M/s. Sir Shadilal Enterprises Ltd., New Delhi V. DCIT, New Delhi

ITA 4993/DEL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98121 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 22-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 09-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUNITA KEJRIWAL
• Assessee Lawyers: G N GUPTA I T P
• Keywords: Unexplained expenditure; Income from undisclosed sources; Search and seizure; Document seized; Opportunity of cross examination; Third party statement; Retraction; Revised return; Documents seized
• Section: 143(3); 133A; 153A; 80G; 32; 37; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI A.T. VARKEY, JUDICIAL MEMBER ITA NO.4993/DEL./2011 (ASSESSMENT YEAR : 2006-07) M/S. SIR SHADILAL ENTERPRISES LTD., VS. DCIT, CENT RAL CIRCLE-19, 4 A, HANSALAYA, 15, BARAKHAMBA ROAD, NEW DELHI. NEW DELHI. (PAN : AAECS3636D) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G. N. GUPTA, I.T.P. REVENUE BY : SMT. SUNITA KEJRIWAL, CIT DR DATE OF HEARING : 22.09.2015 DATE OF PRONOUNCEMENT : 18.12.2015 O R D E R PER A.T. VARKEY, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE ARE DIRECTED AGAI NST THE ORDERS PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) XXXIII, NEW DELHI DATED 14.10.2011 FOR THE ASSESSMENT YEAR 2006-07. 2. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE READ AS UNDER :- 1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XXXIII, NEW DE LHI (HEREINAFTER CALLED CIT(A) FOR SHORT) ERRED IN REJECTING THE CON TENTION OF THE APPELLANT THAT THE ASSESSMENT ORDER WAS BAD IN LAW AS IT WAS FRAME D BY THE ASSESSING OFFICER ON SURMISES AND CONJECTURES AND THAT TOO WITHOUT AF FORDING PROPER OPPORTUNITY TO THE APPELLANT OF BEING HEARD. 2 ITA NO.4993/DEL/2011 2.1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, CIT(A) ERRED IN UPHOLDING AN ADDITION OF RS.2,14,39,000/- MADE BY THE AO ON ACCOUNT OF UNACCOUNTED CONTRIBUTION ALLEGED TO HAVE BEEN MADE BY THE APPELLANT TO UPDA IN FINANCIAL YEAR 2005-06 MERELY ON THE BASIS OF THE STATEMENT OF SHRI R.K.MIGLANI RECORDED ON 14/2/2006 AT THE BACK OF TH E APPELLANT AND WITHOUT ALLOWING AN OPPORTUNITY TO THE APPELLANT TO CROSS E XAMINE SHRI R.K.MIGLANI ALTHOUGH A SPECIFIC REQUEST IN THIS REGARD WAS MADE BY THE APPELLANT AND DESPITE THE SPECIFIC DIRECTIONS OF PREDECESSOR OF C IT(A) THAT THE APPELLANT SHOULD BE GIVEN AN OPPORTUNITY TO CROSS EXAMINE SHR I R.K. MIGLANI. CIT(A) ALSO FAILED TO TAKE INTO ACCOUNT THE FACT THAT SUBS EQUENTLY SHRI R.K. MIGLANI HAS FILED AN AFFIDAVIT DATED 03.03.2008 UNEQUIVOCAL LY DENYING THE STATEMENT GIVEN BY HIM ON 14.2.2006 DURING THE COURSE OF SEAR CH PROCEEDINGS. 2.2 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, CIT (A) ERRED IN HOLDING THAT THE AFFIDAVIT OF SHRI R.K. MIGLANI, DATED 03.03.2008 RETRACTING HIS STATEMENT DATED 14.02.2006 WAS NOT VALID IN LA W. 2.3 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, CIT(A) ERRED IN COMING TO THE CONCLUSION THAT IT WAS NOT LEGALLY IN CUMBENT TO THE REVENUE TO ALLOW THE APPELLANT TO CROSS EXAMINE SHRI R.K. MIGL ANI. 2.4 WITHOUT PREJUDICE TO GROUNDS OF APPEAL NO. 2.1, 2.2 & 2.3 ABOVE, CIT(A) ERRED UPHOLDING AN ADDITION OF RS.2,14,39,00 0/- MADE BY THE A.O. ON ACCOUNT OF UNACCOUNTED CONTRIBUTION ALLEGED TO HAVE BEEN PAID BY THE APPELLANT TO UPDA WITHOUT ALLOWING A CORRESPONDING DEDUCTION U/S 37 OF THE INCOME TAX ACT, 1961 IN RESPECT OF THESE ALLEGED CO NTRIBUTIONS TO UPDA. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, CIT(A) ERRED IN UPHOLDING THE ACTION OF THE A.O. IN SUBJECTING TO T AX THE FOLLOWING:- A) RS.19,96,406/- TOWARDS CUSTOMARY COLLECTION IN D HARMADA A/C MEANT FOR CHARITY AND KEPT IN SEPARATE BANK A/C AND NOT FORMING PART OF APPELLANT'S TRADING RECEIPTS. B) RS.4,54,426/- TOWARDS INTEREST EARNED ON 'ACCUMU LATED DHARMADA COLLECTIONS' MEANT FOR CHARITY AND NO LIEN CLAIMED BY THE APPELLANT OVER THE SAID FUND. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, CIT(A) ERRED IN UPHOLDING THE ACTION OF THE A.O. IN DISALLOWING A S UM OF RS.37,43,667/- REPRESENTING 'INTEREST PAYABLE ON SUGAR DEVELOPMENT FUND LOAN' BY WRONGLY RESORTING TO THE PROVISIONS OF SECTION 43B(D) OF TH E INCOME TAX ACT, 1961. 5. THAT THE APPELLANT CRAVES LIBERTY TO ADD, ALTER OR VARY ANY GROUND OF APPEAL EITHER AT THE TIME OF HEARING OR BEFORE DISP OSAL OF THE APPEAL. 