOTS, THE ASSESSEE IS UNDER THE OBLIGATION TO PAY THE AMOUNT OF COMMISSION TO THE AGENT WHO INTRODUCED THE PARTY TO THE ASSESSEE. 4.3 THE AO ALSO OBSERVED THAT SHRI TEJAS V. SHAH HA S DULY ADMITTED IN THE STATEMENT FOR THE RECEIPT OF COMMISSION INCOME FROM THE ASSESSEE AS DISCUSSED ABOVE. ITA NO.3286/AHD/2016 ADI INFRA DEVELOPERS VS. ITO A .Y. 2012-13 - 4 - IN VIEW OF ABOVE, THE AO HELD THAT THE COMMISSION E XPENSE AS DISCUSSED ABOVE HAS BEEN INCURRED BY THE ASSESSEE OUTSIDE THE BOOKS OF ACCOUNTS. ACCORDINGLY, THE AO MADE THE ADDITION OF RS.7,69,24 3/- ON ACCOUNT OF COMMISSION EXPENSES U/S 69C OF THE ACT TO THE TOTAL INCOME OF THE ASSESSEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL TO LD CI T(A). THE ASSESSEE BEFORE THE LD CIT(A) SUBMITTED THAT THE QU ERY FOR THE COMMISSION WAS RAISED BY THE AO AT THE FAG END OF T HE ASSESSMENT VIDE LETTER DATED 09.03.2015 WHICH WAS DULY REPLIED DATE D 16.03.2015. 5.1 THE ASSESSEE ALSO SUBMITTED THAT THERE IS NO SA LE DEED WHICH HAS TAKEN PLACE IN THE YEAR UNDER CONSIDERATION. AS SU CH, THE ASSESSEE HAS RECEIVED ONLY ADVANCES FROM CERTAIN PARTIES BUT NO COMMISSION EXPENSE WAS INCURRED FOR THE SALE OF SUCH PLOTS. 5.2 THERE IS NO MENTION IN THE ASSESSMENT ORDER WHE THER THE STATEMENT WAS RECORDED OF SHRI TEJAS V. SHAH U/S 132(4) OF TH E ACT OR 131 OF THE ACT OR 133(A) OF THE ACT. THEREFORE NO ADDITION CAN BE MADE BY THE AO MERELY BASED ON THE STATEMENT FURNISHED BY SHRI TEJ AS V. SHAH WHICH IS NOT SUPPORTED ON THE BASIS OF ANY TANGIBLE MATERIAL . THE COPY OF THE STATEMENT WAS NOT FURNISHED TO THE ASSESSEE DESPITE THE FACT THE ASSESSEE MADE A REQUEST FOR FURNISHING THE STATEMENT AS DISCUSSED ITA NO.3286/AHD/2016 ADI INFRA DEVELOPERS VS. ITO A .Y. 2012-13 - 5 - ABOVE. HOWEVER, THE LD CIT(A) DISREGARDED THE SUBMI SSION OF THE ASSESSEE AND CONFIRMED THE ORDER OF THE AO BY OBSER VING AS UNDER: 3.5. FACTS OF THE CASE AND THE SUBMISSIONS ARE CON SIDERED. THE ADDITION MADE BY THE AO IS BASED ON THE STATEMENT O F SHRI TEJAS V. SHAH RECORDED UNDER OATH AND HAS ITS OWN EVIDENTIARY VAL UE. DURING THE ASSESSMENT PROCEEDINGS IN RESPONSE TO SHOW CAUSE IS SUED BY THE AO THE APPELLANT HAS SIMPLY STATED THAT IT HAS NO TRANSACT IONS WITH THE FIRM OR ITS PARTNER TEJAS V. SHAH. DURING THE ASSESSMENT PR OCEEDINGS THE APPELLANT HAS NOT ASKED FOR COPY OF THE STATEMENT O F TEJAS V. SHAH. A PROPER OPPORTUNITY WAS PROVIDED TO THE APPELLANT. T HE APPELLANT HAS ALSO ADMITTED THAT IT HAS RECEIVED ADVANCES AGAINST THESE PLOTS WHICH SHOWS THAT THE ASSESSEE HAS TRANSACTIONS WITH THESE PARTIES AND THE STATEMENT RECORDED UNDER OATH OF SHRI TEJAS SHAH SH OWS THAT THE