TMI Blog2023 (1) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... enforcing both the demands which amount to double taxation of same income. We make it clear that the department cannot enforce both the demands, which is created vide assessment u/s. 143(3) of the Act and assessment framed u/s. 153A of the Act. As held by Hon'ble Delhi High Court in the case of Kabul Chawla cited (supra), department has to ensure the enforcement of only one demand created consequent to the search action and framing of assessment u/s. 153A of the Act and we direct accordingly. Addition under the terminology 'Unaccounted Fees Received in Cash' - addition was made based on certain notings found impounded material labelled as GEF(M)/133A/5 which are loose sheets as, holding the same to be fees received in cash - HELD THAT:- Adverting to the facts of present case, AO relied upon the statement recorded and loose sheets impounded during the survey u/s. 133(1A) for making addition. The statement of D.V. Guruprasad cannot be relied in its entirety and this is not supported by any corroborated evidence. In such circumstances, we are not in a position to uphold the addition made on that basis. Accordingly, the Ld. CIT(A) is justified in deleting the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income. 2. On facts and in circumstances of the case, whether the Ld. CIT(A) is right in not considering the fact that the Hon'ble High Court of Karnataka in the case of Canara Housing Development Co Ltd. vs DCIT held that When once the proceedings are initiated under Section 153A of the Act, the legal effect is even in case where the assessment order is passed it stands reopened . 3. On facts and in circumstances of the case, whether the Ld. CIT(A) is right in not considering the fact that the AO has to re-determine the total income of the assessee by considering all the additions made previously while completing the order u/s. 153A of the IT Act. 3. Similarly, common grounds are raised in CO Nos. 12 to 14/Bang/2021 and hence, the grounds raised in CO 12/Bang/21 are reproduced as under:- 1. The order of the learned Commissioner of Income-tax [Appeals] in so far as it is against the Respondent/Cross Objector are opposed to law, weight of evidence, natural justice, facts and circumstances of the case. 2. The order passed by the learned Commissioner of Income-tax [Appeals] in so far as it is in favour of the Respondent/Cross Objector is just and proper and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature and in the absence of incriminating materials or in the absence of such recording, no notice under section 153A of the Act should have been issued on the facts and circumstances of the case. 7. Without Prejudice the Respondent/Cross Objector denies itself liable to be assessed over and above the total income reported by the Respondent/Cross Objector of Rs. NIL/under the facts and circumstances of the case. 8. The learned Commissioner of Income-tax [Appeals] failed to appreciate that centralization of case of the Respondent/Cross Objector from regular circle to Central Circle is without proper jurisdiction and the order of assessment passed under section 153A r.w.s. 143[3] of the Act is without jurisdiction on the facts and circumstances of the case. 9. Without prejudice to the right to seek waiver as per the parity of reasoning of the decision of the Hon'ble Apex Court in the case of Karanvir Singh 349 ITR 692, the Respondent/Cross Objector denies itself liable to be charged to interest under section 234B Et 234C of the Income Tax Act under the facts and circumstances of the case. Further the levy of interest under section 234B a 234C of the Act is also ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon to make the addition was not found in any premises belonging to the appellant but alleged to have been found during the course of a survey proceeding u/s. 133A of the Act in a premise not belonging to the appellant and not connected to the appellant. Thus, the appellant contends that initiation of proceedings u/s. 153A is incorrect and invalid. 9. The appellant has also objected to the notice under section 143(2) of the Act dated 17/05/2018 since it does not contain the date of return of income filed by the appellant and states that the said notice was issued to the Principal Officer which is also bad in law. The appellant states that under section 143(2) ought to have been issued to the appellant M/s. Gokula Education Foundation (Medical). Further the notice issued is not as per the prescribed format as per Notification No. F. No. 225/157/2017/ITA II dated 23/06/2017. Consequently no valid mandatory notice under section 143(2) has been issued to the appellant to pass a valid assessment order u/s. 143(3) of the Act. 10. In the assessment order, the AO did not accept appellant's NIL returned income of and concluded the assessment by following the assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of proceeding u/s. 153A is found to be untenable and hence rejected. 13. It is also not necessary that every premises which is covered under a search needs to necessarily belong to the appellant. Any premises which the investigating authorities opine may contain material etc pertaining to the appellant can be searched u/s. 132 or subjected to survey u/s. 133A. Thus, the objection on the ground that the material relied upon to initiate proceedings u/s. 153A was not found in the premises belonging to the appellant and therefore no proceeding can be initiated u/s.153A is untenable and is therefore rejected. 