Amitabh Bansal, Delhi v. ITO, Ward- 46(4), New Delhi

ITA 7804/DEL/2018 | 2015-2016
Pronouncement Date: 11-02-2019 | Result: Partly Allowed
Expert Summary: "Invocation of section 68 sans valid and proper books of account of assessee is invalid Principles of cross- examination have to be invariably followed, where revenue relies on statements of certain persons to implicate assessee, as not providing such opportunity to cross-examine is violative of principles of natural justice."

Appeal Details

RSA Number 780420114 RSA 2018
Assessee PAN ACTPB6786D
Bench Delhi
Appeal Number ITA 7804/DEL/2018
Duration Of Justice 2 month(s) 4 day(s)
Appellant Amitabh Bansal, Delhi
Respondent ITO, Ward- 46(4), New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 11-02-2019
Appeal Filed By Assessee
Tags No record found
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 11-02-2019
Assessment Year 2015-2016
Appeal Filed On 07-12-2018
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: SMC NEW DELHI BEFORE SHRI H.S. SIDHU JUDICIAL MEMBER ITA NO. 7802/DEL/2018 AY: 2015-16 AMITABH BANSAL C/O KAPIL GOEL ADVOCATE F-26/124 SECTOR-7 ROHINI DELHI (PAN: ACTPB6786D) VS. ITO WARD 46(4) NEW DELHI (APPELLANT) (RESPONDENT) ITA NO. 7804/DEL/2018 AY: 2015-16 ANJUL BANSAL C/O KAPIL GOEL ADVOCATE F-26/124 SECTOR-7 ROHINI DELHI (PAN: ALLPB6364J) VS. ITO WARD 46(4) NEW DELHI (APPELLANT) (RESPONDENT) ITA NO. 7806/DEL/2018 AY: 2015-16 DAYA BANSAL C/O KAPIL GOEL ADVOCATE F-26/124 SECTOR-7 ROHINI DELHI (PAN: AALPB6363R) VS. ITO WARD 48(1) 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)PPEAL S 16 NEW DELHI CONFIRMING AOS ACTION DISALLOWING LONG TERM CAPITAL GAINS EXEMPTIO N U/S 10(38) OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT) INVOKING DEEMING PRO VISIONS OF SECTION 68 OF THE ACT 2 HENCE THE SAME WERE HEARD TOGETHER AND ARE BEING D ISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE BY DEALING WITH THE FACTS OF ITA NO. 7802/DEL/2018 (AY 2015-16) IN CASE OF SMT. ANJUL BA NSAL WHICH WILL APPLY MUTATIS MUTANDIS TO OTHER APPEALS. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND HAS FILED RETURN OF INCOME U/S 139 OF THE INCOME TAX ACT 196 1 (IN SHORT ACT) ON 20.09.2016 DECLARING INCOME OF RS 13 87 300/-. THE RETURN WAS SELECTED FOR SCRUTINY UNDER CASS FOR THE REASON SUSPICIOUS LONG TERM CAPITAL GAINS (INPUTS FROM INVESTIGATION WING). THE NOTICE U/S 143(2) WAS ISSU ED ON 20.09.2016. 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 19 88 500/-. DURING ASSESSMENT PROCEEDINGS ASSESSEE HAS FILED DOCUMENTS SUPPORTING EXEMPTION U/S 10(38) NAMELY BANK STATEMENTS BROKER NOTES ETC. PURCHASE AND SALE TOOK PLACE THROUGH DOUBTLESS BANKING CHANNEL. NOTABLY NO BOOKS OF ACCOUNTS WERE THERE BEFORE AO AND LD CIT(A) DURING ASSESSMENT AND FIRST APPELL ATE PROCEEDINGS. SHOW CAUSE NOTICE WAS ISSUED BY AO TO ASSESSEE AS TO WHY SECTI ON 68 SHOULD NOT BE INVOKED AGAINST THE STATED LTCG EXEMPTION CLAIMED BY ASSESS EE U/S 10(38) OF THE ACT. ASSESSEE REPLIED TO SAME AND PLEADED FOR ACCEPTANCE OF LTCG CLAIMED IN RETURN OF INCOME. IN ASSESSMENT PROCEEDINGS AO HEAVILY RELIED ON STATEMENTS OF I) ANIL KHEMKA AND II) HARSHVARDHAN KAYAN TO DRAW ADVERSE IN FERENCE AGAINST THE ASSESSEE AND THESE STATEMENT WERE RECORDED BY INV ESTIGATION WING KOLKATA. FINALLY AO TREATED LTCG CLAIMED AS EXEMPT AS UNEXPL AINED CASH CREDIT U/S 68 OF THE ACT AND ADDITION OF RS 19 88 500 AND RS 94 425 AS A LLEGED COMMISSION PAID BY ASSESSEE U/S 69C OF THE ACT THUS TOTALING TO RS 20 82 925/- . THIS WAS CHALLENGED 3 BY ASSESSEE BEFORE LD CIT(A) WHO VIDE HIS IMPUGNED ORDER DATED 12.7.2018 HAS CONFIRMED THE ACTION OF AO IN MAKING OF ADDITION U/ S 68 AND SECTION 69C RESPECTIVELY BY DISMISSING ASSESSEES APPEAL. THUS FEELING AGGRIEVED WITH ORDER OF LD CIT(A) THIS APPEAL IS FILED BY ASSESSEE BEFORE T HIS TRIBUNAL. 3. DURING THE COURSE OF HEARING BEFORE THIS TRIBUNA L LD COUNSEL FOR THE ASSESSEE SH. KAPIL GOEL ADVOCATE HAS ARGUED MAIN LY ON TWO ASPECTS OF THE CASE FIRSTLY ON APPLICABILITY OF SECTION 68 OF THE ACT T O 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 TRANSACTION AND SECOND LY ON IMPACT OF CROSS EXAMINATION BEING DENIED TO ASSESSEE DESPITE REPEAT ED REQUESTS BEFORE AO AND LD CIT(A) AND IN THIS CONTEXT LD AR HAS DRAWN MY ATTEN TION TO FOLLOWING SPECIFIC LEGAL GROUNDS RAISED IN GROUNDS OF APPEAL : 2.1 THAT ORDER PASSED BY AO DATED 30/12/2017 AND F URTHER ORDER PASSED BY LD CIT A DATED 11/07/2018 ARE BAD IN LAW IN AS MUCH AS ADDITION OF RS 20 82 925 /- IS MADE VIOLATING PRINCIPLES OF NATURAL JUSTICE WITHOUT CONFRONTING ANY INVESTIGATION WING REPORT RELEVANT EXTRACT STATEMENTS RECORDED BY INVESTIGATION WING ETC WHICH IS SUFFI CIENT TO QUASH THE ASSESSMENT ORDER AND ORDER PASSD BY LD CIT(A) . 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW AO AND LD CIT(A) ERRED IN MAKING AND SUSTAINING SUBJEC T ADDITIONS WITHOUT APPRECIATING THAT LAW GIVES DISCRETION TO THE ASSES SING OFFICER IN APPLYING DEEMING FICTIONS U/S 68 ETC AS FIRSTLY NO BOOKS ARE THERE IN EXISTENCE BEFORE AO IN WHICH ANY SUM IS FOUND CREDITED THEREI N 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 ARRIVE D IN FACTS OF PRESENT CASE ON DUE APPLICATION OF MIND THIRDLY ASSESSEE HAS NO ECONOMIC CAPACITY AND SOURCE TO GENERATE GIVEN AMOUNT OF UNACCOUNTED INCO ME. FOURTHLY LAW REQUIRES THAT ADDITIONS UNDER SAID DEEMING FICTION CANNOT BE MADE SANS INCRIMINATING MATERIAL BROUGHT ON RECORD WHICH IS C OMPLETELY LACKING IN PRESENT CASE. LASTLY SECTION 68 DOES NOT APPLY TO S ALE OF SHARES WHERE NO CREDIT WITHIN MEANING OF SECTION 68 CAN BE SAID TO HAVE ARISEN THEREIN 7. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW LD CIT(A) ERRED IN SUSTAINING THE ACTION OF AO IN MAKI NG ADDITION OF RS 4 20 82 925 /- WITHOUT APPRECIATING THAT NO OPPORTUNITY IS GIV EN TO THE ASSESSEE TO BE CONFRONTED WITH BACK MATERIAL RELIED EXTENSIVELY IN IMPUGNED ORDERS LIKE INVESTIGATION WING REPORT ETC AND NO OPPORTUNITY TO CROSS EXAMINE THE REVENUES WITNESS WAS GIVEN DESPI TE SPECIFIC WRITTEN REQUEST IN THIS REGARD MADE TO 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 WHICH W AS DULY GIVEN TO LD DR ALSO. HE REQUESTED THAT KEEPING IN VIEW OF THE GROUNDS RAIS ED BY ASSESSEE AS WELL AS HIS WRITTEN SUBMISSIONS ALONGWITH CASE LAWS ADDITION IN DISPUTE MAY BE DELETED BY ACCEPTING THE APPEAL FILED BY THE ASSESSEE. 5. ON THE CONTRARY LD DR HAS ARGUED THAT NO WHERE ASSESSEE HAS BEEN ABLE TO ESTABLISH HIS/HER CASE SUCCESSFULLY AND MERELY TAKI NG SHIELD OF TECHNICALITIES CANT WISH AWAY THE ONUS TO PROVE THE GENUINENESS OF EXEM PTION . FURTHER PROCEEDINGS WITH HIS ARGUMENT LD DR HAS STATED WITH PASSION THA T AO AND LD CIT(A) HAVE DISCUSSED AT GREAT LENGTH THE SERIOUS FLAW AND DEFI CIENCY IN DEFENSE SET UP BY ASSESSEE WHICH IS NOT ADEQUATELY CONTROVERTED BY LD AR. LD DR HAS SUPPORTED THE INVOCATION OF SECTION 68 OF THE ACT ON THE BROADER PRINCIPLE OF BURDEN TO GIVE SATISFACTORY EXPLANATION ON PART OF ASSESSEE AND TH US ARGUED FOR CONFIRMING THE ORDERS OF AO AND LD CIT(A). LD DR HAS TAKEN SUPPORT OF SECTION 292B OF THE ACT PLEADING FOR ERROR IF ANY BEING CURABLE AND HAS RE QUESTED FOR CONFIRMING ADDITION IN SECTION 69/69A OF THE ACT REQUESTING FOR USE OF WID ER DISCRETION AVAILABLE TO THE TRIBUNAL. LD DR HAS FURTHER HIGHLIGHTED THAT MERE L ACK OF CROSS EXAMINATION IS NOT FATAL TO REVENUES CASE AND SAME IS AT BEST A IRREG ULARITY ONLY. LD DR HAS FURTHER EXHORTED BEFORE ME THAT SUCH KIND OF CASES DOES NOT DESERVE ANY SYMPATHY OF THE TRIBUNAL AS ENTIRE TRANSACTION ARE PROVED TO BE SHA M AND BOGUS. CONTINUING WITH HIS ARGUMENTS LD DR PREYED THAT GROUNDS RAISED BY LD AR ARE DEVOID OF MERITS AND 5 DOES NOT CARRY ANY LEGAL WEIGHT. FINALLY LD DR HAS RELIED ON CASE LAWS REFERRED 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 APPLICA BILITY OF SECTION 68 OF THE ACT IT IS FIRSTLY APPROPRIATE TO REFER TO TEXT 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 OPINION O F 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 APPLICATION M ONEY SHARE CAPITAL SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEV ER NAME CALLED ANY EXPLANATION OFFERED BY SUCH ASSESSEE-CO MPANY SHALL BE DEEMED TO BE NOT SATISFACTORY 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: 6.1.1 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 6 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 FORM 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 ACCOU NTANCY OR TECHNICAL CONSULTANCY OR INTERIOR DECORATION OR ANY OTHER PROFESSION AS IS NOTIFIED BY THE BOARD IN THE OFFICIAL GAZETTE SHALL KEEP AND MAINTAIN SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS AS MAY ENABLE THE ASSESSING OFFICER TO COMPUTE HIS TOTAL I NCOME 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 YEA RS 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 TOTAL SALES TURNOVER OR GROSS RECEIPTS AS THE CASE MAY BE IN BUSINESS OR PROFESSION ARE OR IS LIKELY TO EXCEED TEN LAKH RUPEES 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 SECT ION 44AE OR SECTION 44BB OR SECTION 44BBB AS THE CASE MAY BE AND THE ASSESSEE HAS CLAIMED HIS INCOME TO BE LOWER THA N THE PROFITS OR GAINS SO DEEMED TO BE THE PROFITS AND GAINS OF HIS BUSINESS AS THE CASE MAY BE DURING SUCH PREVIOUS YEAR; OR 47 [(IV) WHERE THE PROVISIONS OF SUB-SECTION (4) OF SE CTION 44AD ARE APPLICABLE