TaxTMI 
TaxTMI 
2018 (12) TMI 1751
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....2, 1022, 1023, 1024, 1310, 1311, 1312, 1537, 1538, 1539, 4692, 1563, 1564, 2013, 2772, 2773, 2774, 2177, 2178, 2151/Del/2012, ITA No. 1654, 1655, 1656, 1657, 3208, 3209, 3210, 3211, 1648, 1649, 1650, 1651, 1652, 1653/Del/2013, ITA No. 3328, 5056/Del/2011, ITA No. 5572, 3001/Del/2014, C.O. 67, 68, 69, 84, 127, 128, 129/Del/ 2010, C.O. No. 126, 127, 128, 129, 130, 131/Del/2013 ORDER PER BENCH:- The Jurisdictional High Court of Delhi, vide order dated 22.01.2015, has considered a batch of appeals preferred by the Revenue, challenging the common order of the Tribunal dated 23.11.2012. 2. The question of law, sought to be urged by the Revenue is as to whether section 153C of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short], to the extent it, inter alia, enables the Assessing Officer to issue notice to third parties, on the basis of satisfaction that "any money, bullion, any 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 i.e. the person searched, is wide enough to lead to a notice only on the basis of entries ....
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....4. Accordingly, the matters relating to Mohan Meakins Limited, National Industries Corporation Ltd, Superior Industries Ltd, DCM Shriram Industries Ltd, Saraya Industries, M/s Lords Distillery Limited and National Industrial Corporation Ltd were remitted to the Tribunal for reconsideration on the lines indicated in the said order of the Hon'ble High Court. 5. The representatives of the captioned assessees were heard at length. In addition to their respective oral submissions, each of them also preferred written synopsis. 6. The ld. CIT-DR was also heard at length, who also preferred to file written synopsis alongwith certain documents, which formed the basis of satisfaction note and ultimately the assessment orders framed u/s 153C of the Act. 7. Arguing his case for UPDA, the ld. AR Shri Sampat vehemently stated that the revenue has misguided the Hon'ble High Court in as much as all the documents were very much there in the paper book filed before the Tribunal in the first round of litigation though they were not annexed with the assessment order. 8. It is true that the Assessing Officer has annexed certain impounded documents/loose sheets as part of the assessm....
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....R.K. Miglani. The scrutiny of incriminating documents found at the residence of Shri Miglani and also from the office of UPDA reveals that illegal payments were made by various Distilleries to various public servants. The UPDA acted as the nodal agency for making these illegal payments. The total of such illegal payments which are inadmissible expenditures works out to Rs. 246 crore as per details given hereunder {as understood from annexure A-l & A-2 seized from the residential premises of Shri R K Miglani}:-' S.No. Name of the Distillery 2002-03 2003-04 2004-05 2005-06 (Till Jan) Total (in Lakhs) 1. Saraya 945 1045 527.5 690 (Saraya+Balrampur 3207.5 804 1.134 636.9 889.6 3464.5 2 Rampur 752 945 599.4 705.6- 3002 3 SSL (Mansurpur) 463 607 374.8 591 2035.8 4 Lords (D.K. Modi) 582 616 404.9 486.9 2089.8 5 Daurala (DCM) 374 453 310.2 448.6 1585.8 6 7 Kesar (Baheri) 419 317 176.3' 245 1157.3 8 NIC (National) 327 359 242.4 348.6 1277 9 Simbholi ....
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....eized from LPDA headquarters and the residence of its Secretary General Shri R. K. Miglani, in fact, tallies with the actual production / sales shown by different distilleries in their books of a/c, which, in a way indicate that these papers depict the illegal payments made and are not imaginary papers. These distilleries have adopted different methods for siphoning off / generation of this illegal payment amounts. Some of the instances noticed are as under:- (a) M/S National Industrial Corporation Ltd. (NICL) has paid more than Rs. 10 Crores in F.Y. 2002-2003 and 2003-2004 to M/S Aneja & Co. as commission / supervision charges. M/S Aneja & Co. even after including these amounts did not have to pay any tax. (b) M/S Unnao Distillery has paid more than Rs. 30 Crores as depot charges / expenses to two Delhi based parties, who .have paid negligible taxes on this amount. Such charges were not paid till Financial Year 2001-02. (c) Many distilleries started paying commission on sales, expenses on sales, sales incentives etc. from F.Y. 2002-2003 onwards, when these types: of payments do not result into corresponding incidence of tax in the hands of the r....
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....en, the books of account or documents or assets, seized or requisitioned shall be handed over to Assessing Officer having jurisdiction over such other person] and that Assessing Officer shall proceed against each such other person and issue notice assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person [for six assessment iimmediately preceding the assessment year relevant to the previous year] such search is conducted or requisition is made and for the relevant assessment year or years referred to in sub-section (1) of section 153A]" Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to 45[sub-section (1) of] section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person."....
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....f the searched person must be "satisfied" that inter alia any document seized or requisitioned "belongs to" a person other than the searched person. It is only then that the http://www.itatonline.org WP (C) Nos.414, 566, 567, 572, 573 & 574 of 2014 Page 5 of 17 Assessing Officer of the searched person can handover such document to the Assessing Officer having jurisdiction over such other person (other than the searched person). Furthermore, it is only after such handing over that the Assessing Officer of such other person can issue a notice to that person and assess or reassess his income in accordance with the provisions of Section 153A. Therefore, before a notice under Section 153C can be issued two steps have to be taken. The first step is that the Assessing Officer of the person who is searched must arrive at a clear satisfaction that a document seized from him does not belong to him but to some other person. The second step is - after such satisfaction is arrived at - that the document is handed over to the Assessing Officer of the person to whom the said document "belongs". In the present cases it has been urged on behalf of the petitioner that the first step itself ....
