Commissioner Of Income Tax-Central, New Central Revenuebuilding , Statue Circle, Jaipur(Raj v. Connected With

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR (1) D.B. Income Tax Appeal No. 197 / 2012 Commissioner of Income Tax-central, New Central RevenueBuilding , Statue Circle, Jaipur(Raj) ----Appellant Versus Smt. Sunita Dhadda, 1387, Ganesh Bhawan, Partanion, Ka Rasta,Johri Bazar, Jaipur ----Respondent Connected With (2) D.B. Income Tax Appeal No. 199 / 2012 Commissioner of Income Tax-central, New Central Revenue Building , Statue Circle, Jaipur(Raj) ----Appellant Versus Shri Padam Chand Dhadda, 1387, Ganesh Bhawan, Partanion, Ka Rasta, Johri Bazar, Jaipur ----Respondent Connected With (3) D.B. Income Tax Appeal No. 198 / 2012 Commissioner of Income Tax-central, New Central Revenue Building , Statue Circle, Jaipur(Raj) ----Appellant Versus Smt. Vijay Laxmi Dhadda, 1387, Ganesh Bhawan, Partanion, Ka Rasta, Johri Bazar, Jaipur ----Respondent _____________________________________________________ For Appellant(s) : Mr. Anil Mehta with Mr. Sameer Sharma.For Respondent(s) : Mr. Siddharth Ranka with Mr. Muzaffar Iqbal. _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGHJudgment 31/07/2017 1.In all these appeals, common questions of law and facts are involved, hence they are decided by this common judgment. 2.By way of these appeals, the appellant has challenged thejudgment and order of the Tribunal whereby the tribunal hasdismissed the appeal of the department and allowed the appeal of the assessee. 3.While admitting the appeals, this court framed the following substantial questions of law:- Income Tax Appeal No.197/2012 admitted on 12.08.2015. (i)Whether the Tribunal was justified in deleting theaddition of Rs.4,07,00,000/- made by the AssessingOfficer and confirmed by the CIT(A), being on money’received with respect to subject land of the assesseefrom Unique Group, which was evidence by thedocument seized during search u/s 132 of the Act? (ii)Whether on the premises that Ravindra SinghThakkar on whose testimony the present assessee wasalso fasten the tax liability supposed to be affordedopportunity of cross-examination in the facts of theinstant case and what would be the effect of theopportunity of cross-examination if not beenafforded?” Income Tax Appeal No.199/2012 admitted on 30.08.2016. (i)Whether the Tribunal was justified in deleting theaddition of Rs.7,50,00,000/- made by the AssessingOfficer and confirmed by CIT (A), on substantive basis,being on money received with respect to land of theassessee from Unique Dream Builders Pvt. Ltd. (UBD),which was evidenced by document seized duringsearch u/s 132 of the Act. Income Tax Appeal No.198/2012 admitted on30.08.2016 “(i) Whether the Tribunal was justified in deleting theaddition of Rs.7,50,00,000/- made by the AssessingOfficer and confirmed by CIT(A), on substantivebasis, being ‘on money’ received with respect to landof the assessee from Unique Dream Builders Pvt. Ltd.(UDB), which was evidenced by document seizedduring search u/s 132 of the Act?” 4.Counsel for the appellant taken us to the order of CIT(A) andcontended that the order passed by the A.O is required to berestored inasmuch as both the authorities committed serious errorin relying on the documents and the material which was found bythe A.O. The A.O., after considering the matter has rightly came tothe conclusion that on the basis of the document which wasrecovered from Mr. Thakkar, the income ought to have been addedin the account of the assessee. However, CIT(A) and Tribunal afterconsidering the same allowed the appeal of the assessee. 5.Counsel for the respondent has relied upon the followingjudgments :- “1.CIT VS. Dinesh Kumar Sharma, ITANo.14/2005 decided on 24.04.2017 holding asunder:- 4.We have heard the learned counsel for theappellant. 4.Counsel for the appellant taken us to the order of CIT(A) andcontended that the order passed by the A.O is required to berestored inasmuch as both the authorities committed serious errorin relying on the documents and the material which was found bythe A.O. The A.O., after considering the matter has rightly came tothe conclusion that on the basis of the document which wasrecovered from Mr. Thakkar, the income ought to have been addedin the account of the assessee. However, CIT(A) and Tribunal afterconsidering the same allowed the appeal of the assessee. 5.Counsel for the respondent has relied upon the followingjudgments :- “1.CIT VS. Dinesh Kumar Sharma, ITANo.14/2005 decided on 24.04.2017 holding asunder:- 4.We have heard the learned counsel for theappellant. 4.1However, the Tribunal while considering the case,held as under:-held as under:- 7. By considering the totality of facts andcircumstances of the case, it appears that the lowerauthorities presumed that the above mentionedproperties belong to the assessee. But they have notverified in whose name these properties are recordedin the record of the Municipal Council/JDA or any otheragency of the Government. It appears that the lowerauthorities made the addition by adopting short-cutmethod in the name of the assessee without verifyingthe record. No case is made out about the benamitransactions by the lower authorities. In thesecircumstances, we deem it fit to set aside both the orders of the lower authorities and restore the matterback to the AO to examine the issue from the record ofthe Municipal council/JDA or any Government agency.If the properties stand in the name of the assessee,only then the addition can be made in the hands of theassessee. However, the AO will be at liberty toexamine the case for making the addition in the handsof the persons in whose name the property is recordedin the record of the Municipal Council/JDA etc., if needbe. With this direction, the issue is set aside to the AOwho will adjudicate in the light of above discussion andby considering the entire evidence as per law but byproviding reasonable opportunity to the assessee. 