IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH : B : NEW DELHI
BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER
AND
SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER
ITA Nos.1648 to 1653/Del/2013
Assessment Years : 2000-01 to 2005-06
DCIT, Vs. DCM Shriram Industries Ltd.,
Central Circle-19, 6th Floor, Kanchenjunga Building,
Room No.319, 18, Barakhamba Road,
E-2, ARA Centre, New Delhi.
Jhandewalan Extension,
New Delhi. PAN : AAACD0204C
CO Nos.126 to 131/Del2013
ITA Nos.1648 to 1653/Del/2013
Assessment Years : 2000-01 to 2005-06
DCM Shriram Industries Ltd., Vs. DCIT,
6th Floor, Kanchenjunga Central Circle-19,
Building, Room No.319,
18, Barakhamba Road, E-2, ARA Centre,
New Delhi. Jhandewalan Extension,
New Delhi.
PAN : AAACD0204C
(Appellant) (Respondent)
Assessee by : Shri Pradeep Dinodia, CA
Revenue by : Dr. Sudha Kumari, CIT, DR
ORDER
PER BENCH:
These are Department's appeals and Assessee's Cross
Objections for Assessment Years 2000-01 to 2005-06. The facts being
similar in all these cases, they are being taken from ITA
No.1648/Del/2013 and CO No.126/Del/2013.
2 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
2. The sole effective ground taken by the Department is that on the
facts and in the circumstances of the case, the CIT (A) has erred in
cancelling the assessment for the year under consideration.
3. The Cross Objections of the assessee are as follows:-
"1. That on the facts and in the circumstances of the case and
in law the Learned Commissioner of Income Tax (Appeals) has
erred in not holding that appellant was entitled to cross examine
Mr. R.K. Miglani, while completing the assessment, whose
statement had been relied upon by the Assessing Officer.
2. That on the facts and in the circumstances of the case and
in law the Learned Commissioner of Income Tax (Appeals) has
erred in assuming jurisdiction and completing the assessment
when it has been found and no addition, on account of
documents alleged to be found during search, has been made.
3. That on the facts and in the circumstances of the case and
in law the Learned Commissioner of Income Tax (Appeals) has
erred in not holding that disallowances liable to be made in
regular assessment can not be made in the assessment
proceedings u/s 153C/A of the Act especially when no
incriminating documents were found during the search
proceedings in respect of the disallowed item.
4. That on the facts and in the circumstances of the case and
in law the Learned Commissioner of Income Tax (Appeals) has
erred in not holding that Book Profits assessed u/s 115JA ought
to have been Rs.37, 168/- as against Rs.12,63,68,811/- assessed
in the assessment framed u/s 153C/A of the Act.
5. That on the facts and in the circumstances of the case and
in law the Learned Commissioner of Income Tax (Appeals) has
erred in not holding that provision of Rs.16,70,095/- (correctly
3 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
Rs.1,67,095/-) made for interest payable as per Allahabad High
Court order on additional levy sugar price realised in earlier
years is a provision for ascertained liability and is not to be
added back under Clause 'c' of Explanation to Second Proviso to
Section 115JA(2) of the Act. Without prejudice, the CIT (A) ought
to have held that the correct figure of provision was
Rs.1,67,095/- as against Rs.16,70,095/- adopted by the A.O.
6. That on the facts and in the circumstances of the case and in
law the Learned Commissioner of Income Tax (Appeals) has
erred in not holding that provision of Rs.9,22,845/- made for
interest payable, as per Allahabad High Court order on disuted
sugar cane price realised in earlier years is a provision for
ascertained liability and is not to be added back under Clause 'c'
of Explanation to Second Proviso to Section 115JA(2) of the Act.
7. That on the facts and in the circumstances of the case and
in law the Learned Commissioner of Income Tax (Appeals) has
erred in not holding that profit of power plants amounting to
Rs.12,16,88,179/- are the profit derived from the business of
generation of power and as such are not liable to be taxed u/s
115JA of the I.T. Act.
8. That on the facts and in the circumstances of the case and
in law the Learned Commissioner of Income Tax (Appeals) has
erred in not directing the AO to compute interest u/s 234A of the
Act for 6 months as against 7 months charged by the AO.
9. That on the facts and in the circumstances of the case and
in law the Learned Commissioner of Income Tax (Appeals) has
erred in not directing the AO to charge interest u/s 234B at
Rs.69,72,939/- as against Rs.1,44,13,152/- charged in the
assessment.
10. That on the facts and in the circumstances of the case and
in law the Learned Commissioner of Income Tax (Appeals) has
4 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
erred in not directing the AO to allow credit of tax of Rs.5,625/-
paid by the Appellant."
4. The facts are that the Assessing Officer, vide the assessment
order passed u/s 143 (3) of the IT Act, following the Assessing Officer's
findings in the `M/s National Industrial Corporation Ltd.', and other
similar cases, for Assessment Years 2003-04 to 2006-07, computed the
assessee's income as follows:-
"With the above findings, income of the assessee is computed as under:
Total business income as per Computation filed by the
assessee with letter dated 12.06.2007. Rs.15,34,91,291/-
Less: b.f. business loss/unabsorbed depreciation
subject rectification u/s 154 Rs.15,34,91,291/-
Total Income NIL
Computation of book profit u/s 115JA of the Act:
Net profit as per profit and loss account Rs.14,64,72,736/-
Add:
Provision for bad and doubtful debts as discussed above Rs.20,50,524/-
Provision for interest on additional levy sugar price and Rs.25,92,940/-
disputed sugar can price as discussed above
Rs.15,11,16,200/-
Less transfer from revaluation reserve 2,47,47,213
Add: Dividend exempt u/s 10(33) 176 Rs.2,47,47,389/-
Taxable Book Profit Rs.12,63,68,811/-
5. While passing the assessment order, the Assessing Officer made
the following observations:-
"1. The assessee company filed its original return on 29-11-
2000 declaring Nil income after set off of brought forward
losses. This return was processed u/s 143(1) on 28.03.2001 at
Nil income.