APPELLANT HAS PAID COMMISSION TO HIM FOR THESE PLOT S. CONSIDERING ALL THESE, THE ADDITION MADE BY THE AO IS CONFIRMED. TH US THE GROUND OF APPEAL IS DISMISSED. BEING AGGRIEVED BY THE ORDER OF LD CIT(A) ASSESSEE IS IN APPEAL BEFORE US. 6. THE LD. AR BEFORE US FILED A PAPER BOOK RUNNING FROM PAGES 1-22 AND SUBMITTED AS UNDER: WITHOUT CONSIDERING THE REPLY OF THE APPELLANT AND WITHOUT ISSUING ANY SHOW CAUSE NOTICE OF PROPER OPPORTUNITY LD. A.O. H AS MADE HEAVY ADDITION OF RS.7,69,243/- ON ACCOUNT OF COMMISSION PAID TO M/S TRICON CONSTRUCTION U/S 69C OF THE LT. ACT, 1961. THEREFO RE ON FOLLOWING GROUNDS THE APPELLANT APPEAL MAY PLEASE ME ALLOWED. 01. THE ADDITION MADE U/S 69C WITHOUT HAVING ANY CO RROBORATIVE MATERIAL ON RECORD. 02. THE SEARCH WAS CONDUCTED IN CASE OF TRICON C ONSTRUCTION AND THEIR PARTNER MR. TEJAS V. SHAH AND STATEMENT UNDER OATH RECORDED IS TO BE USED FOR EVIDENCE IN CASE OF PERS ON SEARCHED AND NOT FOR OTHER PARTIES WITHOUT HAVING CORROBORAT IVE MATERIAL TO PROVE THE TRANSACTIONS ARE TO BE TOOK PLACE. ITA NO.3286/AHD/2016 ADI INFRA DEVELOPERS VS. ITO A .Y. 2012-13 - 6 - 03. STATEMENT RECORDED ON OATH CANNOT BE USED AS EVIDENCE TO MADE ADDITION U/S 69C IN CASE OF THIRD PERSON WITHOUT GI VING OPPORTUNITY OF CROSS EXAMINATION. 04. NO ADDITION CAN BE MADE WITHOUT ISSUING SH OW CASE NOTICE U/S 143(3) OF THE IT. ACT. 1961. 05. THE APPELLANT HAS SPECIFICALLY DENIED ANY TRANSACTION WITH M/S TRICON CONSTRUCTION OR WITH TEJAS V. SHAH, FURTHER NO ANY TRANSACTION IN PAST OR IN FUTURE THE DONE BY THE AP PELLANT WITH M/S TRICON CONSTRUCTION OR TEJAS V. SHAH. THEREFORE THE BURDEN LIES WITH THE A.O. WHICH THE A.O. FAILS TO DO. 06. NO EVIDENCE FOUND DURING THE COURSE OF SEARCH OR SURVEY PROCEEDINGS THAT THE APPELLANT HAS PAID THE AMOUNT TO THE M/S TRICON CONSTRUCTION. ONLY THE STATEMENT OF THIRD PA RTY CANNOT BE THE EVIDENCE TO MADE ADDITION U/S 69C OF THE I. T. ACT, 1961. 07. ANY MATERIAL OR DOCUMENT OR CHIT HAS NOT BEEN PROVIDED OR EVEN THE STATEMENT RECORDED ON OATH OF TEJAS V. SHAH ON WHICH THE A.O. HAS RELIED ON AND MADE HEAVY ADDITIONS OF RS.7 ,69,243/- IS ALSO NOT PROVIDED TO THE APPELLANT AND THEREFORE TH E ADDITION MADE IS NOT TENABLE IN LAW AND REQUIRES TO BE DELET ED. 08. IN PARA 5.1 OF THE ASSESSMENT ORDER LD. A.O . HAS GIVEN FINDING IS 'THAT GENERALLY THE COMMISSION IS PAID WHEN A PERSO N INTRODUCES A PURCHASER TO THE SELLER' AND IN THE VERY NEXT LIN E LD. A.O. HAS SAID THAT 'WHEN SUCH INTERESTED PARTY APPROACHES TH E SELLER / BUILDER FOR BOOKING A FLAT/SHOP AND PAYS ADVANCE FO R THE SAME, THE INTRODUCER BECOME ELIGIBLE FOR THE COMMISSION.' THEREFORE THE A.O. HIMSELF