Mohan Meakin Ltd., Ghaziabad vs Acit, New Delhi on 1 August, 2017

[Cites 37, Cited by 6]

Income Tax Appellate Tribunal - Delhi

Mohan Meakin Ltd., Ghaziabad vs Acit, New Delhi on 1 August, 2017

           IN THE INCOME TAX APPELLATE TRIBUNAL
                 DELHI BENCH 'E' NEW DELHI

          BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER
                              AND
          SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER

                     ITA No. 3787/Del/2008
                          AY: 2003-04

                     ITA No. 3788/Del/2008
                          AY: 2004-05

                     ITA No. 3789/Del/2008
                          AY: 2005-06

                     ITA No. 3790/Del/2008
                          AY: 2006-07

Mohan Meakin Ltd.,      vs   Asstt.Commissioner of Income Tax,
P.O. Mohan Nagar,            Central Circle 20,
Ghaziabad (UP).              New Delhi.
(Appellant)                  (Respondent)

                 Appellant by: Shri Salil Aggarwal, Adv.
                               Shri Shailesh Gupta, Adv.
               Respondent by: Shri H.K. Choudhary, CIT DR



                             ORDER


PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER

A search had taken place on 14.02.2006 in the premises of Radico Khaitan and one Shri R.K. Miglani, Secretary General of M/s Uttar Pradesh Distilleries Association (UPDA). In the course of these search proceedings, various documents including reports narrating amounts alleged to have been received/receivable from various members of the UPDA were recovered/seized. The 1 statement of Shri R.K. Miglani was also recorded. The Department proceeded to assess the assessee u/s 153C of the Income Tax Act, 1961 (hereinafter called "the Act") based on the material recovered during the course of survey and also relying on the statement of Shri R.K. Miglani. The matter travelled up to the ITAT and these four appeals of the assessee were disposed of by a common order of the Tribunal dated 23.11.2012, wherein all the appeals of the assessee were allowed. It had been held in the aforesaid order in Para 18 that if all the annexures i.e. A-1 to A- 10 found from the residential premises of Sh. R.K. Miglani during the course of search u/s 132(1) the Act and A-1 to A-8 from the business premises of M/s UPDA during the course of the survey u/s 133A of the Act and also found from premises of M/s Radico Khaitan during the course of search u/s 132(1) of the Act, as had been relied by Revenue are looked into in the light of the statement given by Sh. R.K. Miglani, the contention of Revenue that such documents belonged to assessee is unsustainable. It was observed by the ITAT in the aforesaid Para 18, that no forwarding letter in the shape of e-mail, fax or any recorded audio message recorded on telephonic conversation was found with regard to the assessee which could establish that any 2 document/material which was seized from the residential premises of Shri. R.K. Miglani belonged to the assessee. It was held that since such documents cannot be held to be belonging to the assessee, the proceedings initiated under section 153C of the Act were without jurisdiction.

1.1 Revenue being aggrieved by the aforesaid order of ITAT, filed appeals under section 260A of the Income Tax Act before Hon'ble High Court of Delhi and Hon'ble High Court vide its judgment dated 22.01.2015, has remitted the matters for reconsideration on the lines and findings recorded in its judgment at Para 5, 6 and 7. For the sake of convenience Para 5, 6 and 7 of the aforesaid judgment are being extracted here-in-below:

"(5) The revenue urges that the Assessing Officer and the CIT (Appeals) took note of not merely the document which listed out the payments made in a tabular form for different purposes, but also other documents and materials in the form of production figures, the statement of Mr. R. K. Miglani and the circumstance that the production figures coincide with the figures available with the revenue in the pending proceedings. It appears that the ITAT has not rendered any specific findings on the status of such documents. For instance, if the production figures were in fact forwarded by the concerned unit under a letter or some other form connecting it with the material form seized, inference would be of particular kind.

(6) Having regard to these factors, this Court is of the opinion that the ITAT should render specific findings as to the status of the documents and in the sense, connect 3 with the concerned assessee's third parties who were issued notice under section 153C and not merely the general nature of the documents in the form of production figures or amounts tabulated in a chart. This would give a clearer picture as to whether any document or material seized during the course of the proceedings belonged to any of the assessees.

(7) We refrain from expressing any final opinion in the matter even on the contentions urged. Instead, we remit the matter for reconsideration on the lines indicated above. The ITAT shall refer to the material in entirety in respect of each assessee and render specific findings on this aspect. All rights and contentions of the parties, including that of the revenue, if they feel aggrieved against the orders of the ITAT, are kept open. It is also clarified that the findings of the ITAT, if adverse to the revenue, are open to challenge."

1.2 Thus, the Hon'ble High Court has remitted these appeals to the ITAT, to consider and render findings with regard to the documents alleged by the revenue and also on the grounds raised in the appeals before it by the assessee. It has been clarified by the Hon'ble High Court that it is not making a limited remand and the ITAT shall proceed to hear the merits of the appeals pending before it on other grounds as well. We find that the Hon'ble High Court has not reversed the findings or set aside the findings recorded by ITAT in order dated 23.11.2012. However, it appears from the aforesaid judgment of the High Court that the revenue had contended before the Hon'ble High Court (as is noted 4 by their Lordships in Para 5) that the Assessing Officer and CIT(A) took note of not merely the document which listed out the payments made in a tabular form for different purposes but also other documents and materials in the form of production figures forwarded by the respective assessees, the statement of Shri R. K. Miglani and the circumstances that the production figures coincide with the figures available with the revenue in the pending proceedings. The Hon'ble High Court, in view of the aforesaid, has held that the ITAT has not recorded any specific finding in respect of such documents forwarded by assessee and found from the premises of Sh. R.K. Miglani. The Hon'ble High Court has specifically stated, for instance, if the production figures were in fact forwarded by the concerned unit under a letter or some other form connecting it with the material seized, then the inference would be of different kind. 1.3 In view of the aforesaid directions of the Hon'ble High Court, the Revenue was specifically directed on earlier dates, when the appeals were fixed for hearing, viz. 19.05.2016, 29.06.2016, 06.09.2016 and 29.11.2016, to produce all the assessment records of assessee in the shape of seized documents found and relied upon by the assessing officer during the course of 5 assessment proceedings and as has been alleged by the revenue before the Hon'ble High Court. Further, when we took up the matters for final disposal on 01.05.2017, 03.05.2017 and 04.05.2017, despite the fact that Revenue had been directed to produce other records/ seized documents, with regard to the assessee, the learned CIT DR again produced Annexures A-1 to A- 10 found and seized from the residential premises of Sh. R.K. Miglani, which documents were already on record of the ITAT in the first round of proceedings. However, having regard to the specific directions of the Hon'ble High Court, a specific query was raised by earlier benches and also by this Bench of the ITAT, as to whether, Revenue in pursuance to its submissions/ contentions before Hon'ble High Court, wants to produce any other document/ material which was not on record of the ITAT in the first round of the proceedings which can be held to be belonging to the assessee and learned CIT DR insisted that aforesaid documents are the only documents which has been made the basis of addition and there are no other documents in the possession of the revenue.

1.4 From the perusal of the records, we find that the assessee has filed 3 voluminous paper books and the learned CIT DR has 6 also produced Annexures A-1 to A-10 seized from the premises of Shri. R.K. Miglani and no other documents have been produced by the revenue. It is, therefore, seen that despite the fact that the Revenue had urged before the Hon'ble High Court regarding certain other documents in the shape of production figures forwarded by assessee, no such documents/ material were produced before us during the course of hearing and as such, we are inclined to decide the instant appeal on the basis of material already available on record.

1.5 With the aforesaid background as stated above, before we proceed to hear the appeals filed by the assessee M/s Mohan Meakins Limited, for the sake of completeness, we reproduce the grounds taken by the assessee. They are as under- ITA No. 3787/Del/2008:-

"1. That the learned Commissioner of Income Tax (Appeals) has grossly erred, both on facts and in law in upholding the legality and the validly of the order of assessment dated 31.12.2007, impugned before him, framed by the learned ACIT by invoking the provisions of section 153C of the Income Tax Act.

1.2 That the learned CIT(A) has failed to appreciate that, the assessment framed by the learned ACIT, was wholly without jurisdiction and was ab-initio bad in law and thus deserved to have been quashed altogether.

1.3 That the leaned CIT(A) has further failed to appreciate that the jurisdictional precondition for 7 invoking the applicability of provisions of section 153C of the Act being absent, no valid proceedings could have been initiated by invoking the provisions of section 153C (1) of the Income tax Act, and as such the assessment framed was entirely illegal.

1.4 That the learned CIT(A) has overlooked that the provisions of section 153C could be invoked only, "where the Assessing Officer is satisfied that any money, bullion, 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 of the Income tax Act and as such in the absence of any documents or book of accounts "belonging to" the assessee having been seized from the person searched no valid proceedings could have been initiated against the assessee.

1.5 The CIT(A) has further completely overlooked that neither any books of accounts nor any document(s) which were allegedly seized, could be held to belong to the assessee and as such the learned CIT(A) has erred in confirming the order of assessment, since no valid proceedings u/s 153C (2) could have been initiated against the assessee. The order of the CIT (A) made thus is without application of mind, who has merely mechanically upheld the order by the Assessing Officer.

2. That without prejudice and in the alternative the learned CIT(A) has thus erred in confirming the addition made of Rs. 3,28,36,200/-, representing an alleged payment without even identifying and establishing that, who had made the payment, when the alleged payment was made and to whom such an amount was paid. In the absence of any positive evidence that the assessee had incurred the alleged sum of expenditure the addition sustained is highly perverse and is totally unjustified.

2.1 That the learned CIT(A) has thus erred in confirming the addition of the aforesaid sum of Rs. 3,28,36,200/- even without appreciating that the learned ACIT had failed to discharge the burden that "the assessee" had purportedly paid such a sum. In fact no such claim of deduction had either been made, and as such prima- facie too the allegation since was based on no evidence or material the addition could not have been sustained.

2.2 That further the learned CIT (A) has erred in confirming the addition of the aforesaid sum even when the ACIT had failed to comprehend that the learned ACIT failed to discharge the burden by bringing on record the necessary material in support thereof. The finding of the learned CIT(A), that the assessee had incurred the expenditure i.e. the amount has been paid by the assessee as alleged, is based on no valid admissible evidence and is based on merely theoretical assumptions and presumptions and as such the addition made of the aforesaid sum is totally arbitrary and is wholly unsustainable in law.

