Nazia Zafar, Delhi V. ITO, Ward- 46(3), New Delhi

ITA 8093/DEL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4395 (ITAT-DELHI)
• Duration Of Justice: 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 20-12-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Keywords: Reopening of assessment; Unexplained cash credit; Rejection of books of accounts; Unexplained expenditure; Gift; Income from undisclosed sources; Search and seizure; Document seized; Opportunity of being heard; Principle of natural justice; Opportunity of cross examination; Difference of opinion; Accommodation entries; Onus to prove; Bogus loan; Documents seized; Change of opinion
• Section: 271(1)(c); 44AD; 69C; 143(3); 142(1); 133A; 12A; 195; 147; 131; 68; 69; 132; 11; 139

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: SMC, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 8093/DEL/2018 AY : 2014-15 NAZIA ZAFAR, C/O KAPIL GOEL, ADVOCATE, F-26/124, SECTOR-7, ROHINI, DELHI (PAN: AAIPZ25398) VS . ITO, WARD 46(3), NEW DELHI (APPELLANT) (RESPONDENT) ITA NO. 207/DEL/2019 AY: 2015-16 NASEEM ZAFAR C/O KAPIL GOEL, ADVOCATE, F-26/124, SECTOR-7, ROHINI, DELHI (PAN: AAAPZ2495G) VS . ITO, WARD 46(3), NEW DELHI (APPELLANT) (RESPONDENT) ITA NO. 208/DEL/2019 AY: 2015-16 NASEEM SAAD C/O KAPIL GOEL, ADVOCATE, F-26/124, SECTOR-7, ROHINI, DELHI (PAN: AARPS3364A VS . ITO, WARD 46(5), NEW DELHI (APPELLANT) (RESPONDENT) ITA NO. 266/DEL/2019 AY: 2015-16 KAMRAN NASEEM, C/O KAPIL GOEL, ADVOCATE, F-26/124, SECTOR-7, ROHINI, DELHI (PAN: AAIPZ25398) VS . ITO, WARD 46(3), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. KAPIL GOEL, ADV. REVENUE BY : SH. S.L. ANURAGI, SR. DR. ORDER THESE AFORESAID APPEALS HAVE BEEN FILED BY THE RESP ECTIVE ASSESSEES CHALLENGING SIMILAR ORDERS PASSED BY LD CIT(A)APPEALS 16 NEW DELHI CONFIRMING 2 LD AOS ACTION DISALLOWING LONG TERM CAPITAL GAINS E XEMPTION U/S 10(38) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) INVOKING DE EMING PROVISIONS OF SECTION 68 OF THE ACT, HENCE, THE SAME WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE, B Y DEALING WITH THE FACTS OF ITA NO. 8093/DEL/2018 (AY 2014-15) (NAZIA ZAFAR) WH ICH WOULD APPLY MUTATIS MUTANDIS TO REST OTHER APPEALS. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN I NDIVIDUAL AND HAS FILED RETURN OF INCOME U/S 139 OF THE ACT ON 24.11.2014 DECLARING INCOME OF RS. 4,41,010/-. THE RETURN OF THE ASSESSEE WAS SELE CTED FOR SCRUTINY UNDER CASS FOR THE REASON SUSPICIOUS LONG TERM CAPITAL GAINS ( INPUTS FROM INVESTIGATION WING). THE NOTICE U/S 143(2) OF THE INCOME TAX ACT, 1961 WAS ISSUED ON 18.09.2015. THE MAIN ISSUE TAKEN UP IN ASSESSMENT WAS EXEMPTION OF LONG TERM CAPITAL GAINS ARISING FROM SALE OF SHARES OF M /S KAILASH AUTO FINANCE LIMITED OF RS 36,81,687/-. DURING ASSESSMENT PROCEE DINGS ASSESSEE HAS FILED DOCUMENTS SUPPORTING EXEMPTION U/S 10(38) OF THE ACT NAMELY BANK STATEMENTS, BROKER NOTES, ETC. PURCHASE AND SALE TOOK PLACE THR OUGH DOUBTLESS BANKING CHANNEL. NOTABLY NO BOOKS OF ACCOUNTS WERE THERE BE FORE AO AND LD CIT(A) DURING ASSESSMENT AND FIRST APPELLATE PROCEEDINGS. SHOW CAUSE NOTICE WAS ISSUED BY LD AO TO ASSESSEE AS TO WHY SECTION 68 SHO ULD NOT BE INVOKED AGAINST THE STATED LTCG EXEMPTION CLAIMED BY ASSESSEE U/S 1 0(38) OF THE ACT. ASSESSEE REPLIED TO SAME AND PLEADED FOR ACCEPTANCE OF LTCG CLAIMED IN RETURN OF INCOME. IN ASSESSMENT PROCEEDINGS LD AO HEAVILY RELIED ON ST ATEMENTS OF I) SH SUBRATA HALDER II) SUNIL DOKANIA III) HARSVARDHAN KAYAN IV) NARENDRA BALASIA TO DRAW ADVERSE INFERENCE AGAINST THE ASSESSEE , AND THESE STATEMENT WERE RECORDED U/S 133A AND SECTION 131 BY INVESTIGATION WING KOLKATA. FINALLY AO TREATED SHARE SALE PROCEEDS AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AMOUNTING TO 3 RS. 36,95,000 AND RS 110,850 AS COMMISSION PAID BY ASSESSEE WAS MADE U/S 69C OF THE ACT TOTALLING TO RS 38,05,850/- . THIS WA S CHALLENGED BY ASSESSEE BEFORE LD CIT(A) WHO VIDE ORDER DATED 30.11.2018 C ONFIRMED THE ACTION OF AO IN MAKING OF ADDITION U/S 68 AND SECTION 69C RESPEC TIVELY BY DISMISSING ASSESSEES APPEAL. THUS FEELING AGGRIEVED WITH ORD ER OF LD CIT(A) THIS APPEAL IS FILED BY ASSESSEE BEFORE THIS TRIBUNAL. 3. DURING THE COURSE OF HEARING BEFORE THIS TRIBUNA L, LD COUNSEL FOR THE ASSESSEE, SHRI KAPIL GOEL, ADVOCATE HAS ARGUED MAINL Y ON TWO ASPECTS OF THE CASE FIRSTLY ON APPLICABILITY OF SECTION 68 OF THE ACT TO SHARE SALE PROCEEDS ON MERE BASIS OF TRADE DATA AVAILABLE IN OFFICE OF AO AND WITHOUT BOOKS BEING AVAILABLE BEFORE AO AND LD CIT(A) QUA SHARE SALE TR ANSACTION AND SECONDLY ON IMPACT OF CROSS EXAMINATION BEING DENIED TO ASSESSE E DESPITE REPEATED REQUESTS BEFORE AO AND LD CIT(A). IN THIS CONTEXT, LD. AR HAS DRAWN MY ATTENTION TO FOLLOWING SPECIFIC LEGAL GROUNDS RAISED IN GROUNDS OF APPEAL : 2.1 THAT ORDER PASSED BY LD AO DATED 29/12/2016 AN D FURTHER ORDER PASSED BY LD CIT A DATED 30/11/2018 ARE BAD IN LAW IN AS MUCH AS ADDITION OF RS 38,05,850 /- IS MADE VIOLATING PRINCIPLES OF NATURAL JUSTICE WITHOUT CONFRONTING ANY INVESTIGATION WING REPORT RELEVANT EXTRACT, STATEMENTS RECORDED BY INVESTIGATION WING , ETC AND WITHOUT OFFERING CROSS EXAMINATION OF WITNESS WHOSE STATEME NTS IS EXTENSIVELY RELIED IN IMPUGNED ORDERS, WHICH IS SUFFICIENT TO Q UASH THE ASSESSMENT ORDER AND ORDER PASSED BY LD CIT(A), DESPITE REPEAT ED SPECIFIC REQUEST IN THIS REGARD . 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD AO AND LD CIT(A) ERRED IN MAKING AND SUSTAINING SUB JECT ADDITIONS WITHOUT APPRECIATING THAT LAW GIVES DISCRETION TO T HE ASSESSING OFFICER IN APPLYING DEEMING FICTIONS U/S 68 ETC AS FIRSTLY NO BOOKS ARE THERE IN EXISTENCE BEFORE LD AO IN WHICH ANY SUM IS FOUND CREDITED THEREIN SO AS TO INVOKE SECTION 68 OF THE ACT VIS A VIS SUBJECT LTCG IS CONCERNED , AND SECONDLY OPINION AND SATISFACTION U/S 68 HAS NOT BEEN OBJECTIVELY ARRIVED IN FACTS OF PRE SENT CASE ON DUE APPLICATION OF MIND THIRDLY ASSESSEE HAS NO ECONOMIC CAPACITY AND SOURCE TO GENERATE GIVEN AMOUNT OF UNACCOUNTED INCOME. FOURTHLY LAW REQUIRES THAT ADDITIONS UNDER SAID DEEMING FICT ION CANNOT BE MADE SANS INCRIMINATING MATERIAL BROUGHT ON RECORD WHICH IS COMPLETELY 4 LACKING IN PRESENT CASE. LASTLY SECTION 68 DOES NOT APPLY TO SALE OF SHARES WHERE NO CREDIT WITHIN MEANING OF SECTION 68 CAN BE SAID TO HAVE ARISEN THEREIN. 8. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD CIT(A) ERRED IN SUSTAINING THE ACTION OF LD AO IN M AKING ADDITION OF RS 38,05,850 /- WITHOUT APPRECIATING THAT NO OPPORTUNITY IS GIV EN TO THE ASSESSEE TO BE CONFRONTED WITH BACK MATERIAL RELIED EXTENSIVELY IN IMPUGNED ORDERS LIKE INVESTIGATION W ING REPORT ETC AND NO OPPORTUNITY TO CROSS EXAMINE THE REVENUES W ITNESS WAS GIVEN DESPITE SPECIFIC WRITTEN REQUEST IN THIS REGA RD MADE TO LD AO/CIT(A). 4. DURING HEARING LD AR HAS PLACED ON RECORD THE WR ITTEN SUBMISSIONS AS WELL AS GIST OF CASE LAWS TO SUPPORT HIS ARGUMENTS WHIC H WAS DULY GIVEN TO LD DR ALSO. HE REQUESTED THAT KEEPING IN VIEW OF THE GR OUNDS RAISED BY ASSESSEE AS WELL AS HIS WRITTEN SUBMISSIONS ALONGWITH CASE LAWS , ADDITION IN DISPUTE MAY BE DELETED BY ACCEPTING THE APPEAL FILED BY THE ASSESS EE. 5. ON THE CONTRARY, LD DR HAS ARGUED THAT NO WHERE ASSESSEE HAS BEEN ABLE TO ESTABLISH HIS/HER CASE SUCCESSFULLY AND MERELY T AKING SHIELD OF TECHNICALITIES CANT WISH AWAY THE ONUS TO PROVE THE GENUINENESS OF EXEMPTION. FURTHER PROCEEDINGS WITH HIS ARGUMENT LD DR HAS STATED WITH PASSION THAT LD AO AND LD CIT(A) HAVE DISCUSSED AT GREAT LENGTH THE SERIOUS FL AW AND DEFICIENCY IN DEFENSE SET UP BY ASSESSEE WHICH IS NOT ADEQUATELY CONTROVE RTED BY LD AR. LD DR HAS SUPPORTED THE INVOCATION OF SECTION 68 OF THE ACT O N THE BROADER PRINCIPLE OF BURDEN TO GIVE SATISFACTORY EXPLANATION ON PART OF ASSESSEE AND THUS ARGUED FOR CONFIRMING THE ORDERS OF AO AND LD CIT(A). LD DR HA S TAKEN SUPPORT OF SECTION 292B OF THE ACT PLEADING FOR ERROR IF ANY BEING CURA BLE AND HAS REQUESTED FOR CONFIRMING ADDITION IN SECTION 69/69A OF THE ACT REQ UESTING FOR USE OF WIDER DISCRETION AVAILABLE TO THE TRIBUNAL. LD DR HAS FUR THER HIGHLIGHTED THAT MERE LACK OF CROSS EXAMINATION IS NOT FATAL TO REVENUES CASE AND SAME IS AT BEST A IRREGULARITY ONLY. LD DR HAS FURTHER EXHORTED BEFOR E ME THAT SUCH KIND OF CASES DOES NOT DESERVE ANY SYMPATHY OF THE TRIBUNAL AS EN TIRE TRANSACTION ARE PROVED 5 TO BE SHAM AND BOGUS. CONTINUING WITH HIS ARGUMENTS LD DR PREYED THAT GROUNDS RAISED BY LD AR ARE DEVOID OF MERITS AND DOE S NOT CARRY ANY LEGAL WEIGHT. FINALLY LD DR HAS RELIED ON CASE LAWS REFER RED IN ORDERS OF AO AND LD CIT(A) PRAYING FOR DISMISSAL OF ALL THESE APPEALS. 6. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS. ON DUE CONSIDERATION OF THE ENTIRE CONSPECTUS OF THE CASE, I PROCEED TO ADJUDICATE THE APPEALS ON AFORESAID THREE GROUNDS. THE FIRST ISSUE OF APPLICABILITY OF SECTION 68 OF THE ACT, IT IS FIRSTLY APPROPRIATE TO REFER TO TE XT OF SECTION 68 OF THE ACT: CASH CREDITS. 68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE T HEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINI ON OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITE D MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR : PROVIDED THAT WHERE THE ASSESSEE IS A COMPANY (NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTER ESTED), AND THE SUM SO CREDITED CONSISTS OF SHARE APPLICATI ON MONEY, SHARE CAPITAL, SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, ANY EXPLANATION OFFERED BY SU CH ASSESSEE-COMPANY SHALL BE DEEMED TO BE NOT SATISFAC TORY, UNLESS (A) THE PERSON, BEING A RESIDENT IN WHOSE NAME SUCH CREDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALSO OFFERS A N EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH SUM SO CREDITED; AND (B) SUCH EXPLANATION IN THE OPINION OF THE ASSESSI NG OFFICER AFORESAID HAS BEEN FOUND TO BE SATISFACTORY: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IF THE PERSON, IN WHOSE NAME THE SUM RE FERRED TO THEREIN IS RECORDED, IS A VENTURE CAPITAL FUND OR A VENTURE CAPITAL COMPANY AS REFERRED TO IN CLAUSE (23FB) OF SECTION 10. 6.1 IF OBJECTIVELY AND DISPASSIONATELY SECTION 68 O F THE ACT IS DISSECTED FOLLOWING WOULD BE KEY INGREDIENTS OF THE SAME: 6 6.1.1 FIRSTLY IS REQUIRES THAT WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR THAT IS THERE IS A SUM FOUND T O HAVE BEEN CREDITED IN BOOKS OF ASSESSEE FOR PREVIOUS YEAR WHICH MANDATES EXISTENCE OF BOOKS OF ACCOUNTS OF ASSESSSEE SANS WHICH SECTION 68 CANT BE PRESSED INTO SERVICE; NOTABLY BOOKS OF ACCOUNTS ARE ANALYSED IN FOLLOWING PROVISIONS OF THE ACT: A) SECTION 2 CLAUSE (12A) DEFINES 'BOOKS OR BOOKS OF ACCOUNT' INCLUDES LEDGERS, DAY-BOOKS, CASH BOOKS, ACCOUNT-BO OKS AND OTHER BOOKS, WHETHER KEPT IN THE WRITTEN FORM OR AS PRINT-OUTS OF DATA STORED IN A FLOPPY, DISC, TAPE OR ANY OTHER FO RM OF ELECTRO- MAGNETIC DATA STORAGE DEVICE; B) SECTION 44AA STATES FOR MAINTENANCE OF ACCOUNTS BY CERTAIN PERSONS CARRYING ON PROFESSION OR BUSINESS AS :. 44AA. (1) EVERY PERSON CARRYING ON LEGAL, MEDICAL, ENGIN EERING OR ARCHITECTURAL PROFESSION OR THE PROFESSION OF AC COUNTANCY OR TECHNICAL CONSULTANCY OR INTERIOR DECORATION OR ANY OTHER PROFESSION AS IS NOTIFIED BY THE BOARD IN THE OFFIC IAL GAZETTE SHALL KEEP AND MAINTAIN SUCH BOOKS OF ACCOUNT AND OTHER D OCUMENTS AS MAY ENABLE THE ASSESSING OFFICER TO COMPUTE HIS TOTAL INCOME IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT. (2) EVERY PERSON CARRYING ON BUSINESS OR PROFESSION [NOT BEING A PROFESSION REFERRED TO IN SUB-SECTION (1)] SHALL, (I) IF HIS INCOME FROM BUSINESS OR PROFESSION EXC EEDS ONE LAKH TWENTY THOUSAND RUPEES OR HIS TOTAL SALES, TURNOVER OR GROSS RECEIPTS, AS THE CASE MAY BE, IN BUSINESS OR PROFES SION EXCEED OR EXCEEDS TEN LAKH RUPEES IN ANY ONE OF THE THREE YEARS IMMEDIATELY PRECEDING THE PREVIOUS YEAR; OR (II) WHERE THE BUSINESS OR PROFESSION IS NEWLY SET UP IN ANY PREVIOUS YEAR, IF HIS INCOME FROM BUSINESS OR PROFE SSION IS LIKELY TO EXCEED ONE LAKH TWENTY THOUSAND RUPEES OR HIS TO TAL SALES, TURNOVER OR GROSS RECEIPTS, AS THE CASE MAY BE, IN BUSINESS OR PROFESSION ARE OR IS LIKELY TO EXCEED TEN LAKH RUPE ES, DURING SUCH PREVIOUS YEAR; OR (III) WHERE THE PROFITS AND GAINS FROM THE BUSINES S ARE DEEMED TO BE THE PROFITS AND GAINS OF THE ASSESSEE UNDER S ECTION 44AE OR SECTION 44BB OR SECTION 44BBB, AS THE CASE MAY BE, AND THE ASSESSEE HAS CLAIMED HIS INCOME TO BE LOWER THAN THE PROFITS OR GAINS SO DEEMED TO BE THE PROFITS AND GA INS OF HIS BUSINESS, AS THE CASE MAY BE, DURING SUCH PREVIOUS YEAR; OR 7 47 [(IV) WHERE THE PROVISIONS OF SUB-SECTION (4) OF SE CTION 44AD ARE APPLICABLE IN HIS CASE AND HIS INCOME EXCE EDS THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TA X IN ANY PREVIOUS YEAR,] KEEP AND MAINTAIN SUCH BOOKS OF ACCOUNT AND OTHER D OCUMENTS AS MAY ENABLE THE ASSESSING OFFICER TO COMPUTE HIS TOTAL INCOME IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT: \48 [ PROVIDED THAT IN THE CASE OF A PERSON BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, THE PROVISIONS OF CLAUSE (I) AND CLAUSE (II) SHALL HAVE EFFECT, AS IF FOR THE WORDS 'ONE LA KH TWENTY THOUSAND RUPEES', THE WORDS 'TWO LAKH FIFTY THOUSAN D RUPEES' HAD BEEN SUBSTITUTED : PROVIDED FURTHER THAT IN THE CASE OF A PERSON BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, THE PROVISI ONS OF CLAUSE (I) AND CLAUSE (II) SHALL HAVE EFFECT, AS IF FOR TH E WORDS 'TEN LAKH RUPEES', THE WORDS 'TWENTY-FIVE LAKH RUPEES' HAD BE EN SUBSTITUTED.] (3) THE BOARD MAY, HAVING REGARD TO THE NATURE OF T HE BUSINESS OR PROFESSION CARRIED ON BY ANY CLASS OF PERSONS, P RESCRIBE 49 , BY RULES, THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS (IN CLUDING INVENTORIES, WHEREVER NECESSARY) TO BE KEPT AND MAI NTAINED UNDER SUB-SECTION (1) OR SUB-SECTION (2), THE PARTI CULARS TO BE CONTAINED THEREIN AND THE FORM AND THE MANNER IN WH ICH AND THE PLACE AT WHICH THEY SHALL BE KEPT AND MAINTAINED. (4) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECT ION (3), THE BOARD MAY PRESCRIBE, BY RULES, THE PERIOD FOR WHICH THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS TO BE KEPT AND MAINTAIN ED UNDER SUB-SECTION (1) OR SUB-SECTION (2) SHALL BE RETAINE D. 6.2 FROM ABOVE PROVISIONS IT IS CRYSTAL CLEAR THAT MERE BANK STATEMENT WHICH IS ISSUED BY BANK TO ITS CLIENT/ACCOUNT HOLDER CAN T BE ELEVATED TO STATUS OF BOOKS MAINTAINED BY ASSESSEE WITHIN THE MEANING OF SECTIO N 2 CLAUSE 12A AND SECTION 44AA OF THE ACT. 6.3 IT IS NOTED THAT JUDICIAL ANALYSIS OF BOOKS OF ACCOUNTS IS AVAILABLE IN HONBLE BOMBAY HIGH COURT DECISION IN CASE OF SHERA TON APPARELS REPORTED AT 256 ITR 20 RELEVANT EXTRACT IS REPRODUCED BELOW FOR SAKE OF READY REFERENCE: ..27. THE APPELLANTS' CASE IS THAT THE DIARIES, WH ICH WERE SEIZED, WERE REGULARLY MAINTAINED IN THE REGULAR CO URSE OF BUSINESS AS REGULAR BOOKS OF ACCOUNT, WHICH CONTAIN ED ALL THE TRANSACTIONS ENTERED INTO BY THE APPELLANTS. IT REF LECTED A TRUE STATE OF ACCOUNTS CONSTITUTING THE REAL CASH B OOK. AS 8 SUCH HIS CASE SQUARELY FALLS WITHIN EXPLANATION 5 T O SECTION 271(1)(C) OF THE ACT. 28. IN ORDER TO APPRECIATE THE SCOPE OF CLAUSE (1) TO EXPLANATION 5, IT WOULD BE NECESSARY TO UNDERSTAND THE WORDS IN WHICH THEY ARE APPEARING UNDER THE SAID EXPLANAT ION. BEFORE CONCENTRATING ON THE SPECIFIC MEANING THEREO F, IN THE LIGHT OF THE LEGISLATIVE INTENT BEHIND CLAUSE (1), LET US SEE, WHAT DO YOU MEAN BY 'BOOKS OF ACCOUNT'. IF 'BOOKS O F ACCOUNT' IS CONSIDERED IN ISOLATION, THEN, IT MAY M EAN BOOKS IN WHICH MERCHANTS, TRADERS AND BUSINESSMEN GENERAL LY KEEP THEIR ACCOUNTS AND ARE MAINTAINED FOR RECORDING (A) ALL RECEIPTS AND EXPENSES WITH MATTERS RELATING THERETO ; (B) ALL SALES AND PURCHASES; AND (C) THE ASSETS AND LIABILI TIES. THEY ARE THE DOCUMENTS AND LEDGERS WHICH MUST BE PREPARE D AND KEPT BY THE BUSINESS ENTITY INCLUDING THE PROFIT AN D LOSS ACCOUNT AND THE BALANCE-SHEET. IN TRADITIONAL TERMS , BOOKS MEANS A COLLECTION OF SHEETS OF PAPERS BOUND TOGETH ER WITH THE INTENTION THAT SUCH BINDING SHALL BE PERMANENT AND PAPERS USED ARE KEPT COLLECTIVELY IN ONE VOLUME. IT MAY ALSO BE ASSUMED THAT IT CONNOTES THE INTENTION THAT IT S HOULD SERVE AS A PERMANENT RECORD. AT THE SAME TIME, THE TERM O F ACCOUNT, I.E., TO ACCOUNT, MEANS TO RECKON, AND IT IS DIFFICULT TO CONCEIVE OF ANY ACCOUNTING WHICH DOES NOT INVOLV E EITHER ADDITIONS OR SUBTRACTIONS OR BOTH OF THESE OPERATIO NS OF ARITHMETIC. A BOOK WHICH CONTAINS SUCCESSIVE ENTRIE S OF ITEMS MAY BE A GOOD MEMORANDUM BOOK; BUT UNTIL THOSE ENTR IES ARE TOTALLED OR BALANCED, OR BOTH, AS THE CASE MAY BE, THERE IS NO RECKONING AND NO ACCOUNTS. A BOOK WHICH MEREL Y CONTAINS ENTRIES OF ITEMS OF WHICH NO ACCOUNT IS MA DE AT ANY TIME, IS NOT A 'BOOK OF ACCOUNT' IN A COMMERCIAL SE NSE. 29. IN DIFFERENT LEGISLATIONS THE CONCEPT OF BOOKS OF ACCOUNT HAS BEEN EMPLOYED. ONE OF SUCH OLDEST LEGISLATION I S THE LAW OF EVIDENCE. SECTION 34 REFERS TO THE WORDS 'ENTRIE S IN BOOKS OF ACCOUNT'. SECTION 34 HAS BEEN INTERPRETED BY VARI OUS HIGH COURTS INCLUDING THE APEX COURT. THE SUPREME COURT I N THE RECENT JUDGMENT DELIVERED IN THE CASE OF ISHWAR DAS S JAIN V. SOHAN LAL, HAS OBSERVED AS UNDER (HEADNOTE) : 'UNDER SECTION 34 SANCTITY IS ATTACHED IN THE LAW O F EVIDENCE TO BOOKS OF ACCOUNT IF THE BOOKS ARE INDEED 'ACCOUN T BOOKS', I.E., IN ORIGINAL IF THEY SHOW, ON THEIR FACE, THAT THEY ARE KEPT IN THE 'REGULAR COURSE OF BUSINESS'.' 30. SO, THE ACCOUNTS UNDER SECTION 34 MEANS ACCOUNTS WHICH ARE MAINTAINED IN THE REGULAR COURSE OF BUSINESS. 31. THE INCOME-TAX LEGISLATION HAS BEEN USING THE T ERM 'BOOK' OR 'BOOKS OF ACCOUNT' RIGHT FROM ITS INCEPTI ON. BUT, THESE TERMS ARE DEFINED IN THE ACT FOR THE FIRST TI ME BY 9 THE FINANCE ACT, 2001, WITH EFFECT FROM JUNE 1, 200 1. SECTION 2(12A) DEFINES THE SAID TERMS TO MEAN : '(12A) 'BOOKS OR BOOKS OF ACCOUNT' INCLUDES LEDGERS , DAY- BOOKS, CASH BOOKS, ACCOUNT BOOKS, AND OTHER BOOKS, WHETHER KEPT IN THE WRITTEN FORM OR AS PRINT-OUTS OF DATA S TORED IN A FLOPPY, DISC, TAPE OR ANY OTHER FORM OF ELECTROMAGN ETIC DATA STORAGE DEVICE.' 32. THEN ABOVE DEFINITION APPEARS TO HAVE BEEN FRAM ED BY THE LEGISLATURE KEEPING IN VIEW THE DEVELOPMENT OF COMPUTER TECHNOLOGY. IF THE NEWLY INSERTED DEFINITION OF BOO KS OF ACCOUNT INSERTED IN THE INCOME-TAX ACT IS EXAMINED IN CONTRAST TO THE DEFINITION GIVEN UNDER SECTION 34 OF THE EVIDENCE ACT, IT WILL BE CLEAR THAT THE STRINGENT R EQUIREMENTS OF SECTION 34 ARE NOT TO BE FOUND IN THE SAID DEFINI TION. OBVIOUSLY, FOR THE SIMPLE REASON THAT THE PURPOSE O F BOTH THE LEGISLATIONS ARE DIFFERENT. SO FAR AS THE CASES AT H AND ARE CONCERNED, THEY RELATE TO THE ASSESSMENT YEARS 1984 -85 TO 1988-89 ; MUCH PRIOR TO THE PERIOD OF INTRODUCTION OF THE DEFINITION WHICH WAS INTRODUCED FOR THE FIRST TIME UNDER THE FINANCE ACT, 2001. 33. IN ORDER TO APPRECIATE THE SUBMISSIONS KEEPING IN VIEW THE FACTS OF THE PRESENT CASES, ONE HAS TO CONCENTR ATE NOT ONLY ON THE BARE TERM 'BOOKS OF ACCOUNT' BUT ALSO O N THE WORDS IN WHOSE COMPANY THE SAID TERM IS APPEARING. THE EXTRACTED SUB-CLAUSE APPEARING HEREINBELOW WILL HAV E TO BE UNDERSTOOD PROPERLY AND APPROPRIATE MEANING WILL HA VE TO BE ASSIGNED KEEPING IN MIND THE BACKDROP IN WHICH THE CONCEPT OF 'BOOKS OF ACCOUNT' IS REFERRED TO IN SUB-CLAUSE ( 1) OF CLAUSE (B) OF EXPLANATION 5. THE WORDS USED ARE : 'SUCH INCOME IS, OR THE TRANSACTIONS RESULTING IN S UCH INCOME ARE RECORDED . . . IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME .. . BEFORE THE SAI D DATE.' 34. THE TERM 'BOOKS OF ACCOUNT' REFERRED TO IN SUB- CLAUSE (1) OF EXPLANATION 5 TO SECTION 271(1)(C)MEANS BOOKS OF ACCOUNT WHICH HAVE BEEN MAINTAINED FOR DETERMINING ANY SOUR CE OF INCOME. THE TERM 'SOURCE OF INCOME' AS UNDERSTOOD I N THE INCOME-TAX ACT IS TO IDENTIFY OR CLASSIFY INCOM E SO AS TO DETERMINE UNDER WHICH HEAD, OUT OF THE VARIOUS HEAD S OF INCOME REFERRED TO IN SECTION 14 OF THE ACT, IT WOU LD FALL FOR THE PURPOSES OF COMPUTATION OF THE TOTAL INCOME FOR CHARGING INCOME-TAX THEREON. THUS, THE TERM 'BOOKS OF ACCOUNT' REFERRED TO IN THIS RELEVANT SUB-CLAUSE OF EXPLANAT ION 5 WOULD MEAN THOSE BOOKS OF ACCOUNT WHOSE MAIN OBJECT IS TO PROVIDE CREDIBLE DATA AND INFORMATION TO FILE THE TAX RETURNS . A CREDIBLE ACCOUNTING RECORD PROVIDES THE BEST FOUNDATION FOR FILING RETURNS OF BOTH DIRECT AND IN DIRECT TAXES. 10 ACCOUNTING IS CALLED A LANGUAGE OF BUSINESS. ITS AI M IS TO COMMUNICATE FINANCIAL INFORMATION ABOUT THE FINANCI AL RESULTS. THIS IS NOT POSSIBLE UNLESS THE MAIN OBJECTIVES OF THE BOOKS OF ACCOUNT ARE TO MAINTAIN A RECORD OF BUSINE SS : TO CALCULATE PROFIT EARNED OR LOSS SUFFERED DURING THE PERIOD OF TIME, TO DEPICT THE FINANCIAL POSITION OF THE BUSINESS ; TO PORTRAY THE LIQUIDITY POSITION ; TO P ROVIDE UP TO DATE INFORMATION OF ASSETS AND LIABILITIES WI TH A VIEW TO DERIVE INFORMATION SO AS TO PREPARE A PROFI T AND LOSS ACCOUNT AND DRAW A BALANCE-SHEET TO DETERMINE INCOME AND SOURCE THEREOF . THUS, THE TERM 'BOOKS OF ACCOUNT' REFERRED TO IN EXPLANATION 5 MUST ANSWER T HE ABOVE QUALIFICATIONS . IT CANNOT BE UNDERSTOOD TO MEAN COMPILATION OR COLLECTIONS OF SHEETS IN ONE VOLUME. THE BOOKS OF ACCOUNT REFERRED TO ARE THOSE BOOKS OF ACCOUNT W HICH ARE MAINTAINED FOR THE PURPOSES OF THE INCOME-TAX ACT A ND NOT DIARIES WHICH ARE MAINTAINED MERELY AS A MAN'S PRIV ATE RECORD ; PREPARED BY HIM AS MAY BE IN ACCORDANCE WI TH HIS PLEASURE OR CONVENIENCE TO SECRETLY RECORD SECRET, UNACCOUNTED CLANDESTINE TRANSACTIONS NOT MEANT FOR THE PURPOSES OF THE INCOME-TAX ACT, BUT WITH SPECIFIC I NTENTION OR DESIRE ON THE PART OF THE ASSESSEE TO HIDE OR CONCE AL INCOME SO AS TO AVOID IMPOSITION OF TAX THEREON. 35. THE WORDS IN EXPLANATION 5 'BOOKS OF ACCOUNT, I F ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME' ARE IMP ORTANT WORDS SIGNIFYING THE LEGISLATIVE INTENT EMBODIED IN THE EXPLANATION WARRANTING GRANT OF IMMUNITY FROM PENAL TY. THE LEGISLATIVE INTENT IS TO ADMIT ONLY THOSE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE ON HIS OWN BEHALF AS BY THEIR VERY NATURE AND CIRCUMSTANCES ARE MAINTAINED FOR TH E PURPOSES OF DRAWING THE SOURCE OF INCOME. THEREFORE, WHEN BOOKS OF ACCOUNT ARE TENDERED FOR CLAIMING THE BENE FIT OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT, IT MUST BE SHOWN TO BE A BOOK, THAT BOOK MUST BE A BOOK OF ACCOUNT, AND ON THE TOP OF IT THAT MUST BE ONE MAINTAINED FOR THE PURPOSES OF DRAWING THE SOURCE O F INCOME UNDER THE INCOME-TAX ACT . THESE ESSENTIAL REQUIREMENTS MUST BE CAREFULLY OBSERVED WHILE IMPLEMENTING TAX LEGISLATION IN THE COUNTRY WHERE SECRET AND PARALLEL ACCOUNTS BASED ON FRAUDS AND FORGERY ARE EXTREMELY COMMON AND RESPONSIBILITY OF KEEPING AND MAINTAINING ACCOUNTS FOR THE PURPOSES O F THE TAX LEGISLATION IS HONOURED IN THE BREACH RATHE R THAN THE OBSERVANCE. 6.4 ABOVE DICTUM LEAVES NO ROOM FOR ANY POSSIBLE DOU BT THAT CREDIT IN BANK ACCOUNT SIMPLY OR ANY OTHER RAW INFORMATION AVAILAB LE TO AO CANT BE LOOSELY CALLED AS BOOKS OF ACCOUNT U/S 68 OF THE ACT. 11 7. SECONDLY IT REQUIRES ..OPINION ON PART OF AS SESSING OFFICER VIS A VIS EXPLANATION OF ASSESSEE IF ANY WHICH OPINION IN CLE AR PRESCRIPTION OF STATUTE IS EXCLUSIVELY RESERVED FOR ASSESSING OFFICER WHICH IS DEFINED U/S 2 CLAUSE 7A AS ASSESSING OFFICER' MEANS THE ASSISTANT COMMISSIONER OR DEPUTY COMMISSIONER OR ASSISTANT DIRECTOR OR DEPUTY DIRECTOR OR THE INCO ME-TAX OFFICER WHO IS VESTED WITH THE RELEVANT JURISDICTION BY VIRTUE OF DIRECTI ONS OR ORDERS ISSUED UNDER SUB- SECTION (1) OR SUB-SECTION (2) OF SECTION 120 OR AN Y OTHER PROVISION OF THIS ACT, AND THE ADDITIONAL COMMISSIONER OR ADDITIONAL DIRECTO R OR JOINT COMMISSIONER OR JOINT DIRECTOR WHO IS DIRECTED UNDER CLAUSE (B) OF SUB-SECTION (4) OF THAT SECTION TO EXERCISE OR PERFORM ALL OR ANY OF THE POWERS AND FUNCTIONS CONFERRED ON, OR ASSIGNED TO, AN ASSESSING OFFICER UNDER THIS ACT SO SATISFACTION REQUIRED ON PART OF AO U/S 68 OF THE ACT (WHICH PHRASE IS ALSO EMPLOY ED IN SECTION 69 AND SECTION 69A ETC) CANT BE IMPLANTED BY ANY OTHER AUTHORITY. THIS VIEW IS FORTIFIED BY THE FOLLOWING DECISIONS:- INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012-13) SMT. TRIPAT KAUR DATE OF PRONOUNCEMENT 09/10/2018 IF AUTHORITY IS GIVEN EXPRESSLY BY AFFIRMATIVE WO RDS UPON A DEFINED CONDITION, THE EXPRESSION OF THAT CONDITION EXCLUDES THE DOING OF THE ACT AUTHORIZED UNDER OTHER CIRCUMSTANC ES THAN THOSE AS DEFINED. IT IS ALSO ESTABLISHED PRINCIPLE OF LAW THAT IF A PARTICULAR AUTHORITY HAS BEEN DESIGNATED TO PERFORM AN ACTION ON ANY PARTICULAR ISSUE, THEN IT IS THAT AUTHORITY ALO NE WHO SHOULD DO THAT ACTION. WE DRAW SUPPORT FROM VARIOUS DECISI ON OF HONORABLE HIGH COURTS IN 346 ITR 343 ( BOM) , 345 I TR 223 ( DEL ) AND ALSO OF THE HONOURABLE SUPREME COURT ANIR UDHSINHJI KARANSINHJI JADEJA V. STATE OF GUJARAT [1995] 5 SCC 3 02 WHERE IN HON. SUPREME COURT HELD AS UNDER :- 13. IT HAS BEEN STATED BY WADE AND FORSYTH IN ADMINISTRATIVE LAW, 7TH EDITION AT PAGES 358 AND 359 UNDER THE HEADING SURRENDER, ABDICATION, DICTATION AND S UB- HEADING 'POWER IN THE WRONG HANDS' AS BELOW:- 'CLOS ELY AKIN TO 12 DELEGATION, AND SCARCELY DISTINGUISHABLE FROM IT IN SOME CASES, IS ANY ARRANGEMENT BY WHICH A POWER CONFERRED UPON ONE AUTHORITY IS IN SUBSTANCE EXERCISED BY ANOTHER.THE PROPER AUTHORITY MAY SHARE ITS POWER WITH SOMEONE ELSE, OR MAY ALLOW SOMEONE ELSE TO DICTATE TO IT BY DECLINING TO ACT W ITHOUT THEIR CONSENT OR BY SUBMITTING TO THEIR WISHES OR INSTRUC TIONS. THE EFFECT THEN IS THAT THE DISCRETION CONFERRED BY PAR LIAMENT IS EXERCISED, AT LEAST IN PART, BY THE WRONG AUTHORITY , AND THE RESULTING DECISION IS ULTRA VIRES AND VOID. SO STRIC T ARE THE COURTS IN APPLYING THIS PRINCIPLE THAT THEY CONDEMN SOME A DMINISTRATIVE ARRANGEMENTS WHICH MUST SEEM QUITE NATURAL AND PROP ER TO THOSE WHO MAKE THEM.....'. 