14. Further the objection that the notice issued u/s. 143(2) is defective as it is not in the prescribed format, that notice was not drawn up on the appellant but on a person other than the appellant and that it also does not specify the return of income which is proposed to be assessed cannot be the basis of declaring it as null and void. The defects, if any, pointed out by the appellant are curable in nature and does not vitiate the assessment proceedings by virtue of the provisions of section 292BB of the Act. This objection is also rejected. 15. The appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment proceedings and which are subject matter of appeals at different stages of appellate proceedings thereafter. 21. This has only resulted in all those additions which were made in earlier assessment proceedings being repeated and the same has resulted in duplicity of additions and duplicity of demand as these additions have been made substantively. The interest of the department is not in any way disturbed on these issues as the original assessments are in various stages of appeal for the respective assessment years. 22. The jurisdictional Hon'ble High Court of Karnataka in the case of Canara Housing Development Co Ltd. vs DCIT 48 Taxmann.com 98 has said that in the case of a person searched and whose assessments are to be initiated and completed u/s. 153A of the Act, it is expressly provided that the Assessing Officer shall assess or reassess the total income of six assessment years which means the said total income includes income which was returned in the earlier return, the income which was unearthed during search and income which is not the subject matter of aforesaid two income. If the Commissioner has come across any income that the assessing authority h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of section 153A of the Act could be summarized as follows as per the order of the Mumbai Special Bench in the case of All Cargo Global Logistics Ltd. Vs. Deputy Commissioner of Income-tax (23 taxmann.com 103):- Scenario Scope of Section 153A 1. No return of income is filed by the assessee (whether or not time limit to file return of income has expired Since no return has been filed, the entire income shall be regarded as undisclosed income. Consequently, AO would have the authority/jurisdiction to assess the entire income, similar to jurisdiction in regular assessment u/s 143(3). No requirement to restrict to documents found during the course of search. 2. Return of Income just filed by the assessee return yet to be processed u/s 143(1) Time limit for issue of notice u/s 143(2) not expired. Since return filed is even pending to be processed, the return would be treated as pending before the AO. Consequently, AO would have authority/jurisdiction to assessee the entire income, similar to jurisdiction in regular assessment u/s 143(3). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment u/s. 143(3) of the Act were already completed before the date of search i.e. on 23.8.2016. As held by Special bench in the case of All Cargo Global Logistics cited(supra) that in case of assessments that are abated, the AO retains the original jurisdiction as well as jurisdiction conferred u/s. 153A of the Act for which assessment shall be made for each of 6 assessment years separately. In other cases, income that has already been assessed, the assessment u/s. 153A of the Act will be made on the basis of incriminating material, which in the context of relevant provisions means - (i) books of accounts, other documents, found in the course of search but not produced in the course of original assessment (ii) undisclosed income of property disclosed in the course of search. The argument of the Ld. A.R. is that in these assessment years, there were no seized material none the less incriminating materials to frame the assessment u/s. 153A of the Act and there is no necessity of framing any assessment u/s. 153A of the Act. On the other hand, Ld. D.R. submitted that AO has not made any addition in these assessment years. He only reinstated the income what is assessed u/s. 143(3) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the addition was originally made had not abated. In the absence of any further additions being made to the returned income, other than the additions which already form part of the assessments which have not abated, the AO ought to have accepted the returned income as it is. This ground of the appellant is upheld. For these above findings, we do not find any infirmity and these findings of Ld. CIT(A) is in conformity with the judgement of Hon'ble Delhi High Court in the case of Kaul Chawla cited (supra). Before us, Ld. A.R. made one more plea that the department enforced the demand created in these assessment years consequent to assessment u/s. 143(3) of the Act and also demand created as a result of assessment framed u/s. 153A of the Act and he also filed copies of demand notices for these assessment years stating that department is enforcing both the demands which