2.3 That in any case and without prejudice, the learned CIT(A) has completely ignored, while confirming the aforesaid addition, that the learned ACIT did not either provide to the assessee any valid opportunity and had not confronted to the assessee any such adverse material for its rebuttal and had proceeded to draw adverse inferences on the basis of such material which is no material in the eye of law and in any case before making use of any such material the same was not confronted to the assessee, by providing adequate and valid opportunity. In fact he has failed to appreciate the burden lay upon the learned ACIT to establish that the assessee had incurred such an expenditure which could have been done only by producing the author of the documents, which had not even been attempted, inspite of the appellant's written requests. The learned CIT(A) has failed to appreciate the nature of allegation leveled by the Ld. ACIT in making the addition and without appreciating that on these mere allegation no addition 9 could have been made.

2.4 That the learned CIT(A) has completely ignored the detailed written submissions filed by the assessee before him. The learned CIT(A) has failed to appreciate that there was no evidence at all to establish that it is the assessee who had incurred an expenditure as has been alleged nor was even there any evidence from the documents seized to establish that such alleged expenditure was incurred by the assessee company. The inference drawn to hold the assessee having incurred such an expenditure is highly arbitrary and wholly unjustified, more particularly when neither Shri Miglani nor any other person was produced for the assessee's cross examination, before relying on the statements as were allegedly/recorded. The authorities have acted in complete disregard of the judgment of Hon'ble Delhi High Court in the case of I.T. Exports.

3. That the learned CIT(A) has further erred in sustaining the addition of Rs. 2,61,678/- representing a disallowances made out of business expenditure and debited under the head tips.

4. That the Ld. CIT(A) has further erred in upholding the levy of interest u/s 234B and 234D which is not leviable.

5. That the learned Commissioner of Income Tax (Appeals) has erred in not disposing off the additional legal ground of appeal before him of not allowing the deduction of provision for leave encashment.

6. It is therefore prayed that it be held that the initiation of proceedings u/s 153C was without jurisdiction and in any case it be held that the addition/disallowance made of sum aggregating to Rs.

2,19,92,478/- is unsustainable in law and consequently the aggregate interest levied u/s 234B of Rs. 28,19,406/- and u/s 234D of Rs. 7,82,812/-- also deserves to be deleted."

I 10 TA No. 3788/Del/2008 "1. That the learned Commissioner of Income Tax (Appeals) has grossly erred, both on facts and in law in upholding the legality and the validly of the order of assessment dated 31.12.2007, impugned before him, framed by the learned ACIT by invoking the provisions of section 153C of the Income Tax Act.

1.2 That the learned CIT (A) has failed to appreciate that, the assessment framed by the learned ACIT, was wholly without jurisdiction and was ab-initio bad in law and thus deserved to have been quashed altogether. 1.3 That the leaned CIT(A) has further failed to appreciate that the jurisdictional precondition for invoking the applicability of provisions of section 153C of the Act being absent, no valid proceedings could have been initiated by invoking the provisions of section 153C (1) of the Income tax Act, and as such the assessment framed was entirely illegal.

1.4 That the learned CIT(A) has overlooked that the provisions of section 153C could be invoked only, "where the Assessing Officer is satisfied that any money, bullion, 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 of the Income tax Act and as such in the absence of any documents or book of accounts "belonging to" the assessee having been seized from the person searched no valid proceedings could have been initiated against the assessee.

1.5 The CIT(A) has further completely overlooked that neither any books of accounts nor any document(s) which were allegedly seized, could be held to belong to the assessee and as such the learned CIT(A) has erred in confirming the order of assessment, since no valid proceedings u/s 153C (2) could have been initiated against the assessee. The order of the CIT(A) made thus 11 is without application of mind, who has merely mechanically upheld the order by the Assessing Officer.

2. That without prejudice and in the alternative the learned CIT(A) has thus erred in confirming the addition made of Rs. 3,28,36,200/-, representing an alleged payment without even identifying and establishing that, who had made the payment, when the alleged payment was made and to whom such an amount was paid. In the absence of any positive evidence that the assessee had incurred the alleged sum of expenditure the addition sustained is highly perverse and is totally unjustified.

2.3 That in any case and without prejudice, the learned CIT(A) has completely ignored, while confirming the aforesaid addition, that the learned ACIT did not either provide to the assessee any valid opportunity and had not confronted to the assessee any such adverse 12 material for its rebuttal and had proceeded to draw adverse inferences on the basis of such material which is no material in the eye of law and in any case before making use of any such material the same was not confronted to the assessee, by providing adequate and valid opportunity. In fact he has failed to appreciate the burden lay upon the learned ACIT to establish that the assessee had incurred such an expenditure which could have been done only by producing the author of the documents, which had not even been attempted, in spite of the appellant's written requests. The learned CIT (A) has failed to appreciate the nature of allegation leveled by the Ld. ACIT in making the addition and without appreciating that on these mere allegation no addition could have been made.

3. That the learned CIT(A) has further erred in sustaining the addition of Rs. 4,27,430/- representing a disallowances made out of business expenditure and debited under the head tips.

4. That the learned Commissioner of Income Tax (Appeals) has erred in not allowing the claims made of the carry forward of long term capital loss and as also short deduction u/s 80HHC of the I.T. Act. The findings 13 that the assessee is to file an application u/s 154 of the Act before A.O. is misconceived.

5. That the learned CIT(A) has further erred in upholding the levy of interest u/s 234B which is not leviable.

6. That the learned Commissioner of Income Tax (Appeals) has erred in not disposing off the additional legal ground of appeal before him of not allowing the deduction of provision for leave encashment.

7. It is therefore prayed that it be held that the initiation of proceedings u/s 153C was without jurisdiction and in any case it be held that the addition/disallowance made of sum aggregating to Rs.

3,32,63,630/- is unsustainable in law and consequently the aggregate interest levied u/s 234B of Rs. 62,35,603/- also deserves to be deleted." ITA No. 3789/Del/2008

"1. That the learned Commissioner of Income Tax (Appeals) has grossly erred, both on facts and in law in upholding the legality and the validly of the order of assessment dated 31.12.2007, impugned before him, framed by the learned ACIT by invoking the provisions of section 153C of the Income Tax Act.

1.2 That the learned CIT(A) has failed to appreciate that, the assessment framed by the learned ACIT, was wholly without jurisdiction and was ab-initio bad in law and thus deserved to have been quashed altogether.

1.3 That the leaned CIT(A) has further failed to appreciate that the jurisdictional precondition for invoking the applicability of provisions of section 153C of the Act being absent, no valid proceedings could have been initiated by invoking the provisions of section 153C (1) of the Income tax Act, and as such the assessment framed was entirely illegal.

1.4 That the learned CIT(A) has overlooked that the provisions of section 153C could be invoked only, "where the Assessing Officer is satisfied that any money, bullion, 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 of the Income tax Act and as such in the absence of any documents or book of accounts "belonging to" the assessee having been seized from the person searched no valid proceedings could have been initiated against the assessee.

1.5 The CIT(A) has further completely overlooked that neither any books of accounts nor any document(s) which were allegedly seized, could be held to belong to the assessee and as such the learned CIT(A) has erred in confirming the order of assessment, since no valid proceedings u/s 153C (2) could have been initiated against the assessee. The order of the CIT(A) made thus is without application of mind, who has merely mechanically upheld the order by the Assessing Officer.

2. That without prejudice and in the alternative the learned CIT(A) has thus erred in confirming the addition made of Rs. 2,04,15,426/-, representing an alleged payment without even identifying and establishing that, who had made the payment, when the alleged payment was made and to whom such an amount was paid. In the absence of any positive evidence that the assessee had incurred the alleged sum of expenditure the addition sustained is highly perverse and is totally unjustified.

2.1 That the learned CIT(A) has thus erred in confirming the addition of the aforesaid sum of Rs. 2,04,15,426/- even without appreciating that the learned ACIT had failed to discharge the burden that "the assessee" had purportedly paid such a sum. In fact no such claim of deduction had either been made, and as such prima- facie too the allegation since was based on no evidence 15 or material the addition could not have been sustained.

2.2 That further the learned CIT (A) has erred in confirming the addition of the aforesaid sum even when the ACIT had failed to comprehend that the learned ACIT failed to discharge the burden by bringing on record the necessary material in support thereof. The finding of the learned CIT(A), that the assessee had incurred the expenditure i.e. the amount has been paid by the assessee as alleged, is based on no valid admissible evidence and is based on merely theoretical assumptions and presumptions and as such the addition made of the aforesaid sum is totally arbitrary and is wholly unsustainable in law.

2.3 That in any case and without prejudice, the learned CIT(A) has completely ignored, while confirming the aforesaid addition, that the learned ACIT did not either provide to the assessee any valid opportunity and had not confronted to the assessee any such adverse material for its rebuttal and had proceeded to draw adverse inferences on the basis of such material which is no material in the eye of law and in any case before making use of any such material the same was not confronted to the assessee, by providing adequate and valid opportunity. In fact he has failed to appreciate the burden lay upon the learned ACIT to establish that the assessee had incurred such an expenditure which could have been done only by producing the author of the documents, which had not even been attempted, in spite of the appellant's written requests. The learned CIT(A) has failed to appreciate the nature of allegation leveled by the Ld. ACIT in making the addition and without appreciating that on these mere allegation no addition could have been made.

2.4 That the learned CIT(A) has completely ignored the detailed written submissions filed by the assessee before him. The learned CIT(A) has failed to appreciate that there was no evidence at all to establish that it is the assessee who had incurred an expenditure as has been alleged nor was even there any evidence from the 16 documents seized to establish that such alleged expenditure was incurred by the assessee company. The inference drawn to hold the assessee having incurred such an expenditure is highly arbitrary and wholly unjustified, more particularly when neither Shri Miglani nor any other person was produced for the assessee's cross examination, before relying on the statements as were allegedly/recorded. The authorities have acted in complete disregard of the judgment of Hon'ble Delhi High Court in the case of J.T. Exports.

3. That the learned CIT(A) has further erred in sustaining the addition of Rs. 4,64,200/- representing a disallowances made out of business expenditure and debited under the head tips.

4. That the learned Commissioner of Income Tax (Appeals) has erred in not allowing the claims made of the carry forward of long term capital loss and as also short deduction u/s 80HHC of the I.T. Act. The findings that the assessee is to file an application u/s 154 of the Act before A.O. is misconceived.

5. That the learned CIT(A) has further erred in upholding the levy of interest u/s 234B which is not leviable.

6. That the learned Commissioner of Income Tax (Appeals) has erred in not disposing off the additional legal ground of appeal before him of not allowing the deduction of provision for leave encashment.