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...., a letter written by the assessee to the company R was found, which contained the details of commission payments by the assessee to R in that year with a request to issue bills to the assessee A copy of the ledger account of R maintained by the assessee as proof of payments made through official channel was also seized. The seized documents were handed over to the Assessing Officer, but, only one document namely the letter written by the assessee to R was handed over to the Officer of the assessee. A notice under section 153C of the Act was issued directing the assessee to file its return of income for the assessments 2007-08 to 2012-13, enclosing a satisfaction note dated July 21, 2014 stating that the seized documents belonged to the assessee and it was a fit case for initiating proceedings under section 153C read with section 153A of the Act." 24. And held as under: "Allowing the petitions, that the seized documents mentioned in the satisfaction note were the ledger account maintained by the assessee showing the commission payments made by the assessee to R and the letter written by the assessee to R. Since the letter was written by assessee to R to be treated as a ....
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..... It has been brought to the notice by the AO of M/s Earth Infrastructures Ltd,(in this case the AO is same as undersigned) in whose cases-action under section 132 of the Income Tax Act was taken place that various documents/books of accounts etc were found, and seized during the course of search and statement of various persons were recorded; The AO of the searched persons has recorded his satisfaction that the following seized papers / documents belonged to the assessee i.e. M/s ARN Infrastructure India Limited. Party No Name and, address of the person searched Details of Annexure seized Details of papers/documents 1. M/s Earth Infrastructures Ltd, at B-100, Indl Area, Naraina, Phase -1 New Delhi Annexure A/27 panchnama dated 18.01.2013 Pages 120-122 are a of extract from the books (Ledger) of M/s ARN Infrastructures India Limited relating to M/s Real Gains Estate Pvt Ltd. Page no. 123 is a fetter written by ARN Infrastructures India Limited dated 27/1/2010. The said satisfaction note prepared by the AO of the person searched has been kept on record. I have also examined the above documents and the contents noted/written therein. Af....
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....eries had made unaccounted payments to UPDA and in such of his contentions, reliance was placed on the decision of the Hon'ble Supreme Court in the case of Smt. Sumati Dayal 214 ITR 801 where it was held that "Matters have to be considered in the light of human probabilities". It is the say of the ld. DR that by preponderance of probability, the distilleries had made unaccounted payments to UPDA. 30. In our considered opinion, the Revenue's argument mainly hinges upon the clandestine payments made to UPDA and statements of its Secretary General. These included various tables and charts mentioning the names of distilleries [Member of Association] and the expected payments from such distilleries. These documents were signed by Shri R.K. Miglani and on behalf of different distilleries. The Revenue had prepared a chart for each assessment year and the payments made by the captioned assessees to the fund. This was allegedly used to bribe the public officials and politicians. The main thrust of the Revenue's grievance is with respect to amount stated to have been clandestinely given to UPDA as the captioned assessees contribution towards 'Slush Funds' to be used as 'pay offs' to p....
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.... Answered - "Pages 152 and 155 only have been written by me. However, all the above mentioned papers contained record of payment/contribution by various members of UPDA which add upto 508.05 lakhs. The next figure is 670.00 which is contribution to be paid (due) from these members on account of above mentioned payment. Page 154 again contains details of balances attributed to various members of UPDA in respect of amount to be paid (due) on account of the above." 35. It can be seem from the aforementioned answer that nowhere Shri R.K. Miglani accepted that the seized documents were authored by any distillery or any particular member of UPDA. In fact, he has admitted that pages 152 and 155 were authored by him. 36. In reply to question No. 9, wherein Shri R.K. Miglani was asked to tell in brief about the expenses incurred by the members of UPDA during the course of normal business expenses, Shri R.K. Miglani replied that his office keeps record of contribution/payments by various members of UPDA directly to politicians and other persons/agencies. He showed his inability to furnish details of actual names and amount paid to various members. 37. This reply of Shri R.K. Miglani....
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....f Shri R.K. Miglani recorded u/s 132(4) of the Act. The ld. DR further pointed out that the said order of the Tribunal was confirmed by the Hon'ble High Court of Delhi vide order dated 23.10.2017 and the SLP filed against the same was dismissed by the Hon'ble Supreme Court on 13.4.2018. It is the say of the ld. DR that since the decision of the Tribunal has been affirmed by the Hon'ble High Court of Delhi as well as the Hon'ble Supreme Court, these issues cannot now be revisited in these proceedings. 45. We do not find any force in the contentions of the ld. DR. Firstly, the cancellation of registration u/s 12AA of the Act in the case of UPDA is altogether a different issue. The Assessing Officer cancelled the registration on the strength of the statement of Shri R.K. Miglani and search which took place at his residence. The Tribunal upheld the order of the Assessing Officer which was affirmed by the Hon'ble High Court of Delhi. But this was in the context of provisions of section 12AA of the Act, and, therefore, cannot be stretched to the proceedings u/s 153C of the Act in respect of 11 distilleries. A judgment has to be considered in the context in which it....
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....this judgment has no application at all on the facts of the cases in hand. In this judgment, the Hon'ble High Court has only examined whether a satisfaction note prepared in the case of the person other than the person searched by the same Assessing Officer in the file of the person searched could be held as valid. If the judgment is read as a whole, the Hon'ble High Court has not held that the term "belong to" is inter-changeable with "relating to" or "pertaining to". 52. As mentioned elsewhere, the Revenue has not brought anything on record to establish that the production figures reflected in the tables were forwarded by the appellants through a fax message or on its letter head. This was clear mandate of the Hon'ble High Court when it remitted the matter to the file of the Tribunal. 53. The ld. DR emphasized that the document 114 of Annexure A-1 bears the signature of two employees but we have to say that during the course of assessment proceedings, these employees were never questioned by the Assessing Officer to verify whether they actually put the signatures on those documents. In our considered opinion, such documents are only hearsay evidence. 54. Anot....
