TMI Blog2019 (3) TMI 1841X X X X Extracts X X X X X X X X Extracts X X X X ..... y. His statement was recorded on 27.06.2014, in continuation to the statement recorded on 26.06.2014. As declared an income of ₹ 9 crores stated to have been earned by him from commodity trading till that date. During the course of regular assessment proceedings, he was extensively examined on 01.09.2016 by issue of summons under section 131(1). In response to Question Nos.14, 15 and 16, he stated that he had done trading in commodity, and looking to the market conditions prevailing at that time, it was not improbable to have earned income of this volume. Further, in response to Question No.18, he was required to submit documentary evidences in support of income declared by him. In response to Question No.21, he gave complete details supported by documentary evidences relating to commodity trading. In response to Question No.22, he gave complete information about income declared and income tax, wealth tax payments made by him on such income/wealth. In response to Question No.23, he gave complete information, name-wise, of the booking receipts as had been impounded during the course of survey at the office premises of Shri Anoop Asthana, and in the end, he categorically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant and the managing director of the appellant-company repeatedly denied having received any on-money. 2.2 That the CIT(A)/ assessing officer erred on facts and in law in making the aforesaid addition on the basis of ex-parte material, in gross violation of principles of natural justice. 2.3 That the CIT(A) erred on facts and in law in holding that surrender of ₹ 9 crores by Shri Sanjeev Kumar Jhunjhunwala was unsubstantiated and based on flimsy grounds and such surrender allegedly confirms modus operand!, as mentioned by the assessing officer, used the appellant company. 2.4 Without prejudice, the CIT(A)/ assessing officer erred on facts and in law in adding sum of ₹ 9 crores assessed as income in hands of managing director of the appellant, Shri Sanjeev Kumar Jhunjhunwala, leading to double taxation of such sum. 3. That the CIT(A)/ assessing officer erred on facts and in law in charging/ computing interest under sections 234B and 234D of the Act. 2. The brief facts of the case are that a search and seizure operation under section 132(1) of the Income-tax Act, 1961 was carried out at the residential and business premises of Dolphin Developers/Anand/Ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant and the managing director of the appellant-company who repeatedly denied having received any on-money. 2.3 That the assessing officer erred on facts and in law in making the aforesaid addition on the basis of ex-parte material, in gross violation of principles of natural justice. 7. In its written submissions, the assessee, inter alia, submitted before the ld. CIT(A) that:- It is, at the outset, emphatically submitted that the aforesaid huge addition of ₹ 64 crores made by the Assessing Officer is patently illegal and bad in law since the same has been made merely on the basis of presumptions, conjectures and surmises, without any credible material/corroborative evidence to establish receipt of any income/cash, outside the books of account, as explained hereunder: The Assessing Officer, as stated above, has simply primarily relied upon the contents of a diary purportedly impounded from the premises of one property broker, Mr. Anoop Ashthana, and his exparte statement recorded during the course of survey at his premises. Re: diary impounded from premises of Mr. Anoop Asthana It is respectfully submitted that the contents of the aforesaid diary foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y negative inference against the appellant. 8. The ld. CIT(A) has held, inter alia, as follows:- 5.6 The incriminating document at page 163, 164 and 165 contains the details related to the Emerald Garden project being developed by the appellant company. Page No.163 of the Annexure A-4 mentions certain figures which establishes that the money was receiving sale consideration in white and black for example for a 3 BHK flats 2080 square feet, the quantum of while and black mentioned are ₹ 1,20,57,600/- and ₹ 42,12,000/- respectively. Further, another entry is made for the 3 BHK flat admeasuring 2325 sq. ft. area, wherein amount of white and black mentioned is 1,34,81,400/- and ₹ 47,08,125/- respectively. Thus, Assessing Officer has calculated the quantum of black amount at 25% of the total consideration. During survey proceedings the statement of Shri Anoop Asthana, proprietor of AAP was recorded. For answer to question No.22, in the statement recorded on 25/6/2014 Shri Anoop Asthana has categorically stated that page 163 of the annexure A-4 are the entries relating to Emerald Garden and the amount of white and black represents the amount of cheque and cash. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deducted by appellant company. It is not denied by the ld. AR that no commission whatsoever was paid to AAP. Thus the relation between the appellant company and Shri Anoop Asthana proprietor of AAP is established as property developer and the property broker. The incriminating document found from premises of AAP establishes the fact that appellant company is engaged in receiving 25% of the sale consideration in cash, which is unaccounted in the books of the appellant. Assessing Officer has correctly extrapolated the modus operandi for calculating unaccounted income of appellant. 5.11. The contention of the ld. AR that no opportunity of cross examination to Shri Anoop Asthana was ever accorded to the appellant is far away from truth and reality of the case. The incriminating document found and impounded in the business premises of the Anoop Asthana and the incriminating statements of Shri Anoop Asthana was specifically confronted to the Managing Director of the appellant company Shri Sanjeev Kumar Jhunjhunwala on 27/1/2014. This statement is part and parcel fo the assessment order page 6 to 9, therefore, the plethora of the case laws cited by the ld. AR of the appellant does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered from the possession of the assessee. Then, page 163 is undated, whereas pages 164 and 165 do not pertain to the year under consideration. It is only in the statement of Shri Anoop Asthana, that he attributed account of these documents to the assessee. 