10. After hearing rival submissions and considering thematerial available on record, we are of the view thatthe AO made the addition de hores without having anyspecific material on hand. The said property atHanuman Nagar D is not identifiable as the HanumanNagar D is the name of the colony. The ld. A/Rsubmitted that the assessee is not owning anyproperty in Hanuman Nagar D nor he had sold anyproperty during the assessment year underconsideration. 11. From the AO’s order, it appears that he has notbrought any evidence to establish the ownership of theassessee or to identity the property. It was expectedfrom the AO to verify the ownership of the property orthe transaction done by the assessee through the Sub-Registrar’s office. When assessee has categoricallydenied any involvement, then it was expected at leastfrom the first appellant authority to ask for the remandreport from the AO. We are satisfied that in the instantcase the addition was made merely on the basis ofpresumption, surmises and conjectures. No additioncan by made on the basis of presumption in the blockassessment. Therefore, by taking into considerationthe ration laid down in the case of Union of India vs.Ajit Jain And Another, 260 ITR 80, we set aside boththe orders of the lower authorities and delete theaddition of Rs. 1,86,500/-. The assessee will get therelief of this amount. 16. By considering the totality of facts andcircumstances of the case, it appears that thestatement of Shri Dinesh Kumar Sharma was recordedon 11.1.2001. In his statement, he merely submittedthat he has taken the loan on interest from Shri AshokKumar Jain (question no. 11). The said loan was partlyrepaid. Balance of Rs. 45.000/- was continued. Thesaid loan was taken for purchasing the property in thename of wife of the assessee. In these circumstances,we are of the view that when a person is taking the loan from Shri Ashok Kumar Jain, then he cann’t havethe business relation with him in normalcircumstances. The amount of Rs. 45,000/- wasoutstanding. If he has the brokerage business withShri Ashok Kumar Jain, this amount might have beenadjusted. In other words, the assessee might have nottaken to amount on loan. The assessee has expresslydenied that he was having any brokerage businesswith Shri Ashok Kumar Jain. The assessee is a wholetime director in M/s. Shakambri Stone Crushing Pvt.Ltd. The department has made no enquiry whetherany brokerage payment was received either fromassessee or from any other sources. Even theproperties were not identified for which the brokeragewas received. If he was a broker, he might have signedas a witness on the transfer deed or diary or at leastsome document at the time of registration oragreement, but in the instant case no material wasbrought on record to prove that he was havingbrokerage business. Moreover, no chance was given forto confront Shri Ashok Kumar Jain. Shri Ashok KumarJain never stated of having the brokerage businesswith the assessee. In these circumstances, we find nojustification for making the addition of Rs. 1,13,000/-.Therefore, by setting aside both the orders of thelower authorities, we delete this addition. Thus, theassessee will get the relief of this amount. 19. After hearing rival submissions and considering thematerial available on record, we are of the view thatthe AO made the first two additions in summarymanner as appears from his order. The CIT(A) hasconfirmed the order without any discussion. The abovetwo additions are without any material. The AO madeno attempt to bring any corroborative evidence orspecific circumstances for the presumption. Hence theaddition of Rs. 3,24,000/- for the year 1997-98 andaddition of Rs. 35,000/- for the years 1998-99 aredeleted as the same are de hors without any material. 23. After hearing rival submissions and considering thematerial available on record, it appears that in theprevious ground the AO made the addition for takingthe advances from Shri Ashok Kumar Jain on interest.But in this ground, the AO made the addition for givingthe advances to Shri Ashok Kumar Jain. Both the factsare contradictory to each other. It appears that theadditions were made merely on the basis ofpresumption and surmises. Neither any statement wasrecorded of Shri Ashok Kumar Jain nor any admissionwas obtained from the assessee regarding the saidadvances. No corroborative evidence was collected bythe lower authorities to justify the additions. No specific circumstances like admission, signature,statement etc. were mentioned before making thepresumption pertaining to the said additions. For thesimilar reasons mentioned above, we find nojustification for upholding the orders of the lowerauthorities. 