TaxTMI 
TaxTMI 
2025 (12) TMI 1831
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....e take up the appeal of the assessee for assessment year 2017-18 for adjudication. The relevant grounds raised by the assessee are reproduced as under: 1. On the facts and circumstances of the case in law, Ld. CIT(A) erred in confirming the stand of A.O. about that issuing the notice u/s 153C of the Act without DIN. It is blatant contravention of the Circular No. 19/2019,dated 14-8-2019 issued by the CBDT 2. On the facts and circumstances of the case in law, Ld. CIT(A) erred in confirming addition without referring to any incrementing document. Besides, he has not referred to any incriminating material in the satisfaction note issued to the Appellant. 3. On the facts and circumstances of the case in law, Ld. CIT(A) erred in confirming stand of A.O. for not sharing incrementing documents found during the course of search of rubberwala group which was pertained to the appellant. 4. On the facts and circumstances of the case in law, Ld. CIT(A) erred in confirming stand of A.O. about the not providing statement and materials used by him against the appellant 5. On the facts and circumstances of the case in law, Ld. CIT(A) erred in confirming....
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....al year 2016-17 corresponding to assessment year 2017-18 (ii) Rs.6,09,200/- in financial year 2017-18 corresponding to assessment year 2018-19 ; (iii) Rs.5,78,700/- in financial year 2018-19 corresponding to assessment year 2019-2020. In this manner total amount of Rs. 12,87,900/- has been claimed by Shri Imran Ansari as received in cash against the shop sold to the assessee based on the excel sheet. 4.3 On the basis of such material, notice under section 153C of the Act was issued to the assessee on 29.09.202. In response, the assessee filed a return on 18.10.2022 declaring Nil income. The assessment was completed under section 153C read with section 153A of the Act on 22.03.2024, wherein the Assessing Officer treated the cash alleged component as unexplained expenditure/investment. For the assessment year 2017-18, in the order dated 22.03.2024 passed u/s 153C read with section 153A of the Act an addition of Rs.1,00,000/- was made under section 69C of the Act. 5. On appeal, the assessee primarily challenged the addition on the ground that (i) the addition was based solely on third-party statements and documents, (ii) the incriminating material was never supplied to the asses....
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.... including the area, rate, registration charges, and other terms and conditions. Shri Imran Ansari further stated that, upon the purchaser agreeing to the terms, a token amount, stated to range between Rs. 50,000/- and Rs. 2,00,000/-, was collected in cash, and upon receipt thereof, the shop would be provisionally booked in the name of the purchaser. He claimed that, thereafter, a small diary was handed over to the purchaser, wherein the cash amounts received were noted. He would then intimate the details of the transaction to Shri Tabrez Shaikh, Chairman and Managing Director of RHIL. According to him, the balance consideration was thereafter paid by the purchaser in agreed instalments, and upon completion of the formalities, the shop was registered either in the name of the purchaser or in the name specified by such purchaser. He further explained that the sale price of the shops was determined by Shri Tabrez Shaikh, having regard to factors such as the floor on which the shop was situated and its proximity to the atrium. He stated that each floor was divided into four levels based on proximity to the atrium, with Level-1 shops, being closest to the atrium, commanding the highest....
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.... the amount in Rs. accepted as token in cash at the time of booking of shop from buyer as mentioned in Column B. L Date This is the date of the amount paid in cash mentioned in Column K. M Token Amount B This means the amount in Rs. accepted as second token amount in cash from buyer as mentioned in Column B. N Date This is the date of the amount paid in cash mentioned in Column M. O 1st inst. Payment This means the amount in Rs. accepted as first instalment amount in cash from buyer as mentioned in Column B. P Date This is the date of the amount paid in cash mentioned in Column O. Q 2nd Inst. Payment This means the amount in Rs. accepted as Second instalment amount in cash from buyer as mentioned in Column B. R Date This is the date of the amount paid in cash mentioned in Column Q. S 3rd Inst. Payment This means the amount in Rs. accepted as third instalment amount in cash from buyer as mentioned in Column B. T Date This is the date of the amount paid in cash mentioned in Column S. U Penalty This means th....