3 ITA NO.4993/DEL/2011 3. THE MAIN GRIEVANCE RAISED BY THE ASSESSEE FROM G ROUNDS NO.1 TO 2.4 IS THAT THE ADDITION OF RS.2,14,39,000/- ON ACCOUNT OF UNACCOUNTED CONTRIBUTION ALLEGED TO HAVE BEEN PAID BY THE ASSESSEE TO UPDA, MAINLY RELYING ON THE STATEMENT GIVEN BY R.K. MIGLANI RECORDED ON 14.02.2 006 AT THE BACK OF THE ASSESSEE AND AN OPPORTUNITY TO CROSS EXAMINE HIM WA S NOT GRANTED TO ASSESSEE AND THE SAID R.K. MIGLANI HAS RETRACTED THE STATEME NT BY AN AFFIDAVIT DATED 03.03.2008. THEREFORE, ACCORDING TO ASSESSEE, THE I MPUGNED ADDITION IS BAD IN LAW. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF SPIRIT, EXTRA INDUSTRI AL ALCOHOL, INDIAN MADE FOREIGN LIQUOR AND COUNTRY LIQUOR. TWENTY THREE DISTILLERS HAVE FORMED AN ASSOCIATION WHICH IS A REGISTERED SOCIETY IN THE NAME AND STYLE OF M/S. UTTAR PRADESH DISTILLERY ASSOCIATION, (HEREINAFTER REFERRED TO U PDA). THE UPDA WAS FORMED WITH THE OBJECTIVE OF AUGMENTING THE BUSINESS INTER EST OF ALL ITS MEMBERS. A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF T HE ACT WAS CARRIED OUT ON 14.02.2006 AT THE PREMISES OF M/S. RADICO KHAITAN & GROUP OF CASES, WHO HAPPENS TO BE A MEMBER OF UPDA. ALONG WITH RADICO KHAITAN, THE RESIDENTIAL PREMISES OF SHRI R.K. MIGLANI, GENERAL SECRETARY OF THE UPDA WAS ALSO SEARCHED. SIMULTANEOUSLY, A SURVEY UNDER SECTION 13 3A OF THE ACT WAS CARRIED OUT AT THE PREMISES OF UPDA. STATEMENT OF SHRI R K MIGLANI WAS RECORDED UNDER SECTION 132(4) OF THE ACT. ACCORDING TO THE A SSESSING OFFICER, DURING THE 4 ITA NO.4993/DEL/2011 COURSE OF SEARCH, LARGE NUMBER OF DOCUMENTS WERE FO UND AND SEIZED FROM VARIOUS PREMISES INCLUDING THAT OF M/S RADICO KHAIT AN, OFFICE OF UPDA, RESIDENCE OF R K MIGLANI AND OFFICE OF M/S SORAYA I NDUSTRY (WHICH WAS ALSO ONE OF ACTIVE MEMBER OF THE SOCIETY). FROM A PERUSA L OF THESE SEIZED MATERIALS, IT CAME TO THE NOTICE OF THE INCOME TAX DEPARTMENT THAT UPDA WAS COLLECTING HUGE SUMS FROM ITS MEMBERS WHICH REPRESENTED THEIR UNACCOUNTED INCOME AND THEN THROUGH UPDA, THESE SUMS WERE UTILIZED FOR THE PAYMENTS TO VARIOUS AUTHORITIES INCLUDING POLITICIANS FOR FURTHERING TH E BUSINESS CAUSE OF ITS MEMBERS. SHRI R K MIGLANI HAS EXPLAINED THE MODUS O PERANDI OF THE CASH SO CALCULATED ON THE BASIS OF PRODUCTION OF LIQUOR ACH IEVED BY THE MEMBER DISTILLERY OF UPDA AND HOW IT IS BEING COLLECTED BY CORE COMMITTEE AND LATER DISTRIBUTED AMONG THE OFFICIAL OF EXCISE DEPARTMENT , OTHER BUREAUCRATS AND THE POLITICIANS. BEING A SEARCH CASE, NOTICES U/S 153C WAS ISSUED AGAINST THE ASSESSEE, WHICH HAS BEEN QUASHED BY THE TRIBUNAL VI DE ORDER DATED 23.11.2012. HOWEVER, IN THIS ASSESSMENT YEAR I.E. AY 2006-07, A SSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT. THE RETURN OF INCOME WAS FI LED BY THE ASSESSEE ON 18.11.2006 DECLARING TOTAL INCOME OF RS.34,08,29,76 9/-. ON THE BASIS OF STATEMENT OF SHRI R K MIGLANI AND THE MATERIAL FOUN D DURING THE COURSE OF SEARCH AND CERTAIN OTHER EVIDENCES LIKE ADMISSION B EFORE SETTLEMENT COMMISSION ETC., THE AO FORMED AN OPINION THAT ASSE SSEES HAVE MADE UNEXPLAINED PAYMENTS TO THE VARIOUS OFFICIALS AND P OLITICIANS THROUGH THE UPDA. ACCORDINGLY, HE MADE ADDITIONS OF THE PAYMENT S ALLEGED TO HAVE BEEN 5 ITA NO.4993/DEL/2011 MADE TO VARIOUS UNKNOWN PERSONS TO THE TUNE OF RS. 2,14,39,000/=THROUGH UPDA. ASSESSMENT U/S 143(3) WAS CONCLUDED ON 28.12 .2007 AT TOTAL INCOME OF RS.36,56,10,563/-. 5. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE T HE LD. CIT (A) WHO HAS DEALT WITH THE AFORESAID GRIEVANCE AS UNDER :- 2. GROUND NO.1, 2, 3.1, 3.2, 3.3 & 4 ARE DIRECTED AGAINST THE RELIANCE OF THE ASSESSING OFFICER ON CERTAIN DOCUMENTS FOUND DU RING THE SEARCH OPERATIONS CONDUCTED BY THE INCOME TAX DEPARTMENT A T THE PREMISES OF M/S. RADICO KHAITAN, UPDA AND AT THE RESIDENCE OF MR. R. K. MIGLANI COUPLED WITH THE STATEMENTS OF MR. R.K. MIGLANI RECORDED ON 14.2.2006 AND THEREBY MAKING AN ADDITION OF RS.2,14,39,000/- ON ACCOUNT O F UNEXPLAINED PAYMENTS TO UPDA/ THROUGH UPDA AND GROUND NO.4 IS AGAINST NO T GIVING AN OPPORTUNITY TO THE APPELLANT TO CROSS EXAMINE MR. R .K. MIGLANI, WHOSE STATEMENTS HAVE BEEN RELIED UPON BY THE AO FOR MAKI NG ADDITIONS ON ACCOUNT OF UNEXPLAINED PAYMENTS. THIS ISSUE WAS ALSO THE S UBJECT MATTER OF APPEAL NO.45407-08 AGAINST AOS ORDER U/S 153C R.W. SECTIO N 153A FOR THE ASSESSMENT YEAR 2005-06 WHICH HAS BEEN DISPOSED OFF BY MY PREDECESSOR VIDE HIS ORDER DATED 27.4.2011 WHEREIN HE HAS CONFI RMED A SIMILAR ADDITION MADE BY AO FOR THE ASSESSMENT YEAR 2005-06. THEREF ORE, FOLLOWING THE AFORESAID DECISION OF MY PREDECESSOR, THE ADDITION OF RS.2,14,39,000/- IS CONFIRMED. 