ACIT, New Delhi V. M/s. Pyramid Realtors Pvt. Ltd., New Delhi

ITA 435/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6742 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 23-05-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 24-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NANDITA KANCHAN
• Assessee Lawyers: SURESH ANANTHARAMAN
• Keywords: Unexplained expenditure; Income from undisclosed sources; Search and seizure; Deemed to accrue or arise in india; Additional evidence; Question of law; Assessment record; Condonation of delay
• Section: 69C; 40A(3); 153A; 147; 131; 69; 263; 132; 139

Judgement Text

1 ITA NOS. 435 & 404/DEL/2014 BEFORE IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI G.D. AGRAWAL. VICE PRESIDENT AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEM BER ITA NOS. 435 & 404/DEL /2014 ASSESSMENT YEAR: 2006-07 & 2007-08 THE ACIT VS. M/S PYRAMID REALTORS PVT LTD CIRCLE X B 67, SARITA VIHAR PHASE II, NEW DELHI NEW DELHI PAN AASXP 4395 F (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SURESH ANANTHARAMAN, C A DEPARTMENT BY : SHRI NANDITA KANC HAN, CIT-DR DATE OF HEARING : 24.05.2016 DATE OF PRONOUNCEMENT : 2 9.07.2016 O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THESE TWO APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE ORDER OF THE CIT(A)-XXXII, NEW DELHI DATED 28/1 0/2012 FOR A.YS 2006-07 & 2007-08. ITA NO. 435/DEL/2014 2. GROUND NO. 3 IS GENERAL IN NATURE AND NO ADJUDIC ATION REQUIRED ON THE SAME. MAIN EFFECTIVE GROUND OF THE ASSESSEE READS AS UNDER: 2 ITA NOS. 435 & 404/DEL/2014 1. THE LEARNED CIT(A) ERRED IN ADMITTING ADDITION AL EVIDENCE UNDER RULE 46A. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 96,41,952/- ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S 69 OF THE ACT. GROUND NO. 1 3. APROPOS GROUND NO. 1, WE HAVE HEARD THE RIVAL CO NTENTIONS AND HAVE PERUSED THE RELEVANT MATERIAL ON RECORD. THE LD. C OUNSEL OF THE REVENUE POINTED OUT THAT HE LD. CIT(A) HAS ERRED IN ADMITTI NG AND CONSIDERING ADDITIONAL EVIDENCE IN VIOLATION OF PROVISIONS OF R SULE 46A OF THE INCOME-TAX RULES, 1962 [HEREINAFTER REFERRED TO AS THE RULES]. 4. PER CONTRA, THE LD. AR REPLIED THAT THE LD. CIT( A) CALLED REMAND REPORT FROM THE A.O WHICH WAS SUBMITTED AND AFTER CONSIDER ING THE SAME ON THE BASIS OF LOGICAL ANALYSIS AND CAUSE SHOWN BY THE AS SESSEE AND TAKING INTO CONSIDERATION THE FACTS AND CIRCUMSTANCES ADMITTED THE ADDITIONAL EVIDENCE AND THEREAFTER THE SAME WAS CONSIDERED AS PER PROVI SIONS OF RULE 46A OF THE RULES. FROM THE RELEVANT OPERATIVE PART OF THE ORD ER, WE OBSERVE THAT ADDITIONAL EVIDENCE ALONGWITH WRITTEN SUBMISSIONS W ERE FORWARDED TO THE A.O AND HE SUBMITTED VIDE REMAND REPORT DATED 27.9. 2013 WHICH HAS BEEN CONSIDERED BY THE A.O. IN THE REMAND REPORT THE A. O HAS NOT CONTROVERTED THIS FACT THAT THE A.O REFUSED TO BRING ON RECORD T HE RELEVANT EVIDENCE OR 3 ITA NOS. 435 & 404/DEL/2014 BECAUSE THEY WERE NOT TRACEABLE AT THAT POINT OF TI ME. IN THIS SITUATION, WE ARE INCLINED TO GO WITH THE CONCLUSION OF THE LD. C IT(A) THAT THERE WAS SUFFICIENT REASON FOR THE ASSESSEE WHICH PREVENTED HIM TO FILE RELEVANT EVIDENCE DURING THE COURSE OF ASSESSMENT PROCEEDING S AND THE SAME WAS SUBMITTED DURING THE FIRST APPELLATE PROCEEDINGS UN DER RULE 46A OF THE RULES. WE ARE NOT AGREEMENT WITH THE CONTENTION OF THE LD. COUNSEL OF THE REVENUE THAT THE ADDITIONAL EVIDENCE HAS BEEN ADMIT TED AND CONSIDERED IN CONTRAVENTION OF RULE 46A OF THE RULE AS THE LD. CI T(A) CALLED REMAND REPORT WHICH WAS SUBMITTED BY THE A.O ON 27.9.2013 AND AFT ER CONSIDERING THE SAME ADDITIONAL EVIDENCE WAS ADMITTED AND CONSIDER ED BY THE LD. CIT(A) WHICH CANNOT BE SAID IN CONTRAVENTION OF RULE 46A O F THE RULES. ACCORDINGLY GROUND NO. 1 OF THE REVENUE IS DISMISSED. GROUND NO. 2 5. APROPOS GROUND NO. 2 THE LD. COUNSEL OF THE REVE NUE VEHEMENTLY ARGUED THAT THE LD. CIT(A) HAS GROSSLY ERRED IN DEL ETING THE ADDITION OF RS. 96,41,952/- ON ACCOUNT OF UNEXPLAINED EXPENDITURE U /S 69 OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT]. HE ALSO POINTED OUT THAT THE IMPUGNED EXPENDITURE STANDS UNEXPLAINED AN D ADDED TO THE INCOME OF THE ASSESSEE AS THE FIGURES APPEARING IN THE SEI ZED DOCUMENTS FOR ARRANGING LOANS FROM AMC IS NOT ACCEPTABLE. 4 ITA NOS. 435 & 404/DEL/2014 6. REPLYING TO THE ABOVE, THE LD. AR SUPPORTED THE ACTION OF THE A.O AND CONTENDED THAT THE BASELESS ADDITION HAS BEEN RIGHT LY DELETED BY THE LD. CIT(A). 