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....has not been sold. This is initial of my name which was put to identify unsold shops. D Mobile This means the mobile number of the buyer whose name has been mentioned in Column B. E Shop No. This means the Shop number on the floor. On each floor, the shop number starts from 1 and goes up to the maximum number. F Area Old Area of the shops 6.5 Further, in response to Question No. 26 of his statement, Shri Imran Ansari elaborated upon the manner in which buyers were informed of the payment structure and the procedure followed for collection of amounts through cash and banking channels. For the sake of completeness, the substance of his response is summarised below. Shri Imran Ansari stated that, at the time of booking of a shop, the buyer was informed of the respective components of the consideration payable in cash and through cheque or banking channels. According to him, payments were made by the buyers in accordance with the agreed schedule, and in cases of delay, he would contact the buyers telephonically to remind them of the pending payments. He further stated that cheques were handed over to him by the buyers at the offi....
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.... buyer at the time of booking of shop. I mention the amount of cash along with date of payment in that diary and sign after each entry. Parallelly, I update my Excel File named "consolidated 1 2 3 balance" which has been mentioned above." 6.6 Further, in response to Question No. 27 of his statement, Shri Imran Ansari stated that he would accompany the buyers to Shri Abrar Ahmed, who was stated to be the person entrusted with handling cash transactions on behalf of the Rubberwala Group. He deposed that, upon receipt of cash from the buyer, Shri Abrar Ahmed would orally confirm such receipt to him, whereafter he would update the relevant entries in the diaries and the corresponding Excel sheets maintained by him. Shri Imran Ansari further stated that the cash so received by Shri Abrar Ahmed was thereafter handed over to Shri Tabrez Shaikh. 6.7 On the basis of the aforesaid Excel sheets maintained by Shri Imran Ansari, the Assessing Officer observed that the assessee had booked a shop in the Platinum Mall project and had allegedly made cash payments aggregating to Rs.12,87,900/-, spread over three assessment years, namely Assessment Years 2017-18 to 2019-20. The Assessing Office....
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....h circumstances are warranted as in the documents collected during the search and survey proceedings in the case of M/s Bait-Al-Tamur Co., the name and PAN of the assessee (ACM- Ashok Chimanlal Mehta) was clearly mentioned in respect of unaccounted purchase of Rs. 13,81,350/- from M/s Bait-Al- Tamur Co. during the F.Y.2017- 18 relevant to A.Y.2018-19. Further, these facts in the pendrive were also confronted to Shri Rajal Narendra Ashar (proprietor of M/s Bait-Al-Tamur Co.) and in his statement recorded on oath u/s. 131 of the Act, he admitted the fact that the pen drive contained a list of out of books sales. The Hon'ble Rajasthan High Court in the case of Rameshwarlal Mali vs. CIT 256 ITR 536( Raj.) has held that "there is no provision for permitting the cross examination of the persons whose statements were recorded during survey." In CIT v. Metal Products of India (1984) 150 ITR 714 (P&H), it was held that the AO may gather information in any manner he likes, behind the back of the assessee and utilize the same against the assessee, even if it does not, in all respects satisfy the requirements of the Indian Evidence Act. What is necessary is that he should....
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....rness is shown by the decision-maker to the man proceeded against, the form, features and the fundamentals of such essential procedural propriety being conditioned by the facts and circumstances of each situation, no breach of natural justice can be complained of. Unnatural expansion of natural justice without reference to the administrative realities and other factors of a given case can be exasperating. Courts cannot look at law in the abstract or natural justice as a mere artifact ... If the totality of circumstances from denial of reasonable opportunity the Court will decline to be punctilious or fanatical as if the rules of natural justice were sacred scriptures." 8.5. Duties and obligations go hand in hand and the appellant cannot merely harp on technicalities even while failing to discharge the onus laid on him. 8.6. In the case of Hersh W Chadah V. DDIT, 43 SOT 544, the Hon'ble ITAT has held that :- "6.14 It will also be worthwhile to consider the nature of burden of proof on the Assessing Officer for proving a fact or circumstance in the income-tax proceedings. The questions raised about the tax liability by the Assessing Officer are to be an....