7. It is therefore prayed that it be held that the initiation of proceedings u/s 153C was without jurisdiction and in any case it be held that the addition/disallowance made of sum aggregating to Rs. 2,08,79,626/- is unsustainable in law and consequently the aggregate interest levied u/s 234B of Rs. 22,88,978/- also deserves to be deleted."

17 ITA No. 3790/Del/2008

"1. That the learned Commissioner of Income Tax (Appeals) has grossly erred, both on facts and in law in upholding the legality and the validly of the order of assessment dated 31.12.2007, impugned before him, framed by the learned ACIT by invoking the provisions of section 153C of the Income Tax Act.

1.2 That the learned CIT(A) has failed to appreciate that, the assessment framed by the learned ACIT, was wholly without jurisdiction and was ab-initio bad in law and thus deserved to have been quashed altogether.

1.3 That the leaned CIT(A) has further failed to appreciate that the jurisdictional precondition for invoking the applicability of provisions of section 153C of the Act being absent, no valid proceedings could have been initiated by invoking the provisions of section 153C (1) of the Income tax Act, and as such the assessment framed was entirely illegal.

1.4 That the learned CIT(A) has overlooked that the provisions of section 153C could be invoked only, "where the Assessing Officer is satisfied that any money, bullion, 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 of the Income tax Act and as such in the absence of any documents or book of accounts "belonging to" the assessee having been seized from the person searched no valid proceedings could have been initiated against the assessee.

1.5 The CIT(A) has further completely overlooked that neither any books of accounts nor any document(s) which were allegedly seized, could be held to belong to the assessee and as such the learned CIT(A) has erred in confirming the order of assessment, since no valid proceedings u/s 153C (2) could have been initiated against the assessee. The order of the CIT(A) made thus 18 is without application of mind, who has merely mechanically upheld the order by the Assessing Officer.

2. That without prejudice and in the alternative the learned CIT(A) has thus erred in confirming the addition made of Rs. 2,73,41,542/-, representing an alleged payment without even identifying and establishing that, who had made the payment, when the alleged payment was made and to whom such an amount was paid. In the absence of any positive evidence that the assessee had incurred the alleged sum of expenditure the addition sustained is highly perverse and is totally unjustified.

2.1 That the learned CIT(A) has thus erred in confirming the addition of the aforesaid sum of Rs. 2,73,41,542/- even without appreciating that the learned ACIT had failed to discharge the burden that "the assessee" had purportedly paid such a sum. In fact no such claim of deduction had either been made, and as such prima- facie too the allegation since was based on no evidence or material the addition could not have been sustained.

2.2 That further the learned CIT (A) has erred in confirming the addition of the aforesaid sum even when the ACIT had failed to comprehend that the learned ACIT failed to discharge the burden by bringing on record the necessary material in support thereof. The finding of the learned CIT(A), that the assessee had incurred the expenditure i.e. the amount has been paid by the assessee as alleged, is based on no valid admissible evidence and is based on merely theoretical assumptions and presumptions and as such the addition made of the aforesaid sum is totally arbitrary and is wholly unsustainable in law.

2.3 That in any case and without prejudice, the learned CIT(A) has completely ignored, while confirming the aforesaid addition, that the learned ACIT did not either provide to the assessee any valid opportunity and had not confronted to the assessee any such adverse 19 material for its rebuttal and had proceeded to draw adverse inferences on the basis of such material which is no material in the eye of law and in any case before making use of any such material the same was not confronted to the assessee, by providing adequate and valid opportunity. In fact he has failed to appreciate the burden lay upon the learned ACIT to establish that the assessee had incurred such an expenditure which could have been done only by producing the author of the documents, which had not even been attempted, in spite of the appellant's written requests. The learned CIT(A) has failed to appreciate the nature of allegation leveled by the Ld. ACIT in making the addition and without appreciating that on these mere allegation no addition could have been made.

2.4 That the learned CIT(A) has completely ignored the detailed written submissions filed by the assessee before him. The learned CIT(A) has failed to appreciate that there was no evidence at all to establish that it is the assessee who had incurred an expenditure as has been alleged nor was even there any evidence from the documents seized to establish that such alleged expenditure was incurred by the assessee company. The inference drawn to hold the assessee having incurred such an expenditure is highly arbitrary and wholly unjustified, more particularly when neither Shri Miglani nor any other person was produced for the assessee's cross examination, before relying on the statements as were allegedly/recorded. The authorities have acted in complete disregard of the judgment of Hon'ble Delhi High Court in the case of J.T. Exports.

3. That the learned CIT(A) has further erred in sustaining the addition of Rs. 4,21,488/- representing a disallowances made out of business expenditure and debited under the head tips.

4. That the learned Commissioner of Income Tax (Appeals) has erred in not directing the Assessing Officer to carry forward the long term capital loss, short deduction u/s 80HHC and non-application of provisions 20 of section 115JB of the Act. The findings that the assessee is to file an application u/s 154 of the Act before A.O. is misconceived.

5. That the learned Commissioner of Income Tax (Appeals) has erred in not disposing off the additional legal ground of appeal before him of not allowing the deduction of provision for leave encashment.

6. It is therefore prayed that it be held that the initiation of proceedings u/s 153C was without jurisdiction and in any case it be held that the addition/disallowance made of sum aggregating to Rs. 2,77,63,030/- is unsustainable in law."

2.0 Shri Salil Aggarwal, Advocate appeared for the assessee and Shri. H.K. Choudhary, CIT DR appeared for the revenue. At the outset, both the parties agreed that since the appeals for AY 2003-04, AY 04-05 and AY 05-06 were identical, AY 2003-04 may be taken as the lead case.

2.1 The Ld. AR sought permission under Rule 29 of the Income Tax Appellate Tribunal Rules, to adduce as additional evidence a letter dated 03.03.2008 along with an affidavit of Shri R.K. Miglani, which had been filed by him before the assessing officer, in the course of the assessment of UPDA. A copy of the aforesaid additional evidence was made available to the learned CIT DR for rejoinder.

2.2 The Ld. AR has also filed before us, a short note containing 3 sheets with 11 annexures and has also read out 21 extensively from the earlier submissions dated 12.03.2009, 23.10.2009, 15.04.2010, 19.04.2010 and 21.04.2010 filed before ITAT in the first round of proceedings. The short note filed by the Ld. AR is reproduced here-in -under for a ready reference -

"That with reference to the captioned appeals and in furtherance to our written synopsis dated 12.03.2009, 23.10.2009, 15.04.2010, 19.04.2010 and 21.04.2010 as contained in Paper Book (Part - 2); the assessee company would seek to summarize its arguments in brief as below:

1. First Proposition: Proceedings initiated under section 153C of the Act, are without jurisdiction in as much as, no document belonging to Assessee Company was found as a result of search conducted on Sh. R.K. Miglani on 14.02.2006. Reliance is placed on the judgment of Hon'ble Delhi High Court in the case of Pepsico India Holdings Pvt.

Ltd. vs ACIT reported in 370 ITR 295 and further the amendment brought into statute book w.e.f. 01.06.2015 is prospective in nature and is not applicable for the impugned assessment years, as will also be clear from the order of Hon'ble High Court of Delhi in assessee's case dated 22.01.2015, wherein, Hon'ble High Court has merely directed revenue to produce specific documents before the Hon'ble ITAT, in order to prove that documents belonging to assessee -- appellant were found as a result of search on Sh. R.K. Miglani.

2. Second Proposition: Additions have been made by learned AO under section 69C of the Act and under the said section, the burden squarely lies on Revenue to establish that the assessee has made alleged payments so as to warrant addition under section 69C of the Act, which has not been discharged by Revenue by leading any material what so ever and thus, the addition so made needs to be deleted. In order to support the said proposition, the assessee company 22 would seek to place reliance on following judgments:

a. 254 ITR 261 (Del) CIT vs. Dr. S. Bharti.

b. 261 ITR 664 (Del) CIT V. Naresh Khattar (HUF).

3. Third Proposition That in face of denial by assessee - appellant with regards to the said alleged payments, the burden is on Revenue to establish the factum of making said alleged payments with corroborative evidences, which has not been done by Revenue and thus, relying on the judgment of Hon'ble Delhi High Court in the case of CIT vs Ved Prakash Choudhary reported in 305 ITR 245, the additions so made needs to be deleted. Here even the recipients of the alleged payments have not been identified and nor produced for our cross examination, even though a specific to that effect was made before AO vide letter dated at pages 132 and 133 of PB Part-I.

4. Fourth Proposition: That statement of Sh. R.K. Miglani and directors of M/s Prudent Distillery cannot be relied and needs to be excluded for consideration, as none of them have been produced for cross - examination, even though specific request for the same was made by assessee - appellant vide letters dated 24.12.2007 and 28.12.2007 at pages 125 to 128 and 132 to 133 of PB Part - I. Reliance is placed on following judgments in support of the aforesaid proposition:

(a) [1980] 125 ITR 713 (SC) Kishinchand Chellaram vs. CIT.

(b)    322 ITR 396 (Del) CIT vs Ashwani Gupta.
(c)    Andaman Timber Industries vs CCE (SC) reported in 127
      DTR 241 (attached as Annexure - A).

That further, it is submitted that even the statement of Sh. R.K. Miglani so relied on by the Revenue, cannot be relied on, as Sh.

Miglani had retracted the said statement by filing an affidavit dated 01.03.2006 and thus, relying on the judgment of Hon'ble High Court of Delhi in the case of CIT vs Sunil Aggarwal (attached as Annexure - B) and order of ITAT Pune in the case of 23 Prabhat Chandra S. Jain vs AC1T in ITA No. 1325/Pune/2013, it is prayed that the addition made be deleted, as such.

5. Fifth Proposition: That the officer while framing the order of assessment under section 153A of the Act, in the case of M/s UPDA had categorically held that documents found from Sh. R.K. Miglani and M/s UPDA belong to UPDA and made additions under section 68 of the Act holding the said documents to be the books of accounts of M/s UPDA, with respect to the documents so found, as such, same set of documents cannot belong to assessee - appellant and UPDA as well and thus, the addition made in the hands of the appellant on the basis of documents found from Sh. R.K. Miglani and UPDA needs to be deleted.

6. Sixth Proposition: That further, the assessee is only earning guaranteed profit from the distillery at Lucknow and no production/ manufacturing was done by the assessee, as there was a Manufacturing and Supply Agreement with M/s Prudent Distillery Ltd. for the year under consideration and thus, there was no occasion for assessee to supply the alleged production figures to M/s UPDA.