7. ON CAREFUL CONSIDERATION OF THE ABOVE, FROM THE RELEVANT OPERATIVE PART OF THE IMPUGNED ORDER, WE OBSERVE THAT THE LD. CIT(A) GRANTED RELIEF TO THE ASSESSEE BY OBSERVING AS UNDER: 19.1.6 THE ADDITIONAL EVIDENCE ALONGWITH THE WRIT TEN SUBMISSIONS WHERE FORWARDED TO THE ASSESSING OFFICER. VIDE REPO RT DATED 27.09.2013 THE ASSESSING OFFICER FURNISHED THE REPO RT WHERE IN THE ASSESSING OFFICER COMMENTED UPON AS UNDER: '4.2 THE 'SAPATH PATRA' ONLY, IN ITSELF CANNOT BE T AKEN AS AN EVIDENCE FOR THE JUSTIFICATION REGARDING PAYMENT MADE BY THE ASSESSEE. THE ADDITIONS HAVE BEEN MADE ON THE BASIS OF SEIZED DOC UMENTS AND AFTER THE CASE WENT THROUGH SPECIAL AUDIT U/S 142(2A). TH E ASSESSEE HAD NEITHER FILE THESE EVIDENCES BEFORE SPECIAL AUDITOR (EVEN DURING EXTENDED PERIOD OF SPECIAL AUDIT) NOR BEFORE THE AS SESSING OFFICER. THUS IT IS APPARENT THAT IT IS AN AFTER THOUGHT AND ADDITIONAL EVIDENCE SUBMITTED DURING POST SEARCH CANNOT BE RELIED UPON UNTIL AND UNLESS THE GENUINENESS IS PROVED BEYOND DOUBT. SINCE, THE ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS, THEREFORE, THE ADDITIONS HAV E BEEN RIGHTLY MADE BY THE ASSESSING OFFICER.' FROM THE ABOVE, I FIND THAT THE ASSESSING OFFICER D ID NOT CHALLENGE THE AFFIDAVIT FILED AS ADDITIONAL EVIDENCE BY THE A PPELLANT. THE PERSONS WHO GAVE THE AFFIDAVITS WERE NOT SUMMONED U /S 131 AND NO 5 ITA NOS. 435 & 404/DEL/2014 ADVERSE MATERIAL WAS BROUGHT ON RECORD. IN THE SPEC IAL AUDIT REPORT U/S 142(2A) IN THE STATEMENT OF RECONCILIATION OF S EIZED MATERIAL WITH BOOKS OF ACCOUNT AS A POINT OF REFERENCE THE S PECIAL AUDITOR MENTIONED THE KHATA NOS. AND KHASRA NOS. AGAINST TH E CASH GIVEN. THE ASSESSING OFFICER DID NOT ASK THE APPELLANT REG ARDING THE OWNERSHIP OF THE LAND TENEMENTS THAT WERE INDICATED IN THE REPORT SO THAT SUCH INFORMATION CAN BE VERIFIED WITH THE A DDITIONAL EVIDENCES FILED. WHERE NO EVIDENCE OR COGENT MATERI AL IS BROUGHT ON RECORD BY THE ASSESSING OFFICER, THE SUBMISSIONS MADE BY THE APPELLANT CANNOT BE IGNORED. MOREOVER, THE EVIDENCE FILED BY THE APPELLANT HAS ITS ROOTS FROM THE REMARKS MADE BY TH E SPECIAL AUDITOR IN HIS ANNEXURES. 19.1.7 THE REMAND REPORT WAS PROVIDED TO THE APPE LLANT TO FILE HIS REJOINDER VIDE DATED 23.10.2013, THE APPELLANT FILED THE REJOINDER ON THIS ISSUE THE COMMENTS OF THE APPELLA NT REGARDING THE UNEXPLAINED EXPENDITURE ARE AS UNDER: 'OUR FURTHER SUBMISSIONS WITH REGARD TO THE ADDITIO N OF RS.96,41,952/- AS UNEXPLAINED EXPENDITURE U/S 69C O F THE ACT ARE AS UNDER. THESE MAY BE READ IN CONJUNCTION WITH OUT WRITTEN SUBMISSIONS DATED 30 TH NOVEMBER, 2012. FULL DETAILS OF THIS ADDITION ARE PLACED AT PAGES 3 5 TO 38 OF THE PAPER BOOK. PAGE 39 OF THE PAPER BOOK CONTAINS SUMS OF MONEY WH ICH ARE THE SUBJECT MATTER OF ADDITION. WITH REGARD TO THE SUMS SPECIFIED, THE RESPECTIVE VENDOR (MR. VEERPAL SINGH) HAS FURNISHED AFFIDAVIT AFFIRMING THAT HE HAS NOT RECEIVED ANY CONSIDERATIO N OVER AND ABOVE THE CONSIDERATION AS SPECIFIED IN THE SALE AG REEMENT ENTERED INTO BY HIM. 6 ITA NOS. 435 & 404/DEL/2014 THUS THE RECIPIENT HAS DENIED THE CASH PAYMENT ALLE GED TO BE PAID BY THE APPELLANT THE ASSESSING OFFICER HAS NOT COMM ENTED ADVERSELY ON THIS ASPECT IN THE REMAND PROCEEDINGS, NO FURTHER QUERIES OR INFORMATION HAVE BEEN DIRECTED AT THE AP PELLANT WITH REGARD TO THESE AFFIDAVITS. IN THE LIGHT OF THE ABOVE, THE ADDITION OF RS.96,41 ,952/- MAY PLEASE BE DELETED.' 19.1.8 IT IS ALSO PERTINENT TO MENTION HERE, AND A LSO FROM THE MATERIAL ON RECORD THAT IN ANNEXURE 12 OF THE SPECI AL AUDIT REPORT PART-II THE SPECIAL AUDITOR RECONCILED THE CASH PAY MENT AS PER THE SEIZED MATERIAL AND ALSO THE BOOKS OF ACCOUNT AT SE RIAL NO. 1. IN THE REMARKS COLUMN IT WAS MENTIONED AS UNDER: THE PAYMENT HAS BEEN MADE BY SCL AND SHOWN AS ITS INVENTORY. HOWEVER, THIS PAYMENT WAS MADE BY SCL ON BEHALF OF PRPL AND THIS CORRECTION WAS MADE IN THE F.Y. 2006- 07 RELEVANT TO THE A.Y. 2007-08. ACCORDINGLY, THE PAYMENTS MADE BY SCL IN CASH ON BEHALF OF PRPL HAS BEEN REPORTED IN PRPL AT POINT NO. 15 OF ANNEXURE TO FORM 68 OF THE A.Y. 2006-07.' THIS FACT WAS NOT BROUGHT ON RECORD BY THE ASSESSIN G OFFICER NOR ANY QUERY WAS POSED BY HIM TO THE APPELLANT REGARDI NG THE SAME. ONLY A PART OF THE OBSERVATION OF THE SPECIAL AUDIT OR IN THE TABLE FORM MENTIONED ABOVE WAS BROUGHT ON RECORD WITH REG ARD TO HE CASH GIVEN AMOUNTING TO RS.96,41,952/- WHICH WAS TR EATED AS UNEXPLAINED EXPENDITURE AS DEEMED INCOME UNDER THE HEAD UNEXPLAINED EXPENDITURE U/S 69C. FROM THE REMARKS O F THE SPECIAL AUDITOR IT IS EVIDENT THAT THE PAYMENT OF RS. 96,41 ,952/- WAS MADE BY M/S SAMAAG CONSTRUCTION LTD AND WAS SHOWN IN ITS INVENTORY. IT WAS ALSO STATED THAT THIS PAYMENT WAS MADE ON BEHAL F OF THE 7 ITA NOS. 435 & 404/DEL/2014 APPELLANT AND SUBSEQUENTLY CORRECTION WAS MADE IN T HE F.Y. 2006- 07 RELEVANT TO THE ASSESSMENT YEAR 2007-08. 19.1.9 SECTION 69C CAN BE INVOKED WHEN THE APPELLAN T ONLY INCURS AN EXPENDITURE AND SUCH EXPENDITURE WAS NOT SATISFACTO RILY EXPLAINED WITH REGARD TO SOURCE OF SUCH EXPENDITURE OR PART T HEREOF THEN THE AMOUNT COVERED BY SUCH EXPENDITURE WOULD BE DEEMED TO BE INCOME OF THE APPELLANT. IN THE PRESENT CASE THE EXPENDITU RE WAS INCURRED BY M/S SAMSUNG CONSTRUCTION LTD., ANOTHER PERSON ON BE HALF OF APPELLANT AND SUCH EXPENDITURE WAS NOT INCURRED BY THE APPELLANT. SINCE THIS EXPENDITURE AMOUNTING TO RS. 96,41,952 / - WAS INCURRED BY M/S SAMAAG CONSTRUCTION LTD. IT WOULD BE TAXED IN I TS ON HAND. .ACCORDINGLY, THE ADDITION WAS MADE ASSESSING OFFIC ER AMOUNTING TO RS. 96,41,952/- ON ACCOUNT OF UNEXPLAINED EXPENDITU RE U/S 69C IS HEREBY DELETED. FROM THE ABOVE, IT IS APPARENT THAT THE IMPUGNED