TMI Blog1998 (10) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 89-90 92- Para (D) on p. 9 to valuable 93 to 96-97 1st para on p. 11 assets read with Annexure A (shares) (ii) Bogus 5,42,21,070 91-92 to 96- Last para on p. 22 to share 97 1st para on p. 30 holdings read with Annexure D. (iii) Loans 1,40,71,250 92-93 to 94- Paras 14 16 on pp. advanced by 95 95-96 38 and 39 various Companies/ firms (iv)Consoli- 8,91,86,382 89-90 to 96-97 Pages Nos. 30 to 43 dated undis- read with Annexure E. closed income of various companies (v) Sales 86,90,314 93-94 94-95 Para 9 on page 34 made by B.P. and subsequent Marketing Ltd. Paras on p. 35. (vi) Aggre- 1,39,16,170 87-88 to 96-97 Running 1st para on gate of Bank p. 21 read with deposits/ Annexure B-2. credits in bank accounts of the members of appellant and others in Benaras State Bank Ltd. (vii) Aggr- 2,25,31,068 91-92 to 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) That consequently, the total demand of tax of Rs. 15,30,41,703 determined by the impugned block assessment against the appellant is bad, illegal, untenable and at any rate, without prejudice, very excessive. Various observations made by the learned AO in the impugned assessment order are either incorrect or untenable. Statement of Facts are attached as Annexure "A". (4) That without prejudice to the above grounds, various additions as made by the learned AO overlap each other, also amounting to double assessment not permissible under the law, principles of telescoping ought not to have been ignored." 2. The assessee has also sought permission to raise additional grounds of appeal vide letter dt23rd July, 1998. These grounds read as under: "That the impugned block assessment order dt.30th May, 1997as passed by the learned Dy. CIT Special Range 13,New Delhiis arbitrary, illegal and void inter alia because: (a) The learned CIT X Delhi had given his approval mechanically and without applying his mind independently, (b) The learned CIT X,Delhihad not afforded an opportunity of being heard to the appellant before giving his approval. (c) Principles of natural justice ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 305-309 31. Affidavit of Sh. Alok Aggarwal on behalf of 1801-1802 his HUF ------------------------------------------------------------- 2. The above evidence deserves to be entertained, inter alia, because: (i) This is the first appeal before the Hon'ble Tribunal against block assessment order. (ii) The assessee was prevented by sufficient- cause from filing the above evidence before the learned AO because either he failed to summon various persons even though the assessee had specifically requested him to do so, or he had recorded some statements behind the back of the assessee without giving him opportunity of cross-examination. (iii) The above evidence goes to the root of the matter." 4. Since the additional grounds as well the additional evidence to be admitted are intimately connected with the specific grounds taken in respect of the lack of proper opportunity allowed to the assessee, we would first advert to the aforesaid issue before coming to the admission of the additional ground and the additional evidence. Shri O.P. Sapra who appeared oh behalf of the assessee, submitted that the assessee is a qualified chartered accountant. The firm w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aggregate Assessment amount of years undisclosed income Rs. -------------------------------------------------------------- (1) Other valuable assets (shares) 2,84,29,400 89-90 92- 93 to 96-97 (2) Bogus shareholdings 5,42,21,000 91-92 to 96- 97 (3) Loans advanced by various 1,40,71,206 92-93 to 94- companies/firms 95 95-96 (4) Consolidated undisclosed income of various companies 8,91,86,382 89-90 to 96- 97 (5) Sales made by B.P. Marketing Ltd. 86,90,314 93-94 94- 95 ------------ Total 19,45,98,302 -------------------------------------------------------------- From the fact that the assessee was in possession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and there was no evidence to show that usufruct was enjoyed by the assessee. As to the requirement of producing shareholders/directors the assessee brought to the notice of the AO that it was not possible for him to comply with the request and as such notice under s 131 be issued to them. Copies of the statements of the directors/shareholders of various companies as recorded by the authorities were supplied to the assessee as late as on20th May, 1997. Asking for assessee's comments by25th May, 1997. The assessee made a request that he be allowed to cross-examine these witnesses whose statements were recorded at his back. Not only the same was not allowed perhaps for lack of time because the assessment was finalised on30th May, 1997, the assessee could not effectively refute the allegations for want of time. The statements recorded at the back of the assessee could not be made use of as held by their Lordships in the case of Kishanchand Chellaram vs. CIT (1980) 19 CTR (SC) 360 : (1980) 125 ITR 713 (SC). Furthermore as held by their Lordships of Allahabad High Court in the case of Nathu Ram Prem Chand vs. CIT (1963) 49 ITR 561 (All) and in the case of EMC (Works) (P) Ltd. vs. ITO (19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee and opportunity was not allowed to meet way of the queries by way any material or evidence in rebuttal. Furthermore the particulars in regard to the bank account were not even supplied to the assessee before passing the block assessment order. The assessee had no knowledge about the accounts maintained in the names of the third parties. To quote a few Shri O.P. Sapra drew our attention to certain facts as listed in the application which showed that in making the addition gross violation of principles of natural justice occurred. Similar lapse occurred while bringing to tax an amount of Rs. 2,25,31,068 on account of unconnected accounts of holders being clients of the assessee. The addition was made on the strength of 52 blank cheque books found in the premises of the assessee. These belong to the assessee's clients and came to his possession for the purpose of finalisation of their annual accounts and preparation of their income-tax returns. Despite written requests made to summon these account holders, this was not done. 6. As regards addition made at Rs. 80,75,145 on account of deposits/credits in bank account of Shri Mukesh Gupta, it was submitted that the AO had no evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since it was not done the AO had no alternative but to draw adversed inferences. He however admitted that the assessee was not allowed to cross-examine as requested by him. He also fairly admitted that in the assessment as framed double additions have occurred as pointed out by the assessee in the written submissions. 9. We have carefully considered the rival submissions. As pointed out earlier ground No. 2 of revised grounds of appeal reads as under: "(2) That without prejudice to the generality of the aforesaid grounds, all and every addition made in the impugned assessment as undisclosed income of the appellant is vitiated in law on, inter alia, one or more of such grounds, as lack of jurisdiction, want of authority of law, lack of evidence, lack of proper opportunity to the appellant to adduce evidence, to prove his case and failure on the part of the AO to discharge his burden of proof." The hearing was confined to the aforesaid ground without going into the merits of the case. As mentioned in the elaborate submissions made before us we find that though the statements of shareholders/directors/persons were recorded by the AO. These were at the back of the assessee. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possession of the Department which called for the enquiry m the case of bank account of Shri Mukesh Gupta who was in no manner connected with the assessee. While Shri Mukesh Gupta was never examined the statement of Shri Surender Garg, his elder brother was recorded at the back of the assessee and the cross-examination of the party was not allowed. The linkage between the additions made on various accounts with the ones made on account of share capital funds for which separate additions were made was also not established. The additions made have to be as per the procedure laid down under ss. 28 to 43C of the Act. It has also to be shown that certain additions are called for under ss. 68, 69, 69A or 69C of the Act, to which reference has to be made. On the reasons stated above briefly, it is clear that the assessment framed was in violation of the principles of natural justice. Before any adverse material collected at the back of the assessee is made use of, the same is to be confronted to the assessee for rebuttal. In the circumstances, we agree with the assessee's counsel that on the limited ground of non-allowance of proper opportunity the matter needs to be restored back to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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