1.1 Proceedings u/s 153-C read with section 153A were
initiated in this case vide notice dated 11-12-2006 issued under
section 153A read with section 153C of the Act. Reasons for
5 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
taking action u/s 153C are recorded in subsequent paras. In
response to the notice u/s 153A/ 153C the assessee filed a Writ
Petition under Article 226/ 227 of Constitution before the High
Court of Delhi at New Delhi on 18-01-2007 challenging above
notices u/s 153A read with section 153C of the Act for the block
assessment years 2000-01, 2001-02, 2002-03, 2003-04, 2004-
05 and 2005-06. The Hon 'ble High Court vide their order dated
19-01-2007 (annexure-A pages 1-3) directed that no final order
under section 153C read with Section 153A of the Income-tax
Act be passed till next date viz. 05-03-2007. On 10-05-2007 the
Hon'ble Court passed order (annexure-A pages 4-6) that
interim order passed on 19-01-2007 is made absolute till the
disposal of the writ petition. In response to notice u/s 153A
read with Section 153C of the Act the assessee, vide its letter
dated 12-06-2007 submitted that the return for the captioned
assessment year is already with the Income-tax Department
which may be treated as filed pursuant to the notice u/s 153A/
153C of the Act. Along with this letter the assessee has filed
revised computation of income showing NIL income under the
normal provisions of the Act and has declared book profit u/s
115JA of the Act at Rs. 37,168/-. In this letter dated 12.06.2007
the assessee also made a request that the material/
documents alleged to be belonging to the assessee company
and relied upon by the Department for invoking the provisions
of Section 153C of the Act be supplied along with the
satisfaction recorded, if any, before commencing proceedings
u/s 153C of the Act. On 27-07-2007 Shri Sunil Murgai AR of the
assessee company attended and collected copies of seized
documents and satisfaction notes. The assessee vide letter
dated 20.08.2007 made a request to give copies of certain
selected documents and the copies of two statements of Shri
R.K. Miglani, Secretary General of UPDA. Vide letter dated 31-
08-2007 the copies of selected documents as well as two
statements of Shri Miglani were given to the assessee which
were received my Shri Miglani on behalf of the assessee
company on 05-09-2007 (receipt has been made on letter
dated 31.08.2007 of this office). Notices u/s 143(2) and 142(1)
along-with questionnaire were issued on 17-08-2007. In
response to statutory notices, Shri Y.D. Gupta DGM (Taxation)
and Sunil Murgai Assistant Manager (Taxation) of the assessee
company attended from time to time, furnished the details and
the case was discussed with him.
1.2 The assessee company is engaged in the business of
manufacture of Rectified Spirit, IMFL and Country Liquor.
1.3 Search and seizure action under section 132 of Income-tax
Act, 1961 was taken in the case of M/s Radico Khaitan Ltd. (a
leading distillery primarily based in UP) group of cases. Along-
with them, search was also conducted at the residence of Shri
R.K. Miglani, General Secretary UPDA (Uttar Pradesh Distillers
6 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
Association) and at the premises of M/s UPDA on 14.2.2006.
Many incriminating documents were seized. Statements of
various persons including Shri R.K. Miglani were recorded u/s
132(4)/133A of the Act.
1.4 M/s UPDA is a registered society formed by all the
distilleries of UP for its welfare to jointly take up their causes
with various authorities on different issues.
1.5 Main allegation was that UPDA was collecting huge sums
from its members which represented their unaccounted income
and then through UPDA utilizing these sums for the payment to
various authorities including politicians to further the business
cause of its members.
1.6 During the searches, large number of documents were
found and seized from various premises including that of M/s
Radico Khaitan, office of UPDA, residence of R.K. Miglani and
office of M/s Saraya Industries (which was also one of the
active members of the association) which prima-facie
confirmed the above allegations.
1.7 These documents seized from Miglani's residence and from
the office of UPDA were regular a/cs of money received date-
wise from the member distilleries from the Financial year 2002-
03 till the date of search i. e. 14.02.2006, basis of
determination of this contribution by each distillery and
manner of spending this money. As per these documents and
statements of Sh. Miglani, contribution of each member was
fixed on the basis of country liquor produced by each distillery.
These collections made by UPDA from its members were on
regular basis given to various officials and politicians which
basically represented illegal payments. This whole activity was
coordinated through select committee known as "Core
Committee" and Sh. Miglani as General Secretary maintained
the regular accounts of this collection and payments.
2. While examining the seized documents, the ACIT Central
Circle-4, New Delhi who was the Assessing Officer of the
persons searched viz. M/s Radico Khaitan Ltd., M/s UPDA (Uttar
Pradesh Distillery Association) and Sh. R.K. Miglani, General
Secretary of UPDA found that the documents seized during the
course of search coupled with the contents of the statements
of Shri R.K. Miglani, General Secretary of UPDA, showed that
unaccounted payments, were made by various distilleries
including the assessee M/s DCM Shriram Industries Ltd. to
UPDA which utilized that sum further for payments to various
public servants and politicians. It Was further inferred that the
UPDA acted as a nodal agency for making these illegal
payments for and on behalf of their Member Distilleries. The
details of such illegal! unaccounted payments on the basis of
7 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
these documents coupled with various other
details/information which are not allowable as expenditure
under the law are as under:-
S.No. Name of the 2002-03 2003-04 2004-05 2005-06 (till Total (in
Distillery Jan.) . Lakhs)
1 Saraya 945 1045 527.5 690 3207.5
(Saraya+
Balrampur
2 Unnao. 804 1134 636.9 889.6 3464.5
3 NIC (National) 327 359 242.4 348.6 1277
4 Narang 6·1 153 105.1 235.7 554.8
5& Pilkhani & 214.4 333.1 185 214 947.0
6 ShamIi
7 Modi 21 125 149.7 308.8 604.5
8 Superior/ITRC 6 46 34.7 233.6 320.3
9 Simbholi 298 472 278.5 583.1 1631.6
10 Cooperative 150 182 99.8 194.8 626.6
11 Kesar (Baheri) 419 317 176.3 245 1157.3
12 Daurala (DCM) 374 453 310.2 448.6 1585.8
13 Rampur 752 945 599.4 705.6 3002
14 SSL 463 607 374.8 591 2035.8
(Mansurpur)
15 M Meakins 202 334 204.2 275.6 1015.8
16 Lords (D.K. 582 616 404.9 486.9 2089.8
Modi)
17 Balrampur 298 328 244.5 870.5
18 Central 22 44 32.4 98.4
19 Majhola 72.5 72.5
2.1 Therefore, from the above chart it is clear that M/s DCM
Shriram Industries Ltd. has paid a sum of Rs.1585.8 Iakh during
the financial years 2002-03, 2003-04, 2004-05 &2005-06 relevant
to the assessment years 2003-04, 2004-05, 2005-06 & 2006-07.
2.2 The ACIT Central Circle-4, New Delhi recorded a satisfaction
as per the provisions of Section 153A on 1.12.2006 that action u/s
153C of the Act was called for in this case as the assessee had
made unaccounted payments/incurred illegal/ unaccounted
expenditure as mentioned above. He delivered the satisfaction
note along with certified, photo copies of the seized documents to
Dy. Commissioner of Income Tax, Central. Circle-19, New Delhi
who is the Assessing Officer of the assessee being the person
other than the parson searched, (Copy of the satisfaction
recorded by the ACIT Central Circle4, New Delhi is enclosed with
this order as per Annexure-A Pages 7-10).
2.3 On receipt of the above, the records were examined and the
satisfaction was also recorded by this office on 11.12.2006 that
action u/s 153C of the Act is applicable in this case. Accordingly,
notices under section 153A read with section 153C of the Act
were issued on 11.12.2006 requiring the assessee to file the
returns for the block assessment years 2000-01 to 2005-06 within
16 days of service of the said notices. Copy of this satisfaction
note recorded by this office is enclosed with the order as per
Annexure-A Pages 11-15.
8 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
3. The issue that these seized documents actually belong to the
assessee and that action u/s 153C has been validly taken is
discussed in detail in assessment orders for the assessment years
2003-04 to 2006-07.