EX PENDITURE WAS INCURRED BY M/S SAMSUNG CONSTRUCTION LTD WHICH IS ANOTHER PERSON, ON BEHALF OF THE ASSESSEE AND THE SAME WAS NOT INCURRED BY THE ASSESSEE. THESE FACTS HAVE NOT BEEN CONTROV ERTED BY THE A.O IN THE REMAND REPORT AND BY THE LD. COUNSEL OF THE REVENUE DURING HEARING BEFORE US. IN THIS POSITION OF FACT S AND CIRCUMSTANCES, WE ARE IN AGREEMENT WITH THE CONCLUS ION OF THE LD. CIT(A) THAT SINCE IMPUGNED EXPENDITURE WAS NOT INCURRED BY THE ASSESSEE AND IT WAS INCURRED BY M/S SAMSUNG CON STRUCTION LTD CAN AT THE BEST BE TAXED I THE HANDS OF M/S SAM SUNG AND NOT IN THE HANDS OF THE ASSESSEE U/S 69C OF THE ACT. T HE LD. CIT(A) WAS QUITE JUSTIFIED IN DELETING THE ADDITION AND TH US WE UPHOLD HIS CONCLUSION. CONSEQUENTLY, GROUND NO. 2 OF THE REVENUE BEING DEVOID OF MERITS IS DISMISSED. 8 ITA NOS. 435 & 404/DEL/2014 ITA NO. 404/DEL/2014 FOR A.Y 2007-08 7. GROUND RAISED BY THE REVNEUE READ AS UNDER: 1. THE LEARNED CIT(A) ERRED IN ADMITTING ADDITIONA L EVIDENCE UNDER RULE 46A. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION ON ACCOUNT OF UNEXPLAINED EXP ENDITURE U/S 69 OF THE ACT. GROUND NO. 1 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAR EFULLY PERUSED THE RELEVANT MATERIAL ON RECORD. THE LD. COUNSEL O F THE REVENUE SUBMITTED THAT THE LD. CIT(A) ADMITTED AND CONSIDER ED THE ADDITIONAL EVIDENCE IN CONTRAVENTION OF RULE 46A OF THE RULES. HOWEVER, ON VIGILANT PERUSAL OF THE IMPUGNED FIRST APPELLATE OR DER, WE ARE IN AGREEMENT WITH THE CONTENTION OF THE LD. COUNSEL OF THE REVENUE THAT THE EVIDENCE WHICH WAS SOUGHT TO BE SUBMITTED AS AD DITIONAL EVIDENCE WAS NOT AVAILABLE WITH THE APPELLANT DURING THE COU RSE OF FIRST APPELLATE PROCEEDINGS AND THEREFORE, THE SAME COULD NOT BE PR ODUCED DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. FROM THE IMPUGN ED ORDER OF THE LD. CIT(A), IT IS AMPLY CLEAR THAT THE LD. CIT(A) AFTER CONSIDERING THE REMAND REPORT OF THE A.O AND REJOINDER OF THE ASSES SEE ADMITTED AND CONSIDERED THE ADDITIONAL EVIDENCE AS MANDATE OF RU LE 46A OF THE 9 ITA NOS. 435 & 404/DEL/2014 RULES. THUS GROUND NO. 1 OF THE REVENUE BEING DEVO ID OF MERITS IS DISMISSED. GROUND NO. 2 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAR EFULLY PERUSED THE RELEVANT MATERIAL ON RECORD. THE LD. COUNSEL O F THE REVENUE CONTENDED THAT EXPENDITURE OF RS. 24,36,500/- AS UN EXPLAINED EXPENDITURE U/S 69C OF THE ACT AS THE AUDITOR OF TH E ASSESSEE COMPANY OBSERVED THAT THE ASSESSEE HAS MADE CERTAIN EXPENDI TURE WHICH WAS NOT FOUND RECORDED IN THE REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE. THE LD. COUNSEL OF THE REVENUE VEHEMENTLY POINTED O UT THAT THE LD. CIT(A) GRANTED RELIEF TO THE ASSESSEE WITHOUT ANY R EASON OR BASIS. HENCE THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTOR ING THAT OF THE A.O. 10. PER CONTRA, THE LD. AR REPLIED THAT HE A.O MADE ADDITION WITHOUT CONSIDERING THE EXPLANATION AND EVIDENCE OF THE ASS ESSEE. THE LD. AR ALSO DREW OUR ATTENTION TOWARDS EH RELEVANT OPERATI VE PARA 19 T 19.1.10 AND CONTENDED THAT THE LD. CIT(A) HAS GIVEN RELIEF ON JUSTIFIED AND REASONABLE BASIS THUS THE IMPUGNED ORDER REQUIRES N O INTERFERENCE ON THIS COUNT. 10 ITA NOS. 435 & 404/DEL/2014 11. ON CAREFUL CONSIDERATION OF THE ABOVE, FROM THE ORDER OF THE LD. CIT(A), WE OBSERVE THAT THE RELIED HAS BEEN GRANTED BY OBSERVED AS UNDER: 19. I HAVE CONSIDERED THE WRITTEN SUBMISSIONS OF THE APPELLANT, PERUSED THE ORDER OF THE ASSESSING OFFICER, THE CON TENTS OF THE SPECIAL AUDIT REPORT U/S 142(2A) AND THE ASSESSMENT ORDER, ON PERUSAL OF THE ASSESSMENT RECORD, IT IS SEEN THAT V IDE LETTER DATED 11.07.2011, THE APPELLANT FILED ITS EXPLANATION REG ARDING THE UNEXPLAINED EXPENDITURE OF RS.24,36,500/-. 19.1 HOWEVER, I FIND THAT IN THIS REGARD THE ASS ESSING OFFICER WAS NOT FAIR AS HE DID NOT EVEN REFER TO THE COMMENTS O F THE SPECIAL AUDITOR ON THIS CASH RECORDING FOUND ON ANNEXURE A- 2, PAGE 5 SEIZED BY PARTY B-3. WITHOUT APPRECIATING THE ADDIT IONAL EVIDENCE FILED IN CONJUNCTION WITH THE AUDIT REPORT, HE ONLY CHOOSE TO COMMENT UPON THE CONFIRMATION OR CERTIFICATE FIELD BY M/S APEX MARINE CONSULTING CO. LTD., KOREA WHERE IT WAS STAT ED THAT THEY WERE ACTING AS BROKER / INTERMEDIARY FOR SAMAAG GRO UP OF COMPANIES TO ARRANGE FINANCES FOR THEIR PROJECT PLA NNING THROUGH KOREAN COMPANIES FROM 2006 ONWARDS. IN THE SAID STA TEMENT IT WAS ALSO STATED THAT NEGOTIATIONS WERE ARRANGED WIT H M/S LANDMARK WORLDWIDE, A KOREAN CONSTRUCTION COMPANY W HO AGREED TO FUND THE PROJECT OF SAMAAG GROUP SUBJECT TO DUE DILIGENCE. AFTER A PERIOD OF CERTAIN INTERACTION, NEGOTIATIONS FAILED BETWEEN SAMAAG AND M/S LANDMARK WORLDWIDE AS M/S LANDMARK W ORLDWIDE COULD NOT CONVINCE ANY BANKER IN KOREA TO FUND THE PROJECT. IT ALSO STATED THAT AT THE REQUEST OF SAMAAG, A FACTUAL POS ITION WAS 11 ITA NOS. 435 & 404/DEL/2014 BROUGHT AROUND ALONG WITH THE ROUGH WORKING WHICH W AS FOUND DURING THE SEARCH IN SAMAAG GROUP OF CASES. THIS LE TTER VYHICH WAS SELF-CONFIRMATORY WAS BROUGHT ON RECORD AS A PART O F THE ASSESSMENT ORDER. IT IS POINT TO MENTION THAT DOCUM ENT WAS RELIED BY THE APPELLANT TO EVIDENCE THAT THEY NEGOTIATED F OR FOREIGN FUNDING OF THEIR PROJECT AS THEY WERE ACQUIRING LAN D FROM THE FARMERS FOR DEVELOPMENT. AT PAGE 171 OF THE SPECIAL AUDIT REPORT PART-1 AT PARA 3.5 THE AUDITORS OBSERVED AS UNDER: '3.5 YEAR WISE DETAILS OF RECONCILIATION OF CASH PAYMENT AS PER POR AND BOOKS OF ACCOUNT ALONG WITH ANNEXURES ARE GIVEN AS UNDER: ACCORDINGLY, ADDITION FOR THE AY. 2007-08 OFRS.24,3 6,500 ARE TO BE MADE.' 19.1.2 IN ANNEXURE 13, PART II OF THE SPECIAL AU DIT REPORT, THE AUDITOR REMARKED AS UNDER: 'SINCE THE PARTICULAR LAND IS NOT IN THE BOOKS OF A CCOUNT,- THUS NOT SHOWN IN THE ANNEXURE OF 40A[3). THEREFORE WE CAN TAKE ALL THESE PAYMENTS AS EXPENDITURE FROM UNEXPLA INED SOURCES.' 