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.... The interests of justice equally demand that the guilty should be punished and that technicalities and irregularities which do not occasion failure of justice are not allowed to defeat the ends of justice. Principles of natural justice are but the means to achieve the ends of justice. They cannot be perverted to achieve the very opposite end. That would be a counter-productive exercise." The Hon'ble Court further held that "(6) While applying the rule of audi alteram partem [the primary principle of natural justice] the Court/ Tribunal/ Authority must always bear in mind the ultimate and over-riding objective underlying the said rule, viz., to ensure a fair hearing and to ensure that there is no failure of justice. It is this objective which should guide them in applying the rule to varying situations that arise before them." 8.12. Right to Cross-examination as held in various decisions, is not absolute in nature. (i) The Hon'ble Supreme Court has held in the case of State of J&K Vs. Bakshi GulamMohd. AIR 1967 (SC) 122 and in the case of Nath International Sales Vs. UOI AIR 1992 Del 295 that the right of hearing does not include a right to cross-examine. ....
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....e impugned order does is that it refers to the evidence on the record which militates against the version of the appellant and then states that the appellant had not been able to meet the inferences arising there from. In our opinion, the High Court was right in holding that the burden of proof had shifted on to the appellant after the Customs Authorities had informed the appellant of the results of the enquiries and investigations.". (iv) In Surjeet Singh Chhabravs Union of India &Ors on 25 October, 1996, the Hon'ble SC held that cross-examination was not an absolute right. This case was cited by Hon'ble Andhra Pradesh High Court in its order dated 31.10.2017 in M/s Manidhari Stainless Wire Private Limited Vs. Union of India, (Writ Petition No. 5917 of 2017), wherein it held "25. In Surjeet Singh Chhabra v. Union of India, the Supreme Court was concerned with a case arising under the Foreign Exchange Regulation Act and the Customs Act. Though the decision in Surjeet Singh Chhabra was a very brief order, the Supreme Court rejected the contention that the denial of cross-examination tantamounted to the violation of the principles of natural justice. (v) In ....
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....eposition made by the employee of Rubberwala group, the buyers were given a diary, in which, the details of cash received were acknowledged. The Ld A.R submitted the search officials did not find any such diary with the assessee during the course of search operation conducted in his hands. Hence the statement so given by the employee stands disproved. He submitted that the AO has simply relied upon third party statement without bringing any independent material to support the same. The AO also did not provide the opportunity of cross examination despite being asked by the assessee. Accordingly, by placing reliance on various case laws, the Ld A.R submitted that this addition should be deleted. 16. We heard Ld D.R and perused the record. We notice that the AO has made the addition on the basis of evidence found in the premises of third party and also on the basis of deposition made by the employee of the third party. No corroborative material was brought on record to support the statement so given, which is mandatory when the assessee denies any such payment. Further, the AO also did not provide opportunity of cross examination to the assessee, even after the said request w....
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....hose materials in an abated assessment years. Accordingly, we reject these legal grounds of the assessee. 19. In view of the foregoing discussions, we are of the view that the addition of Rs. 18,64,200/- made by the AO cannot be sustained. Accordingly, we set aside the order passed by Ld CIT(A) and direct the AO to delete this addition." 13. In the appeal filed by the assessee, the addition of alleged cash payment of Rs. 18,64,200/- in respect of purchase of shop confirmed by Ld CIT(A) is being assailed. 14. We noticed earlier that the assessee had purchased a shop in the purchase commercial premises developed by Rubberwala group. During the course of search conducted in their hands, incriminating documents containing details of cash collected on sale of various shops were found. The employee of Rubberwala group confirmed that the cash has been collected from the buyers of shops. However, the assessee denied payment of cash. However, the AO relied upon the materials found in the case of Rubberwala group and accordingly made addition of Rs. 18,64,200/- in AY 2020-21. The Ld CIT(A) also confirmed the same. 15. The Id A.R submitted that the addition....
