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TMI Blog2024 (7) TMI 729X X X X Extracts X X X X X X X X Extracts X X X X ..... as held conditions are not satisfied in the case of the assessee as Shri Chander Prakash Sachdeva was available to the A.O. because his statement at various stages have been recorded after the search and at the assessment stage. Therefore, he was available for cross- examination on behalf of the assesee. When assessee asked for cross-examination to his statement, he was capable to give statement. He was not kept out of the way by the assessee and that there was no delay in the proceedings. Therefore, it is clear that without any just cause Shri Chander Prakash Sachdeva refused to cross-examination on behalf of the assessee. A.O. has also not exercised his powers to summon him to produce him for cross- examination on behalf of the assessee. Therefore, when Shri Chander Prakash Sachdeva refused for cross-examination on behalf of the assessee which were recorded at the back of the assessee by the Investigation Wing and the A.O, his statement cannot be relied upon against the assessee to frame the assessment. As according to assessment order, statement of Shri Chander Prakash Sachdeva was also recorded on 09.11.1998 i.e., prior to the search. Therefore, such statement cannot be conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R. JUSTICE RAVINDER DUDEJA For the Appellant Through: Mr. Indruj Singh Rai, SSC with Mr. Sanjeev Menon Mr. Rahul Singh, JSCs. For the Respondent Through: Dr. Rakesh Gupta, Mr. Somil Agarwal Mr. Dushyant Agrawal, Advs. JUDGMENT YASHWANT VARMA, J. (ORAL) 1. The instant appeal represents the third round of litigation instituted inter partes and pertains to a block assessment undertaken for the period 01 April 1989 to 14 July 1999. The Income Tax Appellate Tribunal [ Tribunal ] while considering cross-appeals filed by the Commissioner as well as the assessee had disposed of those matters by way of a common order dated 05 September 2008. That decision of the Tribunal formed subject matter of ITA No. 923/2009 and ITA No. 1157/2009. 2. The appeals stood admitted on two principal questions as set out in paragraphs 2 and 3 of the judgment dated 25 November 2013 passed in the aforenoted ITAs and which read thus: Whether the Income Tax Appellate Tribunal was right in deleting the addition of Rs. 5,23,78,058/- in the block assessment proceedings on account of transactions in question? Whether the order of the Tribunal is erroneous and contrary to law as it has no adjudicated and decided the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the respondent-assessee. The Tribunal was required to examine the reason and effect thereof. Factual matrix of each case has to be examined to ascertain the cause/ reason and decide why the witness did not appear or refused and did not agree be subjected to cross-examination. Evidence Act is not directly and specifically made applicable to income tax assessment proceedings. However, principles of natural justice and fair play apply. Principles of natural justice require and mandate, a fair, equitable and just procedure and what could be fair and just in a given case is premised on the factual matrix and cannot be put in a strait jacket formula. The Delhi High Court in J K Cigarettes Ltd. vs. Collector of Central Excise, 2009 (242) ELT 189 (Del.) examined the constitutional validity of Section 9D of the Central Excise Act, 1944 which confers power or discretion upon the Central Excise Officer to rely upon statement of witnesses who have not been subjected to cross-examination, if any of the following conditions are satisfied: (a) when the person who had given the statement is dead; (b) when he cannot be found; (c) when he is incapable of giving evidence; (d) when he is kept out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and material is required to be examined, for deciding whether there is truth in the statement. Even if the statement is not relied upon, there should be reference and examination of corroborative and surrounding facts and material. This aspect and examination is clearly absent in the order of the tribunal. xxxx xxxx xxxx 22. We would now like to refer to the written submissions field by the respondent and notice the contentions. The respondent-assessee has incorrectly submitted that the Commissioner (Appeals) had held that the purchases from Sachdeva Trading Co. and Rave Scans were genuine. There is no such finding by the Commissioner (Appeals). Findings of Commissioner (Appeals) as noticed above is vague, contradictory and not coherent. Commissioner (Appeals) had not agreed that the purchases of the exported goods were made from Sachdeva Trading Co. or Rave Scans and has observed that purchases were made in cash from third parties and, therefore, the Assessing Officer should examine the applicability of Section 40A of the Act. Our attention was also drawn to the fact that the goods were rejected and returned by the Hong Kong party and this had made Chander Prakash Sachdewa unhapp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amed the following question for determination in that appeal: Did the Income Tax Appellate Tribunal ( ITAT ) fail to adhere to the specific mandate issued to it by this Court in the previous order dated 25th November, 2013 in CIT v. Arun Malhotra (2014) 363 ITR 195 (Del)? 