6. AGGRIEVED BY THE AFORESAID ORDER OF LD.CIT (A), THE ASSESSEE IS IN APPEAL BEFORE US. 7. LD. AR CONTENDED THAT AUTHORITIES BELOW ERRED IN RELYING ON THE STATEMENT OF SHRI R.K. MIGLANI FOR SADDLING THE IMPUGNED ADDI TION BECAUSE, THE STATEMENT OF SHRI MIGLANI WAS NOT CROSS-EXAMINED BY THE ASSES SEE. REQUEST MADE BY THE ASSESSEE TO CROSS-EXAMINE HIM WAS TURNED DOWN ON TH E PLEA THAT MIGLANI WAS AN EMPLOYEE OF THE ASSESSEE AND NOT A THIRD PARTY. TH E LD. AR POINTED OUT THAT THE 6 ITA NO.4993/DEL/2011 TRIBUNAL QUASHED 153C NOTICE FOR AY 2000-01 TO 2005 -06 AND THE PROCEEDINGS PURSUANT THEREOF AGAINST THE ASSESSEE SINCE NO DOCU MENTS OF THE ASSESSEE WERE FOUND DURING THE SEARCH AND SEIZURE ON 14.02.2006. ACCORDING TO LD. AR, IN THE SAID ORDER OF THE TRIBUNAL, THERE IS A CATEGORICAL FINDING THAT MR. R.K. MIGLANI IS NOT AN EMPLOYEE OF THE ASSESSEE. THEREFORE, HE SUB MITTED THAT IT IS A SETTLED PRINCIPLE OF LAW THAT THE COPY OF ANY MATERIAL USED AGAINST THE ASSESSEE HAS TO BE GIVEN TO THE ASSESSEE AND IF ANY THIRD PARTY STATEM ENT IS USED AGAINST THE ASSESSEE, THEN THE THIRD PARTY SHOULD BE ALLOWED TO CROSS EXAMINED BEFORE USING THE SAID STATEMENT / INFORMATION AGAINST THE ASSESS EE. IT WAS POINTED OUT BY THE LD. AR THAT THE ASSESSEE BEFORE THE AO HAS PLEADED THAT AN OPPORTUNITY FOR CROSS EXAMINATION OF MR. MIGLANI SHOULD BE GRANTED. HOWE VER, THE AO NOR THE CIT (A) DID NOT PREFER TO GIVE AN OPPORTUNITY TO THE AS SESSEE TO CROSS EXAMINE MR. MIGLANI ON WHOSE STATEMENT THE ENTIRE ADDITION WAS MADE ON THE ASSESSEE. THEREFORE, ACCORDING TO LD AR, THE IMPUGNED ADDITIO N IS BAD IN LAW AND HAS TO BE STRUCK DOWN. 8. ON THE OTHER HAND, THE LD. DR VEHEMENTLY OPPOSED THE GROUNDS RAISED BY THE ASSESSEE STATING THAT M/S. UPDA HAS BEEN FORMED BY 23 DISTILLERIES AND ASSESSEE WAS ONE OF THE MEMBER AND IS FORMED ONLY T O GIVE BRIBE TO THE POLITICIANS, BUREAUCRATS AND EXCISE OFFICIALS. MR. R.K. MIGLANI WAS THE GENERAL SECRETARY OF THE UPDA AND WAS COORDINATING THE PAYM ENTS BY A PARTICULAR FORMULA BASED ON THE PRODUCTION OF LIQUOR MADE BY E ACH DISTILLERY. MR. R.K. 7 ITA NO.4993/DEL/2011 MIGLANI DURING THE STATEMENT RECORDED U/S 132(4) HA S GIVEN THE FORMULA AND THE DOCUMENTS SEIZED DURING THE SEARCH, WHEN COMPARED W ITH THE BOOKS OF ACCOUNTS PRODUCED BY THE ASSESSEE TALLIED AND SO IT CORROBOR ATED WITH THE STATEMENT BY R.K. MIGLANI AND OTHER SEIZED DOCUMENTS. ACCORDING TO HIM, R.K. MIGLANI IS NOT A THIRD PERSON BUT AN EMPLOYEE OF M/S UPDA WHIC H WAS FORMED ONLY FOR THE BENEFIT OF 23 DISTILLERIES AND ASSESSEE IS ALSO ONE AMONG THEM, SO CROSS EXAMINATION OF MIGLANI IS NOT A MUST. IN THE LIGHT OF THE ABOVE, THE LD. DR DOES NOT WANT US TO INTERFERE WITH THE ORDERS OF THE AUT HORITIES BELOW ON THIS GROUND. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS. WE FIND THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURIN G AND SALE OF SPIRIT, EXTRA INDUSTRIAL ALCOHOL, INDIAN MADE FOREIGN LIQUOR AND COUNTRY LIQUOR. THE ASSESSEE COMPANY HAS GOT THE FOLLOWING DISTILLERY UNITS :- (I) UPPER DOAB SUGAR MILLS AT SHAMLI, DISTT. MUZAFFARNA GAR; (II) SHAMLI DISTILLERY & CHEMICAL WORKS AT SHAMLI, MUZAF FARNAGAR; (III) PILKHANI DISTILLERY AND CHEMICAL WORKS AT PILKHANI, DISTT. SHARANPUR. WE TAKE NOTE THAT TWENTY THREE DISTILLERS HAVE FORM ED AN ASSOCIATION WHICH IS A REGISTERED SOCIETY IN THE NAME AND STYLE OF M/S. UT TAR PRADESH DISTILLERY ASSOCIATION, AND THE UPDA WAS FORMED WITH THE OBJEC TIVE OF AUGMENTING THE BUSINESS INTEREST OF ALL ITS MEMBERS. WE FIND THAT A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT AT THE PREMISES OF M/S. RADICO KHAITAN & GROUP OF CASES, WHO HAPPENS TO BE A MEMBE R OF UPDA. ALONG WITH 8 ITA NO.4993/DEL/2011 RADICO KHAITAN, THE RESIDENTIAL PREMISES OF SHRI R. K. MIGLANI, GENERAL SECRETARY OF THE UPDA WAS ALSO SEARCHED ON 14.02.20 06. WE FURTHER FIND THAT A SURVEY UNDER SECTION 133A OF THE ACT WAS CARRIED OU T AT THE PREMISES OF UPDA. STATEMENT OF SHRI R K MIGLANI WAS RECORDED UNDER SE CTION 132(4) OF THE ACT. WE FIND THAT DURING THE COURSE OF SEARCH, LARGE NUM BER OF DOCUMENTS WERE FOUND AND SEIZED FROM VARIOUS PREMISES INCLUDING TH AT OF M/S RADICO KHAITAN, OFFICE OF UPDA, RESIDENCE OF R K MIGLANI AND OFFICE OF M/S SORAYA INDUSTRY (WHICH WAS ALSO ONE OF ACTIVE MEMBER OF THE SOCIETY ). WE ALSO TAKE NOTE THAT AFTER GOING THROUGH THE SEIZED MATERIALS, IT CAME T O THE NOTICE OF THE INCOME TAX DEPARTMENT THAT UPDA WAS COLLECTING HUGE SUMS FROM ITS MEMBERS WHICH REPRESENTED THEIR UNACCOUNTED INCOME AND THEN THROU GH UPDA, THESE SUMS WERE UTILIZED FOR THE PAYMENTS TO VARIOUS