5.The judgment which has been cited by thecounsel for the appellant in the case of P.R. Metrani Vs.Commissioner of Income Tax, Bangalore (2007) 1 SCC789 is not applicable in the facts of the present caseinasmuch as the duplicate books of account were notof assessee but of Ashok Kumar Jain in whose books ofaccount the name of assessee was found.” “2.CIT Jaipur vs. Vijendra Kumar Kankaria ,ITA No. 175/2010 decided on 29.05.2017observing as under:- specific circumstances like admission, signature,statement etc. were mentioned before making thepresumption pertaining to the said additions. For thesimilar reasons mentioned above, we find nojustification for upholding the orders of the lowerauthorities. 5.The judgment which has been cited by thecounsel for the appellant in the case of P.R. Metrani Vs.Commissioner of Income Tax, Bangalore (2007) 1 SCC789 is not applicable in the facts of the present caseinasmuch as the duplicate books of account were notof assessee but of Ashok Kumar Jain in whose books ofaccount the name of assessee was found.” “2.CIT Jaipur vs. Vijendra Kumar Kankaria ,ITA No. 175/2010 decided on 29.05.2017observing as under:- “7. He has also taken us to the judgment of Punjaband Haryana High Court in case of Navdeep Dhingravs. Commissioner of Income Tax reported in [2015]232 Taxman 0425 (P & H) wherein in para 3 & 4 heldas under:- “3. Aggrieved by this order, the assessee filed anappeal, which was dismissed by the CIT(A). Theassessee thereafter filed an appeal before the ITATwhich was also dismissed. 4. Counsel for the assessee submits that as admittedlythe appellant retracted his admissions, the retractedadmissions/statement could not form the basis ofadditions without any corroborative evidence. Counselfor the assessee draws attention to Office Note(Annexure-A6) dated 26.12.2008, wherein, the DeputyCommissioner of Income Tax has recorded that noother incriminating document except the slip pad hasbeen recovered by the revenue. Counsel for theassessee submits that though an admission is the bestevidence of a fact but where an admission is madeunder coercion and pressure and is retracted, therevenue cannot place reliance upon such an admissionand must, therefore, look for other evidence to proveits case. The absence of any other evidence rendersthe impugned orders which are based upon retractedstatements made by the assessee null and void. 8. However, counsel for the respondent contended thatthe view has been taken by the Supreme Court inrecent judgment in case of M/s Andaman TimberIndustries vs. Commissioner of Central Excise,Kolkata-II reported in [2015] 281 CTR 241 (SC)wherein it has been held as under:- “As mentionedabove, the appellant had contested the truthfulness of the statements of these two witnesses and wanted todiscredit their testimony for which purpose it wantedto avail the opportunity of cross-examination. Thatapart, the Adjudicating Authority simply relied uponthe price list as maintained at the depot to determinethe price for the purpose of levy of excise duty.Whether the goods were, in fact, sold to the saiddealers/witnesses at the price which is mentioned inthe price list itself could be the subject matter ofcross-examination. Therefore, it was not for theAdjudicating Authority to presuppose as to what couldbe subject matter of the cross-examination and makethe remarks as mentioned above. We may also pointout that on an earlier occasion when the matter camebefore this Court in Civil Appeal No. 2216 of 2000,order dated 17.03.2005 was passed remitting the caseback to the Tribunal with the directions to decide theappeal on merits giving its reasons for accepting orrejecting the submissions. In view of the above, weare of the opinion that if the testimony of these twowitnesses is discredited, there was no material withthe Department on the basis of which it could justifyits action, as the statement of the aforesaid twowitnesses was the only basis of issuing the ShowCause Notice. We, thus, set aside the impugned orderas passed by the Tribunal and allow this appeal.” 9. He has also relied upon another decision in case ofGopal Saran vs. Satyanarayan reported in AIR 1989Supreme Court 1141 wherein in para 5 it has beenheld as under:- 9. He has also relied upon another decision in case ofGopal Saran vs. Satyanarayan reported in AIR 1989Supreme Court 1141 wherein in para 5 it has beenheld as under:- “5. On the basis of the aforesaid, it was contendedthat it was the definite case of the defendant inExamination-in-chief, that the board belonged to himand that the defendant was carrying on his ownbusiness and that there was no dispute as to the sameby the plaintiff. It may be mentioned that the plaintiffhad not subjected himself to crossexamination in spiteof the order of the Court after the remand, therefore,it would not be safe to rely on the examination-in-chiefrecorded which was not subjected to cross-examination before the remand was made. If that isso, it will appear that there is no evidence of theplaintiff in respect of allegations in the plaint. Thisposition appears established from the facts on record.When the plaintiff appeared for evidence in rebuttal hecould have been cross-examined on these points. Itwas submitted that in rebuttal the plaintiff had statedonly with regard to the default in payment of rent butthe plaintiff had not chosen to support his plaint case.Before the defendant went to the witness box. Therewas no question of cross-examining the plaintiff travelling beyond the evidence of the plaintiff given inexamination-in-chief and thereby giving an opportunityto made out a case in cross-examination. It, therefore,appears from the pleadings and the evidence that