2022 (3) TMI 301 - AT - Income Tax

Reopening of assessment u/s 147 - Addition u/s 68 - reliance on report of the Investigation Wing that the assessee has received accommodation entry from four companies - cross-examination of Shri S.K. Gupta, whose statement recorded to make addition - CIT(A) dismissed the ground challenging the validity of the reassessment proceedings as well as the addition on merit - HELD THAT:- It is clear that despite the request of the assessee for cross-examination of Shri S.K. Gupta, whose statement is the basis of addition made by the AO, the AO has not provided the opportunity of cross-examination to the assessee.

We find, identical issue had come up before the coordinate Bench of the Tribunal in the case of TRN Impex Pvt. Ltd. [2021 (2) TMI 678 - ITAT DELHI] where the Tribunal deleted the addition on the ground that the AO did not grant the opportunity of cross-examination despite being asked for by the assessee.

In the instant case, reopened the assessment on the basis of the report of the Investigation Wing that the assessee has received accommodation entry from four companies, the details of which are given in the reasons recorded. We find, the AO after going through the various statements filed by the assessee from time to time, made addition being the share application money/share capital received by the assessee by invoking the provisions of section 68 of the Act and made further addition being 1.5% of the above amount which the assessee incurred as commission for arranging the accommodation entries. CIT(A) dismissed the ground challenging the validity of the reassessment proceedings as well as the addition on merit. It is the submission of the ld. Counsel that the assessee during the assessment proceedings had categorically asked for the corss-examination of Shri S.K. Gupta, whose statement was the basis for making the addition to the total income of the assessee.

Despite the request of the assessee for cross-examination of Shri S.K. Gupta, whose statement is the basis of addition made by the AO, the AO has not provided the opportunity of cross-examination to the assessee.

Since, in the instant case also the reopening was made on the basis of the report of the Investigation Wing in the case of Mukesh Gupta group along with its close confidants Sh. Rajan Jassal and Sh. Surinder Pal Singh, but the addition was made on the basis of the statement of Shri S.K. Gupta recorded during the course of survey on 20.11.2007 in the case of M/s Sino Credits & Liasing Limited, M/s Rapid Packaging Limited, Girisho Company (P.) Limited, M/s Mitsu Securities Management (Pvt.) Ltd., M/s Sino Securities and M/s Anila Industries and since even after repeated requests of the assessee, the AO has not provided the opportunity of cross-examination of Shri S.K. Gupta to the assessee, therefore, respectfully following the decisions cited supra, we hold that the addition made by the AO and sustained by the CIT(A) is not in accordance with the law. We, therefore, delete the addition.

So far as the grounds challenging the validity of the reassessment proceedings are concerned, the ld. Counsel for the assessee did not seriously argue these grounds for which we dismiss the grounds challenging the validity of the reassessment proceedings. - Decided partly in favour of assessee.