TaxTMI 
TaxTMI 
2015 (9) TMI 137
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....eized document PB-20, PB-17, the assessee was found to have received Rs. 55,83,300/- in cash, which was not disclosed in his books of account. 2. That Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs. 55,83,300/-made by the AQ on protective basis on account of coal business carried out by the assessee through the syndicate of Bhutoria Group, without appreciating the facts that the AO's finding of assessing Rs. 55,83,300/- in the hands of the assessee was also supported by the statement of Shri Bhutoria recorded at the time of search at his premises, though Shri P. C. Butoria could not be crossexamined during the course of assessment proceedings, because of his non-cooperation. 3. That Ld CIT(A) has erred in law and on facts in deleting the addition of Rs. 55,83,300/-made by the AO on protective basis on account of coal business carried out by the assessee through the syndicate of Bhutoria Group, without appreciating the facts that the A.O. was justified in making the protective addition in the hands of the assessee because the existence of the syndicate AOP, its address and PAN etc. were not ascertainable and the AO had to make the addition of Rs. 55,83,30....
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....e addition of Rs. 36 lacs made by the AO on protective basis on account of coal business carried out by the assessee through the syndicate of Bhutoria group, without appreciating the fact that the AO had given his finding on the basis of seized documents found at the premises of Mr. Bhutoria and that on the basis of seized document PB-20, PB-17 the assessee was found to have received Rs. 36 lacs in cash, which was not disclosed in his books of account. 2. That the . Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 36 lacs made by the AO on protective basis on account of coal business carried out by the assessee through the syndicate of Bhutoria group, without appreciating the fact that the AO's finding of assessing Rs. 36 lacs in the hands of the assessee was also supported by the statement of Shri Bhutoria recorded at the time of search at his premises, though Shri P. C. Bhutoria could not be cross-examined during the course of assessment proceedings, because of his non cooperation. 3. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 36 lacs made by the AO on protective basis on account of coal business carried out by the ....
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.... Chandra Bhutoria has deposed that there was a syndicate consisting of 10 persons identified through codes which were decoded as under:- (i) PB : decoded as Prakash Chandra Bhutoria (ii) IB : decoded as Indraraj Mull Bhutoria (iii) LP : decoded as Laxrhan Poddar. (iv) MP : decoded as Mahendra Bhutoria (v) LCS : decoded as Labh Chandra Surana (vi) PG : decoded as Pawan Gupta (vii) LKM : decoded as LK. Mukherjee (viii)BNM : decoded as B.N. Mishra (ix) MA : decoded as Mohan Agarwal (x) BK : decoded as Vickery Khanna 6. Subsequently a search was carried out at the business-cum commercial premises of the assessee at 15/86, Lathawali Kothi, Civil Lines, Kanpur on 13.3.2006. During the course of search, assessee has disclosed an income of Rs. 75 lakhs and offered to pay taxes on the same. On being interrogated about the contents of the three computer sheets as above seized from Bhutoria group, the assessee specifically denied the existence of any syndicate as stated to be in existence as per the statement of Shri. Prakash Chandra Bhutoria. The assessee has also denied his interest in the coal business, if any, carried out on syndicate in any manner. 7. After surrendering the i....
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....iscussed in the ld. CIT(A)'s order for assessment year 2005-06. Therefore, we examine the order of the ld. CIT(A) in assessment year 2005-06 in this regard. 13. Before the ld. CIT(A), it was strongly contended that this addition was made on the basis of the statement of Shri. Prakash Chandra Bhutoria who was not allowed to be cross-examined by the assessee to testify the veracity of his statement. It was further contended that the Assessing Officer has not allowed any opportunity to cross-examine Shri. Prakash Chandra Bhutoria. He was summoned to be appeared on a particular day in Kolkata, but Shri. Prakash Chandra Bhutoria did not appear on that day, therefore, he was not allowed to be cros-examined. Thereafter, the Assessing Officer has not enforced the attendance of Shri. Prakash Chandra Bhutoria for his cross-examination. Thus, his statement cannot be relied on for making addition in the hands of the assessee. The three computer printout sheets found during the course of search was found from the computer of Shri. Prakash Chandra Bhutoria and it was not corroborated by any other evidence. It was further contended that the other member of this so called syndicate group, Shri. L....