therespondent did not make out any case of the appellantparting with possession by putting up the hoarding. Inexamination-in-chief also he did not make out such acase and on the contrary his case was that it was thedefendant-appellant who had put up the hoarding. Theplaintiff has made the evidence in examination-in-chiefnon est. It was the case of the defendant that he wascarrying on the business of advertisement by puttingup the hoardings of different parties. The board wasmade by him, paintings and writings were also doneby him and for putting the hoarding he charged fromhis customers. Therefore, it appears to us that thereare no clear findings that anybody was given lease oranybody was given the right to put up the hoardingand there was parting of possession in favour ofanyone else. It was, however, argued that even if theappellant had put the advertisement board hoardinghe was earning a huge amount by the same and thiswas a factor which would indicate that there wasparting of possession by him. It was, however,submitted on behalf of the appellant that when theshop had been let out to the defendant-appellant forcarrying on business it was the right of the defendant-appellant to carry on the business. It was legallypermissible to use the said shop room and also use theroof thereof and earn as much as could be done and assuch it is not parting with possession.” 10. In view of the above, the view taken by the CIT(A)which was confirmed by the Tribunal is just and properthough the amount which has taken as income fromcommission is taken on a reasonable side.” He has also relied on the following decisions:- “3. Common Cause (A Registered Society) andOrs. vs. Union of India (UOI) and Ors. “22. In case of Sahara, in addition we have theadjudication by the Income Tax SettlementCommission. The order has been placed on recordalong with I.A. No. 4. The Settlement Commission hasobserved that the scrutiny of entries on loose papers,computer prints, hard disk, pen drives etc. haverevealed that the transactions noted on documentswere not genuine and have no evidentiary value andthat details in these loose papers, computer print outs,hard disk and pen drive etc. do not comply with the He has also relied on the following decisions:- “3. Common Cause (A Registered Society) andOrs. vs. Union of India (UOI) and Ors. “22. In case of Sahara, in addition we have theadjudication by the Income Tax SettlementCommission. The order has been placed on recordalong with I.A. No. 4. The Settlement Commission hasobserved that the scrutiny of entries on loose papers,computer prints, hard disk, pen drives etc. haverevealed that the transactions noted on documentswere not genuine and have no evidentiary value andthat details in these loose papers, computer print outs,hard disk and pen drive etc. do not comply with the requirement of the Indian Evidence Act and are notadmissible evidence. It further observed that thedepartment has no evidence to prove that entries inthese loose papers and electronic data were keptregularly during the course of business of theconcerned business house and the fact that theseentries were fabricated, non-genuine was proved. Itheld as well that the PCIT/DR have not been able toshow and substantiate the nature and source ofreceipts as well as nature and reason of payments andhave failed to prove evidentiary value of loose papersand electronic documents within the legal parameters.The Commission has also observed that Departmenthas not been able to make out a clear case of taxingsuch income in the hands of the applicant firm on thebasis of these documents. 23. It is apparent that the Commission has recorded afinding that transactions noted in the documents werenot genuine and thus has not attached any evidentiaryvalue to the pen drive, hard disk, computer loosepapers, computer printouts. “4. Bhandari Construction Company vs. NarayanGopal Upadhye “15. When the terms of the transaction are reduced towriting, it is impossible to lead evidence to contradictits terms in view of Section 91 of the Evidence Act.There is no case that any of the provisos to Section 92of the Act are attracted in this case. Why the case thatwas sought to be spoken to by the respondent was notset up by him in the complaint was not explained. Thecase set up in evidence was completely at variancewith the case in the complaint. There was no evidenceto show that the consideration was to be Rs.9,00,000/-, especially, in the light of the recitals in theregistered agreement. There was also no document toshow the payment of Rs. 4,00,000/- by way of cash.Hence, this was no evidence to show that the balanceamount due under the agreement after the admittedpayment of Rs. 5,00,000/- was paid. The affidavitproduced before the State Forum and the evidence ofthe colleague of the respondent is clearly inadmissibleand insufficient to prove any such payment. Thus, thecase set up by the respondent in his evidence was notestablished. It is in that situation that the DistrictForum taking note of the payment of Rs. 5,00,000/-and the failure of the respondent to encash the chequefor Rs. 5,00,000/- that was returned by the company,ordered the complainant to pay the balance amountdue under the transaction as evidenced by the writteninstrument and take delivery of the premises in question and in the alternative gave him the option totake back the sum of Rs. 5,00,000/- with interest.Neither the State Commission, nor the NationalCommission has given any sustainable reason fordiffering from the conclusion of the District Forum. Amere suspicion that builders in the country are proneto take a part of the sale amount in cash, is no groundto accept the story of payment of Rs. 4,00,000/-especially when such a payment had not even been setup in the complaint before the District Forum. Not onlythat, there was no independent evidence to supportthe payment of such a sum of Rs. 4,00,000/- exceptthe ipse dixit of the respondent. The affidavit of thebank employee filed in the State Commission cannotcertainly be accepted as evidence of such a payment.Payment of such a sum had clearly been denied by thecompany. The respondent had, therefore, to provesuch a payment. His case that the purchase price wasRs. 