9911796707
TMI Blog2008 (4) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... ect which cannot be cured and assessment has to be held to be invalid because the AO did not have any jurisdiction to assess the assessee without adopting the procedure laid down in s. 153C as the search was neither initiated nor conducted in the case of assessee. There was no warrant of authorization to conduct search on the assessee and no search was initiated or conducted in the case of the assessee. To further explain that the assessments framed in the hands of assessee company under s. 153A are not valid, it is observed that the provisions of s. 153C(1) are almost similar to provisions of s. 158BD which is applicable to the searches conducted upto the day of 31st May, 2003. In view of these observations, it will be incorrect to say that non-fulfilment of conditions precedent for invoking provisions of s. 153C is merely a technical defect which can be cured. Reference here also can be made to the decision of Hon ble Calcutta High Court in the case of Sunrolling Mills (P) Ltd. vs. ITO [ 1985 (5) TMI 9 - CALCUTTA HIGH COURT] , wherein the AO had proceeded on the basis of s. 147(b) and AO sought to justify the proceedings at the time of reassessment as if they were taken under s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusion that in respect of over-billing also, the record seized will be correct as the said conclusion will be based on mere presumption without verifying the truth thereof. Allegation of the AO regarding payments received on account of over-billing from Chopra Group of cases, no material has been brought on record by the Revenue that in fact any extra amount was received by the assessee from Chopra Group. It has already been pointed out that it was a matter of investigation and enquiry on the basis of which alone such addition could have been made. Keeping in view the above facts, it is clear that addition has been made in violation of principle of natural justice as no opportunity was afforded by the AO to the assessee for cross-examination of said Shri Sandeep Bansal despite the repeated requests made in this regard. Therefore, also, the addition is liable to be deleted. To support such conclusion, reliance can be placed on the decision in the case of Kalra Glue Factory vs. Sales-tax Tribunal Ors.[ 1987 (3) TMI 110 - SUPREME COURT] . In the said case the appeal of the assessee was allowed solely on the ground that the statement of Bankelal which was not tested by cross-exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proof of payment was furnished with the return of income. After hearing both the parties on this issue we restore this issue to the file of AO with a direction to verify the payment. If the payment is made before the due date if filling the income tax return than the same will be allowed. We direct accordingly. This ground is allowed for statistical purposes. In the result appeals filed by the assessee are allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... as no evidence on the basis whereof it could even be validly suspected that the supplies made were under-invoiced. 6. That the learned CIT(A) has completely overlooked the evidence furnished by the assessee in the course of assessment proceedings and relied on by the assessee in the course of appellate proceedings. There was no valid justification to have brushed aside all such evidences and that too without discharging even the initial burden which admittedly was on the Revenue, to establish there was any under invoicing made by the assessee. 7. The learned CIT(A) has failed to appreciate that the learned AO having accepted the books of accounts which showed that the sale prices of the stocks supplied were duly recorded which were comparable to the sale value of the stocks sold in the broken period during the financial year. He has failed to comprehend that how could it be accepted that, only for a part of broken period, there could be such substantial difference in the sale value, so as to support an allegation of an under-invoicing of the stocks. 8. That the learned CIT(A) in sustaining the addition of such huge amount has failed to appreciate and overlooked that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rification of the seized material vis-a-vis entries in the books of accounts had explained in order to prove the entries of cash collection in seized documents were genuine' is misconceived. In fact, this could have alone been so done only after establishing that the customers had made any such alleged payments and not on the basis of purported documents allegedly found and seized, which had been fabricated by a disgruntled employee. The basis of an allegation that it has been established that the entries were genuine is itself misconceived. 