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TMI Blog2022 (10) TMI 1173X X X X Extracts X X X X X X X X Extracts X X X X ..... nce simpliciter. Such a meaning would defeat the language of Section 133A of IT Act. A few of the statements recorded at any point in time during the pendency of the proceedings on the description of the place are not conclusive in interpreting the applicability of Section 133A - Annexure A filed describes the place of the survey as follows: Chelembra, Malappuram, Office room of Shri Riyas M @ Veliyaparambil House, Pulliparamba . In our view, the ground raised u/s 133A is not sustainable. The question is answered in favour of the Revenue and against the assessee. - ITA Nos.247/2019, 255/2019, 259/2019, 256/2019, 260/2019, 258/2019, 10/2020, 3/2020, 13/2020, 4/2020, 8/2020, 11/2020, 12/2020, 16/2020 - - - Dated:- 30-10-2022 - Honourable Mr.Justice S.V.Bhatti And Honourable Mr.Justice Basant Balaji For the Appellant : By Advs.P.Raghunath, Sri.Premjit Nagendran For the Respondent : By Adv. Sri.P.K.Ravindranatha Menon (Sr.), Sri.Jose Joseph, SC, For Income Tax ORDER S.V. BHATTI, J. We have heard Sri P Raghunathan, learned Counsel for the appellants, and Sri P K Ravindranatha Menon, learned Senior Counsel for the respondent. 2. M/s.Hillwood Imports a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenge are substantially identical in all the appeals. Hence, reference to the circumstances in one appeal would be sufficient for disposing of all the appeals. The appeals, though, are admitted on a few substantial questions of law, Adv. P Ragunathan formulated the following three substantial questions of law for decision in all the appeals. Question no.1: Whether the appellate Tribunal should not have found that the survey conducted on 14.7.2014 at the residential house of Sri Riyaz violated the provisions of Section 133A of the Income Tax Act? Question No.2: Whether the Appellate Tribunal did not commit an error of law when it dismissed the application for permission to raise additional ground - based on the provisions of Sections 65A and 65B read with Section 93 and the Second Schedule of the IT Act. Question No.3: Whether the generation of Hash Value Report in the presence of the assessee would mean that the contents of the pen drives were accessed in the presence of the assessee? ITA No.247/2019 has been treated as the representative appeal for disposing of connected appeals. I.T.A. No.247/2019 4. Hillwood Imports and Exports Pvt. Ltd./assessee is the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 93 and Second Schedule of the IT Act? (3) Whether the generation of Hash Value Report in the presence of the assessee would mean that the contents of the pen drives were accessed in the presence of the assessee? 5.1 Adv P Ragunathan argues that the Tribunal committed a jurisdictional error, both in law and fact, by dismissing the application filed to raise additional grounds under Sections 65A and 65B of the Evidence Act read with the Second Schedule of the IT Act. Sections 65A and 65B are the provisions dealing with the admissibility of electronic records as evidence. Section 65B deals with the accessibility of electronic records. The assessment orders are based on the data retrieved from the three pen drives recovered from Riyaz, who, according to the assessee, is a former employee of the business concerns. The Department got the pen drives examined by an expert and data was recovered. The Department has relied upon the contents of the record electronically generated. Therefore, strict compliance with the conditions laid down in Section 65B is necessary. The Supreme Court in Anvar P V v. P K Basheer [(2014) 10 SCC 473] held that if the electronic record is being us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... K R Menon, learned Senior Counsel appearing for the respondent, argues that the substantial question nos. 2 and 3 ought not to be appreciated by this Court in isolation of the circumstances preceding the pre-assessment notice. He invites our attention to the pre-assessment notice and contends that the block assessment refers to books of account seized in the search conducted on 04.12.2013 and the statement recorded under Section 132(4) of the Act of the Managing Director and other employees of the assessee s business undertakings. The pre-assessment notice specifically calls upon the assessee to give a reply on the details of business transactions recovered from the premises of Riyaz. The details/materials collected, both in the search and the survey, were counter-checked with the parties noted in the evidence gathered by the Department. The confirmation statements of the parties referred to in the material recovered during and in the course of the search and survey constitute the basis for the pre-assessment notice. 