HAS GIVEN CONTRADICTOR) FINDING BE CAUSE TO ELIGIBLE FOR COMMISSION AND PAYMENT FOR COMMISSION ARE DIFFERENT. ELIGIBLE MEANS RIGHT WAS CREATED BUT TRA NSACTION HAS NOT BEEN TOOK PLACE, AND PAID MEANS ALREADY PAID. T HEREFORE THE ADDITION MADE ON ASSUMPTION AND PRESUMPTION ON THE BASIS OF THIRD PARTY IS NOT TENABLE IN KM AND REQUIRES TO BE DELETED. FURTHER THE A.O. HAS MADE ASSUMPTION AND GIVEN FIND ING THAT GENERALLY THE COMMISSION IS PAID WHEN A PERSON INTR ODUCES A PURCHASE TO THE SELLER IS VERY VAGUE FINDING. IN GE NERAL PRINCIPAL COMMISSION IS PAYABLE WHEN ALL THE TRANSACTIONS ARE COMPLETED AND ALL THE CONDITIONS ARE FULFILLED BETWEEN BUYER AND SELLER EVEN IN GENERAL TRADE PRACTICE COMMISSION ON SALE IS PAI D AFTER THE PAYMENT HAS BEEN RECEIVED BY THE SELLER AFTER THE C REDIT PERIOD IS OVER. THEREFORE THE A.O. HAS MADE ADDITION ON WRONG ITA NO.3286/AHD/2016 ADI INFRA DEVELOPERS VS. ITO A .Y. 2012-13 - 7 - PRESUMPTIVE FINDING IS AGAINST THE PRINCIPAL OF NAT URAL JUSTICE AND THEREFORE THE ADDITION REQUIRES TO BE DELETED. 09. SECTION 69C IS AS UNDER: 'WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS INCURR ED ANY EXPENDITURE AND LIE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF OR THE EXPLANATION , IF ANY, OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESS ING OFFICER, SATISFACTORY, THE AMOUNT COVERED BY SUCH EXPENDITUR E OR PART THEREOF, AS THE CASE MAY BE, MAY BE DEEMED TO BE TH E INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR.' SECTION 69 TALKS ABOUT THE EXPENDITURE INCURRED. HO WEVER THE APPELLANT HAS SPECIFICALLY DENIED IN HIS REPLY DATE D 13/03/2015 PARA 4 THAT THEY HAVE NOT INCURRED ANY EXPENDITURE AND A.O. HAS NO MATERIAL TO PROVE THAT THE APPELLANT HAS MADE AN Y EXPENDITURE. THEREFORE THE ADDITION MADE ONLY ON TH E BASIS OF STATEMENT OF THIRD PARTY ADDITION U/S 69C CANNOT BE MADE. 10. THE A.O. HAS MADE ADDITION ON THE BASIS OF STA TEMENT OF THIRD PARTY WHICH MUST BE A PART OF ANNEXURE TO THE ASSES SMENT ORDER, HOWEVER THE SAME HAS BEEN NOT PROVIDED TILL TODAY T O THE APPELLANT IS ALSO AGAINST THE PRINCIPAL OF NATURAL JUSTICE AND THEREFORE THE ADDITION MADE MAY PLEASE BE DELETED. 11. THE PROJECT OF THE APPELLANT IS STOPPED DUE TO GUJARAT GOVERNMENT HAS ISSUED THE RESTRICTION ON CONSTRUCTI ON AS WELL AS SALES TRANSACTION OF THE PROPERTIES UNDER QUESTION. THE SALE DEED OF ANY OF THE BUYER NOT EXECUTED TILL DATE THEN THE QUESTION OF PAYMENT OF COMMISSION DOES NOT ARISE. THE LD. A.O. HAS MAY INQUIRE FURTHER BECAUSE THE APPELLANT HAS GIVEN NAM E OF THE BOOKING HOLDER. EVEN ONE OF THE PLOT NO. 45 HAS NOT BEEN ALLOTTED TO ANY PARTY THEN