7. As mentioned in para 1.1 of this order, the Hon 'ble High Court
vide their order dated 19-01-2007(copy enclosed as annexure A,
page 1-3) directed that no final order under section 153C read
with Section 153A of the Income-tax Act should be passed till the
next date of hearing i. e. 05-03-2007 and thereafter vide order
dated 10-05-2007 (copy enclosed as annexure A, page 4-6) that
interim order passed on 19-01-2007 is made absolute till the
disposal of the writ petition. Now, the Hon 'ble High Court vide
their order dated 31-10-2011 disposing off the writ petition of the
assessee, have held as under.
"2. Present writ petition is disposed of in terms of the
order dated 27th February, 2008 passed in Saraya
Industries Ltd. (supra).
3. Ld. Counsel for the petition submits that they want
to rely upon certain other orders decisions before
the Assessing Officer. It will be open to them to rely
upon the orders/decisions. It is an aspect which the
Assessing Officer has to examine and consider. We
express no opinion.
4. Interim order is vacated.
5. The petitioner will appear before the Assessing
Officer on 14th November 2011 at 11 a. m. when a
date of hearing will be fixed. "
7.1 Shri Y. D. Gupta, General Manager(Legal) of the assessee
company attended on 14-11-2011 and case was adjourned to 28-
11-2011 for further discussion. On 28-112011 Shri Y.D. Gupta,
General Manager (Legal) of the assessee company again
attended and filed a letter dated 17-11-2011/28-11-2011 stating
therein that since beginning, the assessee had maintained that
the proceedings initiated under section 153A/153C are bad in law,
in as much as, jurisdictional precondition initiation are not met
besides that the documents supplied do not belong to the
assessee as held in similar cases by various Courts. This
submission of the assessee has already been discussed in details
in the foregoing paragraphs and needs no further elaboration."
9 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
6. By virtue of the impugned order, the Ld. CIT (A) cancelled the
assessment order, observing thus:-
" I have considered the assessment order & argument of Ld.
AR. The impugned order is based entirely on same facts on which
hon'ble ITAT, Delhi has given decision that document Seized from
the residence of Sh. R.K. Miglani, Secretary General of UPDA does
not belong to 5 Member of UPDA. Appellant is also a member of
UPDA.
Section 153C was invoked in all members of UPDA on the
basis of Material Seized & evidence gathered from the residence
of Sh. M.K. Miglani during Search Action under See 132. In case of
Five Members namely M/s National Industrial Corporation Ltd., M/s
Kesar Enterprise Ltd., M/s Sir Shadi Lal Enterprises, M/s Mohan
Mekins Ltd., M/s Lords Distillery Ltd., for various Assessment
years; Hon'able ITAT, Delhi has given the finding that document
seized & evidences gathered from the residence of Sh. M.K.
Miglani during search does not belong to Members of UPDA.
Present appellant is also a member of UPDA.
Basic fact remains the same for all members of UPDA
against whom Section 153C was invoked on the basis of material
seized from residence of Sh. M.K. Miglani. Respectfully following
the decision of hon'ble ITAT cited supra, I hereby cancel the
impugned assessment. Appellant gets relief on this ground."
7. Thus, the Ld. CIT (A) followed the Tribunal Order dated
23.11.2012 in `National Industrial Corporation Ltd.' and thirty other
connected matters for Assessment Years 2000-01 to 2006-07.
8. Before us, the Ld. DR has contended that the Ld. CIT (A) has
erred in cancelling the assessment; and that while doing so, the Ld. CIT
(A) has failed to appreciate the well reasoned and elaborate findings
recorded by the Assessing Officer in the assessment order.
9. The ld. counsel for the assessee, on the other hand, has placed
strong reliance on the impugned order.
10 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
10. On hearing the rival contentions, we find that the Tribunal, vide
order (supra) dated 23.11.2012, passed in `M/s National Industrial
Corporation Ltd.' and thirty other connected matters (which order has
been followed by the Ld. CIT (A) in the impugned order), has held as
follows:-
"11. We have heard the rival contentions and gone through the
record carefully As observed earlier, the first question for our
adjudication is, whether during the course of search at the
premises of Radico Khaitan and at the residential premises of Shri
R.K. Miglani, General Secretary of UPDA, documents belonging to
the assessees have been found which enabled the Assessing
Officer of the searched persons to harbour a belief that action
under sec. 153C of the Act is required to be taken against the
assessees. Learned Assessing Officer of the searched person has
recorded a satisfaction for proceedings against the assessees.
This satisfaction note is dated 01.12.2006 as far as in the case of
Mohan Meakins Ltd. is concerned. Though the note is similar but
a different date has been put while communicating it to the
Assessing Officer of NICL i.e. DCIT, Central Circle-19, New Delhi.
On this note, the date is 16.3.2007. Learned Assessing Officer of
the present assessees have made an analysis of the note along
with the evidence available on the record transmitted with this
satisfaction note. They have recorded their separate satisfaction
particularly in the case of NICL and Kesser Enterprises (which
were brought to our notice). Thereafter, notice under sec. 153C
of the Act was issued and served upon the assessees.
12. In order to resolve this controversy, it is imperative upon us
to take note of section 153C of the Act, satisfaction note of the
Assessing Officer, Central Circle-4, New Delhi who has the
jurisdiction over the searched persons and the satisfaction of the
Assessing Officer in NICL or Kessar Enterprises exhibiting as to
how they have formed the opinion before the issuance of a notice
under sec. 153C of the Act. They read as under :
"153C. 89[(1)] Notwithstanding anything contained in section 139,
section 147, section 148, section 149, section 151 and section
153, 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,
then the books of account or documents or assets seized or
requisitioned shall be handed over to the Assessing Officer having
jurisdiction over such other person and that Assessing Officer
shall proceed against each such other person and issue such
other person notice and assess or reassess income of such other
person in accordance with the provisions of section 153A:]
11 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
90
Provided that in case of such other person, the reference to the
[Provided
date of initiation of the search under section 132 or making of
requisition under section 132A in the second proviso to 91(sub-
section (1) of] section 153A shall be construed as reference to the
date of receiving the books of account or documents or assets
seized or requisitioned by the Assessing Officer having jurisdiction
over such other person:]
Provided further that the Central Government may by rules
91a(Provided
made by it and published in the Official Gazette, specify the class
or classes of cases in respect of such other person, in which the
Assessing Officer shall not be required to issue notice for
assessing or reassessing the total income for six assessment
years immediately preceding the assessment year relevant to the
previous year in which search is conducted or requisition is made
except in cases where any assessment or reassessment has
abated.]
92
[(2)] Where books of account or documents or assets seized or
requisitioned as referred to in sub-section (1) has or have been
received by the Assessing Officer having jurisdiction over such
other person after the due date for furnishing the return of
income for the assessment year relevant to the previous year in
which search is conducted under section 132 or requisition is
made under section 132A and in respect of such assessment
year--- (a) no return of income has been furnished by such other
person and no notice under sub-section (1) of section 142 has
been issued to him, or
(b) a return of income has been furnished by such other person
but no notice under sub-section (2) of section 143 has been
served and limitation of serving the notice under sub-section (2)
of section 143 has expired, or
(c) assessment or reassessment, if any, has been made,
before the date of receiving the books of account or documents or
assets seized or requisitioned by the Assessing Officer having
jurisdiction over such other person, such Assessing Officer shall
issue the notice and assess the reassess total income of such
other person of such assessment year in the manner provided in
section 153A.]