9,00,000/-, itself stands discredited by the recitalsin the agreement dated 27.7.1997 in which thepurchase price was recited as Rs. 7,75,000/-. Not onlythat the respondent did not have a receipt forevidencing the payment of Rs. 4,00,000/- and if theamount was paid on 5.7.1997 or 8.7.1997, as claimedby him, he would certainly have ensured that thepayment was acknowledged in the agreement for saleexecuted on 27.7.1997. The agreement for saleactually speaks of his obligation to pay the balance tomake up Rs. 7,75,000/- after acknowledging receipt ofRs. 5,00,000/-. The respondent is not a layman. He isa practising advocate. According to him, he specialisesin documentation. He cannot, therefore, pleadignorance about the existence of the recital in theagreement. He cannot plead ignorance of itsimplications.” “5. Ayaaubkhan Noorkhan Pathan vs. The Stateof Maharashtra and Ors.Cross-examination is one part of the principles ofnatural justice: “23. A Constitution Bench of this Court in State of M.P.v. Chintaman Sadashiva Vaishampayan AIR 1961 SC1623, held that the rules of natural justice, requirethat a party must be given the opportunity to adduceall relevant evidence upon which he relies, and furtherthat, the evidence of the opposite party should betaken in his presence, and that he should be given theopportunity of cross-examining the witnessesexamined by that party. Not providing the saidopportunity to cross-examine witnesses, would violatethe principles of natural justice. (See also: Union of India v. T.R. Varma, AIR 1957 SC 882; Meenglas TeaEstate v. Workmen, AIR 1963 SC 1719; M/s. KesoramCotton Mills Ltd. v. Gangadhar and Ors. ,AIR 1964 SC708; New India Assurance Co. Ltd. v. Nusli NevilleWadia and Anr. AIR 2008 SC 876; Rachpal Singh andOrs. v. Gurmit Singh and Ors.AIR 2009 SC 2448;Biecco Lawrie and Anr. v. State of West Bengal andAnr. AIR 2010 SC 142; and State of Uttar Pradesh v.Saroj Kumar Sinha AIR 2010 SC 3131).24. In Lakshman Exports Ltd. v. Collector of CentralExcise (2005) 10 SCC 634, this Court, while dealingwith a case under the Central Excise Act, 1944,considered a similar issue i.e. permission with respectto the cross-examination of a witness. In the saidcase, the Assessee had specifically asked to be allowedto cross-examine the representatives of the firmsconcern, to establish that the goods in question hadbeen accounted for in their books of accounts, andthat excise duty had been paid. The Court held thatsuch a request could not be turned down, as the denialof the right to cross-examine, would amount to adenial of the right to be heard i.e. audi alterampartem. 28. The meaning of providing a reasonable opportunityto show cause against an action proposed to be takenby the government, is that the government servant isafforded a reasonable opportunity to defend himselfagainst the charges, on the basis of which an inquiry isheld. The government servant should be given anopportunity to deny his guilt and establish hisinnocence. He can do so only when he is told what thecharges against him are. He can therefore, do so bycross-examining the witnesses produced against him.The object of supplying statements is that, thegovernment servant will be able to refer to theprevious statements of the witnesses proposed to beexamined against him. Unless the said statements areprovided to the government servant, he will not beable to conduct an effective and useful cross-examination. 29. In Rajiv Arora v. Union of India and Ors. AIR 2009SC 1100, this Court held: Effective cross-examination could have been done asregards the correctness or otherwise of the report, ifthe contents of them were proved. The principlesanalogous to the provisions of the Indian Evidence Actas also the principles of natural justice demand thatthe maker of the report should be examined, save andexcept in cases where the facts are admitted or thewitnesses are not available for cross-examination orsimilar situation. The High Court in its impugned judgment proceeded to consider the issue on atechnical plea, namely, no prejudice has been causedto the Appellant by such non-examination. If the basicprinciples of law have not been complied with or therehas been a gross violation of the principles of naturaljustice, the High Court should have exercised itsjurisdictionofjudicialreview.30. The aforesaid discussion makes it evident that, notonly should the opportunity of cross-examination bemade available, but it should be one of effective cross-examination, so as to meet the requirement of theprinciples of natural justice. In the absence of such anopportunity, it cannot be held that the matter has beendecided in accordance with law, as cross-examinationis an integral part and parcel of the principles ofnatural justice.” “6.AndamanTimberIndustriesvs.Commissioner of C. Ex., Kolkata-II “4. We have heard Mr. Kavin Gulati, learned seniorcounsel appearing for the Assessee, and Mr. K.Radhakrishnan, learned senior counsel who appearedfor the Revenue. 