HOW THE APPELLANT HAS PAID THE CO MMISSION. THEREFORE THE ADDITION MADE AGAINST THE FACTS AND C IRCUMSTANCES OF THE CASE OF THE APPELLANT IS NOT SUSTAINABLE ON KM AND REQUIRES TO BE DELETED. YOUR APPELLANT HAS RELIED ON FOLLOWING DECISION OF VARIOUS TRIBUNALS & HIGH COURTS : ITA NO.3286/AHD/2016 ADI INFRA DEVELOPERS VS. ITO A .Y. 2012-13 - 8 - (1) KANTIBHAI REVANDAS PATEL V/S DEPARTMENT OF INCO ME TAX (AHD- TRIB) (COPY ENCLOSED) (2) MUSTUFAMIYA H. SHEIKH V. ASST. C1T (2013)(AHD -TRIB) (COPY ENCLOSED) (3) DY. CTT V. NATIONAL STANDARD INDIA LTD. (2 017) 166 1TD 426 (MUM-TRIB) (COPY) (4) RIVERIA PROPERTIES (P) LTD. V. ITO (2017) (MU M TRIB) (COPY ENCLOSED) (5) CIT V. LUBTEC INDIA LTD.. 311 ITR P. 175 (D ELHI-HC) FROM THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT THE IMPUGNED ADDITION OF RS. 7,69,243/- MAY PLEASE BE D ELETED. 7. ON THE OTHER HAND, LD DR SUBMITTED THAT SHRI TEJ AS V. SHAH HAS DULY ADMITTED IN THE STATEMENT FOR THE SALE OF PLOT S. IN THE STATEMENT, THE DETAILS OF THE NUMBER OF THE PLOTS ALONG WITH ADDRE SS WERE DULY FURNISHED. 7.1 IT IS UNDISPUTED FACT THAT THE ASSESSEE HAS REC EIVED ADVANCES AGAINST THE SALE OF SUCH PLOTS WHICH FORTIFIES THE ORDER OF THE AO. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF AUTHORITIES BELOW . 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS A FACT ON RECORD THAT TH E ADDITION WAS MADE ON THE BASIS OF THE STATEMENT FURNISHED BY SHRI TEJAS V. SHAH DURING THE COURSE OF SEARCH AND SURVEY PROCEEDINGS. 8.1 FROM THE FINDING OF THE AO WE NOTE THAT THERE I S NO CLEAR FINDING GIVEN BY HIM WITH REGARD TO THE STATEMENT WHETHER I T WAS OBTAINED DURING THE SURVEY PROCEEDINGS OR SEARCH PROCEEDINGS. IN OU R CONSIDERED VIEW, ITA NO.3286/AHD/2016 ADI INFRA DEVELOPERS VS. ITO A .Y. 2012-13 - 9 - THE AO SHOULD HAVE RECORDED THE RELEVANT DETAILS OF THE SECTION UNDER WHICH THE STATEMENT WAS RECORDED. 8.2 WE ALSO NOTE THAT THE ADDITION WAS MADE BY THE AO UNDER SECTION 69C OF THE ACT MERELY ON THE BASIS OF THE STATEMENT OBTAINED FROM SHRI TEJAS V. SHAH. THERE WAS NO OTHER IOTA OF EVIDENCE SUGGESTING THAT THE ASSESSEE HAS INCURRED ANY EXPENDITURE ON ACCOUNT OF COMMISSION PAID TO SHRI TEJAS V. SHAH. THE AO HAS NOT REFERRED TO ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SURVEY EVIDENCI NG THE PAYMENT BY THE ASSESSEE FOR THE COMMISSION. IN OUR CONSIDERED VIEW, FOR THE ADDITION MADE U/S 69C OF THE ACT, THE ONUS LIES ON THE REVEN UE TO PROVE THAT THE ASSESSEE HAS INCURRED EXPENDITURE ON ACCOUNT OF COM MISSION EXPENSES. IN THIS REGARD, WE FIND SUPPORT AND GUIDANCE FROM THE ORDER OF ITAT 311 ITR (TRIB) 177 (PARA 5) & DK GUPTA VS. DCIT REPORTE D IN 60 TTJ 597. 