CONFIDENTIAL
F.No.ACIT/CC-4/2006-07 OFFICE OF THE
ASSTT. COMMISSIONER OF INCOME-TAX,
CENTRAL CIRCLE-4, NEW DELHI
Date : 16.03.2007
To,
The Deputy Commissioner of Income Tax
Central Circle-19, New Delhi
12 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
Sir,
SUB: - SATISFACTION NOTE FOR ACTION U/S 153C OF INCOME
TAX, ACT, 1961 IN THE CASE OF MIS. KESAR ENTERPRISES
LIMITED, ORIENTAL HOUSE,7, JAMSHADJI TATA ROAD, CHURCH
GATE, MUMBAI APPEARING IN THE DOCOMENTS SEIZED IN MIS.
RADICO KHAITAN GROUP OF CASES - REGARDING
It has come to my knowledge that you exercise jurisdiction
over the case of M/s. Kesar Enterprises Limited.
Search and seizure actions under section 132 of I.T. Act,
1961 were taken on M/s Radico Khaitan Limited group of cases
and also at the residence of Shri R.K. Miglani, Secretary General
of UPDA on 14.2.2006. Simultaneously a survey u/s 133A of the
I.T. Act, 1961 was carried out at the office of the UPDA (Uttar
Pradesh Distillery Association). Various incriminating documents
were found and seized therefrom. Action u/s 153A has been
initiated against, various persons including M/s Radico Khaitan
Ltd, and Shri R.K. Miglani. During the course of search various
documents were seized / impounded and statements u/s 132(4) /
133 A were recorded including those of Shri R.K. Miglani. The
scrutiny of incriminating documents found at the residence of Shri
Miglani and also from the office of UPDA reveals that illegal
payments were made by various Distilleries to various public
servants. The UPDA acted as the nodal agency for making these
illegal payments. The total of such illegal payments which hare
inadmissible expenditures works out to RS.246 crore as per
details given hereunder {as understood from annexure A-1 & A-2
seized from the residential premises of Shr R.K. Miglani.
S.No. Name of Distillery 2002-03 2003-04 2004-05 2005-06(till Total (in
Jan.) Lakhs)
1 Saraya 945 1045 527.5 *690(Sarya + 3207.5
Balrampur)
2 Unnao 804 1134 636.9 889.6 3464.5
3 Rampur 952 945 599.4 705.6 3002
4 SSL 463 607 374.8 591 2035.8
(Mansurpur)
5 Lords 582 616 404.9 486.9 2089.8
(D.K. Modi)
6 Daurala (DCM) 374 453 310.2 448.6 1585.8
7 Kessar (Baheri) 419 317 176.3 245 1157.3
8 NIC (National) 327 359 242.4 348.6 1277
9 Simbholi 298 472 278.5 583.1 1631.6
10 Balrampur 298 328 244.5 870.5
11 Narang 61 153 105.1 235.7 554.8
13 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
12 **Pilkhani 162 339 185.3 213.6 899.9
13 ""Shamli 93 93
14 Cooperative 150 182 99.8 194.8 626.6
15 ***M. Meakins 202 334 204.2 375.6 1015.8
16 Central 22 44 32.4 98.4
17 Modi 21 125 149.7 308.8 604.5
18 Superior/ITRC 6 46 34.7 233.6 320.3
19 ****Majhola 72.5 72.5
Total 59.80Cr 75Cr 46.10Cr. 65.23Cr 246.076C
r
So, from the above chart, the total of such illegal payments in
respect of M/s. Kessar Enterprises Ltd., Oriental House, 7-
Jamshadji Tata Road, Church Gate, Mumbai, which are
inadmissible expenditures works out to Rs.1157.3 lakh as per
details given hereunder:
S.No. Name of the Distillery 2002-03 2003-04 2004- 2005-06 Total (in
05 (till Jan) Lakhs)
1 Kesar Enterprises 419 317 176.3 245 1157.3
Ltd. (Baheri)
*M/s. Saraya Industries Ltd. has taken over the country liquor
division of M/s. Balrampur Chini Mills Ltd. in the F.Y. 2005-06, so
there are no illegal payments by M/s. Balrampur Chini Mills Ltd. in
this year.
**Pilkhani and Shamli Distilleries are owned by the same Sir Shadi
Lal Group, so till a part of F.Y. 2003-04, the illegal payment
amount has been calculated separately, but thereafter, it has
been clubbed.
*** For M/s Mohan Meakins Group also the Lucknow and
Ghaziabad Distilleries are clubbed, though the major production /
illegal payments come from Lucknow Distillery operations.
****M/s Majhola Distillery started making illegal payments in the
F.Y. 2005-2006. These illegal payments to public servants are
fixed on the basis of monthly production/sales of different
distilleries. The-total illegal payment amount is settled with the
public servants and then this amount "is divided proportionately
on the basis of production / sales of different Distilleries. These
figures of production / sales reflected in the papers
impounded/seized from ITI UPDA headquarters and the residence
of its Secretary General Shri R.K. Miglani, in fact, tallies with the
14 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
actual production / sales shown by different distilleries in their
books of alc, which, in a way indicate that these papers depict the
illegal payments made and are not imaginary papers. These
distilleries have adopted different methods for siphoning off /
generation of this illegal payment amounts. Some of the
instances noticed are as under :-
(a) M/s National Industrial Corporation Ltd. (NICL) has paid
more than Rs.10 Crores in F.Y. 2002-2003 and 2003-2004 to M/s
Aneja & Co. as commission / supervision charges. M/s Aneja &
Co, even after including these amounts did not have to pay any
tax.
(b) M/s Unnao Distillery has paid more than Rs.30 Crores as
depot charges / expenses to two Delhi based parties, who have
paid negligible taxes on this amount. Such charges were not paid
till F.Y. 2001-2002.
(c) Many distilleries started paying commission on sales,
expenses on sales, sales incentives etc. from F.Y. 2002-2003
onwards, when these types of payments do not result into
corresponding incidence of tax in the hands of the recipients.
Sometimes these payments are made to business concerns in
non-related business. Shamli and Pilkhani Distilleries, Daurala
Distillery, M/s Lords Distillery have made such types of payments.
(d) In most cases, expenses on empty bottles have increased
disproportionately since F.Y. 2002-03
(e) Some of the distilleries like Saraya are paying inflated
transportation charges if compared with other distilleries.
In view of the above facts based on seized documents and
coupled with the statements of Shri R.K. Miglani, Secretary
General of UPDA, I am satisfied that the documents seized from
the residence of Shri R.K. Miglani belong to the above mentioned
persons also. Hence, action u/s. 153C of Income-tax Act, 1961 is
called for in the case of above noted person who has incurred
illegal expenditure as mentioned above.
Photocopies of Annexure-1 to A8 impounded from the office of
UPDA are being enclosed. Annexure A-9, impounded from the
office of UPDA is a hard disc. Assessing Officers requiring copies
thereof may obtain it from the undersigned. Also find enclosed
statement of Sh. R.K. Miglani, Secretary General UPDA recorded
u/s 132 (4) and u/s'133 A on 14.02.2006.
