TMI Blog2016 (5) TMI 852X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the assessee against the order dated 25/01/2012 of the learned CIT(A), Kota for A.Y. 2004-05. The effective grounds of appeal are as under:- 1. On the facts and in the circumstances of the case the Ld. CIT(A) has grossly erred in upholding the action of Ld. AO in initiating the action u/s 147 of the Income Tax Act, 1961, without making any enquiries/ investigation upon alleged facts/material received from other party based on assumption and presumption and further not providing the proper opportunity to the assessee to cross examine of the persons / authority from whom such material was collected behind the back of the assessee, thus the consequent order passed u/s 143(3)/147 of the Income Tax Act, 1961 being grossly in violation of principal of natural justice, which deserves to be hold void-ab-initio. 2. On the facts and in the circumstances of the case the Ld. CIT(A) has grossly erred in confirming the addition of ₹ 76,00,000/- made on account of undisclosed income u/s 69 in arbitrary manner without properly considering the submission made and evidence adduced and has further ignored the effective compliance made by the assessee by submitting the all p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 003 in the bank. He has further held that after one day i.e. on 12/09/2003 vide cheque No. 30983 for ₹ 26.00 lacs and vide cheque No. 30984 for ₹ 50.00 lacs on 30/09/2003 have been withdrawn by self made cheques. The ld Assessing Officer gave reasonable opportunity of being heard on this issue. The assessee asked to provide the copy of seized material. He was directed to complete the formality for granting of the copy of the seized material. The ld Assessing Officer provided copy of seized material on 24/12/2009. It was submitted by the assessee before the ld Assessing Officer that the assessee took the loan from M/s Abhaya Investment Pvt. Ltd. at ₹ 76.00 lacs, which was repaid on 09/09/2003 through 8 demand drafts of 9.5 lacs each, which was prepared from the PNB, Hindaun City. After maturing the FDR, which was in the name of Resident Engineer Rajasthan State Road Development Corp.. He also filed affidavit before the Assessing Officer and claimed that the copy of the seized material was provided late and whatever copy of deposit slip and withdrawal cheques found during the course of search were not pertained to his firm and no partner/employee has signed on it. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . I was noticed that this was an entry provided by M/s Abhaya Investment Pvt. Ltd. after receiving equal amount of cash from assessee. An affidavit, of Shri Gajendra Porwal stating the above facts, was obtained by ADIT(Investigation), which was forwarded to the Assessing Officer. The Assessing Officer treated this cash credit of ₹ 76.00 lacs as undisclosed investment U/s 69 of the Act and added it in the total income of the assessee. The ld CIT(A) further analysed the situation-1 and situation-2 for example and considered this case in situation-2 where the Assessing Officer has not allowed cross examination of Shri Gajendra Porwal. However, the assessee had also not discharged his initial onus as in the case of cash credit, the burden to prove the genuineness of the cash creditor was on the assessee and as it failed to discharge even its initial onus. Thus, he confirmed the addition. 5. Now the assessee is in appeal before us. The ld AR of the assessee has submitted that third party statement and material gathered during the search had been used in making addition by the Assessing Officer and confirming addition by the ld CIT(A). The assessee had taken loan of ₹ 76.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the record. It is undisputed fact that the ld Assessing Officer has made addition in the premise of cash receipts from the assessee deposited in M/s Abhaya Investment Pvt. Ltd.. Thereafter, he got accommodation entry. The ld CIT(A) had discussed situation-1 in his order and held this addition is not justified but he having coterminous power and confirmed the addition by treating this loan as cash creditor, which has not been proved by the assessee as onus cast on him. It is also not as per law as the ld CIT(A) has not provided any opportunity to the assessee before using coterminous power given under the law to him. The identical case has already been considered by the Coordinate Bench in ITA Nos. 1351 to 1356/JP/2008 order dated 31/03/2010 where additions were made without providing cross examination of Shri Gajendra Porwal, which has been either confirmed or deleted by the ld CIT(A), has been decided in favour of the assessee by the ITAT. The operative portion of the Coordinate Bench is as under:- Under the facts and circumstances in totality, we come to the conclusion that the admission made by Shri Porwal admitting that the transaction in question was managed by him for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve that the amount credited is the appellant s own money. Also that M/s. JTFSPL was not credit worthy of paying this much amount and the transaction entered into between the appellant and M/s. JTFSPL was not genuine. The AO has taken support of the general statement given by Sh. Porwal, that the shares were subsequently been transferred to confident of the beneficiaries. However, the AO failed to give any specific finding about a particular transaction under consideration that the shares purchased by M/s. JTFSPL were subsequently transferred to the appellant or its beneficiaries. In fact the AO has not quoted any specific question and its answer given by Sh. Porwal with reference to the transaction under reference. Sh. Porwal in his statement also admitted that he provided entry for a commission received in cash but in the present case the AO has not given any finding, how much commission was received by Sh. Porwal from the appellant for this transaction. No such entry for receipt of commission was found in the case of Sh. Gajendra Porwal nor any addition or an accounted payment of commission was made by the AO in the case of the appellant. The appellant company asked for cro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of appeal is decided in favour of the appellant. We fully concur with the above finding of the ld. CIT (A) under the facts and circumstances of the present case as discussed above. The first appellate order in this regard is thus upheld. The ground is accordingly rejected. Recently, the Hon'ble Supreme Court in the case of Andaman Timber Industry Vs. Commissioner of Central Excise in Civil appeal No. 4228/2006 vide order dated 2nd September, 2015 has held that not allowing the assessee to cross examine the witnesses by adjudicating the authority, though the statement of those witnesses were made the basis of impugned order is a serious flaw, which makes the order nullity, inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. This to be borne in mind that the order of the CCE was based upon the statement given by two witnesses. By respectfully following the order of the Coordinate Bench and proposition of Hon'ble Supreme Court, we allow the assessee s appeal. 8. In the result, the assessee s appeal partly allowed. Order pronounced in the open court on 08/04/2016. - - TaxTMI - TMITax - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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