4.1 HOWEVER, EVEN WITHOUT THE AVAILABILITY OF SUCH PRESUMPTION AS CONTAINED IN S. 132(4A) DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE INITIAL ONUS OF PROVING THAT THE ASSESSEE WAS N OT THE OWNER OF SEIZED MATERIAL IS ON HIM AS IT IS NOT IN DISPUTE THAT THE MATERIAL RELIED UPON BY THE AO FOR MAKING THE ADDITION WAS WITHOUT DISPUTE FOUND AND SEIZED FROM HIM. THEREFORE, THE LEARNED DEPARTMENTAL REPRE SENTATIVE IS RIGHT WHEN HE SAYS THAT BURDEN OF PROOF LIES ON THE ASSES SEE. BUT AT THE SAME TIME WE ARE IN AGREEMENT WITH THE LEARNED AUTHORISE D REPRESENTATIVE FOR THE APPELLANT THAT BEFORE INVOKING THE PROVISIONS O F SS. 68 , 69 , 69A , 69B AND 69C IT WILL BE ESSENTIAL TO ENSURE THE FULFILMENT OF ALL THE CONDITIONS PRECEDENT TO THE EXISTENCE OF UN EXPLAINED INVESTMENTS/EXPENDITURE, ETC., FOR WHICH THE ONUS L IES ON THE REVENUE. THE RELEVANT PROVISIONS CAN BE INVOKED ONLY IF IT I S FACTUALLY FOUND THAT THE ASSESSEE HAS MADE SUCH INVESTMENTS OR INCURRED SUCH EXPENDITURE AND IT WAS ASSESSEE ALONE AND NONE ELSE WHO WAS THE OWNER OF SUCH INVESTMENTS, ETC. IT WILL HAVE TO BE FURTHER ESTABL ISHED BY THE REVENUE THAT SUCH AMOUNTS HAVE NOT BEEN RECORDED OR/ARE IN EXCESS OF THE AMOUNTS RECORDED IN THE BOOKS OF ACCOUNTS, IF ANY, MAINTAINED BY THE ITA NO.3286/AHD/2016 ADI INFRA DEVELOPERS VS. ITO A .Y. 2012-13 - 10 - ASSESSEE AND THE ASSESSEE OFFERS NO EXPLANATION ABO UT SUCH AMOUNTS OR EXPLANATION OFFERED IS NOT SATISFACTORY. ONLY THEN SUCH AMOUNTS ARE DEEMED TO REPRESENT ASSESSEE'S INCOME. THE FACTS MU ST BE FOUND CLEARLY TO BRING AN ITEM WITHIN THE AFORESAID DEEMING PROVI SIONS AND IT WILL HAVE TO BE ESTABLISHED BY THE REVENUE THAT ALL THE ABOVE CIRCUMSTANCES DO FACTUALLY EXIST. IT HAS FURTHER TO BE FOUND OUT THAT IF SOME EXPENSES HAVE BEEN INCURRED OUTSIDE THE BOOKS OF ACCOUNTS OR SUCH EXPENDITURE IS NOT FULLY RECORDED IN THE BOOKS OF ACCOUNTS, IF ANY , MAINTAINED BY THE ASSESSEE, AS TO WHETHER SUCH UNRECORDED EXPENDITURE REPRESENTED PERSONAL EXPENDITURE OR PERTAINED TO BUSINESS. 8.3 THE PROVISION OF SECTION 69C REQUIRES TO MAKE T HE DISALLOWANCE OF THE EXPENSES WHICH HAS BEEN INCURRED BY THE ASSESSE E AND THE ASSESSEE FAILS TO EXPLAIN THE NATURE/ SOURCE OF SUCH EXPENDI TURE. THUS, IT IS IMPLIED THAT FIRST OF ALL THE AO HAS TO PROVE WHETHER THE A SSESSEE HAS INCURRED EXPENDITURE AND THEN THE QUESTION COMES FOR THE EXP LANATION. IN THE INSTANT CASE, THE AO HAS NOT PROVED WITH THE DOCUME NTARY EVIDENCES THAT THE ASSESSEE HAS INCURRED EXPENDITURE ON ACCOUNT OF COMMISSION EXPENSES. THUS, IN SUCH CASE THE QUESTION OF EXPLAN ATION DOES NOT ARISE. IN THIS