Sd/- (C.P. SINGH)
Astt. Commissioner of Income-tax
Central Circle-t, New Delhi
15 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
Even No. & Date
Copy to-
The Additional Commissioner of Income-tax, Central Range-6,
New Delhi for information.
Astt. Commissioner of Income-tax
Central Circle-t, New Delhi
13. The Assessing Officer of NIC and Kessar Enterprises has
analyzed the material along with the above satisfaction note and
thereafter recorded his satisfaction for serving notice under sec.
153(c). The satisfaction note containing the material considered
by him reads as under :
"SATISFACTION NOTE FOR INITIATING ACTION UNDER SECTION
153C OF INCOME TAX ACT 1961, IN THE CASE OF M/S. KESAR
ENTERPRISES UMITED, ORIENTAL HOUSE, 7, JAMSHADJI TATA
ROAD, CHURCH GATE, MUMBAI BASED ON APPRAISAL REPORT &
THE DOCUMENTS SEIZED / IMPOUNDED IN THE CASE OF SHRI R.K.
MIGLANI. AND M/S UTTAR PRADESH DISTILLERY ASSOCIATION.
Search and seizure action under section 132 of the Income-
tax Act, 1961 was conducted on M/s Radico Khaitan Ltd. Group of
cases on 14.02.2006. M/s Radico Khaitan Ltd. is engaged in the
manufacture and sale of IMFL. It is the second largest
manufacturer of IMFL in India and a leading manufacturer of Extra
Neutral Alcohol. It also manufactures Rectified Spirit and
Anyhydrous Alcohol or Ethanol or Gasohol. Simultaneously,
search and seizure actions under section 132 of LT. Act, 1961
were also carried out at the residence of Shri R.K. Miglani,
Secretary General of UPDA on 14.2.2006. Further, a survey u/s
133-A of the LT. Act, 1961 was also carried out at the office of the
UPDA (Uttar Pradesh Distillery Association). Various incriminating
documents were found and seized/impounded and statements u/s
132(4) /133A were recorded including those of Shri R.K. Miglani.
After search the cases of M/s Radico Khaitan Ltd. group including
those of Shri R.K. Miglani, and UPDA have been centralized with
ACIT, Central Circle-4, New Delhi.
The ACIT Central Circle-4, New Delhi after initiating
proceedings u/s 153A in cases of persons searched viz. M/s
Radico Khaitan Ltd. group and Shri R.K. Miglani and after examing
the seized / impounded documents has recorded his satisfaction
for initiating proceedings u/s 153C of the Act in various distillery
cases. Including the case of the assessee M/s Kesar Enterprises
Ltd. This case of M/s Kesar Enterprises Ltd. was centralized with
the undersigned in Central Circle-19 by the Commissioner of
Income-tax-I, Mumbai vide order u/s 127(2) of the Act
No.M.1/3/4/2/Centralisation/2006-07/475 dated 14.03.2007. This
recorded satisfaction for initiating action u/s 153C of the Act has
been conveyed by him to the DCIT Central Circle-19 New Delhi
16 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
vide his Confidential letter F.No.ACIT/CC-4/2006-07/ dated
16.03.2007 along with the certified copies of the documents
which belongs or belong to persons other than the persons
referred to in Section 153A in the form of Annexures A-I to A-IO
seized from the residence of Shri R.K. Miglani and annexures A-I
to K;.8. Impounded from the office of the UPDA.
I have examined the above seized documents, statements
recorded and Appraisal Report.
During the search at the residential premises of Shri R.K.
Miglani, Secretary General of UPDA (Uttar Pradesh Distillery
Association) at P-25 South Extension Part-II, New Delhi complete
set of incriminating papers documenting the unaccounted:
payments and the' individual contributions of the Members of
Association were found. These incriminating documents found at
the residence of Shri Miglani are also supported by the documents
found from the office of the UPDA PHD House (4th Floor) 4/2 Sri
Institutional Area August Karanti Marg, New Delhi on 14.2.2006.
They reveal that unaccounted payments were made by various
Distilleries to various public servants / persons / agencies. The
UPDA acted as the nodal agency for making these unaccounted
the payments. The total of such unaccounted payments in this
case which are inadmissible expenditures works out to Rs.1157.3
lac as per details given hereunder {as understood from annexure
A-I to A 10 seized from the residential premises of Shri R.K.
Miglani and annexure A-I to A-8 impounded from the premises of
UPDA}.
Financial year 2002-03 2003-04 2004-05 2005-06 Total
Amount paid 419 317 176.3 245 1157.3
(in lacs)
The collection of these, unaccounted payments to public
servants / persons / agencies are fixed on the basis of monthly
production/sales of different distilleries. The total unaccounted
payment amount is settled with the public servants / persons /
agencies and then this amount is divided proportionately on the
basis of production/sales of different Distilleries. These figures of
production/sales reflected in the papers seized from the residence
of Shri R.K. Miglani supported by evidence in documents
impounded from UPDA office, in fact, tally with the actual
production/sales shown by different distilleries in their book of
a/c, which, in a way indicate that these papers depict the actual
unaccounted payments made by the Distilleries. For example a
lap top computer pertaining to Shri Ajay Agarwal, GM (Accounts)
of M/s . Radico Khaitan was seized from Rampur during the search
operations found that some of the pages containing the details
17 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
monthly bribe payments for April to July, 2003 (Annexure"3d")
matched with the pages showing these details and seized from
Shri Miglani's house. Thus the fact of monthly bribe payments by
U.P. Based distilleries producing country liquor stands proved
beyond doubt.
The statement of Shri R.K. Miglani was recorded during the
search on these collections and payments in which he has
admitted that all these are unaccounted payments collected from
distilleries and paid to politicians, but he has declined to name
the politicians. The questions and answers of the statement of
Shri R.K. Recorded u/s 132(4) of the I.T. Act, 1961 on 14.02.2006
are being extracted as under :
UQ 8 Please give details of duties performed by you as Secretary
General of UPDA
Ans. I attend to the day to day working of the association. During
the course of funtions listed above. I also book (my office) the
record of dispatch if sic. of various types of liquor produced by the
member of UP DA on weekly basis. This also include records of
various expenses incurred by the member of UPDA during the
course of their normal business expenses.
Q 9 Please tell in brief about the expenses incurred by the
members of UPDA during the course of normal business expenses
for which your office keep records?
Ans. My office keep record of the contribution/payments made by
various members of UPDA directly to politicians and other persons
/ agencies. I do not however know the actual name and amount
paid to various persons (payees).
Q 10 I am showing you page 150 to 155 of Annexure A-I. Have
these paper been written by you and if yes. Please explain the
transactions on these papers?
Ans. Pages 153 & 155 only are written by me. However, all the
above mentioned papers contains record of payment /
contribution by various members of UPDA which ad up to 508.05
lacs. The next figure of Rs.670.00 which is the contribution to be
paid (due) from these members on Ale of above mentioned
payment. Page 154 again contain the details of balances
attributed to various members if UPDA in respect of amount to be
paid (due) on A/c of above.