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.... could not have been treated to be the "material" against the appellant so as to give jurisdiction to the Assessing Officer to draw an inference that the appellant had made investment in coal business for doing 'trading' at his own and has earned income from such trading. The appellant's case is on a better footing, as even after the appellant agreeing to go to Kolkata for cross examination. The witness of the department, of Sri P. O. Bhutoria and even then Sri P. O. Bhutoria did not turn up. Not only this, the Assessing Officer did not take any step to enforce attendance of Sn P. O. Bhutoria. 13. On the other hand; statement of Sri Lakshman Poddar (copy appearing at page 115 to 118 of 1st Paper Book), who was also alleged to be a member of 'Syndicate' for the coal business was recorded by the Id. Assessing Officer and in such statement, he categorically denied the existence of any such syndicate. In view of the categorical statement of existence of syndicate gets wholly disproved. 14. From the discussion made in the foregoing paragraphs, it follows that no evidence or material whatsoever was brought on record by the Assessing Officer, which could go to show (a) that any such sy....
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....d the turnover of Vanaspati by the Dealer of Rs. 1,77,34,842 should have been accepted." (ii) State of Kerala vs. K. T. Shaduli reported in (1977) (S. C.) AIR (1977)(S. C.) page 1627 wherein their lordships have observed and held as under:- "The second part of the proviso lays down that where a return has been submitted, the assessee should be given a reasonable opportunity to prove the correctness or completeness of such return. This requirement obviously applies at the first stage of the enquiry before the Sales Tax Officer comes to the conclusion that the return submitted by the assessee is incorrect or incomplete so as to warrant the making of a best judgment assessment. The question is v/hat is the content of this provision which imposes an obligation on the Sales Tax Officer to give and confers a corresponding right on the assessee to be afforded, a reasonable opportunity "to prove the correctness or completeness of such return". Now, obviously "to prove" means to establish the correctness or completeness of the return by any mode permissible under law. The usual mode recognised by law for proving a fact is by production of evidence and evidence includes oral evidence of wi....
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....arwal repotted in (2004) (4) MFC Page 474 Lucknow Bench: "I have considered the rival submissions and perused the record carefully. The Id CIT(A) has discussed the issue in detail and no interference is called for as the addition was based on the chit which was not found from the possession of the assessee and the A.O. has not brought on record any other material to co-relate that such paper was relating to the assessee or he transacted the huge amount particularly when statement of Shn Dharam Chandra Agarwal is a specific that he never entered into such transaction." (iv) Amarjit Singh Bakshi HUF Vs. AC/7 (2003) S6 ITD page 13 (Delhi) TM. "Whether where document in question was not recovered from assessee's possession but was recovered from N's possession, and assessee was not allowed any opportunity of cross-examination and, further. N's testimony was not found creditable at all, it could not be said that there was any iota of evidence to support revenue's case that a huge figure over and above figure booked in records and accounts changed hand between parties and, therefore, no addition could be made based of such document in hand of assessee." (v) Prarthana Construction (P)....
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....r dated February 18, 1955, it could be taken into account as evidence. But before the income tax authorities could rely upon it they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it by asking for an opportunity to cross examine the manager of the bank with reference to the statements made by him". 6.4 Decision:- 6.4.1 In this regards it would be useful to reproduce the relevant portion of the Assessment order which is as under: 'The information was received from the Investigation Wing, Kolkatta. During the course of search at the premises of Sri Prakash Chand Bhutoria, a laptop was found which carries the details of the sales and their details as given above. Sri Prakash Chand Bhutoria through a syndicate obtained coal, the funds were contributed by the members of syndicate, its sale, expenses of the transactions for the period given above, the profit and its distribution amongst the members of syndicate and Shri Pawan Kumar Gupta. The chart would show that there is no investment made by Shri Pavsan Kumar Gupta in the related month. His share of profit is on account of he being, principal agent and the persons auth....
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....ered therein. The appellant was also not given the opportunity to cross examine Shri P. C. Bhutoria, based on whose statement, the current proceeding had been undertaken. Shri Bhutoria could not be produced by the department although the appellant went to Kolkatta for this purpose also waited for him at Kanpur. It was submitted by learned A. R. that it is a settled law that in absence of cross examination no cognizance of such material could be taken based on catena of cases cited herein before. Admittedly there was no other material in possession of the AO except these three sheets and the statement of Shri P. C. Bhutoria. 6.4.3 I have carefully considered the findings of A.O. submissions made by the appellant before the A.O. as well as before me. However, before going in to the merits of the additions, i find it prudent to mention that the A.O. himself was of the view that the income on account of purchase and sale of coal for March 05 and April 05 quota ( as per the computerized sheet seized at Kolkata) belong to the Syndicate (AOP ) and not to any individual members of the said syndicate (AOP). According to the A.O., Sri Pawan Gupta (the appellant) was also a member to the sai....
