TaxTMI 
TaxTMI 
2024 (10) TMI 1703
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....and in law, the impugned order passed by the Ld. AO under section 153A r.w.s 143(3) of the Income Tax Act, 1961 dated 30.07.2021 is non-est as the same was passed without any document identification number (DIN) as mandated by Circular No. 19/2019 dated 14.08.2019 and thus the said order deserves to be quashed. 3. That on the facts and circumstances of the case and in law the Hon'ble CIT-(A) erred in confirming the erroneous addition of Rs. 13973400/- by the Ld. AO without properly appreciating the facts of the case and submissions made before him. 4. That on the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in confirming the addition without giving the assessee company an adequate opportunity for cross-examination, which violates principles of natural justice. 5. That on the facts and circumstances of the case and in law, the Ld. CIT (A) erred in confirming the addition of Rs. 13973400/- made by the Ld. AO to the income of the appellant company based on alleged incriminating worksheets contained in a laptop seized from a third party Shri Dileep Kumar Gupta without allowing any opportunity for cross-examin....
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....to cross examine Shri Dileep Gupta. Thus, the assessee was not even confronted with the alleged incriminating documents seized from 3rd party during a separate search and seizure action which is in violation of principles of natural justice. Even otherwise the Allegation in the statement of Shri Dileep Gupta was only to the extent that he has collected cash from the customers for sale and booking of the residential units in project Pebble Bay and the same was handed over to the directors of the assessee company as well as M/s Amrit Colonizers Pvt. Ltd. He has relied upon the judgment of Hon'ble Supreme Court in case of M/s Andaman Timber Industries v. CIT (2015) 281 CTR 241 (SC) as well as judgment of Hon'ble Delhi High Court in case of CIT vs. SMC Share Brokers Ltd. 159 Taxman 306. Ld. AR has also relied the judgment of Hon'ble jurisdictional High Court in case of Prakash Chand Nahta v. CIT 170 taxman 520 and submitted that without allowing the assessee to cross examined the witness, the addition made on the basis of the said statement is not sustainable and liable to be deleted. 4.2 Ld. AR has further submitted that even the alleged seized document was seized from the possessi....
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....is confined only to the addition made by the AO on the basis of seized documents marked as LPS 1 & 2 being Excel Sheet taken from Laptop of Shri Dileep Gupta seized during the course of search and seizure action dated 12.01.2018 carried out in case of M/s D.G Homes & Realty Pvt. Ltd. Though the assessee was also subjected to search and seizure action u/s 132(1) but the same was carried out on 16.05.2018. Therefore, these are two separate and distinct search and seizure actions; one dated 16.05.2018 in case of the assessee and another dated 12.01.2018 in case of Shri Dileep Gupta and M/s DG Homes & Realty Pvt. Ltd. The addition made by the AO which was confirmed by the CIT (A) is undisputedly based on the said seized documents marked as LPS-1 & 2 as well as statement of Shri Dileep Gupta not related to the search and seizure action carried in the case of assessee cannot be considered as an incriminating material for the purpose of framing assessment u/s 153A of the Act for A.Ys which were not pending on the date of initiation of search and seizure action dated 16.05.2018. The AO has given details of the return of income filed by the assessee for A.Ys. 2015- 16 & 2016-17 as under: ....
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....undisclosed income' for two reasons, firstly that there were two parallel assessments envisaged under the erstwhile regime, i.e., (i) block assessment under section 158BA to assess the 'undisclosed income' and (ii) regular assessment in accordance with the provisions of the Act to make assessment qua income other than undisclosed income. Secondly, that the 'undisclosed income' was chargeable to tax at a special rate of 60% under section 113 whereas income other than 'undisclosed income' was required to be assessed under regular assessment procedure and was taxable at normal rate. Therefore, section 153A came to be inserted and brought on the statute. Under Section 153A regime, the intention of the legislation was to do away with the scheme of two parallel assessments and tax the 'undisclosed' income too at the normal rate of tax as against any special rate. Thus, after introduction of Section 153A and in case of search, there shall be block assessment for six years. Search assessments/block assessments under Section 153A are triggered by conducting of a valid search under Section 132 of the Act, 1961. The very purpose of search, which is a prerequisite/trigger for invoking the prov....
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....on of the search under Section 132 or making of requisition under Section 132- A, as the case may be, shall abate. (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or Section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to subsection (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside Explanation.-For the removal of doubts, it is hereby declared that,- (i) save as otherwise provided in this section, Section 153- B and Section 153- C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year." 11. As per the provisions of Section 153A, in case of a search under Section ....
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.... a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy. 12. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under Section 153A of the Act is linked with the search and requisition under Sections 132 and 132A of the Act. The object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of....
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....saged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs. Accordingly, the addition made by the AO and sustained by the CIT (A) on the basis of the alleged LPS 1 & 2 is not sustainable and liable to be deleted on this ground alone. 6.2 Further it is also undisputed fact that the AO has not confronted the alleged LPS 1 & 2 as well as the statement of Shri Dileep Gupta to the assessee and therefore, the assessee was not even given opportunity to put up its defense as well as cross examine Shri Dileep Gupta whose statement has been relied upon by the AO while making addition in question. Once the alleged incriminating material LPS 1 & 2 is not found and seized during the course of search and seizure of the assessee but was seized during the course of separate and distinct search and seizure operation of third person then making addition on the basis of the alleged documents as well as statement of third party without giving opportunity to the assessee ....