5. According to us, not allowing the Assessee to cross-examine the witnesses by the Adjudicating Authoritythough the statements of those witnesses were madethe basis of the impugned order is a serious flaw whichmakes the order nullity inasmuch as it amounted toviolation of principles of natural justice because ofwhich the Assessee was adversely affected. It is to beborne in mind that the order of the Commissioner wasbased upon the statements given by the aforesaid twowitnesses. Even when the Assessee disputed thecorrectness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant thisopportunity to the Assessee. It would be pertinent tonote that in the impugned order passed by theAdjudicating Authority he has specifically mentionedthat such an opportunity was sought by the Assessee.However, no such opportunity was granted and theaforesaid plea is not even dealt with by theAdjudicating Authority. As far as the Tribunal isconcerned, we find that rejection of this plea is totallyuntenable. The Tribunal has simply stated that cross-examination of the said dealers could not have broughtout any material which would not be in possession ofthe Appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunalto have guess work as to for what purposes theAppellant wanted to cross-examine those dealers andwhat extraction the Appellant wanted from them. 6. As mentioned above, the Appellant had contestedthe truthfulness of the statements of these twowitnesses and wanted to discredit their testimony forwhich purpose it wanted to avail the opportunity ofcross-examination. That apart, the AdjudicatingAuthority simply relied upon the price list asmaintained at the depot to determine the price for thepurpose of levy of excise duty. Whether the goodswere, in fact, sold to the said dealers/witnesses at theprice which is mentioned in the price list itself could bethe subject matter of cross-examination. Therefore, itwas not for the Adjudicating Authority to presupposeas to what could be the subject matter of the cross-examination and make the remarks as mentionedabove. We may also point out that on an earlieroccasion when the matter came before this Court inCivil Appeal No. 2216 of 2000, order dated 17-3-2005[2005 (187) E.L.T. A33 (S.C.)] was passed remittingthe case back to the Tribunal with the directions todecide the appeal on merits giving its reasons foraccepting or rejecting the submissions. 7. In view the above, we are of the opinion that if thetestimony of these two witnesses is discredited, therewas no material with the Department on the basis ofwhich it could justify its action, as the statement of theaforesaid two witnesses was the only basis of issuingthe show cause notice.” “7. Principal Commissioner of Income TaxAhmedabad and Ors. vs. Kanubhai Maganlal Patel “12. We have heard Shri Varun K Patel, learnedcounsel appearing on behalf of the Revenue at length.It emerges from the impugned orders and even theorder passed by the Assessing Officer that theAssessing Officer made additions under Section 69B ofthe Act, relying upon the statements of two farmers[i.e., two sellers of the land] in which, according to theDepartment, they admitted of having received on-money in cash. However, it is required to be noted andit is an admitted position that the statements of thosetwo farmers upon which reliance was placed by theDepartment were not furnished/given to the assesseeto controvert the same. Not only that when a specificrequest was made before the Assessing Officer topermit them to cross examine the aforesaid twofarmers, the same was rejected by the AssessingOfficer. Under the circumstances, as rightly observedby the learned Tribunal, the Assessing Officer was notjustified in making addition under Section 69B of theAct solely relying upon the statements of those twofarmers. 13. We see no reason to interfere with the findingsrecorded by the learned Tribunal. We are in completeagreement with the view taken by the learned Tribunalwhile deleting the addition made by the AssessingOfficer made under Section 69B of the Act. Nosubstantial question of law arises.” “8. CIT v. Devendra Kumar Singhal 13. We see no reason to interfere with the findingsrecorded by the learned Tribunal. We are in completeagreement with the view taken by the learned Tribunalwhile deleting the addition made by the AssessingOfficer made under Section 69B of the Act. Nosubstantial question of law arises.” “8. CIT v. Devendra Kumar Singhal “5. The ITAT thereafter relied upon finding of CIT (A)regarding the nature of diary, which was not found tobe an exclusive record of the financial transactions.TheITATobserved:- "It is also observed by the ld. CIT (A) that the diarydid not show an element of exclusive/confidentialbusiness record. The ld. CIT (A) treated the diary asgeneral household diary and not related to actualbusiness transactions. We fully agree with thisobservation of the ld. CIT (A) that there is no sufficientmaterial including LP-4, which could lead to theconclusion that the assessee has received anyundisclosed money from employer towards his incomei.e. salary. On the other hand, the explanations andsubmissions of