13. That the findings of the learned CIT(A), the statement of Shri Sandeep Bansal during the course of search under s. 132(4) of the IT Act was binding on the assessee, are contrary to well-settled legal position. It is well-settled that before any adverse inference is drawn on the basis of any statement, the same has to be confronted to the person against whom the said evidence/statement is to be used. 14. That the finding of the learned CIT(A) that it was the burden of the assessee to have produced Shri Sandeep Bansal is also based on an assumption that the burden lay upon the assessee to establish the non-existing facts which are uns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e produced, books of account or other documents which will be useful for, or relevant to, proceedings under the Indian IT Act, 1922, or under the IT Act, 1961, he would not produce, or cause to be produced, such books of account or other documents as required by such summons or notice; Sarvashri/Shri/Shrimati Shri Sandeep Bansal are/is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been, or would not be, disclosed for the purposes of the Indian IT Act, 1922, or the IT Act, 1961; And whereas I have reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable articles or things have been kept and are to be found in Sector A, Shastri Nagar, Near Mahaveer Mandir, Jodhpur (specify particulars of the building/place/vessel/vehicle/aircraft); This is to authorise and require you as overleaf (name of the Dy. Director or of the Dy. CIT or of the Asstt. Director or of the Asstt. CIT or the ITO)-" Second warrant of authorisation "If a summons under sub-s. (1) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lling on sale of SS flats to all re-rolling mills at Jodhpur. He also stated that in addition to receipts of payments in cheques against sale proceedings, payment in cash for under-billing is also received. Payments in cheques were received in Jodhpur and Mumbai and cash from parties on account of under-billing was collected by him at Jodhpur and by Shri Jhala Ram at Mumbai, who was the former agent of the company. It is on the basis of that statement of Shri Sandeep Bansal, notice was issued to the assessee under the provisions of s. 153A of the IT Act, 1961 on 4th Feb., 2005 in response to which return of income was filed at the same income which was originally filed i.e. at an income of Rs. 20,06,83,700. AO issued a questionnaire to the assessee to explain as to why the excess amount received on account of under-billing as stated by said Shri Sandeep Bansal should not be treated as income of the assessee. AO has reproduced certain parts of statement of said Shri Sandeep Bansal in the assessment order. In response it was submitted vide letter dt. 22nd Dec., 2005 that Panchnama was prepared in the case of Shri Sandeep Bansal which clearly states that it is a warrant in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the notebook were tallying with the regular books of account whereas in the same notebook the other entries regarding cash collections in the names of different persons were not accepted. Thus, AO pointed out that the assessee has been accepting some part of the notebook and denying the other part of the note book. It was submitted vide reply dt. 18th Feb., 2006 that Annexs. A1 to A11 which were admittedly seized from the residence of said Shri Sandeep Bansal when search was conducted in his case and the assessee company has no connection whatsoever with those documents and since those documents neither belonged to the assessee nor have been seized from office premises of the assessee, therefore, no adverse inference could be drawn against the assessee on the basis of such documents. Assessee also submitted affidavit of said Shri Sandeep Bansal which is dt. 5th Nov., 2003 wherein said Shri Sandeep Bansal had submitted that the alleged statement on the basis of which adverse inference is sought to be drawn against the assessee, was totally untrue and had been made by him in the scheme of things planned by him to cause financial loss and damage to the company. AO issued summons t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt received from different parts of Jodhpur during the months of February and March, 2003, and totals of these are a sum of Rs. 2,58,41,760 which was collected by said Shri Sandeep Bansal and such figure more or less tallies with the under-billing payment received during the months of February and March and thus, it is a corroborative evidence which goes to prove that assessee company was receiving under-billing amount from said Shri Sandeep Bansal and the same constituted the concealed income of the assessee. 8. Assessee was duty-bound to produce said Shri Sandeep Bansal for examination and it was not done. Thus, assessee has failed to produce its witness and the Department has discharged its burden as the statement of said Shri Sandeep Bansal was recorded at the time of search in which all the facts were categorically admitted. Therefore, AO observed that the plea of the assessee that opportunity has not been given to cross-examine the witness is not acceptable as the witness is an employee of the assessee. 5. On the basis of these observations the AO concluded that assessee has been collecting cash from re-rolling mills at Jodhpur on the rates decided by the head office whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid Shri Sandeep Bansal that he had been planning to use the fabricated records against the assessee company. Thus, it was pleaded that no adverse influence can be drawn on the basis of statement of said Shri Sandeep Bansal which was recorded during the course of search proceedings against him. It was again submitted that Sandeep Bansal should be produced before the assessee for cross-examination in order to enable the assessee to rebut the purported statement which was admittedly made by him to cause financial loss to the assessee company on the basis of fabricated material. It was further submitted that a letter was filed before the AO on 25th Feb., 2006, wherein a chart of selling rate at Jodhpur by different manufacturers of the material was furnished and it was submitted that selling prices of the assessee company shown in the books of account were duly comparable with the selling prices of the other manufacturers who were selling their products in the market. 