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2017 (9) TMI 955 - ITAT DELHIProceedings initiated under section 153C - illegal payments - whether any document belonging to the assessee has been found which can form the basis of initiation of proceedings u/s 153C? - Held that:- Since the instant proceedings were initiated under section 153C of the Act and no incriminating material has at all been found, as such, the additions made by the AO and sustained by the Ld. CIT (A) is wholly unsustainable in view of the judgments of jurisdictional High Court in the cases of CIT vs RRJ Securities Ltd [2015 (11) TMI 19 - DELHI HIGH COURT] and CIT vs Kabul Chawala [2015 (9) TMI 80 - DELHI HIGH COURT]. Hence, the aforesaid additions made by the AO and sustained by the Ld. CIT (A) are hereby deleted, being beyond the scope of section 153C of the Act. As already held that documents being relied upon by the revenue are unreliable being unauthenticated and hence dumb. The fact remains that the author of the documents has also not been produced for the cross examination and, therefore, on the basis of such documents, addition cannot be made. We also find strength in the contention of learned counsel of assessee that statements recorded behind the back of assessee, i.e. of Sh. R.K. Miglani and that of the directors of M/s Prudent Distillery cannot be relied upon and need to be excluded for consideration as none of them have been produced for cross – examination. The assessee’s specific request for cross examination was rejected by the AO of his order on the ground that Shri Miglani is employee of assessee. This finding of AO, as has been noted above is factually incorrect. Sh. R.K. Miglani was the General Secretary of M/s UPDA and not an employee of assessee and, therefore, it was incumbent upon the AO/ Ld. CIT (A) to have provided the opportunity to cross – examine the person on whose statement reliance was being placed by the Department. This is an elementary principle of law and not providing such opportunity is fatal to the proceedings and no additions, can be made on the basis of such statement as has been held by the Hon’ble Apex Court in its judgment in the case of M/s Andaman Timber Industries vs CCE (2015 (10) TMI 442 - SUPREME COURT ). Disallowance on account of “Tips” - Held that:- With respect to the said disallowance, we find that the ITAT had held that 1/3rd of the expenditure could alone have been held to be disallowable. It is held, here as well, following the order of ITAT, that the ld. CIT (A) was not right either in law or on facts to have sustained the entire disallowance. Not allowed the carry forward of long term capital loss and also challenged the short deduction under section 80M - Held that: On perusal of the assessment order, we find that no discussion has been made while making the said disallowance by the AO and further, the same has not been allowed in the computation of tax being worked out by the AO and thus, we hold here that, the same needs to be allowed in view of the inadvertent mistake having crept in the order of assessment.
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