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TMI Blog2017 (9) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... h in the contention of learned counsel of assessee that statements recorded behind the back of assessee, i.e. of Sh. R.K. Miglani and that of the directors of M/s Prudent Distillery cannot be relied upon and need to be excluded for consideration as none of them have been produced for cross – examination. The assessee’s specific request for cross examination was rejected by the AO of his order on the ground that Shri Miglani is employee of assessee. This finding of AO, as has been noted above is factually incorrect. Sh. R.K. Miglani was the General Secretary of M/s UPDA and not an employee of assessee and, therefore, it was incumbent upon the AO/ Ld. CIT (A) to have provided the opportunity to cross – examine the person on whose statement reliance was being placed by the Department. This is an elementary principle of law and not providing such opportunity is fatal to the proceedings and no additions, can be made on the basis of such statement as has been held by the Hon’ble Apex Court in its judgment in the case of M/s Andaman Timber Industries vs CCE (2015 (10) TMI 442 - SUPREME COURT ). Disallowance on account of “Tips” - Held that:- With respect to the said disallowance, we fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, as had been relied by Revenue are looked into in the light of the statement given by Sh. R.K. Miglani, the contention of Revenue that such documents belonged to assessee is unsustainable. It was observed by the ITAT in the aforesaid Para 18, that no forwarding letter in the shape of e-mail, fax or any recorded audio message recorded on telephonic conversation was found with regard to the assessee which could establish that any document/material which was seized from the residential premises of Shri. R.K. Miglani belonged to the assessee. It was held that since such documents cannot be held to be belonging to the assessee, the proceedings initiated under section 153C of the Act were without jurisdiction. 1.1 Revenue being aggrieved by the aforesaid order of ITAT, filed appeals under section 260A of the Income Tax Act before Hon ble High Court of Delhi and Hon ble High Court vide its judgment dated 22.01.2015, has remitted the matters for reconsideration on the lines and findings recorded in its judgment at Para 5, 6 and 7. For the sake of convenience Para 5, 6 and 7 of the aforesaid judgment are being extracted here-in-below: ( 5) The revenue urges that the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revenue had contended before the Hon ble High Court (as is noted by their Lordships in Para 5) that the Assessing Officer and CIT(A) took note of not merely the document which listed out the payments made in a tabular form for different purposes but also other documents and materials in the form of production figures forwarded by the respective assessees, the statement of Shri R. K. Miglani and the circumstances that the production figures coincide with the figures available with the revenue in the pending proceedings. The Hon ble High Court, in view of the aforesaid, has held that the ITAT has not recorded any specific finding in respect of such documents forwarded by assessee and found from the premises of Sh. R.K. Miglani. The Hon ble High Court has specifically stated, for instance, if the production figures were in fact forwarded by the concerned unit under a letter or some other form connecting it with the material seized, then the inference would be of different kind. 1.3 In view of the aforesaid directions of the Hon ble High Court, the Revenue was specifically directed on earlier dates, when the appeals were fixed for hearing, viz. 19.05.2016, 29.06.2016, 06.09.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment dated 31.12.2007, impugned before him, framed by the learned ACIT by invoking the provisions of section 153C of the Income Tax Act. 1.2 That the learned CIT(A) has failed to appreciate that, the assessment framed by the learned ACIT, was wholly without jurisdiction and was ab-initio bad in law and thus deserved to have been quashed altogether. 1.3 That the leaned CIT(A) has further failed to appreciate that the jurisdictional precondition for invoking the applicability of provisions of section 153C of the Act being absent, no valid proceedings could have been initiated by invoking the provisions of section 153C (1) of the Income tax Act, and as such the assessment framed was entirely illegal. 