'MINISTERS AND THEIR DEP ARTMENTS HAVE SEVERAL TIMES FALLEN FOUL OF THE SAME RULE, NO DOUBT EQUALLY TO THEIR SURPRISE....': 8. AFTER THIS DETAILED ANALYSIS OF VARIOUS INGREDIEN TS OF SECTION 68 OF THE ACT, I HAVE NO HESITATION TO ACCEPT THE JURISDICTIONAL P LEA RAISED BY LD AR THAT INVOCATION OF SECTION 68 IN EXTANT FACTS SANS VALID AND PROPER BOOKS OF ACCOUNT OF ASSESSEE IS INVALID AND ACCORDINGLY ADDITION MADE B Y AO AS SUSTAINED BY LD CIT(A) IS HELD TO BE INCORRECT AND REVERSED. SIGNIFI CATION OF CORRECT ASSUMPTION OF JURISDICTION IS HIGHLIGHTED IN THE FOLLOWING DECISI ONS OF HONBL E DELHI AND MADRAS HIGH COURT: IN THE HIGH COURT OF DELHI AT NEW DELHI + WRIT PETITION (CIVIL) NO. 5937/2016 RESERVED ON : 10TH MAY, 2018 DATE OF DECISION: 30TH NOVEMBER, 2018 SHAH E NAAZ JUDGE ..... PETITIONER (SPEAKING THROUGH HIS LORDSHIP AS HE THEN WAS HONB LE JUSTICE MR SANJIV KHANNA) 31. AUTHORITY AND POWER TO CONDUCT SEARCH AND SEI ZURE OPERATIONS IS STRIDENT AND CAUSTIC POWER AUTHORIZED BY LAW TO BE TAKEN RECOURSE TO WHEN THE CONDITIONS MENTIONED UNDER DIFFERENT CLAUSES OF SECTION 132 (1) OF THE ACT ARE SATISFIED. CONSTITUTIONAL VALIDITY OF THE SAID PROVISION HAS B EEN UPHELD DUE TO THE SAFEGUARDS PROVIDED BY THE SECTION ITSEL F, TO PREVENT AND CHECK CASES OF ABUSE AND MISUSE. INVEST IGATION AND DETECTION OF ECONOMIC OFFENCES IS ONEROUS AND A DIFFICULT TASK, FOR OFTEN EVIDENCE AND MATERIAL IS CONCEALED AND SUBTERFUGE IS ADOPTED TO PREVENT AND DEFLECT DETECT ION. THIS, HOWEVER, DOES NOT GIVE LIBERTY TO THE AUTHORITIES T O DISREGARD AND AUTHORIZE SEARCH AND SEIZURE OPERATIONS WITHOUT 13 FORMATION OF REQUISITE BELIEF. POWER AND AUTHORITY GIVEN TO THE AUTHORITIES MUST BE EXERCISED IN TERMS OF THE STATUTE AND NOT CONTRARY TO AND IN VIOLATION OF JURISDICTIONAL REQUIREMENTS. POWER, AS GIVEN, ALSO IMPOSES AN OBLIGATION ON THE AUTHORITIES TO SATISFY JURISDICTIONAL PRE-CONDITIONS FOR THE EXERCISE OF P OWER TO BE HELD TO BE VALID AND NOT BAD AND CONTRARY TO LAW ABOVE PASSAGE AND INGEMINATED WORDS MAKES IT LUCULE NT THAT . POWER AND AUTHORITY GIVEN TO THE AUTHORITIES MUST B E EXERCISED IN TERMS OF THE STATUTE AND NOT CONTRARY TO AND IN VIOLATION OF JURISDICTIONAL REQUIREMENTS. PO WER, AS GIVEN, ALSO IMPOSES AN OBLIGATION ON THE AUTHORI TIES TO SATISFY JURISDICTIONAL PRE-CONDITIONS FOR THE EX ERCISE OF POWER TO BE HELD TO BE VALID AND NOT BAD AND CONTRARY TO LAW WHICH FITS IN PRESENT FACTS FULLY. ON JURISDICTIONAL FACT , IN RECENT DECISION OF MADR AS HIGH COURT IN CASE OF KARTI CHIDAMBRAM (2/11/2018) HAS SUCCINCTLY OBSERVED THAT: 168. FROM THE ABOVE JUDGMENTS, IT COULD BE DEDUCED THAT EXISTENCE OF JURISDICTIONAL FACT IS A SINE QUA NON FOR EXERCISE OF POWER. A JURISDICTIONAL FACT IS ONE ON EXISTENCE OR NON;EXISTENCE OF WHICH DEPENDS JURISDICTION ON A CO URT OR TRIBUNAL OR AUTHORITY, AS THE CASE MAY BE. IF THE J URISDICTIONAL FACT DOES NOT EXIST, THE COURT, AUTHORITY OR OFFICE R CANNOT ACT. IF A COURT OR AUTHORITY HAS WRONGLY ASSUMES THE EXI STENCE OF SUCH FACT, THE ORDER CAN BE QUASHED BY A WRIT OF CE RTIORARI. 169. IF THE JURISDICTIONAL FACT EXISTS, THE AUTHORI TY CAN PROCEED FURTHER AND EXERCISE HIS POWER AND TAKE A D ECISION IN ACCORDANCE WITH LAW. NO COURT OR TRIBUNAL, STATUTOR Y AUTHORITY CAN ASSUME JURISDICTION, IN RESPECT OF A MATTER WHI CH THE STATUTE DOES NOT CONFER ON IT. ERROR ON JURISDICTIO NAL FACT, RENDERS THE ORDER, ULTRA VIRES AND BAD. IN THE CAS E ON HAND, AS RIGHTLY SUBMITTED BY MR.GOPAL SUBRAMANIUM, LEARN ED SENIOR COUNSEL, THAT IN THE LIGHT OF SECTIONS 2(11) AND 50 OF THE BLACK MONEY ACT, 2015, JURISDICTIONAL FACT TO E NQUIRE DOES NOT EXIST AND THAT THE PRINCIPAL DIRECTOR OF INCOME TAX/FIRST RESPONDENT HEREIN, HAS ASSUMED JURISDICTION THAT HE CAN ENQUIRE INTO THE MATTER UNDER SECTION 55 OF THE ACT , BY ISSUING A SHOW CAUSE NOTICE. 8.1 ACCORDINGLY PLEA OF LD DR THAT SECTION 292B MAY CURE THE DEFECT OF WRONG INVOCATION OF SECTION 68 CANT BE ACCEPTED BEING JU RISDICTIONAL ERROR AND SAME IS THE VIEW OF HONBLE DELHI HIGH COURT IN CASE OF JCB CASE REPORTED AT 398 ITR 189 WHEREIN IT IS HELD THAT: 19. AS ALREADY NOTED, THE FINAL ASSESSMENT ORDER O F THE AO STOOD VITIATED NOT ON ACCOUNT OF MERE IRREGULARITY BUT SINCE IT 14 WAS AN INCURABLE ILLEGALITY. SECTION 292B OF THE ACT WOULD NOT PROTECT SUCH AN ORDER. THIS HAS BEEN EXPLAINED BY T HIS COURT IN ITS DECISION DATED 17TH JULY 2015 PASSED IN ITA NO. 275/2015 (PR. COMMISSIONER OF INCOME TAX, DELHI-2, NEW DELHI V. CITI FINANCIAL CONSUMER FINANCE INDIA PVT. LTD.) WHERE IT WAS HELD: 'SECTION 292B OF THE ACT CANNOT BE READ TO CONFER JU RISDICTION ON THE AO WHERE NONE EXISTS. THE SAID SECTION ONLY PROTECTS RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OT HER PROCEEDINGS FROM ANY MISTAKE IN SUCH RETURN OF INCO ME, ASSESSMENT NOTICES, SUMMONS OR OTHER PROCEEDINGS, PROVIDED THE SAME ARE IN SUBSTANCE AND IN EFFECT IN CONFORMITY WITH THE INTENT OF PURPOSES OF THE ACT.' 20. THE COURT FURTHER OBSERVED THAT SECTION 292B OF THE ACT CANNOT SAVE AN ORDER NOT PASSED IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. AS THE COURT EXPLAINED, 'THE ISSUE INVOLVED IS NOT ABOUT A MISTAKE IN THE SAID ORDER B UT THE POWER OF THE AO TO PASS THE ORDER.' 8.2 FURTHER MY DECISION ON INCORRECT APPLICABILITY OF SECTION 68 OF THE ACT IN PRESENT FACTS IS SUPPORTED BY FOLLOWING CHAIN OF DE CISIONS WHICH ARE RESPECTFULLY APPLIED AND FOLLOWED BY THE TRIBUNAL: S.NO. & PARTICULARS / TITLE OF DECISION BENCH (CITATION / REF. NO./ ORDER NO. HELD (GIST IN BRIEF) RELEVANT PARA. 1. BABBAL BHATIA A BENCH DELHI ITAT ITA 5430 &5432/DEL/2011( 08/06/2018) PARA 19 (PARA 14 TO 26) 2.ZAHEER ABDULHAMID MULANI SMC PUNE BENCH (BEFORE MS SUSHMA CHOWLA AND SHRI ANIL CHATURVEDI) ITA 862/PUN/2017 (31.08.2018) PARA 13 3. LATIF EBRAHIM PATEL MUMBAI A BENCH ITA 7097/MUM/2013 (23.03.2018) PARA 7 & PARA 8 (MUMBAI ITAT DECISIONS IN 164 ITD 296 & 160 ITD 605 FOLLOWED) 4. SHAMSHER SINGH GILL DELHI SMC BENCH IN ITA 2987/DEL/2015 (28/02/2017) PARA 4 TO 7 5. DANVEER SINGH DELHI SMC BENCH IN ITA PARA 5 15 4036/DEL/2017 (14/12/2017) 6. OM PRAKASH DELHI E BENCH IN ITA 1325/DEL/2011 (11/08/2016) PARA 5 TO 8 7. KAMAL KUMAR MISHRA LUCKNOW ITAT 143 ITD 686 PARA 7 8. SUNIL VAID DELHI ITAT SMC BENCH IN ITA 2414/DEL/2016 (30/12/2016) PARA 7 9. VIJAY KUMAR PROP. V.K. MEDICAL HALL DELHI ITAT F BENCH ITA NO. 2483/DEL/2015 (27/11/2018) PARA 13 & 14 10. INDER SINGH, DELHI ITAT B BENCH ITA NO. 1931/DEL/2016 (05/12/2018) PARA 5 8.4 IN ABOVE DECISIONS NOTABLY IT IS ALSO HELD THAT ITAT AT THIS BELATED STAGE CANT IMPROVE THE ORDER OF AO AND COVERT THE ADDITIO N FROM SECTION 68 TO SECTION 69A ETC. EVEN OTHERWISE PROVISIONS OF SECTION 68 OF THE ACT HAS BEEN HELD CANT BE APPLICABLE TO MERE SHARE SALE WHICH IS NOT AKIN TO RECEIPT OF GIFT, LOAN, SHARE CAPITAL, ADVANCE ETC IS VIEW OF: THE HONBLE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS JATIN INVESTMENT PVT. LTD. IN ITA NO.4325 & 4326/KOL/2009 ORDER DATED 27.05.2015 HELD AS FOLLOWS :- 11. IN HIS RIVAL SUBMISSIONS, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE AS SESSEE WAS HAVING INVESTMENT IN SHARES ETC. WHICH WERE DUL Y SHOWN ON THE ASSET ASIDE OF THE BALANCE SHEET, OUT OF THO SE INVESTMENTS SOME WERE SOLD AND FEW NEW WERE PURCHAS ED AND IF THERE WAS ANY GAIN ON THE SALE THE SAME WAS OFFERED FOR TAXATION. IT WAS FURTHER SUBMITTED THAT IN EARL IER YEAR UNDER SIMILAR CIRCUMSTANCES, THE CASE WAS REOPENED U/S 147 OF THE ACT AND THE ADDITION MADE BY THE AO WAS DELE TED BY THE I.T.A.T. IT WAS FURTHER SUBMITTED THAT THE ASSE SSEE SOLD THE SHARES WHICH WERE EARLIER PURCHASED IN DIFFEREN T YEARS AND DULY SHOWN IN THE BALANCE SHEET OF THE RESPECTI VE YEARS AND THAT THE ASSESSEE HAD SHOWN THE SALE PROCEEDS I N THE BOOKS OF ACCOUNTS, THE INVESTMENTS WERE REDUCED AFT ER 16 MAKING THE SALES. IT WAS CONTENDED THAT THERE WAS N O OBLIGATION UNDER THE LAW THAT THE ASSESSEE WAS REQU IRED TO PROVE THE SOURCE OF PAYEE. IT WAS FURTHER CONTENDED THAT THE AO HAD NOT REJECTED THE BOOKS OF ACCOUNTS AND THE P URCHASES WERE DULY ACCEPTED SO THERE WAS NO REASON TO DOUBT THE SALES. IT WAS SUBMITTED THAT THE CASE OF THE ASSESS EE IS SQUARELY COVERED BY THE DECISION OF THIS BENCH OF T HE TRIBUNAL IN THE CASE OF ITO VS. M/S VISHAL HOLDING AND CAPIT AL PVT. LTD. IN ITA NO. 1788/DEL/2009 ORDER DATED 17.07.2009 WHI CH HAS BEEN UPHELD BY THE HON'BLE JURISDICTIONAL HIGH COUR T AS REPORTED IN (2011) 200 TAXMAN 186 (DELHI). IT WAS F URTHER, SUBMITTED THAT THE ISSUE IS ALSO COVERED BY THE ORD ER OF THE ITAT, DELHI BENCH IN THE CASE OF ITO VS. GOODWILL C RESEC PVT. LTD. IN ITA NO. 4151/DEL./2010 ORDER DATED 25.01.20 12. RELIANCE WAS ALSO PLACED ON THE FOLLOWING CASES LAW S :- '1. CIT VS. SH. UDIT NARAIN AGGARWAL, ITA NO. 560 OF 2009, DT. 12.12.2012 2. CIT VS. SUDEEP GOENKA, ITA NO. 468 OF 2009, DT. 3.01.2013. 3. CIT VS. ANIRUDH NARAIN AGGARWAL, ITA NO. 195 OF 2010, DT. 16.01.2013.' IT WAS POINTED OUT THAT THE SAME ISSUE HAS BEEN DEC IDED BY THE I.T.A.T. IN ASSESSEE'S OWN CASE IN I.T.A.T. NO. 1584/DEL./2009 FOR THE A.Y. 2002-03 VIDE ORDER DATE D 13.11.2009, IN ASSESSEE'S FAVOUR (COPY OF THE ORDER WAS FURNISHED WHICH IS PLACED ON RECORD) 12. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON THE RECO RD. IN THE PRESENT CASE, IT IS NOTICED THAT THE ASSESSEE PURCH ASED THE SHARES IN EARLIER YEARS WHICH WERE SHOWN AS INVESTM ENT IN THE BOOKS OF ACCOUNTS AND REFLECTED IN THE 'ASSET SI DE' OF THE 'BALANCE SHEET', OUT OF THOSE INVESTMENTS (COPY WHI CH IS PLACED AT PAGE NO. 23 AND 24 OF THE ASSESSEE'S PAPE R BOOK), THE ASSESSEE SOLD CERTAIN INVESTMENTS AND ACCOUNTED FOR THE PROFIT / LOSS AND OFFERED THE SAME FOR TAXATION. IN THE PRESENT CASE, THE AMOUNT IN QUESTION WAS NEITHER A LOAN OR THE DEPOSIT , IT WAS ALSO NOT ON ACCOUNT OF SHARE APPLI CATION MONEY, THE SAID AMOUNT WAS ON ACCOUNT OF SALE OF INVESTMENT THEREFORE THE PROVISIONS OF SECTION 68 O F THE ACT WERE NOT APPLICABLE AND THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION. IN OUR OPINION, THE LD. CIT(A) RIGHTL Y DELETED THE ADDITION MADE BY THE AO. 13. ON A SIMILAR ISSUE THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. VISHAL HOLDING AND CAPITAL PVT. LTD. VIDE ORDER DATED 9TH AUGUST, 2010 UPHELD THE ORDER DATED 30.7.2009 OF THE ITAT I N ITA NO. 1788/DEL/2007 FOR THE ASSESSMENT YEAR 2000-2001 WHEREIN THE ORDER OF THE LD. CIT(A) MAKING THE SIMI LAR DELETION WAS UPHELD BY OBSERVING IN PARA 6 AS UNDER :- 'WE ARE OF THE VIEW THAT THE ASSESSEE HAD PRODUCED COPIES OF ACCOUNTS, BILLS AND CONTRACT NOTES ISSUED BY M/S. M KM FINSEC PVT. LTD., AND HAD BEEN MAINTAINING BOOKS OF ACCOUN T AS PER COMPANIES ACT. THE ASSESSEE HAD ALSO DEMONSTRATED T HE 17 PURCHASE AND SALE OF SHARES OVER A PERIOD OF TIME A S SEEN FROM THE BALANCE SHEET'S. IN OUR OPINION, THE ASSESSING OFFICER HAS SIMPLY AC TED ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING WI THOUT VERIFYING THE DETAILS FURNISHED BY THE ASSESSEE. THE ASSESSEE HAS ALSO PRODUCED BEST POSSIBLE EVIDEN CE TO SUPPORT ITS CLAIM. CONSEQUENTLY THE ADDITION MADE BY THE ASSESSING OFF ICER CANNOT BE SUSTAINED.' 14. WE, THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). ACCORDINGLY, WE DO NOT SEE ANY MERIT IN THI S APPEAL OF THE DEPARTMENT. IN ITA NO. 4326/DEL./2009 OF THE ASSESSMENT YEAR 2004- 05 IDENTICAL ISSUE HAVING SIM ILAR FACTS IS INVOLVED, THE ONLY DIFFERENCE IS IN THE AMOUNT O F ADDITION WHICH WAS DELETED BY THE LD. CIT(A). THEREFORE, OUR FINDINGS GIVEN IN FORMER PART OF THIS ORDER, IN RESPECT OF 1 6 4325 & 4326/ DEL/2009 ASSESSMENT YEAR 2003-04, SHALL APPLY MUTATIS MUTANDIS FOR ASSESSMENT YEAR 2004-05. 14. WE, THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). ACCORDINGLY, WE DO NOT SEE ANY MERIT IN THI S APPEAL OF THE DEPARTMENT. IN ITA NO. 4326/DEL./2009 OF THE ASSESSMENT YEAR 2004- 05 IDENTICAL ISSUE HAVING SIM ILAR FACTS IS INVOLVED, THE ONLY DIFFERENCE IS IN THE AMOUNT O F ADDITION WHICH WAS DELETED BY THE LD. CIT(A). THEREFORE, OUR FINDINGS GIVEN IN FORMER PART OF THIS ORDER, IN RESPECT OF A SSESSMENT YEAR 2003-04, SHALL APPLY MUTATIS MUTANDIS FOR ASSE SSMENT YEAR 2004-05. THE HONBLE DELHI HIGH COURT IN THE CASE OF PRINCIP AL C.I.T. VS JATIN INVESTMENT PVT. LTD. [2017 ] TMI 34 2 (DELHI) HELD AS FOLLOWS :- 4. THE ITAT AGREED WITH THE CONCLUSIONS OF THE CIT (A) UPON ITS INDEPENDENT EXAMINATION OF THE RECORD. IT ALSO DISCOUNTED THE REVENUE'S SUBMISSIONS THAT THE INVESTMENT SHOWN IN THE BOOK OF ACCOUNTS AND REFLECTED AS ASSETS IN THE SID E OF THE BALANCE SHEET, SHOULD HAVE BEEN PROPERLY TREATED AN D THAT IN THE ABSENCE OF SUCH TREATMENT. SECTION 68 APPLIES. THE ITAT REJECTED THIS CONTENTION AND HELD BASED UPON THE PRINCIPLES ENUNCIATED IN CIT V. VISHAF HOLDING & CAPITAL PVT. LTD. (ORDER OF THIS COURT DATED 9.8.2010) THAT THE INVOCATION O F SECTION'68 IN THE CIRCUMSTANCES IS UNWARRANTED. 5. LEARNED COUNSEL FOR THE REVENUE REITERATED THE G ROUNDS CITED IN SOME OF THE CONTENTIONS MADE BEFORE THE IT AT. LEARNED COUNSEL ESPECIALLY EMPHASIZED ON THE SUBMIS SION THAT THE INCORRECT REFLECTION OF THE RECEIPTS IN TH E BALANCE SHEET BELIED THE TRUE NATURE OF THE RECEIPTS AS A J USTIFICATION FOR THE APPLICATION OF SECTION 68. 