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....he price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions." 6.3 Accordingly addition made by the AO in violation of principle of natural justice is not sustainable and liable to be deleted on this ground alone. 7. The third objection raised by the assessee is regarding inadmissibility of the said Excel Sheet taken from laptop of Shri Dileep Gupta in contravention of provisions of section 65B(4) of the Indian Evidence Act as evidence. An identical issue has been considered by us in case of M/s Asnani Builders & Developers Ltd. in ITA No. 11 to 14/Ind/2014 vide even dated order in para 6.6 & 6.7 as under: "6.6 The Ld. AR has also raised a strong objection against the admissibili....
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....r section 65. These provisions are very important. They govern the integrity of the electronic record as evidence, as well as, the process for creating electronic record. Importantly, they impart faithful output of computer the same evidentiary value as original without further proof or production of original. Accordingly, while handling any digital evidence, the procedure has to be in consonance of these provisions." 40. Further, we find that section 65B(2) of the Indian Evidence Act clearly specifies the following conditions with respect to obtaining of Digital Evidence both for primary and secondary evidences. The relevant extract of section 65B(2), (3) and (4) are as follows: "(2) The conditions referred to in sub-section (1) in respect of a computer output shall be the following, namely: (a) the computer output containing the information was produced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over 181 that period by the person having lawful control over the use of the computer; (b) during the said period, information of t....
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....ever is appropriate) shall be evidence of any matter stated in the certificate; and for the purposes of this sub-section it shall be sufficient for a matter to be stated to the best of the knowledge and belief of the person stating it." 41. We find from the written submissions of the Ld. AR that the provisions of section 65B(2)(d) as extracted above was not followed by the Revenue. The Revenue failed to identify the primary system giving particulars of the device involved in the production of the data was produced by a computer. 42. Further, we have also considered the cases referred to by the Ld. AR. In the case of Vetrivel Mineral (supra) the Hon'ble Madras High Court has observed as under: "24. As contended by the writ petitioners, when the entire assessment has been framed only on the basis of the so-called electronic record which are said to be copies of Excel Sheet, Excel work note book etc., non-compliance of section 65(B) of the Indian Evidence Act renders the document inadmissible in the eye of law as held by the Supreme Court in the judgment Anvar P.V. case (supra). ''14. Any documentary evidence by way of an electronic reco....
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....d; (c) The certificate must furnish the particulars of the device involved in the production of that record; (d) The certificate must deal with the applicable conditions mentioned under section 65B(2) of the Evidence Act; and (e) The certificate must be signed by a person occupying a responsible official position in relation to the operation of the relevant device. 16. It is further clarified that the person need only to state in the certificate that the same is to the best of his knowledge and belief. Most importantly, such a certificate must accompany the electronic record like computer printout, Compact Disc (CD), Video Compact Disc (VCD), pen drive, etc., pertaining to which a statement is sought to be given in evidence, when the same is produced in evidence. All these safeguards are taken to ensure the source and authenticity, which are the two hallmarks pertaining to electronic record sought to be used as evidence. Electronic records being more susceptible to tampering, alteration, transposition, excision, etc. without such safeguards, the whole trial based on proof of electronic records can lead to travesty of justice. 17. Only if....
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....ord, admissibility and proof thereof must follow the drill of section 65B, which is a special provision in this behalf - sections 62 to 65 being irrelevant for this purpose. However, section 65B(1) clearly differentiates between the "original" document - which would be the original "electronic record" contained in the "computer" in which the original information is first stored - and the computer output containing such information, which then may be treated as evidence of the contents of the "original" document. All this necessarily shows that section 65B differentiates between the original information contained in the "computer" itself and copies made therefrom - the former being primary evidence, and the latter being secondary evidence. 32. Quite obviously, the requisite certificate in sub-section (4) is unnecessary if the original document itself is produced. This can be done by the owner of a laptop computer, a computer tablet or even a mobile phone, by stepping into the witness box and proving that the concerned device, on which the original information is first stored, is owned and/or operated by him. In cases where "the computer", as defined, happens to be a part of....
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....ificate as prescribed under the Indian Evidence Act 1872 and hence cannot be enforced. Therefore, the Certificate obtained in the case of the assessee cannot be regarded as a legally valid certificate u/s. 65B of the Indian Evidence Act and the same has no recognition in the eyes of law. The information contained in the seized pen drive is could not be considered as admissible evidence as per the provisions of section 65B of Indian Evidence Act. Therefore, we are of the considered view that such inadmissible seized material is not sustainable in the eyes of law. Thus, the assessment order passed in the case of the assessee on 31-3-2022 is not a valid assessment order in the eyes of law and it deserves to be set aside." 6.7 Therefore, the said seized document in the shape of excel sheet taken from the laptop of Shri Dileep Kumar Gupta cannot be considered as an admissible evidence in the absence of the procedure followed as required u/s 65B(4) of the Evidence Act.. In view of the facts discussed above we are of the considered view that the A.O has recorded the satisfaction to initiate the proceedings u/s 153C of the Act only on the presumption that the assessee has earned u....