19.1.3 AGAIN, AT PAGE 164 PARA 3.1 OF THE AUDIT REPORT, T HE AUDITORS OBSERVED AS UNDER: '3.1 FROM THE PERUSAL OF SUCH VERIFICATION ITS HAS BEEN ASSESSMENT YEAR PAYMENT OUT OF BOOKS ANNEXURE 2005 - 06 NIL - 2006 - 07 NIL - 2007 - 08 24,36,500 13 2008 - 09 NIL - 2009 - 10 NIL - 12 ITA NOS. 435 & 404/DEL/2014 OBSERVED THAT THERE ARE 2 TYPES OF CASH PAYMENTS EXCEEDING RS.20,000/- ONE WHICH IS RECORDED IN THE BOOKS OF ACCOUNTS AND I ANOTHER CASH PAYMENTS WHICH IS UNRECORDED IN THE BOOKS OF ACCOUNTS. ACCORDINGLY, W E HAVE GIVEN THE YEAR WISE CASH PAYMENT IN TWO PARTS, ONE PART CONTAINING THE PAYMENT WHICH ARE COVERED U/S 40A(3) AND RECORDED IN THE BOOKS OF ACCOUNTS. IN THE SECOND PA RT WE HAVE GIVEN THE RECONCILIATION OF CASH PAYMENT AS PE R THE SEIZED MATERIALS AND BOOKS OF ACCOUNTS. ON RECONCIL IATION IT HAS BEEN OBSERVED THAT THERE WERE CERTAIN PAYMENTS WHICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNT AND ACCOR DINGLY ARE SUBJECT TO ADDITION U/S 69C IN RESPECT OF UNEXP LAINED EXPENDITURE.' 19.1.4 FROM THE ABOVE REMARKS OF THE AUDITORS, I T IS EVIDENT THAT THE UNEXPLAINED EXPENDITURE WAS DERIVED AT ON THE B ASIS OF THE RECONCILIATION OF SEIZED MATERIAL WITH THE BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT. IF A CERTAIN TRANSACTI ON DID NOT TALLY THE SAID AMOUNT RECORDED ON THE SEIZED PAGE WAS TREATED AS EXPENDITURE INCURRED FROM UNDISCLOSED SOURCES. THE SEIZED PAGE DID NOT INDICATE THE YEAR IN WHICH SUCH EXPENDITURE WAS INCURRED OR THE PURPOSE. 19.1.5. THE AR OF THE APPELLANT ARGUED THAT IN ANNE XURE 13, THE AUDITOR OBSERVED THAT RS. 12,54,000/- WAS PAID AGAI NST KHASRA NO.2790. HOWEVER, IT WAS SEEN THAT NO KHASRA NO. WA S MENTIONED. IT WAS STATED THAT KHASRA NO. WAS APPEARING ON PAGE NO . 4 WHERE NO SUCH AMOUNT WAS WRITTEN. IT WAS STATED THAT AN AMOU NT OF RS.12,54,000/- WAS MENTIONED AGAINST KHASRA NO. 276 1 WHICH THE APPELLANT ACQUIRED UNDER AN EXCHANGE DEED FROM M/S. ARMAAN 13 ITA NOS. 435 & 404/DEL/2014 PROMOTERS PVT. LTD. BESIDES THE ABOVE, A BALANCE AM OUNT OF RS.11,82,500/- WAS MENTIONED AS PERTAINED TO KHASRA NO.2763, WHICH TOO WAS A PART OF LAND UNDER EXCHANGE DEED WITH M/S . ARMAAN PROMOTERS PVT. LTD. IT WAS ALSO STATED THAT KHASRA NO.2790 WAS REGISTERED PARTLY IN M/S. SAMAAG CONSTRUCTION LTD. AND PARTLY IN M/S. SAGA DEVELOPERS PVT. LTD. IT WAS ALSO STATED THAT T HIS KHASRA WAS REQUIRED FROM TWO PERSONS NAMELY MR. BRAHM SINGH AN D SEWA RAM FOR A TOTAL CASH PAYMENT OF RS. 12,65,842/-. 19.1.6 IN THE SOURCE OF THE APPEAL PROCEEDINGS, A DDITIONAL EVIDENCES WERE FILED AS UNDER: 'YOUR HONOUR, THE ASSESSEE IS A PVT LTD. COMPANY AN D FILED HIS RETURN OF INCOME U/S 139 ON 30.03.2008 FOR THE ASSE SSMENT YEAR 2007-08, DECLARING A TOTAL INCOME OFRS.13,830/- A SEARCH AND SEIZURE OPERATION U/S 132 OF THE IT. A CT, 1961 WAS CONDUCTED BY THE INVESTIGATION WING OF THE DEPARTME NT ON 29.1.2009 IN THE CASE OF M/S SAAMAG GROUP OF CASES. THE ASSESSEES BUSINESS PREMISES SITUATED AT B-67, SARI TA VIHAR, NEW DELHI-110044 WAS ALSO COVERED U/S 132(1) OF THE I.T . ACT, 1961. ACCORDINGLY, NOTICE U/S 153A OF THE I.T. ACT WAS IS SUED TO THE ASSESSEE ON 10.7.2009. IN RESPONSE TO THE SAID NOTI CE, RETURN WAS FILED ON 6.11.2009 DECLARING SAME INCOME AS IN THE ORIGINAL RETURN, I.E. OF RS.13,830/-. THE ASSESSMENT OF THE APPELLANT WAS COMPLETED U/S 153A/143(3) OF THE I.T. ACT, 1961 DATED 3.8.2011 ON AN ENHANCED INCOME OFRS.24,66,770/-. THE MAJOR ADDITIO N OFRS.24,36,500/- IS MADE U/S 69C AS UNEXPLAINED EXP ENDITURE 14 ITA NOS. 435 & 404/DEL/2014 AND RS.16,440/- U/S 40A(3) BY THE LD. ASSESSING OFF ICER. IT IS IMPERATIVE HERE TO MENTION THAT THE ADDITION OF IMPUGNED SUM OF RS.24,66,770/- IS MADE ON THE BASIS OF WORKI NGS DONE BY THE APPELLANT COMPANY IN FURTHERANCE OF ITS REAL ES TATE PROJECTS AT BAMHETTAM GHAZIABAD, UP. THESE WORKINGS WERE MAI NLY DONE TO MAKE REPRESENTATIONS BEFORE THE PROSPECTIVE FINA NCIAL PARTICIPANTS IN THE PROJECT. HOWEVER, AUDITOR HAS OBSERVED THAT RS.12,54,000/- H AS BEEN PAID AGAINST KHASRA NO.2790. HOWEVER THIS KHASRA NO . IS NOT MENTIONED ON SUCH PAGE. KHASRA NO 2790 IS APPEARING ON PAGE NO. 4 WHERE NO SUCH AMOUNT IS WRITTEN. THE IMPUGNED AMOUNT OF RS.12,54,000/- IS MENTIONED AGAINST KHASRA NO. 2 761 ARMAN PROMOTERS PVT LTD. APART FROM THIS, THE BALANCE AMO UNT OF RS.11,82,500/- PERTAINS