6. THE ITAT IN OUR OPINION QUITE CORRECTLY APPRECIA TED THE LAW AND ITS APPLICATION BY THE FIRST APPELLATE AUTHORIT Y, I.E., CIT (A). HAVING REGARD TO THE FACTS AND THE NATURE OF T HE ANALYSIS BASED UPON THE DECISIONS OF THIS COURT, AS WELL AS THE RELIANCE 18 ON VARIOUS DECISIONS WITH RESPECT TO THE TRUE NATUR E OF SECTION 68, WE ARE OF THE OPINION THAT NO QUESTION O F LAW ARISES; THE APPEALS ARE ACCORDINGLY DISMISSED 8. APPLYING THE PROPOSITION OF LAW LAID DOWN IN THE CASE LAW TO THE FACTS OF THE CASE, WE DELETE THE ADDITION MA DE U/S 68 OF THE ACT FOR THE REASONS CITED ABOVE. WHILE I WAS WRITING THIS ORDER, I FOUND THAT THIS H ONBLE TRIBUNAL IN FOLLOWING TWO RECENT DECISIONS HAS BEEN PLEASED TO DELETE THE SIMILAR ADDITIONS AFTER CONSIDERING THE ENTIRE CONUNDRUM OF THE MATTER: LALIT KUMAR AGGARWAL IN ITA NO. 3509/DEL/2018 : ASSTT. YEAR : 2014-15 DELHI BENCH SMC, NEW DELHI DATE OF PRONOUNCEMENT: 24.01.2019 HELD ..21. I FIND THAT ON EXAMINING THE SAME AND AFTER MAKING INQUIRIES, NO DEFECT IN THE SAID DOCUMENTARY EVIDEN CES COULD BE BROUGHT ON RECORD BY THE REVENUE. THE ADDITION I N QUESTION WAS MADE MERELY ON THE BASIS OF SUSPICION AND SURMISES. NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE ASSESSEE WAS INVOLVED IN THE RACKET WHICH WAS UNEARTHED BY THE INVESTIGATION WING OF THE DEPARTME NT. THE REVENUE COULD NOT POINT OUT THAT IN ANYWHERE IN THE STATEMENT OF SH. SANJAY VORA AND/OR SH. PRAVEEN KUMA R AGARWAL, THE NAME OF THE ASSESSEE WAS STATED BY THE M. THEREFORE, SIMPLY BECAUSE SOME PERSONS WERE INVOLVE D IN GENERATION OF BOGUS LONG TERM CAPITAL GAIN CANNOT L EAD TO CONCLUSION THAT THE ASSESSEE WAS ALSO INVOLVED IN I T WITHOUT COGENT MATERIAL. 22. FURTHER, AFTER MAKING INQUIRIES FROM THE PERSON , FROM WHOM, THE ASSESSEE PURCHASED THE SHARES IN QUESTION AND/OR FROM THE SHARE BROKER THROUGH WHOM THE ASSESSEE SOL D THE SHARES, NO MATERIAL COULD BE BROUGHT ON RECORD BY T HE ASSESSING OFFICER TO SHOW THAT THE TRANSACTION OF T HE ASSESSEE WAS NOT GENUINE AND THE ASSESSEE ACTUALLY PAID ANY AMOUNT IN CASH TO ANY PERSON IN CONSIDERATION OF CH EQUE RECEIVED BY HIM FROM THE AUTHORIZED SHARE BROKER. I N ABSENCE OF SUCH A MATERIAL BEING BROUGHT ON RECORD BY THE REVENUE, IN MY CONSIDERED OPINION, THE TRANSACTION OF THE ASSESSEE WHICH IS SUPPORTED BY OVERWHELMING DOCUMEN TARY EVIDENCES CANNOT BE IMPEACHED MERELY BECAUSE SHARE PRICES ROSE ABNORMALLY OR OTHER PERSONS WERE INVOLVED IN G ENERATION OF BOGUS LONG TERM CAPITAL GAIN. THUS, IN MY CONSID ERED OPINION, THE ADDITION MADE U/S 68 OF THE ACT OF RS.23,51,714/- BY THE REVENUE IS UNSUSTAINABLE. SANJEEV JAIN PROP. M/S. S.K. JEWELLERS ITA NO.3381/DEL/2017 ASSESSMENT YEAR: 2013-14 DELHI BENCH G, NEW DELHI (DATE OF ORDER : 15.01.2019 ) 19 HELD 21. WE FIND MERIT IN THE ARGUMENTS ADVANCED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE SHARES HAVE BEEN SOLD AT THE RATE AS PREVAILING ON THE STOCK EXCHANGE AT THE TIME OF SALE AND THE SHARE PRICES OF ALL THE SCRIP ARE CLOS ELY MONITORED BY THE STOCK EXCHANGE AND SEBI. EVEN IF T HE PRICES HAVE GONE UP ARTIFICIALLY AS ALLEGED BY THE REVENUE AUTHORITIES, HOWEVER, THERE IS NO MATERIAL TO HOLD THAT THE ASSESSEE WAS INVOLVED THEREIN. IT IS ALSO AN ADMITT ED FACT THAT ALTHOUGH THE ASSESSING OFFICER HAD MADE ENQUIR IES FROM VARIOUS ENTITIES I.E. ASSESSEES BANKER, DEPOSITORY , BROKER AND THE BANKER OF M/S. TCL TECHNOLOGIES LIMITED, HO WEVER, NOTHING ADVERSE HAVE BEEN FOUND. THERE IS NO ADVERS E FINDING BY SEBI IN RELATION TO THE SCRIP IN QUESTIO N HAS BEEN GIVEN TO THE ASSESSING OFFICER. FURTHER IN RESPONSE TO NOTICE U/S 131 SH. SACHIN JAIN, FRENCHISE OF M/S. GLOBE CAPITAL MARK ET LTD, APPEARED BEFORE THE ASSESSING OFFICER AND HIS STATE MENT WAS RECORDED WHEREIN HE HAS CONFIRMED TO HAVE EXECUTED THE ORDER FOR SALE OF SHARES. THEREFORE, MERELY ON THE BASIS OF PREPONDERANCE OF HUMAN PROBABILITIES THE ADDITION C ANNOT BE MADE IN THE HANDS OF THE ASSESSEE WITHOUT DISPROVIN G THE VARIOUS DOCUMENTS FILED BY THE ASSESSEE. CASE LAW R ELIED: HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MU KESH RATILAL MAROLIA, IN ITA NO.456/DEL/2007 ORDER DATED 07.09.2011; HONBLE JHARKAND HIGH COURT AT RANCHI IN THE CASE OF CIT VS. ARUN KUMAR AGARWAL (HUF) & ORS, TAX APPEAL NO. 13 OF 2011, SINCE REPORT IN [2013] DTR (JHARKHA ND) 219 ORDER DATED 13.07.2012; HONBLE GUJARATA HIGH COURT IN THE CASE OF CIT-I VS. MAHESHCHANDRA G. VAKIL [2013] 40 TAXMAN.COM 326 (GUJARAT) HONBLE GUJARATA HIGH COURT IN THE CASE O F CIT-I VS. HIMAN M. VAKIL [2014] 41 TAXMAN.COM 425 (GUJARA T); HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PREM PAL GANDHI (SUPRA) FINALLY HELD THAT THE VARIOUS OTHE R DECISIONS RELIED ON THE LD. COUNSEL FOR THE ASSESSE E ALSO SUPPORT HIS CASE. UNDER THESE CIRCUMSTANCES AND IN VIEW OF OUR ABOVE DISCUSSION WE ARE OF THE CONSIDERED OPINI ON THAT THE ADDITION MADE BY THE ASSESSING OFFICER U/S 68 O F THE ACT WHICH HAS BEEN SUSTAINED BY THE CIT(A) IS NOT JUSTI FIED UNDER THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. WE , THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND DI RECT THE ASSESSING OFFICER TO DELETE THE ADDITION 8.5 SO RESPECTFULLY APPLYING RATIO OF ABOVE PLETHORA OF DECISIONS TO EXTANT FACTS, I DIRECT THE AO TO DELETE THE ADDITIONS MADE IN CAPTIONED APPEALS IN SO FAR AS IT RELATES TO SHARE SALE PROCEEDS AND ALLEGED CO MMISSION PORTION IS CONCERNED. 20 8.6 NOW ADVERTING TO SECOND ISSUE FRAMED ABOVE ON IMPACT OF CROSS EXAMINATION, I STRONGLY RELY ON THE FOLLOWING STRIN G OF DECISIONS OF VARIOUS COURTS TO HOLD THAT WHEN REVENUE STRONGLY RELIES ON STATEM ENTS OF CERTAIN PERSONS TO IMPLICATE AN ASSESSEE, PRINCIPLE OF CROSS EXAMINATI ON HAS TO INVARIABLY FOLLOWED IF TRUTH AND JUSTICE NEEDS TO BE FOUND OUT. FOLLOWI NG RECENT JURISPRUDENCE AS RELIED BY LD AR IS SUPPORTIVE TO MY VIEW: IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR ITA NO. 997 TO 1002/JP/2018 & 1119/JP/2018 M/S. KOTA DALL MILL DATE OF PRONOUNCEMENT : 31/12/2018. 11.1. EVEN OTHERWISE, THE ASSESSMENT ORDER IS SOLEL Y BASED ON THE REPORT OF THE INVESTIGATION WING KOLKATA WHI CH IN TURN IS NOTHING BUT THE NARRATION OF THE STATEMENTS RECO RDED DURING THE INVESTIGATION AND THE AO WAS HAVING IN P OSSESSION THE STATEMENT OF ONLY SHRI ANAND SHARMA. THEREFORE, ALL THESE PROCEEDINGS CONDUCTED BY THE INVESTIGATION WI NG KOLKATA WERE AT THE BACK OF THE ASSESSEE AND HENCE THE STATEMENT WHICH IS THE FOUNDATION OF THE REPORT OF THE INVESTIGATION WING KOLKATA AS WELL AS THE ASSESSMEN T ORDER CANNOT BE ACCEPTED IN THE ABSENCE OF GIVING AN OPPO RTUNITY OF CROSS EXAMINATION TO THE ASSESSEE. WE FIND THAT THE ASSESSEE HAS INSISTED FOR CROSS EXAMINATION DURING THE ASSES SMENT PROCEEDINGS AND FURTHER DURING THE APPELLATE PROCEE DINGS. THE LD.CIT(A) EVEN CALLED FOR A REMAND REPORT AND D IRECTED THE AO TO ALLOW CROSS EXAMINATION TO THE ASSESSEE. HOWEVER, THE AO HAS EXPRESSED HIS INABILITY TO ALLOW THE ASS ESSEE CROSS EXAMINATION OF THE WITNESSES DUE TO THE REASON THAT THE WITNESSES BELONG TO KOLKATA AND IT IS NOT POSSIBLE FOR AO TO MAKE SUCH ARRANGEMENT. THE LD. CIT(A) HAS FINALLY D ENIED THE CROSS EXAMINATION TO THE ASSESSEE BY GIVING HIS FINDING IN PARA 5.11 AT PAGE 188 ALREADY REPRODUCED IN THE EAR LIER PART OF THIS ORDER AND, THEREFORE, THE ONLY REASON FOR D ENIAL OF CROSS EXAMINATION BY THE LD.CIT(A) IS THAT THE STAT EMENTS ARE SO VOCAL AND UNDENIABLE THAT CROSS EXAMINATION OF S UCH ACCOMMODATION ENTRY PROVIDED BY THOUSANDS OF BENEFI CIARIES ACROSS INDIA IS NEITHER PRACTICABLE NOR VIABLE AND THEREFORE UNCALLED FOR. WE FIND THAT THE ASSESSEE HAS DEMANDED THE CROSS EXAMINATION ONLY IN RESPECT OF THE ALLEGED TRANSACT IONS OF LOANS AND NOT FOR THE ENTIRE BUSINESS OF THE ENTRY PROVIDERS PROVIDING THE BOGUS ENTRIES. UNDISPUTEDLY, THE STAT EMENT OF SHRI ANAND SHARMA WAS RECORDED BY THE INVESTIGATION WING KOLKATA AT THE BACK OF THE ASSESSEE, EVEN THE PROCE EDINGS BY THE INVESTIGATION WERE CONDUCTED AT THE BACK OF THE 21 ASSESSEE, THEREFORE, THE SAID STATEMENT OF SHRI ANA ND SHARMA CANNOT BE THE SOLE BASIS OF ASSESSMENT WITHOU T GIVING AN OPPORTUNITY OF CROSS EXAMINATION TO THE A SSESSEE. THE HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIM BER INDUSTRIES VS. CCE (SUPRA) WHILE DEALING WITH THE I SSUE OF VIOLATION OF PRINCIPLES OF NATURAL JUSTICE FOR NOT PROVIDING THE OPPORTUNITY OF CROSS EXAMINATION OF THE WITNESSES W HOSE STATEMENTS WERE RELIED ON BY THE AO HAS HELD IN PAR A 6 TO 9 AS UNDER :- ONCE THE ASSESSEE HAS DISPUTED THE CORRECTNESS OF T HE STATEMENT AND WANTED TO CROSS EXAMINE THE WITNESS WHICH WAS NOT GIVEN BY THE AO AS WELL AS LD . CIT (A), THEN THE ORDERS PASSED BASED ON SUCH STATEMENT ARE NOT SUSTAINABLE IN LAW. THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS. ASHWANI GUPTA, 322 ITR 396 (DELHI) WHILE DE ALING WITH THE ISSUE OF NOT PROVIDING THE OPPORTUNITY TO CROSS EXAMINE THE WITNESSES HAS HELD IN PARA 5 TO 7 AS UN DER :- THUS THE HONBLE HIGH COURT HAS HELD THAT ONCE THER E IS A VIOLATION OF PRINCIPLES OF NATURAL JUSTICE INASMUCH AS SEIZED MATERIAL IS NOT PROVIDED TO THE ASSESSEE NOR IS CRO SS EXAMINATION OF THE PERSON ON WHOSE STATEMENT THE AO RELIED UPON, GRANTED, THEN, SUCH DEFICIENCIES WOULD AMOUNT TO DENIAL OF OPPORTUNITY AND CONSEQUENTLY WOULD BE FAT AL TO THE PROCEEDINGS. THE HONBLE BOMBAY HIGH COURT IN THE C ASE OF H.R. MEHTA VS. ACIT, 387 ITR 561 (BOMBAY) HAS ALSO CONSIDERED THE ISSUE OF NOT PROVIDING OPPORTUNITY O F CROSS EXAMINATION IN PARA 11 TO 17 AS UNDER :- THUS THE D ENIAL OF OPPORTUNITY TO CROSS EXAMINE WAS CONSIDERED BY THE HONBLE HIGH COURT WHICH GOES TO THE ROOT OF THE MATTER AND STRIKES AT THE VERY FOUNDATION OF THE ASSESSMENT AND, THERE FORE, RENDERS THE ASSESSMENT ORDER PASSED BY THE AO NOT SUSTAINABLE. THE LD. A/R HAS SUBMITTED THAT COORDIN ATE BENCH OF THIS TRIBUNAL IN THE CASE OF DCIT VS. SHRI PRATEE K KOTHARI VIDE ORDER DATED 16TH DECEMBER, 2012 IN ITA NO. 159/JP/2016 HAS CONSIDERED THIS ISSUE IN PARA 2.8 T O 2.11 AS UNDER :- 2.8 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. THE TRANSACTION UNDER QUESTION RELATES TO UNSECURED LOANS TAKEN BY THE ASSESSEE AM OUNTING TO RS 1 CRORES FROM M/S MEHUL GEMS PVT LTD DURING T HE IMPUNGED ASSESSMENT YEAR AND NOT ACCEPTING THE SAID LOAN TRANSACTION AS A GENUINE TRANSACTION BY THE ASSESSI NG OFFICER AND THE RESULTANT ADDITION MADE UNDER SECTION 68 OF THE ACT. UNDISPUTEDLY, THE PRIMARY ONUS TO ESTABLISH GENUINE NESS OF THE LOAN TRANSACTION IS ON THE ASSESSEE. IN THE INS TANT CASE, THE ASSESSEE HAS PROVIDED THE NECESSARY EXPLANATION , FURNISHED DOCUMENTARY EVIDENCE IN TERMS OF TAX FILI NGS, AFFIDAVITS AND CONFIRMATION OF THE DIRECTORS, BANK STATEMENTS OF THE LENDER, BALANCE SHEET OF THE LENDER COMPANY, AND AN INDEPENDENT CONFIRMATION HAS ALSO BEEN OBTAINED BY THE 22 ASSESSING OFFICER TO SATISFY THE CARDINAL TEST OF I DENTITY, CREDITWORTHINESS AND GENUINENESS OF THE LOAN TRANSA CTION. HOWEVER, THE ASSESSING OFFICER HAS NOT GIVEN ANY FI NDING IN RESPECT OF SUCH EXPLANATION, DOCUMENTARY EVIDENCE A S WELL AS INDEPENDENT CONFIRMATION. APPARENTLY, THE REASON FO R NOT ACCEPTING THE SAME IS THAT THE ASSESSING OFFICER WA S IN RECEIPT OF CERTAIN INFORMATION FROM THE INVESTIGATI ON WING OF THE TAX DEPARTMENT AS PER WHICH THE TRANSACTION UND ER CONSIDERATION IS A BOGUS LOAN TRANSACTION. THE SAID INFORMATION RECEIVED FROM THE INVESTIGATION WING TH US OVERWEIGHED THE MIND OF THE ASSESSING OFFICER. THE ASSESSING OFFICER STATED THAT THE PRIMARY ONUS IS ON THE ASSE SSEE TO ESTABLISH THE GENUINENESS OF THE TRANSACTION CLAIME D BY IT AND IF THE INVESTIGATION DONE BY THE DEPARTMENT LEA DS TO DOUBT REGARDING THE GENUINENESS OF THE TRANSACTIONS , IT IS INCUMBENT ON THE ASSESSEE TO PRODUCE THE PARTIES AL ONGWITH NECESSARY DOCUMENTS TO ESTABLISH THE GENUINENESS OF THE TRANSACTION. IN RESPONSE, THE ASSESSEE SUBMITTED TH AT SHRI BHANWARLAL JAIN IS NOT KNOWN TO HIM AND REGARDING V ARIOUS INCRIMINATING DOCUMENTARY EVIDENCES SEIZED DURING T HE COURSE OF SEARCH AND STATEMENTS RECORDED OF SHRI BH ANWARLAL JAIN AND OTHER PERSONS, HE SPECIFICALLY REQUESTED T HE AO TO PROVIDE COPIES OF SUCH INCRIMINATING DOCUMENTS AND STATEMENT OF ALL VARIOUS PERSONS RECORDED IN THIS R EGARD AND PROVIDE AN OPPORTUNITY TO THE ASSESSEE TO CROSS EXA MINE SUCH PERSONS. HOWEVER, THE AO DIDNT PROVIDE TO THE ASSE SSEE COPIES OF SUCH INCRIMINATING DOCUMENTS AND STATEMEN TS OF VARIOUS PERSONS RECORDED AND ALLOW THE CROSS-EXAMIN ATION OF ANY OF THESE PERSONS. WHILE DOING SO, THE AO STATED THAT IN HIS STATEMENTS, BHANWARLAL JAIN HAD DESCRIBED THAT THEY ARE INDULGED IN PROVIDING ACCOMMODATION ENTRIES OF BOGU S UNSECURED LOANS AND ADVANCES THROUGH VARIOUS BENAMI CONCERNS (70) OPERATED AND MANAGED BY THEM. THIS ADMISSION AUTOMATICALLY MAKES ALL THE TRANSACTIONS DONE BY THEM AS MERE PAPER TRANSACTIONS AND IN THESE CIRCUM STANCES, FURTHER AS PER THE INFORMATION NAME AND ADDRESS OF ASSESSEE AND THE BENAMI CONCERN THROUGH WHICH ACCOMMODATION ENTRY OF UNSECURED LOANS WAS PROVIDED IS APPEARING IN THE LIST OF BENEFICIARIES TO WHOM THE SAID GROUP HAS PROVIDE D. THIS ADMISSION IS SUFFICIENT TO REJECT THE CONTENTIONS O F THE ASSEESSE. FURTHER, REGARDING CROSS EXAMINATION, TH E AO STATED THAT THE RIGHT OF CROSS EXAMINATION IS NOT AN ABSOLUTE RIGHT AND IT DEPENDS UPON THE CIRCUMSTANCES OF EACH CASE AND ALSO ON THE STATUTE CONCERNED. IN THE PRESENT CASE, NO SUCH CIRCUMSTANCES ARE WARR ANTED AS IN THE LIST OF BENEFICIARIES TO WHOM ACCOMMODATION ENTRIES WERE PROVIDED BY THE SAID GROUP CATEGORICALLY CONTA INS THE NAME AND ADDRESS OF THE ASSESSEE. FURTHER THE GROUP HAS CATEGORICALLY ADMITTED TO PROVIDING OF ACCOMMODATIO N ENTRIES OF UNSECURED LOANS THROUGH VARIOUS BENAMI CONCERNS. THE AO FURTHER RELIED UPON THE DECISION OF HONBLE SUPRE ME COURT IN HE CASE OF C. VASANTLAL & CO. VS. CIT 45 ITR 20 6(SC) AND 23 HONBLE RAJASTHAN HIGH COURT IN CASE OF RAMESHWARLA L MALI VS. CIT 256 ITR 536(RAJ.) AMONG OTHERS. IN THIS REG ARD, IT WAS SUBMITTED BY THE ASSESSEE THAT IF THE ENTRIES A ND MATERIAL ARE GATHERED BEHIND THE BACK OF THE ASSESS EE AND IF THE AO PROPOSES TO ACT ON SUCH MATERIAL AS HE MIGHT HAVE GATHERED AS A RESULT OF HIS PRIVATE ENQUIRIES, HE M UST DISCLOSE ALL SUCH MATERIAL TO THE ASSESSEE AND ALSO ALLOW TH E CROSS EXAMINATION AND IF THIS IS NOT DONE, THE PRINCIPLES OF NATURAL JUSTICE STAND VIOLATED. 