AUTHORITIES IN CLUDING POLITICIANS FOR FURTHERING THE BUSINESS CAUSE OF ITS MEMBERS; AND S HRI R. K. MIGLANI HAS EXPLAINED THE FORMULA AND THE MODUS OPERANDI OF GEN ERATING THE CASH SO COLLECTED FROM EACH MEMBER ON THE BASIS OF PRODUCTI ON ACHIEVED BY THE EACH MEMBER DISTILLERY AND HOW IT IS BEING COLLECTED BY THE CORE COMMITTEE MEMBERS AND DISTRIBUTED AMONG THE OFFICIALS OF EXCISE DEPAR TMENT, OTHER BUREAUCRATS AND THE POLITICIANS. THE CORE COMMITTEE MEMBERS ARE GIV EN AS BELOW :- (I) LORD DISTILLERY (II) RAMPUR DISTILLERY (III) MANSURPUR DISTILLERY (IV) NATIONAL INDUSTRIAL CORPORATION 9 ITA NO.4993/DEL/2011 THE ASSESSEE UNIT PILKHANI DISTILLERY IS ATTACHED W ITH THE CORE DISTILLERY I.E. LORD DISTILLERY AND SHAMLI & PILKHANI DISTILLERIES ARE A TTACHED WITH LEAD DISTILLERY S.S.L. AS PER PAGE 8 & 9 OF AOS ORDER. 10. WE FIND THAT THIS UPDA IS NOTHING BUT SPECIAL PURPOSE VEHICLE CREATED BY THE 23 DISTILLERIES FOR THE PURPOSE OF BRIBING P EOPLE IN POWER AND GOVERNMENT FROM THE FOLLOWING FINDINGS MADE BY THE AO BASED ON ORAL AND DOCUMENTARY EVIDENCES. THE GENERAL SECRETARY OF UP DA, MR. MIGLANI, DURING THE SEARCH IN HIS PREMISES, HAS GIVEN STATEMENT U/S 132(4) OF THE ACT WHEREIN HE HAS EXPLAINED THE MODUS OPERANDI OF HOW THE FUNDS F OR BRIBE ARE CALCULATED. THE EXTRACTS OF FEWRELEVANT QUESTIONS ARE REPRODUCE D BELOW :- Q.8 PLEASE GIVE DETAILS OF DUTIES PERFORMED BY YOU AS SECRETARY GENERAL OF UPDA? ANS. I ATTEND TO THE DAY TO DAY WORKING OF THE ASSO CIATION. DURING THE COURSE OF FUNCTION LISTED ABOVE, I ALSO BOOK (MY OF FICE) THE RECORD OF DISPATCH IF (SIC) OF VARIOUS TYPES OF LIQUOR PRODUCED BY THE MEMBER OF UPDA ON WEEKLY BASIS. THIS ALSO INCLUDES RECORDS OF VARIOUS EXPENSES INCURRED BY THE MEMBER OF UPDA DURING THE COURSE OF THEIR NORMAL BU SINESS EXPENSES. .. Q.10 I AM SHOWING YOU PAGE 150 TO 155 OF ANNEXURE A -1. HAVE THESE PAPER BEEN WRITTEN BY YOU AND IF YES, PLEASE EXPLAI N THE TRANSACTIONS ON THESE PAPERS? ANS. PAGES 152 & 155 ONLY ARE WRITTEN BY ME. HOWEVE R, ALL THE ABOVE MENTIONED PAPERS CONTAINS RECORD OF PAYMENT/CONTRIB UTION BY VARIOUS MEMBERS OF UPDA WHICH AD UP TO 508.05 LACS. THE NEX T FIGURE IS RS.670.00 WHICH IS THE CONTRIBUTION TO BE PAID (DUE) FROM THE SE MEMBERS ON A/C OF ABOVE MENTIONED PAYMENT. PAGE 154 AGAIN CONTAINS TH E DETAILS OF BALANCES ATTRIBUTED TO VARIOUS MEMBERS IF UPDA IN RESPECT OF AMOUNT TO BE PAID (DUE) ON A/C OF ABOVE. .. Q.16 I AM SHOWING YOU PAGES 72 TO 75 OF ANNEXURE A- 2. PLEASE EXPLAIN THE NATURE OF TRANSACTION OF THESE PAPERS? 10 ITA NO.4993/DEL/2011 ANS. THESE TRANSACTIONS ARE AMOUNT PAID BY VARIOUS MEMBERS OF UPDA DURING F.Y. 2004-05 & 2005-06 TO VARIOUS GOVT. AGEN CY AND OTHER PERSON ON VARIOUS DATED MENTIONED AGAINST EACH PAYMENT MADE. Q.17 I AM SHOWING YOU PAGE 77 TO 79 OF ANNEXURE A-2 . PLEASE EXPLAIN THE AMOUNT WRITTEN BY HAND ON VARIOUS DATES AND WHO HAS WRITTEN THESE AMOUNTS? ANS. THE HAND WRITTEN ENTRIES ARE WRITTEN BY ME AND THESE ARE IN RESPECT OF AMOUNT RECEIVED BY THE CORE DISTILLERIES FROM OTHER MEMBER TOWARDS THE CONTRIBUTION OF AMOUNT TO BE PAID TO VARIOUS GOVT. AGENCIES/PERSONS. Q.18 I AM SHOWING YOU PAGE 94 OF ANNEXURE A-3 WHICH IS MARKED 'CONFIDENTIAL' PLEASE EXPLAIN THE TRANSACTION RECOR DED ON THIS PAPER? 11. AFTER GOING THROUGH THE DOCUMENTS SEIZED AND FR OM THE STATEMENT OF SHRI MIGLANI, THE AO HAS HELD AS UNDER IN RESPECT TO THE MODUS OPERANDI TO COLLECT THE FUND FOR DISTRIBUTING TO POLITICIANS AND GOVERN MENT OFFICIALS :- 4.10 AS THERE ARE LARGE NUMBER OF DOCUMENTS THAT H AVE BEEN SEIZED FROM UPDA OFFICE AND RESIDENCE OF SHRI MIGLANI, SO PHOTO COPIES OF SOME OF THE IMPORTANT PAGES IS ENCLOSED AS ANNEXURE B/1-75 OF THIS ORDERS. 4.11 THESE RECORDS ARE MAINTAINED ALMOST ON WEEKLY BASIS. SPECIMEN COPIES OF THIS RECORD ARE ENCLOSED AS PAGE 65-75/AN NEXURE B OF THIS ORDER. THEN THERE ARE LARGE COMPUTER GENERATED SHEETS IN W HICH DETAILS OF PRODUCTION OF COUNTRY LIQUOR BY INDIVIDUAL DISTILLERIES AND CO NTRIBUTION TO UPDA BY EACH MEMBER AND BASIS OF CALCULATION IS GIVEN. FOR EXAM PLE PAGE 81/A-3 SEIZED FROM MR. MIGLANIS RESIDENCE IS VERY IMPORTANT (COP Y PLACED AS PAGE 22/ANNEXURE B OF THIS ORDER). IN THIS, TOTAL COUNT RY LIQUOR PRODUCED BY EACH DISTILLERY IS GIVEN, THEN THIS IS CONVERTED INTO NU MBER OF CASES. THEN THE CONTRIBUTION BY EACH DISTILLERY IS CALCULATED @ RS. 20/- PER CASE. THUS, THE CONTRIBUTION OF M/S. SIR SHADI LAL ENTERPRISES LTD. HAS BEEN WORKED OUT AT RS.1,49,77,482/- FOR THIS PERIOD. SIMILARLY, AMOUN TS HAVE BEEN WORKED OUT FOR ALL THE