IN HIS CASE AND HIS INCOME EXCEEDS THE M AXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX IN ANY PREVIOUS YEAR ] 7 KEEP AND MAINTAIN SUCH BOOKS OF ACCOUNT AND OTHER D OCUMENTS AS MAY ENABLE THE ASSESSING OFFICER TO COMPUTE HIS TOT AL 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 LAKH TW ENTY THOUSAND RUPEES' THE WORDS 'TWO LAKH FIFTY THOUSAND RUPEES' HAD BEEN SUBSTITUTED : PROVIDED FURTHER THAT IN THE CASE OF A PERSON BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY THE PROVISIONS OF CLAUS E (I) AND CLAUSE (II) SHALL HAVE EFFECT AS IF FOR THE WORDS 'TEN LA KH RUPEES' THE WORDS 'TWENTY-FIVE LAKH RUPEES' HAD BEEN SUBSTITUTE D.] (3) THE BOARD MAY HAVING REGARD TO THE NATURE OF T HE BUSINESS OR PROFESSION CARRIED ON BY ANY CLASS OF PERSONS PRES CRIBE 49 BY RULES THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS (INCLUDING INVENTORIES WHEREVER NECESSARY) TO BE KEPT AND MAINTAINED UNDER SUB-SECTION (1) OR SUB-SECTION (2) THE PARTICULARS TO BE CONTA INED THEREIN AND THE FORM AND THE MANNER IN WHICH AND THE PLACE AT W HICH 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 CANT B E 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 SHERATON APPAR ELS REPORTED AT 256 ITR 20 RELEVANT EXTRACT IS REPRODUCED BELOW FOR SAKE OF RE ADY 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 BOOK. AS SUCH HIS 8 CASE SQUARELY FALLS WITHIN EXPLANATION 5 TO 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 EXPLANATION. BEFORE CO NCENTRATING ON THE SPECIFIC MEANING THEREOF IN THE LIGHT OF TH E LEGISLATIVE INTENT BEHIND CLAUSE (1) LET US SEE WHAT DO YOU M EAN BY 'BOOKS OF ACCOUNT'. IF 'BOOKS OF ACCOUNT' IS CONSID ERED IN ISOLATION THEN IT MAY MEAN BOOKS IN WHICH MERCHAN TS TRADERS AND BUSINESSMEN GENERALLY KEEP THEIR ACCOUNTS AND A RE MAINTAINED FOR RECORDING (A) ALL RECEIPTS AND EXPEN SES WITH MATTERS RELATING THERETO; (B) ALL SALES AND PURCHAS ES; AND (C) THE ASSETS AND LIABILITIES. THEY ARE THE DOCUMENTS AND LEDGERS WHICH MUST BE PREPARED AND KEPT BY THE BUSINESS ENT ITY INCLUDING THE PROFIT AND LOSS ACCOUNT AND THE BALAN CE-SHEET. IN TRADITIONAL TERMS BOOKS MEANS A COLLECTION OF SHEE TS OF PAPERS BOUND TOGETHER 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 INTENTI ON THAT IT SHOULD SERVE AS A PERMANENT RECORD. AT THE SAME TIM E THE TERM OF 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 MERELY CONT AINS ENTRIES OF ITEMS OF WHICH NO ACCOUNT IS MADE AT ANY TIME IS NOT A 'BOOK OF ACCOUNT' IN A COMMERCIAL SENSE. 29. IN DIFFERENT LEGISLATIONS THE CONCEPT OF BOOKS OF ACCOUNT HAS BEEN EMPLOYED. ONE OF SUCH OLDEST LEGISLATION IS TH E LAW OF EVIDENCE. SECTION 34 REFERS TO THE WORDS 'ENTRIES IN BOOKS OF ACCOUNT'. SECTION 34 HAS BEEN INTERPRETED BY VARIOUS HIGH COURTS INCLUDING THE APEX COURT. THE SUPREME COURT IN 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 OF EVIDENCE TO BOOKS OF ACCOUNT IF THE BOOKS ARE INDEED 'ACCOUNT B OOKS' 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. 9 31. THE INCOME-TAX LEGISLATION HAS BEEN USING THE T ERM 'BOOK' OR 'BOOKS OF ACCOUNT' RIGHT FROM ITS INCEPTION. BUT THESE TERMS ARE DEFINED IN THE ACT FOR THE FIRST TIME BY THE FI NANCE ACT 2001 WITH EFFECT FROM JUNE 1 2001. 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 STORED IN A FLOPPY DISC TAPE OR ANY OTHER FORM OF ELECTROMAGNETIC DATA STOR AGE DEVICE.' 32. THEN ABOVE DEFINITION APPEARS TO HAVE BEEN FRAM ED BY THE LEGISLATURE KEEPING IN VIEW THE DEVELOPMENT OF COMP UTER 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 REQUIREMENTS OF SECTION 34 ARE NOT TO BE FOUND IN THE SAID DEFINITION. OBVIOUSLY FOR THE SI MPLE REASON THAT THE PURPOSE OF BOTH THE LEGISLATIONS ARE DIFFE RENT. SO FAR AS THE CASES AT HAND 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 CONCENTRATE NOT ONLY ON THE BARE TERM 'BOOKS OF ACCOUNT' BUT ALSO ON THE WO RDS IN WHOSE COMPANY THE SAID TERM IS APPEARING. THE EXTRA CTED SUB- CLAUSE APPEARING HEREINBELOW WILL HAVE TO BE UNDERS TOOD PROPERLY AND APPROPRIATE MEANING WILL HAVE TO BE AS SIGNED KEEPING IN MIND THE BACKDROP IN WHICH THE CONCEPT O F '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 MAI NTAINED BY HIM FOR ANY SOURCE OF INCOME .. . BEFORE THE SAID 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 INCOME SO AS TO DETERMINE UNDER WHICH HEAD OUT OF THE VARIOUS HEAD S OF INCOME REFERRED TO IN SECTION 14 OF THE ACT IT WOULD FALL FOR THE PURPOSES OF COMPUTATION OF THE TOTAL INCOME FOR CHARGING INC OME-TAX THEREON. THUS THE TERM 'BOOKS OF ACCOUNT' REFERRED TO IN THIS RELEVANT SUB-CLAUSE OF EXPLANATION 5 WOULD MEAN THO SE BOOKS OF 10 ACCOUNT WHOSE MAIN OBJECT IS TO PROVIDE CREDIBLE DA TA AND INFORMATION TO FILE THE TAX RETURNS. A CREDIBLE ACC OUNTING RECORD PROVIDES THE BEST FOUNDATION FOR FILING RETURNS OF BOTH DIRECT AND INDIRECT TAXES. ACCOUNTING IS CALLED A LANGUAGE OF BUSINESS. ITS AIM IS TO COMMUNICATE FINANCIAL INFORMATION ABOUT T HE FINANCIAL RESULTS. THIS IS NOT POSSIBLE UNLESS THE MAIN OBJEC TIVES 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 PROVIDE UP TO DATE INFORMAT ION OF ASSETS AND LIABILITIES WITH A VIEW TO DERIVE INFORMATION S O AS TO PREPARE A PROFIT 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 THE ABOVE QUALIFICATIONS. IT CANNOT BE UNDERSTOOD TO MEAN COM PILATION OR COLLECTIONS OF SHEETS IN ONE VOLUME. THE BOOKS OF A CCOUNT REFERRED TO ARE THOSE BOOKS OF ACCOUNT WHICH ARE MA INTAINED FOR THE PURPOSES OF THE INCOME-TAX ACT AND NOT DIARIES WHICH ARE MAINTAINED MERELY AS A MAN'S PRIVATE RECORD ; PREPA RED BY HIM AS MAY BE IN ACCORDANCE WITH HIS PLEASURE OR CONVEN IENCE TO SECRETLY RECORD SECRET UNACCOUNTED CLANDESTINE TRA NSACTIONS NOT MEANT FOR THE PURPOSES OF THE INCOME-TAX ACT BUT WITH SPECIFIC INTENTION OR DESIRE ON THE PART OF THE ASSESSEE TO HIDE OR CONCEAL 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 THE PUR POSES OF DRAWING THE SOURCE OF INCOME. THEREFORE WHEN BOOKS OF ACCOUNT ARE TENDERED FOR CLAIMING THE BENEFIT OF EXPLANATIO N 5 TO SECTION 271(1)(C) OF THE ACT IT MUST BE SHOWN TO BE A BOOK THAT BO OK MUST BE A BOOK OF ACCOUNT AND ON THE TOP OF IT THA T MUST BE ONE MAINTAINED FOR THE PURPOSES OF DRAWING THE SOUR CE OF INCOME UNDER THE INCOME-TAX ACT . THESE ESSENTIAL REQUIREMENTS MUST BE CAREFULLY OBSERVED WHILE IMPLEMENTING TAX L EGISLATION IN THE COUNTRY WHERE SECRET AND PARALLEL ACCOUNTS BASE D ON FRAUDS AND FORGERY ARE EXTREMELY COMMON AND RESPONSIBILITY OF KEEPING AND MAINTAINING ACCOUNTS FOR THE PURPOSES OF THE TA X LEGISLATION IS HONOURED IN THE BREACH RATHER THAN THE OBSERVANC E. 11 6.4 ABOVE DICTUM LEAVES NO ROOM FOR ANY POSSIBLE DO UBT 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. 7. SECONDLY IT REQUIRES ..OPINION ON PART OF A SSESSING 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 COMMISSIONE R OR DEPUTY COMMISSIONER OR ASSISTANT DIRECTOR OR DEPUTY DIRECTOR OR THE INCOME -TAX OFFICER WHO IS VESTED WITH THE RELEVANT JURISDICTION BY VIRTUE OF DIRECTIONS O R ORDERS ISSUED UNDER SUB-SECTION (1) OR SUB-SECTION (2) OF SECTION 120 OR ANY OTHER PROVISION OF THIS ACT AND THE ADDITIONAL COMMISSIONER OR ADDITIONAL DIRECTOR OR J OINT COMMISSIONER OR JOINT DIRECTOR WHO IS DIRECTED UNDER CLAUSE (B) OF SUB-SE CTION (4) OF THAT SECTION TO EXERCISE OR PERFORM ALL OR ANY OF THE POWERS AND FU NCTIONS CONFERRED ON OR ASSIGNED TO AN ASSESSING OFFICER UNDER THIS ACT SO SATISFA CTION REQUIRED ON PART OF AO U/S 68 OF THE ACT (WHICH PHRASE IS ALSO EMPLOYED IN SECTIO N 69 AND SECTION 69A ETC) CANT BE IMPLANTED BY ANY OTHER AUTHORITY. THIS VIEW IS F ORTIFIED 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 ALONE W HO SHOULD DO THAT ACTION. WE DRAW SUPPORT FROM VARIOUS DECISION OF HON ORABLE HIGH 12 COURTS IN 346 ITR 343 ( BOM) 345 ITR 223 ( DEL ) AND ALSO OF THE HONOURABLE SUPREME COURT ANIRUDHSINHJI KARANSINHJI J ADEJA V. STATE OF GUJARAT [1995] 5 SCC 302 WHERE IN HON. SUPREME C OURT 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 SUB- HEADING 'POWER IN THE WRONG HANDS' AS BELOW:- 'CLOSELY AKIN TO DELEGATION AND SCARCELY DISTINGUISHABLE FROM IT IN SOME CASES IS ANY ARRANGEMENT BY WHICH A POWER CONFERRED UPON ONE AUT HORITY 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 WITHOUT THEIR CONSENT OR BY SUBMITTING TO THEIR WISHES OR INSTRUCTIONS. THE EFFECT THEN IS THAT THE DISCRETION CONFERRED BY PARLIAMENT IS EXERCISED AT LEAST IN P ART BY THE WRONG AUTHORITY AND THE RESULTING DECISION IS ULTRA VIRE S AND VOID. SO STRICT ARE THE COURTS IN APPLYING THIS PRINCIPLE THAT THEY CONDEMN SOME ADMINISTRATIVE ARRANGEMENTS WHICH MUST SEEM QUITE N ATURAL AND PROPER TO THOSE WHO MAKE THEM.....'. 