6.1 Therefore, it is incorrect to argue that the three pen drives recovered from Riyaz and the electronically generated copies from these pen drives alone constitu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For our present purpose, it is sufficient to note that, among other objections, the principal objection of the assessee, either on the material or pen drives retrieved from Riyaz, is that the survey was conducted at the residence of Riyaz and conducting the survey at the residence under Section 133A of the Act is unauthorized. On the pen drives, the objection raised by the assessee is that the material and pen drive must be eschewed and alternatively, there is no evidence on record to show that the alleged data, projected in the notice and furnished to the assessee, are available in the pen drives alleged to have been impounded. The assessment order has referred to the documents recovered or impounded on both occasions and considered in the background of the statements recorded from the persons who seized the material. The assessment order refers to item-wise examination. 8. The assessment order in paragraphs 12 and 12.2 considered the data in the pen drives. Paragraphs 13 and 14 refer to the business transactions and preparation of accounts supported by the sworn statement of Hakkim, Beeran, and Krishnaprasad. A bare reading of the assessment order concludes the controversy on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed materials relate to the same party Murali, Irinjalakuda. The ledger account of the above party in the books of account in support of the assessee's ROI has also recorded all the transactions as appearing in the seized and impounded materials. 14.4 The MD of the company has acknowledged (Refer Q A 5 of statement u/s 131(1) recorded on 04-08-2014) that the documents and the pendrive impounded from the TAX premises under the control of Shri M Riyaz pertain to the business transactions entered into by the assessee with various parties. 8.1 The Commissioner of Income Tax (Appeals) adverting to the objections on placing reliance on the data available in the pen drive, read as follows: 5.4. I have gone through the assessment order and submission of the appellant. On 04.12.2013 a search and seizure operation was carried out at the premises of the appellant company, other group concerns and directors of the companies. During the course of search, voluminous documents were found and seized evidencing that the appellant company as well as other group concerns were engaged in systematic suppression of sales and thereby profits. Details of these documents seized and contents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g out the same. There is no dispute that the data contained in the said Pen Drive belonged to the Appellant Ground of Appeal No. 3 of the appellant is dismissed accordingly. c) Ground of Appeal No.4 also cannot be allowed as it is proved beyond doubt that the data contained in the Pen Drive belonged to the Appellant and its group concerns and the AO has correctly used such data in computing the income of the appellant. This ground of appeal of the appellant is dismissed. d) Grounds of Appeal Nos. 5, 6 and 7 relate to Principle of Natural justice and use of data contained in the Pen Drives. It has already been discussed earlier that there is no dispute about the fact that the data contained in the said pen drives belonged to the appellant group and copy of the data was provided to the appellant before finalization of the assessment. The appellant has objected that Mr. Riyaz was not made available for cross-examination by the Department. In this regard, it is an important fact that the statement of Riyaz has not been used to compute the income of the appellant, but it is the date contained in the pen drive has been used for assessment. Since the statement of Mr. Riyaz has not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e such powers or not, would essentially depend upon the facts of such a case and as there cannot be any, and there is o straitjacket formula of universal application to decide the question of admission of additional ground or criteria for admission thereof, which operates de hors the peculiarities of a fact situation. As long as the issue is related to the correct determination of tax liability of the assessee in a particular assessment year and availability of relevant facts found from the material already on record, it is open to the assessee and department to raise that issue provided that the issue so raised is bona fide and the same could not have been raised on an earlier occasion for good and sufficient reasons. The limitations are that there are no new facts which required to be investigated by the said admission of additional ground and there should be good and sufficient reasons for not raising the issue on an earlier occasion by the assessee/department. The assessee has to demonstrate the existence of good and sufficient reasons for not raising the additional ground in the earlier proceedings of the lower authorities. The additional grounds have to be taken up before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y till the