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....he Revenue is entirely unjustified, unsupported by any document found from the possession or control of the appellants. It is well settled rule of law that burden of proof is on the alleger and not on the person against whom the allegation is made. In the present appeals, the burden is thus on the Revenue to establish that the documents found from the third persons are reliable and authentic and also such documents belong to the distilleries which is uncorroborated by any evidence and even the author of the documents have not been identified. Therefore, it can safely been concluded that the Revenue has not discharged its burden. The mere fact that some of the distilleries are members of the association [UPDA] does not by itself lead to a conclusion that adverse inference can be drawn against members of the association since documents were found from the premises of the association and not from the distilleries. The contents of the impugned documents have to be established as genuine by leading cogent positive evidence or material and have to be supported by corroborative material. In the present appeals, no such material has been brought on record. Therefore, we have no hesitation ....
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....n the seized material. The ld. DR concluded by stating that ,in effect, Shri R.K. Miglani was an employee of the member of the UPDA and, therefore, there was no necessity for his cross examination. 64. The contention of the ld. DR that since Shri R.K. Miglani was related to the member distilleries of UPDA, therefore it was not necessary to allow cross examination is not acceptable. The Hon'ble High Court of Delhi in the case of Shri S.N. Aggarwal 293 ITR 43 has held as under: "11. In the present case the Assessing Officer has placed reliance on the statement of Smt.Sarla Aggarwal, daughter of the assessed while arriving at the conclusion, that the entries belong to the transactions of the assessed. This statement made by Smt.Sarla Gupta, cannot be said to be relevant or admissible evidence against the assessed, since the assessed was not given any opportunity to cross-examine her and even from the statement, no conclusion can be drawn that the entries made on the relevant page belongs to the assessed and represents his undisclosed income. It is also an admitted fact that the statement of the assessed was not recorded at any stage during the assessment proceedings. T....
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....r thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person' s handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.] Section 292C |l)] Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession ol of any person in the course of a search under section 132 20[or survey section 133A], it may, in any proceeding under this Act, be presumed- 1 i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; ii) that the contents of such books of account and other documents are true; and ....
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....the strength of his statement that the documents seized from his premises belong to distilleries, the additions have been made as unexplained expenditure/contribution to UPDA. 71. It is well settled that only the person competent to give evidence on the truthfulness of the contents of the document is writer thereof. So, unless and until the contents of the documents are proved against a person, the possession of the document or hand writing of that person on such document by itself cannot prove the contents of the document. 72. Considering the facts of the dispute in totality, we are of the opinion that the assessment framed u/s 153C of the Act is in gross violation of the principles of natural justice and deserve to be tagged as nullity. 73. We will now address to the specific issues raised in the captioned appeals. Lords Distillery Limited ITA No. 2576, 2577 & 2578/DEL/2010 [A.Ys. 2003-04, 2004-05 & 2005-06] [Assessee's appeals] 74. The assessee urged permission to raise the following additional ground of appeal in support of Ground No. 2 of the grounds of appeal. The specific ground of appeal reads as under: "The assessment framed by the Assessin....
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....#39;ble High Court, inter alia, held as under: The legal position about waiver of such a mandatory provision created in the wider public interest to operate as fetter on the jurisdiction of the authority is well settled that there could never be waiver, for the simple reason that in such cases jurisdiction could not be conferred on the authority by mere consent, but only on conditions precedent for the exercise of jurisdiction being fulfilled. If the jurisdiction cannot be conferred by consent, there would be no question of waiver, acquiescence or estoppel or the bar of res judicata being attracted because the order in such cases would lack inherent jurisdiction unless the conditions precedent are fulfilled and it would be a void order or a nullity. The settled distinction between invalidity and nullity is now well brought out in the decision in Dhirendra Nath Gurai v. Sudhir Chandra Ghosh, AIR 1964 SC 1300, 1304, where their Lordships had gone into this material question as to whether the act in breach of the mandatory provision is per force a nullity. The passage in Macnamara on Nullities and Irregularities, referred to in Ashutosh Sikdar v. Bihari Lai Kirtania [1907] IL....
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....unction order obtained by the assessee, ignoring the two years' limit laid down as a fetter for issuance of the notice under section 7(2), the best judgment assessment procedure was permissible. At page 2070, the learned Chief Justice first held that if a return under section 7(1) was not made, the service of a notice under section 7(2) of the Act was the only method for initiation of a valid assessment proceeding under the Act. The period of two years under section 7(2) was a fetter on the power of the authority and was not just a bar of time. It was the scheme of the Act that the service of notice within two years from the end of the return period was an imperative requirement for initiation of assessment proceeding as also reassessment proceeding under the Act. Further proceeding, at page 2071, their Lordships pointed out the settled legal distinction between the provisions which conferred jurisdiction and provisions which regulated procedure, because jurisdiction could neither be waived nor created by consent, while a procedural provision could be waived by conduct or agreement. Their Lordships pointed out that in that case the assessee could not be said to have waived the ....
