M/S. PAUL RESORTS & HOTELS PVT LTD,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(1), BANGALORE

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ITA 843/BANG/2023Status: DisposedITAT Bangalore24 July 2024AY 2016-17147 pages

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Cases cited in this judgment

Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.

National Thermal Power Co. Ltd. v. CIT
229 ITR 383 · 1998 · SC
5,796 citing
CIT v. Text Hundred India Pvt. Ltd.
351 ITR 57 · 2013 · HC
88 citing
CIT v. Abhisar Buildwell (P) Ltd.
2023 SCC OnLine SC 481 · 2023
49 citing

Income Tax Appellate Tribunal, “C’’ BENCH: BANGALORE

Before: SHRI CHANDRA POOJARI & SHRI KESHAV DUBEY

For Respondent: Ms. Neera Malhotra, D.R

Hearing: 19.06.2024Pronounced: 24.07.2024

O R D E R PER BENCH:

All the appeals by assessee and revenue are directed against different orders of CIT(A) for the respective assessment years noted above. Since the issues in all these appeals is common except for figures, these are clubbed together, heard together and disposed of by this common order for the sake of convenience.

ITA Nos.982 to 987/Bang/2023 in the case of M/. John Distilleries Pvt. Ltd. for the AYs 2011-12 to 2016-17: 2. First, we will take up to 987/Bang/2023 for the assessment years 2011-12 to 2016-17. 2.1 These appeals are directed against common order of CIT(A) for the assessment years 2011-12 to 2017-18 dated 31.12.2018. Since the issues in these appeals are common, these are clubbed together, heard together and disposed of by this common order for the sake of convenience.

3. The assessee filed common additional ground in ITA Nos.984, 986/Bang/2023 for assessment years 2013-14 & 2015-16 under Rule 11 of the I.T. Act along with petition as follows: “Ground no. 9A: Without prejudice to the above, there was no transaction with the said contractors during the Previous Year 2012- 13 and hence no addition was called for in this AY and thus the addition made by the AO is liable to be deleted.”

Similar additional ground in assessment year 2015-16. 3.1 With regard to above additional ground, the contention of the assessee counsel is that in this two assessment years 2013-14 & 2015-16, there was no transaction with the said contractors which ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 4 of 147 is considered as a bogus and there cannot e any disallowance since the main issue has been remitted back to the file of ld. AO to consider the books of accounts of the assessee. This ground is also should go back to the ld. AO if there is no transaction with the said contractors as narrated in the assessment order in AY 2013-14 & 2015-16 and no addition could be made.

14.11 She submitted that it could be seen from the profit and loss account enclosed to the return of income filed by the assessee that the assessee was offering certain incomes under the head other income. The assessee was given a show cause letter on 11.12.2018 to bring to tax a sum of Rs.96,00,000/- and was asked to furnish the breakup of the other income. The assessee produced the breakup of the other income along with ledger copy. It could be seen from the documents produced that the assessee had admitted a sum of Rs. 53,08,832/- as income from the return trip. The ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 31 of 147 return trip income was received in cash from the drivers who have while returning from the various depots of KSBCL after delivering the products of the assessee, have transported goods mainly agricultural products. Based on the statement referred above a sum of Rs. 96,00,000/- is the actual return trip income of the assessee. However, considering the return trip income offered by the assessee, the ld. AO brought to tax a sum of Rs.42,91,168/- (Rs.96,00,000 – Rs.53,08,832). Further, she submitted that there was seized material A/JDPL/12 which has been considered along with statement recorded u/s 132(4) of the Act from the MD Shri Paul P. John and also on the basis of statement recorded u/s 131 of the Act from various key employees of the company for these two assessment years 2011-12 & 2012-13. 14.12 In our opinion, at this stage, we cannot quash the assessment u/s 153A of the Act is bad in law. However, the ld. AO has to examine whether the seized material referred in these two assessment years marked as A/JDPL/12 is having any relevance to for making addition in these two assessment years. If this seized material has no relevance in these assessment years 2011-12 & 2012-13, in such circumstances, these two assessments are being concluded assessments and these assessments cannot be reopened u/s 153A of the Act. In other words, if the assessee’s case falls under below category for these two assessment years, the assessment cannot be reopened u/s 153A of the Act without any seized material found during the course of search action.

27.

Recently, this Court, in the case of Saksham Commodities Limited v. Income Tax Officer, Ward 22(1), Delhi & Anr6, while relying upon the ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 51 of 147 decision of the Supreme Court in Abhisar Buildwell (supra) and this Court’s decision in the case of CIT v. RRJ Securities Ltd.7, upheld the position of law that the AO would not be justified to assess income in case no incriminating material is found during the search. The relevant paragraph is reproduced herein below: - “54. In any case, Abhisar Buildwell, in our considered opinion, is a decision which conclusively lays to rest any doubt that could have been possibly harboured. The Supreme Court in unequivocal terms held that absent incriminating material, the AO would not be justified in seeking to assess or reassess completed assessments. Though the aforesaid observations were rendered in the context of completed assessments, the same position would prevail when it comes to assessments which abate pursuant to the issuance of a notice under Section 153C. Here too, the AO would have to firstly identify the AYs' to which the material gathered in the course of the search may relate and consequently it would only be those assessments which would face the spectre of abatement. The additions here too would have to be based on material that may have been unearthed in the course of the search or on the basis of material requisitioned. The statute thus creates a persistent and enduring connect between the material discovered and the assessment that may be ultimately made. The provision while speaking of AYs' falling within the block of six AYs' or for that matter all years forming part of the block of ten AYs', appears to have been put in place to cover all possible contingencies. The aforesaid provisions clearly appear to have been incorporated and made applicable both with respect to Section 153A as well as Section 153C ex abundanti cautela. Which however takes us back to what had been observed earlier, namely, the existence of the power being merely enabling as opposed to a statutory compulsion or an inevitable consequence which was advocated

ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 53 of 147 B. Both Sections 153A and 153C embody non-obstante clauses and are in express terms ordained to override Sections 139, 147 to 149, 151 and 153 of the Act. By virtue of the 2017 Amending Act, significant amendments came to be introduced in Section 153A. These included, inter alia, the search assessment block being enlarged to ten AYs' consequent to the addition of the stipulation of “relevant assessment year” and which was defined to mean those years which would fall beyond the six year block period but not later than ten AYs'. The block period for search assessment thus came to be enlarged to stretch up to ten AYs'. The 2017 Amending Act also put in place certain prerequisite conditions which would have to inevitably be shown to be satisfied before the search assessment could stretch to the “relevant assessment year”. The preconditions include the prescription of income having escaped assessment and represented in the form of an asset amounting to or “likely to amount to” INR 50 lakhs or more in the “relevant assessment year” or in aggregate in the “relevant assessment years”. C. Section 153C, on the other hand, pertains to the non- searched entity and in respect of whom any material, books of accounts or documents may have been seized and were found to belong to or pertain to a person other than the searched person. As in the case of Section 153A, Section 153C was also to apply to all searches that may have been undertaken between the period 01 June 2003 to 31 March 2021. In terms of that provision, the AO stands similarly empowered to undertake and initiate an assessment in respect of a non-searched entity for the six AYs' as well as for “the relevant assessment year”. The AYs', which would consequently be thrown open for assessment or reassessment under Section 153C follows lines pari materia with Section 153A. D. The First Proviso to Section 153C introduces a legal fiction on the basis of which the commencement date for computation of the six year or the ten year block is deemed to be the date of receipt of books of accounts by the jurisdictional AO. The identification of the starting block for the purposes of computation of the six and the ten year period is governed by the First Proviso to Section 153C, which significantly shifts the reference point spoken of in Section 153A(1), while defining the point from which the period of the “relevant assessment year” is to be calculated, to the date of receipt of the books of accounts, documents or assets seized by ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 54 of 147 the jurisdictional AO of the non-searched person. The shift of the relevant date in the case of a non-searched person being regulated by the First Proviso of Section 153C(1) is an issue which is no longer res integra and stands authoritatively settled by virtue of the decisions of this Court in SSP Aviation and RRJ Securities as well as the decision of the Supreme Court in Jasjit Singh. The aforesaid legal position also stood reiterated by the Supreme Court in Vikram Sujitkumar Bhatia. The submission of the respondents, therefore, that the block periods would have to be reckoned with reference to the date of search can neither be countenanced nor accepted. E. The reckoning of the six AYs' would require one to firstly identify the FY in which the search was undertaken and which would lead to the ascertainment of the AY relevant to the previous year of search. The block of six AYs' would consequently be those which immediately precede the AY relevant to the year of search. In the case of a search assessment undertaken in terms of Section 153C, the solitary distinction would be that the previous year of search would stand substituted by the date or the year in which the books of accounts or documents and assets seized are handed over to the jurisdictional AO as opposed to the year of search which constitutes the basis for an assessment under Section 153A. F. While the identification and computation of the six AYs' hinges upon the phrase “immediately preceding the assessment year relevant to the previous year” of search, the ten year period would have to be reckoned from the 31st day of March of the AY relevant to the year of search. This, since undisputedly, Explanation 1 of Section 153A requires us to reckon it “from the end of the assessment year”. This distinction would have to necessarily be acknowledged in light of the statute having consciously adopted the phraseology “immediately preceding” when it be in relation to the six year period and employing the expression “from the end of the assessment year” while speaking of the ten year block.”

20.14 Further, Hon’ble Supreme Court in the case of Common Cause (A registered Society) Vs. Union of India in Writ Petition (Civil) No.505 of 2015 dated 2.7.2018 [2017] 394 ITR 220 (SC) wherein considered and observed that the entries in the loose papers/sheets are not “books of accounts” and has no evidentiary value u/s 34 of the Indian Evidence Act. The Hon’ble Supreme Court dismissing the writ petition filed by Common Cause, a registered society, refused to give nod to investigate against the Sahara and Birla Groups in the alleged payoff scandal. The factual setting of the case are that, a search was conducted by the CBI in the premises of Birla Groups, as a result of which, certain incriminating materials and an amount of Rs.25 crores were recovered. CBI referred the matter to Income Tax Department. In another search, the IT department recovered certain incriminating materials and unaccounted money of Rs.135 crores from Sahara Group of Companies. Allegedly the department recovered certain print out of excel sheets showing that Rs.115 crores were paid to ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 59 of 147 several public figures. The settlement commission granted immunity to the Sahara Group of Companies on ground that the scrutiny of entries on loose papers, computer prints, hard disk, pen drives, etc. have revealed that the transactions noted on documents were not genuine and have no evidentiary value and that details in these loose papers, computer print outs, hard disks and pen drives, etc. do not comply with the requirement of the Indian Evidence Act and are not admissible evidence. The Income Tax Settlement Commission has also observed that department has not been able to make out a clear case of taxing such income in the hands of the applicant firm on the basis of these documents. The petitioner, Common Cause, impugned the orders before the Hon’ble Supreme Court. Dismissed the petition Supreme Court clarified that the evidence that had surfaced was not credible and cogent. The Attorney General contended that documents which have been filed by the Birla as well as Sahara Group are not in the form of Account books maintained in the regular course of business. They are random sheets and loose papers and their correctness and authenticity even for the purpose of income mentioned therein have been found to be unreliable having no evidentiary value, by the concerned authorities of Income Tax. Analysing the veracity of the evidences procured from the companies, the Supreme Court, relied upon the ratio laid in V.C. Shukla case and observed that the entries in loose sheets of papers are not in the form of “Books of Accounts” and has held that such entries in loose papers/sheets are irrelevant and not admissible u/s 34 of Indian Evidence Act, and that only where the entries are in the Books of Accounts regularly kept depending on the nature of the occupation, that those are admissible.

ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 60 of 147 20.15 Tribunal in the case of ACIT Vs. Manchukonda Shyam in ITA 87/Viz/2020 dt.23.09.2020 wherein the Tribunal at paras 6 and 6.1 has held as under: “6. We have heard both the parties, gone through the orders of the authorities below. Shri Lanka Anil Kumar is an employee of M/s Navaratna Estates Ltd. A search u/s 132 was conducted in the residence of Shri Lanka Anil Kumar and certain sums were found in whatsapp messages in digits. When asked to explain, Shri Anil Kumar stated that the amounts were written in thousands represent lakhs and the total sum of Rs.1,05,00,000/-was taken as loan from the assessee in cash for his business purposes. When confronted with the assessee, he explained that the amounts mentioned in thousands are correct and the total amount would be in the range of Rs.5,000/- and Rs.10,000/- given to Shri Anil Kumar to meet the petty cash or miscellaneous expenses from M/s Navaratna Estates during registration of properties. A search u/s 132 was conducted in the case of Shri Lanka Anil Kumar as well as the assessee and the survey u/s 133A was conducted in the case of M/s Navaratna Estates. No evidence was found by the department either in the premises of the assessee or in the premises of M/s Navaratna Estates, having given loan to Sri Anil Kumar to the extent of Rs.1,05,00,000/-. In the search proceedings in the residence of Shri Anil Kumar also, no evidence with regard to unaccounted investment or expenditure representing the loan supposed to be taken from the assessee was found. Merely on the basis of the statement given by Shri Lanka Anil Kumar, which was subsequently retracted, the AO made the addition on the presumption that the assessee had advanced the sums to Shri Lanka Anil Kumar without bringing any evidence on record. The AO has neither given opportunity to the assessee to cross examine the third party nor disproved the explanation given by the assessee. As found from the order of the AO Sri Lanka Anil Kumar is an employee of M/s Navaratna Estates and drawing the salary of Rs.25000/- per month. He explained that the sums mentioned in the whatsapp messages were related to the amounts given to Sri Lanka Anil Kumar in the range of Rs.5,000/- to Rs.10,000/- to meet the petty cash and miscellaneous expenses. No evidence was found with regard to the investment made by Shri Anil Kumar in his own business out of the loans stated to have given by the assessee. In the above facts and circumstances there is no reason to disbelieve the statement given by the assessee that the payments were given for meeting petty cash or miscellaneous expenses. The Ld.CIT(A) following the decisions of Hon’ble Jurisdictional High Court as well as this Tribunal held that on the ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 61 of 147 basis of notings and loose sheets found from third parties and the statement of third parties, the additions cannot be made without having corroborative / independent evidences. For the sake of clarity and convenience, we extract relevant part of the order of Ld.CIT(A) in para No.6.2 of page No.13 which reads as under : “6.2. I have considered the assessment order and submissions of the appellant. It is seen that the addition made by the AO is solely based on the social media (whatsapp) messages exchanged between the appellant and Mr. Anil Kumar, an employee of M/s Navaratna Estates. A statement u/s.132 recorded from Mr. L, Anil Kumar during the course of Search during which Mr. L. Anil Kumar was questioned and he explained the nature and 'details of messages exchanged by him with the appellant. The messages contain details of transactions in digits. Those were explained to be in lakhs of rupees and the transaction was loans advanced by the appellant to Mr.L. Anil Kumar whereas the appellant explained the same to be in thousands of rupees which were given for miscellaneous expenses. Mr.L. Anil Kumar also took similar stand in his assessment proceedings and said that the statement given during Search was under duress. The AO has not brought on record any evidences as to utility of such amount nor any other corroborative evidence to support the findings. Such evidences(Messages) without any supporting/corroborative along with admission of third person cannot be, basis for AO to come to conclusion and make addition in the assessment order. The low or the issue is laid down by the jurisdictional High Court, and followed by ITAT consistently in the following cases.