2.9 IN LIGHT OF ABOVE DISCUSSIONS, IN OUR VIEW, THE CRUX OF THE ISSUE AT HAND IS THAT WHETHER THE PRINCIPLE OF NATU RAL JUSTICE STAND VIOLATED IN THE INSTANT CASE. IN OTHER WORDS, WHERE THE AO DOESNT WANT TO ACCEPT THE EXPLANATION OF THE AS SESSEE AND THE DOCUMENTATION FURNISHED REGARDING THE GENUI NENESS OF THE LOAN TRANSACTION AND INSTEAD WANTS TO RELY U PON THE INFORMATION INDEPENDENTLY RECEIVED FROM THE INVESTI GATION WING OF THE DEPARTMENT IN RESPECT OF INVESTIGATION CARRIED OUT AT A THIRD PARTY, CAN THE SAID INFORMATION BE USED AGAINST THE ASSESSEE WITHOUT SHARING SUCH INFORMATION WITH THE ASSESSEE AND ALLOWING AN OPPORTUNITY TO THE ASSESSEE TO EXAM INE SUCH INFORMATION AND EXPLAIN ITS POSITION ESPECIALLY WHE N THE ASSESSEE HAS REQUESTED THE SAME TO THE ASSESSING OF FICER. 2.10 IN THIS REGARD, THE HONBLE SUPREME COURT IN TH E CASE OF DHAKESWARI COTTON MILLS LTD. V. CIT (1954) 26 ITR 7 75 (SC) (COPY AT CASE LAW PB 812-818) HAS HELD THAT THE RULE OF LAW ON THIS SUBJECT HAS BEEN FAIRLY AND RIGHTLY STA TED BY THE LAHORE HIGH COURT IN THE CASE OF SETH GURMUKH SINQH WHERE IT WAS STATED THAT WHILE PROCEEDING UNDER SUB-SECTI ON (3) OF SECTION 23, THE INCOME-TAX OFFICER, THOUGH NOT BOUN D TO RELY ON EVIDENCE PRODUCED BY THE ASSESSEE AS HE CONSIDER S TO BE FALSE, YET IF HE PROPOSES TO MAKE AN ESTIMATE IN DI SREGARD OF THAT EVIDENCE, HE SHOULD IN FAIRNESS DISCLOSE TO TH E ASSESSEE THE MATERIAL ON WHICH HE IS GOING TO FIND THAT ESTI MATE; AND THAT IN CASE HE PROPOSES TO USE AGAINST THE ASSESSE E THE RESULT OF ANY PRIVATE INQUIRIES MADE BY HIM, HE MUS T COMMUNICATE TO THE ASSESSEE THE SUBSTANCE OF THE INFORMATION SO PROPOSED TO BE UTILIZED TO SUCH AN E XTENT AS TO PUT THE ASSESSEE IN POSSESSION OF FULL PARTICULARS OF THE CASE HE IS EXPECTED TO MEET AND THAT HE SHOULD FURTHER G IVE HIM AMPLE OPPORTUNITY TO MEET IT. IT WAS HELD IN THAT CASE THAT IN THIS CASE WE ARE OF THE OPINION THAT THE TRIBUN AL VIOLATED CERTAIN FUNDAMENTAL RULES OF JUSTICE IN REACHING IT S CONCLUSIONS. FIRSTLY, IT DID NOT DISCLOSE TO THE AS SESSEE WHAT INFORMATION HAD BEEN SUPPLIED TO IT BY THE DEPARTME NTAL REPRESENTATIVE. NEXT, IT DID NOT GIVE ANY OPPORTUNI TY TO THE COMPANY TO REBUT THE MATERIAL FURNISHED TO IT BY HI M, AND LASTLY, IT DECLINED TO TAKE ALL THE MATERIAL THAT T HE ASSESSEE WANTED TO PRODUCE IN SUPPORT OF ITS CASE. THE RESUL T IS THAT THE ASSESSEE HAD NOT HAD A FAIR HEARING. THE HONBLE SUPREME COURT IN CASE OF C. VASANTLAL & CO. VS. CIT 45 ITR 206 (SC) HAS HELD THAT THE ITO IS NOT B OUND BY ANY TECHNICAL RULES OF THE LAW OF EVIDENCE. IT IS O PEN TO HIM 24 TO COLLECT MATERIAL TO FACILITATE ASSESSMENT EVEN B Y PRIVATE ENQUIRY. BUT, IF HE DESIRES TO USE THE MATERIAL SO COLLECTED, THE ASSESSEE MUST BE INFORMED ABOUT THE MATERIAL AN D GIVEN ADEQUATE OPPORTUNITY TO EXPLAIN IT. THE STATEMENTS MADE BY PRAVEEN JAIN AND GROUP WERE MATERIAL ON WHICH THE I T AUTHORITIES COULD ACT PROVIDED THE MATERIAL WAS DIS CLOSED AND THE ASSESSEE HAD AN OPPORTUNITY TO RENDER THEIR EXP LANATION IN THAT REGARD. THE HONBLE SUPREME COURT IN CASE OF KISHINCHAND CHE LLARAM V. CIT (1980) 125 ITR 713 (SC) (COPY AT CASE LAW PB 585-591) HAS HELD THAT WHETHER THERE WAS ANY MATERIAL EVIDENCE TO JUSTIFY THE FINDINGS OF THE TRIBUNAL TH AT THE AMOUNT OF RS.1,07,350 SAID TO HAVE BEEN REMITTED BY TILOKCHAND FROM MADRAS REPRESENTED THE UNDISCLOSED INCOME OF THE ASSESSEE. THE ONLY EVIDENCE ON WHICH THE TRIBUNAL COULD RELY FOR THE PURPOSE OF ARRIVING AT THIS FINDING WAS THE LETTER, DATED 18-2- 1955 SAID TO HAVE BEEN ADDRESSED BY THE MANAGER OF THE BANK TO THE ITO. NOW IT IS DIFFICULT TO SEE HOW THI S LETTER COULD AT ALL BE RELIED UPON BY THE TRIBUNAL AS A MATERIAL PIECE OF EVIDENCE SUPPORTIVE OF ITS FINDING. IN THE FIRST PL ACE, THIS LETTER WAS NOT DISCLOSED TO THE ASSESSEE BY THE ITO AND EVEN THOUGH THE AAC REPRODUCED AN EXTRACT FROM IT IN HIS ORDER, HE DID NOT CARE TO PRODUCE IT BEFORE THE ASSESSEE OR G IVE A COPY OF IT TO THE ASSESSEE. THE SAME POSITION OBTAINED A LSO BEFORE THE TRIBUNAL AND THE HIGH COURT AND IT WAS ONLY WHE N A SUPPLEMENTAL STATEMENT OF THE CASE WAS CALLED FOR B Y THIS COURT BY ITS ORDER, DATED 16-8-1979 THAT, ACCORDING TO THE ITO, THIS LETTER WAS TRACED BY HIM AND EVEN THEN IT WAS NOT SHOWN BY HIM TO THE ASSESSEE BUT IT WAS FORWARDED T O THE TRIBUNAL AND IT WAS FOR THE FIRST TIME AT THE HEARI NG BEFORE THE TRIBUNAL IN REGARD TO THE PREPARATION OF THE SUPPLE MENTAL STATEMENT OF THE CASE THAT THIS LETTER WAS SHOWN TO THE ASSESSEE. IT WILL, THEREFORE, BE SEEN THAT, EVEN IF WE ASSUME THAT THIS LETTER WAS IN FACT ADDRESSED BY THE MANAG ER OF THE BANK TO THE ITO, NO RELIANCE COULD BE PLACED UPON I T, SINCE IT WAS NOT SHOWN TO THE ASSESSEE UNTIL AT THE STAGE OF PREPARATION OF THE SUPPLEMENTAL STATEMENT OF THE CA SE AND NO OPPORTUNITY TO CROSS EXAMINE THE MANAGER OF THE BANK COULD IN THE CIRCUMSTANCES BE SOUGHT OR AVAILED OF BY THE ASSESSEE. IT IS TRUE THAT THE PROCEEDINGS UNDER THE INCOME- TAX LAW ARE NOT GOVERNED BY THE STRICT RULES OF EVI DENCE AND, THEREFORE, IT MIGHT BE SAID THAT EVEN WITHOUT CALLI NG THE MANAGER OF THE BANK IN EVIDENCE TO PROVE THIS LETTE R, IT COULD BE TAKEN INTO ACCOUNT AS EVIDENCE. BUT BEFORE THE I NCOME-TAX AUTHORITIES COULD RELY UPON IT, THEY WERE BOUND TO PRODUCE IT BEFORE THE ASSESSEE SO THAT THE ASSESSEE COULD CONT ROVERT THE STATEMENTS CONTAINED IN IT BY ASKING FOR AN OPPORTU NITY TO CROSS EXAMINE THE MANAGER OF THE BANK WITH REFERENC E TO THE STATEMENTS MADE BY HIM. 2.11 IN LIGHT OF ABOVE PROPOSITION IN LAW AND ESPEC IALLY TAKING INTO CONSIDERATION THE DECISION OF THE HONBLE SUPRE ME COURT 25 IN CASE OF C. VASANTLAL & CO. (SUPRA) RELIED UPON B Y THE REVENUE AND WHICH ACTUALLY SUPPORTS THE CASE OF THE ASSESSEE, IN THE INSTANT CASE, THE ASSESSMENT WAS C OMPLETED BY THE AO RELYING SOLELY ON THE INFORMATION RECEIVE D FROM THE INVESTIGATION WING, STATEMENT RECORDED U/S 132(4) O F SHRI BHANWARLAL JAIN AND OTHERS, AND VARIOUS INCRIMINATI NG DOCUMENTARY EVIDENCE FOUND FROM THE SEARCH AND SEIZ URE CARRIED OUT BY INVESTIGATION WING, MUMBAI ON THE SHR I BHANWARLAL JAIN GROUP ON 03.10.2013. IT REMAINS UND ISPUTED THAT THE ASSESSEE WAS NEVER PROVIDED COPIES OF SUCH INCRIMINATING DOCUMENTS AND STATEMENTS OF SHRI BHAN WARLAL JAIN AND VARIOUS PERSONS AND AN OPPORTUNITY TO CROS S EXAMINE SUCH PERSONS THOUGH HE SPECIFICALLY ASKED F OR SUCH DOCUMENTS AND CROSS EXAMINATION. ON THE OTHER HAND, THE BURDEN WAS SOUGHT TO BE SHIFTED ON THE ITA NO. 159/ JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHAR I, JAIPUR 21 ASSESSEE BY THE A.O. IT IS CLEAR CASE WHERE THE PRINCIPLE OF NATURAL JUSTICE STAND VIOLATED AND THE ADDITIONS MA DE UNDER SECTION 68 THEREFORE ARE UNSUSTAINABLE IN THE EYE O F LAW AND WE HEREBY DELETE THE SAME. THE ORDER OF THE LD CIT( A) IS ACCORDINGLY CONFIRMED AND THE GROUND OF THE REVENUE IS DISMISSED. THUS WHEN THE ASSESSEE HAS SPECIFICALLY ASKED FOR C ROSS EXAMINATION OF THE WITNESSES WHOSE STATEMENTS WERE RELIED UPON BY THE AO, THEN THE DENIAL OF THE OPPORTUNITY TO CROSS EXAMINE WOULD CERTAINLY IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND CONSEQUENTLY RENDERS THE ASSESSMENT ORD ER BASED ON SUCH STATEMENT AS NOT SUSTAINABLE IN LAW. HENCE IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE WHERE THE A SSESSEE HAS REPEATEDLY REQUESTED AND DEMANDED THE CROSS EXAMINATION OF THE WITNESSES WHOSE STATEMENTS WERE RELIED UPON BY THE AO IN THE ASSESSMENT ORDER AND FURTHER THE REPORT OF THE DDIT INVESTIGATION KOLKATA IS ALSO BA SED ON THE STATEMENT OF SUCH PERSON THEN THE DENIAL OF CROSS EXAMINATION BY THE AO AS WELL AS LD. CIT (A) DESPI TE THE FACT THAT THE ASSESSEE WAS READY TO BEAR THE COST OF THE CROSS EXAMINATION OF THE WITNESSES IS A GROSS VIOLATION O F PRINCIPLES OF NATURAL JUSTICE. THUS THE ADDITIONS MADE BY THE AO ON THE BASIS OF SUCH STATEMENT WITHOUT ANY TANGIBLE MATERI AL IS NOT SUSTAINABLE IN LAW AND LIABLE TO BE DELETED. ACCORD INGLY THE ADDITION MADE BY THE AO IS ALSO DELETED ON MERITS A PART FROM THE LEGAL ISSUE DECIDED IN FAVOUR OF THE ASSESSEE. APPELLATE TRIBUNAL, FOREIGN EXCHANGE MANAGEMENT ACT AT NEW DELHI DATE OF DECISION:-13.04.2018 (1) FPA-FE-01/DLI/2018 SHRI ASHWANI KUMAR MEHRA APPELLANT VERSUS SHRI A.H. KHAN 26 DIRECTORATE OF ENFORCEMENT, DELHI RESPONDENT CORAM JUSTICE MANMOHAN SINGH : CHAIRMAN SHRI G.C. MISHRA : MEMBER JUDGEMENT FPA-FE-01/DLI/2018, FPA-FE-03/DLI/2018, FPA-FE- 04/DLI/2018 & FPA-FE-05/DLI/2018 54. THE HONBLE SUPREME COURT OF INDIA IN THE CAS E OF AYAAUBKHAN NOORKHAN PATHAN V. STATE OF MAHARASHTRA & OTHERS REPORTED IN (2013) 4 SCC 465, HAS INTER ALIA HELD THAT THE OPPORTUNITY OF CROSS-EXAMINATION BE MADE AVAILA BLE, BUT IT SHOULD BE ONE OF EFFECTIVE CROSS-EXAMINATION, SO AS TO MEET THE REQUIREMENT OF THE PRINCIPLES OF NATURAL JUSTIC E. IN THE ABSENCE OF SUCH AN OPPORTUNITY, IT CANNOT BE HELD T HAT THE MATTER HAS BEEN DECIDED IN ACCORDANCE WITH LAW, AS CROSS- EXAMINATION IS AN INTEGRAL PART AND PARCEL OF THE P RINCIPLES OF NATURAL JUSTICE. THE CONSTITUTION BENCH OF THE HON BLE SUPREME COURT OF INDIA IN STATE OF M.P. V. SADASHIUVA VISHAMPAYAN REPORTED IN AIR 1961 SC 1623, HAS ALSO CONFIRMED THE PRINCIPLE THAT, THE RULES OF NATURAL JUSTICE REQUIRE THAT A PARTY SHOULD BE GIVEN THE OPPORTUNIT Y OF CROSS- EXAMINING A WITNESS. I) IN PREM SINGH VS. SPECIAL DI RECTOR, ENFORCEMENT DIRECTORATE, CRL A. 276 OF 2008, DELHI HIGH COURT, DECIDED ON 24.04.2014, WHEREBY IT WAS HELD T HAT THE DENIAL OF RIGHT TO CROSS EXAMINE THE WITNESSES WOUL D CAUSE PREJUDICE TO THE ACCUSED AS STATEMENTS OF WITNESSES ARE NOT SUBSTANTIVE EVIDENCE IN THEMSELVES. IT WAS HELD IN THE SAID JUDGEMENT THAT DELAY IS NOT A GROUND FOR DISAL LOWING THE OPPORTUNITY TO CROSS EXAMINE WITNESSES. THE COURT L AID DOWN THAT: 18. THE IMPUGNED ORDER OF THE AO FAILS TO DISCUSS THIS ASPECT ALTHOUGH IT HAS NOTICED THE SUBMISSION OF LE ARNED COUNSEL FOR THE APPELLANTS THAT THE SAID STATEMENTS HAD BEEN RETRACTED AS THEY HAD BEEN GIVEN UNDER THREAT AND C OERCION. IN ORDER TO DETERMINE WHETHER THE CLAIM OF THE APPE LLANTS THAT THEY WERE SUBJECTED TO TORTURE, THREAT AND COE RCION WAS A CREDIBLE ONE, THE SD SOUGHT TO HAVE PERMITTED THE APPELLANTS TO CROSS-EXAMINE THE OFFICERS OF THE ED WHO RECORDED THE STATEMENTS. AS REGARDS PREM SINGH, HIS STATEMENT IS STATED TO HAVE BEEN RECORDED BY A.K. N ARANG, ASSISTANT DIRECTOR. THE STATEMENT OF RAJENDRA SINGH WAS RECORDED BY DEVENDER MALHOTRA. NEITHER OF THESE OFF ICERS WAS TENDERED FOR CROSS-EXAMINATION. IN THE CONSIDERED V IEW OF THE COURT, IN THE CONTEXT OF THE SPECIFIC ALLEGATIO N THAT THE RETRACTED CONFESSIONAL STATEMENTS WERE OBTAINED UND ER TORTURE AND COERCION, THAT ASPECT OUGHT TO HAVE BEE N EXAMINED BY THE SD. IN THE CIRCUMSTANCES, THE REASON S GIVEN BY THE SD IN THE IMPUGNED AO FOR DISALLOWING THE REQ UEST OF THE APPELLANTS FOR CROSS-EXAMINATION OF THE ED OFFI CIALS ONLY BECAUSE IT WOULD TANTAMOUNT TO FURTHER DELAY IN FI NALISING 27 THE PROCEEDING WERE NOT TENABLE OR JUSTIFIED. THE DENIAL OF CROSS EXAMINATION OF THE ED OFFICIALS BY THE APPELL ANTS INDEED HAS CAUSED THEM SEVERE PREJUDICE SINCE THE ED WAS R ELYING ON THE SAID STATEMENTS AS IF THEY WERE BY THEMSELVE S SUBSTANTIVE EVIDENCE. (III) THE HONBLE HIGH COURT OF DELHI IN DEVASHIS B HATTACHARYA VS. UNION OF INDIA 159 (2009) DLT 780 , WHILE DECIDING A CASE UNDER FOREIGN EXCHANGE REGULATION ACT, 1973 HA D OBSERVED THAT: 18. IT IS WELL SETTLED THAT WHERE AN ACTION UNDER THE STATUTE ENTAILS CIVIL CONSEQUENCES, THEN EVEN IF AN OPPORTU NITY OF BEING HEARD MAY NOT BE EXPLICITLY SET OUT IN THE AP PLICABLE LEGAL PROVISIONS, THE ADHERENCE TO THE PRINCIPLES O F NATURAL JUSTICE HAS TO BE READ INTO SUCH A STATUTE. 