'MINISTERS AND THEIR DEPARTMENTS HAVE SEVERAL TIMES FALLEN FOUL OF THE S AME RULE NO DOUBT EQUALLY TO THEIR SURPRISE....': 8. AFTER THIS DETAILED ANALYSIS OF VARIOUS INGREDIE NTS OF SECTION 68 OF THE ACT I HAVE NO HESITATION TO ACCEPT THE JURISDICTIONAL PLE A 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 BY AO AS SUST AINED BY LD CIT(A) IS HELD TO BE INCORRECT AND REVERSED. SIGNIFICATION OF CORRECT AS SUMPTION OF JURISDICTION IS HIGHLIGHTED IN THE FOLLOWING DECISIONS 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 HONBLE 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 13 TAKEN RECOURSE TO WHEN THE CONDITIONS MENTIONED UND ER 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 ITSELF T O PREVENT AND CHECK CASES OF ABUSE AND MISUSE. INVESTIGATION AND DETECTION OF ECONOMIC OFFENCES IS ONEROUS AND A DIFFICULT TASK FOR OFTEN EVIDENCE AND MATERIAL IS CONCEALED AND SUBTERFUGE I S ADOPTED TO PREVENT AND DEFLECT DETECTION. THIS HOWEVER DOES NOT GIVE LIBERTY TO THE AUTHORITIES TO DISREGARD AND AUTHORI ZE SEARCH AND SEIZURE OPERATIONS WITHOUT FORMATION OF REQUISITE B ELIEF. POWER AND AUTHORITY GIVEN TO THE AUTHORITIES MUST BE EXER CISED 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 SA TISFY 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. POWER AS GIVEN ALSO IMPOSES AN OBLIGATION ON THE AUTHORITIE S TO SATISFY JURISDICTIONAL PRE-CONDITIONS FOR THE EXERC ISE OF POWER TO BE HELD TO BE VALID AND NOT BAD AND CONTRA RY TO LAW WHICH FITS IN PRESENT FACTS FULLY. ON JURISDICTIONAL FACT IN RECENT DECISION OF MADR AS HIGH COURT IN CASE OF KARTI CHIDAM BRAM (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 COURT OR TRIBUNA L OR AUTHORITY AS THE CASE MAY BE. IF THE JURISDICTIONAL FACT DOES NOT EXIST THE COURT AUTHORITY OR OFFICER CANNOT ACT. IF A COURT OR AUTHORITY HAS WRONGLY ASSUMES THE EXISTENCE OF SUCH FACT THE ORD ER CAN BE QUASHED BY A WRIT OF CERTIORARI. 169. IF THE JURISDICTIONAL FACT EXISTS THE AUTHORI TY CAN PROCEED FURTHER AND EXERCISE HIS POWER AND TAKE A DECISION IN ACCORDANCE WITH LAW. NO COURT OR TRIBUNAL STATUTORY AUTHORITY CAN ASSUME JURISDICTION IN RESPECT OF A MATTER WHICH THE STAT UTE DOES NOT CONFER ON IT. ERROR ON JURISDICTIONAL FACT RENDERS THE ORDER ULTRA VIRES AND BAD. IN THE CASE ON HAND AS RIGHTLY SUB MITTED BY MR.GOPAL SUBRAMANIUM LEARNED SENIOR COUNSEL THAT IN THE LIGHT OF SECTIONS 2(11) AND 50 OF THE BLACK MONEY A CT 2015 JURISDICTIONAL FACT TO ENQUIRE DOES NOT EXIST AND T HAT THE PRINCIPAL DIRECTOR OF INCOME TAX/FIRST RESPONDENT HEREIN HAS ASSUMED 14 JURISDICTION THAT HE CAN ENQUIRE INTO THE MATTER UN DER 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 WAS AN INCURABLE ILLEGALITY. SECTION 292B OF THE AC T 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 I T WAS HELD: 'SECTION 292B OF THE ACT CANNOT BE READ TO CONFER J URISDICTION ON THE AO WHERE NONE EXISTS. THE SAID SECTION ONLY PRO TECTS RETURN OF INCOME ASSESSMENT NOTICE SUMMONS OR OTHER PRO CEEDINGS FROM ANY MISTAKE IN SUCH RETURN OF INCOME ASSESSME NT NOTICES SUMMONS OR OTHER PROCEEDINGS PROVIDED THE SAME ARE IN SUBSTANCE AND IN EFFECT IN CONFORMITY WITH THE INTE NT 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 BUT THE PO WER 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 PARA 13 15 AND SHRI ANIL CHATURVEDI) ITA 862/PUN/2017 (31.08.2018) 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 4036/DEL/2017 (14/12/2017) PARA 5 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 ADDITION FRO M 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: 16 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 FOLLOW S :- 11. IN HIS RIVAL SUBMISSIONS THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW AND FURTHER SUBMITTED THAT THE ASSESSEE WAS HAVING INVESTMENT IN SHARES ETC. WHICH WERE DULY SHOWN ON THE ASSET A SIDE OF THE BALANCE SHEET OUT OF THOSE INVESTMENTS SOME WERE S OLD AND FEW NEW WERE PURCHASED AND IF THERE WAS ANY GAIN ON THE SALE THE SAME WAS OFFERED FOR TAXATION. IT WAS FURTHER SUBMI TTED THAT IN EARLIER YEAR UNDER SIMILAR CIRCUMSTANCES THE CASE WAS REOPENED U/S 147 OF THE ACT AND THE ADDITION MADE B Y THE AO WAS DELETED BY THE I.T.A.T. IT WAS FURTHER SUBMITTE D THAT THE ASSESSEE SOLD THE SHARES WHICH WERE EARLIER PURCHAS ED IN DIFFERENT YEARS AND DULY SHOWN IN THE BALANCE SHEET OF THE RESPECTIVE YEARS AND THAT THE ASSESSEE HAD SHOWN TH E SALE PROCEEDS IN THE BOOKS OF ACCOUNTS THE INVESTMENTS WERE REDUCED AFTER MAKING THE SALES. IT WAS CONTENDED TH AT THERE WAS NO OBLIGATION UNDER THE LAW THAT THE ASSESSEE WAS R EQUIRED TO PROVE THE SOURCE OF PAYEE. IT WAS FURTHER CONTENDED THAT THE AO HAD NOT REJECTED THE BOOKS OF ACCOUNTS AND THE PURC HASES WERE DULY ACCEPTED SO THERE WAS NO REASON TO DOUBT THE S ALES. IT WAS SUBMITTED THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF THIS BENCH OF THE TRIBUNAL IN THE C ASE OF ITO VS. M/S VISHAL HOLDING AND CAPITAL PVT. LTD. IN ITA NO. 1788/DEL/2009 ORDER DATED 17.07.2009 WHICH HAS BEEN UPHELD BY THE HON'BLE JURISDICTIONAL HIGH COURT AS REPORTED IN (2011) 200 TAXMAN 186 (DELHI). IT WAS FURTHER SUBMITTED T HAT THE ISSUE IS ALSO COVERED BY THE ORDER OF THE ITAT DEL HI BENCH IN THE CASE OF ITO VS. GOODWILL CRESEC PVT. LTD. IN IT A NO. 4151/DEL./2010 ORDER DATED 25.01.2012. RELIANCE WAS ALSO PLACED ON THE FOLLOWING CASES LAW S :- '1. CIT VS. SH. UDIT NARAIN AGGARWAL ITA NO. 560 O F 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. 158 4/DEL./2009 FOR THE A.Y. 2002-03 VIDE ORDER DATED 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 RECORD. 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 SIDE' OF THE 'BALANCE SHEET' OUT OF THOSE INVESTMENTS (COPY WHI CH IS PLACED 17 AT PAGE NO. 23 AND 24 OF THE ASSESSEE'S PAPER BOOK) THE ASSESSEE SOLD CERTAIN INVESTMENTS AND ACCOUNTED FOR THE PROFIT / LOSS AND OFFERED THE SAME FOR TAXATION. IN THE PRES ENT CASE THE AMOUNT IN QUESTION WAS NEITHER A LOAN OR THE DEPOSI T IT WAS ALSO NOT ON ACCOUNT OF SHARE APPLICATION MONEY THE SAID AMOUNT WAS ON ACCOUNT OF SALE OF INVESTMENT THEREFORE THE PROVISIONS OF SECTION 68 OF THE ACT WERE NOT APPLICABLE AND THE A O WAS NOT JUSTIFIED IN MAKING THE ADDITION. IN OUR OPINION T HE LD. CIT(A) RIGHTLY DELETED THE ADDITION MADE BY THE AO. 13. ON A SIMILAR ISSUE THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CA SE OF CIT VS. VISHAL HOLDING AND CAPITAL PVT. LTD. VIDE ORDER DATE D 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 WHE REIN THE ORDER OF THE LD. CIT(A) MAKING THE SIMILAR 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 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 AS SESSMENT YEAR 2004- 05 IDENTICAL ISSUE HAVING SIMILAR FACTS IS INVOLVED THE ONLY DIFFERENCE IS IN THE AMOUNT OF ADDITION WH ICH WAS DELETED BY THE LD. CIT(A). THEREFORE OUR FINDINGS GIVEN IN FORMER PART OF THIS ORDER IN RESPECT OF 16 4325 & 4326/ DEL/2009 ASSESSMENT YEAR 2003-04 SHALL APPLY MUTAT IS 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 AS SESSMENT YEAR 2004- 05 IDENTICAL ISSUE HAVING SIMILAR FACTS IS INVOLVED THE ONLY DIFFERENCE IS IN THE AMOUNT OF ADDITION WH ICH WAS DELETED BY THE LD. CIT(A). THEREFORE OUR FINDINGS GIVEN IN FORMER PART OF THIS ORDER IN RESPECT OF ASSESSMENT YEAR 2003- 04 SHALL APPLY MUTATIS MUTANDIS FOR ASSESSMENT YEA R 2004-05. 18 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 DISC OUNTED THE REVENUE'S SUBMISSIONS THAT THE INVESTMENT SHOWN IN THE BOOK OF ACCOUNTS AND REFLECTED AS ASSETS IN THE SIDE OF THE BALANCE SHEET SHOULD HAVE BEEN PROPERLY TREATED AND THAT I N 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. L TD. (ORDER OF THIS COURT DATED 9.8.2010) THAT THE INVOCATION OF S ECTION'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 ITAT. LE ARNED COUNSEL ESPECIALLY EMPHASIZED ON THE SUBMISSION THA T THE INCORRECT REFLECTION OF THE RECEIPTS IN THE BALANCE SHEET BELIED THE TRUE NATURE OF THE RECEIPTS AS A JUSTIFICATION 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 THE ANA LYSIS BASED UPON THE DECISIONS OF THIS COURT AS WELL AS THE RE LIANCE ON VARIOUS DECISIONS WITH RESPECT TO THE TRUE NATURE O F SECTION 68 WE ARE OF THE OPINION THAT NO QUESTION OF LAW ARISE S; 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 MADE 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 CONU NDRUM 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 IN Q UESTION WAS MADE MERELY ON THE BASIS OF SUSPICION AND SURMISES. NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW THAT TH E ASSESSEE WAS INVOLVED IN THE RACKET WHICH WAS UNEARTHED BY T HE INVESTIGATION WING OF THE DEPARTMENT. THE REVENUE C OULD NOT POINT OUT THAT IN ANYWHERE IN THE STATEMENT OF SH. SANJAY VORA AND/OR SH. PRAVEEN KUMAR AGARWAL THE NAME OF THE A SSESSEE 19 WAS STATED BY THEM. THEREFORE SIMPLY BECAUSE SOME PERSONS WERE INVOLVED IN GENERATION OF BOGUS LONG TERM CAPI TAL GAIN CANNOT LEAD TO CONCLUSION THAT THE ASSESSEE WAS ALS O INVOLVED IN IT WITHOUT COGENT MATERIAL. 