9. Considering these submissions, learned CIT(A) has observed that it is an undisputed fact that a search was carried out at the branch office at the assessee company at Jodhpur on 17th Sept., 2003 and also at the resid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot acceptable as the quality in the case of assessee may be better and also because of the popularity of brand of the assessee company. Learned CIT(A) further observed that the rate chart is not supported with prevailing price evidence by the assessee and other suppliers. He observed that there is emphatic evidence of cash collection over and above the bill amount. Keeping in view all these facts learned CIT(A) has upheld the addition. The assessee is aggrieved hence in appeal. 10. Learned Authorised Representative after narrating the facts arguing on the issue of validity or otherwise of search assessment, pleaded that search assessments suffer from legal infirmities as no search operation has been carried out in the case of assessee company. Therefore, he pleaded that assumption of jurisdiction by the AO under s. 153A is illegal and invalid. Before the AO as well as CIT(A) it has been repeatedly argued that there being no search carried out on the assessee, the search assessment is invalid but both of them have brushed aside such submission of the assessee. It was further argued that the impugned additions on account of alleged under-billing of sale of stainless steel flats (SS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndisputable to support the contention that assessment is liable to be quashed on this ground. Reliance was placed on the decisions in the cases of Nenmal Shankarlal Parmer vs. Asstt. CIT (Inv.) (1992) 102 CTR (Kar) 64 : (1992) 195 ITR 582 (Kar), CIT vs. Tirupati Oil Corporation (2001) 167 CTR (Bom) 77 : (2001) 248 ITR 194 (Bom), Rudrachar vs. Director of IT (Inv.) (2002) 178 CTR (Kar) 314 : (2002) 257 ITR 549 (Kar) and Smt. Sita Devi vs. CIT (1979) 12 CTR (P&H) 108 : (1980) 122 ITR 105 (P&H). 12. It was further submitted that no incriminating evidence or material has been found at the business premises of the branch office. It was pointed out that the documents which have been found and inventoried from the business premises of the assessee are Annex. A (serial No. 1) from pp. 1-40 and 1-383 and Annex. A (serial No. 2) pp. 1-320. 13. It was pointed out that documents at Annex. A (serial No. 1) are computerized sheets which are statement of accounts duly entered in the books of account of the assessee company maintained in the regular course of business and all these transactions are found recorded in the seized material are duly recorded in the regular books of account and are au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri San deep Bansal is a mere facade and said Shri Sandeep Bansal is in fact the kingpin of the entire conspiracy and engineered against the assessee. 16. With regard to statement of Shri Sandeep Bansal recorded on the date of search at his residence, learned Authorised Representative referred to the explanation of the assessee furnished vide letter dt. 15th Feb., 2006 of the paper book. In the said letter, it was submitted that statement of said Shri Sandeep Bansal was recorded at the back of the assessee and no opportunity. was ever allowed to the assessee to cross-examine said Shri Sandeep Bansal. The assessee has conduced enquiries from Shri Sandeep Bansal about the contents of his statement and he has furnished to the assessee company an affidavit dt. 5th Nov., 2003, a copy of which was submitted to the AO. It was submitted that it is evident from the affidavit that what was stated in the statement recorded at the time of search was totally untrue and the statement was made in the scheme of things planned by him to cause financial loss or damage to the assessee company. It was also admitted by him that he had been planning to use the fabricated records against the company. Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is binding on the assessee company, learned Authorised Representative argued that the same is factually and legally wrong. It was submitted that statement may be relevant and admissible in his individual case but the same is not binding on the assessee company. If the said statement is to be used against the assessee then it is imperative on the Department to give opportunity to the assessee for cross-examination. To support contention, reliance was placed on the decisions in the cases of Kalra Glue Factory vs. Sales-tax Tribunal & Ors. (1987) 65 CTR (SC) 233 : (1987) 167 ITR 498 (SC), Kishinchand Chellaram vs. CIT (1980) 19 CTR (SC) 360 : (1980) 125 ITR 713 (SC) and CIT vs. SMC Share Brokers Ltd. (2007) 210 CTR (Del) 353 : (2007) 288 ITR 345 (Del). 