7. Seventh Proposition: That Hon'ble Settlement Commission in the case of M/s Radico Khaitan has dismissed the plea of Revenue to rely on the documents found from Sh. R.K. Miglani and M/s UPDA and have also held that since opportunity to cross - examine Sh. R.K. Miglani was not provided to M/s Radico Khaitan, thus, addition cannot be made on the basis of said documents."

2.3 In the submissions made, the learned counsel for assessee supported the findings and conclusion recorded by ITAT in the first round that the proceedings initiated u/s 153C of the Act were per-se bad in law and were without jurisdiction. The 24 various contentions raised by Shri Salil Aggarwal, the Ld. AR, are summarized as below:

2.3 The Ld. AR submitted that the proceedings initiated under section 153C of the Act, were without jurisdiction in as much as, no document belonging to Assessee Company were made the basis of recording the note of satisfaction. In support of the aforesaid argument, it was contended by the Ld. AR that that the documents were seized from the premises of the Shri R.K. Miglani and the presumption u/s 132(4A) of the Act is that such document belongs to the person from whose premises such document is found unless such presumption is rebutted, and in the instant case, such presumption has not been rebutted. It was further submitted that the assessing officer, while framing the order of assessment under section 153A of the Act, in the case of M/s UPDA had categorically held that the documents found from Sh. R.K. Miglani and M/s UPDA belonged to UPDA and made additions under section 68 of the Act holding the said documents to be the books of accounts of M/s UPDA, with respect to the documents so found, as such, same set of documents cannot belong to the assessee and the UPDA as well and thus, the addition made in the hands of the assessee on the 25 basis of documents found from Sh. R.K. Miglani and UPDA needs to be deleted.

2.4 The Ld. AR placed reliance on the judgment of Hon'ble Delhi High Court in the case of Pepsico India Holdings Pvt. Ltd.

vs ACIT reported in 370 ITR 295. It was submitted that the amendment brought into statute book w.e.f. 01.06.2015 is prospective in nature and is not applicable for the impugned assessment years, as will also be clear from the order of Hon'ble High Court of Delhi in assessee's case dated 22.01.2015 wherein the Hon'ble High Court has merely directed the revenue to produce specific documents before the ITAT in order to prove that documents belonging to assessee were found as a result of search on Sh. R.K. Miglani.

2.5 The Ld. AR further submitted that the assessee was only earning guaranteed profit from the distillery at Lucknow and that no production/ manufacturing was done by the assessee as there was a Manufacturing and Supply Agreement with M/s Prudent Distillery Ltd. for the year under consideration and thus, there was no occasion for the assessee to supply the alleged production figures to M/s UPDA.

26 2.6 The Ld. AR further submitted that the additions made by the AO were unsustainable in law as the additions have been made by AO under section 69C of the Act and under the said section, the burden squarely lies on the Revenue to establish that the assessee had made alleged payments so as to warrant addition under section 69C of the Act. It was submitted that the burden of proof had not been discharged by the Revenue by leading any material, what so ever, and thus, the addition so made needed to be deleted. In support of the said proposition, reliance was placed on 254 ITR 261 (Del) in CIT vs. Dr. S. Bharti and on 261 ITR 664 (Del) in CIT vs. Naresh Khattar (HUF).

2.7 It was submitted by the Ld. AR that in face of denial by the assessee with regard to the alleged payments, the burden was on the Revenue to establish the factum of making the alleged payments with corroborative evidences, which has not been done by the Revenue and thus, relying on the judgment of Hon'ble Delhi High Court in the case of CIT vs Ved Prakash Choudhary reported in 305 ITR 245, the additions so made need to be deleted. It was submitted that even the recipients of the alleged payments have neither been identified nor produced for cross examination by the assessee even though a specific request to 27 that effect was made before the AO vide letter dated 28.12.2007 ( copy at pages 132 and 133 of PB Part - I).

2.8 The Ld. AR submitted that the Hon'ble Settlement Commission in the case of M/s Radico Khaitan has dismissed the plea of the Revenue to rely on the documents found from Sh. R.K. Miglani and M/s UPDA and have also held that since the opportunity to cross - examine Sh. R.K. Miglani was not provided to M/s Radico Khaitan, addition cannot be made on the basis of the said documents.

2.9 It was further submitted that in respect of the surrender made by M/s Radico Khaitan, M/s Balrampur Chinni Mills Limited, despite the specific request of the assessee vide its reply/request dated 28.12.2007 (at pages 132-133 of PB-1), to provide such document and material, the same was not provided to the assessee. It was also submitted that the surrender made by M/s Radico Khaitan, M/s Balrampur Chinni Mills Limited in any case was wholly irrelevant in so far as the assessee was concerned, as the assessee cannot comment upon in respect of the surrender made by the other assesses, more particularly when no documents were shown to the assessee despite the assessee having made a specific request.

28 2.10 In respect of the laptop of Shri Ajay Aggarwal of M/s Radico Khaitan, it was submitted by the Ld. AR that such document was also not confronted to the assessee despite a specific request and as such the reliance placed by the Department on such document was unsustainable in law. 2.11 It was further submitted by the Ld. AR that statement of Sh. R.K. Miglani and Directors of M/s Prudent Distillery cannot be relied upon and needs to be excluded, as none of them have been produced for cross - examination, even though specific request for the same was made by assessee vide letters dated 24.12.2007 and 28.12.2007 (at pages 125 to 128 and 132 to 133 of PB Part - I.) The Ld. AR submitted that reliance is placed on following judgments in support of the aforesaid proposition:

Kishinchand Chellaram vs. CIT. [1980] 125 ITR 713 (SC), CIT vs Ashwani Gupta. 322 ITR 396 (Del) and Andaman Timber Industries vs CCE (SC) reported in 127 DTR 241.

2.12. It was submitted that even the statement of Sh. R.K. Miglani, relied upon by the Revenue, cannot be relied upon, as Sh. Miglani had retracted the said statement by filing an affidavit dated 01.03.2006 and thus, relying on the judgment of Hon'ble High Court of Delhi in the case of CIT vs Sunil Aggarwal (supra) 29 and order of the ITAT Pune in the case of Prabhat Chandra S. Jain vs. ACIT in ITA No. 1325/Pune/2013, the addition needs to be deleted.

2.13 It was further submitted by the Ld. AR that the perusal of the seized documents would show that such documents are wholly unauthenticated and unreliable for the reason that there is no entry showing any alleged payment made to politicians and bureaucrats and there is not even balancing of figures. Thus, in the absence of any entry made in such alleged documents and there being no other evidence, either in the shape of cash book, day book, recording of payments etc., the documents showing the alleged production of all the distilleries and the alleged contribution by such distilleries are wholly unreliable. It was submitted that had there been any entry found establishing the payouts by UPDA, the Department could be then probably be justified in contending that contributions were made by the distilleries and payments were made to the politicians and bureaucrats. It was submitted that the documents are not only illegible and dumb but have no connection, whatsoever, with the alleged contribution. It was further contended that it has not been established as to who is author of the document as no such 30 person has either been identified or examined. The Ld. AR submitted that the allegation of the revenue is unsupported and uncorroborated by any material.

3. The learned CIT DR, (apart from Annexures A-1 to A-10), also filed written submissions which are being reproduced here in under for a ready reference -

"1) Entire seized documents seized from the residence of Sh.

R.K. Miglani (A-1to A-l 0) was submitted during the hearing before the Court.

Documents Seized from the residence of Sh. R.K.Miglani at P- 25,NDSE, part II, New Delhi belongs to the appellant for invoking section 153C of IT Act on the Following grounds:-

i) Contents of seized documents:-

a) Annexure A-l to A-10 Seized contains actual dispatch of century liquor by the members of UPDA which is evident from notings contained in seized documents.

Few references are detailed as under:-

A) Annexure A-l S.No. Production figure for the period Page No of annexure 1. Dec 2004 86 2. August 2003 84 3. Dec 2004 72 4. Nov 2004 70 5. Nov 2004 37 Nov 2004 36

6.

--------------- --------------

31 B) Annexure A-2 S.No. Production figure for the period Page No of annexure 1. Jan 2006 80

2. F.Y. 2004-05 up to Nov 2005 64 3. April 2005 to Jan 2006 54 C) Annexure A-3 S.No. Production figure for the period Page No of annexure August 2003 105

1. 2. May & June 2004 68 3. 01.04.2003 to 31.03.2004 56 4. Oct 2004 3 D) Annexure A-4 S.No. Production figure for the period Page No of annexure Oct 2003 30

1. 2. April 03. Jan 2004 10 E) Annexure A-6 S.No. Production figure for the period Page No of annexure April 03- July 03 42

1. F) Annexure A-10 32 S.No. Production figure for the period Page No of annexure June 2003 10

1. 2. July 2003 12 3. April 03-July 03 14 4. August 2003 15 5. August 2003 17

b) On the basis of these dispatches illegal payment is computed & the seized documents contains such computation and in tabular form it contains the amount received from the respective members of UPDA for illicit payment and amount due/pending. Few instances of such corroboration are enumerated as under:-

S. No Annexure Page No. 1. A-l 126 2. A-l 125 3. A-l 113 4. A-l 109 5. A-l 100 6. A-l 99 7. A-l 98 8. A-l 97 9. A-l 84 10. A-3 105 11. A-3 104 12. A-3 103 13. A-3 97 14. A-2 34 15. A-2 63

c) Seized documents contains the quantity of molasses lifted by the members of UPDA including the appellant & computation and receipt of money & pending amounts of various payment of Govt. officers/ including excise Department & politician :- 33

A) Annexure A-3 S.No. Production figure for the period Page No of annexure 1. 01.04.2003 to 31.03.2004 97 01.04.2003 to 31.03.2003 36

ii) Statement of Sh. R.K. Miglani at his residence u/s 132(4) & 133 A at the office premise of UPDA of IT Act supports the view that the above seized documents belong to the members of UPDA including the appellant. Specific instances are quoted as under:-

a) Answer in response of Q.3 of Sh. R.K.Miglani at the office of UPDA during 133A proves that the complete data of dispatch was received from the members. Answer question no. 5 during survey states that the data received from his residence are related data taken out from drive 'F' from the computers at the office, therefore, the data of dispatch seized from the residence is prepared on the basis of fax received from the members of UPDA including the appellant.

b) Answer to Question No.8 at residence u/s 132(4), Sh. R.K. Miglani has stated that it received data of dispatch from the members of UPDA including the appellant on weekly basis.

c) Vide answer question No. 10 to 24 during his statement u/s 132 (4) at his residence, Sh. R.K. Miglani has stated that seized documents contains the figure of details of illicit payment made various Govt. Officer and Politicians by various members and its computation based on the quantity of dispatch received from the members of UPDA.

d) The details of illegal payment made by the member of UPDA in during the appellant to various Govt. authority were received from core distillery by Sh. R.K. Miglani refer to Question and answer No 13 of Sh. R.K. Miglani.