Q 11. I am again showing you annexure A-I which contain pages
1 to 155. Please explain the nature of transaction recorded on
these papers?
18 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
Ans. I am again showing you annexure A-I which contain pages 1
to 155. Please explain the nature of transactions recorded on
these papers?
Ans. As I have already explained to you that the transactions
recorded on these papers relate to the payment/contribution
made by various members of UPDA periodically to the persons /
agencies mentioned in my answer to Q No.9.
Q. 12 ...................................
Ans.......................................
Q. 13 ...................................
Ans........................................
Q. 14. I showing you pages 101 and 103 of Annexure A-I which
have "Thakur A/c" written on each of them. Please tell who is
Thakur and on what a/c the payments have been ade/due to
him?
Ans. I do not know who is Thakur. However, these papers must
have been received from one of the members of the UP DA. I am
unable to recollect the name of the member. These transactions
pertain to payment made /due to Sh. Thakur.
Q 15 I am showing you pages 43, 44 45 of annexure A-2. Please
explain the nature of transaction on these papers?
Ans : Page 43 and Page 45 are typed details of transaction
recorded on page 44 and 46 respectively. The transactions
recorded on page 43 & 45 are amount of money paid to various
offices / officers of the Govt. Deptt. (Excise)
Q 16 I am showing you pages 72 to 75 of Annexure A-2. Please
explain the nature of transaction of these papers?
Ans. These transactions are amount paid by various members of
UPDA during FY 2004-05 & 2005-06 to various Govt. Agency and
other person on various dated mentioned against each payment
made.
Q 17 I am showing you page 77 to 79 of Annexure A-2. Please
explain the amount written by hand on various dates and who has
written these amounts?
Ans. The hand written entries are written by me and these are in
respect of amount received by the Core Distilleries from other
member towards the contribution of amount to be paid to various
Govt. Agencies / persons.
19 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
Q.18 I am showing you page 94 of Annexure A-3 which is marked
"Confidential" please explain the transaction recorded on this
paper?
Ans : This is details of expense! to be incurred by each member of
UPDA @ Rs.201- per case and amount to be paid by each party
has been calculated on this basis and mentioned against each of
them.
Q 19 I am showing you pages 47 & 48 of Annexure 4. Please
explain the nature of transaction recorded on these pages?
Ans. This page 47 contains the cash a/c for the month of Oct. 2 to
3 of expenses attributable to various members of UPDA. This Ale
has been given by Sh. Wadhwa of M/s Saraya Distilleries on
11/12/2003. Page 48 contains the records of balances
outstanding in respect of various members of UPDA for F.Y. 2003-
04 as on 22/06/203.
Q 23 As per page 24 of Annexure A-1, an amount of Rs.76.06
Crore during F.Y. 2003-04, as per page 124 of Annexure A=1,
Rs.46.09 crores and as per page 68 of Annexure A-2, Rs.63.40
Crores for members of UP DA to various Govt. Agencies j persons
as facilitation money totaling to Rs.185.56 Crores. What you will
have to say about this?
Ans. As these figures have been taken by you from the seized
record found at my residences which are self explanatory, I have
nothing to add."
In view of above, I am satisfied that the documents seized from
the residence of Shri R.K. Miglani and found from the office of the
UPDA belong to the above concern and it is a fit case to issue
notices u/s 153AJ153C. Notices u/s 153AJ153C of the Act are,
therefore, issued.
Dated : 19.03.2007 (Balwant Singh)
Dy. Commissioner of Income-tax
Central Circle-I S, New Delhi"
14. Before adverting to the respective arguments, vis-a-vis,
analysis of the material available on record, we deem it
appropriate to make a reference about the order of the ITAT,
Bangalore in the case of DCIT vs. United Spirits Ltd., Bangalore
vide ITA Nos. 1375 to 1378/Bang/2010 dated 13.01.2012. The
satisfaction recorded by the Assessing Officer who has jurisdiction
over the searched persons is a common satisfaction in respect of
nineteen distilleries. Similar assessment orders were made in the
case of Central Distillery & Breviaries Ltd. mentioned at Sr. No.16
of the satisfaction note. Learned CIT (Appeals), Bangalore has
held that no material belonging to the assessee was found which
20 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
authorized the Assessing Officer to initiate the proceedings under
sec. 153C of the Act. The order of the Learned CIT(Appeals)-VI,
Bangalore dated 27.9.2010 was challenged before the ITAT in ITA
Nos.1375 to 1378/Bang/2010 for assessment years 2002-03 to
2005-06 (supra). The ITAT has dismissed the appeals of the
revenue. Thus, one of the contentions raised by the learned
counsel for the assessee is that the issue in dispute is squarely
covered in favour of the assessee by the order of the ITAT which
has interpreted and construed the same satisfaction note. In this
background of fact, we deem fit appropriate to take note of the
findings recorded by the ITAT, Bangalore. It reads as under :
"8. We have carefully considered the rival submissions,
perused the relevant records and also the case laws on which
reliance was placed.
8.1 During the course of action u/s 132 of the Act at the
residential premises of Shri Miglani, some incriminating
documents purported to have been unearthed which, according to
Revenue, revealed illegal payments made by various distilleries
to public servants and that the impounded materials revealed
that the appellant was one of the members of UPDA which also
indulged in certain illegal payments. On the basis of above
narration, the appellant was called upon by way of issuance of
notice u/s 153A r.w.s. 153C of the Act to furnish its returns of
income. 8.1.1. Thus, the core issue before this Bench is :
Whether the assessing officer was within his sphere to call upon
the appellant to furnish its returns of income on the solitary
reasoning that the appellant's was also one of the members of
UPDA who had made certain illegal payments to various public
servants? At this juncture, it is worthwhile to mention here that
neither books of account nor any documents belonging to the
appellant were discovered during the course of action u/s 132 of
the Act at the residential premises of Sri Miglani. Such being a
situation, it is worthwhile as to whether the AO was justified in his
stand in issuing a notice u/s 153A r.w.s. 153C of the Act. To find
an answer, we shall have a glance at section 153C of the Act
which reads as under :
"153C (1) Notwithstanding anything contained in
section 139, section 147, section 148, section 149,
section 151 and section 153, 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, then the books of account or documents or
assets seized or requisitioned shall be handed over to
the assessing officer having jurisdiction over such
other person and that assessing officer shall proceed
against each such other person and issue such other
21 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
person notice and assess or reassess income of such
other person in accordance with the provisions of
section 153A"
8.1.2. On a simple reading of s. 153C of the Act, it is crystal clear
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 to belong
to a person other than the person referred to in section 153A,
then the books of account or documents or assets seized or
requisitioned shall be handed over to the assessing officer having
jurisdiction over such other person and that assessing officer shall
proceed against each such other person and issue such other
person notice and assess or reassess income of such other person
in accordance with the provisions of section 153A". However, in
the present appellant's case, no books of account nor any
incriminate documents pertaining to the appellant were seized
when a search was conducted in the residential premises of Sri
Miglani and that no books of account or documents or assets
seized or requisitioned were handed over to the assessing officer
having jurisdiction over the appellant, but, only "(Para 3 of asst.
order) 3....A satisfaction note for initiation of action u/s 153C/148
in the case of CBDL was also received from the DCIT, CC-19, New
Delhi...." Thus, the AO, in our considered view, was not within his
realm for initiation of proceedings u/s 153A r.w.s. 153C of the Act
in the case of the present appellant.