TO KHASRA NO. 2763 WHICH TO O IS A PART OF LAND UNDER EXCHANGE DEED WITH M/S ARMAN PROMOTER S PVT LTD. A COPY OF THE SAID EXCHANGE DEED IS ENCLOSED H EREWITH AS AN ADDITIONAL EVIDENCE UNDER RULE 46A OF THE I.T RU LES, 1962. DURING THE ASSESSMENT PROCEEDINGS, THE APPELLANT HA D PROVIDED ALL THE DETAILS AND DOCUMENTS AS AND WHEN REQUIRED BY THE ID. ASSESSING OFFICER IN ORDER TO JUSTIFY ITS CLAIM THA T NO MONIES WERE PAID OUT OF BOOKS OF ACCOUNT THE APPELLANT HAD CATEGORICALLY STATED THAT IT WAS READ TO FURNISH AF FIDAVITS FROM THE FARMERS/OWNERS OF THE LAND STATING THAT THE HAV E NOT RECEIVED ANY CASH AMOUNT APART FROM WHAT WAS AGREED UNDER THE TERMS OF THE SALE DEED. HOWEVER, THE ID ASSESSI NG OFFICER REFUSED TO BRING THEM ON RECORD. THE APPELLANT HERE BY PRAYS TO 15 ITA NOS. 435 & 404/DEL/2014 SUBMIT SAMPLE COPY OF SUCH AFFIDAVITS AS ADDITIONAL EVIDENCE. YOUR HONOUR, IT IS FURTHER SUBMITTED THAT THE LAND BANK WAS PROCURED THROUGH VARIOUS BROKERS/AGENT ENGAGED FOR THIS PURPOSE. ALL THE TRANSACTIONS, WHETHER IN CHEQUE OR IN CASH, WERE DONE THROUGH THESE BROKERS. COPIES OF ENGAGEME NT LETTERS AND OTHER CORRESPONDENCES WITH THESE BROKER ARE ENC LOSED HEREWITH. BESIDES, THE APPELLANT ALSO PRAYS TO SUBMIT HEREWIT H THE COPY OF CERTIFICATE OF THE GRAM PRADHAN OF VILLAGE BAMHETTA , CERTIFYING THAT NO BANKING FACILITIES WERE AVAILABLE IN THE VI LLAGE OR NEARBY VICINITY AT THAT PERIOD OF TIME. YOUR HONOUR, IT WOULD PERTINENT HERE TO MENTION THA T THE SEARCH AND SEIZURE OPERATION WERE CARRIED OUT ON TH E SAAMAG GROUP ON 29.1.2009. THE APPELLANTS BUSINESS PREMIS ES WAS ALSO COVERED UNDER SUCH SEARCH ALONG WITH OTHER GROUP CO MPANIES. DURING THE SEARCH PROCEEDINGS, THE APPELLANT COULD NOT HAVE BEEN ABLE TO PROVIDE ALL THE DOCUMENTARY EVIDENCES. THE ENTIRE GROUP WRITTEN SUBMISSIONS COVERED UNDER SEARCH AND ASSESSMENT PROCEEDINGS OF NEAR ABOUT MORE THAN 40 ASSESSEE (I. E. 40X6 = 240 CASES) WERE ON FULL SWING. THE APPELLANT WAS AL SO UNDER PRESSURE, MENTAL AND OTHERWISE, TO ENSURE THE COMPL ETION OF ALL THE CASES AND THUS COULD NOT CONCENTRATE TO TRACE A LL THE RELEVANT DOCUMENTS AT THAT TIME. YOUR HONOUR, THESE PAPERS WERE FETCHED LATER ON, AF TER THE 16 ITA NOS. 435 & 404/DEL/2014 COMPLETION OF THE ASSESSMENT PROCEEDINGS. THE APPEL LANT PRAYS AND SEEKS AN OPPORTUNITY TO FILE THOSE DOCUMENTS/EV IDENCES UNDER RULE 46A OF IT. RULES 1962. IT IS, THEREFORE, RESPECTFULLY SUBMITTED THAT THE ADDITIONAL EVIDENCES AS ENCLOSED HEREWITH MAY KINDLY BE ADMITTED AS ADDITIONAL EVIDENCES. IT IS HUMBLY SUBMITTED THAT THESE COPIES WERE NOT P RODUCED BEFORE THE LD. AO EITHER BECAUSE HE REFUSED TO BRIN G THEM ON RECORD OR BECAUSE THEY WERE NOT TRACEABLE AT THAT P OINT OF TIME AS WELL AS BECAUSE OF THE PRESSURE, THE APPELLANT W AS INTO, ON ACCOUNT OF ASSESSMENT OF SEARCH AND SEIZURE CASES O F GROUP, INCLUDING COMPANIES AND ALL INDIVIDUALS OF FAMILY. THIS MAY PLEASE BE CONSIDERED TO CONSTITUTE SUFFICIENT CAUSE FOR NOT PROVIDING THESE VARIOUS EVIDENCES BEFORE THE LEARNE D AO ' IT IS, THEREFORE, PRAYED TO ADMIT THE FOLLOWING DOC UMENTS AS ADDITIONAL EVIDENCE UNDER RULE 46 A OF INCOME TAX R ULES,1962: (IJ SAMPLE COPY OF AFFIDAVIT FROM FARMERS STATING O N OATH THAT NO PAYMENT, OTHER THAN THOSE MENTIONED IN THE SALE DEED, HAS BEEN MADE TO THEM, (II) COPIES OF ENGAGEMENT LETTERS AND OTHER CORRESPONDEN CE WITH ONE OF THE BROKERS, AND (III) COPY OF CERTIFICATE OF THE GRAM PRADHAN OFVILLEGE BAMHETTA, CERTIFYING THAT NO BANKING FACILITIES WER E AVAILABLE IN THE VILLAGE OR NEARBY VICINITY AT THAT PERIOD OF TIME 17 ITA NOS. 435 & 404/DEL/2014 (IV) COPY OF EXCHANGE DEED WITH M/S ARMAN PROMOTERS PVT LTD.. NOW COMING TO RULE 46A, YOUR HONOUR, THE RULE 46A ( RELEVANT PORTION) IS REPRODUCED HERE BELOW: 46A. (1) THE APPELLANT SHALL NOT BE ENTITLED TO PRO DUCE BEFORE THE [DEPUTY COMMISSIONER [APPEALS)] [OR, AS THE CAS E MAY BE, THE COMMISSIONER (APPEALS)], ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER THAN THE EVIDENCE PRODUCED BY HI M DURING THE COURSE OF PROCEEDINGS BEFORE THE [ASSESS ING OFFICER], EXCEPT IN THE FOLLOWING CIRCUMSTANCE, NAM ELY:- (C) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROMPRODUCING BEFORE THE [ASSESSING OFFICER] ANY EV IDENCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL; OR YOUR HONOUR, THERE IS A SUFFICIENT CAUSE WITH THE A SSESSEE FOR NOT SUBMITTING THESE PAPERS AND ARE NOW BEING RAISE D BEFORE YOUR HONOUR AS ADDITIONAL EVIDENCE. HOWEVER, OTHER RELEVANT DETAILS HAD BEEN DULY SUBMITTED. THE KIND ATTENTION OF YOU HONOUR IS INVITED ON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OFCIT VS. SURETECH HOSPITAL AND RESEARCH CENTRE LTD. [2007] 2 93 ITR 53 WHEREIN THE HONBLE BOMBAY HIGH COURT DEALT THE SITUATION WHERE QUESTION OF INVOKING RULE 46A BY TH E CIT (APPEALS) WAS RAISED BY THE REVENUE. YOUR HONOUR, IN THIS CASE, THE CONFIRMATION FROM VA RIOUS 18 ITA NOS. 435 & 404/DEL/2014 CREDITORS COULD NOT HAVE BEEN SUBMITTED BEFORE THE AO AT THE TIME OF THE ASSESSMENT AND WERE SUBMITTED BEFORE TH E LD. COMMISSIONER OF INCOME TAX (APPEALS). THE