In view of specific dispatch data received from the member of UPDA and details of illegal payment by various members of UPDA, maintained by Shri Miglani on the basis of such dispatch figure belong to the appellant, the entry of dispatch belongs to 34 the appellant and are part of the books of accounts of the appellant, which has been provided to UPDA for specific purposes for computing the facilitation money given to Govt. officers /politicians. These documents are for various F.Y's. maintained monthwise/yearwise. Therefore, these documents belong to the various members of UPDA jointly. Each members of UPDA partially owns these documents containing data of dispatch of country made liquor and computation of illicit payment made to Govt. Officers/politicians, and details of such money received and amount due. In any case, these documents can not be said to belong to Sh. R.K. Miglani or UPDA as these two persons are not engaged in the business of manufacturing of country liquors. Therefore on this ground also belongingness/ownership of these paper lie with the member of UPDA needless to mention that name of members of UPDA is specifically mentioned on various seized documents and Sh. R.K. Miglani has explained that these documents specially dispatch figure was received from members.

iii) Not providing cross examination of Sh. R.K. Miglani is irrelevant:-

Ld. AR has relied on various judicial pronouncements that statement without cross examination cannot be considered as evidence. These judicial pronouncements are distinguishable on facts as in those cases witness was independent and not related person. In present case as Sh. R.K. Miglani is Secretary General of UPDA in which the appellant is a member. Therefore, if the statement of Sh. R.K. Miglani which was adverse to the member was untrue than immediately Sh. R.K. Miglani could have been removed from the post of Secretary General, UPDA, or Sh. R.K. Miglani could have brought before I.T. Authority for retraction or modification of statement.

Further, statement of Sh. Miglani is not on stray/dumb documents but contains the figures of dispatch and amount of illegal payment made by members which is clear from the notings of the seized documents. Therefore, Sh. Miglani has only confirmed the specific variation contained in the seized material.

Still further, Sh. R.K. Miglani being employee of UPDA is an interest person and associates of the members of UPDA.

Therefore, the appellant and other members of UPDA could itself has produced Sh. R.K. Miglani, if his statement was untrue and could not have waited for the revenue to offer cross examination.

iv) Retraction of Sh. R.K. Miglani has no evidential value on the following grounds:-

a) Retraction of Sh. R.K. Miglani was made after two years from the statement recorded u/s 132(4). Therefore it is after thought.

b) The retraction of statement was not submitted before the Assessing Officer but before CIT(C)-III, Delhi, during the proceeding for withdrawal of registration u/s 12AA(3) in case of UPDA. Further, the date of affidavit in just one day prior to submission before CIT (c)-III during the proceeding u/s 12AA(3) this also proves that such retraction was necessitated because of threat of cancelation of registration u/s 12AA(3). Therefore on this basis also, it is afterthought. The result and further investigation in such retraction has not been submitted.

c) The appellant has filed this retraction of Sh. R.K. Miglani first time as fresh evidence and has not submitted the same in appellate proceeding in first till Hon'ble High Court. The Ld. AR has neither filed certified copy nor produced Sh. Miglani in person, therefore, this fresh evidence should not be entertained.

d) The most important aspect of retraction is that during statement, Sh. R.K. Miglani has explained the apparent contents of seized document. In retraction Statement he has not submitted the meaning of the contents of such seized documents, otherwise.

v) Findings in the case of UPDA by the AO is irrelevant:-

Ld. AR's argument that AO in the case of UPDA has held in Para 10(b) that the seized document belong to UPDA and therefore does not belong to the members. This finding is not factually correct as AO of UPDA in Para 6.15 has himself held that these documents belong to the members.

Further, UPDA is not manufacture of Alcohal, therefore question of dispatch of Alcohal in UPDA's case has no meaning. Therefore, essentially all computation and receipt of money and reimbursement based on such dispatch belong to members of UPDA who are in Alcohal manufacturing business.

vi) Findings of CIT(A) in appellant's case somewhere in the order that the document pertains to the appellant firstly does not prove that these documents do not belong to appellant as finally CIT(A) has dismissed the appeal and held that these documents belong to the appellant and therefore Section 153C has rightly been invoked.

Further words 'pertains to' is a bigger set and 'belonging to' is submerged in that bigger set.

vii) Ld. AR's argument that statement of Sh. Ashok Dutt & Sh. Rahul Jain of M/s PDL that the financial power vests with appellant cannot be relied as cross examination was not offered, cannot be accepted. In this case also Sh. Ashok Dutt & Sh. Rahul Jain was the employee of PDL therefore, these persons were not independent witness but business associate of the appellant with whom the appellant continued its business even after giving adverse statement. In these circumstances as witness was not independent, judicial pronouncements relied by Ld. AR for providing opportunity of cross examination to treat statement as evidence will not apply in present case.

Further, PDL admittedly was only supervising the Lucknow Plant with two persons. Plant was run by the employees of the appellant, plant & machinery of the appellant and sales are effected by the head of the appellant. These are undisputed facts. Further the appellant is a member of UPDA and not PDL. Therefore, unaccounted expense incurred has to be borne by the appellant and not PDL.

viii) Ld. AR's argument that in the case of Radico Khaitan, in the order of u/s 245D(4), Settlement Commission have not accepted Rule 9 report of CIT(C)-III for enhancement of income by the figure of unaccounted payment as per seized document. A perusal of order u/s 245D(4) reveals that as per order total income settled in the case of M/s Radico Khaitan was for Rs. 30 crores. The source 37 & basis of initial offer is not discussed in the order. Undisputedly, the M/s Radico Khaitan has filed application before Settlement Commission on the basis of search conducted in its case as well as at R.K. Miglani's premises. The only finding of search is in respect of unaccounted payment made by the members of UPDA. Therefore acceptances of additional income before Settlement Commission confirm unaccounted payment.

ix) If Hon'ble ITAT confirm, legality of the proceedings u/s 153C in appellant's case, quantification of unaccounted payment can be restored to the AO on the basis of seized document and other evidences, books of accounts impounded during survey u/s 133A in UPDA's office and statement of Sh. R.K. Miglani, if any mistakes are found in figure either in the satisfaction u/s 153C or quantification of income while passing assessment order." 3.1 The Ld. CIT DR argued at length in which he contended that Annexures A - 1 to A - 10 found from the residential premises of Sh. R.K. Miglani clearly mention the production figures/ dispatch figures as forwarded by UPDA members through fax messages and as noted by Sh. Miglani on their behalf. He stressed on the fact that the author of the document was Sh. R.K. Miglani, who was maintaining all these annexures on behalf of members of various distilleries of UPDA, and as such, the said annexures pertained to the various assessees, even though the same may not belong to assessees. 3.2 The second argument of learned CIT DR was that Sh. Miglani in his statement recorded (at pages 82 to 85 of PB - I), has categorically accepted in his statement that the various 38 member distilleries of UPDA were giving bribes to various politicians/ bureaucrats through the core distillery members of UPDA.

3.3 It was submitted by the Ld. CIT DR that the affidavit of Sh. Miglani, produced as additional evidence by the assessee, should be excluded and not admitted, as it was not submitted earlier before the ITAT and also because the same was given by Sh. Miglani after 2 years of search conducted on his residential premises.

3.4 The Ld. CIT DR submitted that there was no requirement to provide cross examination of Sh. R.K. Miglani and the Directors of M/s Prudent Distilleries Ltd., as all these were related to the assessee and so it was the onus of assessee to produce theses persons before the AO.

3.5 The Ld. CIT DR also submitted that the matter may be remanded or set - aside to the AO as the AO had not worked out the correct figures on the basis of seized documents and as such, for proper calculation of additions on the basis of seized documents, the matter may be set - aside to the file of Assessing Officer.

4. In rejoinder to the submission of the learned CIT DR, Sh. Salil Aggarwal, Advocate appearing for assessee submitted that the argument of learned CIT DR that details/ annexures seized from Sh. Miglani contain production or dispatch figures, as forwarded by the assessee through fax, is completely baseless and without any material available on record. The Ld. AR submitted that even on specific directions of the Hon'ble High Court and the ITAT, the learned CIT DR has only made oral submissions without bringing any material on record which could suggest that any such material or letter or note was forwarded by the assessee via Fax. 4.1 The Ld. AR reiterated that the reliance placed on the statement of Sh. R.K. Miglani is unwarranted, as he has not been produced for cross examination, even though a specific request was made by the assessee and further, even in the alleged statement, there is no mention of the assessee and thus, the reliance placed by learned CIT DR on the same is uncalled for and unwarranted, as has also been held by Hon'ble Supreme Court recently in the case of Andaman Timber Industries vs CCE (SC) reported in 127 DTR

241. 4.2 On the issue of assessee's application under Rule 29, the Ld. AR submitted that the application under Rule 29 for admission of 40 additional evidence merely contained a letter dated 03.03.2008 containing an affidavit of Sh. R.K. Miglani dated 01.03.2008 and filed during the course of proceedings of M/s UPDA and the aforesaid documents were filed in the case of M/s Lords Distillery Ltd. before learned CIT (A), and were a part of the record of the ITAT in the first round of appellate proceedings, as a consolidated order was passed by the ITAT dated 23.11.2012 in the cases of assessee company, M/s Lords Distillery Ltd. and various other assessees. The Ld. AR submitted that since the captioned appeals have been set - aside by the Hon'ble High Court of Delhi vide order dated 22.01.2015, the afore said letter and the affidavit of R.K. Migalni along with order of CIT (A) in case of M/s Lords Distillery Ltd. is being now filed under Rule 29, as the same was earlier filed in the case of M/s Lords Distillery Ltd. and not in the case of assessee company and thus, the same needs to be admitted for consideration.

4.3 The Ld. AR further submitted that the argument of learned CIT DR that the matter may be set - aside to the file of AO for reworking of additions is uncalled for and unjustified in as much as the assessee should not undergo endless litigation. It was submitted that the assessee had throughout cooperated in the 41 assessment proceedings and the appellate proceedings and for this proposition, he relied on the judgment of Hon'ble Punjab & Haryana High Court CIT vs F.C.S. International Marketing (P.) Ltd. reported in 203 CTR 601.