OTHER DISTILLERIES. WE TAKE NOTE OF THE FACT EMERGING FROM THE SEIZED D OCUMENTS AND STATEMENT OF SHRI MIGLANI, WHICH CORROBORATES WITH THE ASSESSEE S BOOKS WHICH HAS BEEN GIVEN IN THE FORM OF A CHART AT PAGE 23 & 24 OF THE AOS ORDER IS GIVEN BELOW :- 11 ITA NO.4993/DEL/2011 6.4 TO INDEPENDENTLY CORROBORATE THAT THESE RECORD S MAINTAINED BY SH. MIGLANI AND UPDA OFFICE ARE AUTHENTIC AND GENUINE, DETAIL OF DISPATCH OF ALL TYPES OF LIQUOR WAS OBTAINED FROM THE ASSESSEE AND THE SAME WAS VERIFIED WITH REFERENCE TO THE DISPATCH FIGURES OF MONTHLY/YEARLY SUPPLY OF THE ASSESSEE AS FOUND IN THE SEIZED DOCUMENTS. FROM THE VERIFICATI ON THE FOLLOWING POSITION EMANATES. PILKHANI UNIT MONTHS DESPATCH FIGURES IN AL IN ASSESSEES BOOKS (INLAC) DESPATCH FIGURES IN AL IN SEIZED DOCUMENTS AS PER PAGE 16&17 OF ANNEXURE A-2 PARTY 8 (IN LAC) MAY2005 1.69 1.69 JUNE2005 1.30 1.30 JULY 2005 1.18 1.18 AUGUST 2005 1.25 1.25 SEPTEMBER 2005 0.96 0.96 OCTOBER 2005 1.10 1.10 NOVEMBER2005 1.17 1.17 DECEMBER2005 1.09 1.09 JANUARY2006 1.11 1.11 SHAMLI UNIT MONTHS DESPATCH FIGURES IN AL IN ASSESSEES BOOKS (IN LAC) DESPATCH FIGURES IN AL IN SEIZED DOCUMENTS AS PER PAGE 16&17 OF ANNEXUREA-2, PARTY 8 ( IN LAC) APRIL2005 1.16 1.16 MAY2005 1.03 1.03 JUNE2005 0.91 0.91 JULY2005 1.02 1.02 AUGUST2005 1.02 1.02 SEPTEMBER2005 0.69 0.69 OCTOBER2005 0.94 0.94 NOVEMBER2005 0.92 0.92 DECEMBER2005 0.83 0.83 JANUARY2006 0.75 0.75 12 ITA NO.4993/DEL/2011 6.5 THIS SHOWS THAT THE TOTAL YEARLY DISPATCH FIGUR E OF CL IN AL IN ASSESSEES BOOKS OF ACCOUNT FOR THE ASSESSMENT YEARS 2003-04, 2004-05, 2005-06,2006-07 TALLIES WITH THE FIGURE OF TOTAL DISPATCH OF CL IN AL AS FOUND IN THE SEIZED DOCUMENTS. 12. WE TAKE NOTE THAT THE AO HAS COUNTERED THE CONT ENTION OF THE ASSESSEE THAT THERE IS NO SPECIFIC MENTION OF ITS NAME IN TH E STATEMENTS OF SH. R.K. MIGLANI AND THAT THESE ARE GENERAL IN NATURE. THE A O NOTES THAT THESE DOCUMENTS CONTAIN THE NAME OF ALL THE DISTILLERY MEMBERS INCL UDING THE ASSESSEE AND DETAILS OF PAYMENTS/CONTRIBUTION FOR ILLEGAL PAYMEN TS ARE MENTIONED AGAINST THE NAME OF EACH MEMBER INCLUDING THE ASSESSEE. REFERR ING TO CERTAIN SPECIFIC DOCUMENTS SEIZED AND STATEMENT OF MR. MIGLANI THE A O IN PAGE 19, PARA 5.2 OF HIS ORDER STATES THAT FROM THESE PRODUCTION FIGURES OF COUNTRY LIQUOR PRODUCED BY EACH DISTILLERY, THE FIGURES OF ILLEGAL PAYMENTS TO BE MADE BY EACH DISTILLERY WERE DETERMINED BY WAY OF FORMULA KNOWN AS FACTOR FORMULA. THIS FACTOR FORMULA WAS DEVISED BY DIVIDING THE FIGURE OF TOTAL DISPATCH/SUPPLY BY ALL THE DISTILLERY MEMBERS BY A FIGURE OF AMOUNT WHICH WAS REQUIRED TO BE PAID DURING A PARTICULAR PERIOD. THE AO NOTES THAT FOR EXAMPLE, REFERENCE IS INVITED TO PAGE NO. 3 OF ANNEXURE A-6 AND PAGE 94 OF ANNEXURE A-3 S EIZED FROM THE RESIDENCE OF SH. R.K. MIGLANI. THESE CONTAIN TOTAL LIQUOR SUP PLIED IN BL (BULK LITRES) AND CONVERSION OF TOTAL SUPPLY INTO CASES AND THEREAFTE R AMOUNTS PAYABLE IN EACH CASE HAVE BEEN DETERMINED @ RS. 20/- PER CASE. HERE IT IS ALSO CLARIFIED THAT ONE CASE CONTAINS 9BL OF LIQUOR. THESE FIGURES OF DISPA TCHES WRITTEN IN THE RECORDS OF UPDA TALLIES WITH THE ACTUAL DISPATCH RECORD OF THE ASSESSEE. SO, THE 13 ITA NO.4993/DEL/2011 COLLECTION OF THESE AMOUNTS IS IN THE RATIO OF PROD UCTION. THAT IS WHY COLLECTION FROM SOME OF THE DISTILLERIES IS VERY HIGH COMPARED TO ORDERS. 13. THE AO HAS ANALYZED THE DOCUMENTS SEIZED AND HA S FOUND THAT THESE RECORDS ARE MAINTAINED ALMOST ON WEEKLY BASIS. ACCO RDING TO THE AO, THERE ARE LARGE COMPUTER GENERATED SHEETS IN WHICH DETAILS OF PRODUCTION OF COUNTRY LIQUOR BY INDIVIDUAL DISTILLERIES AND CONTRIBUTION TO UPDA BY EACH MEMBER AND BASIS OF CALCULATION IS GIVEN. THE AO REFERS TO CERTAIN S EIZED DOCUMENTS FROM MR. MIGLANIS RESIDENCE AND STATES THAT A PERUSAL OF TH E SAID DOCUMENTS WOULD REVEAL TOTAL COUNTRY LIQUOR PRODUCED BY EACH DISTILLERY IS GIVEN, AND THEN THIS IS CONVERTED INTO NUMBER OF CASES. THEN THE CONTRIBUTI ON BY EACH DISTILLERY IS CALCULATED @ RS.20/- PER CASE. THUS, THE CONTRIBUTI ON OF M/S SIR SHADI LAL ENTERPRISES LTD. HAS BEEN WORKED OUT AT RS.2,14,39, 000/- FOR THIS ASSESSMENT YEAR. THE HAND WRITTEN ENTRIES ARE WRITTEN BY AND T HESE ARE IN RESPECT OF AMOUNT RECEIVED BY THE CORE DISTILLERIES FROM OTHER MEMBER TOWARDS THE CONTRIBUTION OF AMOUNT TO BE PAID TO VARIOUS GOVT. AGENCIES/PERSON. 