22. FURTHER AFTER MAKING INQUIRIES FROM THE PERSON FROM WHOM THE ASSESSEE PURCHASED THE SHARES IN QUESTION AND/O R FROM THE SHARE BROKER THROUGH WHOM THE ASSESSEE SOLD THE SHA RES NO MATERIAL COULD BE BROUGHT ON RECORD BY THE ASSESSIN G OFFICER TO SHOW THAT THE TRANSACTION OF THE ASSESSEE WAS NOT G ENUINE AND THE ASSESSEE ACTUALLY PAID ANY AMOUNT IN CASH TO AN Y PERSON IN CONSIDERATION OF CHEQUE RECEIVED BY HIM FROM THE AU THORIZED SHARE BROKER. IN ABSENCE OF SUCH A MATERIAL BEING B ROUGHT ON RECORD BY THE REVENUE IN MY CONSIDERED OPINION TH E TRANSACTION OF THE ASSESSEE WHICH IS SUPPORTED BY O VERWHELMING DOCUMENTARY EVIDENCES CANNOT BE IMPEACHED MERELY BE CAUSE SHARE PRICES ROSE ABNORMALLY OR OTHER PERSONS WERE INVOLVED IN GENERATION 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 ) 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 TIM E OF SALE AND THE SHARE PRICES OF ALL THE SCRIP ARE CLOSELY MONIT ORED BY THE STOCK EXCHANGE AND SEBI. EVEN IF THE PRICES HAVE GO NE UP ARTIFICIALLY AS ALLEGED BY THE REVENUE AUTHORITIES HOWEVER THERE IS NO MATERIAL TO HOLD THAT THE ASSESSEE WAS INVOLV ED THEREIN. IT IS ALSO AN ADMITTED FACT THAT ALTHOUGH THE ASSESSIN G OFFICER HAD MADE ENQUIRIES FROM VARIOUS ENTITIES I.E. ASSESSEE S BANKER DEPOSITORY BROKER AND THE BANKER OF M/S. TCL TECHN OLOGIES LIMITED HOWEVER NOTHING ADVERSE HAVE BEEN FOUND. THERE IS NO ADVERSE FINDING BY SEBI IN RELATION TO THE SCRIP IN QUESTION HAS BEEN GIVEN TO THE ASSESSING OFFICER. FURTHER IN RES PONSE TO NOTICE U/S 131 SH. SACHIN JAIN FRENCHISE OF M/S. GLOBE CAPITAL MA RKET 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 20 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. MUKE SH RATILAL MAROLIA IN ITA NO.456/DEL/2007 ORDER DATED 07.09.2 011; 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 (JHARKHAND) 219 ORDER DA TED 13.07.2012; HONBLE GUJARATA HIGH COURT IN THE CASE O F CIT-I VS. MAHESHCHANDRA G. VAKIL [2013] 40 TAXMAN.COM 326 (GU JARAT) HONBLE GUJARATA HIGH COURT IN THE CASE OF CIT-I VS. HIMAN M. VAKIL [2014] 41 TAXMAN.COM 425 (GUJARAT); HONBLE P UNJAB & HARYANA HIGH COURT IN THE CASE OF PREM PAL GANDHI (SU PRA) FINALLY HELD THAT THE VARIOUS OTHER DECISIONS RELI ED ON THE LD. COUNSEL FOR THE ASSESSEE ALSO SUPPORT HIS CASE. UND ER THESE CIRCUMSTANCES AND IN VIEW OF OUR ABOVE DISCUSSION W E ARE OF THE CONSIDERED OPINION THAT THE ADDITION MADE BY THE AS SESSING OFFICER U/S 68 OF THE ACT WHICH HAS BEEN SUSTAINED BY THE CIT(A) IS NOT JUSTIFIED UNDER THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. WE THEREFORE SET ASIDE THE ORDER OF THE CIT (A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION 8.5 SO RESPECTFULLY APPLYING RATIO OF ABOVE PLETHOR A OF DECISIONS TO EXTANT FACTS I DIRECT THE AO TO DELETE THE ADDITIONS MADE IN CAPTI ONED APPEALS IN SO FAR AS IT RELATES TO SHARE SALE PROCEEDS AND ALLEGED COMMISSI ON PORTION IS CONCERNED. 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 STATEMENT S 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. FOLLOWING 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 WHICH IN TURN IS NOTHING BUT THE NARRATION OF THE STATEMENTS RECORDE D DURING THE 21 INVESTIGATION AND THE AO WAS HAVING IN POSSESSION T HE STATEMENT OF ONLY SHRI ANAND SHARMA. THEREFORE ALL THESE PROCEEDINGS CONDUCTED BY THE INVESTIGATION WING KOL KATA WERE AT THE BACK OF THE ASSESSEE AND HENCE THE STATEMENT WHICH IS THE FOUNDATION OF THE REPORT OF THE INVESTIGATION W ING KOLKATA AS WELL AS THE ASSESSMENT ORDER CANNOT BE ACCEPTED IN THE ABSENCE OF GIVING AN OPPORTUNITY OF CROSS EXAMINATION TO TH E ASSESSEE. WE FIND THAT THE ASSESSEE HAS INSISTED FOR CROSS EX AMINATION DURING THE ASSESSMENT PROCEEDINGS AND FURTHER DURIN G THE APPELLATE PROCEEDINGS. THE LD.CIT(A) EVEN CALLED FO R A REMAND REPORT AND DIRECTED THE AO TO ALLOW CROSS EXAMINATI ON TO THE ASSESSEE. HOWEVER THE AO HAS EXPRESSED HIS INABILIT Y TO ALLOW THE ASSESSEE 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. C IT(A) HAS FINALLY DENIED THE CROSS EXAMINATION TO THE ASSESSE E BY GIVING HIS FINDING IN PARA 5.11 AT PAGE 188 ALREADY REPROD UCED IN THE EARLIER PART OF THIS ORDER AND THEREFORE THE ONLY REASON FOR DENIAL OF CROSS EXAMINATION BY THE LD.CIT(A) IS THA T THE STATEMENTS ARE SO VOCAL AND UNDENIABLE THAT CROSS E XAMINATION OF SUCH ACCOMMODATION ENTRY PROVIDED BY THOUSANDS O F BENEFICIARIES ACROSS INDIA IS NEITHER PRACTICABLE N OR VIABLE AND THEREFORE UNCALLED FOR. WE FIND THAT THE ASSESSEE HAS DEMANDED THE CROSS EX AMINATION ONLY IN RESPECT OF THE ALLEGED TRANSACTIONS OF LOAN S AND NOT FOR THE ENTIRE BUSINESS OF THE ENTRY PROVIDERS PROVIDIN G THE BOGUS ENTRIES. UNDISPUTEDLY THE STATEMENT OF SHRI ANAND SHARMA WAS RECORDED BY THE INVESTIGATION WING KOLKATA AT THE B ACK OF THE ASSESSEE EVEN THE PROCEEDINGS BY THE INVESTIGATION WERE CONDUCTED AT THE BACK OF THE ASSESSEE THEREFORE T HE SAID STATEMENT OF SHRI ANAND SHARMA CANNOT BE THE SOLE B ASIS OF ASSESSMENT WITHOUT GIVING AN OPPORTUNITY OF CROSS E XAMINATION TO THE ASSESSEE. THE HONBLE SUPREME COURT IN THE CA SE OF ANDAMAN TIMBER INDUSTRIES VS. CCE (SUPRA) WHILE DEA LING WITH THE ISSUE OF VIOLATION OF PRINCIPLES OF NATURAL JUS TICE FOR NOT PROVIDING THE OPPORTUNITY OF CROSS EXAMINATION OF T HE WITNESSES WHOSE STATEMENTS WERE RELIED ON BY THE AO HAS HELD IN PARA 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 C ASE OF CIT VS. ASHWANI GUPTA 322 ITR 396 (DELHI) WHILE DEALIN G WITH THE ISSUE OF NOT PROVIDING THE OPPORTUNITY TO CROSS EXA MINE THE WITNESSES HAS HELD IN PARA 5 TO 7 AS UNDER :- 22 THUS THE HONBLE HIGH COURT HAS HELD THAT ONCE THERE 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 FATAL TO T HE PROCEEDINGS. THE HONBLE BOMBAY HIGH COURT IN THE CAS E OF H.R. MEHTA VS. ACIT 387 ITR 561 (BOMBAY) HAS ALSO CONSI DERED THE ISSUE OF NOT PROVIDING OPPORTUNITY OF CROSS EXAMINA TION IN PARA 11 TO 17 AS UNDER :- THUS THE DENIAL OF OPPORTUNITY TO CROSS EXAMINE WAS CONSIDERED BY THE HONBLE HIGH COURT WHIC H GOES TO THE ROOT OF THE MATTER AND STRIKES AT THE VERY FOUNDATION OF THE ASSESSMENT AND THEREFORE RENDERS THE ASSE SSMENT 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 PRATEEK KOTHARI VIDE ORDER DATED 16TH DECEMBER 2012 IN ITA NO. 159/JP/2 016 HAS CONSIDERED THIS ISSUE IN PARA 2.8 TO 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 THE IMPUNGED ASSESSMENT YEAR AND NOT ACCEPTING THE SAID LOAN TRA NSACTION AS A GENUINE TRANSACTION BY THE ASSESSING OFFICER AND THE RESULTANT ADDITION MADE UNDER SECTION 68 OF THE ACT. UNDISPUT EDLY THE PRIMARY ONUS TO ESTABLISH GENUINENESS OF THE LOAN T RANSACTION IS ON THE ASSESSEE. IN THE INSTANT CASE THE ASSESSEE HAS PROVIDED THE NECESSARY EXPLANATION FURNISHED DOCUMENTARY EV IDENCE IN TERMS OF TAX FILINGS AFFIDAVITS AND CONFIRMATION O F THE DIRECTORS BANK STATEMENTS OF THE LENDER BALANCE SHEET OF THE LENDER COMPANY AND AN INDEPENDENT CONFIRMATION HAS ALSO B EEN OBTAINED BY THE ASSESSING OFFICER TO SATISFY THE CA RDINAL TEST OF IDENTITY CREDITWORTHINESS AND GENUINENESS OF THE L OAN TRANSACTION. HOWEVER THE ASSESSING OFFICER HAS NOT GIVEN ANY FINDING IN RESPECT OF SUCH EXPLANATION DOCUMENTARY EVIDENCE AS WELL AS INDEPENDENT CONFIRMATION. APPARENTLY THE R EASON FOR NOT ACCEPTING THE SAME IS THAT THE ASSESSING OFFICER WA S IN RECEIPT OF CERTAIN INFORMATION FROM THE INVESTIGATION WING OF THE TAX DEPARTMENT AS PER WHICH THE TRANSACTION UNDER CONSI DERATION IS A BOGUS LOAN TRANSACTION. THE SAID INFORMATION RECE IVED FROM THE INVESTIGATION WING THUS OVERWEIGHED THE MIND OF THE ASSESSING OFFICER. THE ASSESSING OFFICER STATED THAT THE PRIM ARY ONUS IS ON THE ASSESSEE TO ESTABLISH THE GENUINENESS OF THE TR ANSACTION CLAIMED BY IT AND IF THE INVESTIGATION DONE BY THE DEPARTMENT LEADS TO DOUBT REGARDING THE GENUINENESS OF THE TRA NSACTIONS IT IS INCUMBENT ON THE ASSESSEE TO PRODUCE THE PARTIES ALONGWITH NECESSARY DOCUMENTS TO ESTABLISH THE GENUINENESS OF THE TRANSACTION. IN RESPONSE THE ASSESSEE SUBMITTED TH AT SHRI 23 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 BHANWARLA L JAIN AND OTHER PERSONS HE SPECIFICALLY REQUESTED THE AO TO PROVIDE COPIES OF SUCH INCRIMINATING DOCUMENTS AND STATEMEN T OF ALL VARIOUS PERSONS RECORDED IN THIS REGARD AND PROVIDE AN OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE SUCH P ERSONS. HOWEVER THE AO DIDNT PROVIDE TO THE ASSESSEE COPIE S OF SUCH INCRIMINATING DOCUMENTS AND STATEMENTS OF VARIOUS P ERSONS RECORDED AND ALLOW THE CROSS-EXAMINATION OF ANY OF THESE PERSONS. WHILE DOING SO THE AO STATED THAT IN HIS STATEMENTS BHANWARLAL JAIN HAD DESCRIBED THAT THEY ARE INDULGE D IN PROVIDING ACCOMMODATION ENTRIES OF BOGUS UNSECURED LOANS AND ADVANCES THROUGH VARIOUS BENAMI CONCERNS (70) OPERA TED AND MANAGED BY THEM. THIS ADMISSION AUTOMATICALLY MAKES ALL THE TRANSACTIONS DONE BY THEM AS MERE PAPER TRANSACTION S AND IN THESE CIRCUMSTANCES 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 PROVIDED. THIS ADMISSION IS SUFFICIENT TO REJECT TH E CONTENTIONS OF THE ASSEESSE. FURTHER REGARDING CROSS EXAMINATION THE 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 ENT RIES WERE PROVIDED BY THE SAID GROUP CATEGORICALLY CONTAINS T HE NAME AND ADDRESS OF THE ASSESSEE. FURTHER THE GROUP HAS CATE GORICALLY ADMITTED TO PROVIDING OF ACCOMMODATION ENTRIES OF U NSECURED LOANS THROUGH VARIOUS BENAMI CONCERNS. THE AO FURT HER RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN HE CA SE OF C. VASANTLAL & CO. VS. CIT 45 ITR 206(SC) AND HONBLE R AJASTHAN HIGH COURT IN CASE OF RAMESHWARLAL MALI VS. CIT 256 ITR 536(RAJ.) AMONG OTHERS. IN THIS REGARD IT WAS SUBM ITTED BY THE ASSESSEE THAT IF THE ENTRIES AND MATERIAL ARE GATHE RED BEHIND THE BACK OF THE ASSESSEE AND IF THE AO PROPOSES TO ACT ON SUCH MATERIAL AS HE MIGHT HAVE GATHERED AS A RESULT OF H IS PRIVATE ENQUIRIES HE MUST DISCLOSE ALL SUCH MATERIAL TO TH E ASSESSEE AND ALSO ALLOW THE 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 ASSES SEE AND THE DOCUMENTATION FURNISHED REGARDING THE GENUINENESS O F THE LOAN TRANSACTION AND INSTEAD WANTS TO RELY UPON THE INFO RMATION INDEPENDENTLY RECEIVED FROM THE INVESTIGATION WING OF THE 24 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 EXAMINE SUCH INFO RMATION AND EXPLAIN ITS POSITION ESPECIALLY WHEN 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-SECTION (3) OF SECTION 23 THE INCOME-TAX OFFICER THOUGH NOT BOUN D TO RELY ON EVIDENCE PRODUCED BY THE ASSESSEE AS HE CONSIDERS T O BE FALSE YET IF HE PROPOSES TO MAKE AN ESTIMATE IN DISREGARD OF THAT EVIDENCE HE SHOULD IN FAIRNESS DISCLOSE TO THE ASS ESSEE THE MATERIAL ON WHICH HE IS GOING TO FIND THAT ESTIMATE ; AND THAT IN CASE HE PROPOSES TO USE AGAINST THE ASSESSEE THE RE SULT OF ANY PRIVATE INQUIRIES MADE BY HIM HE MUST COMMUNICATE TO THE ASSESSEE THE SUBSTANCE OF THE INFORMATION SO PROPOS ED TO BE UTILIZED TO SUCH AN EXTENT AS TO PUT THE ASSESSEE I N POSSESSION OF FULL PARTICULARS OF THE CASE HE IS EXPECTED TO MEET AND THAT HE SHOULD FURTHER GIVE HIM AMPLE OPPORTUNITY TO MEET I T. IT WAS HELD IN THAT CASE THAT IN THIS CASE WE ARE OF THE OPINION THAT THE TRIBUNAL VIOLATED CERTAIN FUNDAMENTAL RULES OF JUST ICE IN REACHING ITS CONCLUSIONS. FIRSTLY IT DID NOT DISCLOSE TO TH E ASSESSEE 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 THE ASSES SEE WANTED TO PRODUCE IN SUPPORT OF ITS CASE. THE RESULT 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 BOUND BY ANY TECHNICAL RULES OF THE LAW OF EVIDENCE. IT IS OPEN TO HIM 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 AND GI VEN 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 EVIDE NCE TO JUSTIFY THE FINDINGS OF THE TRIBUNAL THAT THE AMOUN T OF 25 RS.1 07 350 SAID TO HAVE BEEN REMITTED BY TILOKCHAN D FROM MADRAS REPRESENTED THE UNDISCLOSED INCOME OF THE AS SESSEE. 