1.4 That the learned CIT(A) has overlooked that the provisions of section 153C could be invoked only, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A of the Income tax Act and as such in the absence of any documents or book of accounts belonging to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee any such adverse material for its rebuttal and had proceeded to draw adverse inferences on the basis of such material which is no material in the eye of law and in any case before making use of any such material the same was not confronted to the assessee, by providing adequate and valid opportunity. In fact he has failed to appreciate the burden lay upon the learned ACIT to establish that the assessee had incurred such an expenditure which could have been done only by producing the author of the documents, which had not even been attempted, inspite of the appellant s written requests. The learned CIT(A) has failed to appreciate the nature of allegation leveled by the Ld. ACIT in making the addition and without appreciating that on these mere allegation no addition could have been made. 2.4 That the learned CIT(A) has completely ignored the detailed written submissions filed by the assessee before him. The learned CIT(A) has failed to appreciate that there was no evidence at all to establish that it is the assessee who had incurred an expenditure as has been alleged nor was even there any evidence from the documents seized to establish that such alleged expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voked only, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A of the Income tax Act and as such in the absence of any documents or book of accounts belonging to the assessee having been seized from the person searched no valid proceedings could have been initiated against the assessee. 1.5 The CIT(A) has further completely overlooked that neither any books of accounts nor any document(s) which were allegedly seized, could be held to belong to the assessee and as such the learned CIT(A) has erred in confirming the order of assessment, since no valid proceedings u/s 153C (2) could have been initiated against the assessee. The order of the CIT(A) made thus is without application of mind, who has merely mechanically upheld the order by the Assessing Officer. 2. That without prejudice and in the alternative the learned CIT(A) has thus erred in confirming the addition made of ₹ 3,28,36,200/-, representing an alleged payment without even identifying and establishing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.4 That the learned CIT(A) has completely ignored the detailed written submissions filed by the assessee before him. The learned CIT(A) has failed to appreciate that there was no evidence at all to establish that it is the assessee who had incurred an expenditure as has been alleged nor was even there any evidence from the documents seized to establish that such alleged expenditure was incurred by the assessee company. The inference drawn to hold the assessee having incurred such an expenditure is highly arbitrary and wholly unjustified, more particularly when neither Shri Miglani nor any other person was produced for the assessee s cross examination, before relying on the statements as were allegedly/recorded. The authorities have acted in complete disregard of the judgment of Hon ble Delhi High Court in the case of J.T. Exports. 3. That the learned CIT(A) has further erred in sustaining the addition of ₹ 4,27,430/- representing a disallowances made out of business expenditure and debited under the head tips. 4. That the learned Commissioner of Income Tax (Appeals) has erred in not allowing the claims made of the carry forward of long term capital loss and as al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oked that neither any books of accounts nor any document(s) which were allegedly seized, could be held to belong to the assessee and as such the learned CIT(A) has erred in confirming the order of assessment, since no valid proceedings u/s 153C (2) could have been initiated against the assessee. The order of the CIT(A) made thus is without application of mind, who has merely mechanically upheld the order by the Assessing Officer. 2. That without prejudice and in the alternative the learned CIT(A) has thus erred in confirming the addition made of ₹ 2,04,15,426/-, representing an alleged payment without even identifying and establishing that, who had made the payment, when the alleged payment was made and to whom such an amount was paid. In the absence of any positive evidence that the assessee had incurred the alleged sum of expenditure the addition sustained is highly perverse and is totally unjustified. 2.1 That the learned CIT(A) has thus erred in confirming the addition of the aforesaid sum of ₹ 2,04,15,426/- even without appreciating that the learned ACIT had failed to discharge the burden that the assessee had purportedly paid such a sum. In fact no s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particularly when neither Shri Miglani nor any other person was produced for the assessee s cross examination, before relying on the statements as were allegedly/recorded. The authorities have acted in complete disregard of the judgment of Hon ble Delhi High Court in the case of J.T. Exports. 3. That the learned CIT(A) has further erred in sustaining the addition of ₹ 4,64,200/- representing a disallowances made out of business expenditure and debited under the head tips. 4. That the learned Commissioner of Income Tax (Appeals) has erred in not allowing the claims made of the carry forward of long term capital loss and as also short deduction u/s 80HHC of the I.T. Act. The findings that the assessee is to file an application u/s 154 of the Act before A.O. is misconceived. 5. That the learned CIT(A) has further erred in upholding the levy of interest u/s 234B which is not leviable. 