the assessee clearly established thatthe same were placed before the AO and were notappreciated by him due to lack of concluding enquiryand examination of other relevant persons in thisbehalf. Considering the entire facts and circumstancesof the present case, we do not see any infirmity in thefindings of the ld. CIT (A) on this issue. In our view,the ld. CIT (A) has passed a well-reasoned order afterappreciating the facts of the present case as well asthe settled legal position and therefore, we decline tointerfere with his order." “9. Commissioner of Income Tax-V vs. IndrajitSingh Suri “The entire issue is based on factual matrix presentedbefore the authorities. We are in complete agreementwith the findings of the Tribunal that the AssessingOfficer had largely proceeded on the basis of thestatement of one Shri Gajjar in whose books ofaccount, the said transaction of Ninad Co-op. HousingSociety had emerged. It further appears that noopportunity of cross examination of Shri Gajjar, thoughrequested for, was granted by the Assessing Officer.Cumulatively, thus, when the Tribunal found that therewas violation of principles of natural justice by notallowing cross examination despite such requestcoupled with absence of any evidence, no error muchless any substantial error is committed by the Tribunal in deleting the said amount. This issue, therefore,requires no further consideration.” “10. CIT vs. Supertech Diamond Tools Pvt. Ltd.,74 of 2012 “The reference to the statements made by some of thepersons related with the said investing companies is ofno effect because such statements could not havebeen utilized against the assessee Company when theassessee company had not been afforded anopportunity of confronting and cross-examining thepersons concerned. There does not appear anythingoccurring in the statements of the persons relatingwith the assessee Company so as to provide a basisfor the findings recorded by the AO.” “11. Commissioner of Income Tax vs. AshwaniGupta “2. The Tribunal has confirmed the order passed by theCommissioner of Income Tax (Appeals) which held theentire addition made by the Assessing Officer to beinvalid and had deleted the same. The Commissionerof Income Tax (Appeals) had clearly held that theAssessing Officer had passed the assessment order inviolation of the principles of natural justice inasmuchas he had neither provided copies of the seizedmaterial to the assessee nor had he allowed theassessee to cross-examine one Mr. Manoj Aggarwal onthe basis of whose statement the said addition wasmade. The Commissioner of Income Tax (Appeals) alsoheld that the entire addition deserved to be deleted,particularly so, because the transactions also stoodduly reflected in his regular returns. “2. The Tribunal has confirmed the order passed by theCommissioner of Income Tax (Appeals) which held theentire addition made by the Assessing Officer to beinvalid and had deleted the same. The Commissionerof Income Tax (Appeals) had clearly held that theAssessing Officer had passed the assessment order inviolation of the principles of natural justice inasmuchas he had neither provided copies of the seizedmaterial to the assessee nor had he allowed theassessee to cross-examine one Mr. Manoj Aggarwal onthe basis of whose statement the said addition wasmade. The Commissioner of Income Tax (Appeals) alsoheld that the entire addition deserved to be deleted,particularly so, because the transactions also stoodduly reflected in his regular returns. 3. The Tribunal, after referring to the decision of thisCourt in the case of CIT v. SMC Share Brokers Ltd.MANU/DE/9286/2006 : [2007] 288 ITR 345, came tothe conclusion that there was no infirmity in the orderof the Commissioner of Income Tax (Appeals) and,therefore, declined to interfere with the same anddismissed the appeal of the Revenue.” “12. ACIT vs. Govindbhai N. Patel “Addition under section 69B Undisclosed investment inpurchase of agricultural lands--The addition made bythe AO on account of undisclosed investment inpurchase of agricultural lands. The AO had carried outinvestment and had collected statements of the sellersof the lands in question to establish that they hadreceived cash payments from the assessee towards sale consideration. The assessee, however, stronglydisputed the contents thereof and requested for cross-examination of the authors of such statements. TheAO refused to grant such cross-examination on thepremise that the sale deeds were executed. CIT (A)deleted the addition. Tribunal found that the AOproceeded to make addition on the basis of enquiriesconducted behind the back of the assessee withoutgiving any opportunity of being heard or without givingany opportunity to cross examine the statements ofthe sellers. The CIT(A) was, therefore, justified inholding that the addition could not be sustained onthat ground itself. Revenue filed appeal against theorder of Tribunal. Held: The AO had made additions ontwo basis firstly, that some of the lands in the villagewere sold at a higher price, and sellers had givenstatements to the AO of having received higher saleconsideration. Both the grounds were knocked downby the CIT(A) and Tribunal on the premise that theother lands were not shown to be comparable and thatthe witnesses were not offered for cross-examination.In fact, the assessee contended that the lands soughtto be compared by the AO were converted into non-agricultural land, and therefore, naturally