AI Drafter 
TaxTMI 
TaxTMI 
2026 (5) TMI 1483
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....ce premise of M/s Dengen Products India LLP (DPI for Short) on 08.12.2018 were conducted, however, Mr. PrateekChitkara was not present at the premises and the proceedings were conducted in the presence of Mr. Shiv, employee of PrateekChitkara. During the search action, allegedly 10 spiral diaries were found, seized and marked as Annexure A-1 to A-10. The ld. AO records that there were various cash entries in the said diaries which appeared to be relating to the cash committees and various other entries of cash received from and paid to various persons. 3. The ld. AO mentions that statement of one Mr. Shiv was recorded u/s 132(4) of the Act wherein he had stated that in the instant case, Prateek Chitkara used to organize such cash committees from his office premises. Each committee consisted 15-16 members and monthly contribution from each member ranged from thousands to lakhs. The monthly capital raised ranged between 24 lakhs to 80 lakhs. The job of Mr. Shiv in this system was to collect and distribute cash on the directions of Sh. Prateek Chitkara and write down the same in the diaries and he has admitted the same in his statement recorded on Oath. 4. The diaries seized fro....
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.... marked as Annexure A-1 to A-10 seized from the premises of M/s Dengen Products India LLP and copies of statements of Mr. Shiv and Sh. PrateekChitkara on 23.02.2023 through the last known email id i.e., [email protected]. However, assessee has furnished any explanation to the same till date and I am left with no option but to pass the assessment order on the basis of material facts available on record and on the following facts: i. Assessee has outrightly denied any link to the incriminating material in spite of the fact that there is incrimination material available on record in the form of handwritten diaries corroborated by the statements on Oath of Mr. shiv and Sh. PrateekChitkara already confronted to the assessee. ii. There is credible incriminating material available on record in the form of handwritten diaries as discussed in previous Paras which establishes that assessee does in fact participated in the said committees. iii. Assessee was allowed the opportunity of being heard by issue of summons under section 131(1A) of the Act by Investigation Wing to which he failed to comply and thus did not avail the opportunity allowed iv. Assessee has not placed on record....
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....ation. Adverse evidence and material relied upon in the order, to reach the finality, should be disclosed to the assessee. But this rule is not applicable where the material or evidence used is of collateral nature. (iii) In Kanungo& Company vs Collector of Customs And Ors. on 7 February, 1972, AIR 1972 SC 2136, a 3-judge bench of the Hon'ble Apex Court held that "We may first deal with the question of breach of natural justice. On the material on record, in our opinion, there has been no such breach. In the show-cause notice issued on August 21, 1961, all the material on which the Customs Authorities have relied was set out and it was then for the appellant to give a suitable explanation. The complaint of the appellant now is that all the persons from whom enquiries were alleged to have been made by the authorities should have been produced to enable it to cross-examine them. In our-opinion, the principles of natural justice do not require that in matters like this the persons who have given information should be examined in the presence of the appellant or should be allowed to be cross-examined by them on the statements made before the Customs Authorities. Accordingl....
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....n therein clearly establish that when statements are relied upon by the Department as secondary evidence in collaboration with other evidence, then the denial of right to cross-examination cannot be taken as plea to not make the addition. The department had in fact issued summons u/s 131 to the appellant. The AO has asked for compliance to notices issued u/s 142(1) of the IT Act, 1961. This being the case, the appellant is not justified in ignoring such summons and yet claim that adequate opportunity was not provided. The ground raised by the appellant regarding denial of cross-examination stands DISMISSED." 11. After taking into consideration the contentions and the material on record we are of the considered view that in the case in hand primarily a statement of Mr. Shiv who was alleged employee of Prateek Chitkara became foundation to draw all the inferences about assessee's investment in the chit fund, then, Prateek Chitkara statement was recorded u/s 131(1A) and what comes up is that in question No. 5 he was questioned with regard to some diaries Annexure A1 to Annexure A10 which were allegedly impounded during search action at the premises 5-79, Ground Floor, G.K. 2, New D....