20.17 The Hon’ble Supreme Court in Andaman Timber Industries v. Commissioner of Central Excise, 281 CTR 241 (SC) held as follows:- “Not allowing the assessee to cross-examine the witness 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 ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 63 of 147 assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. (para 6) 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 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. (para 7) 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. (para 8)” 20.18 The Delhi Tribunal in the case of Veena Gupta v. ACIT in ITA No.5662/Del/2018 dated 27.11.2018 relying on the above judgment of Hon’ble Supreme Court in the case of Andaman Timber Industries (supra) quashed the assessment order on the reason of not providing cross-examination of witnesses whose statements were recorded.

The Hon’ble Supreme Court in the case of Mehta Parikh 20.19 & Co. v. CIT, 30 ITR 181 held as under:- “In the instant case a mere calculation of the nature indulged in by the ITO or the AAC was not enough, without any further scrutiny, to dislodge the position taken up by the assessee, supported as it was, by the entries in the cash book and the affidavits put in by the assessee before the AAC. The Tribunal also fell into the same error. It could not negative the possibility of the assessee being in possession of a substantial number of these high denomination currency notes. It, however, considered that it was impossible for the assessee to have had 61 such notes in the cash balance in their hands on 12-1-1946, and then it applied a rule of ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 64 of 147 the thumb treating 31 out of such 61 notes as within the bounds of possibility, excluding 30 such notes as not covered by the explanation of the assessee. This was pure surmise and had no basis in the evidence, which was on the record of the proceedings. Facts proved or admitted may provide to support further conclusions to be deduced from them, which conclusions may themselves be conclusions of fact and such inferences from facts proved or admitted could be matters of law. The court would be entitled to intervene if it appears that the fact finding authority has acted without any evidence or upon a view of the facts, which could not reasonably be entertained or the facts found are such that no person acting judicially and properly instructed as to the relevant law would have come to the determination in question. The High Court treated this finding of the Tribunal as a mere finding of fact and recognised this position in effect but went wrong in applying the true principles of interference with such findings of fact to the present case. Really speaking the Tribunal had not indicated upon what material it held that Rs. 30,000 should be treated as secret profit or profits from undisclosed sources and the order passed by it was bad. The assessee had furnished a reasonable explanation for the possession of the high denomination notes of the face value of Rs. 61,000 and there was no justification for having accepted it in part and discarded it in relation to a sum of Rs. 30,000. The High Court ought to have held that there were no materials to justify the assessment of Rs. 30,000 from out of the sum of Rs. 61,000, for income-tax and excess profits tax and business profits tax purposes, representing the value of the high denomination notes which were encashed.” 20.20 The Hon’ble Calcutta High Court in the case of CIT v. Eastern Commercial Enterprises, 210 ITR 103 (Cal) held as follows:- “8. We have considered the contesting contentions of the parties. It is true that Shri Sukla has proved to be a shifty person as a witness. At the earlier stages, he claimed all his sales to be genuine but before the Assessing Officer in the case of the assessee, he disowned the sales specifically made to the assessee. This statement can at the worst show that Shri Sukla is not a trustworthy witness and little value can be attached to what he stated either in his affidavits or in his examination by the Assessing Officer. His conduct neutralises his value as a witness. A man indulging in double-speaking cannot be said by any ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 65 of 147 means a truthful man at any stage and no court can decide on which occasion he was truthful. If Shri Sukla is neutralised as a witness what remains is the accounts, vouchers, challans, bank accounts, etc. But, we would observe here that which way lies the truth in Shri Sukla's depositions, could have been revealed only if he was subjected to a cross-examination by the assessee. As a matter of fact, the right to cross-examine a witness adverse to the assessee is an indispensable right and the opportunity of such cross-examination is one of the corner-stones of natural justice. Here Shri Sukla is the witness of the Department. Therefore, the Department cannot cut short the process of taking oral evidence by merely having the examination-in-chief. It is the necessary requirement of the process of taking evidence that the examination-in-chief is followed by cross-examination and re- examination, if necessary.

9. It is not just a question of form or a question of giving an adverse party its privilege but a necessity of the process of testing the truth of oral evidence of a witness. Without the truth being tested no oral evidence can be admissible evidence and could not form the basis of any inference against the adverse parties. We have also examined the records and we find that this Shri Sukla was examined by a number of officers. The Assistant Director of Investigation examined him on August 4, 1987, and in reply to question No. 2 in that deposition he confirmed that he was a dealer in lubricating oil since 1977. In reply to question No. 3, he confirmed having been assessed to income-tax. Again, in reply to question No. 4, he explained that he used to purchase lubricating oil from different garages as well as through various brokers. Such lubricating oil was processed by him in his factory for sale. All payments were received by him through account payee cheques. In reply to question No. 5, he stated that he had seven full-time employees whose names are mentioned by him. He also claimed to have maintained books of account like sales books, purchase books, cash books and sale bills. In reply to question No. 18, he, on his own, stated that his big customers were the Reliance Oil Mills and Eastern Commercial Enterprises, the assessee, in the present reference. As for his cash withdrawals, he explained that his business required ready cash for purchase of raw materials which explained his large drawings of cash from the bank. Learned counsel then cited a host of decisions to bring home the point that no evidence or document can be relied upon unless it is shown to the assessee. Kishanchand Chellaram v. CIT. Similarly, the requirement of cross-examination as the requirement of the rules of natural justice has been underlined by the Bombay High Court in Vasanji Ghela and Co. v. CST [1977] 40 STC 544. It is trite law that cross-examination is the sine qua non of ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 66 of 147 due process of taking evidence and no adverse inference can be drawn against a party unless the party is put on notice of the case made out against him. He must be supplied the contents of all such evidence, both oral and documentary, so that he can prepare to meet the case against him. This necessarily also postulates that he should cross- examine the witness hostile to him.