6. On due consideration of the issues which arose, the Court ultimately came to conclude that the Tribunal had failed to undertake the adjudication in accordance with the directions framed in the earlier set of appeals which had been disposed of by way of the judgment dated 25 November 2013. This becomes evident from a reading of the following observations as appearing in the decision of this Court dated 17 May 2017: 11. The Court is unable to agree with the above submission. There was a specific mandate before the ITAT that had been spelt out in para 24 of this Court s previous order. The ITAT was to consider afresh all the issues and contentions that arose before it. That the ITAT simply failed to do. It has chosen to adopt a shortcut by verbatim reproducing the portions of the order of the assessment order or the order of this Court whether for the purposes of setting out the facts or even the reasoning and con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s filed by the Ld. D.R, nothing is established against the exports made by the assessee. There is no adverse material available on record relating to the exports made by the assessee. In the absence of any material or evidence on record to disprove the exports made by the assessee, we hold that export was made by assessee in his proprietorship concern and there was absolutely no justification for making the addition of Rs. 5,23,78,058/- as undisclosed export proceeds under section 69A of the I.T. Act. The export proceeds are recorded in the books of account of the assessee. Therefore, it could not be treated as undisclosed particularly, when export proceeds have been received through banking channel. No material has been produced by Department to prove if any incriminating material was found in search that export or export sale proceeds received through banking channel were bogus. May be assessee did not file return for A.Y. 1994-1995, but assessee proved that genuine export sales have been made by him. There was no other income detected by Department. Assessee, therefore, explained Section 69A is not applicable in this case. In view of the above, we are of the view that Section 69 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 i.e., prior to the search. Therefore, such statement cannot be considered as statement recorded under section 132 (4) of the I.T. Act. Therefore, allegation of the alleged threat to Shri Chander Prakash Sachdeva is not substantiated through any evidence or material on record. Ld. D.R. in his synopsis relied upon decisions of Hon ble Delhi High Court in the cases of CIT vs. Somal Construction (supra), CIT, Naresh Kumar Aggarwala (supra) and decision of Hon'ble Kerala High Court in the case of Bhagheeradha Engineering Ltd., vs. ACIT (supra) and others on the proposition of presumption under section 132 (4A) and 292 (C) of the I.T. Act, 1961, which are not applicable to the facts and circumstances of the case. It is well settled law that burden to prove that apparent is not real is on the person who alleges it to be so. It is a case of search, therefore, burden is upon A.O. to prove that assessee has earned undisclosed income through evidence and material recovered during the course of search. But, nothing has been brought on record if assessee earned any undisclosed income. The entire story is built-up on the statement of Shri Chander Prakash Sachdeva which cannot be read in ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in cash. We, therefore, hold that assessee made purchases from these two concerns belongings to Shri Chander Prakash Sachdeva in a sum of Rs. 3,38,65,440/-. The addition on this amount is accordingly deleted. The Order of the Ld. CIT(A) invoking provisions of Section 40A (3) of the I.T. Act, is accordingly set aside. In the absence of any evidence of cash purchases made by assessee, such findings of the Ld. CIT(A) are reversed. We, accordingly, hold that assessee made genuine purchases from the above two concerns of Shri Chander Prakash Sachdeva. Therefore, no addition could be made against the assessee. The findings of the authorities below is accordingly set aside and entire addition is deleted. Issue No. 2 is decided in favour of the Assessee and against the Revenue. 10. While in the instant appeal the appellants have sought to question the correctness of the conclusions ultimately arrived at and noticed hereinabove, in our considered opinion, the aspects pertaining to import lose all significance bearing in mind the findings returned by the Tribunal in the aforenoted paragraph 12.1 of its judgement. 11. Insofar as benefits under Section 80HHC are concerned, the Tribunal has on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Auditor's Report, assessee claimed deduction of Rs. 2,56,54,271/- under section 80HHC for A.Y. 1995-1996. Deduction has been claimed on the basis of sale proceeds received by the assessee in convertible foreign exchange. Therefore, the Ld. CIT(A) noted at page-15 of the appellate order that A.O. admitted that proper Audit Report was filed along with the return of income of the Company. Therefore, the Ld. CIT(A) rightly held that in view of the same, A.O. must accept the report now filed in the name of proprietorship concern before its incorporation. Ld. CIT(A), therefore, correctly directed the A.O. to calculate the deduction under section 80HHC after proper verification and as per law. Learned Counsel for the Assessee relied upon decision of ITAT, Delhi Bench in the case of Mrs. Manju Kapoor Dalmia vs. ITO (2011) 140 TTJ 1 (UO) in which it was held as under: Filing of certificate in Form No. 10CCD along with return for claiming deduction under s. 8OQQB is a procedural requirement and it should not be construed as mandatory; failure to file the certificate before the AO can be cured by permitting appropriate rectification at a subsequent stage; once the certificate was admi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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