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....mitted the Income-tax Officer to pass an order of seizure within 90 days. The provision was held to be not a mandatory provision and at page 400 it was also pointed out that there was no question of the period of limitation under section 132(5) involving public interest. It was intended for the benefit of the parties. The settled principle which had been stated on Crates on Statute Law, 6th edition, at page 259, was as under: "As a general rule, the conditions imposed by statutes which authorize legal proceedings are treated as being" indispensable to giving the court jurisdiction. But if it appears that the statutory conditions were inserted by the legislature simply for the security or benefit of the parties to the action themselves, and that no public interests are involved, such conditions will not be considered as indispensable, and either party may waive them without affecting the jurisdiction of the court." Therefore, the period of limitation prescribed under section 132(5) being intended for the benefit of the person concerned, it was held that the assessee could waive that provision. That decision could not, therefore, be invoked in the present context of....
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....d not permit contracting out of the Acts so there could be no contracting in. A status of control of premises under the Rent Control Acts could not be acquired either by estoppel or by res judicata. Their Lordships in terms held that the principle was that neither estoppel nor res judicata could give the court jurisdiction under the Acts which those Acts said it was not to have. Therefore, bar of res judicata or estoppel or waiver were negatived in such a case where the plea was outside the ambit of the Rent Control Act, for the simple reason that as one could not confer jurisdiction by consent, similarly one could not by agreement waive exclusive jurisdiction of the rent courts over the buildings in question. It is true that section 254(4) in terms provides that save as provided in section 256 (which provides for the reference to the High Court), orders passed by the Appellate Tribunal on appeal shall be final. That finality or conclusiveness could only arise in respect of orders which are competent orders with jurisdiction and if the proceedings of reassessment are not validly initiated at all, the order would be a void order as per the settled legal position which could never ha....
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.... decision in Satyadhyan Ghosal v. Smt. Deora-jin Debi, AIR 1960 SC 941, where the question had arisen about the applicability of section 28 of the Calcutta Thika Tenancy Act, 1949, and the plea having been rejected by the munsif trying a suit, revision, the High Court had held that operation of section 28 of the Act was not affected by the subsequent amendment Act and the case was remanded to the munsif for disposal according to law. After the final decree was passed by the munsif and the appeal finally came to the Supreme Court, it was held by the Supreme Court that the order of the High Court holding section 28 to be applicable could not operate as res judicata in appeal before the Supreme Court, because the High Court's order of remand was merely an interlocutory order, which did not terminate the proceeding pending before the munsif and which had not been appealed from at that stage. Consequently, in the appeal from the final decree or order it was open to the party concerned to challenge the correctness of the High Court's decision. The two special features which distinguished that case were: one, that the order of the High Court which was relied upon to invoke the pri....
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.... Nos. 1 and 2 are in the negative, while our answer on question No. 3 is in the affirmative, that is to say, all the questions are answered against the revenue and in favour of the assessee. The reference is accordingly disposed of and the Commissioner shall pay the costs of the assessee." 79. The judgment on which the ld. DR has heavily relied upon relates to the claim of deduction u/s 80IA of the Act. In our considered opinion, a claim of deduction u/s 80IA of the Act requires many verification of facts as per the exception clause provided in the provisions of section 80IA of the Act whereas the question of jurisdiction of the Assessing Officer does not necessarily require any new verification of facts. Respectfully following the judgment of the Hon'ble High Court of Gujarat [supra] and further drawing support from the judgment of the Hon'ble Karnataka High Court in ITA No. 2638 of 2005 order dated 05.04.2010 in the case of CIT Vs. Pai Vaibhav Hotels Private Limited, we hold that the assessment is barred by limitation. We accordingly, reject the contention of the ld. DR and allow the additional ground of appeal raised by the assessee. 80. The ld. counsel for the ass....
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....r reassessment shall be the period as referred to in clause (a) or clause (b) of this sub-section or one year from the end of the financial year in which books of account or documents or assets seized or requisitioned are handed over under section 153C to the Assessing Officer having jurisdiction over such other person, whichever is later: Provided further that in the case where the last of the authorizations for search under section 132 or for requisition under section 132A was executed during the financial year commencing on or after the 1st day of April, 2004 but before the 1st day of April, 2010,- (i) the provisions of clause (a) or clause (b) of this sub-section shall have effect as if / for the words "two years" the words "twenty-one months" had been substituted; (ii) the period of limitation for making the assessment or reassessment in case of other J person referred to in section 153C, shall be the period of twenty-one months from the end of the financial year in which the last of the authorizations for search under section 132 or for requisition under section 132A was executed or nine months from the end of the financial year in which books of account or ....
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....hs whereas assessment order is framed on 30.12.2008 and is, therefore, well beyond the period of limitation. In our considered opinion, when the stay got vacated on 07.05.2017 and there being no further stay only such time during which the order of the Hon'ble High Court had been passed granting stay till the same was allowed can alone be excluded. 86. Before us, the ld. DR vehemently stated that the time taken for filing the appeal by the department before the Hon'ble High Court of Calcutta should also be excluded. We do not find any merit in this contention of the ld. DR because the provision specifically provides that only that period will be excluded during which the proceedings have been stayed by the Hon'ble High Court. In our considered opinion, the facts on record clearly show that the assessment order framed u/s 153C r.w.s 153A of the Act dated 30.12.2008 is barred by limitation. Since the assessment order has been held to be barred by limitation, proceedings subsequent to the happenings get vitiated. 87. In the result, the appeals of the assessee are allowed. Shadi Lal Enterprises Ltd ITA Nos. 454 to 456/DEL/2010 [Revenue's appeals & CO Nos. 67 ....
