S. 143(3)/ 292C: If the AO wants to rely upon documents found with third parties, the presumption u/s 292C against the assessee is not available. As per the principles of natural justice, the AO has to provide the evidence to the assessee & grant opportunity of cross-examination. Secondary evidences cannot be relied on as if neither the person who prepared the documents nor the witnesses are produced. The violation of natural justice renders the assessment void. The Dept cannot be given a second chance (All judgements considered)

We do not find any ground to interfere with the impugned order. The special leave petition is, accordingly, dismissed.

Held by the Rajasthan High Court:

5. Counsel for the respondent has relied upon the following judgments :-

“1. CIT VS. Dinesh Kumar Sharma, ITA No.14/2005 decided on 24.04.2017 holding as under:-

4. We have heard the learned counsel for the appellant.

4.1 However, the Tribunal while considering the case, held as under:-

7. By considering the totality of facts and circumstances of the case, it appears that the lower authorities presumed that the above mentioned properties belong to the assessee. But they have not verified in whose name these properties are recorded in the record of the Municipal Council/JDA or any other agency of the Government. It appears that the lower authorities made the addition by adopting short-cut method in the name of the assessee without verifying the record. No case is made out about the benami transactions by the lower authorities. In these circumstances, we deem it fit to set aside both the orders of the lower authorities and restore the matter back to the AO to examine the issue from the record of the Municipal council/JDA or any Government agency.

If the properties stand in the name of the assessee, only then the addition can be made in the hands of the assessee. However, the AO will be at liberty to examine the case for making the addition in the hands of the persons in whose name the property is recorded in the record of the Municipal Council/JDA etc., if need be. With this direction, the issue is set aside to the AO who will adjudicate in the light of above discussion and by considering the entire evidence as per law but by providing reasonable opportunity to the assessee.

10. After hearing rival submissions and considering the material available on record, we are of the view that the AO made the addition de hores without having any specific material on hand. The said property at Hanuman Nagar D is not identifiable as the Hanuman Nagar D is the name of the colony. The ld. A/R submitted that the assessee is not owning any property in Hanuman Nagar D nor he had sold any property during the assessment year under consideration.

11. From the AO’s order, it appears that he has not brought any evidence to establish the ownership of the assessee or to identity the property. It was expected from the AO to verify the ownership of the property or the transaction done by the assessee through the Sub- Registrar’s office. When assessee has categorically denied any involvement, then it was expected at least from the first appellant authority to ask for the remand report from the AO. We are satisfied that in the instant case the addition was made merely on the basis of presumption, surmises and conjectures. No addition can by made on the basis of presumption in the block assessment. Therefore, by taking into consideration the ration laid down in the case of Union of India vs. Ajit Jain And Another, 260 ITR 80, we set aside both the orders of the lower authorities and delete the addition of Rs. 1,86,500/-. The assessee will get the relief of this amount.

16. By considering the totality of facts and circumstances of the case, it appears that the statement of Shri Dinesh Kumar Sharma was recorded on 11.1.2001. In his statement, he merely submitted that he has taken the loan on interest from Shri Ashok Kumar Jain (question no. 11). The said loan was partly repaid. Balance of Rs. 45.000/- was continued. The said loan was taken for purchasing the property in the name of wife of the assessee. In these circumstances, we are of the view that when a person is taking the loan from Shri Ashok Kumar Jain, then he cann’t have the business relation with him in normal circumstances. The amount of Rs. 45,000/- was outstanding. If he has the brokerage business with Shri Ashok Kumar Jain, this amount might have been adjusted. In other words, the assessee might have not taken to amount on loan.

The assessee has expressly denied that he was having any brokerage business with Shri Ashok Kumar Jain. The assessee is a whole time director in M/s. Shakambri Stone Crushing Pvt. Ltd. The department has made no enquiry whether any brokerage payment was received either from assessee or from any other sources. Even the properties were not identified for which the brokerage was received.

If he was a broker, he might have signed as a witness on the transfer deed or diary or at least some document at the time of registration or agreement, but in the instant case no material was brought on record to prove that he was having brokerage business.

Moreover, no chance was given for to confront Shri Ashok Kumar Jain. Shri Ashok Kumar Jain never stated of having the brokerage business with the assessee. In these circumstances, we find no justification for making the addition of Rs. 1,13,000/-. Therefore, by setting aside both the orders of the lower authorities, we delete this addition. Thus, the assessee will get the relief of this amount.

19. After hearing rival submissions and considering the material available on record, we are of the view that the AO made the first two additions in summary manner as appears from his order. The CIT(A) has confirmed the order without any discussion. The above two additions are without any material. The AO made no attempt to bring any corroborative evidence or specific circumstances for the presumption. Hence the addition of Rs. 3,24,000/- for the year 1997-98 and addition of Rs. 35,000/- for the years 1998-99 are deleted as the same are de hors without any material.