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2015 (12) TMI 451 - ITAT PUNE

2015 (12) TMI 451 - ITAT PUNE - TMI - Undisclosed cash element in sale of plot - non providing opportunity to cross examine the witness - Held that:- Hon’ble Bombay High Court in the case of M/s.R.W. Promotions Pvt. Ltd [2015 (7) TMI 782 - BOMBAY HIGH COURT] while deciding an identical issue where opportunity to cross examine the witness whose statement was relied upon by the revenue was not allowed had held that denial of such cross examination is breach of principles of natural justice. Accord .....

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e restore the issue to the file of the AO with a direction to give an opportunity to the assessee to cross examine Shri Rakesh Agarwal. The AO shall decide the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. - ITA No.1681/PN/2013 - Dated:- 9-10-2015 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Appellant : Shri Pramod Shingte For The Department : Shri Dheeraj Kumar Jain ORDER .....

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n u/s.132 of the I.T. Act was carried out at the premises of Pride Purple and Bhale group of Pune on 11-01-2008. From the premises of Shri Rakesh Agarwal, consultant of Pride group, a document No.27/Bundle No.2 pertaining to the assessee, i.e. Shri Sandeep Shantilal Khivansara was seized. The said document is related to execution of the transaction relating to sale of plot at Pune on which the assessee has disclosed short term capital gain. The document clearly indicates that against the agreeme .....

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nt of Shri Rakesh Agarwal to the authorized representative of the assessee on 03-11-2010 calling for his explanation/comments in respect of the above with reference to the short term capital gain disclosed. 3. The assessee in his statement stated that the seized paper is not in the handwriting of the assessee. The payment for the transaction of the property in question was received by him at ₹ 22 lakhs by cheques for which he has paid the broker a lumpsum brokerage of ₹ 2 lakhs on wh .....

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assessee. It was further mentioned that if the above explanation is not acceptable, then the assessee should be given an opportunity to cross examine Shri Rakesh Agarwal before the issue is decided. 4. However, the AO held that the seized paper and the deposition of Shri Rakesh Agarwal relates to the transaction entered into by the assessee with the Pride group on which short term capital gain has been offered to tax by the assessee on the consideration received as per the agreement at ₹ .....

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e categorical findings. Therefore, there is no force in the submission of the assessee that he does not know about the cash of ₹ 29,83,030/- mentioned in the seized paper. As there is no other party to the deal except the pride group, the brokers whose names and amounts are mentioned and the assessee and since the pride group has already accepted the fact that they have paid the cash amount of ₹ 29,83,030/- which is over and above the consideration of ₹ 22 lakhs recorded in the .....

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both in making addition of ₹ 29,83,030/- and denial of opportunity to cross examine Shri Rakesh Agarwal. While doing so, he held that the seized document as well as the copy of statement of Shri Rakesh Agarwal were given to the assessee by the AO during the course of assessment proceedings. The contents of the seized documents clearly establish the nature and the amount of the total consideration. The consultant of pride group, who has paid cash of ₹ 29,83,030/- over and above the ch .....

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grounds : 1. On the basis of facts and in the circumstances of the case and as per law, the CIT(A)-I, Nashik is not justified in confirming the addition of ₹ 29,82,030/- made by the Assessing Officer on account of alleged undisclosed cash element in sale of plot. 2. On the basis of facts and in the circumstances of the case, the CIT(A) is not justified in not granting opportunity to cross examine Mr. Rakesh Agarwal, on the basis of whose statement, the addition of ₹ 29,83,030/- was .....

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ing to the decision of the Hon ble Bombay High Court in the case of R.W. Promotions Pvt. Ltd. Vs. ACIT vide ITA No.1489/2013 order dated 13-07-2015 he submitted that the Hon ble High Court in the said decision has held that the assessee is entitled to cross examine the witness whose statement is relied upon by the revenue. This right to examine is a part of the audi altrem partem principle and the same can be denied only on strong reason to be recorded and communicated. Opportunity to cross exam .....

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r hand heavily relied on the order of the CIT(A). 9. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the decision relied on by the Ld. Counsel for the assessee. We find the AO on the basis of some documents seized from the premises of Shri Rakesh Agarwal, a consultant of pride group to whom the assessee has sold the land, made addition of ₹ 29,83,030/- whic .....

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d the categorical statement of Shri Rakesh Agarwal. We find the Ld.CIT(A) upheld this action of the AO. It is the submission of the Ld. Counsel for the assessee that without giving an opportunity to the assessee to cross examine Shri Rakesh Agarwal the AO should not have made the addition to the total income of the assessee especially when the assessee does not know Mr. Rakesh Agarwal. For the above proposition the assessee relied on the decision of Hon ble Bombay High Court in the case of M/s.R .....

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ess. The relevant observation of the Hon ble High Court at para 11 to 13 of the order reads as under : 11. We find that there has been a breach of principles of natural justice in as much as the Assessing Officer has in his order placed reliance upon the statements of representatives of M/s. Inorbit and M/s. Nupur to come to the conclusion that claim for expenditure made by the appellant is not genuine. Thus the appellant was entitled to cross examine them before any reliance could be placed upo .....

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