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....per page 13 of Annexure A-2 impounded from the premises of the assessee, the Assessing Officer formed a belief that Rs. 2.63 crores have been paid by the appellant to UPDA from April to July 2005. The Assessing Officer was of the opinion that Rs. 75 lakhs was paid to UPDA in the month of July 2005. Since the alleged documents pertain to F.Y. 2005-06, assessment for A.Y 2000-01 was assessed on the income already assessed u/s 143(3) /250/154 of the Act vide order dated 19.03.2004. 97. Assessment was challenged before the CIT(A) on the ground that there is no material to support that the alleged documents in question belong to the assessee which is a mandatory requirement for assuming jurisdiction u/s 153C of the Act. 98. We have discussed this issue in detail while adjudicating common grievance Nos. 1 and 2 elsewhere. For our detailed discussion therein, we hold that the assessment framed u/s 153C r.w.s 153A of the Act is without jurisdiction and accordingly, assessment order is annulled for want of jurisdiction. 99. In the result, appeals of the assessee are allowed. 1537, 1538, 1539 & 4692/DEL/2012 Saraya Industries [Assessee's appeal] 100. The entire assessment h....
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....proceedings/FEMA/CBI proceedings and I.T. proceedings are different from these proceedings. Therefore, the content of evidence is different in I.T. proceedings. Accordingly, the judgments delivered in the cases of V.C. Shukla and Common Cause, A registered Society [supra] are not relevant for the appeal under consideration. It is the say of the ld. DR that the notings found in the documents seized from the assessee clearly show a payment of Rs. 2.63 crores to UPDA. Therefore, it cannot be said that such documents do not have any evidentiary value. 105. We have given thoughtful consideration to the rival submissions and have carefully perused the orders of the authorities below. We have given elaborate findings on the documents seized from the premises of Shri R.K. Miglani/UPDA while adjudicating Common Grievance Nos. 1 and 2 elsewhere. For our detailed discussion given therein, we hold that such documents do not belong to the assessee and, therefore, the assessments framed on the strength of such documents are without jurisdiction and hence deserve to be annulled. 106. Now the issue is whether the entries in the seized documents were admissible as good evidence against the as....
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....gation against the various functionaries/officers and further monitor the same? 108. And held as under: • Loose sheets of papers are wholly irrelevant as evidence being not admissible under section 34 so as to constitute evidence with respect to the transactions mentioned therein being of no evidentiary value. The entire prosecution based upon such entries which led to the investigation was quashed by this Court. [Para 20] • The Court has to be on guard while ordering investigation against any important constitutional functionary, officers or any person in the absence of some cogent legally cognizable material. When the material on the basis of which investigation is sought is itself irrelevant to constitute evidence and not admissible evidence , whether it would be safe to even initiate investigation? In case it is done, the investigation can be as against any person whosoever high in integrity on the basis of irrelevant or inadmissible entry falsely made, by any unscrupulous person or business house that too not kept in regular books of account but on random papers at any given point of time. There has to be some relevant and admissible evidence and s....
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....re not genuine and thus has not attached any evidentiary value to the pen drive, hard disk, computer loose papers, computer printouts. [Para 23] • Since it is not disputed that for entries relied on in these loose papers and electronic data were not regularly kept during course of business, such entries were discussed in the order passed in Sahara's case by the Settlement Commission and the documents have not been relied upon the Commission against assessee and thus such documents have no evidentiary value against third parties. On the sis of the materials which have been placed on record, it is opined that no case is made out to direct investigation against any of the persons named in the Birla's documents or in the documents of Sahara. [Para 24] • In the case of State of Haryana v. Bhajan Lai 1992 Supp (1) SCC 335, this Court has laid down principles in regard to quashing the F.l.R. The Court can quash FIR also if situation warrant even before investigation takes place in certain circumstances. This Court has laid down thus: (1) Where the allegations made in the first information report of the complaint, even if they are taken at their f....
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....ct to third parties and considering the explanation which have been made by the Birla Group and Sahara Group, it is opined that it would not be legally justified, safe, just and proper to direct investigation. [Para 27]" 109. It is true that the afore discussed judgments of the Hon'ble Supreme Court were not considered in the context of Income-tax proceedings, but the ratio decidendi is directly applicable on the facts of the case in hand. Therefore, we have no hesitation to hold that the additions made on the basis of the impugned seized documents do not hold any water and deserve to be deleted. This finding of ours is in addition to the detailed findings given in Common Grievance Nos. 1 and 2 elsewhere. 110. In the result, the appeals filed by the assessee are allowed. 1563 & 1564/DEL/2012 Saraya Industries [Revenue's appeals] 111. The sole grievance of Revenue in both the appeals is that the CIT(A) erred in deleting the disallowance of Rs. 3,16,91,550/- in A.Y 2004-05 and Rs. 4,12,20,600/- in A.Y 2005-06. 112. Since we have categorically held that assessment framed u/s 153C r.w.s 153A of the Act is without jurisdiction and the same is annulled for want of j....
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.... Officer in the case of Lord's Distillery Limited in ITA No. 2576 to 2578/DEL/2010 at para 79 page 74. For our detailed discussion therein, the additional ground is admitted and since it goes to the root of the mater, we will first address to this additional ground raised by the appellant. 122. Facts of the case reveal that a satisfaction note received by the Assessing Officer is dated 10.04.2007 which date has to be taken as the date of search in the case of the "other person". In the light of the provisions of section 153C of the Act discussed elsewhere. Six A.Ys constitute block preceding year of search, therefore, in the case in hand, the six A.Ys will be as follows: 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 which means that the impugned A.Y 2006-07 is part of the block period, which means that the assessment ought to have been framed u/s 153C r.w.s 153A of the Act which is the mandate of relevant provisions relating to assessment in the case of search and seizure operation. The present assessment order is framed u/s 143(3) of the Act and is, therefore, bad in law. Accordingly, we do not have any hesitation in annulling the assessment order. Since ....