11. First and foremost, the subject diary/pages were found and impounded from the premises of Shri Anoop Asthana, a third party, and not from the appellant. Further, Shri Anoop Asthana, in his statement, had stated that entries in the said diary were made by staff member of Shri Anoop Asthana, without providing details of the so-called staff member. Thus, the author of the so-called diary in question is not even known till date. Shri Anoop Asthana nowhere stated that the diary was written by someone on his behalf and/or on his instructions. Therefore, the entire case is fundamentally based on a mere inference drawn about the nature of the contents of the diary written by someone unknown, more particularly, only on the statement of Shri Anoop Asthana about the contents of the diary written by someone else. Since the diary was undisputedly found from the possession of Shri Anoop Asthana and not from the appellant, the contents o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in his personal capacity. Therefore, the recordings in the diary could not be held to be related to the other sale of flats undertaken by the appellant, without any involvement of Shri Anoop Asthana. Even the names of the individual parties appearing in the diary alongside the amounts are, statedly, completely alien to the appellant. The appellant had not sold any flat in the Emerald Garden project to the persons named in the said diary. Therefore, the very contents of the diary are suspect and are totally unreliable/unauthentic. No adverse inference can be drawn from the payment receipts (3 in number) in respect of flats in Emerald Garden project found from the premises of Shri. Anoop Asthana, particularly when nothing adverse has been stated by Shri. Asthana in this regard. 12. These facts, as specifically contended by the assessee before the ld. CIT(A) have not been rebutted and the ld. CIT(A) has gone merely by the uncorroborated unilateral statement of Shri Anoop Asthana, qua which, no opportunity of cross-examination of the deponent, Shri Anoop Asthana, was afforded to the assessee at any stage whatsoever. It is not sufficient to observe, as has been done by the ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it has been held that the statement of a witness recorded at the back of the assessee has to be excluded, as the same was relied on without giving any opportunity to crossexamine the person giving statement; and that the assessment based on such a statement is a statement rendered as based on no evidence and, accordingly, liable to be annulled. 16. In Amarjit Singh Bakshi (HUF) vs. ACIT (supra), it has been held that opportunity to cross-examine the person giving a statement of culpable nature has to be given; and that in the absence of such an opportunity being given to the affected person, the statement ceases to be material for the purposes of assessment. 17. In CIT vs. SMC Share Brokers Ltd. (supra), it was held that a statement given by a broker at the back of the assessee could not be used to the detriment of an assessee and dismissal of Revenue s appeal was held to be justified. 18. In the case of Andaman Timber Industries vs. Commissioner of Central Excise , 281 CTR 241(SC), it has been held that the assessee was manufacturing ply-woods and related products in its factory. Some of those products were sold from factory premises only to certain buyers. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice. Impugned order as passed by CESTAT was set aside. Appeal allowed. 19. Evidently, the three documents found during survey from the possession of Shri Anoop Asthana, in the absence of the statement of Shri Anoop Asthana, do not have any value, particularly in the face of the fact that they are not corroborated by any independent evidence. Page No. 163: This is un-dated, but name of the project 'Emerald Garden' launched by the appellant was mentioned there. With reference to this, Shri Anoop Aathana who had been examined by the Authorised Officers, stated categorically that he had been working as a broker for last 30 years and all the prominent Developers of Kanpur were his clients. In his subsequent statement which appears at page 31 to 36 of the synopsis dated 10.12.2018, and in response to question no.7, he stated that 'cash money' as mentioned there was subject to negotiation between the Customer and the Developer. He further stated in his reply that he was not concerned with the 'incoming' and 'out-going' 'lenden payments. Page Nos. 164 and 165: These were dated 18.01.2014 and 13.01.2013, falling in the assessment years 2014-15 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation about income declared and income tax, wealth tax payments made by him on such income/wealth. In response to Question No.23, he gave complete information, name-wise, of the booking receipts as had been impounded during the course of survey at the office premises of Shri Anoop Asthana, and in the end, he categorically stated that it would not be proper to draw adverse inference in relation to income from commodity trading. 16. Thus, one cannot but come to the inexorable conclusion that the order under appeal suffers from the vice of not taking into consideration the assessee s contention, which contention also does not stand rebutted, that it was not provided with any opportunity of crossexamining Shri Anoop Asthana. 17. In view of the above, we hold that: (i) the case of the assessee has been prejudiced for want of providing him opportunity of cross-examination of Shri Anoop Asthana, whose unilateral statement recorded exparte qua the assessee has been made the sole basis of the addition, thereby violating the principles of natural justice; and (ii) the other material, i.e., three pages of the diary found in the search do not establish any case for addition in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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