18. It was further submitted that CIT(A) was wrong in holding that onus was on assessee to produce said Shri Sandeep Bansal and the said stand of Revenue is contrary to the following decisions: (1) Munnalal Murlidhar vs. CIT (1971) 79 ITR 540 (All); (2) Addl. CIT vs. Radhey Shyam Jagdish Prasad (1979) 9 CTR (All) 143 : (1979) 117 ITR 186 (All); (3) Food Corporation of India vs. Provident Fund Commr. (1990) 1 SCC 68; (4) Nathur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of Bombay High Court in the case of Vasanji Chela & Co. vs. CST 40 STC 544. Reference was also made to the decision of Bangalore Bench in the case of Kirloskar Investments & Finance Ltd. vs. Asstt. CIT (1998) 67 ITD 504 (Bang) for raising similar proposition. 21. Referring to all these decisions, it was vehemently pleaded that despite repeated requests made on behalf of assessee company during the assessment proceedings, the opportunity of cross-examining Shri Sandeep Bansal has been denied in gross violation of the well accepted principle of natural justice and thus, statement of said Shri Sandeep Bansal recorded on 17th Sept., 2003 cannot be used against the assessee. 22. Arguing further, learned Authorised Representative pleaded that it has been clearly stated in the affidavit filed by said Shri Sandeep Bansal that the seized records are false and have been fabricated by him to cause financial harm to the assessee company. He pleaded that said Shri Sandeep Bansal bore a serious grudge against the assessee company for being denied an increase in his remuneration and proceeded to fabricate the records to harm the company. He pleaded that it is noteworthy that these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries, is adduced by the Revenue. It was pleaded that not a shred of evidence has been produced by the Revenue to establish that any such cash on account of under-billing has found its way into the coffers of the assessee company. It was pleaded that on the contrary, the investigation made by the Department and the statement of various persons like Jhala Ram, Shanti Saxena, etc. recorded by the Department proved that no such cash amounts have been paid by the purchasers and the affidavit of said Shri Sandeep Bansal further demolishes the false story to under-billing. 24. Reference was made to the decision of Hon'ble Supreme Court in the case of Kishinchand Chellaram vs. CIT to contend that the denial of opportunity to controvert evidence collected at the back of the assessee would disentitle the AO from using the said evidence in taxation proceedings. In that case the addition was deleted on the ground that evidence was not confronted to the assessee and there was no material on record to link the amount transferred through telegraphic transfer by an employee of the Madras branch to an employ of Bombay office. 25. Further reliance was placed on the decision of Delhi High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that AO has heavily relied on appraisal report prepare(j by Director of IT (Inv.), Jaipur, on the Chopra Group of cases and it is observed by the AO that "clinching evidence" has been provided against the assessee. It was submitted that no such material or evidence, allegedly collected by Director of IT (Inv.) during the course of search operations carried out at Chopra Group, has been confronted to the assessee and thus, reliance placed by AO on the appraisal report in the Chopra Group is in total violation of principle of natural justice and on this ground alone impugned assessment as well as additions are liable to be treated as void ab initio and deserve to be cancelled. Concluding his arguments learned Authorised Representative submitted as under: (i) The Department has, inter alia, carried out search operations at the business premises of the company at Jodhpur on the strength of the warrant of authorization issued in the case of Shri Bansal. No incriminating ,evidence whatsoever has been found. The books of accounts of the assessee company found and seized have been accepted as correct and true and there is no resort by the AO to the provisions of s. 145 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the parties. According to the High Court, if sale deed shows lower sale consideration than the consideration mentioned in the, agreement to sell and both documents are found during search, sale deed may be accepted as the actual price for sale. In the instant case of the assessee, sale bills of the transactions as well as ledger accounts and other books of accounts of the assessee have been seized from the office premises which indicate the sale rates and the consideration accruing or received by the assessee and there is no admissible evidence that on-money has been charged or received. (iv) The undisputed fact is that Shri Bansal is a disgruntled employee of the company and fabricated the record for harming the employer company. His affidavit dt. 5th Nov., 2003 brings out the sinister motives and intention to blackmail the company. In fact the entire conduct and action of this employee during the course of the search at his house, as indicated hereinbefore, vividly bring out the despicable fact that he is the kingpin of the entire conspiracy against the company to harm its interest by fabricating the record and then pass it on to the Department. (v) The patent falsehood o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bansal. Statements