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....e by the Assessing Officer on account of alleged unaccounted contribution made to UPDA on the basis of impounded documents and statements of Shri R.K. Miglani. 133. We have discussed this issue in detail while adjudicating common grievance Nos. 1 and 2 elsewhere. For our detailed discussion therein, we hold that the assessment framed u/s 153C r.w.s 153A of the Act is without jurisdiction and accordingly, assessment order is annulled for want of jurisdiction. 134. In the result, the appeals filed by the assessee are allowed. ITA Nos. 2071, 2072 & 2073 /DEL/2010 Narang Distillery Ltd [Assessee's appeal] 135. The sum and substance of the grievance of the assessee is that the CIT(A) grossly erred in confirming the action of the Assessing Officer in assuming jurisdiction u/s 153C r.w.s. 153A of the Act when no satisfaction as per law was recorded in the case of the appellant company. 136. The assessee is further aggrieved by the addition of Rs. 39.81 lakhs added by the Assessing Officer on account of expenditure from undisclosed sources. 137. The peculiar facts of the case are that satisfaction note, which triggered the proceedings u/s 153C of the Act was recorded i....
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....ion u/s 153C of the Act on the basis of documents impounded from the premises of Shri R.K. Miglani/UPDA has been held by us as unlawful. Accordingly, we have annulled the assessment order so framed while deciding common Grievance No. 1. For our detailed discussion given therein, added with our findings given in common grievance No. 2, we hold that the assessment so framed u/s 153C r.w.s 153A of the Act is bad in law and without jurisdiction. Since we have annulled the assessment, there is no need to dwell into the merits of the addition. 143. In the result, the appeal of the assessee is allowed. ITA No. 2827/DEL/2010 Narang Distillery Ltd [Revenue's appeal] 144. The revenue is aggrieved by the deletion of addition of Rs. 2.66 crores. 145. While deleting the impugned addition, the CIT(A) was of the view that since the original assessment was not pending as on the date of initiation of charge, the same has not abated and admittedly, nothing was found during the search to suggest that any income in regard to the ground raised by the assessee appellant has escaped assessment and no books of account, documents or other assets being found or seized in the search belong to ....
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....therein, added with our findings given in common grievance No. 2, we hold that the assessment so framed u/s 153C r.w.s 153A of the Act is bad in law and without jurisdiction. 153. In the result, Cross objections of the assessee are allowed and the appeals filed by the Revenue are dismissed. ITA No. 2053/Del/2010 ITA No. 2054/Del/2010 ITA No. 2772/Del/2012 ITA No. 2773/Del/2012 ITA No. 2774/Del/2012 Modi Industries Limited [Revenue's appeals] 154. All the above appeals by the Revenue have to be dismissed because of the following: Sl No. Assessment Year ITA Number Total Quantum Involved Tax Effect [Calculated @ 33.99%] 1. 2000-01 ITA No. 2053/Del/2010 Rs. 17,58,000 Rs. 5,97,544 2. 2002-03 ITA No. 2054/ Del/2010 Rs. 32,89,000 Rs. 11,17,931 3. 2004-05 ITA No. 2772/Del/2012 Rs. 12,51,000 Rs. 4,25,215 4. 2005-06 ITA No. 2773/Del/2012 Rs. 23,28,000 Rs. 7,91.287 5. 2006-07 ITA No. 2774/Del/2012 Rs. 5,44,000 Rs. 1,84,906 155. As can be seen from the afore-mentioned chart, the tax effect is less than Rs. 20 lakhs in all the A.Ys. In the light of the CBDT Circular No. 3/2018 da....
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....been made. We have annulled the assessment framed on the strength of the documents seized from the premises of Shri R.K. Miglani and impounded from the premises of UPDA. Since we have annulled the assessment framed u/s 153C of the Act on the basis of documents found from the premises of Shri R.K. Miglani, for our detailed discussion given in common grievance Nos. 1 and 2, we hold that the assessment so framed u/s 153C r.w.s 153A of the Act is bad in law and without jurisdiction 163. In the result, the appeal of the Revenue is dismissed. ITA No. 5572/Del/2014 ITA No. 4215/Del/2010 ITA No. 4216/Del/2010 ITA No. 4217/Del/2010 Simbholi Sugars Limited [Assessee's appeals] 164. The sum and substance of the grievance of the assessee is that since the assessment for A.Y 2006-07 was framed u/s 143(3) of the Act, reassessment on the total income u/s 153A of the Act can only be made on account of material found during the course of search operation. The assessee alleges that the assessment has been framed on the basis of documents found during the course of search and seizure proceedings conducted on third party, namely Shri R.K. Miglani or survey operation of UPDA. There....
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.... (iv) Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." (v) In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. (vi) Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. (vii) Completed assessments can be interfered with by the AO ....
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....ength of the notings found from the premises of Shri R.K. Miglani/UPDA and on the statement of Shri R.K. Miglani recorded u/s 132(4) of the Act for making the impugned addition. 179. While adjudicating common grievance No. 1, we have categorically held that the documents seized from the premises of Shri R.K. Miglani do not have any evidentiary value and further while adjudicating common grievance No. 2, we have held that the additions made on the statement of Shri R.K. Miglani who was not subjected to cross examination is not sustainable. 180. We have discussed this issue in detail while adjudicating common grievance Nos. 1 and 2 elsewhere. For our detailed discussion therein, we hold that the assessment framed u/s 153C r.w.s 153A of the Act is without jurisdiction and accordingly, assessment order is annulled for want of jurisdiction. Therefore, the Assessing Officer is directed to delete the impugned addition. 181. In the result, the appeals of the assessee are allowed. ITA No. 1648/Del/2013 ITA No. 1649/Del/2013 ITA No. 1650/Del/2013 ITA No. 1651/Del/2013 ITA No. 1652/Del/2013 ITA No. 1653/Del/2013 DCM Shriram Industries Ltd [Revenue's appeals] 1....