5. We have heard the rival submissions and have also perused the relevant records. Before proceeding to deal with each of the argument of the assessee and the revenue, it is relevant to state here itself that as per the directions of the Tribunal, revenue has furnished the seized material annexures A-1 to A-10, which were seized from the premises of Shri. R.K. Miglani and which were made the basis for initiating the proceedings u/s 153C of the Act, and not a single document/evidence had been pointed out by the learned CIT DR which could suggest that such documents belong to the assessee. Apart from the aforesaid documents, despite the specific direction of the Hon'ble High Court, and also our specific query, no other documents were produced before us. Even in the documents produced before us, no document had been pointed out by the learned CIT DR which would suggest that the assessee had forwarded any production figures. Further, no document has been referred to by the revenue which could connect the assessee of making or forwarding of the documents as alleged and there is also 42 no material to support that the production figures as mentioned in the seized documents coincide with the production figures as allegedly forwarded by the assessee. As such, the earlier finding of the ITAT that documents do not belong to the assessee has to be reiterated.

5.1 However, looking into the chequered history of the case, we will deal with each and every argument of assessee and revenue in detail, in the following paragraphs.

5.2 It is seen that a common satisfaction note in respect of 19 assessee companies were recorded by the ACIT, Central Circle - 4 (appearing at pages 281 to 283 of PB - 2). In the aforesaid satisfaction note, the ACIT has referred to the search conducted on M/s Radico Khaitan Ltd., Sh. R.K. Miglani and the survey conducted on UPDA. However, only the documents seized from the residential premises of Sh. R.K. Miglani and documents impounded from the premises of UPDA have been made the basis of recording of the satisfaction note and no other document has even been referred to in the note of satisfaction for initiating the proceedings. In fact, during the course of the assessment proceedings initiated u/s 153C of the Act, the AO did not refer to any other material apart from the documents seized from the residential premises of 43 Sh. R.K. Miglani and documents impounded from the premises of UPDA. Further, even in the orders of assessment for all the four assessment years, while making the impugned additions, the AO has relied upon only pages 24, 134-136 of Annexure A-1, pages 68- 69 of Annexure A-2 and pages 45-46 of Annexure A-6 found from the premises of Shri R.K. Miglani. It is seen that while making the aforesaid addition, the AO also derived support from the surrender made by M/s Radico Khaitan Limited and M/s Balrampur Chinni Mills Ltd. With regard to the surrender made by M/s Radico Khaitan Limited, the AO has also referred to the laptop Computer of Shri Ajay Aggarwal. It is undisputed that the assessee vide its reply dated 28.12.2007 (pages 132-133 of PB-1) requested the AO to provide such material, however the same was not made available. The AO has also relied on the statement of Shri R.K. Miglani recorded during the course of search on 14.02.2006, and the assessee in its reply dated 24.12.2007 (at pages 125-128 at PB-1) made a specific request to produce Shri Miglani for cross examination and again on 18.12.2007 (at pages 132-133 of PB-1) also requested to produce such persons for cross examination to whom alleged payments were made. It is again undisputed that 44 neither Shri. Miglani nor the persons to whom the alleged payments had been made were produced for cross examination. 5.3 At this juncture, it would be appropriate to record the chronological sequence of events, as to how the matter proceeded before the assessing officer and CIT (A) and taking AY 2003-04, as the basis, since facts are identical in all the remaining assessment years 2004-05 and 2005-06, as the assessment proceedings for such assessment year was pending on the date of search, as such assessment was made under section 143(3) of the Act:

(a) Return of Income was filed by assessee on 02.11.2003 at an income of Rs. 5, 12, 56, 800/-.

(b) Original assessment was completed under section 143(3) of the Act dated 01.03.2006 at an income of Rs.

5, 37, 69, 100/-.

(c) The assessee challenged the said additions before the learned CIT (A), who partly allowed the appeal of the assessee vide order dated 18.08.2006 and on further appeal, the ITAT deleted the additions.

(d) The notice under section 153C of the Act was issued by the AO on 22.12.2006 (at pages 20 of PB - 1) and on the basis of the a satisfaction note dated 45 05.12.2006 recorded by the ACIT, CC-4, New Delhi i.e. by the AO of M/s Radico Khaitan and Sh. R.K. Miglani, Secretary General (UPDA), on whom the search was conducted on 14.02.2006 (at pages 281 to 285 of PB - 2). However, the said satisfaction note was brought on record for the first time before the ITAT only in the first round of proceedings.

(e) A perusal of the satisfaction note reveals that it has been stated by the ACIT, CC-4, New Delhi that some incriminating documents were found showing payments made by various distilleries to various public servants and that the UPDA acted as nodal agency for making such payments worth Rs. 246 crores and out of that Rs. 10.15 crores payments have been made by M/s Mohan Meakins Ltd. i.e. the assessee.

(f) The assessee vide replies dated 11.01.2007 (at pages 21 to 24 of PB - 1) and 21.05.2007 (at pages 33 to 60 of PB - 2) objected to the initiation of proceedings under section 153C of the Act and also stated that no alleged illegal payment had been made by the 46 assessee, as the distilleries were being run by M/s Prudent Distillery and M/s Suraj Distillery and the assessee was only getting a fixed share of profit and further all the expenses were being incurred by the aforesaid two distilleries as per the Memorandum (at pages 37 to 48 and 49 to 60 of PB - 1).

(g) Vide replies dated 11.01.2007, 21.05.2007 and 19.11.2007 (at pages 21 to 24, 33 to 60 and 69 to 70 of PB - 1), the assessee repeatedly sought all the documents on the basis of which proceedings had been initiated under section 153C of the Act against the assessee, and the documents on the basis of which proceedings were initiated were provided to the assessee by the AO vide letter dated 20.12.2007 (at pages 71 to 127 of PB - 1).

(h) On receipt of the aforesaid documents from the AO, the assessee vide replies dated 24.12.2007 and 28.12.2007 (at pages 125 to 128 and 132 to 133 of PB

- 1) demanded cross examination of Sh. R.K. Miglani and other authorized persons of M/s Prudent Distilleries on whose statements the AO was placing 47 reliance and further, it was also requested by the assessee to identify and allow cross examinations of the bureaucrats/politicians, who had received the alleged illegal payments from the assessee. However, no cross - examination was given to the assessee. At pages 11 and 12 of assessment order, AO held that no purpose will served by allowing cross - examination to the assessee as Sh. R.K. Miglani is employee of the assessee.

(i) The AO passed the order u/s 153C of the Act dated 31.12.2007 and made additions of Rs. 2,17,30, 800/- for AY 2003-04 being the alleged illegal payments made to bureaucrats/politicians.

(j) The learned CIT (A), vide order dated 05.12.2008, dismissed the appeal of assessee, both on the legal ground as well as on merits. At page 34, Para 22 of the said order, the learned CIT (A) gave a finding that documents relating to assessee had been found from the searched residential premises of Sh. R.K. Miglani. However, in respect of the specific contention of the assessee that addition made without providing an 48 opportunity of the cross examination of the persons whose statements have been relied upon, no finding had been recorded by the Ld. CIT (A).

(k) The ITAT, vide order dated 23.11.2012, allowed the appeal of the assessee and quashed the proceedings so initiated under section 153C of the Act by recording a finding that no document belonging to the assessee was found from search conducted at the residential premises of Sh. R. K. Miglani and as such, proceedings under section 153C of the Act were quashed. It was also observed that no forwarding letter in the shape of e-mail, fax or any recorded audio message recorded on telephonic conversation was found which could allege that any document belonging to assessee were found from the premises of Sh. R.K. Miglani during the course of search on his residential premises.

(l) On an appeal by the revenue u/s 260A of the Act, the Hon'ble High Court of Delhi vide order dated 22.01.2015 remitted the captioned matters back to the file of the ITAT to record a specific finding with regard 49 to other documents and materials forwarded by the assessee and found from the premises of Shri R.K. Miglani in the shape of fax or e-mail as was urged by the revenue before the High Court.

(m) After the remit, when these appeals were fixed before the Tribunal, revenue was specifically directed on various occasions to produce assessment records and all such materials which could establish the fact that any document/ material was forwarded by the assessee and which had been found from the premises of Sh. R.K. Miglani. Except Annexures A-1 to A-10 no other material has been produced before us, and the aforesaid annexures were already on record in the first round of proceedings before us.

5.4 Now, after recording the factual matrix of the captioned appeals and recording the directions of the Hon'ble High Court of Delhi, we proceed to adjudicate on the admissibility of additional evidence filed under Rule 29 by the assessee. The said application under Rule 29 reads as under:

1. "The appellant named above seeks the permission of Hon'ble Bench to place on record a letter dated 03.03.2008 filed by Sh. R.K. Miglani in the case of M/s U.P. Distillery Association and also Affidavit of Sh. R.K. Miglani dated 50 01.03.2008 (annexed as Annexure - A) and also the order of CIT (A) in the case of M/s Lords Distillery Ltd. (annexed as Annexure - B).

2. It is submitted that, the aforesaid documents were filed in the case of M/s Lords Distillery Ltd. before learned CIT (A), and were part of record of Hon'ble ITAT in the first round of appellate proceedings, as a consolidated order was passed by Hon'ble ITAT dated 23.11.2012 in cases of assessee company, M/s Lords Distillery Ltd. and various other assessee's. However, since the captioned appeals have been set - aside by Hon'ble High Court of Delhi vide order dated 22.01.2015, thus, the afore said letter and affidavit of R.K. Miglani along with order of CIT (A) in case of M/s Lords Distillery Ltd. is being now filed under Rule 29, as the same was earlier filed in the case of M/s Lords Distillery Ltd. and not in the case of assessee company.

3. It is thus, most respectfully submitted that the aforesaid additional evidences be admitted, as the same goes to the root of the matter and is of paramount importance for deciding the captioned appeals. Reference is also being made to the judgment of Hon'ble High Court of Calcutta in the case of Sanjay Kumar Modi vs DIT reported in 278 ITR 374, wherein, it has been held that, "It has now become an elementary principle of law that the subsequent development having nexus to the original cause of action can be brought in the present proceeding to cut short the litigation and to meet the ends of justice."