19. THERE CAN BE NO DISPUTE THAT THE ACTION PERMITT ED UNDER SECTION 61 OF THE FERA, 1973 CERTAINLY RESULTS IN D RASTIC PENAL CONSEQUENCES (IV) THE HONBLE SUPREME COURT OF IND IA IN RAMESH AHLUWALIA VS. STATE OF PUNJAB & ORS. 2012 (10 ) SCALE 46 HAD OBSERVED THAT: 18. THIS IS IN CONFORMITY WITH THE PRINCIPLE THAT JUSTICE MUST NOT ONLY BE DONE. ACTUAL AND DEMONSTRABLE FAIR PLAY MUST BE THE HALLMARK OF THE PROCEEDINGS AND THE DECISIONS O F THE ADMINISTRATIVE AND QUASI JUDICIAL COURTS. IN PARTIC ULAR, WHEN THE DECISIONS TAKEN BY THESE BODIES ARE LIKELY TO C AUSE ADVERSE CIVIL CONSEQUENCES TO THE PERSONS AGAINST W HOM SUCH DECISION ARE TAKEN. IV-A THE HONBLE SUPREME COURT OF INDIA IN ASHIWIN S. MEHTA AND ANR. VS. UNION OF INDIA (UOI) AND ORS. (2012) 1 SCC 83 HAD OBSERVED THAT: 27. IT IS THUS, TRITE THAT REQUIREMENT OF GIVING R EASONABLE OPPORTUNITY OF BEING HEARD BEFORE AN ORDER IS MADE BY AN ADMINISTRATIVE, QUASI JUDICIAL OR JUDICIAL AUTHORIT Y, PARTICULARLY WHEN SUCH AN ORDER ENTAILS ADVERSE CIVIL CONSEQUENC ES, WHICH WOULD INCLUDE INFRACTION OF PROPERTY, PERSONAL RIGH TS AND MATERIAL DEPRIVATION FOR THE PARTY AFFECTED, CANNOT BE SACRIFICED AT THE ALTER OF ADMINISTRATIVE EXIGENCY OR CELERITY. IV-B THE CONSTITUTIONAL BENCH OF THE HONBLE SUPREME COURT OF INDIA IN KHEM CHAND VS. UNION OF INDIA AIR 1958 SC 300 HAS DEFINED THE MEANING OF THE TERM REASONABLE OPPORTUNITY TO INCLUDE AN OPPORTUNITY TO DEFINED BY CROSS- EXAMINING THE WITNESSES PRODUCED AGAINST THE ACCUSE D. THE HONBLE COURT HELD THAT: TO SUMMARIZE: THE REASONABLE OPPORTUNITY ENVISAGED BY THE PROVISION UNDER CONSIDERATION INCLUDES- (A) AN OPPORTUNITY TO DENY HIS GUILT AND ESTABLISH HIS INNOCENCE, WHICH HE CAN ONLY DO IF HE IS TOLD WHAT THE CHARGES LEVELLED AGAINST HIM ARE AND THE ALLEGATION S ON WHICH SUCH CHARGES ARE BASED; (B) AN OPPORTUNITY TO DEFEND HIMSELF BY CROSS-EXAMI NING THE WITNESSES PRODUCED AGAINST HIM AND BY EXAMINING HIM SELF OR ANY OTHER WITNESSES IN SUPPORT OF HIS DEFENSE; AND FINALLY (C ) 28 AN OPPORTUNITY TO MAKE HIS REPRESENTATION AS TO WHY THE PROPOSED PUNISHMENT SHOULD NOT BE INFLICTED ON HIM. IV). THE HONBLE SUPREME COURT OF INDIA IN AYUBKHAN NOORKHAN PATHAN VS. THE STATE OF MAHARASHTRA & ORS. DECIDED ON 08.11.2012, CIVIL APPEAL NO. 7728 OF 2012 , AFTER RELYING UPON VARIOUS AUTHORITATIVE JUDGMENTS, HAS OBSERVED THAT CROSS- EXAMINATION IS AN INTEGRAL PART AND PARCEL OF THE P RINCIPLES OF NATURAL JUSTICE. IT HELD THAT CROSS-EXAMINATION IS ONE PART OF THE PRINCIPLES OF NATURAL JUSTICE. (V) A CONSTITUTION BENCH OF THE HONBLE SUPREME COUR T IN STATE OF M.P. V. CHINTAMAN SADASHIVA VAISHAMPAYAN, AIR 1961 SC 1623, HAS HELD THAT THE PRINCIPLE OF NATURAL JUSTICE REQUIRE THAT A PARTY BE GIVEN THE OPPORTUNI TY TO ADDUCE ALL RELEVANT EVIDENCE UPON WHICH IT RELIES, THAT EVIDENCE OF THE OPPOSITE PARTY BE TAKEN IN HIS PRES ENCE, AND THAT HE BE GIVEN THE OPPORTUNITY TO CROSSEXAMINE TH E WITNESSES EXAMINED BY THAT PARTY. NOT PROVIDING THE SAID OPPORTUNITY TO CROSS-EXAMINE IS VIOLATIVE OF THE PR INCIPLES OF NATURAL JUSTICE. (VI). IN LAKSHMAN EXPORTS LTD. V. COLLECTOR OF CENTRAL EXCISE, (2005) 10 SCC 634, THE APEX COURT, WHILE DEALING WITH A CASE UNDER THE CENTRAL EXCISE ACT, 1944, CONSIDERED WHETHER TO GRANT PERMISSION FOR CROSS-EXAMINATION OF A WITNESS. IN T HAT CASE, THE ASSESSEE HAD SPECIFICALLY ASKED TO BE ALLOWED T O CROSSEXAMINE THE REPRESENTATIVES OF THE CONCERNED F IRM, IN ORDER TO ESTABLISH THAT THE GOODS IN QUESTION HAD B EEN ACCOUNTED FOR IN THE FIRMS BOOKS OF ACCOUNTS AND E XCISE DUTY HAD BEEN PAID THEREOF. THE COURT HELD THAT SUCH A R EQUEST COULD NOT BE TURNED DOWN, AS THE DENIAL OF THE RIGH T TO CROSS- EXAMINE, WOULD AMOUNT TO A DENIAL OF THE RIGHT TO B E HEARD I.E. AUDI ALTERAM PARTEM. (VII). IN K.L. TRIPATHI V. STATE BANK OF INDIA & ORS., AIR 1984 SC 273, THE HONBLE SUPREME COURT HAS HELD THAT IN ORDER TO SUSTAIN A COMPLAINT OF VIOLATION OF THE PR INCIPLES OF NATURAL JUSTICE ON THE GROUND OF DENIAL OF OPPORTUN ITY TO CROSS-EXAMINE, IT MUST BE ESTABLISHED THAT SOME PRE JUDICE HAS BEEN CAUSED TO THE PARTY BY THE PROCEDURE FOLLO WED. A PARTY WHICH DOES NOT WANT TO CONTROVERT THE VERACIT Y OF THE EVIDENCE ON RECORD OR DOES NOT WANT TO CONTROVERT T HE TESTIMONY GATHERED BEHIND ITS BACK CANNOT EXPECT TO SUCCEED IN ANY SUBSEQUENT GRIEVANCE RAISED BY HIM ON THE GR OUND THAT NO OPPORTUNITY OF CROSS-EXAMINATION WAS PROVID ED TO HIM ESPECIALLY WHEN THE SAME WAS NOT REQUESTED AND ESPECIALLY WHEN THERE WAS NO DISPUTE REGARDING THE VERACITY OF THE STATEMENT. (VIII). IN RAJIV ARORA V. UNION OF INDIA & ORS. , AIR 2009 SC 1100, THE APEX COURT HELD: EFFECTIVE CROSS-EXAMINATION COULD HAVE BEEN DONE A S REGARDS THE CORRECTNESS OR OTHERWISE OF THE REPORT, IF THE CONTENTS OF THEM WERE PROVED. THE PRINCIPLES ANALOG OUS TO 29 THE PROVISIONS OF THE INDIAN EVIDENCE ACT AS ALSO T HE PRINCIPLES OF NATURAL JUSTICE DEMAND THAT THE MAKER OF THE REPORT SHOULD BE EXAMINED, SAVE AND EXCEPT IN CASES WHERE THE FACTS ARE ADMITTED OR THE WITNESSES ARE NOT AVA ILABLE FOR CROSS-EXAMINATION OR SIMILAR SITUATION. THE HIGH CO URT IN ITS IMPUGNED JUDGMENT PROCEEDED TO CONSIDER THE ISSUE O N A TECHNICAL PLEA, NAMELY, NO PREJUDICE HAS BEEN CAUSE D TO THE APPELLANT BY SUCH NON-EXAMINATION. IF THE BASIC PRI NCIPLES OF LAW HAVE NOT BEEN COMPLIED WITH OR THERE HAS BEEN A GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE, THE HIGH COURT SHOULD HAVE EXERCISED ITS JURISDICTION OF JUDICIAL REVIEW. IX). THE HONBLE SUPREME COURT OF INDIA IN NEW INDIA ASSURANCE COMPANY LTD., V. NUSLI NEVILLE WADIA & ANR ., AIR 2008 SC 876, WHILE CONSIDERING A CASE UNDER THE PUBLIC PREMISES (EVICTION OF UNAUTHORISED OCCUPANTS) ACT, 1971, HELD THAT THOUGH THE STATUTE MAY NOT PROVIDE FOR CR OSS- EXAMINATION, THE SAME BEING A PART OF PRINCIPLES OF NATURAL JUSTICE SHOULD BE HELD TO BE AN INDEFEASIBLE RIGHT. IT WAS HELD AS FOLLOWS:- IF SOME FACTS ARE TO BE PROVED BY THE LANDLORD, IN DISPUTABLY THE OCCUPANT SHOULD GET AN OPPORTUNITY TO CROSS-EXA MINE. THE WITNESS WHO INTENDS TO PROVE THE SAID FACT HAS THE RIGHT TO CROSS-EXAMINE THE WITNESS. THIS MAY NOT BE PROVIDED BY UNDER THE STATUTE, BUT IT BEING A PART OF THE PR INCIPLE OF NATURAL JUSTICE SHOULD BE HELD TO BE INDEFEASIBL E RIGHT X). THE HONBLE SUPREME COURT IN NEEDLE INDUSTRIES (INDIA) LTD. & ORS. V. N.I.N.I.H. LTD. & ORS., AIR 1981 SC 1298, CONSIDERED A CASE UNDER THE INDIAN COMPANIES ACT, AND OBSERVED THAT: IT IS GENERALLY UNSATISFACTORY TO RECORD A FINDING INVOLVING GRAVE CONSEQUENCES WITH RESPECT TO A PERSON, ON THE BASIS OF AFFIDAVITS AND DOCUMENTS ALONE, WITHOUT ASKING THAT PERSON TO SUBMIT TO CROSS-EXAMINATION (XI). HONBLE HIGH COURT IN MEHAR SINGH VS. THE APPELLATE BOARD FOREIGN EXCHANG E 1986 (10) DRJ 19, WHILE DEALING WITH A CASE UNDER THE FOREIGN EXCHANGE REGULATION ACT, 1973, DECIDED THE APPEAL IN FAVOUR OF THE APPELLANTS ON THE SHORT GROUND THA T THE APPLICATIONS MADE TO THE DIRECTOR OF ENFORCEMENT AN D BEFORE THE APPELLATE BOARD DURING THE PENDENCY OF THE APPE AL TO SUMMON FOUR WITNESSES FOR CROSS-EXAMINATION, WERE N OT DEALT WITH BY THE AUTHORITIES BELOW. IT WAS HELD: 5. NON-SUMMONING OF THE SAID WITNESSES FOR PURPOSE S OF CROSS-EXAMINATION HAS RESULTED IN MISCARRIAGE OF JU STICE. 55. IN THE NATURE OF THE SERIOUSNESS OF PRESENT CAS E, THE RIGHT TO CROSS EXAMINATION WOULD HAVE BEEN GIVEN IN VIEW OF GRAVITY OF THE MATTER. INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G : NEW DELHI ITA NO. 1415 TO 1417/DEL/2018 (ASSESSMENT YEAR: 2013-14 TO 2015-16) 30 SHRI BRIJ BHUSHAN SINGAL DATE OF PRONOUNCEMENT 07/12/2018 IT IS NOT IN DISPUTE THAT ASSESSEE HAS FURNISHED AL L THE DETAILS SUCH AS PURCHASE BILLS, ALLOTMENT DETAILS, DEMAT AC COUNTS, BANK STATEMENTS , DETAILS OF PAYMENTS BY CHEQUES AN D SALE ON BSE ELECTRONIC PLATFORM, PROOF OF PAYMENT OF SEC URITIES TRANSACTION TAX AND RECEIPT OF PAYMENT THROUGH CHEQ UE BY AN INDEPENDENT BROKER, SALE BILLS ETC WHICH IS NOT DOUBTED BY THE REVENUE. THE FACTS HAVE ALREADY NARRATED BY US IN EARLIER PARAS, WHICH ARE UNDISPUTED BY BOTH THE PARTIES. ON LY FOLLOWING ISSUES ARE TO BE DECIDED IN THIS APPEAL:- I. WHETHER AO CAN USE THE STATEMENTS OF THIRD PARTIES WITHOUT GRANTING CROSSEXAMINATION OF THOSE PARTIES. II. WHETHER WITH OUT PROVIDING THE COPIES OF THE STATEMENTS AS WELL AS T HE CROSS EXAMINATION OF ALLEGED EXIT PROVIDERS, SUCH EVIDENC ES CAN BE USED AGAINST THE ASSESSEE FOR MAKING ADDITION. III. WHETHER THE INTERIM ORDERS OF THE SEBI RELIED UP ON BY THE L D AO IMPLICATE THE ASSESSEE FOR MAKING ADDITION U/S 68 O F THE ACT ON ALLEGED BOGUS LONGTERM CAPITAL GAINS. IV. WHETHE R CASH TRAILS OF THE BUYERS OF THE SECURITIES AS STATED BY THE LD AO MAKES THE LONG-TERM CAPITAL GAIN OF THE ASSESSEE BO GUS. V. WHETHER THE DISCLOSURE OF SOME OTHER PERSONS AS THE IR UNDISCLOSED INCOME OF LONG-TERM CAPITAL GAIN AFFECT S THE CASE OF THE ASSESSEE ALSO. VI. WHETHER DE HORS ALL THE A BOVE FACTS ADDITION IN THE HANDS OF THE ASSESSEE U/S 68 OF LON G TERM CAPITAL GAIN CAN BE MADE. THUS, IT IS APPARENT THAT THE ASSESSEE HAS NOT BEEN GRANTED AN OPPORTUNITY OF THE CROSS-EXAMINATION OF SRI R. K . KEDIA AND SHRI MANISH ARORA. THE LEARNED AUTHORISED REPRES ENTATIVE HAS RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT WHERE IN RELYING ON CASE OF STATE OF MADHYA PRADESH VS. CHINTAMAN SADASHIV WAISHAMPAYAN AIR 1961 SC 1623 WHEREIN IN PARA NUMBER 11, IT HAS BEEN HELD REFERRI NG ANOTHER DECISION IN UNION OF INDIA VS. TR VARMA ST ATING IT BROADLY AND WITHOUT INTENDING IT TO BE EXHAUSTIVE, IT MAY BE OBSERVED THAT THE RULES OF NATURAL JUSTICE REQUIRE THAT THE PARTY SHOULD HAVE THE OPPORTUNITY OF PRODUCING ALL RELEVANT EVIDENCE ON WHICH HE RELIES, THAT THE EVIDENCES OF THE APPELLANT SHOULD BE TAKEN IN HIS PRESENCE, AND THAT HE SHOULD BE GIVEN THE OPPORTUNITY OF CROSS-EXAMINING THE WIT NESSES EXAMINED BY THAT PARTY, AND THAT NO MATERIAL SHOULD BE RELIED ON AGAINST HIM WITHOUT HE IS BEING GIVEN AN OPPORTU NITY OF EXPLAINING THEM. IT WAS FURTHER STATED THAT IT IS HARDLY NECESSARY TO EMPHASIZE THAT THE RIGHT TO CROSS-EXAM INE THE WITNESSES WHO GIVE EVIDENCES AGAINST HIM IS A VERY VALUABLE RIGHT, AND IF IT APPEARS THAT EFFECTIVE EXERCISE OF THIS RIGHT HAS BEEN PREVENTED BY THE ENQUIRY OFFICER BY NOT GIVING TO OFFICER RELEVANT DOCUMENTS, TO WHICH HE IS ENTITLED, THAT I NEVITABLY WOULD BE THAT THE ENQUIRY HAD NOT BEEN HELD IN ACCO RDANCE 31 WITH THE RULES OF NATURAL JUSTICE. THE HONBLE SUPRE ME COURT THEREAFTER, REFERRING TO THE ANOTHER DECISION OF TH E HONBLE SUPREME COURT HELD THAT THE IMPORTANCE OF GIVING AN OPPORTUNITY TO THE PUBLIC OFFICER TO DEFEND HIMSELF BY CROSS- EXAMINING WITNESS PRODUCED AGAINST HIM IS NECESSARY FOR FOLLOWING THE RULES OF NATURAL JUSTICE. FURTHER, TH E DECISION OF THE HONBLE SUPREME COURT IN CASE OF ANADAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE (2015 ) 281 CTR 241 (SC) HAS HELD AS UNDER :- ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROSS-EXAMINE THE WITNESSE S BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THO SE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUST ICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WA S BASED UPON THE STATEMENTS GIVEN BY THE AFORESAID TWO WITN ESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDIC ATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASS ESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORD ER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY M ENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE . HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AF ORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUT HORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJE CTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TRIBUNAL HAS SIMPLY STATED THAT CROSS-EXAMINATION OF THE SAID DEALERS COULD NOT HAV E BROUGHT OUT ANY MATERIAL, WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX- FACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL T O HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WANTED T O CROSS- EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPEL LANT WANTED FROM THEM. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THE SE TWO WITNESSES AND WANTED TO DISCREDIT THEIR TESTIMONY F OR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS - EXAMINATION. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPON THE PRICE LIST AS MAINTAINED AT THE DEP OT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCI SE DUTY. WHETHER THE GOODS WERE, IN FACT, SOLD TO THE SAID DEALERS/WITNESSES AT THE PRICE WHICH IS MENTIONED I N THE PRICE LIST ITSELF COULD BE THE SUBJECT MATTER OF CROSS-EX AMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICATING AUTHORIT Y TO PRESUPPOSE AS TO WHAT COULD BE THE SUBJECT MATTER O F THE CROSSEXAMINATION AND MAKE THE REMARKS AS MENTIONED ABOVE. WE MAY ALSO POINT OUT THAT ON AN EARLIER OCC ASION WHEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APP EAL NO. 2216 OF 2000, ORDER DATED 17.03.2005 WAS PASSED REM ITTING THE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS T O DECIDE THE APPEAL ON MERITS GIVING ITS REASONS FOR ACCEPTI NG OR REJECTING THE SUBMISSIONS. IN VIEW THE ABOVE, WE AR E OF THE 32 OPINION THAT IF THE TESTIMONY OF THESE TWO WITNESSE S IS DISCREDITED, THERE WAS NO MATERIAL WITH THE DEPARTM ENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEMENT OF THE AFORESAID TWO WITNESSES WAS THE ONLY BASIS O F ISSUING THE SHOW CAUSE NOTICE. IN THE PRESENT CASE, ALSO THE ASSESSEE SOUGHT OPPORTUNITY OF CROSS-EXAMINATION OF THE WITNESSES WHOSE STATEMENTS ARE USED BY THE LEARNED ASSESSING OFFICER AGAINST THE ASSESSEE FOR MAKING T HE ADDITION. THE ASSESSEE HAS CONTESTED THE TRUTHFULNE SS OF THE STATEMENT OF THE WITNESSES RECORDED BY THE ASSESSIN G OFFICER. THE TRUTHFULNESS IS ALSO TESTED BY THE CHANGING STA NDS FREQUENTLY. IT IS ALSO NOT FOR THE ASSESSING OFFICE R TO DECIDE THAT NO OPPORTUNITY IS NECESSARY BECAUSE HE IS NOT AWARE WHAT COULD BE THE PURPOSE FOR THE CROSS-EXAMINATION ASKED BY THE ASSESSEE. THEREFORE NOT GRANTING OF OPPORTUN ITY OF THE CROSS-EXAMINATION OF THE BROKERS SRI RK KEDIA, MANIS H ARORA, ANKUR AGARWAL, DIRECTORS OF THE COMPANIES WHO HAVE PURCHASED SHARES FROM THE ASSESSEE THROUGH ELECTRON IC PLATFORM OF THE BOMBAY STOCK EXCHANGE/ NSE AND VARIO US OTHER PEOPLE AS WERE MENTIONED IN THE ASSESSMENT OR DER IS FATAL TO THE ASSESSMENT MADE BY THE ASSESSING OFFIC ER. WE ARE ALSO CONSCIOUS OF THE DECISION OF THE HONBLE S UPREME COURT IN CASE OF M. PIRAI CHOODI VS. ITO 334 ITR 26 2, WHEREIN THE HONBLE SUPREME COURT WHILE CONSIDERING THE DEC ISION OF THE HONBLE MP HIGH COURT IN 302 ITR 40 HAS HELD TH AT NOT GRANTING AN OPPORTUNITY OF CROSS-EXAMINATION TO THE ASSESSEE IS MERELY AN REGULARITY AND THEREFORE THE HIGH COUR T WAS NOT CORRECT IN CANCELLING THE ORDER OF THE ADJUDICATING AUTHORITY. THEREFORE, HONBLE SUPREME COURT THOUGHT IT FIT TO SET ASIDE THE MATTER TO THE ADJUDICATING AUTHORITY WITH A DIR ECTION TO GRANT OPPORTUNITY OF CROSS-EXAMINATION TO THE ASSES SEE. BEFORE US, AN ISSUE ARISES THAT WHETHER THE MATTER SHOULD BE SET ASIDE TO THE FILE OF THE LEARNED ASSESSING OFFI CER TO GRANT ASSESSEE AN OPPORTUNITY OF CROSS-EXAMINATION OF ALL THE WITNESSES WHOSE STATEMENTS HAVE BEEN USED BY THE LE ARNED ASSESSING OFFICER IN THE ASSESSMENT ORDER FOR THE P URPOSE OF MAKING THE ADDITION UNDER SECTION 68 OF THE ACT OR TO ANNUL THE ASSESSMENT ORDER ITSELF. ON CAREFUL PERUSAL OF THE DECISION OF THE HONBLE SUPREME COURT, IT IS NOTED T HAT SUCH DIRECTION WERE GIVEN BY THE HONBLE SUPREME COURT I N THE CASE OF WRIT PETITION FILED BY THE ASSESSEE BEFORE THE HONBLE HIGH COURT AND THEREFORE SUPREME COURT HELD THAT TH E ASSESSEE COULD HAVE GONE BEFORE THE COMMISSIONER AP PEALS TO AGITATE THIS ISSUE OF CROSS-EXAMINATION AND THER EFORE THE OPPORTUNITY WAS AVAILABLE TO THE ASSESSEE AT THAT P ARTICULAR POINT OF PROCEEDINGS. IN THE PRESENT CASE, ASSESSEE HAS ALSO RAISED THE SAME ISSUE BEFORE THE LEARNED CIT A THAT CROSS- EXAMINATION HAS NOT BEEN PROVIDED TO THE ASSESSEE D ESPITE ASKING FOR THE SAME. THE LEARNED CIT A HAS ALSO BRU SHED ASIDE THE ABOVE ARGUMENT OF THE ASSESSEE WITHOUT GI VING ANY PLAUSIBLE REASON. THEREFORE, WHEN THE ASSESSEE HAS NOT EXHAUSTED ALL THE JUDICIAL PROCESS BEFORE REACHING TO THE 33 HIGHER FORUM, BUT HAS BYPASSED THEM BY INVOKING THE DIFFERENT RIGHTS, THEN IN SUCH CIRCUMSTANCES, THE V IOLATION OF THE PRINCIPLES OF NATURAL JUSTICE, SUCH AS NOT GRAN TING OF OPPORTUNITY OF THE CROSSEXAMINATION, BECOMES ANY RE GULARITY AND NOT AN ILLEGALITY. HOWEVER, WHEN THE ASSESSEE H AS EXHAUSTED ALL THE REMEDIES AVAILABLE TO HIM BY EXER CISING HIS RIGHT OF THE JUDICIAL PROCESS, THEN IN SUCH CIRCUMS TANCES VIOLATION OF THE PRINCIPLE OF NATURAL JUSTICE, SUCH AS NOT GRANTING AN OPPORTUNITY OF CROSS-EXAMINATION OF THE WITNESS BECOMES AN ILLEGALITY. THEREFORE, IN SUCH CIRCUMSTA NCES, THE ORDER/ADDITION MADE BASED ON THE STATEMENT OF THIRD PARTIES AND NO OPPORTUNITY HAS BEEN GRANTED TO THE ASSESSEE FOR THEIR CROSS-EXAMINATION DESPITE REPEATED REQUESTS, ADDITION DESERVES TO BE DELETED. IN VIEW OF OUR ABOVE FINDIN GS, FINDINGS OF THE COORDINATE BENCH IN ASSESSEES OWN CASE FOR EARLIER YEARS, AND BASED ON THE VARIOUS JUDICIAL PR ECEDENT RELIED UPON, WE DO NOT AGREE THAT DOCUMENT SEIZED F ROM THIRD-PARTY CAN BE USED FOR MAKING ADDITION IN THE HANDS OF THE ASSESSEE WITHOUT ASSESSEE BEING GRANTED AN OPPO RTUNITY OF CROSS-EXAMINATION OF THOSE PARTIES. IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI E BENCH, NEW DELHI ITA NO. 2576/DEL/2010 ASSESSMENT YEAR: 2003-04 LORDS DISTILLERY LIMITED, COMMON GRIEVANCE NO. 2 NO CROSS EXAMIANTION OF SHRI R.K. MIGLANI WAS ALLOWED BY THE REVENUE THE LD. DR CONCLUDED BY STATING THAT ,IN EFFECT, SHR I R.K. MIGLANI WAS AN EMPLOYEE OF THE MEMBER OF THE UPDA A ND, THEREFORE, THERE WAS NO NECESSITY FOR HIS CROSS EXA MINATION. 64. THE CONTENTION OF THE LD. DR THAT SINCE SHRI R. K. MIGLANI WAS RELATED TO THE MEMBER DISTILLERIES OF UPDA, THE REFORE IT WAS NOT NECESSARY TO ALLOW CROSS EXAMINATION IS NOT ACCEPTABLE. THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF SHRI S.N. AGGARWAL 293 ITR 43 HAS HELD AS UNDER: 11. IN THE PRESENT CASE THE ASSESSING OFFICER HAS PLACED RELIA NCE ON THE STATEMENT OF SMT.SARLA AGGARWAL, DAUGHTER OF THE ASSE SSED WHILE ARRIVING AT THE CONCLUSION, THAT THE ENTRIES BELONG TO THE TRANSACTIONS OF THE ASSESSED. THIS STATEMENT MA DE BY SMT.SARLA GUPTA, CANNOT BE SAID TO BE RELEVANT OR ADM ISSIBLE EVIDENCE AGAINST THE ASSESSED, SINCE THE ASSESSED W AS NOT GIVEN ANY OPPORTUNITY TO CROSS-EXAMINE HER AND EVEN FROM THE STATEMENT, NO CONCLUSION CAN BE DRAWN THAT THE ENTRIES MADE ON THE RELEVANT PAGE BELONGS TO THE ASSESSED A ND REPRESENTS HIS UNDISCLOSED INCOME. IT IS ALSO AN AD MITTED FACT THAT THE STATEMENT OF THE ASSESSED WAS NOT RECORDED AT ANY STAGE DURING THE ASSESSMENT PROCEEDINGS. THE ONLY CONCLUSION WHICH CAN BE DRAWN ABOUT THE NATURE AND CONTENTS OF THE DOCUMENT IS THAT IT IS A DUMB DOCUM ENT AND 34 ON THE BASIS OF THE ENTRY OF NOTHINGS OR FIGURE ETC . IN THIS DOCUMENT, IT CANNOT BE CONCLUDED THAT THIS REPRESEN TS THE UNDISCLOSED INCOME OF THE ASSESSEE. 65. THE HON'BLE SUPREME COURT IN THE CASE OF ANDAMA N TIMBER VS. CIT IN CIVIL APPEAL NO. 4228 OF 2006 HAS HELD AS UNDER: ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROSS- EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BAS IS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES TH E ORDER NULLITY IN AS MUCH AS IT AMOUNTED TO VIOLATION OF P RINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS A DVERSELY AFFECTED. 66. THE LD. DR HAS STRONGLY EMPHASIZED ON THE EVIDE NTIARY VALUE OF THE STATEMENT RECORDED U/S 132(4) OF THE A CT AND HAS RELIED UPON SEVERAL JUDICIAL DECISIONS TO SUPPO RT HIS CONTENTIONS. THE LD. DR FURTHER RELIED UPON THE PRO VISIONS OF SECTION 132(4A) OF THE ACT AND 292C OF THE ACT. THE SE SECTIONS READ AS UNDER: 70. IT CAN BE SEEN FROM THE ABOVE CHART THAT THE CA SE IN WHICH THE PRESUMPTION WAS AVAILABLE, THE REVENUE AC CEPTED WHAT WAS RETURNED BY SHRI R.K. MIGLANI AND ON THE ST RENGTH OF HIS STATEMENT THAT THE DOCUMENTS SEIZED FROM HIS PREMISES BELONG TO DISTILLERIES, THE ADDITIONS HAVE BEEN MADE AS UNEXPLAINED EXPENDITURE/CONTRIBUTION TO UPDA. 71. IT IS WELL SETTLED THAT ONLY THE PERSON COMPETE NT TO GIVE EVIDENCE ON THE TRUTHFULNESS OF THE CONTENTS OF THE DOCUMENT IS WRITER THEREOF. SO, UNLESS AND UNTIL THE CONTENTS OF THE DOCUMENTS ARE PROVED AGAINST A PERSON, THE POSSESSI ON OF THE DOCUMENT OR HAND WRITING OF THAT PERSON ON SUCH DOCUMENT BY ITSELF CANNOT PROVE THE CONTENTS OF THE DOCUMENT. 72. CONSIDERING THE FACTS OF THE DISPUTE IN TOTALIT Y, WE ARE OF THE OPINION THAT THE ASSESSMENT FRAMED U/S 153C OF THE ACT IS IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND DESERVE TO BE TAGGED AS NULLITY. IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: F, NEW DELHI ITA NO. 5662/DEL/2018 AY: 2014-15 VEENA GUPTA DATE OF PRONOUNCEMENT: 27/11/2018 12.1 IT IS PERTINENT TO NOTE THAT ASSESSEE, VIDE LE TTER DATED 21/12/16 HAD ASKED LD. AO TO PROVIDE MATERIAL BASED UPON WHICH VARIOUS ALLEGATIONS HAVE BEEN LEVIED BY LD. A O. THESE FACTORS FROM PARA 20 OF ASSESSMENT ORDER, WHEREIN A SSESSEE RAISED OBJECTIONS, ONE OF WHICH IS OPPORTUNITY TO C ROSS EXAMINE, IN CASE OF ANY EVIDENCE USED AGAINST ASSES SEE. 35 12.3 TO OUR SURPRISE, LD. AO WITHOUT PROVIDING ANY MATERIAL EVIDENCE, REPORT ON WHICH HE WAS RELYING AND NOT GR ANTING AN OPPORTUNITY TO CROSS EXAMINE THE PERSONS ON WHOSE STATEMENT HE ARRIVED AT CERTAIN PRESUPPOSITIONS, MA DE ADDITION IN THE HANDS OF ASSESSEE. THIS IS EVIDENT FROM PARA 22 OF ASSESSMENT ORDER. 13. BEFORE LD. CIT (A) ASSESSEE ONCE AGAIN RAISED P LEA OF CROSSEXAMINATION GRANTED TO ASSESSEE AND MATERIALS NOT BASED UPON WHICH THE SUBMISSIONS HAVE BEEN MADE HAS NOT BEEN PROVIDED FOR EXAMINATION. EVEN THEN OPPORTUNIT Y WAS NOT GRANTED TO ASSESSEE, THOUGH LD. CIT (A) HAD COT ERMINOUS POWERS AS THAT OF LD. AO. 14. IN OUR VIEW THIS AMOUNTS TO GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. WE DRAW OUR SUPPORT FROM THE DE CISION OF HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VERSUS CCE REPORTED IN (2015) 62 TAXMANN .COM 3, WHEREIN HONBLE COURT OBSERVED AS UNDER: ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROS SEXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS O F THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE OR DER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRI NCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS A DVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEMENTS GIVEN BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSESSEE DIS PUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CRO SS- EXAMINE, THE ADJUDICATING AUTHORITY DID NOT GRANT T HIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATI NG AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH A N OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS N OT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. 15. WE, ACCORDINGLY, RESPECTFULLY FOLLOWING DECISION OF HON BLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRI ES VERSUS CCE (SUPRA) ALLOW APPEAL OF ASSESSEE ON LEGA L GROUND RAISED IN GROUND 2(C), AND QUASH AND SET-ASIDE THE ASSESSMENT ORDER SO PASSED. 15.1 AS WE HAVE ALLOWED ASSESSEES APPEAL ON GROUND 2(C), OTHER GROUNDS RAISED BY ASSESSEE BECOMES ACADEMIC I N NATURE WHICH DO NOT REQUIRE ANY ADJUDICATION AT THI S STAGE. RECENT COORDINATE AND DIVISION PUNE BENCH ITAT DEC ISION IN CASE OF BRIJENDRA NATH AGARWAL (ITA 1666/PUN/2015) DATE OF ORDER: 29/11/2018 HAS HELD AS UNDER: THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IN SU CH SCENARIO, IS WHETHER RE-ASSESSMENT PROCEEDINGS WHIC H HAVE BEEN COMPLETED AGAINST ASSESSEE, CAN STAND IN THE E YES OF LAW, WHERE (A) DOCUMENTS ASKED FOR HAVE NOT BEEN SU PPLIED TO THE ASSESSEE AND (B) CROSS-EXAMINATION OF WITNES SES HAVE 36 NOT BEEN PROVIDED TO THE ASSESSEE. BEFORE PROCEEDIN G FURTHER, IT MAY BE POINTED OUT THAT THE ASSESSING O FFICER REFERS TO THE PROCEEDINGS BEFORE DDIT(INV) AND ALLE GES THAT ALL THE DOCUMENTS HAVE BEEN HANDED OVER BY DDIT(INV ) TO THE ASSESSEE AND HENCE, THEY WERE NOT BEING PROVIDE D. IT IS NOT CLEAR AS TO WHAT DOCUMENTS WERE PROVIDED BY DDI T(INV). EVEN IF IT WAS SO, THEN IT WAS INCUMBENT UPON THE A SSESSING OFFICER TO PROVIDE THE DOCUMENTS, WHICH WERE IN HIS POSSESSION AND WHICH HE WAS SEEKING TO RELY ON IN O RDER TO COMPLETE ASSESSMENT AGAINST ASSESSEE. THE ASSESSEE HAS TIME AND AGAIN ASKED FOR THE COPIES OF DOCUMENTS AN D EVEN WAS READY TO PAY COPYING CHARGES BUT THE ASSESSING OFFICER HAD BLATANTLY REFUSED TO GIVE THE DOCUMENTS ON THE PREMISE THAT THEY HAVE ALREADY BEEN RECEIVED BY ASSESSEE. B UT NO SUCH EVIDENCES OF SUCH DOCUMENTS BEING HANDED OVER BY DDIT(INV) HAS BEEN FILED ON RECORD. ANOTHER ASPECT TO BE NOTED IS THAT THE ASSESSING OFFICER IS RELYING ON S TATEMENTS OF TWO PERSONS, THE ASSESSEE HAD SOUGHT CROSS-EXAMINAT ION OF THE SAID PERSONS AND OF MANY EVIDENCES ALSO, WHICH HAVE NOT BEEN PROVIDED BY ASSESSING OFFICER. ANOTHER ASPECT OF THE ISSUE IS THAT THE ASSESSING OFFICER HAS PURELY RELI ED ON THE STATEMENT OF SHRI PRAVIN KUMAR JAIN OF HAVING PROVI DED ACCOMMODATION ENTRIES IN ORDER TO FIRST INITIATE RE -ASSESSMENT PROCEEDINGS AND THEN ALSO TO COMPLETE RE-ASSESSMENT PROCEEDINGS BUT THE COPY OF SAID STATEMENT MADE BY SHRI PRAVIN KUMAR JAIN HAS BEEN REFUSED BY HIM. AFTER TH E SEARCH PROCEEDINGS, THE ASSESSEE HAS EVEN FILED COPY OF AF FIDAVIT OF SHRI PRAVIN KUMAR JAIN IN THIS REGARD, BUT THE SAME HAS NOT BEEN COMMENTED ON BY THE ASSESSING OFFICER NOR REFE RRED TO BEFORE MAKING ADDITION IN THE HANDS OF ASSESSEE. TH E ISSUE WHICH HAS BEEN RAISED BEFORE US IS WHETHER IN SUCH CIRCUMSTANCES, RE-ASSESSMENT ORDER PASSED BY THE AS SESSING OFFICER WITHOUT PROVIDING COPIES OF DOCUMENTS AND W ITHOUT AFFORDING CROSS-EXAMINATION IS INVALID AND BAD IN L AW. 22. THE ISSUE WHICH NEEDS TO BE ADDRESSED IS NON PROVIDING OF COPIES OF DOCUMENTS AND NON AFFORDING OF CROSS-EXAMINATION OF THE WITNESSES IS WHETHER FATAL TO THE ASSESSMENT PROCEE DINGS. THE ASSESSING OFFICER ALLEGES THAT THE DOCUMENTS WE RE PROVIDED BY DDIT(INV). HOWEVER, IT IS NOT CLEAR AS TO COPIES OF WHAT DOCUMENTS HAVE BEEN GIVEN BY DDIT(INV). IN ANY CASE, THE INVESTIGATION WAS CARRIED OUT NOT IN THE HANDS OF ASSESSEE BUT IN THE HANDS OF OTHER PERSON, SO ONCE THE ASSESSEE ASKS THAT THE DOCUMENTS BE ISSUED TO IT ON WHICH RELIANCE IS PLACED UPON FOR REOPENING