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2018 (12) TMI 1751 - AT - Income TaxAssessment u/s 153A - 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? - satisfaction recorded by the Assessing Officer - HELD THAT:- Allegation of the 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 to hold that the proceedings u/s 153C of the Act have not been validly initiated and, therefore, deserve to be quashed. Gross violation of principles of natural justice - No cross examination was allowed by the revenue - Revenue accepted what was returned by Shri R.K. Miglani and on 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. 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. 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. Assessment barred by limitation - As mentioned elsewhere, the assessment proceedings u/s 153C of the Act were started on 11.12.2006 when the Assessing Officer received alleged satisfaction note and the documents belonging to the assessee. As per the provisions of the Act contained in section 153B(b) of the Act, as stated hereinabove, the Assessing Officer had to frame assessment order by 22.03.2008, excluding the period of stay and adding the same period to nine months 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. 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. Appeals of the assessee are allowed. Addition u/s 68 - HELD THAT:- The linkage between the material seized from UPDA’s premise as well as statement of Shri R.K. Miglani was not established through any objective material. Without bringing any cogent material on record, it is merely a presumption that the UPDA has been primarily engaged in the work of facilitating the collection and payment of bribe money. Some more issues have been raised by the ld. DR. (i) On the basis seized from the residence of Shri R.K. Miglani, M/s Radico Khaitan Ltd surrendered ₹ 27.50 crores and Balrampur Chini Mills surrendered ₹ 8.90 crores. We fail to understand how the action of some other tax payer is relevant in the case of the appellant. The wisdom of Radico Khaitan Ltd and Balrampur Chini Mills cannot be considered and should not be considered in the hands of the appellant. Incriminating documents were also seized from the laptop of Shri Ajay Agarwal, General Manager of M/s Radico Khaitan Ltd. Again, it is between M/s Radico Khaitan Ltd and its General Manager to explain the incriminating documents. The assessee cannot be held to be responsible for the same. 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 Exemption u/s 11 and 12 - HELD THAT:- In the light of our decision relating to the additions made u/s 68 of the Act, we are of the considered opinion that the benefits of section 11 & 12 cannot be denied to the assessee. Cancellation of registration granted u/s 12AA - enhancement of the income by the ld. CIT(A) from NIL - HELD THAT:- Since the registration was cancelled, the assessee was assessed in the status of an AOP. The ld. CIT(A) found that surplus of receipt over expenditure is ₹ 4,88,140/-. According to the ld. CIT(A), this income should have been brought to tax by the Assessing Officer. The ld. CIT(A) issued notice of enhancement in reply to which the assessee strongly contended that it is not carrying out any business activity and that it has not earned during the year under appeal which can be subjected to income tax. It was further brought to the notice of the first appellate authority that the assessee has only received membership subscription of ₹ 22.34 lakhs. The surplus of ₹ 4.88 lakhs is the unspent amount from out of the membership subscription received during the year under appeal. Since we have already pointed out that registration u/s 12AA of the Act has been protected till 01.10.2014, therefore, the action of the ld. CIT(A) is uncalled for. We accordingly, direct the Assessing Officer to delete the addition
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