8.1.3. Even from the legal angle too, the AO was not justified for
initiation of actin u/s 153A r.w.s. 153C of the Act, as held by the
Hon'ble Bench in the case of P Srinivas Naik V. ACIT reported in
(2008) 114 TTJ (Bng) 0856 wherein it has been declared that :
"7. We have heard both the parties. It is an
undisputed fact that books of accounts or documents do
not belong to the assessee, as these were seized from the
premises of Shri Reddy. It is nowhere stated that these
books of account or documents showed that all the
transactions belonging to the assessee. Such books of
account or documents contained the transactions relating
to the group concerns of Shri Reddy. No valuable belonging
to the assessee has been seized during the course of
search. The terms belonging implied something more than
the idea of casual association. It involves the notion of
continuity and indicates one more or less intimate
connection with the person over a period of time. The
books of account or documents seized during the course of
search have a close association with the group concern of
Shri Reddy. It records the transaction carried out by that
group. It does not record the transaction carried out by the
asessee. Under Wealth-tax Act, assets belonging to
assessee were taxable. The expression belonging to the
22 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
assessee connotes both the complete ownership and
limited ownership or interest, of course belonging to is
capable connoting interest which is less than absolute
perfect legal title. However, there should be some limited
ownership of interest, if it is to be permitted that the assets
belongs to the assessee. In the instant case, documents or
books of account found during the course of search and
seized cannot be termed to be indicating any limited
interest of the ownership of the assessee in such books of
account or documents. The language used in section 153C
is materially different from the language used under section
158BD. As per Page 11 of 12 ITA Nos. 1375 11 to
1378/Bang/2010 section 158BD, if any undisclosed income
relates to other person, then action against such other
person can be taken provided such undisclosed income is
referable to the document seized during the course of
search. However, section 153C says that if valuable or
books of account or documents belonging to other persons
are seized then action under section 153C can be taken
against that person. In the instant case, we are satisfied
that books of account or documents do not belong to the
assessee and, therefore, the AO was not justified in
initiating action under section 153A read with section 153C
of the Act........"
8.1.4. Incidentally, the earlier Bench had, in the case of ACIT V.
Shri Lakshman B Tukral in ITA Nos. 897 to 902/Bang/2007 dated
11.2.2011, echoed a similar view thus:
"8.5. In an overall consideration of the facts and
circumstances of the issue as deliberated upon
judicial as well as on merits in the foregoing
paragraphs and in conformity with the findings of the
jurisdictional Hon'Ble Bench as well as the Hon'ble
Gujarat High Court cited supra, we are of the firm view
that when the conditions precedence for issuance of
notice u/s 153C r.w.s. 153A were not fulfilled, as rightly
ruled by the Hon'ble Gujarat High Court, any action
taken u/s 153C of the Act stand vitiated...."
8.1.5. On an identical issue, the Hon'ble High Court of Gujarat in
the case of Vijaybhai N Chandrani v. ACIT reported in (2010) 231
CTR 474 (Guj) ruled in a similar way thus:
"13. Thus, a condition precedent for issuing notice
under section 153C and assessing or reassessing
income of such person, is that the money, bullion,
jewellery or other Page 12 of 12 ITA Nos. 1375 12 to
1378/Bang/2010 valuable article or thing or books of
account or documents seized or requisitioned should
belong to such person. If the said requirement is not
23 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
satisfied, resort cannot be had to the provisions of
section 153C of the Act."
8.2 Taking all the above facts into consideration and also the
judicial pronouncements on a similar as discussed above, we are
of the considered view that the stand of the CIT(A) is justified in
the sense that the primary condition for issue of notices under
section 153C of the Income-tax Act are not satisfied and, hence,
the assessing officer was not justified in initiating proceedings
under section 153C of the Income-tax Act for all the assessment
years under dispute. It is ordered accordingly.
9. In the result, the Revenue's appeals for the Ays.2002-03,
2003-04, 2004-05 and 2005-06 are dismissed".
15. As far as the proposition, that during the search operation,
material belonging to third person was found and the Assessing
Officer of the searched persons was satisfied that such
documents, money, bullion etc. belongs to other person then, he
will hand over those books of account and documents etc. to the
Assessing Officer having jurisdiction over such other person. The
Assessing Officer will commence the assessment proceedings
over such person under sec. 153C of the Act. If no document,
money, bullion and jewellery etc. was found in respect of any
other person than there will not be any proceedings under sec.
153C of the Act qua the other such person. The ITAT, Bangalore
has made lucid analysis of this proposition in the findings
extracted supra and there is no dispute on this aspect.
16. The dispute is whether documents belonging to the assessees
were found during the course of search at the premises Shri R.K.
Miglani or Radico Khaitan. The ITAT, Bangalore had arrived at a
conclusion that no such material was found which can authorize
the Assessing Officer to commence proceedings under sec. 153C
of the Act. Apart from the order of the Co-ordinate Bench, we
have gone through the seized material available in the paper
book filed by each assessee. We have specifically gone through
page Nos. 105 to 190 of the paper book filed in the case of Kessar
Enterprises for assessment year 2003-04. All these papers are
also placed in the paper books of other assessees. Learned CIT
(Appeals) has also reproduced some of the seized material in the
impugned orders, particularly, in the case of NICL and Kessar
Enterprises.
17. According to the Learned CIT(Appeals), operating force of
the expression "belonging to" is something more than the idea of
casual association. It involves the notion of continuity and
indicates one more or less intimate connection with the person
over a period of time. It cannot both complete ownerships or
limited ownership of interest, which may be less than the
absolute legal title. Probably, learned first appellate authority has
construed this meaning on the basis of the meaning explaoned on
24 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
this expression in the judicial dictionary. This expression has
been explained as under:
"Belong The world "belong" in Bombay Municipal Boroughs
Act denotes ownership. [Borough Municipality of
Ahmedabad V. Govt of Province of Bombay ILR 1942
Bom 463, 201 IC 329, 15 RB 66, 64 Bom LR 35, AIR
1942 Bom 183].
Mere possession, or joint possession,
unaccompanied by the right to, or ownership of
property does not amount to `belong'. [CWT v.
Bishwanath Chatterjee (1976) 1 SCJ 484].
Belong to [See `Owner', Raja Mohammad Amir Ahmad Khan v.
Municipal Board, Sitapur AIR 1965 S.C. 1923. (1996)
1 SCJ 484].
Though the word `belonging' no doubt is
capable of denoting an absolute title, it is
nevertheless not confined to connoting that sense.
Even possession of an interest less than that of full
ownership could be signed by the word. The precise
sense which the word was meant to convey can,
therefore, be gathered only by reading the
document as a whole and adverting to the context in
which it occurs. [Raja Md. Amir Ahmed Khan V.
Municipal Board, Sitapur, supra.