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 THIS LET TER COULD AT ALL BE RELIED UPON BY THE TRIBUNAL AS A MATERIAL PIECE OF EVIDENCE SUPPORTIVE OF ITS FINDING. IN THE FIRST PLACE THIS LETTER WAS NOT DISCLOSED TO THE ASSESSEE BY THE ITO AND EVEN THOUG H THE AAC REPRODUCED AN EXTRACT FROM IT IN HIS ORDER HE DID NOT CARE TO PRODUCE IT BEFORE THE ASSESSEE OR GIVE A COPY OF IT TO THE ASSESSEE. THE SAME POSITION OBTAINED ALSO BEFORE TH E TRIBUNAL AND THE HIGH COURT AND IT WAS ONLY WHEN A SUPPLEMENT AL STATEMENT OF THE CASE WAS CALLED FOR BY THIS COURT BY ITS ORDER DATED 16-8-1979 THAT ACCORDING TO THE ITO THIS LE TTER WAS TRACED BY HIM AND EVEN THEN IT WAS NOT SHOWN BY HIM TO THE ASSESSEE BUT IT WAS FORWARDED TO THE TRIBUNAL AND I T WAS FOR THE FIRST TIME AT THE HEARING BEFORE THE TRIBUNAL IN RE GARD TO THE PREPARATION OF THE SUPPLEMENTAL STATEMENT OF THE CA SE THAT THIS LETTER WAS SHOWN TO THE ASSESSEE. IT WILL THEREFOR E BE SEEN THAT EVEN IF WE ASSUME THAT THIS LETTER WAS IN FAC T ADDRESSED BY THE MANAGER OF THE BANK TO THE ITO NO RELIANCE COU LD BE PLACED UPON IT SINCE IT WAS NOT SHOWN TO THE ASSESSEE UNT IL AT THE STAGE OF PREPARATION OF THE SUPPLEMENTAL STATEMENT OF THE CASE 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 EVIDENC E 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 INCO ME-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 REFERENCE TO T HE 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 IN CASE OF C. VASANTLAL & CO. (SUPRA) RELIED UPON BY T HE REVENUE AND WHICH ACTUALLY SUPPORTS THE CASE OF THE ASSESSE E IN THE INSTANT CASE THE ASSESSMENT WAS COMPLETED BY THE A O RELYING SOLELY ON THE INFORMATION RECEIVED FROM THE INVESTI GATION WING STATEMENT RECORDED U/S 132(4) OF SHRI BHANWARLAL JA IN AND OTHERS AND VARIOUS INCRIMINATING DOCUMENTARY EVIDE NCE FOUND FROM THE SEARCH AND SEIZURE CARRIED OUT BY INVESTIG ATION WING MUMBAI ON THE SHRI BHANWARLAL JAIN GROUP ON 03.10.2 013. IT REMAINS UNDISPUTED THAT THE ASSESSEE WAS NEVER PROV IDED COPIES OF SUCH INCRIMINATING DOCUMENTS AND STATEMEN TS OF SHRI 26 BHANWARLAL JAIN AND VARIOUS PERSONS AND AN OPPORTUN ITY TO CROSS 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 KOTHARI J AIPUR 21 ASSESSEE BY THE A.O. IT IS CLEAR CASE WHERE THE PRI NCIPLE 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 I N VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE WHERE THE A SSESSEE HAS REPEATEDLY REQUESTED AND DEMANDED THE CROSS EXAMINA TION 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 BASED ON THE STATEMEN T OF SUCH PERSON THEN THE DENIAL OF CROSS EXAMINATION BY THE AO AS WELL AS LD. CIT (A) DESPITE THE FACT THAT THE ASSESSEE WAS READY TO BEAR THE COST OF THE CROSS EXAMINATION OF THE WITNE SSES IS A GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. T HUS THE ADDITIONS MADE BY THE AO ON THE BASIS OF SUCH STATEMENT WITHO UT ANY TANGIBLE MATERIAL IS NOT SUSTAINABLE IN LAW AND LIA BLE TO BE DELETED. ACCORDINGLY THE ADDITION MADE BY THE AO IS ALSO DELETED ON MERITS APART FROM THE LEGAL ISSUE DECIDED IN FAV OUR 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 DIRECTORATE OF ENFORCEMENT DELHI RESPONDENT CORAM JUSTICE MANMOHAN SINGH : CHAIRMAN SHRI G.C. MISHRA : MEMBER JUDGEMENT 27 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 CASE OF AYAAUBKHAN NOORKHAN PATHAN V. STATE OF MAHARASHTRA & OTHERS REPORTED IN (2013) 4 SCC 465 HAS INTER ALIA HELD T HAT THE OPPORTUNITY OF CROSS-EXAMINATION BE MADE AVAILABLE BUT IT SHOULD BE ONE OF EFFECTIVE CROSS-EXAMINATION SO AS TO MEET THE REQUIREMENT OF THE PRINCIPLES OF NATURAL JUSTICE. I N THE ABSENCE OF SUCH AN OPPORTUNITY IT CANNOT BE HELD THAT THE MATTER HAS BEEN DECIDED IN ACCORDANCE WITH LAW AS CROSS-EXAMI NATION IS AN INTEGRAL PART AND PARCEL OF THE PRINCIPLES OF NATUR AL JUSTICE. THE CONSTITUTION BENCH OF THE HONBLE SUPREME COURT OF I NDIA 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 OPPORTUNITY OF CRO SS-EXAMINING A WITNESS. I) IN PREM SINGH VS. SPECIAL DIRECTOR E NFORCEMENT DIRECTORATE CRL A. 276 OF 2008 DELHI HIGH COURT D ECIDED ON 24.04.2014 WHEREBY IT WAS HELD THAT THE DENIAL OF RIGHT TO CROSS EXAMINE THE WITNESSES WOULD 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 DISALLOWIN G 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 LEARNED C OUNSEL FOR THE APPELLANTS THAT THE SAID STATEMENTS HAD BEEN RETRAC TED AS THEY HAD BEEN GIVEN UNDER THREAT AND COERCION. IN ORDER TO DETERMINE WHETHER THE CLAIM OF THE APPELLANTS THAT THEY WERE SUBJECTED TO TORTURE THREAT AND COERCION WAS A CRE DIBLE 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 RE CORDED BY A.K. NARANG ASSISTANT DIRECTOR. THE STATEMENT OF R AJENDRA SINGH WAS RECORDED BY DEVENDER MALHOTRA. NEITHER OF THESE OFFICERS WAS TENDERED FOR CROSS-EXAMINATION. IN THE CONSIDERED VIEW OF THE COURT IN THE CONTEXT OF THE SPECIFIC A LLEGATION THAT THE RETRACTED CONFESSIONAL STATEMENTS WERE OBTAINED UNDER TORTURE AND COERCION THAT ASPECT OUGHT TO HAVE BEE N EXAMINED BY THE SD. IN THE CIRCUMSTANCES THE REASONS GIVEN BY THE SD IN THE IMPUGNED AO FOR DISALLOWING THE REQUEST OF THE APPELLANTS FOR CROSS-EXAMINATION OF THE ED OFFICIALS ONLY BECA USE IT WOULD TANTAMOUNT TO FURTHER DELAY IN FINALISING THE PROC EEDING WERE NOT TENABLE OR JUSTIFIED. THE DENIAL OF CROSS EXAMI NATION OF THE ED OFFICIALS BY THE APPELLANTS INDEED HAS CAUSED TH EM SEVERE PREJUDICE SINCE THE ED WAS RELYING ON THE SAID STAT EMENTS AS IF THEY WERE BY THEMSELVES SUBSTANTIVE EVIDENCE. 28 (III) THE HONBLE HIGH COURT OF DELHI IN DEVASHIS BHA TTACHARYA 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 APPLICAB LE LEGAL PROVISIONS THE ADHERENCE TO THE PRINCIPLES OF NATU RAL 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 (1 0) 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 OF TH E ADMINISTRATIVE AND QUASI JUDICIAL COURTS. IN PARTIC ULAR WHEN THE DECISIONS TAKEN BY THESE BODIES ARE LIKELY TO CAUSE ADVERSE CIVIL CONSEQUENCES TO THE PERSONS AGAINST WHOM SUCH DECIS ION 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 OPPORTU NITY TO INCLUDE AN OPPORTUNITY TO DEFINED BY CROSS-EXAMININ G THE WITNESSES PRODUCED AGAINST THE ACCUSED. 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 ALLEGATIONS ON WHICH SUCH C HARGES 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 ) AN OPPORTUNITY TO MAKE HIS REPRESENTATION AS TO WHY TH E PROPOSED PUNISHMENT SHOULD NOT BE INFLICTED ON HIM. 29 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-EX AMINATION IS AN INTEGRAL PART AND PARCEL OF THE PRINCIPLES OF NA TURAL JUSTICE. IT HELD THAT CROSS-EXAMINATION IS ONE PART OF THE PRIN CIPLES OF NATURAL JUSTICE. (V) A CONSTITUTION BENCH OF THE HONBLE SUPREME COUR T IN STATE OF M.P. V. CHINTAMAN SADASHIVA VAISHAMPAYAN AIR 19 61 SC 1623 HAS HELD THAT THE PRINCIPLE OF NATURAL JUSTICE REQU IRE THAT A PARTY BE GIVEN THE OPPORTUNITY TO ADDUCE ALL RELEVANT EVIDENCE UPON WHICH IT RELIES THAT EVIDENCE OF THE OPPOSITE PARTY BE TAKEN IN HIS PRESENCE AND THAT HE BE GIVE N THE OPPORTUNITY TO CROSSEXAMINE THE WITNESSES EXAMINED BY THAT PARTY. NOT PROVIDING THE SAID OPPORTUNITY TO CROSS- EXAMINE IS VIOLATIVE OF THE PRINCIPLES 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 GRA NT PERMISSION FOR CROSS-EXAMINATION OF A WITNESS. IN T HAT CASE THE ASSESSEE HAD SPECIFICALLY ASKED TO BE ALLOWED TO CR OSSEXAMINE THE REPRESENTATIVES OF THE CONCERNED FIRM IN ORDER TO ESTABLISH THAT THE GOODS IN QUESTION HAD BEEN ACCOUNTED FOR I N THE FIRMS BOOKS OF ACCOUNTS AND EXCISE DUTY HAD BEEN PAID THE REOF. THE COURT HELD THAT SUCH A REQUEST COULD NOT BE TURNED DOWN AS THE DENIAL OF THE RIGHT TO CROSS-EXAMINE WOULD AMOUNT TO A DENIAL OF THE RIGHT TO BE 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 PREJUDICE HAS BEEN CAUSED TO THE PARTY BY THE PROCEDURE FOLLOWED. A PA RTY WHICH DOES NOT WANT TO CONTROVERT THE VERACITY OF THE EVI DENCE ON RECORD OR DOES NOT WANT TO CONTROVERT THE TESTIMONY GATHERED BEHIND ITS BACK CANNOT EXPECT TO SUCCEED IN ANY SUB SEQUENT GRIEVANCE RAISED BY HIM ON THE GROUND THAT NO OPPOR TUNITY OF CROSS-EXAMINATION WAS PROVIDED TO HIM ESPECIALLY WH EN THE SAME WAS NOT REQUESTED AND ESPECIALLY WHEN THERE WA S 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 ANALOGOUS TO THE P ROVISIONS OF THE INDIAN EVIDENCE ACT AS ALSO THE PRINCIPLES OF N ATURAL JUSTICE 30 DEMAND THAT THE MAKER OF THE REPORT SHOULD BE EXAMI NED SAVE AND EXCEPT IN CASES WHERE THE FACTS ARE ADMITTED OR THE WITNESSES ARE NOT AVAILABLE FOR CROSS-EXAMINATION O R SIMILAR SITUATION. THE HIGH COURT IN ITS IMPUGNED JUDGMENT P ROCEEDED TO CONSIDER THE ISSUE ON A TECHNICAL PLEA NAMELY NO PREJUDICE HAS BEEN CAUSED TO THE APPELLANT BY SUCH NON-EXAMIN ATION. IF THE BASIC PRINCIPLES OF LAW HAVE NOT BEEN COMPLIED WITH OR THERE HAS BEEN A GROSS VIOLATION OF THE PRINCIPLES OF NAT URAL JUSTICE THE HIGH COURT SHOULD HAVE EXERCISED ITS JURISDICTIO N OF JUDICIAL REVIEW. IX). THE HONBLE SUPREME COURT OF INDIA IN NEW INDIA ASSURANCE COMPANY LTD. V. NUSLI NEVILLE WADIA & AN R. 