TRIBUNAL HELD THAT IN THE LIGHT OF RULE 46A (4) , THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE PERMITTED THE ASSESSEE TO PRODUCE CONFIRMATION LETT ERS GIVEN BY 12 UNSECURED CREDITORS AS THE SAME WERE NECESSAR Y FOR DISPOSAL OF THE APPEAL ON MERITS. ACCORDINGLY, THE TRIBUNAL SET ASIDE THE ADDITION OFRS.6,06,725/- AND REMANDED THE MATTER FOR FRESH CONSIDERATION. THE ORDER OF THE TRIBUNAL HAD FURTHER BEEN CHALLENG ED IN THE HIGH COURT AND HIGH COURT HELD THAT THE FIRST CONTE NTION OF THE REVENUE IS THAT THE TRIBUNAL WAS NOT JUSTIFIED IN I NVOKING RULE 46(A) (4) OF THE INCOME TAX RULES AND ALLOWING ADDI TIONAL EVIDENCE TO BE PRODUCED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) FOR THE FIRST TIME. IT IS CONTENDED THAT THE MERE FACT THAT THE EVIDENCE SOUGHT TO BE PRODUCED IS VIT AL AND IMPORTANT DOES NOT PROVIDE THE SSUBSTANTIAL CAUSE T O ALLOW ITS ADMISSION AT THE APPELLATE STAGE WHEN THE EVIDE NCE WAS AVAILABLE TO THE ASSESSEE AT THE INITIAL STAGE AND WAS NOT PRODUCED BV HIM. IN OUR OPINION . THERE IS NO MERIT IN THIS CONTENTION BECAUSE RULE 46AL41 PROVIDE THAT NOTWITHSTANDING RULE 46A(1 L THE APPELLATE AUTHORIT Y CAN PERMIT PRODUCTION OF DOCUMENTS WHICH ENABLE HIM TO DISPOSE OF THE APPEAL IN THE FACT OF THE CASE, THE FINDING GVEN BY THE TRIBUNAL IS THAT THE DOCUMENTS PRODUCED WERE NECESSARY FOR DISPOSAL OF THE APPEAL ON THE MERITS AND NO 19 ITA NOS. 435 & 404/DEL/2014 QUESTION OF LAW ARISES FROM SUCH FINDING OF FACT RE CORDED BV THE TRIBUNAL. YOUR HONOUR, THE APPELLANT ON THE ISSUE OF ADDITION AL GROUNDS WITH ADDITIONAL EVIDENCE, FURTHER DRAWS YOUR KIND A TTENTION ON THE JUDGMENTS OF MUMBAI BENCH OF ITAT IN THE CASE OF JCIT VS. GRASIM INDUSTRIES LTD. AIT 2011 140 ITAT (MUM). IN THIS CASE, THE HON.BLE ITAT AFTER CONSIDERING THE VARIOUS JUDG EMENTS AND RELYING UPON THE HON'BLE APEX COURT'S JUDGMENT IN N ATIONAL THERMAL POWER CORPORATION VS. CIT229ITR 383 (SC) AN D JUTE CORPORATION OF INDIA LTD. VS. CIT 187 ITR 688 (SC) OBSERVED AS UNDER: ' 25. WE FAILS TO SEE ANY PREJUDICE THAT WOULD BE CAU SED TO THE REVENUE, IF THE ISSUE IS EXAMINED AFRESH BY THE AO. THE OBJECTION THAT THE ADDITIONAL GROUND SHOULD NOT BE ADMITTED SEEMS TO SUGGEST THAT TAX LIABILITY CAN BE FASTENED ON A TAXPAYER EVEN WITHOUT DECIDING EXISTE NCE OR OTHERWISE OF SUCH LIABILITY IN ACCORDANCE WITH LAW. IN THIS REGARD WE ARE ALSO OF THE VIEW THAT APPROACH IN SUC H MATTERS WOULD BE DIFFERENT WHEN THE REVENUE SEEKS T O FASTEN LIABILITY ON AN ASSESSEE AT THE STAGE OF PRO CEEDINGS BEFORE THE TRIBUNAL ON A BASIS DIFFERENT FROM ONE T HAT WAS ADOPTED BY THE REVENUE AUTHORITIES. THE REASONS ARE THAT AN ASSESSEE HAS NO FURTHER AVENUE TO PROJECT HIS GR IEVANCE EXCEPT BEFORE THE TRIBUNAL. IF ON THE FACTS AND IN LAW, ULTIMATELY IT IS FOUND THAT THE ASSESSEE IS NOT LIA BLE TO TAX, THE REVENUE CANNOT HAVE GRIEVANCE. ART 265 OF THE CONSTITUTION OF INDIA PROVIDE THAT NO TAX SHALL BE LEVIED AND COLLECTED EXCEPT BY AUTHORITY OF LAW. IF ULTIMA TELY THE 20 ITA NOS. 435 & 404/DEL/2014 ASSESSEE IS FOUND TO BE LIABLE TO TAX, HE COMPENSAT ES THE REVENUE IN THE FORM OF INTEREST THEREFORE, THE TRIB UNAL CAN EVEN THINK OF A REMAND OF THE CASE FOR A FINDIN G ON FACTS OR CAN ADJUDICATE ON FACTS ITSELF. ON THE OTH ER HAND THE REVENUE HAS OTHER OPTIONS OPEN TO IT UNDER THE ACT IF THE ORDER OF AN ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE THE SAM E CAN BE REVISED BY THE CIT U/S 263 OF THE ACT. IF INCOME CHARGEABLE TO TAX ESCAPES ASSESSMENT, PROCEEDINGS U /S 147 CAN BE INITIATED TO BRING TO TAX SUCH ESCAPED INCOM E. IN AN APPEAL BY THE ASSESSEE AGAINST THE ORDER OF ASSESSI NG OFFICER, THE CIT(A) HAS POWER OF ENHANCEMENT U/S 25 1(1) OF THE ACT 26. THE NEXT ARGUMENT PUT FORTH BY THE LEARNED D.R. BEFORE US THAT THE POWER OF THE AO PRIOR TO 1 -4-89 TO CALL UPON THE ASSESSEE TO PRODUCE EVIDENCE IN SUPPORT OF THE CLAIM IN THE RETURN OF INCOME WAS MUCH WIDER VIZ., TO ENSURE THAT THE RETURN IS CORRECT AND COMPLETE' WHE REAS AFTER 1-4-89, SUCH POWERS ARE RESTRICTED ONLY IN TH E CASES OF UNDERSTATEMENT OF INCOME, COMPUTATION OF EXCESSIVE LOSS OR UNDERPAYMENT OF TAX. THEREFORE, ACCORDING TO THE LEARNED D.R. AFTER 1-4- 89, THE POWERS OF THE AO WHILE MAKING AN ASSESSMENT WHILE COMPLETING THE ORIGINAL ASSESSMENT BEING VERY ) LIM ITED, CANNOT BE ENLARGED BY THE TRIBUNAL BY ADMITTING ADD ITIONAL GROUND, WHICH THE AO COULD NOT HAVE CONSIDERED WHIL E COMPLETING THE ORIGINAL ASSESSMENT ACCORDING TO THE LEARNED D.R. BECAUSE OF THE CHANGE IN THE POLICY OF THE GOVERNMENT IN THE MATTER OF MAKING ASSESSMENT, THE 21 ITA NOS. 435 & 404/DEL/2014 DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F NTPC (SUPRA) SHOULD BE APPLIED KEEPING IN VIEW THE ABOVE CHANGE. WE ARE OF THE VIEW THAT THE ARGUMENT PUT FO RTH BY THE LEARNED D.R. CANNOT BE ACCEPTED BECAUSE THE ARGUMENTS OVERLOOKS THE PRINCIPLE THAT TAX LIABILIT Y HAS TO BE DETERMINED IN ACCORDANCE WITH LAW. EVEN OTHERWIS E THE LIMITATION OF THE POWERS SHOULD APPLY ONLY TO AO AN D THE ASSESSEE SHOULD NOT LOSE RIGHT TO DEMAND ASSESSMENT OF CORRECT INCOME