4. It is prayed accordingly."

5.5 It is seen that along with the application under Rule 29, the assessee has filed a letter dated 03.03.2008, containing an affidavit of Sh. R.K. Miglani dated 01.03.2008, filed during the course of proceedings of M/s UPDA. The aforesaid letter dated 03.03.2008 along with the affidavit was filed in the case of M/s Lords Distillery 51 Ltd. before the learned CIT (A). After going through the said additional evidence, we are of the opinion that the letter dated 03.03.2008 along with the affidavit of Shri Miglani was already on record when the matter was being decided by the ITAT in the first round in batch of matters, and is not a fresh document. Now since, all the appeals have been segregated and are being heard separately, the aforesaid document would be necessary and important for the disposal of the instant appeals. The assessee's reliance on the judgment of the Hon'ble High Court of Calcutta in the case of Sanjay Kumar Modi vs DIT (supra) squarely covers the issue wherein it has been held that it is settled law that the subsequent development having nexus to the original cause of action can be brought on record to cut short the litigation and to meet the ends of justice. Hence, in view of the aforesaid judgment, the document filed by the assessee being subsequent development and also having nexus with the issue involved in the instant appeals is admitted.

5.6 Now we come to the main issue at hand, i.e. whether any document belonging to the assessee has been found which can form the basis of initiation of proceedings u/s 153C of the Act. The Hon'ble High Court has directed the ITAT to look into the matter 52 holistically and come to a finding as to whether, there was any material directly (e.g. forwarded by assessee) or indirectly (e.g. signed by assessee) found from the premises of the searched persons from whose statements and documents it can be concluded that the documents belonging to assessee were found and thus, proceedings initiated under section 153C of the Act were validly initiated.

5.7 Even at the risk of being repetitive, we record that in spite of view of the directions of the Hon'ble High Court and despite the fact that the revenue produced only Annexures A-1 to A-10 found from the premises of Shri Miglani, which was already on record before the ITAT, a specific query, was raised by the Bench to the learned CIT DR, that apart from the aforesaid, whether there is any other document which has been made the basis of recording of the satisfaction note and also the addition made in the order of assessment, and learned CIT DR has submitted that apart from the aforesaid, there are no other documents which had been made the basis of initiation of the proceedings as well as for making the addition. He was also asked to show any such document seized from the premises of searched persons, which could suggest that any production figure was forwarded by 53 assessee "as was contended by Revenue before Hon'ble High Court". In response, the learned CIT DR placed reliance on the seized annexures A-1 to A-10, found from the residential premises of Sh. R.K. Migalni during the course of search on 14.02.2006 and referred to various pages of seized annexures.

However, nowhere, the learned CIT DR has been able to show any such document, which could suggest that any document showing production figures was in fact forwarded by the assessee to Sh. R.K. Miglani or M/s UPDA. He again placed reliance on the statement of Sh. R.K. Miglani recorded during the search on his residential premises and also at the business premises of M/s UPDA, wherein Sh. Miglani had stated that production figures had been recorded by him on the basis of fax messages forwarded by various member distilleries of UPDA. However, not even one such alleged fax message with regard to the assessee has been produced before us by the revenue as seized annexure does not contain any such document. These arguments placed by learned CIT DR have already been dealt by Tribunal in the first round of proceedings and nothing new has been brought on record by the Revenue even though specific plea was raised by the Revenue before the Hon'ble High Court of 54 Delhi. Thus, on the same set of documents which were earlier placed before the ITAT, we cannot concur with the view of learned CIT DR that documents belonging to assessee had been found from the premises of the searched persons and in support of this view, we draw support from the of Hon'ble Delhi High Court in the case of Pepsico India Holdings Pvt. Ltd. vs ACIT reported in 370 ITR 295, wherein, the Hon'ble Court has held as follows:

"14. First of all we may point out, once again, that it is nobody"s case that the Jaipuria Group had disclaimed these documents as belonging to them. Unless and until it is established that the documents do not belong to the searched person, the provisions of Section 153C of the said Act do not get attracted because the very expression used in Section 153C of the said Act is that "where the Assessing Officer is satisfied that any money, bullion, 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 ...." In view of this phrase, it is necessary that before the provisions of Section 153C of the said Act can be invoked, the Assessing Officer of the searched person must be satisfied that the seized material (which includes documents) does not belong to the person referred to in Section 153A (i.e., the searched person). In the Satisfaction Note, which is the subject matter of these writ petitions, there is nothing therein to indicate that the seized documents do not belong to the Jaipuria Group. This is even apart from the fact that, as we have noted above, there is no disclaimer on the part of the Jaipuria Group insofar as these documents are concerned.

15. Secondly, we may also observe that the finding of photocopies in the possession of a searched person does not necessarily mean and imply that they "belong"

to the person who holds the originals. Possession of documents and possession of photocopies of documents are two separate things. While the Jaipuria Group may be the owner of the photocopies of the documents it is quite possible that the originals may be owned by some other person. Unless it is established that the documents in question, whether they be photocopies or originals, do not belong to the searched person, the question of invoking Section 153C of the said Act does not arise.

16. Thirdly, we would also like to make it clear that the assessing officers should not confuse the expression "belongs to" with the expressions "relates to" or "refers to". A registered sale deed, for example, "belongs to" the purchaser of the property although it obviously "relates to" or "refers to" the vendor. In this example if the purchaser's premises are searched and the registered sale deed is seized, it cannot be said that it "belongs to"

the vendor just because his name is mentioned in the document. In the converse case if the vendor's premises are searched and a copy of the sale deed is seized, it cannot be said that the said copy "belongs to" the purchaser just because it refers to him and he (the purchaser) holds the original sale deed. In this light, it is obvious that none of the three sets of documents - copies of preference shares, unsigned leaves of cheque books and the copy of the supply and loan agreement - can be said to "belong to" the petitioner.

17. In view of the foregoing discussion, we do not find that the ingredients of Section 153C of the said Act have been satisfied in this case. Consequently the notices dated 02.08.2013 issued under Section 153C of the said Act are quashed. Accordingly all proceedings pursuant thereto stand quashed."

5.8 In the instant case, the officer while framing the order of assessment under section 153A of the Act, in the case of M/s UPDA 56 had categorically held that documents found from Sh. R.K. Miglani and M/s UPDA belonged to UPDA and made additions under section 68 of the Act holding the said documents to be the books of accounts of M/s UPDA. Thus, with respect to the documents so found, as such, the same set of documents cannot belong to assessee and UPDA as well and thus the Revenue cannot take a dual stand, as the same set of documents cannot belong to two different assessees.

5.9 In view of the aforesaid, we are of the considered opinion that proceedings initiated under section 153C of the Act, are without jurisdiction in as much as, no document belonging to the Assessee Company was found as a result of search conducted on Sh. R.K. Miglani on 14.02.2006. and more over, the argument of learned CIT DR that the expression used in statute "belonging to" means "pertaining to" or "relating to", cannot be accepted as the amendment to said effect has been brought in the Income Tax Act w.e.f. 01.06.2015 and is prospective in nature and is not applicable for the impugned assessment years. Further, the Hon'ble High Court has merely directed the revenue to produce specific documents before the ITAT, in order to prove that the documents belonging to assessee were found as a result of search on Sh. R.K. 57 Miglani and the Revenue again has failed to produce any such document which can be said to be belonging to assessee. We note that the Revenue has merely re-filed again all such documents which were already on record of the ITAT in the first round of proceedings and on which the ITAT had already given a finding that such documents did not belong to the assessee. Accordingly, it is our considered opinion that the proceedings initiated under section 153C of the Act need to be quashed, as no document belonging to the assessee has been found from the premises of searched persons.

6. Further, since the Hon'ble High Court has directed us to decide all the issues taken by assessee, the remaining issues involved in the instant appeals are now decided hereunder. 6.1 In the case of the assessee, the allegation of the revenue, based on the documents seized from the premises of UPDA, is that the assessee had made illegal payments to various politicians/ bureaucrats. We have gone through the pages of the seized documents Annexure A-1 to A-10 furnished before us and from the examination of the aforesaid documents, as have been furnished before us by the revenue, we are of opinion that the said documents are dumb documents as such documents are wholly 58 unauthenticated and unreliable. The allegation of the revenue is that UPDA was collecting the sums from the distilleries to make illegal payments to various politicians/ bureaucrats. Had the theory of revenue been true and correct then the document would have been complete i.e. would also recorded the name of payees i.e. the politicians/ bureaucrats to whom such payments have been made or even some entries would have been found indicating/identifying the persons to whom such alleged payments were made. We concur with the submission of the assessee that there is no document found in respect of balancing of figures in respect of the alleged payments. Thus, in the absence of any other evidence either in the shape of cash book, day book, recording of payment, etc. the record showing the alleged production of all the distilleries and alleged contribution by such distilleries, is wholly unreliable. Had there been any entry found establishing payouts by UPDA, the revenue could have been then probably justified to contend that contributions were made by the distilleries and the payments were made to the politicians and bureaucrats. In such circumstances, we, on the appreciation of the entire evidences produced before us, are of the considered opinion that such documents are unreliable and dumb.

59 6.2 The revenue has also placed heavy reliance on the statements of third persons recorded behind the back of the assessee. In the instant case revenue has relied on the statements of Sh. R.K. Miglani and directors of M/s Prudent Distillery. However, the fact remains that before placing reliance, such persons have not been confronted for the cross examination of the assessee even though specific request for the same was made by the assessee vide letters dated 24.12.2007 and 28.12.2007 (at pages 125 to 128 and 132 to 133 of PB Part - I.) The AO rejected the prayer of the assessee, as is evident from page 11 and 12 of his order, wherein he has held that there is no requirement to provide cross - examination of Sh. R.K. Miglani to the assessee and with regard to the cross examination of the directors of M/s Prudent Distilleries Ltd., no finding has been recorded. As such, on an appreciation of the entire factual matrix and the settled law we hold that these statements need to be excluded altogether, as it was incumbent upon the AO/ Ld. CIT (A) to have provided the opportunity to cross - examine the persons on whose statements reliance was being placed by them. Not providing such opportunity is fatal to the proceedings and no additions can be made on the basis of such unreliable statements. It has so been held by various courts, and recently the Hon'ble 60 Apex Court in the case of M/s Andaman Timber Industries vs CCE (SC) reported in 127 DTR 241 has held as follows:

"According to us, not allowing the assessee to cross- examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross- examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross- examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex- factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what as mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was 61 not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross- examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause Notice.

We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal."