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....d 19.08.2021. He verified the contents of the Excel file and affirmed the truth of Shri Imran Ansari's statement. Moreover, the Rubberwala Group itself admitted to having received such on-money (cash component), offered the same as additional income, and paid taxes thereon. 10.9 Further, proposition of law laid down discussed in para (supra) was not placed before the Hon'ble ITAT, which clearly establish that when statements are relied upon by the Department as secondary evidence in collaboration with other evidences, then the denial of right to cross-examination cannot be taken as plea to not make the addition. Therefore, decision relied upon by the assessee, in my considered opinion, is not of any help to him. 10.10 Thus, Hon'ble ITAT decision relied upon by the appellant does not aid his case. Unlike the present matter, where there is clear linkage between the documents found, the assessee's transaction, and the admission of parties involved, the cases cited by the appellant pertain to instances where uncorroborated third- party statements were the sole basis of addition. Here, the evidence is not only specific but also substantiated. 1....
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....ion that the assessment in the earlier years operates as res judicata or that it precludes the assessee from raising the plea as done in the instant case. We overrule the contention. 10.15 The appellant's argument that the absence of a diary (as claimed by the employee of the Rubberwala Group) disproves the entire case is fallacious. The addition was not based on the alleged diary alone, but on robust and corroborated digital evidence, supported by multiple sworn depositions and voluntarily admitted by the developer group. 10.16 Accordingly, given the detailed evidentiary support, corroboration by key persons, and admission by the builder group, the addition made by the AO is legally and factually justified." 7. Before us, the Ld. counsel for the assessee filed a Paper Book containing pages 1 to 58 and relied on the submissions made before the lower authorities. The learned counsel for the assessee reiterated that the addition rests entirely on third-party material found during the search of the Rubberwala Group and on the statement of Shri Imran Ansari. It was submitted that: ● no document bearing the assessee's handwriting or signature ....
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....sis of the material found in possession of the third party, statement of the third party and the disclosure made by them, bind the assessee for the addition without providing opportunity of confronting the material to the assessee. 8.4 In the case assessment has been initiated u/s 153C of the Act and under the provisions of section 153C of the Act material pertaining to the assessee which is basis of the recording of satisfaction u/s 153C must have been forwarded to the Assessing Officer of the assessee. But despite specific request by the assessee no such material was provided to the assessee. The assessee also sought for the opportunity to cross-examine Shri Imran Ansari but both the Assessing Officer as well as Ld. CIT(A) has declined on the ground that was not the sole basis for making addition. But we find that no other evidence has been brought on record by the lower authorities to substantiate that the cash on-money was actually paid by the assessee to Shri Imran Ansari accept confession of Shri Imran Ansari. 8.5 The Ld. counsel for the assessee submitted that said Rubberwala Group has credited 100% amount of the cash in its books of accounts against offering 8% of inc....
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....search action. This materially weakens the evidentiary value of the statement. 8.9 Further, although the assessment was framed under section 153C of the Act, the incriminating material forming the basis of satisfaction was admittedly not furnished to the assessee in entirety. The assessee also specifically sought cross-examination of Shri Imran Ansari, whose statement constitutes the fulcrum of the addition. The request was declined on the premise that the statement was not the sole basis of the addition. However, on a careful examination of the record, we find that there is no other independent evidence apart from the said statement and the Excel sheet maintained by the same person. 8.10 It is well settled that while income-tax proceedings are not governed by strict rules of evidence, the principles of natural justice cannot be diluted where additions are founded on adverse material collected from third parties. Where such material is relied upon as substantive evidence, denial of effective opportunity to rebut or cross-examine strikes at the root of fairness of the proceedings. 8.11 In the absence of any corroborative material directly connecting the assessee with the al....