date of hearing of these appeals. In other words, the whole period of delay is not at all explained as held in the case of Ramlal and others v. Rewa Coalfields Ltd., [AIR 1962 SC 361] wherein it was held that it is not the case of the assessee whether the assessee exercised due diligence so as to file legal remedy. As discussed earlier, the assesses have not given sufficient cause for raising the additional ground before us in these cases. Hence, it cannot be admitted. xxx xxx xxx 12. We have heard the rival submissions and perused the record. In our opinion, the Tribunal has discretion to receive and adjudicate additional evidence even if it is not an arbitrary one but it is a judicial one circumscribed by the limitation specified under Rule 29 of the Act. The Tribunal has the power to allow additional evidence if it requires such evidence to enable to pass orders, i.e. to say, when it finds that there is any lacunae or defect which is to be filled up so as to render justice. The Tribunal has the power to allow additional evidence also if it requires such evidence for any other substantial cause, i.e. to say, even in cases where the Tribunal finds that it is able ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ginally brought out, which is not permissible at this stage. The assessee must prove beyond the shadow of doubt that the assessee was diligent and was not guilty of negligence whatsoever. The sufficient cause in procuring the expert opinion from the cyber expert within the contemplation of the limitation provision must be a cause which is beyond the control of the party invoking the aid of the provisions. In our opinion, in the present case, there is no sufficient cause to procure such cyber expert opinion after such a long period after survey in this case. The seeker of justice must come with clean hands and should prove that there was no negligence whether in action or want of bona fides. We find that in the affidavit, the assesses were not able to understand the significance of the hash value report. There was delay in procuring the expert opinion and it was procured with such a delay so as to delay the proceedings under the Act. More so, the affidavits filed by the assesses herein were Self serving documents so as to derive undue benefit. We are not convinced with the reason explained by the assessee in obtaining the cyber expert opinion after such a long period. Even if it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t correct in laying the foundation by referring to what is stated by the Department in the Tribunal or before the Commissioner of Income Tax (Appeals). The order of assessment is not based either on the pen drives or the details contained in the pen drive, as rightly contended by the Revenue. 10.1 Recapitulation of circumstances set out in assessment notices till order of the Tribunal would reveal, as a matter of fact, that the assessee has been put on notice of all the inputs taken note of by the Revenue for carrying out block assessment. Therefore, the reasons stated for introducing additional evidence are definitely an afterthought and to challenge the order of assessment on new grounds. Therefore, in our considered view, the situation emerging from the narrative that the assessee has full knowledge of the material relied on by the Revenue was put to the assessee, who filed the reply resulting in order of assessment. Therefore, the question for consideration is whether the Tribunal exercised the discretion or jurisdiction correctly or not. To answer the question, reference to Tribunal s findings is sufficient to conclude that no error of jurisdiction had occasioned. We are in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to his business or profession [or activity for charitable purpose] are or is kept. 13. An explanation is appended to a Section to explain the meaning of words contained in the Section (Sundaram Pillai v. Pattabiraman [(1985) 1 SCC 591]) . The explanation becomes a part and parcel of the enactment (Bengal Immunity Co. Ltd. v. State of Bihar [AIR 1955 SC 661]) . The meaning given to an Explanation must depend upon its terms, and no theory of its purpose can be entertained unless it is to be inferred from the language used. The Explanation is introduced by Finance Act, 2017 with effect from 01.04.2017. 14. Keeping the said purpose of an explanation in our perspective, we have to interpret Section 133A (1). According to the explanation, a place (a) where a business or profession or activity for charitable purpose is carried on, (b) shall also include any other place where any business or profession and activity for charitable purpose is carried on or not. Therefore, explanation includes a place where any one of the three activities is carried on therein or not. Excluding residence by the construction now commended to this Court would completely take away from the scope ..... X X X X Extracts X X X X X X X X Extracts X X X X
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