TMI Blog1997 (9) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... ch it does not require any specific adjudication. 5. Ground No. 3(a) relates to the addition of Rs. 15,695 as payment to DDA. The facts relating to the issue are that during the course of assessment it was observed by the AO from a letter dt. 4th Jan., 1990, that the assessee had made a payment of Rs. 15,695 on 16th Jan., 1978 to Delhi Development Authority for the allotment of a flat No. C-195, Malviya Nagar, New Delhi. The assessee was asked to explain the source of the said investment. The assessee merely replied that the said payment was made out of the cash in hand. As per the AO no cash flow statement was filed before him to justify the payment in cash to DDA, but the assessee strongly refuted the observations of the AO and submitted before us that he has filed the cash flow statement before the AO being not satisfied with the explanation of the assessee, the AO made an addition of Rs. 15,695 as an unexplained investment against which the assessee carried the matter before the CIT(A) but did not find favour from him. 6. The learned counsel for the assessee submitted before us that the assessee has obtained the loan of Rs. 1,05,000 in cash from Madanlal Tiwari, Kishanji Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time of investment, Kum. Meena was a minor and she had no source of income. Being not satisfied with the explanation of the assessee, he added this amount in the hands of the assessee, against which the assessee went in appeal before the CIT(A) but did not find favour from him. 9. We have heard the rival submissions of the parties and perused the orders of the authorities below. The learned counsel for the assessee has invited our attention to the query raised by the AO which is placed at p. 19 of the paper-book of the Revenue in which a specific query was made regarding the various investments made by the assessee in his own name and in the name of his family members. In response to this query, the assessee specifically denied the alleged investments. The AO did not make any effort to find out from whose account the investment was made, as submitted by the learned counsel for the assessee. After careful perusal of the orders of the lower authorities and the documents placed on record, we find that the AO simply raised a query but did not make any sincere effort to ascertain from whose account the investment was made. Furthermore, the assessee was not allowed to defend his case p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not invested from his own account. The assessee s main grievance is that he was not allowed to defend his case properly and the AO after noticing these investments, made an addition in the hands of the assessee. Under the given circumstances, we are of the view that this issue requires fresh adjudication and we, accordingly, restore the matter to the file of the AO with the direction to re-adjudicate this issue afresh after affording an opportunity of being heard to the assessee. 12. Ground No. 3(a) relates to the addition of Rs. 1,05,000 as unexplained credits. The facts relating to the issue are that during the course of assessment the AO has observed that in the statement of affairs as on 31st March, 1978, the assessee has indicated loans from the following three persons: . . Rs. (i) Shri Madanlal Tiwari 50,000 (ii) Kishanji Patidar 50,000 (iii) Jagannath Patidar 05,000 But in the list of creditors with dates filed by the assessee it was stated that this loan was obtained from 9th April, 1978, to 15th April, 1978. To ascertain the correct position, the AO has examined the statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the assessee was not specifically asked to cross-examine the witnesses in the instant case. Our attention was further invited to the letter of the assessee written to the AO in which the AO was specifically asked to furnish information in which case the assessee was asked to examine the witnesses. Even otherwise, on the date fixed the creditors which are required to be examined did not appear before the AO and the AO concluded its proceedings and made the report to the CIT(A). The learned counsel for the assessee further argued that despite the objections of the assessee regarding examination of the cash creditors, the CIT(A) did not pass the remand order and the assessee had no knowledge about any internal correspondence made between the CIT(A) and the Dy. CIT(A)/AO. The AO has relied on the statement of the creditors recorded in other assessment proceedings. The learned counsel for the assessee has invited our attention to the affidavit of Mr. Khabya, the learned counsel for the assessee, in which he categorically denied the observations of the CIT(A) that he did not express his desire to cross-examine the various creditors and wanted the appeals to be disposed of on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dates of cash credits were shown as 9th April, 1978, 10th April, 1978 and 15th April, 1978. Since the alleged list of creditors with dates has not been filed before us, by any of the parties, we are unable to express our comments how far the Revenue authorities are correct in making the observations that if the cash credits are excluded from the balance sheet, there will be excess of assets over the liabilities as on 31st March, 1978 by the amount of Rs. 1,05,000 which could be considered as income of the assessee from undisclosed sources being the unexplained investment. It is quite obvious from record that the assessee was not affording any opportunity to cross-examine the cash creditors whose statements were recorded in other assessment proceedings. As per the principles of natural justice, an opportunity should be afforded to the assessee to cross-examine all those witnesses if at all they are relevant to the assessment proceedings in the case of the assessee. Though it is not obvious from the orders that the statements of the cash creditors were relied on by the AO, but the main grievance of the assessee is that he has not been afforded an opportunity to cross-examine the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of Rs. 11,140 which are placed at p. 10 of the second compilation of the assessee. He further argued that it is evident from the balance sheet that Smt. Chetandevi had financial transactions with the assessee and while making the additions in the hands of the assessee with regard to the investment made by Smt. Chetandevi, no explanation was asked from the assessee for making the addition and by doing so, he has violated the principles of natural justice. The learned counsel for the assessee has also invited our attention to the following judgments: (i) Jaydayal Poddar (Decd) Anr. vs. Mst. Bibi Hazra Ors. AIR 1974 SC 171 and (ii) Krishnanand Agnihotri vs. State of MP AIR 1966 SC 796 and submitted that for treating the benami transactions the Revenue has to bring some material on record. The learned Departmental Representative on the other hand, relied on the findings of the CIT(A). 20. We have heard the rival submissions of the parties and carefully perused the orders of the authorities below and the documents placed on record. After careful perusal of the order of the AO and the CIT(A), we are of the view that their order is very cryptic and no detailed discussi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit was added to the income of the assessee. The learned Departmental Representative on the other hand, relied on the observations of the CIT(A). 24. After careful perusal of the orders of the authorities below and hearing the rival submissions of the parties, it is evident from the balance sheet that Shri Raj Kumar and Vijay Kumar had shown the cash credit in their balance sheet. From the orders of the authorities below, there is no inkling that the assessee was ever asked to explain the reason why this addition should not be made in his hands. It is incumbent upon the AO to afford an opportunity of being heard to the assessee before making any addition in the hands of the assessee. The grievance of the assessee is quite reasonable that he was not allowed to defend his case properly. In these circumstances, we are of the view that this issue requires fresh adjudication. Accordingly, we set aside the order of the CIT(A) and restore the matter to the file of the AO with the direction to adjudicate this issue afresh after affording the assessee an opportunity of being heard. 25. Ground No. 3(b) relates to the addition of Rs. 1,73,000 being loan given by V.K. Saklecha Sons, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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