20.22 Reliance on this incomplete statement cannot be appreciated as held by the Hon’ble Supreme Court in the case of Kishinchand Chellaram v. CIT, 125 ITR 713 (SC) as follows:- “Held, reversing the decision of the High Court, (i) on the facts, that the two letters dated February 18, 1955 , and March 9, 1957 did not constitute any material evidence which the Tribunal could take into account for the purpose of arriving at the finding that the sum of ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 67 of 147 Rs.1,07,350 was remitted by the assessee from Madras, and if these two letters were eliminated, there was no material evidence at all which could support its finding. The statements of managers in those two letters were based on hearsay, as in the absence of evidence, it could not be taken that he must have been in charge of the Madras office on October 16, 1946, so as to have personal knowledge. The department ought to have called upon the manager to produce the documents and papers on the basis of which he made the statement and confronted the assessee with those documents and papers. It was true that proceedings under the income-tax law were not governed by the strict rules of evidence, and, therefore, it might be said that even without calling the manager of the bank in evidence to prove the letter dated February 18, 1955, it could be taken into account as evidence. But before the income-tax authorities could rely upon it, they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it by asking for an opportunity to cross-examine the manager of the bank with reference to the statements made by him. Nor was there any explanation regarding what happened when the manager appeared in obedience to the summons referred to in the letter dated March 9, 1957, and what statement he had made.” 20.23 For this purpose we place reliance on the judgement in the case of ICT Vs. Abhinitha Foundation Pvt. Ltd. (2017) (396 ITR 251), wherein held as under:

ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 69 of 147 12.1.The assessee, in that case, had available with it surplus funds, which it chose to deposit with banks on a short term basis. Qua the said short term deposits, the assessee earned interest during the relevant previous year amounting to Rs.22,84,994/-. The said interest was offered for levy tax by the assessee, based on which, assessment proceedings were completed. The assessee, however, challenged the assessment order before the CIT (A) qua grounds other than the inclusion of the interest earned on short term deposits in the total income. Consequently, this aspect of the matter was not considered by the CIT (A). The assessee, however, carried the matter in appeal to the Tribunal. The appeal, as originally filed with the Tribunal, did not object to the inclusion of interest in the sum of Rs.22,84,994/-. The assessee, however, as indicated above, for the first time, by way of a letter dated 16.07.1983, raised additional grounds, whereby, a challenge was laid to the inclusion of interest in the total income. The basis of the challenge was that, since, the sum of Rs.22,84,994/- had been deducted from the expenditure incurred during construction period, it could not have been included in the total income. 12.2.The Supreme Court, after examining the matter threadbare, made the following observations: ''Under Section 254 of the Income-tax Act, the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, we do not see any reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of that item. We do not see any reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the Department have aright to file an appeal/cross- objections before the Tribunal. We fail to see why the Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier. 12.3 In the case of Jute Corporation of India Ltd. v. CIT (1991) 187 ITR 688, this court, while dealing with the powers of the Appellate Assistant Commissioner observed that an appellate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory provisions. In the absence of any ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 70 of 147 statutory provision, the appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter. There is no good reason to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income-tax Officer. This court further observed that there may be several factors justifying the raising of a new plea in an appeal and each case has to be considered on its own facts. The Appellate Assistant Commissioner must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons. The Appellate Assistant Commissioner should exercise his discretion in permitting or not permitting the assessee to raise an additional ground in accordance with law and reason. The same observations would apply to appeals before the Tribunal also. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner of Income-tax (Appeals) takes too narrow a view of the powers of the Appellate Tribunal (vide, e.g., CIT v. Anand Prasad (1981) 128 ITR 388 (Delhi), CIT v. Karamchand Premchand P. Ltd. (1969)

18. We have given a careful consideration to the rival submissions made before us. We have also carefully gone through the relevant facts and the judicial pronouncements cited before us. In our view, the grounds raised by the assessee in appellate proceedings to the effect that the interest income disclosed by him in the returns of income filed in response to notices issued Under Section 148 must be excluded from his total income, has to be entertained and dealt with on merits. The Hon'ble Jurisdictional High Court's decision in the case of Nirmala L Mehta (supra) squarely applies to the facts of this case. In that case also the Hon'ble Bombay High Court observed that merely because the assessee offered the prize money won in the lottery of the Sikkim Government, that would not take away her right to contend that the prize money was not chargeable to tax under Income tax Act, 1961. In this case also, having conditionally offered the income for tax, the assessee raised the issue before the learned CIT(A) that such income is not legally includible in his total income. The learned CIT(A) rejected this plea on the ground that having already voluntarily disclosed the income, the assessee cannot raise such ground. This finding of the learned CIT(A) is not in consonance with the Hon'ble Bombay High Court decision referred above. Another basis on which the learned CIT(A) did not entertain the ground of appeal raised by the assessee is the provisions contained in proviso (b) of Section 240. The relevant section has already been reproduced above. A plain reading of the provision shows that Clause (b) of proviso applies only to a case where the assessment is annulled. In the present case, admittedly, the assessment is not annulled. The assessments have been partly confirmed by the learned CIT(A). Therefore, it cannot be said that in the present case, relevant assessments have been annulled. This is substantiated from the exposition of the word annulment" as contained in the judgment of Hon'ble Bombay High Court in the case of M/s Ratanbai N.K. Dubhash referred to above. We, therefore, hold that the grounds of appeal raised by the assessee regarding taxability of interest income must be admitted and decided on merits.

Income escaping assessment. 147 If the [Assessing] Officer /has reason to believe/ that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of Sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in Sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under Sub-section (3) of Section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to lax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under Section 139 or in response to a notice issued under Sub-section (1) of Section 112 or Section 118 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. Explanation 1. Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2. For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely: (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax; (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understood the income or has claimed excessive loss, deduction, allowance or relief in the return; (c) where an assessment has been made, but (i) income chargeable to lax has been under assessed; or (ii) such income has been assessed at too low a rate; or (iii) such income has been made the subject of excessive relief under this Act; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed.]

26. From the above, it may be seen that once re-assessment proceedings have been validly initiated Under Section 147, the assessing officer is authorized to assess or ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 86 of 147 reassess such escaped income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of assessment proceedings Under Section 147, it is clear that the jurisdiction of the assessing officer Under Section 147 is not merely confined to bringing to charge of tax the income referred to in the reasons recorded for issue of notice Under Section 148, but it also extends to bringing to charge of tax any other income which has escaped assessment and which comes to his notice during the re- assessment proceedings. The Hon'ble Punjab & Haryana High Court, in the case of Vipan Khanna (supra) held that it is only such income which has escaped assessment which can be brought to the charge of tax in the re-assessment framed Under Section 147. If during the course of re-assessment proceedings, the assessing officer notices that any other income chargeable has also escaped assessment, he is within his power to bring to charge of tax such income. However, the assessing officer cannot make any roving or fishing enquiries and he cannot proceed in a fashion as if entire proceedings are open before him. In that case, in response to the notice issue Under Section 148, the assessee filed returns of income for the relevant assessment years declaring same income as had been shown in the original returns. The assessing officer, thereafter, issued notices Under Section 143(3) and 142(1) requiring the assessee to produce the books of account and to furnish information specified in the letter issued by the assessing officer. Making of such enquiries was not approved by the Hon'ble High Court.