Section 2(m) of the WT Act, uses the
expression `belonging to' and as such indicates
something over which a person has dominion and
lawful dominion should be the person assessable to
wealth tax for this purpose. Even in some cases, the
phrases `belonging to' is capable of connoting
interest less than absolute perfect legal title. The
assessee, who has received full consideration but
has not executed registered sale deed, is regarded
the person to whom the property belongs. [Nawab
Sir Mr Osman Ali Khan v CWT 1986 Supp SCC 700 at
708, 711, 714].
In juxtaposition with the words `in lawful
possession' in s 2(25)(b) of the Land Reforms Act
1964 (Kerala), the words `belonging to' means
ownership. In expl II-A, the words `belonging to' do
not mean `in possession of'. [Achutan v. Narayani
Amma 1980 Ker LT 160].
18. According to the revenue, if all the Annexures A1 to A 10
are looked into in the light of the statement given by their author
25 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
Shri Miglani, then it reveals that day to day transaction noted on
these pages are directly related to the business o the assessee
and members of the UPDA. Therefore, these documents were
belonged to the assessee. Prima facie, it appears to be very
simple version. It becomes more simple if we conceive these
facts as a layman on the basis of our experience, we gather from
the society, rather that impression makes our task more difficult
and give rise to conflict of thoughts and beliefs. The expression
"document" has been defined in the Indian Evidence Act, to mean
any matter expressed or described upon any substance by means
of letter, figure, marks or by more than one of these means
intended to be used for the purpose of recording that matter.
There is no dispute that documents in these appeals were in the
handwriting of Mr. Miglani. He is not the employee of any of the
assessees. Accordingly to our understanding, the presumption of
ownership of document could be attached with the person who
authored it or with whom it was found i.e. the person who
possessed it. All the documents relied upon by the revenue were
not emanating from the books of the assessee or in the
handwriting of any employee of the assessee. We could
appreciate the case of the revenue if it was able to lay its hands
on any forwarding letter i.e. chit etc. written by the assessee
while handing over the money to UPDA. Any fax message, any e-
mail or any audio message recorded from the telephone
conversation. Had any such material was found then it could be
`said that the documents belonging to the assessee were found.
The material emanating from the alleged compilation of details
from Mr. Miglani can be an information pertaining to the assessee
disclosing the details of income or expenditure but that cannot be
a document belonging to the assessee. It can be explained with a
simple example, suppose an ex-employee of a concern who has a
knowledge of account makes extra polation of the accounts on
the basis of his experience and that person was searched, can the
document be considered as belonging to the assessee. It may
give information to the Income-tax Department for investigation.
It may lead to reopening of assessment but those details cannot
be a gospel truth and cannot be considered as documents
belonging to the erstwhile employer.
19. During the course of hearing, a query struck to our mind
that UPDA is a society where all the assessees are members.
According to the principle of mutuality, why the details prepared
by the Secretary of the Society be not construed as belonging to
all the members of the society. To this query, it was contended
by the learned counsel for the assessee that UPDA is an
independent taxable entity. It is not a members club and not a
mutual benefit society. It is constituted under a separate
Memorandum of Association. The Memorandum of Association
does not provide that excess of the income shall be paid or
transferred directly or indirectly to the members of the society. It
also does not provide that on dissolution of the society, assets of
26 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
the society shall be distributed among the members of the
society. Any thing belong to the society can not be said to be
belonged to the members. All these amounts have been taxed in
the hands of UPDA also. The assessees have their independent
status as a company other than the members of a society. On an
analysis of above submission, we do not find any merit in the
contention of Learned DR that considering the position of Shri
Miglani as Secretary of UPDA. The document should be construed
as belonged to assessee.
20. In view of the above discussion, we do not find any reason
to differ with the decision of the Co-ordinate Bench and make a
reference for the constitution of a larger bench. Respectfully
following the order of the ITAT, Bangalore, we allow the
preliminary grounds raised by the assessee that no documents
belonging to the assessee were found and, therefore, no
assessment under sec. 153C of the Act can be framed in their
cases. Consequently, all the assessment orders are quashed."
11. The Ld. CIT (A) has found that the facts of the present case are
entirely similar to those before the Tribunal in `National Industrial
Corporation Ltd.' (supra); that the Tribunal held that the documents
seized and evidences gathered from the residence of Shri R.K. Miglani,
Secretary General of Uttar Pradesh Distillers Association (UPDA) do not
belong to the Members of UPDA and that no assessment u/s 153-C of
the IT Act can be framed in their cases. The Ld. CIT (A) found the
present assessee also to be a member of UPDA. The department has
not been able to dispute before us these findings of the Ld. CIT (A). The
ld. counsel for the assessee has pointed out that in `National Industrial
Corporation Ltd.' (supra), in the table at page 18 of the Tribunal order,
the assessee's name occurs at item 6 of such table [the entry in
column 2, i.e., Name of Distillery, is `Daurala (DCM)', which, according
to the ld. Counsel for the assessee, and not disputed by the ld. DR, is
the distillery of the assessee company], in the satisfaction note of the
Assessing Officer, Central Circle-4, New Delhi, for action u/s 153-C of
the IT Act, in the case of M/s Kesar Enterprises Ltd., Mumbai, appearing
in the documents seized in the M/s Radico Khaitan group of cases. As
per this satisfaction note, the assessee was one of the persons named
27 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
in the aforesaid table, who had made such illegal payments. Also, as
per para 1.3 of the assessment order, search was conducted on the
M/s Radico Khaitan group of cases and also at the residence of Shri
R.K. Miglani, Secretary General of UPDA. Simultaneously, search was
carried out at the office of UPDA. The incriminating documents found
at the residence of Shri Miglani revealed the aforesaid illegal payments
having been made. Even as per the assessment order (paras 2.1 and
2.2), the assessee had made such illegal payments and action u/s 153-
C of the Act was taken against the assessee.
12. The order of the Tribunal (supra), thus, is squarely applicable to
the case of the present assessee, the facts therein being entirely
similar to those of the present case, as rightly held by the Ld. CIT (A).
This Tribunal order has not been stated to have been, hitherto, either
set aside, or even stayed, on appeal. This Tribunal Order, therefore,
holds the field till date and the CIT (A) has not erred in any manner in
following the same. We hold so.
13. Therefore, finding no error whatsoever therein, the impugned
order is confirmed.
14. As noted at the beginning of this order, the facts in all these
appeals and Cross Objections are, mutatis mutandis, entirely similar
inter se.
15. In view of the above, the sole ground raised by the department
in all these appeals is rejected. Consequently, all the Cross Objections
raised by the assessee are infructuous and are rejected as such.
28 ITA Nos.1648 to 1653/Del/2013
CO Nos.126 to 131/Del/2013.
16. In the result, all the six appeals filed by the department are
dismissed and all the six Cross Objections are dismissed as infructious.
The order pronounced in the open court on 11.10.2013.
Sd/- Sd/-
[SHAMIM YAHYA] [A.D. JAIN]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated, 11.10.2013.
dk
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT
TRUE COPY
By Order,
Deputy Registrar,
ITAT, Delhi Benches
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