amount to double taxation of same income. We make it clear that the department cannot enforce both the demands, which is created vide assessment u/s. 143(3) of the Act and assessment framed u/s. 153A of the Act. As held by Hon'ble Delhi High Court in the case of Kabul Chawla cited (supra), department has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tural justice, facts and circumstances of the case. 2. The order passed by the learned Commissioner of Income-tax [Appeals] in so far as it is in favour of the Respondent/Cross Objector is just and proper and the appeal filed by the department requires to be dismissed on the facts and circumstances of the case. 3. Without prejudice, the Respondent/Cross Objector denies itself liable to be assessed under section 143[3] r.w.s. 153A of the Act under the impugned order, on the ground that:- i. The search initiated in the case of the Respondent/Cross Objector is illegal and ultra vires the provisions of section 132[1][a], [b] [c] of the Act; ii. That the search is conducted not on the basis of any prior information or material inducing any belief but purely on the suspicion and therefore, the action under section 132[2] is bad in law [224 ITR 19 [SC]] and consequent assessment under section 153A is null and void-ab-initio on the parity of the ratio of the decision of the Hon'ble Apex Court in the case of Ajith Jain, reported in 260 ITR 80. iii. The learned authorities below have not discharged the burden of proving that there is a valid initiation of searc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor from regular circle to Central Circle is without proper jurisdiction and the order of assessment passed under section 153A r.w.s. 143[3] of the Act is without jurisdiction on the facts and circumstances of the case. 10. Without prejudice to the right to seek waiver as per the parity of reasoning of the decision of the Hon'ble Apex Court in the case of Karanvir Singh 349 ITR 692, the Respondent/Cross Objector denies itself liable to be charged to interest under section 234B Et 234 C of the Income Tax Act under the facts and circumstances of the case. Further the levy of interest under section 234B a 234C of the Act is also bad in law as the period, rate, quantum and method of calculation adopted on which interest is levied are all not discernable and are wrong on the facts of the case. 11. The Respondent/Cross Objector craves leave of this Hon'ble Tribunal, to add, alter, delete or substitute any of the grounds urged above. 12. In view of the above and other grounds that may be urged at the time of hearing of the Cross Objection, your Respondent/Cross Objector humbly pray that the Cross Objection may be allowed in the interest of equity and justice. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. 17. Please keep in mind that you are giving this statement under oath and consequence of giving false statement on oath. You are once again asked to explain these notings in detail. Ans: As I see the notings are of the year 2013. At this point of time really do not remember. 18. Please go, through the contents of Page no. 5 of impounded document GEF(M)/133A/05 which has the following notings and explain the same. Ans: I do not recollect at this stage under what circumstances I made this notings in the above said page and what it represents. 19. Please state what does VIT , Rew , PES and R stand for? Ans: When I had written these notings, I might have known but right now I don't recollect as it is very old. 20. It appears that R stands for receipt. What do you say? Ans: It might be. 21. Please go through the contents of Page no. 4 of impounded document GEF(M)/1343A/05 which has the following notings and explain the same. Ashok D.R. Varsha 75, 00,000 Jeria 1,85,00,000 Sujata ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the AO failed to conduct further inquiry which is necessary. The assessee states that AO without conducting further inquiry merely relied upon impounded material and statements which do not confirm receipt of monies and proceeded to make additions which is impermissible in law. It is contended that an addition cannot be made merely based on a material which does not stand corroborated. 11.3. According to Ld. CIT(A), as seen from the assessment order, the AO has relied upon statements recorded and loose sheets impounded during survey u/s. 133A for making additions. A reading of sworn statements of Mr. D.V. Guruprasad shows that he is rather ambivalent in his replies, neither confirming nor denying, categorically the veracity of the documents shown to him. This certainly leads one to infer that there is a distinct possibility that impounded document represents amounts actually 'received by. assessee. But unfortunately, the same is not backed by any other evidence as assessment order is based on statements recorded and loose sheets. In this context, it may be noted that inquiry from persons, students who allegedly paid the money was essential to corroborate the loose shee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to cross-examine the manager of the bank with reference to the statements made by him. Nor was there any explanation regarding what happened when the manager appeared in obedience to the summons referred to in the letter dated March 9, 1957, and