14. WE FIND ALSO THAT THE AO HAS RELIED ON THE DISC LOSURE MADE BY M/S. RADICO KHAITAN LIMITED BEFORE THE SETTLEMENT COMMIS SION WHEREIN IN ITS NAME UNACCOUNTED PAYMENTS AMOUNTING TO RS.30.02 CRORES W ERE FOUND RECORDED. THE AO NOTES THAT THIS COMPANY SURRENDERED A SUM OF RS. 27.50 CRORES DURING SEARCH AND THEREAFTER FILED AN APPLICATION U/S 245D OF THE ACT AND RELIED ON THE COPY OF THE SURRENDER LETTER FILED BEFORE THE INVESTIGATION WING AND LATER ON BEFORE THE 14 ITA NO.4993/DEL/2011 SETTLEMENT COMMISSION. HOWEVER, WE FIND THAT THE A O STATES THAT THE AMOUNT OF SURRENDER IS NOT ON ACCOUNT OF THESE UNACCOUNTED PAYMENTS, BUT SURRENDER IN DIFFERENT YEARS ROUGHLY TALLIES WITH THE AMOUNTS OF ILLEGAL PAYMENTS AS MENTIONED IN THE SEIZED DOCUMENTS. HERE WE WOULD L IKE TO POINT OUT THAT SUCH VAGUE ASSERTIONS CANNOT BE MADE BY THE AO, HE SHOUL D SPELL OUT EVERY FACT CLEARLY AND IF HE INTENDS TO RELY ON IT FOR IMPOSIT ION OF ADDITION OR MAKING AN ADVERSE FINDING AGAINST THE ASSESSEE, THEN THE COPY OF THE SAME SHOULD BE FURNISHED TO THE ASSESSEE FOR ITS REBUTTAL OR EXPLA NATION. 15. LIKEWISE, WE FIND THAT THE AO HAS RELIED ON THE REVISED RETURNS FILED BY M/S. BALRAMPUR CHINNI MILLS LTD. WHO WAS ALSO A MEM BER OF THE UPDA AND HAS ALSO MADE UNACCOUNTED PAYMENTS. THIS COMPANY HAS S URRENDERED AN AMOUNT OF RS.8.90 CRORES FROM AY 2003-04 TO 2005-06 AND REVIS ED THE RETURNS. ACCORDING TO THE AO, THE SURRENDER ROUGHLY TALLIES WITH THE A MOUNT MENTIONED IN THE DOCUMENTS SEIZED FROM MR. MIGLANIS RESIDENCE AND U PDAS OFFICE. 16. LIKEWISE, THE AO RELIES ON DOCUMENTS SEIZED FRO M LAPTOP COMPUTER OF SHRI AJAY AGGARWAL, GM (ACCOUNTS) OF M/S. RADICO KH AITAN LTD. AND DISCUSSED THE DETAILS FROM PAGE 26 TO 28 OF AOS ORDER. FURT HER, THE AO RELIES ON THE DOCUMENTS FOUND AT THE PREMISES OF M/S. SARAYA INDU STRIES LTD. AND FAX DATED 26.10.2005 FROM SHRI K.P. SINGH OF RADICO KHAITAN L TD. TO VARIOUS MEMBERS OF UPDA, WHEREIN CERTAIN INFORMATIONS / PROPOSALS OF S HARE OF INVESTMENT OF DISTILLERIES ARE MENTIONED. 15 ITA NO.4993/DEL/2011 17. HERE, WE WOULD LIKE TO POINT OUT THAT IF THE AO RELIES ON ANY DOCUMENT TO MAKE ADDITIONS OR INTEND TO MAKE OR DRAW AN ADVERSE FINDING AGAINST THE ASSESSEE, THEN THE AO IS DUTY BOUND TO SUPPLY A COP Y OF THAT DOCUMENT TO ASSESSEE AND GIVE AN OPPORTUNITY TO THE ASSESSEE TO REBUT THE SAME AND IF NECESSARY, TO CROSS EXAMINE ANY PERSON WHO HAS GIVE N ANY ADVERSE INFORMATION OR STATEMENT AGAINST THE ASSESSEE. 18. THE FACTS IS THAT THE PAPERS AND DOCUMENTS SEIZ ED FROM R.K. MIGLANI PREMISES AND THAT OF THE UPDA AND THAT OF RADICO KH AITAN GROUP MAY HAVE THROWN LIGHT ON THE NEFARIOUS ACTIVITIES CARRIED OU T BY THE DISTILLERIES CONNECTED WITH THOSE PERSONS WHO HAS BEEN SEARCHED. HOWEVER, THE QUESTION BEFORE US IS WHETHER THE ASSESSEE DISTILLERY IS ALSO INVOLVED IN THE SAID ILLEGAL ACTIVITIES AS DONE BY THE SEARCHED DISTILLERIES, AND WHETHER THES E DISTILLERS SEARCHED ADMITTED WHAT MIGLANI IS SAYING (I.E MODUS OPERANDI) ETC. NE ED TO BE PROPERLY BROUGHT OUT. FOR THAT, AO HAS TO BRING EVIDENCE REGARDING ASSESSEES INVOLVEMENT IN THE ACTIVITIES BY DIRECT OR CIRCUMSTANTIAL EVIDENCE, AN D THEN ONLY THE ADDITION WILL BE JUSTIFIED. WE TAKE NOTE THAT THE AO HAS MADE A FIN DING THAT FROM THE STATEMENTS OF MR. MIGLANI WHICH HAS BEEN CORROBORATED BY DOCUM ENTS SEIZED AS WELL AS FIGURES REVEALED BY THE ASSESSEES BOOKS OF ACCOUNT IN FACT TALLIES, WHICH CANNOT BE CALLED STRANGE COINCIDENCE BUT GIVES STRENGTH TO CERTAIN INFERENCES TO THE DIRECTION THAT UNEXPLAINED EXPENDITURE IN THE HANDS OF ASSESSEE AND UNDISCLOSED INCOME IN THE HANDS OF THE UPDA, WHICH CANNOT BE BR USHED ASIDE. SO, WE ARE OF 16 ITA NO.4993/DEL/2011 THE OPINION THAT FURTHER INVESTIGATION ON THE PART OF THE AO IS REQUIRED. THE ASSESSEE HAS TO EXPLAIN HOW THE FIGURES DATE-WISE F OUND IN UPDA AND OTHER PREMISES ARE THE SAME FIGURES AND TALLYING WITH THA T OF THE BOOKS OF ACCOUNTS REGULARLY MAINTAINED BY THE ASSESSEE. IN CASE THE A SSESSEE DOES NOT REPLY OR THE REPLY IS NOT SATISFACTORY FOR REASONS TO BE STATED BY THE AO, THEN THE AO IS AT LIBERTY TO DRAW AN ADVERSE VIEW OR NOT HAS TO BE DECIDED BY THE AO. IT SHOULD BE REMEMBERED THAT DIRECT EVIDENCE MAY LIE BUT CIRC UMSTANTIAL EVIDENCE DOES NOT LIE. HOWEVER, THE CHAIN OF EVENTS MUST BE ESTA BLISHED AND THE CHAIN SHALL NOT BREAK AND THE FACT SHOULD EMERGE CLEARLY. 