6. That the learned Commissioner of Income Tax (Appeals) has erred in not disposing off the additional legal ground of appeal before him of not allowing the deduction of provision for leave encashment. 7. It is therefore prayed that it be held that the initiation of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made of ₹ 2,73,41,542/-, representing an alleged payment without even identifying and establishing that, who had made the payment, when the alleged payment was made and to whom such an amount was paid. In the absence of any positive evidence that the assessee had incurred the alleged sum of expenditure the addition sustained is highly perverse and is totally unjustified. 2.1 That the learned CIT(A) has thus erred in confirming the addition of the aforesaid sum of ₹ 2,73,41,542/- even without appreciating that the learned ACIT had failed to discharge the burden that the assessee had purportedly paid such a sum. In fact no such claim of deduction had either been made, and as such prima- facie too the allegation since was based on no evidence or material the addition could not have been sustained. 2.2 That further the learned CIT (A) has erred in confirming the addition of the aforesaid sum even when the ACIT had failed to comprehend that the learned ACIT failed to discharge the burden by bringing on record the necessary material in support thereof. The finding of the learned CIT(A), that the assessee had incurred the expenditure i.e. the amount has been pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals) has erred in not directing the Assessing Officer to carry forward the long term capital loss, short deduction u/s 80HHC and non-application of provisions of section 115JB of the Act. The findings that the assessee is to file an application u/s 154 of the Act before A.O. is misconceived. 5. That the learned Commissioner of Income Tax (Appeals) has erred in not disposing off the additional legal ground of appeal before him of not allowing the deduction of provision for leave encashment. 6. It is therefore prayed that it be held that the initiation of proceedings u/s 153C was without jurisdiction and in any case it be held that the addition/disallowance made of sum aggregating to ₹ 2,77,63,030/- is unsustainable in law. 2.0 Shri Salil Aggarwal, Advocate appeared for the assessee and Shri. H.K. Choudhary, CIT DR appeared for the revenue. At the outset, both the parties agreed that since the appeals for AY 2003-04, AY 04-05 and AY 05-06 were identical, AY 2003-04 may be taken as the lead case. 2.1 The Ld. AR sought permission under Rule 29 of the Income Tax Appellate Tribunal Rules, to adduce as additional evidence a letter dated 03.03.2008 along with an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion That in face of denial by assessee - appellant with regards to the said alleged payments, the burden is on Revenue to establish the factum of making said alleged payments with corroborative evidences, which has not been done by Revenue and thus, relying on the judgment of Hon ble Delhi High Court in the case of CIT vs Ved Prakash Choudhary reported in 305 ITR 245, the additions so made needs to be deleted. Here even the recipients of the alleged payments have not been identified and nor produced for our cross examination, even though a specific to that effect was made before AO vide letter dated at pages 132 and 133 of PB Part-I. 4. Fourth Proposition: That statement of Sh. R.K. Miglani and directors of M/s Prudent Distillery cannot be relied and needs to be excluded for consideration, as none of them have been produced for cross - examination, even though specific request for the same was made by assessee - appellant vide letters dated 24.12.2007 and 28.12.2007 at pages 125 to 128 and 132 to 133 of PB Part - I. Reliance is placed on following judgments in support of the aforesaid proposition: ( a) [1980] 125 ITR 713 (SC) Kishinchand Chellaram vs. CIT. ( b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the proceedings initiated under section 153C of the Act, were without jurisdiction in as much as, no document belonging to Assessee Company were made the basis of recording the note of satisfaction. In support of the aforesaid argument, it was contended by the Ld. AR that that the documents were seized from the premises of the Shri R.K. Miglani and the presumption u/s 132(4A) of the Act is that such document belongs to the person from whose premises such document is found unless such presumption is rebutted, and in the instant case, such presumption has not been rebutted. It was further submitted that the assessing officer, while framing the order of assessment under section 153A of the Act, in the case of M/s UPDA had categorically held that the documents found from Sh. R.K. Miglani and M/s UPDA belonged to UPDA and made additions under section 68 of the Act holding the said documents to be the books of accounts of M/s UPDA, with respect to the documents so found, as such, same set of documents cannot belong to the assessee and the UPDA as well and thus, the addition made in the hands of the assessee on the basis of documents found from Sh. R.K. Miglani and UPDA needs to be del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 28.12.2007 ( copy at pages 132 and 133 of PB Part I). 2.8 The Ld. AR submitted that the Hon ble Settlement Commission in the case of M/s Radico Khaitan has dismissed the plea of the Revenue to rely on the documents found from Sh. R.K. Miglani and M/s UPDA and have also held that since the opportunity to cross examine Sh. R.K. Miglani was not provided to M/s Radico Khaitan, addition cannot be made on the basis of the said documents. 2.9 It was further submitted that in respect of the surrender made by M/s Radico Khaitan, M/s Balrampur Chinni Mills Limited, despite the specific request of the assessee vide its reply/request dated 28.12.2007 (at pages 132-133 of PB-1), to provide such document and material, the same was not provided to the assessee. It was also submitted that the surrender made by M/s Radico Khaitan, M/s Balrampur Chinni Mills Limited in any case was wholly irrelevant in so far as the assessee was concerned, as the assessee cannot comment upon in respect of the surrender made by the other assesses, more particularly when no documents were shown to the assessee despite the assessee having made a specific request. 2.10 In respect of the laptop of Shri Aja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded that it has not been established as to who is author of the document as no such person has either been identified or examined. The Ld. AR submitted that the allegation of the revenue is unsupported and uncorroborated by any material. 3. The learned CIT DR, (apart from Annexures A-1 to A-10), also filed written submissions which are being reproduced here in under for a ready reference 1) Entire seized documents seized from the residence of Sh. R.K. Miglani (A-1to A-l 0) was submitted during the hearing before the Court. Documents Seized from the residence of Sh. R.K.Miglani at P- 25, NDSE, part II, New Delhi belongs to the appellant for invoking section 153C of IT Act on the Following grounds:- i) Contents of seized documents:- a) Annexure A-l to A-10 Seized contains actual dispatch of century liquor by the members of UPDA which is evident from notings contained in seized documents. Few references are detailed as under:- A) Annexure A-l S.No. Production figure for the period Page No of annexure 1. Dec 2004 86 2. Augu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of such corroboration are enumerated as under:- S. No Annexure Page No. 1. A-l 126 2. A-l 125 3. A-l 113 4. A-l 109 5. A-l 100 6. A-l 99 7. A-l 98 8. A-l 97 9. A-l 84 10. A-3 105 11. A-3 104 12. A-3 103 13. A-3 97 14. A-2 34 15. A-2 63 c) Seized documents contains the quantity of molasses lifted by the members of UPDA including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se documents are for various F.Y s. maintained monthwise/yearwise. Therefore, these documents belong to the various members of UPDA jointly. Each members of UPDA partially owns these documents containing data of dispatch of country made liquor and computation of illicit payment made to Govt. Officers/politicians, and details of such money received and amount due. In any case, these documents can not be said to belong to Sh. R.K. Miglani or UPDA as these two persons are not engaged in the business of manufacturing of country liquors. Therefore on this ground also belongingness/ownership of these paper lie with the member of UPDA needless to mention that name of members of UPDA is specifically mentioned on various seized documents and Sh. R.K. Miglani has explained that these documents specially dispatch figure was received from members. iii) Not providing cross examination of Sh. R.K. Miglani is irrelevant:- Ld. AR has relied on various judicial pronouncements that statement without cross examination cannot be considered as evidence. These judicial pronouncements are distinguishable on facts as in those cases witness was independent and not related person. In present cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of UPDA by the AO is irrelevant:- Ld. AR s argument that AO in the case of UPDA has held in Para 10(b) that the seized document belong to UPDA and therefore does not belong to the members. This finding is not factually correct as AO of UPDA in Para 6.15 has himself held that these documents belong to the members. Further, UPDA is not manufacture of Alcohal, therefore question of dispatch of Alcohal in UPDA s case has no meaning. Therefore, essentially all computation and receipt of money and reimbursement based on such dispatch belong to members of UPDA who are in Alcohal manufacturing business. vi) Findings of CIT(A) in appellant s case somewhere in the order that the document pertains to the appellant firstly does not prove that these documents do not belong to appellant as finally CIT(A) has dismissed the appeal and held that these documents belong to the appellant and therefore Section 153C has rightly been invoked. Further words pertains to is a bigger set and belonging to is submerged in that bigger set. vii) Ld. AR s argument that statement of Sh. Ashok Dutt Sh. Rahul Jain of M/s PDL that the financial power vests with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tch figures as forwarded by UPDA members through fax messages and as noted by Sh. Miglani on their behalf. He stressed on the fact that the author of the document was Sh. R.K. Miglani, who was maintaining all these annexures on behalf of members of various distilleries of UPDA, and as such, the said annexures pertained to the various assessees, even though the same may not belong to assessees. 3.2 The second argument of learned CIT DR was that Sh. Miglani in his statement recorded (at pages 82 to 85 of PB I), has categorically accepted in his statement that the various member distilleries of UPDA were giving bribes to various politicians/ bureaucrats through the core distillery members of UPDA. 3.3 It was submitted by the Ld. CIT DR that the affidavit of Sh. Miglani, produced as additional evidence by the assessee, should be excluded and not admitted, as it was not submitted earlier before the ITAT and also because the same was given by Sh. Miglani after 2 years of search conducted on his residential premises. 3.4 The Ld. CIT DR submitted that there was no requirement to provide cross examination of Sh. R.K. Miglani and the Directors of M/s Prudent Distilleries Ltd., as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... afore said letter and the affidavit of R.K. Migalni along with order of CIT (A) in case of M/s Lords Distillery Ltd. is being now filed under Rule 29, as the same was earlier filed in the case of M/s Lords Distillery Ltd. and not in the case of assessee company and thus, the same needs to be admitted for consideration. 4.3 The Ld. AR further submitted that the argument of learned CIT DR that the matter may be set aside to the file of AO for reworking of additions is uncalled for and unjustified in as much as the assessee should not undergo endless litigation. It was submitted that the assessee had throughout cooperated in the assessment proceedings and the appellate proceedings and for this proposition, he relied on the judgment of Hon ble Punjab Haryana High Court CIT vs F.C.S. International Marketing (P.) Ltd. reported in 203 CTR 601. 5. We have heard the rival submissions and have also perused the relevant records. Before proceeding to deal with each of the argument of the assessee and the revenue, it is relevant to state here itself that as per the directions of the Tribunal, revenue has furnished the seized material annexures A-1 to A-10, which were seized from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat while making the aforesaid addition, the AO also derived support from the surrender made by M/s Radico Khaitan Limited and M/s Balrampur Chinni Mills Ltd. With regard to the surrender made by M/s Radico Khaitan Limited, the AO has also referred to the laptop Computer of Shri Ajay Aggarwal. It is undisputed that the assessee vide its reply dated 28.12.2007 (pages 132-133 of PB-1) requested the AO to provide such material, however the same was not made available. The AO has also relied on the statement of Shri R.K. Miglani recorded during the course of search on 14.02.2006, and the assessee in its reply dated 24.12.2007 (at pages 125-128 at PB-1) made a specific request to produce Shri Miglani for cross examination and again on 18.12.2007 (at pages 132-133 of PB-1) also requested to produce such persons for cross examination to whom alleged payments were made. It is again undisputed that neither Shri. Miglani nor the persons to whom the alleged payments had been made were produced for cross examination. 5.3 At this juncture, it would be appropriate to record the chronological sequence of events, as to how the matter proceeded before the assessing officer and CIT (A) and taking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een initiated under section 153C of the Act against the assessee, and the documents on the basis of which proceedings were initiated were provided to the assessee by the AO vide letter dated 20.12.2007 (at pages 71 to 127 of PB 1). (h) On receipt of the aforesaid documents from the AO, the assessee vide replies dated 24.12.2007 and 28.12.2007 (at pages 125 to 128 and 132 to 133 of PB 1) demanded cross examination of Sh. R.K. Miglani and other authorized persons of M/s Prudent Distilleries on whose statements the AO was placing reliance and further, it was also requested by the assessee to identify and allow cross examinations of the bureaucrats/politicians, who had received the alleged illegal payments from the assessee. However, no cross examination was given to the assessee. At pages 11 and 12 of assessment order, AO held that no purpose will served by allowing cross examination to the assessee as Sh. R.K. Miglani is employee of the assessee. (i) The AO passed the order u/s 153C of the Act dated 31.12.2007 and made additions of ₹ 2,17,30, 800/- for AY 2003-04 being the alleged illegal payments made to bureaucrats/politicians. (j) The learned CIT (A), vide o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 29 reads as under: 1. The appellant named above seeks the permission of Hon ble Bench to place on record a letter dated 03.03.2008 filed by Sh. R.K. Miglani in the case of M/s U.P. Distillery Association and also Affidavit of Sh. R.K. Miglani dated 01.03.2008 (annexed as Annexure A) and also the order of CIT (A) in the case of M/s Lords Distillery Ltd. (annexed as Annexure B). 2. It is submitted that, the aforesaid documents were filed in the case of M/s Lords Distillery Ltd. before learned CIT (A), and were part of record of Hon ble ITAT in the first round of appellate proceedings, as a consolidated order was passed by Hon ble ITAT dated 23.11.2012 in cases of assessee company, M/s Lords Distillery Ltd. and various other assessee s. However, since the captioned appeals have been set aside by Hon ble High Court of Delhi vide order dated 22.01.2015, thus, the afore said letter and affidavit of R.K. Miglani along with order of CIT (A) in case of M/s Lords Distillery Ltd. is being now filed under Rule 29, as the same was earlier filed in the case of M/s Lords Distillery Ltd. and not in the case of assessee company. 3. It is thus, most respectfully submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound from the premises of the searched persons from whose statements and documents it can be concluded that the documents belonging to assessee were found and thus, proceedings initiated under section 153C of the Act were validly initiated. 5.7 Even at the risk of being repetitive, we record that in spite of view of the directions of the Hon ble High Court and despite the fact that the revenue produced only Annexures A-1 to A-10 found from the premises of Shri Miglani, which was already on record before the ITAT, a specific query, was raised by the Bench to the learned CIT DR, that apart from the aforesaid, whether there is any other document which has been made the basis of recording of the satisfaction note and also the addition made in the order of assessment, and learned CIT DR has submitted that apart from the aforesaid, there are no other documents which had been made the basis of initiation of the proceedings as well as for making the addition. He was also asked to show any such document seized from the premises of searched persons, which could suggest that any production figure was forwarded by assessee as was contended by Revenue before Hon ble High Court . In response ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer of the searched person must be satisfied that the seized material (which includes documents) does not belong to the person referred to in Section 153A (i.e., the searched person). In the Satisfaction Note, which is the subject matter of these writ petitions, there is nothing therein to indicate that the seized documents do not belong to the Jaipuria Group. This is even apart from the fact that, as we have noted above, there is no disclaimer on the part of the Jaipuria Group insofar as these documents are concerned. 15. Secondly, we may also observe that the finding of photocopies in the possession of a searched person does not necessarily mean and imply that they belong to the person who holds the originals. Possession of documents and possession of photocopies of documents are two separate things. While the Jaipuria Group may be the owner of the photocopies of the documents it is quite possible that the originals may be owned by some other person. Unless it is established that the documents in question, whether they be photocopies or originals, do not belong to the searched person, the question of invoking Section 153C of the said Act does not arise. 16. Thirdl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and is prospective in nature and is not applicable for the impugned assessment years. Further, the Hon ble High Court has merely directed the revenue to produce specific documents before the ITAT, in order to prove that the documents belonging to assessee were found as a result of search on Sh. R.K. Miglani and the Revenue again has failed to produce any such document which can be said to be belonging to assessee. We note that the Revenue has merely re-filed again all such documents which were already on record of the ITAT in the first round of proceedings and on which the ITAT had already given a finding that such documents did not belong to the assessee. Accordingly, it is our considered opinion that the proceedings initiated under section 153C of the Act need to be quashed, as no document belonging to the assessee has been found from the premises of searched persons. 6. Further, since the Hon ble High Court has directed us to decide all the issues taken by assessee, the remaining issues involved in the instant appeals are now decided hereunder. 6.1 In the case of the assessee, the allegation of the revenue, based on the documents seized from the premises of UPDA, is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Miglani to the assessee and with regard to the cross examination of the directors of M/s Prudent Distilleries Ltd., no finding has been recorded. As such, on an appreciation of the entire factual matrix and the settled law we hold that these statements need to be excluded altogether, as it was incumbent upon the AO/ Ld. CIT (A) to have provided the opportunity to cross examine the persons on whose statements reliance was being placed by them. Not providing such opportunity is fatal to the proceedings and no additions can be made on the basis of such unreliable statements. It has so been held by various courts, and recently the Hon ble Apex Court in the case of M/s Andaman Timber Industries vs CCE (SC) reported in 127 DTR 241 has held as follows: According to us, not allowing the assessee to crossexamine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal. 6.3 In the instant case revenue has relied on the statements of Sh. Miglani andon going through the additional evidence so filed by the assessee, which has been admitted earlier in the order, even the statement of Sh. R.K. Miglani, so relied on by the Revenue, cannot be relied on, as Sh. Miglani had retracted the said statement by filing an affidavit dated 01.03.2008 and thus, relying on the judgment of Hon ble High Court of Delhi in the case of CIT vs Sunil Aggarwal (supra) and order of ITAT Pune in the case of Prabhat Chandra S. Jain vs ACIT (supra), relief is given to assessee on this count also, as the sole case of Revenue is the statement of Sh. R.K. Miglani and once the same is excluded from consideration, the addition made by the AO has no legs to stand and needs to be deleted. 6.4 We also note that the Hon ble Settlement Commission in the case of M/s Radico Khaitan (searched along with Sh. R.K. Miglani) has dismissed the plea of the Revenue to rely on the documents found from Sh. R.K. Miglani and M/s UPDA and have also held that since the opportunity to cross examine Sh. R.K. Miglani was not provided to M/s Radico Khaitan, addition cannot be made on the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 25 lakhs each to Ravi Talwar and Madhu Talwar towards part consideration for the purchase of agricultural land valued at ₹ 123.30 lakhs. The balance amount was to be paid on or before 30-4-1999, failing which the amount of ₹ 25 lakhs each would be forfeited. On the basis of the MoUs, the Assessing Officer issued a questionnaire to Ravi Talwar and Madhu Talwar regarding receipt of the amount of ₹ 25 lakhs each, but while they both admitted having signed the MoUs, they denied having received any amount. The Assessing Officer concluded that the denials by the assessee of having made payments and of Ravi Talwar and Madhu Talwar of having received the amounts were only to escape payment of tax liabilities. Accordingly, an amount of ₹ 50 lakhs was added in the hands of the assessee under section 69 of the Income-tax Act, 1961 as unexplained expenditure. The addition made by the AO was deleted by the CIT (A) and the Tribunal. On further appeal, Hon ble High Court dismissed the appeal of the revenue by holding as under: 12. Insofar as the present case is concerned, the Assessee had stated that in fact there was no transfer of money between him and Ravi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ips of a sum of ₹ 2,61,678/- (AY 2003-04), ₹ 4,27,430/- (AY 2004-05) and ₹ 4,64, 200/- (AY 2005-06) and further, in AY 2003-04, 2004-05 and 2005-06, AO has also not allowed carry forward of long term capital loss and also short deduction under section 80 HHC of the Act. Since the instant proceedings were initiated under section 153C of the Act and no incriminating material has at all been found, as such, the additions made by the AO and sustained by the Ld. CIT (A) is wholly unsustainable in view of the judgments of jurisdictional High Court in the cases of CIT vs RRJ Securities Ltd reported in 380 ITR 612 and CIT vs Kabul Chawala reported in 380 ITR 573.Hence, the aforesaid additions made by the AO and sustained by the Ld. CIT (A) are hereby deleted, being beyond the scope of section 153C of the Act. 8. Now coming to the appeal for AY 2006-07, in ITA No. 3790/Del/2008, since the said assessment was pending on the date of search and as such, stood abated, the said appeal needs to be decided on merits. The learned counsel of the assessee argued that addition needs to be deleted on following counts: (a) The documents seized from the premises of Shri Miglani, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such documents, addition cannot be made. We also find strength in the contention of learned counsel of assessee that statements recorded behind the back of assessee, i.e. of Sh. R.K. Miglani and that of the directors of M/s Prudent Distillery cannot be relied upon and need to be excluded for consideration as none of them have been produced for cross examination. The assessee s specific request for cross examination was rejected by the AO at page 11 and 12 of his order on the ground that Shri Miglani is employee of assessee. This finding of AO, as has been noted above is factually incorrect. Sh. R.K. Miglani was the General Secretary of M/s UPDA and not an employee of assessee and, therefore, it was incumbent upon the AO/ Ld. CIT (A) to have provided the opportunity to cross examine the person on whose statement reliance was being placed by the Department. This is an elementary principle of law and not providing such opportunity is fatal to the proceedings and no additions, can be made on the basis of such statement as has been held by the Hon ble Apex Court in its judgment in the case of M/s Andaman Timber Industries vs CCE (SC) (supra). The relevant paragraph of the aforesa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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