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....ssue. 192. The undisputed fact is that the assessments have been framed u/s 153A of the Act vide order dated 28.12.2007. The Assessing Officer has categorically mentioned that the premises of the assessee were searched u/s 132 of the Act on 14.02.2006 and various incriminating documents were found and seized. 193. There is no dispute that search operations were carried out when the Warrant of Authorisation u/s 132 of the Act is executed. The mandatory requirement of a Warrant of Authorisation u/s 132 as given in Form No. 45 are names of the persons to be searched and the names of the premises to be searched. A Warrant of Authorisation may contain name of more than one person but for each premise, Warrant of Authorisation is required. Both the ld. AR and ld. DR have supplied the copy of Warrant of Authorisation which is part of record. A perusal of Warrant of Authorisation u/s 132 of the Act shows the names of the following persons: 1. Shri R.K. Miglani 2. Shri Lalit Khaitan 3. M/s Radico Khaitan Ltd 4. UPDA 194. Address on which this Warrant of Authorisation was to be executed is P/25, 1st Floor, South Extension, Part - 2, New Delhi. Ind....
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.... If the search warrant was never executed at the premises of the assessee, it leads to only one conclusion that the assessee wsa never searched. If the assessee was never searched u/s 132 fo the Act, assessments framed u/s 153A of the Act are bad in law because provisions of section 153A provides for assessment in case of search or requisition. 200. The ld. AR has heavily relied upon the decision in the case of N.K. Jewellers Vs. CIT wherein the Hon'ble Supreme Court has held that : "In view of the amendment made in section 132A by the Finance Act 2017, 'reason to believe' as the case may be, is not required to be disclosed to any person or any authority or Appellate Tribunal as recorded by revenue authority u/s 132 or section 132A of the Act." 201. We fail to understand how the decision in this case is relevant and applicable to the facts of the case in hand. As mentioned elsewhere, the dispute in the present case is whether the Warrant of Authorisation was executed at the premises of the assessee searched or not. It is not the case of the assessee that the person who has issued the Warrant of Authorisation has "reason to believe" or "reason to suspect". 202.....
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....275.6 1015.8 16 Central 22 44 32.4 17 Modi 21 125 149.7 308.8 98.4 18 Superior/ITRC 6 46 34.7 233.6 320.3 19 Majhola 72.5 72.5 205. From the above details, the Assessing Officer came to the conclusion that the assessee has received the following sums in the respective A.Ys: Sl. No. A.Y Sum 1. 2003-04 56.80 crores 2. 2004-05 76.04 crores 3. 2005-06 45.42 crores 4. 2006-07 56.41 crores 206. The above amounts, extracted from the seized documents, have been treated as unexplained cash credits in the respective A.Ys. 207. As a result of search conducted at the resident of Shri R.K. Miglani on 14.02.2006, documents A-1 to A-10 were found and seized therefrom. The Assessing Officer has further observed that Annexure A-1 to A-10 were also impounded from the office of UPDA during survey for which Panchnama was provided. 208. The Assessing Officer has mentioned that what was taken out from the computer at UPDA premises were only copies of papers impounded from the residence of Shri R.K. Miglani. What was found from ....
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....o even initiate investigation ? In case it is done, the investigation can be as against any person whosoever high in integrity on the basis of irrelevant or inadmissible entry falsely made, by any unscrupulous person or business house that too not kept in regular books of account but on random papers at any given point of time. There has to be some relevant and admissible evidence and some cogent reason, which is prima facie reliable and that too, supported by some other circumstances pointing out that the particular third person against whom the allegations have been levelled was in fact involved in the matter or he has done some act during that period, which may have co-relations with the random entries. In case all these are not insisted, the process of law can be abused against all and sundry very easily to achieve ulterior goals and then no democracy can survive in case investigations are lightly set in motion against important constitutional functionaries on the basis of fictitious entries, in absence of cogent and admissible material on record, lest liberty of an individual be compromised unnecessarily. The materials which have been placed on record either in the case of Bir....
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....ate of Haryana v. Bhajan Lai 1992 Supp (1) SCC 335, this Court has laid down principles in regard to quashing the F.l.R. The Court can quash FIR also if situation warrant even before investigation takes place in certain circumstances. This Court has laid down thus: (8) Where the allegations made in the first information report of the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused. (9) Where the allegations in the first information report and other materials, if any. accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under section 156( 1) of the Code except under an order of a Magistrate within the purview of section 155(2) of the Code. (10) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused. (11) Where the allegations in the FIR do not constitute a cognizable offence but constitute only a non- cognizable offence, no investigati....
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....under Section 9 of the Act to support an inference about the formers' correctness still those entries would not be sufficient to charge Shri Advani and Shri Shukla with the accusations levelled against them for there is not an iota of independent evidence in support thereof. In that view of the matter we need not discuss, deleve into or decide upon the contention raised by Mr. Altaf Ahmed in this regard. Suffice it to say that the statements of the for witnesses, who have admitted receipts of the payments as shown against them in MR 71/91, can at best be proof of reliability of the entries so far they are concerned and not others. In other words, the statements of the above witnesses cannot be independent evidence under Section 34 as against the above two respondents. So far as Shri Advani is concerned Section 34 would not come in aid of the prosecution for another reason also. According to the prosecution case itself his name finds place only in one of the loose sheets (sheet No. 8) and not in MR 71/91. Resultantly, in view of our earlier discussion, section 34 cannot at all be pressed into service against him." 211. In the light of the ratio laid down by the Supreme Court ....