REGARD, WE FIND SUPPORT AND GUIDANCE FROM T HE JUDGMENT OF DELHI HIGH COURT IN THE CASE OF CIT VS. LUBTEC INDIA LTD. REPORTED IN 311 ITR P. 175, WHEREIN IT WAS HELD AS UNDER: 5. THE ADDITION IS SOUGHT TO BE MADE IN VIEW OF THE PR OVISIONS OF SECTION 69C OF THE INCOME-TAX ACT, 1961, WHICH READS AS FOL LOWS : '69C. WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS I NCURRED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF, OR THE EXPLANATION, IF ANY, OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATIS FACTORY, THE AMOUNT COVERED BY SUCH EXPENDITURE OR PART THEREOF, AS THE CASE MAY BE, MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FI NANCIAL YEAR : PROVIDED THAT NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, SUCH UNEXPLAINED EXPENDITURE WHICH IS DEEMED TO ITA NO.3286/AHD/2016 ADI INFRA DEVELOPERS VS. ITO A .Y. 2012-13 - 11 - BE THE INCOME OF THE ASSESSEE SHALL NOT BE ALLOWED AS A DEDUCTION UNDER ANY HEAD OF INCOME.' 6. IT IS QUITE CLEAR THAT WHAT IS POSTULATED IN SECTIO N 69C OF THE ACT IS THAT FIRST OF ALL THE ASSESSEE MUST HAVE INCURRE D THAT EXPENDITURE AND THEREAFTER, IF THE EXPLANATION OFFERED BY THE ASSES SEE ABOUT THE SOURCE OF SUCH EXPENDITURE IS NOT FOUND SATISFACTORY BY THE A SSESSING OFFICER, THE AMOUNT MAY BE ADDED TO HIS INCOME. 7. IN THE PRESENT CASE, THERE IS NOTHING TO SHOW THAT THE EXPENDITURE WAS IN FACT INCURRED BY THE ASSESSEE. THE ASSESSEE HAD DENIED HAVING INCURRED THE EXPENDITURE AND HAD CONTENDED THAT IT DID NOT HAVE THAT KIND OF MONEY. THE TRIBUNAL NOTED THAT THE ASSESSIN G OFFICER HAD NOT MADE ANY ENQUIRY WHATSOEVER TO FIND OUT WHETHER SUC H EXPENDITURE WAS ACTUALLY INCURRED BY THE ASSESSEE. SINCE A PART OF THE EXPENDITURE RELATED TO ADVERTISEMENTS IN NEWSPAPERS, IT COULD H AVE BEEN EASILY VERIFIED BY THE ASSESSING OFFICER, BUT HE DID NOT D O SO. 8. WE FIND NO FAULT IN THE VIEW TAKEN BY THE TRIBUNAL SINCE THERE IS NOTHING ON RECORD TO SHOW THAT THE EXPENDITURE WAS ACTUALLY INCURRED BY THE ASSESSEE NOR DID THE ASSESSING OFFICER TAKE ANY ACTION TO FIND OUT WHETHER THE EXPENDITURE WAS ACTUALLY INCURRED OR NO T. 8.4 WE ALSO NOTE THAT THE AO FAILED TO PROVIDE THE OPPORTUNITY OF CROSS EXAMINATION OF THE STATEMENT OBTAINED UNDER THE PRO VISION OF ACT. IN OUR CONSIDERED VIEW, THE AO BEFORE MAKING THE ADDITION ON THE BASIS OF STATEMENT SHOULD HAVE PROVIDED THE OPPORTUNITY OF C ROSS EXAMINATION TO THE ASSESSEE. IN THIS REGARD, WE FIND SUPPORT AND G UIDANCE FROM THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF AN DAMAN TIMBER INDUSTRIES VS. CCE REPORTED IN 281 ITR P. 241, WHER EIN IT WAS HELD AS UNDER: WE HAVE HEARD MR. KAVIN GULATI, LEARNED SENIOR COU NSEL APPEARING FOR THE ASSESSEE, AND MR. K. RADHAKRISHNAN, LEARNED SENIOR COUNSEL WHO APPEARED FOR THE REVENUE. ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROSS-EXAMINE THE WITNESSES BY THE ADJU DICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE ITA NO.3286/AHD/2016 ADI INFRA DEVELOPERS VS. ITO A .Y. 2012-13 - 12 - IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE OR DER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTE D. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASE D UPON THE STATEMENTS GIVEN BY THE AFORESAID TWO WITNESSES. EV EN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANT ED TO CROSS-EXAMINE, THE ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPOR TUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFI CALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOW EVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS N OT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. T HE TRIBUNAL HAS SIMPLY STATED THAT CROSS-EXAMINATION OF THE SAID DEALERS C OULD NOT HAVE BROUGHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION O F THE APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX-FACTORY PR ICES 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. 8.5 WE ALSO FIND SUPPORT AND GUIDANCE FROM THE JUDG MENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF PCIT VS. BHARTI S OMCHAND SHAH IN TAX APPEAL NO.1023 OF 2017 WHEREIN IT WAS HELD AS UNDER : 1. THE APPELLANT REVENUE IN THIS APPEAL UNDER SECTION 260A OF THE INCOME TAX ACT, 1961 (HEREINAFT ER REFERRED TO AS THE ACT) HAS CHALLENGED THE ORDER DATED 21.10.2016 MADE BY THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD BENCH B IN ITA NO.926/AHD/2015 FOR ASSESSMENT YEAR 2008 09, BY PROPOSING THE FOLLOWING QUESTIONS STATED TO BE SUBSTAN TIAL QUESTIONS OF LAW: [A] WHETHER THE APPELLATE TRIBUNAL IS CORRECT IN LAW AND ON FACTS IN NOT CONSIDERING THE STATEMENT OF SHRI MUKESH M. CHOKSHI TAKEN ON OATH U/S.132(4) OF THE ACT AND IS BINDING AS EVIDENCE OR NOT? [B] WHETHER THE APPELLATE TRIBUNAL IS CORRECT IN LAW AND ON FACTS IN DELETING THE ADDITIONS WITHOUT APPRECIATING THE FACT ITA NO.3286/AHD/2016 ADI INFRA DEVELOPERS VS. ITO A .Y. 2012-13 - 13 - THAT THE ASSESSEE HAD NOT CARRIED OUT S HARE TRANSACTIONS THROUGH STOCK EXCHANGE AND THOSE TRANSACT IONS WERE CARRIED OUT OFF MARKET, THUS SHOULD BE TREATED AS ILLEGAL AND FRAUDULENT OR NOT? 2. HEARD MRS. MAUNA BHATT, LEARNED SENIO R STANDING COUNSEL FOR THE APPELLANT AND MR. D.K. PUJ, LEARNED ADVOCATE FOR THE RESPONDENT IN THE APPEAL. 