The principle laid down by this court in V. Jaganmohan Rao's case, therefore, is only to the extent that once an assessment is validly reopened by issuance of a notice under Section 22(2) of the 1922 Act (corresponding to Section 148 of the Act), the previous underassessment is set aside and the Income-tax Officer has the jurisdiction and duty to levy lax on the entire income that had escaped assessment during the previous year. What is set aside is, thus, only the previous underassessment and not the original assessment proceedings. An order made in relation to the escaped turnover does not affect the operative force of the original assessment, particularly if it has acquired finality, and the original order retains both its character and identity. It is only in case of "underassessment" based on Clauses (a) to (d) of Explanation 1 to Section 147, that the assessment of tax due has to be recomputed on the entire taxable income. The judgment in V. Jaganmohan Rao's case , therefore, cannot be read to imply as laying down that, in the reassessment proceedings validly initiated, the assessee can seek reopening of the whole assessment and claim credit in respect of items finally concluded in the original assessment. The assessee cannot claim re-computation of the income or redoing of an assessment and be allowed a claim, which he either failed to make or which was otherwise rejected at the time of original assessment, which has since acquired finality. Of course, in the reassessment proceedings, it is open to an assessee to show that the income alleged to have escaped assessment has in truth and in fact not escaped assessment but that the same had been shown under some inappropriate head in the original return, but to read the judgment in v. Jaganmohan Rao's case , as laying down that reassessment wipes out the original assessment and that reassessment is not only confined to "escaped assessment" or "underassessment" but to the entire assessment for the year and starts the assessment proceedings be novo giving the right to an assessee to re- agitate matters, which he had lost during the original assessment proceedings, which had acquired finality, is not only erroneous but also against the phraseology of Section 147 of the Act and the object of reassessment proceedings. Such an interpretation would be reading that judgment totally out of context in which the question arose for decision in that case. It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this court, divorced from the context of the question under consideration and treat it to be the complete "law" declared by this court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions, which were before this court. A decision of this court takes its colour from the questions involved in the case in which it is rendered and, while applying the decision to a later case, the court must carefully try to ascertain the true principle laid down by the decision of this court and not to pick out words or sentences from the ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 88 of 147 judgment, divorced from the context of the questions under consideration by this court, to support their reasonings. In Madhav Rao Jwaji Rao Scindia Bahadur v. Union of India , this court cautioned (at page 578 of AIR 1971 SC): It is not proper to regard a word, a clause or a sentence occurring in a judgment of the Supreme Court, divorced from its context, as containing a full exposition of the law on a question when the question did not even all to be answered in that judgment.

Although Section 147 is a part of a taxing statute, it imposes no charge on the subject but deals merely with the machinery of assessment and in interpreting a provision of that kind, the rule is that construction should be preferred under Section 147 of the Act are for the benefit of the Revenue and not an assessee and are aimed at garnering the "escaped income" of an assessee, the same cannot be allowed to be converted as "revisional" or " review" proceedings at the instance of the assessee, thereby making the machinery unworkable. As a result of the aforesaid discussion, we find that, in proceedings under Section 147 of the Act, the Income tax Officer may bring to charge items of income, which had escaped assessment other than or in addition to that item or items, which have led to the issuance of the notice under Section 148 and where reassessment is made under Section 147 in respect of income, which has escaped tax, the Income- tax Officer's jurisdiction is confined to only such income, which has escaped tax or has been under assessed and does not extend to revising, reopening or reconsidering the whole assessment or permitting the assessee to re-agitate questions, which have been decided in the original assessment proceedings. It is only the underassessment, which is set aside and not the entire assessment when reassessment proceedings are initiated. The Income-tax Officer cannot make an order of reassessment inconsistent with the original order of assessment in respect of matters, which are not the subject matter of proceedings under Section 147. An assessee cannot resist validly initiated reassessment proceedings under this section merely by showing that other income which had been assessed originally was at too high a figure except in cases under Section 152(2). The words "such income" in Section 147 clearly refer to the income, which is chargeable to tax but has "escaped assessment" and the Income-tax Officer's jurisdiction under the section is confined only to such income which has escaped assessment. It does not extend to reconsidering generally the concluded earlier assessment. Claims which have been disallowed in the original assessment proceedings cannot be permitted to be re- agitated on the assessment being reopened for bringing to tax certain income, which had escaped assessment because the controversy on reassessment is confined to matters, which are relevant only in respect of the income, which had not been brought to tax during the course of original assessment. A matter not agitated in the concluded original assessment proceedings also cannot be permitted to be agitated in the reassessment proceedings unless relatable to the item sought to be taxed as "escaped income". Indeed, in the reassessment proceedings for bringing to lax items, which had escaped assessment, it would be ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 89 of 147 opened to an assessee to put forward claims for deduction of any expenditure in respect of that income or the non-taxability of the items at all. Keeping in view the object and purpose of the proceedings under Section 117 of the Act, which are for the benefit of the Revenue and not an assessee, an assessee cannot be permitted to convert the reassessment proceedings as his appeal or revision, in disguise, and seek relief in respect of items not claimed in the original assessment proceedings, unless relatable to "escaped income", and re-agitate the concluded matters.

Mr. Swaminathan would refer to the judgment of the Division Bench of the Andhra Pradesh High Court in M.S. Raju Vs. Deputy Commissioner of Income Tax (MANU/AP/0956/2007 : 298 ITR 373) which has expressed a view to the effect that the import of the word 'record' as set out in the Circular (supra) would be restricted to the power under section 263 only and not section 264. The distinction noted by the Division Bench in that case was that the power of revision under section 263 of the Act was intended to be exercised in cases where the interests of revenue were prejudiced and it was for this reason that the inquiry of the Commissioner of Income Tax was not limited only to material available before the assessing officer, but also material obtained subsequently. The power under section 264 of the Act is, in fact as wide a power, and one that is intended to prevent miscarriage of justice. Courts have consistently taken a view that the conferment of powers under section 264 of the Act is to enable the Commissioner to provide relief to an assessee, where the law permits the same. Reference may be made to the decisions of the Gujarat High Court in C.Parikh and Co. Vs. Commissioner of Income Tax (MANU/GJ/0013/1979 : 122 ITR 610); Ramdev Exports Vs. Commissioner of Income Tax (MANU/GJ/0313/2001 : 251 ITR 873); Kerala High Court in Parekh Brothers Vs. Commissioner of Income Tax and Calcutta High Court in Smt. Phool Lata Somani Vs. Commissioner of Income Tax (MANU/WB/0081/2005 : 276 ITR 216). In this view of the matter, we see no reason to take a different view on the interpretation of the word 'record' occurring in section 264 of the Act from that expressed by the Central Board of Direct Taxes in the Circular extracted above. The order under section 144A dated 31.12.2007 is thus part of the record and ought to have been take into consideration in deciding the petition under section 264 of the Act. The relief provided in terms of section 139(5) is specific to the correction of a wrong statement or an omission in the original return by way of a revised return. The power under section 264 of the Act extends to passing any order as the Principal Commissioner or Commissioner may think fit after making an inquiry and subject to the provisions of the Act, either suo-moto or on an application by the assessee. Though the remedies over lap, power under section 264 is significantly wider and the wisdom of choosing one over the other would really depend on the facts and legal position of each case.

19. No doubt Section 139(5) provides for filing a revised return within one year for correcting any mistake. It is true that the petitioner has not exercised such option within such time. However, the petitioner filed a rectification return after receipt of intimation under Section 143(1). It is true that there is a delay in filing such return. But the said rectification return was rejected on 24.10.2017 and immediately, within one year, the petitioner approached the Commissioner under Section 264 of the IT Act, and filed the revision. Since the Commissioner is empowered to entertain the revision under Section 264 of the IT Act, against any order other than the order to which Section 263 applies, the revision filed by the ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 99 of 147 petitioner herein within one year from the date of rejection of their rectification return, is certainly maintainable and consequently, the Commissioner ought to have exercised his power and considered the relief sought for by the petitioner and pass the order to that effect, more particularly, when he has found that the Assessee had committed the error inadvertently and that the expenditure claimed by the Assessee under the head "Total Compensation to Employees" is also supported by the certified copy of "Profit and Loss Account". Therefore, when the Commissioner is approached by the Assessee within one year from the date of an adverse order passed against the Assessee, the Commissioner is empowered and entitled to look into the grievance of the Assessee and pass such order thereon notwithstanding the fact that the Assessee has not approached the Assessing Officer within the time stipulated for filing the revised return. If such technical objection is allowed to stand in the way of the Commissioner in exercising his jurisdiction/power under Section 264 of the IT Act, it would certainly, result in defeating the very purpose and object of granting such ample and wider power to the Commissioner under Section 264 of the IT Act. An apparent injustice or miscarriage of justice need to be set right, notwithstanding the technical objections, if any. While the substantial justice is the King, technicalities are only his soldiers. Certainly, the King can do no wrong and thus, let the soldiers do not stand in his way.

ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 104 of 147 evidence filed before us to substantiate that there were all evidences in support of claiming of expenditure which could be examined at the end of ld. AO, if necessary. We accede to the request of the assessee counsel in the interest of justice that this is the assessment consequent to search action and the income returned u/s 153A of the Act consequent to search and addition made by ld. AO shall be based on the incriminating material found during the course of search as held by Hon’ble Supreme Court in the case of PCIT Vs. Abhisara Buildwell Pvt. Ltd. in ITA No.454 ITR 212 wherein it was held that no addition can be made in respect of assessment framed u/s 153A of the Act without any seized material supporting such additions. 20.32 Accordingly, we direct the ld. AO to determine the income of the assessee in these assessment years only on the basis of seized material/incriminating material in the assessment year 2011-12 to 2016-17 and not solely on the basis of statement recorded u/s 132(4) of the Act. More so, assessee has been continuously before the ld. AO as well as ld. CIT(A) requesting to do the assessments on the basis of books of accounts and evidence found during the course of search since the declaration made by assessee during the course of search was lumpsum basis as there was no enough time to verify the correctness of the records which were voluminous. Before us, assessee filed additional evidence, those are admitted as discussed in the earlier para of this order and it is required to be examined by the authorities as they have vital impact on the computation of income of the assessee. Hence, the issue relating to the admission of additional income by the assessee in the returns filed u/s 153A of the Act and addition made by ld. AO while framing assessment u/s 153A of the Act is required to be re-examined in the light of additional evidences filed by the assessee. Therefore, by placing reliance on the order of the ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 105 of 147 Tribunal in the case of Fibres & Fabrics International (P) Ltd. Vs. ACIT in ITA Nos.1242, 1243, 1269 & 1270 /Bang/2010 and ITA No.141/Bang/2011 dated 30.11.2012, wherein held that where the assessee has filed additional evidence in support of the claim, matter was to be remanded back for disposal afresh in the light of additional evidences. Further, we also place reliance on the judgement of Hon’ble Delhi High Court in the case of CIT Vs. Textr Hundred India Pvt. Ltd. (2011) 239 CTR 263. Further, we place reliance in the case of H.L. Malhotra & Co. (P) Ltd. (2021) 125 taxmann.com 70 (Delhi). Further, we place reliance on ACIT Vs. Kuber Khadyan Pvt. Ltd. (2021) SCC Online ITAT 224, we remand the issues in dispute in all these appeals in all these ground nos.5 to 8 & 10 & 11 to the file of ld. AO for reconsideration to examine the issue in the light of additional evidence filed by the assessee before us as listed in earlier para of this order. We also make it clear that assessee is at liberty to produce any further evidence in support of the claim made by assessee in these grounds. At the same time, the ld. AO is also at liberty to carry on the requisite enquiry on this issue in accordance with law after giving opportunity of hearing to the assessee. Similarly, the additional ground raised by the assessee in ITA No.984 & 986/Bang/2023 in assessment years 2013-14 & 2015-16 also remitted to the file of ld. AO to decide the issue afresh on the basis of seized/incriminating material found, if any during the course of search action conducted on 3.11.2016. All these grounds of appeals in ground Nos.5 to 8, 10 & 11 in all these appeals in ITA Nos.982 to 987/Bang/2024 and also additional ground no.9A in ITA Nos.984 & 986/Bang/2023 are remitted to the file of ld. AO to decide the same in the light of our above observations.

ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 113 of 147 is submitted that the assessment proceedings were started very late in the day and the AO completed the assessment without considering the Assessee’s request in this regard. 27.5 The ld. A.R. submitted that before the Ld CIT(A) the assessee took the relevant grounds stating that the search team as well as the AO did not give opportunity to produce the bills and vouchers relating to the said expenses and that the disallowance confirmed by him was unwarranted. This plea duly noted by the CIT-A in his para 6.1 of his order but rejected it by relying solely on the statements of the employees and the Director made during the search without the corresponding documents supporting such declaration. In fact he has made a baseless allegation that the assessee had not made any efforts till the conclusion of assessment to submit the supporting documents for sales promotion and carriage outward expenses and that it had raised the issue for the first time before him by completely ignoring the protest letter of 30.10.2018 and replies to notice u/s 142(1) dated 30.10.2018 and 17.12.2018. Ld.CIT(A) has also stated that no retraction statement, no revised computation and no revised return was filed by the assessee without appreciating that the assessee has been pleading before each authority below including himself to examine the books of accounts and all the bills and vouchers and give credit– which was not allowed by the authorities. 27.6 He submitted that the authorities below have not heeded to the request of the assessee to examine the books of accounts and bills and vouchers in respect of the additional income offered in the ITRs under ‘protest’ and to exclude the same from total income. Thus, the assessee was not allowed opportunity to substantiate the expenses genuinely incurred for the purpose of ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 114 of 147 business and duly supported by the underlying documents like bills and vouches. It is submitted that this is a case which is covered by the situations visualized under Rule 29 of the ITAT Rules, 1963. The authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence on the subject disallowances included under protest in the ITR. This is also a case where this Hon’ble Tribunal would require the additional evidence to enable it to pass order. This is also a case where the additional evidences are required to do substantial justice to the case as the ‘cause of justice’ has taken a big hit in the whole process culminating into the impugned order. 27.7 Pertinently, the income that can be assessed to tax under section 153C of the Act is only that income which is based on the incriminating material found during the search u/s 132 of the Act as held by the Apex Court in CIT v. Abhisar Buildwell (P) Ltd., 2023 SCC OnLine SC 481. However, the income that has been assessed by the AO is not based on incriminating material but is based merely on the declaration obtained under pressure without the corresponding incriminating material. As stated earlier, the declaration by way agreeing to disallowance of the expenditure was made with an understanding and assurance that the same would be allowed and deleted when the company substantiates it during the assessment proceedings. Both the authorities below did no appreciate the spirit behind and the bona fide actions of the Assessee in adhering to the declaration, though given under pressure. The CIT(A) even went on to the extent of holding that the same was an after-thought which, it is humbly submitted, is contrary to the facts on record.

ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 116 of 147 27.11 He submitted that the company follows the system wherein the bills and vouchers of a particular month relating to all kinds of expenditure are kept together in to bound books, files etc at the end of the year and stored in godowns. Bills and vouchers etc of a particular head of expenditure cannot be easily taken out without breaking the bound books/ files with a risk of them getting torn. Hence the Assessee has, on sample basis producing few vouchers with supporting bills etc for admission as additional evidence with a prayer to allow production of balance documents of the year on being convinced of the bona fide submission of the Assessee in the interest of justice. 27.12 He submitted that the non-submission of the present additional evidences before the AO or CIT(A) were not willful nor intentional. In this regard the assessee respectfully relies upon the ratio of the decision of the Hon’ble High Court of Delhi in the case CIT v. Text Hundred India Pvt. Ltd., (2013) 351 ITR 57 wherein at Para-13 of the Judgment, it was held that Rule 29 enables the Tribunal to admit any additional evidence which would be necessary to do substantial justice in the matter. Their Lordships further observed that the various procedures, including that relating to filing of additional evidence, is a handmade of justice and justice should not be allowed to be choked only because of some inadvertent error or omission on the part of one of the parties to lead evidence. 27.13 Without prejudice to the above, the Assessee submitted that ITAT is the last fact finding authority under the Act and hence empowered to look into the question of fact also, even if not raised earlier in order to determine the correct tax liability of the Assessee. In this regard the Assessee respectfully relies upon the ratio of the ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 117 of 147 decision of the Hon’ble Apex Court in Commissioner Of Income-Tax, Madras vs Mahalakshmi Textile Mills 1968 AIR 101 wherein it has been held that ‘all questions whether of law or of fact which relate to the assessment of the assessee may be raised before the Tribunal’. 27.14 In light of the above the ld. A.R. respectfully prayed for admission of the following additional documents / evidences under Rule 29 r/w Rule 18(4) of the ITAT Rules, 1962: a) Revised computation of income (COI) excluding the additional income included in ITR under protest. b) Bills and vouchers supporting the expenditures under the head Travel Expenditure – Eight vouchers with supporting document for the year as a sample lot. c) Bills and vouchers supporting the expenditures under the head Repairs and Maintenance– Eight vouchers with supporting document for the year as a sample lot. d) Bills and vouchers supporting the expenditures under the head Commission Expenses– Twelve vouchers with supporting document for the year as a sample lot. e) He also prayed that the Assessee may kindly be allowed to submit all the bills and vouchers for entire previous year relevant to A.Y. 11-12 in support of the subject expenditures as the same are not being produced along with this application being voluminous and bulky.

21.

Likewise, the Delhi High Court also decided the case on altogether different facts which will have no bearing once the matter is examined in the aforesaid hue on the facts of this case. The Bombay High Court has rightly distinguished the said judgment as not applicable giving the following reasons: "8. Reliance on the judgment of the Division Bench of the High Court of Delhi reported in case of SSP Aviation Ltd. v. Deputy Commissioner of Income Tax [2012] 346 ITR 177 is misplaced. There, search was carried out in the case of "P" group of companies. It was found that the assessee before the Hon'ble Delhi High Court had acquired certain development rights from "P" group of companies. Based thereon, the satisfaction was recorded by the Assessing Officer and he issued notice in terms of Section 153C. Thereupon the proceedings were initiated under section 153A and the assessee was directed to file returns for the six assessment years commencing from 2003-04 onwards. The assessees filed returns for those years but disclosed Nil taxable income. These returns were accepted by the Assessing Officer, however, in respect of the assessment year 2007-08 there was a significant difference in the pattern of assessment for this year also, the return was filed for Nil income but there were certain documents and which showed that there were transactions of sale of development rights and from which profits were generated and taxable for the assessment year 2007-08. Thus, the receipt of Rs.44 crores as deposit in the previous year relevant to the assessment year 2008-09 and later on became subject matter of the writ petition before the ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 124 of 147 Delhi High Court. That was challenging the validity of notice under section 153C read with section 153A. In dealing with such situation and the peculiar facts that the Delhi High Court upheld the satisfaction and the Delhi High Court found that the machinery provided under section 153C read with section 153A equally facilitates inquiry regarding existence of undisclosed income in the hands of a person other than searched person. The provisions have been referred to in details in dealing with a challenge to the legality and validity of the seizure and action founded thereon. We do not find anything in this judgment which would enable us to hold that the tribunal's understanding of the said legal provision suffers from any error apparent on the face of the record. The Delhi High Court judgment, therefore, will not carry the case of the revenue any further." We, thus, do not find any merit in these appeals.

22.

We now advert to the implication of the fact which has been emphasised in para 15. As pointed out in the said para, the assessment order passed by the AO covers eight Assessment Years. Assessment done in six Assessment Years is under Section 153C of the Act. Assessment order is set aside only in respect of four such Assessment Years that too on the technical ground, noted above. This objection pertaining to the four Assessment Years in question does not relate to the other two Assessment Years, namely, 2004-05 and 2005-06. Likewise, this decision has no bearing in respect of assessment done qua Assessment Year 1999-2000 as well as Assessment Year 200607. The necessary consequence would be that insofar as the conclusions of the AO in his assessment order regarding the activities of the trust not being genuine and not carried out in accordance with the trust deed or cancellation of registration, denial of benefits of Sections 11 and 12 etc. are concerned, the same would not be affected by this judgment. It is, thus, clarified that this Court has not dealt with the matter on merits insofar as incriminating material found against the assessee or Mr. Navale is concerned. Pithily put, this Court has not given any clean chit to the assessee insofar as the finding of the AO to the effect that the assessee had been indulging in profiteering and collecting capitation fee is concerned. Whatever other repercussions are there, based on these findings, they can follow. This Court was not informed and, therefore, unaware of any challenge to the assessment order in respect of other four Assessment Years and outcome thereof. Wherever any such proceedings are pending, ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 125 of 147 same would be considered without being affected by the outcome of these proceedings.

23.

The appeals are dismissed with the aforesaid observations.” 36.2 In view of the above, in respect of assessment years 2013-14 to 2016-17, we hold that the completed assessment cannot be reopened for framing assessment u/s 153C of the Act, unless there is a seized material found during the course of search conducted in the group of cases mentioned in earlier part of this order. Accordingly, this issue is remitted to the file of ld. AO to examine the same afresh and to frame assessment u/s 153C of the Act in these assessment years if there is a valid seized material found during the search action in the case of M/s. John Distilleries Pvt. Ltd. conducted on 3.11.2016 as held by Hon’ble Supreme Court in the case of Singhad Technical Education Society cited (supra) and in the case of Abhisara Buildwell Pvt. Ltd. reported in 454 ITR 212 wherein held that only when during the course of search undisclosed income was found on unearthing incriminating material during the search, the ld. AO assumed jurisdiction to assess or reassess the total income even in case of completed or unabated assessments. In other words there should be seized material relating to each assessment year found during the course of search to reopen completed assessment, if there is no valid seized material the concluded assessment cannot be reopened. With this observation, we remit this ground relating to framing assessment of unabated assessments consequent to search action to the file of ld. AO for reconsideration. 36.3 In respect of assessment year 2011-12 & 2012-13, ld. A.R. submitted that notice u/s 153A of the Act was issued on 7.9.2018. The order was passed u/s 153C of the Act on 28.12.2018 as the ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 126 of 147 time limit to issue notice for those assessment years has been already lapsed, as such no notice u/s 153C of the Act to be issued for the assessment years 2011-12 & 2012-13. 36.4 In our opinion section 153C of the Act is to empower the Assessing Officer of the person searched to handover the money, gold, jewellery or other relevant articles/things or books of account or documents belonging to the other person to the Assessing Officer of that other person and the Assessing Officer of that other person is empowered to proceed against such other person to assess undisclosed income resulting from such money, bullion, jewellery and valuable articles or things, books of account or other documents. The proviso introduced by the Finance Act, 2005 with effect from 1-6-2003 makes a change in the date for reckoning the initiation of the assessment proceedings of the earlier year in the case of other person. In the case of person searched provisions of section 153A are applicable. Provisions of sub-section (1)(b) empower the Assessing Officer to assess or reassess total income of the six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Accordingly, the Assessing Officer can issue notice under section 153A for the six preceding assessment years following the previous year in which search is conducted. In the instant case search of '’JDPL’' was conducted on 03.11.2016, then in his case, the Assessing Officer was empowered to initiate the proceedings for assessment/reassessment for the assessment years 2016-17, 2015-16, 2014-15, 2013-14, 2012-13 & 2011-12. It was because the assessment year relevant to previous year in which search took place was the assessment year 2017-18 (previous year 2016-17), but when provisions of proviso to section ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 127 of 147 153C are applied, then date of search is substituted by date of handing over of the documents by the Assessing Officer of the person searched to the Assessing Officer of the other person (present assessee). Even if we consider the issue of notice u/s153C of the Act was on 7.9.2018, which fell in the assessment year 2019- 20. The Assessing Officer could reopen the assessment for six assessment years preceding this assessment year. They were assessment years 2018-19, 2017-18, 2016-17, 2015-16, 2014-15 & 2013-14. Thus, the assessment for the assessment years 2011-12 & 2012-13 was barred by limitation, so far as the present assessee was concerned. In any case, the instant issue was raised for the first time before the Tribunal and, thus, it had not been examined by the lower authorities, therefore, the matter was to be restored to his file for considering the date when the relevant documents were handed over by the Assessing Officer of the person searched to the Assessing Officer of the present assessee and decide this issue accordingly, in the light of our above observations.