TO TAX IN ACCORDANCE WITH LAW. IN OT HER WORDS, THE REVENUE SHOULD NOT BE PERMITTED TO PUT I TS OWN INABILITY AS A DEFENCE TO DENY A LEGITIMATE CLAIM M ADE BY AN ASSESSEE. WE ARE OF THE VIEW THAT FUNDAMENTAL PR INCIPLE LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF NTPC (SUPRA)IS THAT THERE CAN BE NO TAX LIABILITY W ITHOUT THE AUTHORITY OF LAW AND THIS PRINCIPLE WILL HOLD G OOD AT ALL POINT OF TIME. WE THEREFORE REJECT THIS ARGUMENT OF THE REVENUE. THE ARGUMENT THAT THE POWER OF THE TRIBUNA L TO ENTERTAIN ADDITIONAL GROUND OF APPEAL SHOULD ALSO B E CONSIDERED TO BE RESTRICTED BECAUSE OF THE CHANGE I N THE LAW REFERRED TO ABOVE ALSO DESERVE TO BE REJECTED F OR THE REASONS GIVEN ABOVE. YOUR HONOUR, THE HONBLE SUPREME COURT OF INDIA, IN THE CASE OF COLLECTOR, LAND ACQUISITION VS. MST KATIJI [1987 ] SCR (2) 387, WHILE DECIDING A MATTER OF CONDONATION OF DELAY IN REVENUE MATTERS, HAD OBSERVED AS UNDER: 2. REFUSING TO CONDONE DELAY CAN RESULT IN A MERITORIOUS MATTER BEING THROWN OUT AT THE VERY THRESHOLD AND CAUSE OF JUSTICE BEING DEFEATED. AS AGAINST THIS WHEN DELAY IS CONDONED THE HIGHER THAT CAN HAPPEN IS THAT A CAUSE WOULD BE DECIDED ON MERITS AFTER HEARING BOTH THE PARTIES. 22 ITA NOS. 435 & 404/DEL/2014 4. WHEN THE SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATION ARE PITTED AGAINST EACH OTHER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVE TO BE PREFERRE D, FOR THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGH T IN JUSTICE BEING DONE BECAUSE OFNON-DELIBERATE DELAY. 6. IT MUST BE GRASPED THAT THE JUDICIARY IS EXPECT ED NOT ON ACCOUNT OF ITS POWER TO LEGALIZE ON TECHNICA L GROUNDS BUT BECAUSE IT IS CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO.' UNDER THE ABOVE CIRCUMSTANCES AND IN THE INTEREST O F THE NATURAL EQUITY AND JUSTICE, THE ASSESSEE PRAYS BEFORE YOUR HONOUR, FOR ADMISSION OF THE ADDITIONAL EVIDENCES, WHICH COULD NOT HAVE BEEN SUBMITTED BEFORE THE LD. ASSESSING OFFICER AT THE TIME OF ASSESSMENT PROCEEDINGS.' 19.1.7 WITH SO MUCH INFORMATION ON HAND THE ASSESS ING OFFICER DID NOT CONDUCT ANY ENQUIRY / INVESTIGATION DURING THE PERIOD OF REMAND PERTAINING TO THE CASH PAYMENTS MENTIONED AS ABOVE THE ADDITIONAL EVIDENCES FILED U/S 46A. NO EVIDENCE WAS BROUGHT ON RECORD TO SAY THAT THE APPELLANT INCURRED PAYMENTS / MADE OUTSIDE THE BOOKS. THE NOTINGS ON THE PAGE 5 OF ANN EXURE A- 2 WAS VERIFIED WITH THE BOOKS AND WHEN IT DID NOT T ALLY, IT IS PRESUMED AS PAYMENTS MADE OUTSIDE THE BOOKS BY THE SPECIAL AUDITOR. THE ASSESSING OFFICER DID NOT INDE PENDENTLY VERIFY THAT THE CASH PAID TO FARMERS WAS WHETHER TH EY ARE DULY REFLECTED IN THE BOOKS OF ACCOUNT OF THE APPEL LANT AS CLAIMED BY IT. NO EVIDENCE WAS PLACED ON RECORD BY THE ASSESSING OFFICER TO SAY WITH CONVICTION THAT THE A PPELLANT 23 ITA NOS. 435 & 404/DEL/2014 INCURRED EXPENDITURE THAT QUALIFIED FOR INVOKING TH E PROVISIONS U/S 69C OF THE I.T. ACT. 19.1.8 THE APPELLANT RELIED ON THE FOLLOWING CASE LAWS IN SUPPORT OF THIS GROUND: 1. DHAKESHWARI COTTON MILLS LTD. VS. CIT 26 ITR IT (SC ) 2. CIT VS. MAHINDRA & MAHINDRA LTD. 144 ITR 225 (SC) 3. GUJARAT GAS CO. LTD. VS. JCIT 245 ITR 84 (GUJ.) 4. ITO VS. SHEO NARAIN JAISWAL 176 ITR 352 (PATNA) 5. CIT VS. GIRNISH CHOUDHARY 256 ITR 919 (DEL.) 6. CIT ASHWINI KUMAR VS. ITO 39 ITD 183 (DELHI BENCH H ONBLE TRIBUNAL) 19.1.6 BESIDES THE ABOVE, I ALSO PLACE RELIANCE IN THE JU DICIAL PRONOUNCEMENT OF HONBLE SUPREME COURT IN THE CASE OF CENTRAL BUREAU OF INVESTIGATION VS. VC SHUKLA (1998) 3 SCC 410 WHERE IT WAS HELD AS UNDER: 'IT IS NOT ENOUGH MERELY TO PROVE THAT THE BOOKS HA VE BEEN REGULARLY KEPT IN THE COURSE OF BUSINESS AND TFJE ENTRIES THEREIN ARE CORRECT IT IS FURTHER INCUMBENT UPON TH E PERSON RELYING UPON THOSE ENTRIES TO PROVE THAT THEY WERE IN ACCORDANCE WITH FACTS. SUCH ENTRIES THOUGH RELEVANT WERE ONLY CORROBORATIVE EVIDENCE AND IT IS TO BE SHOWN FURTHE R BY SOME INDEPENDENT EVIDENCE THAT THE ENTRIES REPRESENT HON EST AND REAL TRANSACTIONS AND THAT MONIES WERE PAID IN ACCO RDANCE WITH THOSE ENTRIES. EVEN CORRECT AND AUTHENTIC ENTR IES IN BOOKS OF ACCOUNTS CANNOT WITHOUT INDEPENDENT EVIDENCE OF THEIR TRUSTWORTHINESS, FIX A LIABILITY UPON A PERSON. KEE PING IN VIEW 24 ITA NOS. 435 & 404/DEL/2014 OF ABOVE PRINCIPLES, EVEN IF IT IS ASSUMED THAT ENT RIES MADE IN MR 71/91 ARE CORRECT AND THE ENTRIES IN THE OTHER B OOKS AND LOOSE SHEETS (WHICH HAVE ALREADY BEEN FOUND TO BE N OT ADMISSIBLE IN EVIDENCE U/S 34) ARE ADMISSIBLE U/S 9 OF THE ACT TO SUPPORT AN INFERENCE ABOUT THE FORMER'S CORRECTN ESS, STILL THOSE ENTRIES WOULD NOT BE SUFFICIENT TO CHARGE SH. ADVANI AND SH. SHUKLA WITH THE ACCUSATIONS LEVELED AGAINST THE M FOR THEIR NOT AN IOTA OF INDEPENDENT EVIDENCE IN SUPPORT THER EOF. 19.1.10. IN VIEW OF THE ABOVE DISCUSSION AS THE A.O DID NOT GIVE A CATEGORICAL FINDING ON THE BASIS OF THE ENQUIRY CARRIED OUT PERTAINING TO THE SEIZED PAGE NO. 5 OF ANNEXURE A- 2, THE ADDITION MADE BY THE ASSESSING OFFICER AMOUN TING I TO RS.24,36,500/- TREATING THE SAME AS UNEXPLAINED EXP ENDITURE U/S 69C IS HEREBY DELETED . 