3. THE LEARNED ADVOCATE FOR THE RESPONDENT HAS DRAWN THE ATTENTION OF THE COURT TO THE ORDER DATED 12.09.2017 PASSED BY THIS COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX-5 V. DHWANI MAHENDRA SHAH, RENDERED IN TAX APPEAL NO.674 OF 2017, TO SUBMIT THAT IN AN APPEAL ARISING OUT OF THE COMMON ORDER OF THE TRIBUNAL, RAISING IDENTICAL QUESTIONS, THIS COURT HAS DISMISSED THE APPEAL AND UPHELD THE ORDER PASSED BY THE TRIBUNAL. IT WAS SUBMITTED THAT THEREFORE, FOR THE SAME REASONS, THIS APPEAL ALSO DESERVES TO BE DISMISSED. 4. MRS. MAUNA BHATT, LEARNED SENIOR STAN DING COUNSEL FOR THE REVENUE, IS NOT IN A POSITION TO DISPUTE THE AFORESAID POSITION OF LAW. 5. HAVING REGARD TO THE FACT THAT THE CONTROVERSY INVOLVED IN THE PRESENT CASE STANDS CONCLUDED BY THE ABOVE REFERRED DECISION OF THIS COURT, IT IS NOT NECESSARY TO SET OUT THE FACTS AN D CONTENTIONS IN DETAIL. FOR THE REASONS RECORDED IN THE OR DER DATED 12.9.2017 PASSED BY THIS COURT IN TAX APPEAL NO. 674 OF 2017, IT CANNOT BE SAID THAT THE IMPUGNED ORDER PASSED BY THE TRIBUNAL SUFFERS FROM ANY LEGAL INFIRMITY SO AS TO GIVE RISE ANY QUESTION OF LAW, MUCH LESS, A SUBSTANTIAL QUESTION OF LAW AS PROPOSED OR OTHERWISE. THE A PPEAL, THEREFORE, FAILS AND IS, ACCORDINGLY, SUMMARILY DISMISSED. 8.6 THE CASE LAW RELIED BY THE AO IN HIS ASSESSMENT ORDER ARE DISTINGUISHABLE FROM THE FACTS ON HAND. THEREFORE W E ARE RELUCTANT TO PLACE OUR RELIANCE ON SUCH ORDERS. IN VIEW OF ABOVE , WE HAVE NO ITA NO.3286/AHD/2016 ADI INFRA DEVELOPERS VS. ITO A .Y. 2012-13 - 14 - HESITATION IN REVERSING THE ORDER OF AUTHORITIES BE LOW. THE AO IS DIRECTED TO DELETE THE ADDITION MADE BY HIM. HENCE, THE GRO UND OF APPEAL OF THE ASSESSEE IS ALLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . THIS ORDER PRONOUNCED IN OPEN COURT ON 01/11/2018 SD/- SD/- E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; YK S[KK LNL; U;KF;D LNL; YK S[KK LNL; U;KF;D LNL; YK S[KK LNL; U;KF;D LNL; YK S[KK LNL; (MADHUMITA ROY) (WASEEM AHMED ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 01/11/2018 PRITI YADAV, SR.PS !' #' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. % &' ( / CONCERNED CIT 4. ( () / THE CIT(A)-5, AHMEDABAD. 5. +,- ..&' , &'! , 01'%' / DR, ITAT, AHMEDABAD. 6. -23 4 / GUARD FILE. $ % / BY ORDER, + . //TRUE COPY// &/% () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 19/09/2018 (PAGE-6) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER : .. 12/10/2018 3. OTHER MEMBER.. 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 15/10/2018 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT.. 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER 10. DATE OF DESPATCH OF THE ORDER