41. The ld. A.R. made same submissions as in the case of M/s. John Distilleries Pvt. Ltd. 41.1 Further submitted that assessment in case of search assessment to be made on the basis of incriminating material/seized material as held in the case of PCIT Vs. Abhisara Buildwell Pvt. Ltd cited (supra) and in the case of CIT vs. Sinhgad Technical Education Society cited (supra). 41.2 Further, some of the statements have been recorded under section 131 by the authorized officer subsequent to ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 129 of 147 completion of search and these statements cannot be considered as conclusive evidence in view of the below mentioned CBDT Circular in file no.286/98/2013-IT (Inv.II) dated 18.12.2014 cited (supra) 41.3 He also submitted that the above circular is binding on the department and it is to be followed in true spirit. 41.4 At the cost of repetition, we reproduce his arguments: A. 132(4) Statement per se is not an incriminating material: For this proposition, he relied on the following judgements:- 1) CIT v. Harjeev Aggarwal, 2016 (2016) 290 CTR 263l (2016) 229 DLT 33, ITA 8 of 2004 (HC, Delhi) 2) CIT vs. Kuber Khadyan Pvt. Ltd., 2021 ITA No.4223/4225/4226/Del/2018 (ITAT, New Delhi) B. No addition without incriminating material : For this proposition, he relied on the following judgements:- 1) CIT vs. Abhisar Buildwell (P) Ltd. (2024) 2 Supreme Court cses 433, 149 taxmann.com 399 (SC), Civil appeal No.6580 of 2021 C. Tribunal has discretion to admit additional evidence in the interest of justice: For this proposition, he relied on the following judgements:- 1) Goetze (India) Ltd. vs. Commissioner of Income-tax (2006) 284 ITR 323 2) Goetz India CIT vs. Text Hundred India Pvt. Ltd. (2013) 351 ITR 57 3) Fibres & Fabrics International (P) Ltd. vs. ACIT, Circle-11(3), Bangalore (2013) 33 taxmann.com 90 (Bangalore Trib) 4) HL Malhotra & Co. (P) Ltd. vs. DCIT, Circle12(1), New Delhi(2021) 125 taxmann.com 70 (Delhi) D. Extrapolation not permitted in S&S assessment: He relied on the following judgements: 1) CIT v. B. Nagendra Baliga, (2014) 363 ITR 410 2) A. Shivashankar v. DCIT ITA Nos.617 to 620/Chny/2017 Dated 31.05.2022 (ITAT, Chennai) 3) Sri Devraj Urs Education Trust for Backward Classes v. ACIT, Bangalore ITA No.500 to 506/Bang/2020 (TAT, Bangalore) 41.5 Further, he submitted that the assessee has filed various letters before ld. AO seeking opportunity to produce evidence in support of the claim of expenditure, which are not considered by ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 130 of 147 him even the assessee has retracted the statement which was observed by the ld. AO after thought. A. He submitted that claim to be entertained even if not made in ITR and income to be assessed and tax to be collected as per Art 265 of Constitution: For this proposition, he relied on the following judgements:-

42.9 She submitted that it is clear from the above statements that the Shri Paul P John confirmed the statements given by the Key employees of the Assessee i.e. Paul Resorts and Hotels Pvt Limited with regard to ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 138 of 147 bogus expenses and generation of cash and admitted undisclosed income for the relevant AYs. 42.10 She also submitted that it is evident from the above sequence of events that the Assessee had ample opportunities earlier to substantiate its claim made in the appellate proceedings. Assessee, after admitting to the details of undisclosed income in the statement recorded under oath from key employees including the statement of CMD, Chairman during the search and post search, on different dates, did not file the supporting documents for the travel expenses, repairs and maintenance and commission paid to establish that the admission of undisclosed income is incorrect. It is also noted that Assessee also did not file any retraction statement at all. This proves the fact that the admission of undisclosed income was correct as it was based on incriminating materials and evidence detected during the search proceedings. Even at the stage of filing of return in response to notice u/s 153C, the Assessee consciously chose to file the return, adhering to the admissions of undisclosed income made in the statements recorded under oath. This again proves the fact that the admission of undisclosed income was based on incriminating material which was declared only due to the search proceedings. 42.11 Further she submitted that even during the assessment proceedings Assessee did not file any documents in support of travel expenses, repairs and maintenance and commission paid before the AO. A revised computation contradicting the disclosure made in the return u/s 153C was not filed and neither did the Assessee file a revised return u/s 153C. Thus in the time period from 3.11.2016, when the search was carried out till 31.12.2018, i.e date of passing of order u/s 143(3) rws 153C, Assessee never contested the admission of undisclosed income. However only during the appellate proceedings, it has raised the ground that the undisclosed income pertaining to travel expenses, repairs and maintenance and commission paid, is not correct as these expenses are ITA No.838 to 843/Bang/2023 M/s. Paul Resorts & Hotels Pvt. Ltd., Bangalore M/s. Paul Plathotathil John ITA Nos.845 to 847/Bang/2023 M/s. John Developers, Bangalore , ITA Nos.961, 962, 982 to 987 & 1012/Bang/2023 M/s. John Distilleries Pvt. Ltd., Bangalore Page 139 of 147 supported by bills and vouchers. It is only an afterthought on part of the Assessee, to raise the issue during appellate proceedings that opportunity was not given to produce bills and vouchers relating to undisclosed income under travel expenses, repairs and maintenance and commission paid, when such undisclosed income was offered by the Assessee in response to notice u/s 153C. She also submitted that it is also noticed that the assessee has failed to make a case that any declaration of undisclosed income during the search and post search proceedings, was made under duress or that the declaration made was incorrect based on additional evidence furnished. The fact remains that the declarations were made on account of bogus expenses claimed to generate cash funds, which is clearly discussed in the assessment order passed. The assessees claim that the TDS is deducted on commission payments claimed does not hold ground as the core issue to be decided is genuinity of the expenses claimed. Once it is proved that the expenses claimed itself is bogus, any colorable device/methodology used to legitimise it, cannot suffice the genuineness of the claims made.