what statement he had made. 11.5. Further, the Hon'ble Calcutta High Court in the case of CIT v. Eastern Commercial Enterprises, 210 ITR 103 (Cal) held as follows:- 8. We have considered the contesting contentions of the parties. It is true that Shri Sukla has proved to be a shifty person as a witness. At the earlier stages, he claimed all his sales to be genuine but before the Assessing Officer in the case of the assessee, he disowned the sales specifically made to the assessee. This statement can at the worst show that Shri Sukla is not a trustworthy witness and little value can be attached to what he stated either in his affidavits or in his examination by the Assessing Officer. His conduct neutralises his value as a witness. A man indulging in double-speaking cannot be said by any means a truthful man at any stage and no court can decide on which occasion he was truthful. If Shri Sukla is neutralised as a witness what rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat no evidence or document can be relied upon unless it is shown to the assessee. Kishanchand Chellaram v. CIT. Similarly, the requirement of cross-examination as the requirement of the rules of natural justice has been underlined by the Bombay High Court in Vasanji Ghela and Co. v. CST [1977] 40 STC 544. It is trite law that cross-examination is the sine qua non of due process of taking evidence and no adverse inference can be drawn against a party unless the party is put on notice of the case made out against him. He must be supplied the contents of all such evidence, both oral and documentary, so that he can prepare to meet the case against him. This necessarily also postulates that he should cross-examine the witness hostile to him. 10. In any case, we have nothing to rely upon to come to a decision this way or the other. The first thing is that which of the statements of Shri Sukla is correct, is anybody's guess. Therefore, it is necessary to delve out the truth from him and for that matter a cross-examination is necessary. Secondly, if the statement of Shri Sukla as a witness against the adverse party, the assessee, is relied upon as truthful, still remains the ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e party against whom such oral evidence is being used must be allowed the opportunity of examining the person because, both the types of evidences need to weighed properly before rejecting one for the other. 11.8. In Sunrise Tooling Systems Pvt. Ltd. v. ITO 2012 (11) TMI 1081 - ITAT Delhi, the Tribunal held as under:- The opportunity of cross-examining, Sh. Nitin Aggarwal, a partner of Shree Laxmi Industrial Corporation has also been denied to the assessee on wrong basis by the authorities below that an opportunity of cross examines needs to be given only when third party is involved or a party not known to the assessee or a hostile witness is involved and further that the onus for cross examination does not lie with the department but lies with the assessee who allegedly made purchases in his books of accounts from the said concerns. 11.9. Same view has been taken in the case of Sri Devaraj Urs Educational Trust for Backward Classes (Regd.) Vs. ACIT in ITA Nos. 500 to 506/Bang/2020 dated 16.8.2021. 11.10. Adverting to the facts of present case, AO relied upon the statement recorded and loose sheets impounded during the survey u/s. 133(1A) for making addition. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the books of account has been regularly kept, the nature of occupation is an eminent factor to be considered. In order to charge any person with liability it is not enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is also necessary for the person relying upon those entries to prove that they were in accordance with facts. In other words, even correct and authentic entries in books of account cannot without independent evidence of their trustworthiness fix a liability upon a person. (C. B. I. v. V.C. Shukla 1998 3 SCC 410 at 425). Entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. Para 37. In Beni v. Disan Dayal it was observed that entries in books of account are not by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) as to the value of entries in the books of account, that such statement shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. It has been held even then independent evidence is necessary as to trustworthiness of those entries which is a requirement to fasten the liability. 12.3. Ld. CIT(A) further observed that the AO has relied upon the sworn statements of Mr. D.V. Guruprasad which are ambivalent in nature which certainly necessitates further inquiry and gathering of clinching/formidable evidence to justify the addition. 12.4. Ld. CIT(A) observed that inquiry from persons, students who allegedly paid the money was essential to corroborate loose sheets as required by the decision of Hon'ble Supreme Court in the case of CBI vs VC Shukla (1998) 3 SCC and Common Cause (A Registered Society) and Others vs Union of India in Writ Petition Civil Appeal No. 505 of 2015 reported in 394 ITR 220(SC). And since such corroborative evidence is not found, one is constrained from sustaining an addition so made in view of the decisions of the Hon'ble Supreme Court cited s ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