6.3 In the instant case revenue has relied on the statements of Sh. Miglani andon going through the additional evidence so filed by the assessee, which has been admitted earlier in the order, even the statement of Sh. R.K. Miglani, so relied on by the Revenue, cannot be relied on, as Sh. Miglani had retracted the said statement by filing an affidavit dated 01.03.2008 and thus, relying on the judgment of Hon'ble High Court of Delhi in the case of CIT vs Sunil Aggarwal (supra) and order of ITAT Pune in the case of Prabhat Chandra S. Jain vs ACIT (supra), relief is given to assessee on this count also, as the sole case of Revenue is the statement of Sh. R.K. Miglani and once the same is 62 excluded from consideration, the addition made by the AO has no legs to stand and needs to be deleted.

6.4 We also note that the Hon'ble Settlement Commission in the case of M/s Radico Khaitan (searched along with Sh. R.K. Miglani) has dismissed the plea of the Revenue to rely on the documents found from Sh. R.K. Miglani and M/s UPDA and have also held that since the opportunity to cross - examine Sh. R.K. Miglani was not provided to M/s Radico Khaitan, addition cannot be made on the basis of said documents. This is what has also been held by us in earlier paragraphs that not providing the opportunity to cross - examine Sh. R.K. Miglani is fatal to the proceedings and the addition needs to be deleted on this count also.

6.5 The facts of the instant assessee are somewhat peculiar as the distillery of the assessee company at Lucknow is not being operated by the assessee but by M/s Prudent Distilleries Ltd and M/s Suraj Distilleries Ltd under manufacturing, sales and, financial assistance agreements and the assessee gets a guaranteed amount only. The Lucknow Distillery was operated by M/s Prudent Distilleries Ltd. from 01.07.2002 to 31.03.04 and, thereafter from 01.04.2004 by M/s Suraj Distilleries Ltd. All 63 the operations of the unit are to be managed and, financed by the operators. In such circumstances, even if the theory of the revenue is taken to be correct, which we have already negated, the submission of the assessee that there was no occasion for the assessee to have made any such alleged payment, seems logical and well founded. In such circumstances, merely because the documents refer MML, does not by itself would mean that the assessee has been referred to as a distillery since the assessee company is not engaged in the production at all. 6.6 In the instant case, the assessee has denied making any such payments and hence, the burden is on the Revenue to establish the fact of making the alleged payments with corroborative evidences, which has not been done by Revenue. In the instant case, the revenue has merely relied on the statement of Shri Miglani and also on the seized material found from him, which remain unreliable and unauthenticated. In any case, there is no material showing any nexus of the assessee with such documents and, therefore, the burden was on the revenue to bring positive material to prove the allegation, which in the instant case has not been discharged. The judgment of Hon'ble Delhi High Court in the case of CIT vs Ved Prakash Choudhary 64 reported in 305 ITR 245 is fully applicable on the facts of this case, wherein, a search was conducted at the residence of the assessee on 10-2-2000. During the course of search, two Memorandums of Understanding (MOU) dated 1-3-1999 were recovered. These MOUs were entered into between the assessees, Ravi Talwar and Madhu Talwar. In terms of the MOUs, the assessee had paid Rs. 25 lakhs each to Ravi Talwar and Madhu Talwar towards part consideration for the purchase of agricultural land valued at Rs. 123.30 lakhs. The balance amount was to be paid on or before 30-4-1999, failing which the amount of Rs. 25 lakhs each would be forfeited. On the basis of the MoUs, the Assessing Officer issued a questionnaire to Ravi Talwar and Madhu Talwar regarding receipt of the amount of Rs. 25 lakhs each, but while they both admitted having signed the MoUs, they denied having received any amount. The Assessing Officer concluded that the denials by the assessee of having made payments and of Ravi Talwar and Madhu Talwar of having received the amounts were only to escape payment of tax liabilities. Accordingly, an amount of Rs. 50 lakhs was added in the hands of the assessee under section 69 of the Income-tax Act, 1961 as unexplained expenditure. The addition made by the 65 AO was deleted by the CIT (A) and the Tribunal. On further appeal, Hon'ble High Court dismissed the appeal of the revenue by holding as under:

"12. Insofar as the present case is concerned, the Assessee had stated that in fact there was no transfer of money between him and Ravi Talwar and Madhu Talwar. On the other hand, Ravi Talwar and Madhu Talwar had denied receipt of any money from the assessee. In the fact of these denials, there ought to have been corroborative evidence to show that there was in fact such a transfer of money. Both the Commissioner as well as the Tribunal have come to the conclusion that there was no such material on record.

13. The Assessing Officer relied on certain other transactions entered into by the assessee with Ravi Talwar and Madhu Talwar for drawing a presumption in respect of the transfer of money, but the Tribunal rightly held that those were independent transactions and had nothing to do with the MoUs, which were the subject-matter of discussion. Even if there was something wrong with some other transactions entered into, that would not give rise to an adverse inference insofar as the subject MoUs are concerned.

14. In our opinion, no substantial question of law arises."

6.7 In the instant case, the allegation is that the assessee has made payments to UPDA for paying illegal gratification to politicians/Bureaucrats, and except making the aforesaid bald allegation, the recipients of the alleged payments have neither been identified nor produced for cross examination of the assessee. No FIRs have been registered against any such alleged bureaucrats/politicians, Even a specific request for cross 66 examination was made before the AO vide letter dated 28.12.2007 (at pages 132 and 133 of PB Part - I) but the same was not responded to by the Department. Further, no document has been brought on record evidencing any such alleged payment to the politicians/bureaucrats and thus, the addition made by the AO without any material and without discharging the burden deserves to be deleted.

6.8 That since, we have decided the appeal for AY 2003-04 in ITA No. 3787/Del/2008, in favour of the assessee, the remaining two appeals for AY 2004-05 and 2005-06 in ITA Nos. 3788, 3789/Del/2008 are identical and are also allowed in view of our order passed above for AY 2003-04 in ITA No. 3787/Del/2008.

7. Apart from the aforesaid legal issue with respect to initiation of proceedings under section 153C of the Act and also the additions made in respect of alleged illegal payments, for AY 2003-04 and 2005-06, in ground no. 3 the assessee has challenged the disallowance of expenditures made in respect of "tips" of a sum of Rs.2,61,678/- (AY 2003-04), Rs. 4,27,430/- (AY 2004-05) and Rs. 4,64, 200/- (AY 2005-06) and further, in AY 2003-04, 2004-05 and 2005-06, AO has also not allowed carry forward of long term capital loss and also short deduction under section 80 HHC of the Act. 67 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 reported in 380 ITR 612 and CIT vs Kabul Chawala reported in 380 ITR 573.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.

8. Now coming to the appeal for AY 2006-07, in ITA No. 3790/Del/2008, since the said assessment was pending on the date of search and as such, stood abated, the said appeal needs to be decided on merits. The learned counsel of the assessee argued that addition needs to be deleted on following counts:

(a) The documents seized from the premises of Shri Miglani, which has been made the basis for making the addition are unreliable being unauthenticated and hence dumb documents.

(b) That the statement of Sh. R.K. Miglani and directors of M/s Prudent Distillery cannot be relied upon and needs to be excluded for consideration, as none of them have been produced for cross -

examination, even though specific request for the same was made 68 by assessee vide letters dated 24.12.2007 and 28.12.2007 (at pages 125 to 128 and 132 to 133 of PB Part - I).

(c) Reliance is placed on following judgments in support of the aforesaid proposition: Kishinchand Chellaram vs. CIT. [1980] 125 ITR 713 (SC), CIT vs Ashwani Gupta. 322 ITR 396 (Del) and Andaman Timber Industries vs CCE (SC) reported in 127 DTR 241. 8.1 It was further submitted that even the statement of Sh. R.K. Miglani so relied on by the Revenue, cannot be relied on, as Sh. Miglani had retracted the said statement by filing an affidavit dated 01.03.2008 and thus, relying on the judgment of Hon'ble High Court of Delhi in the case of CIT vs Sunil Aggarwal (supra) and order of ITAT Pune in the case of Prabhat Chandra S. Jain vs ACIT (supra), it was prayed that the addition made be deleted, as such. 8.2 It was also submitted by the Ld. AR that the officer while framing the order of assessment under section 153A of the Act, in the case of M/s UPDA had categorically held that the documents found from Sh. R.K. Miglani and M/s UPDA belonged to UPDA and made additions under section 68 of the Act holding the said documents to be the books of accounts of M/s UPDA, with respect to the documents so found, as such, same set of documents cannot belong to the assessee and UPDA as well and thus, the addition 69 made in the hands of the assessee on the basis of documents found from Sh. R.K. Miglani and UPDA needs to be deleted.

9. The Ld. CIT DR relied on the orders of the authorities below and while reading out extensively from the assessment order as well as the first appellate order, he vehemently argued that the additions be upheld.

10. Having heard both the parties and having gone through the relevant records, we observe that we have 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 at page 11 and 12 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. 70 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 (SC) (supra). The relevant paragraph of the aforesaid judgment has been extracted in the preceding paragraphs of this order.

10.1 That apart, Shri Miglani has retracted his statement made during the course of search by filing a letter dated 03.03.2008, containing an affidavit dated 01.03.2008, and as such, even the statement of Sh. R.K. Miglani so relied on by the Revenue, cannot be relied upon. The aforesaid finding is supported by the judgment of Hon'ble High Court of Delhi in the case of CIT vs Sunil Aggarwal (supra) and hence the addition made of Rs.2,73,41,542/- is deleted. 71 10.2 In ground no. 3, the AO has made disallowance of Rs. 4,21,488/- on account of "Tips". With respect to the said disallowance, we find that the ITAT by its order dated 27.03.2009 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.

10.3 In ground no. 4, it has been contended by the assessee that the AO has inadvertently not allowed the carry forward of long term capital loss and also challenged the short deduction under section 80M of the Act. 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. We direct accordingly.

10.4 Accordingly, ITA No. 3790/Del/2008 stands allowed. 72

11. In the final result, all the four appeals of the assessee stand allowed.

Order pronounced in the Open Court on 1st August, 2017.

      Sd/-                                   Sd/-
  (R.K. PANDA)                       (SUDHANSHU SRIVASTAVA)
ACCOUNTANT MEMBER                         JUDICIAL MEMBER

 Dated: 1st AUGUST, 2017
 'GS'

 Copy forwarded to: -

 1.     Appellant
 2.     Respondent
 3.     CIT
 4.     CIT(A)
 5.     DR, ITAT
                                          By Order


                                     ASSTT. REGISTRAR




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