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....t he joined UPDA in June 2003, then how can he explain the data/entries in the loose sheets/impounded documents prior to June 2003. It appears that whatever he has stated in respect of transactions prior to June 2003 is nothing but hearsay. The appellant has recorded all the contributions made by members of UPDA in its books of account. 216. The ld. DR has heavily relied upon various judicial decisions to buttress his stand in respect of statements recorded u/s 132(4) of the Act and the presumption of entries found recorded in the books of account seized during search as per section 132(4) and 292C of the Act. 217. We do not find any relevance on these judicial decisions of the High Courts in as much as the presumption is against a person whose statement has been recorded u/s 132(4) of the Act during the course of search and seizure proceedings. As mentioned elsewhere, no search operation was conducted at the business of the appellant. It was Shri R.K. Miglani whose premises were searched. WE have summarized the assessment status of Shri R.K. Miglani elsewhere from which it can be seen from the returned income of Shri R.K. Miglani was assessed as such. Presumptions u/s 132(4)....
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.... seized from the assessee's premises in this regard was necessary. The question here is whether this reasoning is sound. 24. Section 132 no doubt mandates a presumption in respect of search and seizure operations; yet textually the presumption relates to material documents and books of account seized of from the assessee's premises and the presumption that can be made from it, not from materials seized and statement recorded, of third parties. Only if the materials that are sought to be relied upon emanate from the premises of the party subject to assessment, that the presumption can be drawn. This is evident from Sections 132 (4) and (4A) of the Act, which read as follows: "Section 132.... (4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income- tax Act, 1922 (11 of 1922 ), or under this Act. 1 Explanation.- For the removal of doubts,....
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.... inability of the revenue to establish as it were, that the assessee's expenditure claim was bogus, or it had underreported income and that it resorted to over invoicing and diversion of funds into the funds allegedly maintained by the UPDA, was not established. The findings of the Commission therefore cannot be faulted as contrary to law. 25. As far as suppression of profits for various financial years, alleged by the revenue, the Commission was of the opinion that the documents relied upon were work estimates and projections that revealed tentative profitability in respect of the assessee's activities towards sale of country liquor i.e. that the documents did not reflect actual figures. The documents reflected profit methods for both years which left the Commission to infer they were in fact not based upon actuals but alternative projections. Here again the view taken by the Commission cannot be said to be unreasonable as to warrant interference. Likewise, so far as suppression of profits for financial year 2004-05 is concerned the revenue in its Rule 9 report stated that the extra money generated was Rs. 33.35 crores and expenditure incurred was Rs. 17.35 crores....
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....nsible for the same. 224. The ld. DR has further asserted that the Revenue has produced a number of evidences in support of the fact that the distillers had made unaccounted payments to UPDA. In this regard, we have to point out that except for the notings in the loose sheets/impounded documents, the Revenue has brought nothing on record to establish any payments made by the distillers to UPDA. Whatever a member distiller has contributed to UPDA is recorded in the regular books of account of the assessee. Preponderance of probabilities do not allow us to assume or presume non existing facts. Considering the facts in totality from all possible angles, we do not find any merit in the additions made u/s 68 of the Act. 225. Coming to the issue relating to denial of benefit of sections 11 and 12 of the Act, the Assessing Officer in Para 13 of the assessment order for assessment year 2001-02 held that the assessee is not eligible for exemption u/ss 11 & 12 of the Act for the following reasons: "1. The A.O in Para 13 of the assessment order for Assessment Year 2001-02, held that assessee is not eligible for exemption u/s 11 & 12 of IT Act as follows: "13. The perus....
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....ounted receipts are not reflected in the return of income filed by the assessee. Moreover, at no stage of the proceedings, the assessee has claimed or furnished documentary evidence in support of the fact that the above amounts were spent for charitable purposes, which is the primary condition for claiming exemption u/s 11 & 12 of IT Act. " 226. Barring the issue relating to the additions made u/s 68 of the Act as per the aforesaid chart, the other issues were considered in the appellate proceedings for assessment year 2001-02 and the matter had travelled upto the Tribunal and the Tribunal in ITA No. 573/DEL/2005 has allowed the benefit of provisions of section 11 and 12 of the Act to the assessee. 227. The only distinguishing feature is the addition made u/s 68 of the Act. The allegation of the Assessing Officer is that the aforesaid receipts are unaccounted and are not reflected in the return of income filed by the assessee. In our findings elsewhere, relating to the additions made u/s 68 of the Act, we have elaborately discussed the issue and have categorically held that the additions made u/s 68 of the Act is not tenable in law and have directed to delete the same. Since ....
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....addition of Rs. 56.41 crores being unexplained credit entries u/s 68 of the Act. 234. We have already granted benefit of sections 11 & 12 of the Act and in so far as rejection of registration granted u/s 12AA of the Act is concerned, as mentioned elsewhere, the Hon'ble High Court has protected the assessee by its order till 01.10.2014. Further, we have directed for deletion of the addition made u/s 68 of the Act. Considering all these issues in totality, the appeal of the assessee is allowed. 235. In ITA No. 11/DEL/2012 for assessment year 2007-08, the assessee is aggrieved by the cancellation of registration granted u/s 12AA of the Act and is further aggrieved by the enhancement of the income by the ld. CIT(A) from NIL income to Rs. 4,88,140/- regardless of the fact that the amount of Rs. 4,88,140/- treated as income by the ld. CIT(A) was, in fact, the amount of contribution received by the assessee from the members for reimbursement of expenses. 236. In so far as cancellation of registration u/s 12AA is concerned, we have already mentioned hereinabove that the clarification of the Hon'ble High Court protected the assessee by its order till 01.10.2014. The same cl....