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 CROSS-E XAMINATION THE SAME BEING A PART OF PRINCIPLES OF NATURAL JUST ICE SHOULD BE HELD TO BE AN INDEFEASIBLE RIGHT. IT WAS HELD AS FO LLOWS:- 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 PRINC IPLE OF NATURAL JUSTICE SHOULD BE HELD TO BE INDEFEASIBLE R IGHT 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 A ND 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 EXCHANGE 1986 (10) DRJ 19 WHILE DEALING WITH A CASE UNDER THE FOREIGN EXCHANGE REGULATION ACT 1973 DECIDED THE APPEAL I N FAVOUR OF THE APPELLANTS ON THE SHORT GROUND THAT THE APPLICA TIONS MADE TO THE DIRECTOR OF ENFORCEMENT AND BEFORE THE APPEL LATE BOARD DURING THE PENDENCY OF THE APPEAL TO SUMMON FOUR WI TNESSES FOR CROSS-EXAMINATION WERE NOT DEALT WITH BY THE AUTHO RITIES 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 31 ITA NO. 1415 TO 1417/DEL/2018 (ASSESSMENT YEAR: 201 3- 14 TO 2015-16) 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 AND SAL E ON BSE ELECTRONIC PLATFORM PROOF OF PAYMENT OF SECURITIES TRANSACTION TAX AND RECEIPT OF PAYMENT THROUGH CHEQUE BY AN IND EPENDENT 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. ONLY FOLLOWING ISSU ES 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 WITHOUT PROVIDING THE COPIES O F THE STATEMENTS AS WELL AS THE CROSS EXAMINATION OF ALLE GED EXIT PROVIDERS SUCH EVIDENCES CAN BE USED AGAINST THE A SSESSEE FOR MAKING ADDITION. III. WHETHER THE INTERIM ORDERS OF THE SEBI RELIED UP ON BY THE LD AO IMPLICATE THE ASSESSEE FO R MAKING ADDITION U/S 68 OF THE ACT ON ALLEGED BOGUS LONGTER M CAPITAL GAINS. IV. WHETHER CASH TRAILS OF THE BUYERS OF THE SECURITIES AS STATED BY THE LD AO MAKES THE LONG-TERM CAPITAL GAI N OF THE ASSESSEE BOGUS. V. WHETHER THE DISCLOSURE OF SOME O THER PERSONS AS THEIR UNDISCLOSED INCOME OF LONG-TERM CA PITAL GAIN AFFECTS THE CASE OF THE ASSESSEE ALSO. VI. WHETHER DE HORS ALL THE ABOVE FACTS ADDITION IN THE HANDS OF THE ASSESSEE U /S 68 OF LONG 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. K EDIA AND SHRI MANISH ARORA. THE LEARNED AUTHORISED REPRESENTATIVE HAS RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT WHERE IN RELYING ON CASE OF STATE OF MADHYA PRADESH VS. CHINTAMAN SA DASHIV WAISHAMPAYAN AIR 1961 SC 1623 WHEREIN IN PARA NUMBE R 11 IT HAS BEEN HELD REFERRING ANOTHER DECISION IN UNIO N OF INDIA VS. TR VARMA STATING IT BROADLY AND WITHOUT INTENDING IT TO BE EXHAUSTIVE IT MAY BE OBSERVED THAT THE RULES OF NA TURAL 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 WITNESSES EXAMINED BY THAT PARTY AND THAT NO MATER IAL SHOULD BE RELIED ON AGAINST HIM WITHOUT HE IS BEING GIVEN AN OPPORTUNITY OF EXPLAINING THEM. IT WAS FURTHER STATED THAT IT IS HARDLY NECESSARY TO EMPHASIZE THAT THE RIGHT TO CRO SS-EXAMINE THE WITNESSES WHO GIVE EVIDENCES AGAINST HIM IS A V ERY VALUABLE 32 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 WITH THE RULES OF NATURAL JUSTICE. THE HONBLE SUPREME C OURT 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 IND USTRIES VS. COMMISSIONER OF CENTRAL EXCISE (2015) 281 CTR 2 41 (SC) HAS HELD AS UNDER :- ACCORDING TO US NOT ALLOWING THE ASSESSEE TO CROSS-EXAMINE THE WITNESSES BY THE ADJU DICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW W HICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLAT ION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEMENTS GIVE N BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSESSEE DIS PUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-E XAMINE THE ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPORTUNI TY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS S PECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY TH E ASSESSEE. HOWEVER NO SUCH OPPORTUNITY WAS GRANTED A ND THE AFORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDI CATING AUTHORITY. AS FAR AS THE TRIBUNAL IS CONCERNED WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TR IBUNAL HAS SIMPLY STATED THAT CROSS-EXAMINATION OF THE SAID DE ALERS COULD NOT HAVE BROUGHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT THEMSELVES TO EXPLAIN A S TO WHY THEIR EX-FACTORY PRICES REMAIN STATIC. IT WAS NOT F OR THE TRIBUNAL TO HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPE LLANT WANTED TO CROSS-EXAMINE THOSE DEALERS AND WHAT EXTR ACTION THE APPELLANT WANTED FROM THEM. AS MENTIONED ABOVE THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE 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 RELIE D UPON THE PRICE LIST AS MAINTAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETHER THE GOO DS WERE IN FACT SOLD TO THE SAID DEALERS/WITNESSES AT THE PR ICE WHICH IS MENTIONED IN THE PRICE LIST ITSELF COULD BE THE SUB JECT MATTER OF CROSS-EXAMINATION. THEREFORE IT WAS NOT FOR THE AD JUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COULD BE THE SUB JECT MATTER OF THE CROSSEXAMINATION AND MAKE THE REMARKS AS MEN TIONED 33 ABOVE. WE MAY ALSO POINT OUT THAT ON AN EARLIER OCC ASION WHEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APPEAL N O. 2216 OF 2000 ORDER DATED 17.03.2005 WAS PASSED REMITTING T HE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING ITS REASONS FOR ACCEPTING OR REJECTIN G THE SUBMISSIONS. IN VIEW THE ABOVE WE ARE OF THE OPINI ON THAT IF THE TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED TH ERE WAS NO MATERIAL WITH THE DEPARTMENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION AS THE STATEMENT OF THE AFORESA ID TWO WITNESSES WAS THE ONLY BASIS OF ISSUING THE SHOW CA USE NOTICE. IN THE PRESENT CASE ALSO THE ASSESSEE SOUGHT OPPOR TUNITY OF CROSS-EXAMINATION OF THE WITNESSES WHOSE STATEMENTS ARE USED BY THE LEARNED ASSESSING OFFICER AGAINST THE ASSESS EE FOR MAKING THE ADDITION. THE ASSESSEE HAS CONTESTED THE TRUTHF ULNESS 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 T HE ASSESSEE. THEREFORE NOT GRANTING OF OPPORTUNITY OF THE CROSS- EXAMINATION OF THE BROKERS SRI RK KEDIA MANISH ARO RA ANKUR AGARWAL DIRECTORS OF THE COMPANIES WHO HAVE PURCHA SED SHARES FROM THE ASSESSEE THROUGH ELECTRONIC PLATFORM OF TH E BOMBAY STOCK EXCHANGE/ NSE AND VARIOUS OTHER PEOPLE AS WER E MENTIONED IN THE ASSESSMENT ORDER IS FATAL TO THE A SSESSMENT MADE BY THE ASSESSING OFFICER. WE ARE ALSO CONSCIOU S OF THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF M. PIRAI CHOODI VS. ITO 334 ITR 262 WHEREIN THE HONBLE SUPREME COU RT WHILE CONSIDERING THE DECISION OF THE HONBLE MP HIGH COURT IN 302 ITR 40 HAS HELD THAT NOT GRANTING AN OPPORTUNITY OF CRO SS- EXAMINATION TO THE ASSESSEE IS MERELY AN REGULARITY AND THEREFORE THE HIGH COURT WAS NOT CORRECT IN CANCELLI NG THE ORDER OF THE ADJUDICATING AUTHORITY. THEREFORE HONBLE SU PREME COURT THOUGHT IT FIT TO SET ASIDE THE MATTER TO THE ADJUD ICATING AUTHORITY WITH A DIRECTION TO GRANT OPPORTUNITY OF CROSS- EXAMINATION TO THE ASSESSEE. BEFORE US AN ISSUE AR ISES THAT WHETHER THE MATTER SHOULD BE SET ASIDE TO THE FILE OF THE LEARNED ASSESSING OFFICER TO GRANT ASSESSEE AN OPPORTUNITY OF CROSS- EXAMINATION OF ALL THE WITNESSES WHOSE STATEMENTS H AVE BEEN USED BY THE LEARNED ASSESSING OFFICER IN THE ASSESS MENT ORDER FOR THE PURPOSE OF MAKING THE ADDITION UNDER SECTIO N 68 OF THE ACT OR TO ANNUL THE ASSESSMENT ORDER ITSELF. ON CAR EFUL PERUSAL OF THE DECISION OF THE HONBLE SUPREME COURT IT IS NO TED THAT SUCH DIRECTION WERE GIVEN BY THE HONBLE SUPREME COURT IN THE CASE OF WRIT PETITION FILED BY THE ASSESSEE BEFORE THE HO NBLE HIGH COURT AND THEREFORE SUPREME COURT HELD THAT THE ASS ESSEE COULD HAVE GONE BEFORE THE COMMISSIONER APPEALS TO AGITAT E THIS ISSUE OF CROSS-EXAMINATION AND THEREFORE THE OPPORT UNITY WAS 34 AVAILABLE TO THE ASSESSEE AT THAT PARTICULAR POINT OF PROCEEDINGS. IN THE PRESENT CASE ASSESSEE HAS ALSO RAISED THE S AME ISSUE BEFORE THE LEARNED CIT A THAT CROSS-EXAMINATION HAS NOT BEEN PROVIDED TO THE ASSESSEE DESPITE ASKING FOR THE SAM E. THE LEARNED CIT A HAS ALSO BRUSHED ASIDE THE ABOVE ARGU MENT OF THE ASSESSEE WITHOUT GIVING ANY PLAUSIBLE REASON. THERE FORE WHEN THE ASSESSEE HAS NOT EXHAUSTED ALL THE JUDICIAL PRO CESS BEFORE REACHING TO THE HIGHER FORUM BUT HAS BYPASSED THEM BY INVOKING THE DIFFERENT RIGHTS THEN IN SUCH CIRCUMS TANCES THE VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE SUC H AS NOT GRANTING OF OPPORTUNITY OF THE CROSSEXAMINATION BECOMES ANY REGULARITY AND NOT AN ILLEGALITY. HOWEVER WHEN THE ASSESSEE HA S 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 GR ANTING AN OPPORTUNITY OF CROSS-EXAMINATION OF THE WITNESS BEC OMES AN ILLEGALITY. THEREFORE IN SUCH CIRCUMSTANCES THE O RDER/ADDITION MADE BASED ON THE STATEMENT OF THIRD PARTIES AND NO OPPORTUNITY HAS BEEN GRANTED TO THE ASSESSEE FOR TH EIR CROSS- EXAMINATION DESPITE REPEATED REQUESTS ADDITION DES ERVES TO BE DELETED. IN VIEW OF OUR ABOVE FINDINGS FINDINGS OF THE COORDINATE BENCH IN ASSESSEES OWN CASE FOR EARLIER YEARS AND BASED ON THE VARIOUS JUDICIAL PRECEDENT RELIED UPON WE DO NOT A GREE THAT DOCUMENT SEIZED FROM THIRD-PARTY CAN BE USED FOR MA KING ADDITION IN THE HANDS OF THE ASSESSEE WITHOUT ASSES SEE BEING GRANTED AN OPPORTUNITY OF CROSS-EXAMINATION OF THOS E PARTIES. IN THE INCOME TAX APPELLATE TRIBUNAL DELHI E BENCH NEW DELHI ITA NO. 2576/DEL/2010 ASSESSMENT YEAR: 2003-04 LORD S 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 SH RI R.K. MIGLANI WAS AN EMPLOYEE OF THE MEMBER OF THE UPDA AND THER EFORE THERE WAS NO NECESSITY FOR HIS CROSS EXAMINATION. 