fetchedmuch higher price. Therefore, CIT(A) and the Tribunalhad correctly concluded that there was no evidencesupporting the AO's version that the assessee hadinvested large amount in purchase of agriculturallands.” “13. CIT Kanpur vs. Shadiram & Others, “13. CIT Kanpur vs. Shadiram & Others, “Section 69 of the Income Tax Act, 1961- UnexplainedInvestments-Assessment Year 1981-82-During courseof search carried out at business premises of apartnership firm (one of assessee), a loose parcha wasrecovered from wallet of one of partner of firm – Onbasis of entries in that parcha, ITO inferred thatinvestment mentioned in parcha against variousnames belonged to persons whose name had beenmentioned and interest on aforesaid capital investmenthad been given to them- He, accordingly, addedcertain amount towards unexplained investments andinterest in case of three assessees i.e., partnershipfirm and two individuals – On appeal, Commissioner(Appeals) confirmed order of Assessing Officer- Onsecond appeal, Tribunal deleted additions holding thatthere being no corroborative evidence, no adverseinference could be drawn from entries of parchaagainst assessees- Whether finding recorded byTribunal was pure finding of fact based on material onrecord and, therefore, no question of law arose therefrom-Held, yes.” “14. Commissioner of Income Tax vs. BhanwarlalMurwatiya and Ors. “4.The entire case was sought to be hanged by theRevenue on the peg of statement of Shri SureshKumar Soni, said to have been recorded from time totime, who had given varying statements, at differenttimes. Learned AO also relied upon certain statements,said to have, been recorded by the Asstt. Director ofIT, of Amar Chand, Bhanwarlal and Radhey Shyam, butthen, no reliance was placed on those statements bythe learned Tribunal. 5. Assailing the impugned judgment, it is contended,with all vehemence, that it is more than clearlyestablished on record, that a consideration of Rs. 61lacs did pass, so much so that Suresh Kumar Soni hasbeen assessed, his balance sheets have beenconsidered, and it is writ large, that during therelevant time, his resources had disproportionatelyincreased, which obviously was on account of theabove consideration. Likewise, the aforesaid threewitnesses viz; Amar Chand, Bhanwarlal and RadheyShyam, have also clearly given out, that the land wassold for Rs. 61 lacs and, thus, there was no occasionfordeletingtheadditions.6. On the other hand, learned Counsel for theassessees submitted that none of the witnesses wereexamined by the AO, and even Suresh Kumar Soni hadgiven varying statements at different occasions, apartfrom the fact that he was also not examined by theAO, nor did the assessee have any opportunity to crossexamine on the version of Suresh Kumar Soni, so as totest his veracity or reliability, and the statements ofthe said witnesses, recorded by the other authority,could not be looked into, as they are not evenrelevant, in view of the provisions of Section 32 of theEvidence Act. It was also contended that even anindependent enquiry was got conducted, wherein thelearned Dy. CIT had found, that the valuation of theland was not above the one, as shown in the saledeed, and thus, no interference is required to bemade. 7. We have considered the submissions, and aftergoing through the impugned orders, are of the viewthat all said and done, the question as to what was theprice of the land at the relevant time, is a purequestion of fact. Apart from the fact, that even if, itwere to be assumed, that the price of the land wasdifferent than the one, recited in the sale deed, unlessit is established on record by the Department, that as 7. We have considered the submissions, and aftergoing through the impugned orders, are of the viewthat all said and done, the question as to what was theprice of the land at the relevant time, is a purequestion of fact. Apart from the fact, that even if, itwere to be assumed, that the price of the land wasdifferent than the one, recited in the sale deed, unlessit is established on record by the Department, that as a matter of fact, the consideration, as alleged by theDepartment, did pass to the seller from the purchaser,it cannot be said, that the Department had any right tomake any additions. It is a different story as to, towhat extent and how, the statement of Suresh KumarSoni, as given before different authorities, at differenttimes, can be used against the assessee. More so,when none of the witnesses were examined before theAO, and the assessee did not have any opportunity tocross examine them. 8. In any case, the question as to whether theconsideration of Rs. 61 lacs, or any other higherconsideration than the one, mentioned in the saledeed, did pass from the assessee to the seller or not,does nonetheless remain a question of fact, and it isnot shown by the Department, that any relevantmaterial has been ignored, or misread by the learnedCIT, or the learned Tribunal.” “15. CIT vs. Dhrampal Premchand Ltd. “However, AO paid no heed to such request andproceeded with assessment order- Whether sincecorrectness or otherwise of report, on basis of whichassessment order was passed against assessee, wasitself under challenge, said repost could not beautomatically accepted and Assessing Officercommitted violation of principles of natural justice innot permitting cross-examination of analyst andrelying upon his report to detriment of assessee-Held,yes.” “16. CIT vs. S.M.Aggarwal