of Shri Vikram Jindal, Shri Rattan Jindal, directors and Shri Bikram Kumar, senior vice president of the company have also been recorded by the Department which clearly falsify the earlier statement of Shri Bansal regarding over-billing. These statements provide irrefutable evidence regarding fabrication of records by Shri Bansal. The AO has unfortunately ignored this direct evidence which supports the case of the assessee company. Obviously, the AO found this evidence much too inconvenient to consider and refute it. The studied silence of the AO regarding this crucial evidence collected by the Department itself supports the assessee. The misplaced zeal of the AO in adopting the earlier statement of Shri Bansal dt. 13th Sept., 2003 as the mainstay of the Department's case ignoring a mass of evidence supporting the truthfulness of assessee's accounts cannot but be deprecated as illegal, vitiated and void. 30. Thus, it was pleaded by learned Authorised Representative that having regard to the aforementioned facts and circumstances of the case and keeping in view the totality of facts and evidences on record, the assessments made by the AO may be cancelled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not invalidate proceedings initiated or completed which are in substantial compliance with statutory scheme. Thus, learned Departmental Representative pleaded that in order to uphold a defective proceedings, what has to be considered is whether the action taken is in substance and is in conformity with the intent and purposes of Act. 33. Further reference was made to the decision of Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. (1987) 62 CTR (SC) 23 : (1987) 167 ITR 471 (SC) in which it has been observed by Hon'ble Supreme Court that when substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred. 34. Further reference was made to the decision of Allahabad High Court in the case of Atul Traders vs. ITO (2006) 200 CTR (All) 71 : (2006) 282 ITR 536 (All) to contend that wherein it has been held that the object of giving notice is to inform a person concerned with the matter and if a person receives information/notice by any source and thus, had opportunity of defending him, then the mere fact that notice as per statutory provision, or in a particular mod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no police complaint has been lodged against that employee. 38. On the issue of cross-examination, learned. Departmental Representative pleaded that affidavit given by said Shri Sandeep Bansal is a self-serving evidence which is afterthought. It was pleaded that it cannot be relied on. Reference was made to the decision of Hon'ble Supreme Court in the case of CIT vs. Durga Prasad More 1973 CTR (SC) 500 : (1971) 82 ITR 540 (SC) to contend that it was neither a rule of prudence nor a rule of law that a statement made in the affidavit which remains uncontroverted must-invariably be accepted as true and reliable. It was pleaded that it is also a duty of the assessee company to explain its case and also produce Shri Sandeep Bansal for cross-examination and what prevented the assessee from producing him before the AO when assessee could get affidavit from him. 39. On the issue of principle of natural justice learned Departmental Representative pleaded that assessee company was supplied with the copies of seized documents as mentioned in para 9 on p. 10 of the assessment order for asst. yr. 2003-04 and the assessee company did not choose to reply as mentioned in para 11 of the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 or books of account or other documents or any assets are requisitioned under s. 132A after 31st May, 2003. As the present case is not a case of requisition as described in s. 132A, therefore, the prerequisite condition for application of s. 153A is that assessment under this section can be made against a person in the case of whom a search is initiated under s. 132 of the Act. It is the case of the assessee that no search has been initiated in its case therefore, resort to s. 153A was in violation of law. To examine such contention it has to be seen that whether any search has been initiated in the case of the assessee. Copies of two Panchnamas on the basis of which search was conducted in the case of Shri San deep Bansal at his residential premises as well as Jodhpur branch office of the assessee, where the person searched was an employee, are placed at pp. 1-6 and 7717 of the paper 'book filed by the assessee. In both of the Panchnamas in Col. A, the name of Shri Sandeep Bansal has been Written which clearly shows that search warrant was in the case of Shri Sandeep Bansal and not in the name of assessee. For sake of convenience the inscription in Panchnama regarding Col. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that such argument of the assessee is only technical, therefore, assessment framed on the assessee without following the procedure laid down in s. 153C cannot be held to be invalid. There may be a valid search in the case of said Shri Sandeep Bansal but assessment under s. 153A could be made only in his hands and not in the case of assessee unless procedure laid down in s. 153C is followed. Such defect in framing the assessment is a jurisdictional defect which cannot be cured and assessment has to be held to be invalid because the AO did not have any jurisdiction to assess the assessee without adopting the procedure laid down in s. 153C as the search was neither initiated nor conducted in the case of assessee. There was no warrant of authorization to conduct search on the assessee and no search was initiated or conducted in the case of the assessee. 