THE ASSESSMEN T, THEN IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO PROVIDE THE SAME TO THE ASSESSEE IN ORDER TO ENABLE THE ASSESSE E TO PERUSE THE SAME AND THEN POINT OUT WHETHER BY RELYI NG ON THE SAID DOCUMENTS, THE RE-ASSESSMENT HAS BEEN VALI DLY REOPENED. MAY BE, THE LETTER WHICH IS FORWARDED BY DDIT(INV) TO THE ASSESSING OFFICER IS AN INTERNAL D OCUMENT AND THE ASSESSING OFFICER HAS PROVIDED GIST OF THE SAME TO THE ASSESSEE. HOWEVER, THERE ARE OTHER DOCUMENTS TH E 37 ASSESSEE HAS ASKED FOR I.E. COPIES OF PAGE NO.6 TO 15 OF BUNDLE NO.1 SEIZED FROM THE OFFICE OF CIIL, BHOSARI , THE DETAILS OF DIRECTORS OF THE COMPANIES AS MENTIONED IN THE SAID LETTER. IN ADDITION, THE ASSESSEE HAD SOUGHT C ROSS- EXAMINATION OF DIFFERENT PERSONS WHOSE STATEMENTS / MATERIALS SEIZED FROM THEM WERE BEING RELIED UPON. HOWEVER, WE HAVE ALREADY MADE REFERENCE TO THE SAID DOCUMENT S IN PARAS 15, 17 AND 18 HEREINABOVE. THE ASSESSEE HAS T IME AND AGAIN ASKED FOR THE COPIES OF SAID DOCUMENTS BUT TH E SAME HAVE NOT BEEN SUPPLIED TO THE ASSESSEE. THE ASSESSE E HAS ALSO SOUGHT CROSS-EXAMINATION OF THE PERSONS WHOSE STATEMENTS WERE BEING RELIED UPON TO PROPOSE RE-ASS ESSMENT IN THE HANDS OF ASSESSEE, FOR WHICH REASONS WERE RE CORDED FOR REOPENING THE ASSESSMENT BUT NONE OF THE CROSS- EXAMINATIONS HAVE BEEN ALLOWED. THE NON-ALLOWANCE O F CROSS-EXAMINATION HAS BEEN HELD BY THE HON'BLE SUPR EME COURT IN M/S. ANDAMAN TIMBER INDUSTRIES VS. COMMIS SIONER OF CENTRAL EXCISE IN CIVIL APPEAL NO.4228 OF 2006, JUDGMENT DATED 02.09.2015 TO BE MOST FATAL. THE FACTS OF PRESENT CASE ARE SIMILAR, WHEREIN NO C ROSS- EXAMINATION HAS BEEN ALLOWED THOUGH THE ASSESSEE HA S TIME AND AGAIN ASKED FOR THE SAME. EVEN IF WE ACCEPT THE REASONING OF ASSESSING OFFICER THAT SEIZED DOCUMENT S HAVE BEEN SUPPLIED TO THE ASSESSEE BUT NO CROSS-EXAMINAT ION OF WITNESSES HAS BEEN PROVIDED TO THE ASSESSEE. IN SUC H SCENARIO, INVOKING OF JURISDICTION UNDER SECTION 14 7/148 OF THE ACT GETS AFFECTED AS THE ASSESSEE HAS A RIGHT T O FILE OBJECTIONS TO REOPENING OF ASSESSMENT AND SUCH A RI GHT OF ASSESSEE HAS BEEN VIOLATED. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS POINTED OUT THA T IN THE ABSENCE OF GETTING THE DOCUMENTS RELIED UPON AND IN NOT ALLOWING CROSS-EXAMINATION OF WITNESSES, THE ASSESS EE WAS NOT IN A POSITION TO FILE OBJECTIONS AGAINST REOPEN ING OF ASSESSMENT. THE JURISDICTION IS CONFERRED UPON THE ASSESSING OFFICER FOR MAKING RE-ASSESSMENT IN THE CASE OF ASS ESSEE ONLY ON THE BASIS OF AFORESAID SEIZED DOCUMENTS AND THE COMMUNICATION FROM DDIT(INV), WHO IN TURN, HAS RELI ED ON THE STATEMENTS OF VARIOUS PERSONS WHO WERE SEARCHED . HENCE, IN SUCH CIRCUMSTANCES, IT WAS INCUMBENT UPON THE ASSESSING OFFICER NOT ONLY TO ALLOW CROSS-EXAMINATI ON OF WITNESSES BUT ALSO FURNISH THE COPIES OF ALL THE SE IZED DOCUMENTS RELIED UPON AND EVEN THE LETTER FORWARDED BY DDIT(INV). IT IS THIS LETTER WHICH HAS BEEN RELIED UPON BY ASSESSING OFFICER TO CARRY OUT INVESTIGATION AGAINS T ASSESSEE. HENCE, THE SAME PARTAKES THE CHARACTER OF AN EVIDEN CE TO BE USED AGAINST ASSESSEE AND ITA THE PRINCIPLES OF NAT URAL JUSTICE DEMAND THAT SUCH EVIDENCE WHICH IS TO BE US ED AGAINST ASSESSEE, THEN COPY OF THE SAME SHOULD BE M ADE AVAILABLE TO THE ASSESSEE. THE CONTENTS OF SAID LET TER HAVE BEEN MADE AVAILABLE BY THE ASSESSING OFFICER, HENCE WE DO NOT UNDERSTAND WHAT STOPPED HIM FOR MAKING AVAILABL E THE 38 LETTER, COPY OF WHICH WAS FORWARDED BY DDIT(INV). T HE PERUSAL OF ASSESSMENT ORDER REFLECTS THAT THE ASSES SING OFFICER HAS ELABORATELY REFERRED TO THE CONTENTS OF SAID LETTER AND RELIED UPON THE INVESTIGATION CARRIED OUT BY DD IT(INV) IN ORDER TO REOPEN THE ASSESSMENT IN THE CASE OF ASSES SEE. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTAN CES, WHERE THE ASSESSEE HAS BEEN DENIED COPY OF STATEMENT RECO RDED AND COPY OF LETTER ISSUED BY DDIT(INV), WHICH HAS B EEN EXTENSIVELY RELIED UPON BY THE ASSESSING OFFICER TO RECORD REASONS FOR REOPENING THE ASSESSMENT AND FAILURE OF ASSESSING OFFICER IN NOT PROVIDING CROSS-EXAMINATIO N OF WITNESSES IN ORDER TO ENABLE THE ASSESSEE TO MEET T HE CASE OF BOTH REOPENING AND ALSO THE ASSESSMENT BEING CARRIE D OUT AGAINST THE ASSESSEE ON THE BASIS OF SUCH STATEMENT S, VIOLATES THE BASIC FUNDAMENTAL PRINCIPLE OF NATURAL JUSTICE AND IN SUCH SCENARIO, THE ASSESSMENT WHICH HAS BEEN COM PLETED AGAINST THE ASSESSEE CANNOT STAND. ACCORDINGLY, WE HOLD SO. 24. THE HON'BLE SUPREME COURT IN GKN DRIVESHAFTS IND IA LTD. VS. ITO (SUPRA) HAS HELD THAT IT IS INCUMBENT UPON THE ASSESSING OFFICER TO PROVIDE AN OPPORTUNITY TO THE ASSESSEE TO SUBMIT HIS OBJECTIONS TO REOPENING OF ASSESSMENT AND WHERE THE ASSESSING OFFICER HAS FAILED TO PROVIDE S UCH AN OPPORTUNITY, RE-ASSESSMENT ORDER CANNOT STAND. IN T HE FACTS OF PRESENT CASE, SINCE THE ASSESSEE DID NOT RECEIVE COPIES OF DOCUMENTS RELIED UPON AND ALSO NO CROSS-EXAMINATION OF WITNESSES ON WHOSE STATEMENTS THE ASSESSING OFFICER RELIED UPON TO RECORD REASONS FOR REOPENING ASSESSMENT, WA S PROVIDED TO THE ASSESSEE, HENCE THE ASSESSEE WAS PR EVENTED FROM FILING THE OBJECTIONS TO REOPENING OF ASSESSME NT. IN SUCH SCENARIO, EVEN IF THE ASSESSEE WAS WELL AWARE OF REASONS FOR REOPENING BUT THE FAILURE TO PROVIDE OP PORTUNITY TO FILE OBJECTIONS TO THE REOPENING OF ASSESSMENT V IOLATES THE GOVERNING PRINCIPLE OF LAW AND HENCE, RE-ASSESSMENT ORDER NEEDS TO BE QUASHED AND SET ASIDE. 25. THE HONBLE BOMBAY HIGH COURT IN AGARWAL METALS AND ALLOYS VS. ACIT (2 012) 346 ITR 64 (BOM) HAS PROPOUNDED SUCH A VIEW IN TURN REL YING ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN GKN DRIVESHAFTS (INDIA) LTD. VS. ITO (SUPRA). THE LEARN ED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS RAIS ED VARIOUS ISSUES OF CHANGE OF OPINION IN THE CASE OF SHRI B.N. AGARWAL, WHEREIN ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT. HOWEVER, SINCE WE HAVE D ECIDED THE ISSUE ON THE OTHER ASPECTS OF CASE AND HELD THE ASSESSMENT ORDER INVALID AND BAD IN LAW, WE ARE NOT ADDRESSING THE SAME. IT MAY BE POINTED OUT HEREIN I TSELF THAT SINCE THE ASSESSING OFFICER DID NOT PROVIDE COPIES OF STATEMENTS AND DID NOT ALLOW CROSS-EXAMINATION, THE N THE PLEA OF ASSESSEE THAT IT COULD NOT OBJECT TO THE RE ASONS RECORDED FOR REOPENING THE ASSESSMENT HAS MERITS TO BE 39 ALLOWED AND FOR SUCH ACT, WHEREIN NO PROPER OPPORTU NITY WAS GIVEN TO THE ASSESSEE TO FILE OBJECTIONS TO RE-ASSE SSMENT, PROCEEDINGS INITIATED UNDER SECTION 147/148 OF THE ACT CANNOT STAND. THERE IS NO MERIT IN THE OBSERVATIONS OF CIT(A) THAT THE ASSESSEE HAD PARTICIPATED IN ASSESSMENT PR OCEEDINGS AND HENCE, IT CANNOT BE SAID THAT HE HAD ANY OBJECT IONS TO REOPENING OF ASSESSMENT. THE PRELIMINARY ISSUE AFFE CTING THE JURISDICTION OF REVENUE AUTHORITIES CAN BE RAISED A T ANY STAGE AND ACCORDINGLY, WE ADMIT THE PLEA OF ASSESSEE AND HOLD THAT ASSESSMENT ORDER PASSED IN THE CASE WITHOUT JURISDI CTION IS BOTH INVALID AND BAD IN LAW. THE GROUNDS OF APPEAL NO.1 TO 3 RAISED BY ASSESSEE ARE THUS, ALLOWED. WE HUMBLY REQUEST THAT INSTANT PROCEEDINGS MAY PLEA SE BE QUASHED ON THIS COUNT ONLY THAT LD AO HAS CHOSEN NO T TO SUPPLY ANY BACK MATERIAL REFERRED IN REASONS RECORD ED NAMELY INVESTIGATION WING REPORT LETTER ETC AND EVE N CROSS EXAMINATION IS NEVER OFFERED WITH REFERENCE TO STAT EMENT OF SEARCHED PERSON IF ANY , SO ENTIRE PROCEEDINGS ARE BAD IN LAW. RECENTLY DELHI ITAT A BENCH DECISION IN CASE OF ASH TECH INDUSTRIES PRIVATE LIMITED (20/12/2018) HAS CLEARLY HELD THAT WE FURTHER NOTE THAT AO SUPPLIED THE REASONS RECORD ED (WITHOUT APPROVAL) TO ASSESSEE (AS PLACED IN PAPER BOOK BEFORE US) WHICH WERE OBJECTED BEFORE THE AO IN DET AILED MANNER VIDE OBJECTION LETTER DATED 27.04.2016 IN WH ICH NOTE WORTHY ASPECT IS ASSESSEE SPECIFICALLY SOUGHT FROM AO COPIES OF BACK MATERIAL REFERRED IN REASONS INCLUDING INVE STIGATION WING REPORT/LETTER, SEIZED DOCUMENTS ETC REFERRED T HEREIN, AO WITHOUT CONFRONTING ANY BACK MATERIAL AS EVIDENT FR OM OBJECTION DISPOSAL ORDER DATED 17.05.2016 REJECTED ASSESSEES OBJECTION CHALLENGING REOPENING ACTION. IN VARIOUS LETTERS PLACED IN PAPER BOOK AND REFERRED IN WRITTE N SUBMISSION BEFORE US, IT WAS SPECIFICALLY ASKED TO AO DURING ASSESSMENT PROCEEDINGS TO CONFRONT THE BACK MATERIA L AS REFERRED IN REASONS RECORDED NAMELY IN LETTERS DATE D 07/06/2016, 20/10/2016 WHICH REQUEST OF ASSESSEE HA S NOT BEEN ADVERTED TO BY THE AO IS PATENT FROM OBJECTION DISPOSAL ORDER DATED 17/05/2016 AND FURTHER NOTICES DATED 09/08/2016 U/S 142(1) AND SHOW CAUSE NOTICE DATED 13/10/2016. IN NONE OF THESE NOTICES AS PLACED IN P APER BOOK, WE COULD FIND THE BACK MATERIAL BEING CONFRON TED TO ASSESSEE AS SPECIFICALLY REQUESTED BY ASSESSEE. WE NOTE HERE THAT THE TRIBUNAL IN VARIOUS DECISIONS SPECIALLY ON E WHICH IS REFERRED BY LD COUNSEL FOR THE ASSESSEE EXTENSIVELY IN CASE OF MOTI ADHESIVES (ITA 3133/DEL/2018) IN ORDER DATED 25/06/2018 COPY PLACED BEFORE US, HAS BEEN CONSISTE NTLY HOLDING WHILE TAKING SUPPORT FROM HONBLE APEX COUR T LEADING DECISION IN ANDAMAN TIMBER INDUSTRIES CASE (CIVIL A PPEAL NO. 4228 OF 2006) REPORTED AT 127 DTR 241 THAT VIOLATIO N OF PRINCIPLE OF NATURAL JUSTICE (HERE WITHHOLDING OF B ACK MATERIAL 40 REFERRED IN REASONS WHICH IS SPECIFICALLY REQUESTED FOR REPEATEDLY) IS A SERIOUS FLAW AND RESULTS IN NULLIT Y OF THE ORDER SO PASSED, WHICH IS SQUARELY APPLICABLE TO PRESENT CASE. ALL THE ABOVE DECISIONS SQUARELY ANSWERS THE SERIOU S WRONG IMPRESSION IN MIND OF REVENUE AUTHORITIES ON PRINCI PLE OF CROSS EXAMINATION MAY BE COMPROMISED OR ESCHEWED AN D EXCLUDED FROM INCOME TAX ASSESSMENT PROCEEDINGS WHE RE ENTIRE ASSESSMENT IS OTHERWISE PLAGIARIZED AND HEAV ILY INFLUENCED BY STATEMENTS RECORDED BY INVESTIGATION WING WHICH CANT BE TAKEN ON BOARD UNLESS TESTED ON TERRA FERMA OF CROSS EXAMINATION WHICH FOR REASONS BEST KNOWN TO R EVENUE IS NOT ADHERED IN ANY OF SUCH CASES. AS DISCUSSED SUPRA THERE ARE FIVE JUDGE CONSTITUTION BENCH RULINGS FRO M HONBLE APEX COURT (HONBLE SUPREME COURT OF INDIA IN KHEM CHAND VS. UNION OF INDIA AIR 1958 SC 300; THE HONBLE SUPR EME COURT IN STATE OF M.P. V. CHINTAMAN SADASHIVA VAISHAMPAYAN, AIR 1961 SC 1623 ETC) HOLDING NOT PROVIDING THE SAID OPPORTUNITY TO CROSS-EXAMINE IS VIOLATIVE OF THE PRINCIPLES OF NATURAL JUSTICE AND HAS ALSO HELD THAT THE MEANING OF THE TERM REASONABLE OPPORTUNITY TO INCLUDE AN OPPORTUNITY TO DEFINED BY CROSS-EXAMINING THE WITNE SSES PRODUCED AGAINST THE ACCUSED.. EVEN CELEBRATED DECI SION OF HONBLE APEX COURT IN ANDAMAN TIMBER CASE (SUPRA) WHICH THIS TRIBUNAL IS REGULARLY FOLLOWING IN VARIOUS RUL INGS CONSISTENTLY IS ALSO COMPLETE ANSWER TO CONTRARY RE VENUE ARGUMENT WHICH CANT BE ACCEPTED. IN THIS CONNECTIO N, THERE IS ONE RECENT DIVISION BENCH DECISION OF THIS HONB LE TRIBUNAL WHERE ONE PRADEEP JINDAL STATEMENT WAS MADE AS BASI S TO DRAW ADVERSE INFERENCE AND SANS CROSS EXAMINATION O F THAT PERSON IT IS HELD BY THIS TRIBUNAL IN CASE OF REETA SINGHAL IN ITA NO.4819/DEL/2018 ORDER DATED 17/01/2019 HELD (D ELHI BENCHES CAMP AT MEERUT)THAT: ..6. ON APPEAL, LD. CIT(A) DELETED THE ADDITION MA INLY ON THE GROUND THAT THE SUM OF RS.50 LAC RECEIVED BY TH E ASSESSEE WAS TOWARDS SALE CONSIDERATION OF SHARES O F M/S. SHRI GANGA PAPER MILLS PVT. LTD. AT FACE VALUE ON WH ICH THE ASSESSEE HAD NOT EARNED ANY CAPITAL GAIN. THE SHARE S ALREADY EXISTED IN THE BALANCE SHEET OF THE ASSESSEE IN THE ASSESSMENT YEARS 2006- 07 AND 2009-10. FURTHER, THE ASSESSEE WAS NOT ALLOWED CROSSEXAMINATION OF THE MA KER OF THE STATEMENT THAT THE ASSESSEE RECEIVED ACCOMMODAT ION ENTRY OF RS.69 LAC IN THE GUISE OF SALE CONSIDERATI ON OF SHARES, AND THEREFORE, THE STATEMENT OF THE PERSONS CANNOT BE USED AGAINST THE ASSESSEE FOR MAKING ADDITION U/S.68 OF THE ACT AND RELIED UPON THE DECISION OF HON'BLE SUPREME COU RT IN THE CASE OF M/S. ANDAMAN TIMBER INDUSTRIES (SUPRA). N O MATERIAL HAS BEEN BROUGHT ON RECORD BY THE DEPARTME NT TO SHOW THAT THE ABOVE FINDINGS OF THE LD. CIT(A) ARE NOT CORRECT. EVEN OTHERWISE, NO SPECIFIC ERROR IN THE O RDER OF THE LD. CIT(A) COULD BE POINTED OUT BY THE LEARNED DEPA RTMENT 41 REPRESENTATIVE. HENCE, WE FIND NO GOOD REASON TO IN TERFERE WITH THE ORDER OF THE LD. CIT(A) WHICH IS HEREBY CO NFIRMED AND THE GROUNDS OF APPEAL OF THE REVENUE IS DISMISS ED. 9. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES O F THE CASE AND RESPECTFULLY FOLLOWING AND APPLYING PRINCIPLES IN A FORESAID HONBLE SUPREME COURT, HONBLE HIGH COURT AND THIS TRIBUNAL RULINGS , SECOND ISSUE FRAMED BY ME ABOVE ON CONSEQUENTIAL IMPACT OF LACK OF CROSS EXAM INATION AND VIOLATION OF PRINCIPLE OF NATURAL JUSTICE, I HAVE NO HESITATION TO ACCEPT THE PLEA OF LD AR THAT LACK OF CROSS EXAMINATION AND VIOLATION OF PRINCIPL E OF NATURAL JUSTICE RESULTS IS TOTAL NULLITY OF THE ENTIRE ADDITION, HENCE, THE AD DITIONS IN DISPUTE IS HEREBY DELETED. 10. IN THE RESULT, ALL THE 04 APPEALS OF ALL THE AB OVE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED ON 11.02.2019. SD/- (H.S. SIDHU) JUDIC IAL MEMBER DT. 11-02-2019 SR BHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR ITAT DELHI BENCHES