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....s of an assessee, who is liable to pay the tax. Protective assessments are also permissible, but they cannot continue to infinity". xxxxxxxxxxxxxxx "that by now the ITO must make up his mind as to who has really earned the income The additions are consequently to be made in the hands of such person alone and not in the hands of the assessee where the Department itself treated that the income is not earned by the person and the assessment is made only on a protective basis The additions, therefore, had to be added in the hands of the person who has really earned the income and substantive assessment is made in respect of the income itself ". 6.4.5 Considering the above facts, circumstances of the case & various case laws, I hold that the addition made by the Assessing Officer on "protective basis is not called for since the income belongs to the Syndicate which was liable to be assessed as an AOP. Further, I am sure that department has taken due action against the said AOP as has been mentioned by the AO in the assessment order. !n any case the department is free to pursue the matter in the case of AOP, as per the provisions of the I. T. Act. 6.4.6 I am also of the considered v....
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....hat the assessee has specifically asked the Assessing Officer to afford an opportunity to crossexamine Shri. Prakash Chandra Bhutoria but his attendance was not enforced by the Assessing Officer for cross-examination. Therefore, the statement of Shri. Prakash Chandra Bhutoria cannot be taken into account for making addition on the basis of the seized documents. The ld. counsel for the assessee has further invited our attention to the provisions of section 153C of the Act with the submission that in case the Assessing Officer has found something from Shri. Prakash Chandra Bhutoria which relates to the assessee, the mechanism of section 153C of the Act could have been invoked after recording requisite satisfaction in the case of Shri. Prakash Chandra Bhutoria that the material found belongs to the assessee. But nothing was done in the instant case and therefore the issue is squarely covered in favour of the assessee by the decision of the Hon'ble Allahabad High Court in the case of CIT vs. Gopy Apartments, 365 ITR 411. It was further contended that the Assessing Officer has framed the assessment in the hands of the assessee on protective basis and nothing has been brought on record t....
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....ssee is allowed to crossexamine the said witness or person. In the instant case, the assessee has asked the Assessing Officer during the course of assessment proceedings to allow him to cross-examine Shri. Prakash Chandra Bhutoria whose statement was sought to be relied on by the Assessing Officer. Initially the Assessing Officer has summoned Shri. Prakash Chandra Bhutoria and asked the assessee to cross-examine in Kolkata, but on the designated date Shri. Prakash Chandra Bhutoria did not appear and the assessee was forced to come with empty hands. Thereafter though the assessee has requested to afford an opportunity to cross-examine Shri. Prakash Chandra Bhutoria with respect to the documents found during the course of search, but the Assessing Officer did not enforce his attendance for cross-examination and finally despite repeated requests the assessee was not allowed to cross-examine Shri. Prakash Chandra Bhutoria. The Assessing Officer, however, heavily relied upon the statement and the seized documents for making the addition in the hands of the assessee on account of undisclosed receipt from the alleged syndicate group. Under these circumstances, we are of the considered opi....
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....ore the ld. CIT(A) against the said order of the Assessing Officer with the submission that the addition was worked out on the basis of the computer sheets found in the course of search from Shri. Prakash Chandra Bhutoria and his statement and Shri. Prakash Chandra Bhutoria was not allowed to be cross-examined by the assessee. Therefore, the material seized from him cannot be relied on for making the addition. 21. With regard to the sundry debtors and creditors according to the seized material, it was stated that for NCCF branch at Kanpur, they could not get proper sub-agent. Therefore, the work carried on by the sub-agent was also handled by the assessee himself and the entire commission calculated @ 1½% of the basis value of coal was earned as commission by the assessee. The coal was given directly to the consumers as was to be done by the sub-agent. If there would have been any collection made from the consumers, it was deposited in the bank account of NCCF and all the billings were done directly by NCCF as they themselves were the sellers. The assessee's interest being confined only to earn commission @ 1½%. 22. The ld. CIT(A) re-examined this issue in the light....
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...., but during the course of hearing, the ld. D. R. could not point out any defect in the order of the ld. CIT(A); whereas the ld. counsel for the assessee has placed reliance upon the order of the ld. CIT(A) with the submission that the Assessing Officer has made addition on the basis of conjectures and surmises, as no material evidence was available before him. He tried to place reliance upon the evidence and statement of Shri. Prakash Chandra Bhutoria who was never allowed to be cross-examined by the assessee despite repeated requests by the assessee. Therefore, the evidence and statement of Shri. Prakash Chandra Bhutoria collected by the Assessing Officer could not be relied on for making the addition. 24. Having carefully examined the orders of the lower authorities in the light of the rival submissions, we find that the Assessing Officer has made addition only on conjectures and surmises. No evidence was brought on record in order to establish that the assessee has earned any other income except commission receipts. Moreover, the assessee worked as an agent of NCCF who sold coal to the consumers. Undisputedly the coal was being supplied directly to the consumers by NCCF and as....