46. To further explain that the assessments framed in the hands of assessee company under s. 153A are not valid, it is observed that the provisions of s. 153C(1) are almost similar to provisions of s. 158BD which is applicable to the searches conducted upto the day of 31st May, 2003. Provisions of ss. 158BD and 153C(1) are reproduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o any person, other than the person with respect to whom search was made under s. 132 of the Act; (ii) the books of account or other documents or assets seized or requisitioned had been handed over to the AO having jurisdiction over such other person; and (iii) the AO has proceeded under s. 158BC against such other person. The conditions precedent for invoking the provisions of s. 158BD, thus, are required to be satisfied before the provisions of the said chapter are applied in relation to any person other than the person whose premises had been searched or whose documents and other assets had been requisitioned under s. 132A of the Act." (emphasis ours) 48. It is further observed as under: "The provisions contained in Chapter XIV-B are drastic in nature. It has draconian consequences. Such a proceeding can be initiated, it would bear repetition to state, only if a raid is conducted. When the provisions are attracted, legal presumptions are raised against the assessee. The burden shifts on the assessee. Audited accounts for a period of ten years may have to be reopened." (emphasis ours) 49. From the above observations of their Lordships of Hon'ble Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice was invalid as authority had lapsed on the death of J and such invalidity could not be cured by invoking s. 292B. Their Lordships observed as under: "In view of above, the Tribunal has rightly held that s. 292B of the Act will have no application to the facts of the present case. The said section condones the invalidity which arise merely by reason of any mistake, defect or omission in a notice, if in substance and effect, it is in conformity with the or according to the intent and purpose of the Act. The notice in question was not served on all the adult members of the family, as required under s. 283(1) of the Act. This mistake goes to the very root of the matter. It is fairly settled that an assessing authority gets jurisdiction to reopen a concluded assessment only after serving a valid notice on the assessee. A notice contemplated under s. 148 of the Act is a jurisdictional notice and is not curable under s. 292B of the Act, if it was not served in accordance with the provisions of the Act." 51. In view of above discussion, the argument of learned Departmental Representative that in view of s. 292B, the assessments of the assessee could not be held invalid, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on merits. This decision has been relied upon by learned Authorised Representative to contend that substantial justice deserves to be preferred ignoring the technical aspect of the issue. In the present case no issue is involved regarding condonation of delay. So as it relates to the contention that it is merely a technical defect, it has already been observed that the framing of assessment under s. 153A cannot be said to be a technical defect as no search has been conducted in the case of the assessee. Thus, no support can be derived by Revenue from the said decision. 54. In the case of Hindustan Transport Co. vs. IAC a writ petition was filed by the assessee against the assessment on the ground that the officer lacked jurisdiction to make the assessment. It was contended that CBDT vide its order dt. 31st Dec., 1987 passed under s. 127 of the Act had transferred the assessee's case to E Ward, Lucknow Circle, Lucknow, and the said order will take effect from 20th Jan., 1988. It was contended that in view of the said transfer order, the AO who has framed the assessment seized to have jurisdiction to deal with the assessment w.e.f. 20th Jan., 1988 and thus, the order of assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid Shri Sandeep Bansal which is dt. 5th Nov., 2003. The same was submitted by the assessee to the AO. In the affidavit said Shri Sandeep Bansal had admitted that he had been planning to use the fabricated records against the assessee company. It was also submitted that in view of the affidavit filed by said Shri Sandeep Bansal, no adverse inference should be drawn against the assessee by taking recourse to the statement recorded at the back of the assessee and in the alternative, it was submitted that Shri Sandeep Bansal may be produced for cross-examination in order to enable the assessee to rebut the purported statement which was admittedly made by him to cause financial loss to the assessee company on the basis of fabricated material. Copy of affidavit has been filed at pp. 103-104 of the paper book. In the said affidavit it has been stated by said Shri Sandeep Bansal that he was promised for a higher emolument after sometimes after he was transferred to Jodhpur in the month of January, 2003 but despite the promise made, no substantial increase was given despite his repeated request to the management for higher salary. It has further been mentioned that the statement given at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue but such evidentiary value is attached to the person who has been searched. Even in the case of a person who has been searched the statement given by him can be rebutted by producing evidence that such statement is contrary to the existing facts. But, for framing the assessment in the case of a third party (the assessee) the statement could not be relied upon by the AO, if a request has been made for the cross-examination of the deposer. In the present case. as already mentioned, the assessee had obtained affidavit from the deposer during the course of in-house enquiry and the same was submitted to the AO, therefore, it was requirement of law to provide the assessee with an opportunity to cross-examine him, if the same is demanded. If such opportunity is not provided then additions cannot be made in the case of a third party by relying on the said statement. The AO further has placed reliance on the documents which have been seized from the residence of said Shri Sandeep Bansal. Here also, no further verification has done by the AO to find out the authenticity of those documents as according to Department full statement of affairs was recorded therein. If full particulars were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to s. 153C. Thus, the documents recovered from the residential premises of said Shri Sandeep Bansal cannot be the basis for making addition. 62. It has been the contention of the learned Departmental Representative that evidence gathered during the course of search clearly established the collection of money, outside the books of account maintained by way of under-billing and for such contention reliance was placed by him on the decision of Special Bench in the case of Mange Ram Mittal vs. Asstt. CIT. Such contention of learned Departmental Representative is incorrect as the evidence gathered from the residence of Shri Sandeep Bansal does not in any way establish the collection of money outside the books of account as for holding so, Department has relied only on the statement given by Shri Sandeep Bansal and there is no independent material/evidence to establish such collection of money. It has already been pointed out that it is not the case of the Department that such evidence/material could not be collected by the Revenue to establish the fact that there was any collection made by the assessee by way of under-billing. 63. For contending that affidavit given by Shri Sandeep B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t relates to allegation of the AO regarding payments received on account of over-billing from Chopra Group of cases, no material has been brought on record by the Revenue that in fact any extra amount was received by the assessee from Chopra Group. It has already been pointed out that it was a matter of investigation and enquiry on the basis of which alone such addition could have been made. 67. Keeping in view the above facts, it is clear that addition has been made in violation of principle of natural justice as no opportunity was afforded by the AO to the assessee for cross-examination of said Shri Sandeep Bansal despite the repeated requests made in this regard. Therefore, also, the addition is liable to be deleted. To support such conclusion, reliance can be placed on the decision in the case of Kalra Glue Factory vs. Sales-tax Tribunal & Ors. In the said case the appeal of the assessee was allowed solely on the ground that the statement of Bankelal which was not tested by cross-examination was used in order to reach the conclusion that the transaction was an inter-State sale. 68. In the case of Kishinchand Chellaram vs. CIT, an employee of the said company had made telegrap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is dt. 25th Feb., 2006, a copy of which is placed at pp. 111-112 of the paper book. Vide this letter assessee had submitted a comparative chart showing sale price of SS flats by the assessee company during the period January, 2003 to October, 2003, vis-a-vis the selling price of SS flats by other competitors in the open market. Not only the comparative chart was furnished but copies of sale invoices of the assessee company as well as copies of sales invoices of the other parties were furnished to support the contention that the prices of assessee company are duly comparable with the selling prices of the other manufacturers. The chart is based at p. 113 of the paper book and invoices are furnished at pp. 114-234 of the paper book. Before CIT(A) also, such submissions were made and comparable rates were furnished vide letter dt. 31st Aug., 2006. The AO has not made any comments on such submissions of the assessee. However, CIT(A) has rejected such extension of the assessee with the following observations: "As far as comparability of accounts for rates with other parties is concerned, the same is not acceptable because in the present case quality may be better and popularity ..... X X X X Extracts X X X X X X X X Extracts X X X X
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