19. WE FIND THAT THE STATEMENT GIVEN BY MR. MIGLANI IN 14.02.2006 HAS BEEN RETRACTED BY MR. MIGLANI ON 03.03.2008 (I.E. AFTER MORE THAN 2 YEARS) BY FILING AN AFFIDAVIT. IT HAS TO BE SEEN UNDER WHAT CIRCUMS TANCES HE HAS RESILED FROM THE EARLIER STATEMENT AND REASONS FOR DOING SO AFTER 2 YEARS AND IT HAS TO BE EXAMINED WHETHER THE RETRACTION AFTER SUCH A LONG T IME INSPIRES CONFIDENCE AND, WHETHER ANY WEIGHTAGE NEED TO BE GIVEN TO IT HAS TO BE EXAMINED BY THE AO. HOWEVER, THE AO SHOULD KEEP IN MIND THAT BEFORE MAK ING AN ADDITION BY THE DEPARTMENT AGAINST THE ASSESSEE, IF MR. MIGLANIS S TATEMENT HAS BEEN RELIED ON BY THE AO, THEN MR. MIGLANI SHOULD HAVE BEEN ALLOWE D TO BE CROSS EXAMINED BY THE ASSESSEE. WE FIND THAT THE ASSESSEE HAD REQUES TED FOR CROSS-EXAMINING MR. MIGLANI WHICH HAS NOT BEEN DONE IN THIS MATTER. TH E AO SIMPLY HAS SENT SOME SUMMONS AND HAS ASKED THE ASSESSEE TO PRODUCE MR. M IGLANI. WE TAKE NOTE THAT 17 ITA NO.4993/DEL/2011 IN THE ABSENCE OF MR. MIGLANI NOT COMING BEFORE HIM , THE AO PUT THE RESPONSIBILITY ON THE ASSESSEE TO PRODUCE HIM AND W HEN THE ASSESSEE FAILED TO PRODUCE MIGLANI BEFORE THE AO, THEN HE WENT AHEAD W ITH THE IMPUGNED ADDITION WHICH CANNOT BE COUNTENANCED. IN CASE, IF MR. MIG LANI IS NOT KEEPING WELL THEN THE AO SHOULD CONSIDER TO ISSUE A COMMISSION U/S 13 1(D) OF THE ACT TO COLLECT EVIDENCE AND ALLOWING THE ASSESSEE ALSO TO CROSS EX AMINE HIM. THE EVIDENCES COULD HAVE BEEN COLLECTED NOT ONLY FROM MR. MIGLANI , IT COULD HAVE BEEN COLLECTED BY INVESTIGATING FURTHER FROM 23 DISTILLE RIES WHICH COULD HAVE THROWN LIGHT OF THE MODUS OPERANDI OF THESE DISTILLERS AS HAS BEEN SAID BY MR. MIGLANI DURING SEARCH. WE FIND A THOROUGH INVESTIGATION IS NEEDED IN THIS CASE. 20. FROM A PERUSAL OF PAGE 4 OF THE AOS ORDER, WE NOTE THAT ASSESSEES PILKHANI AND SHAMLI DISTILLERIES, ACCORDING TO AO, INCURRED UNEXPLAINED EXPENDITURE OF RS.214 LAKHS. SINCE THE ASSESSEE IS ONE OF THE MEMBER OF THE SOCIETY REGISTERED AS UPDA, WHICH WAS INVOLVED IN I LLEGAL ACTIVITIES AS STATED BY THE AO, THEN NOTHING PREVENTED THE AO TO HAVE PI ERCED THE VEIL AND EXAMINE/INVESTIGATE THE SAID ILLEGAL ACTIVITIES IN DETAIL TO BRING OUT THE UNEXPLAINED EXPENDITURE INCURRED BY THE ASSESSEE AN D UNDISCLOSED INCOME IN THE HANDS OF UPDA. IT IS WELL SETTLED THAT THE AO IS N OT TIED DOWN BY THE STRICT APPLICATION OF EVIDENCE ACT, AND HE CAN USE THE INF ORMATION FROM HIS ENQUIRY FROM THIRD PERSONS ALSO, HOWEVER, IT HAS TO BE KEPT IN MIND THAT, IF THE AO IS GOING TO MAKE ANY ADDITION/DISALLOWANCE BASED ON TH IRD PARTY INFORMATION, THEN 18 ITA NO.4993/DEL/2011 HE IS BOUND TO GIVE A COPY OF THE INFORMATION TO TH E ASSESSEE AND GIVE AN OPPORTUNITY TO THE ASSESSEE TO REBUT THE SAME AND A LLOW THE ASSESSEE TO TEST THE THIRD PARTY STATEMENT BY ALLOWING THE ASSESSEE TO C ROSS-EXAMINE THE THIRD PARTY. IN CASE, IF THE THIRD PARTY CANNOT BE TRACED OR DIE S, APPLICATION OF SECTION 32 OF THE INDIAN EVIDENCE ACT NEED TO BE EXAMINED, HOWEVE R, THE AO SHOULD MAKE ALL ENDEAVOUR TO TRACE THE THIRD PARTY AND SHOULD NOT P UT THE BURDEN ON THE ASSESSEE TO PRODUCE THE THIRD PARTY INFORMATION ON WHICH HE INTENDS TO MAKE ADVERSE FINDING OR ADDITION OR DISALLOWANCE ON THE ASSESSEE . 22. FROM MR. MIGLANI STATEMENT AND OTHER EVIDENCES, IT HAS TO BE ESTABLISHED THAT ASSESSEE WAS A MEMBER OF UPDA, THEN MR. MIGLAN IS STATEMENT THAT MONEY USED TO BE COLLECTED BY CORE DISTILLERY IN THE CASE OF ASSESSEE, IT IS SAID TO BE LORD DISTILLERY AND A LEAD DISTILLERY, M/S. S.S.L., WHETHER ANY EVIDENCE IS COLLECTED TO CORROBORATE THIS FACT. 23. THEREFORE, WE ARE INCLINED TO SET ASIDE THE ORD ER OF THE LOWER AUTHORITIES AND REMAND THIS ISSUE I.E. GROUNDS NO.1 TO 2.4 BACK TO THE FILE OF THE AO TO DE NOVO DECIDE ON THESE ISSUES IMPUGNING ADDITION OF R S.2,14,39,000/- AFTER GIVING OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE MR. MI GLANI AND TO COLLECT EVIDENCES IN THE LIGHT OF THE ABOVE DIRECTION OF OU RS. WE WOULD LIKE TO MAKE IT CLEAR THAT ANY OBSERVATION OF OURS MADE ABOVE SHALL NOT INFLUENCE IN ANY MANNER THE OUTCOME OF THE ADJUDICATION THE ISSUES HAVE TO BE DEALT WITH ON ITS OWN 19 ITA NO.4993/DEL/2011 MERITS AND NOTHING SHOULD BE READ TO ADVERSELY AFFE CT THE ASSESSEE. WE ORDER ACCORDINGLY. 24. GROUND NO.3 IS THAT THE LD. CIT(A) ERRED IN HOLDING THAT CUSTOMER COLLECTION IN DHARMADA ACCOUNT IS A TRADING RECEIPT . IT IS THE COMMON GROUND OF BOTH THE PARTIES THAT THE ISSUE STANDS CO VERED AGAINST THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN EARLIER YE ARS AND A CONSOLIDATED ORDER FOR ASSESSMENT YEARS 1990-91 AND 2000-01 WAS PLACED IN THE PAPER BOOK. FOR THE SAKE OF READY REFERENCE, THE RELEVANT PARAGRAPH 23 IS REPRODUCED BELOW:- '23. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THOU GH THE ASSESSEE IS STATED TO BE COLLECTING RECEIPTS TOWARDS DHARMADA ( CHARITY) FROM THE CUSTOMERS, THE AMOUNT IS SIMPLY ACCUMULATED FROM YE AR TO YEAR AND NOT SPENT FOR THE PURPOSE FOR WHICH IT IS COLLECTED. TH US, IT IS ONLY A NAME GIVEN BUT IT IS NOT SPENT FOR THE INTENDED PURPOSE. IT IS SUBMITTED THAT THE AMOUNT IS BEING ACCUMULATED SO THAT A HUGE PROJECT OF MULTI SPECIALTY HOSPITAL CAN BE TAKEN. ON QUERY FROM THE BENCH, THE LD. COUNSEL FOR THE ASSESSEE CLARIFIED THAT TILL DATE NO SUCH HOSPITAL PROJECT HAS COME OVER NOR EVEN ANY LAND HAS BEEN IDENTIFIED IN THIS REGARD. I T IS MERELY AN ARGUMENT WITHOUT ANY SUBSTANCE. THE ASSESSEE HAS NOT DEMONST RATED THAT ANY STEPS ARE TAKEN TOWARDS THE OBJECT OF SETTING UP SUCH HOS PITAL. EVEN THE LAND FOR SUCH HOSPITAL HAS NOT BEEN IDENTIFIED LEAVE APART C ONSTRUCTION THEREOF. THEREFORE, IT CANNOT BE HELD THAT THE AMOUNT COLLEC TED FROM CUSTOMERS WERE REALLY TOWARDS AVOWED OBJECT OF CHARITY. THERE FORE, THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF BIJLI COTTON M ILLS (SUPRA) WILL NOT APPLY TO THE FACTS OF THE CASE. THE ASSESSEE HAS DE MONSTRATED NOT ONLY COLLECTING DHARMADA RECEIPTS AS A CUSTOMARY PRACTIC E BUT ALSO TO SHOW THAT SUCH CUSTOMARY PRACTICE IS CARRIED TO ITS LOGIC CON CLUSION, I.E., SPENDING TOWARDS CHARITY OUT OF SUCH ACCOUNT. THE ASSESSEE C ANNOT MERELY GO ON COLLECTING RECEIPTS FROM YEAR TO YEAR AND STILL CLA IM THE SAME AS CHARITY WITHOUT ANY INTENTION TO SPEND SUCH AMOUNT. WE, THE REFORE, UPHOLD THE ADDITION. AS REGARDS ALTERNATE CLAIM, IF THE ASSESS EE SATISFIES THE CONDITION FOR ALLOWING DEDUCTION UNDER SECTION 80G, THE ASSES SEE MAY PRODUCE 20 ITA NO.4993/DEL/2011 NECESSARY EVIDENCE BEFORE THE ASSESSING OFFICER TO CLAIM THAT DEDUCTION UNDER SECTION 80G IS ALLOWABLE.' RESPECTFULLY FOLLOWING THE ABOVE DECISION, THE GROU ND IS DISPOSED OFF ACCORDINGLY. THE AO MAY CONSIDER THE DEDUCTION TO BE ALLOWED, IF ANY, UNDER SECTION 80G. THIS GROUND IS DISMISSED. 25. GROUND NO.4 IS THAT THE LD. CIT (A) ERRED IN DI SALLOWING INTEREST PAYABLE TO IFCI IN RESPECT OF SUGAR DEVELOPMENT FUND (SDF), BY INVOKING THE PROVISIONS CONTAINED IN SECTION 43B, AS THE INTERES T IS PAYABLE TO THE GOVERNMENT. IT IS THE ADMITTED POSITION THAT THE I SSUE STANDS DECIDED AGAINST THE ASSESSEE BY THE DECISION OF HONBLE DELHI HIGH COUR T IN THE CASE OF TRIVENI ENGINEERING & INDUSTRIES LTD. VS. CIT (2009) 226 CT R 526. THE RELEVANT PORTION CONTAINED IN PARAGRAPH 5 IS REPRODUCED BELO W :- 5. THE AFORESAID PROVISION MAKES IT MORE THAN ABUN DANTLY CLEAR THAT INTEREST CAN ONLY BE ALLOWABLE WHEN THE SAME IS AC TUALLY PAID AND NOT MERELY BECAUSE THE SAME IS DUE AS PER THE METHOD OF ACCOU NTING ADOPTED BY THE ASSESSEE. ANY OTHER INTERPRETATION AS SUGGESTED BY THE APPELLANT THAT THE INTEREST SHOULD BE ALLOWED EVEN WHEN NOT ACTUALLY P AID WILL DEFEAT THE VERY PURPOSE OF SECTION 43B. THE CONTENTION OF THE ASSES SEE THAT IT HAS RECEIVED THE LOAN FROM SUGAR DEVELOPMENT FUND ADMINISTERED BY TH E MINISTRY OF SUGAR, GOVERNMENT OF INDIA IS LIABLE TO BE REJECTED AT THE THRESHOLD BECAUSE ADMITTEDLY THE LOAN IS OBTAINED FROM IFCI BY THE AS SESSEE. IT IS THE IFCI WITH WHOM THE DOCUMENTATION FOR THE LOAN HAS BEEN SIGNED AND TO WHOM THE LOAN ALONG WITH THE INTEREST, IS REPAYABLE. MERELY BECAU SE THE SUGAR DEVELOPMENT FUND IS UNDER THE OVERALL CONTROL AND ADMINISTRATIO N OF THE MINISTRY OF SUGAR. GOVERNMENT OF INDIA DOES NOT MEAN THAT THE LOAN IS NOT GIVEN BY THE IFCI. THE OTHER CONTENTION RAISED BY THE APPELLANT RELYING UP ON THE JUDGMENT OF THE ANDHRA PRADESH HIGH COURT IN THE CASE SRIKAKOLLU SU BBA RAO & CO. AND ORS. VS. UNION OF INDIA AND OTHER, 173 ITR 708 THAT WHE RE THE AMOUNT IS NOT DUE FOR PAYMENT BEFORE THE END OF THE RELEVANT PREVIOUS YEAR SUCH AMOUNT THOUGH HAVING ACCRUED COULD NOT BE DISALLOWED UNDER SECTIO N 43B(D) OF THE ACT, CANNOT BE ACCEPTED BY THIS COURT BECAUSE THE SAME W OULD NEGATE THE INTENTION OF EXISTENCE OF SECTION 43B(D) AND WOULD RENDER OTI OSE THE EXPRESSION 21 ITA NO.4993/DEL/2011 'ACTUALLY PAID' OCCURRING IN THE PROVISION. FURTHE R WE FEEL THAT IN VIEW OF THE CATEGORICAL LANGUAGE USED IN THE RELEVANT PROVISION , WE NEED NOT REFER TO THE OTHER SUB-SECTIONS AND EXCEPTIONS OF SECTION 43B. RESPECTFULLY FOLLOWING THE AFORESAID DECISION, THIS GROUND IS DISMISSED. 26. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF DECEMBER, 2015. SD/- SD/- (N.K. SAINI) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 18 TH DAY OF DECEMBER, 2015 TS COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A)-XXXIII, NEW DELHI. 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI