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TMI Blog2019 (2) TMI 1798X X X X Extracts X X X X X X X X Extracts X X X X ..... l as the actual jewellery found along with the details of the family members staying with the assessee, thereafter the AO may examine the same and grant benefit of instruction number 1994 dated 11/05/1994 to the assessee. In view of this the issue on account of addition of jewellery is set aside to the file of the assessing officer with above direction. Addition with respect to cash received over and above the amount of sale consideration mentioned in the sale deed treated as undisclosed income of the assessee - HELD THAT:- We do not have any hesitation is holding that when the addition is made solely on the basis of statement the third party and revenue does not have any other evidences, then without granting opportunity of cross examination , such addition cannot be made. In the result the assessee succeeds on the second issue. Gr. No 2 is allowed. Addition of cash found during the course of search - HELD THAT:- Before us assessee has filed a copy of that letter but relevant annexure were not filed. Therfore it is not possible for us to verify that assessee has filed any statement of affairs or not along with the return of income. Before us assessee has not submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition cannot be sustained. - ITA No. 4881 to 4883/Del/2016 - - - Dated:- 6-2-2019 - Shri Prashant Maharishi, Accountant Member And Shri K.N.Chary, Judicial Member Assessee by : Shri Kapil Goel, Adv Revenue by: Smt Sulekha Verma, CIT DR ORDER Prashant Maharishi, 1. These are the three appeals filed by the assessee against the order of the ld CIT(A)-2, Agra (camp at Dehradun) dated 31.03.2016 for the Assessment Years 2010-11, 2012-13 and 2013-14. Facts of AY 2010-11 2. For assessment year 2010 11, brief facts of the case are that assessee is an individual deriving income from salary, business, house property and other sources. Search was carried out at business and residential premises of the assessee on 26/4/2012 in group case of Ganga Realtors group of cases. Notice u/s 153A of the act, was issued on 03/06/2013 for assessment year 2010 11. The assessee furnished his return of income on 4/9/2013 declaring income of INR 572690/ . Assessment under section 153A, read with section 143 (3) was passed on 22/9/2014 determining total income of the assessee at INR 5711954/ . The assessee agitated the issue before the learned CIT A, who passed an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purchase invoices of jewelry were found during the course of search , it was incumbent upon the appellant to prove that this did not relate to him. He further held that appellant has not carried his assertions with any documentary support to prove that the papers indicative of purchase of jewelry were not his but same belonged to his friends and relatives. According to him Assessee failed to substantiate it. Therefore he held that the appellant cannot be absolved from the onus that weighs heavily upon him. Accordingly he confirmed the addition. The assessee has challenged it as per ground number one of the appeal. 5. The learned authorised representative vehemently stated that during the course of search 5 invoices of purchase of jewelry were found along with 27.967 gram of the jewelry and certain cards containing the details of jewelry. He submitted that invoices of the jewelry are pertaining from financial year 2007 08 till the date of search. It was further his submission that central board of direct taxes have issued a circular wherein if the jewelry is falling within the allowed limit per person of the family according to the status, then no addition should be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wellery held by each of the family members was below the limits specified in the said circular. 10. Though it is true that the Central Board of Direct Taxes Circular No. 1916, dated May 11, 1994, lays down guidelines for seizure of jewellery and ornaments in the course of search, the same takes into account the quantity of jewellery which would generally be held by the family members of an assessee belonging to an ordinary Hindu household. The approach adopted by the Tribunal in following the said circular and giving benefit to the assessee, even for explaining the source in respect of the jewellery being held by the family is in consonance with the general practice in the Hindu families whereby jewellery is gifted by the relatives and friends at the time of social functions, viz., marriages, birthdays, marriage anniversary and other festivals. These gifts are customary and customs prevailing in a society cannot be ignored. Thus, although the circular had been issued for the purpose of non-seizure of jewellery during the course of search, the basis for the same recognizes customs prevailing in the Hindu society. In the circumstances, unless the Revenue shows anything to the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exure LP 1 at page number 100 182 dated 07/01/2010 for INR 24.20 Lacs whose market value was found to be INR 7,865,000 for land situated at Khasra number 217 admeasuring 1210 sq meter at Muja Kargi Grant Dehradun between three different sellers and Sri Akshat Bansal, wherein the details of payment of 3 cheques of INR 800,000 each of the federal bank Dehradun and INR 20,000 cash was mentioned. Stamp duty of INR 629200/ was paid. Post search enquiries were conducted by issuing summons u/s 131 of the income tax act by The Assistant Director of Income Tax to the sellers and the statement was recorded on oath. One of the person in his statement stated that he along with his brothers has entered into an agreement dated 16/12/2009 with Sri Shamshad Hasan and MS Balodi where land area admeasuring 1.5 Bigha was agreed to be sold at the rate of INR 3,800,000/- per bigha . Accordingly, agreed sale consideration was INR 5,700,000 out of which the cheques of ₹ 8,00,000 each was given to the 3 brothers and out of the balance of INR 3,300,000 receivable only INR 3,000,000 was received in cash and balance INR 300,000 was stated to be receivable. It was further stated that the deal was f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48 of the income tax act. c. He further stated that the assessing officer was also requested for the cross-examination of these parties however same was denied. He therefore submitted that as held by the honourable Supreme Court in case of Anadaman Timbers [281 CTR 472] any addition made without granting an opportunity of cross-examination of the witnesses who statements have been used by the assessing officer for making an addition is invalid. He therefore submitted that this additions deserves to be deleted on all these counts. 10. The learned departmental representative vehemently supported the order of the lower authorities. She referred paragraph number 5 of the order of the learned AO and stated that during the course of search copy of sale deed was found and seized. Such sale deed shows that the market value of the property is INR 7,865,000 which is purchased at INR 24.20 Lacs. Therefore there is an incriminating material found during the course of search. On the basis of the incriminating material found during the course of search the learned assessing officer has made further enquiries. Therefore it cannot be said that no addition can be made on this count. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme court in . 2015 (324) E.L.T. 641 (SC), 2017 (50) S.T.R. 93 (SC), 2016 (15) SCC 785 ANDAMAN TIMBER INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II it is held that :- 6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the 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 the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements 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 Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that reje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of those sellers but same was not granted. Hence, without granting such an opportunity, addition is made. Therefore according to us the same is not in conformity with the decision of the Honourable Supreme Court in Anadaman Timbers case (supra) where it is held that such an action renders the addition a nullity. 13. Further the ld CIT DR has vehemently relied up on decision in case of 2015] 59 taxmann.com 212 (Delhi - Trib.) Nokia India (P.) Ltd.v.Deputy Director of Income-tax, Circle -2(1), International Taxation, New Delhi . That decision was on different facts where during the course of survey statement of employees of the assessee were recorded and assessee asked for cross examination. Further the adverse view against the assessee was also not on the solitary basis of statement of employees but many other materials. In that case the statements were recorded of the employees in survey proceedings u/s 133A of the act and those statements were stated by the ld AO himself as merely corroborating evidences and not the only evidence [ para no 6.18] 6.18 As regards the proceedings before the Assessing Officer (AO), ld. Special Counsel pointed out that in Para 3.2 of the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement of witnesses and materials which are relied upon by the Assessing Officer in the assessment order to reach the conclusions and findings which are adverse to the assessee should be disclosed to the appellant and the witnesses should be offered for crossexamination. Supreme Court in the case of Suraj Mall Mohta Co. (supra) laid down : the assessee ordinarily has the fullest right to inspect the records and all documents and materials that are to be used against him. Under the provisions of section 37 of the Indian Income-tax Act the proceedings before the Income-tax Officer are judicial proceedings and all the incidents of such judicial proceedings have to be observed before the result is arrived at. In other words, the assessee would have a right to inspect the record and all relevant documents before he is called upon to lead evidence in rebuttal. 97. In the case of K.T. Shaduli Grocery Dealer (supra), it was held (at p. 1631) : . . . the usual mode recognized by law for proving fact is by production of evidence and evidence includes oral evidence of witnesses. The opportunity to prove the correctness of completeness of the return would, therefore, necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xamination as an invariable attribute of the requirements of reasonable opportunity. The Apex Court has stated the rule with sufficient elasticity and amplitude as to make the right depend on the terms of the statute, the nature of the proceedings or of the function exercised, the conduct of the party and the circumstances of the case. 99. Whether in a particular case the particular party should have the right to cross-examine or not depends upon the facts and circumstances of a particular case. This is so, because the right to cross-examine is not necessarily a part of reasonable opportunity. This view was taken by the Calcutta High Court in the case of Manindra Nath Chatterjee (supra). Thus in a given case the rule of audi alteram partem may impost a requirement that witnesses whose statements are sought to be relied upon by the authority holding the enquiry should be permitted to be cross-examined by the party affected while in some other case it may not. 100. In the case of Kishanchand Chellaram (supra), the Apex Court was concerned with the evidence which was to be used against the assessee. This was in the form of letter from the Manger of a Bank through which money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted by the finer norms of justice. That all is required is impartial and fair hearing, and determination of disputes with utmost promptitude. The question whether or not any rules of natural justice had been contravened, should be decided not under any preconceived notions but in the light of the statutory rules and provisions. The violation or otherwise of any rule of natural justice must be a matter of substance not of mere form. It is important to keep in mind the caveat issued by the Apex Court AIR 1977 SC 965 that unnatural expansion of natural justice, without reference to the administrative realities and other factors of a given case, can be exasperating. 105. In our opinion right to cross-examine the witness who made adverse report, is not an invariable attribute of the requirement of the dictum, audi alteram partem‟. The principles of natural justice do not require formal cross-examination. Formal cross-examination is a part of procedural justice. It is governed by the rules of evidence, and is the creation of Court. It is part of legal and statutory justice, and not a part of natural justice, therefore, it cannot be laid down as a general proposition of law th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee filed his return of income on 16/9/2013 declaring income of INR 2080650/ . Assessment under section 153A, was made on 22/9/2014 determining total income of the assessee of INR 12080649/ . The addition of INR 1809000/ was made for the reason that during the course of search cash of INR 109000 was found from the residence of the assessee and INR 1,700,000 from his bank locker number 84 at federal bank. In his statement under section 132 (4), the assessee disclosed it to be part of his undisclosed income for assessment year 2011 12. In explanation before the assessing officer it is submitted that it represents the reported cash balance, as shown in his statement of affairs by the assessee and his family members. This contention of the assessee was rejected as he has already declared in his statement recorded on oath that it was part of his undisclosed income. Therefore, the addition of INR 18,09,000/- was made as unexplained cash under section 69A of the income tax act. This addition was challenged by the assessee before the learned CIT A, who confirmed the same. 19. The learned authorised representative referred to the fact that during the course of search an amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence it was submitted that addition should have been deleted by the lower authorities. 20. The learned departmental representative vehemently submitted that when the assessee has disclosed the above sum in his statement recorded u/s 132 (4) of the income tax act, he does not have any right to speak now to say that there was a statement of affairs in which the above cash on hand was shown. The learned CIT DR also stated that though the explanation of the statement of affairs given by the assessee before the lower authorities however such statement of affairs are not available before the ITAT or before the lower authorities and it is also not known whether such statement of affairs have already been filed before the lower authorities are not. In view of this she submitted that the addition cannot be deleted. 21. We have carefully considered the rival contentions and find that the assessee has made a statement under section 132 (4) of the income tax act on 26/4/2012 which was later on retracted by the assessee by filing a letter dated 9/7/2012. Further the disclosure has been made by the assessee in the answer to question number 11 of the statement recorded by the income tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of affairs of all these family concerns and individuals in whose account the assessee is saying that there is enough cash available on hand. The learned assessing officer may verify the same and if it is found that that such persons are having the cash balances in the statement of affairs , then after examination and proper verification, the learned assessing officer is directed to delete the addition of INR 1809000/ on account of cash found during the course of search. Accordingly ground number 1 of the appeal of the assessee is allowed for statistical purposes with above direction. 22. Coming to Ground No 2 and 3 of the appeal, A further addition of INR 8191000 was made on account of the voluntary disclosure made by the assessee in his statement recorded u/s 132 (4) of the income tax act on 26/4/2014 for as financial year 2011 12. As assessee has disclosed a sum of ₹ 1 Crore for this year. Out of which the ld AO has made addition of ₹ 1809000/- as unaccounted cash found, the balance addition of ₹ 81,91,000/- is made separately. The assessee did not submit the breakup of surrendered income and disclosing his return of income filed for the relevant asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closure . The letter states as under :- LETTER [F.NO.286/98/2013-IT (INV.II)], DATED 18-12-2014 Instances/complaints of undue influence/coercion have come to notice of the CBDT that some assessees were coerced to admit undisclosed income during Searches/Surveys conducted by the Department. It is also seen that many such admissions are retracted in the subsequent proceedings since the same are not backed by credible evidence. Such actions defeat the very purpose of Search/Survey operations as they fail to bring the undisclosed income to tax in a sustainable manner leave alone levy of penalty or launching of prosecution. Further, such actions show the Department as a whole and officers concerned in poor light. 2. I am further directed to invite your attention to the Instructions/Guidelines issued by CBDT from time to time, as referred above, through which the Board has emphasized upon the need to focus on gathering evidences during Search/Survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence. 3. In view of the above, while reiterating the aforesaid guidelines of the Board, I am directed to convey that any instance of undu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al status of assessee herein. 29. For assessment year 2013 14 assessee was issued notice u/s 143 (2) on 11/11/2013. The assessee filed as return of income on 7/11/2013 declaring income of rupees 2122770/ . The assessment under section 143 (3) of the income tax act was passed on 22/9/2014 wherein an addition of INR 7,500,000 was made on account of the disclosure made in the statement recorded u/s 132 (4) of the act for the relevant financial year. This addition was made by the ld AO based on the statement made by assessee u/s 132 (4) of the act. The addition was also confirmed by the ld CIT (A).Therefore same is challenged by assesee vide Ground no 1 and 2 of this appeal. 30. The Facts admitted by both the parties are that identical issue is in Ground of appeal of the assessee for AY 2012-13. This addition is also on the basis of the same statement. Therefore our decision while deciding the Ground no 2 3 for AY 2012-13 regarding addition of disclosure in the search statement for AY 2012-13 applies to it mutatis mutandis. Accordingly Ground no 1 2 of the appeal of the assessee is allowed. 31. The further, the addition of rupees 332040/ was also made on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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