6 4. THE CONTENTION OF THE LD. DR THAT SINCE SHRI R.K. MIGLA NI WAS RELATED TO THE MEMBER DISTILLERIES OF UPDA THEREFORE IT WA S NOT NECESSARY TO ALLOW CROSS EXAMINATION IS NOT ACCEPTA BLE. 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 C ASE THE ASSESSING OFFICER HAS PLACED RELIANCE ON THE STATEM ENT OF SMT.SARLA AGGARWAL DAUGHTER OF THE ASSESSED WHILE ARRIVING AT THE CONCLUSION THAT THE ENTRIES BELONG TO THE TRAN SACTIONS OF THE ASSESSED. THIS STATEMENT MADE BY SMT.SARLA GUPTA C ANNOT BE SAID TO BE RELEVANT OR ADMISSIBLE EVIDENCE AGAINST THE ASSESSED 35 SINCE THE ASSESSED WAS NOT GIVEN ANY OPPORTUNITY TO CROSS- EXAMINE HER AND EVEN FROM THE STATEMENT NO CONCLUS ION CAN BE DRAWN THAT THE ENTRIES MADE ON THE RELEVANT PAGE BE LONGS TO THE ASSESSED AND REPRESENTS HIS UNDISCLOSED INCOME. IT IS ALSO AN ADMITTED FACT THAT THE STATEMENT OF THE ASSESSED WAS NOT RECORDED AT ANY STAGE DURING THE ASSESSMENT PROCEED INGS. THE ONLY CONCLUSION WHICH CAN BE DRAWN ABOUT THE NATURE AND CONTENTS OF THE DOCUMENT IS THAT IT IS A DUMB DOCUM ENT AND ON THE BASIS OF THE ENTRY OF NOTHINGS OR FIGURE ETC. I N 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 ANDAMAN TIMBER VS. CIT IN CIVIL APPEAL NO. 4228 OF 2006 HAS HELD A S UNDER: ACCORDING TO US NOT ALLOWING THE ASSESSEE TO CROS S-EXAMINE 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 IN AS MUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLE S OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. 66. THE LD. DR HAS STRONGLY EMPHASIZED ON THE EVIDE NTIARY VALUE OF THE STATEMENT RECORDED U/S 132(4) OF THE ACT AND HAS RELIED UPON SEVERAL JUDICIAL DECISIONS TO SUPPORT HIS CONT ENTIONS. THE LD. DR FURTHER RELIED UPON THE PROVISIONS OF SECTIO N 132(4A) OF THE ACT AND 292C OF THE ACT. THESE 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 ACCEPTED WHAT WAS RETURNED BY SHRI R.K. MIGLANI AND ON THE STRENGTH O F HIS STATEMENT THAT THE DOCUMENTS SEIZED FROM HIS PREMIS ES BELONG TO DISTILLERIES THE ADDITIONS HAVE BEEN MADE AS UN EXPLAINED 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 O F THE DOCUMENTS ARE PROVED AGAINST A PERSON THE POSSESSI ON OF THE DOCUMENT OR HAND WRITING OF THAT PERSON ON SUCH DOC UMENT 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 JUSTIC E 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 36 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 ASSESSEE. 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 S TATEMENT HE ARRIVED AT CERTAIN PRESUPPOSITIONS MADE ADDITIO N 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 B EEN PROVIDED FOR EXAMINATION. EVEN THEN OPPORTUNITY WAS NOT GRANTED TO ASSESSEE THOUGH LD. CIT (A) HAD COTERMI NOUS 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 DECIS ION 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 OF THE IMPUG NED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY INA SMUCH 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 WAS BASED U PON THE STATEMENTS GIVEN BY THE AFORESAID TWO WITNESSES. EV EN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEM ENTS AND WANTED TO CROSS-EXAMINE THE ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUD ICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH A N OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER NO SUCH OPPORTU NITY WAS GRANTED AND THE AFORESAID PLEA IS NOT EVEN DEALT WI TH BY THE ADJUDICATING AUTHORITY. 15. WE ACCORDINGLY RESPE CTFULLY FOLLOWING DECISION OF HONBLE SUPREME COURT IN THE C ASE OF ANDAMAN TIMBER INDUSTRIES VERSUS CCE (SUPRA) ALLOW APPEAL OF ASSESSEE ON LEGAL GROUND RAISED IN GROUND 2(C) AND QUASH AND SET-ASIDE THE ASSESSMENT ORDER SO PASSED. 37 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 THIS 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 WHICH HAVE BEEN C OMPLETED AGAINST ASSESSEE CAN STAND IN THE EYES OF LAW WHE RE (A) DOCUMENTS ASKED FOR HAVE NOT BEEN SUPPLIED TO THE A SSESSEE AND (B) CROSS-EXAMINATION OF WITNESSES HAVE NOT BEE N PROVIDED TO THE ASSESSEE. BEFORE PROCEEDING FURTHER IT MAY BE POINTED OUT THAT THE ASSESSING OFFICER REFERS TO THE PROCEE DINGS BEFORE DDIT(INV) AND ALLEGES THAT ALL THE DOCUMENTS HAVE B EEN HANDED OVER BY DDIT(INV) TO THE ASSESSEE AND HENCE THEY W ERE NOT BEING PROVIDED. IT IS NOT CLEAR AS TO WHAT DOCUMENT S WERE PROVIDED BY DDIT(INV). EVEN IF IT WAS SO THEN IT W AS INCUMBENT UPON THE ASSESSING OFFICER TO PROVIDE THE DOCUMENTS WHICH WERE IN HIS POSSESSION AND WHICH HE WAS SEEKING TO RELY ON IN ORDER TO COMPLETE ASSESSMENT AGAINST ASSESSEE. THE ASSESSEE HAS TIME AND AGAIN ASKED FOR THE COPIES OF DOCUMENT S AND EVEN WAS READY TO PAY COPYING CHARGES BUT THE ASSESSING OFFICER HAD BLATANTLY REFUSED TO GIVE THE DOCUMENTS ON THE PREM ISE THAT THEY HAVE ALREADY BEEN RECEIVED BY ASSESSEE. BUT NO SUCH EVIDENCES OF SUCH DOCUMENTS BEING HANDED OVER BY DD IT(INV) HAS BEEN FILED ON RECORD. ANOTHER ASPECT TO BE NOTE D IS THAT THE ASSESSING OFFICER IS RELYING ON STATEMENTS OF TWO P ERSONS THE ASSESSEE HAD SOUGHT CROSS-EXAMINATION OF THE SAID P ERSONS AND OF MANY EVIDENCES ALSO WHICH HAVE NOT BEEN PROVIDE D BY ASSESSING OFFICER. ANOTHER ASPECT OF THE ISSUE IS T HAT THE ASSESSING OFFICER HAS PURELY RELIED ON THE STATEMEN T OF SHRI PRAVIN KUMAR JAIN OF HAVING PROVIDED ACCOMMODATION ENTRIES IN ORDER TO FIRST INITIATE RE-ASSESSMENT PROCEEDINGS A ND THEN ALSO TO COMPLETE RE-ASSESSMENT PROCEEDINGS BUT THE COPY OF SAID STATEMENT MADE BY SHRI PRAVIN KUMAR JAIN HAS BEEN R EFUSED BY HIM. AFTER THE SEARCH PROCEEDINGS THE ASSESSEE HAS EVEN FILED COPY OF AFFIDAVIT OF SHRI PRAVIN KUMAR JAIN IN THIS REGARD BUT THE SAME HAS NOT BEEN COMMENTED ON BY THE ASSESSING OFF ICER NOR REFERRED TO BEFORE MAKING ADDITION IN THE HANDS OF ASSESSEE. THE 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 WERE P ROVIDED BY 38 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 A SSESSEE BUT IN THE HANDS OF OTHER PERSON SO ONCE THE ASSESSEE ASK S THAT THE DOCUMENTS BE ISSUED TO IT ON WHICH RELIANCE IS PLAC ED UPON FOR REOPENING THE ASSESSMENT THEN IT WAS INCUMBENT UPO N THE ASSESSING OFFICER TO PROVIDE THE SAME TO THE ASSESS EE IN ORDER TO ENABLE THE ASSESSEE TO PERUSE THE SAME AND THEN POINT OUT WHETHER BY RELYING ON THE SAID DOCUMENTS THE RE-AS SESSMENT HAS BEEN VALIDLY REOPENED. MAY BE THE LETTER WHICH IS FORWARDED BY DDIT(INV) TO THE ASSESSING OFFICER IS AN INTERNA L DOCUMENT AND THE ASSESSING OFFICER HAS PROVIDED GIST OF THE SAME TO THE ASSESSEE. HOWEVER THERE ARE OTHER DOCUMENTS THE ASS ESSEE 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 DI RECTORS OF THE COMPANIES AS MENTIONED IN THE SAID LETTER. IN ADDIT ION THE ASSESSEE HAD SOUGHT CROSS-EXAMINATION OF DIFFERENT PERSONS WHOSE STATEMENTS / MATERIALS SEIZED FROM THEM WERE BEING RELIED UPON. HOWEVER WE HAVE ALREADY MADE REFERENCE TO THE SAID DOCUMENTS IN PARAS 15 17 AND 18 HEREINABOVE. THE ASSESSEE HAS TIME AND AGAIN ASKED FOR THE COPIES OF SAID DOCUMENTS BUT THE SAME HAVE NOT BEEN SUPPLIED TO TH E ASSESSEE. THE ASSESSEE HAS ALSO SOUGHT CROSS-EXAMIN ATION OF THE PERSONS WHOSE STATEMENTS WERE BEING RELIED UPON TO PROPOSE RE-ASSESSMENT IN THE HANDS OF ASSESSEE FOR WHICH REASONS WERE RECORDED FOR REOPENING THE ASSESSMENT BUT NONE OF THE CROSS-EXAMINATIONS HAVE BEEN ALLOWED. THE NO N- ALLOWANCE OF CROSS-EXAMINATION HAS BEEN HELD BY THE HON'BLE SUPREME COURT IN M/S. ANDAMAN TIMBER INDUSTRIES VS . COMMISSIONER OF CENTRAL EXCISE IN CIVIL APPEAL NO.4 228 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 DOCUMENTS HAVE BEE N SUPPLIED TO THE ASSESSEE BUT NO CROSS-EXAMINATION OF WITNESS ES HAS BEEN PROVIDED TO THE ASSESSEE. IN SUCH SCENARIO INVOKIN G OF JURISDICTION UNDER SECTION 147/148 OF THE ACT GETS AFFECTED AS THE ASSESSEE HAS A RIGHT TO FILE OBJECTIONS TO REOP ENING OF ASSESSMENT AND SUCH A RIGHT OF ASSESSEE HAS BEEN VI OLATED. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS POINTED OUT THAT IN THE ABSENCE OF GETTING THE DOCUMENTS RE LIED UPON AND IN NOT ALLOWING CROSS-EXAMINATION OF WITNESSES THE ASSESSEE WAS NOT IN A POSITION TO FILE OBJECTIONS A GAINST REOPENING OF ASSESSMENT. THE JURISDICTION IS CONFER RED UPON THE ASSESSING OFFICER FOR MAKING RE-ASSESSMENT IN THE C ASE OF ASSESSEE ONLY ON THE BASIS OF AFORESAID SEIZED DOCU MENTS AND 39 THE COMMUNICATION FROM DDIT(INV) WHO IN TURN HAS RELIED ON THE STATEMENTS OF VARIOUS PERSONS WHO WERE SEARCHED . HENCE IN SUCH CIRCUMSTANCES IT WAS INCUMBENT UPON THE ASSES SING OFFICER NOT ONLY TO ALLOW CROSS-EXAMINATION OF WITN ESSES BUT ALSO FURNISH THE COPIES OF ALL THE SEIZED DOCUMENTS RELI ED 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 AGAINST ASSESSEE. HENCE THE SAME PART AKES THE CHARACTER OF AN EVIDENCE TO BE USED AGAINST ASSESSE E AND ITA THE PRINCIPLES OF NATURAL JUSTICE DEMAND THAT SUCH EVIDENCE WHICH IS TO BE USED AGAINST ASSESSEE THEN COPY OF THE SAME SHOULD BE MADE AVAILABLE TO THE ASSESSEE. THE CONTE NTS OF SAID LETTER HAVE BEEN MADE AVAILABLE BY THE ASSESSING OF FICER HENCE WE DO NOT UNDERSTAND WHAT STOPPED HIM FOR MAKING AV AILABLE THE LETTER COPY OF WHICH WAS FORWARDED BY DDIT(INV ). THE PERUSAL OF ASSESSMENT ORDER REFLECTS THAT THE ASSES SING OFFICER HAS ELABORATELY REFERRED TO THE CONTENTS OF SAID LE TTER AND RELIED UPON THE INVESTIGATION CARRIED OUT BY DDIT(INV) IN ORDER TO REOPEN THE ASSESSMENT IN THE CASE OF ASSESSEE. IN T HE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES WHERE THE A SSESSEE HAS BEEN DENIED COPY OF STATEMENT RECORDED AND COPY OF LETTER ISSUED BY DDIT(INV) WHICH HAS BEEN EXTENSIVELY REL IED UPON BY THE ASSESSING OFFICER TO RECORD REASONS FOR REOPENI NG THE ASSESSMENT AND FAILURE OF ASSESSING OFFICER IN NOT PROVIDING CROSS-EXAMINATION OF WITNESSES IN ORDER TO ENABLE T HE ASSESSEE TO MEET THE CASE OF BOTH REOPENING AND ALSO THE ASS ESSMENT BEING CARRIED OUT AGAINST THE ASSESSEE ON THE BASIS OF SUCH STATEMENTS VIOLATES THE BASIC FUNDAMENTAL PRINCIPL E OF NATURAL JUSTICE AND IN SUCH SCENARIO THE ASSESSMENT WHICH HAS BEEN COMPLETED AGAINST THE ASSESSEE CANNOT STAND. ACCORD INGLY 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 T O SUBMIT HIS OBJECTIONS TO REOPENING OF ASSESSMENT AND WHERE THE ASSESSING OFFICER HAS FAILED TO PROVIDE SUCH AN OPPORTUNITY RE-ASSESSMENT ORDER CANNOT STAND. IN THE FACTS OF PRESENT CASE S INCE THE ASSESSEE DID NOT RECEIVE COPIES OF DOCUMENTS RELIED UPON AND ALSO NO CROSS-EXAMINATION OF WITNESSES ON WHOSE STA TEMENTS THE ASSESSING OFFICER RELIED UPON TO RECORD REASONS FOR REOPENING ASSESSMENT WAS PROVIDED TO THE ASSESSEE HENCE THE ASSESSEE WAS PREVENTED FROM FILING THE OBJECTIONS T O REOPENING OF ASSESSMENT. IN SUCH SCENARIO EVEN IF THE ASSESS EE WAS WELL AWARE OF REASONS FOR REOPENING BUT THE FAILURE TO P ROVIDE OPPORTUNITY TO FILE OBJECTIONS TO THE REOPENING OF ASSESSMENT VIOLATES THE GOVERNING PRINCIPLE OF LAW AND HENCE RE- 40 ASSESSMENT ORDER NEEDS TO BE QUASHED AND SET ASIDE. 25. THE HONBLE BOMBAY HIGH COURT IN AGARWAL METALS AND ALLOY S VS. ACIT (2012) 346 ITR 64 (BOM) HAS PROPOUNDED SUCH A VIEW IN TURN RELYING ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN GKN DRIVESHAFTS (INDIA) LTD. VS. ITO (SUPRA). THE L EARNED 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 SEC TION 143(3) OF THE ACT. HOWEVER SINCE WE HAVE DECIDED TH E ISSUE ON THE OTHER ASPECTS OF CASE AND HELD THE ASSESSMENT O RDER INVALID AND BAD IN LAW WE ARE NOT ADDRESSING THE SAME. IT MAY BE POINTED OUT HEREIN ITSELF THAT SINCE THE ASSESSING OFFICER DID NOT PROVIDE COPIES OF STATEMENTS AND DID NOT ALLOW CROS S- EXAMINATION THEN THE PLEA OF ASSESSEE THAT IT COUL D NOT OBJECT TO THE REASONS RECORDED FOR REOPENING THE ASSESSMEN T HAS MERITS TO BE ALLOWED AND FOR SUCH ACT WHEREIN NO P ROPER OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO FILE OBJEC TIONS TO RE- ASSESSMENT PROCEEDINGS INITIATED UNDER SECTION 147 /148 OF THE ACT CANNOT STAND. THERE IS NO MERIT IN THE OBSERVAT IONS OF CIT(A) THAT THE ASSESSEE HAD PARTICIPATED IN ASSESS MENT PROCEEDINGS AND HENCE IT CANNOT BE SAID THAT HE HA D ANY OBJECTIONS TO REOPENING OF ASSESSMENT. THE PRELIMIN ARY ISSUE AFFECTING THE JURISDICTION OF REVENUE AUTHORITIES C AN BE RAISED AT ANY STAGE AND ACCORDINGLY WE ADMIT THE PLEA OF ASS ESSEE AND HOLD THAT ASSESSMENT ORDER PASSED IN THE CASE WITHO UT JURISDICTION IS BOTH INVALID AND BAD IN LAW. THE GR OUNDS 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 RECORDED NAME LY INVESTIGATION WING REPORT LETTER ETC AND EVEN CROSS EXAMINATION IS NEVER OFFERED WITH REFERENCE TO STATEMENT OF SEA RCHED 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 DETAILED M ANNER VIDE OBJECTION LETTER DATED 27.04.2016 IN WHICH NOTE WOR THY ASPECT IS ASSESSEE SPECIFICALLY SOUGHT FROM AO COPIES OF BACK MATERIAL REFERRED IN REASONS INCLUDING INVESTIGATION WING RE PORT/LETTER SEIZED DOCUMENTS ETC REFERRED THEREIN AO WITHOUT C ONFRONTING ANY BACK MATERIAL AS EVIDENT FROM OBJECTION DISPOSA L ORDER DATED 17.05.2016 REJECTED ASSESSEES OBJECTION CHAL LENGING REOPENING ACTION. IN VARIOUS LETTERS PLACED IN PAPE R BOOK AND REFERRED IN WRITTEN SUBMISSION BEFORE US IT WAS SP ECIFICALLY 41 ASKED TO AO DURING ASSESSMENT PROCEEDINGS TO CONFRO NT THE BACK MATERIAL AS REFERRED IN REASONS RECORDED NAMEL Y IN LETTERS DATED 07/06/2016 20/10/2016 WHICH REQUEST OF ASSES SEE HAS NOT BEEN ADVERTED TO BY THE AO IS PATENT FROM OBJEC TION 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 CONFRONTED TO ASSESSEE AS SPECIFICALLY REQUESTED BY ASSESSEE. WE NOTE HERE TH AT THE TRIBUNAL IN VARIOUS DECISIONS SPECIALLY ONE WHICH I S 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 CONSISTENTLY HOLDING WHI LE TAKING SUPPORT FROM HONBLE APEX COURT LEADING DECISION IN ANDAMAN TIMBER INDUSTRIES CASE (CIVIL APPEAL NO. 4228 OF 20 06) REPORTED AT 127 DTR 241 THAT VIOLATION OF PRINCIPLE OF NATURAL JUSTICE (HERE WITHHOLDING OF BACK MATERIAL REFERRED IN REASONS WHICH IS SPECIFICALLY REQUESTED FOR REPEATEDLY) IS A SERIOUS FLAW AND RESULTS IN NULLITY OF THE ORDER SO PASSED WHIC H 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 AND EXCL UDED FROM INCOME TAX ASSESSMENT PROCEEDINGS WHERE ENTIRE ASSESSMENT IS OTHERWISE PLAGIARIZED AND HEAVILY INF LUENCED BY STATEMENTS RECORDED BY INVESTIGATION WING WHICH CAN T BE TAKEN ON BOARD UNLESS TESTED ON TERRA FERMA OF CROSS EXAM INATION WHICH FOR REASONS BEST KNOWN TO REVENUE IS NOT ADHE RED IN ANY OF SUCH CASES. AS DISCUSSED SUPRA THERE ARE FIVE J UDGE CONSTITUTION BENCH RULINGS FROM HONBLE APEX COURT ( HONBLE SUPREME COURT OF INDIA IN KHEM CHAND VS. UNION OF I NDIA AIR 1958 SC 300; THE HONBLE SUPREME COURT IN STATE OF M.P. V. CHINTAMAN SADASHIVA VAISHAMPAYAN AIR 1961 SC 1623 ETC) HOLDING NOT PROVIDING THE SAID OPPORTUNITY TO CROS S- EXAMINE IS VIOLATIVE OF THE PRINCIPLES OF NATURAL J USTICE AND HAS ALSO HELD THAT THE MEANING OF THE TERM REASONABLE OPPORTUNITY TO INCLUDE AN OPPORTUNITY TO DEFINED BY CROSS- EXAMINING THE WITNESSES PRODUCED AGAINST THE ACCUSE D.. EVEN CELEBRATED DECISION OF HONBLE APEX COURT IN ANDAMAN TIMBER CASE (SUPRA) WHICH THIS TRIBUNAL IS REGULARLY FOLL OWING IN VARIOUS RULINGS CONSISTENTLY IS ALSO COMPLETE ANSWER TO CON TRARY REVENUE ARGUMENT WHICH CANT BE ACCEPTED. IN THIS CONNECTIO N THERE IS ONE RECENT DIVISION BENCH DECISION OF THIS HONBLE TRIBUNAL WHERE ONE PRADEEP JINDAL STATEMENT WAS MADE AS BASIS TO D RAW ADVERSE INFERENCE AND SANS CROSS EXAMINATION OF THA T PERSON IT IS HELD BY THIS TRIBUNAL IN CASE OF REETA SINGHAL IN ITA 42 NO.4819/DEL/2018 ORDER DATED 17/01/2019 HELD (DELHI 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 THE AS SESSEE WAS TOWARDS SALE CONSIDERATION OF SHARES OF M/S. SHRI G ANGA PAPER MILLS PVT. LTD. AT FACE VALUE ON WHICH THE ASSESSEE HAD NOT EARNED ANY CAPITAL GAIN. THE SHARES ALREADY EXISTED IN THE BALANCE SHEET OF THE ASSESSEE IN THE ASSESSMENT YEA RS 2006- 07 AND 2009-10. FURTHER THE ASSESSEE WAS NOT ALLOWED CROSSEXAMINATION OF THE MAKER OF THE STATEMENT THAT THE ASSESSEE RECEIVED ACCOMMODATION ENTRY OF RS.69 LAC IN THE GUISE OF SALE CONSIDERATION OF SHARES AND THEREFOR E THE STATEMENT OF THE PERSONS CANNOT BE USED AGAINST THE ASSESSEE FOR MAKING ADDITION U/S.68 OF THE ACT AND RELIED UP ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF M/ S. ANDAMAN TIMBER INDUSTRIES (SUPRA). NO MATERIAL HAS BEEN B ROUGHT ON RECORD BY THE DEPARTMENT TO SHOW THAT THE ABOVE FIN DINGS OF THE LD. CIT(A) ARE NOT CORRECT. EVEN OTHERWISE NO SPEC IFIC ERROR IN THE ORDER OF THE LD. CIT(A) COULD BE POINTED OUT BY THE LEARNED DEPARTMENT REPRESENTATIVE. HENCE WE FIND NO GOOD RE ASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) WHICH IS HEREBY CONFIRMED AND THE GROUNDS OF APPEAL OF THE REVENUE IS DISMISSED. 9. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES O F THE CASE AND RESPECTFULLY FOLLOWING AND APPLYING PRINCIPLES IN AFORESAID HONB LE SUPREME COURT HONBLE HIGH COURT AND THIS TRIBUNAL RULINGS SECOND ISSUE FRAME D BY ME ABOVE ON CONSEQUENTIAL IMPACT OF LACK OF CROSS EXAMINATION AND VIOLATION O F PRINCIPLE OF NATURAL JUSTICE I HAVE NO HESITATION TO ACCEPT THE PLEA OF LD AR THAT LACK OF CROSS EXAMINATION AND 43 VIOLATION OF PRINCIPLE OF NATURAL JUSTICE RESULTS I S TOTAL NULLITY OF THE ENTIRE ADDITION HENCE THE ADDITIONS IN DISPUTE IS HEREBY DELETED. 10. IN THE RESULT ALL THE 03 APPEALS OF THE ASSE SSEES ARE PARTLY ALLOWED. ORDER PRONOUNCED ON 11.02.2019. SD/- (H.S. SIDHU) JUDICIAL MEMBER DT. 11-02-2019 SR BHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT ASSISTANT REGISTRAR IT AT DELHI BENCHES 44