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....ation where facts are disputed. 8.13 Considerable reliance has been placed on the alleged admission by the Rubberwala Group that it received on-money and offered the same to tax. This, however, cannot be determinative of the assessee's liability. It is trite law that an admission by one party cannot be used as conclusive evidence against another, unless the latter is afforded an opportunity to test and rebut such admission. The assessee is not estopped from disputing the correctness or applicability of such admission to his case, particularly when the alleged payment is denied and no independent corroboration exists. 8.14 The learned Commissioner (Appeals) has sought to distinguish the coordinate Bench decision in Rajesh Jain primarily on the ground that the assessee therein was subjected to search, whereas the present assessee was not. This distinction is wholly irrelevant to the core issue of evidentiary reliance on third-party material without cross-examination. Considerable reliance has been placed on the alleged admission by the Rubberwala Group that it received on-money and offered the same to tax. This, however, cannot be determinative of the assessee's liabili....
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....de of 42 lakh on account of alleged payment of on-money in cash towards purchase of a flat lies in a search and seizure operation conducted in case of Hiranandani Group and related persons. Though, in the assessment order the Assessing Officer has not discussed in detail the nature of incriminating material/ evidence available on record to indicate payment of on-money in cash by the assessee to M/s. Crescendo Associates, however, from the show cause notice dated 4th March 2015, which is reproduced by the Assessing Officer in the assessment order, it appears that the incriminating materials are in the form of pen drive found and seized from the residence of one of the employees of Hiranandani Group and a statement recorded under section 132(4) of the Act from Shri Niranjan Hiranandani, Director and Promoter of the Group, wherein, the details of on- money paid by buyers / prospective buyers to Hiranandani Group concerns are mentioned and further, in the statement recorded under section 132(4) of the Act on 14th March 2014, Shri Niranjan Hiranandani, has admitted receipt of on-money in cash towards sale of flats / shops. Thus, it is clear that except these two pieces of evidences the ....
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....whose statements were relied upon. This, in my view, is in gross violation of rules of natural justice and against the basic principle of law. In this context, I may refer to the decision of the Tribunal, Mumbai Bench, in Nikhil Vinod Agarwal (supra). Thus, for the aforesaid reason, the addition made cannot be sustained. 11. Even otherwise also, the addition made is unsustainable because of the following reasons. As discussed earlier in the order, the basis for addition on account of on-money is the information contained in the pen drive found during the search and seizure operation and the statement recorded under section 132(4) of the Act. As regards the information contained in the pen drive, it is the contention of the assessee that the said pen drive was not found from the possession of the assessee but in course of search and seizure operation conducted in case of a third party. Therefore, in absence of further corroborative evidence to establish that the contents of the pen drive are correct and authentic to the extent that the assessee paid on- money in cash, no addition can be made under section 69B of the Act. Further contention of the assessee is that in the sta....
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....ther person whose statements were relied upon. 8.21 It is well settled that while the rigours of the Evidence Act do not strictly apply to income-tax proceedings, additions must nevertheless be founded on material which is reliable, cogent, and has a direct nexus with the assessee. Third-party statements, cannot be treated as conclusive unless supported by independent corroborative evidence. At best, such material may give rise to suspicion, but suspicion, however strong, cannot take the place of proof. 8.22 Equally well settled is the principle that if the Assessing Officer proposes to rely upon any adverse material to the detriment of the assessee, such material must be confronted to the assessee, and a reasonable opportunity must be granted to rebut or contradict the same. Where the addition rests substantially on a third-party statement, denial of cross-examination strikes at the very root of the matter and amounts to a serious breach of the principles of natural justice. The Hon'ble Supreme Court in Andaman Timber Industries v. CCE (supra) has categorically held that failure to grant such opportunity renders the order a nullity. 8.23 In the present case, it is und....