12. FROM THE ABOVE RELEVANT PART OF THE ORDER OF TH E LD. CIT(A), AT THE VERY OUTSET, WE NOTE THAT SOME VITAL AND RELEVANT E VIDENCE WHICH COULD NOT PRODUCED DURING THE ASSESSMENT PROCEEDINGS WAS ADMITTED AND CONSIDERED BY THE A.O U/R 46A OF THE RULES. EVEN D URING THE REMAND PROCEEDINGS THE A.O DID NOT REFER TO ANY COMMENTS O F SPECIAL AUDITOR ON THE RECORDING FOUND IN ANNEXURE A-2 AT PAGE 5 SE IZED BY THE PARTY B-3 I,E, ASSESSEE. THE A.O DID NOT MAKE ANY COMMENT ON THE ADDITIONAL EVIDENCE IN THE LIGHT OF AUDIT REPORT AND HE ONLY C OMMENTED ON THE CONFIRMATION CERTIFICATE ISSUED BY M/S APEX MARINE CONSULTING CO. LTD, KOREA. THE ASSESSEE ALSO FILED EVIDENCE WITH DUE D ILIGENCE THAT IT 25 ITA NOS. 435 & 404/DEL/2014 NEGOTIATED FOR FOREIGN FUNDING OF THEIR PROJECT AS THEY WERE ACQUIRING LAND FROM THE FARMERS FOR DEVELOPMENT AND IN THE RE MAND REPORT HE COULD NOT CONTROVERT THE FACTUM THAT AT THE REQUEST OF THE SAMAAG, A FACTUAL POSITION WAS BROUGHT WITH THE ROUGH WORKING WHICH WAS FOUND DURING THE SEARCH IN SAMAAG GROUP CASES. IT WAS AL SO NOTICED BY THE LD. CIT(A) THAT HE NEGOTIATIONS IN THIS REGARD FAIL ED BETWEEN SAMSUNG AND M/S LANDMARK WORLDWIDE AS M/S LANDMARK COULD NO T CONVINCE ANY BANKER IN KOREA TO FUND THIS PROJECT. THE LD. CIT( A) ALSO CORRECTLY OBSERVED THAT IF CERTAIN TRANSACTIONS DID NOT TALLY AND SAID AMOUNT IS RECORDED ON THE SEIZED PAGE TREATED AS EXPENDITURE INCURRED FROM UNDISCLOSED SOURCES BUT SEIZED PAGE DID NOT INDICAT E THE YEAR IN WHICH SUCH EXPENDITURE WAS INCURRED FOR THE SAID PURPOSE. 13. THE LD. CIT(A) IN PARA 19.1.5, AS REPRODUCED AB OVE, RECORDED A REASONABLE FINDING TO SHOW THAT THE SPECIAL AUDITOR OBSERVED THAT RS. 12,54,000/- WAS PAID AGAINST KHASRA NO. 2790 BUT NO KHASRA NO WAS MENTIONED AGAINST THE SAID AMOUNT. HE ALSO OBSERVE D THAT KHASRA NUMBER WAS APPEARING ON PAGE 4 WHERE NO SUCH AMOUNT IS WRITTEN. THE LD. CIT(A) ALSO NOTED THAT THE KHASRA NO. 2761 WAS ACQUIRED BY THE ASSESSEE UNDER EXCHANGE DEED FROM M/S ARMAN PROMOTE RS PVT LTD AND IN OUR OPINION IT IS SUFFICIENT TO EXPLAIN THE FACT THAT NO EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE FROM UNDISCLOSED SOU RCES TO ACQUIRE LAND OF KHASRA NO. 2761 AND IT WAS ACQUIRED UNDER E XCHANGE DEED WITH 26 ITA NOS. 435 & 404/DEL/2014 ERSTWHILE OWNER I.E. M/S ARMAN PROMOTERS. 14. THE LD. CIT(A) ALSO RECORDED A CATEGORICAL FIND ING ON THE BASIS OF PROPER APPRECIATION OF FACTS THAT THE BALANCE IMPUG NED AMOUNT OF RS. 11,82,500/- AS MENTIONED AND ALLEGED BY THE SPECIAL AUDITOR, AS PERTAINED TO KHASRA NO. 2763 WAS ALSO PART OF EXCHA NGE DEED WITH M/S ARMAN PROMOTERS PVT LTD AND OTHER DISPUTED KHASRA N O. 2790 WAS REGISTERED PARTLY IN THE NAME OF M/S SAMAAG CONSTRU CTION PVT. LTD AND PARTLY IN M/S SAGA DEVELOPERS PVT LTD. THUS THE AL LEGATION OF SPECIAL AUDITOR THAT KHASRA NO. 2790 WAS ACQUIRED BY THE AS SESSEE FROM THE PERSONS NAMELY M/S BRAHMA SINGH AND MR. SEWARAM FOR ACTUAL CASH PAYMENT RS. 12,65,842/- COULD NOT BE FOUND SUSTAINA BLE ON THE BASIS OF CORRECT APPRECIATION OF FACTS. THUS WE REACH TO A CONCLUSION THAT THE A.O MADE ADDITION U/S 69C OF THE ACT WITHOUT CONDUC TING ANY ENQUIRY OR INVESTIGATION EVEN DURING REMAND PROCEEDINGS IN REGARD TO IMPUGNED CASH PAYMENTS ALLEGEDLY HAVE BEEN MADE IN CASH OUT OF INCOME EARNED FROM UNDISCLOSED SOURCES. FROM THE ASSESSMENT ORDE R AND REMAND REPORT, WE NOTE THAT THE A.O HAS NOT BROUGHT ANY EV IDENCE AND MATERIAL TO CORROBORATE THE FACT, NOTICED BY THE SPECIAL AUD ITOR, WHICH PROMPTED THE A.O TO MAKE ADDITIONS, AND THE A.O DID NOT INDE PENDENTLY AND CAUTIOUSLY EXAMINED THE CASH PAYMENTS ALLEGEDLY MAD E TO THE FARMERS AS TO WHETHER THE SAME ARE RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE OR NOT. THEREFORE, WE ARE UNABLE TO APPRO VE THE CONCLUSION OF 27 ITA NOS. 435 & 404/DEL/2014 THE A.O THAT THE ASSESSEE INCURRED EXPENDITURE OUT OF INCOME EARNED FROM UNDISCLOSED SOURCES WHICH COULD SUBSTANTIATE A DDITION U/S 69C OF THE ACT. IT IS ALSO PERTINENT TO MENTION THAT AS P ER ALLEGATIONS OF THE A.O THE ASSESSEE MADE PAYMENTS IN CASH TO ACQUIRE LAND FROM FARMERS AND MADE ADDITION U/S 69C OF THE ACT WHICH IS RELE VANT TO UNEXPLAINED EXPENDITURE AND AS OBSERVED AS TO ALLEGATIONS OF UN EXPLAINED EXPENDITURE OUT OF INCOME FROM UNDISCLOSED SOURCES HAS NOT BEEN FOUND TO BE SUSTAINABLE. THUS ADDITION MADE BY THE A.O WA S RIGHTLY DELETED BY THE LD. CIT(A). IN THESE CIRCUMSTANCES, AS WE ARE I NCLINED TO HOLD THAT THE LD. CIT(A) RECORDED A LOGICAL CONCLUSION WHICH REQUIRES NO INTERFERENCE AS WE ARE UNABLE TO SEE ANY VALID REAS ON FOR DISTURBING THE SAME AND THUS WE UPHOLD THE ORDER OF THE FIRST APPE LLATE AUTHORITY ON THIS COUNT. ACCORDINGLY, GROUND NO. 2 OF THE REVEN UE IS DISMISSED. 15. IN THE RESULT, BOTH APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.07.2016. SD/- SD/- (G.D. AGRAWAL) (CHANDR A MOHAN GARG) VICE PRESIDENT JUDIC IAL MEMBER DATED: 29 TH JULY, 2016 VL/ COPY OF ORDER FORWARDED TO: 28 ITA NOS. 435 & 404/DEL/2014 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSISTANT REGISTRAR ITAT, NEW DELHI